10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2020.

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______ to ______

Commission file number 001-15373

ENTERPRISE FINANCIAL SERVICES CORP

Incorporated in the State of Delaware

I.R.S. Employer Identification # 43-1706259

Address: 150 North Meramec

Clayton, MO 63105

Telephone: (314) 725-5500

___________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	EFSC	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

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

If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes ☐  No ☒

As of July 22, 2020, the Registrant had 26,206,044 shares of outstanding common stock, $0.01 par value per share.

This document is also available through our website at http://www.enterprisebank.com.

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

TABLE OF CONTENTS

	Page
PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)	1
Condensed Consolidated Statements of Operations (Unaudited)	2
Condensed Consolidated Statements of Comprehensive Income (Unaudited)	3
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)	4
Condensed Consolidated Statements of Cash Flows (Unaudited)	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosures About Market Risk	49
Item 4. Controls and Procedures	50
PART II - OTHER INFORMATION
Item 1.  Legal Proceedings	50
Item 1A.  Risk Factors	50
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3. Defaults Upon Senior Securities	53
Item 4. Mine Safety Disclosures	53
Item 5. Other Information	53
Item 6. Exhibits	54
Signatures	56

Glossary of Acronyms, Abbreviations and Entities

The acronyms and abbreviations identified below are used in various sections of this Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 2 and the Condensed Consolidated Financial Statements and the Notes to Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q.

ACL	Allowance for Credit Losses	FDIC	Federal Deposit Insurance Corporation
ACLL	Allowance for Credit Losses on Loans (excludes allowance for securities and allowance for unfunded commitments)	FHLB	Federal Home Loan Bank
ASC	Accounting Standards Codification	GAAP	Generally Accepted Accounting Principles (United States)
ASU	Accounting Standards Update	LIBOR	London Interbank Offered Rate
Bank	Enterprise Bank & Trust	MD&A	Management’s Discussion and Analysis of Financial Condition and Results of Operations
C&I	Commercial and Industrial	PCD	Purchased Credit Deteriorated
CECL	Current Expected Credit Loss	PCI	Purchased Credit Impaired
Company	Enterprise Financial Services Corp and Subsidiaries	PPP	Paycheck Protection Program
CRE	Commercial Real Estate	SBA	Small Business Administration
DCF	Discounted Cash Flow	SEC	Securities and Exchange Commission
EFSC	Enterprise Financial Services Corp	SOFR	Secured Overnight Financing Rate
Enterprise	Enterprise Financial Services Corp and Subsidiaries	Trinity	Trinity Capital Corporation
FASB	Financial Accounting Standards Board

PART 1 - ITEM 1 - FINANCIAL STATEMENTS

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)	June 30, 2020			December 31, 2019
Assets
Cash and due from banks	$	100,804		$	74,769
Federal funds sold	2,381			3,060
Interest-earning deposits (including $47,085 and $15,285 pledged as collateral, respectively)	245,542			89,427
Total cash and cash equivalents	348,727			167,256
Interest-earning deposits greater than 90 days	6,907			3,730
Securities available-for-sale	998,104			1,135,317
Securities held-to-maturity, net	345,791			181,166
Loans held-for-sale	16,029			5,570
Loans	6,140,051			5,314,337
Less: Allowance for credit losses on loans	110,270			43,288
Total loans, net	6,029,781			5,271,049
Other investments	43,106			38,044
Fixed assets, net	58,231			60,013
Goodwill	210,344			210,344
Intangible assets, net	23,196			26,076
Other assets	277,285			235,226
Total assets	$	8,357,501		$	7,333,791
Liabilities and Shareholders' Equity
Noninterest-bearing deposit accounts	$	1,965,868		$	1,327,348
Interest-bearing transaction accounts	1,508,535			1,367,444
Money market accounts	1,962,916			1,713,615
Savings accounts	603,095			536,169
Certificates of deposit:
Brokered	85,414			215,758
Other	573,752			610,689
Total deposits	6,699,580			5,771,023
Subordinated debentures and notes	203,384			141,258
FHLB advances	250,000			222,406
Other borrowings	196,532			230,886
Notes payable	31,429			34,286
Other liabilities	108,613			66,747
Total liabilities	$	7,489,538		$	6,466,606
Commitments and contingent liabilities (Note 5)
Shareholders' equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 0 shares issued and outstanding	—			—
Common stock, $0.01 par value; 45,000,000 shares authorized; 28,176,087 and 28,067,087 shares issued, respectively	281			281
Treasury stock, at cost; 1,980,093 and 1,523,842 shares, respectively	(73,528		)	(58,181		)
Additional paid in capital	527,734			526,599
Retained earnings	380,667			380,737
Accumulated other comprehensive income	32,809			17,749
Total shareholders' equity	867,963			867,185
Total liabilities and shareholders' equity	$	8,357,501		$	7,333,791

The accompanying notes are an integral part of these consolidated financial statements.

1

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

	Three months ended June 30,					Six months ended June 30,
(in thousands, except per share data)	2020			2019		2020		2019
Interest income:
Interest and fees on loans	$	64,478		$	69,628	$	131,647	$	130,653
Interest on debt securities:
Taxable	6,587			7,757		14,144		13,232
Nontaxable	1,812			861		3,301		1,308
Interest on interest-earning deposits	87			703		387		1,150
Dividends on equity securities	227			252		400		475
Total interest income	73,191			79,201		149,879		146,818
Interest expense:
Deposits	4,383			13,119		14,271		24,939
Subordinated debentures and notes	2,316			1,958		4,235		3,606
FHLB advances	455			1,696		1,350		3,094
Notes payable and other borrowings	204			713		822		1,121
Total interest expense	7,358			17,486		20,678		32,760
Net interest income	65,833			61,715		129,201		114,058
Provision for credit losses	19,591			1,722		41,855		3,198
Net interest income after provision for credit losses	46,242			59,993		87,346		110,860
Noninterest income:
Service charges on deposit accounts	2,616			3,366		5,759		6,301
Wealth management revenue	2,326			2,661		4,827		4,653
Card services revenue	2,225			2,461		4,472		4,251
Tax credit income	(221		)	572		1,815		730
Miscellaneous income	3,014			2,904		6,495		5,259
Total noninterest income	9,960			11,964		23,368		21,194
Noninterest expense:
Employee compensation and benefits	22,389			20,687		44,074		40,039
Occupancy	3,185			3,188		6,532		5,825
Data processing	2,144			2,458		4,226		4,364
Professional fees	1,287			1,037		2,149		1,783
Merger-related expenses	—			10,306		—		17,576
Other	8,907			11,378		19,604		19,305
Total noninterest expense	37,912			49,054		76,585		88,892
Income before income tax expense	18,290			22,903		34,129		43,162
Income tax expense	3,656			4,479		6,627		8,582
Net income	$	14,634		$	18,424	$	27,502	$	34,580
Earnings per common share
Basic	$	0.56		$	0.69	$	1.04	$	1.36
Diluted	0.56			0.68		1.04		1.36

The accompanying notes are an integral part of these consolidated financial statements.

2

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

	Three months ended June 30,						Six months ended June 30,
(in thousands)	2020			2019			2020			2019
Net income	$	14,634		$	18,424		$	27,502		$	34,580
Other comprehensive income (loss), after-tax:
Change in unrealized gain on available-for-sale debt securities	10,984			12,842			21,548			24,344
Reclassification adjustment for realized (gain) loss on sale of available-for-sale debt securities	—			—			(3		)	220
Reclassification of (gain) loss on held-to-maturity securities	(329		)	3			(485		)	5
Change in unrealized loss on cash flow hedges arising during the period	(1,177		)	(1,265		)	(6,357		)	(2,217		)
Reclassification of loss on cash flow hedges	234			4			357			4
Total other comprehensive income, after-tax	9,712			11,584			15,060			22,356
Comprehensive income	$	24,346		$	30,008		$	42,562		$	56,936

The accompanying notes are an integral part of these consolidated financial statements.

3

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

Three and six months ended June 30, 2020
(in thousands, except per share data)	Common Stock		Treasury Stock			Additional paid in capital			Retained earnings			Accumulated other comprehensive income (loss)			Total shareholders’ equity
Balance at March 31, 2020	$	281	$	(73,528	)	$	525,838		$	370,748		$	23,097		$	846,436
Net income	—		—			—			14,634			—			14,634
Other comprehensive income	—		—			—			—			9,712			9,712
Comprehensive income	—		—			—			14,634			9,712			24,346
Cash dividends paid on common shares, $0.18 per share	—		—			—			(4,715		)	—			(4,715		)
Issuance under equity compensation plans, 35,485 shares, net	—		—			827			—			—			827
Share-based compensation	—		—			1,069			—			—			1,069
Balance at June 30, 2020	$	281	$	(73,528	)	$	527,734		$	380,667		$	32,809		$	867,963
Balance at December 31, 2019	$	281	$	(58,181	)	$	526,599		$	380,737		$	17,749		$	867,185
Net income	—		—			—			27,502			—			27,502
Other comprehensive income	—		—			—			—			15,060			15,060
Total comprehensive income	—		—			—			27,502			15,060			42,562
Cash dividends paid on common shares, $0.36 per share	—		—			—			(9,458		)	—			(9,458		)
Repurchase of common shares	—		(15,347		)	—			—			—			(15,347		)
Issuance under equity compensation plans, 109,000 shares, net	—		—			(894		)	—			—			(894		)
Share-based compensation	—		—			2,029			—			—			2,029
Reclassification for the adoption of ASU 2016-13 (CECL)	—		—			—			(18,114		)	—			(18,114		)
Balance at June 30, 2020	$	281	$	(73,528	)	$	527,734		$	380,667		$	32,809		$	867,963
Three and six months ended June 30, 2019
(in thousands, except per share data)	Common Stock		Treasury Stock			Additional paid in capital			Retained earnings			Accumulated other comprehensive income (loss)			Total shareholders’ equity
Balance at March 31, 2019	$	280	$	(42,655	)	$	521,761		$	316,959		$	1,490		$	797,835
Net income	—		—			—			18,424			—			18,424
Other comprehensive income	—		—			—			—			11,584			11,584
Comprehensive income	—		—			—			18,424			11,584			30,008
Cash dividends paid on common shares, $0.15 per share	—		—			—			(4,035		)	—			(4,035		)
Issuance under equity compensation plans, 28,341 shares, net	—		—			707			—			—			707
Share-based compensation	—		—			986			—			—			986
Balance at June 30, 2019	$	280	$	(42,655	)	$	523,454		$	331,348		$	13,074		$	825,501
Balance at December 31, 2018	$	239	$	(42,655	)	$	350,936		$	304,566		$	(9,282	)	$	603,804
Net income	—		—			—			34,580			—			34,580
Other comprehensive income	—		—			—			—			22,356			22,356
Total comprehensive income	—		—			—			34,580			22,356			56,936
Cash dividends paid on common shares, $0.29 per share	—		—			—			(7,798		)	—			(7,798		)
Issuance under equity compensation plans, 103,430 shares, net	1		—			(1,234		)	—			—			(1,233		)
Share-based compensation	—		—			1,907			—			—			1,907
Shares issued in connection with acquisition of Trinity Capital Corporation, 3,990,822 shares	40		—			171,845			—			—			171,885
Balance at June 30, 2019	$	280	$	(42,655	)	$	523,454		$	331,348		$	13,074		$	825,501

The accompanying notes are an integral part of these consolidated financial statements.

4

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Six months ended June 30,
(in thousands, except share data)	2020			2019
Cash flows from operating activities:
Net income	$	27,502		$	34,580
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	3,048			2,743
Provision for credit losses	41,855			3,198
Deferred income taxes	(4,937		)	3,813
Net amortization of debt securities	2,756			1,189
Amortization of intangible assets	2,880			2,418
Mortgage loans originated-for-sale	(94,536		)	(11,645		)
Proceeds from mortgage loans sold	84,799			10,629
Loss (gain) on:
Sale of investment securities	(4		)	292
Sale of other real estate	5			(48		)
Sale of state tax credits	(211		)	(107		)
Share-based compensation	2,029			1,907
Net accretion of loan discount	(4,049		)	(4,702		)
Changes in other assets and liabilities, net	(2,277		)	(23,700		)
Net cash provided by operating activities	58,860			20,567
Cash flows from investing activities:
Acquisition cash purchase price, net of cash and cash equivalents acquired	—			(23,377		)
Net increase in loans	(815,437		)	(121,115		)
Proceeds received from:
Sale of debt securities, available-for-sale	207			263,298
Paydown or maturity of debt securities, available-for-sale	140,218			58,229
Paydown or maturity of debt securities, held-to-maturity	8,711			2,864
Redemption of other investments	25,978			31,138
Sale of state tax credits held for sale	1,924			2,252
Sale of other real estate	609			2,281
Settlement of bank-owned life insurance policies	974			—
Payments for the purchase of:
Available-for-sale debt securities	(152,082		)	(363,900		)
Other investments	(38,527		)	(43,589		)
State tax credits held for sale	(3,730		)	(1,852		)
Fixed assets, net	(1,532		)	(2,236		)
Net cash used in investing activities	(832,687		)	(196,007		)
Cash flows from financing activities:
Net increase (decrease) in noninterest-bearing deposit accounts	638,520			(88,219		)
Net increase (decrease) in interest-bearing deposit accounts	290,036			(21,615		)
Proceeds from FHLB advances, net	27,700			312,500
Proceeds from notes payable	—			40,000
Repayments of notes payable	(2,857		)	(4,857		)
Proceeds from issuance of subordinated debentures, net	61,953			—
Net decrease in other borrowings	(34,355		)	(60,490		)
Cash dividends paid on common stock	(9,458		)	(7,798		)
Payments for the repurchase of common stock	(15,347		)	—
Payments for the issuance of equity instruments, net	(894		)	(1,233		)
Net cash provided by financing activities	955,298			168,288
Net increase (decrease) in cash and cash equivalents	181,471			(7,152		)
Cash and cash equivalents, beginning of period	167,256			196,552
Cash and cash equivalents, end of period	$	348,727		$	189,400
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	20,574		$	32,036
Income taxes	30			11,915
Noncash transactions:
Transfer to other real estate owned in settlement of loans	$	—		$	7,783
Sales of other real estate financed	48			—
Right-of-use assets obtained in exchange for lease obligations	200			—
Common shares issued in connection with acquisition	—			171,885
Transfer of securities from available for sale to held to maturity	163,592			—

The accompanying notes are an integral part of these consolidated financial statements.

5

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used by Enterprise Financial Services Corp (the “Company,” “EFSC,” or “Enterprise”) in the preparation of the condensed consolidated financial statements are summarized below:

Business and Consolidation

Enterprise is a financial holding company that provides a full range of banking and wealth management services to individuals and corporate customers located in the Arizona, Kansas, Missouri, and New Mexico markets through its banking subsidiary, Enterprise Bank & Trust.

Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2020. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC.

Basis of Financial Statement Presentation

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All intercompany accounts and transactions have been eliminated.

In the opinion of management, the consolidated financial statements contain all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of the statements of financial position, results of operations, and cash flow for the interim periods.

Recently Adopted Accounting Pronouncements

On January 1, 2020, the Company adopted ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with an expected loss methodology commonly referred to as the CECL methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures such as loan commitments, standby letters of credit, financial guarantees, and other similar instruments. In addition, this standard made changes to the accounting for available-for-sale debt securities, including the requirement for credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities.

The Company adopted this standard using the modified retrospective method for all financial assets measured at amortized cost, and off-balance-sheet credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under the new standard while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company recorded an after-tax decrease to retained earnings of $18.1 million as of January 1, 2020 for the cumulative effect of adopting this standard.

The Company adopted this standard using the prospective transition approach for PCD assets that were previously classified as PCI assets. Management did not reassess whether PCI assets met the criteria of PCD assets as of the date of the adoption.

6

The Company elected not to maintain PCI pools for certain loans which are now accounted for individually. Thus they are now included in nonperforming and classified loans. Management did not reassess whether modifications to individual acquired financial assets accounted for in pools were troubled debt restructurings as of the date of adoption.

The following table illustrates the impact of adoption:

($ in thousands)	December 31, 2019		Impact of Adoption			January 1, 2020
Assets:
Loans	$	5,314,337	$	7,091		$	5,321,428
Allowance for credit losses on loans	43,288		28,387			71,675
Allowance for credit losses on held-to-maturity debt securities	—		303			303
Deferred tax asset	14,851		5,898			20,749
Liabilities:
Reserve for unfunded commitments	430		2,413			2,843
Shareholders’ Equity
Retained Earnings	380,737		(18,114		)	362,623

The Company also adopted ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” on January 1, 2020. The Company previously selected the option to adopt the removal or modification of disclosures during the second quarter of 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are applied prospectively for only the most recent interim or annual period presented. All other amendments are applied retrospectively to all periods presented upon their effective date. The adoption of this update did not have a material effect on the Company's consolidated financial statements.

Accounting Standards Issued but not yet Adopted

FASB ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” In March 2020, the FASB issued “Reference Rate Reform (Topic 848)” which provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The guidance is effective for contract modifications as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the optional expedients and exceptions and has not yet determined the impact this standard may have on its consolidated financial statements.

Loans

The Company has elected to present the accrued interest receivable balance separate from amortized cost basis, to exclude accrued interest receivable balances from the tabular disclosures, and not to estimate an ACL on accrued interest receivable as these amounts are timely written off as a credit loss expense.

Accrued interest receivable totaled $19.7 million at June 30, 2020 and was reported in Other Assets on the consolidated balance sheets.

7

PCD Loans

The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An ACL is determined using the same methodology as other loans held for investment. The initial ACL determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and ACL becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the ACL are recorded through provision expense.

Allowance for Credit Losses on Loans

The ACLL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected. Loans are charged-off against the allowance when management believes the uncollectibility of a loan balance is confirmed.

Management estimates the allowance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors.

The ACLL is measured on a collective basis when similar risk characteristics exist. The Company has identified the following portfolio segments:

C&I – C&I loans consist of loans to small and medium-sized businesses in a wide variety of industries. These loans are generally collateralized by inventory, accounts receivable, equipment, real estate and other commercial assets, and may be supported by other credit enhancements such as personal guarantees. Risk arises primarily due to a difference between expected and actual cash flows of the borrower. However, the recoverability of these loans is also dependent on other factors primarily dictated by the type of collateral securing these loans. The fair value of the collateral securing these loans may fluctuate as market conditions change. Included within C&I are revolving loans supported by borrowing bases that fluctuate depending on the amount of underlying collateral. A portion of C&I loans consists of enterprise value lending, which are loans with senior debt exposure to private equity backed companies.

CRE – CRE loans include various types of loans for which the Company holds real property as collateral. Commercial real estate lending activity is typically restricted to owner-occupied properties or to investor properties that are owned by customers with a current banking relationship. The primary risks of CRE loans include the borrower’s inability to pay, material decreases in the value of the real estate being held as collateral and significant increases in interest rates, which may make the real estate mortgage loan unprofitable. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy.

Construction and Land Development – The Company originates loans to finance construction projects including one- to four-family residences, multifamily residences, commercial office, and industrial projects. Construction loans are generally collateralized by first liens on the real estate and have floating interest rates. Construction loans are considered to have higher risks due to construction completion and timing risk, and the ultimate repayment being sensitive to interest rate changes, governmental regulation of real property and the availability of long-term financing. Additionally, economic conditions may impact the Company’s ability to recover its investment in construction loans. Adverse economic conditions may negatively impact the real estate market which could affect the borrowers’ ability to complete and sell the project. Additionally, the fair value of the underlying collateral may fluctuate as market conditions change.

Residential Real Estate – The Company originates loans to finance one- to four-family residences, secured by both first and second liens. Repayment of these loans is dependent on the borrowers’ ability to pay and the fair value of the underlying collateral. Residential loans with a second lien are inherently riskier due to the junior lien position.

8

Agricultural – Agricultural loans are generally secured with equipment, cattle, crops or other non-real property and at times the underlying real property. Agricultural loans are primarily included as a component of CRE and C&I loans.

Consumer – The Company provides a broad range of consumer loans to customers, including personal lines of credit, credit cards and automobile loans. Repayment of these loans is dependent on the borrowers’ ability to pay and the fair value of the underlying collateral. Consumer loans are included as a component of Other loans.

The Company utilizes a DCF method to measure the ACL on loans collectively evaluated that are sub-segmented by credit risk levels. The DCF method incorporates assumptions for probability of default, loss given default, prepayments and curtailments over the contractual term of the loans. In determining the probability of default, the Company utilized a regression analysis to determine certain economic factors that are relevant loss drivers in the portfolio segments based on historical or peer evaluations. National unemployment is a loss driver used in nearly all portfolios, except Consumer. The annual percentage change in gross domestic product is also used in C&I, Construction, Agricultural and Consumer portfolios. The annual percentage change in a commercial real estate index, national house price index and the consumer price index are used in the CRE, Residential Real Estate and Consumer portfolios, respectively. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

The Company uses a one-year reasonable and supportable forecast that considers baseline, upside and downside economic scenarios. For periods beyond the forecast period, the Company reverts to historical loss rates on a straight-line basis over a six-month period.

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

9

NOTE 2 - EARNINGS PER SHARE

Basic earnings per common share data is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Common shares outstanding include common stock and restricted stock awards where recipients have satisfied the vesting terms. Diluted earnings per common share gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method.

The following table presents a summary of per common share data and amounts for the periods indicated.

	Three months ended June 30,				Six months ended June 30,
(in thousands, except per share data)	2020		2019		2020		2019
Net income as reported	$	14,634	$	18,424	$	27,502	$	34,580
Weighted average common shares outstanding	26,180		26,887		26,325		25,415
Additional dilutive common stock equivalents	15		53		29		73
Weighted average diluted common shares outstanding	26,195		26,940		26,354		25,488
Basic earnings per common share:	$	0.56	$	0.69	$	1.04	$	1.36
Diluted earnings per common share:	0.56		0.68		$	1.04	$	1.36

For the three and six months ended June 30, 2020 common stock equivalents of approximately 157,000 and 147,000, respectively, were excluded from the earnings per share calculations because their effect would have been anti-dilutive. Comparatively, there were 130,000 and 99,000 common stock equivalents excluded in the prior year periods, respectively.

10

NOTE 3 - INVESTMENTS

The following table presents the amortized cost, gross unrealized gains and losses, allowance of credit losses and fair value of securities available for sale and held to maturity:

 

	June 30, 2020
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
Available-for-sale securities:
Obligations of U.S. Government-sponsored enterprises	$	9,966	$	275	$	—		$	—		$	10,241
Obligations of states and political subdivisions	245,961		8,450		(133		)	—			254,278
Agency mortgage-backed securities	693,082		27,915		(6		)	—			720,991
U.S. Treasury bills	9,975		591		—			—			10,566
Corporate debt securities	2,000		28		—			—			2,028
Total securities available for sale	$	960,984	$	37,259	$	(139	)	$	—		$	998,104
Held-to-maturity securities:
Obligations of states and political subdivisions	$	96,547	$	336	$	(122	)	$	(16	)	$	96,745
Agency mortgage-backed securities	127,353		2,469		(28		)	—			129,794
Corporate debt securities	122,536		7,693		—			(629		)	129,600
Total securities held-to-maturity	$	346,436	$	10,498	$	(150	)	$	(645	)	$	356,139
Less: Allowance for credit losses	645
Total securities held-to-maturity, net	$	345,791

	December 31, 2019
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Obligations of U.S. Government-sponsored enterprises	$	9,954	$	92	$	—		$	10,046
Obligations of states and political subdivisions	207,269		6,118		(363		)	213,024
Agency mortgage-backed securities	888,129		15,083		(1,191		)	902,021
U.S. Treasury Bills	9,971		255		—			10,226
Total securities available for sale	$	1,115,323	$	21,548	$	(1,554	)	$	1,135,317
Held-to-maturity securities:
Obligations of states and political subdivisions	$	11,704	$	170	$	—		$	11,874
Agency mortgage-backed securities	46,346		675		—			47,021
Corporate debt securities	123,116		128		(200		)	123,044
Total securities held to maturity	$	181,166	$	973	$	(200	)	$	181,939

During the second quarter of 2020, the Company transferred municipal securities and agency mortgage-backed securities with a book value of $163.6 million and fair value of $175.1 million from available-for-sale to held-to-maturity. The Company believes the held- to-maturity category is more consistent with the Company’s intent for these securities. The transfer of securities was made at fair value at the time of transfer. The unamortized portion of the $11.5 million unrealized holding gain at the time of transfer is retained in accumulated other comprehensive income and in the carrying value of held-to-maturity securities. Such amounts are amortized over the remaining life of the securities.

11

At June 30, 2020 and December 31, 2019, there were no holdings of securities of any one issuer in an amount greater than 10% of shareholders’ equity, other than U.S. Government agencies and sponsored enterprises. The agency mortgage-backed securities are all issued by U.S. Government agencies and sponsored enterprises. Securities having a fair value of $449.9 million and $484.8 million at June 30, 2020 and December 31, 2019, respectively, were pledged as collateral to secure deposits of public institutions and for other purposes as required by law or contract provisions.

The amortized cost and estimated fair value of debt securities at June 30, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The weighted average life of the mortgage-backed securities is approximately 3 years.

	Available for sale				Held to maturity
(in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	2,313	$	2,345	$	—	$	—
Due after one year through five years	25,981		27,058		10,207		10,597
Due after five years through ten years	9,455		9,915		126,285		133,206
Due after ten years	230,153		237,795		82,591		82,542
Agency mortgage-backed securities	693,082		720,991		127,353		129,794
	$	960,984	$	998,104	$	346,436	$	356,139

The following table represents a summary of available-for-sale investment securities that had an unrealized loss:

	June 30, 2020
	Less than 12 months				12 months or more				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of states and political subdivisions	$	33,821	$	133	$	—	$	—	$	33,821	$	133
Agency mortgage-backed securities	8,366		5		66		1		8,432		6
	$	42,187	$	138	$	66	$	1	$	42,253	$	139
The following table represents a summary of investment securities that had an unrealized loss:
	December 31, 2019
	Less than 12 months				12 months or more				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of states and political subdivisions	56,327		363		—		—		56,327		363
Agency mortgage-backed securities	131,693		756		41,491		435		173,184		1,191
Corporate debt securities	67,964		200		—		—		67,964		200
	$	255,984	$	1,319	$	41,491	$	435	$	297,475	$	1,754

The unrealized losses at both June 30, 2020 and December 31, 2019, were primarily attributable to changes in market interest rates since the securities were purchased. Management systematically evaluates investment securities for other-than-temporary declines in fair value on a quarterly basis. This analysis requires management to consider various factors, which include among other considerations (1) the present value of the cash flows expected to be collected compared to the amortized cost of the security, (2) duration and magnitude of the decline in value, (3) the financial condition of the issuer or issuers, (4) structure of the security, and (5) the intent to sell the security or whether it is more likely than not the Company would be required to sell the security before its anticipated recovery in market value. At June 30, 2020, management performed its quarterly analysis of all securities with an unrealized loss and concluded

12

no individual securities were other-than-temporarily impaired. Accrued interest receivable on available-for-sale debt securities totaled $3.6 million at June 30, 2020 and is excluded from the estimate of credit losses.

Accrued interest receivable on held-to-maturity debt securities totaled $2.3 million at June 30, 2020 and is excluded from the estimate of expected credit losses. The estimate of expected credit losses considers historical credit loss information adjusted for current conditions and reasonable and supportable forecasts. At June 30, 2020, the ACL on held-to-maturity securities was $0.6 million.

NOTE 4 - LOANS

Below is a summary of loans by category at June 30, 2020 and December 31, 2019:

(in thousands)	June 30, 2020			December 31, 2019
Commercial and industrial	$	3,165,611		$	2,361,157
Real estate:
Commercial - investor owned	1,309,895			1,299,884
Commercial - owner occupied	738,549			697,437
Construction and land development	481,221			457,273
Residential	326,992			366,261
Total real estate loans	2,856,657			2,820,855
Other	142,224			134,941
Loans, before unearned loan fees	6,164,492			5,316,953
Unearned loan fees, net	(24,441		)	(2,616		)
Loans, including unearned loan fees	$	6,140,051		$	5,314,337

PPP loans totaled $830.2 million at June 30, 2020, or $807.8 million net of unearned fees of $22.4 million. The loan balance at June 30, 2020 also includes a discount on acquired loans of $22.2 million. At June 30, 2020 loans of $2.4 billion were pledged to FHLB and the Federal Reserve Bank.

A summary of the activity in the ACLL by category for the three and six months ended June 30, 2020 is as follows:

(in thousands)	Commercial and industrial			CRE - investor owned			CRE - owner occupied		Construction and land development		Residential real estate			Other			Total
Allowance for credit losses on loans:
Balance at March 31, 2020	$	45,981		$	19,892		$	9,477	$	9,895	$	5,395		$	1,547		$	92,187
Provision for credit losses	7,168			2,599			1,600		6,038		744			242			18,391
Charge-offs	(3,303		)	(224		)	—		—		(32		)	(105		)	(3,664		)
Recoveries	293			2,752			11		29		226			45			3,356
Balance at June 30, 2020	$	50,139		$	25,019		$	11,088	$	15,962	$	6,333		$	1,729		$	110,270

13

(in thousands)	Commercial and industrial			CRE - investor owned			CRE - owner occupied			Construction and land development			Residential real estate			Other			Total
Allowance for credit losses on loans:
Balance at December 31, 2019	$	27,455		$	5,935		$	4,873		$	2,611		$	1,280		$	1,134		$	43,288
CECL adoption	6,494			10,726			2,598			5,183			3,470			(84		)	28,387
PCD loans immediately charged off	—			(5		)	(57		)	(217		)	(1,401		)	—			(1,680		)
Balance at January 1, 2020	$	33,949		$	16,656		$	7,414		$	7,577		$	3,349		$	1,050		$	69,995
Provision for credit losses	18,759			5,823			3,594			8,347			2,755			808			40,086
Charge-offs	(3,366		)	(226		)	—			(31		)	(154		)	(191		)	(3,968		)
Recoveries	797			2,766			80			69			383			62			4,157
Balance at June 30, 2020	$	50,139		$	25,019		$	11,088		$	15,962		$	6,333		$	1,729		$	110,270

Reserves on enterprise value lending and agricultural lending, which are included in the categories above, represented $15.8 million and $2.4 million, respectively.

On January 1, 2020, the Company adopted the CECL methodology which added $28.4 million to the ACLL. Upon adoption, $1.7 million of nonaccrual PCD loans that were less than $100,000 were immediately charged-off. Under the CECL method, the Company recorded a $18.4 million and $40.1 million provision for credit losses on loans in the three and six months ended June 30, 2020, respectively, compared to a $1.7 million and $3.2 million provision for loan losses in the prior year periods, respectively, under the incurred loss method. The increase in the provision for credit losses on loans is primarily due to the Company’s forecast of macroeconomic factors over the next 12 months, which significantly deteriorated in the first quarter 2020 due to the COVID-19 pandemic. The forecast continued to worsen in the second quarter of 2020.

The CECL methodology incorporates various economic scenarios. The Company utilizes three forecasts in the model, a Moody’s baseline, a stronger near-term growth and a moderate recession forecast. The Company weights these scenarios at 80%, 10%, and 10%, respectively. These forecasts incorporate an accommodative monetary policy and the current and anticipated impact of government stimulus. Accordingly, the CECL model has not been adjusted for negative qualitative factors, such as the potential loss mitigation of loan deferrals and the PPP. Some of the key risks to the forecasts that could result in future provision for credit losses are additional shutdowns and self-quarantines if a second wave of COVID hits, small-business bankruptcies occur at higher levels or unemployment increases. The 80/10/10 weighting adds approximately $1.0 million to the ACL.

The recorded investment in nonperforming loans by category at June 30, 2020 and December 31, 2019, is as follows: 

	June 30, 2020
(in thousands)	Nonaccrual		Restructured, accruing		Loans over 90 days past due and still accruing interest		Total nonperforming loans		Nonaccrual loans with no allowance
Commercial and industrial	$	27,431	$	3,642	$	865	$	31,938	$	20,553
Real estate:
Commercial - investor owned	2,389		—		—		2,389		1,677
Commercial - owner occupied	2,400		—		—		2,400		1,403
Construction and land development	207		—		—		207		207
Residential	4,421		78		—		4,499		3,444
Other	19		—		21		40		—
Total	$	36,867	$	3,720	$	886	$	41,473	$	27,284

There was no interest income recognized on nonaccrual loans during the six months ended June 30, 2020.

14

	December 31, 2019
(in thousands)	Nonaccrual		Restructured, accruing		Loans over 90 days past due and still accruing interest		Total nonperforming loans
Commercial and industrial	$	22,328	$	—	$	250	$	22,578
Real estate:
Commercial - investor owned	2,303		—		—		2,303
Commercial - owner occupied	213		—		—		213
Residential	1,251		79		—		1,330
Other	1		—		—		1
Total	$	26,096	$	79	$	250	$	26,425

The following table presents the amortized cost basis of collateral-dependent nonperforming loans by class of loan at June 30, 2020:

	Type of Collateral
(in thousands)	Commercial Real Estate		Residential Real Estate		Blanket Lien
Commercial and industrial	$	13,124	$	—	$	4,872
Real estate:
Commercial - investor owned	2,389		—		—
Commercial - owner occupied	1,811		—		—
Construction and land development	—		207		—
Residential	—		4,271		—
Total	$	17,324	$	4,478	$	4,872

There were no troubled debt restructurings that occurred during the three months ended June 30, 2020. The recorded investment by category for troubled debt restructurings that occurred during the six months ended June 30, 2020 and the three and six months ended June 30, 2019 are as follows:

	June 30, 2020					June 30, 2019
(in thousands, except for number of loans)	Number of loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance		Number of loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Commercial and industrial	1	$	3,731	$	3,731	—	$	—	$	—
Real estate:
Commercial - owner occupied	—	—		—		1	188		188
Residential	2	155		155		2	332		332
Total	3	$	3,886	$	3,886	3	$	520	$	520

There were no troubled debt restructured loans that subsequently defaulted during the three or six months ended June 30, 2020 or 2019.

In response to the COVID-19 pandemic, the Company has implemented short-term deferral programs allowing customers to primarily defer payments for up to 90 days. Deferrals under the CARES Act or interagency guidance are not included above as troubled debt restructurings. As of June 30, 2020, $685.7 million in loans have participated in the programs, including $361.4 million in loans deferring full principal and interest payments and $324.3 million in

15

loans deferring principal only. Interest of $4.0 million has been deferred and will be collected upon final maturity. The Company has moved all loans that have requested deferrals to a level six risk rating for additional monitoring.

The aging of the recorded investment in past due loans by class at June 30, 2020 is shown below.

