Atlantic Union Bankshares Corp

For the period ended Mar 31, 2024. Filed May 2, 2024.

About this filing

A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Mar 31, 2024 · Filed May 2, 2024

AUB$40.18+2.1%Stored close · as of Nov 9, 2026

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Contents

Notes to Consolidated Financial Statements (unaudited)

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

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

Basis of Financial Information

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

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

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

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2. SECURITIES AND OTHER INVESTMENTS

Available for Sale

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


· · Amortized · · Gross Unrealized · · Estimated
· Cost · Gains · (Losses) · Fair Value
March 31, 2024 · · · · ·
U.S. government and agency securities	$62,561	$208	$(33)	$62,736
Obligations of states and political subdivisions	585,749	14	(123,913)	461,850
Corporate and other bonds (1)	267,621	83	(17,440)	250,264
Commercial MBS
Agency	231,296	160	(42,609)	188,847
Non-agency	58,243	—	(1,756)	56,487
Total commercial MBS	289,539	160	(44,365)	245,334
Residential MBS
Agency	1,322,392	350	(220,742)	1,102,000
Non-agency	83,437	213	(5,397)	78,253
Total residential MBS	1,405,829	563	(226,139)	1,180,253
Other securities	1,779	—	—	1,779
Total AFS securities	$2,613,078	$1,028	$(411,890)	$2,202,216

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


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

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


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

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

(2)* Comprised of759 and757 individual securities as of March 31, 2024 and December 31, 2023, respectively.*

The Company has evaluated AFS securities in an unrealized loss position for credit related impairment at March 31, 2024 and December 31, 2023 and concludedno impairment existed based on several factors which included: (1) the majority of these securities are of high credit quality, (2) unrealized losses are primarily the result of market volatility and increases in market interest rates, (3) the contractual terms of the investments do not permit the issuer(s) to settle the securities at a price less than the cost basis of each investment, (4) issuers continue to make timely principal and interest payments, and (5) the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis.

Additionally, the majority of the Company’s MBS are issued by FNMA, FHLMC, and GNMA and do not have credit risk given the implicit and explicit government guarantees associated with these agencies. In addition, the non-agency mortgage-backed and asset-backed securities generally received a 20% simplified supervisory formula approach rating. The Company’s AFS investment portfolio is generally highly-rated or agency backed. At March 31, 2024 and December 31, 2023, all AFS securities were current withno securities past due or on non-accrual andno ACL was held against the Company’s AFS securities portfolio.

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

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

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

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

Held to Maturity

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


· · Carrying · · Gross Unrealized · · Estimated
· Value · Gains · (Losses) · · Fair Value
March 31, 2024 · · · · · ·
Obligations of states and political subdivisions	$695,952	$2,851	$(27,308)	$671,495
Corporate and other bonds(1)	4,230	—	(182)	4,048
Commercial MBS
Agency	27,377	—	(5,819)	21,558
Non-agency	23,437	14	(493)	22,958
Total commercial MBS	50,814	14	(6,312)	44,516
Residential MBS
Agency	39,928	—	(6,365)	33,563
Non-agency	38,004	121	(402)	37,723
Total residential MBS	77,932	121	(6,767)	71,286
Total HTM securities	$828,928	$2,986	$(40,569)	$791,345

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


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

(1)* Other bonds include asset-backed securities**.*

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


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

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

(2) Non-agency mortgage-backed and asset-backed securities have limited credit risk, supported by most receiving a20% simplified supervisory formula approach rating.

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

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

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

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

The Company’s HTM investment portfolio primarily consists of highly-rated municipal securities. At March 31, 2024 and December 31, 2023, the Company’s HTM securities were all current, withno securities past due or on non-accrual. The Company’s HTM securities ACL was immaterial at March 31, 2024 and December 31, 2023.

