~~(Former name, address and fiscal year, if changed since last report)~~Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definition s of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

~~85,769,278~~86,283,006 common shares were outstanding ~~as of July 31, 2019.~~at April 30, 2020.

Hancock Whitney Corporation – a financial holding company registered with the Securities and Exchange Commission

Hancock Whitney Bank – a wholly-owned subsidiary of Hancock Whitney Corporation through which Hancock Whitney Corporation conducts its banking operations

Company – Hancock Whitney Corporation and its ~~wholly-owned~~consolidated subsidiaries

Basel III -– Basel Committee's 2010 Regulatory Capital Framework (Third Accord)

Beta – amount by which deposit or loan costs change in response to movement in short-term interest rates

Beige Book -– Federal Reserve’s Summary of Commentary on Current Economic Conditions

~~Capital One~~CARES Act – ~~Capital One, National Association, from which the Company acquired a trust~~Coronavirus Aid, Relief, and ~~asset management business in July 2018.~~

~~CECL~~ ~~– Current Expected Credit Losses, the Accounting Standards Update effective for the Company on January 1, 2020~~Economic Security Act

CECL – Current Expected Credit Losses, the term commonly used to refer to the methodology of estimating credit losses required by ASC 326, “Financial Instruments – Credit Losses.” ASC 326 was adopted by the Company on January 1, 2020, superseding the methodology prescribed by ASC 310.

CMO – ~~Collateralized Mortgage Obligation~~collateralized mortgage obligation

Coronavirus – the novel coronavirus declared a pandemic during the first quarter of 2020, resulting in profound market disruptions

Federal Reserve ~~Bank~~Board – The ~~12 banks~~7-member Board of Governors that ~~are~~oversees the ~~operating arms~~Federal Reserve System, establishes

monetary policy (interest rates, credit, etc.), and monitors the economic health of the ~~U.S. central bank.~~country. Its members are appointed

Federal Reserve System - The 12 Federal Reserve Banks, with each one serving member banks in its own district.

This system, supervised by the Federal Reserve Board, has broad regulatory powers over the money supply and the

credit structure. They implement the policies of the Federal Reserve Board and also conduct economic ~~research.~~research

GAAP – Generally Accepted Accounting Principles in the United States of America

MD&A – management’s discussion and analysis of financial condition and results of operations

MidSouth – MidSouth Bancorp, Inc., an entity the Company ~~has agreed to acquire under an Agreement and Plan of Merger dated April 30,~~acquired on September 21, 2019

PPP – Paycheck Protection Program, a loan program administered by the Small Business Administration designed to provide a direct incentive for small businesses to keep workers on payroll during interruptions caused by the COVID-19 pandemic

Reference rate reform – refers to the global transition away from LIBOR and other interbank offered rates toward new reference rates that are more reliable and robust

~~Tax Act~~SOFR – ~~Tax Cuts and Jobs Act of 2017~~secured overnight financing rate

te – taxable equivalent adjustment, or the term used to indicate that a financial measure is presented on a fully taxable equivalent basis

	June 30,			December 31,			March 31,			December 31,
(in thousands, except per share data)	2019			2018			2020			2019
ASSETS
Cash and due from banks	$	365,152		$	383,372		$	476,811		$	432,104
Interest-bearing bank deposits		150,765			110,579			876,058			109,961
Federal funds sold		297			515			256			268
Securities available for sale, at fair value (amortized cost of $2,758,723 and $2,755,806)		2,790,468			2,691,037
Securities held to maturity (fair value of $2,979,401 and $2,935,856)		2,935,267			2,979,547
Securities available for sale, at fair value (amortized cost of $4,709,075 and $4,637,610)								4,893,996			4,675,304
Securities held to maturity (fair value of $1,562,577 and $1,611,004)								1,480,494			1,568,009
Loans held for sale		36,150			28,150			67,587			55,864
Loans		20,175,812			20,026,411			21,515,681			21,212,755
Less: allowance for loan losses		(195,625	)		(194,514	)		(426,003	)		(191,251	)
Loans, net		19,980,187			19,831,897			21,089,678			21,021,504
Property and equipment, net of accumulated depreciation of $238,051 and $225,969		360,298			353,668
Right of use assets, net of accumulated amortization of $6,172		113,319			—
Property and equipment, net of accumulated depreciation of $252,459 and $249,527								377,638			380,209
Right of use assets, net of accumulated amortization of $14,719 and $12,194								116,809			110,023
Prepaid expenses		40,701			35,047			43,772			40,178
Other real estate and foreclosed assets, net		27,520			26,270			18,460			30,405
Accrued interest receivable		88,391			86,681			96,167			92,037
Goodwill		792,084			790,972			855,453			855,453
Other intangible assets, net		85,967			96,151			101,463			106,807
Life insurance contracts		591,287			549,300			604,812			608,063
Deferred tax asset, net		—			22,967
Funded pension assets, net		172,946			65,125			190,166			185,791
Other assets		231,064			184,629			472,073			328,777
Total assets	$	28,761,863		$	28,235,907		$	31,761,693		$	30,600,757
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
Noninterest-bearing	$	8,114,632		$	8,499,027		$	9,204,631		$	8,775,632
Interest-bearing		15,121,410			14,651,158			15,803,865			15,027,943
Total deposits		23,236,042			23,150,185			25,008,496			23,803,575
Short-term borrowings		1,641,598			1,589,128			2,673,283			2,714,872
Long-term debt		232,754			224,993			225,606			233,462
Accrued interest payable		19,060			12,267			11,513			10,200
Lease liabilities		128,718			—			134,908			127,703
Deferred tax liability, net		33,046			—			32,063			37,721
Other liabilities		151,730			177,994			254,760			205,539
Total liabilities		25,442,948			25,154,567			28,340,629			27,133,072
Stockholders' equity:
Common stock		292,716			292,716			309,513			309,513
Capital surplus		1,737,492			1,725,741			1,741,156			1,736,664
Retained earnings		1,363,910			1,243,592			1,297,129			1,476,232
Accumulated other comprehensive loss, net		(75,203	)		(180,709	)
Accumulated other comprehensive income (loss), net								73,266			(54,724	)
Total stockholders' equity		3,318,915			3,081,340			3,421,064			3,467,685
Total liabilities and stockholders' equity	$	28,761,863		$	28,235,907		$	31,761,693		$	30,600,757
Preferred shares authorized (par value of $20.00 per share)		50,000			50,000			50,000			50,000
Preferred shares issued and outstanding		—			—			—			—
Common shares authorized (par value of $3.33 per share)		350,000			350,000			350,000			350,000
Common shares issued		87,903			87,903			92,947			92,947
Common shares outstanding		85,759			85,643			86,275			87,515

	Three Months Ended					Six Months Ended						Three Months Ended
	June 30,					June 30,						March 31,
(in thousands, except per share data)	2019		2018			2019			2018			2020			2019
Interest income:
Loans, including fees	$	243,233	$	215,161		$	481,515		$	421,008		$	238,723		$	238,282
Loans held for sale		344		295			597			516			621			253
Securities-taxable		30,244		30,783			61,383			60,084			32,607			31,139
Securities-tax exempt		5,211		5,490			10,657			11,027			4,944			5,446
Short-term investments		1,346		575			2,509			1,064			448			1,163
Total interest income		280,378		252,304			556,661			493,699			277,343			276,283
Interest expense:
Deposits		49,843		29,870			95,981			56,829			38,937			46,138
Short-term borrowings		7,847		7,416			15,929			12,767			4,462			8,082
Long-term debt		2,820		3,471			5,629			6,892			2,756			2,809
Total interest expense		60,510		40,757			117,539			76,488			46,155			57,029
Net interest income		219,868		211,547			439,122			417,211			231,188			219,254
Provision for loan losses		8,088		8,891			26,131			21,144
Net interest income after provision for loan losses		211,780		202,656			412,991			396,067
Provision for credit losses													246,793			18,043
Net interest income (loss) after provision for credit losses													(15,605	)		201,211
Noninterest income:
Service charges on deposit accounts		20,723		20,981			41,090			42,429			22,837			20,367
Trust fees		15,904		11,653			31,028			22,988			14,806			15,124
Bank card and ATM fees		16,619		15,464			31,909			29,922			17,362			15,290
Investment and annuity fees and insurance commissions		6,591		6,264			13,119			12,389			7,150			6,528
Secondary mortgage market operations		4,433		3,965			8,159			7,366			6,053			3,726
Other income		14,980		10,505			24,448			19,990			16,179			9,468
Total noninterest income		79,250		68,832			149,753			135,084			84,387			70,503
Noninterest expense:
Compensation expense		87,747		79,885			171,715			159,985			91,071			83,968
Employee benefits		18,888		17,358			38,618			37,232			22,478			19,730
Personnel expense		106,635		97,243			210,333			197,217			113,549			103,698
Net occupancy expense		12,961		12,316			24,945			23,326			12,522			11,984
Equipment expense		4,342		4,262			9,021			7,808			4,617			4,679
Data processing expense		20,088		18,273			39,419			34,722			22,047			19,331
Professional services expense		9,665		13,381			17,833			22,636			9,741			8,168
Amortization of intangible assets		5,047		5,322			10,185			10,940			5,345			5,138
Deposit insurance and regulatory fees		4,755		8,376			10,161			16,324			5,815			5,406
Other real estate (income) expense		395		(289	)		(596	)		(79	)
Other real estate and foreclosed assets (income) expense													10,130			(991	)
Other expense		19,679		25,518			37,966			42,299			19,569			18,287
Total noninterest expense		183,567		184,402			359,267			355,193			203,335			175,700
Income before income taxes		107,463		87,086			203,477			175,958
Income taxes		19,186		15,909			36,036			32,306
Net income	$	88,277	$	71,177		$	167,441		$	143,652
Earnings per common share-basic	$	1.01	$	0.82		$	1.92		$	1.65
Earnings per common share-diluted	$	1.01	$	0.82		$	1.92		$	1.65
Income (loss) before income taxes													(134,553	)		96,014
Income taxes expense (benefit)													(23,520	)		16,850
Net income (loss)												$	(111,033	)	$	79,164
Earnings (loss) per common share-basic												$	(1.28	)	$	0.91
Earnings (loss) per common share-diluted												$	(1.28	)	$	0.91
Dividends paid per share	$	0.27	$	0.24		$	0.54		$	0.48		$	0.27		$	0.27
Weighted average shares outstanding-basic		85,728		85,305			85,708			85,273			87,186			85,688
Weighted average shares outstanding-diluted		85,835		85,483			85,810			85,451			87,186			85,800

Three Months Ended June 30, 2019 and 2018										Accumulated
																										Accumulated
	Common Stock									Other						Common Stock										Other
(in thousands, except per share data)	Shares Issued		Amount		Capital Surplus		Retained Earnings			Comprehensive Loss, Net			Total			Shares Issued		Amount		Capital Surplus			Retained Earnings			Comprehensive Income (Loss), Net			Total
Balance, March 31, 2019		87,903	$	292,716	$	1,731,148	$	1,299,220		$	(132,509	)	$	3,190,575
Balance, December 31, 2018																	87,903	$	292,716	$	1,725,741		$	1,243,592		$	(180,709	)	$	3,081,340
Net income		—		—		—		88,277			—			88,277			—		—		—			79,164			—			79,164
Other comprehensive income		—		—		—		—			57,306			57,306
Other comprehensive loss																	—		—		—			—			48,200			48,200
Comprehensive income		—		—		—		88,277			57,306			145,583			—		—		—			79,164			48,200			127,364
Cash dividends declared ($0.27 per common share)		—		—		—		(23,593	)		—			(23,593	)		—		—		—			(23,581	)		—			(23,581	)
Common stock activity, long-term incentive plan		—		—		5,420		6			—			5,426			—		—		4,528			45			—			4,573
Issuance of stock from dividend reinvestment and stock purchase plans		—		—		924		—			—			924			—		—		879			—			—			879
Balance, June 30, 2019		87,903	$	292,716	$	1,737,492	$	1,363,910		$	(75,203	)	$	3,318,915
Balance, March 31, 2019																	87,903	$	292,716	$	1,731,148		$	1,299,220		$	(132,509	)	$	3,190,575

Balance, March 31, 2018		87,903	$	292,716	$	1,723,689	$	1,060,182		$	(180,549	)	$	2,896,038
Net income		—		—		—		71,177			—			71,177
Other comprehensive loss		—		—		—		—			(22,660	)		(22,660	)
Comprehensive income		—		—		—		71,177			(22,660	)		48,517
Cash dividends declared ($0.24 per common share)		—		—		—		(20,894	)		—			(20,894	)
Common stock activity, long-term incentive plan		—		—		5,044		41			—			5,085
Issuance of stock from dividend reinvestment and stock purchase plans		—		—		809		—			—			809
Balance, June 30, 2018		87,903	$	292,716	$	1,729,542	$	1,110,506		$	(203,209	)	$	2,929,555

Six Months Ended June 30, 2019 and 2018										Accumulated
	Common Stock									Other
(in thousands, except per share data)	Shares Issued		Amount		Capital Surplus		Retained Earnings			Comprehensive Loss, Net			Total
Balance, December 31, 2018		87,903	$	292,716	$	1,725,741	$	1,243,592		$	(180,709	)	$	3,081,340
Net income		—		—		—		167,441			—			167,441
Balance, December 31, 2019																	92,947	$	309,513	$	1,736,664		$	1,476,232		$	(54,724	)	$	3,467,685
Net income (loss)																	—		—		—			(111,033	)		—			(111,033	)
Other comprehensive income		—		—		—		—			105,506			105,506			—		—		—			—			127,990			127,990
Comprehensive income		—		—		—		167,441			105,506			272,947			—		—		—			(111,033	)		127,990			16,957
Cash dividends declared ($0.54 per common share)		—		—		—		(47,174	)		—			(47,174	)
Cumulative effect of change in accounting principle																	—		—		—			(44,087	)		—			(44,087	)
Cash dividends declared ($0.27 per common share)																	—		—		—			(24,028	)		—			(24,028	)
Common stock activity, long-term incentive plan		—		—		9,948		51			—			9,999			—		—		4,114			45			—			4,159
Repurchase of common stock																	—		—		(12,716	)		—			—			(12,716	)
Net settlement of accelerated share repurchase agreement (1,001,472 shares)																	—		—		12,110			—			—			12,110
Issuance of stock from dividend reinvestment and stock purchase plans		—		—		1,803		—			—			1,803			—		—		984			—			—			984
Balance, June 30, 2019		87,903	$	292,716	$	1,737,492	$	1,363,910		$	(75,203	)	$	3,318,915

Balance, December 31, 2017		87,903	$	292,716	$	1,718,117	$	1,008,518		$	(134,402	)	$	2,884,949
Net income		—		—		—		143,652			—			143,652
Other comprehensive loss		—		—		—		—			(68,807	)		(68,807	)
Comprehensive income		—		—		—		143,652			(68,807	)		74,845
Cash dividends declared ($0.48 per common share)		—		—		—		(41,775	)		—			(41,775	)
Common stock activity, long-term incentive plan		—		—		9,779		111			—			9,890
Issuance of stock from dividend reinvestment and stock purchase plans		—		—		1,646		—			—			1,646
Balance, June 30, 2018		87,903	$	292,716	$	1,729,542	$	1,110,506		$	(203,209	)	$	2,929,555
Balance, March 31, 2020																	92,947	$	309,513	$	1,741,156		$	1,297,129		$	73,266		$	3,421,064

	Six Months Ended						Three Months Ended
	June 30,						March 31,
(in thousands)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	167,441		$	143,652
Net income (loss)							$	(111,033	)	$	79,164
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		15,169			13,019			7,880			7,516
Provision for loan losses		26,131			21,144
Gain on other real estate owned		(1,093	)		(266	)
Deferred tax expense		24,573			21,361
Provision for credit losses								246,793			18,043
(Gain) loss on other real estate and foreclosed assets								10,550			(991	)
Gain on sale of securities								(112	)		—
Deferred tax expense (benefit)								(34,279	)		30,829
Increase in cash surrender value of life insurance contracts		(6,896	)		(2,621	)		(646	)		(3,772	)
(Gain) loss on disposal of other assets		(81	)		1,501
Loss on sale of business		—			1,145
Net (increase) decrease in loans held for sale		(7,998	)		4,299			(5,709	)		5,714
Net amortization of securities premium/discount		14,628			16,913			9,349			7,009
Amortization of intangible assets		10,185			10,940			5,345			5,138
Stock-based compensation expense		10,368			9,821			5,583			5,181
Net change in liability from variation margin collateral								(105,921	)		(3,820	)
Contribution to pension plan		(100,000	)		—			—			(100,000	)
Decrease in interest payable and other liabilities		(20,825	)		(22,397	)		(18,641	)		(11,658	)
Decrease in payable to FDIC for loan servicing		—			(11,113	)
(Increase) decrease in other assets		(183	)		13,074			9,887			(23,335	)
Other, net		(2,613	)		(307	)		(7,521	)		(1,595	)
Net cash provided by operating activities		128,806			220,165			11,525			13,423
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of available for sale securities								124,122			—
Proceeds from maturities of securities available for sale		125,154			168,186			166,265			55,596
Purchases of securities available for sale		(133,992	)		(318,786	)		(367,944	)		(1,502	)
Proceeds from maturities of securities held to maturity		191,553			178,625			84,176			79,533
Purchases of securities held to maturity		(154,498	)		(340,508	)
Net increase in short-term investments		(39,968	)		(11,826	)		(766,085	)		(52,668	)
Proceeds from sales of loans and leases		100,751			32,003			2,608			42,059
Net increase in loans		(278,834	)		(504,866	)		(339,888	)		(148,073	)
Purchase of life insurance contracts		(32,788	)		(1,601	)
Purchases of property and equipment		(22,718	)		(18,116	)		(9,460	)		(12,435	)
Proceeds from sales of property and equipment		202			42
Proceeds from sales of other real estate		6,134			8,010			3,007			4,613
Final cash settlement for acquisition of business		(1,112	)		—			—			(1,112	)
Proceeds from the sale of business, net of cash sold		—			77,648
Other, net		(10,887	)		(34,241	)		(1,731	)		(8,863	)
Net cash used in investing activities		(251,003	)		(765,430	)		(1,104,930	)		(42,852	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits		85,857			(17,746	)
Net increase in short-term borrowings		52,470			610,300
Net increase in deposits								1,204,921			230,109
Net decrease in short-term borrowings								(41,589	)		(200,393	)
Repayments of long-term debt		(151	)		(39,817	)		(76	)		(75	)
Net proceeds from issuance of long-term debt		11,649			83
Dividends paid		(47,174	)		(41,775	)		(24,028	)		(23,581	)
Payroll tax remitted on net share settlement of equity awards		(845	)		(415	)		(1,494	)		(688	)
Proceeds from exercise of stock options		368			1,113
Proceeds from dividend reinvestment and stock purchase plans		1,803			1,646			984			879
Settlement of forward contract portion of accelerated share repurchase								12,110			—
Repurchase of shares								(12,716	)		—
Net cash provided by financing activities		103,977			513,389			1,138,112			6,251
NET DECREASE IN CASH AND DUE FROM BANKS		(18,220	)		(31,876	)
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS								44,707			(23,178	)
CASH AND DUE FROM BANKS, BEGINNING		383,372			386,948			432,104			383,372
CASH AND DUE FROM BANKS, ENDING	$	365,152		$	355,072		$	476,811		$	360,194
SUPPLEMENTAL INFORMATION FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
Assets acquired in settlement of loans	$	6,070		$	2,911		$	1,612		$	4,273

The consolidated financial statements include the accounts of Hancock Whitney Corporation and all other entities in which it has a controlling interest (the “Company”). The financial statements include all adjustments that are, in the opinion of management, necessary to fairly state the Company’s financial condition, results of operations, changes in stockholders’ equity and cash flows for the interim periods presented. The Company has also evaluated all subsequent events for potential recognition and disclosure through the date of the filing of this Quarterly Report on Form 10-Q. Some financial information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been condensed or omitted in this Quarterly Report on Form 10-Q pursuant to Securities and Exchange Commission rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. Financial information reported in these financial statements is not necessarily indicative of the Company’s financial condition, results of operations, or cash flows for any other interim or annual period.

Certain prior period amounts have been reclassified to conform to the current period presentation. These changes in presentation did not have a material impact on the Company’s financial condition or operating results.

The accounting principles the Company follows and the methods for applying these principles conform to GAAP and general practices followed by the banking industry. These accounting principles require management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.

On January 1, 2020, the Company adopted Accounting Standards Codification (“ASC”) 326, “Financial Instruments – Credit Losses,” more commonly referred to as CECL, on a modified retrospective basis. The provisions of this guidance require a material change to the manner in which the Company estimates and reports losses on financial instruments, including loans and unfunded lending commitments, select securities and other assets carried at amortized cost. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP. Changes to the Company’s accounting policies related to CECL are described below. There were no other material changes or developments during the reporting period with respect to methodologies that the Company uses when applying what management believes are critical accounting policies and developing critical accounting estimates as disclosed in its Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. Refer to Note 1615 – Recent Accounting Pronouncements for a discussion of accounting standards adopted during the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020 and the impact to the Company’s financial statements.

Allowance for Credit Losses on Loans, Leases Held for Investment and Unfunded Exposures

For reporting periods beginning on or after January 1, 2020, the Allowance for Credit Losses (ACL) is comprised of the Allowance for Loan and Lease Losses (ALLL), a valuation account available to absorb losses on loans and leases held for investment, and the Reserve for Unfunded Lending Commitments, a liability established to absorb credit losses for the expected life of the contractual term of on and off-balance sheet exposures as of the date of the determination. Quarterly, management estimates losses in the portfolio and unfunded exposures based on a number of factors, including the Company’s past loan loss experience, known and potential risks in the portfolio, adverse situations that may affect the borrowers’ ability to repay, the estimated value of any underlying collateral, and current and forecasted economic conditions.

The analysis and methodology for estimating the ACL includes two primary elements: a collective approach for pools of loans that have similar risk characteristics using a loss rate analysis, and a specific reserve analysis for credits individually evaluated for credit loss. For the collective approach, the Company segments loans into commercial non-real estate, commercial real estate – owner occupied, commercial real estate – income producing, construction and land development, residential mortgage and consumer, with further segmentation by region and sub-portfolio, as deemed appropriate. Both quantitative and qualitative factors are applied at the portfolio segment levels. The Company applies the practical expedient that permits the exclusion of the accrued interest receivable balance from amortized cost basis of financing receivables.

For the collectively evaluated portfolios, the Company utilizes internally developed credit models and third party economic forecasts for the calculation of the reasonable and supportable forecast period for the majority of the portfolio and other methods, generally

historical loss based, for select portfolios. The Company calculates collective allowance for a two-year reasonable and supportable forecast period utilizing the weighted average of multiple macroeconomic scenarios, and then reverts on a linear basis over four quarters to an average historical loss rate for the remaining life. The credit models consist primarily of multivariate regression and autoregressive models that correlate our historical net charge-off rates to select macroeconomic variables at a collective level. Forward-looking macroeconomic forecasts are applied as inputs to the regression equations to estimate quarterly collective net charge-off rates over the reasonable and supportable period. The net charge-off rates from the credit models for the reasonable and supportable period, the linear reversion rates, and the average loss rates for the post reasonable and supportable periods are applied to forecasted balance runoff for the estimated remaining term. The balance runoff incorporates prepayment assumptions developed from historical experience that are applied to the multiple macroeconomic forecasts. Forecasted net charge-off rates are also applied to forecasted draws and subsequent runoff of unfunded commitments in the calculation of the reserve for unfunded lending commitments. Qualitative adjustments to the output of quantitative calculations are made when management deems it necessary to reflect differences in current and forecasted conditions as compared to those during the historical loss period used in model development. Conditions to be considered include, but are not limited to, problem loan trends, current business and economic conditions, credit concentrations, lending policies and procedures, lending staff, collateral values, loan profiles and volumes, loan review quality, changes in competition and regulations, and other adjustments for model limitations or other variables not specifically captured.

The Company establishes specific reserves using an individually evaluated approach for nonaccrual loans, loans modified in troubled debt restructures, loans for which a troubled debt restructure is reasonably expected, and other financial instruments that are deemed to not share risk characteristics with other collectively evaluated financial assets. For loans individually evaluated, a specific allowance is recognized for any shortfall between the loan’s value and its recorded investment. The loan’s value is measured by either the loan’s observable market price, the fair value of the collateral of the loan (less liquidation costs) if it is collateral dependent, or by the present value of expected future cash flows discounted at the loan’s effective interest rate. The Company applies the practical expedient and defines collateral dependent loans as those where the borrower is experiencing financial difficulty and on which repayment is expected to be provided substantially through the operation or sale of the collateral. Loans individually analyzed are not incorporated into the pool analysis to avoid double counting. The Company limits the individually evaluated specific reserve analysis to include commercial and residential mortgage loans with relationship balances of $1 million or greater and all loans classified as troubled debt restructurings.

Acquired loans and other financial assets within the scope of CECL are segregated between those purchased with credit deterioration (“PCD”) and those that are not (“non PCD”). Assets considered PCD include those individual financial assets (or groups of financial assets with similar risk characteristics) that as of the date of acquisition are assessed as having experienced a more-than-insignificant deterioration in credit quality since origination. The assessment of what is more-than-insignificant credit deterioration since origination considers information including, but not limited to, financial assets that are delinquent, on nonaccrual and/or otherwise adversely risk rated as of the acquisition date, those that have been downgraded since origination, and those for which, after origination, credit spreads have widened beyond the threshold specified in policy. The Company bifurcates the fair value discount between the credit and noncredit components and records an allowance for credit losses for PCD assets by adding the credit portion of the fair value discount to the initial amortized cost basis and increasing the allowance for credit losses at the date of acquisition. Any noncredit discount or premium resulting from acquiring assets with credit deterioration is allocated to each individual asset. All non PCD financial assets acquired are recorded at the loans estimated fair value at acquisition, with the estimated allowance for credit loss recorded as a provision for credit losses through earnings in the period in which the acquisition has occurred. The noncredit discount or premium for PCD assets and full discount for non PCD assets will be accreted to interest income using the interest method based on the effective interest rate at the acquisition date.

Under the transition provisions for prospective application of CECL, the Company has classified all purchased credit impaired loans (“PCI”) previously accounted for under Financial Accounting Standard Subtopic 310-30 to be classified as PCD, without reassessing whether the financial assets meet the criteria of PCD as of the date of adoption. The prospective application resulted in an adjustment to the amortized cost basis of the financial asset to reflect the addition of the allowance for credit losses at the date of adoption. The Company elected not to maintain pools of loans accounted for under Subtopic 310-30 at adoption. The Company was also not required to reassess whether modifications to individual acquired financial assets accounted for in pools were troubled debt restructurings as of the date of adoption. The noncredit discount, after the adjustment for the allowance for credit losses, will be accreted to interest income using the interest method based on the effective interest rate determined after the adjustment for credit losses at the adoption date.

The CECL standard also requires an assessment of the Company’s held to maturity debt securities for expected credit losses and the available for sale debt securities for credit-related impairment. The Company applies the practical expedient to exclude the accrued interest receivable balance from amortized cost basis of financing receivables. The allowance for credit losses on held to maturity debt securities is estimated at the individual security level when there is a more than inconsequential risk of default. The assessment uses probability of default and loss given default models based on public ratings, where available, or mapped internally developed risk grades to public ratings and forecasted cash flows using the same economic forecasts and probability weighting as used for the

Company’s evaluation of the loan portfolio. Qualitative adjustments to the output of the quantitative calculation are made when management deems it necessary to reflect differences in current and forecasted conditions as compared to those during the historical loss period used in model development. The Company evaluates credit impairment on available for sale debt securities at an individual security level. This evaluation is done for securities whose fair value is below amortized cost with a more than inconsequential risk of default and where the Company has assessed the decline in fair value is significant enough to suggest a credit event occurred. Credit events are generally assessed based on adverse conditions specifically related to the security, an industry, or geographic area, changes in the financial condition of the issuer of the security, or in the case of an asset-backed debt security, changes in the financial condition of the underlying loan obligors. The allowance for credit losses for such securities is measured using a discounted cash flow methodology, through which management compares the present value of expected cash flows with the amortized cost basis of the security. The allowance for credit loss is limited to the amount by which the fair value is less than the amortized cost basis.

The Company reassess the credit losses at each reporting period and records subsequent changes in the allowance for credit losses on securities with a corresponding adjustment recorded in the provision for credit loss expense. If the Company intends to sell the debt security, or more likely than not will be required to sell the security before recovery of its amortized cost basis, the security is charged down to fair value against the allowance for credit losses, with any incremental impairment reported in earnings.

On ~~July 13, 2018,~~September 21, 2019, the Company completed the acquisition of MidSouth Bancorp, Inc. (“MidSouth”) (NYSE: MSL), parent company of MidSouth Bank, N.A. The transaction provides the Company opportunity for both enhanced growth in several of its current markets, such as MidSouth’s home market of Lafayette, Louisiana, as well as opportunities for expansion into new markets in Louisiana and Texas. The transaction was accounted for as a business combination whereby the Company acquired net assets with an estimated fair value of $130.5 million and recorded goodwill of $63.4 million. In consideration for the ~~bank-managed high~~ net ~~worth individual and institutional investment management and trust business of Capital One, National Association (“Capital One”). The transaction added~~ assets ~~under management of $4 billion and assets under management and administration of $10.4 billion to the Company’s existing trust and asset management business. In addition,~~acquired, the Company ~~assumed~~issued approximately ~~$217~~5.0 million shares resulting in a transaction value of ~~customer deposit liabilities.~~$193.8 million. The following table sets forth the preliminary acquisition date fair value of the assets acquired and ~~the~~ liabilities assumed, ~~the consideration received,~~ and the resulting goodwill. The goodwill is not deductible for federal income tax purposes.

(in thousands)
ASSETS
Accounts receivable	$	2,803
Cash and due from banks				$	28,059
Interest bearing bank deposits					276,911
Federal funds sold					3,475
Securities available for sale					272,240
Loans					787,628
Property and equipment					34,288
Other real estate					343
Identifiable intangible assets		27,562			31,500
Other assets					79,888
Total identifiable assets		30,365			1,514,332
LIABILITIES
Deposit liabilities		217,432			1,280,947
Short term borrowings					66,996
Long term debt					13,919
Other liabilities		151			21,990
Total liabilities		217,583			1,383,852
Net liabilities assumed		(187,218	)
Consideration received		140,657
Net assets acquired					130,480
Value of stock-based consideration					193,849
Goodwill	$	46,561		$	63,369

~~Identifiable intangible assets include customer relationships that~~The results of the acquired business were included in the Company’s consolidated results of operations from the date of acquisition. The results of the acquired business are ~~being amortized using an accelerated method based on forecasted cash flows over a useful life~~not material to the Company’s consolidated results of ~~approximately 17 years.~~ operations and, as such, neither supplemental pro forma information of the combined entity nor revenue and earnings contributed by the acquired business since the date of acquisition are presented.

Goodwill represents the excess of the consideration transferred over the fair value of the net ~~liabilities assumed over the consideration received.~~assets acquired. It is comprised of estimated future economic benefits arising from the transaction that cannot be individually identified or do not qualify for separate recognition. These benefits include expanded presence in existing markets and entry into new markets, and expected earnings streams and operational efficiencies that the Company believes will result from this business combination. The ~~tax basis of the goodwill is deductible for federal income tax purposes.~~

~~The~~ following table presents the change in the Company’s goodwill during the year ended December 31, ~~2018 and~~2019. NaN measurement period adjustments were recorded during the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020.

The acquired trust and asset management business added $10.1 million in trust fee revenue and $9.8 million of expense to the Company’s results of operations for the six months ended June 30, 2019. The results are not material to the Company’s results of operations and, as such, supplemental proforma financial information for the six months ended June 30, 2018 is not presented. During the six months ended June 30, 2018, the Company incurred acquisition related costs of approximately $1.9 million.

On April 30, 2019, the Company announced its entry to an Agreement and Plan of Merger providing for, among other things, the acquisition of MidSouth Bancorp, Inc. (“MidSouth”) (NYSE: MSL), parent company of MidSouth Bank, N.A. At June 30, 2019, MidSouth had approximately $1.7 billion in assets, including $0.9 billion of loans, and $1.4 billion of deposits. Under the terms of the agreement, each share of MidSouth common stock outstanding will convert, pursuant to a fixed conversion ratio, into the right to receive 0.2952 shares of the Company’s common stock. In addition, the merger agreement allows for the redemption of all of MidSouth’s outstanding preferred stock at closing, subject to receipt of applicable governmental approvals. The value of the stock-based consideration will be determined at the time of closing based on the fixed conversion ratio. The approximate transaction value based on an average of the Company’s share price at the date of the agreement, April 30, 2019, was $213 million. The acquisition is subject to the satisfaction of customary closing conditions, including the receipt of regulatory approvals and approval by the shareholders of MidSouth. The transaction is expected to close late in the third quarter of 2019.

The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available for sale and held to maturity at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 as follow. Amortized cost of securities does not include accrued interest which is reflected in the accrued interest line item on the Consolidated Balance Sheets totaling $22.8 million and $23.9 million at March 31, 2020 and December 31, 2019, respectively.

Securities Available for Sale
(in thousands)	June 30, 2019								December 31, 2018								March 31, 2020									December 31, 2019
			Gross		Gross						Gross		Gross						Gross			Gross				Gross		Gross
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized			Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value		Cost		Gains			Losses		Value		Cost		Gains		Losses		Value
U.S. Treasury and government agency securities	$	80,935		1,078		149	$	81,864	$	74,339	$	—	$	2,633	$	71,706	$	107,750		1,676			223	$	109,203	$	98,320	$	652	$	300	$	98,672
Municipal obligations		244,600		4,744		3		249,341		246,713		360		6,646		240,427		241,050		8,643			—		249,693		242,016		7,789		—		249,805
Residential mortgage-backed securities		1,357,580		16,847		6,776		1,367,651		1,468,912		4,284		29,794		1,443,402		2,061,777		62,764	��		10		2,124,531		1,910,909		20,268		7,020		1,924,157
Commercial mortgage-backed securities		919,756		17,199		2,380		934,575		799,060		1,953		30,936		770,077		1,648,643		94,268			105		1,742,806		1,570,765		19,880		4,178		1,586,467
Collateralized mortgage obligations		152,352		1,463		278		153,537		163,282		903		2,260		161,925		641,855		17,712			—		659,567		807,600		3,757		3,142		808,215
Corporate debt securities		3,500		—		—		3,500		3,500		—		—		3,500		8,000		218			22		8,196		8,000		21		33		7,988
	$	2,758,723	$	41,331	$	9,586	$	2,790,468	$	2,755,806	$	7,500	$	72,269	$	2,691,037	$	4,709,075	$	185,281		$	360	$	4,893,996	$	4,637,610	$	52,367	$	14,673	$	4,675,304

The following tables present the amortized cost and estimated fair value of debt securities available for sale and held to maturity at ~~June 30, 2019~~March 31, 2020 by contractual maturity. Actual maturities will differ from contractual maturities because of rights to call or repay obligations with or without penalties and scheduled and unscheduled principal payments on mortgage-backed securities and collateralized mortgage obligations.

Debt Securities Available for Sale	Amortized		Fair		Amortized		Fair
(in thousands)	Cost		Value		Cost		Value
Due in one year or less	$	190	$	194	$	14,698	$	14,850
Due after one year through five years		235,774		239,806		135,349		141,030
Due after five years through ten years		1,178,941		1,198,484		1,765,040		1,865,926
Due after ten years		1,343,818		1,351,984		2,793,988		2,872,190
Total available for sale debt securities	$	2,758,723	$	2,790,468	$	4,709,075	$	4,893,996

Debt Securities Held to Maturity	Amortized		Fair		Amortized		Fair
(in thousands)	Cost		Value		Cost		Value
Due in one year or less	$	62,394	$	62,356	$	—	$	—
Due after one year through five years		92,045		93,495		136,494		141,840
Due after five years through ten years		1,490,042		1,525,907		668,437		718,740
Due after ten years		1,290,786		1,297,643		675,563		701,997
Total held to maturity securities	$	2,935,267	$	2,979,401	$	1,480,494	$	1,562,577

The Company held no0 securities classified as trading at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.

During the three months ended March 31, 2020, proceeds from the sales of securities totaled $124.1 million, with gross gains of $1.1 million and gross losses of $1.0 million. There were 0 sales of securities during the three months ended March 31, 2019.

Securities with carrying values totaling $4.8 billion and $3.3 billion at March 31, 2020 and December 31, 2019, respectively, were pledged as collateral, primarily to secure public deposits or securities sold under agreements to repurchase and, at March 31, 2020, to provide enhanced liquidity through additional borrowing capacity at the Federal Reserve.

The Company’s policy is to invest only in securities of investment grade quality. These investments are largely limited to U.S. agency securities and municipal securities. Management has concluded, based on the long history of no credit losses, that the expectation of nonpayment of the held to maturity securities carried at amortized cost is zero for securities that are backed by the full faith and credit of and/or guaranteed by the U.S. government. As such,0 allowance for credit losses has been recorded for these securities. The municipal portfolio is analyzed separately for allowance for credit loss in accordance with the applicable guidance for each portfolio as noted below.

Effective January 1, 2020, in conjunction with the adoption of CECL, and again at March 31, 2020, the Company evaluated credit impairment for individual securities available for sale whose fair value was below amortized cost with a more than inconsequential risk of default and where the Company had assessed the decline in fair value significant enough to suggest a credit event occurred. There were 0 securities that met the criteria of a credit loss event and therefore, 0 allowance for credit loss was recorded for either period. The fair value and gross unrealized losses for securities classified as available for sale with unrealized losses for the periods indicated follow.

Available for Sale
June 30, 2019	Losses < 12 months				Losses 12 months or >				Total
March 31, 2020													Losses < 12 months				Losses 12 months or >				Total
(in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. Treasury and government agency securities	$	—	$	—	$	21,215		149	$	21,215	$	149	$	7,807	$	223	$	—	$	—	$	7,807	$	223
Municipal obligations		2,292		3		—		—		2,292		3		—		—		—		—		—		—
Residential mortgage-backed securities		1		—		689,726		6,776		689,727		6,776		714		5		1,688		5		2,402		10
Commercial mortgage-backed securities		22,112		12		367,211		2,368		389,323		2,380		25,196		105		—		—		25,196		105
Collateralized mortgage obligations		—		—		57,800		278		57,800		278		—		—		—		—		—		—
Other debt obligation		700		—		—		—		700		—
Corporate debt securities														778		22		—		—		778		22
	$	25,105	$	15	$	1,135,952	$	9,571	$	1,161,057	$	9,586	$	34,495	$	355	$	1,688	$	5	$	36,183	$	360

Available for Sale
December 31, 2018	Losses < 12 months				Losses 12 months or >				Total
December 31, 2019													Losses < 12 months				Losses 12 months or >				Total
			Gross				Gross		Gross						Gross				Gross		Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses		Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and government agency securities	$	—	$	—	$	71,706	$	2,633	$	71,706	$	2,633	$	28,235		300	$	—	$	—	$	28,235	$	300
Municipal obligations		41,203		591		170,883		6,054		212,086		6,645		—		—		—		—		—		—
Residential mortgage-backed securities		305,090		2,485		762,826		27,309		1,067,916		29,794		420,066		5,042		399,787		1,978		819,853		7,020
Commercial mortgage-backed securities		96,226		1,851		570,485		29,085		666,711		30,936		458,855		3,971		14,896		207		473,751		4,178
Collateralized mortgage obligations		254		1		111,804		2,259		112,058		2,260		89,689		1,315		184,389		1,827		274,078		3,142
Corporate debt securities														1,467		33		—		—		1,467		33
	$	442,773	$	4,928	$	1,687,704	$	67,340	$	2,130,477	$	72,268	$	998,312	$	10,661	$	599,072	$	4,012	$	1,597,384	$	14,673

Effective January 1, 2020 and in conjunction with the adoption of CECL, and again as of March 31, 2020, the Company evaluated its municipal obligation portfolio for credit loss using probability of default and loss given default models. The models were run using a long-term average probability of default migration and with a probability weighting of Moody’s economic forecast. The economic forecast was largely weighted to a baseline forecast with some weight given to downside scenarios for both periods. The March 31, 2020 forecast was further stressed by running a more severe probability of default migration. The resulting credit loss was negligible for both periods and no allowance for credit loss was recorded. The fair value and gross unrealized losses for securities classified as held to maturity with unrealized losses for the periods indicated follow.

Held to maturity
June 30, 2019	Losses < 12 months				Losses 12 months or >				Total
March 31, 2020													Losses < 12 months				Losses 12 months or >				Total
			Gross				Gross				Gross				Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses		Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and government agency securities	$	—	$	—	$	49,881	$	119	$	49,881	$	119	$	—	$	—	$	—	$	—	$	—	$	—
Municipal obligations		3,027		27		18,972		59		21,999		86		—		—		2,894		20		2,894		20
Residential mortgage-backed securities		—		—		177,953		791		177,953		791		—		—		—		—		—		—
Commercial mortgage-backed securities		—		—		74,946		619		74,946		619		—		—		—		—		—		—
Collateralized mortgage obligations		—		—		467,781		3,829		467,781		3,829		—		—		1,287		2		1,287		2
	$	3,027	$	27	$	789,533	$	5,417	$	792,560	$	5,444	$	—	$	—	$	4,181	$	22	$	4,181	$	22

Held to maturity
December 31, 2018	Losses < 12 months				Losses 12 months or >				Total
December 31, 2019													Losses < 12 months				Losses 12 months or >				Total
			Gross		Gross				Gross						Gross		Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses		Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and government agency securities	$	—	$	—	$	49,521	$	478	$	49,521	$	478	$	—	$	—	$	—	$	—	$	—	$	—
Municipal obligations		233,469		2,256		233,280		7,247		466,749		9,503		4,735		38		3,143		31		7,878		69
Residential mortgage-backed securities		90,730		123		235,251		5,994		325,981		6,117		—		—		—		—		—		—
Commercial mortgage-backed securities		—		—		305,419		10,882		305,419		10,882		28,426		581		—		—		28,426		581
Collateralized mortgage obligations		77,394		281		897,153		22,212		974,547		22,493		—		—		49,110		458		49,110		458
	$	401,593	$	2,660	$	1,720,624	$	46,813	$	2,122,217	$	49,473	$	33,161	$	619	$	52,253	$	489	$	85,414	$	1,108

~~The unrealized~~Unrealized losses in both portfolios relate primarily to changes in ~~market~~interest rates on fixed rate debt securities since the respective purchase dates. In all cases, the indicated impairment on these debt securities would be recovered no later than the security’s maturity date or possibly earlier if the market price for the security increases with a reduction in the yield required by the market. None of the unrealized losses relate to the marketability of the securities or the issuers’ abilities to meet contractual obligations. The Company had adequate liquidity as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 and did not intend to nor believe that it would be required to sell these securities before recovery of the indicated impairment. ~~Accordingly, the~~The unrealized losses on these securities were determined to be ~~temporary. Should the Company’s intent to sell these securities change, the difference between the amortized cost and the fair value will be recognized into earnings at that time.~~

~~There were no sales~~non-credit related as of ~~securities during the six months ended June 30,~~December 31, 2019 and ~~2018.~~

~~Securities with carrying values totaling $3.5 billion and $3.4 billion at June 30, 2019 and December~~as noted above, 0 allowance for credit losses was recorded as of January 1, 2020 or March 31, ~~2018, respectively, were pledged as collateral, primarily to secure public deposits or securities sold under agreements to repurchase.~~

The Company generally makes loans in its market areas of south ~~Mississippi,~~Mississippi; southern and central ~~Alabama,~~Alabama; northwest, central and south ~~Louisiana, the Houston, Texas area,~~Louisiana; the northern, central, and panhandle regions of ~~Florida,~~Florida; certain areas of east and northeast Texas, including Houston,

Beaumont and Dallas; and Nashville, Tennessee. Loans, net of unearned income, by portfolio are presented at amortized cost basis in the table below. Amortized cost does not include accrued interest, which is reflected in the accrued interest line item in the Consolidated Balance Sheets, totaling $72.2 million and $67.7 million at March 31, 2020 and December 31, 2019, respectively.

	June 30,		December 31,		March 31,		December 31,
(in thousands)	2019		2018		2020		2019
Commercial non-real estate	$	8,559,118	$	8,620,601	$	9,321,340	$	9,166,947
Commercial real estate - owner occupied		2,519,970		2,457,748		2,731,320		2,738,460
Total commercial and industrial		11,079,088		11,078,349		12,052,660		11,905,407
Commercial real estate - income producing		2,895,468		2,341,779		3,232,783		2,994,448
Construction and land development		1,144,062		1,548,335		1,098,726		1,157,451
Residential mortgages		2,968,271		2,910,081		2,979,985		2,990,631
Consumer		2,088,923		2,147,867		2,151,527		2,164,818
Total loans	$	20,175,812	$	20,026,411	$	21,515,681	$	21,212,755

Commercial and industrial loans are made available to businesses for working capital (including financing of inventory and receivables), business expansion, to facilitate the acquisition of a business, and the purchase of equipment and machinery, including equipment leasing. These loans are primarily made based on the identified cash flows of the borrower and, when secured, have the added strength of the underlying collateral.

Commercial non-real estate loans may be secured by the assets being financed or other tangible or intangible business assets such as accounts receivable, inventory, ownership, enterprise value or commodity interests, and may incorporate a personal or corporate guarantee; however, some short-term loans may be made on an unsecured basis, including a small portfolio of corporate credit cards, generally issued as a part of overall customer relationships.

Commercial real estate – owner occupied loans consist of commercial mortgages on properties where repayment is generally dependent on the cash flow from the ongoing operations and activities of the borrower. Like commercial non-real estate, these loans are primarily made based on the identified cash flows of the borrower, but also have the added strength of the value of underlying real estate collateral.

Commercial real estate – income producing loans consist of loans secured by commercial mortgages on properties where the loan is made to real estate developers or investors and repayment is dependent on the sale, refinance, or income generated from the operation of the property. Properties financed include retail, office, multifamily, senior housing, hotel/motel, skilled nursing facilities and other commercial properties.

Construction and land development loans are made to facilitate the acquisition, development, improvement and construction of both commercial and residential-purpose properties. Such loans are made to builders and investors where repayment is expected to be made from the sale, refinance or operation of the property or to businesses to be used in their business operations. This portfolio also includes a small amount of residential construction loans and loans secured by raw land not yet under development.

Residential mortgages consist of closed-end loans secured by first liens on 1- 4 family residential properties. The portfolio includes both fixed and adjustable rate loans, although most longer term, fixed rate loans originated are sold in the secondary mortgage market.

Consumer loans include second lien mortgage home loans, home equity lines of credit and nonresidential consumer purpose loans. Nonresidential consumer loans include both direct and indirect loans. Direct nonresidential consumer loans are made to finance the purchase of personal property, including automobiles, recreational vehicles and boats, and for other personal purposes (secured and unsecured), and deposit account secured loans. Indirect nonresidential consumer loans include automobile financing provided to the consumer through an agreement with automobile dealerships. Consumer loans also include a small portfolio of credit card receivables issued on the basis of applications received through referrals from the Bank’s branches, online and other marketing efforts.

The following tables show activity in the allowance for ~~loan~~credit losses by portfolio class for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ as well as the corresponding recorded investment in loans at the end of each period. Effective January 1, 2020, the Company adopted the provisions of ASC 326 (CECL) using a modified prospective basis. The difference between the December 31, 2019 incurred allowance and the CECL allowance is reflected as a cumulative effect of change in accounting principle in the table below. For further discussion of the day one impact of the CECL adoption, refer to Note 15 – Recent Accounting Pronouncements.

Commercial

Total

Commercial

Commercial

real estate-

commercial

real estate-

Construction

non-real

owner

and

income

and land

Residential

(in thousands)

estate

occupied

industrial

producing

development

mortgages

Consumer

Total

Six Months Ended June 30, 2019

Allowance for loan losses:

Beginning balance

$
97,752

$
13,757

$
111,509

$
17,638

$
15,647

$
23,782

$
25,938

$
194,514

Charge-offs

(21,653
)

(71
)

(21,724
)

(10
)

—

(439
)

(8,167
)

(30,340
)
Recoveries

2,730

221

2,951

2

97

266

2,004

5,320

Net provision for loan losses

17,698

328

18,026

7,781

(4,079
)

(551
)

4,954

26,131

Ending balance

$
96,527

$
14,235

$
110,762

$
25,411

$
11,665

$
23,058

$
24,729

$
195,625

Ending balance:

Allowance:

Individually evaluated for impairment

$
8,486

$
142

$
8,628

$
93

$
1

$
146

$
253

$
9,121

Amounts related to purchased credit impaired loans

138

172

310

105

151

8,695

313

9,574

Collectively evaluated for impairment

87,903

13,921

101,824

25,213

11,513

14,217

24,163

176,930

Total allowance

$
96,527

$
14,235

$
110,762

$
25,411

$
11,665

$
23,058

$
24,729

$
195,625

Loans:

Individually evaluated for impairment

$
224,603

$
17,769

$
242,372

$
1,880

$
19

$
4,089

$
1,521

$
249,881

Purchased credit impaired loans

6,313

5,581

11,894

4,702

1,482

98,472

3,444

119,994

Collectively evaluated for impairment

8,328,202

2,496,620

10,824,822

2,888,886

1,142,561

2,865,710

2,083,958

19,805,937

Total loans

$
8,559,118

$
2,519,970

$
11,079,088

$
2,895,468

$
1,144,062

$
2,968,271

$
2,088,923

$
20,175,812

				Commercial			Total			Commercial
	Commercial			real estate-			commercial			real estate-			Construction
	non-real			owner			and			income			and land		Residential
(in thousands)	estate			occupied			industrial			producing			development		mortgages			Consumer			Total
	Three Months Ended March 31, 2020
Allowance for credit losses
Allowance for loan losses:
Beginning balance	$	106,432		$	10,977		$	117,409		$	20,869		$	9,350	$	20,331		$	23,292		$	191,251
Cumulative effect of change in accounting principle		(244	)		14,877			14,633			7,287			7,478		12,921			7,092			49,411
Charge-offs		(40,713	)		(514	)		(41,227	)		(830	)		—		(141	)		(5,540	)		(47,738	)
Recoveries		2,226			81			2,307			7			234		212			1,214			3,974
Net provision for loan losses		119,297			23,414			142,711			37,627			16,761		14,877			17,129			229,105
Ending balance - allowance for loan losses	$	186,998		$	48,835		$	235,833		$	64,960		$	33,823	$	48,200		$	43,187		$	426,003
Reserve for unfunded lending commitments:
Beginning balance	$	3,974		$	—		$	3,974		$	—		$	—	$	—		$	—		$	3,974
Cumulative effect of change in accounting principle		5,772			288			6,060			449			15,658		17			5,146			27,330
Provision for losses on unfunded commitments		5,182			289			5,471			280			13,205		—			(1,268	)		17,688
Ending balance - reserve for unfunded lending commitments		14,928			577			15,505			729			28,863		17			3,878			48,992
Total allowance for credit losses	$	201,926		$	49,412		$	251,338		$	65,689		$	62,686	$	48,217		$	47,065		$	474,995

Allowance for loan losses:
Individually evaluated	$	67,404		$	102		$	67,506		$	458		$	23	$	312		$	195		$	68,494
Collectively evaluated		119,594			48,733			168,327			64,502			33,800		47,888			42,992			357,509
Allowance for loan losses	$	186,998		$	48,835		$	235,833		$	64,960		$	33,823	$	48,200		$	43,187		$	426,003
Reserve for unfunded lending commitments:
Individually evaluated	$	7,215		$	—		$	7,215		$	—		$	—	$	—		$	—		$	7,215
Collectively evaluated		7,713			577			8,290			729			28,863		17			3,878			41,777
Reserve for unfunded lending commitments:	$	14,928		$	577		$	15,505		$	729		$	28,863	$	17		$	3,878		$	48,992
Total allowance for credit losses	$	201,926		$	49,412		$	251,338		$	65,689		$	62,686	$	48,217		$	47,065		$	474,995
Loans:
Individually evaluated	$	253,790		$	4,184		$	257,974		$	7,300		$	3,350	$	4,625		$	1,280		$	274,529
Collectively evaluated		9,067,550			2,727,136			11,794,686			3,225,483			1,095,376		2,975,360			2,150,247			21,241,152
Total loans	$	9,321,340		$	2,731,320		$	12,052,660		$	3,232,783		$	1,098,726	$	2,979,985		$	2,151,527		$	21,515,681

Commercial

Total

Commercial

Commercial

real estate-

commercial

real estate-

Construction

non-real

owner

and

income

and land

Residential

(in thousands)

estate

occupied

industrial

producing

development

mortgages

Consumer

Total

Six Months Ended June 30, 2018

Allowance for loan losses:

Beginning balance

$
127,918

$
12,962

$
140,880

$
13,709

$
7,372

$
24,844

$
30,503

$
217,308

Charge-offs

(11,845
)

(6,804
)

(18,649
)

(1,604
)

(220
)

(498
)

(12,964
)

(33,935
)
Recoveries

12,476

275

12,751

65

38

712

3,095

16,661

Net provision for loan losses

(1,981
)

7,727

5,746

1,975

3,121

(862
)

11,164

21,144

Reduction as a result of sale of subsidiary

—

—

—

—

—

—

(6,648
)

(6,648
)
Ending balance

$
126,568

$
14,160

$
140,728

$
14,145

$
10,311

$
24,196

$
25,150

$
214,530

Ending balance:

Allowance:

Individually evaluated for impairment

$
19,369

$
824

$
20,193

$
407

$
1

$
99

$
130

$
20,830

Amounts related to purchased credit impaired loans

427

420

847

46

115

10,873

497

12,378

Collectively evaluated for impairment

106,772

12,916

119,688

13,692

10,195

13,224

24,523

181,322

Total allowance

$
126,568

$
14,160

$
140,728

$
14,145

$
10,311

$
24,196

$
25,150

$
214,530

Loans:

Individually evaluated for impairment

$
291,071

$
26,967

$
318,038

$
8,820

$
113

$
3,733

$
599

$
331,303

Purchased credit impaired loans

8,221

6,630

14,851

3,800

4,769

111,805

5,381

140,606

Collectively evaluated for impairment

8,111,669

2,200,197

10,311,866

2,329,572

1,510,351

2,664,821

2,082,398

18,899,008

Total loans

$
8,410,961

$
2,233,794

$
10,644,755

$
2,342,192

$
1,515,233

$
2,780,359

$
2,088,378

$
19,370,917


				Commercial		Total			Commercial
	Commercial			real estate-		commercial			real estate-			Construction
	non-real			owner		and			income			and land			Residential
(in thousands)	estate			occupied		industrial			producing			development			mortgages			Consumer			Total
	Three Months Ended March 31, 2019
Allowance for loan losses:
Beginning balance	$	97,752		$	13,757	$	111,509		$	17,638		$	15,647		$	23,782		$	25,938		$	194,514
Charge-offs		(16,344	)		—		(16,344	)		(10	)		—			(406	)		(4,231	)		(20,991	)
Recoveries		1,926			17		1,943			2			11			162			1,004			3,122
Net provision for loan losses		14,186			33		14,219			3,173			(1,631	)		(3	)		2,285			18,043
Ending balance	$	97,520		$	13,807	$	111,327		$	20,803		$	14,027		$	23,535		$	24,996		$	194,688
Ending balance:
Allowance:
Individually evaluated for impairment	$	1,775		$	205	$	1,980		$	143		$	1		$	219		$	347		$	2,690
Amounts related to purchased credit impaired loans		288			185		473			35			78			9,162			341			10,089
Collectively evaluated for impairment		95,457			13,417		108,874			20,625			13,948			14,154			24,308			181,909
Total allowance	$	97,520		$	13,807	$	111,327		$	20,803		$	14,027		$	23,535		$	24,996		$	194,688
Loans:
Individually evaluated for impairment	$	231,506		$	16,974	$	248,480		$	2,668		$	19		$	5,397		$	1,508		$	258,072
Purchased credit impaired loans		6,445			5,472		11,917			4,267			2,897			102,199			3,615			124,895
Collectively evaluated for impairment		8,418,375			2,492,982		10,911,357			2,556,459			1,337,151			2,825,655			2,099,249			19,729,871
Total loans	$	8,656,326		$	2,515,428	$	11,171,754		$	2,563,394		$	1,340,067		$	2,933,251		$	2,104,372		$	20,112,838

The calculation of the allowance for credit losses under CECL is performed using two primary approaches: a collective approach for pools of loans that have similar risk characteristics using a loss rate analysis, and a specific reserve analysis for credits individually evaluated. The increase in the allowance for credit losses for the three months ended March 31, 2020 reflects the impact of the unprecedented economic shutdown caused by the pandemic and the significant drop in oil prices. The allowance for credit losses was developed using multiple Moody’s macroeconomic forecasts applied to internally developed credit models for a two year reasonable and supportable period. The Company weighted the baseline economic forecast 80% which includes a sharp recession in the first and second quarters of 2020, with a relatively quick recovery in the second half of 2020. The more severe downside scenarios S-3 and S-4 were weighted at 15% and 5%, respectively, to capture the risk a prolonged downturn might have on our markets, which is more heavily concentrated in tourism, oil and gas and certain areas of healthcare that are more severely impacted by the widespread shutdown and market turmoil. These downside scenarios include double-dip recessions with a more prolonged recovery, with the S-4 scenario having a more severe immediate impact and a longer, more gradual recovery compared to S-3. The degradation in economic conditions created the need for an increased allowance across all portfolios. See the detail of the individually evaluated allowance in the impaired loans section that follows.

The following table shows the composition of nonaccrual loans by portfolio class. ~~Purchased~~Prior to the adoption of CECL, purchased credit impaired loans accounted for in pools with an accretable yield ~~are~~were considered to be ~~performing~~performing. Such loans totaled $17.5 million at December 31, 2019.

For the three months ended March 31, 2020 and ~~are excluded from~~2019, the ~~table.~~

estimated amount of interest income that would have been recorded had the loans not been assigned nonaccrual status was $4.3 million and $2.9 million, respectively.

Nonaccrual loans include nonaccruing loans modified in troubled debt restructurings (“TDRs”) of ~~$99.1~~$117.9 million and ~~$85.5~~$132.5 million at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. Total TDRs, both accruing and nonaccruing, were ~~$200.3~~$153.1 million at ~~June 30, 2019~~March 31, 2020 and ~~$224.6~~$193.7 million at December 31, ~~2018.~~2019. All TDRs are individually evaluated for ~~impairment.~~credit loss. At ~~June 30, 2019~~March 31, 2020 and

December 31, ~~2018,~~2019, the Company had unfunded commitments of ~~$3.6~~$8.1 million and ~~$2.1~~$2.4 million, respectively, to borrowers whose loan terms have been modified in a TDR.

The tables below detail by portfolio class TDRs that were modified during the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:

	Three Months Ended												Three Months Ended
($ in thousands)	June 30, 2019						June 30, 2018						March 31, 2020						March 31, 2019
			Pre- Modification		Post- Modification				Pre- Modification		Post- Modification				Pre- Modification		Post- Modification				Pre- Modification		Post- Modification
	Number		Outstanding		Outstanding		Number		Outstanding		Outstanding		Number		Outstanding		Outstanding		Number		Outstanding		Outstanding
	of		Recorded		Recorded		of		Recorded		Recorded		of		Recorded		Recorded		of		Recorded		Recorded
Troubled Debt Restructurings:	Contracts		Investment		Investment		Contracts		Investment		Investment		Contracts		Investment		Investment		Contracts		Investment		Investment
Commercial non-real estate		1	$	334	$	334		5	$	6,477	$	6,477		1	$	395	$	395		7	$	13,803	$	13,803
Commercial real estate - owner occupied		—		—		—		—		—		—		—		—		—		1		167		167
Total commercial and industrial		1		334		334		5		6,477		6,477		1		395		395		8		13,970		13,970
Commercial real estate - income producing		—		—		—		—		—		—		—		—		—		—		—		—
Construction and land development		—		—		—		—		—		—		—		—		—		—		—		—
Residential mortgages		2		638		638		2		75		75		1		256		256		5		1,264		1,264
Consumer		—		—		—		—		—		—		3		34		34		2		46		46
Total loans		3	$	972	$	972		7	$	6,552	$	6,552		5	$	685	$	685		15	$	15,280	$	15,280

The TDRs modified during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 reflected in the table above include $0.3 million of loans with extended amortization terms or other payment concessions and $0.4 million with significant covenant waivers. The TDRs modified during the three months ended March 31, 2019 include $0.1 million of loans with extended amortization terms or other payment concessions, ~~$9.1~~$8.8 million with significant covenant waivers and $7.0 million with other modifications. The TDRs modified during the six months ended June 30, 2018 include $49.6 million of loans with extended amortization terms or other payment concessions, $14.6 million with significant covenant waivers and $5.6$6.4 million with other modifications.

There were no0 defaults on loans during the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 or 2019 ~~or 2018~~ that had been modified in a TDR during the prior twelve months.

The tables below present loans that are individually evaluated ~~for impairment~~ disaggregated by portfolio class at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019. Loans individually evaluated ~~for impairment~~ include nonaccrual loans, TDRs and other loans that ~~are determined to be impaired and~~do not share common characteristics with loans evaluated on a collective basis that have aggregate relationship balances of $1 million or more.

	June 30, 2019								March 31, 2020
(in thousands)	Recorded investment without an allowance		Recorded investment with an allowance		Unpaid principal balance		Related allowance		Recorded investment without an allowance		Recorded investment with an allowance		Unpaid principal balance		Related allowance
Commercial non-real estate	$	149,605	$	74,998	$	260,833	$	8,486	$	34,003	$	219,787	$	316,651	$	67,404
Commercial real estate - owner occupied		10,971		6,798		22,352		142		1,608		2,576		6,954		102
Total commercial and industrial		160,576		81,796		283,185		8,628		35,611		222,363		323,605		67,506
Commercial real estate - income producing		385		1,495		1,932		93		2,407		4,893		8,136		458
Construction and land development		—		19		19		1		3,192		158		3,949		23
Residential mortgages		2,669		1,420		4,619		146		2,598		2,027		5,160		312
Consumer		494		1,027		1,802		253		136		1,144		1,668		195
Total loans	$	164,124	$	85,757	$	291,557	$	9,121	$	43,944	$	230,585	$	342,518	$	68,494

	December 31, 2018								December 31, 2019
(in thousands)	Recorded investment without an allowance		Recorded investment with an allowance		Unpaid principal balance		Related allowance		Recorded investment without an allowance		Recorded investment with an allowance		Unpaid principal balance		Related allowance
Commercial non-real estate	$	144,625	$	94,759	$	273,290	$	3,636	$	134,191	$	98,247	$	270,078	$	21,733
Commercial real estate - owner occupied		13,027		8,639		25,888		607		2,665		1,716		7,793		104
Total commercial and industrial		157,652		103,398		299,178		4,243		136,856		99,963		277,871		21,837
Commercial real estate - income producing		1,138		1,563		3,428		210		373		1,525		1,959		18
Construction and land development		100		21		121		1		—		277		322		21
Residential mortgages		2,058		1,818		4,421		444		3,383		1,791		5,709		217
Consumer		279		728		1,253		216		479		1,004		1,906		292
Total loans	$	161,227	$	107,528	$	308,401	$	5,114	$	141,091	$	104,560	$	287,767	$	22,385

The tables below present the average balances and interest income for ~~total impaired~~individually evaluated loans for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019. Interest income recognized represents interest on accruing loans modified in a TDR.

	Three Months Ended								Three Months Ended
	June 30, 2019				June 30, 2018				March 31, 2020				March 31, 2019
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial non-real estate	$	228,055	$	1,444	$	307,492	$	2,002	$	243,114	$	522	$	235,445	$	1,696
Commercial real estate - owner occupied		17,371		71		28,643		102		4,283		—		19,320		80
Total commercial and industrial		245,426		1,515		336,135		2,104		247,397		522		254,765		1,776
Commercial real estate - income producing		2,274		7		11,446		24		4,599		6		2,685		7
Construction and land development		19		—		113		—		1,814		2		70		—
Residential mortgages		4,743		2		6,036		5		4,900		4		4,637		5
Consumer		1,515		18		608		9		1,382		23		1,258		16
Total loans	$	253,977	$	1,542	$	354,338	$	2,142	$	260,092	$	557	$	263,415	$	1,804

~~Table~~The TDR disclosure above does not include loans modified under Section 4013 of ~~Contents~~the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) signed into law on March 27, 2020, which allows financial institutions to exclude eligible modifications from TDR reporting. Eligible modification must be (1) related to COVID-19, (2) executed on a loan that was not more than 30 days past due as of December 31, 2019 and (3) executed between March 1, 2020 and the earlier of 60 days after the date of the termination of the national emergency or December 31, 2020. As of March 31, 2020, there were 1,618 customers with loans totaling $839.4 million with payment deferral modifications of principal, interest or both that are eligible to be excluded from TDR reporting requirements. These loans are also excluded from reporting in the aging analysis that follows as delinquency is tracked under the modified terms.

The tables below present the ~~age~~aging analysis of past due loans by portfolio class at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018. Purchased~~2019. Prior to the adoption of CECL, purchased credit impaired loans accounted for in pools under ASC 310-30 with an accretable yield ~~are~~were considered to be ~~current.~~current in the table below as of December 31, 2019. These loans totaled $6.1 million for 30-59 days past due, $2.0 million for 60-89 days past due and $8.3 million for both greater than 90 days past due and greater than 90 days past due and still accruing at December 31, 2019.

June 30, 2019	30-59 days past due		60-89 days past due		Greater than 90 days past due		Total past due		Current		Total Loans		Recorded investment > 90 days and still accruing
March 31, 2020															30-59 days past due		60-89 days past due		Greater than 90 days past due		Total past due		Current		Total Loans		Recorded investment > 90 days and still accruing
(in thousands)
Commercial non-real estate	$	4,289	$	9,159	$	57,760	$	71,208	$	8,487,910	$	8,559,118	$	613	$	23,478	$	7,629	$	116,763	$	147,870	$	9,173,470	$	9,321,340	$	6,832
Commercial real estate - owner occupied		2,858		1,732		16,047	$	20,637		2,499,333		2,519,970		4,031		5,294		803		11,298		17,395		2,713,925		2,731,320		4,747
Total commercial and industrial		7,147		10,891		73,807		91,845		10,987,243		11,079,088		4,644		28,772		8,432		128,061		165,265		11,887,395		12,052,660		11,579
Commercial real estate - income producing		762		—		2,798		3,560		2,891,908		2,895,468		—		8,727		80		9,430		18,237		3,214,546		3,232,783		4,221
Construction and land development		779		2,199		1,322		4,300		1,139,761		1,144,062		612		6,289		344		4,406		11,039		1,087,687		1,098,726		667
Residential mortgages		2,865		8,748		20,690		32,303		2,935,968		2,968,271		47		46,695		1,305		23,484		71,484		2,908,501		2,979,985		64
Consumer		15,989		3,960		9,498		29,447		2,059,476		2,088,923		1,190		24,002		7,870		9,451		41,323		2,110,204		2,151,527		1,259
Total	$	27,542	$	25,798	$	108,115	$	161,455	$	20,014,356	$	20,175,812	$	6,493	$	114,485	$	18,031	$	174,832	$	307,348	$	21,208,333	$	21,515,681	$	17,790

The following tables present the credit quality indicators by segments and portfolio class of loans at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~ 2019. The Company routinely assesses the ratings of loans in its portfolio through an established and comprehensive portfolio management process. In addition, the Company often looks at portfolios of loans to determine if there are areas of risk not specifically identified in its loan by loan approach. As a result, several loans were downgraded to pass-watch at March 31, 2020 to reflect the potential risk from the economic downturn caused by the pandemic and other environmental factors. In alignment with regulatory guidance, the Company has been working with its customers to manage through this period of severe uncertainty and economic stress. The Company expects that further risk rating adjustments will likely be required in the future to account for stresses on individual accounts.

	June 30, 2019												March 31, 2020
(in thousands)	Commercial non-real estate		Commercial real estate - owner- occupied		Total commercial and industrial		Commercial real estate - income producing		Construction and land development		Total commercial		Commercial non-real estate		Commercial real estate - owner- occupied		Total commercial and industrial		Commercial real estate - income producing		Construction and land development		Total commercial
Grade:
Pass	$	7,940,853	$	2,320,832	$	10,261,685	$	2,755,518	$	1,122,619	$	14,139,822	$	8,391,474	$	2,533,020	$	10,924,494	$	3,119,828	$	1,064,747	$	15,109,069
Pass-Watch		169,005		122,050		291,055		98,767		16,121	$	405,943		507,455		136,808		644,263		75,823		24,883		744,969
Special Mention		62,545		11,981		74,526		20,927		253	$	95,706		61,397		11,677		73,074		11,330		970		85,374
Substandard		386,715		65,107		451,822		20,256		5,069	$	477,147		346,065		49,815		395,880		25,802		8,126		429,808
Doubtful		—		—		—		—		—		—		14,949		—		14,949		—		—		14,949
Total	$	8,559,118	$	2,519,970	$	11,079,088	$	2,895,468	$	1,144,062	$	15,118,618	$	9,321,340	$	2,731,320	$	12,052,660	$	3,232,783	$	1,098,726	$	16,384,169

	December 31, 2018												December 31, 2019
(in thousands)	Commercial non-real estate		Commercial real estate - owner- occupied		Total commercial and industrial		Commercial real estate - income producing		Construction and land development		Total commercial		Commercial non-real estate		Commercial real estate - owner- occupied		Total commercial and industrial		Commercial real estate - income producing		Construction and land development		Total commercial
Grade:
Pass	$	7,875,588	$	2,274,211	$	10,149,799		2,265,087	$	1,487,599	$	13,902,485	$	8,492,113	$	2,517,448	$	11,009,561		2,883,553	$	1,120,997	$	15,014,111
Pass-Watch		260,510		84,271		344,781		46,535		49,099		440,415		220,850		146,266		367,116		69,765		25,621		462,502
Special Mention		75,752		23,149		98,901		5,510		816		105,227		71,654		14,651		86,305		14,995		283		101,583
Substandard		408,751		76,117		484,868		24,647		10,821		520,336		382,330		60,095		442,425		26,135		10,550		479,110
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	8,620,601	$	2,457,748	$	11,078,349	$	2,341,779	$	1,548,335	$	14,968,463	$	9,166,947	$	2,738,460	$	11,905,407	$	2,994,448	$	1,157,451	$	16,057,306

	June 30, 2019						December 31, 2018						March 31, 2020						December 31, 2019
(in thousands)	Residential mortgage		Consumer		Total		Residential mortgage		Consumer		Total		Residential mortgage		Consumer		Total		Residential mortgage		Consumer		Total
Performing	$	2,930,531	$	2,070,863	$	5,001,394	$	2,873,669	$	2,130,395	$	5,004,064	$	2,936,218	$	2,132,482	$	5,068,700	$	2,950,854	$	2,147,312	$	5,098,166
Nonperforming		37,740		18,060	$	55,800		36,412		17,472		53,884		43,767		19,045		62,812		39,777		17,506		57,283
Total	$	2,968,271	$	2,088,923	$	5,057,194	$	2,910,081	$	2,147,867	$	5,057,948	$	2,979,985	$	2,151,527	$	5,131,512	$	2,990,631	$	2,164,818	$	5,155,449

The following tables further disaggregates credit quality disclosures by amortized cost by class and vintage for term loans and by revolving and revolving converted to amortizing as of March 31, 2020. We define vintage as the later of origination, renewal or restructure date.

