•The effect of changes in accounting policies and practices or accounting standards, as may be adopted from time to time by bank regulatory agencies, the SEC, the Public Company Accounting Oversight Board, the FASB, or other accounting standards setters, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the CECL model, which has changed how we estimate credit losses and may further increase the required level of our allowance for credit losses in future periods;

•Possible credit-related impairments of securities held by us;

•Changes in the level of our nonperforming assets and charge-offs;

•~~Possible credit-related impairments of securities held by us;~~

•The impact of ~~current and possible future~~ governmental efforts to restructure the U.S. financial regulatory system;

•The impact of recent or future changes in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount;

•Changes in consumer spending, borrowing, and savings habits;

•The effects of our lack of a diversified loan portfolio, including the risks of geographic and industry concentrations;

•~~Our ability to attract deposits and other sources of liquidity;~~

•The possibility that we may reduce or discontinue the payments of dividends on our common stock;

•The possibility that we may discontinue, reduce, or otherwise limit the level of repurchases of our common stock we may make from time to time pursuant to our stock repurchase program;

•Changes in the financial performance and/or condition of our borrowers;

•Changes in the competitive environment among financial and bank holding companies and other financial service providers;

•Public health crises and pandemics, including the COVID-19 pandemic, and the effects on the economic and business environments in which we operate, including our credit quality and business operations, as well as the impact on general economic and financial market conditions;

•Geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism and/or military conflicts, including the war between Russia and Ukraine, which could impact business and economic conditions in the United States and abroad;

•Public health crises and pandemics, including the COVID-19 pandemic, and their effects on the economic and business environments in which we operate, including on our credit quality and business operations, as well as the impact on general economic and financial market conditions;

•Cybersecurity threats and the cost of defending against ~~them,~~them;

•Climate change, including the ~~costs of~~enhanced regulatory, compliance, ~~with potential legislation to combat cybersecurity at a state, national, or global level;~~credit, and reputational risks and costs;

•Natural disasters, earthquakes, fires, and severe weather;

•Unanticipated regulatory, legal, or judicial proceedings; and

•Our ability to manage the risks involved in the foregoing.

If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Quarterly Report on Form 10-Q and other reports and registration statements filed by us with the SEC. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. We will not update the forward-looking information and statements to reflect actual results or changes in the factors affecting the forward-looking information and statements. For information on the factors that could cause actual results to differ from the expectations stated in the forward-looking statements, see “Risk Factors” under Part I, Item 1A of our ~~2020~~2021 Form 10-K in addition to Part II, Item 1A - Risk Factors of this Quarterly Report on Form 10-Q and other reports as filed with the SEC.

Forward-looking information and statements should not be viewed as predictions, and should not be the primary basis upon which investors evaluate us. Any investor in our common stock should consider all risks and uncertainties disclosed in our filings with the SEC, all of which are accessible on the SEC’s website at http://www.sec.gov.

8666

GENERAL

Management’s discussion and analysis of financial condition and results of operations is intended to provide a better understanding of the significant changes in trends relating to the Company’s financial condition, results of operations, liquidity, and capital resources. This discussion should be read in conjunction with our ~~Management Discussion and Analysis of Financial Condition and Results of Operations included in our 2020~~2021 Form 10-K, plus the unaudited consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. The results for the three and nine months ended September 30, ~~2021~~2022 are not necessarily indicative of the results expected for the year ending December 31, ~~2021.~~2022.

The Corporation is a California-based bank holding company incorporated in 1997 in the state of Delaware and registered as a bank holding company under the Bank Holding Company Act of 1956, as amended (“BHCA”). Our wholly owned subsidiary, Pacific Premier Bank, is a California state-chartered commercial bank. The Bank was founded in 1983 as a state-chartered thrift and subsequently converted to a federally-chartered thrift in 1991. The Bank converted to a California-chartered commercial bank and became a member of the Federal Reserve System in March 2007. The Bank is also a member of the FHLB, which is a member of the Federal Home Loan Bank System. As a bank holding company, the Corporation is subject to regulation and supervision by the Federal Reserve. We are required to file with the Federal Reserve quarterly and annual reports and such additional information as the Federal Reserve may require pursuant to the BHCA. The Federal Reserve may conduct examinations of bank holding companies, such as the Corporation, and its subsidiaries. The Corporation is also a bank holding company within the meaning of the California Financial Code. As such, the Corporation and its subsidiaries are subject to the supervision and examination by, and may be required to file reports with, the California Department of Financial Protection and Innovation (“DFPI”).

A bank holding company, such as the Corporation, is required to serve as a source of financial strength to its subsidiary depository institutions and to commit resources to support such institutions in circumstances where it might not do so absent such a policy. The Federal Reserve, under the BHCA, has the authority to require a bank holding company to terminate any activity or to relinquish control of a nonbank subsidiary (other than a nonbank subsidiary of a bank) upon the Federal Reserve’s determination that such activity or control constitutes a serious risk to the financial soundness and stability of any bank subsidiary of the bank holding company.

As a California state-chartered commercial bank, which is a member of the Federal Reserve, the Bank is subject to supervision, periodic examination, and regulation by the DFPI, the Federal Reserve, the Consumer Financial Protection Bureau, ~~(“CFPB”),~~ and the ~~FDIC.~~Federal Deposit Insurance Corporation (“FDIC”). The Bank’s deposits are insured by the FDIC through the Deposit Insurance Fund. In general terms, insurance coverage is up to $250,000 per depositor for all deposit accounts. As a result of this deposit insurance function, the FDIC also has certain supervisory authority and powers over the Bank. If, as a result of an examination of the Bank, the regulators should determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of the Bank’s operations are unsatisfactory or that the Bank or our management is violating or has violated any law or regulation, various remedies are available to the regulators. Such remedies include the power to enjoin unsafe or unsound practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in capital, to restrict growth, to assess civil monetary penalties, to remove officers and directors, and ultimately, to request the FDIC to terminate the Bank’s deposit insurance. As a California-chartered commercial bank, the Bank is also subject to certain provisions of California law.

Our corporate headquarters ~~are~~is located in Irvine, California. At September 30, ~~2021,~~2022, we primarily conduct business throughout the Western Region of the United States from 63our 59 full-service depository branches located in Arizona, California, Nevada, ~~Oregon,~~ and Washington. Following the two branch consolidations in San Diego County and Los Angeles County of California in early November 2021, the Bank operates 61 full-service depository branches. The branches consolidated were identified largely based on the proximity of neighboring branches, deposit base, historic growth, and market opportunity to improve further the overall efficiency of operations, as well as the Bank's goals related to Fair Lending and the Community Reinvestment Act.

8767

As a result of our organic and strategic growth strategy we have developed a variety of banking products and services within our targeted markets in the Western United States tailored to small- and middle-market businesses, corporations, including the owners and employees of those businesses, professionals, entrepreneurs, real estate investors, and non-profit organizations, as well as consumers in the communities we serve. Through our branches and our website, www.ppbi.com, we provide a wide array of banking products and services such as: various types of deposit accounts, digital banking, treasury management services, online bill payment, and a wide array of loan products, including commercial business loans, lines of credit, SBA loans, commercial real estate loans, agribusiness loans, franchise lending, home equity lines of credit, and construction loans throughout the Western United States in major metropolitan markets within Arizona, California, Nevada, Oregon, and Washington. We also ~~have acquired and~~ enhanced nationwide specialty banking products and services for ~~Homeowners’ Associations (“HOA”)~~HOA and HOA management companies, as well as experienced owner-operator franchisees in the ~~quick service restaurant (“QSR”)~~QSR industry. ~~Most recently, we~~We have expanded our specialty products and services offerings to include commercial escrow and exchange services through our Commerce Escrow division, which facilitates commercial escrow services and tax-deferred commercial real estate exchanges under Section 1031 of the Internal Revenue Code, as well as custodial and maintenance services through our Pacific Premier Trust division, which serves as a custodian for self-directed IRAs as well as certain accounts that do not qualify as IRAs pursuant to the Internal Revenue Code.

The Bank funds its lending and investment activities with retail and commercial deposits obtained through its branches, advances from the FHLB, lines of credit, and wholesale and brokered certificates of deposit.

Our principal source of income is the net spread between interest earned on loans and investments and the interest costs associated with deposits and borrowings used to finance the loan and investment portfolios. Additionally, the Bank generates fee income from loan and investment sales, and various products and services offered to depository, loan, escrow, and IRA custodial clients.

~~COVID-19 PANDEMIC~~RECENT DEVELOPMENTS

The COVID-19 outbreak was declared a Public Health Emergency of International Concern by the World Health Organization on January 30, 2020 and a pandemic by the World Health Organization on March 11, 2020. The ongoing COVID-19 global pandemic and national health emergency has caused significant disruption in the United States and international economies and financial markets. The operations and business results of the Company have been and could continue to be materially adversely affected.

In early March 2020, the Company began preparing for potential disruptions and government limitations of activity in the markets in which we serve. We activated our Business Continuity Program and Pandemic Preparedness Plan, and we were able to quickly execute on multiple initiatives to adjust our operations to protect the health and safety of our employees and clients. We expanded remote-access availability to ensure a greater number of employees have the capability to work from home or other remote locations without impacting our operations while continuing to provide a superior level of customer service. We also reconfigured our corporate headquarters, administrative offices, and branches to promote social distancing for employees by erecting physical barriers. In addition, the Company issued a Company-wide employee appreciation bonus related to the COVID-19 pandemic during the fourth quarter of 2020. Beginning April 2021, non-exempt employees will receive up to 4 hours of paid time off for COVID-19 vaccination appointments and exempt employees will receive flexibility for vaccination appointments.

Since the beginning of the crisis, we have been in close contact with our clients, assessing the level of impact on their businesses, and implementing a process to evaluate each client’s specific situation, and where appropriate, providing relief programs. We also enhanced client awareness of our digital banking offerings to ensure that we continue to provide a superior level of customer service. We have taken steps to comply with various government directives regarding social distancing and use of personal protective equipment in the work place, and we are following the guidance from the Centers of Disease Control (“CDC”) to protect our clients and employees.

The Company continued its efforts to monitor the loan portfolio to identify potential at-risk segments and line of credit draws for deviations from normal activity, and support our customers affected by the COVID-19 pandemic, including but not limited to the following:

•~~Participated in the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”)~~

~~We were able to quickly establish our process for participating in the SBA PPP program that enabled our clients to utilize this valuable resource~~b~~eginning in April 2020. O~~ur team executed PPP loans in the two rounds of the program, which allowed us to further strengthen and deepen our client relationships, while positively impacting tens of thousands of individuals. In July 2020, the Bank sold its entire SBA PPP loan portfolio with an aggregate amortized cost of $1.13 billion to a seasoned and experienced non-bank lender and servicer of SBA loans, resulting in improved balance sheet liquidity and a gain on sale of approximately ~~$18.9 million,~~ ~~net of net deferred origination fees and net purchase discounts.~~

•~~Implemented a temporary loan modification program for borrowers affected by the COVID-19 pandemic, including payment deferrals, fee waivers, and extensions of repayment terms~~

In keeping with regulatory guidance to work with borrowers during this unprecedented situation and as outlined in the CARES Act, the Bank established a COVID-19 temporary modification program, including interest-only payments, or full payment deferrals for clients that are adversely affected by the COVID-19 pandemic. The CARES Act also addressed COVID-19 related modifications and specified that such modifications made on loans that were current as of December 31, 2019 are not classified as TDRs. In accordance with interagency guidance issued in April 2020, these short-term modifications made to a borrower affected by the COVID-19 pandemic and governmental shutdown orders, including payment deferrals, fee waivers, and extensions of repayment terms, do not need to be identified as TDRs if the loans were current at the time a modification plan was implemented. The CAA, signed into law on December 27, 2020, extended the applicable period to include modification to loans held by financial institutions executed between March 1, 2020 and the earlier of (i) January 1, 2022, or (ii) 60 days after the date of termination of the COVID-19 national emergency. At September 30, 2021, there were no loans classified as a COVID-19 modification under Section 4013 of the CARES Act and no loans in-process for potential modification. At December 31, 2020, 52 loans totaling $79.5 million, or 0.60% of loans held for investment, remained within their COVID-19 modification period. Please also see ~~Note 6 - Loans Held for Investment~~ ~~for additional information.~~

Additionally, the CARES Act provides for relief on existing and new SBA loans through the Small Business Debt Relief program. As part of the SBA Small Business Debt Relief program, the SBA will automatically pay principal, interest, and fees of certain SBA loans for a period of six months for both existing loans and new loans issued prior to September 27, 2020. On December 27, 2020, the CAA authorized a second round of SBA payments on covered loans approved before March 27, 2020, for a two-month period beginning with the first payment due on the loan on or after February 1, 2021, and for an additional three-month period for certain eligible borrowers. For new loans approved beginning on February 2, 2021 and ending on September 30, 2021, the SBA will make the payments for a three-month period subject to the availability of funds. At September 30, 2021, approximately 13 loans, representing approximately $9.4 million aggregate reported balance, are eligible for this relief. The CARES Act also provides for mortgage payment relief and a foreclosure moratorium.

The extent to which the COVID-19 pandemic impacts the Company’s business, asset valuations, results of operations, and financial condition, as well as its regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be accurately predicted, including the scope and duration of the COVID-19 pandemic, vaccine adoption rates and the effectiveness of vaccines against variants, and the actions taken by governmental authorities and other third parties in response to the COVID-19 pandemic. Material adverse impacts may include all or a combination of valuation impairments on our intangible assets, investments, loans, loan servicing rights, and deferred tax assets.

While economic conditions have generally improved since the ~~ongoing~~onset of the COVID-19 pandemic in early 2020, such as with favorable trends in employment metrics and increased economic activity, the strong demand for goods and services in recent years in conjunction with supply chain constraints have contributed to higher levels of inflation throughout the U.S. economy, including within the Company’s market area. Inflation has ~~placed strain~~resulted in higher prices for food, energy, housing, and various supply chain inputs, among others. These inflationary pressures have persisted throughout 2022, resulting in higher costs for consumers and businesses. To address the persistent levels of inflation, the Federal Open Market Committee (“FOMC”) has taken steps to tighten monetary policy through a cumulative 375 basis point increase to the federal funds rate since March 2022, as well as by beginning to reduce the size of the Federal Reserve’s balance sheet. The FOMC has stated that it remains committed to monetary policy measures that are designed to bring inflation down. The impact of these measures, including future actions taken by the FOMC, on ~~certain businesses and service providers, many~~the Company’s business are uncertain. While the recent increases in interest rates have generally resulted in higher levels of ~~which have not been able to conduct operations~~interest income for the Company, they may also reduce economic activity overall or result in ~~their usual manner.~~recessionary conditions in future periods. Should ~~the COVID-19 pandemic~~these ongoing economic pressures persist, we anticipate it ~~may~~could have an impact on the following:

•Loan growth and interest income - ~~Economic~~If economic activity ~~expanded moderately during the first nine months of 2021, but macroeconomic conditions have not yet fully recovered~~begins to ~~the levels observed prior to the onset of the COVID-19 pandemic in the first quarter of 2020. If a recovery in economic conditions fails to continue,~~wane, it may have an impact on our borrowers, the businesses they operate, and their financial condition. Our borrowers may have less demand for credit needed to invest in and expand their businesses, ~~and/or support their ongoing operations. Additionally, our borrowers may have~~as well as less demand for real estate and consumer loans. Further, the Federal Reserve’s Federal Open Market Committee continues to maintain the federal funds rate within a range of 0% to 0.25%. Lower levels of interest rates in conjunction with the potential reduction in future loan growthSuch factors would place pressure on the level of ~~and yield on~~ interest-earning assets, which may negatively impact our interest income.

•Credit quality - ~~Elevated levels of~~Should there be a decline in economic activity, the markets we serve could experience increases in unemployment, declines in consumer confidence, and a reluctance on the part of businesses to invest in and expand their operations, among other ~~things,~~things. Such factors may result in ~~additional weakness in~~weakened economic conditions, place strain on our borrowers, and ultimately impact the credit quality of our loan portfolio. We expect this ~~would~~could result in increases in the level of past due, nonaccrual, and classified loans, as well as higher net charge-offs. While ~~there has been a recovery in~~ economic conditions ~~since the onset~~have generally been favorable thus far, notwithstanding higher levels of ~~the COVID-19 pandemic in the first quarter of 2020,~~inflation, there can be no assurance ~~the recovery~~favorable economic conditions will continue. As such, should we experience future deterioration in the credit quality of our loan portfolio, it may ~~require us~~contribute to ~~record~~the need for additional provisions for credit losses.

•~~CECL~~ACL - ~~On January 1, 2020, the~~The Company ~~adopted ASC 326, which requires the Company~~is required to ~~measure~~record credit losses on certain financial assets ~~such as loans and debt securities, using~~in accordance with the CECL ~~model. The CECL~~ model ~~for measuring credit losses~~stipulated under ASC 326, which is highly dependent upon expectations of future economic conditions and requires management judgment. Should ~~the recovery in economic conditions fail to continue and the~~ expectations ~~concerning~~of future economic conditions deteriorate, the Company may be required to record additional provisions for credit ~~losses under the CECL model.~~losses.

•Impairment charges - ~~Should the recovery in~~If economic conditions ~~fail to continue,~~deteriorate, it ~~may~~could adversely impact the Company’s operating results and the value of certain of our assets. As a result, the Company may be required to write-down the value of certain assets such as goodwill, intangible assets, or deferred tax assets when there is evidence to suggest their value has become impaired or will not be realizable at a future date.

~~The U.S. government~~•Accumulated other comprehensive income (loss) - Unrealized gains and losses on AFS investment securities are recognized in stockholders’ equity as ~~well as~~accumulated other ~~state and local policy makers have responded~~comprehensive income (loss). If economic conditions deteriorate, and/or if the interest rates continue to increase, the valuation of the Company’s AFS investment securities could be negatively impacted, which may lead to increases in other comprehensive loss, the potential for credit losses, decreases to the ~~ongoing COVID-19 pandemic with actions geared to support not only~~Company’s stockholders’ equity, and declines in the health and well-being of the public, but also consumers, businesses, and the economy as a whole. In addition, during the first quarter of 2021, the President signed into law the American Rescue Plan Act of 2021 (“American Rescue Plan”), which provides approximately $1.9 trillion in various forms of economic stimulus and aid to individuals and state and local governments that have been affected by the ongoing COVID-19 pandemic. However, the impact and overall effectiveness of these actions is difficult to determine at this time.

~~ACQUISITION OF OPUS~~

Effective as of June 1, 2020, the Corporation completed the acquisition of Opus, a California-chartered state bank headquartered in Irvine, California, pursuant to a definitive agreement dated as of January 31, 2020. At closing, Opus had $8.32 billion in total assets, $5.94 billion in gross loans, and $6.91 billion in total deposits and operated 46 banking offices located throughout California, Washington, Oregon, and Arizona. As a result of the Opus acquisition, the Corporation acquired specialty lines of business, including trust and escrow services.

Pursuant to the terms of the merger agreement, the consideration paid to Opus shareholders consisted of whole shares of the Corporation’s common stock and cash in lieu of fractional shares of the Corporation’s common stock. Upon consummation of the transaction, (i) each share of Opus common stock issued and outstanding immediately prior to the effective time of the acquisition was canceled and exchangedCompany’s tangible book value per share. See “Non-GAAP measures” for the right to receive 0.900 shares of the Corporation’s common stock, with cash to be paid in lieu of fractional shares at a rate of $19.31 per share, and (ii) each share of Opus Series A non-cumulative, non-voting preferred stock issued and outstanding immediately prior to the effective time of the acquisition was converted into and canceled in exchange for the right to receive that number of shares of the Corporation’s common stock equal to the product of (X) the number of shares of Opus common stock into which such share of Opus preferred stock was convertible in connection with, and as a result of, the acquisition, and (Y) 0.900, in each case, plus cash in lieu of fractional shares of the Corporation’s common stock.

The Corporation issued 34,407,403 shares of the Corporation’s common stock valued at $21.62 per share, which was the closing price of the Corporation’s common stock on May 29, 2020, the last trading day prior to the consummation of the acquisition, and paid cash in lieu of fractional shares. The Corporation assumed Opus’s warrants and options, which represented the issuance of up to approximately 406,778 and 9,538 additional shares of the Corporation’s common stock, valued at approximately $1.8 million and $46,000, respectively, and issued substitute restricted stock units in an aggregate amount of $328,000. The value of the total transaction consideration paid amounted to approximately $749.6 million. The Opus warrants assumed by the Corporation expired unexercised as of September 30, 2020 and no longer remain outstanding. The Opus options assumed by the Corporation were fully exercised during the third quarter of 2020.

details.

As a result of the Opus acquisition, the Company acquired Opus and recorded net assets of $656.6 million. The final fair value of assets acquired and liabilities assumed primarily consist of the following:

•~~$5.81 billion of loans~~

•Deposits and deposit costs ~~$937.1 million of cash~~- Given the expectation for further rate increases by the FOMC in the near future, it is likely that deposit costs will continue to increase and ~~cash equivalents~~

•~~$829.9 million of investment securities~~

•~~$93.0 million of goodwill~~

•~~$16.1 million of core~~it may become more challenging for the Company to retain and attract deposit ~~intangible~~

•~~$3.2 million of customer relationship intangible~~

•~~$6.92 billion of deposits~~relationships.

~~The fair values of~~•Liquidity - Consistent with our prudent, proactive approach to liquidity management, we may take certain actions to further enhance our liquidity, including but not limited to, increasing our FHLB borrowings, increasing our brokered deposits, and liquidating loans and AFS investment securities. In the ~~assets acquired and liabilities assumed were determined based on the requirements of ASC 820 -~~ ~~Fair Value Measurement~~. Such fair values are preliminary estimates at the time of acquisition and are subject to adjustment for up to one year after the merger date or when additional information relative to the closing date fair values becomes available and such information is considered final, whichever is earlier. Since the acquisition, the Company has made a net adjustment of $146,000 related to loans, deferred tax assets, other assets, and other liabilities. During the second quarter of 2021, the Company finalized its fair values analysis of the acquired assets and assumed liabilities associated with this acquisition. For additional information about the acquisition of Opus, please see ~~Note 4 - Acquisitions.~~event that we liquidate AFS securities having an unrealized loss position, those losses would become realized.