Restricted Stock, at cost

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

Realized Gains and Losses

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


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

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

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

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3. LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES

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


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

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

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

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


· · · · · · Greater than · · · · ·
· · · · · 30-59 Days · · 60-89 Days · · 90 Days and · · · · · · ·
· · Current · · Past Due · · Past Due · · still Accruing · · Nonaccrual · · Total Loans ·
Construction and Land Development	$1,242,478	$2,163	$1,097	$171	$342	$1,246,251
Commercial Real Estate – Owner Occupied	1,971,428	3,663	—	3,634	2,888	1,981,613
Commercial Real Estate – Non-Owner Occupied	4,210,657	2,271	558	1,197	10,335	4,225,018
Multifamily Real Estate	1,074,813	—	—	144	—	1,074,957
Commercial & Industrial	3,547,743	5,540	348	1,860	6,480	3,561,971
Residential 1-4 Family – Commercial	511,342	1,407	98	1,030	1,790	515,667
Residential 1-4 Family – Consumer	1,062,189	6,070	204	1,641	10,990	1,081,094
Residential 1-4 Family – Revolving	609,076	1,920	1,477	1,343	3,135	616,951
Auto	435,883	3,192	330	284	429	440,118
Consumer	112,658	418	197	141	—	113,414
Other Commercial	986,285	8,187	102	—	—	994,574
Total LHFI, net of deferred fees and costs	$15,764,552	$34,831	$4,411	$11,445	$36,389	$15,851,628
% of total loans	99.45%	0.22%	0.03%	0.07%	0.23%	100.00%

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


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

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


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

There wasno interest income recognized on nonaccrual loans during the three months ended March 31, 2024 and 2023. See Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” in the Company’s 2023 Form 10-K for additional information on the Company’s policies for nonaccrual loans.

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Troubled Loan Modifications

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

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


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

Total	$20,541

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

Three Months Ended March 31, 2023


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

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

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

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

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

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

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Allowance for Loan and Lease Losses

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

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

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

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

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

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

Credit Quality Indicators

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

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

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

Commercial Loans

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

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

-17-

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Consumer Loans

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


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

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

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

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

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

-20-

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


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

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

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

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

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

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

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4. GOODWILL AND INTANGIBLE ASSETS

The Company’s intangible assets consist of core deposits, goodwill, and other intangibles arising from previous acquisitions. The Company has determined that core deposit intangibles have finite lives and amortizes them over their estimated useful lives. Core deposit intangibles are being amortized over the period of expected benefit, which ranges from four years toten years, using an accelerated method. Other amortizable intangible assets are being amortized over the period of expected benefit, which ranges from four years toten years, using various methods. The Company concluded that there wasno impairment to the goodwill or intangible assets as of the balance sheet date. In the normal course of business, the Company routinely monitors the impact of the changes in the financial markets and includes these assessments in the Company’s impairment process.

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

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

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

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


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

-22-

5. LEASES

Lessor Arrangements

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

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


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

Lessee Arrangements

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

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


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

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


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


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

-23-

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


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

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

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

-24-

6. BORROWINGS

*Short-term Borrowings

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

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


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

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

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

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

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

-25-

*Long-term Borrowings

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


· · · · Spread to · · · · · · ·
· · Principal · · 3-Month SOFR (1) · · Rate (2) · · Maturity · · Investment (3)
Trust Preferred Capital Securities
Trust Preferred Capital Note – Statutory Trust I	$22,500	2.75%	8.31%	6/17/2034	$696
Trust Preferred Capital Note – Statutory Trust II	36,000	1.40%	6.96%	6/15/2036	1,114
VFG Limited Liability Trust I Indenture	20,000	2.73%	8.29%	3/18/2034	619
FNB Statutory Trust II Indenture	12,000	3.10%	8.66%	6/26/2033	372
Gateway Capital Statutory Trust I	8,000	3.10%	8.66%	9/17/2033	248
Gateway Capital Statutory Trust II	7,000	2.65%	8.21%	6/17/2034	217
Gateway Capital Statutory Trust III	15,000	1.50%	7.06%	5/30/2036	464
Gateway Capital Statutory Trust IV	25,000	1.55%	7.11%	7/30/2037	774
MFC Capital Trust II	5,000	2.85%	8.41%	1/23/2034	155
Total Trust Preferred Capital Securities	$150,500				$4,659
Subordinated Debt (4)
2031 Subordinated Debt	250,000	—%	2.875%	12/15/2031
Total Subordinated Debt (5)	$250,000
Fair Value Discount (6)	(13,840)
Investment in Trust Preferred Capital Securities	4,659
Total Long-term Borrowings	$391,319

(1) Three-Month CME SOFR +0.262%.

