What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-05 compared with 2024-08-06 · 194 added, 180 removed, 1222 unchanged (23% of the section changed)

3 unchanged sentences

(Unaudited) (In thousands, except shares and per share amounts)

June 30, 2024 and December 31, 2023

ASSETS June 30, 2024 December 31, 2023

September 30, 2024 and December 31, 2023

ASSETS September 30, 2024 December 31, 2023

Cash and due from banks $ 226,568 $ 209,634

38 unchanged sentences

Preferred stock - $ 0.01 par value per share, 500,000 shares authorized;

no shares outstanding at June 30, 2024 and December 31, 2023

no shares outstanding at September 30, 2024 and December 31, 2023

Common stock and paid in capital - $ 0.01 par value per share, 50,000,000 shares authorized;

34,455,752 shares issued and outstanding at June 30, 2024;

34,456,688 shares issued and outstanding at September 30, 2024;

34,348,369 shares issued and outstanding at December 31, 2023

1 unchanged sentence

Common stock (non-voting) and paid in capital - $ 0.01 par value per share, 5,000,000 shares authorized;

no shares issued and outstanding at June 30, 2024;

no shares issued and outstanding at September 30, 2024;

no shares issued and outstanding at December 31, 2023

9 unchanged sentences

(Unaudited) (In thousands, except shares and per share amounts)

For the Three and Six Months Ended June 30, 2024 and 2023

Three Months Ended June 30, Six Months Ended June 30,

For the Three and Nine Months Ended September 30, 2024 and 2023

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

52 unchanged sentences

BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited) (In thousands)

For the Three and Six Months Ended June 30, 2024 and 2023

Three Months Ended June 30, Six Months Ended June 30,

For the Three and Nine Months Ended September 30, 2024 and 2023

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

1 unchanged sentence

OTHER COMPREHENSIVE INCOME (LOSS), NET OF INCOME TAXES:

Unrealized holding (loss) gain on securities—available-for-sale arising during the period ( 2,366 ) ( 31,395 ) ( 24,119 ) 4,748

Income tax benefit (expense) related to securities—available-for-sale unrealized holding losses 568 7,535 5,789 ( 1,140 )

Unrealized holding gain (loss) on securities—available-for-sale arising during the period 88,822 ( 76,417 ) 64,703 ( 71,669 )

Income tax (expense) benefit related to securities—available-for-sale unrealized holding losses ( 21,318 ) 18,341 ( 15,529 ) 17,201

Reclassification for net loss on securities—available-for-sale realized in earnings — 2,657 5,465 14,436

Income tax benefit related to securities—available-for-sale realized in earnings — ( 638 ) ( 1,312 ) ( 3,465 )

Reclassification of provision for credit losses on securities—available-for-sale realized in earnings — 2,000 — 2,000

Income tax expense related to the reclassification of provision for credit losses on securities—available-for-sale realized in earnings — ( 480 ) — ( 480 )

Reclassification of (recapture of) provision for credit losses on securities—available-for-sale realized in earnings — ( 1,250 ) — 750

Income tax benefit (expense) related to the reclassification of (recapture) provision for credit losses on securities—available-for-sale realized in earnings — 300 — ( 180 )

Amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity 603 617 1,717 1,773

Income tax expense related to amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity ( 145 ) ( 150 ) ( 412 ) ( 426 )

Net unrealized gain (loss) on interest rate swaps used in cash flow hedges 4,007 ( 1,356 ) 6,887 3,382

Income tax (expense) benefit related to interest rate swaps used in cash flow hedges ( 962 ) 325 ( 1,653 ) ( 812 )

Net unrealized gain on interest rate swaps used in cash flow hedges 4,746 3,090 11,633 6,472

Income tax expense related to interest rate swaps used in cash flow hedges ( 1,139 ) ( 741 ) ( 2,792 ) ( 1,553 )

Changes in fair value of junior subordinated debentures related to instrument specific credit risk 574 953 156 8,573

Income tax benefit (expense) related to junior subordinated debentures 58 ( 1,792 ) 100 ( 1,829 )

Income tax expense related to junior subordinated debentures ( 137 ) ( 229 ) ( 37 ) ( 2,058 )

Other comprehensive income (loss) 72,006 ( 53,467 ) 63,592 ( 30,146 )

COMPREHENSIVE INCOME $ 41,728 $ 25,779 $ 68,940 $ 118,467

COMPREHENSIVE INCOME (LOSS) $ 117,159 $ ( 7,613 ) $ 186,099 $ 110,854

See Selected Notes to the Consolidated Financial Statements

2 unchanged sentences

(Unaudited) (In thousands, except shares and per share amounts)

For the Six Months Ended June 30, 2024 and the Year Ended December 31, 2023

For the Nine Months Ended September 30, 2024 and the Year Ended December 31, 2023

Common Stock and Paid in Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Shareholders’ Equity

43 unchanged sentences

Balance, June 30, 2024 34,455,752 $ 1,302,236 $ 686,079 $ ( 297,549 ) $ 1,690,766

Net income 45,153 45,153

Other comprehensive income, net of income tax 72,006 72,006

Accrual of dividends on common stock ($ 0.48 /share)

( 16,760 ) ( 16,760 )

Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered 936 2,556 2,556

Balance, September 30, 2024 34,456,688 $ 1,304,792 $ 714,472 $ ( 225,543 ) $ 1,793,721

See Selected Notes to the Consolidated Financial Statements

2 unchanged sentences

(Unaudited) (In thousands)

For the Six Months Ended June 30, 2024 and 2023

Six Months Ended June 30,

For the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended September 30,

OPERATING ACTIVITIES:

34 unchanged sentences

Investment in bank-owned life insurance ( 41 ) ( 66 )

Other 732 419

Net cash (used by) provided from investing activities ( 304,621 ) 272,659

3 unchanged sentences

(Unaudited) (In thousands)

For the Six Months Ended June 30, 2024 and 2023

Six Months Ended June 30,

For the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended September 30,

FINANCING ACTIVITIES:

Increase (decrease) in deposits, net $ 508,651 $ ( 445,507 )

Advances of overnight and short term FHLB advances, net 75,000 220,000

(Repayment) advances of overnight and short term FHLB advances, net ( 93,000 ) 90,000

Decrease in other borrowings, net ( 28,344 ) ( 44,360 )

5 unchanged sentences

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 478,795 $ 251,706

Six Months Ended June 30,

Nine Months Ended September 30,

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

12 unchanged sentences

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (SEC).