The ~~client account integration~~Company continues to focus on serving its customers and ~~system conversion~~communities, maintaining the well-being of ~~Opus was completed in October 2020. At~~its employees, and executing its strategic initiatives. The Company continues to monitor the ~~same time,~~economic environment and will make changes as a result of the Opus acquisition, the Bank consolidated 20 branch offices primarily in California, Washington, and Arizona into nearby branch offices. The consolidated branches were identified largely based on the proximity of neighboring branches, historic growth, and market opportunity to improve further the overall efficiency of operations in line with the Bank's ongoing cost reduction initiatives.appropriate.

CRITICAL ACCOUNTING POLICIES

Management has established various accounting policies that govern the application of GAAP in the preparation of our financial statements. Certain accounting policies require management to make estimates and assumptions that involve a significant level of estimation uncertainty and are reasonably likely to have a material impact on the carrying value of certain assets and liabilities as well as the Company’s results of operations; management considers these to be critical accounting policies. The estimates and assumptions management uses are based on historical experience and other factors, which management believes to be reasonable under the circumstances. Actual results could differ significantly from these estimates and assumptions, which could have a material impact on the carrying value of the Company’s assets and liabilities as well as the Company’s results of operations in future reporting periods. Our significant accounting policies are described in ~~the Notes~~Note 1. Description of Business and Summary of Significant Accounting Policies to the consolidated financial statements in our ~~2020~~2021 Form 10-K.

Allowance for Credit Losses on Loans and Off-Balance Sheet Commitments

The Company accounts for credit losses on loans and off-balance sheet commitments, such as unfunded loan commitments, in accordance with ASC 326 - Financial Instruments - Credit Losses, which requires the Company to record an estimate of expected lifetime credit losses for loans and unfunded loan commitments at the time of origination or acquisition. The ACL is maintained at a level deemed appropriate by management to provide for current expected future credit losses in the portfolio as of the date of the consolidated statements of financial condition. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts. The estimation process in determining the ACL involves a significant degree of judgement, requiring management to make numerous estimates and assumptions. These estimates and assumptions are subject to change in future periods, which may have a material impact on the level of the ACL and the Company’s results of operations.

The measurement of the ACL is performed by collectively evaluating loans with similar risk ~~characteristics.~~characteristics, as well as the individual evaluation of loans that are deemed to no longer possess characteristics similar to others in the loan portfolio. The Company measures the ACL on commercial real estate loans and commercial loans ~~using~~through a discounted cash flow approach ~~and~~using a loan’s effective interest rate, while a historical loss rate methodology is used to determine the ACL on retail loans. The Company’s discounted cash flow methodology incorporates a ~~probability of default~~PD and ~~loss given default~~LGD model, ~~as well as~~which is impacted by expectations of future economic ~~conditions, using reasonable~~conditions. The Company’s ACL methodology also incorporates estimates and ~~supportable forecasts.~~ assumptions concerning loan prepayments, future draws on revolving credit facilities, and the probability an unfunded commitment will be drawn upon.

The use of reasonable and supportable forecasts ~~require~~in the ACL methodology requires significant judgment, such as selecting forecast scenarios and related scenario-weighting, as well as determining the appropriate length of the forecast horizon. Management leverages economic projections from a reputable and independent third party to inform and provide its reasonable and supportable economic forecasts. Other internal and external indicators of economic forecasts may also be considered by management when developing ~~the~~ forecast metrics. ~~The Company’s ACL model reverts to long-term average loss rates for purposes~~Forecasts of ~~estimating expected cash flows beyond a period deemed reasonable and supportable. The Company forecasts~~ economic conditions and expected credit losses are made over a two-year time horizon, before reverting to long-term average loss rates over a period of three years. The duration of the forecast horizon, the period over which forecasts revert to long-term averages, the economic forecasts that management utilizes, as well as additional internal and external indicators of economic forecasts that management considers, may change over time depending on the nature and composition of our loan portfolio. Changes in economic forecasts, in conjunction with changes in loan specific attributes, have an impact on a loan’s ~~probability of default~~PD and ~~loss given default,~~LGD, which can drive changes in the determination of the ~~ACL.~~ACL and can have a significant impact on the provision for credit losses.

~~Expectations~~Although no one economic variable can fully demonstrate the sensitivity of ~~future cash flows are discounted at~~ the ~~loan’s effective interest rate. The resulting~~ ACL ~~represents~~calculation to changes in the ~~amount by which~~economic variables used in the ~~loan’s amortized cost exceeds~~ACL model, the ~~net present value~~Company, as of ~~a loan’s discounted cash flows. The ACL is recorded through a charge to provision for credit losses and is reduced by charge-offs, net of recoveries on loans previously charged-off. It is~~September 30, 2022, has identified certain economic variables that have significant influence in the Company’s ~~policy to promptly charge-off loan balances at~~model for determining the ~~time they have been deemed uncollectible.~~ACL. These key economic variables include the U.S. unemployment rate, U.S. real GDP growth, CRE prices, and the 10-year U.S. Treasury yield. Please also see ~~Note 7 -~~ “Allowance for Credit ~~Losses~~Losses” ,under ~~of the consolidated financial statements~~ Item 2 - Management’s Discussion and Analysis for additional discussion on assumptions concerning economic forecasts and economic variables used in the Company’s ACL ~~methodology, including discussion concerning economic forecasts used in~~model as well as the ~~determination~~impact of those items on the Company’s ACL.

The Company’s ACL ~~model~~methodology also includes adjustments for qualitative factors where appropriate. Since historical information (such as historical net losses and economic cycles) may not always, by themselves, provide a sufficient basis for determining future expected credit losses, the Company periodically considers the need for qualitative adjustments to the ACL. Qualitative adjustments may be related to and include, but not limited to, factors such as: (i) management’s assessment of economic forecasts used in the model and how those forecasts align with management’s overall evaluation of current and expected economic conditions, (ii) organization specific risks such as credit concentrations, collateral specific risks, regulatory risks, and external factors that may ultimately impact credit quality, (iii) potential model limitations such as limitations identified through back-testing, and other limitations associated with factors such as underwriting changes, acquisition of new portfolios, changes in portfolio segmentation, and (iv) management’s overall assessment of the adequacy of the ACL, including an assessment of model data inputs used to determine the ACL.

The Company has a credit portfolio review process designed to detect problem loans. Problem loans are typically those of a substandard or worse internal risk grade, and may consist of loans on nonaccrual status, troubled debt restructurings, loans where the likelihood of foreclosure on underlying collateral has increased, collateral dependent loans, and other loans where concern or doubt over the ultimate collectability of all contractual amounts due has become elevated. Such loans may, in the opinion of management, be deemed to no longer possess risk characteristics similar to other loans in the loan portfolio, and as such, may require individual evaluation to determine an appropriate ACL for the loan. When a loan is individually evaluated, the Company typically measures the expected credit loss for the loan based on a discounted cash flow approach, unless the loan has been deemed collateral dependent. Collateral dependent loans are loans where the repayment of the loan is expected to come from the operation of and/or eventual liquidation of the underlying collateral. The ACL for collateral dependent loans is determined using estimates for the fair value of the underlying collateral, less costs to sell.

Although management uses the best information available to derive estimates necessary to measure an appropriate level of the ACL, future adjustments to the ACL may be necessary due to economic, operating, regulatory, and other conditions that ~~may~~ extend beyond the Company’s control. ~~Additionally,~~In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s ~~ACL and credit risk grading process.~~ACL. Such agencies may require the Company to recognize ~~additions~~changes to the ~~allowance~~ACL based on judgments different from those of management.

~~Business Combinations~~

~~The Company accounts for business combinations under~~ Further, as the size, complexity, and composition of the loan portfolio changes over time, such as through the acquisition ~~method~~ of ~~accounting. Upon obtaining control~~other financial institutions, new product offerings, client demand for various types of credit, and changes in our geographic footprint, the Company may seek to make additional enhancements to its ACL methodology. Such enhancements may have an impact on the level of the acquired entity, the Company records all identifiable assets and liabilities at their estimated fair values. Goodwill is recorded when the consideration paid for an acquired entity exceeds the estimated fair value of the net assets acquired. Changes to the acquisition date fair values of assets acquired and liabilities assumed may be made as adjustments to goodwill over a 12-month measurement period following the date of acquisition. Such adjustments are attributable to additional information obtained related to fair value estimates of the assets acquired and liabilities assumed. Certain costs associated with business combinations are expensed as incurred.

~~Goodwill~~

Goodwill assets arise from the acquisition method of accounting for business combinations and represent the excess value of the consideration paid over the fair value of the net assets acquired. Goodwill assets are deemed to have indefinite lives, are not subject to amortization and instead are tested for impairment at least annually. The Company’s policy is to assess goodwill for impairment in the fourth quarter of each year or more frequently if events or circumstances lead management to believe the value of goodwill may be impaired. Impairment testing is performed at the reporting unit level, which is considered the Corporation level as management has identified the Corporation as its sole reporting unit as of the date of the consolidated statements of financial condition. Management’s assessment of goodwill is performed in accordance with ASC 350-20 ~~- Goodwill and Other - Goodwill~~, which allows the Company to first perform a qualitative assessment of goodwill to determine if it is more likely than not the fair value of the Company’s equity is below its carrying value. However, GAAP also allows the Company, at its option, to unconditionally forego the qualitative assessment and proceed directly to a quantitative assessment. When performing a qualitative assessment of goodwill, should the results of such analysis indicate it is more likely than not the fair value of the Company’s equity is below its carrying value, the Company then performs the quantitative assessment of goodwill to determine the fair value of the reporting unit and compares it to its carrying value. If the fair value of the reporting unit is below its carrying value, the Company would then recognize the amount of impairment as the amount by which the reporting unit’s carrying value exceeds its fair value, limited to the total amount of goodwill allocated to the reporting unit. Impairment losses are recorded as a charge to noninterest expense.

The Company is required to employ the use of significant judgment in its assessment of goodwill, both in a qualitative assessment and a quantitative assessment, if needed. Assessments of goodwill often require the use of fair value estimates, which are dependent upon various factors including estimates concerning the Company’s long term growth prospects. Imprecision in estimates can affect the estimated fair value of the reporting unit in a goodwill assessment. Additionally, various events or circumstances could have a negative effect on the estimated fair value of a reporting unit, including declines in business performance, increases in credit losses, as well as deterioration in economic or market conditions, which may result in a material impairment charge to earningsACL in future periods.

~~Acquired Loans~~

When the Company acquires loans through purchase or a business combination an assessment is first performed to determine if such loans have experienced more than insignificant deterioration in credit quality since their origination and thus should be classified and accounted for as PCD loans or otherwise classified as non-PCD loans. All acquired loans are recorded at their fair value as of the date of acquisition, with any resulting discount or premium accreted or amortized into interest income over the remaining life of the loan using the interest method. Additionally, upon the purchase or acquisition of non-PCD loans, the Company measures and records an ACL based on the Company’s methodology for determining the ACL. The ACL ~~for non-PCD loans~~ is recorded through a charge to provision for credit losses inand is reduced by charge-offs, net of recoveries on loans previously charged-off. It is the ~~period in which~~Company’s policy to promptly charge-off loan balances at the ~~loans were purchased or acquired.~~time they have been deemed uncollectible.

~~Unlike non-PCD loans,~~Please also see Note 6 – Allowance for Credit Losses, of the ~~initial ACL for PCD loans is established through an adjustment~~Notes to the ~~acquired loan balance and not through a charge to provision~~Consolidated Financial Statements for ~~credit losses in the period in which the loans were acquired. The ACL for PCD loans is determined with the use of~~additional discussion concerning the Company’s ACL methodology. Characteristics of PCD loans include: delinquency, downgrade in credit quality since origination, loans on nonaccrual status, loans that had been modified, and/or other factors the Company may become aware of through its initial analysis of acquired loans that may indicate there has been more than insignificant deterioration in credit quality since a loan’s origination. Subsequent to acquisition, the ACL for both non-PCD and PCD loans are determined with the use of the Company’s ACL methodology in the same manner as all other loans.

In connection with the Opus acquisition on June 1, 2020, the Company acquired PCD loans with an aggregate fair value of approximately $841.2 million, and recorded a net ACL of approximately $21.2 million, which was added to the amortized cost of the loans.

9471

NON-GAAP MEASURES

The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position, or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures and may not be comparable to non-GAAP financial measures that may be presented by other companies.

For periods presented below, return on average tangible common equity is a non-GAAP financial measure derived from GAAP-based amounts. We calculate this figure by excluding amortization of intangible assets expense from net income and excluding the average intangible assets and average goodwill from the average stockholders’ equity during the period. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.


	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands)	2022			2022			2021			2022			2021
Net income	$	73,363		$	69,803		$	90,088		$	210,070		$	255,058
Plus: amortization of intangible assets expense	3,472			3,479			3,912			10,543			12,056
Less: amortization of intangible assets expense tax adjustment (1)	991			993			1,119			3,009			3,449
Net income for average tangible common equity	$	75,844		$	72,289		$	92,881		$	217,604		$	263,665

Average stockholders’ equity	$	2,775,124		$	2,764,893		$	2,844,800		$	2,801,141		$	2,780,932
Less: average intangible assets	61,101			64,583			75,795			64,588			79,812
Less: average goodwill	901,312			901,312			901,312			901,312			900,170
Average tangible common equity	$	1,812,711		$	1,798,998		$	1,867,693		$	1,835,241		$	1,800,950

Return on average equity (2)	10.57		%	10.10		%	12.67		%	10.00		%	12.23		%
Return on average tangible common equity (2)	16.74		%	16.07		%	19.89		%	15.81		%	19.52		%

(1) Amortization of intangible assets expense adjusted by statutory tax rate.

(2) Ratio is annualized.

~~Fair Value~~Tangible book value per share and tangible common equity to tangible assets (the “tangible common equity ratio”) are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible book value per share by dividing tangible common stockholder’s equity by shares outstanding. We calculate the tangible common equity ratio by excluding the balance of intangible assets from common stockholders’ equity and dividing by period end tangible assets, which also excludes intangible assets. We believe that this information is important to shareholders as tangible equity is a measure that is consistent with the calculation of capital for bank regulatory purposes, which excludes intangible assets from the calculation of risk-based ratios.


	September 30,			December 31,
(Dollars in thousands)	2022			2021
Total stockholders’ equity	$	2,735,396		$	2,886,311
Less: intangible assets	960,340			970,883
Tangible common equity	$	1,775,056		$	1,915,428

Total assets	$	21,619,201		$	21,094,429
Less: intangible assets	960,340			970,883
Tangible assets	$	20,658,861		$	20,123,546

Tangible common equity ratio	8.59		%	9.52		%

Common shares issued and outstanding	95,016,767			94,389,543

Book value per share	$	28.79		$	30.58
Less: intangible book value per share	10.11			10.29
Tangible book value per share	$	18.68		$	20.29

For periods presented below, efficiency ratio is a non-GAAP financial measure derived from GAAP-based amounts. This figure represents the ratio of noninterest expense less other real estate owned operations, core deposit intangible amortization, and merger-related expense to the sum of net interest income before provision for loan losses and total noninterest income, less gain (loss) on sale of securities, other income - security recoveries on investment securities, gain (loss) on sale of other real estate owned, and gain (loss) from debt extinguishment. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.


	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands)	2022			2022			2021			2022			2021
Total noninterest expense	$	100,866		$	98,974		$	96,040		$	297,488		$	283,025
Less: amortization of intangible assets	3,472			3,479			3,912			10,543			12,056
Less: merger-related expense	—			—			—			—			5

Noninterest expense, adjusted	$	97,394		$	95,495		$	92,128		$	286,945		$	270,964

Net interest income before provision for loan losses	$	181,112		$	172,765		$	169,069		$	515,716		$	491,655
Add: total noninterest income	20,164			22,193			30,100			68,251			80,569
Less: net (loss) gain from investment securities	(393)			(31)			4,190			1,710			13,321
Less: other income - security recoveries	—			—			1			—			9

Less: net gain (loss) from debt extinguishment	—			—			970			—			(180)

Revenue, adjusted	$	201,669		$	194,989		$	194,008		$	582,257		$	559,074

Efficiency ratio	48.3		%	49.0		%	47.5		%	49.3		%	48.5		%

Core net interest income and core net interest margin are non-GAAP financial measures derived from GAAP based amounts. We calculate core net interest income by excluding scheduled accretion income, accelerated accretion income, premium amortization on CDs, nonrecurring nonaccrual interest paid, and gain (loss) on interest rate in fair value hedging relationships from net interest income. The core net interest margin is calculated as the ratio of core net interest income to average interest-earning assets. Management believes that the exclusion of such items from these financial measures provides useful information to gain an understanding of the operating results of our core business.


	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands)	2022			2022			2021			2022			2021
Net interest income	$	181,112		$	172,765		$	169,069		$	515,716		$	491,655
Less: scheduled accretion income	2,377			2,626			3,339			7,860			10,777
Less: accelerated accretion income	2,269			4,918			6,107			10,270			18,022
Less: premium amortization on CDs	39			60			390			195			3,083
Less: nonrecurring nonaccrual interest paid	(848)			48			(74)			(1,156)			(893)
Less: gain (loss) on fair value hedging relationships	4,240			128			(95)			2,701			(95)
Core net interest income	$	173,035		$	164,985		$	159,402		$	495,846		$	460,761



Average interest-earning assets	$	19,929,636		$	19,876,806		$	19,131,172		$	19,680,163		$	18,804,146



Net interest margin (1)	3.61		%	3.49		%	3.51		%	3.50		%	3.50		%
Core net interest margin (1)	3.44		%	3.33		%	3.31		%	3.37		%	3.28		%

(1) Ratio is annualized.

Pre-provision net revenue is a non-GAAP financial measure derived from GAAP-based amounts. We calculate the pre-provision net revenue by excluding income tax, provision for credit losses, and merger-related expenses from net income. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business and a consistent comparison to the financial results of prior periods.


	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands)	2022			2022			2021			2022			2021
Interest income	$	199,025		$	183,226		$	176,047		$	550,797		$	519,733
Interest expense	17,913			10,461			6,978			35,081			28,078
Net interest income	181,112			172,765			169,069			515,716			491,655
Noninterest income	20,164			22,193			30,100			68,251			80,569
Revenue	201,276			194,958			199,169			583,967			572,224
Noninterest expense	100,866			98,974			96,040			297,488			283,025
Add: merger-related expense	—			—			—			—			5
Pre-provision net revenue	$	100,410		$	95,984		$	103,129		$	286,479		$	289,204
Pre-provision net revenue (annualized)	$	401,640		$	383,936		$	412,516		$	381,972		$	385,605

Average assets	$	21,687,436		$	21,670,153		$	20,804,903		$	21,440,803		$	20,366,162

Pre-provision net revenue to average assets	0.46		%	0.44		%	0.50		%	1.34		%	1.42		%
Pre-provision net revenue to average assets (annualized)	1.85		%	1.77		%	1.98		%	1.78		%	1.89		%


Cost of core deposits is a non-GAAP financial measure derived from GAAP-based amounts. Cost of core deposits is calculated as the ratio of core deposit interest expense to average core deposits. We calculate core deposit interest expense by excluding interest expense for certificates of deposit and brokered deposits from total deposit expense, and we calculate average core deposits by excluding certificates of deposit and brokered deposits from total deposits. Management believes cost of core deposits is a useful measure to assess the Company's deposit base, including its potential volatility.

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands)	2022			2022			2021			2022			2021
Total deposits interest expense	$	9,873		$	2,682		$	2,432		$	14,228		$	10,123
Less: certificates of deposit interest expense	1,420			607			775			2,557			2,815
Less: brokered deposits interest expense	3,827			327			2			4,155			148
Core deposits expense	$	4,626		$	1,748		$	1,655		$	7,516		$	7,160

Total average deposits	$	17,732,822		$	17,752,727		$	17,345,302		$	17,590,276		$	16,848,558
Less: average certificates of deposit	835,645			922,784			1,196,187			934,518			1,304,436
Less: average brokered deposits	703,848			85,131			5,551			268,812			45,181
Average core deposits	$	16,193,329		$	16,744,812		$	16,143,564		$	16,386,946		$	15,498,941

Cost of core deposits	0.11		%	0.04		%	0.04		%	0.06		%	0.06		%

RESULTS OF OPERATIONS

The following table presents the components of results of operations, share data, and performance ratios for the periods indicated:


	Three Months Ended									Nine Months Ended
(Dollar in thousands, except per share data and	September 30,			June 30,			September 30,			September 30,			September 30,
percentages)	2022			2022			2021			2022			2021
Operating data
Interest income	$	199,025		$	183,226		$	176,047		$	550,797		$	519,733
Interest expense	17,913			10,461			6,978			35,081			28,078
Net interest income	181,112			172,765			169,069			515,716			491,655
Provision for credit losses	1,077			469			(19,726)			1,994			(56,228)
Net interest income after provision for credit losses	180,035			172,296			188,795			513,722			547,883
Net gain from sales of loans	457			1,136			1,187			3,087			3,094
Other noninterest income	19,707			21,057			28,913			65,164			77,475
Noninterest expense	100,866			98,974			96,040			297,488			283,025
Net income before income taxes	99,333			95,515			122,855			284,485			345,427
Income tax expense	25,970			25,712			32,767			74,415			90,369
Net income	$	73,363		$	69,803		$	90,088		$	210,070		$	255,058
Pre-provision net revenue (3)	$	100,410		$	95,984		$	103,129		$	286,479		$	289,204
Share data
Earnings per share:
Basic	$	0.77		$	0.74		$	0.95		$	2.22		$	2.70
Diluted	0.77			0.73			0.95			2.21			2.68
Common equity dividends declared per share	0.33			0.33			0.33			0.99			0.96
Dividend payout ratio (1)	42.72		%	44.89		%	34.63		%	44.68		%	35.59		%
Book value per share	$	28.79		$	29.01		$	30.08		$	28.79		$	30.08
Tangible book value per share (2)	18.68			18.86			19.75			18.68			19.75
Performance ratios
Return on average assets (3)	1.35		%	1.29		%	1.73		%	1.31		%	1.67		%
Return on average equity (3)	10.57			10.10			12.67			10.00			12.23
Return on average tangible common equity (2)(3)	16.74			16.07			19.89			15.81			19.52

Pre-provision net revenue on average assets (2)(3)	1.85			1.77			1.98			1.78			1.89
Net interest margin	3.61			3.49			3.51			3.50			3.50
Cost of deposits	0.22			0.06			0.06			0.11			0.08
Average equity to average assets	12.80			12.76			13.67			13.06			13.65
Efficiency ratio (2)	48.3			49.0			47.5			49.3			48.5

(1) Dividend payout ratio is defined as common equity dividends declared per share divided by basic earnings per share.

