# National Bank Holdings Corp (NBHC) FY 2022 MD&A Verbatim Item 7 Management's Discussion and Analysis from National Bank Holdings Corp's 10-K for fiscal year 2022. SEC filing source: https://www.sec.gov/Archives/edgar/data/1475841/000155837023002370/nbhc-20221231x10k.htm Accession: 0001558370-23-002370 Filing date: 2023-02-28 Report date: 2022-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/NBHC/ All MD&A years: /company/NBHC/mda/ Previous year: /company/NBHC/mda/fy2021/ (FY 2021) Next year: /company/NBHC/mda/fy2023/ (FY 2023) Item 7.       MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. ​ The following management's discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes as of and for the years ended December 31, 2022, 2021, and 2020, and with the other financial and statistical data presented in this annual report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions that may cause actual results to differ materially from management's expectations. Factors that could cause such differences are discussed in the section entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” and should be read herewith. ​ Management’s discussion focuses on 2022 results compared to 2021. For a discussion of 2021 results compared to 2020, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. ​ All amounts are in thousands, except share and per share data, or as otherwise noted. ​ Overview ​ Our focus is on building relationships by creating a win-win scenario for our clients and our Company. We believe in providing solutions and services to our clients that are based on fairness and simplicity. We have established a solid financial services franchise with a sizable presence for deposit gathering and building client relationships necessary for growth. We are executing on strategic acquisition opportunities to expand our presence in attractive markets and to diversify our revenue streams. Additionally, we are innovating and building strategic fintech partnerships with the goal of delivering a comprehensive digital financial ecosystem for our clients. We are focused on providing small and medium-sized businesses with alternative digital access to address borrowing, depository and cash management needs, while also providing information management and access to digital payment tools, under the safety of a regulated bank. We believe that our established presence in our core markets of Colorado, the greater Kansas City region, Utah, Wyoming, Texas, New Mexico and Idaho, as well as our ongoing investment in digital solutions and strategic acquisitions, position us well for growth opportunities. As of December 31, 2022, we had $9.6 billion in assets, $7.2 billion in loans, $7.9 billion in deposits, $1.1 billion in equity and $0.8 billion in assets under management in our trust and wealth management business. ​ Operating Highlights and Key Challenges ​ On September 1, 2022, the Company completed its acquisition of Community Bancorporation, the holding company for Rock Canyon Bank (“RCB”), headquartered in Provo, Utah. At the close of the acquisition, the Company acquired seven banking centers in the greater Salt Lake City region. The acquisition added $832.2 million in total assets, $537.7 million in loans and $734.5 million in deposits as of September 1, 2022. The merger consideration totaled $140.4 million and consisted of $124.3 million in Company stock and $16.1 million in cash. All core operating systems were converted during the fourth quarter of 2022. ​ On October 1, 2022, the Company completed its acquisition of Bancshares of Jackson Hole Incorporated, the holding company for Bank of Jackson Hole (“BOJH”), with operations in Jackson Hole, Wyoming and Idaho. At the close of the acquisition, the Company acquired 12 banking centers. As of October 1, 2022, the acquisition added $1.5 billion in total assets, $1.2 billion in loans and $1.4 billion in deposits and an attractive Wyoming-based trust and wealth management business with $0.8 billion in assets under management. The merger consideration totaled $213.4 million and consisted of $162.5 million in Company stock and $51.0 million in cash. All core operating systems were converted in December of 2022. ​ Profitability and returns ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b"],["\u25cf","","Net income totaled $71.3 million, or $2.18 per diluted share, for the year ended December 31, 2022, compared to net income of $93.6 million, or $3.01 per diluted share, for the year ended December 31, 2021. Adjusting for $36.8 million of non-recurring acquisition-related expenses, including CECL Day 1 provision expense totaling $21.7 million, net income totaled $99.6 million, or $3.05 per diluted share, for the year ended December 31, 2022."],["\u25cf","","The return on average tangible assets was 0.95% for 2022, compared to 1.37% for 2021. Adjusting for non-recurring acquisition-related expenses, the return on average tangible assets for the year ended December 31, 2022 was 1.32%."]] [[/GREPCENT_TABLE]] 43 Table of Contents [[GREPCENT_TABLE]] [["","","\u200b"],["\u25cf","","The return on average tangible common equity was 9.91% for 2022, compared to 12.87% for 2021. Adjusting for non-recurring acquisition-related expenses, the return on average tangible common equity for the year ended December 31, 2022 was 13.75%."]] [[/GREPCENT_TABLE]] ​ Strategic execution ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b"],["\u25cf","\u200b","Completed the acquisition of RCB on September 1, 2022, further expanding our presence in the Salt Lake City region. Additionally, the Company became the #1 SBA lender by loan volume in the state of Utah."],["\u25cf","\u200b","Completed the acquisition of BOJH on October 1, 2022, located in the fast-growing Wyoming and Boise markets, adding a favorable Wyoming-domiciled trust business."],["\u25cf","\u200b","Continued to invest in digital solutions for our clients through our financial eco-system, 2UniFiSM, for small and medium-sized businesses that we believe will increase access to financial services while reducing the costs of banking services."],["\u25cf","","Maintained a conservatively structured loan portfolio represented by diverse industries and concentrations with most industry sector concentrations at 10% or less of total loans and all concentration levels remain well below our self-imposed limits."]] [[/GREPCENT_TABLE]] ​ Loan portfolio ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b"],["\u25cf","","Excluding the newly acquired loans, loans increased $1.0 billion or 21.7% led by originated commercial loan growth of $629.0 million."],["\u25cf","\u200b","New loan fundings during 2022 totaled a record $2.0 billion, led by commercial loan fundings of $1.2 billion. The RCB acquisition added loans totaling $537.7 million on September 1, 2022, and the BOJH acquisition added loans totaling $1.2 billion on October 1, 2022."],["\u25cf","\u200b","Loans outstanding totaled a record $7.2 billion, increasing $2.7 billion, or 60.0%, from the prior year."]] [[/GREPCENT_TABLE]] ​ Credit quality ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b"],["\u25cf","\u200b","Allowance for credit losses totaled 1.24% of total loans at December 31, 2022, compared to 1.10% at December 31, 2021."],["\u25cf","","The Company recorded an increase in the allowance for credit losses of $39.9 million for the year ended December 31, 2022, which included $27.4 million from the RCB and BOJH loan portfolios. The remainder of the provision expense was driven by record loan growth and higher allowance requirements from changes in the CECL model\u2019s underlying macro-economic forecast."],["\u25cf","","Net charge-offs of $1.8 million and $1.3 million were recorded during 2022 and 2021, respectively. Net charge-offs to average total loans totaled 0.03% and 0.03% for 2022 and 2021, respectively."],["\u25cf","\u200b","Credit quality remained strong, as non-performing loans (comprised of non-accrual loans and non-accrual troubled debt restructured loans) decreased to 0.23% of total loans at December 31, 2022, compared to 0.24% at December 31, 2021. Non-performing assets to total loans and OREO decreased 11 basis points to 0.28% at December 31, 2022."]] [[/GREPCENT_TABLE]] ​ Client deposit funded balance sheet ​ [[GREPCENT_TABLE]] [["\u200b","\u200b",".9"],["\u25cf","\u200b","Average transaction deposits for the fourth quarter of 2022 totaled $7.1 billion, increasing 33.6%, compared to $5.3 billion for the same period in the prior year."],["\u25cf","\u200b","Average total deposits for the fourth quarter of 2022 totaled $8.0 billion, increasing 29.6%, compared to $6.2 billion for the same period in the prior year."],["\u25cf","","The mix of transaction deposits to total deposits improved 240 basis points to 88.9% at December 31, 2022, from 86.5% at December 31, 2021. The RCB acquisition added $734.5 million of total deposits, including $653.0 million of transaction deposits and $81.5 million of time deposits on September 1, 2022, and the BOJH acquisition added $1.4 billion of total deposits, including $1.3 billion of transaction deposits and $0.1 billion of time deposits on October 1, 2022."],["\u25cf","\u200b","Cost of deposits increased 15 basis points when comparing the fourth quarter of 2022 to the fourth quarter of 2021. The increase represents less than a five percent beta this rate cycle."]] [[/GREPCENT_TABLE]] 44 Table of Contents ​ Revenues ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b"],["\u25cf","","Fully taxable equivalent net interest income totaled a record $272.3 million for the year ended December 31, 2022 an increase of $80.0 million, or 41.6%, compared to the prior year due to an increase in average earning assets, several increases in the federal funds rate since March 2022, and excess cash being deployed into higher-yielding originated loans."],["\u25cf","\u200b","The FTE net interest margin widened 78 basis points from the prior year to 3.73% for the year ended December 31, 2022, benefitting from an 81 basis point increase in earning asset yields to 3.97%. The cost of funds totaled 0.26%, compared to 0.23% during 2021."],["\u25cf","\u200b","Non-interest income totaled $67.3 million during 2022, decreasing $43.1 million, or 39.0%, from 2021, largely driven by $39.6 million of lower mortgage banking income due to slower refinance activity in 2022 and competition driving tighter gain on sale margins. During 2022, service charges and bank card fees increased a combined $2.1 million."],["\u25cf","\u200b","Other non-interest income decreased $5.6 million largely due to market adjustments on company-owned life insurance and higher unrealized gains on equity method investments included in the prior year. The year ended December 31, 2021 included $4.6 million of non-recurring banking center consolidation-related income."]] [[/GREPCENT_TABLE]] ​ Expenses ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b"],["\u25cf","","Non-interest expense totaled $211.2 million during 2022, representing an increase of $19.4 million, or 10.1%, from 2021, primarily driven by expenses from acquisitions."],["\u25cf","\u200b","Included in the year ended December 31, 2022 were $36.8 million of non-recurring acquisition-related expenses, including $21.7 million of CECL Day 1 provision expense for credit losses, $8.2 million of professional fees, $1.7 million of salaries and benefits, $2.1 million of data processing expense, $1.6 million of occupancy and equipment expense and $1.5 million in other non-interest expense in the consolidated statements of operations."],["\u25cf","\u200b","The FTE efficiency ratio during the year ended December 31, 2022 totaled 62%, compared to 63% during the year ended December 31, 2021. Adjusting for CDI and WMI asset amortization and non-recurring acquisition-related expenses, the FTE efficiency ratio improved 592 basis points to 57% during the year ended December 31, 2022, compared to the same period in the prior year."],["\u25cf","","Income tax expense totaled $14.9 million during 2022, compared to $21.4 million during 2021. The 2022 and 2021 effective tax rates were 17.3% and 18.6%, respectively."]] [[/GREPCENT_TABLE]] ​ Strong capital position ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b"],["\u25cf","","Capital ratios continue to be strong and in excess of federal bank regulatory agency \u201cwell capitalized\u201d thresholds. At December 31, 2022, our consolidated tier 1 leverage ratio was 9.29%, and our common equity tier 1 and consolidated tier 1 risk based capital ratios were 10.54%."],["\u25cf","","At December 31, 2022, common book value per share was $29.04. The tangible common book value per share decreased $3.70 to $20.63 at December 31, 2022, compared to December 31, 2021, as earnings, net of dividends paid, were outpaced by a $2.16 increase in accumulated other comprehensive loss and the impact of the RCB and BOJH acquisitions."]] [[/GREPCENT_TABLE]] ​ Key Challenges ​ There are a number of significant challenges confronting us and our industry. We face continual challenges implementing our business strategy. These include growing our assets, particularly loans, and deposits amidst intense competition, changing interest rates, adhering to changes in the regulatory environment and identifying and consummating disciplined acquisition and other expansionary opportunities in a very competitive and inflationary environment. ​ The COVID-19 pandemic has caused disruption to the U.S. labor market, supply chain, consumer spending and business operations. The prolonged economic impacts from the pandemic, including inflationary pressures and demand for labor, are likely to continue to present challenges to our business and to our clients. ​ 45 Table of Contents We are focused on growing our loan portfolio while adhering to our established underwriting standards and self-imposed concentration limits. A significant portion of our loan portfolio is secured by real estate and any deterioration in real estate values or credit quality or elevated levels of non-performing assets would ultimately have a negative impact on the quality of our loan portfolio. ​ The agriculture industry continues to be impacted by elevated and volatile commodity prices and intermittent disruptions in supply chains. Our food and agribusiness portfolio is only 4.9% of total loans and is well-diversified across food production, crop and livestock types. Crop and livestock loans represent 1.4% of total loans. We have maintained relationships with food and agribusiness clients that generally possess low leverage and, correspondingly, low bank debt to assets, minimizing any potential credit losses in the future. ​ Future growth in our interest income will ultimately be dependent on our ability to originate high-quality loans and other high-quality earning assets such as investment securities. Cash balances total $195.5 million at December 31, 2022 and have decreased $650.2 million from December 31, 2021. Investment securities totaled $1.4 billion at December 31, 2022 and increased $57.0 million, or 4.4%, compared to December 31, 2021. At December 31, 2022, our loans outstanding totaled a record $7.2 billion, increasing $2.7 billion, or 60.0%, compared to December 31, 2021. Loans outstanding at December 31, 2022 included $1.7 billion of loans acquired through the RCB and BOJH acquisitions. During the year ended December 31, 2022, our weighted average rate on new loans funded at the time of origination was 5.25%, compared to the weighted average yield of our originated loan portfolio of 4.58% (FTE). During the year ended December 31, 2022, the Federal Reserve increased