What changed in this filing

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Item 1. Financial Statements

2024-10-17 compared with 2024-07-18 · 120 added, 115 removed, 623 unchanged (27% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(in thousands except share data) June 30, 2024 December 31, 2023

(in thousands except share data) September 30, 2024 December 31, 2023

Cash and due from banks $ 297,048 $ 200,493

25 unchanged sentences

Authorized shares - 10,000,000

Issued shares - 300,000 at June 30, 2024 and December 31, 2023

Issued shares - 300,000 at September 30, 2024 and December 31, 2023

300,000 300,000

1 unchanged sentence

Authorized shares - 100,000,000

Issued shares - 51,474,581 and 51,142,979 at June 30, 2024 and December 31, 2023, respectively

Issued shares - 51,494,260 and 51,142,979 at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 1,054,614 1,045,576

Retained earnings 2,428,940 2,435,393

Treasury stock - 5,286,503 and 3,905,067 shares at cost at June 30, 2024 and December 31, 2023, respectively

Treasury stock - 5,286,503 and 3,905,067 shares at cost at September 30, 2024 and December 31, 2023, respectively

( 301,868 ) ( 220,334 )

6 unchanged sentences

COMPREHENSIVE INCOME - UNAUDITED

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands except per share data) 2024 2023 2024 2023

18 unchanged sentences

Trading income 5,786 6,092 16,148 18,693

Available-for-sale debt securities gains/(losses), net

( 179,581 ) — ( 179,581 ) 489

Other 11,524 6,343 25,875 21,368

9 unchanged sentences

Total non-interest expense 195,324 179,891 586,126 555,562

Income before income taxes 58,597 89,357 93,532 140,078

Income tax expense 16,935 20,706 25,728 32,766

Net income 41,662 68,651 67,804 107,312

Income/(loss) before income taxes ( 79,993 ) 81,052 13,539 221,130

Income tax expense/(benefit) ( 18,674 ) 19,373 7,054 52,139

Net income/(loss) ( 61,319 ) 61,679 6,485 168,991

Preferred stock dividends 4,313 4,313 12,938 12,938

Net income available to common stockholders $ 37,350 $ 64,339 $ 59,179 $ 98,687

Net income/(loss) available to common stockholders $ ( 65,632 ) $ 57,366 $ ( 6,453 ) $ 156,053

Other comprehensive income/(loss)

Change in unrealized gain/(loss) $ 109,849 $ ( 102,330 ) $ 53,567 $ ( 158,619 )

Amounts reclassified into net income 19,825 16,762 39,533 29,735

Amounts reclassified into net income/(loss) 199,599 19,285 239,132 48,531

Other comprehensive income/(loss) 309,448 ( 83,045 ) 292,699 ( 110,088 )

1 unchanged sentence

Other comprehensive income/(loss), net of tax 239,575 ( 65,604 ) 233,847 ( 86,969 )

Comprehensive income

$ 53,816 $ 3,105 $ 62,076 $ 85,947

Basic earnings per common share $ 0.80 $ 1.34 $ 1.26 $ 2.05

Diluted earnings per common share $ 0.80 $ 1.33 $ 1.25 $ 2.02

Comprehensive income/(loss) $ 178,256 $ ( 3,925 ) $ 240,332 $ 82,022

Basic earnings/(loss) per common share $ ( 1.42 ) $ 1.19 $ ( 0.14 ) $ 3.24

Diluted earnings/(loss) per common share $ ( 1.41 ) $ 1.18 $ ( 0.14 ) $ 3.20

See accompanying notes to consolidated financial statements.

4 unchanged sentences

(in thousands except share data) Shares Amount Shares Amount Capital Earnings Shares Amount Income/(Loss) Total

Balance at March 31, 2023 300,000 $ 300,000 50,947,306 $ 509 $ 1,031,905 $ 2,297,850 ( 3,095,444 ) $ ( 175,528 ) $ ( 374,762 ) $ 3,079,974

Balance at June 30, 2023 300,000 $ 300,000 51,087,965 $ 511 $ 1,035,063 $ 2,362,189 ( 3,095,444 ) $ ( 175,528 ) $ ( 440,308 ) $ 3,081,927

Comprehensive income/(loss):

1 unchanged sentence

Change in other comprehensive income/(loss), net of taxes — — — — — — — — ( 65,604 ) ( 65,604 )

Total comprehensive income 3,105

Total comprehensive loss

Stock-based compensation expense recognized in earnings — — — — 4,441 — — — — 4,441

