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~~definitions 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.

~~86,412,669~~86,826,483 common shares were outstanding at October 31, ~~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

AMERIBOR - Index created by the American Financial Exchange as a potential replacement for LIBOR; calculated daily as the volume-weighted average interest rate of the overnight unsecured loans on American Financial Exchange

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

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.

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

Excess Liquidity – deposits held at the Federal Reserve above $200 million, plus excess investments in the securities portfolio above normal cash flows

Federal Reserve Board – The 7-member Board of Governors that oversees the Federal Reserve System, establishes

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

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

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 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

Structured Solutions – longer-term contractual payment modifications of original loan agreement

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

	September 30,			December 31,			September 30,			December 31,
(in thousands, except per share data)	2020			2019			2021			2020
ASSETS
Cash and due from banks	$	484,315		$	432,104		$	527,880		$	526,306
Interest-bearing bank deposits		778,363			109,961			3,062,325			1,333,352
Federal funds sold		694			268			456			434
Securities available for sale, at fair value (amortized cost of $5,410,502 and $4,637,610)		5,647,315			4,675,304
Securities held to maturity (fair value of $1,517,688 and $1,611,004)		1,408,961			1,568,009
Securities available for sale, at fair value (amortized cost of $6,943,511 and $5,766,234)								7,000,921			5,999,327
Securities held to maturity (fair value of $1,385,967 and $1,467,581)								1,307,701			1,357,170
Loans held for sale		103,566			55,864			90,618			136,063
Loans		22,240,204			21,212,755			20,886,015			21,789,931
Less: allowance for loan losses		(448,674	)		(191,251	)		(371,521	)		(450,177	)
Loans, net		21,791,530			21,021,504			20,514,494			21,339,754
Property and equipment, net of accumulated depreciation of $266,241 and $249,527		384,329			380,209
Right of use assets, net of accumulated amortization of $20,309 and $12,194		114,420			110,023
Property and equipment, net of accumulated depreciation of $272,213 and $271,801								350,554			380,516
Right of use assets, net of accumulated amortization of $31,365 and $23,330								98,419			110,691
Prepaid expenses		40,003			40,178			40,329			41,443
Other real estate and foreclosed assets, net		11,640			30,405			8,423			11,648
Accrued interest receivable		112,686			92,037			99,314			104,268
Goodwill		855,453			855,453			855,453			855,453
Other intangible assets, net		91,505			106,807			74,146			86,892
Life insurance contracts		611,713			608,063			661,770			615,780
Funded pension assets, net		191,946			185,791			220,121			171,175
Other assets		564,885			328,777			405,384			568,330
Total assets	$	33,193,324		$	30,600,757		$	35,318,308		$	33,638,602
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
Noninterest-bearing	$	11,881,548		$	8,775,632		$	13,653,376		$	12,199,750
Interest-bearing		15,149,111			15,027,943			15,554,781			15,498,127
Total deposits		27,030,659			23,803,575			29,208,157			27,697,877
Short-term borrowings		1,906,895			2,714,872			1,745,228			1,667,513
Long-term debt		385,887			233,462			248,011			378,322
Accrued interest payable		7,336			10,200			3,060			4,315
Lease liabilities		134,007			127,703			119,250			130,627
Deferred tax liability, net		46,665			37,721			31,250			49,406
Other liabilities		306,231			205,539			333,586			271,517
Total liabilities		29,817,680			27,133,072			31,688,542			30,199,577
Stockholders' equity:
Common stock		309,513			309,513			309,513			309,513
Capital surplus		1,755,315			1,736,664			1,774,874			1,757,937
Retained earnings		1,211,878			1,476,232			1,545,181			1,291,506
Accumulated other comprehensive income (loss), net		98,938			(54,724	)
Accumulated other comprehensive income, net								198			80,069
Total stockholders' equity		3,375,644			3,467,685			3,629,766			3,439,025
Total liabilities and stockholders' equity	$	33,193,324		$	30,600,757		$	35,318,308		$	33,638,602
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		92,947			92,947			92,947			92,947
Common shares outstanding		86,400			87,515			86,823			86,728

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands, except per share data)

2020

2019

2020

2019

Interest income:

Loans, including fees

$
220,392

$
243,875

$
688,032

$
725,390

Loans held for sale

833

592

2,104

1,189

Securities-taxable

30,863

32,724

95,172

94,107

Securities-tax exempt

4,831

5,058

14,629

15,715

Short-term investments

124

915

791

3,424

Total interest income

257,043

283,164

800,728

839,825

Interest expense:

Deposits

14,783

49,220

76,349

145,201

Short-term borrowings

1,673

7,729

8,388

23,658

Long-term debt

5,404

3,276

11,754

8,905

Total interest expense

21,860

60,225

96,491

177,764

Net interest income

235,183

222,939

704,237

662,061

Provision for credit losses

24,999

12,421

578,690

38,552

Net interest income (loss) after provision for credit losses

210,184

210,518

125,547

623,509

Noninterest income:

Service charges on deposit accounts

18,440

21,892

56,795

62,982

Trust fees

14,424

15,098

43,390

46,126

Bank card and ATM fees

17,222

17,154

50,541

49,063

Investment and annuity fees and insurance commissions

5,988

7,048

18,504

20,167

Secondary mortgage market operations

12,875

5,713

28,736

13,872

Other income

14,799

16,325

44,112

40,773

Total noninterest income

83,748

83,230

242,078

232,983

Noninterest expense:

Compensation expense

97,095

93,858

286,922

265,573

Employee benefits

20,761

18,622

64,892

57,240

Personnel expense

117,856

112,480

351,814

322,813

Net occupancy expense

13,191

13,156

39,272

38,101

Equipment expense

5,355

4,685

14,724

13,706

Data processing expense

21,888

21,532

65,185

60,951

Professional services expense

14,372

17,704

35,098

35,537

Amortization of intangible assets

4,788

4,889

15,302

15,074

Deposit insurance and regulatory fees

4,108

3,995

15,039

14,156

Other real estate and foreclosed asset (income) expense

(482
)

2,055

9,188

1,459

Other expense

14,698

33,058

50,026

71,024

Total noninterest expense

195,774

213,554

595,648

572,821

Income (loss) before income taxes

98,158

80,194

(228,023
)

283,671

Income taxes expense (benefit)

18,802

12,387

(79,274
)

48,423

Net income (loss)

$
79,356

$
67,807

$
(148,749
)

$
235,248

Earnings (loss) per common share-basic

$
0.90

$
0.77

$
(1.73
)

$
2.69

Earnings (loss) per common share-diluted

$
0.90

$
0.77

$
(1.73
)

$
2.69

Dividends paid per share

$
0.27

$
0.27

$
0.81

$
0.81

Weighted average shares outstanding-basic

86,358

86,377

86,614

85,934

Weighted average shares outstanding-diluted

86,400

86,462

86,614

86,010

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2020

2019

2020

2019

Net income (loss)

$
79,356

$
67,807

$
(148,749
)

$
235,248

Other comprehensive income (loss) before income taxes:

Net change in unrealized gain or loss on securities available for sale and cash flow hedges

425

34,159

217,254

160,627

Reclassification of net gain or loss realized and included in earnings

(4,076
)

3,280

(6,593
)

11,483

Valuation adjustment to employee benefit plan

—

(7,015
)

(10,251
)

(7,015
)
Amortization of unrealized net loss or gain on securities transferred to held to maturity

(89
)

954

(378
)

2,435

Other comprehensive income (loss) before income taxes

(3,740
)

31,378

200,032

167,530

Income tax expense

48

7,331

46,370

37,977

Other comprehensive income (loss) net of income taxes

(3,788
)

24,047

153,662

129,553

Comprehensive income

$
75,568

$
91,854

$
4,913

$
364,801

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands, except per share data)	2021			2020			2021			2020
Interest income:
Loans, including fees	$	204,102		$	220,392		$	626,881		$	688,032
Loans held for sale		635			833			1,954			2,104
Securities-taxable		33,936			30,863			98,287			95,172
Securities-tax exempt		4,724			4,831			14,269			14,629
Short-term investments		1,020			124			2,111			791
Total interest income		244,417			257,043			743,502			800,728
Interest expense:
Deposits		5,090			14,783			21,381			76,349
Short-term borrowings		1,470			1,673			4,558			8,388
Long-term debt		3,148			5,404			13,624			11,754
Total interest expense		9,708			21,860			39,563			96,491
Net interest income		234,709			235,183			703,939			704,237
Provision for credit losses		(26,955	)		24,999			(49,095	)		578,690
Net interest income after provision for credit losses		261,664			210,184			753,034			125,547
Noninterest income:
Service charges on deposit accounts		21,159			18,440			59,686			56,795
Trust fees		16,041			14,424			47,351			43,390
Bank card and ATM fees		19,833			17,222			58,436			50,541
Investment and annuity fees and insurance commissions		7,167			5,988			21,956			18,504
Secondary mortgage market operations		6,972			12,875			31,238			28,736
Securities transactions, net		—			376			333			488
Other income		22,189			14,423			55,722			43,624
Total noninterest income		93,361			83,748			274,722			242,078
Noninterest expense:
Compensation expense		92,601			97,095			289,034			286,922
Employee benefits		19,377			20,761			85,213			64,892
Personnel expense		111,978			117,856			374,247			351,814
Net occupancy expense		11,974			13,191			37,839			39,272
Equipment expense		4,894			5,355			14,067			14,724
Data processing expense		24,766			21,888			71,598			65,185
Professional services expense		12,748			14,372			37,472			35,098
Amortization of intangible assets		4,082			4,788			12,746			15,302
Deposit insurance and regulatory fees		3,680			4,108			10,042			15,039
Other real estate and foreclosed assets expense (income)		(376	)		(482	)		(456	)		9,188
Other expense		20,957			14,698			66,990			50,026
Total noninterest expense		194,703			195,774			624,545			595,648
Income (loss) before income taxes		160,322			98,158			403,211			(228,023	)
Income taxes expense (benefit)		30,740			18,802			77,739			(79,274	)
Net income (loss)	$	129,582		$	79,356		$	325,472		$	(148,749	)
Earnings (loss) per common share-basic	$	1.46		$	0.90		$	3.67		$	(1.73	)
Earnings (loss) per common share-diluted	$	1.46		$	0.90		$	3.67		$	(1.73	)
Dividends paid per share	$	0.27		$	0.27		$	0.81		$	0.81
Weighted average shares outstanding-basic		86,834			86,358			86,800			86,614
Weighted average shares outstanding-diluted		87,006			86,400			86,951			86,614

Consolidated Statements of ~~Changes in Stockholders’ Equity~~Comprehensive Income

Three Months Ended September 30, 2020 and 2019

Accumulated

Common Stock

Other

(in thousands, except per share data)

Shares
Issued

Amount

Capital
Surplus

Retained
Earnings

Comprehensive
Income (Loss), Net

Total

Balance, June 30, 2020

92,947

$
309,513

$
1,747,640

$
1,156,278

$
102,726

$
3,316,157

Net income

—

—

—

79,356

—

79,356

Other comprehensive loss

—

—

—

—

(3,788
)

(3,788
)
Comprehensive income

—

—

—

79,356

(3,788
)

75,568

Cash dividends declared ($0.27 per common share)

—

—

—

(23,803
)

—

(23,803
)
Common stock activity, long-term incentive plans

—

—

6,595

47

—

6,642

Issuance of stock from dividend reinvestment and stock purchase plans

—

—

1,080

—

—

1,080

Balance, September 30, 2020

92,947

$
309,513

$
1,755,315

$
1,211,878

$
98,938

$
3,375,644

Balance, June 30, 2019

87,903

$
292,716

$
1,737,492

$
1,363,910

$
(75,203
)

$
3,318,915

Net income

—

—

—

67,807

—

67,807

Other comprehensive income

—

—

—

—

24,047

24,047

Comprehensive income

—

—

—

67,807

24,047

91,854

Cash dividends declared ($0.27 per common share)

—

—

—

(23,597
)

—

(23,597
)
Common stock issued in business combination

5,044

16,797

177,052

—

—

193,849

Common stock activity, long-term incentive plan

—

—

4,407

63

—

4,470

Issuance of stock from dividend reinvestment and stock purchase plans

—

—

889

—

—

889

Balance, September 30, 2019

92,947

$
309,513

$
1,919,840

$
1,408,183

$
(51,156
)

$
3,586,380

Nine Months Ended September 30, 2020 and 2019

Accumulated

Common Stock

Other

(in thousands, except per share data)

Shares
Issued

Amount

Capital
Surplus

Retained
Earnings

Comprehensive
Income (Loss), Net

Total

Balance, December 31, 2019

92,947

$
309,513

$
1,736,664

$
1,476,232

$
(54,724
)

$
3,467,685

Net loss

—

—

—

(148,749
)

—

(148,749
)
Other comprehensive income

—

—

—

—

153,662

153,662

Comprehensive income

—

—

—

(148,749
)

153,662

4,913

Cumulative effect of change in accounting principle

—

—

—

(44,087
)

—

(44,087
)
Cash dividends declared ($0.81 per common share)

—

—

—

(71,620
)

—

(71,620
)
Common stock activity, long-term incentive plans

—

—

16,159

102

—

16,261

Net settlement of accelerated share
repurchase agreement (1,001,472 shares)

—

—

12,110

—

—

12,110

Repurchase of common stock

—

—

(12,716
)

—

—

(12,716
)
Issuance of stock from dividend reinvestment and stock purchase plans

—

—

3,098

—

—

3,098

Balance, September 30, 2020

92,947

$
309,513

$
1,755,315

$
1,211,878

$
98,938

$
3,375,644

Balance, December 31, 2018

87,903

$
292,716

$
1,725,741

$
1,243,592

$
(180,709
)

$
3,081,340

Net income

—

—

—

235,248

—

235,248

Other comprehensive income

—

—

—

—

129,553

129,553

Comprehensive income

—

—

—

235,248

129,553

364,801

Cash dividends declared ($0.81 per common share)

—

—

—

(70,771
)

—

(70,771
)
Common stock issued in business combination

5,044

16,797

177,052

—

—

193,849

Common stock activity, long-term incentive plan

—

—

14,355

114

—

14,469

Issuance of stock from dividend reinvestment and stock purchase plans

—

—

2,692

—

—

2,692

Balance, September 30, 2019

92,947

$
309,513

$
1,919,840

$
1,408,183

$
(51,156
)

$
3,586,380

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2021			2020			2021			2020
Net income (loss)	$	129,582		$	79,356		$	325,472		$	(148,749	)
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain or loss on securities available for sale and cash flow hedges		(48,569	)		425			(143,924	)		217,254
Reclassification of net income realized and included in earnings		(6,425	)		(4,076	)		(9,337	)		(6,593	)
Valuation adjustments to pension plan attributable to the Voluntary Early Retirement Incentive Program (VERIP) and curtailment		—			—			59,606			—
Other valuation adjustments to employee benefit plans		—			—			(10,651	)		(10,251	)
Amortization of unrealized net gain on securities transferred to held to maturity		(33	)		(89	)		(134	)		(378	)
Other comprehensive income (loss) before income taxes		(55,027	)		(3,740	)		(104,440	)		200,032
Income tax expense (benefit)		(12,363	)		48			(24,569	)		46,370
Other comprehensive income (loss) net of income taxes		(42,664	)		(3,788	)		(79,871	)		153,662
Comprehensive income	$	86,918		$	75,568		$	245,601		$	4,913

Three Months Ended September 30, 2021 and 2020											Accumulated
	Common Stock										Other
(in thousands, except parenthetical share data)	Shares Issued		Amount		Capital Surplus			Retained Earnings			Comprehensive Income (Loss)			Total
Balance, June 30, 2021		92,947	$	309,513	$	1,770,973		$	1,439,553		$	42,862		$	3,562,901
Net income		—		—		—			129,582			—			129,582
Other comprehensive loss		—		—		—			—			(42,664	)		(42,664	)
Comprehensive income		—		—		—			129,582			(42,664	)		86,918
Cash dividends declared ($0.27 per common share)		—		—		—			(24,002	)		—			(24,002	)
Common stock activity, long-term incentive plans		—		—		5,432			48			—			5,480
Repurchase of common stock (56,349 shares)		—		—		(2,509	)		-			—			(2,509	)
Issuance of stock from dividend reinvestment and stock purchase plans		—		—		978			—			—			978
Balance, September 30, 2021		92,947	$	309,513	$	1,774,874		$	1,545,181		$	198		$	3,629,766
Balance, June 30, 2020		92,947	$	309,513	$	1,747,640		$	1,156,278		$	102,726		$	3,316,157
Net income		—		—		—			79,356			—			79,356
Other comprehensive loss		—		—		—			—			(3,788	)		(3,788	)
Comprehensive income		—		—		—			79,356			(3,788	)		75,568
Cash dividends declared ($0.27 per common share)		—		—		—			(23,803	)		—			(23,803	)
Common stock activity, long-term incentive plans		—		—		6,595			47			—			6,642
Issuance of stock from dividend reinvestment and stock purchase plans		—		—		1,080			—			—			1,080
Balance, September 30, 2020		92,947	$	309,513	$	1,755,315		$	1,211,878		$	98,938		$	3,375,644
Nine Months Ended September 30, 2021 and 2020
	Common Stock										Accumulated Other
(in thousands, except parenthetical share data)	Shares Issued		Amount		Capital Surplus			Retained Earnings			Comprehensive Income (Loss)			Total
Balance, December 31, 2020		92,947	$	309,513	$	1,757,937		$	1,291,506		$	80,069		$	3,439,025
Net income		—		—		—			325,472			—			325,472
Other comprehensive loss		—		—		—			—			(79,871	)		(79,871	)
Comprehensive income		—		—		—			325,472			(79,871	)		245,601
Cash dividends declared ($0.81 per common share)		—		—		—			(72,046	)		—			(72,046	)
Common stock activity, long-term incentive plans		—		—		16,506			249			—			16,755
Repurchase of common stock (56,349 shares)		—		—		(2,509	)		—			—			(2,509	)
Issuance of stock from dividend reinvestment and stock purchase plans		—		—		2,940			—			—			2,940
Balance, September 30, 2021		92,947	$	309,513	$	1,774,874		$	1,545,181		$	198		$	3,629,766
Balance, December 31, 2019		92,947	$	309,513	$	1,736,664		$	1,476,232		$	(54,724	)	$	3,467,685
Net loss		—		—		—			(148,749	)		—			(148,749	)
Other comprehensive income		—		—		—			—			153,662			153,662
Comprehensive income		—		—		—			(148,749	)		153,662			4,913
Cumulative effect of change in accounting principle		—		—		—			(44,087	)		—			(44,087	)
Cash dividends declared ($0.81 per common share)		—		—		—			(71,620	)		—			(71,620	)
Common stock activity, long-term incentive plans		—		—		16,159			102			—			16,261
Net settlement of accelerated share repurchase agreement (1,001,472 shares)		—		—		12,110			—			—			12,110
Repurchase of common stock (315,851 shares)		—		—		(12,716	)		—			—			(12,716	)
Issuance of stock from dividend reinvestment and stock purchase plans		—		—		3,098			—			—			3,098
Balance, September 30, 2020		92,947	$	309,513	$	1,755,315		$	1,211,878		$	98,938		$	3,375,644

	Nine Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2020			2019			2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(148,749	)	$	235,248		$	325,472		$	(148,749	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		22,869			22,867			21,743			22,869
Provision for credit losses		578,690			38,552			(49,095	)		578,690
Loss on other real estate and foreclosed assets		9,252			852
(Gain) loss on other real estate and foreclosed assets								(1,124	)		9,252
Gain on sale of securities		(488	)		—			(333	)		(488	)
Deferred tax expense (benefit)		(28,949	)		30,136			1,378			(28,949	)
Increase in cash surrender value of life insurance contracts		(14,443	)		(10,792	)		(21,122	)		(14,443	)
(Gain) loss on disposal of other assets		(556	)		70
Net increase in loans held for sale		(46,691	)		(46,727	)
Impairment (gain) on disposal of assets								15,165			(556	)
Loss on extinguishment of debt								4,165			—
Net (increase) decrease in loans held for sale								43,867			(46,691	)
Net amortization of securities premium/discount		30,576			23,133			38,318			30,576
Amortization of intangible assets		15,302			15,074			12,746			15,302
Stock-based compensation expense		16,661			15,497			17,270			16,661
Net change in liability from variation margin collateral		(102,501	)		(42,500	)		53,387			(102,501	)
Contribution to pension plan		—			(100,000	)
Increase (decrease) in interest payable and other liabilities		11,369			(1,632	)
Increase in other assets		(97,265	)		(10,631	)
Decrease in interest payable and other liabilities								22,037			11,369
(Increase) decrease in other assets								60,971			(97,265	)
Other, net		(17,607	)		(2,854	)		(13,970	)		(17,607	)
Net cash provided by operating activities		227,470			166,293			530,875			227,470
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of available for sale securities		211,919			143,334			198,681			211,919
Proceeds from maturities of securities available for sale		662,269			204,391			831,433			662,269
Purchases of securities available for sale		(1,667,476	)		(810,198	)		(2,235,723	)		(1,667,476	)
Proceeds from maturities of securities held to maturity		169,863			297,150			99,044			169,863
Purchases of securities held to maturity		(20,884	)		(183,626	)		(59,362	)		(20,884	)
Net (increase) decrease in short-term investments		(668,828	)		383,970
Net redemptions (purchases) of Federal Home Loan Bank stock								52,535			(12,868	)
Net increase in short-term investments								(1,728,995	)		(668,828	)
Proceeds from sales of loans and leases		301,609			111,141			12,540			301,609
Net increase in loans		(1,657,939	)		(353,971	)
Net (increase) decrease in loans								915,652			(1,657,939	)
Purchase of life insurance contracts		—			(32,788	)		(75,000	)		—
Proceeds from the surrender of life insurance contracts								44,045			—
Purchases of property and equipment		(31,214	)		(33,746	)		(12,402	)		(31,214	)
Proceeds from sales of other real estate		15,299			20,764			7,804			15,299
Cash acquired in stock-based business combination		—			28,060
Final cash settlement for acquisition of business		—			(1,112	)
Other, net		(4,412	)		(19,815	)		35,903			8,456
Net cash used in investing activities		(2,689,794	)		(246,446	)		(1,913,845	)		(2,689,794	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits		3,227,084			(229,964	)
Net increase in deposits								1,510,280			3,227,084
Net increase (decrease) in short-term borrowings		(807,977	)		452,691			77,715			(807,977	)
Proceeds from the issuance of long-term debt, net of issuance costs		166,425			11,649
Proceeds from the issuance of long-term debt								22,388			166,425
Repayments of long-term debt		(230	)		(226	)		(153,365	)		(230	)
Dividends paid		(71,620	)		(70,771	)		(72,046	)		(71,620	)
Payroll tax remitted on net share settlement of equity awards		(1,639	)		(1,594	)		(1,298	)		(1,639	)
Proceeds from exercise of stock options		—			367			439			—
Proceeds from dividend reinvestment and stock purchase plans		3,098			2,692			2,940			3,098
Settlement of forward contract portion of accelerated share repurchase		12,110			—			—			12,110
Repurchase of shares		(12,716	)		—			(2,509	)		(12,716	)
Net cash provided by financing activities		2,514,535			164,844			1,384,544			2,514,535
NET INCREASE IN CASH AND DUE FROM BANKS		52,211			84,691			1,574			52,211
CASH AND DUE FROM BANKS, BEGINNING		432,104			383,372			526,306			432,104
CASH AND DUE FROM BANKS, ENDING	$	484,315		$	468,063		$	527,880		$	484,315
SUPPLEMENTAL INFORMATION FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
Value of stock-based consideration in business combination	$	—		$	193,849
Assets acquired in settlement of loans		5,459			14,170		$	2,623		$	5,459

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, ~~2019.~~2020. 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. Further, the Company performed an interim test of goodwill impairment using a quantitative assessment, as 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, ~~2019.~~ 2020.

Beginning in the second quarter of 2021, the Company enters into mandatory delivery forward sales contracts concurrently with interest rate lock commitments for select residential mortgage banking product offerings that are expected to be sold when funded. Previously, the Company only entered into forward sales agreements on a best-efforts basis and will now utilize both types of delivery methods. With mandatory delivery contracts, the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. Forward loan sale commitments for the mandatory delivery contracts include the use of To Be Announced (“TBA”) securities to mitigate the risk of changes in value of the rate lock commitment. With the change in delivery method, the Company has elected the fair value option on funded residential mortgage loans originated for sale that are associated with forward sales contracts. For mortgage loans for which the Company has elected the fair value option, gains and losses are included in noninterest income within secondary mortgage market operations. For further discussion, see Note 6 – Derivatives and Note 14 – Fair Value Measurements.

Refer to Note 1615 – Recent Accounting Pronouncements for a discussion of accounting standards adopted during the nine months ended September 30, ~~2020~~2021 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 expected credit loss over 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 probability weighted multiple macroeconomic scenarios, and then reverts on a linear basis over four quarters to an average historical loss rate for the remaining term. 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 estimated fair value of the asset 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 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 application of these provisions 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 reassesses the potential for 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.

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 that it is more likely than not that a goodwill impairment exists. The impairment test compares the estimated fair value of a reporting unit with its net book value. If the unit’s fair value is less than its carrying value, an impairment is recognized.

The Company completed its annual impairment test of goodwill as of September 30, 2019 by performing a qualitative (“Step Zero”) assessment. The qualitative assessment involved the examination of changes in macroeconomic conditions, industry and market conditions, overall financial performance, cost factors and other relevant entity-specific events, including changes in management and other key personnel and changes in the share price of the Company’s common stock. As a result of the assessment, the Company concluded that its goodwill was not impaired.

~~During the third quarter of 2020, the Company assessed the indicators of goodwill impairment and noted certain events that indicated that~~it is “more likely than not” that a goodwill impairment exists, necessitating an interim test of impairment. Triggering events stemming from and in response to the COVID-19 pandemic include continued economic disruption, operating losses driven by a higher provision for credit losses and a lower interest rate environment, and a sustained decrease in the Company’s share price. As such, the Company performed a quantitative assessment of goodwill impairment as of September 30, 2020, which included determining the estimated fair value of the reporting unit and comparing that fair value to the reporting unit's carrying amount. The results of the test indicated that the estimated fair value of the reporting unit exceeded its carrying amount at September 30, 2020; therefore, goodwill was 0t impaired as of the testing date.

The Company used multiple approaches to measure its fair value at September 30, 2020. The primary approaches included an income approach using the discounted net present value of estimated future cash flows and a market approach using transaction or price-to-forward earnings multiples methodology using the actual price paid in recent acquisition transactions for similar entities, discounted for the current recessionary environment, neither of which resulted in impairment. The results from each of the primary approaches were weighted equally, with the valuation of the reporting unit approximately 14% in excess of net book value at September 30, 2020.

Both valuation techniques employed by the Company require significant assumptions. Depending upon the specific approach, assumptions are made regarding the economic environment, expected net interest margins, growth rates, discount rate used to present value future cash flows, asset quality metrics, control premiums, and price-to-forward earnings multiples. Changes to any one of these assumptions could result in significantly different results. Changes in the amount and/or timing of the Company’s expected future cash flows or estimated growth rates, lack of improvement and/or further decline in the price of the Company’s common stock relative to our book value per share, and/or further deterioration in the economic environment beyond current estimates could result in an impairment charge to goodwill in future reporting periods. Annual impairment testing will be performed in the fourth quarter of 2020 in coordination with our annual strategic planning process, and interim testing is expected to continue until indicators of goodwill impairment no longer exist.

On 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 net assets acquired, the Company issued approximately 5.0 million shares of our common stock, resulting in a transaction value of $193.8 million. The following table sets forth the acquisition date fair value of the assets acquired and liabilities assumed, and the resulting goodwill. The goodwill is not deductible for federal income tax purposes.

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 not material to the Company’s consolidated results of 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 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 following table presents the change in the Company’s goodwill during the year ended December 31, 2019. NaN measurement period adjustments were recorded during the nine months ended September 30, 2020.

The following tables set forth the amortized cost, gross unrealized gains and losses, and estimated fair value of debt securities classified as available for sale and held to maturity at September 30, ~~2020~~2021 and December 31, ~~2019.~~2020. Amortized cost of securities does not include accrued interest which is reflected in the accrued interest line item on the consolidated balance sheets totaling ~~$23.2 million and $23.9~~$25.0 million at September 30, ~~2020~~2021 and $24.4 million at December 31, ~~2019, respectively.~~2020.

	September 30, 2020								December 31, 2019								September 30, 2021								December 31, 2020
			Gross		Gross				Gross		Gross								Gross		Gross						Gross		Gross
Securities Available for Sale	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value		Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. Treasury and government agency securities	$	192,077	$	6,664	$	125	$	198,616	$	98,320	$	652	$	300	$	98,672	$	394,069	$	4,822	$	4,169	$	394,722	$	207,365	$	6,289	$	284	$	213,370
Municipal obligations		297,712		16,291		347		313,656		242,016		7,789		—		249,805		305,701		13,504		3,178		316,027		309,342		17,536		153		326,725
Residential mortgage-backed securities		2,536,999		70,222		531		2,606,690		1,910,909		20,268		7,020		1,924,157		3,256,700		39,681		42,988		3,253,393		2,560,249		69,570		8		2,629,811
Commercial mortgage-backed securities		1,965,664		136,056		720		2,101,000		1,570,765		19,880		4,178		1,586,467		2,838,584		81,615		35,766		2,884,433		2,323,306		135,516		3,288		2,455,534
Collateralized mortgage obligations		410,050		9,141		21		419,170		807,600		3,757		3,142		808,215		133,957		3,628		—		137,585		354,472		7,651		—		362,123
Corporate debt securities		8,000		185		2		8,183		8,000		21		33		7,988		14,500		263		2		14,761		11,500		264		—		11,764
	$	5,410,502	$	238,559	$	1,746	$	5,647,315	$	4,637,610	$	52,367	$	14,673	$	4,675,304	$	6,943,511	$	143,513	$	86,103	$	7,000,921	$	5,766,234	$	236,826	$	3,733	$	5,999,327

	September 30, 2020								December 31, 2019								September 30, 2021								December 31, 2020
			Gross		Gross				Gross		Gross								Gross		Gross						Gross		Gross
Securities Held to Maturity	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value		Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. Treasury and government agency securities	$	—	$	—	$	—	$	—	$	50,000	$	3	$	—	$	50,003	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Municipal obligations		630,894		49,348		17		680,225		641,019		27,146		69		668,096		617,289		39,989		211		657,067		627,019		51,408		2		678,425
Residential mortgage-backed securities		24,041		1,641		—		25,682		29,687		883		—		30,570		47,330		985		243		48,072		21,951		1,469		—		23,420
Commercial mortgage-backed securities		550,201		53,253		—		603,454		539,371		12,474		581		551,264		573,854		36,614		350		610,118		549,686		54,587		—		604,273
Collateralized mortgage obligations		203,825		4,502		—		208,327		307,932		3,597		458		311,071		69,228		1,482		—		70,710		158,514		2,949		—		161,463
	$	1,408,961	$	108,744	$	17	$	1,517,688	$	1,568,009	$	44,103	$	1,108	$	1,611,004	$	1,307,701	$	79,070	$	804	$	1,385,967	$	1,357,170	$	110,413	$	2	$	1,467,581

The following tables present the amortized cost and estimated fair value of debt securities available for sale and held to maturity at September 30, ~~2020~~2021 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	$	14,492	$	14,540	$	2,290	$	2,294
Due after one year through five years		239,148		258,655		636,212		670,865
Due after five years through ten years		2,066,697		2,196,332		2,805,443		2,839,375
Due after ten years		3,090,165		3,177,788		3,499,566		3,488,387
Total available for sale debt securities	$	5,410,502	$	5,647,315	$	6,943,511	$	7,000,921

Debt Securities Held to Maturity	Amortized		Fair		Amortized		Fair
(in thousands)	Cost		Value		Cost		Value
Due in one year or less	$	2,196	$	2,191	$	11,226	$	11,371
Due after one year through five years		189,141		201,869		336,328		354,897
Due after five years through ten years		636,976		701,345		548,812		587,548
Due after ten years		580,648		612,283		411,335		432,151
Total held to maturity securities	$	1,408,961	$	1,517,688	$	1,307,701	$	1,385,967

The Company held 0 securities classified as trading at September 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

The following table presents the proceeds from, gross gain on, and gross losses on sales of securities during the nine months ended September 30, ~~2020~~2021 and ~~2019.~~

	Nine Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2020		2019		2021		2020
Proceeds	$	211,919	$	143,304	$	198,681	$	211,919
Gross gains		1,984		—		1,649		1,984
Gross losses		1,496		—		1,316		1,496
Net gain					$	333	$	488

Securities with carrying values totaling ~~$3.2~~$3.6 billion and ~~$3.3~~$3.4 billion were pledged as collateral at September 30, ~~2020~~2021 and December 31, ~~2019~~2020, respectively, primarily to secure public deposits or securities sold under agreements to repurchase.

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 September 30, 2020,~~At each reporting period, the Company ~~evaluated~~evaluates 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 whether the decline in fair value was 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.~~ period presented.

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
September 30, 2020	Losses < 12 months				Losses 12 months or >				Total
September 30, 2021													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	$	44,039	$	125	$	—	$	—	$	44,039	$	125	$	199,451	$	2,712	$	32,489	$	1,457	$	231,940	$	4,169
Municipal obligations		26,010		347		—		—		26,010		347		43,297		2,098		25,243		1,080		68,540		3,178
Residential mortgage-backed securities		229,662		529		367		2		230,029		531		2,097,625		42,984		704		4		2,098,329		42,988
Commercial mortgage-backed securities		252,858		720		—		—		252,858		720		856,462		22,196		294,972		13,570		1,151,434		35,766
Collateralized mortgage obligations		3,300		21		—		—		3,300		21		—		—		—		—		—		—
Corporate debt securities		3,498		2		—		—		3,498		2		2,998		2		—		—		2,998		2
	$	559,367	$	1,744	$	367	$	2	$	559,734	$	1,746	$	3,199,833	$	69,992	$	353,408	$	16,111	$	3,553,241	$	86,103

Available for Sale
December 31, 2019	Losses < 12 months				Losses 12 months or >				Total
December 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	$	28,235		300	$	—	$	—	$	28,235	$	300	$	35,845		284	$	—	$	—	$	35,845	$	284
Municipal obligations		—		—		—		—		—		—		30,170		153		—		—		30,170		153
Residential mortgage-backed securities		420,066		5,042		399,787		1,978		819,853		7,020		530		2		760		6		1,290		8
Commercial mortgage-backed securities		458,855		3,971		14,896		207		473,751		4,178		446,190		3,288		—		—		446,190		3,288
Collateralized mortgage obligations		89,689		1,315		184,389		1,827		274,078		3,142		70		—		—		—		70		—
Corporate debt securities		1,467		33		—		—		1,467		33		2,000		—		—		—		2,000		—
	$	998,312	$	10,661	$	599,072	$	4,012	$	1,597,384	$	14,673	$	514,805	$	3,727	$	760	$	6	$	515,565	$	3,733

~~Effective January 1, 2020 and in conjunction with the adoption of CECL, and again as of September 30, 2020,~~

At each reporting period, the Company ~~evaluated~~evaluates its held to maturity municipal obligation portfolio for credit loss using probability of default and loss given default models. The models ~~were~~are run using a long-term average probability of default migration and with a probability weighting of Moody’s economic forecasts. The economic forecasts ~~were~~are largely weighted to a baseline scenario with some weight given to ~~other~~one or more upside and/or downside scenarios. ~~The September 30, 2020 forecast was further stressed by running a more severe probability of default migration.~~ The resulting credit loss was negligible for both periods presented 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
September 30, 2020	Losses < 12 months				Losses 12 months or >				Total
Held to maturity
September 30, 2021													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	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Municipal obligations		523		2		2,890		15		3,413		17		7,789		211		190		—		7,979		211
Residential mortgage-backed securities		—		—		—		—		—		—		7,821		243		—		—		7,821		243
Commercial mortgage-backed securities		222		—		—		—		222		—		11,960		350		—		—		11,960		350
Collateralized mortgage obligations		—		—		—		—		—		—		291		—		—		—		291		—
	$	745	$	2	$	2,890	$	15	$	3,635	$	17	$	27,861	$	804	$	190	$	—	$	28,051	$	804

Held to Maturity
December 31, 2019	Losses < 12 months				Losses 12 months or >				Total
Held to maturity
December 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	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Municipal obligations		4,735		38		3,143		31		7,878		69		—		—		2,381		2		2,381		2
Residential mortgage-backed securities		—		—		—		—		—		—		—		—		—		—		—		—
Commercial mortgage-backed securities		28,426		581		—		—		28,426		581		—		—		—		—		—		—
Collateralized mortgage obligations		—		—		49,110		458		49,110		458		—		—		—		—		—		—
	$	33,161	$	619	$	52,253	$	489	$	85,414	$	1,108	$	—	$	—	$	2,381	$	2	$	2,381	$	2

As of September 30, 2021 and December 31, 2020, the Company had 40115 and 28 securities, respectively, with market values below their cost basis. ~~Unrealized~~None of the unrealized losses ~~in both portfolios~~ relate primarily to ~~changes in interest rates on fixed rate debt~~the marketability of the securities ~~since~~or the ~~respective purchase dates.~~issuer’s ability to meet contractual obligations. 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~~The unrealized losses ~~relate~~were deemed to ~~the marketability of the securities or the issuers’ abilities to meet contractual obligations. The Company had adequate liquidity as of~~be non-credit related at September 30, ~~2020~~2021 and December 31, ~~2019~~2020. The Company has adequate liquidity and, ~~did~~therefore does not ~~intend~~plan to, ~~nor believe that it would~~and more likely than not, will not be required to ~~sell~~liquidate these securities before recovery of the indicated impairment. The unrealized losses on these securities were determined to be non-credit related as of December 31, 2019 and as noted above, 0 allowance for credit losses was recorded as of January 1, 2020 or September 30, 2020.

The Company generally makes loans in its market areas of south and central Mississippi; southern and central Alabama; northwest, central and south Louisiana; the northern, central and panhandle regions of 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 ~~$86.0~~$70.5 million and ~~$67.7~~$76.2 million at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Included in commercial non-real estate loans at September 30, 2021 and December 31, 2020 was $935.3 million and $2.0 billion, respectively, of Paycheck Protection Program loans, described in more detail below. The following table presents loans, net of unearned income, by portfolio class at September 30, 2021 and December 31, 2020.

	September 30,		December 31,		September 30,		December 31,
(in thousands)	2020		2019		2021		2020
Commercial non-real estate	$	10,257,788	$	9,166,947	$	9,416,990	$	9,986,983
Commercial real estate - owner occupied		2,779,407		2,738,460		2,812,926		2,857,445
Total commercial and industrial		13,037,195		11,905,407		12,229,916		12,844,428
Commercial real estate - income producing		3,406,554		2,994,448		3,467,939		3,357,939
Construction and land development		1,096,149		1,157,451		1,213,991		1,065,057
Residential mortgages		2,754,388		2,990,631		2,351,053		2,665,212
Consumer		1,945,918		2,164,818		1,623,116		1,857,295
Total loans	$	22,240,204	$	21,212,755	$	20,886,015	$	21,789,931

The following briefly describes the composition of each loan ~~category.~~category and portfolio class.

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 non-real estate loans also include loans made under the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). PPP loans are guaranteed by the SBA and are forgivable to the debtor upon satisfaction of certain criteria. The loans bear interest at 1% per annum and have two or five year terms, depending on the date of origination. These loans also earn an origination fee of 1% to, 3%, or 5%, depending on the loan ~~size, that~~size; this origination fee is deferred and amortized over the estimated life of the loan using the effective yield method.

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.~~dealerships, though the Company is no longer engaged in this type of lending and the remaining portfolio is in runoff. 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~~present activity in the allowance for credit losses (ACL) by portfolio class for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, 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~~Accounting Standards Codification (ASC) 326, ~~(CECL)~~“Financial Instruments – Credit Losses,” using a modified retrospective basis. ASC 326, commonly referred to as CECL, prescribed a change in computing allowance for credit losses from an incurred methodology to a life of loan methodology. 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~~ACL activity for the ~~day one impact of the CECL adoption, refer to Note 16 – Recent Accounting Pronouncements.~~ nine months ended September 30, 2020.

				Commercial			Total			Commercial																		Commercial			Total			Commercial
	Commercial			real estate-			commercial			real estate-			Construction												Commercial			real estate-			commercial			real estate-			Construction
	non-real			owner			and			income			and land			Residential									non-real			owner			and			income			and land			Residential
(in thousands)	estate			occupied			industrial			producing			development			mortgages			Consumer			Total			estate			occupied			industrial			producing			development			mortgages			Consumer			Total
	Nine Months Ended September 30, 2020																								Nine Months Ended September 30, 2021
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		$	149,693		$	69,134		$	218,827		$	109,474		$	26,462		$	48,842		$	46,572		$	450,177
Cumulative effect of change in accounting principle		(244	)		14,877			14,633			7,287			7,478			12,921			7,092			49,411
Charge-offs		(364,123	)		(1,828	)	$	(365,951	)		(2,211	)		(7	)		(170	)		(13,640	)		(381,979	)		(32,369	)		(1,722	)		(34,091	)		(231	)		(267	)		(218	)		(9,874	)		(44,681	)
Recoveries		4,831			659		$	5,490			46			549			1,078			4,360			11,523			6,579			363			6,942			100			1,548			933			4,636			14,159
Net provision for loan losses		401,155			41,336		$	442,491			78,661			12,325			17,613			27,378			578,468			(17,594	)		(10,642	)		(28,236	)		11,752			(5,167	)		(18,484	)		(7,999	)		(48,134	)
Ending balance - allowance for loan losses	$	148,051		$	66,021		$	214,072		$	104,652		$	29,695		$	51,773		$	48,482		$	448,674		$	106,309		$	57,133		$	163,442		$	121,095		$	22,576		$	31,073		$	33,335		$	371,521
Reserve for unfunded lending commitments:
Beginning balance	$	3,974		$	—		$	3,974		$	—		$	—		$	—		$	—		$	3,974		$	4,529		$	381		$	4,910		$	1,099		$	22,694		$	19		$	1,185		$	29,907
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		(3,786	)		187			(3,599	)		1,599			6,046			(11	)		(3,813	)		222			(176	)		(131	)		(307	)		124			(383	)		(8	)		(387	)		(961	)
Ending balance - reserve for unfunded lending commitments		5,960			475			6,435			2,048			21,704			6			1,333			31,526			4,353			250			4,603			1,223			22,311			11			798			28,946
Total allowance for credit losses	$	154,011		$	66,496		$	220,507		$	106,700		$	51,399		$	51,779		$	49,815		$	480,200		$	110,662		$	57,383		$	168,045		$	122,318		$	44,887		$	31,084		$	34,133		$	400,467
Allowance for loan losses:
Individually evaluated	$	27,304		$	1,344		$	28,648		$	24		$	169		$	416		$	456		$	29,713		$	113		$	33		$	146		$	20		$	20		$	447		$	202		$	835
Collectively evaluated		120,747			64,677			185,424			104,628			29,526			51,357			48,026			418,961			106,196			57,100			163,296			121,075			22,556			30,626			33,133			370,686
Allowance for loan losses	$	148,051		$	66,021		$	214,072		$	104,652		$	29,695		$	51,773		$	48,482		$	448,674		$	106,309		$	57,133		$	163,442		$	121,095		$	22,576		$	31,073		$	33,335		$	371,521
Reserve for unfunded lending commitments:
Individually evaluated	$	992		$	—		$	992		$	—		$	—		$	—		$	5		$	997		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated		4,968			475			5,443			2,048			21,704			6			1,328			30,529			4,353			250			4,603			1,223			22,311			11			798			28,946
Reserve for unfunded lending commitments:	$	5,960		$	475		$	6,435		$	2,048		$	21,704		$	6		$	1,333		$	31,526		$	4,353		$	250		$	4,603		$	1,223		$	22,311		$	11		$	798		$	28,946
Total allowance for credit losses	$	154,011		$	66,496		$	220,507		$	106,700		$	51,399		$	51,779		$	49,815		$	480,200		$	110,662		$	57,383		$	168,045		$	122,318		$	44,887		$	31,084		$	34,133		$	400,467
Loans:
Individually evaluated	$	73,139		$	11,124		$	84,263		$	5,549		$	1,837		$	6,064		$	3,924		$	101,637		$	5,929		$	5,618		$	11,547		$	4,004		$	127		$	5,083		$	1,315		$	22,076
Collectively evaluated		10,184,649			2,768,283			12,952,932			3,401,005			1,094,312			2,748,324			1,941,994			22,138,567			9,411,061			2,807,308			12,218,369			3,463,935			1,213,864			2,345,970			1,621,801			20,863,939
Total loans	$	10,257,788		$	2,779,407		$	13,037,195		$	3,406,554		$	1,096,149		$	2,754,388		$	1,945,918		$	22,240,204		$	9,416,990		$	2,812,926		$	12,229,916		$	3,467,939		$	1,213,991		$	2,351,053		$	1,623,116		$	20,886,015

				Commercial			Total			Commercial																		Commercial			Total			Commercial
	Commercial			real estate-			commercial			real estate-			Construction												Commercial			real estate-			commercial			real estate-			Construction
	non-real			owner			and			income			and land			Residential									non-real			owner			and			income			and land			Residential
(in thousands)	estate			occupied			industrial			producing			development			mortgages			Consumer			Total			estate			occupied			industrial			producing			development			mortgages			Consumer			Total
	Nine Months Ended September 30, 2019																								Nine Months Ended September 30, 2020
Allowance for credit losses
Allowance for loan losses:
Beginning balance	$	97,752		$	13,757		$	111,509		$	17,638		$	15,647		$	23,782		$	25,938		$	194,514		$	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		(33,382	)		(137	)		(33,519	)		(10	)		(7	)		(660	)		(13,169	)		(47,365	)		(364,123	)		(1,828	)		(365,951	)		(2,211	)		(7	)		(170	)		(13,640	)		(381,979	)
Recoveries		5,662			284			5,946			518			108			433			2,866			9,871			4,831			659			5,490			46			549			1,078			4,360			11,523
Net provision for loan losses		29,267			545			29,812			7,604			(5,982	)		(2,076	)		9,194			38,552			401,155			41,336			442,491			78,661			12,325			17,613			27,378			578,468
Ending balance	$	99,299		$	14,449		$	113,748		$	25,750		$	9,766		$	21,479		$	24,829		$	195,572
Ending balance:
Allowance:
Ending balance - allowance for loan losses																									$	148,051		$	66,021		$	214,072		$	104,652		$	29,695		$	51,773		$	48,482		$	448,674
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																										(3,786	)		187			(3,599	)		1,599			6,046			(11	)		(3,813	)		222
Ending balance - reserve for unfunded lending commitments																										5,960			475			6,435			2,048			21,704			6			1,333			31,526
Total allowance for credit losses																									$	154,011		$	66,496		$	220,507		$	106,700		$	51,399		$	51,779		$	49,815		$	480,200

Allowance for loan losses:
Individually evaluated for impairment	$	11,535		$	57		$	11,592		$	49		$	29		$	183		$	365		$	12,218		$	27,304		$	1,344		$	28,648		$	24		$	169		$	416		$	456		$	29,713
Amounts related to purchased credit impaired loans		135			172			307			40			144			8,032			300			8,823
Collectively evaluated for impairment		87,629			14,220			101,849			25,661			9,593			13,264			24,164			174,531			120,747			64,677			185,424			104,628			29,526			51,357			48,026			418,961
Total allowance	$	99,299		$	14,449		$	113,748		$	25,750		$	9,766		$	21,479		$	24,829		$	195,572
Allowance for loan losses																									$	148,051		$	66,021		$	214,072		$	104,652		$	29,695		$	51,773		$	48,482		$	448,674
Reserve for unfunded lending commitments:
Individually evaluated																									$	992		$	—		$	992		$	—		$	—		$	—		$	5		$	997
Collectively evaluated																										4,968			475			5,443			2,048			21,704			6			1,328			30,529
Reserve for unfunded lending commitments:																										5,960			475			6,435			2,048			21,704			6			1,333			31,526
Total allowance for credit losses																									$	154,011		$	66,496		$	220,507		$	106,700		$	51,399		$	51,779		$	49,815		$	480,200
Loans:
Individually evaluated for impairment	$	201,979		$	11,109		$	213,088		$	2,781		$	3,385		$	4,301		$	1,583		$	225,138		$	73,139		$	11,124		$	84,263		$	5,549		$	1,837		$	6,064		$	3,924		$	101,637
Purchased credit impaired loans		33,040			45,124			78,164			27,281			23,431			93,450			6,294			228,620
Collectively evaluated for impairment		8,657,985			2,678,146			11,336,131			3,030,506			1,163,902			2,907,207			2,144,448			20,582,194			10,184,649			2,768,283			12,952,932			3,401,005			1,094,312			2,748,324			1,941,994			22,138,567
Total loans	$	8,893,004		$	2,734,379		$	11,627,383		$	3,060,568		$	1,190,718		$	3,004,958		$	2,152,325		$	21,035,952		$	10,257,788		$	2,779,407		$	13,037,195		$	3,406,554		$	1,096,149		$	2,754,388		$	1,945,918		$	22,240,204

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 nine months ended September 30, 2020 reflects the impact of the economic shutdown in response to the pandemic and the significant drop in oil prices. The allowance for credit losses was developed using multiple Moody’s Analytics (“Moody’s) macroeconomic forecasts applied to internally developed credit models for a two year reasonable and supportable period. ~~The~~In the calculation of the September 30, 2021 allowance, the Company weighted the September 2021 baseline economic forecast, which Moody’s defines as the “most likely outcome” based on current conditions and its view of where the economy is headed, at 50%. ~~Following~~The September 2021 baseline scenario assumes: (1) coronavirus herd resiliency was achieved in late August 2021, with infection abatement in November 2021; (2) no new widespread economic shutdowns will occur in response to virus outbreaks; (3) the ~~sharp recession~~unemployment rate continues to decline, with fourth quarter 2021 averaging 4.5%, and full year 2021, 2022 and 2023 rates averaging 5.5%, 3.6% and 3.5%, respectively; (4) gross domestic product will increase an average of 6.0% in 2021, 4.3% in 2022 and 2.3% in 2023; (5) the Build Back Better infrastructure and social legislation package, forecasted to be passed in late 2021 at $2.5 trillion, will provide an additional boost to the economy; and (6) the Federal Reserve will continue to respond to the economic impact of COVID-19 by maintaining rates at or near 0 until the first half of 2020, the baseline scenario assumes a gradual recovery beginning in the second half of 2020, with the most meaningful growth occurring after a vaccine for the coronavirus becomes widely available in the second quarter of ~~2021.~~2023. The ~~upside scenario S-1 and the~~ downside scenario S-2 ~~were each~~was weighted ~~25%~~at 50% to incorporate a reasonably possible alternative ~~outcomes. The S-1 scenario reflects reasonably possible improving conditions and a quicker recovery in 2020 and in 2021 compared to the baseline.~~economic outcome. The S-2 scenario reflects ~~reasonably possible~~a slower economic recovery ~~with higher instances of infection and death, and restrictions on travel and business winding down somewhat more slowly~~ as compared to the ~~baseline.~~ baseline, with key assumptions that include a delay in infection abatement, continued supply chain disruptions, a scaled back stimulus package resulting in less of a rise in real consumer spending and a near-term rise in unemployment that impedes growth in late 2021 and in 2022. The ~~degradation in economic conditions~~modest release during the ~~nine months ended September 30, 2020 created~~third quarter of 2021 reflects improvements in the ~~need for an increased~~economic forecast. The continued elevated allowance ~~across all portfolios. The allowance for credit loss activity for the nine months ended September 30, 2020 also reflects~~level is a result of uncertainty surrounding payment performance of borrowers in certain regions and/or industries that have not returned to pre-pandemic circumstances and as the impact ~~the sale~~ of ~~$497 million~~federal stimulus diminishes and modifications expire.

~~Impaired Loans~~Nonaccrual loans and loans modified in troubled debt restructurings

The following table shows the composition of nonaccrual loans and those without an allowance for loan loss, by portfolio class. ~~Prior to the adoption of CECL, purchased credit impaired loans accounted for in pools with an accretable yield were considered to be performing. Such loans totaled $17.5 million at December 31, 2019.~~


						September 30,						December 31,
	September 30,		December 31,		2021							2020
(in thousands)	2020		2019			Total nonaccrual			Nonaccrual without allowance for loan loss			Total nonaccrual			Nonaccrual without allowance for loan loss
Commercial non-real estate	$	78,184	$	178,678	$		9,948	$		5,449	$		52,836	$		15,268
Commercial real estate - owner occupied		14,683		7,708			6,720			5,379			13,856			7,038
Total commercial and industrial		92,867		186,386			16,668			10,828			66,692			22,306
Commercial real estate - income producing		7,028		2,594			4,249			3,922			6,743			—
Construction and land development		3,234		1,217			1,238			—			2,486			1,116
Residential mortgages		43,596		39,262			25,964			1,598			40,573			1,705
Consumer		24,737		16,374			12,238			250			23,385			—
Total loans	$	171,462	$	245,833	$		60,357	$		16,598	$		139,879	$		25,127

For the nine months ended September 30, 2020 and 2019, the estimated amount of interest income that would have been recorded had the loans not been assigned nonaccrual status was $10.6 million and $9.9 million, respectively.

Nonaccrual loans include nonaccruing loans modified in troubled debt restructurings (“TDRs”) of ~~$39.9~~$7.2 million and ~~$132.5~~$21.6 million at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Total TDRs, both accruing and nonaccruing, were ~~$49.1~~$10.3 million at September 30, ~~2020~~2021 and ~~$193.7~~$25.8 million at December 31, ~~2019.~~2020. All TDRs are individually evaluated for credit loss. At September 30, ~~2020 and December 31, 2019,~~2021, the Company had 0 unfunded commitments ~~of $1.0 million and $2.4 million, respectively,~~ to borrowers whose loan terms have been modified in a ~~TDR.~~TDR and $4.6 million at December 31, 2020.

The tables below detail by portfolio class TDRs that were modified during the three and nine months ended September 30, ~~2020~~2021 and ~~2019:~~

	Three Months Ended												Three Months Ended
($ in thousands)	September 30, 2020						September 30, 2019						September 30, 2021						September 30, 2020
			Pre- Modification		Post- Modification				Pre- Modification		Post- Modification
	Number		Outstanding		Outstanding		Number		Outstanding		Outstanding
	of		Recorded		Recorded		of		Recorded		Recorded
Troubled Debt Restructurings:	Contracts		Investment		Investment		Contracts		Investment		Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial non-real estate		—	$	—	$	—		2	$	13,083	$	6,271		—	$	—	$	—		—	$	—	$	—
Commercial real estate - owner occupied		—		—		—		—		—		—		—		—		—		—		—		—
Total commercial and industrial		—		—		—		2		13,083		6,271		—		—		—		—		—		—
Commercial real estate - income producing		—		—		—		1		123		123		—		—		—		—		—		—
Construction and land development		—		—		—		3		323		323		—		—		—		—		—		—
Residential mortgages		5		1,358		1,358		3		297		297		1		196		196		5		1,358		1,358
Consumer		2		25		25		4		70		70		—		—		—		2		25		25
Total loans		7	$	1,383	$	1,383		13	$	13,896	$	7,084		1	$	196	$	196		7	$	1,383	$	1,383

	Nine Months Ended												Nine Months Ended
($ in thousands)	September 30, 2020						September 30, 2019						September 30, 2021						September 30, 2020
															Pre- Modification		Post- Modification				Pre- Modification		Post- Modification
													Number		Outstanding		Outstanding		Number		Outstanding		Outstanding
													of		Recorded		Recorded		of		Recorded		Recorded
Troubled Debt Restructurings:	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Contracts		Investment		Investment		Contracts		Investment		Investment
Commercial non-real estate		3	$	745	$	745		10	$	27,220	$	20,408		3	$	6,935	$	6,935		3	$	745	$	745
Commercial real estate - owner occupied		—		—		—		1		167		167		—		—		—		—		—		—
Total commercial and industrial		3		745		745		11		27,387		20,575		3		6,935		6,935		3		745		745
Commercial real estate - income producing		—		—		—		1		123		123		—		—		—		—		—		—
Construction and land development		1		15		15		3		323		323		—		—		—		1		15		15
Residential mortgages		14		3,424		3,424		10		2,199		2,199		3		515		538		14		3,424		3,424
Consumer		7		89		89		6		116		116		4		86		86		7		89		89
Total loans		25		4,273		4,273		31	$	30,148	$	23,336		10	$	7,536	$	7,559		25	$	4,273	$	4,273

The TDRs modified during the nine months ended September 30, ~~2020~~2021 reflected in the table above include $7.1 million of loans with extended amortization terms or other payment concessions and $0.5 million of loans with other modifications. The TDRs modified during the nine months ended September 30, 2020 include $0.7 million of loans with extended amortization terms or other payment concessions, $1.1 million with reduced interest rates, $0.4 million with significant covenant waivers, and $2.1 million with other modifications. ~~The TDRs modified~~

NaN residential mortgage loan totaling $0.6 million that defaulted during the nine months ended September 30, ~~2019 include $0.6 million of loans with extended amortization terms or other payment concessions, $22.1 million with significant covenant waivers and $7.4 million with other modifications.~~

~~NaN commercial~~2021 had been modified in a TDR during the twelve months prior to default.NaNcommercial non-real estate loan totaling $0.4 million, 1 residential mortgage loan totaling $0.6 million and 2 consumer loans totaling $0.2 million that defaulted during the nine months ended September 30, 2020 had been modified in a TDR during the twelve months prior to default.~~NaN loans that defaulted during the nine months ended September 30, 2019 had been modified in a TDR during the twelve months prior to default.~~

The tables below present loans that are individually evaluated by portfolio class at September 30, 2020 and December 31, 2019. Loans individually evaluated include nonaccrual loans, TDRs and other loans thatTDR disclosures above do ~~not share common characteristics with loans evaluated on a collective basis that have aggregate relationship balances of $1 million or more.~~

The tables below present the average balances and interest income for individually evaluated loans for the three and nine months ended September 30, 2020 and 2019. Interest income recognized represents interest on accruing loans modified in a TDR.

~~The TDR disclosure above does~~ not include loans ~~modified~~eligible for exclusion from TDR assessment under Section 4013 of 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 assessment. 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. Loans modified under the earlier of 60 days after the date of the termination of the national emergency or December 31, 2020. At September 30, 2020, there were 817 loans totaling $564.8 million with active short-term payment deferrals of principal, interest or both, or other qualifying CARES Act ~~modifications. These loans~~ are reported in the aging analysis that follows based on the modified terms.

The tables below present the aging analysis of past due loans by portfolio class at September 30, ~~2020~~2021 and December 31, 2019. Prior to the adoption of CECL, purchased credit impaired loans accounted for in pools under ASC 310-30 with an accretable yield were considered to be 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. 2020.

September 30, 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
September 30, 2021															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	$	6,026	$	14,277	$	65,705	$	86,008	$	10,171,780	$	10,257,788	$	5,110	$	5,623	$	2,100	$	14,568	$	22,291	$	9,394,699	$	9,416,990	$	7,228
Commercial real estate - owner occupied		535		2,276		11,708		14,519		2,764,888		2,779,407		113		5,761		762		1,548		8,071		2,804,855		2,812,926		142
Total commercial and industrial		6,561		16,553		77,413		100,527		12,936,668		13,037,195		5,223		11,384		2,862		16,116		30,362		12,199,554		12,229,916		7,370
Commercial real estate - income producing		165		30,238		8,701		39,104		3,367,450		3,406,554		2,490		1,175		1,474		5,441		8,090		3,459,849		3,467,939		1,346
Construction and land development		1,076		237		3,178		4,491		1,091,658		1,096,149		393		369		733		1,035		2,137		1,211,854		1,213,991		57
Residential mortgages		3,164		11,779		32,908		47,851		2,706,537		2,754,388		1,818		3,799		5,579		17,567		26,945		2,324,108		2,351,053		254
Consumer		9,451		4,621		12,920		26,992		1,918,926		1,945,918		515		13,750		3,108		7,331		24,189		1,598,927		1,623,116		943
Total	$	20,417	$	63,428	$	135,120	$	218,965	$	22,021,239	$	22,240,204	$	10,439	$	30,477	$	13,756	$	47,490	$	91,723	$	20,794,292	$	20,886,015	$	9,970

December 31, 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
December 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	$	20,893	$	13,445	$	100,806	$	135,144	$	9,031,803		9,166,947	$	1,537	$	7,963	$	2,564	$	39,530	$	50,057	$	9,936,926	$	9,986,983	$	583
Commercial real estate - owner occupied		4,862		556		7,268		12,686		2,725,774		2,738,460		830		1,525		753		13,663		15,941		2,841,504		2,857,445		955
Total commercial and industrial		25,755		14,001		108,074		147,830		11,757,577		11,905,407		2,367		9,488		3,317		53,193		65,998		12,778,430		12,844,428		1,538
Commercial real estate - income producing		738		703		2,910		4,351		2,990,097		2,994,448		450		1,494		798		5,744		8,036		3,349,903		3,357,939		182
Construction and land development		5,747		680		2,480		8,907		1,148,544		1,157,451		2,042		4,168		284		2,001		6,453		1,058,604		1,065,057		—
Residential mortgages		32,867		8,584		23,577		65,028		2,925,603		2,990,631		85		29,319		9,858		27,886		67,063		2,598,149		2,665,212		912
Consumer		18,586		6,215		9,901		34,702		2,130,116		2,164,818		1,638		12,215		5,012		11,714		28,941		1,828,354		1,857,295		729
Total	$	83,693	$	30,183	$	146,942	$	260,818	$	20,951,937	$	21,212,755	$	6,582	$	56,684	$	19,269	$	100,538	$	176,491	$	21,613,440	$	21,789,931	$	3,361

The following tables present the credit quality indicators by ~~segments~~segment and portfolio class of loans held for investment at September 30, ~~2020~~2021 and December 31, ~~2019.~~2020. The Company routinely assesses the ratings of loans in its portfolio through an established and comprehensive portfolio management process. In addition, the Company often examines 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 in 2020 in reaction to 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, including providing various types of loan deferrals. While a significant number of these deferrals have expired, our ability to predict future cash flow is limited due to the economic uncertainty, and we expect that further risk rating adjustments may be required.

	September 30, 2020												September 30, 2021
(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	$	9,617,743	$	2,562,635	$	12,180,378	$	3,278,116	$	1,062,252	$	16,520,746	$	9,032,981	$	2,659,738	$	11,692,719	$	3,363,503	$	1,190,718	$	16,246,940
Pass-Watch		368,292		127,688		495,980		83,736		27,851		607,567		204,260		68,660		272,920		79,328		19,048		371,296
Special Mention		85,096		37,299		122,395		2,021		210		124,626		46,263		24,878		71,141		4,739		1,887		77,767
Substandard		186,657		51,785		238,442		42,681		5,836		286,959		133,486		59,650		193,136		20,369		2,338		215,843
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	10,257,788	$	2,779,407	$	13,037,195	$	3,406,554	$	1,096,149	$	17,539,898	$	9,416,990	$	2,812,926	$	12,229,916	$	3,467,939	$	1,213,991	$	16,911,846

	December 31, 2019												December 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	$	8,492,113	$	2,517,448	$	11,009,561		2,883,553	$	1,120,997	$	15,014,111	$	9,439,264	$	2,641,423	$	12,080,687	$	3,219,155	$	1,033,060	$	16,332,902
Pass-Watch		220,850		146,266		367,116		69,765		25,621		462,502		314,739		114,358		429,097		89,968		22,820		541,885
Special Mention		71,654		14,651		86,305		14,995		283		101,583		79,613		46,239		125,852		5,989		5,751		137,592
Substandard		382,330		60,095		442,425		26,135		10,550		479,110		153,367		55,425		208,792		42,827		3,426		255,045
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	9,166,947	$	2,738,460	$	11,905,407	$	2,994,448	$	1,157,451	$	16,057,306	$	9,986,983	$	2,857,445	$	12,844,428	$	3,357,939	$	1,065,057	$	17,267,424

	September 30, 2020						December 31, 2019						September 30, 2021						December 31, 2020
(in thousands)	Residential mortgage		Consumer		Total		Residential mortgage		Consumer		Total		Residential mortgage		Consumer		Total		Residential mortgage		Consumer		Total
Performing	$	2,708,484	$	1,920,049	$	4,628,533	$	2,950,854	$	2,147,312	$	5,098,166	$	2,323,682	$	1,609,813	$	3,933,495	$	2,622,422	$	1,832,885	$	4,455,307
Nonperforming		45,904		25,869		71,773		39,777		17,506		57,283		27,371		13,303		40,674		42,790		24,410		67,200
Total	$	2,754,388	$	1,945,918	$	4,700,306	$	2,990,631	$	2,164,818	$	5,155,449	$	2,351,053	$	1,623,116	$	3,974,169	$	2,665,212	$	1,857,295	$	4,522,507

The following table presents credit quality disclosures of amortized cost by ~~class~~segment and vintage for term loans and by revolving and revolving converted to amortizing at September 30, ~~2020.~~2021. The Company defines 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

$
4,980,953

$
3,098,996

$
1,979,152

$
1,508,213

$
1,067,144

$
1,417,583

$
2,385,763

$
82,942

$
16,520,746

Pass-Watch

70,389

101,741

56,681

78,598

53,259

116,413

125,134

5,352

607,567

Special Mention

5,687

13,763

24,805

17,888

31,355

2,268

25,960

2,900

124,626

Substandard

76,243

21,552

24,505

37,104

18,231

50,571

48,004

10,749

286,959

Doubtful

—

—

—

—

—

—

—

—

—

Total Commercial Loans

$
5,133,272

$
3,236,052

$
2,085,143

$
1,641,803

$
1,169,989

$
1,586,835

$
2,584,861

$
101,943

$
17,539,898

Residential Mortgage and Consumer Loans:

Performing

$
351,828

$
501,172

$
489,007

$
629,621

$
536,380

$
901,979

$
1,212,937

$
5,609

4,628,533

Nonperforming

1,244

4,540

6,181

10,422

5,178

35,169

3,039

6,000

71,773

Total Consumer Loans

$
353,072

$
505,712

$
495,188

$
640,043

$
541,558

$
937,148

$
1,215,976

$
11,609

$
4,700,306

Under the transition provisions for the 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 application of these provisions 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 year ended December 31, 2019.

December 31, 2019

(in thousands)

Carrying
Amount
of Loans

Accretable
Yield

Balance at beginning of period

$
129,596

$
37,294

Additions

120,562

6,246

Payments received, net

(48,076
)

(4,601
)
Accretion

13,163

(13,163
)
Decrease in expected cash flows based on actual cash flows and changes in cash flow assumptions

—

4,170

Balance at end of period

$
215,245

$
29,946

	Term Loans
	Amortized Cost Basis by Origination Year
		2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Commercial Loans:
Pass		$	3,916,476	$	3,333,009	$	2,308,701	$	1,374,599	$	1,105,917	$	1,520,061	$	2,582,321	$	105,856	$	16,246,940
Pass-Watch			40,835		59,789		71,484		31,238		22,528		82,569		47,600		15,253		371,296
Special Mention			15,346		3,105		6,857		11,061		19,648		8,613		11,841		1,296		77,767
Substandard			26,982		51,212		38,745		17,302		27,220		22,332		25,384		6,666		215,843
Doubtful			—		—		—		—		—		—		—		—		—
Total Commercial Loans		$	3,999,639	$	3,447,115	$	2,425,787	$	1,434,200	$	1,175,313	$	1,633,575	$	2,667,146	$	129,071	$	16,911,846
Residential Mortgage and Consumer Loans:
Performing		$	330,316	$	461,269	$	401,774	$	265,787	$	367,106	$	973,576	$	1,128,048	$	5,619	$	3,933,495
Nonperforming			433		1,101		1,902		3,599		5,614		25,114		1,424		1,487		40,674
Total Consumer Loans		$	330,749	$	462,370	$	403,676	$	269,386	$	372,720	$	998,690	$	1,129,472	$	7,106	$	3,974,169

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 September 30, ~~2020~~2021 and December 31, ~~2019~~2020 was ~~$11.2~~$6.1 million and ~~$8.6~~$17.2 million, respectively, of consumer loans secured by single family residential real estate that were in process of foreclosure. In March 2020, in light of the economic deterioration stemming from the COVID-19 pandemic, the Company placed all active residential mortgage foreclosures on hold and suspended the filing of new foreclosures. On September 1, 2020 the Company resumed foreclosure activity in all states except Florida, where the moratorium expired on September 30 and foreclosure activity resumed October 1, 2020. In addition to the single family residential real estate loans in process of foreclosure, the Company also held ~~$3.6~~$4.0 million and ~~$6.3~~$3.4 million of foreclosed single family residential properties in other real estate owned at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

~~At September 30, 2020 and December 31, 2019, loans~~Loans held for sale ~~was comprised only~~is composed primarily of mortgage loans originated for sale in the secondary market.

Included in short-term borrowings are ~~customer~~ securities sold under agreements to repurchase that mature daily and are secured by U.S. agency securities totaling ~~$806.6~~$643.4 million and ~~$484.4~~$567.2 million at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, 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.

At September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, long-term debt was comprised of the following:

The following table sets forth unamortized debt issuance costs associated with the respective debt instruments at September 30, ~~2020:~~2021:

					Unamortized						Unamortized
					Debt						Debt
					Issuance						Issuance
(in thousands)		Principal			Costs			Principal			Costs
Subordinated notes payable, maturing June 2045	$		150,000	$		4,296
Subordinated notes payable, maturing June 2060			172,500			6,026	$		172,500	$		5,874
Other long-term debt			73,709			—			81,385			—
Total	$		396,209	$		10,322	$		253,885	$		5,874

On June 15, 2021, the Company redeemed in full its 5.95% $150 million subordinated notes due 2045. The notes were redeemed at 100% of principal plus accrued and unpaid interest therein. Loss on extinguishment of debt included in other noninterest expense totaling $4.2 million represents the disposal of unamortized loan costs associated with the original issuance of the notes.

On June 9, 2020, the Company completed the issuance of subordinated notes payable with an aggregate principal amount of $172.5 million with a stated maturity of June 15, 2060. The notes accrue interest at a fixed rate of 6.25% per annum, with quarterly interest payments that began September 15, 2020. Subject to prior approval by the Federal Reserve, the Company may redeem the notes in whole or in part on any interest payment date on or after June 15, 2025. This debt qualifies as tier 2 capital in the calculation of certain regulatory capital ratios. ~~The proceeds from the issuance are intended for general corporate purposes, including providing capital to Hancock Whitney Bank if and when deemed appropriate.~~

On March 9, 2015, the Company completed the issuance of subordinated notes payable with an aggregate principal amount of $150 million with a stated maturity of June 15, 2045. These notes accrue interest at a fixed rate of 5.95% per annum, with quarterly interest payments that began in June 2015. Subject to prior approval by the Federal Reserve, the Company may redeem the notes in whole or in part on any interest payment date on or after June 15, 2020. This debt qualifies as tier 2 capital in the calculation of certain regulatory capital ratios.

Substantially all of the Company’s other long-term debt consists of borrowings associated with tax credit fund activities. Although these borrowings have indicated maturities through ~~2053,~~2050, each is expected to be satisfied at the end of the seven-year compliance period for the related tax credit investments.

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 associated with fixed rate brokered deposits, certain investment securities and select pools of variable rate loans.~~payments. The ~~Company~~Bank also ~~enters~~entered into interest rate derivative agreements as a service to certain qualifying customers. AThe Bank manages a matched book ~~is managed~~ with respect to these customer derivatives in order to minimize its net interest rate risk exposure resulting from such agreements. ~~The Company~~In addition, 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 September 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

		September 30, 2020								December 31, 2019									September 30, 2021								December 31, 2020
				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 - variable rate loans	Cash Flow	$	1,175,000	$	57,412		—			$	1,175,000	$	24,172		$	337		Cash Flow	$	1,025,000	$	9,731		$	867		$	1,175,000	$	50,962		$	—
Interest rate swaps - securities	Fair Value		762,650		842			24,203			441,400		1,474			1,759		Fair Value		1,608,150		28,629			7,742			1,158,150		6,686			18,920
Interest rate swaps - brokered deposits	Fair Value		—		—			—			43,000		—			9
			1,937,650		58,254			24,203			1,659,400		25,646			2,105				2,633,150		38,360			8,609			2,333,150		57,648			18,920
Derivatives not designated as hedging instruments:
Interest rate swaps ⁽²⁾	N/A		4,560,306		164,273			168,207			3,759,232		54,512			55,664
Interest rate swaps																		N/A		5,174,836		96,176			95,297			4,806,258		145,517			148,778
Risk participation agreements	N/A		205,787		78			136			254,825		21			45		N/A		218,947		2			5			216,511		35			108
Interest rate-lock commitments on residential mortgage loans																		N/A		108,155		2,038			—			206,258		1,793			14
Forward commitments to sell residential mortgage loans	N/A		345,871		82			3,584			145,623		651			744		N/A		67,476		—			1,010			310,458		19			3,211
Interest rate-lock commitments on residential mortgage loans	N/A		265,957		2,452			59			83,224		369			375
To Be Announced (TBA) securities																		N/A		74,000		318			18			—		—			—
Foreign exchange forward contracts	N/A		81,492		1,937			1,888			64,632		303			366		N/A		62,806		1,250			1,114			58,822		2,816			2,785
Visa Class B derivative contract	N/A		43,565	—				4,616			43,753		—			5,704		N/A		43,565		—			4,472			43,565		—			5,645
			5,502,978		168,822			178,490			4,351,289		55,856			62,898				5,749,785		99,784			101,916			5,641,872		150,180			160,541
Total derivatives		$	7,440,628	$	227,076		$	202,693		$	6,010,689	$	81,502		$	65,003			$	8,382,935	$	138,144		$	110,525		$	7,975,022	$	207,828		$	179,461
Less: netting adjustment ⁽³⁾⁽²⁾					(58,254	)		(146,415	)				(27,056	)		(43,914	)					(39,988	)		(70,817	)				(57,648	)		(124,204	)
Total derivative assets/liabilities				$	168,822		$	56,278				$	54,446		$	21,089					$	98,156		$	39,708				$	150,180		$	55,257

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. Amortization of other comprehensive loss on terminated cash flow hedges totaled $1.4~~ rate.~~million and 3.4 million for~~ During the nine months ended September 30, ~~2020~~2021, the Company terminated six swap agreements and ~~2019.~~received cash of approximately $23.7 million, which was recorded as accumulated other comprehensive income and will be accreted into earnings through the original maturity dates of the respective contracts. The notional amounts of the swap agreements in place at September 30, ~~2020~~2021 expire as follows: $50 million in 2021; $475 million in 2022; ~~$550~~$150 million in 2023; ~~and~~ $100 million in ~~2024.~~

The Company is party to forward-starting fixed payer swaps that convert the latter portion of the term of certain available for sale securities to a floating rate. These derivative instruments are designated as fair value hedges of interest rate risk. 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 ~~September~~August 2025, and maturity dates from ~~January 2028~~December 2027 through March ~~2031.~~2032. 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.

The majority of the hedged available for sale securities is a closed portfolio of pre-payable commercial mortgage backed securities. In accordance with ASC 815, prepayment risk may be excluded when measuring the change in fair value of such hedged items attributable to interest rate risk under the last-of-layer approach. At September 30, ~~2020,~~2021, the amortized cost basis of the closed portfolio of pre-payable commercial mortgage backed securities totaled ~~$823.6 million.~~$1.7 billion. The amount that represents the hedged items was ~~$752.5 million~~$1.5 billion and the basis adjustment associated with the hedged items totaled ~~$23.8~~$21.0 million.

Prior to January 2020, the Company was party to certain interest rate swap agreements that 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 matched the features of the hedged deposits. As interest rates declined or increased, the corresponding movement in the value of the certificates of deposit were offset by the change in the value of the interest rate swaps, resulting in no impact to earnings. Interest expense was adjusted by the difference between the fixed and floating rates for the period the swaps are in effect.

The ~~Company~~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 Company has offered customers a deferral of the monthly derivative payment/settlement if the associated loan was on deferral. At September 30, 2020, the Company had a receivable totaling $0.1 million related to these deferrals.

The ~~Company~~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 ~~Company~~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 either a best efforts or a mandatory delivery basis. The Company uses these forward sales commitments, which may include To Be Announced (“TBA”) security contracts, on the open market to protect the value of its rate locks and mortgage loans held for sale from changes in interest rates and pricing between the origination of the rate lock and the final sale of these loans. These instruments meet the definition of derivative financial instruments and are reflected in other assets and other liabilities in the Consolidated Balance Sheets, with changes to the fair value recorded in noninterest income within the secondary mortgage market operations line item in the Consolidated Statements of Income.

The loans sold on a mandatory basis commit the Company to deliver a specific principal amount of mortgage loans to an investor at a specified price, by a specified date. If the Company fails to deliver the amount of mortgages necessary to fulfill the commitment by the specified date, we may be obligated to pay a pair-off fee, based on then-current market prices, to the investor/counterparty to compensate the investor for the shortfall. Mandatory delivery forward commitments include TBA security contracts on the open market to provide protection against changes in interest rates on the locked mortgage pipeline. The Company expects that mandatory delivery contracts, including TBA security contracts, will experience changes in fair value opposite to the changes in the fair value of derivative loan commitments. Certain assumptions, including pull through rates and rate lock periods, are used in managing the existing and future hedges. The accuracy of underlying assumptions could impact the ultimate effectiveness of any hedging strategies.

Forward commitments under best effort contracts commit the Company to deliver a specific individual mortgage loan to an investor if the loan to the underlying borrower closes. Generally, best efforts cash contracts have no pair-off risk regardless of market movement. The price the investor will pay the seller for an individual loan is specified prior to the loan being funded, generally the same day the Company enters into the interest rate lock commitment with the potential borrower. The Company expects that these best efforts forward loan sale commitments will experience a net neutral shift in fair value with related derivative loan commitments.

At the closing of the loan, the rate lock commitment derivative expires and the Company records a loan held for sale at fair value under the election of fair value option.

The Company 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~~The Bank has not elected to designate these foreign exchange forward

contract derivatives ~~associated with this program do not meet hedge accounting requirements,~~as hedges; as such, 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 September 30, ~~2020~~2021 and December 31, ~~2019~~2020, the fair value of the liability associated with this contract was ~~$4.6~~$4.5 million and ~~$5.7~~$5.6 million, respectively. Refer to Note 14 – Fair Value of Financial Instruments for discussion of the valuation inputs and process for this derivative liability.

The effects of derivative instruments on the consolidated statements of income for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 are presented in the table below. Interest ~~income or the reduction of interest~~ income attributable to cash flow hedges includes amortization of accumulated other comprehensive income or loss that resulted from termination of certain interest rate swap contracts.

Three Months Ended

Nine Months Ended

September 30,

September 30,

Derivative Instruments:

Location of Gain (Loss)
Recognized in the
Statement of Income:

2020

2019

2020

2019

Cash flow hedges - variable rate loans

Interest income

$
5,788

$
(956
)

$
11,249

$
(4,632
)
Fair value hedges - securities

Interest income

(7
)

15

33

15

Fair value hedges - brokered deposits

Interest expense

—

(243
)

46

(1,692
)
All other instruments

Other noninterest income

1,739

4,324

9,718

8,733

Total gain

$
7,520

$
3,140

$
21,046

$
2,424

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
Derivative Instruments:	Location of Gain (Loss) Recognized in the Statements of Income:	2021			2020			2021			2020
Cash flow hedges:
Variable rate loans	Interest income - loans	$	6,950		$	5,788		$	19,941		$	11,249
Fair value hedges:
Securities	Interest income - securities - taxable		21			(7	)		(6	)		33
Securities - termination	Noninterest income - securities transactions, net		—			—			2,499			—
Brokered deposits	Interest expense - deposits		—			—			—			46
Derivatives not designated as hedging:
Residential mortgage banking	Noninterest income - secondary mortgage market operations		(1,249	)		—			2,223			—
Customer and all other instruments	Noninterest income - other noninterest income		2,970			1,739			11,755			9,718
Total gain		$	8,692		$	7,520		$	36,412		$	21,046

Certain of the ~~Company’s~~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 September 30, ~~2020,~~2021, 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 September 30, ~~2020~~2021 and December 31, ~~2019~~2020 was ~~$47.1~~$56.9 million and ~~$12.9~~$109.7 million, respectively, for which the Company had posted collateral of ~~$47.8~~$24.3 million and ~~$12.4~~$44.7 million, respectively.

The ~~Company’s~~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 September 30, ~~2020~~2021 and December 31, ~~2019~~2020 is presented in the following tables.

(in thousands)			Gross Amounts			Net Amounts		Gross Amounts Not Offset in the Statement of Financial Condition									Gross Amounts			Net Amounts		Gross Amounts Not Offset in the Statement of Financial Condition
Description	Gross Amounts Recognized		Offset in the Statement of Financial Condition			Presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral		Net Amount
As of September 30, 2020
															Gross Amounts Recognized		Offset in the Statement of Financial Condition			Presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral		Net Amount
September 30, 2021
Derivative Assets	$	60,231	$	(60,231	)	$	—	$	—	$	—	$	—		$	46,013	$	(41,102	)	$	4,911	$	4,911	$	0	$	0
Derivative Liabilities	$	195,780	$	(148,738	)	$	47,042	$	—	$	87,926	$	(40,884	)	$	101,940	$	(72,835	)	$	29,105	$	4,911	$	69,668	$	(45,474	)

(in thousands)			Gross Amounts			Net Amounts		Gross Amounts Not Offset in the Statement of Financial Condition									Gross Amounts			Net Amounts		Gross Amounts Not Offset in the Statement of Financial Condition
Description	Gross Amounts Recognized		Offset in the Statement of Financial Condition			Presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral		Net Amount
As of December 31, 2019
															Gross Amounts Recognized		Offset in the Statement of Financial Condition			Presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral		Net Amount
December 31, 2020
Derivative Assets	$	27,938	$	(27,915	)	$	23	$	23	$	—	$	—			61,529	$	(58,660	)	$	2,869	$	2,869	$	0	$	0
Derivative Liabilities	$	56,523	$	(44,570	)	$	11,953	$	23	$	35,113	$	(23,183	)		171,275	$	(126,434	)	$	44,841	$	2,869	$	90,312	$	(48,340	)

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 ~~5.2~~4.6 million at September 30, ~~2020~~2021 and ~~4.0~~4.5 million at December 31, ~~2019,~~2020, with a first-in-first-out cost basis of ~~$176.1~~$151.3 million and ~~$135.8~~$150.7 million at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Shares outstanding also excludes unvested restricted share awards totaling ~~1.4~~1.6 million and1.7 million at ~~both~~ September 30, ~~2020~~2021 and December 31, ~~2019.~~2020, respectively.

On September 21, 2019, the Company issued approximately 5.0 million shares of common stock at a market value of $38.42 per share as consideration for its acquisition of MidSouth. Refer to Note 2 – Business Combination for further information.

On ~~September 23, 2019,~~April 22, 2021, the Company’s board of directors approved a stock buyback program ~~that authorized~~whereby the Company is authorized to repurchase up to ~~5.5~~4.3 million shares of its common stock through the program’s expiration date of December 31, ~~2020.~~2022. The program allows the Company to repurchase its common shares in the open market, by block purchase, through accelerated share repurchase programs, in privately negotiated transactions, or otherwise, in one or more transactions. The Company is not obligated to purchase any shares under this program, and the board of directors has the ability to terminate or amend the program at any time prior to the expiration date. During the third quarter of 2021, the Company repurchased 56,349 shares of its common stock at an average cost of $44.52 per share, inclusive of commissions.

Prior to its expiration date of December 31, 2020, the Company had in place a stock buyback program that authorized the repurchase of up to 5.5 million shares of its common stock. The program, as amended, allowed the Company to repurchase its common shares on the open market, by block purchase, through accelerated share repurchase programs, in privately negotiated transactions, or as otherwise determined by the Company, in one or more transactions. The Company iswas not obligated to purchase any shares under this program, and the board of directors ~~may~~had the ability to terminate or amend the program at any time prior to the expiration date. In total, the Company repurchased 4.9 million of the 5.5 million authorized shares under this buyback program at an average cost of $37.65 per share, inclusive of commissions.

~~On October 18, 2019, the~~The Company ~~entered into~~was party to an accelerated share repurchase ~~agreement~~ (“ASR”) agreement with Morgan Stanley & Co. LLC ~~(“Morgan Stanley”) to repurchase $185 million of the Company’s common stock. Pursuant to the ASR,~~whereby the Company made a $185 million payment to Morgan Stanley ~~on October 21, 2019,~~ and received from Morgan Stanley an initial delivery of 3,611,870 shares

of the Company’s common stock, 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.~~stock on October 18, 2019. Final settlement of the ASR agreement occurred on March 18, 2020. Pursuant to the terms of the settlement, the Company received cash of approximately $12.1 million and a final delivery of ~~1.0 million shares.~~1,001,472 shares of its common stock.

In January 2020, the Company repurchased 315,851 shares of its common stock at a ~~price~~cost of $40.26 in a privately negotiated transaction. ~~In total, the Company repurchased 4.9 million of the 5.5 million authorized shares under the buyback program at an average price of $37.65 per share.~~

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

The components of Accumulated Other Comprehensive 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, 2018	$	(50,125	)	$	(12,044	)	$	(110,247	)	$	(8,293	)	$	—		$	(180,709	)
Net change in unrealized loss		125,589			—			—			35,472			(434	)		160,627
Reclassification of net loss realized and included in earnings		—			—			6,851			4,632			—			11,483
Valuation adjustment to employee benefit plans		—			—			(7,015	)		—			—			(7,015	)
Amortization of unrealized net loss on securities transferred to HTM		—			2,435			—			—			—			2,435
Income tax expense (benefit)		28,395			551			(37	)		9,068			—			37,977
Balance, September 30, 2019	$	47,069		$	(10,160	)	$	(110,374	)	$	22,743		$	(434	)	$	(51,156	)
Balance, December 31, 2019	$	28,950		$	639		$	(101,278	)	$	17,399		$	(434	)	$	(54,724	)	$	28,950		$	639		$	(101,278	)	$	17,399		$	(434	)	$	(54,724	)
Net change in unrealized gain or loss		176,009			—			—			46,180			(4,935	)		217,254			176,009			—			—			46,180			(4,935	)		217,254
Reclassification of net income or loss realized and included in earnings		—			—			4,656			(11,249	)		—			(6,593	)		—			—			4,656			(11,249	)		—			(6,593	)
Valuation adjustment to employee benefit plans		—			—			(10,251	)		—			—			(10,251	)		—			—			(10,251	)		—			—			(10,251	)
Amortization of unrealized net gain on securities transferred to HTM		—			(378	)		—			—			—			(378	)
Amortization of unrealized net gain or loss on securities transferred to HTM																				—			(378	)		—			—			—			(378	)
Income tax expense (benefit)		39,817			(85	)		(1,265	)		7,903			—			46,370			39,817			(85	)		(1,265	)		7,903			—			46,370
Balance, September 30, 2020	$	165,142		$	346		$	(105,608	)	$	44,427		$	(5,369	)	$	98,938		$	165,142		$	346		$	(105,608	)	$	44,427		$	(5,369	)	$	98,938
Balance, December 31, 2020																			$	171,224		$	276		$	(125,573	)	$	39,511		$	(5,369	)	$	80,069
Net change in unrealized gain or loss																				(144,715	)		—			—			353			438			(143,924	)
Reclassification of net income or loss realized and included in earnings																				2,166			—			3,970			(19,941	)		4,468			(9,337	)
Valuation adjustments to pension plan attributable to VERIP and curtailment																				—			—			59,606			—			—			59,606
Other valuation adjustments to employee benefit plans																				—			—			(10,651	)		—			—			(10,651	)
Amortization of unrealized net gain or loss on securities transferred to HTM																				—			(134	)		—			—			—			(134	)
Income tax expense (benefit)																				(31,952	)		(30	)		11,783			(4,370	)		—			(24,569	)
Balance, September 30, 2021																			$	60,627		$	172		$	(84,431	)	$	24,293		$	(463	)	$	198

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~~hedges of ~~the~~ variable rate loans described in Note 76 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.

	Nine Months Ended							Nine Months Ended
Amount reclassified from AOCI (a)	September 30,						Affected line item on	September 30,						Affected line item on
(in thousands)	2020			2019			the statement of income	2021			2020			the statement of income
Amortization of unrealized net gain or loss or gain on securities transferred to HTM	$	378		$	(2,435	)	Interest income
Loss on sale of AFS securities								$	(2,166	)	$	—		Noninterest income
Tax effect									487			—		Income taxes
Net of tax									(1,679	)		—		Net income
Amortization of unrealized net gain on securities transferred to HTM									134			378		Interest income
Tax effect		(85	)		551		Income taxes		(30	)		(85	)	Income taxes
Net of tax		293			(1,884	)	Net income		104			293		Net income
Amortization of defined benefit pension and post-retirement items		(4,656	)		(6,851	)	Other noninterest expense (b)		(3,970	)		(4,656	)	Other noninterest expense (b)
Tax effect		1,053			1,546		Income taxes		884			1,053		Income taxes
Net of tax		(3,603	)		(5,305	)	Net income		(3,086	)		(3,603	)	Net income
Reclassification of unrealized gain (loss) on cash flow hedges		12,602			(1,200	)	Interest income
Reclassification of unrealized gain on cash flow hedges									18,771			12,602		Interest income
Tax effect		(2,851	)		271		Income taxes		(4,188	)		(2,851	)	Income taxes
Net of tax		9,751			(929	)	Net income		14,583			9,751		Net income
Amortization of loss on terminated cash flow hedges		(1,353	)		(3,432	)	Interest income
Amortization of gain (loss) on terminated cash flow hedges									1,170			(1,353	)	Interest income
Tax effect									(261	)		306		Income taxes
Net of tax									909			(1,047	)	Net income
Reclassification of unrealized loss on equity method investment									(4,468	)		—		Noninterest income
Tax effect		306			776		Income taxes		—			—		Income taxes
Net of tax		(1,047	)		(2,656	)	Net income		(4,468	)		—		Net income
Total reclassifications, net of tax	$	5,394		$	(10,774	)	Net income	$	6,363		$	5,394		Net income

On March 27, 2020, the Office of the Comptroller of the Currency ~~(OCC)~~(“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 of CECL for a transition period of five years. The five-year rule provides a full delay 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 was and 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				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
(in thousands)	2020		2019		2020		2019		2021		2020		2021		2020
Income from bank-owned life insurance	$	6,628	$	4,147	$	14,211	$	11,495	$	3,907	$	6,628	$	14,535	$	14,211
Credit related fees		2,911		2,988		8,585		8,520		2,568		2,911		8,383		8,585
Income from derivatives		1,739		4,324		9,718		8,733		2,970		1,739		11,755		9,718
Gain on sale of Mastercard Class B common stock										—		—		2,800		—
Gain on sale of Hancock Horizon Funds										4,576		—		4,576		—
Other miscellaneous		3,521		4,866		11,598		12,025		8,168		3,145		13,673		11,110
Total other noninterest income	$	14,799	$	16,325	$	44,112	$	40,773	$	22,189	$	14,423	$	55,722	$	43,624

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
(in thousands)	2020			2019			2020			2019			2021			2020			2021			2020
Advertising	$	3,159		$	5,435		$	10,089		$	11,768
Corporate value and franchise taxes		4,872			4,109			13,649			12,366		$	3,414		$	4,872		$	11,300		$	13,649
Telecommunications and postage		4,043			3,610			11,483			10,439			3,087			4,043			9,568			11,483
Advertising														3,638			3,159			8,400			10,089
Entertainment and contributions		1,315			2,765			7,146			8,215			2,280			1,315			5,214			7,146
Tax credit investment amortization														1,112			961			3,337			2,882
Printing and supplies														914			1,271			2,833			4,006
Travel expense		309			1,172			1,816			3,614			765			309			1,789			1,816
Printing and supplies		1,271			1,459			4,006			3,720
Tax credit investment amortization		961			1,286			2,882			3,658
Net other retirement expense (income)		(6,337	)		(4,152	)		(18,796	)		(12,409	)
Net other retirement expense														(7,294	)		(6,337	)		(20,645	)		(18,796	)
Loss on facilities and equipment from consolidation														—			—			15,462			929
Loss on extinguishment of debt														—			—			4,165			—
Other miscellaneous		5,105			17,374			17,751			29,653			13,041			5,105			25,567			16,822
Total other noninterest expense	$	14,698		$	33,058		$	50,026		$	71,024		$	20,957		$	14,698		$	66,990		$	50,026

~~11.~~For the three and nine months ended September 30, 2021, other miscellaneous expense includes certain expenses incurred as a result of Hurricane Ida.

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				Nine Months Ended					Three Months Ended				Nine Months Ended
	September 30,				September 30,					September 30,				September 30,
(in thousands, except per share data)	2020		2019		2020			2019		2021		2020		2021		2020
Numerator:
Net income (loss) to common shareholders	$	79,356	$	67,807	$	(148,749	)	$	235,248	$	129,582	$	79,356	$	325,472	$	(148,749	)
Net dividends or income allocated to participating securities - basic and diluted		1,435		1,141		1,278			3,980		2,419		1,435		6,650		1,278
Net income (loss) allocated to common shareholders - basic and diluted	$	77,921	$	66,666	$	(150,027	)	$	231,268	$	127,163	$	77,921	$	318,822	$	(150,027	)
Denominator:
Weighted-average common shares - basic		86,358		86,377	$	86,614		$	85,934		86,834		86,358	$	86,800	$	86,614
Dilutive potential common shares		42		85		—			76		172		42		151		—
Weighted-average common shares - diluted		86,400		86,462	$	86,614		$	86,010		87,006		86,400	$	86,951	$	86,614
Earnings (loss) per common share:
Basic	$	0.90	$	0.77	$	(1.73	)	$	2.69	$	1.46	$	0.90	$	3.67	$	(1.73	)
Diluted	$	0.90	$	0.77	$	(1.73	)	$	2.69	$	1.46	$	0.90	$	3.67	$	(1.73	)

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. NaN potential common shares would have had an antidilutive effect in the calculation of earnings per common share for the three months ended September 30, 2021. For the nine months ended September 30, 2021, antidilutive potential common shares with a weighted average of 796 were excluded from the computation of earnings per common share. For the three months ended September 30, 2020, antidilutive potential common shares with a weighted average of 78,867 were excluded from the computation of earnings per common share. For reporting periods in which a net loss is reported, 0no effect is given to potentially dilutive common shares in the computation of loss per common share as any impact from such shares would be ~~antidilutive. Potentially dilutive~~antidilutive; as such, no effect was given to antidilutive potential common shares ~~with weighted averages of 78,867~~ for the ~~three months ended September 30, 2020 and 43,794 and 37,680~~computation of earnings per common share for the ~~three and~~ nine months ended September 30, ~~2019, respectively, were excluded from the calculation of earnings per common share, as the effect would have been antidilutive.~~2020.

The Company ~~sponsors~~offers a qualified defined benefit pension plan, theHancock Whitney CorporationPension Plan and Trust Agreement (“Pension Plan”), covering certain eligible associates. ~~Those~~Eligibility is based on minimum age and service-related requirements. The Pension Plan excludes any individual hired or rehired by the Company ~~prior to~~after June 30, 2017 ~~are eligible~~from eligibility to ~~participate; however,~~participate, and the accrued benefits of ~~each~~any participant in the Pension Plan whose combined age plus years of service as of January 1, 2018 totaled less than 55 were frozen asof January 1, 2018 and will not thereafter increase. The Company makes contributions tothe Pension Planin 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.~~

The Company also offers a defined contribution retirement benefit plan (401(k) plan), the Hancock Whitney Corporation 401(k) Savings Plan and Trust Agreement (“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 current 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~~under which accrued benefits were frozen as of December 31, 2012 and, as such, no future benefits are accrued under this plan.

The Company sponsors defined benefit ~~postretirement~~post-retirement 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~~benefit 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 Three Months Ended September 30,	2020			2019			2020			2019			2021			2020			2021			2020
Service cost	$	3,207		$	2,735		$	28		$	22		$	2,620		$	3,207		$	23		$	28
Interest cost		3,892			4,659			106			165			3,552			3,892			91			106
Expected return on plan assets		(12,047	)		(11,299	)		—			—			(11,463	)		(12,047	)		—			—
Amortization of net loss and prior service costs		1,854			2,553			(142	)		(229	)
Net reduction of periodic benefit cost	$	(3,094	)	$	(1,352	)	$	(8	)	$	(42	)
Amortization of net (gain) or loss and prior service costs														717			1,854			(192	)		(142	)
Net periodic benefit cost													$	(4,574	)	$	(3,094	)	$	(78	)	$	(8	)

							Other Post-												Other Post-
(in thousands)	Pension Benefits						Retirement Benefits						Pension Benefits						Retirement Benefits
For the Nine Months Ended September 30,	2020			2019			2020			2019			2021			2020			2021			2020
Service cost	$	9,690		$	8,245		$	78		$	73		$	8,996		$	9,690		$	71		$	78
Interest cost		12,315			14,183			377			457			9,982			12,315			257			377
Expected return on plan assets		(36,144	)		(33,899	)		—			—			(34,854	)		(36,144	)		—			—
Amortization of net loss and prior service costs		5,168			7,535			(512	)		(684	)
Net reduction of periodic benefit cost	$	(8,971	)	$	(3,936	)	$	(57	)	$	(154	)
Amortization of net (gain) or loss and prior service costs														4,471			5,168			(501	)		(512	)
Special termination benefits														16,052			—			4,137			—
Net periodic benefit cost													$	4,647		$	(8,971	)	$	3,964		$	(57	)

During the nine months ended September 30, 2021, the Company completed a Voluntary Early Retirement Incentive Program (VERIP), which was accepted by approximately 260 eligible Pension Plan participants. The event constituted a curtailment of the Pension Plan and resulted in a re-measurement of the projected benefit obligation. The program had two components: a supplemental cash incentive, substantially all of which was paid through the Pension Plan with existing plan assets, and coverage in a post-retirement medical plan, with each component having specific age and years of service requirements. The impact of offering these incentives is classified as special termination benefits in the table above. As of the re-measurement date of April 30, 2021, Pension Plan assets totaled $808 million and the benefit obligation totaled $597 million.

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 1819 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~

At September 30, ~~2020,~~2021, the Company had ~~28,725~~10,891 outstanding and exercisable stock options, with a weighted average exercise price of ~~$34.11 and a~~$32.98, weighted average remaining contractual term of ~~1.4 years. The options had 0~~less than 1 year and an aggregate intrinsic ~~value.~~ value of $0.2 million.

~~There were 0 exercises of stock options during~~During the nine months ended September 30, ~~2020. The~~2021, there were exercises of 12,183 stock options with a total intrinsic value of ~~options exercised during the nine months ended September 30, 2019 was $0.2~~$0.1 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 September 30, ~~2020~~2021 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, 2020		1,596,258		$	40.43
Nonvested at January 1, 2021							1,886,853		$	34.77
Granted		131,025			31.81		236,874			36.50
Vested		(32,706	)		41.39		(62,299	)		33.74
Forfeited		(55,814	)		41.21		(167,411	)		35.32
Nonvested at September 30, 2020		1,638,763		$	39.70
Nonvested at September 30, 2021							1,894,017		$	34.97

At September 30, ~~2020,~~2021, there was ~~$44.8~~$46.8 million of total unrecognized compensation expense related to nonvested restricted and performance shares expected to vest in the future. This compensation is expected to be recognized in expense over a weighted average period of 33.0 years. The total fair value of shares ~~which~~that vested during the nine months ended September 30, ~~2020 and 2019~~2021 was ~~$1.4 million and $1.3 million, respectively.~~$2.6 million.

During the nine months ended September 30, ~~2020,~~2021, the Company granted ~~35,754~~60,996 performance share awards subject to a total shareholder return (“TSR”) performance metric with a grant date fair value of ~~$46.61~~$38.49 per share and ~~35,754~~60,996 performance shares subject to an operating earnings per share performance metric with a grant date fair value of ~~$39.39~~$32.17 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 4748 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 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. ~~At September 30, 2020, the~~The Company had a reserve for unfunded lending commitments of ~~$31.5 million.~~$28.9 million and $29.9 million at September 30, 2021 and December 31, 2020, respectively.

The following table presents a summary of the Company’s off-balance sheet financial instruments as of September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

	September 30,		December 31,		September 30,		December 31,
(in thousands)	2020		2019		2021		2020
Commitments to extend credit	$	7,803,139	$	7,530,143	$	8,983,039	$	8,106,223
Letters of credit		369,538		393,284		370,905		365,510

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”)~~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 financial assets and liabilities that are measured at fair value on a recurring basis in the consolidated balance sheets at September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

	September 30, 2020								September 30, 2021
(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	$	—	$	198,616	$	—	$	198,616	$	—	$	394,722	$	—	$	394,722
Municipal obligations		—		313,656		—		313,656		—		316,027		—		316,027
Corporate debt securities		—		8,183		—		8,183		—		14,761		—		14,761
Residential mortgage-backed securities		—		2,606,690		—		2,606,690		—		3,253,393		—		3,253,393
Commercial mortgage-backed securities		—		2,101,000		—		2,101,000		—		2,884,433		—		2,884,433
Collateralized mortgage obligations		—		419,170		—		419,170		—		137,585		—		137,585
Total available for sale securities		—		5,647,315		—		5,647,315		—		7,000,921		—		7,000,921
Mortgage loans held for sale										—		72,456		—		72,456
Derivative assets (1)		—		168,822		—		168,822		—		98,156		—		98,156
Total recurring fair value measurements - assets	$	—	$	5,816,137	$	—	$	5,816,137	$	—	$	7,171,533	$	—	$	7,171,533
Liabilities
Derivative liabilities (1)	$	—	$	51,662	$	4,616	$	56,278	$	—	$	35,236	$	4,472	$	39,708
Total recurring fair value measurements - liabilities	$	—	$	51,662	$	4,616	$	56,278	$	—	$	35,236	$	4,472	$	39,708

	December 31, 2019								December 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	$	—	$	98,672	$	—	$	98,672	$	—	$	213,370	$	—	$	213,370
Municipal obligations		—		249,805		—		249,805		—		326,725		—		326,725
Corporate debt securities		—		7,988		—		7,988		—		11,764		—		11,764
Residential mortgage-backed securities		—		1,924,157		—		1,924,157		—		2,629,811		—		2,629,811
Commercial mortgage-backed securities		—		1,586,467		—		1,586,467		—		2,455,534		—		2,455,534
Collateralized mortgage obligations		—		808,215		—		808,215		—		362,123		—		362,123
Total available for sale securities		—		4,675,304		—		4,675,304		—		5,999,327		—		5,999,327
Derivative assets (1)		—		54,446		—		54,446		—		150,180		—		150,180
Total recurring fair value measurements - assets	$	—	$	4,729,750	$	—	$	4,729,750	$	—	$	6,149,507	$	—	$	6,149,507
Liabilities
Derivative liabilities (1)	$	—	$	15,385	$	5,704	$	21,089	$	—	$	49,612	$	5,645	$	55,257
Total recurring fair value measurements - liabilities	$	—	$	15,385	$	5,704	$	21,089	$	—	$	49,612	$	5,645	$	55,257

Securities classified as level 2 include obligations of U.S. Government agencies and U.S. Government-sponsored agencies, including “off-the-run” U.S. Treasury securities, 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.

37Loans held for sale consist of residential mortgage loans carried under the fair value option. The fair value for these instruments is classified as level 2 based on market prices obtained from potential buyers.

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 and 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.~~basis and To Be Announced securities for mandatory delivery contracts. 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 nine months ended September 30, ~~2020~~2021 and the year ended December 31, ~~2019~~2020 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:

(in thousands)
Balance at December 31, 2018	$	7,304
Cash settlement		(1,900	)
Losses included in earnings		300
Balance at December 31, 2019		5,704		$	5,704
Cash settlement		(1,243	)		(1,656	)
Losses included in earnings		155			1,597
Balance at September 30, 2020	$	4,616
Balance at December 31, 2020					5,645
Cash settlement					(1,327	)
Losses included in earnings					154
Balance at September 30, 2021				$	4,472

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.

($ in thousands)

Fair Value

Level 3 Class

September 30, 2020

December 31, 2019

September 30, 2021

December 31, 2020

Derivative liability

4,616

5,704

4,472

5,645

Valuation technique

Discounted cash flow

Unobservable inputs:

Visa Class A appreciation - range

6% - 18%

6%-12%

Visa Class A appreciation - weighted average

12%

Conversion rate - range

1.63x - 1.59x

1.62x-1.60x

Conversion rate -weighted average

1.6109x

1.616x

1.6114x

Time until resolution

3-27 months

12 - 36 months

3-27 months

3-36 months

The Company’s policy is to recognize transfers between valuation hierarchy levels as of the end of a reporting period.

Certain assets and liabilities are measured at fair value on a nonrecurring basis. Collateral-dependent ~~impaired~~ loans individually evaluated for credit loss 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 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 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.

	September 30, 2020								September 30, 2021
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Collateral-dependent impaired loans	$	—	$	91,819	$	—	$	91,819
Collateral-dependent loans individually evaluated for credit loss									$	—	$	17,381	$	—	$	17,381
Other real estate owned and foreclosed assets, net		—		—		11,219		11,219		—		—		8,423		8,423
Total nonrecurring fair value measurements	$	—	$	91,819	$	11,219	$	103,038	$	—	$	17,381	$	8,423	$	25,804

	December 31, 2019								December 31, 2020
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Collateral-dependent impaired loans	$	—	$	182,377	$	—	$	182,377
Collateral-dependent loans individually evaluated for credit loss									$	—	$	60,451	$	—	$	60,451
Other real estate owned and foreclosed assets, net		—		—		24,422		24,422		—		—		11,648		11,648
Total nonrecurring fair value measurements	$	—	$	182,377	$	24,422	$	206,799	$	—	$	60,451	$	11,648	$	72,099

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~~described earlier in ~~the~~this 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~~either carried under the fair value ~~and carried~~option or at the lower of cost or ~~market. The carrying amount~~market, which 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.

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

Short-Term FHLB Borrowings – The fair value ~~at September 30, 2020~~ is estimated by discounting the future contractual cash flows using current market rates at which borrowings with similar terms and options could be obtained. ~~The fair value at December 31, 2019 assumed that the carrying amount was a reasonable estimate of fair value given the relatively stable interest rate environment.~~

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~~described earlier in ~~the~~this 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:

	September 30, 2020										September 30, 2021
							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	$	1,263,372	$	—	$	—	$	1,263,372	$	1,263,372	$	3,590,661	$	—	$	—	$	3,590,661	$	3,590,661
Available for sale securities		—		5,647,315		—		5,647,315		5,647,315		—		7,000,921		—		7,000,921		7,000,921
Held to maturity securities		—		1,517,688		—		1,517,688		1,408,961		—		1,385,967		—		1,385,967		1,307,701
Loans, net		—		91,819		21,970,946		22,062,765		21,791,530		—		17,381		20,526,735		20,544,116		20,514,494
Loans held for sale		—		103,566		—		103,566		103,566		—		90,618		—		90,618		90,618
Derivative financial instruments		—		168,822		—		168,822		168,822		—		98,156		—		98,156		98,156
Financial liabilities:
Deposits		—		—		27,017,416		27,017,416		27,030,659	$	—	$	—	$	29,177,424	$	29,177,424	$	29,208,157
Federal funds purchased		250		—		—		250		250		1,825		—		—		1,825		1,825
Securities sold under agreements to repurchase		806,645		—		—		806,645		806,645		643,403		—		—		643,403		643,403
FHLB short-term borrowings		—		1,161,666		—		1,161,666		1,100,000		—		1,126,938		—		1,126,938		1,100,000
Long-term debt		—		434,597		—		434,597		385,887		—		260,964		—		260,964		248,011
Derivative financial instruments		—		51,662		4,616		56,278		56,278		—		35,236		4,472		39,708		39,708

	December 31, 2019										December 31, 2020
(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	$	542,333	$	—	$	—	$	542,333	$	542,333	$	1,860,092	$	—	$	—	$	1,860,092	$	1,860,092
Available for sale securities		—		4,675,304		—		4,675,304		4,675,304		—		5,999,327		—		5,999,327		5,999,327
Held to maturity securities		—		1,611,004		—		1,611,004		1,568,009		—		1,467,581		—		1,467,581		1,357,170
Loans, net		—		182,377		20,861,702		21,044,079		21,021,504		—		60,451		21,472,933		21,533,384		21,339,754
Loans held for sale		—		55,864		—		55,864		55,864		—		136,063		—		136,063		136,063
Derivative financial instruments		—		54,446		—		54,446		54,446		—		150,180		—		150,180		150,180
Financial liabilities:
Deposits	$	—	$	—	$	23,786,775	$	23,786,775	$	23,803,575	$	—	$	—	$	27,679,321	$	27,679,321	$	27,697,877
Federal funds purchased		195,450		—		—		195,450		195,450		300		—		—		300		300
Securities sold under agreements to repurchase		484,422		—		—		484,422		484,422		567,213		—		—		567,213		567,213
FHLB short-term borrowings		2,035,000		—		—		2,035,000		2,035,000		—		1,147,335		—		1,147,335		1,100,000
Long-term debt		—		226,098		—		226,098		233,462		—		404,880		—		404,880		378,322
Derivative financial instruments		—		15,385		5,704		21,089		21,089		—		49,612		5,645		55,257		55,257

In ~~June 2016,~~August 2021, the FASB issued ~~Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments~~ASU 2021-06, “Presentation of Financial Statements (Topic 205), Financial Services – ~~Credit Losses~~Depository and Lending (Topic ~~326): Measurement of Credit Losses on~~942) and Financial ~~Instruments.~~Services – Investment Companies (Topic 946),” The ASU, more commonly referred to 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 reasonable and supportable forecasts. As such, financial institutions and other organizations are required to use forward-looking information to inform their credit loss estimates. Many of the loss estimation techniques prescribed by previous guidance will still be permitted, although the inputs to those techniques will change to reflect the ~~full amount~~issuance of ~~expected credit losses~~SEC Release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, and No. 33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants. The Company is required to comply with the ~~estimated remaining life of the instrument. An entity will continue to use judgment to determine which loss estimation methods are appropriate~~rules set forth in SEC Release No. 33-10835 for ~~its circumstances. In addition, ASC 326 amends the accounting for credit losses~~fiscal years ending on ~~both held to maturity and available for sale debt securities and purchased financial assets~~or after December 31, 2021, with ~~credit deterioration.~~

voluntary early compliance permitted. The Company adopted the ~~provisions of ASC 326 on January 1,~~rules set forth in this release in its December 31, 2020 Form 10-K and, therefore, was in compliance with ~~a cumulative-effect adjustment to retained earnings for non-purchased credit impaired loans. For purchased credit impaired loans (as defined by ASC 310-30), there was no impact to retained earnings~~this standard upon adoption; rather, a portion of the purchase accounting fair value mark was reclassified to allowance for credit losses. A more detailed discussion of the Company’s policy for accounting for credit losses under the provisions of ASC 326 is presented in Note 1 – Basis of Presentation.

