What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-01 compared with 2022-03-01 · 356 added, 459 removed, 2536 unchanged (24% of the section changed)

18 unchanged sentences

Director of Berkshire Hills Bancorp and Berkshire Bank

Gray 45 Senior Executive Vice President of the Company;

Gray 46 Senior Executive Vice President, Chief Operating Officer;

President - Berkshire Bank

Subhadeep Basu 51 Senior Executive Vice President, Chief Financial Officer of the Company and the Bank

Bacigalupo 67 Senior Executive Vice President, Head of Commercial Banking - Berkshire Bank

Lindenmuth 54 Senior Executive Vice President, Chief Risk Officer – Berkshire Bank

Stephenson 51 Senior Executive Vice President, Regulatory & Compliance- -Berkshire Bank

Lucia “Lucy” Bellomia 56 Executive Vice President, Head of Retail Banking – Berkshire Bank

Carmichael 44 Executive Vice President, Chief Internal Audit Officer - Berkshire Bank

Jacqueline Courtwright 58 Executive Vice President, Chief Human Resources and Culture Officer – Berkshire Bank

Georgia Melas 58 Executive Vice President, Chief Credit Officer – Berkshire Bank

Gordon Prescott 60 Executive Vice President, General Counsel and Corporate Secretary - Berkshire Bank;

Corporate Secretary – Berkshire Hills Bancorp

Ellen Steinfeld 60 Executive Vice President, Head of Consumer Lending & Payments

White 46 Executive Vice President , Chief Information Officer – Berkshire Bank

David Rosato 61 Senior Executive Vice President, Chief Financial Officer

Lucia “Lucy” Bellomia 57 Senior Executive Vice President, Head of Retail Banking

James Brown 57 Senior Executive Vice President, Head of Commercial Banking

Carmichael 46 Executive Vice President, Chief Internal Audit Officer

Jacqueline Courtwright 59 Senior Executive Vice President, Chief Human Resources and Culture Officer

Ashlee Flores 38 Executive Vice President, Chief Compliance Officer

Philip Jurgeleit 53 Executive Vice President, Chief Credit Officer

Lindenmuth 55 Senior Executive Vice President, Chief Risk Officer

Gordon Prescott 61 Senior Executive Vice President, General Counsel and Corporate Secretary

Sumant Pustake 38 Executive Vice President, Chief Transformation & Strategy Officer

Ellen Steinfeld 61 Senior Executive Vice President, Head of Consumer Lending & Payments

White 47 Senior Executive Vice President, Chief Information Officer – Berkshire Bank

The executive officers are elected annually and hold office until their successors have been elected and qualified or until they are removed or replaced.

6 unchanged sentences

Mhatre spent 13 years at Citi Group in various leadership roles across consumer-related businesses globally.

Gray was appointed to the role of Senior Executive Vice President and Chief Operating Officer of the Company and President of the Bank in November 2018.

Gray was appointed to the role of Senior Executive Vice President, Chief Operating Officer;

President of the Bank in November 2018.

He was previously Senior Executive Vice President of the Company and Chief Operating Officer of the Bank since 2015.

1 unchanged sentence

Previously, he was Vice President and Consumer Market Manager at Bank of America, in Waltham, Massachusetts.

Subhadeep Basu, Age 51.

Basu joined the Company in March 2021 as Senior Executive Vice President, Chief Financial Officer.

He is responsible for the accounting, treasury, tax, investor relations, procurement/facilities, and capital markets functions.

Prior to joining Berkshire, Mr.

Basu served as Senior Vice President of Global Institutional Services at State Street.

Before joining State Street, he spent more than 15 years at Citigroup, Bank of America, and Ally Financial in various leadership roles across Finance, Treasury, Risk, and Consumer and Commercial Banking.

Bacigalupo was promoted to Senior Executive Vice President, Head of Commercial Banking, Berkshire Bank in September 2015, having previously served as an Executive Vice President since October 2013 and Senior Vice President, Chief Credit Officer since 2011.

Previously, Mr.

Bacigalupo was EVP of Specialty Lending at TD Banknorth, where he established the ABL and other middle-market lending groups.

Subsequently, at TD Bank, he was the Senior Lender for New England.

Lindenmuth is Senior Executive Vice President, Chief Risk Officer of the Bank, a position he was promoted to in October 2018.

Lindenmuth joined Berkshire in 2016 from the FDIC where he was employed for 24 years and held multiple positions including Senior Risk Examiner for the Division of Risk Management Supervision and Acting Regional Manager for the Division of Insurance and Research.

With the FDIC, Mr.

Lindenmuth was also a Capital Markets, Mortgage Banking, and Fraud Specialist.

Stephenson is Senior Executive Vice President, Compliance and Regulatory of Berkshire Bank, a position she was promoted to in 2018.

Stephenson joined the Company in 2014.

She was previously Senior Vice President at Country Bank where she managed retail banking and human resources.

She started her career at the FDIC as a Safety and Soundness and Compliance Examiner.

Subsequently, she has held various leadership roles in Compliance, CRA, BSA/AML, Retail Sales/Branch Administration, Human Resources and Training.

Lucia “Lucy” Bellomia, Age 56.

Bellomia is Executive Vice President and Head of Retail Banking.

David Rosato.

Rosato joined the Company in February 2023 as Senior Executive Vice President, Chief Financial Officer.

He spent the last 15 years with People’s United Financial, Inc., eight of which as Chief Financial Officer.

Prior to joining People’s United, Mr.

Rosato worked at Webster Financial Corporation, including serving as its Treasurer, and M&T Bank Corporation.

Rosato is a former board member of the Federal Home Loan Bank of Boston.

Lucia “Lucy” Bellomia.

Bellomia is Senior Executive Vice President and Head of Retail Banking.

She oversees the retail branch network, branch training, the MyBanker program, Call Center, Branch Operations, Retail Sales and Service Delivery.

1 unchanged sentence

She previously held positions at the Police and Fire Credit Union in Philadelphia, Santander Bank, PNC Bank, Sun National Bank, and Pioneer Savings and Loans.

Carmichael, Age 44.

Brown joined the Company in January 2023 as Senior Executive Vice President, Commercial Banking.

Brown is responsible for all aspects of commercial banking operations, including the middle-market, business banking and asset based lending teams.

Previously, he spent more than 20 years at Boston Private Bank & Trust Company in multiple senior executive roles including Co-President, EVP, Head of Commercial Banking and Credit Administration, and Chief Lending Officer.

He served with Silicon Valley Bank as Head of Specialty Commercial within the Private Bank, following the acquisition of Boston Private in 2021

Carmichael was promoted to Executive Vice President, Chief Internal Audit Officer of Berkshire Bank in November 2020.

2 unchanged sentences

She joined the Bank in 2016 from Accume Partners where she served as Senior Audit Manager to several clients in the New York and New England regions, including Berkshire.

Jacqueline Courtwright, Age 58.

Courtwright was promoted in September 2020 to Executive Vice President, Chief Human Resources and Culture Officer at Berkshire Bank.

Jacqueline Courtwright.

Courtwright is Senior Executive Vice President, Chief Human Resources and has served as Culture Officer since September 2020.

She had been appointed as Senior Vice President, Chief Human Resources Officer in July 2019.

1 unchanged sentence

Courtwright was VP, Human Resources Business Partner at Citizen Bank and also held senior human resource roles during her 20 years at KeyBank.

Georgia Melas.

Melas is Executive Vice President, Chief Credit Officer of Berkshire Bank, a position she was promoted to in October 2018.

Melas joined Berkshire as Senior Vice President, Chief Credit Officer in 2015 from Key Bank where she held multiple positions including Senior Credit Officer, Commercial Banking.

Ashlee Flores.

Flores was promoted to Executive Vice President, Chief Compliance Officer in September 2022.

She oversees all aspects of the compliance risk management program, including compliance with the Bank Secrecy Act, Community Reinvestment Act, consumer protection laws and regulations, as well as the Security and Fraud Investigations functions.

Flores previously served as SVP, Compliance, where she oversaw Berkshire Bank's compliance program.

Prior to joining Berkshire Bank, Ms.

Flores was a compliance officer at Hampden Bank in Springfield, MA where she managed the compliance and audit program.

Philip Jurgeleit.

Jurgeleit joined the Company in January 2023 as Executive Vice President, Chief Credit Officer.

He oversees all aspects of the company's credit underwriting, policy, and approval processes.

Jurgeleit most recently served as SVP and Senior Director of Credit Risk at Santander Bank where he was responsible for all aspects of credit risk management including credit approval, asset quality, underwriting guidelines, and credit policies for the Middle Market, Mid-Corporate, Asset Based Lending, and Healthcare/Not-for-Profit business units.

He also held senior leadership roles at Citizens Bank, Webster Bank and Bank of America.

Lindenmuth is Senior Executive Vice President, Chief Risk Officer of the Bank, a position he was promoted to in October 2018.

With the FDIC, Mr.

Lindenmuth was also a Capital Markets, Mortgage Banking, and Fraud Specialist.

Gordon Prescott, Age 61.

Prescott is Executive Vice President, General Counsel and Corporate Secretary of the Bank, a position he was promoted to in October 2018.

Prescott is Senior Executive Vice President, General Counsel and Corporate Secretary, a position he was promoted to in October 2018.

Prescott joined Berkshire in 2008 as VP, General Counsel and Corporate Secretary.

1 unchanged sentence

prior to joining the Bank.

Sumant Pustake.

Pustake was promoted to Executive Vice President in February 2023 and has served as Chief Transformation and Strategy Officer since June 2021.

Pustake previously oversaw Berkshire's corporate development efforts, where he served as the development leader and helped define and realize Berkshire’s vision and growth strategy.

Prior to joining Berkshire Bank, he served as Vice President, Head of Corporate Credit for Commerce Bank and Trust at the time of its acquisition by Berkshire in 2017.

Ellen Steinfeld, Age 61.

Steinfeld is Executive Vice President and Head of Consumer Lending & Payments.

Steinfeld is Senior Executive Vice President and Head of Consumer Lending & Payments.

She is responsible for Mortgage Banking sales and operations, Home Equity, Consumer Lending and Payments.

4 unchanged sentences

White, Age 47.

White was promoted to Executive Vice President, Chief Information Officer of Berkshire Bank in November 2020.

White is Senior Executive Vice President and was named Chief Information Officer of Berkshire Bank in November 2020.

He previously served as Senior Vice President, Chief Technology Officer since May 2019 when he joined the Bank following the acquisition of Savings Institute Bank & Trust, where he served as Chief Information Officer and Information Security Officer.

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• Consolidated Statements of Operations for the Years Ended December 31, 2022, 2021, and 2020

• Consolidated Statements of Comprehensive Income/(Loss) for the Years Ended December 31, 2021, 2020, and 2019

• Consolidated Statements of Comprehensive (Loss)/Income for the Years Ended December 31, 2022, 2021, and 2020

• Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2022, 2021, and 2020

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All financial statement schedules are omitted because the required information is either included or is not applicable.

3.1 Certificate of Incorporation of Berkshire Hills Bancorp, Inc.

3.1 Amended Certificate of Incorporation of Berkshire Hills Bancorp, Inc.

3.2 Amended and Restated Bylaws of Berkshire Hills Bancorp, Inc.

3.3 Certificate of Amendment to the Certificate of Incorporation of Berkshire Hills Bancorp, Inc.

3.4 Certificate of Designations of the Series B Non-Voting Preferred Stock (3)

12 unchanged sentences

10.6 Berkshire Bank Enhanced Change in Control Severance Plan (Gregory D.

Lindenmuth and Deborah Stephenson) (12)

Lindenmuth and Brett Brbovic) (12)

10.7 Form of Split Dollar Agreement entered into with Sean A.

3 unchanged sentences

10.10 Senior Executive Short Term Incentive Plan (16)

10.11 Berkshire Hills Bancorp, Inc.

2022 Equity Incentive Plan (17)

10.12 Transition Agreement and Release of Claims entered into with Subhadeep Basu (18)

10.13 Transition Agreement entered into with Deborah Stephenson (19)

21.0 Subsidiary Information

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(i) the Consolidated Statements of Condition, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements tagged as blocks of text and in detail

(1) Incorporated herein by reference from the Exhibits to Form S-1, Registration Statement and amendments thereto, initially filed on March 10, 2000, Registration No.

