FIRST HAWAIIAN, INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ FIRST HAWAIIAN, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ (dollars in thousands, except per share amounts) 2023 2022 Interest income ​ ​ ​ ​ ​ ​ ​ Loans and lease financing ​ $ 172,339 ​ $ 103,732 ​ Available-for-sale investment securities ​ ​ 18,688 ​ ​ 32,107 ​ Held-to-maturity investment securities ​ ​ 18,957 ​ ​ — ​ Other ​ ​ 3,561 ​ ​ 782 ​ Total interest income ​ ​ 213,545 ​ ​ 136,621 ​ Interest expense ​ ​ ​ ​ ​ ​ ​ Deposits ​ ​ 43,284 ​ ​ 2,749 ​ Short-term and long-term borrowings ​ ​ 2,563 ​ ​ — ​ Other ​ ​ 451 ​ ​ — ​ Total interest expense ​ ​ 46,298 ​ ​ 2,749 ​ Net interest income ​ ​ 167,247 ​ ​ 133,872 ​ Provision for credit losses ​ ​ 8,800 ​ ​ ( 5,747 ) ​ Net interest income after provision for credit losses ​ ​ 158,447 ​ ​ 139,619 ​ Noninterest income ​ ​ ​ ​ ​ ​ ​ Service charges on deposit accounts ​ ​ 7,231 ​ ​ 7,501 ​ Credit and debit card fees ​ ​ 16,298 ​ ​ 14,850 ​ Other service charges and fees ​ ​ 9,162 ​ ​ 9,654 ​ Trust and investment services income ​ ​ 9,614 ​ ​ 8,883 ​ Bank-owned life insurance ​ ​ 5,120 ​ ​ ( 417 ) ​ Other ​ ​ 1,598 ​ ​ 909 ​ Total noninterest income ​ ​ 49,023 ​ ​ 41,380 ​ Noninterest expense ​ ​ ​ ​ ​ ​ ​ Salaries and employee benefits ​ ​ 56,032 ​ ​ 48,226 ​ Contracted services and professional fees ​ ​ 16,313 ​ ​ 17,147 ​ Occupancy ​ ​ 7,782 ​ ​ 7,410 ​ Equipment ​ ​ 9,736 ​ ​ 5,977 ​ Regulatory assessment and fees ​ ​ 3,836 ​ ​ 2,224 ​ Advertising and marketing ​ ​ 1,994 ​ ​ 2,028 ​ Card rewards program ​ ​ 8,085 ​ ​ 6,883 ​ Other ​ ​ 14,789 ​ ​ 14,147 ​ Total noninterest expense ​ ​ 118,567 ​ ​ 104,042 ​ Income before provision for income taxes ​ ​ 88,903 ​ ​ 76,957 ​ Provision for income taxes ​ ​ 22,085 ​ ​ 19,238 ​ Net income ​ $ 66,818 ​ $ 57,719 ​ Basic earnings per share ​ $ 0.52 ​ $ 0.45 ​ Diluted earnings per share ​ $ 0.52 ​ $ 0.45 ​ Basic weighted-average outstanding shares ​ ​ 127,453,820 ​ ​ 127,556,242 ​ Diluted weighted-average outstanding shares ​ ​ 128,033,812 ​ ​ 128,121,126 ​ ​ 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 (LOSS) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ (dollars in thousands) 2023 2022 Net income ​ $ 66,818 $ 57,719 ​ Other comprehensive income (loss), net of tax: ​ ​ ​ ​ ​ ​ ​ Net change in investment securities ​ ​ 26,944 ​ ​ ( 394,551 ) ​ Net change in cash flow derivative hedges ​ ​ 631 ​ ​ ( 1,258 ) ​ Other comprehensive income (loss) ​ ​ 27,575 ​ ​ ( 395,809 ) ​ Total comprehensive income (loss) ​ $ 94,393 ​ $ ( 338,090 ) ​ ​ 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) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, (dollars in thousands, except share amount) 2023 2022 Assets ​ ​ ​ ​ ​ ​ Cash and due from banks ​ $ 253,705 ​ $ 297,502 Interest-bearing deposits in other banks ​ ​ 611,887 ​ ​ 229,122 Investment securities: ​ ​ ​ ​ ​ ​ Available-for-sale, at fair value (amortized cost: $ 3,427,708 as of March 31, 2023 and $ 3,549,599 as of December 31, 2022) ​ ​ 3,054,280 ​ ​ 3,151,133 Held-to-maturity, at amortized cost (fair value: $ 3,824,478 as of March 31, 2023 and $ 3,814,822 as of December 31, 2022) ​ ​ 4,261,361 ​ ​ 4,320,639 Loans and leases ​ ​ 14,221,272 ​ ​ 14,092,012 Less: allowance for credit losses ​ ​ 147,122 ​ ​ 143,900 Net loans and leases ​ ​ 14,074,150 ​ ​ 13,948,112 ​ ​ ​ ​ ​ ​ ​ Premises and equipment, net ​ ​ 278,121 ​ ​ 280,355 Other real estate owned and repossessed personal property ​ ​ 91 ​ ​ 91 Accrued interest receivable ​ ​ 79,200 ​ ​ 78,194 Bank-owned life insurance ​ ​ 473,255 ​ ​ 473,067 Goodwill ​ ​ 995,492 ​ ​ 995,492 Mortgage servicing rights ​ ​ 6,299 ​ ​ 6,562 Other assets ​ ​ 796,366 ​ ​ 796,954 Total assets ​ $ 24,884,207 ​ $ 24,577,223 Liabilities and Stockholders' Equity ​ ​ ​ ​ ​ ​ Deposits: ​ ​ ​ ​ ​ ​ Interest-bearing ​ $ 12,579,155 ​ $ 12,824,383 Noninterest-bearing ​ ​ 8,702,345 ​ ​ 8,864,646 Total deposits ​ ​ 21,281,500 ​ ​ 21,689,029 Short-term borrowings ​ ​ 250,000 ​ ​ 75,000 Long-term borrowings ​ ​ 500,000 ​ ​ — Retirement benefits payable ​ ​ 101,622 ​ ​ 102,577 Other liabilities ​ ​ 422,073 ​ ​ 441,612 Total liabilities ​ ​ 22,555,195 ​ ​ 22,308,218 ​ ​ ​ ​ ​ ​ ​ Commitments and contingent liabilities (Note 13) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders' equity ​ ​ ​ ​ ​ ​ Common stock ($ 0.01 par value; authorized 300,000,000 shares; issued/outstanding: 141,291,086 / 127,573,680 as of March 31, 2023; issued/outstanding: 140,963,918 / 127,363,327 as of December 31, 2022) ​ ​ 1,413 ​ ​ 1,410 Additional paid-in capital ​ ​ 2,540,653 ​ ​ 2,538,336 Retained earnings ​ ​ 769,791 ​ ​ 736,544 Accumulated other comprehensive loss, net ​ ​ ( 611,679 ) ​ ​ ( 639,254 ) Treasury stock ( 13,717,406 shares as of March 31, 2023 and 13,600,591 shares as of December 31, 2022) ​ ​ ( 371,166 ) ​ ​ ( 368,031 ) Total stockholders' equity ​ ​ 2,329,012 ​ ​ 2,269,005 Total liabilities and stockholders' equity ​ $ 24,884,207 ​ $ 24,577,223 ​ 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 March 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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, 2022 127,363,327 ​ $ 1,410 $ 2,538,336 $ 736,544 $ ( 639,254 ) $ ( 368,031 ) $ 2,269,005 Net income ​ — ​ ​ — ​ ​ — ​ ​ 66,818 ​ ​ — ​ ​ — ​ ​ 66,818 Cash dividends declared ( $ 0.26 per share) ​ — ​ ​ — ​ ​ — ​ ​ ( 33,114 ) ​ ​ — ​ ​ — ​ ​ ( 33,114 ) Equity-based awards ​ 210,353 ​ ​ 3 ​ ​ 2,317 ​ ​ ( 457 ) ​ ​ — ​ ​ ( 3,135 ) ​ ​ ( 1,272 ) Other comprehensive income, net of tax ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 27,575 ​ ​ — ​ ​ 27,575 Balance as of March 31, 2023 ​ 127,573,680 ​ $ 1,413 ​ $ 2,540,653 ​ $ 769,791 ​ $ ( 611,679 ) ​ $ ( 371,166 ) ​ $ 2,329,012 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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, 2021 ​ 127,502,472 ​ $ 1,406 ​ $ 2,527,663 ​ $ 604,534 ​ $ ( 121,693 ) ​ $ ( 354,998 ) ​ $ 2,656,912 Net income ​ — ​ ​ — ​ ​ — ​ ​ 57,719 ​ ​ — ​ ​ — ​ ​ 57,719 Cash dividends declared ($ 0.26 per share) ​ — ​ ​ — ​ ​ — ​ ​ ( 33,151 ) ​ ​ — ​ ​ — ​ ​ ( 33,151 ) Equity-based awards ​ 183,835 ​ ​ 3 ​ ​ 3,132 ​ ​ ( 460 ) ​ ​ — ​ ​ ( 3,197 ) ​ ​ ( 522 ) Other comprehensive loss, net of tax ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 395,809 ) ​ ​ — ​ ​ ( 395,809 ) Balance as of March 31, 2022 ​ 127,686,307 ​ $ 1,409 ​ $ 2,530,795 ​ $ 628,642 ​ $ ( 517,502 ) ​ $ ( 358,195 ) ​ $ 2,285,149 ​ ​ The accompanying notes are an integral part of these unaudited interim consolidated financial statements. ​ ​ 5 Table of Contents FIRST HAWAIIAN, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, (dollars in thousands) 2023 2022 Cash flows from operating activities ​ ​ ​ ​ ​ ​ Net income ​ $ 66,818 ​ $ 57,719 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ Provision for credit losses ​ ​ 8,800 ​ ​ ( 5,747 ) Depreciation, amortization and accretion, net ​ ​ 10,827 ​ ​ 15,581 Deferred income tax provision ​ ​ 4,330 ​ ​ 15,059 Stock-based compensation ​ ​ 2,320 ​ ​ 3,135 Other losses ​ ​ 1,223 ​ ​ 1,566 Originations of loans held for sale ​ ​ ( 1,468 ) ​ ​ ( 6,566 ) Proceeds from sales of loans held for sale ​ ​ 1,447 ​ ​ 6,194 Change in assets and liabilities: ​ ​ ​ ​ ​ ​ Net increase in other assets ​ ​ ( 9,536 ) ​ ​ ( 33,509 ) Net (decrease) increase in other liabilities ​ ​ ( 2,128 ) ​ ​ 12,830 Net cash provided by operating activities ​ ​ 82,633 ​ ​ 66,262 Cash flows from investing activities ​ ​ ​ ​ ​ ​ Available-for-sale securities: ​ ​ ​ ​ ​ ​ Proceeds from maturities and principal repayments ​ ​ 119,692 ​ ​ 383,290 Proceeds from calls and sales ​ ​ — ​ ​ 970 Purchases ​ ​ — ​ ​ ( 563,925 ) Held-to-maturity securities: ​ ​ ​ ​ ​ ​ Proceeds from maturities and principal repayments ​ ​ 68,854 ​ ​ — Proceeds from calls ​ ​ 220 ​ ​ — Other investments: ​ ​ ​ ​ ​ ​ Proceeds from sales ​ ​ 13,984 ​ ​ 2,690 Purchases ​ ​ ( 42,251 ) ​ ​ ( 2,841 ) Loans: ​ ​ ​ ​ ​ ​ Net (increase) decrease in loans and leases resulting from originations and principal repayments ​ ​ ( 88,408 ) ​ ​ 180,505 Purchases of loans ​ ​ ( 48,741 ) ​ ​ ( 114,677 ) Proceeds from bank-owned life insurance ​ ​ 4,932 ​ ​ — Purchases of premises, equipment and software ​ ​ ( 1,555 ) ​ ​ ( 2,695 ) Proceeds from sales of other real estate owned ​ ​ — ​ ​ 176 Other ​ ​ ( 1,614 ) ​ ​ — Net cash provided by (used in) investing activities ​ ​ 25,113 ​ ​ ( 116,507 ) Cash flows from financing activities ​ ​ ​ ​ ​ ​ Net (decrease) increase in deposits ​ ​ ( 407,529 ) ​ ​ 454,284 Net increase in short-term borrowings ​ ​ 175,000 ​ ​ — Proceeds from long-term borrowings ​ ​ 500,000 ​ ​ — Dividends paid ​ ​ ( 33,114 ) ​ ​ ( 33,151 ) Stock tendered for payment of withholding taxes ​ ​ ( 3,135 ) ​ ​ ( 3,197 ) Net cash provided by financing activities ​ ​ 231,222 ​ ​ 417,936 Net increase in cash and cash equivalents ​ ​ 338,968 ​ ​ 367,691 Cash and cash equivalents at beginning of period ​ ​ 526,624 ​ ​ 1,258,469 Cash and cash equivalents at end of period ​ $ 865,592 ​ $ 1,626,160 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures ​ ​ ​ ​ ​ ​ Interest paid ​ $ 40,937 ​ $ 3,545 Income taxes paid, net of income tax refunds ​ ​ 1,761 ​ ​ 2,124 Noncash investing and financing activities: ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets obtained in exchange for new lease obligations ​ ​ 1,306 ​ ​ 761 Transfers to loans and leases from loans held for sale ​ ​ — ​ ​ ( 834 ) ​ The accompanying notes are an integral part of these unaudited interim consolidated financial statements. ​ 6 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, 2022. ​ 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. ​ Loan Modifications to Borrowers Experiencing Financial Difficulty ​ Loan modifications are assessed by the Company to determine: (1) whether the borrower is experiencing financial difficulty and (2) whether the Company granted the borrower a modification or combination of modifications in the form of one or more of the following modification types: principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay and/or a term extension. If both criteria are met, then the loan modification is subject to additional evaluation for credit losses and enhanced disclosure requirements. ​ Generally, a non-accrual loan that has been modified with a borrower experiencing financial difficulty remains on non-accrual status for at least six months to demonstrate that the borrower is able to meet the terms of the modified loan. However, performance prior to the modification, or significant events that coincide with the modification, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of loan modification or after a shorter performance period. If the borrower’s ability to meet the revised payment terms is uncertain, the loan remains on non-accrual status. ​ 7 Table of Contents 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 loan or lease balance is deemed uncollectible. 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 consist of quantitative and qualitative estimates. The Company’s methodology leverages two quantitative models: a one-variable forward-looking macroeconomic model that estimates the impact of management’s economic outlook and a transition probability matrix that estimates expected losses over the long run. The quantitative estimation is overlaid with qualitative adjustments to account for current conditions and forward-looking factors not captured in the quantitative model. Qualitative adjustments that are considered include adjustments for regulatory determinants, model limitations, model maturity, and other current or anticipated events that are not captured in the Company’s historical loss experience. ​ 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, loan modifications to borrowers experiencing financial difficulty, 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. 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, respectively. ​ On at least a quarterly basis, management convenes the Bank’s forecasting team which is responsible for reviewing the economic forecast model inputs and outputs and approving the resulting economic adjustment. The model uses a one-variable econometric model to produce factors that modify the long-run default rate assumptions used in the CECL model. These factors are applied to calculate the economic adjustment over the Reasonable and Supportable Forecast Period. At the meeting, management is presented with the economic forecast model input and output as well as the resulting economic adjustment. Depending on the current economic conditions, a range of inputs and outputs may be presented, in which case, using judgment, management will select an input and output. ​ 8 Table of Contents The economic forecast framework also allows management to use judgment in selecting the economic model input in cases where management’s outlook diverges from the official forecasts, and to apply qualitative dollar overlays to account for other economic related conditions not captured in the economic forecast model but are expected to potentially impact losses. ​ The team also reviews other relevant economic variables and economic factors at the time of the meeting that could potentially impact future losses. These materials are presented to the economic forecasting team as they are economic in nature. If determined to be relevant and needing to be considered in the ACL estimate, these risks will be included in the ACL estimate through a qualitative dollar overlay that is determined using either quantitative analysis or qualitative judgment, or a mix of both. These other factors could include inflation indicators, personal income, or visitor arrivals, for example. ​ At present, 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. ​ Regarding accrued interest receivable, the Company made accounting policy elections to (1) not measure an ACL on accrued interest receivable, (2) write-off accrued interest receivable by reversing interest income and (3) present accrued interest receivable separately from the related financial asset on the balance sheet. Furthermore, regarding collateral-dependent financial assets, 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. ​ Accounting Standards Adopted in 2023 ​ In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-01, Derivatives and Hedging (Topic 815), Fair Value Hedging –Portfolio Layer Method. This update clarifies the guidance in Topic 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets. Under current hedge accounting guidance, the “last-of-layer” method enables an entity to apply fair value hedging to a stated amount of a closed portfolio of prepayable financial assets without having to consider prepayment risk or credit risk when measuring those assets. The hedged item represents a single layer within that closed portfolio. This update expands the scope of this guidance to allow entities to apply the “portfolio layer” method to portfolios of all financial assets, including both prepayable and nonprepayable financial assets. The current model is expanded to (1) explicitly allow entities to designate multiple layers in a single portfolio as individual hedged items and (2) also allow entities the flexibility to use any type of derivative (or combination of derivatives) by applying the multiple-layer model that aligns with its risk management strategy. Although no assets may be added to a closed portfolio once it is designated in a portfolio layer method hedge, at any time after the initial hedge designation, new hedging relationships associated with the portfolio may be designated and existing hedging relationships associated with the portfolio may be dedesignated to align with an entity’s evolving strategy for managing interest rate risk on a timely basis. Under the portfolio layer method, the basis of the portfolio assets is generally adjusted at the portfolio level rather than being allocated to individual assets within the portfolio, except when the allocation of basis adjustments is required by other areas of GAAP. The intent of this update is consistent with the FASB’s efforts to better align an entity’s financial reporting with the results of its risk management strategy and to further simplify the hedge accounting model. The Company adopted the provisions of ASU No. 2022-01 on January 1, 2023, and it did not have a material impact on the Company’s consolidated financial statements. ​ 9 Table of Contents In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures . This update eliminates the accounting guidance on troubled debt restructurings (“TDRs”) for creditors in Subtopic 310-40 and amends the guidance on vintage disclosures to require disclosure of current-period gross charge-offs by year of origination. This ASU also updates the requirements related to accounting for credit losses under Topic 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. The Company adopted the provisions of ASU No. 2022-02 on January 1, 2023, and it did not have a material impact on the Company’s consolidated financial statements. See “Note 4. Allowance for Credit Losses” for required disclosures related to this new guidance. ​ Enactment of the Inflation Reduction Act of 2022 ​ On August 16, 2022, the U.S. government enacted the Inflation Reduction Act (IRA) which, among other changes, created a new corporate alternative minimum tax (AMT) based on adjusted financial statement income and imposes a 1% excise tax on corporate stock repurchases. These provisions became effective January 1, 2023. The enactment of the IRA did not have a material impact on the Company’s consolidated financial statements. ​ Recent Accounting Pronouncements ​ The following ASUs have been issued by the FASB and are applicable to the Company in future reporting periods. ​ In March 2023, the FASB issued ASU No. 2023-01, Leases (Topic 842), Common Control Arrangements. This update clarifies the accounting for leasehold improvements associated with common control leases. Prior to this update, Topic 842 generally required leasehold improvements to have an amortization period consistent with the shorter of the useful life of those improvements or the remaining lease term. This update will require leasehold improvements associated with common control leases to be (1) amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset (the leased asset) through a lease, and (2) accounted for as a transfer between entities under common control through an adjustment to equity if, and when, the lessee no longer controls the use of the underlying asset. In addition, this update also subjects leasehold improvements to the impairment guidance in Topic 360, Property, Plant, and Equipment. This update is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact that this new guidance may have on the Company’s consolidated financial statements. ​ In March 2023, the FASB issued ASU No. 2023-02, Investments—Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. This update expands the population of tax equity investments for which a reporting entity may elect to apply the proportional amortization method (“PAM”). Under current guidance, an entity can only elect to apply the PAM to investments in low-income housing tax credit (“LIHTC”) structures. This update permits an entity to make an election to account for tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the PAM if certain conditions are met. An accounting policy election is made to apply the PAM on a tax credit program-by-program basis rather than electing to apply the PAM at the reporting entity level or to individual investments. By applying the PAM, a reporting entity must account for the receipt of the investment tax credits using the flow-through method under Topic 740, Income Taxes , even if the entity applies the deferral method for other investment tax credits received. For all tax equity investments accounted for using the PAM, this update also requires the use of the delayed equity contribution guidance. LIHTC investments not accounted for using the PAM will no longer be permitted to use the delayed equity contribution guidance. In addition, LIHTC investments accounted for using the equity method must apply the impairment guidance in Subtopic 323-10, Investments—Equity Method and Joint Ventures—Overall . Further, LIHTC investments that are not accounted for using the PAM or the equity method must use the guidance in Topic 321, Investments—Equity Securities , when accounting for equity investments. In addition, the amendments in this update require specific disclosures that must be applied to all investments that generate income tax credits and other income tax benefits from a tax credit program for which the entity has elected to apply the PAM, including investments within that elected program that do not meet the conditions to apply the PAM. Such disclosures include the nature of its tax equity investments and the effect of such investments and related income tax credits and other income tax benefits on its financial position and results of operations. This update is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact that this new guidance may have on the Company’s consolidated financial statements. ​ ​ 10 Table of Contents 2. Investment Securities ​ As of March 31, 2023 and December 31, 2022, 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 government 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. ​ Collateralized loan obligations – includes structured debt securities backed by a pool of loans, consisting of primarily non-investment grade broadly syndicated corporate loans with additional credit enhancement. These are floating rate securities that have an investment grade rating of AA or better. ​ Debt securities issued by states and political subdivisions – includes general obligation bonds issued by state and local governments. ​ As of March 31, 2023 and December 31, 2022, the Company’s investment securities were classified as either available-for-sale or held-to-maturity. Amortized cost and fair value of securities as of March 31, 2023 and December 31, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2023 ​ December 31, 2022 ​ ​ 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 ​ $ 130,936 ​ $ — ​ $ ( 10,708 ) ​ $ 120,228 ​ $ 163,309 ​ $ — ​ $ ( 12,327 ) ​ $ 150,982 Government-sponsored enterprises debt securities ​ ​ 45,000 ​ ​ — ​ ​ ( 675 ) ​ ​ 44,325 ​ ​ 45,000 ​ ​ — ​ ​ ( 699 ) ​ ​ 44,301 Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential - Government agency ​ ​ 65,261 ​ ​ — ​ ​ ( 5,964 ) ​ ​ 59,297 ​ ​ 66,792 ​ ​ — ​ ​ ( 7,069 ) ​ ​ 59,723 Residential - Government-sponsored enterprises ​ ​ 1,276,130 ​ ​ — ​ ​ ( 143,876 ) ​ ​ 1,132,254 ​ ​ 1,317,718 ​ ​ — ​ ​ ( 157,263 ) ​ ​ 1,160,455 Commercial - Government agency ​ ​ 281,009 ​ ​ — ​ ​ ( 45,938 ) ​ ​ 235,071 ​ ​ 282,700 ​ ​ — ​ ​ ( 44,847 ) ​ ​ 237,853 Commercial - Government-sponsored enterprises ​ ​ 126,057 ​ ​ — ​ ​ ( 9,290 ) ​ ​ 116,767 ​ ​ 130,612 ​ ​ — ​ ​ ( 11,039 ) ​ ​ 119,573 Commercial - Non-agency ​ ​ 21,964 ​ ​ — ​ ​ ( 831 ) ​ ​ 21,133 ​ ​ 21,964 ​ ​ — ​ ​ ( 493 ) ​ ​ 21,471 Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government agency ​ ​ 715,004 ​ ​ — ​ ​ ( 78,402 ) ​ ​ 636,602 ​ ​ 738,524 ​ ​ — ​ ​ ( 85,202 ) ​ ​ 653,322 Government-sponsored enterprises ​ ​ 516,458 ​ ​ — ​ ​ ( 65,266 ) ​ ​ 451,192 ​ ​ 533,103 ​ ​ — ​ ​ ( 70,971 ) ​ ​ 462,132 Collateralized loan obligations ​ ​ 249,889 ​ ​ — ​ ​ ( 12,478 ) ​ ​ 237,411 ​ ​ 249,877 ​ ​ 50 ​ ​ ( 8,606 ) ​ ​ 241,321 Total available-for-sale securities ​ $ 3,427,708 ​ $ — ​ $ ( 373,428 ) ​ $ 3,054,280 ​ $ 3,549,599 ​ $ 50 ​ $ ( 398,516 ) ​ $ 3,151,133 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government agency debt securities ​ $ 54,386 ​ $ — ​ $ ( 4,694 ) ​ $ 49,692 ​ $ 54,318 ​ $ — ​ $ ( 5,674 ) ​ $ 48,644 Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential - Government agency ​ ​ 45,860 ​ ​ — ​ ​ ( 5,716 ) ​ ​ 40,144 ​ ​ 46,302 ​ ​ — ​ ​ ( 6,294 ) ​ ​ 40,008 Residential - Government-sponsored enterprises ​ ​ 104,868 ​ ​ — ​ ​ ( 11,607 ) ​ ​ 93,261 ​ ​ 106,534 ​ ​ — ​ ​ ( 12,978 ) ​ ​ 93,556 Commercial - Government agency ​ ​ 30,606 ​ ​ — ​ ​ ( 5,544 ) ​ ​ 25,062 ​ ​ 30,544 ​ ​ — ​ ​ ( 5,229 ) ​ ​ 25,315 Commercial - Government-sponsored enterprises ​ ​ 1,147,009 ​ ​ 111 ​ ​ ( 117,007 ) ​ ​ 1,030,113 ​ ​ 1,150,449 ​ ​ — ​ ​ ( 138,451 ) ​ ​ 1,011,998 Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government agency ​ ​ 1,060,910 ​ ​ — ​ ​ ( 104,573 ) ​ ​ 956,337 ​ ​ 1,080,492 ​ ​ — ​ ​ ( 122,378 ) ​ ​ 958,114 Government-sponsored enterprises ​ ​ 1,763,805 ​ ​ — ​ ​ ( 181,013 ) ​ ​ 1,582,792 ​ ​ 1,798,178 ​ ​ — ​ ​ ( 207,045 ) ​ ​ 1,591,133 Debt securities issued by states and political subdivisions ​ ​ 53,917 ​ ​ — ​ ​ ( 6,840 ) ​ ​ 47,077 ​ ​ 53,822 ​ ​ — ​ ​ ( 7,768 ) ​ ​ 46,054 Total held-to-maturity securities ​ $ 4,261,361 ​ $ 111 ​ $ ( 436,994 ) ​ $ 3,824,478 ​ $ 4,320,639 ​ $ — ​ $ ( 505,817 ) ​ $ 3,814,822 ​ 11 Table of Contents During the year ended December 31, 2022, the Company reclassified at fair value approximately $ 4.6 billion, in available-for-sale investment securities to the held-to-maturity category. The related total unrealized after-tax losses of approximately $ 372.4 million remained in accumulated other comprehensive loss to be amortized over the estimated remaining life of the securities as an adjustment of yield, offsetting the related accretion of the discount on the transferred securities. No gains or losses were recognized at the time of reclassification. Management considers the held-to-maturity classification of these investment securities to be appropriate as the Company has the positive intent and ability to hold these securities to maturity. There were no securities transferred from available-for-sale investment securities to the held-to-maturity category during the three months ended March 31, 2023. ​ Accrued interest receivable related to available-for-sale investment securities was $ 8.9 million as of both March 31, 2023 and December 31, 2022. Accrued interest receivable related to held-to-maturity investment securities was $ 7.7 million and $ 7.5 million as of March 31, 2023 and December 31, 2022, respectively. Accrued interest receivable is recorded separately from the amortized cost basis of investment securities on the Company’s unaudited interim consolidated balance sheets. ​ Proceeds from calls and sales of investment securities were $ 0.2 million and nil for the three months ended March 31, 2023, and $ 1.0 million and nil , respectively, for the three months ended March 31, 2022. The Company recorded gross realized gains of nil and gross realized losses of nil for the three months ended March 31, 2023 and 2022. The income tax benefit related to the Company’s net realized loss on the sale of investment securities was nil for the three months ended March 31, 2023 and 2022. Gains and losses realized on sales of securities are determined using the specific identification method. ​ Interest income from taxable investment securities was $ 34.0 million and $ 29.2 million, respectively, for the three months ended March 31, 2023 and 2022. Interest income from non-taxable investment securities was $ 3.6 million and $ 2.9 million, respectively, for the three months ended March 31, 2023 and 2022. ​ The amortized cost and fair value of debt securities issued by the U.S. Treasury, government agencies, government-sponsored enterprises and states and political subdivisions, non-agency mortgage-backed securities and collateralized loan obligations as of March 31, 2023, by contractual maturity, are shown below. Mortgage-backed securities and collateralized mortgage obligations issued by government agencies and government-sponsored enterprises are disclosed separately in the table below as remaining expected maturities will differ from contractual maturities as borrowers have the right to prepay obligations. ​ 12 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2023 ​ ​ Amortized ​ Fair (dollars in thousands) Cost Value Available-for-sale securities ​ ​ ​ ​ ​ ​ Due in one year or less ​ $ 44,758 ​ $ 44,068 Due after one year through five years ​ ​ 60,529 ​ ​ 57,863 Due after five years through ten years ​ ​ 177,638 ​ ​ 165,278 Due after ten years ​ ​ 164,864 ​ ​ 155,888 ​ ​ ​ 447,789 ​ ​ 423,097 ​ ​ ​ ​ ​ ​ ​ Mortgage-backed securities: ​ ​ ​ ​ ​ ​ Residential - Government agency ​ ​ 65,261 ​ ​ 59,297 Residential - Government-sponsored enterprises ​ ​ 1,276,130 ​ ​ 1,132,254 Commercial - Government agency ​ ​ 281,009 ​ ​ 235,071 Commercial - Government-sponsored enterprises ​ ​ 126,057 ​ ​ 116,767 Total mortgage-backed securities ​ ​ 1,748,457 ​ ​ 1,543,389 Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ Government agency ​ ​ 715,004 ​ ​ 636,602 Government-sponsored enterprises ​ ​ 516,458 ​ ​ 451,192 Total collateralized mortgage obligations ​ ​ 1,231,462 ​ ​ 1,087,794 Total available-for-sale securities ​ $ 3,427,708 ​ $ 3,054,280 ​ ​ ​ ​ ​ ​ ​ Held-to-maturity securities ​ ​ ​ ​ ​ ​ Due in one year or less ​ $ — ​ $ — Due after one year through five years ​ ​ — ​ ​ — Due after five years through ten years ​ ​ 10,232 ​ ​ 9,141 Due after ten years ​ ​ 98,071 ​ ​ 87,628 ​ ​ ​ 108,303 ​ ​ 96,769 ​ ​ ​ ​ ​ ​ ​ Mortgage-backed securities: ​ ​ ​ ​ ​ ​ Residential - Government agency ​ ​ 45,860 ​ ​ 40,144 Residential - Government-sponsored enterprises ​ ​ 104,868 ​ ​ 93,261 Commercial - Government agency ​ ​ 30,606 ​ ​ 25,062 Commercial - Government-sponsored enterprises ​ ​ 1,147,009 ​ ​ 1,030,113 Total mortgage-backed securities ​ ​ 1,328,343 ​ ​ 1,188,580 Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ Government agency ​ ​ 1,060,910 ​ ​ 956,337 Government-sponsored enterprises ​ ​ 1,763,805 ​ ​ 1,582,792 Total collateralized mortgage obligations ​ ​ 2,824,715 ​ ​ 2,539,129 Total held-to-maturity securities ​ $ 4,261,361 ​ $ 3,824,478 ​ At March 31, 2023, pledged securities totaled $ 3.0 billion, of which $ 2.8 billion was pledged to secure public deposits and $ 194.4 million was pledged to secure other financial transactions. At December 31, 2022, pledged securities totaled $ 3.2 billion, of which $ 3.0 billion was pledged to secure public deposits and $ 207.8 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 March 31, 2023 or December 31, 2022. ​ The following tables present the unrealized gross losses and fair values of securities in the available-for-sale portfolio by length of time that the 284 and 275 individual securities in each category have been in a continuous loss position as of March 31, 2023 and December 31, 2022, respectively. The unrealized losses on available-for-sale 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. 13 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time in Continuous Loss as of March 31, 2023 ​ ​ Less Than 12 Months ​ 12 Months or More ​ Total ​ ​ Unrealized ​ ​ ​ ​ Unrealized ​ ​ ​ ​ Unrealized ​ ​ ​ (dollars in thousands) Losses Fair Value Losses Fair Value Losses Fair Value U.S. Treasury and government agency debt securities ​ $ ( 505 ) ​ $ 19,453 ​ $ ( 10,203 ) ​ $ 100,775 ​ $ ( 10,708 ) ​ $ 120,228 Government-sponsored enterprises debt securities ​ ​ ( 675 ) ​ ​ 44,325 ​ ​ — ​ ​ — ​ ​ ( 675 ) ​ ​ 44,325 Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential - Government agency ​ ​ — ​ ​ — ​ ​ ( 5,964 ) ​ ​ 59,297 ​ ​ ( 5,964 ) ​ ​ 59,297 Residential - Government-sponsored enterprises ​ ​ ( 7,523 ) ​ ​ 176,840 ​ ​ ( 136,353 ) ​ ​ 955,414 ​ ​ ( 143,876 ) ​ ​ 1,132,254 Commercial - Government agency ​ ​ ( 90 ) ​ ​ 4,453 ​ ​ ( 45,848 ) ​ ​ 230,618 ​ ​ ( 45,938 ) ​ ​ 235,071 Commercial - Government-sponsored enterprises ​ ​ ( 1,647 ) ​ ​ 43,342 ​ ​ ( 7,643 ) ​ ​ 73,425 ​ ​ ( 9,290 ) ​ ​ 116,767 Commercial - Non-agency ​ ​ ( 831 ) ​ ​ 21,133 ​ ​ — ​ ​ — ​ ​ ( 831 ) ​ ​ 21,133 Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government agency ​ ​ ( 1,047 ) ​ ​ 33,970 ​ ​ ( 77,355 ) ​ ​ 602,632 ​ ​ ( 78,402 ) ​ ​ 636,602 Government-sponsored enterprises ​ ​ ( 2,445 ) ​ ​ 38,871 ​ ​ ( 62,821 ) ​ ​ 412,321 ​ ​ ( 65,266 ) ​ ​ 451,192 Collateralized loan obligations ​ ​ ( 7,764 ) ​ ​ 155,133 ​ ​ ( 4,714 ) ​ ​ 75,278 ​ ​ ( 12,478 ) ​ ​ 230,411 Total available-for-sale securities with unrealized losses ​ $ ( 22,527 ) ​ $ 537,520 ​ $ ( 350,901 ) ​ $ 2,509,760 ​ $ ( 373,428 ) ​ $ 3,047,280 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time in Continuous Loss as of December 31, 2022 ​ ​ Less Than 12 Months ​ 12 Months or More ​ Total ​ ​ Unrealized ​ ​ ​ ​ Unrealized ​ ​ ​ ​ Unrealized ​ ​ ​ (dollars in thousands) Losses Fair Value Losses Fair Value Losses Fair Value U.S. Treasury and government agency debt securities ​ $ ( 2,962 ) ​ $ 83,870 ​ $ ( 9,365 ) ​ $ 67,112 ​ $ ( 12,327 ) ​ $ 150,982 Government-sponsored enterprises debt securities ​ ​ ( 699 ) ​ ​ 44,301 ​ ​ — ​ ​ — ​ ​ ( 699 ) ​ ​ 44,301 Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential - Government agency ​ ​ ( 7,069 ) ​ ​ 59,723 ​ ​ — ​ ​ — ​ ​ ( 7,069 ) ​ ​ 59,723 Residential - Government-sponsored enterprises ​ ​ ( 73,954 ) ​ ​ 645,338 ​ ​ ( 83,309 ) ​ ​ 515,117 ​ ​ ( 157,263 ) ​ ​ 1,160,455 Commercial - Government agency ​ ​ ( 15,852 ) ​ ​ 108,842 ​ ​ ( 28,995 ) ​ ​ 129,011 ​ ​ ( 44,847 ) ​ ​ 237,853 Commercial - Government-sponsored enterprises ​ ​ ( 7,348 ) ​ ​ 94,657 ​ ​ ( 3,691 ) ​ ​ 24,916 ​ ​ ( 11,039 ) ​ ​ 119,573 Commercial - Non-agency ​ ​ ( 493 ) ​ ​ 21,471 ​ ​ — ​ ​ — ​ ​ ( 493 ) ​ ​ 21,471 Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government agency ​ ​ ( 74,797 ) ​ ​ 596,907 ​ ​ ( 10,405 ) ​ ​ 56,415 ​ ​ ( 85,202 ) ​ ​ 653,322 Government-sponsored enterprises ​ ​ ( 21,916 ) ​ ​ 198,108 ​ ​ ( 49,055 ) ​ ​ 264,024 ​ ​ ( 70,971 ) ​ ​ 462,132 Collateralized loan obligations: ​ ​ ( 8,606 ) ​ ​ 170,042 ​ ​ — ​ ​ — ​ ​ ( 8,606 ) ​ ​ 170,042 Total available-for-sale securities with unrealized losses ​ $ ( 213,696 ) ​ $ 2,023,259 ​ $ ( 184,820 ) ​ $ 1,056,595 ​ $ ( 398,516 ) ​ $ 3,079,854 ​ At March 31, 2023 and December 31, 2022, the Company did not have any available-for-sale securities in an unrealized loss position with the intent to sell and determined it was more likely than not that the Company would not be required to sell these securities prior to recovery of the amortized cost basis. As the Company had the intent and ability to hold the remaining available-for-sale securities in an unrealized loss position as of March 31, 2023 and December 31, 2022, each security with an unrealized loss position in the above tables has been further assessed to determine if a credit loss exists. As of March 31, 2023 and December 31, 2022, the Company did not expect any credit losses in its available-for-sale debt securities and no credit losses were recognized on available-for-sale securities during the three months ended March 31, 2023 and for the year ended December 31, 2022. ​ As of March 31, 2023 and December 31, 2022, the Company’s investment securities were comprised primarily of debt securities, mortgage-backed securities and collateralized mortgage obligations issued by the U.S. Government, its agencies and government-sponsored enterprises, with under 4 % of the investment securities comprised of collateralized loan obligations rated AA or better and obligations issued by local state and political subdivisions rated AA or better. For investment securities 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, and these 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. For collateralized loan obligations and debt securities issued by local state and political subdivisions, these securities are investment grade and highly rated and carry either sufficient credit enhancement or days cash on hand to support timely payments of principal and interest. As a result, the Company does not expect any future payment defaults and has no t recorded an allowance for credit losses for its available-for-sale and held-to-maturity debt securities as of March 31, 2023 or December 31, 2022. ​ 14 Table of Contents The Company held approximately 120,000 Visa Class B restricted shares as of both March 31, 2023 and December 31, 2022. These shares continued to be carried at $ 0 cost basis as of both March 31, 2023 and December 31, 2022. ​ 3. Loans and Leases ​ As of March 31, 2023 and December 31, 2022, loans and leases were comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, (dollars in thousands) 2023 2022 Commercial and industrial ​ $ 2,268,332 ​ $ 2,235,897 Commercial real estate ​ ​ 4,106,200 ​ ​ 4,132,309 Construction ​ ​ 913,959 ​ ​ 844,643 Residential: ​ ​ ​ ​ ​ ​ Residential mortgage ​ ​ 4,318,742 ​ 4,302,788 Home equity line ​ ​ 1,095,365 ​ ​ 1,055,351 Total residential ​ 5,414,107 ​ ​ 5,358,139 Consumer ​ ​ 1,191,552 ​ ​ 1,222,934 Lease financing ​ ​ 327,122 ​ ​ 298,090 Total loans and leases ​ $ 14,221,272 ​ $ 14,092,012 ​ Outstanding loan balances are reported net of deferred loan costs and fees of $ 57.5 million and $ 56.1 million at March 31, 2023 and December 31, 2022, respectively. ​ Accrued interest receivable related to loans and leases was $ 62.4 million and $ 61.6 million as of March 31, 2023 and December 31, 2022, respectively, and is recorded separately from the amortized cost basis of loans and leases on the Company’s unaudited interim consolidated balance sheets. ​ As of March 31, 2023, residential real estate loans totaling $ 3.5 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, commercial real estate and residential real estate loans totaling $ 1.6 billion were pledged to collateralize the Company’s borrowing capacity at the Federal Reserve Bank of San Francisco (“FRB”). As of December 31, 2022, residential real estate loans totaling $ 3.5 billion were pledged to collateralize the Company’s borrowing capacity at the FHLB, and consumer, commercial and industrial, commercial real estate and residential real estate loans totaling $ 1.7 billion 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 $ 3.2 million and $ 2.8 million as of March 31, 2023 and December 31, 2022, 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 the 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 collectibility of the reported amount of loans and leases. While management utilizes its best judgment and information available, the ultimate appropriateness of the ACL is dependent upon a variety of factors beyond our control, including the performance of our loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications. The Company’s methodology is more fully described in our Annual Report on Form 10-K for the year ended December 31, 2022. ​ 15 Table of Contents 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 off-balance sheet financial instruments expire, loan funding occurs, or is otherwise settled. ​ Rollforward of the Allowance for Credit Losses ​ The following presents the activity in the ACL by class of loans and leases for the three months ended March 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2023 ​ ​ 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 ​ $ 14,564 ​ $ 43,810 ​ $ 5,843 ​ $ 1,551 ​ $ 35,175 ​ $ 8,296 ​ $ 34,661 ​ $ 143,900 Charge-offs ​ ​ ( 791 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 122 ) ​ ​ ( 135 ) ​ ​ ( 4,782 ) ​ ​ ( 5,830 ) Recoveries ​ ​ 246 ​ ​ — ​ ​ — ​ ​ — ​ ​ 27 ​ ​ 177 ​ ​ 2,166 ​ ​ 2,616 Provision ​ ​ 19 ​ ​ ( 3,499 ) ​ ​ 630 ​ ​ ( 70 ) ​ ​ ( 760 ) ​ ​ 1,003 ​ ​ 9,113 ​ ​ 6,436 Balance at end of period ​ $ 14,038 ​ $ 40,311 ​ $ 6,473 ​ $ 1,481 ​ $ 34,320 ​ $ 9,341 ​ $ 41,158 ​ $ 147,122 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2022 ​ ​ 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 ​ $ 20,080 ​ $ 42,951 ​ $ 9,773 ​ $ 1,659 ​ $ 34,364 ​ $ 5,642 ​ $ 42,793 ​ $ 157,262 Charge-offs ​ ​ ( 706 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 43 ) ​ ​ ( 4,109 ) ​ ​ ( 4,858 ) Recoveries ​ ​ 53 ​ ​ 14 ​ ​ — ​ ​ — ​ ​ 16 ​ ​ 28 ​ ​ 2,148 ​ ​ 2,259 Provision ​ ​ ( 267 ) ​ ​ 2,273 ​ ​ ( 865 ) ​ ​ ( 297 ) ​ ​ ( 3,492 ) ​ ​ ( 543 ) ​ ​ ( 1,192 ) ​ ​ ( 4,383 ) Balance at end of period ​ $ 19,160 ​ $ 45,238 ​ $ 8,908 ​ $ 1,362 ​ $ 30,888 ​ $ 5,084 ​ $ 39,640 ​ $ 150,280 ​ Rollforward of the Reserve for Unfunded Commitments ​ The following presents the activity in the Reserve for Unfunded Commitments for the three months ended March 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2023 ​ ​ 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 ​ $ 7,811 ​ $ 2,004 ​ $ 7,470 ​ $ — ​ $ 30 ​ $ 16,483 ​ $ 37 ​ $ 33,835 Provision ​ ​ ( 658 ) ​ ​ ( 312 ) ​ ​ 1,482 ​ ​ — ​ ​ ( 13 ) ​ ​ 1,853 ​ ​ 12 ​ ​ 2,364 Balance at end of period ​ $ 7,153 ​ $ 1,692 ​ $ 8,952 ​ $ — ​ $ 17 ​ $ 18,336 ​ $ 49 ​ $ 36,199 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2022 ​ ​ 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 ​ $ 8,615 ​ $ 2,114 ​ $ 8,963 ​ $ — ​ $ 15 ​ $ 10,546 ​ $ 69 ​ $ 30,322 Provision ​ ​ 693 ​ ​ ( 325 ) ​ ​ ( 917 ) ​ ​ — ​ ​ ( 12 ) ​ ​ ( 780 ) ​ ​ ( 23 ) ​ ​ ( 1,364 ) Balance at end of period ​ $ 9,308 ​ $ 1,789 ​ $ 8,046 ​ $ — ​ $ 3 ​ $ 9,766 ​ $ 46 ​ $ 28,958 ​ 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. ​ 16 Table of Contents 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. ​ 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 mortgage 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. ​ 17 Table of Contents The amortized cost basis by year of origination and credit quality indicator of the Company’s loans and leases as of March 31, 2023 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Converted ​ ​ ​ ​ ​ Term Loans ​ Revolving ​ to Term ​ ​ ​ ​ ​ Amortized Cost Basis by Origination Year ​ Loans ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized ​ Amortized ​ ​ ​ (dollars in thousands) ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ Prior ​ Cost Basis ​ Cost Basis ​ Total Commercial Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and Industrial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 66,587 ​ $ 338,534 ​ $ 412,459 ​ $ 48,560 ​ $ 167,698 ​ $ 178,991 ​ $ 921,651 ​ $ 13,566 ​ $ 2,148,046 Special Mention ​ ​ 152 ​ ​ 16,591 ​ ​ 202 ​ ​ 994 ​ ​ 2,526 ​ ​ 1,548 ​ ​ 2,557 ​ ​ 283 ​ ​ 24,853 Substandard ​ ​ — ​ ​ 594 ​ ​ 274 ​ ​ 1,058 ​ ​ 958 ​ ​ 1,422 ​ ​ 11,043 ​ ​ 41 ​ ​ 15,390 Other (1) ​ ​ 5,223 ​ ​ 14,426 ​ ​ 6,965 ​ ​ 3,780 ​ ​ 3,312 ​ ​ 2,287 ​ ​ 44,050 ​ ​ — ​ ​ 80,043 Total Commercial and Industrial ​ ​ 71,962 ​ ​ 370,145 ​ ​ 419,900 ​ ​ 54,392 ​ ​ 174,494 ​ ​ 184,248 ​ ​ 979,301 ​ ​ 13,890 ​ ​ 2,268,332 Current period gross charge-offs ​ ​ — ​ ​ 60 ​ ​ — ​ ​ — ​ ​ 20 ​ ​ 711 ​ ​ — ​ ​ — ​ ​ 791 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Real Estate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 105,554 ​ ​ 880,292 ​ ​ 661,523 ​ ​ 321,162 ​ ​ 521,596 ​ ​ 1,533,711 ​ ​ 56,034 ​ ​ — ​ ​ 4,079,872 Special Mention ​ ​ — ​ ​ 163 ​ ​ — ​ ​ 551 ​ ​ 7,031 ​ ​ 11,490 ​ ​ 659 ​ ​ — ​ ​ 19,894 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ 172 ​ ​ — ​ ​ 5,808 ​ ​ 305 ​ ​ — ​ ​ 6,285 Other (1) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 149 ​ ​ — ​ ​ — ​ ​ 149 Total Commercial Real Estate ​ ​ 105,554 ​ ​ 880,455 ​ ​ 661,523 ​ ​ 321,885 ​ ​ 528,627 ​ ​ 1,551,158 ​ ​ 56,998 ​ ​ — ​ ​ 4,106,200 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 15,219 ​ ​ 152,263 ​ ​ 333,608 ​ ​ 89,515 ​ ​ 103,855 ​ ​ 141,243 ​ ​ 20,349 ​ ​ — ​ ​ 856,052 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 213 ​ ​ — ​ ​ — ​ ​ — ​ ​ 213 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 486 ​ ​ — ​ ​ — ​ ​ 486 Other (1) ​ ​ 817 ​ ​ 29,615 ​ ​ 16,206 ​ ​ 2,991 ​ ​ 2,160 ​ ​ 4,478 ​ ​ 941 ​ ​ — ​ ​ 57,208 Total Construction ​ ​ 16,036 ​ ​ 181,878 ​ ​ 349,814 ​ ​ 92,506 ​ ​ 106,228 ​ ​ 146,207 ​ ​ 21,290 ​ ​ — ​ ​ 913,959 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lease Financing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 51,664 ​ ​ 99,102 ​ ​ 22,653 ​ ​ 42,081 ​ ​ 37,333 ​ ​ 72,254 ​ ​ — ​ ​ — ​ ​ 325,087 Special Mention ​ ​ — ​ ​ — ​ ​ 388 ​ ​ 82 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 470 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ 184 ​ ​ 9 ​ ​ 1,372 ​ ​ — ​ ​ — ​ ​ 1,565 Total Lease Financing ​ ​ 51,664 ​ ​ 99,102 ​ ​ 23,041 ​ ​ 42,347 ​ ​ 37,342 ​ ​ 73,626 ​ ​ — ​ ​ — ​ ​ 327,122 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Commercial Lending ​ $ 245,216 ​ $ 1,531,580 ​ $ 1,454,278 ​ $ 511,130 ​ $ 846,691 ​ $ 1,955,239 ​ $ 1,057,589 ​ $ 13,890 ​ $ 7,615,613 Current period gross charge-offs ​ $ — ​ $ 60 ​ $ — ​ $ — ​ $ 20 ​ $ 711 ​ $ — ​ $ — ​ $ 791 (continued) 18 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) ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ Prior ​ Cost Basis ​ Cost Basis ​ Total Residential Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential Mortgage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FICO: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 740 and greater ​ $ 61,686 ​ $ 550,291 ​ $ 1,044,555 ​ $ 546,035 ​ $ 235,535 ​ $ 1,057,166 ​ $ — ​ $ — ​ $ 3,495,268 680 - 739 ​ ​ 11,937 ​ ​ 75,088 ​ ​ 118,790 ​ ​ 86,202 ​ ​ 35,379 ​ ​ 145,363 ​ ​ — ​ ​ — ​ ​ 472,759 620 - 679 ​ ​ 2,776 ​ ​ 11,464 ​ ​ 17,424 ​ ​ 9,946 ​ ​ 9,243 ​ ​ 36,678 ​ ​ — ​ ​ — ​ ​ 87,531 550 - 619 ​ ​ — ​ ​ 2,613 ​ ​ 2,865 ​ ​ 2,447 ​ ​ 825 ​ ​ 12,487 ​ ​ — ​ ​ — ​ ​ 21,237 Less than 550 ​ ​ — ​ ​ 530 ​ ​ 2,445 ​ ​ 1,498 ​ ​ 275 ​ ​ 7,276 ​ ​ — ​ ​ — ​ ​ 12,024 No Score (3) ​ ​ 4,909 ​ ​ 19,766 ​ ​ 14,573 ​ ​ 6,773 ​ ​ 10,494 ​ ​ 61,168 ​ ​ — ​ ​ — ​ ​ 117,683 Other (2) ​ ​ 4,425 ​ ​ 18,205 ​ ​ 18,013 ​ ​ 13,511 ​ ​ 9,064 ​ ​ 35,164 ​ ​ 13,306 ​ ​ 552 ​ ​ 112,240 Total Residential Mortgage ​ ​ 85,733 ​ ​ 677,957 ​ ​ 1,218,665 ​ ​ 666,412 ​ ​ 300,815 ​ ​ 1,355,302 ​ ​ 13,306 ​ ​ 552 ​ ​ 4,318,742 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 122 ​ ​ — ​ ​ — ​ ​ 122 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Home Equity Line ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FICO: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 740 and greater ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 824,038 ​ ​ 1,304 ​ ​ 825,342 680 - 739 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 190,187 ​ ​ 2,440 ​ ​ 192,627 620 - 679 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 52,239 ​ ​ 1,728 ​ ​ 53,967 550 - 619 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 12,734 ​ ​ 1,566 ​ ​ 14,300 Less than 550 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 5,370 ​ ​ 661 ​ ​ 6,031 No Score (3) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,098 ​ ​ — ​ ​ 3,098 Total Home Equity Line ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,087,666 ​ ​ 7,699 ​ ​ 1,095,365 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 116 ​ ​ 19 ​ ​ 135 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Residential Lending ​ $ 85,733 ​ $ 677,957 ​ $ 1,218,665 ​ $ 666,412 ​ $ 300,815 ​ $ 1,355,302 ​ $ 1,100,972 ​ $ 8,251 ​ $ 5,414,107 Current period gross charge-offs ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 122 ​ $ 116 ​ $ 19 ​ $ 257 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FICO: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 740 and greater ​ ​ 40,337 ​ ​ 158,451 ​ ​ 96,174 ​ ​ 46,618 ​ ​ 37,211 ​ ​ 24,636 ​ ​ 114,058 ​ ​ 161 ​ ​ 517,646 680 - 739 ​ ​ 23,366 ​ ​ 97,741 ​ ​ 56,306 ​ ​ 29,741 ​ ​ 24,169 ​ ​ 15,970 ​ ​ 70,708 ​ ​ 441 ​ ​ 318,442 620 - 679 ​ ​ 7,022 ​ ​ 44,839 ​ ​ 26,924 ​ ​ 12,728 ​ ​ 14,484 ​ ​ 11,731 ​ ​ 33,772 ​ ​ 860 ​ ​ 152,360 550 - 619 ​ ​ 750 ​ ​ 10,172 ​ ​ 9,698 ​ ​ 6,475 ​ ​ 7,647 ​ ​ 7,519 ​ ​ 11,937 ​ ​ 855 ​ ​ 55,053 Less than 550 ​ ​ 122 ​ ​ 4,446 ​ ​ 5,400 ​ ​ 4,078 ​ ​ 4,951 ​ ​ 4,518 ​ ​ 4,329 ​ ​ 526 ​ ​ 28,370 No Score (3) ​ ​ 866 ​ ​ 2,376 ​ ​ 8 ​ ​ — ​ ​ 16 ​ ​ 36 ​ ​ 36,396 ​ ​ 167 ​ ​ 39,865 Other (2) ​ ​ 76 ​ ​ 1,588 ​ ​ 4,060 ​ ​ 348 ​ ​ 1,136 ​ ​ — ​ ​ 72,608 ​ ​ — ​ ​ 79,816 Total Consumer Lending ​ $ 72,539 ​ $ 319,613 ​ $ 198,570 ​ $ 99,988 ​ $ 89,614 ​ $ 64,410 ​ $ 343,808 ​ $ 3,010 ​ $ 1,191,552 Current period gross charge-offs ​ $ — ​ $ 635 ​ $ 681 ​ $ 312 ​ $ 614 ​ $ 867 ​ $ 1,471 ​ $ 202 ​ $ 4,782 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Loans and Leases ​ $ 403,488 ​ $ 2,529,150 ​ $ 2,871,513 ​ $ 1,277,530 ​ $ 1,237,120 ​ $ 3,374,951 ​ $ 2,502,369 ​ $ 25,151 ​ $ 14,221,272 Current period gross charge-offs ​ $ — ​ $ 695 ​ $ 681 ​ $ 312 ​ $ 634 ​ $ 1,700 ​ $ 1,587 ​ $ 221 ​ $ 5,830 (1) Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score. (2) Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a “Pass” rating. (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. ​ 19 Table of Contents The amortized cost basis by year of origination and credit quality indicator of the Company’s loans and leases as of December 31, 2022 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Converted ​ ​ ​ ​ ​ Term Loans ​ Revolving ​ to Term ​ ​ ​ ​ ​ Amortized Cost Basis by Origination Year ​ Loans ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized ​ Amortized ​ ​ ​ (dollars in thousands) ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ 2018 ​ Prior ​ Cost Basis ​ Cost Basis ​ Total Commercial Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and Industrial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 359,881 ​ $ 422,567 ​ $ 54,656 ​ $ 170,222 ​ $ 51,476 ​ $ 137,257 ​ $ 894,384 ​ $ 15,715 ​ $ 2,106,158 Special Mention ​ ​ 2,059 ​ ​ 240 ​ ​ 1,371 ​ ​ 2,643 ​ ​ 184 ​ ​ 1,431 ​ ​ 22,897 ​ ​ 378 ​ ​ 31,203 Substandard ​ ​ 625 ​ ​ 289 ​ ​ 1,117 ​ ​ 1,092 ​ ​ 668 ​ ​ 885 ​ ​ 14,733 ​ ​ 65 ​ ​ 19,474 Other (1) ​ ​ 17,679 ​ ​ 7,721 ​ ​ 4,329 ​ ​ 3,965 ​ ​ 1,881 ​ ​ 1,167 ​ ​ 42,320 ​ ​ — ​ ​ 79,062 Total Commercial and Industrial ​ ​ 380,244 ​ ​ 430,817 ​ ​ 61,473 ​ ​ 177,922 ​ ​ 54,209 ​ ​ 140,740 ​ ​ 974,334 ​ ​ 16,158 ​ ​ 2,235,897 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Real Estate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 889,583 ​ ​ 695,882 ​ ​ 319,838 ​ ​ 565,587 ​ ​ 395,474 ​ ​ 1,173,163 ​ ​ 48,081 ​ ​ — ​ ​ 4,087,608 Special Mention ​ ​ 170 ​ ​ — ​ ​ 555 ​ ​ 14,878 ​ ​ 512 ​ ​ 11,398 ​ ​ 675 ​ ​ — ​ ​ 28,188 Substandard ​ ​ — ​ ​ — ​ ​ 173 ​ ​ — ​ ​ 1,704 ​ ​ 14,485 ​ ​ — ​ ​ — ​ ​ 16,362 Other (1) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 151 ​ ​ — ​ ​ — ​ ​ 151 Total Commercial Real Estate ​ ​ 889,753 ​ ​ 695,882 ​ ​ 320,566 ​ ​ 580,465 ​ ​ 397,690 ​ ​ 1,199,197 ​ ​ 48,756 ​ ​ — ​ ​ 4,132,309 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 124,464 ​ ​ 261,536 ​ ​ 96,423 ​ ​ 97,000 ​ ​ 88,973 ​ ​ 84,704 ​ ​ 25,957 ​ ​ — ​ ​ 779,057 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ 221 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 221 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 21 ​ ​ 490 ​ ​ — ​ ​ — ​ ​ 511 Other (1) ​ ​ 29,694 ​ ​ 21,339 ​ ​ 4,686 ​ ​ 2,201 ​ ​ 3,784 ​ ​ 2,196 ​ ​ 954 ​ ​ — ​ ​ 64,854 Total Construction ​ ​ 154,158 ​ ​ 282,875 ​ ​ 101,109 ​ ​ 99,422 ​ ​ 92,778 ​ ​ 87,390 ​ ​ 26,911 ​ ​ — ​ ​ 844,643 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lease Financing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 113,563 ​ ​ 24,052 ​ ​ 43,497 ​ ​ 37,502 ​ ​ 6,004 ​ ​ 67,687 ​ ​ — ​ ​ — ​ ​ 292,305 Special Mention ​ ​ — ​ ​ 411 ​ ​ 2,498 ​ ​ 1,299 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 4,208 Substandard ​ ​ — ​ ​ — ​ ​ 197 ​ ​ 12 ​ ​ 11 ​ ​ 1,357 ​ ​ — ​ ​ — ​ ​ 1,577 Total Lease Financing ​ ​ 113,563 ​ ​ 24,463 ​ ​ 46,192 ​ ​ 38,813 ​ ​ 6,015 ​ ​ 69,044 ​ ​ — ​ ​ — ​ ​ 298,090 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Commercial Lending ​ $ 1,537,718 ​ $ 1,434,037 ​ $ 529,340 ​ $ 896,622 ​ $ 550,692 ​ $ 1,496,371 ​ $ 1,050,001 ​ $ 16,158 ​ $ 7,510,939 (continued) 20 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) ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ 2018 ​ Prior ​ Cost Basis ​ Cost Basis ​ Total Residential Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential Mortgage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FICO: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 740 and greater ​ $ 557,636 ​ $ 1,064,444 ​ $ 560,463 ​ $ 245,241 ​ $ 165,258 ​ $ 920,100 ​ $ — ​ $ — ​ $ 3,513,142 680 - 739 ​ ​ 73,929 ​ ​ 112,672 ​ ​ 82,416 ​ ​ 40,355 ​ ​ 22,126 ​ ​ 130,508 ​ ​ — ​ ​ — ​ ​ 462,006 620 - 679 ​ ​ 12,320 ​ ​ 13,804 ​ ​ 9,881 ​ ​ 3,649 ​ ​ 3,054 ​ ​ 35,441 ​ ​ — ​ ​ — ​ ​ 78,149 550 - 619 ​ ​ 2,455 ​ ​ 2,246 ​ ​ 1,791 ​ ​ 263 ​ ​ 601 ​ ​ 6,955 ​ ​ — ​ ​ — ​ ​ 14,311 Less than 550 ​ ​ — ​ ​ 1,321 ​ ​ 367 ​ ​ — ​ ​ 966 ​ ​ 5,304 ​ ​ — ​ ​ — ​ ​ 7,958 No Score (3) ​ ​ 22,289 ​ ​ 14,671 ​ ​ 6,820 ​ ​ 10,599 ​ ​ 15,921 ​ ​ 47,245 ​ ​ — ​ ​ — ​ ​ 117,545 Other (2) ​ ​ 18,970 ​ ​ 18,211 ​ ​ 15,287 ​ ​ 9,201 ​ ​ 9,124 ​ ​ 29,128 ​ ​ 9,202 ​ ​ 554 ​ ​ 109,677 Total Residential Mortgage ​ ​ 687,599 ​ ​ 1,227,369 ​ ​ 677,025 ​ ​ 309,308 ​ ​ 217,050 ​ ​ 1,174,681 ​ ​ 9,202 ​ ​ 554 ​ ​ 4,302,788 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Home Equity Line ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FICO: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 740 and greater ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 817,123 ​ ​ 2,059 ​ ​ 819,182 680 - 739 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 171,117 ​ ​ 2,714 ​ ​ 173,831 620 - 679 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 45,368 ​ ​ 2,100 ​ ​ 47,468 550 - 619 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 7,485 ​ ​ 1,029 ​ ​ 8,514 Less than 550 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,151 ​ ​ 481 ​ ​ 1,632 No Score (3) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 4,724 ​ ​ — ​ ​ 4,724 Total Home Equity Line ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,046,968 ​ ​ 8,383 ​ ​ 1,055,351 Total Residential Lending ​ ​ 687,599 ​ ​ 1,227,369 ​ ​ 677,025 ​ ​ 309,308 ​ ​ 217,050 ​ ​ 1,174,681 ​ ​ 1,056,170 ​ ​ 8,937 ​ ​ 5,358,139 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer Lending ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FICO: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 740 and greater ​ ​ 200,887 ​ ​ 111,047 ​ ​ 53,534 ​ ​ 43,912 ​ ​ 24,951 ​ ​ 8,432 ​ ​ 125,126 ​ ​ 185 ​ ​ 568,074 680 - 739 ​ ​ 99,787 ​ ​ 67,140 ​ ​ 37,260 ​ ​ 31,751 ​ ​ 15,874 ​ ​ 7,665 ​ ​ 72,101 ​ ​ 514 ​ ​ 332,092 620 - 679 ​ ​ 25,949 ​ ​ 29,587 ​ ​ 14,226 ​ ​ 16,872 ​ ​ 9,672 ​ ​ 6,488 ​ ​ 31,854 ​ ​ 937 ​ ​ 135,585 550 - 619 ​ ​ 3,017 ​ ​ 5,475 ​ ​ 5,226 ​ ​ 8,056 ​ ​ 5,396 ​ ​ 3,924 ​ ​ 11,269 ​ ​ 854 ​ ​ 43,217 Less than 550 ​ ​ 656 ​ ​ 1,351 ​ ​ 2,286 ​ ​ 3,779 ​ ​ 1,869 ​ ​ 1,593 ​ ​ 3,541 ​ ​ 443 ​ ​ 15,518 No Score (3) ​ ​ 3,205 ​ ​ 258 ​ ​ — ​ ​ 51 ​ ​ 24 ​ ​ 29 ​ ​ 38,805 ​ ​ 227 ​ ​ 42,599 Other (2) ​ ​ 1,615 ​ ​ 4,082 ​ ​ 353 ​ ​ 1,368 ​ ​ — ​ ​ — ​ ​ 78,430 ​ ​ 1 ​ ​ 85,849 Total Consumer Lending ​ ​ 335,116 ​ ​ 218,940 ​ ​ 112,885 ​ ​ 105,789 ​ ​ 57,786 ​ ​ 28,131 ​ ​ 361,126 ​ ​ 3,161 ​ ​ 1,222,934 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Loans and Leases ​ $ 2,560,433 ​ $ 2,880,346 ​ $ 1,319,250 ​ $ 1,311,719 ​ $ 825,528 ​ $ 2,699,183 ​ $ 2,467,297 ​ $ 28,256 ​ $ 14,092,012 (1) Other credit quality indicators used for monitoring purposes are primarily FICO scores. The majority of the loans in this population were originated to borrowers with a prime FICO score. (2) Other credit quality indicators used for monitoring purposes are primarily internal risk ratings. The majority of the loans in this population were graded with a “Pass” rating. (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 March 31, 2023 or December 31, 2022. ​ 21 Table of Contents 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 March 31, 2023 and December 31, 2022, the aging analysis of the amortized cost basis of the Company’s past due loans and leases was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2023 ​ ​ 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 ​ $ 2,766 ​ $ 5 ​ $ 1,617 ​ $ 4,388 ​ $ 2,263,944 ​ $ 2,268,332 ​ $ 461 Commercial real estate ​ ​ 3,421 ​ ​ — ​ ​ 2,073 ​ ​ 5,494 ​ ​ 4,100,706 ​ ​ 4,106,200 ​ ​ 1,346 Construction ​ ​ 901 ​ ​ — ​ ​ 102 ​ ​ 1,003 ​ ​ 912,956 ​ ​ 913,959 ​ ​ 102 Lease financing ​ ​ 24 ​ ​ — ​ ​ — ​ ​ 24 ​ ​ 327,098 ​ ​ 327,122 ​ ​ — Residential mortgage ​ ​ 893 ​ ​ 2,355 ​ ​ 4,399 ​ ​ 7,647 ​ ​ 4,311,095 ​ ​ 4,318,742 ​ ​ 58 Home equity line ​ ​ 4,149 ​ ​ 898 ​ ​ 2,343 ​ ​ 7,390 ​ ​ 1,087,975 ​ ​ 1,095,365 ​ ​ — Consumer ​ ​ 22,769 ​ ​ 1,617 ​ ​ 2,503 ​ ​ 26,889 ​ ​ 1,164,663 ​ ​ 1,191,552 ​ ​ 2,502 Total ​ $ 34,923 ​ $ 4,875 ​ $ 13,037 ​ $ 52,835 ​ $ 14,168,437 ​ $ 14,221,272 ​ $ 4,469 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ 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 ​ $ 2,682 ​ $ 769 ​ $ 1,441 ​ $ 4,892 ​ $ 2,231,005 ​ $ 2,235,897 ​ $ 291 Commercial real estate ​ ​ 4,505 ​ ​ — ​ ​ 727 ​ ​ 5,232 ​ ​ 4,127,077 ​ ​ 4,132,309 ​ ​ — Construction ​ ​ 109 ​ ​ — ​ ​ — ​ ​ 109 ​ ​ 844,534 ​ ​ 844,643 ​ ​ — Lease financing ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 298,090 ​ ​ 298,090 ​ ​ — Residential mortgage ​ ​ 3,681 ​ ​ 1,983 ​ ​ 2,572 ​ ​ 8,236 ​ ​ 4,294,552 ​ ​ 4,302,788 ​ ​ 58 Home equity line ​ ​ 5,161 ​ ​ 1,381 ​ ​ 2,072 ​ ​ 8,614 ​ ​ 1,046,737 ​ ​ 1,055,351 ​ ​ — Consumer ​ ​ 29,927 ​ ​ 6,801 ​ ​ 2,886 ​ ​ 39,614 ​ ​ 1,183,320 ​ ​ 1,222,934 ​ ​ 2,885 Total ​ $ 46,065 ​ $ 10,934 ​ $ 9,698 ​ $ 66,697 ​ $ 14,025,315 ​ $ 14,092,012 ​ $ 3,234 ​ 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 March 31, 2023 and December 31, 2022 and the amortized cost basis of loans and leases on nonaccrual status with no ACL as of March 31, 2023 and December 31, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2023 ​ ​ Nonaccrual ​ ​ ​ ​ ​ Loans ​ ​ ​ ​ ​ and Leases ​ ​ ​ ​ ​ With No ​ Nonaccrual ​ ​ Allowance ​ Loans (dollars in thousands) for Credit Losses ​ and Leases Commercial and industrial ​ $ 633 ​ $ 1,158 Commercial real estate ​ ​ 727 ​ ​ 727 Residential mortgage ​ ​ 1,551 ​ ​ 6,896 Home equity line ​ ​ 596 ​ ​ 4,903 Total Nonaccrual Loans and Leases ​ $ 3,507 ​ $ 13,684 22 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Nonaccrual ​ ​ ​ ​ ​ Loans ​ ​ ​ ​ ​ and Leases ​ ​ ​ ​ ​ With No ​ Nonaccrual ​ ​ Allowance ​ Loans (dollars in thousands) for Credit Losses ​ and Leases Commercial and industrial ​ $ 665 ​ $ 1,215 Commercial real estate ​ ​ 727 ​ ​ 727 Residential mortgage ​ ​ 1,560 ​ ​ 6,166 Home equity line ​ ​ 596 ​ ​ 3,797 Total Nonaccrual Loans and Leases ​ $ 3,548 ​ $ 11,905 ​ For the three months ended March 31, 2023 and 2022, the Company recognized interest income of $ 0.1 million and nil , respectively, on nonaccrual loans and leases. Furthermore, for both the three months ended March 31, 2023 and 2022, the amount of accrued interest receivables written off by reversing interest income was $ 0.2 million. ​ 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 March 31, 2023 and December 31, 2022, the amortized cost basis of collateral-dependent loans were $ 8.1 million and $ 8.2 million, respectively. As of March 31, 2023 and December 31, 2022, these loans were primarily collateralized by residential real estate property. As of both March 31, 2023 and December 31, 2022, the fair value of collateral on substantially all collateral-dependent loans were significantly in excess of their amortized cost basis. ​ Loan Modifications to Borrowers Experiencing Financial Difficulty ​ The Company adopted the provisions of Accounting Standards Update (“ASU”) No. 2022-02, Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures , on January 1, 2023. This update eliminates the accounting guidance on troubled debt restructurings (“TDRs”) for creditors in Subtopic 310-40, updates the requirements related to accounting for credit losses under Topic 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. For additional information, see “Note 1. Organization and Basis of Presentation.” ​ Commercial and industrial loans with a borrower experiencing financial difficulty may be modified through interest rate reductions, term extensions, and converting revolving credit lines to term loans. Modifications of commercial real estate and construction loans with a borrower experiencing financial difficulty may involve reducing the interest rate for the remaining term of the loan or extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk. Modifications of construction loans with a borrower experiencing financial difficulty 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. Modifications of residential real estate loans with a borrower experiencing financial difficulty may be comprised of loans where monthly payments are lowered to accommodate the borrowers' financial needs for a period of time, including extended interest-only periods and reamortization of the balance. Modifications of consumer loans with a borrower experiencing financial difficulty may involve interest rate reductions and term extensions. ​ Loans modified with a borrower experiencing financial difficulty, whether in default or not, 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 with a borrower experiencing financial difficulty are evaluated for impairment. As a result, this may have a financial effect of impacting the specific ACL associated with the loan. An ACL for impaired commercial loans, including commercial real estate and construction loans, 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 is measured based on the estimated fair value of the collateral, less any selling costs. Management exercises significant judgment in developing these estimates. 23 Table of Contents ​ The following tables present, by class of financing receivable and type of modification granted, the amortized cost basis as of March 31, 2023, related to loans modified to borrowers experiencing financial difficulty during the three months ended March 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Rate Reduction ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ ​ March 31, 2023 ​ ​ ​ ​ ​ Amortized ​ % of Total Class ​ ​ (dollars in thousands) ​ Cost Basis ​ of Financing Receivable ​ Commercial real estate ​ $ 4 ​ n/m % ​ Consumer ​ ​ 358 ​ 0.03 ​ ​ Total ​ $ 362 ​ n/m % ​ n/m – Represents less than 0.01% of total class of financing receivable. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Term Extension ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ ​ March 31, 2023 ​ ​ ​ ​ ​ Amortized ​ % of Total Class ​ ​ (dollars in thousands) ​ Cost Basis ​ of Financing Receivable ​ Commercial and industrial ​ $ 96 ​ n/m % ​ Construction ​ ​ 231 ​ 0.03 ​ ​ Residential mortgage ​ ​ 34 ​ n/m ​ ​ Consumer ​ ​ 71 ​ 0.01 ​ ​ Total ​ $ 432 ​ n/m % ​ n/m – Represents less than 0.01% of total class of financing receivable. ​ ​ The following tables describe, by class of financing receivable and type of modification granted, the financial effect of the modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2023: ​ ​ ​ ​ ​ ​ ​ Interest Rate Reduction ​ ​ ​ Financial Effect ​ ​ ​ Three Months Ended March 31, 2023 ​ Commercial real estate ​ Reduced weighted-average contractual interest rate by 0.75 %. ​ Consumer ​ Reduced weighted-average contractual interest rate by 13.51 %. ​ ​ ​ ​ ​ ​ ​ ​ ​ Term Extension ​ ​ ​ Financial Effect ​ ​ ​ Three Months Ended March 31, 2023 ​ Commercial and industrial ​ Added a weighted-average 3.0 years to the life of loans. ​ Construction ​ Added a weighted-average 2.9 years to the life of loans. ​ Residential mortgage ​ Added a weighted-average 5.9 years to the life of loans. ​ Consumer ​ Added a weighted-average 4.6 years to the life of loans. ​ ​ The following table presents, by class of financing receivable and type of modification granted, the amortized cost basis, as of March 31, 2023, of loans that had a payment default during the three months ended March 31, 2023 and were modified in the 12 months before default to borrowers experiencing financial difficulty. The Company is reporting these defaulted loans based on a payment default definition of 30 days past due: ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2023 ​ ​ ​ Amortized Cost Basis of Modified Loans That Subsequently Defaulted ​ (dollars in thousands) ​ Interest Rate Reduction ​ Consumer ​ $ 10 ​ Total ​ $ 10 ​ 24 Table of Contents ​ Performance of the loans that are modified to borrowers experiencing financial difficulty is monitored to understand the effectiveness of the Company’s modification efforts. As of March 31, 2023, the aging analysis of the amortized cost basis of the performance of loans that have been modified in the last 12 months related to borrowers experiencing financial difficulty was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2023 ​ ​ ​ ​ Past Due ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Greater Than ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ or Equal to ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 30-59 Days ​ ​ 60-89 Days ​ ​ 90 Days ​ ​ Total ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ Past Due ​ Past Due ​ Past Due ​ Past Due ​ Current ​ Total ​ Commercial and industrial ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 96 ​ $ 96 ​ Commercial real estate ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 4 ​ ​ 4 ​ Construction ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 231 ​ ​ 231 ​ Residential mortgage ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 34 ​ ​ 34 ​ Consumer ​ ​ 9 ​ ​ — ​ ​ — ​ ​ 9 ​ ​ 420 ​ ​ 429 ​ Total ​ $ 9 ​ $ — ​ $ — ​ $ 9 ​ $ 785 ​ $ 794 ​ ​ The Company had commitments to extend credit, standby letters of credit, and commercial letters of credit totaling $ 7.1 billion as of March 31, 2023. Of the $ 7.1 billion at March 31, 2023, there were commitments of $ 5.0 million to lend additional funds to borrowers experiencing financial difficulty for which the Company had modified the terms of the loans in the form of an interest rate reduction or a term extension during the three months ended March 31, 2023. ​ Troubled Debt Restructuring Disclosures Prior to Adoption of ASU No. 2022-02 ​ Prior to the adoption of ASU No. 2022-02, the Company accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulty as a TDR. On January 1, 2023, the Company adopted ASU No. 2022-02, which eliminated TDR accounting prospectively for all restructurings occurring on or after January 1, 2023. Loans that were restructured in a TDR prior to the adoption of ASU No. 2022-02 will continue to be accounted for under the historical TDR accounting until the loan is paid off or subsequently modified. The disclosures below related to TDRs for prior periods are presented in accordance with Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors . ​ Commercial and industrial loans modified in a TDR may have involved 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 have involved 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 have also involved extending the interest-only payment period. Interest continued to accrue on the missed payments and as a result, the effective yield on the loan remained unchanged. Residential real estate loans modified in a TDR may have been comprised of loans where monthly payments were lowered to accommodate the borrowers' financial needs for a period of time, including extended interest-only periods and reamortization of the balance. Modifications of consumer loans in a TDR may have involved temporary or permanent reduced payments, temporary interest-only payments and below-market interest rates. ​ Loans modified in a TDR may have already been 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 were evaluated for impairment. As a result, this may have had a financial effect of impacting the specific ACL associated with the loan. An ACL for impaired commercial loans, including commercial real estate and construction loans, that had been modified in a TDR was measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or if the loan was collateral-dependent, the estimated fair value of the collateral, less any selling costs. An ACL for impaired residential real estate loans that had been modified in a TDR was measured based on the estimated fair value of the collateral, less any selling costs. Management exercised significant judgment in developing these estimates. ​ 25 Table of Contents The following presents, by class, information related to loans modified in a TDR during the three months ended March 31, 2022, presented in accordance with Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, 2022 ​ ​ Number of ​ Recorded ​ Related (dollars in thousands) Contracts (1) Investment (2) ACL Consumer ​ 144 ​ $ 1,759 ​ $ 202 Total ​ 144 ​ $ 1,759 ​ $ 202 (1) The number of contracts does not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period. (2) 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 reduced payments or below-market interest rates. ​ The Company had commitments to extend credit, standby letters of credit, and commercial letters of credit totaling $ 7.0 billion as of December 31, 2022. Of the $ 7.0 billion at December 31, 2022, there were commitments of $ 0.1 million to lend additional funds 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 period below within 12 months of their permanent modification date for the period indicated, presented in accordance with Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors . The Company was reporting these defaulted TDRs based on a payment default definition of 30 days past due: ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, 2022 ​ ​ Number of ​ Recorded (dollars in thousands) Contracts (1) Investment (2) Commercial and industrial ​ 1 ​ $ 216 Consumer ​ 142 ​ ​ 1,991 Total ​ 143 ​ $ 2,207 (1) The number of contracts does not include TDRs that have been fully paid off, charged off, or foreclosed upon by the end of the period. (2) 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. ​ Foreclosed Property ​ As of both March 31, 2023 and December 31, 2022, residential real estate property held from one foreclosed residential mortgage loan of $ 0.1 million was included in other real estate owned and repossessed personal property shown in 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 $ 1.4 billion as of both March 31, 2023 and December 31, 2022. Servicing fees include contractually specified fees, late charges, and ancillary fees, and were $ 0.9 million and $ 1.0 million for the three months ended March 31, 2023 and 2022, respectively. ​ 26 Table of Contents Amortization of mortgage servicing rights (“MSRs”) was $ 0.3 million and $ 0.7 million for three months ended March 31, 2023 and 2022, respectively. The estimated future amortization expenses for MSRs over the next five years are as follows: ​ ​ ​ ​ ​ ​ ​ Estimated (dollars in thousands) Amortization Under one year ​ $ 910 One to two years ​ ​ 809 Two to three years ​ ​ 718 Three to four years ​ ​ 634 Four to five years ​ ​ 560 ​ The details of the Company’s MSRs are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, (dollars in thousands) 2023 2022 Gross carrying amount ​ $ 69,290 ​ $ 69,273 Less: accumulated amortization ​ ​ 62,991 ​ ​ 62,711 Net carrying value ​ $ 6,299 ​ $ 6,562 ​ ​ ​ ​ ​ ​ ​ ​ The following table presents changes in amortized MSRs for the three months ended March 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (dollars in thousands) 2023 2022 Balance at beginning of period ​ $ 6,562 ​ $ 8,302 Originations ​ ​ 17 ​ ​ 84 Amortization ​ ​ ( 280 ) ​ ​ ( 736 ) Balance at end of period ​ $ 6,299 ​ $ 7,650 Fair value of amortized MSRs at beginning of period ​ $ 15,193 ​ $ 12,243 Fair value of amortized MSRs at end of period ​ $ 15,169 ​ $ 13,585 ​ MSRs are evaluated for impairment if events and circumstances indicate a possible impairment. No impairment of MSRs was recorded for the three months ended March 31, 2023 and 2022. ​ The quantitative assumptions used in determining the lower of cost or fair value of the Company’s MSRs as of March 31, 2023 and December 31, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2023 ​ December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ Weighted ​ ​ Range ​ Average ​ Range ​ Average ​ Conditional prepayment rate ​ 6.92 % - 12.25 % 7.04 % 7.02 % - 13.58 % 7.11 % Life in years (of the MSR) ​ 3.61 ​ - 7.33 ​ 7.18 ​ 3.35 ​ - 7.37 ​ 7.20 ​ Weighted-average coupon rate ​ 3.55 % - 6.16 % 3.68 % 3.55 % - 6.24 % 3.68 % Discount rate ​ 10.40 % - 10.57 % 10.52 % 10.41 % - 10.54 % 10.51 % ​ 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. ​ 27 Table of Contents 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 March 31, 2023 and December 31, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) March 31, 2023 December 31, 2022 Public deposits ​ $ 2,760,479 ​ $ 2,977,693 Federal Home Loan Bank ​ ​ 3,493,694 ​ ​ 3,451,070 Federal Reserve Bank ​ ​ 1,646,765 ​ ​ 1,704,803 ACH transactions ​ ​ 131,344 ​ ​ 133,173 Interest rate swaps ​ ​ 20,678 ​ ​ 31,091 Total ​ $ 8,052,960 ​ $ 8,297,830 ​ As the Company did not enter into reverse repurchase agreements or repurchase agreements, no collateral was accepted as of March 31, 2023 and December 31, 2022. In addition, no debt was extinguished by in-substance defeasance. ​ ​ ​ 7. Deposits ​ As of March 31, 2023 and December 31, 2022, deposits were categorized as interest-bearing or noninterest-bearing as follows: ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) March 31, 2023 December 31, 2022 U.S.: ​ ​ ​ ​ ​ ​ Interest-bearing ​ $ 11,681,158 ​ $ 11,936,775 Noninterest-bearing ​ ​ 7,800,992 ​ ​ 7,978,046 Foreign: ​ ​ ​ ​ ​ ​ Interest-bearing ​ ​ 897,997 ​ ​ 887,608 Noninterest-bearing ​ ​ 901,353 ​ ​ 886,600 Total deposits ​ $ 21,281,500 ​ $ 21,689,029 ​ The following table presents the maturity distribution of time certificates of deposit as of March 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Under ​ $250,000 ​ ​ ​ (dollars in thousands) $250,000 or More Total Three months or less ​ $ 186,517 ​ $ 447,744 ​ $ 634,261 Over three through six months ​ ​ 141,036 ​ ​ 583,966 ​ ​ 725,002 Over six through twelve months ​ ​ 395,557 ​ ​ 427,780 ​ ​ 823,337 One to two years ​ ​ 185,920 ​ ​ 71,394 ​ ​ 257,314 Two to three years ​ ​ 57,854 ​ ​ 15,888 ​ ​ 73,742 Three to four years ​ ​ 36,343 ​ ​ 3,925 ​ ​ 40,268 Four to five years ​ ​ 24,169 ​ ​ 8,444 ​ ​ 32,613 Thereafter ​ ​ 865 ​ ​ — ​ ​ 865 Total ​ $ 1,028,261 ​ $ 1,559,141 ​ $ 2,587,402 ​ Time certificates of deposit in denominations of $250,000 or more, in the aggregate, were $ 1.6 billion and $ 1.5 billion as of March 31, 2023 and December 31, 2022, respectively. Overdrawn deposit accounts are classified as loans and totaled $ 1.7 million and $ 2.5 million as of March 31, 2023 and December 31, 2022, respectively. 28 Table of Contents ​ 8. Short-Term Borrowings ​ At March 31, 2023 and December 31, 2022, short-term borrowings were comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) March 31, 2023 December 31, 2022 Federal funds purchased ​ $ — ​ $ 75,000 Short-term FHLB repo advance ​ ​ 250,000 ​ ​ — Total short-term borrowings ​ $ 250,000 ​ $ 75,000 ​ As of March 31, 2023, the Company’s short-term borrowings consisted of a $ 250.0 million short-term FHLB repo advance with a 5.00 % annual interest rate that matured in April 2023. As of December 31, 2022, the Company’s short-term borrowings consisted of $ 75.0 million in federal funds purchased with a 4.35 % annual interest rate that matured in January 2023. As of March 31, 2023 and December 31, 2022, the Company had a remaining line of credit of $ 1.7 billion and $ 2.5 billion available from the FHLB, respectively. The FHLB repo advance and remaining borrowing capacity were secured by residential real estate loan collateral as of March 31, 2023 and December 31, 2022. As of both March 31, 2023 and December 31, 2022, the Company had an undrawn line of credit of $ 1.2 billion available from the FRB. The borrowing capacity with the FRB was secured by consumer, commercial and industrial, commercial real estate and residential real estate loans as of March 31, 2023 and December 31, 2022. See “Note 6. Transfers of Financial Assets” for more information. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (dollars in thousands) 2023 ​ 2022 ​ Federal funds purchased: ​ ​ ​ ​ ​ ​ ​ Weighted-average interest rate at March 31, ​ ​ — % ​ — % Highest month-end balance ​ $ 150,000 ​ $ — ​ Average outstanding balance ​ $ 67,056 ​ $ — ​ Weighted-average interest rate paid ​ ​ 4.43 % ​ — % Short-term FHLB repo advance: ​ ​ ​ ​ ​ ​ ​ Weighted-average interest rate at March 31, ​ ​ 5.00 % ​ — % Highest month-end balance ​ $ 250,000 ​ $ — ​ Average outstanding balance ​ $ 52,778 ​ $ — ​ Weighted-average interest rate paid ​ ​ 5.02 % ​ — % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 9. Long-Term Borrowings ​ Long-term borrowings consisted of the following as of March 31, 2023 and December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) March 31, 2023 December 31, 2022 FHLB fixed-rate advances (1) ​ $ 500,000 ​ $ — Total long-term borrowings ​ $ 500,000 ​ $ — (1) Interest is payable monthly. ​ As of March 31, 2023, the Company’s long-term borrowings consisted of $ 500.0 million in FHLB fixed-rate advances with a weighted average interest rate of 4.71 % and maturity dates in September 2024. The FHLB fixed-rate advances require monthly interest-only payments with the principal amount due on the maturity date. There were no long-term borrowings as of December 31, 2022. The FHLB fixed-rate advances and remaining borrowing capacity were secured by residential real estate loan collateral as of March 31, 2023 and December 31, 2022. ​ 29 Table of Contents As of March 31, 2023, future contractual principal payments and maturities of long-term borrowings were as follows: ​ ​ ​ ​ ​ ​ ​ Principal (dollars in thousands) Payments 2023 ​ $ — 2024 ​ ​ 500,000 2025 ​ ​ — 2026 ​ ​ — 2027 ​ ​ — Total ​ $ 500,000 ​ ​ 10. Accumulated Other Comprehensive Loss ​ Accumulated other comprehensive loss is defined as the revenues, expenses, gains and losses that are included in comprehensive loss but excluded from net income. The Company’s significant items of accumulated other comprehensive loss are pension and other benefits, net unrealized gains or losses on investment securities and net unrealized gains or losses on cash flow derivative hedges. ​ Changes in accumulated other comprehensive income (loss) for the three months ended March 31, 2023 and 2022 are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income ​ ​ ​ ​ ​ ​ ​ ​ Tax ​ ​ ​ ​ ​ Pre-tax ​ Benefit ​ Net of (dollars in thousands) Amount (Expense) Tax Accumulated other comprehensive loss at December 31, 2022 ​ $ ( 871,813 ) ​ $ 232,559 ​ $ ( 639,254 ) Three months ended March 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net gains arising during the period ​ ​ 25,038 ​ ​ ( 6,679 ) ​ ​ 18,359 Reclassification of net losses to net income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization of unrealized holding losses on held-to-maturity securities ​ ​ 11,708 ​ ​ ( 3,123 ) ​ ​ 8,585 Net change in investment securities ​ ​ 36,746 ​ ​ ( 9,802 ) ​ ​ 26,944 Cash flow derivative hedges: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net losses arising during the period ​ ​ ( 442 ) ​ ​ 118 ​ ​ ( 324 ) Reclassification of net losses included in net income ​ ​ 1,303 ​ ​ ( 348 ) ​ ​ 955 Net change in cash flow derivative hedges ​ ​ 861 ​ ​ ( 230 ) ​ ​ 631 Other comprehensive income ​ ​ 37,607 ​ ​ ( 10,032 ) ​ ​ 27,575 Accumulated other comprehensive loss at March 31, 2023 ​ $ ( 834,206 ) ​ $ 222,527 ​ $ ( 611,679 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income ​ ​ ​ ​ ​ Pre-tax ​ Tax ​ Net of (dollars in thousands) Amount Benefit Tax Accumulated other comprehensive loss at December 31, 2021 ​ $ ( 165,967 ) ​ $ 44,274 ​ $ ( 121,693 ) Three months ended March 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net losses arising during the period ​ ​ ( 538,085 ) ​ ​ 143,534 ​ ​ ( 394,551 ) Net change in investment securities ​ ​ ( 538,085 ) ​ ​ 143,534 ​ ​ ( 394,551 ) Cash flow derivative hedges: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net losses arising during the period ​ ​ ( 1,716 ) ​ ​ 458 ​ ​ ( 1,258 ) Net change in cash flow derivative hedges ​ ​ ( 1,716 ) ​ ​ 458 ​ ​ ( 1,258 ) Other comprehensive loss ​ ​ ( 539,801 ) ​ ​ 143,992 ​ ​ ( 395,809 ) Accumulated other comprehensive loss at March 31, 2022 ​ $ ( 705,768 ) ​ $ 188,266 ​ $ ( 517,502 ) ​ 30 Table of Contents The following table summarizes changes in accumulated other comprehensive income (loss), net of tax, for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pensions ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ and ​ Available-for-Sale ​ Held-to-Maturity ​ Cash Flow ​ Other ​ ​ Other ​ Investment ​ Investment ​ Derivative ​ Comprehensive (dollars in thousands) Benefits Securities Securities Hedges Income (Loss) Three Months Ended March 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ ( 5,431 ) ​ $ ( 292,175 ) ​ $ ( 336,946 ) ​ $ ( 4,702 ) ​ $ ( 639,254 ) Other comprehensive income ​ ​ — ​ ​ 18,359 ​ ​ 8,585 ​ ​ 631 ​ ​ 27,575 Balance at end of period ​ $ ( 5,431 ) ​ $ ( 273,816 ) ​ $ ( 328,361 ) ​ $ ( 4,071 ) ​ $ ( 611,679 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ ( 24,390 ) ​ $ ( 97,303 ) ​ $ — ​ $ — ​ $ ( 121,693 ) Other comprehensive loss ​ ​ — ​ ​ ( 394,551 ) ​ ​ — ​ ​ ( 1,258 ) ​ ​ ( 395,809 ) Balance at end of period ​ $ ( 24,390 ) ​ $ ( 491,854 ) ​ $ — ​ $ ( 1,258 ) ​ $ ( 517,502 ) ​ ​ 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. ​ The table below sets forth those ratios at March 31, 2023 and December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Hawaiian ​ Minimum ​ Well- ​ ​ ​ First Hawaiian, Inc. ​ Bank ​ Capital ​ Capitalized ​ (dollars in thousands) Amount Ratio ​ Amount Ratio ​ Ratio (1) Ratio (1) ​ March 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common equity tier 1 capital to risk-weighted assets ​ $ 1,945,199 ​ 11.97 % $ 1,932,081 ​ 11.89 % 4.50 % 6.50 % Tier 1 capital to risk-weighted assets ​ ​ 1,945,199 ​ 11.97 % ​ 1,932,081 ​ 11.89 % 6.00 % 8.00 % Total capital to risk-weighted assets ​ ​ 2,128,520 ​ 13.09 % ​ 2,115,402 ​ 13.01 % 8.00 % 10.00 % Tier 1 capital to average assets (leverage ratio) ​ ​ 1,945,199 ​ 8.26 % ​ 1,932,081 ​ 8.21 % 4.00 % 5.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common equity tier 1 capital to risk-weighted assets ​ $ 1,912,767 ​ 11.82 % $ 1,895,693 ​ 11.71 % 4.50 % 6.50 % Tier 1 capital to risk-weighted assets ​ ​ 1,912,767 ​ 11.82 % ​ 1,895,693 ​ 11.71 % 6.00 % 8.00 % Total capital to risk-weighted assets ​ ​ 2,090,502 ​ 12.92 % ​ 2,073,428 ​ 12.81 % 8.00 % 10.00 % Tier 1 capital to average assets (leverage ratio) ​ ​ 1,912,767 ​ 8.11 % ​ 1,895,693 ​ 8.04 % 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”). ​ 31 Table of Contents Federal regulations require 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 March 31, 2023, 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 March 31, 2023, 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 and collars 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 the notional amounts and fair values of derivatives held by the Company as of March 31, 2023 and December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2023 ​ December 31, 2022 ​ ​ ​ ​ ​ 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 ​ $ 267,500 ​ $ 8,464 ​ $ ( 5,681 ) ​ $ 267,500 ​ $ 7,276 ​ $ ( 6,840 ) Interest rate collars ​ ​ 200,000 ​ ​ 267 ​ ​ ( 137 ) ​ ​ 200,000 ​ ​ 491 ​ ​ ( 63 ) Derivatives not designated as hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate swaps ​ ​ 2,796,954 ​ ​ — ​ ​ ( 30,043 ) ​ ​ 2,849,776 ​ ​ 3,178 ​ ​ ( 42,365 ) Visa derivative ​ ​ 93,312 ​ ​ — ​ ​ ( 1,200 ) ​ ​ 121,013 ​ ​ — ​ ​ ( 851 ) Foreign exchange contracts ​ ​ 241 ​ ​ — ​ ​ — ​ ​ 210 ​ ​ — ​ ​ — (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 . ​ 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. As of March 31, 2023 and December 31, 2022, the amount of initial margin cash collateral posted by the Company was $ 1.5 million and $ 1.2 million, respectively. As of March 31, 2023 and December 31, 2022, the variation margin was $ 30.0 million and $ 39.2 million, respectively. ​ As of March 31, 2023, the Company pledged $ 19.2 million in financial instruments and $ 1.5 million in cash and received $ 39.1 million in cash as collateral for interest rate swaps. As of December 31, 2022, the Company pledged $ 29.9 million in financial instruments and $ 1.2 million in cash and received $ 48.1 million in cash as collateral for interest rate swaps. As of March 31, 2023 and December 31, 2022, 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. ​ 32 Table of Contents At March 31, 2023 and December 31, 2022, the Company carried one interest rate swap with a notional amount of $ 67.5 million, which was designated and qualified as a fair value hedge for a commercial and industrial loan. As of March 31, 2023 and December 31, 2022, the interest rate swap had a positive fair value of $ 8.5 million and $ 7.3 million, respectively. The swap matures in 2041. The Company received a USD Federal Funds floating rate and paid a fixed rate of 2.07 % . ​ The following table shows the gains and losses recognized in income related to derivatives in fair value hedging relationships for the three months ended March 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gains (losses) recognized in ​ Three Months Ended ​ ​ the consolidated statements ​ March 31, (dollars in thousands) of income line item 2023 2022 Gains (losses) on fair value hedging relationships recognized in interest income: ​ ​ ​ ​ ​ ​ ​ ​ Recognized on interest rate swap ​ Loans and lease financing ​ $ 1,189 ​ $ 1,512 Recognized on hedged item ​ Loans and lease financing ​ ​ ( 1,284 ) ​ ​ ( 1,617 ) ​ As of March 31, 2023 and December 31, 2022, 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) March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 Line item in the consolidated balance sheets in which the hedged item is included ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans and leases ​ $ 58,995 ​ $ 60,189 ​ $ ( 8,505 ) ​ $ ( 7,311 ) ​ Cash Flow Hedges ​ The Company utilized interest rate swaps to reduce asset sensitivity and enhance current yields associated with interest payments received on a pool of floating-rate loans. The Company entered into interest rate swaps paying floating rates and receiving fixed rates. The floating-rate index (Bloomberg Short-Term Bank Yield Index, or “BSBY”) corresponds to the floating-rate nature of the interest receipts being hedged (based on USD Prime). The swaps provided an initial benefit to interest income as the Company received the higher fixed rate, which persisted while the floating rate remained below the swap’s fixed rate. By hedging with interest rate swaps, the Company minimized the adverse impact on interest income previously associated with a low interest rate environment on floating-rate loans. ​ As of March 31, 2023 and December 31, 2022, the Company carried two interest rate swaps with notional amounts totaling $ 200.0 million, with a negative fair value totaling $ 5.7 million and $ 6.8 million, respectively. The swaps mature in 2024. The Company received fixed rates ranging from 1.70 % to 2.08 % and paid 1-month BSBY. ​ The Company also utilized interest rate collars to manage interest rate risk and protect against downside risk in yields associated with interest payments received on a pool of floating-rate assets. The floating-rate index of the collars (Secured Overnight Financing Rate, or “SOFR”) corresponds to the floating-rate nature of the interest receipts being hedged (based on 1-month USD LIBOR). Interest rate collars involve the payments of variable-rate amounts if the collar index exceeds the cap strike rate on the contract and receipts of variable-rate amounts if the collar index falls below the floor strike rate on the contract. No payments are required if the collar index falls between the cap and floor rates. By hedging with interest rate collars, the Company mitigates the adverse impact on interest income associated with possible future decreases in interest rates. ​ As of March 31, 2023 and December 31, 2022, the Company carried two interest rate collars with notional amounts totaling $ 200.0 million. As of March 31, 2023, these interest rate collars had a positive fair value of $ 0.3 million and a negative fair value of $ 0.1 million. As of December 31, 2022, these interest rate collars had a positive fair value of $ 0.5 million and a negative fair value of $ 0.1 million. The collars mature in 2025 and 2027. The interest rate collars had a floor strike rate of 2.00 % and cap strike rates ranging from 5.31 % to 5.64 %. ​ The interest rate swaps and collars are designated and qualify as cash flow hedges. To the extent that the hedge is considered highly effective, the gain or loss on the interest rate swaps and collars is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period that the hedged transaction affects earnings. 33 Table of Contents ​ The following table summarizes the effect of cash flow hedging relationships for the three months ended March 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, (dollars in thousands) 2023 2022 Pretax net losses recognized in other comprehensive income on cash flow derivative hedges ​ $ ( 442 ) ​ $ ( 1,716 ) Pretax net losses reclassified from accumulated other comprehensive income to interest income from loans and lease financing ​ ​ 1,303 ​ ​ — ​ The estimated net amount to be reclassified within the next 12 months out of accumulated other comprehensive income (loss) into earnings is $ 5.7 million as a decrease to interest income from loans and lease financing. As of March 31, 2023, the maximum length of time over which forecasted transactions are hedged is approximately five years . ​ 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 months ended March 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net gains (losses) recognized Three Months Ended ​ ​ in the consolidated statements March 31, (dollars in thousands) of income line item 2023 2022 Derivatives Not Designated As Hedging Instruments: ​ ​ ​ ​ ​ ​ ​ Interest rate swaps ​ Other noninterest income $ ( 378 ) ​ $ — Visa derivative ​ Other noninterest income ​ ( 1,963 ) ​ ​ ( 1,480 ) Foreign exchange contracts ​ Other noninterest income ​ — ​ ​ 6 ​ As of March 31, 2023, 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 negative fair value of $ 30.0 million. The Company received floating rates ranging from 5.14 % to 7.66 % and paid fixed rates ranging from 2.39 % to 5.78 %. The swaps mature between October 2023 and June 2040. As of December 31, 2022, 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 $ 3.2 million and a negative fair value of $ 42.4 million. The Company received floating rates ranging from 4.62 % to 7.12 % and paid fixed rates ranging from 2.39 % to 6.13 %. These swaps resulted in net interest expense of nil during both the three months ended March 31, 2023 and 2022. ​ 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 $ 0.1 million and $ 1.0 million for the three months ended March 31, 2023 and 2022, respectively. ​ Visa Class B Restricted Shares ​ 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 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. During 2018 through 2022, Visa funded its litigation escrow account, thereby reducing each member bank’s Class B conversion rate to unrestricted Class A common shares from 1.6483 to the current conversion rate of 1.5991 . 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 $ 1.2 million and $ 0.9 million was included in the unaudited interim consolidated balance sheets at March 31, 2023 and December 31, 2022, 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. ​ 34 Table of Contents 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 valuation of the pledged asset. Counterparty credit risk adjustments of nil and $ 0.1 million were recognized during the three months ended March 31, 2023 and 2022, respectively. ​ Credit-Risk Related Contingent Features ​ Certain of the Company’s 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. The aggregate fair value of all derivative instruments with such credit-risk related contingent features that are in a net liability position was nil at both March 31, 2023 and December 31, 2022, for which the Company posted nil in collateral in the normal course of business. If the Company’s credit rating had been downgraded as of March 31, 2023 and December 31, 2022, the Company may have been required to settle the contracts in an amount equal to their fair value. ​ 13. Commitments and Contingent Liabilities ​ Contingencies ​ On November 2, 2020, a lawsuit was filed in Hawaii Circuit Court by a Bank customer related to the sale of credit facilities that the Bank had previously extended to the customer. The customer asserts claims against the Bank for interference with the customer’s contract and business opportunity, unfair methods of competition and declaratory and injunctive relief. The outcome of this legal proceeding is uncertain at this point. Based on information available to the Company at present, the Company cannot reasonably estimate a range of potential loss, if any, for this action. Accordingly, the Company has not recognized any liability associated with this action. Management disputes any wrongdoing and the case is being vigorously defended. ​ In addition to the litigation noted above, 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. ​ 35 Table of Contents 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 $ 89.7 million and $ 90.5 million at March 31, 2023 and December 31, 2022, 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 $ 8.6 million and $ 8.1 million at March 31, 2023 and December 31, 2022, 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 March 31, 2023 have maturities ranging from April 2023 to September 2026. 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. ​ Financial instruments with off-balance sheet risk at March 31, 2023 and December 31, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, (dollars in thousands) 2023 2022 Financial instruments whose contract amounts represent credit risk: ​ ​ ​ ​ ​ ​ Commitments to extend credit ​ $ 6,825,318 ​ $ 6,760,395 Standby letters of credit ​ ​ 243,965 ​ ​ 244,275 Commercial letters of credit ​ ​ 6,040 ​ ​ 7,299 ​ 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. 36 Table of Contents ​ 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, Revenue from Contracts with Customers , 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. ​ Disaggregation of Revenue ​ 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 March 31, 2023 ​ ​ ​ ​ ​ ​ ​ Treasury ​ ​ ​ ​ ​ Retail ​ Commercial ​ and ​ ​ ​ (dollars in thousands) Banking Banking Other Total Net interest income (1) ​ $ 108,920 ​ $ 40,939 ​ $ 17,388 ​ $ 167,247 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service charges on deposit accounts ​ ​ 6,541 ​ ​ 626 ​ ​ 64 ​ ​ 7,231 Credit and debit card fees ​ ​ — ​ ​ 14,414 ​ ​ 1,296 ​ ​ 15,710 Other service charges and fees ​ ​ 6,171 ​ ​ 420 ​ ​ 513 ​ ​ 7,104 Trust and investment services income ​ ​ 9,614 ​ ​ — ​ ​ — ​ ​ 9,614 Other ​ ​ 239 ​ ​ 1,317 ​ ​ 1,649 ​ ​ 3,205 Not in scope of Topic 606 (1) ​ ​ 1,702 ​ ​ 1,111 ​ ​ 3,346 ​ ​ 6,159 Total noninterest income ​ ​ 24,267 ​ ​ 17,888 ​ ​ 6,868 ​ ​ 49,023 Total revenue ​ $ 133,187 ​ $ 58,827 ​ $ 24,256 ​ $ 216,270 (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, derivative financial instruments and bank-owned life insurance. ​ 37 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2022 ​ ​ ​ ​ ​ ​ ​ Treasury ​ ​ ​ ​ ​ Retail ​ Commercial ​ and ​ ​ ​ (dollars in thousands) Banking Banking Other Total Net interest income (1) ​ $ 94,048 ​ $ 35,088 ​ $ 4,736 ​ $ 133,872 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service charges on deposit accounts ​ ​ 6,650 ​ ​ 346 ​ ​ 505 ​ ​ 7,501 Credit and debit card fees ​ ​ — ​ ​ 13,026 ​ ​ 1,216 ​ ​ 14,242 Other service charges and fees ​ ​ 6,563 ​ ​ 781 ​ ​ 369 ​ ​ 7,713 Trust and investment services income ​ ​ 8,883 ​ ​ — ​ ​ — ​ ​ 8,883 Other ​ ​ 128 ​ ​ 2,584 ​ ​ 258 ​ ​ 2,970 Not in scope of Topic 606 (1) ​ ​ 1,091 ​ ​ 1,918 ​ ​ ( 2,938 ) ​ ​ 71 Total noninterest income ​ ​ 23,315 ​ ​ 18,655 ​ ​ ( 590 ) ​ ​ 41,380 Total revenue ​ $ 117,363 ​ $ 53,743 ​ $ 4,146 ​ $ 175,252 (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, derivative financial instruments and bank-owned life insurance. ​ For the three months ended March 31, 2023 and 2022, 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. ​ 38 Table of Contents 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. The Company received signing bonuses from two vendors in prior years, which are being amortized over the term of the respective contracts. As of March 31, 2023 and December 31, 2022, the Company had contract liabilities of $ 2.5 million and $ 2.7 million, respectively, which it expects to recognize over the remaining term of the respective contracts with the vendors. For the three months ended March 31, 2023, the Company’s recognized revenues increased and contract liabilities decreased by approximately $ 0.2 million due to the passage of time. For the three months ended March 31, 2022, the Company’s recognized revenues increased and contract liabilities decreased by approximately $ 0.3 million due to the passage of time. There were no changes in contract liabilities due to changes in transaction price estimates. ​ 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 March 31, 2023 and December 31, 2022, there were no material receivables from contracts with customers or contract assets recorded on the Company’s unaudited interim consolidated balance sheets. ​ Other ​ Except for the contract liabilities noted above, the Company did not have any significant performance obligations as of March 31, 2023 and December 31, 2022. 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 months ended March 31, 2023, the Company made no adjustments to net income for the purpose of computing earnings per share and there were 221,000 antidilutive securities. For the three months ended March 31, 2022, the Company made no adjustments to net income for the purposes of computing earnings per share and there were no antidilutive securities. For the three months ended March 31, 2023 and 2022, the computations of basic and diluted earnings per share were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (dollars in thousands, except shares and per share amounts) 2023 2022 Numerator: ​ ​ ​ ​ ​ ​ Net income ​ $ 66,818 ​ $ 57,719 ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ ​ ​ ​ Basic: weighted-average shares outstanding ​ ​ 127,453,820 ​ ​ 127,556,242 Add: weighted-average equity-based awards ​ ​ 579,992 ​ ​ 564,884 Diluted: weighted-average shares outstanding ​ ​ 128,033,812 ​ ​ 128,121,126 ​ ​ ​ ​ ​ ​ ​ Basic earnings per share ​ $ 0.52 ​ $ 0.45 Diluted earnings per share ​ $ 0.52 ​ $ 0.45 ​ ​ 39 Table of Contents 16. Noninterest Income and Noninterest Expense ​ Benefit Plans ​ The following table sets forth the components of net periodic benefit cost for the Company’s pension and postretirement benefit plans for the three months ended March 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income line item where recognized in ​ Pension Benefits ​ Other Benefits (dollars in thousands) ​ the consolidated statements of income 2023 2022 2023 2022 Three Months Ended March 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost ​ Salaries and employee benefits ​ $ — ​ $ — ​ $ 147 ​ $ 215 Interest cost ​ Other noninterest expense ​ ​ 2,059 ​ ​ 1,361 ​ ​ 220 ​ ​ 144 Expected return on plan assets ​ Other noninterest expense ​ ​ ( 883 ) ​ ​ ( 783 ) ​ ​ — ​ ​ — Recognized net actuarial loss (gain) ​ Other noninterest expense ​ ​ 719 ​ ​ 1,268 ​ ​ ( 379 ) ​ ​ ( 101 ) Total net periodic benefit cost ​ ​ ​ $ 1,895 ​ $ 1,846 ​ $ ( 12 ) ​ $ 258 ​ Leases ​ The Company recognized operating lease income related to lease payments of $ 1.6 million and $ 1.5 million for the three months ended March 31, 2023 and 2022, respectively. In addition, the Company recognized $ 1.8 million and $ 1.6 million of lease income related to variable lease payments for the three months ended March 31, 2023 and 2022, 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. ​ 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. 40 Table of Contents ​ 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 March 31, 2023 and December 31, 2022, 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. During 2018 through 2022, Visa funded its litigation escrow account, thereby reducing each member bank’s Class B conversion rate to unrestricted Class A common shares from 1.6483 to the current conversion rate of 1.5991 . The Visa derivative of $ 1.2 million and $ 0.9 million was included in the unaudited interim consolidated balance sheets at March 31, 2023 and December 31, 2022, 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. ​ 41 Table of Contents Assets and Liabilities Recorded at Fair Value on a Recurring Basis ​ Assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 are summarized below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements as of March 31, 2023 ​ ​ 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 ​ $ — ​ $ 120,228 ​ $ — ​ $ 120,228 Government-sponsored enterprises debt securities ​ ​ — ​ ​ 44,325 ​ ​ — ​ ​ 44,325 Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential - Government agency (1) ​ ​ — ​ ​ 59,297 ​ ​ — ​ ​ 59,297 Residential - Government-sponsored enterprises (1) ​ ​ — ​ ​ 1,132,254 ​ ​ — ​ ​ 1,132,254 Commercial - Government agency ​ ​ — ​ ​ 235,071 ​ ​ — ​ ​ 235,071 Commercial - Government-sponsored enterprises ​ ​ — ​ ​ 116,767 ​ ​ — ​ ​ 116,767 Commercial - Non-agency ​ ​ — ​ ​ 21,133 ​ ​ — ​ ​ 21,133 Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government agency ​ ​ — ​ ​ 636,602 ​ ​ — ​ ​ 636,602 Government-sponsored enterprises ​ ​ — ​ ​ 451,192 ​ ​ — ​ ​ 451,192 Collateralized loan obligations ​ ​ — ​ ​ 237,411 ​ ​ — ​ ​ 237,411 Total available-for-sale securities ​ ​ — ​ ​ 3,054,280 ​ ​ — ​ ​ 3,054,280 Other assets (2) ​ ​ 1,141 ​ ​ 8,731 ​ ​ — ​ ​ 9,872 Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other liabilities (3) ​ ​ — ​ ​ ( 35,861 ) ​ ​ ( 1,200 ) ​ ​ ( 37,061 ) Total ​ $ 1,141 ​ $ 3,027,150 ​ $ ( 1,200 ) ​ $ 3,027,091 (1) Backed by residential real estate. (2) Other assets classified as Level 1 include money market funds that have quoted prices in active markets and are related to the Company’s deferred compensation plans. Other assets classified as Level 2 include derivative assets. (3) Other liabilities include derivative liabilities. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 42 Table of Contents ​ Fair Value Measurements as of December 31, 2022 ​ ​ 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 ​ $ — ​ $ 150,982 ​ $ — ​ $ 150,982 Government-sponsored enterprises debt securities ​ ​ — ​ ​ 44,301 ​ ​ — ​ ​ 44,301 Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential - Government agency (1) ​ ​ — ​ ​ 59,723 ​ ​ — ​ ​ 59,723 Residential - Government-sponsored enterprises (1) ​ ​ — ​ ​ 1,160,455 ​ ​ — ​ ​ 1,160,455 Commercial - Government agency ​ ​ — ​ ​ 237,853 ​ ​ — ​ ​ 237,853 Commercial - Government-sponsored enterprises ​ ​ — ​ ​ 119,573 ​ ​ — ​ ​ 119,573 Commercial - Non-agency ​ ​ — ​ ​ 21,471 ​ ​ — ​ ​ 21,471 Collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government agency ​ ​ — ​ ​ 653,322 ​ ​ — ​ ​ 653,322 Government-sponsored enterprises ​ ​ — ​ ​ 462,132 ​ ​ — ​ ​ 462,132 Collateralized loan obligations ​ ​ — ​ ​ 241,321 ​ ​ — ​ ​ 241,321 Total available-for-sale securities ​ ​ — ​ ​ 3,151,133 ​ ​ — ​ ​ 3,151,133 Other assets (2) ​ ​ 5,376 ​ ​ 10,945 ​ ​ — ​ ​ 16,321 Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other liabilities (3) ​ ​ — ​ ​ ( 49,268 ) ​ ​ ( 851 ) ​ ​ ( 50,119 ) Total ​ $ 5,376 ​ $ 3,112,810 ​ $ ( 851 ) ​ $ 3,117,335 (1) Backed by residential real estate. (2) Other assets classified as Level 1 include mutual funds and money market funds that have quoted prices in active markets and are related to the Company’s deferred compensation plans. Other assets classified as Level 2 include derivative assets. (3) Other liabilities include derivative liabilities. ​ For Level 3 assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022, the significant unobservable inputs used in the fair value measurements were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quantitative Information about Level 3 Fair Value Measurements at March 31, 2023 ​ ​ ​ ​ ​ ​ ​ Significant ​ ​ (dollars in thousands) ​ Fair value Valuation Technique Unobservable Input Range Visa derivative ​ $ ( 1,200 ) ​ Discounted Cash Flow ​ Expected Conversion Rate - 1.5991 (1) ​ 1.5514 - 1.5991 ​ ​ ​ ​ ​ ​ ​ Expected Term - 3 months (2) ​ 0 - 6 months ​ ​ ​ ​ ​ ​ ​ Growth Rate - 26 % (3) ​ 10 % - 38 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quantitative Information about Level 3 Fair Value Measurements at December 31, 2022 ​ ​ ​ ​ ​ ​ ​ Significant ​ ​ (dollars in thousands) ​ Fair value Valuation Technique Unobservable Input Range Visa derivative ​ $ ( 851 ) ​ Discounted Cash Flow ​ Expected Conversion Rate - 1.5991 (1) ​ 1.5514 - 1.5991 ​ ​ ​ ​ ​ ​ ​ Expected Term - 3 months (2) ​ 0 - 6 months ​ ​ ​ ​ ​ ​ ​ Growth Rate - 26 % (3) ​ 10 % - 38 % (1) Due to the uncertainty in the movement of the conversion rate, the current conversion rate was utilized in the fair value calculation. (2) The expected term of 3 months was based on the median of 0 to 6 months. (3) The growth rate was based on the arithmetic average of analyst price targets. ​ Changes in Fair Value Levels ​ For the three months ended March 31, 2023 and 2022, there were no transfers between fair value hierarchy levels. 43 Table of Contents ​ The changes in Level 3 liabilities measured at fair value on a recurring basis for the three months ended March 31, 2023 and 2022 are summarized below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Visa Derivative (dollars in thousands) ​ 2023 2022 Three Months Ended March 31, ​ ​ ​ ​ ​ ​ Balance as of January 1, ​ $ ( 851 ) ​ $ ( 5,530 ) Total net losses included in other noninterest income ​ ​ ( 1,963 ) ​ ​ ( 1,480 ) Settlements ​ ​ 1,614 ​ ​ 1,216 Balance as of March 31, ​ $ ( 1,200 ) ​ $ ( 5,794 ) Total net losses included in net income attributable to the change in unrealized losses related to liabilities still held as of March 31, ​ $ ( 1,963 ) ​ $ ( 1,480 ) ​ 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2023 ​ ​ ​ ​ ​ 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 ​ $ 865,592 ​ $ 253,705 ​ $ 611,887 ​ $ — ​ $ 865,592 Investment securities held-to-maturity ​ ​ 4,261,361 ​ ​ — ​ ​ 3,824,478 ​ ​ — ​ ​ 3,824,478 Loans (1) ​ ​ 13,894,150 ​ ​ — ​ ​ — ​ ​ 13,353,156 ​ ​ 13,353,156 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time deposits (2) ​ $ 2,587,402 ​ $ — ​ $ 2,546,680 ​ $ — ​ $ 2,546,680 Short-term borrowings ​ ​ 250,000 ​ ​ — ​ ​ 249,991 ​ ​ — ​ ​ 249,991 Long-term borrowings ​ ​ 500,000 ​ ​ — ​ ​ 498,537 ​ ​ — ​ ​ 498,537 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ ​ ​ ​ 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 ​ $ 526,624 ​ $ 297,502 ​ $ 229,122 ​ $ — ​ $ 526,624 Investment securities held-to-maturity ​ ​ 4,320,639 ​ ​ — ​ ​ 3,814,822 ​ ​ — ​ ​ 3,814,822 Loans (1) ​ ​ 13,793,922 ​ ​ — ​ ​ — ​ ​ 13,138,787 ​ ​ 13,138,787 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time deposits (2) ​ $ 2,476,050 ​ $ — ​ $ 2,423,231 ​ $ — ​ $ 2,423,231 Short-term borrowings ​ ​ 75,000 ​ ​ — ​ ​ 74,991 ​ ​ — ​ ​ 74,991 (1) Excludes financing leases of $ 327.1 million at March 31, 2023 and $ 298.1 million at December 31, 2022. (2) Excludes deposit liabilities with no defined or contractual maturity of $ 18.7 billion as of March 31, 2023 and $ 19.2 billion as of December 31, 2022. ​ 44 Table of Contents Unfunded loan and lease commitments and letters of credit are not included in the tables above. As of March 31, 2023 and December 31, 2022, the Company had $ 7.1 billion and $ 7.0 billion, respectively, of unfunded loan and lease commitments and letters of credit. The Company believes that 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 $ 50.9 million and $ 48.5 million at March 31, 2023 and December 31, 2022, 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. ​ 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 ACL. ​ 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. ​ There were no assets with nonrecurring fair value adjustments held as of March 31, 2023 and December 31, 2022. Additionally, there were no nonrecurring fair value adjustments for both the three months ended March 31, 2023 and 2022. ​ 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. ​ 45 Table of Contents 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. ​ 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 and loans, automobile loans and leases, secured and unsecured 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 51 banking locations throughout the State of Hawaii, Guam and Saipan. ​ Commercial Banking Commercial Banking offers products that include corporate banking related products, commercial real estate loans, commercial lease financing, secured and unsecured lines of credit, 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. ​ 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 cross-border wires for business and personal reasons 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. ​ 46 Table of Contents 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 March 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ $ 108,920 ​ $ 40,939 ​ $ 17,388 ​ $ 167,247 Provision for credit losses ​ ​ ( 2,563 ) ​ ​ ( 3,873 ) ​ ​ ( 2,364 ) ​ ​ ( 8,800 ) Net interest income after provision for credit losses ​ ​ 106,357 ​ ​ 37,066 ​ ​ 15,024 ​ ​ 158,447 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest income ​ ​ 24,267 ​ ​ 17,888 ​ ​ 6,868 ​ ​ 49,023 Noninterest expense ​ ​ ( 75,843 ) ​ ​ ( 27,770 ) ​ ​ ( 14,954 ) ​ ​ ( 118,567 ) Income before provision for income taxes ​ ​ 54,781 ​ ​ 27,184 ​ ​ 6,938 ​ ​ 88,903 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ ​ ( 13,266 ) ​ ​ ( 6,330 ) ​ ​ ( 2,489 ) ​ ​ ( 22,085 ) Net income ​ $ 41,515 ​ $ 20,854 ​ $ 4,449 ​ $ 66,818 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Treasury ​ ​ ​ ​ ​ Retail ​ Commercial ​ and ​ ​ ​ (dollars in thousands) Banking Banking Other Total Three Months Ended March 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ $ 94,048 ​ $ 35,088 ​ $ 4,736 ​ $ 133,872 Benefit for credit losses ​ ​ 1,841 ​ ​ 2,542 ​ ​ 1,364 ​ ​ 5,747 Net interest income after benefit for credit losses ​ ​ 95,889 ​ ​ 37,630 ​ ​ 6,100 ​ ​ 139,619 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest income ​ ​ 23,315 ​ ​ 18,655 ​ ​ ( 590 ) ​ ​ 41,380 Noninterest expense ​ ​ ( 70,220 ) ​ ​ ( 26,505 ) ​ ​ ( 7,317 ) ​ ​ ( 104,042 ) Income (loss) before (provision) benefit for income taxes ​ ​ 48,984 ​ ​ 29,780 ​ ​ ( 1,807 ) ​ ​ 76,957 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Provision) benefit for income taxes ​ ​ ( 12,150 ) ​ ​ ( 7,253 ) ​ ​ 165 ​ ​ ( 19,238 ) Net income (loss) ​ $ 36,834 ​ $ 22,527 ​ $ ( 1,642 ) ​ $ 57,719 ​ ​ ​ 47 Table of Contents