The following table reflects the impact of adoption reflected in the Company’s consolidated balance sheets. The increase in the allowance for loan losses represents a reduction in total assets, while the reserve for unfunded lending commitments represents an increase in total liabilities.

In ~~March 2020,~~January 2021, the FASB issued ASU ~~2020-04,~~2021-01, “Reference Rate Reform (Topic 848)~~: Facilitation of the Effects of Reference Rate Reform on Financial Reporting.~~,” ~~The amendments in this Update provide optional guidance for a limited period of 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 elective and apply to all entities, subject to meetingclarify that 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 in Topic 848 for ~~applying generally accepted~~contract modifications and hedge accounting ~~principles (GAAP)~~apply to ~~contracts, hedging relationships, and other transactions~~derivatives that are affected by the transition to new reference ~~rate reform if certain criteria are met.~~rates. 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~~update do not apply to contract modifications made ~~and~~after December 31, 2022, new hedging relationships entered into orafter December 31, 2022, and existing hedging relationships evaluated for effectiveness in periods after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that ~~an entity has elected~~apply certain optional expedients ~~for and that~~in which the accounting effects are ~~retained~~recorded through the end of the hedging ~~relationship.~~relationship (including periods after December 31, 2022). The provisions of this guidance were effective upon issuance for all entities. An entity may elect to apply the amendments in

this update on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued. The Company adopted this guidance on a full retrospective basis upon ~~its issuance; at adoption,~~issuance. Adoption of this guidance did not have a material impact upon the ~~Company elected to amend the hedge documentation, without de-designating~~Company’s financial position and ~~re-designating, for all outstanding hedging relationships using the available expedient to assert probability~~results of ~~the hedged interest, regardless of any expected modification in terms related to reference rate reform.~~operations.

In ~~August 2018,~~October 2020, the FASB issued ASU ~~2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes~~2020-08, “Codification Improvements to Subtopic 310-20, Receivables- Nonrefundable Fees and Other Costs,” to clarify that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period. Securities within the scope of this paragraph are those that have explicit, noncontingent call options that are callable at fixed prices and on preset dates at prices less than the amortized cost basis of the security. Whether a security is subject to this paragraph may change depending on the amortized cost basis of the security and the terms of the next call option. For instruments that fall within the scope, the premium should be amortized 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,next call date, which is defined as the first date at which a call option at a specified price becomes exercisable. Once the next call date has passed, the next call date after that (if applicable) is the date at which the next call option at a specified price becomes exercisable, and, if there is no remaining premium or if there are no further call dates, the effective yield should be reset using the payment terms of the debt security. For public business entities, 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,~~15, 2020, and entities should apply the amendments in the update on a prospective basis for existing and newly purchased callable debt securities. The Company ~~adopted~~assessed its bond portfolio upon adoption and determined that there were no bonds with premium calls at such dates. The Company will evaluate its bond portfolio at each interim and annual reporting date to determine if any instruments fall within the ~~guidance effective January 1, 2020. Refer to Note 15 - Fair Value Measurements for the modified disclosures. Adoption~~scope of ~~this guidance had no impact upon the Company’s results of operations or financial condition.~~paragraph 310-20-35-33.

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~~adopted this guidance on January 1, 2021. Adoption of this guidance ~~but does~~did not ~~expect the update to~~ have a material impact upon ~~its~~the Company’s 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.

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 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, ~~2019, Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended June 30,~~ 2020 ~~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 the provisions of subpart 229.1400 of the Securities and Exchange ~~Commission Industry Guide 3,~~Commission’s Regulation S-K, “Disclosures by Bank and Savings and Loan Registrants,” 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 Pre-Provision Net Revenue as 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.~~

The COVID-19 pandemic continues to profoundly impact economic conditions throughout the United States and globally. Early and ongoing efforts to contain the spread of the novel coronavirus in the form of stay at home orders and restrictions on travel, trade and retail operations triggered a sharp decline in commercial and consumer activity, resulting in a recessionary economic environment. Gross domestic product (“GDP”) declined 31% on an annualized basis and unemployment averaged 13%

Economic recovery continued during the second quarter of 2020. The federal government’s CARES Act and other stimulus programs in addition to the Federal Reserve’s actions to reduce interest rates to near zero provided businesses and individuals temporary relief from these conditions. Consumer spending increased meaningfully in the third quarter of ~~2020, resulting~~2021, albeit at a slower pace in ~~GDP~~some respects when compared to the previous quarter. The rate of unemployment again declined, falling to 4.8% in September 2021 from 5.9% in June 2021. Gross Domestic Product displayed 2% growth, slightly short of consensus and smaller than the growth experienced in the preceding four fiscal quarters.Supply chain interruption, labor shortages and wage and pricing pressures intensified during the period, largely the result of the surge in COVID-19 infections caused by the Delta variant of the virus. While there were no widespread or pervasive restrictions on movement or business instituted in response to the surge, the rapid increase in the rate of infection and serious illness created strain on healthcare delivery in many areas in the US and prompted certain localized mandated mitigation measures and other voluntary responses, such as leisure and business event cancellations. These cancellations, continued restrictions on international travel and lagging/limited large-scale convention and other events continue to impact our markets, particularly in the central region.

Parts of our footprint were further affected by Hurricane Ida, a major hurricane that made landfall in late August in Southeast Louisiana. Along with personal and commercial property damage in some hard-hit areas, extensive damage to the region’s energy grid resulted in extended power outages for a portion of our market. The effects of the storm prompted temporary evacuation for many residents and unplanned closures of businesses, schools, and other essential services. As a result, supply chain and labor constraints already present were exacerbated, and many events that foster leisure and business tourism were canceled or postponed. Certain of our fee income categories, such as ATM fees and secondary mortgage market operations, were temporarily impacted by Hurricane Ida’s disruption, but those conditions are not expected to persist. Our hurricane impacted markets generally experience increased ~~hiring~~economic activity as the communities rebuild and ~~employment. According~~recover from the damage.

Despite the disruption to portions of our market, we continued to experience growth in our core loan portfolio, which excludes the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) loans that continue to be paid down through debt forgiveness. Although loan pricing pressure continues, particularly on shorter-duration facilities, core loan growth continued across most regions and in our equipment finance and healthcare specialty business lines. Similar to last quarter, improvement in economic activity across our footprint led to an ~~October 2, 2020 release by~~increased loan pipeline with a higher pull-through rate and a slight uptick in credit line utilization. These factors, coupled with fewer payoffs, resulted in 4% linked quarter annualized growth. Excess liquidity from PPP loan forgiveness, elevated deposit levels, and the ~~Bureau of Labor Statistics, the unemployment~~low interest rate ~~fell~~environment continue to ~~approximately 8% during the month of September, reflecting the partial resumption of economic activities as many jurisdictions began or continued phased reopening programs.~~pressure net interest margin.

We utilize economic forecasts produced by Moody’s Analytics (Moody’s) that provide various scenarios to assist ~~with~~in the development of our economic outlook. ~~These~~This outlook discussion utilizes the September 2021 Moody’s forecast, the most current available at September 30, 2021. The forecasts are anchored on a baseline forecast scenario, which ~~by definition reflects a 50% probability that~~Moody’s defines as the “most likely outcome” of where the economy ~~will perform better or worse than the forecasted baseline parameters.~~is headed based on current conditions. Several upside and downside scenarios are produced that are derived from the baseline scenario. In the September ~~2020 Baseline~~2021 baseline forecast, the near-term economic recovery ~~in the near-term is expected~~was assumed to be somewhat ~~faster than~~slower in the short term compared to the assumptions included in the June forecast, ~~but~~largely due to the surge in cases of the COVID-19 Delta variant and scaled back expectations regarding proposed fiscal stimulus. Following a slowdown in late 2021, Moody’s expects growth ~~is muted until a vaccine is widely available.~~will be strong in 2022. Key assumptions underlying ~~assumptions in~~ the ~~Baseline~~baseline forecast are that (1) ~~there is not a second wave of economic shutdown, (2) a vaccine will be made available by April~~coronavirus herd resiliency was achieved in late August 2021, with ~~infections abating by June~~infection abatement pushed to November 2021 due to the Delta variant; (2) no new widespread economic shutdowns will occur in response to virus outbreaks; (3) the unemployment ~~rates average 9.1% in the~~rate continues to decline, with fourth quarter 2021 averaging 4.5%, and full year 2021, 2022 and 2023 rates averaging 5.5%, 3.6% and 3.5%, respectively, reaching full employment by the end of ~~2020, 8.4%~~2022; (4) gross domestic product will increase an average of 6.0% in 2021, ~~and 6.4%~~4.3% in 2022 ~~(4) lawmakers~~and 2.3% in 2023; (5) the Build Back Better infrastructure and social legislation package, forecasted to be passed in late 2021 at $2.5 trillion, will ~~pass an~~spur additional ~~stimulus bill in 2020 that is split between aid for state~~economic activity; and ~~local governments and unemployment benefits, and (5)~~(6) the Federal Reserve will continue to respond to the economic ~~damage~~impact of COVID-19 by maintaining rates at or near zero until ~~late~~the first quarter of 2023.

The alternative Moody’s forecast scenarios have varying degrees of positive and negative severity of the outcome of the economic downturn, as well as varying shapes and length of recovery. Management determined that assumptions provided for in the ~~stronger and~~downside slower near-term growth ~~scenarios (S-1 and S-2, respectively)~~(S-2) were as reasonably possible ~~and~~as the baseline scenario, particularly within our footprint; as such, the ~~S-1 and~~ S-2 ~~scenarios were~~scenario was given equal consideration through probability weighting in our allowance for credit losses calculation at September 30, ~~2020. We believe these alternative scenarios are~~2021. The S-2 slower near-term growth assumptions (compared to baseline) include a delay in infection abatement until January 2022, continued supply chain disruptions, a smaller or less ~~likely~~impactful stimulus package and a near-term rise in unemployment, resulting in a smaller increase in real consumer spending that impedes growth in late 2021 and in 2022.

Uncertainty over some of the assumptions underlying the baseline forecast has increased since the second quarter due to ~~occur than~~ the ~~Baseline~~emergence of and ~~have weighted them accordingly~~resulting effects of the Delta variant of COVID-19 and the disruption caused by Hurricane Ida. These emerging risks lead to a higher weighting of the S-2 slower growth scenario in ~~developing~~the September 30, 2021 calculation of the allowance as compared to June 30, 2021. However, our ~~economic forecast. The extent to which observed and forecasted economic conditions deteriorate or recover beyond that currently forecasted may result in additional volatility and allowance for~~ credit loss ~~builds or releases~~outlook has not changed materially, and continued optimism inherent in the ~~future. Changes~~forecasted scenarios, coupled with improvements in ~~the depth and duration~~our asset quality metrics allowed for a modest release of ~~these economic conditions may also require revisions to our currently forecasted cash flows that could result in impairment of certain intangible or other assets in future periods.~~

Our response at the outset of the COVID-19 crisis was proactive and continues to be adaptive to ongoing changing conditions. We have taken deliberate measures to maintain a strong liquidity position and enhance capital levels, control both interest and noninterest expense, and build an allowance for credit losses that we believe to be appropriate in light of current and forecasted economic conditions. We have participated in various economic relief strategies, including the origination of $2.4 billion of Small Business Administration Paycheck Protection Program (PPP) loans, and offering temporary waivers of certain service fees, short-term deferrals of principal and/or interest on loan payments as well as other modifications to loan repayment terms for customers affected by COVID-19. The PPP loans provided loan growth and contributed favorably to our net interest income and marginreserves during the ~~second and third quarters, while providing much needed assistance in the communities we serve.~~period.

We have been able to return most of our financial centers to full service operation and substantially all of our back office associates to onsite work in compliance with guidelines from the Centers for Disease Control and Prevention. Recent easing of certain restrictions on movement and the impacts of government stimulus programs and the low interest rate environment have positively impacted business activity for both commercial and consumer customers. We experienced an increase in most categories of noninterest income, including sizable increases in secondary mortgage origination and sales activity, bank card usage fees and deposit account service charges, albeit not to pre-pandemic levels. We initiated cost reduction measures in the third quarter, including closing two trust locations in New York and New Jersey in mid-September 2020, closing 12 branch locations in Louisiana and Mississippi scheduled for late October 2020 and reducing headcount through higher vacancy levels and attrition, as well as other initiatives. Increased business activity, cost control measures, and balance sheet de-risking strategies undertaken in the first half of the year, including the sale of a large portion of the energy portfolio, resulted in a return to profitability in the third quarter of 2020.

Despite recent improvements in certain economic indicators, significant constraints to commerce remain in place, and considerable uncertainty remains over the timing of an effective and widely available coronavirus vaccine, the timing and scope of additional government stimulus packages, and the economic impact resulting from the outcome of the November 2020 elections. The duration

Excess liquidity from Paycheck Protection Program (PPP) loan forgiveness and ~~extent~~elevated customer deposit levels, coupled with the low interest rate environment are expected to continue to pressure net interest margin in the near term. We continue to focus on effectively managing our asset/liability mix to maximize those resources, and to gain efficiency within our organization. The timing of the ~~downturn~~return to pre-pandemic conditions in our footprint remains uncertain. Forward-looking information based on management’s expectation of near-term performance is provided in the sections that follow.

Given the economic volatility that has stemmed from the pandemic, including supply chain constraints, labor shortages and ~~speed~~the potential for future impacts that may result from mitigation measures intended to combat variants of the ~~related recovery~~virus, it is not possible to accurately predict the extent, severity or duration of these conditions or when typical operating conditions will fully resume. The continued success of government initiatives in stimulating economic activity, societal response to virus containment measures and the efficacy of vaccines and/or treatments that will control the rate of serious illness are critical to the resolution of the crisis. We continuously seek to monitor and anticipate developments, but cannot predict all of the various adverse effects COVID-19 will have on our business, ~~customers,~~financial condition, liquidity and ~~the economy as a whole remains uncertain.~~results of operations.

We reported net income for the third quarter of ~~2020~~2021 of ~~$79.4~~$129.6 million, or ~~$.90~~$1.46 per diluted common share (EPS), compared to ~~a net loss for~~$88.7 million, or $1.00 EPS in the second quarter ~~2020~~ of ~~$117.1~~2021 and $79.4 million, or ~~$(1.36)~~$.90 EPS, ~~and net income for~~in the third quarter of 2019 of $67.8 million, or $.77 EPS. The second quarter net loss reflected a provision for credit losses of $306.9 million that included both a $160 million, or $1.47 per share, provision for credit losses related to the sale of $497 million of energy loans and an additional reserve build for credit losses related to COVID-19.2020. The third quarter of ~~2019~~2021 included ~~$28.8~~net nonoperating income of $1.4 million (pre-tax), or ~~$.26 per share,~~$0.01 EPS (after tax), including a gain of ~~merger~~$4.6 million from the sale of the remaining Hancock Horizon funds and a severance expense reversal of $1.9 million, partially offset by Hurricane Ida expenses of $5.1 million. The second quarter of 2021 included net nonoperating expense of $42.2 million (pre-tax), or $0.37 EPS (after tax), including costs associated with the ~~September 2019 acquisition~~planned closure of ~~MidSouth Bancorp, Inc. (“Midsouth”).~~

~~As noted above, second quarter 2020 results included~~18 financial centers, the Voluntary Early Retirement Incentive Program (VERIP), a ~~$160 million provision for credit loss associated with~~reduction in force, and the redemption of subordinated notes, partially offset by a gain on the sale of $497 million of energy loans that included reserve-based (RBL), midstream and nondrilling service credits, significantly reducing our exposure in this portfolio. The transaction closed on July 21, 2020 and the company received proceeds of $257.5 million from the sale. Mastercard Class B common stock (Mastercard stock).

We ~~were able to return to profitability~~achieved solid third quarter performance despite the impact of Hurricane Ida and the COVID-19 Delta surge. Net income was up, with operating results driven largely by a $27 million negative provision, reflecting continued improved economic conditions and asset quality. Despite a 2 bp compression in the ~~third quarter, despite continued challenges~~net interest margin, net interest income (te) was virtually unchanged linked-quarter. Fee income declined, partly as a result of the current economy. Our de-risking strategies implemented during the first half of 2020, which included building a strong reserve for credit losses, issuing subordinated debt, and divesting a large portion of the energy portfolio, positioned us to report solid results and strengthenHurricane Ida disruptions; however, our ~~capital. Pre-provision net revenue increased, our provision for credit loss returned to a more normalized level and our capital ratios improved compared to the second quarter of 2020.~~

The overactive hurricane season has impacted several of our Gulf Coast markets, including Southwest and Southeast Louisiana, Coastal Mississippi, Alabama and Florida, with three significant hurricanes making landfalloperating expense was essentially flat as efficiency initiatives announced earlier in the ~~third quarter~~year are maturing and ~~another~~reflected in ~~October. After each event,~~our results. Our balance sheet remained strong with continued core loan growth and an increase in noninterest-bearing deposits. Capital remained solid, with TCE improving 15 bps to 7.85%.

As an organization, we ~~quickly mobilized portable banking units~~are proud to have aided in hurricane relief efforts and ~~ATMs~~provided recovery assistance to ~~affected areas,~~our impacted communities by maintaining business continuity and ~~most locations reopened under generator power~~through the ~~following day. We will continue~~distribution of meals, ice and fuel to ~~support~~those in need. Reinforced with technological and structural enhancements we have implemented since Hurricane Katrina, our ~~clients, communities~~corporate headquarters in Gulfport, Mississippi, and ~~our colleagues in these areas.~~technology and operations centers opened without storm damage. While we had ~~some~~ damage to facilities, we do not expect ~~significant~~a financial impact ~~from any of~~other than the ~~storms,~~$5.1 million reflected in our third quarter results, including no ~~material~~significant provision for credit ~~losses.~~loss.

We believe our third quarter results and near term guidance are the building blocks for our path to an efficiency ratio target of 55% by fourth quarter of 2022. Our path to this target considers continued momentum in core loan growth, maintaining our target level of expenses with additional efficiency initiatives, including strategic procurement, and deployment of excess liquidity into loans and modest investment in the bond portfolio. Additional information related to our expectations is included in the discussions that follow.

Net interest income (te) for the third quarter of ~~2020~~2021 was ~~$238.4~~$237.5 million, ~~a $2.7 million, or 1%, decrease from~~relatively flat compared to the second quarter of ~~2020, but up $11.8~~2021 and down $0.9 million, or ~~5%, compared to~~less than 1% from the third quarter of ~~2019.~~ 2020.

The ~~linked~~relatively flat net interest income (te) compared to the second quarter ~~decrease~~of 2021 was ~~primarily attributable~~due to ~~declining earning asset volumes, partially~~increases from ~~the energy loan sale,~~an additional accrual day and reduction in ~~excess~~cost of ~~interest-bearing deposit and lower net yields. Factors impacting the lower yields included $1.5 million increase in securities premium amortization, $0.5~~funds, offset by a $1.3 million decrease in ~~purchase accounting accretion~~interest recoveries and $0.7 million increase in net nonaccrual interest reversals. Net interest income was also negatively impacted by higher long-term debt expense of $1.8 million resulting from a full quarter impact of the June 2020 issuance of subordinated debt. This decline in income was partially offset by an ~~approximate $1.8 million impact of the additional accrual day~~unfavorable change in the ~~quarter. The increase compared to the third quarter of 2019 is primarily attributable to an increase in~~ earning asset ~~balances, partially offset by the impact~~mix. The reduction in cost of funds reflects a ~~lower rate environment. The year-over-year increase in earning asset balances is due to PPP loans originated~~favorable change in the ~~second~~

~~and third quarters of 2020, the MidSouth acquisition that occurred~~$150 million in subordinated notes late in the ~~third quarter~~second quarter. The unfavorable change in average earning assets was a result of ~~2019, and an increase~~a net decrease in ~~securities and~~loans, largely due to the forgiveness of PPP loans offset by increases in lower-yielding short-term investments ~~resulting~~and securities from investments made late in the ~~influx of deposits from PPP loans and stimulus funds.~~prior quarter.

The net interest margin for the third quarter of ~~2020~~2021 was ~~3.23%~~2.94%, ~~flat compared to~~down 2 bps from 2.96% in the second quarter of ~~2020.~~2021. The ~~impact~~compression compared to the prior quarter was driven by declines of 6 bps attributable to a change in earning asset mix and 1 bp from lower interest recoveries, partially offset by an increase of 3 bps attributable to lower deposit costs, due in part to strategic pricing and an improving mix and 2 bps due to the full quarter impact of the subordinated note redemption.

The $0.9 million decrease in net interest income (te) compared to the third quarter of 2020 was attributable to the impact of the low interest rate environment on average earning assets combined with an unfavorable change in earning asset ~~yields~~mix, a $0.8 million increase in securities premium amortization, and a ~~full~~$1.6 million decrease in purchase accounting accretion, partially offset by the impact of a $2.7 billion increase in average earning assets, a $3.5 million increase in interest recoveries, and an 18 bp decrease in funding costs as a result of a combination of the interest rate environment, strategic deposit pricing and a favorable change in deposit mix. Average earning asset growth compared to the same quarter last year of $2.7 billion, or 9%, was driven by excess liquidity from a $2.5 billion increase in average deposits. The increase in average earning assets reflects an unfavorable change in mix, with a $2.2 billion increase in short-term investments, a $2.0 billion increase in securities, and a $1.5 billion decrease in loans.

The net interest margin was down 29 bps compared to the third quarter of 2020 as a result of the low interest ~~expense on~~rate environment and a less favorable average earning asset mix, partially offset by a favorable change in the ~~subordinated notes issued in June of 2020 offset a reduction in excess liquidity and lower cost of deposits.~~funding mix. Compared to the third quarter of ~~2019,~~2020, the ~~net interest margin~~yield on earning assets was down 47 bps, while the cost of funds decreased 18 bps ~~primarily driven~~to 0.12% from 0.30%, as we strategically priced downward interest-bearing transaction and time deposits by reducing promotional rates and used excess liquidity to reduce the ~~lower rate environment that resulted in a 78 bp decline~~balance of higher costing brokered deposits. The cost of long-term debt was 5.08%, down 52 bps from 5.60% in the ~~earning asset yield, partially offset by a 60 bp decline in~~third quarter of 2020 due to the ~~cost~~June 2021 redemption of ~~funds.~~subordinated notes.

Net interest income (te) for the nine months ended September 30, ~~2020~~2021 was ~~$714.1~~$712.5 million, ~~up $40.9~~down $1.6 million, or 6%less than 1%, from the same period in ~~2019.~~2020, due in part to one fewer accrual day. The ~~increase was largely driven by a $2.9 billion increase~~impacts of changes in ~~average~~volume/mix and rates within earning assets ~~primarily due to~~and interest-bearing liabilities largely offset, as illustrated in the MidSouth acquisition at the end of the third quarter of 2019, as well as the funding of PPP loans. The lower rate environment and aggressive deposit pricing drove down total cost of funds, which was partially offset by the impact of lower yields on earning assets.table that follows this discussion. The net interest margin was ~~3.29%~~3.00% for the nine months ended September 30, ~~2020,~~2021, down 1529 bps from the same period in ~~2019.~~ 2020.

We anticipate that the net interest margin could compress an additional 4 bps in the fourth quarter of 2021, primarily due to elevated levels of excess liquidity as a result of PPP loan forgiveness, absent opportunities to deploy liquidity. We currently expect the net interest margin to ~~remain relatively stable~~be down 30 bps for the ~~remainder~~full year of ~~2020. We anticipate~~2021 versus the 2020 net interest margin ~~headwinds in 2021 with the substantial reduction in PPP loans~~of 3.27%. Net interest income (te) is expected to ~~begin in~~be slightly down linked-quarter and to be down approximately 1% for the ~~fourth quarter~~full year 2021 as compared to 2020.

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

Three Months Ended

September 30, 2020

June 30, 2020

September 30, 2019

(dollars in millions)

Volume

Interest (d)

Rate

Volume

Interest (d)

Rate

Volume

Interest (d)

Rate

Average earning assets

Commercial & real estate loans (te) (a)

$
17,607.2

$
155.6

3.52
%

$
17,931.8

$
165.3

3.71
%

$
15,126.1

$
185.5

4.87
%
Residential mortgage loans

2,807.5

27.5

3.92
%

2,923.2

28.4

3.89
%

2,978.7

30.1

4.05
%
Consumer loans

1,993.1

24.0

4.79
%

2,102.0

25.3

4.85
%

2,092.3

30.4

5.76
%
Loan fees & late charges

—

15.2

0.00
%

—

11.8

0.00
%

—

0.1

0.00
%
Total loans (te) (b)

22,407.8

222.3

3.95
%

22,957.0

230.8

4.04
%

20,197.1

246.1

4.84
%
Loans held for sale

112.2

0.8

2.96
%

90.0

0.6

2.89
%

55.3

0.6

4.26
%
US Treasury and government agency securities

165.6

0.8

1.99
%

127.1

0.8

2.31
%

141.6

0.8

2.33
%
Mortgage-backed securities and
collateralized mortgage obligations

5,326.2

29.4

2.21
%

5,128.2

30.4

2.37
%

4,966.5

31.4

2.53
%
Municipals (te)

889.5

6.7

3.01
%

866.3

6.6

3.06
%

893.1

6.9

3.08
%
Other securities

8.0

0.1

4.33
%

8.0

0.1

4.31
%

3.5

0.0

3.61
%
Total securities (te) (c)

6,389.3

37.0

2.31
%

6,129.6

37.9

2.47
%

6,004.7

39.1

2.61
%
Total short-term investments

503.0

0.1

0.10
%

837.2

0.3

0.11
%

180.5

1.0

2.01
%
Total earning assets (te)

$
29,412.3

$
260.2

3.53
%

$
30,013.8

$
269.6

3.61
%

$
26,437.6

$
286.8

4.31
%
Average interest-bearing liabilities

Interest-bearing transaction and savings deposits

$
9,806.8

$
4.2

0.17
%

$
9,387.3

$
4.4

0.19
%

$
8,179.3

$
15.7

0.76
%
Time deposits

2,174.6

6.0

1.09
%

3,005.1

11.9

1.60
%

3,840.1

20.0

2.07
%
Public funds

3,196.8

4.6

0.57
%

3,320.3

6.3

0.76
%

2,979.5

13.5

1.80
%
Total interest-bearing deposits

15,178.2

14.8

0.39
%

15,712.7

22.6

0.58
%

14,998.9

49.2

1.30
%
Short-term borrowings

1,733.3

1.6

0.39
%

2,254.7

2.3

0.40
%

2,063.3

8.1

1.57
%
Long-term debt

386.0

5.4

5.60
%

276.9

3.6

5.19
%

234.3

2.9

4.82
%
Total borrowings

2,119.3

7.0

1.33
%

2,531.6

5.9

0.93
%

2,297.6

11.0

1.90
%
Total interest-bearing liabilities

17,297.5

21.8

0.50
%

18,244.3

28.5

0.63
%

17,296.5

60.2

1.38
%
Net interest-free funding sources

12,114.8

—

0.00
%

11,769.5

—

0.00
%

9,141.1

—

0.00
%
Total cost of funds

$
29,412.3

$
21.8

0.30
%

$
30,013.8

$
28.5

0.38
%

$
26,437.6

$
60.2

0.90
%
Net interest spread (te)

$
238.4

3.02
%

$
241.1

2.98
%

$
226.6

2.93
%
Net interest margin

$
29,412.3

$
238.4

3.23
%

$
30,013.8

$
241.1

3.23
%

$
26,437.6

$
226.6

3.41
%

	Nine Months Ended																Three Months Ended
	September 30, 2020							September 30, 2019									September 30, 2021							June 30, 2021							September 30, 2020
(dollars in millions)	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)	$	17,217.5	$	503.5		3.91	%		$	15,090.3	$	551.3			4.88	%	$	16,918.4	$	150.3		3.52	%	$	17,233.1	$	149.3		3.47	%	$	17,607.2	$	155.6		3.52	%
Residential mortgage loans		2,899.6		85.4		3.93	%			2,963.7		91.4			4.11	%		2,376.5		21.5		3.63	%		2,443.0		23.9		3.92	%		2,807.5		27.5		3.92	%
Consumer loans		2,083.3		78.7		5.05	%			2,104.3		90.6			5.76	%		1,646.3		20.4		4.90	%		1,712.7		21.0		4.92	%		1,993.1		24.0		4.79	%
Loan fees & late charges		—		26.4		0.00	%			—		(0.9	)		0.00	%		—		13.5		0.00	%		—		16.5		0.00	%		—		15.2		0.00	%
Total loans (te) (b)		22,200.4		694.0		4.17	%			20,158.3		732.4			4.86	%		20,941.2		205.7		3.90	%		21,388.8		210.7		3.95	%		22,407.8		222.3		3.95	%
Loans held for sale		80.9		2.1		3.47	%			34.7		1.2			4.57	%		82.6		0.6		3.06	%		89.6		0.6		2.90	%		112.2		0.8		2.96	%
US Treasury and government agency securities		139.2		2.3		2.20	%			130.5		2.2			2.30	%		395.6		1.6		1.59	%		291.0		1.2		1.67	%		165.6		0.8		1.99	%
Mortgage-backed securities and collateralized mortgage obligations		5,198.4		91.1		2.34	%			4,706.7		90.3			2.56	%		7,033.7		31.4		1.79	%		6,961.4		31.0		1.78	%		5,326.2		29.4		2.21	%
Municipals (te)		877.7		20.0		3.05	%			909.8		21.4			3.13	%		925.0		6.8		2.93	%		930.1		6.8		2.94	%		889.5		6.7		3.01	%
Other securities		8.0		0.3		4.31	%			3.5		0.1			3.33	%		14.5		0.1		3.56	%		12.3		0.1		3.64	%		8.0		0.1		4.33	%
Total securities (te) (c)		6,223.3		113.7		2.44	%			5,750.5		114.0			2.64	%		8,368.8		39.9		1.91	%		8,194.8		39.1		1.91	%		6,389.3		37.0		2.31	%
Total short-term investments		515.7		0.8		0.21	%			208.3		3.4			2.20	%		2,704.8		1.0		0.15	%		2,522.3		0.7		0.11	%		503.0		0.1		0.10	%
Total earning assets (te)	$	29,020.3	$	810.6		3.73	%		$	26,151.8	$	851.0			4.35	%	$	32,097.4	$	247.2		3.06	%	$	32,195.5	$	251.1		3.13	%	$	29,412.3	$	260.2		3.53	%
Average interest-bearing liabilities
Interest-bearing transaction and savings deposits	$	9,332.6	$	21.4		0.31	%		$	8,096.3	$	45.6			0.75	%	$	11,341.0	$	1.7		0.06	%	$	11,315.8	$	2.7		0.10	%	$	9,806.8	$	4.2		0.17	%
Time deposits		2,895.0		33.3		1.54	%			3,800.8		57.4			2.02	%		1,274.9		1.0		0.32	%		1,466.5		1.7		0.47	%		2,174.6		6.0		1.09	%
Public funds		3,256.2		21.6		0.89	%			3,077.7		42.1			1.83	%		3,085.4		2.3		0.30	%		3,208.7		2.6		0.33	%		3,196.8		4.6		0.57	%
Total interest-bearing deposits		15,483.8		76.3		0.66	%			14,974.8		145.1			1.30	%		15,701.3		5.0		0.13	%		15,991.0		7.0		0.18	%		15,178.2		14.8		0.39	%
Short-term borrowings		2,044.9		8.4		0.55	%			1,790.1		24.1			1.93	%
Repurchase agreements																		509.0		0.1		0.08	%		556.1		0.2		0.15	%		627.9		0.3		0.19	%
Other short-term borrowings																		1,103.3		1.4		0.49	%		1,104.9		1.4		0.49	%		1,105.4		1.3		0.50	%
Long-term debt		298.5		11.8		5.25	%			230.5		8.5			3.22	%		248.0		3.2		5.08	%		371.9		5.0		5.42	%		386.0		5.4		5.60	%
Total borrowings		2,343.4		20.2		1.15	%			2,020.6		32.6			2.15	%		1,860.3		4.7		0.99	%		2,032.9		6.6		1.30	%		2,119.3		7.0		1.33	%
Total interest-bearing liabilities		17,827.2		96.5		0.72	%			16,995.4		177.7			1.40	%		17,561.6		9.7		0.22	%		18,023.9		13.6		0.30	%		17,297.5		21.8		0.50	%
Net interest-free funding sources		11,193.1		—		0.00	%			9,156.4		—			0.00	%		14,535.8							14,171.6							12,114.8
Total cost of funds	$	29,020.3	$	96.5		0.44	%		$	26,151.8	$	177.7			0.91	%	$	32,097.4	$	9.7		0.12	%	$	32,195.5	$	13.6		0.17	%	$	29,412.3	$	21.8		0.30	%
Net interest spread (te)			$	714.1		3.01	%				$	673.3			2.95	%			$	237.5		2.84	%			$	237.5		2.82	%			$	238.4		3.02	%
Net interest margin	$	29,020.3	$	714.1		3.29	%		$	26,151.8	$	673.3			3.44	%	$	32,097.4	$	237.5		2.94	%	$	32,195.5	$	237.5		2.96	%	$	29,412.3	$	238.4		3.23	%

	Nine Months Ended
	September 30, 2021							September 30, 2020
(dollars in millions)	Volume		Interest (d)		Rate			Volume		Interest (d)		Rate
Average earning assets
Commercial & real estate loans (te) (a)	$	17,160.4	$	455.4		3.55	%	$	17,217.5	$	503.5		3.91	%
Residential mortgage loans		2,472.5		70.1		3.78	%		2,899.6		85.4		3.93	%
Consumer loans		1,722.6		62.7		4.87	%		2,083.3		78.7		5.05	%
Loan fees & late charges		—		43.4		0.00	%		—		26.4		0.00	%
Total loans (te) (b)		21,355.5		631.6		3.95	%		22,200.4		694.0		4.17	%
Loans held for sale		94.6		2.0		2.76	%		80.9		2.1		3.47	%
US Treasury and government agency securities		301.0		3.7		1.66	%		139.2		2.3		2.20	%
Mortgage-backed securities and collateralized mortgage obligations		6,770.4		91.8		1.81	%		5,198.4		91.1		2.34	%
Municipals (te)		929.8		20.4		2.93	%		877.7		20.0		3.05	%
Other securities		12.8		0.4		3.73	%		8.0		0.3		4.31	%
Total securities (te) (c)		8,014.0		116.3		1.94	%		6,223.3		113.7		2.44	%
Total short-term investments		2,309.4		2.1		0.12	%		515.7		0.8		0.21	%
Total earning assets (te)	$	31,773.5	$	752.0		3.16	%	$	29,020.3	$	810.6		3.73	%
Average interest-bearing liabilities
Interest-bearing transaction and savings deposits	$	11,152.9	$	7.8		0.09	%	$	9,332.6	$	21.4		0.31	%
Time deposits		1,497.8		5.7		0.51	%		2,895.0		33.3		1.54	%
Public funds		3,168.0		7.8		0.33	%		3,256.2		21.6		0.89	%
Total interest-bearing deposits		15,818.7		21.3		0.18	%		15,483.8		76.3		0.66	%
Repurchase agreements		549.3		0.5		0.12	%		574.6		1.2		0.27	%
Other short-term borrowings		1,104.3		4.1		0.49	%		1,470.3		7.2		0.66	%
Long-term debt		338.4		13.6		5.37	%		298.5		11.8		5.25	%
Total borrowings		1,992.0		18.2		1.22	%		2,343.4		20.2		1.15	%
Total interest-bearing liabilities		17,810.7		39.5		0.30	%		17,827.2		96.5		0.72	%
Net interest-free funding sources		13,962.8							11,193.1
Total cost of funds	$	31,773.5	$	39.5		0.17	%	$	29,020.3	$	96.5		0.44	%
Net interest spread (te)			$	712.5		2.87	%			$	714.1		3.01	%
Net interest margin	$	31,773.5	$	712.5		3.00	%	$	29,020.3	$	714.1		3.29	%

~~For~~During the third quarter of ~~2020,~~2021, we recorded a negative provision for credit losses ~~totaling $25.0~~of $27.0 million, compared to ~~$306.9~~a negative provision for credit losses of $17.2 million in the second quarter of ~~2020~~2021, and ~~$12.4~~a $25.0 million provision for credit losses expense in the third quarter of ~~2019.~~2020. The third quarter of 2021 negative provision included net charge-offs of $1.8 million and a reserve release of $28.8 million. The second quarter of 2021 negative provision included net charge-offs of $10.5 million and a reserve release of $27.7 million. The negative provision for credit losses recorded in the third and second quarters of 2021 reflect improvements in macroeconomic forecasts and in our asset quality metrics. The third quarter of 2020 provision for credit loss expense included net charge-offs of $24.0 million and a reserve build of $1.0 million. The second quarter of 2020 provision for credit losses included approximately $146.8 million related to the COVID-19 recessionary environment, with an additional $160.1 million related to the energy loan sale, comprised of charge-offs of $242.6 million and a reserve release of $82.5 million. Economic conditions related to the pandemic, coupled with the write-down of the divested energy loans to their net realizable value, led to the elevated provisions for credit losses recorded in the first and second quarters of the year. As economic forecasts were relatively stable quarter over quarter and loan volumes declined, we returned to a more normalized provision level during the third quarter of 2020.