prevailing interest rates by a total of 425 basis points. Our future earnings will be impacted by the Federal Reserve’s future interest rate policy decisions. ​ Continued regulation, impending new liquidity and capital constraints, and a continual need to bolster cybersecurity are adding costs and uncertainty to all U.S. banks and could affect profitability. Also, nontraditional participants in the market may offer increased competition as non-bank payment businesses, including fintechs, are expanding into traditional banking products. While certain external factors are out of our control and may provide obstacles to our business strategy, we are prepared to deal with these challenges and expand our offerings in digital technology, including by partnering with and investing in fintechs where appropriate. We seek to remain flexible, yet methodical and proactive, in our strategic decision making so that we can quickly respond to market changes and the inherent challenges and opportunities that accompany such changes. ​ Application of Critical Accounting Policies and Significant Estimates ​ We use accounting principles and methods that conform to GAAP and general banking practices. We are required to apply significant judgment and make material estimates in the preparation of our financial statements and with regard to various accounting, reporting and disclosure matters. Assumptions and estimates are required to apply these principles where actual measurement is not possible or practical. The most significant of these estimates relate to the determination of the allowance for credit losses and accounting for acquired loans. See additional discussion of our ACL policy in note 2 – Summary of Significant Accounting Policies in the notes to our consolidated financial statements for the year ended December 31, 2022. ​ Allowance for credit losses ​ The determination of the ACL, which represents management’s estimate of lifetime credit losses inherent in our loan portfolio at the balance sheet date, involves a high degree of judgment and complexity. The Company estimates the collective ACL by first disaggregating the loan portfolio into segments based upon broad characteristics such as primary use and underlying collateral. Within these segments, the portfolio is further disaggregated into classes of loans with similar attributes and risk characteristics. The collective ACL is determined at the class level, analyzing loss history based upon specific loss drivers and risk factors affecting each loan class. The Company utilizes a discounted cash flow (“DCF”) model that incorporates forecasts of certain national macroeconomic factors (reasonable and supportable forecasts) which drive the losses predicted in establishing the Company’s collective ACL. Management accounts for the inherent uncertainty of the underlying economic forecast by reviewing and weighting alternate forecast scenarios. For periods beyond the reasonable and supportable forecast period, the Company reverts to historical long-term average loss rates on a straight-line basis. Additionally, the collective ACL calculation includes subjective adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience. Changes in these assumptions, estimates or the conditions 46 Table of Contents surrounding them may have a material impact on our financial condition. For further discussion of the ACL, see notes 2 and 7 to our consolidated financial statements. ​ Accounting for Acquired Loans ​ ASC Topic 805, Business Combinations, requires that acquired loans are recorded at fair value at the date of acquisition. The fair value for acquired loans at the time of acquisition is based on a variety of factors including discounted expected cash flows, adjusted for estimated prepayments and credit losses. In accordance with ASC 326, the fair value adjustment is recorded as premium or discount to the unpaid principal balance of each acquired loan. Loans that have been identified as having experienced a more-than-insignificant deterioration in credit quality since origination are purchase credit deteriorated (“PCD”) loans. The net premium or discount on PCD loans is adjusted by our allowance for credit losses recorded at the time of acquisition. The remaining net premium or discount is accreted or amortized into interest income over the remaining life of the loan using the level yield method. The net premium or discount on non-PCD loans, that includes credit quality and interest rate considerations, is accreted or amortized into interest income over the remaining life of the loan using the level yield method. The Company then records the necessary allowance for credit losses on the non-PCD loans through provision for credit losses expense. ​ Future Accounting Pronouncements ​ In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance on TDRs and requires disclosure of current-period gross write-offs by year of origination. The guidance also updates the requirements related to accounting for credit losses under ASC Topic 326 and adds enhanced disclosures for creditors with respect to loan refinancing and restructuring for borrowers experiencing financial difficulty. The guidance will be effective for fiscal years, and interim periods, beginning after December 15, 2022 for entities that have adopted ASU 2016-13. The Company does not expect the adoption of that pronouncement to have a material impact on its financial statements. ​ In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. The purpose of this updated guidance is to further align risk management objectives with hedge accounting results on the application of the last-of-layer method, which was first introduced in ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2022-01 is effective for public business entities for fiscal years beginning after December 15, 2022. The Company does not expect the adoption of that pronouncement to have a material impact on its financial statements. ​ Financial Condition ​ Total assets were $9.6 billion at December 31, 2022, compared to $7.2 billion at December 31, 2021, an increase of $2.4 billion, or 32.7% primarily due to the acquisitions of RCB and BOJH. At December 31, 2022, cash and cash equivalents decreased $650.2 million, compared to December 31, 2021, as excess cash liquidity was deployed into higher yielding investment securities and loans. At December 31, 2022, investment securities increased $57.0 million, or 4.4%, and total loans increased $2.7 billion, or 60.0% compared to December 31, 2021. Total loans increased $1.7 billion through the acquisitions of RCB and BOJH. ​ During 2022, lower cost demand, savings and money market deposits (“transaction deposits”) increased $1.6 billion, or 29.8%, compared to the prior year, largely due to the acquisitions of RCB and BOJH and the continued development of full banking relationships with our clients. The increase in transaction deposits provided lower-cost funding utilized to fund loan growth. ​ 47 Table of Contents Investment securities ​ Available-for-sale ​ Total investment securities available-for-sale were $706.3 million at December 31, 2022, compared to $691.8 million at December 31, 2021, an increase of $14.4 million, or 2.1%. During 2022 and 2021, purchases of available-for-sale securities totaled $259.8 million and $288.6 million, respectively. Maturities and paydowns of available-for-sale securities during 2022 and 2021 totaled $141.9 million and $235.9 million, respectively. The Company sold $128.4 million of the available-for-sale securities acquired through the BOJH acquisition. The remaining BOJH available-for-sale portfolio was reclassified to held-to-maturity on Day 1. There were no sales of available-for-sale securities during 2021. ​ Available-for-sale investment securities are summarized as follows as of the dates indicated: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31, 2022","\u200b","December 31, 2021"],["\u200b","","\u200b","\u200b","","\u200b","\u200b","","\u200b","","Weighted","","\u200b","\u200b","","\u200b","\u200b","","\u200b","","Weighted"],["\u200b","\u200b","Amortized","\u200b","Fair","\u200b","Percent of","\u200b","average","\u200b","Amortized","\u200b","Fair","\u200b","Percent of","\u200b","average"],["\u200b","\u200b","cost","\u200b","value","\u200b","portfolio","\u200b","yield","\u200b","cost","\u200b","value","\u200b","portfolio","\u200b","yield"],["Treasury securities","\u200b","$","74,031","\u200b","$","71,388","\u200b","10.1%","\u200b","2.54%","\u200b","$","\u2014","\u200b","$","\u2014","\u200b","0.0%","\u200b","0.00%"],["Mortgage-backed securities:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises","\u200b","\u200b","263,939","\u200b","\u200b","226,131","\u200b","32.0%","\u200b","1.72%","\u200b","\u200b","231,523","\u200b","\u200b","227,696","\u200b","32.9%","\u200b","1.38%"],["Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises","\u200b","","478,866","\u200b","","405,926","\u200b","57.5%","\u200b","1.69%","\u200b","","467,490","\u200b","","461,334","\u200b","66.7%","\u200b","1.47%"],["Municipal securities","\u200b","\u200b","155","\u200b","\u200b","153","\u200b","0.0%","\u200b","3.17%","\u200b","\u200b","230","\u200b","\u200b","237","\u200b","0.0%","\u200b","3.17%"],["Corporate debt","\u200b","\u200b","2,000","\u200b","\u200b","1,920","\u200b","0.3%","\u200b","5.87%","\u200b","\u200b","2,000","\u200b","\u200b","2,111","\u200b","0.3%","\u200b","5.80%"],["Other securities","\u200b","","771","\u200b","","771","\u200b","0.1%","\u200b","0.00%","\u200b","","469","\u200b","","469","\u200b","0.1%","\u200b","0.00%"],["Total investment securities available-for-sale","\u200b","$","819,762","\u200b","$","706,289","\u200b","100.0%","\u200b","1.79%","\u200b","$","701,712","\u200b","$","691,847","\u200b","100.0%","\u200b","1.46%"]] [[/GREPCENT_TABLE]] ​ As of December 31, 2022 and 2021, nearly all the available-for-sale investment portfolio was primarily backed by mortgages. The residential mortgage pass-through securities portfolio is comprised of both fixed rate and adjustable rate Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Government National Mortgage Association (“GNMA”) securities. The other mortgage-backed securities (“MBS”) are comprised of securities backed by FHLMC, FNMA and GNMA securities. ​ Mortgage-backed securities may have actual maturities that differ from contractual maturities depending on the repayment characteristics and experience of the underlying financial instruments. The estimated weighted average life of the available-for-sale mortgage-backed securities portfolio was 5.4 years and 4.2 years at December 31, 2022 and December 31, 2021, respectively. This estimate is based on assumptions and actual results may differ. At December 31, 2022 and December 31, 2021, the duration of the total available-for-sale investment portfolio was 4.4 years and 3.8 years, respectively. ​ At December 31, 2022 and 2021, adjustable rate securities comprised 11.5% and 1.7%, respectively, of the available-for-sale mortgage-backed security portfolio. The remainder of the portfolio was comprised of fixed rate amortizing securities with 10 to 30 year contractual maturities, with a weighted average coupon of 1.75% per annum and 1.70% per annum at December 31, 2022 and 2021, respectively. ​ The available-for-sale investment portfolio included $113.5 million of unrealized losses at December 31, 2022. At December 31, 2021, the available-for-sale investment portfolio included $3.4 million of unrealized gains and $13.3 million of unrealized losses. We believe any unrealized losses are a result of prevailing interest rates, and as such, we do not believe that any of the securities with unrealized losses were impaired. Management believes that default of the available-for-sale securities is highly unlikely. FHLMC, FNMA and GNMA guaranteed mortgage-backed securities and U.S. Treasury securities have a long history of zero credit losses, an explicit guarantee by the U.S. government (although limited for FNMA and FHLMC securities) and yields that generally trade based on market views of prepayment and liquidity risk rather than credit risk. ​ 48 Table of Contents  Held-to-maturity ​ ​ ​ At December 31, 2022, we held $651.5 million of held-to-maturity investment securities, compared to $609.0 million at December 31, 2021, an increase of $42.5 million, or 7.0%. Purchases of held-to-maturity securities totaled $101.7 million and $397.8 million during 2022 and 2021, respectively. Maturities and paydowns of held-to-maturity securities totaled $133.4 million and $161.9 million during 2022 and 2021, respectively. The Company sold a portion of the available-for-sale securities acquired through the BOJH acquisition. The Company transferred the remaining $75.3 million of available-for-sale securities acquired through the BOJH acquisition to held-to-maturity. ​ Held-to-maturity investment securities are summarized as follows as of the dates indicated: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31, 2022","\u200b","December 31, 2021"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Weighted","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Weighted"],["\u200b","","Amortized","","Fair","","Percent of","","average","","Amortized","","Fair","","Percent of","","average"],["\u200b","\u200b","cost","\u200b","value","\u200b","portfolio","\u200b","yield","\u200b","cost","\u200b","value","\u200b","portfolio","\u200b","yield"],["Treasury securities","\u200b","$","49,045","\u200b","$","47,629","\u200b","7.5%","\u200b","3.14%","\u200b","$","\u2014","\u200b","$","\u2014","\u200b","\u2014","\u200b","\u2014"],["Mortgage-backed securities:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises","\u200b","\u200b","339,815","\u200b","\u200b","298,816","\u200b","52.2%","\u200b","2.29%","\u200b","\u200b","312,916","\u200b","\u200b","309,614","\u200b","51.4%","\u200b","1.56%"],["Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises","\u200b","","262,667","\u200b","","213,479","\u200b","40.3%","\u200b","1.60%","\u200b","","296,096","\u200b","","289,646","\u200b","48.6%","\u200b","1.25%"],["Total investment securities held-to-maturity","\u200b","$","651,527","\u200b","$","559,924","\u200b","100.0%","\u200b","2.07%","\u200b","$","609,012","\u200b","$","599,260","\u200b","100.0%","\u200b","1.41%"]] [[/GREPCENT_TABLE]] ​ The residential mortgage pass-through and other residential MBS held-to-maturity investment portfolios are comprised of fixed rate FHLMC, FNMA and GNMA securities. ​ The fair value of the held-to-maturity investment portfolio included $0.2 million of unrealized gains and $91.8 million of unrealized losses at December 31, 2022. At December 31, 2021, the held-to-maturity investment portfolio included $2.2 million of unrealized gains and $11.9 million of unrealized losses. ​ The Company does not measure expected credit losses on a financial asset, or groups of financial assets, in which historical credit loss information adjusted for current conditions and reasonable and supportable forecasts results in an expectation that nonpayment of the amortized cost basis is zero. Management evaluated held-to-maturity securities noting they are backed by loans guaranteed by either U.S. government agencies or U.S. government sponsored entities, and management believes that default is highly unlikely given this governmental backing and long history without credit losses. Additionally, management notes that yields on which the portfolio generally trades are based upon market views of prepayment and liquidity risk and not credit risk. The Company has no intention to sell the securities and believes it will not be required to sell the securities before the recovery of their amortized cost. ​ Mortgage-backed securities may have actual maturities that differ from contractual maturities depending on the repayment characteristics and experience of the underlying financial instruments. The estimated weighted average expected life of the held-to-maturity mortgage-backed securities portfolio as of December 31, 2022 and December 31, 2021 was 6.0 years and 4.1 years, respectively. This estimate is based on assumptions and actual results may differ. The duration of the total held-to-maturity portfolio was 4.8 years and 3.8 years as of December 30, 2022 and December 31, 2021, respectively. ​ Non-marketable securities ​ Non-marketable securities totaled $89.0 million and $50.7 million at December 31, 2022 and 2021, respectively, and included FRB stock, FHLB stock and other non-marketable securities. ​ At December 31, 2022, the Company held $20.3 million of FHLB stock and $18.1 million of FRB stock for regulatory or debt facility purposes. During the year ended December 31, 2022, purchases of FHLB and FRB stock totaled $23.8 million, and FHLB and FRB stock from the acquisitions of RCB and BOJH totaled $4.0 million. Redemptions of FHLB stock totaled 49 Table of Contents $4.0 million during 2022. At December 31, 2021, the Company held $0.7 million of FHLB stock and $13.9 million of FRB stock. There were no purchases of FHLB and FRB stock during 2021. These are restricted securities which, lacking a market, are carried at cost. The Company is not aware of any events or changes in circumstances that may have an adverse effect on the investments carried at cost. ​ At December 31, 2022, other non-marketable securities totaled $50.7 million and consisted of equity method investments totaling $21.7 million and convertible preferred stock without readily determinable fair values totaling $29.0 million. At December 31, 2021, other non-marketable securities totaled $36.2 million and consisted of equity method investments totaling $14.2 million and convertible preferred stock without readily determinable fair values totaling $22.0 million. During the years ended December 31, 2022 and 2021, purchases of other non-marketable securities totaled $13.5 million and $27.7 million, respectively. The Company continues to invest with fintech solution providers to support our digital ecosystem buildout, support our core bank products and offerings, and to leverage efficiencies and technological solutions in our shared services areas. ​ Loans overview ​ At December 31, 2022, our loan portfolio was comprised of new loans that we have originated and loans that were acquired in connection with our eight acquisitions to date. The Company added $537.7 million of loans to the acquired loan portfolio on September 1, 2022 from the acquisition of RCB and $1.2 billion of loans on October 1, 2022 from the acquisition of BOJH. ​ As discussed in note 4 to our consolidated financial statements, under ASC Topic 805, Business Combinations, all acquired loans are recorded at fair value at the date of acquisition. The fair value for acquired loans at the time of acquisition is based on a variety of factors including discounted expected cash flows, adjusted for estimated prepayments and credit losses. In accordance with ASC 326, the fair value adjustment is recorded as premium or discount to the unpaid principal balance of each acquired loan. Loans that have been identified as having experienced a more-than-insignificant deterioration in credit quality since origination are PCD loans. The net premium or discount on PCD loans is adjusted by our allowance for credit losses recorded at the time of acquisition. The remaining net premium or discount is accreted or amortized into interest income over the remaining life of the loan using a level yield method. The net premium or discount on non-PCD loans, that includes credit quality and interest rate considerations, is accreted or amortized into interest income over the remaining life of the loan using a level yield method. The Company then records the necessary allowance for credit losses on the non-PCD loans through provision for credit losses expense. ​ ​ 50 Table of Contents The table below shows the loan portfolio composition at the respective dates: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","December 31, 2022 vs."],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","December 31, 2021"],["\u200b","December 31, 2022","\u200b","December 31, 2021","\u200b","% Change"],["Originated:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commercial:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commercial and industrial","$","1,841,313","\u200b","$","1,479,895","\u200b","24.4%"],["Municipal and non-profit","\u200b","959,305","\u200b","\u200b","928,705","\u200b","3.3%"],["Owner-occupied commercial real estate","\u200b","656,361","\u200b","\u200b","503,663","\u200b","30.3%"],["Food and agribusiness","\u200b","284,714","\u200b","\u200b","200,412","\u200b","42.1%"],["Total commercial","\u200b","3,741,693","\u200b","\u200b","3,112,675","\u200b","20.2%"],["Commercial real estate non-owner occupied","\u200b","841,657","\u200b","\u200b","611,765","\u200b","37.6%"],["Residential real estate","\u200b","827,030","\u200b","\u200b","616,135","\u200b","34.2%"],["Consumer","\u200b","16,986","\u200b","\u200b","17,336","\u200b","(2.0)%"],["Total originated","\u200b","5,427,366","\u200b","\u200b","4,357,911","\u200b","24.5%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Acquired:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commercial:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commercial and industrial","\u200b","183,522","\u200b","\u200b","16,252","\u200b","100%"],["Municipal and non-profit","\u200b","321","\u200b","\u200b","340","\u200b","(5.6)%"],["Owner-occupied commercial real estate","\u200b","256,979","\u200b","\u200b","29,973","\u200b","100%"],["Food and agribusiness","\u200b","69,265","\u200b","\u200b","3,177","\u200b","100%"],["Total commercial","\u200b","510,087","\u200b","\u200b","49,742","\u200b","100%"],["Commercial real estate non-owner occupied","\u200b","854,393","\u200b","\u200b","52,964","\u200b","100%"],["Residential real estate","\u200b","424,251","\u200b","\u200b","52,521","\u200b","100%"],["Consumer","\u200b","4,372","\u200b","\u200b","245","\u200b","100%"],["Total acquired","\u200b","1,793,103","\u200b","\u200b","155,472","\u200b","100%"],["Total loans","$","7,220,469","\u200b","$","4,513,383","\u200b","60.0%"]] [[/GREPCENT_TABLE]] ​ The Company maintains a granular and well-diversified loan portfolio with self-imposed concentration limits. The loan portfolio increased $2.7 billion, or 60.0%, from December 31, 2021 to December 31, 2022. Excluding loans totaling $537.7 million from the acquisition of RCB and $1.2 billion from the acquisition of BOJH, loans increased $980.9 million led by originated commercial loan growth of $629.0 million, or 20.2%. ​ Our commercial and industrial loan portfolio is highly diversified across industry sectors and geography. As of December 31, 2022, there were no industry sectors representing more than 10% of our total loan portfolio. Key segments included government/non-profit loans of $559.9 million, or 7.8% of total loans, and health care/hospital loans of $402.8 million, or 5.6% of total loans. ​ Non-owner occupied CRE loans were 169.5% of the Company’s risk based capital, or 23.5% of total loans, and no specific property type comprised more than 5.0% of total loans. The Company maintains very little exposure to non-owner occupied CRE retail properties and office properties, comprising 2.0% and 1.6% of total loans, respectively. Multi-family loans totaled $214.8 million, or 3.0% of total loans as of December 31, 2022. ​ When considering the loan portfolio in its entirety, 76.9% of loans were located within our footprint of Colorado, the greater Kansas City region, Utah, Wyoming, Texas, New Mexico and Idaho as of December 31, 2022, based on the domicile of the borrower or, in the case of collateral-dependent loans, the geographical location of the collateral. ​ New loan origination is a direct result of our ability to recruit and retain top banking talent, connect with clients in our markets and provide needed services at competitive rates. Loan fundings totaled a record $2.0 billion over the past 12 months, led by commercial loan fundings of $1.2 billion. Fundings are defined as closed end funded loans and revolving lines 51 Table of Contents of credit advances net of any current period paydowns. Management utilizes this more conservative definition of fundings to better approximate the impact of fundings on loans outstanding and ultimately net interest income. ​ The following tables represent new loan fundings during 2022 and 2021: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","Fourth quarter","","Third quarter","","Second quarter","","First quarter","","Total"],["\u200b","2022","\u200b","2022","\u200b","2022","\u200b","2022","\u200b","2022"],["Commercial:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commercial and industrial","$","177,693","\u200b","$","201,106","\u200b","$","152,550","\u200b","$","169,168","\u200b","$","700,517"],["Municipal and non-profit","\u200b","20,393","\u200b","\u200b","20,845","\u200b","\u200b","81,428","\u200b","\u200b","49,906","\u200b","\u200b","172,572"],["Owner occupied commercial real estate","","40,912","\u200b","","65,125","\u200b","","78,905","\u200b","","67,597","\u200b","","252,539"],["Food and agribusiness","","28,518","\u200b","","76,293","\u200b","","(4,186)","\u200b","","18,620","\u200b","","119,245"],["Total commercial","\u200b","267,516","\u200b","\u200b","363,369","\u200b","\u200b","308,697","\u200b","\u200b","305,291","\u200b","\u200b","1,244,873"],["Commercial real estate non-owner occupied","","133,271","\u200b","","166,739","\u200b","","88,612","\u200b","","63,416","\u200b","","452,038"],["Residential real estate","","95,067","\u200b","","99,951","\u200b","","93,220","\u200b","","49,040","\u200b","","337,278"],["Consumer","","1,396","\u200b","","1,505","\u200b","","1,989","\u200b","","1,904","\u200b","","6,794"],["Total","$","497,250","\u200b","$","631,564","\u200b","$","492,518","\u200b","$","419,651","\u200b","$","2,040,983"]] [[/GREPCENT_TABLE]] ​ Included in the table above are net fundings under revolving lines of credit of $96,903, $124,834, $21,762 and $66,430 for the dates noted in the table above, respectively. ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","Fourth quarter","","Third quarter","","Second quarter","","First quarter","","Total"],["\u200b","2021","\u200b","2021","\u200b","2021","\u200b","2021","\u200b","2021"],["Commercial:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commercial and industrial","$","229,529","\u200b","$","196,289","\u200b","$","147,030","\u200b","$","144,531","\u200b","$","717,379"],["Municipal and non-profit","\u200b","101,450","\u200b","\u200b","43,516","\u200b","\u200b","25,131","\u200b","\u200b","7,999","\u200b","\u200b","178,096"],["Owner occupied commercial real estate","","28,914","\u200b","","53,445","\u200b","","48,225","\u200b","","27,093","\u200b","","157,677"],["Food and agribusiness","","11,016","\u200b","","8,442","\u200b","","26,956","\u200b","","(10,104)","\u200b","","36,310"],["Total Commercial","\u200b","370,909","\u200b","\u200b","301,692","\u200b","\u200b","247,342","\u200b","\u200b","169,519","\u200b","\u200b","1,089,462"],["Commercial real estate non-owner occupied","","46,128","\u200b","","55,392","\u200b","","58,532","\u200b","","49,195","\u200b","","209,247"],["Residential real estate","","55,873","\u200b","","54,442","\u200b","","53,962","\u200b","","74,145","\u200b","","238,422"],["Consumer","","2,524","\u200b","","1,810","\u200b","","2,267","\u200b","","1,353","\u200b","","7,954"],["Total","$","475,434","\u200b","$","413,336","\u200b","$","362,103","\u200b","$","294,212","\u200b","$","1,545,085"]] [[/GREPCENT_TABLE]] ​ Included in the table above are net fundings (paydowns) under revolving lines of credit of $138,777, $29,154, $59,520 and ($26,395) for the dates noted in the table above, respectively. ​ 52 Table of Contents The tables below show the contractual maturities of our loans for the dates indicated: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31, 2022"],["\u200b","","Due within","","Due after 1 but","","Due after 5 but","","Due after","","\u200b","\u200b"],["\u200b","\u200b","1 year","\u200b","within 5 years","\u200b","within 15 years","\u200b","15 Years","\u200b","Total"],["Commercial:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commercial and industrial","\u200b","$","234,028","\u200b","$","1,421,752","\u200b","$","353,909","\u200b","$","15,146","\u200b","$","2,024,835"],["Municipal and non-profit","\u200b","\u200b","1,184","\u200b","\u200b","134,012","\u200b","\u200b","513,872","\u200b","\u200b","310,558","\u200b","\u200b","959,626"],["Owner occupied commercial real estate","\u200b","","61,598","\u200b","","261,305","\u200b","","478,104","\u200b","","112,333","\u200b","","913,340"],["Food and agribusiness","\u200b","","83,254","\u200b","","203,910","\u200b","","46,624","\u200b","","20,191","\u200b","","353,979"],["Total commercial","\u200b","\u200b","380,064","\u200b","\u200b","2,020,979","\u200b","\u200b","1,392,509","\u200b","\u200b","458,228","\u200b","\u200b","4,251,780"],["Commercial real estate non-owner occupied","\u200b","","234,962","\u200b","","863,842","\u200b","","579,843","\u200b","","17,403","\u200b","","1,696,050"],["Residential real estate","\u200b","","72,035","\u200b","","169,024","\u200b","","372,638","\u200b","","637,584","\u200b","","1,251,281"],["Consumer","\u200b","","6,142","\u200b","","12,494","\u200b","","2,721","\u200b","","1","\u200b","","21,358"],["Total loans","\u200b","$","693,203","\u200b","$","3,066,339","\u200b","$","2,347,711","\u200b","$","1,113,216","\u200b","$","7,220,469"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31, 2021"],["\u200b","","Due within","","Due after 1 but","","Due after 5 but","","Due after","","\u200b","\u200b"],["\u200b","\u200b","1 year","\u200b","within 5 years","\u200b","within 15 years","\u200b","15 Years","\u200b","Total"],["Commercial:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commercial and industrial","\u200b","$","143,152","\u200b","$","1,119,195","\u200b","$","226,793","\u200b","$","7,007","\u200b","$","1,496,147"],["Municipal and non-profit","\u200b","\u200b","23,827","\u200b","\u200b","112,022","\u200b","\u200b","559,493","\u200b","\u200b","233,703","\u200b","\u200b","929,045"],["Owner occupied commercial real estate","\u200b","","40,510","\u200b","","160,853","\u200b","","266,664","\u200b","","65,609","\u200b","","533,636"],["Food and agribusiness","\u200b","","79,507","\u200b","","107,799","\u200b","","11,193","\u200b","","5,090","\u200b","","203,589"],["Total commercial","\u200b","\u200b","286,996","\u200b","\u200b","1,499,869","\u200b","\u200b","1,064,143","\u200b","\u200b","311,409","\u200b","\u200b","3,162,417"],["Commercial real estate non-owner occupied","\u200b","","200,042","\u200b","","316,473","\u200b","","147,783","\u200b","","431","\u200b","","664,729"],["Residential real estate","\u200b","","12,605","\u200b","","30,233","\u200b","","201,918","\u200b","","423,900","\u200b","","668,656"],["Consumer","\u200b","","3,504","\u200b","","11,507","\u200b","","2,570","\u200b","","\u2014","\u200b","","17,581"],["Total loans","\u200b","$","503,147","\u200b","$","1,858,082","\u200b","$","1,416,414","\u200b","$","735,740","\u200b","$","4,513,383"]] [[/GREPCENT_TABLE]] ​ The stated interest rate (which excludes the effects of non-refundable loan origination and commitment fees, net of costs and the accretion of fair value marks) of total loans with maturities over one year is as follows at the dates indicated: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31, 2022"],["\u200b","\u200b","Fixed","\u200b","Variable","\u200b","Total"],["\u200b","","\u200b","\u200b","","Weighted","","\u200b","\u200b","","Weighted","","\u200b","\u200b","","Weighted"],["\u200b","\u200b","Balance","\u200b","average rate","\u200b","Balance","\u200b","average rate","\u200b","Balance","\u200b","average rate"],["Commercial","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commercial and industrial","\u200b","$","726,568","","4.62%","\u200b","$","1,064,239","","7.00%","\u200b","$","1,790,807","","6.04%"],["Municipal and non-profit(1)","\u200b","\u200b","965,635","\u200b","3.50%","\u200b","\u200b","22,483","\u200b","4.77%","\u200b","\u200b","988,118","\u200b","3.63%"],["Owner occupied commercial real estate","\u200b","","417,675","","4.51%","\u200b","","434,066","","6.00%","\u200b","","851,741","","5.33%"],["Food and agribusiness","\u200b","","49,961","","5.26%","\u200b","","220,764","","7.19%","\u200b","","270,725","","6.83%"],["Total commercial","\u200b","\u200b","2,159,839","\u200b","4.14%","\u200b","\u200b","1,741,552","\u200b","6.75%","\u200b","\u200b","3,901,391","\u200b","5.35%"],["Commercial real estate non-owner occupied","\u200b","","569,788","","4.28%","\u200b","","891,299","","5.88%","\u200b","","1,461,087","","5.25%"],["Residential real estate","\u200b","","500,170","","3.75%","\u200b","","679,075","","4.88%","\u200b","","1,179,245","","4.40%"],["Consumer","\u200b","","11,480","","4.98%","\u200b","","3,736","","7.21%","\u200b","","15,216","","5.52%"],["Total loans with 1 year maturity","\u200b","$","3,241,277","","4.11%","\u200b","$","3,315,662","","6.13%","\u200b","$","6,556,939","","5.15%"]] [[/GREPCENT_TABLE]] ​ 53 Table of Contents [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31, 2021"],["\u200b","\u200b","Fixed","\u200b","Variable","\u200b","Total"],["\u200b","","\u200b","\u200b","","Weighted","","\u200b","\u200b","","Weighted","","\u200b","\u200b","","Weighted"],["\u200b","\u200b","Balance","\u200b","average rate","\u200b","Balance","\u200b","average rate","\u200b","Balance","\u200b","average rate"],["Commercial","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commercial and industrial","\u200b","$","480,034","","4.05%","\u200b","$","872,961","","3.41%","\u200b","$","1,352,995","","3.63%"],["Municipal and non-profit(1)","\u200b","\u200b","881,339","\u200b","3.37%","\u200b","\u200b","23,879","\u200b","2.76%","\u200b","\u200b","905,218","\u200b","3.35%"],["Owner occupied commercial real estate","\u200b","","293,190","","4.70%","\u200b","","199,936","","3.75%","\u200b","","493,126","","4.45%"],["Food and agribusiness","\u200b","","49,303","","5.21%","\u200b","","74,779","","3.95%","\u200b","","124,082","","4.45%"],["Total commercial","\u200b","\u200b","1,703,866","\u200b","3.88%","\u200b","\u200b","1,171,555","\u200b","3.49%","\u200b","\u200b","2,875,421","\u200b","3.72%"],["Commercial real estate non-owner occupied","\u200b","","214,463","","4.28%","\u200b","","250,224","","3.51%","\u200b","","464,687","","3.86%"],["Residential real estate","\u200b","","360,648","","3.45%","\u200b","","295,403","","4.00%","\u200b","","656,051","","3.70%"],["Consumer","\u200b","","11,567","","4.37%","\u200b","","2,510","","3.52%","\u200b","","14,077","","4.21%"],["Total loans with 1 year maturity","\u200b","$","2,290,544","","3.85%","\u200b","$","1,719,692","","3.58%","\u200b","$","4,010,236","","3.74%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b"],["(1)","","Included in municipal and non-profit fixed rate loans are loans totaling $340,081 and $343,089 that have been swapped to variable rates at current market pricing at December 31, 2022 and 2021, respectively. Included in the municipal and non-profit segment are tax exempt loans totaling $772,908 and $746,508 with an FTE weighted average rate of 4.08% and 3.97% at December 31, 2022 and 2021, respectively."]] [[/GREPCENT_TABLE]] ​ ​ ​ ​ Asset quality ​ Asset quality is fundamental to our success and remains a strong point, driven by our disciplined adherence to our self-imposed concentration limits across industry sector and real estate property type. Accordingly, for the origination of loans, we have established a credit policy that allows for responsive, yet controlled lending with credit approval requirements that are scaled to loan size. Within the scope of the credit policy, each prospective loan is reviewed in order to determine the appropriateness and the adequacy of the loan characteristics and the security or collateral prior to making a loan. We have established underwriting standards and loan origination procedures that require appropriate documentation, including financial data and credit reports. For loans secured by real property, we require property appraisals, title insurance or a title opinion, hazard insurance and flood insurance, in each case where appropriate. ​ Additionally, we have implemented procedures to timely identify loans that may become problematic in order to ensure the most beneficial resolution for the Company. Asset quality is monitored by our credit risk management department and evaluated based on quantitative and subjective factors such as the timeliness of contractual payments received. Additional factors that are considered, particularly with commercial loans over $500,000, include the financial condition and liquidity of individual borrowers and guarantors, if any, and the value of our collateral. To facilitate the oversight of asset quality, loans are categorized based on the number of days past due and on an internal risk rating system, and both are discussed in more detail below. ​ Our internal risk rating system uses a series of grades which reflect our assessment of the credit quality of loans based on an analysis of the borrower's financial condition, liquidity and ability to meet contractual debt service requirements. Loans that are perceived to have acceptable risk are categorized as “Pass” loans. “Special mention” loans represent loans that have potential credit weaknesses that deserve close attention. Special mention loans include borrowers that have potential weaknesses or unwarranted risks that, unless corrected, may threaten the borrower's ability to meet debt service requirements. However, these borrowers are still believed to have the ability to respond to and resolve the financial issues that threaten their financial situation. Loans classified as “Substandard” have a well-defined credit weakness and are inadequately protected by the current paying capacity of the obligor or of the collateral pledged, if any. Although these loans are identified as potential problem loans, they may never become non-performing. Substandard loans have a distinct possibility of loss if the deficiencies are not corrected. “Doubtful” loans are loans that management believes that collection of payments in accordance with the terms of the loan agreement are highly questionable and improbable. Doubtful loans are deemed impaired and put on non-accrual status. ​ In the event of borrower default, we may seek recovery in compliance with state lending laws, the respective loan agreements, and credit monitoring and remediation procedures that may include modifying or restructuring a loan from its 54 Table of Contents original terms, for economic or legal reasons, to provide a concession to the borrower from their original terms due to borrower financial difficulties in order to facilitate repayment. Such restructured loans are considered TDRs in accordance with ASC 310-40. Assets that have been foreclosed on or acquired through deed-in-lieu of foreclosure are classified as OREO until sold, and are carried at the fair value of the collateral less estimated costs to sell, with any initial valuation adjustments charged to the ACL and any subsequent declines in carrying value charged to impairments on OREO. ​ Non-performing assets and past due loans ​ Non-performing assets consist of non-accrual loans and OREO. Interest income that would have been recorded had non-accrual loans performed in accordance with their original contract terms during 2022 and 2021 was $0.7 million and $0.8 million, respectively. ​ Past due status is monitored as an indicator of credit deterioration. Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement remains unpaid after the due date of the scheduled payment. Loans that are 90 days or more past due are put on non-accrual status unless the loan is well secured and in the process of collection. ​ The following table sets forth the non-performing assets and past due loans as of the dates presented: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","December 31, 2022","","December 31, 2021","","December 31, 2020","","December 31, 2019","","December 31, 2018"],["Non-accrual loans:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Non-accrual loans, excluding restructured loans","$","14,034","\u200b","$","8,466","\u200b","$","12,190","\u200b","$","16,894","\u200b","$","21,017"],["Restructured loans on non-accrual","","2,478","\u200b","","2,366","\u200b","\u200b","8,197","\u200b","","4,854","\u200b","","3,439"],["Non-performing loans","","16,512","\u200b","","10,832","\u200b","","20,387","\u200b","","21,748","\u200b","","24,456"],["OREO","","3,731","\u200b","","7,005","\u200b","","4,730","\u200b","","7,300","\u200b","","10,596"],["Other repossessed assets","","\u2014","\u200b","","\u2014","\u200b","","17","\u200b","","\u2014","\u200b","","\u2014"],["Total non-performing assets","$","20,243","\u200b","$","17,837","\u200b","$","25,134","\u200b","$","29,048","\u200b","$","35,052"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Loans 30-89 days past due and still accruing interest","$","2,986","\u200b","$","1,687","\u200b","$","968","\u200b","$","6,349","\u200b","$","5,066"],["Loans 90 days or more past due and still accruing interest","","95","\u200b","","420","\u200b","","162","\u200b","","1,662","\u200b","","1,047"],["Non-accrual loans","\u200b","16,512","\u200b","\u200b","10,832","\u200b","\u200b","20,387","\u200b","\u200b","21,748","\u200b","\u200b","24,456"],["Total past due and non-accrual loans","$","19,593","\u200b","$","12,939","\u200b","$","21,517","\u200b","$","29,759","\u200b","$","30,569"],["Accruing restructured loans","$","4,654","\u200b","$","7,186","\u200b","$","13,945","\u200b","$","6,885","\u200b","$","5,944"],["Allowance for credit losses","\u200b","89,553","\u200b","\u200b","49,694","\u200b","\u200b","59,777","\u200b","\u200b","39,064","\u200b","\u200b","35,692"],["Non-performing loans to total loans","","0.23%","\u200b","","0.24%","\u200b","","0.47%","\u200b","","0.49%","\u200b","","0.60%"],["Total 90 days past due and still accruing interest and non-accrual loans to total loans","","0.23%","\u200b","","0.25%","\u200b","\u200b","0.47%","\u200b","\u200b","0.53%","\u200b","\u200b","0.62%"],["Total non-performing assets to total loans and OREO","","0.28%","\u200b","","0.39%","\u200b","","0.58%","\u200b","","0.66%","\u200b","","0.85%"],["ACL to non-performing loans","","542.35%","\u200b","","458.77%","\u200b","","293.21%","\u200b","","179.62%","\u200b","","145.94%"]] [[/GREPCENT_TABLE]] ​ During 2022, total non-performing loans increased $5.7 million, from December 31, 2021, primarily driven by the inclusion of the RCB and BOJH portfolios. During 2022, accruing TDRs decreased $2.5 million, or 35.2%. OREO decreased $3.3 million, or 46.7%, to $3.7 million at December 31, 2022, compared to December 31, 2021. Total non-performing assets to total loans and OREO decreased 11 basis points to 0.28% at December 31, 2022. ​ ​ Loans 30-89 days past due and still accruing interest increased $1.3 million from December 31, 2021 to December 31, 2022, and loans 90 days or more past due and still accruing interest decreased $0.3 million from December 31, 2021 to December 31, 2022. ​ 55 Table of Contents Allowance for credit losses ​ The ACL represents the amount that we believe is necessary to absorb estimated lifetime credit losses inherent in the loan portfolio at the balance sheet date and involves a high degree of judgment and complexity. On January 1, 2020, the Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments which replaced the incurred loss methodology for recognizing credit losses with a CECL model. The Company utilizes a DCF model developed within a third-party software tool to establish expected lifetime credit losses for the loan portfolio. The ACL is calculated as the difference between the amortized cost basis and the projections from the DCF analysis. The DCF model allows for individual life of loan cash flow modeling, excluding extensions and renewals, using loan-specific interest rates and repayment schedules including estimated prepayment rates and loss recovery timing delays. The model incorporates forecasts of certain national macro-economic factors, including unemployment rates, home price index (“HPI”), retail sales and gross domestic product (“GDP”), which drive correlated loss rates. The determination and application of the ACL accounting policy involves judgments, estimates and uncertainties that are subject to change. For periods beyond the reasonable and supportable forecast period, we revert to historical long-term average loss rates on a straight-line basis. ​ We measure expected credit losses for loans on a pooled basis when similar risk characteristics exist. We have identified four primary loan segments within the ACL model that are further stratified into 11 loan classes to provide more granularity in analyzing loss history and to allow for more definitive qualitative adjustments based upon specific risk factors affecting each loan class. Generally, the underlying risk of loss for each of these loan segments will follow certain norms/trends in various economic environments. Loans that do not share risk characteristics are evaluated on an individual basis and are not included in the collective evaluation. Following are the loan classes within each of the four primary loan segments: [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Non-owner occupied","\u200b","\u200b","\u200b","\u200b"],["Commercial","\u200b","commercial real estate","\u200b","Residential real estate","\u200b","Consumer"],["Commercial and industrial","\u200b","Construction","\u200b","Senior lien","\u200b","Consumer"],["Owner occupied commercial real estate","\u200b","Acquisition and development","\u200b","Junior lien","\u200b","\u200b"],["Food and agribusiness","\u200b","Multifamily","\u200b","\u200b","\u200b","\u200b"],["Municipal and non-profit","\u200b","Non-owner occupied","\u200b","\u200b","\u200b","\u200b"]] [[/GREPCENT_TABLE]] ​ Loans on non-accrual, in bankruptcy and TDRs with a balance greater than $250,000 are excluded from the pooled analysis and are evaluated individually. If management determines that foreclosure is probable, expected credit losses are evaluated based on the criteria listed below, adjusted for selling costs as appropriate. Typically, these loans consist of commercial, commercial real estate and agriculture loans and exclude homogeneous loans such as residential real estate and consumer loans. Specific allowances are determined by collectively analyzing: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b"],["\u25cf","","the borrower\u2019s resources, ability and willingness to repay in accordance with the terms of the loan agreement;"],["\u25cf","","the likelihood of receiving financial support from any guarantors;"],["\u25cf","","the adequacy and present value of future cash flows, less disposal costs, of any collateral; and"],["\u25cf","","the impact current economic conditions may have on the borrower\u2019s financial condition and liquidity or the value of the collateral."]] [[/GREPCENT_TABLE]] ​ The collective resulting ACL for loans is calculated as the sum of the general reserves, specific reserves on individually evaluated loans, and qualitative factor adjustments. While these amounts are calculated by individual loan or on a pool basis by segment and class, the entire ACL is available for any loan that, in our judgment, should be charged-off. The determination and application of the ACL accounting policy involves judgments, estimates, and uncertainties that are subject to change. Changes in these assumptions, estimates or the conditions surrounding them may have a material impact on our financial condition, liquidity or results of operations. ​ Net charge-offs on loans during the year ended December 31, 2022 totaled $1.8 million, or 0.03% of total loans. During the year ended December 31, 2022, the Company recorded an increase in the allowance for credit losses of $39.9 million, which included a $21.2 million provision expense as a Day 1 allowance reserve for the RCB and BOJH portfolios and a $6.2 million credit allowance for Day 1 PCD loans. The remainder of the provision expense during the year was driven by strong loan growth and higher reserve requirements from changes in the CECL model’s underlying macro-economic forecast. Specific reserves on loans totaled $5.3 million at December 31, 2022. ​ 56 Table of Contents Net charge-offs on loans during the year ended December 31, 2021 totaled $1.3 million, or 0.03% of total loans. During the year ended December 31, 2021, the allowance for credit losses totaled $49.7 million, which included a provision release of $8.8 million for funded loans. The provision release was driven by strong asset quality and an improved outlook in the CECL model’s underlying economic forecast. Specific reserves on loans totaled $1.6 million at December 31, 2021. ​ The Company has elected to exclude accrued interest receivable (“AIR”) from the ACL calculation. As of December 31, 2022 and December 31, 2021, AIR totaled $31.8 million and $15.7 million, respectively, from total loans. The increase in AIR was driven by originated loan growth and the acquired loan portfolios. When a loan is placed on non-accrual, any recorded AIR is reversed against interest income. ​ Total ACL ​ After considering the above mentioned factors, we believe that the ACL of $89.6 million is adequate to cover estimated lifetime losses inherent in the loan portfolio at December 31, 2022. However, it is likely that future adjustments to the ACL will be necessary. Any changes to the underlying assumptions, circumstances or estimates, including but not limited to changes in the underlying macro-economic forecast, used in determining the ACL, could negatively or positively affect the Company's results of operations, liquidity or financial condition. ​ The following schedule presents, by class stratification, the changes in the ACL during the years listed: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","As of and for the years ended","\u200b","\u200b"],["\u200b","\u200b","December 31, 2022","\u200b","December 31, 2021","\u200b","December 31, 2020","\u200b","December 31, 2019","\u200b","December 31, 2018"],["\u200b","\u200b","Total loans","\u200b","% NCOs(1)","\u200b","Total loans","\u200b","% NCOs(1)","\u200b","Total loans","\u200b","% NCOs(1)","\u200b","Total loans","\u200b","% NCOs(1)","\u200b","Total loans","\u200b","% NCOs(1)"],["Beginning balance","\u200b","$","49,694","\u200b","\u200b","\u200b","$","59,777","\u200b","\u200b","\u200b","$","39,064","\u200b","\u200b","\u200b","$","35,692","\u200b","\u200b","\u200b","$","31,264","\u200b","\u200b"],["Cumulative effect adjustment(2)","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","5,836","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u200b"],["Day 1 CECL provision expense","\u200b","","21,228","\u200b","\u200b","\u200b","","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u200b"],["PCD allowance for credit loss at acquisition","\u200b","\u200b","6,238","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u200b"],["Charge-offs:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commercial","\u200b","","(1,340)","\u200b","0.02%","\u200b","\u200b","(1,171)","\u200b","0.02%","\u200b","\u200b","(2,023)","\u200b","0.04%","\u200b","\u200b","(7,422)","\u200b","0.17%","\u200b","\u200b","(895)","\u200b","0.00%"],["Commercial real estate non-owner occupied","\u200b","","\u2014","\u200b","0.00%","\u200b","\u200b","\u2014","\u200b","0.00%","\u200b","\u200b","(412)","\u200b","0.01%","\u200b","\u200b","(116)","\u200b","0.00%","\u200b","\u200b","(11)","\u200b","0.00%"],["Residential real estate","\u200b","","(2)","\u200b","0.00%","\u200b","\u200b","(24)","\u200b","0.00%","\u200b","\u200b","(67)","\u200b","0.00%","\u200b","\u200b","(124)","\u200b","0.00%","\u200b","\u200b","(118)","\u200b","0.00%"],["Consumer","\u200b","","(845)","\u200b","0.01%","\u200b","\u200b","(621)","\u200b","0.01%","\u200b","\u200b","(726)","\u200b","0.01%","\u200b","\u200b","(937)","\u200b","0.02%","\u200b","\u200b","(1,134)","\u200b","0.02%"],["Total charge-offs","\u200b","","(2,187)","\u200b","\u200b","\u200b","\u200b","(1,816)","\u200b","\u200b","\u200b","\u200b","(3,228)","\u200b","\u200b","\u200b","\u200b","(8,599)","\u200b","\u200b","\u200b","\u200b","(2,158)","\u200b","\u200b"],["Recoveries","\u200b","","385","\u200b","\u200b","\u200b","\u200b","552","\u200b","\u200b","\u200b","\u200b","571","\u200b","\u200b","\u200b","\u200b","328","\u200b","\u200b","\u200b","\u200b","1,389","\u200b","\u200b"],["Net charge-offs","\u200b","","(1,802)","\u200b","0.03%","\u200b","\u200b","(1,264)","\u200b","0.03%","\u200b","\u200b","(2,657)","\u200b","0.06%","\u200b","\u200b","(8,271)","\u200b","0.19%","\u200b","\u200b","(769)","\u200b","0.02%"],["Provision expense (release) for credit losses","\u200b","","14,195","\u200b","\u200b","\u200b","\u200b","(8,819)","\u200b","\u200b","\u200b","\u200b","17,534","\u200b","\u200b","\u200b","\u200b","11,643","\u200b","\u200b","\u200b","\u200b","5,197","\u200b","\u200b"],["Ending allowance for credit losses","\u200b","$","89,553","\u200b","\u200b","\u200b","$","49,694","\u200b","\u200b","\u200b","$","59,777","\u200b","\u200b","\u200b","$","39,064","\u200b","\u200b","\u200b","$","35,692","\u200b","\u200b"],["Ratio of ACL to total loans outstanding at period end","\u200b","","1.24%","\u200b","\u200b","\u200b","\u200b","1.10%","\u200b","\u200b","\u200b","\u200b","1.37%","\u200b","\u200b","\u200b","\u200b","0.88%","\u200b","\u200b","\u200b","\u200b","0.87%","\u200b","\u200b"],["Ratio of ACL to total non-performing loans at period end","\u200b","","542.35%","\u200b","\u200b","\u200b","\u200b","458.77%","\u200b","\u200b","\u200b","\u200b","293.21%","\u200b","\u200b","\u200b","\u200b","179.62%","\u200b","\u200b","\u200b","\u200b","145.94%","\u200b","\u200b"],["Total loans","\u200b","$","7,220,469","\u200b","\u200b","\u200b","$","4,513,383","\u200b","\u200b","\u200b","$","4,353,726","\u200b","\u200b","\u200b","$","4,415,406","\u200b","\u200b","\u200b","$","4,092,308","\u200b","\u200b"],["Average total loans outstanding during the period","\u200b","\u200b","5,349,916","\u200b","\u200b","\u200b","\u200b","4,358,707","\u200b","\u200b","\u200b","\u200b","4,578,894","\u200b","\u200b","\u200b","\u200b","4,288,226","\u200b","\u200b","\u200b","\u200b","3,819,603","\u200b","\u200b"],["Non-performing loans","\u200b","\u200b","16,512","\u200b","\u200b","\u200b","\u200b","10,832","\u200b","\u200b","\u200b","\u200b","20,387","\u200b","\u200b","\u200b","\u200b","21,748","\u200b","\u200b","\u200b","\u200b","24,456","\u200b","\u200b"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b"],["(1)","\u200b","Ratio of net charge-offs to average total loans."],["(2)","\u200b","Related to the adoption of Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments."]] [[/GREPCENT_TABLE]] ​ 57 Table of Contents At their respective acquisition dates, RCB had $2.1 million and BOJH had $0.5 million of previously charged off loans for which the Company continued to have contractual rights to the cash flows. In accordance with ASC Topic 326, PCD loan accounting is to be applied by the acquirer whereby an allowance for credit losses should be recorded for this subset of loans at the acquisition date, and if deemed non-collectible, the loans are to be fully charged off on the acquirer’s books. Such amounts were fully reserved for, charged off on the acquisition date and excluded from the table above. ​ The following tables present the allocation of the ACL and the percentage of the total amount of loans in each loan category listed as of the dates presented: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31, 2022"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","ACL as a %"],["\u200b","","Total loans","","% of total loans","","Related ACL","","of total ACL"],["Commercial","\u200b","$","4,251,780","","58.9%","\u200b","$","37,608","","42.0%"],["Commercial real estate non-owner occupied","\u200b","","1,696,050","","23.5%","\u200b","","32,050","","35.8%"],["Residential real estate","\u200b","","1,251,281","","17.3%","\u200b","","19,306","","21.5%"],["Consumer","\u200b","","21,358","","0.3%","\u200b","","589","","0.7%"],["Total","\u200b","$","7,220,469","","100.0%","\u200b","$","89,553","","100.0%"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31, 2021"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","ACL as a %"],["\u200b","","Total loans","","% of total loans","","Related ACL","","of total ACL"],["Commercial","\u200b","$","3,162,417","","70.1%","\u200b","$","31,256","","62.9%"],["Commercial real estate non-owner occupied","\u200b","","664,729","","14.7%","\u200b","","10,033","","20.2%"],["Residential real estate","\u200b","","668,656","","14.8%","\u200b","","8,056","","16.2%"],["Consumer","\u200b","","17,581","","0.4%","\u200b","","349","","0.7%"],["Total","\u200b","$","4,513,383","","100.0%","\u200b","$","49,694","","100.0%"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31, 2020"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","ACL as a %"],["\u200b","","Total loans","","% of total loans","","Related ACL","","of total ACL"],["Commercial","\u200b","$","3,044,065","","70.0%","\u200b","$","30,376","","50.8%"],["Commercial real estate non-owner occupied","\u200b","","631,996","","14.5%","\u200b","","17,448","","29.2%"],["Residential real estate","\u200b","","658,659","","15.1%","\u200b","","11,492","","19.2%"],["Consumer","\u200b","","19,006","","0.4%","\u200b","","461","","0.8%"],["Total","\u200b","$","4,353,726","","100.0%","\u200b","$","59,777","","100.0%"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31, 2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","ACL as a %"],["\u200b","","Total loans","","% of total loans","","Related ACL","","of total ACL"],["Commercial","\u200b","$","2,992,307","","67.8%","\u200b","$","30,442","","77.9%"],["Commercial real estate non-owner occupied","\u200b","","630,906","","14.3%","\u200b","","4,850","","12.4%"],["Residential real estate","\u200b","","770,417","","17.4%","\u200b","","3,468","","8.9%"],["Consumer","\u200b","","21,776","","0.5%","\u200b","","304","","0.8%"],["Total","\u200b","$","4,415,406","","100.0%","\u200b","$","39,064","","100.0%"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31, 2018"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","ACL as a %"],["\u200b","","Total loans","","% of total loans","","Related ACL","","of total ACL"],["Commercial","\u200b","$","2,644,571","","64.6%","\u200b","$","27,137","","76.1%"],["Commercial real estate non-owner occupied","\u200b","","592,212","","14.5%","\u200b","","4,406","","12.3%"],["Residential real estate","\u200b","","830,815","","20.3%","\u200b","","3,800","","10.6%"],["Consumer","\u200b","","24,710","","0.6%","\u200b","","349","","1.0%"],["Total","\u200b","$","4,092,308","","100.0%","\u200b","$","35,692","","100.0%"]] [[/GREPCENT_TABLE]] ​ ​ ​ 58 Table of Contents Deposits ​ Deposits from banking clients serve as a primary funding source for our banking operations and our ability to gather and manage deposit levels is critical to our success. Deposits not only provide a lower-cost funding source for our loans, but also provide a foundation for the client relationships that are critical to future loan growth. The following table presents information regarding our deposit composition at December 31, 2022 and 2021: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Increase (decrease)"],["\u200b","December 31, 2022","\u200b","December 31, 2021","\u200b","Amount","\u200b","% Change"],["Non-interest bearing demand deposits","$","3,134,716","\u200b","39.9%","\u200b","$","2,506,265","\u200b","40.2%","\u200b","$","628,451","","25.1%"],["Interest bearing demand deposits","","913,852","\u200b","11.6%","\u200b","","555,401","\u200b","8.9%","\u200b","","358,451","","64.5%"],["Savings accounts","","885,488","\u200b","11.2%","\u200b","","774,559","\u200b","12.4%","\u200b","","110,929","","14.3%"],["Money market accounts","","2,065,170","\u200b","26.2%","\u200b","","1,558,032","\u200b","25.0%","\u200b","","507,138","","32.5%"],["Total transaction deposits","","6,999,226","\u200b","88.9%","\u200b","","5,394,257","\u200b","86.5%","\u200b","","1,604,969","","29.8%"],["Time deposits $250,000","","670,197","\u200b","8.5%","\u200b","","703,741","\u200b","11.4%","\u200b","","(33,544)","","(4.8)%"],["Time deposits $250,000","","203,203","\u200b","2.6%","\u200b","","130,175","\u200b","2.1%","\u200b","","73,028","","56.1%"],["Total time deposits","","873,400","\u200b","11.1%","\u200b","","833,916","\u200b","13.5%","\u200b","","39,484","","4.7%"],["Total deposits","$","7,872,626","\u200b","100.0%","\u200b","$","6,228,173","\u200b","100.0%","\u200b","$","1,644,453","","26.4%"]] [[/GREPCENT_TABLE]] ​ The following table shows uninsured time deposits by scheduled maturity as of December 31, 2022: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b"],["\u200b","","December 31, 2022"],["Three months or less","\u200b","$","13,477"],["Over 3 months through 6 months","\u200b","","24,567"],["Over 6 months through 12 months","\u200b","","37,800"],["Thereafter","\u200b","","95,926"],["Total uninsured time deposits","\u200b","$","171,770"]] [[/GREPCENT_TABLE]] ​ At December 31, 2022 and 2021, time deposits that were scheduled to mature within 12 months totaled $469.8 million and $555.4 million, respectively. Of the time deposits scheduled to mature within 12 months at December 31, 2022, $98.2 million were in denominations of $250,000 or more, and $371.6 million were in denominations less than $250,000. ​ Long-term debt ​ The Company holds a subordinated note purchase agreement to issue and sell a fixed-to-floating rate note totaling $40.0 million. The balance on the note at December 31, 2022, net of long-term debt issuance costs totaling $0.5 million, totaled $39.5 million. Interest expense totaling $1.3 million and $0.2 million was recorded in the consolidated statements of operations during the years ended December 31, 2022 and 2021, respectively. ​ The note is subordinated, unsecured and matures on November 15, 2031. Payments consist of interest only. Interest expense on the note is payable semi-annually in arrears and will bear interest at 3.00% per annum until November 15, 2026 (or any earlier redemption date). From November 15, 2026 until November 15, 2031 (or any earlier redemption date) payments will be made quarterly in arrears, and the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month term SOFR plus 203 basis points. The Company deployed the net proceeds from the sale of the note for general corporate purposes. Prior to November 5, 2026, the Company may redeem the note only under certain limited circumstances. Beginning on November 5, 2026 through maturity, the note may be redeemed, at the Company’s option, on any scheduled interest payment date. Any redemption by the Company would be at a redemption price equal to 100% of the principal amount of the note being redeemed, together with any accrued and unpaid interest on the note being redeemed up to but excluding the date of redemption. The note is not subject to redemption at the option of the holder. ​ As part of the acquisition of BOJH on October 1, 2022, the Company assumed three subordinated note purchase agreements to issue and sell fixed-to-floating rates totaling $15.0 million. The balance on the notes at December 31, 2022, net of a fair 59 Table of Contents value adjustment related to the acquisition totaling $0.6 million, totaled $14.4 million. Interest expense related to the notes totaling $0.2 million was recorded in the consolidated statements of operations during the year ended December 31, 2022. ​ The three notes, containing similar terms, are subordinated, unsecured and mature on June 15, 2031. Payments consist of interest only. Interest expense on the notes is payable semi-annually in arrears and will bear interest at 3.75% per annum until June 15, 2026 (or any earlier redemption date). From June 15, 2026 until June 15, 2031 (or any earlier redemption date) payments will be made quarterly in arrears, and the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month term SOFR plus 306 basis points. Prior to June 15, 2026, the Company may redeem the notes only under certain limited circumstances. Beginning on June 15, 2026 through maturity, the notes may be redeemed, at the Company’s option, on any scheduled interest payment date. Any redemption by the Company would be at a redemption price equal to 100% of the principal amount of the notes being redeemed, together with any accrued and unpaid interest on the notes being redeemed up to but excluding the date of redemption. The notes are not subject to redemption at the option of the holder. ​ Other borrowings ​ As of December 31, 2022 and 2021, the Company sold securities under agreements to repurchase totaling $20.2 million and $22.8 million, respectively. In addition, as a member of the FHLB, the Company has access to a line of credit and term financing from the FHLB with total available credit of $1.1 billion at December 31, 2022. The Company may utilize its FHLB line of credit as a funding mechanism for originated loans and loans held for sale. At December 31, 2022, the Company had $385.0 million of outstanding borrowings with the FHLB. At December 31, 2021, the Company had no outstanding borrowings with the FHLB. The Company may pledge investment securities and loans as collateral for FHLB advances. There were no investment securities pledged at December 31, 2022 or 2021. Loans pledged were $2.0 billion at December 31, 2022 and $1.3 billion at December 31, 2021. The Company incurred $1.7 million of interest expense related to FHLB advances or other short-term borrowings for the year ended December 31, 2022. ​ Regulatory Capital ​ Our subsidiary banks and the holding company are subject to the regulatory capital adequacy requirements of the Federal Reserve Board and the FDIC, as applicable. Failure to meet the minimum capital requirements can initiate certain mandatory and possibly further discretionary actions by regulators that could have a material adverse effect on us. At December 31, 2022 and 2021, our subsidiary banks and the consolidated holding company exceeded all capital ratio requirements under prompt corrective action and other regulatory requirements, as further detailed in note 15 of our consolidated financial statements. ​ Results of Operations ​ Our net income depends largely on net interest income, which is the difference between interest income from interest earning assets and interest expense on interest bearing liabilities. Our results of operations are also affected by provisions for credit losses and non-interest income, such as service charges, bank card income, swap fee income, and gain on sale of mortgages. Our primary operating expenses, aside from interest expense, consist of salaries and benefits, occupancy costs, telecommunications data processing expense, and intangible asset amortization. Any expenses related to the resolution of problem assets are also included in non-interest expense. ​ Overview of results of operations ​ Net income totaled $71.3 million, or $2.18 per diluted share, during 2022, compared to net income of $93.6 million, or $3.01 per diluted share, during 2021. Adjusting for acquisition-related provision expense and non-recurring acquisition-related expenses of $36.8 million during 2022, adjusted net income totaled $99.6 million or $3.05 per diluted share, during the year ended December 31, 2022. The return on average tangible assets was 0.95% and 1.37% during the years ended December 31, 2022 and 2021, respectively, and the return on average tangible common equity was 9.91% and 12.87%, respectively. Adjusting for acquisition-related expenses, the return on average tangible assets was 1.32% and the return on average tangible common equity was a record 13.75% during the year ended December 31, 2022. The increases in the Federal Reserve’s interest rates are driving higher loan yields. The increasing interest rates, in combination with our strong originated loan 60 Table of Contents growth and growth from our acquisitions resulted in increasing levels of net interest income. However, the rise in interest rates in 2022 has resulted in lower mortgage banking income. ​ Net interest income ​ We regularly review net interest income metrics to provide us with indicators of how the various components of net interest income are performing. We regularly review: (i) our loan mix and the yield on loans; (ii) the investment portfolio and the related yields; (iii) our deposit mix and the cost of deposits; and (iv) net interest income simulations for various forecast periods. ​ The effects of trade-date accounting of investment securities for which the cash had not settled are not considered interest earning assets and are excluded from this presentation for time frames prior to their cash settlement, as are the market value adjustments on the investment securities available-for-sale and loans. ​ 61 Table of Contents The table below presents the components of net interest income on a FTE basis for the years ended December 31, 2022, 2021 and 2020. ​ ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the year ended","\u200b","For the year ended","\u200b","For the year ended"],["\u200b","\u200b","December 31, 2022","\u200b","December 31, 2021","\u200b","December 31, 2020"],["\u200b","\u200b","Average balance","\u200b","Interest","\u200b","Average rate","\u200b","Average balance","\u200b","Interest","\u200b","Average rate","\u200b","Average balance","\u200b","Interest","\u200b","Average rate"],["Interest earning assets:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Originated loans FTE(1)(2)(3)","\u200b","$","4,767,713","\u200b","$","218,561","\u200b","4.58%","\u200b","$","4,129,684","\u200b","$","164,527","\u200b","3.98%","\u200b","$","4,237,091","\u200b","$","171,592","\u200b","4.05%"],["Acquired loans","\u200b","\u200b","594,222","\u200b","\u200b","40,060","\u200b","6.74%","\u200b","\u200b","202,174","\u200b","\u200b","17,340","\u200b","8.58%","\u200b","\u200b","299,901","\u200b","\u200b","27,909","\u200b","9.31%"],["Loans held for sale","\u200b","\u200b","58,788","\u200b","\u200b","2,563","\u200b","4.36%","\u200b","\u200b","178,373","\u200b","\u200b","5,110","\u200b","2.86%","\u200b","\u200b","185,182","\u200b","\u200b","5,628","\u200b","3.04%"],["Investment securities available-for-sale","\u200b","","839,872","\u200b","","15,091","\u200b","1.80%","\u200b","","667,859","\u200b","\u200b","10,014","\u200b","1.50%","\u200b","","591,870","\u200b","","11,406","\u200b","1.93%"],["Investment securities held-to-maturity","\u200b","","604,423","\u200b","","9,109","\u200b","1.51%","\u200b","","576,343","\u200b","\u200b","7,311","\u200b","1.27%","\u200b","","248,006","\u200b","","5,099","\u200b","2.06%"],["Other securities","\u200b","","17,598","\u200b","","1,034","\u200b","5.88%","\u200b","","15,032","\u200b","\u200b","838","\u200b","5.57%","\u200b","","26,903","\u200b","","1,157","\u200b","4.30%"],["Interest earning deposits","\u200b","","426,137","\u200b","","3,782","\u200b","0.89%","\u200b","","751,835","\u200b","","986","\u200b","0.13%","\u200b","","206,911","\u200b","","314","\u200b","0.15%"],["Total interest earning assets FTE(2)","\u200b","$","7,308,753","\u200b","$","290,200","\u200b","3.97%","\u200b","$","6,521,300","\u200b","$","206,126","\u200b","3.16%","\u200b","$","5,795,864","\u200b","$","223,105","\u200b","3.85%"],["Cash and due from banks","\u200b","","90,657","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","78,979","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","74,461","\u200b","\u200b","\u200b","\u200b","\u200b"],["Other assets","\u200b","","490,206","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","472,775","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","511,721","\u200b","\u200b","\u200b","\u200b","\u200b"],["Allowance for credit losses","\u200b","","(59,824)","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","(52,943)","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","(55,778)","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total assets","\u200b","$","7,829,792","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","$","7,020,111","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","$","6,326,268","\u200b","\u200b","\u200b","\u200b","\u200b"],["Interest bearing liabilities:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Interest bearing demand, savings and money market deposits","\u200b","$","3,235,834","\u200b","$","9,347","\u200b","0.29%","\u200b","$","2,772,091","\u200b","$","6,240","\u200b","0.23%","\u200b","$","2,730,857","\u200b","$","8,605","\u200b","0.32%"],["Time deposits","\u200b","","826,293","\u200b","","5,249","\u200b","0.64%","\u200b","","914,837","\u200b","\u200b","7,362","\u200b","0.80%","\u200b","","1,038,107","\u200b","","15,024","\u200b","1.45%"],["Securities sold under agreements to repurchase","\u200b","","21,298","\u200b","","43","\u200b","0.20%","\u200b","","20,338","\u200b","\u200b","23","\u200b","0.11%","\u200b","","28,585","\u200b","","132","\u200b","0.46%"],["Long-term debt, net","\u200b","","43,048","\u200b","","1,519","\u200b","3.53%","\u200b","\u200b","6,200","\u200b","\u200b","196","\u200b","3.16%","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","0.00%"],["Federal Home Loan Bank advances","\u200b","","40,870","\u200b","","1,695","\u200b","4.15%","\u200b","","\u2014","\u200b","\u200b","\u2014","\u200b","0.00%","\u200b","","95,418","\u200b","","1,295","\u200b","1.36%"],["Total interest bearing liabilities","\u200b","$","4,167,343","\u200b","$","17,853","\u200b","0.43%","\u200b","$","3,713,466","\u200b","$","13,821","\u200b","0.37%","\u200b","$","3,892,967","\u200b","$","25,056","\u200b","0.64%"],["Demand deposits","\u200b","","2,652,561","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","2,355,171","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","1,497,940","\u200b","\u200b","\u200b","\u200b","\u200b"],["Other liabilities","\u200b","","105,507","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","104,935","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","147,075","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total liabilities","\u200b","","6,925,411","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","6,173,572","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","5,537,982","\u200b","\u200b","\u200b","\u200b","\u200b"],["Shareholders' equity","\u200b","","904,381","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","846,539","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","788,286","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total liabilities and shareholders' equity","\u200b","$","7,829,792","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","$","7,020,111","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","$","6,326,268","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net interest income FTE(2)","\u200b","\u200b","\u200b","\u200b","$","272,347","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","$","192,305","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","$","198,049","\u200b","\u200b"],["Interest rate spread FTE(2)","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","3.54%","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","2.79%","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","3.21%"],["Net interest earning assets","\u200b","$","3,141,410","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","$","2,807,834","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","$","1,902,897","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net interest margin FTE(2)","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","3.73%","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","2.95%","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","3.42%"],["Average transaction deposits","\u200b","$","5,888,395","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","$","5,127,262","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","$","4,228,797","\u200b","\u200b","\u200b","\u200b","\u200b"],["Average total deposits","\u200b","\u200b","6,714,688","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","6,042,099","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","5,266,904","\u200b","\u200b","\u200b","\u200b","\u200b"],["Ratio of average interest earning assets to average interest bearing liabilities","\u200b","\u200b","175.38%","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","175.61%","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","148.88%","\u200b","\u200b","\u200b","\u200b","\u200b"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b"],["(1)","","Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan."],["(2)","","Presented on an FTE basis using the statutory tax rate of 21% for all periods presented. The taxable equivalent adjustments included above are $5,512, $5,161 and $5,103 for the years ended 2022, 2021 and 2020, respectively."],["(3)","","Loan fees included in interest income totaled $9,453, $18,207 and $15,713 during 2022, 2021 and 2020, respectively."]] [[/GREPCENT_TABLE]] ​ Net interest income totaled $266.8 million, $187.1 million and $192.9 million during the years ended 2022, 2021 and 2020, respectively. Net interest income on an FTE basis totaled $272.3 million, $192.3 million and $198.0 million during the years ended 2022, 2021 and 2020, respectively. During the year ended December 31, 2022, the FTE net interest margin widened 78 62 Table of Contents basis points to 3.73%, compared to the year ended December 31, 2021. The yield on earning assets increased 81 basis points to 3.97%, primarily driven by multiple increases in the federal funds rate since March 2022 as well as excess cash being deployed into higher-yielding originated loans and investment securities. The cost of funds increased three basis points to 0.26% during the year ended December 31, 2022, compared to the year ended December 31, 2021. ​ Average loans comprised $5.4 billion, or 73.4%, of total average interest earning assets during 2022, compared to $4.3 billion, or 66.4%, during 2021. The increase in average loan balances was largely driven by a $638.0 million increase in average originated loans. Average acquired loans increased $392.0 million as a result of the RCB and BOJH acquisitions. ​ Average investment securities comprised 19.8% and 19.1% of total interest earning assets during 2022 and 2021, respectively. Average interest bearing cash balances totaled $426.1 million during 2022, compared to $751.8 million during 2021 as the excess cash liquidity has been deployed into higher-yielding earning assets. ​ Average balances of interest bearing liabilities increased $453.9 million during 2022, compared to 2021. The increase was driven by interest bearing demand, savings and money market deposits totaling $463.7 million, FHLB advances totaling $40.9 million, long-term debt totaling $36.8 million and securities sold under agreements to repurchase totaling $1.0 million. The increase was partially offset by a decrease in average time deposits totaling $88.5 million. ​ The RCB acquisition added $0.7 billion of total deposits, including $0.6 billion of transaction deposits and $0.1 billion of time deposits on September 1, 2022. The BOJH acquisition added $1.4 billion of total deposits, including $1.3 billion of transaction deposits and $0.1 billion of time deposits on October 1, 2022. ​ Total interest expense related to interest bearing liabilities was $17.9 million and $13.8 million during 2022 and 2021, respectively, at an average cost of 0.43% and 0.37% during 2022 and 2021, respectively. Additionally, the cost of deposits decreased one basis point to 0.22% during 2022, compared to 2021. ​ 63 Table of Contents The following table summarizes the changes in net interest income on an FTE basis by major category of interest earning assets and interest bearing liabilities, identifying changes related to volume and changes related to rates for 2022, 2021 and 2020: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","The year ended December 31, 2022","\u200b","The year ended December 31, 2021"],["\u200b","\u200b","compared to","\u200b","compared to"],["\u200b","\u200b","the year ended December 31, 2021","\u200b","the year ended December 31, 2020"],["\u200b","\u200b","Increase (decrease) due to","\u200b","Increase (decrease) due to"],["\u200b","","Volume","","Rate","","Net","","Volume","","Rate","","Net"],["Interest income:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Originated loans FTE(1)(2)(3)","\u200b","$","29,248","\u200b","$","24,786","\u200b","$","54,034","\u200b","$","(4,279)","\u200b","$","(2,786)","\u200b","$","(7,065)"],["Acquired loans","\u200b","\u200b","26,430","\u200b","\u200b","(3,710)","\u200b","\u200b","22,720","\u200b","\u200b","(8,382)","\u200b","\u200b","(2,187)","\u200b","\u200b","(10,569)"],["Loans held for sale","\u200b","","(5,214)","\u200b","\u200b","2,667","\u200b","\u200b","(2,547)","\u200b","\u200b","(195)","\u200b","\u200b","(323)","\u200b","\u200b","(518)"],["Investment securities available-for-sale","\u200b","","3,091","\u200b","","1,986","\u200b","","5,077","\u200b","","1,139","\u200b","","(2,531)","\u200b","","(1,392)"],["Investment securities held-to-maturity","\u200b","","423","\u200b","","1,375","\u200b","","1,798","\u200b","","4,165","\u200b","","(1,953)","\u200b","","2,212"],["Other securities","\u200b","","151","\u200b","","45","\u200b","","196","\u200b","","(662)","\u200b","","343","\u200b","","(319)"],["Interest earning deposits","\u200b","","(2,891)","\u200b","","5,687","\u200b","","2,796","\u200b","","715","\u200b","","(43)","\u200b","","672"],["Total interest income","\u200b","$","51,238","\u200b","$","32,836","\u200b","$","84,074","\u200b","$","(7,499)","\u200b","$","(9,480)","\u200b","$","(16,979)"],["Interest expense:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Interest bearing demand, savings and money market deposits","\u200b","$","1,340","\u200b","$","1,767","\u200b","$","3,107","\u200b","$","93","\u200b","$","(2,458)","\u200b","$","(2,365)"],["Time deposits","\u200b","","(562)","\u200b","","(1,551)","\u200b","","(2,113)","\u200b","","(992)","\u200b","","(6,670)","\u200b","","(7,662)"],["Securities sold under agreements to repurchase","\u200b","","2","\u200b","","18","\u200b","","20","\u200b","","(9)","\u200b","","(100)","\u200b","","(109)"],["Long-term debt, net","\u200b","\u200b","1,300","\u200b","","23","\u200b","\u200b","1,323","\u200b","\u200b","196","\u200b","\u200b","\u2014","\u200b","\u200b","196"],["Federal Home Loan Bank advances","\u200b","","1,695","\u200b","","\u2014","\u200b","","1,695","\u200b","","\u2014","\u200b","","(1,295)","\u200b","","(1,295)"],["Total interest expense","\u200b","","3,775","\u200b","","257","\u200b","","4,032","\u200b","","(712)","\u200b","","(10,523)","\u200b","","(11,235)"],["Net change in net interest income","\u200b","$","47,463","\u200b","$","32,579","\u200b","$","80,042","\u200b","$","(6,787)","\u200b","$","1,043","\u200b","$","(5,744)"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b"],["(1)","","Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan."],["(2)","","Presented on a fully taxable equivalent basis using the statutory tax rate of 21% for all periods presented. The taxable equivalent adjustments included above are $5,512, $5,161 and $5,103 for the years ended 2022, 2021 and 2020, respectively."],["(3)","\u200b","Loan fees included in interest income totaled $9,453, $18,207 and $15,713 for the years ended December 31, 2022, 2021 and 2020, respectively."]] [[/GREPCENT_TABLE]] ​ Below is a breakdown of average deposits and the average rates paid during the periods indicated: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","For the three months ended","\u200b","For the years ended"],["\u200b","December 31, 2022","\u200b","December 31, 2021","\u200b","December 31, 2022","\u200b","December 31, 2021"],["\u200b","\u200b","\u200b","\u200b","Average","\u200b","\u200b","\u200b","\u200b","Average","\u200b","\u200b","\u200b","\u200b","Average","\u200b","\u200b","\u200b","\u200b","Average"],["\u200b","Average","\u200b","rate","\u200b","Average","\u200b","rate","\u200b","Average","\u200b","rate","\u200b","Average","\u200b","rate"],["\u200b","balance","","paid","","balance","","paid","","balance","","paid","","balance","","paid"],["Non-interest bearing demand","$","3,142,296","\u200b","0.00%","\u200b","$","2,459,063","","0.00%","\u200b","$","2,652,561","","0.00%","\u200b","$","2,355,171","\u200b","0.00%"],["Interest bearing demand","","939,973","\u200b","0.53%","\u200b","","547,740","\u200b","0.17%","\u200b","","678,151","\u200b","0.32%","\u200b","","548,612","\u200b","0.20%"],["Money market accounts","","2,115,876","\u200b","0.53%","\u200b","","1,549,844","\u200b","0.25%","\u200b","","1,744,797","\u200b","0.33%","\u200b","","1,506,274","\u200b","0.27%"],["Savings accounts","","890,724","\u200b","0.21%","\u200b","","749,978","\u200b","0.16%","\u200b","","812,886","\u200b","0.17%","\u200b","","717,205","\u200b","0.16%"],["Time deposits","","892,122","\u200b","0.91%","\u200b","","851,779","\u200b","0.61%","\u200b","","826,293","\u200b","0.64%","\u200b","","914,837","\u200b","0.80%"],["Total average deposits","$","7,980,991","\u200b","0.33%","\u200b","$","6,158,404","\u200b","0.18%","\u200b","$","6,714,688","\u200b","0.22%","\u200b","$","6,042,099","\u200b","0.23%"]] [[/GREPCENT_TABLE]] ​ ​ Provision for credit losses ​ The provision for loan losses represents the amount of expense that is necessary to bring the ACL to a level that we deem appropriate to absorb estimated lifetime losses inherent in the loan portfolio as of the balance sheet date. The determination of the ACL, and the resultant provision for credit losses, is subjective and involves significant estimates and assumptions. The allowance for credit losses totaled 1.24% of total loans at December 31, 2022, compared to the allowance for credit losses of 1.10% at December 31, 2021. 64 Table of Contents ​ The Company recorded a credit loss provision expense of $36.7 million for the year ended December 31, 2022, which included $21.7 million of Day 1 reserve funding for the RCB and BOJH loan portfolios. The remainder of the provision expense was driven by strong loan growth and higher reserve requirements from changes in the CECL model’s underlying macro-economic forecast. During the year ended December 31, 2021, the Company recorded a provision release of $9.3 million, which included a provision release of $8.8 million for funded loans and a provision release of $0.5 million for unfunded loan commitments, driven by strong asset quality and an improved outlook in the CECL model’s underlying economic forecast. ​ Non-interest income ​ The table below details the components of non-interest income for the years presented: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the years ended December 31,","\u200b","2022 vs 2021","\u200b","2021 vs 2020"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Increase (decrease)","\u200b","Increase (decrease)"],["\u200b","","2022","","2021","","2020","\u200b","Amount","\u200b","% Change","\u200b","Amount","\u200b","% Change"],["Service charges","\u200b","$","16,357","\u200b","$","14,894","\u200b","$","14,962","\u200b","$","1,463","\u200b","9.8 %","\u200b","$","(68)","\u200b","(0.5)%"],["Bank card fees","\u200b","","18,299","\u200b","","17,693","\u200b","","15,446","\u200b","\u200b","606","\u200b","3.4 %","\u200b","\u200b","2,247","\u200b","14.5 %"],["Mortgage banking income","\u200b","","23,774","\u200b","","63,360","\u200b","","102,384","\u200b","\u200b","(39,586)","\u200b","(62.5)%","\u200b","\u200b","(39,024)","\u200b","(38.1)%"],["Bank-owned life insurance income","\u200b","\u200b","2,272","\u200b","\u200b","2,208","\u200b","\u200b","2,360","\u200b","\u200b","64","\u200b","2.9 %","\u200b","\u200b","(152)","\u200b","(6.4)%"],["Other non-interest income","\u200b","","6,603","\u200b","","12,174","\u200b","","4,719","\u200b","\u200b","(5,571)","\u200b","(45.8)%","\u200b","\u200b","7,455","\u200b","100.0%"],["OREO-related income","\u200b","","7","\u200b","","35","\u200b","","387","\u200b","\u200b","(28)","\u200b","(80.0)%","\u200b","\u200b","(352)","\u200b","(91.0)%"],["Total non-interest income","\u200b","$","67,312","\u200b","$","110,364","\u200b","$","140,258","\u200b","$","(43,052)","\u200b","(39.0)%","\u200b","$","(29,894)","\u200b","(21.3)%"]] [[/GREPCENT_TABLE]] ​ Non-interest income totaled $67.3 million for the year ended December 31, 2022, compared to $110.4 million for the year ended December 31, 2021. The decrease was primarily driven by $39.6 million lower mortgage banking income due to slower refinance activity in 2022 and competition driving tighter gain on sale margins. The year ended December 31, 2021 included a $1.3 million gain from the sale of mortgage servicing rights included in mortgage banking income. Other non-interest income decreased $5.6 million primarily due to market adjustments on company-owned life insurance, lower unrealized gains on equity method investments and non-recurring banking center consolidation-related income included in 2021. Service charges and bank card fees increased a combined $2.1 million during the year ended December 31, 2022, compared to 2021, due to the growth in our deposit base and changes in consumer behavior. ​ Non-interest expense ​ The table below details the components of non-interest expense for the years presented: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the years ended December 31,","\u200b","2022 vs 2021","\u200b","2021 vs 2020"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Increase (decrease)","\u200b","Increase (decrease)"],["\u200b","\u200b","2022","","2021","","2020","\u200b","Amount","\u200b","% Change","\u200b","Amount","\u200b","% Change"],["Salaries and benefits","\u200b","$","124,971","\u200b","$","127,504","\u200b","$","141,170","\u200b","$","(2,533)","\u200b","(2.0)%","\u200b","$","(13,666)","\u200b","(9.7)%"],["Occupancy and equipment","\u200b","","31,496","\u200b","","25,283","\u200b","","27,473","\u200b","","6,213","\u200b","24.6 %","\u200b","\u200b","(2,190)","\u200b","(8.0)%"],["Data processing","\u200b","","12,657","\u200b","","9,310","\u200b","","9,042","\u200b","","3,347","\u200b","36.0 %","\u200b","\u200b","268","\u200b","3.0 %"],["Marketing and business development","\u200b","","3,821","\u200b","","2,509","\u200b","","2,802","\u200b","","1,312","\u200b","52.3 %","\u200b","\u200b","(293)","\u200b","(10.5)%"],["FDIC deposit insurance","\u200b","","2,121","\u200b","","1,850","\u200b","","1,168","\u200b","","271","\u200b","14.6 %","\u200b","\u200b","682","\u200b","58.4 %"],["Bank card expenses","\u200b","","5,480","\u200b","","5,177","\u200b","","4,388","\u200b","","303","\u200b","5.9 %","\u200b","\u200b","789","\u200b","18.0 %"],["Professional fees","\u200b","","14,418","\u200b","","5,423","\u200b","","2,946","\u200b","","8,995","\u200b","165.9 %","\u200b","\u200b","2,477","\u200b","84.1 %"],["Other non-interest expense","\u200b","","14,332","\u200b","","10,414","\u200b","","10,547","\u200b","","3,918","\u200b","37.6 %","\u200b","\u200b","(133)","\u200b","(1.3)%"],["Problem asset workout","\u200b","\u200b","248","\u200b","\u200b","2,063","\u200b","\u200b","3,148","\u200b","\u200b","(1,815)","\u200b","(88.0)%","\u200b","\u200b","(1,085)","\u200b","(34.5)%"],["Gain on OREO sales, net","\u200b","\u200b","(648)","\u200b","\u200b","(475)","\u200b","\u200b","(38)","\u200b","\u200b","(173)","\u200b","36.4 %","\u200b","\u200b","(437)","\u200b","100.0%"],["Core deposit intangible asset amortization","\u200b","","2,338","\u200b","","1,183","\u200b","","1,183","\u200b","","1,155","\u200b","97.6 %","\u200b","\u200b","\u2014","\u200b","0.0 %"],["Banking center consolidation-related expense","\u200b","","\u2014","\u200b","","1,589","\u200b","","2,348","\u200b","","(1,589)","\u200b","(100.0)%","\u200b","\u200b","(759)","\u200b","(32.3)%"],["Total non-interest expense","\u200b","$","211,234","\u200b","$","191,830","\u200b","$","206,177","\u200b","$","19,404","\u200b","10.1 %","\u200b","$","(14,347)","\u200b","(7.0)%"]] [[/GREPCENT_TABLE]] ​ During the year ended December 31, 2022, non-interest expense increased $19.4 million, or 10.1%, compared to the year ended December 31, 2021. The year ended December 31, 2022 included $15.1 million of non-recurring acquisition-related expenses with $8.2 million included in professional fees, $1.7 million included in salaries and benefits, $2.1 million included in data processing, $1.6 million included in occupancy and equipment, $0.9 million included in other non-interest expense 65 Table of Contents and $0.6 million included in marketing and business development. Compared to 2021, our on-going operating expenses increased driven by growth from our recent acquisitions. Excluding non-recurring acquisition-related expenses, occupancy and equipment increased $4.6 million, data processing increased $1.2 million, core deposit and wealth management intangible assets amortization increased $1.2 million, professional fees increased $0.8 million and other non-interest expense increased $3.0 million. Partially offsetting these increases was a $0.8 million decrease in salaries and benefits as the decrease in mortgage banking-related compensation more than offset additional expense for the RCB and BOJH associates. The year ended December 31, 2022 included $4.3 million for continued investment in our digital platform 2UniFiSM, and the year ended December 31, 2021 included banking center consolidation-related expense of $1.6 million. ​ Income taxes ​ Income taxes are accounted for in accordance with ASC Topic 740. Under this guidance, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. ASC Topic 740 requires the establishment of a valuation allowance against the net deferred tax asset unless it is more-likely-than-not that the tax benefit of the deferred tax asset will be realized. For purposes of projecting whether the deferred tax asset will be realized, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results, or the ability to implement tax planning strategies varies, adjustments to the carrying value of the deferred tax assets may be required. We believe that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets. ​ Income tax expense totaled $14.9 million during 2022, compared to $21.4 million during 2021. The decrease in income tax expense was driven by the lower taxable income due to 2022’s acquisition-related expenses. Included in income tax expense was $0.3 million and $0.6 million of tax benefit from stock compensation activity during 2022 and 2021, respectively. Adjusting for the stock compensation activity, the effective tax rate for 2022 was 17.6% compared to an adjusted rate of 19.1% for 2021. As of December 31, 2022, our marginal tax rate (the rate we pay on each incremental dollar of earnings) was approximately 23%. However, our effective tax rate (income tax expense divided by income before income taxes) for a given period differs from our marginal rate largely due to income and expense items that are non-taxable or non-deductible in the calculation of income tax expense. The lower effective tax rate compared to the federal statutory tax rate was primarily due to interest income from tax-exempt lending, bank-owned life insurance income, and the relationship of these items to pre-tax income. ​ Liquidity and Capital Resources ​ Liquidity ​ Liquidity is monitored and managed to ensure that sufficient funds are available to operate our business and pay our obligations to depositors and other creditors, while providing ample available funds for opportunistic and strategic investments. Management believes that the Company's excess cash, borrowing capacity and access to sufficient sources of capital are adequate to meet its short-term and long-term liquidity needs in the foreseeable future. Our primary sources of funds are deposits, securities sold under agreements to repurchase, prepayments and maturities of loans and investment securities, the sale of investment securities, and funds provided from operations. We anticipate having access to other third party funding sources, including the ability to raise funds through FHLB advances, issuance of debt, federal funds purchased, and the issuance of shares of our common stock or other equity or equity-related securities, that may also be a source of liquidity. We anticipate that these sources of liquidity will provide adequate funding and liquidity for at least a 12-month period, and we may utilize any combination of these funding sources for long-term liquidity needs if deemed prudent. 66 Table of Contents ​ On-balance sheet liquidity is represented by our cash and cash equivalents and unencumbered investment securities, and is detailed in the table below as of December 31, 2022 and 2021: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","December 31, 2022","","December 31, 2021"],["Cash and due from banks","\u200b","$","194,756","\u200b","$","845,195"],["Interest bearing bank deposits","\u200b","","749","\u200b","","500"],["Unencumbered investment securities, at fair value","\u200b","","476,250","\u200b","","781,166"],["Total","\u200b","$","671,755","\u200b","$","1,626,861"]] [[/GREPCENT_TABLE]] ​ Total on-balance sheet liquidity decreased $954.9 million from December 31, 2021 to December 31, 2022. The decrease was due to $304.9 million lower unencumbered available-for-sale and held-to-maturity securities balances and lower cash and due from banks of $650.4 million as excess cash liquidity was deployed into higher earning investment securities and loans. ​ At present, financing activities primarily consist of changes in deposits and repurchase agreements, and advances from the FHLB, in addition to the payment of dividends and the repurchase of our common stock. Maturing time deposits represent a potential use of funds. As of December 31, 2022, $469.8 million of time deposits were scheduled to mature within 12 months. Based on the current interest rate environment and market conditions, our consumer banking strategy is to focus on lower cost transaction accounts and time deposits. During 2021, the Company entered into a subordinated note purchase agreement to issue and sell a fixed-to-floating note. The Company deployed the net proceeds from the sale of the note for general corporate purposes. The note is not subject to redemption at the option of the holder. Additionally, as part of the acquisition of BOJH on October 1, 2022, the Company assumed three subordinated note purchase agreements to issue and sell fixed-to-floating rate notes. ​ Through our relationship with the FHLB, the Company may pledge qualifying loans and investment securities allowing us to obtain additional liquidity through FHLB advances and lines of credit. There were no investment securities pledged at December 31, 2022 or 2021. The Company had loans of $2.0 billion and $1.3 billion pledged as collateral for FHLB advances at December 31, 2022 and 2021, respectively. FHLB advances, lines of credit and other short-term borrowing availability totaled $1.1 billion at December 31, 2022. The Company can obtain additional liquidity through the FHLB facility, if required, and also has access to federal funds lines of credit with correspondent banks. At December 31, 2022, the Company had $385.0 million of outstanding borrowings with the FHLB. ​ Our primary uses of funds are loan fundings, investment security purchases, withdrawals of deposits, settlement of repurchase agreements, capital expenditures, operating expenses, and share repurchases. For additional information regarding our operating, investing and financing cash flows, see our consolidated statements of cash flows in the accompanying consolidated financial statements. ​ Exclusive from the investing activities related to acquisitions, our primary investing activities are loan fundings and pay-offs and paydowns of loans and purchases and sales of investment securities. At December 31, 2022, pledgeable investment securities represented a significant source of liquidity. Our available-for-sale investment securities are carried at fair value and our held-to-maturity securities are carried at amortized cost. Our collective investment securities portfolio totaled $1.4 billion at December 31, 2022, inclusive of pre-tax net unrealized losses of $113.5 million on the available-for-sale securities portfolio. Additionally, our held-to-maturity securities portfolio had $91.6 million of pre-tax net unrealized losses at December 31, 2022. The gross unrealized gains and losses are detailed in note 5 of our consolidated financial statements. As of December 31, 2022, our investment securities portfolio consisted primarily of MBS, all of which were issued or guaranteed by U.S. Government agencies or sponsored enterprises. The anticipated repayments and marketability of these securities offer substantial resources and flexibility to meet new loan demand, reinvest in the investment securities portfolio, or provide optionality for reductions in our deposit funding base. ​ We enter into contractual obligations that require a future cash settlement. These may include operating lease obligations, purchase obligations, time deposits and issuance of long-term debt. For the year ended December 31, 2022, contractual obligations totaled $967.5 million with $495.4 million estimated to be paid within one year. Included within those contractual obligations were time deposits totaling $873.4 million, with $469.8 million of that estimated to be paid within one year. ​ 67 Table of Contents Capital ​ Under the Basel III requirements, at December 31, 2022, the Company and the Banks met all capital adequacy requirements, and the Banks had regulatory capital ratios in excess of the levels established for well-capitalized institutions. For more information on regulatory capital, see note 15 in our consolidated financial statements. ​ Our shareholders' equity is impacted by earnings, changes in unrealized gains and losses on securities, net of tax, stock-based compensation activity, share repurchases, shares issued in connection with acquisitions and the payment of dividends. ​ The Board of Directors has from time to time authorized multiple programs to repurchase shares of the Company’s common stock either in open market or in privately negotiated transactions in accordance with applicable regulations of the SEC. On February 24, 2021, the Company’s Board of Directors authorized a program to repurchase up to $75.0 million of the Company’s stock. The remaining authorization under the program as of December 31, 2022 was $38.6 million. ​ On January 19, 2023, our Board of Directors declared a quarterly dividend of $0.25 per common share, payable on March 15, 2023 to shareholders of record at the close of business on February 24, 2023. ​ Asset/Liability Management and Interest Rate Risk ​ Management and the Board of Directors are responsible for managing interest rate risk and employing risk management policies that monitor and limit this exposure. Interest rate risk is measured using net interest income simulations and market value of portfolio equity analyses. These analyses use various assumptions, including the nature and timing of interest rate changes, yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, and reinvestment/replacement of asset and liability cash flows. ​ The principal objective of the Company's asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled assumption of interest rate risk while maximizing earnings and preserving adequate levels of liquidity and capital. The asset and liability management function is under the guidance of the Asset Liability Committee with direction from the Board of Directors. The Asset Liability Committee meets monthly to review, among other things, the sensitivity of the Company's assets and liabilities to interest rate changes, local and national market conditions and rates. The Asset Liability Committee also reviews the liquidity, capital, deposit mix, loan mix and investment positions of the Company. ​ Instantaneous parallel rate shift scenarios are modeled and utilized to evaluate risk and establish exposure limits for acceptable changes in net interest margin. These scenarios, known as rate shocks, simulate an instantaneous change in interest rates and utilize various assumptions, including, but not limited to, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment and replacement of asset and liability cash flows. ​ We also analyze the economic value of equity as a secondary measure of interest rate risk. This is a complementary measure to net interest income where the calculated value is the result of the market value of assets less the market value of liabilities. The economic value of equity is a longer term view of interest rate risk because it measures the present value of the future cash flows. The impact of changes in interest rates on this calculation is analyzed for the risk to our future earnings and is used in conjunction with the analyses on net interest income. ​ 68 Table of Contents Our interest rate risk model indicated that the Company was asset sensitive in terms of interest rate sensitivity at December 31, 2022 and 2021. During the year ended December 31, 2021, our asset sensitivity decreased for a rising rate environment as a result of the decrease in excess cash liquidity. The table below illustrates the impact of an immediate and sustained 200 and 100 basis point increase and a 100 and 200 basis point decrease in interest rates on net interest income based on the interest rate risk model at December 31, 2022 and 2021: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b"],["Hypothetical","","\u200b","\u200b","\u200b"],["shift in interest","\u200b","% change in projected net interest income"],["rates (in bps)","\u200b","December 31, 2022","","December 31, 2021"],["200","\u200b","2.60%","\u200b","11.12%"],["100","\u200b","1.31%","\u200b","5.37%"],["(100)","\u200b","(2.93)%","\u200b","\u2014"],["(200)","\u200b","(8.24)%","\u200b","\u2014"]] [[/GREPCENT_TABLE]] ​ Many assumptions are used to calculate the impact of interest rate fluctuations. Actual results may be significantly different than our projections due to several factors, including the timing and frequency of rate changes, market conditions and the shape of the yield curve. The computations of interest rate risk shown above do not include actions that management may undertake to manage the risks in response to anticipated changes in interest rates and actual results may also differ due to any actions taken in response to the changing rates. ​ As part of the asset/liability management strategy to manage primary market risk exposures expected to be in effect in future reporting periods, management has executed interest rate derivatives primarily using floors and collars. For further discussion of the Company’s derivative contracts refer to note 21. The strategy with respect to liabilities has been to continue to emphasize transaction deposit growth, particularly non-interest or low interest bearing non-maturing deposit accounts while building long-term client relationships. Non-maturing deposit accounts totaled 88.9% of total deposits at December 31, 2022, compared to 86.5% at December 31, 2021. We currently have no brokered time deposits. ​ Impact of Inflation and Changing Prices ​ The primary impact of inflation on our operations is reflected in increasing operating costs and non-interest expense. Unlike most industrial companies, virtually all of our assets and liabilities are monetary in nature. As a result, changes in interest rates have a more significant impact on our performance than do changes in the general rate of inflation and changes in prices. Interest rate changes do not necessarily move in the same direction, nor have the same magnitude, as changes in the prices of goods and services. Although not as critical to the banking industry as many other industries, inflationary factors may have some impact on our ability to grow total assets, earnings and capital levels. While we plan to continue our disciplined approach to expense management, an inflationary environment may cause wage pressures and general increases in our cost of doing business, which may increase our non-interest expense. ​ Off-Balance Sheet Activities ​ In the normal course of business, we are a party to various contractual obligations, commitments and other off-balance sheet activities that contain credit, market, and operational risk that are not required to be reflected in our consolidated financial statements. The most significant of these are the loan commitments that we enter into to meet the financing needs of clients, including commitments to extend credit, commercial and consumer lines of credit and standby letters of credit. As of December 31, 2022 and 2021, we had loan commitments totaling $2.0 billion and $1.0 billion, respectively, and standby letters of credit that totaled $13.9 million and $7.3 million, respectively. Unused commitments do not necessarily represent future credit exposure or cash requirements, as commitments often expire without being drawn upon. ​ ​