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

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

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

(5) Fixed-to-floating rate notes. On December 15, 2026, the interest rate changes to a floating rate of the then current Three-Month Term SOFR plus a spread of186 bps through its maturity date or earlier redemption. The notes may be redeemed before maturity on any interest payment date occurring on or after December 15, 2026.

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

-26-

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


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

(1) Three-Month CME SOFR +0.262%.

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

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

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

(5) Fixed-to-floating rate notes. On December 15, 2026, the interest changes to a floating rate of the then current Three-Month Term SOFR plus a spread of186 bps through its maturity date or earlier redemption. The notes may be redeemed before maturity on any interest payment date occurring on or after December 15, 2026.

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

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

· · · · · · · · · · · ·
· Trust · · ·
· Preferred · · · Total
· Capital · Subordinated · Fair Value · Long-term
· Notes · Debt · Discount (1) · Borrowings
For the remaining nine months of 2024	$—	$—	$(893)	$(893)
2025	—	—	(1,211)	(1,211)
2026	—	—	(1,236)	(1,236)
2027	—	—	(1,263)	(1,263)
2028	—	—	(1,293)	(1,293)
Thereafter	155,159	250,000	(7,944)	397,215
Total long-term borrowings	$155,159	$250,000	$(13,840)	$391,319

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

-27-

7. COMMITMENTS AND CONTINGENCIES

*Litigation and Regulatory Matters

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

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

*Financial Instruments with Off-Balance Sheet Risk

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

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

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

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

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

-28-

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

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

(1)* Includes unfunded overdraft protection*.

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

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

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


· · Pledged Assets as of March 31, 2024 · · ·
· · · AFS · HTM · · · ·
· · Cash · · Securities (1) · · Securities (1) · · Loans (2) · · Total
Public deposits	$—	$754,132	$615,378	$—	$1,369,510
Repurchase agreements	—	199,975	—	—	199,975
FHLB advances	—	46,448	—	3,244,890	3,291,338
Derivatives	156,891	60,868	—	—	217,759
Federal Reserve Discount Window	—	—	—	394,700	394,700
Other purposes	—	16,836	—	—	16,836
Total pledged assets	$156,891	$1,078,259	$615,378	$3,639,590	$5,490,118

(1)* Balance represents market value.*

(2)* Balance represents book value.*


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

(1)* Balance represents market value.*

(2)* Balance represents book value.*

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

-29-

8. DERIVATIVES

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

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


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

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

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

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

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

(4)* Includes RPAs.*

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

-30-

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

· · · · · · · · · · · ·
· · March 31, 2024 · · December 31, 2023
· · · Cumulative · · 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)	$80,236	$(1,888)	$82,203	$(1,323)
Loans (3)	76,830	(10,507)	78,072	(9,392)

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

(2)Carrying value represents amortized cost.

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

-31-

9. STOCKHOLDERS’ EQUITY

*Share Repurchase Programs

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

*Series A Preferred Stock

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

Accumulated Other Comprehensive Income (Loss)**

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

· · · · · · · · · · · · · · ·
· · · Unrealized Gains · · · · · ·
· · · · · (Losses) · · · · · · · · ·
· · Unrealized · · for AFS · · · · · Unrealized · · ·
· · (Losses) · · Securities · · Change in Fair · · Gains · · ·
· · on AFS · · Transferred to · · Value of Cash · · (Losses) on · · ·
· · Securities · · HTM · · Flow Hedge · · BOLI · · Total
AOCI (loss) – December 31, 2023	$(302,532)	$6	$(42,165)	$1,342	$(343,349)
Other comprehensive (loss) income:
Other comprehensive loss before reclassification	(20,501)	—	(10,253)	(16)	(30,770)
Amounts reclassified from AOCI into earnings	(2)	(2)	—	(175)	(179)
Net current period other comprehensive loss	(20,503)	(2)	(10,253)	(191)	(30,949)
AOCI (loss) – March 31, 2024	$(323,035)	$4	$(52,418)	$1,151	$(374,298)

