# Atlantic Union Bankshares Corp (AUB) FY 2021 MD&A Verbatim Item 7 Management's Discussion and Analysis from Atlantic Union Bankshares Corp's 10-K for fiscal year 2021. SEC filing source: https://www.sec.gov/Archives/edgar/data/883948/000155837022002183/aub-20211231x10k.htm Accession: 0001558370-22-002183 Filing date: 2022-02-25 Report date: 2021-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/AUB/ All MD&A years: /company/AUB/mda/ Next year: /company/AUB/mda/fy2022/ (FY 2022) ITEM 7. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion and analysis provides information about the major components of the results of operations and financial condition, liquidity, and capital resources of the Company and its subsidiaries. This discussion and analysis should be read in conjunction with the “Consolidated Financial Statements” and the “Notes to the Consolidated Financial Statements,” which include the Company’s critical accounting policies, presented in Item 8 “Financial Statements and Supplementary Data” contained in this Form 10-K. In management’s discussion and analysis, the Company provides certain financial information determined by methods other than in accordance with U.S. GAAP. These non-GAAP financial measures are a supplement to GAAP, which is used to prepare the Company’s financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, the Company’s non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies. The Company believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in the Company’s underlying performance. Non-GAAP financial measures may be identified with the symbol (+) and may be labeled as adjusted. Refer to the “Non-GAAP Financial Measures” section within this Item 7 for more information about these non-GAAP financial measures, including a reconciliation of these measures to the most directly comparable financial measures in accordance with GAAP. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The accounting and reporting policies of the Company are in accordance with U.S. GAAP and conform to general practices within the banking industry. The Company’s financial position and results of operations are affected by management’s application of accounting policies, including estimates, assumptions, and judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues, expenses, and related disclosures. Different assumptions in the application of these policies could result in material changes in the Company’s consolidated financial position and/or results of operations. The Company evaluates its critical accounting estimates and assumptions on an ongoing basis and updates them as needed. Management has discussed the Company’s critical accounting policies and estimates with the Audit Committee of the Board of Directors of the Company. The critical accounting and reporting policies include the Company’s accounting for the ALLL, acquired loans, and goodwill. The Company’s accounting policies are fundamental to understanding the Company’s consolidated financial position and consolidated results of operations. Accordingly, the Company’s significant accounting policies are discussed in detail in Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K. The following is a summary of the Company’s critical accounting policies that are highly dependent on estimates, assumptions, and judgments. The below accounting policies related to the ALLL were updated following the Company’s adoption of ASC 326 on January 1, 2020. Allowance for Loan and Lease Losses - The provision for loan losses is an amount sufficient to bring the ALLL to an estimated balance that management considers adequate to absorb expected losses in the portfolio. The ALLL is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the ALLL when management believes the loan balance is no longer collectible. Subsequent recoveries of previously charged off amounts are recorded as increases to the ALLL; however, expected recoveries do not exceed the aggregate of amounts previously charged-off. Management’s determination of the adequacy of the ALLL is based on an evaluation of the composition of the loan portfolio, the value and adequacy of collateral, current economic conditions, historical loan loss experience, reasonable and supportable forecasts, and other risk factors. The ALLL is estimated using a loan-level PD/LGD method for all loans with the exception of its overdraft, auto and third-party consumer lending portfolios. For auto and third party consumer lending portfolios, the Company has elected to pool those loans based on similar risk characteristics to determine the ALLL using vintage and loss rate methods. The Company considers a number of economic variables in developing the ALLL of which the Virginia unemployment rate is the most significant. The ALLL quantitative estimate is sensitive to changes in the forecast of the Virginia 42 Table of Contents unemployment rate over the two-year reasonable and supportable period, with the commercial portfolio being the most sensitive to fluctuations in unemployment. To forecast Virginia unemployment, the Company utilizes Moody’s economic forecasts.  At December 31, 2021, the baseline scenario used in the two-year reasonable and supportable period forecast included the Virginia unemployment rate at an average of 2.6%, compared to an average of 5.0% Virginia unemployment rate in the baseline scenario forecast used for the December 31, 2020 estimate.  Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses on loans, and therefore the appropriateness of the ALLL, could change significantly. It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance because a wide variety of factors and inputs are considered in estimating the allowance and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all loan types. Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others. While management uses available information to estimate expected losses on loans, future changes in the ALLL may be necessary based on changes in portfolio composition, portfolio credit quality, and/or economic conditions. Determining the Contractual Term Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a TDR will be executed with an individual borrower or the extensions or renewal options are included in the original or modified contract at the reporting date and are not unconditionally legally cancelable by the Company. The Company’s ALLL measures the expected lifetime loss using pooled assumptions and loan-level details for financial assets that share common risk characteristics and evaluates an individual reserve in instances where the financial assets do not share the same risk characteristics. Collectively Assessed Reserve Consideration Loans that share common risk characteristics are considered collectively assessed. Loss estimates within the collectively assessed population are based on a combination of pooled assumptions and loan-level characteristics. Quantitative loss estimation models have been developed based largely on internal historical data at the loan and portfolio levels from 2005 through the current period and the economic conditions during the same time period. Expected losses for the Company’s collectively assessed loan segments are estimated using a number of quantitative methods including PD/LGD, Vintage, and Loss Rate. As part of its qualitative framework, the Company evaluates its current underwriting standards, geographic footprint, national and international current and forecasted economic conditions, expected government stimulus, and other factors to estimate the impact that changes in these factors may have on expected loan losses. The Company’s ALLL for the current period is based on a two-year reasonable and supportable forecast period with a straight-line reversion over the next two years to long-term average loss factors. Individually Assessed Reserve Consideration Loans that do not share risk characteristics are evaluated on an individual basis. The individual reserve component relates to loans that have shown substantial credit deterioration as measured by risk rating and/or delinquency status. In addition, the Company has elected the practical expedient that would include loans for individual assessment consideration if the repayment of the loan is expected substantially through the operation or sale of collateral because the borrower is experiencing financial difficulty. Where the source of repayment is the sale of collateral, the ALLL is based on the fair value of the underlying collateral, less selling costs, compared to the amortized cost basis of the loan. If the ALLL is based on the operation of the collateral, the reserve is calculated based on the fair value of the collateral calculated as the present value of expected cash flows from the operation of the collateral, compared to the amortized cost basis. If the Company determines that the value of a collateral dependent loan is less than the recorded investment in the loan, the Company charges off the deficiency if it is determined that such amount is deemed uncollectible. Typically, a loss is confirmed when the Company is moving toward foreclosure or final disposition. The Company obtains appraisals from a pre-approved list of independent, third party appraisers located in the market in which the collateral is located. The Company’s approved appraiser list is continuously maintained by the Company’s REVG to ensure the list only includes such appraisers that have the experience, reputation, character, and knowledge of 43 Table of Contents the respective real estate market. At a minimum, it is ascertained that the appraiser is currently licensed in the state in which the property is located, experienced in the appraisal of properties similar to the property being appraised, has knowledge of current real estate market conditions and financing trends, and is reputable. The Company’s internal REVG, which reports to the Enterprise Risk Management group, performs either a technical or administrative review of all appraisals obtained in accordance with the Company’s Appraisal Policy. The Appraisal Policy mirrors the federal regulations governing appraisals, specifically the Interagency Appraisal and Evaluation Guidelines and FIRREA. A technical review will ensure the overall quality of the appraisal, while an administrative review ensures that all of the required components of an appraisal are present. Independent appraisals or valuations are obtained on all individually assessed loans, as well as updated every twelve months for all individually assessed loans. Adjustments to real estate appraised values are only permitted to be made by the REVG. The individually assessed analysis is reviewed and approved by senior Credit Administration officers and the Special Assets Loan Committee. External valuation sources are the primary source to value collateral dependent loans; however, the Company may also utilize values obtained through other valuation sources. These alternative sources of value are used only if deemed to be more representative of value based on updated information regarding collateral resolution. The ALLL on loans individually assessed is updated, reviewed, and approved on a quarterly basis at or near the end of each reporting period. The Company performs regular credit reviews of the loan portfolio to review the credit quality and adherence to its underwriting standards. The credit reviews include annual commercial loan reviews performed by the Company’s commercial bankers in accordance with CLP, relationship reviews that accompany annual loan renewals, and independent reviews by its Loan Review Group. Upon origination, each commercial loan is assigned a risk rating ranging from one to nine, with loans closer to one having less risk. This risk rating scale is the Company’s primary credit quality indicator. Consumer loans are not risk rated unless past due status, bankruptcy, or other event results in the assignment of a Substandard or worse risk rating in accordance with the consumer loan policy. Governance The Company’s Allowance Committee, which reports to the Audit Committee and contains representatives from both the Company’s finance and risk teams, is responsible for approving the Company’s estimate of expected credit losses and resulting ALLL. The Allowance Committee considers the quantitative model results and qualitative factors when approving the final ALLL. The Company’s ALLL model is subject to the Company’s models risk management program which is overseen by the Model Risk Management Committee, which reports to the Company’s Board Risk Committee. Acquired Loans –The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination. Acquired loans are recorded at their fair value at acquisition date without carryover of the acquiree’s previously established ALLL, as credit discounts are included in the determination of fair value. The fair value of the loans is determined using market participant assumptions in estimating the amount and timing of both principal and interest cash flows expected to be collected on the loans and then applying a market-based discount rate to those cash flows. During evaluation upon acquisition, acquired loans are also classified as either PCD or acquired performing. The acquired loans are subject to the Company’s ALLL Policy upon acquisition. Acquired performing loans are accounted for under ASC 310-20, Receivables – Nonrefundable Fees and Other Costs. The difference between the fair value and unpaid principal balance of the loan at acquisition date (premium or discount) is amortized or accreted into interest income over the life of the loans. If the acquired performing loan has revolving privileges, it is accounted for using the straight-line method; otherwise, the effective interest method is used. PCD loans reflect loans that have experienced more-than-insignificant credit deterioration since origination, as it is probable at acquisition that the Company will not be able to collect all contractually required payments. These PCD loans are accounted for under ASC 326. The PCD loans are segregated into pools based on loan type and credit risk. Loan type is determined based on collateral type, purpose, and lien position. Credit risk characteristics include risk rating groups, nonaccrual status, and past due status. For valuation purposes, these pools are further disaggregated by maturity, pricing characteristics, and re-payment structure. ​ PCD loans are recorded at the amount paid. An ALLL is determined using the same methodology as other LHFI. The initial ALLL is determined on a collective basis and is allocated to individual loans. The sum of the loan's purchase price and ALLL becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the ALLL are recorded through provision expense. ​ 44 Table of Contents Goodwill- The Company follows ASC 350, Goodwill and Other Intangible Assets, which prescribes the accounting for goodwill and intangible assets subsequent to initial recognition. Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exists that indicate that a goodwill impairment test should be performed. The Company has selected April 30th as the date to perform the annual impairment test. Goodwill is the only intangible asset with an indefinite life on the Company’s Consolidated Balance Sheets. ​ ​ 45 Table of Contents RECENT ACCOUNTING PRONOUNCEMENTS (ISSUED BUT NOT FULLY ADOPTED) In March 2020, the FASB issued ASU No. 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This guidance provides temporary, optional guidance to ease the potential burden in accounting for reference rate reform associated with the LIBOR transition. LIBOR and other interbank offered rates are widely used benchmark or reference rates that have been used in the valuation of loans, derivatives, and other financial contracts. Global capital markets are going to be required to move away from LIBOR and other interbank offered rates and toward rates that are more observable or transaction based and less susceptible to manipulation. Topic 848 provides optional expedients and exceptions, subject to meeting certain criteria, for applying current GAAP to contract modifications and hedging relationships, for contracts that reference LIBOR or another reference rate expected to be discontinued. Topic 848 is intended to help stakeholders during the global market-wide reference rate transition period. The amendments are effective as of March 12, 2020 through December 31, 2022 and can be adopted at an instrument level. As of December 31, 2021, the Company utilized the expedient to assert probability of hedged interest as detailed in Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data”. The Company may incorporate other components of Topic 848 at a later date as it continues to evaluate the remaining components of Topic 848 and its impact to the Company. 