(1) Incorporated herein by reference from the Exhibits to Form 10-Q as filed on August 9, 2018

(2) Incorporated herein by reference from the Exhibits to the Form 8-K as filed on June 26, 2017.

(3) Incorporated herein by reference from the Exhibits to the Form 10-Q as filed on November 9, 2017.

(3) Incorporated herein by reference from the Exhibits to Form S-1, Registration Statement and amendments thereto, initially filed on March 10, 2000, Registration No.

(4) Incorporated herein by reference from the Exhibits to the Form 8-K as filed on October 16, 2017.

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(16) Incorporated herein by reference from the Exhibits to the Form 10-Q as filed on May 10, 2019.

(17) Incorporated herein by reference from the Appendix to the Proxy Statement as filed on April 8, 2022.

(18) Incorporated herein by reference from the Exhibit to the Form 8-K as filed on October 13, 2022.

(19) Incorporated herein by reference from the Exhibit to the Form 8-K as filed on September 12, 2022.

FORM 10-K SUMMARY

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Mhatre (principal executive officer)

/s/ Subhadeep Basu Senior Executive Vice President, Chief Financial Officer March 1, 2022

Subhadeep Basu (principal financial and accounting officer)

David Rosato Senior Executive Vice President, Chief Financial Officer March 1, 2023

David Rosato (principal financial officer)

/s/ Brett Brbovic Senior Managing Director, Chief Accounting Officer March 1, 2023

Brett Brbovic (principal accounting officer)

Brunelle Chairperson March 1, 2023

1 unchanged sentence

Baye Adofo-Wilson

Brouillard Director March 1, 2022

Charnley Director March 1, 2023

Davies Director March 1, 2023

Desai Director March 1, 2023

/s/ William H.

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Laurie Norton Moffatt

/s/ Karyn Polito Director March 1, 2023

/s/ Jonathan I.

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This report expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022.

Mhatre /s/ Subhadeep Basu

Mhatre Subhadeep Basu

Mhatre /s/ R.

President & Chief Executive Officer Senior Executive Vice President & Chief Financial Officer

6 unchanged sentences

We have audited the accompanying consolidated balance sheets of Berkshire Hills Bancorp, Inc.

(the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income/(loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements").

(the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive (loss)/income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements").

We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework:

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material

misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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• Significant assumptions and judgements applied within the allowance for credit loss calculation.

Substantively testing management’s process to estimate the allowance for credit loss calculation included:

Substantively testing management’s process to e stimate the allow ance f or credit loss calcu lation included:

• Testing the completeness and accuracy of the underlying internal data utilized to prepare the calculation.

26 unchanged sentences

Premises and equipment, net 85,217 94,383

Other real estate owned — 149

Other intangible assets 24,483 29,619

9 unchanged sentences

Total deposits 10,327,269 10,068,953

Short-term debt — 40,000

Long-term Federal Home Loan Bank advances 4,445 13,331

2 unchanged sentences

Other liabilities 256,024 192,681

Liabilities held for sale — 630,065

Total liabilities 10,708,802 10,372,478

8 unchanged sentences

Retained (deficit) ( 71,428 ) ( 139,383 )

Accumulated other comprehensive income/(loss) ( 3,243 ) 30,871

Accumulated other comprehensive (loss) ( 181,052 ) ( 3,243 )

Treasury stock, at cost ( 7,541,968 shares in 2022 and 3,236,080 shares in 2021)

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Other 6,973 6,631 2,597

(Loss)/gain on securities, net ( 787 ) ( 7,520 ) 4,389

(Loss) on securities, net ( 2,031 ) ( 787 ) ( 7,520 )

Gain on sale of business operations and assets, net — 52,942 1,240

1 unchanged sentence

Total net revenue 413,534 434,414 383,089

Provision (benefit) for credit losses ( 500 ) 75,878 35,419

Provision expense/(benefit) for credit losses 11,000 ( 500 ) 75,878

Non-interest expense

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BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME

Years Ended December 31,

3 unchanged sentences

Changes in unrealized gains and losses on securities available-for-sale ( 235,081 ) ( 46,794 ) 25,726

Changes in unrealized gains and losses on cash flow hedges ( 6,667 ) — —

Changes in unrealized gains and losses on pension 1,674 993 ( 489 )

2 unchanged sentences

Changes in unrealized gains and losses on securities available-for-sale 60,922 11,937 ( 6,471 )

Changes in unrealized gains and losses on cash flow hedges 1,789 — —

Changes in unrealized gains and losses on pension ( 446 ) ( 250 ) 112

1 unchanged sentence

Total other comprehensive (loss)/income ( 177,809 ) ( 34,114 ) 18,878

Total comprehensive income/(loss) $ 84,550 $ ( 514,139 ) $ 122,913

Total comprehensive (loss)/income $ ( 85,276 ) $ 84,550 $ ( 514,139 )

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

5 unchanged sentences

Balance at January 1, 2020 522 $ 40,633 49,585 $ 517 $ 1,422,441 $ ( 8,465 ) $ 361,082 $ 11,993 $ ( 69,637 ) $ 1,758,564

Comprehensive income:

Net income — — — — — — 97,450 — — 97,450

Other net comprehensive (loss) — — — — — — — 25,463 — 25,463

Comprehensive (loss):

Net (loss) — — — — — — ( 533,017 ) — — ( 533,017 )

Other net comprehensive income — — — — — — — 18,878 — 18,878

Total comprehensive income — — — — — — ( 533,017 ) 18,878 — ( 514,139 )

Acquisition of SI Financial Group, Inc.

— — 5,691 57 176,655 — — — — 176,712

Impact of ASC 326 Adoption — — — — — — ( 24,380 ) — — ( 24,380 )

Conversion of preferred stock to common stock ( 522 ) ( 40,633 ) 1,043 11 10,395 — — — 30,227 —

Cash dividends declared on common shares ($ 0.72 per share)

10 unchanged sentences

Comprehensive income:

Net (loss) — — — — — — ( 533,017 ) — — ( 533,017 )

Other net comprehensive income — — — — — — — 18,878 — 18,878

Total comprehensive (loss) — — — — — — ( 533,017 ) 18,878 — ( 514,139 )

Impact of ASC 326 Adoption — — — — — — ( 24,380 ) — — ( 24,380 )

Conversion of preferred stock to common stock ( 522 ) ( 40,633 ) 1,043 11 10,395 — — — 30,227 —

Net income — — — — — — 118,664 — — 118,664

Other net comprehensive (loss) — — — — — — — ( 34,114 ) — ( 34,114 )

Total comprehensive income — — — — — — 118,664 ( 34,114 ) — 84,550

Cash dividends declared on common shares ($ 0.48 per share)

— — — — — — ( 24,553 ) — — ( 24,553 )

Cash dividends declared on preferred shares ($ 1.20 per share)

— — — — — — ( 313 ) — — ( 313 )

Treasury stock purchased — — ( 2,500 ) — — — — — ( 68,712 ) ( 68,712 )

28 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Provision (benefit) for credit losses ( 500 ) 75,878 35,419

Provision expense/(benefit) for credit losses 11,000 ( 500 ) 75,878

Net amortization of securities 2,886 1,939 2,513

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Net change in Mid-Atlantic region loans held for sale — 50,914 —

Acquisitions, net of cash paid — — 110,774

Proceeds from surrender of bank-owned life insurance 2,311 2,566 553

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Net investing cash flows provided/(used) by discontinued operations — — 252

Net cash provided by investing activities 600,554 641,103 1,202,582

Net cash (used)/provided by investing activities $ ( 1,273,380 ) $ 600,554 $ 641,103

Cash flows from financing activities:

3 unchanged sentences

Repayments of Federal Home Loan Bank advances and other borrowings ( 60,196 ) ( 462,059 ) ( 582,648 )

Proceeds from issuance of subordinated debt 98,032 — —

Repayment from calling of subordinated debt ( 75,000 ) — —

Purchase of treasury stock ( 124,519 ) ( 68,712 ) ( 473 )

2 unchanged sentences

Settlement of derivative contracts with financial institution counterparties 84,044 51,907 ( 97,611 )

Net cash (used)/provided by financing activities ( 636,099 ) 109,302 ( 917,467 )

Net cash provided/(used) by financing activities $ 207,695 $ ( 636,099 ) $ 109,302

Net change in cash and cash equivalents ( 942,452 ) 69,932 978,046

5 unchanged sentences

Income taxes (refunded)/paid, net 28,439 14,816 ( 13,864 )

Acquisition of non-cash assets and liabilities:

Assets acquired — — 1,595,054

Liabilities assumed — — ( 1,530,010 )

Other non-cash changes:

Other net comprehensive income/(loss) ( 34,114 ) 18,878 25,463

Other net comprehensive (loss)/income $ ( 177,809 ) $ ( 34,114 ) $ 18,878

Impact to retained earnings from adoption of ASC 326, net of tax — — 24,380

1 unchanged sentence

Mid-Atlantic liabilities reclassified to held for sale — — 630,065

Reclass of Mid-Atlantic loans held-for-sale to portfolio loans, net 29,418 — —

Reclass of Mid-Atlantic deposits held-for-sale to deposits, net 7,197 — —

Reclass of seasoned loan portfolios to held-for-sale, net 11,660 14,845 120,307

Reclass of premises and equipment to held-for-sale 4,577 — —

Mid-Atlantic loans held-for-sale reclassified to portfolio loans, net — 29,418 —

Mid-Atlantic deposits held-for-sale reclassified to deposits, net — 7,197 —

Seasoned loan portfolios reclassified to held-for-sale, net 3,369 11,660 14,845

Held-for-sale loans reclassified to held-for-investment, net 606 — —

Premises and equipment reclassified to held-for-sale 1,380 4,577 —

Real estate owned acquired in settlement of loans — — 224

Premium payable on cash flow hedges 2,296 — —

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

68 unchanged sentences

Direct loan origination costs, net of any origination fees, in addition to premiums and discounts on loans, are deferred and recognized as an adjustment of the related loan yield using the interest method.

Interest on loans, excluding automobile loans, is generally not accrued on loans which are ninety days or more past due unless the loan is well-secured and in the process of collection.

Interest on loans, excluding automobile and unsecured consumer loans, is generally not accrued on loans which are ninety days or more past due unless the loan is well-secured and in the process of collection.

Past due status is based on contractual terms of the loan.

Automobile loans generally continue accruing until one hundred and twenty days delinquent, at which time they are charged off.

Automobile and unsecured consumer loans generally continue accruing until one hundred and twenty days delinquent, at which time they are charged off.

All interest accrued but not collected for loans that are placed on non-accrual or charged-off is reversed against interest income, except for certain loans designated as well-secured.

10 unchanged sentences

Allowance for Credit Losses for Loans

The allowance for credit losses for loans (“ACLL”) is comprised of the allowance for loan losses and the allowance for unfunded commitments which is accounted for as a separate liability in other liabilities on the consolidated balance sheet.

The allowance for credit losses for loans (“ACLL”) is comprised of the allowance for credit losses on loans and the allowance for unfunded commitments which is accounted for as a separate liability in other liabilities on the consolidated balance sheets.

The ACLL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.

10 unchanged sentences

• the effect of other economic factors such as economic stimulus and customer forbearance programs.