(2) Reconciliations of the non-GAAP measures are set forth in the Non-GAAP Measures section of Item 2 - Management’s Discussion and Analysis of Financial ~~Instruments~~Condition and Results of Operations in this Form 10-Q.

(3) Ratio is annualized.

~~We use~~

In the third quarter of 2022, we reported net income of $73.4 million, or $0.77 per diluted share. This compares with net income of $69.8 million, or $0.73 per diluted share, for the second quarter of 2022. The increase in net income was primarily due to an $8.3 million increase in net interest income, partially offset by a $2.0 million decrease in noninterest income, a $1.9 million increase in noninterest expense, and a $608,000 increase in provision for credit losses.

Net income of $73.4 million, or $0.77 per diluted share, for the third quarter of 2022 compares to net income for the third quarter of 2021 of $90.1 million, or $0.95 per diluted share. The decrease in net income was primarily due to a $1.1 million provision expense for credit losses for the third quarter of 2022, compared to a $19.7 million provision recapture for the third quarter of 2021, a $9.9 million decrease in noninterest income, and a $4.8 million increase in noninterest expense, partially offset by a $12.0 million increase in net interest income and a $6.8 million decrease in income tax expense. The provision recapture during the third quarter of 2021 was reflective of improved macroeconomic forecasts used in the Company’s ACL model relative to prior periods.

For the third quarter of 2022, the Company’s return on average assets was 1.35%, return on average equity was 10.57%, and return on average tangible common equity was 16.74%, compared to 1.29%, 10.10%, and 16.07%, respectively, for the second quarter of 2022, and 1.73%, 12.67%, and 19.89%, respectively, for the third quarter of 2021. For additional details, see “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis.

For the nine months ended September 30, 2022, the Company recorded net income of $210.1 million, or $2.21 per diluted share. This compares with net income of $255.1 million or $2.68 per diluted share for the nine months ended September 30, 2021. The decrease in net income of $45.0 million was mostly due to a $2.0 million provision expense for credit losses for the nine months ended September 30, 2022, compared to a $56.2 million provision recapture for the nine months ended September 30, 2021, a $14.5 million increase in noninterest expense excluding merger-related expenses, and a $12.3 million decrease in noninterest income, partially offset by a $24.1 million increase in net interest income and a $16.0 million decrease in income tax expense. The provision recapture during the nine months ended September 30, 2021 was reflective of improved macroeconomic forecasts used in the Company’s ACL model relative to prior periods, partially offset by loan growth and net charge-offs.

For the nine months ended September 30, 2022, the Company’s return on average assets was 1.31%, return on average equity was 10.00%, and return on average tangible common equity was 15.81%, compared with 1.67%, 12.23%, and 19.52%, respectively, for the nine months ended September 30, 2021. For additional details, see “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis.

Net Interest Income

Our primary source of revenue is net interest income, which is the difference between the interest earned on loans, investment securities, and interest-earning balances with financial institutions (“interest-earning assets”) and the interest paid on deposits and borrowings (“interest-bearing liabilities”). Net interest margin is net interest income expressed as a percentage of average interest-earning assets. Net interest income is affected by changes in both interest rates and the volume of interest-earning assets and interest-bearing liabilities.

Net interest income totaled $181.1 million in the third quarter of 2022, an increase of $8.3 million, or 4.8%, from the second quarter of 2022. The increase in net interest income was primarily attributable to higher yields on average interest-earning assets and slightly higher average loan balances, a favorable interest impact from fair value ~~measurements~~hedges on fixed-rate loans of $4.2 million, as well as one more day of interest, partially offset by higher cost of funds and lower loan-related fees and accretion income as a result of decreased prepayment activity.

The net interest margin for the third quarter of 2022 increased 12 basis points to ~~record~~3.61%, from 3.49% in the prior quarter. The core net interest margin, which excludes the impact of loan accretion income, certificates of deposit mark-to-market amortization, interest impact from fair value hedge, and other adjustments, increased 11 basis points to ~~certain financial instruments~~3.44%, compared to 3.33% in the prior quarter, reflecting higher yields on interest-earning assets and a favorable remix of earning-assets towards higher yielding loans, partially offset by higher cost of funds and lower loan prepayment fees. For additional details of the core net interest margin, see “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis.

Net interest income for the third quarter of 2022 increased $12.0 million, or 7.1%, compared to ~~determine~~the third quarter of 2021. The increase was attributable to higher yields on average interest-earning assets and higher average loan balances, as well as a favorable impact from fair value ~~disclosures. Investment securities available-for-sale, derivative instruments,~~hedges on fixed-rate loans, partially offset by higher cost of funds and ~~equity warrant~~lower loan-related fees and accretion income as a result of decreased prepayment activity.

For the nine months ended 2022, net interest income increased $24.1 million, or 4.9%, compared to the nine months ended 2021. The increase was related to an increase in average interest-earning assets, ~~are financial instruments recorded at~~partially offset by lower average loan yields, higher average interest-bearing liabilities, and higher cost of funds. For the nine months ended 2022, the net interest margin was 3.50%, unchanged from the same period last year. The core net interest margin, which excludes the impact of loan accretion income, certificates of deposit mark-to-market amortization, interest impact from fair value hedge, and other adjustments, was 3.37%, compared with 3.28% for the same period last year, reflecting higher average interest-earning assets balance. For additional details of the core net interest margin, see “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis.

The following table presents the net interest margin, average balances calculated based on ~~a recurring basis. Additionally, from time to time, we may be required to record other financial~~daily average, interest income and yields earned on average interest-earning assets atand interest expense and rates paid on average interest-bearing liabilities, and the average yield/rate by asset and liability component for the periods indicated:


	Average Balance Sheet
	Three Months Ended
	September 30, 2022						June 30, 2022						September 30, 2021
(Dollars in thousands)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
Assets
Interest-earning assets:
Cash and cash equivalents	$	665,510	$	2,754	1.64	%	$	702,663	$	1,211	0.69	%	$	663,076	$	195	0.12	%
Investment securities	4,277,444		22,067		2.06	%	4,254,961		17,560		1.65	%	4,807,854		18,827		1.57	%
Loans receivable, net (1)(2)	14,986,682		174,204		4.61	%	14,919,182		164,455		4.42	%	13,660,242		157,025		4.56	%
Total interest-earning assets	19,929,636		199,025		3.96	%	19,876,806		183,226		3.70	%	19,131,172		176,047		3.65	%
Noninterest-earning assets	1,757,800						1,793,347						1,673,731
Total assets	$	21,687,436					$	21,670,153					$	20,804,903
Liabilities and equity
Interest-bearing deposits:
Interest checking	$	3,812,448	$	1,658	0.17	%	$	4,055,506	$	712	0.07	%	$	3,383,219	$	290	0.03	%
Money market	5,053,890		2,940		0.23	%	5,231,464		1,010		0.08	%	5,554,881		1,309		0.09	%
Savings	434,591		28		0.03	%	432,586		27		0.03	%	401,804		58		0.06	%
Retail certificates of deposit	835,645		1,420		0.67	%	922,784		607		0.26	%	1,196,187		775		0.26	%
Wholesale/brokered certificates of deposit	702,785		3,827		2.16	%	80,182		326		1.63	%	—		—		—	%
Total interest-bearing deposits	10,839,359		9,873		0.36	%	10,722,522		2,682		0.10	%	10,536,091		2,432		0.09	%
FHLB advances and other borrowings	636,006		3,480		2.17	%	602,621		3,217		2.14	%	1,670		1		0.24	%
Subordinated debentures	330,975		4,560		5.51	%	330,796		4,562		5.52	%	330,575		4,545		5.50	%
Total borrowings	966,981		8,040		3.31	%	933,417		7,779		3.34	%	332,245		4,546		5.43	%
Total interest-bearing liabilities	11,806,340		17,913		0.60	%	11,655,939		10,461		0.36	%	10,868,336		6,978		0.25	%
Noninterest-bearing deposits	6,893,463						7,030,205						6,809,211
Other liabilities	212,509						219,116						282,556
Total liabilities	18,912,312						18,905,260						17,960,103
Stockholders’ equity	2,775,124						2,764,893						2,844,800
Total liabilities and equity	$	21,687,436					$	21,670,153					$	20,804,903
Net interest income			$	181,112					$	172,765					$	169,069

Net interest margin (3)					3.61	%					3.49	%					3.51	%
Cost of deposits (4)					0.22	%					0.06	%					0.06	%
Cost of funds (5)					0.38	%					0.22	%					0.16	%
Cost of core deposits (6)					0.11	%					0.04	%					0.04	%
Ratio of interest-earning assets to interest-bearing liabilities					168.80	%					170.53	%					176.03	%

(1) Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees/costs and discounts/premiums, and the basis adjustment of certain loans included in fair value hedging relationships, where applicable.

(2) Interest income includes net discount accretion of $4.6 million, $7.5 million, and $9.4 million, respectively.

(3) Represents annualized net interest income divided by average interest-earning assets.

(4) Represents annualized interest expense on deposits divided by the sum of average interest-bearing deposits and noninterest-bearing deposits.

(5) Represents annualized total interest expense divided by the sum of average total interest-bearing liabilities and noninterest-bearing deposits.

(6) Reconciliation of the “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis.



	Average Balance Sheet
	Nine Months Ended
	September 30, 2022						September 30, 2021
(Dollars in thousands)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
Assets
Interest-earning assets:
Cash and cash equivalents	$	564,727	$	4,055	0.96	%	$	1,096,175	$	811	0.10	%
Investment securities	4,358,619		57,479		1.76	%	4,382,288		54,307		1.65	%
Loans receivable, net (1)(2)	14,756,817		489,263		4.43	%	13,325,683		464,615		4.66	%
Total interest-earning assets	19,680,163		550,797		3.74	%	18,804,146		519,733		3.70	%
Noninterest-earning assets	1,760,640						1,562,016
Total assets	$	21,440,803					$	20,366,162
Liabilities and equity
Interest-bearing deposits:
Interest checking	$	3,802,932	$	2,599	0.09	%	$	3,200,920	$	1,045	0.04	%
Money market	5,208,713		4,838		0.12	%	5,520,919		5,899		0.14	%
Savings	429,833		81		0.03	%	384,945		224		0.08	%
Retail certificates of deposit	934,518		2,557		0.37	%	1,304,436		2,815		0.29	%
Wholesale/brokered certificates of deposit	263,563		4,153		2.11	%	39,635		140		0.47	%
Total interest-bearing deposits	10,639,559		14,228		0.18	%	10,450,855		10,123		0.13	%
FHLB advances and other borrowings	489,464		7,171		1.96	%	9,921		66		0.89	%
Subordinated debentures	330,801		13,682		5.51	%	436,888		17,889		5.46	%
Total borrowings	820,265		20,853		3.39	%	446,809		17,955		5.37	%
Total interest-bearing liabilities	11,459,824		35,081		0.41	%	10,897,664		28,078		0.34	%
Noninterest-bearing deposits	6,950,717						6,397,703
Other liabilities	229,121						289,863
Total liabilities	18,639,662						17,585,230
Stockholders’ equity	2,801,141						2,780,932
Total liabilities and equity	$	21,440,803					$	20,366,162
Net interest income			$	515,716					$	491,655

Net interest margin (3)					3.50	%					3.50	%
Cost of deposits (4)					0.11	%					0.08	%
Cost of funds (5)					0.25	%					0.22	%
Cost of core deposits (6)					0.06	%					0.06	%
Ratio of interest-earning assets to interest-bearing liabilities					171.73	%					172.55	%

_____________________________

(2) Interest income includes net discount accretion of $18.1 million and $28.8 million, respectively.

(3) Represents net interest income divided by average interest-earning assets.

(4) Represents annualized interest expense on deposits divided by the sum of average interest-bearing deposits and noninterest-bearing deposits.

(5) Represents annualized total interest expense divided by the sum of average total interest-bearing liabilities and noninterest-bearing deposits.

(6) Reconciliation of the “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis.

Changes in our net interest income are a ~~non-recurring basis, such as collateral dependent loans~~function of changes in volume, days in a period, and rates of interest-earning assets and interest-bearing liabilities. The following tables present the impact that ~~are~~the volume, days in a period, and rate changes have had on our net interest income for the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, we have provided information on changes to our net interest income with respect to:

•Changes in volume (changes in volume multiplied by prior rate);

•Changes in days in a period (changes in days in a period multiplied by daily interest; no changes in days for comparisons of the three and nine months ended September 30, 2022 to the three and nine months ended September 30, 2021);

•Changes in interest rates (changes in interest rates multiplied by prior volume and includes the recognition of discounts/premiums and deferred fees/costs); and

•The net change or the combined impact of volume, days in a period, and rate changes allocated proportionately to changes in volume, days in a period, and changes in interest rates.


	Three Months Ended September 30, 2022
	Compared to
	Three Months Ended June 30, 2022
	Increase (Decrease) Due to
(Dollars in thousands)	Volume		Days		Rate		Net
Interest-earning assets
Cash and cash equivalents	$	(61)	$	30	$	1,574	$	1,543
Investment securities	93		—		4,414		4,507
Loans receivable, net	746		1,894		7,109		9,749
Total interest-earning assets	778		1,924		13,097		15,799
Interest-bearing liabilities
Interest checking	(40)		18		968		946
Money market	(33)		32		1,931		1,930
Savings	—		—		1		1
Retail certificates of deposit	(52)		15		850		813
Wholesale/brokered certificates of deposit	3,320		42		139		3,501
FHLB advances and other borrowings	180		38		45		263
Subordinated debentures	2		—		(4)		(2)
Total interest-bearing liabilities	3,377		145		3,930		7,452
Increase (decrease) in net interest income	$	(2,599)	$	1,779	$	9,167	$	8,347


	Three Months Ended September 30, 2022
	Compared to
	Three Months Ended September 30, 2021
	Increase (Decrease) Due to
(Dollars in thousands)	Volume		Rate		Net
Interest-earning assets
Cash and cash equivalents	$	1	$	2,558	$	2,559
Investment securities	(1,728)		4,968		3,240
Loans receivable, net	15,399		1,780		17,179
Total interest-earning assets	13,672		9,306		22,978
Interest-bearing liabilities
Interest checking	41		1,327		1,368
Money market	(106)		1,737		1,631
Savings	6		(36)		(30)
Retail certificates of deposit	(147)		792		645
Wholesale/brokered certificates of deposit	3,827		—		3,827
FHLB advances and other borrowings	3,409		70		3,479
Subordinated debentures	5		10		15
Total interest-bearing liabilities	7,035		3,900		10,935
Increase in net interest income	$	6,637	$	5,406	$	12,043



	Nine Months Ended September 30, 2022
	Compared to
	Nine Months Ended September 30, 2021
	Increase (Decrease) Due to
(Dollars in thousands)	Volume		Rate		Net
Interest-earning assets
Cash and cash equivalents	$	(188)	$	3,432	$	3,244
Investment securities	(291)		3,463		3,172
Loans receivable, net	48,675		(24,027)		24,648
Total interest-earning assets	48,196		(17,132)		31,064
Interest-bearing liabilities
Interest checking	228		1,326		1,554
Money market	(321)		(740)		(1,061)
Savings	30		(173)		(143)
Retail certificates of deposit	(905)		647		(258)
Wholesale/brokered certificates of deposit	2,488		1,525		4,013
FHLB advances and other borrowings	6,949		156		7,105
Subordinated debentures	(4,486)		279		(4,207)
Total interest-bearing liabilities	3,983		3,020		7,003
Increase (decrease) in net interest income	$	44,213	$	(20,152)	$	24,061

Provision for Credit Losses

For the third quarter of 2022, the Company recorded a $1.1 million provision expense for credit losses, compared to a $469,000 provision expense during the second quarter of 2022, and a $19.7 million provision recapture during the third quarter of 2021. The provision expense during the third quarter of 2022 was reflective of a combination of factors, including increases due to specific reserves on two individually evaluated loans and ~~OREO. These non-recurring fair value adjustments typically involve~~higher unfunded commitments in the ~~application of lower of cost or fair value accounting or write-downs of individual assets. Please also see~~ ~~Note 11 -Fair Value of Financial Instruments~~commercial and industrial loan segment, partially offset by an overall decrease in loans held for investment and changes in the composition of the ~~consolidated financial statements~~loan portfolio. With the increasing probability of downside risks due to high inflation, rising interest rates, higher energy prices, volatility observed in equity markets, and the ongoing supply chain challenges, we are carefully monitoring the current and forecasted macroeconomic environment as well as key modeling variables.

The provision expense for ~~more information about~~ the ~~extent to which fair value is used to measure assets~~second quarter of 2022 was driven principally by loan growth and ~~liabilities, the valuation methodologies used, and its impact to earnings,~~net charge-offs, as well as the ~~estimated fair~~impact of macroeconomic forecasts, partially offset by a recapture for unfunded commitments which was largely due to favorable changes in the unfunded lending segment mix. The provision recapture for the third quarter of 2021 was primarily due to improved macroeconomic forecasts used in the Company’s ACL model relative to prior periods.

Net loan charge-offs for the three months ended September 30, 2022 totaled $1.1 million, compared with net loan charge-offs of $5.2 million for the three months ended June 30, 2022, and net loan charge-offs of $1.8 million for the three months ending September 30, 2021.


	Three Months Ended						Variance From
	September 30,		June 30,		September 30,		June 30, 2022				September 30, 2021
(Dollars in thousands)	2022		2022		2021		$		%		$		%
Provision for credit losses
Provision for loan losses	$	546	$	3,803	$	(19,543)	$	(3,257)	(85.6)	%	$	20,089	(102.8)	%
Provision for unfunded commitments	549		(3,402)		(194)		3,951		(116.1)	%	743		(383.0)	%

Provision for HTM securities	(18)		68		11		(86)		(126.5)	%	(29)		(263.6)	%
Total provision for credit losses	$	1,077	$	469	$	(19,726)	$	608	129.6	%	$	20,803	(105.5)	%

For the first nine months of 2022, the Company recorded a $2.0 million provision expense for credit losses, compared to a $56.2 million provision recapture recorded for the first nine months of 2021. The provision expense for the first nine months of 2022 was driven principally by loan growth and specific reserves on two individually evaluated loans, partially offset by a provision recapture for unfunded commitments, as well as the favorable impact of macroeconomic forecasts. The provision recapture for unfunded commitments was largely due to changes in the mix of unfunded commitments between various loan segments. The provision recapture for the first nine months of 2021 was reflective of improved macroeconomic forecasts used in the Company’s ACL model relative to prior periods, partially offset by loan growth and net charge-offs.



	Nine Months Ended				Variance From
	September 30,		September 30,		September 30, 2021
(Dollars in thousands)	2022		2021		$		%
Provision for credit losses
Provision for loans and lease losses	$	4,560	$	(52,359)	$	56,919	(108.7)	%
Provision for unfunded commitments	(2,635)		(3,880)		1,245		(32.1)	%

Provision for held-to-maturity securities	69		11		58		527.3	%
Total provision for credit losses	$	1,994	$	(56,228)	$	58,222	(103.5)	%

Noninterest Income

The following table presents the components of noninterest income for the periods indicated:


	Three Months Ended						Variance From
	September 30,		June 30,		September 30,		June 30, 2022				September 30, 2021
(Dollars in thousands)	2022		2022		2021		$		%		$		%
Noninterest income
Loan servicing income	$	397	$	502	$	536	$	(105)	(20.9)	%	$	(139)	(25.9)	%
Service charges on deposit accounts	2,704		2,690		2,375		14		0.5	%	329		13.9	%
Other service fee income	323		366		350		(43)		(11.7)	%	(27)		(7.7)	%
Debit card interchange fee income	808		936		834		(128)		(13.7)	%	(26)		(3.1)	%
Earnings on bank owned life insurance	3,339		3,240		3,266		99		3.1	%	73		2.2	%
Net gain from sales of loans	457		1,136		1,187		(679)		(59.8)	%	(730)		(61.5)	%
Net (loss) gain from sales of investment securities	(393)		(31)		4,190		(362)		1167.7	%	(4,583)		(109.4)	%



Trust custodial account fees	9,951		10,354		11,446		(403)		(3.9)	%	(1,495)		(13.1)	%
Escrow and exchange fees	1,555		1,827		1,867		(272)		(14.9)	%	(312)		(16.7)	%
Other income	1,023		1,173		4,049		(150)		(12.8)	%	(3,026)		(74.7)	%
Total noninterest income	$	20,164	$	22,193	$	30,100	$	(2,029)	(9.1)	%	$	(9,936)	(33.0)	%


	Nine Months Ended				Variance From
	September 30,		September 30,		September 30, 2021
(Dollars in thousands)	2022		2021		$		%
Noninterest income
Loan servicing income	$	1,318	$	1,616	$	(298)	(18.4)	%
Service charges on deposit accounts	8,009		6,629		1,380		20.8��	%
Other service fee income	1,056		1,175		(119)		(10.1)	%
Debit card interchange fee income	2,580		2,720		(140)		(5.1)	%
Earnings on bank owned life insurance	9,800		7,778		2,022		26.0	%
Net gain from sales of loans	3,087		3,094		(7)		(0.2)	%
Net gain from sales of investment securities	1,710		13,321		(11,611)		(87.2)	%



Trust custodial account fees	31,884		26,565		5,319		20.0	%
Escrow and exchange fees	5,043		5,065		(22)		(0.4)	%
Other income	3,764		12,606		(8,842)		(70.1)	%
Total noninterest income	$	68,251	$	80,569	$	(12,318)	(15.3)	%

Noninterest income for the third quarter of 2022 was $20.2 million, a decrease of $2.0 million, or 9.1%, from the second quarter of 2022. The decrease was primarily due to a $679,000 decrease in net gain from sales of loans, a $403,000 decrease in trust custodial account fees resulting primarily from a decrease in the market value ~~disclosures~~of custodial assets, and a $362,000 greater net loss from sales of investment securities.