46 Table of Contents RESULTS OF OPERATIONS SIGNIFICANT ACTIVITIES SBA Paycheck Protection Program The Company’s financial condition and results of operations as of and for the years ended December 31, 2021 and December 31, 2020 have been impacted by COVID-19, as well as governmental programs and initiatives responding to COVID-19, including the PPP. The Company participated in the SBA PPP under the CARES Act, which was intended to provide economic relief to small businesses that had been adversely impacted by COVID-19. The PPP loan funding program expired on May 31, 2021. The Company had PPP loans with a recorded investment of $154.7 million and $1.2 billion and unamortized deferred fees of $4.4 million and $17.6 million as of December 31, 2021 and 2020, respectively. The loans carry a 1% interest rate. In addition to an insignificant amount of PPP loan pay offs, the Company has processed approximately $2.0 billion of loan forgiveness on approximately 16,000 PPP loans since the inception of the program through December 31, 2021. Strategic Initiatives During 2021, the Company took certain actions to reduce expenses in light of the current and expected operating environment that included the closure of the operations center and consolidation of 16 branches, all expected to be completed in March 2022. These actions resulted in restructuring expenses in the fourth quarter of 2021 of approximately $16.5 million and an estimated $5.7 million in the first quarter of 2022, primarily related to real estate, lease and other asset write downs, as well as severance costs. In addition, the Company completed the consolidation of five branches in February 2021 and 15 branches in 2020, which resulted in expenses of approximately $900,000 for the year ended December 31, 2021 and $6.8 million for the year ended December 31, 2020, primarily related to lease termination costs, severance costs and real estate write-downs. Additionally, during 2021 the Company sold shares of Visa, Inc. Class B common stock and recorded a gain in other income of $5.1 million. Subordinated Notes Offering During the fourth quarter of 2021, the Company issued the 2031 Notes at a 2.875% fixed-to-floating rate. The 2031 Notes were sold at par resulting in net proceeds, after underwriting discounts and offering expenses, of approximately $246.9 million. The Company used a portion of the net proceeds from the 2031 Notes issuance to redeem during the fourth quarter of 2021 its outstanding $150 million of 5.00% fixed-to-floating rate subordinated notes that were due to mature in 2026. As a result of the redemption, the Company recorded additional interest expense of approximately $1.0 million in the fourth quarter of 2021 due to the acceleration of the related unamortized discount. Share Repurchase Program On December 10, 2021, the Company’s Board of Directors authorized a share repurchase program to purchase up to $100.0 million of the Company’s common stock in open market transactions or privately negotiated transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and/or Rule 10b-18 under the Exchange Act. This new Repurchase Program replaced the prior $125.0 million share repurchase authorization that was fully utilized by September 30, 2021 and was due to expire on June 30, 2022. There were no share repurchase transactions during the year ended December 31, 2021. Refer to Note 21 “Subsequent Events” in the “Notes to Consolidated Financial Statements” contained in Item 8 of this Form 10-K for share repurchase transactions that occurred in 2022. ​ ​ ​ 47 Table of Contents ASC 326 Adoption On January 1, 2020, the Company adopted ASC 326, which resulted in an increase of $51.7 million in the ACL on January 1, 2020. Subsequent to the adoption of ASC 326, the Company has been impacted by the uncertainties associated with COVID-19. The ACL at December 31, 2021 decreased $62.8 million from December 31, 2020 due to lower expected losses than previously estimated as a result of ongoing economic improvements, benign credit quality metrics since the COVID-19 pandemic began, and a positive macroeconomic outlook. At December 31, 2021 the ACL was $107.8 million, which included an ALLL of $99.8 million and a RUC of $8.0 million, compared to an ACL of $170.5 million, which included an ALLL of $160.5 million and a RUC of $10.0 million at December 31, 2020. COVID-19 UPDATE The Company’s financial performance generally, and in particular the ability of its borrowers to repay their loans, the value of collateral securing those loans, as well as demand for loans and other products and services the Company offers, is highly dependent on the business environment in its primary markets where it operates and in the United States as a whole. COVID-19 has had and may continue to have a wide range of economic impacts. Since the first quarter of 2020, COVID-19 severely disrupted supply chains and adversely affected production, demand, sales, and employee productivity across a range of industries, and has increased unemployment in the Company’s areas of operation and nationally. During 2021, the economy has, with certain setbacks, started to reopen, as there was wider vaccine distribution, resulting in the easing of restrictions related to COVID-19, which appear to be leading to greater economic activity. However, the national economy and economies in the Company’s areas of operations were impacted during 2021 and may continue to be impacted into 2022, despite the fact that many businesses have re-opened at full capacity. In addition, COVID-19 may have social and other impacts that are not yet known but may affect the Company’s customers, employees, and vendors. If a resurgence in the COVID-19 pandemic leads to significant restrictions on economic activity or significant impacts on public health, COVID-19 may still present the possibility of an extended economic recession. During 2021 and 2020, the Company has taken and is continuing to take precautions to protect the safety and well-being of the Bank’s employees and customers during COVID-19. The Bank has implemented additional safety policies and procedures and follows guidance issued by the Centers for Disease Control and Prevention, state health authorities, and state and local executive orders where our branches and corporate offices are located. The Bank remains very focused on the safety and well-being of its employees and customers during COVID-19 and is committed to safely and responsibly operating its branch network and maintaining appropriate staffing in each branch. COVID-19 has adversely affected the Company’s business, financial condition, and results of operations since the first quarter of 2020. The duration, nature and severity of future impacts of COVID-19 on the Company’s operational and financial performance will depend on future developments with respect to COVID-19, many of which remain highly uncertain and cannot be predicted. For additional information about the risks posed by COVID-19, see “Risks Related to the COVID-19 Pandemic” in Item 1A “Risk Factors”. ​ 48 Table of Contents SUMMARY OF 2021 FINANCIAL RESULTS ​ Executive Overview Net Income & Performance Metrics ​ [[GREPCENT_TABLE]] [["","\u25cf","Net income available to common shareholders was $252.0 million and diluted EPS was $3.26 for the year ended December 31, 2021, compared to net income of $152.6 million and diluted EPS of $1.93 for the year ended December 31, 2020."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Adjusted operating earnings available to common shareholders(+), which excludes dividends on preferred stock, net losses related to balance sheet repositioning, gains or losses on sales of securities, gains on the sale of Visa, Inc. Class B common stock, as well as branch closing and facility consolidation costs, totaled $273.3 million and diluted adjusted operating EPS(+) was $3.53 for the year ended December 31, 2021, compared to adjusted operating earnings available to common shareholders(+) of $174.2 million and diluted adjusted operating EPS(+) of $2.21 for the year ended December 31, 2020."]] [[/GREPCENT_TABLE]] ​ Balance Sheet [[GREPCENT_TABLE]] [["","\u25cf","Cash and cash equivalents were $802.5 million at December 31, 2021, an increase of $309.2 million or 62.7% from December 31, 2020."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Total investments were $4.2 billion at December 31, 2021, an increase of $1.0 billion or 31.6% from December 31, 2020."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Loans held for investment (net of deferred fees and costs) were $13.2 billion at December 31, 2021, a decrease of $825.5 million or 5.9% from December 31, 2020. Excluding the effects of the PPP(+), loans held for investment (net of deferred fees and costs) totaled $13.0 billion at December 31, 2021, an increase of $203.7 million or 1.6% from the prior year."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Total deposits at December 31, 2021 were $16.6 billion, an increase of $888.3 million or 5.6% from December 31, 2020."]] [[/GREPCENT_TABLE]] ​ Net Income 2021 compared to 2020 Net income available to common shareholders for the year ended December 31, 2021 increased $99.5 million or 65.2% to $252.0 million for the year ended December 31, 2021 and represented diluted EPS of $3.26, compared to $152.6 million and $1.93 for the year ended December 31, 2020. The increase primarily reflects the decrease in the provision for credit losses, by $148.0 million from the year ended December 31, 2020 to a negative $60.9 million for the year ended December 31, 2021, primarily due to decreases to the Company’s ACL estimates driven by ongoing economic improvements, benign credit quality metrics since the COVID-19 pandemic began and a positive macroeconomic outlook. This increase was partially offset by higher income tax expense, higher noninterest expenses, and lower net interest income and noninterest income. Adjusted operating earnings available to common shareholders(+) totaled $273.3 million for the year ended December 31, 2021, compared to $174.2 million for the year ended December 31, 2020, and diluted adjusted operating EPS(+) were $3.53 for the year ended December 31, 2021, compared to $2.21 for the year ended December 31, 2020. Net interest income for the year ended December 31, 2021 totaled $551.3 million, which was a decrease of $4.0 million or 0.7% compared to the prior year, primarily reflecting the impact of a decline in overall earning asset yields of 52 bps for the year ended December 31, 2021, offset by a decline in cost of funds of 35 bps for the year ended December 31, 2021 and increased loan accretion recognized on PPP loans. 49 Table of Contents Noninterest income decreased $5.7 million or 4.3% from $131.5 million for the year ended December 31, 2020 to $125.8 million for the year ended December 31, 2021 as declines in gains on securities transactions, loan swap fees reflecting lower transaction volumes in the current year, and mortgage banking income reflecting lower mortgage loan origination volumes in the current year, were partially offset by increases in unrealized gains on equity method investments, the gain on sale of Visa, Inc. Class B common stock, fiduciary and asset management fees primarily reflecting higher assets under management, income on bank owned life insurance, interchange fees, service charges on deposits, and also the impact of prior year benefitting from a balance sheet repositioning gain. Noninterest expense increased $5.8 million or 1.4% from $413.3 million for the year ended December 31, 2020 to $419.2 million for the year ended December 31, 2021. The increase was primarily driven by an increase in branch closing and facility consolidation costs, as well as the impact of higher salaries and benefit costs, professional services costs, and technology and data processing expenses for the year ended December 31, 2021, partially offset by declines in losses related to balance sheet repositioning, core deposit intangibles amortization costs, loan-related expenses, and other business continuity expenses associated with the Company’s response to COVID-19. 2020 compared to 2019 Net income available to common shareholders for the year ended December 31, 2020 decreased $41.0 million or 21.2% to $152.6 million for the year ended December 31, 2020 and represented earnings per share of $1.93, compared to $193.5 million and $2.41 for the year ended December 31, 2019. The decrease was primarily due to the economic disruption caused by the COVID-19 pandemic. Adjusted operating earnings available to common shareholders(+) totaled $174.2 million for the year ended December 31, 2020, compared to $227.8 million for the year ended December 31, 2019, and diluted adjusted operating EPS(+) were $2.21 for the year ended December 31, 2020, compared to $2.84 for the year ended December 31, 2019. For reconciliation of the non-GAAP measures, refer to section “Non-GAAP Measures” included within this Item 7. The reduction in net income for the year ended December 31, 2020 included an increase to the provision for credit losses of $66.0 million from $21.1 million for the year ended December 31, 2019 to $87.1 million for the year ended December 31, 2020, primarily due to increases to the Company’s ACL estimates driven by the impact of the overall worsening economic forecast related to COVID-19 and its related forecast implications required as a result of the Company’s 2020 adoption of CECL. In addition, the Company incurred FHLB prepayment penalties of $31.1 million, expenses of approximately $6.8 million related to branch consolidation costs and other expense reduction actions, and approximately $2.1 million in costs related to the Company’s response to COVID-19 during the year ended December 31, 2020. Net interest income for the year ended December 31, 2020 totaled $555.3 million, which was an increase of $17.4 million from the year ended December 31, 2019, primarily the result of higher average loan balances, an increase in loan accretion recognized on PPP loans, and cost of funds declines, partially offset by a decline in overall loan and investment yields, and lower purchased loan discount accretion. Noninterest income decreased $1.3 million from $132.8 million for the year ended December 31, 2019 to $131.5 million for the year ended December 31, 2020 due to a decline in service charges on deposit accounts, which were partially offset by an increases in mortgage banking income and loan related interest rate swap income, as well as benefit proceeds on bank owned life insurance. Noninterest expense decreased $5.0 million or 1.2% from $418.3 million for the year ended December 31, 2019 to $413.3 million for the year ended December 31, 2020. The decrease was primarily driven by the lack of rebranding and merger-related costs for the year ended December 31, 2020, partially offset by increases in debt extinguishment costs, as well as increases in salaries and benefit costs. ​ ​ ​ ​ 50 Table of Contents Net Interest Income Net interest income, which represents the principal source of revenue for the Company, is the amount by which interest income exceeds interest expense. The net interest margin is net interest income expressed as a percentage of average earning assets. Changes in the volume and mix of interest-earning assets and interest-bearing liabilities, as well as their respective yields and rates, have a significant impact on the level of net interest income, the net interest margin, and net income. The following tables show interest income on earning assets and related average yields, as well as interest expense on interest-bearing liabilities and related average rates paid for the periods indicated: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the Year Ended","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31,","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","2021","","2020","","Change","","\u200b"],["\u200b","\u200b","(Dollars in thousands)","\u200b","\u200b"],["Average interest-earning assets","\u200b","$","17,903,671","\u200b","$","17,058,795","\u200b","$","844,876"],["Interest and dividend income","\u200b","$","592,359","\u200b","$","653,454","\u200b","$","(61,095)"],["Interest and dividend income (FTE) (+)","\u200b","$","604,950","\u200b","$","665,001","\u200b","$","(60,051)"],["Yield on interest-earning assets","\u200b","","3.31","%","","3.83","%","","(52)","","bps"],["Yield on interest-earning assets (FTE) (+)","\u200b","","3.38","%","","3.90","%","","(52)","","bps"],["Average interest-bearing liabilities","\u200b","$","11,938,582","\u200b","$","12,243,845","\u200b","$","(305,263)"],["Interest expense","\u200b","$","41,099","\u200b","$","98,156","\u200b","$","(57,057)"],["Cost of interest-bearing liabilities","\u200b","","0.34","%","","0.80","%","","(46)","","bps"],["Cost of funds","\u200b","","0.23","%","","0.58","%","","(35)","","bps"],["Net interest income","\u200b","$","551,260","\u200b","$","555,298","\u200b","$","(4,038)"],["Net interest income (FTE) (+)","\u200b","$","563,851","\u200b","$","566,845","\u200b","$","(2,994)"],["Net interest margin","\u200b","","3.08","%","","3.26","%","","(18)","","bps"],["Net interest margin (FTE) (+)","\u200b","","3.15","%","","3.32","%","","(17)","","bps"]] [[/GREPCENT_TABLE]] ​ For the year ended December 31, 2021, net interest income was $551.3 million, a decrease of $4.0 million from the year ended December 31, 2020. For the year ended December 31, 2021, net interest income (FTE) (+) was $563.9 million, a decrease of $3.0 million from the prior year. The decreases in both net interest income and net interest income (FTE) (+) were primarily the result of a decline in overall loan and securities yields partially offset by a decline in cost of funds and increased loan accretion recognized on PPP loans. For the year ended December 31, 2021, PPP loan accretion totaled $39.3 million, an increase of $6.8 million from $32.5 in the prior year. For the year ended December 31, 2021, net interest margin decreased 18 bps and net interest margin (FTE) (+) decreased 17 bps, compared to the year ended December 31, 2020. The net decline in net interest margin and net interest margin (FTE) (+) measures were primarily driven by a decrease in the yield on interest-earning assets, partially offset by a decrease in cost of funds and an increase in loan accretion on PPP loans. The decline in the Company’s earning asset yields was primarily driven by declines in loan and securities yields, as a result of the decrease in market interest rates. The cost of funds decline was driven by lower deposit costs and wholesale borrowing costs driven by lower market interest rates and a favorable funding mix. ​ 51 Table of