	Term Loans
	Amortized Cost Basis by Origination Year
		2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Commercial Loans:
Pass		$	1,200,289	$	3,482,650	$	2,316,675	$	1,817,884	$	1,268,500	$	1,815,527	$	3,166,739	$	40,805	$	15,109,069
Pass-Watch			45,483		89,492		50,169		73,719		45,264		45,098		393,676		2,068		744,969
Special Mention			1,106		2,754		11,838		26,324		699		20,130		21,204		1,319		85,374
Substandard			25,939		58,802		86,630		30,860		30,772		49,519		127,734		19,552		429,808
Doubtful			—		—		12,980		—		—		—		1,969		—		14,949
Loss			—		—		—		—		—		—		—		—		—
Total Commercial Loans		$	1,272,817	$	3,633,698	$	2,478,292	$	1,948,787	$	1,345,235	$	1,930,274	$	3,711,322	$	63,744	$	16,384,169
Consumer Loans:
Performing		$	172,403	$	528,274	$	577,525	$	771,724	$	622,557	$	1,096,363	$	1,295,598	$	4,256		5,068,700
Nonperforming			547		2,521		3,962		6,800		4,114		41,575		1,817		1,476		62,812
Total Consumer Loans		$	172,950	$	530,795	$	581,487	$	778,524	$	626,671	$	1,137,938	$	1,297,415	$	5,732	$	5,131,512

Under the transition provisions for prospective application of CECL, the Company has classified all loans previously accounted for as purchased credit impaired under ASC 310-30 to be classified as purchased credit deteriorated. The prospective application resulted in

an increase of $19.8 million to the amortized cost basis of the financial asset and the allowance for credit losses at the date of adoption, representing the remaining credit portion of the purchased discount. The Company elected not to maintain pools of loans accounted for under Subtopic 310-30 with the adoption of CECL. The remaining noncredit discount was allocated to the individual loans and will be accreted to interest income using the interest method based on the effective interest rate. Changes in the carrying amount of purchased credit impaired loans and related accretable yield are presented in the following table for the ~~six months ended June 30, 2019 and the~~ year ended December 31, ~~2018.~~2019.

	June 30, 2019						December 31, 2018						December 31, 2019
(in thousands)	Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans			Accretable Yield
Balance at beginning of period	$	129,596		$	37,294		$	153,403		$	62,517		$	129,596		$	37,294
Additions														120,562			6,246
Payments received, net		(16,254	)		(2,328	)		(39,556	)		(5,779	)		(48,076	)		(4,601	)
Accretion		6,652			(6,652	)		15,749			(15,749	)		13,163			(13,163	)
Decrease in expected cash flows based on actual cash flows and changes in cash flow assumptions		—			3,926			—			(3,695	)		—			4,170
Balance at end of period	$	119,994		$	32,240		$	129,596		$	37,294		$	215,245		$	29,946

Included in loans are $8.7 million and $7.1 million of consumer loans secured by single family residential real estate that are in process of foreclosure as of June 30, 2019 and December 31, 2018, respectively. Loans in process of foreclosure include those for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction. Included in loans at December 31, 2019 was $8.6 million of consumer loans secured by single family residential real estate that were in process of foreclosure. In light of the economic conditions stemming from the pandemic, the Company placed all active foreclosures on hold and suspended the filing of new foreclosures. In addition to the single family residential real estate loans in process of foreclosure, the Company also held ~~$2.6~~$5.6 million and ~~$1.8~~$6.3 million of foreclosed single family residential properties in other real estate owned at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

The Company has amended its accounting policy related to leases to comply with the new standard as follows. The Company determines if an arrangement is a lease at inception of the contract and assesses the appropriate classification as finance or operating. Operating leases with terms greater than one year are included in right-of-use lease assets and lease obligations on the Company’s balance sheets. The lease term includes payments to be made in optional or renewal periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term using the interest rate implicit in the contract, when available, or the Company’s incremental collateralized borrowing rate with similar terms. Agreements with both lease and non-lease components are accounted for separately, with only the lease component capitalized. The right-of-use asset is the amount of the lease liability adjusted for prepaid or accrued lease payments, remaining balance of any lease incentives received, unamortized initial direct costs, and impairment. Lease expense is recorded on a straight-line basis over the lease term through amortization of the right-of-use asset plus implicit interest accreted on the operating lease liability obligation, and is reflected in Net Occupancy Expense in the Consolidated Statement of Income.

Some of the Company’s leases contain variable components, such as annual changes to rent based on the consumer price index. Operating lease liabilities are not re-measured as a result of changes to variable components unless the lease must be re-measured for

some other reason such as a renewal that was not reasonably certain of being exercised. Changes to the variable components are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

The standard provides several practical expedients available for use in transition. The Company elected to use the standard’s “package of practical expedients,” which allows the use of previous conclusions about lease identification, lease classification and the accounting treatment for initial direct costs. The Company also elected the short-term lease recognition exemption for all leases with lease terms of one year or less; as such, the Company will not recognize right-of-use assets or lease liabilities on the consolidated balance sheet for such leases. The Company valued its lease obligation using incremental collateralized borrowing rates as of January 1, 2019 for the remaining term of each identified lease. At adoption, the Company recorded a right-of-use asset totaling $115.9 million and a liability for lease payment obligations totaling $130.7 million, offset by the elimination of $14.8 million of existing lease incentive and other deferred rent liabilities. Accounting for leases in accordance with Topic 842 has not had a material impact upon the Company’s consolidated results of operations, and is not expected to in future periods.

The Company has operating leases on a number of its branches, certain regional headquarters and other properties to limit its exposure to ownership risks such as fluctuations in real estate prices and obsolescence. The Company leases real estate with lease terms generally from five to 20 years, some of which have renewal options from one to 20 years. As these extension options are not generally considered reasonably certain of renewal, they are not included in the lease term. The Company is not a lessee in any contracts classified as finance leases.

~~The following table sets forth the maturities of the Company’s lease liabilities and the present value discount at June 30, 2019.~~

~~The following table sets forth the components of the Company’s lease expense for the three and six months ended June 30, 2019.~~

Included in short-term borrowings are customer securities sold under agreements to repurchase ~~(“repurchase agreements”)~~ that mature daily and are secured by U.S. agency securities totaling ~~$631.0~~ $483.0million and ~~$428.6~~$484.4 million at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. The Company borrows funds on a secured basis by selling securities under agreements to repurchase, mainly in connection with treasury management services offered to its deposit customers. As the Company maintains effective control over assets sold under agreements to repurchase, the securities continue to be carried on the consolidated statements of financial condition. Because the Company acts as borrower transferring assets to the counterparty, and the agreements mature daily, the Company’s risk is limited.

The Company enters into derivative financial instruments to manage risks related to differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments, currently ~~related to~~associated with fixed rate brokered deposits, certain investment securities and select pools of variable rate ~~loans and fixed rate brokered deposits.~~loans. The Bank also enters into interest rate derivative agreements as a service to certain qualifying customers. The Bank manages a matched book with respect to these customer derivatives in order to minimize its net interest rate risk exposure resulting from such agreements. The Bank also enters into risk participation agreements under which it may either sell or buy credit risk associated with a customer’s performance under certain interest rate derivative contracts related to loans in which participation interests have been sold to or purchased from other banks.

The table below presents the notional or contractual amounts and fair values of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.

		June 30, 2019								December 31, 2018									March 31, 2020								December 31, 2019
				Derivative ⁽¹⁾								Derivative ⁽¹⁾									Derivative ⁽¹⁾								Derivative ⁽¹⁾
(in thousands)	Type of Hedge	Notional or Contractual Amount		Assets			Liabilities			Notional or Contractual Amount		Assets			Liabilities			Type of Hedge	Notional or Contractual Amount		Assets			Liabilities			Notional or Contractual Amount		Assets			Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps	Cash Flow	$	1,075,000	$	25,328		$	—		$	875,000	$	3,954		$	9,173
Interest rate swaps	Fair Value		163,110		—			290			483,110		—			2,089
Interest rate swaps - variable rate loans																		Cash Flow	$	1,175,000	$	63,742		$	—		$	1,175,000	$	24,172		$	337
Interest rate swaps - securities																		Fair Value		479,900		—			23,453			441,400		1,474			1,759
Interest rate swaps - brokered deposits																		Fair Value		—		—			—			43,000		—			9
			1,238,110		25,328			290			1,358,110		3,954			11,262				1,654,900		63,742			23,453			1,659,400		25,646			2,105
Derivatives not designated as hedging instruments:
Interest rate swaps ⁽²⁾	N/A		1,495,638		51,255			52,573			1,277,404		23,670			24,669		N/A		4,284,812		161,835			165,934			3,759,232		54,512			55,664
Risk participation agreements	N/A		181,100		11			70			171,222		10			131		N/A		248,423		72			82			254,825		21			45
Forward commitments to sell residential mortgage loans	N/A		124,987		48			742			77,208		110			664		N/A		278,632		3,224			404			145,623		651			744
Interest rate-lock commitments on residential mortgage loans	N/A		91,325		576			42			59,119		464			67		N/A		229,364		319			2,659			83,224		369			375
Foreign exchange forward contracts	N/A		40,230		466			434			37,749		751			718		N/A		83,094		1,419			1,367			64,632		303			366
Visa Class B derivative contract	N/A		43,753		—			6,602			43,753		—			7,304		N/A		43,272		—			5,345			43,753		—			5,704
			1,977,033		52,356			60,463			1,666,455		25,005			33,553				5,167,597		166,869			175,791			4,351,289		55,856			62,898
Total derivatives		$	3,215,143	$	77,684		$	60,753		$	3,024,565	$	28,959		$	44,815			$	6,822,497	$	230,611		$	199,244		$	6,010,689	$	81,502		$	65,003
Less: netting adjustment ⁽³⁾					(26,075	)		(41,505	)				(11,979	)		(22,588	)					(63,742	)		(149,835	)				(27,056	)		(43,914	)
Total derivative assets/liabilities				$	51,609		$	19,248				$	16,980		$	22,227					$	166,869		$	49,409				$	54,446		$	21,089

The Company is party to various interest rate swap agreements designated and qualifying as cash flow hedges of the Company’s forecasted variable cash flows for pools of variable rate loans. For each agreement, the Company receives interest at a fixed rate and pays at a variable rate. During the six months ended June 30, 2018, the Company terminated five of its shorter-term swap agreements with notional amounts totaling $450 million and entered into five longer-term agreements with notional amounts totaling $450 million. The Company paid termination fees of approximately $10.6 million to settle the interest rate swap liabilities, and the resulting accumulated other comprehensive loss is being amortized over the remaining maturities of the designated instruments. Amortization of other comprehensive loss on terminated cash flow hedges totaled ~~$2.5~~$0.7 million and $1.4 million for ~~each of~~ the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019. The notional amounts of the swap agreements in place at ~~June 30, 2019~~March 31, 2020 expire as follows: $50 million in 2021; $475 million in 2022; ~~$450~~$550 million in 2023; and $100 million in 2024.

Prior to January 2020, the Company ~~enters into~~was party to certain interest rate swap agreements that ~~modify~~modified the Company’s exposure to interest rate risk by effectively converting a portion of the Company’s brokered certificates of deposit from fixed rates to variable rates. The maturities and call features of these interest rate swaps ~~match~~matched the features of the hedged deposits. As interest rates ~~fall,~~declined or increased, the ~~decline~~corresponding movement in the value of the certificates of deposit iswere offset by the ~~increase~~change in the value of the interest rate ~~swaps. Conversely, as interest rates rise, the value of the underlying hedged deposits increases, but the value of the interest rate~~ swaps, ~~decreases,~~ resulting in no impact onto earnings. Interest expense iswas adjusted by the difference between the fixed and floating rates for the period the swaps are in effect.

The Company is party to forward starting fixed payer swaps that convert the latter portion of pools of available for sale securities to a floating rate. These instruments were designated as last-of-layer fair value hedges against the select closed pools of prepayable

commercial mortgage backed securities. This strategy provides the Company with a fixed rate coupon during the front end unhedged tenor of the bonds and results in a floating rate security during the back end hedged tenor, with hedged start dates between August 2023 through January 2025 and maturity dates from January 2028 through January 2029. In accordance with ASC 815, an entity may exclude prepayment risk when measuring the change in fair value of the hedged item attributable to interest rate risk under the last-of-layer approach. The fair value of the hedged item attributable to interest rate risk will be presented in interest income along with the change in the fair value of the hedging instrument.

At March 31, 2020, the amortized cost basis of the closed portfolio of prepayable commercial mortgage backed securities totaled $473.2 million. The amount that represents the hedged items was $479.9 million and the basis adjustment associated with the hedged items totaled $23.5 million.

The Bank enters into interest rate derivative agreements, primarily rate swaps, with commercial banking customers to facilitate their risk management strategies. The Bank enters into offsetting agreements with unrelated financial institutions, thereby mitigating its net risk exposure resulting from such transactions. Because the interest rate derivatives associated with this program do not meet hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

The Bank also enters into risk participation agreements under which it may either assume or sell credit risk associated with a borrower’s performance under certain interest rate derivative contracts. In those instances where the Bank has assumed credit risk, it is not a direct counterparty to the derivative contract with the borrower and has entered into the risk participation agreement because it is a party to the related loan agreement with the borrower. In those instances in which the Bank has sold credit risk, it is the sole counterparty to the derivative contract with the borrower and has entered into the risk participation agreement because other banks participate in the related loan agreement. The Bank manages its credit risk under risk participation agreements by monitoring the creditworthiness of the borrower, based on the Bank’s normal credit review process.

The Bank also enters into certain derivative agreements as part of its mortgage banking activities. These agreements include interest rate lock commitments on prospective residential mortgage loans and forward commitments to sell these loans to investors on a best efforts delivery basis.

The Bank enters into foreign exchange forward derivative agreements, primarily forward foreign currency contracts, with commercial banking customers to facilitate their risk management strategies. The Bank manages its risk exposure from such transactions by entering into offsetting agreements with unrelated financial institutions. Because the foreign exchange forward contract derivatives associated with this program do not meet hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

The Company is a member of Visa USA. During the fourth quarter of 2018, the Company sold the majority of its Visa Class B holdings, at which time it entered into a derivative agreement with the purchaser whereby the Company will make or receive cash payments whenever the conversion ratio of the Visa Class B shares into Visa Class A shares is adjusted. The conversion ratio changes when Visa deposits funds to a litigation escrow account established by Visa to pay settlements for certain litigation, for which Visa is indemnified by Visa USA members. The Company is also required to make periodic financing payments to the purchaser until all of Visa’s covered litigation matters are resolved. Thus, the derivative contract extends until the end of Visa’s covered litigation matters, the timing of which is uncertain.

The contract includes a contingent accelerated termination clause based on the credit ratings of the Company. At ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 the fair value of the liability associated with this contract was ~~$6.6~~$5.3 million and ~~$7.3~~$5.7 million, respectively. ~~Refer to Note 15 – Fair Value of Financial Instruments for discussion of the valuation inputs for this derivative liability.~~

The effects of derivative instruments on the consolidated statements of income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ are presented in the table below. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~interest income or the reduction of interest income attributable to cash flow hedges, respectively, includes amortization of accumulated other comprehensive loss that resulted from termination of ~~five~~ interest rate swap contracts.

		Three Months Ended						Six Months							Three Months Ended
		June 30,						June 30,							March 31,
Derivative Instruments:	Location of Gain (Loss) Recognized in the Statement of Income:	2019			2018			2019			2018			Location of Gain (Loss) Recognized in the Statement of Income:	2020		2019
Interest rate swaps - cash flow hedges	Interest income	$	(1,660	)	$	(946	)	$	(3,676	)	$	(1,565	)
Interest rate swaps - fair value hedges	Interest expense	$	(461	)		(519	)		(1,449	)		(646	)
Cash flow hedges - variable rate loans														Interest income	$	864	$	(2,016	)
Fair value hedges – securities														Interest income		41		—
Fair value hedges - brokered deposits														Interest expense		46		(988	)
All other instruments	Other noninterest income	$	3,600			1,588			4,409			3,111		Other noninterest income		3,871		809
Total		$	1,479		$	123		$	(716	)	$	900			$	4,822	$	(2,195	)

Certain of the Bank’s derivative instruments contain provisions allowing the financial institution counterparty to terminate the contracts in certain circumstances, such as a downgrade of the Bank’s credit ratings below specified levels, a default by the Bank on its indebtedness, or the failure of the Bank to maintain specified minimum regulatory capital ratios or its regulatory status as a well-capitalized institution. These derivative agreements also contain provisions regarding the posting of collateral by each party. At ~~June 30, 2019,~~March 31, 2020, the Company was not in violation of any such provisions. The aggregate fair value of derivative instruments with credit risk-related contingent features that were in a net liability position at March 31, 2020 and December 31, 2019 was $40.0 million and $12.9 million, respectively, for which the Company had posted collateral of $40.0 million and $12.4 million, respectively.

The Bank’s derivative instruments with certain counterparties contain legally enforceable netting provisions that allow for net settlement of multiple transactions to a single amount, which may be positive, negative, or zero. Agreements with certain bilateral counterparties require both parties to maintain collateral in the event that the fair values of derivative instruments exceed established exposure thresholds. For centrally cleared derivatives, the Company is subject to initial margin posting and daily variation margin exchange with the central clearinghouses. Offsetting information in regards to all derivative assets and liabilities, including accrued interest, subject to these master netting agreements at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 is presented in the following tables.

(in thousands)			Gross Amounts			Net Amounts		Gross Amounts Not Offset in the Statement of Income									Gross Amounts			Net Amounts		Gross Amounts Not Offset in the Statement of Income
Description	Gross Amounts Recognized		Offset in the Statement of Income			Presented in the Statement of Income		Financial Instruments		Cash Collateral		Net Amount			Gross Amounts Recognized		Offset in the Statement of Income			Presented in the Statement of Income		Financial Instruments		Cash Collateral		Net Amount
As of June 30, 2019
As of March 31, 2020
Derivative Assets	$	26,558	$	(26,405	)	$	153	$	153	$	—	$	—		$	64,413	$	(64,409	)	$	4	$	4	$	—	$	—
Derivative Liabilities	$	51,833	$	(41,325	)	$	10,508	$	153	$	15,304	$	(4,949	)	$	188,984	$	(150,673	)	$	38,311	$	4	$	75,670	$	(37,363	)

(in thousands)			Gross Amounts			Net Amounts		Gross Amounts Not Offset in the Statement of Income									Gross Amounts			Net Amounts		Gross Amounts Not Offset in the Statement of Income
Description	Gross Amounts Recognized		Offset in the Statement of Income			Presented in the Statement of Income		Financial Instruments		Cash Collateral		Net Amount			Gross Amounts Recognized		Offset in the Statement of Income			Presented in the Statement of Income		Financial Instruments		Cash Collateral		Net Amount
As of December 31, 2018
As of December 31, 2019
Derivative Assets	$	16,167	$	(12,842	)	$	3,325	$	1,846	$	—	$	1,479		$	27,938	$	(27,915	)	$	23	$	23	$	—	$	—
Derivative Liabilities	$	23,811	$	(21,651	)	$	2,160	$	1,846	$	2,871	$	(2,557	)	$	56,523	$	(44,570	)	$	11,953	$	23	$	35,113	$	(23,183	)

The Company has excess collateral compared to total exposure due to initial margin requirements for day-to-day rate volatility.

Common shares outstanding excludes treasury shares totaling ~~0.8~~5.3 million at ~~June 30, 2019~~March 31, 2020 and ~~0.9~~4.0 million at December 31, ~~2018,~~2019, with a first-in-first-out cost basis of ~~$14.2~~$180.9 million and ~~$18.5~~$135.8 million at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. Shares outstanding also excludes unvested restricted share awards totaling ~~1.3~~1.4 million at ~~June 30, 2019~~both March 31, 2020 and December 31, ~~2018.~~2019.

On September 20, 2019, the Company issued approximately 5.0 million shares of common stock at $38.42 as consideration in its acquisition of MidSouth. Refer to Note 2 – Business Combination for further information.

On ~~May 24, 2018,~~September 23, 2019, the Company’s board of directors approved a stock buyback program that authorized the Company to repurchase of up to ~~5%, or approximately 4.3~~5.5 million shares of its ~~outstanding~~ common ~~stock.~~stock through the expiration date of December 31, 2020. The ~~approved~~ program allows the Company to repurchase its common shares ~~either~~ in the open market, ~~in compliance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended, or~~by block purchase, through accelerated share repurchase programs, in privately negotiated transactions, ~~with non-affiliated sellers~~ or as otherwise determined by the Company in one or more ~~transactions, from time to time until December 31, 2019.~~transactions. The Company is not obligated to purchase any shares under this program, and the board of directors may terminate or amend the program at any time prior to the expiration date. As

On October 18, 2019, the Company entered into an accelerated share repurchase agreement (“ASR”) with Morgan Stanley & Co. LLC (“Morgan Stanley”) to repurchase $185 million of ~~June 30,~~the Company’s common stock. Pursuant to the ASR, the Company made a $185 million payment to Morgan Stanley on October 21, 2019, ~~200,000~~and received from Morgan Stanley an initial delivery of 3,611,870 shares of the Company’s common stock, ~~had been purchased~~which represented 75% of the estimated total number of shares to be repurchased based on the October 18, 2019 closing price of the Company’s common stock. The value of the remaining shares to be exchanged upon final settlement was accounted for as a forward contract until settlement.

Final settlement of the ASR agreement was expected to occur as early as the second quarter of 2020 and no later than the third quarter of 2020. However, on March 18, 2020, pursuant to the terms of the ASR, the contract was settled; in the settlement, the Company received from Morgan Stanley on March 20, 2020 cash of approximately $12.1 million and a final delivery of 1.0 million shares.

In January 2020, the Company repurchased 315,851 shares of its common stock at a price of $40.26 in a privately negotiated transaction. In total, the Company repurchased 4.9 million shares of the 5.5 million authorized shares under the buyback program at an average price of ~~$41.30~~$37.65 per share through the ASR and a privately negotiated transaction. Refer to Part II, Item 2 of this report for tabular presentation of share repurchase activity during the three months ended March 31, 2020.

The Company suspended the repurchase of shares under ~~this~~its stock buyback program.

The components of Accumulated Other Comprehensive ~~Loss~~Income (Loss) and changes in those components are presented in the following table.

	Available for Sale Securities			HTM Securities Transferred from AFS			Employee Benefit Plans			Cash Flow Hedges			Equity Method Investment		Total			Available for Sale Securities			HTM Securities Transferred from AFS			Employee Benefit Plans			Cash Flow Hedges			Equity Method Investment			Total
(in thousands)
Balance, December 31, 2017	$	(29,512	)	$	(14,585	)	$	(79,078	)	$	(11,227	)	$	—	$	(134,402	)
Other comprehensive income/loss before income taxes:
Net change in unrealized loss		(71,759	)		—			—			(13,894	)		—		(85,653	)
Reclassification of net loss realized and included in earnings		—			—			2,448			1,565			—		4,013
Other Valuation adjustments for employee benefit plan		—			—			(9,039	)		—			—		(9,039	)
Amortization of unrealized net loss on securities transferred to HTM		—			1,680			—			—			—		1,680
Income tax expense (benefit)		(16,284	)		380			(1,494	)		(2,794	)		—		(20,192	)
Balance, June 30, 2018	$	(84,987	)	$	(13,285	)	$	(84,175	)	$	(20,762	)	$	—	$	(203,209	)
Balance, December 31, 2018	$	(50,125	)	$	(12,044	)	$	(110,247	)	$	(8,293	)	$	—	$	(180,709	)	$	(50,125	)	$	(12,044	)	$	(110,247	)	$	(8,293	)	$	—		$	(180,709	)
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain or loss		96,514			—			—			29,343			611		126,468			46,984			—			—			9,475			784			57,243
Reclassification of net loss realized and included in earnings		—			—			4,527			3,676			—		8,203			—			—			2,203			2,016			—			4,219
Amortization of unrealized net loss on securities transferred to HTM		—			1,481			—			—			—		1,481			—			591			—			—			—			591
Income tax expense		21,822			335			1,023			7,466			—		30,646
Balance, June 30, 2019	$	24,567		$	(10,898	)	$	(106,743	)	$	17,260		$	611	$	(75,203	)
Income tax expense (benefit)																			10,623			134			498			2,598			—			13,853
Balance, March 31, 2019																		$	(13,764	)	$	(11,587	)	$	(108,542	)	$	600		$	784		$	(132,509	)
Balance, December 31, 2019																		$	28,950		$	639		$	(101,278	)	$	17,399		$	(434	)	$	(54,724	)
Net change in unrealized gain or loss																			124,018			—			—			41,476			(197	)		165,297
Reclassification of net income or loss realized and included in earnings																			—			—			1,232			(864	)		—			368
Amortization of unrealized net gain on securities transferred to HTM																			—			(195	)		—			—			—			(195	)
Income tax expense (benefit)																			28,056			(44	)		279			9,189			—			37,480
Balance, March 31, 2020																		$	124,912		$	488		$	(100,325	)	$	48,822		$	(631	)	$	73,266

Accumulated Other Comprehensive Income or Loss (“AOCI”) is reported as a component of stockholders’ equity. AOCI can include, among other items, unrealized holding gains and losses on securities available for sale (“AFS”), including the Company’s share of unrealized gains and losses reported by a partnership accounted for under the equity method, gains and losses associated with pension or other post-retirement benefits that are not recognized immediately as a component of net periodic benefit cost, and gains and losses on derivative instruments that are designated as, and qualify as, cash flow hedges. Net unrealized gains and losses on AFS securities reclassified as securities held to maturity (“HTM”) also continue to be reported as a component of AOCI and will be amortized over the estimated remaining life of the securities as an adjustment to interest income. Subject to certain thresholds, unrealized losses on employee benefit plans will be reclassified into income as pension and post-retirement costs are recognized over the remaining service period of plan participants. Accumulated gains or losses on the cash flow hedge of the variable rate loans described in Note 7 will be reclassified into income over the life of the hedge. Accumulated other comprehensive loss resulting from the terminated interest rate swaps will be amortized over the remaining maturities of the designated instruments. Gains and losses within AOCI are net of deferred income taxes, where applicable.

The following table shows the line items of the consolidated statements of income affected by amounts reclassified from AOCI.

	Six Months							Three Months Ended
Amount reclassified from AOCI (a)	June 30,						Affected line item on	March 31,						Affected line item on
(in thousands)	2019			2018			the statement of income	2020			2019			the statement of income
Amortization of unrealized net loss on securities transferred to HTM	$	(1,481	)	$	(1,680	)	Interest income
Amortization of unrealized net loss or gain on securities transferred to HTM								$	195		$	(591	)	Interest income
Tax effect		335			380		Income taxes		(44	)		134		Income taxes
Net of tax		(1,146	)		(1,300	)	Net income		151			(457	)	Net income
Amortization of defined benefit pension and post-retirement items		(4,527	)		(2,448	)	Other noninterest expense (b)		(1,232	)		(2,203	)	Other noninterest expense (b)
Tax effect		1,023			555		Income taxes		279			498		Income taxes
Net of tax		(3,504	)		(1,893	)	Net income		(953	)		(1,705	)	Net income
Reclassification of unrealized gain (loss) on cash flow hedges		(1,204	)		979		Interest income		1,569			(610	)	Interest income
Tax effect		272			(222	)	Income taxes		(355	)		138		Income taxes
Net of tax		(932	)		757		Net income		1,214			(472	)	Net income
Amortization of loss on terminated cash flow hedges		(2,472	)		(2,544	)	Interest income		(705	)		(1,406	)	Interest income
Tax effect		559			577		Income taxes		159			318		Income taxes
Net of tax		(1,913	)		(1,967	)	Net income		(546	)		(1,088	)	Net income
Total reclassifications, net of tax	$	(7,495	)	$	(4,403	)	Net income	$	(134	)	$	(3,722	)	Net income

On March 27, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation issued an interim final rule that provides an option to delay the estimated impact on regulatory capital stemming from the implementation CECL for a transition period of five years. The five-year rule provides a full delay for of the estimated impact of CECL on regulatory capital transition (0%) for the first two years, followed by a three-year transition (25% of the impact included in 2022, 50% in 2023, 75% in 2024 and 100% thereafter). The two-year delay includes the full impact of day one CECL plus the estimated impact of current CECL activity calculated quarterly as 25% of the current ACL over the day one balance (“modified transition amount”). The modified transition amount will be recalculated each quarter in 2020 and 2021, with the December 31, 2021 impact carrying through the remaining three years of the transition. The Company elected the five-year transition period option upon issuance of the interim final rule.

	Three Months Ended				Six Months Ended					Three Months Ended
	June 30,				June 30,					March 31,
(in thousands)	2019		2018		2019		2018			2020		2019
Income from bank-owned life insurance	$	4,083	$	3,113	$	7,348	$	6,183		$	4,266	$	3,265
Credit related fees		2,937		2,416		5,532		5,138			3,065		2,595
Income from derivatives		3,600		1,588		4,409		3,111			3,871		809
Gain (loss) on sales of assets		34		41		431		(1,166	)
Other miscellaneous		4,326		3,347		6,728		6,724			4,977		2,799
Total other noninterest income	$	14,980	$	10,505	$	24,448	$	19,990		$	16,179	$	9,468

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
(in thousands)	2019			2018			2019			2018			2020			2019
Advertising	$	3,253		$	3,517		$	6,333		$	6,043		$	4,234		$	3,080
Corporate value and franchise taxes		4,215			3,577			8,257			7,017			4,296			4,042
Printing and supplies		1,092			1,688			2,261			2,974			1,108			1,169
Telecommunications and postage		3,363			3,615			6,829			7,465			4,065			3,466
Travel expense		1,344			1,441			2,442			2,507			1,111			1,098
Entertainment and contributions		2,742			3,193			5,450			5,711			2,447			2,708
Tax credit investment amortization		1,234			875			2,372			1,749			961			1,138
Other retirement expense		(4,152	)		(4,458	)		(8,257	)		(8,921	)		(6,122	)		(4,105	)
Loss on restructuring of bank-owned life insurance contracts		—			3,240			—			3,240
Other miscellaneous		6,588			8,830			12,279			14,514			7,469			5,691
Total other noninterest expense	$	19,679		$	25,518		$	37,966		$	42,299		$	19,569		$	18,287

The Company calculates earnings (loss) per share using the two-class method. The two-class method allocates net income or loss to each class of common stock and participating security according to common dividends declared and participation rights in undistributed earnings. For reporting periods in which a net loss is recorded, net loss is not allocated to participating securities because the holders of such securities bear no contractual obligation to fund or otherwise share in the losses. Participating securities consist of nonvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents.

A summary of the information used in the computation of earnings (loss) per common share follows.

	Three Months Ended				Six Months Ended				Three Months Ended
	June 30,				June 30,				March 31,
(in thousands, except per share data)	2019		2018		2019		2018		2020			2019
Numerator:
Net income to common shareholders	$	88,277	$	71,177	$	167,441	$	143,652
Net income allocated to participating securities - basic and diluted		1,502		1,328		2,839		2,694
Net income allocated to common shareholders - basic and diluted	$	86,775	$	69,849	$	164,602	$	140,958
Net income (loss) to common shareholders									$	(111,033	)	$	79,164
Net dividends or income allocated to participating securities - basic and diluted										427			1,337
Net income (loss) allocated to common shareholders - basic and diluted									$	(111,460	)	$	77,827
Denominator:
Weighted-average common shares - basic		85,728		85,305	$	85,708	$	85,273		87,186			85,688
Dilutive potential common shares		107		178		102		178		—			112
Weighted-average common shares - diluted		85,835		85,483	$	85,810	$	85,451		87,186			85,800
Earnings per common share:
Earnings (loss) per common share:
Basic	$	1.01	$	0.82	$	1.92	$	1.65	$	(1.28	)	$	0.91
Diluted	$	1.01	$	0.82	$	1.92	$	1.65	$	(1.28	)	$	0.91

Potential common shares consist of stock options, nonvested performance-based awards, and nonvested restricted share awards deferred under the Company’s nonqualified deferred compensation plan. These potential common shares do not enter into the calculation of diluted earnings per share if the impact would be antidilutive, i.e., increase earnings per share or reduce a loss per share. ~~Weighted average antidilutive potential~~For reporting periods in which a net loss is recorded, 0 effect is given to potentially dilutive common shares ~~totaled 14,150 and 14,183 for~~in the ~~three and six months ended June 30, 2019, respectively. There were 1,816 and 913 antidilutive potential~~computation of loss per common share as any impact from such shares would be antidilutive. Potentially dilutive common shares with a weighted average of 1,281 were excluded from the calculation of ~~diluted~~ earnings per common share for the three ~~and six~~ months ended ~~June 30, 2018, respectively.~~March 31, 2019 as the effect would have been antidilutive.

The Company sponsors a qualified defined benefit pension plan, the Hancock Whitney Corporation Pension Plan (“Pension Plan”), covering certain eligible associates. Those hired or rehired by the Company prior to June 30, 2017 are eligible to participate; however, the accrued benefits of each participant in the Pension Plan whose combined age plus years of service as of January 1, 2018 totaled less than 55 were frozen as of January 1, 2018 and will not thereafter increase. The Company makes contributions to the Pension Plan in amounts sufficient to meet funding requirements set forth in federal employee benefit and tax laws, plus such additional amounts as the Company may determine to be appropriate. During the first quarter of 2019, the Company made a discretionary contribution of $100 million to the Pension Plan. ~~During the third quarter of 2018, the Company made a discretionary contribution of$39million to thePensionPlandesignated tothe 2017 plan year.~~

The Company also offers a defined contribution retirement benefit plan, the Hancock Whitney Corporation 401(k) Savings Plan (“401(k) Plan”), that covers substantially all associates who have been employed 60 days and meet a minimum age requirement and employment classification criteria. The Company matches 100% of the first 1% of compensation saved by a participant, and 50% of the next 5% of compensation saved. Newly eligible associates are automatically enrolled at an initial 3% savings rate unless the associate actively opts out of participation in the plan. Beginning January 1, 2018, the Company makes an additional basic contribution to associates hired or rehired after June 30, 2017 in an amount equal to 2% of the associate’s eligible compensation. For Pension Plan participants whose benefits were frozen as of January 1, 2018, the 401(k) Plan provides an enhanced Company contribution in the amount of 2%, 4% or 6% of such participant’s eligible compensation, based on the participant’s age and years of service with the Company. Participants vest in basic and enhanced Company contributions upon completion of three years of service.

The Company sponsors a nonqualified defined benefit plan covering certain legacy Whitney employees that was frozen as of December 31, 2012 and no future benefits are accrued under this plan.

The Company sponsors defined benefit postretirement plans for both legacy Hancock and legacy Whitney employees that provide health care and life insurance benefits. Benefits under the Hancock plan are not available to employees hired on or after January 1, 2000. Benefits under the Whitney plan are restricted to retirees who were already receiving benefits at the time of plan amendments in 2007 or active participants who were eligible to receive benefits as of December 31, 2007.

The following tables show the components of net periodic benefits cost included in expense for the plans for the periods indicated.

							Other Post-												Other Post-
(in thousands)	Pension Benefits						Retirement Benefits						Pension Benefits						Retirement Benefits
For the Six Months Ended June 30,	2019			2018			2019			2018
For the Three Months Ended March 31,													2020			2019			2020			2019
Service cost	$	5,510		$	6,088		$	51		$	63		$	3,275		$	2,775		$	22		$	29
Interest cost		9,524			8,202			292			298			3,782			4,863			164			128
Expected return on plan assets		(22,600	)		(19,869	)		—			—			(11,300	)		(11,300	)		—			—
Amortization of net loss and prior service costs		4,982			2,691			(455	)		(243	)		1,461			2,430			(229	)		(227	)
Net periodic benefit cost (reduction of cost)	$	(2,584	)	$	(2,888	)	$	(112	)	$	118		$	(2,782	)	$	(1,232	)	$	(43	)	$	(70	)

The Company maintains incentive compensation plans that provide for awards of share-based compensation to employees and directors. These plans have been approved by the Company’s shareholders. Detailed descriptions of these plans were included in Note 1718 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

A summary of stock option activity for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 is presented below:

						Weighted								Weighted
				Weighted		Average						Weighted		Average
				Average		Remaining		Aggregate				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic		Number of		Exercise		Contractual		Intrinsic
Options	Shares			Price		Term (Years)		Value ($000)		Shares		Price		Term (Years)		Value ($000)
Outstanding at January 1, 2019		46,865		$	31.88		2.6	$	164
Outstanding at January 1, 2020											28,725	$	34.11		2.2	$	296
Exercised/Released		(11,804	)		31.14				105		—		—				—
Cancelled/Forfeited		—			—				—		—		—				—
Expired		—			—				—		—		—				—
Outstanding at June, 2019		35,061		$	32.13		2.0	$	278
Exercisable at June 30, 2019		35,061		$	32.13		2.0	$	278
Outstanding at March 31, 2020											28,725	$	34.11		1.9	$	—
Exercisable at March 31, 2020											28,725	$	34.11		1.9	$	—

The total intrinsic value of options exercised during the ~~six~~three months ended ~~June 30,~~March 31, 2019 ~~and 2018~~ was ~~$0.1 million and $0.6 million, respectively.~~$0.5 million.

The Company’s restricted and performance-based share awards to certain employees and directors are subject to service requirements. A summary of the status of the Company’s nonvested restricted and performance-based share awards at ~~June 30, 2019 and changes during the six months ended June 30, 2019,~~March 31, 2020 are presented in the following table.

				Weighted					Weighted
				Average					Average
	Number of			Grant Date		Number of			Grant Date
	Shares			Fair Value		Shares			Fair Value
Nonvested at January 1, 2019		1,494,041		$	39.89
Nonvested at January 1, 2020							1,596,258		$	40.43
Granted		94,907			35.80		75,607			42.88
Vested		(20,290	)		42.61		(3,839	)		42.64
Forfeited		(23,782	)		38.62		(29,567	)		41.65
Nonvested at June 30, 2019		1,544,876		$	39.62
Nonvested at March 31, 2020							1,638,459		$	40.52

As of ~~June 30, 2019,~~March 31, 2020, there was ~~$47.3~~$55.3 million of total unrecognized compensation expense related to nonvested restricted and performance shares expected to ~~vest.~~vest in the future. This compensation is expected to be recognized in expense over a weighted average period of ~~3.1~~3.3 years. The total fair value of shares which vested during the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ was ~~$0.6~~$0.2 million and ~~$0.9~~$0.1 million, respectively.

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, the Company granted ~~33,691~~35,754 performance share awards subject to a total shareholder return (“TSR”) performance metric with a grant date fair value of ~~$35.27~~$46.61 per share and ~~33,691~~35,754 performance shares subject to an operating earnings per share performance metric with a grant date fair value of ~~$32.15~~$39.39 per share to key members of executive management. The number of performance shares subject to TSR that ultimately vest at the end of the three-year performance period, if any, will be based on the relative rank of the Company’s three-year TSR among the TSRs of a peer group of 4249 regional banks. The fair value of the performance shares subject to TSR at the grant date was determined using a Monte Carlo simulation method. The number of performance shares subject to ~~core~~operating earnings per share that ultimately vest will be based on the Company’s attainment of certain operating earnings per share goals over the two-year performance period. The maximum number of performance shares that could vest is 200% of the target award. Compensation expense for these performance shares is recognized on a straight line basis over the three-year service period.

In the normal course of business, the Bank enters into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of its customers. Such instruments are not reflected in the accompanying consolidated financial statements until they are funded, although they expose the Bank to varying degrees of credit risk and interest rate risk in much the same way as funded loans. Under regulatory capital guidelines, the Company and Bank must include unfunded commitments meeting certain criteria in risk-weighted capital calculations.

Commitments to extend credit include revolving commercial credit lines, nonrevolving loan commitments issued mainly to finance the acquisition and development or construction of real property or equipment, and credit card and personal credit lines. The availability of funds under commercial credit lines and loan commitments generally depends on whether the borrower continues to meet credit standards established in the underlying contract and has not violated other contractual conditions. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower. Credit card and personal credit lines are generally subject to cancellation if the borrower’s credit quality deteriorates. A number of commercial and personal credit lines are used only partially or, in some cases, not at all before they expire, and the total commitment amounts do not necessarily represent future cash requirements of the Company.

A substantial majority of the letters of credit are standby agreements that obligate the Bank to fulfill a customer’s financial commitments to a third party if the customer is unable to perform. The Bank issues standby letters of credit primarily to provide credit enhancement to its customers’ other commercial or public financing arrangements and to help them demonstrate financial capacity to vendors of essential goods and services.

The contract amounts of these instruments reflect the Company’s exposure to credit risk. The Company undertakes the same credit evaluation in making loan commitments and assuming conditional obligations as it does for on-balance sheet instruments and may require collateral or other credit support. The following table presents a summary of the Company’s off-balance sheet financial instruments as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:

	June 30,		December 31,		March 31,		December 31,
(in thousands)	2019		2018		2020		2019
Commitments to extend credit	$	6,930,220	$	7,234,528	$	7,591,029	$	7,530,143
Letters of credit		359,487		365,498		366,112		393,284

The Company is party to various legal proceedings arising in the ordinary course of business. Management does not believe that loss contingencies, if any, arising from pending litigation and regulatory matters will have a material adverse effect on the consolidated financial position or liquidity of the Company.

The Financial Accounting Standards Board (“FASB”) defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The FASB’s guidance also establishes a fair value hierarchy that prioritizes the inputs to these valuation techniques used to measure fair value, giving preference to quoted prices in active markets for identical assets or liabilities (“level 1”) and the lowest priority to unobservable inputs such as a reporting entity’s own data (“level 3”). Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in markets that are not active, observable inputs other than quoted prices, such as interest rates and yield curves, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

The following tables present for each of the fair value hierarchy levels the Company’s assets and liabilities that are measured at fair value on a recurring basis in the consolidated balance sheets at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:

	June 30, 2019								March 31, 2020
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Available for sale debt securities:
U.S. Treasury and government agency securities	$	—	$	81,864	$	—	$	81,864	$	—	$	109,203	$	—	$	109,203
Municipal obligations		—		249,341		—		249,341		—		249,693		—		249,693
Corporate debt securities		—		3,500		—		3,500		—		8,196		—		8,196
Residential mortgage-backed securities		—		1,367,651		—		1,367,651		—		2,124,531		—		2,124,531
Commercial mortgage-backed securities		—		934,575		—		934,575		—		1,742,806		—		1,742,806
Collateralized mortgage obligations		—		153,537		—		153,537		—		659,567		—		659,567
Total available for sale securities		—		2,790,468		—		2,790,468		—		4,893,996		—		4,893,996
Derivative assets (1)		—		51,609		—		51,609		—		166,869		—		166,869
Total recurring fair value measurements - assets	$	—	$	2,842,077	$	—	$	2,842,077		—	$	5,060,865		—	$	5,060,865
Liabilities
Derivative liabilities (1)	$	—	$	12,646	$	6,602	$	19,248	$	—	$	44,064	$	5,345	$	49,409
Total recurring fair value measurements - liabilities	$	—	$	12,646	$	6,602	$	19,248	$	—	$	44,064	$	5,345	$	49,409

	December 31, 2018								December 31, 2019
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Available for sale debt securities:
U.S. Treasury and government agency securities	$	—	$	71,706	$	—	$	71,706	$	—	$	98,672	$	—	$	98,672
Municipal obligations		—		240,427		—		240,427		—		249,805		—		249,805
Corporate debt securities		—		3,500		—		3,500		—		7,988		—		7,988
Residential mortgage-backed securities		—		1,443,402		—		1,443,402		—		1,924,157		—		1,924,157
Commercial mortgage-backed securities		—		770,077		—		770,077		—		1,586,467		—		1,586,467
Collateralized mortgage obligations		—		161,925		—		161,925		—		808,215		—		808,215
Total available for sale securities		—		2,691,037		—		2,691,037		—		4,675,304		—		4,675,304
Derivative assets (1)		—		16,980		—		16,980		—		54,446		—		54,446
Total recurring fair value measurements - assets		—	$	2,708,017		—	$	2,708,017		—	$	4,729,750		—	$	4,729,750
Liabilities
Derivative liabilities (1)	$	—	$	14,923	$	7,304	$	22,227	$	—	$	15,385	$	5,704	$	21,089
Total recurring fair value measurements - liabilities	$	—	$	14,923	$	7,304	$	22,227	$	—	$	15,385	$	5,704	$	21,089

Securities classified as level 2 include obligations of U.S. Government agencies and U.S. Government-sponsored agencies, residential and commercial mortgage-backed securities and collateralized mortgage obligations that are issued or guaranteed by U.S. government agencies, and state and municipal bonds. The level 2 fair value measurements for investment securities are obtained quarterly from a third-party pricing service that uses industry-standard pricing models. Substantially all of the model inputs are observable in the marketplace or can be supported by observable data.

The Company invests only in securities of investment grade quality with a targeted duration, for the overall portfolio, generally between two and five and a half years. Company policies generally limit investments to U.S. agency securities and municipal securities determined to be investment grade according to an internally generated score which generally includes a rating of not less than “Baa” or its equivalent by a nationally recognized statistical rating agency.

For the Company’s derivative financial instruments designated as hedges and those under the customer interest rate program, the fair value is obtained from a third-party pricing service that uses an industry-standard discounted cash flow model that relies on inputs, LIBOR swap curves, Overnight Index swap rate curves, all observable in the marketplace. To comply with the accounting guidance, credit valuation adjustments are incorporated in the fair values to appropriately reflect nonperformance risk for both the Company and the counterparties. Although the Company has determined that the majority of the inputs used to value these derivative instruments fall within level 2 of the fair value hierarchy, the credit value adjustments utilize level 3 inputs, such as estimates of current credit spreads. The Company has determined that the impact of the credit valuation adjustments is not significant to the overall valuation of these derivatives. As a result, the Company has classified its derivative valuations for these instruments in level 2 of the fair value hierarchy. The Company’s policy is to measure counterparty credit risk quarterly for all derivative instruments subject to master netting arrangements consistent with how market participants would price the net risk exposure at the measurement date.

The Company also has certain derivative instruments associated with the Bank’s mortgage-banking activities. These derivative instruments include interest rate lock commitments on prospective residential mortgage loans and forward commitments to sell these loans to investors on a best efforts delivery basis. The fair value of these derivative instruments is measured using observable market prices for similar instruments and is classified as a level 2 measurement.

The Company’s Level 3 liability consists of a derivative contract with the purchaser of 192,163 shares of Visa Class B common stock. Pursuant to the agreement, the Company retains the risks associated with the ultimate conversion of the Visa Class B common shares into shares of Visa Class A common stock, such that the counterparty will be compensated for any dilutive adjustments to the conversion ratio and the Company will be compensated for any anti-dilutive adjustments to the ratio. The agreement also requires periodic payments by the Company to the counterparty calculated by reference to the market price of Visa Class A common shares at the time of sale and a fixed rate of interest that steps up once after the eighth scheduled quarterly payment. The fair value of the liability is determined using a discounted cash flow methodology. The significant unobservable inputs used in the fair value measurement are the Company’s own assumptions about estimated changes in the conversion rate of the Visa Class B common shares into Visa Class A common shares, the date on which such conversion is expected to occur and the estimated growth rate of the Visa Class A common share price. Refer to Note 76 – Derivatives for information about the derivative contract with the counterparty.

The Company believes its valuation methods for its assets and liabilities carried at fair value are appropriate; however, the use of different methodologies or assumptions, particularly as applied to Level 3 assets and liabilities, could have a material effect on the computation of their estimated fair values.

Changes in Level 3 Fair Value Measurements and Quantitative Information about Level 3 Fair Value Measurements

The table below presents a rollforward of the amounts on the consolidated balance sheets for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 and the year ended December 31, ~~2018~~2019 for financial instruments of a material nature that are classified within Level 3 of the fair value hierarchy and are measured at fair value on a recurring basis:

The table below provides an overview of the valuation techniques and significant unobservable inputs used in those techniques to measure the financial instrument measured on a recurring basis and classified within Level 3 of the valuation. The range of sensitivities that management utilized in its fair value calculations is deemed acceptable in the industry with respect to the identified financial instrument.

~~The Company’s policy is to recognize transfers between valuation hierarchy levels as of the end of a reporting period. There were no transfers between levels during the periods presented.~~

Certain assets and liabilities are measured at fair value on a nonrecurring basis. Collateral-dependent impaired loans are level 2 assets measured at the fair value of the underlying collateral based on independent third-party appraisals that take into consideration market-based information such as recent sales activity for similar assets in the property’s market.

Other real estate owned and foreclosed assets, including both foreclosed property and surplus banking property, are level 3 assets that are adjusted to fair value, less estimated selling costs, upon transfer ~~to other real estate owned.~~from loans or property and equipment. Subsequently, other real estate owned and foreclosed assets is carried at the lower of carrying value or fair value less estimated selling costs. Fair values are determined by sales agreement or third-party appraisals as discounted for estimated selling costs, information from comparable sales, and marketability of the ~~property.~~assets.

The fair value information presented below is not as of the period end, rather it was as of the date the fair value adjustment was recorded during the twelve months for each of the dates presented below, and excludes nonrecurring fair value measurements of assets no longer on the balance sheet.

The following tables present the Company’s financial assets that are measured at fair value on a nonrecurring basis for each of the fair value hierarchy levels.

	June 30, 2019								March 31, 2020
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Collateral-dependent impaired loans	$	—	$	168,190	$	—	$	168,190	$	—	$	281,121	$	—	$	281,121
Other real estate owned and foreclosed assets, net		—		—		7,103		7,103		—		—		18,425		18,425
Total nonrecurring fair value measurements	$	—	$	168,190	$	7,103	$	175,293	$	—	$	281,121	$	18,425	$	299,546

	December 31, 2018								December 31, 2019
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Collateral-dependent impaired loans	$	—	$	170,918	$	—	$	170,918	$	—	$	182,377	$	—	$	182,377
Other real estate owned and foreclosed assets, net		—		—		14,594		14,594		—		—		24,422		24,422
Total nonrecurring fair value measurements	$	—	$	170,918	$	14,594	$	185,512	$	—	$	182,377	$	24,422	$	206,799

Accounting guidance from the FASB requires the disclosure of estimated fair value information about certain on- and off-balance sheet financial instruments, including those financial instruments that are not measured and reported at fair value on a recurring basis. The significant methods and assumptions used by the Company to estimate the fair value of financial instruments are discussed below.

Cash, Short-Term Investments and Federal Funds Sold – For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities – The fair value measurement for securities available for sale was discussed earlier in the note. The same measurement techniques were applied to the valuation of securities held to maturity.

Loans, Net – The fair value measurement for certain impaired loans was discussed earlier in the note. For the remaining portfolio, fair values were generally determined by discounting scheduled cash flows using discount rates determined with reference to current market rates at which loans with similar terms would be made to borrowers of similar credit quality.

Loans Held for Sale – These loans are recorded at fair value and carried at the lower of cost or market. The carrying amount is considered a reasonable estimate of fair value.

Deposits – The accounting guidance requires that the fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, interest-bearing checking and savings accounts, be assigned fair values equal to amounts payable upon demand (“carrying amounts”). The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.

Securities Sold under Agreements to Repurchase, Federal Funds Purchased, and FHLB Borrowings – For these short-term liabilities, the carrying amount is a reasonable estimate of fair value.

Long-Term Debt – The fair value is estimated by discounting the future contractual cash flows using current market rates at which debt with similar terms could be obtained.

Derivative Financial Instruments – The fair value measurement for derivative financial instruments was discussed earlier in the note.

The following tables present the estimated fair values of the Company’s financial instruments by fair value hierarchy levels and the corresponding carrying amounts:

	June 30, 2019										March 31, 2020
							Total Fair		Carrying								Total Fair		Carrying
(in thousands)	Level 1		Level 2		Level 3		Value		Amount		Level 1		Level 2		Level 3		Value		Amount
Financial assets:
Cash, interest-bearing bank deposits, and federal funds sold	$	516,214	$	—	$	—	$	516,214	$	516,214	$	1,353,125	$	—	$	—	$	1,353,125	$	1,353,125
Available for sale securities		—		2,790,468		—		2,790,468		2,790,468		—		4,893,996		—		4,893,996		4,893,996
Held to maturity securities		—		2,979,401		—		2,979,401		2,935,267		—		1,562,577		—		1,562,577		1,480,494
Loans, net		—		168,190		19,894,266		20,062,456		19,980,187		—		281,121		21,107,746		21,388,867		21,089,678
Loans held for sale		—		36,150		—		36,150		36,150		—		67,587		—		67,587		67,587
Derivative financial instruments		—		51,609		—		51,609		51,609		—		166,869		—		166,869		166,869
Financial liabilities:
Deposits	$	—	$	—	$	23,220,712	$	23,220,712	$	23,236,042	$	—	$	—	$	25,003,807	$	25,003,807	$	25,008,496
Federal funds purchased		550		—		—		550		550		330,330		—		—		330,330		330,330
Securities sold under agreements to repurchase		631,048		—		—		631,048		631,048		482,953		—		—		482,953		482,953
FHLB short-term borrowings		1,010,000		—		—		1,010,000		1,010,000		1,860,000		—		—		1,860,000		1,860,000
Long-term debt		—		224,547		—		224,547		232,754		—		231,044		—		231,044		225,606
Derivative financial instruments		—		12,646		6,602		19,248		19,248		—		44,064		5,345		49,409		49,409

	December 31, 2018										December 31, 2019
(in thousands)	Level 1		Level 2		Level 3		Total Fair Value		Carrying Amount		Level 1		Level 2		Level 3		Total Fair Value		Carrying Amount
Financial assets:
Cash, interest-bearing bank deposits, and federal funds sold	$	494,466	$	—	$	—	$	494,466	$	494,466	$	542,333	$	—	$	—	$	542,333	$	542,333
Available for sale securities		—		2,691,037		—		2,691,037		2,691,037		—		4,675,304		—		4,675,304		4,675,304
Held to maturity securities		—		2,935,856		—		2,935,856		2,979,547		—		1,611,004		—		1,611,004		1,568,009
Loans, net		—		170,918		19,555,969		19,726,887		19,831,897		—		182,377		20,861,702		21,044,079		21,021,504
Loans held for sale		—		28,150		—		28,150		28,150		—		55,864		—		55,864		55,864
Derivative financial instruments		—		16,980		—		16,980		16,980		—		54,446		—		54,446		54,446
Financial liabilities:
Deposits	$	—	$	—	$	23,129,574	$	23,129,574	$	23,150,185	$	—	$	—	$	23,786,775	$	23,788,775	$	23,803,575
Federal funds purchased		425		—		—		425		425		195,450		—		—		195,450		195,450
Securities sold under agreements to repurchase		428,599		—		—		428,599		428,599		484,422		—		—		484,422		484,422
FHLB short-term borrowings		1,160,104		—		—		1,160,104		1,160,104		2,035,000		—		—		2,035,000		2,035,000
Long-term debt		—		223,135		—		223,135		224,993		—		226,098		—		226,098		233,462
Derivative financial instruments		—		14,923		7,304		22,227		22,227		—		15,385		5,704		21,089		21,089

In ~~February~~June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU, ~~2016-02, “Leases (Topic 842),”~~more commonly referred to ~~increase transparency~~as Current Expected Credit Losses, or CECL, along with several subsequently issued related amendments, were codified as ASC 326. The provisions of ASC 326, which supersede the incurred loss methodology, require the measurement of expected credit losses over the life of financial assets based on historical experience, current conditions, and ~~comparability among~~reasonable and supportable forecasts. As such, financial institutions and other organizations ~~by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. With the exception of short-term leases, lessees~~ are required to ~~recognize a lease liability representing~~use forward-looking information to inform their credit loss estimates. Many of the ~~lessee’s obligation~~loss estimation techniques prescribed by previous guidance will still be permitted, although the inputs to ~~make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset representing~~those techniques will change to reflect the ~~lessee’s right~~full amount of expected credit losses for the estimated remaining life of the instrument. An entity will continue to use ~~or control~~judgment to determine which loss estimation methods are appropriate for its circumstances. In addition, ASC 326 amends the ~~use~~accounting for credit losses on both held to maturity and available for sale debt securities and purchased financial assets with credit deterioration.

The Company adopted the provisions of a specified asset for the lease term upon adoption. Lessor accounting was largely unchanged under the new guidance, except for clarification of the definition of initial direct costs which provided additional guidanceASC 326 on the timing of recognition of those costs. Subsequent to the issuance of this update, the FASB issued three additional ASUs that provide codification improvements and certain transition elections, including ASU 2018-11, which permits an additional transition method whereby an entity may elect to recordJanuary 1, 2020, with a cumulative-effect adjustment to ~~the opening balance of~~ retained earnings infor non-purchased credit impaired loans. For purchased credit impaired loans (as defined by ASC 310-30), there was no impact to retained earnings upon adoption; rather, a portion of the ~~period~~purchase accounting fair value mark was reclassified to allowance for credit losses. A more detailed discussion of ~~adoption. The Company was required to and did adopt the standard effective January 1, 2019, using the modified retrospective transition method permitted by ASU 2018-11. Thus,~~ the Company’s ~~reporting~~policy for accounting for credit losses under the ~~comparative period~~provisions of ASC 326 is presented in Note 1 – Basis of Presentation.

The following table reflects the ~~financial statements and disclosures continues to be~~impact of adoption reflected in accordance with GAAP Topic 840. Upon adoption, the Company recorded a gross-up of assets and liabilities in its Consolidated Balance Sheet, with approximately $116 million for right of use assets and $131 million of lease payment obligations offset by the elimination of $15 million of existing lease incentive and other deferred rent liabilities. Accounting for leases in accordance with Topic 842 has not had a material impact upon the Company’s consolidated ~~results of operations, and is not expected to~~balance sheets. The increase in ~~future periods. Refer to Note 5 – Operating Leases~~the allowance for ~~further information related to operating lease accounting policy, practical expedient elections~~loan losses represents a reduction in total assets, while the reserve for ~~adoption and operating leasing information at adoption and as of June 30, 2019.~~unfunded lending commitments represents an increase in total liabilities.

In ~~April 2019,~~March 2020, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” The Update provides clarification and correction to certain areas of previously issued ASUs concerning financial instruments (2016-01, 2016-13 and 2017-12). The FASB does not expect the provisions contained in this Update to have a significant effect on current accounting practice. Effective dates for adoption of this Update’s provisions vary in accordance with the effective dates and adoption status2020-04, “Reference Rate Reform (Topic 848): Facilitation of the ~~amended ASUs. The Company is currently assessing the impact~~Effects of ~~adoption of this guidance, but it is not expected to have a material impact upon its financial position and results of operations.~~

In August 2018, the FASB issued ASU 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.Reference Rate Reform on Financial Reporting.” The amendments in this Update ~~modify certain disclosure requirements by removing disclosures that are no longer considered cost beneficial, clarifying specific requirements~~provide optional guidance for a limited period of ~~disclosures, and adding disclosure requirements identified as relevant.~~time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this Update are ~~effective~~elective and apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments in this Update provide optional expedients and exceptions for ~~fiscal years ending~~applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December ~~15, 2020~~31, 2022, except for ~~public business entities,~~hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and ~~early adoption is permitted.~~that are retained through the end of the hedging relationship. The Company ~~is currently assessing the impact of adoption of~~adopted this guidance upon its ~~pension~~issuance; at adoption, Company elected to amend the hedge documentation, without dedesignating and ~~postretirement plan disclosures. Adoption~~redesignating, for all outstanding hedging relationships using the available expedient to assert probability of ~~this guidance will have no impact upon~~ the ~~Company’s results~~hedged interest, regardless of ~~operations or financial condition.~~any expected modification in terms related to reference rate reform.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments in this Update modify certain disclosure requirements on fair value measurements set forth in Topic 820, Fair Value Measurements. In addition, the amendments in this Update eliminate the phrase “an entity shall disclose at a minimum” to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 31, 2019, and ~~early adoption is permitted.~~the Company adopted the guidance effective January 1, 2020. Refer to Note 14 - Fair Value Measurements for the modified disclosures. Adoption of this guidance had no impact upon the Company’s results of operations or financial condition.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes (Topic 740).” The amendments in this Update are meant to simplify the accounting for income taxes by removing certain exceptions to GAAP. The amendments also improve consistent application of and simplify GAAP by modifying and/or revising the accounting for certain income tax transactions and by clarifying certain existing codification. The amendments in the update are effective for public business entities for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. The Company is currently assessing the impact of adoption of this guidance, but does not expect the update to have a material impact upon its ~~fair value measurements disclosures.~~financial position and results of operations.

In August 2018, the FASB issued ASU 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.” The amendments in this Update modify certain disclosure requirements by removing disclosures that are no longer considered cost beneficial, clarifying specific requirements of disclosures, and adding disclosure requirements identified as relevant. The amendments in this Update are effective for fiscal years ending after December 15, 2020 for public business entities. Adoption of this guidance will have no impact upon the Company’s results of operations or financial condition.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU, more commonly referred to as Current Expected Credit Losses, or CECL, requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques currently applied will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. In addition, the ASU amends the accounting for credit losses on debt securities and purchased financial assets with credit deterioration. The ASU is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. Early application is permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is not planning to early adopt this guidance. The Company has engaged third party consultants and formed cross-functional working groups comprised of individuals from various areas including credit, finance, treasury, risk management and information technology for implementation. Five work streams have been created to develop the expected credit loss models; execute system implementation; complete balance sheet scoping; ensure the design of effective internal controls surrounding new processes; and provide executive oversight of the project. The Company has completed the configuration of a vendor provided software solution for which testing and implementation is expected to be complete in the third quarter of 2019. Validation of models began in the first quarter of 2019 and is also expected to be completed during the third quarter of 2019. The Company plans to conduct parallel testing of the estimation process during the third and fourth quarters of 2019. While the Company has not yet quantified the financial impact of adoption, the expectation is that application of this guidance will result in an increase in the allowance for loan losses given the change in methodology from covering losses inherent in the portfolio to covering losses over the remaining expected life of the portfolio. Application of the guidance is also expected to result in the establishment of an allowance for credit loss on held to maturity debt securities. The amount of the increase in these allowances will be impacted by the portfolio composition and quality at the adoption date as well as economic conditions and forecasts at that time.

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

This report contains forward-looking statements within the meaning and protections of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q and in other reports or documents that we file from time to time with the SEC ~~and~~ include, but are not limited to, the following:

Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “forecast,” “goals,” “targets,” “initiatives,” “focus,” “potentially,” “probably,” “projects,” “outlook,” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.

Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward looking statements. Additional factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019, Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q, and in other periodic reports that we file with the SEC.

You are cautioned not to place undue reliance on these forward-looking statements. We do not intend, and undertake no obligation, to update or revise any forward-looking statements, whether as a result of differences in actual results, changes in assumptions or changes in other factors affecting such statements, except as required by law.

Management’s Discussion and Analysis of Financial Condition and Results of Operations include non-GAAP measures used to describe our performance. These non-GAAP financial measures have inherent limitations as analytical tools and should not be considered on a standalone basis or as a substitute for analyses of financial condition and results as reported under GAAP. Non-GAAP financial measures are not standardized and therefore, it may not be possible to compare these measures with other companies that present measures having the same or similar names. These disclosures should not be considered an alternative to GAAP.

A reconciliation of those measures to GAAP measures are provided within the Selected Financial Data section that appears later in this item. The following is a summary of these non-GAAP measures and an explanation as to why they are deemed useful.

Consistent with Securities and Exchange Commission Industry Guide 3, we present net interest income, net interest margin and efficiency ratios on a fully taxable equivalent (“te”) basis. The te basis adjusts for the tax-favored status of net interest income from certain loans and investments using a statutory federal tax rate of 21% to increase tax-exempt interest income to a taxable equivalent basis. We believe this measure to be the preferred industry measurement of net interest income, and that it enhances comparability of net interest income arising from taxable and tax-exempt sources.

We present certain additional non-GAAP financial measures to assist the reader with a better understanding of the Company’s performance period over period, as well as to provide investors with assistance in understanding the success management has experienced in executing its strategic initiatives. These non-GAAP measures may reference the concept “operating.” We use the term “operating” to describe a financial measure that excludes income or expense considered to be nonoperating in nature. Items identified as nonoperating are those that, when excluded from a reported financial measure, provide management or the reader with a measure that may be more indicative of forward-looking trends in our business.

We define Operating ~~Revenue~~ ~~as net interest income (te) and noninterest income less nonoperating revenue. We define~~ ~~Operating~~ Pre-Provision Net Revenue as ~~operating~~total revenue (te) less noninterest expense, excluding nonoperating items. Management believes that operating pre-provision net revenue is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.

We define Operating Earnings as reported net income excluding nonoperating items net of income tax. We define Operating Earnings per Share as operating earnings expressed as an amount available to each common shareholder on a diluted basis.

On April 30, 2019, we announced our entry into an agreement to acquire MidSouth Bancorp, Inc. (“MidSouth”) (NYSE: MSL) in a stock-for-stock transaction. MidSouth Bank N.A., the wholly-owned banking subsidiary of MidSouth, operates 42 locations in Louisiana and Texas and had approximately $1.7 billion of assets, including $0.9 billion of loans, and $1.4 billion of deposits at June 30, 2019. At the closing, each share of MidSouth’s common stock will convert to the right to receive 0.2952 shares of our common stock. The merger agreement also allows for the redemption of MidSouth’s outstanding preferred stock at closing, subject to the receipt of applicable governmental approvals. The Company expects acquisition-related expenses to approximate $38 million in 2019 and expects the transaction to be accretive to income beginningEconomic activity in the first quarter of ~~2020.~~ 2020 contracted sharply and abruptly across all regions in the United States as a result of the COVID-19 pandemic (“the pandemic”) with mandated economic closures for non-essential businesses because of social distancing measures to slow the spread of the disease. The ~~transaction is expected to add approximately $0.13 to $0.15 to earnings once fully phased-in. The transaction provides~~spread of COVID-19 has created a global public health crisis that has resulted in unprecedented uncertainty, volatility and disruption in financial markets and in governmental, commercial and consumer activity globally, and in the ~~opportunity for both enhanced growth in several~~markets that we serve. A large portion of our ~~current~~customer base is concentrated in Louisiana, which was an early hot spot for the coronavirus, prompting business closures in mid-March and causing significant disruption to the economy and our customer base. Our geographic markets are concentrated in areas that depend on highly impacted industries such as ~~MidSouth’s home market of Lafayette, Louisiana, as well as opportunities for expansion into new markets in Louisiana~~hospitality and Texas. The acquisition is subject to the satisfaction of customary closing conditions, including the receipt of regulatory approvals and approval by the shareholders of MidSouth. The transaction is expected to close with a simultaneous systems conversion late in the third quarter of 2019.

~~Current Economic Environment~~tourism, nonessential healthcare and oil and gas. Demand for COVID-19 related loan modification has been high, further indicating that our impact may be more significant than others in our industry. Conversely, success of current and future economic stimulus programs, such as enhanced unemployment benefits and the Small Business Administration guaranteed paycheck protection programs, among others, mitigates some of the risk. The impact to our business will be contingent upon the success of containment measures in our markets and across the country, success in medical advancements for treatment and/or vaccines, and restoration of consumer confidence, which will allow for profitable restart of the economy. Timing and success of these items are difficult to predict and therefore significant uncertainty exists for the near term. The realization of these economic conditions have been reflected in our first quarter results most notably through the increase to the allowance for credit losses which is discussed further below.

~~Most~~The Company utilizes Moody’s macroeconomic forecasts that provide various scenarios to assist with the development of our ~~market areas experienced~~outlook. These forecasts are anchored on a ~~modest~~baseline forecast scenario, which by definition reflects a 50% probability distribution that the economy will perform better or worse than the baseline forecasted parameters. Several upside and downside scenarios are also provided that compare to ~~moderate expansion~~the baseline scenario. Our March 2020 baseline scenario reflects a sharp and severe recession in ~~economic activity during~~the first and second quarters of 2020. The catalysts are the pandemic, turmoil in equity markets, and the steep decline in global oil prices. This scenario is based on the assumption that infections peak in May and begin to abate by July. Restrictions on travel and stay at home orders start to wind down slowly in May and will be lifted in July. Fifty percent of industries will be on lockdown in April, with restrictions gradually easing through June 2020. The unemployment rate peaks in the second quarter of ~~2019, according~~2020. Oil prices remain depressed as the oil supply significantly exceeds demand, and are not forecasted to rebound to equilibrium until 2021. As a result of these factors, real gross domestic product begins to contract in first quarter 2020 and more dramatically in second quarter. Recovery is relatively quick with economic growth resuming in third quarter 2020. Consumer housing prices are only marginally impacted, but commercial real estate price index are more heavily impacted. The real estate price indices both return to positive growth in 2021. The Federal Reserve continues to aggressively respond to the ~~Federal Reserve’s~~ ~~Summary~~pandemic and emergency measures are expected to remain in place until the end of ~~Commentary~~2021, with unlimited quantitative easing and the zero interest rate policy in place until the economy is on ~~Current Economic Conditions~~ ~~(“Beige Book”). Overall,~~track to return to full employment. The baseline forecast also assumes that lawmakers will pass additional stimulus bills in 2020 to support the economy. Downside scenarios from the baseline have varying degrees of severity of the outcome of the economic ~~outlook was generally positive,~~downturn as well as varying shapes and length of recovery. The downside scenarios S-3 and S-4 include double-dip recessions with ~~some growing uncertainty due~~a more prolonged recovery, with the S-4 scenario having a more severe immediate impact and a longer, more gradual recovery compared to ~~concerns over tariffs~~S-3. We believe these scenarios are less likely to occur than baseline and ~~trade tensions. Activity~~have weighted them accordingly in developing our outlook. The utilization of these economic forecasts in our allowance for credit models resulted in a $247 million provision for credit losses this quarter. The extent to which observed and forecasted economic conditions deteriorate beyond that currently forecasted may result in additional material allowance for credit loss builds in the ~~energy sector slowed with a weaker oil price outlook~~future. Changes in the depth and ~~a challenging environment for funding. Oil~~duration of these unprecedented economic conditions may also require revisions to the Company’s currently forecasted cash flows that could result in impairment of certain intangible or other assets in future periods.

The Company’s response to the current and ~~gas production decreased, along with capital spending~~forecasted economic conditions described above has been proactive. Business continuity plans have been effective in maintaining operations and ~~orders for new equipment.~~

~~Commercial real estate conditions continued~~we continue to ~~advance in most~~meet the needs of the customers we serve. Approximately 98% of our ~~markets,~~financial centers remain open and operating with ~~vacancies trending downward at a modest pace~~full service drive up lanes and ~~an uptick~~availability of in ~~new projects. In~~person meetings by appointment. Our online and mobile banking applications have also allowed us to continue to assist our ~~Houston market, apartment demand surged, however rents were flat. Industrial demand and construction remained strong.~~

~~The residential real estate market experienced increased demand~~customers. Our corporate service team members continue to support our operations with ~~lower mortgage rates and a relatively healthy economy. Demand in most~~approximately 70% of our associates working remotely. We have also taken meaningful measures to enhance our liquidity and strengthen our balance sheet maintaining solid capital levels in anticipation of continued market disruption that negatively impacts the customers and markets ~~was down compared to prior year, but increased through the spring selling season. Overall, the housing market experienced moderate price appreciation and outlooks stayed positive~~we serve. These measures include increasing our line of credit with ~~builders generally on plan for 2019.~~

Retail sales activity and consumer spending were flat to declining in most of our markets. Auto sales remained steady in our markets with continued concerns over the impact that tariffs will have on the pricing and demand in the auto industry. Tourism and hospitality industries reported healthy activity since the prior quarter. The labor market remained tight in our markets with steady wage growth.

Economic data indicates that loan growth continued at a slower pace in most of our markets, and at a faster pace in our Houston market, primarily with residential real estate and commercial and industrial lending. Financial institutions continue to report increased competition for deposits and tightening margins. We could see additional margin challenges should the Federal Reserve ~~reduce~~to $4.4 billion (up $1.8 billion from December 31, 2019) and increasing short-term investments by $766 million; providing total available net liquidity of $13.9 billion at March 31, 2020. These proactive measures have allowed the Company to effectively support and participate in the various economic relief strategies employed at the federal level and provide loan payment deferral options in response to the COVID-19 pandemic. At March 31, 2020, there were 1,618 customers with loans totaling $839.4 million with payment deferral modifications of principal, interest ~~rates further.~~ or both under this program. Demand for such modifications continues, with 7,299 customers with loans totaling $3.1 billion modified through April 22, 2020. We are also waiving fees on certain product offerings such as penalty-free CD withdrawals and various overdraft fees to provide relief to our customers. These fee waiver relief measures to help support our customer base will likely result in reduced fee income realized by the Company in the near term. Further, changes in consumer spending behavior in response to economic uncertainty may have a negative impact on other sources of noninterest income, such as bank card and ATM fees.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law. It contains substantial tax and spending provisions intended to address the impact of ~~Second~~the COVID-19 pandemic. The CARES Act includes the Paycheck Protection Program ("PPP"), a $349 billion program designed to aid small- and medium-sized businesses through federally guaranteed loans distributed through banks. The Company originated 4,893 loans totaling $1.7 billion to our customers under the initial phase of the PPP. On April 24, 2020, an additional $310 billion in new funds was approved for this program and we processed approximately 7,000 additional applications totaling about $800 million in loans under the second phase of this program. The fees earned by administering these loan will provide substantial income to the Company that will be accreted through margin for the remainder of year.

Our customers have also taken measures to enhance their liquidity, drawing on existing credit lines and participating in the PPP, which will contribute to loan growth in the short-term. As funding from government sponsored relief programs evaporates and economic conditions continue to slow, loan demand will likely fall in the near term. The participation in these programs by our customers and draws on lines of credit have also bolstered deposits, which will likely be depleted in the short term as depositors supplement lost cash flows. We continue to monitor the impact of COVID-19 closely, as well as any effects that may result from the CARES Act; however, the extent to which the COVID-19 pandemic will impact our operations and financial results during the remainder of 2020 and beyond is highly uncertain.

Net ~~income~~loss for the ~~second~~first quarter of ~~2019~~2020 was ~~$88.3~~$111.0 million, or ~~$1.01~~$(1.28) per diluted common share (EPS), ~~compared~~driven by a reserve build in response to deterioration in the macroeconomic environment from the pandemic and lower oil prices. Fourth quarter 2019 net income was $92.1 million, or $1.03 and first quarter 2019 net income was $79.2 million, or ~~$.91 EPS in the~~$0.91 EPS. The first quarter of ~~2019~~both 2020 and ~~$71.2 million, or $.82 EPS, in the second quarter of 2018. The second quarter of~~ 2019 did not include any nonoperating ~~items, while the first~~items. The fourth quarter of 2019 included ~~a $10.1~~$3.9 million, ~~($.09~~or $0.03 per share ~~after-tax~~(after-tax impact) ~~provision for loan losses~~of nonoperating expenses related to the ~~alleged DC Solar fraud and the second~~MidSouth acquisition that closed on September 21, 2019.

First quarter ~~of 2018 included $15.8 million ($.14 per share after-tax impact) of nonoperating items.~~

~~Highlights of our second~~2020 results compared to fourth quarter ~~2019 results (compared to first quarter 2019):~~2019:

~~The second~~We ended 2019 with solid capital and liquidity and were well positioned to weather the economic turmoil that we and our customers are facing in 2020. Our first quarter ~~of 2019 results were strong, with seasonal and specialty income contributing to a 12%~~2020 increase in ~~noninterest income compared~~the allowance for credit loss is based on scenario modeling that reflects a prolonged return to ~~first quarter, more than covering increased noninterest expense~~normal economic activity in our market areas and considers continued concerns related to our oil and gas portfolio. Our healthy liquidity position allows us to work with our customers by offering loan modifications and participating in other stimulus lending programs designed to help our customer until our markets return to full operation. We believe our stress testing process has prepared us to deal with the challenges ahead and we are committed to executing those strategies and being a source of strength for the same period. Increased expenses are due in-part to seasonal salaries increases, direct costs for transaction based revenues, and additional investments in new and upgraded technology. We remain focused on managing our ~~expenses while we invest in technology directed towards becoming more scalable, effective and efficient.~~

The second quarter of 2019 reflects an improvement in loan yield compared to the prior quarter despite a challenging rate environment as we continue to focus our growth in more granular loans with better spreads. Asset quality continued to improve, with criticized commercial loans down in both the energy and nonenergy portfolios.customers.

Net interest income (te) for the ~~second~~first quarter of ~~2019~~2020 was ~~$223.6~~$234.6 million, a ~~$0.5~~$2.1 million, or ~~less than~~ 1%, ~~increase~~decrease from the ~~first~~fourth quarter of 2019. Compared to the ~~second~~first quarter of ~~2018,~~2019, net interest income (te) ~~for the second quarter of 2019~~ increased ~~$8.0~~$11.6 million, or 4%5%. The linked quarter ~~increase~~decrease is primarily attributable to ~~an additional~~one less accrual day, a lower rate environment and a $2.5 million decrease in purchase accounting accretion. The increase compared to the prior year is due largely to an ~~interest recovery on a legacy Whitney CRE credit,~~increase in earning asset balances and one more accrual day, partially offset by ~~higher deposit costs and premium amortization on the bond portfolio.~~ a lower rate environment.

The net interest margin ~~(te)~~ for ~~the second quarter of 2019 was relatively stable at 3.45 % despite the challenging rate environment, down 1 bp from~~ the first quarter of 2020 was down 2 bps at 3.41% from the fourth quarter of 2019. ~~Net interest margin (te) was negatively impacted by higher CD renewal rates,~~The decrease is primarily due to the $2.5 million reduction in purchase accounting accretion, resulting in a ~~change~~4 bp (basis point) decline in the funding mix, and higher prepayments on the bond portfolio, and almost fully offset by interest recoveries and a favorable change in the earning asset mix. Interest recoveries on problem credits have favorably impacted themargin. The net interest margin ~~in four out of the last five quarters, adding 3 bps to the second quarter of 2019 and~~less purchase accounting accretion was up 1 bp to 3.32%. The decline in Prime and LIBOR rates also negatively impacted the ~~first quarter of 2019.~~

~~Compared~~yield on loans by 7 bps. However, proactive deposit pricing, and changes in wholesale funding related to ~~the second quarter of 2018, the net interest margin (te) increased 5 bps, primarily due to an improvement in the earning asset mix and the net benefit from interest~~a lower rate ~~increases during 2018. Interest recoveries~~environment, positively impacted the net interest margin by ~~1 bp~~8 bps. There were no interest reversals related to nonaccrual activity in the first quarter as compared to one bp of interest reversals in the ~~second~~prior quarter.

Compared to the first quarter of ~~2018.~~2019, the net interest margin decreased 5 bps, primarily due to a lower rate environment that resulted in a 27 bp drop in the earning asset yield and a 22 bp drop in the cost of funds.

We expect margin pressure to continue into the second quarter with lower earning assets yields from the full effect of the March Federal Reserve interest rate cuts and potential lower LIBOR rates as market uncertainty abates, as 55% of our loans are variable rate, with approximately one third of those having floors. Additional pressures include a reduced level of scheduled purchase accounting accretion (down an estimated 5 bps) and a less favorable earning asset mix as the Company maintains additional liquidity with an increased level of short-term investments. Partially offsetting the lower asset yields will be a reduction in cost of funds from actions taken on deposit pricing and funding mix as well as from a significant number of higher rate certificates of deposit maturing during the quarter.

The following tables detail the components of our net interest income (te) and net interest margin.

	Three Months Ended																							Three Months Ended
	June 30, 2019								March 31, 2019								June 30, 2018							March 31, 2020								December 31, 2019								March 31, 2019
(dollars in millions)	Volume		Interest (d)			Rate			Volume		Interest (d)			Rate			Volume		Interest (d)		Rate			Volume		Interest (d)			Rate			Volume		Interest (d)			Rate			Volume		Interest (d)			Rate
Average earning assets
Commercial & real estate loans (te) (a)	$	15,081.9	$	185.3			4.93	%	$	15,062.1	$	180.5			4.86	%	$	14,380.9	$	162.3		4.53	%	$	16,109.2	$	182.5			4.56	%	$	15,881.3	$	187.7			4.69	%	$	15,062.1	$	180.5			4.86	%
Residential mortgage loans		2,969.7		30.1			4.06	%		2,942.4		31.1			4.23	%		2,754.3		28.1		4.08	%		2,969.0		29.5			3.98	%		3,004.8		30.3			4.04	%		2,942.4		31.1			4.23	%
Consumer loans		2,098.5		30.3			5.79	%		2,122.4		29.9			5.72	%		2,058.0		27.2		5.30	%		2,155.9		29.4			5.48	%		2,151.9		30.9			5.70	%		2,122.4		29.9			5.72	%
Loan fees & late charges		—		(0.1	)		0.00	%		—		(0.9	)		0.00	%		—		0.2		0.00	%		—		(0.6	)		0.00	%		—		(0.3	)		0.00	%		—		(0.9	)		0.00	%
Total loans (te) (b)		20,150.1		245.6			4.89	%		20,126.9		240.6			4.84	%		19,193.2		217.8		4.55	%		21,234.1		240.8			4.56	%		21,038.0		248.6			4.69	%		20,126.9		240.6			4.84	%
Loans held for sale		27.9		0.3			4.96	%		20.6		0.3			4.92	%		22.6		0.3		5.22	%		40.3		0.6			6.17	%		62.3		0.7			4.41	%		20.6		0.3			4.92	%
US Treasury and government agency securities		126.0		0.7			2.30	%		123.8		0.7			2.25	%		145.6		0.8		2.22	%		124.7		0.8			2.37	%		145.0		0.8			2.30	%		123.8		0.7			2.25	%
Mortgage-backed securities and collateralized mortgage obligations		4,550.1		29.0			2.55	%		4,599.4		29.9			2.60	%		4,932.0		29.3		2.38	%		5,139.5		31.3			2.44	%		5,162.7		32.0			2.48	%		4,599.4		29.9			2.60	%
Municipals (te)		906.8		7.1			3.12	%		930.0		7.4			3.17	%		951.0		7.6		3.18	%		877.2		6.7			3.07	%		888.1		6.9			3.09	%		930.0		7.4			3.17	%
Other securities		3.5	0.0				3.30	%		3.5	0.0				3.09	%		3.5	0.0			2.84	%		8.0		0.1			4.29	%		5.8	0.0				4.61	%		3.5	0.0				3.09	%
Total securities (te) (c)		5,586.4		36.8			2.64	%		5,656.7		38.0			2.69	%		6,032.1		37.7		2.50	%		6,149.4		38.9			2.53	%		6,201.6		39.7			2.56	%		5,656.7		38.0			2.69	%
Total short-term investments		228.5		1.4			2.36	%		216.2		1.2			2.18	%		143.1		0.6		1.61	%		206.9		0.5			0.87	%		139.6		0.5			1.51	%		216.2		1.2			2.18	%
Total earning assets (te)	$	25,992.9	$	284.1			4.38	%	$	26,020.4	$	280.1			4.35	%	$	25,391.0	$	256.4		4.05	%	$	27,630.7	$	280.8			4.08	%	$	27,441.5	$	289.5			4.20	%	$	26,020.4	$	280.1			4.35	%
Average interest-bearing liabilities
Interest-bearing transaction and savings deposits	$	8,026.0	$	15.3			0.76	%	$	8,082.6	$	14.7			0.74	%	$	7,860.0	$	9.3		0.47	%	$	8,798.5	$	12.7			0.58	%	$	8,803.7	$	14.4			0.65	%	$	8,082.6	$	14.7			0.74	%
Time deposits		3,817.8		19.4			2.03	%		3,743.3		18.0			1.95	%		3,121.8		11.5		1.48	%		3,513.2		15.4			1.76	%		3,364.4		16.4			1.93	%		3,743.3		18.0			1.95	%
Public funds		3,194.1		15.2			1.91	%		3,060.5		13.4			1.78	%		2,970.1		9.1		1.22	%		3,252.2		10.8			1.33	%		3,079.0		12.0			1.55	%		3,060.5		13.4			1.78	%
Total interest-bearing deposits		15,037.9		49.9			1.33	%		14,886.4		46.1			1.26	%		13,951.9		29.9		0.86	%		15,563.9		38.9			1.01	%		15,247.1		42.8			1.11	%		14,886.4		46.1			1.26	%
Short-term borrowings		1,617.8		7.8			1.94	%		1,684.9		8.1			1.92	%		1,989.4		7.4		1.49	%		2,150.2		4.5			0.83	%		2,393.4		7.1			1.19	%		1,684.9		8.1			1.92	%
Long-term debt		232.3		2.8			4.86	%		225.0		2.8			4.99	%		299.7		3.5		4.63	%		231.4		2.8			4.76	%		242.5		2.9			4.79	%		225.0		2.8			4.99	%
Total borrowings		1,850.1		10.6			2.31	%		1,909.9		10.9			2.30	%		2,289.1		10.9		1.91	%		2,381.6		7.3			1.22	%		2,635.9		10.0			1.51	%		1,909.9		10.9			2.30	%
Total interest-bearing liabilities		16,888.0		60.5			1.44	%		16,796.3		57.0			1.38	%		16,241.0		40.8		1.01	%		17,945.5		46.2			1.03	%		17,883.0		52.8			1.17	%		16,796.3		57.0			1.38	%
Net interest-free funding sources		9,104.9								9,224.1								9,150.0							9,685.2								9,558.5								9,224.1
Total cost of funds	$	25,992.9	$	60.5			0.93	%	$	26,020.4	$	57.0			0.89	%	$	25,391.0	$	40.8		0.64	%	$	27,630.7	$	46.2			0.67	%	$	27,441.5	$	52.8			0.76	%	$	26,020.4	$	57.0			0.89	%
Net interest spread (te)			$	223.6			2.94	%			$	223.1			2.97	%			$	215.6		3.04	%			$	234.6			3.05	%			$	236.7			3.02	%			$	223.1			2.97	%
Net interest margin	$	25,992.9	$	223.6			3.45	%	$	26,020.4	$	223.1			3.46	%	$	25,391.0	$	215.6		3.40	%	$	27,630.7	$	234.6			3.41	%	$	27,441.5	$	236.7			3.43	%	$	26,020.4	$	223.1			3.46	%

Six Months Ended

June 30, 2019

June 30, 2018

(dollars in millions)

Volume

Interest (d)

Rate

Volume

Interest (d)

Rate

Average earning assets

Commercial & real estate loans (te) (a)

$
15,072.1

$
365.8

4.89
%

$
14,303.1

$
313.3

4.41
%
Residential mortgage loans

2,956.1

61.2

4.14
%

2,736.4

56.0

4.09
%
Consumer loans

2,110.4

60.2

5.75
%

2,071.8

56.2

5.47
%
Loan fees & late charges

—

(1.0
)

0.00
%

—

0.6

0.00
%
Total loans (te) (b)

20,138.6

486.2

4.86
%

19,111.3

426.1

4.49
%
Loans held for sale

24.3

0.6

4.96
%

27.4

0.5

3.77
%
US Treasury and government agency securities

124.9

1.4

2.28
%

147.0

1.6

2.22
%
Mortgage-backed securities and collateralized mortgage obligations

4,574.6

58.9

2.58
%

4,859.0

57.2

2.35
%
Municipals (te)

918.3

14.5

3.14
%

955.5

15.2

3.18
%
Other securities

3.5

0.1

3.19
%

3.5

0.0

2.45
%
Total securities (te) (c)

5,621.3

74.9

2.66
%

5,965.0

74.0

2.48
%
Total short-term investments

222.4

2.5

2.28
%

145.7

1.1

1.47
%
Total earning assets (te)

$
26,006.6

$
564.2

4.36
%

$
25,249.4

$
501.7

4.00
%
Average interest-bearing liabilities

Interest-bearing transaction and savings deposits

$
8,054.1

$
30.0

0.75
%

$
7,951.1

$
18.4

0.47
%
Time deposits

3,780.8

37.4

1.99
%

3,050.8

21.2

1.40
%
Public funds

3,127.7

28.6

1.85
%

3,019.8

17.2

1.15
%
Total interest-bearing deposits

14,962.6

96.0

1.29
%

14,021.7

56.8

0.82
%
Short-term borrowings

1,651.2

15.9

1.93
%

1,906.7

12.8

1.35
%
Long-term debt

228.6

5.6

4.92
%

302.4

6.9

4.56
%
Total borrowings

1,879.8

21.5

2.31
%

2,209.1

19.7

1.79
%
Total interest-bearing liabilities

16,842.4

117.5

1.41
%

16,230.8

76.5

0.95
%
Net interest-free funding sources

9,164.2

9,018.6

Total cost of funds

$
26,006.6

$
117.5

0.91
%

$
25,249.4

$
76.5

0.61
%
Net interest spread (te)

$
446.7

2.96
%

$
425.2

3.05
%
Net interest margin

$
26,006.6

$
446.7

3.45
%

$
25,249.4

$
425.2

3.39
%

During the ~~second~~first quarter of ~~2019,~~2020, we recorded a provision for ~~loan~~credit losses totaling $246.8 million, up from $9.2 million in the fourth quarter of ~~$8.1~~2019 and $18.0 million ~~down $10.0 million from~~in the first quarter of ~~2019 and down $0.8 million from the second~~2019. The first quarter of ~~2018. Included~~2020 provision expense includes an increase to the allowance for credit losses of $203.0 million related to the update of expected lifetime credit losses as a result of the impact of the pandemic and widespread economic shutdown. The allowance increase was comprised of $185.3 million of allowance for loan losses and a $17.7 million reserve for unfunded commitments. Net charge-offs in the first quarter ~~2019 provision was a $10.1~~of 2020 were $43.8 million, ~~charge-off related to the DC Solar credit discussed below. Excluding the impact~~or 0.83% of the DC Solar credit, provision expense was relatively flat compared to the prior quarter. For the six months ended June 30, 2019, we recorded a total provision for loan losses of $26.1 million, up from $21.1 million in the same period in 2018.

The Company had a lease financing facility to DC Solar, a company that sold and managed mobile solar generators. In February 2019, the borrower filed for Chapter 11 bankruptcy protection and we became aware of an affidavit from a Federal Bureau of Investigation special agent that alleged that this borrower was operating a potentially fraudulent Ponzi-type scheme and that the majority of mobile solar generators sold to investors and managed by the borrower and the majority of the related lease revenues claimed to have been received by the borrower may not have existed. The $10.1 million charge-off taken in the first quarter represents the majority of our exposure to this borrower. Management continues to believe there could be potential for recovery in the future depending on our ability to sell or re-lease the solar units.

The second quarter 2019 provision includes net charge-offs totaling $7.2 million, which represents 0.14% of average total loans on an annualized basis, compared to 0.16% in the first quarter, when adjusted to exclude the DC Solar charge-off, and 0.11% in the second quarter of 2018.

average total loans on an annualized basis, up from $9.5 million or 0.18% in the fourth quarter of 2019, and $17.9 million, or 0.36% in the first quarter of 2019. The first quarter of 2020 included $35.9 million of energy charge-offs in our reserve based lending subsector, with virtually no energy charge-offs in the fourth or first quarters of 2019. The first quarter of 2019 included a $10.1 million charge-off related to a lease financing facility fraud.

The discussion of Allowance for ~~Loan~~Credit Losses and Asset Quality later in this Item provides additional information on these changes ~~in the allowance for loan losses~~ and on general credit quality.

Noninterest income totaled ~~$79.3~~$84.4 million for the ~~second~~first quarter of ~~2019,~~2020, up ~~$8.7~~$1.5 million, or ~~12%~~2%, from the ~~first~~fourth quarter of 2019 and up ~~$10.4~~$13.9 million, or ~~15%~~20%, compared to the ~~second~~first quarter of ~~2018.~~2019. The increase ~~from the prior quarter~~in noninterest income linked-quarter was primarily ~~driven by~~due to a $1.5 million gain on the sale of historic tax credits and higher income ~~from our specialty business lines, including derivatives,~~on bank-owned life insurance, ~~(BOLI)~~partially offset by lower transactional and ~~small business investment companies (SBIC), the impact of an additional business day on card activity and service charges, and seasonal~~ trust fees. The increase in noninterest income compared to the ~~second quarter of 2018~~prior year was due largely to higher derivative and secondary mortgage income driven by ~~an increase in trust fees following~~ the ~~trust and asset management acquisition,~~lower interest rate environment as well as increased transaction and other fees from higher activity due to the MidSouth acquisition.

Fees were collected as usual for most of the first quarter of 2020. As noted earlier, we began waiving fees on certain products in mid-March to provide relief to our customers during the economic shutdown. Depending on the duration of the impact of the pandemic on our customers, fee waivers will impact our results in future quarters. Further, changes in consumer spending habits in response to economic uncertainty are expected to negatively impact other sources of noninterest income, such as bank card ~~fees~~ and ~~derivative income.~~ATM fees.

The components of ~~operating and nonoperating~~ noninterest income are presented in the following table for the indicated periods. ~~The nonoperating item for the six months ended June 30, 2018 relates to the loss on the sale of our consumer finance subsidiary in March 2018.~~

	Three Months Ended						Six Months Ended					Three Months Ended
	June 30,		March 31		June 30,		June 30,					March 31,		December 31,		March 31,
	2019		2019		2018		2019		2018
(in thousands)												2020		2019		2019
Service charges on deposit accounts	$	20,723	$	20,367	$	20,981	$	41,090	$	42,429		$	22,837	$	23,382	$	20,367
Trust fees		15,904		15,124		11,653		31,028		22,988			14,806		15,483		15,124
Bank card and ATM fees		16,619		15,290		15,464		31,909		29,922			17,362		17,913		15,290
Investment and annuity fees and insurance commissions		6,591		6,528		6,264		13,119		12,389			7,150		6,407		6,528
Secondary mortgage market operations		4,433		3,726		3,965		8,159		7,366			6,053		5,981		3,726
Income from bank-owned life insurance		4,083		3,265		3,113		7,348		6,183			4,266		3,451		3,265
Credit related fees		2,937		2,595		2,416		5,532		5,138			3,065		2,879		2,595
Income from derivatives		3,600		809		1,588		4,409		3,111			3,871		4,225		809
Gain (loss) on sales of assets		34		397		41		431		(21	)
Other miscellaneous		4,326		2,402		3,347		6,728		6,724			4,977		3,203		2,799
Total noninterest operating income	$	79,250	$	70,503	$	68,832	$	149,753	$	136,229
Nonoperating income items		—		—		—		—		(1,145	)
Total noninterest income	$	79,250	$	70,503	$	68,832	$	149,753	$	135,084		$	84,387	$	82,924	$	70,503

Service charges on deposits totaled ~~$20.7~~$22.8 million for the ~~second~~first quarter of ~~2019, up $0.4~~2020, down $0.5 million, or 2%, from the ~~first~~fourth quarter of 2019 and ~~down $0.3~~up $2.5 million, or 12%, from the ~~second~~first quarter of ~~2018.~~2019. The ~~increase~~decrease from the prior quarter was ~~primarily~~ due to ~~an additional business day.~~one less processing day and lower overdraft fees, as noted above. The ~~decrease~~increase from the ~~second~~first quarter of ~~2018~~2019 was ~~due~~primarily attributable to ~~lower consumer overdraft fees and service charges.~~the MidSouth acquisition in September 2019.

Trust fees ~~increased $0.8~~decreased $0.7 million, or 5%4%, linked quarter largely due to ~~seasonal tax preparation fees.~~the downturn in the market during the quarter and strong fourth quarter results. Compared to the ~~second~~first quarter of ~~2018,~~2019, trust fees ~~increased $4.3~~decreased $0.3 million, or ~~36%~~2%, largely due to ~~the July 2018 trust and asset management acquisition.~~changes in market conditions.

Bank card and ATM fees totaled ~~$16.6~~$17.4 million for the ~~second~~first quarter of ~~2019, up $1.3~~2020, down $0.6 million, or 9%3%, from the ~~first~~fourth quarter of 2019, primarily due to ~~an additional~~one fewer day in the quarter. Compared to the ~~second~~first quarter of ~~2018,~~2019, bank card and ATM fees were up ~~$1.2~~$2.1 million, or 7%14%, primarily due to increased card ~~activity.~~activity and the acquisition of MidSouth.

Investment and annuity fees and insurance commissions increased ~~$0.1~~$0.7 million, or 1%12%, compared to ~~first~~fourth quarter 2019 primarily due to an increase in ~~insurance~~annuity fees, corporate underwriting fees, equities and ~~annuity sales,~~bond trading fees, partially offset by ~~a decrease in bond trading fees and~~ lower ~~underwriting activity.~~insurance commissions. Investment and annuity fees and insurance commissions increased ~~$0.3~~$0.6 million, or 5%10%, compared to ~~second~~first quarter ~~2018~~2019 due to higher investment fees, insurance fees, and ~~trading income,~~underwriting fees partially offset by a decrease in annuity sales.

~~Fee income~~Income from secondary mortgage market operations was up ~~$0.7~~$0.1 million, or ~~19%~~1%, from the fourth quarter of 2019 and up $2.3 million, or 62%, from the first quarter of ~~2019 and up $0.5 million, or 12%, from~~2019. Origination volume during the ~~second~~first quarter of ~~2018. These fees~~2020, particularly when compared to the first quarter of 2019, was positively impacted by the rate environment. Secondary mortgage market operations income will vary based on origination volume and the timing of subsequent sales. ~~Origination volume during the second quarter~~

Income from ~~BOLI~~bank-owned life insurance was ~~$4.1~~$4.3 million in the ~~second~~first quarter of ~~2019,~~2020, up $0.8 million, or ~~25%~~24%, from the ~~first~~fourth quarter of 2019 and up $1.0 million, or 31%, from the ~~second~~first quarter of ~~2018.~~2019. The increase from the ~~prior~~fourth quarter of 2019 was due to mortality gains and the increase from the ~~second~~first quarter of ~~2018~~2019 is attributable to both higher mortality gains and incremental earnings on the additional investment of $33 million in April 2019. ~~In addition, a restructuring of a portion of the BOLI portfolio in 2018 resulted in improved earnings over the second quarter of 2018.~~

Credit related fees were ~~$2.9~~$3.1 million for the ~~second~~first quarter of ~~2019,~~2020, up ~~$0.3~~$0.2 million, or ~~13%~~6%, from the ~~first~~fourth quarter of 2019 and up $0.5 million, or ~~22%~~18%, from the ~~second~~first quarter of ~~2018.~~2019. The linked quarter ~~and prior year increases were~~increase was due to both higher unused commitment fees and letter of credit fees, with the increase over the same quarter last year primarily due to higher unused commitment fees.

Income from our customer interest rate derivative program ~~resulted in a $3.6~~totaled $3.9 million ~~net gain~~ for the ~~second~~first quarter of 2020 compared to $4.2 million in the fourth quarter of 2019 ~~compared~~and $0.8 million for the first quarter of 2019. Increased derivative income reflects increased transaction volume due to ~~$0.8 million~~customer demand given the lower interest rates in the first quarter of ~~2019 and $1.6 million for the second quarter of 2018.~~2020. Derivative income can be volatile and is dependent upon the composition of the portfolio, customer sales activity and market value adjustments due to market interest rate movement.

Other miscellaneous income was $5.0 million in the first quarter of ~~$4.3~~2020, up $1.8 million compared to the fourth quarter of 2019 and up $2.2 million compared to the first quarter of 2019. The increase compared to the prior quarter was ~~up $1.9~~largely due to a $1.5 million ~~or 80%,~~gain on the sale of historic tax credits. The increase compared to the first quarter of 2019 ~~and up $1.0~~includes the historic tax credit sale, an increase of $0.6 million ~~or 29%, compared to the second quarter of 2018. The increase compared to both periods was due largely to~~in income from investments in small business investment companies ~~of $1.2 million. The increase compared to the prior quarter also reflects~~and $0.3 million in higher syndication fees.

Noninterest income was $149.8 million in the first six months of 2019, up $14.7 million, or 11%, from the first six months of 2018. Excluding nonoperating items in the first six months of 2018, noninterest income was up $13.5 million, or 10%. Compared to the first six months of 2018, trust fees increased $8.0 million, or 35%, due to the trust and asset management acquisition in July 2018. Bank card and ATM fees were $31.9 million, up $2.0 million, or 7%, due to increased card activity. Derivative income increased $1.3 million, or 42%, with increased activity and the changing interest rate environment. BOLI income was up $1.2 million, or 19%, due to the third quarter 2018 restructure and the additional investment in April of 2019. Secondary mortgage market income was up $0.8 million, or 11%, to $8.2 million due to higher production and sales volumes. Investment and annuity fees and insurance commissions increased $0.7 million, or 6%. Service charges were down $1.3 million, or 3%, primarily due to lower consumer overdraft fees and service charges.

Noninterest expense for the ~~second~~first quarter of 2020 was $203.3 million, up $5.5 million, or 3%, from the fourth quarter of 2019, ~~was $183.6 million,~~and up ~~$7.9~~$27.6 million, or 4%16%, from the first quarter of ~~2019, and down $0.8 million, or less than 1%, from the second quarter of 2018.~~2019. There were no nonoperating ~~noninterest expense items~~expenses in the first ~~half~~quarters of ~~2019. Nonoperating~~2020 and 2019, and there were $3.9 million of nonoperating expenses in the ~~second~~fourth quarter of ~~2018 were $15.8 million and included costs associated with the brand consolidation project ($9.8 million), the acquisition of the trust and asset management business ($1.5 million), a charge~~2019 related to the ~~restructuring~~acquisition and operational integration of MidSouth. Items identified as nonoperating are those that, when excluded from a ~~portion~~reported financial measure, provide management or the reader with a measure that may be more indicative of forward-looking trends in our bank-owned life insurance contracts ($3.2 million), and other smaller miscellaneous items. Excluding nonoperating items, noninterest expense for the second quarter of 2019 was up $15.0 million, or 9%, from the second quarter of 2018.business.

The components of noninterest ~~operating~~ and nonoperating expense for the periods indicated are presented in the following tables.

	Three Months Ended									Six Months Ended						Three Months Ended								��
	June 30,			March 31,			June 30,			June 30,						March 31,			December 31,			March 31,
(in thousands)	2019			2019			2018			2019			2018			2020			2019			2019
Operating expense
Compensation expense	$	87,747		$	83,968		$	79,670		$	171,715		$	156,413		$	91,071		$	96,510		$	83,968
Employee benefits		18,888			19,730			17,165			38,618			36,788			22,478			20,556			19,730
Personnel expense		106,635			103,698			96,835			210,333			193,201			113,549			117,066			103,698
Net occupancy expense		12,961			11,984			11,698			24,945			22,641			12,522			12,835			11,984
Equipment expense		4,342			4,679			3,641			9,021			7,134			4,617			4,687			4,679
Data processing expense		20,088			19,331			17,279			39,419			33,647			22,047			22,030			19,331
Professional services expense		9,665			8,168			8,189			17,833			16,036			9,741			9,470			8,168
Amortization of intangible assets		5,047			5,138			5,322			10,185			10,940			5,345			5,770			5,138
Deposit insurance and regulatory fees		4,755			5,406			8,376			10,161			16,324			5,815			5,356			5,406
Other real estate (income) expense		395			(991	)		(289	)		(596	)		(79	)
Other real estate and foreclosed asset (income) expense																	10,130			(788	)		(991	)
Advertising		3,253			3,080			2,390			6,333			4,731			4,234			3,483			3,080
Corporate value and franchise taxes		4,215			4,042			3,577			8,257			7,017			4,296			3,583			4,042
Telecommunications and postage																	4,065			4,149			3,466
Entertainment and contributions																	2,447			2,562			2,708
Travel expense																	1,111			1,664			1,098
Printing and supplies		1,092			1,169			842			2,261			1,873			1,108			1,227			1,169
Telecommunications and postage		3,363			3,466			3,400			6,829			7,100
Travel expense		1,344			1,098			1,436			2,442			2,500
Entertainment and contributions		2,742			2,708			2,950			5,450			5,459
Tax credit investment amortization		1,234			1,138			875			2,372			1,749			961			1,285			1,138
Other retirement expense		(4,152	)		(4,105	)		(4,458	)		(8,257	)		(8,921	)		(6,122	)		(4,152	)		(4,105	)
Other miscellaneous		6,588			5,691			6,534			12,279			12,183			7,469			7,629			5,691
Total operating expense	$	183,567		$	175,700		$	168,597		$	359,267		$	333,535
Nonoperating expense items		—			—			15,805			—			21,658
Total noninterest expense	$	183,567		$	175,700		$	184,402		$	359,267		$	355,193		$	203,335		$	197,856		$	175,700

	Three Months Ended						Six Months Ended				Three Months Ended
	June 30,		March 31,		June 30,		June 30,				March 31,		December 31,		March 31,
(in thousands)	2019		2019		2018		2019		2018		2020		2019		2019
Nonoperating expense
Personnel expense	$	—	$	—	$	408	$	—	$	4,016	$	—	$	2,504	$	—
Net occupancy expense		—		—		618		—		685		—		54		—
Equipment expense		—		—		621		—		674		—		487		—
Data processing expense		—		—		994		—		1,075		—		655		—
Professional services expense		—		—		5,192		—		6,600
Advertising		—		—		1,127		—		1,312
Printing and supplies		—		—		846		—		1,101
Loss on restructure of bank-owned life insurance contracts		—		—		3,240		—		3,240
Other real estate (income) expense												—		130		—
Other expense		—		—		2,759		—		2,955		—		26		—
Total nonoperating expenses	$	—	$	—	$	15,805	$	—	$	21,658	$	—	$	3,856	$	—

~~The following discussion of the components of operating expense excludes nonoperating items for each period.~~

Personnel expense totaled ~~$106.6~~$113.5 million for the ~~second~~first quarter of ~~2019, up $2.9~~2020, down $3.5 million, or 3%, compared to the prior quarter, primarily ~~due~~related to ~~an additional payroll day~~lower bonus and incentives, including a ~~full~~reduction of $2.5 million of merger-related expenses from the MidSouth acquisition reflected in the fourth quarter ~~impact~~ of ~~annual merit increases.~~2019, partially offset by seasonably higher benefits expense in first quarter 2020. Compared to the ~~second~~first quarter of ~~2018,~~2019, personnel costs were up ~~$9.8~~$9.9 million, or ~~10%~~9%, primarily related to annual merit increases, and up $3.0 million as a result of ~~merit increases and an increase in headcount following~~ the ~~trust and asset management acquisition.~~acquisition of MidSouth.

Occupancy and equipment expenses totaled ~~$17.3~~$17.1 million in the ~~second~~first quarter of 2020, down $ 0.4 million, or 2%, from the fourth quarter of 2019 and up ~~$ 0.6~~$0.5 million, or 4%3%, from the first quarter of ~~2019 and up $2.0 million, or 13%, from~~2019. The linked-quarter decrease was largely due to lower expenses related to leases that were acquired with MidSouth that were discontinued in the ~~second quarter of 2018.~~fourth quarter. The increase compared to the ~~prior~~first quarter of 2019 is largely due to ~~annual insurance payments in~~additional expenses related to locations acquired with the ~~second quarter of 2019. The increase compared to the second quarter of 2018 is largely attributable to both the move of the New Orleans regional headquarters and the trust and asset management~~MidSouth acquisition.

Data processing expense was ~~$20.1~~$22.0 million for the ~~second~~first quarter of 2020, flat to the fourth quarter of 2019, and up ~~$0.8~~$2.7 million, or 4%14%, compared to the first quarter of 2019. Merger-related expenses reflected in the fourth quarter ceased, but were offset by an increase in investments in new technology. The increase from the first quarter of 2019 was primarily due to investments in new technology, as well as expenses resulting from increased card activity.

Professional services expense for the first quarter of 2020 totaled $9.7 million, up $0.3 million, or 3%, compared to the previous quarter and $1.6 million, or 19%, from the first quarter of ~~2019, and up $2.8 million, or 16%, from~~2019. The increase over the ~~second~~fourth quarter of ~~2018. The~~2019 was due to higher consulting fees and the increase ~~from~~over the ~~second~~first quarter of ~~2018~~2019 was ~~primarily~~ due to ~~additional processing cost~~higher legal fees related to problem credits as well as a higher level of expense related to the ~~acquired trust and asset management business and recent~~ investment in new ~~technologies.~~

Professional services expense totaled $9.7 million in the second quarter of 2019, up $1.5 million, or 18%, compared to both the previous quarter and the same period in 2018. The increase from each of these prior periods was largely due to consulting costs associated with systems conversion for the acquired trust and asset management business, and related to investment in new technology aimed at becoming more scalable, effective and efficient.technology.

Deposit insurance and regulatory fees ~~and corporate value and franchise taxes were $9.0~~totaled $5.8 million, ~~down~~up $0.5 million, or 5%9%, from the fourth quarter of 2019 and $0.4 million, or 8%, from the first quarter of ~~2019 and down $3.0 million, or 25%, from the second quarter of 2018.~~2019. The ~~decrease~~increase from both the prior quarter and the same period in ~~2018~~2019 is primarily due to ~~a reduction~~an increase in the risk-based ~~deposit insurance~~ assessment fees ~~with~~over prior periods.

Corporate value and franchise tax expense for the ~~year over year variance also favorably impacted by~~first quarter of 2020 totaled $4.3 million, up $0.7 million, or 20%, compared to the ~~elimination~~prior quarter and $0.3 million, or 6%, compared to the same quarter last year. The increase from both the prior quarter and the first quarter of 2019 is primarily attributable to the ~~quarterly deposit insurance fund surcharge.~~impact the acquisition of MidSouth had on our operations and the corresponding effect on our corporate value and franchise tax calculations.

Business development-related expenses (including advertising, travel, entertainment and contributions) were ~~$7.3~~$7.8 million for ~~the second quarter of 2019, up $0.5 million, or 7%, from~~ the first quarter of ~~2019 and~~2020, up ~~$0.5~~$0.1 million, or 8%1%, from the ~~second quarter of 2018. The primary driver of the linked-quarter and year-over-year increases is higher advertising cost, including new sponsorships.~~

Other real estate net expense was $0.4 million for the second quarter of 2019, compared to net gains of $1.0 million in the first quarter of 2019 and net gains of $0.3 million in the second quarter of 2018. Management believes that the second quarter of 2019 reflects a typical level of net ORE expense.

~~All other expenses, excluding amortization of intangibles, totaled $8.1 million for the second quarter of 2019, up $0.8 million, or 10%, from the first~~fourth quarter of 2019 and up $0.9 million, or 13%, from the ~~second~~first quarter of ~~2018.~~2019. The linked-quarter and year over year increase was largely due to an increase in advertising.

Other real estate and foreclosed asset expense was $10.1 million for the first quarter of 2020, compared to income of $0.8 million in the fourth quarter of 2019 and income of $1.0 million in the first quarter of 2019. First quarter of 2020 expense includes a non-cash write-down totaling $9.8 million of equity interests in two energy-related companies received in borrower bankruptcy restructurings. Gains on sales exceeded expenses in both the fourth and first quarters of 2019.

All other expenses, excluding amortization of intangibles, totaled $7.5 million for the first quarter of 2020, a decrease of $2.7 million, or 26% from the fourth quarter of 2019 and up $0.1 million, or 2% from the first quarter of 2019. The linked-quarter and prior ~~quarter was~~year variances both reflect lower other retirement expense due to ~~higher other miscellaneous~~performance of pension plan assets. The favorable impact of lower retirement expense ~~which includes operational losses that can vary period to period. The increase~~ compared to the ~~same period in 2018~~prior year was ~~largely driven~~offset by ~~changes in tax credit investment expense and the net credit in other retirement expense.~~

For the first six months of 2019, noninterest expense was $359.3 million, an increase of $4.1 million, or 1%, from the same period in 2018. Nonoperating expense for the first half of 2018 totaled $21.7 million, including costs associated with the brand consolidation, acquisition of the trust and asset management business, a charge related to the restructure of our bank-owned life insurance contracts, as well as a one-time all hands bonushigher telecommunications and other miscellaneous ~~items. Excluding nonoperating items, noninterest expense was up $25.7~~expense.

million, or 8%, from the first half of 2018. Personnel expense totaled $210.3 million, up $17.1 million, or 9%. Occupancy and equipment expenses totaled $34.0 million for the first six months of 2018, up $4.2 million, or 14%. Data processing expense was $39.4 million, an increase of $5.8 million, or 17%. Professional service expense was $17.8 million for the first half of 2019, up $1.8 million or 11%. Deposit insurance and regulatory fees and corporate value and franchise taxes were down $4.9 million, or 21%. Business development-related expenses were $14.2 million, up $1.5 million, or 12%. All other expenses, excluding amortization of intangibles, were up $1.5 million, or 11%. Noninterest expense variances when comparing the six months ended June 30, 2019 and 2018 are in large part attributable to the same factors that contributed to variances between the second quarters of 2019 and 2018, as described above.

The effective income tax rate for the ~~second~~first quarter of 2020 was approximately 17.5%, compared to 15.5% in the fourth quarter of 2019 ~~was approximately 17.9%, compared to~~and 17.6% in the first quarter of ~~2019~~2018. The current quarter’s net loss resulting from economic conditions attributable to the pandemic has significantly reduced our estimated annual effective tax rate. The tax benefit recorded to date is comprised of a 10.4% estimated annual effective tax rate in addition to discrete items predominantly related to the settlement of tax matters and ~~18.3% in~~ the ~~second quarter of 2018. Management expects~~anticipated impact from the net operating loss carryback provision granted under CARES Act. Refer to the table below table for details.

The CARES Act provides relief for individuals and businesses that have been negatively impacted by the pandemic. The business-specific relief granted is broad-reaching and ranges from operational relief (e.g., liquidity through payroll tax credits or deferrals) to income tax provisions. The income tax provisions that would impact the effective tax rate ~~for 2019 will be~~include relief related to net operating loss carrybacks to a 35% statutory tax regime, interest deductibility enhancements, accelerated alternative minimum tax credit refunds, and a technical correction to the qualified improvement property classification. We are still reviewing and quantifying the extent of the impact from the CARES Act. As of first quarter 2020, the only impact from the CARES Act reflected in our effective tax rate relates to our intent to carryback the ~~range of 17% to 19% based on current forecasts.~~ net operating loss attribute that we inherited from an acquired entity.

Our effective tax rate has historically varied from the federal statutory rate primarily because of tax-exempt income and tax credits. Interest income on bonds issued by or loans to state and municipal governments and authorities, and earnings from the life insurance contract program are the major components of tax-exempt income. The main source of tax credits has been investments in tax-advantaged securities and tax credit projects. These investments are made primarily in the markets the Company serves and are directed at tax credits issued under the ~~Qualified Zone Academy Bonds (“QZAB”), Qualified School Construction Bonds (“QSCB”) as well as~~ Federal and State New Market Tax Credit (“NMTC”) ~~programs. The~~programs, Low-Income Housing Tax Credit (“LIHTC”) programs, as well as pre-2018 Qualified Zone Academy Bonds (“QZAB”) and Qualified School Construction Bonds (“QSCB”). These investments generate tax credits, which reduce current and future taxes and are recognized when earned as a benefit in the provision for income taxes. ~~The Tax Act repealed the provision related to tax credit bonds effective for bonds issued after December 31, 2017.~~

We have invested in NMTC projects through investments in our own Community Development Entity (“CDE”), as well as other unrelated CDEs. Federal tax credits from NMTC investments are recognized over a seven-year period, while recognition of the benefits from state tax credits varies from three to five years. Our LIHTC investments to date are through variable interest entities for which the Company is not the primary beneficiary and, therefore, are not consolidated. LIHTC credits from the affordable housing projects are recognized over a ten-year period, beginning with the year the rental activity begins, as a reduction of income tax expense.

Based on tax credit investments that have been made to date ~~and those anticipated to be made utilizing the remaining portion of our $50 million NMTC allocation award received~~ in ~~2018,~~2020, we expect to realize benefits from federal and state tax credits over the next three years totaling ~~$7.5~~$7.8 million, ~~$5.6~~$8.6 million and ~~$4.9~~$8.5 million for ~~2020,~~ 2021, 2022, and ~~2022,~~2023, respectively. We intend to continue making investments in tax credit projects. However, our ability to access new credits will depend upon, among other factors, federal and state tax policies and the level of competition for such credits.

The following table reconciles reported income tax expense to that computed at the statutory federal tax rate for the indicated periods.

	Three Months Ended									Six Months Ended						Three Months Ended
	June 30,			March 31,			June 30,			June 30,						March 31,			December 31,			March 31,
(in thousands)	2019			2019			2018			2019			2018			2020			2019			2019
Taxes computed at statutory rate	$	22,567		$	20,163		$	18,288		$	42,730		$	36,951		$	(28,256	)	$	22,904		$	20,163
Tax credits:
QZAB/QSCB		(710	)		(710	)		(760	)		(1,420	)		(1,519	)		(572	)		(710	)		(710	)
NMTC - Federal and State		(1,999	)		(1,402	)		(1,378	)		(3,401	)		(2,757	)		(1,258	)		(1,851	)		(1,402	)
LIHTC and other tax credits																	(125	)		(500	)		—
Total tax credits		(2,709	)		(2,112	)		(2,138	)		(4,821	)		(4,276	)		(1,955	)		(3,061	)		(2,112	)
State income taxes, net of federal income tax benefit		1,756			1,905			1,924			3,661			3,968			(1,972	)		2,024			1,905
Tax-exempt interest		(2,274	)		(2,417	)		(2,761	)		(4,691	)		(5,547	)		(2,756	)		(2,863	)		(2,417	)
Life insurance contracts		(927	)		(678	)		306			(1,605	)		(624	)		(560	)		(1,030	)		(678	)
Employee share-based compensation		(74	)		(272	)		(176	)		(346	)		(316	)		(43	)		(411	)		(272	)
Impact from interim estimated effective tax rate		27			(776	)		(844	)		(749	)		(488	)		20,390			1,038			(776	)
FDIC Assessment Disallowance		379			545			758			924			1,505			584			528			545
Impact from CARES Act																	(7,128	)		—			—
Impact from tax settlement																	(3,690	)		—			—
Return to provision adjustment																	—			(1,459	)		—
Other, net		441			492			552			933			1,133			1,866			(734	)		492
Income tax expense	$	19,186		$	16,850		$	15,909		$	36,036		$	32,306		$	(23,520	)	$	16,936		$	16,850

The following tables contain selected financial data as of the dates and for the periods indicated.

	Three Months Ended						Six Months Ended				Three Months Ended
	June 30,		March 31,		June 30,		June 30,				March 31,			December 31,		March 31,
	2019		2019		2018		2019		2018		2020			2019		2019
Common Share Data
Earnings per share:
Basic	$	1.01	$	0.91	$	0.82	$	1.92	$	1.65	$	(1.28	)	$	1.03	$	0.91
Diluted	$	1.01	$	0.91	$	0.82	$	1.92	$	1.65	$	(1.28	)	$	1.03	$	0.91
Cash dividends paid	$	0.27	$	0.27	$	0.24	$	0.54	$	0.48	$	0.27		$	0.27	$	0.27
Book value per share (period-end)	$	38.70	$	37.23	$	34.33	$	38.70	$	34.33	$	39.65		$	39.62	$	37.23
Tangible book value per share (period-end)	$	28.46	$	26.92	$	24.66	$	28.46	$	24.66	$	28.56		$	28.63	$	26.92
Weighted average number of shares (000s):
Basic		85,728		85,688		85,305		85,708		85,273		87,186			88,188		85,688
Diluted		85,835		85,800		85,483		85,810		85,451		87,186			88,315		85,800
Period-end number of shares (000s)		85,759		85,710		85,335		85,759		85,335		86,275			87,515		85,710
Market data:
High sales price	$	44.74	$	44.34	$	53.60	$	44.74	$	56.40
Low sales price	$	37.03	$	34.11	$	45.76	$	34.11	$	45.76
Period-end closing price	$	40.06	$	40.40	$	46.65	$	40.06	$	46.65
Trading volume (000s) (a)		27,874		28,124		35,705		55,998		71,075

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

(in thousands)

2019

2019

2018

2019

2018

Income Statement:

Interest income

$
280,378

$
276,283

$
252,304

$
556,661

$
493,699

Interest income (te) (a)

284,096

280,107

256,385

564,203

501,743

Interest expense

60,510

57,029

40,757

117,539

76,488

Net interest income (te)

223,586

223,078

215,628

446,664

425,255

Provision for loan and lease losses

8,088

18,043

8,891

26,131

21,144

Noninterest income

79,250

70,503

68,832

149,753

135,084

Noninterest expense (excluding amortization of intangibles)

178,520

170,562

179,080

349,082

344,253

Amortization of intangibles

5,047

5,138

5,322

10,185

10,940

Income before income taxes

107,463

96,014

87,086

203,477

175,958

Income tax expense

19,186

16,850

15,909

36,036

32,306

Net income

$
88,277

$
79,164

$
71,177

$
167,441

$
143,652

Earnings excluding nonoperating items

Net income

$
88,277

$
79,164

$
71,177

$
167,441

$
143,652

Provision for alleged fraud (b)

—

10,084

—

10,084

—

Nonoperating income

—

—

—

—

1,145

Nonoperating expense

—

—

15,805

—

21,658

Income tax benefit

—

(2,118
)

(3,319
)

(2,118
)

(4,535
)
Nonoperating items, net of applicable income tax benefit

—

7,966

12,486

7,966

18,268

Operating earnings

$
88,277

$
87,130

$
83,663

$
175,407

$
161,920

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

2019

2019

2018

2019

2018

Performance Ratios

Return on average assets

1.24
%

1.13
%

1.04
%

1.18
%

1.06
%
Return on average common equity

10.96
%

10.30
%

9.81
%

10.64
%

10.02
%
Return on average tangible common equity

15.07
%

14.38
%

13.72
%

14.73
%

14.06
%
Earning asset yield (te) (a)

4.38
%

4.35
%

4.05
%

4.36
%

4.00
%
Total cost of funds

0.93
%

0.89
%

0.64
%

0.91
%

0.61
%
Net interest margin (te)

3.45
%

3.46
%

3.40
%

3.45
%

3.39
%
Noninterest income to total revenue (te)

26.17
%

24.01
%

24.20
%

25.11
%

24.11
%
Average loan/deposit ratio

87.09
%

87.08
%

86.84
%

87.08
%

86.58
%
FTE employees (period-end)

3,930

3,885

3,780

3,930

3,780

Capital Ratios

Common stockholders' equity to total assets

11.54
%

11.20
%

10.49
%

11.54
%

10.49
%
Tangible common equity ratio (c)

8.75
%

8.36
%

7.76
%

8.75
%

7.76
%

Select performance measures excluding nonoperating items (d)

Operating earnings per share - diluted

$
1.01

$
1.00

$
0.96

$
2.01

$
1.86

Return on average assets - operating

1.24
%

1.24
%

1.22
%

1.24
%

1.19
%
Return on average common equity - operating

10.96
%

11.33
%

11.54
%

11.14
%

11.29
%
Return on average tangible common equity - operating

15.07
%

15.83
%

16.12
%

15.44
%

15.85
%
Efficiency ratio (e)

58.95
%

58.10
%

57.40
%

58.53
%

57.45
%
Noninterest income as a percent of total revenue (te) - operating

26.17
%

24.01
%

24.20
%

25.11
%

24.26
%

	Three Months Ended									Six Months Ended						Three Months Ended
	June 30,			March 31,			June 30,			June 30,						March 31,			December 31,			March 31,
($ in thousands)	2019			2019			2018			2019			2018			2020			2019			2019
Asset Quality Information
Nonaccrual loans ~~(a)~~(b)	$	209,831		$	204,831		$	241,681		$	209,831		$	241,681		$	254,058		$	245,833		$	204,831
Restructured loans - still accruing		101,250			117,578			152,507			101,250			152,507			34,251			61,265			117,578
Total nonperforming loans		311,081			322,409			394,188			311,081			394,188			288,309			307,098			322,409
Other real estate (ORE) and foreclosed assets		27,520			27,148			22,342			27,520			22,342			18,460			30,405			27,148
Total nonperforming assets	$	338,601		$	349,557		$	416,530		$	338,601		$	416,530		$	306,769		$	337,503		$	349,557
Accruing loans 90 days past due ~~(b)~~(d)	$	6,493		$	20,308		$	7,941		$	6,493		$	7,941		$	17,790		$	6,582		$	20,308
Net charge-offs		7,151			17,869			5,074			25,020			17,274			43,764			9,503			17,869
Allowance for loan and lease losses		195,625			194,688			214,530			195,625			214,530
Provision for loan and lease losses		8,088			18,043			8,891			26,131			21,144
Allowance for loan losses																	426,003			191,251			194,688
Reserve for unfunded lending commitments																	48,992			3,974			—
Allowance for credit losses																	474,995			195,225			194,688
Total provision for credit losses																	246,793			9,156			18,043
Ratios:
Nonperforming assets to loans, ORE and foreclosed assets		1.68	%		1.74	%		2.15	%		1.68	%		2.15	%		1.42	%		1.59	%		1.74	%
Accruing loans 90 days past due to loans		0.03	%		0.10	%		0.04	%		0.03	%		0.04	%		0.08	%		0.03	%		0.10	%
Nonperforming assets + accruing loans 90 days past due to loans, ORE and foreclosed assets		1.71	%		1.84	%		2.19	%		1.71	%		2.19	%		1.51	%		1.62	%		1.84	%
Net charge-offs to average loans		0.14	%		0.36	%		0.11	%		0.25	%		0.18	%		0.83	%		0.18	%		0.36	%
Allowance for loan losses to period-end loans		0.97	%		0.97	%		1.11	%		0.97	%		1.11	%		1.98	%		0.90	%		0.97	%
Allowance for credit losses to period-end loans																	2.21	%		0.92	%		0.97	%
Allowance for loan losses to nonperforming loans + accruing loans 90 days past due		61.60	%		56.81	%		53.35	%		61.60	%		53.35	%		139.17	%		60.97	%		56.81	%

	June 30,			March 31,			December 31,			September 30,			June 30,			March 31,			December 31,			September 30,			June 30,			March 31,
(in thousands)	2019			2019			2018			2018			2018			2020			2019			2019			2019			2019
Period-End Balance Sheet
Total loans, net of unearned income (a)	$	20,175,812		$	20,112,838		$	20,026,411		$	19,543,717		$	19,370,917
Total loans																$	21,515,681		$	21,212,755		$	21,035,952		$	20,175,812		$	20,112,838
Loans held for sale		36,150			27,437			28,150			29,043			36,047			67,587			55,864			75,789			36,150			27,437
Securities		5,725,735			5,577,522			5,670,584			5,987,447			6,113,873			6,374,490			6,243,313			6,404,719			5,725,735			5,577,522
Short-term investments		151,062			163,762			111,094			108,074			104,210			876,314			110,229			49,513			151,062			163,762
Earning assets		26,088,759			25,881,559			25,836,239			25,668,281			25,625,047			28,834,072			27,622,161			27,565,973			26,088,759			25,881,559
Allowance for loan losses		(195,625	)		(194,688	)		(194,514	)		(214,550	)		(214,530	)		(426,003	)		(191,251	)		(195,572	)		(195,625	)		(194,688	)
Goodwill and other intangible assets		878,051			883,097			887,123			892,595			825,223			956,916			962,260			977,369			878,051			883,097
Other assets		1,990,678			1,920,263			1,707,059			1,751,849			1,689,707			2,396,708			2,207,587			2,195,779			1,990,678			1,920,263
Total assets	$	28,761,863		$	28,490,231		$	28,235,907		$	28,098,175		$	27,925,447		$	31,761,693		$	30,600,757		$	30,543,549		$	28,761,863		$	28,490,231
Noninterest-bearing deposits	$	8,114,632		$	8,158,658		$	8,499,027		$	8,140,530		$	8,165,796		$	9,204,631		$	8,775,632		$	8,686,383		$	8,114,632		$	8,158,658
Interest-bearing transaction and savings deposits		8,034,801			8,224,203			8,000,093			7,972,417			7,711,542			8,931,192			8,845,097			8,758,993			8,034,801			8,224,203
Interest-bearing public funds deposits		3,159,790			3,229,589			3,006,516			2,613,858			2,854,839			3,251,445			3,364,416			2,954,966			3,159,790			3,229,589
Time deposits		3,926,819			3,767,844			3,644,549			3,691,002			3,503,161			3,621,228			2,818,430			3,800,957			3,926,819			3,767,844
Total interest-bearing deposits		15,121,410			15,221,636			14,651,158			14,277,277			14,069,542			15,803,865			15,027,943			15,514,916			15,121,410			15,221,636
Total deposits		23,236,042			23,380,294			23,150,185			22,417,807			22,235,338			25,008,496			23,803,575			24,201,299			23,236,042			23,380,294
Short-term borrowings		1,641,598			1,388,735			1,589,128			2,276,647			2,314,190			2,673,283			2,714,872			2,108,815			1,641,598			1,388,735
Long-term debt		232,754			224,962			224,993			215,912			266,009			225,606			233,462			246,641			232,754			224,962
Other liabilities		332,554			305,665			190,261			208,931			180,355			433,244			381,163			400,414			332,554			305,665
Stockholders' equity		3,318,915			3,190,575			3,081,340			2,978,878			2,929,555			3,421,064			3,467,685			3,586,380			3,318,915			3,190,575
Total liabilities & stockholders' equity	$	28,761,863		$	28,490,231		$	28,235,907		$	28,098,175		$	27,925,447		$	31,761,693		$	30,600,757		$	30,543,549		$	28,761,863		$	28,490,231

	Three Months Ended									Six Months Ended						Three Months Ended
	June 30,			March 31,			June 30,			June 30,						March 31,			December 31,			March 31,
(in thousands)	2019			2019			2018			2019			2018			2020			2019			2019
Average Balance Sheet
Total loans, net of unearned income (a)	$	20,150,104		$	20,126,948		$	19,193,234		$	20,138,590		$	19,111,318
Total loans																$	21,234,016		$	21,037,942		$	20,126,948
Loans held for sale		27,873			20,618			22,575			24,266			27,358			40,318			62,272			20,618
Securities ~~(b)~~(a)		5,586,390			5,656,689			6,032,058			5,621,345			5,965,046			6,149,432			6,201,612			5,656,689
Short-term investments		228,527			216,192			143,158			222,394			145,719			206,886			139,633			216,192
Earning assets		25,992,894			26,020,447			25,391,025			26,006,595			25,249,441			27,630,652			27,441,459			26,020,447
Allowance for loan losses		(195,238	)		(196,384	)		(212,766	)		(195,808	)		(214,770	)		(241,364	)		(195,616	)		(196,384	)
Goodwill and other intangible assets		880,497			885,381			827,760			882,926			830,499			959,500			973,601			885,381
Other assets		1,859,657			1,742,104			1,479,033			1,801,204			1,496,580			2,314,813			2,123,849			1,742,104
Total assets	$	28,537,810		$	28,451,548		$	27,485,052		$	28,494,917		$	27,361,750		$	30,663,601		$	30,343,293		$	28,451,548
Noninterest-bearing deposits	$	8,099,621		$	8,227,698		$	8,149,521		$	8,163,306		$	8,050,870		$	8,763,359		$	8,601,323		$	8,227,698
Interest-bearing transaction and savings deposits		8,026,012			8,082,584			7,860,019			8,054,141			7,951,092			8,798,483			8,803,703			8,082,584
Interest-bearing public fund deposits		3,194,113			3,060,565			2,970,117			3,127,708			3,019,821			3,252,233			3,079,001			3,060,565
Time deposits		3,817,817			3,743,292			3,121,817			3,780,761			3,050,825			3,513,167			3,364,347			3,743,292
Total interest-bearing deposits		15,037,942			14,886,441			13,951,953			14,962,610			14,021,738			15,563,883			15,247,051			14,886,441
Total deposits		23,137,563			23,114,139			22,101,474			23,125,916			22,072,608			24,327,242			23,848,374			23,114,139
Short-term borrowings		1,617,776			1,684,904			1,989,416			1,651,155			1,906,684			2,150,164			2,393,444			1,684,904
Long-term debt		232,277			224,966			299,695			228,642			302,391			231,438			242,473			224,966
Other liabilities		319,691			309,488			185,470			314,616			189,062			445,030			385,309			309,488
Stockholders' equity		3,230,503			3,118,051			2,908,997			3,174,588			2,891,005			3,509,727			3,473,693			3,118,051
Total liabilities & stockholders' equity	$	28,537,810		$	28,451,548		$	27,485,052		$	28,494,917		$	27,361,750		$	30,663,601		$	30,343,293		$	28,451,548

	Three Months Ended									Six Months						Three Months Ended
	June 30,			March 31,			June 30,			June 30,						March 31,			December 31,			September 30,			June 30,			March 31,
(in thousands)	2019			2019			2018			2019			2018			2020			2019			2019			2019			2019
Net interest income	$	219,868		$	219,254		$	211,547		$	439,122		$	417,211		$	231,188		$	233,156		$	222,939		$	219,868		$	219,254
Noninterest income		79,250			70,503			68,832			149,753			135,084			84,387			82,924			83,230			79,250			70,503
Total revenue	$	299,118		$	289,757		$	280,379		$	588,875		$	552,295		$	315,575		$	316,080		$	306,169		$	299,118		$	289,757
Tax-equivalent adjustment (a)		3,718			3,824			4,081			7,542			8,044			3,448			3,580			3,652			3,718			3,824
Nonoperating revenue		—			—			—			—			1,145
Operating revenue (te)	$	302,836		$	293,581		$	284,460		$	596,417		$	561,484		$	319,023		$	319,660		$	309,821		$	302,836		$	293,581
Noninterest expense		(183,567	)		(175,700	)		(184,402	)		(359,267	)		(355,193	)		(203,335	)		(197,856	)		(213,554	)		(183,567	)		(175,700	)
Nonoperating expense		—			—			15,805			—			21,658			-			3,856			28,810			-			-
Operating pre-prevision net revenue (te)	$	119,269		$	117,881		$	115,863		$	237,150		$	227,949		$	115,688		$	125,660		$	125,077		$	119,269		$	117,881

	Three Months Ended									Six Months						Three Months Ended
	June 30,			March 31,			June 30,			June 30,						March 31,			December 31,			September 30,			June 30,			March 31,
(in thousands)	2019			2019			2018			2019			2018			2020			2019			2019			2019			2019
Net income	$	88,277		$	79,164		$	71,177		$	167,441		$	143,652
Net income (loss)																$	(111,033	)	$	92,132		$	67,807		$	88,277		$	79,164
Net income allocated to participating securities		(1,502	)		(1,337	)		(1,328	)		(2,839	)		(2,694	)		(427	)		(1,566	)		(1,141	)		(1,502	)		(1,337	)
Net income available to common shareholders		86,775			77,827			69,849			164,602			140,958
Net income (loss) available to common shareholders																	(111,460	)		90,566			66,666			86,775			77,827
Nonoperating items, net of applicable income tax		—			7,966			12,486			7,966			18,268			-			3,046			22,760			-			-
Nonoperating items allocated to participating securities		—			(134	)		(233	)		(134	)		(342	)		-			(52	)		(383	)		-			-
Operating earnings available to common shareholders		86,775			85,659			82,102			172,434			158,884
Operating earnings (loss) available to common shareholders																$	(111,460	)	$	93,560		$	89,043		$	86,775		$	77,827
Weighted average common shares - diluted		85,835			85,800			85,483			85,810			85,451			87,186			88,315			86,462			85,835			85,800
Earnings per share - diluted	$	1.01		$	0.91		$	0.82		$	1.92		$	1.65		$	(1.28	)	$	1.03		$	0.77		$	1.01		$	0.91
Operating earnings per share - diluted	$	1.01		$	1.00		$	0.96		$	2.01		$	1.86		$	(1.28	)	$	1.06		$	1.03		$	1.01		$	0.91

Liquidity management is focused on ensuring that funds are available to meet the cash flow requirements of our depositors and borrowers, while also meeting the operating, capital and strategic cash flow needs of the Company, the Bank and other subsidiaries. ~~We develop~~As part of the overall asset and liability management process, liquidity management strategies and ~~measure~~measurements have been developed to manage and monitor liquidity ~~risk as part~~risk. Management has taken deliberate, proactive measures to manage liquidity during this period of unprecedented economic uncertainty. Anticipated further disruption of financial and credit markets have prompted the Company to enact strategies to strengthen liquidity through various measures to ensure we have funds available to meet the needs of our ~~overall asset/liability management process.~~day to day operations and those of our customers. At March 31, 2020, we had nearly $14 billion in net available sources of funds, summarized as follows:

The asset portion of the balance sheet provides liquidity primarily through loan principal repayments, maturities and repayments of investment securities and occasional sales of various assets. Short-term investments such as federal funds sold, securities purchased

under agreements to resell and interest-bearing deposits with the Federal Reserve Bank or with other commercial banks are additional sources of liquidity to meet cash flow requirements. Free securities represent unpledged securities that can be sold or used as collateral for borrowings, and include unpledged securities assigned to short-term dealer repurchase agreements or to the Federal Reserve Bank discount window. Management has established an internal target for the ratio of free securities to total securities to be 20% or more. As shown in the table below, our ratio of free securities to total securities was ~~40.10%~~25.42% at ~~June 30,~~March 31, 2020, compared to 47.27% at December 31, 2019 ~~compared to~~and 33.57% at March 31, ~~2019 and 49.31% at June 30, 2018.~~2019. The total of pledged securities at ~~June 30, 2019 was $3.5 billion, down $278.9 million from~~ March 31, 2020 was $4.8 billion, up $1.5 billion from December 31, 2019. The pledge of additional securities, part of our COVID-19 asset liability response strategy, provides enhanced liquidity through additional borrowing capacity at the Federal Reserve. Securities and FHLB letters of credit are pledged as collateral related to public funds and repurchase agreements. Total ~~pledged~~ securities and FHLB letters of credits of $6.5 billion at March 31, 2020 were up ~~$148.6~~$136.3 million compared to ~~March~~December 31, 2019 and ~~$362.0~~$834.3 million lower than ~~at June 30, 2018.~~

	June 30,			March 31,			December 31,			September 30,			June 30,			March 31,			December 31,			September 30,			June 30,			March 31,
Liquidity Metrics	2019			2019			2018			2018			2018			2020			2019			2019			2019			2019
Free securities / total securities		40.10	%		33.57	%		41.39	%		48.90	%		49.31	%		25.42	%		47.27	%		54.44	%		40.10	%		33.57	%
Core deposits / total deposits		89.30	%		89.98	%		90.47	%		89.71	%		89.65	%		90.48	%		93.54	%		90.31	%		89.30	%		89.98	%
Wholesale funds / core deposits		15.13	%		13.61	%		14.53	%		19.34	%		19.93	%		17.76	%		13.99	%		15.54	%		15.13	%		13.61	%
Quarter-to-date average loans /quarter-to-date average deposits		87.09	%		87.08	%		88.09	%		88.39	%		86.84	%		87.28	%		88.22	%		87.47	%		87.09	%		87.08	%

The liability portion of the balance sheet provides liquidity mainly through the Company’s ability to use cash sourced from various customers’ interest-bearing and noninterest-bearing deposit and sweep accounts. At ~~June 30, 2019,~~March 31, 2020, deposits totaled ~~$23.2~~$25.0 billion, ~~a decrease~~an increase of ~~$144.3 million,~~$1.2 billion, or 1%5%, from ~~March~~December 31, 2019 and an increase of ~~$1.0~~$1.6 billion, or 5%7%, from ~~June 30, 2018.~~March 31, 2019. The increase over December 31, 2019 is due to an increase in brokered deposits and the increase compared to March 31, 2019 is due largely to the acquisition of $1.3 billion in deposits in the MidSouth transaction. Core deposits consist of total deposits excluding certificates of deposit (“CDs”) of $250,000 or more and brokered deposits. Core deposits totaled ~~$20.7~~$22.6 billion at ~~June 30,~~March 31, 2020, an increase of $361.1 million from December 31, 2019, ~~a decrease of $289.3 million~~and $1.6 billion from March 31, ~~2019, and an increase of $816.2 million from June 30, 2018.~~2019. The ratio of core deposits to total deposits was ~~89.30%~~90.48% at ~~June 30,~~March 31, 2020, compared to 93.54% at December 31, 2019 ~~compared to~~and 89.98% at March 31, ~~2019 and 89.65% at June 30, 2018.~~2019. Brokered deposits totaled ~~$1.3~~$1.1 billion as of ~~June 30, 2019,~~March 31, 2020, an increase of ~~$15 million~~$1.0 billion compared to ~~March~~December 31, 2019 and a decrease of ~~$105.2~~$131.2 million compared to ~~June 30, 2018.~~March 31, 2019. The use of brokered deposits as a funding source is subject to certain policies regarding the amount, term and interest rate. In the second quarter of 2020, the Bank implemented a reciprocal deposit program that allows depositors to authorize and instruct the Bank to reciprocate their uninsured deposits with other FDIC insured financial institutions in order to obtain FDIC insurance on those deposits.

Purchases of federal funds, securities sold under agreements to repurchase and other short-term borrowings from customers provide additional sources of liquidity to meet short-term funding requirements. Besides funding from customer sources, the Bank has a line of credit with the FHLB that is secured by blanket pledges of certain mortgage loans. At ~~June 30, 2019,~~March 31, 2020, the Bank had borrowings of approximately ~~$1.0~~$1.9 billion and had approximately ~~$3.8~~$2.9 billion available under this line. ~~The~~As a part of the Company’s COVID-19 asset liability response strategy, the Bank ~~also has~~increased its pledged securities by $1.5 billion to provide additional borrowing capacity at the Federal Reserve. The unused borrowing capacity at the Federal Reserve’s discount window ofis approximately ~~$2.6~~$4.4 billion; there were no outstanding borrowings with the Federal Reserve at any date during any period covered by this report. In the second quarter of 2020, we began participation in the Federal Reserve’s Paycheck Protection Program Liquidity Facility that extends credit to eligible financial institutions that originate PPP loans, with the loans pledged as collateral. Borrowings under this new facility will not impact existing unused borrowing capacity with the Federal Reserve.

The Company is offering loan modifications under Section 4013 of the CARES Act to offer assistance to our customers impacted by the pandemic. The Company has sufficient excess liquidity to cover cash flow reduction due the short-term loan payment deferrals.

Wholesale funds, which are comprised of short-term borrowings, long-term debt and brokered deposits were ~~15.13%~~17.76% of core deposits at ~~June 30,~~March 31, 2020, compared to 13.99% at December 31, 2019 ~~compared to~~and 13.61% at March 31, ~~2019 and 19.93% at June 30, 2018.~~2019. The linked quarter increase in wholesale funds was primarily related to increases in ~~repurchase agreements~~brokered deposits and federal funds purchased, partially offset by a decrease in FHLB ~~borrowings.~~borrowing. The year over year ~~decrease~~increase in wholesale funds was primarily related to ~~decreases~~increases in FHLB borrowings and ~~brokered certificates deposits,~~federal funds purchased, partially offset by ~~an increase~~a decrease in ~~repurchase agreements.~~brokered deposits. The Company has established an internal target for wholesale funds to be less than 25% of core deposits.

Another key measure used to monitor our liquidity position is the loan-to-deposit ratio (average loans outstanding for the reporting period divided by average deposits outstanding). The loan-to-deposit ratio measures the amount of funds the Company lends for each dollar of deposits on hand. Our average loan-to-deposit ratio for the ~~second~~first quarter of 2020 was 87.28%, compared to 88.22% for the fourth quarter of 2019 ~~was 87.09%, compared to~~and 87.08% for the first quarter of ~~2019 and 86.84% for the second quarter of 2018.~~2019. Management has an established target range for the loan-to-deposit ratio of 87% to 89%, which could be exceeded under certain circumstances.

Cash generated from operations is another important source of funds to meet liquidity needs. The consolidated statements of cash flows present operating cash flows and summarize all significant sources and uses of funds for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~ 2019.

Dividends received from the Bank have been the primary source of funds available to the Parent for the payment of dividends to our stockholders and for servicing its debt. The liquidity management process takes into account the various regulatory provisions that can limit the amount of dividends the Bank can distribute to the Parent. The Parent targets cash and other liquid assets to provide liquidity in an amount sufficient to fund approximately ~~six~~four quarters of anticipated common stockholder dividends, but will temporarily operate below that level if a return to the target can be achieved in the near-term.

Stockholders’ equity totaled ~~$3.3~~$3.4 billion at ~~June 30, 2019, up $128.3~~March 31, 2020, down $46.6 million, or 4%1%, from December 31, 2019 and $230.5 million, or 7%, from March 31, ~~2019 and up $389.4 million, or 13%, from June 30, 2018.~~2019. The tangible common equity ratio was ~~8.75 %~~8.00% at ~~June 30,~~March 31, 2020, compared to 8.45% at December 31, 2019 ~~compared to~~and 8.36% at March 31, ~~2019 and 7.76% at June 30, 2018.~~ 2019. The ~~increase~~decrease in the tangible common equity ratio from ~~both March~~December 31, 2019 ~~and June 30, 2018 is~~was primarily attributable to a decrease in net tangible retained earnings related to the pandemic, growth in tangible assets and the cumulative effect of the adoption of CECL, partially offset by net gains on fair value adjustments of securities available for sale and interest rate swaps included in other accumulated comprehensive income. The decrease from March 31, 2019 was mainly due to the Midsouth acquisition which occurred during the third quarter of 2019, dividends paid and the cumulative effect of the adoption of CECL, partially offset by net gains on fair value adjustments of securities available for sale and interest rate swaps included in other accumulated comprehensive income ~~partially offset by growth in~~and net tangible ~~assets. The increase from June 30, 2018 was negatively impacted by acquired intangible assets.~~retained earnings. Management has established an internal target for the tangible common equity ratio of at least 8.00%; however, management will allow the tangible common equity ratio to drop below 8.00% on a temporary basis if it believes that the shortfall can be replenished through normal operations within a short time frame.