1 unchanged sentence

Issuance of stock related to stock-based awards — — 22,482 — ( 430 ) — — — — ( 430 )

Balance at September 30, 2023 300,000 $ 300,000 51,110,447 $ 511 $ 1,039,074 $ 2,419,555 ( 3,095,444 ) $ ( 175,528 ) $ ( 505,912 ) $ 3,077,700

Balance at June 30, 2024 300,000 $ 300,000 51,474,581 $ 515 $ 1,050,114 $ 2,494,572 ( 5,286,503 ) $ ( 301,868 ) $ ( 367,732 ) $ 3,175,601

Balance at March 31, 2024 300,000 $ 300,000 51,420,680 $ 514 $ 1,044,669 $ 2,457,222 ( 4,434,405 ) $ ( 251,857 ) $ ( 379,886 ) $ 3,170,662

Comprehensive income/(loss):

Net income — — — — — 41,662 — — — 41,662

Net loss — — — — — ( 61,319 ) — — — ( 61,319 )

Change in other comprehensive income/(loss), net of taxes — — — — — — — — 239,575 239,575

3 unchanged sentences

Issuance of stock related to stock-based awards — — 19,679 — ( 457 ) — — — — ( 457 )

Repurchase of common stock — — — — — — ( 852,098 ) ( 50,011 ) — ( 50,011 )

Balance at June 30, 2024 300,000 $ 300,000 51,474,581 $ 515 $ 1,050,114 $ 2,494,572 ( 5,286,503 ) $ ( 301,868 ) $ ( 367,732 ) $ 3,175,601

Balance at September 30, 2024 300,000 $ 300,000 51,494,260 $ 515 $ 1,054,614 $ 2,428,940 ( 5,286,503 ) $ ( 301,868 ) $ ( 128,157 ) $ 3,354,044

See accompanying notes to consolidated financial statements.

17 unchanged sentences

Repurchase of common stock — — — — — — ( 1,011,909 ) ( 60,218 ) — ( 60,218 )

Balance at June 30, 2023 300,000 $ 300,000 51,087,965 $ 511 $ 1,035,063 $ 2,362,189 ( 3,095,444 ) $ ( 175,528 ) $ ( 440,308 ) $ 3,081,927

Balance at September 30, 2023 300,000 $ 300,000 51,110,447 $ 511 $ 1,039,074 $ 2,419,555 ( 3,095,444 ) $ ( 175,528 ) $ ( 505,912 ) $ 3,077,700

Balance at December 31, 2023 (audited)

1 unchanged sentence

Comprehensive income/(loss):

Net income — — — — — 67,804 — — — 67,804

— — — — — 6,485 — — — 6,485

Change in other comprehensive income/(loss), net of taxes — — — — — — — — 233,847 233,847

6 unchanged sentences

Repurchase of common stock — — — — — — ( 1,381,436 ) ( 81,534 ) — ( 81,534 )

Balance at June 30, 2024 300,000 $ 300,000 51,474,581 $ 515 $ 1,050,114 $ 2,494,572 ( 5,286,503 ) $ ( 301,868 ) $ ( 367,732 ) $ 3,175,601

Balance at September 30, 2024 300,000 $ 300,000 51,494,260 $ 515 $ 1,054,614 $ 2,428,940 ( 5,286,503 ) $ ( 301,868 ) $ ( 128,157 ) $ 3,354,044

See accompanying notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2024 2023

1 unchanged sentence

Net income $ 6,485 $ 168,991

Adjustments to reconcile net income to net cash provided by/(used in) operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses 49,000 53,000

Depreciation and amortization 38,917 30,870

Net gain recognized on investment securities ( 3,604 ) ( 2,685 )

Net (gain)/loss recognized on investment securities 173,708 ( 1,423 )

Stock-based compensation expense 21,208 17,948

Purchases and originations of loans held for sale — ( 706 )

Proceeds from sales and repayments of loans held for sale 53,494 8,980

14 unchanged sentences

Net cash used in investing activities ( 2,238,735 ) ( 2,073,892 )

( 1,781,832 ) ( 2,717,816 )

Financing activities

Net increase/(decrease) in deposits 1,446,488 461,360

Net increase in deposits 3,493,416 1,022,098

Issuance of stock related to stock-based awards ( 9,187 ) ( 4,465 )

4 unchanged sentences

Net cash provided by financing activities 2,724,757 1,068,335

1,322,599 462,340

Net increase/(decrease) in cash and cash equivalents 948,735 ( 819,484 )

( 329,771 ) ( 2,164,815 )