Contents ​ ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the Year Ended","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31,","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","2020","","2019(1)","","Change","","\u200b"],["\u200b","\u200b","(Dollars in thousands)","\u200b","\u200b"],["Average interest-earning assets","\u200b","$","17,058,795","\u200b","$","14,881,142","\u200b","$","2,177,653"],["Interest and dividend income","\u200b","$","653,454","\u200b","$","699,332","\u200b","$","(45,878)"],["Interest and dividend income (FTE) (+)","\u200b","$","665,001","\u200b","$","710,453","\u200b","$","(45,452)"],["Yield on interest-earning assets","\u200b","","3.83","%","","4.70","%","","(87)","","bps"],["Yield on interest-earning assets (FTE) (+)","\u200b","","3.90","%","","4.77","%","","(87)","","bps"],["Average interest-bearing liabilities","\u200b","$","12,243,845","\u200b","$","11,280,822","\u200b","$","963,023"],["Interest expense","\u200b","$","98,156","\u200b","$","161,460","\u200b","$","(63,304)"],["Cost of interest-bearing liabilities","\u200b","","0.80","%","","1.43","%","","(63)","","bps"],["Cost of funds","\u200b","","0.58","%","","1.08","%","","(50)","","bps"],["Net interest income","\u200b","$","555,298","\u200b","$","537,872","\u200b","$","17,426"],["Net interest income (FTE) (+)","\u200b","$","566,845","\u200b","$","548,993","\u200b","$","17,852"],["Net interest margin","\u200b","","3.26","%","","3.61","%","","(35)","","bps"],["Net interest margin (FTE) (+)","\u200b","","3.32","%","","3.69","%","","(37)","","bps"]] [[/GREPCENT_TABLE]] (1) The 2019 information presented excludes discontinued operations. Refer to Note 1 “Summary of Significant Accounting Policies” in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K for further discussion regarding discontinued operations. ​ In the first quarter of 2020, the Federal Reserve reduced the upper bound target on the federal funds rate from 1.75% to 0.25%. As a result of the decrease in market rates, loans indexed to short-term market rates, primarily 1-month LIBOR, repriced lower leading to an overall decline in earning assets yield and compression of the Company’s net interest margin. The Company reduced the rates it pays on all customer deposits and has repriced most of its wholesale borrowings as a result of the lower interest rate environment. ​ For the year ended December 31, 2020, net interest income was $555.3 million, an increase of $17.4 million from the year ended December 31, 2019. For the year ended December 31, 2020, net interest income (FTE) (+) was $566.8 million, an increase of $17.9 million from the prior year. The increases in both net interest income and net interest income (FTE) (+) were primarily the result of a decline in cost of funds and loan accretion recognized on PPP loans, partially offset by a decline in overall loan and investment yields. For the year ended December 31, 2020, PPP loan accretion totaled $32.5 million. Net accretion related to acquisition accounting decreased $1.5 million from $25.3 million for the year ended December 31, 2019 to $23.8 million for the year ended December 31, 2020. For the year ended December 31, 2020, net interest margin decreased 35 bps and net interest margin (FTE) (+) decreased 37 bps, compared to the year ended December 31, 2019. The net decline in net interest margin and net interest margin (FTE) (+) measures were primarily driven by a decrease in the yield on interest-earning assets, partially offset by a decrease in cost of funds and an increase in loan accretion on PPP loans. The decline in the Company’s earning asset yields was primarily driven by declines in loan and investment securities yields, as a result of the decrease in market interest rates. The cost of funds decline was driven by lower deposit costs and wholesale borrowing costs driven by lower market interest rates and a favorable funding mix. 52 Table of Contents ​ The following table shows interest income on earning assets and related average yields as well as interest expense on interest-bearing liabilities and related average rates paid for the years indicated (dollars in thousands): AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS) [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the Year Ended December 31,"],["\u200b","\u200b","2021","\u200b","2020","\u200b","2019"],["\u200b","","\u200b","\u200b","","Interest","","\u200b","","\u200b","\u200b","","Interest","","\u200b","","\u200b","\u200b","","Interest","","\u200b"],["\u200b","\u200b","Average","\u200b","Income /","\u200b","Yield /","\u200b","Average","\u200b","Income /","\u200b","Yield /","\u200b","Average","\u200b","Income /","\u200b","Yield /"],["\u200b","\u200b","Balance","\u200b","Expense (1)","\u200b","Rate (1)(2)","\u200b","Balance","\u200b","Expense (1)","\u200b","Rate (1)(2)","\u200b","Balance","\u200b","Expense (1)","\u200b","Rate (1)(2)"],["Assets:","","\u200b","","","\u200b","","","","","\u200b","","","\u200b","","","","","\u200b","","","\u200b","","","","\u200b"],["Securities:","","\u200b","","","\u200b","","\u200b","","","\u200b","","","\u200b","","","","","\u200b","","","\u200b","","","","\u200b"],["Taxable","\u200b","$","2,170,983","\u200b","$","43,859","\u200b","2.02","%","$","1,719,795","\u200b","$","43,585","","2.53","%","$","1,676,918","\u200b","$","51,437","","3.07","%"],["Tax-exempt","\u200b","","1,408,395","\u200b","","49,210","\u200b","3.49","%","","1,106,709","\u200b","","42,694","","3.86","%","","986,266","\u200b","","40,574","","4.11","%"],["Total securities","\u200b","","3,579,378","\u200b","","93,069","","2.60","%","","2,826,504","\u200b","","86,279","","3.05","%","","2,663,184","\u200b","","92,011","","3.45","%"],["Loans, net (3) (4)","\u200b","","13,639,325","\u200b","","509,757","","3.74","%","","13,777,467","\u200b","","575,575","","4.18","%","","11,949,171","\u200b","","612,250","","5.12","%"],["Other earning assets","\u200b","","684,968","\u200b","","2,124","","0.31","%","","454,824","\u200b","","3,147","","0.69","%","","268,787","\u200b","","6,192","","2.30","%"],["Total earning assets","\u200b","","17,903,671","\u200b","$","604,950","","3.38","%","","17,058,795","\u200b","$","665,001","","3.90","%","","14,881,142","\u200b","$","710,453","","4.77","%"],["Allowance for credit losses","\u200b","","(128,100)","\u200b","","","","","\u200b","","(147,633)","\u200b","","","","","\u200b","","(43,797)","\u200b","","","","","\u200b"],["Total non-earning assets","\u200b","","2,201,980","\u200b","","","","","\u200b","","2,172,691","\u200b","","","","","\u200b","","2,002,965","\u200b","","","","","\u200b"],["Total assets","\u200b","$","19,977,551","\u200b","","","","","\u200b","$","19,083,853","\u200b","","","","","\u200b","$","16,840,310","\u200b","","","","","\u200b"],["Liabilities and Stockholders' Equity:","\u200b","","","\u200b","","","","","\u200b","","","\u200b","","","","","\u200b","","","\u200b","","","","","\u200b"],["Interest-bearing deposits:","\u200b","","","\u200b","","","","","\u200b","","","\u200b","","","","","\u200b","","","\u200b","","","","","\u200b"],["Transaction and money market accounts","\u200b","$","8,254,615","\u200b","$","6,669","","0.08","%","$","7,569,749","\u200b","$","29,675","","0.39","%","$","6,249,053","\u200b","$","62,937","","1.01","%"],["Regular savings","\u200b","","1,029,476","\u200b","","226","","0.02","%","","815,191","\u200b","","497","","0.06","%","","747,356","\u200b","","1,273","","0.17","%"],["Time deposits (5)","\u200b","","2,201,039","\u200b","","20,222","","0.92","%","","2,643,229","\u200b","","45,771","","1.73","%","","2,627,987","\u200b","","50,762","","1.93","%"],["Total interest-bearing deposits","\u200b","","11,485,130","\u200b","","27,117","","0.24","%","","11,028,169","\u200b","","75,943","","0.69","%","","9,624,396","\u200b","","114,972","","1.19","%"],["Other borrowings (6)","\u200b","","453,452","\u200b","","13,982","","3.08","%","","1,215,676","\u200b","","22,213","","1.83","%","","1,656,426","\u200b","","46,488","","2.81","%"],["Total interest-bearing liabilities","\u200b","","11,938,582","\u200b","$","41,099","","0.34","%","","12,243,845","\u200b","$","98,156","","0.80","%","","11,280,822","\u200b","$","161,460","","1.43","%"],["Noninterest-bearing liabilities:","\u200b","","","\u200b","","","","","\u200b","","","\u200b","","","","","\u200b","","","\u200b","","","","","\u200b"],["Demand deposits","\u200b","","5,056,156","\u200b","","","","","\u200b","","3,922,126","\u200b","","","","","\u200b","","2,891,156","\u200b","","","","","\u200b"],["Other liabilities","\u200b","","257,483","\u200b","","","","","\u200b","","341,510","\u200b","","","","","\u200b","","216,897","\u200b","","","","","\u200b"],["Total liabilities","\u200b","","17,252,221","\u200b","","","","","\u200b","","16,507,481","\u200b","","","","","\u200b","","14,388,875","\u200b","","","","","\u200b"],["Stockholders' equity","\u200b","","2,725,330","\u200b","","","","","\u200b","","2,576,372","\u200b","","","","","\u200b","","2,451,435","\u200b","","","","","\u200b"],["Total liabilities and stockholders' equity","\u200b","$","19,977,551","\u200b","","","","","\u200b","$","19,083,853","\u200b","","","","","\u200b","$","16,840,310","\u200b","","","","","\u200b"],["Net interest income","\u200b","","","\u200b","$","563,851","","","\u200b","","","\u200b","$","566,845","","","\u200b","","","\u200b","$","548,993","","","\u200b"],["Interest rate spread","\u200b","","","\u200b","","","","3.04","%","","","\u200b","","","","3.10","%","","","\u200b","","","","3.34","%"],["Cost of funds","\u200b","","","\u200b","","","","0.23","%","","","\u200b","","","","0.58","%","","","\u200b","","","","1.08","%"],["Net interest margin","\u200b","","","\u200b","","","","3.15","%","","","\u200b","","","","3.32","%","","","\u200b","","","","3.69","%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21%."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Rates and yields are calculated from actual, not rounded amounts in thousands, which appear above."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(3)","Nonaccrual loans are included in average loans outstanding."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(4)","Interest income on loans includes $17.0 million, $24.3 million, and $24.8 million for the years ended December 31, 2021, 2020, and 2019, respectively, in accretion of the fair market value adjustments related to acquisitions."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(5)","Interest expense on time deposits includes $13,000, $132,000, and $833,000 for the years ended December 31, 2021, 2020, and 2019, respectively, in accretion of the fair market value adjustments related to acquisitions."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(6)","Interest expense on borrowings includes $806,000, $633,000, and $360,000 for the years ended December 31, 2021, 2020, and 2019 in amortization of the fair market value adjustments related to acquisitions. Interest expenses on borrowings, for the year ended December 31, 2021, also includes $1.0 million in acceleration of the unamortized discount on the redeemed $150 million fixed-to-floating rate subordinated notes that were due to mature in 2026."]] [[/GREPCENT_TABLE]] ​ 53 Table of Contents The Volume Rate Analysis table below presents changes in interest income and interest expense and distinguishes between the changes related to increases or decreases in average outstanding balances of interest-earning assets and interest-bearing liabilities (volume), and the changes related to increases or decreases in average interest rates on such assets and liabilities (rate). Changes attributable to both volume and rate have been allocated proportionally. Results, on a taxable equivalent basis, are as follows in this Volume Rate Analysis table for the years ended December 31, (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","2021 vs. 2020","","2020 vs. 2019"],["\u200b","\u200b","Increase (Decrease) Due to Change in:","\u200b","Increase (Decrease) Due to Change in:"],["\u200b","","Volume","","Rate","","Total","","Volume","","Rate","","Total"],["Earning Assets:","","\u200b","","","\u200b","","","\u200b","","","\u200b","","","\u200b","","","\u200b"],["Securities:","","\u200b","","","\u200b","","","\u200b","","","\u200b","","","\u200b","","","\u200b"],["Taxable","\u200b","$","10,126","\u200b","$","(9,852)","\u200b","$","274","\u200b","$","1,286","\u200b","$","(9,138)","\u200b","$","(7,852)"],["Tax-exempt","\u200b","","10,823","\u200b","","(4,307)","\u200b","","6,516","\u200b","","4,751","\u200b","","(2,631)","\u200b","","2,120"],["Total securities","\u200b","","20,949","\u200b","","(14,159)","\u200b","","6,790","\u200b","","6,037","\u200b","","(11,769)","\u200b","","(5,732)"],["Loans, net (1)","\u200b","","(5,718)","\u200b","","(60,100)","\u200b","","(65,818)","\u200b","","85,839","\u200b","","(122,514)","\u200b","","(36,675)"],["Other earning assets","\u200b","","1,172","\u200b","","(2,195)","\u200b","","(1,023)","\u200b","","2,795","\u200b","","(5,840)","\u200b","","(3,045)"],["Total earning assets","\u200b","$","16,403","\u200b","$","(76,454)","\u200b","$","(60,051)","\u200b","$","94,671","\u200b","$","(140,123)","\u200b","$","(45,452)"],["Interest-Bearing Liabilities:","\u200b","","","\u200b","","","\u200b","","","\u200b","","","\u200b","","","\u200b"],["Interest-Bearing Deposits:","\u200b","","","\u200b","","","\u200b","","","\u200b","","","\u200b","","","\u200b"],["Transaction and money market accounts","\u200b","$","2,467","\u200b","$","(25,473)","\u200b","$","(23,006)","\u200b","$","11,213","\u200b","$","(44,475)","\u200b","$","(33,262)"],["Regular savings","\u200b","","107","\u200b","","(378)","\u200b","","(271)","\u200b","","106","\u200b","","(882)","\u200b","","(776)"],["Time deposits (2)","\u200b","","(6,713)","\u200b","","(18,836)","\u200b","","(25,549)","\u200b","","293","\u200b","","(5,284)","\u200b","","(4,991)"],["Total interest-bearing deposits","\u200b","","(4,139)","\u200b","","(44,687)","\u200b","","(48,826)","\u200b","","11,612","\u200b","","(50,641)","\u200b","","(39,029)"],["Other borrowings (3)","\u200b","","(18,494)","\u200b","","10,263","\u200b","","(8,231)","\u200b","","(10,501)","\u200b","","(13,774)","\u200b","","(24,275)"],["Total interest-bearing liabilities","\u200b","","(22,633)","\u200b","","(34,424)","\u200b","","(57,057)","\u200b","","1,111","\u200b","","(64,415)","\u200b","","(63,304)"],["Change in net interest income","\u200b","$","39,036","\u200b","$","(42,030)","\u200b","$","(2,994)","\u200b","$","93,560","\u200b","$","(75,708)","\u200b","$","17,852"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","The rate-related change in interest income on loans includes the impact of lower accretion of the acquisition-related fair market value adjustments of $7.3 million and $520,000 for the 2021 vs. 2020 and 2020 vs. 2019 change, respectively."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","The rate-related change in interest expense on deposits includes the impact of lower accretion of the acquisition-related fair market value adjustments of $119,000 and $701,000 for the 2021 vs. 2020 and 2020 vs 2019 change, respectively."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(3)","The rate-related change in interest expense on other borrowings includes the impact of higher amortization of the acquisition-related fair market value adjustments of $173,000 and $273,000 for the 2021 vs. 2020 and 2020 vs. 2019 change, respectively. The year ended December 31, 2021, also included the impact of the $1.0 million acceleration of unamortized discount on the redemption of the $150 million fixed-to-floating rate subordinated notes that were due to mature in 2026."]] [[/GREPCENT_TABLE]] The Company’s net interest margin (FTE)(+) includes the impact of acquisition accounting fair value adjustments. The impact of net accretion for 2019, 2020, and 2021 are reflected in the following table (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","\u200b","\u200b","","\u200b","\u200b","\u200b","","\u200b","\u200b"],["\u200b","\u200b","Loans","\u200b","Deposit","\u200b","Borrowings","\u200b","\u200b","\u200b"],["\u200b","\u200b","Accretion","\u200b","Accretion","\u200b","Accretion","\u200b","Total"],["For the year ended December 31, 2019","\u200b","$","24,846","\u200b","","833","\u200b","","(360)","\u200b","","25,319"],["For the year ended December 31, 2020","\u200b","","24,326","\u200b","","132","\u200b","","(633)","\u200b","","23,825"],["For the year ended December 31, 2021","\u200b","","17,044","\u200b","","13","\u200b","","(806)","\u200b","","16,251"]] [[/GREPCENT_TABLE]] ​ 54 Table of Contents Noninterest Income [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the Year Ended","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31,","\u200b","Change"],["\u200b","","2021","","2020","","$","","%"],["\u200b","\u200b","(Dollars in thousands)"],["Noninterest income:","","\u200b","","","\u200b","","\u200b","","","\u200b","","\u200b"],["Service charges on deposit accounts","\u200b","$","27,122","\u200b","$","25,251","\u200b","$","1,871","\u200b","7.4","%"],["Other service charges, commissions and fees","\u200b","","6,595","\u200b","","6,292","\u200b","","303","\u200b","4.8","%"],["Interchange fees","\u200b","","8,279","\u200b","","7,184","\u200b","","1,095","\u200b","15.2","%"],["Fiduciary and asset management fees","\u200b","","27,562","\u200b","","23,650","\u200b","","3,912","\u200b","16.5","%"],["Mortgage banking income","\u200b","\u200b","21,022","\u200b","\u200b","25,857","\u200b","\u200b","(4,835)","\u200b","(18.7)","%"],["Gains on securities transactions","\u200b","","87","\u200b","","12,294","\u200b","","(12,207)","\u200b","(99.3)","%"],["Bank owned life insurance income","\u200b","","11,488","\u200b","","9,554","\u200b","","1,934","\u200b","20.2","%"],["Loan-related interest rate swap fees","\u200b","","5,620","\u200b","","15,306","\u200b","","(9,686)","\u200b","(63.3)","%"],["Other operating income","\u200b","","18,031","\u200b","","6,098","\u200b","","11,933","\u200b","195.7","%"],["Total noninterest income","\u200b","$","125,806","\u200b","$","131,486","\u200b","$","(5,680)","\u200b","(4.3)","%"]] [[/GREPCENT_TABLE]] ​ For the year ended December 31, 2021, noninterest income decreased $5.7 million or 4.3% to $125.8 million from $131.5 million for the year ended December 31, 2020. Excluding the gain from the sale of Visa, Inc. Class B common stock ($5.1 million for the year ended December 31, 2021 compared to $0 in the prior year), gains on securities transactions ($87,000 for the year ended December 31, 2021 compared to $12.3 million in the prior year) and losses related to balance sheet repositioning ($0 for the year ended December 31, 2021 compared to gains of $1.8 million in the prior year), adjusted operating noninterest income(+) for the year ended December 31, 2021 declined by $379,000 or 0.31% from the prior year. The slight net decrease in adjusted operating noninterest income(+) from the prior year was driven by a decline of $9.7 million in loan-related interest rate swap fees due to lower transaction volumes and a decline of $4.8 million in mortgage banking income due to lower mortgage origination volumes; largely offset by increases of $5.8 million in unrealized gains on equity method investments, an increase of $3.9 million in fiduciary and asset management fees due to market driven increases in assets under management, higher BOLI of $1.9 million primarily due to life insurance proceeds received in 2021, increases of $1.9 million in service charges on deposit accounts, and $1.1 million in interchange fees due to higher transaction volumes. ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the Year Ended","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31,","\u200b","Change"],["\u200b","","2020","","2019(1)","","$","","%"],["\u200b","\u200b","(Dollars in thousands)"],["Noninterest income:","","\u200b","","","\u200b","","\u200b","","","\u200b","","\u200b"],["Service charges on deposit accounts","\u200b","$","25,251","\u200b","$","30,202","\u200b","$","(4,951)","\u200b","(16.4)","%"],["Other service charges, commissions and fees","\u200b","","6,292","\u200b","","6,423","\u200b","","(131)","\u200b","(2.0)","%"],["Interchange fees","\u200b","","7,184","\u200b","","14,619","\u200b","","(7,435)","\u200b","(50.9)","%"],["Fiduciary and asset management fees","\u200b","","23,650","\u200b","","23,365","\u200b","","285","\u200b","1.2","%"],["Mortgage banking income","\u200b","\u200b","25,857","\u200b","\u200b","10,303","\u200b","\u200b","15,554","\u200b","151.0","%"],["Gains on securities transactions","\u200b","","12,294","\u200b","","7,675","\u200b","","4,619","\u200b","60.2","%"],["Bank owned life insurance income","\u200b","","9,554","\u200b","","8,311","\u200b","","1,243","\u200b","15.0","%"],["Loan-related interest rate swap fees","\u200b","","15,306","\u200b","","14,126","\u200b","","1,180","\u200b","8.4","%"],["Other operating income","\u200b","","6,098","\u200b","","17,791","\u200b","","(11,693)","\u200b","(65.7)","%"],["Total noninterest income","\u200b","$","131,486","\u200b","$","132,815","\u200b","$","(1,329)","\u200b","(1.0)","%"]] [[/GREPCENT_TABLE]] (1) The 2019 information presented excludes discontinued operations. Refer to Note 1 “Summary of Significant Accounting Policies” in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K for further discussion regarding discontinued operations. 55 Table of Contents ​ For the year ended December 31, 2020, noninterest income decreased $1.3 million or 1.0% to $131.5 million from $132.8 million for the year ended December 31, 2019. Excluding gains on sales of securities and gains related to balance sheet repositioning, adjusted operating noninterest income(+) for the year ended December 31, 2020 decreased $4.2 million or 3.3%, compared to the year ended December 31, 2019, primarily driven by approximately $9.3 million in life insurance proceeds received during the third quarter of 2019 related to a Xenith-acquired loan that had been charged off prior to the Company’s acquisition of Xenith. In addition, there was a decline in service charges on deposit accounts of $5.0 million primarily due to lower NSF and overdraft fees, and a decline of $7.4 million in interchange fees primarily due to reduced debit card interchange transaction fees as a result of the Durbin Amendment which was effective for the Company on July 1, 2019. Partially offsetting these decreases was an increase of $1.2 million in loan related interest rate swap income and an increase in bank owned life insurance income of $1.2 million primarily related to death benefit proceeds received during the third quarter of 2020. In addition, mortgage banking income increased $15.6 million primarily due to increased mortgage loan origination volumes resulting from the current low interest rate environment. ​ Noninterest Expense [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the Year Ended","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31,","\u200b","Change"],["\u200b","","2021","","2020","","$","","%"],["\u200b","\u200b","(Dollars in thousands)"],["Noninterest expense:","","\u200b","","","\u200b","","\u200b","","","\u200b","","\u200b"],["Salaries and benefits","\u200b","$","214,929","\u200b","$","206,662","\u200b","$","8,267","\u200b","4.0","%"],["Occupancy expenses","\u200b","","28,718","\u200b","","28,841","\u200b","","(123)","\u200b","(0.4)","%"],["Furniture and equipment expenses","\u200b","","15,950","\u200b","","14,923","\u200b","","1,027","\u200b","6.9","%"],["Technology and data processing","\u200b","","30,200","\u200b","","25,929","\u200b","","4,271","\u200b","16.5","%"],["Professional services","\u200b","","17,841","\u200b","","13,007","\u200b","","4,834","\u200b","37.2","%"],["Marketing and advertising expense","\u200b","","9,875","\u200b","","9,886","\u200b","","(11)","\u200b","(0.1)","%"],["FDIC assessment premiums and other insurance","\u200b","","9,482","\u200b","","9,971","\u200b","","(489)","\u200b","(4.9)","%"],["Other taxes","\u200b","","17,740","\u200b","","16,483","\u200b","","1,257","\u200b","7.6","%"],["Loan-related expenses","\u200b","","7,004","\u200b","","9,515","\u200b","","(2,511)","\u200b","(26.4)","%"],["Amortization of intangible assets","\u200b","","13,904","\u200b","","16,574","\u200b","","(2,670)","\u200b","(16.1)","%"],["Loss on debt extinguishment","\u200b","\u200b","14,695","\u200b","\u200b","31,116","\u200b","\u200b","(16,421)","\u200b","(52.8)","%"],["Other expenses","\u200b","","38,857","\u200b","","30,442","\u200b","","8,415","\u200b","27.6","%"],["Total noninterest expense","\u200b","$","419,195","\u200b","$","413,349","\u200b","$","5,846","\u200b","1.4","%"]] [[/GREPCENT_TABLE]] ​ For the year ended December 31, 2021, noninterest expense increased $5.8 million or 1.4% to $419.2 million from $413.3 million for the year ended December 31, 2020. Excluding amortization of intangible assets ($13.9 million for the year ended December 31, 2021 compared to $16.6 million in the prior year), losses related to balance sheet repositioning ($14.7 million for the year ended December 31, 2021 compared to $31.1 million in the prior year) and branch closing and facility consolidation costs ($17.4 million for the year ended December 31, 2021 compared to $6.8 million in the prior year), adjusted operating noninterest expense(+) for the year ended December 31, 2021 increased $14.3 million or 4.0%, compared to the year ended December 31, 2020, due to an increase of $8.3 million in salaries and benefits primarily driven by higher salaries, wages, and contract labor costs, $4.8 million in professional services costs due to an increase in legal and consulting fees associated with various strategic initiatives, $4.3 million in technology and data processing expenses primarily driven by higher software licensing and maintenance expenses, and a contract termination cost of approximately $900,000. The increases were partially offset by a decline in loan-related expenses of approximately $2.5 million driven by lower third party loan servicing costs compared to the prior year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 56 Table of Contents ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the Year Ended","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31,","\u200b","Change"],["\u200b","","2020","","2019(1)","","$","","%"],["\u200b","\u200b","(Dollars in thousands)"],["Noninterest expense:","","\u200b","","","\u200b","","\u200b","","","\u200b","","\u200b"],["Salaries and benefits","\u200b","$","206,662","\u200b","$","195,349","\u200b","$","11,313","\u200b","5.8","%"],["Occupancy expenses","\u200b","","28,841","\u200b","","29,793","\u200b","","(952)","\u200b","(3.2)","%"],["Furniture and equipment expenses","\u200b","","14,923","\u200b","","14,216","\u200b","","707","\u200b","5.0","%"],["Technology and data processing","\u200b","","25,929","\u200b","","23,686","\u200b","","2,243","\u200b","9.5","%"],["Professional services","\u200b","","13,007","\u200b","","11,905","\u200b","","1,102","\u200b","9.3","%"],["Marketing and advertising expense","\u200b","","9,886","\u200b","","11,566","\u200b","","(1,680)","\u200b","(14.5)","%"],["FDIC assessment premiums and other insurance","\u200b","","9,971","\u200b","","6,874","\u200b","","3,097","\u200b","45.1","%"],["Other taxes","\u200b","","16,483","\u200b","","15,749","\u200b","","734","\u200b","4.7","%"],["Loan-related expenses","\u200b","","9,515","\u200b","","10,043","\u200b","","(528)","\u200b","(5.3)","%"],["OREO and credit-related expenses","\u200b","","2,023","\u200b","","4,708","\u200b","","(2,685)","\u200b","(57.0)","%"],["Amortization of intangible assets","\u200b","","16,574","\u200b","","18,521","\u200b","","(1,947)","\u200b","(10.5)","%"],["Merger-related costs","\u200b","","\u2014","\u200b","\u200b","27,824","\u200b","","(27,824)","\u200b","(100.0)","%"],["Rebranding expense","\u200b","\u200b","\u2014","\u200b","\u200b","6,455","\u200b","\u200b","(6,455)","\u200b","(100.0)","%"],["Loss on debt extinguishment","\u200b","\u200b","31,116","\u200b","\u200b","16,397","\u200b","\u200b","14,719","\u200b","89.8","%"],["Other expenses","\u200b","","28,419","\u200b","\u200b","25,254","\u200b","","3,165","\u200b","12.5","%"],["Total noninterest expense","\u200b","$","413,349","\u200b","$","418,340","\u200b","$","(4,991)","\u200b","(1.2)","%"]] [[/GREPCENT_TABLE]] (1) The 2019 information presented excludes discontinued operations. Refer to Note 1 “Summary of Significant Accounting Policies” in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K for further discussion regarding discontinued operations. ​ For the year ended December 31, 2020, noninterest expense decreased $5.0 million or 1.2% to $413.3 million from $418.3 million for the year ended December 31, 2019. Excluding merger-related costs, amortization of intangible assets, rebranding-related costs, losses related to balance sheet repositioning, and branch closing and facility consolidation costs, adjusted operating noninterest expense(+) for the year ended December 31, 2020 increased $9.8 million or 2.8%, compared to the year ended December 31, 2019, primarily driven by an increase of $11.3 million in salaries and benefits driven by the full year impact of the Access acquisition, annual merit adjustments, and increased costs of benefits. In addition, there was an increase in FDIC assessment premiums of $3.1 million, primarily due to $3.8 million in FDIC small bank assessment expense credits received during 2019. Noninterest expense also included approximately $2.1 million in costs related to the Company’s response to COVID-19 incurred during the year ended December 31, 2020. The increases were partially offset by a decline in OREO and credit-related expenses of approximately $2.7 million due to lower OREO valuation adjustments and a decline in marketing and advertising expense of $1.7 million. ​ Income Taxes The provision for income taxes is based upon the results of operations, adjusted for the effect of certain tax-exempt income and non-deductible expenses. In addition, certain items of income and expense are reported in different periods for financial reporting and tax return purposes. The tax effects of these temporary differences are recognized currently in the deferred income tax provision or benefit. Deferred tax assets or liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the applicable enacted marginal tax rate. The effective tax rate for the years ended December 31, 2021, 2020, and 2019 was 17.2%, 15.1% and 16.2%, respectively. The increase in the effective rate for the year ended December 31, 2021 is primarily due to the lower proportion of tax-exempt income to pre-tax income. ​ 57 Table of Contents BALANCE SHEET Assets At December 31, 2021, total assets were $20.1 billion, an increase of $436.3 million or approximately 2.2% from December 31, 2020. The increase in assets was primarily a result of net growth in the investment securities portfolio and higher cash balances reflecting the impact of excess liquidity in the market, partially offset by a decline in the loan portfolio, mainly due to PPP loan forgiveness, which was partially offset by organic loan growth. ​ LHFI (net of deferred fees and costs) were $13.2 billion, including $150.4 million in PPP loans, at December 31, 2021, a decrease of $825.5 million or 5.9% from December 31, 2020. Excluding the effects of the PPP (+), LHFI (net of deferred fees and costs) at December 31, 2021 increased $203.7 million or 1.6% from December 31, 2020. Average loan balances decreased $138.1 million in 2021 or 1.0%, from December 31, 2020. Excluding the effects of the PPP (+), average loan balances at December 31, 2021 increased $89.0 million or 0.7% from December 31, 2020. For additional information on the Company’s loan activity, please refer to section “Loan Portfolio” included within this Item 7 and Note 4 “Loans and Allowance for Loan and Lease Losses” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K. ​ Liabilities and Stockholders’ Equity At December 31, 2021, total liabilities were $17.4 billion, an increase of $434.8 million from December 31, 2020. Total deposits at December 31, 2021 were $16.6 billion, an increase of $888.3 million or approximately 5.6% from December 31, 2020. Average deposits at December 31, 2021 increased $1.6 billion or 10.6% from December 31, 2020. The increase from prior year was primarily due to additional liquidity of bank customers due to higher levels of government assistance programs since the start of COVID-19 and increased savings. For additional information on this topic, see section “Deposits” included within this Item 7. Total short-term and long-term borrowings at December 31, 2021 were $506.6 million, a decrease of $334.1 million or 39.7% when compared to $840.7 million at December 31, 2020. The Company prepaid a $200.0 million long-term FHLB advance during the first quarter of 2021. At December 31, 2021, the Company did not have any outstanding federal funds purchased or advances with the FHLB balances as compared to $150.0 million and $100.0 million, respectively, at December 31, 2020. In addition, during the fourth quarter of 2021, the Company issued $250.0 million of the 2031 Notes at par resulting in net proceeds, after underwriting discounts and offering expenses, of approximately $246.9 million. The Company used a portion of the net proceeds from the 2031 Notes issuance to redeem its then-outstanding $150 million of 5.00% fixed-to-floating rate subordinated notes that were due to mature in 2026. For additional information on the Company’s borrowing activity, please refer to Note 9 “Borrowings” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K. At December 31, 2021, stockholders’ equity was $2.7 billion, an increase of $1.6 million from December 31, 2020. The net increase in stockholders’ equity reflects the impact of earnings retained by the Company during 2021, partially offset by share repurchases, dividends, and other comprehensive losses, primarily related to losses on agency MBS held in the Company’s AFS portfolio. The Company’s capital ratios continue to exceed the minimum capital requirements and is considered “well-capitalized” for regulatory purposes. The following table summarizes the Company’s regulatory capital ratios for the periods ended December 31, (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","\u200b","2020","\u200b"],["Common equity Tier 1 capital ratio","","10.24","%","10.26","%"],["Tier 1 capital ratio","","11.33","%","11.39","%"],["Total capital ratio","","14.18","%","14.00","%"],["Leverage ratio (Tier 1 capital to average assets)","\u200b","9.01","%","8.95","%"],["Common equity to total assets","","12.68","%","12.95","%"],["Tangible common equity to tangible assets","","8.20","%","8.31","%"]] [[/GREPCENT_TABLE]] ​ ​ ​ 58 Table of Contents During 2021, the Company declared and paid dividends on the outstanding shares of Series A Preferred Stock of $687.52 per share (equivalent to $1.72 per outstanding depositary share). During 2021, the Company also declared and paid cash dividends of $1.09 per common share, an increase of $0.09 per share, or 9.0%, over cash dividends paid in 2020. ​ On December 10, 2021, the Company’s Board of Directors authorized a share Repurchase Program to purchase up to $100 million of the Company’s common stock in open market transactions or privately negotiated transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and/or Rule 10b-18 under the Exchange Act. This new Repurchase Program replaced the prior $125 million share repurchase authorization that was fully utilized by September 30, 2021 and was otherwise due to expire on June 30, 2022. There were no share repurchase transactions under the new Repurchase Program for the year ended December 31, 2021. Securities At December 31, 2021, the Company had total investments in the amount of $4.2 billion or 20.9% of total assets, as compared to $3.2 billion or 16.2% of total assets at December 31, 2020. The Company seeks to diversify its portfolio to minimize risk. It focuses on purchasing MBS for cash flow and reinvestment opportunities and securities issued by states and political subdivisions due to the tax benefits and the higher yield offered from these securities. The majority of the Company’s MBS are agency-backed securities, which have a government guarantee. For information regarding the hedge transaction related to AFS securities, see Note 11 “Derivatives” in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K. The table below sets forth a summary of the AFS securities, HTM securities, and restricted stock as of the dates indicated (dollars in thousands): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","December 31,","","December 31,"],["\u200b","\u200b","2021","\u200b","2020"],["Available for Sale:","","\u200b","","","\u200b"],["U.S. government and agency securities","\u200b","$","73,849","\u200b","$","13,394"],["Obligations of states and political subdivisions","\u200b","","1,008,396","\u200b","","837,326"],["Corporate and other bonds","\u200b","","153,376","\u200b","","151,078"],["MBS","\u200b","","\u200b","\u200b","","\u200b"],["Commercial","\u200b","\u200b","471,157","\u200b","\u200b","388,684"],["Residential","\u200b","\u200b","1,773,232","\u200b","\u200b","1,148,312"],["Total MBS","\u200b","\u200b","2,244,389","\u200b","\u200b","1,536,996"],["Other securities","\u200b","","1,640","\u200b","","1,625"],["Total AFS securities, at fair value","\u200b","","3,481,650","\u200b","","2,540,419"],["Held to Maturity:","\u200b","","","\u200b"],["U.S. government and agency securities","\u200b","\u200b","2,604","\u200b","\u200b","2,751"],["Obligations of states and political subdivisions","\u200b","","620,873","\u200b","","536,767"],["MBS","\u200b","","\u200b","\u200b","","\u200b"],["Commercial","\u200b","\u200b","4,523","\u200b","\u200b","5,333"],["Residential","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014"],["Total MBS","\u200b","\u200b","4,523","\u200b","\u200b","5,333"],["Total held to maturity securities, at carrying value","\u200b","","628,000","\u200b","","544,851"],["Restricted Stock:","\u200b","","","\u200b"],["Federal Reserve Bank stock","\u200b","","67,032","\u200b","","67,032"],["FHLB stock","\u200b","","9,793","\u200b","","27,750"],["Total restricted stock, at cost","\u200b","","76,825","\u200b","","94,782"],["Total investments","\u200b","$","4,186,475","\u200b","$","3,180,052"]] [[/GREPCENT_TABLE]] ​ 59 Table of Contents The following table summarizes the weighted average yields for AFS securities by contractual maturity date of the underlying securities as of December 31, 2021: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","1 Year or","","\u200b","\u200b","","5 \u2013 10","","Over 10","","\u200b","\u200b"],["\u200b","\u200b","Less","\u200b","1 - 5 Years","\u200b","Years","\u200b","Years","\u200b","Total"],["U.S. government and agency securities","","\u200b","\u2014","%","\u200b","\u2014","%","\u200b","1.48","%","\u200b","\u2014","%","\u200b","1.48","%"],["Obligations of states and political subdivisions","\u200b","","4.92","%","","2.79","%","\u200b","2.66","%","\u200b","2.77","%","\u200b","2.77","%"],["Corporate bonds and other securities","\u200b","","0.97","%","","4.17","%","\u200b","4.04","%","\u200b","1.81","%","\u200b","3.75","%"],["MBS:","\u200b","","\u200b","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commercial","\u200b","\u200b","3.32","%","\u200b","3.24","%","\u200b","2.47","%","\u200b","1.96","%","\u200b","2.38","%"],["Residential","\u200b","\u200b","3.12","%","\u200b","2.36","%","\u200b","2.34","%","\u200b","1.80","%","\u200b","1.83","%"],["Total MBS","\u200b","\u200b","3.32","%","\u200b","3.12","%","\u200b","2.38","%","\u200b","1.83","%","\u200b","1.94","%"],["Total AFS securities","\u200b","","3.31","%","","3.17","%","\u200b","2.83","%","\u200b","2.12","%","\u200b","2.25","%"]] [[/GREPCENT_TABLE]] ​ The following table summarizes the weighted average yields for HTM securities by contractual maturity date of the underlying securities as of December 31, 2021: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","1 Year or","","\u200b","\u200b","","5 \u2013 10","","Over 10","","\u200b","\u200b"],["\u200b","\u200b","Less","\u200b","1 - 5 Years","\u200b","Years","\u200b","Years","\u200b","Total"],["U.S. government and agency securities","\u200b","\u200b","4.19","%","\u200b","-","%","\u200b","4.04","%","\u200b","-","%","\u200b","4.13","%"],["Obligations of states and political subdivisions","\u200b","\u200b","2.20","%","\u200b","2.60","%","\u200b","4.35","%","\u200b","3.78","%","\u200b","3.78","%"],["MBS:","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commercial","\u200b","\u200b","\u2014","%","\u200b","\u2014","%","\u200b","\u2014","%","\u200b","4.96","%","\u200b","4.96","%"],["Residential","\u200b","\u200b","\u2014","%","\u200b","\u2014","%","\u200b","\u2014","%","\u200b","\u2014","%","\u200b","\u2014","%"],["Total MBS","\u200b","\u200b","\u2014","%","\u200b","\u2014","%","\u200b","\u2014","%","\u200b","4.96","%","\u200b","4.96","%"],["Total HTM securities","\u200b","","3.19","%","\u200b","2.60","%","\u200b","4.33","%","\u200b","3.79","%","\u200b","3.79","%"]] [[/GREPCENT_TABLE]] ​ Weighted average yield is calculated as the tax-equivalent yield on a pro rata basis for each security based on its relative amortized cost. Yields on tax-exempt securities have been computed on a tax-equivalent basis. ​ As of December 31, 2021, the Company maintained a diversified municipal bond portfolio with approximately 64% of its holdings in general obligation issues and the remainder primarily backed by revenue bonds. Issuances within the State of Texas represented 19% of total municipal bonds; no other state had a concentration above 10%. Substantially all municipal holdings are considered investment grade. When purchasing municipal securities, the Company focuses on strong underlying ratings for general obligation issuers or bonds backed by essential service revenues. 60 Table of Contents Loan Portfolio LHFI, net of deferred fees and costs, were $13.2 billion and $14.0 billion at December 31, 2021 and December 31, 2020, respectively. Commercial & industrial loans and commercial real estate-non-owner occupied loans represented the Company’s largest categories at December 31, 2021. Commercial & industrial loans included approximately $145.3 million and $1.2 billion in loans from the PPP loan program (net of deferred fees) at December 31, 2021 and December 31, 2020, respectively. The following table presents the remaining maturities, based on contractual maturity, by loan type and by rate type (variable or fixed), as of December 31, 2021 (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Variable Rate","\u200b","Fixed Rate"],["\u200b","","Total","","Less than 1","","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","","More than","","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","","More than"],["\u200b","\u200b","Maturities","\u200b","year","\u200b","Total","\u200b","1-5 years","\u200b","5-15 years","\u200b","15 years","\u200b","Total","\u200b","1-5 years","\u200b","5-15 years","\u200b","15 years"],["Construction and Land Development","\u200b","$","862,236","\u200b","$","344,872","\u200b","$","369,560","\u200b","$","320,639","\u200b","$","47,646","\u200b","$","1,275","\u200b","$","147,804","\u200b","$","96,199","\u200b","$","23,528","\u200b","$","28,077"],["Commercial Real Estate - Owner Occupied","\u200b","","1,995,409","\u200b","","188,180","\u200b","","616,759","\u200b","","131,106","\u200b","","466,190","\u200b","","19,463","\u200b","","1,190,470","\u200b","","488,635","\u200b","","670,936","\u200b","","30,899"],["Commercial Real Estate - Non-Owner Occupied","\u200b","","3,789,377","\u200b","","391,123","\u200b","","2,017,040","\u200b","","874,756","\u200b","","1,103,582","\u200b","","38,702","\u200b","","1,381,214","\u200b","","963,481","\u200b","","360,819","\u200b","","56,914"],["Multifamily Real Estate","\u200b","","778,626","\u200b","","110,344","\u200b","","435,891","\u200b","","101,684","\u200b","","334,207","\u200b","","\u2014","\u200b","","232,391","\u200b","","164,156","\u200b","","68,235","\u200b","","\u2014"],["Commercial & Industrial","\u200b","","2,542,243","\u200b","","388,432","\u200b","","1,221,312","\u200b","","997,881","\u200b","","216,506","\u200b","","6,925","\u200b","","932,499","\u200b","","614,082","\u200b","","307,365","\u200b","","11,052"],["Residential 1-4 Family - Commercial","\u200b","","607,337","\u200b","","98,217","\u200b","","121,869","\u200b","","31,376","\u200b","","80,058","\u200b","","10,435","\u200b","","387,251","\u200b","","283,106","\u200b","","91,448","\u200b","","12,697"],["Residential 1-4 Family - Consumer","\u200b","","816,524","\u200b","","5,099","\u200b","","201,405","\u200b","","2,071","\u200b","","29,283","\u200b","","170,051","\u200b","","610,020","\u200b","","8,434","\u200b","","71,349","\u200b","","530,237"],["Residential 1-4 Family - Revolving","\u200b","","560,796","\u200b","","33,921","\u200b","","499,081","\u200b","","37,512","\u200b","","135,248","\u200b","","326,321","\u200b","","27,794","\u200b","","1,522","\u200b","","12,217","\u200b","","14,055"],["Auto","\u200b","","461,052","\u200b","","3,150","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b","","457,902","\u200b","","186,588","\u200b","","271,314","\u200b","","\u2014"],["Consumer","\u200b","","176,992","\u200b","","12,131","\u200b","","27,763","\u200b","","24,920","\u200b","","2,096","\u200b","","747","\u200b","","137,098","\u200b","","53,400","\u200b","","57,276","\u200b","","26,422"],["Other Commercial","\u200b","","605,251","\u200b","","45,759","\u200b","","87,239","\u200b","","9,461","\u200b","","40,343","\u200b","","37,435","\u200b","","472,253","\u200b","","167,190","\u200b","","195,150","\u200b","","109,913"],["Total LHFI","\u200b","$","13,195,843","\u200b","$","1,621,228","\u200b","$","5,597,919","\u200b","$","2,531,406","\u200b","$","2,455,159","\u200b","$","611,354","\u200b","$","5,976,696","\u200b","$","3,026,793","\u200b","$","2,129,637","\u200b","$","820,266"]] [[/GREPCENT_TABLE]] ​ The Company remains committed to originating soundly underwritten loans to qualifying borrowers within its markets. As reflected in the loan table, at December 31, 2021, the largest components of the Company’s loan portfolio consisted of commercial real estate, commercial & industrial, and construction and land development loans. The risks attributable to these concentrations are mitigated by the Company’s credit underwriting and monitoring processes, including oversight by a centralized credit administration function and credit policy and risk management committee, as well as seasoned bankers focusing their lending to borrowers with proven track records in markets with which the Company is familiar. Total short-term loan modifications related to COVID-19 are immaterial to the Company as a whole at December 31, 2021. ​ ​ ​ ​ ​ ​ 61 Table of Contents Asset Quality Overview At December 31, 2021, the Company experienced decreases of NPAs compared to December 31, 2020. Accruing past due loan levels as a percentage of total LHFI at December 31, 2021 were down as compared to the prior year end. Net charge-offs decreased for the year ended December 31, 2021, compared to the prior year. Total net charge-offs as a percentage of total average loans also decreased for the year ended December 31, 2021, compared to the prior year. For the year ended December 31, 2021, the ACL and the provision for loan losses decreased from the prior year due to lower expected losses than previously estimated as a result of benign credit quality metrics, improvements in credit trends during the year, and an improved economic outlook. The Company believes its continued proactive efforts to effectively manage its loan portfolio, combined with the unprecedented government stimulus and programs and regulatory support, have contributed to the sustained historically low levels of NPAs. The Company’s efforts included identifying potential problem credits through early identification and diligent monitoring of specific problem credits where the uncertainty has been realized, or conversely, has been reduced or eliminated. The Company continues to refrain from originating or purchasing loans from foreign entities. The Company selectively originates loans to higher risk borrowers. The Company’s loan portfolio generally does not include exposure to option adjustable rate mortgage products, high loan-to-value ratio mortgages, interest only mortgage loans, subprime mortgage loans or mortgage loans with initial teaser rates, which are all considered higher risk instruments. As discussed within the “Significant Activities” section within this Item 7, COVID-19 has had, and may continue to have a wide range of economic impacts, even as the economy significantly opened up in 2021, including impacts in the Company’s area of operations and on the Company’s clients and borrowers. The Company, however, has not yet experienced material deterioration in asset quality as compared to asset quality before COVID-19. The Company’s asset quality may in the future be adversely impacted to some degree due to the effects of COVID-19 (including the emergence and impact of new COVID-19 variants); although at this time it is impossible for the Company to estimate either the timing or the magnitude of any such adverse changes in asset quality. The Company continues to monitor asset quality trends and economic and market conditions for indications that COVID-19 may have more significant impacts on the Company’s asset quality than experienced to date. As of December 31, 2021, the Company’s management believes that the ultimate impact of COVID-19 on the Company’s asset quality will be less severe than initially projected at the start of the pandemic. Nonperforming Assets At December 31, 2021, NPAs totaled $32.8 million, a decrease of $12.4 million or 27.5% from December 31, 2020. NPAs as a percentage of total outstanding loans at December 31, 2021 were 0.25%, a decrease of 7 bps from 0.32% at December 31, 2020. Excluding the impact of the PPP loans (+), NPAs as a percentage of total outstanding loans were 0.25%, a decrease of 10 bps from 0.35% at December 31, 2020. 62 Table of Contents The following table shows a summary of asset quality balances and related ratios as of and for the years ended December 31, (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","","2020"],["Nonaccrual loans","\u200b","$","31,100","\u200b","$","42,448","\u200b"],["Foreclosed properties","\u200b","","1,696","\u200b","","2,773","\u200b"],["Total NPAs","\u200b","","32,796","\u200b","","45,221","\u200b"],["Loans past due 90 days and accruing interest","\u200b","","9,132","\u200b","","13,634","\u200b"],["Total NPAs and loans past due 90 days and accruing interest","\u200b","$","41,928","\u200b","$","58,855","\u200b"],["Performing TDRs","\u200b","$","10,313","\u200b","$","13,961","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Balances","\u200b","","","\u200b","","","\u200b"],["Allowance for loan and lease losses","\u200b","$","99,787","\u200b","$","160,540","\u200b"],["Allowance for credit losses","\u200b","$","107,787","\u200b","$","170,540","\u200b"],["Average loans, net of deferred fees and costs","\u200b","","13,639,325","\u200b","","13,777,467","\u200b"],["Loans, net of deferred fees and costs","\u200b","","13,195,843","\u200b","","14,021,314","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Ratios","\u200b","","","\u200b","","","\u200b"],["Nonaccrual loans to total loans","\u200b","","0.24","%","","0.30","%"],["NPAs to total loans","\u200b","","0.25","%","","0.32","%"],["NPAs to total adjusted loans(+)","\u200b","\u200b","0.25","%","\u200b","0.35","%"],["NPAs & loans 90 days past due and accruing interest to total loans","\u200b","","0.32","%","","0.42","%"],["NPAs to total loans & foreclosed property","\u200b","","0.25","%","","0.32","%"],["NPAs & loans 90 days past due and accruing interest to total loans & foreclosed property","\u200b","","0.32","%","","0.42","%"],["ALLL to nonaccrual loans","\u200b","","320.86","%","","378.20","%"],["ALLL to nonaccrual loans & loans 90 days past due and accruing interest","\u200b","\u200b","248.03","%","\u200b","286.26","%"],["ACL to nonaccrual loans","\u200b","","346.58","%","","401.76","%"]] [[/GREPCENT_TABLE]] ​ NPAs at December 31, 2021 included $31.1 million in nonaccrual loans, a net decrease of $11.3 million or 26.7% from December 31, 2020. The following table shows the activity in nonaccrual loans for the years ended December 31, (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","\u200b","2020","\u200b"],["Beginning Balance","\u200b","$","42,448","\u200b","$","28,232","\u200b"],["Net customer payments","\u200b","","(23,227)","\u200b","","(17,418)","\u200b"],["Additions","\u200b","","13,454","\u200b","","20,266","\u200b"],["Impact of ASC 326 adoption","\u200b","\u200b","\u2014","\u200b","\u200b","14,381","\u200b"],["Charge-offs","\u200b","","(1,436)","\u200b","","(3,021)","\u200b"],["Loans returning to accruing status","\u200b","","(153)","\u200b","","8","\u200b"],["Transfers to foreclosed property","\u200b","","14","\u200b","","\u2014","\u200b"],["Ending Balance","\u200b","$","31,100","\u200b","$","42,448","\u200b"]] [[/GREPCENT_TABLE]] ​ 63 Table of Contents The following table presents the composition of nonaccrual loans and the coverage ratio, which is the ALLL expressed as a percentage of nonaccrual loans, at the years ended December 31, (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","","2020"],["Construction and Land Development","\u200b","$","2,697","\u200b","$","3,072","\u200b"],["Commercial Real Estate - Owner Occupied","\u200b","","5,637","\u200b","","7,128","\u200b"],["Commercial Real Estate - Non-owner Occupied","\u200b","","3,641","\u200b","","2,317","\u200b"],["Multifamily Real Estate","\u200b","\u200b","113","\u200b","\u200b","33","\u200b"],["Commercial & Industrial","\u200b","","1,647","\u200b","","2,107","\u200b"],["Residential 1-4 Family \u2013 Commercial","\u200b","","2,285","\u200b","","9,993","\u200b"],["Residential 1-4 Family \u2013 Consumer","\u200b","","11,397","\u200b","","12,600","\u200b"],["Residential 1-4 Family \u2013 Revolving","\u200b","","3,406","\u200b","","4,629","\u200b"],["Auto","\u200b","","223","\u200b","","500","\u200b"],["Consumer","\u200b","\u200b","54","\u200b","\u200b","69","\u200b"],["Total","\u200b","$","31,100","\u200b","$","42,448","\u200b"],["Coverage Ratio(1)","\u200b","","320.86","%","","378.20","%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Represents the ALLL divided by nonaccrual loans."]] [[/GREPCENT_TABLE]] ​ NPAs at December 31, 2021 also included $1.7 million in foreclosed property, a decrease of $1.1 million or 38.8% from the prior year. The following table shows the activity in foreclosed property for the years ended December 31, (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","\u200b","2020"],["Beginning Balance","\u200b","$","2,773","\u200b","$","4,708"],["Additions of foreclosed property","\u200b","","14","\u200b","","615"],["Valuation adjustments","\u200b","","\u2014","\u200b","","(79)"],["Proceeds from sales","\u200b","","(991)","\u200b","","(2,520)"],["Gains (losses) from sales","\u200b","","(100)","\u200b","","49"],["Ending Balance","\u200b","$","1,696","\u200b","$","2,773"]] [[/GREPCENT_TABLE]] ​ The following table presents the composition of the foreclosed property portfolio at the years ended December 31, (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","2021","","2020"],["Land","$","728","\u200b","$","1,227"],["Land Development","","894","\u200b","","1,323"],["Residential Real Estate","","74","\u200b","","60"],["Commercial Real Estate","","\u2014","\u200b","","163"],["Total","$","1,696","\u200b","$","2,773"]] [[/GREPCENT_TABLE]] ​ Past Due Loans At December 31, 2021 past due loans still accruing interest totaled $29.9 million or 0.23% of total LHFI, compared to $49.8 million or 0.36% of total LHFI at December 31, 2020. Of the total past due loans still accruing interest $9.1 million or 0.07% of total LHFI were loans past due 90 days or more at December 31, 2021, compared to $13.6 million or 0.10% of total LHFI at December 31, 2020. 64 Table of Contents Troubled Debt Restructurings A modification of a loan’s terms constitutes a TDR if the creditor grants a concession that it would not otherwise consider to the borrower for economic or legal reasons related to the borrower’s financial difficulties. Management strives to identify borrowers in financial difficulty early and work with them to modify their loan to more affordable terms before their loan reaches nonaccrual status. These modified terms may include rate reductions, extension of terms that are considered to be below market, conversion to interest only, principal forgiveness and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. The total recorded investment in TDRs at December 31, 2021 was $18.0 million, a decrease of $2.7 million or 12.9% from $20.6 million at December 31, 2020. Of the $18.0 million of TDRs at December 31, 2021, $10.3 million or 57.4% were considered performing while the remaining $7.6 million were considered nonperforming. Of the $20.6 million of TDRs at December 31, 2020, $14.0 million or 68.0% were considered performing while the remaining $6.6 million were considered nonperforming. Loans are removed from TDR status in accordance with the established policy described in Note 1 “Summary of Significant Accounting Policies” in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K. For loan modifications made under the Joint Guidance and CARES Act, as amended by the CAA, refer to Note 1 “Summary of Significant Accounting Polices” in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K. this report. Net Charge-offs For the year ended December 31, 2021, net charge-offs of loans were $1.9 million or 0.01% of total average loans, compared to $11.4 million or 0.08% for the year ended December 31, 2020. The net charge-offs of loans for the years ended December 31, 2021 and 2020 continue to be insignificant, driven by benign credit impacts since the pandemic began. Provision for Credit Losses The Company recorded a negative provision for credit losses of $60.9 million for the year ended December 31, 2021, a decrease of $148.0 million or 169.9% from the prior year’s provision for credit losses of $87.1 million. The provision for credit losses for the year ended December 31, 2021 reflected a negative provision of $58.9 million in provision for loan losses and negative $2.0 million in provision for unfunded commitments. The decrease in the provision for credit losses in the current year compared to the prior year was driven by the benign credit impacts since the pandemic began, the ongoing recovery in the economy since last year, and the improvement in the economic forecast utilized in estimating the ACL as of December 31, 2021. Allowance for Credit Losses At December 31, 2021, the ACL was $107.8 million and included an ALLL of $99.8 million and a RUC of $8.0 million. The ACL decreased $62.8 million from December 31, 2020 due to negative provisions for credit losses that were driven by lower expected losses than previously estimated as a result of benign credit quality metrics to date and an improved economic outlook due to the roll-out of COVID-19 vaccines, as well as additional government stimulus inclusive of more PPP funding. The ACL as a percentage of the total loan portfolio was 0.82% at December 31, 2021, compared to 1.22% at December 31, 2020. The ACL as a percentage of adjusted loans (+) decreased 50 bps from December 31, 2020 to 0.83% at December 31, 2021. The ALLL as a percentage of the total loan portfolio was 0.76% at December 31, 2021 and 1.14% at December 31, 2020. When excluding PPP loans (+), which are 100% guaranteed by the SBA, the ALLL as a percentage of adjusted loans decreased 49 bps from December 31, 2020 to 0.76% at December 31, 2021. The ratio of the ALLL to nonaccrual loans was 320.86% at December 31, 2021, compared to 378.20% at December 31, 2020. 65 Table of Contents The following table summarizes the ACL as of December 31, (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","","2020"],["Total ALLL","\u200b","$","99,787","\u200b","$","160,540","\u200b"],["Total RUC","\u200b","\u200b","8,000","\u200b","\u200b","10,000","\u200b"],["Total ACL","\u200b","$","107,787","\u200b","$","170,540","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["ALLL to total loans","\u200b","\u200b","0.76","%","","1.14","%"],["ALLL to adjusted loans(+)","\u200b","\u200b","0.76","%","\u200b","1.25","%"],["ACL to total loans","\u200b","\u200b","0.82","%","\u200b","1.22","%"],["ACL to adjusted loans(+)","\u200b","\u200b","0.83","%","\u200b","1.33","%"],["Net charge-offs to average loans","\u200b","","0.01","%","","0.08","%"],["Net charge-offs to adjusted loans(+)","\u200b","\u200b","0.01","%","\u200b","0.09","%"],["Provision for loan losses to average loans","\u200b","\u200b","(0.43)","%","\u200b","0.60","%"],["Provision for loan losses to adjusted average loans(+)","\u200b","\u200b","(0.46)","%","\u200b","0.65","%"]] [[/GREPCENT_TABLE]] ​ The following table summarizes the net-charge off and ACL activity by segment for the years ended of December 31, (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","\u200b","2020","\u200b"],["\u200b","\u200b","Commercial","\u200b","Consumer","","Total","","Commercial","\u200b","Consumer","","Total","\u200b"],["Loans charged-off","\u200b","$","(5,186)","\u200b","$","(4,897)","\u200b","$","(10,083)","\u200b","$","(6,671)","\u200b","$","(11,522)","\u200b","$","(18,193)","\u200b"],["Recoveries","\u200b","\u200b","4,915","\u200b","\u200b","3,303","\u200b","\u200b","8,218","\u200b","\u200b","3,517","\u200b","\u200b","3,238","\u200b","\u200b","6,755","\u200b"],["Net charge-offs","\u200b","$","(271)","\u200b","$","(1,594)","\u200b","$","(1,865)","\u200b","$","(3,154)","\u200b","$","(8,284)","\u200b","$","(11,438)","\u200b"],["Net charge-offs to average loans","\u200b","","NM","\u200b","\u200b","0.08","%","\u200b","0.01","%","\u200b","0.03","%","","0.38","%","","0.08","%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["ACL","\u200b","$","85,323","\u200b","$","22,464","\u200b","$","107,787","\u200b","$","126,309","\u200b","$","44,231","\u200b","$","170,540","\u200b"],["ACL to total loans","\u200b","\u200b","0.76","%","\u200b","1.11","%","\u200b","0.82","%","\u200b","1.06","%","","2.14","%","","1.22","%"]] [[/GREPCENT_TABLE]] ​ The decrease in the ACL for both loan segments is due to negative provisions for credit losses that were driven by lower expected losses than previously estimated as a result of benign credit quality metrics to date and an improved economic outlook due to the roll-out of COVID-19 vaccines, as well as additional government stimulus inclusive of more PPP funding. ​ The following table shows the ACL by loan segment and the percentage of the total loan portfolio that the related ACL covers as of December 31, (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","\u200b","2020","\u200b"],["\u200b","","$","","% (1)","","$","","%(1)"],["Commercial","\u200b","$","85,323","\u200b","84.7","%","$","126,309","\u200b","85.2","%"],["Consumer","\u200b","","22,464","\u200b","15.3","%","","44,231","\u200b","14.8","%"],["Total","\u200b","$","107,787","\u200b","100.0","%","$","170,540","\u200b","100.0","%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","(1)","The percent represents the loan balance divided by total loans."]] [[/GREPCENT_TABLE]] 66 Table of Contents Deposits As of December 31, 2021, total deposits were $16.6 billion, an increase of $888.3 million, or 5.6%, compared to December 31, 2020. Total interest-bearing deposits consist of NOW, money market, savings, and time deposit account balances. Total time deposit balances of $1.9 billion accounted for 16.3% of total interest-bearing deposits at December 31, 2021, compared to $2.6 billion and 22.7% at December 31, 2020. The following table presents the deposit balances by major category as of December 31, (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","\u200b","2020"],["\u200b","","\u200b","\u200b","","% of total","","\u200b","\u200b","","% of total"],["Deposits:","\u200b","Amount","\u200b","deposits","\u200b","Amount","\u200b","deposits"],["Non-interest bearing","\u200b","$","5,207,324","","31.3","%","$","4,368,703","","27.8","%"],["NOW accounts","\u200b","","4,176,032","","25.1","%","","3,621,181","","23.0","%"],["Money market accounts","\u200b","","4,249,858","","25.6","%","","4,248,335","","27.0","%"],["Savings accounts","\u200b","","1,121,297","","6.8","%","","904,095","","5.8","%"],["Time deposits of $250,000 and over","\u200b","","452,193","","2.7","%","","1,532,082","","9.7","%"],["Other time deposits","\u200b","","1,404,364","","8.5","%","","1,048,369","","6.7","%"],["Total Deposits (1)","\u200b","$","16,611,068","","100.0","%","$","15,722,765","","100.0","%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Includes uninsured deposits of $5.9 billion and $5.3 billion as of December 31, 2021 and December 31, 2020, respectively. Amounts are based on estimated amounts of uninsured deposits as of the reported period."]] [[/GREPCENT_TABLE]] The Company may also borrow additional funds by purchasing certificates of deposit through a nationally recognized network of financial institutions. The Company utilizes this funding source when rates are more favorable than other funding sources. As of December 31, 2021 and 2020, there were $0 and $145.9 million, respectively, purchased certificates of deposit included in certificates of deposit on the Company’s Consolidated Balance Sheets. The reduced usage of purchase certificates of deposit in 2021 is due to the increase in customer deposits. Maturities of time deposits in excess of FDIC insurance limits as of December 31, 2021 were as follows (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b"],["\u200b","","Amount"],["Within 3 Months","\u200b","$","42,696"],["3 - 6 Months","\u200b","","30,313"],["6 - 12 Months","\u200b","\u200b","101,942"],["Over 12 Months","\u200b","","104,242"],["Total","\u200b","$","279,193"]] [[/GREPCENT_TABLE]] ​ ​ Capital Resources Capital resources represent funds, earned or obtained, over which financial institutions can exercise greater or longer control in comparison with deposits and borrowed funds. The adequacy of the Company’s capital is reviewed by management on an ongoing basis with reference to size, composition, and quality of the Company’s resources and consistency with regulatory requirements and industry standards. Management seeks to maintain a capital structure that will assure an adequate level of capital to support anticipated asset growth and to absorb potential losses, yet allow management to effectively leverage its capital to maximize return to shareholders. On June 9, 2020, the Company issued 6,900,000 depositary shares, each representing a 1/400th ownership interest in a share of its Series A preferred stock, with a liquidation preference of $10,000 per share of Series A preferred stock (equivalent to $25 per depositary share), including 900,000 depositary shares pursuant to the exercise in full by the underwriters of their option to purchase additional depositary shares. The total net proceeds to the Company were approximately $166.4 million, after deducting the underwriting discount and other offering expenses payable by the Company. The Company used the net proceeds of the offering for general corporate purposes in the ordinary course of its business, such as the repayment of debt, loan funding, acquisitions, additions to working capital, capital expenditures and investments in the Company’s subsidiaries. 67 Table of Contents In 2019, the Company’s Board of Directors authorized a share repurchase program to purchase up to $150.0 million of the Company’s common stock through June 30, 2021 in open market transactions or privately negotiated transactions. On March 20, 2020, the Company suspended its share repurchase program, which had approximately $20.0 million remaining in authorization at the time of suspension and as of December 31, 2020. The Company repurchased an aggregate of approximately 3.7 million shares, at an average price of $35.48 per share, under the authorization prior to suspension. On May 4, 2021, the Company’s Board of Directors authorized a share repurchase program to purchase up to $125.0 million worth of the Company’s common stock through June 30, 2022 in open market transactions or privately negotiated transactions, which was fully utilized as of September 30, 2021. On December 10, 2021, the Company’s Board of Directors authorized a share repurchase program to purchase up to $100.0 million of the Company’s common stock through December 9, 2022 in open market transactions or privately negotiated transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and /or Rule 10b-18 under the Exchange Act. There were no share repurchase transactions under this new Repurchase Program for the year ended December 31, 2021. Refer to Note 21 “Subsequent Events” in the “Notes to Consolidated Financial Statements” contained in Item 8 of this Form 10-K for share repurchase transactions that occurred in 2022. On January 28, 2022, the Company announced that its Board of Directors declared a quarterly dividend on the outstanding shares of its Series A preferred stock. The dividend of $171.88 per share (equivalent to $0.43 per outstanding depositary share) is payable on March 1, 2022 to preferred shareholders of record as of February 14, 2022. The Board also declared a quarterly dividend of $0.28 per share of common stock. The common stock dividend is payable on February 25, 2022 to common shareholders on record as of February 11, 2022. The Federal Reserve requires the Company and the Bank to comply with the following minimum capital ratios: (i) a common equity Tier 1 capital ratio of 7.0% of risk-weighted assets; (ii) a Tier 1 capital ratio of 8.5% of risk-weighted assets; (iii) a total capital ratio of 10.5% of risk-weighted assets; and (iv) a leverage ratio of 4.0% of total assets. These ratios, with the exception of the leverage ratio, include a 2.5% capital conservation buffer, which is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall. On March 27, 2020, the banking agencies issued an interim final rule that allows the Company to phase in the impact of adopting the CECL methodology up to two years, with a three-year transition period to phase out the cumulative benefit to regulatory capital provided during the two-year delay.  The Company is allowed to include the impact of the CECL transition, which is defined as the CECL Day 1 impact to capital plus 25% of the Company’s provision for credit losses during 2020, in regulatory capital through 2021. The Company elected to phase in the regulatory capital impact as permitted under the aforementioned interim final rule. Beginning in 2022, the transition amount will begin to impact regulatory capital by phasing it in over a three-year period ending in 2024. 68 Table of Contents The table summarizes the Company’s regulatory capital and related ratios for the periods ended December 31, (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","2021","","2020"],["Common equity Tier 1 capital","\u200b","$","1,569,751","\u200b","$","1,512,507","\u200b"],["Tier 1 capital","\u200b","","1,736,107","\u200b","","1,678,863","\u200b"],["Tier 2 capital","\u200b","","437,435","\u200b","","384,494","\u200b"],["Total risk-based capital","\u200b","","2,173,542","\u200b","","2,063,356","\u200b"],["Risk-weighted assets","\u200b","","15,328,166","\u200b","","14,739,253","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Capital ratios:","\u200b","","","\u200b","","","\u200b"],["Common equity Tier 1 capital ratio","\u200b","","10.24","%","","10.26","%"],["Tier 1 capital ratio","\u200b","","11.33","%","","11.39","%"],["Total capital ratio","\u200b","","14.18","%","","14.00","%"],["Leverage ratio (Tier 1 capital to average assets)","\u200b","","9.01","%","","8.95","%"],["Capital conservation buffer ratio (1)","\u200b","","5.33","%","","5.39","%"],["Common equity to total assets","\u200b","","12.68","%","","12.95","%"],["Tangible common equity to tangible assets (+)","\u200b","","8.20","%","","8.31","%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Calculated by subtracting the regulatory minimum capital ratio requirements from the Company\u2019s actual ratio results for Common equity, Tier 1, and Total risk-based capital. The lowest of the three measures represents the Company\u2019s capital conservation buffer ratio."]] [[/GREPCENT_TABLE]] (+) Refer to “Non-GAAP Measures” within this Item 7 for more information about this non-GAAP financial measure, including a reconciliation of this measure to the most directly comparable financial measure calculated in accordance to GAAP. ​ For more information about the Company’s off-balance sheet obligations and cash requirements refer to section “Liquidity” included within this Item 7. ​ MARKET RISK Interest Sensitivity Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, exchange rates, and equity prices. The Company’s market risk is composed primarily of interest rate risk. The ALCO of the Company is responsible for reviewing the interest rate sensitivity position of the Company and establishing policies to monitor and limit exposure to this risk. The Company’s Board of Directors reviews and approves the guidelines established by ALCO. Interest rate risk is monitored through the use of three complementary modeling tools: static gap analysis, earnings simulation modeling, and economic value simulation (net present value estimation). Each of these models measures changes in a variety of interest rate scenarios. While each of the interest rate risk models has limitations, taken together they represent a reasonably comprehensive view of the magnitude of interest rate risk in the Company, the distribution of risk along the yield curve, the level of risk through time, and the amount of exposure to changes in certain interest rate relationships. Static gap, which measures aggregate re-pricing values, is less utilized because it does not effectively measure the options risk impact on the Company and is not addressed here. Earnings simulation and economic value models, which more effectively measure the cash flow and optionality impacts, are utilized by management on a regular basis and are explained below. The Company determines the overall magnitude of interest sensitivity risk and then formulates policies and practices governing asset generation and pricing, funding sources and pricing, and off-balance sheet commitments. These decisions are based on management’s expectations regarding future interest rate movements, the states of the national, regional and local economies, and other financial and business risk factors. The Company uses simulation modeling to measure and monitor the effect of various interest rate scenarios and business strategies on net interest income. This modeling reflects interest rate changes and the related impact on net interest income and net income over specified time horizons. 69 Table of Contents Earnings Simulation Analysis Management uses simulation analysis to measure the sensitivity of net interest income to changes in interest rates. The model calculates an earnings estimate based on current and projected balances and rates. This method is subject to the accuracy of the assumptions that underlie the process, but it provides a better analysis of the sensitivity of earnings to changes in interest rates than other analyses, such as the static gap analysis discussed above. Assumptions used in the model are derived from historical trends and management’s outlook and include loan and deposit growth rates and projected yields and rates. These assumptions may not materialize and unanticipated events and circumstances may occur. The model also does not take into account any future actions of management to mitigate the impact of interest rate changes. Such assumptions are monitored by management and periodically adjusted as appropriate. All maturities, calls, and prepayments in the securities portfolio are assumed to be reinvested in like instruments. MBS prepayment assumptions are based on industry estimates of prepayment speeds for portfolios with similar coupon ranges and seasoning. Different interest rate scenarios and yield curves are used to measure the sensitivity of earnings to changing interest rates. Interest rates on different asset and liability accounts move differently when the prime rate changes and are reflected in the different rate scenarios. The Company uses its simulation model to estimate earnings in rate environments where rates are instantaneously shocked up or down around a “most likely” rate scenario, based on implied forward rates and futures curves. The analysis assesses the impact on net interest income over a 12-month time horizon after an immediate increase or “shock” in rates, of 100 bps up to 300 bps. The model, under all scenarios, does not drop the index below zero. The following table represents the interest rate sensitivity on net interest income for the Company across the rate paths modeled for balances at the period ended December 31, 2021 and 2020 (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Change In Net Interest Income"],["\u200b","\u200b","December 31,"],["\u200b","\u200b","2021","\u200b","2020"],["\u200b","","%","","","%"],["Change in Yield Curve:","","","","\u200b"],["+300 basis points","","30.15","","\u200b","16.20","\u200b"],["+200 basis points","","20.39","","\u200b","11.15","\u200b"],["+100 basis points","","10.33","","\u200b","5.63","\u200b"],["Most likely rate scenario","","\u2014","","\u200b","\u2014","\u200b"],["-100 basis points","","(9.20)","","\u200b","(2.66)","\u200b"],["-200 basis points","","(13.62)","","\u200b","(3.04)","\u200b"]] [[/GREPCENT_TABLE]] ​ Asset sensitivity indicates that in a rising interest rate environment the Company’s net interest income would increase and in a decreasing interest rate environment the Company’s net interest income would decrease. Liability sensitivity indicates that in a rising interest rate environment the Company’s net interest income would decrease and in a decreasing interest rate environment the Company’s net interest income would increase. From a net interest income perspective, the Company was more asset sensitive as of December 31, 2021 compared to its position as of December 31, 2020. This shift is in part due to the changing market characteristics of certain loan and deposit products and in part due to various other balance sheet strategies. The Company would expect net interest income to increase with an immediate increase or shock in market rates. In the decreasing interest rate environments, the Company would expect a decline in net interest income as interest-earning assets re-price at lower rates and interest-bearing deposits remain at or near their floors. Economic Value Simulation Economic value simulation is used to calculate the estimated fair value of assets and liabilities over different interest rate environments. Economic values are calculated based on discounted cash flow analysis. The net economic value of equity is the economic value of all assets minus the economic value of all liabilities. The change in net economic value over different rate environments is an indication of the longer-term earnings capability of the balance sheet. The same assumptions are used in the economic value simulation as in the earnings simulation. The economic value simulation uses instantaneous rate shocks to the balance sheet. 70 Table of Contents The following chart reflects the estimated change in net economic value over different rate environments using economic value simulation for the balances at the period ended December 31, 2021 and 2020 (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Change In Economic Value of Equity"],["\u200b","\u200b","December 31,"],["\u200b","\u200b","2021","\u200b","2020"],["\u200b","","%","","","%"],["Change in Yield Curve:","","","\u200b","\u200b","","\u200b"],["+300 basis points","","(6.85)","\u200b","\u200b","2.78","\u200b"],["+200 basis points","","(3.55)","\u200b","\u200b","2.97","\u200b"],["+100 basis points","","(1.22)","\u200b","\u200b","2.57","\u200b"],["Most likely rate scenario","","-","\u200b","\u200b","\u2014","\u200b"],["-100 basis points","","(4.82)","\u200b","\u200b","(4.67)","\u200b"],["-200 basis points","","(12.89)","\u200b","\u200b","(2.30)","\u200b"]] [[/GREPCENT_TABLE]] ​ As of December 31, 2021, the Company’s economic value of equity is generally less asset sensitive in a rising interest rate environment compared to its position as of December 31, 2020 primarily due to the composition of the Consolidated Balance Sheets and due in part to the pricing characteristics and assumptions of certain deposits. Liquidity Liquidity represents an institution’s ability to meet present and future financial obligations through either the sale or maturity of existing assets or the acquisition of additional funds through liability management. Liquid assets include cash, interest-bearing deposits with banks, money market investments, federal funds sold, LHFS, and securities and loans maturing or re-pricing within one year. Additional sources of liquidity available to the Company include its capacity to borrow additional funds when necessary through federal funds lines with several correspondent banks, a line of credit with the FHLB, the Federal Reserve Discount Window, the purchase of brokered certificates of deposit, corporate line of credit with a large correspondent bank, and debt and capital issuance. Management considers the Company’s overall liquidity to be sufficient to satisfy its depositors’ requirements and to meet its customers’ credit needs. As a result of adverse market conditions including the impacts of COVID-19, the Company has continued to see elevated customer deposit balances. These increased balances are due primarily to the combination of government stimulus programs, and customer expense and savings habits in response to the pandemic. As a result of the increases in customer deposits, the Company has reduced its wholesale borrowings during 2020 and 2021.  The Company considers a portion of the increases in customer deposits to be temporary, which it expects will result in outflows in subsequent quarters. ​ Under the terms of the PPPLF, prior to that program’s expiration, the Company could borrow funds which are secured by the Company’s PPP loans. During 2020, the Company’s borrowings pursuant to the PPPLF fluctuated; however, at its peak, the Company borrowed $200.5 million. The PPPLF expired on July 30, 2021, following an extension by the Federal Reserve from the previously scheduled expiration date of June 30, 2021. ​ In response to the current rate environment, the Company prepaid $550.0 million of long-term FHLB advances throughout 2020, which resulted in prepayment penalties of $31.2 million. Additionally, the Company sold several securities, which resulted in a gain of approximately $10.3 million during the second quarter of 2020, and redeemed $8.5 million in subordinated debt during the fourth quarter of 2020. Also in response to the low market interest rate environment, in February 2021 the Company prepaid a $200.0 million long-term FHLB advance, which resulted in a prepayment penalty of $14.7 million. As of December 31, 2021, liquid assets totaled $5.4 billion or 26.7% of total assets, and liquid earning assets totaled $5.2 billion or 28.8% of total earning assets. Asset liquidity is also provided by managing loan and securities maturities and cash flows. As of December 31, 2021, loan payments of approximately $4.3 billion or 32.2% of total loans are expected within one year based on contractual terms, adjusted for expected prepayments, and approximately $285.7 million or 6.8% of total securities are scheduled to be paid down within one year based on contractual terms, adjusted for expected prepayments. 71 Table of Contents For additional information and the available balances on various lines of credit, please refer to Note 9 “Borrowings” in the “Notes to the Consolidated Financial Statements” contained in Items 8 “Financial Statements and Supplementary Data” of this Form 10-K. In addition to lines of credit, the Bank may also borrow additional funds by purchasing certificates of deposit through a nationally recognized network of financial institutions. For additional information and outstanding balances on purchased certificates of deposits, please refer to “Deposits” within this Item 7. For additional information on cash requirements for known contractual and other obligations, please refer to “Capital Resources” within this Item 7. Cash Requirements The Company’s cash requirements outside of lending transactions relate primarily to borrowings, debt, and capital instruments which are used as part of the Company’s overall liquidity and capital management strategy.  Cash required to repay these obligations will be sourced from future debt and capital issuances and from other general liquidity sources as described above under “Liquidity” within this Item 7. ​ The following table presents the Company’s contractual obligations related to its major cash requirements and the scheduled payments due at the various intervals over the next year and beyond as of December 31, 2021 (dollars in thousands): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","\u200b","\u200b","","Less than","","More than"],["\u200b","\u200b","Total","\u200b","1 year","\u200b","1 year"],["Long-term debt (1)","\u200b","$","250,000","\u200b","$","\u2014","\u200b","$","250,000"],["Trust preferred capital notes (1)","\u200b","","155,159","\u200b","","\u2014","\u200b","","155,159"],["Leases (2)","\u200b","","65,655","\u200b","","12,644","\u200b","","53,011"],["Repurchase agreements","\u200b","","117,870","\u200b","","117,870","\u200b","","\u2014"],["Total contractual obligations","\u200b","$","588,684","\u200b","$","130,514","\u200b","$","458,170"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["(1)","Excludes related unamortized premium/discount and interest payments."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Represents lease payments due on non-cancellable operating leases at December 31, 2021. Excluded from these tables are variables lease payments or renewals."]] [[/GREPCENT_TABLE]] ​ For more information pertaining to the previous table, reference Note 7 “Leases” and Note 9 “Borrowings” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K Off-Balance Sheet Obligations In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and letters of credit. These instruments involve elements of credit and interest rate risk in excess of the amount recognized in the Company’s Consolidated Balance Sheets. The contractual amounts of these instruments reflect the extent of the Company’s involvement in particular classes of financial instruments. For more information pertaining to these commitments, reference Note 10 “Commitments and Contingencies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and letters of credit written is represented by the contractual amount of these instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Unless noted otherwise, the Company does not require collateral or other security to support off-balance sheet financial instruments with credit risk. 72 Table of Contents The following table represents the Company’s other commitments with balance sheet or off-balance sheet risk as of December 31, (dollars in thousands): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","2021","","2020"],["Commitments with off-balance sheet risk:","","\u200b","","","\u200b"],["Commitments to extend credit (1)","\u200b","$","5,825,557","\u200b","$","4,722,412"],["Letters of credit","\u200b","","152,506","\u200b","","161,827"],["Total commitments with off-balance sheet risk","\u200b","$","5,978,063","\u200b","$","4,884,239"],["(1) Includes unfunded overdraft protection.\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]] [[/GREPCENT_TABLE]] The Company is also a lessor in sales-type and direct financing leases for equipment, as noted in Note 7 “Leases” in the Notes of the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K. The Company’s future commitments related to the aforementioned leases totaled $217 million and $151 million, respectively, at December 31, 2021 and 2020. Impact of Inflation and Changing Prices The Company’s financial statements included in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K below have been prepared in accordance with GAAP, which requires the financial position and operating results to be measured principally in terms of historic dollars without considering the change in the relative purchasing power of money over time due to inflation. Inflation affects the Company’s results of operations mainly through increased operating costs, but since nearly all of the Company’s assets and liabilities are monetary in nature, changes in interest rates generally affect the financial condition of the Company to a greater degree than changes in the rate of inflation. Although interest rates are greatly influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate. The Company’s management reviews pricing of its products and services, in light of current and expected costs due to inflation, to mitigate the inflationary impact on financial performance. NON-GAAP MEASURES In this Form 10-K, the Company has provided supplemental performance measures on a tax-equivalent, tangible, operating, adjusted or pre-tax pre-provision basis. These non-GAAP financial measures are a supplement to GAAP, which is used to prepare the Company’s financial statements and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, the Company’s non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies. The Company uses the non-GAAP measures discussed herein in its analysis of the Company’s performance. The Company’s management believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and changes in the periods presented without the impact of items or events that may obscure trends in the Company’s underlying performance. Net interest income (FTE), total revenue (FTE) and total adjusted revenue (FTE), which are used in computing net interest margin (FTE) and adjusted operating efficiency ratio (FTE), respectively, provide valuable additional insight into the net interest margin and the efficiency ratio by adjusting for differences in the tax treatment of interest income sources. The entire FTE adjustment is attributable to interest income on earning assets, which is used in computing the yield on earning assets. Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the FTE components. The information presented for 2019 excludes discontinued operations. Refer to Note 1 “Summary of Significant Accounting Policies” in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K for further discussion regarding discontinued operations. 73 Table of Contents The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures for each of the periods presented (dollars in thousands): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","2021","","2020","","2019"],["Interest Income (FTE)","","\u200b","","","\u200b","","","\u200b"],["Interest and Dividend Income (GAAP)","\u200b","$","592,359","\u200b","$","653,454","\u200b","$","699,332","\u200b"],["FTE adjustment","\u200b","","12,591","\u200b","","11,547","\u200b","","11,121","\u200b"],["Interest and Dividend Income FTE (non-GAAP)","\u200b","$","604,950","\u200b","$","665,001","\u200b","$","710,453","\u200b"],["Average earning assets","\u200b","$","17,903,671","\u200b","$","17,058,795","\u200b","$","14,881,142","\u200b"],["Yield on interest-earning assets (GAAP)","\u200b","","3.31","%","","3.83","%","","4.70","%"],["Yield on interest-earning assets (FTE) (non-GAAP)","\u200b","","3.38","%","","3.90","%","","4.77","%"],["Net Interest Income (FTE)","\u200b","","\u200b","\u200b","","","\u200b","","","\u200b"],["Net Interest Income (GAAP)","\u200b","$","551,260","\u200b","$","555,298","\u200b","$","537,872","\u200b"],["FTE adjustment","\u200b","","12,591","\u200b","","11,547","\u200b","","11,121","\u200b"],["Net Interest Income FTE (non-GAAP)","\u200b","$","563,851","\u200b","$","566,845","\u200b","$","548,993","\u200b"],["Noninterest income (GAAP)","\u200b","\u200b","125,806","\u200b","\u200b","131,486","\u200b","\u200b","132,815","\u200b"],["Total revenue (FTE) (non-GAAP)","\u200b","$","689,657","\u200b","$","698,331","\u200b","$","681,808","\u200b"],["Average earning assets","\u200b","$","17,903,671","\u200b","$","17,058,795","\u200b","$","14,881,142","\u200b"],["Net interest margin (GAAP)","\u200b","","3.08","%","","3.26","%","","3.61","%"],["Net interest margin (FTE) (non-GAAP)","\u200b","","3.15","%","","3.32","%","","3.69","%"]] [[/GREPCENT_TABLE]] ​ The Company believes tangible common equity is an important indication of its ability to grow organically and through business combinations as well as its ability to pay dividends and to engage in various capital management strategies. Tangible common equity is used in the calculation of certain profitability, capital, and per share ratios. The Company believes tangible common equity and related ratios are meaningful measures of capital adequacy because they provide a meaningful basis for period-to-period and company-to-company comparisons, which the Company believes will assist investors in assessing the capital of the Company and its ability to absorb potential losses. The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures for each of the periods presented (dollars in thousands): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","","2020","","2019"],["Tangible Assets","\u200b","","","\u200b","","","\u200b"],["Ending Assets (GAAP)","\u200b","$","20,064,796","\u200b","$","19,628,449","\u200b","$","17,562,990"],["Less: Ending goodwill","\u200b","","935,560","\u200b","","935,560","\u200b","","935,560"],["Less: Ending amortizable intangibles","\u200b","","43,312","\u200b","","57,185","\u200b","","73,669"],["Ending tangible assets (non-GAAP)","\u200b","$","19,085,924","\u200b","$","18,635,704","\u200b","$","16,553,761"],["Tangible Common Equity","\u200b","","","\u200b","","","\u200b"],["Ending Equity (GAAP)","\u200b","$","2,710,071","\u200b","$","2,708,490","\u200b","$","2,513,102"],["Less: Ending goodwill","\u200b","","935,560","\u200b","","935,560","\u200b","","935,560"],["Less: Ending amortizable intangibles","\u200b","","43,312","\u200b","","57,185","\u200b","","73,669"],["Less: Perpetual preferred stock","\u200b","\u200b","166,357","\u200b","\u200b","166,357","\u200b","\u200b","\u2014"],["Ending tangible common equity (non-GAAP)","\u200b","$","1,564,842","\u200b","$","1,549,388","\u200b","$","1,503,873"],["Average equity (GAAP)","\u200b","$","2,725,330","\u200b","$","2,576,372","\u200b","$","2,451,435"],["Less: Average goodwill","\u200b","","935,560","\u200b","","935,560","\u200b","","912,521"],["Less: Average amortizable intangibles","\u200b","","49,999","\u200b","","65,094","\u200b","","79,405"],["Less: Average perpetual preferred stock","\u200b","\u200b","166,356","\u200b","\u200b","93,658","\u200b","\u200b","\u2014"],["Average tangible common equity (non-GAAP)","\u200b","$","1,573,415","\u200b","$","1,482,060","\u200b","$","1,459,509"],["Common equity to assets (GAAP)","\u200b","","12.68","%","","12.95","%","","14.31"],["Tangible common equity to tangible assets (non-GAAP)","\u200b","","8.20","%","","8.31","%","","9.08"],["Book value per common share (GAAP)","\u200b","$","33.80","\u200b","$","32.46","\u200b","$","31.58"],["Tangible book value per common share (non-GAAP)","\u200b","$","20.79","\u200b","$","19.78","\u200b","$","18.90"]] [[/GREPCENT_TABLE]] ​ 74 Table of Contents Adjusted operating measures exclude merger and rebranding-related costs, the gains or losses related to balance sheet repositioning (principally composed of gains and losses on debt extinguishment), gains or losses on sale of securities, gains on the sale of Visa, Inc. Class B common stock, as well as branch closing and facility consolidation costs (principally composed of real estate, leases and other assets write downs, gains or losses on related real estate sales, as well as severance associated with branch closing and corporate expense reduction initiatives). The Company believes these non-GAAP adjusted measures provide investors with important information about the continuing economic results of the organization’s operations. Prior periods in this Form 10-K have been adjusted for previously announced branch closing and corporate expense reduction initiatives. The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures for each of the periods presented (dollars in thousands, except per share amounts): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","","2020","","2019"],["Adjusted Operating Earnings & EPS","\u200b","","","\u200b","","","\u200b"],["Net Income (GAAP)","\u200b","$","263,917","\u200b","$","158,228","\u200b","$","193,528"],["Plus: Merger and rebranding-related costs, net of tax","\u200b","","\u2014","\u200b","","\u2014","\u200b","","27,395"],["Plus: Net loss related to balance sheet repositioning, net of tax","\u200b","\u200b","11,609","\u200b","\u200b","25,979","\u200b","\u200b","12,953"],["Less: Gain on sale of securities, net of tax","\u200b","\u200b","69","\u200b","\u200b","9,712","\u200b","\u200b","6,063"],["Less: Gain on Visa, Inc. Class B common stock, net of tax","\u200b","\u200b","4,058","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014"],["Plus: Branch closing and facility consolidation costs, net of tax","\u200b","\u200b","13,775","\u200b","\u200b","5,343","\u200b","\u200b","\u2014"],["Adjusted operating earnings (non-GAAP)","\u200b","$","285,174","\u200b","$","179,838","\u200b","$","227,813"],["Less: Dividends on preferred stock","\u200b","\u200b","11,868","\u200b","\u200b","5,658","\u200b","\u200b","\u2014"],["Adjusted operating earnings available to common shareholders (non-GAAP)","\u200b","$","273,306","\u200b","$","174,180","\u200b","$","227,813"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Weighted average common shares outstanding, diluted","\u200b","","77,417,801","\u200b","","78,875,668","\u200b","","80,263,557"],["Earnings per common share, diluted (GAAP)","\u200b","$","3.26","\u200b","$","1.93","\u200b","$","2.41"],["Adjusted operating earnings per common share, diluted (non-GAAP)","\u200b","$","3.53","\u200b","$","2.21","\u200b","$","2.84"]] [[/GREPCENT_TABLE]] ​ The adjusted operating efficiency ratio (FTE) excludes merger-related costs, rebranding costs, the amortization of intangible assets, gains or losses on sale of securities, gains on the sale of Visa, Inc. Class B common stock, gains or losses related to balance sheet repositioning (principally composed of gains and losses on debt extinguishment), as well as branch closing and facility consolidation costs. This measure is similar to the measure utilized by the Company when analyzing corporate performance and is also similar to the measure utilized for incentive compensation. The Company believes this adjusted measure provides investors with important information about the combined economic results of the organization’s operations. Net interest income (FTE) and total adjusted revenue (FTE), which are used in computing net interest margin (FTE) and adjusted operating efficiency ratio (FTE), respectively, provide valuable additional insight into the net interest margin and the efficiency ratio by adjusting for differences in tax treatment of interest income sources. The entire FTE adjustment is attributable to interest income on earning assets, which is used in computing yield on earning assets. Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the FTE components. Prior periods in this Form 10-K have been adjusted for previously announced branch closing and corporate expense reduction initiatives. The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures for each of the periods presented (dollars in thousands): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","","2020","","2019"],["Adjusted Operating Noninterest Expense, Noninterest Income & Efficiency Ratio","\u200b","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b"],["Noninterest expense (GAAP)","\u200b","$","419,195","\u200b","$","413,349","\u200b","$","418,340","\u200b"],["Less: Merger-related costs","\u200b","","\u2014","\u200b","","\u2014","\u200b","","27,824","\u200b"],["Less: Rebranding costs","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","6,455","\u200b"],["Less: Amortization of intangible assets","\u200b","\u200b","13,904","\u200b","\u200b","16,574","\u200b","\u200b","18,521","\u200b"],["Less: Losses related to balance sheet repositioning","\u200b","\u200b","14,695","\u200b","\u200b","31,116","\u200b","\u200b","16,397","\u200b"],["Less: Branch closing and facility consolidation costs","\u200b","\u200b","17,437","\u200b","\u200b","6,764","\u200b","\u200b","\u2014","\u200b"],["Adjusted operating noninterest expense (non-GAAP)","\u200b","$","373,159","\u200b","$","358,895","\u200b","$","349,143","\u200b"],["Noninterest income (GAAP)","\u200b","$","125,806","\u200b","$","131,486","\u200b","$","132,815","\u200b"],["Less: Losses related to balance sheet repositioning","\u200b","\u200b","\u2014","\u200b","","(1,769)","\u200b","","\u2014","\u200b"],["Less: Gains on sale of securities","\u200b","\u200b","87","\u200b","\u200b","12,294","\u200b","\u200b","7,675","\u200b"],["Less: Gain on Visa, Inc. Class B common stock","\u200b","\u200b","5,137","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b"],["Adjusted operating noninterest income (non-GAAP)","\u200b","$","120,582","\u200b","$","120,961","\u200b","$","125,140","\u200b"],["Net interest income (FTE) (non-GAAP)","\u200b","$","563,851","\u200b","$","566,845","\u200b","$","548,993","\u200b"],["Adjusted operating noninterest income (non-GAAP)","\u200b","","120,582","\u200b","","120,961","\u200b","","125,140","\u200b"],["Total adjusted revenue (FTE)(non-GAAP)","\u200b","$","684,433","\u200b","$","687,806","\u200b","$","674,133","\u200b"],["Efficiency Ratio (GAAP)","\u200b","","61.91","%","","60.19","%","","62.37","%"],["Adjusted operating efficiency ratio (FTE) (non-GAAP)","\u200b","","54.52","%","","52.18","%","","51.79","%"]] [[/GREPCENT_TABLE]] ​ 75 Table of Contents PPP adjustment impact excludes the SBA guaranteed PPP loans funded during 2021 and 2020. The Company believes LHFI (net of deferred fees and costs), excluding PPP is useful to investors as it provides more clarity on the Company’s organic growth. The Company also believes that the related non-GAAP financial measures of past due loans still accruing interest as a percentage of total LHFI (net of deferred fees and costs), provision for credit losses as a percentage of average LHFI, and net charge-offs as a percentage of average LHFI (net of deferred fees and costs), in each case excluding impacts from the PPP, are useful to investors as loans originated under the PPP carry an SBA guarantee. The Company believes that the ALLL and the ACL, each as a percentage of loans held for investment (net of deferred fees and costs), and each excluding impacts from the PPP, are useful to investors because of the size of the Company’s PPP loan originations and the impact of the embedded credit enhancement provided by the SBA guarantee. The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures for each of the periods presented (dollars in thousands, except per share amounts): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","","2020","","2019","\u200b"],["Adjusted Loans","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Loans held for investment (net of deferred fees and costs) (GAAP)","\u200b","$","13,195,843","\u200b","$","14,021,314","\u200b","$","12,610,936","\u200b"],["Less: PPP adjustments (net of deferred fees and costs)","\u200b","\u200b","150,363","\u200b","\u200b","1,179,522","\u200b","\u200b","\u2014","\u200b"],["Total adjusted loans (non-GAAP)","\u200b","$","13,045,480","\u200b","$","12,841,792","\u200b","$","12,610,936","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Average loans held for investment (net of deferred fees and costs) (GAAP)","\u200b","$","13,639,325","\u200b","$","13,777,467","\u200b","$","11,949,171","\u200b"],["Less: Average PPP adjustments (net of deferred fees and costs)","\u200b","\u200b","864,814","\u200b","\u200b","1,091,921","\u200b","\u200b","\u2014","\u200b"],["Total adjusted average loans (non-GAAP)","\u200b","$","12,774,511","\u200b","$","12,685,546","\u200b","$","11,949,171","\u200b"],["Asset Quality","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Provision for loan losses","\u200b","$","(58,888)","\u200b","$","82,200","\u200b","$","22,125","\u200b"],["Net charge-offs","\u200b","\u200b","1,865","\u200b","\u200b","11,438","\u200b","\u200b","20,876","\u200b"],["Allowance for loan and lease losses","\u200b","\u200b","99,787","\u200b","\u200b","160,540","\u200b","\u200b","42,294","\u200b"],["Allowance for credit losses","\u200b","\u200b","107,787","\u200b","\u200b","170,540","\u200b","\u200b","43,194","\u200b"],["Total NPAs","\u200b","\u200b","32,796","\u200b","\u200b","45,221","\u200b","\u200b","32,940","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["ALLL/total outstanding loans","\u200b","\u200b","0.76","%","\u200b","1.14","%","\u200b","0.34","%"],["ALLL/total adjusted loans (non-GAAP)","\u200b","\u200b","0.76","%","\u200b","1.25","%","\u200b","0.34","%"],["ACL/total outstanding loans","\u200b","\u200b","0.82","%","\u200b","1.22","%","\u200b","0.34","%"],["ACL/total adjusted loans (non-GAAP)","\u200b","\u200b","0.83","%","\u200b","1.33","%","\u200b","0.34","%"],["NPAs/total outstanding loans","\u200b","\u200b","0.25","%","\u200b","0.32","%","\u200b","0.26","%"],["NPAs/total adjusted loans (non-GAAP)","\u200b","\u200b","0.25","%","\u200b","0.35","%","\u200b","0.26","%"],["Net charge-offs/total average loans","\u200b","\u200b","0.01","%","\u200b","0.08","%","\u200b","0.17","%"],["Net charge-offs/total adjusted average loans (non-GAAP)","\u200b","\u200b","0.01","%","\u200b","0.09","%","\u200b","0.17","%"],["Provision for loan losses/total average loans","\u200b","\u200b","(0.43)","%","\u200b","0.60","%","\u200b","0.19","%"],["Provision for loan losses/total adjusted average loans (non-GAAP)","\u200b","\u200b","(0.46)","%","\u200b","0.65","%","\u200b","0.19","%"]] [[/GREPCENT_TABLE]] ​ ​ ​ 76 Table of Contents ​ ​