What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-17 compared with 2024-07-18 · 88 added, 78 removed, 297 unchanged (36% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial condition and results of operations for the six months ended June 30, 2024 and 2023 should be read in conjunction with its audited consolidated financial statements and the related notes to the consolidated financial statements included in 2023 Form 10-K.

Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024 or any future period.

The following discussion and analysis of the Company’s financial condition and results of operations for the nine months ended September 30, 2024 and 2023 should be read in conjunction with its audited consolidated financial statements and the related notes to the consolidated financial statements included in 2023 Form 10-K.

Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024 or any future period.

Forward-Looking Statements

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TCBI’s ability to pursue and execute upon growth plans, whether as a function of capital, liquidity, or other limitations;

TCBI’s ability to successfully execute its business strategy, including developing and executing new lines of business and new products and services;

TCBI’s ability to successfully execute its business strategy, including its strategic plan and developing and executing new lines of business and new products and services;

the extensive regulations to which TCBI is subject and its ability to comply with applicable governmental regulations, including legislative and regulatory changes;

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increased or expanded competition from banks and other financial service providers in TCBI’s markets;

adverse developments in the banking industry and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments, including the context of regulatory examinations and related findings and actions;

adverse developments in the banking industry and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments, including in the context of regulatory examinations and related findings and actions;

negative press and social media attention with respect to the banking industry or TCBI, in particular;

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Selected income statement data and key performance indicators are presented in the table below:

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

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

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

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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

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

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

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

Net interest margin 3.16 % 3.13 % 3.07 % 3.25 %

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(1) Non-interest expense divided by the sum of net interest income and non-interest income.

Three months ended June 30, 2024 compared to three months ended June 30, 2023

The Company reported net income of $41.7 million and net income available to common stockholders of $37.4 million for the second quarter of 2024, compared to net income of $68.7 million and net income available to common stockholders of $64.3 million for the second quarter of 2023.

On a fully diluted basis, earnings per common share were $0.80 for the second quarter of 2024, compared to $1.33 for the same period in 2023.

ROE was 5.26% and ROA was 0.56% for the second quarter of 2024, compared to 9.17% and 0.95%, respectively, for the same period in 2023.

The decrease in net income for the second quarter of 2024 compared to the second quarter of 2023 resulted primarily from a decrease in net interest income and an increase in provision for credit losses.

Six months ended June 30, 2024 compared to six months ended June 30, 2023

The Company reported net income of $67.8 million and net income available to common stockholders of $59.2 million for the six months ended June 30, 2024, compared to net income of $107.3 million and net income available to common stockholders of $98.7 million for the same period in 2023.

On a fully diluted basis, earnings per common share were $1.25 for the six months ended June 30, 2024, compared to $2.02 for the same period in 2023.

ROE was 4.14% and ROA was 0.46% for the six months ended June 30, 2024, compared to 7.15% and 0.74%, respectively, for the same period in 2023.

The decrease in net income for the six months ended June 30, 2024 compared to the same period in 2023 resulted primarily from a decrease in net interest income and an increase in non-interest expense.

Three months ended September 30, 2024 compared to three months ended September 30, 2023

The Company reported net loss of $61.3 million and net loss available to common stockholders of $65.6 million for the third quarter of 2024, compared to net income of $61.7 million and net income available to common stockholders of $57.4 million for the third quarter of 2023.

On a fully diluted basis, earnings/(loss) per common share was $(1.41) for the third quarter of 2024, compared to $1.18 for the same period in 2023.

ROE was (8.87)% and ROA was (0.78)% for the third quarter of 2024, compared to 8.08% and 0.81%, respectively, for the same period in 2023.

The decrease in net income for the third quarter of 2024 compared to the third quarter of 2023 resulted primarily from a decrease in non-interest income, resulting primarily from the $179.6 million loss on sale of available-for-sale debt securities during the third quarter of 2024.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

The Company reported net income of $6.5 million and net loss available to common stockholders of $6.5 million for the nine months ended September 30, 2024, compared to net income of $169.0 million and net income available to common stockholders of $156.1 million for the same period in 2023.

On a fully diluted basis, earnings/(loss) per common share was $(0.14) for the nine months ended September 30, 2024, compared to $3.20 for the same period in 2023.

ROE was (0.30)% and ROA was 0.03% for the nine months ended September 30, 2024, compared to 7.46% and 0.77%, respectively, for the same period in 2023.

The decrease in net income for the nine months ended September 30, 2024 compared to the same period in 2023 resulted primarily from a decrease in non-interest income, also primarily as a result of the loss on sale of available-for-sale debt securities described above.

Details of the changes in the various components of net income are discussed below.

Taxable Equivalent Net Interest Income Analysis - Quarterly(1)

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023

Three Months Ended September 30, 2024 Three Months Ended September 30, 2023

(in thousands except percentages) Average

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Interest bearing cash and cash equivalents

3,958,843 52,737 5.30 % 3,965,045 53,561 5.36 %

Loans held for sale 23,793 565 9.44 % 31,878 647 8.06 %

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Taxable Equivalent Net Interest Income Analysis - Year to Date(1)

Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

(dollars in thousands) Average

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The following table presents the changes in taxable equivalent net interest income and identifies the changes due to differences in the average volume of earning assets and interest bearing liabilities and the changes due to differences in the average interest rate on those assets and liabilities.

Three Months Ended June 30, 2024/2023 Six Months Ended June 30, 2024/2023

Three Months Ended September 30, 2024/2023

Nine Months Ended September 30, 2024/2023

Change Change Due To(1) Net

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Net Interest Income

Net interest income was $216.6 million for the three months ended June 30, 2024, compared to $232.0 million for the same period in 2023.

The decrease was primarily due to increases in funding costs and average interest bearing deposits, partially offset by increases in yields on average earning assets and average loans held for investment, excluding mortgage finance.

Average earning assets for the three months ended June 30, 2024 increased $619.9 million compared to the same period in 2023, which included increases of $512.4 million in average total loans held for investment and $120.1 million in average investment securities, partially offset by a $13.0 million decrease in average interest-bearing cash and cash equivalents.

Average interest-bearing liabilities increased $1.7 billion for the three months ended June 30, 2024 compared to the same period in 2023, primarily due to a $2.2 billion increase in average interest-bearing deposits, partially offset by decreases of $470.0 million in average short-term borrowings and $105.5 million in average long-term debt related to the second quarter 2024 redemption in full of the bank-issued senior unsecured credit-linked notes of $275.0 million.

Average non-interest bearing deposits for the three months ended June 30, 2024 decreased to $8.6 billion from $9.7 billion for the same period in 2023.

Net interest margin for the three months ended June 30, 2024 was 3.01%, compared to 3.29% for the same period in 2023.

The decrease in net interest margin was primarily due to an increase in funding costs, partially offset by an increase in yields on average earning assets.

Net interest income was $240.1 million for the three months ended September 30, 2024, compared to $232.1 million for the same period in 2023.

The increase was primarily due to increases in average total LHI and yields on average earning assets, partially offset by an increase in average interest bearing liabilities.

Average earning assets for the three months ended September 30, 2024 increased $997.5 million compared to the same period in 2023, which included increases of $901.7 million in average total loans held for investment and $110.1 million in average investment securities, partially offset by a $6.2 million decrease in average interest bearing cash and cash equivalents.

Average interest bearing liabilities increased $1.5 billion for the three months ended September 30, 2024 compared to the same period in 2023, primarily due to a $2.1 billion increase in average interest bearing deposits, partially offset by decreases of $380.9 million in average short-term borrowings and $198.1 million in average long-term debt.

Average non-interest bearing deposits for the three months ended September 30, 2024 decreased to $9.4 billion from $10.0 billion for the same period in 2023.

Net interest margin for the three months ended September 30, 2024 was 3.16%, compared to 3.13% for the same period in 2023.

The increase in net interest margin was primarily due to an increase in yields on investment securities, partially offset by an increase in the cost of interest bearing deposits.

The increases in yields on earnings assets and cost of funds are attributed to the impact of rising interest rates.

The yield on total loans held for investment increased to 6.65% for the three months ended June 30, 2024, compared to 6.56% for the same period in 2023, and the yield on earning assets increased to 5.86% for the three months ended June 30, 2024, compared to 5.69% for the same period in 2023.

Total cost of deposits increased to 2.99% for the three months ended June 30, 2024 from 2.37% for the same period in 2023, and total funding costs, including non-interest bearing deposits and stockholders' equity, increased to 2.83% for the three months ended June 30, 2024, compared to 2.38% for the same period in 2023.

Net interest income was $431.6 million for the six months ended June 30, 2024, compared to $467.3 million for the same period in 2023.

The decrease was primarily due to rising funding costs and an increase in average interest bearing deposits, partially offset by an increase in yields on average earnings assets and an increase in average total earning assets.

Average earning assets increased $267.7 million for the six months ended June 30, 2024, compared to the same period in 2023, which included increases of $830.0 million in average total loans held for investment and $178.8 million in average investment securities, partially offset by a decrease of $745.1 million in average interest-bearing cash and cash equivalents.

interest-bearing liabilities increased $1.5 billion for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to an increase of $2.0 billion in average interest-bearing deposits, partially offset by a $400.8 million decrease in average short-term borrowings.

Average non-interest bearing deposits for the six months ended June 30, 2024 decreased to $8.6 billion from $10.0 billion for the same period in 2023.

Net interest margin for the six months ended June 30, 2024 was 3.02%, compared to 3.31% for the same period of 2023.

The decrease was primarily due to the effect of rising interest rates on funding costs, partially offset by higher earning asset yields, also as a result of rising interest rates, compared to the same period in 2023.

The yield on total loans held for investment increased to 6.68% for the six months ended June 30, 2024, compared to 6.51% for the same period in 2023, and the yield on earning assets increased to 5.87% for the six months ended June 30, 2024, compared to 5.57% for the same period in 2023.

Total cost of deposits increased to 2.98% for the six months ended June 30, 2024 from 2.22% for the same period in 2023 and total funding costs, including non-interest bearing deposits and stockholders' equity, increased to 2.83% for the six months ended June 30, 2024, compared to 2.24% for the same period in 2023.

The yield on total loans held for investment increased to 6.62% for the three months ended September 30, 2024, compared to 6.58% for the same period in 2023, and the yield on earning assets increased to 5.96% for the three months ended September 30, 2024, compared to 5.75% for the same period in 2023.

Total cost of deposits increased to 2.94% for the three months ended September 30, 2024 from 2.62% for the same period in 2023, and total funding costs, including non-interest bearing deposits and stockholders' equity, increased to 2.76% for the three months ended September 30, 2024, compared to 2.60% for the same period in 2023.

Net interest income was $671.7 million for the nine months ended September 30, 2024, compared to $699.4 million for the same period in 2023.

The decrease was primarily due to increases in the cost of interest bearing deposits and average interest bearing deposits, partially offset by an increase in yields on average earnings assets and an increase in average total loans held for investment.

Average earning assets increased $511.7 million for the nine months ended September 30, 2024, compared to the same period in 2023, which included increases of $852.5 million in average total loans held for investment and $155.7 million in average

investment securities, partially offset by a decrease of $496.5 million in average interest bearing cash and cash equivalents.

Average interest bearing liabilities increased $1.5 billion for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to an increase of $2.0 billion in average interest bearing deposits, partially offset by a $394.2 million decrease in average short-term borrowings and $125.4 million decrease in average long-term debt.

Average non-interest bearing deposits for the nine months ended September 30, 2024 decreased to $8.9 billion from $10.0 billion for the same period in 2023.

Net interest margin for the nine months ended September 30, 2024 was 3.07%, compared to 3.25% for the same period of 2023.

The decrease was primarily due to the effect of rising interest rates on the cost of interest bearing deposits, partially offset by higher earning asset yields, also as a result of rising interest rates, compared to the same period in 2023.

The yield on total loans held for investment increased to 6.66% for the nine months ended September 30, 2024, compared to 6.53% for the same period in 2023, and the yield on earning assets increased to 5.90% for the nine months ended September 30, 2024, compared to 5.63% for the same period in 2023.

Total cost of deposits increased to 2.97% for the nine months ended September 30, 2024 from 2.36% for the same period in 2023 and total funding costs, including non-interest bearing deposits and stockholders' equity, increased to 2.80% for the nine months ended September 30, 2024, compared to 2.36% for the same period in 2023.

Non-interest 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

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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

Total non-interest income $ (114,771) $ 46,872 $ (23,028) $ 130,286

Non-interest income increased $4.4 million during the three months ended June 30, 2024, compared to the same period in 2023.

The increase was primarily due to increases in investment banking and advisory fees, partially offset by a decrease in trading income.

Non-interest income increased $8.3 million during the six months ended June 30, 2024 to $91.7 million, compared to $83.4 million for the same period in 2023.

The increase was primarily due to an increase in investment banking and advisory fees.

Non-interest income decreased $161.6 million during the three months ended September 30, 2024, compared to the same period in 2023.

The decrease was primarily due to the $179.6 million loss on sale of available-for-sale debt securities recognized during the third quarter of 2024, partially offset by increases in investment banking and advisory fees and other non-interest income.

Non-interest income decreased $153.3 million during the nine months ended September 30, 2024, compared to $130.3 million for the same period in 2023, primarily due to the $179.6 million loss on sale of available-for-sale debt securities recognized during the third quarter of 2024, partially offset by an increase in investment banking and advisory fees.

Non-interest 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

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

Non-interest expense increased $6.8 million during the three months ended June 30, 2024, compared to the same period in 2023.

The increase was primarily due to increases in salaries and benefits, occupancy expense, communications and technology expense, FDIC insurance assessment and other non-interest expense, partially offset by a decrease in legal and professional expense.

Non-interest expense for the six months ended June 30, 2024 increased $15.1 million, compared to the same period in 2023, primarily due to increases in salaries and benefits, communications and technology expense and FDIC insurance assessment, resulting from an additional $3.5 million FDIC special assessment expense recorded in the first six months of 2024, partially offset by decreases in marketing expense and legal and professional expense.

Non-interest expense increased $15.4 million during the three months ended September 30, 2024, compared to the same period in 2023.

The increase was primarily due to increases in salaries and benefits, occupancy expense and communications and technology expense, partially offset by a decrease in legal and professional expense.

The third quarter of 2024 included restructuring expenses of $2.4 million recorded in salaries and benefits, $476,000 recorded in occupancy expense and $3.1 million recorded in communications and technology expense.

The third quarter of 2024 also included a $651,000 release of FDIC special assessment accrual.

Non-interest expense for the nine months ended September 30, 2024 increased $30.6 million, compared to the same period in 2023, primarily due to increases in salaries and benefits, communications and technology expense and FDIC insurance

assessment, partially offset by a decrease in legal and professional expense.

Non-interest expense for the nine months ended September 30, 2024 included restructuring expenses of $4.4 million recorded in salaries and benefits, $476,000 recorded in occupancy expense and $3.1 million recorded in communications and technology expense, as well as $2.8 million in FDIC special assessment expense.

The decrease in legal and professional expense for the nine months ended September 30, 2024 resulted primarily from declines in professional services, partially offset by a $5.0 million legal settlement expense recognized in the first quarter of 2024.

Analysis of Financial Condition

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See Note 1 - Operations and Summary of Significant Accounting Policies in the 2023 Form 10-K for details of these portfolio segments.

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

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

Commercial $ 10,967,807 $ 10,410,766

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Total loans held for investment $ 22,294,171 $ 20,340,558

Total loans held for investment were $21.8 billion at June 30, 2024, an increase of $1.4 billion from December 31, 2023.

The Company experienced loan growth in all loan categories as it has continued to execute on its long-term strategy.

Mortgage finance loans relate to the mortgage warehouse lending operations in which the Company purchases mortgage loan ownership interests that are typically sold within 10 to 20 days and represent 23% and 19% of gross loans held for investment at June 30, 2024 and December 31, 2023, respectively.

Total loans held for investment were $22.3 billion at September 30, 2024, an increase of $2.0 billion from December 31, 2023.

The Company experienced loan growth in all loan categories, except for commercial real estate, as it has continued to execute on its long-term strategy.

Commercial loan growth includes the impact of the acquisition of a $332.0 million loan portfolio completed during the third quarter of 2024.

Mortgage finance loans relate to the mortgage warehouse lending operations in which the Company purchases mortgage loan ownership interests that are typically sold within 10 to 20 days and represent 25% and 19% of gross loans held for investment at September 30, 2024 and December 31, 2023, respectively.

Volumes fluctuate based on the level of market demand for the product and the number of days between purchase and sale of the loans, which can be affected by changes in overall market interest rates, and tend to peak at the end of each month.

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The Company also participates in shared national credits, both as a participant and as an agent.

As of June 30, 2024, the Company had $5.3 billion in shared national credits, $871.9 million of which the Company administered as agent.

As of September 30, 2024, the Company had $5.3 billion in shared national credits, $1.0 billion of which the Company administered as agent.

All syndicated loans, whether the Company acts as agent or participant, are underwritten to the same standards as all other loans the Company originates.

As of June 30, 2024, approximately $16.8 million of the Company’s shared national credits were on non-accrual.

As of September 30, 2024, approximately $16.5 million of the Company’s shared national credits were on non-accrual.

Portfolio Concentrations

Although more than 50% of the Company’s total loan exposure is outside of Texas and more than 50% of deposits are sourced outside of Texas, Texas concentration remains significant.

As of June 30, 2024, a majority of the loans held for investment, excluding mortgage finance and other national lines of business, were to businesses with headquarters or operations in Texas.

As of September 30, 2024, a majority of the loans held for investment, excluding mortgage finance and other national lines of business, were to businesses with headquarters or operations in Texas.

This geographic concentration subjects the Company’s loan portfolio to the general economic conditions within this state.

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The table below summarizes non-accrual loans by portfolio segment and by type of property securing the credit.

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

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

Non-accrual loans held for investment

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The provision for credit losses, comprised of a provision for loans and off-balance sheet credit losses, is a charge to earnings to maintain the allowance for credit losses at a level consistent with management’s assessment of expected losses at each balance sheet date.

The Company recorded a provision for credit losses of $39.0 million for the six months ended June 30, 2024, compared to a provision of $35.0 million for the six months ended June 30, 2023.

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

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

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

The Company recorded a provision for credit losses of $49.0 million for the nine months ended September 30, 2024, compared to a provision of $53.0 million for the nine months ended September 30, 2023.

The provision for credit losses for the nine months ended September 30, 2024 reflects growth in loans held for investment and $28.8 million in net charge-offs recorded during the nine months ended September 30, 2024.

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

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

The table below presents key metrics related to the Company’s credit loss experience:

June 30, 2024 June 30, 2023

September 30, 2024 September 30, 2023

Allowance for credit losses on loans to total loans held for investment 1.23 % 1.19 %

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Total provision for credit losses to average total loans held for investment(1)(2) 0.31 % 0.35 %

(1) Ratios are calculated using average balance for the six months ended June 30, 2024 and 2023, respectively.

(2) Ratios are annualized utilizing provision for credit losses for the six months ended June 30, 2024 and 2023, respectively.

(1) Ratios are calculated using average balance for the nine months ended September 30, 2024 and 2023, respectively.

(2) Ratios are annualized utilizing provision for credit losses for the nine months ended September 30, 2024 and 2023, respectively.

The table below details net charge-offs/(recoveries) as a percentage of average total loans by portfolio segment:

Six Months Ended June 30,

Nine Months Ended September 30,

(dollars in thousands) Net

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Total $ 28,802 0.18 % $ 37,090 0.25 %

(1) Ratios are calculated using net charge-offs for the six months ended June 30, 2024 and 2023, respectively.

(1) Ratios are calculated using net charge-offs for the nine months ended September 30, 2024 and 2023, respectively.

Liquidity and Capital Resources

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The following table summarizes the Company’s interest bearing cash and cash equivalents:

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

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

Interest bearing cash and cash equivalents $ 3,894,537 $ 3,042,357

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The following table summarizes period-end total deposits:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(dollars in thousands) Balance % of Total Balance % of Total

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Total deposits $ 25,865,255 100.0 % $ 22,371,839 100.0 %

Estimated uninsured assessable deposits, including accrued interest, were 40% of total deposits at June 30, 2024, compared to 43% of total deposits at December 31, 2023.

Estimated uninsured assessable deposits, including accrued interest, were 40% of total deposits at September 30, 2024, compared to 43% of total deposits at December 31, 2023.

The uninsured amounts are estimated based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements.

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The following table summarizes short-term borrowings, all of which mature within one year:

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

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

Repurchase agreements $ — $ —

2 unchanged sentences

The following table summarizes the Company’s short-term borrowing capacities net of balances outstanding:

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

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

FHLB borrowing capacity relating to loans and pledged securities $ 4,544,368 $ 2,602,092

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The loan agreement contains customary financial covenants and restrictions.

No borrowings were made against this line of credit during the six months ended June 30, 2024 or 2023.

The Company has long-term debt outstanding of $660.0 million as of June 30, 2024, comprised of trust preferred securities and subordinated notes with maturity dates ranging from January 2026 to December 2036.

No borrowings were made against this line of credit during the nine months ended September 30, 2024 or 2023.

The Company has long-term debt outstanding of $660.2 million as of September 30, 2024, comprised of trust preferred securities and subordinated notes with maturity dates ranging from January 2026 to December 2036.

See Note 5 - Short-Term Borrowings and Long-Term Debt in the accompanying notes to the consolidated financial statements included elsewhere in this report for additional information.

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Capital Resources

The Company’s equity capital averaged $3.2 billion for the six months ended June 30, 2024 compared to $3.1 billion for the same period in 2023.

The Company’s equity capital averaged $3.2 billion for the nine months ended September 30, 2024 compared to $3.1 billion for the same period in 2023.

The Company has not paid any cash dividends on common stock since operations commenced and has no plans to do so in the foreseeable future.

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The share repurchase program is set to expire on January 31, 2025, and the program may be suspended or discontinued at any time.

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

Critical Accounting Estimates

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Management considers a range of macroeconomic scenarios in connection with the allowance estimation process.

Within the various economic scenarios considered as of June 30, 2024, the quantitative estimate of the allowance for credit loss would increase by approximately $151.7 million under sole consideration of the most severe downside scenario.

Within the various economic scenarios considered as of September 30, 2024, the quantitative estimate of the allowance for credit loss would increase by approximately $108.3 million under sole consideration of the most severe downside scenario.

The quoted sensitivity calculation reflects the sensitivity of the modeled allowance estimate to macroeconomic forecast data, but is absent of qualitative overlays and other qualitative adjustments that are part of the quarterly reserving process and does not necessarily reflect the nature and extent of future changes in the allowance for reasons including increases or decreases in qualitative adjustments, changes in the risk profile and size of the portfolio, changes in the severity of the macroeconomic scenario and the range of scenarios under management consideration.

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 2. Management’s Discussion and Analysis