	June 30, 2020
(in thousands)	30-89 Days  Past Due		90 or More Days Past Due		Total Past Due		Current		Total
Commercial and industrial	$	6,684	$	22,623	$	29,307	$	3,113,890	$	3,143,197
Real estate:
Commercial - investor owned	116		2,095		2,211		1,307,684		1,309,895
Commercial - owner occupied	2,723		1,208		3,931		734,618		738,549
Construction and land development	58		—		58		481,163		481,221
Residential	951		1,738		2,689		324,303		326,992
Other	100		21		121		140,076		140,197
Total	$	10,632	$	27,685	$	38,317	$	6,101,734	$	6,140,051

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, payment experience, credit documentation, and current economic factors among other factors. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

• Grades 1, 2, and 3 – Includes loans to borrowers with a continuous record of strong earnings, sound balance sheet condition and capitalization, ample liquidity with solid cash flow, and whose management team has experience and depth within their industry.

• Grade 4 – Includes loans to borrowers with positive trends in profitability, satisfactory capitalization and balance sheet condition, and sufficient liquidity and cash flow.

• Grade 5 – Includes loans to borrowers that may display fluctuating trends in sales, profitability, capitalization, liquidity, and cash flow.

• Grade 6 – Includes loans to borrowers where an adverse change or perceived weakness has occurred, but may be correctable in the near future. Alternatively, this rating category may also include circumstances where the borrower is starting to reverse a negative trend or condition, or has recently been upgraded from a 7, 8, or 9 rating.

• Grade 7 – Watch credits are borrowers that have experienced financial setback of a nature that is not determined to be severe or influence ‘ongoing concern’ expectations. Although possible, no loss is anticipated at this time, due to strong collateral and/or guarantor support.

• Grade 8 – Substandard credits include those borrowers characterized by significant losses and sustained downward trends in balance sheet condition, liquidity, and cash flow. Repayment reliance may have shifted to secondary sources. Collateral exposure may exist and additional reserves may be warranted.

• Grade 9 – Doubtful credits include borrowers that may show deteriorating trends that are unlikely to be corrected. Collateral values may appear insufficient for full recovery, therefore requiring a partial charge-off, or debt renegotiation with the borrower. The borrower may have declared bankruptcy or bankruptcy is likely in the near term. All doubtful rated credits will be on nonaccrual.

16

The recorded investment by risk category of the loans by class at June 30, 2020, which is based upon the most recent analysis performed is as follows:

	Term Loans by Origination Year
(in thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Converted to Term Loans		Revolving Loans		Total
Commercial and industrial
Pass (1-6)	$	1,239,062	$	535,477	$	318,046	$	180,269	$	47,210	$	85,529	$	14,954	$	510,168	$	2,930,715
Watch (7)	26,347		13,354		4,850		6,468		24,044		175		—		62,293		137,531
Classified (8-9)	3,775		15,068		8,155		3,950		5,093		3,673		295		23,222		63,231
Total Commercial and industrial	$	1,269,184	$	563,899	$	331,051	$	190,687	$	76,347	$	89,377	$	15,249	$	595,683	$	3,131,477
Commercial real estate-investor owned
Pass (1-6)	$	246,319	$	321,849	$	204,242	$	126,567	$	153,904	$	181,761	$	3,284	$	35,460	$	1,273,386
Watch (7)	5,136		4,220		1,192		369		12,681		1,275		—		—		24,873
Classified (8-9)	—		966		8,286		455		249		1,680		—		—		11,636
Total Commercial real estate-investor owned	$	251,455	$	327,035	$	213,720	$	127,391	$	166,834	$	184,716	$	3,284	$	35,460	$	1,309,895
Commercial real estate-owner occupied
Pass (1-6)	$	147,313	$	200,519	$	92,624	$	79,058	$	44,990	$	80,172	$	2,756	$	42,883	$	690,315
Watch (7)	9,473		1,963		261		9,729		8,533		5,074		—		2,500		37,533
Classified (8-9)	601		1,156		4,267		458		—		4,219		—		—		10,701
Total Commercial real estate-owner occupied	$	157,387	$	203,638	$	97,152	$	89,245	$	53,523	$	89,465	$	2,756	$	45,383	$	738,549
Construction real estate
Pass (1-6)	$	75,983	$	167,936	$	121,909	$	37,555	$	28,060	$	12,906	$	—	$	20,631	$	464,980
Watch (7)	2,408		722		1,254		11,047		—		546		—		—		15,977
Classified (8-9)	—		227		—		—		—		37		—		—		264
Total Construction real estate	$	78,391	$	168,885	$	123,163	$	48,602	$	28,060	$	13,489	$	—	$	20,631	$	481,221
Residential real estate
Pass (1-6)	$	26,448	$	33,085	$	22,074	$	19,931	$	34,427	$	115,036	$	591	$	63,505	$	315,097
Watch (7)	181		895		842		—		—		2,027		279		802		5,026
Classified (8-9)	184		1,265		758		13		213		3,445		—		50		5,928
Total residential real estate	$	26,813	$	35,245	$	23,674	$	19,944	$	34,640	$	120,508	$	870	$	64,357	$	326,051
Other
Pass (1-6)	$	8,758	$	25,567	$	20,615	$	682	$	3,705	$	34,455	$	—	$	43,971	$	137,753
Watch (7)	—		2		—		—		—		—		—		1		3
Classified (8-9)	—		1		3		4		—		19		10		7		44
Total Other	$	8,758	$	25,570	$	20,618	$	686	$	3,705	$	34,474	$	10	$	43,979	$	137,800

In the table above, loan originations in 2020 and 2019 with a classification of watch or classified primarily represent renewals or modifications initially underwritten and originated in prior years.

17

For certain loans, primarily credit cards, the Company evaluates credit quality based on the aging status.

The following table presents the recorded investment on loans based on payment activity:

	June 30, 2020
(in thousands)	Performing		Non Performing		Total
Commercial and industrial	$	11,682	$	38	$	11,720
Real estate:
Residential	941		—		941
Other	2,376		21		2,397
Total	$	14,999	$	59	$	15,058

The recorded investment by risk category of loans by class at December 31, 2019, was as follows:

	December 31, 2019
(in thousands)	Pass (1-6)		Watch (7)		Classified (8 & 9)		Total*
Commercial and industrial	$	2,151,084	$	124,718	$	70,021	$	2,345,823
Real estate:
Commercial - investor owned	1,242,569		17,572		2,840		1,262,981
Commercial - owner occupied	643,276		28,773		6,473		678,522
Construction and land development	437,134		12,140		106		449,380
Residential	348,246		4,450		2,496		355,192
Other	132,096		3		51		132,150
Total	$	4,954,405	$	187,656	$	81,987	$	5,224,048

*Excludes $90.3 million of loans accounted for as PCI

NOTE 5 - COMMITMENTS AND CONTINGENCIES

The Company issues financial instruments with off balance sheet risk in the normal course of the business of meeting the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments may involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

The Company’s extent of involvement and maximum potential exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of these instruments.

The Company uses the same credit policies in making commitments and conditional obligations as it does for financial instruments included on its consolidated balance sheets.

The contractual amounts of off-balance-sheet financial instruments as of June 30, 2020, and December 31, 2019, are as follows:

(in thousands)	June 30, 2020		December 31, 2019
Commitments to extend credit	$	1,659,225	$	1,469,413
Letters of credit	51,798		47,969

18

Off-Balance Sheet Credit Risk

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments usually have fixed expiration dates or other termination clauses, may have significant usage restrictions, and may require payment of a fee. Of the total commitments to extend credit at June 30, 2020, and December 31, 2019, approximately $161.3 million and $144.8 million, respectively, represent fixed rate loan commitments. Since certain of the commitments may expire without being drawn upon or may be revoked, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral held varies, but may include accounts receivable, inventory, premises and equipment, and real estate. Other liabilities includes $4.9 million and $0.4 million for estimated losses attributable to the unadvanced commitments at June 30, 2020, and December 31, 2019, respectively.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance or payment of a customer to a third party. These standby letters of credit are issued to support contractual obligations of the Company’s customers. The credit risk involved in issuing letters of credit is essentially the same as the risk involved in extending loans to customers. As of June 30, 2020, the approximate remaining terms of standby letters of credit range from 1 month to 4 years.

Contingencies

The Company and its subsidiaries are, from time to time, parties to various legal proceedings arising out of their businesses. Management believes there are no such proceedings pending or threatened against the Company or its subsidiaries which, if determined adversely, would have a material adverse effect on the business, consolidated financial condition, results of operations or cash flows of the Company or any of its subsidiaries.

NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS

Risk Management Objective of Using Derivatives

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings. The Company does not enter into derivative financial instruments for trading purposes.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. These derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. These cash flow hedges include: (1) swaps of variable three-month LIBOR on $62.0 million of junior subordinated debentures to a weighted-average-fixed rate of 2.62% over approximately six years, (2) a swap of the federal funds effective rate on $100.0 million of rolling FHLB overnight

19

advances to a fixed rate of 1.12% for three years, and (3) a swap of three-month LIBOR on $100.0 million of rolling three-month FHLB advances for five years.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are paid on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $2.8 million will be reclassified as an increase to interest expense.

Non-designated Hedges

Derivatives not designated as hedges are not considered speculative and result from a service the Company provides to certain customers. The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting derivatives the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings as a component of other noninterest income.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of June 30, 2020 and December 31, 2019.

	Derivative Assets										Derivative Liabilities
	June 30, 2020					December 31, 2019					June 30, 2020			December 31, 2019
(in thousands)	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives Designated as Hedging Instruments
Interest rate swap	$	261,962	Other Assets	$	—	$	61,962	Other Assets	$	—	Other Liabilities	$	10,840	Other Liabilities	$	2,872
Total				$	—				$	—		$	10,840		$	2,872
Derivatives not Designated as Hedging Instruments
Interest rate swap	$	1,021,528	Other Assets	$	35,728	$	749,819	Other Assets	$	11,055	Other Liabilities	$	35,988	Other Liabilities	$	11,875
Total				$	35,728				$	11,055		$	35,988		$	11,875

20

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s financial instruments that are subject to offsetting as of June 30, 2020 and December 31, 2019. The gross amounts of assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that financial assets and liabilities are presented on the Balance Sheet.

As of June 30, 2020
							Gross Amounts Not Offset in the Statement of Financial Position
(in thousands)	Gross Amounts Recognized		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets presented in the Statement of Financial Position		Financial Instruments		Fair Value Collateral Posted		Net Amount
Assets:
Interest rate swap	$	35,728	$	—	$	35,728	$	14	$	—	$	35,714
Liabilities:
Interest rate swap	$	46,828	$	—	$	46,828	$	14	$	46,222	$	592
Securities sold under agreements to repurchase	196,532		—		196,532		—		196,532		—
As of December 31, 2019
							Gross Amounts Not Offset in the Statement of Financial Position
(in thousands)	Gross Amounts Recognized		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets presented in the Statement of Financial Position		Financial Instruments		Fair Value Collateral Posted		Net Amount
Assets:
Interest rate swap	$	11,055	$	—	$	11,055	$	56	$	—	$	10,999
Liabilities:
Interest rate swap	$	14,747	$	—	$	14,747	$	56	$	14,573	$	118
Securities sold under agreements to repurchase	230,886		—		230,886		—		230,886		—

As of June 30, 2020, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $46.8 million. Further, the Company has minimum collateral posting thresholds with certain of its derivative counterparties and has posted collateral of $47.1 million.

21

NOTE 7 - FAIR VALUE MEASUREMENTS

The following table summarizes financial instruments measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	June 30, 2020
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	10,241	$	—	$	10,241
Obligations of states and political subdivisions	—		254,278		—		254,278
Agency mortgage-backed securities	—		720,991		—		720,991
U.S. Treasury bills	—		10,566		—		10,566
Corporate debt securities	—		2,028		—		2,028
Total securities available for sale	—		998,104		—		998,104
Derivatives	—		35,728		—		35,728
Total assets	$	—	$	1,033,832	$	—	$	1,033,832
Liabilities
Derivatives	$	—	$	46,828	$	—	$	46,828
Total liabilities	$	—	$	46,828	$	—	$	46,828

	December 31, 2019
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	10,046	$	—	$	10,046
Obligations of states and political subdivisions	—		213,024		—		213,024
Residential mortgage-backed securities	—		902,021		—		902,021
U.S. Treasury bills	—		10,226		—		10,226
Total securities available-for-sale	—		1,135,317		—		1,135,317
Derivative financial instruments	—		11,055		—		11,055
Total assets	$	—	$	1,146,372	$	—	$	1,146,372
Liabilities
Derivatives	$	—	$	14,747	$	—	$	14,747
Total liabilities	$	—	$	14,747	$	—	$	14,747

22

From time to time, the Company measures certain assets at fair value on a nonrecurring basis. These include assets measured at the lower of cost or fair value that were recognized at fair value below cost at the end of the period.

	(1)		(1)		(1)		(1)
(in thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total losses for the three months ended June 30, 2020		Total losses for the six months ended June 30, 2020
Impaired loans	$	3,627	$	—	$	—	$	3,627	$	3,219	$	3,230
Other real estate	3,899		—		—		3,899		79		777
Total	$	7,526	$	—	$	—	$	7,526	$	3,298	$	4,007
(1) The amounts represent only balances measured at fair value during the period and still held as of the reporting date.

Following is a summary of the carrying amounts and fair values of the Company’s financial instruments on the consolidated balance sheets at June 30, 2020 and December 31, 2019.

	June 30, 2020			December 31, 2019
(in thousands)	Carrying Amount	Estimated fair value	Level	Carrying Amount	Estimated fair value	Level
Balance sheet assets
Securities held-to-maturity, net	345,791	356,139	Level 2	181,166	181,939	Level 2
Other investments	43,106	43,106	Level 2	38,044	38,044	Level 2
Loans held for sale	16,029	16,029	Level 2	5,570	5,570	Level 2
Loans, net	6,029,781	5,876,000	Level 3	5,271,049	5,205,651	Level 3
State tax credits, held for sale	38,820	44,164	Level 3	36,802	39,046	Level 3
Balance sheet liabilities
Certificates of deposit	659,166	665,374	Level 3	826,447	825,203	Level 3
Subordinated debentures and notes	203,384	192,852	Level 2	141,258	130,985	Level 2
FHLB advances	250,000	251,978	Level 2	222,406	221,402	Level 2
Other borrowings and notes payable	227,961	227,961	Level 2	265,172	265,172	Level 2

For information regarding the methods and assumptions used to estimate the fair value of each class of financial instruments refer to Note 19 – Fair Value Measurements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC.

23

NOTE 8 - SUBORDINATED DEBENTURES

The amounts and terms of each issuance of the Company’s subordinated debentures at June 30, 2020 and December 31, 2019 were as follows:

	Amount						Maturity Date	Initial Call Date(1)	Interest Rate
(in thousands)	June 30, 2020			December 31, 2019
EFSC Clayco Statutory Trust I	$	3,196		$	3,196		December 17, 2033	December 17, 2008	Floats @ 3MO LIBOR + 2.85%
EFSC Capital Trust II	5,155			5,155			June 17, 2034	June 17, 2009	Floats @ 3MO LIBOR + 2.65%
EFSC Statutory Trust III	11,341			11,341			December 15, 2034	December 15, 2009	Floats @ 3MO LIBOR + 1.97%
EFSC Clayco Statutory Trust II	4,124			4,124			September 15, 2035	September 15, 2010	Floats @ 3MO LIBOR + 1.83%
EFSC Statutory Trust IV	10,310			10,310			December 15, 2035	December 15, 2010	Floats @ 3MO LIBOR + 1.44%
EFSC Statutory Trust V	4,124			4,124			September 15, 2036	September 15, 2011	Floats @ 3MO LIBOR + 1.60%
EFSC Capital Trust VI	14,433			14,433			March 30, 2037	March 30, 2012	Floats @ 3MO LIBOR + 1.60%
EFSC Capital Trust VII	4,124			4,124			December 15, 2037	December 15, 2012	Floats @ 3MO LIBOR + 2.25%
JEFFCO Stat Trust I(2)	7,819			7,886			February 22, 2031	February 22, 2011	Fixed @ 10.20%
JEFFCO Stat Trust II(2)	4,415			4,388			March 17, 2034	March 17, 2009	Floats @ 3MO LIBOR + 2.75%
Trinity Capital Trust III(2)	5,239			5,206			September 8, 2034	September 8, 2009	Floats @ 3MO LIBOR + 2.70%
Trinity Capital Trust IV(2)	10,310			10,302			November 23, 2035	August 23, 2010	Fixed @ 6.88%
Trinity Capital Trust V(2)	7,625			7,543			December 15, 2036	September 15, 2011	Floats @ 3MO LIBOR + 1.65%
Total junior subordinated debentures	92,215			92,132
5.75% Fixed-to-floating rate subordinated notes	63,250			—			June 1, 2030	June 1, 2025	Fixed @ 5.75% until June 1, 2025, then floats @ Benchmark rate (3 month term SOFR) + 5.66%
4.75% Fixed-to-floating rate subordinated notes	50,000			50,000			November 1, 2026	November 1, 2021	Fixed @ 4.75% until November 1, 2021, then floats @ 3MO LIBOR + 3.387%
Debt issuance costs	(2,081		)	(874		)
Total fixed-to-floating rate subordinated notes	111,169			49,126
Total subordinated debentures and notes	$	203,384		$	141,258
(1) Callable each quarter after initial call date.
(2) Purchase accounting adjustments are reflected in the balance and also impact the effective interest rate.

On May 21, 2020, the Company issued $63.3 million of 5.75% fixed-to-floating rate subordinated notes due in 2030 in a public offering (the “2030 Notes”). From and including the date of issuance to, but excluding June 1, 2025, the 2030 Notes will bear interest at a rate equal to 5.75% per annum, payable semiannually in arrears on each June 1 and December 1. From and including June 1, 2025 to, but excluding the maturity date or the date of earlier redemption, the 2030 Notes will bear interest at a floating rate per annum equal to a benchmark rate (which is expected to be three-month term SOFR (as defined in the Indenture, dated May 21, 2020, between the Company and U.S. Bank National Association, as trustee, and subsequent First Supplemental Indenture)), plus 566.0 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2025.

24

Notwithstanding the foregoing, in the event that the benchmark rate is less than zero, then the benchmark rate shall be deemed to be zero.

NOTE 9 - ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents the changes in accumulated other comprehensive income after-tax by component:

(in thousands)	Net Unrealized Gain (Loss) on Available-for-Sale Debt Securities			Unamortized Gain (Loss) on Held-to-Maturity Securities			Net Unrealized Loss on Cash Flow Hedges			Total
Balance, March 31, 2020	$	25,538		$	4,778		$	(7,219	)	$	23,097
Net change	10,984			(329		)	(943		)	9,712
Transfer from available-for-sale to held-to-maturity	$	(8,650	)	$	8,650		$	—		$	—
Balance, June 30, 2020	$	27,872		$	13,099		$	(8,162	)	$	32,809
Balance, December 31, 2019	$	14,977		$	4,934		$	(2,162	)	$	17,749
Net change	21,545			(485		)	(6,000		)	15,060
Transfer from available-for-sale to held-to-maturity	$	(8,650	)	$	8,650		$	—		$	—
Balance, June 30, 2020	$	27,872		$	13,099		$	(8,162	)	$	32,809
(in thousands)	Net Unrealized Gain (Loss) on Available-for-Sale Debt Securities			Unamortized Gain (Loss) on Held-to-Maturity Securities			Net Unrealized Loss on Cash Flow Hedges			Total
Balance, March 31, 2019	$	2,675		$	(233	)	$	(952	)	$	1,490
Net change	12,842			3			(1,261		)	11,584
Balance, June 30, 2019	$	15,517		$	(230	)	$	(2,213	)	$	13,074
Balance, December 31, 2018	$	(9,047	)	$	(235	)	$	—		$	(9,282	)
Net change	24,564			5			(2,213		)	22,356
Balance, June 30, 2019	$	15,517		$	(230	)	$	(2,213	)	$	13,074

25

The following table presents the pre-tax and after-tax changes in the components of other comprehensive income:

	Three months ended June 30,
(in thousands)	2020									2019
	Pre-tax			Tax effect			After-tax			Pre-tax			Tax effect			After-tax
Change in unrealized gain on available-for-sale debt securities	$	14,587		$	3,603		$	10,984		$	17,054		$	4,212		$	12,842
Reclassification of (gain) loss on held-to-maturity securities(b)	(437		)	(108		)	(329		)	4			1			3
Change in unrealized loss on cash flow hedges arising during the period	(1,563		)	(386		)	(1,177		)	(1,679		)	(414		)	(1,265		)
Reclassification of loss on cash flow hedges(b)	311			77			234			5			1			4
Total other comprehensive income	$	12,898		$	3,186		$	9,712		$	15,384		$	3,800		$	11,584
	Six months ended June 30,
	2020									2019
	Pre-tax			Tax effect			After-tax			Pre-tax			Tax effect			After-tax
Change in unrealized gain on available-for-sale debt securities	$	28,616		$	7,068		$	21,548		$	32,329		$	7,985		$	24,344
Reclassification adjustment for realized (gain) loss on sale of available-for-sale debt securities(a)	(4		)	(1		)	(3		)	292			72			220
Reclassification of (gain) loss on held-to-maturity securities(b)	(644		)	(159		)	(485		)	7			2			5
Change in unrealized loss on cash flow hedges arising during the period	(8,442		)	(2,085		)	(6,357		)	(2,944		)	(727		)	(2,217		)
Reclassification of loss on cash flow hedges(b)	474			117			357			5			1			4
Total other comprehensive income	$	20,000		$	4,940		$	15,060		$	29,689		$	7,333		$	22,356

^(a)The pre-tax amount is reported in noninterest income/expense in the Consolidated Statements of Operations

^(b)The pre-tax amount is reported in interest income/expense in the Consolidated Statements of Operations

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Forward Looking Statements

This Quarterly Report on Form 10-Q contains information and statements that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements about the Company’s plans, objectives, expectations, or consequences of statements about the future performance, operations, products and services of the Company and its subsidiaries. Forward-looking statements are typically

identified with the use of terms such as “may,” “might,” “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “could,” “continue,” “intend,” and the negative and other variations of these terms and similar words and expressions, although some forward-looking statements may be expressed differently. Forward-looking statements are inherently subject to risks and uncertainties and our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. You should be aware that our actual results could differ materially from those contained in the forward-looking statements. The COVID-19 pandemic is adversely affecting us, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. Continued deterioration in general business and economic conditions, including further increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price

26

volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways.  Other factors that could cause or contribute to such differences include, but are not limited to: our ability to efficiently integrate acquisitions into our operations, retain the customers of these businesses and grow the acquired operations; credit risk; changes in the appraised valuation of real estate securing impaired loans; our ability to recover our investment in loans; fluctuations in the fair value of collateral underlying loans; outcomes of litigation and other contingencies; exposure to general and local economic conditions; risks associated with rapid increases or decreases in prevailing interest rates; changes in business prospects that could impact goodwill estimates and assumptions; consolidation within the banking industry; competition from banks and other financial institutions; our ability to attract and retain relationship officers and other key personnel; burdens imposed by federal and state regulation; changes in regulatory requirements; changes in accounting policies and practices or accounting standards, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as CECL model, which has changed how we estimate credit losses; uncertainty regarding the future of LIBOR; natural disasters, war or terrorist activities, or pandemics, or the outbreak of COVID-19 or similar outbreaks, and their effects on economic and business environments in which we operate; increased unemployment rates and defaults as a result of the economic disruptions caused by COVID-19; the impact of governmental orders issued in response to COVID-19; and other risks discussed under the caption “Risk Factors” under Part 1, Item 1A of our 2019 Annual Report on Form 10-K and Item 1A of Part II of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and other reports filed with the SEC, all of which could cause the Company’s actual results to differ from those set forth in the forward-looking statements.

Readers are cautioned not to place undue reliance on our forward-looking statements, which reflect management’s analysis and expectations only as of the date of such statements. Forward-looking statements speak only as of the date they are made, and the Company does not intend, and undertakes no obligation, to publicly revise or update forward-looking statements after the date of this report, whether as a result of new information, future events or otherwise, except as required by federal securities law. You should understand that it is not possible to predict or identify all risk factors. Readers should carefully review all disclosures we file from time to time with the SEC which are available on our website at www.enterprisebank.com under “Investor Relations.”

Introduction

The following discussion describes the significant changes to the financial condition of the Company that have occurred during the first six months of 2020 compared to the financial condition as of December 31, 2019. In addition, this discussion summarizes the significant factors affecting the results of operations, liquidity and cash flows of the Company for the three and six months ended June 30, 2020, compared to the same periods in 2019. This discussion should be read in conjunction with the accompanying condensed consolidated financial statements included in this report and our Annual Report on Form 10-K for the year ended December 31, 2019.

COVID-19 Pandemic

On January 31, 2020, the Secretary of Health and Human Services declared a public health emergency due to the global outbreak of a new strain of coronavirus (COVID-19). On March 13, 2020, the President of the United States proclaimed the COVID-19 as a national emergency, following the World Health Organization’s categorization of the outbreak as a pandemic. COVID-19 continues to aggressively spread globally, including throughout the United States. The pandemic and resulting travel bans, closure of non-essential businesses, social distancing measures and government responses across the country have had a profound impact on the global economy, financial markets and how business has been conducted across all industries and have affected many of the Company’s customers and clients. To the extent the economic impacts of the pandemic continue for a prolonged period and conditions stagnate or worsen, our provision for credit losses, noninterest income, and profitability may be adversely affected.

The Company has taken proactive and disciplined steps to promote the safety and overall wellbeing of its employees, customers and stakeholders, as well as to manage its financial performance. Steps taken include activation of the Company’s business continuity plan, formation of a communication and action task force, cost containment measures,

27

restrictions on business travel, conversion of in-person meetings to virtual and a work-from-home mandate. The Company has also worked with its customers to implement appropriate loan deferral strategies in certain circumstances.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law. The CARES Act contains provisions to assist individuals and businesses, including the SBA’s Paycheck Protection Program (“PPP”). The PPP provided $349 billion in guaranteed loans that are forgivable if certain requirements are met. On April 24, 2020, an additional $310 billion was added to the PPP program. The CARES Act included a provision that allowed depository institutions the option to defer adoption of the CECL standard to the earlier of (1) the end of the COVID-19 national emergency or (2) December 31, 2020. The Company did not elect the deferral option.

On April 7, 2020, the U.S. banking agencies issued an Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised). The statement describes accounting for COVID-19-related loan modifications, including clarifying the interaction between current accounting rules and the temporary relief provided by the CARES Act. The statement also encourages institutions to work constructively with borrowers affected by COVID-19 and states the agencies will not criticize supervised institutions for prudent loan modifications. Both the CARES Act and the interagency statement provide relief from the accounting and reporting implications of troubled debt restructurings. The Company has implemented short-term deferral programs allowing customers to primarily defer payments for up to 90 days. As of June 30, 2020, $685.7 million in loans have participated in the programs.

Critical Accounting Policies

The following accounting policies are considered most critical to the understanding of the Company’s financial condition and results of operations. These critical accounting policies require management’s most difficult, subjective and complex judgments about matters that are inherently uncertain. Because these estimates and judgments are based on current circumstances, they may change over time or prove to be inaccurate based on actual experience. If different assumptions or conditions were to prevail, and depending upon the severity of such changes, the possibility of a materially different financial condition and/or results of operations could reasonably be expected. The impact and any associated risks related to our critical accounting policies on our business operations are discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” where such policies affect our reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The Company has prepared the consolidated financial information in this report in accordance with GAAP. The Company makes estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Such estimates include the valuation of loans, goodwill, intangible assets, and other long-lived assets, along with assumptions used in the calculation of income taxes, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using loss experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. The three and six months ended June 30, 2020 were characterized by heightened uncertainty due to the COVID-19 pandemic which could impact estimates and assumptions made by management. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statement in future periods. There can be no assurances that actual results will not differ from those estimates.

Allowance for Credit Losses

On January 1, 2020, the Company adopted Accounting Standard Update 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This standard, referred to as CECL, requires an estimate of lifetime expected credit losses on certain financial assets measured at amortized cost.

28

The Company maintains separate allowances for funded loans, unfunded loans, and held-to-maturity securities, collectively the ACL. The ACL is a valuation account to adjust the cost basis to the amount expected to be collected, based on management’s estimate of experience, current conditions, and reasonable and supportable forecasts. For purposes of determining the allowance for funded and unfunded loans, the portfolios are segregated into pools that share similar risk characteristics that are then further segregated by credit grades. Loans that do not share similar risk characteristics are evaluated on an individual basis and are not included in the collective evaluation. The Company estimates the amount of the allowance based on loan loss experience, adjusted for current and forecasted economic conditions, including unemployment, changes in GDP, and commercial and residential real estate prices. The Company’s forecast of economic conditions uses internal and external information and considers a weighted average of a baseline, upside, and downside scenarios. Because economic conditions can change and are difficult to predict, the anticipated amount of estimated loan defaults and losses, and therefore the adequacy of the allowance, could change significantly and have a direct impact on the Company’s credit costs.

Goodwill and Other Intangible Assets

The Company completes a goodwill impairment test in the fourth quarter each year or whenever events or changes in circumstances indicate the Company may not be able to recover the goodwill, or intangible assets, respective carrying amount. The impairment test involves the use of various estimates and assumptions. Management believes the estimates and assumptions utilized are reasonable.

Goodwill is evaluated for impairment at the reporting unit level. Reporting units are defined as the same level as, or one level below, an operating segment. An operating segment is a component of a business for which separate financial information is available that management regularly evaluates in deciding how to allocate resources and assess performance. The Company has one reporting unit and one operating segment.

Potential impairments to goodwill must first be identified by performing a qualitative assessment that evaluates relevant events or circumstances to determine whether it is more likely than not the fair value of a reporting unit is less than its carrying amount. If this test indicates it is more likely than not that goodwill has been impaired, then a quantitative impairment test is completed. The quantitative impairment test calculates the fair value of the reporting unit and compares it with its carrying amount, including goodwill. If the carrying amount of goodwill exceeds its implied fair market value, an impairment loss is recognized. That loss is equal to the carrying amount of goodwill that is in excess of its implied fair market value.

Intangible assets other than goodwill, such as core deposit intangibles, determined to have finite lives are amortized over their estimated remaining useful lives. These assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

As of June 30, 2020, an assessment of goodwill and intangibles was performed due to a decrease in the Company’s market capitalization below book value. The impairment evaluation of goodwill and intangible balances did not identify any impairment in the second quarter 2020, though there can be no assurance that prolonged market volatility resulting from the COVID-19 pandemic will not result in impairments to goodwill or other intangibles in future periods.

Executive Summary

The Company closed its acquisition of Trinity on March 8, 2019. The results of operations of Trinity are included in our results from this date forward, which may affect certain comparisons to the six months ended June 30, 2019.

29

Below are highlights of our financial performance for the three and six months ended June 30, 2020 and 2019.

(in thousands, except per share data)	At or for the three months ended						At or for the six months ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
EARNINGS
Total interest income	$	73,191		$	79,201		$	149,879		$	146,818
Total interest expense	7,358			17,486			20,678			32,760
Net interest income	65,833			61,715			129,201			114,058
Provision for credit losses	19,591			1,722			41,855			3,198
Net interest income after provision for credit losses	46,242			59,993			87,346			110,860
Total noninterest income	9,960			11,964			23,368			21,194
Total noninterest expense	37,912			49,054			76,585			88,892
Income before income tax expense	18,290			22,903			34,129			43,162
Income tax expense	3,656			4,479			6,627			8,582
Net income	$	14,634		$	18,424		$	27,502		$	34,580
Basic earnings per share	$	0.56		$	0.69		$	1.04		$	1.36
Diluted earnings per share	$	0.56		$	0.68		$	1.04		$	1.36
Return on average assets	0.72		%	1.05		%	0.71		%	1.07		%
Return on average common equity	6.78		%	9.09		%	6.38		%	9.45		%
Return on average tangible common equity1	9.28		%	12.92		%	8.76		%	12.93		%
Net interest margin (tax equivalent)	3.53		%	3.86		%	3.65		%	3.87		%
Core net interest margin1	3.50		%	3.80		%	3.60		%	3.80		%
Efficiency ratio	50.02		%	66.58		%	50.20		%	65.72		%
Core efficiency ratio1	50.66		%	53.30		%	50.94		%	53.65		%
Book value per common share	$	33.13		$	30.68
Tangible book value per common share1	$	24.22		$	21.74
ASSET QUALITY
Net charge-offs	$	309		$	970		$	1,491		$	2,796
Nonperforming loans	41,473			19,842
Classified assets	96,678			91,715
Nonperforming loans to total loans	0.68		%	0.39		%
Nonperforming assets to total assets	0.55		%	0.42		%
ACLL to total loans	1.80		%	0.85		%
Net charge-offs to average loans (annualized)	0.02		%	0.08		%	0.05		%	0.12		%
(1) A non-GAAP measure. A reconciliation has been included in this section under the caption “Use of Non-GAAP Financial Measures.”

30

For the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019, the Company notes the following trends:

• The Company was active in supporting its customers in the PPP. Details of the PPP loans are noted in the following table:

	Quarter ended
(in thousands)	June 30, 2020
PPP loans outstanding, net of unearned fees	$	807,814
Average PPP loans outstanding, net	634,632
PPP average loan size	224
PPP interest and fee income	4,083
PPP unearned fees	22,414
PPP average yield	2.59		%

Participation in the PPP has impacted the Company’s financial metrics in the second quarter 2020. Loan and deposit growth, earnings per share, and return on assets all increased due to the PPP. Conversely, net interest margin, the allowance coverage ratio, the leverage ratio and the ratio of tangible common equity to tangible assets all decreased. Since the PPP loans are guaranteed by the SBA, CET1, Tier 1 and total risk-based capital are not impacted by the PPP loan balances.

• For the three and six months ended June 30, 2020, the Company had net income of $14.6 million and $27.5 million, respectively, compared to $18.4 million and $34.6 million, respectively, for the prior year periods. Earnings per diluted share for the three and six months ended June 30, 2020, was $0.56 and $1.04 per diluted share, respectively, and $0.68 and $1.36 per diluted share, for the same periods in 2019. Net income and earnings per share for the three and six months ended June 30, 2020 were impacted from $19.6 million and $41.9 million, respectively, on a pretax basis ($14.8 million and $31.5 million, respectively, after tax), of provision for credit losses. The increase in the provision for credit losses for the three and six months ending June 30, 2020 was primarily due to deterioration in the economic forecast. Net income and earnings per share for the three and six months ended June 30, 2019 were impacted from $10.3 million and $17.6 million, respectively, on a pretax basis ($8.0 million and $13.7 million, respectively, after tax), of merger-related expenses.

• Net interest income for the three and six months ended June 30, 2020 increased 7% and 13%, respectively, over the prior year periods primarily from higher loan and investment volumes, both of which benefited from the Trinity acquisition and growth in the loan portfolio. The three-month period also benefited from higher loan volume due to PPP loans. The benefit to net interest income from higher earning-asset volumes and a decrease in funding costs was partially offset by the decrease in LIBOR in both the three and six months ended June 30, 2020.

The tax-equivalent net interest margin was 3.53% and 3.65% for the three and six months ended June 30, 2020, respectively, compared to 3.86% and 3.87% in the prior year periods, respectively. The net interest margin was impacted by the decline in short-term rates as approximately 60% of the Company’s loan portfolio (excluding PPP) has variable rates, with most indexed to one-month LIBOR that has declined significantly over the past year. An increase in the investment portfolio and in PPP loans in the second quarter 2020 contributed to growth in net interest income; however, the lower yields on these products compared to the loan portfolio yield excluding PPP reduced the net interest margin. The Company responded to interest rate trends by reducing the cost of certain managed money market and interest-bearing transaction accounts. Net interest income and margin both benefited from an 84-basis point decrease in the rate paid on interest-bearing deposits in the second quarter 2020 compared to the second quarter 2019. The rate on interest-bearing deposits for the six months ended June 30, 2020 declined 64 basis points compared to the prior-year period.

31

• Noninterest income for the three and six months ended June 30, 2020 decreased $2.0 million and increased $2.2 million, respectively, compared to the prior year periods. For the second quarter 2020, the increase in deposit balances provided more earnings credits to business customers on analysis, resulting in lower service charge income compared to the prior year quarter. Lower transaction volumes on credit and debit cards impacted card services revenue for the three months ended June 30, 2020. For the six months ended June 30, noninterest income increased due to a full period of income from the Trinity acquisition in wealth management and card services revenue. Tax credit income, swap fees and a claim on bank-owned life insurance also contributed to the year-over-year increase.

• Noninterest expense for the three and six months ended June 30, 2020 decreased $11.1 million and $12.3 million, respectively, compared to the prior year periods. The decrease is primarily due to a reduction in merger-related expenses.

Balance sheet highlights:

Loans – Total loans grew $825.7 million from December 31, 2019, or 15.1%, to $6.1 billion as of June 30, 2020. Growth in the loan portfolio was primarily driven by PPP loans.

• Deposits – Total deposits grew $928.6 million, or 15.5%, to $6.7 billion as of June 30, 2020 primarily due to PPP related deposits, government stimulus checks and organic growth. Noninterest deposit accounts represented 29.3% of total deposits at June 30, 2020, and the loan to deposit ratio was 91.6%.

• Asset quality – The allowance for credit losses on loans to total loans increased to 1.80% at June 30, 2020 from 0.81% at December 31, 2019. Nonperforming assets to total assets was 0.55% at June 30, 2020 compared to 0.45% at December 31, 2019. The adoption of CECL on January 1, 2020, increased nonperforming loans by $6.8 million due to the reclassification of loans previously accounted for in performing pools of loans.

• Subordinated notes - In the second quarter 2020, the Company issued $63.3 million of 5.75% fixed-to-floating rate subordinated notes due in 2030. The notes are callable beginning in 2025 and are included in tier 2 capital.

• Shareholders’ equity – Total shareholders’ equity was $868.0 million and the tangible common equity to tangible assets ratio¹ was 7.81% at June 30, 2020 compared to 8.89% at December 31, 2019. Balance sheet growth from the PPP was the primary cause of the decline in the tangible common equity to tangible assets ratio. Bank regulatory capital ratios remain “well-capitalized,” with a common equity tier 1 ratio of 11.75% and a total risk-based capital ratio of 13.00%.

¹A non-GAAP measure. A reconciliation has been included in this section under the caption “Use of Non-GAAP Financial Measures.”

32

RESULTS OF OPERATIONS

Net Interest Income

Average Balance Sheet

The following tables present, for the periods indicated, certain information related to our average interest-earning assets and interest-bearing liabilities, as well as the corresponding interest rates earned and paid, all on a tax equivalent basis. Non-core acquired loans noted in the table below were acquired from the FDIC and were previously covered by shared-loss agreements.

	Three months ended June 30,
	2020						2019
(in thousands)	Average Balance		Interest Income/Expense		Average Yield/ Rate		Average Balance		Interest Income/Expense		Average Yield/ Rate
Assets
Interest-earning assets:
Taxable portfolio loans (1)	$	5,982,117	$	63,250	4.25	%	$	5,056,172	$	68,093	5.40	%
Tax-exempt portfolio loans (2)	36,864		447		4.88		26,821		453		6.77
Non-core acquired loans - contractual	13,095		172		5.28		12,188		284		9.35
Non-core acquired loans - incremental accretion			719		22.08				910		29.95
Total loans	6,032,076		64,588		4.31		5,095,181		69,740		5.49
Taxable debt and equity investments	1,076,158		6,814		2.55		1,120,526		8,009		2.87
Non-taxable debt and equity investments (2)	285,695		2,406		3.39		126,003		1,143		3.64
Short-term investments	177,267		87		0.20		111,291		703		2.53
Total securities and short-term investments	1,539,120		9,307		2.43		1,357,820		9,855		2.91
Total interest-earning assets	7,571,196		73,895		3.93		6,453,001		79,595		4.95
Noninterest-earning assets	587,008						604,604
Total assets	$	8,158,204					$	7,057,605
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing transaction accounts	$	1,487,467	$	244	0.07	%	$	1,384,090	$	2,134	0.62	%
Money market accounts	1,941,874		995		0.21		1,576,333		6,996		1.78
Savings	590,104		45		0.03		562,503		231		0.16
Certificates of deposit	718,529		3,099		1.73		815,138		3,758		1.85
Total interest-bearing deposits	4,737,974		4,383		0.37		4,338,064		13,119		1.21
Subordinated debentures	169,311		2,316		5.50		141,059		1,958		5.57
FHLB advances	251,231		455		0.73		263,384		1,696		2.58
Securities sold under agreements to repurchase	192,117		57		0.12		164,037		338		0.83
Other borrowed funds	32,842		147		1.80		40,338		375		3.73
Total interest-bearing liabilities	5,383,475		7,358		0.55		4,946,882		17,486		1.42
Noninterest bearing liabilities:
Demand deposits	1,813,760						1,244,008
Other liabilities	92,806						53,609
Total liabilities	7,290,041						6,244,499
Shareholders' equity	868,163						813,106
Total liabilities & shareholders' equity	$	8,158,204					$	7,057,605
Net interest income			$	66,537					$	62,109
Net interest spread					3.38	%					3.53	%
Net interest margin					3.53	%					3.86	%
Core net interest margin (3)					3.50	%					3.80	%

(1) Average balances include nonaccrual loans. The income on such loans is included in interest but is recognized only upon receipt. Loan fees, net of amortization of deferred loan origination fees and costs, included in interest income are approximately $3.6 million and $0.9 million for the three months ended June 30, 2020 and 2019 respectively.

(2) Non-taxable income is presented on a tax-equivalent basis using a 24.7% tax rate in 2020 and 2019. The tax-equivalent adjustments were $0.7 million and $0.4 million for the three months ended June 30, 2020 and 2019, respectively.

(3) A non-GAAP measure. A reconciliation has been included in this section under the caption “Use of Non-GAAP Financial measures.”

33

	Six months ended June 30,
	2020						2019
(in thousands)	Average Balance		Interest Income/Expense		Average Yield/ Rate		Average Balance		Interest Income/Expense		Average Yield/ Rate
Assets
Interest-earning assets:
Taxable portfolio loans (1)	$	5,640,977	$	128,569	4.58	%	$	4,763,916	$	127,320	5.39	%
Tax-exempt portfolio loans (2)	37,019		938		5.10		27,418		878		6.46
Non-core acquired loans - contractual	14,163		379		5.38		13,564		605		8.99
Non-core acquired loans - incremental accretion			1,992		28.29				2,067		30.74
Total loans	5,692,159		131,878		4.66		4,804,898		130,870		5.49
Taxable debt and equity investments	1,096,703		14,544		2.67		976,875		13,707		2.83
Non-taxable debt and equity investments (2)	257,707		4,384		3.42		95,823		1,737		3.66
Short-term investments	134,758		387		0.58		106,752		1,150		2.17
Total securities and short-term investments	1,489,168		19,315		2.61		1,179,450		16,594		2.84
Total interest-earning assets	7,181,327		151,193		4.23		5,984,348		147,464		4.97
Noninterest-earning assets	579,577						525,540
Total assets	$	7,760,904					$	6,509,888
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing transaction accounts	$	1,431,311	$	1,581	0.22	%	$	1,231,537	$	3,924	0.64	%
Money market accounts	1,876,482		5,735		0.61		1,549,255		13,511		1.76
Savings	566,549		188		0.07		431,843		414		0.19
Certificates of deposit	755,871		6,767		1.80		763,988		7,090		1.87
Total interest-bearing deposits	4,630,213		14,271		0.62		3,976,623		24,939		1.26
Subordinated debentures	155,303		4,235		5.48		132,653		3,606		5.48
FHLB advances	235,842		1,350		1.15		239,535		3,094		2.60
Securities sold under agreements to repurchase	197,002		419		0.43		175,603		611		0.70
Other borrowed funds	33,556		403		2.42		27,689		510		3.71
Total interest-bearing liabilities	5,251,916		20,678		0.79		4,552,103		32,760		1.45
Noninterest bearing liabilities:
Demand deposits	1,564,513						1,166,595
Other liabilities	77,876						52,994
Total liabilities	6,894,305						5,771,692
Shareholders' equity	866,599						738,196
Total liabilities & shareholders' equity	$	7,760,904					$	6,509,888
Net interest income			$	130,515					$	114,704
Net interest spread					3.44	%					3.52	%
Net interest margin					3.65	%					3.87	%
Core net interest margin (3)					3.60	%					3.80	%

(1) Average balances include non-accrual loans. The income on such loans is included in interest but is recognized only upon receipt. Loan fees, net of amortization of deferred loan origination fees and costs, included in interest income are approximately $4.9 million and $2.1 million for the six months ended June 30, 2020 and 2019 respectively.

(2) Non-taxable income is presented on a fully tax-equivalent basis using a 24.7% tax rate in 2020 and 2019. The tax-equivalent adjustments were $1.3 million and $0.6 million for the six months ended June 30, 2020 and 2019, respectively.

(3) A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial measures."

34

Rate/Volume

The following table sets forth, on a tax-equivalent basis for the periods indicated, a summary of the changes in interest income and interest expense resulting from changes in yield/rates and volume.

	2020 compared to 2019
	Three months ended June 30,									Six months ended June 30,
	Increase (decrease) due to									Increase (decrease) due to
(in thousands)	Volume(1)			Rate(2)			Net			Volume(1)			Rate(2)			Net
Interest earned on:
Taxable loans	$	11,129		$	(15,972	)	$	(4,843	)	$	21,761		$	(20,512	)	$	1,249
Tax-exempt loans (3)	141			(147		)	(6		)	269			(209		)	60
Non-core acquired loans	83			(386		)	(303		)	116			(417		)	(301		)
Taxable debt and equity investments	(313		)	(882		)	(1,195		)	1,646			(809		)	837
Non-taxable debt and equity investments (3)	1,346			(83		)	1,263			2,766			(119		)	2,647
Short-term investments	264			(880		)	(616		)	245			(1,008		)	(763		)
Total interest-earning assets	$	12,650		$	(18,350	)	$	(5,700	)	$	26,803		$	(23,074	)	$	3,729
Interest paid on:
Interest-bearing transaction accounts	$	147		$	(2,037	)	$	(1,890	)	$	557		$	(2,900	)	$	(2,343	)
Money market accounts	1,313			(7,314		)	(6,001		)	2,415			(10,191		)	(7,776		)
Savings	10			(196		)	(186		)	102			(328		)	(226		)
Certificates of deposit	(426		)	(233		)	(659		)	(71		)	(252		)	(323		)
Subordinated debentures	383			(25		)	358			628			1			629
FHLB advances	(75		)	(1,166		)	(1,241		)	(47		)	(1,697		)	(1,744		)
Securities sold under agreements to repurchase	50			(331		)	(281		)	68			(260		)	(192		)
Other borrowings	(60		)	(168		)	(228		)	94			(201		)	(107		)
Total interest-bearing liabilities	1,342			(11,470		)	(10,128		)	3,746			(15,828		)	(12,082		)
Net interest income	$	11,308		$	(6,880	)	$	4,428		$	23,057		$	(7,246	)	$	15,811

(1) Change in volume multiplied by yield/rate of prior period.

(2) Change in yield/rate multiplied by volume of prior period.

(3) Nontaxable income is presented on a tax equivalent basis using the combined statutory federal and state income tax rate in effect for each tax year.

NOTE: The change in interest due to both rate and volume has been allocated to rate and volume changes in proportion to the relationship of the absolute dollar amounts of the change in each.

Net interest income (on a tax equivalent basis) for the three and six months ended June 30, 2020 increased 7% and 13%, respectively, over the prior year periods primarily from higher loan and investment volumes, both of which benefited from the Trinity acquisition and growth in the loan portfolio. The three-month period also benefited from a higher loan volume due to PPP loans. The benefit to net interest income from higher earning-asset volumes and a decrease in funding costs was partially offset by a decrease in earning-asset yields.

The tax-equivalent net interest margin was 3.53% and 3.65% for the three and six months ended June 30, 2020, respectively, compared to 3.86% and 3.87% in the prior year periods, respectively. The net interest margin was impacted by the decline in short-term rates as approximately 60% of the Company’s loan portfolio (excluding PPP) has variable rates, with most indexed to one-month LIBOR that has declined significantly over the past year. Average one-month LIBOR was 0.35% and 0.89% in the three and six months ended June 30, 2020, respectively, compared to 2.44% and 2.47% in the comparable prior year periods, respectively. An increase in the investment portfolio and in PPP loans in

35

the second quarter 2020 contributed to growth in net interest income; however, the lower yields on these products compared to the loan portfolio yield excluding PPP reduced the net interest margin.

The Company responded to interest rate trends by reducing the cost of certain managed money market and interest-bearing transaction accounts. Net interest income and margin both benefited from an 84-basis point decrease in the rate paid on interest-bearing deposits in the second quarter 2020 compared to the second quarter 2019. The rate on interest-bearing deposits for the six months ended June 30, 2020 declined 64 basis points compared to the prior-year period. In addition, the new subordinated debt issuance in the quarter reduced net interest margin by two basis points.

The Company manages its balance sheet to defend against pressures on core net interest margin, which could be negatively impacted from continued competition for deposits, current interest rate conditions, and movements in short-term rates.

Noninterest Income

The following table presents a comparative summary of the major components of noninterest income for the periods indicated.

	2020 compared to 2019
	Three months ended June 30,										Six months ended June 30,
(in thousands)	2020			2019		Increase (decrease)					2020		2019		Increase (decrease)
Service charges on deposit accounts	$	2,616		$	3,366	$	(750	)	(22	)%	$	5,759	$	6,301	$	(542	)	(9	)%
Wealth management revenue	2,326			2,661		(335		)	(13	)%	4,827		4,653		174			4	%
Card services revenue	2,225			2,461		(236		)	(10	)%	4,472		4,251		221			5	%
Tax credit income	(221		)	572		(793		)	(139	)%	1,815		730		1,085			149	%
Miscellaneous income	3,014			2,904		110			4	%	6,495		5,259		1,236			24	%
Total noninterest income	$	9,960		$	11,964	$	(2,004	)	(17	)%	$	23,368	$	21,194	$	2,174		10	%

Noninterest income decreased $2.0 million, or 17%, for the three months ended June 30, 2020, compared to the same period in 2019. The increase in deposit account balances provided more earnings credits to business customers, resulting in lower service charge income compared to the prior year quarter. Lower transaction volumes on credit and debit cards impacted card services revenue for the three months ended June 30, 2020. The Company’s tax credit income decreased in the current quarter over the prior year period primarily due to timing delays on projects.

Noninterest income increased $2.2 million, or 10%, for the six months ended June 30, 2020, compared to the same period in 2019. Wealth management and card services benefited from a full period of income in 2020 from the Trinity acquisition compared to the prior year. Tax credit income increased partially due to fair value adjustments on tax credits. The fair value of these projects increased due to a decline in the LIBOR component of the discount rate. Miscellaneous income increased $1.2 million in 2020 over 2019 due primarily to a $0.9 million increase in swap fees and a $0.7 million claim on a life insurance policy, partially offset by a $0.4 million decrease in non-core acquired fee income.

36

Noninterest Expense

The following table presents a comparative summary of the major components of noninterest expense for the periods indicated.

	2020 compared to 2019
	Three months ended June 30,											Six months ended June 30,
(in thousands)	2020			2019			Increase (decrease)					2020			2019			Increase (decrease)
Employee compensation and benefits	$	22,389		$	20,687		$	1,702		8	%	$	44,074		$	40,039		$	4,035		10	%
Occupancy	3,185			3,188			(3		)	—	%	6,532			5,825			707			12	%
Data processing	2,144			2,458			(314		)	(13	)%	4,226			4,364			(138		)	(3	)%
Professional fees	1,287			1,037			250			24	%	2,149			1,783			366			21	%
Merger-related expenses	—			10,306			(10,306		)	(100	)%	—			17,576			(17,576		)	(100	)%
Other	8,907			11,378			(2,471		)	(22	)%	19,604			19,305			299			2	%
Total noninterest expense	$	37,912		$	49,054		$	(11,142	)	(23	)%	$	76,585		$	88,892		$	(12,307	)	(14	)%
Efficiency ratio	50.02		%	66.58		%	(16.56		)%			50.20		%	65.72		%	(15.52		)%
Core efficiency ratio1	50.66		%	53.30		%	(2.64		)%			50.94		%	53.65		%	(2.71		)%
1A non-GAAP measure. A reconciliation has been included in this section under the caption “Use of Non-GAAP Financial Measures.”

Noninterest expense decreased $11.1 million, or 23%, for the second quarter 2020, compared to the same period in 2019. The decrease from the prior year period was primarily impacted by merger-related expenses of $10.3 million from the Trinity transaction incurred in the second quarter 2019. For the six months ended June 30, 2020, noninterest expense decreased $12.3 million, or 14%, from the prior year period primarily due to merger-related expenses of $17.6 million, partially offset by an increase in employee compensation from merit increases.

Efficiency gains primarily from growth in net interest income combined with reductions in noninterest expense have resulted in continued improvements to the Company’s core efficiency ratio.¹ The core efficiency ratio was 50.66% in the second quarter 2020 compared to 53.30% in the second quarter 2019.

Income Taxes

The Company’s effective tax rate was 20.0% for the second quarter 2020, compared to 19.6% for the same period in 2019. For the six months ended June 30, 2020, the effective tax rate was 19.4% compared to 19.9% for the same period in 2019.

Summary Balance Sheet

(in thousands)	June 30, 2020		December 31, 2019		Increase (decrease)
Total cash and cash equivalents	$	348,727	$	167,256	$	181,471	108	%
Securities	1,343,895		1,316,483		27,412		2	%
Loans held for investment	6,140,051		5,457,517		682,534		13	%
Total assets	8,357,501		7,333,791		1,023,710		14	%
Deposits	6,699,580		5,771,023		928,557		16	%
Total liabilities	7,489,538		6,466,606		1,022,932		16	%
Total shareholders’ equity	867,963		867,185		778		—	%

37

Assets

Loans by Type

The Company has a diversified loan portfolio, with no particular concentration of credit in any one economic sector; however, a substantial portion of the portfolio, including the C&I category, is secured by real estate. The ability of the Company’s borrowers to honor their contractual obligations is partially dependent upon the local economy and its effect on the real estate market.

The following table summarizes the composition of the Company’s loan portfolio:

(in thousands)	June 30, 2020		December 31, 2019		Increase (decrease)
Commercial and industrial	$	3,143,197	$	2,361,157	$	782,040		33	%
Commercial real estate - investor owned	1,309,895		1,299,884		10,011			1	%
Commercial real estate - owner occupied	738,549		697,437		41,112			6	%
Construction and land development	481,221		457,273		23,948			5	%
Residential real estate	326,992		366,261		(39,269		)	(11	)%
Other	140,197		132,325		7,872			6	%
Loans held for investment	$	6,140,051	$	5,314,337	$	825,714		16	%

Loans grew $825.7 million to $6.1 billion at June 30, 2020, from December 31, 2019. Loan growth was primarily due to the $807.8 million PPP loans outstanding at June 30, 2020. Revolving line utilization for C&I customers decreased in the second quarter 2020, partially due to the influx of PPP funds to our customers. Low interest rates and higher refinance activity has reduced the residential real estate portfolio, while construction and commercial real estate loans have increased.

The following table illustrates loan growth with selected specialized lending detail:

(in thousands)	June 30, 2020		December 31, 2019		Increase (decrease)
C&I - general	$	1,057,899	$	1,186,667	$	(128,768	)	(11	)%
CRE investor owned - general	1,302,235		1,290,258		11,977			1	%
CRE owner occupied - general	599,800		582,579		17,221			3	%
PPP	807,814		—		807,814			NM
Enterprise value lending1	382,828		428,896		(46,068		)	(11	)%
Life insurance premium financing1	520,705		472,822		47,883			10	%
Residential real estate - general	326,697		366,261		(39,564		)	(11	)%
Construction and land development - general	455,686		428,681		27,005			6	%
Tax credits1	363,222		294,210		69,012			23	%
Agriculture1	191,093		139,873		51,220			37	%
Other	132,072		124,090		7,982			6	%
Total loans	$	6,140,051	$	5,314,337	$	825,714		16	%
Note: Certain prior period amounts have been reclassified among the categories to conform to the current period presentation.
1Specialized categories may include a mix of C&I, CRE, construction and land development, or other loans.

Specialized lending products, especially enterprise value lending, life insurance premium financing, and tax credits, consist of primarily C&I loans. These loans are sourced through relationships developed with estate planning firms and private equity funds and are not bound geographically by our four markets. These specialized loan products offer opportunities to expand and diversify geographically by entering into new markets. The Company continues to focus on originating high-quality C&I relationships, as they typically have variable interest rates and allow for cross selling

38

opportunities involving other banking products. C&I loan growth, coupled with typically fixed-rate CRE lending, supports management’s efforts to maintain a flexible asset sensitive interest rate risk position. The specialized lending products declined in 2020, primarily due to a decrease in enterprise value loans, offset by an increase in life insurance premium financing and tax credits. Life insurance premium financing and tax credits are typically lower risk products due to the high collateral value securing the loans. Agriculture loans increased primarily due to one relationship for hog and pig farming, and other loans increased primarily due to loans to financial institutions as part of the Company’s correspondent business unit.

In response to the COVID-19 pandemic, the Company has processed short-term deferrals allowing customers to defer payments. Approximately 99% of the deferrals are for 90 days or less. As of June 30, 2020, $685.7 million in loans have received deferrals, of which 53% are deferring all principal and interest and 47% are paying interest only.

The following table summarizes the loans modified by category:

(in thousands)	June 30, 2020
Commercial and industrial	$	171,108
Commercial real estate	404,295
Construction and land development	88,368
Residential real estate	21,762
Other	134
Loans held for investment	$	685,667

39

Provision and Allowance for Credit Losses

The adoption of CECL on January 1, 2020 increased the ACLL by $28.4 million, or 65%, and the allowance for unfunded commitments by $2.4 million. These increases were primarily offset in retained earnings and did not impact the consolidated statement of operations. The following table summarizes changes in the ACLL arising from CECL adoption; loan charge-offs and recoveries by loan category, and additions to the allowance charged to expense.

	Three months ended June 30,						Six months ended June 30,
(in thousands)	2020			2019			2020			2019
Allowance, at beginning of period	$	92,187		$	43,095		$	43,288		$	43,476
CECL adoption	—			—			28,387			—
PCD loans immediately charged-off	—			—			(1,680		)	—
Allowance at beginning of period, adjusted for adoption of CECL	92,187			43,095			69,995			43,476
Charge-offs:
Commercial and industrial	(3,303		)	(1,380		)	(3,366		)	(3,233		)
Real estate:
Commercial	(224		)	(431		)	(226		)	(587		)
Construction and land development	—			—			(31		)	(45		)
Residential	(32		)	(26		)	(154		)	(93		)
Other	(105		)	(53		)	(191		)	(182		)
Total charge-offs	(3,664		)	(1,890		)	(3,968		)	(4,140		)
Recoveries:
Commercial and industrial	293			32			797			61
Real estate:
Commercial	2,763			58			2,846			67
Construction and land development	29			489			69			498
Residential	226			124			383			488
Other	45			217			62			230
Total recoveries	3,356			920			4,157			1,344
Net (charge-offs) recoveries	(308		)	(970		)	189			(2,796		)
Provision for credit losses	18,391			1,722			40,086			3,198
Other	—			(25		)	—			(56		)
Allowance, at end of period	$	110,270		$	43,822		$	110,270		$	43,822

The following table presents the components of the provision for credit losses:

	Three months ended June 30,					Six months ended June 30,
(in thousands)	2020			2019		2020			2019
Provision for loan losses	$	18,391		$	1,722	$	40,086		$	3,198
Provision for off-balance sheet commitments	1,206			—		2,055			—
Provision for held-to-maturity securities	342			—		342			—
Recovery for accrued interest	(348		)	—		(628		)	—
Provision for credit losses	$	19,591		$	1,722	$	41,855		$	3,198

The provision for credit losses, which includes a provision for losses on unfunded commitments, is a charge to earnings to maintain the ACL at a level consistent with management’s assessment of expected losses in the loan portfolio at the balance sheet date. The Company also records reversals of interest on nonaccrual loans and interest recoveries directly

40

through the provision of credit losses. Due to current economic conditions, the provision for credit losses was $19.6 million and $41.9 million for the three and six months ended June 30, 2020, respectively. CECL requires economic forecasts to be factored into determining estimated losses. As a result, CECL will typically require a higher level of provision at the start of an economic downturn. The increase in the provision for credit losses in 2020 was primarily due to a change in economic forecasts from the end of 2019, which worsened significantly starting in March 2020 due to the COVID-19 pandemic and the resulting slow-down of business activity. Two of the primary economic loss drivers used in estimating the ACL include the percentage change in GDP and unemployment. The Company’s forecast of the percentage change in GDP included a range of (10.0)% to 8.0%. The Company’s forecast of unemployment included a range of 7.9% to 11.8%. The Company utilizes a one-year reasonable and supportable forecast.

To the extent the Company does not recognize charge-offs and economic forecasts improve in future periods, the Company could recognize a reversal of provision for credit losses. Conversely, if economic conditions and the Company’s forecast worsens, the Company could recognize elevated levels of provision for credit losses. The provision is also reflective of charge-offs in the period.

The Company had net charge-offs of $1.5 million in the first six months of 2020, primarily due to the administrative charge-off of nonaccrual loans less than $100,000 under the Company’s credit policy. Most of these charge-offs were loans added to nonaccual as part of the CECL adoption. The ACLL was 1.80% of loans at June 30, 2020, compared to 0.81% at December 31, 2019.

Nonperforming assets

Prior to the adoption of CECL, PCI loans were accounted for in performing pools of loans and were not individually identified as nonaccrual or classified. Under the CECL accounting model, the Company elected not to maintain PCI pools for certain loans which are now accounted for individually and are now included in nonperforming and classified loans. PCI loans are referred to as PCD under CECL.

The following table presents the categories of nonperforming assets and other ratios as of the dates indicated.

(in thousands)	June 30, 2020			December 31, 2019			June 30, 2019
Nonaccrual loans	$	36,867		$	26,096		$	15,659
Loans past due 90 days or more and still accruing interest	886			250			3,999
Troubled debt restructurings	3,720			79			184
Total nonperforming loans	41,473			26,425			19,842
Other real estate	4,874			6,344			10,531
Total nonperforming assets	$	46,347		$	32,769		$	30,373
Total assets	$	8,357,501		$	7,333,791		$	7,181,855
Total loans	6,140,051			5,314,337			5,149,497
Nonperforming loans to total loans	0.68		%	0.50		%	0.39		%
Nonperforming assets to total assets	0.55		%	0.45		%	0.42		%
ACLL to nonperforming loans	266		%	164		%	221		%

Nonperforming loans increased $15.1 million to $41.5 million at June 30, 2020 from $26.4 million at December 31, 2019 partially due to the adoption of CECL that added $6.8 million in PCD loans that were previously accounted for in an accruing pool of loans. The addition of a $5.0 million nonaccrual enterprise value loan in 2020 also contributed to the increase. Other real estate decreased during 2020 due to write-downs of $0.9 million and sales of $0.6 million.

41

Nonperforming loans 

Nonperforming loans based on loan type were as follows:

 

(in thousands)	June 30, 2020		December 31, 2019		June 30, 2019
Commercial and industrial	$	31,938	$	22,578	$	15,112
Commercial real estate	4,789		2,516		1,670
Construction and land development	207		—		—
Residential real estate	4,499		1,330		3,060
Other	40		1		—
Total	$	41,473	$	26,425	$	19,842

The following table summarizes the changes in nonperforming loans:

	Six months ended June 30,
(in thousands)	2020			2019
Nonperforming loans, beginning of period	$	26,425		$	16,745
CECL adoption	8,462			—
PCD loans immediately charged off	(1,680		)	—
Nonperforming loans, January 1	$	33,207		$	16,745
Additions to nonaccrual loans	12,154			10,605
Additions to restructured loans	3,750			—
Charge-offs	(3,970		)	(3,965		)
Other principal reductions	(4,250		)	(5,136		)
Moved to other real estate	—			(1,732		)
Moved to performing	(6		)	(674		)
Loans past due 90 days or more and still accruing interest	588			3,999
Nonperforming loans, end of period	$	41,473		$	19,842

Other real estate

Other real estate was $4.9 million at June 30, 2020 compared to $10.5 million at June 30, 2019.

The following table summarizes the changes in other real estate:

	Six months ended June 30,
(in thousands)	2020			2019
Other real estate beginning of period	$	6,344		$	469
Additions and expenses capitalized to prepare property for sale	—			7,783
Additions from acquisition	—			4,512
Writedowns in value	(856		)	—
Sales	(615		)	(2,233		)
Other real estate end of period	$	4,873		$	10,531

Writedowns in fair value are recorded in other noninterest expense based on current market activity shown in the appraisals.

42

Deposits

(in thousands)	June 30, 2020			December 31, 2019			Increase (decrease)
Noninterest-bearing deposit accounts	$	1,965,868		$	1,327,348		$	638,520		48	%
Interest-bearing transaction accounts	1,508,535			1,367,444			141,091			10	%
Money market accounts	1,962,916			1,713,615			249,301			15	%
Savings accounts	603,095			536,169			66,926			12	%
Certificates of deposit:
Brokered	85,414			215,758			(130,344		)	(60	)%
Other	573,752			610,689			(36,937		)	(6	)%
Total deposits	$	6,699,580		$	5,771,023		$	928,557		16	%
Non-time deposits / total deposits	90		%	86		%
Demand deposits / total deposits	29		%	23		%

Total deposits at June 30, 2020 were $6.7 billion, an increase of 16%, from December 31, 2019. The increase in deposits has been influenced by the PPP, as many of the recipients have maintained increased deposit levels since receiving PPP funding. Government stimulus checks and organic growth have also impacted deposit balances. Due to increased liquidity, the brokered certificates of deposit have been reduced in 2020. Noninterest bearing deposits as a percentage of total deposits was 29% at June 30, 2020, compared to 23% at December 31, 2019, respectively.

Shareholders’ Equity

Shareholders’ equity totaled $868.0 million at June 30, 2020, an increase of $0.8 million from December 31, 2019. Significant activity during the first six months of 2020 was as follows:

• increase from net income of $27.5 million,

• net increase in fair value of securities and cash flow hedges of $15.1 million,

• decrease from CECL adoption of $18.1 million,

• decrease from dividends paid on common shares of $9.5 million,

• increase from the issuance under equity compensation plans of $1.1 million, and

• decrease from share repurchases of $15.3 million.

Liquidity and Capital Resources

Liquidity

Our objective of liquidity management is to ensure we have the ability to generate sufficient cash or cash equivalents in a timely and cost-effective manner to meet our commitments as they become due. Typical demands on liquidity are run-off from demand deposits, maturing time deposits which are not renewed, and fundings under credit commitments to customers. Funds are available from a number of sources, such as from the core deposit base and from loans and securities repayments and maturities.

Liquidity is provided from sales of the securities portfolio, fed fund lines with correspondent banks, borrowings from the Federal Reserve and the FHLB, the ability to acquire large and brokered deposits, and the ability to sell loan participations to other banks. These alternatives are an important part of our liquidity plan and provide flexibility and efficient execution of the asset-liability management strategy.

The Bank’s Asset-Liability Management Committee oversees our liquidity position, the parameters of which are approved by the Bank’s Board of Directors. Our liquidity position is monitored monthly by measuring the amount of liquid versus non-liquid assets and liabilities. Our liquidity management framework includes measurement of several

43

key elements, such as the loan to deposit ratio, a liquidity ratio, and a dependency ratio. The Company’s liquidity framework also incorporates contingency planning to assess the nature and volatility of funding sources and to determine alternatives to these sources. While core deposits and loan and investment repayments are principal sources of liquidity, funding diversification is another key element of liquidity management and is achieved by strategically varying depositor types, terms, funding markets, and instruments.

The Bank has a variety of funding sources available to increase financial flexibility. In addition to amounts currently borrowed, at June 30, 2020, the Bank had borrowing capacity of $562 million from the FHLB of Des Moines under blanket loan pledges, and has an additional $879 million available from the Federal Reserve Bank under a pledged loan agreement. The Bank has unsecured federal funds lines with six correspondent banks totaling $90 million, and $367 million of unsecured credit through the American Financial Exchange.

Investment securities are another important tool in managing the Bank’s liquidity objectives. Securities totaled $1.4 billion at June 30, 2020, and included $450 million pledged as collateral for deposits of public institutions, treasury, loan notes, and other requirements. The remaining $904 million could be pledged or sold to enhance liquidity, if necessary.

In the normal course of business, the Bank enters into certain forms of off-balance sheet transactions, including unfunded loan commitments and letters of credit. These transactions are managed through the Bank’s various risk management processes. Management considers both on-balance sheet and off-balance sheet transactions in its evaluation of the Company’s liquidity. The Bank has $1.7 billion in unused commitments as of June 30, 2020. The nature of these commitments is such that the likelihood of funding them in the aggregate at any one time is low.

Parent Company liquidity

The parent company’s liquidity is managed to provide the funds necessary to pay dividends to shareholders, service debt, invest in subsidiaries as necessary, and satisfy other operating requirements. The parent company’s primary funding sources to meet its liquidity requirements are dividends and payments from the Bank and proceeds from the issuance of equity (i.e. stock option exercises, stock offerings). Another source of funding for the parent company includes the issuance of subordinated debentures and other debt instruments.

The Company has an effective automatic shelf registration statement on Form S-3 allowing for the issuance of various forms of equity and debt securities. The Company’s ability to offer securities pursuant to the registration statement depends on market conditions and the Company’s continuing eligibility to use the Form S-3 under rules of the SEC.

On November 1, 2016, the Company issued $50 million aggregate principal amount of 4.75% fixed-to-floating rate subordinated notes with a maturity date of November 1, 2026, which initially bear an annual interest rate of 4.75%, with interest payable semiannually. Beginning November 1, 2021, the interest rate resets quarterly to the three-month LIBOR rate plus a spread of 338.7 basis points, payable quarterly.

On May 21, 2020, the Company issued $63.3 million aggregate principal amount of 5.75% fixed-to-floating rate subordinated notes with a maturity date of June 1, 2030, which initially bear an annual interest rate of 5.75%, with interest payable semiannually. Beginning June 1, 2025, the interest rate resets quarterly to the three-month SOFR rate plus a spread of 566.0 basis points, payable quarterly.

The Company has a senior unsecured revolving credit agreement (the “Revolving Agreement”) with another bank allowing for borrowings up to $25 million that matures in February 2021. The proceeds can be used for general corporate purposes. The Revolving Agreement is subject to ongoing compliance with a number of customary affirmative and negative covenants as well as specified financial covenants. As of June 30, 2020, no amount was outstanding under the Revolving Agreement.

In March 2019, the Company entered into a five-year term note for $40 million that matures in March 2024. The Company principally used the proceeds from the issuance of the note to fund the cash consideration at the closing of the acquisition of Trinity. The remaining balance at June 30, 2020 was $31 million.

44

As of June 30, 2020, the Company had $92 million of outstanding junior subordinated debentures as part of 13 statutory trusts. These debentures are classified as debt but are included in regulatory capital and the related interest expense is tax-deductible, which makes them an attractive source of funding.

Management believes our current level of cash at the holding company of $68 million, along with the Company’s other available funding sources, will be sufficient to meet all projected cash needs for the remainder of 2020.

Capital Resources

The Company and the Bank are subject to various regulatory capital requirements administered by the Federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and its bank affiliate must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The banking affiliate’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total, Tier 1, and common equity tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. To be categorized as “well capitalized”, banks must maintain minimum total risk-based (10%), Tier 1 risk-based (8%), common equity tier 1 risk-based (6.5%), and Tier 1 leverage ratios (5%). As of June 30, 2020, and December 31, 2019, the Company and the Bank met all capital adequacy requirements to which they are subject.

The Bank continues to exceed regulatory standards and met the definition of “well-capitalized” (the highest category) at June 30, 2020.

The following table summarizes the Company’s various capital ratios at the dates indicated:

(in thousands)	June 30, 2020			December 31, 2019			Well Capitalized Minimum %	Minimum Capital Requirement Including Capital Conservation Buffer
Total capital to risk-weighted assets	14.40		%	12.90		%	N/A	10.50	%
Tier 1 capital to risk-weighted assets	11.37			11.40			N/A	8.50
Common equity tier 1 capital to risk-weighted assets	9.91			9.90			N/A	7.00
Leverage ratio (Tier 1 capital to average assets)	9.16			10.05			N/A	4.00
Tangible common equity to tangible assets1	7.81			8.89			N/A
Total risk-based capital	$	919,693		$	804,273
Tier 1 capital	726,574			710,480
Common equity tier 1 capital	632,919			616,825
1 Not a required regulatory capital ratio

45

The following table summarizes the Bank’s various capital ratios at the dates indicated:

(in thousands)	June 30, 2020			December 31, 2019			Well Capitalized Minimum %		Minimum Capital Requirement Including Capital Conservation Buffer
Total capital to risk-weighted assets	13.00		%	12.40		%	10.00	%	10.50	%
Tier 1 capital to risk-weighted assets	11.75			11.70			8.00		8.50
Common equity tier 1 capital to risk-weighted assets	11.75			11.69			6.50		7.00
Leverage ratio (Tier 1 capital to average assets)	9.48			10.31			5.00		4.00
Total risk-based capital	$	829,134		$	769,254
Tier 1 capital	749,402			725,461
Common equity tier 1 capital	749,347			725,406

In March 2020, the U.S. banking agencies issued an interim final rule that provides banking organizations that implement CECL before the end of 2020 the option to delay for two years an estimate of CECL’s effect on regulatory capital followed by a three-year transition period. The Company adopted CECL on January 1, 2020. For additional information regarding the adoption of CECL, see “Item 1. Note 1 – Summary of Significant Accounting Policies.” The Company has elected the transition provisions provided by the U.S. banking agencies’ rule. Accordingly, the regulatory capital effects resulting from adoption of the CECL methodology will not be fully reflected in the Company’s regulatory capital until January 1, 2025. Based on the Company’s regulatory capital position as of June 30, 2020, the estimated impact of adopting CECL methodology would reduce the Common Equity Tier 1 Capital ratio by approximately 44 basis points. The actual impact of adopting CECL on the regulatory capital ratios may change as the final impact is not determined until the end of the second year of the transition period.

The Company believes the tangible common equity ratio is an important measure of capital strength, even though it is considered a non-GAAP measure. A reconciliation has been included in this section under the caption “Use of Non-GAAP Financial Measures.”

Use of Non-GAAP Financial Measures:

The Company’s accounting and reporting policies conform to GAAP and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as core net interest income, core net interest margin, core efficiency ratios, tangible common equity, return on average tangible common equity, and the tangible common equity ratio, in this report that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position, or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP.

The Company considers its core net interest income, core net interest margin, core efficiency ratio, tangible common equity, return on average tangible common equity, and the tangible common equity ratio, collectively “core performance measures,” presented in this report and the included tables as important measures of financial performance, even though they are non-GAAP measures, as they provide supplemental information by which to evaluate the impact of non-core acquired loans, which were acquired from the FDIC and previously covered by loss share agreements, and the related income and expenses, the impact of certain non-comparable items, and the Company’s operating performance on an ongoing basis. Core performance measures include contractual interest on non-core acquired loans, but exclude incremental accretion on these loans. Core performance measures also exclude expenses directly related to non-core acquired loans. Core performance measures also exclude certain other income and expense items, such as merger-related expenses, and the gain or loss on sale of investment securities, the Company believes to be not indicative of or useful to measure the Company’s operating performance on an ongoing basis. The attached tables contain a reconciliation of these core performance measures to the GAAP measures. The Company believes the tangible common equity ratio provides useful information to investors about the Company’s capital strength even though it is considered

46

to be a non-GAAP financial measure and is not part of the regulatory capital requirements to which the Company is subject.

The Company believes these non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and ratios, provide meaningful supplemental information regarding the Company’s performance and capital strength. The Company’s management uses, and believes that investors benefit from referring to, these non-GAAP measures and ratios in assessing the Company’s operating results and related trends and when forecasting future periods. However, these non-GAAP measures and ratios should be considered in addition to, and not as a substitute for or preferable to, ratios prepared in accordance with GAAP. In the following tables, the Company has provided a reconciliation of, where applicable, the most comparable GAAP financial measures and ratios to the non-GAAP financial measures and ratios, or a reconciliation of the non-GAAP calculation of the financial measure for the periods indicated.

Core Performance Measures

	For the three months ended						At or for the six months ended
(in thousands)	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Net interest income	$	65,833		$	61,715		$	129,201		$	114,058
Less: Incremental accretion income	719			910			1,992			2,067
Core net interest income	65,114			60,805			127,209			111,991
Total noninterest income	9,960			11,964			23,368			21,194
Less: Gain on sale of investment securities	—			—			4			—
Less: Other income from non-core acquired assets	—			2			—			367
Less: Other non-core income	265			266			265			266
Core noninterest income	9,695			11,696			23,099			20,561
Total core revenue	74,809			72,501			150,308			132,552
Total noninterest expense	37,912			49,054			76,585			88,892
Less: Other expenses related to non-core acquired loans	12			103			24			206
Less: Merger related expenses	—			10,306			—			17,576
Core noninterest expense	37,900			38,645			76,561			71,110
Core efficiency ratio	50.66		%	53.30		%	50.94		%	53.65		%

Net Interest Margin to Core Net Interest Margin (tax equivalent)

	Three months ended June 30,						Six months ended June 30,
(in thousands)	2020			2019			2020			2019
Net interest income	$	66,537		$	62,109		$	130,515		$	114,704
Less: Incremental accretion income	719			910			1,992			2,067
Core net interest income, tax equivalent	$	65,818		$	61,199		$	128,523		$	112,637
Average earning assets	$	7,571,196		$	6,453,005		$	7,181,327		$	5,984,348
Reported net interest margin	3.53		%	3.86		%	3.65		%	3.87		%
Core net interest margin	3.50		%	3.80		%	3.60		%	3.80		%

47

Tangible Common Equity Ratio

(in thousands)	June 30, 2020			December 31, 2019
Total shareholders' equity	$	867,963		$	867,185
Less: Goodwill	210,344			210,344
Less: Intangible assets	23,196			26,076
Tangible common equity	$	634,423		$	630,765
Total assets	$	8,357,501		$	7,333,791
Less: Goodwill	210,344			210,344
Less: Intangible assets, net	23,196			26,076
Tangible assets	$	8,123,961		$	7,097,371
Tangible common equity to tangible assets	7.81		%	8.89		%

Average Shareholders’ Equity and Average Tangible Common Equity

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2020		2019		2020		2019
Average shareholder’s equity	$	868,163	$	813,106	$	866,599	$	738,196
Less: Average goodwill	210,344		211,251		210,344		176,529
Less: Average intangible assets, net	23,873		29,965		24,587		22,261
Average tangible common equity	$	633,946	$	571,890	$	631,668	$	539,406

Critical Accounting Policies

The impact and any associated risks related to the Company’s critical accounting policies on business operations are described throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” where such policies affect our reported and expected financial results. For a detailed description on the application of these and other accounting policies, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

48

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The disclosures set forth in this item are qualified by the section captioned “Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995” included in Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report and other cautionary statements set forth elsewhere in this report.

Interest Rate Risk 

Our interest rate risk management practices are aimed at optimizing net interest income, while guarding against deterioration that could be caused by certain interest rate scenarios. Interest rate sensitivity varies with different types of interest-earning assets and interest-bearing liabilities. We attempt to maintain interest-earning assets, comprised primarily of both loans and investments, and interest-bearing liabilities, comprised primarily of deposits, maturing or repricing in similar time horizons in order to minimize or eliminate any impact from market interest rate changes. In order to measure earnings sensitivity to changing rates, the Company uses an earnings simulation model.

The Company determines the sensitivity of its short-term future earnings to a hypothetical plus or minus 100 to 300 basis point parallel rate shock through the use of simulation modeling (due to the current level of interest rates, the downward shock scenarios are not shown in the table below.) The simulation of earnings includes the modeling of the balance sheet as an ongoing entity. Future business assumptions involving administered rate products, prepayments for future rate-sensitive balances, and the reinvestment of maturing assets and liabilities are included. These items are then modeled to project net interest income based on a hypothetical change in interest rates. The resulting net interest income for the next 12-month period is compared to the net interest income amount calculated using flat rates. The Company uses an earning sensitivity model to track earnings sensitivity to a plus or minus 100 basis points parallel rate shock.

The following table summarizes the expected impact of interest rate shocks on net interest income:

Rate Shock1	Annual % change in net interest income
+ 300 bp	7.8%
+ 200 bp	4.9%
+ 100 bp	2.1%
1 Due to the current levels of interest rates, the downward shock scenarios are not shown.

In addition to the rate shocks shown in the table above, the Company models net interest income under various dynamic

interest rate scenarios. Generally, positive changes in rates result in higher levels of net interest income, while scenarios based on declining rates, particularly those involving decreases in long-term rates, result in reduced net interest income.

At June 30, 2020, model scenarios based on a flatter yield curve through a reduction in longer term rates result in a marginal decrease in net interest income over a 12 month horizon.

At June 30, 2020, the Company had $3.1 billion in variable rate loans including $2.5 billion based on LIBOR and $332 million based on Prime. Approximately 86% of the LIBOR based loans are indexed to one-month LIBOR. Of the total variable rate loans, $1.2 billion, or 39%, had a rate floor of which approximately $1.0 billion, or 86%, were currently priced at the floor.

The Company occasionally uses interest rate derivative financial instruments as an asset/liability management tool to hedge mismatches in interest rate exposure indicated by the net interest income simulation described above. They are used to modify the Company’s exposures to interest rate fluctuations and provide more stable spreads between loan yields and the rate on their funding sources.

49

ITEM 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company’s Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), management has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15, as of June 30, 2020. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based on that evaluation, the CEO and CFO concluded the Company’s disclosure controls and procedures were effective as of June 30, 2020 to provide reasonable assurance of the achievement of the objectives described above.

Changes to Internal Controls

There were no changes during the period covered by this Quarterly Report on Form 10-Q in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, those controls.

PART II - OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

The Company and its subsidiaries are, from time to time, parties to various legal proceedings arising out of their businesses. Management believes there are no such proceedings pending or threatened against the Company or its subsidiaries which, if determined adversely, would have a material adverse effect on the business, consolidated financial condition, results of operations or cash flows of the Company or any of its subsidiaries.

ITEM 1A: RISK FACTORS

For information regarding risk factors affecting the Company, please see the cautionary language regarding forward-looking statements in the introduction to Item 2 of Part I of this Report on Form 10-Q, and Part I, Item 1A of our Report on Form 10-K for the fiscal year ended December 31, 2019, which is supplemented by the additional risk factors set forth below.

The recent global coronavirus (COVID-19) pandemic has led to periods of significant volatility in financial, commodities and other markets and could harm our business and results of operations.

In December 2019, a novel strain of coronavirus (COVID-19) was first reported in Wuhan, Hubei Province, China. Since then, COVID-19 infections have spread to additional countries including the United States. In March 2020, the World Health Organization declared COVID-19 to be a pandemic. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the COVID-19 pandemic on our business, and there is no guarantee that our efforts to address or mitigate the adverse impacts of the COVID-19 pandemic will be effective. The impact to date has included periods of significant volatility in financial, commodities and other markets. This volatility, if it continues, could have an adverse impact on our customers and on our business, financial condition and results of operations as well as our growth strategy.

50

Our business is dependent upon the willingness and ability of our customers to conduct banking and other financial transactions. The spread of COVID-19 has caused and could continue to cause severe disruptions in the U.S. economy at large, and has resulted and may continue to result in disruptions to our customers’ businesses, and a decrease in consumer confidence and business generally. In addition, recent actions by US federal, state and local governments to address the pandemic, including travel bans, stay-at-home orders and school, business and entertainment venue closures, may have a significant adverse effect on our customers and the markets in which we conduct our business. The extent of impacts resulting from the COVID-19 pandemic and other events beyond our control will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 pandemic and actions taken to contain the COVID-19 or its impact, among others.

Disruptions to our customers could result in increased risk of delinquencies, defaults, foreclosures and losses on our loans as well as declines in wealth management revenues. The escalation of the pandemic may also negatively impact regional economic conditions for a period of time, resulting in declines in local loan demand, liquidity of loan guarantors, loan collateral (particularly in real estate), loan originations and deposit availability. If the global response to contain COVID-19 escalates or is unsuccessful, we could experience a material adverse effect on our business, financial condition, results of operations and cash flows.

The Company has implemented restrictions on employee business travel, conversion of in-person meetings to virtual, and a work-from home mandate. The Company has also worked with its customers to implement appropriate loan deferral strategies in certain circumstances. These actions in response to the COVID-19 pandemic, and similar actions by our vendors and business partners, have not materially impaired our ability to support our employees, conduct our business and serve our customers, but there is no assurance these actions will be sufficient to successfully mitigate the risks presented by COVID-19 or that our ability to operate will not be materially affected going forward. For instance, our business operations may be disrupted if key personnel or significant portions of our employees are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the COVID-19 pandemic. Similarly, if any of our vendors or business partners become unable to continue to provide their products and services, which we rely upon to maintain our day-to-day operations, our ability to serve our customers could be impacted.

The spread of the COVID-19 outbreak and the governmental responses may disrupt banking and other financial activity in the areas in which we operate and could potentially create widespread business continuity issues for us.

The outbreak of COVID-19 and the US federal, state and local governmental responses may result in a disruption in the services we provide. We rely on our third-party vendors to conduct business and to process, record, and monitor transactions. If any of these vendors are unable to continue to provide us with these services or experience interruptions in their ability to provide us with these services, it could negatively impact our ability to serve our customers. Furthermore, the COVID-19 pandemic could negatively impact the ability of our employees and customers to engage in banking and other financial transactions in the geographic areas in which we operate and could create widespread business continuity issues for us. We also could be adversely affected if key personnel or a significant number of employees were to become unavailable due to infection, quarantine or other effects and restrictions of a COVID-19 outbreak in our market areas. Although we have business continuity plans and other safeguards in place, there is no assurance that such plans and safeguards will be effective. If we are unable to promptly recover from such business disruptions, our business and financial conditions and results of operations would be adversely affected. We also may incur additional costs to remedy damages caused by such disruptions, which could adversely affect our financial condition and results of operations.

Our participation in the SBA PPP loan program exposes us to risks related to noncompliance with the PPP, as well as litigation risk related to our administration of the PPP loan program, which could have a material adverse impact on our business, financial condition and results of operations.

The Company is a participating lender in the PPP, a loan program administered through the SBA, that was created to help eligible businesses, organizations and self-employed persons fund their operational costs during the COVID-19

51

pandemic. Under this program, the SBA guarantees 100% of the amounts loaned under the PPP. The PPP opened on April 3, 2020; however, because of the short window between the passing of the CARES Act and the opening of the PPP, there is some ambiguity in the laws, rules and guidance regarding the operation of the PPP, which exposes the Company to risks relating to noncompliance with the PPP. For instance, other financial institutions have experienced litigation related to their process and procedures used in processing applications for the PPP. Any financial liability, litigation costs or reputational damage caused by PPP related litigation could have a material adverse impact on our business, financial condition and results of operations. In addition, the Company may be exposed to credit risk on PPP loans if a determination is made by the SBA that there is a deficiency in the manner in which the loan was originated, funded, or serviced. If a deficiency is identified, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from the Company.

Unpredictable future developments related to or resulting from the COVID-19 pandemic could materially and adversely affect our business and results of operations.

Because there have been no comparable recent global pandemics that resulted in similar global impact, we do not yet know the full extent of the COVID-19 pandemic’s effects on our business, operations, or the global economy as a whole. Any future development will be highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the effectiveness of our work from home arrangements, third party providers’ ability to support our operation, and any actions taken by governmental authorities and other third parties in response to the pandemic. We are continuing to monitor the COVID-19 pandemic and related risks, although the rapid development and fluidity of the situation precludes any specific prediction as to its ultimate impact on us. However, if the COVID-19 outbreak continues to spread or otherwise results in a continuation or worsening of the current economic and commercial environments, our business, financial condition, results of operations and cash flows as well as our regulatory capital and liquidity ratios could be materially adversely affected and many of the risks described in our Annual Report on Form 10-K for the year ended December 31, 2019 will be heightened.

52

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4: MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5: OTHER INFORMATION

None.

53

ITEM 6: EXHIBITS

Exhibit No. Description

2.1 Agreement and Plan of Merger, among Enterprise Financial Services Corp, Enterprise Bank & Trust, Trinity Capital Corporation and Los Alamos National Bank, dated November 1, 2018 (incorporated herein by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed on November 2, 2018 (File No. 001-15373)).

3.1 Certificate of Incorporation of Registrant, (incorporated herein by reference to Exhibit 3.1 of Registrant's Registration Statement on Form S-1 filed on December 16, 1996 (File No. 333-14737)).

3.2 Amendment to the Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 4.2 to Registrant's Registration Statement on Form S-8 filed on July 1, 1999 (File No. 333-82087)).

3.3 Amendment to the Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3.1 to Registrant's Quarterly Report on Form 10-Q for the period ending September 30, 1999 (File No. 001-15373)).

3.4 Amendment to the Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 99.2 to Registrant's Current Report on Form 8-K filed on April 30, 2002 (File No. 001-15373)).

3.5 Amendment to the Certificate of Incorporation of Registrant (incorporated herein by reference to Appendix A to Registrant's Proxy Statement on Form 14-A filed on November 20, 2008 (File No. 001-15373)).

3.6 Certificate of Designations of Registrant for Fixed Rate Cumulative Perpetual Preferred Stock, Series A, dated December 17, 2008 (incorporated herein by reference to Exhibit 3.1 to Registrant's Current Report on Form 8-K filed on December 23, 2008 (File No. 001-15373)).

3.7 Amendment to the Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q for the period ending June 30, 2014 (File No. 001-15373)).

3.8 Amendment to the Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3.8 to Registrant’s Quarterly Report on Form 10-Q filed on July 26, 2019 (File No. 001-15373)).

3.9 Amended and Restated Bylaws of Registrant (incorporated herein by reference to Exhibit 3.1 to Registrant's Current Report on Form 8-K filed on June 12, 2015 (File No. 001-15373)).

4.1 Long-term borrowing instruments are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The Company undertakes to furnish copies of such instruments to the Securities and Exchange Commission upon request.

*31.1 Chief Executive Officer’s Certification required by Rule 13(a)-14(a).

*31.2 Chief Financial Officer’s Certification required by Rule 13(a)-14(a).

**32.1 Chief Executive Officer Certification pursuant to 18 U.S.C. § 1350, as adopted pursuant to section § 906 of the Sarbanes-Oxley Act of 2002.

**32.2 Chief Financial Officer Certification pursuant to 18 U.S.C. § 1350, as adopted pursuant to section § 906 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH XBRL Taxonomy Extension Schema Document.

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB XBRL Taxonomy Extension Label Linkbase Document.

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.

54

101.DEF XBRL Taxonomy Extension Definitions Linkbase Document.

104 The cover page of Enterprise Financial Services Corp’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL (contained in Exhibit 101).

* Filed herewith

** Furnished herewith. Notwithstanding any incorporation of this Quarterly Statement on Form 10-Q in any other filing by the Registrant, Exhibits furnished herewith and designated with two (**) shall not be deemed incorporated by reference to any other filing unless specifically otherwise set forth herein or therein.

55

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Clayton, State of Missouri on the day of July 24, 2020.

ENTERPRISE FINANCIAL SERVICES CORP
By:	/s/ James B. Lally
	James B. Lally
	Chief Executive Officer
By:	/s/ Keene S. Turner
	Keene S. Turner
	Chief Financial Officer

56

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, James B. Lally, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Enterprise Financial Services Corp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

By:	/s/ James B. Lally	Date:	July 24, 2020
	James B. Lally
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Keene S. Turner, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Enterprise Financial Services Corp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

By:	/s/ Keene S. Turner	Date:	July 24, 2020
	Keene S. Turner
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Enterprise Financial Services Corp (the “Company”) on Form 10-Q for the period ended June 30, 2020 as filed with the Securities and Exchange Commission (the “Report”), I, James B. Lally, Chief Executive Officer of the Company, certify to the best of my knowledge and belief, pursuant to 18 U.S.C. § 1350, as enacted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James B. Lally

James B. Lally

Chief Executive Officer

July 24, 2020

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Enterprise Financial Services Corp (the “Company”) on Form 10-Q for the period ended June 30, 2020 as filed with the Securities and Exchange Commission (the “Report”), I, Keene S. Turner, Chief Financial Officer of the Company, certify to the best of my knowledge and belief, pursuant to 18 U.S.C. § 1350, as enacted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Keene S. Turner

Keene S. Turner

Chief Financial Officer

July 24, 2020

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Jul. 22, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-15373
Entity Registrant Name	ENTERPRISE FINANCIAL SERVICES CORP
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	43-1706259
Entity Address, Address Line One	150 North Meramec
Entity Address, City or Town	Clayton
Entity Address, State or Province	MO
Entity Address, Postal Zip Code	63105
City Area Code	314
Local Phone Number	725-5500
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	EFSC
Security Exchange Name	NASDAQ
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		26,206,044
Entity Central Index Key	0001025835
Document Period End Date	Jun. 30, 2020
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets
Cash and due from banks	$ 100,804	$ 74,769
Federal funds sold	2,381	3,060
Interest-earning deposits (including $47,085 and $15,285 pledged as collateral, respectively)	245,542	89,427
Total cash and cash equivalents	348,727	167,256
Interest-earning deposits greater than 90 days	6,907	3,730
Securities available-for-sale	998,104	1,135,317
Debt Securities, Held-To-Maturity, Net Of Allowance For Credit Losses	345,791	181,166
Trade and Loans Receivables Held-for-sale, Net, Not Part of Disposal Group	16,029	5,570
Loans	6,140,051	5,314,337
Less: Allowance for credit losses on loans	110,270	43,288
Total loans, net	6,029,781	5,271,049
Other investments	43,106	38,044
Fixed assets, net	58,231	60,013
Goodwill	210,344	210,344
Intangible assets, net	23,196	26,076
Other assets	277,285	235,226
Total assets	8,357,501	7,333,791
Liabilities and Shareholders' Equity
Noninterest-bearing deposit accounts	1,965,868	1,327,348
Interest-bearing transaction accounts	1,508,535	1,367,444
Money market accounts	1,962,916	1,713,615
Savings accounts	603,095	536,169
Certificates of deposit:
Brokered	85,414	215,758
Other	573,752	610,689
Total deposits	6,699,580	5,771,023
Subordinated debentures and notes	203,384	141,258
FHLB advances	250,000	222,406
Other borrowings	196,532	230,886
Notes payable	31,429	34,286
Other liabilities	108,613	66,747
Total liabilities	7,489,538	6,466,606
Shareholders' equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 0 shares issued and outstanding	0	0
Common stock, $0.01 par value; 45,000,000 shares authorized; 28,176,087 and 28,067,087 shares issued, respectively	281	281
Treasury stock, at cost; 1,980,093 and 1,523,842 shares, respectively	(73,528)	(58,181)
Additional paid in capital	527,734	526,599
Retained earnings	380,667	380,737
Accumulated other comprehensive income	32,809	17,749
Total shareholders' equity	867,963	867,185
Total liabilities and shareholders' equity	$ 8,357,501	$ 7,333,791

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets
Collateral pledged	$ 47,085	$ 15,285
Shareholders' equity:
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	45,000,000	45,000,000
Common stock, shares issued	28,176,087	28,067,087
Treasury stock, shares	1,980,093	1,523,842

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest income:
Interest and fees on loans	$ 64,478	$ 69,628	$ 131,647	$ 130,653
Interest on debt securities:
Taxable	6,587	7,757	14,144	13,232
Nontaxable	1,812	861	3,301	1,308
Interest on interest-earning deposits	87	703	387	1,150
Dividends on equity securities	227	252	400	475
Total interest income	73,191	79,201	149,879	146,818
Interest expense:
Interest Expense, Deposits	4,383	13,119	14,271	24,939
Subordinated debentures and notes	2,316	1,958	4,235	3,606
FHLB advances	455	1,696	1,350	3,094
Notes payable and other borrowings	204	713	822	1,121
Total interest expense	7,358	17,486	20,678	32,760
Net interest income	65,833	61,715	129,201	114,058
Provision for credit losses	19,591	1,722	41,855	3,198
Net interest income after provision for credit losses	46,242	59,993	87,346	110,860
Noninterest income:
Total noninterest income	9,960	11,964	23,368	21,194
Noninterest expense:
Employee compensation and benefits	22,389	20,687	44,074	40,039
Occupancy	3,185	3,188	6,532	5,825
Data processing	2,144	2,458	4,226	4,364
Professional fees	1,287	1,037	2,149	1,783
Merger-related expenses	0	10,306	0	17,576
Other	8,907	11,378	19,604	19,305
Total noninterest expense	37,912	49,054	76,585	88,892
Income before income tax expense	18,290	22,903	34,129	43,162
Income tax expense	3,656	4,479	6,627	8,582
Net income	$ 14,634	$ 18,424	$ 27,502	$ 34,580
Earnings per common share
Basic (usd per share)	$ 0.56	$ 0.69	$ 1.04	$ 1.36
Diluted (usd per share)	$ 0.56	$ 0.68	$ 1.04	$ 1.36
Deposit Account [Member]
Noninterest income:
Total noninterest income	$ 2,616	$ 3,366	$ 5,759	$ 6,301
Fiduciary and Trust [Member]
Noninterest income:
Total noninterest income	2,326	2,661	4,827	4,653
Card Services Revenue [Member]
Noninterest income:
Total noninterest income	2,225	2,461	4,472	4,251
Tax credit activity, net [Member]
Noninterest income:
Total noninterest income	(221)	572	1,815	730
Financial Service, Other [Member]
Noninterest income:
Total noninterest income	$ 3,014	$ 2,904	$ 6,495	$ 5,259

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement of Comprehensive Income [Abstract]
Net income	$ 14,634	$ 18,424	$ 27,502	$ 34,580
Other comprehensive income (loss), after-tax:
Change in unrealized gain on available-for-sale debt securities	10,984	12,842	21,548	24,344
Reclassification adjustment for realized (gain) loss on sale of available-for-sale debt securities	0	0	(3)	220
Reclassification of (gain) loss on held-to-maturity securities	(329)	3	(485)	5
Change in unrealized loss on cash flow hedges arising during the period	(1,177)	(1,265)	(6,357)	(2,217)
Reclassification of loss on cash flow hedges	234	4	357	4
Total other comprehensive income, after-tax	9,712	11,584	15,060	22,356
Comprehensive income	$ 24,346	$ 30,008	$ 42,562	$ 56,936

XML

Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance at Dec. 31, 2018	$ 603,804	$ 239	$ (42,655)	$ 350,936	$ 304,566	$ (9,282)
Net income	34,580	0	0	0	34,580	0
Other comprehensive income	22,356	0	0	0	0	22,356
Comprehensive income	56,936	0	0	0	34,580	22,356
Cash dividends paid on common shares	(7,798)	0	0	0	(7,798)	0
Issuance under equity compensation plans, net	(1,233)	1	0	(1,234)	0	0
Share-based Payment Arrangement, Noncash Expense	1,907	0	0	1,907	0	0
Shares issued in connection with acquisition	171,885	40	0	171,845	0	0
Ending balance at Jun. 30, 2019	825,501	280	(42,655)	523,454	331,348	13,074
Beginning balance at Mar. 31, 2019	797,835	280	(42,655)	521,761	316,959	1,490
Net income	18,424	0	0	0	18,424	0
Other comprehensive income	11,584	0	0	0	0	11,584
Comprehensive income	30,008	0	0	0	18,424	11,584
Cash dividends paid on common shares	(4,035)	0	0	0	4,035	0
Issuance under equity compensation plans, net	707	0	0	707	0	0
Share-based Payment Arrangement, Noncash Expense	986	0	0	986	0	0
Ending balance at Jun. 30, 2019	825,501	280	(42,655)	523,454	331,348	13,074
Beginning balance at Dec. 31, 2019	867,185	281	(58,181)	526,599	380,737	17,749
Net income	27,502	0	0	0	27,502	0
Other comprehensive income	15,060	0	0	0	0	15,060
Comprehensive income	42,562	0	0	0	27,502	15,060
Cash dividends paid on common shares	(9,458)	0	0	0	(9,458)	0
Repurchase of common stock	(15,347)	0	(15,347)	0	0	0
Issuance under equity compensation plans, net	(894)	0	0	(894)	0	0
Share-based Payment Arrangement, Noncash Expense	2,029	0	0	2,029	0	0
Reclassification for the adoption of new accounting standards	(18,114)	0	0	0	(18,114)	0
Ending balance at Jun. 30, 2020	867,963	281	(73,528)	527,734	380,667	32,809
Beginning balance at Mar. 31, 2020	846,436	281	(73,528)	525,838	370,748	23,097
Net income	14,634	0	0	0	14,634	0
Other comprehensive income	9,712	0	0	0	0	9,712
Comprehensive income	24,346	0	0	0	14,634	9,712
Cash dividends paid on common shares	(4,715)	0	0	0	(4,715)	0
Issuance under equity compensation plans, net	827	0	0	827	0	0
Share-based Payment Arrangement, Noncash Expense	1,069	0	0	1,069	0	0
Ending balance at Jun. 30, 2020	$ 867,963	$ 281	$ (73,528)	$ 527,734	$ 380,667	$ 32,809

XML

Condensed Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash dividends paid on common shares, per share	$ 0.36	$ 0.29
Issuance under equity compensation plans, shares	109,000	103,430

XML

Condensed Consolidated Statements of Cash Flows $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)
Cash flows from operating activities:
Net income	$ 27,502	$ 34,580
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	3,048	2,743
Provision for credit losses	41,855	3,198
Deferred income taxes	(4,937)	3,813
Net amortization of debt securities	2,756	1,189
Amortization of intangible assets	2,880	2,418
Gain on sale of investment securities	(4)	292
Mortgage loans originated-for-sale	(94,536)	(11,645)
Proceeds from mortgage loans sold	84,799	10,629
Sale of other real estate	5	(48)
Sale of state tax credits	(211)	(107)
Share-based Payment Arrangement, Noncash Expense	2,029	1,907
Net accretion of loan discount	(4,049)	(4,702)
Changes in other assets and liabilities, net
Increase (Decrease) in Other Operating Assets and Liabilities, Net	(2,277)	(23,700)
Net cash provided by operating activities	58,860	20,567
Cash flows from investing activities:
Payments for Previous Acquisition	0	(23,377)
Net increase in loans	(815,437)	(121,115)
Sale of debt securities, available-for-sale	207	263,298
Paydown or maturity of debt securities, available-for-sale	140,218	58,229
Paydown or maturity of debt securities, held-to-maturity	8,711	2,864
Redemption of other investments	25,978	31,138
Sale of state tax credits held for sale	1,924	2,252
Sale of other real estate	609	2,281
Proceeds from Life Insurance Policy	974	0
Payments for the purchase of:
Available-for-sale debt securities	(152,082)	(363,900)
Other investments	(38,527)	(43,589)
State tax credits held for sale	(3,730)	(1,852)
Fixed assets, net	(1,532)	(2,236)
Net cash used in investing activities	(832,687)	(196,007)
Cash flows from financing activities:
Net increase (decrease) in noninterest-bearing deposit accounts	638,520	(88,219)
Net increase (decrease) in interest-bearing deposit accounts	290,036	(21,615)
Proceeds from FHLB advances, net	27,700	312,500
Proceeds from Issuance of Long-term Debt	0	40,000
Repayments of Long-term Debt	(2,857)	(4,857)
Proceeds from Issuance of Subordinated Long-term Debt	61,953	0
Net decrease in other borrowings	(34,355)	(60,490)
Cash dividends paid on common stock	(9,458)	(7,798)
Payments for Repurchase of Common Stock	(15,347)	0
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture	(894)	(1,233)
Net cash provided by financing activities	955,298	168,288
Net increase (decrease) in cash and cash equivalents	181,471	(7,152)
Cash and cash equivalents, beginning of period	167,256	196,552
Cash and cash equivalents, end of period	348,727	189,400
Noncash transactions:
Cash paid during the period for interest	20,574	32,036
Income Taxes Paid, Net	30	11,915
Transfer to other real estate owned in settlement of loans	0	7,783
Sales of other real estate financed	48	0
Right-of-use assets obtained in exchange for lease obligations	$ 200	$ 0
Common shares issued related to acquisition	0	171,885
Transfer to Investments	$ 163,592	$ 0

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used by Enterprise Financial Services Corp (the “Company,” “EFSC,” or “Enterprise”) in the preparation of the condensed consolidated financial statements are summarized below:

Business and Consolidation

Enterprise is a financial holding company that provides a full range of banking and wealth management services to individuals and corporate customers located in the Arizona, Kansas, Missouri, and New Mexico markets through its banking subsidiary, Enterprise Bank & Trust.

Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2020. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC.

Basis of Financial Statement Presentation

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All intercompany accounts and transactions have been eliminated.