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

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

-32-

10. FAIR VALUE MEASUREMENTS

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

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

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

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

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

Assets and Liabilities Measured at Fair Value on a Recurring Basis* **

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

●

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

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

●

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

-33-

●

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

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


	Fair Value Measurements at March 31, 2024 using
· · · Significant · · · ·
· · Quoted Prices in · · Other · · Significant · · ·
· · Active Markets for · · Observable · · Unobservable · · ·
· · Identical Assets · · Inputs · · Inputs · · ·
· · Level 1 · · Level 2 · · Level 3 · · Balance
ASSETS · · · · ·
AFS securities: · · · · ·
U.S. government and agency securities		$60,868	$1,868	$—	$62,736
Obligations of states and political subdivisions		—	461,850	—	461,850
Corporate and other bonds(1)		—	250,264	—	250,264
MBS		—	1,425,587	—	1,425,587
Other securities		—	1,779	—	1,779
LHFS		—	12,200	—	12,200
Financial Derivatives(2)		—	99,259	—	99,259

LIABILITIES
Financial Derivatives(2)		$—	$226,777	$—	$226,777

(2)* Includes hedged and non-hedged derivatives.*

-34-


	Fair Value Measurements at December 31, 2023 using
· · · Significant · · · ·
· · Quoted Prices in · · Other · · Significant · · ·
· · Active Markets for · · Observable · · Unobservable · · ·
· · Identical Assets · · Inputs · · Inputs · · ·
· · Level 1 · · Level 2 · · Level 3 · · Balance
ASSETS · · · · ·
AFS securities: · · · · ·
U.S. government and agency securities		$61,311	$2,045	$—	$63,356
Obligations of states and political subdivisions		—	475,447	—	475,447
Corporate and other bonds(1)		—	241,889	—	241,889
MBS		—	1,448,817	—	1,448,817
Other securities		—	1,752	—	1,752
LHFS		—	6,710	—	6,710
Financial Derivatives(2)		—	93,027	—	93,027

LIABILITIES
Financial Derivatives(2)		$—	$206,561	$—	$206,561

(1)Other bonds include asset-backed securities.

(2)Includes hedged and non-hedged derivatives.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis* **

Certain assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets after they are evaluated for impairment. The primary assets accounted for at fair value on a nonrecurring basis are related to loans held for sale, foreclosed properties, former bank premises, and collateral-dependent loans that are individually assessed. When the asset is secured by real estate, the Company measures the fair value utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser using observable market data. Management may discount the value from the appraisal in determining the fair value if, based on its understanding of the market conditions, the collateral had been impaired below the appraised value (Level 3). The nonrecurring valuation adjustments for these assets did not have a significant impact on the Company’s consolidated financial statements.

*Fair Value of Financial Instruments

ASC 825,*Financial Instruments,*requires disclosure about fair value of financial instruments for interim periods and excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. Refer to Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” in the Company’s 2023 Form 10-K for additional information on the valuation techniques used by the Company to measure fair value.

●	Cash and Cash Equivalents: The carrying amount is a reasonable estimate of fair value.

●

HTM Securities: The Company’s investment portfolio is primarily valued using fair value measurements that are considered to be Level 2; however, there are a few investments that are considered to be Level 3. The Company has contracted with a third-party portfolio accounting service vendor for valuation of its securities portfolio; no material differences were identified during the valuations as of March 31, 2024 and December 31, 2023.

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●

Loans and Leases: The fair value of loans and leases were estimated using an exit price, representing the amount that would be expected to be received if the Company sold the loans and leases. The fair value of performing loans and leases were estimated through use of discounted cash flows. Credit loss assumptions were based on market probability of default/loss given default for loan and lease cohorts. The discount rate was based primarily on recent market origination rates. Fair value of loans and leases individually assessed and their respective levels within the fair value hierarchy are described in the previous section related to fair value measurements of assets that are measured on a nonrecurring basis.

●	Accrued Interest: The carrying amounts of accrued interest approximate fair value.

●	Bank Owned Life Insurance: The carrying value of BOLI approximates fair value. The Company records these policies at their cash surrender value, which is estimated using information provided by insurance carriers.

●

Deposits: The fair value of demand deposits, savings accounts, brokered deposits, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of certificates of deposits were valued 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.

●

Borrowings: The carrying amounts of federal funds purchased, borrowings under repurchase agreements and any other short-term borrowings approximate their fair value. The fair values of the Company’s long-term borrowings, including trust preferred securities are estimated using discounted cash flow analyses, based on the current incremental borrowing rates for similar types of borrowing arrangements.

The carrying values and estimated fair values of the Company’s financial instruments as of the periods ended are as follows (dollars in thousands):


· · Fair Value Measurements at March 31, 2024 using
· · · Quoted Prices · Significant · · · ·
· · · · · in Active · · Other · · Significant · · ·
· · · · · Markets for · · Observable · · Unobservable · · Total Fair
· · · · · Identical Assets · · Inputs · · Inputs · · Value
· · Carrying · · · · · · · · · · · ·
· Value · · Level 1 · · Level 2 · · Level 3 · · Balance
ASSETS
Cash and cash equivalents	$396,670	$396,670	$—	$—	$396,670
AFS securities	2,202,216	60,868	2,141,348	—	2,202,216
HTM securities	828,928	—	790,123	1,222	791,345
Restricted stock	110,272	—	110,272	—	110,272
LHFS	12,200	—	12,200	—	12,200
LHFI, net of deferred fees and costs	15,851,628	—	—	15,235,459	15,235,459
Financial Derivatives (1)	99,259	—	99,259	—	99,259
Accrued interest receivable	90,299	—	90,299	—	90,299
BOLI	455,885	—	455,885	—	455,885

LIABILITIES
Deposits	$17,278,435	$—	$17,254,950	$—	$17,254,950
Borrowings	1,057,724	—	990,347	—	990,347
Accrued interest payable	26,175	—	26,175	—	26,175
Financial Derivatives (1)	226,777	—	226,777	—	226,777

(1)* Includes hedged and non-hedged derivatives.*

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	Fair Value Measurements at December 31, 2023 using
· · · · · Quoted Prices · · Significant · · · · · ·
· · · · · in Active · · Other · · Significant · · ·
· · · · · Markets for · · Observable · · Unobservable · · Total Fair
· · · · · Identical Assets · · Inputs · · Inputs · · Value
· · Carrying · · · · · · · · · · · ·
· · Value · · Level 1 · · Level 2 · · Level 3 · · Balance
ASSETS
Cash and cash equivalents		$378,131	$378,131	$—	$—	$378,131
AFS securities		2,231,261	61,311	2,169,950	—	2,231,261
HTM securities		837,378	—	806,834	1,240	808,074
Restricted stock		115,472	—	115,472	—	115,472
LHFS		6,710	—	6,710	—	6,710
LHFI, net of deferred fees and costs		15,635,043	—	—	15,148,256	15,148,256
Financial Derivatives (1)		93,027	—	93,027	—	93,027
Accrued interest receivable		91,370	—	91,370	—	91,370
BOLI		452,565	—	452,565	—	452,565

LIABILITIES
Deposits		$16,818,129	$—	$16,799,791	$—	$16,799,791
Borrowings		1,311,858	—	1,154,694	—	1,154,694
Accrued interest payable		20,528	—	20,528	—	20,528
Financial Derivatives (1)		206,561	—	206,561	—	206,561

(1)* Includes hedged and non-hedged derivatives.** *

The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments will change when interest rate levels change and that change may be either favorable or unfavorable to the Company. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. Borrowers with fixed rate obligations, however, are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment. Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the Company’s overall interest rate risk.

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11. EARNINGS PER SHARE

Basic EPS is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common shares outstanding during the period, including the effect of dilutive potential common shares outstanding attributable to stock awards.

The following table presents basic and diluted EPS calculations for the periods ended (dollars in thousands except per share data):


· · Three Months Ended
· · March 31,
· · 2024 · · 2023
Net Income
Net Income	$49,769	$35,653
Less: Preferred Stock Dividends	2,967	2,967
Net income available to common shareholders	$46,802	$32,686


Weighted average shares outstanding, basic	75,197	74,832
Dilutive effect of stock awards	—	3
Weighted average shares outstanding, diluted	75,197	74,835

Earnings per common share, basic	$0.62	$0.44
Earnings per common share, diluted	$0.62	$0.44

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12. SEGMENT REPORTING AND REVENUE

Operating Segments

The Company hastwo reportable operating segments, Wholesale Banking and Consumer Banking, with corporate support functions and intercompany eliminations being presented within Corporate Other.

Segment Results

The following tables present the Company’s operating segment results for the three months ended March 31, (dollars in thousands):


· · Wholesale Banking · · Consumer Banking · · Corporate Other · · Total
2024
Net interest income	$80,874	$69,237	$(2,286)	$147,825
Provision for credit losses	5,366	2,873	—	8,239
Net interest income after provision for credit losses	75,508	66,364	(2,286)	139,586
Noninterest income	8,363	12,615	4,574	25,552
Noninterest expenses	44,299	55,536	5,438	105,273
Income before income taxes	$39,572	$23,443	$(3,150)	$59,865
2023
Net interest income	$67,540	$63,145	$22,758	$153,443
Provision for credit losses	10,487	1,340	23	11,850
Net interest income after provision for credit losses	57,053	61,805	22,735	141,593
Noninterest income	7,414	12,178	(9,964)	9,628
Noninterest expenses	42,123	57,246	8,905	108,274
Income before income taxes	$22,344	$16,737	$3,866	$42,947

The following table presents the Company’s operating segment results for key balance sheet metrics as of the periods ended (dollars in thousands):


· · Wholesale Banking · · Consumer Banking · · Corporate Other · · Total
March 31, 2024
LHFI, net of deferred fees and costs (1)	$12,941,541	$2,921,874	$(11,787)	$15,851,628
Goodwill	639,180	286,031	—	925,211
Deposits	6,403,103	10,101,594	773,738	17,278,435
December 31, 2023
LHFI, net of deferred fees and costs (1)	$12,688,833	$2,958,811	$(12,601)	$15,635,043
Goodwill	639,180	286,031	—	925,211
Deposits	6,403,432	9,816,562	598,135	16,818,129

(1)Corporate Other includes acquisition accounting fair value adjustments.

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Revenue

Noninterest income disaggregated by major source for the three months ended March 31, consisted of the following (dollars in thousands):


· · 2024 · · 2023
Noninterest income: · ·
Service charges on deposit accounts (1): · ·
Overdraft fees	$4,748	$4,823
Maintenance fees & other	3,821	3,079
Other service charges, commissions, and fees (1)	1,731	1,746
Interchange fees(1)	2,294	2,325
Fiduciary and asset management fees (1):
Trust asset management fees	3,356	3,107
Brokerage management fees	1,482	1,155
Mortgage banking income	867	854
Gain (loss) on sale of securities	3	(13,400)
Bank owned life insurance income	3,245	2,828
Loan-related interest rate swap fees	1,216	1,439
Other operating income	2,789	1,672
Total noninterest income	$25,552	$9,628

(1) Income within scope of ASC 606, Revenue from Contracts with Customers.

The following tables present noninterest income disaggregated by reportable operating segment for the three months ended March 31, (dollars in thousands):


· · · Wholesale Banking · · Consumer Banking · · Corporate Other (1)(2) · · Total
2024
Noninterest income: · · · · ·
Service charges on deposit accounts	$2,611	$5,958	$—	$8,569
Other service charges, commissions and fees	396	1,335	—	1,731
Fiduciary and asset management fees	3,286	1,552	—	4,838
Mortgage banking income	—	867	—	867
Other income	2,070	2,903	4,574	9,547
Total noninterest income	$8,363	$12,615	$4,574	$25,552
2023
Noninterest income:
Service charges on deposit accounts	$1,975	$5,927	$—	$7,902
Other service charges, commissions and fees	445	1,301	—	1,746
Fiduciary and asset management fees	3,035	1,227	—	4,262
Mortgage banking income	—	854	—	854
Other income	1,959	2,869	(9,964)	(5,136)
Total noninterest income	$7,414	$12,178	$(9,964)	$9,628

(1)* For the three months ended March 31, 2023, other income primarily includes**$13.4** million of losses incurred on the sale of AFS securities, income from BOLI and equity method investment income.*

(2)* For the three months ended March 31, 2024, other income primarily includes income from BOLI and equity method investment income**.*

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13. SUBSEQUENT EVENTS

The Company’s management has evaluated subsequent events through May 2, 2024, the date the financial statements were issued.

On April 1, 2024, the Company completed its previously announced merger with American National, pursuant to the Agreement and Plan of Merger, dated as of July 24, 2023. Under the terms of the merger agreement, at the effective time of the merger, each outstanding share of American National common stock was converted into 1.35 shares of the Company’s common stock, resulting in the Company issuing 14.3 million shares of its common stock, valued at approximately$505.8 million as of March 28, 2024, which was the last trading day prior to the consummation of the acquisition. In addition, cash consideration of$76,000 was paid for the settlement of fractional shares.

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ContentsView on SEC.gov

The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.