In preparing these financial statements, the Company has evaluated events and transactions subsequent to June 30, 2024, for potential recognition or disclosure.

In preparing these financial statements, the Company has evaluated events and transactions subsequent to September 30, 2024, for potential recognition or disclosure.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included.

43 unchanged sentences

The Company is currently evaluating the impact on the Company’s Consolidated Financial Statements as the Company has a single reportable segment.

The amortized cost, gross unrealized gains and losses and estimated fair value of securities at June 30, 2024 and December 31, 2023 are summarized as follows (in thousands):

June 30, 2024

The amortized cost, gross unrealized gains and losses and estimated fair value of securities at September 30, 2024 and December 31, 2023 are summarized as follows (in thousands):

September 30, 2024

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

6 unchanged sentences

$ 2,523,968 $ 3,380 $ ( 289,409 ) $ 2,237,939

June 30, 2024

September 30, 2024

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Allowance for Credit Losses

22 unchanged sentences

$ 1,059,387 $ 687 $ ( 152,228 ) $ 907,514 $ ( 332 )

Accrued interest receivable on held-to-maturity debt securities was $ 4.2 million and $ 4.5 million at June 30, 2024 and December 31, 2023, and was $ 10.0 million and $ 10.8 million on available-for-sale debt securities at June 30, 2024 and December 31, 2023, respectively.

Accrued interest receivable on held-to-maturity debt securities was $ 3.8 million and $ 4.5 million at September 30, 2024 and December 31, 2023, and was $ 10.1 million and $ 10.8 million on available-for-sale debt securities at September 30, 2024 and December 31, 2023, respectively.

Accrued interest receivable on securities is reported in accrued interest receivable on the Consolidated Statements of Financial Condition and is excluded from the calculation of the allowance for credit losses.

At June 30, 2024 and December 31, 2023, the gross unrealized losses and the fair value for securities available-for-sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position were as follows (in thousands):

June 30, 2024

At September 30, 2024 and December 31, 2023, the gross unrealized losses and the fair value for securities available-for-sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position were as follows (in thousands):

September 30, 2024

Less Than 12 Months 12 Months or More Total

9 unchanged sentences

— — 1,647,906 ( 255,764 ) 1,647,906 ( 255,764 )

Asset-backed securities

20,000 ( 1 ) — — 20,000 ( 1 )

$ 32,227 $ ( 179 ) $ 1,863,678 $ ( 289,230 ) $ 1,895,905 $ ( 289,409 )

December 31, 2023

13 unchanged sentences

$ 208,081 $ ( 1,477 ) $ 2,042,517 $ ( 356,794 ) $ 2,250,598 $ ( 358,271 )

At June 30, 2024, there were 212 securities—available-for-sale with unrealized losses, compared to 224 at December 31, 2023.

Management does not believe that any remaining individual unrealized loss as of June 30, 2024 or December 31, 2023 resulted from credit loss.

At September 30, 2024, there were 194 securities—available-for-sale with unrealized losses, compared to 224 at December 31, 2023.

Management does not believe that any remaining individual unrealized loss as of September 30, 2024 or December 31, 2023 resulted from credit loss.

The decline in fair market value of these securities was generally due to changes in interest rates and changes in market-desired spreads subsequent to their purchase.

There were no securities—available-for-sale in a nonaccrual status at June 30, 2024 or December 31, 2023.

There were no securities—available-for-sale in a nonaccrual status at September 30, 2024 or December 31, 2023.

The following table presents gross gains and losses on sales and partial calls of securities available-for-sale (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

3 unchanged sentences

Balance, end of the period $ — $ ( 2,657 ) $ ( 5,465 ) $ ( 14,436 )

The following table presents the amortized cost and estimated fair value of securities at June 30, 2024, by contractual maturity and does not reflect any required periodic payments (in thousands).

The following table presents the amortized cost and estimated fair value of securities at September 30, 2024, by contractual maturity and does not reflect any required periodic payments (in thousands).

Expected maturities will differ from contractual maturities because some securities may be called or prepaid with or without call or prepayment penalties.

June 30, 2024

September 30, 2024

Available-for-Sale Held-to-Maturity

5 unchanged sentences

$ 2,523,968 $ 2,237,939 $ 1,014,210 $ 879,278

The following table presents, as of June 30, 2024, investment securities which were pledged to secure borrowings, public deposits or other obligations as permitted or required by law (in thousands):

June 30, 2024

The following table presents, as of September 30, 2024, investment securities which were pledged to secure borrowings, public deposits or other obligations as permitted or required by law (in thousands):

September 30, 2024

Carrying Value Amortized Cost Fair Value

1 unchanged sentence

State and local governments public deposits $ 276,380 $ 288,392 $ 252,146

Federal Reserve — — —

Interest rate swap counterparties 962 962 827

7 unchanged sentences

This municipal debt is predominately essential service or unlimited general obligation backed debt.

The following tables summarize the amortized cost of held-to-maturity debt securities by credit rating at June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024

The following tables summarize the amortized cost of held-to-maturity debt securities by credit rating at September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

Government and agency obligations Municipal bonds Corporate bonds Mortgage-backed or related securities Total

7 unchanged sentences

$ 307 $ 466,032 $ 2,781 $ 590,267 $ 1,059,387

We had no allowance for credit losses for securities available-for-sale during three and six months ended June 30, 2024.

The following tables present the activity in the allowance for credit losses for securities available-for-sale by major type for the three and six months ended June 30, 2023 (in thousands).