For the nine months ended September 30, ~~2020,~~2021, we recorded a ~~total~~negative provision for credit losses of ~~$578.7~~$49.1 million, compared to ~~$38.6~~a provision for credit loss expense of $578.7 million for same period in 2020. As noted above, reserve releases made in 2021 reflect continued improvement in macroeconomic forecasts and asset quality metrics. The provision for credit losses expense recorded in the nine months ended September 30, ~~2019. The year-over-year increase is attributable~~2020 was driven by economic deterioration brought on by the widespread economic shutdown in response to the ~~impact of widespread economic disruption~~COVID-19 pandemic and the ~~additional provision related to~~loss on the sale of a portion of our energy loan ~~sale.~~portfolio in July 2020.

48Net charge-offs in the third quarter of 2021 were $1.8 million, or 0.03% of average total loans on an annualized basis, compared to $10.5 million, or 0.20% in the second quarter of 2021, and $24.0 million, or 0.43% in the third quarter of 2020. The third quarter of 2021 included $0.5 million of commercial net charge-offs, $0.4 million of residential mortgage net recoveries and $1.7 million of consumer net charge-offs. The second quarter of 2021 included $9.3 million of commercial net charge-offs, $0.1 million of residential

mortgage net recoveries and $1.3 million of consumer net charge-offs. Net charge-offs in the third quarter of 2020 ~~were $24.0~~included $17.3 million ~~or 0.43%~~ of average total loans on an annualized basis, compared to $302.7 million or 5.30% in the second quarter of 2020, and $12.5 million, or 0.25% in the third quarter of 2019. The third quarter of 2020 included net charge-offs of ~~$17.3 million of~~ healthcare-dependent credits and no energy related charge-offs. Substantially all of the commercial credits charged off during the third quarter were existing problem credits that were further impacted by the pandemic. The second quarter of 2020 included $242.6 million of charge-offs on the energy loans sold as a part of our strategy to reduce our concentration in that portfolio. The remaining $60.1 million of second quarter 2020 net charge-offs included $20.7 million of credits in the healthcare sector and $25.9 million of credits in the energy portfolio. Third quarter of 2019 reflects a more normalized level of net charge-offs in a benign credit environment.credits.

The discussion of Allowance for Credit Losses and Asset Quality later in this Item provides additional information on these changes and on general credit ~~quality.~~quality, including our near-term outlook.

Noninterest income totaled ~~$83.7~~$93.4 million for the third quarter of ~~2020, up $9.8~~2021, down $0.9 million, or ~~13%~~1%, from the second quarter of ~~2020~~2021, and up ~~$0.5~~$9.6 million, or 1%11%, from the third quarter of 2020. Noninterest income includes nonoperating income of $4.6 million from the sale of the remaining Hancock Horizon Funds in the third quarter of 2021 and $2.8 million related to the sale of Mastercard stock in the second quarter of 2021. Excluding these items, operating noninterest income decreased $2.7 million, or 3%, linked quarter which was largely attributable to lower secondary mortgage market operations income, with limited impact from Hurricane Ida. The increase compared to the third quarter of ~~2019. The linked-quarter increase in noninterest income~~2020 was attributable to ~~improvements in~~ most fee categories as ~~the economy began to reopen~~economic conditions have improved and consumer activity ~~rebounded. The modest increase~~rebounded, and the previously mentioned nonoperating items, partially offset by the decline in ~~noninterest income compared to the prior year was largely due to higher~~ secondary mortgage market ~~fees driven by the low rate environment~~operations income and ~~benefit proceeds from bank-owned~~a lower level of bank owned life insurance ~~contracts, partially offset by declines in most other fee categories due to the economic slowdown stemming from the pandemic.~~gains.

The components of noninterest income are presented in the following table for the indicated periods.

	Three Months Ended						Nine Months Ended				Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,				September 30,		June 30,		September 30,		September 30,		September 30,
(in thousands)	2020		2020		2019		2020		2019		2021		2021		2020		2021		2020
Service charges on deposit accounts	$	18,440	$	15,518	$	21,892	$	56,795	$	62,982	$	21,159	$	19,381	$	18,440	$	59,686	$	56,795
Trust fees		14,424		14,160		15,098		43,390		46,126		16,041		16,307		14,424		47,351		43,390
Bank card and ATM fees		17,222		15,957		17,154		50,541		49,063		19,833		20,483		17,222		58,436		50,541
Investment and annuity fees and insurance commissions		5,988		5,366		7,048		18,504		20,167		7,167		7,331		5,988		21,956		18,504
Secondary mortgage market operations		12,875		9,808		5,713		28,736		13,872		6,972		12,556		12,875		31,238		28,736
Income from bank-owned life insurance		6,628		3,317		4,147		14,211		11,495		3,907		3,347		6,628		14,535		14,211
Credit related fees		2,911		2,609		2,988		8,585		8,520		2,568		2,971		2,911		8,383		8,585
Income from derivatives		1,739		4,108		4,324		9,718		8,733
Income from customer and other derivatives												2,970		3,750		1,739		11,755		9,718
Securities transactions, net												—		333		376		333		488
Gain on sale of Mastercard Class B common stock												—		2,800		—		2,800		—
Gain on sale of Hancock Horizon Funds												4,576		—		—		4,576		—
Other miscellaneous		3,521		3,100		4,866		11,598		12,025		8,168		5,013		3,145		13,673		11,110
Total noninterest income	$	83,748	$	73,943	$	83,230	$	242,078	$	232,983	$	93,361	$	94,272	$	83,748	$	274,722	$	242,078

Service charges are composed of overdraft and insufficient funds fees, ~~consumer,~~ business and corporate account analysis ~~service charges,~~fees, overdraft protection fees and other customer transaction-related charges. Service charges on deposits totaled ~~$18.4~~$21.2 million for the third quarter of ~~2020,~~2021, up ~~$2.9~~$1.8 million, or ~~19%~~9%, from the second quarter of ~~2020~~2021, and ~~down $3.5~~up $2.7 million, or ~~16%~~15%, from the third quarter of ~~2019.~~2020. The increase from the second quarter ~~was largely due~~of 2021 is primarily attributable to ~~higher overdraft~~an additional processing day, increased account activity and ~~service charge fees resulting from an~~a lower earnings credit rate applied to excess deposit balances. The increase ~~in customer spending activity and the resumption of select fees that had been temporarily waived during the first and second quarters. The decrease~~ from the third quarter of ~~2019~~2020 was largely due to both increased activity related fees and higher ~~customer account balances that resulted from PPP loan proceeds and stimulus payments, and decreased~~overdraft revenue, which continues to rebound as consumer spending activity returns, although fees remain lower than pre-pandemic levels due in part to ~~the economic environment.~~higher checking account balances.

Trust fee income represents revenue generated from a full range of trust services, including asset management and custody services provided to individuals, businesses and institutions. Trust fees ~~increased~~decreased $0.3 million, or 2%, ~~linked~~from the prior quarter and ~~decreased $0.7~~increased $1.6 million, or 4%11%, ~~from~~compared to the same quarter a year ago. The ~~modest increase~~decrease compared to the prior quarter is primarily due to seasonal tax preparation fees recorded in the ~~rebound of~~second quarter. The increase from the ~~market. The decrease compared the prior~~same quarter a year ago was largely due to the ~~downturn~~continued rebound from the volatility in the ~~market beginning at the end of the first quarter of~~markets in 2020 and ~~continuing through much of~~a new fee structure introduced in the second quarter of ~~2020, impacting~~2021. Trust assets under management ~~and related trust fees. The estimated fair value of trust assets under management as of~~totaled $9.5 billion at September 30, ~~2020 was $9.0 billion,~~2021, compared to ~~$8.8~~$10.1 billion at June 30, ~~2020,~~2021, and ~~$9.3~~$9.0 billion at September 30, ~~2019.~~2020.

Bank card and ATM fees include interchange and other income from credit and debit card transactions, fees earned from processing card transactions for merchants, and fees earned from ATM transactions. Bank card and ATM fees totaled ~~$17.2~~$19.8 million for the third quarter of ~~2020, up $1.3~~2021, down $0.7 million, or 8%3%, from the second quarter of ~~2020~~2021 and up ~~less than $0.1~~$2.6 million, or 15%, from the same quarter last year. The ~~increase~~decrease from the prior quarter iswas largely due to branch and ATM closures and fee waivers related to Hurricane Ida. The increase from the same quarter last year reflects higher levels of ~~card~~ activity as ~~consumer spending activity increased.~~ economic conditions continue to improve.

Investment and annuity fees and insurance commissions increased $0.6 million, or 12%, compared to second quarter 2020 and were down $1.1 million, or 15%, compared to the same quarter a year ago. Investment and annuity fees and insurance commissions were up from the prior quarter primarily due to an increase in investment and annuity transaction-based fees as a result of the phased

~~re-opening of~~Investment and annuity fees and insurance commissions decreased $0.2 million, or 2%, compared to the ~~financial centers during~~second quarter 2021 and were up $1.2 million, or 20%, compared to the ~~third~~same quarter ~~of 2020~~a year ago. The decline from the prior quarter was primarily due to lower underwriting activity, annuity sales and ~~an increase in~~ insurance commissions, partially offset by ~~a $0.2 million decrease in corporate underwriting~~higher investment activity fees. The ~~decrease~~increase from the same quarter ~~last~~of the prior year was ~~due~~attributable to ~~decreases~~an increase in ~~transaction-based fees due to the continued economic impact of the pandemic, lower insurance~~investment commissions and ~~a $0.3 million decrease~~annuity sales activity as the lower interest rate environment slowed bond trading activity in ~~corporate underwriting fees.~~2020.

Income from secondary mortgage market operations is comprised of income produced from the origination and sales of residential mortgage loans in the secondary market. We offer a full range of mortgage products to our customers and typically sell longer-term fixed rate loans while retaining the majority of adjustable rate loans, as well as loans generated through programs to support customer relationships. Income from secondary mortgage market operations was ~~$12.9~~$7.0 million in the third quarter of ~~2020, up $3.1~~2021, down $5.6 million, or ~~31%~~44%, from the second quarter of ~~2020~~2021 and ~~up $7.2~~down $5.9 million, or ~~125%~~46%, from the third quarter of ~~2019. Origination volume during~~2020. The decrease in income compared to the prior quarter was due largely to the diversification of delivery methods in the second quarter of 2021, which resulted in a one-time acceleration of income recognition in the prior quarter, as well as slowed production in the third quarter ~~of 2020, particularly when compared~~due in part to ~~the third quarter of 2019, was positively impacted~~disruption caused by ~~the low rate environment, resulting~~Hurricane Ida in a ~~surge in both refinancing and purchase production. Mortgage production for the third~~portion of our market. Third quarter ~~of 2020 was up 31%~~2021 mortgage applications were down approximately 15% when compared to the second quarter of ~~2020 and up 57% compared to the third quarter of 2019.~~2021. Secondary mortgage market operations income will vary based on ~~origination~~application volume and pull through rates. We expect mortgage fees to decline in time as the ~~timing of subsequent sales. To the extent low interest rate trends persist,~~demand for mortgage ~~loan production may remain elevated in the near term, but is not expected to be at the level experienced in third quarter of 2020.~~loans and refinancing slows.

Income from bank-owned life insurance (BOLI) is typically generated through insurance benefit proceeds as well as the growth of the cash surrender value of insurance contracts held. Income from bank-owned life insurance was ~~$6.6~~$3.9 million infor the third quarter of ~~2020,~~2021, up ~~$3.3~~$0.6 million, or ~~100%~~17%, from the second quarter of ~~2020~~2021, and ~~up $2.5~~down $2.7 million, or ~~60%~~41%, from the third quarter of ~~2019.~~2020. The linked-quarter increase is attributable to benefit proceeds recorded in third quarter of 2021, and the decrease from the prior year is attributable to benefit proceeds of $3.4 million recorded in the third quarter of ~~2020, compared to none in the second quarter of 2020, and $0.5 million in the third quarter of 2019. A similar level of benefits proceeds is not expected in the fourth quarter of~~ 2020.

~~Credit related~~Credit-related fees include ~~unused commitment~~ fees ~~and letter~~assessed on letters of credit ~~fees.~~and unused portions of loan commitments. Credit related fees were ~~$2.9~~$2.6 million for the third quarter of ~~2020, up~~2021, down $0.4 million, or 14%, from the second quarter of 2021 and down $0.3 million, or 12%, from the ~~second~~third quarter of ~~2020 and down $0.1 million, or 3%,~~2020. The linked quarter decrease is primarily attributable to a decline in loan commitment fees, as credit line utilization increased during the period. The decrease from the third quarter of ~~2019. The linked quarter increase was due~~2020 is primarily attributable to ~~higher unused commitment fees and letter~~a decrease in letters of credit fees. ~~The decrease over the same quarter last year~~

Income from customer and other derivatives is primarily due to lower unused commitment fees, partially offset by higher letter of credit fees. During the second quarter of 2020, customers drew on their lines as a source of liquidity as a cautionary measure in response to the pandemic. They began to pay down the lines during the third quarter of 2020, resulting in higher unused commitment fees compared to the prior quarter, but lower compared to the same quarter a year ago.

~~Income~~largely from our customer interest rate derivative program and totaled $3.0 million for the third quarter of 2021 compared to $3.8 million in the second quarter of 2021 and $1.7 million for the third quarter of 2020 compared to $4.1 million in the second quarter of 2020 and $4.3 million for the third quarter of 2019. The decrease compared to both the previous quarter and the third quarter of 2019 reflects a decline in customer demand for interest rate swap arrangements, resulting in a lower transaction volume, due in part to the sustained low rate environment.2020. Derivative income can be volatile and is dependent upon the composition of the portfolio, volume and mix of sales activity and market value adjustments due to market interest rate movement.

Other miscellaneous income ~~was $3.5~~is comprised of various items, including income from small business investment companies (SBIC), FHLB stock dividends, and syndication fees. Other miscellaneous income (excluding nonoperating items) totaled $8.2 million, ~~in the third quarter of 2020,~~ up ~~$0.4~~$3.2 million compared to the second quarter of ~~2020~~2021 and ~~down $1.3~~up $5.0 million compared to the third quarter of ~~2019.~~2020. The increase compared to the prior ~~quarter~~period was largely ~~due to $0.4 million of~~driven by net ~~gain on sales of securities, $0.4 million in~~ gains on sales of other assets, ~~primarily leases,~~partially offset by decreases in syndication fees and anSBIC income. The increase compared to the prior year reflects increased net gains on sales of ~~$0.3 million in income from investments in small business investment companies,~~other assets and higher teller fees, partially offset by a ~~$0.2 million decrease~~gain on a lease buyout recorded in ~~syndication fees and a $0.2 million decrease in FHLB stock dividends. The decrease compared to~~ the third quarter of 2019 includes a decrease of $1.0 million in income from investments in small business investment companies, a $0.6 million decrease in syndication fees, and a $0.2 million decrease in FHLB stock dividends, partially offset by the $0.4 million net gain on the sales of securities and the $0.3 million gain on sales of assets, primarily leases.2020.

Noninterest income for the first nine months of ~~2020 totaled $242.1~~2021 was $274.7 million, up ~~$9.1~~$32.6 million, or 4%13% from the first nine months of ~~2019. The impact~~2020, and includes the $7.4 million of nonoperating income, as noted above. Excluding the ~~lower rate environment drove a surge in activity in our secondary mortgage market operations with fees~~nonoperating items, operating noninterest income was up ~~$14.9~~$25.3 million, or ~~107%, compared to the same period~~10%. The increase in ~~2019. Income on bank-owned life insurance was up $2.7 million, or 24%, as mortality benefits received in~~fee income for the first nine months of 2021 compared to 2020 ~~exceeded~~includes increases in almost all fee categories and is primarily attributable to the economic rebound from the recessionary market conditions present in much of the first nine months of ~~2019 by $2.9 million.~~2020. Card fees were up ~~$1.5~~$7.9 million, or 3%16%, ~~due largely~~related to increased ~~activity as a result of the acquisition of MidSouth in the third quarter of 2019, partially offset by lower levels of activity during 2020 as a result of the pandemic. Derivative~~activity. Trust fees were up ~~$1.0~~$4.0 million, or ~~11%~~9%, primarily in personal trust with improved market conditions and a higher level of assets under management. Insurance, investment and annuity fees were up $3.5 million, or 19%, with ~~higher activity during the first half of 2020. The first nine months of 2020 also includes a $1.5~~increased annuity and investment fees. Secondary mortgage fees were up $2.5 million, ~~gain on the sale of historic tax credits. These increases were partially offset by lower service charges, down $6.2 million, and trust fees, down $2.7 million,~~or 9%, related to the ~~impact~~low interest rate environment. Other miscellaneous income, excluding nonoperating items, was up $2.6 million, or 23%.

Management expects fee income, excluding nonoperating items, to remain relatively flat for the fourth quarter of ~~COVID-19~~2021, and to grow approximately 9% on ~~economic conditions.~~a full year basis with increases expected in most fee categories.

Noninterest expense for the third quarter of ~~2020~~2021 was ~~$195.8~~$194.7 million, down ~~$0.8~~$42.1 million, or ~~less than 1%~~18%, from the second quarter of ~~2020,~~2021, and down ~~$17.8~~$1.1 million, or 8%1%, from the third quarter of ~~2019.~~2020. The ~~linked~~third quarter ~~decrease is largely due~~of 2021 included $3.2 million in net nonoperating expenses which included a $1.9 million severance reversal for certain employees with positions eliminated in the prior quarter that were internally placed and $5.1 million in expenses related to ~~a focus on expense control with offsetting nonrecurring items leading~~Hurricane Ida, which includes damage to ~~a slightly lower level~~facilities, recovery cost, charitable contributions to organizations providing recovery assistance, temporary housing, distribution of ~~expense, discussed in more detail below. The decrease over the same quarter last year is primarily due to merger costs of $28.8 million associated with the acquisition~~meals, ice and ~~operational~~fuel, among

~~integration~~other things. The second quarter of ~~MidSouth incurred~~2021 included $45.0 million of nonoperating expenses, with $40.8 million related to initiatives put in place to improve overall efficiency and operating performance and $4.2 million related to the redemption of $150 million of subordinated notes. There were no nonoperating expenses in the third quarter of ~~2019.~~2020. Excluding ~~the nonoperating merger costs, noninterest~~these items, operating expense was ~~up $11.0~~down $0.3 million, or 6%less than 1%, ~~reflecting an increase~~linked quarter, and down $4.3 million, or 2%, from the same quarter a year ago. The decrease in ~~personnel~~operating expense from the prior quarter was largely driven by lower salaries and benefits and lower occupancy as a result of initiatives put in place during the second quarter of 2021, and lower professional services expense, partially offset by higher business development costs, ~~related to annual merit raises~~regulatory expense and data processing expense, as ~~well as increased costs from MidSouth operations, additional costs incurred in response~~card activity increased. Compared to the ~~pandemic,~~same quarter last year, the decrease was largely attributable to personnel expense savings as a result of reduced headcount, lower occupancy expense resulting from branch closures, lower FDIC assessment and ~~an increase~~corporate value tax, and a decrease in professional services expense, ~~largely related to PPP consulting.~~partially offset by an increase in data processing expense as a result of higher level of card activity.

The components of noninterest expense for the periods indicated are presented in the following tables.

	Three Months Ended									Nine Months Ended						Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,						September 30,			June 30,			September 30,			September 30,			September 30,
(in thousands)	2020			2020			2019			2020			2019			2021			2021			2020			2021			2020
Compensation expense	$	97,095		$	98,756		$	93,858		$	286,922		$	265,573		$	92,601		$	100,587		$	97,095		$	289,034		$	286,922
Employee benefits		20,761			21,653			18,622			64,892			57,240			19,377			42,067			20,761			85,213			64,892
Personnel expense		117,856			120,409			112,480			351,814			322,813			111,978			142,654			117,856			374,247			351,814
Net occupancy expense		13,191			13,559			13,156			39,272			38,101			11,974			12,955			13,191			37,839			39,272
Equipment expense		5,355			4,752			4,685			14,724			13,706			4,894			4,392			5,355			14,067			14,724
Data processing expense		21,888			21,250			21,532			65,185			60,951			24,766			23,885			21,888			71,598			65,185
Professional services expense		14,372			10,985			17,704			35,098			35,537			12,748			13,473			14,372			37,472			35,098
Amortization of intangible assets		4,788			5,169			4,889			15,302			15,074			4,082			4,245			4,788			12,746			15,302
Deposit insurance and regulatory fees		4,108			5,116			3,995			15,039			14,156			3,680			2,967			4,108			10,042			15,039
Other real estate and foreclosed asset (income) expense		(482	)		(460	)		2,055			9,188			1,459
Other real estate and foreclosed asset expense																	(376	)		(86	)		(482	)		(456	)		9,188
Advertising		3,159			2,696			5,435			10,089			11,768			3,638			2,276			3,159			8,400			10,089
Corporate value and franchise taxes		4,872			4,481			4,109			13,649			12,366
Corporate value, franchise and other non-income taxes																	3,414			3,422			4,872			11,300			13,649
Telecommunications and postage		4,043			3,374			3,610			11,483			10,439			3,087			3,163			4,043			9,568			11,483
Entertainment and contributions		1,315			3,384			2,765			7,146			8,215			2,280			1,486			1,315			5,214			7,146
Travel expense		309			396			1,172			1,816			3,614			765			667			309			1,789			1,816
Printing and supplies		1,271			1,627			1,459			4,006			3,720			914			941			1,271			2,833			4,006
Tax credit investment amortization		961			961			1,286			2,882			3,658			1,112			1,113			961			3,337			2,882
Other retirement expense		(6,337	)		(6,337	)		(4,152	)		(18,796	)		(12,409	)		(7,294	)		(6,806	)		(6,337	)		(20,645	)		(18,796	)
Loss on extinguishment of debt																	—			4,165			—			4,165			—
Loss on facilities and equipment from consolidation																	—			15,462			—			15,462			929
Other miscellaneous		5,105			5,177			17,374			17,751			29,653			13,041			6,396			5,105			25,567			16,822
Total noninterest expense	$	195,774		$	196,539		$	213,554		$	595,648		$	572,821		$	194,703		$	236,770		$	195,774		$	624,545		$	595,648

	Three Months Ended						Nine Months Ended				Three Months Ended							Nine Months Ended
	September 30,		June 30,		September 30,		September				September 30,			June 30,		September 30,		September 30,
(in thousands)	2020		2020		2019		2020		2019		2021			2021		2020		2021			2020
Nonoperating expense
Compensation expense											$	(1,862	)	$	5,161	$	—	$	3,299		$	—
Employee benefits												3			20,189		—		20,192			—
Personnel expense	$	—	$	—	$	5,002	$	—	$	5,002		(1,859	)		25,350		—		23,491			—
Net occupancy expense		—		—		735		—		735		2			—		—		2			—
Equipment expense		—		—		188		—		188		2			—		—		2			—
Data processing expense		—		—		437		—		437
Professional services expense		—		—		7,491		—		7,491
Advertisng		—		—		2,624		—		2,624
Advertising												2			—		—		2			—
Entertainment and contributions												174			—		—		174			—
Travel expense												5			—		—		5			—
Printing and supplies		—		—		433		—		433		22			—		—		22			—
other expenses		—		—		11,900		—		11,900
Loss on extinguishment of debt												—			4,165		—		4,165	��		—
Loss on facilities and equipment from consolidation												—			15,462		—		15,462			—
Other miscellaneous												4,877			—		—		4,877			—
Total nonoperating expenses	$	—	$	—	$	28,810	$	—	$	28,810	$	3,225		$	44,977	$	—	$	48,202		$	—

Personnel expense consists of salaries, incentive compensation, long-term incentives, payroll taxes, and other employee benefits such as 401(k), pension, and medical, life and ~~disability insurance.~~disability. Personnel expense totaled ~~$117.9~~$112.0 million for the third quarter of ~~2020,~~2021, down ~~$2.6~~$30.7 million, or 2%22%, compared to the prior quarter and ~~up $5.4~~down $5.9 million, or 5%, compared to the same quarter last year. The ~~decrease from prior~~third quarter ~~was~~of 2021 includes a $1.9 million credit of nonoperating expense, primarily ~~due to lower bonus, incentive, and payroll tax expense; partially offset by severance accruals~~ related to the ~~closure~~reversal of ~~two trust offices~~severance, as noted above. The second quarter of 2021 includes $25.4 million of nonoperating expenses related to efficiency initiatives, including the VERIP ($20.2 million) and reduction in ~~New York~~force ($5.1 million). Excluding the nonoperating expenses, personnel expense was down $3.5 million, or 3%, from the prior quarter, and ~~New Jersey, twelve branches~~down $4.0 million, or 3%, from the same quarter last year. The decrease from the prior quarter is primarily attributable to a decrease of 197 full-time equivalent employees (FTEs), primarily the result of the reduction in ~~Louisiana and Mississippi scheduled for closure in late October 2020, and other associate reductions.~~force at the end of the second quarter. The ~~increase over~~decrease from the same quarter last year is ~~primarily due~~attributable to ~~compensation expense related to annual merit increases, overtime related to an increase in the volume~~a decrease of ~~mortgage origination and implementation~~629 FTEs as a result of the ~~PPP, other support costs in response to~~VERIP, the ~~pandemic, the impact~~closure of ~~adding MidSouth operations,~~20 financial centers and the ~~severance accruals mentioned above. These increases are~~second quarter reduction in force, partially offset by ~~merger-related expenses of $5.0 million in the third quarter of 2019.~~annual merit raises and higher bonus and incentive accruals.

Occupancy and equipment expenses are primarily composed of lease expenses, depreciation, maintenance and repairs, rent, taxes, and other equipment expenses. Occupancy and equipment expenses totaled ~~$18.5~~$16.9 million in the third quarter of ~~2020, up $0.2~~2021, down $0.5 million, or 1%3%, from the second quarter of ~~2020~~2021 and ~~up $0.7~~$1.7 million, or 4%9%, from the third quarter of ~~2019.~~2020. The linked-quarter ~~increase~~decrease was largely related to a decrease in occupancy expense due in part to branch closures, partially offset by an increase in equipment expense ~~partially offset by a decrease in occupancy expense~~ related to ~~insurance payments in the second quarter of 2020.~~equipment purchases. The ~~increase~~decrease from the same quarter last year is ~~primarily~~ related ~~increased~~to decreases in both occupancy expense and equipment expense, ~~and additional cost from~~largely attributable to the ~~MidSouth operations. The third quarter of 2019 included $0.9 million~~eight financial centers that were closed in ~~merger-related expenses.~~April 2021.

Data processing expense includes expenses related to third party technology processing and servicing costs, technology project costs and fees associated with bank card and ATM transactions. Data processing expense was ~~$21.9~~$24.8 million for the third quarter of ~~2020,~~2021, up ~~$0.6~~$0.9 million, or 3%4%, compared to the second quarter of ~~2020,~~2021, and up ~~$0.4~~$2.9 million, or 2%13%, compared to the third quarter of ~~2019.~~2020. The increase over the second quarter of ~~2020~~2021 is largely due to ~~a higher level of ATM and~~the increase in card ~~activity, reflecting the partial resumption of economic activities as many areas in our market began or continued phased reopening programs.~~activity. The increase from ~~the~~ third quarter of ~~2019~~2020 is ~~primarily~~largely due to ~~a higher level of ATM and~~expense associated with investments in new technology, along with processing expense related to the increase in bank card ~~activity as a result of the acquisition of MidSouth. The third quarter of 2019 included $0.4 million of merger-related expenses.~~activity.

Professional services expense for the third quarter of ~~2020~~2021 totaled ~~$14.4~~$12.7 million, ~~up $3.4~~down $0.7 million, or ~~31%~~5%, compared to the previous quarter and ~~down $3.3~~$1.6 million, or ~~19%~~11%, from the third quarter of ~~2019.~~2020. The ~~increase over~~decrease from the second quarter of ~~2020 is primarily attributable to higher consulting fees related to PPP support~~2021 and ~~legal fees. The third quarter of 2019 included $7.5 million of merger-related expenses. Excluding merger-related cost, professional fees increased $4.2 million compared to~~ the same quarter last year ~~also largely due~~is primarily attributable to ~~the increase in consulting fees~~lower levels of expense related to PPP consulting support and legal fees.

Deposit insurance and regulatory fees totaled ~~$4.1~~$3.7 million, ~~down $1.0~~up $0.7 million, or ~~20%~~24%, from the second quarter of ~~2020~~2021 and ~~up $0.1~~down $0.4 million, or 3%10%, from the third quarter of ~~2019.~~2020. The increase from the prior period is due in part to the impact of declining PPP loans and a change in the treatment of certain CECL transition provisions on the risk based assessment. The decrease from the ~~prior~~same quarter last year is largely due to the favorable effect that excess liquidity and continued asset quality improvement has on the risk-based assessment. We expect our deposit assessment fee to return to a ~~lower risk-based assessment rate resulting from an improved~~more typical level as our excess liquidity ~~position and the sale of energy loans. The increase compared to 2019 is primarily due to higher assessment base and rates, largely driven by the MidSouth acquisition.~~declines.

Corporate value, franchise and ~~franchise~~other non-income tax expense for the third quarter of ~~2020~~2021 totaled ~~$4.9~~$3.4 million, ~~up modestly by $0.4 million, or 9%, compared to~~virtually unchanged from the prior quarter and ~~up $0.8~~down $1.5 million, or ~~19%~~30%, compared to the same quarter last year. The ~~increase~~decrease from the third quarter of ~~2019 is primarily attributable to~~2020 reflects a decrease in bank share tax as a result of the ~~impact the acquisition of MidSouth.~~net loss recorded in 2020.

Business development-related expenses (including advertising, travel, entertainment and contributions) ~~were $4.8~~totaled $6.7 million for the third quarter of ~~2020, down $1.7~~2021, up $2.3 million, or ~~26%~~51%, from the second quarter of ~~2020~~2021, and ~~$4.6~~$1.9 million, or ~~49%~~40%, from the third quarter of ~~2019.~~2020. The linked-quarter ~~decrease~~increase was largely due to ~~a $2.5 million contribution made~~an increase in advertising and charitable contributions and the ~~second quarter of 2020 as an investment in Gulf South communities to assist with the effects of the pandemic. The~~increase over last year ~~over year decrease~~ was largely due to ~~a decrease in~~entertainment and contributions, advertising ~~as the third quarter of 2019 included $2.6 million of merger-related expenses for the acquisition of MidSouth,~~ and ~~a decrease in business~~ travel ~~in response to the pandemic.~~

Other real estate and foreclosed asset (income) reflects gains in excess of expense of $0.5 million for the both the third and second quarter of 2020 and net expense of $2.1 million in the third quarter of 2019. The expense in third quarter of 2019 was largely due to the non-cash write-down of foreclosed asset, partially offset by gains on sales of a former corporate facility. expense.

All other expenses, excluding amortization of intangibles and nonoperating items, totaled ~~$5.0~~$5.6 million for the third quarter of ~~2020,~~2021, an increase of ~~$0.2~~$0.9 million ~~or 5%,~~ from the second quarter of ~~2020~~2021, and ~~a decrease~~an increase of ~~$14.5~~$1.0 million ~~or 74%,~~ from the third quarter of ~~2019.~~2020. The ~~linked-quarter increase was primarily due~~variance compared to ~~higher telephone and postage expense. The third quarter~~both periods is the result of ~~2019 included $12.3~~approximately $1.0 million in ~~expenses related to the acquisition of MidSouth. The decrease compared to the same quarter last year also reflects lower other retirement expense~~contract cancellation costs in the third quarter of ~~2020 due to the performance of pension plan assets.~~2021.

~~Total noninterest~~Noninterest expense totaled ~~$595.6~~$624.5 million for the first nine months of ~~2020,~~2021, up ~~$22.8~~$28.9 million, or 4%5%, from the ~~same period last year. The~~ first nine months of ~~2019 included $28.8 million in~~2020. Excluding the nonoperating expenses ~~related to acquisition of MidSouth. Personnel~~described above, operating expense was ~~up $29.0~~down $19.3 million, or 9%3%. Other real estate and foreclosed assets expense was down $9.6 million, as 2020 included a $9.8 million write-down of equity interests received in energy-related bankruptcy restructurings. Deposit insurance and regulatory expense was down $5.0 million, or 33%, due to the favorable impact of higher liquidity and improved asset quality upon the risk-based assessment. Operating business development expense was down $3.8 million, or 20%, attributable to expense control initiatives put in place in the current year. The nine months ended September 30, 2020 also includes $2.5 million of pandemic relief contributions in the Gulf Coast region. Operating personnel expense was down $1.1 million or less than 1%, with lower salary expense related to the ~~MidSouth acquisition, merit-based compensation~~efficiency initiatives referred to above, partially offset by higher bonus and incentives in connection with improved Company performance. Occupancy and equipment expense was down $2.1 million, or 4% related to expense control measures and branch closures. These decreases were partially offset by increases of $6.4 million, or 10% in data processing expense attributable to investments in new technology and ~~other costs~~increased card activity, and $2.4 million, or 7%, in professional services as a result of consulting and support related to PPP loan origination and forgiveness.

52Management expects fourth quarter 2021 operating noninterest expense to total $187 million, and to be down approximately 3% for the full year of 2021 compared to 2020. The forecasted fourth quarter 2021 expense level of approximately $187 million is the expected quarterly run rate for 2022 operating expense.

associated with pandemic response, including the implementation of the Paycheck Protection Program. Other real estate expense increased $7.7 million, primarily attributable to $9.8 million in write-downs of equity interests in two energy related borrowers recorded in the first quarter of 2020. Data processing was up $4.2 million, or 7%, with an increase in ATM and card fee activity following the acquisition of MidSouth, as well as an increase in outside processing charges. These increases were partially offset by a $6.4 million, or 51%, decrease in other retirement expense with better performance from pension plan assets.

The effective income tax rate for the third quarter of ~~2020~~2021 was approximately 19.2% compared to ~~38.9%~~18.9% in the second quarter of ~~2020~~2021 and ~~15.5%~~19.2% in the third quarter of ~~2019.~~2020. The ~~decrease~~nominal increase in the third quarter ~~2020~~2021 effective income tax rate ~~was largely~~is due to ~~an improved projected annual pre-tax income forecast as compared~~a slight decrease in expected tax credits due to ~~the prior quarter.~~ revised estimates.

Many factors impact the effective income tax rate including, but not limited to, the level of pre-tax income and ~~the~~ relative impact of net tax benefits related to tax credit investments, tax-exempt interest income, bank-owned life insurance, and nondeductible expenses.

~~Additionally,~~ Based on the current forecast, management expects the effective income tax rate ~~could~~for 2021 will be ~~impacted by discrete items that may occur~~ in the 19%-20% range, absent any ~~given period, such as tax benefits from share-based compensation and~~ changes in ~~valuation allowances that are recognized as a separate component from continuing operations in the interim period the items impact. The effect of a change in~~ tax laws or rates on existing deferred tax assets and liabilities are also recognized as a discrete item in the interim period that includes the enactment date of the change. As such, we recognized a discrete benefit of $7.1 million in the first quarter of 2020 related to our intent to carryback a net operating loss attribute that we inherited from an acquired entity to a 35% statutory tax rate year (provided for under the CARES Act).law.

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 bank-owned 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 we serve and are directed at tax credits issued under the Federal and State New Market Tax Credit (“NMTC”) 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.

We have invested in NMTC projects through investments in our own Community Development ~~Entity~~Entities (“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~~We have also invested in affordable housing projects that generate federal LIHTC tax credits that are recognized over a ten-year period, beginning ~~with~~in the year the rental activity ~~begins,~~begins. The amortization of the LIHTC investment cost is recognized as a ~~reduction~~component of income tax expense in proportion to the ~~provision for income taxes.~~tax credits recognized over the ten-year credit period.

Based on tax credit investments that have been made to date in ~~2020,~~2021, we expect to realize benefits from federal and state tax credits over the next three years totaling ~~$7.8~~$10.1 million, ~~$8.6~~$10.0 million and ~~$8.5~~$10.1 million ~~for 2021,~~in 2022, 2023, and ~~2023,~~2024, 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 Company expects the effective tax rate for the fourth quarter of 2020 to be lower than the third quarter 2020 effective tax rate of 19.2% as tax strategies are evaluated and implemented prior to year-end.

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

	Three Months Ended							Nine Months Ended					Three Months Ended						Nine Months Ended
	September 30,		June 30,			September 30,		September 30,					September 30,		June 30,		September 30,		September 30,
	2020		2020			2019		2020			2019		2021		2021		2020		2021		2020
Common Share Data																			��
Earnings per share:
Earnings (loss) per share:
Basic	$	0.90	$	(1.36	)	$	0.77	$	(1.73	)	$	2.69	$	1.46	$	1.00	$	0.90	$	3.67	$	(1.73	)
Diluted	$	0.90	$	(1.36	)	$	0.77	$	(1.73	)	$	2.69	$	1.46	$	1.00	$	0.90	$	3.67	$	(1.73	)
Cash dividends paid	$	0.27	$	0.27		$	0.27	$	0.81		$	0.81	$	0.27	$	0.27	$	0.27	$	0.81	$	0.81
Book value per share (period-end)	$	39.07	$	38.41		$	39.49	$	39.07		$	39.49	$	41.81	$	41.03	$	39.07	$	41.81	$	39.07
Tangible book value per share (period-end)	$	28.11	$	27.38		$	28.73	$	28.11		$	28.73	$	31.10	$	30.27	$	28.11	$	31.10	$	28.11
Weighted average number of shares (000s):
Basic		86,358		86,301			86,377		86,614			85,934		86,834		86,814		86,358		86,800		86,614
Diluted		86,400		86,301			86,462		86,614			86,010		87,006		86,990		86,400		86,951		86,614
Period-end number of shares (000s)		86,400		86,342			90,822		86,400			90,822		86,823		86,847		86,400		86,823		86,400

		Three Months Ended							Nine Months Ended					Three Months Ended								Nine Months Ended
		September 30,		June 30,			September 30,		September 30					September 30,			June 30,			September 30,		September 30,
(in thousands)		2020		2020			2019		2020			2019		2021			2021			2020		2021			2020
Income Statement:
Interest income		$	257,043	$	266,342		$	283,164	$	800,728		$	839,825	$	244,417		$	248,300		$	257,043	$	743,502		$	800,728
Interest income (te) (a)			260,232		269,590			286,816		810,613			851,019		247,185			251,154			260,232		752,046			810,613
Interest expense			21,860		28,476			60,225		96,491			177,764		9,708			13,657			21,860		39,563			96,491
Net interest income (te)			238,372		241,114			226,591		714,122			673,255		237,477			237,497			238,372		712,483			714,122
Provision for credit losses			24,999		306,898			12,421		578,690			38,552		(26,955	)		(17,229	)		24,999		(49,095	)		578,690
Noninterest income			83,748		73,943			83,230		242,078			232,983		93,361			94,272			83,748		274,722			242,078
Noninterest expense (excluding amortization of intangibles)			190,986		191,370			208,665		580,346			557,747		190,621			232,525			190,986		611,799			580,346
Amortization of intangibles			4,788		5,169			4,889		15,302			15,074		4,082			4,245			4,788		12,746			15,302
Income before income taxes			98,158		(191,628	)		80,194		(228,023	)		283,671
Income (loss) before income taxes															160,322			109,374			98,158		403,211			(228,023	)
Income tax expense (benefit)			18,802		(74,556	)		12,387		(79,274	)		48,423		30,740			20,656			18,802		77,739			(79,274	)
Net income (loss)		$	79,356	$	(117,072	)	$	67,807	$	(148,749	)	$	235,248	$	129,582		$	88,718		$	79,356	$	325,472		$	(148,749	)
For informational purposes - included above, pre-tax
Nonoperating item included in noninterest income:
Gain on sale of Hancock Horizon Funds														$	4,576		$	—		$	—	$	4,576		$	—
Gain on sale of Mastercard Class B common stock															—			2,800			—		2,800			—
Nonoperating items included in noninterest expense:
Efficiency initiatives															(1,867	)		40,812			—		38,945			—
Hurricane related expenses															5,092			—			—		5,092			—
Loss on redemption of subordinated notes															—			4,165			—		4,165			—
Provision for credit loss associated with energy loan sale		$	—	$	160,101		$	—	$	160,101		$	—		—			—			—		—			160,101
Nonoperating merger-related expenses	.		—		—			28,810		—			28,810

	Three Months Ended									Nine Months Ended						Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,						September 30,			June 30,			September 30,			September 30,
	2020			2020			2019			2020			2019			2021			2021			2020			2021			2020
Performance Ratios
Return on average assets		0.97	%		(1.42	)%		0.92	%		(0.62	)%		1.10	%		1.46	%		1.01	%		0.97	%		1.25	%		(0.62	)%
Return on average common equity		9.42	%		(13.59	)%		7.95	%		(5.77	)%		9.69	%		14.26	%		10.20	%		9.42	%		12.39	%		(5.77	)%
Return on average tangible common equity		13.14	%		(18.75	)%		10.77	%		(7.99	)%		13.32	%		19.22	%		13.94	%		13.14	%		16.89	%		(7.99	)%
Earning asset yield (te) (a)		3.53	%		3.61	%		4.31	%		3.83	%		4.35	%		3.06	%		3.13	%		3.53	%		3.16	%		3.73	%
Total cost of funds		0.30	%		0.38	%		0.90	%		0.44	%		0.91	%		0.12	%		0.17	%		0.30	%		0.17	%		0.44	%
Net Interest Margin (te)		3.23	%		3.23	%		3.41	%		3.29	%		3.44	%		2.94	%		2.96	%		3.23	%		3.00	%		3.29	%
Noninterest income to total revenue (te)		26.00	%		23.47	%		26.86	%		25.32	%		25.71	%		28.22	%		28.41	%		26.00	%		27.83	%		25.32	%
Efficiency ratio (b)		59.29	%		60.74	%		58.05	%		60.69	%		58.37	%		57.44	%		57.01	%		59.29	%		57.52	%		60.69	%
Average loan/deposit ratio		83.72	%		85.97	%		87.47	%		85.61	%		87.21	%		71.62	%		73.18	%		83.72	%		73.97	%		85.61	%
FTE employees (period-end)		4,058			4,196			4,222			4,058			4,222			3,429			3,626			4,058			3,429			4,058
Capital Ratios
Common stockholders' equity to total assets		10.17	%		9.98	%		11.74	%		10.17	%		11.74	%		10.28	%		10.15	%		10.17	%		10.28	%		10.17	%
Tangible common equity ratio (c)		7.53	%		7.33	%		8.82	%		7.53	%		8.82	%		7.85	%		7.70	%		7.53	%		7.85	%		7.53	%

	Three Months Ended									Nine Months Ended						Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,						September 30,			June 30,			September 30,			September 30,
($ in thousands)	2020			2020			2019			2020			2019			2021			2021			2020			2021			2020
Asset Quality Information
Nonaccrual loans (a) (b)	$	171,462		$	183,979		$	222,860		$	171,462		$	222,860
Nonaccrual loans (a)																$	60,357		$	83,551		$	171,462		$	60,357		$	171,462
Restructured loans - still accruing		9,115			9,848			60,897			9,115			60,897			3,071			3,830			9,115			3,071			9,115
Total nonperforming loans		180,577			193,827			283,757			180,577			283,757			63,428			87,381			180,577			63,428			180,577
ORE and foreclosed assets		11,640			18,724			30,955			11,640			30,955			8,423			10,201			11,640			8,423			11,640
Total nonperforming assets	$	192,217		$	212,551		$	314,712		$	192,217		$	314,712		$	71,851		$	97,582		$	192,217		$	71,851		$	192,217
Accruing loans 90 days past due ~~(c)~~(b)	$	10,439		$	5,230		$	7,872		$	10,439		$	7,872		$	9,970		$	8,925		$	10,439		$	9,970		$	10,439
Net charge-offs		24,008			302,684			12,474			370,456			37,494			1,770			10,498			24,008			30,522			370,456
Allowance for loan losses	$	448,674		$	442,638		$	195,572		$	448,674		$	195,572		$	371,521		$	399,668		$	448,674		$	371,521		$	448,674
Reserve for unfunded lending commitments		31,526			36,571			—			31,526			—			28,946			29,524			31,526			28,946			31,526
Allowance for credit losses	$	480,200		$	479,209		$	195,572		$	480,200		$	195,572		$	400,467		$	429,192		$	480,200		$	400,467		$	480,200
Total provision for credit losses	$	24,999		$	306,898		$	12,421		$	578,690		$	38,552		$	(26,955	)	$	(17,229	)	$	24,999		$	(49,095	)	$	578,690
Ratios:
Nonperforming assets to loans, ORE and foreclosed assets		0.86	%		0.94	%		1.49	%		0.86	%		1.49	%		0.34	%		0.46	%		0.86	%		0.34	%		0.86	%
Accruing loans 90 days past due to loans		0.05	%		0.02	%		0.04	%		0.05	%		0.04	%		0.05	%		0.04	%		0.05	%		0.05	%		0.05	%
Nonperforming assets + accruing loans 90 days past due to loans, ORE and foreclosed assets		0.91	%		0.96	%		1.53	%		0.91	%		1.53	%		0.39	%		0.50	%		0.91	%		0.39	%		0.91	%
Net charge-offs to average loans		0.43	%		5.30	%		0.25	%		2.23	%		0.25	%		0.03	%		0.20	%		0.43	%		0.19	%		2.23	%
Allowance for loan losses to period-end loans		2.02	%		1.96	%		0.93	%		2.02	%		0.93	%		1.78	%		1.89	%		2.02	%		1.78	%		2.02	%
Allowance for credit losses to period-end loans		2.16	%		2.12	%		0.93	%		2.16	%		0.93	%		1.92	%		2.03	%		2.16	%		1.92	%		2.16	%
Allowance for loan losses to nonperforming loans + accruing loans 90 days past due		234.89	%		222.37	%		67.06	%		234.89	%		67.06	%		506.17	%		415.00	%		234.89	%		506.17	%		234.89	%
For informational purposes - included above
Provision for credit loss associated with energy loan sale	$	—		$	160,101		$	—		$	160,101		$	—		$	—		$	—		$	—		$	—		$	160,101
Charge-offs associated with energy loan sale		—			242,628			—			242,628			—			—			—			—			—			242,628

	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			June 30,			March 31,			December 31,			September 30,
(in thousands)	2020			2020			2020			2019			2019			2021			2021			2021			2020			2020
Period-End Balance Sheet
Total loans	$	22,240,204		$	22,628,377		$	21,515,681		$	21,212,755		$	21,035,952			20,886,015			21,148,530			21,664,859			21,789,931			22,240,204
Loans held for sale		103,566			364,416			67,587			55,864			75,789			90,618			90,002			124,677			136,063			103,566
Securities		7,056,276			6,381,803			6,374,490			6,243,313			6,404,719			8,308,622			8,633,133			8,005,990			7,356,497			7,056,276
Short-term investments		779,057			760,194			876,314			110,229			49,513			3,062,781			2,203,785			2,339,111			1,333,786			779,057
Earning assets		30,179,103			30,134,790			28,834,072			27,622,161			27,565,973			32,348,036			32,075,450			32,134,637			30,616,277			30,179,103
Allowance for loan losses		(448,674	)		(442,638	)		(426,003	)		(191,251	)		(195,572	)		(371,521	)		(399,668	)		(424,360	)		(450,177	)		(448,674	)
Goodwill and other intangible assets		946,958			951,746			956,916			962,260			977,369			929,599			933,681			937,926			942,345			946,958
Other assets		2,515,937			2,571,502			2,396,708			2,207,587			2,195,779			2,412,194			2,489,246			2,424,440			2,530,157			2,515,937
Total assets	$	33,193,324		$	33,215,400		$	31,761,693		$	30,600,757		$	30,543,549		$	35,318,308		$	35,098,709		$	35,072,643		$	33,638,602		$	33,193,324
Noninterest-bearing deposits	$	11,881,548		$	11,759,085		$	9,204,631		$	8,775,632		$	8,686,383		$	13,653,376		$	13,406,385		$	13,174,911		$	12,199,750		$	11,881,548
Interest-bearing transaction and savings deposits		9,971,869			9,605,254			8,931,192			8,845,097			8,758,993			11,291,878			11,308,744			11,200,412			10,413,870			9,971,869
Interest-bearing public fund deposits		3,176,225			3,326,033			3,251,445			3,364,416			2,954,966			3,055,388			3,206,799			3,198,523			3,234,936			3,176,225
Time deposits		2,001,017			2,631,896			3,621,228			2,818,430			3,800,957			1,207,515			1,351,179			1,636,674			1,849,321			2,001,017
Total interest-bearing deposits		15,149,111			15,563,183			15,803,865			15,027,943			15,514,916			15,554,781			15,866,722			16,035,609			15,498,127			15,149,111
Total deposits		27,030,659			27,322,268			25,008,496			23,803,575			24,201,299			29,208,157			29,273,107			29,210,520			27,697,877			27,030,659
Short-term borrowings		1,906,895			1,754,875			2,673,283			2,714,872			2,108,815			1,745,228			1,516,508			1,652,747			1,667,513			1,906,895
Long-term debt		385,887			386,269			225,606			233,462			246,641			248,011			248,052			397,583			378,322			385,887
Other liabilities		494,239			435,831			433,244			381,163			400,414			487,146			498,141			394,890			455,865			494,239
Stockholders' equity		3,375,644			3,316,157			3,421,064			3,467,685			3,586,380			3,629,766			3,562,901			3,416,903			3,439,025			3,375,644
Total liabilities & stockholders' equity	$	33,193,324		$	33,215,400		$	31,761,693		$	30,600,757		$	30,543,549		$	35,318,308		$	35,098,709		$	35,072,643		$	33,638,602		$	33,193,324
For informational purposes only - included above
SBA Paycheck Protection Program (PPP) loans	$	2,323,691		$	2,286,963		$	—		$	—		$	—		$	935,330		$	1,417,523		$	2,345,605		$	2,005,237		$	2,323,691

	Three Months Ended									Nine Months Ended						Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,						September 30,			June 30,			September 30,			September 30,
(in thousands)	2020			2020			2019			2020			2019			2021			2021			2020			2021			2020
Average Balance Sheet
Total loans	$	22,407,825		$	22,957,032		$	20,197,114		$	22,200,385		$	20,158,313		$	20,941,173		$	21,388,814		$	22,407,825		$	21,355,483		$	22,200,385
Loans held for sale		112,230			89,935			55,348			80,942			34,740			82,588			89,638			112,230			94,553			80,942
Securities (a)		6,389,214			6,129,616			6,004,688			6,223,361			5,750,530			8,368,824			8,194,812			6,389,214			8,014,023			6,223,361
Short-term investments		502,992			837,246			180,463			515,661			208,263			2,704,796			2,522,251			502,992			2,309,414			515,661
Earning assets		29,412,261			30,013,829			26,437,613			29,020,349			26,151,846			32,097,381			32,195,515			29,412,261			31,773,473			29,020,349
Allowance for loan losses		(446,901	)		(425,844	)		(197,259	)		(371,646	)		(196,297	)		(392,767	)		(418,753	)		(446,901	)		(420,900	)		(371,646	)
Goodwill and other intangible assets		949,287			954,252			886,868			954,328			884,254			931,584			935,737			949,287			935,767			954,328
Other assets		2,770,783			2,594,469			2,020,884			2,560,792			1,875,236			2,571,762			2,453,185			2,770,783			2,533,080			2,560,792
Total assets	$	32,685,430		$	33,136,706		$	29,148,106		$	32,163,823		$	28,715,039		$	35,207,960		$	35,165,684		$	32,685,430		$	34,821,420		$	32,163,823
Noninterest-bearing deposits	$	11,585,617		$	10,989,921		$	8,092,482		$	10,450,457		$	8,139,439		$	13,535,961		$	13,237,796		$	11,585,617		$	13,053,586		$	10,450,457
Interest-bearing transaction and savings deposits		9,806,826			9,387,292			8,179,240			9,332,604			8,096,299			11,341,034			11,315,790			9,806,826			11,152,935			9,332,604
Interest-bearing public fund deposits		3,196,767			3,320,338			2,979,494			3,256,228			3,077,760			3,085,452			3,208,718			3,196,767			3,167,956			3,256,228
Time deposits		2,174,585			3,005,071			3,840,139			2,894,969			3,800,771			1,274,859			1,466,505			2,174,585			1,497,840			2,894,969
Total interest-bearing deposits		15,178,178			15,712,701			14,998,873			15,483,801			14,974,830			15,701,345			15,991,013			15,178,178			15,818,731			15,483,801
Total deposits		26,763,795			26,702,622			23,091,355			25,934,258			23,114,269			29,237,306			29,228,809			26,763,795			28,872,317			25,934,258
Short-term borrowings		1,733,298			2,254,731			2,063,335			2,044,923			1,790,058			1,612,253			1,661,015			1,733,298			1,653,600			2,044,923
Long-term debt		386,015			276,891			234,240			298,436			230,528			248,019			371,892			386,015			338,336			298,436
Other liabilities		450,729			436,845			375,438			444,225			335,113			504,295			415,376			450,729			444,516			444,225
Stockholders' equity		3,351,593			3,465,617			3,383,738			3,441,981			3,245,071			3,606,087			3,488,592			3,351,593			3,512,651			3,441,981
Total liabilities & stockholders' equity	$	32,685,430		$	33,136,706		$	29,148,106		$	32,163,823		$	28,715,039		$	35,207,960		$	35,165,684		$	32,685,430		$	34,821,420		$	32,163,823
For informational purposes only - included above
SBA Paycheck Protection Program (PPP) loans	$	2,308,021		$	1,727,797		$	—		$	1,348,786		$	—		$	1,172,276		$	2,043,032		$	2,308,021		$	1,798,465		$	1,348,786

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

(in thousands)

2020

2020

2019

2020

2019

Net income (loss)

$
79,356

$
(117,072
)

$
67,807

$
(148,749
)

$
235,248

Net income and dividends allocated to participating securities

(1,436
)

(422
)

(1,141
)

(1,278
)

(3,980
)
Net income (loss) available to common shareholders

77,920

(117,494
)

66,666

(150,027
)

231,268

Nonoperating items, net of applicable income tax

—

—

22,760

—

30,720

Nonoperating items allocated to participating securities

—

—

(383
)

—

(517
)
Operating earnings (loss) available to common shareholders

$
77,920

$
(117,494
)

$
89,043

(150,027
)

261,471

Weighted average common shares - diluted

86,400

86,301

86,462

86,614

86,010

Earnings per share - diluted

$
0.90

$
(1.36
)

$
0.77

$
(1.73
)

$
2.69

Operating earnings per share - diluted

$
0.90

$
(1.36
)

$
1.03

$
(1.73
)

$
3.04

Quarter earnings per share - diluted, impact of energy loan sale

Three Months Ended

June 30,

(in thousands, except per share amounts)

2020

1

Provision for credit losses attributable to the sale of energy loans

$
160,101

Income tax benefit at a 21% rate

(33,621
)

Impact of energy loan sale, net of income tax

$
126,480

Weighted average common shares - diluted

86,323

Impact of energy loan sale per share - diluted

$
(1.47
)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
(in thousands)	2021			2021			2020			2021			2020
Net interest income	$	234,709		$	234,643		$	235,183		$	703,939		$	704,237
Noninterest income		93,361			94,272			83,748			274,722			242,078
Total revenue	$	328,070		$	328,915		$	318,931		$	978,661		$	946,315
Taxable equivalent adjustment (a)		2,768			2,854			3,189			8,544			9,885
Nonoperating revenue		(4,576	)		(2,800	)		—			(7,376	)		—
Operating revenue (te)	$	326,262		$	328,969		$	322,120		$	979,829		$	956,200
Noninterest expense		(194,703	)		(236,770	)		(195,774	)		(624,545	)		(595,648	)
Nonoperating expense		3,225			44,977			—			48,202			—
Operating pre-provision net revenue (te)	$	134,784		$	137,176		$	126,346		$	403,486		$	360,552

Liquidity management ensures 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. As part of the overall asset and liability management process, liquidity management strategies and measurements have been developed to manage and monitor liquidity risk. The Company enacted strategies in 2020 to strengthen liquidity through various measures to ensure funds are available to meet the needs of our day to day operations and those of our customers during this unprecedented period of disruption in financial and credit markets. At September 30, ~~2020,~~2021, we had ~~over $18~~$20.9 billion in net available sources of funds, summarized as follows:

	September 30, 2020						September 30, 2021
(in millions)	Total Available		Amount Used		Net Availability		Total Available		Amount Used		Net Availability
Internal Sources
Cash and Free Securities	$	4,719	$	—	$	4,719
Free Securities, cash and other							$	7,829	$	—	$	7,829
External Sources
Federal Home Loan Bank		6,248		2,591		3,657		5,834		2,134		3,700
Federal Reserve Bank		4,567		—		4,567		3,605		—		3,605
Brokered Deposits		4,055		105		3,950
Brokered deposits								4,381		9		4,372
Other		1,244		—		1,244		1,369		—		1,369
Total Liquidity	$	20,834	$	2,696	$	18,138	$	23,018	$	2,143	$	20,875

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 of 20% or greater. As shown in the table below, our ratio of free securities to total securities was ~~54.68%~~56.73% at September 30, ~~2020,~~2021, compared to ~~48.83%~~65.33% at June 30, ~~2020~~2021 and ~~54.44%~~54.68% at September ~~30, 2019. The total of pledged securities at September 30, 2020 was $3.2 billion, down $73.9 million from June~~ 30, 2020. Securities and FHLB letters of credit are pledged as collateral related to public funds and repurchase agreements. Pledged securities at September 30, 2021 totaled $3.6 billion, up $588 million from June 30, 2021. The increase in pledged securities, as well as the decrease in the ratio of free securities to total securities, was the result of utilizing securities to replace $400 million in maturing FHLB letters of credit as pledged collateral.

	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			June 30,			September 30,
Liquidity Metrics	2020			2020			2020			2019			2019			2021			2021			2020
Free securities / total securities		54.68	%		48.83	%		25.42	%		47.27	%		54.44	%		56.73	%		65.33	%		54.68	%
Core deposits / total deposits		96.22	%		94.53	%		90.48	%		93.54	%		90.31	%		98.27	%		98.07	%		96.22	%
Wholesale funds / core deposits		9.42	%		10.37	%		17.76	%		13.99	%		15.54	%		7.19	%		6.41	%		9.42	%
Quarter-to-date average loans /quarter-to-date average deposits		83.72	%		85.97	%		87.28	%		88.22	%		87.47	%		71.62	%		73.18	%		83.72	%

The liability portion of the balance sheet provides liquidity mainly through the ability to use cash sourced from various customers’ interest-bearing and noninterest-bearing deposit and sweep accounts. At September 30, ~~2020,~~2021, deposits totaled ~~$27.0~~$29.2 billion, a decrease of ~~$291.6~~$65 million, or less than 1%, from June 30, ~~2020~~2021 and an increase of ~~$2.8~~$2.2 billion, or ~~12%~~8%, from September 30, ~~2019.~~2020. The ~~decrease from June 30, 2020 is primarily attributable to a decrease in certificates of deposit (“CDs”). The~~year over year increase ~~from September 30, 2019~~ is largely attributable to ~~the increase~~pandemic-related conditions, such as an overall slowdown in ~~noninterest-bearing deposits following the funding~~consumer and business spending,

coupled with government stimulus such as direct payments to individuals and PPP loans ~~and the issuance of government stimulus payments.~~to qualifying businesses. Core deposits consist of total deposits excluding CDs of $250,000 or more and brokered deposits. Core deposits totaled ~~$26.0~~$28.7 billion at September 30, ~~2020, an increase of $178.9 million from~~2021, relatively flat compared to June 30, ~~2020,~~2021, and ~~$4.2~~up $2.7 billion from September 30, ~~2019.~~2020. The ratio of core deposits to total deposits was 98.27% at September 30, 2021, compared to 98.07% at June 30, 2021 and 96.22% at September 30, ~~2020, compared to 94.53% at June 30, 2020 and 90.31% at September 30, 2019.~~2020. Brokered deposits totaled ~~$157.0~~$69.3 million as of September 30, ~~2020,~~2021, a decrease of ~~$381.4~~$4.9 million compared to June 30, ~~2020~~2021 and a decrease of ~~$885.0~~$87.7 million compared to September 30, ~~2019. Brokered~~2020. The decline in brokered deposits ~~declined compared to~~from both comparative periods asresulted from maturing brokered ~~certificates~~time deposits that ~~matured during the period~~ were not reissued as part of our effort to utilize excess liquidity.

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 place their uninsured deposits with other FDIC insured financial institutions in order to obtain FDIC insurance on those deposits, and allows us to reciprocate those deposits. To-date, there has been only minimal activity in this program.

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 September 30, ~~2020,~~2021, the Bank had borrowings of approximately $1.1 billion and had approximately $3.7 billion available under this line. The unused borrowing capacity at the Federal Reserve’s discount window is approximately ~~$4.6 billion; there~~$3.6 billion. There were no outstanding borrowings with the Federal Reserve at any date during any period covered by this report.

Wholesale funds, which are comprised of short-term borrowings, long-term debt and brokered deposits were ~~9.42%~~7.19% of core deposits at September 30, ~~2020,~~2021, compared to ~~10.37%~~6.41% at June 30, ~~2020~~2021 and ~~15.54%~~9.42% at September 30, ~~2019.~~2020. At September 30, ~~2020,~~2021, wholesale funds totaled ~~$2.5~~$2.1 billion, ~~a decrease~~an increase of ~~$229.7~~$223.8 million, or ~~8.6%~~12%, from June 30, ~~2020~~2021 and a decrease of ~~$947.6~~$387.2 million, or ~~27.9%~~16%, from

September 30, ~~2019.~~2020. The ~~linked~~ quarter ~~decrease in wholesale funds was~~over quarter increase primarily ~~attributable~~due to ~~the decrease in brokered deposits, offset by an increase in~~increased repurchase agreements. The year over year decrease ~~in wholesale funds~~ was largely attributable to decreases in short-term borrowings, brokered deposits and ~~short-term borrowings, partially offset by~~ the ~~June 2020 issuance~~redemption of our 5.95% subordinated ~~debt.~~notes. 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 third quarter of ~~2020~~2021 was ~~83.72%~~71.62%, compared to ~~85.97%~~73.18% for the second quarter of ~~2020~~2021 and ~~87.47%~~83.72% for the third quarter of ~~2019.~~2020. Management has an established target range for the loan-to-deposit ratio of 87% to 89%, but ~~may~~will operate outside that range under certain circumstances. The average loan to deposit ratio ~~is currently impacted by~~began to decline during the second quarter of 2020, as pandemic-related economic stimulus and funding of PPP loans began to increase deposits, coupled with core loan contraction. Average loans outstanding for the third quarter of 2021, the second quarter of 2021, and the third quarter in 2020, included approximately $1.2 billion, $2.0 billion, and $2.3 billion, respectively, of low-risk SBA guaranteed PPP ~~lending~~loans that isare expected to be largely repaid through the forgiveness process ~~beginning in fourth quarter of 2020 through early 2021.~~by mid-year 2022.

Cash generated from operations is another important source of funds to meet liquidity needs. The consolidated statements of cash flows included in Part I. Item 1 of this document present operating cash flows and summarize all significant sources and uses of funds during the nine months ended September 30, ~~2020~~2021 and ~~2019.~~2020.

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 four quarters of ongoing cash or liquid asset needs, consisting primarily of common stockholder dividends, debt service requirements, and any expected share repurchase or early extinguishment of debt. The Parent may operate below the target level on a temporary basis if a return to the target can be achieved in the near-term, generally not to exceed four quarters.

During the third quarter of 2021, we repurchased 56,349 shares of our common stock at an average cost of $44.52 per share under a Board authorization to repurchase up to 4,338,000 shares of the company’s common stock, set to expire December 31, 2022.

On June 9, 2020, the Parent completed the issuance of subordinated notes payable with an aggregate principal amount of $172.5 million, providing additional liquidity that can be used by the Parent or to provide capital to the Bank, if deemed appropriate. On June 15, 2021, the Parent redeemed all of its issued and outstanding 5.95% Subordinated Notes due 2045 with an aggregate principal amount of $150 million.

Stockholders’ equity totaled ~~$3.4~~$3.6 billion at September 30, ~~2020,~~2021, up ~~$59.5~~$66.9 million from June 30, ~~2020~~2021 and ~~down $210.7~~$254.1 million from September 30, ~~2019.~~2020. The ~~tangible common equity ratio was 7.53% at September 30, 2020, compared to 7.33% at June 30, 2020 and 8.82% at September 30, 2019.~~ ~~The~~ increase ~~in the tangible common equity ratio~~ from June 30, ~~2020~~2021 is primarily attributable to ~~tangible net earnings,~~$129.6 million of income and $6.5 million of long-term incentive and dividend reinvestment activity, partially offset by ~~dividends paid.The~~a $42.7 million decrease from September 30, 2019 is attributable to the decrease in retained earnings as a result of net loss, dividends paid and the cumulative effect of the adoption of CECL, share repurchases, and the growth in tangible assets, largely driven by the origination of PPP loans; these factors were partially offset by net gains on fair value adjustments included in accumulated other comprehensive ~~income. Following~~income, largely attributable to the ~~de-risking strategies executed during~~fair value adjustments on the ~~first half~~available for sale securities portfolio and cash flow hedges, $24.0 million of dividends and the repurchase of $2.5 million of common stock. The increase from September 30, 2020 ~~the tangible common equity ratio declined below management’s internal target~~is attributable to $429.0 million of ~~at least 8.00%; however, the ratio has increased in third quarter~~net income and ~~based on current expectations, we estimate the ratio to approximate 8.00% by the end~~$17.1 million of ~~the year.~~long term incentive and dividend reinvestment activity, partially

offset by a decline of $98.7 million of accumulated other comprehensive income, largely attributable to fair value adjustments on the available for sale securities portfolio and cash flow hedges the re-measurement of the pension liability, $96.0 million of dividends and the repurchase of $2.5 million of common stock.

The tangible common equity (TCE) ratio was 7.85% at September 30, 2021, compared to 7.70% at June 30, 2021 and 7.53% at September 30, 2020. The linked-quarter increase is primarily attributable to tangible earnings, partially offset by other comprehensive loss and dividends. The year over year increase is largely attributable to tangible earnings, partially offset by tangible asset growth, dividends, and other comprehensive loss. The growth in tangible assets is principally attributable to low-risk excess liquidity carried in short-term investment with the Federal Reserve and SBA guaranteed PPP loans. The impact of additional assets from PPP loans reduced the TCE ratio by 22 bps at September 30, 2021 and 33 bps at June 30, 2021.

The regulatory capital ratios of the Company and the Bank at September 30, ~~2020~~2021 remained well in excess of current regulatory minimum requirements, including capital conservation buffers, by at least ~~$428~~$503 million. The Company and the Bank have been categorized as “well-capitalized” in the most recent notices received from our regulators. Refer to the Supervision and Regulation section in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 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 ~~at September 30, 2020, June 30, 2020 and March 31, 2020~~ reflect the election to use the ~~interim final~~CECL 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~~that allowed for the option to delay for two years the estimated impact of CECL on regulatory capital (0%) in 2020 and 2021), 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 the full impact of January 1, 2020 cumulative effect impact plus an estimated impact of CECL calculated quarterly as 25% of the current ACL over the January 1, 2020 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-year transition. ~~The election to use the revised final CECL transition rules favorably impacted our leverage ratio upon adoption by 19 bps and our tier 1 common, tier 1 equity and~~

Hancock Whitney Corporation total capital ~~regulatory~~to risk weighted assets ratios ~~by 22 bps.~~

Onat September ~~23, 2019,~~30, 2021 and June 30, 2021 reflect the Company’s board of directors approved a stock buyback program that authorizes the Company to repurchase up to 5.5 million shares of our common stock 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 privately negotiated transactions, or as otherwise determined by the Company in one or more 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.

~~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~~impact of the ~~Company’s common stock. Pursuant to the ASR agreement, the Company made a $185~~June 15, 2021 redemption of $150 million payment to Morgan Stanley on October 21, 2019, and received on the same day an initial delivery of approximately 3.6 million shares of the Company’s common stock. On March 18, 2020, pursuant to the terms of the agreement, the final settlement of the ASR commenced whereby the Company received 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 per share in a privately negotiated transaction. The Company has repurchased a total of 4.9 million shares of the 5.5 million authorized under the buyback program at an average price of $37.65 per share through the ASR agreement and the privately negotiated transaction. The Company has suspended further repurchases of shares under this program.

~~On June 9, 2020, the Parent completed the issuance~~ of subordinated notes ~~with an aggregate principal amount~~ of ~~$172.5 million and a stated maturity of June 15, 2060,~~the Parent that ~~qualify~~qualified as tier 2 capital in the calculation of certain regulatory capital ~~ratios.~~

~~On August 27, 2020, our board~~ratios, reducing total capital to risk weighted assets ratio by approximately 60 bps. Our regulatory ratios also reflect the impact of directors declared a regular third quarter cash dividend of $0.27 per share, consistent with the prior quarter. The dividend was paid on September 15, 2020. The Company intends to pay its next quarterly dividend and is in consultation with its regulators regarding the dividend payment, while the board evaluates the dividend payout policy quarterly.

~~As of September 30, 2020, the Company has~~ PPP loans, ~~totaling $2.3 billion that~~which are guaranteed by the SBA and, when meeting certain ~~regulatory~~ criteria, are subject to ~~forgiveness.~~forgiveness to the debtor by the SBA. These loans carry a 0% risk-weighting in the tier 1 and total capital regulatory ratios due to the full guarantee by the SBA. However, these loans are reflected in average assets used to compute tier 1 leverage.

On April 22, 2021, our board of directors authorized the repurchase of up to 4,338,000 shares of the Company’s common stock (approximately 5% of the shares of common stock outstanding as of March 31, 2021). The authorization is currently set to expire on December 31, 2022. The shares may be repurchased in the open market, by block purchase, through accelerated share repurchase plans, in privately negotiated transactions or otherwise, in one or more transactions, from time to time, depending upon market conditions and other factors, and in accordance with applicable regulations of the Securities and Exchange Commission. The repurchase authorization may be terminated or amended by the Board at any time prior to the expiration date. During the third quarter of 2021, 56,349 shares were repurchased under this program at an average cost of $44.52 per share, inclusive of commissions.

On July 30, 2021, our board of directors declared a regular third quarter cash dividend of $0.27 per share, consistent with the prior quarter. The Company has paid uninterrupted dividends to its shareholders since 1967.

Investment in securities totaled $7.1 billion at September 30, 2020, up $674.5 million, or 11%, from June 30, 2020 and up $651.6 million, or 10%, from September 30, 2019. At September 30, 2020, securities available for sale totaled $5.7 billion and securities held to maturity totaled $1.4 billion. The purpose of our securities portfolio is to increase profitability, mitigate interest rate risk, provide liquidity and comply with regulatory requirements. Our securities portfolio includes securities categorized as available for sale and held to maturity. Available for sale securities are carried at fair value and may be sold prior to maturity. Unrealized gains or losses on available for sale securities, net of deferred taxes, are recorded as accumulated other comprehensive income in shareholders’ equity.

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 effective duration generally between two and five and a half years. At September 30, 2020, the average expected maturity of the portfolio was 5.54 years with an effective duration of 4.00 years and a nominal weighted-average yield of 2.20%. Management simulations indicate that the effective duration would increase to 4.29 years with a 100 bp increase in the yield curve and increase to 4.50 years with a 200 bp increase. At June 30, 2020, the average expected maturity of the portfolio was 5.51 years with an effective duration of 3.79 years and a nominal weighted-average yield of 2.41%. The average maturity of the portfolio at September 30, 2019 was 5.75 years, with an effective duration was 4.0 years and the nominal weighted-average yield was 2.63%. The changes in expected maturity, effective duration, and nominal weighted-average yield compared to prior quarter and year-over-year were primarily related to securities portfolio growth and the reinvestment of the securities portfolio maturities, paydowns and sales.

Effective January 1, 2020 and in conjunction with the adoption of CECL, and again as of September 30, 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 September 30, 2020 were $22.2 billion, down $0.4 billion, or 2%, from June 30, 2020, and up $1.2 billion, or 6%, from September 30, 2019. The linked-quarter decline was primarily related to limited demand throughout our footprint stemming from the current economic environment. Growth compared to the same quarter last year reflect the originations of PPP loans, partially offset by the sale of a portion of the energy loan portfolio and a decrease in demand across our footprint.

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

Commercial and industrial (“C&I”) loans, including both non-real estate and owner occupied real estate secured loans, totaled approximately $13.0 billion, or 59% of the total loan portfolio, at September 30, 2020, a decrease of $0.2 billion, or 1%, from June 30, 2020 and an increase of $1.4 billion, or 12%, from September 30, 2019. The linked-quarter decline is primarily due to lower demand across our footprint. The year over year increase is related to PPP loan originations, partially offset by the energy loan sale and lower demand across most regions and specialty lines as a result of the economic impact of the pandemic.

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 September 30, 2020 totaled approximately $1.6 billion, or 7% of total loans, a decrease of $145.3 million from June 30, 2020, due primarily to the energy loan sale. At September 30, 2020, approximately $291.1 million of our shared national credits were with healthcare-related customers.

Loans to borrowers in the energy sector totaled $337.8 million at September 30, 2020, down $14.1 million, or 4%, from June 30, 2020 and $696.0 million, or 67%, compared to September 30, 2019. The linked quarter decrease in energy-related loans resulted from net paydowns. The year-over-year decrease was largely due to the sale of $497 million of energy loans in June 2020, net paydowns and charge-offs, partially offset by acquired MidSouth energy loans. At September 30, 2020, the majority of the remaining energy portfolio is comprised of customers engaged in onshore and offshore services and products to support exploration and production activities, with approximately 70% of the balances in increments of $10 million or less.

Our loan portfolio is well diversified by product, client, and geography throughout our footprint. Nevertheless, we may be exposed to certain concentrations of credit risk which exist in relation to different borrowers or groups of borrowers, specific types of collateral, industries, loan products, or regions. The following table provides detail of the more significant industry concentrations for our commercial and industrial loan portfolio, which is based on NAICS codes for all industries, with the exceptions of energy, which is based on the borrower’s source of revenue (i.e. manufacturer whose income is derived from energy-related business is reported as energy), and PPP loans, as those are expected to be 100% SBA guaranteed and therefore have limited credit risk.

September 30,

June 30,

March 31,

December 31,

September 30,

2020

2020

2020

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

$
1,273,360

10
%

$
1,326,198

10
%

$
1,420,629

12
%

$
1,432,319

12
%

$
1,454,795

13
%
Healthcare and social assistance

1,135,986

9
%

1,129,983

9
%

1,201,423

10
%

1,144,369

10
%

1,084,884

9
%
Retail trade

1,035,295

8
%

1,057,248

8
%

1,066,780

9
%

1,098,810

9
%

1,060,765

9
%
Manufacturing

934,582

7
%

967,054

7
%

959,653

8
%

928,467

8
%

957,622

8
%
Transportation and warehousing

825,113

3
%

839,192

6
%

828,215

7
%

768,971

6
%

705,536

6
%
Public administration

696,160

6
%

723,565

5
%

761,284

6
%

774,401

7
%

765,492

7
%
Finance and insurance

655,468

5
%

693,044

5
%

740,915

6
%

677,500

6
%

632,197

5
%
Wholesale trade

664,648

5
%

691,671

5
%

784,354

7
%

751,794

6
%

691,648

6
%
Accommodation, food services and entertainment

632,582

5
%

640,167

5
%

616,473

5
%

613,982

5
%

611,663

5
%
Construction

631,239

5
%

599,238

5
%

700,313

6
%

724,614

6
%

637,512

5
%
Professional, scientific, and technical services

481,296

5
%

476,011

4
%

503,325

4
%

515,634

4
%

492,424

4
%
Other services (except public administration)

433,718

4
%

442,407

4
%

456,084

4
%

451,889

4
%

476,731

4
%
Energy

335,677

3
%

348,547

3
%

935,076

8
%

958,486

8
%

1,026,680

9
%
Educational services

309,664

2
%

323,673

2
%

326,708

3
%

342,544

3
%

353,366

3
%
Other

668,716

5
%

682,578

5
%

751,428

5
%

721,627

6
%

676,068

7
%
Total commercial & industrial loans

$
10,713,504

82
%

$
10,940,576

83
%

$
12,052,660

100
%

$
11,905,407

100
%

$
11,627,383

100
%
PPP loans

2,323,691

18
%

2,286,963

17
%

—

—

—

—

—

—

Total commercial & industrial loans

$
13,037,195

100
%

$
13,227,539

100
%

$
12,052,660

100
%

$
11,905,407

100
%

$
11,627,383

100
%

Commercial real estate – income producing loans totaled approximately $3.4 billion at September 30, 2020, an increase of $56.3 million, or 2%, from June 30, 2020 and $346.0, or 11%, from September 30, 2019. Construction and land development loans, totaling approximately $1.1 billion at September 30, 2020, decreased $32.8 million, or 3%, from June 30, 2020 and $94.6 million, or 8%, from September 30, 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.

September 30,

June 30,

March 31,

December 31,

September 30,

2020

2020

2020

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 real estate - income producing and construction loans:

Retail

$
744,994

17
%

$
712,844

16
%

$
708,087

16
%

$
663,196

16
%

$
636,484

15
%
Multifamily

625,992

14
%

601,749

13
%

552,464

13
%

520,444

13
%

539,994

13
%
Healthcare related properties

559,196

12
%

546,641

12
%

569,166

13
%

517,855

12
%

562,726

13
%
Office

504,168

11
%

537,476

12
%

475,565

11
%

447,972

11
%

447,872

11
%
Industrial

530,450

12
%

538,955

12
%

535,070

12
%

498,291

12
%

491,984

12
%
Hotel, motel and restaurants

524,275

12
%

510,021

11
%

502,866

12
%

477,728

11
%

431,082

10
%
1-4 family residential construction

464,347

10
%

457,011

10
%

439,739

10
%

443,835

11
%

486,848

11
%
Other land loans

273,915

6
%

258,858

6
%

246,377

6
%

250,357

6
%

262,298

6
%
Other

275,366

6
%

315,703

8
%

302,175

7
%

332,221

8
%

391,998

9
%
Total commercial real estate - income producing and construction loans

$
4,502,703

100
%

$
4,479,258

100
%

$
4,331,509

100
%

$
4,151,899

100
%

$
4,251,286

100
%

Our residential mortgages loan portfolio totaled $2.8 billion at September 30, 2020, down $122.9 million, or 4%, from June 30, 2020 and down $250.6 million, or 8%, compared to September 30, 2019. The low interest rate environment has led to increased activity in mortgages originated for sale, resulting in a decline in our residential mortgage portfolio. Generally, fixed-rate longer-term loans originated are sold in the secondary market. The consumer loan portfolio totaled $1.9 billion at September 30, 2020, down $98.3 million, or 5%, compared to June 30, 2020, and down $206.4 million, or 10%, compared to September 30, 2019. The decline in the consumer loan portfolio is due in part to the wind down of indirect auto lending.

The markets that we serve have been negatively impacted by the widespread economic shutdown and market turmoil caused by the pandemic and prolonged depressed oil prices. While we expect to see impacts across all of our portfolios, we have identified four principle sectors that are of particular focus where we expect there may be a greater effect and a more challenging recovery. We are closely monitoring our concentrations in these industries and others with active 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 table below summarizes our funded commercial loan exposure to these sectors under focus at September 30, 2020 and the relative concentration to the total loan portfolio, excluding low-risk SBA guaranteed PPP loans. Loans within our sectors under focus total approximately 24% of total loans outstanding, excluding PPP loans, and comprise nearly 50% of both our commercial criticized and pass watch rated loans.

Management’s expectation for loan growth through the remainder of the year is tempered given the ongoing economic environment. We expect forgiveness of PPP loans to begin in fourth quarter and continue through early 2021. As such, continued contraction of total loans is anticipated for the fourth quarter of 2020.

The Company's allowance for credit losses was $480.2 million at September 30, 2020, compared to $479.2 million at June 30, 2020 and $195.2 million at December 31, 2019. 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 16 – Recent Accounting Pronouncements for additional discussion of the impact of adoption.

~~The $1.0~~million increase in the third quarter 2020 allowance for credit losses is primarily due to higher individually evaluated reserves (generally used for nonperforming and troubled debt restructured loans), largely offset by lower collectively evaluated reserves driven by a modestly improved economic forecast and lower overall outstanding balances. The Company probability-weighted three Moody’s macroeconomic scenarios in the calculation of our collectively evaluated allowance for credit losses. Consistent with the second quarter, the baseline scenario was weighted most heavily at 50% and the upside scenario S-1 (faster near-term growth) and downside scenario S-2 (slower near-term growth) were each weighted 25% to incorporate reasonably possible alternative economic outcomes. All three economic scenarios utilized reflect a gradual recovery from the recessionary first half of 2020, with second quarter 2020 unemployment as the peak; however, the upside and downside scenarios have varying degrees of size and timing of additional fiscal stimulus and duration of recovery. The baseline scenario reflects what we believe to be the most likely outcome, and, therefore was given the greatest probability weighting, and the alternative scenarios reflect reasonably possible outcomes due to the uncertainty, both upside and downside, in the economy in the near-term.

The September 2020 baseline forecast assumes that the new cases of COVID-19 peaked in July 2020 and does not include new widespread business closures. In this scenario, a vaccine is expected by April 2021 and infections are expected to abate by June 2021. Positive job numbers reported to-date have led to a slighter quicker recovery in the U.S. job market than included in the June 2020 forecast. This scenario assumes that an additional stimulus bill is passed in 2020 to aid in the recovery. Additional information on the September Baseline forecast is provided in the “Economic Outlook and Ongoing Impact of COVID-19” of this document. The stronger near-term growth S-1 forecast reflects a quicker economic recovery than the baseline forecast, with more rapid GDP growth and lower unemployment rates through our reasonable and supportable forecast period. The slower near-term growth S-2 forecast

reflects a slower economic recovery than the baseline forecast, with higher incidence of infection and death and restrictions on travel and business winding down somewhat more slowly, resulting in higher unemployment rates than the Baseline scenario in the reasonable and supportable period. The S-2 scenario also reflects a delay in additional economic stimulus with sustained recovery not occurring until the second half of 2021.

The $285 million increase in the allowance for credit loss for September 30, 2020 compared to December 31, 2019, reflects the $76.7 million cumulative effect adjustment for the adoption of CECL and a net reserve build of $208.2 million which included increases for pandemic-related impacts to the economy, net of the second quarter allowance release of $82.5 million related to the energy loan sale.

Our allowance for credit loss coverage to total loans remains strong at 2.16% at September 30, 2020, or 2.40% when excluding SBA guaranteed PPP loans, compared to 2.12% at June 30, 2020, or 2.36% excluding PPP loans, and 0.92% at December 31, 2019.

The allowance for credit losses on the commercial nonenergy portfolio increased to $357.2 million, or 2.08% of that portfolio, at September 30, 2020 compared to the June 30, 2020 allowance of $350.5 million, or 2.01%. The commercial nonenergy portfolio includes concentration in lessors of real estate to various pandemic-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 the widespread shutdown. The increase in allowance is primarily due to individually evaluated reserves, largely in the healthcare sector, with increased coverage reflecting declining loan balances as demand has been limited throughout the footprint. The allowance for credit losses on the energy portfolio increased to $21.4 million, or 6.33% of that portfolio, compared to the June 30, 2020 allowance of $19.9 million, or 5.66%, with the increase also due to individually evaluated credits. Our residential mortgage reserve for credit loss decreased to $51.8 million, or 1.88%, at September 30, 2020, compared to $57.4 million, or 2.02%, at June 30, 2020, due primarily to favorable movement in forecasted variables for home prices. Our allowance for credit losses on the consumer portfolio was $49.8 million, or 2.56 %, at September 30, 2020, compared to $51.5 million, or 2.52 %, at June 30, 2020.

Criticized commercial loans totaled $412 million at September 30, 2020, up from $348 million at June 30, 2020. The increase in commercial criticized loans includes $39 million attributable to the commercial nonenergy portfolio and $25 million attributable to the energy portfolio and was largely concentrated in pandemic-impacted portfolios. 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. 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 by providing various types of loan deferrals to manage the effects of economic stress. While a significant number of these deferrals have expired, our ability to predict future cash flow is limited due to economic uncertainty, and we expect that further risk rating adjustments may be required.

Net charge-offs were $24.0 million, or .43% of average total loans on an annualized basis in the third quarter of 2020, compared to $302.7 million, or 5.30% of average total loans in the second quarter of 2020. Commercial net charge-offs totaled $23.2 million in the third quarter of 2020, consisting largely of charges related to healthcare-dependent credits. This compared to second quarter commercial charge-offs of $299.4 million, which included $242.6 million of charge-offs from the energy loan sale. Our residential mortgage portfolio reflected minimal net recoveries in both the third and second quarters of 2020 and consumer net charge-offs were $1.1 million in the third quarter of 2020, down from $3.9 million in the prior quarter. Third quarter 2020 consumer charge-offs were favorably impacted by loan deferrals and are expected to return to more normalized levels in the near term.

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

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

(in thousands)

2020

2020

2019

2020

2019

Provision and Allowance for Credit Losses

Allowance for loan losses:

Allowance for loan losses at beginning of period

$
442,638

$
426,003

$
195,625

$
191,251

$
194,514

Loans charged-off:

Commercial non real estate

24,557

298,853

11,729

364,123

33,382

Commercial real estate - owner-occupied

122

1,192

66

1,828

137

Total commercial & industrial

24,679

300,045

11,795

365,951

33,519

Commercial real estate - income producing

710

671

—

2,211

10

Construction and land development

2

5

7

7

7

Total commercial

25,391

300,721

11,802

368,169

33,536

Residential mortgages

29

-

221

170

660

Consumer

2,904

5,196

5,002

13,640

13,169

Total charge-offs

28,324

305,917

17,025

381,979

47,365

Recoveries of loans previously charged-off:

Commercial non real estate

1,532

1,073

2,932

4,831

5,662

Commercial real estate - owner-occupied

552

26

63

659

284

Total commercial & industrial

2,084

1,099

2,995

5,490

5,946

Commercial real estate - income producing

—

39

516

46

518

Construction and land development

98

217

11

549

108

Total commercial

2,182

1,355

3,522

6,085

6,572

Residential mortgages

317

549

167

1,078

433

Consumer

1,817

1,329

862

4,360

2,866

Total recoveries

4,316

3,233

4,551

11,523

9,871

Total net charge-offs

24,008

302,684

12,474

370,456

37,494

Provision for loan losses

30,044

319,319

12,421

578,468

38,552

Cumulative effect of change in accounting principle (a)

—

-

—

49,411

—

Allowance for loan losses at end of period

$
448,674

$
442,638

$
195,572

$
448,674

$
195,572

Reserve for Unfunded Lending Commitments:

Reserve for Unfunded Lending Commitments at beginning of period

$
36,571

$
48,992

$
—

$
3,974

$
—

Cumulative effect of change in accounting principle (a)

—

—

—

27,330

—

Provision for losses on unfunded lending commitments

(5,045
)

(12,421
)

—

222

—

Reserve for unfunded lending commitments at end of period

$
31,526

$
36,571

$
—

$
31,526

$
—

Total Allowance for Credit Losses

$
480,200

$
479,209

$
195,572

$
480,200

$
195,572

Total Provision for Credit Losses

$
24,999

$
306,898

$
12,421

$
578,690

$
38,552

Ratios:

Gross charge-offs to average loans

0.50
%

5.36
%

0.33
%

2.30
%

0.31
%
Recoveries to average loans

0.08
%

0.06
%

0.09
%

0.07
%

0.07
%
Net charge-offs to average loans

0.43
%

5.30
%

0.25
%

2.23
%

0.25
%
Allowance for loan losses to period-end loans

2.02
%

1.96
%

0.93
%

2.02
%

0.93
%
Allowance for credit losses to period-end loans

2.16
%

2.12
%

0.93
%

2.16
%

0.93
%
For informational purposes - included above

Provision for credit loss associated with energy

$
—

$
160,101

$
—

$
160,101

$
—

Charge-offs associated with energy loan sale

$
—

$
242,628

$
—

$
242,628

$
—

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.

September 30,

December 31,

(in thousands)

2020

2019

Loans accounted for on a nonaccrual basis: (a)

Commercial non-real estate

$
41,401

$
49,628

Commercial non-real estate - restructured

36,783

129,050

Total commercial non-real estate

78,184

178,678

Commercial real estate - owner occupied

14,394

7,413

Commercial real estate - owner-occupied - restructured

289

295

Total commercial real estate - owner-occupied

14,683

7,708

Commercial real estate - income producing

6,932

2,489

Commercial real estate - income producing - restructured

96

105

Total commercial real estate - income producing

7,028

2,594

Construction and land development

3,192

1,051

Construction and land development - restructured

42

166

Total construction and land development

3,234

1,217

Residential mortgage

40,865

36,638

Residential mortgage - restructured

2,731

2,624

Total residential mortgage

43,596

39,262

Consumer

24,737

16,159

Consumer - restructured

—

215

Total consumer

24,737

16,374

Total nonaccrual loans

$
171,462

$
245,833

Restructured loans - still accruing:

Commercial non-real estate

$
5,195

$
59,136

Commercial real estate - owner occupied

—

—

Commercial real estate - income producing

357

373

Construction and land development

123

111

Residential mortgage

2,308

514

Consumer

1,132

1,131

Total restructured loans - still accruing

9,115

61,265

Total nonperforming loans

180,577

307,098

ORE and foreclosed assets

11,640

30,405

Total nonperforming assets (b)

$
192,217

$
337,503

Loans 90 days past due still accruing to loans (c)

$
10,439

$
6,582

Total restructured loans

$
49,056

$
193,720

Ratios:

Nonperforming assets to loans plus ORE and foreclosed assets

0.86
%

1.59
%
Allowance for loan losses to nonperforming loans and accruing loans 90 days past due

234.89
%

60.97
%
Loans 90 days past due still accruing to loans

0.05
%

0.03
%

Nonperforming assets totaled $192.2 million at September 30, 2020, down $20.3 million from June 30, 2020, and $145.3 million from December 31, 2019. Nonperforming loans decreased approximately $13.3 million compared to June 30, 2020, and $126.5 million from December 31, 2019. The decline in nonperforming loans compared to the prior quarter was largely due to charge-offs, while the decrease from year-end was primarily due to the energy loan sale. ORE and foreclosed assets decreased to $11.6 million at September 30, 2020, from $18.7 million at June 30, 2020, and $30.4 million at December 31, 2019. The decrease compared to year-end includes the first quarter 2020 write-downs of equity interest in two energy-related companies received in borrower bankruptcy restructurings

on two energy credits totaling $9.8 million. Nonperforming assets as a percent of total loans, ORE and other foreclosed assets was 0.86% at September 30, 2020, down 8 bps from June 30, 2020, and 73 bps from December 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 ~~$779.1 million~~$3.1 billion at September 30, ~~2020,~~2021, up ~~$18.9 million~~$0.9 billion from June 30, ~~2020~~2021 and ~~$729.5 million~~up $2.3 billion from September 30, ~~2019.~~2020. Average short-term investments of $2.7 billion for the third quarter of 2021 were up $0.2 billion compared to the second quarter of 2021, and up $2.2 billion compared to the third quarter of 2020. Typically, these balances will change on a daily basis depending upon movement in customer loan and deposit accounts. ~~Average short-term~~However, excess liquidity that has stemmed from pandemic related conditions (refer to discussions of Liquidity above) continues to drive the elevated balance of short-terms investments, largely held at the Federal Reserve.

Investment in securities totaled $8.3 billion at September 30, 2021, down $324.5 million, or 4%, from June 30, 2021, and up $1.3 billion, or 18%, from September 30, 2020. The decrease from June 30, 2021 was the result of ~~$503.0~~maturities and paydowns as there were no securities purchased during the quarter. The increase from September 30, 2020 reflects investment of a portion of excess cash from federal funds into higher-yielding securities. Our securities portfolio includes securities categorized as available for sale and held to maturity. At September 30, 2021, securities available for sale totaled $7.0 billion and securities held to maturity totaled $1.3 billion. The purpose of the securities portfolio is to increase profitability, mitigate interest rate risk, provide liquidity and comply with regulatory pledging requirements. Available for sale securities are carried at fair value and may be sold prior to maturity. Unrealized gains or losses on available for sale securities, net of deferred taxes, are recorded as accumulated other comprehensive income in stockholders’ equity.

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 effective duration generally between two and five and a half years. At September 30, 2021, the average expected maturity of the portfolio was 5.81 years with an effective duration of 4.41 years and a nominal weighted-average yield of 1.89%. Under an immediate, parallel rate shock of 100 bps and 200 bps, the effective duration would be 4.72 years and 4.80 years, respectively. At June 30, 2021, the average expected maturity of the portfolio was 5.91 years with an effective duration of 4.58 years and a nominal weighted-average yield of 1.89%. The average maturity of the portfolio at September 30, 2020 was 5.54 years, with an effective duration of 4.00 years and a nominal weighted-average yield of 2.20%. The changes in expected maturity, effective duration, and nominal weighted-average yield compared to June 30, 2021 was the result of maturities and paydowns; and compared to September 30, 2020, is primarily related to securities portfolio growth and the reinvestment of the securities portfolio maturities and paydowns. At September 30, 2021, approximately $1.8 billion of our available for sale securities are hedged with $1.6 billion in fair value hedges in order to provide protection and flexibility to reposition and/or reprice the portfolio in a rising interest rate environment, effectively reducing the duration (market price risk) on the hedged securities. Our strategy in the near term will be to invest in the securities portfolio as rates rise and monitor our hedge positions to adjust interest rate sensitivity.

At the end of each reporting period, we evaluate the securities portfolio for credit loss. Based on our assessments, expected credit loss was negligible for all periods in 2021 and 2020, and therefore no allowance for credit loss was recorded.

Total loans at September 30, 2021 were $20.9 billion, down $263 million, or 1%, from June 30, 2021, and down $1.4 billion, or 6%, from September 30, 2020. The linked-quarter decline was primarily attributable to a $482 million decrease in PPP loans, partially offset by net growth in core loans of $219.7 million, as demand for traditional loan products increased across most regions and in specialty lines. The decline compared to September 30, 2020 is due to a net decrease in PPP loans of $1.4 billion, residential mortgage loans of $403 million, and consumer loans of $323 million, partially offset by moderate growth in most other portfolios.

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

Commercial and industrial (“C&I”) loans, including both non-real estate and owner occupied real estate secured loans, totaled approximately $12.2 billion, or 59% of the total loan portfolio, at September 30, 2021, a decrease of $113 million, or 1%, from June 30, 2021, and a decrease of $807 million, or 6%, from September 30, 2020. The linked-quarter decrease is primarily attributable to the reduction in PPP loans of $482 million, due to repayment through the SBA’s forgiveness program, partially offset by growth in the core portfolio. Core loan growth linked quarter reflects increased production in the western and central regions and in our equipment finance and health care specialty portfolios, as well as fewer than expected payoffs and an increase in the line utilization rate. The year over year decrease is attributable to a $1.4 billion net reduction in PPP loans. PPP loans included in C&I portfolio totaled $935 million at September 30, 2021, $1.4 billion at June 30, 2021, and $2.3 billion at September 30, 2020.

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 September 30, 2021 totaled approximately $1.8 billion, or 9% of total loans, an increase of $182 million from June 30, 2021 and $185 million from September 30, 2020. At September 30, 2021, approximately $383 million of our shared national credits were with healthcare-related customers, with the remaining portfolio in commercial real estate and other diverse industries.

Our loan portfolio is well diversified by product, client, and geography throughout our footprint. Nevertheless, we may be exposed to certain concentrations of credit risk which exist in relation to different borrowers or groups of borrowers, specific types of collateral, industries, loan products, or regions. The following table provides detail of the more significant industry concentrations for our commercial and industrial loan portfolio, which is based on NAICS codes for all industries, with the exceptions of energy, which is based on the borrower’s source of revenue (i.e. a manufacturer whose income is derived from energy-related business is reported as energy), and PPP loans, as those are expected to be 100% SBA guaranteed and therefore have limited credit risk.

	September 30,					June 30,					March 31,					December 31,					September 30,
	2021					2021					2021					2020					2020
			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	$	1,298,560		11	%	$	1,250,737		10	%	$	1,234,521		10	%	$	1,260,084		10	%	$	1,273,360		10	%
Health care and social assistance		1,219,769		10	%		1,086,845		9	%		1,140,616		9	%		1,152,713		9	%		1,135,986		9	%
Retail trade		1,069,225		9	%		1,051,317		9	%		1,033,822		8	%		1,084,810		8	%		1,035,295		8	%
Manufacturing		928,041		8	%		946,266		8	%		928,993		7	%		929,737		7	%		934,582		7	%
Construction		861,075		7	%		753,049		6	%		648,379		5	%		688,676		5	%		631,239		5	%
Wholesale trade		808,252		7	%		751,689		6	%		707,541		5	%		708,640		6	%		664,648		5	%
Finance and insurance		796,980		7	%		772,464		6	%		680,368		5	%		690,354		5	%		655,468		5	%
Transportation and warehousing		785,367		6	%		769,145		6	%		789,573		6	%		800,034		6	%		825,113		6	%
Public administration		625,979		5	%		638,921		5	%		629,571		5	%		650,595		5	%		696,160		5	%
Accommodation, food services and entertainment		604,550		5	%		605,728		5	%		625,352		5	%		633,869		5	%		632,582		5	%
Professional, scientific, and technical services		521,965		4	%		503,425		4	%		486,970		4	%		500,219		4	%		481,296		4	%
Other services (except public administration)		421,884		3	%		420,321		4	%		433,848		3	%		436,665		3	%		433,718		3	%
Energy		264,791		2	%		274,641		2	%		284,435		2	%		305,867		2	%		335,677		3	%
Educational services		251,383		2	%		260,366		2	%		268,305		2	%		270,980		2	%		309,664		2	%
Other		836,765		6	%		840,141		7	%		648,547		5	%		725,948		6	%		668,716		5	%
Total commercial & industrial loans		11,294,586		92	%		10,925,055		89	%		10,540,841		82	%		10,839,191		84	%		10,713,504		82	%
PPP loans		935,330		8	%		1,417,523		11	%		2,345,605		18	%		2,005,237		16	%		2,323,691		18	%
Total commercial & industrial loans	$	12,229,916		100	%	$	12,342,578		100	%	$	12,886,446		100	%	$	12,844,428		100	%	$	13,037,195		100	%

Commercial real estate – income producing loans totaled approximately $3.5 billion at September 30, 2021, an increase of $49 million, or 1%, from June 30, 2021 and $61 million, or 2%, from September 30, 2020. Construction and land development loans, totaling approximately $1.2 billion at September 30, 2021, decreased $81 million, or 6%, from June 30, 2021 and increased $118 million, or 11%, from September 30, 2020. The following table details 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.

	September 30,					June 30,					March 31,					December 31,					September 30,
	2021					2021					2021					2020					2020
			Pct of					Pct of					Pct of					Pct of					Pct of
( $ in thousands )	Balance		Total			Balance		Total			Balance		Total			Balance		Total			Balance		Total
Commercial real estate - income producing and construction loans:
Retail	$	756,619		16	%	$	781,143		16	%	$	742,649		16	%	$	746,520		17	%	$	744,994		17	%
Multifamily		696,924		15	%		688,900		15	%		648,097		14	%		630,392		14	%		625,992		14	%
Healthcare related properties		677,137		15	%		676,587		14	%		614,510		14	%		557,473		13	%		559,196		12	%
Industrial		577,988		12	%		569,123		12	%		544,755		12	%		540,198		12	%		530,450		12	%
Hotel/motel and restaurants		504,536		11	%		501,434		11	%		519,736		12	%		527,393		12	%		524,275		12	%
Office		487,510		10	%		501,885		11	%		506,661		11	%		527,576		12	%		504,168		11	%
1-4 family residential construction		441,925		9	%		426,745		9	%		426,124		9	%		393,568		9	%		464,347		10	%
Other land loans		291,415		7	%		318,136		7	%		283,833		6	%		273,285		6	%		273,915		6	%
Other		247,876		5	%		250,111		5	%		246,804		6	%		226,591		5	%		275,366		6	%
Total commercial real estate - income producing and construction loans	$	4,681,930		100	%	$	4,714,064		100	%	$	4,533,169		100	%	$	4,422,996		100	%	$	4,502,703		100	%

Our residential mortgages loan portfolio totaled $2.4 billion at September 30, 2021, down $61 million, or 3%, from June 30, 2021 and down $403 million, or 15%, from September 30, 2020. The low interest rate environment has led to increased demand for longer term, fixed rate mortgages, which we typically originate for sale in the secondary market, and, as such, we have experienced a decline in our residential mortgage portfolio. The consumer loan portfolio totaled $1.6 billion at September 30, 2021, down $56 million, or 3%, from June 30, 2021, and down $323 million, or 17%, from September 30, 2020. The decline in the consumer loan portfolio is due in part to the exit of indirect automobile lending, and decreased loan demand.

The markets that we serve have been negatively impacted by the economic and social conditions caused by the pandemic. We are continuing to monitor portions of three principle sectors that are of particular focus where we expect there may be a greater effect and a more challenging recovery. We are closely monitoring our concentrations in these industries and others with active 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 length of time until full recovery and the effectiveness of government stimulus plans to bridge our customers to the end.

The table below summarizes our funded commercial loan exposure to sectors currently identified as pandemic-related sectors under focus at September 30, 2021, and the relative concentration to the total loan portfolio, excluding low-risk SBA guaranteed PPP loans. Loans within our sectors under focus total approximately 17% of total loans outstanding, excluding PPP loans, and comprise 24% of our commercial criticized loans and 37% of our commercial pass-watch rated loans at September 30, 2021. Approximately $232 million of these loans have active structured solutions, defined as a longer-term contractual payment modification of the original loan agreement. Across all portfolios, our active structured solutions totaled $260 million at September 30, 2021.

Management expects core loan growth of $400 to $500 million in the fourth quarter of 2021, ending the year at approximately $20.4 billion. We expect most of the remaining PPP loans to be forgiven by mid-year 2022, with a forecasted December 31, 2021 balance of approximately $400 to $500 million.

The Company's allowance for credit losses was $400.5 million at September 30, 2021, compared to $429.2 million at June 30, 2021 and $480.2 million at September 30, 2020.

The $28.8 million decrease in the September 30, 2021 allowance for credit losses is primarily attributable to lower collectively evaluated reserves driven by an improved economic forecast and improving asset quality, and lower individually evaluated reserves (generally used for nonperforming and troubled debt restructured loans) due largely to customer payment activity. The Company probability-weighted two Moody’s macroeconomic scenarios in the calculation of our collectively evaluated allowance for credit losses. The baseline scenario and downside scenario S-2 (slower near-term growth) were each weighted 50%, compared to a weighting of 65% on the baseline scenario and 35% on the downside scenario S-2 in prior quarter. Both scenarios reflect a continued economic recovery, with the downside scenario including a longer duration recovery, and both scenarios had improved economic conditions when compared to the prior quarter. The baseline and S-2 scenarios are both reasonably likely outcomes, and, therefore were given equal probability weighting in our calculation. Uncertainty over some of the assumptions underlying the baseline forecast has increased since the second quarter due to the emergence of and resulting effects of the Delta variant and the disruption caused by Hurricane Ida, leading to a higher weighing of the slower growth scenario compared to June 30, 2021.

The September 2021 baseline forecast assumes that COVID-19 cases peaked in January 2021 and new infections abate in November 2021. Any future surges in cases do not result in new widespread business closures. Additional legislation focused on infrastructure, social benefits, and expanded tax credits is expected to pass in late 2021, which will boost gross domestic product growth, but the total dollar amount of fiscal stimulus has been scaled back compared to prior quarter. Compared to the June 2021 baseline scenario, the

reduction in fiscal stimulus combined with the surge in the Delta variant resulted in slower economic recovery in the near term in the baseline forecast. However, September 2021 baseline reflects rapid growth in 2022 due to the passage of additional stimulus, resolution of the global supply chain constraints, and labor supply shortages. Additional information on the September baseline forecast is provided in the “Economic Outlook” section of this document. The slower near-term growth S-2 forecast reflects a slower economic recovery than the baseline forecast, with concerns about resistant strains leading to lower consumer spending and slower reopening of businesses, resulting in higher unemployment rates than the Baseline scenario. The S-2 scenario also reflects infrastructure and social benefits legislation smaller than that within the baseline and more persistent global supply chain constraints and labor shortages, further impeding economic growth in the fourth quarter of 2021 and 2022.

The allowance release of $28.8 million in the third quarter 2021 and the release of $79.7 million when compared to September 30, 2020 are across most portfolios and reflect the continued improvement in the economic forecast. Our allowance for credit loss coverage to total loans remains strong at 1.92% at September 30, 2021, or 2.00% when excluding SBA guaranteed PPP loans, compared to 2.03% at June 30, 2021, or 2.17% excluding PPP loans, and 2.16% at September 30, 2020, or 2.40% excluding PPP loans. While our reserve coverage to total loans continues to decline, it remains elevated compared to normalized levels as our expectation of loss has not diminished substantially, with borrower performance for select regions/industries not yet at pre-pandemic levels and uncertainty related to future payment performance as the impact of the federal stimulus tapers and modifications expire. The impact of the Delta variant, inflationary pressures, global supply chain issues, and labor supply shortages in our markets adds uncertainty to the overall outlook.

The allowance for credit losses on the commercial portfolio, excluding PPP loans, decreased to $334.3 million, or 2.09% of that portfolio, at September 30, 2021 compared to the June 30, 2021 allowance of $352.0 million, or 2.25%. The commercial portfolio includes concentrations of various pandemic-impacted industries including hospitality and tourism, which includes hotels, restaurants, and bars, certain healthcare services such as assisted living facilities, and certain types of retail outlets, as well as our remaining energy portfolio. The modest decrease in the commercial allowance is primarily due to improved economic conditions and improved asset quality. Our residential mortgage allowance for credit loss decreased to $31.1 million, or 1.32%, at September 30, 2021, compared to $36.5 million, or 1.51%, at June 30, 2021, due primarily to a favorable movement in forecasted variables for home prices. Our allowance for credit losses on the consumer portfolio was $34.1 million, or 2.10%, at September 30, 2021, compared to $39.3 million, or 2.34%, at June 30, 2021.

Criticized commercial loans totaled $294 million at September 30, 2021, down 11% from $330 million at June 30, 2021 and down 29% from $412 million at September 30, 2020. The reduction in commercial criticized loans reflects payoffs, paydowns and charge-offs exceeding new downgrades. Criticized commercial loans at September 30, 2021 include $69 million of loans in our sectors under focus, or those that we deem to be disproportionately impacted by the pandemic and $72 million in our 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. 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 by providing various types of loan deferrals or other modifications to manage the effects of economic stress. Most shorter-term deferrals have expired; however, loans totaling approximately $260 million at September 30, 2021 have active structured solutions, or longer-term contractual payment modifications of the original loan agreement, down from $385 million at June 30, 2021. Our ability to predict future cash flow beyond the modification period is limited due to economic uncertainty, and further risk rating adjustments could be required.

Net charge-offs were $1.8 million, or 0.03% of average total loans on an annualized basis in the third quarter of ~~2020 were~~2021, compared to $10.5 million, or 0.20% of average total loans in the second quarter of 2021 and $24.0 million, or 0.43% in the third quarter of 2020. Commercial net charge-offs totaled $0.5 million in the third quarter of 2021. This is down ~~$334.3 million~~ compared to the second quarter of 2021 commercial charge-offs of $9.3 million. The third quarter of 2020 commercial net charge-offs totaled $23.2 million, consisting largely of charges related to healthcare-dependent credits. Our residential mortgage portfolio reflected minimal net recoveries in the third and ~~up $322.5 million compared to~~second quarters of 2021 and the third quarter of ~~2019.~~2020, and consumer net charge-offs were $1.7 million in the third quarter of 2021, up from $1.4 million in the prior quarter and $1.1 million in the third quarter of 2020.

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

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
(in thousands)	2021			2021			2020			2021			2020
Provision and Allowance for Credit Losses
Allowance for loan losses:
Allowance for loan losses at beginning of period	$	399,668		$	424,360		$	442,638		$	450,177		$	191,251
Loans charged-off:
Commercial non real estate		3,437			11,420			24,557			32,369			364,123
Commercial real estate - owner-occupied		40			1,335			122			1,722			1,828
Total commercial & industrial		3,477			12,755			24,679			34,091			365,951
Commercial real estate - income producing		-			37			710			231			2,211
Construction and land development		11			8			2			267			7
Total commercial		3,488			12,800			25,391			34,589			368,169
Residential mortgages		11			98			29			218			170
Consumer		3,256			2,924			2,904			9,874			13,640
Total charge-offs		6,755			15,822			28,324			44,681			381,979
Recoveries of loans previously charged-off:
Commercial non real estate		2,392			2,288			1,532			6,579			4,831
Commercial real estate - owner-occupied		76			250			552			363			659
Total commercial & industrial		2,468			2,538			2,084			6,942			5,490
Commercial real estate - income producing		100			—			—			100			46
Construction and land development		384			1,005			98			1,548			549
Total commercial		2,952			3,543			2,182			8,590			6,085
Residential mortgages		496			231			317			933			1,078
Consumer		1,537			1,550			1,817			4,636			4,360
Total recoveries		4,985			5,324			4,316			14,159			11,523
Total net charge-offs		1,770			10,498			24,008			30,522			370,456
Provision for loan losses		(26,377	)		(14,194	)		30,044			(48,134	)		578,468
Cumulative effect of change in accounting principle (a)		—			—			—			—			49,411
Allowance for loan losses at end of period	$	371,521		$	399,668		$	448,674		$	371,521		$	448,674
Reserve for Unfunded Lending Commitments:
Reserve for Unfunded Lending Commitments at beginning of period	$	29,524		$	32,559		$	36,571		$	29,907		$	3,974
Cumulative effect of change in accounting principle (a)		—			—			—			—			27,330
Provision for losses on unfunded lending commitments		(578	)		(3,035	)		(5,045	)		(961	)		222
Reserve for unfunded lending commitments at end of period	$	28,946		$	29,524		$	31,526		$	28,946		$	31,526
Total Allowance for Credit Losses	$	400,467		$	429,192		$	480,200		$	400,467		$	480,200
Total Provision for Credit Losses	$	(26,955	)	$	(17,229	)	$	24,999		$	(49,095	)	$	578,690
Coverage Ratios:
Allowance for loan losses to period-end loans		1.78	%		1.89	%		2.02	%		1.78	%		2.02	%
Allowance for credit losses to period-end loans		1.92	%		2.03	%		2.16	%		1.92	%		2.16	%
Charge-offs ratios:
Gross charge-offs to average loans		0.13	%		0.30	%		0.50	%		0.28	%		2.30	%
Recoveries to average loans		0.09	%		0.10	%		0.08	%		0.09	%		0.07	%
Net charge-offs to average loans		0.03	%		0.20	%		0.43	%		0.19	%		2.23	%
Net Charge-offs to average loans by portfolio
Commercial non real estate		0.04	%		0.37	%		0.88	%		0.35	%		4.75	%
Commercial real estate - owner-occupied		(0.01	)%		0.16	%		(0.06	)%		0.06	%		0.06	%
Total commercial & industrial		0.03	%		0.32	%		0.69	%		0.29	%		3.75	%
Commercial real estate - income producing		(0.01	)%		0.00	%		0.08	%		0.01	%		0.09	%
Construction and land development		(0.12	)%		(0.35	)%		(0.03	)%		(0.15	)%		(0.06	)%
Total commercial		0.01	%		0.22	%		0.52	%		0.20	%		2.81	%
Residential mortgages		(0.08	)%		(0.02	)%		(0.04	)%		(0.04	)%		(0.04	)%
Consumer		0.41	%		0.32	%		0.22	%		0.41	%		0.60	%
For informational purposes - included above
Provision for credit loss associated with energy loan sale	$	—		$	—		$	—		$	—		$	160,101
Charge-offs associated with energy loan sale	$	—		$	—		$	—		$	—		$	242,628

	September 30,			June 30,			March 31,			December 31,			September 30,
(in thousands)	2021			2021			2021			2020			2020
Loans accounted for on a nonaccrual basis:
Commercial non-real estate	$	7,167		$	16,029		$	24,108		$	34,200		$	41,401
Commercial non-real estate - restructured		2,781			3,095			3,542			18,636			36,783
Total commercial non-real estate		9,948			19,124			27,650			52,836			78,184
Commercial real estate - owner occupied		4,922			6,276			9,922			13,514			14,394
Commercial real estate - owner-occupied - restructured		1,798			1,839			1,882			342			289
Total commercial real estate - owner-occupied		6,720			8,115			11,804			13,856			14,683
Commercial real estate - income producing		4,167			4,975			4,729			6,650			6,932
Commercial real estate - income producing - restructured		82			86			89			93			96
Total commercial real estate - income producing		4,249			5,061			4,818			6,743			7,028
Construction and land development		1,230			2,004			1,680			2,475			3,192
Construction and land development - restructured		8			8			9			11			42
Total construction and land development		1,238			2,012			1,689			2,486			3,234
Residential mortgage		23,423			30,995			39,066			38,075			40,865
Residential mortgage - restructured		2,541			1,780			1,649			2,498			2,731
Total residential mortgage		25,964			32,775			40,715			40,573			43,596
Consumer		12,238			16,464			21,758			23,385			24,737
Consumer - restructured		—			—			—			—			—
Total consumer		12,238			16,464			21,758			23,385			24,737
Total nonaccrual loans	$	60,357		$	83,551		$	108,434		$	139,879		$	171,462
Restructured loans - still accruing:
Commercial non-real estate	$	480		$	526		$	2,337		$	549		$	5,195
Commercial real estate - owner occupied		—			—			—			—			—
Commercial real estate - income producing		—			—			341			349			357
Construction and land development		119			120			121			122			123
Residential mortgage		1,407			2,103			2,457			2,217			2,308
Consumer		1,065			1,081			1,064			1,025			1,132
Total restructured loans - still accruing		3,071			3,830			6,320			4,262			9,115
Total nonperforming loans		63,428			87,381			114,754			144,141			180,577
ORE and foreclosed assets		8,423			10,201			9,467			11,648			11,640
Total nonperforming assets (a)	$	71,851		$	97,582		$	124,221		$	155,789		$	192,217
Loans 90 days past due still accruing (b)	$	9,970		$	8,925		$	5,090		$	3,361		$	10,439
Total restructured loans	$	10,281		$	10,638		$	13,491		$	25,842		$	49,056
Ratios:
Nonaccrual loans to total loans		0.29	%		0.40	%		0.50	%		0.64	%		0.77	%
Nonperforming assets to loans plus ORE and foreclosed assets		0.34	%		0.46	%		0.57	%		0.71	%		0.86	%
Allowance for loan losses to nonaccrual loans		615.54	%		478.35	%		391.35	%		321.83	%		261.68	%
Allowance for loan losses to nonperforming loans and accruing loans 90 days past due		506.17	%		415.00	%		354.09	%		305.20	%		234.89	%
Loans 90 days past due still accruing to loans		0.05	%		0.04	%		0.02	%		0.02	%		0.05	%

(a) Includes total nonaccrual loans, total restructured loans - still accruing and ORE and foreclosed assets.

(b) Excludes 90+ accruing restructured loans already reflected in total nonperforming loans of $1.8 million at 3/31/2021.

Nonperforming assets totaled $71.9 million at September 30, 2021, down $25.7 million from June 30, 2021, and $120.4 million from September 30, 2020. Nonperforming loans decreased $24.0 million compared to June 30, 2021, and $117.1 million from September 30, 2020. The decline in nonperforming loans was largely attributable to charge-offs and payoffs outpacing downgrades. ORE and foreclosed assets were $8.4 million at September 30, 2021, down from $10.2 million at June 30, 2021, and $11.6 million at September 30, 2020. Nonperforming assets as a percentage of total loans, ORE and other foreclosed assets was 0.34% at September 30, 2021, down 12 bps from June 30, 2021, and 52 bps from September 30, 2020.

Changes in assumptions in our underlying economic forecasts, such as vaccination rates, size and timing of government infrastructure spending, timing of the resolution of the coronavirus pandemic and return to full economic activity will drive our future level of reserves. Assuming that we continue to see improving credit quality and favorable changes in economic assumptions, we expect a modest reserve release in the fourth quarter of 2021.

Deposits provide the most significant source of funding for our interest earning assets. ~~Our~~Generally, our ability to compete for market share depends on our deposit pricing and our wide range of products and services that are focused on customer needs. In order to meet our customers’ needs, we offer high-quality banking services with convenient delivery channels, including online and mobile banking. We provide specialized services to our commercial customers to promote commercial deposit growth. These services include treasury management, industry expertise and lockbox services.

Since early 2020, deposit levels have also been influenced by pandemic driven factors, such as inflows from government stimulus payments, deposits related to funding PPP loans into business checking accounts and a general slowdown in customer spending.

Total deposits were ~~$27.0~~$29.2 billion at September 30, ~~2020,~~2021, down ~~$291.6~~$65 million, or less than 1%, from June 30, ~~2020, primarily driven by~~2021, with a favorable change in our deposit mix that included a $247 million increase in noninterest-bearing deposits and a $312 million decrease in ~~certificates of deposit, both retail and brokered.~~interest-bearing accounts, including a $144 million decrease in higher-cost time deposits. Total deposits increased ~~$2.8~~$2.2 billion, or ~~12%~~8%, from September 30, ~~2019, primarily due to~~2020, with strong growth in both noninterest-bearing and interest bearing transaction deposits, largely the result of ~~proceeds from PPP loan funding remaining on deposit.~~pandemic-related activity. Average deposits for the third quarter of ~~2020~~2021 were ~~$26.8~~$29.2 billion, ~~up $61.2 million, or less than 1%, from~~flat to the second quarter of ~~2020~~2021 and up ~~$3.7~~$2.5 billion, or ~~16%~~9%, from the third quarter of ~~2019.~~

Noninterest-bearing demand deposits were ~~$11.9~~$13.7 billion at September 30, ~~2020,~~2021, up ~~$122.5~~$247 million, or 1%2%, from June 30, ~~2020,~~2021, and ~~$3.2~~$1.8 billion, or ~~37%~~15%, from September 30, ~~2019.~~2020. The continued elevated balances are primarily due to ~~residual impacts of the~~ stimulus ~~response to the pandemic. We expect the balance to decline during the fourth quarter as these~~and additional PPP funds ~~are utilized. The year over year increase reflects the deposit of proceeds from PPP loans funded primarily during the second quarter of 2020.~~deposited in business accounts. Noninterest-bearing demand deposits comprised ~~44%~~47% of total deposits at September 30, ~~2020, 43%~~2021, 46% at June 30, ~~2020~~2021 and ~~36%~~44% at September 30, ~~2019.~~

Interest-bearing transaction and savings accounts of ~~$10.0~~$11.3 billion at September 30, ~~2020 increased $366.6 million, or 4%, from~~2021 were virtually flat compared to June 30, ~~2020~~2021, and ~~$1.2~~increased $1.3 billion, or ~~14%~~13%, from September 30, ~~2019.~~2020. These increases were primarily driven by movement from maturing certificates of deposit in the low interest rate environment, as well as ~~PPP loan proceeds~~other stimulus-related funds that remain in customer accounts.

Interest-bearing public fund deposits totaled ~~$3.2~~$3.1 billion at September 30, ~~2020,~~2021, down ~~$149.8~~$151.4 million, or 5%, from June 30, ~~2020,~~2021, and ~~up $221.3~~down $120.8 million, or 7%4%, from September 30, ~~2019.~~2020. Time deposits other than public funds totaled ~~$2.0~~$1.2 billion at September 30, ~~2020,~~2021, down ~~$630.9~~$143.7 million, or ~~24%~~11%, from June 30, ~~2020, with~~2021, and $793.5 million, or 40%, from the third quarter of 2020. The decrease from both periods was due in part to maturing retail and jumbo certificates of deposit which were not renewed, likely due to prevailing rates that reflect management’s strategic approach to lowering the cost of funds. The decrease from the prior year was also due to a ~~$392.2~~$96.2 million decrease in brokered certificates of deposit which matured and a $238.7 million decrease in retail certificates of deposits. The decrease in time deposits resulted from higher level of maturities and slower production due to the pandemic. Maturing brokered deposits were not replaced due to excess liquidity. ~~Time~~

Management expects deposits ~~other than public funds were down $1.8~~to increase $100 to $200 million in the fourth quarter, ending the year at approximately $29.4 billion, or ~~47%~~up 6% compared to year-end 2020.

At September 30, 2021, short-term borrowings totaled $1.7 billion, up $229 million, or 15%, from June 30, 2021 and down $162 million, or 8%, from September 30, ~~2019, with a decrease of $936.4 million in brokered certificates of deposit and $863.6 million in retail certificates of deposits.~~

~~At September 30, 2020, short-term borrowings totaled $1.9 billion, up $152 million, or 9%, from June 30,~~ 2020, driven mainly by ~~an increase~~changes in customer repurchase agreements. Short-term borrowings decreased $201.9 million, or 10%, from September 30, 2019, mainly due to decreases of $337.5 million in FHLB borrowings and $125.2 million in federal funds purchased, partially offset by an increase of $260.7 million in repurchase agreements.

Average short-term borrowings of ~~$1.7~~$1.6 billion in the third quarter of ~~2020~~2021 were down ~~$521.4~~$49 million, or ~~23%~~3%, compared to the second quarter of ~~2020,~~2021, and ~~$330.0~~$121 million, or ~~16%~~7%, compared to the third quarter of ~~2019.~~2020. The decrease in both periods was largely due to a lower level of customer repurchase agreements.

Short-term borrowings are a core portion of the Company’s funding strategy and can fluctuate depending on our funding needs and the sources utilized. 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 certain residential mortgage and commercial real estate loans included in the Bank’s loan portfolio, subject to specific criteria.

Long-term debt totaled $248.0 million at September 30, 2021 virtually flat compared to June 30, 2021, and down from $385.9 million at September 30, ~~2020 and $386.3 million at June~~2020. The decrease from September 30, 2020 ~~compared~~is attributable to ~~$246.6 million~~the June 15, 2021 early redemption of the 5.95% subordinated notes due 2045 with an aggregate principal amount of $150 million.

Long-term debt at September 30, ~~2019. On June 9, 2020, the Parent completed the issuance of~~2021 includes subordinated notes payable with an aggregate principal amount of $172.5 million with a stated maturity of June 15, ~~2060. The notes accrue interest at~~2060, a fixed rate of 6.25% per annum ~~with quarterly interest payments~~ that began September 15, 2020. Subject to prior approval by the Federal Reserve, the Company may redeem the notes in whole or in part on any interest payment date on or after June 15, 2025. This debt qualifiesqualify as ~~tier~~Tier 2 capital ~~in the calculation~~ of certain regulatory capital ratios.

~~Long-term debt also includes subordinated notes payable with an aggregate principal amount of $150 million with a stated maturity of June 15, 2045with a fixed rate of 5.95% per annum.~~ Subject to prior approval by the Federal Reserve, the Company may redeem these notes in whole or in part on any of its quarterly interest payment dates after June 15, 2020. This debt also qualifies as tier 2 capital in the calculation of certain regulatory capital ratios. The remaining long-term debt is comprised primarily of borrowings associated with tax credit fund activities.2025.

Commitments to extend credit include revolving commercial credit lines, ~~nonrevolving~~non-revolving 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 our future cash ~~requirements of the Company.~~requirements.

The contract amounts of these instruments reflect ~~the Company's~~our exposure to credit risk. The ~~Company~~Bank 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 September 30, ~~2020,~~2021, the Company had a reserve for unfunded lending commitments totaling ~~$31.5~~$28.9 million.

The following table shows the commitments to extend credit and letters of credit at September 30, ~~2020~~2021 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	$	7,803,139	$	3,794,225	$	1,756,576	$	1,415,153	$	837,185	$	8,983,039	$	4,128,455	$	2,240,564	$	1,788,746	$	825,274
Letters of credit		369,538		279,980		81,560		7,998		—		370,905		300,619		58,387		11,899		—
Total	$	8,172,677	$	4,074,205	$	1,838,136	$	1,423,151	$	837,185	$	9,353,944	$	4,429,074	$	2,298,951	$	1,800,645	$	825,274

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 are disclosed in Note 1 – Basis of Presentation – Critical Accounting Estimates, with further discussion of changes to significant accounting estimates noted below. Further, the Company performed a quantitative interim test of goodwill impairment during the nine months ended September 30, 2020. 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, ~~2019.~~2020.

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 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 outcomes. During 2020, the United States and global financial markets experienced unprecedented volatility, with significant uncertainty surrounding the pandemic, including varying degrees of economic shutdown and a significant and sustained decline in oil prices. The lack of a vaccine or decidedly effective medical treatment for the virus has significantly reduced travel and impaired tourism and trade, which has deteriorated the Gulf Coast economy. Changing economic conditions and resulting government response in the form of interest rate adjustments and several current and expected future stimulus packages have introduced enhanced estimation uncertainty in the forecasts used to estimate expected credit loss. Our credit loss models were built using historical data that may not correlate to economic conditions stemming from the pandemic. 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 results 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 loss 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 that it is more likely than not that a goodwill impairment exists. The Company completed its annual impairment test of goodwill as of September 30, 2019 by performing a qualitative (“Step Zero”) assessment. The qualitative assessment involved the examination of changes in macroeconomic conditions,

industry and market conditions, overall financial performance, cost factors and other relevant entity-specific events, including changes in management and other key personnel and changes in the share price of the Company’s common stock. As a result of the assessment, the Company concluded that its goodwill was not impaired.

~~During the third quarter of 2020, the Company assessed the indicators of goodwill impairment and noted certain events that indicated that~~it is “more likely than not” that a goodwill impairment exists, necessitating an interim test of impairment. Triggering events stemming from and in response to the COVID-19 pandemic include continued economic disruption, operating losses driven by a higher provision for credit losses and a lower interest rate environment, and a sustained decrease in the share price of the Company. As such, the Company performed a quantitative assessment of goodwill impairment as of September 30, 2020, which included determining the estimated fair value of the reporting unit and comparing that fair value to the reporting unit's carrying amount. The results of the test indicated that the estimated fair value of the reporting unit exceeded its carrying amount at September 30, 2020; therefore, goodwill was not impaired as of the testing date.

Both valuation techniques employed by the Company require significant assumptions. Depending upon the specific approach, assumptions are made regarding the economic environment, expected net interest margins, growth rates, discount rate used to present value future cash flows, asset quality metrics, control premiums, and price-to-forward earnings multiples. Changes to any one of these assumptions could result in significantly different results. Changes in the amount and/or timing of Company’s expected future cash flows or estimated growth rates, lack of improvement and/or further decline in the price of the Company’s common stock relative to our book value per share, and/or further deterioration in the economic environment beyond current estimates could result in an impairment charge to goodwill in future reporting periods. Annual impairment testing will be performed in the fourth quarter of 2020 in coordination with a more robust corporate-wide annual budget process and interim testing is expected to continue until indicators of goodwill impairment no longer exist.

Refer to Note 1615 to our consolidated financial statements included elsewhere in this report.

The Company’s net income is materially dependent upon 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 interest 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 September 30, ~~2020.~~2021. Shifts are measured in 100 basis point increments in a range from -500 to +500 basis points from base case, with +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 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		3.10	%		6.23	%		6.64	%		10.66	%
+200		7.04	%		13.05	%		14.01	%		21.30	%
+300		10.80	%		19.36	%		21.48	%		32.22	%

The results indicate a general asset sensitivity across most scenarios driven primarily by repricing in variable rate loans, an increase in short-term excess reserves held at the Federal Reserve, 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.

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~~Kingdom’s Financial Conduct Authority ~~(the authority that regulates LIBOR)~~ announced that after 2021 it ~~intends to stop compelling~~would no longer compel banks to submit the rates ~~for~~required to calculate the ~~calculation~~London Interbank Offered Rate (“LIBOR”). In November 2020, the administrator of LIBOR announced it will consult on its intention to extend the retirement date of certain offered rates whereby the publication of the one week and two month LIBOR offered rates will cease after ~~2021. Working groups comprised~~December 31, 2021, but the publication of ~~various regulators~~the remaining LIBOR offered rates will continue until June 30, 2023. Given consumer protection, litigation, and ~~other~~reputation risks, the bank regulatory agencies have indicated

that entering into new contracts that use LIBOR as a reference rate after December 31, 2021, would create safety and soundness risks and that they will examine bank practices accordingly. Therefore, the agencies encouraged banks to cease entering into new contracts that use LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021.

Uncertainty remains over what rate or rates may become widely accepted alternatives to LIBOR within the industry,~~groups~~ and the effect of any such changes in views or alternatives may have ~~been formed in~~on the ~~United States and other countries in order to provide guidance on this topic.~~markets for LIBOR-indexed financial instruments. In particular, regulators, industry groups and certain committees (e.g., the Alternative Reference Rates Committee ~~(“ARRC”~~(ARRC)) ~~has proposed that the Secured Overnight Financing Rate (“SOFR”) is the rate that represents best practice as the alternative to LIBOR for use in derivatives and~~have, among other ~~financial contracts that are currently indexed to LIBOR. The ARRC has also~~things, published recommended fallback language for LIBOR-linked financial instruments, ~~among numerous~~identified recommended alternatives for certain LIBOR rates (e.g., AMERIBOR or the Secured Overnight Financing Rate (SOFR) as the recommended alternative to U.S. Dollar LIBOR), and proposed implementations of the recommended alternatives in floating rate instruments.

We have a significant number of loans, derivative contracts, borrowings and other ~~areas of guidance. ARRC has proposed a paced market~~financial instruments with attributes that are either directly or indirectly dependent on LIBOR. The transition ~~plan to SOFR~~ from LIBOR has resulted in and ~~organizations~~could continue to result in added costs and employee efforts and could present additional risk. Since proposed alternative rates are ~~currently working on industry-wide~~calculated differently, payments under contracts referencing new rates will differ from those referencing LIBOR. The transition will change our market risk profiles, requiring changes to risk and ~~company-specific transition plans as it relates to derivatives~~pricing models, valuation tools, product design and cash markets exposed to LIBOR. However, at this time, no consensus exists as to what rate or rates may become acceptable alternatives to LIBOR and it is impossible to predict the effect of any such alternatives on the value of LIBOR-based securities and variable rate loans, debentures, or other securities or financial arrangements, given LIBOR’s role in determining market interest rates globally.

Management has established a LIBOR Transition Working Group (the “Group”) whose purpose is to direct the overall transition process for the Company. The Group is an internal, cross-functional team with representatives from business lines, support and control functions and legal counsel. ~~During~~Beginning in the third quarter of 2019, key provisions in our loan documents were modified to ensure new and renewed loans include appropriate pre-cessation trigger language and LIBOR fallback language for transition from LIBOR to the new benchmark when such transition occurs. All direct exposures resulting from existing financial contracts that mature after 2021 have been inventoried and are monitored on an ongoing basis. Remediation of these exposures will be consistent with industry timing. The Group has also inventoried indirect LIBOR exposures within the Company's systems, models and processes. The results of this assessment will drive development and prioritization of remediation plans, and the Group is continuing to monitor developments and taking steps to ensure readiness when the LIBOR benchmark rate is discontinued. Although we are currently unable to assess what the ultimate impact of the transition from LIBOR will be, failure to adequately manage the transition could have a material adverse effect on our business, financial condition and results of operations.

The Bank has adopted several replacement benchmarks to use in place of LIBOR benchmark rates, with AMERIBOR along with FRB-NY SOFR as the primary rates. The replacement benchmarks rates adopted by the Bank have been affirmed to comply with the 19 principles set forth by the International Organization of Securities Commissions (IOSCO) for Financial Benchmarks, and it further provides the Bank confidence these replacement benchmarks are based on transparent, market-based transactions. The Bank began using these replacement benchmarks towards the end of the third quarter of 2021.

At September 30, ~~2020,~~2021, approximately ~~28%~~36% of our loan portfolio, excluding PPP loans, consisted of variable rate loans tied to LIBOR, along with related derivatives and other financial instruments.

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 September 30, ~~2020,~~2021, 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 September 30, ~~2020,~~2021, 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, ~~2019.~~2020. 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 has created and will likely continue to create 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, liquidity and litigation, 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, 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 could 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, or if the SBA determines there is a deficiency in the manner in which any PPP loans were originated, funded or serviced by the Bank, we are subject to repayment risk as well as the heightened risk of holding these loans at unfavorable interest rates as compared to 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. 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.

Further, we use quantitative models to help manage certain aspects of our business and to assist with certain business decisions, including estimating credit losses, grading loans and extending credit, estimating the effects of changing interest rates and other market measures on our financial condition and results of operations. Our modeling methodologies rely on many assumptions, historical analyses and correlations. These assumptions may be incorrect, particularly in times of market distress, as we have experienced and expect to continue to experience as a result of the COVID-19 pandemic, and the historical correlations on which we rely may not continue to be relevant. As a result, our models may not capture or fully express the risks we face or may lead us to misjudge the business and economic environment in which we operate. If our models fail to produce reliable results on an ongoing basis, we may not make appropriate risk management or other business or financial decisions. Furthermore, strategies that we employ to manage and govern the risks associated with our use of models may not be effective or fully reliable, and as a result, we may realize losses or other lapses.

If our models fail to produce reliable results on an ongoing basis, we may not make appropriate risk management or other business or financial decisions. Furthermore, strategies that we employ to manage and govern the risks associated with our use of models may not be effective or fully reliable, and as a result, we may realize losses or other lapses.

~~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 and the long-term impact of COVID-19’s effects on our business, operations, or the global economy as a whole. Any future developments 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 operations, 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.

~~Liquidity and Litigation Risk~~. Federal, state and local governments have mandated or encouraged financial services companies to make accommodations to borrowers and other customers affected by the COVID-19 pandemic. Legal and regulatory responses to ~~concerns about the COVID-19 pandemic could result in additional regulation or restrictions affecting the conduct of our business in the future.~~ In addition to the potential effects from negative economic conditions noted above, the Company instituted a program to help COVID-19 impacted customers. This program included waiving certain fees and charges and offering payment deferment and other loan relief, as appropriate, for customers impacted by COVID-19. The Company’s liquidity could be negatively impacted if a significant number of customers apply and are approved for the deferral of payments or request additional deferrals. In addition, if these deferrals are not effective in mitigating the effect of COVID-19 on the Company’s customers, it may adversely affect its business and results of operations more substantially over a longer period of time. A significant amount of the loan growth the Company experienced year-to-date in 2020 was a direct result of PPP loans; this loan growth is likely to end in the near-term. Furthermore, since the inception of the PPP, a number of banks have been subject to litigation regarding the process and procedures that such banks used in processing applications for the PPP and claims related to agent fees. In addition, some banks have received negative media attention associated with the PPP. The Company and the Bank are exposed to similar litigation risk and negative media attention, from both customers and non-customers that approached the Bank regarding PPP loans, regarding its process and procedures used in processing applications for the PPP, or litigation from agents with respect to agent fees. If any such litigation against the Company or the Bank is not resolved in a manner favorable to the Company or the Bank, it may result in significant financial liability or adversely affect the Company’s reputation. In addition, litigation can be costly, regardless of outcome. Any financial liability, litigation costs or reputational damage caused by PPP related litigation or negative media attention could have a material adverse impact on our business, financial condition and results of operations.

The PPP has also attracted interest from federal and state enforcement authorities, oversight agencies, regulators and Congressional committees. State attorney generals and other federal and state agencies may assert that they are not subject to the provisions of the CARES Act and the PPP regulations entitling the Bank to rely on borrower certifications, and they may take more aggressive actions against the Bank for alleged violations of the provisions governing the Bank’s participation in the PPP. Federal and state regulators can impose or request that we consent to substantial sanctions, restrictions and requirements if they determine there are violations of laws, rules or regulations or weaknesses or failures with respect to general standards of safety and soundness, which could adversely affect our business, reputation, results of operation and financial condition.

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.

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
6.25% Subordinated Notes	HWCPZ	Nasdaq

Part I. Financial Information		Page Number
ITEM 1.	Financial Statements	45
	Consolidated Balance Sheets (unaudited) – September 30, ~~2020~~2021 and December 31, ~~2019~~2020	45
	Consolidated Statements of Income (unaudited) – Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	56
	Consolidated Statements of Comprehensive Income (unaudited) – Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	67
	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) – Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	78
	Consolidated Statements of Cash Flows (unaudited) – Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	89
	Notes to Consolidated Financial Statements (unaudited) – September 30, ~~2020~~2021 and ~~2019~~2020	910
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4338
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	7165
ITEM 4.	Controls and Procedures	7266
Part II. Other Information
ITEM 1.	Legal Proceedings	7467
ITEM 1A.	Risk Factors	7467
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7767
ITEM 3.	Default on Senior Securities	N/A
ITEM 4.	Mine Safety Disclosures	N/A
ITEM 5.	Other Information	N/A
ITEM 6.	Exhibits	7767
Signatures		7868

(in thousands)
ASSETS
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		31,500
Other assets		79,888
Total identifiable assets		1,514,332
LIABILITIES
Deposit liabilities		1,280,947
Short term borrowings		66,996
Long term debt		13,919
Other liabilities		21,990
Total liabilities		1,383,852
Net assets acquired		130,480
Value of stock-based consideration		193,849
Goodwill	$	63,369

(in thousands)
Goodwill balance at December 31, 2018	$	790,972
Final settlement of cash consideration - acquisition of trust and asset management business		1,112
Initial goodwill recorded in the acquisition of MidSouth Bancorp, Inc.		69,207
Measurement period adjustments - acquisition of MidSouth Bancorp, Inc.		(5,838	)
Goodwill balance at December 31, 2019	$	855,453
Goodwill balance at September 30, 2020	$	855,453

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

	September 30, 2020
(in thousands)	Recorded investment without an allowance		Recorded investment with an allowance		Unpaid principal balance		Related allowance for loan loss
Commercial non-real estate	$	20,689	$	52,450	$	125,893	$	27,304
Commercial real estate - owner occupied		6,900		4,224		14,029		1,344
Total commercial and industrial		27,589		56,674		139,922		28,648
Commercial real estate - income producing		5,453		96		7,016		24
Construction and land development		667		1,170		1,838		169
Residential mortgages		2,890		3,174		6,869		416
Consumer		1,592		2,332		3,924		456
Total loans	$	38,191	$	63,446	$	159,569	$	29,713

	December 31, 2019
(in thousands)	Carrying Amount of Loans			Accretable Yield
Balance at beginning of period	$	129,596		$	37,294
Additions		120,562			6,246
Payments received, net		(48,076	)		(4,601	)
Accretion		13,163			(13,163	)
Decrease in expected cash flows based on actual cash flows and changes in cash flow assumptions		—			4,170
Balance at end of period	$	215,245		$	29,946

(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

	Three Months Ended
	September 30, 2020							June 30, 2020							September 30, 2019
(dollars in millions)	Volume		Interest (d)		Rate			Volume		Interest (d)		Rate			Volume		Interest (d)		Rate
Average earning assets
Commercial & real estate loans (te) (a)	$	17,607.2	$	155.6		3.52	%	$	17,931.8	$	165.3		3.71	%	$	15,126.1	$	185.5		4.87	%
Residential mortgage loans		2,807.5		27.5		3.92	%		2,923.2		28.4		3.89	%		2,978.7		30.1		4.05	%
Consumer loans		1,993.1		24.0		4.79	%		2,102.0		25.3		4.85	%		2,092.3		30.4		5.76	%
Loan fees & late charges		—		15.2		0.00	%		—		11.8		0.00	%		—		0.1		0.00	%
Total loans (te) (b)		22,407.8		222.3		3.95	%		22,957.0		230.8		4.04	%		20,197.1		246.1		4.84	%
Loans held for sale		112.2		0.8		2.96	%		90.0		0.6		2.89	%		55.3		0.6		4.26	%
US Treasury and government agency securities		165.6		0.8		1.99	%		127.1		0.8		2.31	%		141.6		0.8		2.33	%
Mortgage-backed securities and collateralized mortgage obligations		5,326.2		29.4		2.21	%		5,128.2		30.4		2.37	%		4,966.5		31.4		2.53	%
Municipals (te)		889.5		6.7		3.01	%		866.3		6.6		3.06	%		893.1		6.9		3.08	%
Other securities		8.0		0.1		4.33	%		8.0		0.1		4.31	%		3.5	0.0			3.61	%
Total securities (te) (c)		6,389.3		37.0		2.31	%		6,129.6		37.9		2.47	%		6,004.7		39.1		2.61	%
Total short-term investments		503.0		0.1		0.10	%		837.2		0.3		0.11	%		180.5		1.0		2.01	%
Total earning assets (te)	$	29,412.3	$	260.2		3.53	%	$	30,013.8	$	269.6		3.61	%	$	26,437.6	$	286.8		4.31	%
Average interest-bearing liabilities
Interest-bearing transaction and savings deposits	$	9,806.8	$	4.2		0.17	%	$	9,387.3	$	4.4		0.19	%	$	8,179.3	$	15.7		0.76	%
Time deposits		2,174.6		6.0		1.09	%		3,005.1		11.9		1.60	%		3,840.1		20.0		2.07	%
Public funds		3,196.8		4.6		0.57	%		3,320.3		6.3		0.76	%		2,979.5		13.5		1.80	%
Total interest-bearing deposits		15,178.2		14.8		0.39	%		15,712.7		22.6		0.58	%		14,998.9		49.2		1.30	%
Short-term borrowings		1,733.3		1.6		0.39	%		2,254.7		2.3		0.40	%		2,063.3		8.1		1.57	%
Long-term debt		386.0		5.4		5.60	%		276.9		3.6		5.19	%		234.3		2.9		4.82	%
Total borrowings		2,119.3		7.0		1.33	%		2,531.6		5.9		0.93	%		2,297.6		11.0		1.90	%
Total interest-bearing liabilities		17,297.5		21.8		0.50	%		18,244.3		28.5		0.63	%		17,296.5		60.2		1.38	%
Net interest-free funding sources		12,114.8		—		0.00	%		11,769.5		—		0.00	%		9,141.1		—		0.00	%
Total cost of funds	$	29,412.3	$	21.8		0.30	%	$	30,013.8	$	28.5		0.38	%	$	26,437.6	$	60.2		0.90	%
Net interest spread (te)			$	238.4		3.02	%			$	241.1		2.98	%			$	226.6		2.93	%
Net interest margin	$	29,412.3	$	238.4		3.23	%	$	30,013.8	$	241.1		3.23	%	$	26,437.6	$	226.6		3.41	%

	Well-			September 30,			June 30,			March 31,			December 31,			September 30,
	Capitalized			2021			2021			2021			2020			2020
Total capital (to risk weighted assets)
Hancock Whitney Corporation		10.00	%		13.06	%		12.94	%		13.60	%		13.22	%		12.92	%
Hancock Whitney Bank		10.00	%		12.51	%		12.45	%		12.52	%		12.19	%		11.78	%
Tier 1 common equity capital (to risk weighted assets)
Hancock Whitney Corporation		6.50	%		11.17	%		10.98	%		11.00	%		10.61	%		10.30	%
Hancock Whitney Bank		6.50	%		11.30	%		11.20	%		11.26	%		10.94	%		10.53	%
Tier 1 capital (to risk weighted assets)
Hancock Whitney Corporation		8.00	%		11.17	%		10.98	%		11.00	%		10.61	%		10.30	%
Hancock Whitney Bank		8.00	%		11.30	%		11.20	%		11.26	%		10.94	%		10.53	%
Tier 1 leverage capital
Hancock Whitney Corporation		5.00	%		8.15	%		7.83	%		7.89	%		7.88	%		7.70	%
Hancock Whitney Bank		5.00	%		8.25	%		7.98	%		8.08	%		8.11	%		7.86	%


( $ in thousands )	Balance		Percentage of Total Loans *
Sectors under focus *
Healthcare and social assistance
Hospitals	$	288,073		1.40	%
Offices of physicians & dentists		477,719		2.40	%
Assisted living (investor CRE)		372,119		2.00	%
Assisted living (non- investor CRE)		207,470		1.00	%
All other healthcare		242,173		1.20	%
Total healthcare and social assistance		1,587,554		8.00	%
Hospitality
Hotel		523,117		2.60	%
Restaurants full service, casual dining and bars		370,109		1.90	%
Restaurants limited service		121,086		0.60	%
Entertainment		147,291		0.70	%
Total hospitality		1,161,603		5.80	%
Retail trade
Retail CRE		670,955		3.40	%
Retail goods and services		1,096,208		5.50	%
Total retail trade		1,767,163		8.90	%
Energy		337,828		1.70	%
Total Sectors under focus	$	4,854,148		24.40	%

	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
July 1, 2021 - July 31, 2021		—		—		—		4,338,000
August 1, 2021 - August 31, 2021		56,349	$	44.52		56,349		4,281,651
September 1, 2021 - September 30, 2021		—		—		—		4,281,651
		56,349	$	35.55		56,349

Exhibit Number	Description	Filed Herewith	Form	Exhibit	Filing Date
2.1	Master Purchase Agreement by and among Hancock Whitney Bank, OCM Engy Holdings, LLC, et al	X
3.1	Second Amended and Restated Articles of Hancock Whitney Corporation		8-K	3.1	5/1/2020
3.2	Second Amended and Restated Bylaws of Hancock Whitney Corporation		8-K	3.2	5/1/2020
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.INS	Inline XBRL Instance Document	X
101.SCH	Inline XBRL Taxonomy Extension Schema Document	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	X
104	Cover Page Interactive Data File	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, Senior Accounting and Finance Executive (Principal Accounting Officer)

			November 4, ~~2020~~2021