The regulatory capital ratios of the Company and the Bank ~~as of June 30, 2019~~at March 31, 2020 remained well in excess of current regulatory minimum requirements. The Company and the Bank have been categorized as “well-capitalized” in the most recent notices received from our regulators. Both entities currently exceed all capital requirements of the Basel III ~~requirements.~~requirements and continue to have excess capacity with the capital conservation buffer that must be met in order to engage in certain capital activities including, but not limited to paying stockholder dividends. Refer to the Supervision and Regulation section in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 for further discussion of our capital requirements.

The following table shows the regulatory capital ratios for the Company and the Bank as calculated under current rules for the indicated periods. The capital ratios as of March 31, 2020 reflect the election to use the interim final five-year transition rule issued on March 27, 2020 available for institutions required to adopt CECL as of January, 1, 2020. The new CECL transition rule allows for the option to delay for two years the estimated impact of CECL on regulatory capital (0%), followed by a three-year transition (25% in 2022, 50% in 2023, 75% in 2024, and 100% thereafter). In addition, the two-year delay also includes full impact of January 1, 2020 impact plus an estimated impact of CECL calculated quarterly as 25% of the current ACL over the January 1, balance (modified transition amount). The modified transition amount will be recalculated each quarter in 2020 and 2021, with the December 31, 2021 impact carrying through remaining three-year transition. The election to use the revised final CECL transition rules favorably impacted our leverage ratio by 19 bps and our tier 1 common, tier 1 and total capital regulatory ratios by 22 bps.

	Well-			June 30,			March 31,			December 31,			September 30,			June 30,			Well-			March 31,			December 31,			September 30,			June 30,			March 31,
	Capitalized			2019			2019			2018			2018			2018			Capitalized			2020			2019			2019			2019			2019
Total capital (to risk weighted assets)
Hancock Whitney Corporation		10.00	%		12.43	%		12.24	%		11.99	%		11.98	%		12.12	%		10.00	%		11.87	%		11.90	%		12.43	%		12.43	%		12.24	%
Hancock Whitney Bank		10.00	%		11.81	%		11.73	%		11.17	%		11.25	%		11.57	%		10.00	%		11.45	%		11.53	%		11.19	%		11.81	%		11.73	%
Tier 1 common equity capital (to risk weighted assets)
Hancock Whitney Corporation		6.50	%		10.94	%		10.74	%		10.48	%		10.36	%		10.48	%		6.50	%		10.02	%		10.50	%		11.02	%		10.94	%		10.74	%
Hancock Whitney Bank		6.50	%		10.97	%		10.88	%		10.32	%		10.30	%		10.60	%		6.50	%		10.20	%		10.74	%		10.39	%		10.97	%		10.88	%
Tier 1 capital (to risk weighted assets)
Hancock Whitney Corporation		8.00	%		10.94	%		10.74	%		10.48	%		10.36	%		10.48	%		8.00	%		10.02	%		10.50	%		11.02	%		10.94	%		10.74	%
Hancock Whitney Bank		8.00	%		10.97	%		10.88	%		10.32	%		10.30	%		10.60	%		8.00	%		10.20	%		10.74	%		10.39	%		10.97	%		10.88	%
Tier 1 leverage capital
Hancock Whitney Corporation		5.00	%		9.10	%		8.85	%		8.67	%		8.50	%		8.66	%		5.00	%		8.40	%		8.76	%		9.49	%		9.10	%		8.85	%
Hancock Whitney Bank		5.00	%		9.12	%		8.97	%		8.54	%		8.46	%		8.77	%		5.00	%		8.55	%		8.96	%		8.95	%		9.12	%		8.97	%

On ~~May 24, 2018, our~~September 23, 2019, the Company’s board of directors approved a stock buyback program that ~~authorized~~authorizes the Company to repurchase of up to ~~5%, or approximately 4.3~~5.5 million ~~shares, of outstanding common stock. The approved program allows us to repurchase~~ shares of our common stock ~~either~~through the expiration date of December 31, 2020. The program allows the Company to repurchase its common shares in the open market, by block purchase, through accelerated share repurchase programs, in ~~compliance with Rule 10b-18 promulgated under the Securities Exchange Act~~

privately negotiated transactions, ~~with non-affiliated sellers~~ or as otherwise determined by the Company in one or more ~~transactions, from time to time until December 31, 2019.~~transactions. The Company is not obligated to purchase any shares under this program, and the board of directors may terminate or amend the program at any time prior to the ~~expiration. As~~expiration date.

On October 18, 2019, the company entered into an accelerated share repurchase (“ASR”) agreement with Morgan Stanley & Co. LLC (“Morgan Stanley”) to repurchase $185 million of ~~June 30,~~the Company’s common stock. Pursuant to the ASR agreement, the Company made a $185 million payment to Morgan Stanley on October 21, 2019, ~~we had purchased 200,000~~and received from Morgan Stanley on the same day an initial delivery of approximately 3.6 million shares of ~~our~~the Company’s common stock, which represents approximately 75% of the estimated total number of shares to be repurchased under the ASR agreement based on the October 18, 2019 closing price of the Company’s common stock. Final settlement of the ASR agreement was expected to occur as early as the second quarter of 2020 and no later than the third quarter of 2020. On March 18, 2020, pursuant to the terms of the agreement, the final settlement of the ASR commenced whereby the Company received from Morgan Stanley approximately $12.1 million and a final delivery of 1.0 million shares.

In January 2020, the Company repurchased 315,851 shares of its common stock at a price of $40.26 in a privately negotiated transaction. The Company repurchased 4.9 million shares of the 5.5 million authorized shares under the buyback program at an average price of ~~$41.30~~$37.65 per share through the ASR agreement and a privately negotiated transaction. The Company has suspended the repurchase of shares under this program.

On ~~April 26, 2019,~~January 27, 2020, our board of directors declared ~~the~~a regular ~~second~~first quarter cash dividend atof $0.27 per share, ~~the same as~~consistent with the prior quarter. We remain confident in our capability andcapacity to maintain the common dividend at current level based on strength of capital ratios at March 31, 2020 and in consideration for forecasted stressed scenarios through year-end.

The Company expects to fund close to 12,000 loans or approximately $2.5 billion in originations through the first and second phase of the PPP. A portion of these loans that meet certain regulatory criteria are subject to forgiveness by the SBA. These loans are not expected to have any significant impact on regulatory capital as they carry a 0% risk-weighting due to the full guarantee by the SBA.

Investment in securities totaled ~~$5.7~~$6.4 billion at ~~June 30, 2019,~~March 31, 2020, up ~~$148.2~~$131 million, or ~~2.7%~~2%, from December 31, 2019 and up $797 million, or 14%, from March 31, ~~2019 and down $388.1 million, or 6.3%, from June 30, 2018.~~2019. At ~~June 30, 2019,~~March 31, 2020, securities available for sale totaled ~~$2.8~~$4.9 billion and securities held to maturity totaled ~~$2.9~~$1.5 billion.

Our securities portfolio consists mainly of residential and commercial mortgage-backed securities and collateralized mortgage obligations that are issued or guaranteed by U.S. government agencies. We invest only in high quality investment grade securities with a targeted portfolio duration generally between two and five and a half years. At ~~June 30, 2019,~~March 31, 2020, the average expected maturity of the portfolio was ~~5.41~~5.76 years with an effective duration of ~~4.18~~3.57 years and a nominal weighted-average yield of ~~2.75%~~2.51%. Management simulations indicate that the effective duration would increase to ~~4.55~~3.90 years with a 100 bp increase in the yield curve and increase to ~~4.73~~4.06 years with a 200 bp increase. At ~~March~~December 31, 2019, the average expected maturity of the portfolio was ~~5.52~~5.47 years with an effective duration of ~~4.37~~4.16 years and a nominal weighted-average yield of ~~2.75%~~2.49%. The average maturity of the portfolio at ~~June 30, 2018~~March 31, 2019 was ~~6.09~~5.52 years, with an effective duration was ~~4.89~~4.37 years and the nominal weighted-average yield was ~~2.53%~~2.75%. The ~~change~~changes in expected maturity, effective duration, and nominal weighted-average yield compared to prior quarter isand year-over-year were primarily related to ~~prepayments~~the reinvestment of the securities portfolio maturities, paydowns and ~~maturities~~sales.

Effective January 1, 2020 and in conjunction with the adoption of CECL, and again as of March 31, 2020, the Company evaluated its securities portfolio for credit loss. Based on our assessment, expected credit loss was negligible for both periods and therefore, no allowance for credit loss was recorded.

Total loans at March 31, 2020 were $21.5 billion, up $302.9 million, or 1%, from December 31, 2019, and up $1.4 billion, or 7%, from March 31, 2019. The linked-quarter growth was throughout all regions across the Bank’s footprint due to increased loan originations and the funding of existing and expanded lines of credit related to economic uncertainty. Growth compared to same quarter last year reflect the acquisition of $785 million in loans, net of purchase discount, from MidSouth during the ~~second~~third quarter of ~~2019. Year-over-year metrics were impacted by~~2019 with the ~~fourth quarter 2018 portfolio restructure.~~remaining growth across the company’s entire footprint.

Total loans at June 30, 2019 were $20.2 billion, up $63.0 million, or less than 1%, from March 31, 2019, and up $0.8 billion, or 4.2%, from June 30, 2018. Growth from March 31, 2019 was impacted by anticipated paydowns, the sale of approximately $45 million of portfolio mortgage loans, a $55 million decrease in the energy portfolio and a $43 million decrease in the healthcare portfolio. Net loan growth continues to be diversified across products and the Bank’s footprint. Management anticipates that the full year average loan growth percentage for 2019, without consideration of the MidSouth acquisition, will be in the mid-single digits.

The following table shows the composition of our loan portfolio at each date indicated:

	June 30,		March 31,		December 31,		September 30,		June 30,		March 31,		December 31,		September 30,		June 30,		March 31,
(in thousands)	2019		2019		2018		2018		2018		2020		2019		2019		2019		2019
Total loans:
Commercial non-real estate	$	8,559,118	$	8,656,326	$	8,620,601	$	8,438,884	$	8,410,961	$	9,321,340	$	9,166,947	$	8,893,004	$	8,559,118	$	8,656,326
Commercial real estate - owner occupied		2,519,970		2,515,428		2,457,748		2,300,271		2,233,794		2,731,320		2,738,460		2,734,379		2,519,970		2,515,428
Total commercial and industrial		11,079,088		11,171,754		11,078,349		10,739,155		10,644,755		12,052,660		11,905,407		11,627,383		11,079,088		11,171,754
Commercial real estate - income producing		2,895,468		2,563,394		2,341,779		2,311,699		2,342,192		3,232,783		2,994,448		3,060,568		2,895,468		2,563,394
Construction and land development		1,144,062		1,340,067		1,548,335		1,523,419		1,515,233		1,098,726		1,157,451		1,190,718		1,144,062		1,340,067
Residential mortgages		2,968,271		2,933,251		2,910,081		2,846,916		2,780,359		2,979,985		2,990,631		3,004,958		2,968,271		2,933,251
Consumer		2,088,923		2,104,372		2,147,867		2,122,528		2,088,378		2,151,527		2,164,818		2,152,325		2,088,923		2,104,372
Total loans	$	20,175,812	$	20,112,838	$	20,026,411	$	19,543,717	$	19,370,917	$	21,515,681	$	21,212,755	$	21,035,952	$	20,175,812	$	20,112,838

Our commercial customer base is diversified over a range of industries, including energy, healthcare, wholesale and retail trade in various durable and nondurable products and the manufacture of such products, marine transportation and maritime construction, financial and professional services, and agricultural production.

Commercial and industrial (“C&I”) loans, including both non-real estate and owner occupied real estate secured loans, totaled approximately ~~$11.1~~$12.1 billion, or ~~55%~~56% of the total loan portfolio at ~~June 30, 2019, a decrease~~March 31, 2020, an increase of ~~$92.7~~$147.3 million, or 1%, from December 31, 2019 and $880.9 million, or 8%, from March 31, 2019. The ~~decrease in owner occupied real estate~~linked-quarter growth is primarily due to loan closings and increased funding of existing and expanded lines of credit. The year over year increase is related ~~activities, healthcare~~to the MidSouth acquisition, with the remaining growth across most regions and ~~energy lending, were partially offset by growth in retail, professional and manufacturing lines as we continue to diversify into a more granular portfolio.~~specialty lines.

The Bank lends mainly to middle market and smaller commercial entities, although it participates in larger shared credit loan facilities. Shared national credits funded at ~~June 30, 2019~~March 31, 2020 totaled approximately ~~$2.1~~$2.3 billion, or ~~10%~~11% of total loans, an increase of ~~$16.6~~$96.7 million from December 31, 2019. At March 31, ~~2019. Approximately $575.2~~2020, approximately $436.2 million of our shared national credits ~~at June 30, 2019~~ were with energy-related customers ~~at June 30, 2019.~~and $410.5 million were with healthcare related customers.

Loans to borrowers in the energy sector totaled ~~$1.0 billion~~$939.5 million at ~~June 30, 2019,~~March 31, 2020, down ~~$55.2~~$23.7 million, or 5%2%, from ~~March~~December 31, 2019 and ~~up $22.8~~$123.2 million, or 2%12%, compared to ~~June 30, 2018. We intend~~March 31, 2019. The linked quarter decrease in energy-related loans resulted from $42 million in payoffs and paydowns and $36 million in charge-offs partially offset by $54 million in loan growth. The year-over-year decrease was largely due to ~~maintain our total energy concentration at approximately 5%~~net payoffs and ~~to continue shifting the mix within the portfolio to have~~charge-offs partially offset by acquired MidSouth loans largely in support services ~~credits comprise no more than 40%~~sector. At March 31, 2020, approximately $444 million, or 47%, of the ~~portfolio. At June 30, 2019, approximately $537 million, or 53%, of the~~energy portfolio was comprised of customers engaged in exploration and production, transportation, and storage activities. The remaining ~~$470~~$495 million, or ~~47%~~53%, of the portfolio was comprised of customers engaged in onshore and offshore services and products to support exploration and production activities. We expect to continue to reduce our energy exposure through the next several quarters.

The following table ~~provide s~~provides detail of the more significant industry concentrations for our commercial and industrial loan portfolio, which is based on NAICS ~~codes.~~codes for all industries except for energy, which is based on the borrowers’ source of revenue (i.e. manufacturer whose income is derived from energy-related business is reported as energy). There is approximately $4 million of energy-related construction loans as of March 31, 2020 that is reflected in the real estate table that follows.

June 30,

March 31,

December 31,

September 30,

June 30,

2019

2019

2018

2018

2018

Pct of

Pct of

Pct of

Pct of

Pct of

( $ in thousands )

Balance

Total

Balance

Total

Balance

Total

Balance

Total

Balance

Total

Commercial & industrial loans:

Real Estate and Rental and Leasing

$
1,303,770

12
%

$
1,406,207

12
%

$
1,326,146

12
%

$
1,232,737

11
%

$
1,195,278

11
%
Health Care and Social Assistance

1,040,352

9
%

1,083,469

10
%

1,120,799

10
%

1,135,040

11
%

1,152,593

11
%
Retail Trade (a)

1,024,031

9
%

970,599

9
%

937,971

8
%

934,281

9
%

904,117

8
%
Manufacturing (a)

946,700

9
%

922,365

8
%

877,950

8
%

852,643

8
%

823,263

8
%
Mining, Quarrying, and Oil and Gas Extraction (a)

922,055

8
%

957,590

8
%

1,016,870

9
%

917,389

9
%

932,113

9
%
Public Administration

778,622

7
%

799,237

7
%

814,442

7
%

842,199

8
%

866,052

8
%
Transportation and Warehousing (a)

745,403

7
%

746,837

7
%

717,746

7
%

700,698

6
%

702,615

7
%
Wholesale Trade (a)

657,215

6
%

657,685

6
%

602,052

5
%

559,638

5
%

523,839

5
%
Construction

619,204

6
%

645,107

6
%

643,932

6
%

582,761

5
%

632,592

6
%
Finance and Insurance

610,900

5
%

595,373

5
%

605,663

6
%

524,836

5
%

460,803

4
%
Professional, Scientific, and Technical Services (a)

459,794

4
%

421,999

4
%

462,984

4
%

439,153

4
%

440,727

4
%
Other Services (except Public Administration)

452,958

4
%

450,153

4
%

436,390

4
%

391,040

4
%

382,737

4
%
Accommodation and Food Services

415,814

4
%

413,732

4
%

385,958

4
%

416,734

4
%

418,789

4
%
Educational Services

351,697

3
%

353,803

3
%

359,997

3
%

430,238

4
%

437,484

4
%
Other (a)

750,573

7
%

747,598

7
%

769,449

7
%

779,768

7
%

771,753

7
%
Total commercial & industrial loans

$
11,079,088

100
%

$
11,171,754

100
%

$
11,078,349

100
%

$
10,739,155

100
%

$
10,644,755

100
%

~~(a)~~

Certain balances within each of these industry categories may contain loans considered to be energy related lending, as our definition of energy related is based on the borrower’s source of revenue. The energy related portfolio totaled approximately $1.0 billion at June 30, 2019, $1.1 billion at March 31, 2019 and December 31, 2018, $0.9 billion at September 30, 2018, and $1.0 billion at June 30, 2018.

	March 31,					December 31,					September 30,					June 30,					March 31,
	2020					2019					2019					2019					2019
			Pct of					Pct of					Pct of					Pct of					Pct of
( $ in thousands )	Balance		Total			Balance		Total			Balance		Total			Balance		Total			Balance		Total
Commercial & industrial loans:
Real estate and rental and leasing	$	1,420,629		12	%	$	1,432,319		12	%	$	1,454,795		13	%	$	1,341,902		12	%	$	1,432,089		13	%
Health care and social assistance		1,201,423		10	%		1,144,369		10	%		1,084,884		9	%		1,040,352		9	%		1,083,469		10	%
Retail trade		1,066,780		9	%		1,098,810		9	%		1,060,765		9	%		1,024,031		9	%		970,599		9	%
Manufacturing		959,653		8	%		928,467		8	%		957,622		8	%		889,539		8	%		868,171		8	%
Energy		935,076		8	%		958,486		8	%		1,026,680		9	%		1,003,492		9	%		1,058,000		9	%
Transportation and warehousing		828,215		7	%		768,971		6	%		705,536		6	%		681,390		6	%		664,563		6	%
Wholesale trade		784,354		7	%		751,794		6	%		691,648		6	%		654,293		6	%		654,685		6	%
Public administration		761,284		6	%		774,401		7	%		765,492		7	%		778,622		7	%		799,237		7	%
Finance and insurance		740,915		6	%		677,500		6	%		632,197		5	%		610,900		6	%		595,373		5	%
Construction		700,313		6	%		724,614		6	%		637,512		5	%		619,097		6	%		644,896		6	%
Accommodation, food services and entertainment		616,473		5	%		613,982		5	%		611,663		5	%		570,849		5	%		574,053		5	%
Professional, scientific, and technical services		503,325		4	%		515,634		4	%		492,424		4	%		454,445		4	%		416,219		4	%
Other services (except public administration)		456,084		4	%		451,889		4	%		476,731		4	%		452,553		4	%		450,005		4	%
Educational services		326,708		3	%		342,544		3	%		353,366		3	%		351,697		3	%		353,803		3	%
Other		751,428		5	%		721,627		6	%		676,068		7	%		605,926		6	%		606,592		5	%
Total commercial & industrial loans	$	12,052,660		100	%	$	11,905,407		100	%	$	11,627,383		100	%	$	11,079,088		100	%	$	11,171,754		100	%

Commercial real estate – income producing loans totaled approximately ~~$2.9~~$3.2 billion at ~~June 30, 2019,~~March 31, 2020, an increase of ~~$332.1~~$238.3 million, or ~~13%~~8%, from December 31, 2019. Construction and land development loans, totaling approximately $1.1 billion at March 31, ~~2019. The increase reflects the transfer of loans~~2020, decreased $58.7 million, or 5%, from ~~construction to permanent financing, as well as new production that included increases for multifamily properties, retail properties and industrial properties.~~December 31, 2019. The following table details for the preceding five quarters the end-of-period aggregated commercial real estate – income producing and construction loan balances by property type. Loans reflected in 1-4 Family Residential Construction include both loans to construction builders as well as single family borrowers.

	June 30,					March 31,					December 31,					September 30,					June 30,					March 31,					December 31,					September 30,					June 30,					March 31,
	2019					2019					2018					2018					2018					2020					2019					2019					2019					2019
			Pct of					Pct of					Pct of					Pct of					Pct of					Pct of					Pct of					Pct of					Pct of					Pct of
( $ in thousands )	Balance		Total			Balance		Total			Balance		Total			Balance		Total			Balance		Total			Balance		Total			Balance		Total			Balance		Total			Balance		Total			Balance		Total
Commercial real estate - income producing loans:
Commercial real estate - income producing and construction loans:
Retail	$	607,622		21	%	$	542,904		21	%	$	507,129		22	%	$	499,395		22	%	$	502,809		22	%		708,087		16	%	$	663,196		16	%	$	636,484		15	%	$	610,354		15	%	$	599,299		15	%
Healthcare related properties																											569,166		13	%		517,855		12	%		562,726		13	%		548,470		14	%		496,715		13	%
Office																											475,565		11	%		447,972		11	%		447,872		11	%		403,322		10	%		391,858		9	%
Multifamily		519,808		18	%		369,041		14	%		332,145		14	%		333,144		15	%		347,732		15	%		552,464		13	%		520,444		13	%		539,994		13	%		588,282		14	%		529,121		14	%
Office		465,498		16	%		436,819		17	%		444,973		19	%		421,965		18	%		430,319		18	%
Industrial		406,926		14	%		353,804		14	%		311,933		13	%		285,292		12	%		279,041		12	%		535,070		12	%		498,291		12	%		491,984		12	%		471,677		12	%		458,601		12	%
Hotel/Motel		379,385		13	%		377,674		15	%		374,430		16	%		346,735		15	%		332,411		14	%
Hotel, motel and restaurants																											502,866		12	%		477,728		11	%		431,082		10	%		486,939		12	%		473,898		12	%
1-4 family residential construction																											439,739		10	%		443,835		11	%		486,848		11	%		505,730		12	%		540,016		14	%
Other land loans																											246,377		6	%		250,357		6	%		262,298		6	%		232,025		6	%		228,493		6	%
Other		516,229		18	%		483,152		19	%		371,169		16	%		425,168		18	%		449,880		19	%		302,175		7	%		332,221		8	%		391,998		9	%		192,731		5	%		185,460		5	%
Total commercial real estate - income producing loans	$	2,895,468		100	%	$	2,563,394		100	%	$	2,341,779		100	%	$	2,311,699		100	%	$	2,342,192		100	%
Total commercial real estate - income producing and construction loans																											4,331,509		100	%	$	4,151,899		100	%	$	4,251,286		100	%	$	4,039,530		100	%	$	3,903,461		100	%

~~Construction and land development loans, totaling approximately $1.1~~Our residential mortgages loan portfolio totaled $3.0 billion at ~~June 30,~~March 31, 2020, virtually unchanged compared to December 31, 2019 ~~decreased $196.0~~and up $46.7 million, or ~~15%, from~~2% compared to March 31, 2019. The ~~decrease was primarily due~~consumer loan portfolio totaled $2.2 billion at March 31, 2020, down $13.3 million, or 1%, compared to December 31, 2019, but up $47.2, or 2% compared to March 31, 2019.

As noted previously, the ~~reclassification~~Company’s market has been significantly impacted by the widespread economic shutdown and market turmoil caused by the pandemic and drop in oil prices. While we expect to see impacts across all of our portfolios, we have identified four principle components of our impacted portfolios that are of particular focus where we expect there may be a greater effect and a more challenging recovery. We have identified that approximately $1.4 billion of our retail related loans, ~~from construction~~as having potential for weakness based on the products and ~~land development~~services offered and/or type of delivery. Approximately half of these retail loans are income producing real estate secured. We have identified approximately $1.2 billion in hospitality-related loans as being significantly impacted which include loans to ~~commercial real estate loans as noted above.~~hotels, restaurants, bars and other entertainment venues located throughout our Gulf Coast market,

~~Residential mortgages increased $35.0 million, which is net of a $45 million portfolio sale, and consumer loans decreased $15.4 million during the second quarter of 2019.~~

with a concentration in New Orleans. Within our healthcare portfolio, we have approximately $1.2 billion in healthcare related services that we believe may be more adversely impacted, including loans to offices of physicians, dentist and other non-essential medical services, assisted living and select hospitals. Our energy related loans totaling $940 million, or 4.4% of the total portfolio, continues to be a focus with the reduced demand, lower prices and limited liquidity. We are closely monitoring our concentrations in these industries and others by proactive and frequent borrower dialogue, payment deferral, and other accommodations and financial support, where warranted. While these industries and others have been significantly impacted by the pandemic, the long-term impacts remain unknown and are dependent on several factors, including the severity of the economic downturn, length of time until full recovery and the effectiveness of government stimulus plans.

The Company's ~~total~~allowance for credit losses was $475.0 million at March 31, 2020 compared to $195.2 million at December 31, 2019, and $194.7 million at March 31, 2019. The significant increase over the prior period is driven by the implementation of the CECL standard totaling $76.7 million upon adoption and the current quarter allowance increase totaling $203.0 million. The adoption of the CECL standard on January 1, 2020 includes increases totaling $49.4 million in the funded allowance for loan losses and $27.3 million in the reserve for unfunded lending commitments. These increases are the result of the difference between estimated incurred losses at the adoption date and the forward-looking projected losses over the remaining estimated term of the financial instruments. The higher reserves from the change in accounting principal is largely driven by our longer-term assets as well as expected future funding of construction lending and certain other revolving products. Refer to Note 1 – Basis of Presentation - Critical Accounting Policies and Estimates for a description of the CECL methodology and Note 15 – Recent Accounting Pronouncements for additional discussion of the impact of adoption.

The $203.0 million increase in the first quarter 2020 allowance for credit losses is due largely to the unprecedented impact of the widespread economic shutdown caused by the pandemic, including a significant decline in oil and gas prices. The Company probability-weighted three Moody’s macroeconomic scenarios in our allowance for credit loss analysis. The baseline forecast, which reflects a sharp recession in the first half of 2020 with relatively quick recovery in the second half of 2020, was ~~$195.6 million~~weighted most heavily at ~~June 30, 2019 virtually unchanged from March 30, 2019~~80%. The more severe downside scenarios S-3 (Moderate Recession) and ~~down $18.9 million~~S-4 (Protracted Slump) were weighted at 15% and 5%, respectively, to capture the risk a prolonged downturn might have to our markets, which is more heavily concentrated in tourism, oil and gas, lessors of real estate and certain areas of healthcare that may be more severely impacted by the widespread shutdown and market turmoil. These downside scenarios include double-dip recessions with a prolonged recovery, with the S-4 scenario having a more severe immediate impact and a longer, more gradual recovery compared to ~~June 30, 2018.~~S-3. All three economic scenarios utilized were recessionary, with unemployment peaking in the second quarter of 2020; however, the downside scenarios increased severity and lengthened recovery to varying degrees. The ~~ratio~~degradation in economic conditions created the need for allowance builds across all portfolios in the first quarter of ~~the~~2020. The increase in allowance for ~~loan~~credit losses brings our coverage to ~~period-end~~total loans ~~was flat~~up to 2.21% at March 31, 2020, compared to ~~March~~0.92% at December 31, 2019, and ~~December~~0.97% at March 31, ~~2018 at 0.97%.~~ 2019.

The allowance for ~~loan~~credit losses ~~at June 30, 2019~~on the energy portfolio increased to $88.4 million, or 9.4% of that portfolio, compared to ~~March 31, 2019 reflects~~the January 1, 2020 allowance (representing the adoption of CECL) of $46.3 million, or 4.8%. The price war between Russia and the Organization of the Petroleum Exporting Companies ("OPEC") amid the decline in energy demand and excess inventory resulting from global travel restrictions and economic shutdown caused significant reduction in oil prices in the quarter. This resulted in sharply reduced investment in exploration and further stress on the portfolio. The increase in the energy allowance includes a ~~net build~~$29 million increase in the reserve for individually evaluated impaired loans in our reserve-based lending portfolio, reflecting the lower oil prices and deeper discounts on collateral values resulting from additional liquidity stress in the industry. The allowance for credit losses on the commercial nonenergy portfolio increased to $291.3 million, or 1.88%, at March 31, 2020 compared to the January 1, 2020 allowance of ~~$1.7~~$156.9 million, ~~partially offset~~or 1.04%. The commercial nonenergy portfolio includes concentration in lessors of real estate to various impacted industries including hospitality and tourism which includes hotels, restaurants, and bars, certain nonessential healthcare, certain types of retail outlets, and other industries that have been significantly impacted by ~~a net release~~the widespread shutdown. Our residential mortgage reserve for credit loss increased to $48.2 million, or 1.63%, at March 31, 2020, compared to the January 1, 2020 allowance of ~~$0.5~~$35.3 million, ~~in the mortgage portfolio and $0.3 million in~~or 1.11%. Our allowance for credit losses on the consumer portfolio. The relatively flat allowance reflects the favorable impact of improvement in criticized levels and other credit metrics across most of the loan portfolios. Energy performance continues to be stable with a modest decline in criticized levelsportfolio was $47.1 million, or 2.19%, at March 31, 2020, compared to ~~prior quarter. The energy~~the January 1, 2020 allowance ~~totaled $31.5~~of $35.5 million, ~~relatively unchanged compared to prior quarter, with coverage to total loans at 3.13%, up from 2.96% as the portfolio balance declined.~~or 1.64%.

The Company’s balance of criticized commercial loans totaled ~~$572.9~~$530.3 million at ~~June 30, 2019, down $11.4 million, or 2%, compared to~~ March 31, ~~2019, with $4.9~~2020, down from $580.7 million ~~of the~~at December 31, 2019. The decrease ~~attributable to the~~in commercial ~~nonenergy portfolio and $6.5~~criticized loans includes $30.8 million attributable to the energy ~~portfolio. Compared~~portfolio, due largely to ~~June 30, 2018, criticized commercial loans were down $324.5 million, or 36%, with $174.0~~charge-offs, and $19.6 million attributable to the commercial ~~nonenergy portfolio and $150.6 million of the decrease attributable to the~~non energy portfolio. Criticized loans are defined as those having potential weaknesses that deserve management’s close attention (risk-rated as special mention, substandard and doubtful), including both accruing and nonaccruing loans. ~~Our commercial nonenergy criticized portfolio, totaling $314.9 million at June 30, 2019, is comprised~~The Company routinely assesses the ratings of loans in its portfolio through an established and comprehensive portfolio management process. In addition, the Company often looks at portfolios of loans to determine if there are areas of risk not specifically identified in its loan by loan approach. In alignment with regulatory guidance, we have been working with our customers to manage the effects of economic stress. We expect that are diversified as to both industry and geography. Commercial nonenergy criticized loans comprised 2.08% of that portfolio at June 30, 2019, compared to 2.12% March 31, 2019 and 3.37% at June 30, 2018. At June 30, 2019, criticized loansfurther risk rating adjustments may be required in the ~~energy portfolio were $257.9 million, or approximately 26%~~future to account for prolonged stresses on individual accounts.

Net charge-offs were ~~$7.2~~$43.8 million, or ~~0.14%,~~0.83% of average total loans on an annualized basis in the ~~second~~first quarter of ~~2019, down~~2020, up from ~~$17.9~~$9.5 million, or ~~0.36%,~~0.18% of average total loans in the ~~first~~fourth quarter of ~~2019, which includes $10.1 million related to the alleged fraud associated with the DC Solar equipment finance credit .~~2019. Commercial net charge-offs totaled ~~$4.4 million in the second quarter of 2019 down compared to $14.4~~$39.5 million in the first quarter of ~~2019, but relatively flat when excluding~~2020, up compared to $4.9 million in the ~~DC Solar charge-off. There were no energy net charge-offs during the first two quarters~~fourth quarter of 2019. The ~~second~~increase in first quarter of ~~2018 included $1.9~~2020 charge-offs is largely due to net charge-offs in the upstream subsector of the energy portfolio totaling $35.9 million. Our residential mortgage portfolio had a minimal net recovery in the first quarter of 2020 compared a net charge-off of $0.1 million in ~~energy net recoveries. We have recorded approximately $95 million in energy charge-offs during~~ the ~~latest down cycle that began in late 2014. Residential mortgage and consumer~~fourth quarter of 2019. Consumer net charge-offs were ~~each~~$4.3 million in the first quarter of 2020, down ~~$0.3 million~~slightly compared to the prior quarter.

The following table sets forth activity in the allowance for ~~loan~~credit losses for the periods indicated:

	Three Months Ended									Six Months Ended						Three Months Ended
	June 30,			March 31,			June 30,			June 30,						March 31,			December 31,			March 31,
(in thousands)	2019			2019			2018			2019			2018			2020			2019			2019
Provision and Allowance for Credit Losses
Allowance for loan losses:
Allowance for loan losses at beginning of period	$	194,688		$	194,514		$	210,713		$	194,514		$	217,308		$	191,251		$	195,572		$	194,514
Loans charged-off:
Commercial non real estate		5,309			16,344			2,510			21,653			11,845			40,713			6,218			16,344
Commercial real estate - owner-occupied		71			—			5,953			71			6,804			514			-			—
Total commercial & industrial		5,380			16,344			8,463			21,724			18,649			41,227			6,218			16,344
Commercial real estate - income producing		—			10			1,604			10			1,604			830			22			10
Construction and land development		—			—			210			—			220			—			-			—
Total commercial		5,380			16,354			10,277			21,734			20,473			42,057			6,240			16,354
Residential mortgages		33			406			306			439			498			141			186			406
Consumer		3,936			4,231			4,916			8,167			12,964			5,540			5,286			4,231
Total charge-offs		9,349			20,991			15,499			30,340			33,935			47,738			11,712			20,991
Recoveries of loans previously charged-off:
Commercial non real estate		804			1,926			8,330			2,730			12,476			2,226			1,278			1,926
Commercial real estate - owner-occupied		204			17			187			221			275			81			22			17
Total commercial & industrial		1,008			1,943			8,517			2,951			12,751			2,307			1,300			1,943
Commercial real estate - income producing		—			2			2			2			65			7			51			2
Construction and land development		86			11			9			97			38			234			32			11
Total commercial		1,094			1,956			8,528			3,050			12,854			2,548			1,383			1,956
Residential mortgages		104			162			596			266			712			212			47			162
Consumer		1,000			1,004			1,301			2,004			3,095			1,214			779			1,004
Total recoveries		2,198			3,122			10,425			5,320			16,661			3,974			2,209			3,122
Total net charge-offs		7,151			17,869			5,074			25,020			17,274			43,764			9,503			17,869
Provision for loan losses		8,088			18,043			8,891			26,131			21,144			229,105			5,182			18,043
Decrease in allowance as a result of sale of subsidiary		—			—			—			—			(6,648	)
Cumulative effect of change in accounting principle (a)																	49,411			—			—
Allowance for loan losses at end of period	$	195,625		$	194,688		$	214,530		$	195,625		$	214,530		$	426,003		$	191,251		$	194,688
Reserve for Unfunded Lending Commitments:
Reserve for Unfunded Lending Commitments at beginning of period																$	3,974		$	—		$	—
Cumulative effect of change in accounting principle (a)																	27,330			—			—
Provision for losses on unfunded lending commitments																	17,688			3,974			—
Reserve for unfunded lending commitments at end of period																$	48,992		$	3,974		$	-
Total Allowance for Credit Losses																$	474,995		$	195,225		$	194,688
Total Provision for Credit Losses																$	246,793		$	9,156		$	18,043
Ratios:
Gross charge-offs to average loans		0.19	%		0.42	%		0.32	%		0.30	%		0.36	%		0.90	%		0.22	%		0.42	%
Recoveries to average loans		0.04	%		0.06	%		0.22	%		0.05	%		0.18	%		0.08	%		0.04	%		0.06	%
Net charge-offs to average loans		0.14	%		0.36	%		0.11	%		0.25	%		0.18	%		0.83	%		0.18	%		0.36	%
Allowance for loan losses to period-end loans		0.97	%		0.97	%		1.11	%		0.97	%		1.11	%		1.98	%		0.90	%		0.97	%

The following table sets forth nonperforming assets by type for the periods indicated, consisting of nonaccrual loans, troubled debt restructurings and foreclosed and surplus ORE and other foreclosed assets. Loans past due 90 days or more and still accruing are also disclosed.

	June 30,			December 31,			March 31,			December 31,
(in thousands)	2019			2018			2020			2019
Loans accounted for on a nonaccrual basis: (a)
Commercial non-real estate	$	40,274		$	26,617		$	59,610		$	49,628
Commercial non-real estate - restructured		96,852			84,036			115,556			129,050
Total commercial non-real estate		137,126			110,653			175,166			178,678
Commercial real estate - owner occupied		12,860			16,682			7,851			7,413
Commercial real estate - owner-occupied - restructured		360			213			292			295
Total commercial real estate - owner-occupied		13,220			16,895			8,143			7,708
Commercial real estate - income producing		3,544			4,991			5,557			2,489
Commercial real estate - income producing - restructured		—			—			102			105
Total commercial real estate - income producing		3,544			4,991			5,659			2,594
Construction and land development		1,589			2,134			4,273			1,051
Construction and land development - restructured		19			12			48			166
Total construction and land development		1,608			2,146			4,321			1,217
Residential mortgage		35,698			34,594			40,954			36,638
Residential mortgage - restructured		1,602			1,272			1,912			2,624
Total residential mortgage		37,300			35,866			42,866			39,262
Consumer		16,818			16,744			17,903			16,159
Consumer - restructured		215			—			—			215
Total consumer		17,033			16,744			17,903			16,374
Total nonaccrual loans	$	209,831		$	187,295		$	254,058		$	245,833
Restructured loans - still accruing:
Commercial non-real estate	$	93,484		$	130,075		$	31,730		$	59,136
Commercial real estate - owner occupied		5,915			7,286			-			-
Commercial real estate - income producing		385			398			367			373
Construction and land development		—			9			110			111
Residential mortgage		439			546			900			514
Consumer		1,027			728			1,144			1,131
Total restructured loans - still accruing		101,250			139,042			34,251			61,265
Total nonperforming loans		311,081			326,337			288,309			307,098
ORE and foreclosed assets		27,520			26,270			18,460			30,405
Total nonperforming assets (b)	$	338,601		$	352,607		$	306,769		$	337,503
Loans 90 days past due still accruing to loans (c)	$	6,493		$	5,589		$	17,790		$	6,582
Total restructured loans	$	200,298		$	224,575		$	152,161		$	193,720
Ratios:
Nonperforming assets to loans plus ORE and foreclosed assets		1.68	%		1.76	%		1.42	%		1.59	%
Allowance for loan losses to nonperforming loans and accruing loans 90 days past due		61.60	%		58.60	%		139.17	%		60.97	%
Loans 90 days past due still accruing to loans		0.03	%		0.03	%		0.08	%		0.03	%

Nonperforming assets totaled ~~$338.6~~$306.8 million at ~~June 30,~~March 31, 2020, down $30.7 million from December 31, 2019, ~~down $11.0~~and $42.8 million from March 31, ~~2019, $14.0 million from December 31, 2018 and $77.9 million from June 30, 2018.~~2019. Nonperforming loans decreased approximately ~~$11.3~~$18.8 million compared to ~~March~~December 31, 2019, due largely to partial charge-offs and a ~~reduction in restructured accruing loans as a result of the return to a market structure for one of our energy credits as well as other net activity including both paydowns and~~note sale, partially offset by new downgrades. Our nonperforming loans included ~~$101.3~~$34.3 million of accruing restructured loans, most of which are energy ~~credits that endured challenges during the downturn~~credits. ORE and foreclosed assets declined to $18.5 million at March 31, 2020, from $30.4 million at December 31, 2019, due primarily to write-downs totaling $9.8 million of equity interest in ~~the~~two energy-related companies received in borrower bankruptcy restructurings on two energy ~~cycle.~~credits. Nonperforming assets as a percent of total loans, ~~ORE and other foreclosed assets was 1.68% at June 30, 2019, down 6 bps from March 31, 2019, 8 bps from December 31, 2018 and 47 bps from June 30, 2018.~~

~~Short-term liquidity investments, including interest-bearing bank deposits~~ORE and ~~federal funds sold, were $151.1 million~~other foreclosed assets was 1.51% at ~~June 30, 2019. This represents a decrease of $12.7 million~~March 31, 2020, down 11 bps from December 31, 2019 and 33 bps from March 30, 2019 and an increase of $46.9 million from June 30, 2018. These asset levels vary on a daily basis depending upon movement in customer loan and deposit accounts. Average short-term investments of $228.5 million for the second quarter of 2019 were up $12.3 million compared to the first quarter of 2019, and $85.4 million compared to the second quarter of 2018. 31, 2019.

Short-term liquidity assets are held to ensure funds are available to meet the cash flow needs of both borrowers and depositors. Short-term liquidity investments, including interest-bearing bank deposits and federal funds sold, were $876.3 million at March 31, 2020. This represents an increase of $766.1 million from December 31, 2019 and $712.6 million from March 31, 2019. The increase from both the prior quarter and prior year is to provide additional liquidity in order to meet clients’ needs during the economic impact of the pandemic. Normally these balances will change on a daily basis depending upon movement in customer loan and deposit accounts. Average short-term investments of $206.9 million for the first quarter of 2020 were up $67.3 million compared to the fourth quarter of 2019, and down $9.3 million compared to the first quarter of 2019.

Total deposits were ~~$23.2~~$25.0 billion at ~~June 30,~~March 31, 2020, up $1.2 billion, or 5%, from December 31, 2019, primarily due to a $913 million increase in brokered deposits and strong growth in noninterest-bearing deposits. Total deposits increased $1.6 billion, or 7%, from March 31, 2019, primarily due to strong growth in noninterest-bearing deposits and the impact of approximately $1.3 billion of deposits assumed from the MidSouth acquisition in third quarter of 2019. Average deposits for the first quarter of 2020 were $24.3 billion, up $478.9 million, or 2%, from the fourth quarter of 2019 and up $1.2 billion, or 5%, from the first quarter of 2019.

Noninterest-bearing demand deposits were $9.2 billion at March 31, 2020, up $429.0 million, or 5%, from December 31, 2019, and $1.0 billion, or 13%, from March 31, 2019. The linked-quarter increase was primarily due to strong growth in both consumer and business accounts. The year over year increase reflects the noninterest-bearing demand deposits assumed in the MidSouth acquisition as well as strong organic growth during the first quarter of 2020. Noninterest-bearing demand deposits comprised 37% of total deposits at March 31, 2020, 37% at December 31, 2019 and 35% at March 31, 2019.

Interest-bearing transaction and savings accounts of $8.9 billion at March 31, 2020 increased $86.1 million, or 1%, from December 31, 2019 and $707.0 million, or 9%, from March 31, 2019, with the year-over-year increase mainly attributable to deposits from the MidSouth acquisition.

Interest-bearing public fund deposits totaled $3.3 billion at March 31, 2020, down ~~$144.3~~$113.0 million, or 3%, from December 31, 2019, and up $21.9 million, or 1%, from March 31, 2019, and up $1.0 billion, or 5%, from June 30, 2018. Average deposits for the second quarter of 2019 were $23.1 billion, up $23.4 million, or less than 1%, from the first quarter of 2019 and up $1.0 billion, or 5%, from the second quarter of 2018.

Noninterest-bearing demand deposits were $8.1 billion at June 30, 2019, down $44.0 million, or 1%, from March 31, 2019, and down $51.2 million, 1%, from June 30, 2018. Noninterest-bearing demand deposits comprised 35% of total deposits at June 30, 2019 and March 31, 2019 and 37% at June 30, 2018.

Interest-bearing transaction and savings accounts of $8.0 billion at June 30, 2019 decreased $189.4 million, or 2%, from March 31, 2019 and increased $323.3 million, or 4%, from June 30, 2018, with the year-over-year increase mainly attributable to customer deposits assumed2019. The decrease in ~~the trust and asset management acquisition.~~

~~Interest-bearing~~ public fund deposits ~~totaled $3.2 billion at June 30, 2019, down $69.8 million, or 2%, from March 31, 2019, and up $305.0 million, or 11%, from June 30, 2018.~~is related to typical seasonality. Time deposits other than public funds totaled ~~$3.9~~$3.6 billion at ~~June 30, 2019,~~March 31, 2020, up ~~$159.0~~$802.8 million, or 28%, from ~~March~~December 31, 2019, driven primarily by ~~promotional certificate of deposit offers across our markets and~~ a ~~$15~~$913 million increase in brokered certificates of deposit. Time deposits other than public funds were ~~up $423.7~~down $146.6 million, or ~~12.0%~~4%, from ~~June 30, 2018,~~March 31, 2019, largely due to ~~an increase~~a decrease in ~~retail~~brokered certificates of deposit. The growth in time deposits was impacted by $715 million of maturities during the second quarter of 2019 compared to $207 million in first quarter of 2019 and $251 million during the second quarter of 2018.

At ~~June 30, 2019,~~March 31, 2020, short-term borrowings totaled ~~$1.6~~$2.7 billion, ~~up $252.9~~down $41.6 million, or ~~18%~~2%, from December 31, 2019, with a decrease in FHLB borrowings of $175 partially offset by a $134.9 million increase in federal funds purchased. Short-term borrowings increased $1.3 billion, or 92%, from March 31, 2019, ~~with increases in securities sold under repurchase agreements of $152.8 million and~~mainly due to increased FHLB borrowings increased $100.0 million. Short-term borrowings decreased $672.6 million from June 30, 2018. The decrease compared to second quarter of 2018 was due in part to a portfolio restructure late in the fourth quarter where proceeds from the sale of loans and ~~securities were used to pay down a portion of FHLB borrowings.~~higher federal funds purchased.

Average short-term borrowings of ~~$1.6~~$2.2 billion in the ~~second~~first quarter of 2020 were down $243.3 million, or 10%, compared to the fourth quarter of 2019, ~~were down $67.1~~and up $465.3 million, or 4%27%, compared to the first quarter of ~~2019, and down $371.6 million, or 19%, compared to the second quarter of 2018.~~2019.

Customer repurchase agreements and FHLB borrowings are the major sources of short-term borrowings. Customer repurchase agreements are offered mainly to commercial customers to assist them with their cash management strategies or to provide a temporary investment vehicle for their excess liquidity pending redeployment for corporate or investment purposes. While customer repurchase agreements provide a recurring source of funds to the Bank, amounts available will vary. FHLB borrowings are funds from the Federal Home Loan Bank that are collateralized by single family and commercial real estate loans included in the Bank’s loan portfolio, subject to specific criteria.

Effective January 1, 2019, the Company adopted the amended provisions of Financial Accounting Standards Codification Topic 842, “Leases,” using the modified retrospective approach, impacting the reporting and disclosures for operating leases. The core principle of Topic 842 is that a lessee should recognize in the statement of financial position a liability representing the present value of future lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset over the lease term, as well as the disclosure of key information about operating leasing arrangements. Upon adoption, the Company recorded a gross-up of assets and liabilities in its consolidated balance sheet, with approximately $116 million for right-of-use assets and $131 million of lease payment obligations offset by the elimination of $15 million of existing lease incentive and other deferred rent liabilities. Accounting for leases in accordance with Topic 842 has not had a material impact upon our consolidated results of operations, and is not expected to in future periods. Refer to Note 5 – Operating Leases for further information related to the operating lease accounting policy, practical expedient elections for adoption and operating leasing information at adoption.

In the normal course of business, the Bank enters into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of ~~their~~its customers. Such instruments are not reflected in the accompanying consolidated financial statements

until they are funded, although they expose the Bank to varying degrees of credit risk and interest rate risk in much the same way as funded loans. Under regulatory capital guidelines, the Company and Bank must include unfunded commitments meeting certain criteria in risk-weighted capital calculations.

The contract amounts of these instruments reflect the Company's exposure to credit risk. The Company undertakes the same credit evaluation in making loan commitments and assuming conditional obligations as it does for on-balance sheet instruments and may require collateral or other credit support. At March 31, 2020, the Company has a reserve for unfunded lending commitments totaling $49.0 million.

The following table shows the commitments to extend credit and letters of credit at ~~June 30, 2019~~March 31, 2020 according to expiration date.

			Expiration Date										Expiration Date
			Less than		1-3		3-5		More than				Less than		1-3		3-5		More than
(in thousands)	Total		1 year		years		years		5 years		Total		1 year		years		years		5 years
Commitments to extend credit	$	6,930,220	$	2,976,769	$	1,420,688	$	1,370,900	$	1,161,863	$	7,591,029	$	3,360,339	$	1,853,853	$	1,494,917	$	881,920
Letters of credit		359,487		278,934		30,716		49,837		—		366,112		279,944		43,299		42,869		—
Total	$	7,289,707	$	3,255,703	$	1,451,404	$	1,420,737	$	1,161,863	$	7,957,141	$	3,640,283	$	1,897,152	$	1,537,786	$	881,920

On January 1, 2020, the Company adopted Accounting Standards Codification (“ASC”) 326, “Financial Instruments – Credit Losses,” more commonly referred to as “CECL.” The provisions of this guidance required a material change to the manner in which the Company estimates and reports losses on financial instruments. Changes to the Company’s accountings policies related to CECL disclosed in Note 1 – Basis of Presentation – Critical Accounting Estimates, with further discussion of changes to significant accounting estimates noted below. There were no other material changes or developments during the reporting period with respect to methodologies that the Company uses when applying what management believes are critical accounting policies and developing critical accounting estimates as disclosed in ~~our~~its Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and with those generally practiced within the banking industry which require management to make estimates and assumptions about future events. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, and the resulting estimates form the basis for making judgments about the carrying values of certain assets and liabilities not readily apparent from other sources. Actual results could differ significantly from those estimates.

The allowance for credit losses is established in accordance with the CECL standard which introduces several additional subjective inputs to the allowance estimation process. The standard requires that management incorporate an economic forecast for a reasonable and supportable period, which is two years based on our current policy. The Company utilizes third party forecasts that consist of multiple economic scenarios, including a baseline, with a probability distribution of 50% better or worse economic performance and various upside and downside scenarios utilized at an aggregated state (or regional) levels across our footprint or national level, depending on the portfolio. The economic forecasts are generally lagging and may not incorporate all events and circumstances through the financial statement date. The Company’s management considers available forecasts, current events not captured and our specific portfolio characteristics and applies weights to the scenario output based on a best estimate of likely of outcomes. During the first quarter of 2020, the United States and global financial markets experienced unprecedented volatility, with significant uncertainty surrounding the pandemic and the resulting widespread economic shutdown, as well as the failure of the Organization of the Petroleum Exporting Countries to reach an agreement on production curtailment in response to the pandemic. Rapidly changing

economic conditions and resulting government response in the form of interest rate adjustments and several stimulus packages have introduced enhanced estimation uncertainty in the forecasts used to estimate expected credit loss. Our loss models were built using historical data that may not correlate to this unprecedented pandemic economic shutdown. The estimate of the life of a loan considers both contractual cash flows as well as estimated prepayments and forecasted draws on unfunded loan commitments that were also built on historical data that may react differently given the current environment. Such forecasted information is inherently uncertain, particularly in the volatile environment resulting from the pandemic. Forecast uncertainty includes the severity of the impact to local and global economic conditions as well as the timing of recovery, among other things. Therefore, actual result may differ significantly from management’s estimates.

The quantitative loss rate analysis is supplemented by a review of qualitative factors that considers whether conditions differ from those existing during the historical periods used in the development of the credit models. Such factors include, but are not limited to, problem loan trends, changes in loan profiles and volumes, changes in lending policies and procedures, current economic and business conditions, credit concentrations, model limitations and other factors not captured by our models. While quantitative data for these factors is used where available, there is a high level of judgment applied in these processes.

For credits that are individually evaluated, a specific allowance is calculated as the shortfall between the credit’s value and the bank’s exposure. The loan’s value is measured by either the loan’s observable market price, the fair value of the collateral of the loan (less liquidation costs) if it is collateral dependent, or by the present value of expected future cash flows discounted at the loan’s effective interest rate. Collateral on impaired loans includes, but is not limited to, commercial and residential real estate, oil and gas reserves, marine vessels, accounts receivable and other corporate assets. Values for impaired credits are highly subjective and based on information available at the time of valuation and the current resolution strategy. These values are difficult to assess and have heightened uncertainty resulting from the impact of the pandemic on market conditions. Actual results could differ from these estimates.

Management considers the appropriateness of these critical assumptions as part of its allowance review and believes the ACL level is appropriate based on information available through the financial statement date. Refer to Note 4 – Loans and Allowance for Credit Losses for further discussion of significant assumptions used in the current allowance calculation.

Goodwill, which represents the excess of cost over the fair value of the net assets of an acquired business, is not amortized but is assessed for impairment on an annual basis, or more often if events or circumstances indicate there may be impairment, referred to as a triggering event. Upon the occurrence of a triggering event, accounting guidance allows the Company to assess qualitative factors to determine whether it is more likely than not, or a greater than a 50% likelihood, that the fair value of the entity is less than its carrying amount, including goodwill. When it is more likely than not that an impairment has occurred, the Company is required to perform a quantitative analysis and, if necessary, adjust the carrying amount of goodwill and record a goodwill impairment loss. The Company has qualitatively assessed and concluded that there is not a greater than 50% likelihood that the fair value of the entity is less than the its carrying amount as of March 31, 2020, given the short duration of change in macroeconomic conditions and excess of value as of the latest annual test performed as of September 30, 2019. Management will continue to monitor and assess the impacts of the pandemic on the Company’s value and, should conditions be more severe and/or recovery extend for a longer period than currently anticipated, our assessment may change which could have an impact on future earnings.

Refer to Note 1615 to our Consolidated Financial Statements included elsewhere in this report.

The Company’s net income is materially dependent onupon net interest income. The Company’s primary market risk is interest rate risk which stems from uncertainty with respect to absolute and relative levels of future market interest rates that affect financial products and services. In order to manage the exposures to interest rate risk, management measures the sensitivity of net interest income and cash flows under various market interest rate scenarios, establishes interest rate risk management policies and implements asset/liability management strategies designed to produce a relatively stable net interest margin under varying rate environments.

The following table presents an analysis of our interest rate risk as measured by the estimated changes in net interest income resulting from an instantaneous and sustained parallel shift in rates at ~~June 30, 2019.~~March 31, 2020. Shifts are measured in 100 basis point increments in a range from -500 to +500 basis points from base case, with ~~-100~~+100 through +300 basis points presented in the table below. Our interest rate sensitivity modeling incorporates a number of assumptions including loan and deposit repricing characteristics, the rate of loan prepayments and other factors. The base scenario assumes that the current interest rate environment is held constant over a 24-month forecast period and is the scenario to which all others are compared in order to measure the change in net interest income. Policy limits on the change in net interest income under a variety of interest rate scenarios are approved by the ~~Board.~~Board of Directors. All policy scenarios assume a static volume forecast where the balance sheet is held constant, although other scenarios are modeled.

	Estimated Increase						Estimated Increase
	(Decrease) in NII						(Decrease) in NII
Change in Interest Rates	Year 1			Year 2			Year 1			Year 2
(basis points)
-100		(4.26	)%		(6.21	)%
+100		3.10	%		4.30	%		2.70	%		5.22	%
+200		5.59	%		7.57	%		5.70	%		10.37	%
+300		7.80	%		10.35	%		8.42	%		14.91	%

The results indicate a general asset sensitivity across most scenarios driven primarily by repricing in variable rate loans and a funding mix which is composed of material volumes of non-interest bearing and lower rate sensitive deposits. When deemed to be prudent, management has taken actions to mitigate exposure to interest rate risk with on- or off-balance sheet financial instruments and intends to do so in the future. Possible actions include, but are not limited to, changes in the pricing of loan and deposit products, modifying the composition of earning assets and interest-bearing liabilities, and adding to, modifying or terminating existing interest rate swap agreements or other financial instruments used for interest rate risk management ~~purposes~~.purposes.

Even if interest rates change in the designated amounts, there can be no assurance that our assets and liabilities would perform as anticipated. Additionally, a change in the U.S. Treasury rates in the designated amounts accompanied by a change in the shape of the U.S. Treasury yield curve would cause significantly different changes to net interest income than indicated above. Strategic management of our balance sheet and earnings is fluid and would be adjusted to accommodate these movements. As with any method of measuring interest rate risk, certain shortcomings are inherent in the methods of analysis presented above. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Certain assets such as adjustable-rate loans have features which restrict changes in interest rates on a short-term basis and over the life of the asset. Also, the ability of many borrowers to service their debt may decrease in the event of an interest rate increase. We consider all of these factors in monitoring exposure to interest rate risk.

In July 2017, the United Kingdom Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to ~~our market risk should be read in conjunction with our audited consolidated financial statements, related notes and management’s discussion and analysis included in our Annual Report on Form 10-K~~stop compelling banks to submit rates for the ~~year ended December~~calculation of LIBOR after 2021. At March 31, ~~2018.~~2020, approximately 32% of our loan portfolio consisted of variable rate loans tied to LIBOR, along with related derivatives and other financial instruments. During the third quarter of 2019, the Company began transition activities by modifying documents to include pre-cessation fallback trigger language in all new and renewed loan and derivative transactions that reference LIBOR. Our Libor transition team is continuing to monitor developments and is taking steps to ensure readiness when the LIBOR benchmark rate is discontinued.

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by the Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~June 30, 2019,~~March 31, 2020, the Company’s disclosure controls and procedures were effective.

Our management, including the Chief Executive Officer and Chief Financial Officer, identified no change in our internal control over financial reporting that occurred during the three month period ended ~~June 30, 2019,~~March 31, 2020, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. Consideration by management was given to operational changes that were made in response to the COVID-19 pandemic.

The Company, including subsidiaries, is party to various legal proceedings arising in the ordinary course of business. We do not believe that loss contingencies, if any, arising from pending litigation and regulatory matters will have a material adverse effect on our consolidated financial position or liquidity.

The Company disclosed risk factors in its Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. The risks described may not be the only risks facing us. Additional risks and uncertainties not currently known to us or that are currently considered to not be material also may materially adversely affect our business, financial condition, and/or operating results. The following risk factors have been included in this Quarterly Report on Form 10-Q in response to the global market disruptions that have resulted from the COVID-19 pandemic.

The COVID-19 pandemic has adversely impacted our business and financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.

The COVID-19 pandemic is creating extensive disruptions to the global economy and to the lives of individuals throughout the world. Governments, businesses, and the public are taking unprecedented actions to contain the spread of COVID-19 and to mitigate its effects, including quarantines, travel bans, shelter-in-place orders, closures of businesses and schools, fiscal stimulus, and legislation designed to deliver monetary aid and other relief. While the scope, duration, and full effects of COVID-19 are rapidly evolving and not fully known, the pandemic and related efforts to contain it have disrupted global economic activity, adversely affected the functioning of financial markets, impacted interest rates, increased economic and market uncertainty, and disrupted trade and supply chains. If these effects continue for a prolonged period or result in sustained economic stress or recession, many of the risk factors identified in the “Risk Factors” section included in our Annual Report on Form 10-K for the year ended December 31, 2019 could be exacerbated and such effects could have a material adverse impact on us in a number of ways related to credit, collateral, customer demand, funding, operations, interest rate risk and human capital as described in more detail below.

Credit Risk. Our risks of timely loan repayment and the value of collateral supporting the loans are affected by the strength of our borrowers’ business. Concern about the spread of COVID-19 has caused and is likely to continue to cause business shutdowns, limitations on commercial activity and financial transactions, labor shortages, supply chain interruptions, increased unemployment and commercial property vacancy rates, reduced profitability and ability for property owners to make mortgage payments, and overall economic and financial market instability, all of which may cause our customers to be unable to make scheduled loan payments. If the effects of COVID-19 result in widespread and sustained repayment shortfalls on loans in our portfolio, we could incur significant delinquencies, foreclosures and credit losses, particularly if the available collateral is insufficient to cover our exposure. The future effects of COVID-19 on economic activity could negatively affect the collateral values associated with our existing loans, the ability to liquidate the real estate collateral securing our residential and commercial real estate loans, our ability to maintain loan origination volume and to obtain additional financing, the future demand for or profitability of our lending and services, and the financial condition and credit risk of our customers. Further, in the event of delinquencies, regulatory changes and policies designed to protect borrowers may slow or prevent us from making our business decisions or may result in a delay in our taking certain remediation actions, such as foreclosure. In addition, we have unfunded commitments to extend credit to customers. During a challenging economic environment like now, our customers are more dependent on our credit commitments and increased borrowings under these commitments could adversely impact our liquidity. Furthermore, in an effort to support our communities during the pandemic, we are participating in the Paycheck Protection Program (“PPP”) under the CARES Act whereby loans to small businesses are made and those loans are subject to the regulatory requirements that would require forbearance of loan payments for a specified time or that would limit our ability to pursue all available remedies in the event of a loan default. If the borrower under the PPP loan fails to qualify for loan forgiveness, we are at the heightened risk of holding these loans at unfavorable interest rates as compared to the loans to customers that we would have otherwise extended credit.

Strategic Risk. Our financial condition and results of operations may be affected by a variety of external factors that may affect the price or marketability of our products and services, changes in interest rates that may increase our funding costs, reduced demand for our financial products due to economic conditions and the various response of governmental and nongovernmental authorities. In recent weeks, the COVID-19 pandemic has significantly increased economic and demand uncertainty and has led to severe disruption and volatility in the global capital markets. Furthermore, many of the governmental actions in response to the pandemic have been directed toward curtailing household and business activity to contain COVID-19. These actions have been rapidly

changing. For example, in many of our markets, local governments have acted to temporarily close or restrict the operations of most businesses. The future effects of COVID-19 on economic activity could negatively affect the future banking products we provide, including a decline in loan originations.

Operational Risk. Current and future restrictions on our workforce’s access to our facilities could limit our ability to meet customer servicing expectations and have a material adverse effect on our operations. We rely on business processes and branch activity that largely depend on people and technology, including access to information technology systems as well as information, applications, payment systems and other services provided by third parties. In response to COVID-19, we have modified our business practices with a portion of our employees working remotely from their homes to have our operations uninterrupted as much as possible. Further, technology in employees’ homes may not be as robust as in our offices and could cause the networks, information systems, applications, and other tools available to employees to be more limited or less reliable than in our offices. The continuation of these work-from-home measures also introduces additional operational risk, including increased cybersecurity risk. These cyber risks include greater phishing, malware, and other cybersecurity attacks, vulnerability to disruptions of our information technology infrastructure and telecommunications systems for remote operations, increased risk of unauthorized dissemination of confidential information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a security breach resulting in destruction or misuse of valuable information, and potential impairment of our ability to perform critical functions, including wiring funds, all of which could expose us to risks of data or financial loss, litigation and liability and could seriously disrupt our operations and the operations of any impacted customers.

Moreover, we rely on many third parties in our business operations, including the appraiser of the real property collateral, vendors that supply essential services such as loan servicers, providers of financial information, systems and analytical tools and providers of electronic payment and settlement systems, and local and federal government agencies, offices, and courthouses. In light of the developing measures responding to the pandemic, many of these entities may limit the availability and access of their services. For example, loan origination could be delayed due to the limited availability of real estate appraisers for the collateral. Loan closings could be delayed related to reductions in available staff in recording offices or the closing of courthouses in certain counties or parishes, which slows the process for title work, mortgage and UCC filings in those counties or parishes. If the third-party service providers continue to have limited capacities for a prolonged period or if additional limitations or potential disruptions in these services materialize, it may negatively affect our operations.

Interest Rate Risk. Our net interest income, lending activities, deposits and profitability are and are likely to continue to be negatively affected by volatility in interest rates caused by uncertainties stemming from COVID-19. In March 2020, the Federal Reserve lowered the target range for the federal funds rate to a range from 0 to 0.25 percent, citing concerns about the impact of COVID-19 on markets and stress in the energy sector. A prolonged period of extremely volatile and unstable market conditions would likely increase our funding costs and negatively affect market risk mitigation strategies. Higher income volatility from changes in interest rates and spreads to benchmark indices will likely cause a loss of future net interest income and a decrease in current fair market values of our assets. Fluctuations in interest rates will impact both the level of income and expense recorded on most of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, which in turn could have a material adverse effect on our net income, operating results, or financial condition.

Because there have been no comparable recent global pandemics that resulted in similar global impact, we do not yet know the full extent of COVID-19’s effects on our business, operations, or the global economy as a whole. Any future development will be highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the effectiveness of our work from home arrangements, third party providers’ ability to support our operation, and any actions taken by governmental authorities and other third parties in response to the pandemic. The uncertain future development of this crisis could materially and adversely affect our business, operations, operating results, financial condition, liquidity or capital levels.

Our loan portfolio contains several industry and collateral concentrations including, but not limited to, commercial and residential real estate, energy, healthcare and hospitality. Due to the exposure in these concentrations, disruptions in markets, economic conditions, including those resulting from the global response to COVID-19, changes in laws or regulations or other events could cause a significant impact on the ability of borrowers to repay and may have a material adverse effect on our business, financial condition and results of operations.

A substantial portion of our loan portfolio is secured by real estate. In weak economies, or in areas where real estate market conditions are distressed, we may experience a higher than normal level of nonperforming real estate loans. The collateral value of the portfolio and the revenue stream from those loans could come under stress, and additional provisions for the allowance for credit losses could be necessitated. Our ability to dispose of foreclosed real estate at prices at or above the respective carrying values could also be impaired, causing additional losses.

At March 31, 2020, energy or energy-related loans comprised approximately 4.4% of our loan portfolio. Weakness in the oil and gas sector continues to impact many energy-related entities’ profitability, liquidity and/or enterprise value. Global markets for oil and gas have and may continue to be impacted by the coronavirus pandemic and/or other events beyond our control. Further volatility in commodity prices could have a negative impact on the U.S. economy and, in particular, the economies of energy-dominant states such as Texas and Louisiana, two of our core markets. Such circumstances could have a material adverse effect on the performance of energy-related businesses and other commercial segments in these markets, and, in turn, on our financial condition and results of operations.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Mississippi		64-0693170
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Hancock Whitney Plaza, 2510 14^th Street, Gulfport, Mississippi		39501
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, par value $3.33 per share	HWC	Nasdaq


~~Title of each class~~	~~Trading symbol(s)~~	~~Name of each exchange on which registered~~
~~Common stock, par value $3.33 per share~~	~~HWC~~	~~Nasdaq~~

Part I. Financial Information		Page Number
ITEM 1.	Financial Statements	4
	Consolidated Balance Sheets (unaudited) – ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	4
	Consolidated Statements of Income (unaudited) – Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	5
	Consolidated Statements of Comprehensive Income (unaudited) – Three ~~and Six~~ Months Ended ~~June 30,~~March 31,2020 and 2019 ~~and 2018~~	6
	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) – Three ~~and Six~~ Months Ended ~~June 30,~~March 31,2020 and 2019 ~~and 2018~~	7
	Consolidated Statements of Cash Flows (unaudited) – ~~Six~~Three Months Ended ~~June 30,~~March 31,2020 and 2019 ~~and 2018~~	8
	Notes to Consolidated Financial Statements (unaudited) – ~~June 30,~~March 31,2020 and 2019 ~~and 2018~~	9
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3639
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	5962
ITEM 4.	Controls and Procedures	5963
Part II. Other Information
ITEM 1.	Legal Proceedings	6164
ITEM 1A.	Risk Factors	6164
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6166
ITEM 3.	Default on Senior Securities	N/A
ITEM 4.	Mine Safety Disclosures	N/A
ITEM 5.	Other Information	N/A
ITEM 6.	Exhibits	6166
Signatures		6267

(in thousands)
Goodwill balance at December 31, 2017	$	745,523
Initial goodwill recorded - acquisition of trust and asset management business		45,634
Measurement period adjustments - acquisition of trust and asset management business		(185	)
Goodwill balance at December 31, 2018	$	790,972
Final settlement of cash consideration - acquisition of trust and asset management business		1,112
Goodwill balance at June 30, 2019	$	792,084

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

Securities Held to Maturity
(in thousands)	June 30, 2019								December 31, 2018
			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. Treasury and government agency securities	$	50,000		—		119	$	49,881	$	50,000	$	—	$	478	$	49,522
Municipal obligations		653,105		21,047		86		674,066		688,201		2,347		9,503		681,045
Residential mortgage-backed securities		582,429		9,126		791		590,764		640,393		1,461		6,117		635,737
Commercial mortgage-backed securities		511,138		11,685		619		522,204		357,175		376		10,882		346,669
Collateralized mortgage obligations		1,138,595		7,720		3,829		1,142,486		1,243,778		1,598		22,493		1,222,883
	$	2,935,267	$	49,578	$	5,444	$	2,979,401	$	2,979,547	$	5,782	$	49,473	$	2,935,856

(dollars in thousands)	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities for operating leases	$	3,870	$	7,880
Right of use assets obtained in exchange for lease liabilities	$	1,105	$	117,723

				June 30, 2019
Weighted average remaining lease term (in years)				12.93
Weighted average discount rate				3.55	%

(dollars in thousands)
2019	$	8,393
2020		15,779
2021		15,085
2022		14,889
2023		13,525
Thereafter		96,994
Total		164,665
Present value discount		(35,947	)
Lease liability	$	128,718

(in thousands)
Balance at December 31, 2017	$	—
Entry into derivative contract		7,304
Balance at December 31, 2018		7,304
Cash settlements		(843	)
Losses included in earnings		141
Balance at June 30, 2019	$	6,602

($ in thousands)
	Fair Value
Level 3 Class	March 31, 2020		December 31, 2019
Derivative liability	$	5,345	$	5,704
Valuation technique	Discounted cash flow		Discounted cash flow
Unobservable inputs:
Visa Class A appreciation – range	6% - 18%		6% - 18%
Visa Class A appreciation – weighted average	12%		12%
Conversion rate – range	1.63x - 1.59x		1.63x - 1.59x
Conversion rate – weighted average	1.616x		1.616x
Time until resolution	9 - 33 months		12 - 36 months

(in thousands)	December 31, 2019		January 1, 2020		CECL adoption impact
Assets and Liabilities
Allowance for loan and lease losses	$	191,251	$	240,662	$	49,411
Reserve for unfunded lending commitments		3,974		31,304		27,330
Allowance for credit losses	$	195,225	$	271,966	$	76,741
Retained Earnings
Allowance for credit loss increase					$	76,741
Balance sheet reclassification						(19,767	)
Total pretax impact						56,974
Income tax impact						(12,888	)
Decrease to retained earnings					$	44,086

	March 31, 2020
(in millions)	Total Available		Amount Used		Net Availability
Common Share Data
Free Securities	$	2,496	$	—	$	2,496
External Sources
Federal Home Loan Bank		6,235		3,350		2,885
Federal Reserve Bank		4,388		—		4,388
Brokered Deposits		3,751		1,079		2,672
Other		1,504		—		1,504
Total Liquidity	$	18,374	$	4,429	$	13,945

	Total number of shares or units purchased		Average price paid per share		Total number of shares purchased as part of a publicly announced plan or program		Maximum number of shares that may yet be purchased under such plans or programs
January 1, 2020 - January 31, 2020		315,851	$	40.26		315,851		1,572,279
February 1 - February 29, 2020		—		—		—		1,572,279
March 1 - March 31, 2020		1,001,472	$	34.07		1,001,472		570,807
		1,317,323	$	35.56		1,317,323

Exhibit Number	Description	Filed Herewith	Form	Exhibit	Filing Date
2.1	Agreement and Plan of Merger, dated as of April 30, 2019, by and between Hancock Whitney Corporation and MidSouth Bancorp, Inc.		8-K	2.1	5/2/2019
3.1	Composite Articles of the Company		8-K	3.1	5/24/2018
3.2	Amended and Restated Bylaws		8-K	3.2	5/24/2018
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101	Inline XBRL Interactive Data	X
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in Inline XBRL	X

Hancock Whitney Corporation

By:		/s/ John M. Hairston
		John M. Hairston
		President & Chief Executive Officer
		(Principal Executive Officer)

		/s/ Michael M. Achary
		Michael M. Achary
		Senior Executive Vice President & Chief Financial Officer (Principal Financial Officer)


		/s/ Stephen E. Barker
		Stephen E. Barker
		Executive Vice President, ~~& Chief~~Senior Accounting ~~Officer~~ ~~(Principal~~and Finance Executive (Principal Accounting Officer)

		~~August~~May 6, ~~2019~~2020