The allowance for unfunded commitments is maintained at a level by the Company to be sufficient to absorb expected lifetime losses related to unfunded credit facilities (including unfunded loan commitments and letters of credit).) The Company’s allowance for credit losses on unfunded commitments is recognized as a liability (other liability on the Consolidated Balance Sheets), with adjustments to the reserve recognized in other noninterest expense in the Consolidated Statements of Operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18 unchanged sentences

Estimates of specific allowance may be determined by the present value of anticipated future cash flows or the loan’s observable fair market value, or the fair value of the collateral less costs to sell, if the loan is collateral dependent.

However, for collateral dependent loans, the amount of the amortized cost in a loan that exceeds the fair value of the collateral is charged-off against the allowance for loan losses in lieu of an allocation of a specific allowance amount when such an amount has been identified definitively as uncollectible.

Prior to the adoption of ASC 326 on January 1, 2020, the Company calculated allowance for loan losses using incurred losses methodology.

However, for collateral dependent loans, the amount of the amortized cost in a loan that exceeds the fair value of the collateral is charged-off against the allowance for credit losses on loans in lieu of an allocation of a specific allowance amount when such an amount has been identified definitively as uncollectible.

Prior to the adoption of ASC 326 on January 1, 2020, the Company calculated the allowance for loan losses using incurred losses methodology.

Bank-Owned Life Insurance

5 unchanged sentences

Both other real estate owned and repossessed collateral are held for sale and are initially recorded at the fair value less estimated costs to sell at the date of foreclosure or repossession, establishing a new cost basis.

The shortfall, if any, of the loan balance over the fair value of the property or collateral (excluding taxi medallions), less cost to sell, at the time of transfer

The shortfall, if any, of the loan balance over the fair value of the property or collateral (excluding taxi medallions), less cost to sell, at the time of transfer from loans to other real estate owned or repossessed collateral is charged to the allowance for credit losses on loans.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

from loans to other real estate owned or repossessed collateral is charged to the allowance for loan losses.

Subsequent to transfer, the asset is carried at lower of cost or fair value less cost to sell and periodically evaluated for impairment.

23 unchanged sentences

Subsequent reversals of goodwill impairment are prohibited.

As of December 31, 2020, the Company no longer has goodwill.

Other Intangibles

22 unchanged sentences

Such commissions are recognized when determinable, which is generally when such commissions are received or when the Company receives data from the insurance companies that allows the reasonable estimation of these amounts.

On September 1, 2021, the Company completed the sale of substantially all of the assets, and the assumption of certain liabilities, of Berkshire Insurance Group, Inc.

(“BIG”) to Brown & Brown of Massachusetts, LLC ("Buyer"), a Massachusetts limited liability company.

This sale was made pursuant to the Asset Purchase Agreement dated August 24, 2021.

The Buyer paid BIG an aggregate purchase price of $ 41.5 million, minus $ 1.6 million for executive goodwill purchase price payments paid by the Buyer at the Closing to certain executives of BIG.

The Company recorded a $ 37.2 million pre-tax gain related to this sale in 2021, which is included in gain on sale of business operations and assets on the Consolidated Statements of Operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock-Based Compensation

5 unchanged sentences

Income tax benefits and/or tax deficiencies related to stock compensation determined as the difference between compensation cost recognized for financial reporting purposes and the deduction for tax, are recognized in the income statement as income tax expense or benefit in the period in which they occur.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Wealth Management

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The prior service credit is amortized over the average remaining service period to full eligibility for participating employees expected to receive benefits.

The Company recognizes in its statement of condition an asset for a plan’s overfunded status or a liability for a plan’s underfunded status.

The Company also measures the Plans’ assets and obligations that determine its funded status as of the end of the fiscal year and recognizes those changes in other comprehensive income, net of tax.

The Company recognizes in its consolidated balance sheets an asset for a plan’s overfunded status or a liability for a plan’s underfunded status.

The Company also measures the Plans’ assets and obligations that determine its funded status as of the end of the fiscal year and recognizes those changes in other comprehensive income/(loss), net of tax.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9 unchanged sentences

Recently Adopted Accounting Principles

In August 2018, the FASB issued ASU No.

2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20):

Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans.” This ASU amends and modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans.

The amendments in this update remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant.

2018-14 only revises disclosure requirements, the adoption did not have a material impact on the Company’s Consolidated Financial Statements.

In December 2019, the FASB issued ASU No.

2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.” ASU No.

2019-12 removes specific exceptions to the general principles in FASB ASC Topic 740.

It eliminates the need for an organization to analyze whether the following apply in a given period:

(1) exception to the incremental approach for intraperiod tax allocation;

(2) exceptions to accounting for basis differences when there are ownership changes in foreign investments;

and (3) exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses.

ASU 2019-12 also improves financial statement preparers’ application of income tax-related guidance and simplifies:

(1) franchise taxes that are partially based on income;

(2) transactions with a government that result in a step up in the tax basis of goodwill;

(3) separate financial statements of legal entities that are not subject to tax;

and (4) enacted changes in tax laws in interim periods.

The adoption of ASU No.

2019-12 did not have a material impact on the Company's Consolidated Financial Statements.

In January 2020, the FASB issued ASU No.

2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815):

Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815 (a consensus of the FASB Emerging Issues Task Force)”.

2020-01 clarifies the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815.

The amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method.

In addition, this ASU provides direction that a company should not consider whether the underlying securities would be accounted for under the equity method or the fair value option when it is determining the accounting for certain forward contracts and purchased options, upon either settlement or exercise.

The amendments are to be applied prospectively.

The adoption of ASU No.

2020-01 did not have a material impact on the Company's Consolidated Financial Statements.

In January 2021, the FASB issued ASU No.

2021-01, “Reference Rate Reform (Topic 848):

Scope.” ASU No.

2021-01 clarifies that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

2021-01 also amends the expedients and exceptions in ASC 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition.

2021-01 was effective upon issuance and generally can be applied through December 31, 2022.

The adoption of ASU 2021-01 did not significantly impact the Company’s Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There were no new applicable material accounting pronouncements adopted by the Company since December 31, 2021.

Future Application of Accounting Pronouncements

In March 2022, the FASB issued ASU No.

2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU No.

2020-04 provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR.

For instance, entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met.

An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination.

Entities can also elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met.

Finally, entities can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform.

It is anticipated that this ASU will simplify any modifications that are executed before December 31, 2022 that are directly related to LIBOR transition by allowing prospective recognition of the continuation of the contract, rather than extinguishment of the old contract resulting in writing off unamortized fees/costs.

2020-04 was effective upon issuance and generally can be applied through December 31, 2022.

The adoption of ASU 2020-04 did not significantly impact the Company’s Consolidated Financial Statements.

2022-01, “Derivatives and Hedging (Topic 815):

Fair Value Hedging – Portfolio Layer Method.” The guidance expands the current last-of-layer method to allow multiple hedge layers of a single closed portfolio (renamed to portfolio layer method) and expands the portfolio layer method to include nonprepayable financial assets.

The ASU specifies eligible hedging instruments in a single-layer hedge and provides additional guidance on accounting for and disclosure of hedge basis adjustments that are applicable to the portfolio layer method.

Further, hedge basis adjustments should be considered when determining credit losses for assets included in the closed portfolio.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.

Early adoption is permitted.

The adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In March 2022, the FASB issued ASU No.

2022-02, “Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.” The ASU eliminates the troubled debt restructuring (“TDR”) accounting model that was adopted with Topic 326, “Financial Instruments – Credit Losses” and enhances disclosure requirements for certain loan refinancings and restructurings when a borrower is experiencing financial difficulty.

The ASU requires prospective disclosure of current-period gross write-offs by year of origination.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.

The adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS AND BRANCH SALE

During the first quarter of 2019, the Company reached the decision to pursue the sale of the national mortgage banking operations of First Choice Loan Services, Inc.

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Net (loss) from discontinued operations $ — $ — $ ( 19,842 )

FCLS also originated mortgages designated as held-for-investment.

This component of FCLS’s operations was not considered discontinued, since the Company expects to continue to originate mortgages designated as held-for-investment in its footprint on a small scale through processes considered as continuing operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

BRANCH SALE AND SALE OF INSURANCE OPERATIONS

Mid-Atlantic Branch Sale

7 unchanged sentences

The Company provided a settlement cash payment of $ 391 million as part of the sale for the assumption of covered deposit liabilities by Investors.

The Company recorded a $ 14.7 million pre-tax gain related to this branch sale.

The following is a summary of the assets and liabilities held for sale related to the branch sale at December 31, 2021 and 2020:

(in thousands) December 31, 2021 December 31, 2020

Loans $ — $ 300,599

Other assets — 16,705

Total assets $ — $ 317,304

Deposits $ — $ 617,377

Other liabilities — 12,688

Total liabilities $ — $ 630,065

Berkshire Insurance Group Sale of Operations

On September 1, 2021, the Company completed the sale of substantially all of the assets, and the assumption of certain liabilities, of Berkshire Insurance Group, Inc.

(“BIG”) to Brown & Brown of Massachusetts, LLC ("Buyer"), a Massachusetts limited liability company.

This sale was made pursuant to the Asset Purchase Agreement dated August 24, 2021.

The Buyer paid BIG an aggregate purchase price of $ 41.5 million, minus $ 1.6 million for executive goodwill purchase price payments paid by the Buyer at the Closing to certain executives of BIG.

The Company recorded a $ 37.2 million pre-tax gain related to this sale.

The Company recorded a $ 14.7 million pre-tax gain related to this branch sale in 2021, which is included in gain on sale of business operations and assets on the Consolidated Statements of Operations.

As of December 31, 2022 and 2021, there were no assets and liabilities held for sale related to the branch sale.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, amounts due from banks, and short-term investments with original maturities of 90 days or less.

Short-term investments included $ 43.7 million and $ 75.1 million pledged as collateral support for derivative financial contracts at year-end 2021 and 2020, respectively.

At year-end 2022, there were no short-term investments pledged as collateral support for derivative financial contracts.

At year-end 2021, short-term investments included $ 43.7 million pledged as collateral support for derivative financial contracts.

The Federal Reserve Bank requires the Bank to maintain certain reserve requirements of vault cash and/or deposits.

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Debt securities:

U.S Treasuries $ 11,972 $ 1 $ — $ 11,973 $ —

Municipal bonds and obligations 65,943 422 ( 3,030 ) 63,335 —

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Debt securities:

U.S Treasuries $ 59,972 $ 1 $ — $ 59,973 $ —

Municipal bonds and obligations 71,822 5,355 — 77,177 —

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At year-end 2021 and 2020, accumulated net unrealized (losses)/gains on AFS securities included in accumulated other comprehensive income were losses of $ 4.2 million and gains of $ 41.3 million, respectively.

At year-end 2021 and 2020, accumulated net unrealized gains on the securities reclassified from AFS to HTM included in accumulated other comprehensive income/(loss) were $ 2.4 million and $ 3.7 million, respectively.

The year-end 2021 and 2020 related income tax benefit/(liability) of $ 0.4 million and $( 11.5 ) million, respectively, was also included in accumulated other comprehensive income/(loss).

At year-end 2022 and 2021, accumulated net unrealized (losses) on AFS securities included in accumulated other comprehensive (loss)/income were losses of $ 238.0 million and $ 4.2 million, respectively.

At year-end 2022 and 2021, accumulated net unrealized gains on the securities reclassified from AFS to HTM included in accumulated other comprehensive (loss)/income were $ 1.1 million and $ 2.4 million, respectively.

The year-end 2022 and 2021 related income tax benefit/(liability) of $ 61.3 million and $ 0.4 million, respectively, was also included in accumulated other comprehensive (loss).

The following table summarizes the activity in the allowance for credit losses for debt securities held to maturity by security type for the years ended December 31, 2022, 2021 and 2020:

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Balance at December 31, 2020 $ 64 $ 40 $ 104

Provision expense for credit losses 6 ( 5 ) 1

Balance at December 31, 2021 $ 70 $ 35 $ 105

(In thousands) Municipal bonds and obligations Tax advantaged economic development bonds Total

Balance at December 31, 2019 $ — $ — $ —

Impact of ASC 326 adoption 83 226 309

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As of December 31, 2022, none of the Company's investment securities were delinquent or in non-accrual status.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The amortized cost and estimated fair value of AFS and HTM securities, segregated by contractual maturity at year-end 2022 are presented below.

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Total $ 1,661,196 $ 1,423,200 $ 583,453 $ 507,464

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At year-end 2022 and 2021, the Company had pledged securities as collateral for certain municipal deposits and for interest rate swaps with certain counterparties.

6 unchanged sentences

Total $ 316,713 $ 288,777 $ 218,181 $ 224,431

Proceeds from the sale of AFS securities totaled $ 150 million in 2022.

During 2021, there were no sales of AFS securities.

Proceeds from the sale of AFS securities totaled $ 69 million and $ 136 million in 2020 and 2019, respectively.

The amounts for the sale of AFS securities were reclassified out of accumulated other comprehensive income and into earnings.

Proceeds from the sale of AFS securities totaled $ 69 million in 2020.The amounts for the sale of AFS securities were reclassified out of accumulated other comprehensive (loss)/income and into earnings.

The components of net recognized gains and losses on the sale of AFS securities and the fair value change of marketable equities are as follows:

2 unchanged sentences

Gross recognized losses ( 2,009 ) ( 550 ) ( 11,133 )

Net recognized (losses)/gains $ ( 442 ) $ ( 6,531 ) $ 4,389

Net recognized (losses) $ ( 1,937 ) $ ( 442 ) $ ( 6,531 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Debt securities:

Municipal bonds and obligations $ 2,406 $ 36,696 $ 624 $ 2,763 $ 3,030 $ 39,459

Agency collateralized mortgage obligations

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Corporate bonds 114 11,115 — — 114 11,115

Other bonds and obligations — — 8 1,030 8 1,030

Total securities available for sale $ 14,528 $ 712,488 $ 7,868 $ 252,279 $ 22,396 $ 964,767

Securities held to maturity

Municipal bonds and obligations

693 36,981 — — 693 36,981

Agency collateralized mortgage obligations

4 unchanged sentences

1,255 80,406 2,034 51,654 3,289 132,060

Tax advantaged economic development bonds

15 1,255 — — 15 1,255

Total securities held to maturity 4,610 194,606 4,398 113,891 9,008 308,497

Total $ 19,138 $ 907,094 $ 12,266 $ 366,170 $ 31,404 $ 1,273,264

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt Securities

3 unchanged sentences

The following summarizes, by investment security type, the basis for the conclusion that the debt securities in an unrealized loss position within the Company’s AFS and HTM portfolios did not maintain other-than-temporary impairment ("OTTI") at year-end 2022:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AFS municipal bonds and obligations

At year-end 2022, 46 out of 94 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions.

Aggregate unrealized losses represented 7.1 % of the amortized cost of securities in unrealized loss positions.

The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market.

At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for that risk.

There were no material underlying credit downgrades during the quarter.

All securities are performing.

AFS collateralized mortgage obligations

26 unchanged sentences

All securities are performing.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HTM collateralized mortgage obligations

12 unchanged sentences

At year-end 2022, 2 out of 3 securities in the Company’s portfolio of tax-advantaged economic development

bonds were in an unrealized loss position.

Aggregate unrealized losses represented 1.2 % of the amortized cost of the

security in an unrealized loss position.

bonds were in unrealized loss positions.

Aggregate unrealized losses represented 9.5 % of the amortized cost of

securities in unrealized loss position.

The Company believes that more likely than not all the principal outstanding

1 unchanged sentence

All securities are performing.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

17 unchanged sentences

In 2021, the Company purchased loans aggregating $ 211 million and sold loans aggregating $ 560 million.

In 2020, the Company purchased loans aggregating $ 98 million and sold loans aggregating $ 415 million.

Net gains on sales of loans were $ 12.5 million, $ 20.7 million, and $ 10.6 million for the years 2022, 2021, and 2020, respectively.

These amounts are included in Loan Related Income on the Consolidated Statements of Operations.

These amounts are included in Loan Fees and Revenue on the Consolidated Statements of Operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Most of the Company’s lending activity occurs within its primary markets in Massachusetts, Southern Vermont, and Northeastern New York.

2 unchanged sentences

There were no other concentrations of loans related to any single industry in excess of 10% of total loans at year-end 2022 or 2021.

As of December 31, 2021, the Company had no foreclosed residential real estate property.

As of December 31, 2020, the Company maintained foreclosed residential real estate property with fair value of $ 149 thousand.

As of December 31, 2022 and December 31, 2021, the Company had no foreclosed residential real estate property.

Additionally, residential mortgage loans collateralized by real estate property that are in the process of foreclosure as of December 31, 2022 and December 31, 2021 totaled $ 3.0 million and $ 1.4 million, respectively, including sold loans serviced by the Company.

At year-end 2021, the Company had pledged loans totaling $ 0.7 billion to the Federal Reserve Bank of Boston as collateral for certain borrowing arrangements.

At year-end 2022 and 2021, the Company had pledged loans totaling $ 0.8 billion and $ 0.7 billion, respectively, to the Federal Reserve Bank of Boston as collateral for certain borrowing arrangements.

Also, residential first mortgage loans are subject to a blanket lien for FHLBB advances.

3 unchanged sentences

For the years 2022 and 2021, all related party loans were performing.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Risk characteristics relevant to each portfolio segment are as follows:

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The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Allowance for Credit Losses for Loans

The Allowance for Credit Losses for Loans (“ACLL”) is comprised of the allowance for loan losses, and the allowance for unfunded commitments is accounted for as a separate liability in other liabilities on the balance sheet.

The Allowance for Credit Losses for Loans (“ACLL”) is comprised of the allowance for credit losses on loans, and the allowance for unfunded commitments is accounted for as a separate liability in other liabilities on the Consolidated Balance Sheets.

The level of the ACLL represents management’s estimate of expected credit losses over the expected life of the loans at the balance sheet date.

7 unchanged sentences

• the effect of other economic factors such as economic stimulus and customer forbearance programs.

The allowance for unfunded commitments is maintained at a level by the Company to be sufficient to absorb

expected lifetime losses related to unfunded credit facilities (including unfunded loan commitments and letters of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s activity in the allowance for credit losses for loans for the years ended December 31, 2021 and December 31, 2020 was as follows:

(In thousands) Balance at Beginning of Period Impact of Adopting ASC 326 Sub-total Charge-offs Recoveries Provision for Credit Losses Balance at End of Period

The Company’s activity in the allowance for credit losses for loans for the years ended December 31, 2022, December 31, 2021 and December 31, 2020 was as follows:

(In thousands) Balance at Beginning of Period Charge-offs Recoveries Provision for Credit Losses Balance at End of Period

Year ended December 31, 2022

8 unchanged sentences

Total allowance for credit losses $ 106,094 $ ( 28,058 ) $ 7,220 $ 11,014 $ 96,270

(In thousands) Balance at Beginning of Period Charge-offs Recoveries Provision for Credit Losses Balance at End of Period

Year ended December 31, 2021

Construction $ 5,111 $ — $ — $ ( 1,905 ) $ 3,206

Commercial multifamily 5,916 ( 404 ) 157 451 6,120

Commercial real estate owner occupied 12,380 ( 1,640 ) 204 1,808 12,752

Commercial real estate non-owner occupied 35,850 ( 14,557 ) 2,522 8,291 32,106

Commercial and industrial 25,013 ( 10,841 ) 4,565 3,847 22,584

Residential real estate 28,491 ( 1,664 ) 1,767 ( 6,188 ) 22,406

Home equity 6,482 ( 334 ) 335 ( 2,477 ) 4,006

Consumer other 8,059 ( 1,578 ) 761 ( 4,328 ) 2,914

Total allowance for credit losses $ 127,302 $ ( 31,018 ) $ 10,311 $ ( 501 ) $ 106,094

(In thousands) Balance at Beginning of Period Impact of Adopting ASC 326 Sub-total Charge-offs Recoveries Provision for Credit Losses Balance at End of Period

9 unchanged sentences

Total allowance for credit losses $ 63,575 $ 25,434 $ 89,009 $ ( 45,795 ) $ 8,005 $ 76,083 $ 127,302

The Company’s allowance for credit losses on unfunded commitments is recognized as a liability (other liability on consolidated balance sheet), with adjustments to the reserve recognized in other noninterest expense in the Consolidated Statements of Operations.

The Company’s activity in the allowance for credit losses on unfunded commitments for the years ended December 31, 2021 and December 31, 2020 was as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s allowance for credit losses on unfunded commitments is recognized as a liability (other liability on the Consolidated Balance Sheets), with adjustments to the reserve recognized in other noninterest expense in the Consolidated Statements of Operations.

The Company’s activity in the allowance for credit losses on unfunded commitments for the years ended December 31, 2022, December 31, 2021, and December 31, 2020 was as follows:

(In thousands) Total

Balance at December 31, 2021 $ 7,043

Impact of adopting ASC 326 —

Sub-Total 7,629

Expense for credit losses 1,545

Balance at December 31, 2022 $ 8,588

(In thousands) Total

Balance at December 31, 2020 $ 7,629

Release of expense for credit losses ( 586 )

Balance at December 31, 2021 $ 7,043

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) Total

136 unchanged sentences

Total $ 7,290 $ 4,871 $ 38,152 $ 50,313 $ 8,284,996 $ 8,335,309

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due Total Past Due Current Total Loans

109 unchanged sentences

The following table discloses the modifications for TDRs where a concession has been made within the previous 12 months, that then defaulted in the respective reporting period.

For the years ended 2022, there were two loans restructured that had subsequently defaulted during the reporting period.

For the year ended 2021, there were four loans restructured that had subsequently defaulted during the reporting period.

There were no TDRs for which there was a payment default within twelve months following the modification during the year ended 2020.

ended 2019, there was one loan that was restructured that had subsequently defaulted during the reporting period.

(dollars in thousands) Number of Loans Recorded Investment

Year ended December 31, 2022

Commercial real estate non-owner occupied 2 $ 18,746

Commercial and industrial 1 $ 105

Consumer other 1 $ 10

Total 2 $ 115

1 unchanged sentence

Year ended December 31, 2021

Commercial real estate non-owner occupied 2 $ 18,746

Commercial and industrial 2 $ 71

Total 4 $ 18,817

Beginning in March 2020, the Company has offered three-month payment deferrals for customers with a current payment status who were negatively impacted by economic disruption caused by the COVID-19 pandemic.

Refer to Note 18 - Other Commitments, Contingencies, and Off-Balance Sheet Activities for more information regarding these modifications.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Prior to the adoption of ASC 326 on January 1, 2020, the Company calculated allowance for loan losses using incurred losses methodology.

The following tables are disclosures related to year end 2019.

The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality :

(In thousands) 2019

Balance at beginning of period $ 2,840

Acquisitions 4,200

Accretion ( 9,619 )

Net reclassification from nonaccretable difference 7,430

Payments received, net ( 837 )

Reclassification to TDR 9

Balance at end of period 4,023

The following is a summary of the average recorded investment and interest income recognized on impaired loans

as of December 31, 2019:

Business Activities Loans

December 31, 2019

(in thousands) Average Recorded

Investment Cash Basis Interest

Income Recognized

With no related allowance:

Other commercial real estate $ 19,805 $ 586

Other commercial and industrial 3,165 523

Residential mortgages - 1-4 family 185 17

Consumer-home equity 148 3

Consumer-other — —

With an allowance recorded:

Other commercial real estate $ 374 $ 107

Other commercial and industrial 2,533 793

Residential mortgages - 1-4 family 2,427 150

Consumer-home equity 349 32

Consumer - other 11 1

Commercial real estate $ 20,179 $ 693

Commercial and industrial 5,698 1,316

Residential mortgages 2,612 167

Consumer loans 508 36

Total impaired loans $ 28,997 $ 2,212

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Acquired Loans

December 31, 2019

(in thousands) Average Recorded

Investment Cash Basis Interest

Income Recognized

With no related allowance:

Other commercial real estate $ 1,603 $ 117

Other commercial and industrial 441 51

Residential mortgages - 1-4 family 241 11

Consumer - home equity 475 23

Consumer - other — —

With an allowance recorded:

Other commercial real estate $ 1,005 $ 59

Other commercial and industrial 29 2

Residential mortgages - 1-4 family 88 7

Consumer - home equity 68 6

Consumer - other 41 2

Commercial real estate $ 2,608 $ 176

Commercial and industrial 470 53

Residential mortgages 329 18

Consumer loans 584 31

Total impaired loans $ 3,991 $ 278

No additional funds are committed to be advanced in connection with impaired loans.

The following table presents the Company’s TDR activity in 2019:

(In thousands) 2019

Balance at beginning of year $ 27,415

Principal payments ( 6,086 )

TDR status change (1) —

Other reductions (2) ( 4,076 )

Newly identified TDRs 2,063

Balance at end of year $ 19,316

_____________________

(1) TDR status change classification represents TDR loans with a specified interest rate equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk and the loan was on current payment status and not impaired based on the terms specified by the restructuring agreement.

(2) Other reductions classification consists of transfer to other real estate owned, charge-offs to loans, and other loan sale payoffs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Allowance for Loan Losses

Prior to the adoption of ASC 326 on January 1, 2020, the Company calculated allowance for loan losses using incurred losses methodology.

The following tables are disclosures related to the allowance for loan losses for year end 2019.

Activity in the allowance for loan losses for 2019 was as follows:

Business Activities Loans

(In thousands) Commercial

real estate Commercial and

industrial loans Residential

mortgages Consumer Total

Balance at beginning of period $ 21,732 $ 16,504 $ 10,535 $ 7,368 $ 56,139

Charged-off loans 6,577 23,799 635 3,322 34,333

Recoveries on charged-off loans 570 1,012 57 253 1,892

Provision/(releases) for loan losses 9,033 25,404 ( 1,417 ) 458 33,478

Balance at end of period $ 24,758 $ 19,121 $ 8,540 $ 4,757 $ 57,176

Individually evaluated for impairment 20 122 109 43 294

Collectively evaluated 24,738 18,999 8,431 4,714 56,882

Total $ 24,758 $ 19,121 $ 8,540 $ 4,757 $ 57,176

Acquired Loans

(In thousands) Commercial

real estate Commercial and

industrial loans Residential

mortgages Consumer Total

Balance at beginning of period $ 3,153 $ 1,064 $ 630 $ 483 $ 5,330

Charged-off loans 830 571 263 557 2,221

Recoveries on charged-off loans 672 438 116 123 1,349

Provision/(releases) for loan losses 1,111 126 365 339 1,941

Balance at end of period $ 4,106 $ 1,057 $ 848 $ 388 $ 6,399

Individually evaluated for impairment 97 1 8 12 118

Collectively evaluated 4,009 1,056 840 376 6,281

Total $ 4,106 $ 1,057 $ 848 $ 388 $ 6,399

PREMISES AND EQUIPMENT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GOODWILL AND OTHER INTANGIBLES

Goodwill and other intangible assets are presented in the tables below.

The Company had no acquisition during 2021 or 2020.

In accordance with applicable accounting guidance, the Company allocated the amount paid to the fair value of the net assets acquired, with any excess amounts recorded as goodwill.

The goodwill balance is allocated to the consolidated Company.

The activity impacting goodwill in 2021 and 2020 is as follows:

(In thousands) 2021 2020

Balance, beginning of the period $ — $ 553,762

Goodwill acquired and adjusted:

Impairment — ( 553,762 )

Balance, end of the period $ — $ —

______________________________________________________________________________________________________

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination.

Goodwill is assessed annually for impairment and more frequently if events or changes in circumstances indicate that there may be an impairment.

The Company tests goodwill impairment annually as of June 30 using second quarter data.

The Company compares the fair value of the reporting unit with its carrying amount, including goodwill.

If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

The fair value of the reporting unit was determined using the guideline public company method.

As a result of the assessment, the Company recognized a full goodwill impairment during the year ended December 31, 2020.

The primary causes of the goodwill impairment were economic and industry conditions resulting from the COVID-19 pandemic that caused volatility and reductions in the market capitalization of the Company and its peer banks, increased loan provision estimates, increased discount rates and other changes in variables driven by the uncertain macro-environment that resulted in the estimated fair value of the reporting unit being less than the reporting unit’s carrying value.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OTHER INTANGIBLES

The components of other intangible assets are as follows:

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Non-maturity deposits (core deposit intangible) $ 77,213 $ ( 54,618 ) $ 22,595

Insurance contracts 7,558 ( 7,558 ) —

All other intangible assets 7,866 ( 5,978 ) 1,888

2 unchanged sentences

Non-maturity deposits (core deposit intangible) $ 77,213 $ ( 49,963 ) $ 27,250

$ 77,213 $ ( 45,257 ) $ 31,956

Insurance contracts 7,558 ( 7,558 ) —

All other intangible assets 7,866 ( 5,497 ) 2,369

Total $ 85,079 $ ( 55,460 ) $ 29,619

(1) As of December 31, 2020, the Company reclassified $ 4.6 million of net core deposit intangible to held-for-sale related to the assets and liabilities associated with the Mid-Atlantic branch sale.

Other intangible assets are amortized on a straight-line or accelerated basis over their estimated lives, which range from four to fifteen years .

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The Bank earns fees for the servicing provided.

At year end 2021, loans sold and serviced for others amounted to $ 1.6 billion.

For years ended 2020 and 2019, loans sold and serviced for others from continuing operations amounted to $ 1.5 billion, and $ 1.7 billion, respectively.

For years ended 2020 and 2019, loans sold and serviced for others from discontinued operations amounted to $ 0.6 billion, and $ 1.4 billion, respectively.

At years end 2022 and 2021, loans sold and serviced for others amounted to $ 1.5 billion and $ 1.6 billion, respectively.

For year ended 2020, loans sold and serviced for others from continuing operations amounted to $ 1.5 billion.

For year ended 2020, loans sold and serviced for others from discontinued operations amounted to $ 0.6 billion.

Loans serviced for others are not included in the accompanying Consolidated Balance Sheets.

The risks inherent in servicing assets relate primarily to changes in prepayments that result from shifts in interest rates.

For the year 2021, contractually specified servicing fees were $ 8.0 million and are included as a component of loan related fees within non-interest income.

For the years 2020 and 2019, contractually specified servicing fees from continuing operations were $ 5.5 million and $ 5.6 million, respectively and are included as a component of loan related fees within non-interest income.

For the years 2020 and 2019, contractually specified servicing fees from discontinued operations were $ 2.1 million and $ 1.9 million, respectively, and are included as a component of other income in Note 2 - Discontinued Operations.

For the years 2022 and 2021, contractually specified servicing fees were $ 5.5 million and $ 8.0 million, respectively, and are included as a component of loan related fees within non-interest income .

For the year 2020, contractually specified servicing fees from continuing operations were $ 5.5 million and are included as a component of loan related fees within non-interest income on the Consolidated Statements of Operations.

For the year 2020, contractually specified servicing fees from discontinued operations were $ 2.1 million and are included as a component of other income in Note 2 - Discontinued Operations.

Refer to Note 20 - Fair Value Measurements for significant assumptions and inputs used in the valuation at year-end 2022.

4 unchanged sentences

Amortization ( 4,590 ) ( 4,921 ) ( 3,761 )

Change in fair value ( 723 ) ( 9,266 )

Payoffs ( 958 ) — —

Allowance adjustment ( 546 ) 27 ( 10,217 )

29 unchanged sentences

Total short-term borrowings:

— — 40,000 1.05

Long-term borrowings:

Advances from the FHLBB 4,445 0.71 13,331 1.75

Paycheck Protection Program Liquidity Facility ("PPPLF") — — — —

Subordinated notes 98,089 5.50 74,590 7.00

17 unchanged sentences

prepayment penalties.

The advances outstanding at December 31, 2021 included callable advances totaling $ 10 million and amortizing advances totaling $ 3.4 million.

There were no callable advances outstanding at December 31, 2022.

The advances outstanding at December 31, 2022 included amortizing advances totaling $ 4.4 million.

The advances outstanding at December 31, 2021 included callable advances totaling $ 10 million and amortizing advances totaling $ 3.3 million.

5 unchanged sentences

2026 557 2.20

2025 5,969 1.99

2027 and beyond 3,863 0.50

1 unchanged sentence

The Company did no t have variable-rate FHLB advances for the period ended December 31, 2022 and December 31, 2021.

In September 2012, the Company issued fifteen year subordinated notes in the amount of $ 75.0 million at a discount of 1.15 %.

The interest rate is fixed at 6.875 % for the first ten years .

After ten years , the notes become callable and convert to an interest rate of three month LIBOR plus 5.113 %.

The subordinated note includes reduction to the note principal balance of $ 92 thousand and $ 215 thousand for unamortized debt issuance costs as of December 31, 2021 and December 31, 2020, respectively.

In June 2022, the Company issued ten year subordinated notes in the amount of $ 100.0 million.

The interest rate is fixed at 5.50 % for the first five years .

After five years , the notes become callable and will bear interest at a floating rate per annum equal to a benchmark rate (which is expected to be Three-Month Term SOFR), plus 249 basis points.

The subordinated note includes reduction to the note principal balance of $ 1.9 million for unamortized debt issuance costs as of December 31, 2022.

In September 2022, the Company called the fifteen year subordinated notes that were issued in September 2012 in the amount of $ 75 million.

The Company holds 100 % of the common stock of Berkshire Hills Capital Trust I (“Trust I”) which is included in other assets with a cost of $ 0.5 million.

22 unchanged sentences

Derivative liabilities $ 97,030 $ 35,194

Capital and financing lease obligations 9,862 10,383

Finance lease liabilities 9,306 9,862

Employee benefits liability 45,175 45,498

28 unchanged sentences

Fair value of plan assets at end of year 4,683 5,962

(Overfunded)/underfunded status $ ( 634 ) $ 72

(Overfunded) status $ ( 954 ) $ ( 634 )

Amounts Recognized on Consolidated Balance Sheets

12 unchanged sentences

Amortization of actuarial (loss) $ ( 11 ) $ ( 103 ) $ ( 94 )

Actuarial (gain) loss ( 495 ) 171

Actuarial (gain) ( 154 ) ( 495 ) 171

Settlement charge — ( 58 ) —

1 unchanged sentence

Total recognized in net periodic pension cost recognized and other comprehensive income $ ( 321 ) $ ( 764 ) $ 22

The amounts in accumulated other comprehensive income that have not yet been recognized as components of net periodic benefit cost are a net loss of $ 0.7 million and $ 1.3 million in 2021 and 2020, respectively.

The amounts in accumulated other comprehensive (loss)/income that have not yet been recognized as components of net periodic benefit cost are a net loss of $ 0.5 million, $ 0.7 million, and $ 1.3 million in 2022, 2021 and 2020, respectively.

The Company did not make any cash contributions to the pension trust during 2022 and 2021.

2 unchanged sentences

The principal actuarial assumptions used are as follows:

2022 2021 2020

Projected benefit obligation

94 unchanged sentences

Amortization of prior service credit $ ( 83 ) $ ( 83 ) $ ( 84 )

Net actuarial (gain)/loss ( 253 ) 496

Net actuarial (gain) ( 1,426 ) ( 253 ) 496

Total recognized in accumulated other comprehensive income ( 1,509 ) ( 336 ) 412

3 unchanged sentences

Net prior service cost $ 1,159 $ 1,242 $ 1,325

Net actuarial loss 615 869

Net actuarial (gain)/loss ( 812 ) 615 869

Total recognized in accumulated other comprehensive income $ 347 $ 1,857 $ 2,194

The amount expected to be amortized from other comprehensive income into net periodic postretirement cost over the next fiscal year is $ 83 thousand.

The amount expected to be amortized from other comprehensive (loss)/income into net periodic postretirement cost over the next fiscal year is $ 83 thousand.

The discount rates used in the measurement of the postretirement plan obligations are determined by comparing the expected future retirement payment cash flows of the plans to the Above Median FTSE Pension Discount Curve as of the measurement date.

8 unchanged sentences

Expense related to the plan was $ 2.9 million in 2022, $ 3.2 million in 2021, and $ 3.5 million in 2020.

Employee Stock Ownership Plan (“ESOP”)

As part of the SI Financial acquisition in 2019, the Company acquired an ESOP plan that was frozen and terminated prior to the completion of the transaction.

On acquisition date, all amounts in the plan were vested and the loan under the plans was repaid from the sale proceeds of unallocated shares.

The Company maintains supplemental executive retirement plans (“SERPs”) for select current and former executives.

16 unchanged sentences

24,746 24,920 ( 23,865 )

Federal tax expense 5,125 2,048 908

Federal tax expense/(benefit) ( 2,274 ) 5,125 2,048

State tax expense/(benefit) ( 1,187 ) 112 1,964

Total deferred tax expense 5,237 4,012 564

Total deferred tax expense/(benefit) ( 3,461 ) 5,237 4,012

Change in valuation allowance — 200 —

5 unchanged sentences

Specifically, the CARES Act allows a five-year carryback of any NOL generated in a taxable year beginning after December 31, 2017, and before January 1, 2021.

The Company recorded a $ 6 million federal income tax benefit in 2020, and an additional $ 500 thousand benefit in 2021 resulting from the carryback of its 2020 NOL to recover federal income taxes paid in 2015 through 2018 at a 35% federal income tax rate.

Effective Tax Rate

8 unchanged sentences

Goodwill impairment — — — 103,912 ( 19.5 )

Non-deductible merger costs — — — — 122 0.1

Tax credits, net of basis reduction ( 2,129 ) ( 1.9 ) ( 2,881 ) ( 1.9 ) ( 1,812 ) 0.3

10 unchanged sentences

Unrealized capital loss on tax credit investments 1,603 1,451

Net unrealized loss on securities available for sale and pension in OCI 1,085 —

Net unrealized loss on securities available for sale, swaps, and pension in OCI 63,335 1,085

Employee benefit plans 11,659 8,435

5 unchanged sentences

Nonaccrual interest 1,069 1,722

Intangible amortization 659 —

Other 1,778 1,845

3 unchanged sentences

Deferred tax liabilities:

Net unrealized gain on securities available for sale and pension in OCI $ — $ ( 10,602 )

Loan servicing rights $ ( 1,212 ) $ ( 1,488 )

Deferred loan fees — ( 368 )

Intangible amortization — ( 545 )

3 unchanged sentences

Deferred tax assets, net $ 118,331 $ 52,620

The Company’s net deferred tax asset increased by $ 6.3 million during 2021.

The Company’s net deferred tax asset increased by $ 65.7 million during 2022 and $ 62.3 million of this change is related to unrealized losses in OCI.

Deferred tax assets, net of valuation allowances, are expected to be realized through the reversal of existing taxable temporary differences and future taxable income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Valuation Allowances

4 unchanged sentences

Management anticipates that the remaining excess state tax basis will be realized as a capital loss upon disposition, and that it is unlikely that the Company will have capital gains against which to offset such capital losses.

The Company has established an additional $ 200 thousand valuation allowance in 2021 as management anticipates that a portion of the state net operating loss carryforwards may not be utilized.

The valuation allowance as of December 31, 2022 is subject to change in the future as the Company continues to periodically assess the likelihood of realizing its deferred tax assets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Tax Attributes

15 unchanged sentences

Unrecognized tax benefits at December 31 $ 1,042 $ 1,025 $ 516

The Company does not expect any significant changes in unrecognized tax benefits during the next twelve months.

It is reasonably possible that over the next twelve months the amount of unrecognized tax benefits may change from the reevaluation of uncertain tax positions arising in examinations, in appeals, or in the courts, or from the closure of tax statutes.The Company does not expect any significant changes in unrecognized tax benefits during the next twelve months.

All of the Company’s unrecognized tax benefits, if recognized, would be recorded as a component of income tax expense, therefore, affecting the effective tax rate.

1 unchanged sentence

The accrual for interest and penalties was not material for all years presented.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company and its subsidiaries file income tax returns in the U.S.

2 unchanged sentences

federal, state, and local income tax examinations by tax authorities.

The Company is no longer subject to examination for tax years prior to 2018 including any related income tax filings from its recent acquisitions.

The Company has been selected for a limited scope audit in the state of New York for tax year 2020.

Other than open statutes of limitation pertaining specifically to the amended returns filed for 2015 through 2018 to claim NOL carryback refunds, the Company is no longer subject to examination for tax years prior to 2019 including any related income tax filings from its recent acquisitions.

The Company is not under audit in any jurisdiction as of December 31, 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

At year-end 2022, the Company held derivatives with a total notional amount of $ 4.5 billion.

That amount included $ 0.6 billion in interest rate swap derivatives and $ 0.2 billion in interest rate collars that were designated as cash flow hedges for accounting purposes.

The Company had economic hedges and non-hedging derivatives totaling $ 3.7 billion and $ 4.1 million, respectively, which are not designated as hedges for accounting purposes and are therefore recorded at fair value with changes in fair value recorded directly through earnings.

3 unchanged sentences

The agreements are entered into with counterparties that meet established credit standards and contain master netting and collateral provisions protecting the at-risk party.

The derivatives program is overseen by the Risk Management Committee of the Company’s Board of Directors.

The derivatives program is overseen by the Risk Management, Capital and Compliance Committee of the Company’s Board of Directors.

Based on adherence to the Company’s credit standards and the presence of the netting and collateral provisions, the Company believes that the credit risk inherent in these contracts was not significant at December 31, 2022.

The Company pledged collateral to derivative counterparties in the form of cash totaling $ 43.7 million and securities with an amortized cost of $ 34.8 million and a fair value of $ 34.9 million at year-end 2021.

The Company had no pledged collateral to derivative counterparties in the form of cash at year-end 2022.

The Company had pledged securities to derivative counterparties with an amortized cost of $ 12.0 million and a fair value of $ 12.0 million at year-end 2022.

At December 31, 2021, the Company pledged cash collateral of $ 43.7 million and securities with an amortized cost of $ 34.8 million and a fair value of $ 34.9 million.

3 unchanged sentences

The Company may need to post additional collateral in the future in proportion to potential increases in unrealized loss positions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information about interest rate swap agreements and non-hedging derivative assets and liabilities at December 31, 2022 follows:

4 unchanged sentences

(In thousands) (In years) (In thousands)

Cash flow hedges:

Interest rate swaps on commercial loans (1) $ 400,000 2.7 4.09 % 3.51 % $ —

Forward-starting interest rate swaps on commercial loans (1) 200,000 3.3 — % 3.90 % —

Interest rate collars on commercial loans 200,000 3.5 1,937

Total cash flow hedges 800,000 1,937

Economic hedges:

30 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash flow hedges

The effective portion of unrealized changes in the fair value of derivatives accounted for as cash flow hedges is reported in other comprehensive (loss)/income and subsequently reclassified to earnings in the same period or periods during which the hedged transaction is forecasted to affect earnings.

Each quarter, the Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction.

The ineffective portion of changes in the fair value of the derivatives is recognized directly in earnings.

All cash flow hedges are considered highly effective.

The Company has designated its interest rate collars as cash flow hedges.

The structure of these instruments is such that the Company pays the counterparty an incremental amount if the collar index exceeds the cap rate.

Conversely, the Company receives an incremental amount if the index falls below the floor rate.

No payments are required if the collar index falls between the cap and floor rates.

As of December 31, 2022, the Company had six interest rate swap contracts and two forward-starting interest rate swap contracts with a combined notional value of $ 600.0 million.

The two forward starting swaps will become effective in 2023.

The interest rate swaps have durations of two to four years .

This hedge strategy converts commercial variable rate loans to fixed interest rates, thereby protecting the Company from floating interest rate variability.

In December 2022, the Company entered into two interest rate collars.

The first interest rate collar has a 3.00 % floor and a 5.75 % cap with a notional value of $ 100.0 million.

The second interest rate collar has a 3.25 % floor and a 5.75 % cap with a notional value of $ 100.0 million.

The interest rate collars have durations of three to four years .

The structure of these instruments is such that the Company pays the counterparty an incremental amount if the collar index exceeds the cap rate.

Conversely, the Company receives an incremental amount if the index falls below the floor rate.

No payments are required if the collar index falls between the cap and floor rates.

Amounts included in the Consolidated Statements of Operations and in the other comprehensive (loss)/income section of the Consolidated Statements of Comprehensive (Loss)/Income (related to interest rate derivatives designated as hedges of cash flows), were as follows:

Years Ended December 31,

(In thousands) 2022 2021 2020

Interest rate swaps and collars on commercial loans:

Unrealized (loss) recognized in accumulated other comprehensive loss $ ( 6,667 ) $ — $ —

Reclassification of unrealized (loss) from accumulated other comprehensive loss to interest expense — — —

Net tax benefit on items recognized in accumulated other comprehensive income 1,789 — —

Other comprehensive loss recorded in accumulated other comprehensive (loss)/income, net of reclassification adjustments and tax effects $ ( 4,878 ) $ — $ —

Net interest expense recognized in interest expense on hedged commercial loans $ ( 15 ) $ — $ —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Economic hedges

6 unchanged sentences

Because the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts mostly offset each other in earnings.

Credit valuation loss adjustments arising from the difference in credit worthiness of the commercial loan and financial institution counterparties totaled $ 0.9 million at year-end 2021.

There was no credit valuation loss adjustment arising from the difference in credit worthiness of the commercial loan and financial institution counterparties as of December 31, 2022.

The interest income and expense on these mirror image swaps exactly offset each other.

4 unchanged sentences

The forward sale commitments are accounted for as derivatives with changes in fair value recorded in current period earnings.

Forward sale commitments are

included in discontinued operations.

The company uses the following types of forward sale commitments contracts:

17 unchanged sentences

Changes in the fair value of commitments subsequent to inception are based on changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and changes in the probability that the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time.

Commitments to lend are included in discontinued operations.

Amounts included in the Consolidated Statements of Operations related to economic hedges and non-hedging derivatives were as follows:

12 unchanged sentences

Forward Commitments:

Unrealized (loss)/gain recognized in other non-interest income ( 126 ) ( 186 ) —

Unrealized (loss)/gain recognized in discontinued operations — — 547

2 unchanged sentences

Commitments to lend:

Unrealized (loss)/gain recognized in discontinued operations $ ( 611 ) $ ( 1,893 ) $ ( 1,299 )

Realized gain in discontinued operations — 15,672 57,699

Unrealized (loss) recognized in other non-interest income $ ( 107 ) $ ( 611 ) $ —

Unrealized (loss) recognized in discontinued operations — — ( 1,893 )

Realized gain in other non-interest income 462 2,854 —

Realized gain in discontinued operations — — 15,672

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11 unchanged sentences

The Company had net liability positions with its financial institution counterparties totaling $ 1.2 million and $ 33.3 million as of December 31, 2022 and December 31, 2021, respectively.

The Company had net liability positions with its commercial banking counterparties totaling $ 2.5 million as of December 31, 2021.

The Company had no net liability positions with its commercial banking counterparties as of December 31, 2020.

The Company had net liability positions with its commercial banking counterparties totaling $ 96.1 million and $ 2.5 million as of December 31, 2022 and December 31, 2021, respectively.

The Company has collateral pledged to cover this liability.

88 unchanged sentences

Variable lease components, such as consumer price index adjustments, are expensed as incurred and not included in ROU assets and operating lease liabilities.

Lease expense for operating leases for the year ended December 31, 2021 was $ 10.9 million.

Variable lease components, such as consumer price index adjustments, are expensed as incurred and not included in ROU assets and operating lease liabilities.

Lease expense for operating leases for the year ended December 31, 2020 was $ 13.5 million, of which $ 1.2 million was related to FCLS and is reported as discontinued operations.

2 unchanged sentences

Supplemental cash flow information related to leases was as follows:

(In thousands) December 31, 2021 December 31, 2020

(In thousands) December 31, 2022 December 31, 2021 December 31, 2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 9,438 $ 10,897 $ 13,750

$ 10,897 $ 13,750

Operating cash flows from finance leases 476 503 530

3 unchanged sentences

Finance leases — — —

(1) Includes operating cash flows from operating leases related to discontinued operations of $ 1.2 million at December 31, 2020.

The following table presents a maturity analysis of the Company’s lease liability by lease classification at December 31, 2022:

11 unchanged sentences

OTHER COMMITMENTS, CONTINGENCIES, AND OFF-BALANCE SHEET ACTIVITIES

In December 2019, a novel strain of coronavirus (“COVID-19”) was reported to have surfaced in China and has since spread to a number of other countries, including the United States.

In March 2020, the World Health Organization declared COVID-19 a global pandemic and the United States declared a National Public Health Emergency.

In March 2020, the World Health Organization declared a novel strain of coronavirus ("COVID-19") a global pandemic and the United States declared a National Public Health Emergency.

The impact of the COVID-19 pandemic is fluid and continues to evolve, which is adversely affecting some of the Company’s clients.

The COVID-19 pandemic and its associated impacts on trade (including supply chains and export levels), travel, employee productivity, unemployment, consumer spending, and other economic activities has resulted in less economic activity, lower equity market valuations and significant volatility and disruption in financial markets and has had an adverse effect on the Company’s business, financial condition and results of operations.

The ultimate extent of the impact of the COVID-19 pandemic on the Company’s business, financial condition and results of operations is currently uncertain and will depend on various developments and other factors, including, among others, the duration and scope of the pandemic, as well as governmental, regulatory and private sector responses to the pandemic, and the associated impacts on the economy, financial markets, and our clients, employees, and vendors.

The continuing impact of the COVID-19 pandemic on the Company’s business, financial condition and results of operations is currently uncertain and will depend on various developments and other factors, including, among others, the duration and scope of the pandemic, as well as governmental, regulatory and private sector responses to the pandemic, and the associated impacts on the economy, financial markets, and our clients, employees, and vendors.

The Company’s business, financial condition and results of operations generally rely upon the ability of the Company’s borrowers to repay their loans, the value of collateral underlying the Company’s secured loans, and demand for loans and other products and services the Company offers, which are highly dependent on the business environment in the Company’s primary markets where it operates and in the United States as a whole.

During 2020, the Company’s results of operations were negatively impacted by full impairment of the Company's goodwill, an increase in its provision for credit losses and related allowance for credit losses, a decline in the fair value of its equity portfolio, and a decline in valuation of assets.

These circumstances could cause the Company to experience a material adverse effect on our business operations, asset valuations, financial condition, results of operations and prospects.

Material adverse impacts may include all or a combination of valuation impairments on the Company’s intangible assets, investments, loans, loan servicing rights, deferre d tax assets, lease right-of-use assets, or counter-party risk derivatives.

As of December 31, 2021, the Company had modified 19 loans with a carrying value of $ 14.4 million.

Material adverse impacts may include all or a combination of valuation impairments on the Company’s intangible assets, investments, loans, loan servicing rights, deferred tax assets, lease right-of-use assets, or counter-party risk derivatives.

Beginning in March 2020, the Company offered three-month payment deferrals for customers with a current payment status who were negatively impacted by economic disruption caused by the COVID-19 pandemic.

As of December 31, 2022, the Company had 1 active modified loan outstanding with a carrying value of $ 12.4 million.

As of December 31, 2021, the Company had 19 active modified loans outstanding with a carrying value of $ 14.4 million, which excluded loans returning to payment or awaiting evaluation for further deferral.

2 unchanged sentences

In addition, the risk-ratings on COVID-19 modified loans did not automatically change as a result of payment deferrals, and these loans will not be considered past due until after the deferral period is over and scheduled payments resume.

Section 4013 (Temporary Relief from Troubled Debt Restructurings) of the CARES Act expired on December 31, 2021.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

83 unchanged sentences

Accumulated other comprehensive income

Year-end components of accumulated other comprehensive income are as follows:

Year-end components of accumulated other comprehensive (loss)/income are as follows:

(In thousands) 2022 2021

Other accumulated comprehensive income/(loss), before tax:

Net unrealized holding (loss)/gain on AFS securities $ ( 1,806 ) $ 44,988

Other accumulated comprehensive (loss), before tax:

Net unrealized holding (loss) on AFS securities $ ( 236,887 ) $ ( 1,806 )

Net (loss) on effective cash flow hedging derivatives ( 6,667 ) —

Net unrealized holding (loss) on pension plans ( 844 ) ( 2,518 )

Income taxes related to items of accumulated other comprehensive (loss)/income:

Net unrealized holding loss/(gain) on AFS securities 407 ( 11,530 )

Net unrealized holding loss on AFS securities 61,329 407

Net loss on effective cash flow hedging derivatives 1,789 —

Net unrealized holding loss on pension plans 228 674

Accumulated other comprehensive (loss)/income $ ( 3,243 ) $ 30,871

Accumulated other comprehensive (loss) $ ( 181,052 ) $ ( 3,243 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6 unchanged sentences

Net unrealized holding (loss) on AFS securities ( 235,081 ) 60,922 ( 174,159 )

Net loss on cash flow hedging derivatives:

Net unrealized gain arising during the period ( 6,667 ) 1,789 ( 4,878 )

reclassification adjustment for (losses) realized in net income — — —

Net (loss) on cash flow hedging derivatives ( 6,667 ) 1,789 ( 4,878 )

Net unrealized holding (loss) on pension plans

5 unchanged sentences

Year Ended December 31, 2021

Net unrealized holding gain on AFS securities:

Net unrealized gain arising during the period $ 25,721 $ ( 6,470 ) $ 19,251

Net unrealized holding (loss) on AFS securities:

Net unrealized (loss) arising during the period $ ( 46,794 ) $ 11,937 $ ( 34,857 )

reclassification adjustment for gains realized in net income — — —

Net unrealized holding gain on AFS securities 25,726 ( 6,471 ) 19,255

Net unrealized holding (loss) on AFS securities ( 46,794 ) 11,937 ( 34,857 )

Net unrealized holding (loss) on pension plans

2 unchanged sentences

Net unrealized holding (loss) on pension plans 993 ( 250 ) 743

Other comprehensive gain $ 25,237 $ ( 6,359 ) $ 18,878

Other comprehensive (loss) $ ( 45,801 ) $ 11,687 $ ( 34,114 )

(In thousands) Before Tax Tax Effect Net of Tax

Year Ended December 31, 2020

Net unrealized holding (loss) on AFS securities:

Net unrealized holding gain on AFS securities:

Net unrealized gain arising during the period $ 25,721 $ ( 6,470 ) $ 19,251

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the changes in each component of accumulated other comprehensive /income(loss), for the years ended December 31, 2021, 2020, and 2019:

(in thousands) Net unrealized holding gain (loss) on AFS Securities Net unrealized holding gain (loss) on pension plans Total

The following table presents the changes in each component of accumulated other comprehensive (loss)/income, for the years ended December 31, 2022, 2021, and 2020:

(in thousands) Net unrealized holding gain (loss) on AFS Securities Net loss on effective cash flow hedging derivatives Net unrealized holding gain (loss) on pension plans Total

Year Ended December 31, 2022

6 unchanged sentences

Balance at Beginning of Year $ 33,459 $ — $ ( 2,588 ) $ 30,871

Other comprehensive income/(loss) before reclassifications 19,251 ( 377 ) 18,874

Other comprehensive income/(loss)/income before reclassifications ( 34,857 ) — 743 ( 34,114 )

Amounts reclassified from accumulated other comprehensive income — — — —

Total other comprehensive income/(loss) 19,255 ( 377 ) 18,878

Total other comprehensive (loss)/income ( 34,857 ) — 743 ( 34,114 )

Balance at End of Period $ ( 1,398 ) $ — $ ( 1,845 ) $ ( 3,243 )

11 unchanged sentences

(in thousands) 2022 2021 2020

Realized (losses)/gains on AFS securities:

Realized gains/(losses) on AFS securities:

$ 6 $ — $ ( 5 ) Non-interest income

( 2 ) — 1 Tax expense

Realized (losses) on cash flow hedging derivatives:

— — — Interest expense

— — — Non-interest income

— — — Non-interest expense

— — — Tax benefit

Realized (losses) on pension plans:

29 unchanged sentences

Diluted earnings/(loss) per common share $ 2.02 $ 2.39 $ ( 10.60 )

For the year ended 2021, 88 thousand options were anti-dilutive and therefore excluded from the earnings per share calculations.

For the year ended 2022, 64 thousand options were anti-dilutive and therefore excluded from the earnings per share calculations.For the year ended 2021, 88 thousand options were anti-dilutive and therefore excluded from the earnings per share calculations.

Due to the net loss in 2020, all unvested restricted stock and options were considered anti-dilutive and therefore excluded from the earnings per share calculations.

For the year ended 2019, 61 thousand options were anti-dilutive and therefore excluded from the earnings per share calculations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

38 unchanged sentences

The Company did not grant options during 2022 and 2021.

The Company acquired options in the SI Financial Group transaction in 2019, but did not grant additional options during 2019.

The total intrinsic value of options exercised was $ 62 thousand, $ 102 thousand, and $ 246 thousand for the years 2022, 2021, and 2020, respectively.

The expense pertaining to options vesting was $ 13 thousand, $ 14 thousand, and $ 96 thousand for the years 2022, 2021, and 2020, respectively.

The tax benefit associated with stock option expense for 2021 was $ 4 thousand.

The tax benefit associated with stock option expense for both 2020 and 2019 was $ 25 thousand.

The tax benefit associated with stock option expense for 2022, 2021 and 2020 was $ 3 thousand, $ 4 thousand, and $ 25 thousand, respectively.

The unrecognized stock-based compensation expense related to unvested stock options as of year-end 2022, 2021 and 2020 was $ 1 thousand, $ 14 thousand, and $ 27 thousand, respectively.

11 unchanged sentences

Available-for-sale securities:

U.S Treasuries 11,973 — — 11,973

Municipal bonds and obligations — 63,335 — 63,335

11 unchanged sentences

December 31, 2021

(In thousands) Level 1

Inputs Level 2

Inputs Level 3

Level 1 Level 2 Level 3 Total

(In thousands) Inputs Inputs Inputs Fair Value

Trading security $ — $ — $ 8,354 $ 8,354

Available-for-sale securities:

Securities available for sale:

U.S Treasuries — 59,973 — 59,973

Municipal bonds and obligations — 77,177 — 77,177

3 unchanged sentences

Corporate bonds — 41,630 4,030 45,660

Other bonds and obligations — 53,791 — 53,791

Marketable equity securities 14,798 655 — 15,453

Loans held for investment — — 2,265 2,265

Loans held for investment at fair value — — 1,200 1,200

Loans held for sale — 6,110 — 6,110

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended December 31, 2022, there were no transfers between Level 1, 2 and 3.

During the year ended December 31, 2021, the Company had one transfer totaling $ 4.0 million in corporate bonds from Level 2 to Level 3 based on recent inactivity in the market related to pricing information for similar bonds.

During the year ended December 31, 2022, there were no transfers between Level 1, 2 and 3.

During the year ended December 31, 2019, the Company had four transfers totaling $ 44.0 million in corporate bonds from Level 2 to Level 3 based on recent inactivity in the market related to pricing information for similar bonds.

Trading Security at Fair Value.

49 unchanged sentences

The changes in fair value of loans held for sale for the year ended December 31, 2022 were losses of $ 169 thousand.

The changes in fair value of loans held for sale for the year ended December 31, 2020 were gains of $ 97 thousand from continuing operations and losses of $ 138 thousand from discontinued operations.

The changes in fair value of loans held for sale for the year ended December 31, 2021 were losses of $ 169 thousand.

The changes in fair value of loans held for sale for the year ended December 31, 2020 were gains of $ 212 thousand from continuing operations and gains of $ 3.0 million from discontinued operations.

During 2022, originations of loans held for sale totaled $ 20 million and sales of loans originated for sale totaled $ 25 million.

During 2021, originations of loans held for sale totaled $ 104 million and sales of loans originated for sale totaled $ 108 million.

During 2020, originations of loans held for sale from continuing operations totaled $ 150 million and sales of loans originated for sale from continuing operations totaled $ 141 million.

During 2020, originations of loans held for sale from discontinued operations totaled $ 624.0 billion and sales of loans originated for sale from discontinued operations totaled $ 755.0 billion.

During 2020, originations of loans held for sale from discontinued operations totaled $ 624 million and sales of loans originated for sale from discontinued operations totaled $ 755 million.

Interest Rate Swaps.

13 unchanged sentences

As such, these commitments to lend are classified as Level 3 measurements.

Commitments to lend are included in discontinued operations.

Forward Sale Commitments .

4 unchanged sentences

As such, best efforts and mandatory forward sale commitments are classified as Level 3 measurements.

Forward sale commitments are included in discontinued operations.

Capitalized Servicing Rights.

12 unchanged sentences

Balance as of December 31, 2020 $ 9,708 $ 15,000 $ 2,265 $ 735 $ 320 $ 3,033

Adoption of ASC 326 — — 7,660 — — —

Maturities, calls, and prepayments of AFS Security — ( 15,000 ) — — — —

Unrealized (loss) gain, net recognized in other non-interest income ( 578 ) — 1,645 1,995 ( 186 ) ( 1,067 )

Unrealized gain/(loss), net recognized in discontinued

operations — — — 16,565 320 ( 8,444 )

Unrealized (loss) included in accumulated other comprehensive loss — 2,034 — — — —

Unrealized gain included in accumulated other comprehensive loss — 30 — — — —

Transfers to Level 3 — 4,000 — — — —

5 unchanged sentences

Unrealized (loss) gain, net recognized in other non-interest income ( 828 ) — 314 200 ( 126 ) ( 120 )

Unrealized gain included in accumulated other comprehensive loss — 30 — — — —

Unrealized (loss) in included in accumulated other comprehensive loss — ( 30 ) — — — —

Transfers to Level 3 — — — — — —

5 unchanged sentences

Unrealized gains/(losses) relating to instruments still held at December 31, 2021 $ 475 $ 30 $ — $ 124 $ 134 $ —

(1) For 2019, these assets were classified as assets from discontinued operations on the consolidated balance sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

36 unchanged sentences

Individually evaluated loans $ 14,571 December 2022

Loans held for sale 3,369 December 2022

Capitalized servicing rights 11,201 December 2022

Other real estate owned — December 2021

Total $ 29,141

4 unchanged sentences

Capitalized servicing rights 14,056 December 2021

Other real estate owned 149 December 2020

Total $ 26,538

1 unchanged sentence

(in thousands) December 31, 2022 Valuation Techniques Unobservable Inputs Range (Weighted Average) (a)

Individually evaluated loans $ 12,482 Fair value of collateral Loss severity ( 35.96 )% to 133.09 % ( 49.14 %)

Individually evaluated loans $ 14,571 Fair value of collateral Discounted Cash Flow- Loss Severity ( 100.00 )% to 74.74 % (( 40.02 )%)

Appraised value $ 0 to $ 2,160 ($ 643 )

Loans held for sale 3,369 Fair value of collateral Appraised value 3,369

Capitalized servicing rights 11,201 Discounted cash flow Constant prepayment rate (CPR) 5.81 % to 13.18 % ( 10.94 )%

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands) December 31, 2020 Valuation Techniques Unobservable Inputs Range (Weighted Average) (a)

(in thousands) December 31, 2021 Valuation Techniques Unobservable Inputs

Assets Range (Weighted Average) (a)

Individually evaluated loans $ 12,482 Fair value of collateral Loss severity ( 35.96 )% to 133.09 % ( 49.14 %)

2 unchanged sentences

Discount rate 9.59 % to 13.11 % ( 11.97 %)

Other real estate owned 149 Fair value of collateral Appraised value $ 94 - $ 182

Total Assets $ 26,538

11 unchanged sentences

Estimates of fair value for other collateral that supports commercial loans are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3.

Loans Transferred to Held for Sale.

Once a decision has been made to sell loans not previously classified as held for sale, these loans are transferred into the held for sale category and carried at the lower of cost or fair value.

Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace.

The choice of observable data is subject to significant judgment, and there are often adjustments based on judgment in order to make observable data comparable and to consider the impact of time, the condition of properties, interest rates, and other market factors on current values.

Nonrecurring fair value measurement adjustments that relate to real estate collateral have generally been classified as Level 3.

Capitalized loan servicing rights .

49 unchanged sentences

Derivative liabilities 35,194 35,194 — 35,194 —

Liabilities held for sale 630,065 631,268 — 631,268 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5 unchanged sentences

Investment in subsidiaries 986,805 1,172,439

Marketable equity securities, at fair value — 158

Other assets 1,445 213

21 unchanged sentences

Income/(loss) available to common shareholders $ 92,533 $ 118,664 $ ( 533,330 )

Comprehensive income/(loss) $ 84,550 $ ( 514,139 ) $ 122,912

Comprehensive (loss)/income $ ( 85,276 ) $ 84,550 $ ( 514,139 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4 unchanged sentences

Net income/(loss) $ 92,533 $ 118,664 $ ( 533,017 )

Adjustments to reconcile net income to net cash (used) provided by operating activities:

Adjustments to reconcile net income to net cash provided/(used) by operating activities:

Equity in undistributed results of operations of subsidiaries 8,278 ( 6,609 ) 571,650

8 unchanged sentences

Cash flows from financing activities:

Proceed from issuance of short term debt 232 231 431

Proceed from repayment of long term debt — — —

Proceeds from issuance of short term debt — 232 231

Proceeds from issuance of long term debt 98,032 — —

Repayment of long term debt ( 75,000 ) — —

Net proceeds from common stock — — —

16 unchanged sentences

Total revenue 117,746 108,335 97,709 89,744 90,721 145,003 97,404 101,286

Provision (benefit) for credit losses ( 3,000 ) ( 4,000 ) — 6,500 10,000 1,200 29,871 34,807

Provision expense/(benefit) for credit losses 12,000 3,000 — ( 4,000 ) ( 3,000 ) ( 4,000 ) — 6,500

Non-interest expense 70,014 81,677 68,475 68,550 69,407 69,460 68,872 78,154

Income/(loss) from continuing operations before income taxes 24,314 79,543 28,532 16,632 17,240 22,975 ( 559,175 ) ( 14,068 )

Income tax expense/(benefit) 4,066 15,794 6,896 3,601 ( 1,659 ) ( 68 ) ( 16,130 ) ( 1,996 )

Net income/(loss) from continuing operations 20,248 63,749 21,636 13,031 18,899 23,043 ( 543,045 ) ( 12,072 )

(Loss)/income from discontinued operations, net of tax — — — — ( 3,890 ) ( 1,818 ) ( 6,336 ) ( 7,798 )

Net income/(loss) $ 20,248 $ 63,749 $ 21,636 $ 13,031 $ 15,009 $ 21,225 $ ( 549,381 ) $ ( 19,870 )

Basic earnings/(loss) per share:

Continuing operations $ 0.42 $ 1.32 $ 0.43 $ 0.26 $ 0.38 $ 0.46 $ ( 10.80 ) $ ( 0.24 )

Discontinued operations — — — — ( 0.08 ) ( 0.04 ) ( 0.13 ) ( 0.16 )

Basic earnings/(loss) per common share $ 0.42 $ 1.32 $ 0.43 $ 0.26 $ 0.30 $ 0.42 $ ( 10.93 ) $ ( 0.40 )

Diluted earnings/(loss) per share:

Continuing operations $ 0.42 $ 1.31 $ 0.43 $ 0.26 $ 0.38 $ 0.46 $ ( 10.80 ) $ ( 0.24 )

Discontinued operations — — — — ( 0.08 ) ( 0.04 ) ( 0.13 ) ( 0.16 )

Diluted earnings/(loss) per share $ 0.42 $ 1.31 $ 0.43 $ 0.26 $ 0.30 $ 0.42 $ ( 10.93 ) $ ( 0.40 )

Income before income taxes 35,732 23,658 29,234 25,194 24,314 79,543 28,532 16,632

Income tax expense 5,227 4,941 6,119 4,998 4,066 15,794 6,896 3,601

Net income $ 30,505 $ 18,717 $ 23,115 $ 20,196 $ 20,248 $ 63,749 $ 21,636 $ 13,031

Basic earnings per share $ 0.69 $ 0.42 $ 0.50 $ 0.42 $ 0.42 $ 1.32 $ 0.43 $ 0.26

Diluted earnings per share $ 0.69 $ 0.42 $ 0.50 $ 0.42 $ 0.42 $ 1.31 $ 0.43 $ 0.26

Weighted average common shares outstanding:

7 unchanged sentences

Net interest income $ 344,597 $ 291,166 $ 316,782

Provision (benefit) for credit losses ( 500 ) 75,878 35,419

Provision expense/(benefit) for credit losses 11,000 ( 500 ) 75,878

Net interest income after provision for credit losses 333,597 291,666 240,904

23 unchanged sentences

$ 22,396 $ 20,249 $ 19,239

Insurance commissions and fees

7,003 10,770 10,957

Wealth management fees

2 unchanged sentences

8,470 8,321 7,559

Insurance commissions and fees

— 7,003 10,770

Non-interest income (in-scope of Topic 606)

12 unchanged sentences

Waiver of fees reduces the revenue in the period the waiver is granted to the customer.

Insurance Commissions and Fees.

Commission revenue is recognized as of the effective date of the insurance policy or the date the customer is billed, whichever is later, net of return commissions related to policy cancellations.

Policy cancellation is a variable consideration that is not deemed significant and thus, does not impact the amount of revenue recognized.

In addition, the Company may receive additional performance commissions based on achieving certain sales and loss experience measures.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5 unchanged sentences

Due to the day-to-day nature of these fees they are settled on a daily basis and are accounted for as they are received.

Insurance Commissions and Fees.

Commission revenue is recognized as of the effective date of the insurance policy or the date the customer is billed, whichever is later, net of return commissions related to policy cancellations.

Policy cancellation is a variable consideration that is not deemed significant and thus, does not impact the amount of revenue recognized.

In addition, the Company may receive additional performance commissions based on achieving certain sales and loss experience measures.

On September 1, 2021, the Company completed the sale of substantially all of the assets, and the assumption of certain liabilities, of Berkshire Insurance Group, Inc.

Gains/Losses on Sales of OREO.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures