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What changed in HANCOCK WHITNEY CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of HANCOCK WHITNEY CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+539 added−542 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-28)

Top changes in HANCOCK WHITNEY CORP's 2024 10-K

539 paragraphs added · 542 removed · 401 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

161 edited+61 added−30 removed352 unchanged
Biggest changeOur recently revitalized corporate internship program continued to provide an inclusive experience that uniquely incorporates mentorship, financial literacy, community connection, and diversity learning opportunities across the organization and footprint. We proudly hosted the 2023 class of interns consisting of 56% females and 56% people of color, expanding our diverse pool of future talent and campus advocates.
Biggest changeWe were intentional with our campus recruiting, internship, and programming efforts across the footprint, to have a diverse talent pool that included historically Black colleges and universities, among others. Our corporate internship program continued to provide an inclusive experience that uniquely incorporates mentorship, financial literacy, community connection, and experiential learning opportunities across the organization and footprint.
Commercial and industrial loans are made available to businesses for working capital (including financing of inventory and receivables), business expansion, to facilitate the acquisition of a business, and for the purchase of equipment and machinery, including equipment leasing, among other items.
Commercial and industrial loans are made available to businesses for working capital (including financing of inventory and receivables), for business expansion, to facilitate the acquisition of a business, and for the purchase of equipment and machinery, including equipment leasing, among other items.
In attracting deposits and in our lending activities, we generally compete with other commercial banks, savings associations, credit 13 Table of Contents unions, mortgage banking firms, securities brokerage firms, mutual funds and insurance companies, and other financial and non-financial institutions offering similar products.
In 13 Table of Contents attracting deposits and in our lending activities, we generally compete with other commercial banks, savings associations, credit unions, mortgage banking firms, securities brokerage firms, mutual funds and insurance companies, and other financial and non-financial institutions offering similar products.
Although the Bank is not a member of the Federal Reserve, it is subject to Federal Reserve regulations that require the Bank to maintain reserves against transaction accounts (primarily checking accounts). These reserve requirements are subject to annual adjustment by the Federal Reserve. Effective March 26, 2020, reserve requirement ratios were reduced to zero percent. Anti-Money Laundering .
Reserves. Although the Bank is not a member of the Federal Reserve, it is subject to Federal Reserve regulations that require the Bank to maintain reserves against transaction accounts (primarily checking accounts). These reserve requirements are subject to annual adjustment by the Federal Reserve. Effective March 26, 2020, reserve requirement ratios were reduced to zero percent. Anti-Money Laundering .
The Company continues to enhance its diversity-learning opportunities with programs designed to listen and learn directly from the voices and experiences of our associates including Living Room Conversations, Cultural Tasting Series, Understanding Cultural Bias Training, and Associate Spotlights featuring New Associates, Women of Excellence, Random Acts of Kindness, and Living Our Core Values to help drive inclusive behaviors and inspire a growth mindset.
The Company continues to enhance its learning opportunities with programs and experiences designed to listen and learn directly from the voices and experiences of our associates including Living Room Conversations, Cultural Tasting Series, Understanding Cultural Bias Training, and Associate Spotlights featuring New Associates, Women of Excellence, Random Acts of Kindness, and Living Our Core Values to help drive inclusive behaviors and inspire a growth mindset.
Continued heightened market rates of interest rates would increase debt service requirements for some of our borrowers; adversely affect those borrowers’ ability to pay us as contractually obligated; potentially reduce loan demand or result in additional delinquencies or charge-offs; and increase the cost of our deposits, which are a primary source of funding.
Continued heightened interest rates would increase debt service requirements for some of our borrowers; adversely affect those borrowers’ ability to pay us as contractually obligated; potentially reduce loan demand or result in additional delinquencies or charge-offs; and increase the cost of our deposits, which are a primary source of funding.
The Bank is subject to the provisions of the Community Reinvestment Act (“CRA"), which imposes a continuing and affirmative obligation, consistent with their safe and sound operation, to help meet the credit needs of entire communities where the bank accepts deposits, including low- and moderate-income neighborhoods. The FDIC’s assessment of the Bank’s CRA record is made available to the public.
The Bank is subject to the provisions of the Community Reinvestment Act (CRA), which imposes a continuing and affirmative obligation, consistent with their safe and sound operation, to help meet the credit needs of entire communities where the bank accepts deposits, including low- and moderate-income neighborhoods. The FDIC’s assessment of the Bank’s CRA record is made available to the public.
Deposits The Bank has several programs designed to attract deposit accounts from consumers and businesses at interest rates generally consistent with market conditions. Deposits are the most significant funding source for the Company’s interest-earning assets. Interest paid on deposits represents a significant component of our interest expense.
Deposits The Bank has several programs designed to attract and retain deposit accounts from consumers and businesses at interest rates generally consistent with market conditions. Deposits are the most significant funding source for the Company’s interest-earning assets. Interest paid on deposits represents a significant component of our interest expense.
During 2006, the federal bank regulatory agencies released guidance on “Concentrations in Commercial Real Estate Lending” (the “Guidance”) and advised financial institutions of the risks posed by commercial real estate ("CRE") lending concentrations. The Guidance requires that appropriate processes be in place to identify, monitor and control risks associated with real estate lending concentrations.
During 2006, the federal bank regulatory agencies released guidance on “Concentrations in Commercial Real Estate Lending” (the Guidance) and advised financial institutions of the risks posed by commercial real estate (CRE) lending concentrations. The Guidance requires that appropriate processes be in place to identify, monitor and control risks associated with real estate lending concentrations.
Although management believes it has implemented an effective asset and liability management strategy to manage the potential effects of changes in interest rates, including the use of adjustable rate and/or short-term assets, and FHLB advances or longer term repurchase agreements, any substantial, unexpected change in market interest rates could have a material adverse effect on our financial condition and results of our operation and our strategies may not always be successful in managing the risks associated with changes in interest rates. 25 Table of Contents Changes in the policies of monetary authorities and other government action could adversely affect our profitability.
Although management believes it has implemented an effective asset and liability management strategy to manage the potential effects of changes in interest rates, including the use of adjustable rate and/or short-term assets, and FHLB advances or longer term repurchase agreements, any substantial, unexpected change in market interest rates could have a material adverse effect on our financial condition and results of our operation and our strategies may not always be successful in managing the risks associated with changes in interest rates. 26 Table of Contents Changes in the policies of monetary authorities and other government action could adversely affect our profitability.
Further, under the final rule, the FDIC retains the ability to cease collection early, extend the special assessment collection period one or more quarters beyond the initial eight-quarter collection period, or impose a final shortfall special assessment on a one-time basis after the receiverships for the two banks are terminated.
Under the final rule, the FDIC retains the ability to cease collection early, extend the special assessment collection period one or more quarters beyond the initial eight-quarter collection period, or impose a final shortfall special assessment on a one-time basis after the receiverships for the two banks are terminated.
We look to build strong, profitable client relationships over time and maintain a strong presence and position of influence in the communities we serve. Through our relationship-based approach, we have developed a deep knowledge of our customers and the markets in which they operate.
We look to build enduring, profitable client relationships over time and maintain a strong presence and position of influence in the communities we serve. Through our relationship-based approach, we have developed a deep knowledge of our customers and the markets in which they operate.
The FDIC is also authorized to approve mergers, consolidations and assumption of deposit liability transactions between insured banks and between insured banks and uninsured banks or institutions to prevent capital or surplus diminution in such transactions where the resulting, continuing or assumed bank is an insured nonmember state bank. Reserves.
The FDIC is also authorized to approve mergers, consolidations and assumption of deposit liability transactions between insured banks and between insured banks and uninsured banks or institutions to prevent capital or surplus diminution in such transactions where the resulting, continuing or assumed bank is an insured nonmember state bank.
In addition, the Dodd-Frank Act permits states to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the CFPB, and state attorneys general are permitted to enforce consumer protection rules adopted by the CFPB against certain institutions. Branching .
In addition, the Dodd-Frank Act permits states to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the CFPB, and state attorneys general are permitted to enforce consumer protection rules adopted by the CFPB against certain institutions.
The Company and its customers will need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns. We and our customers may face cost increases, asset value reductions and operating process changes.
The Company and its customers may need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns. We and our customers may face cost increases, asset value reductions and operating process changes.
Concerns over the long-term impacts of climate change have led and will continue to lead to global governmental efforts to mitigate those impacts. Consumers and businesses also may change their behavior and operations as a result of these concerns.
Concerns over the long-term impacts of climate change have led and will likely continue to lead to global governmental efforts to mitigate those impacts. Consumers and businesses also may change their behavior and operations as a result of these concerns.
The Deposit Insurance Fund (“DIF”) of the FDIC insures the deposits of the Bank generally up to a maximum of $250,000 per depositor, per insured bank, for each account ownership category. The FDIC charges insured depository institutions quarterly premiums to maintain the DIF.
The Deposit Insurance Fund (DIF) of the FDIC insures the deposits of the Bank generally up to a maximum of $250,000 per depositor, per insured bank, for each account ownership category. The FDIC charges insured depository institutions quarterly premiums to maintain the DIF.
The principal provisions of Title III of the USA PATRIOT Act require that regulated financial institutions, including state member banks: (i) establish an anti-money laundering program that includes training and audit components; (ii) comply with regulations regarding the verification of the identity of any person seeking to open an account; (iii) take additional required precautions with non-U.S. owned accounts; and (iv) perform certain verification and certification of money laundering risk for their foreign correspondent banking relationships.
The principal provisions of Title III of the USA PATRIOT Act require that regulated financial institutions, including state member banks: (i) establish an AML program that includes training and audit components; (ii) comply with regulations regarding the verification of the identity of any person seeking to open an account; (iii) take additional required precautions with non-U.S. owned accounts; and (iv) perform certain verification and certification of money laundering risk for their foreign correspondent banking relationships.
If the Bank ceases to be “well capitalized” or “well managed” under applicable regulatory standards, or if the Bank receives a rating of less than satisfactory under the Community Reinvestment Act of 1977 (“CRA”), the Federal Reserve may, among other things, place limitations on our ability to conduct these broader financial activities or, if the deficiencies persist, require us to divest the banking subsidiary or the businesses engaged in activities permissible only for financial holding companies.
If the Bank ceases to be “well capitalized” or “well managed” under applicable regulatory standards, or if the Bank receives a rating of less than satisfactory under the Community Reinvestment Act of 1977 (CRA), the Federal Reserve may, among other things, place limitations on our ability to conduct these broader financial activities or, if the deficiencies persist, require us to divest the banking subsidiary or the businesses engaged in activities permissible only for financial holding companies.
Commercial non-real estate loans may be secured by the assets being financed or other tangible or intangible business assets such as accounts receivable, inventory, enterprise value or commodity interests, and may incorporate a personal or corporate guarantee; however, some short-term loans may be made on an unsecured basis, including a relatively small portfolio of corporate credit cards, generally issued as a part of overall customer relationships.
Commercial non-real estate loans may be secured by the assets being financed or other tangible or intangible business assets such as accounts receivable, inventory, enterprise value, or commodity interest and may incorporate a personal or corporate guarantee; however, some short-term loans may be made on an unsecured basis, including a relatively small portfolio of corporate credit cards, generally issued as a part of overall customer relationships.
Natural disasters, such as hurricanes, flooding, tornados, freezes and other natural and man-made disasters, such as oil spills in the Gulf of Mexico, can disrupt our operations, result in significant damage to our properties or properties and businesses of our borrowers, including property pledged as collateral, interrupt our ability to conduct business, negatively affect the local economies in which we operate, and increase circumstances leading to litigation.
Natural disasters, such as hurricanes, flooding, tornados, freezes and other natural and man-made disasters, such as oil spills, can disrupt our operations, result in significant damage to our properties or properties and businesses of our borrowers, including property pledged as collateral, interrupt our ability to conduct business, negatively affect the local economies in which we operate, and increase circumstances leading to litigation.
We promote a pay-for-performance philosophy and motivate a majority of our associate population with incentive compensation designed to drive strategies, behaviors and business goals while effectively balancing risk and reward. We also use long-term incentive compensation to attract and retain top talent while keeping associates focused on long-term company performance, significant milestone achievements and creation of shareholder value.
We promote a pay-for-performance philosophy and motivate a majority of our associate population with incentive compensation designed to drive strategies, behaviors and business goals while effectively balancing risk and reward. We also use long-term incentive compensation to attract and retain top talent and to keep associates focused on long-term company performance, significant milestone achievements and creation of shareholder value.
On March 15, 2022, Congress enacted the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) to address references to LIBOR in contracts that (i) are governed by U.S. law; (ii) will not mature before June 30, 2023; and (iii) lack fallback provisions providing for a clearly defined and practicable replacement for LIBOR.
On March 15, 2022, Congress enacted the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) to address references to LIBOR in contracts that (i) are governed by U.S. law; (ii) did not mature before June 30, 2023; and (iii) lack fallback provisions providing for a clearly defined and practicable replacement for LIBOR.
These include, but are not limited to, the SEC, the Financial Industry Regulatory Authority (“FINRA”), federal and state banking regulators and various state regulators of insurance and brokerage activities. Violations of laws and regulations, or other unsafe and unsound practices, may result in regulatory agencies imposing fines or penalties, cease and desist orders, or taking other enforcement actions.
These include, but are not limited to, the SEC, the Financial Industry Regulatory Authority (FINRA), federal and state banking regulators and various state regulators of insurance and brokerage activities. Violations of laws and regulations, or other unsafe and unsound practices, may result in regulatory agencies imposing fines or penalties, cease and desist orders, or taking other enforcement actions.
Asset-based loans, such as accounts receivables and business inventory secured loans, may have limits on borrowing that are based on the collateral values. Our source of repayment for asset-based loans is generally the conversion of those assets to cash and may be substantially dependent on the ability of the borrower to collect amounts due from its customers.
Asset-based loans, such as accounts receivable and business inventory secured loans, may have limits on borrowing that are based on the collateral values. Our source of repayment for asset-based loans is generally the conversion of those assets to cash and may be substantially dependent on the ability of the borrower to collect amounts due from its customers.
The assessments of our financial reporting controls as of December 31, 2023 are included in this report under Item 9A. “Controls and Procedures.” Our failure to comply with these internal control rules may materially adversely affect our reputation, ability to obtain the necessary certifications to financial statements, and the value of our securities.
The assessments of our financial reporting controls as of December 31, 2024 are included in this report under Item 9A. “Controls and Procedures.” Our failure to comply with these internal control rules may materially adversely affect our reputation, ability to obtain the necessary certifications to financial statements, and the value of our securities.
The Company is subject to regulation by the State of Mississippi under its general business corporation laws, and to supervision by the Mississippi Department of Banking and Consumer Finance (the “MDBCF”). The Federal Reserve may also examine our non-bank subsidiaries. Various federal and state bodies regulate and supervise our brokerage, investment advisory and insurance agency operations.
The Company is subject to regulation by the State of Mississippi under its general business corporation laws, and to supervision by the Mississippi Department of Banking and Consumer Finance (the MDBCF). The Federal Reserve may also examine our non-bank subsidiaries. Various federal and state bodies regulate and supervise our brokerage, investment advisory and insurance agency operations.
Under the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), the Bank may continue to accept brokered deposits as long as it is either “well-capitalized” or “adequately-capitalized.” Trust Services The Bank, through its trust department, offers a full range of trust services on a fee basis.
Under the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), the Bank may continue to accept brokered deposits as long as it is either “well-capitalized” or “adequately-capitalized.” Trust Services The Bank, through its trust department, offers a full range of trust services on a fee basis.
In 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act granted certain forbearance rights and protection against foreclosure to borrowers with a “federally backed mortgage loan,” including certain first or subordinate lien loans designed principally for the occupancy of one to four families.
In 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act granted certain forbearance rights and protection against foreclosure to borrowers with a “federally backed mortgage loan,” including certain first or subordinate lien loans designed principally for the occupancy of one to four families.
In 2023, the Company’s human capital strategy continued to focus on evolving to meet the ever-changing needs of our associates and supporting various initiatives to improve operations and overall efficiency while maintaining our commitment to our clients, communities and shareholders. A strong and impactful human capital program begins at the top.
In 2024, the Company’s human capital strategy continued to focus on evolving to meet the ever-changing needs of our associates and supporting various initiatives to improve operations and overall efficiency while maintaining our commitment to our clients, communities and shareholders. A strong and impactful human capital program begins at the top.
Although we have information security procedures and controls in place, certain of our technologies, systems, networks, and clients’ devices and software have in the past and in the future likely will continue to be the target of cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, use, loss, change or destruction of our or our clients’ confidential, proprietary and other information (including personal identifying information of individuals), or otherwise disrupt our or our clients’ or other third parties’ business operations.
Although we have 30 Table of Contents information security procedures and controls in place, certain of our technologies, systems, networks, and clients’ devices and software have in the past and in the future likely will continue to be the target of cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, use, loss, change or destruction of our or our clients’ confidential, proprietary and other information (including personal identifying information of individuals), or otherwise disrupt our or our clients’ or other third parties’ business operations.
Our underwriting standards address the following criteria: • collateral requirements; • guarantor requirements (including policies on financial statements, tax returns, and guarantees); • requirements regarding appraisals and their review; • loan approval hierarchy; • standard consumer and small business credit scoring underwriting criteria (including credit score thresholds, maximum maturity and amortization, loan-to-value limits, global debt service coverage, and debt to income limits); • commercial real estate and commercial and industrial underwriting guidelines (including minimum debt service coverage ratio, maximum amortization, minimum equity requirements, and maximum loan-to-value ratios); • lending limits; and • credit approval authorities.
Our underwriting standards address the following criteria: • collateral requirements; • guarantor requirements (including policies on financial statements, tax returns, and guarantees); • appraisal requirements (and their review); • loan approval hierarchy; • standard consumer and small business credit scoring underwriting criteria (including credit score thresholds, maximum maturity and amortization, loan-to-value limits, global debt service coverage, and debt to income limits); • commercial real estate and commercial and industrial underwriting guidelines (including minimum debt service coverage ratio, maximum amortization, minimum equity requirements, and maximum loan-to-value ratios); • lending limits; and • credit approval authorities.
As further described below, the Company and the Bank are each well-capitalized under applicable regulatory standards as of December 31, 2023, and the Bank has a rating of “Satisfactory” in its most recent CRA evaluation. 15 Table of Contents Source of Strength Obligations .
As further described below, the Company and the Bank are each well-capitalized under applicable regulatory standards as of December 31, 2024, and the Bank has a rating of “Satisfactory” in its most recent CRA evaluation. 15 Table of Contents Source of Strength Obligations .
The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), among other things, requires the federal bank regulatory agencies to take “prompt corrective action” regarding depository institutions that do not meet minimum capital requirements.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), among other things, requires the federal bank regulatory agencies to take “prompt corrective action” regarding depository institutions that do not meet minimum capital requirements.
If the Federal Reserve were to apply the same or a very similar well-capitalized standard to bank holding companies as that applicable to the Bank, the Company’s capital ratios as of December 31, 2023 would exceed such revised well-capitalized standard.
If the Federal Reserve were to apply the same or a very similar well-capitalized standard to bank holding companies as that applicable to the Bank, the Company’s capital ratios as of December 31, 2024 would exceed such revised well-capitalized standard.
Failure to successfully manage these risks in the development and implementation of new lines of business and/or new products or services could have a material adverse effect on our business and, in turn, our financial condition and results of operations. We may not realize the expected benefits from our efficiency and growth initiatives, which could negatively impact our future profitability.
Failure to successfully manage these risks in the development and implementation of new lines of business and/or new products or services could have a material adverse effect on our business and, in turn, our financial condition and results of operations. 33 Table of Contents We may not realize the expected benefits from our efficiency and growth initiatives, which could negatively impact our future profitability.
Indirect nonresidential loans include automobile financing provided to the consumer through an agreement with automobile dealerships, though we are no longer engaged in this type of lending and the remaining portfolio continues to decline.
Indirect nonresidential loans include automobile financing provided to the consumer through an agreement with automobile dealerships, though we are no longer engaged in this type of lending and the remaining portfolio continues to decrease.
To ensure our total rewards programs remain competitive, we engage in nationally recognized third-party compensation and benefits surveys and utilize the expertise of an independent executive compensation firm, an outside benefits broker, and benefits consulting firms.
For our total rewards programs to remain competitive, we engage in nationally recognized third-party compensation and benefits surveys and utilize the expertise of an independent executive compensation firm, an outside benefits broker, and benefits consulting firms.
Interest rates offered on interest-bearing deposits are determined based on a number of factors, including, but not limited to (1) interest rates offered in local markets by competitors, (2) current and expected economic conditions, (3) anticipated future interest rates, (4) the expected amount and timing of funding needs, and (5) the availability and cost of alternative funding sources.
Interest rates offered on interest-bearing deposits are determined based on a number of factors, including, but not limited to (1) interest rates offered in local markets by competitors, (2) current and expected economic conditions, (3) anticipated 9 Table of Contents future interest rates, (4) the expected amount and timing of funding needs, and (5) the availability and cost of alternative funding sources.
Through customized learning plans, associates are provided targeted resources to ensure they gain the knowledge and skills needed to successfully perform their duties in accordance with the Company’s practices. Associates also have access to a full suite of optional classes and self-directed resources to personalize career development and prioritize their unique needs and growth opportunities.
Through customized learning plans, associates are provided targeted resources in order to gain the knowledge and skills needed to successfully perform their duties in accordance with the Company’s practices. Associates also have access to a full suite of optional classes and self-directed resources to personalize career development and prioritize their unique needs and growth opportunities.
For additional information regarding laws and regulations to which our business is subject, see “Supervision and Regulation.” 33 Table of Contents Any of the laws or regulations to which we are subject, including tax laws, regulations or their interpretations, may be modified or changed from time to time, and we cannot be assured that such modifications or changes will not adversely affect us.
For additional information regarding laws and regulations to which our business is subject, see “Supervision and Regulation.” Any of the laws or regulations to which we are subject, including tax laws, regulations or their interpretations, may be modified or changed from time to time, and we cannot be assured that such modifications or changes will not adversely affect us.
Past, present and future litigation has included or could include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. We are also involved from time to time in other reviews, investigations and proceedings (both formal and informal) by governmental, law enforcement and self-regulatory agencies regarding our business.
Past, present and future litigation has included or could include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. We are also involved from time to time in 35 Table of Contents other reviews, investigations and proceedings (both formal and informal) by governmental, law enforcement and self-regulatory agencies regarding our business.
Recognizing the development of our associates is critical to our success, the Company invests in resources to ensure associates have access to the tools needed to do their jobs effectively and succeed within the organization, including technical, skills-based, management and leadership programs, as well as formal talent, performance management and succession planning processes.
Recognizing the development of our associates is critical to our success, the Company invests in resources so that associates have access to the tools needed to do their jobs effectively and succeed within the organization, including technical, skills-based, management and leadership programs, as well as formal talent, performance management and succession planning processes.
Further, the disruption following these types of events have and could in the future generate significant market trading volatility among publicly traded bank holding companies and, in particular, regional banks like Hancock Whitney Bank. 26 Table of Contents Tax law and regulatory changes could adversely affect our financial condition and results of operations.
Further, the disruption following these types of events have and could in the future generate significant market trading volatility among publicly traded bank holding companies and, in particular, regional banks like Hancock Whitney Bank. Tax law and regulatory changes could adversely affect our financial condition and results of operations.
Our operating results may also be negatively impacted by the value of our securities portfolio, if liquidity and/or business strategy necessitate the sales of securities in a loss position, and/or access to select sources of liquidity could be limited should 27 Table of Contents unrealized losses continue to grow to exceed certain levels.
Our operating results may also be negatively impacted by the value of our securities portfolio, if liquidity and/or business strategy necessitate the sales of securities in a loss position, and/or access to select sources of liquidity could be limited should unrealized losses continue to grow to exceed certain levels.
The results of our lending activities and the relative risk of the loan portfolio are discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 6 Table of Contents The Bank has a set of loan policies, underwriting standards and key underwriting functions designed to achieve a consistent lending and credit review approach.
The results of our lending activities and the relative risk of the loan portfolio are discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Bank has a set of loan policies, underwriting standards and key underwriting functions designed to achieve a consistent lending and credit review approach.
The final rule identifies replacement benchmark rates based on SOFR to replace overnight, one-month, three-month, six-month, and 12-month LIBOR in contracts subject to the LIBOR Act. Anti-Bribery Laws.
The final rule identified replacement benchmark rates based on SOFR to replace overnight, one-month, three-month, six-month, and 12-month LIBOR in contracts subject to the LIBOR Act. Anti-Bribery Laws.
Under the regulations, if a regulator determines that a bank fails to meet any standards prescribed by the guidelines, the regulator may require the bank to submit an acceptable plan to achieve compliance, consistent with deadlines for the submission and review of such safety and soundness compliance plans. Examinations .
Under the regulations, if a regulator determines that a bank fails to meet any standards prescribed by the guidelines, the regulator may require the bank to submit an acceptable plan to achieve compliance, consistent with deadlines for the submission and review of such safety and soundness compliance plans. 18 Table of Contents Examinations .
Further, U.S. financial institutions and financial services companies will continue to face breaches 29 Table of Contents in security of their websites or other systems, including attempts to shut down access to their networks and systems in an attempt to extract compensation from them to regain control.
Further, U.S. financial institutions and financial services companies will continue to face breaches in security of their websites or other systems, including attempts to shut down access to their networks and systems in an attempt to extract compensation from them to regain control.
While an impairment charge does not impact regulatory capital, it could have a material adverse effect on our results of operations. Risks Related to Our Business Strategy We are subject to industry competition which may have an impact upon our success.
While an impairment charge does not impact regulatory capital, it could have a material adverse effect on our results of operations. 32 Table of Contents Risks Related to Our Business Strategy We are subject to industry competition which may have an impact upon our success.
The operations of the Bank may also be subject to applicable Office of the Comptroller of the Currency (“OCC”) regulation to the extent state banks are granted parity with national banks.
The operations of the Bank may also be subject to applicable Office of the Comptroller of the Currency (OCC) regulation to the extent state banks are granted parity with national banks.
The FDIC has adopted the Federal Financial Institutions Examination Council’s (“FFIEC”) rating system and assigns each financial institution a confidential composite rating based on an evaluation and rating of six essential components of an institution’s financial condition and operations, including Capital Adequacy, Asset Quality, Management, Earnings, Liquidity and Sensitivity to Market Risk (“CAMELS”), as well as the quality of risk management practices.
The FDIC has adopted the Federal Financial Institutions Examination Council’s (FFIEC) rating system and assigns each financial institution a confidential composite rating based on an evaluation and rating of six essential components of an institution’s financial condition and operations, including Capital Adequacy, Asset Quality, Management, Earnings, Liquidity and Sensitivity to Market Risk (CAMELS), as well as the quality of risk management practices.
On December 16, 2022, the FRB adopted a final rule to implement the LIBOR Act by identifying benchmark rates based on SOFR (Secured Overnight Financing Rate) that will replace LIBOR in certain financial contracts after June 30, 2023.
On December 16, 2022, the FRB adopted a final rule to implement the LIBOR Act by identifying benchmark rates based on SOFR (Secured Overnight Financing Rate) that replaced LIBOR in certain financial contracts after June 30, 2023.
Bank Regulation The operation of the Bank is subject to state and federal statutes applicable to state banks and the regulations of the Federal Reserve, the FDIC and the Consumer Financial Protection Bureau (“CFPB”).
Bank Regulation The operation of the Bank is subject to state and federal statutes applicable to state banks and the regulations of the Federal Reserve, the FDIC and the Consumer Financial Protection Bureau (CFPB).
FinCEN has adopted rules that require financial institutions to obtain beneficial ownership information with respect to legal entities with which such institutions conduct business, subject to certain exclusions and exemptions. Bank regulators are focusing their examinations on anti-money laundering compliance, and we continue to monitor and augment, where necessary, our anti-money laundering compliance programs.
FinCEN has adopted rules that require financial institutions to obtain beneficial ownership information with respect to legal entities with which such institutions conduct business, subject to certain exclusions and exemptions. Bank regulators are focusing their examinations on AML compliance, and we continue to monitor and augment, where necessary, our AML compliance programs.
The sale of fixed-rate mortgage loans allows the Bank to manage the interest rate risks related to such lending operations. 8 Table of Contents Consumer Consumer loans include second lien mortgage home loans, home equity lines of credit and nonresidential consumer purpose loans. Nonresidential consumer loans include both direct and indirect loans.
The sale of fixed-rate mortgage loans allows the Bank to manage the interest rate risks related to such lending operations. Consumer Consumer loans include second lien mortgage home loans, home equity lines of credit and nonresidential consumer purpose loans. Nonresidential consumer loans include both direct and indirect loans.
A continued focus of governmental policy relating to financial institutions in recent years has been combating money laundering and terrorist financing. The USA PATRIOT Act broadened the application of anti-money laundering regulations to apply to additional types of financial institutions such as broker-dealers, investment advisors and insurance companies, and strengthened the ability of the U.S.
A continued focus of governmental policy relating to financial institutions has been combating money laundering and terrorist financing. The USA PATRIOT Act broadened the application of anti-money laundering (AML) regulations to apply to additional types of financial institutions such as broker-dealers, investment advisors and insurance companies, and strengthened the ability of the U.S.
Trade restrictions on products include export and import restrictions recently levied against Russia. In addition, to the extent changes in the political environment have a negative impact on the Company or on the markets in which the Company operates its business, its results of operations and financial condition could be materially and adversely impacted.
Trade restrictions on products include export and import restrictions, such as those levied against Russia. In addition, to the extent changes in the political environment have a negative impact on the Company or on the markets in which the Company operates its business, its results of operations and financial condition could be materially and adversely impacted.
We risk damage to our brand and reputation in certain sectors if we fail to act in response to ESG concerns, such as 35 Table of Contents diversity, equity and inclusion, environmental stewardship, human capital management, support for our local communities, corporate governance and transparency, or fail to consider ESG factors in our business operations.
We risk damage to our brand and reputation in certain sectors if we fail to act in response to ESG concerns, such as diversity, equity and inclusion, environmental stewardship, human capital management, support for our local communities, corporate governance and transparency, or fail to consider ESG factors in our business operations.
Increases in funding, deposit insurance or other costs as a result of these types of events have and could in the future materially adversely affect our financial condition and results of operations.
Increases in funding, deposit insurance or other costs as a result of these types of events 27 Table of Contents have and could in the future materially adversely affect our financial condition and results of operations.
These resources are used to objectively evaluate our compensation and benefits packages and benchmark them against industry peers and similarly situated organizations on an annual basis. 11 Table of Contents Our compensation philosophy is a performance-based strategy which aligns our programs with our business goals and objectives.
These resources are used to objectively evaluate our compensation and benefits packages and benchmark them against industry peers and similarly situated organizations on an annual basis. Our compensation philosophy is a performance-based strategy which aligns our programs with our business goals and objectives.
Further, the Foreign Corrupt Practices Act makes it unlawful to make payments to foreign government officials to assist in obtaining or retaining business. The Company and the Bank have implemented a Code of Business Ethics that governs the behavior of its officers and employees.
Further, the Foreign Corrupt Practices Act makes it unlawful to make payments to foreign government officials to assist in obtaining or retaining business. 22 Table of Contents The Company and the Bank have implemented a Code of Business Ethics that governs the behavior of its officers, employees, and directors.
Like commercial non-real estate, these loans 7 Table of Contents are primarily made based on the identified cash flows of the borrower, but also have the added strength of the value of underlying real estate collateral.
Like commercial non-real estate, these loans are primarily made based on the identified cash flows of the borrower, but also have the added strength of the value of underlying real estate collateral.
If any of these representations and warranties are incorrect, we may be required to indemnify the purchaser for any related losses, or we may be required to repurchase part or all of the affected loans.
If any of these representations and warranties are incorrect, we may be required to indemnify the purchaser for any 29 Table of Contents related losses, or we may be required to repurchase part or all of the affected loans.
Further, bank failures, including failures in the first half of 2023, have and may in the future diminish public confidence in small and regional banks’ abilities to safeguard deposits in excess of federally insured limits, which could prompt customers to maintain their deposits with larger financial institutions.
Further, bank failures have and may in the future diminish public confidence in small and regional banks’ abilities to safeguard deposits in excess of federally insured limits, which could prompt customers to maintain their deposits with larger financial institutions.
The Office of Foreign Assets Control (“OFAC”) is responsible for helping to ensure that U.S. entities do not engage in transactions with certain prohibited parties, as defined by various Executive Orders and acts of Congress.
Economic Sanctions . The Office of Foreign Assets Control (OFAC) is responsible for helping to ensure that U.S. entities do not engage in transactions with certain prohibited parties, as defined by various Executive Orders and acts of Congress.
Underscoring our ongoing commitment to a culture of inclusion and belonging, the Company established a DEI Council sponsored by the President and CEO in 2018, which consists of associates from a variety of locations, business segments, genders, races, ethnicities, tenures and experiences who work together as thought leaders to promote and foster an inclusive workplace culture that appreciates differences and values all perspectives.
Underscoring our ongoing commitment to a culture of inclusion and belonging, the Company has a diversity council sponsored by the President and CEO, which consists of associates from a variety of locations, business segments, genders, races, ethnicities, tenures and experiences who work together as thought leaders to promote and foster an inclusive workplace culture that appreciates differences and values all perspectives.
The agencies also must prescribe standards for asset quality, earnings, and stock valuation, as well as standards for compensation, fees and benefits. The federal banking agencies have adopted regulations and Interagency Guidelines 18 Table of Contents Establishing Standards for Safety and Soundness to implement these required standards.
The agencies also must prescribe standards for asset quality, earnings, and stock valuation, as well as standards for compensation, fees and benefits. The federal banking agencies have adopted regulations and Interagency Guidelines Establishing Standards for Safety and Soundness to implement these required standards.
Supervision, regulation, and examination of the Company, the Bank, and our respective subsidiaries by the appropriate regulatory agencies, as described herein, are intended primarily for the protection of consumers, bank depositors and the Deposit Insurance Fund (“DIF”) of the FDIC, and the U.S. banking and financial system, rather than holders of our capital stock. 14 Table of Contents Bank Holding Company Regulation The Company is subject to extensive supervision and regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) pursuant to the Bank Holding Company Act of 1956, as amended (the “BHC Act”).
Supervision, regulation, and examination of the Company, the Bank, and our respective subsidiaries by the appropriate regulatory agencies, as described herein, are intended primarily for the protection of consumers, bank depositors and the Deposit Insurance Fund (DIF) of the FDIC, and the U.S. banking and financial system, rather than holders of our capital stock. 14 Table of Contents Bank Holding Company Regulation The Company is subject to extensive supervision and regulation by the Board of Governors of the Federal Reserve System (the Federal Reserve) pursuant to the Bank Holding Company Act of 1956, as amended (the BHC Act).
Public funds are only one of many possible sources of liquidity that the Bank has available to draw upon as part of its liquidity funding strategy as set by ALCO. Brokered deposits, including time deposits and money market accounts, totaled $590 million at December 31, 2023.
Public funds are only one of many possible sources of liquidity that the Bank has available to draw upon as part of its liquidity funding strategy as set by ALCO. Brokered deposits, including time deposits and money market accounts, totaled $6.9 million at December 31, 2024.
Workforce Demographics As of December 31, 2023, the Company had 3,591 full-time equivalent associates, predominately located in our core footprint of Mississippi, Louisiana, Alabama, Florida, Texas and Tennessee, compared to 3,627 associates as of December 31, 2022.
Workforce Demographics As of December 31, 2024, the Company had 3,476 full-time equivalent associates, predominately located in our core footprint of Mississippi, Louisiana, Alabama, Florida, Texas and Tennessee, compared to 3,591 associates as of December 31, 2023.
The banking agencies have 60 days to act on the notice, and take into account several factors, including the resources of the acquirer and the antitrust effects of the acquisition.
The banking agencies 36 Table of Contents have 60 days to act on the notice, and take into account several factors, including the resources of the acquirer and the antitrust effects of the acquisition.
The Bank was well capitalized at December 31, 2023, and brokered deposits are not restricted.
The Bank was well capitalized at December 31, 2024, and brokered deposits are not restricted.
The Bank is subject to restrictions on extensions of credit and certain other transactions between the Bank and the Company or any nonbank affiliate.
Transactions with Affiliates and Insiders. The Bank is subject to restrictions on extensions of credit and certain other transactions between the Bank and the Company or any nonbank affiliate.
We continually work to ensure a consistent lending process across our banking footprint, to strengthen the underwriting criteria we employ to evaluate new loans and loan renewals, and to diversify our loan portfolio in terms of type, industry and geographical concentration.
We continually work to provide a consistent lending process across our banking footprint, to strengthen the underwriting criteria we employ to evaluate new loans and loan renewals, and to 6 Table of Contents diversify our loan portfolio in terms of type, industry and geographical concentration.
In addition, the Federal Deposit Insurance Act provides that, in the event of the liquidation or other resolution of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution, including those of the parent bank holding company. 19 Table of Contents Transactions with Affiliates and Insiders.
In addition, the Federal Deposit Insurance Act provides that, in the event of the liquidation or other resolution of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution, including those of the parent bank holding company.
We continually monitor our concentration of commercial real estate, healthcare, shared national credits, leveraged loans and energy-related loans to ensure the mix is consistent with our risk tolerance.
We continually monitor our concentration of commercial real estate, healthcare, shared national credits, leveraged loans and energy-related loans so that the mix is consistent with our risk tolerance.
"Cybersecurity" for further discussion. Debit Interchange Fees. Interchange fees are fees that merchants pay to credit card companies and card-issuing banks such as the Bank for processing electronic payment transactions on their behalf.
Interchange fees are fees that merchants pay to credit card companies and card-issuing banks such as the Bank for processing electronic payment transactions on their behalf.
In addition, we also employ enhanced due diligence on select customers, portfolios, industry sectors and concentrations as economic, weather or other risk events occur to ensure alignment between credit risk appetite and concentration risk management.
In addition, we also employ enhanced due diligence on select customers, portfolios, industry sectors and concentrations for economic, weather or other risk events to foster alignment between credit risk appetite and concentration risk management.
The Bank has a rating of “Satisfactory” in its most recent CRA evaluation. On October 24, 2023, the Office of the Comptroller of the Currency (“OCC”), Federal Reserve, and FDIC issued a final rule to modernize their respective CRA regulations.
The Bank has a rating of “Satisfactory” in its most recent CRA evaluation. On October 24, 2023, the OCC, Federal Reserve, and FDIC issued a final rule to modernize their respective CRA regulations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Incident Response Plan includes procedures for escalation and reporting of potentially significant cybersecurity incidents to the Company’s Chief Operating Officer, Chief Financial Officer, Chief Risk Officer, and our Board Risk Committee. Impacts of Cybersecurity Incidents To date, the Company has not experienced a cybersecurity incident that has materially impacted our business strategy, results of operations, or financial condition.
Biggest changeThe Incident Response Plan includes procedures for timely escalation and reporting of potentially significant cybersecurity incidents to the Company’s Chief Operating Officer, Chief Financial Officer, Chief Risk Officer, our Board Risk Committee, law enforcement, government agencies and impacted parties, as needed.
We communicate this responsibility to associates upon hiring and regularly throughout their employment. We require each associate to complete training to protect the confidentiality of client information at the time of hire and during each year of employment. Associates must successfully pass a test to demonstrate understanding of these requirements and provide acknowledgement of their responsibilities.
We communicate this responsibility to associates upon hiring and regularly throughout their employment. We require each associate to complete training to 38 Table of Contents protect the confidentiality of client information at the time of hire and during each year of employment. Associates must successfully pass a test to demonstrate understanding of these requirements and provide acknowledgement of their responsibilities.
“Risk Factors” in this document for further discussion of the risks associated with an interruption or breach in our information systems or infrastructure. 37 Table of Contents Cybersecurity Governance Our Board of Directors is responsible for overseeing the Company’s business and affairs, including risks associated with cybersecurity threats.
“Risk Factors” in this document for further discussion of the risks associated with an interruption or breach in our information systems or infrastructure. Cybersecurity Governance Our Board of Directors is responsible for overseeing the Company’s business and affairs, including risks associated with cybersecurity threats.
As part of our information security program, we have adopted an Information and Cybersecurity Incident Response Plan (“Incident Response Plan”), which is administered by our Chief Information Security Officer (“CISO”) in close collaboration with our Director of Enterprise IT Risk. The Incident Response Plan describes the Company’s processes, procedures, and responsibilities for responding to cybersecurity incidents.
As part of our information security program, we have adopted an Information and Cybersecurity Incident Response Plan (Incident Response Plan), which is administered by our Chief Information Security Officer (CISO) in close collaboration with our Director of Enterprise IT Risk. The Incident Response Plan describes the Company’s processes, procedures, and responsibilities for responding to cybersecurity incidents.
The Enterprise Risk Management program assists senior management in identifying, assessing, monitoring, and managing risk, including cybersecurity risk, in a rapidly changing environment. The Board Risk Committee provides reports to the full Board on the Company’s information security program on an annual basis.
The Enterprise Risk Management program assists senior management in identifying, assessing, monitoring, and managing risk, including cybersecurity risk, in a rapidly changing 39 Table of Contents environment. The Board Risk Committee provides reports to the full Board on the Company’s information security program on an annual basis.
Our CISO has cybersecurity experience spanning more than two decades. Prior experience includes senior security roles in large government agencies and Fortune 200 companies. He has spoken at area colleges and various industry events about information security. He holds a degree in electrical engineering, is a graduate of banking school, and maintains several industry certifications.
Prior experience includes senior security roles in large government agencies and Fortune 200 companies. He has spoken at area colleges and various industry events about information security. He holds a degree in electrical engineering, is a graduate of banking school, and maintains several industry certifications.
In this role, the CISO manages the Company’s information security and day-to-day cybersecurity operations and supports the information security risk oversight responsibilities of the Board and its committees. The CISO is a member of the Company’s Corporate Operations group and reports to our Chief Information Officer, who in turn reports to our Chief Operating Officer.
In this role, the CISO manages the Company’s information security and day-to-day cybersecurity operations and supports the information security risk oversight responsibilities of the Board and its committees.
Added
Impacts of Cybersecurity Incidents To date, the Company has no knowledge that we have experienced a cybersecurity incident that has or is reasonably likely to have a material impact on our business strategy, results of operations, or financial condition.
Added
The CISO is a member of the Company’s Corporate Operations group and reports to our Chief Information Officer, who reports to our Head of Operations, Technology and Products, who in turn reports to our Chief Operating Officer. Our CISO has cybersecurity experience spanning more than two decades.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Bank and its subsidiaries hold a variety of property interests acquired in settlement of loans. Some of these properties were acquired in transactions before 1979 and are carried at nominal amounts on our balance sheet and reflected income of $0.1 million in our 2023 operating results.
Biggest changeSome of these properties were acquired in transactions before 1979 and are carried at nominal amounts on our balance sheet and reflected income of $0.1 million in our 2024 operating results. 40 Table of Contents
Additionally, the Company operates combined loan and deposit production offices in the metropolitan areas of Nashville, Tennessee and Atlanta, Georgia. The Company owns approximately 70% of these facilities, and the remaining banking facilities are subject to leases, each of which we consider reasonable and appropriate for its location.
Additionally, the Company operates combined loan and deposit production offices in the metropolitan areas of Nashville, Tennessee and Atlanta, Georgia. The Company owns over 75% of these facilities, and the remaining banking facilities are subject to leases, each of which we consider reasonable and appropriate for its location.
The Company operates 182 full-service banking and financial services offices and 225 automated teller machines across our market, primarily in the Gulf south corridor, including southern and central Mississippi; southern and central Alabama; southern, central and northwest Louisiana; the northern, central, and panhandle regions of Florida; and certain areas of east and northeast Texas, including Houston, Beaumont, Dallas, Austin, and San Antonio, among others.
The Company operates 180 full-service banking and financial services offices and 223 automated teller machines across our market, primarily in the Gulf south corridor, including southern and central Mississippi; southern and central Alabama; southern, central and northwest Louisiana; the northern, central, and panhandle regions of Florida; and certain areas of east and northeast Texas.
We ensure that all properties, whether owned or leased, are maintained in suitable condition. We also evaluate our banking 38 Table of Contents facilities on an ongoing basis to identify possible under-utilization and to determine the need for functional improvements, relocations, closures or possible sales.
We ensure that all properties, whether owned or leased, are maintained in suitable condition. We also evaluate our banking facilities on an ongoing basis to identify possible under-utilization and to determine the need for functional improvements, relocations, closures or possible sales. The Bank and its subsidiaries hold a variety of property interests acquired in settlement of loans.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMINE SAFETY DISCLOSURES Not applicable. 39 Table of Contents PART II
Biggest changeMINE SAFETY DISCLOSURES Not applicable. 41 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

47 edited+23 added−31 removed17 unchanged
Biggest changeConsolidated Financial Results ( in thousands, except per share data ) 2023 2022 2021 Income Statement: Interest income (a) $ 1,620,497 $ 1,137,063 $ 982,258 Interest income (te) (b) 1,631,604 1,147,411 993,437 Interest expense 522,898 87,060 49,023 Net interest income (te) 1,108,706 1,060,351 944,414 Provision for credit losses 59,103 (28,399 ) (77,494 ) Noninterest income 288,480 331,486 364,334 Noninterest expense 836,848 750,692 807,007 Income before income taxes 490,128 659,196 568,056 Income tax expense 97,526 135,107 104,841 Net income $ 392,602 $ 524,089 $ 463,215 Supplemental disclosure items - included above, pre-tax Included in noninterest income: Loss on securities portfolio restructure $ (65,380 ) $ — $ — Gain on sale of parking facility 16,126 — — Gain on sale of Hancock Horizon Funds — — 4,576 Gain on sale of MasterCard Class B common stock — — 2,800 Gain on hurricane-related insurance settlement — — 3,600 Included in noninterest expense: FDIC special assessment 26,123 — — Efficiency initiatives — — 38,296 Hurricane related expenses — — 4,412 Loss on redemption of subordinated notes — — 4,165 Balance Sheet Data: Period end balance sheet data Loans $ 23,921,917 $ 23,114,046 $ 21,134,282 Earning assets 32,175,097 31,873,027 33,610,435 Total assets 35,578,573 35,183,825 36,531,205 Noninterest-bearing deposits 11,030,515 13,645,113 14,392,808 Total deposits 29,690,059 29,070,349 30,465,897 Stockholders' equity 3,803,661 3,342,628 3,670,352 Average balance sheet data Loans $ 23,594,579 $ 21,915,393 $ 21,207,942 Earning assets 33,160,791 32,498,213 32,060,863 Total assets 35,633,442 35,059,178 35,075,392 Noninterest-bearing deposits 11,919,234 14,298,022 13,323,978 Total deposits 29,478,481 29,497,470 29,093,709 Stockholders' equity 3,528,911 3,405,206 3,545,255 Common Shares Data: Earnings per share - basic $ 4.51 $ 6.00 $ 5.23 Earnings per share - diluted 4.50 5.98 5.22 Cash dividends per common share 1.20 1.08 1.08 Book value per share (period end) 44.05 38.89 42.31 Tangible book value per share (period end) 33.63 28.29 31.64 Weighted average number of shares - diluted 86,423 86,394 87,027 Period end number of shares 86,345 85,941 86,749 Performance and other data: Return on average assets 1.10 % 1.49 % 1.32 % Return on average common equity 11.13 % 15.39 % 13.07 % Return on average tangible common equity 14.97 % 21.07 % 17.74 % Tangible common equity (c) 8.37 % 7.09 % 7.71 % Tier 1 common equity 12.33 % 11.41 % 11.09 % Net interest margin (te) 3.34 % 3.26 % 2.95 % Noninterest income as a percentage of total revenue (te) 20.65 % 23.82 % 27.84 % Efficiency ratio (d) 55.25 % 52.93 % 57.29 % Allowance for loan loss as a percentage of total loans 1.29 % 1.33 % 1.62 % Allowance for credit loss as a percentage of total loans 1.41 % 1.48 % 1.76 % Annualized net charge-offs to average loans 0.27 % 0.01 % 0.15 % Nonaccrual assets as a percentage of loans, ORE and foreclosed assets 0.26 % 0.18 % 0.32 % FTE headcount 3,591 3,627 3,486 45 Table of Contents ($ in thousands ) 2023 2022 2021 Reconciliation of pre-provision net revenue (te) and adjusted pre-provision net revenue (te) (non-GAAP measures) (e) Net income (GAAP) $ 392,602 $ 524,089 $ 463,215 Provision for credit losses 59,103 (28,399 ) (77,494 ) Income tax expense 97,526 135,107 104,841 Pre-provision net revenue 549,231 630,797 490,562 Taxable equivalent adjustment 11,107 10,348 11,179 Pre-provision net revenue (te) 560,338 641,145 501,741 Adjustments from supplemental disclosure items Loss on securities portfolio restructure 65,380 — — Gain on sale of parking facility (16,126 ) — — Gain on sale of Hancock Horizon Funds — — (4,576 ) Gain on sale of MasterCard Class B common stock — — (2,800 ) Gain on hurricane-related insurance settlement — — (3,600 ) FDIC special assessment 26,123 — — Efficiency initiatives — — 38,296 Hurricane related expenses — — 4,412 Loss on redemption of subordinated notes — — 4,165 Adjusted pre-provision net revenue (te) $ 635,715 $ 641,145 $ 537,638 Reconciliation of revenue (te), adjusted revenue (te) and efficiency ratio (non-GAAP measures) (e) Net interest income $ 1,097,599 $ 1,050,003 $ 933,235 Noninterest income 288,480 331,486 364,334 Total GAAP revenue 1,386,079 1,381,489 1,297,569 Taxable equivalent adjustment 11,107 10,348 11,179 Total revenue (te) 1,397,186 1,391,837 1,308,748 Adjustments from supplemental disclosure items Loss on securities portfolio restructure 65,380 — — Gain on sale of parking facility (16,126 ) — — Gain on sale of Hancock Horizon Funds — — (4,576 ) Gain on sale of MasterCard Class B common stock — — (2,800 ) Gain on hurricane-related insurance settlement — — (3,600 ) Adjusted revenue 1,446,440 1,391,837 1,297,772 GAAP noninterest expense 836,848 750,692 807,007 Amortization of intangibles (11,556 ) (14,033 ) (16,665 ) Adjustments from supplemental disclosure items FDIC special assessment (26,123 ) — — Efficiency initiatives — — (38,296 ) Hurricane related expenses — — (4,412 ) Loss on redemption of subordinated notes — — (4,165 ) Adjusted noninterest expense $ 799,169 $ 736,659 $ 743,469 Efficiency ratio (d) 55.25 % 52.93 % 57.29 % (a) Interest income includes the net impact of discount accretion and premium amortization arising from business combinations totaling $2.4 million, $4.7 million, and $8.6 million for the years ended December 31, 2023, 2022 and 2021, respectively .
Biggest changeConsolidated Financial Results ( in thousands, except per share data ) 2024 2023 2022 Income Statement: Interest income (a) $ 1,692,991 $ 1,620,497 $ 1,137,063 Interest income (te) (b) 1,704,077 1,631,604 1,147,411 Interest expense 611,070 522,898 87,060 Net interest income (te) 1,093,007 1,108,706 1,060,351 Provision for credit losses 52,167 59,103 (28,399 ) Noninterest income 364,129 288,480 331,486 Noninterest expense 819,910 836,848 750,692 Income before income taxes 573,973 490,128 659,196 Income tax expense 113,158 97,526 135,107 Net income $ 460,815 $ 392,602 $ 524,089 Supplemental disclosure items - included above, pre-tax Included in noninterest income: Loss on securities portfolio restructure $ — $ (65,380 ) $ — Gain on sale of parking facility — 16,126 — Included in noninterest expense: FDIC special assessment 3,800 26,123 — Balance Sheet Data: Period end balance sheet data Loans $ 23,299,447 $ 23,921,917 $ 23,114,046 Earning assets 31,857,841 32,175,097 31,873,027 Total assets 35,081,785 35,578,573 35,183,825 Noninterest-bearing deposits 10,597,461 11,030,515 13,645,113 Total deposits 29,492,851 29,690,059 29,070,349 Stockholders' equity 4,127,636 3,803,661 3,342,628 Average balance sheet data Loans $ 23,630,743 $ 23,594,579 $ 21,915,393 Earning assets 32,422,554 33,160,791 32,498,213 Total assets 34,912,199 35,633,442 35,059,178 Noninterest-bearing deposits 10,491,504 11,919,234 14,298,022 Total deposits 29,168,855 29,478,481 29,497,470 Stockholders' equity 3,951,871 3,528,911 3,405,206 Common Shares Data: Earnings per share - basic $ 5.30 $ 4.51 $ 6.00 Earnings per share - diluted 5.28 4.50 5.98 Cash dividends per common share 1.50 1.20 1.08 Book value per share (period end) 47.93 44.05 38.89 Tangible book value per share (period end) 37.58 33.63 28.29 Weighted-average number of shares - diluted 86,648 86,423 86,394 Period end number of shares 86,124 86,345 85,941 Performance and other data: Return on average assets 1.32 % 1.10 % 1.49 % Return on average common equity 11.66 % 11.13 % 15.39 % Return on average tangible common equity 15.08 % 14.97 % 21.07 % Tangible common equity (c) 9.47 % 8.37 % 7.09 % Tier 1 common equity 14.14 % 12.33 % 11.41 % Net interest margin (te) 3.37 % 3.34 % 3.26 % Noninterest income as a percentage of total revenue (te) 24.99 % 20.65 % 23.82 % Efficiency ratio (d) 55.36 % 55.25 % 52.93 % Allowance for loan loss as a percentage of total loans 1.37 % 1.29 % 1.33 % Allowance for credit loss as a percentage of total loans 1.47 % 1.41 % 1.48 % Annualized net charge-offs to average loans 0.19 % 0.27 % 0.01 % Nonaccrual assets as a percentage of loans, ORE and foreclosed assets 0.54 % 0.26 % 0.18 % FTE headcount 3,476 3,591 3,627 47 Table of Contents ($ in thousands ) 2024 2023 2022 Reconciliation of pre-provision net revenue (te) and adjusted pre-provision net revenue (te) (non-GAAP measures) (e) Net income (GAAP) $ 460,815 $ 392,602 $ 524,089 Provision for credit losses 52,167 59,103 (28,399 ) Income tax expense 113,158 97,526 135,107 Pre-provision net revenue 626,140 549,231 630,797 Taxable equivalent adjustment 11,086 11,107 10,348 Pre-provision net revenue (te) 637,226 560,338 641,145 Adjustments from supplemental disclosure items Loss on securities portfolio restructure — 65,380 — Gain on sale of parking facility — (16,126 ) — FDIC special assessment 3,800 26,123 — Adjusted pre-provision net revenue (te) $ 641,026 $ 635,715 $ 641,145 Reconciliation of revenue (te), adjusted revenue (te) and efficiency ratio (non-GAAP measures) (e) Net interest income $ 1,081,921 $ 1,097,599 $ 1,050,003 Noninterest income 364,129 288,480 331,486 Total GAAP revenue 1,446,050 1,386,079 1,381,489 Taxable equivalent adjustment 11,086 11,107 10,348 Total revenue (te) 1,457,136 1,397,186 1,391,837 Adjustments from supplemental disclosure items Loss on securities portfolio restructure — 65,380 — Gain on sale of parking facility — (16,126 ) — Adjusted revenue $ 1,457,136 $ 1,446,440 $ 1,391,837 GAAP noninterest expense $ 819,910 $ 836,848 $ 750,692 Amortization of intangibles (9,413 ) (11,556 ) (14,033 ) Adjustments from supplemental disclosure items FDIC special assessment (3,800 ) (26,123 ) — Adjusted noninterest expense $ 806,697 $ 799,169 $ 736,659 Efficiency ratio (d) 55.36 % 55.25 % 52.93 % (a) Interest income includes the net impact of discount accretion and premium amortization arising from business combinations totaling $2.1 million, $2.4 million, and $4.7 million for the years ended December 31, 2024, 2023 and 2022, respectively .
The Company highlights certain significant items that are outside of our principal business and/or are not indicative of forward-looking trends in supplemental disclosure items below our GAAP financial data and presents certain “Adjusted” ratios that exclude these disclosed items.
The Company highlights certain items that are outside of our principal business and/or are not indicative of forward-looking trends in supplemental disclosure items below our GAAP financial data and presents certain “Adjusted” ratios that exclude these disclosed items.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The objective of this discussion and analysis is to provide material information relevant to the assessment of the financial condition and results of operations of Hancock Whitney Corporation and its subsidiaries during the year ended December 31, 2023 and selected prior periods, including an evaluation of the amounts and certainty of cash flows from operations and outside sources.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The objective of this discussion and analysis is to provide material information relevant to the assessment of the financial condition and results of operations of Hancock Whitney Corporation and its subsidiaries during the year ended December 31, 2024 and selected prior periods, including an evaluation of the amounts and certainty of cash flows from operations and outside sources.
Management has deemed certain assumptions underlying the S-2 scenario to be somewhat more likely to occur in the near term than those underlying the baseline scenario, and as such, the baseline scenario and the S-2 scenario were given probability weightings of 40% and 60%, respectively, in the calculation of our allowance for credit losses calculation at December 31, 2023.
Management has deemed certain assumptions underlying the S-2 scenario to be somewhat more likely to occur in the near term than those underlying the baseline scenario, and as such, the baseline scenario and the S-2 scenario were given probability weightings of 40% and 60%, respectively, in the calculation of our allowance for credit losses calculation at December 31, 2024.
The performance graph compares the cumulative five-year shareholder return on the Company’s common stock, assuming an investment of $100 on December 31, 2018 and the reinvestment of dividends thereafter, to that of the common stocks of United States companies reported in the Nasdaq Total Return Index and the common stocks of the KBW Regional Banks Total Return Index.
The performance graph compares the cumulative five-year shareholder return on the Company’s common stock, assuming an investment of $100 on December 31, 2019 and the reinvestment of dividends thereafter, to that of the common stocks of United States companies reported in the Nasdaq Total Return Index and the common stocks of the KBW Regional Banks Total Return Index.
Consistent with the provisions of Subpart 229.1400 of Regulation S-K, “Disclosures by Bank and Savings and Loan Registrants,” we present net interest income, net interest margin and efficiency ratios on a fully taxable equivalent (“te”) basis.
Consistent with the provisions of Subpart 229.1400 of Regulation S-K, “Disclosures by Bank and Savings and Loan Registrants,” we present net interest income, net interest margin and efficiency ratios on a fully taxable equivalent (te) basis.
Discussions of Asset/Liability Management and Net Interest Income at Risk later in this item provide additional information regarding our management of interest rate risk and the potential impact from changes in interest rates, respectively. 47 Table of Contents TABLE 2.
Discussions of Asset/Liability Management and Net Interest Income at Risk later in this item provide additional information regarding our management of interest rate risk and the potential impact from changes in interest rates, respectively. 49 Table of Contents TABLE 2.
The KBW Regional Banks Total Return Index is a proprietary stock index of Keefe, Bruyette & Woods, Inc., that tracks the returns of approximately 50 regional banking companies throughout the United States. 40 Table of Contents Equity Compensation Plan Information The following table provides information as of December 31, 2023 with respect to shares of common stock that may be issued under the Company’s equity compensation plans.
The KBW Regional Banks Total Return Index is a proprietary stock index of Keefe, Bruyette & Woods, Inc., that tracks the returns of approximately 50 regional banking companies throughout the United States. 42 Table of Contents Equity Compensation Plan Information The following table provides information as of December 31, 2024 with respect to shares of common stock that may be issued under the Company’s equity compensation plans.
The table that follows presents our consolidated financial results. Additional information related to our results and outlook are included in the discussions that follow. 44 Table of Contents Table 1.
The table that follows presents our consolidated financial results. Additional information related to our results and outlook are included in the discussions that follow. 46 Table of Contents Table 1.
(e) See non-GAAP financial measures section of this analysis for a discussion of these measures. 46 Table of Contents RESULTS OF OPERATIONS The following is a discussion of results from operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
(e) See non-GAAP financial measures section of this analysis for a discussion of these measures. 48 Table of Contents RESULTS OF OPERATIONS The following is a discussion of results from operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.
(b) Includes nonaccrual loans. (c) Average securities do not include unrealized holding gains or losses on available for sale securities. (d) Included in interest income is net purchase accounting accretion of $2.4 million, $4.7 million and $8.6 million for the years December 31, 2023, 2022, and 2021, respectively. 48 Table of Contents TABLE 3.
(b) Includes nonaccrual loans. (c) Average securities do not include unrealized holding gains or losses on available for sale securities. (d) Included in interest income is net purchase accounting accretion of $2.1 million, $2.4 million and $4.7 million for the years December 31, 2024, 2023, and 2022 respectively. 50 Table of Contents TABLE 3.
(d) The efficiency ratio is noninterest expense to total net interest (te) and noninterest income, excluding amortization of purchased intangibles and supplemental disclosure items.
(d) The efficiency ratio (a non-GAAP measure) is noninterest expense to total net interest (te) and noninterest income, excluding amortization of purchased intangibles and supplemental disclosure items.
(d) Average securities do not include unrealized holding gains or losses on available for sale securities. Provision for Credit Losses During the year ended December 31, 2023, we recorded a provision for credit losses of $59.1 million compared to a negative provision for credit losses of $28.4 million for the year ended December 31, 2022.
(d) Average securities do not include unrealized holding gains or losses on available for sale securities. Provision for Credit Losses During the year ended December 31, 2024, we recorded a provision for credit losses of $52.2 million compared to $59.1 million for the year ended December 31, 2023.
Also includes 463,072 performance share awards. Performance share awards and units are stated in amounts that would be issuable if the highest level of performance conditions is met.
Also includes 405,920 performance share awards. Performance share awards and units are stated in amounts that would be issuable if the highest level of performance conditions are met.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s common stock trades on the Nasdaq Global Select Market under the ticker symbol “HWC.” There were 7,176 active holders of record of the Company’s common stock at January 31, 2024 and 86,347,503 shares outstanding.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s common stock trades on the Nasdaq Global Select Market under the ticker symbol “HWC.” There were 6,908 active holders of record of the Company’s common stock at January 31, 2025 and 86,126,971 shares outstanding.
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders 1,390,639 (1) $ N/A 1,993,867 Equity compensation plans not approved by security holders — — — Total 1,390,639 1,993,867 (1) Includes 87,623 shares potentially issuable upon the vesting of outstanding restricted share units and 92,792 shares potentially issuable upon the vesting of outstanding performance share units that represent awards deferred into the Company’s Nonqualified Deferred Compensation Plan.
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders 1,510,274 (1) $ N/A 1,415,499 Equity compensation plans not approved by security holders — — — Total 1,510,274 1,415,499 (1) Includes 58,006 shares potentially issuable upon the vesting of outstanding restricted share units and 56,084 shares potentially issuable upon the vesting of outstanding performance share units that represent awards deferred into the Company’s Nonqualified Deferred Compensation Plan.
Highlights of 2023 Financial Results Net income for the year ended December 31, 2023 was $392.6 million, or $4.50 per diluted common share, compared to $524.1 million, or $5.98 per diluted common share in 2022.
Highlights of 2024 Financial Results Net income for the year ended December 31, 2024 was $460.8 million, or $5.28 per diluted common share, compared to $392.6 million, or $4.50 per diluted common share in 2023.
The results for 2023 include a net charge of $75.4 million (pre-tax), or $0.68 per share after tax, comprised of the following supplemental disclosure items: a $65.4 million loss on restructuring of the securities portfolio, a $26.1 million FDIC special assessment charge and a $16.1 million gain on the sale of a parking facility.
Included in the results of the year ended December 31, 2023 is a net charge of $75.4 million (pre-tax), or $0.68 per share after tax, comprised of the following supplemental disclosure items: a $65.4 million loss on restructuring of the securities portfolio, a $26.1 45 Table of Contents million FDIC special assessment charge and a $16.1 million gain on the sale of a parking facility.
Refer to previously filed Annual Reports on Form 10-K Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion of prior year variances. Net Interest Income Net interest income was $1.1 billion, up $47.6 million from 2022.
Refer to previously filed Annual Reports on Form 10-K Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion of prior year variances. Net Interest Income Net interest income was $1.1 billion in 2024, down $15.7 million, or 1%, from 2023.
Summary of Average Balances, Interest and Rates (te) (a) Years Ended December 31, 2023 2022 2021 ($ in millions) Average Balance Interest (d) Rate Average Balance Interest (d) Rate Average Balance Interest (d) Rate Assets Interest-Earnings Assets: Commercial & real estate loans (te) (a) $ 18,556.2 $ 1,131.8 6.10 % $ 17,682.3 $ 759.9 4.30 % $ 17,070.3 $ 606.1 3.55 % Residential mortgage loans 3,541.2 128.3 3.62 2,666.1 90.3 3.39 2,445.6 90.6 3.70 Consumer loans 1,497.2 124.0 8.28 1,567.0 88.4 5.64 1,692.1 81.6 4.82 Loan fees & late charges — 1.3 — — 7.4 — — 53.7 0.0 Loans (te) (b) 23,594.6 1,385.4 5.87 21,915.4 946.0 4.32 21,208.0 832.0 3.92 Loans held for sale 26.0 1.7 6.63 43.0 1.8 4.22 90.2 2.5 2.82 Investment securities: U.S.
Summary of Average Balances, Interest and Rates (te) (a) Years Ended December 31, 2024 2023 2022 ($ in millions) Average Balance Interest (d) Rate Average Balance Interest (d) Rate Average Balance Interest (d) Rate Assets Interest-Earnings Assets: Commercial & real estate loans (te) (a) $ 18,263.7 $ 1,179.0 6.46 % $ 18,556.2 $ 1,131.8 6.10 % $ 17,682.3 $ 759.9 4.30 % Residential mortgage loans 3,982.1 152.8 3.84 3,541.2 128.3 3.62 2,666.1 90.3 3.39 Consumer loans 1,384.9 121.5 8.78 1,497.2 124.0 8.28 1,567.0 88.4 5.64 Loan fees & late charges — 5.5 — — 1.3 — — 7.4 — Loans (te) (b) 23,630.7 1,458.8 6.17 23,594.6 1,385.4 5.87 21,915.4 946.0 4.32 Loans held for sale 22.0 1.6 7.44 26.0 1.7 6.63 43.0 1.8 4.22 Investment securities: U.S.
Treasury and government agency securities 567.2 15.3 2.70 426.7 8.3 1.95 330.6 5.4 1.64 Mortgage-backed securities and collateralized mortgage obligations 7,423.9 170.4 2.30 7,652.1 154.5 2.02 6,833.1 122.3 1.79 Municipals (te) 887.0 26.5 2.98 912.0 27.0 2.96 928.4 27.2 2.93 Other securities 23.5 0.8 3.51 22.3 0.8 3.42 13.7 0.5 3.66 Total investment securities (te) (c) 8,901.6 213.0 2.39 9,013.1 190.6 2.11 8,105.8 155.4 1.92 Short-term investments 638.6 31.5 4.93 1,526.7 9.0 0.59 2,656.9 3.5 0.13 Total earning assets (te) 33,160.8 1,631.6 4.92 % 32,498.2 1,147.4 3.53 % 32,060.9 993.4 3.10 % Nonearning assets: Other assets 2,783.5 2,878.4 3,420.6 Allowance for loan losses (310.9 ) (317.4 ) (406.1 ) Total assets $ 35,633.4 $ 35,059.2 $ 35,075.4 Liabilities and Stockholders' Equity Interest-bearing Liabilities: Interest-bearing transaction and savings deposits $ 10,598.6 $ 176.9 1.67 % $ 11,201.1 $ 21.2 0.19 % $ 11,216.5 $ 9.1 0.08 % Time deposits 3,989.1 166.5 4.17 1,056.4 4.7 0.44 1,413.0 6.5 0.46 Public funds 2,971.6 100.5 3.38 2,941.9 32.5 1.10 3,140.2 10.6 0.34 Total interest-bearing deposits 17,559.3 443.9 2.53 15,199.4 58.4 0.38 15,769.7 26.2 0.17 Repurchase agreements 513.3 7.0 1.36 536.7 1.1 0.21 559.4 0.6 0.10 Other short-term borrowings 1,180.1 59.7 5.06 822.0 15.1 1.83 1,103.8 5.4 0.49 Long-term debt 239.1 12.3 5.15 239.3 12.4 5.19 314.9 16.8 5.32 Total interest-bearing liabilities 19,491.8 522.9 2.68 % 16,797.4 87.0 0.52 % 17,747.8 49.0 0.28 % Noninterest-bearing: Noninterest-bearing deposits 11,919.2 14,298.0 13,324.0 Other liabilities 693.5 558.6 458.3 Stockholders' equity 3,528.9 3,405.2 3,545.3 Total liabilities and stockholders' equity $ 35,633.4 $ 35,059.2 $ 35,075.4 Net interest income (te) and margin $ 1,108.7 3.34 $ 1,060.4 3.26 $ 944.4 2.95 Net earning assets and spread $ 13,669.0 2.24 $ 15,700.8 3.01 $ 14,313.1 2.82 Interest cost of funding earning assets 1.58 % 0.27 % 0.15 % (a) Taxable equivalent (te) amounts are calculated using federal income tax rate of 21%.
Treasury and government agency securities 549.9 15.8 2.87 567.2 15.3 2.70 426.7 8.3 1.95 Mortgage-backed securities and collateralized mortgage obligations 6,805.2 175.0 2.57 7,423.9 170.4 2.30 7,652.1 154.5 2.02 Municipals (te) 843.4 25.0 2.96 887.0 26.5 2.98 912.0 27.0 2.96 Other securities 23.5 0.9 3.77 23.5 0.8 3.51 22.3 0.8 3.42 Total investment securities (te) (c) 8,222.0 216.7 2.63 8,901.6 213.0 2.39 9,013.1 190.6 2.11 Short-term investments 547.8 27.0 4.93 638.6 31.5 4.93 1,526.7 9.0 0.59 Total earning assets (te) 32,422.5 1,704.1 5.26 % 33,160.8 1,631.6 4.92 % 32,498.2 1,147.4 3.53 % Nonearning assets: Other assets 2,805.4 2,783.5 2,878.4 Allowance for loan losses (315.7 ) (310.9 ) (317.4 ) Total assets $ 34,912.2 $ 35,633.4 $ 35,059.2 Liabilities and Stockholders' Equity Interest-bearing Liabilities: Interest-bearing transaction and savings deposits $ 10,891.8 $ 248.2 2.28 % $ 10,598.6 $ 176.9 1.67 % $ 11,201.1 $ 21.2 0.19 % Time deposits 4,846.9 223.3 4.61 3,989.1 166.5 4.17 1,056.4 4.7 0.44 Public funds 2,938.7 102.9 3.50 2,971.6 100.5 3.38 2,941.9 32.5 1.10 Total interest-bearing deposits 18,677.4 574.4 3.08 17,559.3 443.9 2.53 15,199.4 58.4 0.38 Repurchase agreements 639.9 10.6 1.65 513.3 7.0 1.36 536.7 1.1 0.21 Other short-term borrowings 251.5 13.8 5.49 1,180.1 59.7 5.06 822.0 15.1 1.83 Long-term debt 234.2 12.3 5.23 239.1 12.3 5.15 239.3 12.4 5.19 Total interest-bearing liabilities 19,803.0 611.1 3.25 % 19,491.8 522.9 2.68 % 16,797.4 87.0 0.52 % Noninterest-bearing: Noninterest-bearing deposits 10,491.5 11,919.2 14,298.0 Other liabilities 665.8 693.5 558.6 Stockholders' equity 3,951.9 3,528.9 3,405.2 Total liabilities and stockholders' equity $ 34,912.2 $ 35,633.4 $ 35,059.2 Net interest income (te) and margin $ 1,093.0 3.37 $ 1,108.7 3.34 $ 1,060.4 3.26 Net earning assets and spread $ 12,619.5 2.17 $ 13,669.0 2.24 $ 15,700.8 3.01 Interest cost of funding earning assets 1.88 % 1.58 % 0.27 % (a) Taxable equivalent (te) amounts are calculated using federal income tax rate of 21%.
The program allows the Company to repurchase its common shares in the open market, by block purchase, through accelerated share repurchase programs, in privately negotiated transactions, or otherwise, in one or more transactions.
The program allowed the Company to repurchase its common shares in the open market, by block purchase, through accelerated share repurchase programs, in privately negotiated transactions, or otherwise, in one or more transactions in accordance with the rules and regulations of the Securities and Exchange Commission.
Issuer Purchases of Equity Securities On January 26, 2023, the Company’s board of directors approved a stock buyback program whereby the Company is authorized to repurchase up to approximately 4.3 million shares of its common stock through the program’s expiration date of December 31, 2024.
Issuer Purchases of Equity Securities The Company had in place a stock buyback program approved by the Board of Directors whereby the Company was authorized to repurchase up to 4,297,000 shares of its common stock through the program’s expiration date of December 31, 2024.
Despite the weakening economy, the Federal Reserve does not begin rate cuts sooner than what is assumed in the baseline. As a result of these pressures, the U.S. falls into a mild recession beginning in the first quarter of 2024 that lasts for three quarters, with the stock market contracting 20% and a peak-to-trough decline in GDP of 1%.
As a result of these pressures, the U.S. falls into a mild recession beginning in the first quarter of 2025 that lasts for three quarters, with the stock market contracting 22% and a peak-to-trough decline in GDP of 1.1%.
The provision for credit losses recorded in 2023 included net charge-offs of $63.4 million, partially offset by a $4.3 million reserve release. The negative provision for credit losses recorded in 2022 included a $30.3 million reserve release, partially offset by net charge-offs of $1.9 million.
The provision for credit losses recorded in 2024 included net charge-offs of $46.0 million and a $6.1 million reserve build. The provision for credit losses recorded in 2023 included net charge-offs of $63.4 million and a reserve release of $4.3 million.
EXECUTIVE OVERVIEW The discussions and analyses that follow provide insight into the impact of macroeconomic and industry trends on our performance in the most recent fiscal year, and our outlook for the near term. Current Economic Environment U.S. economic activity remains resilient nearly two years into the Federal Reserve's aggressive campaign to tame inflation.
EXECUTIVE OVERVIEW The discussions and analyses that follow provide insight into the impact of macroeconomic and industry trends on our performance in the most recent fiscal year, and our outlook for the near term.
Several upside and downside scenarios are produced that are derived from the baseline scenario and incorporate varying degrees of favorable and unfavorable adjustments to economic indicators and circumstances as compared to the baseline.
The forecasts are anchored on a baseline forecast scenario, which Moody’s defines as the “most likely outcome” of where the economy is headed based on current conditions. Several upside and downside scenarios are produced that are derived from the baseline scenario and incorporate varying degrees of favorable and unfavorable adjustments to economic indicators and circumstances as compared to the baseline.
Summary of Changes in Net Interest Income (te) (a) (b) 2023 Compared to 2022 2022 Compared to 2021 Due to Total Due to Total Change in Increase Change in Increase ($ in thousands ) Volume Rate (Decrease) Volume Rate (Decrease) Interest Income (te) Commercial & real estate loans (te) (a) $ 39,213 $ 332,722 $ 371,935 $ 22,399 $ 131,363 $ 153,762 Residential mortgage loans 31,345 6,620 37,965 7,809 (8,049 ) (240 ) Consumer loans (3,297 ) 38,928 35,631 (6,180 ) 12,940 6,760 Loan fees & late charges — (6,089 ) (6,089 ) — (46,301 ) (46,301 ) Loans (te) (c) 67,261 372,181 439,442 24,028 89,953 113,981 Loans held for sale (886 ) 795 (91 ) (1,672 ) 944 (728 ) Investment securities: U.S.
Summary of Changes in Net Interest Income (te) (a) (b) 2024 Compared to 2023 2023 Compared to 2022 Due to Total Due to Total Change in Increase Change in Increase ($ in thousands ) Volume Rate (Decrease) Volume Rate (Decrease) Interest Income (te) Commercial & real estate loans (te) (a) $ (18,062 ) $ 65,233 $ 47,171 $ 39,213 $ 332,722 $ 371,935 Residential mortgage loans 16,613 7,917 24,530 31,345 6,620 37,965 Consumer loans (8,059 ) 5,572 (2,487 ) (3,297 ) 38,928 35,631 Loan fees & late charges — 4,146 4,146 — (6,089 ) (6,089 ) Loans (te) (c) (9,508 ) 82,868 73,360 67,261 372,181 439,442 Loans held for sale (280 ) 197 (83 ) (886 ) 795 (91 ) Investment securities: U.S.
Net interest income (te) was $1.1 billion in 2023, up $48.4 million, or 5%, from 2022, and included an increase in interest income (te) of $484.2 million largely offset by an increase of $435.8 million in interest expense.
Net interest income (te) was $1.1 billion in 2024, also down $15.7 million, or 1%, from 2023, and included an increase in interest income (te) of $72.5 million more than offset by an increase of $88.2 million in interest expense.
Treasury and government agency securities 3,129 3,859 6,988 1,739 1,153 2,892 Mortgage-backed securities and collateralized mortgage obligations (4,779 ) 20,678 15,899 15,284 16,952 32,236 Municipals (743 ) 181 (562 ) (485 ) 275 (210 ) Other securities 43 18 61 297 (34 ) 263 Total investment in securities (te) (d) (2,350 ) 24,736 22,386 16,835 18,346 35,181 Short-term investments (8,066 ) 30,522 22,456 (1,976 ) 7,516 5,540 Total earning assets (te) 55,959 428,234 484,193 37,215 116,759 153,974 Interest-bearing transaction and savings deposits 1,205 (156,819 ) (155,614 ) 13 (12,163 ) (12,150 ) Time deposits (40,103 ) (121,719 ) (161,822 ) 1,589 262 1,851 Public funds (331 ) (67,718 ) (68,049 ) 710 (22,604 ) (21,894 ) Total interest-bearing deposits (39,229 ) (346,256 ) (385,485 ) 2,312 (34,505 ) (32,193 ) Repurchase agreements 52 (5,871 ) (5,819 ) 25 (577 ) (552 ) Other short-term borrowings (8,771 ) (35,876 ) (44,647 ) 1,669 (11,293 ) (9,624 ) Long-term debt 7 106 113 3,938 394 4,332 Total interest expense (47,941 ) (387,897 ) (435,838 ) 7,944 (45,981 ) (38,037 ) Net interest income (te) variance $ 8,018 $ 40,337 $ 48,355 $ 45,159 $ 70,778 $ 115,937 (a) Taxable equivalent (te) amounts are calculated using a federal income tax rate of 21%.
Treasury and government agency securities (350 ) 828 478 3,129 3,859 6,988 Mortgage-backed securities and collateralized mortgage obligations (14,862 ) 19,443 4,581 (4,779 ) 20,678 15,899 Municipals (1,292 ) (158 ) (1,450 ) (743 ) 181 (562 ) Other securities (1 ) 62 61 43 18 61 Total investment in securities (te) (d) (16,505 ) 20,175 3,670 (2,350 ) 24,736 22,386 Short-term investments (4,476 ) 2 (4,474 ) (8,066 ) 30,522 22,456 Total earning assets (te) (30,769 ) 103,242 72,473 55,959 428,234 484,193 Interest-bearing deposits: Interest-bearing transaction and savings deposits (5,020 ) (66,306 ) (71,326 ) 1,205 (156,819 ) (155,614 ) Time deposits (38,313 ) (18,531 ) (56,844 ) (40,103 ) (121,719 ) (161,822 ) Public funds 1,122 (3,469 ) (2,347 ) (331 ) (67,718 ) (68,049 ) Total interest-bearing deposits (42,211 ) (88,306 ) (130,517 ) (39,229 ) (346,256 ) (385,485 ) Repurchase agreements (1,915 ) (1,701 ) (3,616 ) 52 (5,871 ) (5,819 ) Other short-term borrowings 50,496 (4,595 ) 45,901 (8,771 ) (35,876 ) (44,647 ) Long-term debt 257 (197 ) 60 7 106 113 Total interest expense 6,627 (94,799 ) (88,172 ) (47,941 ) (387,897 ) (435,838 ) Net interest income (te) variance $ (24,142 ) $ 8,443 $ (15,699 ) $ 8,018 $ 40,337 $ 48,355 (a) Taxable equivalent (te) amounts are calculated using a federal income tax rate of 21%.
Net charge-offs for the year ended December 31, 2022 totaled $1.9 million, or 0.01% of average loans outstanding, comprised of net charge-offs of $7.4 million in the consumer portfolio, partially offset by net recoveries of $3.9 million in the commercial portfolio and $1.6 million in the residential mortgage portfolio. 49 Table of Contents Loan growth, portfolio composition, credit quality metrics and assumptions in economic forecasts will drive the level of credit loss reserves.
Net charge-offs for the year ended December 31, 2024 totaled $46.0 million, or 0.19% of average loans outstanding, comprised of net charge-offs of $31.3 million in the commercial portfolio and $14.9 million in the consumer portfolio, partially offset by net recoveries of $0.2 million in the residential mortgage portfolio.
Common stock repurchase activity during the fourth quarter of 2023 was as follows: Total Number of Shares of Units Purchased Average Price Paid Per Share Total Number of Shares Purchased as a Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs Oct 1, 2023 - Oct 31, 2023 — $ — — 4,297,000 Nov 1, 2023 - Nov 30, 2023 — $ — — 4,297,000 Dec 1, 2023 - Dec 31, 2023 — $ — — 4,297,000 Total — $ — — 4,297,000 ITEM 6.
Common stock repurchase activity during the fourth quarter of 2024 was as follows: Total Number of Shares of Units Purchased (a) Average Price Paid Per Share (b) Total Number of Shares Purchased as a Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs Oct 1, 2024 - Oct 31, 2024 80,299 $ 52.96 80,000 3,604,007 Nov 1, 2024 - Nov 30, 2024 117,083 $ 52.04 70,000 3,534,007 Dec 1, 2024 - Dec 31, 2024 — $ — — 3,534,007 Total 197,382 $ 52.42 150,000 (a) Includes common stock purchased in connection with our share-based payment plans related shares used to cover payroll tax withholding requirements.
The full extent of the impact of the Federal Reserve’s 43 Table of Contents actions to reduce inflation and the timing and scope of further Federal Reserve actions are uncertain and may have a significant negative impact on the U.S. economy, including the possibility of an economic recession in the near or midterm.
The full extent of the impact of these and other influential factors are uncertain and may have an adverse effect on the U.S. economy, including the possibility of an economic recession or slower growth in the near or midterm.
As such, the cost of funds increased 131 bps to 1.58% in 2023 from 0.27% in 2022, with average interest-bearing deposit costs increasing 215 bps to 2.53% from 0.38% and other short-term borrowing costs, which consist largely of Federal Home Loan Bank advances, increasing 323 bps to 5.06% in 2023 from 1.83% in 2022.
Our total cost of funds increased 30 bps to 1.88% in 2024 from 1.58% in 2023, largely driven by higher interest-bearing deposit costs, up 55 bps in 2024 to 3.08% from 2.53% in 2023, and other short-term borrowing costs, which consist largely of FHLB advances, increasing 43 bps to 5.49% in 2024 from 5.06% in 2023.
The following is an overview of financial results for the year ended December 31, 2023 compared to December 31, 2022: • Net income of $392.6 million, or $4.50 per diluted common share • Adjusted pre-provision net revenue (a non-GAAP measure) totaled $635.7 million, down $5.4 million • Provision for credit losses of $59.1 million in 2023, compared to a negative provision of $28.4 million in 2022; allowance for credit loss to total loans at 1.41% at December 31, 2023 • Loan growth of $807.9 million, or 3%, to $23.9 billion • Deposits of $29.7 billion at December 31, 2023, up $619.7 million, or 2% • Common equity tier 1 capital ratio of 12.33%, up 92 basis points (bps) from December 31, 2022; tangible common equity ratio of 8.37%, up 128 bps • Criticized commercial loans and nonperforming loans remained relatively stable at low levels throughout 2023 • Net interest margin increased 8 bps to 3.34% • Efficiency ratio (a non-GAAP measure) of 55.25%, up from 52.93% in 2022 The year ended December 31, 2023 brought many challenges on both a macroeconomic level and within the financial services industry.
The following is an overview of financial results for the year ended December 31, 2024 compared to December 31, 2023: • Net income of $460.8 million, or $5.28 per diluted common share • Adjusted pre-provision net revenue (a non-GAAP measure) totaled $641.0 million, up $5.3 million • Provision for credit losses of $52.2 million in 2024, compared to $59.1 million in 2023; allowance for credit losses to total loans remains strong at 1.47% at December 31, 2024, up 6 basis points • Loans of $23.3 billion, down $622.5 million; reflects a $307.6 million strategic reduction of the shared national credit portfolio • Deposits of $29.5 billion, down $197.2 million; reflects organic growth offset by a decline of $582.9 million in brokered deposits • Common equity tier 1 capital ratio of 14.14%, up 181 bps from December 31, 2023; tangible common equity ratio of 9.47%, up 110 bps • Criticized commercial loans and nonaccrual loans continued to normalize following the recent benign credit environment but remain comparable to peers; net charge-off ratio improved to 0.19% from 0.27% • Net interest margin expanded 3 bps to 3.37% • Efficiency ratio (a non-GAAP measure) of 55.36%, relatively consistent with 2023 Our results for the year ended December 31, 2024 represent a solid year of performance.
Net interest margin, the ratio of net interest income (te) to average earning assets, increased 8 bps to 3.34% in 2023 from 3.26% in 2022.
Net interest margin, the ratio of net interest income (te) to average earning assets, increased 3 bps to 3.37% in 2024 from 3.34% in 2023. The $72.5 million increase in interest income (te) is largely attributable to the sustained elevated interest rate environment, partially offset by a $738 million decrease in average earning assets.
We expect further modest expansion of net interest margin in 2024, with an emphasis on improving loan yields and by proactively managing deposit costs as interest rates begin to decline. Our forecast assumes three 25 bp rate cuts beginning in June 2024.
We expect our net interest income (te) for 2025 to increase in the range of 3.5% to 4.5%. We expect modest and consistent expansion of net interest margin throughout 2025, with an emphasis on balance sheet growth and by proactively managing deposit costs as interest rates continue to decline.
Treasury yield reached its recent high at nearly 5% in the third quarter of 2023, but will remain above 4% through the end of the decade. The S-2 scenario presents a downside alternative to the baseline.
Treasury yield will remain elevated near its current rate, and is forecasted to average 4.3% for 2025 through 2027 and only gradually decline through the end of the decade. The S-2 scenario presents a downside alternative to the baseline.
The provision for credit losses for the year ended December 31, 2023 includes a $29.7 million charge-off attributable to a single participation in a shared national credit, which stemmed from borrower-specific circumstances that we do not believe to be indicative of an industry or portfolio trend. The modest reserve release reflects relatively stable macroeconomic assumptions and credit quality metrics.
The provision for credit losses for the year ended December 31, 2023 included a $29.7 million charge-off attributable to a single participation in a shared national credit.
The macroeconomic variables underlying the December 2023 economic scenarios differ in certain respects from the comparable forecasts available at December 31, 2022, given the shift in economic circumstances and risks. The December 2023 baseline forecast continues to incorporate the belief that the Federal Reserve will accomplish its goal of bringing inflation to or below its target without precipitating a recession.
The macroeconomic variables underlying the December 2024 economic scenarios differ in many respects from the comparable forecasts available at December 31, 2023, given the shift in economic circumstances and risks, particularly as a result of the outcome of the 2024 presidential and congressional elections. The baseline scenario continues to maintain an overall optimistic tenor with respect to economic outcomes.
The yield on investment securities increased 28 bps in 2023 to 2.39% as new investments were made at higher yields amid the rising interest rate environment, along with yield enhancements from the termination of certain fair value hedges on available for sale securities.
The yield on earning assets (te) was 5.26% in 2024, up 34 bps from 2023. Loan yield was up 30 bps to 6.17%, reflecting the impact of the new and repricing loans in the current interest rate environment. The yield on investment securities increased 24 bps in 2024 to 2.63% as new investments were made at higher yields.
The Company is not obligated to purchase any shares under this program, and the board of directors has the ability to terminate or amend the program at any time prior to the expiration date. To date, the Company has not repurchased shares under this program.
The Company was not obligated to purchase any shares under this program and the repurchase authorization could have been terminated or amended by the Board at any time prior to the expiration date. Prior to the termination of this repurchase plan on December 31, 2024, the Board approved a new plan with similar terms effective January 1, 2025.
Despite the increased pressure on funding costs, interest rates on new, renewed and repricing variable rate loans drove an expanded net interest margin in 2023. Economic Outlook We utilize economic forecasts produced by Moody’s Analytics (Moody’s) that provide various scenarios to assist in the development of our economic outlook.
Economic Outlook We utilize economic forecasts produced by Moody’s Analytics (Moody’s) that provide various scenarios to assist in the development of our economic outlook. This outlook discussion utilizes the December 2024 Moody’s forecast, the most current available at December 31, 2024.
The S-2 scenario assumes an increased likelihood of a U.S. government shutdown, longer and farther-reaching disturbance from geopolitical conflict, and continued disruption in the financial services industry leading to further tightening of credit standards. Further, the scenario assumes the unemployment rate will increase considerably to 5.7% in 2024 before improving to 5.3% in 2025 and 4.0% in 2026.
Further, the scenario assumes the unemployment rate will increase considerably to 6.3% in 2025 (peaking at 7.1% in the fourth quarter) before improving to 5.6% in 2026 and 4.1% in 2027.
The effects of inflation and the Federal Reserve's actions to counter those effects in the form of interest rate increases and quantitative tightening have in the past and could in the near term reduce economic growth.
Recent and expected changes in fiscal and other policies with the current administration creates significant uncertainty as to the impact on the U.S and global economies. The effects of continued elevated inflation, and the Federal Reserve’s actions to counter those effects, as well as to respond to other economic concerns, could reduce economic growth in the near term.
In addition, average short-term borrowings in 2023 were up $334.7 million from 2022, mostly reflective of incremental FHLB borrowings held for a period of time as a cautionary measure subsequent to the bank failures.
Compared to the prior year, average noninterest-bearing deposits were down $1.4 billion, while higher-cost time deposits were up $857.8 million. Average short-term borrowings in 2024 were down $802.0 million from 2023, as the incremental FHLB borrowings drawn as a cautionary measure in early 2023 were repaid.
Key assumptions within the December 2023 baseline forecast include the following: (1) the Federal Funds rate has reached its terminal value in the rate hiking cycle, with rate cuts of 25 basis points per quarter to begin in June 2024 until reaching 3% in late 2026, and 2.5% by 2030; (2) the U.S. government will avoid the recently-feared shutdown; (3) while the labor market remains strong, there are indications of softening, and the unemployment rate will rise from its current rate of 3.7% to 4.0% in 2024 and 4.1% in 2025, then improve slightly to 4.0% for 2026; (4) GDP will display modest annual growth of 1.7% in both 2024 and 2025 and 2.2% in 2026; and, (5) the 10-year U.S.
Key assumptions within the December 2024 baseline forecast include the following: (1) With the Republican majority, spending will decrease, personal income tax provisions of the Tax Cuts and Jobs Act will be extended and the corporate income tax rate will decrease to 15%; (2) The Federal Reserve will issue two rate cuts of 25 basis points each in 2025, with further gradual reductions in 2026 until the benchmark rate reaches 3%; (3) Though the labor market has softened, the economy remains near full-employment with the current unemployment rate of 4%, and is forecasted to remain relatively stable at 4.1% over the succeeding three years; (4) GDP will display modest annual below-trend growth in the coming years of 2.2% in 2025, 1.6% in 2026, and 1.8% in 2027; and, (5) the 10-year U.S.
Removed
Reserv ed. 41 Table of Contents ITEM 7 .
Added
See Note 18 – Share-Based Payment Arrangements in our 2024 in Part II, Item 8 of this Form 10-K, which includes additional information regarding our share-based incentive plans. (b) Average price paid does not include the one percent excise tax charged on public company net share repurchases. ITEM 6. Reserv ed. 43 Table of Contents ITEM 7 .
Removed
Thus far, the Federal Reserve has seen some success in slowing economic growth without precipitating a recession. The December 31, 2023 headline and core (less food and energy) inflation have receded considerably from 40-year highs in 2022, though at 3.4% and 3.9%, respectively, both remain well above the Federal Reserve's target rate of 2%.
Added
Current Economic Environment While the presidential and congressional elections came to the forefront of the economic and social landscape later in the year, progress in the fight against inflation, continued robust economic activity, softening in the labor market and the eventual shift in policy of the Federal Reserve drove much of the economic headlines during the year ended December 31, 2024.
Removed
Real Gross domestic product (GDP) increased 2.5% for the full year 2023, reflecting growth in each of the four fiscal quarters. Despite some softening, the labor market remains strong at near full-employment, with the unemployment rate at 3.7% in December 2023.
Added
Economic activity remained resilient in 2024, with real gross domestic product (GDP) displaying healthy growth of 2.8% for the year, relatively consistent with the prior year and in excess of expectations. While the labor market remained strong overall, employment statistics began to migrate during the year.
Removed
The Federal Reserve issued four 25-basis point interest rate increases between February and July 2023, but has held the rate steady since, indicating the possibility that the target rate has reached its terminal value in the rate hiking cycle.
Added
By mid-year, it seemed that the Federal Reserve ’ s stated inflation target of 2% was in range, and, in September, the Federal Reserve issued a 50 basis point (bp) rate cut, indicating its shift in focus to preserving a healthy labor market. Two additional 25 bp rate cuts followed in November and December.
Removed
While the continued strong pace of consumer spending and the strength of the labor market may help prevent or reduce the severity of a potential recession, the possibility that rates will remain higher for longer may 42 Table of Contents result in below-trend economic growth.
Added
However, the upward trend in inflation markers in December coupled with concerns over the potential fiscal impacts of the current administration’s policy actions, particularly around tariffs and immigration, have somewhat clouded the picture surrounding monetary policy expectations.
Removed
Economic trends may be further influenced by factors outside of inflation, such as a potential shutdown of the U.S. government and expanding geopolitical conflict. Within the financial services industry, particularly in the regional bank space, institutions continue to deal with macroeconomic and industry-specific headwinds.
Added
Longer-term interest rates experienced some volatility 44 Table of Contents as the market responded to mixed data on both inflation and employment throughout the year. The 10-year U.S. Treasury yield ranged from below 4% to 4.7% ending the year at 4.6%, affecting bond indices and mortgage rates and other capital market indicators.
Removed
The heightened interest rate environment has fostered a continued shift within deposit composition toward higher cost products, although the pace of movement slowed somewhat towards the end of 2023.
Added
Within the financial services industry, some of the headwinds experienced in much of the previous year began to ease.
Removed
High-profile bank failures in the first half of 2023 have prompted increased regulatory scrutiny of banks' liquidity and the stability of their deposit bases, which has intensified competition for deposits and, in turn, placed further pressure on borrowing costs. The interest rate environment has also steadily affected the affordability of credit to consumers and businesses that has tempered loan demand.
Added
While interest rates remain elevated and continue to influence loan demand and deposit behavior, negative sentiment from recent high profile bank failures has receded, and funding costs that had begun to stabilize in late 2023 further benefited from rate cuts in the latter half of 2024.
Removed
At the same time, economic uncertainty and industry turmoil has prompted many institutions to tighten credit standards. We experienced loan growth of 3% during the year ended December 31, 2023, though the majority of the growth occurred in the first half of the year.
Added
Within our markets, loan growth remains tempered due in part to loan demand, the credit health of borrowers, and a strategic reduction of exposure to syndicated credits as we focus on full-service relationships.
Removed
In the fourth quarter, we experienced a $61.8 million net decline in loans as demand continued to slow in response to heightened interest rates and, in many of the markets we serve, increased insurance costs. Further, we are continuing to narrow our credit appetite in certain sectors and shift our focus toward full-service relationships.
Added
However, interest rates on new, renewed and repricing variable rate loans and investment securities continue to result in higher yields on earning assets that, coupled with stabilization in funding costs, contributed to net interest margin expansion throughout the year.
Removed
Our core client deposits, defined as total deposits excluding public funds and brokered deposits, were up slightly year-over-year. We were able to maintain our diversified deposit base through competitive pricing, as much of our client base remains interest rate sensitive.
Added
The forecast reflects new assumptions about fiscal policy, monetary policy and immigration and population growth given the Republican sweep of the White House and Congress.
Removed
This outlook discussion utilizes the December 2023 Moody’s forecast, the most current available at December 31, 2023. The forecasts are anchored on a baseline forecast scenario, which Moody’s defines as the “most likely outcome” of where the economy is headed based on current conditions.
Added
The S-2 scenario assumes the impacts of current administration tariffs and deportations on the economy are worse than expected, elevated interest rates weaken credit-sensitive spending more than anticipated and there is longer and farther-reaching disturbance from geopolitical conflict.
Removed
At December 31, 2023, the credit loss outlook for our portfolio as a whole has not changed significantly from that of a year ago, however, we remain cautious given headwinds from elevated interest rates, increased insurance costs and market concerns surrounding commercial real estate.
Added
Despite the onset of the recession, rising inflation prompts the Federal Reserve to raise its benchmark rate in the first quarter of 2025 before resuming easement in the second quarter of 2025.
Removed
Aside from a single sizable charge-off in 2023 attributable to borrower-specific circumstances, our asset quality metrics have remained stable over the preceding two years, with nonaccrual loans, commercial criticized loans and all other net charge-offs at relatively low levels. We continue to closely monitor our portfolio for customers that are sensitive to prolonged inflation and the elevated interest rate environment.
Added
Included in the results of the year ended December 31, 2024 is a charge of $3.8 million, or $0.03 per diluted share after-tax, supplemental disclosure item attributable to a revision of the FDIC special assessment.
Removed
There were no supplemental disclosure items in 2022.
Added
Our net interest margin expanded, reflecting higher earning asset yields and stabilization in the cost of funds. Fee income grew and adjusted noninterest expense increased only modestly. Strong earnings facilitated substantial growth in our capital ratios.
Removed
Our results reflect navigating these headwinds while demonstrating our ability to preserve liquidity and manage operating expenses. The Federal Reserve continued its efforts to combat inflation through interest rate increases, but the benefits of our general asset sensitivity were largely offset by continued increases in funding costs, including a significant shift and deposit mix from noninterest-bearing to interest-bearing products.
Added
Though credit metrics normalized compared to the recent benign credit environment, we have not seen signs of significant weakening in any particular industry, sector or geographic segment, and we continue to maintain a robust allowance for credit loss coverage of 1.47% in light of the current credit and economic environment.
Removed
Disruption in the financial services industry created additional pressure on funding costs and net interest margin, and required incremental noninterest expense through a special assessment to restore the deposit insurance fund.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

181 edited+52 added−80 removed98 unchanged
Biggest changeQuarterly Consolidated Financial Results (in thousands, except per share data) December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 Income Statement Data: Interest income $ 426,794 $ 415,827 $ 405,273 $ 372,603 $ 345,676 Interest income (te) (a) 429,628 418,679 408,110 375,187 348,291 Interest expense 157,334 146,593 131,362 87,609 50,175 Net interest income (te) 272,294 272,086 276,748 287,578 298,116 Provision for credit losses 16,952 28,498 7,633 6,020 2,487 Noninterest income 38,951 85,974 83,225 80,330 77,064 Noninterest expense 229,151 204,675 202,138 200,884 190,154 Income before income taxes 62,308 122,035 147,365 158,420 179,924 Income tax expense 11,705 24,297 29,571 31,953 36,137 Net income $ 50,603 $ 97,738 $ 117,794 $ 126,467 $ 143,787 Supplemental disclosure items-included above, pre-tax: Included in noninterest income: Gain on sale of parking facility $ 16,126 $ — $ — $ — $ — Loss on securities portfolio restructure (65,380 ) — — — — Included in noninterest expense: FDIC special assessment 26,123 — — — — Balance Sheet Data: Period end balance sheet data: Loans $ 23,921,917 $ 23,983,679 $ 23,789,886 $ 23,404,523 $ 23,114,046 Earning assets 32,175,097 32,733,591 32,715,630 34,106,792 31,873,027 Total assets 35,578,573 36,298,301 36,210,148 37,547,083 35,183,825 Noninterest-bearing deposits 11,030,515 11,626,371 12,171,817 12,860,027 13,645,113 Total deposits 29,690,059 30,320,337 30,043,501 29,613,070 29,070,349 Stockholders' equity 3,803,661 3,501,003 3,554,476 3,531,232 3,342,628 Average balance sheet data: Loans 23,795,681 23,830,724 23,654,994 23,086,529 22,723,248 Earning assets 33,128,130 33,137,565 33,619,829 32,753,781 32,244,681 Total assets 35,538,300 35,626,927 36,205,396 35,159,050 34,498,915 Noninterest-bearing deposits 11,132,354 11,453,236 12,153,453 12,963,133 13,854,625 Total deposits 29,974,941 29,757,180 29,372,899 28,792,851 28,816,338 Stockholders' equity 3,560,978 3,572,487 3,567,260 3,412,813 3,228,667 Common Shares Data: Earnings per share: Basic $ 0.58 $ 1.12 $ 1.35 $ 1.45 $ 1.65 Diluted 0.58 1.12 1.35 1.45 1.65 Cash dividends per common share 0.30 0.30 0.30 0.30 0.27 Performance Ratios: Return on average assets 0.56 % 1.09 % 1.30 % 1.46 % 1.65 % Return on average common equity 5.64 % 10.85 % 13.24 % 15.03 % 17.67 % Efficiency ratio (b) 55.58 % 56.38 % 55.33 % 53.76 % 49.81 % Net interest margin (te) 3.27 % 3.27 % 3.30 % 3.55 % 3.68 % Annualized net charge offs to average loans 0.27 % 0.64 % 0.06 % 0.10 % 0.02 % 78 Table of Contents ..
Biggest changeQuarterly Consolidated Financial Results (in thousands, except per share data) December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Income Statement Data: Interest income $ 414,286 $ 429,476 $ 427,545 $ 421,684 $ 426,794 Interest income (te) (a) 417,021 432,169 430,373 424,514 429,628 Interest expense 140,730 157,712 157,115 155,513 157,334 Net interest income (te) 276,291 274,457 273,258 269,001 272,294 Provision for credit losses 11,912 18,564 8,723 12,968 16,952 Noninterest income 91,209 95,895 89,174 87,851 38,951 Noninterest expense 202,333 203,839 206,016 207,722 229,151 Income before income taxes 150,520 145,256 144,865 133,332 62,308 Income tax expense 28,446 29,684 30,308 24,720 11,705 Net income $ 122,074 $ 115,572 $ 114,557 $ 108,612 $ 50,603 Supplemental disclosure items-included above, pre-tax: Included in noninterest income: Gain on sale of parking facility $ — $ — $ — $ — $ 16,126 Loss on securities portfolio restructure — — — — (65,380 ) Included in noninterest expense: FDIC special assessment — — — 3,800 26,123 Balance Sheet Data: Period end balance sheet data: Loans $ 23,299,447 $ 23,455,587 $ 23,911,616 $ 23,970,938 $ 23,921,917 Earning assets 31,857,841 32,045,222 32,056,415 31,985,610 32,175,097 Total assets 35,081,785 35,238,107 35,412,291 35,247,119 35,578,573 Noninterest-bearing deposits 10,597,461 10,499,476 10,642,213 10,802,127 11,030,515 Total deposits 29,492,851 28,982,905 29,200,718 29,775,906 29,690,059 Stockholders' equity 4,127,636 4,174,687 3,920,718 3,853,436 3,803,661 Average balance sheet data: Loans 23,248,512 23,552,002 23,917,361 23,810,163 23,795,681 Earning assets 32,333,012 32,263,748 32,539,363 32,556,821 33,128,130 Total assets 34,770,663 34,780,386 34,998,880 35,101,869 35,538,300 Noninterest-bearing deposits 10,409,022 10,359,390 10,526,903 10,673,060 11,132,354 Total deposits 29,108,381 28,940,163 29,069,097 29,560,956 29,974,941 Stockholders' equity 4,138,326 4,021,211 3,826,296 3,818,840 3,560,978 Common Shares Data: Earnings per share: Basic $ 1.41 $ 1.33 $ 1.31 $ 1.25 $ 0.58 Diluted 1.40 1.33 1.31 1.24 0.58 Cash dividends per common share 0.40 0.40 0.40 0.30 0.30 Performance Ratios: Return on average assets 1.40 % 1.32 % 1.32 % 1.24 % 0.56 % Return on average common equity 11.74 % 11.43 % 12.04 % 11.44 % 5.64 % Efficiency ratio (b) 54.46 % 54.42 % 56.18 % 56.44 % 55.58 % Net interest margin (te) 3.41 % 3.39 % 3.37 % 3.32 % 3.27 % Annualized net charge offs to average loans 0.20 % 0.30 % 0.12 % 0.15 % 0.27 % 78 Table of Contents .. ..
The net gains on sales of premises, equipment and other assets consists primarily of net revenue earned from sales of excess-bank owned facilities and equipment no longer in use, gains on sales of Small Business Administration and other non-residential mortgage loans, and leases and other assets associated with the equipment finance line of business.
Net gains on sales of premises, equipment and other assets consists primarily of net revenue earned from sales of excess bank owned facilities and equipment no longer in use, gains on sales of Small Business Administration and other non-residential mortgage loans, and leases and other assets associated with the equipment finance line of business.
Oversight responsibility for these categories is assigned within our risk committee governance structure: • Credit risk arises from the potential that a borrower or counterparty will fail to perform on an obligation. • Market risk is a financial institution’s condition resulting from adverse movements in market rates or prices, such as interest rates, foreign exchange rates, or equity prices. • Liquidity risk is the potential that an institution will be unable to meet its obligations as they come due because of an inability to liquidate assets or obtain adequate funding (referred to as “funding liquidity risk”) or that it cannot easily unwind or offset specific exposures without significantly lowering market prices because of inadequate market depth or market disruptions (“market liquidity risk”). • Operational risk is the potential that inadequate information systems, operational problems, breaches in internal controls, breaches in customer data, fraud, or unforeseen catastrophes will result in unexpected losses.
Oversight responsibility for these categories is assigned within our risk committee governance structure: • Credit risk arises from the potential that a borrower or counterparty will fail to perform on an obligation. • Market risk is a financial institution’s condition resulting from adverse movements in market rates or prices, such as interest rates, foreign exchange rates, or equity prices. • Liquidity risk is the potential that an institution will be unable to meet its obligations as they come due because of an inability to liquidate assets or obtain adequate funding (referred to as “funding liquidity risk”) or that it cannot easily unwind or offset specific exposures without significantly lowering market prices because of inadequate market depth or market disruptions ("market liquidity risk"). • Operational risk is the potential that inadequate information systems, operational problems, breaches in internal controls, breaches in customer data, fraud, or unforeseen catastrophes will result in unexpected losses.
Real estate loan levels are monitored throughout the year and the bank currently does not have a commercial real estate concentration as defined by interagency guidelines. Managing collateral is also an essential component of managing the Bank’s real estate-and non-real estate related credit risk exposure.
Real estate loan levels are monitored throughout the year and the bank currently does not have a commercial real estate concentration as defined by interagency guidelines. Monitoring collateral is also an essential component of managing the Bank’s real estate-and non-real estate related credit risk exposure.
Dampened depositor confidence over a financial institution's ability to protect deposit balances in excess of the federally insured limit is thought to pose a higher likelihood of a deposit run, and, in turn, the risk that the institution may have insufficient liquidity to meet the demand.
Dampened depositor confidence over a financial institution’s ability to protect deposit balances in excess of the federally insured limit is thought to pose a higher likelihood of a deposit run, and, in turn, the risk that the institution may have insufficient liquidity to meet the customer demand.
Generally, our ability to compete for market share depends on our deposit pricing and our wide range of products and services that are focused on customer needs, among other things. We offer high-quality banking services with convenient delivery channels, including online and mobile banking. We provide specialized services to our commercial customers to promote commercial deposit growth.
Generally, our ability to compete for market share depends on our deposit pricing and our wide range of products and services that are focused on customer needs, among other factors. We offer high-quality banking services with convenient delivery channels, including online and mobile banking. We provide specialized services to our commercial customers to promote commercial deposit growth.
Management applies significant judgment when weighting the macroeconomic scenarios for the reasonable and supportable period. Our assessment considers the scenario description compared to our portfolio performance and benchmarking select variables to other third party forecasts. At December 31, 2023, the Company weighted the Moody’s baseline scenario at 40% and the mild recessionary S-2 scenario at 60%.
Management applies significant judgment when weighting the macroeconomic scenarios for the reasonable and supportable period. Our assessment considers the scenario description compared to our portfolio performance and benchmarking select variables to other third-party forecasts. At December 31, 2024, the Company weighted the Moody’s baseline scenario at 40% and the mild recessionary S-2 scenario at 60%.
The following table summarizes select significant contractual obligations as of December 31, 2023, according to payments due by period. The table excludes obligations under deposit contracts and short-term borrowings discussed previously in this analysis. The maturities of time deposits in amounts greater than $250,000 are presented in Table 22.
The following table summarizes select significant contractual obligations as of December 31, 2024, according to payments due by period. The table excludes obligations under deposit contracts and short-term borrowings discussed previously in this analysis. The maturities of time deposits in amounts greater than $250,000 are presented in Table 22.
Unrealized holding gains (losses) on available for sale securities are excluded from net income and are recognized, net of tax, in other comprehensive income and in accumulated other comprehensive income, a separate component of stockholders’ equity. The following table presents debt securities at amortized cost by type at December 31, 2023 and 2022: TABLE 9.
Unrealized holding gains (losses) on available for sale securities are excluded from net income and are recognized, net of tax, in other comprehensive income and in accumulated other comprehensive income, a separate component of stockholders’ equity. The following table presents the amortized cost of debt securities by type at December 31, 2024 and 2023. TABLE 9.
Table 21 sets forth average balances and weighted-average rates paid on deposits for each year in the three-year period ended December 31, 2023, as well as the percentage of total deposits for each category. Table 22 sets forth the maturities of time certificates of deposit greater than $250,000 at December 31, 2023. TABLE 21.
Table 21 sets forth average balances and weighted-average rates paid on deposits for each year in the three-year period ended December 31, 2024, as well as the percentage of total deposits for each category. Table 22 sets forth the maturities of time certificates of deposit greater than $250,000 at December 31, 2024. TABLE 21.
The following table presents an analysis of the change in the Bank’s EVE resulting from instantaneous and parallel shifts in rates as of December 31, 2023. Shifts are measured in 100 basis point increments ranging from -500 to +500 basis points from base case, with -300 through +300 basis points presented in Table 26. TABLE 26.
The following table presents an analysis of the change in the Bank’s EVE resulting from instantaneous and parallel shifts in rates as of December 31, 2024. Shifts are measured in 100 basis point increments ranging from -500 to +500 basis points from base case, with -300 through +300 basis points presented in Table 26. TABLE 26.
Note 12 – Stockholders’ Equity to the consolidated financial statements provides additional information about the Bank’s regulatory capital ratios. The following table shows certain of the Company's capital ratios and our regulatory capital ratios as calculated under current rules at December 31, 2023 and 2022. 75 Table of Contents TABLE 30.
Note 12 – Stockholders’ Equity to the consolidated financial statements provides additional information about the Bank’s regulatory capital ratios. The following table shows certain of the Company’s capital ratios and our regulatory capital ratios as calculated under current rules at December 31, 2024 and 2023. 75 Table of Contents TABLE 30.
Based on capital ratios as of December 31, 2023 using Basel III definitions, the Company and the Bank exceeded all capital requirements of the rule. The Company and the Bank have established internal target ranges for Total, Tier 1 and Common Equity Tier 1 risk-based capital ratios and the leverage ratio.
Based on capital ratios as of December 31, 2024 using Basel III definitions, the Company and the Bank exceeded all capital requirements of the rule. The Company and the Bank have established internal target ranges for Total, Tier 1 and Common Equity Tier 1 risk-based capital ratios and the leverage ratio.
Based on our assessments, expected credit loss was negligible for all reporting periods in 2023 and 2022, and therefore no allowance for credit loss was recorded. There were no investments in securities of a single issuer, other than U.S.
Based on our assessments, expected credit loss was negligible for all reporting periods in 2024 and 2023, and therefore no allowance for credit loss was recorded. There were no investments in securities of a single issuer, other than U.S.
The following table presents an analysis of our interest rate risk as measured by the estimated changes in net interest income resulting from an instantaneous and sustained parallel shift in rates at December 31, 2023.
The following table presents an analysis of our interest rate risk as measured by the estimated changes in net interest income resulting from an instantaneous and sustained parallel shift in rates at December 31, 2024.
The effective income tax rate continues to be less than the statutory rate primarily due to tax-exempt income and income tax credits. The following table provides selected comparative financial information for the five quarters ending with December 31, 2023. TABLE 31.
The effective income tax rate continues to be less than the statutory rate primarily due to tax-exempt income and income tax credits. The following table provides selected comparative financial information for the five quarters ending with December 31, 2024. TABLE 31.
Purchase obligations represent material legal and binding contracts to purchase services and goods that cannot be settled or terminated without paying substantially all of the contractual amounts. 74 Table of Contents TABLE 29.
Purchase obligations represent material legal and binding contracts to purchase services and goods that cannot be settled or terminated without paying substantially all of the contractual amounts. TABLE 29.
The shares may be repurchased in the open market, by block purchase, through accelerated share repurchase plans, in privately negotiated transactions or otherwise, in one or more transactions, from time to time, depending upon market conditions and other factors, and in accordance with applicable regulations of the Securities and Exchange Commission.
Like the prior program, the shares may be repurchased in the open market, by block purchase, through accelerated share repurchase plans, in privately negotiated transactions or otherwise, in one or more transactions, from time to time, depending upon market conditions and other factors, and in accordance with applicable regulations of the Securities and Exchange Commission.
CAPCO drives business strategy development and execution, provides corporate financial oversight, and is responsible for portfolio risk committee oversight. CAPCO provides oversight of the portfolio risk/reward committees to ensure tactics to address business strategy changes are properly vetted and adopted, and protect the Company’s reputation. 68 Table of Contents • Portfolio committees.
CAPCO drives business strategy development and execution, provides corporate financial oversight, and is responsible for portfolio risk committee oversight. CAPCO provides oversight of the portfolio risk/reward committees to ensure tactics to address business strategy changes are properly vetted and adopted, and protect the Company’s reputation. • Portfolio committees.
Reprice risk results from differences in the maturity or repricing of asset and liability portfolios. Option risk arises from “embedded options” present in many 69 Table of Contents financial instruments such as loan prepayment options, deposit early withdrawal options, and interest rate options.
Reprice risk results from differences in the maturity or repricing of asset and liability portfolios. Option risk arises from “embedded options” present in many financial instruments such as loan prepayment options, deposit early withdrawal options, and interest rate options.
The yield calculation does not include adjustments to amortized cost of available for sale securities for active fair value hedges. 56 Table of Contents TABLE 10.
The yield calculation does not include adjustments to amortized cost of available for sale securities for active fair value hedges. TABLE 10.
Such instruments are not reflected in the accompanying consolidated financial statements 66 Table of Contents until they are funded, although they expose the Bank to varying degrees of credit risk and interest rate risk in much the same way as funded loans.
Such instruments are not reflected in the accompanying consolidated financial statements until they are funded, although they expose the Bank to varying degrees of credit risk and interest rate risk in much the same way as funded loans.
Commitments to extend credit totaled $9.9 billion at December 31, 2023 and include revolving commercial credit lines, non-revolving loan commitments issued mainly to finance the acquisition and development of construction of real property or equipment, and credit card and personal credit lines.
Commitments to extend credit totaled $9.2 billion at December 31, 2024 and include revolving commercial credit lines, non-revolving loan commitments issued mainly to finance the acquisition and development of construction of real property or equipment, and credit card and personal credit lines.
For real estate-secured loans, third party valuations are obtained at the time of origination, and updated if it is determined that the collateral value has deteriorated or if the loan is deemed to be a problem loan. Property valuations are ordered through, and reviewed by, the Bank’s appraisal department.
For real estate-secured loans, third-party valuations are obtained at the time of origination, and updated if it is determined that the collateral value has deteriorated or if the loan is deemed to be a problem loan. Property valuations are ordered through, and reviewed by, the Bank’s appraisal department, which is independent of the loan origination and approval process.
At December 31, 2023, the average expected maturity of the portfolio was 6.22 years with an effective duration of 4.60 years and a nominal weighted-average yield of 2.48%. Under an immediate, parallel rate shock of 100 bps and 200 bps, the effective duration would be 4.58 years and 4.55 years, respectively.
Under an immediate, parallel rate shock of 100 bps and 200 bps, the effective duration would be 4.11 years and 4.07 years, respectively. At December 31, 2023, the average expected maturity of the portfolio was 6.22 years with an effective duration of 4.60 years and a nominal weighted-average yield of 2.48%.
The following table shows the commitments to extend credit and letters of credit at December 31, 2023 and 2022 according to expiration date. TABLE 24.
The following table shows the commitments to extend credit and letters of credit at December 31, 2024 and 2023 according to expiration date. TABLE 24.
Further, at December 31, 2023, our sources of liquidity exceed uninsured deposits. We have estimated the Bank’s amount of uninsured deposits using the methodologies and assumptions required for FDIC regulatory reporting to be approximately $13.8 billion at December 31, 2023, compared to $14.7 billion at December 31, 2022.
Further, at December 31, 2024, our sources of liquidity exceed uninsured deposits. We have estimated the Bank’s amount of uninsured deposits using the methodologies and assumptions required for FDIC regulatory reporting to be approximately $14.6 billion at December 31, 2024, compared to $13.8 billion at December 31, 2023.
The base scenario assumes that balance sheet composition and the current interest rate environment is held constant over a 24-month forecast period and is the scenario to which all others are compared in order to measure the change in net interest income.
The base scenario assumes that balance sheet composition and the current interest rate environment is held constant over a 24-month forecast period and is the scenario to which all others are compared in order to measure the change in 71 Table of Contents net interest income.
We lend mainly to middle-market and smaller 57 Table of Contents commercial entities, although we do participate in larger shared-credit loan facilities generally with businesses/sponsors operating in our market areas that are well known to the relationship officers.
We lend mainly to middle-market and smaller commercial entities, although we do participate in larger shared-credit loan facilities generally with businesses/sponsors operating in our market areas that are well known to the relationship officers.
Based only on tax credit investments that have been made through 2023, we expect to realize benefits from federal and state tax credits over the next three years totaling $12.4 million, $9.8 million and $8.2 million for 2024, 2025 and 2026, respectively. We intend to continue making investments in tax credit projects.
Based only on tax credit investments that have been made through 2024, we expect to realize benefits from federal and state tax credits over the next three years totaling $9.8 million, $8.2 million and $8.0 million for 2025, 2026 and 2027, respectively. We intend to continue making investments in tax credit projects.
A number of commercial and personal credit lines are used only partially or, in some cases, not at all before they expire, and the total commitment amounts do not necessarily represent our future cash requirements. Letters of credit totaled $482 million at December 31, 2023.
A number of commercial and personal credit lines are used only partially or, in some cases, not at all before they expire, and the total commitment amounts do not necessarily represent our future cash requirements. Letters of credit totaled $420.6 million at December 31, 2024.
Commercial loans risk rated pass-watch totaled $433.6 million at December 31, 2023, compared to $457.6 million at December 31, 2022. The pass-watch risk rating includes credits with negative performance trends that reflect sufficient risk to cause concern, but have not risen to the level of criticized.
Commercial loans risk rated pass-watch totaled $521.4 million at December 31, 2024, compared to $433.6 million at December 31, 2023. The pass-watch risk rating includes credits with negative performance trends that reflect sufficient risk to cause concern, but have not risen to the level of criticized.
As part of the overall asset and liability management process, liquidity management strategies and measurements have been developed to manage and monitor liquidity risk. The following table summarizes available liquidity at December 31, 2023. 72 Table of Contents TABLE 27.
As part of the overall asset and liability management process, liquidity management strategies and measurements have been developed to manage and monitor liquidity risk. The following table summarizes available liquidity at December 31, 2024. TABLE 27.
The following table provides detail of the end of period balances of the more significant industry concentrations for our commercial and industrial loan portfolio, which is based on NAICS codes for all industries, with the exceptions of energy, which is based on the borrower’s source of revenue (i.e. manufacturer whose income is derived from energy-related business is reported as energy).
The following table provides detail of the more significant industry concentrations for our commercial and industrial loan portfolio, which is based on NAICS codes for all industries, with the exception of energy, which is based on the borrower’s source of revenue (i.e. manufacturer whose income is derived from energy-related business is reported as energy). TABLE 12.
We currently expect only modest charge-offs and provision expense in 2024; however, loan growth, portfolio composition, asset quality metrics and future assumptions in economic forecasts will drive the level of credit loss reserves in future periods. 62 Table of Contents The following table sets forth activity in the allowance for loan losses for the periods indicated. TABLE 18.
We currently expect modest charge-offs and provision for credit losses in 2025; however, loan growth, portfolio composition, asset quality metrics and future assumptions in economic forecasts will drive the level of credit loss reserves in future periods. 63 Table of Contents The following table sets forth activity in the allowance for loan losses for the periods indicated. TABLE 18.
Additionally, the Board of Directors has established an Audit Committee to provide independent oversight on the effectiveness of these matters and the Company’s internal control and regulatory environment. The Board Risk Committee is chaired by an independent director. The Board has designated Ms. Joan Teofilo and Ms.
Additionally, the Board of Directors has established an Audit Committee to provide independent oversight on the effectiveness of these matters and the Company’s internal control and regulatory environment. The Board Risk 69 Table of Contents Committee is chaired by an independent director. The Board has designated Ms. Joan Teofilo and Mr. H.
The Bank undertakes the same credit evaluation in making loan commitments and assuming conditional obligations as it does for on-balance sheet instruments and may require collateral or other credit support. At December 31, 2023, the Company had a reserve for unfunded lending commitments of $28.9 million.
The Bank undertakes the same credit evaluation in making loan commitments and assuming conditional obligations as it does for on-balance sheet instruments and may require collateral or other credit support. At December 31, 2024, the Company had a reserve for unfunded lending commitments of $24.1 million.
For example, holding all other assumptions constant, the slower growth S-2 scenario produced expected credit losses 34% higher than utilization of the baseline scenario at December 31, 2023. In contrast, for the year ended December 31, 2022, the slower growth S-2 scenario produced results 44% greater than the baseline scenario.
For example, holding all other assumptions constant, the slower growth S-2 scenario produced expected credit losses 40% higher than utilization of the baseline scenario at December 31, 2024. In contrast, for the year ended December 31, 2023, the slower growth S-2 scenario produced results 34% higher than the baseline scenario.
Table 8 reconciles reported income tax expense to that computed at the statutory tax rate of 21% for the years ended December 31, 2023, 2022 and 2021. TABLE 8.
Table 8 reconciles reported income tax expense to that computed at the statutory tax rate of 21% for the years ended December 31, 2024, 2023 and 2022. 55 Table of Contents TABLE 8.
Debt Securities by Type ($ in thousands ) 2023 2022 Available for sale securities U.S.
Debt Securities by Type ($ in thousands ) 2024 2023 Available for sale securities U.S.
Trust assets under management increased to $9.7 billion at December 31, 2023, compared to $9.1 billion at December 31, 2022. Bank card and ATM fees include income from credit and debit card transactions, fees earned from processing card transactions for merchants, and fees earned from ATM transactions.
Trust assets under management increased to $10.2 billion at December 31, 2024, compared to $9.7 billion at December 31, 2023. Bank card and ATM fees include income from credit and debit card transactions, fees earned from processing card transactions for merchants, and fees earned from ATM transactions.
At December 31, 2023, each of these capital ratios fell within, or above, their respective target range. At December 31, 2023, our regulatory capital ratios were well in excess of current regulatory minimum requirements, including the conservatism buffers, by at least $737 million. Additionally, both the Company and the Bank were considered “well capitalized” by regulatory agencies.
At December 31, 2024, each of these capital ratios fell within, or above, their respective target range. At December 31, 2024, our regulatory capital ratios were well in excess of current regulatory minimum requirements, including the conservatism buffers, by at least $1.2 billion. Additionally, both the Company and the Bank were considered “well capitalized” by regulatory agencies.
As shown in Table 28 above, our ratios of free securities to total securities were 38.80% and 41.59% at December 31, 2023 and 2022, respectively. Securities and FHLB letters of credit are pledged as collateral related to public funds and repurchase agreements.
As shown in Table 28 above, our ratios of free securities to total securities were 48.65% and 38.80% at December 31, 2024 and 2023, respectively. Securities and FHLB letters of credit are pledged as collateral related to public funds and repurchase agreements.
As of December 31, 2023, we had approximately $478 million in notional amount of forward-starting fixed payer swaps that convert the latter portion of the term of these available for sale securities to a floating rate. These derivative instruments are designated as fair value hedges of interest rate 55 Table of Contents risk.
As of December 31, 2024, we had approximately $477.5 million in notional amount of forward-starting fixed payer swaps that convert the latter portion of the term of these available for sale securities to a floating rate. These derivative instruments are designated as fair value hedges of interest rate risk.
Allowance for Credit Losses At December 31, 2023, the allowance for credit losses was $336.8 million, comprised of $307.9 million in allowance for loan losses and $28.9 million in the reserve for unfunded lending commitments.
The allowance for credit losses increased $6.1 million from $336.8 million at December 31, 2023, which was comprised of $307.9 million in allowance for loan losses and $28.9 million in the reserve for unfunded lending commitments.
At December 31, 2023, we have calculated our average deposit account size by dividing period-end deposits by the population of accounts with balances to be approximately $37,800, which includes $191,600 in our commercial and small business lines (excluding public funds), $135,900 in our wealth management business line, and $18,700 in our consumer business line.
At December 31, 2024, we have calculated our average deposit account size by dividing period-end deposits by the population of accounts with balances to be approximately $37,900, which includes $199,500 in our commercial and small business lines (excluding public funds), $122,500 in our wealth management business line, and $18,600 in our consumer business line.
Interest-bearing public fund deposits totaled $3.1 billion at December 31, 2023, down $101.2 million, or 3%, from December 31, 2022. Year-end public fund account balances are subject to annual fluctuations dependent upon a number of factors, including the timing of tax collections.
Interest-bearing public fund deposits totaled $3.2 billion at December 31, 2024, up $69.5 million, or 2%, from December 31, 2023. Year-end public fund account balances are subject to annual fluctuations dependent upon a number of factors, including the timing of tax collections.
The Parent may temporarily operate below that level if a return to the target can be achieved in the near-term, generally not to exceed four quarters. The Parent had cash totaling $218.7 million at December 31, 2023. Material Cash Requirements The Company has sufficient access to liquidity for operations.
The Parent may operate below the target level on a temporary basis if a return to the target can be achieved in the near-term, generally not to exceed four quarters. The Parent had cash totaling $272.7 million at December 31, 2024. Material Cash Requirements The Company has sufficient access to liquidity for operations.
The decline in derivative income also reflects a $1.8 million increase in losses associated with our Visa B derivative.
The decline in derivative income also reflects a $1.4 million increase in losses associated with our Visa Class B derivative contract.
These investments are made primarily in the markets we serve and directed at tax credits issued under the Federal and State New Market Tax Credit (“NMTC”), Low-Income Housing Tax Credit (“LIHTC”) and pre-2018 Qualified Zone Academy Bonds (“QZAB”) and Qualified School Construction Bonds (“QSCB”) programs.
These investments are made primarily in the markets we serve and directed at tax credits issued under the Federal and State New Market Tax Credit (NMTC), Low-Income Housing Tax Credit (LIHTC) and pre-2018 Qualified Zone Academy Bonds (QZAB) and Qualified School Construction Bonds (QSCB) programs.
The growth in mortgage loans includes a combination of completed construction loans converting to permanent financing, as well as new loan growth. Consumer loans totaled $1.4 billion at December 31, 2023, down $130.6 million, or 8%, compared to December 31, 2022.
The growth in mortgage loans includes a combination of completed construction loans converting to permanent financing, as well as new loan growth. Consumer loans totaled $1.4 billion at December 31, 2024, down $76.9 million, or 5%, compared to December 31, 2023.
At December 31, 2023, our available on and off-balance sheet liquidity of $18.0 b illi on is well in excess of our estimated uninsured, noncollateralized deposits of approximately $10.2 billion. The asset portion of the balance sheet provides liquidity primarily through loan principal repayments, maturities and repayments of investment securities and occasional sales of various assets.
At December 31, 2024, our available on and off-balance sheet liquidity of $19.5 billion is well in excess of our estimated uninsured, noncollateralized deposits of approximately $11.0 billion. The asset portion of the balance sheet provides liquidity primarily through loan principal repayments, maturities and repayments of investment securities and occasional sales of various assets.
Our uninsured deposit total at December 31, 2023 includes approximately $3.6 billion of public funds that have pledged securities as collateral, leaving $10.2 billion of noncollateralized, uninsured deposits compared to total liquidity of $18.0 billion. Our ratio of noncollateralized, uninsured deposits to total deposits was approximately 34.4% at December 31, 2023, compared to 37.9% at December 31, 2022.
Our uninsured deposit total at December 31, 2024 includes approximately $3.6 billion of public funds that have pledged securities as collateral, leaving approximately $11.0 billion of noncollateralized, uninsured deposits compared to total liquidity of $19.5 billion. Our ratio of noncollateralized, uninsured deposits to total deposits was approximately 37.3% at December 31, 2024, compared to 34.4% at December 31, 2023.
We estimate that our regulatory capital ratios would remain in excess of the well-capitalized minimums under both of these stress scenarios at December 31, 2023. In January 2023, the Company's board of directors declared an 11% increase in the regular quarterly cash dividend to $0.30 per share.
We estimate that our regulatory capital ratios would remain in excess of the well-capitalized minimums under both of these stress scenarios at December 31, 2024. In April 2024, the Company’s Board of Directors declared a 33% increase in the regular quarterly cash dividend to $0.40 per share.
Net gains on sales of premises, equipment and other assets totaled $19.4 million in 2023, compared to $3.1 million in 2023, up $16.3 million. The increase was primarily related to previously mentioned gain on the sale of a stand alone parking facility totaling, $16.1 million, that was identified as a supplemental disclosure item.
Net gains on sales of premises, equipment and other assets totaled $7.8 million in 2024, compared to $19.4 million in 2023, down $11.6 million. The decrease was primarily related to previously mentioned gain on the sale of a stand-alone parking facility of $16.1 million in 2023 that was identified as a supplemental disclosure item.
At December 31, 2023, the amortized cost of securities available for sale totaled $5.5 billion and securities held to maturity totaled $2.7 billion, compared to $6.3 billion and $2.9 billion, respectively, at December 31, 2022.
At December 31, 2024, the amortized cost of securities available for sale totaled $5.8 billion and securities held to maturity totaled $2.4 billion, compared to $5.5 billion and $2.7 billion, respectively, at December 31, 2023.
Noninterest income for 2023 includes two supplemental disclosure items totaling $49.3 million, comprised of a $65.4 million loss on restructuring of the available for sale securities portfolio and a $16.1 million gain on the sale of a parking facility. There were no supplemental disclosure items included in noninterest income in 2022.
For the year ended December 31, 2023, noninterest income included two supplemental disclosure items totaling $49.3 million, comprised of a $65.4 million loss on restructuring of the available for sale securities portfolio and a $16.1 million gain on the sale of a parking facility.
Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Balance Sheet Analysis—Allowance for Credit Losses” provides additional information on changes in the allowance for credit losses and general credit quality. Noninterest Income Noninterest income for the year ended December 31, 2023 totaled $288.5 million, a $43.0 million, or 13%, decrease from 2022.
Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Balance Sheet Analysis—Allowance for Credit Losses” provides additional information on changes in the allowance for credit losses and general credit quality. Noninterest Income Noninterest income for the year ended December 31, 2024 totaled $364.1 million, a $75.6 million, or 26%, increase from 2023.
Other miscellaneous income for the year ended December 31, 2023 was $23.6 million, up $5.0 million from the previous year, or 27%, largely due to a $4.8 million increase in FHLB stock dividends as a result of both an increase in prevailing rates and an increase in volume of FHLB stock.
Other miscellaneous income for the year ended December 31, 2024 was $27.0 million, up $3.4 million, or 14%, from 2023, largely due to a $2.2 million increase in dividends on FHLB stock as a result of both an increase in prevailing rates and an increase in volume of stock owned and a $1.0 million increase in income from SBICs.
Average Loans 2023 2022 2021 Yield Pct of Yield Pct of Yield Pct of ( $ in thousands ) Balance (te) Total Balance (te) Total Balance (te) Total Commercial & real estate loans $ 18,556,175 6.10 % 79 % $ 17,682,332 4.30 % 81 % $ 17,070,252 3.55 % 80 % Residential mortgages 3,541,245 3.62 % 15 % 2,666,134 3.39 % 12 % 2,445,602 3.70 % 12 % Consumer 1,497,159 8.28 % 6 % 1,566,927 5.64 % 7 % 1,692,088 4.82 % 8 % Total loans $ 23,594,579 5.87 % 100 % $ 21,915,393 4.32 % 100 % $ 21,207,942 3.92 % 100 % The following table sets forth the contractual maturity by portfolio segment at December 31, 2023.
Average Loans 2024 2023 2022 Yield Pct of Yield Pct of Yield Pct of ( $ in thousands ) Balance (te) Total Balance (te) Total Balance (te) Total Commercial & real estate loans $ 18,263,676 6.46 % 77 % $ 18,556,175 6.10 % 79 % $ 17,682,332 4.30 % 81 % Residential mortgages 3,982,122 3.84 % 17 % 3,541,245 3.62 % 15 % 2,666,134 3.39 % 12 % Consumer 1,384,945 8.78 % 6 % 1,497,159 8.28 % 6 % 1,566,927 5.64 % 7 % Total loans $ 23,630,743 6.17 % 100 % $ 23,594,579 5.87 % 100 % $ 21,915,393 4.32 % 100 % The following table sets forth the contractual maturity by portfolio segment at December 31, 2024.
Trust fees totaled $67.6 million in 2023, a $2.4 million, or 4%, increase from 2022, primarily attributable to an increase of $3.7 million in corporate and institutional trust fees and a decrease of $1.3 million in personal trust, retirement services, and other trust fees.
Trust fees totaled $71.7 million in 2024, a $4.2 million, or 6%, increase from 2023, primarily attributable to an increase of $2.5 million in personal trust income, $1.4 million in institutional trust fees, and $0.4 million in corporate trust and retirement services fees.
Supplemental Disclosure Items Included in Noninterest Income ($ in thousands ) 2023 2022 2021 Securities transactions: Loss on securities portfolio restructure $ (65,380 ) $ — $ — Other miscellaneous income: Gain on sale of parking facility $ 16,126 $ — $ — Gain on sale of Hancock Horizon Funds — — 4,576 Gain on sale of MasterCard Class B common stock — — 2,800 Gain on hurricane-related insurance settlement — — 3,600 Total other miscellaneous income $ 16,126 $ — $ 10,976 Total supplemental disclosure items in noninterest income $ (49,254 ) $ — $ 10,976 Service charges on deposit accounts include consumer, business, and corporate deposit account servicing fees, as well as overdraft and nonsufficient funds fees, overdraft protection fees, and other customer transaction-related fees.
Supplemental Disclosure Items Included in Noninterest Income ($ in thousands ) 2024 2023 2022 Securities transactions: Loss on securities portfolio restructure $ — $ (65,380 ) $ — Other miscellaneous income: Gain on sale of parking facility — 16,126 — Total supplemental disclosure items in noninterest income $ — $ (49,254 ) $ — Service charges on deposit accounts include consumer, business, and corporate deposit account servicing fees, as well as nonsufficient funds fees on non-consumer accounts, overdraft and overdraft protection fees, and other customer transaction-related fees.
Summary of Activity in the Allowance for Credit Losses December 31, ($ in thousands) 2023 2022 2021 Provision and Allowance for Credit Losses Allowance for Loan Losses: Allowance for loan losses at beginning of period $ 307,789 $ 342,065 $ 450,177 Loans charged-off: Commercial non real estate 59,830 7,637 33,523 Commercial real estate - owner occupied — 948 3,179 Total commercial & industrial 59,830 8,585 36,702 Commercial real estate - income producing 73 1,073 425 Construction and land development 72 3 274 Total Commercial 59,975 9,661 37,401 Residential mortgages 55 137 713 Consumer 15,393 12,792 12,722 Total charge-offs 75,423 22,590 50,836 Recoveries of loans previously charged-off: Commercial non real estate 6,152 11,812 8,985 Commercial real estate - owner occupied 957 733 642 Total commercial & industrial 7,109 12,545 9,627 Commercial real estate - income producing 14 878 105 Construction and land development 11 134 2,172 Total commercial 7,134 13,557 11,904 Residential mortgages 1,278 1,749 1,459 Consumer 3,611 5,382 6,282 Total recoveries 12,023 20,688 19,645 Total net charge-offs 63,400 1,902 31,191 Provision for loan losses 63,518 (32,374 ) (76,921 ) Allowance for loan losses at end of period $ 307,907 $ 307,789 $ 342,065 Reserve for Unfunded Lending Commitments: Reserve for unfunded lending commitments at beginning of period 33,309 29,334 29,907 Provision for losses on unfunded lending commitments (4,415 ) 3,975 (573 ) Reserve for unfunded lending commitments at end of period $ 28,894 $ 33,309 $ 29,334 Total Allowance for Credit Losses $ 336,801 $ 341,098 $ 371,399 Total Provision for Credit Losses $ 59,103 $ (28,399 ) $ (77,494 ) Coverage ratios: Allowance for loan losses to period end loans 1.29 % 1.33 % 1.62 % Allowance for credit loss to period end loans 1.41 % 1.48 % 1.76 % Charge-offs ratios Gross charge-offs to average loans 0.32 % 0.10 % 0.24 % Recoveries to average loans 0.05 % 0.09 % 0.09 % Net charge-offs to average loans 0.27 % 0.01 % 0.15 % Net Charge-offs to average loans by portfolio: Commercial non real estate 0.54 % (0.04 )% 0.25 % Commercial real estate - owner occupied (0.03 )% 0.01 % 0.09 % Total commercial & industrial 0.40 % (0.03 )% 0.22 % Commercial real estate - income producing 0.00 % 0.01 % 0.01 % Construction and land development 0.00 % (0.01 )% (0.16 )% Total Commercial 0.28 % (0.02 )% 0.15 % Residential mortgages (0.03 )% (0.06 )% (0.03 )% Consumer 0.79 % 0.47 % 0.38 % 63 Table of Contents An allocation of the loan loss allowance by major loan category is set forth in the following table for the periods indicated.
Summary of Activity in the Allowance for Credit Losses December 31, ($ in thousands) 2024 2023 2022 Provision and Allowance for Credit Losses Allowance for Loan Losses: Allowance for loan losses at beginning of period $ 307,907 $ 307,789 $ 342,065 Loans charged-off: Commercial non real estate 45,488 59,830 7,637 Commercial real estate - owner occupied 143 — 948 Total commercial & industrial 45,631 59,830 8,585 Commercial real estate - income producing 8,822 73 1,073 Construction and land development 264 72 3 Total Commercial 54,717 59,975 9,661 Residential mortgages 380 55 137 Consumer 17,987 15,393 12,792 Total charge-offs 73,084 75,423 22,590 Recoveries of loans previously charged-off: Commercial non real estate 22,292 6,152 11,812 Commercial real estate - owner occupied 1,036 957 733 Total commercial & industrial 23,328 7,109 12,545 Commercial real estate - income producing 7 14 878 Construction and land development 64 11 134 Total commercial 23,399 7,134 13,557 Residential mortgages 595 1,278 1,749 Consumer 3,057 3,611 5,382 Total recoveries 27,051 12,023 20,688 Total net charge-offs 46,033 63,400 1,902 Provision for loan losses 57,008 63,518 (32,374 ) Allowance for loan losses at end of period $ 318,882 $ 307,907 $ 307,789 Reserve for Unfunded Lending Commitments: Reserve for unfunded lending commitments at beginning of period 28,894 33,309 29,334 Provision for losses on unfunded lending commitments (4,841 ) (4,415 ) 3,975 Reserve for unfunded lending commitments at end of period $ 24,053 $ 28,894 $ 33,309 Total Allowance for Credit Losses $ 342,935 $ 336,801 $ 341,098 Total Provision for Credit Losses $ 52,167 $ 59,103 $ (28,399 ) Coverage ratios: Allowance for loan losses to period end loans 1.37 % 1.29 % 1.33 % Allowance for credit loss to period end loans 1.47 % 1.41 % 1.48 % Charge-offs ratios Gross charge-offs to average loans 0.31 % 0.32 % 0.10 % Recoveries to average loans 0.11 % 0.05 % 0.09 % Net charge-offs to average loans 0.19 % 0.27 % 0.01 % Net Charge-offs to average loans by portfolio: Commercial non real estate 0.24 % 0.54 % (0.04 )% Commercial real estate - owner occupied (0.03 )% (0.03 )% 0.01 % Total commercial & industrial 0.17 % 0.40 % (0.03 )% Commercial real estate - income producing 0.22 % 0.00 % 0.01 % Construction and land development 0.01 % 0.00 % (0.01 )% Total Commercial 0.17 % 0.28 % (0.02 )% Residential mortgages (0.01 )% (0.03 )% (0.06 )% Consumer 1.08 % 0.79 % 0.47 % 64 Table of Contents An allocation of the loan loss allowance by major loan category is set forth in the following table for the periods indicated.
Suzette Kent, independent directors who serve on the Board Risk Committee, as risk management experts.
Merritt Lane, III, independent directors who serve on the Board Risk Committee, as risk management experts.
Income Taxes ($ in thousands ) 2023 2022 2021 Taxes computed at statutory rate $ 102,927 $ 138,431 $ 119,292 Tax credits: QZAB/QSCB (1,114 ) (1,391 ) (1,633 ) NMTC - Federal and State (7,177 ) (5,745 ) (5,487 ) LIHTC and other tax credits (4,884 ) (4,232 ) (1,936 ) LIHTC amortization 3,732 3,329 1,167 Total tax credits (9,443 ) (8,039 ) (7,889 ) State income taxes, net of federal income tax benefit 10,323 13,272 9,048 Tax-exempt interest (8,755 ) (8,612 ) (9,100 ) Life insurance contracts (4,020 ) (1,812 ) (2,653 ) Employee share-based compensation (505 ) (2,084 ) (1,671 ) FDIC assessment disallowance 2,893 1,836 1,609 Net operating loss carryback under CARES Act — 238 (4,948 ) Other, net 4,106 1,877 1,153 Income tax expense $ 97,526 $ 135,107 $ 104,841 The main source of tax credits has been investments in tax-advantage securities and tax credit projects.
Income Taxes ($ in thousands ) 2024 2023 2022 Taxes computed at statutory rate $ 120,534 $ 102,927 $ 138,431 Tax credits: QZAB/QSCB (908 ) (1,114 ) (1,391 ) NMTC - Federal and State (7,521 ) (7,177 ) (5,745 ) LIHTC and other tax credits (4,751 ) (4,884 ) (4,232 ) LIHTC amortization 3,727 3,732 3,329 Total tax credits (9,453 ) (9,443 ) (8,039 ) State income taxes, net of federal income tax benefit 12,640 10,323 13,272 Tax-exempt interest (8,443 ) (8,755 ) (8,612 ) Life insurance contracts (6,017 ) (4,020 ) (1,812 ) Employee share-based compensation (1,514 ) (505 ) (2,084 ) FDIC assessment disallowance 2,466 2,893 1,836 Impact of deferred tax asset re-measurement (435 ) — — Net operating loss carryback under CARES Act — — 238 Other, net 3,380 4,106 1,877 Income tax expense $ 113,158 $ 97,526 $ 135,107 The main source of tax credits has been investments in tax-advantage securities and tax credit projects.
Management expects full year 2024 end of period growth in deposits to be in the low single digit range from $29.7 billion at December 31, 2023. Short-Term Borrowings Short-term borrowings totaled $1.2 billion at December 31, 2023, down $716.4 million, or 38% from December 31, 2022.
Management expects full year 2025 end of period growth in deposits to be in the low single digit range from $29.5 billion at December 31, 2024. Short-Term Borrowings Short-term borrowings totaled $639.0 million at December 31, 2024, down $515.8 million, or 45% from December 31, 2023.
Other committees of the Board of Directors oversee certain risks that overlap with the Board Risk Committee's enterprise risk management oversight, including the Compensation Committee, which evaluates and manages any risk posed by compensation and benefits programs and oversees diversity, equity and inclusion efforts, and the Corporate Governance and Nominating Committee, which oversees all ESG related activities. • Governance committees.
Other committees of the Board of Directors oversee certain risks that overlap with the Board Risk Committee’s enterprise risk management oversight, including the Compensation Committee, which evaluates and manages any risk posed by compensation and benefits programs and oversees inclusion and belonging efforts, and the Corporate Governance and Nominating Committee, which provides oversight on a broad range of issues surrounding the composition and operation of the Board of Directors. • Governance committees.
Average Deposits 2023 2022 2021 ($ in millions) Balance Rate Mix Balance Rate Mix Balance Rate Mix Interest-bearing deposits: Interest-bearing transaction deposits $ 2,429.5 0.93 % 8.2 % $ 2,630.3 0.15 % 8.9 % $ 2,425.2 0.09 % 8.3 % Money market deposits 5,762.9 2.67 % 19.6 % 5,679.8 0.30 % 19.3 % 6,212.0 0.11 % 21.4 % Savings deposits 2,424.9 0.02 % 8.2 % 2,917.4 0.01 % 9.9 % 2,598.2 0.01 % 8.9 % Time deposits 3,970.4 4.17 % 13.5 % 1,030.1 0.45 % 3.5 % 1,394.1 0.47 % 4.8 % Public Funds 2,971.6 3.38 % 10.1 % 2,941.9 1.10 % 10.0 % 3,140.2 0.34 % 10.8 % Total interest-bearing deposits 17,559.3 2.53 % 59.6 % 15,199.5 0.38 % 51.6 % 15,769.7 0.17 % 54.2 % Noninterest bearing demand deposits 11,919.2 40.4 % 14,298.0 48.4 % 13,324.0 45.8 % Total deposits $ 29,478.5 100.0 % $ 29,497.5 100.0 % $ 29,093.7 100.0 % TABLE 22.
Average Deposits 2024 2023 2022 ($ in millions) Balance Rate Mix Balance Rate Mix Balance Rate Mix Interest-bearing deposits: Interest-bearing transaction deposits $ 2,686.1 1.55 % 9.2 % $ 2,429.5 0.93 % 8.2 % $ 2,630.3 0.15 % 8.9 % Money market deposits 6,136.1 3.25 % 21.0 % 5,762.9 2.67 % 19.6 % 5,679.8 0.30 % 19.3 % Savings deposits 2,082.8 0.34 % 7.1 % 2,424.9 0.02 % 8.2 % 2,917.4 0.01 % 9.9 % Time deposits 4,833.7 4.62 % 16.6 % 3,970.4 4.17 % 13.5 % 1,030.1 0.45 % 3.5 % Public Funds 2,938.7 3.50 % 10.1 % 2,971.6 3.38 % 10.1 % 2,941.9 1.10 % 10.0 % Total interest-bearing deposits 18,677.4 3.08 % 64.0 % 17,559.3 2.53 % 59.6 % 15,199.5 0.38 % 51.6 % Noninterest bearing demand deposits 10,491.5 36.0 % 11,919.2 40.4 % 14,298.0 48.4 % Total deposits $ 29,168.9 100.0 % $ 29,478.5 100.0 % $ 29,497.5 100.0 % 66 Table of Contents TABLE 22.
Management has established a target range for the loan to deposit ratio of 87% to 89%, but will operate outside that range under certain circumstances, such as those caused by the continuing impact of the pandemic where deposits became and have remained elevated. Cash generated from operations is another important source of funds to meet liquidity needs.
Management has established a target range for the loan to deposit ratio of 87% to 89%, but has and will continue to operate outside that range under certain market conditions and circumstances. Cash generated from operations is another important source of funds to meet liquidity needs.
Investment and annuity fees and insurance commissions, which include both fees earned from sales of annuity and insurance products as well as managed account fees, totaled $36.7 million in 2023, an $8.0 million, or 28%, increase from 2022.
Investment and annuity fees and insurance commissions, which include both fees earned from sales of annuity and insurance products as well as managed account fees, totaled $43.4 million in 2024, a $6.7 million, or 18%, increase from 2023.
The functional areas reporting to the Chief Risk Officer are the enterprise risk management program office, operational risk management, model validation, data governance, regulatory relations, corporate insurance, credit review (administrative only), Bank Secrecy Act compliance, and the enterprise-wide compliance program.
The functional areas reporting to the Chief Risk Officer are the enterprise risk management, operational risk management, model risk management, information technology risk management, data governance, compliance, credit review (administrative only), corporate insurance, regulatory relations, and financial crimes programs.
Allocation of Allowance for Loan Losses by Category December 31, 2023 2022 ($ in thousands) Allowance for Loan Losses % of Total Allowance Allowance for Loan Losses % of Total Allowance Commercial non-real estate $ 101,737 33 % $ 96,461 31 % Commercial real estate - owner occupied 40,197 13 48,284 16 Total commercial & industrial 141,934 46 144,745 47 Commercial real estate - income producing 74,539 24 71,961 23 Construction and land development 27,039 9 30,498 10 Residential mortgages 38,983 13 32,464 11 Consumer 25,412 8 28,121 9 Total $ 307,907 100 % $ 307,789 100 % Deposits Deposits provide the most significant source of funding for our interest earning assets.
Allocation of Allowance for Loan Losses by Category December 31, 2024 2023 ($ in thousands) Allowance for Loan Losses % of Total Allowance Allowance for Loan Losses % of Total Allowance Commercial non-real estate $ 121,090 38 % $ 101,737 33 % Commercial real estate - owner occupied 36,264 11 40,197 13 Total commercial & industrial 157,354 49 141,934 46 Commercial real estate - income producing 71,975 23 74,539 24 Construction and land development 21,158 7 27,039 9 Residential mortgages 42,445 13 38,983 13 Consumer 25,950 8 25,412 8 Total $ 318,882 100 % $ 307,907 100 % Deposits Deposits provide the most significant source of funding for our interest earning assets.
The primary driver of the decrease is attributable to personnel expense, which was down $1.9 million, or 2%, from the third quarter of 2023, due to lower incentive expense. The effective income tax rate for fourth quarter 2023 was 18.8%.
The primary driver of the decrease is attributable to personnel expense, which was down $2.0 million, or 2%, from the third quarter of 2024, driven by lower incentives and retirement benefits expenses. The effective income tax rate for fourth quarter 2024 was 18.9%.
Average short-term borrowings for 2023 totaled $1.7 billion, up $334.7 million, or 25%, compared to 2022. The variance compared to December 31, 2022 reflects the net repayment of $725 million of FHLB borrowings. Short-term borrowings are a core portion of the Company’s funding strategy, the balance of which can fluctuate depending on our funding needs and the sources utilized.
Average short-term borrowings for 2024 totaled $672.3 million, down $802.0 million, or 47%, compared to 2023. The declines from December 31, 2023 reflects the net repayment of $700 million of FHLB borrowings. Short-term borrowings are a core portion of the Company’s funding strategy, the balance of which can fluctuate depending on our funding needs and the sources utilized.
The substantial year-over-year decline in derivative income is largely tied to the significant change in the interest rate environment present in each of the comparative periods, which affects demand for variable rate loans and related derivative products, valuation adjustments, and related collateral income/expense for the program as a whole.
The year-over-year decline is primarily due to a $3.8 million decrease in customer derivative income largely tied to the elevated interest rate environment, which affects demand for variable rate loans and related derivative products, valuation adjustments, and related collateral income/expense for the program as a whole.
At December 31, 2023, we had a net deferred tax asset of $153.4 million, which is comprised of $293.7 million in deferred tax assets (net of valuation allowance), offset by $140.3 million of deferred tax liabilities.
At December 31, 2024, we had a net deferred tax asset of $146.6 million, which is comprised of $297.4 million in deferred tax assets (net of valuation allowance), offset by $150.8 million of deferred tax liabilities.
Net interest income (te) for the fourth quarter of 2023 was $272.3 million, up $0.2 million, or less than 1%, from the third quarter of 2023.
Net interest income (te) for the fourth quarter of 2024 was $276.3 million, up $1.8 million, or 1%, from the third quarter of 2024.
The program has an expiration date of December 31, 2024 and does not obligate the Company to purchase any shares. The program may be terminated or amended by the Board at any time prior to the expiration date. This program allows us to continue to opportunistically repurchase shares of our common stock when the market is advantageous.
The program has an expiration date of December 31, 2026 and does not obligate the Company to purchase any shares. The program may be terminated or amended by the Board at any time prior to the expiration date.
Federal tax credits from NMTC investments are recognized over a seven-year period, while recognition of the benefits from state tax credits varies from three to five years.
We have invested in NMTC projects through investments in our own CDEs, as well as other unrelated CDEs. Federal tax credits from NMTC investments are recognized over a seven-year period, while recognition of the benefits from state tax credits varies from three to five years.
Shared national credits funded at December 31, 2023 totaled approximately $2.6 billion, or 11% of total loans, compared to $2.7 million, or 12% of total loans at December 31, 2022.
The funded balance of our shared national credits portfolio at December 31, 2024 totaled approximately $2.3 billion, or 10% of total loans, compared to $2.6 billion, or 11% of total loans at December 31, 2023.

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