# First Hawaiian, Inc.: Form 10-Q for the period ended Jun 30, 2023

- Company: [First Hawaiian, Inc.](/companies/fhb.md) (CIK 36377)
- Form: 10-Q
- Filed: 2023-08-07
- Accepted by EDGAR: Aug 7, 2023, 16:23 ET
- Period: 2023-06-30
- Accession: 0001558370-23-013602
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/36377/000155837023013602/fhb-20230630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/36377/000155837023013602/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-04-01 to 2023-06-30 | $207.3m | us-gaap:Revenues |
| Revenue | 6 months, 2023-01-01 to 2023-06-30 | $423.6m | us-gaap:Revenues |
| Interest expense | 3 months, 2023-04-01 to 2023-06-30 | $69.3m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2023-01-01 to 2023-06-30 | $115.6m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-04-01 to 2023-06-30 | $19.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-01-01 to 2023-06-30 | $41.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | $62.4m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | $129.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-04-01 to 2023-06-30 | $0.49 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-01-01 to 2023-06-30 | $1.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-04-01 to 2023-06-30 | $0.49 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-01-01 to 2023-06-30 | $1.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 127,832,351 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-01-01 to 2023-06-30 | 127,901,225 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | $187.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-01-01 to 2023-06-30 | $4.2m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 6 months, 2023-01-01 to 2023-06-30 | $66.3m | us-gaap:PaymentsOfDividendsCommonStock |
| Total assets | at 2023-06-30 | $24.51bn | us-gaap:Assets |
| Total liabilities | at 2023-06-30 | $22.15bn | us-gaap:Liabilities |
| Long-term debt | at 2023-06-30 | $500.0m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2023-06-30 | $2.36bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 194,883 characters.

### Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including the documents incorporated by reference herein, contains, and from time to time our management may make, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” “annualized” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. Statements that are not historical or current facts, are forward-looking statements, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including the following: conditions in the financial markets and economic conditions generally and in Hawaii, Guam and Saipan in particular; turmoil and volatility in the financial services industry, including failures or rumors of failures of other depository institutions, which could affect the ability of FHB to attract and retain depositors, and could affect the ability of financial services providers, including us, to borrow or raise capital; increases in Federal Deposit Insurance Corporation (“FDIC”) assessments due to bank failures; actions taken by governmental agencies to stabilize the financial system and the effectiveness of such actions; a sustained period of high inflation; our dependence on the real estate markets in which we operate; risk arising from conditions in the commercial real estate market; concentration of exposures to certain asset classes and individual obligors; interest rate risk and fluctuations in interest rates; events resulting from the discontinuance of the London Interbank Offered Rate (“LIBOR”); the possibility of a decline in the value of the investment securities we own; the possibility of a deterioration in the credit quality of, or defaults by, third parties who owe us money, securities or other assets or whose securities or obligations we hold; the possibility we might underestimate the credit losses inherent in our loan and lease portfolio; our ability to attract and retain customer deposits; our inability to receive dividends from our bank, our ability to raise additional capital in the future; our ability to maintain, attract and retain customer relationships; our ability to attract and retain key personnel and other skilled employees; the effectiveness of our techniques for managing risk and our use of data and modeling both in our management decision-making generally and in meeting regulatory expectations in particular; the effectiveness of the appraisals and other valuation techniques we use; the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents; the possibility of employee misconduct or mistakes; changes in the actual or perceived soundness or condition of other financial institutions; consumer protection initiatives related to the foreclosure process; risks in connection with any sale of loans; the possibility that certain external vendors on which we rely experience difficulty, terminate their services or fail to comply with banking laws and regulations; issues regarding the accuracy and completeness of information about customers and counterparties; risks associated with our accounting estimates and risk management processes and controls. changes in our accounting policies or in accounting standards; risks relating to the geographic concentration in our existing markets; risks relating to competition in a highly competitive industry and market area; the possibility that new lines of business, products, product enhancements or services may subject us to additional risks; a change in the key role of dealers within the automotive industry or our ability to maintain or build relationships with them; technological change; future legislative or regulatory change; risks relating to our bank in times of stress; capital adequacy requirements; the possibility that we may not pay dividends on our common stock in the future; the possibility of rulemaking changes implemented by the CFPB; the possibility of litigation and regulatory actions; the possibility of increases in FDIC insurance premiums; the risk of non-compliance with the USA PATRIOT Act, the Bank Secrecy Act or other laws and regulations; risks regarding regulations relating to privacy, information security and data protection, and differences in regulation; risks relating to our use of third-party vendors and our other ongoing third-party business relationships; environmental liability risks associated with our bank branches and any real estate collateral we acquire upon foreclosure; the possibility of litigation pertaining to our fiduciary responsibilities; the impact of pandemics, epidemics or other health-related crises; the effects of severe weather, hurricanes, tsunamis, natural disasters, pandemics, acts of war or terrorism or other external events; volatility in our stock price; the possibility of future sales and issuances of our common stock; the possibility of unexpected tax liabilities and unexpected tax liabilities that may be applicable to us as a result of the reorganization transactions to facilitate FHI’s initial public offering; and damage to our reputation from any of the factors described above.

The foregoing factors should not be considered an exhaustive list and should be read together with the risk factors and other cautionary statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law.

### Company Overview

FHI is a bank holding company, which owns 100% of the outstanding common stock of FHB, its only direct, wholly owned subsidiary. FHB was founded in 1858 under the name Bishop & Company and was the first successful banking partnership in the Kingdom of Hawaii and the second oldest bank formed west of the Mississippi River. The Bank operates its business through three operating segments: Retail Banking, Commercial Banking and Treasury and Other.

References to “we,” “our,” “us,” or the “Company” refer to the Parent and its subsidiary that are consolidated for financial reporting purposes.

### Basis of Presentation

The accompanying unaudited interim consolidated financial statements of the Company reflect the results of operations, financial position and cash flows of FHI and its wholly owned subsidiary, FHB. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and accompanying notes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect normal recurring adjustments necessary for a fair presentation of the results for the interim periods.

The accompanying unaudited interim consolidated financial statements of the Company should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and filed with the U.S. Securities and Exchange Commission (the “SEC”).

### Hawaii Economy

Hawaii’s economy reflects growth during the six months ended June 30, 2023, but the forecast for the remainder of the year is still highly uncertain due to the uncertainty of the effect of rate increases and liquidity concerns from the recent bank closures. According to the Hawaii Department of Business, Economic Development & Tourism, the statewide seasonally adjusted unemployment rate has improved to 3.0% at June 30, 2023, compared to 4.3% at June 30, 2022. Nationally, the seasonally adjusted unemployment rate was 3.6% at June 30, 2023, equivalent to the 3.6% rate at June 30, 2022.

Domestic visitor arrivals continue to remain strong and have nearly returned to pre-pandemic levels. The average daily domestic passenger counts for the first six months of 2023 were approximately 95.6% of the average daily passenger counts during the first six months of 2019, according to the Hawaii Tourism Authority. International visitors have been slower to return to pre-pandemic levels, but are continuing to increase.

The housing market has slowed compared to previous periods but remains relatively stable. Both volume of real estate sales and housing prices decreased when comparing the first six months of 2023 with the first six months of 2022. According to the Honolulu Board of Realtors, the volume of single-family home sales decreased by 35%, while condominium sales decreased by 36%, as compared to the same period in 2022. The median price of a single-family home sold on Oahu in the first six months of 2023 was $1,050,000, a decrease of 5.5% from the same period in 2022. The median price of a condominium sold on Oahu in the first six months of 2023 was $500,000, a decrease of 2.9% from the same period in 2022. As of June 30, 2023, months of inventory of single-family homes and condominiums on Oahu remained low at approximately 2.6 and 2.8 months, respectively.

Lastly, state general excise and use tax revenues increased by 8.6% for the six months ended June 30, 2023 as compared to the same period in 2022, according to the Hawaii Department of Business, Economic Development & Tourism.

#### Effect of Inflation, Changing Prices, and Recent Financial Events

The consolidated financial statements and related financial data presented in this Form 10-Q have been prepared according to generally accepted accounting principles in the United States, which require the measurement of financial positions and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation.

Although inflation is not rising as quickly as it did in previous periods, prices remain high due to, among other factors, continued global supply chain disruptions, changes in the labor market and geopolitical tensions.

Our operating costs continue to increase as inflationary conditions put upward pressure on the Company’s expenses. As virtually all of our assets and liabilities are monetary in nature, interest rates (which do not necessarily move in the same direction or the same extent as the prices of goods and services) generally have a more significant impact on our performance than do general levels of inflation. Rising interest rates may contribute to increased yields on assets and higher costs on funding, which generally improves net interest margins when balance sheet composition remains constant. However, changes in interest rates could influence not only the interest rates we receive on loans and securities and the interest rates we pay on deposits and borrowings, but also the composition of loans and deposits. The changing composition of our loans and deposits following a large interest rate change may cause periods where net interest margin compresses as fixed rate loans pay off at a slower pace and deposits migrate to higher cost categories. Our ability to originate loans and deposits could also be impacted. In addition, changes in interest rates have had an impact, and may have a significant impact on (i) the carrying value of certain assets, including loans, real estate and investment securities, on our balance sheet and (ii) the level of loan refinancing activity in our portfolio, which impacts the amount of prepayment penalty income we receive on loans we hold. In addition, we may incur debt in the future, and that debt may also be sensitive to interest rates.

There also remain many uncertainties given the recent financial events in the banking sector. On March 12 and 13, 2023, following the closures of Silicon Valley Bank (“SVB”) and Signature Bank and the appointment of the FDIC as the receiver for those banks, the FDIC announced that, under the systemic risk exception set forth in the Federal Deposit Insurance Act (“FDIA”), all insured and uninsured deposits of those banks were transferred to the respective bridge banks for SVB and Signature Bank. The FDIC also announced that, as required by the FDIA, any losses to the Deposit Insurance Fund (“DIF”) to support uninsured depositors would be recovered by a special assessment. Under the FDIA, the assessment may be on insured depository institutions, depository institution holding companies (with the concurrence of the Treasury Secretary), or both, as the FDIC determines to be appropriate. The FDIC has discretion with respect to the design and timeframe for any special assessment, and, under the FDIA, the FDIC may consider the types of entities that benefit from the action taken, economic conditions, the effects on the industry, and such other factors as the FDIC deems appropriate. In May 2023, the FDIC issued a notice of proposed rulemaking (“NPR”), which proposed an annual special assessment rate of approximately 12.5 basis points to an assessment base that would equal an insured depository institution’s estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion, to be paid in eight quarterly installments beginning in the first quarter of 2024. If the rule is adopted as proposed, the total amount of the special assessment would be expected to be accrued and recognized as a loss in the period the rule is adopted. The ultimate impact and timing of recognition will depend on the final outcome of the ongoing FDIC deliberations.

In addition, the closures of SVB and Signature Bank and adverse developments affecting other banks in the first half of 2023 resulted in heightened levels of market activity and volatility, as well as the potential for increased regulations and more stringent capital requirements going forward. In response to the deterioration in the operating environment and funding conditions for U.S. banks, in April 2023, Moody’s lowered the macro profile of the U.S. banking system and downgraded the credit ratings of the Bank, among other regional banks. In light of volatility in the capital markets and economic disruptions, we continue to carefully monitor our capital and liquidity positions.

As of June 30, 2023, the Company was “well-capitalized” and met all applicable regulatory capital requirements, including a Common Equity Tier 1 capital ratio of 12.05%, compared to the minimum requirement of 4.50%. In light of the recent volatility in the banking sector, we increased our liquidity with higher than normal levels and continued to maintain high levels of liquidity. For additional discussions regarding our capital and liquidity positions and related risks, refer to the sections titled “Liquidity and Capital Resources” and “Capital” in this MD&A.

Economic conditions and therefore our results of operations may be impacted by a variety of other factors as well, such as an economic slowdown or recession, financial market volatility, supply chain disruptions, monetary and fiscal policy measures, heightened geopolitical tensions, fluctuations in interest rates and foreign currency exchange rates, the political and regulatory environment, changes to the U.S. Federal budget and potential changes in tax laws.

These and other key factors could impact our profitability in future reporting periods. See Item 1A. Risk Factors, beginning in the section captioned “Summary of Risk Factors,” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 24, 2023.

### Selected Financial Data

Our financial highlights for the periods indicated are presented in Table 1:

*(dollars in thousands, except per share data)*

| ​ Financial Highlights ​ ​ Income Statement Data: | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ For the Three Months Ended June 30, 2023 ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ For the Six Months Ended June 30, 2023 ​ ​ ​ ​ | ​ ​ ​ Table 1 ​ ​ 2022 ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | --- |
| Interest income | ​ | **$229,205** ​ | $149,744 ​ | ​ | **$442,750** ​ | $286,365 ​ |
| Interest expense | ​ | ​ **69,266** ​ | ​ 4,597 ​ | ​ | ​ **115,564** ​ | ​ 7,346 ​ |
| Net interest income | ​ | ​ **159,939** ​ | ​ 145,147 ​ | ​ | ​ **327,186** ​ | ​ 279,019 ​ |
| Provision for credit losses | ​ | ​ **5,000** ​ | ​ 1,000 ​ | ​ | ​ **13,800** ​ | ​ (4,747) ​ |
| Net interest income after provision for credit losses | ​ | ​ **154,939** ​ | ​ 144,147 ​ | ​ | ​ **313,386** ​ | ​ 283,766 ​ |
| Noninterest income | ​ | ​ **47,348** ​ | ​ 44,137 ​ | ​ | ​ **96,371** ​ | ​ 85,517 ​ |
| Noninterest expense | ​ | ​ **120,881** ​ | ​ 109,175 ​ | ​ | ​ **239,448** ​ | ​ 213,217 ​ |
| Income before provision for income taxes | ​ | ​ **81,406** ​ | ​ 79,109 ​ | ​ | ​ **170,309** ​ | ​ 156,066 ​ |
| Provision for income taxes | ​ | ​ **18,964** ​ | ​ 19,749 ​ | ​ | ​ **41,049** ​ | ​ 38,987 ​ |
| Net income | ​ | **$62,442** ​ | $59,360 ​ | ​ | **$129,260** ​ | $117,079 ​ |
| Basic earnings per share | ​ | **$0.49** ​ | $0.46 ​ | ​ | **$1.01** ​ | $0.92 ​ |
| Diluted earnings per share | ​ | **$0.49** ​ | $0.46 ​ | ​ | **$1.01** ​ | $0.91 ​ |
| Basic weighted-average outstanding shares | ​ | ​ **127,591,371** ​ | ​ 127,672,244 ​ | ​ | ​ **127,522,975** ​ | ​ 127,614,564 ​ |
| Diluted weighted-average outstanding shares | ​ | ​ **127,832,351** ​ | ​ 128,014,777 ​ | ​ | ​ **127,901,225** ​ | ​ 128,108,630 ​ |
| Dividends declared per share | ​ | **$0.26** ​ | $0.26 ​ | ​ | **$0.52** ​ | $0.52 ​ |
| Dividend payout ratio | ​ | ​ **53.06%** | **​** 56.52% | ​ | ​ **51.49%** | **​** 57.14% |
| **Other Financial Information / Performance Ratios(1):** | **​** | ​ ​ ​ | ​ ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ |
| Net interest margin | ​ | ​ **2.91%** | **​** 2.60% | ​ | ​ **3.01%** | **​** 2.51% |
| Efficiency ratio | ​ | ​ **57.96%** | **​** 57.33% | ​ | ​ **56.17%** | **​** 58.15% |
| Return on average total assets | ​ | ​ **1.01%** | **​** 0.94% | ​ | ​ **1.06%** | **​** 0.94% |
| Return on average tangible assets (non-GAAP)(2) | ​ | ​ **1.05%** | **​** 0.98% | ​ | ​ **1.10%** | **​** 0.98% |
| Return on average total stockholders' equity | ​ | ​ **10.68%** | **​** 10.52% | ​ | ​ **11.23%** | **​** 9.82% |
| Return on average tangible stockholders' equity (non-GAAP)(2) | ​ | ​ **18.57%** | **​** 18.79% | ​ | ​ **19.65%** | **​** 16.76% |
| Noninterest expense to average assets | ​ | ​ **1.95%** | **​** 1.73% | ​ | ​ **1.96%** | **​** 1.71% |
| ​ | ​ | ​ **​** **​** | **​** ​ ​ | ​ | ​ **​** **​** | **​** (continued) |

*(dollars in thousands, except per share data)*

| ​ (continued) Balance Sheet Data: | ​ ​ ​ | ​ ​ ​ June 30, ​ 2023 ​ ​ ​ ​ | ​ ​ ​ December 31, ​ 2022 ​ ​ ​ ​ |
| --- | --- | --- | --- |
| Cash and cash equivalents | ​ | **$558,131** **​** | $526,624 ​ |
| Investment securities available-for-sale | ​ | **​** **2,909,372** **​** | ​ 3,151,133 ​ |
| Investment securities held-to-maturity | ​ | **​** **4,180,408** **​** | ​ 4,320,639 ​ |
| Loans and leases | ​ | ​ **14,362,832** **​** | ​ 14,092,012 ​ |
| Allowance for credit losses for loans and leases | ​ | **​** **148,581** **​** | ​ 143,900 ​ |
| Goodwill | ​ | **​** **995,492** **​** | ​ 995,492 ​ |
| Total assets | ​ | **​** **24,511,566** **​** | ​ 24,577,223 ​ |
| Total deposits | ​ | **​** **21,078,166** **​** | ​ 21,689,029 ​ |
| Short-term borrowings | ​ | **​** **—** **​** | ​ 75,000 ​ |
| Long-term borrowings | ​ | **​** **500,000** **​** | ​ — ​ |
| Total liabilities | ​ | **​** **22,151,828** **​** | ​ 22,308,218 ​ |
| Total stockholders' equity | ​ | **​** **2,359,738** **​** | ​ 2,269,005 ​ |
| Book value per share | ​ | **$18.49** **​** | $17.82 ​ |
| Tangible book value per share (non-GAAP)(2) | ​ | **$10.69** **​** | $10.00 ​ |
| ​ | ​ | **​** **​** **​** | ​ **​** ​ |
| **Asset Quality Ratios:** | **​** | **​** **​** **​** | ​ ​ ​ |
| Non-accrual loans and leases / total loans and leases | ​ | **​** **0.09%** | ​ 0.08% |
| Allowance for credit losses for loans and leases / total loans and leases | ​ | **​** **1.03%** | ​ 1.02% |
| Net charge-offs / average total loans and leases(3) | ​ | **​** **0.10%** | ​ 0.08% |

| ​ ​ Capital Ratios: | ​ ​ | ​ June 30, 2023 | ​ ​ ​ ​ | ​ December 31, 2022 | ​ ​ ​ ​ |
| --- | --- | --- | ---: | --- | ---: |
| Common Equity Tier 1 Capital Ratio | ​ |  | **12.05%** |  | 11.82% |
| Tier 1 Capital Ratio | ​ | **​** | **12.05%** | **​** | 11.82% |
| Total Capital Ratio | ​ | **​** | **13.17%** | **​** | 12.92% |
| Tier 1 Leverage Ratio | ​ | **​** | **8.30%** | **​** | 8.11% |
| Total stockholders' equity to total assets | ​ | **​** | **9.63%** | **​** | 9.23% |
| Tangible stockholders' equity to tangible assets (non-GAAP)(2) | ​ | **​** | **5.80%** | **​** | 5.40% |

(1) Except for the efficiency ratio, amounts are annualized for the three and six months ended June 30, 2023 and 2022.

(2) Return on average tangible assets, return on average tangible stockholders’ equity, tangible book value per share and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. We compute our return on average tangible assets as the ratio of net income to average tangible assets. We compute our return on average tangible stockholders’ equity as the ratio of net income to average tangible stockholders’ equity. We compute our tangible book value per share as the ratio of tangible stockholders’ equity to outstanding shares. We compute our tangible stockholders’ equity to tangible assets as the ratio of tangible stockholders’ equity to tangible assets. We believe that these financial measures are useful for investors, regulators, management and others to evaluate financial performance and capital adequacy relative to other financial institutions. Although these non-GAAP financial measures are frequently used by shareholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP.

(3) Net charge-offs / average total loans and leases is annualized for the six months ended June 30, 2023.

The following table provides a reconciliation of these non-GAAP financial measures with their most closely related GAAP measures for the periods indicated:

*(dollars in thousands)*

| ​ GAAP to Non-GAAP Reconciliation ​ ​ Income Statement Data: | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ For the Three Months Ended June 30, 2023 ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ For the Six Months Ended June 30, 2023 ​ ​ ​ ​ | ​ ​ ​ ​ Table 2 ​ ​ 2022 ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | --- |
| Noninterest expense | **​** | **$120,881** ​ | $109,175 ​ | **$239,448** ​ | $213,217 ​ |
| **​** | **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** **​** |
| Net income | ​ | **$62,442** ​ | $59,360 ​ | **$129,260** ​ | $117,079 ​ |
| ​ | ​ | **​** **​** **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** **​** |
| Average total stockholders' equity | ​ | **$2,344,285** ​ | $2,262,654 ​ | **$2,321,977** ​ | $2,404,471 ​ |
| Less: average goodwill | ​ | **​** **995,492** ​ | ​ 995,492 ​ | **​** **995,492** ​ | ​ 995,492 ​ |
| Average tangible stockholders' equity | ​ | **$1,348,793** ​ | $1,267,162 ​ | **$1,326,485** ​ | $1,408,979 ​ |
| ​ | ​ | **​** **​** ​ | ​ ​ ​ | **​** **​** ​ | ​ ​ ​ |
| Average total assets | ​ | **$24,821,486** ​ | $25,250,176 ​ | **$24,685,560** ​ | $25,165,783 ​ |
| Less: average goodwill | ​ | **​** **995,492** ​ | ​ 995,492 ​ | **​** **995,492** ​ | ​ 995,492 ​ |
| Average tangible assets | ​ | **$23,825,994** ​ | $24,254,684 ​ | **$23,690,068** ​ | $24,170,291 ​ |
| ​ | ​ | **​** **​** ​ | ​ ​ ​ | **​** **​** ​ | ​ ​ ​ |
| Return on average total stockholders' equity(a) | ​ | **​** **10.68%** | ​ 10.52% | **​** **11.23%** | ​ 9.82% |
| Return on average tangible stockholders' equity (non-GAAP)(a) | ​ | **​** **18.57%** | ​ 18.79% | **​** **19.65%** | ​ 16.76% |
| ​ | ​ | **​** **​** **​** | ​ ​ ​ | **​** **​** **​** | ​ ​ ​ |
| Return on average total assets(a) | ​ | **​** **1.01%** | ​ 0.94% | **​** **1.06%** | ​ 0.94% |
| Return on average tangible assets (non-GAAP)(a) | ​ | **​** **1.05%** | ​ 0.98% | **​** **1.10%** | ​ 0.98% |
| ​ | ​ | **​** **​** **​** | ​ ​ ​ | **​** **​** **​** | ​ ​ ​ |
| Noninterest expense to average assets(a) | ​ | **​** **1.95%** | ​ 1.73% | **​** **1.96%** | ​ 1.71% |

*(dollars in thousands, except share amount and per share data)*

| ​ ​ ​ Balance Sheet Data: | ​ ​ ​ As of ​ June 30, ​ 2023 ​ ​ ​ ​ | ​ ​ ​ As of ​ December 31, ​ 2022 ​ ​ ​ ​ |
| --- | --- | --- |
| Total stockholders' equity | **$2,359,738** ​ | $2,269,005 ​ |
| Less: goodwill | **​** **995,492** ​ | ​ 995,492 ​ |
| Tangible stockholders' equity | **$1,364,246** ​ | $1,273,513 ​ |
| ​ | **​** **​** ​ | ​ ​ ​ |
| Total assets | **$24,511,566** ​ | $24,577,223 ​ |
| Less: goodwill | **​** **995,492** ​ | ​ 995,492 ​ |
| Tangible assets | **$23,516,074** ​ | $23,581,731 ​ |
| ​ | **​** **​** ​ | ​ ​ ​ |
| Shares outstanding | **​** **127,608,037** ​ | ​ 127,363,327 ​ |
| ​ | **​** **​** ​ | ​ ​ ​ |
| Total stockholders' equity to total assets | **​** **9.63%** | ​ 9.23% |
| Tangible stockholders' equity to tangible assets (non-GAAP) | **​** **5.80%** | ​ 5.40% |
| ​ | **​** **​** ​ | ​ ​ ​ |
| Book value per share | **$18.49** ​ | $17.82 ​ |
| Tangible book value per share (non-GAAP) | **$10.69** ​ | $10.00 ​ |

(a) Annualized for the three and six months ended June 30, 2023 and 2022.

### Financial Highlights

Net income was $62.4 million for the three months ended June 30, 2023, an increase of $3.1 million or 5% as compared to the same period in 2022. Basic and diluted earnings per share were both $0.49 per share for the three months ended June 30, 2023, an increase of $0.03 per share or 7% as compared to the same period in 2022. The increase in net income was primarily due to a $14.8 million increase in net interest income driven by the rising interest rate environment, a $3.2 million increase in noninterest income and a $0.8 million decrease in the provision for income taxes. This was partially offset by a $11.7 million increase in noninterest expense and a $4.0 million increase in the provision for credit losses (the “Provision”).

Our return on average total assets was 1.01% for the three months ended June 30, 2023, an increase of seven basis points from the same period in 2022, and our return on average total stockholders’ equity was 10.68% for the three months ended June 30, 2023, an increase of 16 basis points from the same period in 2022. Our return on average tangible assets was 1.05% for the three months ended June 30, 2023, an increase of seven basis points from the same period in 2022, and our return on average tangible stockholders’ equity was 18.57% for the three months ended June 30, 2023, a decrease of 22 basis points, from the same period in 2022. Our efficiency ratio was 57.96% for the three months ended June 30, 2023 compared to 57.33% for the same period in 2022.

Our results for the three months ended June 30, 2023 were highlighted by the following:

- Net interest income was $159.9 million for the three months ended June 30, 2023, an increase of $14.8 million or 10% as compared to the same period in 2022. Our net interest margin was 2.91% for the three months ended June 30, 2023, an increase of 31 basis points as compared to the same period in 2022. The increase in net interest income, on a fully taxable-equivalent basis, was driven by the rising interest rate environment and was primarily due to higher yields and average balances in our loan and lease portfolio, partially offset by higher deposit funding costs and higher average balances in total borrowings during the three months ended June 30, 2023.
- The Provision was $5.0 million for the three months ended June 30, 2023, an increase of $4.0 million as compared to the same period in 2022. The Provision of $5.0 million for the three months ended June 30, 2023 was primarily due to an increase in the provision for construction loans and home equity lines. The Provision is recorded to maintain the allowance for credit losses for loans and leases (the “ACL”) and the reserve for unfunded commitments at levels deemed adequate to absorb lifetime expected credit losses in our loan and lease portfolio and unfunded loan and lease commitments as of the balance sheet date.
- Noninterest income was $47.3 million for the three months ended June 30, 2023, an increase of $3.2 million or 7% as compared to the same period in 2022. The increase was primarily due to $3.3 million of Bank-owned life insurance (“BOLI”) income as compared to a negative $0.9 million of BOLI income for the same period in 2022, partially offset by a $1.6 million decrease in credit and debit card fees.
- Noninterest expense was $120.9 million for the three months ended June 30, 2023, an increase of $11.7 million or 11% compared to the same period in 2022. The increase in noninterest expense was primarily due to a $8.0 million increase in salaries and employee benefits, a $3.2 million increase in equipment expense and a $1.4 million increase in regulatory assessment and fees, partially offset by a $1.1 million decrease in contracted services and professional fees.

Net income was $129.3 million for the six months ended June 30, 2023, an increase of $12.2 million or 10% as compared to the same period in 2022. Basic earnings per share was $1.01 per share for the six months ended June 30, 2023, an increase of $0.09 per share or 10% as compared to the same period in 2022. Diluted earnings per share was $1.01 per share for the six months ended June 30, 2023, an increase of $0.10 per share or 11% as compared to the same period in 2022. The increase in net income was primarily due to a $48.2 million increase in net interest income and a $10.9 million increase in noninterest income. This was partially offset by a $26.2 million increase in noninterest expense and a $2.1 million increase in the provision for income taxes, in addition to a Provision of $13.8 million for the six months ended June 30, 2023, compared to a negative Provision of $4.7 million for the six months ended June 30, 2022.

Our return on average total assets was 1.06% for the six months ended June 30, 2023, an increase of 12 basis points from the same period in 2022, and our return on average total stockholders’ equity was 11.23% for the six months ended June 30, 2023, an increase of 141 basis points for the same period in 2022. Our return on average tangible assets was 1.10% for the six months ended June 30, 2023, an increase of 12 basis points from the same period in 2022, and our return on average tangible stockholders’ equity was 19.65% for the six months ended June 30, 2023, an increase of 289 basis points from the same period in 2022. Our efficiency ratio was 56.17% for the six months ended June 30, 2023 compared to 58.15% for the same period in 2022.

Our results for the six months ended June 30, 2023 were highlighted by the following:

- Net interest income was $327.2 million for the six months ended June 30, 2023, an increase of $48.2 million or 17% as compared to the same period in 2022. Our net interest margin was 3.01% for the six months ended June 30, 2023, an increase of 50 basis points as compared to the same period in 2022. The increase in net interest income, on a fully taxable-equivalent basis, was primarily due to higher yields and average balances in our loan and lease portfolio, higher yields in our investment securities portfolio and higher yields on interest-bearing deposits in other banks. This was partially offset by higher deposit funding costs, lower average balances in our investment securities portfolio and higher average balances in total borrowings during the six months ended June 30, 2023.
- The Provision was $13.8 million for the six months ended June 30, 2023, compared to a negative Provision of $4.7 million for the same period in 2022. The Provision of $13.8 million for the six months ended June 30, 2023, was primarily due to increases in the provision for consumer loans, construction loans and home equity lines and the provision for unfunded construction and home equity line commitments. The Provision is recorded to maintain the ACL and the reserve for unfunded commitments at levels deemed adequate to absorb lifetime expected credit losses in our loan and lease portfolio and unfunded loan and lease commitments as of the balance sheet date.
- Noninterest income was $96.4 million for the six months ended June 30, 2023, an increase of $10.9 million or 13% as compared to the same period in 2022. The increase was primarily due to $8.4 million of BOLI income as compared to a negative $1.3 million of BOLI income for the same period in 2022, in addition to a $1.4 million increase in trust and investment services income.
- Noninterest expense was $239.4 million for the six months ended June 30, 2023, an increase of $26.2 million or 12% as compared to the same period in 2022. The increase in noninterest expense was primarily due to a $15.8 million increase in salaries and employee benefits expense, a $7.0 million increase in equipment expense, a $3.0 million increase in regulatory assessment and fees and a $1.6 million increase in card rewards program expense, partially offset by a $2.0 million decrease in contracted services and professional fees.

For the six months ended June 30, 2023, we continued to maintain high levels of liquidity and adequate reserves for credit losses. We also remained well-capitalized. Common Equity Tier 1 (“CET1”) was 12.05% as of June 30, 2023, an increase of 23 basis points from December 31, 2022. The increase in CET1 was primarily due to earnings for the six months ended June 30, 2023, partially offset by the dividends declared and paid to the Company’s stockholders and an increase in risk-weighted assets driven by an increase in loans and leases.

- Total loans and leases were $14.4 billion as of June 30, 2023, an increase of $270.8 million or 2% from December 31, 2022. The increase in total loans and leases was primarily due to increases in commercial real estate loans, construction loans, residential real estate loans and lease financing, partially offset by decreases in commercial and industrial loans and consumer loans.
- The ACL was $148.6 million as of June 30, 2023, an increase of $4.7 million or 3% from December 31, 2022. The ratio of our ACL to total loans and leases outstanding was 1.03% as of June 30, 2023, an increase of one basis point compared to December 31, 2022.
- Our investment portfolio is comprised of high-grade investment securities, primarily collateralized mortgage obligations issued by the Government National Mortgage Association (“Ginnie Mae”), the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and mortgage-backed securities issued by Ginnie Mae, Freddie Mac, Fannie Mae, Municipal Housing Authorities and non-agency entities. The total carrying value of our investment securities portfolio was $7.1 billion as of June 30, 2023, a decrease of $382.0 million or 5% from December 31, 2022. Maturities and payments on investment securities were used to fund loan growth and offset the decline in deposits.
- Total deposits were $21.1 billion as of June 30, 2023, a decrease of $610.9 million or 3% from December 31, 2022. The decrease in total deposits was primarily due to a $698.0 million decrease in demand deposit balances, a $546.9 million decrease in savings deposit balances and a $197.6 million decrease in money market deposit balances, partially offset by a $831.7 million increase in time deposit balances.
- Total borrowings consisted of $500.0 million of long-term borrowings as of June 30, 2023, compared to $75.0 million of short-term borrowings as of December 31, 2022. For information with respect to the financial terms of such advances, see “ – *Analysis of Financial Condition – Short-term and Long-term Borrowings.”*
- Total stockholders’ equity was $2.4 billion as of June 30, 2023, an increase of $90.7 million or 4% from December 31, 2022. The increase in stockholders’ equity was primarily due to earnings for the period of $129.3 million and net unrealized gains in our investment securities portfolio, net of tax, of $26.2 million, partially offset by dividends declared and paid to the Company’s stockholders of $66.3 million during the six months ended June 30, 2023.

### Analysis of Results of Operations

### Net Interest Income

For the three months ended June 30, 2023 and 2022, average balances, related income and expenses, on a fully taxable-equivalent basis, and resulting yields and rates are presented in Table 3. An analysis of the change in net interest income, on a fully taxable-equivalent basis, is presented in Table 4.

*(dollars in millions)*

| ​ Average Balances and Interest Rates ​ ​ ​ ​ Earning Assets | ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Three Months Ended June 30, 2023 ​ ​ Average Balance ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Income/ Expense ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Average ​ Yield/ ​ Rate ​ ​ ​ | ​ ​ ​ ​ Three Months Ended June 30, 2022 ​ ​ Average Balance ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Income/ Expense ​ ​ | ​ Table 3 ​ ​ ​ | ​ ​ ​ ​ Average ​ Yield/ ​ Rate ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | ---: | --- | --- | --- | --- | ---: |
| Interest-Bearing Deposits in Other Banks | ​ | **$569.3** | **​** | **$7.2** | **​** | **5.07%** | $1,297.3 | ​ | $2.8 | **​** | 0.85% |
| Available-for-Sale Investment Securities | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | ​ ​ | ​ | ​ ​ | **​** | ​ ​ |
| Taxable | ​ | **​** **2,978.6** | **​** | **​** **18.0** | **​** | **2.42** **​** | ​ 3,946.4 | ​ | ​ 16.6 | **​** | 1.68 ​ |
| Non-Taxable | ​ | **​** **5.8** | **​** | **​** **0.1** | **​** | **5.74** **​** | ​ 8.4 | ​ | ​ 0.1 | **​** | 5.26 ​ |
| Held-to-Maturity Investment Securities | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | ​ ​ | ​ | ​ ​ | **​** | ​ ​ |
| Taxable | ​ | **​** **3,618.7** | **​** | **​** **15.3** | **​** | **1.69** **​** | ​ 3,533.6 | ​ | ​ 15.0 | **​** | 1.70 ​ |
| Non-Taxable | ​ | **​** **610.4** | **​** | **​** **3.7** | **​** | **2.46** **​** | ​ 607.0 | ​ | ​ 4.1 | **​** | 2.71 ​ |
| Total Investment Securities | ​ | ​ **7,213.5** | **​** | **​** **37.1** | **​** | **2.06** **​** | ​ 8,095.4 | ​ | ​ 35.8 | **​** | 1.77 ​ |
| Loans Held for Sale | ​ | ​ **0.5** | **​** | **​** **—** | **​** | **5.87** **​** | ​ 0.3 | ​ | ​ — | **​** | 5.06 ​ |
| Loans and Leases (1) | ​ | ​ **​** | **​** | **​** **​** | **​** | **​** **​** | ​ ​ | ​ | ​ ​ | **​** | ​ ​ |
| Commercial and industrial | ​ | ​ **2,265.7** | **​** | **​** **36.2** | **​** | **6.41** **​** | ​ 1,951.3 | ​ | ​ 15.0 | **​** | 3.09 ​ |
| Commercial real estate | ​ | ​ **4,183.6** | **​** | **​** **64.9** | **​** | **6.22** **​** | ​ 3,808.9 | ​ | ​ 30.7 | **​** | 3.23 ​ |
| Construction | ​ | ​ **874.3** | **​** | **​** **15.2** | **​** | **6.96** **​** | ​ 711.3 | ​ | ​ 6.3 | **​** | 3.57 ​ |
| Residential: | ​ | ​ **​** | **​** | **​** **​** | **​** | **​** **​** | ​ ​ | ​ | ​ ​ | **​** | ​ ​ |
| Residential mortgage | ​ | ​ **4,314.0** | **​** | **​** **39.1** | **​** | **3.62** **​** | ​ 4,183.0 | ​ | ​ 36.7 | **​** | 3.51 ​ |
| Home equity line | ​ | ​ **1,119.3** | **​** | **​** **9.2** | **​** | **3.31** **​** | ​ 945.7 | ​ | ​ 5.9 | **​** | 2.49 ​ |
| Consumer | ​ | ​ **1,196.6** | **​** | **​** **17.7** | **​** | **5.92** **​** | ​ 1,218.0 | ​ | ​ 15.5 | **​** | 5.09 ​ |
| Lease financing | ​ | ​ **329.7** | **​** | **​** **3.6** | **​** | **4.43** **​** | ​ 240.4 | ​ | ​ 2.1 | **​** | 3.53 ​ |
| Total Loans and Leases | ​ | ​ **14,283.2** | **​** | **​** **185.9** | **​** | **5.22** **​** | ​ 13,058.6 | ​ | ​ 112.2 | ​ | 3.44 ​ |
| Other Earning Assets | ​ | ​ **119.8** | **​** | **​** **0.3** | **​** | **0.99** **​** | ​ 69.0 | ​ | ​ 0.1 | ​ | 0.79 ​ |
| Total Earning Assets (2) | ​ | ​ **22,186.3** | **​** | **​** **230.5** | **​** | **4.16** **​** | ​ 22,520.6 | ​ | ​ 150.9 | ​ | 2.68 ​ |
| Cash and Due from Banks | ​ | ​ **257.9** | **​** | **​** **​** | **​** | **​** **​** | ​ 300.8 | ​ | ​ ​ | ​ | ​ ​ |
| Other Assets | ​ | ​ **2,377.3** | **​** | **​** **​** | **​** | **​** **​** | ​ 2,428.8 | ​ | ​ ​ | ​ | ​ ​ |
| **Total Assets** | ​ | **$24,821.5** | **​** | **​** **​** | **​** | **​** **​** | $25,250.2 | ​ | ​ ​ | ​ | ​ ​ |
| ​ | ​ | ​ **​** | **​** | **​** **​** | **​** | **​** **​** | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Interest-Bearing Liabilities** | ​ | ​ **​** | **​** | **​** **​** | **​** | **​** **​** | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Interest-Bearing Deposits | ​ | ​ **​** | **​** | **​** **​** | **​** | **​** **​** | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Savings | ​ | **$6,099.4** | **​** | **$16.1** | **​** | **1.05%** | $6,971.3 | **​** | $1.7 | **​** | 0.10% |
| Money Market | ​ | ​ **3,809.8** | **​** | **​** **19.6** | **​** | **2.07** **​** | ​ 4,127.4 | **​** | ​ 1.4 | **​** | 0.14 ​ |
| Time | ​ | ​ **2,877.8** | **​** | **​** **22.4** | **​** | **3.12** **​** | ​ 1,671.4 | **​** | ​ 1.5 | **​** | 0.36 ​ |
| Total Interest-Bearing Deposits | ​ | ​ **12,787.0** | **​** | **​** **58.1** | **​** | **1.82** **​** | ​ 12,770.1 | **​** | ​ 4.6 | **​** | 0.14 ​ |
| Federal Funds Purchased | ​ | ​ **2.9** | **​** | **​** **—** | **​** | **5.00** **​** | ​ — | **​** | ​ — | **​** | — ​ |
| Other Short-Term Borrowings | ​ | ​ **362.9** | **​** | **​** **4.7** | **​** | **5.16** **​** | ​ — | **​** | ​ — | **​** | — ​ |
| Long-Term Borrowings | ​ | ​ **500.0** | **​** | **​** **6.0** | **​** | **4.78** **​** | ​ — | **​** | ​ — | **​** | — ​ |
| Other Interest-Bearing Liabilities | ​ | ​ **54.0** | **​** | **​** **0.5** | **​** | **4.00** **​** | ​ — | **​** | ​ — | **​** | — ​ |
| **Total Interest-Bearing Liabilities** | ​ | ​ **13,706.8** | **​** | **​** **69.3** | **​** | **2.03** **​** | ​ 12,770.1 | **​** | ​ 4.6 | **​** | 0.14 ​ |
| **Net Interest Income** | ​ | ​ **​** | **​** | **$161.2** | **​** | **​** **​** | ​ ​ | ​ | $146.3 | ​ | ​ ​ |
| Interest Rate Spread | ​ | ​ **​** | **​** | **​** **​** | **​** | **2.13%** | ​ ​ | ​ | ​ ​ | ​ | 2.54% |
| Net Interest Margin | ​ | ​ **​** | **​** | **​** **​** | **​** | **2.91%** | ​ ​ | ​ | ​ ​ | ​ | 2.60% |
| Noninterest-Bearing Demand Deposits | ​ | ​ **8,270.3** | **​** | **​** **​** | **​** | **​** **​** | ​ 9,631.4 | ​ | ​ ​ | ​ | ​ ​ |
| Other Liabilities | ​ | ​ **500.1** | **​** | **​** **​** | **​** | **​** **​** | ​ 586.0 | ​ | ​ ​ | ​ | ​ ​ |
| Stockholders' Equity | ​ | ​ **2,344.3** | **​** | **​** **​** | **​** | **​** **​** | ​ 2,262.7 | ​ | ​ ​ | ​ | ​ ​ |
| **Total Liabilities and Stockholders' Equity** | ​ | **$24,821.5** | **​** | **​** **​** | **​** | **​** **​** | $25,250.2 | ​ | ​ ​ | ​ | ​ ​ |

(1) Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

(2) Interest income includes taxable-equivalent basis adjustments of $1.3 million and $1.2 million for the three months ended June 30, 2023 and 2022, respectively.

*(dollars in millions)*

| ​ Analysis of Change in Net Interest Income ​ ​ Change in Interest Income: | ​ ​ ​ ​ | ​ ​ ​ ​ Three Months Ended June 30, 2023 Compared to June 30, 2022 Volume ​ ​ | ​ ​ | ​ ​ ​ ​ Rate ​ ​ | ​ ​ | ​ ​ ​ Table 4 Total (1) ​ ​ |
| --- | --- | --- | --- | --- | --- | --- |
| Interest-Bearing Deposits in Other Banks | **​** | **$(2.3)** | ​ | **$6.7** | ​ | **$4.4** |
| Available-for-Sale Investment Securities | **​** | **​** **​** | ​ | **​** **​** | ​ | **​** **​** |
| Taxable | **​** | **​** **(4.7)** | ​ | **​** **6.1** | ​ | **​** **1.4** |
| Held-to-Maturity Investment Securities | **​** | **​** **​** | ​ | **​** **​** | ​ | **​** **​** |
| Taxable | **​** | **​** **0.3** | ​ | **​** **—** | ​ | **​** **0.3** |
| Non-Taxable | ​ | ​ **—** | ​ | ​ **(0.4)** | ​ | **​** **(0.4)** |
| Total Investment Securities | ​ | ​ **(4.4)** | ​ | ​ **5.7** | ​ | **​** **1.3** |
| Loans and Leases | ​ | ​ **​** | ​ | ​ **​** | ​ | **​** **​** |
| Commercial and industrial | ​ | ​ **2.8** | ​ | ​ **18.4** | ​ | **​** **21.2** |
| Commercial real estate | ​ | ​ **3.3** | ​ | ​ **30.9** | ​ | **​** **34.2** |
| Construction | ​ | ​ **1.7** | ​ | ​ **7.2** | ​ | **​** **8.9** |
| Residential: | ​ | ​ **​** | ​ | ​ **​** | ​ | **​** **​** |
| Residential mortgage | ​ | ​ **1.2** | ​ | ​ **1.2** | ​ | **​** **2.4** |
| Home equity line | ​ | ​ **1.2** | ​ | ​ **2.1** | ​ | **​** **3.3** |
| Consumer | ​ | ​ **(0.3)** | ​ | ​ **2.5** | ​ | **​** **2.2** |
| Lease financing | ​ | ​ **0.9** | ​ | ​ **0.6** | ​ | **​** **1.5** |
| Total Loans and Leases | ​ | ​ **10.8** | ​ | ​ **62.9** | ​ | **​** **73.7** |
| Other Earning Assets | ​ | ​ **0.1** | ​ | ​ **0.1** | ​ | **​** **0.2** |
| **Total Change in Interest Income** | ​ | ​ **4.2** | ​ | ​ **75.4** | ​ | **​** **79.6** |
| ​ | ​ | ​ **​** | ​ | ​ **​** | ​ | **​** **​** |
| **Change in Interest Expense:** | ​ | ​ **​** | ​ | ​ **​** | ​ | **​** **​** |
| Interest-Bearing Deposits | ​ | ​ **​** | ​ | ​ **​** | ​ | **​** **​** |
| Savings | ​ | ​ **(0.2)** | ​ | ​ **14.6** | ​ | **​** **14.4** |
| Money Market | ​ | ​ **(0.1)** | ​ | ​ **18.3** | ​ | **​** **18.2** |
| Time | ​ | ​ **1.8** | ​ | ​ **19.1** | ​ | **​** **20.9** |
| Total Interest-Bearing Deposits | ​ | ​ **1.5** | ​ | ​ **52.0** | ​ | **​** **53.5** |
| Other Short-term Borrowings | ​ | ​ **4.7** | ​ | ​ **—** | ​ | **​** **4.7** |
| Long-term Borrowings | ​ | ​ **6.0** | ​ | ​ **—** | ​ | **​** **6.0** |
| Other Interest-Bearing Liabilities | ​ | ​ **0.5** | ​ | ​ **—** | ​ | **​** **0.5** |
| **Total Change in Interest Expense** | ​ | ​ **12.7** | ​ | ​ **52.0** | ​ | **​** **64.7** |
| **Change in Net Interest Income** | **​** | **$(8.5)** | ​ | **$23.4** | ​ | **$14.9** |

(1) The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

Net interest income, on a fully taxable-equivalent basis, was $161.2 million for the three months ended June 30, 2023, an increase of $14.9 million or 10% compared to the same period in 2022. Our net interest margin was 2.91% for the three months ended June 30, 2023, an increase of 31 basis points from the same period in 2022. The increase in net interest income, on a fully taxable-equivalent basis, was driven by the rising interest rate environment and was primarily due to higher yields and average balances in our loan and lease portfolio, partially offset by higher deposit funding costs and higher average balances in total borrowings during the three months ended June 30, 2023, compared to the same period in 2022. The yield on our loan and lease portfolio was 5.22% for the three months ended June 30, 2023, an increase of 178 basis points as compared to the same period in 2022. We experienced an increase in our yields from total loans and leases primarily due to increases in yields from our adjustable-rate commercial real estate loans, commercial and industrial loans and construction loans, which are largely based on the SOFR. For the three months ended June 30, 2023, the average balance of our loan and lease portfolio was $14.3 billion, an increase of $1.2 billion or 9% compared to the same period in 2022. The increase in the average balance of our loans and leases reflected increases in most loan categories. Deposit funding costs were $58.1 million for the three months ended June 30, 2023, an increase of $53.5 million compared to the same period in 2022 primarily due to an increase in interest rates. Rates paid on our interest-bearing deposits were 1.82% for the three months ended June 30, 2023, an increase of 168 basis points compared to the same period in 2022, primarily due to increases in our time, money market and savings deposits. For the three months ended June 30, 2023, the average balance of our total borrowings was $865.8 million, compared to nil during the same period in 2022, primarily due to increases in FHLB advances.

For the six months ended June 30, 2023 and 2022, average balances, related income and expenses, on a fully taxable-equivalent basis, and resulting yields and rates are presented in Table 5. An analysis of the change in net interest income, on a fully taxable-equivalent basis, is presented in Table 6.

*(dollars in millions)*

| ​ Average Balances and Interest Rates ​ ​ ​ Earning Assets | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Six Months Ended June 30, 2023 Average Balance ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Income/ Expense ​ ​ | ​ ​ ​ | ​ ​ Yield/ Rate ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Six Months Ended June 30, 2022 Average Balance ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Income/ Expense ​ ​ | ​ ​ ​ | ​ ​ Table 5 ​ ​ Yield/ ​ Rate ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | ---: | --- | --- | --- | --- | ---: |
| Interest-Bearing Deposits in Other Banks | ​ | **$435.2** | **​** | **$10.6** | **​** | **​** | **4.91%** | $1,218.3 | ​ | $3.3 | **​** | 0.55% |
| Available-for-Sale Investment Securities | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** | **​** ​ | ​ ​ | ​ | ​ ​ | **​** | ​ ​ |
| Taxable | ​ | **​** **3,029.7** | **​** | **​** **36.4** | **​** | **​** | **2.41** ​ | ​ 5,862.7 | ​ | ​ 45.7 | **​** | 1.56 ​ |
| Non-Taxable | ​ | **​** **18.4** | **​** | **​** **0.5** | **​** | **​** | **5.58** ​ | ​ 320.8 | ​ | ​ 3.9 | **​** | 2.41 ​ |
| Held-to-Maturity Investment Securities | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** | **​** ​ | ​ ​ | ​ | ​ ​ | **​** | ​ ​ |
| Taxable | ​ | **​** **3,651.1** | **​** | **​** **30.9** | **​** | **​** | **1.70** ​ | ​ 1,776.6 | ​ | ​ 15.0 | **​** | 1.69 ​ |
| Non-Taxable | ​ | **​** **611.3** | **​** | **​** **7.9** | **​** | **​** | **2.60** ​ | ​ 305.2 | ​ | ​ 4.1 | **​** | 2.71 ​ |
| Total Investment Securities | ​ | **​** **7,310.5** | **​** | **​** **75.7** | **​** | **​** | **2.08** **​** | ​ 8,265.3 | ​ | ​ 68.7 | **​** | 1.66 ​ |
| Loans Held for Sale | ​ | **​** **0.3** | **​** | **​** **—** | **​** | **​** | **5.79** **​** | ​ 0.8 | ​ | ​ — | **​** | 2.60 ​ |
| Loans and Leases(1) | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** | **​** **​** | ​ ​ | ​ | ​ ​ | **​** | ​ ​ |
| Commercial and industrial | ​ | **​** **2,229.5** | **​** | **​** **68.6** | **​** | **​** | **6.20** **​** | ​ 1,962.1 | ​ | ​ 29.7 | **​** | 3.05 ​ |
| Commercial real estate | ​ | **​** **4,144.9** | **​** | **​** **123.2** | **​** | **​** | **5.99** **​** | ​ 3,721.0 | ​ | ​ 56.4 | **​** | 3.06 ​ |
| Construction | ​ | **​** **874.1** | **​** | **​** **29.9** | **​** | **​** | **6.89** **​** | ​ 738.9 | ​ | ​ 12.1 | **​** | 3.30 ​ |
| Residential: | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** | **​** **​** | ​ ​ | ​ | ​ ​ | **​** | ​ ​ |
| Residential mortgage | ​ | **​** **4,310.5** | **​** | **​** **77.5** | **​** | **​** | **3.59** **​** | ​ 4,147.2 | ​ | ​ 71.5 | **​** | 3.45 ​ |
| Home equity line | ​ | **​** **1,097.2** | **​** | **​** **17.9** | **​** | **​** | **3.29** **​** | ​ 918.8 | ​ | ​ 11.3 | **​** | 2.48 ​ |
| Consumer | ​ | **​** **1,205.0** | **​** | **​** **34.8** | **​** | **​** | **5.84** **​** | ​ 1,218.3 | ​ | ​ 31.1 | **​** | 5.14 ​ |
| Lease financing | ​ | **​** **320.6** | **​** | **​** **6.8** | **​** | **​** | **4.27** **​** | ​ 233.4 | ​ | ​ 4.0 | **​** | 3.48 ​ |
| Total Loans and Leases | ​ | **​** **14,181.8** | **​** | **​** **358.7** | **​** | **​** | **5.09** **​** | ​ 12,939.7 | ​ | ​ 216.1 | ​ | 3.36 ​ |
| Other Earning Assets | ​ | **​** **102.9** | **​** | **​** **0.5** | **​** | **​** | **0.90** **​** | ​ 68.0 | ​ | ​ 0.4 | ​ | 1.05 ​ |
| Total Earning Assets(2) | ​ | **​** **22,030.7** | **​** | **​** **445.5** | **​** | **​** | **4.07** **​** | ​ 22,492.1 | ​ | ​ 288.5 | ​ | 2.58 ​ |
| Cash and Due from Banks | ​ | **​** **271.9** | **​** | **​** **​** | **​** | **​** | **​** **​** | ​ 296.5 | ​ | ​ ​ | ​ | ​ ​ |
| Other Assets | ​ | **​** **2,383.0** | **​** | **​** **​** | **​** | **​** | **​** **​** | ​ 2,377.2 | ​ | ​ ​ | ​ | ​ ​ |
| **Total Assets** | ​ | **$24,685.6** | **​** | **​** **​** | **​** | **​** | **​** **​** | $25,165.8 | ​ | ​ ​ | ​ | ​ ​ |
| ​ | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** | **​** **​** | ​ ​ | **​** | ​ ​ | **​** | ​ ​ |
| **Interest-Bearing Liabilities** | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** | **​** **​** | ​ ​ | **​** | ​ ​ | **​** | ​ ​ |
| Interest-Bearing Deposits | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** | **​** **​** | ​ ​ | **​** | ​ ​ | **​** | ​ ​ |
| Savings | ​ | **$6,226.2** | **​** | **$30.0** | **​** | **​** | **0.97%** | $6,820.7 | **​** | $2.2 | **​** | 0.07% |
| Money Market | ​ | **​** **3,831.5** | **​** | **​** **33.9** | **​** | **​** | **1.78** **​** | ​ 4,088.3 | **​** | ​ 2.0 | **​** | 0.09 ​ |
| Time | ​ | **​** **2,697.7** | **​** | **​** **37.5** | **​** | **​** | **2.80** **​** | ​ 1,709.8 | **​** | ​ 3.2 | **​** | 0.38 ​ |
| Total Interest-Bearing Deposits | ​ | **​** **12,755.4** | **​** | **​** **101.4** | **​** | **​** | **1.60** **​** | ​ 12,618.8 | **​** | ​ 7.4 | **​** | 0.12 ​ |
| Federal Funds Purchased | ​ | **​** **34.8** | **​** | **​** **0.8** | **​** | **​** | **4.45** **​** | ​ — | **​** | ​ — | **​** | — ​ |
| Other Short-Term Borrowings | ​ | **​** **208.7** | **​** | **​** **5.3** | **​** | **​** | **5.14** **​** | ​ — | **​** | ​ — | **​** | — ​ |
| Long-Term Borrowings | ​ | **​** **303.8** | **​** | **​** **7.1** | **​** | **​** | **4.73** **​** | ​ — | **​** | ​ — | **​** | — ​ |
| Other Interest-Bearing Liabilities | ​ | **​** **48.5** | **​** | **​** **1.0** | **​** | **​** | **4.12** **​** | ​ — | **​** | ​ — | **​** | — ​ |
| **Total Interest-Bearing Liabilities** | ​ | **​** **13,351.2** | **​** | **​** **115.6** | **​** | **​** | **1.75** **​** | ​ 12,618.8 | **​** | ​ 7.4 | **​** | 0.12 ​ |
| **Net Interest Income** | ​ | **​** **​** | **​** | **$329.9** | **​** | **​** | **​** **​** | ​ ​ | ​ | $281.1 | ​ | ​ ​ |
| Interest Rate Spread | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** | **2.32%** | ​ ​ | ​ | ​ ​ | ​ | 2.46% |
| Net Interest Margin | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** | **3.01%** | ​ ​ | ​ | ​ ​ | ​ | 2.51% |
| Noninterest-Bearing Demand Deposits | ​ | **​** **8,506.4** | **​** | **​** **​** | **​** | **​** | **​** **​** | ​ 9,563.6 | ​ | ​ ​ | ​ | ​ ​ |
| Other Liabilities | ​ | **​** **506.0** | **​** | **​** **​** | **​** | **​** | **​** **​** | ​ 578.9 | ​ | ​ ​ | ​ | ​ ​ |
| Stockholders' Equity | ​ | **​** **2,322.0** | **​** | **​** **​** | **​** | **​** | **​** **​** | ​ 2,404.5 | ​ | ​ ​ | ​ | ​ ​ |
| **Total Liabilities and Stockholders' Equity** | ​ | **$24,685.6** | **​** | **​** **​** | **​** | **​** | **​** **​** | $25,165.8 | ​ | ​ ​ | ​ | ​ ​ |

(1) Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

(2) Interest income includes taxable-equivalent basis adjustments of $2.7 million and $2.1 million for the six months ended June 30, 2023 and 2022, respectively.

*(dollars in millions)*

| ​ Analysis of Change in Net Interest Income ​ ​ Change in Interest Income: | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Six Months Ended June 30, 2023 Compared to June 30, 2022 Volume ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Rate ​ ​ | ​ ​ ​ | ​ ​ ​ Table 6 Total(1) ​ ​ |
| --- | --- | --- | --- | --- | --- | --- |
| Interest-Bearing Deposits in Other Banks | **​** | **$(3.4)** | **​** | **$10.7** | **​** | **$7.3** |
| Available-for-Sale Investment Securities | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| Taxable | **​** | **​** **(27.6)** | **​** | **​** **18.3** | **​** | **​** **(9.3)** |
| Non-Taxable | **​** | **​** **(5.6)** | **​** | **​** **2.2** | **​** | **​** **(3.4)** |
| Held-to-Maturity Investment Securities | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| Taxable | **​** | **​** **15.8** | **​** | **​** **0.1** | **​** | **​** **15.9** |
| Non-Taxable | **​** | **​** **4.0** | **​** | **​** **(0.2)** | **​** | **​** **3.8** |
| Total Investment Securities | **​** | **​** **(13.4)** | **​** | **​** **20.4** | **​** | **​** **7.0** |
| Loans and Leases | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| Commercial and industrial | **​** | **​** **4.5** | **​** | **​** **34.4** | **​** | **​** **38.9** |
| Commercial real estate | **​** | **​** **7.1** | **​** | **​** **59.7** | **​** | **​** **66.8** |
| Construction | **​** | **​** **2.5** | **​** | **​** **15.3** | **​** | **​** **17.8** |
| Residential: | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| Residential mortgage | **​** | **​** **3.0** | **​** | **​** **3.0** | **​** | **​** **6.0** |
| Home equity line | **​** | **​** **2.5** | **​** | **​** **4.1** | **​** | **​** **6.6** |
| Consumer | **​** | **​** **(0.4)** | **​** | **​** **4.1** | **​** | **​** **3.7** |
| Lease financing | **​** | **​** **1.7** | **​** | **​** **1.1** | **​** | **​** **2.8** |
| Total Loans and Leases | **​** | **​** **20.9** | **​** | **​** **121.7** | **​** | **​** **142.6** |
| Other Earning Assets | ​ | ​ **0.2** | ​ | ​ **(0.1)** | ​ | **​** **0.1** |
| **Total Change in Interest Income** | **​** | **​** **4.3** | **​** | **​** **152.7** | **​** | **​** **157.0** |
| ​ | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| **Change in Interest Expense:** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| Interest-Bearing Deposits | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| Savings | **​** | **​** **(0.2)** | **​** | **​** **28.0** | **​** | **​** **27.8** |
| Money Market | **​** | **​** **(0.1)** | **​** | **​** **32.0** | **​** | **​** **31.9** |
| Time | **​** | **​** **2.8** | **​** | **​** **31.5** | **​** | **​** **34.3** |
| Total Interest-Bearing Deposits | **​** | **​** **2.5** | **​** | **​** **91.5** | **​** | **​** **94.0** |
| Federal Funds Purchased | **​** | **​** **0.8** | **​** | **​** **—** | **​** | **​** **0.8** |
| Other Short-Term Borrowings | **​** | **​** **5.3** | **​** | **​** **—** | **​** | **​** **5.3** |
| Long-Term Borrowings | **​** | **​** **7.1** | **​** | **​** **—** | **​** | **​** **7.1** |
| Other Interest-Bearing Liabilities | **​** | **​** **1.0** | **​** | **​** **—** | **​** | **​** **1.0** |
| **Total Change in Interest Expense** | **​** | **​** **16.7** | **​** | **​** **91.5** | **​** | **​** **108.2** |
| **Change in Net Interest Income** | **​** | **$(12.4)** | **​** | **$61.2** | **​** | **$48.8** |

(1) The change in interest income and expense not solely due to changes in volume or rate has been allocated on a pro-rata basis to the volume and rate columns.

Net interest income, on a fully taxable-equivalent basis, was $329.9 million for the six months ended June 30, 2023, an increase of $48.8 million or 17% compared to the same period in 2022. Our net interest margin was 3.01% for the six months ended June 30, 2023, an increase of 50 basis points from the same period in 2022. The increase in net interest income, on a fully taxable-equivalent basis, was driven by the rising interest rate environment and was primarily due to higher yields and average balances in our loan and lease portfolio, higher yields in our investment securities portfolio and higher yields on interest-bearing deposits in other banks. This was partially offset by higher deposit funding costs, lower average balances in our investment securities portfolio and higher average balances in total borrowings during the six months ended June 30, 2023. The yield on our loan and lease portfolio was 5.09% for the six months ended June 30, 2023, an increase of 173 basis points as compared to the same period in 2022. We experienced an increase in our yields from total loans and leases primarily due to increases in yields from our adjustable-rate commercial real estate loans, commercial and industrial loans and construction loans, which are largely based on the SOFR. For the six months ended June 30, 2023, the average balance of our loan and lease portfolio was $14.2 billion, an increase of $1.2 billion or 10% compared to the same period in 2022. The increase in the average balance of our loans and leases reflected increases in most loan categories. For the six months ended June 30, 2023, the yield on our investment securities portfolio was 2.08%, an increase of 42 basis points compared to the same period in 2022, primarily due to an increase in interest rates. For the six months ended June 30, 2023, the average balance of our investment securities portfolio was $7.3 billion, a decrease of $954.8 million or 12% compared to the same period in 2022. For the six months ended June 30, 2023, the yield on our interest-bearing deposits in other banks was 4.91%, an increase of 436 basis points compared to the same period in 2022. Deposit funding costs were $101.4 million for the six months ended June 30, 2023, an increase of $94.0 million compared to the same period in 2022, primarily due to an increase in interest rates. Rates paid on our interest-bearing deposits were 1.60% for the six months ended June 30, 2023, an increase of 148 basis points compared to the same period in 2022, primarily due to increases in our money market, time and savings deposits. For the six months ended June 30, 2023, the average balance of our total borrowings was $547.3 million, compared to nil during the same period in 2022, primarily due to increases in FHLB advances.

The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. Our loan portfolio is affected by changes in the prime interest rate. The prime rate began in 2022 at 3.25% and increased a total of 425 basis points (25 basis points in March, 50 basis points in May, 75 basis points in each month of June, July, September and November, and 50 basis points in December) to end the year at 7.50%. During 2023, the prime rate increased 75 basis points (25 basis points each in February, March and May) to end the second quarter of 2023 at 8.25%. As noted above, our loan portfolio is also impacted by changes in the SOFR. At June 30, 2023, the one-month and three-month CME Term SOFR interest rates were 5.14% and 5.27%, respectively. At June 30, 2022, the one-month and three-month CME Term SOFR interest rates were 1.69% and 2.12%, respectively. The target range for the federal funds rate, which is the cost of immediately available overnight funds, began in 2022 at 0.00% to 0.25%. During 2022, the federal funds rate increased 425 basis points to end the year at 4.25% to 4.50%. During 2023, the federal funds rate increased 75 basis points to end the second quarter at 5.00% to 5.25%.

### Provision for Credit Losses

The Provision was $5.0 million for the three months ended June 30, 2023, compared to a Provision of $1.0 million for the same period in 2022. The Provision of $5.0 million for the three months ended June 30, 2023, was primarily due to increases in the provision for construction loans and home equity lines. We recorded net charge-offs of loans and leases of $3.5 million and $2.3 million for the three months ended June 30, 2023 and 2022, respectively. This represented charge-offs of 0.10% and 0.07% of average loans and leases, on an annualized basis, for the three months ended June 30, 2023 and 2022, respectively. The Provision was $13.8 million for the six months ended June 30, 2023, compared to a negative Provision of $4.7 million for the same period in 2022. The Provision of $13.8 million for the six months ended June 30, 2023, was primarily due to increases in the provision for consumer loans, construction loans and home equity lines and the provision for unfunded construction and home equity line commitments. We recorded net charge-offs of loans and leases of $6.8 million and $4.9 million for the six months ended June 30, 2023 and 2022, respectively. This represented charge-offs of 0.10% and 0.08% of average loans and leases, on an annualized basis, for the six months ended June 30, 2023 and 2022, respectively. The ACL was $148.6 million as of June 30, 2023, an increase of $4.7 million or 3% from December 31, 2022 and represented 1.03% of total outstanding loans and leases as of June 30, 2023 compared to 1.02% of total outstanding loans and leases as of December 31, 2022. The reserve for unfunded commitments was $36.2 million as of June 30, 2023, compared to $33.8 million as of December 31, 2022. The Provision is recorded to maintain the ACL and the reserve for unfunded commitments at levels deemed adequate by management based on the factors noted in the “Risk Governance and Quantitative and Qualitative Disclosures About Market Risk — Credit Risk” section of this MD&A.

### Noninterest Income

Table 7 presents the major components of noninterest income for the three months ended June 30, 2023 and 2022 and Table 8 presents the major components of noninterest income for the six months ended June 30, 2023 and 2022:

*(dollars in thousands)*

| ​ Noninterest Income ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Three Months Ended June 30, 2023 | ​ ​ | ​ ​ ​ ​ 2022 | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Dollar Change | ​ ​ ​ ​ | ​ ​ Table 7 ​ ​ Percent ​ Change ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | ---: |
| Service charges on deposit accounts | ​ | **$7,246** | ​ | $6,843 | ​ | $403 | ​ | 6% |
| Credit and debit card fees | ​ | ​ **15,461** | ​ | ​ 17,056 | ​ | ​ (1,595) | ​ | (9) ​ |
| Other service charges and fees | ​ | ​ **9,056** | ​ | ​ 9,018 | ​ | ​ 38 | ​ | — ​ |
| Trust and investment services income | ​ | ​ **9,448** | ​ | ​ 8,759 | ​ | ​ 689 | ​ | 8 ​ |
| Bank-owned life insurance | ​ | ​ **3,271** | ​ | ​ (859) | ​ | ​ 4,130 | ​ | n/m ​ |
| Other | ​ | ​ **2,866** | ​ | ​ 3,320 | ​ | ​ (454) | ​ | (14) ​ |
| Total noninterest income | ​ | **$47,348** | ​ | $44,137 | ​ | $3,211 | ​ | 7% |

n/m – Denotes a variance that is not a meaningful metric to inform the change in noninterest income from the three months ended June 30, 2023 to the same period in 2022.

*(dollars in thousands)*

| ​ Noninterest Income ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ ​ Dollar Change | ​ ​ ​ ​ | ​ ​ Table 8 ​ ​ Percent ​ Change ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | ---: |
| Service charges on deposit accounts | ​ | **$14,477** | ​ | $14,344 | ​ | $133 | ​ | 1% |
| Credit and debit card fees | ​ | ​ **31,759** | ​ | ​ 31,906 | ​ | ​ (147) | ​ | — ​ |
| Other service charges and fees | ​ | ​ **18,218** | ​ | ​ 18,672 | ​ | ​ (454) | ​ | (2) ​ |
| Trust and investment services income | ​ | ​ **19,062** | ​ | ​ 17,642 | ​ | ​ 1,420 | ​ | 8 ​ |
| Bank-owned life insurance | ​ | ​ **8,391** | ​ | ​ (1,276) | ​ | ​ 9,667 | ​ | n/m ​ |
| Other | ​ | ​ **4,464** | ​ | ​ 4,229 | ​ | ​ 235 | ​ | 6 ​ |
| Total noninterest income | ​ | **$96,371** | ​ | $85,517 | ​ | $10,854 | ​ | 13% |

n/m – Denotes a variance that is not a meaningful metric to inform the change in noninterest income from the six months ended June 30, 2023 to the same period in 2022.

Total noninterest income was $47.3 million for the three months ended June 30, 2023, an increase of $3.2 million or 7% as compared to the same period in 2022. Total noninterest income was $96.4 million for the six months ended June 30, 2023, an increase of $10.9 million or 13% as compared to the same period in 2022.

Service charges on deposit accounts were $7.2 million for the three months ended June 30, 2023, an increase of $0.4 million or 6% as compared to the same period in 2022. This increase was primarily due to a $0.4 million increase in dormant account fees and a $0.4 million increase in overdraft and checking account fees, partially offset by a $0.3 million decrease in checking account service fees. Service charges on deposit accounts were $14.5 million for the six months ended June 30, 2023, an increase of $0.1 million or 1% as compared to the same period in 2022.

Credit and debit card fees were $15.5 million for the three months ended June 30, 2023, a decrease of $1.6 million or 9% as compared to the same period in 2022. This decrease was primarily due to a $1.9 million increase in network association dues and a $0.4 million decrease in merchant service revenues, partially offset by a $0.6 million increase in interchange settlement fees. Credit and debit card fees were $31.8 million for the six months ended June 30, 2023, a decrease of $0.1 million as compared to the same period in 2022.

Other service charges and fees were $9.1 million for the three months ended June 30, 2023, a minimal change as compared to the same period in 2022. Other service charges and fees were $18.2 million for the six months ended June 30, 2023, a decrease of $0.5 million or 2% as compared to the same period in 2022. This decrease was primarily due to a $0.3 million decrease in miscellaneous service fees and a $0.2 million decrease in service fees related to participation loans.

Trust and investment services income was $9.4 million for the three months ended June 30, 2023, an increase of $0.7 million or 8% as compared to the same period in 2022. This increase was primarily due to a $0.5 million increase in business cash management fees and a $0.4 million increase in investment management fees. Trust and investment services income was $19.1 million for the six months ended June 30, 2023, an increase of $1.4 million or 8% as compared to the same period in 2022. This increase was primarily due to a $1.4 million increase in business cash management fees and a $0.5 million increase in investment management fees, partially offset by a $0.3 million decrease in irrevocable trust fees.

BOLI income was $3.3 million for the three months ended June 30, 2023, an increase of $4.1 million as compared to the same period in 2022. This increase was primarily due to a $4.0 million increase in BOLI earnings and a $0.1 million increase in death benefit proceeds from life insurance policies. BOLI income was $8.4 million for the six months ended June 30, 2023, an increase of $9.7 million as compared to the same period in 2022. This increase was primarily due to a $7.6 million increase in BOLI earnings and a $2.1 million increase in death benefit proceeds from life insurance policies.

Other noninterest income was $2.9 million for the three months ended June 30, 2023, a decrease of $0.5 million or 14% as compared to the same period in 2022. This decrease was primarily due to a $1.9 million increase in net losses recognized in income related to derivative contracts and a $0.2 million increase in interest paid on collateral payments related to derivative instruments, partially offset by a $0.9 million increase in customer-related interest rate swap fees and a $0.8 million increase in market adjustments on mutual funds purchased. Other noninterest income was $4.5 million for the six months ended June 30, 2023, an increase of $0.2 million or 6% as compared to the same period in 2022.

### Noninterest Expense

Table 9 presents the major components of noninterest expense for the three months ended June 30, 2023 and 2022 and Table 10 presents the major components of noninterest expense for the six months ended June 30, 2023 and 2022:

*(dollars in thousands)*

| ​ Noninterest Expense ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Three Months Ended June 30, 2023 | ​ ​ | ​ ​ ​ ​ 2022 | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ Dollar ​ Change | ​ ​ ​ ​ | ​ ​ Table 9 ​ ​ Percentage ​ Change ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | ---: |
| Salaries and employee benefits | ​ | **$57,904** | ​ | $49,902 | ​ | $8,002 | ​ | 16% |
| Contracted services and professional fees | ​ | ​ **17,498** | ​ | ​ 18,617 | ​ | ​ (1,119) | ​ | (6) ​ |
| Occupancy | ​ | ​ **7,554** | ​ | ​ 7,334 | ​ | ​ 220 | ​ | 3 ​ |
| Equipment | ​ | ​ **11,000** | ​ | ​ 7,754 | ​ | ​ 3,246 | ​ | 42 ​ |
| Regulatory assessment and fees | ​ | ​ **3,676** | ​ | ​ 2,301 | ​ | ​ 1,375 | ​ | 60 ​ |
| Advertising and marketing | ​ | ​ **1,891** | ​ | ​ 1,994 | ​ | ​ (103) | ​ | (5) ​ |
| Card rewards program | ​ | ​ **7,681** | ​ | ​ 7,285 | ​ | ​ 396 | ​ | 5 ​ |
| Other | ​ | ​ **13,677** | ​ | ​ 13,988 | ​ | ​ (311) | ​ | (2) ​ |
| Total noninterest expense | ​ | **$120,881** | ​ | $109,175 | ​ | $11,706 | ​ | 11% |

*(dollars in thousands)*

| ​ Noninterest Expense ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Six Months Ended June 30, 2023 | ​ ​ | ​ ​ ​ ​ 2022 | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Dollar Change | ​ ​ ​ ​ | ​ ​ Table 10 ​ ​ Percentage ​ Change ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | ---: |
| Salaries and employee benefits | ​ | **$113,936** | ​ | $98,128 | ​ | $15,808 | ​ | 16% |
| Contracted services and professional fees | ​ | ​ **33,811** | ​ | ​ 35,764 | ​ | ​ (1,953) | ​ | (5) ​ |
| Occupancy | ​ | ​ **15,336** | ​ | ​ 14,744 | ​ | ​ 592 | ​ | 4 ​ |
| Equipment | ​ | ​ **20,736** | ​ | ​ 13,731 | ​ | ​ 7,005 | ​ | 51 ​ |
| Regulatory assessment and fees | ​ | ​ **7,512** | ​ | ​ 4,525 | ​ | ​ 2,987 | ​ | 66 ​ |
| Advertising and marketing | ​ | ​ **3,885** | ​ | ​ 4,022 | ​ | ​ (137) | ​ | (3) ​ |
| Card rewards program | ​ | ​ **15,766** | ​ | ​ 14,168 | ​ | ​ 1,598 | ​ | 11 ​ |
| Other | ​ | ​ **28,466** | ​ | ​ 28,135 | ​ | ​ 331 | ​ | 1 ​ |
| Total noninterest expense | ​ | **$239,448** | ​ | $213,217 | ​ | $26,231 | ​ | 12% |

Total noninterest expense was $120.9 million for the three months ended June 30, 2023, an increase of $11.7 million or 11% as compared to the same period in 2022. Total noninterest expense was $239.4 million for the six months ended June 30, 2023, an increase of $26.2 million or 12% as compared to the same period in 2022.

Salaries and employee benefits expense was $57.9 million for the three months ended June 30, 2023, an increase of $8.0 million or 16% as compared to the same period in 2022. This increase was primarily due to a $3.7 million increase in base salaries, a $2.9 million decrease in payroll and benefit costs being deferred as loan origination costs, a $2.0 million expense for payments accrued in the quarter ended June 30, 2023 in connection with separation agreements executed with two executive officers, and $0.9 million in severance payments accrued in the quarter ended June 30, 2023 for other employee terminations as part of an effort to reduce operating costs. This was partially offset by a $0.7 million decrease in temporary help expenses and a $0.6 million decrease in incentive compensation. Salaries and employee benefits expense was $113.9 million for the six months ended June 30, 2023, an increase of $15.8 million or 16% as compared to the same period in 2022. This increase was primarily due to a $7.9 million increase in base salaries, a $7.1 million decrease in payroll and benefit costs being deferred as loan origination costs, and the aforementioned separation and termination payments accrued as of June 30, 2023. This was partially offset by a $1.2 million decrease in incentive compensation and a $1.1 million decrease in temporary help expenses.

Contracted services and professional fees were $17.5 million for the three months ended June 30, 2023, a decrease of $1.1 million or 6% as compared to the same period in 2022. This decrease was primarily due to a $2.7 million decrease in contracted data processing expenses and a $2.0 million decrease in audit, legal and consultant fees, partially offset by a $3.5 million increase in outside services, primarily attributable to technology-related projects, marketing and new customer services. Contracted services and professional fees were $33.8 million for the six months ended June 30, 2023, a decrease of $2.0 million or 5% as compared to the same period in 2022. This decrease was primarily due to a $6.0 million decrease in contracted data processing expenses and a $3.2 million decrease in audit, legal and consultant fees, partially offset by a $7.1 million increase in outside services, primarily attributable to technology-related projects, marketing and new customer services.

Occupancy expense was $7.6 million for the three months ended June 30, 2023, an increase of $0.2 million or 3% as compared to the same period in 2022. Occupancy expense was $15.3 million for the six months ended June 30, 2023, an increase of $0.6 million or 4% as compared to the same period in 2022. This increase was primarily due to a $0.6 million increase in utilities expense and a $0.5 million decrease in net sublease rental income, partially offset by a $0.4 million decrease in building depreciation.

Equipment expense was $11.0 million for the three months ended June 30, 2023, an increase of $3.2 million or 42% as compared to the same period in 2022. This increase was primarily due to a $3.6 million increase in technology-related amortization and licensing and maintenance fees, partially offset by a $0.2 million decrease in furniture and equipment depreciation. Equipment expense was $20.7 million for the six months ended June 30, 2023, an increase of $7.0 million or 51% as compared to the same period in 2022. This increase was primarily due to a $7.6 million increase in technology-related amortization and licensing and maintenance fees, partially offset by a $0.3 million decrease in furniture and equipment depreciation.

Regulatory assessment and fees were $3.7 million for the three months ended June 30, 2023, an increase of $1.4 million or 60% as compared to the same period in 2022. Regulatory assessment and fees were $7.5 million for the six months ended June 30, 2023, an increase of $3.0 million or 66% as compared to the same period in 2022. These increases were primarily due to increases in the FDIC insurance assessment. In October 2022, the FDIC adopted a final rule to increase the initial base deposit insurance assessment rate schedules by 2 basis points beginning with the first quarterly assessment period of 2023. In May 2023, the FDIC issued a notice of proposed rulemaking for a special assessment to replenish the deposit insurance fund following the recent bank failures. If the rule is adopted as proposed, the total amount of the special assessment would be expected to be accrued and recognized as a loss in the period the rule is adopted. The ultimate impact and timing of recognition will depend on the final outcome of the ongoing FDIC deliberations.

Advertising and marketing expense was $1.9 million for the three months ended June 30, 2023, a decrease of $0.1 million or 5% as compared to the same period in 2022. Advertising and marketing expense was $3.9 million for the six months ended June 30, 2023, a decrease of $0.1 million or 3% as compared to the same period in 2022.

Card rewards program expense was $7.7 million for the three months ended June 30, 2023, an increase of $0.4 million or 5% as compared to the same period in 2022. This increase was primarily due to a $0.6 million increase in credit card cash reward redemptions and a $0.5 million increase in interchange fees paid to our credit card partners, partially offset by a $0.7 million decrease in priority rewards card redemptions. Card rewards program expense was $15.8 million for the six months ended June 30, 2023, an increase of $1.6 million or 11% as compared to the same period in 2022. This increase was primarily due to a $1.1 million increase in credit card cash reward redemptions and a $1.0 million increase in interchange fees paid to our credit card partners, partially offset by a $0.6 million decrease in priority rewards card redemptions.

Other noninterest expense was $13.7 million for the three months ended June 30, 2023, a decrease of $0.3 million or 2% as compared to the same period in 2022. Other noninterest expense was $28.5 million for the six months ended June 30, 2023, an increase of $0.3 million or 1% as compared to the same period in 2022.

### Provision for Income Taxes

The provision for income taxes was $19.0 million (an effective tax rate of 23.30%) for the three months ended June 30, 2023, compared with a provision for income taxes of $19.7 million (an effective tax rate of 24.96%) for the same period in 2022. The provision for income taxes was $41.0 million (an effective tax rate of 24.10%) for the six months ended June 30, 2023, compared with a provision for income taxes of $39.0 million (an effective tax rate of 24.98%) for the same period in 2022. The reduction in the effective tax rate was partially due to an increase in non-taxable BOLI income recognized during the three and six months ended June 30, 2023.

### Analysis of Business Segments

Our business segments are Retail Banking, Commercial Banking and Treasury and Other. Table 11 summarizes net income from our business segments for the three and six months ended June 30, 2023 and 2022. Additional information about operating segment performance is presented in “Note 18. Reportable Operating Segments” contained in our unaudited interim consolidated financial statements.

*(dollars in thousands)*

| ​ Business Segment Net Income ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Three Months Ended June 30, 2023 | ​ ​ | ​ ​ ​ ​ 2022 | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Six Months Ended June 30, 2023 | ​ ​ ​ | ​ ​ ​ Table 11 2022 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Retail Banking | ​ | **$37,085** | **​** | $42,214 | ​ | **$78,600** | ​ | $79,048 |
| Commercial Banking | ​ | ​ **23,605** | **​** | ​ 22,414 | ​ | **​** **44,459** | ​ | ​ 44,941 |
| Treasury and Other | ​ | ​ **1,752** | **​** | ​ (5,268) | ​ | **​** **6,201** | ​ | ​ (6,910) |
| **Total** | **​** | **$62,442** | **​** | $59,360 | ​ | **$129,260** | ​ | $117,079 |

*Retail Banking.* Our Retail Banking segment includes the financial products and services we provide to consumers and small businesses. Loan and lease products offered include residential and commercial mortgage loans, home equity lines of credit and loans, automobile loans and leases, secured and unsecured lines of credit, installment loans and small business loans and leases. Deposit products offered include checking, savings and time deposit accounts. Our Retail Banking segment also includes our wealth management services.

Net income for the Retail Banking segment was $37.1 million for the three months ended June 30, 2023, a decrease of $5.1 million or 12% as compared to the same period in 2022. The decrease in net income for the Retail Banking segment was primarily due to a $4.2 million increase in noninterest expense, a $3.1 million decrease in net interest income and a $1.6 million increase in the Provision, partially offset by a $2.5 million decrease in the provision for income taxes and a $1.3 million increase in noninterest income. The increase in noninterest expense was primarily due to increases in salaries and benefits expense and regulatory assessment and fees. The decrease in net interest income was primarily due to lower loan spreads, partially offset by higher deposit spreads. The decrease in the provision for income taxes was primarily due to the decrease in pretax income. The increase in the Provision was primarily due to increases in the provision for commercial lending. The increase in noninterest income was primarily due to increases in trust and investment services income and service charges on deposit accounts.

Net income for the Retail Banking segment was $78.6 million for the six months ended June 30, 2023, a decrease of $0.4 million or 1% as compared to the same period in 2022. The decrease in net income for the Retail Banking segment was primarily due to a $9.9 million increase in noninterest expense and a Provision of $4.6 million for the six months ended June 30, 2023, compared to a negative Provision of $1.5 million for the six months ended June 30, 2022. This was partially offset by a $11.7 million increase in net interest income, a $2.3 million increase in noninterest income and a $1.4 million decrease in the provision for income taxes. The increase in noninterest expense was primarily due to increases in salaries and benefits expense, regulatory assessment and fees and occupancy expense. The increase in the Provision was primarily due to an increase in the provision for commercial, residential and consumer lending. The increase in net interest income was primarily due to higher deposit spreads, partially offset by lower loan spreads. The increase in noninterest income was primarily due to increases in trust and investment services income and net mortgage servicing rights income. The decrease in the provision for income taxes was primarily due to the decrease in pretax income.

*Commercial Banking.* Our Commercial Banking segment includes our corporate banking related products, commercial real estate loans, commercial lease financing, secured and unsecured lines of credit, automobile loans and auto dealer financing, business deposit products and credit cards that we provide primarily to middle market and large companies locally, nationally and internationally.

Net income for the Commercial Banking segment was $23.6 million for the three months ended June 30, 2023, an increase of $1.2 million or 5% as compared to the same period in 2022. The increase in net income for the Commercial Banking segment was primarily due to a $4.7 million increase in net interest income, partially offset by a $2.4 million increase in the Provision and a $1.3 million decrease in noninterest income. The increase in net interest income was primarily due to higher average loan balances and spreads, partially offset by lower deposit spreads. The increase in the Provision was primarily due to an increase in the provision for commercial lending. The decrease in noninterest income was primarily due to a decrease in credit and debit card fees.

Net income for the Commercial Banking segment was $44.5 million for the six months ended June 30, 2023, a decrease of $0.5 million or 1% as compared to the same period in 2022. The decrease in net income for the Commercial Banking segment was primarily due to a Provision of $6.9 million for the six months ended June 30, 2023, compared to a negative Provision of $1.9 million for the six months ended June 30, 2022. The decrease in net income for the Commercial Banking segment also stemmed from a $2.1 million decrease in noninterest income and a $1.4 million increase in noninterest expense, partially offset by a $10.5 million increase in net interest income and a $1.3 million decrease in the provision for income taxes. The increase in the Provision was primarily due to increases in the provision for commercial and consumer lending. The decrease in noninterest income was primarily due to a tax refund received in 2022. The increase in noninterest expense was primarily due to increases in card rewards program expense, contracted services and professional fees, regulatory assessment and fees and operational losses, partially offset by lower overall expenses that were allocated to the Commercial Banking segment. The increase in net interest income was primarily due to higher average loan balances and spreads, partially offset by a decrease in loan fees. The decrease in the provision for income taxes was primarily due to the decrease in pretax income.

*Treasury and Other.* Our Treasury and Other segment includes our treasury business, which consists of corporate asset and liability management activities, including interest rate risk management. The assets and liabilities (and related interest income and expense) of our treasury business consist of interest-bearing deposits, investment securities, federal funds sold and purchased, government deposits, short- and long-term borrowings and bank-owned properties. Our primary sources of noninterest income are from bank-owned life insurance, net gains from the sale of investment securities, foreign exchange income related to customer driven cross-border wires for business and personal reasons and management of bank-owned properties. The net residual effect of the transfer pricing of assets and liabilities is included in Treasury and Other, along with the elimination of intercompany transactions.

Other organizational units (Technology, Operations, Credit and Risk Management, Human Resources, Finance, Administration, Marketing and Corporate and Regulatory Administration) provide a wide range of support to our other income earning segments. Expenses incurred by these support units are charged to the applicable business segments through an internal cost allocation process.

Net income for the Treasury and Other segment was $1.8 million for the three months ended June 30, 2023, an increase of $7.0 million as compared to the same period in 2022. The increase in net income for the Treasury and Other segment was primarily due to a $13.3 million increase in net interest income and a $3.2 million increase in noninterest income. This was partially offset by a $7.3 million increase in noninterest expense and a $2.1 million increase in the provision for income taxes. The increase in net interest income was primarily due to an increase in net transfer pricing credits that reside in the Treasury and Other segment and higher yields on our interest-bearing deposits in other banks, partially offset by an increase in interest expense from public deposits and higher borrowings costs. The increase in noninterest income was primarily due to increases in BOLI income and market adjustments on mutual funds purchased, partially offset by an increase in net losses recognized in income related to derivative contracts. The increase in noninterest expense was primarily due to increases in salaries and benefits expense, equipment expense and a lower credit allocation to the Treasury and Other segment. This was partially offset by a decrease in contracted services and professional fees. The increase in the provision for income taxes was primarily due to the increase in pretax income.

Net income for the Treasury and Other segment was $6.2 million for the six months ended June 30, 2023, an increase of $13.1 million as compared to the same period in 2022. The increase in net income was primarily due to a $25.9 million increase in net interest income and a $10.7 million increase in noninterest income. This was partially offset by a $15.0 million increase in noninterest expense and a $4.8 million increase in the provision for income taxes, in addition to a Provision of $2.4 million for the six months ended June 30, 2023, compared to a negative Provision of $1.4 million for the six months ended June 30, 2022. The increase in net interest income was primarily due to an increase in net transfer pricing credits that reside in the Treasury and Other segment and higher yields on interest-bearing deposits in other banks and our investment securities portfolio, partially offset by an increase in interest expense from public deposits and higher borrowing costs. The increase in noninterest income was primarily due to increases in BOLI income and market adjustments on mutual funds purchased and income due to adjustments to certain liabilities assumed as a result of the Reorganization Transactions, partially offset by an increase in net losses recognized in income related to derivative contracts. The increase in noninterest expense was primarily due to increases in equipment expense and salaries and benefits expense, in addition to a lower credit allocation to the Treasury and Other segment. This was partially offset by a decrease in contracted services and professional fees. The increase in the provision for income taxes was primarily due to the increase in pretax income. The increase in the Provision was primarily due to increases in the provision for unfunded construction and home equity commitments.

### Analysis of Financial Condition

### Liquidity and Capital Resources

Liquidity refers to our ability to maintain cash flow that is adequate to fund operations and meet present and future financial obligations through either the sale or maturity of existing assets or by obtaining additional funding through liability management. We consider the effective and prudent management of liquidity to be fundamental to our health and strength. Our objective is to manage our cash flow and liquidity reserves so that they are adequate to fund our obligations and other commitments on a timely basis and at a reasonable cost.

Liquidity is managed to ensure stable, reliable and cost-effective sources of funds to satisfy demand for credit, deposit withdrawals and investment opportunities. Funding requirements are impacted by loan originations and refinancings, deposit balance changes, liability issuances and settlements and off-balance sheet funding commitments. We consider and comply with various regulatory and internal guidelines regarding required liquidity levels and periodically monitor our liquidity position in light of the changing economic environment and customer activity. Based on periodic liquidity assessments, we may alter our asset, liability and off-balance sheet positions. The Company’s Asset Liability Management Committee (“ALCO”) monitors sources and uses of funds and modifies asset and liability positions as liquidity requirements change. This process, combined with our ability to raise funds in money and capital markets and through private placements, provides flexibility in managing the exposure to liquidity risk.

Immediate liquid resources are available in cash, which is primarily on deposit with the Federal Reserve Bank of San Francisco (the “FRB”). As of June 30, 2023 and December 31, 2022, cash and cash equivalents were $0.6 billion and $0.5 billion, respectively. Potential sources of liquidity also include investment securities in our available-for-sale portfolio and held-to-maturity portfolio. The carrying values of our available-for-sale investment securities and held-to-maturity investment securities were $2.9 billion and $4.2 billion as of June 30, 2023, respectively. The carrying values of our available-for-sale investment securities and held-to-maturity investment securities were $3.2 billion and $4.3 billion as of December 31, 2022, respectively. As of June 30, 2023 and December 31, 2022, we maintained our excess liquidity primarily in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac and mortgage-backed securities issued by Ginnie Mae, Freddie Mac, Fannie Mae, Municipal Housing Authorities and non-agency entities. As of June 30, 2023, our available-for-sale investment securities portfolio was comprised of securities with a weighted average life of approximately 4.2 years and our held-to-maturity investment securities portfolio was comprised of securities with a weighted average life of approximately 8.1 years. These funds offer substantial resources to meet either new loan demand or to help offset reductions in our deposit funding base as they provide quick sources of liquidity by pledging to obtain secured borrowings and repurchase agreements or sales of our available-for-sale securities portfolio. Our available-for-sale investment securities portfolio and our held-to-maturity investment securities portfolio could also be used to support borrowings through the Federal Reserve’s new Bank Term Funding Program (“BTFP”). Under the program, eligible depository institutions can obtain loans of up to one year in length by pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. Although the Bank currently has no intention to borrow funds under the program, the BTFP is available and intended to provide depository institutions with liquidity so as to avoid selling securities at market values below cost. Liquidity is further enhanced by our ability to pledge loans to access secured borrowings from the FHLB and the FRB. As of June 30, 2023, we have borrowing capacity of $2.9 billion from the FHLB and $3.8 billion from the FRB based on the amount of collateral pledged.

Our core deposits have historically provided us with a long-term source of stable and relatively lower cost of funding. Our core deposits, defined as all deposits exclusive of time deposits exceeding $250,000, totaled $18.9 billion and $20.2 billion as of June 30, 2023 and December 31, 2022, respectively, which represented 90% and 93% of our total deposits as of June 30, 2023 and December 31, 2022, respectively. These core deposits are normally less volatile, often with customer relationships tied to other products offered by the Company; however, deposit levels could decrease if interest rates increase significantly or if corporate customers increase investing activities, including alternative investment options, that reduce deposit balances.

In March 2023, to enhance liquidity as a precaution in light of recent volatility in the banking sector, the Bank took $500.0 million in FHLB advances. For information with respect to the financial terms of such advances, see “ – Short-term and Long-term Borrowings.” We also utilize short-term advances to help manage liquidity needs that may arise from time to time.

The Company’s routine funding requirements are expected to consist primarily of general corporate needs and capital to be returned to our shareholders. We expect to meet these obligations from dividends paid by the Bank to the Parent. Additional sources of liquidity available to us include selling residential real estate loans in the secondary market, taking out short- and long-term borrowings and issuing long-term debt and equity securities.

Our material cash requirements from our current and long-term contractual obligations have not changed materially since previously reported as of December 31, 2022. We believe that our existing cash, cash equivalents, investments, and cash expected to be generated from operations, are still sufficient to meet our cash requirements within the next 12 months and beyond.

### Potential Demands on Liquidity from Off-Balance Sheet Arrangements

We have off-balance sheet arrangements, such as variable interest entities, guarantees, and certain financial instruments with off-balance sheet risk, that may affect the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

### Variable Interest Entities

We hold interests in several unconsolidated variable interest entities (“VIEs”). These unconsolidated VIEs are primarily low-income housing tax credit investments in partnerships and limited liability companies. Variable interests are defined as contractual ownership or other interests in an entity that change with fluctuations in an entity’s net asset value. The primary beneficiary consolidates the VIE. Based on our analysis, we have determined that the Company is not the primary beneficiary of these entities. As a result, we do not consolidate these VIEs. Unfunded commitments to fund these low-income housing tax credit investments were $40.6 million and $47.2 million as of June 30, 2023 and December 31, 2022, respectively.

### Guarantees

We sell residential mortgage loans on the secondary market, primarily to Fannie Mae or Freddie Mac. The agreements under which we sell residential mortgage loans to Fannie Mae or Freddie Mac contain provisions that include various representations and warranties regarding the origination and characteristics of the residential mortgage loans. Although the specific representations and warranties vary among investors, insurance or guarantee agreements, they typically cover ownership of the loan, validity of the lien securing the loan, the absence of delinquent taxes or liens against the property securing the loan, compliance with loan criteria set forth in the applicable agreement, compliance with applicable federal, state and local laws and other matters. The unpaid principal balance of our portfolio of residential mortgage loans sold was $1.4 billion as of both June 30, 2023 and December 31, 2022. The agreements under which we sell residential mortgage loans require delivery of various documents to the investor or its document custodian. Although these loans are primarily sold on a non-recourse basis, we may be obligated to repurchase residential mortgage loans or reimburse investors for losses incurred if a loan review reveals that underwriting and documentation standards were potentially not met in the origination of those loans. Upon receipt of a repurchase request, we work with investors to arrive at a mutually agreeable resolution. Repurchase demands are typically reviewed on an individual loan by loan basis to validate the claims made by the investor to determine if a contractually required repurchase event has occurred. We manage the risk associated with potential repurchases or other forms of settlement through our underwriting and quality assurance practices and by servicing mortgage loans to meet investor and secondary market standards. For the six months ended June 30, 2023, there was one residential mortgage loan repurchase totaling $0.2 million and there were no pending repurchase requests.

In addition to servicing loans in our portfolio, substantially all of the loans we sell to investors are sold with servicing rights retained. We also service loans originated by other mortgage loan originators. As servicer, our primary duties are to: (1) collect payments due from borrowers; (2) advance certain delinquent payments of principal and interest; (3) maintain and administer any hazard, title or primary mortgage insurance policies relating to the mortgage loans; (4) maintain any required escrow accounts for payment of taxes and insurance and administer escrow payments; and (5) foreclose on defaulted mortgage loans, or loan modifications or short sales. Each agreement under which we act as servicer generally specifies a standard of responsibility for actions taken by the Company in such capacity and provides protection against expenses and liabilities incurred by the Company when acting in compliance with the respective servicing agreements. However, if we commit a material breach of obligations as servicer, we may be subject to termination if the breach is not cured within a specified period following notice. The standards governing servicing and the possible remedies for violations of such standards vary by investor. These standards and remedies are determined by servicing guides issued by the investors as well as the contract provisions established between the investors and the Company. Remedies could include repurchase of an affected loan. For the six months ended June 30, 2023, we had no repurchase requests related to loan servicing activities, nor were there any pending repurchase requests as of June 30, 2023.

Although to-date repurchase requests related to representation and warranty provisions and servicing activities have been limited, it is possible that requests to repurchase mortgage loans may increase in frequency as investors more aggressively pursue all means of recovering losses on their purchased loans. However, as of June 30, 2023, management believes that this exposure is not material due to the historical level of repurchase requests and loss trends and thus has not established a liability for losses related to mortgage loan repurchases. As of June 30, 2023, 99% of our residential mortgage loans serviced for investors were current. We maintain ongoing communications with investors and continue to evaluate this exposure by monitoring the level and number of repurchase requests as well as the delinquency rates in loans sold to investors.

### Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby and commercial letters of credit which are not reflected in the consolidated financial statements.

See “Note 13. Commitments and Contingent Liabilities” contained in our unaudited interim consolidated financial statements for more information on our financial instruments with off-balance sheet risk.

### Investment Securities

Table 12 presents the estimated fair value of our available-for-sale investment securities portfolio and amortized cost of our held-to-maturity investment securities portfolio as of June 30, 2023 and December 31, 2022:

*(dollars in thousands)*

| ​ Investment Securities ​ | ​ ​ ​ | ​ ​ ​ ​ June 30, 2023 | ​ ​ ​ ​ | ​ ​ ​ Table 12 December 31, 2022 |
| --- | --- | --- | --- | --- |
| U.S. Treasury and government agency debt securities | ​ | **$116,885** | **​** | $150,982 |
| Government-sponsored enterprises debt securities | ​ | ​ **44,240** | **​** | ​ 44,301 |
| Mortgage-backed securities: | ​ | ​ **​** | **​** | ​ ​ |
| Residential - Government agency | ​ | ​ **57,202** | **​** | ​ 59,723 |
| Residential - Government-sponsored enterprises | ​ | ​ **1,082,992** | **​** | ​ 1,160,455 |
| Commercial - Government agency | ​ | ​ **225,462** | **​** | ​ 237,853 |
| Commercial - Government-sponsored enterprises | ​ | ​ **87,897** | **​** | ​ 119,573 |
| Commercial - Non-agency | ​ | ​ **21,379** | **​** | ​ 21,471 |
| Collateralized mortgage obligations: | ​ | ​ **​** | **​** | ​ ​ |
| Government agency | ​ | ​ **605,221** | **​** | ​ 653,322 |
| Government-sponsored enterprises | ​ | ​ **427,480** | **​** | ​ 462,132 |
| Collateralized loan obligations | ​ | ​ **240,614** | **​** | ​ 241,321 |
| **Total available-for-sale securities** | **​** | **$2,909,372** | **​** | $3,151,133 |
| ​ | ​ | ​ ​ | ​ | ​ ​ |
| Government agency debt securities | ​ | **$53,189** | **​** | $54,318 |
| Mortgage-backed securities: | ​ | ​ **​** | **​** | ​ ​ |
| Residential - Government agency | ​ | ​ **45,097** | **​** | ​ 46,302 |
| Residential - Government-sponsored enterprises | ​ | ​ **102,940** | **​** | ​ 106,534 |
| Commercial - Government agency | ​ | ​ **30,675** | **​** | ​ 30,544 |
| Commercial - Government-sponsored enterprises | ​ | ​ **1,137,157** | **​** | ​ 1,150,449 |
| Collateralized mortgage obligations: | ​ | ​ **​** | **​** | ​ ​ |
| Government agency | ​ | ​ **1,036,671** | **​** | ​ 1,080,492 |
| Government-sponsored enterprises | ​ | ​ **1,720,672** | **​** | ​ 1,798,178 |
| Debt securities issued by states and political subdivisions | ​ | ​ **54,007** | **​** | ​ 53,822 |
| **Total held-to-maturity securities** | **​** | **$4,180,408** | **​** | $4,320,639 |

Table 13 presents the maturity distribution at amortized cost and weighted-average yield to maturity of our investment securities portfolio as of June 30, 2023:

*(dollars in millions)*

| ​ Maturities and Weighted-Average Yield on Securities(1) ​ ​ ​ As of June 30, 2023 Available-for-sale securities | ​ ​ ​ ​ ​ ​ | ​ ​ 1 Year or Less ​ ​ Amount ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ Weighted ​ Average ​ Yield ​ ​ ​ ​ ​ | ​ ​ After 1 Year - 5 Years ​ ​ Amount ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ Weighted ​ Average ​ Yield ​ ​ ​ ​ ​ | ​ ​ After 5 Years - 10 Years ​ ​ Amount ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ Weighted ​ Average ​ Yield ​ ​ ​ ​ ​ | ​ ​ Over 10 Years ​ ​ Amount ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ Weighted ​ Average ​ Yield ​ ​ ​ ​ ​ | ​ ​ Total ​ ​ Amount ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ Weighted ​ Average ​ Yield ​ ​ ​ ​ ​ | ​ ​ ​ Table 13 ​ ​ Fair Value ​ ​ ​ ​ |
| --- | --- | --- | --- | ---: | --- | --- | ---: | --- | --- | ---: | --- | --- | ---: | --- | --- | ---: | --- |
| U.S. Treasury and government agency debt securities | **​** | **$19.8** | **​** | **1.53%** | **$40.6** | **​** | **1.97%** | **$68.2** | **​** | **1.03%** | **$—** | **​** | **—%** | **$128.6** | **​** | **1.40%** | **$116.9** |
| Government-sponsored enterprises debt securities | ​ | ​ **25.0** | ​ | **3.30** ​ | ​ **20.0** | ​ | **3.33** ​ | ​ **—** | ​ | **—** ​ | ​ **—** | ​ | **—** ​ | ​ **45.0** | ​ | **3.31** ​ | ​ **44.2** |
| Mortgage-backed securities: | ​ | ​ **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** |
| Residential - Government agency(2) | ​ | ​ **—** | **​** | **—** **​** | **​** **—** | **​** | **—** **​** | **​** **63.5** | **​** | **2.33** **​** | **​** **—** | **​** | **—** **​** | **​** **63.5** | **​** | **2.33** **​** | **​** **57.2** |
| Residential - Government-sponsored enterprises(2) | ​ | ​ **—** | **​** | **—** **​** | **​** **1,168.2** | **​** | **1.63** **​** | **​** **61.2** | **​** | **1.73** **​** | **​** **—** | **​** | **—** **​** | **​** **1,229.4** | **​** | **1.63** **​** | **​** **1,083.0** |
| Commercial - Government agency(2) | ​ | ​ **4.4** | **​** | **3.19** **​** | **​** **237.4** | **​** | **1.88** **​** | **​** **34.6** | **​** | **1.76** **​** | **​** **—** | **​** | **—** **​** | **​** **276.4** | **​** | **1.88** **​** | **​** **225.5** |
| Commercial - Government-sponsored enterprises(2) | ​ | ​ **29.3** | **​** | **2.90** **​** | **​** **67.1** | **​** | **1.36** **​** | **​** **—** | **​** | **—** **​** | **​** **—** | **​** | **—** **​** | **​** **96.4** | **​** | **1.83** **​** | **​** **87.9** |
| Commercial - Non-agency | ​ | ​ **—** | **​** | **—** **​** | **​** **—** | **​** | **—** **​** | **​** **—** | **​** | **—** **​** | **​** **22.0** | **​** | **5.83** **​** | **​** **22.0** | **​** | **5.83** **​** | **​** **21.4** |
| Collateralized mortgage obligations(2): | ​ | ​ **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** |
| Government agency | ​ | ​ **5.3** | **​** | **1.80** **​** | **​** **274.0** | **​** | **2.05** **​** | **​** **409.5** | **​** | **1.79** **​** | **​** **—** | **​** | **—** **​** | **​** **688.8** | **​** | **1.89** **​** | **​** **605.2** |
| Government-sponsored enterprises | ​ | ​ **3.0** | **​** | **1.94** **​** | **​** **325.7** | **​** | **1.39** **​** | **​** **168.1** | **​** | **1.82** **​** | **​** **—** | **​** | **—** **​** | **​** **496.8** | **​** | **1.54** **​** | **​** **427.5** |
| Collateralized loan obligations | ​ | ​ **—** | **​** | **—** **​** | **​** **—** | **​** | **—** **​** | **​** **107.0** | **​** | **6.33** **​** | **​** **142.9** | **​** | **5.80** **​** | **​** **249.9** | **​** | **6.03** **​** | **​** **240.6** |
| **Total available-for-sale securities as of June 30, 2023** | ​ | **$86.8** | **​** | **2.62%** | **$2,133.0** | **​** | **1.69%** | **$912.1** | **​** | **2.30%** | **$164.9** | **​** | **5.81%** | **$3,296.8** | **​** | **2.09%** | **$2,909.4** |
| **Held-to-maturity securities** | **​** | **​** **​** | **​** | **​** ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ ​ |
| Government agency debt securities | **​** | **$—** | **​** | **—%** | **$—** | **​** | **—%** | **$—** | **​** | **—%** | **$53.2** | **​** | **1.58%** | **$53.2** | **​** | **1.58%** | **$47.5** |
| Mortgage-backed securities(2): | ​ | ​ **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** |
| Residential - Government agency | ​ | ​ **—** | **​** | **—** **​** | **​** **—** | **​** | **—** **​** | **​** **45.1** | **​** | **2.14** **​** | **​** **—** | **​** | **—** **​** | **​** **45.1** | **​** | **2.14** **​** | **​** **39.6** |
| Residential - Government-sponsored enterprises | ​ | ​ **—** | **​** | **—** **​** | **​** **—** | **​** | **—** **​** | **​** **25.9** | **​** | **1.76** **​** | **​** **77.0** | **​** | **1.54** **​** | **​** **102.9** | **​** | **1.59** **​** | **​** **91.1** |
| Commercial - Government agency | ​ | ​ **—** | **​** | **—** **​** | **​** **6.2** | **​** | **1.62** **​** | **​** **24.5** | **​** | **2.00** **​** | **​** **—** | **​** | **—** **​** | **​** **30.7** | **​** | **1.92** **​** | **​** **24.3** |
| Commercial - Government-sponsored enterprises | ​ | ​ **—** | **​** | **—** **​** | **​** **59.7** | **​** | **1.42** **​** | **​** **532.1** | **​** | **1.78** **​** | **​** **545.4** | **​** | **2.26** **​** | **​** **1,137.2** | **​** | **1.99** **​** | **​** **1,007.4** |
| Collateralized mortgage obligations(2): | ​ | ​ **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** | **​** | **​** **​** | **​** **​** |
| Government agency | ​ | ​ **—** | **​** | **—** **​** | **​** **—** | **​** | **—** **​** | **​** **909.6** | **​** | **1.39** **​** | **​** **127.0** | **​** | **1.36** **​** | **​** **1,036.6** | **​** | **1.39** **​** | **​** **917.2** |
| Government-sponsored enterprises | ​ | ​ **—** | **​** | **—** **​** | **​** **208.0** | **​** | **1.58** **​** | **​** **1,347.2** | **​** | **1.50** **​** | **​** **165.5** | **​** | **1.38** **​** | **​** **1,720.7** | **​** | **1.49** **​** | **​** **1,522.2** |
| Debt securities issued by state and political subdivisions | ​ | ​ **—** | **​** | **—** **​** | **​** **—** | **​** | **—** **​** | **​** **10.2** | **​** | **2.08** **​** | **​** **43.8** | **​** | **2.32** **​** | **​** **54.0** | **​** | **2.27** **​** | **​** **48.0** |
| **Total held-to-maturity securities as of June 30, 2023** | ​ | **$—** | **​** | **—%** | **$273.9** | **​** | **1.55%** | **$2,894.6** | **​** | **1.53%** | **$1,011.9** | **​** | **1.91%** | **$4,180.4** | **​** | **1.63%** | **$3,697.3** |

(1) Weighted-average yields were computed on a fully taxable-equivalent basis.

(2) Maturities for mortgage-backed securities and collateralized mortgage obligations anticipate future prepayments.

The carrying value of our investment securities portfolio was $7.1 billion as of June 30, 2023, a decrease of $382.0 million or 5% compared to December 31, 2022. Our available-for-sale investment securities are carried at fair value with changes in fair value reflected in other comprehensive income or through the Provision. Our held-to-maturity investment securities are carried at amortized cost.

During the year ended December 31, 2022, we reclassified at fair value $4.6 billion in available-for-sale investment securities to the held-to-maturity category. The related total unrealized after-tax losses of approximately $372.4 million remained in accumulated other comprehensive loss to be amortized over the estimated remaining life of the securities as an adjustment of yield, offsetting the related accretion of the discount on the transferred securities. No gains or losses were recognized at the time of reclassification. In addition, we consider the held-to-maturity classification of these investment securities to be appropriate as there is both the positive intent and ability to hold these securities to maturity. There were no securities transferred from available-for-sale investment securities to the held-to-maturity category during the three and six months ended June 30, 2023.

As of June 30, 2023, we maintained all of our investment securities in either the available-for-sale category (recorded at fair value) or the held-to-maturity category (recorded at amortized cost) in the unaudited interim consolidated balance sheets, with $3.8 billion invested in collateralized mortgage obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac. Our investment securities portfolio also included $2.8 billion in mortgage-backed securities issued by Ginnie Mae, Freddie Mac, Fannie Mae, Municipal Housing Authorities and non-agency entities, $240.6 million in collateralized loan obligations, $214.3 million in debt securities issued by the U.S. Treasury, government agencies (U.S. International Development Finance Corporation bonds) and government-sponsored enterprises and $54.0 million in debt securities issued by states and political subdivisions.

We continually evaluate our investment securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability and the level of interest rate risk to which we are exposed. These evaluations may cause us to change the level of funds we deploy into investment securities and change the composition of our investment securities portfolio.

Gross unrealized gains in our investment securities portfolio were $0.2 million and $0.1 million as of June 30, 2023 and December 31, 2022, respectively. Gross unrealized losses in our investment securities portfolio were $870.8 million and $904.3 million as of June 30, 2023 and December 31, 2022, respectively. The lower gross unrealized loss position was primarily due to paydowns in our investment securities portfolio.

For our available-for-sale investment securities, we conduct a regular assessment of our investment securities portfolio to determine whether any securities are impaired. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through the allowance for credit losses is recognized in other comprehensive income. For the three and six months ended June 30, 2023, we did not record any credit losses related to our available-for-sale investment securities portfolio.

For our held-to-maturity investment securities, we utilize the Current Expected Credit Loss (“CECL”) approach to estimate lifetime expected credit losses. Substantially all of our held-to-maturity securities are issued by the U.S. Government, its agencies and government-sponsored enterprises. These securities have a long history of no credit losses and carry the explicit or implicit guarantee of the U.S. government. Therefore, as of June 30, 2023, we did not record an allowance for credit losses related to our held-to-maturity investment securities portfolio.

We are required to hold non-marketable equity securities, comprised of FHLB stock, as a condition of our membership in the FHLB system. Our FHLB stock is accounted for at cost, which equals par or redemption value. As of June 30, 2023 and December 31, 2022, we held $26.1 million and $10.1 million in FHLB stock, respectively, which is recorded as a component of other assets in our unaudited interim consolidated balance sheets.

See “Note 2. Investment Securities” contained in our unaudited interim consolidated financial statements for more information on our investment securities portfolio.

### Loans and Leases

Table 14 presents the composition of our loan and lease portfolio by major categories as of June 30, 2023 and December 31, 2022:

*(dollars in thousands)*

| ​ Loans and Leases ​ Commercial and industrial: | ​ ​ ​ ​ | ​ ​ ​ ​ June 30, 2023 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ Table 14 December 31, 2022 ​ ​ |
| --- | --- | --- | --- | --- |
| Commercial and industrial excluding Paycheck Protection Program loans | ​ | **$2,175,841** | **​** | $2,217,604 |
| Paycheck Protection Program loans | ​ | ​ **11,990** | **​** | **​** 18,293 |
| Total commercial and industrial | ​ | ​ **2,187,831** | **​** | **​** 2,235,897 |
| Commercial real estate | ​ | ​ **4,290,948** | **​** | **​** 4,132,309 |
| Construction | ​ | ​ **913,837** | **​** | **​** 844,643 |
| Residential: | ​ | ​ **​** | **​** | **​** ​ |
| Residential mortgage | ​ | ​ **4,317,537** | **​** | **​** 4,302,788 |
| Home equity line | ​ | ​ **1,138,163** | **​** | **​** 1,055,351 |
| Total residential | ​ | ​ **5,455,700** | **​** | **​** 5,358,139 |
| Consumer | ​ | ​ **1,182,116** | **​** | **​** 1,222,934 |
| Lease financing | ​ | **​** **332,400** | **​** | ​ 298,090 |
| **Total loans and leases** | ​ | **$14,362,832** | ​ | $14,092,012 |

Total loans and leases were $14.4 billion as of June 30, 2023, an increase of $270.8 million or 2% from December 31, 2022. The increase in total loans and leases was primarily due to increases in commercial real estate loans, construction loans, residential real estate loans and lease financing, partially offset by decreases in commercial and industrial loans and consumer loans.

Commercial and industrial loans are made primarily to corporations, middle market and small businesses for the purpose of financing equipment acquisition, expansion, working capital and other general business purposes. We also offer a variety of automobile dealer flooring lines to our customers in Hawaii and California to assist with the financing of their inventory. Commercial and industrial loans were $2.2 billion as of June 30, 2023, a decrease of $48.1 million or 2% from December 31, 2022.

Commercial real estate loans are secured by first mortgages on commercial real estate at loan to value (“LTV”) ratios generally not exceeding 75% and a minimum debt service coverage ratio of 1.20 to 1. The commercial properties are predominantly apartments, neighborhood and grocery anchored retail, industrial, office, and to a lesser extent, specialized properties such as hotels. The primary source of repayment for investor property and owner-occupied property is cash flow from the property and operating cash flow from the business, respectively. Commercial real estate loans were $4.3 billion as of June 30, 2023, an increase of $158.6 million or 4% from December 31, 2022. This increase was primarily due to $130.0 million in completed construction loans that were converted to commercial real estate loans during the six months ended June 30, 2023.

Construction loans are for the purchase or construction of a property for which repayment will be generated by the property. Loans in this portfolio are primarily for the purchase of land, as well as for the development of commercial properties, single family homes and condominiums. We classify loans as construction until the completion of the construction phase. Following completion of the construction phase, if a loan is retained by the Bank, the loan is converted to the commercial real estate or residential real estate classes of loans. Construction loans were $913.8 million as of June 30, 2023, an increase of $69.2 million or 8% from December 31, 2022. The increase in construction loans was primarily due to draws on existing lines, partially offset by the completion of $130.0 million in construction loans mentioned above during the six months ended June 30, 2023.

Residential real estate loans are generally secured by 1-4 unit residential properties and are underwritten using traditional underwriting systems to assess the credit risks and financial capacity and repayment ability of the consumer. Decisions are primarily based on LTV ratios, debt-to-income (“DTI”) ratios, liquidity and credit scores. LTV ratios generally do not exceed 80%, although higher levels are permitted with mortgage insurance. We offer fixed rate mortgage products and variable rate mortgage products including HELOC. Since our transition from LIBOR, which commenced in late 2021, we now offer variable rate mortgage products based on SOFR with interest rates that are subject to change every six months, after the third, fifth, seventh or tenth year, depending on the product. Prior to this, we offered variable rate mortgage products based on LIBOR with interest rates that were subject to change every year, after the first, third, fifth or tenth year, depending on the product. Variable rate residential mortgage loans are underwritten at fully-indexed interest rates. We generally do not offer interest-only, payment-option facilities, Alt-A loans or any product with negative amortization. Residential real estate loans were $5.5 billion as of June 30, 2023, an increase of $97.6 million or 2% from December 31, 2022.

Consumer loans consist primarily of open- and closed-end direct and indirect credit facilities for personal, automobile and household purchases as well as credit card loans. We seek to maintain reasonable levels of risk in consumer lending by following prudent underwriting guidelines, which include an evaluation of personal credit history, cash flow and collateral values based on existing market conditions. Consumer loans were $1.2 billion as of June 30, 2023, a decrease of $40.8 million or 3% from December 31, 2022.

Lease financing consists of commercial single investor leases and leveraged leases. Underwriting of new lease transactions is based on our lending policy, including but not limited to an analysis of customer cash flows and secondary sources of repayment, including the value of leased equipment, the guarantors’ cash flows and/or other credit enhancements. No new leveraged leases are being added to the portfolio and all remaining leveraged leases are running off. Lease financing was $332.4 million as of June 30, 2023, an increase of $34.3 million or 12% from December 31, 2022. The increase was primarily due to the closing of several large lease transactions during the six months ended June 30, 2023.

See “Note 3. Loans and Leases” and “Note 4. Allowance for Credit Losses” contained in our unaudited interim consolidated financial statements and the discussion in “Analysis of Financial Condition — Allowance for Credit Losses” of this MD&A for more information on our loan and lease portfolio.

The Company’s loan and lease portfolio includes adjustable-rate loans, primarily tied to SOFR, LIBOR and Prime, hybrid-rate loans, for which the initial rate is fixed for a period from one year to as much as ten years, and fixed rate loans, for which the interest rate does not change through the life of the loan or the remaining life of the loan. Table 15 presents the recorded investment in our loan and lease portfolio as of June 30, 2023 by rate type:

*(dollars in thousands)*

| ​ Loans and Leases by Rate Type ​ ​ | ​ ​ ​ | ​ ​ ​ June 30, 2023 Adjustable Rate Prime | ​ ​ ​ LIBOR | ​ ​ ​ Treasury | ​ ​ ​ SOFR | ​ ​ ​ BSBY | ​ ​ ​ Other | ​ ​ ​ ​ Total | ​ ​ ​ Hybrid ​ Rate | ​ ​ ​ ​ Fixed ​ Rate | ​ ​ ​ ​ Table 15 ​ ​ ​ Total ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Commercial and industrial | ​ | **$292,241** **​** | **$286,841** **​** | **$—** **​** | **$788,781** **​** | **$115,406** **​** | **$375,311** **​** | **$1,858,580** **​** | **$28,482** **​** | **$300,769** **​** | **$2,187,831** ​ |
| Commercial real estate | ​ | **​** **431,662** **​** | **​** **1,000,614** **​** | **​** **—** **​** | **​** **1,336,117** **​** | **​** **145,369** **​** | **​** **873,752** **​** | **​** **3,787,514** **​** | **​** **138,663** **​** | **​** **364,771** **​** | **​** **4,290,948** ​ |
| Construction | ​ | **​** **98,684** **​** | **​** **159,981** **​** | **​** **12** **​** | **​** **423,556** **​** | **​** **50,775** **​** | **​** **15,582** **​** | **​** **748,590** **​** | **​** **6,574** **​** | **​** **158,673** **​** | **​** **913,837** ​ |
| Residential: | ​ | **​** **​** **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** ​ |
| Residential mortgage | ​ | **​** **18,120** **​** | **​** **98,508** **​** | **​** **15,816** **​** | **​** **140,697** **​** | **​** **—** **​** | **​** **71,866** **​** | **​** **345,007** **​** | **​** **505,339** **​** | **​** **3,467,191** **​** | **​** **4,317,537** ​ |
| Home equity line | ​ | **​** **1,028** **​** | **​** **—** **​** | **​** **92** **​** | **​** **—** **​** | **​** **—** **​** | **​** **—** **​** | **​** **1,120** **​** | **​** **879,345** **​** | **​** **257,698** **​** | **​** **1,138,163** ​ |
| Total residential | ​ | **​** **19,148** **​** | **​** **98,508** **​** | **​** **15,908** **​** | **​** **140,697** **​** | **​** **—** **​** | **​** **71,866** **​** | **​** **346,127** **​** | **​** **1,384,684** **​** | **​** **3,724,889** **​** | **​** **5,455,700** ​ |
| Consumer | ​ | **​** **328,934** **​** | **​** **—** **​** | **​** **1,059** **​** | **​** **—** **​** | **​** **207** **​** | **​** **1,169** **​** | **​** **331,369** **​** | **​** **3,735** **​** | **​** **847,012** **​** | **​** **1,182,116** ​ |
| Lease financing | ​ | **​** **—** **​** | **​** **—** **​** | **​** **—** **​** | **​** **—** **​** | **​** **—** **​** | **​** **—** **​** | **​** **—** **​** | **​** **—** **​** | **​** **332,400** **​** | **​** **332,400** ​ |
| **Total loans and leases** | **​** | **$1,170,669** **​** | **$1,545,944** **​** | **$16,979** **​** | **$2,689,151** **​** | **$311,757** **​** | **$1,337,680** **​** | **$7,072,180** **​** | **$1,562,138** **​** | **$5,728,514** **​** | **$14,362,832** ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ |
| % by rate type at June 30, 2023 | ​ | **​** **8%** | **​** **11%** | **​** **1%** | **​** **18%** | **​** **2%** | **​** **9%** | **​** **49%** | **​** **11%** | **​** **40%** | **​** **100%** |

Tables 16 and 17 present the geographic distribution of our loan and lease portfolio as of June 30, 2023 and December 31, 2022:

*(dollars in thousands)*

| ​ Geographic Distribution of Loan and Lease Portfolio ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ June 30, 2023 ​ ​ Hawaii | ​ ​ ​ | ​ ​ ​ ​ U.S. Mainland(1) | ​ ​ ​ | ​ ​ ​ ​ Guam & Saipan | ​ ​ ​ | ​ ​ ​ ​ Foreign & Other | ​ ​ ​ | ​ ​ ​ Table 16 ​ ​ Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Commercial and industrial | **​** | **$901,775** | **​** | **$1,171,086** | **​** | **$81,245** | **​** | **$33,725** | **​** | **$2,187,831** |
| Commercial real estate | ​ | **​** **2,361,587** | **​** | **​** **1,553,816** | **​** | **​** **375,545** | **​** | **​** **—** | **​** | **​** **4,290,948** |
| Construction | ​ | **​** **430,732** | **​** | **​** **470,476** | **​** | **​** **12,629** | **​** | **​** **—** | **​** | **​** **913,837** |
| Residential: | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| Residential mortgage | ​ | **​** **4,167,606** | **​** | **​** **437** | **​** | **​** **149,494** | **​** | **​** **—** | **​** | **​** **4,317,537** |
| Home equity line | ​ | **​** **1,097,437** | **​** | **​** **479** | **​** | **​** **40,247** | **​** | **​** **—** | **​** | **​** **1,138,163** |
| Total residential | ​ | **​** **5,265,043** | **​** | **​** **916** | **​** | **​** **189,741** | **​** | **​** **—** | **​** | **​** **5,455,700** |
| Consumer | ​ | **​** **839,522** | **​** | **​** **39,877** | **​** | **​** **300,462** | **​** | **​** **2,255** | **​** | **​** **1,182,116** |
| Lease financing | ​ | **​** **115,754** | **​** | **​** **200,036** | **​** | **​** **16,610** | **​** | **​** **—** | **​** | **​** **332,400** |
| **Total Loans and Leases** | **​** | **$9,914,413** | **​** | **$3,436,207** | **​** | **$976,232** | **​** | **$35,980** | **​** | **$14,362,832** |
| **Percentage of Total Loans and Leases** | **​** | **​** **69%** | **​** | **​** **24%** | **​** | **​** **6%** | **​** | **​** **1%** | **​** | **​** **100%** |

(1) For secured loans and leases, classification as U.S. Mainland is made based on where the collateral is located. For unsecured loans and leases, classification as U.S. Mainland is made based on the location where the majority of the borrower’s business operations are conducted.

*(dollars in thousands)*

| ​ Geographic Distribution of Loan and Lease Portfolio ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ December 31, 2022 ​ ​ Hawaii | ​ ​ ​ | ​ ​ ​ ​ U.S. Mainland(1) | ​ ​ ​ | ​ ​ ​ ​ Guam & Saipan | ​ ​ ​ | ​ ​ ​ ​ Foreign & Other | ​ ​ ​ | ​ ​ ​ Table 17 ​ ​ Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Commercial and industrial | ​ | $917,232 | ​ | $1,192,766 | ​ | $98,601 | ​ | $27,298 | ​ | $2,235,897 |
| Commercial real estate | ​ | ​ 2,306,075 | ​ | ​ 1,435,512 | ​ | ​ 390,722 | ​ | ​ — | ​ | ​ 4,132,309 |
| Construction | ​ | ​ 361,899 | ​ | ​ 475,744 | ​ | ​ 7,000 | ​ | ​ — | ​ | ​ 844,643 |
| Residential: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Residential mortgage | ​ | ​ 4,152,272 | ​ | ​ 452 | ​ | ​ 150,064 | ​ | ​ — | ​ | ​ 4,302,788 |
| Home equity line | ​ | ​ 1,020,538 | ​ | ​ — | ​ | ​ 34,813 | ​ | ​ — | ​ | ​ 1,055,351 |
| Total residential | ​ | ​ 5,172,810 | ​ | ​ 452 | ​ | ​ 184,877 | ​ | ​ — | ​ | ​ 5,358,139 |
| Consumer | ​ | ​ 877,550 | ​ | ​ 41,647 | ​ | ​ 300,324 | ​ | ​ 3,413 | ​ | ​ 1,222,934 |
| Lease financing | ​ | ​ 90,755 | ​ | ​ 193,423 | ​ | ​ 13,912 | ​ | ​ — | ​ | ​ 298,090 |
| **Total Loans and Leases** | **​** | $9,726,321 | ​ | $3,339,544 | ​ | $995,436 | ​ | $30,711 | ​ | $14,092,012 |
| **Percentage of Total Loans and Leases** | **​** | **​** 69% | ​ | ​ 23% | ​ | ​ 7% | ​ | ​ 1% | ​ | ​ 100% |

(1) For secured loans and leases, classification as U.S. Mainland is made based on where the collateral is located. For unsecured loans and leases, classification as U.S. Mainland is made based on the location where the majority of the borrower’s business operations are conducted.

Our lending activities are concentrated primarily in Hawaii. However, we also have lending activities on the U.S. mainland, Guam and Saipan. Our commercial lending activities on the U.S. mainland include automobile dealer flooring activities in California, participation in the Shared National Credits Program and selective commercial real estate projects based on existing customer relationships. Our lease financing portfolio includes commercial leveraged and single investor lease financing activities both in Hawaii and on the U.S. mainland. However, no new leveraged leases are being added to the portfolio and all remaining leveraged leases are running off. Our consumer lending activities are concentrated primarily in Hawaii and, to a smaller extent, in Guam and Saipan.

Table 18 presents the contractual maturities of our loan and lease portfolio by major categories and the sensitivities to changes in interest rates as of June 30, 2023:

*(dollars in thousands)*

| ​ Maturities for Loan and Lease Portfolio(1) ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ June 30, 2023 Due in One Year or Less | ​ ​ ​ | ​ ​ ​ ​ Due After One to Five Years | ​ ​ ​ | ​ ​ ​ ​ Due After Five to Fifteen Years | ​ ​ ​ | ​ ​ ​ ​ Due After Fifteen Years | ​ ​ ​ | ​ ​ ​ Table 18 ​ ​ Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Commercial and industrial | ​ | **$802,498** | **​** | **$1,042,674** | **​** | **$267,043** | **​** | **$75,616** | **​** | **$2,187,831** |
| Commercial real estate | ​ | **​** **722,273** | **​** | **​** **1,988,044** | **​** | **​** **1,560,590** | **​** | **​** **20,041** | **​** | **​** **4,290,948** |
| Construction | ​ | **​** **221,969** | **​** | **​** **554,994** | **​** | **​** **95,325** | **​** | **​** **41,549** | **​** | **​** **913,837** |
| Residential: | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| Residential mortgage | ​ | **​** **16,009** | **​** | **​** **40,791** | **​** | **​** **462,237** | **​** | **​** **3,798,500** | **​** | **​** **4,317,537** |
| Home equity line | ​ | **​** **14,663** | **​** | **​** **112,112** | **​** | **​** **166,599** | **​** | **​** **844,789** | **​** | **​** **1,138,163** |
| Total residential | ​ | **​** **30,672** | **​** | **​** **152,903** | **​** | **​** **628,836** | **​** | **​** **4,643,289** | **​** | **​** **5,455,700** |
| Consumer | ​ | **​** **167,657** | **​** | **​** **782,680** | **​** | **​** **231,779** | **​** | **​** **—** | **​** | **​** **1,182,116** |
| Lease financing | ​ | **​** **19,325** | **​** | **​** **154,410** | **​** | **​** **133,826** | **​** | **​** **24,839** | **​** | **​** **332,400** |
| **Total Loans and Leases** | **​** | **$1,964,394** | **​** | **$4,675,705** | **​** | **$2,917,399** | **​** | **$4,805,334** | **​** | **$14,362,832** |
| ​ | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| Total of loans and leases with: | ​ | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| Adjustable interest rates | ​ | **$1,759,899** | **​** | **$3,396,120** | **​** | **$1,647,098** | **​** | **$269,063** | **​** | **$7,072,180** |
| Hybrid interest rates | ​ | **​** **38,816** | **​** | **​** **187,943** | **​** | **​** **152,243** | **​** | **​** **1,183,136** | **​** | **​** **1,562,138** |
| Fixed interest rates | ​ | **​** **165,679** | **​** | **​** **1,091,642** | **​** | **​** **1,118,058** | **​** | **​** **3,353,135** | **​** | **​** **5,728,514** |
| Total Loans and Leases | ​ | **$1,964,394** | **​** | **$4,675,705** | **​** | **$2,917,399** | **​** | **$4,805,334** | **​** | **$14,362,832** |

(1) Based on contractual maturities, including extension and renewal options that are not unconditionally cancellable by the Company.

### Credit Quality

We perform an internal loan review and grading or scoring procedures on an ongoing basis. The review provides management with periodic information as to the quality of the loan portfolio and effectiveness of our lending policies and procedures. The objective of the loan review and grading or scoring procedures is to identify, in a timely manner, existing or emerging credit quality issues so that appropriate steps can be initiated to avoid or minimize future losses.

For purposes of managing credit risk and estimating the ACL, management has identified three portfolio segments (commercial, residential and consumer) that we use to develop our systematic methodology to determine the ACL. The categorization of loans for the evaluation of credit risk is specific to our credit risk evaluation process and these loan categories are not necessarily the same as the loan categories used for other evaluations of our loan portfolio. See “Note 4. Allowance for Credit Losses” contained in our unaudited interim consolidated financial statements for more information about our approach to estimating the ACL.

The following tables and discussion address non-performing assets and loans and leases that are 90 days past due but are still accruing interest.

#### Non-Performing Assets and Loans and Leases Past Due 90 Days or More and Still Accruing Interest

Table 19 presents information on our non-performing assets and accruing loans and leases past due 90 days or more as of June 30, 2023 and December 31, 2022:

*(dollars in thousands)*

| ​ Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More ​ Non-Performing Assets Non-Accrual Loans and Leases Commercial Loans: | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ June 30, ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Table 19 December 31, ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| --- | --- | --- | --- |
| Commercial and industrial | ​ | **$1,024** **​** | $1,215 ​ |
| Commercial real estate | ​ | **​** **—** **​** | ​ 727 ​ |
| Total Commercial Loans | **​** | **​** **1,024** **​** | ​ 1,942 ​ |
| Residential Loans: | **​** | **​** ​ **​** | ​ ​ ​ |
| Residential mortgage | **​** | **​** **6,097** **​** | ​ 6,166 ​ |
| Home equity line | **​** | **​** **6,107** **​** | ​ 3,797 ​ |
| Total Residential Loans | **​** | **​** **12,204** **​** | **​** 9,963 ​ |
| Total Non-Accrual Loans and Leases | **​** | **​** **13,228** **​** | ​ 11,905 ​ |
| Other Real Estate Owned ("OREO") | ​ | **​** **—** **​** | ​ 91 ​ |
| **Total Non-Performing Assets** | **​** | **$13,228** **​** | $11,996 ​ |
| ​ | ​ | **​** **​** **​** | ​ ​ ​ |
| **Accruing Loans and Leases Past Due 90 Days or More** | ​ | **​** **​** **​** | ​ ​ ​ |
| Commercial Loans: | ​ | **​** **​** **​** | ​ ​ ​ |
| Commercial and industrial | ​ | **$599** **​** | $291 ​ |
| Commercial real estate | ​ | **​** **619** **​** | ​ — ​ |
| Total Commercial Loans | **​** | **​** **1,218** **​** | ​ 291 ​ |
| Residential mortgage | **​** | **​** **58** **​** | ​ 58 ​ |
| Consumer | ​ | **​** **1,975** **​** | ​ 2,885 ​ |
| **Total Accruing Loans and Leases Past Due 90 Days or More** | **​** | **$3,251** **​** | $3,234 ​ |
| **​** | **​** | **​** **​** **​** | ​ ​ ​ |
| **Total Loans and Leases** | **​** | **$14,362,832** **​** | $14,092,012 ​ |
| **​** | **​** | **​** **​** **​** | **​** ​ ​ |
| Ratio of Non-Accrual Loans and Leases to Total Loans and Leases | ​ | **​** **0.09%** | **​** 0.08% |
| Ratio of Non-Performing Assets to Total Loans and Leases and OREO | ​ | **​** **0.09%** | **​** 0.09% |
| Ratio of Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More to Total Loans and Leases and OREO | ​ | **​** **0.11%** | **​** 0.11% |

Table 20 presents the activity in Non-Performing Assets (“NPAs”) for the six months ended June 30, 2023 and 2022:

*(dollars in thousands)*

| ​ Non-Performing Assets ​ | ​ ​ ​ | ​ ​ ​ ​ Six Months Ended June 30, 2023 | ​ ​ | ​ ​ ​ Table 20 2022 |
| --- | --- | --- | --- | --- |
| Balance at beginning of period | ​ | **$11,996** | ​ | $7,257 |
| Additions | ​ | **​** **5,500** | ​ | ​ 2,461 |
| Reductions | ​ | **​** **​** | ​ | ​ ​ |
| Payments | ​ | **​** **(2,099)** | ​ | ​ (619) |
| Return to accrual status | ​ | **​** **(1,805)** | ​ | ​ (760) |
| Sales of other real estate owned | ​ | **​** **(91)** | ​ | ​ (175) |
| Charge-offs/write-downs | ​ | **​** **(273)** | ​ | ​ (305) |
| Total Reductions | ​ | **​** **(4,268)** | ​ | ​ (1,859) |
| **Balance at end of period** | **​** | **$13,228** | ​ | $7,859 |

The level of NPAs represents an indicator of the potential for future credit losses. NPAs consist of non-accrual loans and leases and other real estate owned (“OREO”). Changes in the level of non-accrual loans and leases typically represent increases for loans and leases that reach a specified past due status, offset by reductions for loans and leases that are charged-off, paid down, sold, transferred to held for sale classification, transferred to OREO or are no longer classified as non-accrual because they have returned to accrual status as a result of continued performance and an improvement in the borrower’s financial condition and loan repayment capabilities.

Total NPAs were $13.2 million as of June 30, 2023, an increase of $1.2 million or 10% from December 31, 2022. The ratio of our NPAs to total loans and leases and OREO was 0.09% as of both June 30, 2023 and December 31, 2022. The increase in NPAs during the six months ended June 30, 2023, was primarily due to increases in home equity line non-accrual loans of $2.3 million, partially offset by decreases in commercial real estate non-accrual loans of $0.7 million and commercial and industrial non-accrual loans of $0.2 million.

The largest component of our NPAs is typically residential mortgage loans. The level of these NPAs can remain elevated due to a lengthy judicial foreclosure process in Hawaii. As of June 30, 2023, residential mortgage non-accrual loans were $6.1 million, a decrease of $0.1 million or 1% from December 31, 2022. This decrease was due to payments of $0.9 million and returns to accrual status of $0.5 million, partially offset by additions of residential mortgage non-accrual loans totaling $1.3 million. As of June 30, 2023, our residential mortgage non-accrual loans were comprised of 34 loans with a weighted average current LTV ratio of 37%.

As of June 30, 2023, home equity line non-accrual loans were $6.1 million, an increase of $2.3 million or 61% from December 31, 2022. This increase was due to additions in home equity lines totaling $4.2 million, partially offset by returns to accrual status of $1.3 million, payments of $0.3 million and charge-offs of $0.3 million.

OREO represents property acquired as the result of borrower defaults on loans. OREO is recorded at fair value, less estimated selling costs, at the time of foreclosure. On an ongoing basis, properties are appraised as required by market conditions and applicable regulations. There was no OREO held as of June 30, 2023. OREO was $0.1 million as of December 31, 2022, which comprised of one residential property.

*Loans and Leases Past Due 90 Days or More and Still Accruing Interest.* Loans and leases in this category are 90 days or more past due, as to principal or interest, and are still accruing interest because they are well secured and in the process of collection.

Loans and leases past due 90 days or more and still accruing interest were $3.3 million as of June 30, 2023, a nominal increase from December 31, 2022. This increase was comprised of increases in commercial real estate loans of $0.6 million and commercial and industrial loans of $0.3 million, offset by a decrease in consumer loans of $0.9 million, that were past due 90 days or more and still accruing interest.

### Allowance for Credit Losses for Loans and Leases & Reserve for Unfunded Commitments

Table 21 presents an analysis of our ACL for the periods indicated:

*(dollars in thousands)*

| ​ Allowance for Credit Losses and Reserve for Unfunded Commitments ​ | ​ ​ ​ | ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2023 ​ | ​ ​ ​ ​ ​ ​ ​ 2022 ​ | ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 2023 ​ | ​ ​ ​ ​ Table 21 ​ 2022 ​ |
| --- | --- | --- | --- | --- | --- |
| **Balance at Beginning of Period** | ​ | **$183,321** **​** | $179,238 **​** | **$177,735** **​** | $187,584 ​ |
| Loans and Leases Charged-Off | ​ | **​** **​** **​** | ​ ​ **​** | **​** **​** **​** | ​ ​ ​ |
| Commercial Loans: | ​ | **​** **​** **​** | ​ ​ **​** | **​** **​** **​** | ​ ​ ​ |
| Commercial and industrial | ​ | ​ **(997)** **​** | ​ (243) **​** | ​ **(1,788)** **​** | ​ (949) ​ |
| Residential Loans: | ​ | **​** **​** **​** | ​ ​ **​** | **​** **​** **​** | ​ ​ ​ |
| Residential mortgage | ​ | **​** **—** **​** | ​ — **​** | **​** **(122)** **​** | ​ — ​ |
| Home equity line | ​ | **​** **(137)** **​** | ​ (1,120) **​** | **​** **(272)** **​** | ​ (1,163) ​ |
| Total Residential Loans | ​ | **​** **(137)** **​** | ​ (1,120) **​** | **​** **(394)** **​** | ​ (1,163) ​ |
| Consumer | ​ | **​** **(4,516)** **​** | ​ (3,659) **​** | **​** **(9,298)** **​** | ​ (7,768) ​ |
| **Total Loans and Leases Charged-Off** | **​** | **​** **(5,650)** **​** | ​ (5,022) **​** | **​** **(11,480)** **​** | **​** (9,880) ​ |
| Recoveries on Loans and Leases Previously Charged-Off | ​ | **​** **​** **​** | ​ ​ **​** | **​** **​** **​** | ​ ​ ​ |
| Commercial Loans: | ​ | **​** **​** **​** | ​ ​ **​** | **​** **​** **​** | ​ ​ ​ |
| Commercial and industrial | ​ | **​** **292** **​** | ​ 301 **​** | **​** **538** **​** | ​ 354 ​ |
| Commercial real estate | ​ | **​** **—** **​** | ​ — **​** | **​** **—** **​** | ​ 14 ​ |
| Lease financing | ​ | **​** **—** **​** | ​ 60 **​** | **​** **—** **​** | ​ 60 ​ |
| Total Commercial Loans | ​ | **​** **292** **​** | ​ 361 **​** | **​** **538** **​** | ​ 428 ​ |
| Residential Loans: | ​ | **​** **​** **​** | ​ ​ **​** | **​** **​** **​** | ​ ​ ​ |
| Residential mortgage | ​ | **​** **30** **​** | ​ 192 **​** | **​** **57** **​** | ​ 208 ​ |
| Home equity line | ​ | **​** **59** **​** | ​ 191 **​** | **​** **236** **​** | ​ 219 ​ |
| Total Residential Loans | ​ | **​** **89** **​** | ​ 383 **​** | **​** **293** **​** | ​ 427 ​ |
| Consumer | ​ | **​** **1,728** **​** | ​ 1,940 **​** | **​** **3,894** **​** | ​ 4,088 ​ |
| **Total Recoveries on Loans and Leases Previously Charged-Off** | **​** | **​** **2,109** **​** | ​ 2,684 **​** | **​** **4,725** **​** | **​** 4,943 ​ |
| Net Loans and Leases Charged-Off | ​ | **​** **(3,541)** **​** | ​ (2,338) **​** | **​** **(6,755)** **​** | ​ (4,937) ​ |
| Provision for Credit Losses | ​ | **​** **5,000** **​** | ​ 1,000 **​** | **​** **13,800** **​** | ​ (4,747) ​ |
| **Balance at End of Period** | ​ | **$184,780** **​** | $177,900 **​** | **$184,780** **​** | $177,900 ​ |
| Components: | ​ | **​** **​** **​** | ​ ​ **​** | **​** **​** **​** | ​ ​ ​ |
| Allowance for Credit Losses | ​ | **$148,581** **​** | $148,942 **​** | **$148,581** **​** | $148,942 ​ |
| Reserve for Unfunded Commitments | ​ | **​** **36,199** **​** | ​ 28,958 **​** | **​** **36,199** **​** | ​ 28,958 ​ |
| Total Allowance for Credit Losses and Reserve for Unfunded Commitments | ​ | **$184,780** **​** | $177,900 **​** | **$184,780** **​** | $177,900 ​ |
| Average Loans and Leases Outstanding | ​ | **$14,283,222** **​** | $13,058,558 **​** | **$14,181,842** **​** | $12,939,745 ​ |
| Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding(1) | ​ | **​** **0.10%** | ​ 0.07% | **​** **0.10%** | ​ 0.08% |
| Ratio of Allowance for Credit Losses for Loans and Leases to Loans and Leases Outstanding | ​ | **​** **1.03%** | ​ 1.12% | **​** **1.03%** | ​ 1.12% |
| Ratio of Allowance for Credit Losses for Loans and Leases to Non-accrual Loans and Leases | ​ | **​** **11.23x** **​** | ​ 18.95x ​ | **​** **11.23x** **​** | ​ 18.95x ​ |

(1) Annualized for the three and six months ended June 30, 2023 and 2022.

Tables 22 and 23 present the allocation of the ACL by loan and lease category, in both dollars and as a percentage of total loans and leases outstanding as of June 30, 2023 and December 31, 2022:

*(dollars in thousands)*

| ​ Allocation of the Allowance for Credit Losses by Loan and Lease Category ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ Amount | ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Allocated ​ ACL as ​ % of loan or ​ lease ​ category ​ | ​ ​ Table 22 Loan ​ category as ​ % of total ​ loans and ​ leases ​ |
| --- | --- | --- | --- | ---: | ---: |
| Commercial and industrial | ​ | **$13,810** | **​** | **0.63%** | **15.23%** |
| Commercial real estate | ​ | ​ **39,887** | **​** | **0.93** **​** | **29.87** ​ |
| Construction | ​ | ​ **9,871** | **​** | **1.08** **​** | **6.36** ​ |
| Lease financing | ​ | ​ **1,447** | **​** | **0.44** **​** | **2.32** ​ |
| Total commercial | **​** | **​** **65,015** | **​** | **0.84** **​** | **53.78** ​ |
| Residential mortgage | ​ | ​ **32,803** | **​** | **0.76** **​** | **30.06** ​ |
| Home equity line | ​ | ​ **11,806** | **​** | **1.04** **​** | **7.92** ​ |
| Total residential | ​ | ​ **44,609** | **​** | **0.82** **​** | **37.98** ​ |
| Consumer | ​ | ​ **38,957** | **​** | **3.30** **​** | **8.24** ​ |
| **Total** | **​** | **$148,581** | **​** | **1.03%** | **100.00%** |

*(dollars in thousands)*

| ​ Allocation of the Allowance for Credit Losses by Loan and Lease Category ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ Amount | ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Allocated ​ ACL as ​ % of loan or ​ lease ​ category ​ | ​ ​ Table 23 Loan ​ category as ​ % of total ​ loans and ​ leases ​ |
| --- | --- | --- | --- | ---: | ---: |
| Commercial and industrial | ​ | $14,564 | ​ | 0.65% | 15.87% |
| Commercial real estate | ​ | ​ 43,810 | ​ | 1.06 ​ | 29.31 ​ |
| Construction | ​ | ​ 5,843 | ​ | 0.69 ​ | 5.99 ​ |
| Lease financing | ​ | ​ 1,551 | ​ | 0.52 ​ | 2.13 ​ |
| Total commercial | ​ | ​ 65,768 | ​ | 0.88 ​ | 53.30 ​ |
| Residential mortgage | ​ | ​ 35,175 | ​ | 0.82 ​ | 30.53 ​ |
| Home equity line | ​ | ​ 8,296 | ​ | 0.79 ​ | 7.49 ​ |
| Total residential | ​ | ​ 43,471 | ​ | 0.81 ​ | 38.02 ​ |
| Consumer | ​ | ​ 34,661 | ​ | 2.83 ​ | 8.68 ​ |
| **Total** | ​ | $143,900 | ​ | 1.02% | 100.00% |

Table 24 presents the net charge-offs (recoveries) to average loans and leases by category during the three and six months ended June 30, 2023 and 2022:

| ​ Net Charge-Offs (Recoveries) to Average Loans and Leases By Category(1) ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ ​ ​ ​ | ​ ​ 2022 | ​ ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ ​ ​ ​ | ​ ​ 2022 | ​ ​ Table 24 ​ |
| --- | --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Commercial and industrial | ​ | **​** | **0.12%** | ​ | (0.01)% | **​** | **0.11%** | ​ | 0.06% |
| Commercial real estate | ​ | ​ | **—** ​ | ​ | — ​ | ​ | **—** ​ | ​ | — ​ |
| Construction | ​ | ​ | **—** ​ | ​ | — ​ | ​ | **—** ​ | ​ | — ​ |
| Lease financing | ​ | ​ | **—** ​ | ​ | (0.10) ​ | ​ | **—** ​ | ​ | (0.05) ​ |
| Total commercial | **​** | **​** | **0.04** ​ | ​ | (0.01) ​ | **​** | **0.03** ​ | ​ | 0.02 ​ |
| Residential mortgage | ​ | ​ | **—** ​ | ​ | (0.02) ​ | ​ | **—** ​ | ​ | (0.01) ​ |
| Home equity line | ​ | ​ | **0.03** ​ | ​ | 0.39 ​ | ​ | **0.01** ​ | ​ | 0.21 ​ |
| Total residential | ​ | ​ | **—** ​ | ​ | 0.06 ​ | ​ | **—** ​ | ​ | 0.03 ​ |
| Consumer | ​ | ​ | **0.93** ​ | ​ | 0.57 ​ | ​ | **0.90** ​ | ​ | 0.61 ​ |
| Total loans and leases | ​ | ​ | **0.10%** | ​ | 0.07% | ​ | **0.10%** | ​ | 0.08% |

(1) Annualized for the three and six months ended June 30, 2023 and 2022.

As of June 30, 2023, the ACL was $148.6 million or 1.03% of total loans and leases outstanding, compared with an ACL of $143.9 million or 1.02% of total loans and leases outstanding as of December 31, 2022. The reserve for unfunded commitments was $36.2 million as of June 30, 2023, compared to $33.8 million as of December 31, 2022.

Net charge-offs of loans and leases were $3.5 million or 0.10% of total average loans and leases, on an annualized basis, for the three months ended June 30, 2023, compared to net charge-offs of $2.3 million or 0.07% for the three months ended June 30, 2022. Net charge-offs in our commercial lending portfolio were $0.7 million for the three months ended June 30, 2023, compared to net recoveries of $0.1 million for the three months ended June 30, 2022. Net charge-offs in our residential lending portfolio were nil and $0.7 million for the three months ended June 30, 2023 and 2022, respectively. Net charge-offs in our consumer lending portfolio were $2.8 million and $1.7 million for the three months ended June 30, 2023 and 2022, respectively. Net charge-offs in our consumer portfolio segment include those related to credit cards, automobile loans, installment loans and small business lines of credit and reflect the inherent risk associated with these loans.

Net charge-offs of loans and leases were $6.8 million or 0.10% of total average loans and leases on an annualized basis, for the six months ended June 30, 2023, compared to $4.9 million or 0.08% of total average loans and leases, on an annualized basis, for the six months ended June 30, 2022. Net charge-offs in our commercial lending portfolio were $1.3 million and $0.5 million for the six months ended June 30, 2023 and 2022, respectively. Net charge-offs in our residential lending portfolio were $0.1 million and $0.7 million for the six months ended June 30, 2023 and 2022, respectively. Net charge-offs in our consumer lending portfolio were $5.4 million and $3.7 million for the six months ended June 30, 2023 and 2022, respectively. Net charge-offs in our consumer portfolio segment include those related to credit card, automobile loans, installment loans and small business lines of credit and reflect the inherent risk associated with these loans.

Although we determine the amount of each component of the ACL separately, the ACL as a whole was considered appropriate by management as of June 30, 2023 and December 31, 2022. Furthermore, as of June 30, 2023, while the allocation of our ACL to the commercial portfolio segment was lower as compared to December 31, 2022, the ACL was considered adequate based on our ongoing analysis of estimated expected credit losses, credit risk profiles, current economic outlook, coverage ratios and other relevant factors. The ACL anticipates cyclical losses consistent with a recession and includes a qualitative overlay for potential macroeconomic impacts. We will continue to monitor factors that drive expected credit losses including the uncertainty of the economy, inflation and geopolitical instability. See “Note 4. Allowance for Credit Losses” contained in our unaudited interim consolidated financial statements for more information on the ACL.

### Goodwill

Goodwill was $995.5 million as of both June 30, 2023 and December 31, 2022. Our goodwill originated from the acquisition of the Company by BNP Paribas in December of 2001. Goodwill generated in that acquisition was recorded on the balance sheet of the Bank as a result of push down accounting treatment, and remains on our consolidated balance sheets.

The Company’s policy is to assess goodwill for impairment at the reporting unit level on an annual basis or between annual assessments if a triggering event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Impairment is the condition that exists when the carrying amount of a reporting unit exceeds its fair value. There was no impairment in our goodwill for the three and six months ended June 30, 2023. Future events, including geopolitical concerns, inflation concerns, global supply chain issues, and other factors affecting the economy, that could cause a significant decline in our expected future cash flows or a significant adverse change in our business or the business climate may necessitate taking charges in future reporting periods related to the impairment of our goodwill.

### Other Assets

Other assets were $813.1 million as of June 30, 2023, an increase of $16.2 million or 2% from December 31, 2022. The increase in other assets was primarily due to increases of $18.4 million in municipal advances, $18.2 million in interest rate swap agreements and $16.0 million in FHLB stock. This was partially offset by decreases of $14.8 million in prepaid assets, $12.3 million in LIHTC investments and $8.1 million in mutual funds.

### Deposits

Deposits are the primary funding source for the Bank and are acquired from a broad base of local markets, including both individual and corporate customers. We obtain funds from depositors by offering a range of deposit types, including demand, savings, money market and time.

Table 25 presents the composition of our deposits as of June 30, 2023 and December 31, 2022:

*(dollars in thousands)*

| ​ Deposits ​ U.S.: | ​ ​ ​ ​ | ​ ​ ​ ​ June 30, 2023 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ Table 25 December 31, 2022 ​ ​ |
| --- | --- | --- | --- | --- |
| Demand | ​ | **$7,297,964** | ​ | $7,978,046 |
| Savings | ​ | ​ **5,438,653** | ​ | ​ 5,957,368 |
| Money Market | ​ | ​ **3,511,904** | ​ | ​ 3,714,244 |
| Time | ​ | ​ **3,097,843** | ​ | ​ 2,265,163 |
| Foreign(1): | ​ | ​ **​** | ​ | ​ ​ |
| Demand | ​ | ​ **868,663** | ​ | ​ 886,600 |
| Savings | ​ | ​ **397,322** | ​ | ​ 425,542 |
| Money Market | ​ | ​ **255,888** | ​ | ​ 251,179 |
| Time | ​ | ​ **209,929** | ​ | ​ 210,887 |
| **Total Deposits(2)** | **​** | **$21,078,166** | ​ | $21,689,029 |

(1) Foreign deposits were comprised of Guam and Saipan deposit accounts.

(2) Public deposits were $2.2 billion as of June 30, 2023, an increase of $353.1 million or 19% compared to December 31, 2022.

Total deposits were $21.1 billion as of June 30, 2023, a decrease of $610.9 million or 3% from December 31, 2022. The decrease in deposit balances stemmed primarily from a $698.6 million decrease in non-public demand deposit balances, a $333.4 million decrease in non-public savings deposit balances, a $213.5 million decrease in public savings deposit balances and a $205.5 million decrease in non-public money market deposit balances. These decreases were partially offset by a $558.2 million increase in public time deposit balances and a $273.5 million increase in non-public time deposit balances.

As of June 30, 2023 and December 31, 2022, the amount of uninsured deposits that exceeded FDIC insurance limits were estimated to be $10.7 billion, or 51% of total deposits, and $11.1 billion, or 51% of total deposits, respectively. At June 30, 2023 and December 31, 2022, the Company had $2.2 billion and $1.9 billion, respectively, of public deposits, all of which were fully collateralized with investment securities. As of June 30, 2023 and December 31, 2022, the amount of uninsured deposits excluding public deposits that exceeded FDIC insurance limits were estimated to be $8.5 billion, or 40% of total deposits, and $9.2 billion, or 42% of total deposits, respectively. As of June 30, 2023 and December 31, 2022, deposit accounts above $250,000 were estimated to be $12.5 billion and $13.3 billion, respectively.

Table 26 presents the estimated amount of time deposits that were in excess of the FDIC insurance limit, further segregated by time remaining until maturity, as of June 30, 2023:

*(dollars in thousands)*

| ​ Uninsured Time Deposits | ​ ​ | ​ ​ ​ Table 26 ​ June 30, 2023 |
| --- | --- | --- |
| Three months or less | **​** | **$989,052** |
| Over three through six months | **​** | **​** **667,010** |
| Over six through twelve months | **​** | **​** **401,666** |
| Over twelve months | **​** | **​** **81,520** |
| **Total(1)** | **​** | **$2,139,248** |

(1) Includes $1.4 billion in public time deposits.

### Short-term and Long-term Borrowings

As of June 30, 2023, the Company had no short-term borrowings as the remaining short-term FHLB repo advance matured in April 2023. As of December 31, 2022, the Company’s short-term borrowings consisted of $75.0 million in federal funds purchased with a 4.35% annual interest rate that matured in January 2023.

Long-term borrowings were $500.0 million as of June 30, 2023. The Company’s long-term borrowings consisted of $500.0 million in FHLB fixed-rate advances with a weighted average interest rate of 4.71% and maturity dates in September 2024. There were no long-term borrowings as of December 31, 2022. Long-term borrowings mature in excess of one year from the unaudited interim consolidated balance sheet date.

As of June 30, 2023 and December 31, 2022, the Company had a remaining line of credit of $2.9 billion and $2.5 billion available from the FHLB, respectively. The FHLB fixed-rate advances and remaining borrowing capacity were secured by commercial real estate and residential real estate loan collateral as of June 30, 2023. The FHLB borrowing capacity was secured by residential real estate loan collateral as of December 31, 2022.

### Pension and Postretirement Plan Obligations

We have a noncontributory qualified defined benefit pension plan, an unfunded supplemental executive retirement plan (“SERP”), a directors’ retirement plan (a non-qualified pension plan for eligible directors) and a postretirement benefit plan providing life insurance and healthcare benefits that we offer to our directors and employees, as applicable. The noncontributory qualified defined benefit pension plan, the unfunded supplemental executive retirement plan and the directors’ retirement plan are all frozen to new participants. On March 11, 2019, the Company’s board of directors approved an amendment to the SERP to freeze the SERP. As a result of such amendment, effective July 1, 2019, there are no new accruals of benefits, including service accruals. To calculate annual pension costs, we use the following key variables: (1) size of the employee population, length of service and estimated compensation increases; (2) actuarial assumptions and estimates; (3) expected long-term rate of return on plan assets; and (4) discount rate.

Pension and postretirement benefit plan obligations, net of pension plan assets, were $93.5 million as of June 30, 2023, a nominal decrease from December 31, 2022. This decrease was primarily due to payments of $4.2 million, offset by net periodic benefit costs for the six months ended June 30, 2023 of $3.8 million.

See “Note 16. Noninterest Income and Noninterest Expense” contained in our unaudited interim consolidated financial statements for more information on our pension and postretirement benefit plans.

### Capital

The bank regulators currently use a combination of risk-based ratios and a leverage ratio to evaluate capital adequacy. The Company and the Bank are subject to the federal bank regulators’ final rules implementing Basel III and various provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Capital Rules”).

The Capital Rules, among other things impose a capital measure called CET1, to which most deductions/adjustments to regulatory capital must be made. In addition, the Capital Rules specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain specified requirements.

Under the Capital Rules, the minimum capital ratios are as follows:

- 4.5% CET1 capital to risk-weighted assets,
- 6.0% Tier 1 capital (that is, CET1 capital plus Additional Tier 1 capital) to risk-weighted assets,
- 8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets, and
- 4.0% Tier 1 capital to average quarterly assets.

The Capital Rules also require a 2.5% capital conservation buffer designed to absorb losses during periods of economic stress. The capital conservation buffer is composed entirely of CET1, on top of these minimum risk weighted asset ratios, effectively resulting in minimum ratios of (i) 7% CET1 to risk-weighted assets, (ii) 8.5% Tier 1 capital to risk-weighted assets, and (iii) 10.5% total capital to risk-weighted assets.

As of June 30, 2023, the Company’s capital levels remained characterized as “well-capitalized” under the Capital Rules. Our regulatory capital ratios, calculated in accordance with the Capital Rules, are presented in Table 27 below. There have been no conditions or events since June 30, 2023 that management believes have changed either the Company’s or the Bank’s capital classifications. CET1 was 12.05% as of June 30, 2023, an increase of 23 basis points from December 31, 2022. The increase in CET1 was primarily due to earnings for the six months ended June 30, 2023, partially offset by the dividends declared and paid to the Company’s stockholders and an increase in risk-weighted assets driven by an increase in loans and leases.

*(dollars in thousands)*

| ​ Regulatory Capital ​ | ​ ​ ​ | ​ ​ ​ ​ ​ ​ June 30, ​ 2023 ​ | ​ ​ ​ ​ Table 27 December 31, ​ 2022 ​ |
| --- | --- | --- | --- |
| Stockholders' Equity | ​ | **$2,359,738** ​ | $2,269,005 ​ |
| Less: | ​ | ​ **​** ​ | ​ ​ ​ |
| Goodwill | ​ | ​ **995,492** ​ | ​ 995,492 ​ |
| Accumulated other comprehensive loss, net | ​ | ​ **(612,736)** ​ | ​ (639,254) ​ |
| Common Equity Tier 1 Capital and Tier 1 Capital | ​ | **$1,976,982** ​ | $1,912,767 ​ |
| Add: | ​ | ​ **​** ​ | ​ ​ ​ |
| Qualifying allowance for credit losses and reserve for unfunded commitments | ​ | ​ **184,780** ​ | ​ 177,735 ​ |
| Total Capital | **​** | **$2,161,762** **​** | $2,090,502 ​ |
| Risk-Weighted Assets | **​** | **$16,408,132** ​ | $16,182,743 ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ |
| **Key Regulatory Capital Ratios** | **​** | **​** **​** ​ | ​ ​ ​ |
| Common Equity Tier 1 Capital Ratio | ​ | ​ **12.05%** | **​** 11.82% |
| Tier 1 Capital Ratio | ​ | ​ **12.05%** | **​** 11.82% |
| Total Capital Ratio | ​ | ​ **13.17%** | **​** 12.92% |
| Tier 1 Leverage Ratio | ​ | ​ **8.30%** | **​** 8.11% |

Total stockholders’ equity was $2.4 billion as of June 30, 2023, an increase of $90.7 million or 4% from December 31, 2022. The increase in stockholders’ equity was primarily due to earnings for the period of $129.3 million, net unrealized gains in our investment securities portfolio, net of tax, of $26.2 million, partially offset by dividends declared and paid to the Company’s stockholders of $66.3 million during the six months ended June 30, 2023.

In January 2023, the Company announced a stock repurchase program for up to $40.0 million of its outstanding common stock during 2023. The Company has not repurchased any common stock outstanding under this stock repurchase program during the six months ended June 30, 2023 and, as a result, $40.0 million remained of the $40.0 million total repurchase amount authorized under the stock repurchase program for 2023 as of June 30, 2023. The timing and exact amount of stock repurchases, if any, will be subject to management’s discretion and various factors, including the Company’s capital position and financial performance, as well as market conditions. The stock repurchase program may be suspended, terminated or modified at any time for any reason.

In July 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share on our outstanding shares. The dividend will be paid on September 1, 2023 to shareholders of record at the close of business on August 21, 2023.

### Future Application of Accounting Pronouncements

For a discussion of the expected impact of accounting pronouncements recently issued but not adopted by us as of June 30, 2023, see “Note 1. Organization and Basis of Presentation — Recent Accounting Pronouncements” to the unaudited interim consolidated financial statements for more information.

### Risk Governance and Quantitative and Qualitative Disclosures About Market Risk

Managing risk is an essential part of successfully operating our business. Management believes that the most prominent risk exposures for the Company are credit risk, market risk, liquidity risk management, capital management and operational risk. See “Analysis of Financial Condition — Liquidity and Capital Resources” and “—Capital” sections of this MD&A for further discussions of liquidity risk management and capital management, respectively.

### Credit Risk

Credit risk is the risk that borrowers or counterparties will be unable or unwilling to repay their obligations in accordance with the underlying contractual terms. We manage and control credit risk in the loan and lease portfolio by adhering to well-defined underwriting criteria and account administration standards established by management. Written credit policies document underwriting standards, approval levels, exposure limits and other limits or standards deemed necessary and prudent. Portfolio diversification at the obligor, industry, product, and/or geographic location levels is actively managed to mitigate concentration risk. In addition, credit risk management includes an independent credit review process that assesses compliance with commercial, real estate and consumer credit policies, risk ratings and other critical credit information. In addition to implementing risk management practices that are based upon established and sound lending practices, we adhere to sound credit principles. We understand and evaluate our customers’ borrowing needs and capacity to repay, in conjunction with their character and history.

Management has identified three categories of loans that we use to develop our systematic methodology to determine the ACL: commercial, residential and consumer.

Commercial lending is further categorized into four distinct classes based on characteristics relating to the borrower, transaction and collateral. These classes are: commercial and industrial, commercial real estate, construction and lease financing. Commercial and industrial loans are primarily for the purpose of financing equipment acquisition, expansion, working capital and other general business purposes by medium to larger Hawaii based corporations, as well as U.S. mainland and international companies. Commercial and industrial loans are typically secured by non-real estate assets whereby the collateral is trading assets, enterprise value or inventory. As with many of our customers, our commercial and industrial loan customers are heavily dependent on tourism, government expenditures and real estate values. Commercial real estate loans are secured by real estate, including but not limited to structures and facilities to support activities designated as retail, health care, general office space, warehouse and industrial space. Our Bank’s underwriting policy generally requires that net cash flows from the property be sufficient to service the debt while still maintaining an appropriate amount of reserves. Commercial real estate loans in Hawaii are characterized by having a limited supply of real estate at commercially attractive locations, long delivery time frames for development and high interest rate sensitivity. Our construction lending portfolio consists primarily of land loans, single family and condominium development loans. Financing of construction loans is subject to a high degree of credit risk given the long delivery time frames for such projects. Construction lending activities are underwritten on a project financing basis whereby the cash flows or lease rents from the underlying real estate collateral or the sale of the finished inventory is the primary source of repayment. Market feasibility analysis is typically performed by assessing market comparables, market conditions and demand in the specific lending area and general community. We require presales of finished inventory prior to loan funding. However, because this analysis is typically performed on a forward looking basis, real estate construction projects typically present a higher risk profile in our lending activities. Lease financing activities include commercial single investor leases and leveraged leases used to purchase items ranging from computer equipment to transportation equipment. Underwriting of new leasing arrangements typically includes analyzing customer cash flows, evaluating secondary sources of repayment, such as the value of the leased asset, the guarantors’ net cash flows as well as other credit enhancements provided by the lessee.

Residential lending is further categorized into the following classes: residential mortgages (loans secured by 1-4 family residential properties and home equity loans) and home equity lines of credit. Our Bank’s underwriting standards typically require LTV ratios of not more than 80%, although higher levels are permitted with accompanying mortgage insurance. First mortgage loans secured by residential properties generally carry a moderate level of credit risk, with an average loan size of approximately $395,000. Residential mortgage loan production is added to our loan portfolio or is sold in the secondary market, based on management’s evaluation of our liquidity, capital and loan portfolio mix as well as market conditions. Changes in interest rates, the economic environment and other market factors have impacted, and will likely continue to impact, the marketability and value of collateral and the financial condition of our borrowers which impacts the level of credit risk inherent in this portfolio, although we remain in a supply constrained housing environment in Hawaii. Geographic concentrations exist for this portfolio as nearly all residential mortgage loans and home equity lines of credit are for residences located in Hawaii, Guam or Saipan. These island locales are susceptible to a wide array of potential natural disasters including, but not limited to, hurricanes, floods, tsunamis and earthquakes. We offer home equity lines of credit with variable rates; fixed rate lock options may be available post-closing. All lines are underwritten at 2% over the fully indexed rate. Our procedures for underwriting home equity lines of credit include an assessment of an applicant’s overall financial capacity and repayment ability. Decisions are primarily based on repayment ability via debt-to-income ratios, LTV ratios and an evaluation of credit history.

Consumer lending is further categorized into the following classes of loans: credit cards, automobile loans and other consumer-related installment loans. Consumer loans are either unsecured or secured by the borrower’s personal assets. The average loan size is generally small, and risk is diversified among many borrowers. We offer a wide array of credit cards for business and personal use. In general, our customers are attracted to our credit card offerings on the basis of price, credit limit, reward programs and other product features. Credit card underwriting decisions are generally based on repayment ability of our borrower via DTI ratios, credit bureau information, including payment history, debt burden and credit scores, such as FICO, and analysis of financial capacity. Automobile lending activities include loans and leases secured by new or used automobiles. We originate the majority of our automobile loans and leases on an indirect basis through selected dealerships. Our procedures for underwriting automobile loans include an assessment of an applicant’s overall financial capacity and repayment ability, credit history and the ability to meet existing obligations and payments on the proposed loan or lease. Although an applicant’s creditworthiness is the primary consideration, the underwriting process also includes a comparison of the value of the collateral security to the proposed loan amount. We require borrowers to maintain full coverage automobile insurance on automobile loans and leases, with the Bank listed as either the loss payee or additional insured. Installment loans consist of open and closed end facilities for personal and household purchases. We seek to maintain reasonable levels of risk in installment lending by following prudent underwriting guidelines which include an evaluation of personal credit history and cash flow.

### Market Risk

Market risk is the potential of loss arising from changes in interest rates, foreign exchange rates, equity prices and commodity prices, including the correlation among these factors and their volatility. When the value of an instrument is tied to such external factors, the holder faces market risk. We are exposed to market risk primarily from interest rate risk, which is defined as the risk of loss of net interest income or net interest margin because of changes in interest rates.

The potential cash flows, sales or replacement value of many of our assets and liabilities, especially those that earn or pay interest, are sensitive to changes in the general level of interest rates. In the banking industry, changes in interest rates can significantly impact earnings and the safety and soundness of an entity.

Interest rate risk arises primarily from our core business activities of extending loans and accepting deposits. This occurs when our interest earning loans and interest-bearing deposits mature or reprice at different times, on a different basis or in unequal amounts. Interest rates may also affect loan demand, credit losses, mortgage origination volume, pre- payment speeds and other items affecting earnings.

Many factors affect our exposure to changes in interest rates, such as general economic and financial conditions, customer preferences, historical pricing relationships and repricing characteristics of financial instruments. Our earnings are affected not only by general economic conditions, but also by the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve. The monetary policies of the Federal Reserve can influence the overall growth of loans, investment securities and deposits and the level of interest rates earned on assets and paid for liabilities.

### Market Risk Measurement

We primarily use net interest income simulation analysis to measure and analyze interest rate risk. We run various hypothetical interest rate scenarios and compare these results against a measured base case scenario. Our net interest income simulation analysis incorporates various assumptions, which we believe are reasonable but which may have a significant impact on results. These assumptions include: (1) the timing of changes in interest rates, (2) shifts or rotations in the yield curve, (3) re-pricing characteristics for market rate sensitive instruments on and off-balance sheet, (4) differing sensitivities of financial instruments due to differing underlying rate indices and (5) varying loan prepayment speeds for different interest rate scenarios. Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on our results but rather as a means to better plan and execute appropriate asset liability management strategies to manage our interest rate risk.

Table 28 presents, for the twelve months subsequent to June 30, 2023 and December 31, 2022, an estimate of the changes in net interest income that would result from ramps (gradual changes) and shocks (immediate changes) in market interest rates, moving in a parallel fashion over the entire yield curve, relative to the measured base case scenario. Ramp scenarios assume interest rates move gradually in parallel across the yield curve relative to the base case scenario. Shock scenarios assume an immediate and sustained parallel shift in interest rates across the entire yield curve, relative to the base case scenario. The base case scenario assumes that the balance sheet and interest rates are generally unchanged. We evaluate the sensitivity by using a static forecast, where the balance sheets as of June 30, 2023 and December 31, 2022 are held constant.

| ​ Net Interest Income Sensitivity Profile - Estimated Percentage Change Over 12 Months ​ ​ Gradual Change in Interest Rates (basis points) | ​ ​ ​ ​ ​ | ​ ​ ​ June 30, 2023 ​ | ​ Table 28 Static Forecast ​ | ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ December 31, 2022 ​ | ​ Static Forecast ​ | ​ ​ | ​ ​ ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | ---: | --- | --- | --- | ---: |
| +100 | ​ | **​** | **​** | **​** | **3.2%** | **​** | ​ | ​ | 3.2% |
| +50 | ​ | **​** | **​** | **​** | **1.6** **​** | **​** | ​ | ​ | 1.6 ​ |
| (50) | ​ | **​** | **​** | **​** | **(1.7)** **​** | **​** | ​ | ​ | (1.7) ​ |
| (100) | ​ | **​** | **​** | **​** | **(3.4)** **​** | **​** | ​ | ​ | (3.4) ​ |
| ​ | ​ | **​** | **​** | **​** | **​** **​** | **​** | **​** | **​** | ​ ​ |
| **Immediate Change in Interest Rates (basis points)** | ​ | ​ | ​ |  | **​** **​** | ​ | ​ |  | ​ ​ |
| +100 | ​ | ​ | ​ | ​ | **5.7%** | ​ | ​ | ​ | 5.8% |
| +50 | **​** | ​ | ​ | ​ | **2.9** **​** | ​ | ​ | ​ | 2.9 ​ |
| (50) | **​** | ​ | ​ | ​ | **(3.1)** **​** | ​ | ​ | ​ | (3.1) ​ |
| (100) | **​** | ​ | ​ | ​ | **(6.1)** **​** | ​ | ​ | ​ | (6.3) ​ |

The table above shows the effects of a simulation which estimates the effect of a gradual and immediate sustained parallel shift in the yield curve of −100, −50, +50 and +100 basis points in market interest rates over a twelve-month period on our net interest income.

Currently, our interest rate profile, assuming a constant balance sheet, is such that we project net interest income will benefit from higher interest rates as our assets would reprice faster and to a greater degree than our liabilities, while in the case of lower interest rates, our assets would reprice downward and to a greater degree than our liabilities. Other factors such as changes in balance sheet composition or deposit rate behavior could result in a change in repricing sensitivity.

Under the static balance sheet forecast as of June 30, 2023, our net interest income sensitivity profile is relatively unchanged in higher and lower interest rate scenarios compared to similar forecasts as of December 31, 2022. The sensitivity outcomes described above are primarily due to the impact of holding a similar asset repricing balance as of June 30, 2023 as compared with December 31, 2022.

The comparisons above provide insight into the potential effects of changes in interest rates on net interest income. The Company believes that its approach to interest rate risk has appropriately considered its susceptibility to both rising and falling rates and has adopted strategies which minimize the impact of such risks.

We also have longer term interest rate risk exposures which may not be appropriately measured by net interest income simulation analysis. We use market value of equity (“MVE”) sensitivity analysis to study the impact of long-term cash flows on earnings and capital. MVE involves discounting present values of all cash flows of on-balance sheet and off-balance sheet items under different interest rate scenarios. The discounted present value of all cash flows represents our MVE. MVE analysis requires modifying the expected cash flows in each interest rate scenario, which will impact the discounted present value. The amount of base case measurement and its sensitivity to shifts in the yield curve allow management to measure longer term repricing option risk in the balance sheet.

### Limitations of Market Risk Measures

The results of our simulation analyses are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted. For example, if the timing and magnitude of interest rate changes differ from those projected, our net interest income might vary significantly. Non parallel yield curve shifts such as a flattening or steepening of the yield curve or changes in interest rate spreads would also cause our net interest income to be different from that depicted. An increasing interest rate environment could reduce projected net interest income if deposits and other short-term liabilities re-price faster than expected or faster than our assets re-price. Actual results could differ from those projected if we grow assets and liabilities faster or slower than estimated if we experience a net outflow of deposits or if our mix of assets and liabilities otherwise changes. For example, while we maintain relatively high levels of liquidity, a faster than expected withdrawal of deposits out of the bank may cause us to seek higher cost sources of funding. Actual results could also differ from those projected if we experience substantially different prepayment speeds in our loan portfolio than those assumed in the simulation analyses. Finally, these simulation results do not consider all the actions that we may undertake in response to potential or actual changes in interest rates, such as changes to our loan, investment, deposit, funding or hedging strategies.

### Market Risk Governance

We seek to achieve consistent growth in net interest income and capital while managing volatility arising from changes in market interest rates. The objective of our interest rate risk management process is to increase net interest income while operating within acceptable limits established for interest rate risk and maintaining adequate levels of funding and liquidity.

To manage the impact on net interest income, we manage our exposure to changes in interest rates through our asset and liability management activities within guidelines established by our ALCO and approved by our board of directors. The ALCO has the responsibility for approving and ensuring compliance with the ALCO management policies, including interest rate risk exposures. The objective of our interest rate risk management process is to maximize net interest income while operating within acceptable limits established for interest rate risk and maintaining adequate levels of funding and liquidity.

Through review and oversight by the ALCO, we attempt to engage in strategies that neutralize interest rate risk as much as possible. Our use of derivative financial instruments, as detailed in “Note 12. Derivative Financial Instruments” to the unaudited interim consolidated financial statements, has generally been limited. This is due to natural on balance sheet hedges arising out of offsetting interest rate exposures from loans and investment securities with deposits and other interest-bearing liabilities. In particular, the investment securities portfolio is utilized to manage the interest rate exposure and sensitivity to within the guidelines and limits established by the ALCO. We utilize natural and offsetting economic hedges in an effort to reduce the need to employ off-balance sheet derivative financial instruments to hedge interest rate risk exposures. Expected movements in interest rates are also considered in managing interest rate risk. Thus, as interest rates change, we may use different techniques to manage interest rate risk.

Management uses the results of its various simulation analyses to formulate strategies to achieve a desired risk profile within the parameters of our capital and liquidity guidelines.

In addition, our business relies upon a large volume of loans, derivative contracts and other financial instruments with attributes that are either directly or indirectly dependent on LIBOR to establish their interest rate and/or value. According to the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, U.S. Dollar LIBOR settings have ceased to be provided or ceased to be representative after June 30, 2023. The publication of all other LIBOR settings ceased to be provided or ceased to be representative as of December 31, 2021. We transitioned our financial instruments associated to LIBOR currencies and tenors that ceased or became nonrepresentative on December 31, 2021, to alternative reference rates (collectively, “Alternative Rates”), with limited exceptions. As such, effective December 31, 2021, we have ceased the use of U.S Dollar LIBOR as a reference rate on all new contracts and continue to increase the usage of Alternative Rates such as the Secured Overnight Financing Rate (“SOFR”). A working group of key stakeholders from throughout the Company has been working to spearhead the transition from LIBOR to Alternative Rates. There are risks inherent with the transition to any Alternative Rate as the rate may behave differently than LIBOR in reaction to monetary, market and economic events.

Our LIBOR transition plan included work to ensure that our technology systems are prepared for the transition, our loan documents that reference LIBOR-based rates have been appropriately amended to reference other methods of interest rate determinations and internal and external stakeholders are apprised of the transition. We have already implemented certain Prime Rate, SOFR and BSBY conventions as we transitioned our products and transaction agreements to reference rates other than LIBOR. Commercial loans and investment securities will be transitioned to SOFR rates at the first reset date post June 30, 2023 and expected to fully transition off LIBOR before the end of the third quarter in 2023. Residential mortgages with adjustable rates will also transition to SOFR at the first reset date post June 30, 2023 but will fully transition off LIBOR during the fourth quarter of 2024 as resets occur six months prior to the effective date for terms up to 12 months. To see the recorded investment in our loan and lease portfolio by rate type, refer to Table 15 in the section titled “Loans and Leases” in this MD&A.

For a further discussion of the various risks the Company faces in connection with the expected replacement of LIBOR on its operations, see “Risk Factors—Market Risks—Certain of our businesses, our funding and financial products may be adversely affected by changes or the discontinuance of LIBOR” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 24, 2023.

### Operational Risk

Operational risk is the risk of loss arising from inadequate or failed processes, people or systems, external events (such as natural disasters), or compliance, reputational or legal matters, including the risk of loss resulting from fraud, litigation and breaches in data security. Operational risk is inherent in all of our business ventures and the management of that risk is important to the achievement of our objectives. We have a framework in place that includes the reporting and assessment of any operational risk events, and the assessment of our mitigating strategies within our key business lines. This framework is implemented through our policies, processes and reporting requirements. We measure and report operational risk using the seven operational risk event types projected by the Basel Committee on Banking Supervision in Basel II: (1) external fraud; (2) internal fraud; (3) employment practices and workplace safety; (4) clients, products and business practices; (5) damage to physical assets; (6) business disruption and system failures; and (7) execution, delivery and process management. Our operational risk review process is also a core part of our assessment of material new products or activities.

## Market risk

As filed, 189 characters.

See “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Governance and Quantitative and Qualitative Disclosures About Market Risk.”

## Controls and procedures

As filed, 1,484 characters.

#### Disclosure Controls and Procedures

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2023. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2023.

#### Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 463 characters.

Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 24, 2023 contain a discussion of our risk factors. Except to the extent that additional factual information disclosed in this Quarterly Report on Form 10-Q relates to such risk factors, there are no material changes from the risk factors as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Filed Aug 7, 2023.
Source: SEC EDGAR, the filing index for accession 0001558370-23-013602. Last ingested by Listed: Nov 2, 2026, 16:50 ET. No prices; not investment advice.