In the opinion of management, the consolidated financial statements contain all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of the statements of financial position, results of operations, and cash flow for the interim periods.

Recently Adopted Accounting Pronouncements

On January 1, 2020, the Company adopted ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with an expected loss methodology commonly referred to as the CECL methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures such as loan commitments, standby letters of credit, financial guarantees, and other similar instruments. In addition, this standard made changes to the accounting for available-for-sale debt securities, including the requirement for credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities.

The Company adopted this standard using the modified retrospective method for all financial assets measured at amortized cost, and off-balance-sheet credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under the new standard while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company recorded an after-tax decrease to retained earnings of $18.1 million as of January 1, 2020 for the cumulative effect of adopting this standard.

The Company adopted this standard using the prospective transition approach for PCD assets that were previously classified as PCI assets. Management did not reassess whether PCI assets met the criteria of PCD assets as of the date of the adoption.

The Company elected not to maintain PCI pools for certain loans which are now accounted for individually. Thus they are now included in nonperforming and classified loans. Management did not reassess whether modifications to individual acquired financial assets accounted for in pools were troubled debt restructurings as of the date of adoption.

The following table illustrates the impact of adoption:

($ in thousands)	December 31, 2019		Impact of Adoption			January 1, 2020
Assets:
Loans	$	5,314,337	$	7,091		$	5,321,428
Allowance for credit losses on loans	43,288		28,387			71,675
Allowance for credit losses on held-to-maturity debt securities	—		303			303
Deferred tax asset	14,851		5,898			20,749
Liabilities:
Reserve for unfunded commitments	430		2,413			2,843
Shareholders’ Equity
Retained Earnings	380,737		(18,114		)	362,623

The Company also adopted ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” on January 1, 2020. The Company previously selected the option to adopt the removal or modification of disclosures during the second quarter of 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are applied prospectively for only the most recent interim or annual period presented. All other amendments are applied retrospectively to all periods presented upon their effective date. The adoption of this update did not have a material effect on the Company's consolidated financial statements.

Accounting Standards Issued but not yet Adopted

FASB ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” In March 2020, the FASB issued “Reference Rate Reform (Topic 848)” which provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The guidance is effective for contract modifications as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the optional expedients and exceptions and has not yet determined the impact this standard may have on its consolidated financial statements.

Loans

The Company has elected to present the accrued interest receivable balance separate from amortized cost basis, to exclude accrued interest receivable balances from the tabular disclosures, and not to estimate an ACL on accrued interest receivable as these amounts are timely written off as a credit loss expense.

Accrued interest receivable totaled $19.7 million at June 30, 2020 and was reported in Other Assets on the consolidated balance sheets.

PCD Loans

The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An ACL is determined using the same methodology as other loans held for investment. The initial ACL determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and ACL becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the ACL are recorded through provision expense.

Allowance for Credit Losses on Loans

The ACLL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected. Loans are charged-off against the allowance when management believes the uncollectibility of a loan balance is confirmed.

Management estimates the allowance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors.

The ACLL is measured on a collective basis when similar risk characteristics exist. The Company has identified the following portfolio segments:

C&I – C&I loans consist of loans to small and medium-sized businesses in a wide variety of industries. These loans are generally collateralized by inventory, accounts receivable, equipment, real estate and other commercial assets, and may be supported by other credit enhancements such as personal guarantees. Risk arises primarily due to a difference between expected and actual cash flows of the borrower. However, the recoverability of these loans is also dependent on other factors primarily dictated by the type of collateral securing these loans. The fair value of the collateral securing these loans may fluctuate as market conditions change. Included within C&I are revolving loans supported by borrowing bases that fluctuate depending on the amount of underlying collateral. A portion of C&I loans consists of enterprise value lending, which are loans with senior debt exposure to private equity backed companies.

CRE – CRE loans include various types of loans for which the Company holds real property as collateral. Commercial real estate lending activity is typically restricted to owner-occupied properties or to investor properties that are owned by customers with a current banking relationship. The primary risks of CRE loans include the borrower’s inability to pay, material decreases in the value of the real estate being held as collateral and significant increases in interest rates, which may make the real estate mortgage loan unprofitable. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy.

Construction and Land Development – The Company originates loans to finance construction projects including one- to four-family residences, multifamily residences, commercial office, and industrial projects. Construction loans are generally collateralized by first liens on the real estate and have floating interest rates. Construction loans are considered to have higher risks due to construction completion and timing risk, and the ultimate repayment being sensitive to interest rate changes, governmental regulation of real property and the availability of long-term financing. Additionally, economic conditions may impact the Company’s ability to recover its investment in construction loans. Adverse economic conditions may negatively impact the real estate market which could affect the borrowers’ ability to complete and sell the project. Additionally, the fair value of the underlying collateral may fluctuate as market conditions change.

Residential Real Estate – The Company originates loans to finance one- to four-family residences, secured by both first and second liens. Repayment of these loans is dependent on the borrowers’ ability to pay and the fair value of the underlying collateral. Residential loans with a second lien are inherently riskier due to the junior lien position.

Agricultural – Agricultural loans are generally secured with equipment, cattle, crops or other non-real property and at times the underlying real property. Agricultural loans are primarily included as a component of CRE and C&I loans.

Consumer – The Company provides a broad range of consumer loans to customers, including personal lines of credit, credit cards and automobile loans. Repayment of these loans is dependent on the borrowers’ ability to pay and the fair value of the underlying collateral. Consumer loans are included as a component of Other loans.

The Company utilizes a DCF method to measure the ACL on loans collectively evaluated that are sub-segmented by credit risk levels. The DCF method incorporates assumptions for probability of default, loss given default, prepayments and curtailments over the contractual term of the loans. In determining the probability of default, the Company utilized a regression analysis to determine certain economic factors that are relevant loss drivers in the portfolio segments based on historical or peer evaluations. National unemployment is a loss driver used in nearly all portfolios, except Consumer. The annual percentage change in gross domestic product is also used in C&I, Construction, Agricultural and Consumer portfolios. The annual percentage change in a commercial real estate index, national house price index and the consumer price index are used in the CRE, Residential Real Estate and Consumer portfolios, respectively. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

The Company uses a one-year reasonable and supportable forecast that considers baseline, upside and downside economic scenarios. For periods beyond the forecast period, the Company reverts to historical loss rates on a straight-line basis over a six-month period.

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

XML

Earnings Per Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

Basic earnings per common share data is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Common shares outstanding include common stock and restricted stock awards where recipients have satisfied the vesting terms. Diluted earnings per common share gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method.

The following table presents a summary of per common share data and amounts for the periods indicated.

	Three months ended June 30,				Six months ended June 30,
(in thousands, except per share data)	2020		2019		2020		2019
Net income as reported	$	14,634	$	18,424	$	27,502	$	34,580
Weighted average common shares outstanding	26,180		26,887		26,325		25,415
Additional dilutive common stock equivalents	15		53		29		73
Weighted average diluted common shares outstanding	26,195		26,940		26,354		25,488
Basic earnings per common share:	$	0.56	$	0.69	$	1.04	$	1.36
Diluted earnings per common share:	0.56		0.68		$	1.04	$	1.36

For the three and six months ended June 30, 2020 common stock equivalents of approximately 157,000 and 147,000, respectively, were excluded from the earnings per share calculations because their effect would have been anti-dilutive. Comparatively, there were 130,000 and 99,000 common stock equivalents excluded in the prior year periods, respectively.

XML

Investments

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Investments

INVESTMENTS

The following table presents the amortized cost, gross unrealized gains and losses, allowance of credit losses and fair value of securities available for sale and held to maturity:

 

	June 30, 2020
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
Available-for-sale securities:
Obligations of U.S. Government-sponsored enterprises	$	9,966	$	275	$	—		$	—		$	10,241
Obligations of states and political subdivisions	245,961		8,450		(133		)	—			254,278
Agency mortgage-backed securities	693,082		27,915		(6		)	—			720,991
U.S. Treasury bills	9,975		591		—			—			10,566
Corporate debt securities	2,000		28		—			—			2,028
Total securities available for sale	$	960,984	$	37,259	$	(139	)	$	—		$	998,104
Held-to-maturity securities:
Obligations of states and political subdivisions	$	96,547	$	336	$	(122	)	$	(16	)	$	96,745
Agency mortgage-backed securities	127,353		2,469		(28		)	—			129,794
Corporate debt securities	122,536		7,693		—			(629		)	129,600
Total securities held-to-maturity	$	346,436	$	10,498	$	(150	)	$	(645	)	$	356,139
Less: Allowance for credit losses	645
Total securities held-to-maturity, net	$	345,791

	December 31, 2019
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Obligations of U.S. Government-sponsored enterprises	$	9,954	$	92	$	—		$	10,046
Obligations of states and political subdivisions	207,269		6,118		(363		)	213,024
Agency mortgage-backed securities	888,129		15,083		(1,191		)	902,021
U.S. Treasury Bills	9,971		255		—			10,226
Total securities available for sale	$	1,115,323	$	21,548	$	(1,554	)	$	1,135,317
Held-to-maturity securities:
Obligations of states and political subdivisions	$	11,704	$	170	$	—		$	11,874
Agency mortgage-backed securities	46,346		675		—			47,021
Corporate debt securities	123,116		128		(200		)	123,044
Total securities held to maturity	$	181,166	$	973	$	(200	)	$	181,939

During the second quarter of 2020, the Company transferred municipal securities and agency mortgage-backed securities with a book value of $163.6 million and fair value of $175.1 million from available-for-sale to held-to-maturity. The Company believes the held- to-maturity category is more consistent with the Company’s intent for these securities. The transfer of securities was made at fair value at the time of transfer. The unamortized portion of the $11.5 million unrealized holding gain at the time of transfer is retained in accumulated other comprehensive income and in the carrying value of held-to-maturity securities. Such amounts are amortized over the remaining life of the securities.

At June 30, 2020 and December 31, 2019, there were no holdings of securities of any one issuer in an amount greater than 10% of shareholders’ equity, other than U.S. Government agencies and sponsored enterprises. The agency mortgage-backed securities are all issued by U.S. Government agencies and sponsored enterprises. Securities having a fair value of $449.9 million and $484.8 million at June 30, 2020 and December 31, 2019, respectively, were pledged as collateral to secure deposits of public institutions and for other purposes as required by law or contract provisions.

The amortized cost and estimated fair value of debt securities at June 30, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The weighted average life of the mortgage-backed securities is approximately 3 years.

	Available for sale				Held to maturity
(in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	2,313	$	2,345	$	—	$	—
Due after one year through five years	25,981		27,058		10,207		10,597
Due after five years through ten years	9,455		9,915		126,285		133,206
Due after ten years	230,153		237,795		82,591		82,542
Agency mortgage-backed securities	693,082		720,991		127,353		129,794
	$	960,984	$	998,104	$	346,436	$	356,139

The following table represents a summary of available-for-sale investment securities that had an unrealized loss:

	June 30, 2020
	Less than 12 months				12 months or more				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of states and political subdivisions	$	33,821	$	133	$	—	$	—	$	33,821	$	133
Agency mortgage-backed securities	8,366		5		66		1		8,432		6
	$	42,187	$	138	$	66	$	1	$	42,253	$	139
The following table represents a summary of investment securities that had an unrealized loss:
	December 31, 2019
	Less than 12 months				12 months or more				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of states and political subdivisions	56,327		363		—		—		56,327		363
Agency mortgage-backed securities	131,693		756		41,491		435		173,184		1,191
Corporate debt securities	67,964		200		—		—		67,964		200
	$	255,984	$	1,319	$	41,491	$	435	$	297,475	$	1,754

The unrealized losses at both June 30, 2020 and December 31, 2019, were primarily attributable to changes in market interest rates since the securities were purchased. Management systematically evaluates investment securities for other-than-temporary declines in fair value on a quarterly basis. This analysis requires management to consider various factors, which include among other considerations (1) the present value of the cash flows expected to be collected compared to the amortized cost of the security, (2) duration and magnitude of the decline in value, (3) the financial condition of the issuer or issuers, (4) structure of the security, and (5) the intent to sell the security or whether it is more likely than not the Company would be required to sell the security before its anticipated recovery in market value. At June 30, 2020, management performed its quarterly analysis of all securities with an unrealized loss and concluded

no individual securities were other-than-temporarily impaired. Accrued interest receivable on available-for-sale debt securities totaled $3.6 million at June 30, 2020 and is excluded from the estimate of credit losses.

Accrued interest receivable on held-to-maturity debt securities totaled $2.3 million at June 30, 2020 and is excluded from the estimate of expected credit losses. The estimate of expected credit losses considers historical credit loss information adjusted for current conditions and reasonable and supportable forecasts. At June 30, 2020, the ACL on held-to-maturity securities was $0.6 million.

XML

Loans

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Portfolio Loans

LOANS

Below is a summary of loans by category at June 30, 2020 and December 31, 2019:

(in thousands)	June 30, 2020			December 31, 2019
Commercial and industrial	$	3,165,611		$	2,361,157
Real estate:
Commercial - investor owned	1,309,895			1,299,884
Commercial - owner occupied	738,549			697,437
Construction and land development	481,221			457,273
Residential	326,992			366,261
Total real estate loans	2,856,657			2,820,855
Other	142,224			134,941
Loans, before unearned loan fees	6,164,492			5,316,953
Unearned loan fees, net	(24,441		)	(2,616		)
Loans, including unearned loan fees	$	6,140,051		$	5,314,337

PPP loans totaled $830.2 million at June 30, 2020, or $807.8 million net of unearned fees of $22.4 million. The loan balance at June 30, 2020 also includes a discount on acquired loans of $22.2 million. At June 30, 2020 loans of $2.4 billion were pledged to FHLB and the Federal Reserve Bank.

A summary of the activity in the ACLL by category for the three and six months ended June 30, 2020 is as follows:

(in thousands)	Commercial and industrial			CRE - investor owned			CRE - owner occupied		Construction and land development		Residential real estate			Other			Total
Allowance for credit losses on loans:
Balance at March 31, 2020	$	45,981		$	19,892		$	9,477	$	9,895	$	5,395		$	1,547		$	92,187
Provision for credit losses	7,168			2,599			1,600		6,038		744			242			18,391
Charge-offs	(3,303		)	(224		)	—		—		(32		)	(105		)	(3,664		)
Recoveries	293			2,752			11		29		226			45			3,356
Balance at June 30, 2020	$	50,139		$	25,019		$	11,088	$	15,962	$	6,333		$	1,729		$	110,270

(in thousands)	Commercial and industrial			CRE - investor owned			CRE - owner occupied			Construction and land development			Residential real estate			Other			Total
Allowance for credit losses on loans:
Balance at December 31, 2019	$	27,455		$	5,935		$	4,873		$	2,611		$	1,280		$	1,134		$	43,288
CECL adoption	6,494			10,726			2,598			5,183			3,470			(84		)	28,387
PCD loans immediately charged off	—			(5		)	(57		)	(217		)	(1,401		)	—			(1,680		)
Balance at January 1, 2020	$	33,949		$	16,656		$	7,414		$	7,577		$	3,349		$	1,050		$	69,995
Provision for credit losses	18,759			5,823			3,594			8,347			2,755			808			40,086
Charge-offs	(3,366		)	(226		)	—			(31		)	(154		)	(191		)	(3,968		)
Recoveries	797			2,766			80			69			383			62			4,157
Balance at June 30, 2020	$	50,139		$	25,019		$	11,088		$	15,962		$	6,333		$	1,729		$	110,270

Reserves on enterprise value lending and agricultural lending, which are included in the categories above, represented $15.8 million and $2.4 million, respectively.

On January 1, 2020, the Company adopted the CECL methodology which added $28.4 million to the ACLL. Upon adoption, $1.7 million of nonaccrual PCD loans that were less than $100,000 were immediately charged-off. Under the CECL method, the Company recorded a $18.4 million and $40.1 million provision for credit losses on loans in the three and six months ended June 30, 2020, respectively, compared to a $1.7 million and $3.2 million provision for loan losses in the prior year periods, respectively, under the incurred loss method. The increase in the provision for credit losses on loans is primarily due to the Company’s forecast of macroeconomic factors over the next 12 months, which significantly deteriorated in the first quarter 2020 due to the COVID-19 pandemic. The forecast continued to worsen in the second quarter of 2020.

The CECL methodology incorporates various economic scenarios. The Company utilizes three forecasts in the model, a Moody’s baseline, a stronger near-term growth and a moderate recession forecast. The Company weights these scenarios at 80%, 10%, and 10%, respectively. These forecasts incorporate an accommodative monetary policy and the current and anticipated impact of government stimulus. Accordingly, the CECL model has not been adjusted for negative qualitative factors, such as the potential loss mitigation of loan deferrals and the PPP. Some of the key risks to the forecasts that could result in future provision for credit losses are additional shutdowns and self-quarantines if a second wave of COVID hits, small-business bankruptcies occur at higher levels or unemployment increases. The 80/10/10 weighting adds approximately $1.0 million to the ACL.

The recorded investment in nonperforming loans by category at June 30, 2020 and December 31, 2019, is as follows: 

	June 30, 2020
(in thousands)	Nonaccrual		Restructured, accruing		Loans over 90 days past due and still accruing interest		Total nonperforming loans		Nonaccrual loans with no allowance
Commercial and industrial	$	27,431	$	3,642	$	865	$	31,938	$	20,553
Real estate:
Commercial - investor owned	2,389		—		—		2,389		1,677
Commercial - owner occupied	2,400		—		—		2,400		1,403
Construction and land development	207		—		—		207		207
Residential	4,421		78		—		4,499		3,444
Other	19		—		21		40		—
Total	$	36,867	$	3,720	$	886	$	41,473	$	27,284

There was no interest income recognized on nonaccrual loans during the six months ended June 30, 2020.

	December 31, 2019
(in thousands)	Nonaccrual		Restructured, accruing		Loans over 90 days past due and still accruing interest		Total nonperforming loans
Commercial and industrial	$	22,328	$	—	$	250	$	22,578
Real estate:
Commercial - investor owned	2,303		—		—		2,303
Commercial - owner occupied	213		—		—		213
Residential	1,251		79		—		1,330
Other	1		—		—		1
Total	$	26,096	$	79	$	250	$	26,425

The following table presents the amortized cost basis of collateral-dependent nonperforming loans by class of loan at June 30, 2020:

	Type of Collateral
(in thousands)	Commercial Real Estate		Residential Real Estate		Blanket Lien
Commercial and industrial	$	13,124	$	—	$	4,872
Real estate:
Commercial - investor owned	2,389		—		—
Commercial - owner occupied	1,811		—		—
Construction and land development	—		207		—
Residential	—		4,271		—
Total	$	17,324	$	4,478	$	4,872

There were no troubled debt restructurings that occurred during the three months ended June 30, 2020. The recorded investment by category for troubled debt restructurings that occurred during the six months ended June 30, 2020 and the three and six months ended June 30, 2019 are as follows:

	June 30, 2020					June 30, 2019
(in thousands, except for number of loans)	Number of loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance		Number of loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Commercial and industrial	1	$	3,731	$	3,731	—	$	—	$	—
Real estate:
Commercial - owner occupied	—	—		—		1	188		188
Residential	2	155		155		2	332		332
Total	3	$	3,886	$	3,886	3	$	520	$	520

There were no troubled debt restructured loans that subsequently defaulted during the three or six months ended June 30, 2020 or 2019.

In response to the COVID-19 pandemic, the Company has implemented short-term deferral programs allowing customers to primarily defer payments for up to 90 days. Deferrals under the CARES Act or interagency guidance are not included above as troubled debt restructurings. As of June 30, 2020, $685.7 million in loans have participated in the programs, including $361.4 million in loans deferring full principal and interest payments and $324.3 million in

loans deferring principal only. Interest of $4.0 million has been deferred and will be collected upon final maturity. The Company has moved all loans that have requested deferrals to a level six risk rating for additional monitoring.

The aging of the recorded investment in past due loans by class at June 30, 2020 is shown below.

	June 30, 2020
(in thousands)	30-89 Days  Past Due		90 or More Days Past Due		Total Past Due		Current		Total
Commercial and industrial	$	6,684	$	22,623	$	29,307	$	3,113,890	$	3,143,197
Real estate:
Commercial - investor owned	116		2,095		2,211		1,307,684		1,309,895
Commercial - owner occupied	2,723		1,208		3,931		734,618		738,549
Construction and land development	58		—		58		481,163		481,221
Residential	951		1,738		2,689		324,303		326,992
Other	100		21		121		140,076		140,197
Total	$	10,632	$	27,685	$	38,317	$	6,101,734	$	6,140,051

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, payment experience, credit documentation, and current economic factors among other factors. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

• Grades 1, 2, and 3 – Includes loans to borrowers with a continuous record of strong earnings, sound balance sheet condition and capitalization, ample liquidity with solid cash flow, and whose management team has experience and depth within their industry.

• Grade 4 – Includes loans to borrowers with positive trends in profitability, satisfactory capitalization and balance sheet condition, and sufficient liquidity and cash flow.

• Grade 5 – Includes loans to borrowers that may display fluctuating trends in sales, profitability, capitalization, liquidity, and cash flow.

• Grade 6 – Includes loans to borrowers where an adverse change or perceived weakness has occurred, but may be correctable in the near future. Alternatively, this rating category may also include circumstances where the borrower is starting to reverse a negative trend or condition, or has recently been upgraded from a 7, 8, or 9 rating.

• Grade 7 – Watch credits are borrowers that have experienced financial setback of a nature that is not determined to be severe or influence ‘ongoing concern’ expectations. Although possible, no loss is anticipated at this time, due to strong collateral and/or guarantor support.

• Grade 8 – Substandard credits include those borrowers characterized by significant losses and sustained downward trends in balance sheet condition, liquidity, and cash flow. Repayment reliance may have shifted to secondary sources. Collateral exposure may exist and additional reserves may be warranted.

• Grade 9 – Doubtful credits include borrowers that may show deteriorating trends that are unlikely to be corrected. Collateral values may appear insufficient for full recovery, therefore requiring a partial charge-off, or debt renegotiation with the borrower. The borrower may have declared bankruptcy or bankruptcy is likely in the near term. All doubtful rated credits will be on nonaccrual.

The recorded investment by risk category of the loans by class at June 30, 2020, which is based upon the most recent analysis performed is as follows:

	Term Loans by Origination Year
(in thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Converted to Term Loans		Revolving Loans		Total
Commercial and industrial
Pass (1-6)	$	1,239,062	$	535,477	$	318,046	$	180,269	$	47,210	$	85,529	$	14,954	$	510,168	$	2,930,715
Watch (7)	26,347		13,354		4,850		6,468		24,044		175		—		62,293		137,531
Classified (8-9)	3,775		15,068		8,155		3,950		5,093		3,673		295		23,222		63,231
Total Commercial and industrial	$	1,269,184	$	563,899	$	331,051	$	190,687	$	76,347	$	89,377	$	15,249	$	595,683	$	3,131,477
Commercial real estate-investor owned
Pass (1-6)	$	246,319	$	321,849	$	204,242	$	126,567	$	153,904	$	181,761	$	3,284	$	35,460	$	1,273,386
Watch (7)	5,136		4,220		1,192		369		12,681		1,275		—		—		24,873
Classified (8-9)	—		966		8,286		455		249		1,680		—		—		11,636
Total Commercial real estate-investor owned	$	251,455	$	327,035	$	213,720	$	127,391	$	166,834	$	184,716	$	3,284	$	35,460	$	1,309,895
Commercial real estate-owner occupied
Pass (1-6)	$	147,313	$	200,519	$	92,624	$	79,058	$	44,990	$	80,172	$	2,756	$	42,883	$	690,315
Watch (7)	9,473		1,963		261		9,729		8,533		5,074		—		2,500		37,533
Classified (8-9)	601		1,156		4,267		458		—		4,219		—		—		10,701
Total Commercial real estate-owner occupied	$	157,387	$	203,638	$	97,152	$	89,245	$	53,523	$	89,465	$	2,756	$	45,383	$	738,549
Construction real estate
Pass (1-6)	$	75,983	$	167,936	$	121,909	$	37,555	$	28,060	$	12,906	$	—	$	20,631	$	464,980
Watch (7)	2,408		722		1,254		11,047		—		546		—		—		15,977
Classified (8-9)	—		227		—		—		—		37		—		—		264
Total Construction real estate	$	78,391	$	168,885	$	123,163	$	48,602	$	28,060	$	13,489	$	—	$	20,631	$	481,221
Residential real estate
Pass (1-6)	$	26,448	$	33,085	$	22,074	$	19,931	$	34,427	$	115,036	$	591	$	63,505	$	315,097
Watch (7)	181		895		842		—		—		2,027		279		802		5,026
Classified (8-9)	184		1,265		758		13		213		3,445		—		50		5,928
Total residential real estate	$	26,813	$	35,245	$	23,674	$	19,944	$	34,640	$	120,508	$	870	$	64,357	$	326,051
Other
Pass (1-6)	$	8,758	$	25,567	$	20,615	$	682	$	3,705	$	34,455	$	—	$	43,971	$	137,753
Watch (7)	—		2		—		—		—		—		—		1		3
Classified (8-9)	—		1		3		4		—		19		10		7		44
Total Other	$	8,758	$	25,570	$	20,618	$	686	$	3,705	$	34,474	$	10	$	43,979	$	137,800

In the table above, loan originations in 2020 and 2019 with a classification of watch or classified primarily represent renewals or modifications initially underwritten and originated in prior years.

For certain loans, primarily credit cards, the Company evaluates credit quality based on the aging status.

The following table presents the recorded investment on loans based on payment activity:

	June 30, 2020
(in thousands)	Performing		Non Performing		Total
Commercial and industrial	$	11,682	$	38	$	11,720
Real estate:
Residential	941		—		941
Other	2,376		21		2,397
Total	$	14,999	$	59	$	15,058

The recorded investment by risk category of loans by class at December 31, 2019, was as follows:

	December 31, 2019
(in thousands)	Pass (1-6)		Watch (7)		Classified (8 & 9)		Total*
Commercial and industrial	$	2,151,084	$	124,718	$	70,021	$	2,345,823
Real estate:
Commercial - investor owned	1,242,569		17,572		2,840		1,262,981
Commercial - owner occupied	643,276		28,773		6,473		678,522
Construction and land development	437,134		12,140		106		449,380
Residential	348,246		4,450		2,496		355,192
Other	132,096		3		51		132,150
Total	$	4,954,405	$	187,656	$	81,987	$	5,224,048

*Excludes $90.3 million of loans accounted for as PCI

XML

Commitments

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments

COMMITMENTS AND CONTINGENCIES

The Company issues financial instruments with off balance sheet risk in the normal course of the business of meeting the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments may involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

The Company’s extent of involvement and maximum potential exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of these instruments.

The Company uses the same credit policies in making commitments and conditional obligations as it does for financial instruments included on its consolidated balance sheets.

The contractual amounts of off-balance-sheet financial instruments as of June 30, 2020, and December 31, 2019, are as follows:

(in thousands)	June 30, 2020		December 31, 2019
Commitments to extend credit	$	1,659,225	$	1,469,413
Letters of credit	51,798		47,969

Off-Balance Sheet Credit Risk

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments usually have fixed expiration dates or other termination clauses, may have significant usage restrictions, and may require payment of a fee. Of the total commitments to extend credit at June 30, 2020, and December 31, 2019, approximately $161.3 million and $144.8 million, respectively, represent fixed rate loan commitments. Since certain of the commitments may expire without being drawn upon or may be revoked, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral held varies, but may include accounts receivable, inventory, premises and equipment, and real estate. Other liabilities includes $4.9 million and $0.4 million for estimated losses attributable to the unadvanced commitments at June 30, 2020, and December 31, 2019, respectively.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance or payment of a customer to a third party. These standby letters of credit are issued to support contractual obligations of the Company’s customers. The credit risk involved in issuing letters of credit is essentially the same as the risk involved in extending loans to customers. As of June 30, 2020, the approximate remaining terms of standby letters of credit range from 1 month to 4 years.

Contingencies

The Company and its subsidiaries are, from time to time, parties to various legal proceedings arising out of their businesses. Management believes there are no such proceedings pending or threatened against the Company or its subsidiaries which, if determined adversely, would have a material adverse effect on the business, consolidated financial condition, results of operations or cash flows of the Company or any of its subsidiaries.

XML

Derivative Financial Instruments

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

DERIVATIVE FINANCIAL INSTRUMENTS

Risk Management Objective of Using Derivatives

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings. The Company does not enter into derivative financial instruments for trading purposes.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. These derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. These cash flow hedges include: (1) swaps of variable three-month LIBOR on $62.0 million of junior subordinated debentures to a weighted-average-fixed rate of 2.62% over approximately six years, (2) a swap of the federal funds effective rate on $100.0 million of rolling FHLB overnight

advances to a fixed rate of 1.12% for three years, and (3) a swap of three-month LIBOR on $100.0 million of rolling three-month FHLB advances for five years.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are paid on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $2.8 million will be reclassified as an increase to interest expense.

Non-designated Hedges

Derivatives not designated as hedges are not considered speculative and result from a service the Company provides to certain customers. The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting derivatives the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings as a component of other noninterest income.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of June 30, 2020 and December 31, 2019.

	Derivative Assets										Derivative Liabilities
	June 30, 2020					December 31, 2019					June 30, 2020			December 31, 2019
(in thousands)	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives Designated as Hedging Instruments
Interest rate swap	$	261,962	Other Assets	$	—	$	61,962	Other Assets	$	—	Other Liabilities	$	10,840	Other Liabilities	$	2,872
Total				$	—				$	—		$	10,840		$	2,872
Derivatives not Designated as Hedging Instruments
Interest rate swap	$	1,021,528	Other Assets	$	35,728	$	749,819	Other Assets	$	11,055	Other Liabilities	$	35,988	Other Liabilities	$	11,875
Total				$	35,728				$	11,055		$	35,988		$	11,875

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s financial instruments that are subject to offsetting as of June 30, 2020 and December 31, 2019. The gross amounts of assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that financial assets and liabilities are presented on the Balance Sheet.

As of June 30, 2020
							Gross Amounts Not Offset in the Statement of Financial Position
(in thousands)	Gross Amounts Recognized		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets presented in the Statement of Financial Position		Financial Instruments		Fair Value Collateral Posted		Net Amount
Assets:
Interest rate swap	$	35,728	$	—	$	35,728	$	14	$	—	$	35,714
Liabilities:
Interest rate swap	$	46,828	$	—	$	46,828	$	14	$	46,222	$	592
Securities sold under agreements to repurchase	196,532		—		196,532		—		196,532		—
As of December 31, 2019
							Gross Amounts Not Offset in the Statement of Financial Position
(in thousands)	Gross Amounts Recognized		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets presented in the Statement of Financial Position		Financial Instruments		Fair Value Collateral Posted		Net Amount
Assets:
Interest rate swap	$	11,055	$	—	$	11,055	$	56	$	—	$	10,999
Liabilities:
Interest rate swap	$	14,747	$	—	$	14,747	$	56	$	14,573	$	118
Securities sold under agreements to repurchase	230,886		—		230,886		—		230,886		—

As of June 30, 2020, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $46.8 million. Further, the Company has minimum collateral posting thresholds with certain of its derivative counterparties and has posted collateral of $47.1 million.

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The following table summarizes financial instruments measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	June 30, 2020
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	10,241	$	—	$	10,241
Obligations of states and political subdivisions	—		254,278		—		254,278
Agency mortgage-backed securities	—		720,991		—		720,991
U.S. Treasury bills	—		10,566		—		10,566
Corporate debt securities	—		2,028		—		2,028
Total securities available for sale	—		998,104		—		998,104
Derivatives	—		35,728		—		35,728
Total assets	$	—	$	1,033,832	$	—	$	1,033,832
Liabilities
Derivatives	$	—	$	46,828	$	—	$	46,828
Total liabilities	$	—	$	46,828	$	—	$	46,828

	December 31, 2019
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	10,046	$	—	$	10,046
Obligations of states and political subdivisions	—		213,024		—		213,024
Residential mortgage-backed securities	—		902,021		—		902,021
U.S. Treasury bills	—		10,226		—		10,226
Total securities available-for-sale	—		1,135,317		—		1,135,317
Derivative financial instruments	—		11,055		—		11,055
Total assets	$	—	$	1,146,372	$	—	$	1,146,372
Liabilities
Derivatives	$	—	$	14,747	$	—	$	14,747
Total liabilities	$	—	$	14,747	$	—	$	14,747

From time to time, the Company measures certain assets at fair value on a nonrecurring basis. These include assets measured at the lower of cost or fair value that were recognized at fair value below cost at the end of the period.

	(1)		(1)		(1)		(1)
(in thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total losses for the three months ended June 30, 2020		Total losses for the six months ended June 30, 2020
Impaired loans	$	3,627	$	—	$	—	$	3,627	$	3,219	$	3,230
Other real estate	3,899		—		—		3,899		79		777
Total	$	7,526	$	—	$	—	$	7,526	$	3,298	$	4,007
(1) The amounts represent only balances measured at fair value during the period and still held as of the reporting date.

Following is a summary of the carrying amounts and fair values of the Company’s financial instruments on the consolidated balance sheets at June 30, 2020 and December 31, 2019.

	June 30, 2020			December 31, 2019
(in thousands)	Carrying Amount	Estimated fair value	Level	Carrying Amount	Estimated fair value	Level
Balance sheet assets
Securities held-to-maturity, net	345,791	356,139	Level 2	181,166	181,939	Level 2
Other investments	43,106	43,106	Level 2	38,044	38,044	Level 2
Loans held for sale	16,029	16,029	Level 2	5,570	5,570	Level 2
Loans, net	6,029,781	5,876,000	Level 3	5,271,049	5,205,651	Level 3
State tax credits, held for sale	38,820	44,164	Level 3	36,802	39,046	Level 3
Balance sheet liabilities
Certificates of deposit	659,166	665,374	Level 3	826,447	825,203	Level 3
Subordinated debentures and notes	203,384	192,852	Level 2	141,258	130,985	Level 2
FHLB advances	250,000	251,978	Level 2	222,406	221,402	Level 2
Other borrowings and notes payable	227,961	227,961	Level 2	265,172	265,172	Level 2

For information regarding the methods and assumptions used to estimate the fair value of each class of financial instruments refer to Note 19 – Fair Value Measurements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC.