Cash and cash equivalents at beginning of period 3,242,850 5,012,260

28 unchanged sentences

The following table presents the computation of basic and diluted earnings per share:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands except share and per share data) 2024 2023 2024 2023

Net income $ 41,662 $ 68,651 $ 67,804 $ 107,312

Net income/(loss) $ ( 61,319 ) $ 61,679 $ 6,485 $ 168,991

Preferred stock dividends 4,313 4,313 12,938 12,938

Net income available to common stockholders $ 37,350 $ 64,339 $ 59,179 $ 98,687

Net income/(loss) available to common stockholders $ ( 65,632 ) $ 57,366 $ ( 6,453 ) $ 156,053

Basic earnings per common share—weighted average common shares 46,201,518 48,007,466 46,674,034 48,168,486

1 unchanged sentence

Dilutive earnings per common share—weighted average diluted common shares 46,608,742 48,528,698 47,053,717 48,724,028

Basic earnings per common share $ 0.80 $ 1.34 $ 1.26 $ 2.05

Diluted earnings per common share $ 0.80 $ 1.33 $ 1.25 $ 2.02

Basic earnings/(loss) per common share $ ( 1.42 ) $ 1.19 $ ( 0.14 ) $ 3.24

Diluted earnings/(loss) per common share $ ( 1.41 ) $ 1.18 $ ( 0.14 ) $ 3.20

Anti-dilutive outstanding stock-settled awards 622 87,738 62,560 319,021

4 unchanged sentences

Losses Estimated

June 30, 2024

September 30, 2024

Available-for-sale debt securities:

Treasury securities $ 278,200 $ — $ ( 2,396 ) $ 275,804

government agency securities 125,000 — ( 18,791 ) 106,209

Residential mortgage-backed securities 3,323,351 19,768 ( 112,263 ) 3,230,856

18 unchanged sentences

Total investment securities(2) $ 4,143,194

(1) Excludes accrued interest receivable o f $ 12.0 million and $ 9.5 million at June 30, 2024 and December 31, 2023, respectively, related to available-for-sale debt securities and $ 1.3 million and $ 1.4 million at June 30, 2024 and December 31, 2023, respectively, related to held-to-maturity debt securities that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.

(1) Excludes accrued interest receivable of $ 13.9 million and $ 9.5 million at September 30, 2024 and December 31, 2023, respectively, related to available-for-sale debt securities and $ 1.3 million and $ 1.4 million at September 30, 2024 and December 31, 2023, respectively, related to held-to-maturity debt securities that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.

(2) Includes available-for-sale debt securities and equity securities at estimated fair value and held-to-maturity debt securities at amortized cost.

Debt Securities

The Company did not sell any available-for-sale debt securities during the first six months of 2024.

In the first quarter of 2023, the Company sold U.S.

During the third quarter of 2024, the Company sold available-for-sale debt securities with an amortized cost basis of $ 1.2 billion, realizing a loss of $ 179.6 million, and repositioned the proceeds into a purchase of available-for-sale residential mortgage-backed securities with an amortized cost basis of $ 1.1 billion.

In the first quarter of 2023, the Company sold available-for-sale U.S.

Treasury securities with an amortized cost of $ 56.4 million and realized a gain of $ 489,000 .

The amortized cost and estimated fair value as of June 30, 2024, excluding accrued interest receivable, of available-for-sale and held-to-maturity debt securities are presented below by contractual maturity.

The amortized cost and estimated fair value as of September 30, 2024, excluding accrued interest receivable, of available-for-sale and held-to-maturity debt securities are presented below by contractual maturity.

Actual maturities may differ from contractual maturities of mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without prepayment penalties.

6 unchanged sentences

Total $ 3,614,342 $ 3,518,662 $ 812,432 $ 727,743

The table below presents the weighted average yields for the Company’s available-for-sale debt securities for the six months ended June 30, 2024.

The table below presents the weighted average yields for the Company’s available-for-sale debt securities for the nine months ended September 30, 2024.

Weighted average yields are calculated based on amortized cost on a tax-exempt basis assuming a 21% federal tax rate, where applicable.

9 unchanged sentences

(in thousands) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss

June 30, 2024

September 30, 2024

Treasury securities $ — $ — $ 275,804 $ ( 2,396 ) $ 275,804 $ ( 2,396 )

9 unchanged sentences

Total $ 910,999 $ ( 19,751 ) $ 2,256,400 $ ( 327,379 ) $ 3,167,399 $ ( 347,130 )

At June 30, 2024, the Company ha d 108 available-for-sale debt securities in an unrealized loss position, comprised of 10 U.S.

Treasury securities, five U.S.

government agency securities, 91 residential mortgage-backed securities and two CRT securities.

At September 30, 2024, the Company had 43 available-for-sale debt securities in an unrealized loss position, comprised of 6 U.S.

Treasury securities, 35 residential mortgage-backed securities and two CRT securities.

The unrealized losses on the available-for-sale debt securities were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans.

1 unchanged sentence

Held-to-maturity securities consist of government guaranteed securities for which no loss is expected.

At June 30, 2024 and December 31, 2023, no allowance for credit losses was established for available-for-sale or held-to-maturity d ebt securities.

At June 30, 2024 and December 31, 2023, debt securities with carrying values of approximat ely $ 1.5 million and $ 1.6 million , respectively, were pledged to secure certain customer deposits.

Equity Securities

At September 30, 2024 and December 31, 2023, no allowance for credit losses was established for available-for-sale or held-to-maturity debt securities.

At September 30, 2024 and December 31, 2023, debt securities with carrying values of approximately $ 425,000 and $ 1.6 million, respectively, were pledged to secure certain customer deposits.

Equi ty Securities

Equity securities consist of investments that qualify for consideration under the regulations implementing the Community Reinvestment Act and investments in exchange traded funds.

The following is a summary of unrealized and realized gains/(losses) recognized on equity securities included in other non-interest income on the consolidated statements of income and other comprehensive income:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2024 2023 2024 2023

4 unchanged sentences

Loans are summarized by portfolio segment as follows:

(in thousands) June 30, 2024 December 31, 2023

(in thousands) September 30, 2024 December 31, 2023

Loans held for investment(1):

12 unchanged sentences

Total loans held for sale $ 9,022 $ 44,105

(1) Excludes accrued interest receivable of $ 121.9 million and $ 118.1 million at June 30, 2024 and December 31, 2023, respectively, that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.

(1) Excludes accrued interest receivable of $ 114.8 million and $ 118.1 million at September 30, 2024 and December 31, 2023, respectively, that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.

During the third quarter of 2024, the Company purchased a $ 332.0 million commercial loan portfolio, which included certain loans that had experienced a more than insignificant deterioration in credit quality since origination (“PCD loans”).

PCD loans are recorded at fair value at the acquisition date along with an allowance for credit losses determined using the same methodology as originated loans.

The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis.

The difference between the initial amortized cost basis and the par value of the loan is a non-credit discount or premium, which is amortized into interest income over the life of the loan.

Subsequent changes to the allowance for credit losses are recorded through provision for credit losses.

The following table provides a summary of PCD loans purchased and the associated credit loss reserve at acquisition date:

(in thousands) Total

Par value (unpaid principal balance) $ 20,139

Allowance for credit losses on loans at acquisition

Non-credit premium

Purchase price

The following tables summarize gross loans held for investment by year of origination and internally assigned credit grades:

1 unchanged sentence

and prior Revolving lines of credit Revolving lines of credit converted to term loans Total

June 30, 2024

September 30, 2024

(1-7) Pass $ 1,206,729 $ 1,189,307 $ 1,330,253 $ 336,556 $ 90,941 $ 194,600 $ 5,939,588 $ 12,458 $ 10,300,432

53 unchanged sentences

Finance Commercial Real Estate Consumer Total

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Beginning balance $ 171,437 $ 4,173 $ 71,829 $ 2,534 $ 249,973

Allowance established for acquired PCD loans 2,579 — — — 2,579

Provision for credit losses on loans 54,529 1,290 ( 6,840 ) 414 49,393

3 unchanged sentences

Ending balance $ 205,471 $ 5,463 $ 59,291 $ 2,918 $ 273,143

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Beginning balance $ 185,303 $ 10,745 $ 54,268 $ 3,153 $ 253,469

4 unchanged sentences

Ending balance $ 168,818 $ 6,307 $ 67,203 $ 2,574 $ 244,902

The Company recorded a $ 40.0 million provision for credit losses on loans for the six months ended June 30, 2024, compared to $ 12.0 million for the same period of 2023.

The $ 40.0 million provision for credit losses on loans resulted primarily from growth in loans held for investment and $ 22.7 million in net charge-offs recorded during the six months ended June 30, 2024.

Net charge-offs of $ 22.7 million were recorded during the six months ended June 30, 2024, compared to net charge-offs of $ 28.1 million during the same period of 2023.

Criticized loans totaled $ 859.7 million at June 30, 2024, compared to $ 738.2 million at December 31, 2023.

The Company recor ded a $ 49.4 million provision for credit losses on loans for the nine months ended September 30, 2024, compared to $ 28.5 million for the same period of 2023.

T he $ 49.4 million provision for credit losses on loans resulted primarily from growth in loans held for investment and $ 28.8 million in net charge-offs du ring the nine months ended September 30, 2024.

Net charge-offs of $ 28.8 million were recorded during the nine months ended September 30, 2024, compared to net charge-offs of $ 37.1 million during the same period of 2023.

Criticized loans totaled $ 897.7 million at September 30, 2024, compared to $ 738.2 million at December 31, 2023.

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.

At June 30, 2024, the Company had $ 41.9 million in collateral-dependent commercial loans, collateralized by business assets, and $ 1.0 million in collateral-dependent consumer loans, collateralized by real estate.

At September 30, 2024, the Company had $ 44.0 million in collateral-dependent commercial loans, collateralized by business assets, and $ 2.2 million and $ 1.0 million in collateral-dependent commercial real estate and consumer loans, respectively, both of which are collateralized by real estate.

The table below provides an age analysis of gross loans held for investment:

3 unchanged sentences

Due Non-accrual(1) Current Total Non-accrual With No Allowance

June 30, 2024

September 30, 2024

Commercial $ 1,933 $ 40,718 $ 5,281 $ 47,932 $ 85,813 $ 10,834,062 $ 10,967,807 $ 12,086

3 unchanged sentences

Total $ 4,400 $ 41,366 $ 5,281 $ 51,047 $ 88,960 $ 22,241,235 $ 22,381,242 $ 13,050

(1) As of June 30, 2024, $ 1.2 million of non-accrual loans were earning interest income on a cash basis compared to $ 358,000 as of December 31, 2023.

Additionally, $ 161,000 of interest income was recognized on non-accrual loans for the six months ended June 30, 2024 compared to $ 37,000 for the same period in 2023.

Accrued interest of $ 668,000 and $ 1.6 million was reversed during the six months ended June 30, 2024 and June 30, 2023, respectively.

(1) As of September 30, 2024, $ 1.1 million of non-accrual loans were earning interest income on a cash basis compared to $ 358,000 as of December 31, 2023.

Additionally, $ 272,000 of interest income was recognized on non-accrual loans for the nine months ended September 30, 2024 compared to $ 37,000 for the same period in 2023.

Accrued interest of $ 917,000 and $ 1.7 million was reversed during the nine months ended September 30, 2024 and September 30, 2023, respectively.

Modifications to Borrowers Experiencing Financial Difficulty

The table below details gross loans held for investment as of June 30, 2024 and June 30, 2023 made to borrowers experiencing financial difficulty that were modified during the three and six months ended June 30, 2024 and June 30, 2023, by type of modification granted and the financial effect of those modifications:

The table below details gross loans held for investment as of September 30, 2024 and September 30, 2023 made to borrowers experiencing financial difficulty that were modified during the three and nine months ended September 30, 2024 and September 30, 2023, by type of modification granted and the financial effect of those modifications:

Financial Statement Impact

4 unchanged sentences

Extension Total Percentage of Loans Held for Investment Interest Rate Reduction Term Extension (in months) Payment Deferrals

Three Months Ended June 30, 2024

Commercial $ 16,147 $ 253 $ 7,439 $ — $ 23,839 0.11 % — % 3 to 13

Commercial real estate — 15,831 — — 15,831 0.07 % — % 3

Three Months Ended September 30, 2024

Commercial $ 360 $ — $ — $ — $ 360 — % — % 0

Total $ 360 $ — $ — $ — $ 360 — %

Three Months Ended June 30, 2023

Commercial $ — $ 261 $ 3,378 $ — $ 3,639 0.02 % — % 4 to 12

Three Months Ended September 30, 2023

Commercial $ 271 $ 6,372 $ — $ — $ 6,643 0.03 % — % 1

Total $ 271 $ 6,372 $ — $ — $ 6,643 0.03 %

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Commercial $ 6,762 $ 974 $ 6,929 $ — $ 14,665 0.07 % — % 12 to 13

1 unchanged sentence

Total $ 6,762 $ 16,805 $ 6,929 $ — $ 30,496 0.14 %

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Commercial $ 31,327 $ 7,065 $ 5,893 $ 14,332 $ 58,617 0.28 % 0.70 % 1 to 36

Total $ 31,327 $ 7,065 $ 5,893 $ 14,332 $ 58,617 0.28 %

The table below details gross loans held for investment as of June 30, 2024 and June 30, 2023 that experienced a default during the periods presented subsequent to being granted a modification in the prior twelve months.

The table below details gross loans held for investment as of September 30, 2024 and September 30, 2023 that experienced a default during the periods presented subsequent to being granted a modification in the prior twelve months.

Default is defined as movement to nonperforming status, foreclosure or charge-off, whichever occurs first.

3 unchanged sentences

and Term Extension

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Commercial $ 2,902 $ — $ — $ 2,902

Total $ 2,902 $ — $ — $ 2,902

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Commercial $ — $ — $ — $ —

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Commercial $ 2,902 $ — $ 1,370 $ 4,272

Total $ 2,902 $ — $ 1,370 $ 4,272

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Commercial $ — $ 161 $ — $ 161

The table below provides an age analysis of gross loans held for investment as of June 30, 2024 made to borrowers experiencing financial difficulty that were modified in the prior twelve months, and as of June 30, 2023 for loans that were modified since January 1, 2023, the date of adoptions of Accounting Standards Update 2022-02:

The table below provides an age analysis of gross loans held for investment as of September 30, 2024 made to borrowers experiencing financial difficulty that were modified in the prior twelve months, and as of September 30, 2023 for loans that were modified since January 1, 2023, the date of adoptions of Accounting Standards Update 2022-02:

(in thousands) 30-89 Days

1 unchanged sentence

Past Due Non-Accrual Current Total

June 30, 2024

September 30, 2024

Commercial $ — $ — $ 10,191 $ 4,474 $ 14,665

2 unchanged sentences

Total $ — $ — $ 10,191 $ 20,305 $ 30,496

June 30, 2023

September 30, 2023

Commercial $ — $ — $ 5,893 $ 52,724 $ 58,617

2 unchanged sentences

The table below presents a summary of short-term borrowings:

(in thousands) June 30, 2024 December 31, 2023

(in thousands) September 30, 2024 December 31, 2023

Federal Home Loan Bank borrowings $ 1,035,000 $ 1,500,000

1 unchanged sentence

The table below presents a summary of long-term debt:

(in thousands) June 30, 2024 December 31, 2023

(in thousands) September 30, 2024 December 31, 2023

Bank-issued floating rate senior unsecured credit-linked notes due 2024 $ — $ 199,499

11 unchanged sentences

Real Estate Consumer Total

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Beginning balance $ 36,040 $ 6 $ 10,147 $ 169 $ 46,362

1 unchanged sentence

Ending balance $ 41,741 $ 32 $ 4,047 $ 149 $ 45,969

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Beginning balance $ 16,550 $ — $ 5,222 $ 21 $ 21,793

1 unchanged sentence

Ending balance $ 32,349 $ 13 $ 13,755 $ 153 $ 46,270

(in thousands) June 30, 2024 December 31, 2023

(in thousands) September 30, 2024 December 31, 2023

Commitments to extend credit - period end balance $ 9,476,459 $ 9,749,085

9 unchanged sentences

A financial institution with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments and stock repurchases, and certain discretionary bonus payments to executive officers.

No dividends were declared or paid on the Company’s common stock during the six months ended June 30, 2024 or during 2023.

No dividends were declared or paid on the Company’s common stock during the nine months ended September 30, 2024 or during 2023.

On January 17, 2024, the Company’s board of directors authorized a new share repurchase program under which the Company could repurchase up to $ 150.0 million in shares of its outstanding common stock, which is set to expire on January 31, 2025.

During the six months ended June 30, 2024, the Company repurchased 1,381,436 shares of its common stock for an aggregate price, including excise tax expense, of $ 81.5 million, at a weighted average price of $ 58.57 per share.

During the nine months ended September 30, 2024, the Company repurchased 1,381,436 shares of its common stock for an aggregate price, including excise tax expense, of $ 81.5 million, at a weighted average price of $ 58.57 per share.

In February 2019, the federal bank regulatory agencies issued a final rule (the “2019 CECL Rule”) that revised certain capital regulations to account for changes to credit loss accounting under GAAP.

7 unchanged sentences

The table below summarizes the Company’s and the Bank’s actual and required capital ratios under the Basel III Capital Rules and other standards.

As shown in the table below, the Company’s and Bank’s capital ratios exceeded the regulatory definition of well capitalized as of June 30, 2024 and December 31, 2023.

June 30, 2024 December 31, 2023

As shown in the table below, the Company’s and Bank’s capital ratios exceeded the regulatory definition of well capitalized as of September 30, 2024 and December 31, 2023.

September 30, 2024 December 31, 2023

(dollars in thousands) Minimum Capital Required(2) Capital Required to be Well Capitalized Capital Amount Ratio Capital Amount Ratio

14 unchanged sentences

The table below summarizes the Company’s stock-based compensation expense:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2024 2023 2024 2023

3 unchanged sentences

Total $ 6,453 $ 4,441 $ 21,208 $ 17,948

(in thousands except period data) June 30, 2024

(in thousands except period data) September 30, 2024

Unrecognized compensation expense related to unvested stock-settled awards $ 32,278

8 unchanged sentences

(in thousands) Level 1 Level 2 Level 3

June 30, 2024

September 30, 2024

Available-for-sale debt securities:(1)

Treasury securities $ 275,804 $ — $ —

government agency securities — 106,209 —

Residential mortgage-backed securities — 3,230,856 —

1 unchanged sentence

Equity securities(1)(2) 58,140 16,286 —

Mortgage loans held for sale(3)

Loans held for investment(4)

28 unchanged sentences

(in thousands) Balance at Beginning of Period Purchases / Additions Sales / Reductions Realized Unrealized Balance at End of Period

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Available-for-sale debt securities:(1)

CRT securities $ 12,328 $ — $ ( 346 ) $ — $ 20 $ 12,002

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Available-for-sale debt securities:(1)

CRT securities $ 11,756 $ — $ ( 341 ) $ — $ 676 $ 12,091

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Available-for-sale debt securities:(1)

CRT securities $ 11,995 $ — $ ( 846 ) $ — $ 853 $ 12,002

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Available-for-sale debt securities:(1)

4 unchanged sentences

The fair value of CRT securities is based on a discounted cash flow model, which utilizes Level 3 inputs, the most significant of which were a discount rate and weighted-average life.

At June 30, 2024, the discount rates utilized ranged from 5.15 % to 6.99 % and the weighted-average life ranged from 4.63 years to 7.17 years.

On a combined amortized cost weighted-average basis a discount rate of 5.83 % and a weighted-average life of 5.57 years were utilized to determine the fair value of these securities at June 30, 2024.

At September 30, 2024, the discount rates utilized ranged from 4.52 % to 6.09 % and the weighted-average life ranged from 4.63 years to 6.91 years.

On a combined amortized cost weighted-average basis a discount rate of 5.12 % and a weighted-average life of 5.50 years were utilized to determine the fair value of these securities at September 30, 2024.

At December 31, 2023, the combined weighted-average discount rate and weighted-average life utilized were 6.57 % and 6.06 years, respectively.

1 unchanged sentence

Certain collateral-dependent loans held for investment are reported at fair value when, based upon an individual evaluation, the specific allocation of the allowance for credit losses that is deducted from the loan's amortized cost is based upon the fair value of the loan's underlying collateral.

The $ 18.0 million fair value of loans held for investment at June 30, 2024 reported above includes impaired loans with a carrying value of $ 42.8 million that were reduced by specific allowance allocations totaling $ 24.8 million based on collateral valuations utilizing Level 3 inputs.

The $ 20.7 million fair value of loans held for investment at September 30, 2024 reported above includes impaired loans with a carrying value of $ 47.1 million that were reduced by specific allowance allocations totaling $ 26.4 million based on collateral valuations utilizing Level 3 inputs.

The $ 38.3 million fair value of loans held for investment at December 31, 2023 reported above includes impaired loans with a carrying value of $ 58.3 million that were reduced by specific allowance allocations totaling $ 20.0 million based on collateral valuations utilizing Level 3 inputs.

3 unchanged sentences

(in thousands) Total Level 1 Level 2 Level 3

June 30, 2024

September 30, 2024

Financial assets:

29 unchanged sentences

The notional amounts and estimated fair values of derivative positions outstanding are presented in the following table.

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Estimated Fair Value Estimated Fair Value

20 unchanged sentences

In some cases, collateral may be required from the counterparties involved if the net value of the derivative instruments exceeds a nominal amount.

The Company’s credit exposure associated with these instruments, net of any collateral pledged, was approximately $ 11.3 million at June 30, 2024 and approximately $ 32.9 million at December 31, 2023.

The Company’s credit exposure associated with these instruments, net of any collateral pledged, was approximately $ 43.0 million at September 30, 2024 and approximately $ 32.9 million at December 31, 2023.

Collateral levels are monitored and adjusted on a regular basis for changes in the value of derivative instruments.

At June 30, 2024, the Company had $ 98.9 million in cash collateral pledged to counterparties included in interest bearing cash and cash equivalents on the consolidated balance sheet an d $ 46.9 million in cash collateral received from counterparties included in interest bearing deposits on the consolidated balance sheet.

At September 30, 2024, the Company had $ 101.5 million in cash collateral pledged to counterparties included in interest bearing cash and cash equivalents on the consolidated balance sheet and $ 17.7 million in cash collateral received from counterparties included in interest bearing deposits on the consolidated balance sheet.

The comparative amounts at December 31, 2023, were $ 119.0 million in cash collateral pledged to counterparties and $ 42.3 million cash collateral received from counterparties.

1 unchanged sentence

The risk participation agreements entered into by the Company as a participant bank provide credit protection to the financial institution counterparty should the borrower fail to perform on its interest rate derivative contract with that financial institution.

The Company is party to 14 ri sk participation agreements where it acts as a participant bank with a notional amount of $ 227.0 million at June 30, 2024, compared to 14 risk participation agreements with a notional amount of $ 230.7 million at December 31, 2023.

The maximum estimated exposure to these agreements, assuming 100% default by all obligors, was approximately $ 6.1 million at June 30, 2024 and $ 4.5 million at December 31, 2023.

The fair value of these exposures was insignificant to the consolidated financial statements at both June 30, 2024 and December 31, 2023.

The Company is party to 16 risk participation agreements where it acts as a participant bank with a notional amount of $ 219.0 million at September 30, 2024, compared to 14 risk participation agreements with a notional amount of $ 230.7 million at December 31, 2023.

The maximum estimated exposure to these agreements, assuming 100% default by all obligors, was approximately $ 2.3 million at September 30, 2024 and $ 4.5 million at December 31, 2023.

The fair value of these exposures was insignificant to the consolidated financial statements at both September 30, 2024 and December 31, 2023.

Risk participation agreements entered into by the Company as the lead bank provide credit protection should the borrower fail to perform on its interest rate derivative contract.

The Company is part y to 15 ri sk participation agreements where the Company acts as the lead bank having a notional amount of $ 202.9 million at June 30, 2024, compared to 15 agreements having a notional amount of $ 204.8 million at December 31, 2023.

The Company is party to 19 risk participation agreements where the Company acts as the lead bank having a notional amount of $ 253.0 million at September 30, 2024, compared to 15 agreements having a notional amount of $ 204.8 million at December 31, 2023.

Derivatives Designated as Cash Flow Hedges

The Company enters into interest rate derivative contracts that are designated as qualifying cash flow hedges to hedge the exposure to variability in expected future cash flows attributable to changes in a contractually specified interest rate.

During the six months ended June 30, 2024, the Company recorded $ 36.6 million in unrealized losses to adjust its cash flow hedges to fair value, which was recorded net of tax to AOCI, and reclassified $ 36.1 million from AOCI as a decrease to interest income on loans.

During the nine months ended September 30, 2024, the Company recorded $ 17.8 million in unrealized losses to adjust its cash flow hedges to fair value, which was recorded net of tax to AOCI, and reclassified $ 54.4 million from AOCI as a decrease to interest income on loans.

Based on current market conditions, the Company estimates that during the next 12 months, an additional $ 26.0 million related to active and terminated hedges will be reclassified from AOCI as a decrease to interest income.

As of June 30, 2024, the maximum length of time over which forecasted transactions are hedged i s 1.67 years.

As of September 30, 2024, the maximum length of time over which forecasted transactions are hedged is 1.42 years.

(11) Accumulated Other Comprehensive Income

1 unchanged sentence

(in thousands) Cash Flow Hedges Available-for-Sale Securities Held-to-Maturity Securities Total

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Beginning balance $ ( 45,215 ) $ ( 283,559 ) $ ( 38,958 ) $ ( 367,732 )

5 unchanged sentences

Ending balance $ ( 16,492 ) $ ( 74,075 ) $ ( 37,590 ) $ ( 128,157 )

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Beginning balance $ ( 81,785 ) $ ( 313,196 ) $ ( 45,327 ) $ ( 440,308 )

5 unchanged sentences

Ending balance $ ( 84,308 ) $ ( 377,784 ) $ ( 43,820 ) $ ( 505,912 )

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Beginning balance $ ( 45,749 ) $ ( 273,806 ) $ ( 42,449 ) $ ( 362,004 )

5 unchanged sentences

Ending balance $ ( 16,492 ) $ ( 74,075 ) $ ( 37,590 ) $ ( 128,157 )

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Beginning balance $ ( 66,394 ) $ ( 304,309 ) $ ( 48,240 ) $ ( 418,943 )

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements