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Contractual Obligations and Off-Balance Sheet Items | 9 Months Ended
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Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract] |
Contractual Obligations and Off-Balance Sheet Items | 9. CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ITEMS Contractual Obligations The Company’s contractual obligations and other commitments to make future payments (other than deposit obligations and securities sold under repurchase agreements) as of September 30, 2024 are summarized below. Bank Term Funding Program During the second quarter of 2023, the Bank began participating in the Federal Reserve’s Bank Term Funding Program (“BTFP”), which ceased extending new loans as of March 11, 2024. Under the BTFP program, eligible depository institutions could obtain loans of up to one year in length by pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. The pledged assets are valued at par totaling $4.03 billion at September 30, 2024. At September 30, 2024, the balance outstanding was $3.90 billion consisting of a one-term advance maturing in January 2025 with an interest rate of 4.76%, collateralized by the par value of pledged securities. The Company’s future cash payments associated with its contractual obligations pursuant to the BTFP as of September 30, 2024 are summarized below. The future interest payments were calculated using the current rate in effect at September 30, 2024. Payments under the BTFP include interest of $186.1 million that will be due over the future periods. These payments do not include prepayment options that may be available to the Company.
|  | 1 year or less |  |  | More than 1 year but less than 3 years |  |  | 3 years or more but less than 5 years |  |  | 5 years or more |  |  | Total |
|  | (Dollars in thousands) |
Bank Term Funding Program |  | $ | 4,086,149 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 4,086,149 |
Leases The Company’s leases relate primarily to operating leases for office space and banking centers. The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s leases have remaining lease terms of 1 to 15 years, which may include the option to extend the lease when it is reasonably certain for the Company to exercise that option. Operating lease right-of-use (“ROU”) assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses its incremental collateralized borrowing rate to determine the present value of lease payments. Short-term leases and leases with variable lease costs are immaterial and the Company has one sublease arrangement. Sublease income was $826 thousand and $816 thousand for the three months ended September 30, 2024 and 2023, respectively, and $2.5 million and $2.3 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, operating lease ROU assets and lease liabilities were approximately $35.5 million. ROU assets and lease liabilities were classified as other assets and other liabilities, respectively. As of September 30, 2024, the weighted average of remaining lease terms of the Company’s operating leases was 5.9 years. The weighted average discount rate used to determine the lease liabilities as of September 30, 2024 for the Company’s operating leases was 3.0%. Cash paid for the Company’s operating leases was $2.9 million and $3.1 million for the three months ended September 30, 2024 and 2023, respectively, and was $8.7 million and $9.0 million for the nine months ended September 30, 2024 and 2023, respectively. During the nine months ended September 30, 2024, the Company obtained $5.2 million in ROU assets in exchange for lease liabilities for three operating leases. The Company’s future undiscounted cash payments associated with its operating leases as of September 30, 2024 are summarized below (dollars in thousands).
Remaining 2024 |  | $ | 2,668 |
2025 |  |  | 10,461 |
2026 |  |  | 9,334 |
2027 |  |  | 6,332 |
2028 |  |  | 3,355 |
2029 |  |  | 2,006 |
Thereafter |  |  | 10,495 |
Total undiscounted lease payments |  | $ | 44,651 |
Off-Balance Sheet Items In the normal course of business, the Company enters into various transactions that, in accordance with GAAP, are not included in its consolidated balance sheets. The Company enters into these transactions to meet the financing needs of its customers. These transactions include commitments to extend credit and standby letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. The Company’s commitments associated with outstanding standby letters of credit, unused capacity on Warehouse Purchase Program loans and commitments to extend credit expiring by period as of September 30, 2024 are summarized below. Since commitments associated with letters of credit, unused capacity on Warehouse Purchase Program loans and commitments to extend credit may expire unused, the amounts shown may not necessarily reflect the actual future cash funding requirements.
|  | 1 year or less |  |  | More than 1 year but less than 3 years |  |  | 3 years or more but less than 5 years |  |  | 5 years or more |  |  | Total |
|  | (Dollars in thousands) |
Standby letters of credit |  | $ | 71,344 |  |  | $ | 16,656 |  |  | $ | 2,045 |  |  | $ | 26 |  |  | $ | 90,071 |
Unused capacity on Warehouse Purchase Program loans |  |  | 752,452 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 752,452 |
Commitments to extend credit |  |  | 1,595,889 |  |  |  | 911,817 |  |  |  | 172,499 |  |  |  | 1,364,391 |  |  |  | 4,044,596 |
Total |  | $ | 2,419,685 |  |  | $ | 928,473 |  |  | $ | 174,544 |  |  | $ | 1,364,417 |  |  | $ | 4,887,119 |
The Company records an allowance for credit losses on off-balance sheet credit exposure that is adjusted through a charge to provision for credit losses on the Company’s consolidated statement of income. At September 30, 2024 and December 31, 2023, this allowance, reported as a separate line item on the Company’s consolidated balance sheet, totaled $37.6 million and $36.5 million, respectively. The increase in the allowance was primarily due to the LSSB Merger.

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