FIRST HAWAIIAN, INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ FIRST HAWAIIAN, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, ​ June 30, (dollars in thousands, except per share amounts) 2020 2019 2020 2019 Interest income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans and lease financing ​ $ 122,298 ​ $ 146,883 ​ $ 257,269 ​ $ 291,289 Available-for-sale securities ​ ​ 17,529 ​ ​ 24,784 ​ ​ 38,739 ​ ​ 49,270 Other ​ ​ 792 ​ ​ 2,151 ​ ​ 3,143 ​ ​ 5,820 Total interest income ​ ​ 140,619 ​ ​ 173,818 ​ ​ 299,151 ​ ​ 346,379 Interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ ​ 8,583 ​ ​ 23,693 ​ ​ 24,183 ​ ​ 46,890 Short-term and long-term borrowings ​ ​ 4,214 ​ ​ 4,512 ​ ​ 8,463 ​ ​ 8,787 Total interest expense ​ ​ 12,797 ​ ​ 28,205 ​ ​ 32,646 ​ ​ 55,677 Net interest income ​ ​ 127,822 ​ ​ 145,613 ​ ​ 266,505 ​ ​ 290,702 Provision for credit losses ​ ​ 55,446 ​ ​ 3,870 ​ ​ 96,646 ​ ​ 9,550 Net interest income after provision for credit losses ​ ​ 72,376 ​ ​ 141,743 ​ ​ 169,859 ​ ​ 281,152 Noninterest income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service charges on deposit accounts ​ ​ 5,927 ​ ​ 8,123 ​ ​ 14,877 ​ ​ 16,183 Credit and debit card fees ​ ​ 10,870 ​ ​ 16,629 ​ ​ 25,819 ​ ​ 33,284 Other service charges and fees ​ ​ 7,912 ​ ​ 9,403 ​ ​ 16,451 ​ ​ 18,532 Trust and investment services income ​ ​ 8,664 ​ ​ 8,931 ​ ​ 18,255 ​ ​ 17,549 Bank-owned life insurance ​ ​ 4,432 ​ ​ 3,390 ​ ​ 6,692 ​ ​ 7,203 Investment securities (losses) gains, net ​ ​ ( 211 ) ​ ​ 21 ​ ​ ( 126 ) ​ ​ ( 2,592 ) Other ​ ​ 8,062 ​ ​ 2,276 ​ ​ 12,916 ​ ​ 5,686 Total noninterest income ​ ​ 45,656 ​ ​ 48,773 ​ ​ 94,884 ​ ​ 95,845 Noninterest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries and employee benefits ​ ​ 42,414 ​ ​ 42,185 ​ ​ 87,243 ​ ​ 87,045 Contracted services and professional fees ​ ​ 15,478 ​ ​ 14,303 ​ ​ 31,533 ​ ​ 27,948 Occupancy ​ ​ 7,302 ​ ​ 7,286 ​ ​ 14,545 ​ ​ 14,272 Equipment ​ ​ 5,207 ​ ​ 4,544 ​ ​ 9,915 ​ ​ 8,828 Regulatory assessment and fees ​ ​ 2,100 ​ ​ 2,149 ​ ​ 4,046 ​ ​ 3,596 Advertising and marketing ​ ​ 1,402 ​ ​ 1,980 ​ ​ 3,225 ​ ​ 3,946 Card rewards program ​ ​ 5,163 ​ ​ 7,664 ​ ​ 12,178 ​ ​ 14,396 Other ​ ​ 12,384 ​ ​ 13,179 ​ ​ 25,231 ​ ​ 25,882 Total noninterest expense ​ ​ 91,450 ​ ​ 93,290 ​ ​ 187,916 ​ ​ 185,913 Income before provision for income taxes ​ ​ 26,582 ​ ​ 97,226 ​ ​ 76,827 ​ ​ 191,084 Provision for income taxes ​ ​ 6,533 ​ ​ 24,793 ​ ​ 17,913 ​ ​ 48,727 Net income ​ $ 20,049 ​ $ 72,433 ​ $ 58,914 ​ $ 142,357 Basic earnings per share ​ $ 0.15 ​ $ 0.54 ​ $ 0.45 ​ $ 1.06 Diluted earnings per share ​ $ 0.15 ​ $ 0.54 ​ $ 0.45 ​ $ 1.06 Basic weighted-average outstanding shares ​ ​ 129,856,730 ​ ​ 134,420,380 ​ ​ 129,876,218 ​ ​ 134,655,217 Diluted weighted-average outstanding shares ​ ​ 130,005,195 ​ ​ 134,652,008 ​ ​ 130,163,722 ​ ​ 134,924,331 ​ The accompanying notes are an integral part of these unaudited interim consolidated financial statements. ​ ​ 2 Table of Contents FIRST HAWAIIAN, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, ​ June 30, (dollars in thousands) 2020 2019 2020 2019 Net income ​ $ 20,049 $ 72,433 ​ $ 58,914 $ 142,357 Other comprehensive income, net of tax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net change in pensions and other benefits ​ ​ — ​ ​ ( 594 ) ​ ​ ( 96 ) ​ ​ ( 594 ) Net change in investment securities ​ ​ 48,602 ​ ​ 47,364 ​ ​ 84,576 ​ ​ 100,805 Other comprehensive income ​ ​ 48,602 ​ ​ 46,770 ​ ​ 84,480 ​ ​ 100,211 Total comprehensive income ​ $ 68,651 ​ $ 119,203 ​ $ 143,394 ​ $ 242,568 ​ ​ ​ The accompanying notes are an integral part of these unaudited interim consolidated financial statements. ​ 3 Table of Contents FIRST HAWAIIAN, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, (dollars in thousands, except share amount) 2020 2019 Assets ​ ​ ​ ​ ​ ​ Cash and due from banks ​ $ 347,592 ​ $ 360,375 Interest-bearing deposits in other banks ​ ​ 1,507,630 ​ ​ 333,642 Investment securities, at fair value (amortized cost: $ 5,025,433 as of June 30, 2020 and $ 4,080,663 as of December 31, 2019) ​ ​ 5,135,775 ​ ​ 4,075,644 Loans held for sale ​ ​ 6,698 ​ ​ 904 Loans and leases ​ ​ 13,764,030 ​ ​ 13,211,650 Less: allowance for credit losses ​ ​ 192,120 ​ ​ 130,530 Net loans and leases ​ ​ 13,571,910 ​ ​ 13,081,120 ​ ​ ​ ​ ​ ​ ​ Premises and equipment, net ​ ​ 322,919 ​ ​ 316,885 Other real estate owned and repossessed personal property ​ ​ 446 ​ ​ 319 Accrued interest receivable ​ ​ 58,420 ​ ​ 45,239 Bank-owned life insurance ​ ​ 458,720 ​ ​ 453,873 Goodwill ​ ​ 995,492 ​ ​ 995,492 Mortgage servicing rights ​ ​ 11,595 ​ ​ 12,668 Other assets ​ ​ 576,518 ​ ​ 490,573 Total assets ​ $ 22,993,715 ​ $ 20,166,734 Liabilities and Stockholders' Equity ​ ​ ​ ​ ​ ​ Deposits: ​ ​ ​ ​ ​ ​ Interest-bearing ​ $ 12,481,543 ​ $ 10,564,922 Noninterest-bearing ​ ​ 6,880,091 ​ ​ 5,880,072 Total deposits ​ ​ 19,361,634 ​ ​ 16,444,994 Short-term borrowings ​ ​ 200,000 ​ ​ 400,000 Long-term borrowings ​ ​ 200,019 ​ ​ 200,019 Retirement benefits payable ​ ​ 138,624 ​ ​ 138,222 Other liabilities ​ ​ 391,541 ​ ​ 343,241 Total liabilities ​ ​ 20,291,818 ​ ​ 17,526,476 ​ ​ ​ ​ ​ ​ ​ Commitments and contingent liabilities (Note 13) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders' equity ​ ​ ​ ​ ​ ​ Common stock ($ 0.01 par value; authorized 300,000,000 shares; issued/outstanding: 140,140,542 / 129,866,898 as of June 30, 2020; issued/outstanding: 139,917,150 / 129,928,479 as of December 31, 2019) ​ ​ 1,401 ​ ​ 1,399 Additional paid-in capital ​ ​ 2,509,271 ​ ​ 2,503,677 Retained earnings ​ ​ 415,296 ​ ​ 437,072 Accumulated other comprehensive income (loss), net ​ ​ 52,731 ​ ​ ( 31,749 ) Treasury stock ( 10,273,644 shares as of June 30, 2020 and 9,988,671 shares as of December 31, 2019) ​ ​ ( 276,802 ) ​ ​ ( 270,141 ) Total stockholders' equity ​ ​ 2,701,897 ​ ​ 2,640,258 Total liabilities and stockholders' equity ​ $ 22,993,715 ​ $ 20,166,734 ​ The accompanying notes are an integral part of these unaudited interim consolidated financial statements. ​ ​ ​ 4 Table of Contents FIRST HAWAIIAN, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Retained ​ Comprehensive ​ Treasury ​ ​ ​ ​ (dollars in thousands, except share amounts) Shares Amount Capital Earnings Income Stock Total Balance as of March 31, 2020 ​ 129,827,968 ​ $ 1,401 ​ $ 2,506,477 ​ $ 429,323 ​ $ 4,129 ​ $ ( 276,645 ) ​ $ 2,664,685 ​ Net income ​ — ​ ​ — ​ ​ — ​ ​ 20,049 ​ ​ — ​ ​ — ​ ​ 20,049 ​ Cash dividends declared ($ 0.26 per share) ​ — ​ ​ — ​ ​ — ​ ​ ( 33,765 ) ​ ​ — ​ ​ — ​ ​ ( 33,765 ) ​ Equity-based awards ​ 38,930 ​ ​ — ​ ​ 2,794 ​ ​ ( 311 ) ​ ​ — ​ ​ ( 157 ) ​ ​ 2,326 ​ Other comprehensive income, net of tax ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 48,602 ​ ​ — ​ ​ 48,602 ​ Balance as of June 30, 2020 ​ 129,866,898 ​ $ 1,401 ​ $ 2,509,271 ​ $ 415,296 ​ $ 52,731 ​ $ ( 276,802 ) ​ $ 2,701,897 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Retained ​ Comprehensive ​ Treasury ​ ​ ​ ​ (dollars in thousands, except share amounts) Shares Amount Capital Earnings Income (Loss) Stock Total ​ Balance as of December 31, 2019 129,928,479 ​ $ 1,399 $ 2,503,677 $ 437,072 $ ( 31,749 ) $ ( 270,141 ) $ 2,640,258 ​ Cumulative-effect adjustment of a change in accounting principle, net of tax: ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326 ) , Measurement of Credit Losses on Financial Instruments ​ — ​ ​ — ​ ​ — ​ ​ ( 12,517 ) ​ ​ — ​ ​ — ​ ​ ( 12,517 ) ​ Net income ​ — ​ ​ — ​ ​ — ​ ​ 58,914 ​ ​ — ​ ​ — ​ ​ 58,914 ​ Cash dividends declared ($ 0.52 per share) ​ — ​ ​ — ​ ​ — ​ ​ ( 67,547 ) ​ ​ — ​ ​ — ​ ​ ( 67,547 ) ​ Equity-based awards ​ 156,178 ​ ​ 2 ​ ​ 5,594 ​ ​ ( 626 ) ​ ​ — ​ ​ ( 1,661 ) ​ ​ 3,309 ​ Common stock repurchased ​ ( 217,759 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 5,000 ) ​ ​ ( 5,000 ) ​ Other comprehensive income, net of tax ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 84,480 ​ ​ — ​ ​ 84,480 ​ Balance as of June 30, 2020 ​ 129,866,898 ​ $ 1,401 ​ $ 2,509,271 ​ $ 415,296 ​ $ 52,731 ​ $ ( 276,802 ) ​ $ 2,701,897 ​ ​ 5 Table of Contents FIRST HAWAIIAN, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Retained ​ Comprehensive ​ Treasury ​ ​ ​ ​ (dollars in thousands, except share amounts) Shares Amount Capital Earnings Loss Stock Total ​ Balance as of March 31, 2019 ​ 135,012,015 ​ $ 1,399 ​ $ 2,497,770 ​ $ 326,451 ​ $ ( 78,754 ) ​ $ ( 133,664 ) ​ $ 2,613,202 ​ Net income ​ — ​ ​ — ​ ​ — ​ ​ 72,433 ​ ​ — ​ ​ — ​ ​ 72,433 ​ Cash dividends declared ($ 0.26 per share) ​ — ​ ​ — ​ ​ — ​ ​ ( 34,916 ) ​ ​ — ​ ​ — ​ ​ ( 34,916 ) ​ Equity-based awards ​ 6,043 ​ ​ — ​ ​ 2,176 ​ ​ ( 220 ) ​ ​ — ​ ​ ( 4 ) ​ ​ 1,952 ​ Common stock repurchased ​ ( 1,509,846 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 40,000 ) ​ ​ ( 40,000 ) ​ Other comprehensive income, net of tax ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 46,770 ​ ​ — ​ ​ 46,770 ​ Balance as of June 30, 2019 ​ 133,508,212 ​ $ 1,399 ​ $ 2,499,946 ​ $ 363,748 ​ $ ( 31,984 ) ​ $ ( 173,668 ) ​ $ 2,659,441 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Retained ​ Comprehensive ​ Treasury ​ ​ ​ ​ (dollars in thousands, except share amounts) Shares Amount Capital Earnings Loss Stock Total ​ Balance as of December 31, 2018 ​ 134,874,302 ​ $ 1,397 ​ $ 2,495,853 ​ $ 291,919 ​ $ ( 132,195 ) ​ $ ( 132,135 ) ​ $ 2,524,839 ​ Net income ​ — ​ ​ — ​ ​ — ​ ​ 142,357 ​ ​ — ​ ​ — ​ ​ 142,357 ​ Cash dividends declared ($ 0.52 per share) ​ — ​ ​ — ​ ​ — ​ ​ ( 69,984 ) ​ ​ — ​ ​ — ​ ​ ( 69,984 ) ​ Equity-based awards ​ 143,756 ​ ​ 2 ​ ​ 4,093 ​ ​ ( 544 ) ​ ​ — ​ ​ ( 1,533 ) ​ ​ 2,018 ​ Common stock repurchased ​ ( 1,509,846 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 40,000 ) ​ ​ ( 40,000 ) ​ Other comprehensive income, net of tax ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 100,211 ​ ​ — ​ ​ 100,211 ​ Balance as of June 30, 2019 ​ 133,508,212 ​ $ 1,399 ​ $ 2,499,946 ​ $ 363,748 ​ $ ( 31,984 ) ​ $ ( 173,668 ) ​ $ 2,659,441 ​ ​ The accompanying notes are an integral part of these unaudited interim consolidated financial statements. ​ ​ 6 Table of Contents FIRST HAWAIIAN, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended ​ ​ June 30, (dollars in thousands) 2020 2019 Cash flows from operating activities ​ ​ ​ ​ ​ ​ Net income ​ $ 58,914 ​ $ 142,357 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ Provision for credit losses ​ ​ 96,646 ​ ​ 9,550 Depreciation, amortization and accretion, net ​ ​ 34,058 ​ ​ 32,959 Deferred (benefits) income taxes ​ ​ ( 13,786 ) ​ ​ 15,724 Stock-based compensation ​ ​ 5,596 ​ ​ 3,551 Other gains ​ ​ ( 33 ) ​ ​ ( 8 ) Originations of loans held for sale ​ ​ ( 123,331 ) ​ ​ ( 4,091 ) Proceeds from sales of loans held for sale ​ ​ 120,970 ​ ​ 4,343 Net gains on sales of loans originated for investment and held for sale ​ ​ ( 4,581 ) ​ ​ ( 35 ) Net losses on investment securities ​ ​ 126 ​ ​ 2,592 Change in assets and liabilities: ​ ​ ​ ​ ​ ​ Net decrease in other assets ​ ​ 18,272 ​ ​ 1,145 Net decrease in other liabilities ​ ​ ( 84,298 ) ​ ​ ( 63,844 ) Net cash provided by operating activities ​ ​ 108,553 ​ ​ 144,243 Cash flows from investing activities ​ ​ ​ ​ ​ ​ Available-for-sale securities: ​ ​ ​ ​ ​ ​ Proceeds from maturities and principal repayments ​ ​ 597,670 ​ ​ 322,954 Proceeds from calls and sales ​ ​ 644,703 ​ ​ 905,605 Purchases ​ ​ ( 2,195,832 ) ​ ​ ( 999,491 ) Other investments: ​ ​ ​ ​ ​ ​ Proceeds from sales ​ ​ 18,346 ​ ​ 4,854 Purchases ​ ​ ( 27,562 ) ​ ​ ( 12,693 ) Loans: ​ ​ ​ ​ ​ ​ Net (increase) decrease in loans and leases resulting from originations and principal repayments ​ ​ ( 698,069 ) ​ ​ 21,111 Proceeds from sales of loans originated for investment ​ ​ 132,011 ​ ​ — Purchases of loans ​ ​ ( 40,611 ) ​ ​ ( 222,816 ) Proceeds from bank-owned life insurance ​ ​ 1,845 ​ ​ 2,557 Purchases of premises, equipment and software ​ ​ ( 20,646 ) ​ ​ ( 16,269 ) Proceeds from sales of other real estate owned ​ ​ 316 ​ ​ 759 Other ​ ​ ( 1,951 ) ​ ​ ( 1,429 ) Net cash (used in) provided by investing activities ​ ​ ( 1,589,780 ) ​ ​ 5,142 Cash flows from financing activities ​ ​ ​ ​ ​ ​ Net increase (decrease) in deposits ​ ​ 2,916,640 ​ ​ ( 357,990 ) Repayment of short-term borrowings ​ ​ ( 200,000 ) ​ ​ — Dividends paid ​ ​ ( 67,547 ) ​ ​ ( 69,984 ) Stock tendered for payment of withholding taxes ​ ​ ( 1,661 ) ​ ​ ( 1,533 ) Common stock repurchased ​ ​ ( 5,000 ) ​ ​ ( 40,000 ) Net cash provided by (used in) financing activities ​ ​ 2,642,432 ​ ​ ( 469,507 ) Net increase (decrease) in cash and cash equivalents ​ ​ 1,161,205 ​ ​ ( 320,122 ) Cash and cash equivalents at beginning of period ​ ​ 694,017 ​ ​ 1,003,637 Cash and cash equivalents at end of period ​ $ 1,855,222 ​ $ 683,515 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures ​ ​ ​ ​ ​ ​ Interest paid ​ $ 37,370 ​ $ 51,421 Income taxes paid, net of income tax refunds ​ ​ 4,242 ​ ​ 41,593 Noncash investing and financing activities: ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets obtained in exchange for new lease obligations ​ ​ 1,965 ​ ​ 680 Transfers from loans and leases to loans held for sale ​ ​ 130,863 ​ ​ — Obligation to fund low-income housing partnerships ​ ​ 11,369 ​ ​ 32,897 ​ The accompanying notes are an integral part of these unaudited interim consolidated financial statements. ​ 7 Table of Contents FIRST HAWAIIAN, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ 1. Organization and Basis of Presentation ​ First Hawaiian, Inc. (“FHI” or the “Parent”), a bank holding company, owns 100 % of the outstanding common stock of First Hawaiian Bank (“FHB” or the “Bank”), its only direct, wholly owned subsidiary. FHB offers a comprehensive suite of banking services, including loans, deposit products, wealth management, insurance, trust, retirement planning, credit card and merchant processing services, to consumer and commercial customers. ​ The accompanying unaudited interim consolidated financial statements of First Hawaiian, Inc. and Subsidiary (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. ​ The accompanying unaudited interim consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. ​ In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair presentation of the interim period consolidated financial information, have been made. Results of operations for interim periods are not necessarily indicative of results to be expected for the entire year. Intercompany account balances and transactions have been eliminated in consolidation. ​ Use of Estimates in the Preparation of Financial Statements ​ The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events, actual results may differ from these estimates. ​ Investment Securities ​ As of June 30, 2020 and December 31, 2019, investment securities were comprised of debt, mortgage-backed securities and collateralized mortgage obligations issued by the U.S. Government, its agencies and government-sponsored enterprises. The Company amortizes premiums and accretes discounts using the interest method over the expected lives of the individual securities. Premiums on callable debt securities are amortized to their earliest call date. All investment securities transactions are recorded on a trade-date basis. All of the Company’s investment securities were categorized as available-for-sale as of June 30, 2020 and December 31, 2019. Available-for-sale investment securities are reported at fair value, with unrealized gains and losses reported in accumulated other comprehensive income. Gains and losses realized on sales of investment securities are determined using the specific identification method. ​ For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates at the individual security level whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. ​ 8 Table of Contents Changes in the allowance for credit losses, if any, are recorded as a provision for (or reversal of) credit losses. Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale investment security is confirmed or when either of the criteria regarding intent or requirement to sell is met. As noted above, as of June 30, 2020, the Company’s available-for-sale investment securities were comprised entirely of debt, mortgage-backed securities and collateralized mortgage obligations issued by the U.S. Government, its agencies and government-sponsored enterprises. Management has concluded that the long history with no credit losses from these issuers indicates an expectation that nonpayment of the amortized cost basis is zero . The Company’s available-for-sale investment securities are explicitly or implicitly fully guaranteed by the U.S. government. The U.S. government can print its own currency and its currency is routinely held by central banks and other major financial institutions. The dollar is used in international commerce, and commonly is viewed as a reserve currency, all of which qualitatively indicates that historical credit loss information should be minimally affected by current conditions and reasonable and supportable forecasts. Thus, the Company has not recorded an allowance for credit losses for its available-for-sale debt securities as of June 30, 2020. ​ Accrued interest receivable related to available-for-sale investment securities was $ 9.7 million as of June 30, 2020 and is recorded separately from the amortized cost basis of investment securities on the Company’s interim consolidated balance sheet. ​ Loans and Leases ​ Loans are reported at amortized cost which includes the principal amount outstanding, net of deferred loan fees and costs and cumulative net charge-offs. Interest income is recognized on an accrual basis. Loan origination fees, certain direct costs and unearned discounts and premiums, if any, are deferred and are generally accreted or amortized into interest income as yield adjustments using the interest method over the contractual life of the loan. Other credit-related fees are recognized as fee income, a component of noninterest income, when earned. ​ Direct financing leases are carried at the aggregate of lease payments receivable plus the estimated residual value of leased property, less unearned income. Unearned income on direct financing leases is amortized over the lease term by methods that approximate the interest method. Residual values on leased assets are periodically reviewed for impairment. ​ Accrued interest receivable related to loans and leases was $ 48.7 million as of June 30, 2020 and is recorded separately from the amortized cost basis of loans and leases on the Company’s interim consolidated balance sheet. ​ Nonaccrual Loans and Leases ​ The Company generally places a loan or lease on nonaccrual status when management believes that collection of principal or interest has become doubtful or when a loan or lease becomes 90 days past due as to principal or interest, unless it is well secured and in the process of collection. A full or partial charge-off is recorded in the period in which the loan or lease is deemed uncollectible. When the Company places a loan or lease on nonaccrual status, previously accrued and uncollected interest is concurrently reversed against interest income. When the Company receives an interest payment on a nonaccrual loan or lease, the payment is applied as a reduction of the principal balance. Nonaccrual loans and leases are generally returned to accrual status when they become current as to principal and interest and future payments are reasonably assured. ​ Allowance for Credit Losses ​ The allowance for credit losses for loans and leases (the “ACL”) is a valuation account that is deducted from the amortized cost basis of loans and leases to present the net amount expected to be collected from loans and leases. Loans and leases are charged-off against the ACL when management believes the uncollectibility of a loan or lease balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The Company’s ACL and the reserve for unfunded commitments under the Current Expected Credit Losses (“CECL”) approach utilizes both quantitative and qualitative components. The Company’s methodology utilizes a quantitative model based on a single forward-looking macroeconomic forecast. The quantitative estimation is overlaid with qualitative adjustments to account for current conditions and forward-looking events not captured in the quantitative model. Qualitative adjustments that are considered include adjustments for regulatory determinants, model limitations, model maturity, and other current or forecasted events that are not captured in the Company’s historical loss experience. ​ 9 Table of Contents The Company generally evaluates loans and leases on a collective or pool basis when similar risk characteristics exist. However, loans and leases that do not share similar risk characteristics are evaluated on an individual basis. Such loans and leases evaluated individually are excluded from the collective evaluation. Individually assessed loans are measured for estimated credit loss (“ECL”) based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral, less estimated selling costs, if the loan is collateral-dependent. ​ Management reviews relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts about the future. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency levels, or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors. ​ The Company utilizes a Probability of Default (“PD”)/Loss Given Default (“LGD”) framework to estimate the ACL and the reserve for unfunded commitments. The PD represents the percentage expectation to default, measured by assessing loans and leases that migrate to default status (i.e., nonaccrual status, troubled debt restructurings (“TDRs”), 90 days or more past due, partial or full charge-offs or bankruptcy). LGD is defined as the percentage of the exposure at default (“EAD”) lost at the time of default, net of any recoveries, and will be unique to each of the collateral types securing the Company’s loans. PD and LGD’s are based on past experience of the Company and management’s expectations of the future. The ECL on loans and leases is calculated by taking the product of the credit exposure, lifetime default probability (“LDP”) and the LGD. ​ The ECL model is applied to current credit exposures at the account level, using assumptions calibrated at the portfolio segment level using internal historical loan and lease level data. The Company estimates the default risk of a credit exposure over the remaining life of each account using a transition probability matrix approach which captures both the average rate of up/down-grade and default transitions, as well as withdrawal rates which capture the historical rate of exposure decline due to loan and lease amortization and prepayment. To apply the transition matrices, each credit exposure’s remaining life is split into two time segments. The first time segment is for the reasonable and supportable forecast period over which the transition matrices which are applied have been adjusted to incorporate current and forecasted conditions over that period. Management has determined that using a one year time horizon for the reasonable and supportable forecast period for all classes of loans and leases is a reasonable forecast horizon given the difficulty in predicting future economic conditions with a high degree of certainty. The second time segment is the reversion period from the end of the reasonable and supportable forecast period to the maturity of the exposure, over which long-run average transition matrices are applied. Management elected to use an immediate reversion to the mean approach. Lifetime loss rates are applied against the amortized cost basis of loans and leases and unfunded commitments to estimate the ACL and the reserve for unfunded commitments. ​ On a quarterly basis, management convenes the Bank’s forecasting team which is responsible for qualitatively forecasting the economic outlook over the reasonable and supportable forecast period within the context of forecasting credit losses. Management reviews local and national economic forecasts and other pertinent materials to inform the team in establishing their best estimate of the economic outlook over the reasonable and supportable forecast period. The team considers unemployment rates, gross domestic product, personal income per capita, visitor arrivals and expenditures and home prices along with other relevant information. The results from the Bank’s forecasting team dictates the direction of the economic forecast compared to current economic conditions (i.e., better or worse) and the magnitude of the forecast adjustment (e.g., mild, medium or severe). The direction of the economic forecast and magnitude are used to qualitatively adjust the modifier that is applied to the long-run default rates over the reasonable and supportable forecast period. ​ The Company has identified three portfolio segments in estimating the ACL: commercial, residential real estate and consumer lending. The Company’s commercial portfolio segment is comprised of four distinct classes: commercial and industrial loans, commercial real estate loans, construction loans and lease financing. The key risk drivers related to this portfolio segment include risk rating, collateral type, and remaining maturity. The Company’s residential real estate portfolio segment is comprised of two distinct classes: residential real estate loans and home equity lines of credit. Specific risk characteristics related to this portfolio include the value of the underlying collateral, credit score and remaining maturity. Finally, the Company’s consumer portfolio segment is not further segmented, but consists primarily of automobile loans, credit cards and other installment loans. Automobile loans constitute the majority of this segment and are monitored using credit scores, collateral values and remaining maturity. The remainder of the consumer portfolio is predominantly unsecured. ​ 10 Table of Contents Reserve for Unfunded Commitments ​ The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The reserve for unfunded commitments is adjusted through the provision for credit losses. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. ​ Accounting Standards Adopted in 2020 ​ In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments . This guidance eliminates the probable recognition threshold for credit losses on financial assets measured at amortized cost. For loans and held-to-maturity debt securities, this guidance requires a CECL approach to determine an ACL. CECL requires loss estimates for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts. CECL also applies to off-balance sheet (“OBS”) credit exposures (e.g., unfunded loan commitments), except for unconditionally cancellable commitments. In addition, this guidance modifies the other-than-temporary-impairment model for available-for-sale debt securities to require an allowance for credit losses instead of a direct write-down, which allows for a reversal of credit losses in future periods. In April 2019, the FASB also issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments . As it relates to CECL, this guidance amended certain provisions contained in ASU No. 2016-13, particularly with regards to the inclusion of accrued interest in the definition of amortized cost, as well as clarifying that extension and renewal options that are not unconditionally cancelable by the entity that are included in the original or modified contract should be considered in the entity’s determination of expected credit losses. As permitted by ASU No. 2016-13, the Company elected the practical expedient to use the fair value of collateral at the reporting date when recording the net carrying amount of the asset and determining the ACL for a financial asset for which the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Company’s assessment as of the reporting date. Furthermore, as permitted by ASU No. 2019-04, the Company made accounting policy elections to not measure an ACL on accrued interest receivable, write-off accrued interest receivable by reversing interest income and present accrued interest receivable separately from the related financial asset on the balance sheet. ​ The implementation of CECL required significant operational changes, particularly in data collection and analysis. The Company formed a working group comprised of teams from different disciplines, including credit, finance and information technology, to evaluate the requirements of the new standard and the impact it will have on the Company’s existing processes. The Company also engaged a software vendor and had run several CECL parallel run productions during 2019. The Company adopted the provisions of ASU No. 2016-13 and related amendments by recording a cumulative effect adjustment to retained earnings as of January 1, 2020. Note that the Company did not opt to delay the implementation of CECL requirements as permitted under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which allows entities to delay implementation until the earlier of (1) the date on which the national emergency concerning the Coronavirus Disease 2019 (“COVID-19”) terminates, or (2) December 31, 2020. ​ The following table presents the impact of adopting ASC Topic 326 as of January 1, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prior to the ​ Adjustment ​ ​ ​ ​ Adoption of ​ to Adopt ​ After Adoption of (dollars in thousands) ​ ASC Topic 326 ​ ASC Topic 326 ​ ASC Topic 326 Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for Credit Losses - Loans and Leases ​ $ 130,530 ​ $ 770 ​ $ 131,300 Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Reserve for Unfunded Commitments (1) ​ ​ 600 ​ ​ 16,300 ​ ​ 16,900 Pretax Cumulative Effect Adjustment of a Change in Accounting Principle ​ ​ ​ ​ ​ 17,070 ​ ​ ​ Less: Income Taxes ​ ​ ​ ​ ​ ( 4,553 ) ​ ​ ​ Cumulative-Effect Adjustment of a Change in Accounting Principle, Net of Tax ​ ​ ​ ​ $ 12,517 ​ ​ ​ (1) The reserve for unfunded commitments is included as a component of other liabilities in the Company's interim consolidated balance sheets. ​ 11 Table of Contents In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment . This guidance simplifies the subsequent measurement of goodwill by eliminating Step 2 from the current two-step goodwill impairment test. This guidance provides that a goodwill impairment test be conducted by comparing the fair value of a reporting unit with its carrying amount. Entities are to recognize an impairment charge for goodwill by the amount by which the carrying amount exceeds the reporting unit’s fair value. Entities will continue to have the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted the provisions of ASU No. 2017-04 on January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements. ​ In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement . This guidance is a part of the FASB’s disclosure framework project to improve disclosure effectiveness. This guidance eliminates certain disclosure requirements for fair value measurements: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, an entity’s policy for the timing of transfers between levels of the fair value hierarchy and an entity’s valuation processes for Level 3 fair value measurements. This guidance also adds new disclosure requirements for public entities: changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements of instruments held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop recurring and nonrecurring Level 3 fair value measurements, including how the weighted average is calculated. Furthermore, this guidance modifies certain requirements which will involve disclosing: transfers into and out of Level 3 of the fair value hierarchy, purchases and issuances of Level 3 assets and liabilities, and information about the measurement uncertainty of Level 3 fair value measurements as of the reporting date. The Company adopted the provisions of ASU No. 2018-13 on January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements. See “Note 17. Fair Value” for required disclosures related to this new guidance. ​ Recent Accounting Pronouncements ​ The following ASU has been issued by the FASB and is applicable to the Company in future reporting periods. ​ In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The relief provided by this guidance is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The guidance provides that changes in contract terms that are made to effect the reference rate reform transition are considered related to the replacement of a reference rate if they are not the result of a business decision that is separate from or in addition to changes to the terms of a contract to effect that transition. The guidance also provides an optional expedient for loans that would permit the Company to account for the modification as if it was only minor and not an extinguishment in accordance with GAAP. For leases, the guidance provides an optional expedient for modifications to not trigger reassessment of lease classification and the discount rate or require the entity to remeasure lease payments or perform the other reassessments or remeasurements that would otherwise be triggered by a modification under GAAP when the modification is not accounted for as a separate contract. The optional amendments in ASU No. 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. As of June 30, 2020, the Company did not elect any of the optional expedients provided for by this guidance. The Company is in the process of evaluating the optional expedients and the impact that this new guidance may have on the Company’s consolidated financial statements. ​ 2. Investment Securities ​ As of June 30, 2020 and December 31, 2019, investment securities consisted predominantly of the following investment categories: ​ U.S. Treasury and debt securities – includes U.S. Treasury notes and debt securities issued by agencies and government-sponsored enterprises. ​ Mortgage-backed securities – includes securities backed by notes or receivables secured by mortgage assets with cash flows based on actual or scheduled payments. ​ Collateralized mortgage obligations – includes securities backed by a pool of mortgages with cash flows distributed based on certain rules rather than pass through payments. 12 Table of Contents ​ As of June 30, 2020 and December 31, 2019, all of the Company’s investment securities were classified as available-for-sale. Amortized cost and fair value of securities as of June 30, 2020 and December 31, 2019 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2020 ​ December 31, 2019 ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair ​ Amortized ​ Unrealized ​ Unrealized ​ Fair (dollars in thousands) Cost Gains Losses Value Cost Gains Losses Value U.S. Treasury and government agency debt securities ​ $ 94,414 ​ $ 504 ​ $ — ​ $ 94,918 ​ $ 29,832 ​ $ 56 ​ $ — ​ $ 29,888 Government-sponsored enterprises debt securities ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 101,697 ​ ​ 19 ​ ​ ( 277 ) ​ ​ 101,439 Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential - Government agency ​ ​ 224,764 ​ ​ 7,853 ​ ​ — ​ ​ 232,617 ​ ​ 290,131 ​ ​ 2,224 ​ ​ ( 1,146 ) ​ ​ 291,209 Residential - Government-sponsored enterprises ​ ​ 375,118 ​ ​ 15,794 ​ ​ — ​ ​ 390,912 ​ ​ 395,039 ​ ​ 6,126 ​ ​ ( 1,673 ) ​ ​ 399,492 Commercial - Government agency ​ ​ 612,811 ​ ​ 17,324 ​ ​ ( 456 ) ​ ​ 629,679 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Commercial - Government-sponsored enterprises ​ ​ 312,293 ​ ​ 10,703 ​ ​ — ​ ​ 322,996 ​ ​ 101,798 ​ ​ 555 ​ ​ ( 634 ) ​ ​ 101,719 Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government agency ​ ​ 1,887,701 ​ ​ 39,538 ​ ​ ( 655 ) ​ ​ 1,926,584 ​ ​ 2,390,143 ​ ​ 7,483 ​ ​ ( 16,348 ) ​ ​ 2,381,278 Government-sponsored enterprises ​ ​ 1,518,332 ​ ​ 20,194 ​ ​ ( 457 ) ​ ​ 1,538,069 ​ ​ 772,023 ​ ​ 2,505 ​ ​ ( 3,909 ) ​ ​ 770,619 Total available-for-sale securities ​ $ 5,025,433 ​ $ 111,910 ​ $ ( 1,568 ) ​ $ 5,135,775 ​ $ 4,080,663 ​ $ 18,968 ​ $ ( 23,987 ) ​ $ 4,075,644 ​ Proceeds from calls and sales of investment securities were $ 26.7 million and $ 539.5 million, respectively, for the three months ended June 30, 2020, and $ 101.7 million and $ 543.0 million, respectively, for the six months ended June 30, 2020. Proceeds from calls and sales of investment securities were nil and $ 42.6 million, respectively, for the three months ended June 30, 2019 and nil and $ 905.6 million, respectively, for the six months ended June 30, 2019. The Company recorded gross realized gains of $ 0.5 million and gross realized losses of $ 0.8 million for the three months ended June 30, 2020 and gross realized gains of $ 0.6 million and gross realized losses of $ 0.8 million for the six months ended June 30, 2020. The Company recorded gross realized gains of $ 0.1 million and gross realized losses of $ 0.1 million for the three months ended June 30, 2019 and gross realized gains of $ 0.1 million and gross realized losses of $ 2.7 million for the six months ended June 30, 2019. The income tax benefit related to the Company’s net realized loss on the sale of investment securities was $ 0.1 million and nil , respectively, during the three and six months ended June 30, 2020. The income tax expense related to the net realized gains on the sale of investment securities was nil for the three months ended June 30, 2019. The income tax benefit related to the Company's net realized loss on the sale of investment securities was $ 0.7 million for the six months ended June 30, 2019. Gains and losses realized on sales of securities are determined using the specific identification method. ​ Interest income from taxable investment securities was $ 17.5 million and $ 24.8 million, respectively, for the three months ended June 30, 2020 and 2019, and $ 38.7 million and $ 49.3 million, respectively, for the six months ended June 30, 2020 and 2019. Interest income from non-taxable investment securities was nil during both the three and six months ended June 30, 2020 and 2019. ​ The amortized cost and fair value of debt securities issued by the U.S. Treasury and government agencies as of June 30, 2020, by contractual maturity, are shown below. Mortgage-backed securities and collateralized mortgage obligations are disclosed separately in the table below as remaining expected maturities will differ from contractual maturities as borrowers have the right to prepay obligations. ​ 13 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2020 ​ ​ ​ Amortized ​ Fair ​ (dollars in thousands) Cost Value Due in one year or less ​ $ — ​ $ — ​ Due after one year through five years ​ ​ 30,442 ​ ​ 30,941 ​ Due after five years through ten years ​ ​ — ​ ​ — ​ Due after ten years ​ ​ 63,972 ​ ​ 63,977 ​ ​ ​ ​ 94,414 ​ ​ 94,918 ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ Residential - Government agency ​ ​ 224,764 ​ ​ 232,617 ​ Residential - Government-sponsored enterprises ​ ​ 375,118 ​ ​ 390,912 ​ Commercial - Government agency ​ ​ 612,811 ​ ​ 629,679 ​ Commercial - Government-sponsored enterprises ​ ​ 312,293 ​ ​ 322,996 ​ Total mortgage-backed securities ​ ​ 1,524,986 ​ ​ 1,576,204 ​ Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ Government agency ​ ​ 1,887,701 ​ ​ 1,926,584 ​ Government-sponsored enterprises ​ ​ 1,518,332 ​ ​ 1,538,069 ​ Total collateralized mortgage obligations ​ ​ 3,406,033 ​ ​ 3,464,653 ​ Total available-for-sale securities ​ $ 5,025,433 ​ $ 5,135,775 ​ ​ At June 30, 2020, pledged securities totaled $ 3.2 billion, of which $ 3.0 billion was pledged to secure public deposits and $ 237.2 million was pledged to secure other financial transactions. At December 31, 2019, pledged securities totaled $ 1.8 billion, of which $ 1.5 billion was pledged to secure public deposits and $ 242.3 million was pledged to secure other financial transactions. ​ The Company held no securities of any single issuer, other than debt securities issued by the U.S. government, government agencies and government-sponsored enterprises, taken in the aggregate, which were in excess of 10% of stockholders’ equity as of June 30, 2020 or December 31, 2019. ​ The following table presents the unrealized gross losses and fair values of securities in the available-for-sale portfolio by length of time that the 16 and 118 individual securities in each category have been in a continuous loss position as of June 30, 2020 and December 31, 2019, respectively. The unrealized losses on investment securities were attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. At June 30, 2020, the Company did not have any securities with the intent to sell and determined it was more likely than not that the Company would not be required to sell the securities prior to recovery of the amortized cost basis. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time in Continuous Loss as of June 30, 2020 ​ ​ Less Than 12 Months ​ 12 Months or More ​ Total ​ ​ Unrealized ​ ​ ​ ​ Unrealized ​ ​ ​ ​ Unrealized ​ ​ ​ (dollars in thousands) Losses Fair Value Losses Fair Value Losses Fair Value Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial - Government agency ​ $ ( 456 ) ​ $ 90,834 ​ $ — ​ $ — ​ $ ( 456 ) ​ $ 90,834 Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government agency ​ ​ ( 603 ) ​ ​ 200,395 ​ ​ ( 52 ) ​ ​ 9,212 ​ ​ ( 655 ) ​ ​ 209,607 Government-sponsored enterprises ​ ​ ( 430 ) ​ ​ 124,283 ​ ​ ( 27 ) ​ ​ 8,813 ​ ​ ( 457 ) ​ ​ 133,096 Total available-for-sale securities with unrealized losses ​ $ ( 1,489 ) ​ $ 415,512 ​ $ ( 79 ) ​ $ 18,025 ​ $ ( 1,568 ) ​ $ 433,537 ​ 14 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time in Continuous Loss as of December 31, 2019 ​ ​ Less Than 12 Months ​ 12 Months or More ​ Total ​ ​ Unrealized ​ ​ ​ ​ Unrealized ​ ​ ​ ​ Unrealized ​ ​ ​ (dollars in thousands) Losses Fair Value Losses Fair Value Losses Fair Value Government-sponsored enterprises debt securities ​ $ ( 277 ) ​ $ 49,716 ​ $ — ​ $ — ​ $ ( 277 ) ​ $ 49,716 Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential - Government agency ​ ​ — ​ ​ — ​ ​ ( 1,146 ) ​ ​ 109,614 ​ ​ ( 1,146 ) ​ ​ 109,614 Residential - Government-sponsored enterprises ​ ​ ( 115 ) ​ ​ 76,481 ​ ​ ( 1,558 ) ​ ​ 109,025 ​ ​ ( 1,673 ) ​ ​ 185,506 Commercial - Government-sponsored enterprises ​ ​ ( 634 ) ​ ​ 38,062 ​ ​ — ​ ​ — ​ ​ ( 634 ) ​ ​ 38,062 Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government agency ​ ​ ( 8,049 ) ​ ​ 969,762 ​ ​ ( 8,299 ) ​ ​ 565,764 ​ ​ ( 16,348 ) ​ ​ 1,535,526 Government-sponsored enterprises ​ ​ ( 583 ) ​ ​ 180,785 ​ ​ ( 3,326 ) ​ ​ 209,752 ​ ​ ( 3,909 ) ​ ​ 390,537 Total available-for-sale securities with unrealized losses ​ $ ( 9,658 ) ​ $ 1,314,806 ​ $ ( 14,329 ) ​ $ 994,155 ​ $ ( 23,987 ) ​ $ 2,308,961 ​ Visa Class B Restricted Shares ​ In 2008, the Company received 394,000 Visa Class B restricted shares as part of Visa’s IPO. Visa Class B restricted shares are not currently convertible to publicly traded Visa Class A common shares, and only transferable in limited circumstances, until the settlement of certain litigation which are indemnified by Visa members, including the Company. As there are existing transfer restrictions and the outcome of the aforementioned litigation is uncertain, these shares were included in the consolidated balance sheets at their historical cost of $ 0 . ​ In 2016, the Company recorded a $ 22.7 million net realized gain related to the sale of 274,000 Visa Class B restricted shares. Concurrent with the sale of the Visa Class B restricted shares, the Company entered into an agreement with the buyer that requires payment to the buyer in the event Visa reduces each member bank’s Class B conversion rate to unrestricted Class A common shares. On June 28, 2018, Visa additionally funded its litigation escrow account, thereby reducing each member bank’s Class B conversion rate to unrestricted Class A common shares. Accordingly, on July 5, 2018, Visa announced a decrease in conversion rate from 1.6483 to 1.6298 , effective June 28, 2018. In July 2018, the Company made a payment of approximately $ 0.7 million to the buyer as a result of the reduction in the Visa Class B conversion rate. On September 27, 2019, Visa additionally funded its litigation escrow account, thereby further reducing each member bank’s Class B conversion rate to unrestricted Class A common shares. Accordingly, on September 30, 2019, Visa announced a decrease in conversion rate from 1.6298 to 1.6228 , effective September 27, 2019. In October 2019, the Company made a payment of approximately $ 0.3 million to the buyer as a result of the reduction in the Visa Class B conversion rate. See “Note 12. Derivative Financial Instruments” for more information. ​ The Company held approximately 120,000 Visa Class B restricted shares as of both June 30, 2020 and December 31, 2019. These shares continued to be carried at $ 0 cost basis as of both June 30, 2020 and December 31, 2019. ​ 3. Loans and Leases ​ As of June 30, 2020 and December 31, 2019, loans and leases were comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, (dollars in thousands) 2020 2019 Commercial and industrial ​ $ 3,423,708 ​ $ 2,743,242 Commercial real estate ​ ​ 3,423,499 ​ ​ 3,463,953 Construction ​ ​ 617,935 ​ ​ 519,241 Residential: ​ ​ ​ ​ ​ ​ Residential mortgage ​ ​ 3,691,950 ​ 3,768,936 Home equity line ​ ​ 876,491 ​ ​ 893,239 Total residential ​ 4,568,441 ​ ​ 4,662,175 Consumer ​ ​ 1,492,160 ​ ​ 1,620,556 Lease financing ​ ​ 238,287 ​ ​ 202,483 Total loans and leases ​ $ 13,764,030 ​ $ 13,211,650 ​ Outstanding loan balances are reported net of deferred loan costs and fees of $ 15.5 million and $ 41.0 million at June 30, 2020 and December 31, 2019, respectively. ​ 15 Table of Contents As of June 30, 2020, residential real estate loans totaling $ 2.9 billion were pledged to collateralize the Company’s borrowing capacity at the Federal Home Loan Bank of Des Moines (“FHLB”), and consumer, commercial and industrial and commercial real estate loans totaling $ 1.8 billion were pledged to collateralize the Company’s borrowing capacity at the Federal Reserve Bank of San Francisco (“FRB”). As of December 31, 2019, residential real estate loans totaling $ 2.9 billion were pledged to collateralize the Company’s borrowing capacity at the FHLB, and consumer, commercial and industrial and commercial real estate loans totaling $ 953.2 million were pledged to collateralize the Company’s borrowing capacity at the FRB. Residential real estate loans collateralized by properties that were in the process of foreclosure totaled $ 3.1 million and $ 4.1 million as of June 30, 2020 and December 31, 2019, respectively. ​ In the course of evaluating the credit risk presented by a customer and the pricing that will adequately compensate the Company for assuming that risk, management may require a certain amount of collateral support. The type of collateral held varies, but may include accounts receivable, inventory, land, buildings, equipment, income-producing commercial properties and residential real estate. The Company applies the same collateral policy for loans whether they are funded immediately or on a delayed basis. The loan and lease portfolio is principally located in Hawaii and, to a lesser extent, on the U.S. Mainland, Guam and Saipan. The risk inherent in the portfolio depends upon both the economic strength and stability of the state or territories, which affects property values, and the financial strength and creditworthiness of the borrowers. ​ 4. Allowance for Credit Losses ​ The Company maintains an ACL that is deducted from the amortized cost basis of loans and leases to present the net carrying value of loans and leases expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount of loans and leases. ​ The Company also maintains an estimated reserve for unfunded commitments on the unaudited interim consolidated balance sheets. The reserve for unfunded commitments is reduced in the period in which the OBS financial instruments expire, loan funding occurs, or is otherwise settled. ​ In response to the COVID-19 pandemic, on March 27, 2020, the CARES Act was signed into law. The CARES Act creates a forbearance program for federally backed mortgage loans, protects borrowers from negative credit reporting due to loan accommodations related to the National Emergency, and provides financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. Financial institutions accounting for eligible loans under the CARES Act are not required to report such loans as TDRs in accordance with GAAP. In addition, Interagency Statements were issued on March 22, 2020 and April 7, 2020 to encourage financial institutions to work prudently with borrowers and to describe the agencies’ interpretation of how current accounting rules under GAAP apply to certain COVID-19 related modifications. The agencies confirmed with the FASB that short-term modifications (e.g., six months or less) for payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant and made on a good faith basis in response to borrowers impacted by COVID-19 who were current prior to any relief are not TDRs under GAAP. The agencies also confirmed that these short-term modifications should not be reported as being on nonaccrual status and should not be considered past due during the period of the deferral. The Company has adopted the provisions of both the CARES Act and Interagency Statements. The Company is first applying the CARES Act guidance in determining if certain loan modifications are not required to be reported as TDRs. If the loan modification does not qualify under the CARES Act, then the Interagency Statement guidance is applied. The interim consolidated financial information below reflects the application of this guidance. ​ 16 Table of Contents Rollforward of the Allowance for Credit Losses ​ The following presents the activity in the ACL by class of loans and leases for the three and six months ended June 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2020 ​ ​ ​ Commercial Lending ​ Residential Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ Home ​ ​ ​ ​ ​ ​ ​ ​ ​ and ​ Real ​ ​ ​ Lease ​ Residential ​ Equity ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) Industrial Estate Construction Financing Mortgage Line Consumer Total Allowance for credit losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ 20,884 ​ $ 42,838 ​ $ 8,824 ​ $ 851 ​ $ 30,021 ​ $ 6,556 ​ $ 56,039 ​ $ 166,013 ​ Charge-offs ​ ​ ( 13,974 ) ​ ​ ( 2,723 ) ​ ​ ( 379 ) ​ ​ — ​ ​ ( 14 ) ​ ​ — ​ ​ ( 8,907 ) ​ ​ ( 25,997 ) ​ Recoveries ​ ​ 100 ​ ​ — ​ ​ 30 ​ ​ — ​ ​ 17 ​ ​ 8 ​ ​ 2,456 ​ ​ 2,611 ​ Increase (decrease) in Provision ​ ​ 14,289 ​ ​ 13,007 ​ ​ ( 3,199 ) ​ ​ 2,986 ​ ​ 3,850 ​ ​ 1,071 ​ ​ 17,489 ​ ​ 49,493 ​ Balance at end of period ​ $ 21,299 ​ $ 53,122 ​ $ 5,276 ​ $ 3,837 ​ $ 33,874 ​ $ 7,635 ​ $ 67,077 ​ $ 192,120 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 2020 ​ ​ ​ Commercial Lending ​ Residential Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ Home ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ and ​ Real ​ ​ ​ Lease ​ Residential ​ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) Industrial Estate Construction Financing Mortgage Line Consumer Unallocated Total Allowance for credit losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ 28,975 ​ $ 22,325 ​ $ 4,844 ​ $ 424 ​ $ 29,303 ​ $ 9,876 ​ $ 34,644 ​ $ 139 ​ $ 130,530 ​ Adoption of ASU No. 2016-13 ​ ​ ( 16,105 ) ​ ​ 10,559 ​ ​ ( 1,803 ) ​ ​ 207 ​ ​ ( 2,793 ) ​ ​ ( 4,731 ) ​ ​ 15,575 ​ ​ ( 139 ) ​ ​ 770 ​ Charge-offs ​ ​ ( 14,175 ) ​ ​ ( 2,723 ) ​ ​ ( 379 ) ​ ​ — ​ ​ ( 14 ) ​ ​ ( 8 ) ​ ​ ( 17,504 ) ​ ​ — ​ ​ ( 34,803 ) ​ Recoveries ​ ​ 320 ​ ​ — ​ ​ 140 ​ ​ — ​ ​ 152 ​ ​ 130 ​ ​ 4,539 ​ ​ — ​ ​ 5,281 ​ Increase in Provision ​ ​ 22,284 ​ ​ 22,961 ​ ​ 2,474 ​ ​ 3,206 ​ ​ 7,226 ​ ​ 2,368 ​ ​ 29,823 ​ ​ — ​ ​ 90,342 ​ Balance at end of period ​ $ 21,299 ​ $ 53,122 ​ $ 5,276 ​ $ 3,837 ​ $ 33,874 ​ $ 7,635 ​ $ 67,077 ​ $ — ​ $ 192,120 ​ ​ The following presents the activity in the ACL by class of loans and leases for the three and six months ended June 30, 2019, presented in accordance with Topic 310, Receivables : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2019 ​ ​ ​ Commercial Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ and ​ Real ​ ​ ​ Lease ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) Industrial Estate Construction Financing Residential Consumer Unallocated Total Allowance for credit losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ 31,793 ​ $ 21,197 ​ $ 5,381 ​ $ 411 ​ $ 44,911 ​ $ 35,099 ​ $ 2,754 ​ $ 141,546 ​ Charge-offs ​ ​ ( 2,000 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 7,505 ) ​ ​ — ​ ​ ( 9,505 ) ​ Recoveries ​ ​ 25 ​ ​ 32 ​ ​ — ​ ​ — ​ ​ 185 ​ ​ 2,382 ​ ​ — ​ ​ 2,624 ​ Increase (decrease) in Provision ​ ​ 1,870 ​ ​ 975 ​ ​ ( 367 ) ​ ​ 35 ​ ​ ( 1,676 ) ​ ​ 3,662 ​ ​ ( 629 ) ​ ​ 3,870 ​ Balance at end of period ​ $ 31,688 ​ $ 22,204 ​ $ 5,014 ​ $ 446 ​ $ 43,420 ​ $ 33,638 ​ $ 2,125 ​ $ 138,535 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 2019 ​ ​ ​ Commercial Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ and ​ Real ​ ​ ​ Lease ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) Industrial Estate Construction Financing Residential Consumer Unallocated Total Allowance for credit losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ 34,501 ​ $ 19,725 ​ $ 5,813 ​ $ 432 ​ $ 44,906 ​ $ 35,813 ​ $ 528 ​ $ 141,718 ​ Charge-offs ​ ​ ( 2,000 ) ​ ​ — ​ ​ — ​ ​ ( 24 ) ​ ​ — ​ ​ ( 16,103 ) ​ ​ — ​ ​ ( 18,127 ) ​ Recoveries ​ ​ 62 ​ ​ 63 ​ ​ — ​ ​ — ​ ​ 435 ​ ​ 4,834 ​ ​ — ​ ​ 5,394 ​ Increase (decrease) in Provision ​ ​ ( 875 ) ​ ​ 2,416 ​ ​ ( 799 ) ​ ​ 38 ​ ​ ( 1,921 ) ​ ​ 9,094 ​ ​ 1,597 ​ ​ 9,550 ​ Balance at end of period ​ $ 31,688 ​ $ 22,204 ​ $ 5,014 ​ $ 446 ​ $ 43,420 ​ $ 33,638 ​ $ 2,125 ​ $ 138,535 ​ ​ The disaggregation of the ACL and recorded investment in loans by impairment methodology as of December 31, 2019, presented in accordance with Topic 310, Receivables , was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 ​ ​ ​ Commercial Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ and ​ Real ​ ​ ​ Lease ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) Industrial Estate Construction Financing Residential Consumer Unallocated Total Allowance for credit losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated for impairment ​ $ 46 ​ $ 27 ​ $ — ​ $ — ​ $ 130 ​ $ — ​ $ — ​ $ 203 ​ Collectively evaluated for impairment ​ ​ 28,929 ​ ​ 22,298 ​ ​ 4,844 ​ ​ 424 ​ ​ 39,049 ​ ​ 34,644 ​ ​ 139 ​ ​ 130,327 ​ Balance at end of period ​ $ 28,975 ​ $ 22,325 ​ $ 4,844 ​ $ 424 ​ $ 39,179 ​ $ 34,644 ​ $ 139 ​ $ 130,530 ​ Loans and leases: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated for impairment ​ $ 4,951 ​ $ 723 ​ $ — ​ $ — ​ $ 14,964 ​ $ — ​ $ — ​ $ 20,638 ​ Collectively evaluated for impairment ​ ​ 2,738,291 ​ ​ 3,463,230 ​ ​ 519,241 ​ ​ 202,483 ​ ​ 4,647,211 ​ ​ 1,620,556 ​ ​ — ​ ​ 13,191,012 ​ Balance at end of period ​ $ 2,743,242 ​ $ 3,463,953 ​ $ 519,241 ​ $ 202,483 ​ $ 4,662,175 ​ $ 1,620,556 ​ $ — ​ $ 13,211,650 ​ ​ 17 Table of Contents Rollforward of the Reserve for Unfunded Commitments ​ The following presents the activity in the Reserve for Unfunded Commitments for the three and six months ended June 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2020 ​ ​ ​ Commercial Lending ​ Residential Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ Home ​ ​ ​ ​ ​ ​ ​ ​ ​ and ​ Real ​ ​ ​ Lease ​ Residential ​ Equity ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) Industrial Estate Construction Financing Mortgage Line Consumer Total Reserve for unfunded commitments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ 4,791 ​ $ 696 ​ $ 4,813 ​ $ — ​ $ 1 ​ $ 6,927 ​ $ 23 ​ $ 17,251 ​ Increase in Provision ​ ​ 3,390 ​ ​ 472 ​ ​ 1,095 ​ ​ — ​ ​ 2 ​ ​ 963 ​ ​ 31 ​ ​ 5,953 ​ Balance at end of period ​ $ 8,181 ​ $ 1,168 ​ $ 5,908 ​ $ — ​ $ 3 ​ $ 7,890 ​ $ 54 ​ $ 23,204 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 2020 ​ ​ ​ Commercial Lending ​ Residential Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ Home ​ ​ ​ ​ ​ ​ ​ ​ ​ and ​ Real ​ ​ ​ Lease ​ Residential ​ Equity ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) Industrial Estate Construction Financing Mortgage Line Consumer Total Reserve for unfunded commitments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 600 ​ $ 600 ​ Adoption of ASU No. 2016-13 ​ ​ 5,390 ​ ​ 778 ​ ​ 4,119 ​ ​ — ​ ​ 7 ​ ​ 6,587 ​ ​ ( 581 ) ​ ​ 16,300 ​ Increase (decrease) in Provision ​ ​ 2,791 ​ ​ 390 ​ ​ 1,789 ​ ​ — ​ ​ ( 4 ) ​ ​ 1,303 ​ ​ 35 ​ ​ 6,304 ​ Balance at end of period ​ $ 8,181 ​ $ 1,168 ​ $ 5,908 ​ $ — ​ $ 3 ​ $ 7,890 ​ $ 54 ​ $ 23,204 ​ ​ Credit Quality Information ​ The Company performs an internal loan review and grading or scoring procedures on an ongoing basis. The review provides management with periodic information as to the quality of the loan portfolio and effectiveness of the Company’s lending policies and procedures. The objective of the loan review and grading or scoring procedures is to identify, in a timely manner, existing or emerging credit quality issues so that appropriate steps can be initiated to avoid or minimize future losses. ​ Loans and leases subject to grading primarily include: commercial and industrial loans, commercial real estate loans, construction loans and lease financing. Other loans subject to grading include installment loans to businesses or individuals for business and commercial purposes, overdraft lines of credit, commercial credit cards, and other credits as may be determined. Credit quality indicators for internally graded loans and leases are generally updated on an annual basis or on a quarterly basis for those loans and leases deemed to be of potentially higher risk. ​ An internal credit risk rating system is used to determine loan grade and is based on borrower credit risk and transactional risk. The loan grading process is a mechanism used to determine the risk of a particular borrower and is based on the following factors of a borrower: character, earnings and operating cash flow, asset and liability structure, debt capacity, management and controls, borrowing entity, and industry and operating environment. ​ Pass – “Pass” (uncriticized) loans and leases, are not considered to carry greater than normal risk. The borrower has the apparent ability to satisfy obligations to the Company, and therefore no loss in ultimate collection is anticipated. ​ Special Mention – Loans and leases that have potential weaknesses deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for assets or in the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. ​ Substandard – Loans and leases that are inadequately protected by the current financial condition and paying capacity of the obligor or by any collateral pledged. Loans and leases so classified must have a well-defined weakness or weaknesses that jeopardize the collection of the debt. They are characterized by the distinct possibility that the bank may sustain some loss if the deficiencies are not corrected. ​ Doubtful – Loans and leases that have weaknesses found in substandard borrowers with the added provision that the weaknesses make collection of debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. ​ 18 Table of Contents Loss – Loans and leases classified as loss are considered uncollectible and of such little value that their continuance as an asset is not warranted. This classification does not mean that the loan or lease has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future. ​ Loans that are primarily monitored for credit quality using FICO scores include: residential real estate loans, home equity lines and consumer loans. FICO scores are calculated primarily based on a consideration of payment history, the current amount of debt, the length of credit history available, a recent history of new sources of credit and the mix of credit type. FICO scores are updated on a monthly, quarterly or bi-annual basis, depending on the product type. ​ The amortized cost basis by year of origination and credit quality indicator of the Company's loans and leases as of June 30, 2020 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Converted ​ ​ ​ ​ ​ Term Loans ​ Revolving ​ to Term ​ ​ ​ ​ ​ Amortized Cost Basis by Origination Year ​ Loans ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized ​ Amortized ​ ​ ​ (dollars in thousands) ​ 2020 ​ 2019 ​ 2018 ​ 2017 ​ 2016 ​ Prior ​ Cost Basis ​ Cost Basis ​ Total Commercial Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and Industrial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 989,501 ​ $ 349,261 ​ $ 271,941 ​ $ 76,742 ​ $ 62,113 ​ $ 68,468 ​ $ 1,182,299 ​ $ 39,617 ​ $ 3,039,942 Special Mention ​ ​ 28,136 ​ ​ 9,235 ​ ​ 8,460 ​ ​ 841 ​ ​ 335 ​ ​ 27,174 ​ ​ 113,642 ​ ​ 509 ​ ​ 188,332 Substandard ​ ​ 16,621 ​ ​ 1,724 ​ ​ 1,836 ​ ​ 2,000 ​ ​ 4,321 ​ ​ 9,788 ​ ​ 52,225 ​ ​ 938 ​ ​ 89,453 Other (1) ​ ​ 9,091 ​ ​ 16,661 ​ ​ 12,574 ​ ​ 7,884 ​ ​ 3,199 ​ ​ 811 ​ ​ 55,761 ​ ​ — ​ ​ 105,981 Total Commercial and Industrial ​ ​ 1,043,349 ​ ​ 376,881 ​ ​ 294,811 ​ ​ 87,467 ​ ​ 69,968 ​ ​ 106,241 ​ ​ 1,403,927 ​ ​ 41,064 ​ ​ 3,423,708 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Real Estate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 171,445 ​ ​ 618,501 ​ ​ 523,149 ​ ​ 440,549 ​ ​ 296,474 ​ ​ 927,232 ​ ​ 33,878 ​ ​ — ​ ​ 3,011,228 Special Mention ​ ​ — ​ ​ 113,286 ​ ​ 53,391 ​ ​ 62,165 ​ ​ 47,790 ​ ​ 66,008 ​ ​ 2,999 ​ ​ — ​ ​ 345,639 Substandard ​ ​ — ​ ​ 16,304 ​ ​ 14,617 ​ ​ 1,655 ​ ​ 6,630 ​ ​ 17,947 ​ ​ 8,970 ​ ​ — ​ ​ 66,123 Other (1) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 509 ​ ​ — ​ ​ — ​ ​ 509 Total Commercial Real Estate ​ ​ 171,445 ​ ​ 748,091 ​ ​ 591,157 ​ ​ 504,369 ​ ​ 350,894 ​ ​ 1,011,696 ​ ​ 45,847 ​ ​ — ​ ​ 3,423,499 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 16,615 ​ ​ 135,963 ​ ​ 192,016 ​ ​ 96,137 ​ ​ 24,106 ​ ​ 41,457 ​ ​ 29,297 ​ ​ — ​ ​ 535,591 Special Mention ​ ​ — ​ ​ — ​ ​ 2,152 ​ ​ 4,782 ​ ​ — ​ ​ 10,850 ​ ​ 196 ​ ​ — ​ ​ 17,980 Substandard ​ ​ — ​ ​ — ​ ​ 541 ​ ​ 1,840 ​ ​ 528 ​ ​ 1,000 ​ ​ — ​ ​ — ​ ​ 3,909 Other (1) ​ ​ 8,415 ​ ​ 31,038 ​ ​ 8,546 ​ ​ 5,562 ​ ​ 1,795 ​ ​ 4,514 ​ ​ 585 ​ ​ — ​ ​ 60,455 Total Construction ​ ​ 25,030 ​ ​ 167,001 ​ ​ 203,255 ​ ​ 108,321 ​ ​ 26,429 ​ ​ 57,821 ​ ​ 30,078 ​ ​ — ​ ​ 617,935 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lease Financing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 45,489 ​ ​ 67,806 ​ ​ 11,965 ​ ​ 18,915 ​ ​ 3,764 ​ ​ 59,364 ​ ​ — ​ ​ — ​ ​ 207,303 Special Mention ​ ​ 9,142 ​ ​ 1,931 ​ ​ 4,626 ​ ​ 1,545 ​ ​ 1,440 ​ ​ 5,854 ​ ​ — ​ ​ — ​ ​ 24,538 Substandard ​ ​ 2,697 ​ ​ 1,651 ​ ​ 368 ​ ​ 1,207 ​ ​ — ​ ​ 523 ​ ​ — ​ ​ — ​ ​ 6,446 Total Lease Financing ​ ​ 57,328 ​ ​ 71,388 ​ ​ 16,959 ​ ​ 21,667 ​ ​ 5,204 ​ ​ 65,741 ​ ​ — ​ ​ — ​ ​ 238,287 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Commercial Lending ​ $ 1,297,152 ​ $ 1,363,361 ​ $ 1,106,182 ​ $ 721,824 ​ $ 452,495 ​ $ 1,241,499 ​ $ 1,479,852 ​ $ 41,064 ​ $ 7,703,429 (continued) 19 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Converted ​ ​ ​ ​ ​ Term Loans ​ Revolving ​ to Term ​ ​ ​ ​ ​ Amortized Cost Basis by Origination Year ​ Loans ​ Loans ​ ​ ​ (continued) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized ​ Amortized ​ ​ ​ (dollars in thousands) ​ 2020 ​ 2019 ​ 2018 ​ 2017 ​ 2016 ​ Prior ​ Cost Basis ​ Cost Basis ​ Total Residential Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential Mortgage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FICO: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 740 and greater ​ $ 300,079 ​ $ 411,883 ​ $ 353,197 ​ $ 411,670 ​ $ 362,197 ​ $ 988,771 ​ $ — ​ $ — ​ $ 2,827,797 680 - 739 ​ ​ 50,937 ​ ​ 72,139 ​ ​ 64,920 ​ ​ 65,992 ​ ​ 43,666 ​ ​ 161,897 ​ ​ — ​ ​ — ​ ​ 459,551 620 - 679 ​ ​ 6,098 ​ ​ 12,708 ​ ​ 12,060 ​ ​ 12,648 ​ ​ 10,789 ​ ​ 55,000 ​ ​ — ​ ​ — ​ ​ 109,303 550 - 619 ​ ​ 2,006 ​ ​ 1,824 ​ ​ 3,533 ​ ​ 3,389 ​ ​ 3,032 ​ ​ 13,329 ​ ​ — ​ ​ — ​ ​ 27,113 Less than 550 ​ ​ — ​ ​ — ​ ​ 1,204 ​ ​ 1,907 ​ ​ 528 ​ ​ 6,324 ​ ​ — ​ ​ — ​ ​ 9,963 No Score (3) ​ ​ 15,676 ​ ​ 21,603 ​ ​ 24,182 ​ ​ 23,736 ​ ​ 16,298 ​ ​ 51,943 ​ ​ — ​ ​ — ​ ​ 153,438 Other (2) ​ ​ 8,244 ​ ​ 20,308 ​ ​ 22,241 ​ ​ 23,435 ​ ​ 12,412 ​ ​ 17,063 ​ ​ 579 ​ ​ 503 ​ ​ 104,785 Total Residential Mortgage ​ ​ 383,040 ​ ​ 540,465 ​ ​ 481,337 ​ ​ 542,777 ​ ​ 448,922 ​ ​ 1,294,327 ​ ​ 579 ​ ​ 503 ​ ​ 3,691,950 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Home Equity Line ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FICO: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 740 and greater ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 626,897 ​ ​ 858 ​ ​ 627,755 680 - 739 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 169,547 ​ ​ 1,283 ​ ​ 170,830 620 - 679 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 48,655 ​ ​ 1,013 ​ ​ 49,668 550 - 619 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 14,276 ​ ​ 562 ​ ​ 14,838 Less than 550 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 6,661 ​ ​ 212 ​ ​ 6,873 No Score (3) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 6,527 ​ ​ — ​ ​ 6,527 Total Home Equity Line ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 872,563 ​ ​ 3,928 ​ ​ 876,491 Total Residential Lending ​ ​ 383,040 ​ ​ 540,465 ​ ​ 481,337 ​ ​ 542,777 ​ ​ 448,922 ​ ​ 1,294,327 ​ ​ 873,142 ​ ​ 4,431 ​ ​ 4,568,441 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FICO: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 740 and greater ​ ​ 65,206 ​ ​ 141,704 ​ ​ 120,178 ​ ​ 71,525 ​ ​ 35,932 ​ ​ 12,451 ​ ​ 109,702 ​ ​ — ​ ​ 556,698 680 - 739 ​ ​ 47,584 ​ ​ 109,728 ​ ​ 87,056 ​ ​ 48,728 ​ ​ 24,478 ​ ​ 10,094 ​ ​ 83,021 ​ ​ — ​ ​ 410,689 620 - 679 ​ ​ 24,185 ​ ​ 65,310 ​ ​ 43,282 ​ ​ 31,318 ​ ​ 16,144 ​ ​ 7,013 ​ ​ 42,511 ​ ​ — ​ ​ 229,763 550 - 619 ​ ​ 5,881 ​ ​ 26,220 ​ ​ 22,891 ​ ​ 20,874 ​ ​ 10,869 ​ ​ 5,467 ​ ​ 18,429 ​ ​ — ​ ​ 110,631 Less than 550 ​ ​ 1,562 ​ ​ 12,306 ​ ​ 13,110 ​ ​ 10,628 ​ ​ 5,397 ​ ​ 2,567 ​ ​ 7,777 ​ ​ — ​ ​ 53,347 No Score (3) ​ ​ 3,799 ​ ​ 124 ​ ​ 125 ​ ​ 126 ​ ​ 27 ​ ​ 1 ​ ​ 34,281 ​ ​ — ​ ​ 38,483 Other (2) ​ ​ 594 ​ ​ 9,160 ​ ​ 96 ​ ​ 2,225 ​ ​ 72 ​ ​ 6,804 ​ ​ 73,598 ​ ​ — ​ ​ 92,549 Total Consumer Lending ​ ​ 148,811 ​ ​ 364,552 ​ ​ 286,738 ​ ​ 185,424 ​ ​ 92,919 ​ ​ 44,397 ​ ​ 369,319 ​ ​ — ​ ​ 1,492,160 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Loans and Leases ​ $ 1,829,003 ​ $ 2,268,378 ​ $ 1,874,257 ​ $ 1,450,025 ​ $ 994,336 ​ $ 2,580,223 ​ $ 2,722,313 ​ $ 45,495 ​ $ 13,764,030 (1) Other credit quality indicators used for monitoring purposes are primarily FICO scores. (2) Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. (3) No FICO scores are primarily related to loans and leases extended to non-residents. Loans and leases of this nature are primarily secured by collateral and/or are closely monitored for performance. ​ There were no loans and leases graded as Loss as of June 30, 2020. ​ The amortized cost basis of revolving loans that were converted to term loans during the three and six months ended June 30, 2020 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ (dollars in thousands) ​ June 30, 2020 ​ Commercial and industrial ​ $ 294 ​ Home equity line ​ ​ 3,928 ​ Total Revolving Loans Converted to Term Loans During the Period ​ $ 4,222 ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended ​ (dollars in thousands) ​ June 30, 2020 ​ Commercial and industrial ​ $ 28,522 ​ Residential mortgage ​ ​ 296 ​ Home equity line ​ ​ 3,928 ​ Total Revolving Loans Converted to Term Loans During the Period ​ $ 32,746 ​ 20 Table of Contents ​ The credit risk profiles by internally assigned grade for loans and leases as of December 31, 2019, presented in accordance with Topic 310, Receivables , were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 ​ ​ Commercial ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ and ​ Real ​ ​ ​ Lease ​ ​ ​ (dollars in thousands) Industrial Estate Construction Financing Total Grade: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 2,585,908 ​ $ 3,327,659 ​ $ 515,993 ​ $ 201,461 ​ $ 6,631,021 Special mention ​ ​ 91,365 ​ ​ 106,331 ​ ​ 127 ​ ​ 1,022 ​ ​ 198,845 Substandard ​ ​ 65,969 ​ ​ 29,963 ​ ​ 3,121 ​ ​ — ​ ​ 99,053 Total ​ $ 2,743,242 ​ $ 3,463,953 ​ $ 519,241 ​ $ 202,483 ​ $ 6,928,919 ​ There were no loans and leases graded as Loss as of December 31, 2019. ​ The credit risk profiles based on payment activity for loans and leases that were not subject to loan grading as of December 31, 2019 presented in accordance with Topic 310, Receivables , were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 (dollars in thousands) Residential Mortgage Home Equity Line Consumer Consumer - Auto Credit Cards Total Performing ​ $ 3,759,799 ​ $ 886,879 ​ $ 219,046 ​ $ 1,016,142 ​ $ 347,264 ​ $ 6,229,130 Non-performing and delinquent ​ ​ 9,137 ​ ​ 6,360 ​ ​ 7,258 ​ ​ 24,326 ​ ​ 6,520 ​ ​ 53,601 Total ​ $ 3,768,936 ​ $ 893,239 ​ $ 226,304 ​ $ 1,040,468 ​ $ 353,784 ​ $ 6,282,731 ​ Past-Due Status ​ The Company continually updates its aging analysis for loans and leases to monitor the migration of loans and leases into past due categories. The Company considers loans and leases that are delinquent for 30 days or more to be past due. As of June 30, 2020, the aging analysis of the amortized cost basis of the Company’s past due loans and leases was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2020 ​ ​ ​ Past Due ​ ​ ​ ​ ​ Loans and ​ ​ ​ ​ ​ ​ ​ Greater ​ ​ ​ ​ ​ ​ ​ Leases Past ​ ​ ​ ​ ​ ​ ​ Than or ​ ​ ​ ​ ​ ​ ​ Due 90 Days ​ ​ ​ 30-59 ​ 60-89 ​ Equal to ​ ​ ​ ​ ​ ​ ​ or More and ​ ​ ​ Days ​ Days ​ 90 Days ​ Total ​ ​ ​ Total Loans ​ Still Accruing ​ (dollars in thousands) Past Due Past Due Past Due Past Due Current and Leases ​ Interest ​ Commercial and industrial ​ $ 2,535 ​ $ 2,501 ​ $ 2,374 ​ $ 7,410 ​ $ 3,416,298 ​ $ 3,423,708 ​ $ 2,309 ​ Commercial real estate ​ ​ 2,761 ​ ​ 94 ​ ​ 1,655 ​ ​ 4,510 ​ ​ 3,418,989 ​ ​ 3,423,499 ​ ​ 900 ​ Construction ​ ​ 2,737 ​ ​ — ​ ​ 2,292 ​ ​ 5,029 ​ ​ 612,906 ​ ​ 617,935 ​ ​ 248 ​ Lease financing ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 238,287 ​ ​ 238,287 ​ ​ — ​ Residential mortgage ​ ​ 2,630 ​ ​ 4,778 ​ ​ 4,152 ​ ​ 11,560 ​ ​ 3,680,390 ​ ​ 3,691,950 ​ ​ — ​ Home equity line ​ ​ 2,041 ​ ​ 1,591 ​ ​ 4,496 ​ ​ 8,128 ​ ​ 868,363 ​ ​ 876,491 ​ ​ 4,496 ​ Consumer ​ ​ 11,053 ​ ​ 3,103 ​ ​ 2,167 ​ ​ 16,323 ​ ​ 1,475,837 ​ ​ 1,492,160 ​ ​ 2,167 ​ Total ​ $ 23,757 ​ $ 12,067 ​ $ 17,136 ​ $ 52,960 ​ $ 13,711,070 ​ $ 13,764,030 ​ $ 10,120 ​ ​ 21 Table of Contents As of December 31, 2019, the aging analysis of the Company’s past due loans and leases, presented in accordance with Topic 310, Receivables , was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 ​ ​ Accruing Loans and Leases ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Greater ​ ​ ​ ​ ​ ​ ​ Total Non ​ ​ ​ ​ ​ ​ ​ ​ Than or ​ ​ ​ ​ ​ Total ​ Accruing ​ ​ ​ ​ 30-59 ​ 60-89 ​ Equal to ​ Total ​ ​ ​ Accruing ​ Loans ​ ​ ​ ​ Days ​ Days ​ 90 Days ​ Past ​ ​ ​ Loans and ​ and ​ Total (dollars in thousands) Past Due Past Due Past Due Due Current Leases Leases Outstanding Commercial and industrial ​ $ 1,525 ​ $ 808 ​ $ 1,429 ​ $ 3,762 ​ $ 2,739,448 ​ $ 2,743,210 ​ $ 32 ​ $ 2,743,242 Commercial real estate ​ ​ 1,664 ​ ​ 1,125 ​ ​ 1,013 ​ ​ 3,802 ​ ​ 3,460,121 ​ ​ 3,463,923 ​ ​ 30 ​ ​ 3,463,953 Construction ​ ​ — ​ ​ — ​ ​ 2,367 ​ ​ 2,367 ​ ​ 516,874 ​ ​ 519,241 ​ ​ — ​ ​ 519,241 Lease financing ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 202,483 ​ ​ 202,483 ​ ​ — ​ ​ 202,483 Residential mortgage ​ ​ 3,258 ​ ​ 399 ​ ​ 74 ​ ​ 3,731 ​ ​ 3,759,799 ​ ​ 3,763,530 ​ ​ 5,406 ​ ​ 3,768,936 Home equity line ​ ​ 2,971 ​ ​ 394 ​ ​ 2,995 ​ ​ 6,360 ​ ​ 886,879 ​ ​ 893,239 ​ ​ — ​ ​ 893,239 Consumer ​ ​ 26,810 ​ ​ 7,022 ​ ​ 4,272 ​ ​ 38,104 ​ ​ 1,582,452 ​ ​ 1,620,556 ​ ​ — ​ ​ 1,620,556 Total ​ $ 36,228 ​ $ 9,748 ​ $ 12,150 ​ $ 58,126 ​ $ 13,148,056 ​ $ 13,206,182 ​ $ 5,468 ​ $ 13,211,650 ​ Nonaccrual Loans and Leases ​ The Company generally places a loan or lease on nonaccrual status when management believes that collection of principal or interest has become doubtful or when a loan or lease becomes 90 days past due as to principal or interest, unless it is well secured and in the process of collection. The Company charges off a loan or lease when facts indicate that the loan or lease is considered uncollectible. ​ The amortized cost basis of loans and leases on nonaccrual status as of June 30, 2020 and January 1, 2020 and the amortized cost basis of loans and leases on nonaccrual status with no allowance for credit losses as of June 30, 2020 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2020 ​ January 1, 2020 ​ ​ ​ Nonaccrual ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ and Leases ​ ​ ​ ​ ​ ​ ​ ​ ​ With No ​ Nonaccrual ​ Nonaccrual ​ ​ ​ Allowance ​ Loans ​ Loans ​ (dollars in thousands) for Credit Losses ​ and Leases ​ and Leases ​ Commercial and industrial ​ $ 11,494 ​ $ 11,559 ​ $ 32 ​ Commercial real estate ​ ​ 13,088 ​ ​ 13,168 ​ ​ 30 ​ Construction ​ ​ 1,840 ​ ​ 2,043 ​ ​ — ​ Residential mortgage ​ ​ 1,475 ​ ​ 6,059 ​ ​ 5,406 ​ Total Nonaccrual Loans and Leases ​ $ 27,897 ​ $ 32,829 ​ $ 5,468 ​ ​ For both the three and six months ended June 30, 2020, the Company recognized interest income of $ 0.1 million on nonaccrual loans and leases. Furthermore, for the three and six months ended June 30, 2020, the amount of accrued interest receivables written off by reversing interest income was $ 0.5 million and $ 0.9 million, respectively. ​ Collateral-Dependent Loans and Leases ​ Collateral-dependent loans and leases are those for which repayment (on the basis of the Company’s assessment as of the reporting date) is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. As of June 30, 2020, the amortized cost basis of collateral-dependent loans was $ 55.9 million. These loans were primarily collateralized by commercial and residential real estate property and borrower assets. As of June 30, 2020, the fair value of collateral on substantially all collateral-dependent loans were significantly in excess of their amortized cost basis. ​ 22 Table of Contents Impaired Loans ​ The total carrying amounts and the total unpaid principal balances of impaired loans and leases as of December 31, 2019, presented in accordance with Topic 310, Receivables , were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 ​ ​ ​ ​ Unpaid ​ ​ ​ ​ Recorded ​ Principal ​ Related (dollars in thousands) Investment Balance Allowance Impaired loans with no related allowance recorded: ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 3,825 ​ $ 3,841 ​ $ — Commercial real estate ​ ​ 30 ​ ​ 30 ​ ​ — Residential mortgage ​ ​ 10,425 ​ ​ 10,718 ​ ​ — Total ​ $ 14,280 ​ $ 14,589 ​ $ — Impaired loans with a related allowance recorded: ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 1,126 ​ $ 1,126 ​ $ 46 Commercial real estate ​ ​ 693 ​ ​ 693 ​ ​ 27 Residential mortgage ​ ​ 4,539 ​ ​ 4,819 ​ ​ 130 Total ​ $ 6,358 ​ $ 6,638 ​ $ 203 Total impaired loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 4,951 ​ $ 4,967 ​ $ 46 Commercial real estate ​ ​ 723 ​ ​ 723 ​ ​ 27 Residential mortgage ​ ​ 14,964 ​ ​ 15,537 ​ ​ 130 Total ​ $ 20,638 ​ $ 21,227 ​ $ 203 ​ The following table provides information with respect to the Company’s average balances, and of interest income recognized from, impaired loans for the three and six months ended June 30, 2019, presented in accordance with Topic 310, Receivables : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, 2019 ​ June 30, 2019 ​ ​ Average ​ Interest ​ Average ​ Interest ​ ​ Recorded ​ Income ​ Recorded ​ Income (dollars in thousands) Investment Recognized Investment Recognized Impaired loans with no related allowance recorded: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 3,833 ​ $ 94 ​ $ 4,038 ​ $ 175 Commercial real estate ​ ​ 3,102 ​ ​ 40 ​ ​ 3,740 ​ ​ 212 Residential mortgage ​ ​ 7,948 ​ ​ 92 ​ ​ 8,336 ​ ​ 191 Total ​ $ 14,883 ​ $ 226 ​ $ 16,114 ​ $ 578 Impaired loans with a related allowance recorded: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 5,645 ​ $ 61 ​ $ 5,187 ​ $ 117 Commercial real estate ​ ​ 715 ​ ​ 10 ​ ​ 719 ​ ​ 20 Residential mortgage ​ ​ 7,220 ​ ​ 103 ​ ​ 7,147 ​ ​ 199 Total ​ $ 13,580 ​ $ 174 ​ $ 13,053 ​ $ 336 Total impaired loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 9,478 ​ $ 155 ​ $ 9,225 ​ $ 292 Commercial real estate ​ ​ 3,817 ​ ​ 50 ​ ​ 4,459 ​ ​ 232 Residential mortgage ​ ​ 15,168 ​ ​ 195 ​ ​ 15,483 ​ ​ 390 Total ​ $ 28,463 ​ $ 400 ​ $ 29,167 ​ $ 914 ​ Modifications ​ Commercial and industrial loans modified in a TDR may involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Modifications of commercial real estate and construction loans in a TDR may involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Modifications of construction loans in a TDR may also involve extending the interest-only payment period. Interest continues to accrue on the missed payments and as a result, the effective yield on the loan remains unchanged. As the forbearance period usually involves an insignificant payment delay, lease financing modifications typically do not meet the reporting criteria for a TDR. Residential real estate loans modified in a TDR may be comprised of loans where monthly payments are lowered to accommodate the borrowers' financial needs for a period of time, normally two years . Generally, consumer loans 23 Table of Contents are not classified as a TDR as they are normally charged off upon reaching a predetermined delinquency status that ranges from 120 to 180 days and varies by product type. ​ Loans modified in a TDR may already be on nonaccrual status and in some cases partial charge-offs may have already been taken against the outstanding loan balance. Loans modified in a TDR are evaluated for impairment. As a result, this may have a financial effect of increasing the specific ACL associated with the loan. An ACL for impaired commercial loans, including commercial real estate and construction loans, that have been modified in a TDR is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or if the loan is collateral dependent, the estimated fair value of the collateral, less any selling costs. An ACL for impaired residential real estate loans that have been modified in a TDR is measured based on the estimated fair value of the collateral, less any selling costs. Management exercises significant judgment in developing these estimates. ​ The following presents, by class, information related to loans modified in a TDR during the three and six months ended June 30, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, 2020 ​ June 30, 2020 ​ ​ Number of ​ Recorded ​ Related ​ Number of ​ Recorded ​ Related (dollars in thousands) Contracts Investment (1) Allowance Contracts Investment (1) Allowance Commercial and industrial ​ — ​ $ — ​ $ — ​ 1 ​ $ 500 ​ $ 30 Total ​ — ​ $ — ​ $ — ​ 1 ​ $ 500 ​ $ 30 (1) The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, 2019 ​ June 30, 2019 ​ ​ Number of ​ Recorded ​ Related ​ Number of ​ Recorded ​ Related (dollars in thousands) Contracts Investment (1) Allowance Contracts Investment (1) Allowance Commercial and industrial ​ — ​ $ — ​ $ — ​ 4 ​ $ 906 ​ $ 41 Residential mortgage ​ — ​ ​ — ​ ​ — ​ 1 ​ ​ 351 ​ ​ 14 Total ​ — ​ $ — ​ $ — ​ 5 ​ $ 1,257 ​ $ 55 (1) The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period. ​ The above loans were modified in a TDR through an extension of maturity dates, temporary interest-only payments, reduced payments, or below-market interest rates. ​ The Company had commitments to extend credit, standby letters of credit, and commercial letters of credit totaling $ 6.3 billion and $ 6.1 billion as of June 30, 2020 and December 31, 2019, respectively. Of the $ 6.3 billion at June 30, 2020, there were no commitments related to borrowers who had loan terms modified in a TDR. Of the $ 6.1 billion at December 31, 2019, there were commitments of $ 4.5 million related to borrowers who had loan terms modified in a TDR. ​ The following table presents, by class, loans modified in TDRs that have defaulted in the current period within 12 months of their permanent modification date for the periods indicated. The Company is reporting these defaulted TDRs based on a payment default definition of 30 days past due: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ Three Months Ended ​ Six Months Ended ​ ​ ​ ​ June 30, 2020 ​ June 30, 2020 ​ June 30, 2019 ​ June 30, 2019 ​ ​ ​ Number of ​ Recorded ​ Number of ​ Recorded ​ Number of ​ Recorded ​ Number of ​ Recorded ​ ​ (dollars in thousands) Contracts Investment (1) Contracts Investment (1) Contracts Investment (1) Contracts Investment (1) Commercial and industrial (2) ​ 1 ​ $ 500 ​ 1 ​ $ 500 ​ 4 ​ $ 906 ​ 4 ​ $ 906 ​ ​ Residential mortgage (3) ​ — ​ ​ — ​ — ​ ​ — ​ 1 ​ ​ 351 ​ 1 ​ ​ 351 ​ ​ Total ​ 1 ​ $ 500 ​ 1 ​ $ 500 ​ 5 ​ $ 1,257 ​ 5 ​ $ 1,257 ​ ​ (1) The recorded investment balances reflect all partial paydowns and charge-offs since the modification date and do not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period. (2) For the three and six months ended June 30, 2020, the maturity date for the commercial and industrial loan that subsequently defaulted was extended. For the three and six months ended June 30, 2019, the commercial and industrial loans that subsequently defaulted were temporarily modified to interest-only payments. (3) For the three and six months ended June 30, 2019, the maturity date for the residential mortgage loan that subsequently defaulted was extended. ​ 24 Table of Contents Foreclosure Proceedings ​ As of June 30, 2020, there were no residential mortgage loans collateralized by real estate property that was modified in a TDR that was in process of foreclosure. As of December 31, 2019, there was one residential mortgage loan collateralized by real estate property of $ 0.3 million that was modified in a TDR that was in process of foreclosure. ​ Foreclosed Property ​ As of June 30, 2020, residential real estate property held from one foreclosed residential real estate loan was held and included in other real estate owned and repossessed personal property with a carrying value of $ 0.4 million on the unaudited interim consolidated balance sheets. As of December 31, 2019, residential real estate properties from two foreclosed residential real estate loans were held and included in other real estate owned and repossessed personal property with a carrying value of $ 0.3 million on the unaudited interim consolidated balance sheets. ​ 5. Mortgage Servicing Rights ​ Mortgage servicing activities include collecting principal, interest, tax, and insurance payments from borrowers while accounting for and remitting payments to investors, taxing authorities, and insurance companies. The Company also monitors delinquencies and administers foreclosure proceedings. ​ Mortgage loan servicing income is recorded in noninterest income as a part of other service charges and fees and amortization of the servicing assets is recorded in noninterest income as part of other income. The unpaid principal amount of residential real estate loans serviced for others was $ 2.4 billion and $ 2.3 billion as of June 30, 2020 and December 31, 2019, respectively. Servicing fees include contractually specified fees, late charges, and ancillary fees, and were $ 1.4 million and $ 1.6 million for the three months ended June 30, 2020 and 2019, respectively, and $ 2.9 million and $ 3.2 million for the six months ended June 30, 2020 and 2019, respectively. ​ Amortization of mortgage servicing rights (“MSRs”) was $ 1.3 million and $ 0.8 million for the three months ended June 30, 2020 and 2019, respectively, and $ 3.3 million and $ 1.6 million for the six months ended June 30, 2020 and 2019, respectively. The estimated future amortization expenses for MSRs over the next five years are as follows: ​ ​ ​ ​ ​ ​ ​ Estimated (dollars in thousands) Amortization Under one year ​ $ 2,687 One to two years ​ ​ 2,088 Two to three years ​ ​ 1,625 Three to four years ​ ​ 1,292 Four to five years ​ ​ 1,046 ​ The details of the Company’s MSRs are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, (dollars in thousands) 2020 2019 Gross carrying amount ​ $ 65,686 ​ $ 63,480 Less: accumulated amortization ​ ​ 54,091 ​ ​ 50,812 Net carrying value ​ $ 11,595 ​ $ 12,668 ​ The following table presents changes in amortized MSRs for the three and six months ended June 30, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ Six Months Ended June 30, (dollars in thousands) 2020 2019 2020 2019 Balance at beginning of period ​ $ 11,979 ​ $ 15,399 ​ $ 12,668 ​ $ 16,155 Originations ​ ​ 915 ​ ​ 16 ​ ​ 2,206 ​ ​ 24 Amortization ​ ​ ( 1,299 ) ​ ​ ( 842 ) ​ ​ ( 3,279 ) ​ ​ ( 1,606 ) Balance at end of period ​ $ 11,595 ​ $ 14,573 ​ $ 11,595 ​ $ 14,573 Fair value of amortized MSRs at beginning of period ​ $ 17,615 ​ $ 26,383 ​ $ 20,329 ​ $ 27,662 Fair value of amortized MSRs at end of period ​ $ 15,159 ​ $ 23,398 ​ $ 15,159 ​ $ 23,398 ​ 25 Table of Contents MSRs are evaluated for impairment if events and circumstances indicate a possible impairment. No impairment of MSRs was recorded for the three and six months ended June 30, 2020 and 2019. ​ The quantitative assumptions used in determining the lower of cost or fair value of the Company’s MSRs as of June 30, 2020 and December 31, 2019 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2020 ​ December 31, 2019 ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ Weighted ​ ​ Range ​ Average ​ Range ​ Average ​ Conditional prepayment rate ​ 14.35 % - 24.33 % 16.64 % 10.74 % - 23.39 % 11.10 % Life in years (of the MSR) ​ 1.92 ​ - 5.72 ​ 4.45 ​ 2.04 ​ - 6.33 ​ 5.99 ​ Weighted-average coupon rate ​ 3.87 % - 7.11 % 3.96 % 3.96 % - 7.26 % 4.01 % Discount rate ​ 10.00 % - 10.00 % 10.00 % 10.00 % - 10.01 % 10.00 % ​ The sensitivities surrounding MSRs are expected to have an immaterial impact on fair value. ​ 6. Transfers of Financial Assets ​ The Company’s transfers of financial assets with continuing interest may include pledges of collateral to secure public deposits and repurchase agreements, FHLB and FRB borrowing capacity, automated clearing house (“ACH”) transactions and interest rate swaps. ​ For public deposits and repurchase agreements, the Company enters into bilateral agreements with the entity to pledge investment securities as collateral in the event of default. The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral pledged by the Company would be used to settle the fair value of the repurchase agreement should the Company be in default. The counterparty has the right to sell or repledge the investment securities. The Company is required by the counterparty to maintain adequate collateral levels. In the event the collateral fair value falls below stipulated levels, the Company will pledge additional investment securities. For transfers of assets with the FHLB and the FRB, the Company enters into bilateral agreements to pledge loans as collateral to secure borrowing capacity. For ACH transactions, the Company enters into bilateral agreements to collateralize possible daylight overdrafts. For interest rate swaps, the Company enters into bilateral agreements to pledge collateral when either party is in a negative fair value position to mitigate counterparty credit risk. Counterparties to ACH transactions, certain interest rate swaps, the FHLB and the FRB do not have the right to sell or repledge the collateral. ​ The carrying amounts of the assets pledged as collateral to secure public deposits, borrowing arrangements and other transactions as of June 30, 2020 and December 31, 2019 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) June 30, 2020 December 31, 2019 Public deposits ​ $ 3,001,044 ​ $ 1,543,492 Federal Home Loan Bank ​ ​ 2,919,854 ​ ​ 2,928,581 Federal Reserve Bank ​ ​ 1,759,853 ​ ​ 953,169 ACH transactions ​ ​ 145,263 ​ ​ 155,360 Interest rate swaps ​ ​ 57,036 ​ ​ 43,296 Total ​ $ 7,883,050 ​ $ 5,623,898 ​ As the Company did not enter into reverse repurchase agreements or repurchase agreements, no collateral was accepted or pledged as of June 30, 2020 and December 31, 2019. In addition, no debt was extinguished by in-substance defeasance. ​ ​ ​ 26 Table of Contents 7. Deposits ​ As of June 30, 2020 and December 31, 2019, deposits were categorized as interest-bearing or noninterest-bearing as follows: ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) June 30, 2020 December 31, 2019 U.S.: ​ ​ ​ ​ ​ ​ Interest-bearing ​ $ 11,705,106 ​ $ 9,782,957 Noninterest-bearing ​ ​ 6,081,910 ​ ​ 5,188,696 Foreign: ​ ​ ​ ​ ​ ​ Interest-bearing ​ ​ 776,437 ​ ​ 781,965 Noninterest-bearing ​ ​ 798,181 ​ ​ 691,376 Total deposits ​ $ 19,361,634 ​ $ 16,444,994 ​ The following table presents the maturity distribution of time certificates of deposit as of June 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Under ​ $250,000 ​ ​ ​ (dollars in thousands) $250,000 or More Total Three months or less ​ $ 186,536 ​ $ 1,126,120 ​ $ 1,312,656 Over three through six months ​ ​ 184,540 ​ ​ 249,181 ​ ​ 433,721 Over six through twelve months ​ ​ 409,875 ​ ​ 708,352 ​ ​ 1,118,227 One to two years ​ ​ 118,555 ​ ​ 227,567 ​ ​ 346,122 Two to three years ​ ​ 103,852 ​ ​ 54,517 ​ ​ 158,369 Three to four years ​ ​ 82,868 ​ ​ 10,691 ​ ​ 93,559 Four to five years ​ ​ 32,572 ​ ​ 7,597 ​ ​ 40,169 Thereafter ​ ​ 442 ​ ​ 3,400 ​ ​ 3,842 Total ​ $ 1,119,240 ​ $ 2,387,425 ​ $ 3,506,665 ​ Time certificates of deposit in denominations of $250,000 or more, in the aggregate, were $ 2.4 billion and $ 1.4 billion as of June 30, 2020 and December 31, 2019, respectively. Overdrawn deposit accounts are classified as loans and totaled $ 2.1 million and $ 3.6 million as of June 30, 2020 and December 31, 2019, respectively. ​ 8. Short-Term Borrowings ​ At June 30, 2020 and December 31, 2019, short-term borrowings were comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) June 30, 2020 December 31, 2019 Short-term FHLB fixed-rate advances (1) ​ $ 200,000 ​ $ 400,000 Total short-term borrowings ​ $ 200,000 ​ $ 400,000 (1) Interest is payable monthly. ​ As of June 30, 2020 and December 31, 2019, the Company’s short-term borrowings included $ 200.0 million and $ 400.0 million, respectively, in short-term FHLB fixed-rate advances with a weighted average interest rate of 2.88 % and 2.84 %, respectively. The short-term FHLB fixed-rate advances require monthly interest-only payments with the principal amount due on the maturity date. The remaining short-term FHLB fixed-rate advance (as of June 30, 2020) matured in July 2020. As of June 30, 2020 and December 31, 2019, the available remaining borrowing capacity with the FHLB was $ 1.9 billion and $ 1.7 billion, respectively. The FHLB fixed-rate advances and remaining borrowing capacity were secured by residential real estate loan collateral as of June 30, 2020 and December 31, 2019. As of June 30, 2020 and December 31, 2019, the Company had an undrawn line of credit of $ 982.0 million and $ 596.8 million from the FRB, respectively. The borrowing capacity with the FRB was secured by consumer, commercial and industrial and commercial real estate loans as of June 30, 2020 and December 31, 2019. See “Note 6. Transfers of Financial Assets” for more information. ​ 27 Table of Contents 9. Long-Term Borrowings ​ Long-term borrowings consisted of the following as of June 30, 2020 and December 31, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) June 30, 2020 December 31, 2019 Finance lease ​ $ 19 ​ $ 19 FHLB fixed-rate advances (1) ​ ​ 200,000 ​ ​ 200,000 Total long-term borrowings ​ $ 200,019 ​ $ 200,019 (1) Interest is payable monthly. ​ As of June 30, 2020 and December 31, 2019, the Company’s long-term borrowings included $ 200.0 million in FHLB fixed-rate advances with a weighted average interest rate of 2.73 % and maturity dates ranging from 2023 to 2024. The FHLB fixed-rate advances require monthly interest-only payments with the principal amount due on the maturity date. ​ As of June 30, 2020 and December 31, 2019, the Company’s long-term borrowings included a finance lease obligation with a 6.78 % annual interest rate that matures in 2022. ​ As of June 30, 2020, future contractual principal payments and maturities of long-term borrowings were as follows: ​ ​ ​ ​ ​ ​ ​ Principal (dollars in thousands) Payments 2020 ​ $ 9 2021 ​ ​ 10 2022 ​ ​ — 2023 (1) ​ ​ 100,000 2024 (2) ​ ​ 100,000 Total ​ $ 200,019 (1) FHLB fixed-rate advance callable on December 4, 2020 with an interest rate of 2.80 % . (2) FHLB fixed-rate advance callable on January 15, 2021 with an interest rate of 2.65 % . ​ ​ ​ ​ ​ ​ ​ ​ ​ 10. Accumulated Other Comprehensive Income (Loss) ​ Accumulated other comprehensive income (loss) is defined as the revenues, expenses, gains and losses that are included in comprehensive income but excluded from net income. The Company’s significant items of accumulated other comprehensive loss are pension and other benefits and net unrealized gains or losses on investment securities. ​ Changes in accumulated other comprehensive income (loss) for the three and six months ended June 30, 2020 and 2019 are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income ​ ​ ​ ​ ​ ​ ​ ​ Tax ​ ​ ​ ​ ​ Pre-tax ​ Benefit ​ Net of (dollars in thousands) Amount (Expense) Tax Accumulated other comprehensive income at March 31, 2020 ​ $ 5,629 ​ $ ( 1,500 ) ​ $ 4,129 Three months ended June 30, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net gains arising during the period ​ ​ 66,071 ​ ​ ( 17,624 ) ​ ​ 48,447 Reclassification of net losses to net income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities losses, net ​ ​ 211 ​ ​ ( 56 ) ​ ​ 155 Net change in investment securities ​ ​ 66,282 ​ ​ ( 17,680 ) ​ ​ 48,602 Other comprehensive income ​ ​ 66,282 ​ ​ ( 17,680 ) ​ ​ 48,602 Accumulated other comprehensive income at June 30, 2020 ​ $ 71,911 ​ $ ( 19,180 ) ​ $ 52,731 28 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income ​ ​ ​ ​ ​ ​ ​ ​ Tax ​ ​ ​ ​ ​ Pre-tax ​ Benefit ​ Net of (dollars in thousands) Amount (Expense) Tax Accumulated other comprehensive loss at December 31, 2019 ​ $ ( 43,450 ) ​ $ 11,701 ​ $ ( 31,749 ) Six months ended June 30, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in Company tax rate ​ ​ — ​ ​ ( 96 ) ​ ​ ( 96 ) Net change in pension and other benefits ​ ​ — ​ ​ ( 96 ) ​ ​ ( 96 ) Investment securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net gains arising during the period ​ ​ 115,235 ​ ​ ( 30,751 ) ​ ​ 84,484 Reclassification of net losses to net income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities losses, net ​ ​ 126 ​ ​ ( 34 ) ​ ​ 92 Net change in investment securities ​ ​ 115,361 ​ ​ ( 30,785 ) ​ ​ 84,576 Other comprehensive income ​ ​ 115,361 ​ ​ ( 30,881 ) ​ ​ 84,480 Accumulated other comprehensive income at June 30, 2020 ​ $ 71,911 ​ $ ( 19,180 ) ​ $ 52,731 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income ​ ​ ​ ​ ​ ​ ​ ​ Tax ​ ​ ​ ​ ​ Pre-tax ​ Benefit ​ Net of (dollars in thousands) Amount (Expense) Tax Accumulated other comprehensive loss at March 31, 2019 ​ $ ( 107,779 ) ​ $ 29,025 ​ $ ( 78,754 ) Three months ended June 30, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension and other benefits: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net actuarial losses arising during the period ​ ​ ( 813 ) ​ ​ 219 ​ ​ ( 594 ) Net change in pension and other benefits ​ ​ ( 813 ) ​ ​ 219 ​ ​ ( 594 ) Investment securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net gains arising during the period ​ ​ 64,841 ​ ​ ( 17,462 ) ​ ​ 47,379 Reclassification of net gains to net income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities gains, net ​ ​ ( 21 ) ​ ​ 6 ​ ​ ( 15 ) Net change in investment securities ​ ​ 64,820 ​ ​ ( 17,456 ) ​ ​ 47,364 Other comprehensive income ​ ​ 64,007 ​ ​ ( 17,237 ) ​ ​ 46,770 Accumulated other comprehensive loss at June 30, 2019 ​ $ ( 43,772 ) ​ $ 11,788 ​ $ ( 31,984 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income ​ ​ ​ ​ ​ ​ ​ ​ Tax ​ ​ ​ ​ ​ Pre-tax ​ Benefit ​ Net of (dollars in thousands) Amount (Expense) Tax Accumulated other comprehensive loss at December 31, 2018 ​ $ ( 180,915 ) ​ $ 48,720 ​ $ ( 132,195 ) Six months ended June 30, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension and other benefits: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net actuarial losses arising during the year ​ ​ ( 813 ) ​ ​ 219 ​ ​ ( 594 ) Net change in pension and other benefits ​ ​ ( 813 ) ​ ​ 219 ​ ​ ( 594 ) Investment securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net gains arising during the period ​ ​ 135,364 ​ ​ ( 36,453 ) ​ ​ 98,911 Reclassification of net losses to net income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities losses, net ​ ​ 2,592 ​ ​ ( 698 ) ​ ​ 1,894 Net change in investment securities ​ ​ 137,956 ​ ​ ( 37,151 ) ​ ​ 100,805 Other comprehensive income ​ ​ 137,143 ​ ​ ( 36,932 ) ​ ​ 100,211 Accumulated other comprehensive loss at June 30, 2019 ​ $ ( 43,772 ) ​ $ 11,788 ​ $ ( 31,984 ) ​ 29 Table of Contents The following table summarizes changes in accumulated other comprehensive income (loss), net of tax, for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pensions ​ ​ ​ Accumulated ​ ​ and ​ ​ ​ Other ​ ​ Other ​ Investment ​ Comprehensive (dollars in thousands) Benefits Securities Income (Loss) Three Months Ended June 30, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ ( 28,178 ) ​ $ 32,307 ​ $ 4,129 Other comprehensive income ​ ​ — ​ ​ 48,602 ​ ​ 48,602 Balance at end of period ​ $ ( 28,178 ) ​ $ 80,909 ​ $ 52,731 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ ( 28,082 ) ​ $ ( 3,667 ) ​ $ ( 31,749 ) Other comprehensive income ​ ​ ( 96 ) ​ ​ 84,576 ​ ​ 84,480 Balance at end of period ​ $ ( 28,178 ) ​ $ 80,909 ​ $ 52,731 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ ( 28,379 ) ​ $ ( 50,375 ) ​ $ ( 78,754 ) Other comprehensive income ​ ​ ( 594 ) ​ ​ 47,364 ​ ​ 46,770 Balance at end of period ​ $ ( 28,973 ) ​ $ ( 3,011 ) ​ $ ( 31,984 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ ( 28,379 ) ​ $ ( 103,816 ) ​ $ ( 132,195 ) Other comprehensive income ​ ​ ( 594 ) ​ ​ 100,805 ​ ​ 100,211 Balance at end of period ​ $ ( 28,973 ) ​ $ ( 3,011 ) ​ $ ( 31,984 ) ​ ​ 11. Regulatory Capital Requirements ​ Federal and state laws and regulations limit the amount of dividends the Company may declare or pay. The Company depends primarily on dividends from FHB as the source of funds for the Company’s payment of dividends. ​ The Company and the Bank are subject to various regulatory capital requirements imposed by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s operating activities and financial condition. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of its assets and certain off-balance sheet items. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. ​ Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios of Common Equity Tier 1 (“CET1”) capital, Tier 1 capital and total capital to risk-weighted assets, as well as a minimum leverage ratio. ​ 30 Table of Contents The table below sets forth those ratios at June 30, 2020 and December 31, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Hawaiian ​ Minimum ​ Well- ​ ​ ​ First Hawaiian, Inc. ​ Bank ​ Capital ​ Capitalized ​ (dollars in thousands) Amount Ratio ​ Amount Ratio ​ Ratio (1) Ratio (1) ​ June 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common equity tier 1 capital to risk-weighted assets ​ $ 1,653,674 ​ 11.86 % $ 1,634,333 ​ 11.72 % 4.50 % 6.50 % Tier 1 capital to risk-weighted assets ​ ​ 1,653,674 ​ 11.86 % ​ 1,634,333 ​ 11.72 % 6.00 % 8.00 % Total capital to risk-weighted assets ​ ​ 1,828,511 ​ 13.11 % ​ 1,809,165 ​ 12.97 % 8.00 % 10.00 % Tier 1 capital to average assets (leverage ratio) ​ ​ 1,653,674 ​ 7.75 % ​ 1,634,333 ​ 7.66 % 4.00 % 5.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common equity tier 1 capital to risk-weighted assets ​ $ 1,676,515 ​ 11.88 % $ 1,654,304 ​ 11.72 % 4.50 % 6.50 % Tier 1 capital to risk-weighted assets ​ ​ 1,676,515 ​ 11.88 % ​ 1,654,304 ​ 11.72 % 6.00 % 8.00 % Total capital to risk-weighted assets ​ ​ 1,807,645 ​ 12.81 % ​ 1,785,434 ​ 12.65 % 8.00 % 10.00 % Tier 1 capital to average assets (leverage ratio) ​ ​ 1,676,515 ​ 8.79 % ​ 1,654,304 ​ 8.67 % 4.00 % 5.00 % (1) As defined by the regulations issued by the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation (“FDIC”). ​ A capital conservation buffer requires a 2.5 % capital conservation buffer designed to absorb losses during periods of economic stress. The capital conservation buffer is composed entirely of CET1, on top of these minimum risk weighted asset ratios, effectively resulting in minimum ratios of (i) 7 % CET1 to risk-weighted assets, (ii) 8.5 % Tier 1 capital to risk-weighted assets, and (iii) 10.5 % total capital to risk-weighted assets. As of June 30, 2020, under the bank regulatory capital guidelines, the Company and Bank were both classified as well-capitalized. Management is not aware of any conditions or events that have occurred since June 30, 2020, to change the capital adequacy category of the Company or the Bank. ​ 12. Derivative Financial Instruments ​ The Company enters into derivative contracts primarily to manage its interest rate risk, as well as for customer accommodation purposes. Derivatives used for risk management purposes consist of interest rate swaps that are designated as either a fair value hedge or a cash flow hedge. The derivatives are recognized on the unaudited interim consolidated balance sheets as either assets or liabilities at fair value. Derivatives entered into for customer accommodation purposes consist of various free-standing interest rate derivative products and foreign exchange contracts. The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. ​ The following table summarizes notional amounts and fair values of derivatives held by the Company as of June 30, 2020 and December 31, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2020 ​ December 31, 2019 ​ ​ ​ ​ ​ Fair Value ​ ​ ​ ​ Fair Value ​ ​ Notional ​ Asset ​ Liability ​ Notional ​ Asset ​ Liability (dollars in thousands) Amount Derivatives (1) Derivatives (2) Amount Derivatives (1) Derivatives (2) Derivatives designated as hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate swaps ​ $ 22,825 ​ $ — ​ $ ( 1,581 ) ​ $ 23,190 ​ $ — ​ $ ( 682 ) Derivatives not designated as hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate swaps ​ ​ 3,023,471 ​ ​ 170,576 ​ ​ — ​ ​ 2,818,803 ​ ​ 63,527 ​ ​ — Funding swap ​ ​ 88,480 ​ ​ — ​ ​ ( 2,095 ) ​ ​ 82,900 ​ ​ — ​ ​ ( 4,233 ) Interest rate caps and floors ​ ​ 148,800 ​ ​ 35 ​ ​ ( 35 ) ​ ​ — ​ ​ — ​ ​ — Foreign exchange contracts ​ ​ 150 ​ ​ — ​ ​ — ​ ​ 1,428 ​ ​ 12 ​ ​ — (1) The positive fair values of derivative assets are included in other assets. (2) The negative fair values of derivative liabilities are included in other liabilities. ​ 31 Table of Contents Certain interest rate swaps noted above, are cleared through clearinghouses, rather than directly with counterparties. Those transactions cleared through a clearinghouse require initial margin collateral and variation margin payments depending on the contracts being in a net asset or liability position. The amount of initial margin cash collateral posted by the Company was $ 12.6 million and $ 8.7 million as of June 30, 2020 and December 31, 2019, respectively. As of June 30, 2020 and December 31, 2019, the variation margin was $ 170.6 million and $ 63.5 million, respectively. ​ As of June 30, 2020, the Company pledged $ 30.9 million in financial instruments and $ 26.1 million in cash as collateral for interest rate swaps. As of December 31, 2019, the Company pledged $ 29.9 million in financial instruments and $ 13.4 million in cash as collateral for interest rate swaps. As of June 30, 2020 and December 31, 2019, the cash collateral includes the excess initial margin for interest rate swaps cleared through clearinghouses and cash collateral for interest rate swaps with financial institution counterparties. ​ Fair Value Hedges To manage the risk related to the Company’s net interest margin, interest rate swaps are utilized to hedge certain fixed-rate loans. These swaps have maturity, amortization and prepayment features that correspond to the loans hedged, and are designated and qualify as fair value hedges. Any gain or loss on the swaps, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, is recognized in current period earnings. ​ At June 30, 2020, the Company carried one interest rate swap with a notional amount of $ 22.8 million with a negative fair value of $ 1.6 million that was categorized as a fair value hedge for a commercial and industrial loan. The Company received a USD Prime floating rate and paid a fixed rate of 2.90 % . The swap matures in 2023. At December 31, 2019, the Company carried one interest rate swap with a notional amount of $ 23.2 million with a negative fair value of $ 0.7 million that was categorized as a fair value hedge for a commercial and industrial loan. ​ The following table shows the gains and losses recognized in income related to derivatives in fair value hedging relationships for the three and six months ended June 30, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gains (losses) recognized in ​ Three Months Ended ​ Six Months Ended ​ ​ the consolidated statements ​ June 30, ​ June 30, (dollars in thousands) of income line item 2020 2019 2020 2019 Gains (losses) on fair value hedging relationships recognized in interest income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recognized on interest rate swap ​ Loans and lease financing ​ $ 57 ​ $ ( 424 ) ​ $ ( 898 ) ​ $ ( 766 ) Recognized on hedged item ​ Loans and lease financing ​ ​ 35 ​ ​ 427 ​ ​ 942 ​ ​ 689 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2020 and December 31, 2019, the following amounts were recorded in the unaudited interim consolidated balance sheets related to the cumulative basis adjustments for fair value hedges: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cumulative Amount of Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Hedging Adjustment Included in the ​ ​ Carrying Amount of the Hedged Asset ​ Carrying Amount of the Hedged Asset (dollars in thousands) June 30, 2020 December 31, 2019 June 30, 2020 December 31, 2019 Line item in the consolidated balance sheets in which the hedged item is included ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans and leases ​ $ 25,064 ​ $ 24,415 ​ $ 1,959 ​ $ 1,017 ​ 32 Table of Contents Free-Standing Derivative Instruments For the derivatives that are not designated as hedges, changes in fair value are reported in current period earnings. The following table summarizes the impact on pretax earnings of derivatives not designated as hedges, as reported on the unaudited interim consolidated statements of income for the three and six months ended June 30, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net gains (losses) recognized ​ Three Months Ended ​ Six Months Ended ​ ​ in the consolidated statements ​ June 30, ​ June 30, (dollars in thousands) of income line item ​ 2020 2019 2020 2019 Derivatives Not Designated As Hedging Instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate swaps ​ Other noninterest income ​ $ — ​ $ — ​ $ — ​ $ 16 Funding swap ​ Other noninterest income ​ ​ 103 ​ ​ ( 247 ) ​ ​ 109 ​ ​ ( 242 ) Foreign exchange contracts ​ Other noninterest income ​ ​ 52 ​ ​ ( 1 ) ​ ​ — ​ ​ ( 1 ) ​ As of June 30, 2020, the Company carried multiple interest rate swaps with notional amounts totaling $ 3.0 billion, all of which were related to the Company’s customer swap program, with a positive fair value of $ 170.6 million and a negative fair value of nil . The Company received floating rates ranging from 0.17 % to 6.42 % and paid fixed rates ranging from 2.02 % to 8.73 %. The swaps mature between June 2021 and June 2040. As of December 31, 2019, the Company carried multiple interest rate swaps with notional amounts totaling $ 2.8 billion, all of which were related to the Company’s customer swap program, with a positive fair value of $ 63.5 million and a negative fair value of nil . The Company received 1-month LIBOR and paid fixed rates ranging from 1.71 % to 8.73 %. These swaps resulted in net interest expense of nil during both the three and six months ended June 30, 2020 and 2019. ​ The Company’s customer swap program is designed by offering customers a variable-rate loan that is swapped to fixed-rate through an interest rate swap. The Company simultaneously executes an offsetting interest rate swap with a swap dealer. Upfront fees on the dealer swap are recorded in other noninterest income and totaled $ 4.6 million and $ 1.1 million for the three months ended June 30, 2020 and 2019, respectively, and $ 6.5 million and $ 2.0 million for the six months ended June 30, 2020 and 2019, respectively. ​ In conjunction with the 2016 sale of Class B restricted shares of common stock issued by Visa, the Company entered into a funding swap agreement with the buyer that requires payment to the buyer in the event Visa reduces each member bank’s Class B conversion rate to unrestricted Class A common shares. On June 28, 2018, Visa additionally funded its litigation escrow account, thereby reducing each member bank’s Class B conversion rate to unrestricted Class A common shares. Accordingly, on July 5, 2018, Visa announced a decrease in conversion rate from 1.6483 to 1.6298 effective June 28, 2018. In July 2018, the Company made a payment of approximately $ 0.7 million to the buyer as a result of the reduction in the Visa Class B conversion rate. On September 27, 2019, Visa additionally funded its litigation escrow account, thereby further reducing each member bank’s Class B conversion rate to unrestricted Class A common shares. Accordingly, on September 30, 2019, Visa announced a decrease in conversion rate from 1.6298 to 1.6228 effective September 27, 2019. In October 2019, the Company made a payment of approximately $ 0.3 million to the buyer as a result of the reduction in the Visa Class B conversion rate. Under the terms of the funding swap agreement, the Company will make monthly payments to the buyer based on Visa’s Class A stock price and the number of Visa Class B restricted shares that were sold until the date on which the covered litigation is settled. A derivative liability (“Visa derivative”) of $ 2.1 million and $ 4.2 million was included in the unaudited interim consolidated balance sheets at June 30, 2020 and December 31, 2019, respectively, to provide for the fair value of this liability. There were no sales of these shares prior to 2016. See “Note 17. Fair Value” for more information. ​ Counterparty Credit Risk By using derivatives, the Company is exposed to counterparty credit risk if counterparties to the derivative contracts do not perform as expected. If a counterparty fails to perform, the Company’s counterparty credit risk is equal to the amount reported as a derivative asset, net of cash or other collateral received, and net of derivatives in a loss position with the same counterparty to the extent master netting arrangements exist. The Company minimizes counterparty credit risk through credit approvals, limits, monitoring procedures, executing master netting arrangements and obtaining collateral, where appropriate. Counterparty credit risk related to derivatives is considered in determining fair value. ​ The Company’s interest rate swap agreements include bilateral collateral agreements with collateral requirements, which begin with exposures in excess of $ 0.3 million. For each counterparty, the Company reviews the interest rate swap collateral daily. Collateral for customer interest rate swap agreements, calculated as the pledged asset less loan balance, requires 33 Table of Contents valuation of the pledged asset. Counterparty credit risk adjustments of $ 0.1 million and nil were recognized during the three months ended June 30, 2020 and 2019, respectively, and $ 0.3 million and $ 0.1 million were recognized during the six months ended June 30, 2020 and 2019, respectively. ​ Credit-Risk Related Contingent Features Certain of our derivative contracts contain provisions whereby if the Company’s credit rating were to be downgraded by certain major credit rating agencies as a result of a merger or material adverse change in the Company’s financial condition, the counterparty could require an early termination of derivative instruments in a net liability position. The aggregate fair value of all derivative instruments with such credit-risk related contingent features that are in a net liability position was $ 13.4 million and $ 4.0 million at June 30, 2020 and December 31, 2019, respectively, for which we posted $ 13.5 million and $ 4.7 million, respectively, in collateral in the normal course of business. If the Company’s credit rating had been downgraded as of June 30, 2020 and December 31, 2019, we may have been required to settle the contracts in an amount equal to their fair value. ​ 13. Commitments and Contingent Liabilities ​ Contingencies Various legal proceedings are pending or threatened against the Company. After consultation with legal counsel, management does not expect that the aggregate liability, if any, resulting from these proceedings would have a material effect on the Company’s unaudited interim consolidated financial position, results of operations or cash flows. ​ Financial Instruments with Off-Balance Sheet Risk The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby and commercial letters of credit which are not reflected in the unaudited interim consolidated financial statements. ​ Unfunded Commitments to Extend Credit A commitment to extend credit is a legally binding agreement to lend funds to a customer, usually at a stated interest rate and for a specified purpose. Commitments are reported net of participations sold to other institutions. Such commitments have fixed expiration dates and generally require a fee. The extension of a commitment gives rise to credit risk. The actual liquidity requirements or credit risk that the Company will experience is expected to be lower than the contractual amount of commitments to extend credit because a significant portion of those commitments are expected to expire without being drawn upon. Certain commitments are subject to loan agreements containing covenants regarding the financial performance of the customer that must be met before the Company is required to fund the commitment. The Company uses the same credit policies in making commitments to extend credit as it does in making loans. In addition, the Company manages the potential credit risk in commitments to extend credit by limiting the total amount of arrangements, both by individual customer and in the aggregate, by monitoring the size and expiration structure of these portfolios and by applying the same credit standards maintained for all of its related credit activities. Commitments to extend credit are reported net of participations sold to other institutions of $ 116.8 million and $ 94.1 million at June 30, 2020 and December 31, 2019, respectively. ​ Standby and Commercial Letters of Credit Standby letters of credit are issued on behalf of customers in connection with contracts between the customers and third parties. Under standby letters of credit, the Company assures that the third parties will receive specified funds if customers fail to meet their contractual obligations. The credit risk to the Company arises from its obligation to make payment in the event of a customer’s contractual default. Standby letters of credit are reported net of participations sold to other institutions of $ 11.0 million and $ 9.0 million at June 30, 2020 and December 31, 2019, respectively. The Company also had commitments for commercial and similar letters of credit. Commercial letters of credit are issued specifically to facilitate commerce whereby the commitment is typically drawn upon when the underlying transaction between the customer and a third-party is consummated. The maximum amount of potential future payments guaranteed by the Company is limited to the contractual amount of these letters. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Collateral held supports those commitments for which collateral is deemed necessary. The commitments outstanding as of June 30, 2020 have maturities ranging from July 2020 to May 2022. Substantially all fees received from the issuance of such commitments are deferred and amortized on a straight-line basis over the term of the commitment. ​ 34 Table of Contents Financial instruments with off-balance sheet risk at June 30, 2020 and December 31, 2019 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, (dollars in thousands) 2020 2019 Financial instruments whose contract amounts represent credit risk: ​ ​ ​ ​ ​ ​ Commitments to extend credit ​ $ 6,097,646 ​ $ 5,907,690 Standby letters of credit ​ ​ 175,009 ​ ​ 181,412 Commercial letters of credit ​ ​ 3,131 ​ ​ 7,334 ​ Guarantees The Company sells residential mortgage loans in the secondary market primarily to the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation that may potentially require repurchase under certain conditions. This risk is managed through the Company’s underwriting practices. The Company services loans sold to investors and loans originated by other originators under agreements that may include repurchase remedies if certain servicing requirements are not met. This risk is managed through the Company’s quality assurance and monitoring procedures. Management does not anticipate any material losses as a result of these transactions. ​ Foreign Exchange Contracts The Company has forward foreign exchange contracts that represent commitments to purchase or sell foreign currencies at a future date at a specified price. The Company’s utilization of forward foreign exchange contracts is subject to the primary underlying risk of movements in foreign currency exchange rates and to additional counterparty risk should its counterparties fail to meet the terms of their contracts. Forward foreign exchange contracts are utilized to mitigate the Company’s risk to satisfy customer demand for foreign currencies and are not used for trading purposes. See “Note 12. Derivative Financial Instruments” for more information. ​ Reorganization Transactions On April 1, 2016, a series of reorganization transactions were undertaken to facilitate FHI’s initial public offering. In connection with the reorganization transactions, FHI distributed its interest in BancWest Holding Inc. (“BWHI”), including Bank of the West (“BOW”) to BNP Paribas (“BNPP”) so that BWHI was held directly by BNPP. As a result of the reorganization transactions that occurred on April 1, 2016, various tax or other contingent liabilities could arise related to the business of BOW, or related to the Company’s operations prior to the restructuring when it was known as BancWest Corporation, including its then wholly owned subsidiary, BOW. The Company is not able to determine the ultimate outcome or estimate the amounts of these contingent liabilities, if any, at this time. ​ 14. Revenue from Contracts with Customers ​ Revenue Recognition In accordance with Topic 606, revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services that are promised within each contract and identifies those that contain performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. ​ 35 Table of Contents Disaggregation of Revenue ​ In 2019, the Company made changes to the internal measurement of segment operating profits for the purpose of evaluating segment performance and resource allocation. The Company has restated the selected financial information for the three and six months ended June 30, 2019 in order to conform with the current presentation. See “Note 18. Reportable Operating Segments” in the notes to the unaudited interim consolidated financial statements. ​ The following table summarizes the Company’s revenues, which includes net interest income on financial instruments and noninterest income, disaggregated by type of service and business segments for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2020 ​ ​ ​ ​ ​ ​ ​ Treasury ​ ​ ​ ​ ​ Retail ​ Commercial ​ and ​ ​ ​ (dollars in thousands) Banking Banking Other Total Net interest income (1) ​ $ 96,146 ​ $ 33,094 ​ $ ( 1,418 ) ​ $ 127,822 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service charges on deposit accounts ​ ​ 5,469 ​ ​ 326 ​ ​ 132 ​ ​ 5,927 Credit and debit card fees ​ ​ — ​ ​ 10,122 ​ ​ 275 ​ ​ 10,397 Other service charges and fees ​ ​ 4,580 ​ ​ 215 ​ ​ 338 ​ ​ 5,133 Trust and investment services income ​ ​ 8,664 ​ ​ — ​ ​ — ​ ​ 8,664 Other ​ ​ 56 ​ ​ 1,499 ​ ​ 112 ​ ​ 1,667 Not in scope of Topic 606 (1) ​ ​ 3,403 ​ ​ 5,893 ​ ​ 4,572 ​ ​ 13,868 Total noninterest income ​ ​ 22,172 ​ ​ 18,055 ​ ​ 5,429 ​ ​ 45,656 Total revenue ​ $ 118,318 ​ $ 51,149 ​ $ 4,011 ​ $ 173,478 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 2020 ​ ​ ​ ​ ​ ​ ​ Treasury ​ ​ ​ ​ ​ Retail ​ Commercial ​ and ​ ​ ​ (dollars in thousands) Banking Banking Other Total Net interest income (1) ​ $ 186,029 ​ $ 67,508 ​ $ 12,968 ​ $ 266,505 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service charges on deposit accounts ​ ​ 13,556 ​ ​ 677 ​ ​ 644 ​ ​ 14,877 Credit and debit card fees ​ ​ — ​ ​ 23,009 ​ ​ 1,874 ​ ​ 24,883 Other service charges and fees ​ ​ 9,454 ​ ​ 639 ​ ​ 854 ​ ​ 10,947 Trust and investment services income ​ ​ 18,255 ​ ​ — ​ ​ — ​ ​ 18,255 Other ​ ​ 241 ​ ​ 2,605 ​ ​ 300 ​ ​ 3,146 Not in scope of Topic 606 (1) ​ ​ 7,042 ​ ​ 8,921 ​ ​ 6,813 ​ ​ 22,776 Total noninterest income ​ ​ 48,548 ​ ​ 35,851 ​ ​ 10,485 ​ ​ 94,884 Total revenue ​ $ 234,577 ​ $ 103,359 ​ $ 23,453 ​ $ 361,389 (1) Most of the Company’s revenue is not within the scope of ASU No. 2014-09, Revenue from Contracts with Customers . The guidance explicitly excludes net interest income from financial assets and liabilities as well as other noninterest income from loans, leases, investment securities and derivative financial instruments. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2019 ​ ​ ​ ​ ​ ​ ​ Treasury ​ ​ ​ ​ ​ Retail ​ Commercial ​ and ​ ​ ​ (dollars in thousands) Banking Banking Other Total Net interest income (1) ​ $ 107,708 ​ $ 35,000 ​ $ 2,905 ​ $ 145,613 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service charges on deposit accounts ​ ​ 7,131 ​ ​ 309 ​ ​ 683 ​ ​ 8,123 Credit and debit card fees ​ ​ — ​ ​ 14,481 ​ ​ 1,687 ​ ​ 16,168 Other service charges and fees ​ ​ 4,944 ​ ​ 868 ​ ​ 578 ​ ​ 6,390 Trust and investment services income ​ ​ 8,931 ​ ​ — ​ ​ — ​ ​ 8,931 Other ​ ​ 142 ​ ​ 761 ​ ​ 327 ​ ​ 1,230 Not in scope of Topic 606 (1) ​ ​ 2,227 ​ ​ 2,306 ​ ​ 3,398 ​ ​ 7,931 Total noninterest income ​ ​ 23,375 ​ ​ 18,725 ​ ​ 6,673 ​ ​ 48,773 Total revenue ​ $ 131,083 ​ $ 53,725 ​ $ 9,578 ​ $ 194,386 ​ 36 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 2019 ​ ​ ​ ​ ​ ​ ​ Treasury ​ ​ ​ ​ ​ Retail ​ Commercial ​ and ​ ​ ​ (dollars in thousands) Banking Banking Other Total Net interest income (1) ​ $ 214,935 ​ $ 69,656 ​ $ 6,111 ​ $ 290,702 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service charges on deposit accounts ​ ​ 14,365 ​ ​ 620 ​ ​ 1,198 ​ ​ 16,183 Credit and debit card fees ​ ​ — ​ ​ 28,941 ​ ​ 3,417 ​ ​ 32,358 Other service charges and fees ​ ​ 10,277 ​ ​ 1,237 ​ ​ 1,120 ​ ​ 12,634 Trust and investment services income ​ ​ 17,549 ​ ​ — ​ ​ — ​ ​ 17,549 Other ​ ​ 357 ​ ​ 2,270 ​ ​ 535 ​ ​ 3,162 Not in scope of Topic 606 (1) ​ ​ 4,696 ​ ​ 4,045 ​ ​ 5,218 ​ ​ 13,959 Total noninterest income ​ ​ 47,244 ​ ​ 37,113 ​ ​ 11,488 ​ ​ 95,845 Total revenue ​ $ 262,179 ​ $ 106,769 ​ $ 17,599 ​ $ 386,547 (1) Most of the Company’s revenue is not within the scope of ASU No. 2014-09, Revenue from Contracts with Customers. The guidance explicitly excludes net interest income from financial assets and liabilities as well as other noninterest income from loans, leases, investment securities and derivative financial instruments. ​ For the three and six months ended June 30, 2020 and 2019, substantially all of the Company’s revenues under the scope of Topic 606 were related to performance obligations satisfied at a point in time. ​ The following is a discussion of revenues within the scope of Topic 606. ​ Service Charges on Deposit Accounts Service charges on deposit accounts relate to fees generated from a variety of deposit products and services rendered to customers. Charges include, but are not limited to, overdraft fees, non-sufficient fund fees, dormant fees and monthly service charges. Such fees are recognized concurrent with the event on a daily basis or on a monthly basis depending upon the customer’s cycle date. ​ Credit and Debit Card Fees Credit and debit card fees primarily represent revenues earned from interchange fees, ATM fees and merchant processing fees. Interchange and network revenues are earned on credit and debit card transactions conducted with payment networks. ATM fees are primarily earned as a result of surcharges assessed to non-FHB customers who use an FHB ATM. Merchant processing fees are primarily earned on transactions in which FHB is the acquiring bank. Such fees are generally recognized concurrently with the delivery of services on a daily basis. ​ Trust and Investment Services Fees Trust and investment services fees represent revenue earned by directing, holding and managing customers’ assets. Fees are generally computed based on a percentage of the previous period’s value of assets under management. The transaction price (i.e., percentage of assets under management) is established at the inception of each contract. Trust and investment services fees also include fees collected when the Company acts as agent or personal representative and executes security transactions, performs collection and disbursement of income, and completes investment management and other administrative tasks. ​ Other Fees Other fees primarily include revenues generated from wire transfers, lockboxes, bank issuance of checks and insurance commissions. Such fees are recognized concurrent with the event or on a monthly basis. ​ Contract Balances A contract liability is an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer. In prior years, the Company received signing bonuses from two vendors which are being amortized over the term of the respective contracts. As of June 30, 2020 and December 31, 2019, the Company had contract liabilities of $ 1.4 million and $ 1.8 million, respectively, which will be recognized over the remaining term of the respective contracts with the vendors. For the three and six months ended June 30, 2020, the Company’s recognized revenues and contract liabilities decreased by approximately $ 0.2 million and $ 0.4 million, respectively, due to the passage of time. For the three and six months ended June 30, 2019, the Company’s recognized revenues and contract liabilities decreased by approximately $ 0.2 million and $ 0.4 million, respectively, due to the passage of time. There were no changes in contract liabilities due to changes in transaction price estimates. 37 Table of Contents ​ A contract asset is the right to consideration for transferred goods or services when the amount is conditioned on something other than the passage of time. As of June 30, 2020 and December 31, 2019, there were no receivables from contracts with customers or contract assets recorded on the Company’s consolidated balance sheets. ​ Other Except for the contract liabilities noted above, the Company did not have any significant performance obligations as of June 30, 2020 and December 31, 2019. The Company also did not have any material contract acquisition costs or use any significant judgments or estimates in recognizing revenue for financial reporting purposes. ​ 15. Earnings per Share ​ For the three and six months ended June 30, 2020, the Company made no adjustments to net income for the purpose of computing earnings per share and there were 537,000 and 513,000 antidilutive securities, respectively. For the three and six months ended June 30, 2019, the Company made no adjustments to net income for the purpose of computing earnings per share and there were no antidilutive securities. For the three and six months ended June 30, 2020 and 2019, the computations of basic and diluted earnings per share were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ Six Months Ended June 30, (dollars in thousands, except shares and per share amounts) 2020 2019 2020 2019 Numerator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 20,049 ​ $ 72,433 ​ $ 58,914 ​ $ 142,357 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic: weighted-average shares outstanding ​ ​ 129,856,730 ​ ​ 134,420,380 ​ ​ 129,876,218 ​ ​ 134,655,217 Add: weighted-average equity-based awards ​ ​ 148,465 ​ ​ 231,628 ​ ​ 287,504 ​ ​ 269,114 Diluted: weighted-average shares outstanding ​ ​ 130,005,195 ​ ​ 134,652,008 ​ ​ 130,163,722 ​ ​ 134,924,331 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings per share ​ $ 0.15 ​ $ 0.54 ​ $ 0.45 ​ $ 1.06 Diluted earnings per share ​ $ 0.15 ​ $ 0.54 ​ $ 0.45 ​ $ 1.06 ​ ​ 16. Noninterest Income and Noninterest Expense ​ Benefit Plans ​ The Company sponsors an unfunded supplemental executive retirement plan (“SERP”) for certain key executives. In March 2019, the Company’s board of directors approved an amendment to the SERP to freeze the SERP, which became effective on July 1, 2019. As a result of the amendment, since the effective date, there have not been any, and there will be no, new accruals of benefits, including service accruals. Existing benefits under the SERP, as of the effective date of the amendment described above, will otherwise continue in accordance with the terms of the SERP. ​ 38 Table of Contents The following table sets forth the components of net periodic benefit cost for the Company’s pension and postretirement benefit plans for the three and six months ended June 30, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income line item where recognized in ​ Pension Benefits ​ Other Benefits (dollars in thousands) ​ the consolidated statements of income 2020 2019 2020 2019 Three Months Ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost ​ Salaries and employee benefits ​ $ — ​ $ 17 ​ $ 189 ​ $ 159 Interest cost ​ Other noninterest expense ​ ​ 1,621 ​ ​ 2,044 ​ ​ 164 ​ ​ 206 Expected return on plan assets ​ Other noninterest expense ​ ​ ( 1,194 ) ​ ​ ( 1,195 ) ​ ​ — ​ ​ — Prior service credit ​ Other noninterest expense ​ ​ — ​ ​ — ​ ​ ( 13 ) ​ ​ ( 107 ) Recognized net actuarial loss (gain) ​ Other noninterest expense ​ ​ 1,429 ​ ​ 1,564 ​ ​ ( 26 ) ​ ​ ( 76 ) Total net periodic benefit cost ​ ​ ​ $ 1,856 ​ $ 2,430 ​ $ 314 ​ $ 182 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost ​ Salaries and employee benefits ​ $ — ​ $ 34 ​ $ 378 ​ $ 318 Interest cost ​ Other noninterest expense ​ ​ 3,242 ​ ​ 4,088 ​ ​ 328 ​ ​ 412 Expected return on plan assets ​ Other noninterest expense ​ ​ ( 2,388 ) ​ ​ ( 2,390 ) ​ ​ — ​ ​ — Prior service credit ​ Other noninterest expense ​ ​ — ​ ​ — ​ ​ ( 26 ) ​ ​ ( 214 ) Recognized net actuarial loss (gain) ​ Other noninterest expense ​ ​ 2,858 ​ ​ 3,128 ​ ​ ( 52 ) ​ ​ ( 152 ) Total net periodic benefit cost ​ ​ ​ $ 3,712 ​ $ 4,860 ​ $ 628 ​ $ 364 ​ Leases ​ The Company recognized operating lease income related to lease payments of $ 1.6 million and $ 1.5 million for the three months ended June 30, 2020 and 2019, respectively, and $ 3.1 million and $ 3.0 million for the six months ended June 30, 2020 and 2019, respectively. In addition, the Company recognized $ 1.4 million and $ 1.3 million of lease income related to variable lease payments for the three months ended June 30, 2020 and 2019, respectively, and $ 2.9 million and $ 2.6 million for the six months ended June 30, 2020 and 2019, respectively. ​ Amortization of Software Expenses ​ Amortization of software expenses recorded in other noninterest expense was $ 1.4 million and $ 1.0 million for the three months ended June 30, 2020 and 2019, respectively, and $ 2.6 million and $ 2.2 million for the six months ended June 30, 2020 and 2019, respectively. ​ ​ ​ 17. Fair Value ​ The Company determines the fair values of its financial instruments based on the requirements established in Accounting Standards Codification Topic 820 (“Topic 820”), Fair Value Measurements , which provides a framework for measuring fair value under GAAP and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Topic 820 defines fair value as the exit price, the price that would be received for an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date under current market conditions. ​ Fair Value Hierarchy Topic 820 establishes three levels of fair values based on the markets in which the assets or liabilities are traded and the reliability of the assumptions used to determine fair value. The levels are: ​ ◾ Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. ◾ Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ◾ Level 3: Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability (“Company-level data”). Level 3 assets and liabilities include financial instruments whose value is determined using unobservable inputs to pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. ​ 39 Table of Contents Topic 820 requires that the Company disclose estimated fair values for certain financial instruments. Financial instruments include such items as investment securities, loans, deposits, interest rate and foreign exchange contracts, swaps and other instruments as defined by the standard. The Company has an organized and established process for determining and reviewing the fair value of financial instruments reported in the Company’s financial statements. The fair value measurements are reviewed to ensure they are reasonable and in line with market experience in similar asset and liability classes. ​ Additionally, the Company may be required to record at fair value other assets on a nonrecurring basis, such as other real estate owned, other customer relationships, and other intangible assets. These nonrecurring fair value adjustments typically involve the application of lower-of-cost-or-fair-value accounting or write-downs of individual assets. ​ Disclosure of fair values is not required for certain items such as lease financing, obligations for pension and other postretirement benefits, premises and equipment, prepaid expenses, deposit liabilities with no defined or contractual maturity, and income tax assets and liabilities. ​ Reasonable comparisons of fair value information with that of other financial institutions cannot necessarily be made because the standard permits many alternative calculation techniques, and numerous assumptions have been used to estimate the Company’s fair values. ​ Valuation Techniques Used in the Fair Value Measurement of Assets and Liabilities Carried at Fair Value For the assets and liabilities measured at fair value on a recurring basis (categorized in the valuation hierarchy table below), the Company applies the following valuation techniques: ​ Available-for-sale securities Available-for-sale debt securities are recorded at fair value on a recurring basis. Fair value measurement is based on quoted prices, including estimates by third-party pricing services, if available. If quoted prices are not available, fair values are measured using proprietary valuation models that utilize market observable parameters from active market makers and inter-dealer brokers whereby securities are valued based upon available market data for securities with similar characteristics. Management reviews the pricing information received from the Company’s third-party pricing service to evaluate the inputs and valuation methodologies used to place securities into the appropriate level of the fair value hierarchy and transfers of securities within the fair value hierarchy are made if necessary. On a monthly basis, management reviews the pricing information received from the third-party pricing service which includes a comparison to non-binding third-party broker quotes, as well as a review of market-related conditions impacting the information provided by the third-party pricing service. Management also identifies investment securities which may have traded in illiquid or inactive markets by identifying instances of a significant decrease in the volume or frequency of trades, relative to historical levels, as well as instances of a significant widening of the bid-ask spread in the brokered markets. As of June 30, 2020 and December 31, 2019, management did not make adjustments to prices provided by the third-party pricing services as a result of illiquid or inactive markets. The Company’s third-party pricing service has also established processes for the Company to submit inquiries regarding quoted prices. Periodically, the Company will challenge the quoted prices provided by the third-party pricing service. The Company’s third-party pricing service will review the inputs to the evaluation in light of the new market data presented by the Company. The Company’s third-party pricing service may then affirm the original quoted price or may update the evaluation on a going forward basis. The Company classifies all available-for-sale securities as Level 2. ​ Derivatives Most of the Company’s derivatives are traded in over-the-counter markets where quoted market prices are not readily available. For those derivatives, the Company measures fair value on a recurring basis using proprietary valuation models that primarily use market observable inputs, such as yield curves, and option volatilities. The fair value of derivatives includes values associated with counterparty credit risk and the Company’s own credit standing. The Company classifies these derivatives, included in other assets and other liabilities, as Level 2. ​ Concurrent with the sale of the Visa Class B restricted shares, the Company entered into an agreement with the buyer that requires payment to the buyer in the event Visa reduces each member bank’s Class B conversion rate to unrestricted Class A common shares. On July 5, 2018, Visa announced a decrease in conversion rate from 1.6483 to 1.6298 effective June 28, 2018. On September 27, 2019, Visa additionally funded its litigation escrow account, thereby further reducing each member bank’s Class B conversion rate to unrestricted Class A common shares. Accordingly, on September 30, 2019, Visa announced a decrease in conversion rate from 1.6298 to 1.6228 effective September 27, 2019. The Visa derivative of $ 2.1 million and $ 4.2 million was included in the unaudited interim consolidated balance sheets at June 30, 2020 and 40 Table of Contents December 31, 2019, respectively, to provide for the fair value of this liability. The potential liability related to this funding swap agreement was determined based on management’s estimate of the timing and the amount of Visa’s litigation settlement and the resulting payments due to the counterparty under the terms of the contract. As such, the funding swap agreement is classified as Level 3 in the fair value hierarchy. The significant unobservable inputs used in the fair value measurement of the Company’s funding swap agreement are the potential future changes in the conversion rate, expected term and growth rate of the market price of Visa Class A common shares. Material increases (or decreases) in any of those inputs may result in a significantly higher (or lower) fair value measurement. ​ Assets and Liabilities Recorded at Fair Value on a Recurring Basis Assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019 are summarized below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements as of June 30, 2020 ​ ​ Quoted Prices in ​ Significant ​ ​ ​ ​ ​ ​ Active Markets for ​ Other ​ Significant ​ ​ ​ ​ Identical Assets ​ Observable ​ Unobservable ​ ​ (dollars in thousands) (Level 1) Inputs (Level 2) Inputs (Level 3) Total Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury and government agency debt securities ​ $ — ​ $ 94,918 ​ $ — ​ $ 94,918 Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential - Government agency (1) ​ ​ — ​ ​ 232,617 ​ ​ — ​ ​ 232,617 Residential - Government-sponsored enterprises (1) ​ ​ — ​ ​ 390,912 ​ ​ — ​ ​ 390,912 Commercial - Government agency ​ ​ — ​ ​ 629,679 ​ ​ — ​ ​ 629,679 Commercial - Government-sponsored enterprises ​ ​ — ​ ​ 322,996 ​ ​ — ​ ​ 322,996 Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government agency ​ ​ — ​ ​ 1,926,584 ​ ​ — ​ ​ 1,926,584 Government-sponsored enterprises ​ ​ — ​ ​ 1,538,069 ​ ​ — ​ ​ 1,538,069 Total available-for-sale securities ​ ​ — ​ ​ 5,135,775 ​ ​ — ​ ​ 5,135,775 Other assets (2) ​ ​ — ​ ​ 170,611 ​ ​ — ​ ​ 170,611 Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other liabilities (3) ​ ​ — ​ ​ ( 1,616 ) ​ ​ ( 2,095 ) ​ ​ ( 3,711 ) Total ​ $ — ​ $ 5,304,770 ​ $ ( 2,095 ) ​ $ 5,302,675 (1) Backed by residential real estate. (2) Other assets include derivative assets. (3) Other liabilities include derivative liabilities. ​ 41 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements as of December 31, 2019 ​ ​ Quoted Prices in ​ Significant ​ ​ ​ ​ ​ ​ ​ Active Markets for ​ Other ​ Significant ​ ​ ​ ​ Identical Assets ​ Observable ​ Unobservable ​ ​ (dollars in thousands) (Level 1) Inputs (Level 2) Inputs (Level 3) Total Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury securities ​ $ — ​ $ 29,888 ​ $ — ​ $ 29,888 Government-sponsored enterprises debt securities ​ ​ — ​ ​ 101,439 ​ ​ — ​ ​ 101,439 Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential - Government agency (1) ​ ​ — ​ ​ 291,209 ​ ​ — ​ ​ 291,209 Residential - Government-sponsored enterprises (1) ​ ​ — ​ ​ 399,492 ​ ​ — ​ ​ 399,492 Commercial - Government-sponsored enterprises ​ ​ — ​ ​ 101,719 ​ ​ — ​ ​ 101,719 Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government agency ​ ​ — ​ ​ 2,381,278 ​ ​ — ​ ​ 2,381,278 Government-sponsored enterprises ​ ​ — ​ ​ 770,619 ​ ​ — ​ ​ 770,619 Total available-for-sale securities ​ ​ — ​ ​ 4,075,644 ​ ​ — ​ ​ 4,075,644 Other assets (2) ​ ​ — ​ ​ 63,539 ​ ​ — ​ ​ 63,539 Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other liabilities (3) ​ ​ — ​ ​ ( 682 ) ​ ​ ( 4,233 ) ​ ​ ( 4,915 ) Total ​ $ — ​ $ 4,138,501 ​ $ ( 4,233 ) ​ $ 4,134,268 (1) Backed by residential real estate. (2) Other assets include derivative assets. (3) Other liabilities include derivative liabilities. ​ Changes in Fair Value Levels For the three and six months ended June 30, 2020, there were no transfers between fair value hierarchy levels. ​ The changes in Level 3 liabilities measured at fair value on a recurring basis for the three and six months ended June 30, 2020 and 2019 are summarized below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Visa Derivative (dollars in thousands) ​ 2020 2019 Three Months Ended June 30, ​ ​ ​ ​ ​ ​ Balance as of April 1, ​ $ ( 3,199 ) ​ $ ( 1,839 ) Total net gains (losses) included in other noninterest income ​ ​ 103 ​ ​ ( 247 ) Settlements ​ ​ 1,001 ​ ​ 907 Balance as of June 30, ​ $ ( 2,095 ) ​ $ ( 1,179 ) Total net gains (losses) included in net income attributable to the change in unrealized gains or losses related to liabilities still held as of June 30, ​ $ 103 ​ $ ( 247 ) ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ ​ ​ ​ ​ ​ Balance as of January 1, ​ $ ( 4,233 ) ​ $ ( 2,607 ) Total net gains (losses) included in other noninterest income ​ ​ 109 ​ ​ ( 242 ) Settlements ​ ​ 2,029 ​ ​ 1,670 Balance as of June 30, ​ $ ( 2,095 ) ​ $ ( 1,179 ) Total net gains (losses) included in net income attributable to the change in unrealized gains or losses related to liabilities still held as of June 30, ​ $ 109 ​ $ ( 242 ) ​ 42 Table of Contents Assets and Liabilities Carried at Other Than Fair Value The following tables summarize for the periods indicated the estimated fair value of the Company’s financial instruments that are not required to be carried at fair value on a recurring basis, excluding leases and deposit liabilities with no defined or contractual maturity. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2020 ​ ​ ​ ​ ​ Fair Value Measurements ​ ​ ​ ​ ​ Quoted Prices in ​ Significant ​ Significant ​ ​ ​ ​ ​ ​ ​ Active Markets ​ Other ​ Unobservable ​ ​ ​ ​ ​ ​ ​ for Identical ​ Observable ​ Inputs ​ ​ (dollars in thousands) Book Value Assets (Level 1) Inputs (Level 2) (Level 3) Total Financial assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 1,855,222 ​ $ 347,592 ​ $ 1,507,630 ​ $ — ​ $ 1,855,222 Loans held for sale ​ ​ 6,698 ​ ​ — ​ ​ 6,698 ​ ​ — ​ ​ 6,698 Loans (1) ​ ​ 13,525,743 ​ ​ — ​ ​ — ​ ​ 13,832,005 ​ ​ 13,832,005 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time deposits (2) ​ $ 3,506,665 ​ $ — ​ $ 3,520,718 ​ $ — ​ $ 3,520,718 Short-term borrowings ​ ​ 200,000 ​ ​ — ​ ​ 200,286 ​ ​ — ​ ​ 200,286 Long-term borrowings (3) ​ ​ 200,000 ​ ​ — ​ ​ 216,394 ​ ​ — ​ ​ 216,394 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 ​ ​ ​ ​ ​ Fair Value Measurements ​ ​ ​ ​ ​ Quoted Prices in ​ Significant ​ Significant ​ ​ ​ ​ ​ ​ ​ Active Markets ​ Other ​ Unobservable ​ ​ ​ ​ ​ ​ ​ for Identical ​ Observable ​ Inputs ​ ​ (dollars in thousands) Book Value Assets (Level 1) Inputs (Level 2) (Level 3) Total Financial assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 694,017 ​ $ 360,375 ​ $ 333,642 ​ $ — ​ $ 694,017 Loans held for sale ​ ​ 904 ​ ​ — ​ ​ 904 ​ ​ — ​ ​ 904 Loans (1) ​ ​ 13,009,167 ​ ​ — ​ ​ — ​ ​ 13,140,898 ​ ​ 13,140,898 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time deposits (2) ​ $ 2,510,157 ​ $ — ​ $ 2,501,478 ​ $ — ​ $ 2,501,478 Short-term borrowings ​ ​ 400,000 ​ ​ — ​ ​ 401,709 ​ ​ — ​ ​ 401,709 Long-term borrowings (3) ​ ​ 200,000 ​ ​ — ​ ​ 207,104 ​ ​ — ​ ​ 207,104 (1) Excludes financing leases of $ 238.3 million at June 30, 2020 and $ 202.5 million at December 31, 2019. (2) Excludes deposit liabilities with no defined or contractual maturity of $ 15.9 billion as of June 30, 2020 and $ 13.9 billion as of December 31, 2019. (3) Excludes capital lease obligations of $ 19 thousand as of both June 30, 2020 and December 31, 2019. ​ Unfunded loan and lease commitments and letters of credit are not included in the tables above. As of June 30, 2020 and December 31, 2019, the Company had $ 6.3 billion and $ 6.1 billion, respectively, of unfunded loan and lease commitments and letters of credit. A reasonable estimate of the fair value of these instruments is the carrying value of deferred fees plus the related reserve for unfunded commitments, which totaled $ 36.3 million and $ 14.4 million at June 30, 2020 and December 31, 2019, respectively. No active trading market exists for these instruments, and the estimated fair value does not include value associated with the borrower relationship. The Company does not estimate the fair values of certain unfunded loan and lease commitments that can be canceled by providing notice to the borrower. As Company-level data is incorporated into the fair value measurement, unfunded loan and lease commitments and letters of credit are classified as Level 3. ​ Valuation Techniques Used in the Fair Value Measurement of Assets and Liabilities Carried at the Lower of Cost or Fair Value The Company applies the following valuation techniques to assets measured at the lower of cost or fair value: ​ Mortgage servicing rights MSRs are carried at the lower of cost or fair value and are therefore subject to fair value measurements on a nonrecurring basis. The fair value of MSRs is determined using models which use significant unobservable inputs, such as estimates of prepayment rates, the resultant weighted average lives of the MSRs and the option-adjusted spread levels. Accordingly, the Company classifies MSRs as Level 3. ​ 43 Table of Contents Collateral-dependent loans Collateral-dependent loans are those for which repayment is expected to be provided substantially through the operation or sale of the collateral. These loans are measured at fair value on a nonrecurring basis using collateral values as a practical expedient. The fair values of collateral are primarily based on real estate appraisal reports prepared by third-party appraisers less estimated selling costs. The Company measures the estimated credit losses on collateral-dependent loans by performing a lower-of-cost-or-fair-value analysis. If the estimated credit losses are determined by the value of the collateral, the net carrying amount is adjusted to fair value on a nonrecurring basis as Level 3 by recognizing an allowance for credit losses. ​ Other real estate owned The Company values these properties at fair value at the time the Company acquires them, which establishes their new cost basis. After acquisition, the Company carries such properties at the lower of cost or fair value less estimated selling costs on a nonrecurring basis. Fair value is measured on a nonrecurring basis using collateral values as a practical expedient. The fair values of collateral for other real estate owned are primarily based on real estate appraisal reports prepared by third-party appraisers less disposition costs, and are classified as Level 3. ​ Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis The Company may be required to record certain assets at fair value on a nonrecurring basis in accordance with GAAP. These assets are subject to fair value adjustments that result from the application of lower of cost or fair value accounting or write-downs of individual assets to fair value. ​ The following table provides the level of valuation inputs used to determine each fair value adjustment and the fair value of the related individual assets or portfolio of assets with fair value adjustments on a nonrecurring basis as of June 30, 2020 and December 31, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) Level 1 Level 2 Level 3 June 30, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ Collateral-dependent loans ​ $ — ​ $ — ​ $ 1,840 December 31, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ Collateral-dependent loans ​ $ — ​ $ — ​ $ 1,502 ​ Total losses on collateral-dependent loans were nil and $ 0.4 million for the three and six months ended June 30, 2020, respectively. No losses were recognized on collateral-dependent loans for both the three and six months ended June 30, 2019. ​ For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of June 30, 2020 and December 31, 2019, the significant unobservable inputs used in the fair value measurements were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quantitative Information about Level 3 Fair Value Measurements at June 30, 2020 ​ ​ ​ ​ ​ ​ ​ Significant ​ ​ (dollars in thousands) ​ Fair value Valuation Technique Unobservable Input Range Collateral-dependent loans ​ $ 1,840 ​ Appraisal Value ​ Appraisal Value ​ n/m (1) Visa derivative ​ $ ( 2,095 ) ​ Discounted Cash Flow ​ Expected Conversation Rate - 1.6228 (2) ​ 1.5977 - 1.6228 ​ ​ ​ ​ ​ ​ ​ Expected Term - 1 year (3) ​ 0.5 to 1.5 years ​ ​ ​ ​ ​ ​ ​ Growth Rate - 13 % (4) ​ 4 % - 17 % (1) The fair value of these assets is determined based on appraised values of the collateral or broker opinions, the range of which is not meaningful to disclose. (2) Due to the uncertainty in the movement of the conversion rate, the current conversion rate was utilized in the fair value calculation. (3) The expected term of 1 year was based on the median of 0.5 to 1.5 years. (4) The growth rate of 13 % was based on the arithmetic average of analyst price targets. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quantitative Information about Level 3 Fair Value Measurements at December 31, 2019 ​ ​ ​ ​ ​ ​ ​ Significant (dollars in thousands) ​ Fair value Valuation Technique Unobservable Input Collateral-dependent loans ​ $ 1,502 ​ Appraisal Value ​ Appraisal Value Visa derivative ​ $ ( 4,233 ) ​ Discounted Cash Flow ​ Expected Conversion Rate - 1.6228 ​ ​ ​ ​ ​ ​ ​ Expected Term - 1 year ​ ​ ​ ​ ​ ​ ​ Growth Rate - 13 % ​ ​ 44 Table of Contents 18. Reportable Operating Segments ​ The Company’s operations are organized into three business segments – Retail Banking, Commercial Banking, and Treasury and Other. These segments reflect how discrete financial information is currently evaluated by the chief operating decision maker and how performance is assessed and resources allocated. The Company’s internal management process measures the performance of these business segments. This process, which is not necessarily comparable with similar information for any other financial institution, uses various techniques to assign balance sheet and income statement amounts to the business segments, including allocations of income, expense, the provision for credit losses, and capital. This process is dynamic and requires certain allocations based on judgment and other subjective factors. Unlike financial accounting, there is no comprehensive authoritative guidance for management accounting that is equivalent to GAAP. ​ The net interest income of the business segments reflects the results of a funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturity characteristics and reflects the allocation of net interest income related to the Company’s overall asset and liability management activities on a proportionate basis. The basis for the allocation of net interest income is a function of the Company’s assumptions that are subject to change based on changes in current interest rates and market conditions. Funds transfer pricing also serves to transfer interest rate risk to Treasury. ​ The Company allocates the provision for credit losses from the Treasury and Other business segment (which is comprised of many of the Company’s support units) to the Retail and Commercial business segments. These allocations are based on direct costs incurred by the Retail and Commercial business segments. ​ Noninterest income and expense includes allocations from support units to the business segments. These allocations are based on actual usage where practicably calculated or by management’s estimate of such usage. Income tax expense is allocated to each business segment based on the consolidated effective income tax rate for the period shown. ​ In 2019, the Company made changes to the internal measurement of segment operating profits for the purpose of evaluating segment performance and resource allocation. The primary reason for the change was to align deposit balances within the business segment that directly manages them. Specifically, certain deposit balances previously included as part of the Retail Banking segment have been reclassified to the Commercial Banking segment. The reallocation of select deposit balances affected net interest income, net interest income after provision for credit losses, noninterest income, provision for income taxes and net income. The Company has reported its selected financial information using the new deposit balance alignments for the three and six months ended June 30, 2020. The Company has restated the selected financial information for the three and six months ended June 30, 2019 in order to conform with the current presentation. ​ Additionally, during the fourth quarter of 2019, the Company changed its assumptions embedded in allocating deposit costs to business segments. The Company has reported its selected financial information using the new deposit cost assumptions starting with the fourth quarter of 2019. ​ Business Segments Retail Banking Retail Banking offers a broad range of financial products and services to consumers and small businesses. Loan and lease products offered include residential and commercial mortgage loans, home equity lines of credit, automobile loans and leases, personal lines of credit, installment loans and small business loans and leases. Deposit products offered include checking, savings, and time deposit accounts. Retail Banking also offers wealth management services. Products and services from Retail Banking are delivered to customers through 58 banking locations throughout the State of Hawaii, Guam, and Saipan. ​ Commercial Banking Commercial Banking offers products that include corporate banking, residential and commercial real estate loans, commercial lease financing, automobile loans and auto dealer financing, business deposit products and credit cards. Commercial lending and deposit products are offered primarily to middle-market and large companies locally, nationally, and internationally. ​ 45 Table of Contents Treasury and Other Treasury consists of corporate asset and liability management activities including interest rate risk management. The segment’s assets and liabilities (and related interest income and expense) consist of interest-bearing deposits, investment securities, federal funds sold and purchased, government deposits, short- and long-term borrowings and bank-owned properties. The primary sources of noninterest income are from bank-owned life insurance, net gains from the sale of investment securities, foreign exchange income related to customer-driven currency requests from merchants and island visitors and management of bank-owned properties. The net residual effect of the transfer pricing of assets and liabilities is included in Treasury, along with the elimination of intercompany transactions. ​ Other organizational units (Technology, Operations, Credit and Risk Management, Human Resources, Finance, Administration, Marketing, and Corporate and Regulatory Administration) provide a wide-range of support to the Company’s other income earning segments. Expenses incurred by these support units are charged to the business segments through an internal cost allocation process. ​ The following tables present selected business segment financial information for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Treasury ​ ​ ​ ​ ​ Retail ​ Commercial ​ and ​ ​ ​ (dollars in thousands) Banking Banking Other Total Three Months Ended June 30, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income (expense) ​ $ 96,146 ​ $ 33,094 ​ $ ( 1,418 ) ​ $ 127,822 Provision for credit losses ​ ​ ( 24,311 ) ​ ​ ( 25,183 ) ​ ​ ( 5,952 ) ​ ​ ( 55,446 ) Net interest income (expense) after provision for credit losses ​ ​ 71,835 ​ ​ 7,911 ​ ​ ( 7,370 ) ​ ​ 72,376 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest income ​ ​ 22,172 ​ ​ 18,055 ​ ​ 5,429 ​ ​ 45,656 Noninterest expense ​ ​ ( 57,639 ) ​ ​ ( 20,445 ) ​ ​ ( 13,366 ) ​ ​ ( 91,450 ) Income (loss) before (provision) benefit for income taxes ​ ​ 36,368 ​ ​ 5,521 ​ ​ ( 15,307 ) ​ ​ 26,582 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Provision) benefit for income taxes ​ ​ ( 9,331 ) ​ ​ ( 1,179 ) ​ ​ 3,977 ​ ​ ( 6,533 ) Net income (loss) ​ $ 27,037 ​ $ 4,342 ​ $ ( 11,330 ) ​ $ 20,049 Total assets as of June 30, 2020 ​ $ 7,888,155 ​ $ 6,006,128 ​ $ 9,099,432 ​ $ 22,993,715 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Treasury ​ ​ ​ ​ ​ Retail ​ Commercial ​ and ​ ​ ​ (dollars in thousands) Banking Banking Other Total Six Months Ended June 30, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ $ 186,029 ​ $ 67,508 ​ $ 12,968 ​ $ 266,505 Provision for credit losses ​ ​ ( 44,376 ) ​ ​ ( 45,967 ) ​ ​ ( 6,303 ) ​ ​ ( 96,646 ) Net interest income after provision for credit losses ​ ​ 141,653 ​ ​ 21,541 ​ ​ 6,665 ​ ​ 169,859 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest income ​ ​ 48,548 ​ ​ 35,851 ​ ​ 10,485 ​ ​ 94,884 Noninterest expense ​ ​ ( 119,283 ) ​ ​ ( 41,950 ) ​ ​ ( 26,683 ) ​ ​ ( 187,916 ) Income (loss) before (provision) benefit for income taxes ​ ​ 70,918 ​ ​ 15,442 ​ ​ ( 9,533 ) ​ ​ 76,827 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Provision) benefit for income taxes ​ ​ ( 16,854 ) ​ ​ ( 3,824 ) ​ ​ 2,765 ​ ​ ( 17,913 ) Net income (loss) ​ $ 54,064 ​ $ 11,618 ​ $ ( 6,768 ) ​ $ 58,914 Total assets as of June 30, 2020 ​ $ 7,888,155 ​ $ 6,006,128 ​ $ 9,099,432 ​ $ 22,993,715 ​ ​ 46 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Treasury ​ ​ ​ ​ ​ Retail ​ Commercial ​ and ​ ​ ​ (dollars in thousands) Banking Banking Other Total Three Months Ended June 30, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ $ 107,708 ​ $ 35,000 ​ $ 2,905 ​ $ 145,613 Provision for credit losses ​ ​ ( 1,752 ) ​ ​ ( 2,118 ) ​ ​ — ​ ​ ( 3,870 ) Net interest income after provision for credit losses ​ ​ 105,956 ​ ​ 32,882 ​ ​ 2,905 ​ ​ 141,743 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest income ​ ​ 23,375 ​ ​ 18,725 ​ ​ 6,673 ​ ​ 48,773 Noninterest expense ​ ​ ( 59,495 ) ​ ​ ( 19,741 ) ​ ​ ( 14,054 ) ​ ​ ( 93,290 ) Income (loss) before (provision) benefit for income taxes ​ ​ 69,836 ​ ​ 31,866 ​ ​ ( 4,476 ) ​ ​ 97,226 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Provision) benefit for income taxes ​ ​ ( 17,658 ) ​ ​ ( 8,267 ) ​ ​ 1,132 ​ ​ ( 24,793 ) Net income (loss) ​ $ 52,178 ​ $ 23,599 ​ $ ( 3,344 ) ​ $ 72,433 Total assets as of June 30, 2019 ​ $ 7,056,325 ​ $ 6,525,345 ​ $ 6,944,697 ​ $ 20,526,367 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Treasury ​ ​ ​ ​ ​ Retail ​ Commercial ​ and ​ ​ ​ (dollars in thousands) Banking Banking Other Total Six Months Ended June 30, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ $ 214,935 ​ $ 69,656 ​ $ 6,111 ​ $ 290,702 Provision for credit losses ​ ​ ( 4,324 ) ​ ​ ( 5,226 ) ​ ​ — ​ ​ ( 9,550 ) Net interest income after provision for credit losses ​ ​ 210,611 ​ ​ 64,430 ​ ​ 6,111 ​ ​ 281,152 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest income ​ ​ 47,244 ​ ​ 37,113 ​ ​ 11,488 ​ ​ 95,845 Noninterest expense ​ ​ ( 116,662 ) ​ ​ ( 39,226 ) ​ ​ ( 30,025 ) ​ ​ ( 185,913 ) Income (loss) before (provision) benefit for income taxes ​ ​ 141,193 ​ ​ 62,317 ​ ​ ( 12,426 ) ​ ​ 191,084 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Provision) benefit for income taxes ​ ​ ( 35,705 ) ​ ​ ( 16,188 ) ​ ​ 3,166 ​ ​ ( 48,727 ) Net income (loss) ​ $ 105,488 ​ $ 46,129 ​ $ ( 9,260 ) ​ $ 142,357 Total assets as of June 30, 2019 ​ $ 7,056,325 ​ $ 6,525,345 ​ $ 6,944,697 ​ $ 20,526,367 ​ ​ ​ 47 Table of Contents