cade-10q_20180930.htm

(Former name, former address and former fiscal year, if changed since last report)

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 and post 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 emerging growth company. See definitions of “accelerated filer”, “large accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not 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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

	September 30, 2018			December 31, 2017
(In thousands, except share data)	(Unaudited)
ASSETS
Cash and due from banks	$	125,220		$	238,707
Interest-bearing deposits with banks		273,404			482,568
Federal funds sold		249			9,536
Total cash and cash equivalents		398,873			730,811
Securities available-for-sale		1,200,464			1,257,063
Securities held-to-maturity (estimated fair value of $311 at December 31, 2017)		—			290
Equity securities with readily determinable fair values not held for trading		5,923			5,885
Other securities - FRB and FHLB stock		58,783			50,009
Loans held for sale		46,787			61,359
Loans		9,443,819			8,253,427
Less: allowance for credit losses		(86,151	)		(87,576	)
Net loans		9,357,668			8,165,851
Interest receivable		56,026			47,793
Premises and equipment, net		61,436			63,432
Other real estate owned		3,355			7,605
Cash surrender value of life insurance		109,167			108,148
Net deferred tax asset		45,570			30,774
Goodwill		307,083			317,817
Other intangible assets, net		7,915			10,223
Other assets		100,787			91,866
Total Assets	$	11,759,837		$	10,948,926
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Noninterest-bearing deposits	$	2,094,856		$	2,242,765
Interest-bearing deposits		7,463,420			6,768,750
Total deposits		9,558,276			9,011,515
Securities sold under agreements to repurchase		2,191			1,026
Federal Home Loan Bank advances		340,000			150,000
Senior debt		184,778			184,629
Subordinated debt		98,856			98,687
Junior subordinated debentures		36,833			36,472
Other liabilities		124,077			107,541
Total liabilities		10,345,011			9,589,870
Shareholders' Equity:
Common Stock $0.01 par value, authorized 300,000,000 shares; 83,625,000 shares issued and outstanding at September 30, 2018 and December 31, 2017		836			836
Additional paid-in capital		1,040,038			1,037,040
Retained earnings		441,611			340,213
Accumulated other comprehensive loss ("OCI")		(67,659	)		(19,033	)
Total shareholders' equity		1,414,826			1,359,056
Total Liabilities and Shareholders' Equity	$	11,759,837		$	10,948,926

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands, except per share data)	2018			2017		2018			2017
INTEREST INCOME
Interest and fees on loans	$	121,057		$	90,161	$	337,588		$	261,400
Interest and dividends on securities:
Taxable		6,248			4,610		16,884			13,089
Tax-exempt		1,734			3,280		7,802			10,079
Other interest income		2,714			1,452		6,535			3,929
Total interest income		131,753			99,503		368,809			288,497
INTEREST EXPENSE
Interest on time deposits		10,312			5,665		28,300			15,084
Interest on other deposits		17,196			7,413		38,168			19,530
Interest on borrowed funds		6,145			5,262		17,746			15,578
Total interest expense		33,653			18,340		84,214			50,192
Net interest income		98,100			81,163		284,595			238,305
Provision for credit losses		(1,365	)		1,723		4,278			14,210
Net interest income after provision for credit losses		99,465			79,440		280,317			224,095
NONINTEREST INCOME
Service charges on deposit accounts		3,813			3,920		11,576			11,519
Other service fees		1,319			1,174		3,998			3,217
Credit related fees		3,549			3,306		10,933			8,794
Trust services revenue		4,449			4,613		13,578			14,428
Mortgage banking income		747			965		1,974			3,044
Investment advisory revenue		5,535			5,283		16,177			15,260
Securities gains (losses), net		2			1		(1,799	)		(162	)
Other income		4,562			7,862		17,194			18,118
Total noninterest income		23,976			27,124		73,631			74,218
NONINTEREST EXPENSE
Salaries and employee benefits		35,811			35,007		111,432			103,956
Premises and equipment		7,561			7,419		22,283			21,292
Intangible asset amortization		650			1,136		2,157			3,567
Other expense		17,209			12,968		49,733			38,170
Total noninterest expense		61,231			56,530		185,605			166,985
Income before income taxes		62,210			50,034		168,343			131,328
Income tax expense		15,074			17,457		34,408			43,666
Net income	$	47,136		$	32,577	$	133,935		$	87,662
Weighted average common shares outstanding (Basic)		83,625,000			83,625,000		83,625,000			80,212,912
Weighted average common shares outstanding (Diluted)		84,660,256			83,955,685		84,709,240			80,558,337
Earnings per common share (Basic)	$	0.56		$	0.39	$	1.60		$	1.09
Earnings per common share (Diluted)	$	0.56		$	0.39	$	1.58		$	1.09

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2018			2017			2018			2017
Net income	$	47,136		$	32,577		$	133,935		$	87,662
Other comprehensive loss, net of tax:
Net unrealized (losses) gains on securities available-for-sale:
Net unrealized (losses) gains arising during the period (net of $2,881, $(2,153), $11,441 and $(8,844) tax effect, respectively)		(9,582	)		3,745			(38,064	)		15,308
Reclassification adjustments for (gains) losses realized in net income (net of $0, $0, $(416), $(60) tax effect, respectively)		(2	)		(1	)		1,383			102
Net unrealized (losses) gains on securities available-for-sale		(9,584	)		3,744			(36,681	)		15,410
Unrealized losses on derivative instruments designated as cash flow hedges:
Net unrealized (losses) gains arising during the period (net of $835, $(202), $4,311 and $(1,427) tax effect, respectively)		(2,781	)		344			(14,345	)		2,445
Reclassification adjustments for losses (gains) realized in net income (net of $(371), $151, $(721) and $1,269 tax effect, respectively)		1,237			(258	)		2,400			(2,173	)
Net change in unrealized (losses) gains on derivative instruments		(1,544	)		86			(11,945	)		272
Other comprehensive (losses) gains, net of tax		(11,128	)		3,830			(48,626	)		15,682
Comprehensive income	$	36,008		$	36,407		$	85,309		$	103,344

			Additional								Total
	Common		Paid-in		Retained			Accumulated			Shareholders'
(In thousands)	Stock		Capital		Earnings			OCI			Equity
Balance, December 31, 2017	$	836	$	1,037,040	$	340,213		$	(19,033	)	$	1,359,056
Equity-based compensation cost		—		2,998		—			—			2,998
Net income		—		—		133,935			—			133,935
Cash dividends declared year to date ($0.40 per common share)		—		—		(33,450	)		—			(33,450	)
Dividend equivalents on restricted stock units (Note 18)		—		—		(87	)		—			(87	)
Cumulative effect of adoption of new accounting principle		—		—		1,000			—			1,000
Other comprehensive loss		—		—		—			(48,626	)		(48,626	)
Balance, September 30, 2018	$	836	$	1,040,038	$	441,611		$	(67,659	)	$	1,414,826

	Nine Months Ended September 30,
(In thousands)	2018			2017
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES	$	149,727		$	149,841
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities available-for-sale		(337,921	)		(278,339	)
Proceeds from sales of securities available-for-sale		264,231			152,256
Proceeds from maturities, calls and paydowns of securities available-for-sale		80,473			72,137
Proceeds from sale of commercial loans held for sale		17,031			—
Increase in loans, net		(1,214,163	)		(613,993	)
Proceeds from sale of insurance subsidiary		14,039			—
Purchase of premises and equipment		(6,958	)		(5,734	)
Proceeds from disposition of foreclosed property		6,858			6,721
Other, net		(9,694	)		(22,430	)
Net cash used in investing activities		(1,186,104	)		(689,382	)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net		546,761			484,365
Net change in securities sold under agreements to repurchase		1,165			(348	)
Advances from FHLB		190,000			250,000
Repayment of senior debt		—			(9,600	)
Cash dividends paid on common stock		(33,487	)		—
Proceeds from issuance of common stock		—			155,581
Net cash provided by financing activities		704,439			879,998
Net (decrease) increase in cash and cash equivalents		(331,938	)		340,457
Cash and cash equivalents at beginning of period		730,811			248,925
Cash and cash equivalents at end of period	$	398,873		$	589,382

Cadence Bancorporation (the “Company”) is a Delaware corporation and a bank holding company whose primary asset is its investment in its wholly owned subsidiary bank, Cadence Bank, N.A., a national banking association (the “Bank”).

The accompanying unaudited consolidated financial statements for the Company have been prepared in accordance with instructions to the SEC Form 10-Q and Article 10 of Regulation S-X; therefore, they do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, comprehensive income, and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All adjustments consisting of normally recurring accruals that, in the opinion of management, are necessary for a fair presentation of the consolidated financial position and results of operations for the periods covered by this report have been included. These interim financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017. Operating results for the period ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

The Company and its subsidiaries follow GAAP including, where applicable, general practices within the banking industry. The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. The assessment of whether or not the Company has a controlling interest (i.e., the primary beneficiary) in a variable-interest entity (“VIE”) is performed on an on-going basis. All equity investments in non-consolidated VIEs are included in “other assets” in the Company’s consolidated balance sheets (Note 20).

Certain amounts reported in prior years have been reclassified to conform to the 2018 presentation. These reclassifications did not materially impact the Company’s consolidated balance sheets or consolidated statements of income.

The Bank operates under a national bank charter and is subject to regulation by the Office of the Comptroller of the Currency (OCC). The Bank provides lending services in Georgia and full banking services in five southern states: Alabama, Florida, Mississippi, Tennessee, and Texas.

The Company and the Bank also have certain other non-operating and immaterial subsidiaries.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are susceptible to significant change in the near term are the allowance for credit losses, valuation of and accounting for acquired credit impaired loans, valuation of goodwill, intangible assets and deferred income taxes.

On May 11, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with State Bank Financial Corporation, a Georgia corporation (“State Bank”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, State Bank will merge with and into Cadence (the “Merger”), with the Company surviving the Merger. Immediately following the Merger, State Bank’s wholly owned bank subsidiary, State Bank and Trust Company, will merge with and into the Bank (the “Bank Merger”). The Bank will be the surviving entity in the Bank Merger. The Merger Agreement was unanimously approved by the Board of Directors of each of the Company and State Bank.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), State Bank shareholders will have the right to receive 1.160 shares (the “Exchange Ratio”) of Class A common stock, par value $0.01 per share, of the Company (“Cadence Common Stock”) for each share of common stock, par value $0.01 per share, of State Bank (“State Bank Common Stock”). Each State Bank restricted stock award will vest and be cancelled and converted automatically at the Effective Time into the right to receive 1.160 shares of Cadence Common Stock in respect of each share of State Bank Common Stock underlying such award. Each State Bank warrant will be converted automatically at the Effective Time into a warrant to purchase shares of Cadence Common Stock, with the number of underlying shares and per share exercise price adjusted to reflect the Exchange Ratio.

Based on the number of shares of Cadence Class A common stock and State Bank common stock outstanding as of May 11, 2018, the last trading day before public announcement of the merger, it is expected that Cadence stockholders will hold approximately 65%, and State Bank shareholders will hold approximately 35%, of the shares of the combined company outstanding immediately after the merger.

The Company has filed a registration statement on Form S-4 with the Securities and Exchange Commission with respect to the issuance of its common stock in connection with the Merger, which registration statement was declared effective by the Securities and Exchange Commission on July 24, 2018. State Bank held a special meeting of shareholders on Tuesday, September 18, 2018 in Atlanta, Georgia, related to its pending merger with the Company. State Bank’s shareholders approved the Merger Agreement pursuant to which State Bank will merge with and into the Company, with the Company continuing as the surviving corporation. The Merger is expected to close in the fourth quarter of 2018.

On May 31, 2018 the Company completed the sale of the assets of its subsidiary, Town & Country Insurance Agency, Inc. (“T&C”) to an unrelated third party, selling $11.1 million in net assets, including $10.9 million in goodwill and intangibles. This transaction resulted in an pre-tax gain of $4.9 million recorded in noninterest income, offset by $1.1 million in sale related expenses recorded in noninterest expenses during the second quarter of 2018.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (ASU 2014-09), which is intended to improve and converge the financial reporting requirements for revenue contracts with customers. Previous accounting guidance comprised broad revenue recognition concepts along with numerous industry-specific requirements. The new guidance establishes a five-step model which entities must follow to recognize revenue and removes inconsistencies and weaknesses in existing guidance. Our major sources of revenue are from financial instruments that have been excluded from the scope of the new standard (including loans, derivatives, debt and equity securities, etc.). The standard required us to change how we recognize certain recurring revenue streams within insurance commissions and fees and other categories of noninterest income. The adoption at January 1, 2018 of ASU 2014-09 did not have a material effect on the Company’s financial statements.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-1, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheets, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheets or the accompanying notes to the financial statements and (viii) clarifies that an entity should evaluate the need for a valuation

allowance on a deferred tax asset related to available-for-sale. The adoption at January 1, 2018 of ASU 2016-01 resulted in an adjustment to retained earnings of $1.0 million at January 1, 2018 related to fair value measurement changes to equity securities and certain limited partnership investments (See Notes 2, 16 and 20).

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”, to reduce current diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The adoption at January 1, 2018 of ASU 2016-15 did not have a material effect on the Company’s financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”, which introduces amendments that are intended to clarify the definition of a business to assist companies and other reporting organizations with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments are intended to narrow the current interpretation of a business. The adoption at January 1, 2018 of ASU No. 2017-01 did not have a material effect on the Company’s financial statements.

In March 2017, the FASB issued ASU 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Costs,” to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The amendments also allow only the service cost component to be eligible for capitalization when applicable. The Company adopted the standard effective January 1, 2018, which did not have a material impact on the Company’s financial statements.

In May 2017, the FASB issued ASU 2017-09, “Stock Compensation (Topic 718): Scope of Modification Accounting”, which clarifies when modification accounting should be applied to changes in terms or conditions of share-based payment awards. The amendments narrow the scope of modification accounting by clarifying that modification accounting should be applied to awards if the change affects the fair value, vesting conditions, or classification of the award. The amendments do not impact current disclosure requirements for modifications, regardless of whether modification accounting is required under the new guidance. The adoption of ASU 2017-09 at January 1, 2018 did not have a material effect on the Company’s financial statements.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities.” ASU 2017-12 amends the hedge accounting recognition and presentation requirements in ASC 815 to improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities to better align the entity’s financial reporting for hedging relationships with those risk management activities and to reduce the complexity of and simplify the application of hedge accounting. The Company elected to early adopt the provisions of ASU 2017-12 at January 1, 2018 which did not have a material effect on the Company’s financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases”. This ASU requires lessees to recognize lease assets and lease liabilities generated by contracts longer than a year on their balance sheets. The ASU also requires companies to disclose in the footnotes to their financial statements information about the amount, timing, and uncertainty for the payments they make for the lease agreements. ASU 2016-02 will be effective for annual periods and interim periods within those annual periods beginning after December 15, 2018. The Company is evaluating the effect of adopting this new accounting guidance.

In June 2016, the FASB has issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The guidance is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments. The guidance will replace the current incurred loss accounting model with an expected loss approach and requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is evaluating the effect of adopting this new accounting guidance.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Therefore, any carrying amount which exceeds the reporting unit’s fair value (up to the amount of goodwill recorded) will be recognized as an impairment loss. ASU No. 2017-04 will be effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those periods. The amendments will be applied prospectively on or after the effective date. Early adoption is permitted for interim or annual goodwill impairment tests performed

on testing dates after January 1, 2017. Based on recent goodwill impairments tests, which did not require the application of Step 2, the Company does not expect the adoption of this ASU to have an immediate impact.

In March 2017, the FASB issued ASU No. 2017-08, “Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities”, which will shorten the amortization period for callable debt securities held at a premium to the earliest call date instead of the maturity date. The amendments do not require an accounting change for securities held at a discount, which will continue to be amortized to the maturity date. ASU No. 2017-08 will be effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those periods. The amendments should be applied using a modified-retrospective transition method as of the beginning of the period of adoption. Early adoption is permitted, including adoption in an interim period. The Company is currently assessing this pronouncement and it is not expected to have a material impact on the Company’s financial condition or results of operations.

A summary of amortized cost and estimated fair value of securities, excluding equity securities with readily determinable fair values not held for trading, at September 30, 2018 and December 31, 2017 is as follows:

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2018
Securities available-for-sale:
U.S. Treasury securities	$	100,453	$	—	$	5,055	$	95,398
Obligations of U.S. government agencies		63,538		—		740		62,798
Mortgage-backed securities issued or guaranteed by U.S. agencies (MBS)
Residential pass-through:
Guaranteed by GNMA		90,112		160		3,027		87,245
Issued by FNMA and FHLMC		614,032		319		17,259		597,092
Other residential mortgage-backed securities		38,709		3		1,912		36,800
Commercial mortgage-backed securities		116,150		90		6,993		109,247
Total MBS		859,003		572		29,191		830,384
Obligations of states and municipal subdivisions		230,677		43		18,836		211,884
Total securities available-for-sale	$	1,253,671	$	615	$	53,822	$	1,200,464

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
December 31, 2017
Securities available-for-sale:
U.S. Treasury securities	$	100,575	$	—	$	3,731	$	96,844
Obligations of U.S. government agencies		80,552		738		66		81,224
Mortgage-backed securities issued or guaranteed by U.S. agencies (MBS)
Residential pass-through:
Guaranteed by GNMA		106,461		676		1,110		106,027
Issued by FNMA and FHLMC		431,409		1,284		2,271		430,422
Other residential mortgage-backed securities		47,379		97		1,084		46,392
Commercial mortgage-backed securities		76,201		63		4,069		72,195
Total MBS		661,450		2,120		8,534		655,036
Obligations of states and municipal subdivisions		420,111		7,539		3,691		423,959
Total securities available-for-sale	$	1,262,688	$	10,397	$	16,022	$	1,257,063
Securities held-to-maturity:
Obligations of states and municipal subdivisions	$	290	$	21	$	—	$	311

The Company elected to reclassify the one held-to-maturity security as of December 31, 2017 to available-for-sale in the first quarter under the transition election guidance in ASC Topic 815.

The adoption of ASU 2016-01 resulted in a classification change of equity securities from securities available-for-sale to equity securities with readily determinable fair values not held for trading. The Company recorded an adjustment of $95 thousand to retained earnings for the adoption of the accounting principle.

The scheduled contractual maturities of securities available-for-sale and securities held-to-maturity at September 30, 2018 were as follows:

Gross gains and gross losses on sales of securities available for sale for the three and nine months ended September 30, 2018 and 2017 are presented below. There were no other-than-temporary impairment charges included in gross realized losses for the three and nine months ended September 30, 2018 and 2017.

Securities with a carrying value of $493.2 million and $507.3 million at September 30, 2018 and December 31, 2017, respectively, were pledged to secure public deposits, FHLB borrowings, repurchase agreements and for other purposes as required or permitted by law.

The detail concerning securities classified as available-for-sale with unrealized losses as of September 30, 2018 and December 31, 2017 was as follows:

	Unrealized loss analysis
	Losses < 12 Months				Losses > 12 Months
			Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized
(In thousands)	Fair Value		Losses		Fair Value		Losses
September 30, 2018
U.S. Treasury securities	$	—	$	—	$	95,398	$	5,055
Obligations of U.S. government agencies		52,984		637		9,814		103
Mortgage-backed securities		566,645		13,235		234,984		15,956
Obligations of states and municipal subdivisions		82,993		4,556		121,176		14,280
Total

Delaware		47-1329858
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

PART I: FINANCIAL INFORMATION		3

ITEM 1.	FINANCIAL STATEMENTS	3

	Consolidated Balance Sheets as of September 30, 2018 (Unaudited) and December 31, 2017	3
	Unaudited Consolidated Statements of Income for the three and nine months ended September 30, 2018 and 2017	4
	Unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2018 and 2017	5
	Unaudited Consolidated Statement of Changes in Shareholders' Equity for the nine months ended September 30, 2018	6
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017	7
	Notes to Unaudited Consolidated Financial Statements	8

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	43

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	83

ITEM 4.	CONTROLS AND PROCEDURES	85

PART II: OTHER INFORMATION		86

ITEM 1.	LEGAL PROCEEDINGS	86

ITEM 1A.	RISK FACTORS	86

ITEM 2.	UNREGISTERED SALES OF EQUITY AND USE OF PROCEEDS	86

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	86

ITEM 4.	MINE SAFETY DISCLOSURES	86

ITEM 5.	OTHER INFORMATION	86

ITEM 6.	EXHIBITS	86

	Available-for-Sale
	Amortized		Estimated
(In thousands)	Cost		Fair Value
Due in one year or less	$	1,490	$	1,490
Due after one year through five years		107,470		102,357
Due after five years through ten years		47,867		47,293
Due after ten years		237,841		218,940
Mortgage-backed securities		859,003		830,384
Total	$	1,253,671	$	1,200,464

☐	Large accelerated filer	☐	Accelerated filer

☒	Non-accelerated filer	☐	Smaller reporting company

		☒	Emerging growth company

Class A Common Stock, $0.01 Par Value		83,625,000
Class		Outstanding as of November 14, 2018

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(In thousands)	2018		2017		2018			2017
Gross realized gains	$	2	$	1	$	814		$	151
Gross realized losses		—		—		(2,613	)		(313	)
Realized gains (losses) on sale of securities available for sale, net	$	2	$	1	$	(1,799	)	$	(162	)