During the third quarter of 2022, the Bank sold $9.6 million of SBA loans for ~~financial instruments not recorded at fair value.~~a net gain of $434,000 and $15.0 million of other loans for a net gain of $23,000, compared to the sales of $23.4 million of SBA loans and U.S. Department of Agriculture (“USDA”) loans for a net gain of $1.1 million in the second quarter of 2022. The SBA business has slowed in the third quarter in connection with the higher interest rates.

Additionally, during the third quarter of 2022, the Bank sold $231.1 million of investment securities for a net loss of $393,000, compared to the sales of $45.1 million of investment securities for a net loss of $31,000 in the second quarter of 2022. See “Financial Condition - Investment Securities” for a discussion of the actions the Bank took to reduce the size and duration of its AFS securities which increased the Bank’s asset sensitivity.

Noninterest income for the third quarter of 2022 decreased $9.9 million, or 33.0%, compared to the third quarter of 2021. The decrease was primarily due to a $4.6 million decrease in net gain from sales of investment securities, a $3.0 million decrease in other income, primarily due to lower CRA investment income and the gain from debt extinguishment in the same period last year, a $1.5 million decrease in trust custodial account fees resulting primarily from a decrease in the market value of custodial assets, and a $730,000 decrease in net gain from sales of loans.

The net loss from sales of investment securities of $393,000 for the third quarter of 2022 from the sales of $231.1 million of investment securities reflected the negative impact on the values of AFS investment securities from the rising interest rate environment, compared to sales of $161.6 million of investment securities for a net gain of $4.2 million during the third quarter of 2021.

The net gain from sales of loans for the third quarter of 2022 decreased from the same period last year reflecting lower net gain from the sales of $9.6 million of SBA and USDA loans for a net gain of $434,000, compared with the sales of $12.0 million of SBA loans for a net gain of $1.2 million during the third quarter of 2021.

For the first nine months of 2022, noninterest income totaled $68.3 million, a decrease of $12.3 million, or 15.3%, compared to the first nine months of 2021. The decrease was primarily related to a $11.6 million decrease in net gain from sales of investment securities and a $8.8 million decrease in other income, primarily due to $5.8 million lower CRA investment income and $2.9 million of SBA Paycheck Protection Program loan referral fees in the same period last year, partially offset by a $5.3 million increase in trust custodial account fees, a $2.0 million increase in earnings from bank owned life insurance (“BOLI”), and a $1.4 million increase in service charges on deposit accounts.

Noninterest Expense

The following table presents the components of noninterest expense for the periods indicated:


	Three Months Ended						Variance From
	September 30,		June 30,		September 30,		June 30, 2022				September 30, 2021
(Dollars in thousands)	2022		2022		2021		$		%		$		%
Noninterest expense
Compensation and benefits	$	56,355	$	57,562	$	53,592	$	(1,207)	(2.1)	%	$	2,763	5.2	%
Premises and occupancy	12,011		11,829		12,611		182		1.5	%	(600)		(4.8)	%
Data processing	7,058		6,604		6,296		454		6.9	%	762		12.1	%

FDIC insurance premiums	1,461		1,452		1,392		9		0.6	%	69		5.0	%
Legal and professional services	4,075		4,629		4,563		(554)		(12.0)	%	(488)		(10.7)	%
Marketing expense	1,912		1,926		2,008		(14)		(0.7)	%	(96)		(4.8)	%
Office expense	1,338		1,252		1,076		86		6.9	%	262		24.3	%
Loan expense	789		1,144		1,332		(355)		(31.0)	%	(543)		(40.8)	%
Deposit expense	4,846		4,081		3,974		765		18.7	%	872		21.9	%

Amortization of intangible assets	3,472		3,479		3,912		(7)		(0.2)	%	(440)		(11.2)	%
Other expense	7,549		5,016		5,284		2,533		50.5	%	2,265		42.9	%
Total noninterest expense	$	100,866	$	98,974	$	96,040	$	1,892	1.9	%	$	4,826	5.0	%



	Nine Months Ended				Variance From
	September 30,		September 30,		September 30, 2021
(Dollars in thousands)	2022		2021		$		%
Noninterest expense
Compensation and benefits	$	170,898	$	159,614	$	11,284	7.1	%
Premises and occupancy	35,792		36,831		(1,039)		(2.8)	%
Data processing	19,658		17,889		1,769		9.9	%

FDIC insurance premiums	4,309		3,885		424		10.9	%
Legal and professional services	12,772		12,684		88		0.7	%
Marketing expense	5,647		5,096		551		10.8	%
Office expense	3,793		4,494		(701)		(15.6)	%
Loan expense	3,067		3,612		(545)		(15.1)	%
Deposit expense	12,678		11,818		860		7.3	%
Merger-related expense	—		5		(5)		(100.0)	%
Amortization of intangible assets	10,543		12,056		(1,513)		(12.5)	%
Other expense	18,331		15,041		3,290		21.9	%
Total noninterest expense	$	297,488	$	283,025	$	14,463	5.1	%

Noninterest expense totaled $100.9 million for the third quarter of 2022, an increase of $1.9 million compared to the second quarter of 2022, primarily due to a $2.5 million increase in other expense, largely attributable to a client's unauthorized transaction incident for which the Bank provided a $1.9 million provisional credit pending its pursuit of insurance coverage, and a $765,000 increase in deposit expense, partially offset by a $1.2 million decrease in compensation and benefits as overall staffing decreased.

Noninterest expense increased by $4.8 million compared to the third quarter of 2021. The increase was primarily due to a $2.8 million increase in compensation and benefits attributable to higher compensation due to meritincreasesandhigherstockcompensationexpense as well as a $2.3 million increase in other expense due to a client's unauthorized transaction incident referenced above.

The Company’s efficiency ratio was 48.3% for the third quarter of 2022, compared to 49.0% for the second quarter of 2022, and 47.5% for the third quarter of 2021.

Noninterest expense totaled $297.5 million for the first nine months of 2022, an increase of $14.5 million, or 5.1%, compared with the first nine months of 2021. The increase was driven primarily by an $11.3 million increase in compensation and benefits attributable to higher compensation from increased staffing and higher stock compensation expense, a $3.3 million increase in other expense, a $1.8 million increase in data processing, and an $860,000 increase in deposit expense, partially offset by a $1.5 million decrease in amortization of intangible assets, a $1.0 million decrease in premises and occupancy, and a $701,000 decrease in office expense.

The Company’s efficiency ratio was 49.3% for the first nine months of 2022, compared to 48.5% for the first nine months of 2021.

Net Interest Income ~~Taxes~~

~~Deferred tax~~Net interest income totaled $181.1 million in the third quarter of 2022, an increase of $8.3 million, or 4.8%, from the second quarter of 2022. The increase in net interest income was primarily attributable to higher yields on average interest-earning assets and ~~liabilities are recorded for the expected future tax consequences~~slightly higher average loan balances, a favorable interest impact from fair value hedges on fixed-rate loans of events that have been recognized in the Company’s financial statements or tax returns using the asset liability method. In estimating future tax consequences, all expected future events other than enactments$4.2 million, as well as one more day of ~~changes in tax laws or tax rates are considered. The effect on deferred taxes~~interest, partially offset by higher cost of funds and lower loan-related fees and accretion income as a ~~change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are to be recognized for temporary differences that will~~ result ~~in deductible amounts in future years and for tax carryforwards if, in the opinion~~ of ~~management, it is more likely than not that the deferred tax assets will be realized.~~decreased prepayment activity.

The net interest margin for the third quarter of 2022 increased 12 basis points to 3.61%, from 3.49% in the prior quarter. The core net interest margin, which excludes the impact of loan accretion income, certificates of deposit mark-to-market amortization, interest impact from fair value hedge, and other adjustments, increased 11 basis points to 3.44%, compared to 3.33% in the prior quarter, reflecting higher yields on interest-earning assets and a favorable remix of earning-assets towards higher yielding loans, partially offset by higher cost of funds and lower loan prepayment fees. For additional details of the core net interest margin, see “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis.

Net interest income for the third quarter of 2022 increased $12.0 million, or 7.1%, compared to the third quarter of 2021. The increase was attributable to higher yields on average interest-earning assets and higher average loan balances, as well as a favorable impact from fair value hedges on fixed-rate loans, partially offset by higher cost of funds and lower loan-related fees and accretion income as a result of decreased prepayment activity.

For the nine months ended 2022, net interest income increased $24.1 million, or 4.9%, compared to the nine months ended 2021. The increase was related to an increase in average interest-earning assets, partially offset by lower average loan yields, higher average interest-bearing liabilities, and higher cost of funds. For the nine months ended 2022, the net interest margin was 3.50%, unchanged from the same period last year. The core net interest margin, which excludes the impact of loan accretion income, certificates of deposit mark-to-market amortization, interest impact from fair value hedge, and other adjustments, was 3.37%, compared with 3.28% for the same period last year, reflecting higher average interest-earning assets balance. For additional details of the core net interest margin, see “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis.

9578

The following table presents the net interest margin, average balances calculated based on daily average, interest income and yields earned on average interest-earning assets and interest expense and rates paid on average interest-bearing liabilities, and the average yield/rate by asset and liability component for the periods indicated:


	Average Balance Sheet
	Three Months Ended
	September 30, 2022						June 30, 2022						September 30, 2021
(Dollars in thousands)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
Assets
Interest-earning assets:
Cash and cash equivalents	$	665,510	$	2,754	1.64	%	$	702,663	$	1,211	0.69	%	$	663,076	$	195	0.12	%
Investment securities	4,277,444		22,067		2.06	%	4,254,961		17,560		1.65	%	4,807,854		18,827		1.57	%
Loans receivable, net (1)(2)	14,986,682		174,204		4.61	%	14,919,182		164,455		4.42	%	13,660,242		157,025		4.56	%
Total interest-earning assets	19,929,636		199,025		3.96	%	19,876,806		183,226		3.70	%	19,131,172		176,047		3.65	%
Noninterest-earning assets	1,757,800						1,793,347						1,673,731
Total assets	$	21,687,436					$	21,670,153					$	20,804,903
Liabilities and equity
Interest-bearing deposits:
Interest checking	$	3,812,448	$	1,658	0.17	%	$	4,055,506	$	712	0.07	%	$	3,383,219	$	290	0.03	%
Money market	5,053,890		2,940		0.23	%	5,231,464		1,010		0.08	%	5,554,881		1,309		0.09	%
Savings	434,591		28		0.03	%	432,586		27		0.03	%	401,804		58		0.06	%
Retail certificates of deposit	835,645		1,420		0.67	%	922,784		607		0.26	%	1,196,187		775		0.26	%
Wholesale/brokered certificates of deposit	702,785		3,827		2.16	%	80,182		326		1.63	%	—		—		—	%
Total interest-bearing deposits	10,839,359		9,873		0.36	%	10,722,522		2,682		0.10	%	10,536,091		2,432		0.09	%
FHLB advances and other borrowings	636,006		3,480		2.17	%	602,621		3,217		2.14	%	1,670		1		0.24	%
Subordinated debentures	330,975		4,560		5.51	%	330,796		4,562		5.52	%	330,575		4,545		5.50	%
Total borrowings	966,981		8,040		3.31	%	933,417		7,779		3.34	%	332,245		4,546		5.43	%
Total interest-bearing liabilities	11,806,340		17,913		0.60	%	11,655,939		10,461		0.36	%	10,868,336		6,978		0.25	%
Noninterest-bearing deposits	6,893,463						7,030,205						6,809,211
Other liabilities	212,509						219,116						282,556
Total liabilities	18,912,312						18,905,260						17,960,103
Stockholders’ equity	2,775,124						2,764,893						2,844,800
Total liabilities and equity	$	21,687,436					$	21,670,153					$	20,804,903
Net interest income			$	181,112					$	172,765					$	169,069

Net interest margin (3)					3.61	%					3.49	%					3.51	%
Cost of deposits (4)					0.22	%					0.06	%					0.06	%
Cost of funds (5)					0.38	%					0.22	%					0.16	%
Cost of core deposits (6)					0.11	%					0.04	%					0.04	%
Ratio of interest-earning assets to interest-bearing liabilities					168.80	%					170.53	%					176.03	%

(2) Interest income includes net discount accretion of $4.6 million, $7.5 million, and $9.4 million, respectively.

(3) Represents annualized net interest income divided by average interest-earning assets.

(4) Represents annualized interest expense on deposits divided by the sum of average interest-bearing deposits and noninterest-bearing deposits.

(5) Represents annualized total interest expense divided by the sum of average total interest-bearing liabilities and noninterest-bearing deposits.

(6) Reconciliation of the “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis.



	Average Balance Sheet
	Nine Months Ended
	September 30, 2022						September 30, 2021
(Dollars in thousands)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
Assets
Interest-earning assets:
Cash and cash equivalents	$	564,727	$	4,055	0.96	%	$	1,096,175	$	811	0.10	%
Investment securities	4,358,619		57,479		1.76	%	4,382,288		54,307		1.65	%
Loans receivable, net (1)(2)	14,756,817		489,263		4.43	%	13,325,683		464,615		4.66	%
Total interest-earning assets	19,680,163		550,797		3.74	%	18,804,146		519,733		3.70	%
Noninterest-earning assets	1,760,640						1,562,016
Total assets	$	21,440,803					$	20,366,162
Liabilities and equity
Interest-bearing deposits:
Interest checking	$	3,802,932	$	2,599	0.09	%	$	3,200,920	$	1,045	0.04	%
Money market	5,208,713		4,838		0.12	%	5,520,919		5,899		0.14	%
Savings	429,833		81		0.03	%	384,945		224		0.08	%
Retail certificates of deposit	934,518		2,557		0.37	%	1,304,436		2,815		0.29	%
Wholesale/brokered certificates of deposit	263,563		4,153		2.11	%	39,635		140		0.47	%
Total interest-bearing deposits	10,639,559		14,228		0.18	%	10,450,855		10,123		0.13	%
FHLB advances and other borrowings	489,464		7,171		1.96	%	9,921		66		0.89	%
Subordinated debentures	330,801		13,682		5.51	%	436,888		17,889		5.46	%
Total borrowings	820,265		20,853		3.39	%	446,809		17,955		5.37	%
Total interest-bearing liabilities	11,459,824		35,081		0.41	%	10,897,664		28,078		0.34	%
Noninterest-bearing deposits	6,950,717						6,397,703
Other liabilities	229,121						289,863
Total liabilities	18,639,662						17,585,230
Stockholders’ equity	2,801,141						2,780,932
Total liabilities and equity	$	21,440,803					$	20,366,162
Net interest income			$	515,716					$	491,655

Net interest margin (3)					3.50	%					3.50	%
Cost of deposits (4)					0.11	%					0.08	%
Cost of funds (5)					0.25	%					0.22	%
Cost of core deposits (6)					0.06	%					0.06	%
Ratio of interest-earning assets to interest-bearing liabilities					171.73	%					172.55	%

_____________________________

(2) Interest income includes net discount accretion of $18.1 million and $28.8 million, respectively.

(3) Represents net interest income divided by average interest-earning assets.

(4) Represents annualized interest expense on deposits divided by the sum of average interest-bearing deposits and noninterest-bearing deposits.

(5) Represents annualized total interest expense divided by the sum of average total interest-bearing liabilities and noninterest-bearing deposits.

(6) Reconciliation of the “Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis.

Changes in our net interest income are a function of changes in volume, days in a period, and rates of interest-earning assets and interest-bearing liabilities. The following tables present the impact that the volume, days in a period, and rate changes have had on our net interest income for the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, we have provided information on changes to our net interest income with respect to:

•Changes in volume (changes in volume multiplied by prior rate);

•Changes in interest rates (changes in interest rates multiplied by prior volume and includes the recognition of discounts/premiums and deferred fees/costs); and

•The net change or the combined impact of volume, days in a period, and rate changes allocated proportionately to changes in volume, days in a period, and changes in interest rates.


	Three Months Ended September 30, 2022
	Compared to
	Three Months Ended June 30, 2022
	Increase (Decrease) Due to
(Dollars in thousands)	Volume		Days		Rate		Net
Interest-earning assets
Cash and cash equivalents	$	(61)	$	30	$	1,574	$	1,543
Investment securities	93		—		4,414		4,507
Loans receivable, net	746		1,894		7,109		9,749
Total interest-earning assets	778		1,924		13,097		15,799
Interest-bearing liabilities
Interest checking	(40)		18		968		946
Money market	(33)		32		1,931		1,930
Savings	—		—		1		1
Retail certificates of deposit	(52)		15		850		813
Wholesale/brokered certificates of deposit	3,320		42		139		3,501
FHLB advances and other borrowings	180		38		45		263
Subordinated debentures	2		—		(4)		(2)
Total interest-bearing liabilities	3,377		145		3,930		7,452
Increase (decrease) in net interest income	$	(2,599)	$	1,779	$	9,167	$	8,347


	Three Months Ended September 30, 2022
	Compared to
	Three Months Ended September 30, 2021
	Increase (Decrease) Due to
(Dollars in thousands)	Volume		Rate		Net
Interest-earning assets
Cash and cash equivalents	$	1	$	2,558	$	2,559
Investment securities	(1,728)		4,968		3,240
Loans receivable, net	15,399		1,780		17,179
Total interest-earning assets	13,672		9,306		22,978
Interest-bearing liabilities
Interest checking	41		1,327		1,368
Money market	(106)		1,737		1,631
Savings	6		(36)		(30)
Retail certificates of deposit	(147)		792		645
Wholesale/brokered certificates of deposit	3,827		—		3,827
FHLB advances and other borrowings	3,409		70		3,479
Subordinated debentures	5		10		15
Total interest-bearing liabilities	7,035		3,900		10,935
Increase in net interest income	$	6,637	$	5,406	$	12,043



	Nine Months Ended September 30, 2022
	Compared to
	Nine Months Ended September 30, 2021
	Increase (Decrease) Due to
(Dollars in thousands)	Volume		Rate		Net
Interest-earning assets
Cash and cash equivalents	$	(188)	$	3,432	$	3,244
Investment securities	(291)		3,463		3,172
Loans receivable, net	48,675		(24,027)		24,648
Total interest-earning assets	48,196		(17,132)		31,064
Interest-bearing liabilities
Interest checking	228		1,326		1,554
Money market	(321)		(740)		(1,061)
Savings	30		(173)		(143)
Retail certificates of deposit	(905)		647		(258)
Wholesale/brokered certificates of deposit	2,488		1,525		4,013
FHLB advances and other borrowings	6,949		156		7,105
Subordinated debentures	(4,486)		279		(4,207)
Total interest-bearing liabilities	3,983		3,020		7,003
Increase (decrease) in net interest income	$	44,213	$	(20,152)	$	24,061

Provision for Credit Losses

~~NON-GAAP MEASURES~~For the third quarter of 2022, the Company recorded a $1.1 million provision expense for credit losses, compared to a $469,000 provision expense during the second quarter of 2022, and a $19.7 million provision recapture during the third quarter of 2021. The provision expense during the third quarter of 2022 was reflective of a combination of factors, including increases due to specific reserves on two individually evaluated loans and higher unfunded commitments in the commercial and industrial loan segment, partially offset by an overall decrease in loans held for investment and changes in the composition of the loan portfolio. With the increasing probability of downside risks due to high inflation, rising interest rates, higher energy prices, volatility observed in equity markets, and the ongoing supply chain challenges, we are carefully monitoring the current and forecasted macroeconomic environment as well as key modeling variables.

The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated, and presented in accordance with GAAP. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures and may not be comparable to non-GAAP financial measures that may be presented by other companies.

For periods presented below, return on average tangible common equity is a non-GAAP financial measure derived from GAAP-based amounts. We calculate this figure by excluding amortization of intangible assetsprovision expense from net income and excluding the average intangible assets and average goodwill from the average stockholders’ equity during the period. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.

Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands) 2021 2021 2020 2021 2020
Net income (loss) $ 90,088 $ 96,302 $ 66,566 $ 255,058 $ (6,785)
Plus: amortization of intangible assets expense 3,912 4,001 4,538 12,056 12,567
Less: amortization of intangible assets expense tax adjustment (1)
1,119 1,145 1,301 3,449 3,605
Net income for average tangible common equity $ 92,881 $ 99,158 $ 69,803 $ 263,665 $ 2,177
Average stockholders’ equity $ 2,844,800 $ 2,747,308 $ 2,689,867 $ 2,780,932 $ 2,321,138
Less: average intangible assets 75,795 79,784 92,768 79,812 86,244
Less: average goodwill 901,312 900,582 898,430 900,170 848,675
Average tangible common equity $ 1,867,693 $ 1,766,942 $ 1,698,669 $ 1,800,950 $ 1,386,219
Return on average equity (2)
12.67 % 14.02 % 9.90 % 12.23 % (0.39) %
Return on average tangible common equity (2)
19.89 % 22.45 % 16.44 % 19.52 % 0.21 %

~~(1)~~ ~~Amortization of intangible assets expense adjusted by statutory tax rate.~~

~~(2)~~ ~~Ratio is annualized.~~

Tangible book value per share and tangible common equity to tangible assets (the “tangible common equity ratio”) are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible book value per share by dividing tangible common stockholder’s equity by shares outstanding. We calculate the tangible common equity ratio by excluding the balance of intangible assets from common stockholders’ equity and dividing by period end tangible assets, which also excludes intangible assets. We believe that this information is important to shareholders as tangible equity is a measure that is consistent with the calculation of capital for bank regulatory purposes, which excludes intangible assets from the calculation of risk-based ratios.

