What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-13 compared with 2024-08-13 · 184 added, 174 removed, 790 unchanged (31% of the section changed)

35 unchanged sentences

The Bank is supervised and regulated by the FDIC and the Virginia BFI.

Merger with Summit Financial Group, Inc.

Effective on the Closing Date, Burke & Herbert completed the M erger with Summit, pursuant to the August 24, 2023 Merger Agreement.

Pursuant to the Merger Agreement, on the Closing Date, (i) Summit merged with and into Burke & Herbert through the Merger, and (ii) immediately following the Merger, SCB merged with and into the Bank, with the Bank as the surviving bank.

In the Merger, holders of Summit common stock outstanding at the effective time of the Merger received 0.5043 shares of Burke & Herbert common stock for each share of Summit common stock they owned, subject to the payment of cash in lieu of fractional shares.

The total aggregate consideration payable in the Merger was approximately 7,405,772 shares of Burke & Herbert Common Stock.

Additionally, each share of the Summit Series 2021 Preferred Stock issued and outstanding was converted into the right to receive a share of the new Burke & Herbert Series 2021 Preferred Stock.

Summit results of operations are included from the Closing Date forward.

The Bank’s primary market area includes northern Virginia and West Virginia, and it has over 75 branches and other commercial loan offices across Delaware, Kentucky, Maryland, Virginia, and West Virginia.

The Bank’s primary market area includes northern Virginia and West Virginia, and it has over 75 branches and commercial loan offices across Delaware, Kentucky, Maryland, Virginia, and West Virginia.

The Company’s branch locations accept business and consumer deposits from a diverse customer base.

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In order to maintain its operations and branch locations, the Bank incurs various operating expenses which are further described within the “Results of Operations” later in this section.

As of June 30, 2024, we had total consolidated assets of $7.8 billion, gross loans of $5.6 billion, total deposits of $6.6 billion, and total shareholders’ equity of $693.1 million.

As of June 30, 2024, we had 850 full-time employees.

As of September 30, 2024, we had total consolidated assets of $7.9 billion, gross loans of $5.6 billion, total deposits of $6.6 billion, and total shareholders’ equity of $738.1 million.

As of September 30, 2024, we had 857 full-time employees.

None of our employees are covered by a collective bargaining agreement.

Merger with Summit Financial Group, Inc.

Effective on the Closing Date, Burke & Herbert completed the M erger with Summit, pursuant to the August 24, 2023 Merger Agreement.

The total aggregate consideration payable in the Merger was approximately 7,405,772 shares of Burke & Herbert Common Stock.

Additionally, each share of the Summit Series 2021 Preferred Stock issued and outstanding was converted into the right to receive a share of the new Burke & Herbert Series 2021 Preferred Stock.

Summit results of operations are included from the Closing Date forward.

Critical Accounting Policies and Estimates

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and (iii) underwriting and delinquency trends.

The qualitative factors applied at June 30, 2024, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management’s assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of ACL calculated by the model.

The qualitative factors applied at September 30, 2024, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management’s assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of ACL calculated by the model.

Management reviews supplemental data sources including historical net charge-off rates and data measuring other specific credit outcomes from its systems of record in supporting qualitative factors.

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The Bank continues to monitor its commercial real estate portfolio by reviewing various credit risk and concentration reports.

The Bank’s exposure to commercial real estate at June 30, 2024, was $2.5 billion or 45.3% of its gross loan portfolio, not including owner-occupied commercial real estate and acquisition, construction & development.

Commercial real estate as a percent of total assets at June 30, 2024, was 32.6%, not including owner-occupied commercial real estate and acquisition, construction & development.

Including owner-occupied commercial real estate and acquisition, construction & development, total exposure was at $3.6 billion or 65.0% of our total gross loans and 46.7% of total assets at June 30, 2024.

Loan balances by portfolio segment amortized cost (in thousands) and by percentage of our total gross loan portfolio at June 30, 2024, were as follows:

June 30, 2024

The Bank’s exposure to commercial real estate at September 30, 2024, was $2.5 billion, or 45.4%, of its gross loan portfolio, not including owner-occupied commercial real estate and acquisition, construction & development.

Commercial real estate as a percent of total assets at September 30, 2024, was 32.1%, not including owner-occupied commercial real estate and acquisition, construction & development.

Including owner-occupied commercial real estate and acquisition, construction & development, total exposure was at $3.6 billion, or 64.8%, of our total gross loans and 45.9% of total assets at September 30, 2024.

Loan balances by portfolio segment amortized cost (in thousands) and by percentage of our total gross loan portfolio at September 30, 2024, were as follows:

September 30, 2024

Amortized Cost Percentage

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These reports provide an assessment of asset quality and risk rating migration and monitor concentrations against the board approved concentration limits (including sub-limits).

The tables below present the Bank’s commercial real estate, owner-occupied commercial real estate, and acquisition, construction & development portfolios by collateral type and geographic location as of June 30, 2024 (in thousands).

Commercial Real Estate by Collateral Type and Geographic Location

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“Risk Factors” .

The measures taken followed meetings convened by a subcommittee provided for in our Asset/Liability policy more fully described in Item 3.

The measures were taken following meetings convened by a subcommittee provided for in our Asset/Liability policy more fully described in Item 3.

— Quantitative and Qualitative Disclosures About Market Risk .

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Management believes that the current sources of liquidity are adequate to meet the Company’s requirements and plans for continued growth.

See Note 6 - Advances and Other Borrowings and Note 10 - Commitments and Contingencies , in Notes to Consolidated Financial Statements for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations.

See Note 6 - Borrowed Funds and Note 10 - Commitments and Contingencies , in Notes to Consolidated Financial Statements for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations.

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies.

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A depository institution that is not “well capitalized” is generally prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market, may be subject to asset growth limitations, and may be required to submit capital restoration plans.

As of June 30, 2024, and December 31, 2023, the Bank complied with all regulatory capital standards and qualifies as “well capitalized”.

As of September 30, 2024, and December 31, 2023, the Bank complied with all regulatory capital standards and qualifies as “well capitalized”.

Note 8 - Regulatory Capital Matters in Notes to Consolidated Financial Statements contains additional discussion and analysis regarding the Company and the Bank’s regulatory capital requirements.

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The following table contains selected historical consolidated financial data as of the dates and for the periods shown.

The selected balance sheet data as of June 30, 2024, and June 30, 2023, and the selected income statement data for the three months and six months ended June 30, 2024, and June 30, 2023, have been derived from our consolidated financial statements included elsewhere in this Form 10-Q and in other filings we have submitted with the SEC and should be read in conjunction with the other information contained in this Form 10-Q.

As of the Three Months Ended June 30,

As of the Six Months Ended June 30,

The selected balance sheet data as of September 30, 2024, and September 30, 2023, and the selected income statement data for the three months and nine months ended September 30, 2024, and September 30, 2023, have been derived from our consolidated financial statements included elsewhere in this Form 10-Q and in other filings we have submitted with the SEC and should be read in conjunction with the other information contained in this Form 10-Q.

As of the Three Months Ended September 30,

As of the Nine Months Ended September 30,

(In thousands, except ratios, share and per share data) 2024 2023 2024 2023

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Total deposits 6,600,825 2,985,618 6,600,825 2,985,618

Advances and other borrowings 285,161 249,000 285,161 249,000

Short-term borrowings

320,163 299,000 320,163 299,000

Total shareholders’ equity 738,059 270,819 738,059 270,819

1 unchanged sentence

727,646 270,819 727,646 270,819

As of or for the Three Months Ended June 30,

As of or for the Six Months Ended June 30,

As of or for the Three Months Ended September 30,

As of or for the Nine Months Ended September 30,

2024 2023 2024 2023

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Net interest income 73,179 22,889 155,075 71,455

Provision for (recapture of) credit losses 23,910 214 23,240 729

Provision for credit losses

147 235 23,387 964

Total non-interest income 10,616 4,289 24,375 13,128

Total non-interest expenses 50,826 22,423 136,423 64,136

Income (loss) before income taxes

Income before income taxes

32,822 4,520 19,640 19,483

Income tax expense (benefit)

Income tax expense

5,200 464 3,725 1,869

Preferred stock dividends

Net income (loss) applicable to common shares

Net income applicable to common shares

27,397 4,056 15,465 17,614

6 unchanged sentences

14,963,003 7,428,710 14,963,003 7,428,710

Basic net income (loss) per common share

Basic net income per common share

$ 1.83 $ 0.55 $ 1.34 $ 2.37

Diluted net income (loss) per common share

Diluted net income per common share

1.82 0.55 1.33 2.35

5 unchanged sentences

$ 48.63 $ 36.46 $ 48.63 $ 36.46

As of or for the Three Months Ended June 30,

As of or for the Six Months Ended June 30,

As of or for the Three Months Ended September 30,

As of or for the Nine Months Ended September 30,

2024 2023 2024 2023

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Results of Operations

Results of Operations for the Six Months Ended June 30, 2024, and June 30, 2023

Net loss applicable to common shares for the six months ended June 30, 2024, was $11.9 million compared to net income applicable to common shares of $13.6 million for the six months ended June 30, 2023.

The $25.5 million decrease in net income applicable to common shares was primarily the result of merger related expenses and one-time CECL Day 2 provision for non-PCD assets acquired in the Merger for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Net interest income increased by $33.3 million to $81.9 million for the six months ended June 30, 2024, compared to $48.6 million for the six months ended June 30, 2023.

Results of Operations for the Nine Months Ended September 30, 2024, and September 30, 2023

Net income applicable to common shares for the nine months ended September 30, 2024, was $15.5 million compared to net income applicable to common shares of $17.6 million for the nine months ended September 30, 2023.

The $2.1 million decrease in net income applicable to common shares was primarily the result of merger related expenses and one-time CECL Day 2 provision for non-PCD assets acquired in the Merger for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Net interest income increased by $83.6 million to $155.1 million for the nine months ended September 30, 2024, compared to $71.5 million for the nine months ended September 30, 2023.

The main driver for this increase was the impact of the Merger.

For the six months ended June 30, 2024, the Company recorded credit provision expense of $23.2 million compared to a provision of $0.7 million for the six months ended June 30, 2023.

For the six months ended June 30, 2024, the Company recognized a one-time CECL Day 2 provision for non-PCD assets acquired in the Merger, which resulted in a higher credit provision expense for the six months ended June 30, 2024, compared to the six months ended, June 30, 2023.

Non-interest income increased by $4.9 million, or 55.7%, to $13.8 million for the six months ended June 30, 2024, as compared to $8.8 million for the six months ended June 30, 2023, as a result of the Merger.

For the nine months ended September 30, 2024, the Company recorded credit provision expense of $23.4 million compared to a provision of $1.0 million for the nine months ended September 30, 2023.

For the nine months ended September 30, 2024, the Company recognized a one-time CECL Day 2 provision for non-PCD assets acquired in the Merger, which

resulted in a higher credit provision expense for the nine months ended September 30, 2024, compared to the nine months ended, September 30, 2023.

Non-interest income increased by $11.2 million, or 85.7%, to $24.4 million for the nine months ended September 30, 2024, as compared to $13.1 million for the nine months ended September 30, 2023, as a result of the Merger.

In addition, the Company liquidated the majority of the acquired securities portfolio that resulted in a gain on sale of securities of $0.6 million.

Non-interest expense increased by $43.9 million, or 105.2%, to $85.6 million for the six months ended June 30, 2024, compared to $41.7 million for the six months ended June 30, 2023.

Non-interest expense increased by $72.3 million, or 112.7%, to $136.4 million for the nine months ended September 30, 2024, compared to $64.1 million for the nine months ended September 30, 2023.

The increase was primarily due to effect of the Merger and also included higher legal fees, consulting fees, audit fees, investment banking fees, software contract terminations, change-in-control salary and benefit payments, funding a charitable donation (as part of the Merger Agreement), and other expenses related to the Merger.

For the six months ended June 30, 2024, the Company incurred $24.4 million of expenses related to the Merger with Summit.

For the nine months ended September 30, 2024, the Company incurred $27.5 million of expenses related to the Merger with Summit.

Net Interest Income and Net Interest Margin

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Interest rate risk is managed by monitoring the pricing, maturity and repricing options of all classes of interest-bearing assets and liabilities.

Net interest income totaled $81.9 million for the six months ended June 30, 2024, compared to $48.6 million for the six months ended June 30, 2023.

The increase in net interest income was primarily driven by the Merger which resulted in higher average balances of interest-earning assets beyond the higher average balances of interest-bearing liabilities.

The tax-adjusted net interest margin was 3.56% for the six months ended June 30, 2024, compared to 2.96% for the six months ended June 30, 2023.

Net interest income totaled $155.1 million for the nine months ended September 30, 2024, compared to $71.5 million for the nine months ended September 30, 2023.

The increase in net interest income was primarily driven by higher interest earning assets, higher rates, and higher accretion income, as a result of the Merger.

Accretion income associated with acquired loans and borrowings totaled $28.8 million for the nine months ended September 30, 2024.

Amortization expense associated with fair value marks for time deposits, subordinated debt, and trust preferred securities totaled $6.3 million for the nine months ended September 30, 2024.

The tax-adjusted net interest margin was 3.78% for the nine months ended September 30, 2024, compared to 2.90% for the nine months ended September 30, 2023.

The increase in tax-adjusted net interest margin was primarily driven by the effect of the Merger and the acquisition of additional, higher-yielding interest-earning assets.

The yield for the loan portfolio was 6.72% for the six months ended June 30, 2024, compared to 4.94% for the six months ended June 30, 2023.

The yield for the taxable loan portfolio was 7.01% for the nine months ended September 30, 2024, compared to 5.01% for the nine months ended September 30, 2023.

The increase was primarily the result of the effect of the Merger which resulted in the acquisition of additional, higher-yielding loans.

The tax-adjusted yield on the total investment securities portfolio was 3.76% for the six months ended June 30, 2024, compared to 3.45% for the six months ended June 30, 2023.

The tax-adjusted yield on the total investment securities portfolio was 3.81% for the nine months ended September 30, 2024, compared to 3.42% for the nine months ended September 30, 2023.

The increase was partly due to higher yields in our investment portfolio in addition to the Merger, which resulted in the acquisition of additional securities with higher tax-adjusted yields.

The yield on interest-bearing deposits increased to 2.73% during the six months ended June 30, 2024, from 1.50% during the six months ended June 30, 2023.

The yield on interest-bearing deposits increased to 2.86% during the nine months ended September 30, 2024, from 1.70% during the nine months ended September 30, 2023.

The increase was a result of the Merger which resulted in the assumption of additional interest-bearing deposits with higher interest rates and to a lesser extent by higher market interest rates.

The yield on our short-term borrowings for the six months ended June 30, 2024, was 4.58%, compared to 4.66% for the six months ended June 30, 2023.

The decrease was due to the cash flow hedges that effectively lowered our yield on short-term borrowings.

The yield on our short-term borrowings for the nine months ended September 30, 2024, was 4.42%, compared to 4.67% for the nine months ended September 30, 2023.

The decrease was due to decreases in the Federal Funds Rate and other short-term market rates.

The yield on our subordinated debt acquired in the Merger was 10.21%.

The following table sets forth the major components of net interest income and the related yields and rates for the six months ended June 30, 2024, and June 30, 2023, for comparison (dollars in thousands).

For the Six Months Ended June 30,

The following table sets forth the major components of net interest income and the related yields and rates for the nine months ended September 30, 2024, and September 30, 2023, for comparison (dollars in thousands).

For the Nine Months Ended September 30,

Average Outstanding Balance Interest Income/Expense Average Yield / Rate

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2,457 103 5.60 — — N/A

4,071,261 213,503 7.00 % 1,985,898 74,485 5.01 %

Interest-earning deposits and fed funds sold 104,168 2,738 3.51 55,870 1,858 4.45

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The following table reconciles GAAP net interest income to FTE net interest income (in thousands).

Six Months Ended

June 30, 2024 June 30, 2023

Nine Months Ended

September 30, 2024 September 30, 2023

GAAP Financial Measurements

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The following table sets forth the dollar difference in interest earned and paid for each major category of interest-earning assets and interest-bearing liabilities for the noted periods and the amount of such change attributable to changes in average balances (volume) or changes in average interest rates.

Interest income and interest expense for the six months ended June 30, 2024, and June 30, 2023, are annualized using an actual days over calendar year method.

Interest income and interest expense for the nine months ended September 30, 2024, and September 30, 2023, are annualized using an actual days over calendar year method.

The volume variances are equal to the increase or decrease in average balance multiplied by current period rates, and rate variances are equal to the increase or decrease in rate times prior period average balances.

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See table below (in thousands).

Six Months Ended June 30, 2024, compared to June 30, 2023

Nine Months Ended September 30, 2024, compared to September 30, 2023

Dollar Increase (Decrease) Due to Change in:

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Interest Income

Total interest income was $134.8 million for the six months ended June 30, 2024, compared to $71.4 million for the six months ended June 30, 2023, an increase of 88.7%.

Total interest income was $253.4 million for the nine months ended September 30, 2024, compared to $108.7 million for the nine months ended September 30, 2023, an increase of 133.1%.

The increase in interest income was due to the effect of the Merger and the acquisition of additional interest-earning assets.

Interest income on loans increased by $61.7 million and interest income on securities increased $1.7 million, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Interest income on loans increased by $139.0 million and interest income on securities increased $4.6 million, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Interest Expense

Total interest expense was $52.9 million for the six months ended June 30, 2024, compared to $22.9 million for the six months ended June 30, 2023.

Total interest expense was $98.3 million for the nine months ended September 30, 2024, compared to $37.3 million for the nine months ended September 30, 2023.

The increase in interest expense was a result of the Merger and the assumption of additional interest-bearing liabilities.

Interest expense on interest-bearing deposits and borrowed funds increased by $27.9 million and $0.3 million, respectively, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Interest on subordinated debt assumed in the Merger was $1.9 million for the six months ended June 30, 2024.

Interest expense on interest-bearing deposits and borrowed funds increased by $56.0 million and $0.3 million, respectively, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Interest on subordinated debt assumed in the Merger was $4.7 million for the nine months ended September 30, 2024.

Provision for (Recapture of) Credit Losses

The provision for credit losses was $23.2 million for the six months ended June 30, 2024, compared to a provision of $0.7 million for the six months ended June 30, 2023.

The increased provision expense was due to a one-time CECL Day 2 provision for non-PCD assets acquired in the Merger and acquired commitments for unfunded commitments for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

The provision for credit losses was $23.4 million for the nine months ended September 30, 2024, compared to a provision of $1.0 million for the nine months ended September 30, 2023.

The increased provision expense was due to a one-time CECL Day 2 provision for non-PCD assets acquired in the Merger and acquired commitments for unfunded commitments for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

See Note 4 - Allowance for Credit Losses in Notes to Consolidated Financial Statements for further information.

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The following table sets forth the various components of our non-interest income for the periods indicated (in thousands):

Six Months Ended June 30, Increase (Decrease)

Nine Months Ended September 30, Increase (Decrease)

2024 2023 Amount Percent

5 unchanged sentences

Total $ 24,375 $ 13,128 $ 11,247 85.7 %

Non-interest income increased 55.7% for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Non-interest income increased 85.7% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

The increase was primarily driven by the Merger.

The largest increase was a $2.3 million increase in service charges and fees for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

A majority of the securities acquired in the Merger were sold, resulting in gains of $0.6 million for the six months ended June 30, 2024, compared to losses of $0.1 million during the six months ended June 30, 2023.

Loan swap fees included in other non-interest income increased $0.1 million for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Other categories of non-interest income also increased due to the Merger, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

The largest increase was a $6.2 million increase in service charges and fees for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

A majority of the securities acquired in the Merger were sold, resulting in gains of $0.6 million for the nine months ended September 30, 2024, compared to losses of $0.1 million during the nine months ended September 30, 2023.

Loan swap fees included in other non-interest income increased $0.1 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Other categories of non-interest income also increased due to the Merger, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Non-interest Expense

The following table sets forth the various components of our non-interest expense for the periods indicated (in thousands):

Six Months Ended June 30, Increase (Decrease)

Nine Months Ended September 30, Increase (Decrease)

2024 2023 Amount Percent

5 unchanged sentences

Total $ 136,423 $ 64,136 $ 72,287 112.7 %

Non-interest expense increased $43.9 million or 105.2% for the six months ended June 30, 2024, compared to June 30, 2023.

Non-interest expense increased $72.3 million, or 112.7%, for the nine months ended September 30, 2024, compared to September 30, 2023.

The increase was primarily due to effect of the Merger and also included higher legal fees, consulting fees, audit fees, investment banking fees, software contract terminations, change-in-control salary and benefit payments, funding a charitable donation (as contemplated by the Merger Agreement), and other expenses related to the Merger.

For the six months ended June 30, 2024, the Company incurred $24.4 million of non-interest expense related to the Merger with Summit that are included in non-interest expense for the six months ended June 30, 2024.

For the nine months ended September 30, 2024, the Company incurred $27.5 million of merger-related expenses within non-interest expense for the nine months ended September 30, 2024.

Other non-interest expense included $11.3 million of these costs, while the remaining amount of the total is included in the other line items of non-interest expense.

See Note 16 — Business Combination in Notes to Consolidated Financial Statements for further information on merger-related expenses and Note 13 — Other Operating Expenses in Notes to Consolidated Financial Statements for further information on “Other” non-interest expense.

Income Tax Expense (Benefit)

Income tax benefit was $1.5 million for the six months ended June 30, 2024, a decrease of $2.9 million from the tax provision for the six months ended June 30, 2023.

The decrease was due to the decrease in net income and resulting net loss for the six months ended June 30, 2024, when compared to the six months ended June 30, 2023.

For the six months ended June 30, 2024, the effective tax benefit was 11.2% while the effective tax rate was 9.4%, for June 30, 2023.

Results of Operations for the Three Months Ended June 30, 2024, and June 30, 2023

Net loss applicable to common shares for the three months ended June 30, 2024, was $17.1 million, compared to net income applicable to common shares of $6.0 million during the three months ended June 30, 2023.

The $23.2 million decrease was primarily the result of Merger related expenses and one-time CECL Day 2 provision for non-PCD assets acquired in the merger for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Net interest income increased by $36.0 million to $59.8 million for the three months ended June 30, 2024, compared to $23.8 million for the three months ended June 30, 2023.

Income Tax Expense

Income tax expense was $3.7 million for the nine months ended September 30, 2024, an increase of $1.9 million from the tax provision for the nine months ended September 30, 2023.

The increase was due to changes in estimated tax rates, additional estimated state tax liability, and tax credits resulting from the Merger for the nine months ended September 30, 2024, when compared to the nine months ended September 30, 2023.

For the nine months ended September 30, 2024, the effective tax rate was 19.0%, while the effective tax rate was 9.6% for the nine months ended September 30, 2023.

Results of Operations for the Three Months Ended September 30, 2024, and September 30, 2023

Net income applicable to common shares for the three months ended September 30, 2024, was $27.4 million, compared to net income applicable to common shares of $4.1 million during the three months ended September 30, 2023.

The $23.3 million increase was primarily due to results that reflect combined income after the Merger completion for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Net interest income increased by $50.3 million to $73.2 million for the three months ended September 30, 2024, compared to $22.9 million for the three months ended September 30, 2023.

The main driver for this increase was the impact of the Merger.

For the three months ended June 30, 2024, the Company recorded credit provision expense of $23.9 million compared to a provision of $0.2 million for the three months ended June 30, 2023.

For the three months ended June 30, 2024, the Company recognized a one-time CECL Day 2 provision for non-PCD assets acquired in the Merger, which resulted in a higher credit provision expense for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Non-interest income increased by $4.9 million, or 105.5%, to $9.5 million for the three months ended June 30, 2024, as compared to $4.6 million for the three months ended June 30, 2023, as a result of the Merger.

In addition, the Company liquidated the majority of the acquired securities portfolio that resulted in a gain on sale of securities of $0.6 million.

Non-interest expense increased by $43.1 million, or 201.8%, to $64.4 million for the three months ended June 30, 2024, as compared to $21.3 million for the three months ended June 30, 2023.

For the three months ended June 30, 2024, the Company incurred $23.8 million of expenses related to the Merger with Summit.

For the three months ended September 30, 2024, the Company recorded credit provision expense of $0.1 million compared to a provision of $0.2 million for the three months ended September 30, 2023.

For the three months ended September 30, 2024, the Company recognized less credit loss expense on loans and off-balance sheet credit exposures which led to a decrease in credit provision expense for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Non-interest income increased by $6.3 million, or 147.5%, to $10.6 million for the three months ended September 30, 2024, as compared to $4.3 million for the three months ended September 30, 2023, as a result of the Merger.

All categories of non-interest income increased as a result of the combined operations for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Non-interest expense increased by $28.4 million, or 126.7%, to $50.8 million for the three months ended September 30, 2024, as compared to $22.4 million for the three months ended September 30, 2023.

For the three months ended September 30, 2024, the Company incurred $3.1 million of expenses related to the Merger with Summit.

Net Interest Income and Net Interest Margin

4 unchanged sentences

Interest rate risk is managed by monitoring the pricing, maturity and repricing options of all classes of interest-bearing assets and liabilities.

Net interest income totaled $59.8 million for the three months ended June 30, 2024, compared to $23.8 million for the three months ended June 30, 2023.

The increase in net interest income was primarily driven by the merger which resulted in higher average balances on interest-earning assets beyond the higher average balances on interest-bearing liabilities.

The tax-adjusted net interest margin was 4.06% for the three months ended June 30, 2024, compared to 2.87% for the three months ended June 30, 2023.

Net interest income totaled $73.2 million for the three months ended September 30, 2024, compared to $22.9 million for the three months ended September 30, 2023.

The increase in net interest income was primarily driven by higher interest earning assets, higher rates, and higher accretion income, as a result of the Merger.

Accretion income associated with acquired loans and borrowings totaled $15.4 million for the three months ended September 30, 2024.

Amortization expense associated with fair value marks for time deposits, subordinated debt, and trust preferred securities totaled $3.8 million for the three months ended September 30, 2024.

The tax-adjusted net interest margin was 4.07% for the three months ended September 30, 2024, compared to 2.76% for the three months ended September 30, 2023.

The increase in tax-adjusted net interest margin was primarily driven by the effect of the Merger and the acquisition of additional, higher-yielding interest-earning assets.

The yield for the loan portfolio was 7.33% for the three months ended June 30, 2024, compared to 5.07% for the three months ended June 30, 2023.

The yield for the taxable loan portfolio was 7.34% for the three months ended September 30, 2024, compared to 5.15% for the three months ended September 30, 2023.

The increase was primarily the result of the effect of the Merger, which resulted in the acquisition of additional, higher-yielding loans.

The tax-adjusted yield on the total investment securities portfolio was 4.05% for the three months ended June 30, 2024, compared to 3.45% for the three months ended June 30, 2023.

The tax-adjusted yield on the total investment securities portfolio was 3.91% for the three months ended September 30, 2024, compared to 3.37% for the three months ended September 30, 2023.

The increase was partly due to higher yields in our investment portfolio in addition to the Merger, which resulted in the acquisition of additional securities with higher tax-adjusted yields.

The yield on interest-bearing deposits increased to 2.90% during the three months ended June 30, 2024, from 1.88% during the three months ended June 30, 2023.

The increase was a result of the Merger which resulted in the assumption of additional interest-bearing deposits with higher interest rates and to a lesser extent by higher market interest rates.

The yield on our short-term borrowings for the three months ended June 30, 2024, was 4.38%, compared to 4.61% for the three months ended June 30, 2023.

The decrease was due to cash flow hedges that effectively lowered our yield on short-term borrowings.

The yield on interest-bearing deposits increased to 3.02% during the three months ended September 30, 2024, from 2.09% during the three months ended September 30, 2023.

The increase was a result of the Merger, which resulted in the assumption of additional interest-bearing deposits with higher interest rates, and to a lesser extent, by higher market interest rates compared to the prior year quarter.

The yield on our short-term borrowings for the three months ended September 30, 2024, was 4.06%, compared to 4.69% for the three months ended September 30, 2023.

The decrease was due to decreases in the Federal Funds Rate and other short-term market rates.

The yield on our subordinated debt assumed in the Merger was 10.16%.

The following table sets forth the major components of net interest income and the related yields and rates for the three months ended June 30, 2024, and June 30, 2023, for comparison (dollars in thousands).

For the Three Months Ended June 30,

The following table sets forth the major components of net interest income and the related yields and rates for the three months ended September 30, 2024, and September 30, 2023, for comparison (dollars in thousands).

For the Three Months Ended September 30,

Average Outstanding Balance Interest Income/Expense Average Yield / Rate

4 unchanged sentences

4,310 61 5.63 — — N/A

5,625,841 103,743 7.34 % 2,034,275 26,425 5.17 %

Interest-earning deposits and fed funds sold 175,265 1,509 3.43 49,501 562 4.50

42 unchanged sentences

Three Months Ended

June 30, 2024 June 30, 2023

September 30, 2024 September 30, 2023

GAAP Financial Measurements

16 unchanged sentences

Interest income and interest expense for the three months ended June 30, 2024, and June 30, 2023, are annualized using an actual days over calendar year method.

Interest income and interest expense for the three months ended September 30, 2024, and September 30, 2023, are annualized using an actual days over calendar year method.

Volume variances are equal to the increase or decrease in average balance multiplied by current period rates, and rate variances are equal to the increase or decrease in rate times prior period average balances.

1 unchanged sentence

See table below (in thousands).

Three Months Ended June 30, 2024, compared to June 30, 2023

Three Months Ended September 30, 2024, compared to September 30, 2023

Dollar Increase (Decrease) Due to Change in:

18 unchanged sentences

Interest Income

Total interest income was $96.1 million for the three months ended June 30, 2024, compared to $37.1 million for the three months ended June 30, 2023, an increase of 158.9%.

Total interest income was $118.5 million for the three months ended September 30, 2024, compared to $37.3 million for the three months ended September 30, 2023, an increase of 218.0%.

The increase in interest income was due to the effect of the Merger and the acquisition of additional interest-earning assets.

Interest income on loans increased by $56.4 million and interest income on securities increased $2.7 million, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Interest income on loans increased by $77.3 million and interest income on securities increased $2.9 million, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Interest Expense

Total interest expense was $36.3 million for the three months ended June 30, 2024, compared to $13.3 million for the three months ended June 30, 2023.

Total interest expense was $45.3 million for the three months ended September 30, 2024, compared to $14.4 million for the three months ended September 30, 2023.

The increase in interest expense was a result of the Merger and the assumption of additional interest-bearing liabilities.

Interest expense on interest-bearing deposits and borrowed funds increased by $20.3 million and $0.8 million, respectively, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Interest on subordinated debt acquired in the Merger was $1.9 million for the three months ended June 30, 2024.

Interest expense on interest-bearing deposits increased by $28.2 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Interest on subordinated debt acquired in the Merger was $2.8 million for the three months ended September 30, 2024, while interest expense on short-term borrowings amounted to $3.1 million for the three months ended September 30, 2024.

Provision for (Recapture of) Credit Losses

The provision for credit losses was $23.9 million for the three months ended June 30, 2024, compared to a provision of $0.2 million for the three months ended June 30, 2023.

The increased provision expense was due to a one-time CECL Day 2 provision for non-PCD assets acquired in the Merger and acquired commitments for unfunded commitments for three months ended June 30, 2023, compared to the three months ended June 30, 2023.

The provision for credit losses was $0.1 million for the three months ended September 30, 2024, compared to a provision of $0.2 million for the three months ended September 30, 2023.

The decreased provision expense is a function of the Merger closing last quarter and the Day 2 non-PCD provision expense captured for the acquired portfolio, resulting in a lower credit loss expense on loans and off-balance sheet credit exposures, compared to the three months ended September 30, 2023.

See Note 4 - Allowance for Credit Losses in Notes to Consolidated Financial Statements for further information.

1 unchanged sentence

The following table sets forth the various components of our non-interest income for the periods indicated (in thousands):

Three months ended June 30,

Three months ended September 30,

Increase (Decrease)

6 unchanged sentences

Total $ 10,616 $ 4,289 $ 6,327 147.5 %

Non-interest income increased 105.5% for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Non-interest income increased 147.5% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

The increase was primarily driven by the Merger.

The largest increase was a $2.3 million increase in service charges and fees for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

A portion of securities acquired in the Merger were sold, resulting in gains of $0.6 million for the three months ended June 30, 2023, compared to losses of $0.1 million during the three months ended June 30, 2023.

Loan swap fees included in other non-interest income increased $0.1 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Other categories of non-interest income also increased due to the Merger, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

The largest increase was a $3.9 million increase in service charges and fees for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

All other categories of non-interest income also increased due to the Merger for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Non-interest Expense

The following table sets forth the various components of our non-interest expense for the periods indicated (in thousands):

Three months ended June 30,

Three months ended September 30,

Increase (Decrease)

6 unchanged sentences

Total $ 50,826 $ 22,423 $ 28,403 126.7 %

Non-interest expense increased $43.1 million or 201.8% for the three months ended June 30, 2024, compared to June 30, 2023.

For the three months ended June 30, 2024, the Company incurred $23.8 million of non-interest expense related to the Merger with Summit that are included in other non-interest expense for the three months ended June 30, 2024.

Non-interest expense increased $28.4 million, or 126.7%, for the three months ended September 30, 2024, compared to September 30, 2023.

For the three months ended September 30, 2024, the Company incurred $3.1 million of merger-related expenses within non-interest expense for the three months ended September 30, 2024.

Income Tax Expense (Benefit)

Income tax benefit was $2.2 million for the three months ended June 30, 2024, a decrease of $3.0 million from the tax provision for the three months ended June 30, 2023.

The decrease was due to the decrease in net income and resulting net loss for the three months ended June 30, 2024, when compared to the three months ended June 30, 2023.

For the three months ended June 30, 2024, the effective tax benefit was 11.3% while the effective tax rate was 12.0% for June 30, 2023.

Analysis of Financial Condition for the Period Ended June 30, 2024, and December 31, 2023

Due mostly to the Merger, assets increased by $4.19 billion to $7.81 billion as of June 30, 2024, compared to $3.62 billion as of December 31, 2023.

Loans, net of ACL, increased by $3.49 billion from $2.06 billion as of December 31, 2023, to $5.55 billion as of June 30, 2024.

Deposits increased by $3.64 billion and amounted to $6.64 billion at June 30, 2024, compared to $3.00 billion at December 31, 2023.

Borrowed funds increased by $13.2 million to $285.2 million as of June 30, 2024, compared to $272.0 million at December 31, 2023.

Subordinated debt and subordinated debt owed to unconsolidated subsidiary trusts, which were assumed in the Merger, totaled $109.1 million at June 30, 2024, compared to zero at December 31, 2023.

Income Tax Expense

Income tax expense was $5.2 million for the three months ended September 30, 2024, an increase of $4.7 million from the tax provision for the three months ended September 30, 2023.

The increase was due to the increase in net income for the three months ended September 30, 2024, when compared to the three months ended September 30, 2023.

For the three months ended September 30, 2024, the effective tax rate was 15.8%, while the effective tax rate was 10.3% for September 30, 2023.

Analysis of Financial Condition for the Period Ended September 30, 2024, and December 31, 2023

Due mostly to the Merger, assets increased by $4.25 billion to $7.86 billion as of September 30, 2024, compared to $3.62 billion as of December 31, 2023.

Loans, net of ACL, increased by $3.44 billion from $2.06 billion as of December 31, 2023, to $5.51 billion as of September 30, 2024.

Deposits increased by $3.60 billion and amounted to $6.60 billion at September 30, 2024, compared to $3.00 billion at December 31, 2023.

Short-term borrowings increased by $48.2 million to $320.2 million as of September 30, 2024, compared to $272.0 million at December 31, 2023.

Subordinated debt and

subordinated debt owed to unconsolidated subsidiary trusts, which were assumed in the Merger, totaled $110.5 million at September 30, 2024, compared to zero at December 31, 2023.

Investment Securities

5 unchanged sentences

The majority of our AFS investment portfolio is comprised of obligations of states and municipalities and residential mortgage-backed securities.

During the six months ended June 30, 2024, the unrealized losses on our holdings remained mostly unchanged from December 31, 2023.

During the nine months ended September 30, 2024, the unrealized losses on our holdings decreased $36.3 million from December 31, 2023.

The Company determined that the declines in market value were due to increases in interest rates and market movements and not due to credit factors.

Therefore, the Company has concluded that the unrealized losses for the AFS securities do not require an ACL at June 30, 2024, and at December 31, 2023.

Therefore, the Company has concluded that the unrealized losses for the AFS securities do not require an ACL at September 30, 2024, or at December 31, 2023.

The Company has sufficient access to liquidity such that management does not believe it would be necessary to sell any of its investment securities at a loss to offset any unexpected deposit outflows.

Management believes the structure of the Bank’s investment portfolio is appropriately aligned with the rest of the balance sheet to protect against significant and unexpected charges against earnings and capital.

The following tables reflect the amortized cost and fair market values for the total portfolio for each category of investment for June 30, 2024, and December 31, 2023 (in thousands):

June 30, 2024

The following tables reflect the amortized cost and fair market values for the total portfolio for each category of investment for September 30, 2024, and December 31, 2023 (in thousands):

September 30, 2024

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

6 unchanged sentences

Commercial mortgage backed - non-agency 157,569 — 3,875 153,694

Asset backed 77,568 179 795 76,952

71,073 229 667 70,635

Other 38,401 428 1,282 37,547

9 unchanged sentences

Commercial mortgage backed - non-agency 183,454 — 6,393 177,061

Asset backed 79,315 23 1,402 77,936

79,315 23 1,402 77,936

Other 9,500 — 1,486 8,014

$ 1,372,575 $ 89 $ 124,225 $ 1,248,439

The investment maturity table below summarizes contractual maturities for our investment securities at June 30, 2024.

The investment maturity table below summarizes contractual maturities for our investment securities at September 30, 2024.

The actual timing of principal payments may differ from remaining contractual maturities because obligors may have the right to repay certain obligations with or without penalties.

The overall weighted average duration of the Company’s investment portfolio is 4.5 years at June 30, 2024.

The overall weighted average duration of the Company’s investment portfolio is 4.3 years at September 30, 2024.

The weighted-average yield below represents the effective yield for the investment securities and is calculated based on the amortized cost of each security (dollars in thousands).

Interest on securities below excludes tax-equivalent adjustments.

June 30, 2024

September 30, 2024

One Year or Less One to Five Years Five to Ten Years After Ten Years Total

7 unchanged sentences

Commercial mortgage backed - non-agency 91,673 4.03 60,771 4.96 5,125 1.43 — — 157,569 4.30

Asset backed 3,437 5.66 35,543 6.58 38,588 6.47 — — 77,568 6.48

5,551 5.95 39,747 6.54 25,775 6.38 — — 71,073 6.44

Other — — 2,741 8.29 21,263 5.89 14,397 9.15 38,401 7.28

6 unchanged sentences

The following tables set forth the composition of our loan portfolio as of the dates indicated (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

8 unchanged sentences

Loans, net $ 5,506,220 $ 2,062,455

The loan portfolio, excluding ACL, at June 30, 2024, increased by $3.53 billion primarily due to the Merger.

The following table shows the maturity distribution for total loans outstanding as of June 30, 2024.

The loan portfolio, excluding ACL, at September 30, 2024, increased by $3.49 billion primarily due to the Merger.

The following table shows the maturity distribution for total loans outstanding as of September 30, 2024.

The maturity distribution is grouped by remaining scheduled principal payments that are due in the following periods.

The principal balance of loans is indicated by both fixed and floating rate categories in the table below (in thousands).

June 30, 2024

September 30, 2024

Within One Year One Year to Five Years Five Years to 15 Years After 15 Years

12 unchanged sentences

A loan is placed on non-accrual status when (i) the Company is advised by the borrower that scheduled principal or interest payments cannot be met, (ii) when management’s best judgment indicates that payment in full of principal and interest can no longer be expected, or (iii) when any such loan or obligation becomes delinquent for 90 days, unless it is both well-secured and in the process of collection.

The Company’s asset quality remained stable through the second quarter of 2024, but the nonaccrual loan balance increased $29.0 million from December 31, 2023 due to the merger.

The Company’s non-performing assets, which includes non-performing loans consisting of non-accrual loans, loans that are more than 90 days past due and still accruing, and other real estate owned as of June 30, 2024, totaled $36.2 million.

The following table summarizes the Company’s non-performing assets as of June 30, 2024, and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

The Company’s asset quality remained stable through the third quarter of 2024, but the nonaccrual loan balance increased $32.1 million from December 31, 2023.

As a result of the Merger, the nonaccrual loan balance increased due to the acquired loan portfolio.

The following table summarizes the Company’s non-performing assets as of September 30, 2024, and December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

Non-accrual loans $ 35,872 $ 3,744

12 unchanged sentences

Management believes its approach properly addresses relevant accounting and bank regulatory guidance for loans both collectively and individually evaluated.

The Company recorded a provision of $20.1 million and a provision of $310.0 thousand on loans for the three months ended June 30, 2024, and June 30, 2023, respectively, and a provision of $19.4 million and a provision of $0.8 million on loans for the six months ended June 30, 2024, and June 30, 2023, respectively.

This additional provision expense was due to an increase in loans that were classified as non-PCD.

The Company also recorded a $23.9 million provision to establish an allowance for acquired PCD loans for the quarter ended June 30, 2024.

Gross charged-off loans were $611.0 thousand and $104.0 thousand for the three months ended June 30, 2024, and June 30, 2023, respectively, and $641.0 thousand and $121.0 thousand for the six months ended June 30, 2024, and June 30, 2023, respectively.

Gross recoveries totaled $12.0 thousand and $9.0 thousand for the three months ended June 30, 2024, and June 30, 2023, respectively, and $17.0 thousand and $43.0 thousand for the six months ended June 30, 2024, and June 30, 2023, respectively.

The ACL as a percentage of gross loans, net of unearned income, was 1.21% and 1.30% as of June 30, 2024, and June 30, 2023, respectively.

The following table summarizes the changes in the Company’s credit loss experience by portfolio as of the three and six months ended June 30, 2024, and 2023 (dollars in thousands):

Three months ended Six months ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

The Company recorded a provision expense of $0.1 million and a provision expense of $0.2 million on loans for the three months ended September 30, 2024, and September 30, 2023, respectively, and a provision expense of $19.5 million and a provision expense of $1.0 million on loans for the nine months ended September 30, 2024, and September 30, 2023, respectively.

The increase in provision expense for the nine months ended was due to the Merger and the requirement to record a provision expense for loans classified as non-PCD.

The Company also recorded a $23.9 million provision directly to the allowance for credit losses as required for acquired PCD loans for the nine months ended September 30, 2024.

This allowance for acquired PCD loans did not result in an additional provision expense for the nine months ended September 30, 2024.

Gross charged-off loans were $305.0 thousand and $13.0 thousand for the three months ended September 30, 2024, and September 30, 2023, respectively, and $947.0 thousand and $134.0 thousand for the nine months ended September 30, 2024, and September 30, 2023, respectively.

Gross recoveries totaled $20.0 thousand and $5.0 thousand for the three months ended September 30, 2024, and September 30, 2023, respectively, and $38.0 thousand and $48.0 thousand for the nine months ended September 30, 2024, and September 30, 2023, respectively.

The ACL as a percentage of gross loans, net of unearned income, was 1.22% and 1.26% as of September 30, 2024, and September 30, 2023, respectively.

The following table summarizes the changes in the Company’s credit loss experience by portfolio for the three and nine months ended September 30, 2024, and 2023 (dollars in thousands):

Three months ended Nine months ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Loans outstanding at end of period $ 5,574,037 $ 2,070,616 $ 5,574,037 $ 2,070,616

31 unchanged sentences

(3) The Allowance for credit losses as a percentage of non-performing loans ratio is calculated by dividing the ACL at the end of the period by non-accrual loans at the end of the period.

The following table summarizes the ACL by portfolio with a comparison of the percentage composition in relation to total ACL and allowance for credit losses and total loans as of June 30, 2024, and December 31, 2023 (dollars in thousands).

June 30, 2024

The following table summarizes the ACL by portfolio with a comparison of the percentage composition in relation to total ACL and allowance for credit losses and total loans as of September 30, 2024, and December 31, 2023 (dollars in thousands).

September 30, 2024

Allowance for credit losses Percent of Allowance in Each Category to Total Allocated ACL Percent of Loans in Each Category to Total Loans

33 unchanged sentences

For more discussion of brokered time deposits, see the Deposits heading below this section.

As of June 30, 2024, the Company has available unused borrowing capacity of $2.2 billion through its available lines of credit with the FHLB of Atlanta, the Federal Reserve Borrower-In-Custody Program line, and unsecured federal fund lines of credit from correspondent banking relationships.

As of September 30, 2024, the Company has available unused borrowing capacity of $2.4 billion through its available lines of credit with the FHLB of Atlanta, the Federal Reserve Borrower-In-Custody Program line, and unsecured federal fund lines of credit from correspondent banking relationships.

Advances on credit lines are secured by both securities and loans.

The following table shows certain information regarding short-term borrowings as of the three months ended June 30, 2024, and December 31, 2023, respectively (dollars in thousands):

Balance at end of period June 30, 2024 December 31, 2023

The following table shows certain information regarding short-term borrowings as of the three months ended September 30, 2024, and December 31, 2023, respectively (dollars in thousands):

Balance at end of period September 30, 2024 December 31, 2023

Short-term borrowings $ 320,163 $ 272,000

Weighted average interest yield at end of period 4.06% 4.75%

The following table shows certain information regarding long-term debt as of the three months ended June 30, 2024, and December 31, 2023, respectively (dollars in thousands):

Balance at end of period June 30, 2024 December 31, 2023

The following table shows certain information regarding long-term debt as of the three months ended September 30, 2024, and December 31, 2023, respectively (dollars in thousands):

Balance at end of period September 30, 2024 December 31, 2023

Subordinated debentures, net $ 93,532 $ —

2 unchanged sentences

Weighted average interest yield at end of period 10.16% N/A

Total deposits increased by $3.6 billion from December 31, 2023, to June 30, 2024, primarily due to the completion of the Merger with Summit.

The Company has brokered time deposits that amounted to $403.7 million as of June 30, 2024, and $389.0 million at December 31, 2023.

Total deposits increased by $3.6 billion from December 31, 2023, to September 30, 2024, primarily due to the completion of the Merger with Summit.

The Company has brokered time deposits that amounted to $345.3 million as of September 30, 2024, and $389.0 million at December 31, 2023.

The following table sets forth the balance of each category of deposits as of the dates indicated (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

9 unchanged sentences

Management evaluates its utilization of brokered deposits, taking into consideration the interest rate curve and regulatory views on non-core funding sources, and balances this funding source with its funding needs based on growth initiatives.

The Company has deposits that meet or exceed the FDIC insurance limit of $250,000 in the amounts of $1.9 billion and $677.3 million at June 30, 2024, and December 31, 2023, respectively, with the increase being primarily attributable to the Merger.

The following table sets forth maturity ranges of time deposits as of June 30, 2024, that meet or exceed the FDIC insurance limit (in thousands).

June 30, 2024

The Company has deposits that meet or exceed the FDIC insurance limit of $250,000 in the amounts of $2.0 billion and $677.3 million at September 30, 2024, and December 31, 2023, respectively, with the increase being primarily attributable to the Merger.

The following table sets forth maturity ranges of time deposits as of September 30, 2024, that meet or exceed the FDIC insurance limit (in thousands).

September 30, 2024

Due within 3 months or less $ 129,343

4 unchanged sentences

Shareholders’ Equity

Total shareholders’ equity at June 30, 2024, was $693.1 million, compared to $314.8 million at December 31, 2023.

Total shareholders’ equity at September 30, 2024, was $738.1 million, compared to $314.8 million at December 31, 2023.

Shareholders’ equity increased by $423.3 million mostly due to the Merger since December 31, 2023.

Accumulated other comprehensive income/(loss) decreased $3.1 million from December 31, 2023, to June 30, 2024, from $(103.5) million to $(100.4) million.

Accumulated other comprehensive income/(loss) decreased $27.7 million from December 31, 2023, to September 30, 2024, from $(103.5) million to $(75.8) million.

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 2. Management’s Discussion and Analysis