XML

Subordinated Debentures

6 Months Ended

Jun. 30, 2020

Subordinated Borrowings [Abstract]

Subordinated Debentures

NOTE 8 - SUBORDINATED DEBENTURES

The amounts and terms of each issuance of the Company’s subordinated debentures at June 30, 2020 and December 31, 2019 were as follows:

	Amount						Maturity Date	Initial Call Date(1)	Interest Rate
(in thousands)	June 30, 2020			December 31, 2019
EFSC Clayco Statutory Trust I	$	3,196		$	3,196		December 17, 2033	December 17, 2008	Floats @ 3MO LIBOR + 2.85%
EFSC Capital Trust II	5,155			5,155			June 17, 2034	June 17, 2009	Floats @ 3MO LIBOR + 2.65%
EFSC Statutory Trust III	11,341			11,341			December 15, 2034	December 15, 2009	Floats @ 3MO LIBOR + 1.97%
EFSC Clayco Statutory Trust II	4,124			4,124			September 15, 2035	September 15, 2010	Floats @ 3MO LIBOR + 1.83%
EFSC Statutory Trust IV	10,310			10,310			December 15, 2035	December 15, 2010	Floats @ 3MO LIBOR + 1.44%
EFSC Statutory Trust V	4,124			4,124			September 15, 2036	September 15, 2011	Floats @ 3MO LIBOR + 1.60%
EFSC Capital Trust VI	14,433			14,433			March 30, 2037	March 30, 2012	Floats @ 3MO LIBOR + 1.60%
EFSC Capital Trust VII	4,124			4,124			December 15, 2037	December 15, 2012	Floats @ 3MO LIBOR + 2.25%
JEFFCO Stat Trust I(2)	7,819			7,886			February 22, 2031	February 22, 2011	Fixed @ 10.20%
JEFFCO Stat Trust II(2)	4,415			4,388			March 17, 2034	March 17, 2009	Floats @ 3MO LIBOR + 2.75%
Trinity Capital Trust III(2)	5,239			5,206			September 8, 2034	September 8, 2009	Floats @ 3MO LIBOR + 2.70%
Trinity Capital Trust IV(2)	10,310			10,302			November 23, 2035	August 23, 2010	Fixed @ 6.88%
Trinity Capital Trust V(2)	7,625			7,543			December 15, 2036	September 15, 2011	Floats @ 3MO LIBOR + 1.65%
Total junior subordinated debentures	92,215			92,132
5.75% Fixed-to-floating rate subordinated notes	63,250			—			June 1, 2030	June 1, 2025	Fixed @ 5.75% until June 1, 2025, then floats @ Benchmark rate (3 month term SOFR) + 5.66%
4.75% Fixed-to-floating rate subordinated notes	50,000			50,000			November 1, 2026	November 1, 2021	Fixed @ 4.75% until November 1, 2021, then floats @ 3MO LIBOR + 3.387%
Debt issuance costs	(2,081		)	(874		)
Total fixed-to-floating rate subordinated notes	111,169			49,126
Total subordinated debentures and notes	$	203,384		$	141,258
(1) Callable each quarter after initial call date.
(2) Purchase accounting adjustments are reflected in the balance and also impact the effective interest rate.

On May 21, 2020, the Company issued $63.3 million of 5.75% fixed-to-floating rate subordinated notes due in 2030 in a public offering (the “2030 Notes”). From and including the date of issuance to, but excluding June 1, 2025, the 2030 Notes will bear interest at a rate equal to 5.75% per annum, payable semiannually in arrears on each June 1 and December 1. From and including June 1, 2025 to, but excluding the maturity date or the date of earlier redemption, the 2030 Notes will bear interest at a floating rate per annum equal to a benchmark rate (which is expected to be three-month term SOFR (as defined in the Indenture, dated May 21, 2020, between the Company and U.S. Bank National Association, as trustee, and subsequent First Supplemental Indenture)), plus 566.0 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2025.

Notwithstanding the foregoing, in the event that the benchmark rate is less than zero, then the benchmark rate shall be deemed to be zero.

XML

Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Accumulated Other Comprehensive Income

ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents the changes in accumulated other comprehensive income after-tax by component:

(in thousands)	Net Unrealized Gain (Loss) on Available-for-Sale Debt Securities			Unamortized Gain (Loss) on Held-to-Maturity Securities			Net Unrealized Loss on Cash Flow Hedges			Total
Balance, March 31, 2020	$	25,538		$	4,778		$	(7,219	)	$	23,097
Net change	10,984			(329		)	(943		)	9,712
Transfer from available-for-sale to held-to-maturity	$	(8,650	)	$	8,650		$	—		$	—
Balance, June 30, 2020	$	27,872		$	13,099		$	(8,162	)	$	32,809
Balance, December 31, 2019	$	14,977		$	4,934		$	(2,162	)	$	17,749
Net change	21,545			(485		)	(6,000		)	15,060
Transfer from available-for-sale to held-to-maturity	$	(8,650	)	$	8,650		$	—		$	—
Balance, June 30, 2020	$	27,872		$	13,099		$	(8,162	)	$	32,809
(in thousands)	Net Unrealized Gain (Loss) on Available-for-Sale Debt Securities			Unamortized Gain (Loss) on Held-to-Maturity Securities			Net Unrealized Loss on Cash Flow Hedges			Total
Balance, March 31, 2019	$	2,675		$	(233	)	$	(952	)	$	1,490
Net change	12,842			3			(1,261		)	11,584
Balance, June 30, 2019	$	15,517		$	(230	)	$	(2,213	)	$	13,074
Balance, December 31, 2018	$	(9,047	)	$	(235	)	$	—		$	(9,282	)
Net change	24,564			5			(2,213		)	22,356
Balance, June 30, 2019	$	15,517		$	(230	)	$	(2,213	)	$	13,074

The following table presents the pre-tax and after-tax changes in the components of other comprehensive income:

	Three months ended June 30,
(in thousands)	2020									2019
	Pre-tax			Tax effect			After-tax			Pre-tax			Tax effect			After-tax
Change in unrealized gain on available-for-sale debt securities	$	14,587		$	3,603		$	10,984		$	17,054		$	4,212		$	12,842
Reclassification of (gain) loss on held-to-maturity securities(b)	(437		)	(108		)	(329		)	4			1			3
Change in unrealized loss on cash flow hedges arising during the period	(1,563		)	(386		)	(1,177		)	(1,679		)	(414		)	(1,265		)
Reclassification of loss on cash flow hedges(b)	311			77			234			5			1			4
Total other comprehensive income	$	12,898		$	3,186		$	9,712		$	15,384		$	3,800		$	11,584
	Six months ended June 30,
	2020									2019
	Pre-tax			Tax effect			After-tax			Pre-tax			Tax effect			After-tax
Change in unrealized gain on available-for-sale debt securities	$	28,616		$	7,068		$	21,548		$	32,329		$	7,985		$	24,344
Reclassification adjustment for realized (gain) loss on sale of available-for-sale debt securities(a)	(4		)	(1		)	(3		)	292			72			220
Reclassification of (gain) loss on held-to-maturity securities(b)	(644		)	(159		)	(485		)	7			2			5
Change in unrealized loss on cash flow hedges arising during the period	(8,442		)	(2,085		)	(6,357		)	(2,944		)	(727		)	(2,217		)
Reclassification of loss on cash flow hedges(b)	474			117			357			5			1			4
Total other comprehensive income	$	20,000		$	4,940		$	15,060		$	29,689		$	7,333		$	22,356

^(a)The pre-tax amount is reported in noninterest income/expense in the Consolidated Statements of Operations

^(b)The pre-tax amount is reported in interest income/expense in the Consolidated Statements of Operations

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Business and Consolidation

Basis of Financial Statement Presentation

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All intercompany accounts and transactions have been eliminated.

In the opinion of management, the consolidated financial statements contain all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of the statements of financial position, results of operations, and cash flow for the interim periods.

Recently Adopted Accounting Pronouncements

On January 1, 2020, the Company adopted ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with an expected loss methodology commonly referred to as the CECL methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures such as loan commitments, standby letters of credit, financial guarantees, and other similar instruments. In addition, this standard made changes to the accounting for available-for-sale debt securities, including the requirement for credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities.

The Company adopted this standard using the modified retrospective method for all financial assets measured at amortized cost, and off-balance-sheet credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under the new standard while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company recorded an after-tax decrease to retained earnings of $18.1 million as of January 1, 2020 for the cumulative effect of adopting this standard.

The Company adopted this standard using the prospective transition approach for PCD assets that were previously classified as PCI assets. Management did not reassess whether PCI assets met the criteria of PCD assets as of the date of the adoption.

The Company elected not to maintain PCI pools for certain loans which are now accounted for individually. Thus they are now included in nonperforming and classified loans. Management did not reassess whether modifications to individual acquired financial assets accounted for in pools were troubled debt restructurings as of the date of adoption.

The following table illustrates the impact of adoption:

($ in thousands)	December 31, 2019		Impact of Adoption			January 1, 2020
Assets:
Loans	$	5,314,337	$	7,091		$	5,321,428
Allowance for credit losses on loans	43,288		28,387			71,675
Allowance for credit losses on held-to-maturity debt securities	—		303			303
Deferred tax asset	14,851		5,898			20,749
Liabilities:
Reserve for unfunded commitments	430		2,413			2,843
Shareholders’ Equity
Retained Earnings	380,737		(18,114		)	362,623

The Company also adopted ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” on January 1, 2020. The Company previously selected the option to adopt the removal or modification of disclosures during the second quarter of 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are applied prospectively for only the most recent interim or annual period presented. All other amendments are applied retrospectively to all periods presented upon their effective date. The adoption of this update did not have a material effect on the Company's consolidated financial statements.

Accounting Standards Issued but not yet Adopted

FASB ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” In March 2020, the FASB issued “Reference Rate Reform (Topic 848)” which provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The guidance is effective for contract modifications as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the optional expedients and exceptions and has not yet determined the impact this standard may have on its consolidated financial statements.

Loans

The Company has elected to present the accrued interest receivable balance separate from amortized cost basis, to exclude accrued interest receivable balances from the tabular disclosures, and not to estimate an ACL on accrued interest receivable as these amounts are timely written off as a credit loss expense.

Accrued interest receivable totaled $19.7 million at June 30, 2020 and was reported in Other Assets on the consolidated balance sheets.

PCD Loans

The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An ACL is determined using the same methodology as other loans held for investment. The initial ACL determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and ACL becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the ACL are recorded through provision expense.

Allowance for Credit Losses on Loans

The ACLL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected. Loans are charged-off against the allowance when management believes the uncollectibility of a loan balance is confirmed.

Management estimates the allowance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors.

The ACLL is measured on a collective basis when similar risk characteristics exist. The Company has identified the following portfolio segments:

C&I – C&I loans consist of loans to small and medium-sized businesses in a wide variety of industries. These loans are generally collateralized by inventory, accounts receivable, equipment, real estate and other commercial assets, and may be supported by other credit enhancements such as personal guarantees. Risk arises primarily due to a difference between expected and actual cash flows of the borrower. However, the recoverability of these loans is also dependent on other factors primarily dictated by the type of collateral securing these loans. The fair value of the collateral securing these loans may fluctuate as market conditions change. Included within C&I are revolving loans supported by borrowing bases that fluctuate depending on the amount of underlying collateral. A portion of C&I loans consists of enterprise value lending, which are loans with senior debt exposure to private equity backed companies.

CRE – CRE loans include various types of loans for which the Company holds real property as collateral. Commercial real estate lending activity is typically restricted to owner-occupied properties or to investor properties that are owned by customers with a current banking relationship. The primary risks of CRE loans include the borrower’s inability to pay, material decreases in the value of the real estate being held as collateral and significant increases in interest rates, which may make the real estate mortgage loan unprofitable. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy.

Construction and Land Development – The Company originates loans to finance construction projects including one- to four-family residences, multifamily residences, commercial office, and industrial projects. Construction loans are generally collateralized by first liens on the real estate and have floating interest rates. Construction loans are considered to have higher risks due to construction completion and timing risk, and the ultimate repayment being sensitive to interest rate changes, governmental regulation of real property and the availability of long-term financing. Additionally, economic conditions may impact the Company’s ability to recover its investment in construction loans. Adverse economic conditions may negatively impact the real estate market which could affect the borrowers’ ability to complete and sell the project. Additionally, the fair value of the underlying collateral may fluctuate as market conditions change.

Residential Real Estate – The Company originates loans to finance one- to four-family residences, secured by both first and second liens. Repayment of these loans is dependent on the borrowers’ ability to pay and the fair value of the underlying collateral. Residential loans with a second lien are inherently riskier due to the junior lien position.

Agricultural – Agricultural loans are generally secured with equipment, cattle, crops or other non-real property and at times the underlying real property. Agricultural loans are primarily included as a component of CRE and C&I loans.

Consumer – The Company provides a broad range of consumer loans to customers, including personal lines of credit, credit cards and automobile loans. Repayment of these loans is dependent on the borrowers’ ability to pay and the fair value of the underlying collateral. Consumer loans are included as a component of Other loans.

The Company utilizes a DCF method to measure the ACL on loans collectively evaluated that are sub-segmented by credit risk levels. The DCF method incorporates assumptions for probability of default, loss given default, prepayments and curtailments over the contractual term of the loans. In determining the probability of default, the Company utilized a regression analysis to determine certain economic factors that are relevant loss drivers in the portfolio segments based on historical or peer evaluations. National unemployment is a loss driver used in nearly all portfolios, except Consumer. The annual percentage change in gross domestic product is also used in C&I, Construction, Agricultural and Consumer portfolios. The annual percentage change in a commercial real estate index, national house price index and the consumer price index are used in the CRE, Residential Real Estate and Consumer portfolios, respectively. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

The Company uses a one-year reasonable and supportable forecast that considers baseline, upside and downside economic scenarios. For periods beyond the forecast period, the Company reverts to historical loss rates on a straight-line basis over a six-month period.

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

Available-for-sale Securities

Management systematically evaluates investment securities for other-than-temporary declines in fair value on a quarterly basis. This analysis requires management to consider various factors, which include among other considerations (1) the present value of the cash flows expected to be collected compared to the amortized cost of the security, (2) duration and magnitude of the decline in value, (3) the financial condition of the issuer or issuers, (4) structure of the security, and (5) the intent to sell the security or whether it is more likely than not the Company would be required to sell the security before its anticipated recovery in market value. At June 30, 2020, management performed its quarterly analysis of all securities with an unrealized loss and concluded no individual securities were other-than-temporarily impaired.

XML

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]

The following table illustrates the impact of adoption:

($ in thousands)	December 31, 2019		Impact of Adoption			January 1, 2020
Assets:
Loans	$	5,314,337	$	7,091		$	5,321,428
Allowance for credit losses on loans	43,288		28,387			71,675
Allowance for credit losses on held-to-maturity debt securities	—		303			303
Deferred tax asset	14,851		5,898			20,749
Liabilities:
Reserve for unfunded commitments	430		2,413			2,843
Shareholders’ Equity
Retained Earnings	380,737		(18,114		)	362,623

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Summary of Per Common Share Data and Amounts

The following table presents a summary of per common share data and amounts for the periods indicated.

	Three months ended June 30,				Six months ended June 30,
(in thousands, except per share data)	2020		2019		2020		2019
Net income as reported	$	14,634	$	18,424	$	27,502	$	34,580
Weighted average common shares outstanding	26,180		26,887		26,325		25,415
Additional dilutive common stock equivalents	15		53		29		73
Weighted average diluted common shares outstanding	26,195		26,940		26,354		25,488
Basic earnings per common share:	$	0.56	$	0.69	$	1.04	$	1.36
Diluted earnings per common share:	0.56		0.68		$	1.04	$	1.36

XML

Investments (Tables)

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale and Held-to-Maturity Securities Reconciliation

The following table presents the amortized cost, gross unrealized gains and losses, allowance of credit losses and fair value of securities available for sale and held to maturity:

 

	June 30, 2020
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
Available-for-sale securities:
Obligations of U.S. Government-sponsored enterprises	$	9,966	$	275	$	—		$	—		$	10,241
Obligations of states and political subdivisions	245,961		8,450		(133		)	—			254,278
Agency mortgage-backed securities	693,082		27,915		(6		)	—			720,991
U.S. Treasury bills	9,975		591		—			—			10,566
Corporate debt securities	2,000		28		—			—			2,028
Total securities available for sale	$	960,984	$	37,259	$	(139	)	$	—		$	998,104
Held-to-maturity securities:
Obligations of states and political subdivisions	$	96,547	$	336	$	(122	)	$	(16	)	$	96,745
Agency mortgage-backed securities	127,353		2,469		(28		)	—			129,794
Corporate debt securities	122,536		7,693		—			(629		)	129,600
Total securities held-to-maturity	$	346,436	$	10,498	$	(150	)	$	(645	)	$	356,139
Less: Allowance for credit losses	645
Total securities held-to-maturity, net	$	345,791

	December 31, 2019
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Obligations of U.S. Government-sponsored enterprises	$	9,954	$	92	$	—		$	10,046
Obligations of states and political subdivisions	207,269		6,118		(363		)	213,024
Agency mortgage-backed securities	888,129		15,083		(1,191		)	902,021
U.S. Treasury Bills	9,971		255		—			10,226
Total securities available for sale	$	1,115,323	$	21,548	$	(1,554	)	$	1,135,317
Held-to-maturity securities:
Obligations of states and political subdivisions	$	11,704	$	170	$	—		$	11,874
Agency mortgage-backed securities	46,346		675		—			47,021
Corporate debt securities	123,116		128		(200		)	123,044
Total securities held to maturity	$	181,166	$	973	$	(200	)	$	181,939

Schedule of Available-for-sale and Held-to-Maturity Securities Reconciliation

The following table presents the amortized cost, gross unrealized gains and losses, allowance of credit losses and fair value of securities available for sale and held to maturity:

 

	June 30, 2020
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
Available-for-sale securities:
Obligations of U.S. Government-sponsored enterprises	$	9,966	$	275	$	—		$	—		$	10,241
Obligations of states and political subdivisions	245,961		8,450		(133		)	—			254,278
Agency mortgage-backed securities	693,082		27,915		(6		)	—			720,991
U.S. Treasury bills	9,975		591		—			—			10,566
Corporate debt securities	2,000		28		—			—			2,028
Total securities available for sale	$	960,984	$	37,259	$	(139	)	$	—		$	998,104
Held-to-maturity securities:
Obligations of states and political subdivisions	$	96,547	$	336	$	(122	)	$	(16	)	$	96,745
Agency mortgage-backed securities	127,353		2,469		(28		)	—			129,794
Corporate debt securities	122,536		7,693		—			(629		)	129,600
Total securities held-to-maturity	$	346,436	$	10,498	$	(150	)	$	(645	)	$	356,139
Less: Allowance for credit losses	645
Total securities held-to-maturity, net	$	345,791

	December 31, 2019
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Obligations of U.S. Government-sponsored enterprises	$	9,954	$	92	$	—		$	10,046
Obligations of states and political subdivisions	207,269		6,118		(363		)	213,024
Agency mortgage-backed securities	888,129		15,083		(1,191		)	902,021
U.S. Treasury Bills	9,971		255		—			10,226
Total securities available for sale	$	1,115,323	$	21,548	$	(1,554	)	$	1,135,317
Held-to-maturity securities:
Obligations of states and political subdivisions	$	11,704	$	170	$	—		$	11,874
Agency mortgage-backed securities	46,346		675		—			47,021
Corporate debt securities	123,116		128		(200		)	123,044
Total securities held to maturity	$	181,166	$	973	$	(200	)	$	181,939

Investments Classified by Contractual Maturity Date

The amortized cost and estimated fair value of debt securities at June 30, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The weighted average life of the mortgage-backed securities is approximately 3 years.

	Available for sale				Held to maturity
(in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	2,313	$	2,345	$	—	$	—
Due after one year through five years	25,981		27,058		10,207		10,597
Due after five years through ten years	9,455		9,915		126,285		133,206
Due after ten years	230,153		237,795		82,591		82,542
Agency mortgage-backed securities	693,082		720,991		127,353		129,794
	$	960,984	$	998,104	$	346,436	$	356,139

Schedule of Unrealized Loss on Investments

The following table represents a summary of available-for-sale investment securities that had an unrealized loss:

	June 30, 2020
	Less than 12 months				12 months or more				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of states and political subdivisions	$	33,821	$	133	$	—	$	—	$	33,821	$	133
Agency mortgage-backed securities	8,366		5		66		1		8,432		6
	$	42,187	$	138	$	66	$	1	$	42,253	$	139
The following table represents a summary of investment securities that had an unrealized loss:
	December 31, 2019
	Less than 12 months				12 months or more				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of states and political subdivisions	56,327		363		—		—		56,327		363
Agency mortgage-backed securities	131,693		756		41,491		435		173,184		1,191
Corporate debt securities	67,964		200		—		—		67,964		200
	$	255,984	$	1,319	$	41,491	$	435	$	297,475	$	1,754

XML

Loans (Tables)

6 Months Ended

Jun. 30, 2020

Non-covered Loans [Line Items]

Summary of Recorded Investment by Risk Category of Portfolio Loans by Portfolio Class and Category

The following table presents the recorded investment on loans based on payment activity:

	June 30, 2020
(in thousands)	Performing		Non Performing		Total
Commercial and industrial	$	11,682	$	38	$	11,720
Real estate:
Residential	941		—		941
Other	2,376		21		2,397
Total	$	14,999	$	59	$	15,058

The recorded investment by risk category of the loans by class at June 30, 2020, which is based upon the most recent analysis performed is as follows:

	Term Loans by Origination Year
(in thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Converted to Term Loans		Revolving Loans		Total
Commercial and industrial
Pass (1-6)	$	1,239,062	$	535,477	$	318,046	$	180,269	$	47,210	$	85,529	$	14,954	$	510,168	$	2,930,715
Watch (7)	26,347		13,354		4,850		6,468		24,044		175		—		62,293		137,531
Classified (8-9)	3,775		15,068		8,155		3,950		5,093		3,673		295		23,222		63,231
Total Commercial and industrial	$	1,269,184	$	563,899	$	331,051	$	190,687	$	76,347	$	89,377	$	15,249	$	595,683	$	3,131,477
Commercial real estate-investor owned
Pass (1-6)	$	246,319	$	321,849	$	204,242	$	126,567	$	153,904	$	181,761	$	3,284	$	35,460	$	1,273,386
Watch (7)	5,136		4,220		1,192		369		12,681		1,275		—		—		24,873
Classified (8-9)	—		966		8,286		455		249		1,680		—		—		11,636
Total Commercial real estate-investor owned	$	251,455	$	327,035	$	213,720	$	127,391	$	166,834	$	184,716	$	3,284	$	35,460	$	1,309,895
Commercial real estate-owner occupied
Pass (1-6)	$	147,313	$	200,519	$	92,624	$	79,058	$	44,990	$	80,172	$	2,756	$	42,883	$	690,315
Watch (7)	9,473		1,963		261		9,729		8,533		5,074		—		2,500		37,533
Classified (8-9)	601		1,156		4,267		458		—		4,219		—		—		10,701
Total Commercial real estate-owner occupied	$	157,387	$	203,638	$	97,152	$	89,245	$	53,523	$	89,465	$	2,756	$	45,383	$	738,549
Construction real estate
Pass (1-6)	$	75,983	$	167,936	$	121,909	$	37,555	$	28,060	$	12,906	$	—	$	20,631	$	464,980
Watch (7)	2,408		722		1,254		11,047		—		546		—		—		15,977
Classified (8-9)	—		227		—		—		—		37		—		—		264
Total Construction real estate	$	78,391	$	168,885	$	123,163	$	48,602	$	28,060	$	13,489	$	—	$	20,631	$	481,221
Residential real estate
Pass (1-6)	$	26,448	$	33,085	$	22,074	$	19,931	$	34,427	$	115,036	$	591	$	63,505	$	315,097
Watch (7)	181		895		842		—		—		2,027		279		802		5,026
Classified (8-9)	184		1,265		758		13		213		3,445		—		50		5,928
Total residential real estate	$	26,813	$	35,245	$	23,674	$	19,944	$	34,640	$	120,508	$	870	$	64,357	$	326,051
Other
Pass (1-6)	$	8,758	$	25,567	$	20,615	$	682	$	3,705	$	34,455	$	—	$	43,971	$	137,753
Watch (7)	—		2		—		—		—		—		—		1		3
Classified (8-9)	—		1		3		4		—		19		10		7		44
Total Other	$	8,758	$	25,570	$	20,618	$	686	$	3,705	$	34,474	$	10	$	43,979	$	137,800

Portfolio loans, net

Non-covered Loans [Line Items]

Summary of Portfolio Loans by Category

Below is a summary of loans by category at June 30, 2020 and December 31, 2019:

(in thousands)	June 30, 2020			December 31, 2019
Commercial and industrial	$	3,165,611		$	2,361,157
Real estate:
Commercial - investor owned	1,309,895			1,299,884
Commercial - owner occupied	738,549			697,437
Construction and land development	481,221			457,273
Residential	326,992			366,261
Total real estate loans	2,856,657			2,820,855
Other	142,224			134,941
Loans, before unearned loan fees	6,164,492			5,316,953
Unearned loan fees, net	(24,441		)	(2,616		)
Loans, including unearned loan fees	$	6,140,051		$	5,314,337

Summary of Allowance for Loan Losses and the Recorded Investment in Portfolio Loans by Class and Category Based on Impairment Method

A summary of the activity in the ACLL by category for the three and six months ended June 30, 2020 is as follows:

(in thousands)	Commercial and industrial			CRE - investor owned			CRE - owner occupied		Construction and land development		Residential real estate			Other			Total
Allowance for credit losses on loans:
Balance at March 31, 2020	$	45,981		$	19,892		$	9,477	$	9,895	$	5,395		$	1,547		$	92,187
Provision for credit losses	7,168			2,599			1,600		6,038		744			242			18,391
Charge-offs	(3,303		)	(224		)	—		—		(32		)	(105		)	(3,664		)
Recoveries	293			2,752			11		29		226			45			3,356
Balance at June 30, 2020	$	50,139		$	25,019		$	11,088	$	15,962	$	6,333		$	1,729		$	110,270

(in thousands)	Commercial and industrial			CRE - investor owned			CRE - owner occupied			Construction and land development			Residential real estate			Other			Total
Allowance for credit losses on loans:
Balance at December 31, 2019	$	27,455		$	5,935		$	4,873		$	2,611		$	1,280		$	1,134		$	43,288
CECL adoption	6,494			10,726			2,598			5,183			3,470			(84		)	28,387
PCD loans immediately charged off	—			(5		)	(57		)	(217		)	(1,401		)	—			(1,680		)
Balance at January 1, 2020	$	33,949		$	16,656		$	7,414		$	7,577		$	3,349		$	1,050		$	69,995
Provision for credit losses	18,759			5,823			3,594			8,347			2,755			808			40,086
Charge-offs	(3,366		)	(226		)	—			(31		)	(154		)	(191		)	(3,968		)
Recoveries	797			2,766			80			69			383			62			4,157
Balance at June 30, 2020	$	50,139		$	25,019		$	11,088		$	15,962		$	6,333		$	1,729		$	110,270

Reserves on enterprise value lending and agricultural lending, which are included in the categories above, represented $15.8 million and $2.4 million, respectively.

Financing Receivable, Noncurrent, Allowance for Credit Loss

A summary of the activity in the ACLL by category for the three and six months ended June 30, 2020 is as follows:

(in thousands)	Commercial and industrial			CRE - investor owned			CRE - owner occupied		Construction and land development		Residential real estate			Other			Total
Allowance for credit losses on loans:
Balance at March 31, 2020	$	45,981		$	19,892		$	9,477	$	9,895	$	5,395		$	1,547		$	92,187
Provision for credit losses	7,168			2,599			1,600		6,038		744			242			18,391
Charge-offs	(3,303		)	(224		)	—		—		(32		)	(105		)	(3,664		)
Recoveries	293			2,752			11		29		226			45			3,356
Balance at June 30, 2020	$	50,139		$	25,019		$	11,088	$	15,962	$	6,333		$	1,729		$	110,270

(in thousands)	Commercial and industrial			CRE - investor owned			CRE - owner occupied			Construction and land development			Residential real estate			Other			Total
Allowance for credit losses on loans:
Balance at December 31, 2019	$	27,455		$	5,935		$	4,873		$	2,611		$	1,280		$	1,134		$	43,288
CECL adoption	6,494			10,726			2,598			5,183			3,470			(84		)	28,387
PCD loans immediately charged off	—			(5		)	(57		)	(217		)	(1,401		)	—			(1,680		)
Balance at January 1, 2020	$	33,949		$	16,656		$	7,414		$	7,577		$	3,349		$	1,050		$	69,995
Provision for credit losses	18,759			5,823			3,594			8,347			2,755			808			40,086
Charge-offs	(3,366		)	(226		)	—			(31		)	(154		)	(191		)	(3,968		)
Recoveries	797			2,766			80			69			383			62			4,157
Balance at June 30, 2020	$	50,139		$	25,019		$	11,088		$	15,962		$	6,333		$	1,729		$	110,270

Reserves on enterprise value lending and agricultural lending, which are included in the categories above, represented $15.8 million and $2.4 million, respectively.

Summary of Portfolio Loans Individually Evaluated for Impairment and Recorded Investment in Impaired Non-Covered Loans by Category

The recorded investment in nonperforming loans by category at June 30, 2020 and December 31, 2019, is as follows: 

	June 30, 2020
(in thousands)	Nonaccrual		Restructured, accruing		Loans over 90 days past due and still accruing interest		Total nonperforming loans		Nonaccrual loans with no allowance
Commercial and industrial	$	27,431	$	3,642	$	865	$	31,938	$	20,553
Real estate:
Commercial - investor owned	2,389		—		—		2,389		1,677
Commercial - owner occupied	2,400		—		—		2,400		1,403
Construction and land development	207		—		—		207		207
Residential	4,421		78		—		4,499		3,444
Other	19		—		21		40		—
Total	$	36,867	$	3,720	$	886	$	41,473	$	27,284

There was no interest income recognized on nonaccrual loans during the six months ended June 30, 2020.

	December 31, 2019
(in thousands)	Nonaccrual		Restructured, accruing		Loans over 90 days past due and still accruing interest		Total nonperforming loans
Commercial and industrial	$	22,328	$	—	$	250	$	22,578
Real estate:
Commercial - investor owned	2,303		—		—		2,303
Commercial - owner occupied	213		—		—		213
Residential	1,251		79		—		1,330
Other	1		—		—		1
Total	$	26,096	$	79	$	250	$	26,425

The following table presents the amortized cost basis of collateral-dependent nonperforming loans by class of loan at June 30, 2020:

	Type of Collateral
(in thousands)	Commercial Real Estate		Residential Real Estate		Blanket Lien
Commercial and industrial	$	13,124	$	—	$	4,872
Real estate:
Commercial - investor owned	2,389		—		—
Commercial - owner occupied	1,811		—		—
Construction and land development	—		207		—
Residential	—		4,271		—
Total	$	17,324	$	4,478	$	4,872

Summary of Recorded Investment by Category for Portfolio Loans Restructured

The following table presents the amortized cost basis of collateral-dependent nonperforming loans by class of loan at June 30, 2020:

	Type of Collateral
(in thousands)	Commercial Real Estate		Residential Real Estate		Blanket Lien
Commercial and industrial	$	13,124	$	—	$	4,872
Real estate:
Commercial - investor owned	2,389		—		—
Commercial - owner occupied	1,811		—		—
Construction and land development	—		207		—
Residential	—		4,271		—
Total	$	17,324	$	4,478	$	4,872

There were no troubled debt restructurings that occurred during the three months ended June 30, 2020. The recorded investment by category for troubled debt restructurings that occurred during the six months ended June 30, 2020 and the three and six months ended June 30, 2019 are as follows:

	June 30, 2020					June 30, 2019
(in thousands, except for number of loans)	Number of loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance		Number of loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Commercial and industrial	1	$	3,731	$	3,731	—	$	—	$	—
Real estate:
Commercial - owner occupied	—	—		—		1	188		188
Residential	2	155		155		2	332		332
Total	3	$	3,886	$	3,886	3	$	520	$	520

Summary of Recorded Investment by Category for Portfolio Loans Restructured and Subsequently Defaulted

There were no troubled debt restructured loans that subsequently defaulted during the three or six months ended June 30, 2020 or 2019.

Summary of Aging of Recorded Investment in Past Due Portfolio Loans by Portfolio Class and Category

The aging of the recorded investment in past due loans by class at June 30, 2020 is shown below.

	June 30, 2020
(in thousands)	30-89 Days  Past Due		90 or More Days Past Due		Total Past Due		Current		Total
Commercial and industrial	$	6,684	$	22,623	$	29,307	$	3,113,890	$	3,143,197
Real estate:
Commercial - investor owned	116		2,095		2,211		1,307,684		1,309,895
Commercial - owner occupied	2,723		1,208		3,931		734,618		738,549
Construction and land development	58		—		58		481,163		481,221
Residential	951		1,738		2,689		324,303		326,992
Other	100		21		121		140,076		140,197
Total	$	10,632	$	27,685	$	38,317	$	6,101,734	$	6,140,051

Summary of Recorded Investment by Risk Category of Portfolio Loans by Portfolio Class and Category

The recorded investment by risk category of the loans by class at June 30, 2020, which is based upon the most recent analysis performed is as follows:

	Term Loans by Origination Year
(in thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Converted to Term Loans		Revolving Loans		Total
Commercial and industrial
Pass (1-6)	$	1,239,062	$	535,477	$	318,046	$	180,269	$	47,210	$	85,529	$	14,954	$	510,168	$	2,930,715
Watch (7)	26,347		13,354		4,850		6,468		24,044		175		—		62,293		137,531
Classified (8-9)	3,775		15,068		8,155		3,950		5,093		3,673		295		23,222		63,231
Total Commercial and industrial	$	1,269,184	$	563,899	$	331,051	$	190,687	$	76,347	$	89,377	$	15,249	$	595,683	$	3,131,477
Commercial real estate-investor owned
Pass (1-6)	$	246,319	$	321,849	$	204,242	$	126,567	$	153,904	$	181,761	$	3,284	$	35,460	$	1,273,386
Watch (7)	5,136		4,220		1,192		369		12,681		1,275		—		—		24,873
Classified (8-9)	—		966		8,286		455		249		1,680		—		—		11,636
Total Commercial real estate-investor owned	$	251,455	$	327,035	$	213,720	$	127,391	$	166,834	$	184,716	$	3,284	$	35,460	$	1,309,895
Commercial real estate-owner occupied
Pass (1-6)	$	147,313	$	200,519	$	92,624	$	79,058	$	44,990	$	80,172	$	2,756	$	42,883	$	690,315
Watch (7)	9,473		1,963		261		9,729		8,533		5,074		—		2,500		37,533
Classified (8-9)	601		1,156		4,267		458		—		4,219		—		—		10,701
Total Commercial real estate-owner occupied	$	157,387	$	203,638	$	97,152	$	89,245	$	53,523	$	89,465	$	2,756	$	45,383	$	738,549
Construction real estate
Pass (1-6)	$	75,983	$	167,936	$	121,909	$	37,555	$	28,060	$	12,906	$	—	$	20,631	$	464,980
Watch (7)	2,408		722		1,254		11,047		—		546		—		—		15,977
Classified (8-9)	—		227		—		—		—		37		—		—		264
Total Construction real estate	$	78,391	$	168,885	$	123,163	$	48,602	$	28,060	$	13,489	$	—	$	20,631	$	481,221
Residential real estate
Pass (1-6)	$	26,448	$	33,085	$	22,074	$	19,931	$	34,427	$	115,036	$	591	$	63,505	$	315,097
Watch (7)	181		895		842		—		—		2,027		279		802		5,026
Classified (8-9)	184		1,265		758		13		213		3,445		—		50		5,928
Total residential real estate	$	26,813	$	35,245	$	23,674	$	19,944	$	34,640	$	120,508	$	870	$	64,357	$	326,051
Other
Pass (1-6)	$	8,758	$	25,567	$	20,615	$	682	$	3,705	$	34,455	$	—	$	43,971	$	137,753
Watch (7)	—		2		—		—		—		—		—		1		3
Classified (8-9)	—		1		3		4		—		19		10		7		44
Total Other	$	8,758	$	25,570	$	20,618	$	686	$	3,705	$	34,474	$	10	$	43,979	$	137,800

In the table above, loan originations in 2020 and 2019 with a classification of watch or classified primarily represent renewals or modifications initially underwritten and originated in prior years.

For certain loans, primarily credit cards, the Company evaluates credit quality based on the aging status.

The following table presents the recorded investment on loans based on payment activity:

	June 30, 2020
(in thousands)	Performing		Non Performing		Total
Commercial and industrial	$	11,682	$	38	$	11,720
Real estate:
Residential	941		—		941
Other	2,376		21		2,397
Total	$	14,999	$	59	$	15,058

The recorded investment by risk category of loans by class at December 31, 2019, was as follows:

	December 31, 2019
(in thousands)	Pass (1-6)		Watch (7)		Classified (8 & 9)		Total*
Commercial and industrial	$	2,151,084	$	124,718	$	70,021	$	2,345,823
Real estate:
Commercial - investor owned	1,242,569		17,572		2,840		1,262,981
Commercial - owner occupied	643,276		28,773		6,473		678,522
Construction and land development	437,134		12,140		106		449,380
Residential	348,246		4,450		2,496		355,192
Other	132,096		3		51		132,150
Total	$	4,954,405	$	187,656	$	81,987	$	5,224,048

*Excludes $90.3 million of loans accounted for as PCI

XML

Commitments (Tables)

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Schedule of Commitments

The contractual amounts of off-balance-sheet financial instruments as of June 30, 2020, and December 31, 2019, are as follows:

(in thousands)	June 30, 2020		December 31, 2019
Commitments to extend credit	$	1,659,225	$	1,469,413
Letters of credit	51,798		47,969

XML

Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

	Derivative Assets										Derivative Liabilities
	June 30, 2020					December 31, 2019					June 30, 2020			December 31, 2019
(in thousands)	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives Designated as Hedging Instruments
Interest rate swap	$	261,962	Other Assets	$	—	$	61,962	Other Assets	$	—	Other Liabilities	$	10,840	Other Liabilities	$	2,872
Total				$	—				$	—		$	10,840		$	2,872
Derivatives not Designated as Hedging Instruments
Interest rate swap	$	1,021,528	Other Assets	$	35,728	$	749,819	Other Assets	$	11,055	Other Liabilities	$	35,988	Other Liabilities	$	11,875
Total				$	35,728				$	11,055		$	35,988		$	11,875

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s financial instruments that are subject to offsetting as of June 30, 2020 and December 31, 2019. The gross amounts of assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that financial assets and liabilities are presented on the Balance Sheet.

As of June 30, 2020
							Gross Amounts Not Offset in the Statement of Financial Position
(in thousands)	Gross Amounts Recognized		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets presented in the Statement of Financial Position		Financial Instruments		Fair Value Collateral Posted		Net Amount
Assets:
Interest rate swap	$	35,728	$	—	$	35,728	$	14	$	—	$	35,714
Liabilities:
Interest rate swap	$	46,828	$	—	$	46,828	$	14	$	46,222	$	592
Securities sold under agreements to repurchase	196,532		—		196,532		—		196,532		—
As of December 31, 2019
							Gross Amounts Not Offset in the Statement of Financial Position
(in thousands)	Gross Amounts Recognized		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets presented in the Statement of Financial Position		Financial Instruments		Fair Value Collateral Posted		Net Amount
Assets:
Interest rate swap	$	11,055	$	—	$	11,055	$	56	$	—	$	10,999
Liabilities:
Interest rate swap	$	14,747	$	—	$	14,747	$	56	$	14,573	$	118
Securities sold under agreements to repurchase	230,886		—		230,886		—		230,886		—

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Summary of Financial Instruments Measured at Fair Value on a Recurring Basis

The following table summarizes financial instruments measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	June 30, 2020
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	10,241	$	—	$	10,241
Obligations of states and political subdivisions	—		254,278		—		254,278
Agency mortgage-backed securities	—		720,991		—		720,991
U.S. Treasury bills	—		10,566		—		10,566
Corporate debt securities	—		2,028		—		2,028
Total securities available for sale	—		998,104		—		998,104
Derivatives	—		35,728		—		35,728
Total assets	$	—	$	1,033,832	$	—	$	1,033,832
Liabilities
Derivatives	$	—	$	46,828	$	—	$	46,828
Total liabilities	$	—	$	46,828	$	—	$	46,828

	December 31, 2019
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	10,046	$	—	$	10,046
Obligations of states and political subdivisions	—		213,024		—		213,024
Residential mortgage-backed securities	—		902,021		—		902,021
U.S. Treasury bills	—		10,226		—		10,226
Total securities available-for-sale	—		1,135,317		—		1,135,317
Derivative financial instruments	—		11,055		—		11,055
Total assets	$	—	$	1,146,372	$	—	$	1,146,372
Liabilities
Derivatives	$	—	$	14,747	$	—	$	14,747
Total liabilities	$	—	$	14,747	$	—	$	14,747

Summary of Financial Instruments and Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis

	(1)		(1)		(1)		(1)
(in thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total losses for the three months ended June 30, 2020		Total losses for the six months ended June 30, 2020
Impaired loans	$	3,627	$	—	$	—	$	3,627	$	3,219	$	3,230
Other real estate	3,899		—		—		3,899		79		777
Total	$	7,526	$	—	$	—	$	7,526	$	3,298	$	4,007
(1) The amounts represent only balances measured at fair value during the period and still held as of the reporting date.

Summary of Carrying Amount and Fair Values of Financial Instruments Reported on the Balance Sheets

Following is a summary of the carrying amounts and fair values of the Company’s financial instruments on the consolidated balance sheets at June 30, 2020 and December 31, 2019.

	June 30, 2020			December 31, 2019
(in thousands)	Carrying Amount	Estimated fair value	Level	Carrying Amount	Estimated fair value	Level
Balance sheet assets
Securities held-to-maturity, net	345,791	356,139	Level 2	181,166	181,939	Level 2
Other investments	43,106	43,106	Level 2	38,044	38,044	Level 2
Loans held for sale	16,029	16,029	Level 2	5,570	5,570	Level 2
Loans, net	6,029,781	5,876,000	Level 3	5,271,049	5,205,651	Level 3
State tax credits, held for sale	38,820	44,164	Level 3	36,802	39,046	Level 3
Balance sheet liabilities
Certificates of deposit	659,166	665,374	Level 3	826,447	825,203	Level 3
Subordinated debentures and notes	203,384	192,852	Level 2	141,258	130,985	Level 2
FHLB advances	250,000	251,978	Level 2	222,406	221,402	Level 2
Other borrowings and notes payable	227,961	227,961	Level 2	265,172	265,172	Level 2

XML

Subordinated Debentures (Tables)

6 Months Ended

Jun. 30, 2020

Subordinated Borrowings [Abstract]

Schedule of Subordinated Debentures

The amounts and terms of each issuance of the Company’s subordinated debentures at June 30, 2020 and December 31, 2019 were as follows:

	Amount						Maturity Date	Initial Call Date(1)	Interest Rate
(in thousands)	June 30, 2020			December 31, 2019
EFSC Clayco Statutory Trust I	$	3,196		$	3,196		December 17, 2033	December 17, 2008	Floats @ 3MO LIBOR + 2.85%
EFSC Capital Trust II	5,155			5,155			June 17, 2034	June 17, 2009	Floats @ 3MO LIBOR + 2.65%
EFSC Statutory Trust III	11,341			11,341			December 15, 2034	December 15, 2009	Floats @ 3MO LIBOR + 1.97%
EFSC Clayco Statutory Trust II	4,124			4,124			September 15, 2035	September 15, 2010	Floats @ 3MO LIBOR + 1.83%
EFSC Statutory Trust IV	10,310			10,310			December 15, 2035	December 15, 2010	Floats @ 3MO LIBOR + 1.44%
EFSC Statutory Trust V	4,124			4,124			September 15, 2036	September 15, 2011	Floats @ 3MO LIBOR + 1.60%
EFSC Capital Trust VI	14,433			14,433			March 30, 2037	March 30, 2012	Floats @ 3MO LIBOR + 1.60%
EFSC Capital Trust VII	4,124			4,124			December 15, 2037	December 15, 2012	Floats @ 3MO LIBOR + 2.25%
JEFFCO Stat Trust I(2)	7,819			7,886			February 22, 2031	February 22, 2011	Fixed @ 10.20%
JEFFCO Stat Trust II(2)	4,415			4,388			March 17, 2034	March 17, 2009	Floats @ 3MO LIBOR + 2.75%
Trinity Capital Trust III(2)	5,239			5,206			September 8, 2034	September 8, 2009	Floats @ 3MO LIBOR + 2.70%
Trinity Capital Trust IV(2)	10,310			10,302			November 23, 2035	August 23, 2010	Fixed @ 6.88%
Trinity Capital Trust V(2)	7,625			7,543			December 15, 2036	September 15, 2011	Floats @ 3MO LIBOR + 1.65%
Total junior subordinated debentures	92,215			92,132
5.75% Fixed-to-floating rate subordinated notes	63,250			—			June 1, 2030	June 1, 2025	Fixed @ 5.75% until June 1, 2025, then floats @ Benchmark rate (3 month term SOFR) + 5.66%
4.75% Fixed-to-floating rate subordinated notes	50,000			50,000			November 1, 2026	November 1, 2021	Fixed @ 4.75% until November 1, 2021, then floats @ 3MO LIBOR + 3.387%
Debt issuance costs	(2,081		)	(874		)
Total fixed-to-floating rate subordinated notes	111,169			49,126
Total subordinated debentures and notes	$	203,384		$	141,258
(1) Callable each quarter after initial call date.
(2) Purchase accounting adjustments are reflected in the balance and also impact the effective interest rate.

XML

Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in accumulated other comprehensive income after-tax by component:

(in thousands)	Net Unrealized Gain (Loss) on Available-for-Sale Debt Securities			Unamortized Gain (Loss) on Held-to-Maturity Securities			Net Unrealized Loss on Cash Flow Hedges			Total
Balance, March 31, 2020	$	25,538		$	4,778		$	(7,219	)	$	23,097
Net change	10,984			(329		)	(943		)	9,712
Transfer from available-for-sale to held-to-maturity	$	(8,650	)	$	8,650		$	—		$	—
Balance, June 30, 2020	$	27,872		$	13,099		$	(8,162	)	$	32,809
Balance, December 31, 2019	$	14,977		$	4,934		$	(2,162	)	$	17,749
Net change	21,545			(485		)	(6,000		)	15,060
Transfer from available-for-sale to held-to-maturity	$	(8,650	)	$	8,650		$	—		$	—
Balance, June 30, 2020	$	27,872		$	13,099		$	(8,162	)	$	32,809
(in thousands)	Net Unrealized Gain (Loss) on Available-for-Sale Debt Securities			Unamortized Gain (Loss) on Held-to-Maturity Securities			Net Unrealized Loss on Cash Flow Hedges			Total
Balance, March 31, 2019	$	2,675		$	(233	)	$	(952	)	$	1,490
Net change	12,842			3			(1,261		)	11,584
Balance, June 30, 2019	$	15,517		$	(230	)	$	(2,213	)	$	13,074
Balance, December 31, 2018	$	(9,047	)	$	(235	)	$	—		$	(9,282	)
Net change	24,564			5			(2,213		)	22,356
Balance, June 30, 2019	$	15,517		$	(230	)	$	(2,213	)	$	13,074

Schedule of Pre-tax and After-tax Changes in the Components of Other Comprehensive Income

The following table presents the pre-tax and after-tax changes in the components of other comprehensive income:

	Three months ended June 30,
(in thousands)	2020									2019
	Pre-tax			Tax effect			After-tax			Pre-tax			Tax effect			After-tax
Change in unrealized gain on available-for-sale debt securities	$	14,587		$	3,603		$	10,984		$	17,054		$	4,212		$	12,842
Reclassification of (gain) loss on held-to-maturity securities(b)	(437		)	(108		)	(329		)	4			1			3
Change in unrealized loss on cash flow hedges arising during the period	(1,563		)	(386		)	(1,177		)	(1,679		)	(414		)	(1,265		)
Reclassification of loss on cash flow hedges(b)	311			77			234			5			1			4
Total other comprehensive income	$	12,898		$	3,186		$	9,712		$	15,384		$	3,800		$	11,584
	Six months ended June 30,
	2020									2019
	Pre-tax			Tax effect			After-tax			Pre-tax			Tax effect			After-tax
Change in unrealized gain on available-for-sale debt securities	$	28,616		$	7,068		$	21,548		$	32,329		$	7,985		$	24,344
Reclassification adjustment for realized (gain) loss on sale of available-for-sale debt securities(a)	(4		)	(1		)	(3		)	292			72			220
Reclassification of (gain) loss on held-to-maturity securities(b)	(644		)	(159		)	(485		)	7			2			5
Change in unrealized loss on cash flow hedges arising during the period	(8,442		)	(2,085		)	(6,357		)	(2,944		)	(727		)	(2,217		)
Reclassification of loss on cash flow hedges(b)	474			117			357			5			1			4
Total other comprehensive income	$	20,000		$	4,940		$	15,060		$	29,689		$	7,333		$	22,356

^(a)The pre-tax amount is reported in noninterest income/expense in the Consolidated Statements of Operations

^(b)The pre-tax amount is reported in interest income/expense in the Consolidated Statements of Operations

XML

Summary of Significant Accounting Policies (Details) $ in Millions	Jun. 30, 2020 USD ($)
Other Assets
Property, Plant and Equipment [Line Items]
Accrued interest receivable	$ 19.7

XML

Summary of Significant Accounting Policies Schedule of Impact of Adoption of New Accounting Standard (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Jan. 01, 2020	Dec. 31, 2019
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable, allowance for credit loss		$ 43,288
Allowance for credit losses on held-to-maturity debt securities	$ (645)	0
Deferred tax asset		14,851
Retained earnings	$ 380,667	380,737	$ 380,737
Loans Receivable
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable, allowance for credit loss		5,314,337
Unfunded Loan Commitment
Financing Receivable, Credit Quality Indicator [Line Items]
Reserve for unfunded commitments		430
Cumulative Effect, Period Of Adoption, Adjustment
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable, allowance for credit loss		28,387
Allowance for credit losses on held-to-maturity debt securities		303
Deferred tax asset		5,898
Retained earnings		(18,114)
Cumulative Effect, Period Of Adoption, Adjustment | Loans Receivable
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable, allowance for credit loss		7,091
Cumulative Effect, Period Of Adoption, Adjustment | Unfunded Loan Commitment
Financing Receivable, Credit Quality Indicator [Line Items]
Reserve for unfunded commitments		2,413
Cumulative Effect, Period Of Adoption, Adjusted Balance
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable, allowance for credit loss		71,675
Allowance for credit losses on held-to-maturity debt securities		303
Deferred tax asset		20,749
Retained earnings		362,623
Cumulative Effect, Period Of Adoption, Adjusted Balance | Loans Receivable
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable, allowance for credit loss		5,321,428
Cumulative Effect, Period Of Adoption, Adjusted Balance | Unfunded Loan Commitment
Financing Receivable, Credit Quality Indicator [Line Items]
Reserve for unfunded commitments		2,843
Accounting Standards Update 2016-13 | Cumulative Effect, Period Of Adoption, Adjustment
Financing Receivable, Credit Quality Indicator [Line Items]
Retained earnings		$ 18,100

XML

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Earnings Per Share [Abstract]
Net income as reported	$ 14,634	$ 18,424	$ 27,502	$ 34,580
Weighted average common shares outstanding (in shares)	26,180,000	26,887,000	26,325,000	25,415,000
Additional dilutive common stock equivalents (in shares)	15,000	53,000	29,000	73,000
Weighted average diluted common shares outstanding (in shares)	26,195,000	26,940,000	26,354,000	25,488,000
Basic earnings per common share (in dollars per share)	$ 0.56	$ 0.69	$ 1.04	$ 1.36
Diluted earnings per common share (in dollars per share)	$ 0.56	$ 0.68	$ 1.04	$ 1.36
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	157,000	130,000	147,000	99,000

XML

Investments - Schedule of Available-for-sale and Held-to-Maturity Securities Reconciliation (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Jan. 01, 2020	Dec. 31, 2019
Debt Securities, Held-to-maturity [Abstract]
Amortized Cost	$ 346,436		$ 181,166
Gross Unrealized Gains	10,498		973
Gross Unrealized Losses	(150)		(200)
Allowance for Credit Losses	645	$ 0
Fair Value	356,139		181,939
Total securities held-to-maturity, net	345,791		181,166
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	960,984		1,115,323
Gross Unrealized Gains	37,259		21,548
Gross Unrealized Losses	(139)		(1,554)
Allowance for Credit Losses	0
Fair Value	998,104		1,135,317
Obligations of U.S. Government-sponsored enterprises
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	9,966		9,954
Gross Unrealized Gains	275		92
Gross Unrealized Losses	0		0
Allowance for Credit Losses	0
Fair Value	10,241		10,046
Obligations of states and political subdivisions
Debt Securities, Held-to-maturity [Abstract]
Amortized Cost	96,547		11,704
Gross Unrealized Gains	336		170
Gross Unrealized Losses	(122)		0
Allowance for Credit Losses	16
Fair Value	96,745		11,874
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	245,961		207,269
Gross Unrealized Gains	8,450		6,118
Gross Unrealized Losses	(133)		(363)
Allowance for Credit Losses	0
Fair Value	254,278		213,024
Agency mortgage-backed securities
Debt Securities, Held-to-maturity [Abstract]
Amortized Cost	127,353		46,346
Gross Unrealized Gains	2,469		675
Gross Unrealized Losses	(28)		0
Allowance for Credit Losses	0
Fair Value	129,794		47,021
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	693,082		888,129
Gross Unrealized Gains	27,915		15,083
Gross Unrealized Losses	(6)		(1,191)
Allowance for Credit Losses	0
Fair Value	720,991		902,021
US Treasury Bill Securities [Member]
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	9,975		9,971
Gross Unrealized Gains	591		255
Gross Unrealized Losses	0		0
Allowance for Credit Losses	0
Fair Value	10,566		10,226
Corporate Debt Securities [Member]
Debt Securities, Held-to-maturity [Abstract]
Amortized Cost	122,536		123,116
Gross Unrealized Gains	7,693		128
Gross Unrealized Losses	0		(200)
Allowance for Credit Losses	629
Fair Value	129,600		$ 123,044
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	2,000
Gross Unrealized Gains	28
Gross Unrealized Losses	0
Fair Value	$ 2,028

XML

Investments - Investments Classified by Contractual Maturity Date (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Available for sale, Amortized Cost
Due in one year or less	$ 2,313
Due after one year through five years	25,981
Due after five years through ten years	9,455
Due after ten years	230,153
Agency mortgage-backed securities	693,082
Amortized Cost	960,984	$ 1,115,323
Available for sale, Estimated Fair Value
Due in one year or less	2,345
Due after one year through five years	27,058
Due after five years through ten years	9,915
Due after ten years	237,795
Agency mortgage-backed securities	720,991
Available for sale, fair value	998,104	1,135,317
Held to maturity, Amortized Cost
Due in one year or less	0
Due after one year through five years	10,207
Due after five years through ten years	126,285
Due after ten years	82,591
Agency mortgage-backed securities	127,353
Amortized Cost	346,436	181,166
Held to maturity, Estimated Fair Value
Due in one year or less	0
Due after one year through five years	10,597
Due after five years through ten years	133,206
Due after ten years	82,542
Agency mortgage-backed securities	129,794
Held to maturity, fair value	$ 356,139	$ 181,939

XML

Investments - Schedule of Unrealized Loss on Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt Securities, Available-for-sale [Line Items]
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months	$ 42,187	$ 255,984
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	138	1,319
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer	66	41,491
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	1	435
Debt Securities, Available-for-sale, Unrealized Loss Position	42,253	297,475
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss	139	1,754
Obligations of states and political subdivisions
Debt Securities, Available-for-sale [Line Items]
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months	33,821	56,327
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	133	363
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer	0	0
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	0	0
Debt Securities, Available-for-sale, Unrealized Loss Position	33,821	56,327
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss	133	363
Agency mortgage-backed securities
Debt Securities, Available-for-sale [Line Items]
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months	8,366	131,693
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	5	756
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer	66	41,491
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	1	435
Debt Securities, Available-for-sale, Unrealized Loss Position	8,432	173,184
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss	$ 6	1,191
Corporate Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months		67,964
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		200
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer		0
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		0
Debt Securities, Available-for-sale, Unrealized Loss Position		67,964
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		$ 200

XML

Investments - Narrative (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jan. 01, 2020	Dec. 31, 2019
Debt Securities, Available-for-sale [Line Items]
Debt Securities, Available-for-sale, Amortized Cost	$ 960,984		$ 1,115,323
Securities available for sale	998,104		$ 1,135,317
accumulated other comprehensive income loss available for sale securities adjustment pre tax	$ 11,500
Maximum percentage of shareholders' equity security holdings held of one issuer	10.00%		10.00%
Securities pledged	$ 449,900		$ 484,800
Mortgage-backed securities, weighted average life	3 years
Accrued interest receivable, available-for-sale securities	$ 3,600
Accrued interest receivable, held-to-maturity securities	2,300
Allowance for credit losses on held-to-maturity debt securities	645	$ 0
Reclassified to Held to Maturity [Member]
Debt Securities, Available-for-sale [Line Items]
Debt Securities, Available-for-sale, Amortized Cost	163,600
Securities available for sale	$ 175,100

XML

Loans - Summary of Portfolio Loans by Category (Details) - Portfolio loans, net - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, before unearned loan fees	$ 6,164,492	$ 5,316,953
Unearned loan fees, net	(24,441)	(2,616)
Loans, including unearned loan fees	6,140,051	5,314,337
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, before unearned loan fees	3,165,611	2,361,157
Loans, including unearned loan fees	3,143,197
Commercial - investor owned
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, before unearned loan fees	1,309,895	1,299,884
Loans, including unearned loan fees	1,309,895
Commercial - owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, before unearned loan fees	738,549	697,437
Loans, including unearned loan fees	738,549
Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, before unearned loan fees	481,221	457,273
Loans, including unearned loan fees	481,221
Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, before unearned loan fees	326,992	366,261
Loans, including unearned loan fees	326,992
Total real estate loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, before unearned loan fees	2,856,657	2,820,855
Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, before unearned loan fees	142,224	$ 134,941
Loans, including unearned loan fees	$ 140,197

XML

Loans - Summary of Allowance for Loan Losses by Portfolio Class and Category (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Jan. 01, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Allowance for Loan Losses [Roll Forward]
Balance	$ 43,288
Portfolio loans, net
Allowance for Loan Losses [Roll Forward]
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	28,387
Provision for Loan, Lease, and Other Losses		$ 18,391		$ 40,086
Balance at December 31, 2019	43,288	92,187		43,288
Provision for credit losses	(1,680)	18,400	$ 1,700	40,100	$ 3,200
Charge-offs		(3,664)		(3,968)
Recoveries		3,356		4,157
Balance	69,995	110,270		110,270
Portfolio loans, net | Commercial and industrial
Allowance for Loan Losses [Roll Forward]
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	6,494
Provision for Loan, Lease, and Other Losses		7,168		18,759
Balance at December 31, 2019	27,455	45,981		27,455
Provision for credit losses	0
Charge-offs		(3,303)		(3,366)
Recoveries		293		797
Balance	33,949	50,139		50,139
Portfolio loans, net | CRE - investor owned
Allowance for Loan Losses [Roll Forward]
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	10,726
Provision for Loan, Lease, and Other Losses		2,599		5,823
Balance at December 31, 2019	5,935	19,892		5,935
Provision for credit losses	(5)
Charge-offs		(224)		(226)
Recoveries		2,752		2,766
Balance	16,656	25,019		25,019
Portfolio loans, net | CRE - owner occupied
Allowance for Loan Losses [Roll Forward]
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	2,598
Provision for Loan, Lease, and Other Losses		1,600		3,594
Balance at December 31, 2019	4,873	9,477		4,873
Provision for credit losses	(57)
Charge-offs		0		0
Recoveries		11		80
Balance	7,414	11,088		11,088
Portfolio loans, net | Construction and land development
Allowance for Loan Losses [Roll Forward]
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	5,183
Provision for Loan, Lease, and Other Losses		6,038		8,347
Balance at December 31, 2019	2,611	9,895		2,611
Provision for credit losses	(217)
Charge-offs		0		(31)
Recoveries		29		69
Balance	7,577	15,962		15,962
Portfolio loans, net | Residential real estate
Allowance for Loan Losses [Roll Forward]
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	3,470
Provision for Loan, Lease, and Other Losses		744		2,755
Balance at December 31, 2019	1,280	5,395		1,280
Provision for credit losses	(1,401)
Charge-offs		(32)		(154)
Recoveries		226		383
Balance	3,349	6,333		6,333
Portfolio loans, net | Other
Allowance for Loan Losses [Roll Forward]
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	(84)
Provision for Loan, Lease, and Other Losses		242		808
Balance at December 31, 2019	1,134	1,547		1,134
Provision for credit losses	0
Charge-offs		(105)		(191)
Recoveries		45		62
Balance	$ 1,050	$ 1,729		$ 1,729

XML

Loans - Summary of Recorded Investment in Portfolio Loans by Class and Category Based on Impairment Method (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($) loan	Jun. 30, 2019 USD ($) loan	Mar. 31, 2020 USD ($)	Jan. 01, 2020 USD ($)	Dec. 31, 2019 USD ($)
Summary of Recorded Investment in Non-covered Loans by Portfolio Class and Category Based on Impairment Method [Line Items]
Total				$ 43,288
Portfolio loans, net
Summary of Recorded Investment in Non-covered Loans by Portfolio Class and Category Based on Impairment Method [Line Items]
Financing Receivable, Modifications, Number of Contracts | loan	3	3
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 3,886	$ 520
Financing Receivable, Troubled Debt Restructuring, Premodification	3,886	$ 520
Total	110,270		$ 92,187	69,995	$ 43,288
Loans - Ending balance:
Unamortized Loan Commitment and Origination Fees and Unamortized Discounts or Premiums	(24,441)				(2,616)
Total	$ 6,164,492				5,316,953
Portfolio loans, net | Commercial and industrial
Summary of Recorded Investment in Non-covered Loans by Portfolio Class and Category Based on Impairment Method [Line Items]
Financing Receivable, Modifications, Number of Contracts | loan	1	0
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 3,731	$ 0
Financing Receivable, Troubled Debt Restructuring, Premodification	3,731	$ 0
Total	50,139		45,981	33,949	27,455
Loans - Ending balance:
Total	3,165,611				2,361,157
Portfolio loans, net | CRE - investor owned
Summary of Recorded Investment in Non-covered Loans by Portfolio Class and Category Based on Impairment Method [Line Items]
Total	25,019		19,892	16,656	5,935
Loans - Ending balance:
Total	$ 1,309,895				1,299,884
Portfolio loans, net | CRE - owner occupied
Summary of Recorded Investment in Non-covered Loans by Portfolio Class and Category Based on Impairment Method [Line Items]
Financing Receivable, Modifications, Number of Contracts | loan	0	1
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 0	$ 188
Financing Receivable, Troubled Debt Restructuring, Premodification	0	$ 188
Total	11,088		9,477	7,414	4,873
Loans - Ending balance:
Total	738,549				697,437
Portfolio loans, net | Construction and land development
Summary of Recorded Investment in Non-covered Loans by Portfolio Class and Category Based on Impairment Method [Line Items]
Total	15,962		9,895	7,577	2,611
Loans - Ending balance:
Total	$ 481,221				457,273
Portfolio loans, net | Residential real estate
Summary of Recorded Investment in Non-covered Loans by Portfolio Class and Category Based on Impairment Method [Line Items]
Financing Receivable, Modifications, Number of Contracts | loan	2	2
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 155	$ 332
Financing Receivable, Troubled Debt Restructuring, Premodification	155	$ 332
Total	6,333		5,395	3,349	1,280
Loans - Ending balance:
Total	326,992				366,261
Portfolio loans, net | Other
Summary of Recorded Investment in Non-covered Loans by Portfolio Class and Category Based on Impairment Method [Line Items]
Total	1,729		$ 1,547	$ 1,050	1,134
Loans - Ending balance:
Total	$ 142,224				$ 134,941

XML

Loans - Summary of Portfolio Loans Individually Evaluated for Impairment by Category (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Jan. 01, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Mar. 31, 2020	Dec. 31, 2019
Financing Receivable, Impaired [Line Items]
Financing receivable, allowance for credit loss	$ 43,288
Portfolio loans, net
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Allowance		$ 27,284		$ 27,284
Total Recorded Investment		41,473		41,473			$ 26,425
Financing Receivable, Allowance for Credit Loss, Writeoff		(3,664)		(3,968)
Financing Receivable, Allowance for Credit Loss, Recovery		3,356		4,157
Financing receivable, allowance for credit loss	69,995	110,270		110,270		$ 92,187	43,288
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	28,387
Provision for credit losses	1,680	(18,400)	$ (1,700)	(40,100)	$ (3,200)
Portfolio loans, net | Commercial and industrial
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Allowance		20,553		20,553
Total Recorded Investment		31,938		31,938			22,578
Financing Receivable, Allowance for Credit Loss, Writeoff		(3,303)		(3,366)
Financing Receivable, Allowance for Credit Loss, Recovery		293		797
Financing receivable, allowance for credit loss	33,949	50,139		50,139		45,981	27,455
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	6,494
Provision for credit losses	0
Portfolio loans, net | Commercial - investor owned
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Allowance		1,677		1,677
Total Recorded Investment		2,389		2,389			2,303
Financing Receivable, Allowance for Credit Loss, Writeoff		(224)		(226)
Financing Receivable, Allowance for Credit Loss, Recovery		2,752		2,766
Financing receivable, allowance for credit loss	16,656	25,019		25,019		19,892	5,935
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	10,726
Provision for credit losses	5
Portfolio loans, net | Commercial - owner occupied
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Allowance		1,403		1,403
Total Recorded Investment		2,400		2,400			213
Financing Receivable, Allowance for Credit Loss, Writeoff		0		0
Financing Receivable, Allowance for Credit Loss, Recovery		11		80
Financing receivable, allowance for credit loss	7,414	11,088		11,088		9,477	4,873
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	2,598
Provision for credit losses	57
Portfolio loans, net | Construction and land development
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Allowance		207		207
Total Recorded Investment		207		207
Financing Receivable, Allowance for Credit Loss, Writeoff		0		(31)
Financing Receivable, Allowance for Credit Loss, Recovery		29		69
Financing receivable, allowance for credit loss	7,577	15,962		15,962		9,895	2,611
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	5,183
Provision for credit losses	217
Portfolio loans, net | Residential real estate
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Allowance		3,444		3,444
Total Recorded Investment		4,499		4,499			1,330
Financing Receivable, Allowance for Credit Loss, Writeoff		(32)		(154)
Financing Receivable, Allowance for Credit Loss, Recovery		226		383
Financing receivable, allowance for credit loss	3,349	6,333		6,333		5,395	1,280
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	3,470
Provision for credit losses	1,401
Portfolio loans, net | Other
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Allowance		0		0
Total Recorded Investment		40		40			1
Financing Receivable, Allowance for Credit Loss, Writeoff		(105)		(191)
Financing Receivable, Allowance for Credit Loss, Recovery		45		62
Financing receivable, allowance for credit loss	1,050	$ 1,729		$ 1,729		$ 1,547	$ 1,134
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	(84)
Provision for credit losses	$ 0

XML

Loans - Narrative (Details)		3 Months Ended		6 Months Ended
	Jan. 01, 2020 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) loan	Jun. 30, 2019 USD ($) loan	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($) loan
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Purchased with Credit Deterioration, Discount (Premium)				$ 22,200,000
Number of loans over 90 days past due and still accruing interest | loan							0
Unadvanced commitments on impaired loans							$ 225,000
Financing Receivable, Amount Eligible for Deferred Payment		$ 685,700,000		685,700,000
Financing Receivable, Amount Eligible for Deferral of Both Principal and Interest		361,400,000		361,400,000
Financing Receivable, Amount Eligible for Deferral of Principal Only		324,300,000		324,300,000
Loans and Leases Receivable, Deferred Income		4,000,000.0		4,000,000.0
Federal Home Loan Bank, Advances, General Debt Obligations, Maximum Amount Available		2,400,000,000		2,400,000,000
Financing receivable, allowance for credit loss	$ 43,288,000
Financing Receivable, Paycheck Protection Program		830,200,000		830,200,000
Financing Receivable, Paycheck Protection Program, Net of Deferred Fees		807,800,000		807,800,000
Financing Receivable, Paycheck Protection Program, Unearned Fees		22,400,000		22,400,000
Unadvanced Commitment on Impaired Loan
Accounts, Notes, Loans and Financing Receivable [Line Items]
Estimated losses attributable to unadvanced commitments on impaired loans		4,900,000		4,900,000			400,000
Non-Covered Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	28,387,000
Provision for credit losses	(1,680,000)	18,400,000	$ 1,700,000	40,100,000	$ 3,200,000
Financing Receivable, Allowance for Credit Loss, Threshold of Loans Written Off	100,000
Post-Modification Outstanding Recorded Balance				$ 3,886,000	$ 520,000
Financing Receivable, Modifications, Number of Contracts | loan				3	3
Restructuring Reserve		3,720,000		$ 3,720,000			79,000
Financing Receivable, before Allowance for Credit Loss		6,164,492,000		6,164,492,000			5,316,953,000
Financing receivable, allowance for credit loss	69,995,000	110,270,000		110,270,000		$ 92,187,000	43,288,000
Non-Covered Loans | Enterprise Value Lending Portfolio Niche Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing receivable, allowance for credit loss		15,800,000		15,800,000
Non-Covered Loans | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	(84,000)
Provision for credit losses	0
Restructuring Reserve		0		0			0
Financing Receivable, before Allowance for Credit Loss		142,224,000		142,224,000			134,941,000
Financing receivable, allowance for credit loss	1,050,000	1,729,000		1,729,000		$ 1,547,000	1,134,000
Non-Covered Loans | Agriculture Portfolio Niche Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing receivable, allowance for credit loss		2,400,000		2,400,000
Financial Asset Acquired with Credit Deterioration [Member] | Non-Covered Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, before Allowance for Credit Loss							$ 90,300,000
Cumulative Effect, Period Of Adoption, Adjustment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing receivable, allowance for credit loss	$ 28,387,000
Cumulative Effect, Period Of Adoption, Adjustment | Non-Covered Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing receivable, allowance for credit loss		$ 1,000,000.0		$ 1,000,000.0

XML

Loans - Summary of Recorded Investment in Impaired Portfolio Loans by Category (Details) - Non-Covered Loans $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($) loan	Jun. 30, 2019 loan	Dec. 31, 2019 USD ($)
Financing Receivable, Past Due [Line Items]
Total Recorded Investment	$ 41,473		$ 26,425
Recorded Investment With No Allowance	$ 27,284
Financing Receivable, Modifications, Number of Contracts | loan	3	3
Nonaccrual	$ 36,867		26,096
Restructured, accruing	3,720		79
Impaired Financing Receivables, Recorded Investment, 90 Days Past Due and Still Accruing	886		250
Commercial and industrial
Financing Receivable, Past Due [Line Items]
Total Recorded Investment	31,938		22,578
Recorded Investment With No Allowance	$ 20,553
Financing Receivable, Modifications, Number of Contracts | loan	1	0
Nonaccrual	$ 27,431		22,328
Restructured, accruing	3,642		0
Impaired Financing Receivables, Recorded Investment, 90 Days Past Due and Still Accruing	865		250
Commercial - investor owned
Financing Receivable, Past Due [Line Items]
Total Recorded Investment	2,389		2,303
Recorded Investment With No Allowance	1,677
Nonaccrual	2,389		2,303
Restructured, accruing	0		0
Impaired Financing Receivables, Recorded Investment, 90 Days Past Due and Still Accruing	0		0
Commercial - owner occupied
Financing Receivable, Past Due [Line Items]
Total Recorded Investment	2,400		213
Recorded Investment With No Allowance	$ 1,403
Financing Receivable, Modifications, Number of Contracts | loan	0	1
Nonaccrual	$ 2,400		213
Restructured, accruing	0		0
Impaired Financing Receivables, Recorded Investment, 90 Days Past Due and Still Accruing	0		0
Construction and land development
Financing Receivable, Past Due [Line Items]
Total Recorded Investment	207
Recorded Investment With No Allowance	207
Nonaccrual	207
Restructured, accruing	0
Impaired Financing Receivables, Recorded Investment, 90 Days Past Due and Still Accruing	0
Residential real estate
Financing Receivable, Past Due [Line Items]
Total Recorded Investment	4,499		1,330
Recorded Investment With No Allowance	$ 3,444
Financing Receivable, Modifications, Number of Contracts | loan	2	2
Nonaccrual	$ 4,421		1,251
Restructured, accruing	78		79
Impaired Financing Receivables, Recorded Investment, 90 Days Past Due and Still Accruing	0		0
Other
Financing Receivable, Past Due [Line Items]
Total Recorded Investment	40		1
Recorded Investment With No Allowance	0
Nonaccrual	19		1
Restructured, accruing	0		0
Impaired Financing Receivables, Recorded Investment, 90 Days Past Due and Still Accruing	$ 21		$ 0

XML

Loans - Summary of Recorded Investment by Category for Portfolio Loans Restructured (Details) - Non-Covered Loans $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($) loan	Jun. 30, 2019 USD ($) loan
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	3	3
Pre-Modification Outstanding Recorded Balance	$ 3,886	$ 520
Post-Modification Outstanding Recorded Balance	$ 3,886	$ 520
Commercial and industrial
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	1	0
Pre-Modification Outstanding Recorded Balance	$ 3,731	$ 0
Post-Modification Outstanding Recorded Balance	$ 3,731	$ 0
CRE - owner occupied
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	0	1
Pre-Modification Outstanding Recorded Balance	$ 0	$ 188
Post-Modification Outstanding Recorded Balance	$ 0	$ 188
Residential real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	2	2
Pre-Modification Outstanding Recorded Balance	$ 155	$ 332
Post-Modification Outstanding Recorded Balance	$ 155	$ 332

XML

Loans - Summary of Aging of Recorded Investment in Past Due Portfolio Loans by Portfolio Class and Category (Details) - Non-Covered Loans - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Past Due [Line Items]
Total Past Due	$ 38,317
Current	6,101,734
Loans, including unearned loan fees	6,140,051	$ 5,314,337
Commercial and industrial
Financing Receivable, Past Due [Line Items]
Total Past Due	29,307
Current	3,113,890
Loans, including unearned loan fees	3,143,197
CRE - investor owned
Financing Receivable, Past Due [Line Items]
Total Past Due	2,211
Current	1,307,684
Loans, including unearned loan fees	1,309,895
CRE - owner occupied
Financing Receivable, Past Due [Line Items]
Total Past Due	3,931
Current	734,618
Loans, including unearned loan fees	738,549
Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	58
Current	481,163
Loans, including unearned loan fees	481,221
Residential real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	2,689
Current	324,303
Loans, including unearned loan fees	326,992
Other
Financing Receivable, Past Due [Line Items]
Total Past Due	121
Current	140,076
Loans, including unearned loan fees	140,197
Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due	10,632
Financial Asset, 30 to 89 Days Past Due [Member] | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Total Past Due	6,684
Financial Asset, 30 to 89 Days Past Due [Member] | CRE - investor owned
Financing Receivable, Past Due [Line Items]
Total Past Due	116
Financial Asset, 30 to 89 Days Past Due [Member] | CRE - owner occupied
Financing Receivable, Past Due [Line Items]
Total Past Due	2,723
Financial Asset, 30 to 89 Days Past Due [Member] | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	58
Financial Asset, 30 to 89 Days Past Due [Member] | Residential real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	951
Financial Asset, 30 to 89 Days Past Due [Member] | Other
Financing Receivable, Past Due [Line Items]
Total Past Due	100
Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due	27,685
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Total Past Due	22,623
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | CRE - investor owned
Financing Receivable, Past Due [Line Items]
Total Past Due	2,095
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | CRE - owner occupied
Financing Receivable, Past Due [Line Items]
Total Past Due	1,208
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	0
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Residential real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	1,738
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Other
Financing Receivable, Past Due [Line Items]
Total Past Due	$ 21

XML

Loans - Summary of Term Loans by Origination Year (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2020	$ 1,269,184
2019	563,899
2018	331,051
2017	190,687
2016	76,347
Prior	89,377
Financing Receivable, Converted	15,249
Revolving Loans	595,683
Total	3,131,477
Commercial and industrial | Pass (1-6)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	1,239,062
2019	535,477
2018	318,046
2017	180,269
2016	47,210
Prior	85,529
Financing Receivable, Converted	14,954
Revolving Loans	510,168
Total	2,930,715
Commercial and industrial | Watch (7)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	26,347
2019	13,354
2018	4,850
2017	6,468
2016	24,044
Prior	175
Financing Receivable, Converted	0
Revolving Loans	62,293
Total	137,531
Commercial and industrial | Classified (8 & 9)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	3,775
2019	15,068
2018	8,155
2017	3,950
2016	5,093
Prior	3,673
Financing Receivable, Converted	295
Revolving Loans	23,222
Total	63,231
Commercial Real Estate-Investor Owned Portfolio Segment [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2020	251,455
2019	327,035
2018	213,720
2017	127,391
2016	166,834
Prior	184,716
Financing Receivable, Converted	3,284
Revolving Loans	35,460
Total	1,309,895
Commercial Real Estate-Investor Owned Portfolio Segment [Member] | Pass (1-6)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	246,319
2019	321,849
2018	204,242
2017	126,567
2016	153,904
Prior	181,761
Financing Receivable, Converted	3,284
Revolving Loans	35,460
Total	1,273,386
Commercial Real Estate-Investor Owned Portfolio Segment [Member] | Watch (7)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	5,136
2019	4,220
2018	1,192
2017	369
2016	12,681
Prior	1,275
Financing Receivable, Converted	0
Revolving Loans	0
Total	24,873
Commercial Real Estate-Investor Owned Portfolio Segment [Member] | Classified (8 & 9)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	966
2018	8,286
2017	455
2016	249
Prior	1,680
Financing Receivable, Converted	0
Revolving Loans	0
Total	11,636
Commercial Real Estate-Owner Occupied Portfolio Segment [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2020	157,387
2019	203,638
2018	97,152
2017	89,245
2016	53,523
Prior	89,465
Financing Receivable, Converted	2,756
Revolving Loans	45,383
Total	738,549
Commercial Real Estate-Owner Occupied Portfolio Segment [Member] | Pass (1-6)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	147,313
2019	200,519
2018	92,624
2017	79,058
2016	44,990
Prior	80,172
Financing Receivable, Converted	2,756
Revolving Loans	42,883
Total	690,315
Commercial Real Estate-Owner Occupied Portfolio Segment [Member] | Watch (7)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	9,473
2019	1,963
2018	261
2017	9,729
2016	8,533
Prior	5,074
Financing Receivable, Converted	0
Revolving Loans	2,500
Total	37,533
Commercial Real Estate-Owner Occupied Portfolio Segment [Member] | Classified (8 & 9)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	601
2019	1,156
2018	4,267
2017	458
2016	0
Prior	4,219
Financing Receivable, Converted	0
Revolving Loans	0
Total	10,701
Construction Real Estate Portfolio Segment [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
2020	78,391
2019	168,885
2018	123,163
2017	48,602
2016	28,060
Prior	13,489
Financing Receivable, Converted	0
Revolving Loans	20,631
Total	481,221
Construction Real Estate Portfolio Segment [Member] | Pass (1-6)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	75,983
2019	167,936
2018	121,909
2017	37,555
2016	28,060
Prior	12,906
Financing Receivable, Converted	0
Revolving Loans	20,631
Total	464,980
Construction Real Estate Portfolio Segment [Member] | Watch (7)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	2,408
2019	722
2018	1,254
2017	11,047
2016	0
Prior	546
Financing Receivable, Converted	0
Revolving Loans	0
Total	15,977
Construction Real Estate Portfolio Segment [Member] | Classified (8 & 9)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	227
2018	0
2017	0
2016	0
Prior	37
Financing Receivable, Converted	0
Revolving Loans	0
Total	264
Residential Portfolio Segment
Financing Receivable, Credit Quality Indicator [Line Items]
2020	26,813
2019	35,245
2018	23,674
2017	19,944
2016	34,640
Prior	120,508
Financing Receivable, Converted	870
Revolving Loans	64,357
Total	326,051
Residential Portfolio Segment | Pass (1-6)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	26,448
2019	33,085
2018	22,074
2017	19,931
2016	34,427
Prior	115,036
Financing Receivable, Converted	591
Revolving Loans	63,505
Total	315,097
Residential Portfolio Segment | Watch (7)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	181
2019	895
2018	842
2017	0
2016	0
Prior	2,027
Financing Receivable, Converted	279
Revolving Loans	802
Total	5,026
Residential Portfolio Segment | Classified (8 & 9)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	184
2019	1,265
2018	758
2017	13
2016	213
Prior	3,445
Financing Receivable, Converted	0
Revolving Loans	50
Total	5,928
Other
Financing Receivable, Credit Quality Indicator [Line Items]
2020	8,758
2019	25,570
2018	20,618
2017	686
2016	3,705
Prior	34,474
Financing Receivable, Converted	10
Revolving Loans	43,979
Total	137,800
Other | Pass (1-6)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	8,758
2019	25,567
2018	20,615
2017	682
2016	3,705
Prior	34,455
Financing Receivable, Converted	0
Revolving Loans	43,971
Total	137,753
Other | Watch (7)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	2
2018	0
2017	0
2016	0
Prior	0
Financing Receivable, Converted	0
Revolving Loans	1
Total	3
Other | Classified (8 & 9)
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	1
2018	3
2017	4
2016	0
Prior	19
Financing Receivable, Converted	10
Revolving Loans	7
Total	$ 44

XML

Loans - Summary of Performing and Non Performing Loans (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Financing Receivable, Credit Quality Indicator [Line Items]
Investment on loans by payment activity	$ 15,058
Performing
Financing Receivable, Credit Quality Indicator [Line Items]
Investment on loans by payment activity	14,999
Non Performing
Financing Receivable, Credit Quality Indicator [Line Items]
Investment on loans by payment activity	59
Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
Investment on loans by payment activity	11,720
Commercial and industrial | Performing
Financing Receivable, Credit Quality Indicator [Line Items]
Investment on loans by payment activity	11,682
Commercial and industrial | Non Performing
Financing Receivable, Credit Quality Indicator [Line Items]
Investment on loans by payment activity	38
Residential Portfolio Segment
Financing Receivable, Credit Quality Indicator [Line Items]
Investment on loans by payment activity	941
Residential Portfolio Segment | Performing
Financing Receivable, Credit Quality Indicator [Line Items]
Investment on loans by payment activity	941
Residential Portfolio Segment | Non Performing
Financing Receivable, Credit Quality Indicator [Line Items]
Investment on loans by payment activity	0
Other
Financing Receivable, Credit Quality Indicator [Line Items]
Investment on loans by payment activity	2,397
Other | Performing
Financing Receivable, Credit Quality Indicator [Line Items]
Investment on loans by payment activity	2,376
Other | Non Performing
Financing Receivable, Credit Quality Indicator [Line Items]
Investment on loans by payment activity	$ 21

XML

Loans - Summary of Recorded Investment by Risk Category of Portfolio Loans by Portfolio Class and Category (Details) - Non-Covered Loans - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	$ 41,473	$ 26,425
Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	17,324
Residential Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	4,478
Blanket Lien
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	4,872
Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	31,938	22,578
Commercial and industrial | Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	13,124
Commercial and industrial | Residential Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	0
Commercial and industrial | Blanket Lien
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	4,872
CRE - investor owned
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	2,389	2,303
CRE - investor owned | Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	2,389
CRE - investor owned | Residential Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	0
CRE - investor owned | Blanket Lien
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	0
CRE - owner occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	2,400	213
CRE - owner occupied | Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	1,811
CRE - owner occupied | Residential Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	0
CRE - owner occupied | Blanket Lien
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	0
Construction and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	207
Construction and land development | Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	0
Construction and land development | Residential Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	207
Construction and land development | Blanket Lien
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	0
Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	4,499	1,330
Residential real estate | Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	0
Residential real estate | Residential Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	4,271
Residential real estate | Blanket Lien
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	0
Other
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees	$ 40	1
Pass (1-6)
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		4,954,405
Pass (1-6) | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		2,151,084
Pass (1-6) | CRE - investor owned
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		1,242,569
Pass (1-6) | CRE - owner occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		643,276
Pass (1-6) | Construction and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		437,134
Pass (1-6) | Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		348,246
Pass (1-6) | Other
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		132,096
Watch (7)
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		187,656
Watch (7) | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		124,718
Watch (7) | CRE - investor owned
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		17,572
Watch (7) | CRE - owner occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		28,773
Watch (7) | Construction and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		12,140
Watch (7) | Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		4,450
Watch (7) | Other
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		3
Classified (8 & 9)
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		81,987
Classified (8 & 9) | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		70,021
Classified (8 & 9) | CRE - investor owned
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		2,840
Classified (8 & 9) | CRE - owner occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		6,473
Classified (8 & 9) | Construction and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		106
Classified (8 & 9) | Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		2,496
Classified (8 & 9) | Other
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		51
Total
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		5,224,048
Total | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		2,345,823
Total | CRE - investor owned
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		1,262,981
Total | CRE - owner occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		678,522
Total | Construction and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		449,380
Total | Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		355,192
Total | Other
Financing Receivable, Credit Quality Indicator [Line Items]
Loans, before unearned loan fees		$ 132,150

XML

Commitments (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Unadvanced Commitment on Impaired Loan
Schedule of Commitments [Line Items]
Estimated losses attributable to unadvanced commitments on impaired loans	$ 4,900	$ 400
Commitments to extend credit
Schedule of Commitments [Line Items]
Off-balance sheet financial instruments, contractual amounts	1,659,225	1,469,413
Commitments to extend credit | Fixed Rate Loan Commitment
Schedule of Commitments [Line Items]
Off-balance sheet financial instruments, contractual amounts	161,300	144,800
Letters of credit
Schedule of Commitments [Line Items]
Off-balance sheet financial instruments, contractual amounts	$ 51,798	$ 47,969
Letters of credit | Maximum
Schedule of Commitments [Line Items]
Remaining term	4 years
Letters of credit | Minimum
Schedule of Commitments [Line Items]
Remaining term	1 month

XML

Derivative Financial Instruments (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2021	Dec. 31, 2019
Securities Sold under Agreements to Repurchase [Abstract]
Gross Amounts Recognized	$ 196,532		$ 230,886
Gross Amounts Offset in the Statement of Financial Position	0		0
Net Amounts of Liabilities presented in the Statement of Financial Position	196,532		230,886
Financial Instruments	0		0
Fair Value Collateral Posted	196,532		230,886
Net Amount	0		0
Fair value of derivatives in a net liability position	46,800
Posted collateral	47,100
Interest rate swap
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Asset derivatives (other assets), fair value	35,728		11,055
Liability derivatives (other liabilities), fair value	46,828		14,747
Derivative Asset [Abstract]
Gross Amounts Offset in the Statement of Financial Position	0		0
Derivative financial instruments	35,728		11,055
Financial Instruments	14		56
Fair Value Collateral Posted	0		0
Net Amount	35,714		10,999
Derivative Liability [Abstract]
Gross Amounts Offset in the Statement of Financial Position	0		0
Net Amounts of Liabilities presented in the Statement of Financial Position	46,828		14,747
Financial Instruments	14		56
Fair Value Collateral Posted	46,222		14,573
Net Amount	592		118
Derivatives Designated as Hedging Instruments
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Asset derivatives (other assets), fair value	0		0
Liability derivatives (other liabilities), fair value	10,840		2,872
Derivatives Designated as Hedging Instruments | Other Assets | Interest rate swap
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Derivative Asset, Notional Amount	261,962		61,962
Asset derivatives (other assets), fair value	0		0
Derivatives Designated as Hedging Instruments | Other Liabilities | Interest rate swap
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Liability derivatives (other liabilities), fair value	10,840		2,872
Derivatives not Designated as Hedging Instruments
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Asset derivatives (other assets), fair value	35,728		11,055
Liability derivatives (other liabilities), fair value	35,988		11,875
Derivatives not Designated as Hedging Instruments | Other Assets | Interest rate swap
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Derivative Asset, Notional Amount	1,021,528		749,819
Asset derivatives (other assets), fair value	35,728		11,055
Derivatives not Designated as Hedging Instruments | Other Liabilities | Interest rate swap
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Liability derivatives (other liabilities), fair value	$ 35,988		$ 11,875
Cash Flow Hedging | Subordinated Debt [Member]
Derivative [Line Items]
Derivative, Variable Interest Rate	2.62%
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Derivative Asset, Notional Amount	$ 62,000
Cash Flow Hedging | Federal Home Loan Bank Overnight Advances [Member]
Derivative [Line Items]
Derivative, fixed rate	1.12%
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Derivative Asset, Notional Amount	$ 100,000
Cash Flow Hedging | Federal Home Loan Bank 3 Month Advances [Member]
Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]
Derivative Asset, Notional Amount	$ 100,000
Maximum | Cash Flow Hedging | Subordinated Debt [Member]
Derivative [Line Items]
Cash flow hedge term	6 years
Maximum | Cash Flow Hedging | Federal Home Loan Bank Overnight Advances [Member]
Derivative [Line Items]
Cash flow hedge term	3 years
Maximum | Cash Flow Hedging | Federal Home Loan Bank 3 Month Advances [Member]
Derivative [Line Items]
Cash flow hedge term	5 years
Scenario, Forecast | Cash Flow Hedging
Derivative [Line Items]
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income		$ 2,800

XML

Fair Value Measurements - Summary of Financial Instruments Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets
Securities available for sale	$ 998,104	$ 1,135,317
Estimate of Fair Value Measurement [Member]
Assets
State tax credits held for sale	44,164	39,046
Obligations of U.S. Government-sponsored enterprises
Assets
Securities available for sale	10,241	10,046
Obligations of states and political subdivisions
Assets
Securities available for sale	254,278	213,024
Agency mortgage-backed securities
Assets
Securities available for sale	720,991	902,021
US Treasury Bill Securities [Member]
Assets
Securities available for sale	10,566	10,226
Corporate Debt Securities [Member]
Assets
Securities available for sale	2,028
Recurring basis | Estimate of Fair Value Measurement [Member]
Assets
Securities available for sale	998,104	1,135,317
Derivatives	35,728	11,055
Total assets	1,033,832	1,146,372
Liabilities
Derivatives	46,828	14,747
Total liabilities	46,828	14,747
Recurring basis | Obligations of U.S. Government-sponsored enterprises | Estimate of Fair Value Measurement [Member]
Assets
Securities available for sale	10,241	10,046
Recurring basis | Obligations of states and political subdivisions | Estimate of Fair Value Measurement [Member]
Assets
Securities available for sale	254,278	213,024
Recurring basis | Agency mortgage-backed securities | Estimate of Fair Value Measurement [Member]
Assets
Securities available for sale	720,991	902,021
Recurring basis | US Treasury Bill Securities [Member] | Estimate of Fair Value Measurement [Member]
Assets
Securities available for sale	10,566	10,226
Recurring basis | Corporate Debt Securities [Member] | Estimate of Fair Value Measurement [Member]
Assets
Securities available for sale	2,028
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets
Securities available for sale	0	0
Derivatives	0	0
Total assets	0	0
Liabilities
Derivatives	0	0
Total liabilities	0	0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Obligations of U.S. Government-sponsored enterprises
Assets
Securities available for sale	0	0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Obligations of states and political subdivisions
Assets
Securities available for sale	0	0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Agency mortgage-backed securities
Assets
Securities available for sale	0	0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | US Treasury Bill Securities [Member]
Assets
Securities available for sale	0	0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate Debt Securities [Member]
Assets
Securities available for sale	0
Recurring basis | Significant Other Observable Inputs (Level 2)
Assets
Securities available for sale	998,104	1,135,317
Derivatives	35,728	11,055
Total assets	1,033,832	1,146,372
Liabilities
Derivatives	46,828	14,747
Total liabilities	46,828	14,747
Recurring basis | Significant Other Observable Inputs (Level 2) | Obligations of U.S. Government-sponsored enterprises
Assets
Securities available for sale	10,241	10,046
Recurring basis | Significant Other Observable Inputs (Level 2) | Obligations of states and political subdivisions
Assets
Securities available for sale	254,278	213,024
Recurring basis | Significant Other Observable Inputs (Level 2) | Agency mortgage-backed securities
Assets
Securities available for sale	720,991	902,021
Recurring basis | Significant Other Observable Inputs (Level 2) | US Treasury Bill Securities [Member]
Assets
Securities available for sale	10,566	10,226
Recurring basis | Significant Other Observable Inputs (Level 2) | Corporate Debt Securities [Member]
Assets
Securities available for sale	2,028
Recurring basis | Significant Unobservable Inputs (Level 3)
Assets
Securities available for sale	0	0
Derivatives	0	0
Total assets	0	0
Liabilities
Derivatives	0	0
Total liabilities	0	0
Recurring basis | Significant Unobservable Inputs (Level 3) | Obligations of U.S. Government-sponsored enterprises
Assets
Securities available for sale	0	0
Recurring basis | Significant Unobservable Inputs (Level 3) | Obligations of states and political subdivisions
Assets
Securities available for sale	0	0
Recurring basis | Significant Unobservable Inputs (Level 3) | Agency mortgage-backed securities
Assets
Securities available for sale	0	0
Recurring basis | Significant Unobservable Inputs (Level 3) | US Treasury Bill Securities [Member]
Assets
Securities available for sale	$ 0	$ 0

XML

Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments, at cost	$ 43,106	$ 38,044
Estimated fair value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
State Tax Credits Held For Sale, Fair Value Disclosure	$ 44,164	$ 39,046

XML

Fair Value Measurements - Summary of Financial Instruments and Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis (Details) - Fair Value, Measurements, Nonrecurring $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Change in Fair Value, Gains (Losses) in Period	$ 3,298	$ 4,007
Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Change in Fair Value, Gains (Losses) in Period	3,219	3,230
Other real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Change in Fair Value, Gains (Losses) in Period	79	777
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	0
Significant Other Observable Inputs (Level 2) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Significant Other Observable Inputs (Level 2) | Other real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate	0	0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	7,526	7,526
Significant Unobservable Inputs (Level 3) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	3,627	3,627
Significant Unobservable Inputs (Level 3) | Other real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate	3,899	3,899
Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	7,526	7,526
Estimate of Fair Value Measurement [Member] | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	3,627	3,627
Estimate of Fair Value Measurement [Member] | Other real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate	$ 3,899	$ 3,899

XML

Fair Value Measurements - Summary of Carrying Amount and Fair Values of Financial Instruments Reported on the Balance Sheets (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Balance sheet assets
Securities available for sale	$ 998,104	$ 1,135,317
Securities held-to-maturity, net	346,436	181,166
Carrying Amount
Balance sheet assets
Securities held-to-maturity, net	345,791	181,166
Other investments	43,106	38,044
Loans held for sale	16,029	5,570
Loans, net	6,029,781	5,271,049
State tax credits held for sale	38,820	36,802
Balance sheet liabilities
Certificates of deposit	659,166	826,447
Subordinated debentures and notes	203,384	141,258
FHLB advances	250,000	222,406
Other borrowings and notes payable	227,961	265,172
Estimated fair value
Balance sheet assets
Securities held-to-maturity, net	356,139	181,939
Other investments	43,106	38,044
Loans held for sale	16,029	5,570
Loans, net	5,876,000	5,205,651
State tax credits held for sale	44,164	39,046
Balance sheet liabilities
Certificates of deposit	665,374	825,203
Subordinated debentures and notes	192,852	130,985
FHLB advances	251,978	221,402
Other borrowings and notes payable	$ 227,961	$ 265,172

XML

Subordinated Debentures (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 203,384		$ 141,258
Trust Preferred Securities Subject to Mandatory Redemption [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	92,215		92,132
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Clayco Statutory Trust I [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 3,196		3,196
Subordinated Borrowing, Due Date	Dec. 17, 2033
Subordinated Borrowing, Call Date	Dec. 17, 2008
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Clayco Statutory Trust I [Member] | London Interbank Offered Rate (LIBOR) [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Basis Spread on Variable Rate	0.0285
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Capital Trust II [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 5,155		5,155
Subordinated Borrowing, Due Date	Jun. 17, 2034
Subordinated Borrowing, Call Date	Jun. 17, 2009
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Capital Trust II [Member] | London Interbank Offered Rate (LIBOR) [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Basis Spread on Variable Rate	0.0265
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Statutory Trust III [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 11,341		11,341
Subordinated Borrowing, Due Date	Dec. 15, 2034
Subordinated Borrowing, Call Date	Dec. 15, 2009
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Statutory Trust III [Member] | London Interbank Offered Rate (LIBOR) [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Basis Spread on Variable Rate	0.0197
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Clayco Statutory Trust II [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 4,124		4,124
Subordinated Borrowing, Due Date	Sep. 15, 2035
Subordinated Borrowing, Call Date	Sep. 15, 2010
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Clayco Statutory Trust II [Member] | London Interbank Offered Rate (LIBOR) [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Basis Spread on Variable Rate	0.0183
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Statutory Trust IV [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 10,310		10,310
Subordinated Borrowing, Due Date	Dec. 15, 2035
Subordinated Borrowing, Call Date	Dec. 15, 2010
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Statutory Trust IV [Member] | London Interbank Offered Rate (LIBOR) [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Basis Spread on Variable Rate	0.0144
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Statutory Trust V [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 4,124		4,124
Subordinated Borrowing, Due Date	Sep. 15, 2036
Subordinated Borrowing, Call Date	Sep. 15, 2011
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Statutory Trust V [Member] | London Interbank Offered Rate (LIBOR) [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Basis Spread on Variable Rate	0.016
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Capital Trust VI [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 14,433		14,433
Subordinated Borrowing, Due Date	Mar. 30, 2037
Subordinated Borrowing, Call Date	Mar. 30, 2012
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Capital Trust VI [Member] | London Interbank Offered Rate (LIBOR) [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Basis Spread on Variable Rate	0.016
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Capital Trust VII [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 4,124		4,124
Subordinated Borrowing, Due Date	Dec. 15, 2037
Subordinated Borrowing, Call Date	Dec. 15, 2012
Trust Preferred Securities Subject to Mandatory Redemption [Member] | EFSC Capital Trust VII [Member] | London Interbank Offered Rate (LIBOR) [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Basis Spread on Variable Rate	0.0225
Trust Preferred Securities Subject to Mandatory Redemption [Member] | JEFFCO Stat Trust I [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 7,819		7,886
Subordinated Borrowing, Due Date	Feb. 22, 2031
Subordinated Borrowing, Call Date	Feb. 22, 2011
Subordinated Borrowing, Interest Rate	10.20%
Trust Preferred Securities Subject to Mandatory Redemption [Member] | JEFFCO Stat Trust II [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 4,415		4,388
Subordinated Borrowing, Due Date	Mar. 17, 2034
Subordinated Borrowing, Call Date	Mar. 17, 2009
Trust Preferred Securities Subject to Mandatory Redemption [Member] | JEFFCO Stat Trust II [Member] | London Interbank Offered Rate (LIBOR) [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Interest Rate	2.75%
Trust Preferred Securities Subject to Mandatory Redemption [Member] | Trinity Capital Trust III [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 5,239		5,206
Subordinated Borrowing, Due Date	Sep. 08, 2034
Subordinated Borrowing, Call Date	Sep. 08, 2009
Trust Preferred Securities Subject to Mandatory Redemption [Member] | Trinity Capital Trust III [Member] | London Interbank Offered Rate (LIBOR) [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Basis Spread on Variable Rate	0.027
Trust Preferred Securities Subject to Mandatory Redemption [Member] | Trinity Capital Trust IV [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 10,310		10,302
Subordinated Borrowing, Due Date	Nov. 23, 2035
Subordinated Borrowing, Call Date	Aug. 23, 2010
Subordinated Borrowing, Interest Rate	6.88%
Trust Preferred Securities Subject to Mandatory Redemption [Member] | Trinity Capital Trust V [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 7,625		7,543
Subordinated Borrowing, Due Date	Dec. 15, 2036
Subordinated Borrowing, Call Date	Sep. 15, 2011
Trust Preferred Securities Subject to Mandatory Redemption [Member] | Trinity Capital Trust V [Member] | London Interbank Offered Rate (LIBOR) [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Basis Spread on Variable Rate	0.0165
Senior Subordinated Notes [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Interest Rate	4.75%
Payments of Debt Issuance Costs	$ 2,081	$ 874
Subordinated notes, net of issuance costs	$ 111,169		49,126
Senior Subordinated Notes [Member] | London Interbank Offered Rate (LIBOR) [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Basis Spread on Variable Rate	0.03387
Senior Subordinated Notes [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Subordinated Borrowing [Line Items]
Subordinated Borrowing, Basis Spread on Variable Rate	0.0566
5.75% [Member] | Senior Subordinated Notes [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 63,250		0
Subordinated Borrowing, Due Date	Jun. 01, 2030
Subordinated Borrowing, Call Date	Jun. 01, 2025
Subordinated Borrowing, Interest Rate	5.75%
4.75% [Member] | Senior Subordinated Notes [Member]
Subordinated Borrowing [Line Items]
Subordinated debentures and notes	$ 50,000		$ 50,000
Subordinated Borrowing, Due Date	Nov. 01, 2026
Subordinated Borrowing, Call Date	Nov. 01, 2021

XML

Accumulated Other Comprehensive Income - Changes in Accumulated Other Comprehensive Income After-tax By Component (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	$ 846,436	$ 797,835	$ 867,185	$ 603,804
Ending balance	867,963	825,501	867,963	825,501
Net Unrealized Gain (Loss) on Available-for-Sale Debt Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	25,538	2,675	14,977	(9,047)
Net change	10,984	12,842	21,545	24,564
Ending balance	27,872	15,517	27,872	15,517
Debt Securities, Held-to-maturity, Transfer, Derivative Hedge, Gain (Loss)	(8,650)		(8,650)
Unamortized Gain (Loss) on Held-to-Maturity Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	4,778	(233)	4,934	(235)
Net change	(329)	3	(485)	5
Ending balance	13,099	(230)	13,099	(230)
Debt Securities, Held-to-maturity, Transfer, Derivative Hedge, Gain (Loss)	8,650		8,650
Net Unrealized Loss on Cash Flow Hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(7,219)	(952)	(2,162)	0
Net change	(943)	(1,261)	(6,000)	(2,213)
Ending balance	(8,162)	(2,213)	(8,162)	(2,213)
Debt Securities, Held-to-maturity, Transfer, Derivative Hedge, Gain (Loss)	0		0
Total
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	23,097	1,490	17,749	(9,282)
Net change	9,712	11,584	15,060	22,356
Ending balance	32,809	$ 13,074	32,809	$ 13,074
Debt Securities, Held-to-maturity, Transfer, Derivative Hedge, Gain (Loss)	$ 0		$ 0

XML

Accumulated Other Comprehensive Income - Pre-tax and After-tax Changes in the Components of Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Other Comprehensive Income (Loss), Securities, Available-for-sale, Adjustment, before Reclassification Adjustments, after Tax [Abstract]
Change in unrealized gain on available-for-sale debt securities, before tax	$ 14,587	$ 17,054	$ 28,616	$ 32,329
Change in unrealized gain on available-for-sale debt securities, tax	3,603	4,212	7,068	7,985
Change in unrealized gain on available-for-sale debt securities, after tax	10,984	12,842	21,548	24,344
Other Comprehensive Income (Loss), Securities, Available-for-sale, Adjustment, after Tax [Abstract]
Reclassification adjustment for realized (gain) loss on sale of available-for-sale debt securities, before tax			(4)	292
Reclassification adjustment for realized (gain) loss on sale of available-for-sale debt securities, tax			(1)	72
Reclassification adjustment for realized (gain) loss on sale of available-for-sale debt securities, after tax	0	0	3	(220)
Other Comprehensive Loss, Held-to-maturity Security, OTTI, after Tax and Adjustments [Abstract]
Reclassification of (gain) loss on held-to-maturity securities, before tax	(437)	4	(644)	7
Reclassification of (gain) loss on held-to-maturity securities, tax	(108)	1	(159)	2
Reclassification of (gain) loss on held-to-maturity securities, after tax	(329)	3	(485)	5
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax, Parent [Abstract]
Change in unrealized loss on cash flow hedges arising during the period, before tax	(1,563)	(1,679)	(8,442)	(2,944)
Change in unrealized loss on cash flow hedges arising during the period, tax	(386)	(414)	(2,085)	(727)
Change in unrealized loss on cash flow hedges arising during the period, after tax	(1,177)	(1,265)	(6,357)	(2,217)
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax [Abstract]
Reclassification of loss on cash flow hedges, before tax	311	5	474	5
Reclassification of loss on cash flow hedges, tax	77	1	117	1
Reclassification of loss on cash flow hedges, after tax	(234)	(4)	(357)	(4)
OCI, Net of Tax [Abstract]
Total other comprehensive income, before tax	12,898	15,384	20,000	29,689
Total other comprehensive income, tax	3,186	3,800	4,940	7,333
Total other comprehensive income, after-tax	$ 9,712	$ 11,584	$ 15,060	$ 22,356