September 30, December 31,
(Dollars in thousands) 2021 2020
Total stockholders’ equity $ 2,838,116 $ 2,746,649
Less: intangible assets 974,763 984,076
Tangible common equity $ 1,863,353 $ 1,762,573
Total assets $ 21,005,211 $ 19,736,544
Less: intangible assets 974,763 984,076
Tangible assets $ 20,030,448 $ 18,752,468
Tangible common equity ratio 9.30 % 9.40 %
Common shares issued and outstanding 94,354,211 94,483,136
Book value per share $ 30.08 $ 29.07
Less: intangible book value per share 10.33 10.42
Tangible book value per share $ 19.75 $ 18.65

For periods presented below, efficiency ratio is a non-GAAP financial measure derived from GAAP-based amounts. This figure represents the ratio of noninterest expense less other real estate owned operations, core deposit intangible amortization, and merger-related expense to the sum of net interest income before provision for loan losses and total noninterest income, less gain/(loss) on sale of securities, other income - security recoveries on investment securities, gain/(loss) on sale of other real estate owned, and gain/(loss) from debt extinguishment. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.

`
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands) 2021 2021 2020 2021 2020
Total noninterest expense $ 96,040 $ 94,496 $ 98,579 $ 283,025 $ 281,180
Less: amortization of intangible assets 3,912 4,001 4,538 12,056 12,567
Less: merger-related expense — — 2,988 5 44,058
Less: other real estate owned operations, net — — (17) — 6
Noninterest expense, adjusted $ 92,128 $ 90,495 $ 91,070 $ 270,964 $ 224,549
Net interest income before provision for loan losses $ 169,069 $ 160,934 $ 166,546 $ 491,655 $ 406,013
Add: total noninterest income 30,100 26,729 26,758 80,569 48,131
Less: net gain from investment securities 4,190 5,085 1,141 13,321 8,880
Less: other income - security recoveries 1 6 1 9 1
Less: net gain (loss) from other real estate owned — — 13 — (42)
Less: net gain (loss) from debt extinguishment 970 (647) — (180) —
Revenue, adjusted $ 194,008 $ 183,219 $ 192,149 $ 559,074 $ 445,305
Efficiency ratio 47.5 % 49.4 % 47.4 % 48.5 % 50.4 %

Core net interest income and core net interest margin are non-GAAP financial measures derived from GAAP based amounts. We calculate core net interest income by excluding scheduled accretion income, accelerated accretion income, premium amortization on CDs, and nonrecurring nonaccrual interest paid from net interest income. The core net interest margin is calculated as the ratio of core net interest income to average interest-earning assets. Management believes that the exclusion of such items from these financial measures provides useful information to gain an understanding of the operating results of our core business.

Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands) 2021 2021 2020 2021 2020
Net interest income $ 169,069 $ 160,934 $ 166,546 $ 491,655 $ 406,013
Less: scheduled accretion income 3,339 3,560 6,858 10,777 12,152
Less: accelerated accretion income 6,107 5,927 5,338 18,022 9,997
Less: premium amortization on CDs 390 942 2,968 3,083 4,085
Less: nonrecurring nonaccrual interest paid (74) (216) (275) (893) (417)
Core net interest income $ 159,307 $ 150,721 $ 151,657 $ 460,666 $ 380,196
Less: interest income on SBA PPP loans — — 838 — 6,220
Core net interest income excluding SBA PPP loans $ 159,307 $ 150,721 $ 150,819 $ 460,666 $ 373,976
Average interest-earning assets $ 19,131,172 $ 18,783,803 $ 18,707,605 $ 18,804,146 $ 14,317,164
Less: average SBA PPP loans — — 329,396 — 386,287
Average interest-earning assets excluding SBA PPP loans $ 19,131,172 $ 18,783,803 $ 18,378,209 $ 18,804,146 $ 13,930,877
Net interest margin (1)
3.51 % 3.44 % 3.54 % 3.50 % 3.79 %
Core net interest margin (1)
3.30 % 3.22 % 3.23 % 3.28 % 3.55 %
Core net interest margin excluding SBA PPP loans (1)
3.30 % 3.22 % 3.26 % 3.28 % 3.59 %

~~(1)~~ ~~Ratio is annualized.~~

Pre-provision net revenue is a non-GAAP financial measure derived from GAAP-based amounts. We calculate the pre-provision net revenue by excluding income tax, provision for credit losses, and merger-related expenses from net income. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business and a better comparison to the financial results of prior periods.

Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands) 2021 2021 2020 2021 2020
Interest income $ 176,047 $ 170,692 $ 181,991 $ 519,733 $ 449,902
Interest expense 6,978 9,758 15,445 28,078 43,889
Net interest income 169,069 160,934 166,546 491,655 406,013
Noninterest income 30,100 26,729 26,758 80,569 48,131
Revenue 199,169 187,663 193,304 572,224 454,144
Noninterest expense 96,040 94,496 98,579 283,025 281,180
Add: merger-related expense — — 2,988 5 44,058
Pre-provision net revenue 103,129 93,167 97,713 289,204 217,022
Pre-provision net revenue (annualized) $ 412,516 $ 372,668 $ 390,852 $ 385,605 $ 289,363
Average assets $ 20,804,903 $ 20,290,415 $ 20,366,761 $ 20,366,162 $ 15,728,468
Pre-provision net revenue on average assets 0.50 % 0.46 % 0.48 % 1.42 % 1.38 %
Pre-provision net revenue on average assets (annualized) 1.98 % 1.84 % 1.92 % 1.89 % 1.84 %

~~100~~

~~RESULTS OF OPERATIONS~~

~~The following table presents the components of results of operations, share data, and performance ratios for the periods indicated:~~

Three Months Ended Nine Months Ended
(Dollar in thousands, except per share data and September 30, June 30, September 30, September 30, September 30,
percentages) 2021 2021 2020 2021 2020
Operating data
Interest income $ 176,047 $ 170,692 $ 181,991 $ 519,733 $ 449,902
Interest expense 6,978 9,758 15,445 28,078 43,889
Net interest income 169,069 160,934 166,546 491,655 406,013
Provision for credit losses (19,726) (38,476) 4,210 (56,228) 190,299
Net interest income after provision for credit losses 188,795 199,410 162,336 547,883 215,714
Net gain from sales of loans 1,187 1,546 9,542 3,094 8,281
Other noninterest income 28,913 25,183 17,216 77,475 39,850
Noninterest expense 96,040 94,496 98,579 283,025 281,180
Net income (loss) before income taxes 122,855 131,643 90,515 345,427 (17,335)
Income tax expense (benefit) 32,767 35,341 23,949 90,369 (10,550)
Net income (loss) $ 90,088 $ 96,302 $ 66,566 $ 255,058 $ (6,785)
Pre-provision net revenue (3)
$ 103,129 $ 93,167 $ 97,713 $ 289,204 $ 217,022
Share data
Earnings (loss) per share:
Basic $ 0.95 $ 1.02 $ 0.71 $ 2.70 $ (0.10)
Diluted 0.95 1.01 0.70 2.68 (0.10)
Common equity dividends declared per share 0.33 0.33 0.25 0.96 0.75
Dividend payout ratio (1)
34.63 % 32.43 % 35.45 % 35.59 % (759.20) %
Performance ratios
Return on average assets (2)
1.73 % 1.90 % 1.31 % 1.67 % (0.06) %
Return on average equity (2)
12.67 14.02 9.90 12.23 (0.39)
Return on average tangible common equity (2)(3)
19.89 22.45 16.44 19.52 0.21
Pre-provision net revenue on average assets (2)(3)
1.98 1.84 1.92 1.89 1.84
Average equity to average assets 13.67 13.54 13.21 13.65 14.76
Efficiency ratio (3)
47.5 49.4 47.4 48.5 50.4

~~(1)~~ ~~Dividend payout ratio is defined as common equity dividends declared per share divided by basic earnings per share.~~

~~(2)~~ ~~Ratio is annualized.~~

~~(3)~~ A reconciliation of the non-GAAP measures are set forth in the Non-GAAP Measures section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q.

~~101~~

~~In the third quarter of 2021, we reported net income of $90.1 million, or $0.95 per diluted share. This compares with net income of $96.3 million, or $1.01 per diluted share,~~ for the second quarter of ~~2021. The decrease in~~2022 was driven principally by loan growth and net ~~income was primarily due to $18.8 million lower recapture~~charge-offs, as well as the impact of ~~provision for credit losses and an increase of $1.5 million in noninterest expense,~~macroeconomic forecasts, partially offset by ~~an increase of $8.1 million~~a recapture for unfunded commitments which was largely due to favorable changes in ~~net interest income, a $3.4 million increase in noninterest income, and a decrease of $2.6 million in income tax expense.~~the unfunded lending segment mix. The provision recaptures during the second and third quarters of 2021 were reflective of improving economic forecasts used in the Company’s CECL model relative to prior periods and the favorable asset quality profile of the loan portfolio, partially offset by an increase in loans heldrecapture for ~~investment.~~

Net income of $90.1 million, or $0.95 per diluted share, for the third quarter of 2021 compares to a net income for the third quarter of 2020 of $66.6 million, or $0.70 per diluted share. The increase in net income was primarily due to a $23.9 million decrease in provision for credit losses, a $3.3 million increase in noninterest income, a $3.0 million decrease in merger-related expense, and a $2.5 million increase in net interest income, partially offset by an increase of $8.8 million in income tax expense and a $449,000 increase in noninterest expense excluding merger-related expenses. The decrease in the provision for credit losses during the third quarter of 2021 was primarily due to improved ~~economic~~macroeconomic forecasts used in the Company’s ~~CECL~~ACL model relative to prior ~~periods and the favorable asset quality profile of the loan portfolio.~~periods.

~~For~~Net loan charge-offs for the three months ended September 30, ~~2021, the Company’s return on average assets was 1.73%, return on average equity was 12.67%, and return on average tangible common equity was 19.89%. For~~2022 totaled $1.1 million, compared with net loan charge-offs of $5.2 million for the three months ended June 30, ~~2021, the return on average assets was 1.90%, the return on average equity was 14.02%,~~2022, and ~~the return on average tangible common equity was 22.45%. For~~net loan charge-offs of $1.8 million for the three months ~~ended~~ending September 30, ~~2020, the return on average assets was 1.31%, the return on average equity was 9.90%, and the return on average tangible common equity was 16.44%.~~2021.


	Three Months Ended						Variance From
	September 30,		June 30,		September 30,		June 30, 2022				September 30, 2021
(Dollars in thousands)	2022		2022		2021		$		%		$		%
Provision for credit losses
Provision for loan losses	$	546	$	3,803	$	(19,543)	$	(3,257)	(85.6)	%	$	20,089	(102.8)	%
Provision for unfunded commitments	549		(3,402)		(194)		3,951		(116.1)	%	743		(383.0)	%

Provision for HTM securities	(18)		68		11		(86)		(126.5)	%	(29)		(263.6)	%
Total provision for credit losses	$	1,077	$	469	$	(19,726)	$	608	129.6	%	$	20,803	(105.5)	%

For the first nine months ~~ended September 30, 2021,~~of 2022, the Company recorded a $2.0 million provision expense for credit losses, compared to a $56.2 million provision recapture recorded for the first nine months of 2021. The provision expense for the first nine months of 2022 was driven principally by loan growth and specific reserves on two individually evaluated loans, partially offset by a provision recapture for unfunded commitments, as well as the favorable impact of macroeconomic forecasts. The provision recapture for unfunded commitments was largely due to changes in the mix of unfunded commitments between various loan segments. The provision recapture for the first nine months of 2021 was reflective of improved macroeconomic forecasts used in the Company’s ACL model relative to prior periods, partially offset by loan growth and net charge-offs.



	Nine Months Ended				Variance From
	September 30,		September 30,		September 30, 2021
(Dollars in thousands)	2022		2021		$		%
Provision for credit losses
Provision for loans and lease losses	$	4,560	$	(52,359)	$	56,919	(108.7)	%
Provision for unfunded commitments	(2,635)		(3,880)		1,245		(32.1)	%

Provision for held-to-maturity securities	69		11		58		527.3	%
Total provision for credit losses	$	1,994	$	(56,228)	$	58,222	(103.5)	%

Noninterest Income

The following table presents the components of noninterest income for the periods indicated:


	Three Months Ended						Variance From
	September 30,		June 30,		September 30,		June 30, 2022				September 30, 2021
(Dollars in thousands)	2022		2022		2021		$		%		$		%
Noninterest income
Loan servicing income	$	397	$	502	$	536	$	(105)	(20.9)	%	$	(139)	(25.9)	%
Service charges on deposit accounts	2,704		2,690		2,375		14		0.5	%	329		13.9	%
Other service fee income	323		366		350		(43)		(11.7)	%	(27)		(7.7)	%
Debit card interchange fee income	808		936		834		(128)		(13.7)	%	(26)		(3.1)	%
Earnings on bank owned life insurance	3,339		3,240		3,266		99		3.1	%	73		2.2	%
Net gain from sales of loans	457		1,136		1,187		(679)		(59.8)	%	(730)		(61.5)	%
Net (loss) gain from sales of investment securities	(393)		(31)		4,190		(362)		1167.7	%	(4,583)		(109.4)	%



Trust custodial account fees	9,951		10,354		11,446		(403)		(3.9)	%	(1,495)		(13.1)	%
Escrow and exchange fees	1,555		1,827		1,867		(272)		(14.9)	%	(312)		(16.7)	%
Other income	1,023		1,173		4,049		(150)		(12.8)	%	(3,026)		(74.7)	%
Total noninterest income	$	20,164	$	22,193	$	30,100	$	(2,029)	(9.1)	%	$	(9,936)	(33.0)	%


	Nine Months Ended				Variance From
	September 30,		September 30,		September 30, 2021
(Dollars in thousands)	2022		2021		$		%
Noninterest income
Loan servicing income	$	1,318	$	1,616	$	(298)	(18.4)	%
Service charges on deposit accounts	8,009		6,629		1,380		20.8��	%
Other service fee income	1,056		1,175		(119)		(10.1)	%
Debit card interchange fee income	2,580		2,720		(140)		(5.1)	%
Earnings on bank owned life insurance	9,800		7,778		2,022		26.0	%
Net gain from sales of loans	3,087		3,094		(7)		(0.2)	%
Net gain from sales of investment securities	1,710		13,321		(11,611)		(87.2)	%



Trust custodial account fees	31,884		26,565		5,319		20.0	%
Escrow and exchange fees	5,043		5,065		(22)		(0.4)	%
Other income	3,764		12,606		(8,842)		(70.1)	%
Total noninterest income	$	68,251	$	80,569	$	(12,318)	(15.3)	%

Noninterest income for the third quarter of ~~$255.1~~2022 was $20.2 million, a decrease of $2.0 million, or ~~$2.68 per diluted share. This compares with net loss~~9.1%, from the second quarter of ~~$6.8 million, or $(0.10) per diluted share, for the nine months ended September 30, 2020.~~2022. The ~~increase in net income of $261.8 million~~decrease was primarily due to a ~~$246.5 million~~$679,000 decrease in net gain from sales of loans, a $403,000 decrease in trust custodial account fees resulting primarily from a decrease in the ~~provision for credit losses, an $85.6 million increase in net interest income, a $44.1 million decrease in merger-related expenses,~~market value of custodial assets, and a $32.4 million increase in noninterest income, partially offset by a $100.9 million increase in income tax expense and a $45.9 million increase in noninterest expense excluding merger-related expenses. The decrease in$362,000 greater net loss from sales of investment securities.

During the provision for credit losses was attributable to higher provision expense from the Company’s adoption of ASC 326 effective January 1, 2020, the acquisition of Opus, and unfavorable economic forecasts used in the Company’s CECL model driven by the COVID-19 pandemic, as well as the $38.5 million and $19.7 million recapture of provision for credit losses during the second and third quarter of ~~2021, respectively, primarily due~~2022, the Bank sold $9.6 million of SBA loans for a net gain of $434,000 and $15.0 million of other loans for a net gain of $23,000, compared to ~~improved economic forecasts used in~~ the ~~Company’s CECL model relative to prior periods~~sales of $23.4 million of SBA loans and ~~the favorable asset quality profile~~U.S. Department of ~~the loan portfolio. The year-over-year increases in~~Agriculture (“USDA”) loans for a net ~~income reflect the impact~~gain of ~~the acquisition of Opus~~$1.1 million in the second quarter of ~~2020.~~

~~For~~2022. The SBA business has slowed in the ~~nine months ended September 30, 2021,~~third quarter in connection with the Company’s return on average assets was 1.67%, return on average equity was 12.23%, and return on average tangible common equity was 19.52%, compared with a return on average assets of (0.06)%, return on average equity of (0.39)%, and a return on average tangible common equity of 0.21% for the nine months ended September 30, 2020.higher interest rates.

~~102~~84

Noninterest Expense

The following table presents the components of noninterest expense for the periods indicated:


	Three Months Ended						Variance From
	September 30,		June 30,		September 30,		June 30, 2022				September 30, 2021
(Dollars in thousands)	2022		2022		2021		$		%		$		%
Noninterest expense
Compensation and benefits	$	56,355	$	57,562	$	53,592	$	(1,207)	(2.1)	%	$	2,763	5.2	%
Premises and occupancy	12,011		11,829		12,611		182		1.5	%	(600)		(4.8)	%
Data processing	7,058		6,604		6,296		454		6.9	%	762		12.1	%

FDIC insurance premiums	1,461		1,452		1,392		9		0.6	%	69		5.0	%
Legal and professional services	4,075		4,629		4,563		(554)		(12.0)	%	(488)		(10.7)	%
Marketing expense	1,912		1,926		2,008		(14)		(0.7)	%	(96)		(4.8)	%
Office expense	1,338		1,252		1,076		86		6.9	%	262		24.3	%
Loan expense	789		1,144		1,332		(355)		(31.0)	%	(543)		(40.8)	%
Deposit expense	4,846		4,081		3,974		765		18.7	%	872		21.9	%

Amortization of intangible assets	3,472		3,479		3,912		(7)		(0.2)	%	(440)		(11.2)	%
Other expense	7,549		5,016		5,284		2,533		50.5	%	2,265		42.9	%
Total noninterest expense	$	100,866	$	98,974	$	96,040	$	1,892	1.9	%	$	4,826	5.0	%



	Nine Months Ended				Variance From
	September 30,		September 30,		September 30, 2021
(Dollars in thousands)	2022		2021		$		%
Noninterest expense
Compensation and benefits	$	170,898	$	159,614	$	11,284	7.1	%
Premises and occupancy	35,792		36,831		(1,039)		(2.8)	%
Data processing	19,658		17,889		1,769		9.9	%

FDIC insurance premiums	4,309		3,885		424		10.9	%
Legal and professional services	12,772		12,684		88		0.7	%
Marketing expense	5,647		5,096		551		10.8	%
Office expense	3,793		4,494		(701)		(15.6)	%
Loan expense	3,067		3,612		(545)		(15.1)	%
Deposit expense	12,678		11,818		860		7.3	%
Merger-related expense	—		5		(5)		(100.0)	%
Amortization of intangible assets	10,543		12,056		(1,513)		(12.5)	%
Other expense	18,331		15,041		3,290		21.9	%
Total noninterest expense	$	297,488	$	283,025	$	14,463	5.1	%

The Company’s efficiency ratio was 48.3% for the third quarter of 2022, compared to 49.0% for the second quarter of 2022, and 47.5% for the third quarter of 2021.

The Company’s efficiency ratio was 49.3% for the first nine months of 2022, compared to 48.5% for the first nine months of 2021.

Net Interest Income

Net interest income totaled ~~$169.1~~$181.1 million in the third quarter of ~~2021,~~2022, an increase of ~~$8.1~~$8.3 million, or ~~5.1%~~4.8%, from the second quarter of ~~2021.~~2022. The increase in net interest income was ~~due~~primarily attributable to higher yields on average interest-earning assets and slightly higher average loan ~~fees,~~balances, a favorable interest impact from fair value hedges on fixed-rate loans of $4.2 million, as well as one more day of interest, ~~and a lower~~partially offset by higher cost of funds and lower loan-related fees and accretion income as ~~compared to the prior quarter, partially offset by lower average investment securities and loan yields.~~a result of decreased prepayment activity.

The net interest margin for the third quarter of ~~2021 was 3.51%~~2022 increased 12 basis points to 3.61%, ~~compared with 3.44%~~from 3.49% in the prior quarter. ~~Our~~The core net interest margin, which excludes the impact of loan accretion income, ~~of $9.4 million, compared to $9.5 million in the prior quarter,~~ certificates of deposit mark-to-market amortization, interest impact from fair value hedge, and other adjustments, increased ~~eight~~11 basis points to ~~3.30%~~3.44%, compared to ~~3.22%~~3.33% in the prior quarter, reflecting ~~lower~~higher yields on interest-earning assets and a favorable remix of earning-assets towards higher yielding loans, partially offset by higher cost of funds and ~~higher~~lower loan ~~fees, partially offset by lower average investment~~prepayment fees. For additional details of the core net interest margin, see “Non-GAAP measures” presented under Item 2 - Management’s Discussion and ~~loan yields and fees.~~Analysis.

Net interest income for the third quarter of ~~2021~~2022 increased ~~$2.5~~$12.0 million, or ~~1.5%~~7.1%, compared to the third quarter of ~~2020.~~2021. The increase was attributable to higher yields on average interest-earning assets and higher average loan balances, as well as a ~~lower~~favorable impact from fair value hedges on fixed-rate loans, partially offset by higher cost of funds a $1.52 billion increase in average investment securities, and a $377.5 million decrease in average interest-bearing liabilities, which primarily resulted from the redemptions of subordinated debentures, partially offset by lower average interest-earning asset yields and lower ~~average loan balances.~~loan-related fees and accretion income as a result of decreased prepayment activity.

For the ~~first~~ nine months ended ~~2021,~~2022, net interest income increased ~~$85.6~~$24.1 million, or ~~21.1%~~4.9%, compared to the ~~first~~ nine months ended ~~2020.~~2021. The increase was related to an increase in average interest-earning assets, ~~of $4.49 billion, which resulted primarily from our acquisition of Opus on June 1, 2020, and a lower cost of funds,~~ partially offset by lower average loan ~~and investment~~ yields, ~~and~~ higher average interest-bearing ~~liabilities.~~

liabilities, and higher cost of funds. For the nine months ended 2022, the net interest margin was 3.50%, unchanged from the same period last year. The core net interest margin, which excludes the impact of loan accretion income, certificates of deposit mark-to-market amortization, interest impact from fair value hedge, and other adjustments, was 3.37%, compared with 3.28% for the same period last year, reflecting higher average interest-earning assets balance. For additional details of the core net interest margin, see
“Non-GAAP measures” presented under Item 2 - Management’s Discussion and Analysis.

~~103~~78

The following table presents the ~~interest spread,~~ net interest margin, average balances calculated based on daily average, interest income and yields earned on average interest-earning assets and interest expense and rates paid on average interest-bearing liabilities, and the average yield/rate by asset and liability component for the periods indicated:


		Average Balance Sheet																			Average Balance Sheet
		Three Months Ended																			Three Months Ended
		September 30, 2021						June 30, 2021						September 30, 2020							September 30, 2022						June 30, 2022						September 30, 2021
(Dollars in thousands)	(Dollars in thousands)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost		(Dollars in thousands)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
Assets	Assets																			Assets
Interest-earning assets:	Interest-earning assets:																			Interest-earning assets:
Cash and cash equivalents	Cash and cash equivalents	$	663,076	$	195	0.12	%	$	1,323,186	$	315	0.10	%	$	1,388,897	$	305	0.09	%	Cash and cash equivalents	$	665,510	$	2,754	1.64	%	$	702,663	$	1,211	0.69	%	$	663,076	$	195	0.12	%
Investment securities	Investment securities	4,807,854		18,827		1.57		4,243,644		18,012		1.70		3,283,840		14,231		1.73		Investment securities	4,277,444		22,067		2.06	%	4,254,961		17,560		1.65	%	4,807,854		18,827		1.57	%
Loans receivable, net (1)(2)	Loans receivable, net (1)(2)	13,660,242		157,025		4.56		13,216,973		152,365		4.62		14,034,868		167,455		4.75		Loans receivable, net (1)(2)	14,986,682		174,204		4.61	%	14,919,182		164,455		4.42	%	13,660,242		157,025		4.56	%
Total interest-earning assets	Total interest-earning assets	19,131,172		176,047		3.65		18,783,803		170,692		3.64		18,707,605		181,991		3.87		Total interest-earning assets	19,929,636		199,025		3.96	%	19,876,806		183,226		3.70	%	19,131,172		176,047		3.65	%
Noninterest-earning assets	Noninterest-earning assets	1,673,731						1,506,612						1,659,156						Noninterest-earning assets	1,757,800						1,793,347						1,673,731
Total assets	Total assets	$	20,804,903					$	20,290,415					$	20,366,761					Total assets	$	21,687,436					$	21,670,153					$	20,804,903
Liabilities and equity	Liabilities and equity																			Liabilities and equity
Interest-bearing deposits:	Interest-bearing deposits:																			Interest-bearing deposits:
Interest checking	Interest checking	$	3,383,219	$	290	0.03	%	$	3,155,935	$	336	0.04	%	$	3,001,738	$	1,191	0.16	%	Interest checking	$	3,812,448	$	1,658	0.17	%	$	4,055,506	$	712	0.07	%	$	3,383,219	$	290	0.03	%
Money market	Money market	5,554,881		1,309		0.09		5,558,790		2,002		0.14		5,490,541		4,855		0.35		Money market	5,053,890		2,940		0.23	%	5,231,464		1,010		0.08	%	5,554,881		1,309		0.09	%
Savings	Savings	401,804		58		0.06		384,376		84		0.09		357,768		109		0.12		Savings	434,591		28		0.03	%	432,586		27		0.03	%	401,804		58		0.06	%
Retail certificates of deposit	Retail certificates of deposit	1,196,187		775		0.26		1,294,544		839		0.26		1,587,712		1,857		0.47		Retail certificates of deposit	835,645		1,420		0.67	%	922,784		607		0.26	%	1,196,187		775		0.26	%
Wholesale/brokered certificates of deposit	Wholesale/brokered certificates of deposit	—		—		—		1,357		4		1.18		265,672		497		0.74		Wholesale/brokered certificates of deposit	702,785		3,827		2.16	%	80,182		326		1.63	%	—		—		—	%
Total interest-bearing deposits	Total interest-bearing deposits	10,536,091		2,432		0.09		10,395,002		3,265		0.13		10,703,431		8,509		0.32		Total interest-bearing deposits	10,839,359		9,873		0.36	%	10,722,522		2,682		0.10	%	10,536,091		2,432		0.09	%
FHLB advances and other borrowings	FHLB advances and other borrowings	1,670		1		0.24		6,303		—		—		41,041		113		1.10		FHLB advances and other borrowings	636,006		3,480		2.17	%	602,621		3,217		2.14	%	1,670		1		0.24	%
Subordinated debentures	Subordinated debentures	330,575		4,545		5.50		480,415		6,493		5.41		501,396		6,823		5.44		Subordinated debentures	330,975		4,560		5.51	%	330,796		4,562		5.52	%	330,575		4,545		5.50	%
Total borrowings	Total borrowings	332,245		4,546		5.43		486,718		6,493		5.35		542,437		6,936		5.09		Total borrowings	966,981		8,040		3.31	%	933,417		7,779		3.34	%	332,245		4,546		5.43	%
Total interest-bearing liabilities	Total interest-bearing liabilities	10,868,336		6,978		0.25		10,881,720		9,758		0.36		11,245,868		15,445		0.55		Total interest-bearing liabilities	11,806,340		17,913		0.60	%	11,655,939		10,461		0.36	%	10,868,336		6,978		0.25	%
Noninterest-bearing deposits	Noninterest-bearing deposits	6,809,211						6,341,063						5,877,619						Noninterest-bearing deposits	6,893,463						7,030,205						6,809,211
Other liabilities	Other liabilities	282,556						320,324						553,407						Other liabilities	212,509						219,116						282,556
Total liabilities	Total liabilities	17,960,103						17,543,107						17,676,894						Total liabilities	18,912,312						18,905,260						17,960,103
Stockholders’ equity	Stockholders’ equity	2,844,800						2,747,308						2,689,867						Stockholders’ equity	2,775,124						2,764,893						2,844,800
Total liabilities and equity	Total liabilities and equity	$	20,804,903					$	20,290,415					$	20,366,761					Total liabilities and equity	$	21,687,436					$	21,670,153					$	20,804,903
Net interest income	Net interest income			$	169,069					$	160,934					$	166,546			Net interest income			$	181,112					$	172,765					$	169,069

Net interest margin (3)	Net interest margin (3)					3.51	%					3.44	%					3.54	%	Net interest margin (3)					3.61	%					3.49	%					3.51	%
Cost of deposits (4)	Cost of deposits (4)					0.06						0.08						0.20		Cost of deposits (4)					0.22	%					0.06	%					0.06	%
Cost of funds (5)	Cost of funds (5)					0.16						0.23						0.36		Cost of funds (5)					0.38	%					0.22	%					0.16	%
Cost of core deposits (6)																				Cost of core deposits (6)					0.11	%					0.04	%					0.04	%
Ratio of interest-earning assets to interest-bearing liabilities	Ratio of interest-earning assets to interest-bearing liabilities					176.03						172.62						166.35		Ratio of interest-earning assets to interest-bearing liabilities					168.80	%					170.53	%					176.03	%


Delaware			33-0743196
(State or other jurisdiction of incorporation or organization)			(I.R.S Employer Identification No.)


PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

Consolidated Statements of Financial Condition (Unaudited)			3

Consolidated Statements of Income ~~(Loss)~~ (Unaudited)			4

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)			5

Consolidated Statements of Stockholders’ Equity (Unaudited)			6

Consolidated Statements of Cash Flows (Unaudited)			8

Notes to Consolidated Financial Statements (Unaudited)			9

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations			8565

Item 3 - Quantitative and Qualitative Disclosures About Market Risk			~~134~~109

Item 4 - Controls and Procedures			~~136~~111

PART II - OTHER INFORMATION			~~137~~112

Item 1 - Legal Proceedings			~~137~~112

Item 1A - Risk Factors			~~137~~112

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds			~~137~~112

Item 3 - Defaults Upon Senior Securities			~~137~~112

Item 4 - Mine Safety Disclosures			~~137~~112

Item 5 - Other Information			~~137~~112

Item 6 - Exhibits			~~138~~113

SIGNATURE			~~139~~114


(Dollars in thousands, except par value and share data)	(Dollars in thousands, except par value and share data)	September 30, 2021		December 31, 2020		(Dollars in thousands, except par value and share data)	September 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Cash and due from banks	Cash and due from banks	$	160,276	$	135,429	Cash and due from banks	$	132,351	$	83,150
Interest-bearing deposits with financial institutions	Interest-bearing deposits with financial institutions	162,044		745,337		Interest-bearing deposits with financial institutions	606,860		221,553
Cash and cash equivalents	Cash and cash equivalents	322,320		880,766		Cash and cash equivalents	739,211		304,703
Interest-bearing time deposits with financial institutions	Interest-bearing time deposits with financial institutions	2,708		2,845		Interest-bearing time deposits with financial institutions	1,733		2,216
Investments held-to-maturity, at amortized cost, net of allowance for credit losses of $11 and $0 (fair value of $169,154 and $25,013) at September 30, 2021 and December 31, 2020, respectively		170,576		23,732
Investments held-to-maturity, at amortized cost, net of allowance for credit losses of $91 and $22 (fair value of $1,055,187 and $384,423) at September 30, 2022 and December 31, 2021, respectively						Investments held-to-maturity, at amortized cost, net of allowance for credit losses of $91 and $22 (fair value of $1,055,187 and $384,423) at September 30, 2022 and December 31, 2021, respectively	1,385,502		381,674
Investment securities available-for-sale, at fair value	Investment securities available-for-sale, at fair value	4,709,815		3,931,115		Investment securities available-for-sale, at fair value	2,661,079		4,273,864
FHLB, FRB, and other stock, at cost	FHLB, FRB, and other stock, at cost	118,399		117,055		FHLB, FRB, and other stock, at cost	118,778		117,538
Loans held for sale, at lower of cost or fair value	Loans held for sale, at lower of cost or fair value	8,100		601		Loans held for sale, at lower of cost or fair value	2,163		10,869
Loans held for investment	Loans held for investment	13,982,861		13,236,433		Loans held for investment	14,908,811		14,295,897
Allowance for credit losses	Allowance for credit losses	(211,481)		(268,018)		Allowance for credit losses	(195,549)		(197,752)
Loans held for investment, net	Loans held for investment, net	13,771,380		12,968,415		Loans held for investment, net	14,713,262		14,098,145
Accrued interest receivable	Accrued interest receivable	63,228		74,574		Accrued interest receivable	66,192		65,728

Premises and equipment	Premises and equipment	72,850		78,884		Premises and equipment	65,651		71,908
Deferred income taxes, net	Deferred income taxes, net	83,432		89,056		Deferred income taxes, net	190,948		87,344
Bank-owned life insurance		447,135		292,564
Bank owned life insurance						Bank owned life insurance	457,301		449,353
Intangible assets	Intangible assets	73,451		85,507		Intangible assets	59,028		69,571
Goodwill	Goodwill	901,312		898,569		Goodwill	901,312		901,312
Other assets	Other assets	260,505		292,861		Other assets	257,041		260,204
Total assets	Total assets	$	21,005,211	$	19,736,544	Total assets	$	21,619,201	$	21,094,429

LIABILITIES	LIABILITIES					LIABILITIES
Deposit accounts:	Deposit accounts:					Deposit accounts:
Noninterest-bearing checking	Noninterest-bearing checking	$	6,841,495	$	6,011,106	Noninterest-bearing checking	$	6,775,465	$	6,757,259
Interest-bearing:	Interest-bearing:					Interest-bearing:
Checking	Checking	3,477,902		2,913,260		Checking	3,605,498		3,493,331
Money market/savings	Money market/savings	6,037,532		5,662,969		Money market/savings	5,493,988		5,806,726
Retail certificates of deposit	Retail certificates of deposit	1,113,070		1,471,512		Retail certificates of deposit	872,421		1,058,273
Wholesale/brokered certificates of deposit	Wholesale/brokered certificates of deposit	—		155,330		Wholesale/brokered certificates of deposit	999,002		—
Total interest-bearing	Total interest-bearing	10,628,504		10,203,071		Total interest-bearing	10,970,909		10,358,330
Total deposits	Total deposits	17,469,999		16,214,177		Total deposits	17,746,374		17,115,589
FHLB advances and other borrowings	FHLB advances and other borrowings	150,000		31,000		FHLB advances and other borrowings	600,000		558,000
Subordinated debentures	Subordinated debentures	330,408		501,511		Subordinated debentures	331,045		330,567

Accrued expenses and other liabilities	Accrued expenses and other liabilities	216,688		243,207		Accrued expenses and other liabilities	206,386		203,962
Total liabilities	Total liabilities	18,167,095		16,989,895		Total liabilities	18,883,805		18,208,118
STOCKHOLDERS’ EQUITY	STOCKHOLDERS’ EQUITY					STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value; 1,000,000 authorized; none issued and outstanding	Preferred stock, $0.01 par value; 1,000,000 authorized; none issued and outstanding	—		—		Preferred stock, $0.01 par value; 1,000,000 authorized; none issued and outstanding	—		—
Common stock, $0.01 par value; 150,000,000 shares authorized at September 30, 2021 and December 31, 2020; 94,354,211 shares and 94,483,136 shares issued and outstanding, respectively.		929		931
Common stock, $0.01 par value; 150,000,000 shares authorized at September 30, 2022 and December 31, 2021; 95,016,767 shares and 94,389,543 shares issued and outstanding, respectively						Common stock, $0.01 par value; 150,000,000 shares authorized at September 30, 2022 and December 31, 2021; 95,016,767 shares and 94,389,543 shares issued and outstanding, respectively	933		929
Additional paid-in capital	Additional paid-in capital	2,347,626		2,354,871		Additional paid-in capital	2,357,731		2,351,294
Retained earnings	Retained earnings	488,385		330,555		Retained earnings	657,845		541,950
Accumulated other comprehensive income		1,176		60,292
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(281,113)		(7,862)
Total stockholders’ equity	Total stockholders’ equity	2,838,116		2,746,649		Total stockholders’ equity	2,735,396		2,886,311
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	21,005,211	$	19,736,544	Total liabilities and stockholders’ equity	$	21,619,201	$	21,094,429


	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
(Dollars in thousands)	2021		2021		2020		2021		2020
Net income (loss)	$	90,088	$	96,302	$	66,566	$	255,058	$	(6,785)
Other comprehensive (loss) income, net of tax:
Unrealized (loss) gain on securities available-for-sale arising during the period, net of income taxes (1)	(20,138)		45,343		(11,747)		(47,387)		30,473
Reclassification adjustment for net (gain) on sales of securities included in net income, net of income taxes (2)	(2,991)		(3,630)		(814)		(9,510)		(6,333)
Net unrealized loss on securities transferred from available-for-sale to held-to-maturity, net of income taxes (3)	(2,277)		—		—		(2,277)		—
Amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity, net of income taxes (4)	58		—		—		58		—
Other comprehensive (loss) income, net of tax	(25,348)		41,713		(12,561)		(59,116)		24,140
Comprehensive income, net of tax	$	64,740	$	138,015	$	54,005	$	195,942	$	17,355


	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
(Dollars in thousands)	2022		2022		2021		2022		2021
Net income	$	73,363	$	69,803	$	90,088	$	210,070	$	255,058
Other comprehensive loss, net of tax:
Unrealized loss on securities available-for-sale, net of income taxes (1)	(68,070)		(40,474)		(20,138)		(227,135)		(47,387)
Reclassification adjustment for net loss (gain) on sales of securities included in net income, net of income taxes (2)	281		22		(2,991)		(1,222)		(9,510)
Net unrealized loss on securities transferred from available-for-sale to held-to-maturity, net of income taxes (3)	—		(31,326)		(2,277)		(47,884)		(2,277)
Amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity, net of income taxes (4)	1,694		993		58		2,990		58
Other comprehensive loss , net of tax	(66,095)		(70,785)		(25,348)		(273,251)		(59,116)
Comprehensive income (loss), net of tax	$	7,268	$	(982)	$	64,740	$	(63,181)	$	195,942


(Dollars in thousands, except share data)	(Dollars in thousands, except share data)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		(Dollars in thousands, except share data)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Balance at December 31, 2020		94,483,136	$	931	$	2,354,871	$	330,555	$	60,292	$	2,746,649
Balance at December 31, 2021													Balance at December 31, 2021	94,389,543	$	929	$	2,351,294	$	541,950	$	(7,862)	$	2,886,311
Net income	Net income	—	—		—		255,058		—		255,058		Net income	—	—		—		210,070		—		210,070
Other comprehensive loss	Other comprehensive loss	—	—		—		—		(59,116)		(59,116)		Other comprehensive loss	—	—		—		—		(273,251)		(273,251)
Repurchase and retirement of common stock		(479,944)	(5)		(11,942)		(6,120)		—		(18,067)
Cash dividends declared ($0.96 per common share)		—	—		—		(90,747)		—		(90,747)
Dividend equivalents declared ($0.96 per restricted stock unit)		—	—		361		(361)		—		—
Cash dividends declared ($0.99 per common share)													Cash dividends declared ($0.99 per common share)	—	—		—		(93,806)		—		(93,806)
Dividend equivalents declared ($0.99 per restricted stock unit)													Dividend equivalents declared ($0.99 per restricted stock unit)	—	—		369		(369)		—		—
Share-based compensation expense	Share-based compensation expense	—	—		9,911		—		—		9,911		Share-based compensation expense	—	—		14,171		—		—		14,171
Issuance of restricted stock, net	Issuance of restricted stock, net	450,549	3		(3)		—		—		—		Issuance of restricted stock, net	818,229	4		(4)		—		—		—
Restricted stock surrendered and canceled	Restricted stock surrendered and canceled	(149,782)	—		(6,354)		—		—		(6,354)		Restricted stock surrendered and canceled	(234,851)	—		(8,858)		—		—		(8,858)
Exercise of stock options	Exercise of stock options	50,252	—		782		—		—		782		Exercise of stock options	43,846	—		759		—		—		759
Balance at September 30, 2021		94,354,211	$	929	$	2,347,626	$	488,385	$	1,176	$	2,838,116
Balance at September 30, 2022													Balance at September 30, 2022	95,016,767	$	933	$	2,357,731	$	657,845	$	(281,113)	$	2,735,396


Balance at June 30, 2021		94,656,575	$	931	$	2,352,112	$	433,852	$	26,524	$	2,813,419
Balance at June 30, 2022													Balance at June 30, 2022	94,976,605	$	933	$	2,353,361	$	615,943	$	(215,018)	$	2,755,219
Net income	Net income	—	—		—		90,088		—		90,088		Net income	—	—		—		73,363		—		73,363
Other comprehensive loss	Other comprehensive loss	—	—		—		—		(25,348)		(25,348)		Other comprehensive loss	—	—		—		—		(66,095)		(66,095)
Repurchase and retirement of common stock		(280,270)	(3)		(6,965)		(4,202)		—		(11,170)
Cash dividends declared ($0.33 per common share)	Cash dividends declared ($0.33 per common share)	—	—		—		(31,226)		—		(31,226)		Cash dividends declared ($0.33 per common share)	—	—		—		(31,337)		—		(31,337)
Dividend equivalents declared ($0.33 per restricted stock unit)	Dividend equivalents declared ($0.33 per restricted stock unit)	—	—		127		(127)		—		—		Dividend equivalents declared ($0.33 per restricted stock unit)	—	—		124		(124)		—		—
Share-based compensation expense	Share-based compensation expense	—	—		3,349		—		—		3,349		Share-based compensation expense	—	—		4,336		—		—		4,336
Issuance of restricted stock, net	Issuance of restricted stock, net	14,592	1		(1)		—		—		—		Issuance of restricted stock, net	56,452	—		—		—		—		—
Restricted stock surrendered and canceled	Restricted stock surrendered and canceled	(39,755)	—		(1,046)		—		—		(1,046)		Restricted stock surrendered and canceled	(22,348)	—		(184)		—		—		(184)
Exercise of stock options	Exercise of stock options	3,069	—		50		—		—		50		Exercise of stock options	6,058	—		94		—		—		94
Balance at September 30, 2021		94,354,211	$	929	$	2,347,626	$	488,385	$	1,176	$	2,838,116
Balance at September 30, 2022													Balance at September 30, 2022	95,016,767	$	933	$	2,357,731	$	657,845	$	(281,113)	$	2,735,396



Balance at June 30, 2020	94,350,902	$	930	$	2,348,415	$	247,078	$	58,224	$	2,654,647
Net income	—	—		—		66,566		—		66,566
Other comprehensive loss	—	—		—		—		(12,561)		(12,561)
Cash dividends declared ($0.25 per common share)	—	—		—		(23,590)		—		(23,590)
Dividend equivalents declared ($0.25 per restricted stock unit)	—	—		94		(94)		—		—
Share-based compensation expense	—	—		2,899		—		—		2,899
Issuance of restricted stock, net	19,902	—		—		—		—		—
Restricted stock surrendered and canceled	(8,180)	—		(99)		—				(99)
Exercise of stock options	12,897	—		223		—				223
Balance at September 30, 2020	94,375,521	$	930	$	2,351,532	$	289,960	$	45,663	$	2,688,085


~~(Dollars in thousands)~~	~~May 29, 2020~~
~~Merger consideration~~


~~Value of stock consideration paid to shareholders~~	$	~~747,458~~
~~Cash paid in lieu of fractional shares~~	2
~~Value of restricted stock awards~~	~~328~~
~~Value of options and warrants~~ ~~(1)~~	~~1,817~~
~~Total merger consideration~~	$	~~749,605~~


(Dollars in thousands)	(Dollars in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value		(Dollars in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Investment securities available-for-sale:
September 30, 2021
AFS investment securities:										AFS investment securities:
September 30, 2022										September 30, 2022
U.S. Treasury	U.S. Treasury	$	77,803	$	1,665	$	(126)	$	79,342	U.S. Treasury	$	48,926	$	—	$	(2,152)	$	46,774
Agency	Agency	531,867		5,252		(7,026)		530,093		Agency	486,111		—		(55,248)		430,863
Corporate		383,910		5,381		(2,900)		386,391
Municipal bonds		1,237,923		27,585		(9,642)		1,255,866
Corporate debt										Corporate debt	602,058		—		(46,308)		555,750

Collateralized mortgage obligations	Collateralized mortgage obligations	665,851		1,109		(4,729)		662,231		Collateralized mortgage obligations	856,867		24		(65,776)		791,115
Mortgage-backed securities	Mortgage-backed securities	1,807,758		6,194		(18,060)		1,795,892		Mortgage-backed securities	991,429		—		(154,852)		836,577
Total investment securities available-for-sale		$	4,705,112	$	47,186	$	(42,483)	$	4,709,815
Total AFS investment securities										Total AFS investment securities	$	2,985,391	$	24	$	(324,336)	$	2,661,079


December 31, 2020
December 31, 2021										December 31, 2021
U.S. Treasury	U.S. Treasury	$	30,153	$	2,380	$	—	$	32,533	U.S. Treasury	$	57,708	$	614	$	(456)	$	57,866
Agency	Agency	666,702		24,292		(608)		690,386		Agency	440,183		2,081		(10,129)		432,135
Corporate		412,223		3,591		(506)		415,308
Corporate debt										Corporate debt	451,621		6,096		(3,856)		453,861
Municipal bonds	Municipal bonds	1,412,012		37,260		(3,253)		1,446,019		Municipal bonds	1,061,985		32,209		(4,281)		1,089,913
Collateralized mortgage obligations	Collateralized mortgage obligations	513,259		819		(712)		513,366		Collateralized mortgage obligations	680,686		2,012		(6,055)		676,643
Mortgage-backed securities	Mortgage-backed securities	812,384		21,662		(543)		833,503		Mortgage-backed securities	1,586,406		3,220		(26,180)		1,563,446
Total investment securities available-for-sale		$	3,846,733	$	90,004	$	(5,622)	$	3,931,115
Total AFS investment securities										Total AFS investment securities	$	4,278,589	$	46,232	$	(50,957)	$	4,273,864


		September 30, 2021																September 30, 2022
		Less than 12 Months					12 Months or Longer					Total						Less than 12 Months					12 Months or Longer					Total
(Dollars in thousands)	(Dollars in thousands)	Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses		(Dollars in thousands)	Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses
Investment securities available-for-sale:
AFS investment securities:																	AFS investment securities:
U.S. Treasury	U.S. Treasury	2	$	32,626	$	(126)	—	$	—	$	—	2	$	32,626	$	(126)	U.S. Treasury	5	$	33,865	$	(125)	1	$	12,909	$	(2,027)	6	$	46,774	$	(2,152)
Agency	Agency	24	339,270		(5,365)		12	64,991		(1,661)		36	404,261		(7,026)		Agency	8	80,049		(1,118)		35	350,814		(54,130)		43	430,863		(55,248)
Corporate		8	88,666		(1,916)		1	20,346		(984)		9	109,012		(2,900)
Municipal bonds		108	651,169		(9,102)		2	11,068		(540)		110	662,237		(9,642)
Corporate debt																	Corporate debt	49	468,523		(28,413)		8	87,227		(17,895)		57	555,750		(46,308)

Collateralized mortgage obligations	Collateralized mortgage obligations	30	302,104		(4,297)		5	44,615		(432)		35	346,719		(4,729)		Collateralized mortgage obligations	44	543,696		(35,355)		36	239,916		(30,421)		80	783,612		(65,776)
Mortgage-backed securities.	Mortgage-backed securities.	113	1,570,327		(17,961)		1	7,395		(99)		114	1,577,722		(18,060)		Mortgage-backed securities.	16	103,048		(8,957)		66	733,529		(145,895)		82	836,577		(154,852)
Total investment securities available-for-sale		285	$	2,984,162	$	(38,767)	21	$	148,415	$	(3,716)	306	$	3,132,577	$	(42,483)
Total AFS investment securities																	Total AFS investment securities	122	$	1,229,181	$	(73,968)	146	$	1,424,395	$	(250,368)	268	$	2,653,576	$	(324,336)


	Three Months Ended September 30, 2022
(Dollars in thousands)	Balance, June 30, 2022		Provision for Credit Losses		Balance, September 30, 2022









HTM investment securities:
Municipal bonds	$	109	$	(18)	$	91


	Three Months Ended September 30, 2021
(Dollars in thousands)	Balance, June 30, 2021		Provision for Credit Losses		Balance, September 30, 2021









HTM investment securities:
Municipal bonds	$	—	$	11	$	11


	Nine Months Ended September 30, 2022
(Dollars in thousands)	Balance, December 31, 2021		Provision for Credit Losses		Balance, September 30, 2022









HTM investment securities:
Municipal bonds	$	22	$	69	$	91


	Vintage
(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Total
Investment securities available-for-sale at fair value:
U.S. Treasury
Aaa - Aa3	$	32,973	$	14,634	$	—	$	21,274	$	10,461	$	—	$	79,342


Agency
Aaa - Aa3	24,393		324,241		44,487		76,415		—		46,390		515,926

Baa1 - Baa3	—		—		—		5,715		—		8,452		14,167
Corporate debt

A1 - A3	79,252		57,799		—		—		17,864		10,029		164,944
Baa1 - Baa3	36,473		100,614		70,704		—		—		13,656		221,447
Municipal bonds
Aaa - Aa3	118,941		725,524		294,323		32,429		50,536		33,264		1,255,017
A1 - A3	—		—		—		—		—		849		849

Collateralized mortgage obligations
Aaa - Aa3	212,687		224,252		86,604		18,523		14,199		105,966		662,231


Mortgage-backed securities
Aaa - Aa3	1,250,191		391,394		101,935		6,891		25,280		20,201		1,795,892


Total investment securities available-for-sale	1,754,910		1,838,458		598,053		161,247		118,340		238,807		4,709,815
Investment securities held-to-maturity at amortized cost:
Municipal bonds
Aaa - Aa3	—		154,399		—		—		—		—		154,399


Mortgage-backed securities
Aaa - Aa3	—		—		—		4,206		3,767		6,683		14,656


Other


	Term Loans by Vintage
(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving		Revolving Converted to Term During the Period		Total
September 30, 2021
Investor loans secured by real estate
CRE non-owner-occupied
Pass	$	565,605	$	268,733	$	424,397	$	462,395	$	219,672	$	823,208	$	9,599	$	—	$	2,773,609
Special mention	—		—		16,263		1,943		—		—		—		—		18,206
Substandard	—		—		25,775		—		—		4,950		525		—		31,250

Multifamily
Pass	1,694,447		1,012,346		1,348,563		526,744		501,849		619,628		218		—		5,703,795

Substandard	—		—		—		543		556		772		—		—		1,871

Construction and land
Pass	86,107		125,190		51,733		22,134		3,996		3,607		48		—		292,815



SBA secured by real estate
Pass	130		499		7,373		9,113		12,665		9,722		—		—		39,502
Special mention	—		—		—		962		—		548		—		—		1,510
Substandard	—		—		9		2,353		3,170		2,902		—		—		8,434

Total investor loans secured by real estate	2,346,289		1,406,768		1,874,113		1,026,187		741,908		1,465,337		10,390		—		8,870,992
Business loans secured by real estate
CRE owner-occupied
Pass	635,469		302,683		317,035		221,806		207,923		531,119		3,211		300		2,219,546
Special mention	—		—		6,078		1,741		—		—		—		—		7,819
Substandard	—		—		—		6,109		2,972		5,718		—		—		14,799

Franchise real estate secured
Pass	97,884		43,332		59,772		44,306		66,901		42,286		—		—		354,481



SBA secured by real estate
Pass	3,789		2,368		7,533		10,498		11,230		25,181		1,361		—		61,960
Special mention	—		—		—		—		—		212		—		—		212


	Term Loans by Vintage
(Dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving		Revolving Converted to Term During the Period		Total
September 30, 2022
Investor loans secured by real estate
CRE non-owner-occupied
Pass	$	500,592	$	619,259	$	223,908	$	362,597	$	318,172	$	711,998	$	—	$	—	$	2,736,526
Special mention	—		—		—		—		7,537		3,965		—		—		11,502
Substandard	—		—		—		16,393		194		6,182		—		475		23,244

Multifamily
Pass	1,193,692		2,225,146		796,705		922,115		292,670		759,311		388		—		6,190,027

Substandard	—		6,074		—		2,732		—		748		—		—		9,554

Construction and land
Pass	154,286		152,548		38,569		18,817		1,853		7,121		—		—		373,194



SBA secured by real estate
Pass	6,596		130		494		5,466		7,575		14,833		—		—		35,094

Substandard	—		—		—		—		2,422		5,482		—		—		7,904

Total investor loans secured by real estate	1,855,166		3,003,157		1,059,676		1,328,120		630,423		1,509,640		388		475		9,387,045
Business loans secured by real estate
CRE owner-occupied
Pass	589,994		737,861		252,950		248,513		121,626		489,097		5,510		—		2,445,551
Special mention	—		—		504		—		—		9,393		—		—		9,897
Substandard	—		—		4,656		2,442		4,718		10,266		—		—		22,082

Franchise real estate secured
Pass	56,586		147,304		33,874		45,173		33,203		60,255		—		—		376,395

Substandard	981		—		—		6,092		—		—		—		—		7,073

SBA secured by real estate
Pass	10,015		7,038		2,332		6,486		4,968		27,076		—		—		57,915


		Term Loans by Vintage																			Term Loans by Vintage
(Dollars in thousands)	(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving		Revolving Converted to Term During the Period		Total		(Dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving		Revolving Converted to Term During the Period		Total
September 30, 2021
Commercial loans
Commercial and industrial
Pass		260,359		89,545		204,683		139,560		156,915		78,951		906,369		2,059		1,838,441
Special mention		—		—		189		—		—		—		14,629		—		14,818
Substandard		650		1,759		552		2,854		867		1,570		26,619		740		35,611

Franchise non-real estate secured
Pass		118,333		24,954		96,784		65,300		27,683		37,157		—		—		370,211

Substandard		—		—		2,236		4,421		14,903		1,179		—		—		22,739

SBA non-real estate secured
Pass		152		653		1,424		938		3,239		3,567		—		—		9,973
Special mention		—		—		698		117		—		—		—		—		815
Substandard		—		—		78		338		247		617		664		—		1,944

Total commercial loans		379,494		116,911		306,644		213,528		203,854		123,041		948,281		2,799		2,294,552
September 30, 2022																				September 30, 2022
Retail loans	Retail loans																			Retail loans
Single family residential	Single family residential																			Single family residential
Pass	Pass	20,201		3,518		1,967		1,633		6,954		86,711		23,274		—		144,258		Pass	$	—	$	303	$	178	$	—	$	23	$	50,648	$	23,982	$	—	$	75,134

Substandard	Substandard	—		—		—		—		—		51		—		—		51		Substandard	—		—		—		—		—		42		—		—		42

Consumer loans	Consumer loans																			Consumer loans
Pass	Pass	28		30		57		22		15		2,964		3,268		—		6,384		Pass	—		7		19		13		—		1,113		2,609		—		3,761

Substandard		—		—		6		—		—		36		—		—		42

Total retail loans	Total retail loans	20,229		3,548		2,030		1,655		6,969		89,762		26,542		—		150,735		Total retail loans	—		310		197		13		23		51,803		26,591		—		78,937
Totals gross loans		$	3,483,154	$	1,875,610	$	2,573,205	$	1,527,156	$	1,244,757	$	2,286,095	$	989,785	$	3,099	$	13,982,861
Loans held for investment before basis adjustment (1)																				Loans held for investment before basis adjustment (1)	$	2,878,292	$	4,350,441	$	1,438,521	$	1,871,484	$	920,886	$	2,364,115	$	1,149,463	$	3,733	$	14,976,935


	Nine Months Ended September 30, 2021
(Dollars in thousands)	Balance, December 31, 2020		Provision for Credit Losses		Balance, September 30, 2021









HTM investment securities:
Municipal bonds	$	—	$	11	$	11


		Due in One Year or Less				Due after One Year through Five Years				Due after Five Years through Ten Years				Due after Ten Years				Total					Due in One Year or Less				Due after One Year through Five Years				Due after Five Years through Ten Years				Due after Ten Years				Total
(Dollars in thousands)	(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Investment securities available-for-sale:
AFS investment securities:																						AFS investment securities:
U.S. Treasury	U.S. Treasury	$	—	$	—	$	30,126	$	31,734	$	47,677	$	47,608	$	—	$	—	$	77,803	$	79,342	U.S. Treasury	$	9,648	$	9,639	$	24,342	$	24,226	$	14,936	$	12,909	$	—	$	—	$	48,926	$	46,774
Agency	Agency	—		—		352,023		353,184		135,567		134,426		44,277		42,483		531,867		530,093		Agency	25,583		25,329		326,627		298,271		96,469		79,143		37,432		28,120		486,111		430,863
Corporate		10,021		10,029		21,178		21,227		352,711		355,135		—		—		383,910		386,391
Municipal bonds		—		—		3,528		3,731		95,420		96,849		1,138,975		1,155,286		1,237,923		1,255,866
Corporate debt																						Corporate debt	—		—		298,578		289,014		303,480		266,736		—		—		602,058		555,750

Collateralized mortgage obligations	Collateralized mortgage obligations	—		—		41,692		41,631		226,958		223,612		397,201		396,988		665,851		662,231		Collateralized mortgage obligations	34,661		34,426		70,542		68,834		213,821		192,325		537,843		495,530		856,867		791,115
Mortgage-backed securities	Mortgage-backed securities	—		—		12,098		12,704		709,280		709,155		1,086,380		1,074,033		1,807,758		1,795,892		Mortgage-backed securities	—		—		35,049		34,770		549,549		468,798		406,831		333,009		991,429		836,577
Total investment securities available-for-sale		10,021		10,029		460,645		464,211		1,567,613		1,566,785		2,666,833		2,668,790		4,705,112		4,709,815
Investment securities held-to-maturity:
Total AFS investment securities																						Total AFS investment securities	69,892		69,394		755,138		715,115		1,178,255		1,019,911		982,106		856,659		2,985,391		2,661,079
HTM investment securities:																						HTM investment securities:
Municipal bonds	Municipal bonds	—		—		—		—		—		—		154,399		152,163		154,399		152,163		Municipal bonds	—		—		10,484		9,749		50,556		43,410		1,087,194		800,545		1,148,234		853,704
Mortgage-backed securities	Mortgage-backed securities	—		—		—		—		—		—		14,656		15,459		14,656		15,459		Mortgage-backed securities	—		—		—		—		—		—		235,937		200,061		235,937		200,061
Other	Other	—		—		—		—		—		—		1,532		1,532		1,532		1,532		Other	—		—		—		—		—		—		1,422		1,422		1,422		1,422
Total investment securities held-to-maturity		—		—		—		—		—		—		170,587		169,154		170,587		169,154
Total HTM investment securities																						Total HTM investment securities	—		—		10,484		9,749		50,556		43,410		1,324,553		1,002,028		1,385,593		1,055,187
Total investment securities	Total investment securities	$	10,021	$	10,029	$	460,645	$	464,211	$	1,567,613	$	1,566,785	$	2,837,420	$	2,837,944	$	4,875,699	$	4,878,969	Total investment securities	$	69,892	$	69,394	$	765,622	$	724,864	$	1,228,811	$	1,063,321	$	2,306,659	$	1,858,687	$	4,370,984	$	3,716,266


				Days Past Due											Days Past Due
(Dollars in thousands)	(Dollars in thousands)	Current		30-59		60-89		90+		Total		(Dollars in thousands)	Current		30-59		60-89		90+		Total
September 30, 2021
September 30, 2022												September 30, 2022
Investor loans secured by real estate	Investor loans secured by real estate											Investor loans secured by real estate
CRE non-owner-occupied	CRE non-owner-occupied	$	2,812,797	$	—	$	—	$	10,268	$	2,823,065	CRE non-owner-occupied	$	2,754,403	$	—	$	—	$	16,869	$	2,771,272
Multifamily	Multifamily	5,705,666		—		—		—		5,705,666		Multifamily	6,193,507		—		—		6,074		6,199,581
Construction and land	Construction and land	292,815		—		—		—		292,815		Construction and land	373,194		—		—		—		373,194
SBA secured by real estate	SBA secured by real estate	48,470		—		629		347		49,446		SBA secured by real estate	42,998		—		—		—		42,998
Total investor loans secured by real estate	Total investor loans secured by real estate	8,859,748		—		629		10,615		8,870,992		Total investor loans secured by real estate	9,364,102		—		—		22,943		9,387,045
Business loans secured by real estate	Business loans secured by real estate											Business loans secured by real estate
CRE owner-occupied	CRE owner-occupied	2,237,186		—		—		4,978		2,242,164		CRE owner-occupied	2,466,281		—		6,398		4,851		2,477,530
Franchise real estate secured	Franchise real estate secured	354,481		—		—		—		354,481		Franchise real estate secured	383,468		—		—		—		383,468
SBA secured by real estate	SBA secured by real estate	69,496		—		—		441		69,937		SBA secured by real estate	62,675		1,244		—		83		64,002
Total business loans secured by real estate	Total business loans secured by real estate	2,661,163		—		—		5,419		2,666,582		Total business loans secured by real estate	2,912,424		1,244		6,398		4,934		2,925,000
Commercial loans	Commercial loans											Commercial loans
Commercial and industrial	Commercial and industrial	1,886,386		654		14		1,816		1,888,870		Commercial and industrial	2,159,494		240		135		4,754		2,164,623
Franchise non-real estate secured	Franchise non-real estate secured	392,950		—		—		—		392,950		Franchise non-real estate secured	409,773		—		—		—		409,773
SBA not secured by real estate	SBA not secured by real estate	11,701		74		293		664		12,732		SBA not secured by real estate	10,950		—		—		607		11,557

Total commercial loans	Total commercial loans	2,291,037		728		307		2,480		2,294,552		Total commercial loans	2,580,217		240		135		5,361		2,585,953
Retail loans	Retail loans											Retail loans
Single family residential	Single family residential	144,309		—		—		—		144,309		Single family residential	75,176		—		—		—		75,176
Consumer loans	Consumer loans	6,426		—		—		—		6,426		Consumer loans	3,759		—		2		—		3,761
Total retail loans	Total retail loans	150,735		—		—		—		150,735		Total retail loans	78,935		—		2		—		78,937
Totals		$	13,962,683	$	728	$	936	$	18,514	$	13,982,861
Loans held for investment before basis adjustment (1)												Loans held for investment before basis adjustment (1)	$	14,935,678	$	1,484	$	6,535	$	33,238	$	14,976,935


	Nonaccrual Loans (1)
(Dollars in thousands)	Collateral Dependent Loans		ACL		Non-Collateral Dependent Loans		ACL		Total Nonaccrual Loans		Nonaccrual Loans with No ACL
September 30, 2021
Investor loans secured by real estate
CRE non-owner-occupied	$	12,179	$	571	$	—	$	—	$	12,179	$	4,563


SBA secured by real estate	976		—		—		—		976		976
Total investor loans secured by real estate	13,155		571		—		—		13,155		5,539
Business loans secured by real estate
CRE owner-occupied	4,978		—		—		—		4,978		4,978

SBA secured by real estate	604		—		—		—		604		604
Total business loans secured by real estate	5,582		—		—		—		5,582		5,582
Commercial loans
Commercial and industrial	1,816		—		443		—		2,259		2,259
Franchise non-real estate secured	1,086		—		12,333		—		13,419		13,419
SBA non-real estate secured	664		—		—		—		664		664
Total commercial loans	3,566		—		12,776		—		16,342		16,342
Retail loans
Single family residential	11		—		—		—		11		11

Total retail loans	11		—		—		—		11		11
Total nonaccrual loans	$	22,314	$	571	$	12,776	$	—	$	35,090	$	27,474



(Dollars in thousands)	Office Properties		Industrial Properties		Retail Properties		Land Properties		Hotel Properties		Multifamily Properties		Other CRE Properties		Business Assets		Total
September 30, 2022
Investor loan secured by real estate
CRE non-owner-occupied	$	6,181	$	—	$	475	$	—	$	—	$	—	$	16,394	$	—	$	23,050
Multifamily	—		—		—		—		—		8,806		—		—		8,806

SBA secured by real estate	—		—		—		—		547		—		—		—		547
Total investor loans secured by real estate	6,181		—		475		—		547		8,806		16,394		—		32,403
Business loans secured by real estate
CRE owner-occupied	4,656		—		—		4,851		—		—		1,742		—		11,249

SBA secured by real estate	114		83		—		—		—		—		—		—		197
Total business loans secured by real estate	4,770		83		—		4,851		—		—		1,742		—		11,446
Commercial loans
Commercial and industrial	—		—		—		240		—		—		—		4,514		4,754

SBA non-real estate secured	—		—		—		—		—		—		—		607		607
Total commercial loans	—		—		—		240		—		—		—		5,121		5,361




Total collateral dependent loans	$	10,951	$	83	$	475	$	5,091	$	547	$	8,806	$	18,136	$	5,121	$	49,210


	Nine Months Ended September 30, 2021

(Dollars in thousands)	Beginning ACL Balance		Charge-offs		Recoveries		Provision for Credit Losses		Ending ACL Balance
Investor loans secured by real estate
CRE non-owner occupied	$	49,176	$	(154)	$	—	$	(6,555)	$	42,467
Multifamily	62,534		—		—		(10,370)		52,164
Construction and land	12,435		—		—		(4,418)		8,017
SBA secured by real estate	5,159		(423)		—		(857)		3,879
Business loans secured by real estate
CRE owner-occupied	50,517		—		44		(16,882)		33,679
Franchise real estate secured	11,451		—		—		(1,825)		9,626
SBA secured by real estate	6,567		(98)		130		(1,495)		5,104
Commercial loans
Commercial and industrial	46,964		(4,653)		3,428		(8,144)		37,595
Franchise non-real estate secured	20,525		(2,554)		80		(533)		17,518
SBA non-real estate secured	995		—		19		(382)		632

Retail loans
Single family residential	1,204		—		3		(678)		529
Consumer loans	491		—		—		(220)		271
Totals	$	268,018	$	(7,882)	$	3,704	$	(52,359)	$	211,481


	Three Months Ended September 30, 2020

(Dollars in thousands)	Beginning ACL Balance		Charge-offs		Recoveries		Provision for Credit Losses		Ending ACL Balance
Investor loans secured by real estate
CRE non-owner occupied	$	63,007	$	(443)	$	—	$	(8,459)	$	54,105
Multifamily	63,511		—		—		3,825		67,336
Construction and land	18,804		(377)		—		(2,870)		15,557
SBA secured by real estate	2,010		(145)		34		3,428		5,327
Business loans secured by real estate
CRE owner-occupied	48,213		(1,739)		21		2,171		48,666
Franchise real estate secured	13,060		—		—		(1,072)		11,988
SBA secured by real estate	4,368		—		76		1,716		6,160
Commercial loans
Commercial and industrial	41,967		(2,437)		10		8,374		47,914
Franchise non-real estate secured	21,676		(207)		865		(2,185)		20,149
SBA non-real estate secured	600		(10)		8		353		951

Retail loans
Single family residential	1,479		—		2		(238)		1,243
Consumer loans	3,576		(129)		1		(341)		3,107
Totals	$	282,271	$	(5,487)	$	1,017	$	4,702	$	282,503


	Nine Months Ended September 30, 2020

(Dollars in thousands)	Beginning ACL Balance (1)		Adoption of ASC 326		Initial ACL Recorded for PCD Loans		Charge-offs		Recoveries		Provision for Credit Losses		Ending ACL Balance
Investor loans secured by real estate
CRE non-owner occupied	$	1,899	$	8,423	$	3,025	$	(830)	$	—	$	41,588	$	54,105
Multifamily	729		9,174		8,710		—		—		48,723		67,336
Construction and land	4,484		(124)		2,051		(377)		—		9,523		15,557
SBA secured by real estate	1,915		(1,401)		—		(699)		34		5,478		5,327
Business loans secured by real estate
CRE owner-occupied	2,781		20,166		3,766		(1,739)		44		23,648		48,666
Franchise real estate secured	592		5,199		—		—		—		6,197		11,988
SBA secured by real estate	2,119		2,207		235		(315)		147		1,767		6,160
Commercial loans
Commercial and industrial	13,857		87		2,325		(5,213)		37		36,821		47,914
Franchise non-real estate secured	5,816		9,214		—		(1,434)		865		5,688		20,149
SBA non-real estate secured	445		218		924		(803)		13		154		951

Retail loans
Single family residential	655		541		206		(62)		3		(100)		1,243
Consumer loans	406		1,982		—		(137)		2		854		3,107
Totals	$	35,698	$	55,686	$	21,242	$	(11,609)	$	1,145	$	180,341	$	282,503


	Commercial Real Estate and Commercial Term Loans by PD and Vintage
(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving		Revolving Converted to Term During the Period		Total
September 30, 2021
Investor loans secured by real estate
CRE non-owner-occupied
0% - 5.00%	$	530,275	$	239,267	$	392,557	$	421,922	$	198,651	$	722,951	$	4,270	$	—	$	2,509,893
>5.00% - 10.00%	35,330		24,645		23,757		9,755		11,088		53,696		5,329		—		163,600
Greater than 10%	—		4,821		50,121		32,661		9,933		51,511		525		—		149,572
Multifamily
0% - 5.00%	1,660,670		962,609		1,316,575		520,329		500,815		609,731		218		—		5,570,947
>5.00% - 10.00%	28,718		49,737		31,988		6,958		1,590		8,314		—		—		127,305
Greater than 10%	5,059		—		—		—		—		2,355		—		—		7,414
Construction and Land
0% - 5.00%	56,187		82,557		2,329		991		3,996		3,607		48		—		149,715
>5.00% - 10.00%	21,654		11,027		1,700		—		—		—		—		—		34,381
Greater than 10%	8,266		31,606		47,704		21,143		—		—		—		—		108,719
SBA secured by real estate
0% - 5.00%	130		499		7,373		12,428		15,206		12,834		—		—		48,470
>5.00% - 10.00%	—		—		—		—		—		—		—		—		—
Greater than 10%	—		—		9		—		629		338		—		—		976
Total investor loans secured by real estate	2,346,289		1,406,768		1,874,113		1,026,187		741,908		1,465,337		10,390		—		8,870,992
Business loans secured by real estate
CRE owner-occupied
0% - 5.00%	635,469		302,683		315,267		215,974		201,190		499,308		3,211		300		2,173,402
>5.00% - 10.00%	—		—		7,846		7,573		6,733		31,811		—		—		53,963
Greater than 10%	—		—		—		6,109		2,972		5,718		—		—		14,799
Franchise real estate secured
0% - 5.00%	95,937		43,332		55,621		39,053		61,591		37,696		—		—		333,230
>5.00% - 10.00%	812		—		4,151		5,253		5,310		4,590		—		—		20,116
Greater than 10%	1,135		—		—		—		—		—		—		—		1,135
SBA secured by real estate
0% - 5.00%	3,789		2,368		6,237		9,605		8,900		16,909		—		—		47,808
>5.00% - 10.00%	—		—		1,296		893		2,318		8,273		—		—		12,780
Greater than 10%	—		—		—		1,326		3,012		3,650		1,361		—		9,349
Total business loans secured by real estate	737,142		348,383		390,418		285,786		292,026		607,955		4,572		300		2,666,582


	Term Loans by LTV and Vintage
(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving		Revolving Converted to Term During the Period		Total
September 30, 2021
Investor loans secured by real estate
CRE non-owner-occupied
55% and below	$	291,909	$	142,444	$	188,747	$	208,825	$	127,768	$	589,484	$	9,599	—		$	1,558,776
>55-65%	220,116		89,488		193,461		104,301		79,960		204,683		525		—		892,534
>65-75%	53,580		36,801		64,165		146,402		8,118		32,513		—		—		341,579
Greater than 75%	—		—		20,062		4,810		3,826		1,478		—		—		30,176
Multifamily
55% and below	260,469		219,510		314,269		211,795		207,913		299,265		218		—		1,513,439
>55-65%	719,640		421,994		580,084		229,609		158,927		226,977		—		—		2,337,231
>65-75%	703,894		367,815		442,661		85,883		133,716		85,918		—		—		1,819,887
Greater than 75%	10,444		3,027		11,549		—		1,849		8,240		—		—		35,109
Construction and land
55% and below	82,458		120,912		42,774		4,183		3,996		3,607		48		—		257,978
>55-65%	—		4,278		6,630		17,951		—		—		—		—		28,859
>65-75%	3,649		—		2,329		—		—		—		—		—		5,978
Greater than 75%	—		—		—		—		—		—		—		—		—
SBA secured by real estate
55% and below	—		—		9		637		695		2,177		—		—		3,518
>55-65%	—		—		2,407		1,958		1,910		2,853		—		—		9,128
>65-75%	130		—		3,870		4,606		4,461		5,544		—		—		18,611
Greater than 75%	—		499		1,096		5,227		8,769		2,598		—		—		18,189
Total investor loans secured by real estate	2,346,289		1,406,768		1,874,113		1,026,187		741,908		1,465,337		10,390		—		8,870,992
Business loan secured by real estate
CRE owner-occupied
55% and below	296,313		108,338		123,527		100,865		139,455		383,599		3,211		300		1,155,608
>55-65%	161,368		73,789		66,407		70,311		46,314		99,171		—		—		517,360
>65-75%	126,160		87,909		123,495		52,679		16,909		37,740		—		—		444,892
Greater than 75%	51,628		32,647		9,684		5,801		8,217		16,327		—		—		124,304
Franchise real estate secured
55% and below	17,039		23,695		9,052		12,776		14,889		19,988		—		—		97,439
>55-65%	39,872		2,622		11,055		10,137		4,804		10,129		—		—		78,619
>65-75%	23,262		15,150		36,521		8,632		15,563		10,951		—		—		110,079
Greater than 75%	17,711		1,865		3,144		12,761		31,645		1,218		—		—		68,344
SBA secured by real estate
55% and below	2,547		591		1,897		1,127		5,146		14,667		1,361		—		27,336
>55-65%	186		556		199		1,513		1,306		7,513		—		—		11,273
>65-75%	703		328		3,111		5,254		4,104		3,586		—		—		17,086
Greater than 75%	353		893		2,326		3,930		3,674		3,066		—		—		14,242

Total business loans secured by real estate	$	737,142	$	348,383	$	390,418	$	285,786	$	292,026	$	607,955	$	4,572	$	300	$	2,666,582


	Term Loans by FICO and Vintage
(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving		Revolving Converted to Term During the Period		Total
September 30, 2021
Retail loans
Single family residential
Greater than 740	$	20,201	$	3,518	$	1,967	$	1,599	$	3,319	$	53,609	$	17,213	—		$	101,426
>680 - 740	—		—		—		34		3,172		9,756		5,271		—		18,233
>580 - 680	—		—		—		—		453		9,301		757		—		10,511
Less than 580	—		—		—		—		10		14,096		33		—		14,139
Consumer loans
Greater than 740	27		30		37		22		12		2,500		1,325		—		3,953
>680 - 740	1		—		19		—		3		441		1,876		—		2,340
>580 - 680	—		—		7		—		—		59		49		—		115
Less than 580	—		—		—		—		—		—		18		—		18
Total retail loans	$	20,229	$	3,548	$	2,030	$	1,655	$	6,969	$	89,762	$	26,542	$	—	$	150,735


						Carrying Value
(Dollars in thousands)	Stated Maturity	Current Interest Rate		Current Principal Balance		September 30, 2022		December 31, 2021
Subordinated notes
Subordinated notes due 2024, 5.75% per annum	September 3, 2024	5.75	%	$	60,000	$	59,761	$	59,671
Subordinated notes due 2029, 4.875% per annum until May 15, 2024, 3-month LIBOR +2.5% thereafter	May 15, 2029	4.875	%	125,000		123,323		123,132
Subordinated notes due 2030, 5.375% per annum until June 15, 2025, 3-month SOFR +5.170% thereafter	June 15, 2030	5.375	%	150,000		147,961		147,764
Total subordinated debentures				$	335,000	$	331,045	$	330,567


		Three Months Ended							Three Months Ended
(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	September 30, 2021		June 30, 2021		September 30, 2020		(Dollars in thousands, except per share data)	September 30, 2022		June 30, 2022		September 30, 2021
Basic	Basic							Basic
Net income	Net income	$	90,088	$	96,302	$	66,566	Net income	$	73,363	$	69,803	$	90,088
Less: dividends and undistributed earnings allocated to participating securities	Less: dividends and undistributed earnings allocated to participating securities	(937)		(1,034)		(612)		Less: dividends and undistributed earnings allocated to participating securities	(917)		(867)		(937)
Net income allocated to common stockholders	Net income allocated to common stockholders	$	89,151	$	95,268	$	65,954	Net income allocated to common stockholders	$	72,446	$	68,936	$	89,151

Weighted average common shares outstanding	Weighted average common shares outstanding	93,549,639		93,635,392		93,529,967		Weighted average common shares outstanding	93,793,502		93,765,264		93,549,639
Basic earnings per common share	Basic earnings per common share	$	0.95	$	1.02	$	0.71	Basic earnings per common share	$	0.77	$	0.74	$	0.95

Diluted	Diluted							Diluted
Net income allocated to common stockholders	Net income allocated to common stockholders	$	89,151	$	95,268	$	65,954	Net income allocated to common stockholders	$	72,446	$	68,936	$	89,151

Weighted average common shares outstanding	Weighted average common shares outstanding	93,549,639		93,635,392		93,529,967		Weighted average common shares outstanding	93,793,502		93,765,264		93,549,639
Diluted effect of share-based compensation		511,085		582,636		189,200
Dilutive effect of share-based compensation								Dilutive effect of share-based compensation	327,135		275,427		511,085

Weighted average diluted common shares	Weighted average diluted common shares	94,060,724		94,218,028		93,719,167		Weighted average diluted common shares	94,120,637		94,040,691		94,060,724
Diluted earnings per common share	Diluted earnings per common share	$	0.95	$	1.01	$	0.70	Diluted earnings per common share	$	0.77	$	0.73	$	0.95


		September 30, 2021									September 30, 2022
		Fair Value Measurement Using									Fair Value Measurement Using						Total Fair Value
(Dollars in thousands)	(Dollars in thousands)	Level 1		Level 2		Level 3		Total Fair Value		(Dollars in thousands)	Level 1		Level 2		Level 3
Financial assets	Financial assets									Financial assets
Investment securities available-for-sale:
AFS investment securities:										AFS investment securities:
U.S. Treasury	U.S. Treasury	$	—	$	79,342	$	—	$	79,342	U.S. Treasury	$	—	$	46,774	$	—	$	46,774
Agency	Agency	—		530,093		—		530,093		Agency	—		430,863		—		430,863
Corporate		—		386,391		—		386,391
Municipal bonds		—		1,255,866		—		1,255,866
Corporate debt										Corporate debt	—		555,750		—		555,750

Collateralized mortgage obligations	Collateralized mortgage obligations	—		662,231		—		662,231		Collateralized mortgage obligations	—		791,115		—		791,115
Mortgage-backed securities	Mortgage-backed securities	—		1,795,892		—		1,795,892		Mortgage-backed securities	—		836,577		—		836,577
Total securities available-for-sale		$	—	$	4,709,815	$	—	$	4,709,815
Total AFS investment securities										Total AFS investment securities	$	—	$	2,661,079	$	—	$	2,661,079

Equity securities with readily determinable fair values										Equity securities with readily determinable fair values	$	1,035	$	—	$	—	$	1,035

Derivative assets:	Derivative assets:									Derivative assets:

Interest rate swaps		$	—	$	6,747	$	—	$	6,747
Foreign exchange contracts										Foreign exchange contracts	$	15	$	—	$	—	$	15
Interest rate swaps (1)										Interest rate swaps (1)	—		8,033		—		8,033
Equity warrants	Equity warrants	—		—		1,895		1,895		Equity warrants	—		—		1,911		1,911
Total derivative assets	Total derivative assets	$	—	$	6,747	$	1,895	$	8,642	Total derivative assets	$	15	$	8,033	$	1,911	$	9,959

Financial liabilities	Financial liabilities									Financial liabilities

Derivative liabilities		$	—	$	5,819	$	—	$	5,819
Derivative liabilities:										Derivative liabilities:
Foreign exchange										Foreign exchange	$	7	$	—	$	—	$	7
Interest rate swaps										Interest rate swaps	—		12,766		—		12,766
Total derivative liabilities										Total derivative liabilities	$	7	$	12,766	$	—	$	12,773


	December 31, 2020
					Range
(Dollars in thousands)	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Min	Max	Weighted Average
Investor loans secured by real estate
CRE non-owner-occupied	$	198	Fair value of collateral	Collateral discount and cost to sell	10.00%	10.00%	10.00%


SBA secured by real estate (1)	746		Fair value of collateral	Collateral discount and cost to sell	10.00%	10.00%	10.00%

Business loans secured by real estate


SBA secured by real estate (2)	386		Fair value of collateral	Collateral discount and cost to sell	7.00%	10.00%	9.09%

Commercial loans
Commercial and industrial	2,040		Fair value of collateral	Collateral discount and cost to sell	7.00%	10.00%	9.06%

SBA non-real estate secured	707		Fair value of collateral	Collateral discount and cost to sell	7.00%	7.00%	7.00%





Total individually evaluated loans	$	4,077


		At September 30, 2021											At September 30, 2022
(Dollars in thousands)	(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value		(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Assets	Assets											Assets
Cash and cash equivalents	Cash and cash equivalents	$	322,320	$	322,320	$	—	$	—	$	322,320	Cash and cash equivalents	$	739,211	$	739,211	$	—	$	—	$	739,211
Interest-bearing time deposits with financial institutions	Interest-bearing time deposits with financial institutions	2,708		2,708		—		—		2,708		Interest-bearing time deposits with financial institutions	1,733		1,733		—		—		1,733
Investments held-to-maturity		170,576		—		169,154		—		169,154
Investment securities held-to-maturity												Investment securities held-to-maturity	1,385,502		—		1,055,187		—		1,055,187
Investment securities available-for-sale	Investment securities available-for-sale	4,709,815		—		4,709,815		—		4,709,815		Investment securities available-for-sale	2,661,079		—		2,661,079		—		2,661,079
Equity securities with readily determinable fair values												Equity securities with readily determinable fair values	1,035		1,035		—		—		1,035
Loans held for sale	Loans held for sale	8,100		—		8,899		—		8,899		Loans held for sale	2,163		—		2,261		—		2,261
Loans held for investment, net	Loans held for investment, net	13,982,861		—		—		14,121,193		14,121,193		Loans held for investment, net	14,908,811		—		—		14,207,668		14,207,668

Derivative assets(1)	Derivative assets(1)	8,642		—		6,747		1,895		8,642		Derivative assets(1)	9,959		15		8,033		1,911		9,959
Accrued interest receivable	Accrued interest receivable	63,228		63,228		—		—		63,228		Accrued interest receivable	66,192		—		66,192		—		66,192

Liabilities	Liabilities											Liabilities
Deposit accounts	Deposit accounts	$	17,469,999	$	16,356,929	$	1,167,405	$	—	$	17,524,334	Deposit accounts	$	17,746,374	$	—	$	17,724,242	$	—	$	17,724,242
FHLB advances	FHLB advances	150,000		—		150,000		—		150,000		FHLB advances	600,000		—		582,313		—		582,313

Subordinated debentures	Subordinated debentures	330,408		—		367,515		—		367,515		Subordinated debentures	331,045		—		330,742		—		330,742
Derivative liabilities	Derivative liabilities	5,819		—		5,819		—		5,819		Derivative liabilities	12,773		7		12,766		—		12,773
Accrued interest payable	Accrued interest payable	5,065		5,065		—		—		5,065		Accrued interest payable	8,785		—		8,785		—		8,785


	At December 31, 2020
(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Assets
Cash and cash equivalents	$	880,766	$	880,766	$	—	$	—	$	880,766
Interest-bearing time deposits with financial institutions	2,845		2,845		—		—		2,845
Investments held-to-maturity	23,732		—		25,013		—		25,013
Investment securities available-for-sale	3,931,115		—		3,931,115		—		3,931,115
Loans held for sale	601		—		645		—		645
Loans held for investment, net	13,236,433		—		—		13,351,092		13,351,092
Derivative assets	13,967		—		12,053		1,914		13,967
Accrued interest receivable	74,574		74,574		—		—		74,574

Liabilities
Deposit accounts	$	16,214,177	$	14,587,335	$	1,631,047	$	—	$	16,218,382
FHLB advances	31,000		—		31,564		—		31,564

Subordinated debentures	501,511		—		544,436		—		544,436
Derivative liabilities	12,066		—		12,066		—		12,066
Accrued interest payable	6,569		6,569		—		—		6,569


	At December 31, 2021
(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Assets
Cash and cash equivalents	$	304,703	$	304,703	$	—	$	—	$	304,703
Interest-bearing time deposits with financial institutions	2,216		2,216		—		—		2,216
Investment securities held-to-maturity	381,674		—		384,423		—		384,423
Investment securities available-for-sale	4,273,864		—		4,273,864		—		4,273,864
Loans held for sale	10,869		—		11,959		—		11,959
Loans held for investment, net	14,295,897		—		—		14,392,684		14,392,684
Derivative assets	11,989		—		10,100		1,889		11,989
Accrued interest receivable	65,728		65,728		—		—		65,728

Liabilities
Deposit accounts	$	17,115,589	$	16,057,316	$	1,058,822	$	—	$	17,116,138
FHLB advances	550,000		—		550,093		—		550,093
Other borrowings	8,000		—		8,000		—		8,000
Subordinated debentures	330,567		—		350,359		—		350,359
Derivative liabilities	5,263		—		5,263		—		5,263
Accrued interest payable	2,366		2,366		—		—		2,366


Line Item in the Statement of Financial Position in Which the Hedged Item is Included	Line Item in the Statement of Financial Position in Which the Hedged Item is Included	Carrying Amount of the Hedged Assets				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets				Line Item in the Statement of Financial Position in Which the Hedged Item is Included	Carrying Amount of the Hedged Assets				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020		(Dollars in thousands)	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Loans held for investment(1)	Loans held for investment(1)	$	298,973	$	—	$	(1,027)	$	—	Loans held for investment (1)	$	1,131,876	$	1,194,702	$	(68,124)	$	(5,298)
Total	Total	$	298,973	$	—	$	(1,027)	$	—	Total	$	1,131,876	$	1,194,702	$	(68,124)	$	(5,298)


(Dollars in thousands)	(Dollars in thousands)		Three Months Ended September 30,				Nine Months Ended September 30,				(Dollars in thousands)		Three Months Ended						Nine Months Ended
Derivatives Not Designated as Hedging Instruments:	Derivatives Not Designated as Hedging Instruments:	Location of Gain (Loss) Recognized in Income on Derivative Instruments	2021		2020		2021		2020		Derivatives Not Designated as Hedging Instruments:	Location of Gain (Loss) Recognized in Income on Derivative Instruments	September 30, 2022		June 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Foreign exchange contracts											Foreign exchange contracts	Other income	$	141	$	77	$	22	$	264	$	32
Interest rate products	Interest rate products	Other income	$	1	$	—	$	9	$	—	Interest rate products	Other income	1		2		1		4		9
Other contracts		Other income	—		218		—		415
Equity warrants	Equity warrants	Other income	(8)		(31)		(19)		(35)		Equity warrants	Other income	5		(2)		(8)		22		(19)
Total	Total		$	(7)	$	187	$	(10)	$	380	Total		$	147	$	77	$	15	$	290	$	22