Glacier Bancorp(GBCI) - 2021 Q3 - Quarterly Report

ABBREVIATIONS/ACRONYMS This section provides a list of abbreviations and acronyms used throughout the report for clarity and conciseness Part I. Financial Information This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the period ended September 30, 2021 Item 1 – Financial Statements This section contains the company's unaudited condensed consolidated financial statements as of September 30, 2021, including statements of financial condition, operations, comprehensive income, changes in stockholders' equity, and cash flows, along with related notes, providing detailed information on the company's financial performance and position Unaudited Condensed Consolidated Statements of Financial Condition This statement presents the company's financial position, detailing assets, liabilities, and stockholders' equity as of September 30, 2021, and December 31, 2020 | Indicator | September 30, 2021 (Thousands of USD) | December 31, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 348,888 | 633,142 | | Total debt securities | 8,518,879 | 5,527,650 | | Loans receivable, net | 11,140,282 | 10,964,453 | | Total assets | 21,314,019 | 18,504,206 | | Liabilities | | | | Non-interest-bearing deposits | 6,632,402 | 5,454,539 | | Interest-bearing deposits | 10,870,912 | 9,342,990 | | Total liabilities | 18,926,403 | 16,197,165 | | Stockholders' Equity | | | | Total stockholders' equity | 2,387,616 | 2,307,041 | - As of September 30, 2021, the company's total assets reached $21.314 billion, an increase of 15.18% from December 31, 2020[9] - Total debt securities significantly increased from $5.528 billion at the end of 2020 to $8.519 billion as of September 30, 2021, a 54.12% growth[9] - Both non-interest-bearing and interest-bearing deposits grew, contributing to a 16.85% increase in total liabilities[9] Unaudited Condensed Consolidated Statements of Operations This statement details the company's revenues, expenses, and net income for the three and nine months ended September 30, 2021 and 2020, providing insights into operational performance | Indicator | Three Months Ended September 30, 2021 (Thousands of USD) | Three Months Ended September 30, 2020 (Thousands of USD) | Nine Months Ended September 30, 2021 (Thousands of USD) | Nine Months Ended September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | :--- | :--- | | Total interest income | 166,741 | 157,487 | 488,249 | 455,756 | | Total interest expense | 4,128 | 6,084 | 13,355 | 21,765 | | Net interest income | 162,613 | 151,403 | 474,894 | 433,991 | | Provision for credit losses | 725 | 5,186 | (4,880) | 41,300 | | Total non-interest income | 34,815 | 53,667 | 110,458 | 128,163 | | Total non-interest expense | 104,108 | 103,373 | 300,775 | 293,624 | | Net income | 75,619 | 77,757 | 234,048 | 184,540 | | Basic earnings per share | 0.79 | 0.81 | 2.45 | 1.95 | | Diluted earnings per share | 0.79 | 0.81 | 2.45 | 1.95 | | Dividends per share | 0.32 | 0.30 | 0.95 | 0.88 | - For the three months ended September 30, 2021, net income was $75.619 million, a year-over-year decrease of 2.75%, primarily due to reduced gains on loan sales[10] - For the nine months ended September 30, 2021, net income was $234.048 million, a year-over-year increase of 26.83%, driven by higher net interest income and a reduction in the provision for credit losses[10] - Over the nine-month period, the provision for credit losses shifted from $41.3 million in 2020 to a negative $4.88 million (benefit) in 2021, significantly boosting earnings after net interest income[10] Unaudited Condensed Consolidated Statements of Comprehensive Income This statement presents the company's net income and other comprehensive income (loss) components, leading to total comprehensive income for the three and nine months ended September 30, 2021 and 2020 | Indicator | Three Months Ended September 30, 2021 (Thousands of USD) | Three Months Ended September 30, 2020 (Thousands of USD) | Nine Months Ended September 30, 2021 (Thousands of USD) | Nine Months Ended September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | :--- | :--- | | Net income | 75,619 | 77,757 | 234,048 | 184,540 | | Other comprehensive income (loss), net of tax | (12,783) | 1,189 | (65,431) | 90,872 | | Total comprehensive income | 62,836 | 78,946 | 168,617 | 275,412 | - For the nine months ended September 30, 2021, other comprehensive income (loss) net of tax was a negative $65.431 million, compared to a positive $90.872 million in the prior year, primarily due to unrealized losses on available-for-sale securities[12] - Total comprehensive income for the nine months ended September 30, 2021, significantly decreased to $168.617 million, a 38.77% reduction from $275.412 million in the prior year[12] Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity This statement outlines the changes in the company's stockholders' equity for the nine months ended September 30, 2021 and 2020, reflecting net income, other comprehensive income, dividends, and equity transactions | Indicator | Nine Months Ended September 30, 2021 (Thousands of USD) | Nine Months Ended September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Beginning balance | 2,307,041 | 1,960,733 | | Net income | 234,048 | 184,540 | | Other comprehensive loss (income) | (65,431) | 90,872 | | Cash dividends | (90,929) | (84,134) | | Stock issued (acquisition related) | — | 112,133 | | Stock issued under stock option plans | — | — | | Share-based compensation and related taxes | 2,887 | 3,292 | | Cumulative effect of accounting change | — | (12,347) | | Ending balance | 2,387,616 | 2,255,089 | - As of September 30, 2021, total stockholders' equity was $2.388 billion, an increase of 5.88% from September 30, 2020, primarily driven by increased net income[16] - For the first nine months of 2021, other comprehensive loss was $65.431 million, compared to a $90.872 million gain in the same period of 2020, reflecting the impact of valuation changes in available-for-sale securities[16] - Cash dividends per share increased from $0.88 for the first nine months of 2020 to $0.95 for the same period in 2021[10][16] Unaudited Condensed Consolidated Statements of Cash Flows This statement categorizes cash flows into operating, investing, and financing activities for the nine months ended September 30, 2021 and 2020, illustrating changes in cash and cash equivalents | Activity Type | Nine Months Ended September 30, 2021 (Thousands of USD) | Nine Months Ended September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Net cash from operating activities | 417,310 | 113,757 | | Net cash from investing activities | (3,360,929) | (2,878,828) | | Net cash from financing activities | 2,659,365 | 3,203,989 | | Net (decrease) increase in cash and cash equivalents | (284,254) | 438,918 | | Cash and cash equivalents at end of period | 348,888 | 769,879 | - Net cash provided by operating activities significantly increased to $417.31 million for the first nine months of 2021, a 266.85% increase from $113.76 million in the same period of 2020[18] - Net cash used in investing activities increased to $3.361 billion, primarily due to a substantial increase in purchases of available-for-sale debt securities[18] - Net cash provided by financing activities decreased from $3.204 billion in 2020 to $2.659 billion in 2021, mainly due to a reduction in the net increase in deposits[19] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanatory notes to the unaudited condensed consolidated financial statements, offering additional context and breakdowns for key accounts and accounting policies Note 1. Nature of Operations and Summary of Significant Accounting Policies This note outlines Glacier Bancorp, Inc.'s operations as a Montana-based company providing banking services across eight states through its subsidiary, and details significant accounting policies, including consolidation, cash, debt securities, loans, credit losses, and revenue recognition - The company provides comprehensive banking services through its wholly-owned bank subsidiary, Glacier Bank, across Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona, and Nevada[21] - The company adopted FASB ASU 2016-13 on January 1, 2020, which significantly altered accounting policies for credit losses on debt securities and loans[29][40] - The company considers Glacier Bank its sole operating segment due to similar business activities, regular review of operating results by the CEO, and availability of financial information[25] Provision for Credit Losses (Thousands of USD) | Indicator | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Provision for credit losses on loans | 2,313 | 2,869 | (2,921) | 39,165 | | Provision for credit losses on unfunded commitments | (1,588) | 2,317 | (1,959) | 2,135 | | Total provision for credit losses | 725 | 5,186 | (4,880) | 41,300 | Note 2. Debt Securities This note details the company's debt securities, including amortized cost, unrealized gains/losses, and fair value for available-for-sale and held-to-maturity securities, noting that unrealized losses are primarily due to interest rate changes, not credit losses Debt Securities Composition (Thousands of USD) | Security Type | Amortized Cost September 30, 2021 | Fair Value September 30, 2021 | Amortized Cost December 31, 2020 | Fair Value December 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | Available-for-Sale | | | | | | U.S. government and federal agencies | 31,449 | 31,373 | 38,568 | 38,588 | | Residential mortgage-backed securities | 5,498,676 | 5,491,345 | 2,261,463 | 2,289,090 | | Commercial mortgage-backed securities | 1,081,008 | 1,114,001 | 1,177,458 | 1,234,574 | | Total available-for-sale | 7,328,737 | 7,390,580 | 5,145,866 | 5,337,814 | | Held-to-Maturity | | | | | | State and municipal government | 1,128,299 | 1,146,453 | 189,836 | 203,216 | | Total held-to-maturity | 1,128,299 | 1,146,453 | 189,836 | 203,216 | | Total Debt Securities | 8,518,879 | 8,537,033 | 5,335,702 | 5,541,030 | - As of September 30, 2021, total unrealized losses on available-for-sale debt securities were $25.616 million, compared to $0.792 million as of December 31, 2020[92] - The company realized $151 million from sales and redemptions of debt securities in the first nine months of 2021, with total realized gains of $0.945 million and total realized losses of $0.075 million[95] - As of September 30, 2021, all available-for-sale debt securities in an unrealized loss position were determined to be investment grade, and the company does not intend to sell these securities[100][102] Note 3. Loans Receivable, Net This note provides a detailed breakdown of the company's loans receivable and changes in the allowance for credit losses (ACL), noting that ACL decreased due to improved economic forecasts and qualitative factor adjustments Loans Receivable Composition (Thousands of USD) | Loan Type | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Residential real estate | 781,538 | 802,508 | | Commercial real estate | 6,912,569 | 6,315,895 | | Other commercial | 2,598,616 | 3,054,817 | | Home equity | 660,920 | 636,405 | | Other consumer | 340,248 | 313,071 | | Total loans receivable | 11,293,891 | 11,122,696 | | Allowance for credit losses | (153,609) | (158,243) | | Loans receivable, net | 11,140,282 | 10,964,453 | - As of September 30, 2021, commercial real estate loans grew to $6.913 billion, while other commercial loans (including PPP loans) decreased to $2.599 billion[108] Allowance for Credit Losses Movement (Thousands of USD) | Indicator | Nine Months Ended September 30, 2021 | | :--- | :--- | | Beginning balance | 158,243 | | Provision for credit losses | (2,921) | | Total charge-offs | (8,566) | | Total recoveries | 6,853 | | Ending balance | 153,609 | - For the first nine months of 2021, the allowance for credit losses decreased by $2.921 million, primarily due to improved economic forecasts and qualitative factor adjustments[112] - As of September 30, 2021, non-accrual loans 90 days or more past due and not covered by an allowance for credit losses were $24.989 million, compared to $29.532 million as of December 31, 2020[115] Note 4. Leases This note provides information on the company's lease activities, including ROU assets and lease liabilities for operating and finance leases, and details lease maturities and expenses Lease Assets and Liabilities (Thousands of USD) | Indicator | Finance Leases September 30, 2021 | Operating Leases September 30, 2021 | Finance Leases December 31, 2020 | Operating Leases December 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net ROU assets | 5,542 | 44,480 | 5,726 | 46,820 | | Lease liabilities | 5,810 | 47,590 | 5,891 | 49,675 | | Weighted average remaining lease term | 23 years | 17 years | 24 years | 17 years | | Weighted average discount rate | 2.6% | 3.5% | 2.6% | 3.4% | Lease Expenses (Thousands of USD) | Expense Type | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Finance lease cost | 99 | 99 | 297 | 295 | | Operating lease cost | 1,302 | 1,254 | 3,883 | 3,553 | | Short-term lease cost | 93 | 88 | 261 | 266 | | Variable lease cost | 264 | 264 | 759 | 977 | | Sublease income | (11) | (2) | (32) | (5) | | Total lease expense | 1,747 | 1,703 | 5,168 | 5,086 | Note 5. Goodwill This note discloses changes in the carrying value of goodwill, which remained at $514.013 million as of September 30, 2021, with no impairment identified during the annual impairment test Goodwill Carrying Value Movement (Thousands of USD) | Indicator | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Beginning net carrying value | 514,013 | 513,355 | 514,013 | 456,418 | | Acquisitions and adjustments | — | 658 | — | 57,595 | | Ending net carrying value | 514,013 | 514,013 | 514,013 | 514,013 | - The company conducted its annual goodwill impairment test in the third quarter of 2021 and determined that no impairment of goodwill occurred[132] - As of September 30, 2021, and December 31, 2020, accumulated impairment charges were $40.159 million[132] Note 6. Loan Servicing This note details changes in mortgage loan servicing rights, which increased to $11.645 million as of September 30, 2021, reflecting growth in the principal balance of serviced loans Mortgage Loan Servicing Rights Movement (Thousands of USD) | Indicator | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Beginning carrying value | 8,976 | 1,618 | | Additions | 3,996 | 8,298 | | Amortization | (1,327) | (940) | | Ending carrying value | 11,645 | 8,976 | | Principal balance of serviced loans | 1,511,199 | 1,269,080 | | Fair value of servicing rights | 15,477 | 12,087 | - As of September 30, 2021, the carrying value of loan servicing rights was $11.645 million, a 29.74% increase from December 31, 2020[134] - The principal balance of serviced loans increased from $1.269 billion as of December 31, 2020, to $1.511 billion as of September 30, 2021, a 19.08% increase[134] Note 7. Variable Interest Entities This note describes the company's investments in variable interest entities (VIEs), including consolidated CDE and LIHTC funds where the company is the primary beneficiary, and discloses future unfunded equity commitments for non-consolidated LIHTC investments - The company is the primary beneficiary of certain CDE (New Markets Tax Credit) and tax credit funds (Low-Income Housing Tax Credit), thus consolidating their assets, liabilities, and operating results into its financial statements[137][138] Assets and Liabilities of Consolidated VIEs (Thousands of USD) | Indicator | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total assets | 150,455 | 130,875 | | Total liabilities | 28,086 | 27,400 | Future Unfunded Contingent Equity Commitments for Non-Consolidated LIHTC Investments (Thousands of USD) | Year | Amount | | :--- | :--- | | 2021 | 7,237 | | 2022 | 28,759 | | 2023 | 26,446 | | 2024 | 8,937 | | 2025 | 300 | | Thereafter | 1,178 | | Total | 72,857 | Amortization Expense and Tax Credits (Thousands of USD) | Indicator | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Amortization expense | 1,604 | 1,936 | 6,330 | 5,766 | | Tax credits and other tax benefits recognized | 2,983 | 2,608 | 9,260 | 7,771 | Note 8. Securities Sold Under Agreements to Repurchase This note summarizes the carrying value of securities sold under repurchase agreements (repos), totaling $1.041 billion as of September 30, 2021, primarily collateralized by residential mortgage-backed securities Securities Sold Under Agreements to Repurchase (Thousands of USD) | Collateral Type | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | State and municipal government | 118,957 | 787,016 | | Corporate bonds | 137,461 | 217,567 | | Residential mortgage-backed securities | 773,204 | — | | Commercial mortgage-backed securities | 11,317 | — | | Total | 1,040,939 | 1,004,583 | - As of September 30, 2021, total repurchase agreements were $1.041 billion, an increase of 3.62% from December 31, 2020[144] - Repurchase agreements were collateralized by debt securities with carrying values of $1.197 billion as of September 30, 2021, and $1.151 billion as of December 31, 2020[144] Note 9. Derivatives and Hedging Activities This note describes the company's derivative and hedging activities, primarily interest rate caps designated as cash flow hedges and interest rate lock commitments for residential real estate loans, used to manage interest rate risk - The company purchased interest rate caps with a total notional amount of $130.5 million as cash flow hedges to manage interest rate risk on variable-rate subordinated debentures[146] - As of September 30, 2021, the fair value of interest rate caps was $0.553 million, compared to $0.201 million as of December 31, 2020, with changes recorded in other comprehensive income[146] - As of September 30, 2021, total interest rate lock commitments were $179.58 million, with a fair value of $3.884 million for related derivatives[148] Note 10. Other Expenses This note details the composition of other expenses, which totaled $41.926 million for the nine months ended September 30, 2021, a 12.7% decrease from the prior year, primarily due to reduced acquisition-related costs and gains on fixed asset disposals Other Expenses Composition (Thousands of USD) | Expense Type | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Consulting and outside services | 3,003 | 4,050 | 7,918 | 8,604 | | Loan expenses | 1,649 | 1,743 | 5,028 | 3,732 | | VIE amortization and other expenses | 1,668 | 1,510 | 4,342 | 3,396 | | Acquisition-related expenses | 472 | 792 | 1,654 | 7,311 | | (Gain) loss on disposal of fixed assets | (65) | — | (1,463) | 125 | | Total other expenses | 15,320 | 16,469 | 41,926 | 48,094 | - For the nine months ended September 30, 2021, acquisition-related expenses significantly decreased from $7.311 million in the prior year to $1.654 million[149] - Gains on disposal of fixed assets were $1.463 million for the first nine months of 2021, compared to a $0.125 million loss in the same period of 2020[149] Note 11. Accumulated Other Comprehensive Income (Loss) This note presents the components and changes in accumulated other comprehensive income (loss), primarily from available-for-sale debt securities and derivatives, which significantly decreased to $77.659 million as of September 30, 2021 Accumulated Other Comprehensive Income (Loss) Movement (Thousands of USD) | Indicator | Gains (Losses) on Available-for-Sale and Transferred Debt Securities | (Losses) Gains on Derivatives Designated as Cash Flow Hedges | Total | | :--- | :--- | :--- | :--- | | Balance as of January 1, 2021 | 143,443 | (353) | 143,090 | | Other comprehensive (loss) income before reclassifications | (63,468) | 359 | (63,109) | | Reclassification adjustments | (2,322) | — | (2,322) | | Net other comprehensive (loss) income for the period | (65,790) | 359 | (65,431) | | Balance as of September 30, 2021 | 77,653 | 6 | 77,659 | - As of September 30, 2021, accumulated other comprehensive income was $77.659 million, a 45.73% decrease from $143.09 million as of January 1, 2021, primarily due to unrealized losses on available-for-sale and transferred debt securities[151] Note 12. Earnings Per Share This note provides the calculation and results for basic and diluted earnings per share, which both increased to $2.45 for the nine months ended September 30, 2021, compared to the prior year Earnings Per Share Calculation (Thousands of USD, except per share data) | Indicator | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to common stockholders | 75,619 | 77,757 | 234,048 | 184,540 | | Basic average common shares outstanding | 95,510,772 | 95,411,656 | 95,494,211 | 94,704,198 | | Diluted average common shares outstanding | 95,586,202 | 95,442,576 | 95,573,519 | 94,747,894 | | Basic earnings per share | 0.79 | 0.81 | 2.45 | 1.95 | | Diluted earnings per share | 0.79 | 0.81 | 2.45 | 1.95 | - For the nine months ended September 30, 2021, basic and diluted earnings per share were both $2.45, representing a 25.64% increase from $1.95 in the same period of 2020[153] Note 13. Fair Value of Assets and Liabilities This note provides fair value measurements for the company's assets and liabilities, categorized by fair value hierarchy (Level 1, 2, 3), with most available-for-sale debt securities and derivatives classified as Level 2 - Fair value hierarchy is categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1 quoted prices), and Level 3 (unobservable inputs)[154] Assets Measured at Fair Value on a Recurring Basis (Thousands of USD) | Asset Type | Fair Value September 30, 2021 | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Total available-for-sale debt securities | 7,390,580 | — | 7,390,580 | — | | Loans held for sale (at fair value) | 94,138 | — | 94,138 | — | | Interest rate caps | 553 | — | 553 | — | | Interest rate locks | 3,884 | — | 3,884 | — | | TBA hedges | 759 | — | 759 | — | | Total assets measured at fair value on a recurring basis | 7,489,914 | — | 7,489,914 | — | Assets Measured at Fair Value on a Non-Recurring Basis (Thousands of USD) | Asset Type | Fair Value September 30, 2021 | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Collateral-dependent impaired loans (net of ACL) | 28,651 | — | — | 28,651 | - As of September 30, 2021, the fair value of collateral-dependent impaired loans (net of ACL) was $28.651 million, entirely classified as Level 3, primarily valued using the cost and sales comparison approaches[170][171] Note 14. Subsequent Events This note discloses the company's acquisition of Altabancorp and its subsidiary Altabank on October 1, 2021, valued at $839.852 million through the issuance of 15,173,480 common shares, expanding its presence in Utah - The company acquired Altabancorp and its wholly-owned subsidiary Altabank on October 1, 2021, expanding its operations in Utah[180] - As of September 30, 2021, Altabancorp had total assets of $3.647728 billion, total loans of $1.901181 billion, and total deposits of $3.278907 billion[180] - The preliminary value of the acquisition was $839.852 million, with the company issuing 15,173,480 shares of common stock as consideration[180] Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a comprehensive analysis of the company's financial condition and operating results for the three and nine months ended September 30, 2021, highlighting key trends, balance sheet changes, and impacts from PPP loans and recent acquisitions FORWARD-LOOKING STATEMENTS This section clarifies that the 10-Q report contains forward-looking statements based on management's current beliefs and expectations, subject to significant business, economic, and competitive uncertainties and contingencies - This 10-Q report contains forward-looking statements regarding management's plans, objectives, expectations, and intentions, based on current beliefs and expectations, subject to significant business, economic, and competitive uncertainties and contingencies[184] - Factors that could cause actual results to differ include changes in loan credit quality, monetary and fiscal policy shifts, regulatory changes, acquisition integration costs, goodwill impairment, increased market competition, and cybersecurity risks[185] Financial Highlights This section summarizes key financial performance indicators for the three and nine months ended September 30, 2021 and 2020, including net income, EPS, dividends, and various ratios | Indicator | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income (Thousands of USD) | 75,619 | 77,757 | 234,048 | 184,540 | | Diluted earnings per share | 0.79 | 0.81 | 2.45 | 1.95 | | Dividends per share | 0.32 | 0.30 | 0.95 | 0.88 | | Return on average assets (annualized) | 1.43% | 1.80% | 1.57% | 1.56% | | Return on average equity (annualized) | 12.49% | 13.73% | 13.27% | 11.40% | | Efficiency ratio | 50.17% | 48.05% | 48.94% | 49.83% | | Loans to deposits ratio | 65.06% | 82.29% | 65.06% | 82.29% | - Third quarter 2021 net income was $75.6 million, a 3% year-over-year decrease, with diluted EPS of $0.79, down 2%, primarily due to a $21.6 million reduction in residential mortgage loan sale gains[187] - For the first nine months of 2021, net income was $234 million, a 26.83% year-over-year increase, with diluted EPS of $2.45, up 25.64%[187] Acquisition This section highlights the company's acquisition of Altabancorp and its subsidiary Altabank on October 1, 2021, which expanded its operations in Utah and significantly increased its asset base - The company acquired Altabancorp and its wholly-owned subsidiary Altabank on October 1, 2021, expanding its operations in Utah[188] - As of September 30, 2021, Altabank had total assets of $3.648 billion, total loans of $1.901 billion, and total deposits of $3.279 billion[188] Financial Condition Analysis This section analyzes the company's financial position, including changes in assets, liabilities, and stockholders' equity, providing context for balance sheet trends and key drivers Assets This section details changes in the company's assets, including cash, debt securities, and loans receivable, highlighting significant growth in debt securities driven by increased liquidity | Asset Category | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 348,888 | 769,879 | (420,991) | -54.68% | | Total debt securities | 8,518,879 | 4,319,057 | 4,199,822 | 97.24% | | Loans receivable, net | 11,140,282 | 11,454,179 | (313,897) | -2.74% | | Total assets | 21,314,019 | 17,926,067 | 3,387,952 | 18.90% | - As of September 30, 2021, total debt securities were $8.519 billion, a 97% increase from the prior year, primarily due to excess liquidity from increased core deposits[190] - The total loan portfolio was $11.294 billion, a 3% decrease from the prior year; excluding PPP loans, the portfolio grew by $755 million, or 7%, with commercial real estate loans increasing by $711 million (11%)[192] Liabilities This section analyzes changes in the company's liabilities, focusing on significant growth in core deposits driven by federal stimulus and customer savings, which kept other borrowings low | Liability Category | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Total core deposits | 17,477,191 | 14,180,757 | 3,296,434 | 23.25% | | Non-interest-bearing deposits | 6,632,402 | 5,479,311 | 1,153,091 | 21.04% | | Total deposits | 17,503,314 | 14,299,888 | 3,203,426 | 22.40% | | Securities sold under agreements to repurchase | 1,040,939 | 965,668 | 75,271 | 7.80% | | Total liabilities | 18,926,403 | 15,670,978 | 3,255,425 | 20.77% | - As of September 30, 2021, total core deposits were $17.477 billion, a 23% increase from the prior year, driven by PPP loan proceeds, federal stimulus deposits, and increased customer savings[194] - Non-interest-bearing deposits accounted for 38% of core deposits, consistent with the prior year[194] - Due to the significant increase in core deposits, borrowings such as wholesale deposits and Federal Home Loan Bank (FHLB) advances remained at low levels[195] Stockholders' Equity This section examines changes in stockholders' equity, including tangible stockholders' equity, which grew due to retained earnings offsetting a decline in other comprehensive income | Indicator | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Total stockholders' equity | 2,387,616 | 2,255,089 | 132,527 | 5.88% | | Tangible stockholders' equity | 1,825,558 | 1,682,955 | 142,603 | 8.47% | | Stockholders' equity to total assets ratio | 11.20% | 12.58% | -1.38% | -10.97% | | Book value per share | 25.00 | 23.63 | 1.37 | 5.79% | | Tangible book value per share | 19.11 | 17.64 | 1.47 | 8.33% | - As of September 30, 2021, tangible stockholders' equity was $1.826 billion, an 8% increase from the prior year, primarily due to retained earnings offsetting a decrease in other comprehensive income[197] - Both the ratio of stockholders' equity to total assets and tangible stockholders' equity to tangible assets decreased, mainly due to a $2.991 billion increase in debt securities, driven by a significant influx of deposits during the year[197] Cash Dividend This section reports the company's declaration of a quarterly cash dividend of $0.32 per share, marking its 146th consecutive dividend payment - The company's Board of Directors declared a quarterly cash dividend of $0.32 per share on September 30, 2021, marking its 146th consecutive dividend payment[198] Operating Results for Three Months Ended September 30, 2021 Compared to June 30, 2021, March 31, 2021, and September 30, 2020 This section compares the company's operating results for the three months ended September 30, 2021, against prior quarters and the prior year, analyzing income, expenses, and credit loss provisions Income Summary This section provides a summary of the company's income components, including net interest income and non-interest income, for the three months ended September 30, 2021, compared to the prior year | Indicator | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Net interest income | 162,613 | 151,403 | 11,210 | 7.40% | | Total non-interest income | 34,815 | 53,667 | (18,852) | -35.13% | | Total revenue | 197,428 | 205,070 | (7,642) | -3.73% | | Net interest margin (tax equivalent) | 3.39% | 3.92% | -0.53% | -13.52% | - Third quarter 2021 net interest income was $162.613 million, a 7% increase from the prior year, primarily due to higher interest income from PPP loans and debt securities[202] - Total non-interest income was $34.815 million, a 35% decrease from the prior year, mainly due to a $21.614 million reduction in gains on loan sales[201][206] Net Interest Income This section analyzes the drivers of net interest income, including PPP loan interest and deposit rate changes, and explains the decline in net interest margin for the third quarter of 2021 - Third quarter 2021 net interest income was $163 million, a 5% increase from the prior quarter and a 7% increase from the prior year[202] - Interest income from PPP loans (including deferred fees and costs) was $12.9 million this quarter, compared to $10.3 million in the prior quarter and $9.3 million in the prior year[202] - Interest expense for the quarter was $4.1 million, an 8% decrease from the prior quarter and a 32% decrease from the prior year, primarily due to lower deposit rates[203] - The net interest margin (tax equivalent) was 3.39%, a 5 basis point decrease from the prior quarter and a 53 basis point decrease from the prior year, mainly due to lower yields on interest-earning assets[204] Non-interest Income This section analyzes non-interest income, which decreased in the third quarter of 2021 due to slower mortgage activity and reduced loan sale gains, despite growth in service charges - Third quarter 2021 non-interest income totaled $34.8 million, a 2% decrease from the prior quarter and a 35% decrease from the prior year[205] - Service charges and other fees increased by $1.4 million from the prior quarter and $1.8 million from the prior year, primarily due to increased customer account and transaction activity[205] - Gains on loan sales were $13.9 million, a 14% decrease from the prior quarter and a 61% decrease from the prior year, reflecting a slowdown in mortgage activity[206] Non-interest Expense This section details non-interest expenses, including compensation and employee benefits, and other expenses, noting a slight increase in total expenses for the third quarter of 2021 | Expense Type | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Compensation and employee benefits | 66,364 | 64,866 | 1,498 | 2.31% | | Other expenses | 15,320 | 16,469 | (1,149) | -6.98% | | Total non-interest expense | 104,108 | 103,373 | 735 | 0.71% | - Third quarter 2021 total non-interest expense was $104.108 million, a 4% increase from the prior quarter and a 0.71% increase from the prior year[207] - Compensation and employee benefits increased by $2.3 million (4%) from the prior quarter and $1.5 million from the prior year[207] - Other expenses for the quarter were $15.3 million, including $0.472 million in acquisition-related expenses, a 7% decrease from the prior year[208] Efficiency Ratio This section presents the company's efficiency ratio, which increased in the third quarter of 2021, primarily due to a decline in loan sale gains, when excluding the impact of PPP loans - The efficiency ratio was 50.17% in the third quarter of 2021, compared to 49.92% in the prior quarter and 48.05% in the prior year[209] - Excluding the impact of PPP loans, the efficiency ratio was 53.59% this quarter, an increase of 308 basis points from 50.51% in the prior year, mainly due to decreased gains on loan sales[209] Provision for Credit Losses for Loans This section details the provision for credit losses for loans, which increased in the third quarter of 2021 compared to the prior quarter, alongside information on net charge-offs and asset quality ratios | Indicator | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Provision for credit losses on loans (Thousands of USD) | 2,313 | 2,869 | | Net charge-offs (Thousands of USD) | 152 | 826 | | Allowance for credit losses as a percentage of loans | 1.36% | 1.42% | | Loans 30-89 days past due as a percentage of loans | 0.23% | 0.15% | | Non-performing assets as a percentage of subsidiary assets | 0.24% | 0.25% | - The provision for credit losses on loans was $2.3 million in the third quarter of 2021, an $8 million increase from the prior quarter (negative $5.7 million) and a $0.556 million decrease from the prior year ($2.9 million)[211] - Net charge-offs were $0.152 million this quarter, compared to $0.725 million in net recoveries in the prior quarter and $0.826 million in net charge-offs in the prior year[212] Operating Results for Nine Months Ended September 30, 2021 Compared to September 30, 2020 This section compares the company's operating results for the nine months ended September 30, 2021, against the prior year, analyzing income, expenses, and the provision for credit losses Income Summary This section summarizes the company's income components, including net interest income and non-interest income, for the nine months ended September 30, 2021, compared to the prior year | Indicator | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change (Thousands of USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net interest income | 474,894 | 433,991 | 40,903 | 9% | | Total non-interest income | 110,458 | 128,163 | (17,705) | -14% | | Total revenue | 585,352 | 562,154 | 23,198 | 4% | | Net interest margin (tax equivalent) | 3.52% | 4.12% | -0.60% | -14.56% | - For the first nine months of 2021, net interest income was $475 million, a 9% increase from the same period in 2020[215] - Total non-interest income was $110 million, a 14% decrease from the same period in 2020, primarily due to a $21.604 million reduction in gains on loan sales[215][219] Net Interest Income This section analyzes the drivers of net interest income for the nine months ended September 30, 2021, highlighting growth from commercial loans and debt securities, and reduced interest expense from lower deposit costs - For the first nine months of 2021, net interest income was $475 million, an increase of $40.9 million (9%) from the same period in 2020[216] - Interest income increased by $32.5 million (7%), primarily attributable to higher interest income from commercial loans (including PPP loans) and debt securities[216] - Interest expense decreased by $8.4 million (39%), mainly due to lower deposit costs[216] - The net interest margin (tax equivalent) was 3.52%, a 60 basis point decrease from the prior year, primarily due to lower yields on core loans and debt securities, and a shift in interest-earning asset mix towards lower-yielding debt securities[217] Non-interest Income This section analyzes non-interest income for the nine months ended September 30, 2021, noting a decrease primarily due to reduced loan sale gains, despite growth in service charges and miscellaneous loan fees - For the first nine months of 2021, non-interest income was $110 million, a $17.7 million (14%) decrease from the prior year[219] - Service charges and other fees increased by $3 million (8%), and miscellaneous loan fees and charges increased by $3.2 million (64%), primarily due to increased customer account and transaction activity[219] - Gains on loan sales were $51.6 million, a $21.6 million (29%) decrease from the prior year, reflecting a slowdown in purchase and refinancing activity[219] Non-interest Expense This section details non-interest expenses for the nine months ended September 30, 2021, noting an overall increase driven by compensation and employee benefits, partially offset by reduced acquisition-related costs | Expense Type | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change (Thousands of USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Compensation and employee benefits | 192,941 | 182,507 | 10,434 | 6% | | Regulatory assessments and insurance | 5,592 | 3,622 | 1,970 | 54% | | Other expenses | 41,926 | 48,094 | (6,168) | -13% | | Total non-interest expense | 300,775 | 293,624 | 7,151 | 2% | - For the first nine months of 2021, total non-interest expense was $301 million, an increase of $7.2 million (2%) from the prior year[220] - Compensation and employee benefits increased by $10.4 million (6%), primarily due to increased headcount, higher performance-related compensation, and annual salary increases[220] - Other expenses decreased by $6.2 million (13%), mainly due to reduced acquisition-related expenses, from $7.3 million in the prior year to $1.7 million this period[220] Efficiency Ratio This section presents the company's efficiency ratio for the nine months ended September 30, 2021, noting a slight improvement compared to the prior year, and stability when excluding PPP loan impacts - The efficiency ratio was 48.94% for the first nine months of 2021, compared to 49.83% in the prior year[221] - Excluding the impact of PPP loans, the efficiency ratio was 53.34% in 2021, largely consistent with 53.30% in 2020[221] Provision for Credit Losses This section details the company's provision for credit losses, which resulted in a $4.9 million benefit for the nine months ended September 30, 2021, primarily due to improved economic forecasts related to COVID-19 - For the first nine months of 2021, the provision for credit losses was a $4.9 million benefit, comprising a $2.9 million benefit for the loan portfolio and a $2 million benefit for unfunded loan commitments[222] - The loan portfolio provision for credit losses benefit decreased by $42.1 million from the prior year (a $39.2 million expense), primarily attributed to changes in economic forecasts related to COVID-19[222] - Net charge-offs were $1.7 million this year, compared to $2.9 million in the prior year[222] ADDITIONAL MANAGEMENT'S DISCUSSION AND ANALYSIS This section provides supplementary information to the management's discussion and analysis, covering investment and lending activities, asset quality, funding sources, liquidity, capital resources, and tax information Investment Activity This section details the company's investment activities, focusing on debt and equity securities, including transfers between available-for-sale and held-to-maturity portfolios Debt Securities This section provides a breakdown of the company's debt securities portfolio, including available-for-sale and held-to-maturity categories, and their composition by type and credit rating | Security Type | Carrying Value September 30, 2021 (Thousands of USD) | Carrying Value September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Total available-for-sale debt securities | 7,390,580 | 4,125,548 | | Total held-to-maturity debt securities | 1,128,299 | 193,509 | | Total debt securities | 8,518,879 | 4,319,057 | - The company transferred a total of $844 million in available-for-sale securities to the held-to-maturity portfolio during the first and second quarters of 2021[225] - Debt securities primarily consist of state and municipal government securities and mortgage-backed securities, with mortgage-backed securities accounting for 64% of available-for-sale securities[225] State and Municipal Government Securities by NRSRO Rating (Thousands of USD) | Rating | Amortized Cost September 30, 2021 | Fair Value September 30, 2021 | | :--- | :--- | :--- | | S&P: AAA / Moody's: Aaa | 389,559 | 398,464 | | S&P: AA+, AA, AA- / Moody's: Aa1, Aa2, Aa3 | 1,122,979 | 1,156,558 | | S&P: A+, A, A- / Moody's: A1, A2, A3 | 87,099 | 92,155 | | S&P: BBB+, BBB, BBB- / Moody's: Baa1, Baa2, Baa3 | 92 | 95 | | Unrated | 7,686 | 7,872 | | Total | 1,607,415 | 1,655,144 | Equity securities This section discusses the company's equity securities, primarily non-marketable capital stock issued by FHLB Des Moines, which are carried at cost less impairment, with no impairment identified as of September 30, 2021 - Non-marketable equity securities primarily include capital stock issued by FHLB Des Moines, carried at cost less impairment[234] - As of September 30, 2021, the company assessed that no impairment occurred for non-marketable equity securities and marketable equity securities without readily determinable fair values[235] Lending Activity This section describes the company's lending activities, primarily focused on residential and commercial real estate, other commercial loans, and consumer installment loans, and provides a breakdown of the loan portfolio - The company's lending activities primarily focus on residential real estate mortgages, commercial loans (including agricultural and public entities), and consumer installment loans (e.g., home equity, auto loans)[236] | Loan Type | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Residential real estate | 781,538 | 862,614 | | Commercial real estate | 6,912,569 | 6,201,817 | | Other commercial | 2,598,616 | 3,593,322 | | Home equity | 660,920 | 646,850 | | Other consumer | 340,248 | 314,128 | | Total loans receivable | 11,293,891 | 11,618,731 | | Allowance for credit losses | (153,609) | (164,552) | | Loans receivable, net | 11,140,282 | 11,454,179 | - As of September 30, 2021, commercial real estate loans accounted for 62% of the loan portfolio, an increase from 54% as of September 30, 2020[237] Non-performing Assets This section provides an overview of the company's non-performing assets, including other real estate owned and non-accrual loans, and discusses the adequacy of the allowance for credit losses relative to these assets | Non-performing Asset Category | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Other real estate owned and foreclosed assets | 106 | 5,361 | | Total accruing loans 90 days or more past due | 5,172 | 2,952 | | Total non-accrual loans | 45,901 | 36,350 | | Total non-performing assets | 51,179 | 44,663 | | Non-performing assets as a percentage of subsidiary assets | 0.24% | 0.25% | | ACL as a percentage of non-performing loans | 301% | 419% | - As of September 30, 2021, total non-performing assets were $51.179 million, a 4% decrease from the prior quarter and a 15% increase from the prior year[238] - Early stage past due loans (accruing loans 30-89 days past due) were $26.002 million, an increase of $13.9 million from the prior quarter, primarily concentrated in one credit relationship[239] - The company believes that most non-performing assets are collateralized by real estate, and based on available information, the collateral value is sufficient to minimize significant charge-offs or losses[240] Restructured Loans This section discusses the company's troubled debt restructurings (TDRs), which decreased to $39.5 million as of September 30, 2021, and notes that COVID-19 related loan modifications were not classified as TDRs - As of September 30, 2021, the company's troubled debt restructurings (TDRs) were $39.5 million, compared to $45.5 million as of December 31, 2020[241] - In accordance with the CARES Act and related regulatory guidance, the company provided loan modifications to borrowers affected by COVID-19, which were not classified as TDRs[242] Other Real Estate Owned and Foreclosed Assets This section details the changes in other real estate owned (OREO) and foreclosed assets, noting a significant decrease in the OREO balance to $0.106 million as of September 30, 2021 | Indicator | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Beginning balance | 1,744 | 5,142 | | Additions | 1,481 | 2,062 | | Charge-offs | (120) | (189) | | Sales | (2,999) | (2,102) | | Ending balance | 106 | 5,361 | - In 2021, the carrying value of loans prior to acquisition of collateral and transfer to other real estate owned (OREO) was $1.6 million, with the fair value of collateral obtained through foreclosure being $1.5 million[243] - As of September 30, 2021, the OREO balance was $0.106 million, a significant decrease from $5.361 million as of September 30, 2020[243] PPP Loans This section provides an overview of the company's Paycheck Protection Program (PPP) loan activity, including interest income, loan originations, and forgiveness amounts, highlighting remaining loan balances | Indicator | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | PPP interest income | 12,894 | 9,300 | | Total PPP loans | 368,913 | 1,448,417 | | Total remaining net fees | 12,986 | 36,099 | - In the first half of 2021, the company originated $555 million in Round 2 PPP loans, generating $33.2 million in SBA deferred processing fees and $6.7 million in deferred compensation costs, for total net deferred fees of $26.5 million[245] - In 2021, the company received $327 million in PPP loan forgiveness, with $1.103 billion in total forgiveness for the first nine months[247] - As of September 30, 2021, the company still held $56 million in Round 1 PPP loans and $313 million in Round 2 PPP loans[247] Allowance for Credit Losses - Loans Receivable This section details the allowance for credit losses (ACL) for loans receivable, providing a breakdown by loan type and assessing its adequacy to absorb estimated credit losses within the loan portfolio | Loan Type | ACL September 30, 2021 (Thousands of USD) | ACL as a Percentage (%) September 30, 2021 | Loans as a Percentage (%) September 30, 2021 | | :--- | :--- | :--- | :--- | | Residential real estate | 11,859 | 8% | 7% | | Commercial real estate | 100,038 | 65% | 62% | | Other commercial | 28,845 | 19% | 23% | | Home equity | 7,865 | 5% | 5% | | Other consumer | 5,002 | 3% | 3% | | Total | 153,609 | 100% | 100% | - As of September 30, 2021, the allowance for credit losses (ACL) was 1.36% of total loans, an increase of 1 basis point from the prior quarter and a 6 basis point decrease from the prior year[254] - Excluding PPP loans, the ACL as a percentage of loans was 1.40%, a decrease from 1.62% in the prior year[254] - The company believes its $154 million ACL is sufficient to absorb estimated credit losses in any portion of the loan portfolio[254] Loans by Regulatory Classification This section provides a detailed breakdown of loans by regulatory classification, including construction, commercial real estate, and consumer loans, along with information on non-performing assets and net charge-offs | Loan Type | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Total residential construction | 359,157 | 323,437 | | Total land, lot, and other construction | 1,036,514 | 914,024 | | Total commercial real estate | 4,631,328 | 4,148,574 | | Commercial and industrial | 1,407,353 | 2,308,710 | | Agricultural | 748,548 | 747,145 | | Total 1-4 family | 1,196,207 | 1,299,466 | | Multi-family residential | 373,022 | 359,030 | | Home equity lines of credit | 709,828 | 651,546 | | Other consumer | 198,763 | 191,761 | | Total consumer | 908,591 | 843,307 | | Total loans receivable | 11,293,891 | 11,618,731 | - As of September 30, 2021, commercial and industrial loans decreased by 39% from the prior year, while commercial real estate loans increased by 12%[263] | Non-performing Asset Category | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Total non-performing assets | 51,179 | 44,663 | | Non-accrual loans | 45,901 | 36,350 | | Accruing loans 90 days or more past due | 5,172 | 2,952 | | Other real estate owned | 106 | 5,361 | | Loan Type | Net Charge-offs (Recoveries) September 30, 2021 (Thousands of USD) | Net Charge-offs (Recoveries) September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Total residential construction | (12) | (28) | | Total land, lot, and other construction | (568) | (774) | | Total commercial real estate | (766) | 164 | | Commercial and industrial | (87) | 740 | | Agricultural | — | 309 | | Total 1-4 family | (761) | (196) | | Total consumer | (456) | 312 | | Total | 1,713 | 2,872 | Sources of Funds This section outlines the company's primary sources of funds, including deposits from individuals and businesses, and various borrowings such as repurchase agreements and Federal Home Loan Bank advances Deposits This section details the company's deposits, which serve as a primary funding source, primarily from individuals and businesses within its geographic markets, and provides a breakdown of deposit types - Deposits are the company's primary source of funding for loans and other operations, mainly from individuals and business residents within the bank's geographic market areas[269][270] | Deposit Type | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Non-interest-bearing deposits | 6,632,402 | 5,479,311 | | Total interest-bearing deposits | 10,870,912 | 8,820,577 | | Total deposits | 17,503,314 | 14,299,888 | - As of September 30, 2021, non-interest-bearing deposits accounted for 38% of total deposits, consistent with the prior year[270] Securities Sold Under Agreements to Repurchase, Federal Home Loan Bank Advances and Other Borrowings This section describes the company's borrowing activities, including securities sold under repurchase agreements, primarily with municipal entities, and Federal Home Loan Bank advances collateralized by eligible loans and debt securities - The company borrows through securities sold under repurchase agreements, primarily with local municipalities and specific customers, typically with overnight terms[271] - The bank is a member of the Federal Home Loan Bank (FHLB) of Des Moines, accessing funding through FHLB advances collateralized by eligible loans and debt securities[272] Short-term borrowings This section outlines the company's short-term borrowing sources, including FHLB advances, federal funds purchased, and repurchase agreements, and provides details on outstanding amounts and weighted average interest rates - The company's short-term borrowing sources include FHLB advances, federal funds purchased, and retail and wholesale repurchase agreements, with access to the Federal Reserve Bank's short-term discount window borrowing program[274] | Indicator | September 30, 2021 (Thousands of USD) | December 31, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Repurchase agreements outstanding at period-end | 1,040,939 | 1,004,583 | | Weighted average interest rate on repurchase agreements outstanding | 0.19% | 0.33% | | Average balance of repurchase agreements | 988,092 | 783,100 | | Weighted average interest rate on repurchase agreements | 0.25% | 0.46% | Subordinated Debentures This section describes the company's subordinated debentures, issued through financing subsidiaries, which totaled $133 million as of September 30, 2021, and are included as Tier 2 regulatory capital - The company issues trust preferred securities through the formation or acquisition of financing subsidiaries, and issues subordinated debentures with terms identical to the trust preferred securities[276] - As of September 30, 2021, outstanding subordinated debentures were $133 million (including fair value adjustments from acquisitions), counted as Tier 2 capital for regulatory purposes[276] Contractual Obligations and Off-Balance Sheet Arrangements This section discusses the company's off-balance sheet arrangements, including unfunded loan commitments and letters of credit, and confirms the adequacy of the allowance for credit losses for these exposures - The company has various outstanding financing and credit commitments in the normal course of business, such as letters of credit and unfunded loan commitments, which are not reflected in the condensed consolidated financial statements[277] - As of September 30, 2021, the company assessed its off-balance sheet credit exposure and determined that its $14.1 million allowance for credit losses is sufficient to absorb estimated credit losses[277] Liquidity Risk This section defines liquidity risk as the inability to meet obli