National Bank Holdings Corp 10-K

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . ​ Index to Financial Statements ​ ​ ​ Page Report of Independent Registered Public Accounting Firm ( KPMG, LLP , Kansas City, MO - PCAOB ID 185 ) ​ 71 Consolidated Statements of Financial Condition 74 Consolidated Statements of Operations 75 Consolidated Statements of Comprehensive Income 76 Consolidated Statements of Changes in Shareholders’ Equity 77 Consolidated Statements of Cash Flows 78 Notes to Consolidated Financial Statements 79 ​ Report of Independent Registered Public Accounting Firm ​ To the Shareholders and Board of Directors National Bank Holdings Corporation: ​ Opinion on the Consolidated Financial Statements ​ We have audited the accompanying consolidated statements of financial condition of National Bank Holdings Corporation and subsidiaries (the Company) as of December 31, 2021and 2020, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. ​ We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 23, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. ​ Change in Accounting Principle ​ As discussed in Note 3 to the consolidated financial statements, the Company has changed its method of accounting for the recognition and measurement of credit losses as of January 1, 2020 due to the adoption of ASC Topic 326, Financial Instruments - Credit Losses . ​ Basis for Opinion ​ These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant 71 Table of Contents estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ Critical Audit Matter ​ The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. ​ Allowance for credit losses for loans individually evaluated on a collective basis ​ As discussed in Note 3 to the consolidated financial statements, the Company adopted ASU No. 2016-13, Financial Instruments – Credit Losses (ASC Topic 326), as of January 1, 2020. As discussed in Note 7 to the consolidated financial statements, the allowance for credit losses related to loans collectively evaluated for impairment (the collective ACL) was $48.1 million of a total ACL of $49.7 million as of December 31, 2021. The Company estimated the December 31, 2021 collective ACL by first disaggregating the loan portfolio into segments based upon broad characteristics such as primary use and underlying collateral. Within these segments, the portfolio was further disaggregated into classes of loans with similar attributes and risk characteristics. The 2021 collective ACL was determined at the class level, analyzing loss history based upon specific loss drivers and risk factors affecting each loan class. The Company utilized a discounted cash flow (DCF) model developed within a third-party software tool to establish expected lifetime credit losses for the loan portfolio. The 2021 collective ACL was 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 macroeconomic factors (reasonable and supportable forecasts) which drive correlated Probability of Default (“PD”) and Loss Given Default (“LGD”) rates, which in turn, drive the losses predicted in establishing the Company’s 2021 collective ACL. Management accounts for the inherent uncertainty of the underlying economic forecast by reviewing and weighting alternate forecast scenarios. PD and LGD rates along with prepayment rates and loss recovery time delays are determined at a loan class level making use of both internal and peer historical loss rate data. For periods beyond the reasonable and supportable forecast period, the Company reverts to historical long-term average loss rates on a straight-line basis. The length of the forecast period spans four quarters. The length of the reversion period is based on management’s assessment of the length and pattern of the current economic cycle and typically ranges from four to eight quarters. Additionally, the 2021 collective ACL calculation includes subjective adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience. ​ We identified the assessment of the 2021 collective ACL as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge in the industry, and subjective and complex auditor judgment was involved in the assessment of the 2021 collective ACL. Specifically, the assessment encompassed the evaluation of the 2021 collective ACL methodology, including (1) the DCF model and significant assumptions: PD, LGD, prepayment rates, discount rates, loss recovery time delays, the use of peer data, portfolio segmentation, the length and weighting of the reasonable and supportable forecast and the reversion period, and (2) the qualitative risk factors. The assessment also included an evaluation of the conceptual soundness and performance of the underlying models and assumptions. In addition, auditor judgment was required to evaluate the sufficiency of audit evidence obtained. ​ The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s measurement of the 2021 collective ACL estimate, including controls over the: ​ ◾ development of the 2021 collective ACL methodology 72 Table of Contents ◾ continued use and appropriateness of changes made to the DCF model ◾ performance monitoring of the DCF model ◾ identification and determination of the significant assumptions used in the DCF model ◾ continued use and appropriateness of changes made to the qualitative factors, including the significant assumptions used in the measurement of the qualitative factors ◾ analysis of the overall ACL results, trends, and ratios. ​ We evaluated the Company’s process to develop the 2021 collective ACL estimate by testing certain sources of data, factors, and significant assumptions that the Company used, and considered the relevance and reliability of such data, factors, and significant assumptions, including an evaluation of whether additional factors or alternative assumptions should be used. In addition, we involved credit risk professionals with specialized skills and knowledge, who assisted in: ​ ◾ evaluating the Company’s 2021 collective ACL methodology for compliance with U.S. generally accepted accounting principles ◾ assessing the conceptual soundness and performance testing of the DCF model by inspecting the model documentation to determine whether the models are suitable for their intended use ◾ evaluating judgments made by the Company in the continued use and appropriateness of changes made to the PD, LGD, prepayment rates, loss recovery time delays, use of peer data, and the reversion period assumptions by comparing them to relevant Company-specific metrics and trends, and the applicable industry and regulatory practices ◾ evaluating the selection of methodology used to develop the economic forecast scenarios, including the weighting of the scenarios, and underlying assumptions, by comparing it to the Company’s business environment and relevant industry practices ◾ determining whether the loan portfolio is segmented by similar risk characteristics by comparing to the Company’s business environment and relevant industry practices ◾ evaluating the methodology used to develop the qualitative factors and the effect of those factors on the 2021 collective ACL compared with relevant credit risk factors and consistency with credit trends and identified limitations of the underlying DCF model. ​ We also assessed the sufficiency of the audit evidence obtained related to the 2021 collective ACL estimate by evaluating the: ​ ◾ cumulative results of the audit procedures ◾ qualitative aspects of the Company’s accounting practices ◾ potential bias in the accounting estimates. ​ ​ We have served as the Company’s auditor since 2010. ​ Kansas City, Missouri February 23, 2022 ​ ​ ​ 73 Table of Contents NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES Consolidated Statements of Financial Condition December 31, 2021 and 2020 (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 December 31, 2020 ASSETS ​ ​ ​ ​ ​ ​ Cash and due from banks ​ $ 845,195 ​ $ 605,065 Interest bearing bank deposits ​ 500 ​ 500 Cash and cash equivalents ​ ​ 845,695 ​ ​ 605,565 Investment securities available-for-sale (at fair value) ​ 691,847 ​ 661,955 Investment securities held-to-maturity (fair value of $ 599,260 and $ 381,691 at December 31, 2021 and December 31, 2020, respectively) ​ 609,012 ​ 376,615 Non-marketable securities ​ 50,740 ​ 22,073 Loans ​ 4,513,383 ​ 4,353,726 Allowance for credit losses ​ ( 49,694 ) ​ ( 59,777 ) Loans, net ​ 4,463,689 ​ 4,293,949 Loans held for sale ​ 139,142 ​ 247,813 Other real estate owned ​ 7,005 ​ 4,730 Premises and equipment, net ​ 96,747 ​ 106,982 Goodwill ​ 115,027 ​ 115,027 Intangible assets, net ​ 12,322 ​ 17,928 Other assets ​ 182,785 ​ 207,313 Total assets ​ $ 7,214,011 ​ $ 6,659,950 LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ Deposits: ​ ​ ​ ​ ​ ​ Non-interest bearing demand deposits ​ $ 2,506,265 ​ $ 2,111,045 Interest bearing demand deposits ​ 555,401 ​ 514,286 Savings and money market ​ 2,332,591 ​ 2,064,769 Time deposits ​ 833,916 ​ 986,132 Total deposits ​ 6,228,173 ​ 5,676,232 Securities sold under agreements to repurchase ​ 22,768 ​ 22,897 Long-term debt, net ​ ​ 39,478 ​ ​ — Other liabilities ​ 83,486 ​ 140,130 Total liabilities ​ 6,373,905 ​ 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; 29,958,764 and 30,634,291 shares outstanding at December 31, 2021 and December 31, 2020, respectively ​ 515 ​ 515 Additional paid-in capital ​ 1,014,294 ​ 1,011,362 Retained earnings ​ 289,876 ​ 223,175 Treasury stock of 21,384,676 and 20,686,986 shares at December 31, 2021 and December 31, 2020, respectively, at cost ​ ( 457,616 ) ​ ( 424,127 ) Accumulated other comprehensive (loss) income, net of tax ​ ( 6,963 ) ​ 9,766 Total shareholders’ equity ​ 840,106 ​ 820,691 Total liabilities and shareholders’ equity ​ $ 7,214,011 ​ $ 6,659,950 ​ See accompanying notes to the consolidated financial statements. 74 Table of Contents NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations For the Years Ended December 31, 2021, 2020 and 2019 (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2020 ​ 2019 Interest and dividend income: ​ ​ ​ ​ ​ ​ ​ ​ Interest and fees on loans $ 181,816 ​ $ 200,026 ​ $ 218,836 Interest and dividends on investment securities 17,325 ​ 16,505 ​ 21,297 Dividends on non-marketable securities 838 ​ 1,157 ​ 1,770 Interest on interest-bearing bank deposits 986 ​ 314 ​ 698 Total interest and dividend income 200,965 ​ 218,002 ​ 242,601 Interest expense: ​ ​ ​ ​ ​ ​ ​ ​ Interest on deposits 13,602 ​ 23,629 ​ 29,803 Interest on borrowings 219 ​ 1,427 ​ 6,968 Total interest expense 13,821 ​ 25,056 ​ 36,771 Net interest income before provision for loan losses 187,144 ​ 192,946 ​ 205,830 Provision (release) expense for loan losses ( 9,293 ) ​ 17,630 ​ 11,643 Net interest income after provision for loan losses 196,437 ​ 175,316 ​ 194,187 Non-interest income: ​ ​ ​ ​ ​ ​ ​ ​ Service charges 14,894 ​ 14,962 ​ 17,895 Bank card fees 17,693 ​ 15,446 ​ 14,595 Mortgage banking income 63,360 ​ 102,384 ​ 42,346 Bank-owned life insurance income 2,208 ​ 2,360 ​ 1,713 Other non-interest income 12,174 ​ 4,719 ​ 5,888 OREO-related income 35 ​ 387 ​ 315 Total non-interest income 110,364 ​ 140,258 ​ 82,752 Non-interest expense: ​ ​ ​ ​ ​ ​ ​ ​ Salaries and benefits 127,504 ​ 141,170 ​ 122,732 Occupancy and equipment 25,283 ​ 27,473 ​ 27,336 Telecommunications and data processing 9,310 ​ 9,042 ​ 8,754 Marketing and business development 2,509 ​ 2,802 ​ 3,897 FDIC deposit insurance 1,850 ​ 1,168 ​ 1,049 Bank card expenses 5,177 ​ 4,388 ​ 4,780 Professional fees 5,423 ​ 2,946 ​ 3,256 Other non-interest expense 10,414 ​ 10,547 ​ 10,867 Problem asset workout ​ 2,063 ​ ​ 3,148 ​ ​ 3,186 Gain on OREO sales, net ​ ( 475 ) ​ ​ ( 38 ) ​ ​ ( 7,193 ) Core deposit intangible asset amortization 1,183 ​ 1,183 ​ 1,183 Banking center consolidation-related expense 1,589 ​ 2,348 ​ 898 Total non-interest expense 191,830 ​ 206,177 ​ 180,745 Income before income taxes 114,971 ​ 109,397 ​ 96,194 Income tax expense 21,365 ​ 20,806 ​ 15,829 Net income $ 93,606 ​ $ 88,591 ​ $ 80,365 Earnings per share—basic $ 3.04 ​ $ 2.87 ​ $ 2.57 Earnings per share—diluted ​ 3.01 ​ ​ 2.85 ​ ​ 2.55 Weighted average number of common shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ Basic 30,727,566 ​ 30,857,086 ​ 31,175,825 Diluted 31,068,159 ​ 31,075,857 ​ 31,530,817 ​ See accompanying notes to the consolidated financial statements. 75 Table of Contents NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES Consolidated Statements of Comprehensive Income For the Years Ended December 31, 2021, 2020 and 2019 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2020 ​ 2019 Net income $ 93,606 ​ $ 88,591 ​ $ 80,365 Other comprehensive (loss) income, net of tax: ​ ​ ​ ​ ​ ​ ​ ​ ​ Securities available-for-sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net unrealized (losses) gains arising during the period, net of tax benefit (expense) of $ 5,034 , ($ 2,634 ), and ($ 4,510 ) for the years ended 2021, 2020 and 2019, respectively. ​ ( 16,186 ) ​ 8,482 ​ 14,352 Less: amortization of net unrealized holding gains to income, net of tax benefit of $ 168 , $ 248 , and $ 320 for the years ended 2021, 2020 and 2019, respectively. ​ ( 543 ) ​ ( 778 ) ​ ( 1,015 ) Other comprehensive (loss) income ​ ( 16,729 ) ​ 7,704 ​ 13,337 Comprehensive income ​ $ 76,877 ​ $ 96,295 ​ $ 93,702 ​ See accompanying notes to the consolidated financial statements. ​ 76 Table of Contents NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES Consolidated Statements of Changes in Shareholders’ Equity For the Years Ended 2021, 2020 and 2019 (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ other ​ ​ ​ ​ ​ Common ​ paid-in ​ Retained ​ Treasury ​ comprehensive ​ ​ ​ ​ ​ stock ​ capital ​ earnings ​ stock ​ income (loss), net ​ Total Balance, December 31, 2018 ​ $ 515 ​ $ 1,014,399 ​ $ 106,990 ​ $ ( 415,623 ) ​ $ ( 11,275 ) ​ $ 695,006 Cumulative effect adjustment (1) ​ ​ — ​ ​ — ​ ​ 256 ​ ​ — ​ ​ — ​ ​ 256 Net income ​ — ​ ​ — ​ ​ 80,365 ​ ​ — ​ ​ — ​ ​ 80,365 Stock-based compensation ​ — ​ ​ 4,869 ​ ​ — ​ ​ — ​ ​ — ​ ​ 4,869 Issuance of stock under purchase and equity compensation plans, including gain on reissuance of treasury stock of $ 6,010 , net ​ — ​ ​ ( 10,045 ) ​ ​ — ​ ​ 6,661 ​ ​ — ​ ​ ( 3,384 ) Cash dividends declared ($ 0.75 per share) ​ ​ — ​ ​ — ​ ​ ( 23,529 ) ​ ​ — ​ ​ — ​ ​ ( 23,529 ) Other comprehensive income ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 13,337 ​ ​ 13,337 Balance, December 31, 2019 ​ $ 515 ​ $ 1,009,223 ​ $ 164,082 ​ $ ( 408,962 ) ​ $ 2,062 ​ $ 766,920 Cumulative effect adjustment (2) ​ $ — ​ $ — ​ $ ( 4,623 ) ​ $ — ​ $ — ​ $ ( 4,623 ) Net income ​ — ​ — ​ 88,591 ​ — ​ — ​ 88,591 Stock-based compensation ​ — ​ 5,299 ​ — ​ — ​ — ​ 5,299 Issuance of stock under purchase and equity compensation plans, including gain on reissuance of treasury stock of $ 1,588 , net ​ — ​ ( 3,160 ) ​ — ​ 4,311 ​ — ​ 1,151 Repurchase of 734,117 shares ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 19,476 ) ​ ​ — ​ ​ ( 19,476 ) Cash dividends declared ($ 0.80 per share) ​ — ​ — ​ ( 24,875 ) ​ — ​ — ​ ​ ( 24,875 ) Other comprehensive income ​ — ​ — ​ — ​ — ​ 7,704 ​ 7,704 Balance, December 31, 2020 ​ $ 515 ​ $ 1,011,362 ​ $ 223,175 ​ $ ( 424,127 ) ​ $ 9,766 ​ $ 820,691 Net income ​ $ — ​ $ — ​ $ 93,606 ​ $ — ​ $ — ​ $ 93,606 Stock-based compensation ​ — ​ 5,541 ​ — ​ — ​ — ​ 5,541 Issuance of stock under purchase and equity compensation plans, including gain on reissuance of treasury stock of $ 4,661 , net ​ — ​ ( 2,609 ) ​ — ​ 2,911 ​ — ​ 302 Repurchase of 912,213 shares ​ ​ — ​ — ​ — ​ ( 36,400 ) ​ — ​ ( 36,400 ) Cash dividends declared ($ 0.87 per share) ​ — ​ — ​ ( 26,905 ) ​ — ​ — ​ ​ ( 26,905 ) Other comprehensive loss ​ — ​ — ​ — ​ — ​ ( 16,729 ) ​ ( 16,729 ) Balance, December 31, 2021 ​ $ 515 ​ $ 1,014,294 ​ $ 289,876 ​ $ ( 457,616 ) ​ $ ( 6,963 ) ​ $ 840,106 ​ ​ ​ (1) Related to the adoption of Accounting Standards Update No. 2016-02, Leases . Refer to note 3 – Recent Accounting Pronouncements of our consolidated financial statements for further details. (2) ​ Related to the adoption of Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments . Refer to note 3 – Recent Accounting Pronouncements of our consolidated financial statements for further details. ​ See accompanying notes to the consolidated financial statements. ​ ​ 77 Table of Contents NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flow s For the Years Ended December 31, 2021, 2020 and 2019 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2021 ​ 2020 ​ 2019 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 93,606 ​ $ 88,591 ​ $ 80,365 Adjustments to reconcile net income to net cash provided by (used in) operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision (release) expense for loan losses ​ ( 9,293 ) ​ 17,630 ​ 11,643 Provision (release) expense for mortgage loan repurchases ​ ​ ( 108 ) ​ ​ 662 ​ ​ ( 366 ) Depreciation and amortization ​ 13,585 ​ 14,449 ​ 15,038 Change in current income tax receivable ​ 1,045 ​ ( 2,371 ) ​ 1,955 Change in deferred income taxes ​ ( 226 ) ​ 3,477 ​ 8,793 Net excess tax (benefit) expense from stock-based compensation ​ ​ ( 644 ) ​ ​ 51 ​ ​ ( 2,160 ) Discount accretion, net of premium amortization on securities ​ 4,335 ​ 3,374 ​ 2,047 Loan accretion ​ ( 6,582 ) ​ ( 11,694 ) ​ ( 15,590 ) Gain on sale of mortgages, net ​ ( 56,946 ) ​ ( 98,250 ) ​ ( 39,922 ) Origination of loans held for sale, net of repayments ​ ( 1,867,734 ) ​ ( 2,376,660 ) ​ ( 1,317,547 ) Proceeds from sales of loans held for sale ​ 2,041,158 ​ 2,348,166 ​ 1,289,877 Bank-owned life insurance income ​ ​ ( 2,208 ) ​ ​ ( 2,360 ) ​ ​ ( 1,713 ) Gain on the sale of other real estate owned, net ​ ( 475 ) ​ ( 38 ) ​ ( 7,193 ) (Income) loss from non-marketable securities ​ ​ ( 2,985 ) ​ ​ 406 ​ ​ 298 Originations of mortgage serving rights ​ ​ ( 7,882 ) ​ ​ ( 10,354 ) ​ ​ ( 27 ) Proceeds from sales of mortgage servicing rights ​ ​ 11,375 ​ ​ — ​ ​ — Gain on sale of mortgage servicing rights ​ ​ ( 1,290 ) ​ ​ — ​ ​ — (Recovery) impairment of mortgage servicing rights ​ ​ ( 740 ) ​ ​ 751 ​ ​ 129 Impairment on other real estate owned ​ 799 ​ 470 ​ 1,082 Impairment on fixed assets related to banking center consolidations ​ 1,553 ​ 1,631 ​ 898 Gain on sale of fixed assets ​ ( 3,768 ) ​ — ​ — Gain from banking center divestiture ​ ( 778 ) ​ — ​ — Stock-based compensation ​ 5,541 ​ 5,299 ​ 4,869 Operating lease payments ​ ​ ( 5,099 ) ​ ​ ( 5,414 ) ​ ​ ( 5,294 ) Change in other assets ​ 24,225 ​ ( 18,073 ) ​ 670 Change in other liabilities ​ ( 50,962 ) ​ 34,045 ​ 16,391 Net cash provided by (used in) operating activities ​ 179,502 ​ ( 6,212 ) ​ 44,243 Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from non-marketable securities ​ ​ 2,006 ​ ​ 13,709 ​ ​ 14,737 Proceeds from maturities of investment securities available-for-sale ​ ​ 235,860 ​ ​ 271,508 ​ ​ 195,467 Proceeds from maturities of investment securities held-to-maturity ​ 161,923 ​ 88,071 ​ 60,948 Proceeds from sales of investment securities available-for-sale ​ ​ — ​ ​ — ​ ​ 20,378 Proceeds from sales of other real estate owned ​ ​ 1,917 ​ ​ 3,671 ​ ​ 12,112 Purchase of non-marketable securities ​ ​ ( 27,688 ) ​ ​ ( 4,107 ) ​ ​ ( 18,700 ) Purchase of investment securities available-for-sale ​ ​ ( 288,580 ) ​ ​ ( 286,130 ) ​ ​ ( 45,745 ) Purchase of investment securities held-to-maturity ​ ​ ( 397,758 ) ​ ​ ( 284,170 ) ​ ​ ( 10,201 ) Sales (purchases) of premises and equipment, net ​ 5,146 ​ ( 4,352 ) ​ ( 11,204 ) Net (increase) decrease in loans ​ ( 166,662 ) ​ 49,209 ​ ( 312,844 ) Purchase of bank-owned life insurance ​ — ​ — ​ ( 20,000 ) Net cash used in investing activities ​ ( 473,836 ) ​ ( 152,591 ) ​ ( 115,052 ) Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ Net increase in deposits ​ 552,719 ​ 939,100 ​ 201,511 Net decrease in repurchase agreements and other short-term borrowings ​ ​ ( 129 ) ​ ​ ( 34,038 ) ​ ​ ( 9,112 ) Proceeds from long-term debt ​ ​ 40,000 ​ ​ — ​ ​ — Payment of long-term debt issuance costs ​ ​ ( 535 ) ​ ​ — ​ ​ — Advances from FHLB ​ ​ — ​ ​ 947,431 ​ ​ 1,477,447 FHLB repayments ​ ​ — ​ ​ ( 1,155,106 ) ​ ​ ( 1,571,432 ) Issuance of stock under purchase and equity compensation plans ​ ​ ( 2,267 ) ​ ​ ( 749 ) ​ ​ ( 6,229 ) Proceeds from exercise of stock options ​ ​ 2,489 ​ ​ 1,832 ​ ​ 2,788 Payment of dividends ​ ​ ( 26,888 ) ​ ​ ( 24,816 ) ​ ​ ( 23,530 ) Repurchase of common stock ​ ( 36,400 ) ​ ( 19,476 ) ​ — Net cash provided by financing activities ​ 528,989 ​ 654,178 ​ 71,443 Increase in cash, cash equivalents and restricted cash (1) ​ 234,655 ​ 495,375 ​ 634 Cash, cash equivalents and restricted cash at beginning of the year (1) ​ 615,565 ​ 120,190 ​ 119,556 Cash, cash equivalents and restricted cash at end of period (1) ​ $ 850,220 ​ $ 615,565 ​ $ 120,190 Supplemental disclosure of cash flow information during the period: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 16,638 ​ $ 27,622 ​ $ 34,458 Net tax payment ​ ​ 15,389 ​ ​ 22,111 ​ ​ 9,271 Supplemental schedule of non-cash activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans transferred to other real estate owned at fair value ​ ​ 4,516 ​ ​ 1,533 ​ ​ 2,705 (Decrease) increase in loans purchased but not settled ​ ​ — ​ ​ ( 16,351 ) ​ ​ 7,372 Loans transferred from loans held for sale to loans ​ ​ 7,807 ​ ​ 3,625 ​ ​ 1,732 Lease right-of-use assets obtained ​ ​ — ​ ​ — ​ ​ ( 30,474 ) ​ ​ ​ (1) Included in restricted cash at December 31, 2021, 2020 and 2019 is $ 4.5 million, $ 10.0 million and $ 10.0 million, respectively, placed in escrow for certain potential liabilities, for which the Company is indemnified, resulting from a previous acquisition. The restricted cash is included in other assets in the Company’s consolidated statements of financial condition. ​ See accompanying notes to the consolidated financial statements. ​ 78 Table of Contents NATIONAL BANK HOLDINGS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020 and 2019 Note 1 Basis of Presenta tion ​ National Bank Holdings Corporation is a bank holding company that was incorporated in the State of Delaware in 2009. The Company is headquartered in Greenwood Village, Colorado, and its primary operations are conducted through its wholly owned subsidiary, NBH Bank, 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 December 31, 2021, located primarily in Colorado, the greater Kansas City region, Texas, Utah and New Mexico, as well as through online and mobile banking products and services. ​ The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, NBH Bank. The accompanying 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. The 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 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 period presentations have been reclassified to conform to the current period presentations. Refer to note 5 for further discussion. All amounts are in thousands, except share data and per 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. 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 how long new outbreaks of COVID-19 cases will have a continued 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. ​ ​ Note 2 Summary of Significant Accounting Policies ​ a) Cash and cash equivalents —Cash and cash equivalents include cash, cash items, amounts due from other banks, amounts due from the Federal Reserve Bank of Kansas City, federal funds sold, and interest-bearing bank deposits. ​ 79 Table of Contents b) Investment securities —Investment securities may be classified in three categories: trading, available-for-sale or held-to-maturity. Management determines the appropriate classification at the time of purchase and reevaluates the classification at each reporting period. Any sales of available-for-sale securities are for the purpose of executing the Company’s asset/liability management strategy, reducing borrowings, funding loan growth, providing liquidity, or eliminating a perceived credit risk in a specific security. Held-to-maturity securities are carried at amortized cost, and the available-for-sale securities are carried at estimated fair value. Unrealized gains or losses on securities available-for-sale are reported as accumulated other comprehensive income (loss) (“AOCI”), a component of shareholders’ equity, net of income tax. Gains and losses realized upon sales of securities are calculated using the specific identification method. Premiums and discounts are amortized to interest income over the estimated lives of the securities. Prepayment experience is periodically evaluated and a determination made regarding the appropriate estimate of the future rates of prepayment. When a change in a bond’s estimated remaining life is necessary, a corresponding adjustment is made in the related premium amortization or discount accretion. Purchases and sales of securities, including any corresponding gains or losses, are recognized on a trade-date basis and a receivable or payable is recognized for pending transaction settlements. ​ Management evaluates all investments in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security, the security is written down to fair value and the entire loss is recorded in earnings. If either of the above criteria is not met, we evaluate whether the decline in fair value is the result of credit losses or other factors. In making the assessment, we may consider various factors including the extent to which fair value is less than amortized cost, performance on any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specifically related to the security. If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any excess is recorded as an allowance for credit loss. When the loss is not considered a result of credit loss, the cost basis of the security is written down to fair value, with the loss charge recognized in AOCI. The Company does not measure expected credit losses for U.S. agency-backed held-to-maturity securities, since the risk of nonpayment of the amortized cost basis is zero. Credit losses are not estimated for AIR from investment securities as interest deemed uncollectible is written off through interest income. ​ Prior to the adoption of ASU 2016-13, declines in the fair value of held-to-maturity and available-for-sale securities below their cost that were deemed to be other-than-temporarily impaired were reflected in earnings as realized losses. In estimating other-than-temporary-impairment prior to January 1, 2020, the Company considered, among other things, the severity and duration of the unrealized loss position; adverse conditions specifically related to the security; changes in expected future cash flows; downgrades in the rating of the security by a rating agency; the failure of the issuer to make scheduled interest or principal payments; whether the Company had the intent to sell the security; and whether it was more likely than not that the Company would be required to sell the security. ​ c) Non-marketable securities — Non-marketable securities include FRB stock, 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. Equity method investments are periodically evaluated for impairment. If impairment is deemed other than temporary, the Company will reduce the carrying value of the investment to the extent it is not recoverable. 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. ​ d) Loans receivable — Loans receivable include loans originated by the Company and loans that are acquired through acquisitions. Loans originated by the Company are carried at the principal amount outstanding, net of premiums, discounts, unearned income and deferred loan fees and costs. Loan fees and certain costs of originating loans are deferred and the net amount is amortized over the contractual life of the related loans. Acquired loans are initially recorded at fair value. Non-refundable loan origination and commitment fees, net of direct costs of originating or acquiring loans, and fair value adjustments for acquired loans, are deferred and recognized over the remaining lives of the related loans in accordance with ASC 310-20. ​ 80 Table of Contents Estimated fair values of acquired loans are based on a discounted cash flow methodology that considers various factors including the type of loan and related collateral, the expected timing of cash flows, classification status, fixed or variable interest rate, term of loan and whether or not the loan is amortizing, and a discount rate reflecting the Company’s assessment of risk inherent in the cash flow estimates. Discounts created when the loans are recorded at their estimated fair values at acquisition are accreted over the remaining term of the loan as an adjustment to the related loan’s yield. Similar to originated loans described below, the accrual of interest income on acquired loans is discontinued when the collection of principal or interest, in whole or in part, is doubtful. ​ Interest income on acquired loans and interest income on loans originated by the Company is accrued and credited to income as it is earned using the interest method based on daily balances of the principal amount outstanding. However, interest is generally not accrued on loans 90 days or more past due, unless they are well secured and in the process of collection. Additionally, in certain situations, loans that are not contractually past due may be placed on non-accrual status due to the continued failure to adhere to contractual payment terms by the borrower coupled with other pertinent factors, such as insufficient collateral value or deficient primary and secondary sources of repayment. Accrued interest receivable is reversed when a loan is placed on non-accrual status and payments received generally reduce the carrying value of the loan. Interest is not accrued while a loan is on non-accrual status and interest income is generally recognized on a cash basis only after payment in full of the past due principal and collection of principal outstanding is reasonably assured. A loan may be placed back on accrual status if all contractual payments have been received, or sooner under certain conditions and collection of future principal and interest payments is no longer doubtful. ​ In the event of borrower default, the Company 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 “troubled debt restructurings” and are identified in accordance with ASC 310-40. ​ 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 if the borrower has been adversely impacted by COVID-19 and was current on their loan payments. The Company has modified loans due to the effects of the COVID-19 pandemic that were not classified as TDRs. Modifications include deferral of principal as well as full-payment deferral for a period ranging from three months to one year . ​ e) 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 Company estimates fair value based on quoted market prices for similar loans in the secondary market. Gains or losses are recognized upon sale and are included as a component of mortgage banking income in the consolidated statements of operations. Loans held for sale have primarily been fixed rate single-family residential mortgage loans under contract to be sold in the secondary market. In most cases, loans in this category are sold within 45 days . Currently, conventional loans in states where the bank has market presence may be sold with servicing retained or with servicing released. Government loans and conventional loans in states where the bank does not have a market presence are generally sold with servicing released. Under limited circumstances, buyers may have recourse to return a purchased loan to the Company. Recourse conditions may include early payoff, early payment default, breach of representations or warranties, or documentation deficiencies in the underwriting process. ​ The Company enters into commitments to originate residential mortgage loans whereby the interest rate on the loan is determined prior to funding (i.e. interest rate lock commitments). Such interest rate lock commitments on mortgage loans to be sold in the secondary market are considered to be derivatives. To protect against the price risk inherent in residential mortgage loan commitments, the Company utilizes both "best efforts" and "mandatory delivery" forward loan sale commitments to mitigate the risk of potential increases or decreases in the values of loans that would result from the change in market rates for such loans. The Company manages the interest rate risk on interest rate lock commitments by entering into forward sale contracts of mortgage backed securities. Such contracts are accounted for as derivatives and are recorded at fair value as derivative assets or liabilities. They are carried in the consolidated statements of financial condition within other assets or other liabilities, and changes in fair value are recorded net as a component of mortgage banking income in the consolidated statements of operations. The gross gains on loan sales are recognized based on new loan commitments with adjustment for price and pair-off activity. Commission expenses on loans held for sale are recognized based on loans closed. 81 Table of Contents ​ f) Allowance for credit losses —The Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments , effective January 1, 2020. ​ The ACL represents management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date. The Company measures expected credit losses for loans on a pooled basis when similar risk characteristics exist. The Company has identified four primary loan segments that are further stratified into 11 loan classes to provide more granularity in analyzing loss history based upon specific loss drivers and risk factors affecting each loan class. Generally, the underlying risk of loss for each of these loan classes 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. Those 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. ​ 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 adjusted for estimated prepayment rates and loss recovery timing delays. The model incorporates forecasts of certain national macroeconomic factors, including unemployment rates, HPI, retail sales and GDP, which drive correlated probability of default (“PD”) and loss given default (“LGD”) rates. PD and LGD, in turn, drive the losses predicted in establishing our ACL. PD and LGD rates along with prepayment rates and loss recovery time delays are determined at a loan class level making use of both internal and peer historical loss rate data. 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. The length of the forecast period spans four quarters. The length of the reversion period is based on management’s assessment of the length and pattern of the current economic cycle and typically ranges from four to eight quarters. ​ Management accounts for the inherent uncertainty of the underlying economic forecast by reviewing and weighting alternate forecast scenarios. Additionally, the ACL calculation includes subjective adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience. These qualitative adjustments may increase or reduce reserve levels and include adjustments for lending management experience and risk tolerance, loan review and audit results, asset quality and portfolio trends, loan portfolio growth and industry concentrations. The Company has elected to exclude AIR from the allowance for credit losses calculation. When a loan is placed on non-accrual, any recorded AIR is reversed against interest income. ​ The determination and application of the 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. Various regulatory agencies, as an integral part of the examination process, periodically review the ACL. Such agencies may require the Company to recognize additions to the ACL or reserve increases to adversely graded classified loans based on their judgments about information available to them at the time of their examinations. ​ The ACL is decreased by net charge-offs and is increased by provisions for loan losses that are charged to the statements of operations. Charge-offs, if any, are typically measured for each loan based on a thorough analysis of the most probable source of repayment, such as the present value of the loan’s expected future cash flows, the loan’s estimated fair value, or the estimated fair value of the underlying collateral less costs of disposition for collateral-dependent loans. When it is determined that specific loans, or portions thereof, are uncollectible, these amounts are charged off against the ACL. ​ The Company uses an internal risk rating system to indicate credit quality in the loan portfolio. The risk rating system is applied to all loans and uses a series of grades, which reflect management’s assessment of the risk attributable to loans based on an analysis of the borrower’s financial condition and ability to meet contractual debt service requirements. Loans that management perceives to have acceptable risk are categorized as “Pass” loans. The “Special Mention” loans represent loans 82 Table of Contents that have potential credit weaknesses that deserve management’s close attention. Special mention loans include borrowers that have potential weaknesses or unwarranted risks that, unless corrected, may threaten the borrower’s ability to meet debt requirements. However, these borrowers are still believed to have the ability to respond to and resolve the financial issues that threaten their financial situation. Loans classified as “Substandard” are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans have a distinct possibility of loss if the deficiencies are not corrected. “Doubtful” loans are loans that management believes the collection of payments in accordance with the terms of the loan agreement is highly questionable and improbable. Credit quality indicators are reviewed and updated in accordance with internal policy based on loan balance and risk rating. Interest accrual is discontinued on doubtful loans and certain substandard loans. ​ Unfunded loan commitments ​ In addition to the ACL for funded loans, the Company maintains reserves to cover the risk of loss associated with off-balance sheet unfunded loan commitments. The allowance for off-balance sheet credit losses is maintained within the other liabilities in the statements of financial condition. Under the CECL framework, adjustments to this liability are recorded as provision for credit losses in the statements of operations. Unfunded loan commitment balances are evaluated by loan class and further segregated by revolving and non-revolving commitments. In order to establish the required level of reserve, the Company applies average historical utilization rates and ACL loan model loss rates for each loan class to the outstanding unfunded commitment balances. ​ Prior to the adoption of ASU 2016-13, the Company’s determination of the allowance took into consideration, among other matters, the estimated fair value of the underlying collateral, economic conditions, historical net loan losses, the estimated loss emergence period, estimated default rates, any declines in cash flow assumptions from acquisitions, loan structures, growth factors and other elements that warrant recognition. ​ Under the prior incurred loss methodology, the Company routinely evaluated adversely risk-rated credits for impairment. Impairment, if any, was typically measured for each loan based on a thorough analysis of the most probable source of repayment, including the present value of the loan’s expected future cash flows, the loan’s estimated fair value, or the estimated fair value of the underlying collateral less costs of disposition for collateral dependent loans. General allowances were established for loans with similar characteristics. In this process, general allowance factors were based on an analysis of historical loss and recovery experience, if any, related to originated and acquired loans, as well as certain industry experience, with adjustments made for qualitative or environmental factors that were likely to cause estimated credit losses to differ from historical experience. To the extent that the data supporting such factors had limitations, management’s judgment and experience played a key role in determining the allowance estimates. ​ g) Premises and equipment —With the exception of premises and equipment acquired through business combinations, which are initially measured and recorded at fair value, purchased land, buildings and equipment are carried at cost, including capitalized interest when appropriate, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the asset. The Company generally assigns depreciable lives of 39 years for buildings, 7 to 15 years for building improvements, and 3 to 7 years for equipment. Leasehold improvements are amortized over the shorter of their estimated useful lives or remaining lease terms. Maintenance and repairs are charged to non-interest expense as incurred. The Company reviews premises and equipment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recognized when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposal is less than its carrying amount. Property and equipment that meet the held-for-sale criteria is recorded at the lower of its carrying amount or fair value less cost to sell and depreciation is ceased. ​ h) Goodwill and intangible assets —Goodwill is established and recorded if the consideration given during an acquisition transaction exceeds the fair value of the net assets received. Goodwill has an indefinite useful life and is not amortized, but is evaluated annually for potential impairment, or when events or circumstances indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Such events or circumstances may include deterioration in general economic conditions, deterioration in industry or market conditions, an increased competitive environment, a decline in market-dependent multiples or metrics, declining financial performance, entity-specific events or circumstances or a sustained decrease in share price (either in absolute terms or relative to peers). If the Company determines, based upon the 83 Table of Contents qualitative assessment, that it is more likely than not that the fair value of the reporting unit is greater than the carrying amount no additional procedures are performed; however, if the Company determines that it is more likely than not that the fair value of the reporting unit is less than the carrying amount the Company will compare the fair value of the reporting unit to its carrying amount. Any excess of the carrying amount over fair value would indicate a potential impairment and the Company would proceed to perform an additional test to determine whether goodwill has been impaired and calculate the amount of that impairment. ​ Intangible assets that have finite useful lives, such as core deposit intangibles, are amortized over their estimated useful lives. The Company’s core deposit intangible assets represent the value of the anticipated future cost savings that will result from the acquired core deposit relationships versus an alternative source of funding. Judgment may be used in assessing goodwill and intangible assets for impairment. Estimates of fair value are based on projections of revenues, operating costs and cash flows of the reporting unit considering historical and anticipated future results, general economic and market conditions, as well as the impact of planned business or operational strategies. The valuations use a combination of present value techniques to measure fair value considering market factors. Additionally, judgment is used in determining the useful lives of finite-lived intangible assets. Adverse changes in the economic environment, operations of the reporting unit, or changes in judgments and projections could result in a significantly different estimate of the fair value of the reporting unit and could result in an impairment of goodwill and/or intangible assets. ​ MSRs associated with loans originated and sold, where servicing is retained, are initially capitalized at fair value and included in intangible assets in the consolidated statements of financial condition. For subsequent measurement purposes, the Company measures servicing assets based on the lower of cost or market using the amortization method. The values of these capitalized servicing rights are amortized as an offset to the loan servicing income earned in relation to the servicing revenue expected to be earned. The carrying values of these rights are reviewed quarterly for impairment based on the fair value of those assets. For purposes of impairment evaluation and measurement, management stratifies MSRs based on the predominant risk characteristics of the underlying loans, including loan type and loan term. If, by individual stratum, the carrying amount of these MSRs exceeds fair value, a valuation allowance is established and the impairment is recognized in mortgage banking income. If the fair value of impaired MSRs subsequently increases, management recognizes the increase in fair value in current period mortgage banking income and, through a reduction in the valuation allowance, adjusts the carrying value of the MSRs to a level not in excess of amortized cost. ​ i) Reserve for Mortgage Loan Repurchase Losses– The Company sells mortgage loans to various third parties, including government-sponsored entities, under contractual provisions that include various representations and warranties that typically cover ownership of the loan, compliance with loan criteria set forth in the applicable agreement, validity of the lien securing the loan, absence of delinquent taxes or liens against the property securing the loan, and similar matters. The Company may be required to repurchase the mortgage loans with identified defects, indemnify the investor or insurer, or reimburse the investor for credit loss incurred on the loan (collectively “repurchase”) in the event of a material breach of such contractual representations or warranties. Risk associated with potential repurchases or other forms of settlement is managed through underwriting and quality assurance practices. ​ The Company establishes mortgage repurchase reserves related to various representations and warranties that reflect management’s estimate of losses based on a combination of factors. Such factors incorporate actual and historic loss history, delinquency trends in the portfolio and economic conditions. The Company establishes a reserve at the time loans are sold and updates the reserve estimate quarterly during the estimated loan life. The repurchase reserve is included in other liabilities in the consolidated statements of financial condition. ​ j) Other real estate owned —OREO consists of property that has been foreclosed on or repossessed by deed in lieu of foreclosure. The assets are initially recorded at the fair value of the collateral less estimated costs to sell, with any initial valuation adjustments charged to the ACL. Subsequent downward valuation adjustments, if any, in addition to gains and losses realized on sales and net operating expenses, are recorded in non-interest expense. Costs associated with maintaining property, such as utilities and maintenance, are charged to expense in the period in which they occur, while costs relating to the development and improvement of property are capitalized to the extent the balance does not exceed fair value. All OREO acquired through acquisition is recorded at fair value, less cost to sell, at the date of acquisition. ​ 84 Table of Contents k) Bank-owned life insurance —The Company is the owner and beneficiary of bank-owned life insurance ("BOLI”) policies that it purchased on certain associates of the Company. The BOLI is carried at net realizable value with changes in net realizable value recorded in non-interest income in the consolidated statements of operations. ​ l) Securities purchased under agreements to resell and securities sold under agreements to repurchase —The Company periodically enters into purchases or sales of securities under agreements to resell or repurchase as of a specified future date. The securities purchased under agreements to resell are accounted for as collateralized financing transactions and are reflected as an asset in the consolidated statements of financial condition. The securities pledged by the counterparties are held by a third party custodian and valued daily. The Company may require additional collateral to ensure full collateralization for these transactions. The repurchase agreements are considered financing agreements and the obligation to repurchase assets sold is reflected as a liability in the consolidated statements of financial condition of the Company. The repurchase agreements are collateralized by debt securities that are under the control of the Company. ​ m) Stock-based compensation —The Company accounts for stock-based compensation in accordance with ASC Topic 718. The Company grants stock-based awards including stock options, restricted stock and performance stock units. Stock option grants are for a fixed number of common shares and are issued at exercise prices which are not less than the fair value of a share of stock at the date of grant. The options vest over a time period stated in each option agreement and may be subject to other performance vesting conditions, which require the related compensation expense to be recorded ratably over the requisite service period starting when such conditions become probable. Restricted stock is granted for a fixed number of shares, the transferability of which is restricted until such shares become vested according to the terms in the award agreement. Restricted shares may have multiple vesting qualifications, which can include time vesting of a set portion of the restricted shares and performance criterion, such as market criteria that are tied to specified market conditions of the Company’s common stock price and performance targets tied to the Company’s earnings per share. ​ The fair value of stock options is measured using a Black-Scholes model. The fair value of time-based restricted stock awards and performance stock units with performance based vesting criteria is based on the Company’s stock price on the date of grant. The fair value of performance stock units with market-based vesting criteria is measured using a Monte Carlo simulation model. Compensation expense for the portion of the awards that contain performance and service vesting conditions is recognized over the requisite service period based on the fair value of the awards on the grant date. Compensation expense for the portion of the awards that contain a market vesting condition is recognized over the derived service period based on the fair value of the awards on the grant date. The amortization of stock-based compensation reflects any estimated forfeitures, and the expense realized in subsequent periods may be adjusted to reflect the actual forfeitures realized. The outstanding stock options primarily carry a maximum contractual term of ten years . To the extent that any award is forfeited, surrendered, terminated, expires, or lapses without being vested or exercised, the shares of stock subject to such award not delivered are again made available for awards under the Plan. ​ Excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) are recognized in the consolidated statements of operations as a component of income tax expense or benefit and are classified as an operating activity within the Company’s consolidated statements of cash flows. The tax effects of exercised, expired or vested awards are treated as discrete items in the reporting period in which they occur and may result in increased volatility in our effective tax rate. Cash paid by the Company when directly withholding shares for tax withholding purposes is classified as a financing activity in the consolidated statements of cash flows. ​ n) Income taxes —The Company and its subsidiaries file U.S. federal and certain state income tax returns on a consolidated basis. Additionally, the Company and its subsidiaries file separate state income tax returns with various state jurisdictions. The provision for income taxes includes the income tax balances of the Company and all of its subsidiaries. ​ Deferred tax assets and liabilities are recognized for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. Deferred tax assets and liabilities are adjusted for the effects of changes in tax rates in the period of change. The Company establishes a valuation allowance when management believes, based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized. ​ 85 Table of Contents The Company recognizes and measures income tax benefits based upon a two-step model: 1) a tax position must be more likely than not to be sustained based solely on its technical merits in order to be recognized; and 2) the benefit is measured as the largest dollar amount of that position that is more likely than not to be sustained upon settlement. The difference between the benefit recognized for a position in this model and the tax benefit claimed on a tax return is treated as an unrecognized tax benefit. The Company recognizes income tax related interest and penalties in other non-interest expense. ​ o) Earnings per share —The Company applies the two-class method of computing earnings per share as certain of the Company's restricted shares are entitled to non-forfeitable dividends and are therefore considered to be a class of participating securities. The two-class method allocates income according to dividends declared and participation rights in undistributed income. Basic earnings per share is computed by dividing income allocated to common shareholders by the weighted average number of common shares outstanding during each period. Diluted income per common share is computed by dividing income allocated to common shareholders by the weighted average common shares outstanding during the period, plus amounts representing the dilutive effect of stock options outstanding, certain unvested restricted shares, or other contracts to issue common shares (“common stock equivalents”) using the treasury stock method. Common stock equivalents are excluded from the computation of diluted earnings per common share in periods in which they have an anti-dilutive effect. ​ p) Interest Rate Swap Derivatives —The Company carries all derivatives in the statement of financial condition at fair value. All derivative instruments are recognized as either assets or liabilities depending on the rights or obligations under the contracts. All gains and losses on the derivatives due to changes in fair value are recognized in earnings each period. ​ The Company offers interest rate swap products to certain of its clients to manage potential changes in interest rates. Each contract between the Company and a client is offset with a contract between the Company and an institutional counterparty, thus minimizing the Company's exposure to rate changes. The Company's portfolio consists of a “matched book,” and as such, changes in fair value of the swap pairs will largely offset in earnings. In accordance with applicable accounting guidance, if certain conditions are met, a derivative may be designated as (1) a hedge of the exposure to changes in the fair value of a recognized asset or liability, or of an unrecognized firm commitment, that are attributable to a particular risk (referred to as a fair value hedge) or (2) a hedge of the exposure to variability in the cash flows of a recognized asset or liability, or of a forecasted transaction, that is attributable to a particular risk (referred to as a cash flow hedge). The Company documents all hedging relationships at the inception of each hedging relationship and uses industry accepted methodologies and ranges to determine the effectiveness of each hedge. The fair value of the hedged item is calculated using the estimated future cash flows of the hedged item and applying discount rates equal to the market interest rate for the hedged item at the inception of the hedging relationship (inception benchmark interest rate plus an inception credit spread), adjusted for changes in the designated benchmark interest rate thereafter. ​ q) Treasury stock —When the Company acquires treasury stock, the sum of the consideration paid and direct transaction costs after tax is recognized as a deduction from equity. The cost basis for the reissuance of treasury stock is determined using a first-in, first-out basis. To the extent that the reissuance price is more than the cost basis (gain), the excess is recorded as an increase to additional paid-in capital in the consolidated statements of financial condition. If the reissuance price is less than the cost basis (loss), the difference is recorded to additional paid-in capital to the extent there is a cumulative treasury stock paid-in capital balance. Any loss in excess of the cumulative treasury stock paid-in capital balance is charged to retained earnings. ​ r) Acquisition activities —The Company accounts for business combinations under the acquisition method of accounting. Assets acquired and liabilities assumed are measured and recorded at fair value at the date of acquisition, including identifiable intangible assets. If the fair value of net assets acquired exceeds the fair value of consideration paid, a bargain purchase gain is recognized at the date of acquisition. Conversely, if the consideration paid exceeds the fair value of the net assets acquired, goodwill is recognized at the acquisition date. Fair values are subject to refinement for up to a maximum of one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Adjustments recorded to the acquired assets and liabilities assumed are applied prospectively in accordance with Accounting Standards Codification (“ASC”) Topic 805. The determination of the fair value of loans acquired takes into account credit quality deterioration and probability of loss; therefore, the related ACL is not carried forward at the time of acquisition. ​ 86 Table of Contents Identifiable intangible assets are recognized separately if they arise from contractual or other legal rights or if they are separable (i.e., capable of being sold, transferred, licensed, rented, or exchanged separately from the entity). Deposit liabilities and the related depositor relationship intangible assets, known as the core deposit intangible assets, may be exchanged in observable exchange transactions. As a result, the core deposit intangible asset is considered identifiable, because the separability criterion has been met. ​ Note 3 Recent Accounting Pronouncements ​ Leases —In February 2016, the FASB issued ASU 2016-02, Leases . The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases . The new standard established a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statements. ASU 2016-02 became effective for the Company on January 1, 2019 and initially required transition using a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. In July 2018, the FASB issued ASU 2018-11 which, among other things, provided an additional transition method that allows entities to not apply the guidance in ASU 2016-02 in the comparative periods presented in the financial statements and instead recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We elected to apply certain practical expedients provided under ASU 2016-02 whereby we will not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases. We also did not apply the recognition requirements of ASU 2016-02 to any short-term leases (as defined by related accounting guidance). The updates did not significantly change lease accounting requirements applicable to lessors and did not significantly impact our financial statements in relation to contracts whereby we act as a lessor. We applied the modified-retrospective transition approach prescribed by ASU 2018-11. Upon adoption of ASU 2016-02 and ASU 2018-11 on January 1, 2019, we recognized right-of-use assets and related lease liabilities totaling $ 30.5 million with a cumulative-effect adjustment to beginning retained earnings of $ 0.3 million, after tax. ​ Financial Instruments - Credit Losses —In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments . This update replaces the current incurred loss methodology for recognizing credit losses with a CECL model, which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This amendment broadens the information that an entity must consider in developing its expected credit loss estimates. Additionally, the update amends the accounting for credit losses for available-for-sale debt securities and purchased financial assets with a more-than-insignificant amount of credit deterioration since origination. This update requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of a company’s loan portfolio. We adopted ASU 2016-13 on January 1, 2020 using a modified retrospective approach. Results for reporting periods beginning after January 1, 2020 are presented under ASU 2016-13 while prior period amounts continue to be reported in accordance with previously applicable GAAP. Upon adoption, the Company recognized a $ 5.8 million increase in the allowance for credit losses with a corresponding reduction to retained earnings, net of tax, of $ 4.6 million. Since the investment securities portfolio was comprised of mortgage-backed securities issued by government sponsored entities as of January 1, 2020, no credit loss allowance was required upon adoption. ​ Other Pronouncements — The Company adopted ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment and ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement with no material impact on its financial statements. ​ Note 4 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 December 31, 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. ​ 87 Table of Contents Available-for-sale ​ Available-for-sale securities are summarized as follows as of the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 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 ​ $ 231,523 ​ $ 1,436 ​ $ ( 5,263 ) ​ $ 227,696 Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ 467,490 ​ 1,889 ​ ( 8,045 ) ​ 461,334 Municipal securities ​ ​ 230 ​ ​ 7 ​ ​ — ​ ​ 237 Corporate debt ​ ​ 2,000 ​ ​ 111 ​ ​ — ​ ​ 2,111 Other securities ​ 469 ​ — ​ — ​ 469 Total investment securities available-for-sale ​ $ 701,712 ​ $ 3,443 ​ $ ( 13,308 ) ​ $ 691,847 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 2021 and 2020, purchases of available-for-sale securities totaled $ 288.6 million and $ 286.1 million, respectively. Maturities and paydowns of available-for-sale securities during 2021 and 2020 totaled $ 235.9 million and $ 271.5 million, respectively. There were no sales of available-for-sale securities during 2021 or 2020. ​ At December 31, 2021 and 2020, the Company’s available-for-sale investment portfolio was primarily comprised of mortgage-backed securities, and all mortgage-backed securities were backed by GSE collateral such as FHLMC and FNMA and the government owned agency GNMA. ​ 88 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 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 ​ $ 163,579 ​ $ ( 4,404 ) ​ $ 22,852 ​ $ ( 859 ) ​ $ 186,431 ​ $ ( 5,263 ) Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ ​ 237,759 ​ ​ ( 5,593 ) ​ ​ 48,750 ​ ​ ( 2,452 ) ​ ​ 286,509 ​ ​ ( 8,045 ) Total ​ $ 401,338 ​ $ ( 9,997 ) ​ $ 71,602 ​ $ ( 3,311 ) ​ $ 472,940 ​ $ ( 13,308 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 December 31, 2021 and December 31, 2020. The portfolio included 49 securities, which were in an unrealized loss position at December 31, 2021, compared to 22 securities at December 31, 2020. The unrealized losses in the Company’s investment portfolio at December 31, 2021 and 2020 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 $ 363.4 million and $ 385.8 million at December 31, 2021 and 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 December 31, 2021 or 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 December 31, 2021, municipal securities with an amortized cost and fair value of $ 0.2 million were due between one to five years. Corporate debt securities with an amortized cost of $ 2.0 million and fair value of $ 2.1 million were due after five years through ten years. Other securities with an amortized cost and fair value of $ 0.5 million as of December 31, 2021 have no stated contractual maturity date. ​ As of December 31, 2021 and December 31, 2020, 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. ​ 89 Table of Contents Held-to-maturity ​ Held-to-maturity investment securities are summarized as follows as of the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 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 ​ $ 312,916 ​ $ 2,061 ​ $ ( 5,363 ) ​ $ 309,614 Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ 296,096 ​ 122 ​ ( 6,572 ) ​ 289,646 Total investment securities held-to-maturity ​ $ 609,012 ​ $ 2,183 ​ $ ( 11,935 ) ​ $ 599,260 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 2021 and 2020, purchases of held-to-maturity securities totaled $ 397.8 million and $ 284.2 million, respectively. Maturities and paydowns of held-to-maturity securities totaled $ 161.9 million and $ 88.1 million during 2021 and 2020, respectively. ​ The held-to-maturity portfolio included 48 securities which were in an unrealized loss position at December 31, 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 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 ​ $ 197,095 ​ $ ( 3,499 ) ​ $ 45,353 ​ $ ( 1,864 ) ​ $ 242,448 ​ $ ( 5,363 ) Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ ​ 276,098 ​ ​ ( 6,572 ) ​ ​ — ​ ​ — ​ ​ 276,098 ​ ​ ( 6,572 ) Total ​ $ 473,193 ​ $ ( 10,071 ) ​ $ 45,353 ​ $ ( 1,864 ) ​ $ 518,546 ​ $ ( 11,935 ) ​ ​ 90 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 $ 147.3 million and $ 140.6 million at December 31, 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 December 31, 2021 or 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 December 31, 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 5 Non-marketable Securities ​ During 2021, the Company updated its asset classifications to include certain financial instruments previously included in other assets within non-marketable securities in the statements of financial condition. ​ Non-marketable securities totaled $ 50.7 million and $ 22.1 million at December 31, 2021 and 2020, respectively, and included FRB stock, FHLB stock and other non-marketable securities. At December 31, 2021, other non-marketable securities totaled $ 36.2 million and consisted of equity method investments totaling $ 16.2 million and convertible preferred stock without readily determinable fair values totaling $ 20.0 million. During the years ended December 31, 2021 and 2020, purchases of non-marketable securities totaled $ 27.7 million and $ 4.1 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 equity method investments. ​ At December 31, 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. 91 Table of Contents ​ Note 6 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 $ 9.4 million and $ 16.2 million at December 31, 2021 and 2020, respectively. Included in commercial loans are fully-guaranteed loans originated as part of the SBA’s Paycheck Protection Program of which $ 21.7 million and $ 176.1 million, net of fees and costs, were outstanding at December 31, 2021 and 2020, respectively. ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ Total loans % of total Commercial $ 3,162,417 ​ 70.1 % Commercial real estate non-owner occupied 664,729 ​ 14.7 % Residential real estate 668,656 ​ 14.8 % Consumer 17,581 ​ 0.4 % Total $ 4,513,383 ​ 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 December 31, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 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 ​ $ 481 ​ $ — ​ $ 1,490 ​ $ 1,971 ​ $ 1,494,176 ​ $ 1,496,147 Municipal and non-profit ​ ​ 202 ​ ​ — ​ ​ — ​ ​ 202 ​ ​ 928,843 ​ ​ 929,045 Owner occupied commercial real estate ​ ​ 207 ​ ​ — ​ ​ 4,525 ​ ​ 4,732 ​ ​ 528,904 ​ ​ 533,636 Food and agribusiness ​ ​ 89 ​ ​ — ​ ​ 64 ​ ​ 153 ​ ​ 203,436 ​ ​ 203,589 Total commercial ​ ​ 979 ​ ​ — ​ ​ 6,079 ​ ​ 7,058 ​ ​ 3,155,359 ​ ​ 3,162,417 Commercial real estate non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction ​ — ​ — ​ — ​ — ​ 86,126 ​ 86,126 Acquisition/development ​ — ​ — ​ — ​ — ​ 9,609 ​ 9,609 Multifamily ​ — ​ — ​ — ​ — ​ 92,174 ​ 92,174 Non-owner occupied ​ 94 ​ 217 ​ 121 ​ 432 ​ 476,388 ​ 476,820 Total commercial real estate ​ 94 ​ 217 ​ 121 ​ 432 ​ 664,297 ​ 664,729 Residential real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Senior lien ​ ​ 399 ​ ​ 198 ​ ​ 4,251 ​ ​ 4,848 ​ ​ 609,780 ​ ​ 614,628 Junior lien ​ 179 ​ ​ — ​ ​ 374 ​ 553 ​ 53,475 ​ ​ 54,028 Total residential real estate ​ 578 ​ ​ 198 ​ ​ 4,625 ​ ​ 5,401 ​ ​ 663,255 ​ ​ 668,656 Consumer ​ 36 ​ 5 ​ 7 ​ 48 ​ 17,533 ​ 17,581 Total loans ​ $ 1,687 ​ $ 420 ​ $ 10,832 ​ $ 12,939 ​ $ 4,500,444 ​ $ 4,513,383 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 92 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 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 $ 1,490 ​ $ — ​ $ 1,490 Municipal and non-profit ​ — ​ ​ — ​ ​ — Owner occupied commercial real estate ​ 4,525 ​ ​ — ​ ​ 4,525 Food and agribusiness ​ 64 ​ ​ — ​ ​ 64 Total commercial ​ 6,079 ​ ​ — ​ ​ 6,079 Commercial real estate non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ Construction — ​ — ​ — Acquisition/development — ​ — ​ — Multifamily — ​ — ​ — Non-owner occupied 121 ​ — ​ 121 Total commercial real estate 121 ​ — ​ 121 Residential real estate: ​ ​ ​ ​ ​ Senior lien ​ 3,274 ​ ​ 977 ​ ​ 4,251 Junior lien ​ 374 ​ ​ — ​ 374 Total residential real estate ​ 3,648 ​ ​ 977 ​ 4,625 Consumer 7 ​ — ​ 7 Total loans $ 9,855 ​ $ 977 ​ $ 10,832 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ 93 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 TDRs on non-accrual status. There was no interest income recognized from non-accrual loans during the years ended December 31, 2021 and 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. ​ 94 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 December 31, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 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 ​ $ 424,813 ​ $ 155,268 ​ $ 146,420 ​ $ 128,002 ​ $ 49,408 ​ $ 18,529 ​ $ 519,678 ​ $ 5,975 ​ $ 1,448,093 Special mention ​ ​ — ​ ​ 1,122 ​ ​ 2,000 ​ ​ 3,446 ​ ​ 22,654 ​ ​ 4,440 ​ ​ 1,824 ​ ​ 250 ​ ​ 35,736 Substandard ​ ​ — ​ ​ 99 ​ ​ 89 ​ ​ 744 ​ ​ 10,399 ​ ​ 303 ​ ​ 105 ​ ​ — ​ ​ 11,739 Doubtful ​ ​ — ​ ​ 375 ​ ​ — ​ ​ 54 ​ ​ 49 ​ ​ 101 ​ ​ — ​ ​ — ​ ​ 579 Total commercial and industrial ​ ​ 424,813 ​ ​ 156,864 ​ ​ 148,509 ​ ​ 132,246 ​ ​ 82,510 ​ ​ 23,373 ​ ​ 521,607 ​ ​ 6,225 ​ ​ 1,496,147 Municipal and non-profit: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 234,827 ​ ​ 93,310 ​ ​ 69,509 ​ ​ 81,175 ​ ​ 147,115 ​ ​ 302,574 ​ ​ 535 ​ ​ — ​ ​ 929,045 Total municipal and non-profit ​ ​ 234,827 ​ ​ 93,310 ​ ​ 69,509 ​ ​ 81,175 ​ ​ 147,115 ​ ​ 302,574 ​ ​ 535 ​ ​ — ​ ​ 929,045 Owner occupied commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 122,641 ​ ​ 81,072 ​ ​ 84,359 ​ ​ 71,183 ​ ​ 48,086 ​ ​ 77,100 ​ ​ 13,666 ​ ​ 1,688 ​ ​ 499,795 Special mention ​ ​ — ​ ​ — ​ ​ 9,155 ​ ​ 3,864 ​ ​ 1,429 ​ ​ 13,443 ​ ​ — ​ ​ — ​ ​ 27,891 Substandard ​ ​ — ​ ​ 1,192 ​ ​ 1,527 ​ ​ — ​ ​ 220 ​ ​ 2,028 ​ ​ — ​ ​ — ​ ​ 4,967 Doubtful ​ ​ — ​ ​ 389 ​ ​ 550 ​ ​ — ​ ​ — ​ ​ 44 ​ ​ — ​ ​ — ​ ​ 983 Total owner occupied commercial real estate ​ ​ 122,641 ​ ​ 82,653 ​ ​ 95,591 ​ ​ 75,047 ​ ​ 49,735 ​ ​ 92,615 ​ ​ 13,666 ​ ​ 1,688 ​ ​ 533,636 Food and agribusiness: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 11,245 ​ ​ 20,606 ​ ​ 6,966 ​ ​ 21,427 ​ ​ 2,443 ​ ​ 24,047 ​ ​ 107,978 ​ ​ 24 ​ ​ 194,736 Special mention ​ ​ — ​ ​ 4,670 ​ ​ 1,234 ​ ​ — ​ ​ — ​ ​ 215 ​ ​ 1,897 ​ ​ — ​ ​ 8,016 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 259 ​ ​ 578 ​ ​ — ​ ​ — ​ ​ 837 Total food and agribusiness ​ ​ 11,245 ​ ​ 25,276 ​ ​ 8,200 ​ ​ 21,427 ​ ​ 2,702 ​ ​ 24,840 ​ ​ 109,875 ​ ​ 24 ​ ​ 203,589 Total commercial ​ ​ 793,526 ​ ​ 358,103 ​ ​ 321,809 ​ ​ 309,895 ​ ​ 282,062 ​ ​ 443,402 ​ ​ 645,683 ​ ​ 7,937 ​ ​ 3,162,417 Commercial real estate non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 39,584 ​ ​ 10,047 ​ ​ 29,496 ​ ​ — ​ ​ 222 ​ ​ — ​ ​ 6,777 ​ ​ — ​ ​ 86,126 Total construction ​ ​ 39,584 ​ ​ 10,047 ​ ​ 29,496 ​ ​ — ​ ​ 222 ​ ​ — ​ ​ 6,777 ​ ​ — ​ ​ 86,126 Acquisition/development: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 1,691 ​ ​ 385 ​ ​ 766 ​ ​ 1,830 ​ ​ 30 ​ ​ 4,907 ​ ​ — ​ ​ — ​ ​ 9,609 Total acquisition/development ​ ​ 1,691 ​ ​ 385 ​ ​ 766 ​ ​ 1,830 ​ ​ 30 ​ ​ 4,907 ​ ​ — ​ ​ — ​ ​ 9,609 Multifamily: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 3,101 ​ ​ 32,619 ​ ​ 2,184 ​ ​ 15,977 ​ ​ 193 ​ ​ 37,713 ​ ​ — ​ ​ — ​ ​ 91,787 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 387 ​ ​ — ​ ​ — ​ ​ 387 Total multifamily ​ ​ 3,101 ​ ​ 32,619 ​ ​ 2,184 ​ ​ 15,977 ​ ​ 193 ​ ​ 38,100 ​ ​ — ​ ​ — ​ ​ 92,174 Non-owner occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 59,060 ​ ​ 58,964 ​ ​ 122,452 ​ ​ 18,425 ​ ​ 92,349 ​ ​ 95,265 ​ ​ 557 ​ ​ — ​ ​ 447,072 Special mention ​ ​ — ​ ​ — ​ ​ 5,747 ​ ​ 5,584 ​ ​ 9,745 ​ ​ 3,898 ​ ​ — ​ ​ — ​ ​ 24,974 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ 729 ​ ​ — ​ ​ 4,045 ​ ​ — ​ ​ — ​ ​ 4,774 Total non-owner occupied ​ ​ 59,060 ​ ​ 58,964 ​ ​ 128,199 ​ ​ 24,738 ​ ​ 102,094 ​ ​ 103,208 ​ ​ 557 ​ ​ — ​ ​ 476,820 Total commercial real estate non-owner occupied ​ ​ 103,436 ​ ​ 102,015 ​ ​ 160,645 ​ ​ 42,545 ​ ​ 102,539 ​ ​ 146,215 ​ ​ 7,334 ​ ​ — ​ ​ 664,729 Residential real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Senior lien ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 223,120 ​ ​ 100,476 ​ ​ 38,696 ​ ​ 21,889 ​ ​ 29,554 ​ ​ 177,051 ​ ​ 18,278 ​ ​ 188 ​ ​ 609,252 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 290 ​ ​ — ​ ​ — ​ ​ 290 Substandard ​ ​ 44 ​ ​ 325 ​ ​ 684 ​ ​ 318 ​ ​ 299 ​ ​ 3,416 ​ ​ — ​ ​ — ​ ​ 5,086 Total senior lien ​ ​ 223,164 ​ ​ 100,801 ​ ​ 39,380 ​ ​ 22,207 ​ ​ 29,853 ​ ​ 180,757 ​ ​ 18,278 ​ ​ 188 ​ ​ 614,628 Junior lien ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 1,320 ​ ​ 2,150 ​ ​ 2,731 ​ ​ 1,639 ​ ​ 951 ​ ​ 3,209 ​ ​ 40,921 ​ ​ 328 ​ ​ 53,249 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 24 ​ ​ 322 ​ ​ 346 Substandard ​ ​ — ​ ​ 19 ​ ​ — ​ ​ 62 ​ ​ 131 ​ ​ 221 ​ ​ — ​ ​ — ​ ​ 433 Total junior lien ​ ​ 1,320 ​ ​ 2,169 ​ ​ 2,731 ​ ​ 1,701 ​ ​ 1,082 ​ ​ 3,430 ​ ​ 40,945 ​ ​ 650 ​ ​ 54,028 Total residential real estate ​ ​ 224,484 ​ ​ 102,970 ​ ​ 42,111 ​ ​ 23,908 ​ ​ 30,935 ​ ​ 184,187 ​ ​ 59,223 ​ ​ 838 ​ ​ 668,656 Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 8,815 ​ ​ 3,528 ​ ​ 1,241 ​ ​ 631 ​ ​ 131 ​ ​ 557 ​ ​ 2,653 ​ ​ 19 ​ ​ 17,575 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 6 ​ ​ — ​ ​ — ​ ​ 6 Total consumer ​ ​ 8,815 ​ ​ 3,528 ​ ​ 1,241 ​ ​ 631 ​ ​ 131 ​ ​ 563 ​ ​ 2,653 ​ ​ 19 ​ ​ 17,581 Total loans ​ $ 1,130,261 ​ $ 566,616 ​ $ 525,806 ​ $ 376,979 ​ $ 415,667 ​ $ 774,367 ​ $ 714,893 ​ $ 8,794 ​ $ 4,513,383 ​ 95 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 ​ ​ 96 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 December 31, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ ​ ​ ​ ​ Total amortized ​ Real property ​ Business assets ​ cost basis Commercial ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial $ 3,270 ​ $ 1,261 ​ $ 4,531 Owner-occupied commercial real estate ​ 4,012 ​ ​ 255 ​ ​ 4,267 Total Commercial ​ 7,282 ​ ​ 1,516 ​ ​ 8,798 Residential real estate ​ ​ ​ ​ ​ Senior lien 2,212 ​ — ​ 2,212 Total residential real estate 2,212 ​ — ​ 2,212 Total loans $ 9,494 ​ $ 1,516 ​ $ 11,010 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 19 loans totaling $ 9.9 million during the year ended December 31, 2021 and 510 loans totaling $ 519.0 million during the year ended December 31, 2020, due to the effects of the COVID-19 pandemic, that were not classified as TDRs. Modified loans that 97 Table of Contents remained on a payment deferral plan, paying interest only, at December 31, 2021 totaled $ 5.3 million, or 0.1 % of the total loan population. At December 31, 2021, $ 206 thousand of loan modifications related to COVID-19 were a subsequent modification and one loan totaling $ 206 thousand was classified as non-accrual. 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 2021, the Company restructured four loans with an amortized cost basis of $ 1.1 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 December 31, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ ​ Amortized ​ Average year-to-date ​ Unpaid ​ Unfunded commitments ​ ​ cost basis ​ amortized cost basis ​ principal balance ​ to fund TDRs Commercial ​ $ 4,066 ​ $ 4,472 ​ $ 4,417 ​ $ — Commercial real estate non-owner occupied ​ 725 ​ 767 ​ 892 ​ — Residential real estate ​ 2,395 ​ 2,468 ​ 2,781 ​ — Consumer ​ — ​ — ​ — ​ — Total ​ $ 7,186 ​ $ 7,707 ​ $ 8,090 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 December 31, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ December 31, 2020 Commercial $ 644 $ 3,397 Commercial real estate non-owner occupied ​ 117 ​ 1,644 Residential real estate ​ 1,605 ​ 3,156 Consumer ​ — ​ — Total non-accruing TDRs ​ $ 2,366 ​ $ 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 no TDRs that were modified within the past 12 months and had defaulted on their restructured terms during the year ended December 31, 2021. During 2020, the Company had three TDRs totaling $ 3.4 million that had been modified within the prior 12 months and 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. ​ ​ ​ 98 Table of Contents Note 7 Allowance for Credit Losses ​ The tables below detail the Company’s allowance for credit losses as of the dates shown: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 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 ​ ( 1,171 ) ​ — ​ ( 24 ) ​ ( 621 ) ​ ( 1,816 ) Recoveries ​ 371 ​ 7 ​ 48 ​ 126 ​ 552 Provision expense (release) for loan losses ​ 1,680 ​ ( 7,422 ) ​ ( 3,460 ) ​ 383 ​ ( 8,819 ) Ending balance ​ $ 31,256 ​ $ 10,033 ​ $ 8,056 ​ $ 349 ​ $ 49,694 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 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 ​ ( 2,023 ) ​ ( 412 ) ​ ( 67 ) ​ ( 726 ) ​ ( 3,228 ) Recoveries ​ 394 ​ — ​ 32 ​ 145 ​ 571 Provision expense for loan losses ​ 2,862 ​ 11,344 ​ 2,745 ​ 583 ​ 17,534 Ending balance ​ $ 30,376 ​ $ 17,448 ​ $ 11,492 ​ $ 461 ​ $ 59,777 ​ ​ ​ (1) ​ Related to the adoption of Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments . Refer to note 3 – Recent Accounting Pronouncements of our consolidated financial statements for further details. ​ 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. ​ Net charge-offs on loans during the year ended December 31, 2021 were $ 1.3 million. The Company recorded a provision release of $ 9.3 million during 2021, which included a provision release of $ 8.8 million for funded loans and a provision release of $ 0.5 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 year ended December 31, 2020 were $ 2.7 million. The Company recorded total provision expense of $ 17.6 million during 2020, 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 December 31, 2021 and December 31, 2020, AIR from loans totaled $ 15.7 million and $ 16.7 million, respectively. ​ 99 Table of Contents Note 8 Leases ​ Right-of-use (“ROU”) lease assets totaled $ 19.7 million and $ 25.4 million as of December 31, 2021 and 2020, respectively, and were included in other assets in the consolidated statements of financial condition. The related lease liabilities totaled $ 20.3 million and $ 26.0 million as of December 31, 2021 and 2020, respectively, and were included in other liabilities in the consolidated statements of financial condition. ​ The Company has operating leases for banking centers, corporate offices and ATM locations, with remaining lease terms ranging from one year to ten years . The Company only included reasonably certain renewal options in the lease terms. The weighted-average remaining lease term for our operating leases was 4.7 years and 5.4 years at December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, the weighted-average discount rate were 3.25 % and 3.36 %, respectively, utilizing the Company’s incremental FHLB borrowing rate for borrowings of a similar term at the date of lease commencement. ​ Rent expense totaled $ 5.1 million and $ 5.7 million for the years ended December 31, 2021 and 2020, respectively, and was recorded within occupancy and equipment in the consolidated statements of operations. Lease payments do not include non-lease components such as real estate taxes, insurance and common area maintenance. ​ Below is a summary of undiscounted future minimum lease payments as of December 31, 2021: ​ ​ ​ ​ Years ending December 31, Amount 2022 $ 4,511 2023 4,171 2024 3,741 2025 2,985 2026 1,967 Thereafter 10,174 Total lease payments ​ 27,549 Less: Imputed interest ​ ( 7,296 ) Present value of operating lease liabilities $ 20,253 ​ ​ ​ Note 9 Premises and Equipment ​ Premises and equipment consisted of the following at December 31, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 December 31, 2020 Land ​ $ 30,556 ​ $ 33,149 Buildings and improvements ​ 86,201 ​ 92,463 Equipment ​ 63,553 ​ 60,205 Total premises and equipment, at cost ​ 180,310 ​ 185,817 Less: accumulated depreciation and amortization ​ ( 83,563 ) ​ ( 78,835 ) Premises and equipment, net ​ $ 96,747 ​ $ 106,982 ​ The Company recorded $ 7.3 million, $ 8.1 million and $ 8.2 million of depreciation expense during 2021, 2020 and 2019, respectively, as a component of occupancy and equipment expense in the consolidated statements of operations. The Company disposed of $ 13.7 million, $ 3.6 million and $ 0.0 million of premises and equipment, net, during 2021, 2020 and 2019, respectively. The company recorded gains on sale of premises and equipment totaling $ 3.8 million and $ 0.3 million during the years ended December 31, 2021 and 2020, respectively, within other non-interest income in the consolidated statements of operations. During 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 at the time of impairment. During 2020, the Company recognized $ 1.6 million of impairments from the consolidation of 12 banking centers classified as held-for-sale totaling $ 8.0 million. ​ ​ 100 Table of Contents Note 10 Other Real Estate Owned ​ A summary of the activity in OREO during 2021 and 2020 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ 2021 ​ 2020 Beginning balance $ 4,730 $ 7,300 Transfers from loan portfolio, at fair value 4,516 ​ 1,533 Impairments ( 799 ) ​ ( 470 ) Sales ( 1,442 ) ​ ( 3,633 ) Ending balance $ 7,005 ​ $ 4,730 ​ During the year ended December 31, 2021 and 2020, the Company sold OREO properties with net book balances of $ 1.4 million and $ 3.6 million, respectively. Sales of OREO properties resulted in net OREO gains of $ 475 thousand and $ 38 thousand which were included within gain on OREO sales, net in the consolidated statements of operations for the years ended December 31, 2021 and 2020, respectively. ​ Note 11 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 years ended December 31, 2021 or December 31, 2020. ​ The gross carrying amount of the core deposit intangibles and the associated accumulated amortization at December 31, 2021 and December 31, 2020, are presented as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 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 $ ( 42,469 ) ​ $ 6,365 ​ $ 48,834 $ ( 41,286 ) ​ $ 7,548 ​ 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 $ 1.2 million for the years ended December 31, 2021, 2020 and 2019. ​ The following table shows the estimated future amortization expense for the core deposit intangibles as of December 31, 2021: ​ ​ ​ ​ Years ending December 31, ​ Amount 2022 $ 1,127 2023 ​ 1,048 2024 ​ 1,048 2025 ​ 1,048 2026 ​ 1,048 101 Table of Contents ​ 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 other assets in the consolidated statements of financial condition. Mortgage loans serviced for others were $ 0.7 billion at December 31, 2021 and $ 1.4 billion at December 31, 2020. ​ Below are the changes in the MSRs for the years presented: ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ 2021 ​ 2020 Beginning balance $ 10,380 $ 2,630 Originations ​ 7,881 ​ ​ 10,354 Sales ( 10,499 ) ​ — Recovery (impairment) ​ 740 ​ ​ ( 751 ) Amortization ( 2,545 ) ​ ( 1,853 ) Ending balance ​ 5,957 ​ ​ 10,380 Fair value of mortgage servicing rights $ 7,729 ​ $ 11,542 ​ During the year ended December 31, 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 9.3 % to 14.5 % for the December 31, 2021 valuation. Discount rates ranged from 9.5 % to 10.5 %, and the constant prepayment speed ranged from 15.4 % to 21.3 % for the December 31, 2020 valuation. Included in mortgage banking income in the consolidated statements of operations was servicing income of $ 3.5 million and $ 1.7 million for the years ended December 31, 2021 and 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. ​ The following table shows the estimated future amortization expense for the MSRs as of December 31, 2021: ​ ​ ​ ​ Years ending December 31, ​ Amount 2022 $ 813 2023 ​ 702 2024 ​ 606 2025 ​ 524 2026 ​ 453 ​ ​ 102 Table of Contents Note 12 Deposits ​ Total deposits were $ 6.2 billion and $ 5.7 billion at December 31, 2021 and 2020, respectively. Time deposits were $ 0.8 billion and $ 1.0 billion at December 31, 2021 and 2020, respectively. The following table summarizes the Company’s time deposits by remaining contractual maturity: ​ ​ ​ ​ Years ending December 31, Amount 2022 $ 555,361 2023 ​ 197,026 2024 ​ 50,617 2025 ​ 27,882 2026 2,445 Thereafter 585 Total time deposits $ 833,916 ​ The Company incurred interest expense on deposits as follows during the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ 2021 2020 2019 Interest bearing demand deposits ​ $ 1,088 ​ $ 1,921 ​ $ 1,514 Money market accounts ​ 3,995 ​ 5,342 ​ 9,046 Savings accounts ​ 1,157 ​ 1,342 ​ 2,717 Time deposits ​ 7,362 ​ 15,024 ​ 16,526 Total ​ $ 13,602 ​ $ 23,629 ​ $ 29,803 ​ The Federal Reserve System requires cash balances to be maintained at the FRB based on certain deposit levels. There was no minimum reserve requirement for the Bank at December 31, 2021. ​ Note 13 Borrowings ​ Borrowings consist of securities sold under agreements to repurchase, subordinated debt and FHLB advances. ​ Securities sold under agreements to repurchase ​ The following table sets forth selected information regarding repurchase agreements during 2021, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the years ended December 31, ​ 2021 2020 2019 Maximum amount of outstanding agreements at any month end during the period $ 23,574 ​ $ 54,489 ​ $ 68,600 Average amount outstanding during the period ​ 20,338 ​ ​ 30,355 ​ ​ 60,445 Weighted average interest rate for the period 0.11 % ​ 0.45 % ​ 1.11 % ​ The Company enters into repurchase agreements to facilitate the needs of its clients. As of December 31, 2021, 2020 and 2019, the Company sold securities under agreements to repurchase totaling $ 22.8 million, $ 22.9 million and $ 56.9 million, respectively. The Company pledged mortgage-backed securities with a fair value of approximately $ 28.8 million, $ 27.7 million and $ 65.6 million, as of December 31, 2021, 2020 and 2019, 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 December 31, 2021, 2020 and 2019, the Company had $ 6.1 million, $ 2.1 million and $ 7.0 million, respectively, of excess collateral pledged for repurchase agreements. ​ The vast majority of the Company’s repurchase agreements are overnight transactions with clients that mature the day after the transaction. At December 31, 2021, 2020 and 2019, none of the Company’s repurchase agreements were for periods longer than one day. The repurchase agreements are subject to a master netting arrangement; however, the Company has not offset any of the amounts shown in the consolidated financial statements. 103 Table of Contents ​ Long-term debt ​ During the fourth quarter of 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 balance on the note at December 31, 2021, net of long-term debt issuance costs totaling $ 0.5 million, totaled $ 39.5 million. Interest expense totaling $ 183.3 thousand was recorded within other liabilities in the consolidated statements of financial condition during the year ended December 31, 2021. ​ The note is subordinated, unsecured and matures on November 15, 2031. Payments consist of interest only. 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. ​ Federal Home Loan Bank advances ​ 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 December 31, 2021. At December 31, 2021 and 2020, the Bank had no outstanding borrowings from the FHLB. At December 31, 2019, the Bank had $ 192.7 million in line of credit advances from the FHLB that matured within a day. At December 31, 2019, the Bank had $ 15.0 million in term advances from the FHLB with fixed interest rates between 1.55 % - 2.33 % and maturity dates of 2020 - 2021 . ​ The Bank may have investment securities and loans pledged as collateral for FHLB advances. There were no investment securities pledged at December 31, 2021 or 2020. At December 31, 2019, investment securities pledged were $ 17.6 million. Loans pledged were $ 1.3 billion, $ 1.2 billion and $ 1.5 billion at December 31, 2021, 2020 and 2019, respectively. There was no interest expense related to FHLB advances and other short-term borrowings for the year ended December 31, 2021, compared to $ 1.3 million and $ 6.3 million for the years ended December 31, 2020 and 2019, respectively. ​ Note 14 Regulatory Capital ​ As a bank holding company that has elected to be treated as a financial holding company, the Company and NBH Bank is subject to regulatory capital adequacy requirements implemented by the Federal Reserve, including maintaining capital positions at the “well-capitalized” level. 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. ​ 104 Table of Contents Under the Basel III requirements, at December 31, 2021 and 2020, the Company and the Bank met all capital requirements, including the capital conservation buffer of 2.5 %. The Company and Bank had regulatory capital ratios in excess of the levels established for well-capitalized institutions, as detailed in the tables below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ ​ ​ ​ ​ ​ ​ Required to be ​ Required to be ​ ​ ​ ​ ​ ​ ​ well capitalized under ​ considered ​ ​ ​ ​ ​ ​ ​ prompt corrective ​ adequately ​ ​ Actual ​ action provisions ​ capitalized (1) ​ Ratio Amount Ratio Amount Ratio Amount Tier 1 leverage ratio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated 10.4 % ​ $ 731,087 N/A ​ ​ N/A 4.0 % ​ $ 281,463 NBH Bank 9.1 % ​ 637,115 5.0 % ​ $ 350,584 4.0 % ​ 280,467 Common equity tier 1 risk based capital: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ 14.3 % ​ $ 731,087 ​ N/A ​ ​ N/A ​ 7.0 % ​ $ 358,813 NBH Bank ​ 12.5 % ​ ​ 637,115 ​ 6.5 % ​ $ 331,427 ​ 7.0 % ​ ​ 356,921 Tier 1 risk based capital ratio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated 14.3 % ​ $ 731,087 N/A ​ ​ N/A 8.5 % ​ $ 435,701 NBH Bank 12.5 % ​ 637,115 8.0 % ​ $ 407,910 8.5 % ​ 433,404 Total risk based capital ratio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated 15.9 % ​ $ 816,117 N/A ​ ​ N/A 10.5 % ​ $ 538,219 NBH Bank 13.4 % ​ 682,145 10.0 % ​ $ 509,888 10.5 % ​ 535,382 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ ​ ​ ​ ​ ​ Required to be ​ Required to be ​ ​ ​ ​ ​ ​ ​ well capitalized under ​ considered ​ ​ ​ ​ ​ ​ ​ prompt corrective ​ adequately ​ ​ Actual ​ action provisions ​ capitalized (1) ​ 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 ​ ​ ​ ​ ​ ​ ​ (1) Includes the capital conservation buffer of 2.5%. ​ ​ Note 15 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. 105 Table of Contents ​ 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. ​ 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 years ended December 31, 2021, 2020 and 2019. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ 2021 2020 2019 Non-interest income ​ ​ ​ ​ ​ ​ ​ ​ ​ In-scope of Topic 606: ​ ​ ​ ​ ​ ​ ​ ​ ​ Service charges and other fees ​ $ 18,066 ​ $ 16,913 ​ $ 19,720 Bank card fees ​ ​ 17,693 ​ ​ 15,446 ​ ​ 14,595 Non-interest income (in-scope of Topic 606) ​ ​ 35,759 ​ ​ 32,359 ​ ​ 34,315 Non-interest income (out-of-scope of Topic 606) ​ ​ 69,975 ​ ​ 107,899 ​ ​ 48,437 Total non-interest income ​ $ 105,734 ​ $ 140,258 ​ $ 82,752 Non-interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ In-scope of Topic 606: ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain on OREO sales, net ​ $ 475 ​ $ 38 ​ 7,193 Total revenue in-scope of Topic 606 ​ $ 36,234 ​ $ 32,397 ​ $ 41,508 ​ 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 16 Stock-based Compensation and Benefits ​ The Company provides stock-based compensation in accordance with shareholder-approved plans. In 2014, shareholders approved the 2014 Omnibus Incentive Plan (the "2014 Plan"). The 2014 Plan replaces the NBH Holdings Corp. 2009 Equity Incentive Plan (the "Prior Plan"), pursuant to which the Company granted equity awards prior to the approval of the 2014 Plan. Pursuant to the 2014 Plan, the Compensation Committee of the Board of Directors has the authority to grant, from time to time, 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. ​ As of December 31, 2021, the aggregate number of Class A common stock available for issuance under the 2014 Plan is 4,048,761 shares. Any shares that are subject to stock options or stock appreciation rights under the 2014 Plan will be counted against the amount available for issuance as one share for every one share granted, and any shares that are subject to awards under the 2014 Plan other than stock options or stock appreciation rights will be counted against the amount available for issuance as 3.25 shares for every one share granted. The 2014 Plan provides for recycling of shares from both the Prior Plan and the 2014 Plan, the terms of which are further described in the Company's Proxy Statement for its 2014 Annual Meeting of Shareholders. Upon an option exercise, it is the Company’s policy to issue shares from treasury stock. 106 Table of Contents ​ To date, the Company has issued stock options, restricted stock and performance stock units under the plans. The Compensation Committee sets the option exercise price at the time of grant, but in no case is the exercise price less than the fair market value of a share of stock at the date of grant. ​ 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. ​ Below are the weighted average assumptions used in the Black-Scholes option pricing model to determine fair value of the Company’s stock options granted in 2021, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 2019 Weighted average fair value $ 9.65 ​ $ 3.37 ​ $ 6.31 Weighted average risk-free interest rate (1) ​ 1.14 % ​ ​ 0.44 % ​ ​ 2.35 % Expected volatility (2) 30.54 % ​ ​ 25.08 % ​ ​ 20.56 % Expected term (years) (3) 6.04 ​ ​ 6.04 ​ ​ 6.05 Dividend yield (4) 2.09 % ​ ​ 3.44 % ​ ​ 2.00 % (1) The risk-free rate for the expected term of the options was based on the U.S. Treasury yield curve at the date of grant and based on the expected term. (2) Expected volatility was calculated using historical volatility of the Company’s stock price for a period commensurate with the expected term of the options. (3) The expected term was estimated to be the average of the contractual vesting term and time to expiration. (4) The dividend yield was calculated in accordance with the Company’s dividend policy at the time of grant. ​ The Company issued stock options in accordance with the 2014 Plan during 2021. The following table summarizes stock option activity for 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 82,587 ​ 40.18 ​ ​ ​ ​ ​ Exercised ​ ( 128,551 ) ​ ​ 25.00 ​ ​ ​ ​ ​ Forfeited ( 26,205 ) ​ 27.80 ​ ​ ​ ​ ​ Outstanding at December 31, 2021 695,960 ​ ​ 28.19 6.57 ​ $ 10,964 Options exercisable at December 31, 2021 440,806 ​ ​ 26.94 5.49 ​ ​ 7,492 Options vested and expected to vest 677,858 ​ ​ 28.07 6.51 ​ ​ 10,756 ​ Stock option expense is a component of salaries and benefits in the consolidated statements of operations and totaled $ 0.9 million, $ 1.0 million and $ 0.7 million for 2021, 2020 and 2019, respectively. At December 31, 2021, there was $ 0.4 million of total unrecognized 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 2.0 years. ​ 107 Table of Contents The following table summarizes the Company’s outstanding stock options: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options outstanding ​ Options exercisable ​ ​ ​ ​ ​ Weighted average ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number ​ remaining contractual ​ Weighted average ​ Number ​ Weighted average Range of exercise price ​ outstanding ​ life (years) ​ exercise price ​ exercisable ​ exercise price $ 18.00 - 22.99 159,208 3.35 ​ $ 19.22 159,208 ​ $ 19.22 ​ 23.00 - 27.99 193,046 8.24 ​ ​ 23.13 60,728 ​ ​ 23.14 ​ 28.00 - 32.99 ​ 89,409 ​ 6.25 ​ ​ 32.56 ​ 87,455 ​ ​ 32.62 ​ 33.00 - 37.99 ​ 172,080 ​ 6.57 ​ ​ 34.14 ​ 132,133 ​ ​ 34.12 ​ 38.00 and above 82,217 9.22 ​ ​ 40.24 1,282 ​ ​ 40.51 ​ 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 ​ During the years ended December 2021, 2020 and 2019, the Company granted 52,526 , 68,498 , and 60,781 performance stock units in accordance with the 2014 Plan, respectively. 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 is 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 2021 and 2020, the Company awarded an additional 30,024 and 17,852 units due to final performance results related to performance stock units granted in 2018 and 2017, respectively. ​ 108 Table of Contents The following table summarizes restricted stock and performance stock unit activity during 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ Restricted ​ average grant- ​ Performance ​ ​ average grant- ​ ​ stock shares ​ date fair value ​ stock units ​ ​ date fair value Unvested at December 31, 2019 ​ 122,198 ​ $ 34.19 ​ 158,874 ​ $ 31.19 Granted ​ 127,400 ​ ​ 23.94 ​ 68,498 ​ ​ 26.74 Adjustment due to performance ​ — ​ ​ — ​ 17,852 ​ ​ 33.22 Vested ​ ( 69,444 ) ​ ​ 32.60 ​ ( 53,540 ) ​ ​ 33.22 Forfeited ​ ( 13,524 ) ​ ​ 29.25 ​ ( 6,847 ) ​ ​ 29.52 Unvested at December 31, 2020 ​ 166,630 ​ $ 27.42 ​ 184,837 ​ $ 29.21 Granted ​ 89,351 ​ ​ 39.99 ​ 52,526 ​ ​ 37.01 Adjustment due to performance ​ — ​ ​ — ​ 30,024 ​ ​ 30.38 Vested ​ ( 90,645 ) ​ ​ 29.78 ​ ( 90,016 ) ​ ​ 30.38 Forfeited ​ ( 20,869 ) ​ ​ 29.54 ​ ( 16,977 ) ​ ​ 28.96 Unvested at December 31, 2021 ​ 144,467 ​ $ 33.40 ​ 160,394 ​ $ 31.36 ​ As of December 31, 2021, the total unrecognized compensation cost related to the non-vested restricted stock awards and performance stock units totaled $ 2.3 million and $ 2.4 million, respectively, and is expected to be recognized over a weighted average period of approximately 2.0 years and 1.8 years, respectively. Expense related to non-vested restricted stock awards totaled $ 2.7 million, $ 2.5 million and $ 2.2 million during 2021, 2020 and 2019, respectively. Expense related to non-vested performance stock units totaled $ 2.0 million, $ 1.8 million and $ 2.0 million during 2021, 2020 and 2019, 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. ​ 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 December 31, 2021. ​ Under the ESPP, employees purchased 20,980 shares and 23,212 shares during 2021 and 2020, respectively. ​ Note 17 Common Stock ​ The Company had 29,958,764 and 30,634,291 shares of Class A common stock outstanding at December 31, 2021 and 2020, respectively. Additionally, the Company had 144,467 and 166,630 shares outstanding at December 31, 2021 and 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 2021, the Company repurchased 912,213 shares for $ 36.4 million at a weighted average price per share of $ 39.88 . The remaining authorization under the current program as of December 31, 2021 was $ 38.6 million. 109 Table of Contents ​ Note 18 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 16. ​ The Company had 29,958,764 and 30,634,291 shares of Class A common stock outstanding as of December 31, 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 2021, 2020 and 2019. ​ The following table illustrates the computation of basic and diluted earnings per share for 2021, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ 2021 2020 2019 Net income ​ $ 93,606 ​ $ 88,591 ​ $ 80,365 Less: income allocated to participating securities ​ ( 133 ) ​ ( 130 ) ​ ( 94 ) Income allocated to common shareholders ​ $ 93,473 ​ $ 88,461 ​ $ 80,271 Weighted average shares outstanding for basic earnings per common share ​ 30,727,566 ​ 30,857,086 ​ 31,175,825 Dilutive effect of equity awards ​ 340,593 ​ 218,771 ​ 354,992 Weighted average shares outstanding for diluted earnings per common share ​ 31,068,159 ​ 31,075,857 ​ 31,530,817 Basic earnings per share ​ $ 3.04 ​ $ 2.87 ​ $ 2.57 Diluted earnings per share ​ ​ 3.01 ​ ​ 2.85 ​ ​ 2.55 ​ The Company had 695,960 , 768,129 and 657,114 outstanding stock options to purchase common stock at weighted average exercise prices of $ 28.19 , $ 26.35 and $ 26.69 per share at December 31, 2021, 2020 and 2019, 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 304,861 , 351,467 and 281,072 unvested restricted shares and performance stock units issued as of December 31, 2021, 2020 and 2019, 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 19 Income Taxes ​ Income tax expense attributable to income before taxes was $ 21.4 million, $ 20.8 million and $ 15.8 million for 2021, 2020 and 2019, respectively. Included in income tax was $ 0.6 million of tax benefit, $ 51 thousand of tax expense and $ 2.2 million of tax benefit from stock compensation activity during 2021, 2020 and 2019, respectively. ​ 110 Table of Contents (a) Income taxes ​ Total income taxes for 2021, 2020 and 2019 were allocated as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ 2021 2020 2019 Current expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. federal ​ $ 13,746 ​ $ 16,460 ​ $ 8,947 State and local ​ 2,643 ​ 3,255 ​ 2,280 Total current income tax expense ​ ​ 16,389 ​ ​ 19,715 ​ ​ 11,227 Deferred expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. federal ​ ​ 4,327 ​ ​ 560 ​ ​ 4,115 State and local ​ 649 ​ 531 ​ 487 Total deferred income tax expense ​ 4,976 ​ 1,091 ​ 4,602 Income tax expense ​ $ 21,365 ​ $ 20,806 ​ $ 15,829 ​ (b) Tax Rate Reconciliation ​ The reconciliation between the income tax expenses and the amounts computed by applying the U.S. federal income tax rate to pretax income is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ 2021 2020 2019 Income tax at federal statutory rates ( 21 %) ​ $ 24,144 ​ $ 22,974 ​ $ 20,201 State income taxes, net of federal benefits ​ 2,601 ​ 2,991 ​ 2,186 Tax-exempt loan interest income ​ ( 4,862 ) ​ ( 4,628 ) ​ ( 4,354 ) Bank-owned life insurance income ​ ( 603 ) ​ ( 575 ) ​ ( 475 ) Stock-based compensation ​ ( 733 ) ​ 43 ​ ( 1,925 ) Non-deductible compensation ​ ​ 852 ​ ​ 388 ​ ​ 253 Other ​ ( 34 ) ​ ( 387 ) ​ ( 57 ) Income tax expense ​ $ 21,365 ​ $ 20,806 ​ $ 15,829 ​ 111 Table of Contents (c) Significant Components of Deferred Taxes ​ The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020 are presented below: ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 December 31, 2020 Deferred tax assets: ​ ​ ​ ​ ​ Excess tax basis of acquired loans over carrying value $ 679 ​ $ 966 Allowance for credit losses 11,806 ​ 14,154 Other real estate owned 645 ​ 634 Accrued stock-based compensation 1,384 ​ 2,070 Accrued compensation 4,355 ​ 3,674 Capitalized start-up costs 1,223 ​ 1,540 Accrued expenses 316 ​ 532 Net deferred loan fees 1,021 ​ 1,015 Net operating loss ​ 573 ​ ​ 641 Lease liability ​ 4,811 ​ ​ 6,154 Net unrealized losses on investment securities ​ 2,169 ​ ​ — Other 1,791 ​ 2,025 Total deferred tax assets ​ 30,773 ​ ​ 33,405 Deferred tax liabilities: ​ ​ ​ ​ ​ Intangible assets ​ ( 4,822 ) ​ ​ ( 2,563 ) Net unrealized gains on investment securities — ​ ( 3,033 ) Premises and equipment ( 1,858 ) ​ ( 1,599 ) Right of use assets ​ ( 4,674 ) ​ ​ ( 6,015 ) Prepaid expenses ​ ( 255 ) ​ ​ ( 229 ) Mortgage servicing rights ​ ( 1,415 ) ​ ​ ( 2,458 ) Other ( 59 ) ​ ( 44 ) Total deferred tax liabilities ( 13,083 ) ​ ( 15,941 ) Net deferred tax asset $ 17,690 ​ $ 17,464 ​ At December 31, 2021, the Company had federal and state net operating loss carryovers (“NOLs”) of $ 2.2 million and $ 3.2 million, respectively, which are available to offset future taxable income. The federal NOLs expire in varying amounts through 2034, and the state NOLs expire in varying amounts between 2026 and 2034. While these NOLs are subject to certain restrictions on the amount that can be utilized per year, the Company does not expect any tax attribute carryovers to expire before they are utilized. ​ In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, if any (including the impact of available carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. For the years ended December 31, 2021 and 2020, management believes a valuation allowance on the deferred tax asset is not necessary based on the current and future projected earnings of the Company. The Company has no ASC 740-10 unrecognized tax benefits recorded as of December 31, 2021 and 2020 and does not expect the total amount of unrecognized tax benefits to significantly increase within the next 12 months. The Company and its subsidiary bank are subject to income tax by federal, state and local government taxing authorities. The Company is not currently subject to any open income tax examinations; however, the Company’s tax returns for the years ended December 31, 2018 through 2021 remain subject to examination by U.S. federal income tax authorities. The years open to examination by state and local government authorities vary by jurisdiction. ​ 112 Table of Contents Note 20 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 stipulating 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. ​ 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 December 31, 2021 and 2020. ​ Information about the valuation methods used to measure fair value is provided in note 22. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Asset derivatives fair value ​ ​ ​ Liability derivatives fair value ​ ​ Balance Sheet ​ December 31, ​ December 31, ​ Balance Sheet ​ December 31, ​ December 31, ​ location 2021 2020 Location 2021 2020 Derivatives designated as hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate products Other assets ​ $ 477 ​ $ — Other liabilities ​ $ 12,221 ​ $ 38,884 Total derivatives designated as hedging instruments ​ ​ ​ $ 477 ​ $ — ​ ​ ​ $ 12,221 ​ $ 38,884 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivatives not designated as hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate products Other assets ​ $ 8,321 ​ $ 18,149 Other liabilities ​ $ 8,329 ​ $ 18,176 Interest rate lock commitments ​ Other assets ​ ​ 1,792 ​ ​ 7,001 ​ Other liabilities ​ ​ 197 ​ ​ 298 Forward contracts ​ Other assets ​ ​ 91 ​ ​ — ​ Other liabilities ​ ​ 266 ​ ​ 2,622 Total derivatives not designated as hedging instruments ​ ​ ​ $ 10,204 ​ $ 25,150 ​ ​ ​ $ 8,792 ​ $ 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 December 31, 2021, the Company had interest rate swaps with a notional amount of $ 343.1 million that were designated as fair value hedges. These interest rate swaps were associated with $ 345.2 million of the Company’s fixed-rate loans included in loans receivable in the statements of financial condition as of December 31, 2021, before a gain of $ 16.1 million from the fair value hedge adjustment in the carrying amount. ​ 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 $ 389.9 million of the Company’s fixed-rate loans as of December 31, 2020, excluding a gain of $ 40.1 million from the fair value hedge adjustment in the carrying amount. ​ 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. ​ 113 Table of Contents 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 December 31, 2021, the Company had matched interest rate swap transactions with an aggregate notional amount of $ 394.4 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 ("best efforts") or commits to deliver the locked loan in a binding ("mandatory") 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 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 in 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 $ 110.0 million and forward contracts with a notional value of $ 198.3 million at December 31, 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 on the consolidated statements of operations for 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 years ended December 31, hedging relationships derivatives 2021 2020 Interest rate products Interest and fees on loans ​ $ 4,568 ​ $ 4,405 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Location of gain (loss) ​ Amount of loss recognized in income on hedged items ​ ​ recognized in income on ​ For the years ended December 31, Hedged items hedged items 2021 2020 Interest rate products Interest and fees on loans ​ $ ( 3,026 ) $ ( 6,376 ) ​ 114 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Location of gain (loss) ​ Amount of gain (loss) recognized in income on derivatives Derivatives not designated ​ recognized in income on ​ For the years ended December 31, as hedging instruments derivatives 2021 2020 Interest rate products Other non-interest expense $ 23 $ ( 7 ) Interest rate lock commitments ​ Mortgage banking income ​ ​ ( 6,852 ) ​ ​ 7,218 Forward contracts ​ Mortgage banking income ​ ​ 2,447 ​ ​ ( 2,339 ) Total ​ ​ $ ( 4,382 ) $ 4,872 ​ 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 December 31, 2021, the termination value of derivatives in a net liability position related to these agreements was $ 20.8 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 December 31, 2021, the Company had posted $ 21.6 million in eligible collateral. If the Company had breached any of these provisions at December 31, 2021, it could have been required to settle its obligations under the agreements at the termination value. ​ Note 21 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 December 31, 2021 and 2020 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 December 31, 2020 Commitments to fund loans ​ $ 462,151 ​ $ 311,237 Unfunded commitments under lines of credit ​ 530,397 ​ 537,325 Commercial and standby letters of credit ​ 7,321 ​ 7,320 Total unfunded commitments ​ $ 999,869 ​ $ 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 115 Table of Contents 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 year ended December 31, 2021 and 2020 totaling $ 0.5 million and $ 0.5 million, respectively, were primarily driven by early payoffs. The Company recorded a repurchase reserve of $ 2.1 million and $ 2.7 million at December 31, 2021 and 2020, respectively, which 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 years ended December 31, ​ ​ 2021 ​ 2020 Beginning balance ​ $ 2,741 ​ $ 2,589 Provision (released from) charged to operating expense, net ​ ​ ( 108 ) ​ ​ 662 Charge-offs ​ ​ ( 531 ) ​ ​ ( 510 ) Ending balance ​ $ 2,102 ​ $ 2,741 ​ 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 22 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 116 Table of Contents 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 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 December 31, 2021 and 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 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 ("dealers"). International Swaps and Derivative Association Master Agreements (“ISDA”) and Credit Support Annexes (“CSA”) 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 86.7 % 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 117 Table of Contents 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 December 31, 2021 and 2020, in the consolidated statements of financial condition utilizing the hierarchy structure described above: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 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 ​ $ — ​ $ 227,696 ​ $ — ​ $ 227,696 Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises ​ — ​ 461,334 ​ — ​ 461,334 Municipal securities ​ ​ — ​ ​ 237 ​ ​ — ​ ​ 237 Corporate debt ​ ​ — ​ 2,111 ​ — ​ 2,111 Loans held for sale ​ — ​ 139,142 ​ — ​ 139,142 Interest rate swap derivatives ​ — ​ 8,798 ​ — ​ 8,798 Mortgage banking derivatives ​ ​ — ​ ​ — ​ ​ 1,883 ​ ​ 1,883 Total assets at fair value ​ $ — ​ $ 839,318 ​ $ 1,883 ​ $ 841,201 Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate swap derivatives ​ $ — ​ $ 20,550 ​ $ — ​ $ 20,550 Mortgage banking derivatives ​ ​ — ​ ​ — ​ ​ 463 ​ ​ 463 Total liabilities at fair value ​ $ — ​ $ 20,550 ​ $ 463 ​ $ 21,013 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 2021: ​ ​ ​ ​ ​ ​ Mortgage banking ​ ​ ​ derivatives, net Balance at December 31, 2020 ​ $ 4,081 Loss included in earnings, net ​ ​ ( 4,405 ) Fees and costs included in earnings, net ​ 1,744 Balance at December 31, 2021 ​ $ 1,420 ​ 118 Table of Contents 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 % - 15 %, with a weighted average discount rate of 8.3 %, 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 December 31, 2021, the Company recorded a specific reserve of $ 1.6 million related to six loans with a carrying balance of $ 5.1 million. At December 31, 2020, the Company recorded a specific reserve of $ 1.9 million related to seven loans with a carrying balance of $ 7.5 million. ​ OREO —OREO is recorded at the fair value of the collateral less estimated selling costs using a range of 6 % - 10 % with a weighted average discount rate of 7.2 %. The estimated fair values of OREO are updated periodically and further write-downs may be taken to reflect a new basis. The Company recognized $ 0.8 million and $ 0.5 million of OREO impairments in its consolidated statements of operations during 2021 and 2020, respectively. 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, then 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 discount rate of 9.5 % at December 31, 2021 and a prepayment speed assumption range from 9.3 % to 14.5 % with a weighted average rate of 9.4 % at December 31, 2021 as inputs. At December 31, 2020, discount rates ranged from 9.5 % to 10.5 % with a weighted average discount rate of 9.5 % and prepayment speed assumption range from 15.4 % to 21.3 % with a weighted average rate of 15.8 %. 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 2021 compared to $ 0.8 million of impairment during 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 2021, the Company completed the previously announced consolidation of 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 which considers current local commercial real estate market conditions and 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. 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 during the year ended December 31, 2021. During 2020, the Company recognized $ 1.6 million of impairments in its consolidated statements of operations related to premises and equipment classified as held-for-sale totaling $ 8.0 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. 119 Table of Contents ​ The tables below provide information regarding losses from the assets recorded at fair value on a non-recurring basis at December 31, 2021 and 2020. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ ​ Total ​ Losses from fair value changes Individually evaluated loans ​ $ 14,083 ​ $ 1,816 Other real estate owned ​ 7,005 ​ 799 Premises and equipment ​ 6,032 ​ ​ 1,552 Total ​ $ 27,120 ​ $ 4,167 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ Total ​ Losses from fair value changes Individually evaluated loans ​ $ 25,480 ​ $ 3,228 Other real estate owned ​ 4,730 ​ ​ 470 Premises and equipment ​ 8,024 ​ ​ 1,631 Mortgage servicing rights ​ ​ 10,380 ​ ​ 751 Total ​ $ 48,614 ​ $ 6,080 ​ The Company did not record any liabilities measured at fair value on a non-recurring basis during 2021 and 2020. ​ Note 23 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. 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. 120 Table of Contents ​ The fair value of financial instruments at December 31, 2021 and 2020 are set forth below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Level in fair value December 31, 2021 December 31, 2020 ​ ​ measurement ​ Carrying ​ Estimated ​ Carrying ​ Estimated ​ ​ hierarchy ​ amount fair value amount fair value ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents Level 1 ​ $ 845,695 ​ $ 845,695 ​ $ 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 ​ 227,696 ​ 227,696 ​ 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 ​ 461,334 ​ 461,334 ​ 462,779 ​ 462,779 Municipal securities available-for-sale ​ Level 2 ​ ​ 237 ​ ​ 237 ​ ​ 318 ​ ​ 318 Municipal securities available-for-sale ​ Level 3 ​ ​ — ​ ​ — ​ ​ 57 ​ ​ 57 Corporate debt ​ Level 2 ​ ​ 2,111 ​ ​ 2,111 ​ ​ 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 ​ 312,916 ​ 309,614 ​ 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 ​ 296,096 ​ 289,646 ​ 70,428 ​ 70,761 Non-marketable securities ​ Level 2 ​ ​ 14,533 ​ ​ 14,533 ​ ​ 16,493 ​ ​ 16,493 Loans receivable Level 3 ​ 4,513,383 ​ 4,540,847 ​ 4,353,726 ​ 4,511,357 Loans held for sale Level 2 ​ 139,142 ​ 139,142 ​ 247,813 ​ 247,813 Accrued interest receivable Level 2 ​ 17,848 ​ 17,848 ​ 18,795 ​ 18,795 Interest rate swap derivatives Level 2 ​ 8,798 ​ 8,798 ​ 18,149 ​ 18,149 Mortgage banking derivatives ​ Level 3 ​ ​ 1,883 ​ ​ 1,883 ​ ​ 7,001 ​ ​ 7,001 LIABILITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposit transaction accounts Level 2 ​ 5,394,257 ​ 5,394,257 ​ 4,690,100 ​ 4,690,100 Time deposits Level 2 ​ 833,916 ​ 833,163 ​ 986,132 ​ 993,070 Securities sold under agreements to repurchase Level 2 ​ 22,768 ​ 22,768 ​ 22,897 ​ 22,897 Long-term debt ​ Level 2 ​ ​ 40,000 ​ ​ 40,000 ​ ​ — ​ ​ — Accrued interest payable Level 2 ​ 3,944 ​ 3,944 ​ 6,762 ​ 6,762 Interest rate swap derivatives ​ Level 2 ​ ​ 20,550 ​ ​ 20,550 ​ 57,060 ​ 57,060 Mortgage banking derivatives Level 3 ​ 463 ​ 463 ​ ​ 2,920 ​ ​ 2,920 ​ ​ ​ 121 Table of Contents Note 24 Parent Company Only Financial Statements ​ Parent company only financial information for National Bank Holdings Corporation is summarized as follows: ​ Condensed Statements of Financial Condition ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 December 31, 2020 ASSETS ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 107,154 ​ $ 91,402 Non-marketable securities ​ 24,178 ​ 58 Investment in subsidiaries ​ 746,135 ​ 725,002 Other assets ​ 7,366 ​ 14,751 Total assets ​ $ 884,833 ​ $ 831,213 LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ Long-term debt, net ​ $ 39,478 ​ $ — Other liabilities ​ ​ 5,249 ​ ​ 10,522 Total liabilities ​ 44,727 ​ 10,522 Shareholders’ equity ​ 840,106 ​ 820,691 Total liabilities and shareholders’ equity ​ $ 884,833 ​ $ 831,213 ​ Condensed Statements of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ 2021 2020 2019 Income ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity in undistributed earnings of subsidiaries ​ $ 37,866 ​ $ 67,416 ​ $ 28,133 Distributions from subsidiaries ​ 63,000 ​ 27,200 ​ 55,725 Income from non-marketable securities ​ 553 ​ — ​ — Total income ​ 101,419 ​ 94,616 ​ 83,858 Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ 197 ​ — ​ — Salaries and benefits ​ 5,622 ​ 5,136 ​ 4,925 Other expenses ​ 5,042 ​ 2,621 ​ 2,463 Total expenses ​ 10,861 ​ 7,757 ​ 7,388 Income before income taxes ​ 90,558 ​ 86,859 ​ 76,470 Income tax benefit ​ ( 3,048 ) ​ ( 1,732 ) ​ ( 3,895 ) Net income ​ $ 93,606 ​ $ 88,591 ​ $ 80,365 ​ 122 Table of Contents Condensed Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ 2021 2020 2019 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 93,606 ​ $ 88,591 ​ $ 80,365 Equity in undistributed earnings of subsidiaries ​ ( 37,866 ) ​ ( 67,416 ) ​ ( 28,133 ) Stock-based compensation expense ​ 5,541 ​ 5,299 ​ 4,869 Net excess tax (benefit) expense from stock-based compensation ​ ​ ( 644 ) ​ ​ 51 ​ ​ ( 2,160 ) Amortization ​ ​ 13 ​ ​ — ​ ​ — Other ​ ( 3,747 ) ​ 3,074 ​ 5,045 Net cash provided by operating activities ​ 56,903 ​ 29,599 ​ 59,986 Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchase of non-marketable securities ​ ​ ( 23,025 ) ​ ​ — ​ ​ — Net cash used in investing activities ​ ( 23,025 ) ​ — ​ — Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from issuance of long-term debt ​ ​ 40,000 ​ ​ — ​ ​ — Payments of long-term debt issuance costs ​ ​ ( 535 ) ​ ​ — ​ ​ — Issuance of stock under purchase and equity compensation plans ​ ( 2,267 ) ​ ( 749 ) ​ ( 6,229 ) Proceeds from exercise of stock options ​ ​ 2,489 ​ ​ 1,832 ​ ​ 2,788 Payment of dividends ​ ( 26,888 ) ​ ( 24,816 ) ​ ( 23,530 ) Repurchase of shares ​ ( 36,400 ) ​ ( 19,476 ) ​ — Net cash used in financing activities ​ ( 23,601 ) ​ ( 43,209 ) ​ ( 26,971 ) Net increase (decrease) in cash, cash equivalents and restricted cash ​ 10,277 ​ ( 13,610 ) ​ 33,015 Cash, cash equivalents and restricted cash at beginning of the year ​ 101,402 ​ 115,012 ​ 81,997 Cash, cash equivalents and restricted cash at end of the year ​ $ 111,679 ​ $ 101,402 ​ $ 115,012 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 123 Table of Contents Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES. ​ There were no changes in or disagreements with accountants on accounting and financial disclosures. ​