For the Three Months Ended June 30, 2023

We had no allowance for credit losses for securities available-for-sale during three and nine months ended September 30, 2024.

The following tables present the activity in the allowance for credit losses for securities available-for-sale by major type for the three and nine months ended September 30, 2023 (in thousands).

For the Three Months Ended September 30, 2023

Government and agency obligations Municipal bonds Corporate bonds Mortgage-backed or related securities Total

1 unchanged sentence

Beginning balance $ — $ — $ 2,000 $ — $ 2,000

Provision for credit losses — — 2,000 — 2,000

Recapture of provision for credit losses — — (1,250) — (1,250)

Ending balance $ — $ — $ 750 $ — $ 750

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

Government and agency obligations Municipal bonds Corporate bonds Mortgage-backed or related securities Total

4 unchanged sentences

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES - LOANS

The following table presents the loans receivable at June 30, 2024 and December 31, 2023 by class (dollars in thousands).

June 30, 2024 December 31, 2023

The following table presents the loans receivable at September 30, 2024 and December 31, 2023 by class (dollars in thousands).

September 30, 2024 December 31, 2023

Amount Percent of Total Amount Percent of Total

21 unchanged sentences

Net loans $ 11,070,021 $ 10,660,812

Loan amounts are net of unearned loan fees in excess of unamortized costs of $ 14.9 million as of June 30, 2024, and $ 12.1 million as of December 31, 2023.

Net loans include net discounts on acquired loans of $ 4.1 million and $ 4.6 million as of June 30, 2024 and December 31, 2023, respectively.

Loan amounts are net of unearned loan fees in excess of unamortized costs of $ 15.0 million as of September 30, 2024, and $ 12.1 million as of December 31, 2023.

Net loans include net discounts on acquired loans of $ 3.8 million and $ 4.6 million as of September 30, 2024 and December 31, 2023, respectively.

Net loans does not include accrued interest receivable.

Accrued interest receivable on loans was $ 53.3 million as of June 30, 2024, and $ 47.8 million as of December 31, 2023 and was reported in accrued interest receivable on the Consolidated Statements of Financial Condition.

The Company had pledged $ 8.0 billion and $ 7.6 billion of loans as collateral for FHLB and other borrowings at June 30, 2024 and December 31, 2023, respectively.

Accrued interest receivable on loans was $ 53.1 million as of September 30, 2024, and $ 47.8 million as of December 31, 2023 and was reported in accrued interest receivable on the Consolidated Statements of Financial Condition.

The Company had pledged $ 8.0 billion and $ 7.6 billion of loans as collateral for FHLB and other borrowings at September 30, 2024 and December 31, 2023, respectively.

Purchased credit-deteriorated and purchased non-credit-deteriorated loans.

1 unchanged sentence

Acquired loans are evaluated upon acquisition and classified as either purchased credit-deteriorated (PCD) or purchased non-credit-deteriorated.

There were no PCD loans acquired during the six months ended June 30, 2024 or June 30, 2023.

There were no PCD loans acquired during the nine months ended September 30, 2024 or September 30, 2023.

Troubled Loan Modifications.

5 unchanged sentences

These methods incorporate the post-modification loan terms, as well as defaults and charge-offs associated with historical modified loans.

There were no loans modified related to borrowers experiencing financial difficulty during the six months ended June 30, 2024.

The following table presents the amortized cost basis and financial effect of loans at June 30, 2023, that were both experiencing financial difficulty and modified during the six months ended June 30, 2023 (in thousands):

June 30, 2023

Term Extension Total

The following tables present the amortized cost basis and financial effect of loans at September 30, 2024 and September 30, 2023, that were both experiencing financial difficulty and modified during the nine months ended September 30, 2024 and September 30, 2023, respectively (in thousands):

September 30, 2024

Payment Delay Total

Commercial business $ 5,322 $ 5,322

Total $ 5,322 $ 5,322

September 30, 2023

Payment Delay Term Extension Total

One- to four-family construction $ — $ 6,362 $ 6,362

Commercial business 121 — 121

Agricultural business, including secured by farmland

1,580 — 1,580

One- to four-family residential 1,060 — 1,060

Total 4352 $ 2,761 $ 6,362 $ 9,123

The Company had committed to lend additional amounts totaling $ 250,000 to the borrowers included in the previous table as of June 30, 2023 .

The Company had committed to lend additional amounts totaling $ 195,000 to the borrowers included in the previous table as of September 30, 2023 .

The Company closely monitors the performance of loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The follow ing table presents the performance at June 30, 2024 of loans that had been modified in the previous 12 months (in thousands).

There were no loans past due at June 30, 2023 that had been modified in the previous 12 months .

June 30, 2024

Past Due 60-89 Days

Past Due 90 Days or More

Past Due Total

There were no loans modified in the previous 12 months that were past due at September 30, 2024.

The follow ing table presents the performance at September 30, 2023 of loans that had been modified in the previous 12 months (in thousands).

September 30, 2023

30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due

Commercial business $ — $ — $ 121 $ 121

2 unchanged sentences

Total $ — $ — $ 2,761 $ 2,761

The following table presents the financial effect of the loan modifications presented above for borrowers experiencing financial difficulty for the six months ended June 30, 2023:

Six Months Ended June 30, 2023

Weighted-Average Term Extension (in months)

One- to four-family construction 7

The following tables present the financial effect of the loan modifications presented above for borrowers experiencing financial difficulty for the nine months ended September 30, 2024 and September 30, 2023:

Nine Months Ended September 30, 2024

Weighted Average Payment Delay Period (in months)

Commercial business 3

Nine Months Ended September 30, 2023

Weighted Average Payment Delay Period (in months) Weighted-Average Term Extension (in months)

One- to four-family construction n/a 11

Commercial business 8 n/a

Agricultural business, including secured by farmland 8 n/a

One- to four-family residential 8 n/a

Credit Quality Indicators :

35 unchanged sentences

Taking a loss does not mean that a credit has absolutely no recovery or salvage value but, rather, it is not practical or desirable to defer writing off the credit, even though partial recovery may occur in the future.

The following tables present the Company’s portfolio of risk-rated loans by class and by grade as of June 30, 2024 and December 31, 2023 (in thousands).

In addition, the tables include the gross charge-offs for the six months ended June 30, 2024.

The following tables present the Company’s portfolio of risk-rated loans by class and by grade as of September 30, 2024 and December 31, 2023 (in thousands).

In addition, the tables include the gross charge-offs for the nine months ended September 30, 2024.

Revolving loans that are converted to term loans are treated as new originations in the table below and are presented by year of origination.

Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.

June 30, 2024

September 30, 2024

Term Loans by Year of Origination Revolving Loans Total Loans

24 unchanged sentences

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

June 30, 2024

September 30, 2024

Term Loans by Year of Origination Revolving Loans Total Loans

24 unchanged sentences

Current period gross charge-offs $ — $ — $ 145 $ — $ — $ — $ — $ 145

June 30, 2024

September 30, 2024

Term Loans by Year of Origination Revolving Loans Total Loans

96 unchanged sentences

Total Agricultural business, including secured by farmland $ 53,227 $ 35,520 $ 25,937 $ 17,658 $ 31,704 $ 40,854 $ 126,189 $ 331,089

The following tables present the Company’s portfolio of non-risk-rated loans by class and delinquency status as of June 30, 2024 and December 31, 2023 (in thousands).

In addition, the tables include the gross charge-offs for the six months ended June 30, 2024.

The following tables present the Company’s portfolio of non-risk-rated loans by class and delinquency status as of September 30, 2024 and December 31, 2023 (in thousands).

In addition, the tables include the gross charge-offs for the nine months ended September 30, 2024.

Revolving loans that are converted to term loans are treated as new originations in the table below and are presented by year of origination.

Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.

June 30, 2024

September 30, 2024

Term Loans by Year of Origination Revolving Loans Total Loans

24 unchanged sentences

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

June 30, 2024

September 30, 2024

Term Loans by Year of Origination Revolving Loans Total Loans

57 unchanged sentences

Total Consumer-other $ 10,773 $ 31,894 $ 10,027 $ 6,936 $ 4,471 $ 18,007 $ 28,573 $ 110,681

The following tables provide the amortized cost basis of collateral-dependent loans as of June 30, 2024 and December 31, 2023 (in thousands).

The following tables provide the amortized cost basis of collateral-dependent loans as of September 30, 2024 and December 31, 2023 (in thousands).

Our collateral dependent loans presented in the tables below have no significant concentrations by property type or location.

June 30, 2024

September 30, 2024

Real Estate Accounts Receivable Equipment Inventory Total

25 unchanged sentences

Total $ 16,356 $ 1,059 $ 5,085 $ 812 $ 23,312

The following tables provide additional detail on the age analysis of the Company’s past due loans as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024

The following tables provide additional detail on the age analysis of the Company’s past due loans as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

Past Due 60-89 Days

22 unchanged sentences

Total $ 9,373 $ 9,220 $ 26,063 $ 44,656 $ 11,179,950 $ 11,224,606 $ 16,849 $ 39,049 $ 3,958

(1) The Company did not recognize any interest income on non-accrual loans during the six months ended June 30, 2024.

(1) The Company did not recognize any interest income on non-accrual loans during the nine months ended September 30, 2024.

December 31, 2023

24 unchanged sentences

(1) The Company did not recognize any interest income on non-accrual loans during the year ended December 31, 2023.

The following tables provide the activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2024 and 2023 (in thousands):

For the Three Months Ended June 30, 2024

The following tables provide the activity in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2024 and 2023 (in thousands):

For the Three Months Ended September 30, 2024

Commercial Real Estate Multifamily Real Estate Construction and Land Commercial Business Agricultural Business One- to Four-Family Residential Consumer Total

1 unchanged sentence

Beginning balance $ 39,064 $ 8,253 $ 31,597 $ 38,835 $ 4,045 $ 20,906 $ 10,148 $ 152,848

(Recapture)/provision for credit losses ( 4,242 ) ( 1,040 ) 2,689 3,104 ( 40 ) 457 1,025 1,953

Provision/(recapture) for credit losses 911 1,980 ( 3,130 ) 745 1,294 ( 457 ) 624 1,967

Recoveries 65 — — 613 1 14 41 734

1 unchanged sentence

Ending balance $ 40,040 $ 10,233 $ 28,322 $ 39,779 $ 5,340 $ 20,463 $ 10,408 $ 154,585

For the Six Months Ended June 30, 2024

For the Nine Months Ended September 30, 2024

Commercial Real Estate Multifamily Real Estate Construction and Land Commercial Business Agricultural Business One- to Four-Family Residential Consumer Total

5 unchanged sentences

Ending balance $ 40,040 $ 10,233 $ 28,322 $ 39,779 $ 5,340 $ 20,463 $ 10,408 $ 154,585

For the Three Months Ended June 30, 2023

For the Three Months Ended September 30, 2023

Commercial Real Estate Multifamily Real Estate Construction and Land Commercial Business Agricultural Business One- to Four-Family Residential Consumer Total

5 unchanged sentences

Ending balance $ 44,016 $ 8,804 $ 29,389 $ 34,065 $ 3,718 $ 17,925 $ 9,043 $ 146,960

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

Commercial Real Estate Multifamily Real Estate Construction and Land Commercial Business Agricultural Business One- to Four-Family Residential Consumer Total

7 unchanged sentences

Goodwill and Other Intangible Assets:

At June 30, 2024, intangible assets are comprised of goodwill and core deposit intangibles (CDI) acquired in business combinations.

At September 30, 2024, intangible assets are comprised of goodwill and core deposit intangibles (CDI) acquired in business combinations.

Goodwill represents the excess of the purchase consideration paid over the fair value of the assets acquired, net of the fair values of liabilities assumed in a business combination, and is not amortized but is reviewed at least annually for impairment.

3 unchanged sentences

The Company amortizes CDI assets over their estimated useful lives and reviews them at least annually for events or circumstances that could impair their value.

The following table summarizes the changes in the Company’s goodwill and other intangibles for the year ended December 31, 2023 and the six months ended June 30, 2024 (in thousands):

The following table summarizes the changes in the Company’s goodwill and other intangibles for the year ended December 31, 2023 and the nine months ended September 30, 2024 (in thousands):

Goodwill CDI Total

3 unchanged sentences

Amortization — ( 2,037 ) ( 2,037 )

Balance, June 30, 2024 $ 373,121 $ 4,237 $ 377,358

The following table presents the estimated amortization expense with respect to CDI as of June 30, 2024, for the periods indicated (in thousands):

Balance, September 30, 2024 $ 373,121 $ 3,647 $ 376,768

The following table presents the estimated amortization expense with respect to CDI as of September 30, 2024, for the periods indicated (in thousands):

Estimated Amortization

8 unchanged sentences

However, if the fair value is greater than the amortized cost, the amount above the amortized cost is not recognized in the carrying value.

During the three and six months ended June 30, 2024 and 2023, the Company did not record any impairment charges or recoveries against mortgage servicing rights.

The unpaid principal balance of loans for which mortgage and SBA servicing rights have been recognized totaled $ 2.80 billion and $2.78 billion at June 30, 2024 and December 31, 2023, respectively.

Custodial accounts maintained in connection with this servicing totaled $ 17.5 million and $ 11.6 million at June 30, 2024 and December 31, 2023, respectively.

An analysis of the mortgage and SBA servicing rights for the three and six months ended June 30, 2024 and 2023 is presented below (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

The unpaid principal balance of loans for which mortgage and SBA servicing rights have been recognized totaled $ 2.80 billion and $2.78 billion at September 30, 2024 and December 31, 2023, respectively.

Custodial accounts maintained in connection with this servicing totaled $ 29.5 million and $ 11.6 million at September 30, 2024 and December 31, 2023, respectively.

An analysis of the mortgage and SBA servicing rights for the three and nine months ended September 30, 2024 and 2023 is presented below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

6 unchanged sentences

( 21 ) ( 128 ) 50 ( 118 )

Balance, end of the period (3)

Impairment valuation adjustments (3)

( 6 ) — ( 6 ) —

Balance, end of the period $ 13,603 $ 14,868 $ 13,603 $ 14,868

(1) Amortization of mortgage servicing rights is recorded as a reduction of loan servicing income within mortgage banking operations and any unamortized balance is fully amortized if the loan repays in full.

1 unchanged sentence

These adjustments are estimated based on an independent dealer analysis by discounting estimated net future cash flows from servicing SBA loans.

(3) There was no valuation allowance on mortgage servicing rights as of both June 30, 2024 and 2023.

Deposits consisted of the following at June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

(3) Impairment valuation adjustments are recorded on mortgage servicing rights when the carrying value exceeded the fair value for a specific tranche within the mortgage servicing rights portfolio .

Deposits consisted of the following at September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

Non-interest-bearing accounts $ 4,688,244 $ 4,792,369

13 unchanged sentences

Total brokered certificates of deposit $ 50,333 $ 108,058

Scheduled maturities and weighted average interest rates of certificates of deposit at June 30, 2024 are as follows (dollars in thousands):

June 30, 2024

Scheduled maturities and weighted average interest rates of certificates of deposit at September 30, 2024 are as follows (dollars in thousands):

September 30, 2024

Amount Weighted Average Rate

7 unchanged sentences

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents estimated fair values of the Company’s financial instruments as of June 30, 2024 and December 31, 2023, whether or not recognized or recorded in the Consolidated Statements of Financial Condition (dollars in thousands):

June 30, 2024 December 31, 2023

The following table presents estimated fair values of the Company’s financial instruments as of September 30, 2024 and December 31, 2023, whether or not recognized or recorded in the Consolidated Statements of Financial Condition (dollars in thousands):

September 30, 2024 December 31, 2023

Level Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

39 unchanged sentences

Items Measured at Fair Value on a Recurring Basis:

The following tables present financial assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets and liabilities as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024

The following tables present financial assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets and liabilities as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

Level 1 Level 2 Level 3 Total

42 unchanged sentences

$ — $ 30,012 $ 66,437 $ 96,449

(1) The unpaid principal balance of residential mortgage loans held for sale carried at fair value on a recurring basis was $ 9.8 million and $ 8.8 million at June 30, 2024 and December 31, 2023, respectively.

(1) The unpaid principal balance of residential mortgage loans held for sale carried at fair value on a recurring basis was $ 21.3 million and $ 8.8 million at September 30, 2024 and December 31, 2023, respectively.

The following methods were used to estimate the fair value of each class of financial instruments above:

26 unchanged sentences

The fair value of these instruments is not considered to be material.

The fair value estimates presented herein are based on pertinent information available to management as of June 30, 2024 and December 31, 2023.

The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2024 and December 31, 2023.

The factors used in the fair value estimates are subject to change subsequent to the dates the fair value estimates are completed, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3):

The following table provides a description of the valuation technique, unobservable inputs, and quantitative and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring and non-recurring basis at June 30, 2024 and December 31, 2023:

Weighted Average Rate or Range

Financial Instruments Valuation Technique Unobservable Inputs June 30, 2024 December 31, 2023

Financial Instruments Valuation Technique Unobservable Inputs September 30, 2024 December 31, 2023

Corporate bonds (TPS) Discounted cash flows Discount rate 10.10 % 10.84 %

10 unchanged sentences

Management attributes the change in fair value of the junior subordinated debentures, compared to their par value, primarily to perceived general market adjustments to the risk premiums for these types of liabilities subsequent to their issuance.

Future contractions in the risk adjusted spread relative to the spread currently utilized to measure the Company’s junior subordinated debentures at fair value as of June 30, 2024, or the passage of time, will result in negative fair value adjustments.

At June 30, 2024, the discount rate utilized was based on a credit spread of 551 basis points and three-month SOFR of 532 basis points.

Future contractions in the risk adjusted spread relative to the spread currently utilized to measure the Company’s junior subordinated debentures at fair value as of September 30, 2024, or the passage of time, will result in negative fair value adjustments.

At September 30, 2024, the discount rate utilized was based on a credit spread of 551 basis points and three-month SOFR of 459 basis points.

Interest rate lock commitments:

5 unchanged sentences

An increase in the CPR would result in a negative fair value adjustment, where a decrease in CPR would result in a positive fair value adjustment.

The following tables provide a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30, 2024

The following tables provide a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30, 2024

Level 3 Fair Value Inputs

4 unchanged sentences

Purchases, issuances and settlements — — — 208 —

Ending balance at June 30, 2024 $ 25,433 $ 66,831 $ 257 $ 13,417 $ 811

Six Months Ended June 30, 2024

Ending balance at September 30, 2024 $ 25,219 $ 66,257 $ 341 $ 13,582 $ 790

Nine Months Ended September 30, 2024

Level 3 Fair Value Inputs

4 unchanged sentences

Purchases, issuances and settlements — — — 1,244 —

Ending balance at June 30, 2024 $ 25,433 $ 66,831 $ 257 $ 13,417 $ 811

Three Months Ended June 30, 2023

Ending balance at September 30, 2024 $ 25,219 $ 66,257 $ 341 $ 13,582 $ 790

Three Months Ended September 30, 2023

Level 3 Fair Value Inputs

4 unchanged sentences

Purchases, issuances and settlements — — — 333 —

Ending balance at June 30, 2023 $ 25,659 $ 67,237 $ 268 $ 12,776 $ 845

Six Months Ended June 30, 2023

Ending balance at September 30, 2023 $ 25,268 $ 66,284 $ 77 $ 12,841 $ 717

Nine Months Ended September 30, 2023

Level 3 Fair Value Inputs

4 unchanged sentences

Purchases, issuances and settlements — — — 1,344 —

Ending balance at June 30, 2023 $ 25,659 $ 67,237 $ 268 $ 12,776 $ 845

Ending balance at September 30, 2023 $ 25,268 $ 66,284 $ 77 $ 12,841 $ 717

Interest income, dividends and amortization related to TPS are recorded as a component of interest income.

4 unchanged sentences

Items Measured at Fair Value on a Non-recurring Basis:

The following tables present financial assets and liabilities measured at fair value on a non-recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024

The following tables present financial assets and liabilities measured at fair value on a non-recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

Level 1 Level 2 Level 3 Total

5 unchanged sentences

REO — — 526 526

The following table presents the gains and losses resulting from non-recurring fair value adjustments for the three and six months ended June 30, 2024 and June 30, 2023 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

The following table presents the gains and losses resulting from non-recurring fair value adjustments for the three and nine months ended September 30, 2024 and September 30, 2023 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

23 unchanged sentences

This review takes into consideration the status of current taxing authorities’ examinations of the Company’s tax returns, recent positions taken by the taxing authorities on similar transactions, if any, and the overall tax environment.

As of June 30, 2024, the Company has recognized $ 2.0 million of unrecognized tax benefits for uncertain tax positions.

As of September 30, 2024, the Company has recognized $ 2.0 million of unrecognized tax benefits for uncertain tax positions.

The Company does not anticipate that there are additional uncertain tax positions or that any uncertain tax position which has not been recognized would materially affect the effective tax rate if recognized.

4 unchanged sentences

The Company invests in low income housing tax credit funds that are designed to generate a return primarily through the realization of federal tax credits.

The Company accounts for these investments by amortizing the cost of tax credit investments over the life of the investment using a proportional amortization method and tax credit investment amortization expense is a component of the provision for income taxes.

The following table presents the balances of the Company’s tax credit investments and related unfunded commitments at June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

The Company accounts for these investments by amortizing the cost of tax credit investments over the life of the investment using a proportional amortization method and this tax credit investment amortization expense is a component of the provision for income taxes.

The current balance of these tax credit investments is included in other assets, while the unfunded commitments are included in accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

The following table presents the balances of the Company’s tax credit investments and related unfunded commitments at September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

Tax Credit Investments:

1 unchanged sentence

Unfunded commitments 89,321 62,594

The following table presents other information related to the Company’s tax credit investments for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

The following table presents other information related to the Company’s tax credit investments for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

2 unchanged sentences

CALCULATION OF WEIGHTED AVERAGE SHARES OUTSTANDING FOR EARNINGS PER SHARE (EPS)

The following table reconciles basic to diluted weighted average shares outstanding used to calculate earnings per share data for the three and six months ended June 30, 2024 and 2023 (in thousands, except shares and per share data):

Three Months Ended June 30, Six Months Ended June 30,

The following table reconciles basic to diluted weighted average shares outstanding used to calculate earnings per share data for the three and nine months ended September 30, 2024 and 2023 (in thousands, except shares and per share data):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

6 unchanged sentences

Diluted $ 1.30 $ 1.33 $ 3.54 $ 4.09

Restricted stock units and stock options excluded from the diluted average outstanding share calculation (1)

Anti-dilutive restricted stock excluded from the diluted average outstanding share calculation (1)

860 252,817 3,950 90,990

(1) Anti-dilution occurs when the unrecognized compensation cost per share of a restricted stock unit exceeds the current market price of the Company’s stock.

(1) Anti-dilution occurs when the unrecognized compensation cost per share of restricted stock exceeds the current market price of the Company’s stock.

STOCK-BASED COMPENSATION PLANS

3 unchanged sentences

The Company reserved 900,000 shares of its common stock for issuance under the 2014 Plan in connection with the exercise of awards.

As of June 30, 2024, 277,304 restricted stock shares and 600,100 restricted stock units have been granted under the 2014 Plan of which no restricted stock shares and 167,040 restricted stock units were unvested.

As of September 30, 2024, 277,304 restricted stock shares and 597,714 restricted stock units have been granted under the 2014 Plan of which no restricted stock shares and 163,270 restricted stock units were unvested.

No further awards will be granted under the 2014 Plan.

The Company reserved 900,000 shares of common stock for issuance under the 2018 Plan in connection with the exercise of awards.

As of June 30, 2024, 813,657 restricted stock units have been granted under the 2018 Plan of which 270,318 restricted stock units were unvested.

As of September 30, 2024, 808,655 restricted stock units have been granted under the 2018 Plan of which 265,316 restricted stock units were unvested.

The Company reserved 625,000 shares of common stock for issuance under the 2023 Plan in connection with the exercise of awards.

As of June 30, 2024, 4,927 restricted stock shares and 9,798 restricted stock units have been granted under the 2023 Plan all of which were unvested.

The expense associated with all restricted stock grants (including restricted stock shares and restricted stock units) was $ 2.4 million and $ 4.7 million for the three and six month periods ended June 30, 2024, and was $ 2.3 million and $ 4.4 million for the three and six month periods ended June 30, 2023, respectively.

Unrecognized compensation expense for these awards as of June 30, 2024, was $ 18.7 million and will be recognized over a weighted average period of 14 months.

As of September 30, 2024, 4,927 restricted stock shares and 9,798 restricted stock units have been granted under the 2023 Plan, all of which were unvested.

The expense associated with all restricted stock grants (including restricted stock shares and restricted stock units) was $ 2.6 million and $ 7.2 million for the three and six month periods ended September 30, 2024, and was $2.4 million and $ 6.8 million for the three and six month periods ended September 30, 2023, respectively.

Unrecognized compensation expense for these awards as of September 30, 2024, was $ 15.8 million and will be recognized over a weighted average period of 12 months.

COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

We use the same credit policies in making commitments and conditional obligations as for on-balance-sheet instruments.

Outstanding commitments for which no asset or liability for the notional amount has been recorded consisted of the following at the dates indicated (in thousands):

Outstanding commitments consisted of the following at the dates indicated (in thousands):

Contract or Notional Amount

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Commitments to extend credit $ 3,861,746 $ 3,887,423

2 unchanged sentences

Risk participation agreements 44,416 46,348

Derivatives also included in Note 12:

Commitments to originate loans held for sale 44,386 19,572

1 unchanged sentence

Commitments to sell securities related to mortgage banking activities 36,952 17,000

In addition to the commitments disclosed in the table above, the Company is committed to funding the unfunded portion of its tax credit investments.

As of June 30, 2024 and December 31, 2023, the funded balances and remaining outstanding commitments of these unfunded tax investments were as follows (in thousands):

June 30, 2024 December 31, 2023

Funded Balance Unfunded Balance Funded Balance Unfunded Balance

In addition to the commitments disclosed in the table above, the Company is also committed to funding the unfunded portion of its tax credit investments, as well as the remaining unfunded portion of its investments in limited partnerships.

As of September 30, 2024 and December 31, 2023, the remaining outstanding commitments related to the unfunded tax credit investments and limited partnership investments were as follows (in thousands):

Unfunded commitment balance for:

September 30, 2024 December 31, 2023

Tax credit investments $ 89,321 $ 62,594

The Company has also entered into agreements to invest in limited partnerships.

As of June 30, 2024 and December 31, 2023, the funded balances and remaining outstanding commitments of these limited partnership investments were as follows (in thousands):

June 30, 2024 December 31, 2023

Funded Balance Unfunded Balance Funded Balance Unfunded Balance

Limited partnerships investments $ 15,217 $ 10,462

6 unchanged sentences

Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income producing commercial properties.

The Company’s allowance for credit losses - unfunded loan commitments at June 30, 2024 and December 31, 2023 was $ 14.0 million and $ 14.5 million, respectively.

The Company’s allowance for credit losses - unfunded loan commitments at September 30, 2024 and December 31, 2023 was $ 13.8 million and $ 14.5 million, respectively.

Standby letters of credit are conditional commitments issued to guarantee a client’s performance or payment to a third party.

2 unchanged sentences

Interest rates on residential one- to four-family mortgage loan applications are typically rate locked (committed) to clients during the application stage for periods ranging from 30 to 60 days, the most typical period being 45 days.

Traditionally, these loan applications with rate lock commitments had the pricing for the sale of these loans locked with various qualified investors under a best-efforts delivery program at or near the time the interest rate is locked with the client.

The Bank then attempts to deliver these loans before their rate locks expired.

This arrangement generally required delivery of the loans prior to the expiration of the rate lock.

Delays in funding the loans would require a lock extension.

The cost of a lock extension at times was borne by the client and at times by the Bank.

Traditionally, these loan applications with rate lock commitments have the pricing for the sale of these loans locked with various qualified investors under a best-efforts delivery program at or near the time the interest rate is locked with the client.

The Bank then attempts to deliver these loans before their rate locks expire.

This arrangement generally requires delivery of the loans prior to the expiration of the rate lock.

Delays in funding the loans may require a lock extension.

The cost of a lock extension is sometimes covered by the client and other times by the Bank.

These lock extension costs have not had a material impact to the Company’s operations.

2 unchanged sentences

The purpose of these forward commitments is to offset the movement in interest rates between the execution of its residential mortgage rate lock commitments with borrowers and the sale of those loans to the secondary market investor.

There were no counterparty default losses on forward contracts during the three and six months ended June 30, 2024 or June 30, 2023.

There were no counterparty default losses on forward contracts during the three and nine months ended September 30, 2024 or September 30, 2023.

Market risk with respect to forward contracts arises principally from changes in the value of contractual positions due to changes in interest rates.

4 unchanged sentences

These claims and counter-claims typically arise during the course of collection efforts on problem loans or with respect to action to enforce liens on properties in which the Bank holds a security interest.

Based upon the information known to management at this time, the Company has accrued $ 702,000 related to outstanding legal proceedings as of June 30, 2024, compared to $ 14.8 million as of December 31, 2023.

There are no other legal proceedings that management believes would have a material adverse effect on the results of operations or consolidated financial position at June 30, 2024.

Based upon the information known to management, there were no legal proceedings that management believes would have a material adverse effect on the results of operations or consolidated financial position at September 30, 2024.

In connection with certain asset sales, the Bank typically makes representations and warranties about the underlying assets conforming to specified guidelines.

11 unchanged sentences

Market risk represents the possibility that economic value or net interest income will be adversely affected by fluctuations in external factors such as market-driven interest rates and prices or other economic factors.

As of June 30, 2024 and December 31, 2023, the notional values or contractual amounts and fair values of the Company’s derivatives were as follows (in thousands):

As of September 30, 2024 and December 31, 2023, the notional values or contractual amounts and fair values of the Company’s derivatives were as follows (in thousands):

Asset Derivatives Liability Derivatives

June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023

Notional/ Contract Amount Fair Value Notional/ Contract Amount Fair Value Notional/ Contract Amount Fair Value Notional/ Contract Amount Fair Value

18 unchanged sentences

During the next 12 months, the Company estimates that an additional $ 2.3 million will be reclassified as a decrease to interest income.

The following table presents the effect of cash flow hedge accounting on AOCI for the three and six months ended June 30, 2024 and 2023 (in thousands):

For the Three Months Ended June 30, 2024

The following table presents the effect of cash flow hedge accounting on AOCI for the three and nine months ended September 30, 2024 and 2023 (in thousands):

For the Three Months Ended September 30, 2024

Amount of Gain or (Loss) Recognized in AOCI on Derivative Amount of Gain or (Loss) Recognized in AOCI Included Component Amount of Gain or (Loss) Recognized in AOCI Excluded Component Location of Gain or (Loss) Recognized from AOCI into Income Amount of Gain or (Loss) Reclassified from AOCI into Income Amount of Gain or (Loss) Reclassified from AOCI into Income Included Component Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component

Interest rate swaps $ 163 $ 163 $ — Interest Income $ ( 4,585 ) $ ( 4,585 ) $ —

For the Six Months Ended June 30, 2024

For the Nine Months Ended September 30, 2024

Interest rate swaps $ ( 2,110 ) $ ( 2,110 ) $ — Interest Income $ ( 13,743 ) $ ( 13,743 ) $ —

For the Three Months Ended June 30, 2023

For the Three Months Ended September 30, 2023

Interest rate swaps $ ( 1,455 ) $ ( 1,455 ) $ — Interest Income $ ( 4,546 ) $ ( 4,546 ) $ —

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

Interest rate swaps $ ( 5,845 ) $ ( 5,845 ) $ — Interest Income $ ( 12,317 ) $ ( 12,317 ) $ —

At June 30, 2024 and December 31, 2023, we recorded total net unrealized losses on cash flow hedges in AOCI of $ 5.4 million and $ 10.6 million, respectively.

At September 30, 2024 and December 31, 2023, we recorded total net unrealized losses on cash flow hedges in AOCI of $ 1.7 million and $ 10.6 million, respectively.

Interest Rate Swaps:

10 unchanged sentences

The Company economically hedges the risk of changing interest rates associated with these mortgage loan commitments by entering into forward sales contracts to sell one- to four-family mortgage loans or mortgage-backed securities to broker/dealers at specific prices and dates.

Gains (losses) recognized in income within mortgage banking operations on non-designated hedging instruments for the three and six months ended June 30, 2024 and 2023, were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Gains (losses) recognized in income within mortgage banking operations on non-designated hedging instruments for the three and nine months ended September 30, 2024 and 2023, were as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

6 unchanged sentences

Similarly, the Bank could be required to settle its obligations under certain of its agreements if specific regulatory events occur, such as a publicly issued prompt corrective action directive, cease and desist order, or a capital maintenance agreement that required the Bank to maintain a specific capital level.

If the Bank had breached any of these provisions at June 30, 2024 or December 31, 2023, it could have been required to settle its obligations under the agreements at the termination value.

As of June 30, 2024 and December 31, 2023, the Company had no obligations to dealer counterparties related to these agreements.

If the Bank had breached any of these provisions at September 30, 2024 or December 31, 2023, it could have been required to settle its obligations under the agreements at the termination value.

As of September 30, 2024 and December 31, 2023, the Company had no obligations to dealer counterparties related to these agreements.

The Company generally posts collateral against derivative liabilities in the form of cash, government agency-issued bonds, mortgage-backed securities, or commercial mortgage-backed securities.

Collateral posted against derivative liabilities was $ 18.6 million and $ 15.0 million as of June 30, 2024 and December 31, 2023, respectively.

The collateral posted included restricted cash of $ 17.7 million and $ 14.0 million as of June 30, 2024 and December 31, 2023, respectively.

Collateral posted against derivative liabilities was $ 14.3 million and $ 15.0 million as of September 30, 2024 and December 31, 2023, respectively.

The collateral posted included restricted cash of $ 13.4 million and $ 14.0 million as of September 30, 2024 and December 31, 2023, respectively.

Derivative assets and liabilities are recorded at fair value on the balance sheet.

3 unchanged sentences

The variation margin is treated as an adjustment to our cash collateral, as well as a corresponding adjustment to our derivative liability.

The variation margin adjustment was a positive adjustment of $ 8.9 million and a negative adjustment of $ 529,000 as of June 30, 2024 and December 31, 2023, respectively.

The following tables present additional information related to the Company’s derivative contracts, by type of financial instrument, as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024

The variation margin adjustment was a positive adjustment of $ 7.6 million and a negative adjustment of $ 529,000 as of September 30, 2024 and December 31, 2023, respectively.

The following tables present additional information related to the Company’s derivative contracts, by type of financial instrument, as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

Gross Amounts of Financial Instruments Not Offset in the Consolidated Statement of Financial Condition

18 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements