National Bank Holdings Corp 10-Q

​ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-35654 NATIONAL BANK HOLDINGS CORP ORATION (Exact name of registrant as specified in its charter) ​ ​ ​ Delaware 27-0563799 (State or other jurisdiction of incorporation or organization) ​ (I.R.S. Employer Identification No.) ​ 7800 East Orchard Road, Suite 300 , Greenwood Village , Colorado 80111 (Address of principal executive offices) (Zip Code) Registrant’s telephone, including area code: ( 303 ) 892-8715 Securities registered pursuant to Section 12(b) of the Act: Title of each class: Trading Symbol Name of each exchange on which registered: Class A Common Stock ​ NBHC ​ NYSE ​ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻ Indicate by check mark whether the registrant has submitted electronically every interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act: ​ ​ ​ ​ ​ ​ ​ Large accelerated filer ​ ⌧ ​ Accelerated filer ​ ◻ Non-accelerated filer ​ ◻ ​ Smaller reporting company ​ ☐ ​ ​ ​ ​ Emerging growth company ​ ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ ​ ​ APPLICABLE ONLY TO CORPORATE ISSUERS: ​ Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. ​ As of November 5, 2021, the registrant had outstanding 30,297,871 shares of Class A voting common stock, each with $0.01 par value per share, excluding 143,078 shares of restricted Class A common stock issued but not yet vested. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Page Part I. Financial Information ​ ​ ​ ​ ​ ​ Item 1. Financial Statements (Unaudited) ​ 5 ​ ​ ​ ​ ​ Consolidated Statements of Financial Condition as of September 30, 2021 and December 31, 2020 ​ 5 ​ ​ ​ ​ ​ Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020 ​ 6 ​ ​ ​ ​ ​ Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2021 and 2020 ​ 7 ​ ​ ​ ​ ​ Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended September 30, 2021 and 2020 ​ 8 ​ ​ ​ ​ ​ Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 ​ 9 ​ ​ ​ ​ ​ Notes to Consolidated Financial Statements ​ 10 ​ ​ ​ ​ Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 39 ​ ​ ​ ​ Item 3. Quantitative and Qualitative Disclosures About Market Risk ​ 68 ​ ​ ​ ​ Item 4. Controls and Procedures ​ 68 ​ ​ ​ ​ Part II. Other Information ​ ​ ​ ​ ​ ​ Item 1. Legal Proceedings ​ 69 ​ ​ ​ ​ Item 1A. Risk Factors ​ 69 ​ ​ ​ ​ Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ​ 69 ​ ​ ​ ​ Item 5. Other Information ​ 69 ​ ​ ​ ​ Item 6. Exhibits ​ 70 ​ ​ ​ ​ ​ Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENT S ​ This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, notwithstanding that such statements are not specifically identified. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believe,” “can,” “would,” “should,” “could,” “may,” “predict,” “seek,” “potential,” “will,” “estimate,” “target,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “intend” and similar words or phrases. These statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties. We have based these statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, liquidity, results of operations, business strategy and growth prospects. ​ Forward-looking statements involve certain important risks, uncertainties and other factors, any of which could cause actual results to differ materially from those in such statements and, therefore, you are cautioned not to place undue reliance on such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: ​ ● our ability to execute our business strategy, including our digital strategy, as well as changes in our business strategy or development plans; ​ ● business and economic conditions generally and in the financial services industry; ​ ● effects of any potential government shutdowns; ​ ● economic, market, operational, liquidity, credit and interest rate risks associated with our business; ​ ● effects of any changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; ​ ● changes imposed by regulatory agencies to increase our capital to a level greater than the current level required for well-capitalized financial institutions; ​ ● effects of inflation, as well as, interest rate, securities market and monetary supply fluctuations; ​ ● changes in the economy or supply-demand imbalances affecting local real estate values; ​ ● changes in consumer spending, borrowings and savings habits; ​ ● with respect to our mortgage business, our inability to negotiate our fees with Fannie Mae, Freddie Mac, Ginnie Mae or other investors for the purchase of our loans, our obligation to indemnify purchasers or to repurchase the related loans if the loans fail to meet certain criteria, or higher rate of delinquencies and defaults as a result of the geographic concentration of our servicing portfolio; ​ ● our ability to identify potential candidates for, obtain regulatory approval for, and consummate, acquisitions, consolidations or other expansion opportunities on attractive terms, or at all; ​ ● our ability to integrate acquisitions or consolidations and to achieve synergies, operating efficiencies and/or other expected benefits within expected time-frames, or at all, or within expected cost projections, and to preserve the goodwill of acquired financial institutions; ​ ● our ability to realize the anticipated benefits from enhancements or updates to our core operating systems from time to time without significant change in our client service or risk to our control environment; ​ ● our dependence on information technology and telecommunications systems of third-party service providers and the risk of system failures, interruptions or breaches of security, including those that could result in disclosure or misuse of confidential or proprietary client or other information; ​ ● our ability to achieve organic loan and deposit growth and the composition of such growth; ​ ● changes in sources and uses of funds, including loans, deposits and borrowings; ​ 3 ​ Table of Contents ● increased competition in the financial services industry, nationally, regionally or locally, resulting in, among other things, lower returns; ​ ● continued consolidation in the financial services industry; ​ ● our ability to maintain or increase market share and control expenses; ​ ● the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; ​ ● the trading price of shares of the Company's stock; ​ ● the effects of tax legislation, including the potential of future increases to prevailing tax rates, or challenges to our position; ​ ● our ability to realize deferred tax assets or the need for a valuation allowance, or the effects of changes in tax laws on our deferred tax assets; ​ ● costs and effects of changes in laws and regulations and of other legal and regulatory developments, including, but not limited to, changes in regulation that affect the fees that we charge, the resolution of legal proceedings or regulatory or other governmental inquiries, and the results of regulatory examinations, reviews or other inquiries; and changes in regulations that apply to us as a Colorado state-chartered bank; ​ ● technological changes; ​ ● the timely development and acceptance of new products and services, including in the digital technology space, and perceived overall value of these products and services by our clients; ​ ● changes in our management personnel and our continued ability to attract, hire and retain qualified personnel; ​ ● ability to implement and/or improve operational management and other internal risk controls and processes and our reporting system and procedures; ​ ● regulatory limitations on dividends from our bank subsidiary; ​ ● changes in estimates of future credit reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; ​ ● widespread natural and other disasters, dislocations, political instability, pandemics, acts of war or terrorist activities, cyberattacks or international hostilities through impacts on the economy and financial markets generally or on us or our counterparties specifically; ​ ● adverse effects due to the novel Coronavirus Disease 2019 (“COVID-19”) on the Company and its clients, counterparties, employees and third-party service providers, and the adverse impacts on our business, financial position, results of operations and prospects; ​ ● a cyber-security incident, data breach or a failure of a key information technology system; ​ ● impact of reputational risk on such matters as business generation and retention; ​ ● other risks and uncertainties listed from time to time in the Company’s reports and documents filed with the Securities and Exchange Commission; and ​ ● our success at managing the risks involved in the foregoing items. ​ Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law. ​ ​ 4 ​ Table of Contents PART I: FINANCIAL INFORMATIO N Item 1: FINANCIAL STATEMENTS ​ NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES Consolidated Statements of Financial Condition (Unaudited) (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 December 31, 2020 ASSETS ​ ​ ​ ​ ​ ​ Cash and due from banks ​ $ 806,870 ​ $ 605,065 Interest bearing bank deposits ​ 500 ​ 500 Cash and cash equivalents ​ ​ 807,370 ​ ​ 605,565 Investment securities available-for-sale (at fair value) ​ 657,833 ​ 661,955 Investment securities held-to-maturity (fair value of $ 640,341 and $ 381,691 at September 30, 2021 and December 31, 2020, respectively) ​ 642,636 ​ 376,615 Non-marketable securities ​ 46,964 ​ 22,073 Loans ​ 4,421,760 ​ 4,353,726 Allowance for credit losses ​ ( 49,155 ) ​ ( 59,777 ) Loans, net ​ 4,372,605 ​ 4,293,949 Loans held for sale ​ 158,066 ​ 247,813 Other real estate owned ​ 4,325 ​ 4,730 Premises and equipment, net ​ 94,114 ​ 106,982 Goodwill ​ 115,027 ​ 115,027 Intangible assets, net ​ 11,621 ​ 17,928 Other assets ​ 190,430 ​ 207,313 Total assets ​ $ 7,100,991 ​ $ 6,659,950 LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ Deposits: ​ ​ ​ ​ ​ ​ Non-interest bearing demand deposits ​ $ 2,447,099 ​ $ 2,111,045 Interest bearing demand deposits ​ 546,597 ​ 514,286 Savings and money market ​ 2,264,083 ​ 2,064,769 Time deposits ​ 876,841 ​ 986,132 Total deposits ​ 6,134,620 ​ 5,676,232 Securities sold under agreements to repurchase ​ 21,427 ​ 22,897 Other liabilities ​ 100,228 ​ 140,130 Total liabilities ​ 6,256,275 ​ 5,839,259 Shareholders’ equity: ​ ​ ​ ​ ​ ​ Common stock, par value $ 0.01 per share: 400,000,000 shares authorized; 51,487,907 and 51,487,907 shares issued; 30,288,131 and 30,634,291 shares outstanding at September 30, 2021 and December 31, 2020, respectively ​ 515 ​ 515 Additional paid-in capital ​ 1,013,064 ​ 1,011,362 Retained earnings ​ 273,900 ​ 223,175 Treasury stock of 21,044,309 and 20,686,986 shares at September 30, 2021 and December 31, 2020, respectively, at cost ​ ( 441,366 ) ​ ( 424,127 ) Accumulated other comprehensive (loss) income, net of tax ​ ( 1,397 ) ​ 9,766 Total shareholders’ equity ​ 844,716 ​ 820,691 Total liabilities and shareholders’ equity ​ $ 7,100,991 ​ $ 6,659,950 ​ See accompanying notes to the consolidated interim financial statements. 5 ​ Table of Contents ​ NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ For the nine months ended ​ September 30, ​ September 30, ​ 2021 2020 2021 2020 Interest and dividend income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest and fees on loans $ 45,512 ​ $ 47,974 ​ $ 134,342 ​ $ 150,672 Interest and dividends on investment securities 4,750 ​ 4,037 ​ 12,771 ​ 12,918 Dividends on non-marketable securities 210 ​ 221 ​ 629 ​ 945 Interest on interest-bearing bank deposits 329 ​ 70 ​ 722 ​ 179 Total interest and dividend income 50,801 ​ 52,302 ​ 148,464 ​ 164,714 Interest expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest on deposits 3,227 ​ 5,491 ​ 10,790 ​ 18,904 Interest on borrowings 5 ​ 96 ​ 16 ​ 1,420 Total interest expense 3,232 ​ 5,587 ​ 10,806 ​ 20,324 Net interest income before provision for loan losses 47,569 ​ 46,715 ​ 137,658 ​ 144,390 Provision expense (release) for loan losses — ​ 1,200 ​ ( 9,425 ) ​ 17,630 Net interest income after provision for loan losses 47,569 ​ 45,515 ​ 147,083 ​ 126,760 Non-interest income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service charges 3,947 ​ 3,742 ​ 10,989 ​ 10,962 Bank card fees 4,530 ​ 4,039 ​ 13,217 ​ 11,206 Mortgage banking income 16,615 ​ 34,943 ​ 52,973 ​ 79,246 Bank-owned life insurance income 558 ​ 597 ​ 1,659 ​ 1,776 Other non-interest income 2,872 ​ 1,136 ​ 8,276 ​ 3,608 OREO-related income — ​ 75 ​ 35 ​ 103 Total non-interest income 28,522 ​ 44,532 ​ 87,149 ​ 106,901 Non-interest expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries and benefits 32,556 ​ 38,614 ​ 97,518 ​ 108,251 Occupancy and equipment 6,469 ​ 6,878 ​ 19,150 ​ 20,854 Telecommunications and data processing 2,282 ​ 2,270 ​ 6,934 ​ 6,790 Marketing and business development 582 ​ 696 ​ 1,604 ​ 1,992 FDIC deposit insurance 475 ​ 409 ​ 1,375 ​ 744 Bank card expenses 1,457 ​ 1,275 ​ 3,931 ​ 3,334 Professional fees 3,251 ​ 714 ​ 4,642 ​ 2,082 Other non-interest expense 2,828 ​ 2,793 ​ 7,652 ​ 8,362 Problem asset workout ​ 1,119 ​ ​ 1,064 ​ ​ 1,851 ​ ​ 2,341 (Gain) loss on OREO sales, net ​ — ​ ​ ( 119 ) ​ ​ 192 ​ ​ ( 25 ) Core deposit intangible asset amortization 295 ​ 295 ​ 887 ​ 887 Banking center consolidation-related expense — ​ 432 ​ 1,589 ​ 2,140 Total non-interest expense 51,314 ​ 55,321 ​ 147,325 ​ 157,752 Income before income taxes 24,777 ​ 34,726 ​ 86,907 ​ 75,909 Income tax expense 4,952 ​ 6,833 ​ 16,070 ​ 14,487 Net income $ 19,825 ​ $ 27,893 ​ $ 70,837 ​ $ 61,422 Earnings per share—basic $ 0.64 ​ $ 0.91 ​ $ 2.29 ​ $ 1.99 Earnings per share—diluted ​ 0.64 ​ ​ 0.90 ​ ​ 2.27 ​ ​ 1.97 Weighted average number of common shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic 30,800,590 ​ 30,756,116 ​ 30,858,759 ​ 30,881,325 Diluted 31,064,815 ​ 30,924,223 ​ 31,162,132 ​ 31,070,997 ​ See accompanying notes to the consolidated interim financial statements. ​ 6 ​ Table of Contents NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ For the nine months ended ​ September 30, ​ September 30, ​ 2021 ​ 2020 ​ 2021 ​ 2020 Net income $ 19,825 $ 27,893 $ 70,837 $ 61,422 Other comprehensive (loss) income, net of tax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Securities available-for-sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net unrealized (losses) gains arising during the period, net of tax benefit of $ 922 and $ 290 for the three months ended September 30, 2021 and 2020, respectively; and net of tax benefit (expense) of $ 3,331 and ($ 3,021 ) for the nine months ended September 30, 2021 and 2020, respectively ( 2,970 ) ​ ( 925 ) ​ ( 10,727 ) ​ 9,627 Less: amortization of net unrealized holding gains to income, net of tax benefit of $ 38 and $ 60 for the three months ended September 30, 2021 and 2020, respectively; and net of tax benefit of $ 135 and $ 191 for the nine months ended September 30, 2021 and 2020, respectively ( 122 ) ​ ( 190 ) ​ ( 436 ) ​ ( 609 ) Other comprehensive (loss) income ( 3,092 ) ​ ( 1,115 ) ​ ( 11,163 ) ​ 9,018 Comprehensive income $ 16,733 ​ $ 26,778 ​ $ 59,674 ​ $ 70,440 ​ See accompanying notes to the consolidated interim financial statements. ​ 7 ​ Table of Contents NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended September 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ other ​ ​ ​ ​ ​ Common ​ paid-in ​ Retained ​ Treasury ​ comprehensive ​ ​ ​ ​ ​ stock ​ capital ​ earnings ​ stock ​ loss, net ​ Total Balance, June 30, 2020 ​ $ 515 ​ $ 1,008,773 ​ $ 180,537 ​ $ ( 425,053 ) ​ $ 12,195 ​ $ 776,967 Net income ​ — ​ ​ — ​ ​ 27,893 ​ ​ — ​ ​ — ​ 27,893 Stock-based compensation ​ — ​ ​ 1,189 ​ ​ — ​ ​ — ​ ​ — ​ 1,189 Issuance of stock under purchase and equity compensation plans, including gain on reissuance of treasury stock of $ 157 , net ​ — ​ ​ 183 ​ ​ — ​ ​ 432 ​ ​ — ​ 615 Cash dividends declared ($ 0.20 per share) ​ — ​ ​ — ​ ​ ( 6,192 ) ​ ​ — ​ ​ — ​ ​ ( 6,192 ) Other comprehensive loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,115 ) ​ ​ ( 1,115 ) Balance, September 30, 2020 ​ $ 515 ​ $ 1,010,145 ​ $ 202,238 ​ $ ( 424,621 ) ​ $ 11,080 ​ $ 799,357 Balance, June 30, 2021 ​ $ 515 ​ $ 1,011,200 ​ $ 260,821 ​ $ ( 422,365 ) ​ $ 1,695 ​ $ 851,866 Net income ​ — ​ ​ — ​ ​ 19,825 ​ ​ — ​ ​ — ​ 19,825 Stock-based compensation ​ — ​ ​ 1,734 ​ ​ — ​ ​ — ​ ​ — ​ 1,734 Issuance of stock under purchase and equity compensation plans, including gain on reissuance of treasury stock of $ 313 , net ​ — ​ ​ 130 ​ ​ — ​ ​ 369 ​ ​ — ​ 499 Repurchase of 527,214 shares ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 19,370 ) ​ ​ — ​ ( 19,370 ) Cash dividends declared ($ 0.22 per share) ​ — ​ ​ — ​ ​ ( 6,746 ) ​ ​ — ​ ​ — ​ ​ ( 6,746 ) Other comprehensive loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 3,092 ) ​ ( 3,092 ) Balance, September 30, 2021 ​ $ 515 ​ $ 1,013,064 ​ $ 273,900 ​ $ ( 441,366 ) ​ $ ( 1,397 ) ​ $ 844,716 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the nine months ended September 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ other ​ ​ ​ ​ ​ Common ​ paid-in ​ Retained ​ Treasury ​ comprehensive ​ ​ ​ ​ ​ stock ​ capital ​ earnings ​ stock ​ income (loss), net ​ Total Balance, December 31, 2019 ​ $ 515 ​ $ 1,009,223 ​ $ 164,082 ​ $ ( 408,962 ) ​ $ 2,062 ​ $ 766,920 Cumulative effect adjustment (1) ​ ​ — ​ — ​ ( 4,623 ) ​ — ​ — ​ ​ ( 4,623 ) Net income ​ — ​ — ​ 61,422 ​ — ​ — ​ 61,422 Stock-based compensation ​ — ​ 4,028 ​ — ​ — ​ — ​ 4,028 Issuance of stock under purchase and equity compensation plans, including gain on reissuance of treasury stock of $ 1,192 , net ​ — ​ ( 3,106 ) ​ — ​ 3,817 ​ — ​ 711 Repurchase of 734,117 shares ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 19,476 ) ​ ​ — ​ ​ ( 19,476 ) Cash dividends declared ($ 0.60 per share) ​ — ​ — ​ ( 18,643 ) ​ — ​ — ​ ​ ( 18,643 ) Other comprehensive income ​ — ​ — ​ — ​ — ​ 9,018 ​ 9,018 Balance, September 30, 2020 ​ $ 515 ​ $ 1,010,145 ​ $ 202,238 ​ $ ( 424,621 ) ​ $ 11,080 ​ $ 799,357 Balance, December 31, 2020 ​ $ 515 ​ $ 1,011,362 ​ $ 223,175 ​ $ ( 424,127 ) ​ $ 9,766 ​ $ 820,691 Net income ​ — ​ — ​ 70,837 ​ — ​ — ​ 70,837 Stock-based compensation ​ — ​ 4,216 ​ — ​ — ​ — ​ 4,216 Issuance of stock under purchase and equity compensation plans, including gain on reissuance of treasury stock of $ 3,492 , net ​ — ​ ( 2,514 ) ​ — ​ 2,131 ​ — ​ ( 383 ) Repurchase of 527,214 shares ​ ​ — ​ — ​ — ​ ( 19,370 ) ​ — ​ ( 19,370 ) Cash dividends declared ($ 0.65 per share) ​ — ​ — ​ ( 20,112 ) ​ — ​ — ​ ​ ( 20,112 ) Other comprehensive loss ​ — ​ — ​ — ​ — ​ ( 11,163 ) ​ ( 11,163 ) Balance, September 30, 2021 ​ $ 515 ​ $ 1,013,064 ​ $ 273,900 ​ $ ( 441,366 ) ​ $ ( 1,397 ) ​ $ 844,716 ​ ​ ​ ​ ​ ​ (1) Related to the adoption of Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments . ​ See accompanying notes to the consolidated interim financial statements. ​ 8 ​ Table of Contents NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ For the nine months ended ​ ​ September 30, ​ ​ 2021 2020 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Net income ​ $ 70,837 ​ $ 61,422 Adjustments to reconcile net income to net cash provided by (used in) operating activities: ​ ​ ​ ​ ​ ​ Provision (release) expense for loan losses ​ ( 9,425 ) ​ 17,630 Provision (release) expense for mortgage loan repurchases ​ ​ ( 62 ) ​ ​ 604 Depreciation and amortization ​ 11,536 ​ 11,804 Change in current income tax receivable ​ 3,476 ​ 2,394 Change in deferred income taxes ​ ( 207 ) ​ 1,251 Net excess tax (benefit) expense from stock-based compensation ​ ​ ( 396 ) ​ ​ 120 Discount accretion, net of premium amortization on securities ​ 3,398 ​ 1,983 Loan accretion ​ ( 4,509 ) ​ ( 9,687 ) Gain on sale of mortgages, net ​ ( 47,322 ) ​ ( 76,397 ) Origination of loans held for sale, net of repayments ​ ( 1,506,880 ) ​ ( 1,703,208 ) Proceeds from sales of loans held for sale ​ 1,649,747 ​ 1,626,392 Bank-owned life insurance income ​ ​ ( 1,659 ) ​ ​ ( 1,776 ) Loss (gain) on the sale of other real estate owned, net ​ 192 ​ ( 25 ) (Income) loss from non-marketable securities ​ ​ ( 1,031 ) ​ ​ 271 Originations of mortgage serving rights ​ ​ ( 6,649 ) ​ ​ ( 6,627 ) Proceeds from sales of mortgage servicing rights ​ ​ 11,375 ​ ​ — Gain on sale of mortgage servicing rights ​ ​ ( 1,290 ) ​ ​ — (Recovery) impairment of mortgage servicing rights ​ ​ ( 717 ) ​ ​ 847 Impairment on other real estate owned ​ 799 ​ 423 Impairment on fixed assets related to banking center consolidations ​ 1,552 ​ 1,631 Gain on sale of fixed assets ​ ​ ( 2,708 ) ​ ​ — Gain from banking center divestiture ​ ​ ( 778 ) ​ ​ — Stock-based compensation ​ 4,216 ​ 4,028 Operating lease payments ​ ​ ( 3,910 ) ​ ​ ( 4,092 ) Change in other assets ​ 11,226 ​ ( 32,190 ) Change in other liabilities ​ ( 35,945 ) ​ 43,447 Net cash provided by (used in) operating activities ​ 144,866 ​ ( 59,755 ) Cash flows from investing activities: ​ ​ ​ ​ ​ ​ Proceeds from non-marketable securities ​ ​ 1,912 ​ ​ 600 Proceeds from maturities of investment securities available-for-sale ​ 185,025 ​ 191,846 Proceeds from maturities of investment securities held-to-maturity ​ 108,993 ​ 58,099 Proceeds from sales of other real estate owned ​ 936 ​ 3,498 Purchase of non-marketable securities ​ ​ ( 25,772 ) ​ ​ ( 2,405 ) Purchase of investment securities available-for-sale ​ ​ ( 196,257 ) ​ ​ ( 114,735 ) Purchase of investment securities held-to-maturity ​ ​ ( 377,687 ) ​ ​ ( 196,736 ) Sales (purchases) of premises and equipment, net ​ 8,572 ​ ( 4,498 ) Net increase in loans ​ ( 71,913 ) ​ ( 142,133 ) Net cash used in investing activities ​ ( 366,191 ) ​ ( 206,464 ) Cash flows from financing activities: ​ ​ ​ ​ ​ ​ Net increase in deposits ​ 459,166 ​ 879,328 Net decrease in repurchase agreements and other short-term borrowings ​ ( 1,470 ) ​ ( 33,031 ) Advances from FHLB ​ ​ — ​ ​ 947,431 FHLB repayments ​ ​ — ​ ​ ( 1,155,106 ) Issuance of stock under purchase and equity compensation plans ​ ​ ( 2,020 ) ​ ​ ( 570 ) Proceeds from exercise of stock options ​ ​ 1,557 ​ ​ 1,213 Payment of dividends ​ ( 20,208 ) ​ ( 18,657 ) Repurchase of common stock ​ ( 19,370 ) ​ ( 19,476 ) Net cash provided by financing activities ​ 417,655 ​ 601,132 Increase in cash, cash equivalents and restricted cash (1) ​ 196,330 ​ 334,913 Cash, cash equivalents and restricted cash at beginning of the year (1) ​ 615,565 ​ 120,190 Cash, cash equivalents and restricted cash at end of period (1) ​ $ 811,895 ​ $ 455,103 Supplemental disclosure of cash flow information during the period: ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 12,719 ​ $ 21,433 Net tax payment ​ ​ 9,334 ​ ​ 13,673 Supplemental schedule of non-cash activities: ​ ​ ​ ​ ​ ​ Loans transferred to other real estate owned at fair value ​ $ 1,522 ​ $ 1,186 Decrease in loans purchased but not settled ​ ​ — ​ ​ ( 6,119 ) Loans transferred from loans held for sale to loans ​ ​ 5,798 ​ ​ 2,346 ​ ​ ​ (1) ​ Included in restricted cash at September 30, 2021 and 2020 is $ 4.5 million and $ 10.0 million, respectively, held in escrow for certain potential liabilities the Company is indemnified for pursuant to the Peoples merger agreement. The restricted cash is included in other assets in the Company’s consolidated statements of financial condition. ​ See accompanying notes to the consolidated interim financial statements. ​ 9 ​ Table of Contents NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) September 30, 2021 ​ Note 1 Basis of Presentation ​ National Bank Holdings Corporation (&quot;NBHC&quot; or the &quot;Company&quot;) is a bank holding company that was incorporated in the State of Delaware in 2009. The Company is headquartered in Denver, Colorado, and its primary operations are conducted through its wholly owned subsidiary, NBH Bank (the &quot;Bank&quot;), a Colorado state-chartered bank and a member of the Federal Reserve System. The Company provides a variety of banking products to both commercial and consumer clients through a network of 81 banking centers, as of September 30, 2021, located primarily in Colorado and the greater Kansas City region, and through online and mobile banking products and services. ​ The accompanying interim unaudited consolidated financial statements serve to update the National Bank Holdings Corporation Annual Report on Form 10-K for the year ended December 31, 2020 and include the accounts of the Company and its wholly owned subsidiary, NBH Bank. The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and, where applicable, with general practices in the banking industry or guidelines prescribed by bank regulatory agencies. However, they may not include all information and notes necessary to constitute a complete set of financial statements under GAAP applicable to annual periods and accordingly should be read in conjunction with the financial information contained in the Company's most recent Form 10-K . The unaudited consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results presented. All such adjustments are of a normal recurring nature. All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications of prior years' amounts are made whenever necessary to conform to current period presentation. During the third quarter of 2021, the Company updated its asset classifications to include certain financial instruments within non-marketable securities that were previously reported in other assets in the statements of financial condition. The prior year presentation has been reclassified to conform to the current year presentation. The results of operations for the interim period are not necessarily indicative of the results that may be expected for the full year or any other interim period. All amounts are in thousands, except share data, or as otherwise noted. ​ While general economic conditions have been improving, the COVID-19 pandemic caused disruption to the communities we serve and has changed the way we live and work. While access to vaccines in the United States has increased, the efficacy of those vaccines, the impact of emerging targeted vaccine mandates and new variants of the virus, and the length of time that the government-mandated measures must remain in place or potentially be reinstituted to address COVID-19 are unknown. The pandemic has had a negative impact to the U.S. labor market, consumer spending and business operations, and it is not clear whether new outbreaks of COVID-19 cases will have further impact. ​ GAAP requires management to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses and disclosures of contingent assets and liabilities. By their nature, estimates are based on judgment and available information. Management has made significant estimates in certain areas, such as the fair values of financial instruments, contingent liabilities and the allowance for credit losses (“ACL”). Because of the inherent uncertainties associated with any estimation process and future changes in market and economic conditions, it is possible that actual results could differ significantly from those estimates. ​ The Company's significant accounting policies followed in the preparation of the unaudited consolidated financial statements are disclosed in note 2 of the audited financial statements and notes for the year ended December 31, 2020 and are contained in the Company's Annual Report on Form 10-K . There have been no significant changes to the application of significant accounting policies since December 31, 2020, except for the following: ​ Non-marketable securities — Non-marketable securities include Federal Reserve Bank (“FRB”) stock, Federal Home Loan Bank (“FHLB”) stock and other non-marketable securities. FRB and FHLB securities have been acquired for debt facility or regulatory purposes and are carried at cost. Other non-marketable securities consist of equity method investments in which the Company’s proportionate share of income or loss is recognized one quarter in arrears in other non-interest income in the consolidated statements of operations. Other non-marketable securities also include an investment in convertible preferred stock. As the convertible preferred stock does not have a readily determinable fair value, it is carried at cost and evaluated periodically for impairment. ​ 10 ​ Table of Contents Note 2 Recent Accounting Pronouncements ​ The Company has not adopted any recent accounting pronouncements in addition to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020. ​ Note 3 Investment Securities ​ The Company’s investment securities portfolio is comprised of available-for-sale and held-to-maturity investment securities. These investment securities totaled $ 1.3 billion at September 30, 2021 and included $ 0.7 billion of available-for-sale securities and $ 0.6 billion of held-to-maturity securities. At December 31, 2020, investment securities totaled $ 1.0 billion and included $0.6 billion of available-for-sale securities and $ 0.4 billion of held-to-maturity securities. ​ Available-for-sale ​ Available-for-sale securities are summarized as follows as of the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ Amortized Gross Gross ​ ​ ​ ​ cost ​ unrealized gains ​ unrealized losses ​ Fair value Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ $ 244,912 ​ $ 1,898 ​ $ ( 4,508 ) ​ $ 242,302 Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ 412,793 ​ 4,398 ​ ( 4,636 ) ​ 412,555 Municipal securities ​ ​ 362 ​ ​ 8 ​ ​ — ​ ​ 370 Corporate debt ​ ​ 2,000 ​ ​ 137 ​ ​ — ​ ​ 2,137 Other securities ​ 469 ​ — ​ — ​ 469 Total investment securities available-for-sale ​ $ 660,536 ​ $ 6,441 ​ $ ( 9,144 ) ​ $ 657,833 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ Amortized Gross Gross ​ ​ ​ ​ cost ​ unrealized gains ​ unrealized losses ​ Fair value Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ $ 193,424 ​ $ 2,952 ​ $ ( 42 ) ​ $ 196,334 Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ 454,345 ​ 8,778 ​ ( 344 ) ​ 462,779 Municipal securities ​ ​ 362 ​ ​ 13 ​ ​ — ​ ​ 375 Corporate debt ​ ​ 2,000 ​ ​ — ​ ​ ( 2 ) ​ ​ 1,998 Other securities ​ 469 ​ — ​ — ​ 469 Total investment securities available-for-sale ​ $ 650,600 ​ $ 11,743 ​ $ ( 388 ) ​ $ 661,955 ​ During the nine months ended September 30, 2021 and 2020, purchases of available-for-sale securities totaled $ 196.3 million and $ 114.7 million, respectively. Maturities and paydowns of available-for-sale securities during the nine months ended September 30, 2021 and 2020 totaled $ 185.0 million and $ 191.8 million, respectively. There were no sales of available-for-sale securities during the nine months ended September 30, 2021 or 2020. ​ At September 30, 2021 and December 31, 2020, the Company’s available-for-sale investment portfolio was primarily comprised of mortgage-backed securities backed by government sponsored enterprises collateral such as Federal Home Loan Mortgage Corporation (“FHLMC”) and Federal National Mortgage Association (“FNMA”) and the government owned agency Government National Mortgage Association (“GNMA”). ​ 11 ​ Table of Contents The tables below summarize the available-for-sale securities with unrealized losses as of the dates shown, along with the length of the impairment period: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ ​ Less than 12 months ​ 12 months or more ​ Total ​ Fair Unrealized Fair Unrealized Fair Unrealized ​ ​ value ​ losses ​ value ​ losses ​ value ​ losses Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ $ 189,230 ​ $ ( 4,508 ) ​ $ — ​ $ — ​ $ 189,230 ​ $ ( 4,508 ) Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ ​ 182,842 ​ ​ ( 4,627 ) ​ ​ 1,496 ​ ​ ( 9 ) ​ ​ 184,338 ​ ​ ( 4,636 ) Total ​ $ 372,072 ​ $ ( 9,135 ) ​ $ 1,496 ​ $ ( 9 ) ​ $ 373,568 ​ $ ( 9,144 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ Less than 12 months ​ 12 months or more ​ Total ​ Fair Unrealized Fair Unrealized Fair Unrealized ​ ​ value ​ losses ​ value ​ losses ​ value ​ losses Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ $ 26,878 ​ $ ( 42 ) ​ $ 1 ​ $ — ​ $ 26,879 ​ $ ( 42 ) Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ ​ 95,888 ​ ​ ( 328 ) ​ ​ 2,138 ​ ​ ( 16 ) ​ ​ 98,026 ​ ​ ( 344 ) Corporate debt ​ ​ 1,998 ​ ​ ( 2 ) ​ ​ — ​ ​ — ​ ​ 1,998 ​ ​ ( 2 ) Total ​ $ 124,764 ​ $ ( 372 ) ​ $ 2,139 ​ $ ( 16 ) ​ $ 126,903 ​ $ ( 388 ) ​ Management evaluated all of the available-for-sale securities in an unrealized loss position at September 30, 2021 and December 31, 2020. The portfolio included 33 securities, which were in an unrealized loss position at September 30, 2021, compared to 22 securities at December 31, 2020. The unrealized losses in the Company's investment portfolio at September 30, 2021 were caused by changes in interest rates. The Company has no intention to sell these securities and believes it will not be required to sell the securities before the recovery of their amortized cost. Management believes that default of the available-for-sale securities is highly unlikely. FHLMC, FNMA and GNMA guaranteed mortgage-backed securities have a long history of zero credit losses, an explicit guarantee by the U.S. government (although limited for FNMA and FHLMC securities) and yields that generally trade based on market views of prepayment and liquidity risk rather than credit risk. ​ Certain securities are pledged as collateral for public deposits, securities sold under agreements to repurchase and to secure borrowing capacity at the FRB, if needed. The fair value of available-for-sale investment securities pledged as collateral totaled $ 383.6 million and $ 385.8 million at September 30, 2021 and at December 31, 2020, respectively. The Bank may also pledge available-for-sale investment securities as collateral for FHLB advances. No securities were pledged for this purpose at September 30, 2021 or December 31, 2020. ​ Mortgage-backed securities may have actual maturities that differ from contractual maturities depending on the repayment characteristics and experience of the underlying financial instruments. As of September 30, 2021, municipal securities with an amortized cost and fair value of $ 0.1 million were due in one year or less and municipal securities with an amortized cost and fair value of $ 0.3 million were due between one to five years. Corporate debt securities with an amortized cost and fair value of $ 2.0 million were due after five years through ten years. Other securities with an amortized cost and fair value of $ 0.5 million as of September 30, 2021, have no stated contractual maturity date. ​ As of September 30, 2021 and December 31, 2020, accrued interest receivable (“AIR”) from available-for-sale investment securities totaled $ 1.0 million and $ 1.1 million, respectively, and was included within other assets in the statements of financial condition. ​ 12 ​ Table of Contents Held-to-maturity ​ Held-to-maturity investment securities are summarized as follows as of the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ unrealized ​ unrealized ​ ​ ​ ​ ​ cost ​ gains ​ losses ​ Fair value Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ $ 315,257 ​ $ 3,099 ​ $ ( 4,730 ) ​ $ 313,626 Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ 327,379 ​ 580 ​ ( 1,244 ) ​ 326,715 Total investment securities held-to-maturity ​ $ 642,636 ​ $ 3,679 ​ $ ( 5,974 ) ​ $ 640,341 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ unrealized ​ unrealized ​ ​ ​ ​ ​ cost ​ gains ​ losses ​ Fair value Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ $ 306,187 ​ $ 4,940 ​ $ ( 197 ) ​ $ 310,930 Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ 70,428 ​ 396 ​ ( 63 ) ​ 70,761 Total investment securities held-to-maturity ​ $ 376,615 ​ $ 5,336 ​ $ ( 260 ) ​ $ 381,691 ​ During the nine months ended September 30, 2021 and 2020, purchases of held-to-maturity securities totaled $ 377.7 million and $ 196.7 million, respectively. Maturities and paydowns of held-to-maturity securities totaled $ 109.0 million and $ 58.1 million during the nine months ended September 30, 2021 and 2020, respectively. ​ The held-to-maturity portfolio included 37 securities which were in an unrealized loss position as of September 30, 2021, compared to nine securities at December 31, 2020. The tables below summarize the held-to-maturity securities with unrealized losses as of the dates shown, along with the length of the impairment period: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ ​ Less than 12 months ​ 12 months or more ​ Total ​ Fair Unrealized Fair Unrealized Fair Unrealized ​ ​ value ​ losses ​ value ​ losses ​ value ​ losses Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ $ 202,742 ​ $ ( 4,176 ) ​ $ 15,334 ​ $ ( 554 ) ​ $ 218,076 ​ $ ( 4,730 ) Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ ​ 209,417 ​ ​ ( 1,244 ) ​ ​ — ​ ​ — ​ ​ 209,417 ​ ​ ( 1,244 ) Total ​ $ 412,159 ​ $ ( 5,420 ) ​ $ 15,334 ​ $ ( 554 ) ​ $ 427,493 ​ $ ( 5,974 ) ​ ​ 13 ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ Less than 12 months ​ 12 months or more ​ Total ​ Fair Unrealized Fair Unrealized Fair Unrealized ​ ​ value ​ losses ​ value ​ losses ​ value ​ losses Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ $ 53,453 ​ $ ( 197 ) ​ $ — ​ $ — ​ $ 53,453 ​ $ ( 197 ) Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ ​ 19,554 ​ ​ ( 63 ) ​ ​ — ​ ​ — ​ ​ 19,554 ​ ​ ( 63 ) Total ​ $ 73,007 ​ $ ( 260 ) ​ $ — ​ $ — ​ $ 73,007 ​ $ ( 260 ) ​ The Company does not measure expected credit losses on a financial asset, or group of financial assets, in which historical credit loss information adjusted for current conditions and reasonable and supportable forecasts results in an expectation that nonpayment of the amortized cost basis is zero. Management evaluated held-to-maturity securities noting they are backed by loans guaranteed by either U.S. government agencies or U.S. government sponsored entities, and management believes that default is highly unlikely given this governmental backing and long history without credit losses. Additionally, management notes that yields on which the portfolio generally trades are based upon market views of prepayment and liquidity risk and not credit risk. The Company has no intention to sell any held-to-maturity securities and believes it will not be required to sell any held-to-maturity securities before the recovery of their amortized cost. ​ Certain securities are pledged as collateral for public deposits, securities sold under agreements to repurchase and to secure borrowing capacity at the FRB, if needed. The carrying value of held-to-maturity investment securities pledged as collateral totaled $ 156.2 million and $ 140.6 million at September 30, 2021 and December 31, 2020, respectively. The Bank may also pledge held-to-maturity investment securities as collateral for FHLB advances. No held-to-maturity investment securities were pledged for this purpose at September 30, 2021 or December 31, 2020. ​ Actual maturities of mortgage-backed securities may differ from scheduled maturities depending on the repayment characteristics and experience of the underlying financial instruments. ​ As of September 30, 2021 and December 31, 2020, AIR from held-to-maturity investment securities totaled $ 0.9 million and $ 0.7 million, respectively, and was included within other assets in the statements of financial condition. ​ Note 4 Non-marketable Securities ​ During the third quarter of 2021, the Company updated its asset classifications to include other investments within non-marketable securities that were either purchased during the quarter or previously classified in other assets in the statements of financial condition. ​ Non-marketable securities totaled $ 47.0 million and $ 22.1 million at September 30, 2021 and December 31, 2020, respectively, and included FRB stock, FHLB stock and other non-marketable securities. At September 30, 2021, other non-marketable securities totaled $ 32.4 million and consisted of equity method investments and convertible preferred stock without readily determinable fair values. During the nine months ended September 30, 2021 and 2020, purchases of non-marketable securities totaled $ 25.8 million and $ 2.4 million, respectively. Included in these purchases were investments in two fintech firms, Finstro Global Holdings Inc. of $ 20.0 million and Figure Technologies of $ 2.0 million. At December 31, 2020, the Company held $ 5.6 million of other non-marketable securities. ​ At September 30, 2021, the Company held $ 13.9 million of FRB stock and $ 0.7 million of FHLB stock for regulatory or debt facility purposes. At December 31, 2020, the Company held $ 13.9 million of FRB stock and $ 2.6 million of FHLB stock. These are restricted securities which, lacking a market, are carried at cost. There have been no identified events or changes in circumstances that may have an adverse effect on the investments carried at cost. ​ Note 5 Loans ​ The loan portfolio is comprised of loans originated by the Company and loans that were acquired in connection with the Company’s acquisitions. The tables below show the loan portfolio composition including carrying value by segment as of the dates shown. The carrying value of loans is net of discounts, fees, costs and fair value marks of $ 12.9 million and $ 16.2 million as of September 30, 2021 and December 31, 2020, respectively. Included in commercial loans are fully-guaranteed loans originated as part of the Small 14 ​ Table of Contents Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) of which $ 76.8 million and $ 176.1 million, net of fees and costs, were outstanding at September 30, 2021 and December 31, 2020, respectively. ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ Total loans % of total Commercial $ 3,067,300 ​ 69.3 % Commercial real estate non-owner occupied 670,927 ​ 15.2 % Residential real estate 665,502 ​ 15.1 % Consumer 18,031 ​ 0.4 % Total $ 4,421,760 ​ 100.0 % ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ Total loans % of total Commercial $ 3,044,065 ​ 70.0 % Commercial real estate non-owner occupied 631,996 ​ 14.5 % Residential real estate 658,659 ​ 15.1 % Consumer 19,006 ​ 0.4 % Total $ 4,353,726 ​ 100.0 % ​ Information about delinquent and non-accrual loans is shown in the following tables at September 30, 2021 and December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ ​ ​ ​ ​ Greater ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 30-89 days ​ than 90 days ​ ​ ​ Total past ​ ​ ​ ​ ​ ​ past due and ​ past due and ​ Non-accrual ​ due and ​ ​ ​ ​ ​ ​ accruing ​ accruing ​ loans ​ non-accrual ​ Current ​ Total loans Commercial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 249 ​ $ 99 ​ $ 1,405 ​ $ 1,753 ​ $ 1,445,043 ​ $ 1,446,796 Municipal and non-profit ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 879,335 ​ ​ 879,335 Owner occupied commercial real estate ​ ​ 419 ​ ​ — ​ ​ 6,451 ​ ​ 6,870 ​ ​ 534,880 ​ ​ 541,750 Food and agribusiness ​ ​ 92 ​ ​ — ​ ​ 72 ​ ​ 164 ​ ​ 199,255 ​ ​ 199,419 Total commercial ​ ​ 760 ​ ​ 99 ​ ​ 7,928 ​ ​ 8,787 ​ ​ 3,058,513 ​ ​ 3,067,300 Commercial real estate non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction ​ — ​ — ​ — ​ — ​ 61,976 ​ 61,976 Acquisition/development ​ — ​ — ​ — ​ — ​ 20,339 ​ 20,339 Multifamily ​ — ​ — ​ — ​ — ​ 90,427 ​ 90,427 Non-owner occupied ​ — ​ 235 ​ 128 ​ 363 ​ 497,822 ​ 498,185 Total commercial real estate ​ — ​ 235 ​ 128 ​ 363 ​ 670,564 ​ 670,927 Residential real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Senior lien ​ ​ 478 ​ ​ 161 ​ ​ 4,394 ​ ​ 5,033 ​ ​ 603,426 ​ ​ 608,459 Junior lien ​ 28 ​ ​ — ​ ​ 391 ​ 419 ​ 56,624 ​ ​ 57,043 Total residential real estate ​ 506 ​ ​ 161 ​ ​ 4,785 ​ ​ 5,452 ​ ​ 660,050 ​ ​ 665,502 Consumer ​ 36 ​ — ​ 7 ​ 43 ​ 17,988 ​ 18,031 Total loans ​ $ 1,302 ​ $ 495 ​ $ 12,848 ​ $ 14,645 ​ $ 4,407,115 ​ $ 4,421,760 ​ 15 ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ ​ ​ ​ Greater ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 30-89 days ​ than 90 days ​ ​ ​ Total past ​ ​ ​ ​ ​ ​ past due and ​ past due and ​ Non-accrual ​ due and ​ ​ ​ ​ ​ ​ accruing ​ accruing ​ loans ​ non-accrual ​ Current ​ Total loans Commercial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 170 ​ $ — ​ $ 6,312 ​ $ 6,482 ​ $ 1,440,256 ​ $ 1,446,738 Municipal and non-profit ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 870,791 ​ ​ 870,791 Owner occupied commercial real estate ​ — ​ — ​ ​ 5,450 ​ 5,450 ​ 510,789 ​ 516,239 Food and agribusiness ​ 146 ​ — ​ ​ 422 ​ 568 ​ 209,729 ​ 210,297 Total commercial ​ ​ 316 ​ ​ — ​ ​ 12,184 ​ ​ 12,500 ​ ​ 3,031,565 ​ ​ 3,044,065 Commercial real estate non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction ​ — ​ — ​ — ​ — ​ 91,125 ​ 91,125 Acquisition/development ​ — ​ — ​ 6 ​ 6 ​ 24,665 ​ 24,671 Multifamily ​ — ​ — ​ 1,523 ​ 1,523 ​ 67,233 ​ 68,756 Non-owner occupied ​ — ​ — ​ 135 ​ 135 ​ 447,309 ​ 447,444 Total commercial real estate ​ — ​ — ​ 1,664 ​ 1,664 ​ 630,332 ​ 631,996 Residential real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Senior lien ​ 527 ​ 160 ​ ​ 5,820 ​ 6,507 ​ 577,764 ​ ​ 584,271 Junior lien ​ 95 ​ — ​ ​ 709 ​ ​ 804 ​ ​ 73,584 ​ ​ 74,388 Total residential real estate ​ 622 ​ 160 ​ ​ 6,529 ​ ​ 7,311 ​ ​ 651,348 ​ ​ 658,659 Consumer ​ 30 ​ 2 ​ 10 ​ ​ 42 ​ ​ 18,964 ​ ​ 19,006 Total loans ​ $ 968 ​ $ 162 ​ $ 20,387 ​ $ 21,517 ​ $ 4,332,209 ​ $ 4,353,726 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ Non-accrual loans ​ Non-accrual loans ​ ​ ​ ​ with a related ​ with no related ​ ​ ​ ​ allowance for ​ allowance for ​ Non-accrual ​ credit loss ​ credit loss ​ loans Commercial: ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial $ 1,405 ​ $ — ​ $ 1,405 Municipal and non-profit ​ — ​ ​ — ​ ​ — Owner occupied commercial real estate ​ 4,604 ​ ​ 1,847 ​ ​ 6,451 Food and agribusiness ​ 72 ​ ​ — ​ ​ 72 Total commercial ​ 6,081 ​ ​ 1,847 ​ ​ 7,928 Commercial real estate non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ Construction — ​ — ​ — Acquisition/development — ​ — ​ — Multifamily — ​ — ​ — Non-owner occupied 128 ​ — ​ 128 Total commercial real estate 128 ​ — ​ 128 Residential real estate: ​ ​ ​ ​ ​ Senior lien ​ 3,393 ​ ​ 1,001 ​ ​ 4,394 Junior lien ​ 391 ​ ​ — ​ 391 Total residential real estate ​ 3,784 ​ ​ 1,001 ​ 4,785 Consumer 7 ​ — ​ 7 Total loans $ 10,000 ​ $ 2,848 ​ $ 12,848 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 16 ​ Table of Contents ​ December 31, 2020 ​ Non-accrual loans ​ Non-accrual loans ​ ​ ​ ​ with a related ​ with no related ​ ​ ​ ​ allowance for ​ allowance for ​ Non-accrual ​ credit loss ​ credit loss ​ loans Commercial: ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial $ 6,080 ​ $ 232 ​ $ 6,312 Municipal and non-profit ​ — ​ ​ — ​ ​ — Owner occupied commercial real estate ​ 2,698 ​ ​ 2,752 ​ ​ 5,450 Food and agribusiness ​ 88 ​ ​ 334 ​ ​ 422 Total commercial ​ 8,866 ​ ​ 3,318 ​ ​ 12,184 Commercial real estate non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ Construction — ​ — ​ — Acquisition/development 6 ​ — ​ 6 Multifamily — ​ 1,523 ​ 1,523 Non-owner occupied 135 ​ — ​ 135 Total commercial real estate 141 ​ 1,523 ​ 1,664 Residential real estate: ​ ​ ​ ​ ​ Senior lien ​ 4,158 ​ ​ 1,662 ​ ​ 5,820 Junior lien ​ 709 ​ ​ — ​ 709 Total residential real estate ​ 4,867 ​ ​ 1,662 ​ 6,529 Consumer 10 ​ — ​ 10 Total loans $ 13,884 ​ $ 6,503 ​ $ 20,387 ​ Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement remains unpaid after the due date of the scheduled payment. Non-accrual loans include non-accrual loans and troubled debt restructurings (“TDRs”) on non-accrual status. There was no interest income recognized from non-accrual loans during the three or nine months ended September 30, 2021 or 2020. ​ The Company’s internal risk rating system uses a series of grades, which reflect our assessment of the credit quality of loans based on an analysis of the borrower's financial condition, liquidity and ability to meet contractual debt service requirements and are categorized as “Pass”, “Special mention”, “Substandard” and “Doubtful”. For a description of the general characteristics of the risk grades, refer to note 2 Summary of Significant Accounting Policies in our audited consolidated financial statements in our 2020 Annual Report on Form 10-K . ​ 17 ​ Table of Contents The amortized cost basis for all loans as determined by the Company’s internal risk rating system and year of origination is shown in the following tables as of September 30, 2021 and December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ Revolving ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ loans ​ loans ​ ​ ​ ​ ​ Origination year ​ amortized ​ converted ​ ​ ​ ​ ​ 2021 ​ 2020 ​ 2019 ​ 2018 ​ 2017 ​ Prior ​ cost basis ​ to term ​ Total Commercial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 391,229 ​ $ 172,714 ​ $ 162,299 ​ $ 151,647 ​ $ 52,024 ​ $ 23,606 ​ $ 436,119 ​ $ 5,967 ​ $ 1,395,605 Special mention ​ ​ — ​ ​ 1,066 ​ ​ 2,102 ​ ​ 4,250 ​ ​ 12,823 ​ ​ 5,693 ​ ​ 2,045 ​ ​ 100 ​ ​ 28,079 Substandard ​ ​ — ​ ​ 20 ​ ​ 328 ​ ​ 744 ​ ​ 21,040 ​ ​ 286 ​ ​ 440 ​ ​ 41 ​ ​ 22,899 Doubtful ​ ​ — ​ ​ — ​ ​ — ​ ​ 43 ​ ​ 39 ​ ​ 131 ​ ​ — ​ ​ — ​ ​ 213 Total commercial and industrial ​ ​ 391,229 ​ ​ 173,800 ​ ​ 164,729 ​ ​ 156,684 ​ ​ 85,926 ​ ​ 29,716 ​ ​ 438,604 ​ ​ 6,108 ​ ​ 1,446,796 Municipal and non-profit: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 96,149 ​ ​ 92,184 ​ ​ 85,619 ​ ​ 119,619 ​ ​ 150,074 ​ ​ 334,757 ​ ​ 933 ​ ​ — ​ ​ 879,335 Total municipal and non-profit ​ ​ 96,149 ​ ​ 92,184 ​ ​ 85,619 ​ ​ 119,619 ​ ​ 150,074 ​ ​ 334,757 ​ ​ 933 ​ ​ — ​ ​ 879,335 Owner occupied commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 100,608 ​ ​ 84,772 ​ ​ 87,893 ​ ​ 71,987 ​ ​ 44,003 ​ ​ 97,376 ​ ​ 12,654 ​ ​ — ​ ​ 499,293 Special mention ​ ​ — ​ ​ — ​ ​ 7,415 ​ ​ 8,248 ​ ​ 1,449 ​ ​ 16,205 ​ ​ — ​ ​ — ​ ​ 33,317 Substandard ​ ​ — ​ ​ 1,192 ​ ​ 1,567 ​ ​ 1,847 ​ ​ 228 ​ ​ 3,320 ​ ​ — ​ ​ — ​ ​ 8,154 Doubtful ​ ​ — ​ ​ 389 ​ ​ 562 ​ ​ — ​ ​ — ​ ​ 35 ​ ​ — ​ ​ — ​ ​ 986 Total owner occupied commercial real estate ​ ​ 100,608 ​ ​ 86,353 ​ ​ 97,437 ​ ​ 82,082 ​ ​ 45,680 ​ ​ 116,936 ​ ​ 12,654 ​ ​ — ​ ​ 541,750 Food and agribusiness: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 9,515 ​ ​ 23,190 ​ ​ 7,106 ​ ​ 16,375 ​ ​ 2,558 ​ ​ 26,808 ​ ​ 99,645 ​ ​ — ​ ​ 185,197 Special mention ​ ​ — ​ ​ 4,669 ​ ​ 1,083 ​ ​ — ​ ​ — ​ ​ 216 ​ ​ 7,388 ​ ​ — ​ ​ 13,356 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 267 ​ ​ 599 ​ ​ — ​ ​ — ​ ​ 866 Total food and agribusiness ​ ​ 9,515 ​ ​ 27,859 ​ ​ 8,189 ​ ​ 16,375 ​ ​ 2,825 ​ ​ 27,623 ​ ​ 107,033 ​ ​ — ​ ​ 199,419 Total commercial ​ ​ 597,501 ​ ​ 380,196 ​ ​ 355,974 ​ ​ 374,760 ​ ​ 284,505 ​ ​ 509,032 ​ ​ 559,224 ​ ​ 6,108 ​ ​ 3,067,300 Commercial real estate non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 17,307 ​ ​ 11,782 ​ ​ 28,181 ​ ​ — ​ ​ 224 ​ ​ — ​ ​ 4,482 ​ ​ — ​ ​ 61,976 Total construction ​ ​ 17,307 ​ ​ 11,782 ​ ​ 28,181 ​ ​ — ​ ​ 224 ​ ​ — ​ ​ 4,482 ​ ​ — ​ ​ 61,976 Acquisition/development: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 2,557 ​ ​ 385 ​ ​ 1,892 ​ ​ 1,830 ​ ​ 6,045 ​ ​ 7,567 ​ ​ 63 ​ ​ — ​ ​ 20,339 Total acquisition/development ​ ​ 2,557 ​ ​ 385 ​ ​ 1,892 ​ ​ 1,830 ​ ​ 6,045 ​ ​ 7,567 ​ ​ 63 ​ ​ — ​ ​ 20,339 Multifamily: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 3,115 ​ ​ 29,612 ​ ​ 2,964 ​ ​ 16,189 ​ ​ 201 ​ ​ 37,946 ​ ​ — ​ ​ — ​ ​ 90,027 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 400 ​ ​ — ​ ​ — ​ ​ 400 Total multifamily ​ ​ 3,115 ​ ​ 29,612 ​ ​ 2,964 ​ ​ 16,189 ​ ​ 201 ​ ​ 38,346 ​ ​ — ​ ​ — ​ ​ 90,427 Non-owner occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 49,707 ​ ​ 59,726 ​ ​ 122,389 ​ ​ 18,324 ​ ​ 97,332 ​ ​ 117,331 ​ ​ 3,400 ​ ​ 1 ​ ​ 468,210 Special mention ​ ​ — ​ ​ — ​ ​ 5,746 ​ ​ 5,667 ​ ​ 9,805 ​ ​ 3,933 ​ ​ — ​ ​ — ​ ​ 25,151 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ 744 ​ ​ — ​ ​ 4,080 ​ ​ — ​ ​ — ​ ​ 4,824 Total non-owner occupied ​ ​ 49,707 ​ ​ 59,726 ​ ​ 128,135 ​ ​ 24,735 ​ ​ 107,137 ​ ​ 125,344 ​ ​ 3,400 ​ ​ 1 ​ ​ 498,185 Total commercial real estate non-owner occupied ​ ​ 72,686 ​ ​ 101,505 ​ ​ 161,172 ​ ​ 42,754 ​ ​ 113,607 ​ ​ 171,257 ​ ​ 7,945 ​ ​ 1 ​ ​ 670,927 Residential real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Senior lien ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 175,920 ​ ​ 110,891 ​ ​ 46,818 ​ ​ 23,384 ​ ​ 32,345 ​ ​ 193,777 ​ ​ 19,728 ​ ​ 52 ​ ​ 602,915 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 278 ​ ​ — ​ ​ — ​ ​ 278 Substandard ​ ​ — ​ ​ 402 ​ ​ 686 ​ ​ 322 ​ ​ 302 ​ ​ 3,554 ​ ​ — ​ ​ — ​ ​ 5,266 Total senior lien ​ ​ 175,920 ​ ​ 111,293 ​ ​ 47,504 ​ ​ 23,706 ​ ​ 32,647 ​ ​ 197,609 ​ ​ 19,728 ​ ​ 52 ​ ​ 608,459 Junior lien ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 748 ​ ​ 2,494 ​ ​ 2,967 ​ ​ 1,847 ​ ​ 1,076 ​ ​ 3,849 ​ ​ 43,108 ​ ​ 137 ​ ​ 56,226 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 21 ​ ​ 345 ​ ​ — ​ ​ 366 Substandard ​ ​ — ​ ​ 19 ​ ​ — ​ ​ 64 ​ ​ 99 ​ ​ 233 ​ ​ — ​ ​ 36 ​ ​ 451 Total junior lien ​ ​ 748 ​ ​ 2,513 ​ ​ 2,967 ​ ​ 1,911 ​ ​ 1,175 ​ ​ 4,103 ​ ​ 43,453 ​ ​ 173 ​ ​ 57,043 Total residential real estate ​ ​ 176,668 ​ ​ 113,806 ​ ​ 50,471 ​ ​ 25,617 ​ ​ 33,822 ​ ​ 201,712 ​ ​ 63,181 ​ ​ 225 ​ ​ 665,502 Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 6,628 ​ ​ 5,292 ​ ​ 1,762 ​ ​ 803 ​ ​ 188 ​ ​ 630 ​ ​ 2,696 ​ ​ 25 ​ ​ 18,024 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 7 ​ ​ — ​ ​ — ​ ​ 7 Total consumer ​ ​ 6,628 ​ ​ 5,292 ​ ​ 1,762 ​ ​ 803 ​ ​ 188 ​ ​ 637 ​ ​ 2,696 ​ ​ 25 ​ ​ 18,031 Total loans ​ $ 853,483 ​ $ 600,799 ​ $ 569,379 ​ $ 443,934 ​ $ 432,122 ​ $ 882,638 ​ $ 633,046 ​ $ 6,359 ​ $ 4,421,760 ​ 18 ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ Revolving ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ loans ​ loans ​ ​ ​ ​ ​ Origination year ​ amortized ​ converted ​ ​ ​ ​ ​ 2020 ​ 2019 ​ 2018 ​ 2017 ​ 2016 ​ Prior ​ cost basis ​ to term ​ Total Commercial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 372,041 ​ $ 212,388 ​ $ 189,753 ​ $ 93,822 ​ $ 15,145 ​ $ 17,662 ​ $ 499,283 ​ $ 991 ​ $ 1,401,085 Special mention ​ ​ — ​ ​ 1,445 ​ ​ 7,381 ​ ​ 4,845 ​ ​ 5,810 ​ ​ 729 ​ ​ 2,329 ​ ​ 1,478 ​ ​ 24,017 Substandard ​ ​ 23 ​ ​ 1,238 ​ ​ 925 ​ ​ 11,885 ​ ​ 56 ​ ​ 4,840 ​ ​ 1,341 ​ ​ — ​ ​ 20,308 Doubtful ​ ​ — ​ ​ — ​ ​ 34 ​ ​ 456 ​ ​ — ​ ​ 809 ​ ​ 29 ​ ​ — ​ ​ 1,328 Total commercial and industrial ​ ​ 372,064 ​ ​ 215,071 ​ ​ 198,093 ​ ​ 111,008 ​ ​ 21,011 ​ ​ 24,040 ​ ​ 502,982 ​ ​ 2,469 ​ ​ 1,446,738 Municipal and non-profit: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 131,961 ​ ​ 91,911 ​ ​ 125,247 ​ ​ 156,275 ​ ​ 124,269 ​ ​ 238,453 ​ ​ 2,675 ​ ​ — ​ ​ 870,791 Total municipal and non-profit ​ ​ 131,961 ​ ​ 91,911 ​ ​ 125,247 ​ ​ 156,275 ​ ​ 124,269 ​ ​ 238,453 ​ ​ 2,675 ​ ​ — ​ ​ 870,791 Owner occupied commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 100,791 ​ ​ 107,558 ​ ​ 90,398 ​ ​ 53,131 ​ ​ 32,648 ​ ​ 87,758 ​ ​ 1,401 ​ ​ — ​ ​ 473,685 Special mention ​ ​ 1,581 ​ ​ 2,236 ​ ​ 2,714 ​ ​ 544 ​ ​ 3,254 ​ ​ 19,341 ​ ​ — ​ ​ — ​ ​ 29,670 Substandard ​ ​ — ​ ​ 1,988 ​ ​ 6,211 ​ ​ 251 ​ ​ 93 ​ ​ 3,802 ​ ​ — ​ ​ — ​ ​ 12,345 Doubtful ​ ​ — ​ ​ 511 ​ ​ — ​ ​ — ​ ​ — ​ ​ 28 ​ ​ — ​ ​ — ​ ​ 539 Total owner occupied commercial real estate ​ ​ 102,372 ​ ​ 112,293 ​ ​ 99,323 ​ ​ 53,926 ​ ​ 35,995 ​ ​ 110,929 ​ ​ 1,401 ​ ​ — ​ ​ 516,239 Food and agribusiness: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 28,139 ​ ​ 9,198 ​ ​ 20,242 ​ ​ 7,198 ​ ​ 9,556 ​ ​ 28,330 ​ ​ 106,007 ​ ​ 126 ​ ​ 208,796 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 222 ​ ​ — ​ ​ — ​ ​ 222 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ 302 ​ ​ — ​ ​ 977 ​ ​ — ​ ​ — ​ ​ 1,279 Total food and agribusiness ​ ​ 28,139 ​ ​ 9,198 ​ ​ 20,242 ​ ​ 7,500 ​ ​ 9,556 ​ ​ 29,529 ​ ​ 106,007 ​ ​ 126 ​ ​ 210,297 Total commercial ​ ​ 634,536 ​ ​ 428,473 ​ ​ 442,905 ​ ​ 328,709 ​ ​ 190,831 ​ ​ 402,951 ​ ​ 613,065 ​ ​ 2,595 ​ ​ 3,044,065 Commercial real estate non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 15,841 ​ ​ 49,658 ​ ​ 17,349 ​ ​ 4,072 ​ ​ — ​ ​ — ​ ​ 2,006 ​ ​ 1,807 ​ ​ 90,733 Special mention ​ ​ 392 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 392 Total construction ​ ​ 16,233 ​ ​ 49,658 ​ ​ 17,349 ​ ​ 4,072 ​ ​ — ​ ​ — ​ ​ 2,006 ​ ​ 1,807 ​ ​ 91,125 Acquisition/development: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 3,762 ​ ​ 1,997 ​ ​ 1,947 ​ ​ 8,373 ​ ​ 4,559 ​ ​ 3,694 ​ ​ 11 ​ ​ — ​ ​ 24,343 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ 34 ​ ​ — ​ ​ 253 ​ ​ — ​ ​ — ​ ​ 287 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 41 ​ ​ — ​ ​ — ​ ​ 41 Total acquisition/development ​ ​ 3,762 ​ ​ 1,997 ​ ​ 1,947 ​ ​ 8,407 ​ ​ 4,559 ​ ​ 3,988 ​ ​ 11 ​ ​ — ​ ​ 24,671 Multifamily: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 29,738 ​ ​ 13,670 ​ ​ 137 ​ ​ 212 ​ ​ 18,050 ​ ​ 4,990 ​ ​ — ​ ​ — ​ ​ 66,797 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 436 ​ ​ — ​ ​ — ​ ​ 436 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,523 ​ ​ — ​ ​ — ​ ​ 1,523 Total multifamily ​ ​ 29,738 ​ ​ 13,670 ​ ​ 137 ​ ​ 212 ​ ​ 18,050 ​ ​ 6,949 ​ ​ — ​ ​ — ​ ​ 68,756 Non-owner occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 51,445 ​ ​ 92,225 ​ ​ 25,362 ​ ​ 86,975 ​ ​ 26,613 ​ ​ 118,144 ​ ​ 3,083 ​ ​ 643 ​ ​ 404,490 Special mention ​ ​ 70 ​ ​ 5,458 ​ ​ 5,841 ​ ​ 22,737 ​ ​ — ​ ​ 3,662 ​ ​ 100 ​ ​ — ​ ​ 37,868 Substandard ​ ​ — ​ ​ — ​ ​ 779 ​ ​ — ​ ​ 3,937 ​ ​ 370 ​ ​ — ​ ​ — ​ ​ 5,086 Total non-owner occupied ​ ​ 51,515 ​ ​ 97,683 ​ ​ 31,982 ​ ​ 109,712 ​ ​ 30,550 ​ ​ 122,176 ​ ​ 3,183 ​ ​ 643 ​ ​ 447,444 Total commercial real estate non-owner occupied ​ ​ 101,248 ​ ​ 163,008 ​ ​ 51,415 ​ ​ 122,403 ​ ​ 53,159 ​ ​ 133,113 ​ ​ 5,200 ​ ​ 2,450 ​ ​ 631,996 Residential real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Senior lien ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 129,551 ​ ​ 76,504 ​ ​ 36,493 ​ ​ 47,887 ​ ​ 88,358 ​ ​ 173,091 ​ ​ 24,884 ​ ​ 218 ​ ​ 576,986 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 463 ​ ​ — ​ ​ — ​ ​ 463 Substandard ​ ​ 95 ​ ​ 818 ​ ​ 20 ​ ​ 1,232 ​ ​ 550 ​ ​ 4,107 ​ ​ — ​ ​ — ​ ​ 6,822 Total senior lien ​ ​ 129,646 ​ ​ 77,322 ​ ​ 36,513 ​ ​ 49,119 ​ ​ 88,908 ​ ​ 177,661 ​ ​ 24,884 ​ ​ 218 ​ ​ 584,271 Junior lien ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 3,479 ​ ​ 4,217 ​ ​ 2,553 ​ ​ 1,775 ​ ​ 1,226 ​ ​ 3,760 ​ ​ 55,860 ​ ​ 365 ​ ​ 73,235 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 21 ​ ​ 341 ​ ​ — ​ ​ 362 Substandard ​ ​ — ​ ​ 112 ​ ​ 101 ​ ​ 177 ​ ​ 55 ​ ​ 287 ​ ​ — ​ ​ 59 ​ ​ 791 Total junior lien ​ ​ 3,479 ​ ​ 4,329 ​ ​ 2,654 ​ ​ 1,952 ​ ​ 1,281 ​ ​ 4,068 ​ ​ 56,201 ​ ​ 424 ​ ​ 74,388 Total residential real estate ​ ​ 133,125 ​ ​ 81,651 ​ ​ 39,167 ​ ​ 51,071 ​ ​ 90,189 ​ ​ 181,729 ​ ​ 81,085 ​ ​ 642 ​ ​ 658,659 Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 9,777 ​ ​ 3,348 ​ ​ 1,674 ​ ​ 489 ​ ​ 329 ​ ​ 623 ​ ​ 2,700 ​ ​ 19 ​ ​ 18,959 Substandard ​ ​ — ​ ​ — ​ ​ 37 ​ ​ — ​ ​ 2 ​ ​ 8 ​ ​ — ​ ​ — ​ ​ 47 Total consumer ​ ​ 9,777 ​ ​ 3,348 ​ ​ 1,711 ​ ​ 489 ​ ​ 331 ​ ​ 631 ​ ​ 2,700 ​ ​ 19 ​ ​ 19,006 Total loans ​ $ 878,686 ​ $ 676,480 ​ $ 535,198 ​ $ 502,672 ​ $ 334,510 ​ $ 718,424 ​ $ 702,050 ​ $ 5,706 ​ $ 4,353,726 ​ 19 ​ Table of Contents Loans evaluated individually ​ We evaluate loans individually when they no longer share risk characteristics with pooled loans. These loans include loans on non-accrual status, loans in bankruptcy, and TDRs described below. If a specific allowance is warranted based on the borrower’s overall financial condition, the specific allowance is calculated based on discounted expected cash flows using the loan’s initial contractual effective interest rate or the fair value of the collateral less selling costs for collateral-dependent loans. ​ A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. Management individually evaluates collateral-dependent loans with an amortized cost basis of $ 250 thousand or more and includes collateral-dependent loans less than $250 thousand within the general allowance population. The amortized cost basis of collateral-dependent loans over $250 thousand was as follows at September 30, 2021 and December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ ​ ​ ​ ​ Total amortized ​ Real property ​ Business assets ​ cost basis Commercial ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial $ 3,604 ​ $ 1,858 ​ $ 5,462 Owner-occupied commercial real estate ​ 4,493 ​ ​ 261 ​ ​ 4,754 Total Commercial ​ 8,097 ​ ​ 2,119 ​ ​ 10,216 Commercial real estate non owner-occupied ​ ​ ​ ​ ​ ​ ​ ​ Acquisition/development 1,297 ​ — ​ 1,297 Total commercial real estate 1,297 ​ — ​ 1,297 Residential real estate ​ ​ ​ ​ ​ Senior lien 2,247 ​ — ​ 2,247 Total residential real estate 2,247 ​ — ​ 2,247 Total loans $ 11,641 ​ $ 2,119 ​ $ 13,760 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ ​ ​ ​ Total amortized ​ Real property ​ Business assets ​ cost basis Commercial ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial $ 7,579 ​ $ 3,005 ​ $ 10,584 Owner-occupied commercial real estate ​ 3,701 ​ ​ 284 ​ ​ 3,985 Food and agribusiness ​ 334 ​ ​ — ​ ​ 334 Total Commercial ​ 11,614 ​ ​ 3,289 ​ ​ 14,903 Commercial real estate non owner-occupied ​ ​ ​ ​ ​ ​ ​ ​ Acquisition/development 1,573 ​ — ​ 1,573 Multifamily 1,523 ​ — ​ 1,523 Total commercial real estate 3,096 ​ — ​ 3,096 Residential real estate ​ ​ ​ ​ ​ Senior lien 2,021 ​ — ​ 2,021 Total residential real estate 2,021 ​ — ​ 2,021 Total loans $ 16,731 ​ $ 3,289 ​ $ 20,020 ​ Loan modifications and troubled debt restructurings ​ The Company’s policy is to review each prospective credit to determine the appropriateness and the adequacy of security or collateral prior to making a loan. In the event of borrower default, the Company seeks recovery in compliance with lending laws, the respective loan agreements, and credit monitoring and remediation procedures that may include restructuring a loan to provide a concession by the Company to the borrower from their original terms due to borrower financial difficulties in order to facilitate repayment. Additionally, if a borrower’s repayment obligation has been discharged by a court, and that debt has not been reaffirmed by the borrower, regardless of past due status, the loan is considered to be a TDR. ​ The CARES Act afforded financial institutions the option to modify loans within certain parameters in response to the COVID-19 pandemic without requiring the modifications to be classified as TDRs under ASC Topic 310 if the borrower has been adversely impacted by COVID-19 and was current on their loan payments. The Company modified 14 loans totaling $ 4.8 million during the nine months ended September 30, 2021 and 483 loans totaling $ 499.5 million during the nine months ended September 30, 2020, due 20 ​ Table of Contents to the effects of the COVID-19 pandemic, that were not classified as TDRs. Modified loans that remained on a payment deferral plan at September 30, 2021 totaled $ 0.9 million. Of those loans, principal payment deferrals totaled $ 0.3 million and full payment deferrals totaled $ 0.6 million. At September 30, 2021, $ 45 thousand of loan modifications related to COVID-19 were a subsequent modification. All COVID-19 modified loans were classified as performing as of September 30, 2021. At December 31, 2020, modified loans that remained on a payment deferral plan totaled $ 173.6 million, or 4.0 % of the total loan portfolio, of which 26.2 % were a subsequent modification. ​ During the three months ended September 30, 2021, the Company added no new TDRs. During the nine months ended September 30, 2021, the Company restructured three loans with an amortized cost basis of $ 1.4 million to facilitate repayment that are considered TDRs. Loan modifications were a reduction of the principal payment, a reduction in interest rate, or an extension of term. The tables below provide additional information related to accruing TDRs at September 30, 2021 and December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ ​ Amortized ​ Average year-to-date ​ Unpaid ​ Unfunded commitments ​ ​ cost basis ​ amortized cost basis ​ principal balance ​ to fund TDRs Commercial ​ $ 6,380 ​ $ 7,054 ​ $ 6,734 ​ $ 315 Commercial real estate non-owner occupied ​ 2,049 ​ 2,074 ​ 2,880 ​ — Residential real estate ​ 2,706 ​ 2,760 ​ 3,181 ​ 35 Consumer ​ — ​ — ​ — ​ — Total ​ $ 11,135 ​ $ 11,888 ​ $ 12,795 ​ $ 350 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ Amortized ​ Average year-to-date ​ Unpaid ​ Unfunded commitments ​ ​ cost basis ​ amortized cost basis ​ principal balance ​ to fund TDRs Commercial ​ $ 9,387 ​ $ 9,544 ​ $ 9,978 ​ $ 150 Commercial real estate non-owner occupied ​ 2,400 ​ 2,351 ​ 4,105 ​ — Residential real estate ​ 2,121 ​ 2,185 ​ 2,922 ​ 12 Consumer ​ 37 ​ 37 ​ 37 ​ — Total ​ $ 13,945 ​ $ 14,117 ​ $ 17,042 ​ $ 162 ​ ​ The following table summarizes the Company’s carrying value of non-accrual TDRs as of September 30, 2021 and December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ December 31, 2020 Commercial $ 2,505 $ 3,397 Commercial real estate non-owner occupied ​ 121 ​ 1,644 Residential real estate ​ 1,733 ​ 3,156 Consumer ​ — ​ — Total non-accruing TDRs ​ $ 4,359 ​ $ 8,197 ​ Accrual of interest is resumed on loans that were previously on non-accrual only after the loan has performed sufficiently for a period of time. The Company had one TDR totaling $ 36 thousand that was modified within the past 12 months and had defaulted on its restructured terms during the nine months ended September 30, 2021. During the nine months ended September 30, 2020, the Company had no TDRs that were modified within the past 12 months and had defaulted on their restructured terms. For purposes of this disclosure, the Company considers “default” to mean 90 days or more past due on principal or interest. The allowance for credit losses related to TDRs on non-accrual status is determined by individual evaluation, including collateral adequacy, using the same process as loans on non-accrual status, which are not classified as TDRs. ​ ​ 21 ​ Table of Contents Note 6 Allowance for Credit Losses ​ The tables below detail the Company’s allowance for credit losses as of the dates shown: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, 2021 ​ ​ ​ ​ ​ Non-owner ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ commercial ​ Residential ​ ​ ​ ​ ​ ​ ​ Commercial real estate real estate Consumer Total Beginning balance ​ $ 28,640 ​ $ 11,187 ​ $ 8,851 ​ $ 352 ​ $ 49,030 Charge-offs ​ ( 172 ) ​ — ​ ( 4 ) ​ ​ ( 146 ) ​ ( 322 ) Recoveries ​ 61 ​ — ​ 2 ​ 38 ​ 101 Provision expense (release) for loan losses ​ 1,124 ​ ( 388 ) ​ ( 475 ) ​ 85 ​ 346 Ending balance ​ $ 29,653 ​ $ 10,799 ​ $ 8,374 ​ $ 329 ​ $ 49,155 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended September 30, 2021 ​ ​ ​ Non-owner ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ commercial ​ Residential ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ real estate ​ real estate ​ Consumer ​ Total Beginning balance ​ $ 30,376 ​ $ 17,448 ​ $ 11,492 ​ $ 461 ​ $ 59,777 Charge-offs ​ ( 1,112 ) ​ — ​ ( 26 ) ​ ( 410 ) ​ ( 1,548 ) Recoveries ​ 316 ​ 7 ​ 47 ​ 110 ​ 480 Provision expense (release) for loan losses ​ 73 ​ ( 6,656 ) ​ ( 3,139 ) ​ 168 ​ ( 9,554 ) Ending balance ​ $ 29,653 ​ $ 10,799 ​ $ 8,374 ​ $ 329 ​ $ 49,155 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, 2020 ​ ​ ​ ​ ​ Non-owner ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ commercial ​ Residential ​ ​ ​ ​ ​ ​ ​ Commercial real estate real estate Consumer Total Beginning balance ​ $ 33,142 ​ $ 12,314 ​ $ 14,525 ​ $ 484 ​ $ 60,465 Charge-offs ​ ( 499 ) ​ — ​ ( 16 ) ​ ( 104 ) ​ ( 619 ) Recoveries ​ 104 ​ — ​ 4 ​ 25 ​ 133 Provision (release) expense for loan losses ​ ( 1,576 ) ​ 1,467 ​ 1,000 ​ 109 ​ 1,000 Ending balance ​ $ 31,171 ​ $ 13,781 ​ $ 15,513 ​ $ 514 ​ $ 60,979 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended September 30, 2020 ​ ​ ​ Non-owner ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ commercial ​ Residential ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ real estate ​ real estate ​ Consumer ​ Total Beginning balance ​ $ 30,442 ​ $ 4,850 ​ $ 3,468 ​ $ 304 ​ $ 39,064 Cumulative effect adjustment (1) ​ ​ ( 1,299 ) ​ ​ 1,666 ​ ​ 5,314 ​ ​ 155 ​ ​ 5,836 Charge-offs ​ ( 1,411 ) ​ — ​ ( 56 ) ​ ( 502 ) ​ ( 1,969 ) Recoveries ​ 370 ​ — ​ 24 ​ 121 ​ 515 Provision expense for loan losses ​ 3,069 ​ 7,265 ​ 6,763 ​ 436 ​ 17,533 Ending balance ​ $ 31,171 ​ $ 13,781 ​ $ 15,513 ​ $ 514 ​ $ 60,979 ​ ​ ​ (1) Related to the adoption of Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments . ​ In evaluating the loan portfolio for an appropriate ACL level, excluding loans evaluated individually, loans were grouped into segments based on broad characteristics such as primary use and underlying collateral. Within the segments, the portfolio was further disaggregated into classes of loans with similar attributes and risk characteristics for purposes of developing the underlying data used within the discounted cash flow model including, but not limited to, prepayment and recovery rates as well as loss rates tied to macro-economic conditions within management’s reasonable and supportable forecast. The ACL also includes subjective adjustments based upon qualitative risk factors including asset quality, loss trends, lending management, portfolio growth and loan review/internal audit results. 22 ​ Table of Contents ​ Net charge-offs on loans during the three and nine months ended September 30, 2021 were $ 0.2 million and $ 1.1 million , respectively. The Company recorded a net zero provision for loan losses for the three months ended September 30, 2021, as the provision expense of $ 0.3 million for funded loans was fully offset by a provision release of $ 0.3 million for unfunded loan commitments. During the nine months ended September 30, 2021, the Company recorded total provision release of $ 9.4 million, which included a provision release of $ 9.6 million for funded loans and a provision expense of $ 0.2 million for unfunded loan commitments. Provision release was driven by strong asset quality and an improved outlook in the CECL model’s underlying economic forecast. ​ Net charge-offs on loans during the three and nine months ended September 30, 2020 were $ 0.5 million and $ 1.5 million, respectively. The Company recorded total provision expense of $ 1.2 million for the three months ended September 30, 2020, which included a provision expense of $ 1.0 million for funded loans and a provision expense of $ 0.2 million for unfunded loan commitments. During the nine months ended September 30, 2020, the Company recorded total provision expense of $ 17.6 million, which included a provision expense of $ 17.5 million for funded loans and a provision expense of $ 0.1 million for unfunded loan commitments. Provision expense was recorded to provide coverage for the impact of deteriorating economic conditions as a result of COVID-19 and to support non-PPP originated loan growth. ​ The Company has elected to exclude AIR from the allowance for credit losses calculation. As of September 30, 2021 and December 31, 2020, AIR from loans totaled $ 17.6 million and $ 16.7 million, respectively. ​ Note 7 Other Real Estate Owned ​ A summary of the activity in other real estate owned (“OREO”) during the nine months ended September 30, 2021 and 2020 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ For the nine months ended September 30, ​ 2021 ​ 2020 Beginning balance $ 4,730 $ 7,300 Transfers from loan portfolio, at fair value 1,522 ​ 1,186 Impairments ( 799 ) ​ ( 423 ) Sales ( 1,128 ) ​ ( 3,473 ) Ending balance $ 4,325 ​ $ 4,590 ​ During the nine months ended September 30, 2021 and 2020, the Company sold OREO properties with net book balances of $ 1.1 million and $ 3.5 million, respectively. Sales of OREO properties resulted in net OREO losses of $ 0.2 million, which were included in the consolidated statements of operations for the nine months ended September 30, 2021. Net OREO gains of $ 0.1 million and $ 25 thousand were included in the consolidated statements of operations for the three and nine months ended September 30, 2020, respectively. ​ Note 8 Goodwill and Intangible Assets ​ Goodwill and core deposit intangible ​ In connection with our acquisitions, the Company recorded goodwill of $ 115.0 million. Goodwill is measured as the excess of the fair value of consideration paid over the fair value of net assets acquired. No goodwill impairment was recorded during the three or nine months ended September 30, 2021 or the year ended December 31, 2020. ​ The gross carrying amount of the core deposit intangibles and the associated accumulated amortization at September 30, 2021 and December 31, 2020, are presented as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ December 31, 2020 ​ Gross ​ ​ ​ ​ Net ​ Gross ​ ​ ​ ​ Net ​ carrying ​ Accumulated ​ carrying ​ carrying ​ Accumulated ​ carrying ​ amount ​ amortization ​ amount ​ amount ​ amortization ​ amount Core deposit intangible $ 48,834 $ ( 42,173 ) ​ $ 6,661 ​ $ 48,834 $ ( 41,286 ) ​ $ 7,548 ​ 23 ​ Table of Contents The Company is amortizing the core deposit intangibles from acquisitions on a straight-line basis over 7 - 10 years from the date of the respective acquisition, which represents the expected useful life of the assets. The Company recognized core deposit intangible amortization expense of $ 0.3 million and $ 0.9 million during the three and nine months ended September 30, 2021, respectively. During the three and nine months ended September 30, 2020, the Company recognized core deposit intangible amortization expense of $ 0.3 million and $ 0.9 million, respectively. ​ The following table shows the estimated future amortization expense for the core deposit intangibles as of September 30, 2021: ​ ​ ​ ​ Years ending December 31, ​ Amount For the three months ending December 31, 2021 $ 296 For the year ending December 31, 2022 ​ 1,127 For the year ending December 31, 2023 ​ 1,048 For the year ending December 31, 2024 ​ 1,048 For the year ending December 31, 2025 ​ 1,048 ​ Mortgage servicing rights ​ Mortgage servicing rights (“MSRs”) represent rights to service loans originated by the Company and sold to government-sponsored enterprises including FHLMC, FNMA, GNMA and FHLB and are included in intangible assets in the consolidated statements of financial condition. Mortgage loans serviced for others were $ 0.6 billion and $ 1.0 billion at September 30, 2021 and 2020, respectively. ​ Below are the changes in the MSRs for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the nine months ended September 30, ​ ​ 2021 ​ 2020 Beginning balance $ 10,380 $ 2,630 Originations ​ ​ 6,648 ​ ​ 6,627 Sales ​ ( 10,499 ) ​ — Recovery (impairment) ​ ​ 717 ​ ​ ( 847 ) Amortization ​ ( 2,286 ) ​ ( 1,237 ) Ending balance ​ ​ 4,960 ​ ​ 7,173 Fair value of mortgage servicing rights ​ $ 6,179 ​ $ 7,653 ​ During the three months ended September 30, 2021, the Company sold rights to service loans totaling $ 1.3 billion in unpaid principal balances from our mortgage servicing rights portfolio as a strategic move to reduce the risk associated with mortgage servicing. As a result of the sale, the book value of our mortgage servicing right intangible decreased $ 10.5 million and generated a gain of $ 1.3 million included in mortgage banking income in the consolidated statements of operations. ​ The fair value of MSRs was determined based upon a discounted cash flow analysis. The cash flow analysis included assumptions for discount rates and prepayment speeds. Discount rates ranged from 9.5 % to 10.0 %, and the constant prepayment speed ranged from 11.1 % to 14.9 % for the September 30, 2021 valuation. Discount rates ranged from 9.5 % to 10.5 %, and the constant prepayment speed ranged from 18.0 % to 21.8 % for the September 30, 2020 valuation. Included in mortgage banking income in the consolidated statements of operations was servicing income of $ 1.0 million and $ 3.0 million for the three and nine months ended September 30, 2021, respectively, and $ 0.5 million and $ 1.0 million for the three and nine months ended September 30, 2020, respectively. ​ MSRs are evaluated and impairment is recognized to the extent fair value is less than the carrying amount. The Company evaluates impairment by stratifying MSRs based on the predominant risk characteristics of the underlying loans, including loan type and loan term. The Company is amortizing the MSRs in proportion to and over the period of the estimated net servicing income of the underlying loans. ​ 24 ​ Table of Contents The following table shows the estimated future amortization expense for the MSRs as of September 30, 2021: ​ ​ ​ ​ Years ending December 31, ​ Amount For the three months ending December 31, 2021 $ 184 For the year ending December 31, 2022 ​ 708 For the year ending December 31, 2023 ​ 604 For the year ending December 31, 2024 ​ 515 For the year ending December 31, 2025 ​ 439 ​ ​ ​ ​ Note 9 Borrowings ​ The Company enters into repurchase agreements to facilitate the needs of its clients. As of September 30, 2021 and December 31, 2020, the Company sold securities under agreements to repurchase totaling $ 21.4 million and $ 22.9 million, respectively. The Company pledged mortgage-backed securities with a fair value of approximately $ 26.3 million and $ 27.7 million as of September 30, 2021 and December 31, 2020, respectively, for these agreements. The Company monitors collateral levels on a continuous basis and may be required to provide additional collateral based on the fair value of the underlying securities. As of September 30, 2021 and December 31, 2020, the Company had $ 4.9 million and $ 2.1 million, respectively, of excess collateral pledged for repurchase agreements. ​ As a member of the FHLB, the Bank has access to a line of credit and term financing from the FHLB with total available credit of $ 0.9 billion at September 30, 2021. The Bank may utilize its FHLB line of credit as a funding mechanism for originated loans and loans held for sale. At September 30, 2021 and December 31, 2020, the Bank had no outstanding borrowings from the FHLB. The Bank may pledge investment securities and loans as collateral for FHLB advances. There were no investment securities pledged at September 30, 2021 or December 31, 2020. Loans pledged were $ 1.3 billion and $ 1.2 billion at September 30, 2021 and December 31, 2020, respectively. There was no interest expense related to FHLB advances and other short-term borrowings for the three and nine months ended September 30, 2021, compared to $ 0.1 million and $ 1.3 million during the three and nine months ended September 30, 2020, respectively. ​ Note 10 Regulatory Capital ​ As a bank holding company, the Company is subject to regulatory capital adequacy requirements implemented by the Federal Reserve. The federal banking agencies have risk based capital adequacy regulations intended to provide a measure of capital adequacy that reflects the degree of risk associated with a banking organization’s operations. Under these regulations, assets are assigned to one of several risk categories, and nominal dollar amounts of assets and credit equivalent amounts of off-balance-sheet items are multiplied by a risk adjustment percentage for the category. ​ Under the Basel III requirements, at September 30, 2021 and December 31, 2020, the Company and the Bank met all capital requirements. The Bank had regulatory capital ratios in excess of the levels established for well-capitalized institutions, as detailed in the tables below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ ​ ​ ​ ​ ​ ​ Required to be ​ Required to be ​ ​ ​ ​ ​ ​ ​ well capitalized under ​ considered ​ ​ ​ ​ ​ ​ ​ prompt corrective ​ adequately ​ ​ Actual ​ action provisions ​ capitalized ​ Ratio Amount Ratio Amount Ratio Amount Tier 1 leverage ratio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated 10.4 % ​ $ 729,828 N/A ​ ​ N/A 4.0 % ​ $ 279,899 NBH Bank 8.9 % ​ 623,094 5.0 % ​ $ 349,554 4.0 % ​ 279,643 Common equity tier 1 risk based capital: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ 14.6 % ​ $ 729,828 ​ N/A ​ ​ N/A ​ 7.0 % ​ $ 350,589 NBH Bank ​ 12.5 % ​ ​ 623,094 ​ 6.5 % ​ $ 323,842 ​ 7.0 % ​ ​ 348,753 Tier 1 risk based capital ratio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated 14.6 % ​ $ 729,828 N/A ​ ​ N/A 8.5 % ​ $ 425,716 NBH Bank 12.5 % ​ 623,094 8.0 % ​ $ 398,575 8.5 % ​ 423,486 Total risk based capital ratio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated 15.5 % ​ $ 775,091 N/A ​ ​ N/A 10.5 % ​ $ 525,884 NBH Bank 13.4 % ​ 668,358 10.0 % ​ $ 498,219 10.5 % ​ 523,130 ​ 25 ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ ​ ​ ​ ​ ​ Required to be ​ Required to be ​ ​ ​ ​ ​ ​ ​ well capitalized under ​ considered ​ ​ ​ ​ ​ ​ ​ prompt corrective ​ adequately ​ ​ Actual ​ action provisions ​ capitalized ​ Ratio Amount Ratio Amount Ratio Amount Tier 1 leverage ratio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated 10.7 % ​ $ 696,311 N/A ​ ​ N/A 4.0 % ​ $ 260,370 NBH Bank 9.2 % ​ 600,622 5.0 % ​ $ 325,447 4.0 % ​ 260,358 Common equity tier 1 risk based capital: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ 14.7 % ​ $ 696,311 ​ N/A ​ ​ N/A ​ 7.0 % ​ $ 331,632 NBH Bank ​ 12.7 % ​ ​ 600,622 ​ 6.5 % ​ $ 307,631 ​ 7.0 % ​ ​ 331,295 Tier 1 risk based capital ratio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated 14.7 % ​ $ 696,311 N/A ​ ​ N/A 8.5 % ​ $ 402,696 NBH Bank 12.7 % ​ 600,622 8.0 % ​ $ 378,623 8.5 % ​ 402,287 Total risk based capital ratio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated 15.8 % ​ $ 749,899 N/A ​ ​ N/A 10.5 % ​ $ 497,448 NBH Bank 13.8 % ​ 654,209 10.0 % ​ $ 473,279 10.5 % ​ 496,943 ​ ​ ​ Note 11 Revenue from Contracts with Clients ​ Revenue is recognized when obligations under the terms of a contract with clients are satisfied. Below is the detail of the Company’s revenue from contracts with clients. ​ Service charges and other fees ​ Service charge fees are primarily comprised of monthly service fees, check orders and other deposit account related fees. Other fees include revenue from processing wire transfers, bill pay service, cashier’s checks and other services. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account-related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to clients’ accounts. ​ Bank card fees ​ Bank card fees are primarily comprised of debit card income, ATM fees, merchant services income and other fees. Debit card income is primarily comprised of interchange fees earned whenever the Company’s debit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a Bank cardholder uses a non-Bank ATM or a non-Bank cardholder uses a Bank ATM. Merchant services income mainly represents fees charged to merchants to process their debit card transactions. The Company’s performance obligation for bank card fees are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month. ​ Gain on OREO sales, net ​ Gain on OREO sales, net is recognized when the Company meets its performance obligation to transfer title to the buyer. The gain or loss is measured as the excess of the proceeds received compared to the OREO carrying value. Sales proceeds are received in cash at the time of transfer. ​ 26 ​ Table of Contents The following table presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, and non-interest expense in-scope of Topic 606 for the three and nine months ended September 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended September 30, ​ For the nine months ended September 30, ​ 2021 2020 ​ 2021 2020 Non-interest income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In-scope of Topic 606: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service charges and other fees ​ $ 5,286 ​ $ 4,246 ​ $ 13,653 ​ $ 12,453 Bank card fees ​ ​ 4,530 ​ ​ 4,039 ​ ​ 13,217 ​ ​ 11,206 Non-interest income (in-scope of Topic 606) ​ ​ 9,816 ​ ​ 8,285 ​ ​ 26,870 ​ ​ 23,659 Non-interest income (out-of-scope of Topic 606) ​ ​ 18,706 ​ ​ 36,247 ​ ​ 60,279 ​ ​ 83,242 Total non-interest income ​ $ 28,522 ​ $ 44,532 ​ $ 87,149 ​ $ 106,901 Non-interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In-scope of Topic 606: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain (loss) on OREO sales, net ​ $ — ​ $ 119 ​ $ ( 192 ) ​ $ 25 Total revenue in-scope of Topic 606 ​ $ 9,816 ​ $ 8,404 ​ $ 26,678 ​ $ 23,684 ​ Contract acquisition costs ​ The Company utilizes the practical expedient which allows entities to expense immediately contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less. The Company has not capitalized any contract acquisition costs. ​ Note 12 Stock-based Compensation and Benefits ​ The Company provides stock-based compensation in accordance with shareholder-approved plans and is authorized to issue awards of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, other stock-based awards, or any combination thereof to eligible persons. ​ Stock options ​ The Company issues stock options, which are primarily time-vesting with 1/3 vesting on each of the first, second and third anniversary of the date of grant or date of hire. ​ The expense associated with the awarded stock options was measured at fair value using a Black-Scholes option-pricing model. The outstanding option awards vest or have vested on a graded basis over 1 - 4 years of continuous service and have 10 -year contractual terms. ​ The following table summarizes stock option activity for the nine months ended September 30, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ average ​ ​ ​ ​ ​ ​ ​ Weighted ​ remaining ​ ​ ​ ​ ​ ​ ​ average ​ contractual ​ Aggregate ​ ​ ​ ​ exercise ​ term in ​ intrinsic ​ ​ Options ​ price ​ years ​ value Outstanding at December 31, 2020 768,129 ​ $ 26.35 6.91 ​ $ 5,224 Granted 81,438 ​ 40.10 ​ ​ ​ ​ ​ Exercised ​ ( 75,986 ) ​ ​ 27.51 ​ ​ ​ ​ ​ Forfeited ( 25,915 ) ​ 27.73 ​ ​ ​ ​ ​ Outstanding at September 30, 2021 747,666 ​ $ 27.68 6.62 ​ $ 9,566 Options exercisable at September 30, 2021 490,448 ​ ​ 26.32 5.60 ​ ​ 6,980 Options vested and expected to vest 724,844 ​ ​ 27.55 6.55 ​ ​ 9,373 ​ Stock option expense is a component of salaries and benefits in the consolidated statements of operations and totaled $ 0.1 million and $ 0.7 million for the three and nine months ended September 30, 2021, respectively, and $ 0.1 million and $ 0.8 million for the three and nine months ended September 30, 2020, respectively. At September 30, 2021, there was $ 0.5 million of total unrecognized 27 ​ Table of Contents compensation cost related to non-vested stock options granted under the plans. The cost is expected to be recognized over a weighted average period of 2.2 years. ​ Restricted stock awards ​ The Company issues primarily time-based restricted stock awards that vest over a range of a 1 - 3 year period. Restricted stock with time-based vesting was valued at the fair value of the shares on the date of grant as they are assumed to be held beyond the vesting period. ​ Performance stock units ​ The Company grants performance stock units which represent initial target awards and do not reflect potential increases or decreases resulting from the final performance results, which are to be determined at the end of the three-year performance period (vesting date). The actual number of shares to be awarded at the end of the performance period will range from 0 % - 150 % of the initial target awards. For awards granted prior to 2020, 60 % of the award is based on the Company’s cumulative earnings per share (EPS target) during the performance period, and 40 % of the award is based on the Company’s cumulative total shareholder return (TSR target), or TSR, during the performance period. On the vesting date, the Company’s TSR will be compared to the respective TSRs of the companies comprising the KBW Regional Index at the grant date to determine the shares awarded. The fair value of the EPS target portion of the award was determined based on the closing stock price of the Company’s common stock on the grant date. The fair value of the TSR target portion of the award was determined using a Monte Carlo Simulation at the grant date. ​ In establishing the PSU components during 2021 and 2020, the Compensation Committee determined the EPS target portion of the award would not be an effective metric in light of economic uncertainty surrounding COVID-19. Consequently, the Compensation Committee granted an award based upon a relative return on tangible assets (“ROTA”). Annually, the Company’s ROTA will be compared to the respective ROTA of companies comprising the KBW Regional Index. At the end of the measurement period, the Company’s ranking will be averaged to determine the shares awarded. The fair value of the relative ROTA award was determined based on the closing stock price of the Company’s common stock on the grant date. ​ The weighted-average grant date fair value per unit for the relative ROTA target portion and the TSR target portion granted during 2021 was $ 40.16 and $ 33.11 , respectively. The initial weighted-average performance price for the TSR target portion granted during 2021 was $ 33.04 . During the nine months ended September 30, 2021, the Company awarded an additional 30,024 units due to final performance results related to performance stock units granted in 2018. ​ The following table summarizes restricted stock and performance stock unit activity during the nine months ended September 30, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ Restricted ​ average grant- ​ Performance ​ ​ average grant- ​ ​ stock shares ​ date fair value ​ stock units ​ ​ date fair value Unvested at December 31, 2020 ​ 166,630 ​ $ 27.42 ​ 184,837 ​ $ 29.21 Granted ​ 86,084 ​ ​ 39.80 ​ 52,526 ​ ​ 37.01 Adjustment due to performance ​ — ​ ​ — ​ 30,024 ​ ​ 30.38 Vested ​ ( 77,679 ) ​ ​ 28.56 ​ ( 90,016 ) ​ ​ 30.38 Forfeited ​ ( 19,568 ) ​ ​ 29.32 ​ ( 16,977 ) ​ ​ 28.96 Unvested at September 30, 2021 ​ 155,467 ​ $ 33.47 ​ 160,394 ​ $ 31.36 ​ As of September 30, 2021, the total unrecognized compensation cost related to the non-vested restricted stock awards and performance stock units totaled $ 3.0 million and $ 2.9 million, respectively, and is expected to be recognized over a weighted average period of approximately 2.1 years and 1.9 years, respectively. Expense related to non-vested restricted stock awards totaled $ 0.8 million and $ 2.0 million during the three and nine months ended September 30, 2021, respectively, and $ 0.7 million and $ 1.9 million during the three and nine months ended September 30, 2020, respectively. Expense related to non-vested performance stock units totaled $ 0.8 million and $ 1.5 million during the three and nine months ended September 30, 2021, respectively, and $ 0.4 million and $ 1.3 million during the three and nine months ended September 30, 2020, respectively. Expense related to non-vested restricted stock awards and units is a component of salaries and benefits in the Company’s consolidated statements of operations. ​ 28 ​ Table of Contents Employee stock purchase plan ​ The 2014 Employee Stock Purchase Plan (“ESPP”) is intended to be a qualified plan within the meaning of Section 423 of the Internal Revenue Code of 1986 and allows eligible employees to purchase shares of common stock through payroll deductions up to a limit of $ 25,000 per calendar year and 2,000 shares per offering period. The price an employee pays for shares is 90.0 % of the fair market value of Company common stock on the last day of the offering period. The offering periods are the six-month periods commencing on March 1 and September 1 of each year and ending on August 31 and February 28 (or February 29 in the case of a leap year) of each year. There are no vesting or other restrictions on the stock purchased by employees under the ESPP. Under the ESPP, the total number of shares of common stock reserved for issuance totaled 400,000 shares, of which 281,896 was available for issuance at September 30, 2021. ​ Under the ESPP, employees purchased 20,980 shares and 23,212 shares during the nine months ended September 30, 2021 and 2020, respectively. ​ ​ ​ Note 13 Common Stock ​ The Company had 30,288,131 and 30,634,291 shares of Class A common stock outstanding at September 30, 2021 and December 31, 2020, respectively. Additionally, the Company had 155,467 and 166,630 shares outstanding at September 30, 2021 and December 31, 2020, respectively, of restricted Class A common stock issued but not yet vested under the 2014 Omnibus Incentive Plan that are not included in shares outstanding until such time that they are vested; however, these shares do have voting and certain dividend rights during the vesting period. ​ On February 24, 2021, the Company’s Board of Directors authorized a new program to repurchase up to $ 75.0 million of the Company’s stock from time to time in either the open market or through privately negotiated transactions. The new program of $ 75.0 million replaced the previously authorized $ 50.0 million stock repurchase program announced in February 2020 in its entirety. During the third quarter of 2021, the Company repurchased 527,214 shares for $ 19.4 million at a weighted average price per share of $ 36.72 . The remaining authorization under the current program as of September 30, 2021 was $ 55.6 million. ​ Note 14 Earnings Per Share ​ The Company calculates earnings per share under the two-class method, as certain non-vested share awards contain non-forfeitable rights to dividends. As such, these awards are considered securities that participate in the earnings of the Company. Non-vested shares are discussed further in note 12. ​ The Company had 30,288,131 and 30,594,412 shares of Class A common stock outstanding as of September 30, 2021 and 2020, respectively, exclusive of issued non-vested restricted shares. Certain stock options and non-vested restricted shares are potentially dilutive securities, but are not included in the calculation of diluted earnings per share because to do so would have been anti-dilutive for the three and nine months ended September 30, 2021 and 2020. ​ 29 ​ Table of Contents The following table illustrates the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ For the nine months ended ​ September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 Net income ​ $ 19,825 ​ $ 27,893 ​ $ 70,837 ​ $ 61,422 Less: income allocated to participating securities ​ ( 34 ) ​ ( 36 ) ​ ( 101 ) ​ ( 96 ) Income allocated to common shareholders ​ $ 19,791 ​ $ 27,857 ​ $ 70,736 ​ $ 61,326 Weighted average shares outstanding for basic earnings per common share ​ 30,800,590 ​ 30,756,116 ​ 30,858,759 ​ 30,881,325 Dilutive effect of equity awards ​ 264,225 ​ 168,107 ​ 303,373 ​ 189,672 Weighted average shares outstanding for diluted earnings per common share ​ 31,064,815 ​ 30,924,223 ​ 31,162,132 ​ 31,070,997 Basic earnings per share ​ $ 0.64 ​ $ 0.91 ​ $ 2.29 ​ $ 1.99 Diluted earnings per share ​ ​ 0.64 ​ ​ 0.90 ​ ​ 2.27 ​ ​ 1.97 ​ The Company had 747,666 and 802,454 outstanding stock options to purchase common stock at weighted average exercise prices of $ 27.68 and $ 26.18 per share at September 30, 2021 and 2020, respectively, which have time-vesting criteria, and as such, any dilution is derived only for the time frame in which the vesting criteria had been met and where the inclusion of those stock options is dilutive. The Company had 315,861 and 364,485 unvested restricted shares and performance stock units issued as of September 30, 2021 and 2020, respectively, which have performance, market and/or time-vesting criteria, and as such, any dilution is derived only for the time frame in which the vesting criteria had been met and where the inclusion of those restricted shares and units is dilutive. ​ Note 15 Derivatives ​ Risk management objective of using derivatives ​ The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company has established policies that neither carrying value nor fair value at risk should exceed established guidelines. The Company has designed strategies to confine these risks within the established limits and identify appropriate trade-offs in the financial structure of its balance sheet. These strategies include the use of derivative financial instruments to help achieve the desired balance sheet repricing structure while meeting the desired objectives of its clients. Currently, the Company employs certain interest rate swaps that are designated as fair value hedges as well as economic hedges. The Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions. ​ 30 ​ Table of Contents Fair values of derivative instruments on the balance sheet ​ The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the consolidated statements of financial condition as of September 30, 2021 and December 31, 2020. Information about the valuation methods used to measure fair value is provided in note 17. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Asset derivatives fair value ​ ​ ​ Liability derivatives fair value ​ ​ Balance Sheet ​ September 30, ​ December 31, ​ Balance Sheet ​ September 30, ​ December 31, ​ location 2021 2020 Location 2021 2020 Derivatives designated as hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate products Other assets ​ $ 533 ​ $ — Other liabilities ​ $ 18,555 ​ $ 38,884 Total derivatives designated as hedging instruments ​ ​ ​ $ 533 ​ $ — ​ ​ ​ $ 18,555 ​ $ 38,884 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivatives not designated as hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate products Other assets ​ $ 10,535 ​ $ 18,149 Other liabilities ​ $ 10,548 ​ $ 18,176 Interest rate lock commitments ​ Other assets ​ ​ 2,170 ​ ​ 7,001 ​ Other liabilities ​ ​ 448 ​ ​ 298 Forward contracts ​ Other assets ​ ​ 1,022 ​ ​ — ​ Other liabilities ​ ​ 31 ​ ​ 2,622 Total derivatives not designated as hedging instruments ​ ​ ​ $ 13,727 ​ $ 25,150 ​ ​ ​ $ 11,027 ​ $ 21,096 ​ Fair value hedges ​ Interest rate swaps designated as fair value hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount. As of September 30, 2021, the Company had interest rate swaps with a notional amount of $ 350.3 million, which were designated as fair value hedges of interest rate risk. As of December 31, 2020, the Company had interest rate swaps with a notional amount of $ 387.1 million that were designated as fair value hedges. These interest rate swaps were associated with $ 350.3 million and $ 389.9 million of the Company’s fixed-rate loans as of September 30, 2021 and December 31, 2020, respectively, before a gain of $ 22.9 million and $ 40.1 million from the fair value hedge adjustment in the carrying amount, included in loans receivable in the statements of financial condition as of September 30, 2021 and December 31, 2020. ​ For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in earnings. The Company includes the gain or loss on the hedged items in the same line item as the offsetting loss or gain on the related derivatives. ​ Non-designated hedges ​ Derivatives not designated as hedges are not speculative and consist of interest rate swaps with commercial banking clients that facilitate their respective risk management strategies. Interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the client swaps and the offsetting swaps are recognized directly in earnings. As of September 30, 2021, the Company had matched interest rate swap transactions with an aggregate notional amount of $ 408.9 million related to this program. As of December 31, 2020, the Company had matched interest rate swap transactions with an aggregate notional amount of $ 456.0 million. ​ As part of its mortgage banking activities, the Company enters into interest rate lock commitments, which are commitments to originate loans where the interest rate on the loan is determined prior to funding and the clients have locked into that interest rate. The Company then locks in the loan and interest rate with an investor and commits to deliver the loan if settlement occurs (&quot;best efforts&quot;) or commits to deliver the locked loan in a binding (&quot;mandatory&quot;) delivery program with an investor. Fair value changes of certain loans under interest rate lock commitments are hedged with forward sales contracts of MBS. Forward sales contracts of MBS are recorded at fair value with changes in fair value recorded in non-interest income. Interest rate lock commitments and commitments to deliver loans to investors are considered derivatives. The market value of interest rate lock commitments and best efforts contracts are not readily ascertainable with precision because they are not actively traded in stand-alone markets. The Company determines the fair value of interest rate lock commitments and delivery contracts by measuring the fair value of the underlying assets. The fair value of 31 ​ Table of Contents the underlying assets is impacted by current interest rates, remaining origination fees, costs of production to be incurred and the probability that the interest rate lock commitments will close or will be funded. ​ Certain additional risks arise from these forward delivery contracts in that the counterparties to the contracts may not be able to meet the terms of the contracts. The Company does not expect any counterparty to any MBS contract to fail to meet its obligation. Additional risks inherent in mandatory delivery programs include the risk that, if the Company fails to deliver the loans subject to interest rate risk lock commitments, it will still be obligated to “pair off” MBS to the counterparty. Should this be required, the Company could incur significant costs in acquiring replacement loans and such costs could have an adverse effect on the consolidated financial statements. ​ The fair value of the mortgage banking derivative is recorded as a freestanding asset or liability with the change in value being recognized in current earnings during the period of change. ​ The Company had interest rate lock commitments with a notional value of $ 171.4 million and forward contracts with a notional value of $ 267.5 million at September 30, 2021. At December 31, 2020, the Company had interest rate lock commitments with a notional value of $ 258.8 million and forward contracts with a notional value of $ 375.3 million . ​ Effect of derivative instruments on the consolidated statements of operations ​ The tables below present the effect of the Company’s derivative financial instruments in the consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Location of gain (loss) ​ Amount of gain recognized in income on derivatives Derivatives in fair value ​ recognized in income on ​ For the three months ended September 30, ​ For the nine months ended September 30, hedging relationships derivatives 2021 2020 2021 2020 Interest rate products Interest and fees on loans ​ $ 9,057 ​ $ 5,043 ​ $ 1,829 ​ $ 1,310 Total ​ ​ ​ $ 9,057 ​ $ 5,043 ​ $ 1,829 ​ $ 1,310 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Location of gain (loss) ​ Amount of loss recognized in income on hedged items ​ ​ recognized in income on ​ For the three months ended September 30, ​ For the nine months ended September 30, Hedged items hedged items 2021 2020 2021 2020 Interest rate products Interest and fees on loans ​ $ ( 8,321 ) $ ( 4,993 ) ​ $ ( 3,164 ) $ ( 2,869 ) Total ​ ​ ​ $ ( 8,321 ) $ ( 4,993 ) ​ $ ( 3,164 ) $ ( 2,869 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Location of gain (loss) ​ Amount of gain (loss) recognized in income on derivatives Derivatives not designated ​ recognized in income on ​ For the three months ended September 30, ​ For the nine months ended September 30, as hedging instruments derivatives 2021 2020 2021 2020 Interest rate products Other non-interest expense $ 8 $ 8 ​ $ 18 $ ( 65 ) Interest rate lock commitments ​ Mortgage banking income ​ ​ ( 861 ) ​ ​ 3,243 ​ ​ ( 5,962 ) ​ ​ 14,174 Forward contracts ​ Mortgage banking income ​ ​ 1,229 ​ ​ 1,558 ​ ​ 3,613 ​ ​ ( 532 ) Total ​ ​ $ 376 $ 4,809 ​ $ ( 2,331 ) $ 13,577 ​ Credit-risk-related contingent features ​ The Company has agreements with its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness for reasons other than an error or omission of an administrative or operational nature, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. ​ The Company also has agreements with certain of its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well/adequately capitalized institution, then the counterparty has the right to terminate the derivative positions and the Company would be required to settle its obligations under the agreements. ​ As of September 30, 2021, the termination value of derivatives in a net liability position related to these agreements was $ 30.2 million, which includes accrued interest but excludes any adjustment for nonperformance risk. The Company has minimum collateral posting thresholds with certain of its derivative counterparties and, as of September 30, 2021, the Company had posted $ 32.6 million in eligible collateral. If the Company had breached any of these provisions at September 30, 2021, it could have been required to settle its obligations under the agreements at the termination value. 32 ​ Table of Contents ​ Note 16 Commitments and Contingencies ​ In the normal course of business, the Company enters into various off-balance sheet commitments to help meet the financing needs of clients. These financial instruments include commitments to extend credit, commercial and consumer lines of credit and standby letters of credit. The same credit policies are applied to these commitments as the loans in the consolidated statements of financial condition; however, these commitments involve varying degrees of credit risk in excess of the amount recognized in the consolidated statements of financial condition. The total amounts of unused commitments do not necessarily represent future credit exposure or cash requirements, as commitments often expire without being drawn upon. However, the contractual amount of these commitments, offset by any additional collateral pledged, represents the Company’s potential credit loss exposure. ​ Total unfunded commitments at September 30, 2021 and December 31, 2020 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 December 31, 2020 Commitments to fund loans ​ $ 476,573 ​ $ 311,237 Unfunded commitments under lines of credit ​ 558,771 ​ 537,325 Commercial and standby letters of credit ​ 16,193 ​ 7,320 Total unfunded commitments ​ $ 1,051,537 ​ $ 855,882 ​ Commitments to fund loans —Commitments to fund loans are legally binding agreements to lend to clients in accordance with predetermined contractual provisions providing there have been no violations of any conditions specified in the contract. These commitments are generally at variable interest rates and are for specific periods or contain termination clauses and may require the payment of a fee. The total amounts of unused commitments are not necessarily representative of future credit exposure or cash requirements, as commitments often expire without being drawn upon. ​ Unfunded commitments under lines of credit —In the ordinary course of business, the Company extends revolving credit to its clients. These arrangements may require the payment of a fee. ​ Commercial and standby letters of credit —As a provider of financial services, the Company routinely issues commercial and standby letters of credit, which may be financial standby letters of credit or performance standby letters of credit. These are various forms of “back-up” commitments to guarantee the performance of a client to a third party. While these arrangements represent a potential cash outlay for the Company, the majority of these letters of credit will expire without being drawn upon. Letters of credit are subject to the same underwriting and credit approval process as traditional loans, and as such, many of them have various forms of collateral securing the commitment, which may include real estate, personal property, receivables or marketable securities. ​ Contingencies ​ Mortgage loans sold to investors may be subject to repurchase or indemnification in the event of specific default by the borrower or subsequent discovery that underwriting standards were not met. The Company established a reserve liability for expected losses related to these representations and warranties based upon management’s evaluation of actual and historic loss history, delinquency trends in the portfolio and economic conditions. Charges against the reserve during the three and nine months ended September 30, 2021 and 2020 were driven by early payoffs and repurchases. The repurchase reserve is included in other liabilities in the consolidated statements of financial condition. ​ The following table summarizes mortgage repurchase reserve activity for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended September 30, ​ For the nine months ended September 30, ​ ​ 2021 ​ 2020 ​ 2021 ​ 2020 Beginning balance ​ $ 2,398 ​ $ 2,725 ​ $ 2,741 ​ $ 2,589 Provision charged to (released from) operating expense, net ​ ​ 39 ​ ​ 285 ​ ​ ( 62 ) ​ ​ 604 Charge-offs ​ ​ ( 150 ) ​ ​ ( 214 ) ​ ​ ( 392 ) ​ ​ ( 397 ) Ending balance ​ $ 2,287 ​ $ 2,796 ​ $ 2,287 ​ $ 2,796 ​ 33 ​ Table of Contents In the ordinary course of business, the Company and the Bank may be subject to litigation. Based upon the available information and advice from the Company’s legal counsel, management does not believe that any potential, threatened or pending litigation to which it is a party will have a material adverse effect on the Company’s liquidity, financial condition or results of operations. ​ Note 17 Fair Value Measurements ​ The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to disclose the fair value of its financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. For disclosure purposes, the Company groups its financial and non-financial assets and liabilities into three different levels based on the nature of the instrument and the availability and reliability of the information that is used to determine fair value. The three levels are defined as follows: ​ ● Level 1—Includes assets or liabilities in which the valuation methodologies are based on unadjusted quoted prices in active markets for identical assets or liabilities. ● Level 2—Includes assets or liabilities in which the inputs to the valuation methodologies are based on similar assets or liabilities in inactive markets, quoted prices for identical or similar assets or liabilities in inactive markets, and inputs other than quoted prices that are observable, such as interest rates, yield curves, volatilities, prepayment speeds and other inputs obtained from observable market input. ● Level 3—Includes assets or liabilities in which the inputs to the valuation methodology are based on at least one significant assumption that is not observable in the marketplace. These valuations may rely on management’s judgment and may include internally-developed model-based valuation techniques. ​ Level 1 inputs are considered to be the most transparent and reliable and level 3 inputs are considered to be the least transparent and reliable. The Company assumes the use of the principal market to conduct a transaction of each particular asset or liability being measured and then considers the assumptions that market participants would use when pricing the asset or liability. Whenever possible, the Company first looks for quoted prices for identical assets or liabilities in active markets (level 1 inputs) to value each asset or liability. However, when inputs from identical assets or liabilities on active markets are not available, the Company utilizes market observable data for similar assets and liabilities. The Company maximizes the use of observable inputs and limits the use of unobservable inputs to occasions when observable inputs are not available. The need to use unobservable inputs generally results from the lack of market liquidity of the actual financial instrument or of the underlying collateral. While third-party price indications may be available in those cases, limited trading activity can challenge the observability of those inputs. ​ Changes in the valuation inputs used for measuring the fair value of financial instruments may occur due to changes in current market conditions or other factors. Such changes may necessitate a transfer of the financial instruments to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfer occurs. During the nine months ended September 30, 2021 and 2020, there were no transfers of financial instruments between the hierarchy levels. ​ The following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of each instrument under the valuation hierarchy: ​ Fair Value of Financial Instruments Measured on a Recurring Basis ​ Investment securities available-for-sale —Investment securities available-for-sale are carried at fair value on a recurring basis. To the extent possible, observable quoted prices in an active market are used to determine fair value and, as such, these securities are classified as level 1. At September 30, 2021 and December 31, 2020, the Company did not hold any level 1 securities. When quoted market prices in active markets for identical assets or liabilities are not available, quoted prices of securities with similar characteristics, discounted cash flows or other pricing characteristics are used to estimate fair values and the securities are then classified as level 2. ​ Loans held for sale —The Company has elected to record loans originated and intended for sale in the secondary market at estimated fair value. The portfolio consists primarily of fixed rate residential mortgage loans that are sold within 45 days . The Company estimates fair value based on quoted market prices for similar loans in the secondary market and are classified as level 2. ​ Interest rate swap derivatives —The Company's derivative instruments are limited to interest rate swaps that may be accounted for as fair value hedges or non-designated hedges. The fair values of the swaps incorporate credit valuation adjustments in order to 34 ​ Table of Contents appropriately reflect nonperformance risk in the fair value measurements. The credit valuation adjustment is the dollar amount of the fair value adjustment related to credit risk and utilizes a probability weighted calculation to quantify the potential loss over the life of the trade. The credit valuation adjustments are calculated by determining the total expected exposure of the derivatives (which incorporates both the current and potential future exposure) and then applying the respective counterparties’ credit spreads to the exposure offset by marketable collateral posted, if any. Certain derivative transactions are executed with counterparties who are large financial institutions (&quot;dealers&quot;). International Swaps and Derivative Association Master Agreements (&quot;ISDA&quot;) and Credit Support Annexes (&quot;CSA&quot;) are employed for all contracts with dealers. These contracts contain bilateral collateral arrangements. The fair value inputs of these financial instruments are determined using discounted cash flow analysis through the use of third-party models whose significant inputs are readily observable market parameters, primarily yield curves, with appropriate adjustments for liquidity and credit risk, and are classified as level 2. ​ Mortgage banking derivatives —The Company relies on a third-party pricing service to value its mortgage banking derivative financial assets and liabilities, which the Company classifies as a level 3 valuation. The external valuation model to estimate the fair value of its interest rate lock commitments to originate residential mortgage loans held for sale includes grouping the interest rate lock commitments by interest rate and terms, applying an average 82.3 % estimated pull-through rate based on historical experience, and then multiplying by quoted investor prices determined to be reasonably applicable to the loan commitment groups based on interest rate, terms and rate lock expiration dates of the loan commitment groups. The Company also relies on an external valuation model to estimate the fair value of its forward commitments to sell residential mortgage loans (i.e., an estimate of what the Company would receive or pay to terminate the forward delivery contract based on market prices for similar financial instruments), which includes matching specific terms and maturities of the forward commitments against applicable investor pricing. ​ The tables below present the financial instruments measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 in the consolidated statements of financial condition utilizing the hierarchy structure described above: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ ​ Level 1 ​ Level 2 ​ Level 3 ​ Total Assets: ​ ​ ​ ​ Investment securities available-for-sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ $ — ​ $ 242,302 ​ $ — ​ $ 242,302 Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ — ​ 412,555 ​ — ​ 412,555 Municipal securities ​ ​ — ​ ​ 313 ​ ​ — ​ ​ 313 Corporate debt ​ ​ — ​ 2,137 ​ — ​ 2,137 Loans held for sale ​ — ​ 158,066 ​ — ​ 158,066 Interest rate swap derivatives ​ — ​ 11,068 ​ — ​ 11,068 Mortgage banking derivatives ​ ​ — ​ ​ — ​ ​ 3,192 ​ ​ 3,192 Total assets at fair value ​ $ — ​ $ 826,441 ​ $ 3,192 ​ $ 829,633 Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate swap derivatives ​ $ — ​ $ 29,103 ​ $ — ​ $ 29,103 Mortgage banking derivatives ​ ​ — ​ ​ — ​ ​ 479 ​ ​ 479 Total liabilities at fair value ​ $ — ​ $ 29,103 ​ $ 479 ​ $ 29,582 ​ ​ 35 ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities available-for-sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ $ — ​ $ 196,334 ​ $ — ​ $ 196,334 Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ — ​ 462,779 ​ — ​ 462,779 Municipal securities ​ ​ — ​ ​ 318 ​ ​ — ​ ​ 318 Corporate debt ​ ​ — ​ ​ 1,998 ​ ​ — ​ ​ 1,998 Loans held for sale ​ — ​ 247,813 ​ — ​ 247,813 Interest rate swap derivatives ​ — ​ 18,149 ​ — ​ 18,149 Mortgage banking derivatives ​ ​ — ​ ​ — ​ ​ 7,001 ​ ​ 7,001 Total assets at fair value ​ $ — ​ $ 927,391 ​ $ 7,001 ​ $ 934,392 Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate swap derivatives ​ $ — ​ $ 57,060 ​ $ — ​ $ 57,060 Mortgage banking derivatives ​ ​ — ​ ​ — ​ ​ 2,920 ​ ​ 2,920 Total liabilities at fair value ​ $ — ​ $ 57,060 ​ $ 2,920 ​ $ 59,980 ​ The table below details the changes in level 3 financial instruments during the nine months ended September 30, 2021: ​ ​ ​ ​ ​ ​ ​ Mortgage banking ​ ​ ​ derivatives, net Balance at December 31, 2020 ​ $ 4,081 Gain included in earnings, net ​ ​ ( 2,349 ) Fees and costs included in earnings, net ​ 981 Balance at September 30, 2021 ​ $ 2,713 ​ Fair Value of Financial Instruments Measured on a Non-recurring Basis ​ Certain assets may be recorded at fair value on a non-recurring basis as conditions warrant. These non-recurring fair value measurements typically result from the application of lower of cost or fair value accounting or a write-down occurring during the period. ​ Individually evaluated loans —The Company records individually evaluated loans based on the fair value of the collateral when it is probable that the Company will be unable to collect all contractual amounts due in accordance with the terms of the loan agreement. The Company relies on third-party appraisals and internal assessments, utilizing a discount rate in the range of 6 % - 26 % with a weighted average discount rate of 9.5 %, in determining the estimated fair values of these loans. The inputs used to determine the fair values of loans are considered level 3 inputs in the fair value hierarchy. At September 30, 2021, the Company recorded a specific reserve of $ 1.2 million related to five loans with a carrying balance of $ 4.7 million. At September 30, 2020, the Company recorded a specific reserve of $ 1.1 million related to six loans with a carrying balance of $ 4.6 million. ​ OREO —OREO is recorded at the fair value of the collateral less estimated selling costs using a range of 6 % to 10 % with a weighted average discount rate of 7.0 %. The estimated fair values of OREO are updated periodically and further write-downs may be taken to reflect a new basis. The Company recognized $ 799 thousand of OREO impairment during the nine months ended September 30, 2021 and $ 423 thousand of OREO impairment during the nine months ended September 30, 2020 in its consolidated statements of operations. The fair values of OREO are derived from third-party price opinions or appraisals that generally use an income approach or a market value approach. If reasonable comparable appraisals are not available, the Company may use internally developed models to determine fair values. The inputs used to determine the fair value of OREO properties are considered level 3 inputs in the fair value hierarchy. ​ Mortgage servicing rights — MSRs represent the value associated with servicing residential real estate loans that have been sold to outside investors with servicing retained. The fair value for servicing assets is determined through discounted cash flow analysis and utilizes discount rates ranging from 9.5 % to 10.0 % with a weighted average rate of 9.5 % at September 30, 2021 and prepayment speed 36 ​ Table of Contents assumption ranges of 11.1 % to 14.9 % with a weighted average rate of 11.2 % at September 30, 2021. The weighted average MSRs are subject to impairment testing. The carrying values of these MSRs are reviewed quarterly for impairment based upon the calculation of fair value. For purposes of measuring impairment, the MSRs are stratified into certain risk characteristics including note type and note term. If the valuation model reflects a value less than the carrying value, MSRs are adjusted to fair value through a valuation allowance and the adjustment is included in mortgage banking income in the consolidated statements of operations. There was $ 0.7 million of recovery on MSRs during the nine months ended September 30, 2021, compared to $ 0.8 million of impairment during the nine months ended September 30, 2020. The inputs used to determine the fair values of MSRs are considered level 3 inputs in the fair value hierarchy. ​ Premises and equipment —During the first quarter of 2021, the Company approved plans to consolidate seven banking centers. Premises and equipment held-for-sale are written down to estimated fair value less costs to sell in the period in which the held-for-sale criteria are met. Fair value is estimated in a process that considers current local commercial real estate market conditions, the judgment of the sales agent and often involves obtaining third-party appraisals from certified real estate appraisers. These fair value measurements are classified as level 3. Unobservable inputs to these measurements, which include estimates and judgments often used in conjunction with appraisals, are not readily quantifiable. As of September 30, 2021, the Company recognized $ 1.6 million of impairment in its consolidated statements of operations related to premises and equipment classified as held-for-sale totaling $ 6.0 million. ​ The Company may be required to record fair value adjustments on other available-for-sale and municipal securities valued at par on a non-recurring basis. ​ The tables below provide information regarding the assets recorded at fair value on a non-recurring basis as of and for the nine months ended September 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ ​ Total ​ Losses from fair value changes Individually evaluated loans ​ $ 19,406 ​ $ 1,548 Other real estate owned ​ 4,325 ​ 799 Premises and equipment ​ 6,032 ​ ​ 1,552 Total ​ $ 29,763 ​ $ 3,899 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2020 ​ ​ Total ​ Losses from fair value changes Individually evaluated loans ​ $ 33,603 ​ $ 1,969 Other real estate owned ​ 4,590 ​ ​ 423 Premises and equipment ​ 8,024 ​ ​ 1,631 Mortgage servicing rights ​ ​ 7,173 ​ ​ 847 Total ​ $ 53,390 ​ $ 4,870 ​ The Company did not record any liabilities measured at fair value on a non-recurring basis during the nine months ended September 30, 2021. ​ ​ ​ Note 18 Fair Value of Financial Instruments ​ The fair value of a financial instrument is the amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is determined based upon quoted market prices to the extent possible; however, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques that may be significantly impacted by the assumptions used, including the discount rate and estimates of future cash flows. Changes in any of these assumptions could significantly affect the fair value estimates. The fair value of the financial instruments listed below does not reflect a premium or discount that could result from offering all of the Company’s holdings of financial instruments at one time, nor does it reflect the underlying value of the Company, as ASC Topic 825 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies and are based on the exit price concept within ASC Topic 825 and applied to this disclosure on a prospective basis. 37 ​ Table of Contents Considerable judgment is required to interpret market data in order to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. ​ The fair value of financial instruments at September 30, 2021 and December 31, 2020 are set forth below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Level in fair value September 30, 2021 December 31, 2020 ​ ​ measurement ​ Carrying ​ Estimated ​ Carrying ​ Estimated ​ ​ hierarchy ​ amount fair value amount fair value ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents Level 1 ​ $ 807,370 ​ $ 807,370 ​ $ 605,565 ​ $ 605,565 Mortgage-backed securities—residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises available-for-sale Level 2 ​ 242,302 ​ 242,302 ​ 196,334 ​ 196,334 Mortgage-backed securities—other residential mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored enterprises available-for-sale Level 2 ​ 412,555 ​ 412,555 ​ 462,779 ​ 462,779 Municipal securities available-for-sale ​ Level 2 ​ ​ 313 ​ ​ 313 ​ ​ 318 ​ ​ 318 Municipal securities available-for-sale ​ Level 3 ​ ​ 57 ​ ​ 57 ​ ​ 57 ​ ​ 57 Corporate debt ​ Level 2 ​ ​ 2,137 ​ ​ 2,137 ​ ​ 1,998 ​ ​ 1,998 Other available-for-sale securities Level 3 ​ 469 ​ 469 ​ 469 ​ 469 Mortgage-backed securities—residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity Level 2 ​ 315,257 ​ 313,626 ​ 306,187 ​ 310,930 Mortgage-backed securities—other residential mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored enterprises held-to-maturity Level 2 ​ 327,379 ​ 326,715 ​ 70,428 ​ 70,761 Non-marketable securities ​ Level 2 ​ ​ 14,532 ​ ​ 14,532 ​ ​ 16,493 ​ ​ 16,493 Non-marketable securities ​ Level 3 ​ ​ 32,432 ​ ​ 32,432 ​ ​ 5,580 ​ ​ 5,580 Loans receivable Level 3 ​ 4,421,760 ​ 4,498,601 ​ 4,353,726 ​ 4,511,357 Loans held for sale Level 2 ​ 158,066 ​ 158,066 ​ 247,813 ​ 247,813 Accrued interest receivable Level 2 ​ 20,032 ​ 20,032 ​ 18,795 ​ 18,795 Interest rate swap derivatives Level 2 ​ 11,068 ​ 11,068 ​ 18,149 ​ 18,149 Mortgage banking derivatives ​ Level 3 ​ ​ 3,192 ​ ​ 3,192 ​ ​ 7,001 ​ ​ 7,001 LIABILITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposit transaction accounts Level 2 ​ 5,257,779 ​ 5,257,779 ​ 4,690,100 ​ 4,690,100 Time deposits Level 2 ​ 876,841 ​ 879,456 ​ 986,132 ​ 993,070 Securities sold under agreements to repurchase Level 2 ​ 21,427 ​ 21,427 ​ 22,897 ​ 22,897 Accrued interest payable Level 2 ​ 4,850 ​ 4,850 ​ 6,762 ​ 6,762 Interest rate swap derivatives ​ Level 2 ​ ​ 29,103 ​ ​ 29,103 ​ 57,060 ​ 57,060 Mortgage banking derivatives Level 3 ​ 479 ​ 479 ​ ​ 2,920 ​ ​ 2,920 ​ Note 19 Subsequent Event ​ On November 5, 2021, the Company entered into a subordinated note purchase agreement to issue and sell a fixed-to-floating rate note totaling $ 40.0 million. The note is subordinated, unsecured and matures on November 15, 2031. Beginning November 15, 2021, the note will initially be payable semi-annually in arrears and will bear interest at 3.00 % per annum until November 15, 2026 (or any earlier redemption date). From November 15, 2026 until November 15, 2031 (or any earlier redemption date) payments will be made quarterly in arrears, and the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month term SOFR plus 203 basis points. The Company intends to use the net proceeds from the sale of the note for general corporate purposes. ​ Prior to November 5, 2026, the Company may redeem the note only under certain limited circumstances. Beginning on November 5, 2026 through maturity, the note may be redeemed, at the Company’s option, on any scheduled interest payment date. Any redemption by the Company would be at a redemption price equal to 100 % of the principal amount of the note being redeemed, together with any accrued and unpaid interest on the note being redeemed up to but excluding the date of redemption. The note is not subject to redemption at the option of the holder. ​ ​ ​ 38 ​ Table of Contents Item 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. ​ The following management's discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes as of and for the three and nine months ended September 30, 2021, and with our annual report on Form 10-K (file number 001-35654), which includes our audited consolidated financial statements and related notes as of and for the years ended December 31, 2020, 2019 and 2018. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions that may cause actual results to differ materially from management's expectations. Factors that could cause such differences are discussed in the section entitled “Cautionary Note Regarding Forward-Looking Statements” located elsewhere in this quarterly report and in Item 1A“Risk Factors” in the annual report on Form 10-K , referenced above, and should be read herewith. ​ All amounts are in thousands, except share and per share data, or as otherwise noted. ​ Overview ​ Our focus is on building relationships by creating a win-win scenario for our clients and our Company. We believe in providing solutions and services to our clients that are based on fairness and simplicity. We have established a solid financial services franchise with a sizable presence for deposit gathering and building client relationships necessary for growth. We also believe that our established presence in our core markets of Colorado, the greater Kansas City region, Texas, Utah and New Mexico, positions us well for growth opportunities. As of September 30, 2021, we had $7.1 billion in assets, $4.4 billion in loans, $6.1 billion in deposits and $0.8 billion in equity. ​ Operating Highlights and Key Challenges ​ Profitability and returns ​ ​ ​ ​ ● Net income totaled $70.8 million, or $2.27 per diluted share, for the nine months ended September 30, 2021, compared to net income of $61.4 million, or $1.97 per diluted share, for the same period in the prior year. ● The return on average tangible assets was 1.39% for the nine months ended September 30, 2021, compared to 1.36% for the same period in the prior year. ● The return on average tangible common equity was 13.04% for the nine months ended September 30, 2021, compared to 12.47% for the same period in the prior year. ​ Strategic execution ​ ​ ​ ​ ● ​ Loan originations during the three months ended September 30, 2021 totaled a record $413.3 million, led by commercial loan originations totaling $301.7 million. ● ​ Announced investments in two fintech firms including $20.0 million in Finstro Global Holdings Inc. and $2.0 million in Figure Technologies. The Company is partnering with Finstro and Figure to build a comprehensive digital financial ecosystem serving small and medium-sized businesses to provide access to a full range of banking services and block chain payment alternatives. ● ​ As part of our continued focus on improving operating efficiencies and investing in digital solutions for our clients, we completed the previously announced consolidation of seven banking centers and the sale of one banking center during 2021. A deposit premium gain on sale of $0.8 million related to the banking center sale was recorded to other non-interest income during the three months ended September 30, 2021. Banking center consolidation-related expense of $1.6 million was recorded to non-interest expense during the nine months ended September 30, 2021. ● Maintained a conservatively structured loan portfolio represented by diverse industries and concentrations with most industry sector concentrations at 5% or less of total loans, and all concentration levels remain well below our self-imposed limits. ● ​ During the three months ended September 30, 2021, the Company sold mortgage servicing rights generating a gain of $1.3 million. ● ​ Repurchased 527,214 shares for $19.4 million at a weighted average price per share of $36.72 during the three months ended September 30, 2021. ● ​ On November 5, 2021, the Company entered into a subordinated note purchase agreement to issue and sell a fixed-to-floating rate note totaling $40.0 million. The initial interest rate of the note is 3.00% until November 15, 2026. 39 ​ Table of Contents ​ Loan portfolio ​ ​ ​ ​ ● ​ Total loans ended the quarter at $4.4 billion and increased $68.0 million, or 2.1% annualized, since December 31, 2020. Excluding PPP loans, total loans increased by $167.3 million, or 5.4% annualized. ● Total loan originations during the three months ended September 30, 2021 were a record $413.3 million. Loan originations, excluding PPP loans, totaled $948.5 million and $528.5 million for the nine months ended September 30, 2021 and 2020, respectively. ● ​ COVID-related loan modifications totaled $0.9 million as of September 30, 2021, down from $173.6 million as of December 31, 2020 as a majority of the COVID-modified loans have now returned to their full principal and interest payment terms. ​ Credit quality ​ ​ ​ ​ ● ​ Allowance for credit losses totaled 1.11% of total loans at September 30, 2021, compared to 1.37% at December 31, 2020. Excluding PPP loans, the ACL totaled 1.13% of total loans at September 30, 2021, compared to 1.43% at December 31, 2020. ● ​ The Company recorded total provision release of $9.4 million for the nine months ended September 30, 2021, driven by strong asset quality and an improved outlook in the CECL model’s underlying economic forecast. During the nine months ended September 30, 2020, the Company recorded total provision expense of $17.6 million, driven by deteriorating economic conditions caused by the impact of COVID-19. ● ​ Net charge-offs to average total loans for the nine months ended September 30, 2021 totaled 0.03%, annualized, compared to 0.06% for the full year ended December 31, 2020. ● ​ Credit quality remained strong, as non-performing loans (comprised of non-accrual loans and non-accrual TDRs) improved to 0.29% of total loans, compared to 0.47% at December 31, 2020. Non-performing assets to total loans and OREO improved to 0.39% at September 30, 2021, compared to 0.58% at December 31, 2020. ​ Client deposit funded balance sheet ​ ​ ​ ​ ● ​ Average transaction deposits for the nine months ended September 30, 2021 totaled $5.1 billion, increasing 23.9%, compared to $4.1 billion for the same period in the prior year. ● Average total deposits totaled $6.0 billion during the nine months ended September 30, 2021, increasing 16.9%, compared to $5.1 billion for the same period in the prior year. ● The mix of transaction deposits to total deposits improved to 85.7% at September 30, 2021, compared to 82.6% at December 31, 2020. ● Cost of deposits decreased 21 basis points to 0.24% during the nine months ended September 30, 2021. ​ Revenues ​ ​ ​ ​ ● ​ Fully taxable equivalent (“FTE”) net interest income during the three months ended September 30, 2021, excluding PPP loan fee income of $2.6 million, increased $2.2 million, or 19.8% annualized, compared to the three months ended June 30 2021. ● FTE net interest income totaled $141.5 million during the nine months ended September 30, 2021 and decreased $6.7 million, or 4.5%, compared to the same period in the prior year primarily due to interest rate actions taken by the Federal Reserve during 2020 and lower non-PPP originated loan balances. ● ​ The FTE net interest margin widened 11 basis points to 2.93% for the three months ended September 30, 2021, as compared to the three months ended June 30, 2021, driven by excess cash liquidity being deployed into higher yielding originated loans. During the three months ended September 30, 2021, the yield on earning assets increased eight basis points, with the cost of deposits decreasing three basis points to 0.21%, compared to the prior quarter. ● ​ The FTE net interest margin narrowed 56 basis points to 2.92% for the nine months ended September 30, 2021, as compared to the same period in the prior year due to lower earning asset yields. The yield on earning assets decreased 82 basis points, led by the remix of assets into lower-yielding cash balances and a three basis point decrease in the originated loan portfolio yields. The cost of funds decreased 22 basis points to 0.24% for the nine months ended September 30, 2021. ● ​ Non-interest income totaled $87.1 million during the nine months ended September 30, 2021, compared to $106.9 million for the same period in 2020, primarily due to lower mortgage refinance demand and tighter gain on sale margins on mortgage loans sold in the secondary market . 40 ​ Table of Contents ● ​ During the nine months ended September 30, 2021, other non-interest income increased $4.7 million, compared to the nine months ended September 30, 2020, largely due to $3.5 million of gains from banking center-related sales activities. ​ Expenses ​ ​ ​ ​ ● Non-interest expense totaled $147.3 million during the nine months ended September 30, 2021, representing a decrease of $10.4 million, or 6.6%, compared to the nine months ended September 30, 2020, driven by lower mortgage-related compensation as well as the Company’s strategic efforts to improve operating efficiency. ● ​ Income tax expense totaled $16.1 million during the nine months ended September 30, 2021, compared to $14.5 million during the nine months ended September 30, 2020 driven by 2021’s higher pre-tax income. The effective tax rate for the nine months ended September 30, 2021 was 18.9%, adjusted for stock compensation activity, and was consistent with the full year effective tax rate for 2020. ● ​ During the nine months ended September 30, 2021, non-interest expense included $2.5 million of transaction-related expenses for the investments in Finstro Global Holdings Inc. and Figure Technologies to further our vision for building a comprehensive digital financial ecosystem. ● ​ The Company recognized $0.8 million of OREO impairment during the three months ended September 30, 2021 in non-interest expense in the consolidated statements of operations. ​ Strong capital position ​ ​ ​ ​ ● Capital ratios continue to be strong as our capital position remains in excess of federal bank regulatory thresholds. As of September 30, 2021, our consolidated tier 1 leverage ratio was 10.43%, and our common equity tier 1 and consolidated tier 1 risk based capital ratios were both 14.57%. ● The Bank maintains ample liquidity with access to $2.6 billion in readily available funds. ● At September 30, 2021, common book value per share was $27.89. The tangible common book value per share increased $1.11 to $24.20 at September 30, 2021 compared to December 31, 2020, primarily driven by earnings. ​ Key Challenges ​ There are a number of significant challenges confronting us and our industry. We face continual challenges implementing our business strategy, including growing the assets, particularly loans, and deposits of our business amidst intense competition, changing interest rates, adhering to changes in the regulatory environment and identifying and consummating disciplined acquisition and other expansionary opportunities, including building our digital strategy, in a very competitive environment. Prevailing interest rates began decreasing in mid-2019 and are expected to remain relatively low for the foreseeable future as a result of interest rate actions taken by the Federal Reserve. ​ The COVID-19 pandemic has caused disruption and is likely to continue to present challenges to our business. We continue to remain committed to ensuring our associates, clients and communities are receiving the support they need through our banking centers and our digital banking platform. Our teams have been working diligently to support our clients who are experiencing financial hardship due to COVID-19 through participation in the SBA’s Paycheck Protection Program, including assistance with PPP loan forgiveness applications, and loan modifications, as needed. While access to vaccines in the United States has increased, the efficacy of those vaccines, the impact of emerging targeted vaccine mandates and new variants of the virus, and the length of time that the government-mandated measures must remain in place or potentially be reinstituted to address COVID-19 are unknown. The pandemic has had a negative impact to the U.S. labor market, consumer spending and business operations, and it is not clear whether new outbreaks of COVID-19 cases will have further impact. ​ Our markets have historically outperformed the national averages on many key indicators; however, the economic impact from the COVID-19 pandemic has caused economic strain nationally and across all of our markets. We are encouraged by the positive signs of economic recovery we are seeing throughout our markets. We are focused on growing our loan portfolio while taking a careful approach to extending new credit and adhering to our established underwriting standards and self-imposed concentration limits. A significant portion of our loan portfolio is secured by real estate and any deterioration in real estate values or credit quality or elevated levels of non-performing assets would ultimately have a negative impact on the quality of our loan portfolio. ​ As of September 30, 2021, the Company had low exposure to industries highly impacted by the COVID-19 pandemic. Within the commercial loan segment, restaurants were 5.5%, retailers 3.0%, hospital/medical 6.4% and oil and gas 0.4% of total loans. Within the 41 ​ Table of Contents commercial real estate non-owner occupied loan segment, hotel and lodging was 4.5%, multifamily 2.1% and retail 1.5% of total loans. The Company had no direct exposure to other industries and loan types more highly impacted by the pandemic including aviation, cruise lines, energy services, auto manufacturing/dealer floor plans, hedge funds, convention centers, credit cards, malls and taxi/ride share businesses. Furthermore, the Company had no consumer credit card, indirect auto or car leasing exposure. ​ The agriculture industry continues to be impacted by volatility in commodity prices as well as supply chain issues driven by the COVID-19 pandemic. Our food and agribusiness portfolio is only 4.5% of total loans and is well-diversified across food production, crop and livestock types. Crop and livestock loans represent 0.9% of total loans. We have maintained relationships with food and agribusiness clients that generally possess low leverage and, correspondingly, low bank debt to assets, minimizing any potential credit losses in the future. ​ The extraordinary government measures enacted during the COVID-19 pandemic have generated unprecedented levels of economic stimulus funding and produced high levels of cash liquidity within the banking industry. Our cash balances total $807.4 million as of September 30, 2021 and have increased $201.8 million from December 31, 2020 and $362.3 million from September 30, 2020. Future growth in our interest income will ultimately be dependent on our ability to deploy the excess cash liquidity into high-quality originated loans and other high-quality earning assets such as investment securities. Investment securities totaled $1.3 billion as of September 30, 2021 and increased $286.8 million, or 27.0%, compared to December 31, 2020. As of September 30, 2021, our loans outstanding totaled $4.4 billion, increasing $68.0 million, or 1.6%, compared to December 31, 2020. Non-PPP loans increased $167.3 million, or 4.0%, compared to December 31, 2020. During the nine months ended September 30, 2021, our weighted average rate on new loans funded at the time of origination was 3.47%, compared to the weighted average yield of our originated loan portfolio of 3.99% (FTE). Our net interest income has been impacted by interest rate actions taken by the Federal Reserve in response to the COVID-19 pandemic, and our future earnings will be impacted by the Federal Reserve’s future interest rate policy decisions. ​ Continued regulation, impending new liquidity and capital constraints, and a continual need to bolster cybersecurity are adding costs and uncertainty to all U.S. banks and could affect profitability. Also, nontraditional participants in the market may offer increased competition as non-bank payment businesses, including fintechs, are expanding into traditional banking products. While certain external factors are out of our control and may provide obstacles to our business strategy, we are prepared to deal with these challenges and expand our offerings in digital technology, including by partnering with and investing in fintechs where appropriate. We seek to remain flexible, yet methodical and proactive, in our strategic decision making so that we can quickly respond to market changes and the inherent challenges and opportunities that accompany such changes. ​ ​ 42 ​ Table of Contents Performance Overview ​ In evaluating our consolidated statements of financial condition and results of operations financial statement line items, we evaluate and manage our performance based on key earnings indicators, balance sheet ratios, asset quality metrics and regulatory capital ratios, among others. The table below presents some of the primary performance indicators that we use to analyze our business on a regular basis for the periods indicated: ​ Key Ratios (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the three months ended ​ As of and for the nine months ended ​ ​ September 30, ​ December 31, ​ September 30, ​ September 30, ​ September 30, ​ ​ 2021 ​ 2020    ​ 2020    ​ 2021    ​ 2020 Return on average assets 1.11% ​ 1.63% ​ 1.71% ​ 1.36% ​ 1.32% Return on average tangible assets (2) 1.14% ​ 1.67% ​ 1.76% ​ 1.39% ​ 1.36% Return on average equity 9.15% ​ 13.27% ​ 14.00% ​ 11.20% ​ 10.53% Return on average tangible common equity (2) 10.65% ​ 15.55% ​ 16.49% ​ 13.04% ​ 12.47% Loan to deposit ratio (end of period) ​ 72.08% ​ 76.70% ​ 81.12% ​ 72.08% ​ 81.12% Non-interest bearing deposits to total deposits (end of period) 39.89% ​ 37.19% ​ 27.31% ​ 39.89% ​ 27.31% Net interest margin (3) 2.85% ​ 3.16% ​ 3.13% ​ 2.84% ​ 3.39% Net interest margin FTE (2)(3)(4) 2.93% ​ 3.24% ​ 3.21% ​ 2.92% ​ 3.48% Interest rate spread FTE (4)(5) 2.78% ​ 3.05% ​ 3.04% ​ 2.75% ​ 3.27% Yield on earning assets (6) 3.04% ​ 3.47% ​ 3.50% ​ 3.07% ​ 3.87% Yield on earning assets FTE (2)(4)(6) 3.12% ​ 3.55% ​ 3.59% ​ 3.14% ​ 3.96% Cost of interest bearing liabilities 0.34% ​ 0.50% ​ 0.55% ​ 0.39% ​ 0.69% Cost of deposits 0.21% ​ 0.33% ​ 0.40% ​ 0.24% ​ 0.49% Non-interest income to total revenue FTE (4) ​ 36.85% ​ 40.11% ​ 48.13% ​ 38.11% ​ 41.90% Non-interest expense to average assets 2.86% ​ 2.90% ​ 3.39% ​ 2.82% ​ 3.39% Efficiency ratio ​ 67.05% ​ 58.76% ​ 60.30% ​ 65.14% ​ 62.42% Efficiency ratio FTE (2)(4) 65.91% ​ 57.87% ​ 59.47% ​ 64.04% ​ 61.48% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Loans Asset Quality Data (7)(8)(9) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-performing loans to total loans 0.29% ​ 0.47% ​ 0.41% ​ 0.29% ​ 0.41% Non-performing loans to total loans excluding PPP loans 0.30% ​ 0.49% ​ 0.45% ​ 0.30% ​ 0.45% Non-performing assets to total loans and OREO 0.39% ​ 0.58% ​ 0.51% ​ 0.39% ​ 0.51% Non-performing assets to total loans and OREO excluding PPP loans 0.39% ​ 0.60% ​ 0.56% ​ 0.39% ​ 0.56% Allowance for credit losses to total loans 1.11% ​ 1.37% ​ 1.34% ​ 1.11% ​ 1.34% Allowance for credit losses to total loans excluding PPP loans 1.13% ​ 1.43% ​ 1.45% ​ 1.13% ​ 1.45% Allowance for credit losses to non-performing loans 382.59% ​ 293.21% ​ 322.95% ​ 382.59% ​ 322.95% Net charge-offs to average loans 0.02% ​ 0.11% ​ 0.04% ​ 0.03% ​ 0.04% ​ ​ ​ (1) Ratios are annualized. (2) Ratio represents non-GAAP financial measure. See non-GAAP reconciliations below. (3) Net interest margin represents net interest income, including accretion income on interest earning assets, as a percentage of average interest earning assets. (4) Presented on an FTE basis using the statutory rate of 21% for all periods presented. The taxable equivalent adjustments included above are $1,315, $1,260 and $1,275 for the three months ended September 30, 2021, December 31, 2020 and September 30, 2020, respectively. The taxable equivalent adjustments included above are $3,862 and $3,843 for the nine months ended September 30, 2021 and September 30, 2020, respectively. (5) Interest rate spread represents the difference between the weighted average yield on interest earning assets and the weighted average cost of interest bearing liabilities. (6) ​ Interest earning assets include assets that earn interest/accretion or dividends. Any market value adjustments on investment securities are excluded from interest earning assets. (7) ​ Non-performing loans consist of non-accruing loans and restructured loans on non-accrual. (8) ​ Non-performing assets include non-performing loans and OREO. (9) ​ Total loans are net of unearned discounts and fees. ​ ​ 43 ​ Table of Contents About Non-GAAP Financial Measures ​ Certain of the financial measures and ratios we present, including “tangible assets,” “return on average tangible assets,” “return on average tangible common equity,” “tangible common book value,” “tangible common book value per share,” “tangible common equity,” “tangible common equity to tangible assets,” and “fully taxable equivalent” metrics, are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on an FTE basis. We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods. ​ These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance. ​ A reconciliation of our GAAP financial measures to the comparable non-GAAP financial measures is as follows: ​ Tangible Common Book Value Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ September 30, ​ 2021 2020 2020 Total shareholders’ equity ​ $ 844,716 ​ $ 820,691 ​ $ 799,357 Less: goodwill and core deposit intangible assets, net ​ (121,688) ​ (122,575) ​ (122,871) Add: deferred tax liability related to goodwill ​ 9,841 ​ 9,155 ​ 8,927 Tangible common equity (non-GAAP) ​ $ 732,869 ​ $ 707,271 ​ $ 685,413 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 7,100,991 ​ $ 6,659,950 ​ $ 6,600,676 Less: goodwill and core deposit intangible assets, net ​ (121,688) ​ (122,575) ​ (122,871) Add: deferred tax liability related to goodwill ​ 9,841 ​ 9,155 ​ 8,927 Tangible assets (non-GAAP) ​ $ 6,989,144 ​ $ 6,546,530 ​ $ 6,486,732 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible common equity to tangible assets calculations: ​ ​ ​ ​ ​ ​ ​ ​ ​ Total shareholders' equity to total assets ​ 11.90% ​ 12.32% ​ 12.11% Less: impact of goodwill and core deposit intangible assets, net ​ (1.41)% ​ (1.52)% ​ (1.54)% Tangible common equity to tangible assets (non-GAAP) ​ 10.49% ​ 10.80% ​ 10.57% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible common book value per share calculations: ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible common equity (non-GAAP) ​ $ 732,869 ​ $ 707,271 ​ $ 685,413 Divided by: ending shares outstanding ​ 30,288,131 ​ 30,634,291 ​ 30,594,412 Tangible common book value per share (non-GAAP) ​ $ 24.20 ​ $ 23.09 ​ $ 22.40 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible common book value per share, excluding accumulated other comprehensive income calculations: ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible common equity (non-GAAP) ​ $ 732,869 ​ $ 707,271 ​ $ 685,413 Accumulated other comprehensive loss (income), net of tax ​ 1,397 ​ (9,766) ​ (11,080) Tangible common book value, excluding accumulated other comprehensive loss (income), net of tax (non-GAAP) ​ 734,266 ​ 697,505 ​ 674,333 Divided by: ending shares outstanding ​ 30,288,131 ​ 30,634,291 ​ 30,594,412 Tangible common book value per share, excluding accumulated other comprehensive loss (income), net of tax (non-GAAP) ​ $ 24.24 ​ $ 22.77 ​ $ 22.04 ​ 44 ​ Table of Contents Return on Average Tangible Assets and Return on Average Tangible Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the three months ended ​ As of and for the nine months ended ​ ​ September 30, ​ December 31, ​ September 30, ​ September 30, ​ September 30, ​ ​ 2021 ​ 2020 ​ 2020 ​ 2021 ​ 2020 Net income ​ $ 19,825 ​ $ 27,169 ​ $ 27,893 ​ $ 70,837 ​ $ 61,422 Add: impact of core deposit intangible amortization expense, after tax ​ 227 ​ 228 ​ 226 ​ 682 ​ 680 Net income adjusted for impact of core deposit intangible amortization expense, after tax ​ $ 20,052 ​ $ 27,397 ​ $ 28,119 ​ $ 71,519 ​ $ 62,102 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average assets ​ $ 7,116,141 ​ $ 6,635,490 ​ $ 6,483,016 ​ $ 6,977,494 ​ $ 6,222,442 Less: average goodwill and core deposit intangible asset, net of deferred tax liability related to goodwill ​ (112,026) ​ (113,594) ​ (114,122) ​ (112,320) ​ (114,406) Average tangible assets (non-GAAP) ​ $ 7,004,115 ​ $ 6,521,896 ​ $ 6,368,894 ​ $ 6,865,174 ​ $ 6,108,036 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average shareholders' equity ​ $ 859,245 ​ $ 814,483 ​ $ 792,358 ​ $ 845,776 ​ $ 779,491 Less: average goodwill and core deposit intangible asset, net of deferred tax liability related to goodwill ​ (112,026) ​ (113,594) ​ (114,122) ​ (112,320) ​ (114,406) Average tangible common equity (non-GAAP) ​ $ 747,219 ​ $ 700,889 ​ $ 678,236 ​ $ 733,456 ​ $ 665,085 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on average assets ​ 1.11% ​ 1.63% ​ 1.71% ​ 1.36% ​ 1.32% Return on average tangible assets (non-GAAP) ​ 1.14% ​ 1.67% ​ 1.76% ​ 1.39% ​ 1.36% Return on average equity ​ 9.15% ​ 13.27% ​ 14.00% ​ 11.20% ​ 10.53% Return on average tangible common equity (non-GAAP) ​ 10.65% ​ 15.55% ​ 16.49% ​ 13.04% ​ 12.47% ​ Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the three months ended ​ As of and for the nine months ended ​ September 30, ​ December 31, ​ September 30, ​ September 30, ​ September 30, ​ ​ 2021 2020 2020 2021 2020 Interest income ​ $ 50,801 ​ $ 53,288 ​ $ 52,302 ​ $ 148,464 ​ $ 164,714 Add: impact of taxable equivalent adjustment ​ 1,315 ​ 1,260 ​ 1,275 ​ 3,862 ​ 3,843 Interest income FTE (non-GAAP) ​ $ 52,116 ​ $ 54,548 ​ $ 53,577 ​ $ 152,326 ​ $ 168,557 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ $ 47,569 ​ $ 48,556 ​ $ 46,715 ​ $ 137,658 ​ $ 144,390 Add: impact of taxable equivalent adjustment ​ 1,315 ​ 1,260 ​ 1,275 ​ 3,862 ​ 3,843 Net interest income FTE (non-GAAP) ​ $ 48,884 ​ $ 49,816 ​ $ 47,990 ​ $ 141,520 ​ $ 148,233 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average earning assets ​ $ 6,624,047 ​ $ 6,108,513 ​ $ 5,944,790 ​ $ 6,475,934 ​ $ 5,690,884 Yield on earning assets ​ 3.04% ​ 3.47% ​ 3.50% ​ 3.07% ​ 3.87% Yield on earning assets FTE (non-GAAP) ​ 3.12% ​ 3.55% ​ 3.59% ​ 3.14% ​ 3.96% Net interest margin ​ 2.85% ​ 3.16% ​ 3.13% ​ 2.84% ​ 3.39% Net interest margin FTE (non-GAAP) ​ 2.93% ​ 3.24% ​ 3.21% ​ 2.92% ​ 3.48% ​ ​ ​ 45 ​ Table of Contents Efficiency Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the three months ended ​ As of and for the nine months ended ​ ​ September 30, ​ December 31, ​ September 30, ​ September 30, ​ September 30, ​ ​ 2021 2020 2020 2021 2020 Net interest income ​ $ 47,569 ​ $ 48,556 ​ $ 46,715 ​ $ 137,658 ​ $ 144,390 Add: impact of taxable equivalent adjustment ​ 1,315 ​ 1,260 ​ 1,275 ​ 3,862 ​ 3,843 Net interest income, FTE (non-GAAP) ​ $ 48,884 ​ $ 49,816 ​ $ 47,990 ​ $ 141,520 ​ $ 148,233 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-interest income ​ $ 28,522 ​ $ 33,357 ​ $ 44,532 ​ $ 87,149 ​ $ 106,901 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-interest expense ​ $ 51,314 ​ $ 48,425 ​ $ 55,321 ​ $ 147,325 ​ $ 157,752 Less: core deposit intangible asset amortization ​ ​ (295) ​ (296) ​ (295) ​ (887) ​ (887) Non-interest expense, adjusted for core deposit intangible asset amortization ​ $ 51,019 ​ $ 48,129 ​ $ 55,026 ​ $ 146,438 ​ $ 156,865 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Efficiency ratio ​ ​ 67.05% ​ ​ 58.76% ​ ​ 60.30% ​ ​ 65.14% ​ ​ 62.42% Efficiency ratio FTE (non-GAAP) ​ ​ 65.91% ​ ​ 57.87% ​ ​ 59.47% ​ ​ 64.04% ​ ​ 61.48% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Application of Critical Accounting Policies ​ We use accounting principles and methods that conform to GAAP and general banking practices. We are required to apply significant judgment and make material estimates in the preparation of our financial statements and with regard to various accounting, reporting and disclosure matters. Assumptions and estimates are required to apply these principles where actual measurement is not possible or practical. The most significant of these estimates relate to the determination of the ACL. See additional discussion of our ACL policy in note 2 – Summary of Significant Accounting Policies in our audited consolidated financial statements in our 2020 Annual Report on Form 10-K . ​ Future Accounting Pronouncements ​ In March 2020, the Financial Accounting Standards Board issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . ASU 2020-04 was effective upon issuance and can be adopted during any interim period through December 31, 2022. It provides optional expedients and guidance for applying generally accepted accounting principles to contract modifications and hedging relationships, if certain criteria are met, that reference the London Inter-Bank Offered Rate (“LIBOR”) or any other reference rate that is expected to be discontinued. Beginning January 1, 2022, the Company will no longer underwrite loans using LIBOR as a reference rate. The Company continues to evaluate the impact from ASU 2020-04, and any related updates, and does not expect the adoption of ASU 2020-04 to have a material impact on its financial statements. ​ Financial Condition ​ Total assets were $7.1 billion at September 30, 2021, compared to $6.7 billion at December 31, 2020, an increase of $441.0 million, or 6.6%. Cash and cash equivalents increased $201.8 million, or 33.3%, from December 31, 2020, and investment securities increased $286.8 million, or 27.0%. Total loans as of September 30, 2021 increased $68.0 million, or 1.6%, with non-PPP loans increasing $167.3 million, or 4.0%, compared to December 31, 2020. The allowance for credit losses decreased $10.6 million to $49.2 million at September 30, 2021, compared to December 31, 2020. ​ During the nine months ended September 30, 2021, lower cost demand, savings, and money market deposits (&quot;transaction deposits&quot;) increased $567.7 million, or 16.2% annualized, compared to December 31, 2020, as we received cash inflows from economic stimulus and continued developing full banking relationships with our clients. Our clients used their core operating accounts for PPP funds and economic stimulus checks, which aided the strong deposit growth. In addition to providing excess cash liquidity, the increase in transaction deposits provided low-cost funding utilized to fund PPP loans. ​ 46 ​ Table of Contents Investment securities ​ Available-for-sale ​ Total investment securities available-for-sale decreased 0.6% during the nine months ended September 30, 2021 to $0.7 billion. Purchases of available-for-sale securities during the nine months ended September 30, 2021 and 2020 totaled $196.3 million and $114.7 million, respectively. Paydowns and maturities totaled $185.0 million and $191.8 million during the nine months ended September 30, 2021 and 2020, respectively. ​ Our available-for-sale investment securities portfolio is summarized as follows as of the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ December 31, 2020 ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ Weighted ​ ​ Amortized ​ Fair ​ Percent of ​ average ​ Amortized ​ Fair ​ Percent of ​ average ​ ​ cost ​ value ​ portfolio ​ yield ​ cost ​ value ​ portfolio ​ yield Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ $ 244,912 ​ $ 242,302 ​ 36.8% ​ 1.33% ​ $ 193,424 ​ $ 196,334 ​ 29.6% ​ 1.36% Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ 412,793 ​ 412,555 ​ 62.7% ​ 1.49% ​ 454,345 ​ 462,779 ​ 69.9% ​ 1.45% Municipal securities ​ ​ 362 ​ ​ 370 ​ 0.1% ​ 3.44% ​ ​ 362 ​ ​ 375 ​ 0.1% ​ 3.46% Corporate debt ​ ​ 2,000 ​ ​ 2,137 ​ 0.3% ​ 5.80% ​ ​ 2,000 ​ ​ 1,998 ​ 0.3% ​ 5.83% Other securities ​ 469 ​ 469 ​ 0.1% ​ 0.00% ​ 469 ​ 469 ​ 0.1% ​ 0.00% Total investment securities available-for-sale ​ $ 660,536 ​ $ 657,833 ​ 100.0% ​ 1.45% ​ $ 650,600 ​ $ 661,955 ​ 100.0% ​ 1.44% ​ As of September 30, 2021 and December 31, 2020, nearly all the available-for-sale investment portfolio was backed by mortgages. The residential mortgage pass-through securities portfolio is comprised of both fixed rate and adjustable rate FHLMC, FNMA and GNMA securities. The other mortgage-backed securities are comprised of securities backed by FHLMC, FNMA and GNMA securities. ​ Mortgage-backed securities may have actual maturities that differ from contractual maturities depending on the repayment characteristics and experience of the underlying financial instruments. The estimated weighted average life of the available-for-sale mortgage-backed securities portfolio was 3.6 years and 2.7 years at September 30, 2021 and December 31, 2020, respectively. This estimate is based on assumptions and actual results may differ. At September 30, 2021 and December 31, 2020, the duration of the total available-for-sale investment portfolio was 3.4 years and 2.6 years, respectively. ​ At September 30, 2021 and December 31, 2020, adjustable rate securities comprised 1.9% and 2.3%, respectively, of the available-for-sale MBS portfolio. The remainder of the portfolio was comprised of fixed rate amortizing securities with 10 to 30 year contractual maturities, with a weighted average coupon of 1.72% per annum and 2.00% per annum at September 30, 2021 and December 31, 2020, respectively. ​ The available-for-sale investment portfolio included $9.1 million of unrealized losses and $6.4 million of unrealized gains and $11.7 million of unrealized gains and $0.4 million of unrealized losses at September 30, 2021 and December 31, 2020, respectively. We believe any unrealized losses are a result of prevailing interest rates, and as such, we do not believe that any of the securities with unrealized losses were impaired. Management believes that default of the available-for-sale securities is highly unlikely. FHLMC, FNMA and GNMA guaranteed mortgage-backed securities have a long history of zero credit losses, an explicit guarantee by the U.S. government (although limited for FNMA and FHLMC securities) and yields that generally trade based on market views of prepayment and liquidity risk rather than credit risk. ​ 47 ​ Table of Contents Held-to-maturity ​ Held-to-maturity investment securities increased 70.6% during the nine months ended September 30, 2021 to $0.6 billion. Purchases during the nine months ended September 30, 2021 and 2020 totaled $377.7 million and $196.7 million, respectively. Paydowns and maturities totaled $109.0 million and $58.1 million during the nine months ended September 30, 2021 and 2020, respectively. ​ Held-to-maturity investment securities are summarized as follows as of the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ Amortized Fair Percent of average Amortized Fair Percent of average ​ ​ cost ​ value ​ portfolio ​ yield ​ cost ​ value ​ portfolio ​ yield Mortgage-backed securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ $ 315,257 ​ $ 313,626 ​ 49.1% ​ 1.52% ​ $ 306,187 ​ $ 310,930 ​ 81.3% ​ 1.39% Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ 327,379 ​ 326,715 ​ 50.9% ​ 1.21% ​ 70,428 ​ 70,761 ​ 18.7% ​ 0.41% Total investment securities held-to-maturity ​ $ 642,636 ​ $ 640,341 ​ 100.0% ​ 1.36% ​ $ 376,615 ​ $ 381,691 ​ 100.0% ​ 1.21% ​ The residential mortgage pass-through and other residential MBS held-to-maturity investment portfolios are comprised of fixed rate FHLMC, FNMA and GNMA securities. ​ The fair value of the held-to-maturity investment portfolio included $3.7 million and $5.3 million of unrealized gains and $6.0 million and $0.3 million of unrealized losses at September 30, 2021 and December 31, 2020, respectively. ​ The Company does not measure expected credit losses on a financial asset, or group of financial assets, in which historical credit loss information adjusted for current conditions and reasonable and supportable forecasts results in an expectation that nonpayment of the amortized cost basis is zero. Management evaluated held-to-maturity securities noting they are backed by loans guaranteed by either U.S. government agencies or U.S. government sponsored entities, and management believes that default is highly unlikely given this governmental backing and long history without credit losses. Additionally, management notes that yields on which the portfolio generally trades are based upon market views of prepayment and liquidity risk and not credit risk. The Company has no intention to sell the securities and believes it will not be required to sell the securities before the recovery of their amortized cost. ​ Mortgage-backed securities may have actual maturities that differ from contractual maturities depending on the repayment characteristics and experience of the underlying financial instruments. The estimated weighted average expected life of the held-to-maturity mortgage-backed securities portfolio as of September 30, 2021 and December 31, 2020 was 3.5 years and 2.4 years, respectively. This estimate is based on assumptions and actual results may differ. The duration of the total held-to-maturity investment portfolio was 3.3 years and 2.4 years as of September 30, 2021 and December 31, 2020, respectively. ​ Non-marketable securities ​ During the third quarter of 2021, the Company updated its asset classifications to include other investments within non-marketable securities that were either purchased during the quarter or previously classified in other assets in the statements of financial condition. ​ Non-marketable securities totaled $47.0 million and $22.1 million at September 30, 2021 and December 31, 2020, respectively, and included FRB stock, FHLB stock and other non-marketable securities. At September 30, 2021, other non-marketable securities totaled $32.4 million and consisted of equity method investments and convertible preferred stock without readily determinable fair values. During the nine months ended September 30, 2021 and 2020, purchases of non-marketable securities totaled $25.8 million and $2.4 million, respectively. Included in these purchases were investments in two fintech firms, Finstro Global Holdings Inc. of $20.0 million and Figure Technologies of $2.0 million. The Company is working with Finstro Global Holdings Inc. and Figure Technologies to build a comprehensive digital financial ecosystem serving small and medium-sized businesses with a goal to provide access to a full range of banking services and block chain payment alternatives. At December 31, 2020, the Company held $5.6 million of other non-marketable securities. ​ 48 ​ Table of Contents At September 30, 2021, the Company held $13.9 million of FRB stock and $0.7 million of FHLB stock for regulatory or debt facility purposes. At December 31, 2020, the Company held $13.9 million of FRB stock and $2.6 million of FHLB stock. These are restricted securities which, lacking a market, are carried at cost. The Company is not aware of any events or changes in circumstances that may have an adverse effect on the investments carried at cost. ​ Loans overview ​ At September 30, 2021, our loan portfolio was comprised of new loans that we have originated and loans that were acquired in connection with our six acquisitions to date. ​ The table below shows the loan portfolio composition at the respective dates: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 vs. ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ September 30, 2021 ​ December 31, 2020 ​ % Change Originated: ​ ​ ​ ​ ​ ​ ​ Commercial: ​ ​ ​ ​ ​ ​ ​ Commercial and industrial $ 1,352,481 ​ $ 1,248,530 ​ 8.3% Municipal and non-profit ​ 878,988 ​ ​ 870,410 ​ 1.0% Owner-occupied commercial real estate ​ 504,415 ​ ​ 464,417 ​ 8.6% Food and agribusiness ​ 195,766 ​ ​ 205,189 ​ (4.6)% PPP loans (1) ​ 76,794 ​ ​ 176,106 ​ (56.4)% Total commercial ​ 3,008,444 ​ ​ 2,964,652 ​ 1.5% Commercial real estate non-owner occupied ​ 605,143 ​ ​ 542,642 ​ 11.5% Residential real estate ​ 608,158 ​ ​ 581,555 ​ 4.6% Consumer ​ 17,735 ​ ​ 18,581 ​ (4.6)% Total originated ​ 4,239,480 ​ ​ 4,107,430 ​ 3.2% ​ ​ ​ ​ ​ ​ ​ ​ Acquired: ​ ​ ​ ​ ​ ​ ​ Commercial: ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ 17,521 ​ ​ 22,102 ​ (20.7)% Municipal and non-profit ​ 347 ​ ​ 381 ​ (8.9)% Owner-occupied commercial real estate ​ 37,335 ​ ​ 51,821 ​ (28.0)% Food and agribusiness ​ 3,653 ​ ​ 5,108 ​ (28.5)% Total commercial ​ 58,856 ​ ​ 79,412 ​ (25.9)% Commercial real estate non-owner occupied ​ 65,784 ​ ​ 89,354 ​ (26.4)% Residential real estate ​ 57,344 ​ ​ 77,105 ​ (25.6)% Consumer ​ 296 ​ ​ 425 ​ (30.4)% Total acquired ​ 182,280 ​ ​ 246,296 ​ (26.0)% Total loans $ 4,421,760 ​ $ 4,353,726 ​ 1.6% ​ ​ ​ (1) PPP loan balances are net of fees and costs and include principal totaling $79,242 and $179,531 as of September 30, 2021 and December 31, 2020, respectively. ​ The Company maintains a granular and well-diversified loan portfolio with self-imposed concentration limits. Our loan portfolio increased $68.0 million, or 2.1% annualized, from December 31, 2020. Excluding PPP loans, total loans increased by $167.3 million, or 5.4% annualized. During the three months ended September 30, 2021, loan originations totaled a record $413.3 million, led by commercial loan originations of $301.7 million. Loan growth was broad based with all asset classes and geographies contributing to the increased balance. Originations during the nine months ended September 30, 2021 totaled $1.1 billion, including $121.1 million of PPP loan originations. PPP loans forgiven totaled $238.7 million during the nine months ended September 30, 2021. ​ Our commercial and industrial loan portfolio is comprised of diverse industry segments. At September 30, 2021, these segments included finance and financial services, primarily lender finance loans, of $177.1 million, hospital/medical loans of $283.5 million, manufacturing-related loans of $110.8 million, and a variety of smaller subcategories of commercial and industrial loans. Food and agribusiness loans, which are well-diversified across food production, crop and livestock types, totaled $199.4 million and were 25.7% of the Company’s risk based capital. Crop and livestock loans represent 0.9% of total loans. ​ Non-owner occupied CRE loans were 86.6% of the Company’s risk based capital, or 15.2% of total loans, and no specific property type comprised more than 5.0% of total loans. The Company maintains very little exposure to retail properties. Total exposure to 49 ​ Table of Contents retailers as well as non-owner occupied retail properties totaled 4.5% of total loans. Multi-family loans totaled $91.5 million, or 2.1% of total loans as of September 30, 2021. ​ New loan origination is a direct result of our ability to recruit and retain top banking talent, connect with clients in our markets and provide needed services at competitive rates. Loan originations totaled $1.3 billion over the past 12 months, led by commercial loan originations of $895.8 million, which included PPP loan originations of $121.1 million. Originations are defined as closed-end funded loans and revolving lines of credit advances, net of any current period paydowns. Management utilizes this more conservative definition of originations to better approximate the impact of originations on loans outstanding and ultimately net interest income. ​ The following table represents new loan originations for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Third quarter Second quarter First quarter Fourth quarter Third quarter ​ 2021 ​ 2021 ​ 2021 ​ 2020 ​ 2020 Commercial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial $ 196,289 ​ $ 147,030 ​ $ 23,390 ​ $ 96,625 ​ $ 11,354 Municipal and non-profit ​ 43,516 ​ ​ 25,131 ​ ​ 7,999 ​ ​ 25,348 ​ ​ 6,083 Owner occupied commercial real estate 53,445 ​ 48,225 ​ 27,093 ​ 36,085 ​ 23,758 Food and agribusiness 8,442 ​ 26,956 ​ (10,104) ​ 19,191 ​ 13,876 PPP loans ​ — ​ ​ — ​ ​ 121,141 ​ ​ — ​ ​ 122 Total commercial ​ 301,692 ​ ​ 247,342 ​ ​ 169,519 ​ ​ 177,249 ​ ​ 55,193 Commercial real estate non-owner occupied 55,392 ​ 58,532 ​ 49,195 ​ 52,018 ​ 24,937 Residential real estate 54,442 ​ 53,962 ​ 74,145 ​ 41,355 ​ 49,786 Consumer 1,810 ​ 2,267 ​ 1,353 ​ 1,858 ​ 2,980 Total $ 413,336 ​ $ 362,103 ​ $ 294,212 ​ $ 272,480 ​ $ 132,896 ​ Included in originations are net fundings (paydowns) under revolving lines of credit of $29,154, $59,520, ($26,395), $50,982 and ($27,899) as of the third, second and first quarters of 2021 and the fourth and third quarters of 2020, respectively. ​ The tables below show the contractual maturities of our total loans for the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ Due within Due after 1 but Due after ​ ​ ​ ​ 1 year ​ within 5 years ​ 5 years ​ Total Commercial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 122,946 ​ $ 1,026,893 ​ $ 220,163 ​ $ 1,370,002 Municipal and non-profit ​ ​ 29,788 ​ ​ 142,488 ​ ​ 707,059 ​ ​ 879,335 Owner occupied commercial real estate ​ 59,248 ​ 139,614 ​ 342,888 ​ 541,750 Food and agribusiness ​ 83,056 ​ 99,481 ​ 16,882 ​ 199,419 PPP loans ​ ​ 2,793 ​ ​ 74,001 ​ ​ — ​ ​ 76,794 Total commercial ​ ​ 297,831 ​ ​ 1,482,477 ​ ​ 1,286,992 ​ ​ 3,067,300 Commercial real estate non-owner occupied ​ 165,976 ​ 360,774 ​ 144,177 ​ 670,927 Residential real estate ​ 12,216 ​ 31,627 ​ 621,659 ​ 665,502 Consumer ​ 4,861 ​ 10,200 ​ 2,970 ​ 18,031 Total loans ​ $ 480,884 ​ $ 1,885,078 ​ $ 2,055,798 ​ $ 4,421,760 ​ 50 ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ Due within Due after 1 but Due after ​ ​ ​ ​ 1 year ​ within 5 years ​ 5 years ​ Total Commercial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 109,586 ​ $ 927,881 ​ $ 233,165 ​ $ 1,270,632 Municipal and non-profit ​ ​ 42,222 ​ ​ 164,994 ​ ​ 663,575 ​ ​ 870,791 Owner occupied commercial real estate ​ 24,510 ​ 177,311 ​ 314,418 ​ 516,239 Food and agribusiness ​ 80,691 ​ 105,815 ​ 23,791 ​ 210,297 PPP loans ​ ​ — ​ ​ 176,106 ​ ​ — ​ ​ 176,106 Total commercial ​ ​ 257,009 ​ ​ 1,552,107 ​ ​ 1,234,949 ​ ​ 3,044,065 Commercial real estate non-owner occupied ​ 72,486 ​ 426,291 ​ 133,219 ​ 631,996 Residential real estate ​ 18,569 ​ 36,747 ​ 603,343 ​ 658,659 Consumer ​ 5,167 ​ 10,886 ​ 2,953 ​ 19,006 Total loans ​ $ 353,231 ​ $ 2,026,031 ​ $ 1,974,464 ​ $ 4,353,726 ​ The stated interest rate (which excludes the effects of non-refundable loan origination and commitment fees, net of costs and the accretion of fair value marks) of total loans with maturities over one year is as follows at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ ​ Fixed ​ Variable ​ Total ​ ​ ​ Weighted ​ ​ Weighted ​ ​ Weighted ​ ​ Balance ​ average rate ​ Balance ​ average rate ​ Balance ​ average rate Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 383,256 4.34% ​ $ 863,801 3.38% ​ $ 1,247,057 3.68% Municipal and non-profit (1) ​ ​ 824,760 ​ 3.50% ​ ​ 24,786 ​ 2.82% ​ ​ 849,546 ​ 3.48% Owner occupied commercial real estate ​ 288,103 4.55% ​ 194,400 3.92% ​ 482,503 4.48% Food and agribusiness ​ 44,593 5.17% ​ 71,770 4.26% ​ 116,363 4.61% PPP loans ​ ​ 74,001 ​ 1.00% ​ ​ — ​ — ​ ​ 74,001 ​ 1.00% Total commercial ​ ​ 1,614,713 ​ 3.87% ​ ​ 1,154,757 ​ 3.52% ​ ​ 2,769,470 ​ 3.72% Commercial real estate non-owner occupied ​ 239,320 4.33% ​ 265,631 3.40% ​ 504,951 3.84% Residential real estate ​ 348,487 3.46% ​ 304,799 4.03% ​ 653,286 3.72% Consumer ​ 10,630 4.62% ​ 2,540 3.55% ​ 13,170 4.41% Total loans with > 1 year maturity ​ $ 2,213,150 3.86% ​ $ 1,727,727 3.59% ​ $ 3,940,877 3.74% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ Fixed ​ Variable ​ Total ​ ​ ​ Weighted ​ ​ Weighted ​ ​ Weighted ​ ​ Balance ​ average rate ​ Balance ​ average rate ​ Balance ​ average rate Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 320,745 4.68% ​ $ 840,301 3.11% ​ $ 1,161,046 3.54% Municipal and non-profit (1) ​ ​ 803,350 ​ 3.55% ​ ​ 25,219 ​ 2.83% ​ ​ 828,569 ​ 3.53% Owner occupied commercial real estate ​ 261,406 4.82% ​ 230,323 3.88% ​ 491,729 4.51% Food and agribusiness ​ 57,360 5.02% ​ 72,246 3.67% ​ 129,606 4.27% PPP loans ​ ​ 176,106 ​ 1.00% ​ ​ — ​ — ​ ​ 176,106 ​ 1.00% Total commercial ​ ​ 1,618,967 ​ 3.79% ​ ​ 1,168,089 ​ 3.29% ​ ​ 2,787,056 ​ 3.58% Commercial real estate non-owner occupied ​ 253,879 4.65% ​ 305,631 3.42% ​ 559,510 3.98% Residential real estate ​ 298,759 3.60% ​ 341,332 4.14% ​ 640,091 3.89% Consumer ​ 11,384 4.92% ​ 2,455 3.50% ​ 13,839 4.66% Total loans with > 1 year maturity ​ $ 2,182,989 3.86% ​ $ 1,817,507 3.47% ​ $ 4,000,496 3.68% ​ ​ ​ (1) Included in municipal and non-profit fixed rate loans are loans totaling $350,277 and $387,105 that have been swapped to variable rates at current market pricing at September 30, 2021 and December 31, 2020, respectively. Included in the municipal and non-profit segment are tax exempt loans totaling $746,641 and $711,582 with an FTE weighted average rate of 4.02% and 4.03% at September 30, 2021 and December 31, 2020, respectively. 51 ​ Table of Contents ​ ​ Asset quality ​ Asset quality is fundamental to our success and remains a strong point, driven by our disciplined adherence to our self-imposed concentration limits across industry sector and real estate property type. Accordingly, for the origination of loans, we have established a credit policy that allows for responsive, yet controlled lending with credit approval requirements that are scaled to loan size. Within the scope of the credit policy, each prospective loan is reviewed in order to determine the appropriateness and the adequacy of the loan characteristics and the security or collateral prior to making a loan. We have established underwriting standards and loan origination procedures that require appropriate documentation, including financial data and credit reports. For loans secured by real property, we require property appraisals, title insurance or a title opinion, hazard insurance and flood insurance, in each case where appropriate. ​ Additionally, we have implemented procedures to timely identify loans that may become problematic in order to ensure the most beneficial resolution for the Company. Asset quality is monitored by our credit risk management department and evaluated based on quantitative and subjective factors such as the timeliness of contractual payments received. Additional factors that are considered, particularly with commercial loans over $500,000, include the financial condition and liquidity of individual borrowers and guarantors, if any, and the value of our collateral. To facilitate the oversight of asset quality, loans are categorized based on the number of days past due and on an internal risk rating system, and both are discussed in more detail below. ​ In the event of borrower default, we may seek recovery in compliance with state lending laws, the respective loan agreements, and credit monitoring and remediation procedures that may include modifying or restructuring a loan from its original terms, for economic or legal reasons, to provide a concession to the borrower from their original terms due to borrower financial difficulties in order to facilitate repayment. Such restructured loans are considered TDRs in accordance with ASC 310-40. Assets that have been foreclosed on or acquired through deed-in-lieu of foreclosure are classified as OREO until sold, and are carried at the fair value of the collateral less estimated costs to sell, with any initial valuation adjustments charged to the ACL and any subsequent declines in carrying value charged to impairments on OREO. ​ Non-performing assets and past due loans ​ Non-performing assets consist of non-accrual loans, TDRs on non-accrual and OREO. Interest income that would have been recorded had non-accrual loans performed in accordance with their original contract terms during the three and nine months ended September 30, 2021 was $0.2 million and $0.7 million, respectively, and $0.3 million and $0.9 million during the three and nine months ended September 30, 2020, respectively. ​ Past due status is monitored as an indicator of credit deterioration. Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement remains unpaid after the due date of the scheduled payment. Loans that are 90 days or more past due are put on non-accrual status unless the loan is well secured and in the process of collection. ​ 52 ​ Table of Contents The following table sets forth the non-performing assets and past due loans as of the dates presented: ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 December 31, 2020 Non-accrual loans: ​ ​ ​ ​ ​ Non-accrual loans, excluding restructured loans $ 8,489 ​ $ 12,190 Restructured loans on non-accrual 4,359 ​ 8,197 Non-performing loans 12,848 ​ 20,387 OREO 4,325 ​ 4,730 Other repossessed assets — ​ 17 Total non-performing assets $ 17,173 ​ $ 25,134 ​ ​ ​ ​ ​ ​ Loans 30-89 days past due and still accruing interest $ 1,302 ​ $ 968 Loans 90 days or more past due and still accruing interest 495 ​ 162 Non-accrual loans ​ 12,848 ​ ​ 20,387 Total past due and non-accrual loans $ 14,645 ​ $ 21,517 Accruing restructured loans $ 11,135 ​ $ 13,945 Allowance for credit losses ​ 49,155 ​ ​ 59,777 Non-performing loans to total loans 0.29% ​ 0.47% Non-performing loans to total loans excluding PPP loans 0.30% ​ 0.49% Total 90 days past due and still accruing interest and non-accrual loans to total loans 0.30% ​ 0.47% Total non-performing assets to total loans and OREO 0.39% ​ 0.58% Total non-performing assets to total loans and OREO, excluding PPP loans ​ 0.39% ​ ​ 0.60% ACL to non-performing loans 382.59% ​ 293.21% ​ During the nine months ended September 30, 2021, total non-performing loans decreased $7.5 million, or 37.0%, from December 31, 2020. ​ Loans 30-89 days past due and still accruing interest were 0.03% and 0.02% of total loans at September 30, 2021 and December 31, 2020, respectively. Loans 90 days or more past due and still accruing interest were 0.01% of total loans at both September 30, 2021 and December 31, 2020. ​ The Company continues to monitor the operating status and trends of our clients to enable us to quickly detect credit deterioration and take action where needed. The CARES Act afforded financial institutions the option to modify loans within certain parameters in response to the COVID-19 pandemic without requiring the modifications to be classified as TDRs under ASC Topic 310 if the borrower has been adversely impacted by COVID-19 and was current on their loan payments. The Company modified 14 loans totaling $4.8 million during the nine months ended September 30, 2021 and 483 loans totaling $499.5 million during the nine months ended September 30, 2020, due to the effects of the COVID-19 pandemic, that were not classified as TDRs. Modified loans that remained on a payment deferral plan at September 30, 2021 totaled $0.9 million. Of those loans, principal payment deferrals totaled $0.3 million and full payment deferrals totaled $0.6 million. At September 30, 2021, $45 thousand of loan modifications related to COVID-19 were a subsequent modification. All COVID-19 modified loans were classified as performing as of September 30, 2021. At December 31, 2020, modified loans that remained on a payment deferral plan totaled $173.6 million, or 4.0% of the total loan portfolio, of which 26.2% were a subsequent modification. ​ The following table sets forth COVID-19 loan modifications currently on a deferral plan as of the date presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ ​ Loans outstanding ​ Loans modified ​ Modification type ​ ​ ​ Percentage of ​ ​ Percentage of 3-month ​ 4 to 6-month ​ 7 to 12-month ​ 3 to 6-month full ​ 6 to 12-month full ​ ​ Balance ​ loan portfolio ​ Balance ​ loan segment ​ interest only ​ interest only ​ interest only ​ payment deferral ​ payment deferral Commercial ​ $ 2,990,506 ​ 67.6% ​ $ 649 ​ 0.0% ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 649 Commercial real estate non-owner occupied ​ 670,927 ​ 15.2% ​ — ​ 0.0% ​ — ​ — ​ — ​ — ​ — Residential real estate ​ 665,502 ​ 15.1% ​ 251 ​ 0.0% ​ 206 ​ 45 ​ — ​ — ​ — Consumer ​ 18,031 ​ 0.4% ​ — ​ 0.0% ​ — ​ — ​ — ​ — ​ — Total excluding PPP loans ​ $ 4,344,966 ​ 98.3% ​ $ 900 ​ 0.0% ​ $ 206 ​ $ 45 ​ $ — ​ $ — ​ $ 649 PPP loans ​ ​ 76,794 ​ 1.7% ​ ​ — ​ 0.0% ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total loans ​ $ 4,421,760 ​ 100.0% ​ $ 900 ​ 0.0% ​ $ 206 ​ $ 45 ​ $ — ​ $ — ​ $ 649 53 ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ Loans outstanding ​ Loans modified ​ Modification type ​ ​ ​ Percentage of ​ ​ Percentage of 3-month ​ 4 to 6-month ​ 7 to 12-month ​ 3 to 6-month full ​ 6 to 12-month full ​ ​ Balance ​ loan portfolio ​ Balance ​ loan segment ​ interest only ​ interest only ​ interest only ​ payment deferral ​ payment deferral Commercial ​ $ 2,867,959 ​ 66.0% ​ $ 44,655 ​ 1.6% ​ $ — ​ $ — ​ $ 40,097 ​ $ 649 ​ $ 3,909 Commercial real estate non-owner occupied ​ 631,996 ​ 14.5% ​ 126,423 ​ 20.0% ​ — ​ — ​ 126,423 ​ — ​ — Residential real estate ​ 658,659 ​ 15.1% ​ 2,495 ​ 0.4% ​ — ​ 356 ​ 158 ​ 1,693 ​ 288 Consumer ​ 19,006 ​ 0.4% ​ 4 ​ 0.0% ​ 4 ​ — ​ — ​ — ​ — Total excluding PPP loans ​ $ 4,177,620 ​ 96.0% ​ $ 173,577 ​ 4.2% ​ $ 4 ​ $ 356 ​ $ 166,678 ​ $ 2,342 ​ $ 4,197 PPP loans ​ ​ 176,106 ​ 4.0% ​ ​ — ​ 0.0% ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total loans ​ $ 4,353,726 ​ 100.0% ​ $ 173,577 ​ 4.0% ​ $ 4 ​ $ 356 ​ $ 166,678 ​ $ 2,342 ​ $ 4,197 ​ Allowance for credit losses ​ The ACL represents the amount that we believe is necessary to absorb estimated lifetime credit losses inherent in the loan portfolio at the balance sheet date and involves a high degree of judgment and complexity. On January 1, 2020, the Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments which replaced the incurred loss methodology for recognizing credit losses with a CECL model. The Company utilizes a DCF model developed within a third-party software tool to establish expected lifetime credit losses for the loan portfolio. The ACL is calculated as the difference between the amortized cost basis and the projections from the DCF analysis. The DCF model allows for individual life of loan cash flow modeling, excluding extensions and renewals, using loan-specific interest rates and repayment schedules including estimated prepayment rates and loss recovery timing delays. The model incorporates forecasts of certain national macro-economic factors, including unemployment rates, home price index (“HPI”), retail sales and gross domestic product (“GDP”), which drive correlated loss rates. The determination and application of the ACL accounting policy involves judgments, estimates and uncertainties that are subject to change. For periods beyond the reasonable and supportable forecast period, we revert to historical long-term average loss rates on a straight-line basis. ​ We measure expected credit losses for loans on a pooled basis when similar risk characteristics exist. We have identified four primary loan segments within the ACL model that are further stratified into 11 loan classes to provide more granularity in analyzing loss history and to allow for more definitive qualitative adjustments based upon specific risk factors affecting each loan class. Generally, the underlying risk of loss for each of these loan segments will follow certain norms/trends in various economic environments. Loans that do not share risk characteristics are evaluated on an individual basis and are not included in the collective evaluation. Following are the loan classes within each of the four primary loan segments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner occupied ​ ​ ​ ​ Commercial ​ commercial real estate ​ Residential real estate ​ Consumer Commercial and industrial ​ Construction ​ Senior lien ​ Consumer Owner occupied commercial real estate ​ Acquisition and development ​ Junior lien ​ ​ Food and agribusiness ​ Multifamily ​ ​ ​ ​ Municipal and non-profit ​ Non-owner occupied ​ ​ ​ ​ ​ Loans on non-accrual, in bankruptcy and TDRs with a balance greater than $250,000 are excluded from the pooled analysis and are evaluated individually. If management determines that foreclosure is probable, expected credit losses are evaluated based on the criteria listed below, adjusted for selling costs as appropriate. Typically, these loans consist of commercial, commercial real estate and agriculture loans and exclude homogeneous loans such as residential real estate and consumer loans. Specific allowances are determined by collectively analyzing: ​ ​ ​ ​ ● the borrower's resources, ability, and willingness to repay in accordance with the terms of the loan agreement; ● the likelihood of receiving financial support from any guarantors; ● the adequacy and present value of future cash flows, less disposal costs, of any collateral; and ● the impact current economic conditions may have on the borrower's financial condition and liquidity or the value of the collateral. ​ The collective resulting ACL for loans is calculated as the sum of the general reserves, specific reserves on individually evaluated loans, and qualitative factor adjustments. While these amounts are calculated by individual loan or on a pool basis by segment and class, the entire ACL is available for any loan that, in our judgment, should be charged-off. The determination and application of the 54 ​ Table of Contents ACL accounting policy involves judgments, estimates, and uncertainties that are subject to change. Changes in these assumptions, estimates or the conditions surrounding them may have a material impact on our financial condition, liquidity or results of operations. ​ Net charge-offs on loans during the three and nine months ended September 30, 2021 were $0.2 million and $1.1 million, respectively. The Company recorded a net zero provision for loan losses for the three months ended September 30, 2021, as the provision expense of $0.3 million for funded loans was fully offset by a provision release of $0.3 million for unfunded loan commitments. During the nine months ended September 30, 2021, the Company recorded total provision release of $9.4 million, which included a provision release of $9.6 million for funded loans and a provision expense of $0.2 million for unfunded loan commitments. Provision release was driven by strong asset quality and an improved outlook in the CECL model’s underlying economic forecast. Specific reserves on loans totaled $1.2 million at September 30, 2021. ​ Net charge-offs on loans during the three and nine months ended September 30, 2020 were $0.5 million and $1.5 million, respectively. The Company recorded total provision expense of $1.2 million for the three months ended September 30, 2020, which included a provision expense of $1.0 million for funded loans and a provision expense of $0.2 million for unfunded loan commitments. During the nine months ended September 30, 2020, the Company recorded total provision expense of $17.6 million, which included a provision expense of $17.5 million for funded loans and a provision expense of $0.1 million for unfunded loan commitments. Provision expense was recorded to provide coverage for the impact of deteriorating economic conditions as a result of COVID-19 and to support non-PPP originated loan growth. Specific reserves on loans totaled $1.1 million at September 30, 2020. ​ The Company has elected to exclude AIR from the ACL calculation. When a loan is placed on non-accrual, any recorded AIR is reversed against interest income. As of September 30, 2021 and December 31, 2020, AIR from loans totaled $17.6 million and $16.7 million, respectively. ​ Total ACL ​ After considering the above mentioned factors, we believe that the ACL of $49.2 million is adequate to cover estimated lifetime losses inherent in the loan portfolio at September 30, 2021. However, it is likely that future adjustments to the ACL will be necessary. Any changes to the underlying assumptions, circumstances or estimates, including but not limited to changes in the underlying macro-economic forecast, used in determining the ACL, could negatively or positively affect the Company's results of operations, liquidity or financial condition. ​ The following schedules present, by class stratification, the changes in the ACL during the periods listed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the three months ended ​ ​ September 30, 2021 ​ September 30, 2020 ​ ​ Total loans ​ Total loans Beginning allowance for credit losses ​ $ 49,030 ​ $ 60,465 Charge-offs: ​ ​ ​ ​ ​ ​ Commercial ​ (172) ​ (499) Commercial real estate non owner-occupied ​ — ​ — Residential real estate ​ (4) ​ (16) Consumer ​ (146) ​ (104) Total charge-offs ​ (322) ​ (619) Recoveries ​ 101 ​ 133 Net charge-offs ​ (221) ​ (486) Provision expense for loan losses ​ 346 ​ 1,000 Ending allowance for credit losses ​ $ 49,155 ​ $ 60,979 Ratio of annualized net charge-offs to average total loans during the period ​ 0.02% ​ 0.04% Average total loans outstanding during the period ​ $ 4,352,557 ​ $ 4,677,630 Average total loans outstanding excluding, PPP loans during the period ​ ​ 4,245,524 ​ ​ 4,329,458 ​ 55 ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the nine months ended ​ ​ September 30, 2021 ​ September 30, 2020 ​ ​ Total loans ​ Total loans Beginning balance ​ $ 59,777 ​ $ 39,064 Cumulative effect adjustment (1) ​ ​ — ​ ​ 5,836 Charge-offs: ​ ​ ​ ​ ​ ​ Commercial ​ (1,112) ​ ​ (1,411) Commercial real estate non-owner occupied ​ — ​ ​ — Residential real estate ​ (26) ​ ​ (56) Consumer ​ (410) ​ ​ (502) Total charge-offs ​ (1,548) ​ ​ (1,969) Recoveries ​ 480 ​ ​ 515 Net charge-offs ​ (1,068) ​ ​ (1,454) Provision (release) expense for loan losses ​ (9,554) ​ ​ 17,533 Ending allowance for credit losses ​ $ 49,155 ​ $ 60,979 Ratio of annualized net charge-offs to average total loans during the period ​ 0.03% ​ ​ 0.04% Ratio of ACL to total loans outstanding at period end ​ 1.11% ​ ​ 1.34% Ratio of ACL to total loans outstanding, excluding PPP loans at period end ​ 1.13% ​ ​ 1.45% Ratio of ACL to total non-performing loans at period end ​ 382.59% ​ ​ 322.95% Total loans ​ $ 4,421,760 ​ $ 4,556,121 Average total loans outstanding during the period ​ ​ 4,314,330 ​ ​ 4,628,319 Average total loans outstanding, excluding PPP loans during the period ​ ​ 4,152,735 ​ ​ 4,417,606 Non-performing loans ​ ​ 12,848 ​ ​ 18,882 ​ ​ ​ (1) ​ Related to the adoption of Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments . ​ The following tables present the allocation of the ACL and the percentage of the total amount of loans in each loan category listed as of the dates presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ACL as a % ​ Total loans % of total loans Related ACL of total ACL Commercial ​ $ 2,990,506 67.6% ​ $ 29,653 60.3% PPP loans (1) ​ ​ 76,794 ​ 1.7% ​ ​ — ​ 0.0% Commercial real estate non-owner occupied ​ 670,927 15.2% ​ 10,799 22.0% Residential real estate ​ 665,502 15.1% ​ 8,374 17.0% Consumer ​ 18,031 0.4% ​ 329 0.7% Total ​ $ 4,421,760 100.0% ​ $ 49,155 100.0% ​ ​ ​ ​ (1) ​ PPP loans are fully guaranteed by the SBA. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ACL as a % ​ Total loans % of total loans Related ACL of total ACL Commercial ​ $ 2,867,959 66.0% ​ $ 30,376 50.8% PPP loans (1) ​ ​ 176,106 ​ 4.0% ​ ​ — ​ 0.0% Commercial real estate non-owner occupied ​ 631,996 14.5% ​ 17,448 29.2% Residential real estate ​ 658,659 15.1% ​ 11,492 19.2% Consumer ​ 19,006 0.4% ​ 461 0.8% Total ​ $ 4,353,726 100.0% ​ $ 59,777 100.0% ​ ​ ​ (1) ​ PPP loans are fully guaranteed by the SBA. ​ ​ 56 ​ Table of Contents Deposits ​ Deposits from banking clients serve as a primary funding source for our banking operations, and our ability to gather and manage deposit levels is critical to our success. Deposits not only provide a low-cost funding source for our loans, but also provide a foundation for the client relationships that are critical to future loan growth. The following table presents information regarding our deposit composition at September 30, 2021 and December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Increase (decrease) ​ September 30, 2021 ​ December 31, 2020 ​ Amount ​ % Change Non-interest bearing demand deposits $ 2,447,099 ​ 39.9% ​ $ 2,111,045 ​ 37.1% ​ $ 336,054 15.9% Interest bearing demand deposits 546,597 ​ 8.9% ​ 514,286 ​ 9.1% ​ 32,311 6.3% Savings accounts 731,638 ​ 11.9% ​ 646,829 ​ 11.4% ​ 84,809 13.1% Money market accounts 1,532,445 ​ 25.0% ​ 1,417,940 ​ 25.0% ​ 114,505 8.1% Total transaction deposits 5,257,779 ​ 85.7% ​ 4,690,100 ​ 82.6% ​ 567,679 12.1% Time deposits < $250,000 733,064 ​ 12.0% ​ 820,229 ​ 14.5% ​ (87,165) (10.6)% Time deposits > $250,000 143,777 ​ 2.3% ​ 165,903 ​ 2.9% ​ (22,126) (13.3)% Total time deposits 876,841 ​ 14.3% ​ 986,132 ​ 17.4% ​ (109,291) (11.1)% Total deposits $ 6,134,620 ​ 100.0% ​ $ 5,676,232 ​ 100.0% ​ $ 458,388 8.1% ​ The following table shows scheduled maturities of certificates of deposit with denominations greater than or equal to $250,000 as of September 30, 2021: ​ ​ ​ ​ ​ ​ September 30, 2021 Three months or less ​ $ 32,647 Over 3 months through 6 months ​ 25,217 Over 6 months through 12 months ​ 30,623 Thereafter ​ 55,290 Total time deposits > $250,000 ​ $ 143,777 ​ At September 30, 2021 and December 31, 2020, time deposits that were scheduled to mature within 12 months totaled $592.6 million and $659.5 million, respectively. Of the time deposits scheduled to mature within 12 months at September 30, 2021, $88.5 million were in denominations of $250,000 or more, and $504.1 million were in denominations less than $250,000. ​ Other borrowings ​ As of September 30, 2021 and December 31, 2020, the Bank sold securities under agreements to repurchase totaling $21.4 million and $22.9 million, respectively. In addition, as a member of the FHLB, the Bank has access to a line of credit and term financing from the FHLB with total available credit of $0.9 billion at September 30, 2021. The Bank may utilize its FHLB line of credit as a funding mechanism for originated loans and loans held for sale. At September 30, 2021 and December 31, 2020, the Bank had no outstanding borrowings from the FHLB. The Bank may pledge investment securities and loans as collateral for FHLB advances. There were no investment securities pledged at September 30, 2021 or December 31, 2020. Loans pledged were $1.3 billion and $1.2 billion at September 30, 2021 and December 31, 2020, respectively. There was no interest expense related to FHLB advances and other short-term borrowings for the three and nine months ended September 30, 2021, compared to $0.1 million and $1.3 million during the three and nine months ended September 30, 2020, respectively. ​ Results of Operations ​ Our net income depends largely on net interest income, which is the difference between interest income from interest earning assets and interest expense on interest bearing liabilities. Our results of operations are also affected by provisions for loan losses and non-interest income, such as service charges, bank card income, swap fee income, and gain on sale of mortgages. Our primary operating expenses, aside from interest expense, consist of salaries and benefits, occupancy costs, telecommunications data processing expense and intangible asset amortization. Any expenses related to the resolution of problem assets are also included in non-interest expense. ​ 57 ​ Table of Contents Overview of results of operations ​ We recorded net income of $19.8 million and $70.8 million, or $0.64 and $2.27 per diluted share, during the three and nine months ended September 30, 2021, respectively. During the nine months ended September 30, 2021, the return on average tangible assets increased three basis points to 1.39%, and the return on average tangible common equity increased 57 basis points to 13.04%, compared to the nine months ended September 30, 2020. ​ During the three and nine months ended September 30, 2020, we recorded net income of $27.9 million and $61.4 million, or $0.90 and $1.97 per diluted share, respectively. During the nine months ended September 30, 2020, the return on average tangible assets decreased nine basis points to 1.36%, and the return on average tangible common equity decreased 96 basis points to 12.47%, compared to the nine months ended September 30, 2019. ​ Net interest income ​ We regularly review net interest income metrics to provide us with indicators of how the various components of net interest income are performing. We regularly review: (i) our loan mix and the yield on loans; (ii) the investment portfolio and the related yields; (iii) our deposit mix and the cost of deposits; and (iv) net interest income simulations for various forecast periods. ​ 58 ​ Table of Contents The table below presents the components of net interest income on a FTE basis for the three months ended September 30, 2021 and 2020. The effects of trade-date accounting of investment securities for which the cash had not settled are not considered interest earning assets and are excluded from this presentation for time frames prior to their cash settlement, as are the market value adjustments on the investment securities available-for-sale and loans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ For the three months ended ​ ​ September 30, 2021 ​ September 30, 2020 ​ ​ Average balance ​ Interest ​ ​ Average rate ​ Average balance ​ Interest ​ ​ Average rate Interest earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Originated loans FTE (1)(2)(3) ​ $ 4,137,001 ​ $ 41,865 ​ ​ 4.01% ​ $ 4,343,335 ​ $ 40,973 ​ ​ 3.75% Acquired loans ​ 187,419 ​ 3,796 ​ ​ 8.04% ​ 284,653 ​ ​ 6,593 ​ ​ 9.21% Loans held for sale ​ ​ 157,381 ​ ​ 1,166 ​ ​ 2.94% ​ ​ 230,390 ​ ​ 1,683 ​ ​ 2.91% Investment securities available-for-sale ​ 656,757 ​ 2,572 ​ ​ 1.57% ​ 559,330 ​ 2,784 ​ ​ 1.99% Investment securities held-to-maturity ​ 671,053 ​ 2,178 ​ ​ 1.30% ​ 242,511 ​ 1,253 ​ ​ 2.07% Other securities ​ 14,657 ​ 210 ​ ​ 5.73% ​ 29,640 ​ 221 ​ ​ 2.98% Interest earning deposits and securities purchased under agreements to resell ​ 799,779 ​ 329 ​ ​ 0.16% ​ 254,931 ​ 70 ​ ​ 0.11% Total interest earning assets FTE (2) ​ $ 6,624,047 ​ $ 52,116 ​ ​ 3.12% ​ $ 5,944,790 ​ $ 53,577 ​ ​ 3.59% Cash and due from banks ​ $ 77,498 ​ ​ ​ ​ ​ ​ ​ $ 73,274 ​ ​ ​ ​ ​ ​ Other assets ​ 463,553 ​ ​ ​ ​ ​ ​ ​ 525,324 ​ ​ ​ ​ ​ ​ Allowance for credit losses ​ (48,957) ​ ​ ​ ​ ​ ​ ​ (60,372) ​ ​ ​ ​ ​ ​ Total assets ​ $ 7,116,141 ​ ​ ​ ​ ​ ​ ​ $ 6,483,016 ​ ​ ​ ​ ​ ​ Interest bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest bearing demand, savings and money market deposits ​ $ 2,803,071 ​ $ 1,516 ​ ​ 0.21% ​ $ 2,957,604 ​ $ 1,990 ​ ​ 0.27% Time deposits ​ 903,935 ​ 1,711 ​ ​ 0.75% ​ 1,038,983 ​ 3,501 ​ ​ 1.34% Securities sold under agreements to repurchase ​ 19,681 ​ 5 ​ ​ 0.10% ​ 22,667 ​ 10 ​ ​ 0.18% Federal Home Loan Bank advances ​ — ​ — ​ ​ 0.00% ​ 1,141 ​ 86 ​ ​ 29.99% Total interest bearing liabilities ​ $ 3,726,687 ​ $ 3,232 ​ ​ 0.34% ​ $ 4,020,395 ​ $ 5,587 ​ ​ 0.55% Demand deposits ​ $ 2,422,976 ​ ​ ​ ​ ​ ​ ​ $ 1,515,058 ​ ​ ​ ​ ​ ​ Other liabilities ​ 107,233 ​ ​ ​ ​ ​ ​ ​ 155,205 ​ ​ ​ ​ ​ ​ Total liabilities ​ 6,256,896 ​ ​ ​ ​ ​ ​ ​ 5,690,658 ​ ​ ​ ​ ​ ​ Shareholders' equity ​ 859,245 ​ ​ ​ ​ ​ ​ ​ 792,358 ​ ​ ​ ​ ​ ​ Total liabilities and shareholders' equity ​ $ 7,116,141 ​ ​ ​ ​ ​ ​ ​ $ 6,483,016 ​ ​ ​ ​ ​ ​ Net interest income FTE (2) ​ ​ ​ ​ $ 48,884 ​ ​ ​ ​ ​ ​ ​ $ 47,990 ​ ​ ​ Interest rate spread FTE (2) ​ ​ ​ ​ ​ ​ ​ ​ 2.78% ​ ​ ​ ​ ​ ​ ​ ​ 3.04% Net interest earning assets ​ $ 2,897,360 ​ ​ ​ ​ ​ ​ ​ $ 1,924,395 ​ ​ ​ ​ ​ ​ Net interest margin FTE (2) ​ ​ ​ ​ ​ ​ ​ ​ 2.93% ​ ​ ​ ​ ​ ​ ​ ​ 3.21% Average transaction deposits ​ $ 5,226,047 ​ ​ ​ ​ ​ ​ ​ $ 4,472,662 ​ ​ ​ ​ ​ ​ Average total deposits ​ ​ 6,129,982 ​ ​ ​ ​ ​ ​ ​ ​ 5,511,645 ​ ​ ​ ​ ​ ​ Ratio of average interest earning assets to average interest bearing liabilities ​ ​ 177.75% ​ ​ ​ ​ ​ ​ ​ ​ 147.87% ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan. (2) Presented on an FTE basis using the statutory tax rate of 21% for all periods presented. The taxable equivalent adjustments included above are $1,315 and $1,275 for the three months ended September 30, 2021 and 2020, respectively. (3) Loan fees included in interest income totaled $4,514 and $3,703 for the three months ended September 30, 2021 and 2020, respectively. ​ Net interest income totaled $47.6 million and $46.7 million during the three months ended September 30, 2021 and 2020, respectively. Net interest income on an FTE basis totaled $48.9 million and $48.0 million during the three months ended September 30, 2021 and 2020, respectively. The yield on earning assets decreased 47 basis points, driven by the remix of assets into lower-yielding cash balances and interest rate actions taken by the Federal Reserve during 2020. During the three months ended September 30, 2021, the cost of funds decreased 19 basis points, compared to the three months ended September 30, 2020. 59 ​ Table of Contents ​ Average loans comprised $4.3 billion, or 65.3%, of total average interest earning assets during the three months ended September 30, 2021, compared to $4.6 billion, or 77.8%, during the three months ended September 30, 2020. The decrease in average loan balances was primarily driven by our careful approach to extending new credit, a focus on managing credit risk and yield and a decrease in PPP loan balances. Average PPP loans for the three months ended September 30, 2021 decreased $241.1 million, or 69.3%, to $107.0 million, compared to the three months ended September 30, 2020. ​ Average investment securities comprised 20.0% and 13.5% of total interest earning assets during the three months ended September 30, 2021 and 2020, respectively. The increase in the investment portfolio was driven by strategic decisions to deploy a portion of the excess liquidity into investment securities. ​ Average balances of interest bearing liabilities decreased $293.7 million during the three months ended September 30, 2021, compared to the three months ended September 30, 2020. Average non-interest bearing demand deposits increased $907.9 million during the three months ended September 30, 2021, compared to the three months ended September 30, 2020. Average interest bearing demand, savings and money market deposits decreased $154.5 million. Average time deposits decreased $135.0 million between the two periods, and average securities sold under agreements to repurchase decreased $3.0 million. During the three months ended September 30, 2021, average FHLB advances decreased $1.1 million, compared to the three months ended September 30, 2020. The cost of deposits decreased 19 basis points to 0.21% during the three months ended September 30, 2021, compared to 0.40% during the three months ended September 30, 2020. ​ 60 ​ Table of Contents The table below presents the components of net interest income on an FTE basis for the nine months ended September 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the nine months ended ​ For the nine months ended ​ ​ September 30, 2021 ​ September 30, 2020 ​ ​ Average ​ ​ ​ Average Average ​ ​ ​ Average ​ balance ​ Interest ​ ​ rate ​ balance ​ Interest ​ ​ rate Interest earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Originated loans FTE (1)(2)(3) ​ $ 4,073,529 ​ $ 121,461 ​ ​ 3.99% ​ $ 4,273,332 ​ $ 128,392 ​ ​ 4.01% Acquired loans ​ 212,151 ​ 12,847 ​ ​ 8.10% ​ 313,555 ​ ​ 22,194 ​ ​ 9.45% Loans held for sale ​ 182,385 ​ 3,896 ​ ​ 2.86% ​ 163,980 ​ ​ 3,929 ​ ​ 3.20% Investment securities available-for-sale ​ 660,399 ​ 7,454 ​ ​ 1.50% ​ 597,654 ​ 9,229 ​ ​ 2.06% Investment securities held-to-maturity ​ 555,818 ​ 5,317 ​ ​ 1.28% ​ 207,107 ​ 3,689 ​ ​ 2.37% Other securities ​ ​ 15,180 ​ ​ 629 ​ ​ 5.52% ​ ​ 29,826 ​ 945 ​ ​ 4.22% Interest earning deposits and securities purchased under agreements to resell ​ ​ 776,472 ​ ​ 722 ​ ​ 0.12% ​ ​ 105,430 ​ 179 ​ ​ 0.23% Total interest earning assets FTE (2) ​ $ 6,475,934 ​ $ 152,326 ​ ​ 3.14% ​ $ 5,690,884 ​ $ 168,557 ​ ​ 3.96% Cash and due from banks ​ $ 78,953 ​ ​ ​ ​ ​ ​ ​ $ 74,694 ​ ​ ​ ​ ​ ​ Other assets ​ 476,856 ​ ​ ​ ​ ​ ​ ​ 510,941 ​ ​ ​ ​ ​ ​ Allowance for credit losses ​ (54,249) ​ ​ ​ ​ ​ ​ ​ (54,077) ​ ​ ​ ​ ​ ​ Total assets ​ $ 6,977,494 ​ ​ ​ ​ ​ ​ ​ $ 6,222,442 ​ ​ ​ ​ ​ ​ Interest bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest bearing demand, savings and money market deposits ​ $ 2,746,657 ​ $ 4,740 ​ ​ 0.23% ​ $ 2,725,572 ​ $ 6,829 ​ ​ 0.33% Time deposits ​ 936,088 ​ 6,050 ​ ​ 0.86% ​ 1,048,116 ​ 12,075 ​ ​ 1.54% Securities sold under agreements to repurchase ​ 20,310 ​ 16 ​ ​ 0.11% ​ 30,322 ​ 125 ​ ​ 0.55% Federal Home Loan Bank advances ​ — ​ — ​ ​ 0.00% ​ 127,456 ​ 1,295 ​ ​ 1.36% Total interest bearing liabilities ​ $ 3,703,055 ​ $ 10,806 ​ ​ 0.39% ​ $ 3,931,466 ​ $ 20,324 ​ ​ 0.69% Demand deposits ​ $ 2,320,160 ​ ​ ​ ​ ​ ​ ​ $ 1,363,556 ​ ​ ​ ​ ​ ​ Other liabilities ​ 108,503 ​ ​ ​ ​ ​ ​ ​ 147,929 ​ ​ ​ ​ ​ ​ Total liabilities ​ 6,131,718 ​ ​ ​ ​ ​ ​ ​ 5,442,951 ​ ​ ​ ​ ​ ​ Stockholders' equity ​ 845,776 ​ ​ ​ ​ ​ ​ ​ 779,491 ​ ​ ​ ​ ​ ​ Total liabilities and shareholders’ equity ​ $ 6,977,494 ​ ​ ​ ​ ​ ​ ​ $ 6,222,442 ​ ​ ​ ​ ​ ​ Net interest income FTE (2) ​ ​ ​ ​ $ 141,520 ​ ​ ​ ​ ​ ​ ​ $ 148,233 ​ ​ ​ Interest rate spread FTE (2) ​ ​ ​ ​ ​ ​ ​ ​ 2.75% ​ ​ ​ ​ ​ ​ ​ ​ 3.27% Net interest earning assets ​ $ 2,772,879 ​ ​ ​ ​ ​ ​ ​ $ 1,759,418 ​ ​ ​ ​ ​ ​ Net interest margin FTE (2) ​ ​ ​ ​ ​ ​ ​ ​ 2.92% ​ ​ ​ ​ ​ ​ ​ ​ 3.48% Average transaction deposits ​ $ 5,066,817 ​ ​ ​ ​ ​ ​ ​ $ 4,089,128 ​ ​ ​ ​ ​ ​ Average total deposits ​ ​ 6,002,905 ​ ​ ​ ​ ​ ​ ​ ​ 5,137,244 ​ ​ ​ ​ ​ ​ Ratio of average interest earning assets to average interest bearing liabilities ​ ​ 174.88% ​ ​ ​ ​ ​ ​ ​ ​ 144.75% ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan. (2) Presented on a fully taxable equivalent basis using the statutory tax rate of 21% for all periods presented. The taxable equivalent adjustments included above are $3,862 and $3,843 for the nine months ended September 30, 2021 and 2020, respectively. (3) Loan fees included in interest income totaled $13,753 and $8,137 for the nine months ended September 30, 2021 and 2020, respectively. ​ Net interest income totaled $137.7 million and $144.4 million during the nine months ended September 30, 2021 and 2020, respectively. Net interest income on an FTE basis totaled $141.5 million and $148.2 million during the nine months ended September 30, 2021 and 2020, respectively. The yield on earnings assets decreased 82 basis points, led by the remix of assets into lower-yielding cash balances and a decrease in the originated portfolio yields due to interest rate actions taken by the Federal Reserve during 2020. During the nine months ended September 30, 2021, the cost of funds decreased 27 basis points, compared to the nine months ended September 30, 2020. 61 ​ Table of Contents ​ Average loans comprised $4.3 billion, or 66.2%, of total average interest earning assets during the nine months ended September 30, 2021, compared to $4.6 billion, or 80.6%, of total average interest earning assets during the nine months ended September 30, 2020. The $301.2 million decrease in average loan balances was primarily driven by the Company’s careful approach to extending new credit and focus on managing credit risk and yield during 2020. Year-to-date loan originations through September 30, 2021 totaled $1.1 billion, including $121.1 million of PPP loan originations. ​ Average investment securities comprised 18.8% and 14.1% of total interest earning assets during the nine months ended September 30, 2021 and 2020, respectively. The increase in the investment portfolio was driven by strategic decisions to deploy a portion of excess liquidity into investment securities. ​ Average balances of interest bearing liabilities decreased $228.4 million during the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020. The decrease was driven by strong non-interest bearing deposit inflows, which were utilized, in part, to pay off our outstanding FHLB advances in 2020. Average FHLB advances decreased $127.5 million, and average time deposits decreased $112.0 million between the two periods. Those decreases were partially offset by an increase in average interest-bearing transaction deposits of $21.1 million. The cost of deposits decreased 25 basis points to 0.24% during the nine months ended September 30, 2021, compared to 0.49% during the nine months ended September 30, 2020. ​ 62 ​ Table of Contents The following table summarizes the changes in net interest income on an FTE basis by major category of interest earning assets and interest bearing liabilities, identifying changes related to volume and changes related to rates for the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, 2021 ​ Nine months ended September 30, 2021 ​ ​ compared to ​ compared to ​ ​ Three months ended September 30, 2020 ​ Nine months ended September 30, 2020 ​ ​ Increase (decrease) due to ​ Increase (decrease) due to ​ Volume Rate Net Volume Rate Net Interest income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Originated loans FTE (1)(2)(3) ​ $ (2,088) ​ $ 2,980 ​ $ 892 ​ $ (5,958) ​ $ (973) ​ $ (6,931) Acquired loans ​ ​ (1,969) ​ ​ (828) ​ ​ (2,797) ​ ​ (6,141) ​ ​ (3,206) ​ ​ (9,347) Loans held for sale ​ (541) ​ 24 ​ (517) ​ 393 ​ (426) ​ (33) Investment securities available-for-sale ​ 382 ​ (594) ​ (212) ​ 708 ​ (2,483) ​ (1,775) Investment securities held-to-maturity ​ 1,391 ​ (466) ​ 925 ​ 3,336 ​ (1,708) ​ 1,628 Other securities ​ (215) ​ 204 ​ (11) ​ (607) ​ 291 ​ (316) Interest earning deposits and securities purchased under agreements to resell ​ 224 ​ 35 ​ 259 ​ 624 ​ (81) ​ 543 Total interest income ​ $ (2,816) ​ $ 1,355 ​ $ (1,461) ​ $ (7,645) ​ $ (8,586) ​ $ (16,231) Interest expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest bearing demand, savings and money market deposits ​ $ (84) ​ $ (390) ​ $ (474) ​ $ 36 ​ $ (2,125) ​ $ (2,089) Time deposits ​ (256) ​ (1,534) ​ (1,790) ​ (724) ​ (5,301) ​ (6,025) Securities sold under agreements to repurchase ​ (1) ​ (4) ​ (5) ​ (8) ​ (101) ​ (109) Federal Home Loan Bank advances ​ — ​ (86) ​ (86) ​ — ​ (1,295) ​ (1,295) Total interest expense ​ (341) ​ (2,014) ​ (2,355) ​ (696) ​ (8,822) ​ (9,518) Net change in net interest income ​ $ (2,475) ​ $ 3,369 ​ $ 894 ​ $ (6,949) ​ $ 236 ​ $ (6,713) ​ ​ ​ (1) Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan. (2) Presented on an FTE basis using the statutory tax rate of 21% for all periods presented. The taxable equivalent adjustments included above are $1,315 and $1,275 for the three months ended September 30, 2021 and 2020, respectively. The taxable equivalent adjustments included above are $3,862 and $3,843 for the nine months ended September 30, 2021 and 2020, respectively. (3) Loan fees included in interest income totaled $4,514 and $3,703 for the three months ended September 30, 2021 and 2020, respectively. Loan fees included in interest income totaled $13,753 and $8,137 for the nine months ended September 30, 2021 and 2020, respectively. ​ Below is a breakdown of average deposits and the average rates paid during the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ For the nine months ended ​ September 30, 2021 ​ September 30, 2020 ​ September 30, 2021 ​ September 30, 2020 ​ ​ ​ ​ Average ​ ​ ​ ​ Average ​ ​ ​ ​ Average ​ ​ ​ ​ Average ​ Average ​ rate ​ Average ​ rate ​ Average ​ rate ​ Average ​ rate ​ balance paid balance paid balance paid balance paid Non-interest bearing demand $ 2,422,976 ​ 0.00% ​ $ 1,515,058 0.00% ​ $ 2,320,160 0.00% ​ $ 1,363,556 ​ 0.00% Interest bearing demand 544,056 ​ 0.19% ​ 961,468 ​ 0.21% ​ 548,906 ​ 0.21% ​ 875,871 ​ 0.24% Money market accounts 1,535,361 ​ 0.25% ​ 1,390,747 ​ 0.34% ​ 1,491,591 ​ 0.27% ​ 1,271,499 ​ 0.44% Savings accounts 723,654 ​ 0.15% ​ 605,389 ​ 0.18% ​ 706,160 ​ 0.16% ​ 578,202 ​ 0.24% Time deposits 903,935 ​ 0.75% ​ 1,038,983 ​ 1.34% ​ 936,088 ​ 0.86% ​ 1,048,116 ​ 1.54% Total average deposits $ 6,129,982 ​ 0.21% ​ $ 5,511,645 ​ 0.40% ​ $ 6,002,905 ​ 0.24% ​ $ 5,137,244 ​ 0.49% ​ ​ ​ ​ ​ Provision for loan losses ​ The provision for loan losses represents the amount of expense that is necessary to bring the ACL to a level that we deem appropriate to absorb estimated lifetime losses inherent in the loan portfolio as of the balance sheet date. The determination of the ACL, and the resultant provision for loan losses, is subjective and involves significant estimates and assumptions. ​ The Company recorded $0.3 million of provision expense for funded loans and $0.3 million of provision release for unfunded loan commitment reserves, during the three months ended September 30, 2021, as the impact of net loan growth was offset by strong asset 63 ​ Table of Contents quality and an improved outlook in the CECL model’s underlying economic forecast. During the three months ended September 30, 2020, provision for loan loss expense of $1.2 million, including a $0.2 million provision expense for unfunded loan commitment reserves, was recorded under the CECL model to provide coverage for the impact of deterioration in the macro-economic environment as a result of COVID-19. ​ The Company recorded total provision release of $9.4 million for the nine months ended September 30, 2021, which included a provision release of $9.6 million for funded loans and a provision expense of $0.2 million for unfunded loan commitments, driven by strong asset quality and an improved outlook in the CECL model’s underlying economic forecast. During the nine months ended September 30, 2020, the Company recorded total provision expense of $17.6 million, which included a provision expense of $17.5 million for funded loans and a provision expense of $0.1 million for unfunded loan commitments, to provide coverage for the impact of deteriorating economic conditions as a result of COVID-19 and to support non-PPP originated loan growth. ​ The allowance for credit losses totaled 1.11% of total loans at September 30, 2021, compared to the allowance for credit losses of 1.34% at September 30, 2020. Excluding PPP loans, the allowance for credit losses totaled 1.13% and 1.45% of total loans at September 30, 2021 and 2020, respectively. ​ Non-interest income ​ The table below details the components of non-interest income for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended September 30, ​ For the nine months ended September 30, ​ Three months ​ Nine months ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Increase (decrease) ​ Increase (decrease) ​ 2021 2020 2021 2020 ​ Amount ​ % Change ​ Amount ​ % Change Service charges ​ $ 3,947 ​ $ 3,742 ​ $ 10,989 ​ $ 10,962 ​ $ 205 ​ 5.5 % ​ $ 27 ​ 0.2 % Bank card fees ​ 4,530 ​ 4,039 ​ 13,217 ​ 11,206 ​ ​ 491 ​ 12.2 % ​ ​ 2,011 ​ 17.9 % Mortgage banking income ​ 16,615 ​ 34,943 ​ 52,973 ​ 79,246 ​ ​ (18,328) ​ (52.5)% ​ ​ (26,273) ​ (33.2)% Bank-owned life insurance income ​ ​ 558 ​ ​ 597 ​ ​ 1,659 ​ ​ 1,776 ​ ​ (39) ​ (6.5)% ​ ​ (117) ​ (6.6)% Other non-interest income ​ 2,872 ​ 1,136 ​ 8,276 ​ 3,608 ​ ​ 1,736 ​ 152.8 % ​ ​ 4,668 ​ 129.4 % OREO-related income ​ — ​ 75 ​ 35 ​ 103 ​ ​ (75) ​ (100.0)% ​ ​ (68) ​ (66.0)% Total non-interest income ​ $ 28,522 ​ $ 44,532 ​ $ 87,149 ​ $ 106,901 ​ $ (16,010) ​ (36.0)% ​ $ (19,752) ​ (18.5)% ​ Non-interest income totaled $28.5 million and $87.1 million for the three and nine months ended September 30, 2021, respectively, compared to $44.5 million and $106.9 million for the three and nine months ended September 30, 2020, respectively. The decrease in mortgage banking income during both periods was driven by slower refinance activity in 2021 and competition driving tighter gain on sale margins. The decrease in mortgage banking income was partially offset by a $1.3 million gain from the sale of mortgage servicing rights during the third quarter of 2021. Service charges and bank card fees increased a combined $0.7 million and $2.0 million during the three and nine months ended September 30, 2021, respectively, compared to the three and nine months ended September 30, 2020, due to changes in consumer behavior. Included in other non-interest income was $0.8 million of deposit premium gain from the sale of one banking center during the third quarter of 2021. Additionally, other non-interest income included $0.4 million and $3.5 million of gains from fixed assets sales from the banking center consolidations during the three and nine months ended September 30, 2021, respectively. ​ 64 ​ Table of Contents Non-interest expense ​ The table below details the components of non-interest expense for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended September 30, ​ For the nine months ended September 30, ​ Three months ​ Nine months ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Increase (decrease) ​ Increase (decrease) ​ 2021 2020 2021 2020 ​ Amount ​ % Change ​ Amount ​ % Change Salaries and benefits $ 32,556 ​ $ 38,614 ​ $ 97,518 ​ $ 108,251 ​ $ (6,058) ​ (15.7)% ​ $ (10,733) ​ (9.9)% Occupancy and equipment 6,469 ​ 6,878 ​ 19,150 ​ 20,854 ​ (409) ​ (5.9)% ​ ​ (1,704) ​ (8.2)% Telecommunications and data processing 2,282 ​ 2,270 ​ 6,934 ​ 6,790 ​ 12 ​ 0.5 % ​ ​ 144 ​ 2.1 % Marketing and business development 582 ​ 696 ​ 1,604 ​ 1,992 ​ (114) ​ (16.4)% ​ ​ (388) ​ (19.5)% FDIC deposit insurance 475 ​ 409 ​ 1,375 ​ 744 ​ 66 ​ 16.1 % ​ ​ 631 ​ 84.8 % Bank card expenses 1,457 ​ 1,275 ​ 3,931 ​ 3,334 ​ 182 ​ 14.3 % ​ ​ 597 ​ 17.9 % Professional fees 3,251 ​ 714 ​ 4,642 ​ 2,082 ​ 2,537 ​ 355.3 % ​ ​ 2,560 ​ 123.0 % Other non-interest expense 2,828 ​ 2,793 ​ 7,652 ​ 8,362 ​ 35 ​ 1.3 % ​ ​ (710) ​ (8.5)% Problem asset workout ​ 1,119 ​ ​ 1,064 ​ ​ 1,851 ​ ​ 2,341 ​ ​ 55 ​ 5.2 % ​ ​ (490) ​ (20.9)% (Gain) loss on OREO sales, net ​ — ​ ​ (119) ​ ​ 192 ​ ​ (25) ​ ​ 119 ​ 100.0 % ​ ​ 217 ​ 868.0 % Core deposit intangible asset amortization 295 ​ 295 ​ 887 ​ 887 ​ — ​ — ​ ​ — ​ — Banking center consolidation-related expense — ​ 432 ​ 1,589 ​ 2,140 ​ (432) ​ (100.0)% ​ ​ (551) ​ (25.7)% Total non-interest expense $ 51,314 ​ $ 55,321 ​ $ 147,325 ​ $ 157,752 ​ $ (4,007) ​ (7.2)% ​ $ (10,427) ​ (6.6)% ​ During the three and nine months ended September 30, 2021, non-interest expense decreased $4.0 million, or 7.2%, and $10.4 million, or 6.6%, respectively, compared to the three and nine months ended September 30, 2020. Salaries and benefits decreased during both periods primarily due to lower mortgage-related compensation. Occupancy and equipment decreased $0.4 million and $1.7 million, during the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, largely due to efficiencies gained from the completion of the previously announced banking center consolidations. Problem asset workout expense included a write-down during the third quarter of 2021 of one previously acquired OREO property totaling $0.8 million. Included in professional fees for the three and nine months ended September 30, 2020, were $2.4 million and $2.5 million, respectively, of transaction-related expenses for the investments in Finstro Global Holdings Inc. and Figure Technologies. ​ Income taxes ​ Income tax expense totaled $5.0 million and $16.1 million for the three and nine months ended September 30, 2021, respectively. Income tax expense for the three and nine months ended September 30, 2020 was $6.8 million and $14.5 million, respectively. The effective tax rate for the three and nine months ended September 30, 2021 was 20.0% and 18.5%, respectively, compared to 19.7% and 19.1% for the same periods in the prior year. Income tax expense included $0.4 million of benefit and $0.1 million of expense from stock compensation activity during the nine months ended September 30, 2021 and 2020, respectively. Adjusting for stock compensation activity, the effective tax rate for the nine months ended September 30, 2021 and 2020 was consistent at 18.9%. The effective tax rate is lower than the federal statutory rate primarily due to interest income from tax-exempt lending, bank-owned life insurance income, and the relationship of these items to pre-tax income. ​ Additional information regarding income taxes can be found in note 19 of our audited consolidated financial statements in our 2020 Annual Report on Form 10-K . ​ Liquidity and Capital Resources ​ Liquidity is monitored and managed to ensure that sufficient funds are available to operate our business and pay our obligations to depositors and other creditors, while providing ample available funds for opportunistic and strategic investments. On-balance sheet 65 ​ Table of Contents liquidity is represented by our cash and cash equivalents, and unencumbered investment securities, and is detailed in the table below as of September 30, 2021 and December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 December 31, 2020 Cash and due from banks ​ $ 806,870 ​ $ 605,065 Interest bearing bank deposits ​ 500 ​ 500 Unencumbered investment securities, at fair value ​ 758,992 ​ 513,945 Total ​ $ 1,566,362 ​ $ 1,119,510 ​ Total on-balance sheet liquidity increased $446.9 million at September 30, 2021, compared to December 31, 2020. The increase was due to $245.1 million in unencumbered available-for-sale and held-to-maturity securities balances and higher cash and due from banks of $201.8 million. ​ Through our relationship with the FHLB, we have pledged qualifying loans and investment securities allowing us to obtain additional liquidity through FHLB advances and lines of credit. The Bank may pledge investment securities and loans as collateral for FHLB advances. There were no investment securities pledged at September 30, 2021 or December 31, 2020. The Bank had loans pledged as collateral for FHLB advances of $1.3 billion and $1.2 billion at September 30, 2021 and December 31, 2020, respectively. FHLB advances, lines of credit and other short-term borrowing availability totaled $0.9 billion at September 30, 2021. The Bank can obtain additional liquidity through the FHLB facility, if required, and also has access to the Paycheck Protection Program Liquidity Facility and federal funds lines of credit with correspondent banks. ​ Our primary sources of funds are deposits, securities sold under agreements to repurchase, prepayments and maturities of loans and investment securities, the sale of investment securities and funds provided from operations. We anticipate having access to other third-party funding sources, including the ability to raise funds through the issuance of shares of our common stock or other equity or equity-related securities, incurrence of debt and federal funds purchased, that may also be a source of liquidity. We anticipate that these sources of liquidity will provide adequate funding and liquidity for at least a 12-month period. ​ Our primary uses of funds are loan originations, investment security purchases, withdrawals of deposits, settlement of repurchase agreements, capital expenditures, operating expenses and share repurchases. For additional information regarding our operating, investing and financing cash flows, see our consolidated statements of cash flows in the accompanying unaudited consolidated financial statements. ​ Exclusive from the investing activities related to acquisitions, our primary investing activities are originations and pay-offs and paydowns of loans and purchases and sales of investment securities. At September 30, 2021, pledgeable investment securities represented a significant source of liquidity. Our available-for-sale investment securities are carried at fair value and our held-to-maturity securities are carried at amortized cost. Our collective investment securities portfolio totaled $1.3 billion at September 30, 2021, inclusive of pre-tax net unrealized losses of $2.7 million on the available-for-sale securities portfolio. Additionally, our held-to-maturity securities portfolio had $2.3 million of pre-tax net unrealized losses at September 30, 2021. The gross unrealized gains and losses are detailed in note 3 of our consolidated financial statements. As of September 30, 2021, our investment securities portfolio consisted primarily of mortgage-backed securities, all of which were issued or guaranteed by U.S. Government agencies or sponsored enterprises. The anticipated repayments and marketability of these securities offer substantial resources and flexibility to meet new loan demand, reinvest in the investment securities portfolio, or provide optionality for reductions in our deposit funding base. ​ At present, financing activities primarily consist of changes in deposits and repurchase agreements, and advances from the FHLB, in addition to the payment of dividends and the repurchase of our common stock. Maturing time deposits represent a potential use of funds. As of September 30, 2021, $592.6 million of time deposits were scheduled to mature within 12 months. Based on the current interest rate environment, market conditions and our consumer banking strategy focusing on both lower cost transaction accounts and term deposits, our strategy is to replace a portion of those maturing time deposits with transaction deposits and market-rate time deposits. ​ Under the Basel III requirements, at September 30, 2021, the Company and the Bank met all capital adequacy requirements and the Bank had regulatory capital ratios in excess of the levels established for well-capitalized institutions. For more information on regulatory capital, see note 10 in our consolidated financial statements. ​ 66 ​ Table of Contents Our shareholders' equity is impacted by earnings, changes in unrealized gains and losses on securities, net of tax, stock-based compensation activity, share repurchases and the payment of dividends. ​ The Board of Directors has from time to time authorized multiple programs to repurchase shares of the Company’s common stock either in open market or in privately negotiated transactions in accordance with applicable regulations of the SEC. On February 24, 2021, the Company’s Board of Directors authorized a new program to repurchase up to $75.0 million of the Company’s stock which replaces the previously authorized $50.0 million stock repurchase program announced in February 2020 in its entirety. During the third quarter of 2021, the Company repurchased 527,214 shares for $19.4 million at a weighted average price per share of $36.72. The remaining authorization under the new program as of September 30, 2021 was $55.6 million. ​ On November 9, 2021, our Board of Directors declared a quarterly dividend of $0.22 per common share, payable on December 15, 2021 to shareholders of record at the close of business on November 26, 2021. ​ Asset/Liability Management and Interest Rate Risk ​ Management and the Board of Directors are responsible for managing interest rate risk and employing risk management policies that monitor and limit this exposure. Interest rate risk is measured using net interest income simulations and market value of portfolio equity analyses. These analyses use various assumptions, including the nature and timing of interest rate changes, yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits and reinvestment/replacement of asset and liability cash flows. ​ The principal objective of the Company's asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled assumption of interest rate risk while maximizing earnings and preserving adequate levels of liquidity and capital. The asset and liability management function is under the guidance of the Asset Liability Committee from direction of the Board of Directors. The Asset Liability Committee meets monthly to review, among other things, the sensitivity of the Company's assets and liabilities to interest rate changes, local and national market conditions and rates. The Asset Liability Committee also reviews the liquidity, capital, deposit mix, loan mix and investment positions of the Company. ​ Instantaneous parallel rate shift scenarios are modeled and utilized to evaluate risk and establish exposure limits for acceptable changes in net interest margin. These scenarios, known as rate shocks, simulate an instantaneous change in interest rates and utilize various assumptions, including, but not limited to, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment and replacement of asset and liability cash flows. ​ We also analyze the economic value of equity as a secondary measure of interest rate risk. This is a complementary measure to net interest income where the calculated value is the result of the market value of assets less the market value of liabilities. The economic value of equity is a longer term view of interest rate risk because it measures the present value of the future cash flows. The impact of changes in interest rates on this calculation is analyzed for the risk to our future earnings and is used in conjunction with the analyses on net interest income. ​ Our interest rate risk model indicated that the Company was asset sensitive in terms of interest rate sensitivity at September 30, 2021. During the nine months ended September 30, 2021, our asset sensitivity decreased for a rising rate environment as a result of the balance sheet mix. The table below illustrates the impact of an immediate and sustained 200 and 100 basis point increase at September 30, 2021 and December 31, 2020 and a 25 basis point decrease in interest rates on net interest income based on the interest rate risk model at September 30, 2021: ​ ​ ​ ​ ​ ​ Hypothetical ​ ​ ​ shift in interest ​ % change in projected net interest income rates (in bps) ​ September 30, 2021 December 31, 2020 200 ​ 12.11% ​ 14.22% 100 ​ 6.04% ​ 7.46% (25) ​ (0.17)% ​ (0.46)% ​ Many assumptions are used to calculate the impact of interest rate fluctuations. Actual results may be significantly different than our projections due to several factors, including the timing and frequency of rate changes, market conditions and the shape of the yield curve. The computations of interest rate risk shown above do not include actions that management may undertake to manage the risks 67 ​ Table of Contents in response to anticipated changes in interest rates and actual results may also differ due to any actions taken in response to the changing rates. ​ As part of the asset/liability management strategy to manage primary market risk exposures expected to be in effect in future reporting periods, management has emphasized the origination of longer duration loans. The strategy with respect to liabilities has been to continue to emphasize transaction account growth, particularly non-interest or low interest bearing non-maturing deposit accounts while building long-term client relationships. Non-maturing deposit accounts totaled 85.7% of total deposits at September 30, 2021, compared to 82.6% at December 31, 2020. We currently have no brokered time deposits. ​ Off-Balance Sheet Activities ​ In the normal course of business, we are a party to various contractual obligations, commitments and other off-balance sheet activities that contain credit, market, and operational risk that are not required to be reflected in our consolidated financial statements. The most significant of these are the loan commitments that we enter into to meet the financing needs of clients, including commitments to extend credit, commercial and consumer lines of credit and standby letters of credit. As of September 30, 2021 and December 31, 2020, we had loan commitments totaling $1.0 billion and $848.6 million, respectively, and standby letters of credit that totaled $16.2 million and $7.3 million, respectively. Unused commitments do not necessarily represent future credit exposure or cash requirements, as commitments often expire without being drawn upon. ​ Item 3. QUANTITATIVE AND QUALITATIV E DISCLOSURES ABOUT MARKET RISK ​ The information called for by this item is provided under the caption Asset/Liability Management and Interest Rate Risk in Part I, Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations and is incorporated herein by reference. ​ Item 4. CONTROLS AND PROCEDURE S ​ Our management, with the participation of our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as of September 30, 2021. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2021. ​ During the most recently completed fiscal quarter, there were no changes made in the Company's internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. ​ 68 ​ Table of Contents PART II: OTHER INFORMATIO N ​ Item 1. LEGAL PROCEEDINGS ​ From time to time, we are a party to various litigation matters incidental to the conduct of our business. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, prospects, financial condition, liquidity, results of operation, cash flows or capital levels. ​ Item 1A. RISK FACTOR S ​ There have been no material changes to the risk factors disclosed in Item 1A: Risk Factors in our Annual Report on Form 10-K for the year ended December 31 2020. ​ Item 2. UNREGISTERED SALES OF EQUIT Y SECURITIES AND USE OF PROCEEDS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum ​ ​ ​ ​ ​ ​ ​ Total number of ​ approximate dollar ​ ​ ​ ​ ​ ​ ​ shares purchased ​ value of shares ​ ​ ​ ​ ​ ​ as part of publicly ​ that may yet be ​ ​ Total number ​ Average price ​ announced plans ​ purchased under the Period ​ of shares purchased ​ paid per share ​ or programs ​ plans or programs (2) August 1 - August 31, 2021 ​ 229,604 ​ ​ 36.85 ​ 229,604 ​ ​ 66,539,829 August 1 - August 31, 2021 (1) ​ 1,138 ​ ​ 34.71 ​ — ​ ​ 66,539,829 September 1 - September 30, 2021 ​ 297,610 ​ ​ 36.62 ​ 297,610 ​ ​ 55,640,399 Total 528,352 ​ $ 36.72 527,214 ​ $ 55,640,399 ​ ​ ​ (1) ​ These shares represent shares purchased other than through publicly announced plans and were purchased pursuant to the Company’s stock incentive plans. Pursuant to the plans, shares were purchased from plan participants at the then current market value in satisfaction of stock option exercise prices, settlements of restricted stock and tax withholdings. (2) On February 24, 2021, the Company’s Board of Directors authorized a new program to repurchase up to $75.0 million of common stock. Under this authorization, $55.6 million remained available for purchase at September 30, 2021. The new program replaces the previously authorized $50.0 million stock repurchase program announced in February 2020 in its entirety. ​ ​ Item 5. OTHER INFORMATIO N ​ None. ​ 69 ​ Table of Contents Item 6. EXHIBIT S ​ ​ ​ ​ ​ ​ ​ 3.1 Second Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to our Form S-1 Registration Statement (Registration No. 333-177971), filed August 22, 2012) ​ ​ ​ 3.2 ​ Second Amended and Restated By-Laws (incorporated herein by reference to Exhibit 3.2 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014, filed November 7, 2014) ​ ​ ​ 4.1 ​ Form of 3.00% Fixed-to-Floating Rate Subordinated Note due 2031 (incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated and filed on November 5, 2021) ​ ​ ​ 10.1 ​ Form of Subordinated Note Purchase Agreement, dated November 5, 2021 by and among National Bank Holding Corporation and the Purchaser named therein (incorporated herein by reference to Exhibit 10.1 to our Form 8-K dated and filed on November 5, 2021) ​ ​ ​ 31.1 ​ Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ​ ​ ​ 31.2 ​ Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ​ ​ ​ 32 ​ Certifications of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ​ ​ ​ 101.INS ​ XBRL Instance - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. ​ ​ ​ 101.SCH ​ XBRL Taxonomy Extension Schema ​ ​ ​ 101.CAL ​ XBRL Taxonomy Extension Calculation ​ ​ ​ 101.DEF ​ XBRL Taxonomy Extension Definition ​ ​ ​ 101.LAB ​ XBRL Taxonomy Extension Labels ​ ​ ​ 101.PRE ​ XBRL Taxonomy Extension Presentation ​ ​ ​ 104 ​ Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) ​ ​ 70 ​ Table of Contents ​ SIGNATURES ​ Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ​ National Bank Holdings Corporation ​ ​ ​ ​ ​ ​ By /s/ Aldis Birkans ​ ​ Aldis Birkans ​ ​ Chief Financial Officer ​ ​ (principal financial officer) ​ ​ Date: November 9, 2021 ​ ​ 71 ​