What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-05 compared with 2021-08-05 · 209 added, 201 removed, 1311 unchanged (24% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2021 December 31, 2020

3 unchanged sentences

Net loans 14,985,615 16,108,807

Loans held for sale (including $ 17,374,000 and $ 39,396,000 of residential mortgage loans carried at fair value at June 30, 2021 and December 31, 2020, respectively)

Loans held for sale (including $ 11,982,000 and $ 39,396,000 of residential mortgage loans carried at fair value at September 30, 2021 and December 31, 2020, respectively)

16,043 45,089

1 unchanged sentence

Available for sale debt, at fair value (amortized cost of $ 14,027,284,000 and $ 12,097,533,000 and

allowance for credit losses of $ — at June 30, 2021 and December 31, 2020, respectively)

allowance for credit losses of $ — at September 30, 2021 and December 31, 2020, respectively)

14,165,656 12,449,264

3 unchanged sentences

Total investment securities 14,399,394 12,645,693

Federal funds sold and short-term securities purchased under agreements to resell 5,945 —

Long-term securities purchased under agreements to resell 1,300,000 850,000

Securities purchased under agreements to resell 1,750,000 850,000

Interest earning deposits with banks 1,888,545 1,747,363

23 unchanged sentences

Retained earnings 396,655 73,000

Treasury stock of 742,784 shares at June 30, 2021

Treasury stock of 1,303,270 shares at September 30, 2021

and 497,413 shares at December 31, 2020, at cost

10 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended June 30 For the Six Months Ended June 30

For the Three Months Ended September 30 For the Nine Months Ended September 30

(In thousands, except per share data) 2021 2020 2021 2020

3 unchanged sentences

Interest on investment securities 63,904 60,534 170,604 164,391

Interest on federal funds sold and short-term securities purchased under

agreements to resell 2 — 2 2

Interest on long-term securities purchased under agreements to resell 10,416 10,736 21,544 18,198

Interest on federal funds sold 1 — 3 2

Interest on securities purchased under agreements to resell 9,007 11,247 30,551 29,445

Interest on deposits with banks 995 261 2,108 1,996

45 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months Ended June 30 For the Six Months Ended June 30

For the Three Months Ended September 30 For the Nine Months Ended September 30

(In thousands) 2021 2020 2021 2020

14 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three Months Ended June 30, 2021 and 2020

Three Months Ended September 30, 2021 and 2020

Commerce Bancshares, Inc.

1 unchanged sentence

Preferred Stock Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Non-Controlling Interest Total

Balance March 31, 2021

Balance June 30, 2021

$ — $ 589,352 $ 2,424,157 $ 304,739 $ ( 53,018 ) $ 220,390 $ 8,210 $ 3,493,830

3 unchanged sentences

Purchases of treasury stock ( 40,165 ) ( 40,165 )

Sale of non-controlling interest of subsidiary 659 ( 659 ) —

Issuance of stock under purchase and equity

4 unchanged sentences

( 30,645 ) ( 30,645 )

Balance June 30, 2021

Balance September 30, 2021

$ — $ 589,352 $ 2,427,544 $ 396,655 $ ( 92,047 ) $ 159,166 $ 10,551 $ 3,491,221

Balance March 31, 2020

Balance June 30, 2020

$ 144,784 $ 563,978 $ 2,136,874 $ 232,082 $ ( 69,112 ) $ 349,261 $ 302 $ 3,358,169

Net income 132,448 907 133,355

Other comprehensive income 96,125 96,125

Other comprehensive loss ( 5,826 ) ( 5,826 )

Distributions to non-controlling interest ( 608 ) ( 608 )

Redemption of preferred stock ( 144,784 ) ( 5,216 ) ( 150,000 )

Purchases of treasury stock ( 167 ) ( 167 )

8 unchanged sentences

( 2,250 ) ( 2,250 )

Balance June 30, 2020

Balance September 30, 2020

$ — $ 563,978 $ 2,140,410 $ 326,890 $ ( 69,050 ) $ 343,435 $ 601 $ 3,306,264

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Six Months Ended June 30, 2021 and 2020

Nine Months Ended September 30, 2021 and 2020

Commerce Bancshares, Inc.

7 unchanged sentences

Purchases of treasury stock ( 80,052 ) ( 80,052 )

Sale of non-controlling interest of subsidiary 659 ( 659 ) —

Issuance of stock under purchase and equity compensation plans ( 20,991 ) 20,975 ( 16 )

2 unchanged sentences

( 92,204 ) ( 92,204 )

Balance June 30, 2021

Balance September 30, 2021

$ — $ 589,352 $ 2,427,544 $ 396,655 $ ( 92,047 ) $ 159,166 $ 10,551 $ 3,491,221

7 unchanged sentences

Distributions to non-controlling interest ( 708 ) ( 708 )

Redemption of preferred stock ( 144,784 ) ( 5,216 ) ( 150,000 )

Purchases of treasury stock ( 53,760 ) ( 53,760 )

5 unchanged sentences

( 6,750 ) ( 6,750 )

Balance June 30, 2020

Balance September 30, 2020

$ — $ 563,978 $ 2,140,410 $ 326,890 $ ( 69,050 ) $ 343,435 $ 601 $ 3,306,264

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30

For the Nine Months Ended September 30

(In thousands) 2021 2020

9 unchanged sentences

Proceeds from sales of loans held for sale 485,231 152,825

Net decrease in trading debt securities 1,287 5,249

Net (increase) decrease in trading debt securities ( 9,093 ) 5,636

Stock-based compensation 11,588 11,231

1 unchanged sentence

Decrease in interest payable ( 3,168 ) ( 7,670 )

Increase in income taxes payable 19,095 12,842

Increase (decrease) in income taxes payable 19,831 ( 7,942 )

Proceeds from terminated interest rate floors — 110,640

Other changes, net 20,418 ( 37,926 )

1 unchanged sentence

INVESTING ACTIVITIES:

Disbursements received from equity-method investment 13,540 —

Proceeds from sales of investment securities (A) 10,060 574,376

2 unchanged sentences

Net (increase) decrease in loans 1,166,769 ( 1,710,009 )

Long-term securities purchased under agreements to resell ( 450,000 ) —

Securities purchased under agreements to resell ( 900,000 ) —

Purchases of premises and equipment ( 37,385 ) ( 29,192 )

3 unchanged sentences

Net increase in non-interest bearing, savings, interest checking and money market deposits 1,428,561 5,138,314

Net increase (decrease) in certificates of deposit ( 98,436 ) 25,701

Net decrease in certificates of deposit ( 228,916 ) ( 17,565 )

Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase 155,370 ( 197,708 )

Net increase (decrease) in short-term borrowings 3,204 ( 1,636 )

Preferred stock redemption — ( 150,000 )

Purchases of treasury stock ( 80,052 ) ( 53,760 )

Issuance of stock under equity compensation plans

( 15 ) ( 27 )

Issuance of stock under purchase and equity compensation plans ( 16 ) ( 27 )

Cash dividends paid on common stock ( 92,204 ) ( 90,640 )

3 unchanged sentences

Cash, cash equivalents and restricted cash at beginning of year 2,208,328 907,808

Cash, cash equivalents and restricted cash at June 30

Cash, cash equivalents and restricted cash at September 30

$ 2,251,570 $ 1,557,476

5 unchanged sentences

Restricted cash is comprised of cash collateral posted by the Company to secure interest rate swap agreements.

This balance is included in other assets in the consolidated balance sheets and totaled $ 20.6 million and $ 21.9 million at June 30, 2021 and 2020, respectively.

This balance is included in other assets in the consolidated balance sheets and totaled $ 18.6 million and $ 25.9 million at September 30, 2021 and 2020, respectively.

Commerce Bancshares, Inc.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited)

September 30, 2021 (Unaudited)

Principles of Consolidation and Presentation

9 unchanged sentences

Management has evaluated subsequent events for potential recognition or disclosure.

The results of operations for the three and six month periods ended June 30, 2021 are not necessarily indicative of results to be attained for the full year or any other interim period.

The results of operations for the three and nine month periods ended September 30, 2021 are not necessarily indicative of results to be attained for the full year or any other interim period.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission.

1 unchanged sentence

Loans and Allowance for Credit Losses

Major classifications within the Company’s held for investment loan portfolio at June 30, 2021 and December 31, 2020 are as follows:

Major classifications within the Company’s held for investment loan portfolio at September 30, 2021 and December 31, 2020 are as follows:

(In thousands)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Business $ 5,277,850 $ 6,546,087

8 unchanged sentences

Total loans $ 15,148,390 $ 16,329,641

Accrued interest receivable totaled $ 37.2 million and $ 41.9 million at June 30, 2021 and December 31, 2020, respectively, and was included within other assets on the consolidated balance sheets.

For the three months ended June 30, 2021, the Company wrote-off accrued interest by reversing interest income of $ 36 thousand and $ 1.1 million in the Commercial and Personal Banking portfolios, respectively.

Similarly, for the six months ended June 30, 2021, the Company wrote-off accrued interest of $ 161 thousand and $ 3.1 million in the Commercial and Personal Banking portfolios, respectively.

At June 30, 2021, loans of $ 3.5 billion were pledged at the Federal Home Loan Bank as collateral for borrowings and letters of credit obtained to secure public deposits.

Accrued interest receivable totaled $ 33.0 million and $ 41.9 million at September 30, 2021 and December 31, 2020, respectively, and was included within other assets on the consolidated balance sheets.

For the three months ended September 30, 2021, the Company wrote-off accrued interest by reversing interest income of $ 27 thousand and $ 781 thousand in the Commercial and Personal Banking portfolios, respectively.

Similarly, for the nine months ended September 30, 2021, the Company wrote-off accrued interest of $ 188 thousand and $ 3.9 million in the Commercial and Personal Banking portfolios, respectively.

At September 30, 2021, loans of $ 3.5 billion were pledged at the Federal Home Loan Bank as collateral for borrowings and letters of credit obtained to secure public deposits.

Additional loans of $ 1.3 billion were pledged at the Federal Reserve Bank as collateral for discount window borrowings.

16 unchanged sentences

Key model assumptions in the Company’s allowance for credit loss model include the economic forecast, the reasonable and supportable period, prepayment assumptions and qualitative factors applied for portfolio composition changes, underwriting practices, or significant unique events or conditions.

The assumptions utilized in estimating the Company’s allowance for credit losses at June 30, 2021 and March 31, 2021 are discussed below.

Key Assumption June 30, 2021 March 31, 2021

The assumptions utilized in estimating the Company’s allowance for credit losses at September 30, 2021 and June 30, 2021 are discussed below.

Key Assumption September 30, 2021 June 30, 2021

Overall economic forecast • An optimistic recovery from the Global Coronavirus Recession (GCR) continues

• Assumes improving health conditions and expanding vaccine distribution

• Further fiscal stimulus assumed

• Assumes improving health conditions

• Assumes gradual easing of supply constraints

• Continued uncertainty regarding the assumptions related to the health crisis

• Uncertainty regarding rising inflation

• The recovery from the GCR continues

• An optimistic recovery from the GCR continues

• Assumes improving health conditions and expanding vaccine distribution

• Considers government stimulus

• Further fiscal stimulus assumed

• Continued uncertainty regarding the assumptions related to the health crisis

• Uncertainty regarding rising inflation

Reasonable and supportable period and related reversion period • One year for commercial and personal banking loans

6 unchanged sentences

• Unemployment rate ranging from 4.6% to 4.0% during the supportable forecast period

• Real GDP growth ranges from 11.1% to 1.0%

• Real GDP growth ranging from 10.7% to 1.7%

• Prime rate of 3.25%

24 unchanged sentences

Trends in health conditions and vaccine distribution could significantly modify economic projections used in the estimation of the allowance for credit losses.

A summary of the activity in the allowance for credit losses on loans and the liability for unfunded lending commitments during the three and six months ended June 30, 2021 and 2020, respectively, follows:

For the Three Months Ended June 30, 2021

For the Six Months Ended June 30, 2021

A summary of the activity in the allowance for credit losses on loans and the liability for unfunded lending commitments during the three and nine months ended September 30, 2021 and 2020, respectively, follows:

For the Three Months Ended September 30, 2021

For the Nine Months Ended September 30, 2021

(In thousands) Commercial Personal Banking

6 unchanged sentences

Net loan charge-offs (recoveries) 60 3,599 3,659 ( 4,917 ) 19,227 14,310

Balance June 30, 2021 $ 98,038 $ 74,357 $ 172,395 $ 98,038 $ 74,357 $ 172,395

Balance September 30, 2021 $ 98,164 $ 64,611 $ 162,775 $ 98,164 $ 64,611 $ 162,775

LIABILITY FOR UNFUNDED LENDING COMMITMENTS

1 unchanged sentence

Provision for credit losses on unfunded lending commitments ( 1,564 ) 140 ( 1,424 ) ( 15,473 ) ( 50 ) ( 15,523 )

Balance June 30, 2021 $ 23,350 $ 858 $ 24,208 $ 23,350 $ 858 $ 24,208

Balance September 30, 2021 $ 21,786 $ 998 $ 22,784 $ 21,786 $ 998 $ 22,784

ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS $ 119,950 $ 65,609 $ 185,559 $ 119,950 $ 65,609 $ 185,559

For the Three Months Ended June 30, 2020

For the Six Months Ended June 30, 2020

For the Three Months Ended September 30, 2020

For the Nine Months Ended September 30, 2020

(In thousands) Commercial Personal Banking

8 unchanged sentences

Net loan charge-offs 194 7,390 7,584 3,043 23,799 26,842

Balance June 30, 2020 $ 130,553 $ 110,191 $ 240,744 $ 130,553 $ 110,191 $ 240,744

Balance September 30, 2020 $ 128,424 $ 107,936 $ 236,360 $ 128,424 $ 107,936 $ 236,360

LIABILITY FOR UNFUNDED LENDING COMMITMENTS

3 unchanged sentences

Provision for credit losses on unfunded lending commitments ( 60 ) ( 39 ) ( 99 ) 17,536 499 18,035

Balance June 30, 2020 $ 34,052 $ 1,247 $ 35,299 $ 34,052 $ 1,247 $ 35,299

Balance September 30, 2020 $ 33,992 $ 1,208 $ 35,200 $ 33,992 $ 1,208 $ 35,200

ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS $ 162,416 $ 109,144 $ 271,560 $ 162,416 $ 109,144 $ 271,560

1 unchanged sentence

The Company considers loans past due on the day following the contractual repayment date, if the contractual repayment was not received by the Company as of the end of the business day.

The following table provides aging information on the Company’s past due and accruing loans, in addition to the balances of loans on non-accrual status, at June 30, 2021 and December 31, 2020.

The following table provides aging information on the Company’s past due and accruing loans, in addition to the balances of loans on non-accrual status, at September 30, 2021 and December 31, 2020.

(In thousands)

2 unchanged sentences

90 Days Past Due and Still Accruing Non-accrual

June 30, 2021

September 30, 2021

Business $ 5,266,174 $ 3,029 $ 354 $ 8,293 $ 5,277,850

19 unchanged sentences

Total $ 16,230,056 $ 50,855 $ 22,190 $ 26,540 $ 16,329,641

At June 30, 2021, the Company had $ 8.0 million in non-accrual business loans that had no allowance for credit loss.

At September 30, 2021, the Company had $ 5.5 million in non-accrual business loans that had no allowance for credit loss.

At December 31, 2020, the Company had $ 9.4 million in non-accrual business loans that had no allowance for credit loss.

The Company did not record any interest income on non-accrual loans during the three and six months ended June 30, 2021 and 2020, respectively.

The Company did not record any interest income on non-accrual loans during the three and nine months ended September 30, 2021 and 2020, respectively.

Credit quality indicators

15 unchanged sentences

In addition to the regular monitoring performed by the lending personnel and credit committees, loans are subject to review by a credit review department which verifies the appropriateness of the risk ratings for the loans chosen as part of its risk-based review plan.

The risk category of loans in the Commercial portfolio as of June 30, 2021 and December 31, 2020 are as follows:

The risk category of loans in the Commercial portfolio as of September 30, 2021 and December 31, 2020 are as follows:

Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2021 2020 2019 2018 2017 Prior Revolving Loans Amortized Cost Basis Total

June 30, 2021

September 30, 2021

Pass $ 1,134,349 $ 857,499 $ 719,076 $ 287,921 $ 184,147 $ 316,405 $ 1,662,395 $ 5,161,792

53 unchanged sentences

$ 3,992,080 $ 2,034,638 $ 927,791 $ 714,477 $ 545,687 $ 547,950 $ 1,831,176 $ 10,593,799

The credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided as of June 30, 2021 and December 31, 2020 below:

The credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided as of September 30, 2021 and December 31, 2020 below:

Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2021 2020 2019 2018 2017 Prior Revolving Loans Amortized Cost Basis Total

June 30, 2021

September 30, 2021

Real estate-personal

62 unchanged sentences

The Company requires that collateral-dependent loans are either over-collateralized or carry collateral equal to the amortized cost of the loan.

The following table presents the amortized cost basis of collateral-dependent loans as of June 30, 2021 and December 31, 2020.

The following table presents the amortized cost basis of collateral-dependent loans as of September 30, 2021 and December 31, 2020.

(In thousands) Business Assets Business Real Estate Oil & Gas Assets Total

June 30, 2021

September 30, 2021

Business $ 2,056 $ — $ 2,518 $ 4,574

7 unchanged sentences

This is a published credit score designed to measure the risk of default by taking into account various factors from a borrower's financial history and is considered supplementary information utilized by the Company, as management does not consider this information in evaluating the allowance for credit losses on loans.

The Bank normally obtains a FICO score at the loan's origination and renewal dates, and updates are obtained on a quarterly basis.

Excluded from the table below are certain personal real estate

loans for which FICO scores are not obtained because the loans generally pertain to commercial customer activities and are often underwritten with other collateral considerations.

These loans totaled $ 187.4 million at June 30, 2021 and $ 191.1 million at December 31, 2020.

The table also excludes consumer loans related to the Company's patient healthcare loan program, which totaled $ 187.8 million at June 30, 2021 and $ 188.1 million at December 31, 2020.

The Bank normally obtains a FICO score at the loan's origination and

renewal dates, and updates are obtained on a quarterly basis.

Excluded from the table below are certain personal real estate loans for which FICO scores are not obtained because the loans generally pertain to commercial customer activities and are often underwritten with other collateral considerations.

These loans totaled $ 186.0 million at September 30, 2021 and $ 191.1 million at December 31, 2020.

The table also excludes consumer loans related to the Company's patient healthcare loan program, which totaled $ 189.6 million at September 30, 2021 and $ 188.1 million at December 31, 2020.

As the healthcare loans are guaranteed by the hospital, customer FICO scores are not obtained for these loans.

The personal real estate loans and consumer loans excluded below totaled less than 7 % of the Personal Banking portfolio.

For the remainder of loans in the Personal Banking portfolio, the table below shows the percentage of balances outstanding at June 30, 2021 and December 31, 2020 by FICO score.

For the remainder of loans in the Personal Banking portfolio, the table below shows the percentage of balances outstanding at September 30, 2021 and December 31, 2020 by FICO score.

Personal Banking Loans

1 unchanged sentence

Real Estate - Personal Consumer Revolving Home Equity Consumer Credit Card

June 30, 2021

September 30, 2021

Under 600 .9 % 1.7 % 0.9 % 3.3 %

21 unchanged sentences

Other consumer loans classified as troubled debt restructurings consist of various other workout arrangements with consumer customers.

(In thousands) June 30, 2021 December 31, 2020

(In thousands) September 30, 2021 December 31, 2020

Accruing restructured loans:

7 unchanged sentences

Section 4013 of the CARES Act was signed into law on March 27, 2020, and includes a provision that short-term modifications are not troubled debt restructurings, if made on a good-faith basis in response to COVID-19 to borrowers who were current prior to December 31, 2019.

The Company follows the guidance under the CARES Act when determining if a customer’s modification is subject to troubled debt restructuring classification.

If it is deemed the modification is not short-

term, not COVID-19 related or the customer does not meet the criteria under the guidance to be scoped out of troubled debt restructuring classification, the Company will evaluate the loan modifications under its existing framework which requires modifications that result in a concession to a borrower experiencing financial difficulty be accounted for as a troubled debt restructuring.

The Company follows the guidance under the CARES Act when determining if a

customer’s modification is subject to troubled debt restructuring classification.

If it is deemed the modification is not short-term, not COVID-19 related or the customer does not meet the criteria under the guidance to be scoped out of troubled debt restructuring classification, the Company will evaluate the loan modifications under its existing framework which requires modifications that result in a concession to a borrower experiencing financial difficulty be accounted for as a troubled debt restructuring.

The initial guidance issued under the CARES Act was due to expire on December 31, 2020.

1 unchanged sentence

The Company elected to adopt the extension of this guidance.

The table below shows the balance of troubled debt restructurings by loan classification at June 30, 2021, in addition to the outstanding balances of these restructured loans which the Company considers to have been in default at any time during the past twelve months.

The table below shows the balance of troubled debt restructurings by loan classification at September 30, 2021, in addition to the outstanding balances of these restructured loans which the Company considers to have been in default at any time during the past twelve months.

For purposes of this disclosure, the Company considers "default" to mean 90 days or more past due as to interest or principal.

(In thousands) June 30, 2021 Balance 90 days past due at any time during previous 12 months

(In thousands) September 30, 2021 Balance 90 days past due at any time during previous 12 months

Business $ 53,850 $ 347

19 unchanged sentences

If an accruing troubled debt restructuring defaults, the loan's risk rating is downgraded to non-accrual status and the loan's related allowance for credit losses is determined based on individual evaluation, or if necessary, the loan is charged off and collection efforts begin.

The Company had commitments of $ 745 thousand at June 30, 2021 to lend additional funds to borrowers with restructured loans.

Additionally, the Company had commitments at June 30, 2021 of $ 24.0 million related to letters of credit with an internal risk rating below substandard.

The Company had commitments of $ 245 thousand at September 30, 2021 to lend additional funds to borrowers with restructured loans.

Additionally, the Company had commitments at September 30, 2021 of $ 24.0 million related to letters of credit with an internal risk rating below substandard.

Loans held for sale

1 unchanged sentence

The election of the fair value option aligns the accounting for these loans with the related economic hedges discussed in Note 11.

The loans are primarily sold to FNMA and FHLMC.

At June 30, 2021, the fair value of these loans was $ 17.4 million, and the unpaid principal balance was $ 16.9 million.

The loans are primarily sold to Federal Home Loan Mortgage Corporation (FHLMC) and Federal National Mortgage Association (FNMA).

At September 30, 2021, the fair value of these loans was $ 12.0 million, and the unpaid principal balance was $ 11.6 million.

The Company also designates certain student loan originations as held for sale.

1 unchanged sentence

The loans are intended to be sold in the secondary market, and the Company maintains contracts with Sallie Mae to sell the loans within 210 days after the last disbursement to the student.

These loans are carried at lower of cost or fair value, which at June 30, 2021 totaled $ 6.3 million.

At June 30, 2021, none of the loans held for sale were on non-accrual status or 90 days past due and still accruing.

These loans are carried at lower of cost or fair value, which at September 30, 2021 totaled $ 4.1 million.

At September 30, 2021, none of the loans held for sale were on non-accrual status or 90 days past due and still accruing.

Foreclosed real estate/repossessed assets

The Company’s holdings of foreclosed real estate totaled $ 229 thousand and $ 93 thousand at June 30, 2021 and December 31, 2020, respectively.

Personal property acquired in repossession, generally autos, marine and recreational vehicles (RV), totaled $ 1.1 million and $ 1.4 million at June 30, 2021 and December 31, 2020, respectively.

The Company’s holdings of foreclosed real estate totaled $ 115 thousand and $ 93 thousand at September 30, 2021 and December 31, 2020, respectively.

Personal property acquired in repossession, generally autos, totaled $ 1.0 million and $ 1.4 million at September 30, 2021 and December 31, 2020, respectively.

Upon acquisition, these assets are recorded at fair value less estimated selling costs at the date of foreclosure, establishing a new cost basis.

1 unchanged sentence

Investment Securities

Investment securities consisted of the following at June 30, 2021 and December 31, 2020.

(In thousands) June 30, 2021 December 31, 2020

Investment securities consisted of the following at September 30, 2021 and December 31, 2020.

(In thousands) September 30, 2021 December 31, 2020

Available for sale debt securities $ 14,165,656 $ 12,449,264

9 unchanged sentences

$ 14,399,394 $ 12,645,693

(1) Accrued interest receivable totaled $ 39.7 million and $ 41.5 million at June 30, 2021 and December 31, 2020, respectively, and was included within other assets on the consolidated balance sheet.

(1) Accrued interest receivable totaled $ 39.4 million and $ 41.5 million at September 30, 2021 and December 31, 2020, respectively, and was included within other assets on the consolidated balance sheet.

The Company has elected to measure equity securities with no readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes for the identical or similar investment of the same issuer.

6 unchanged sentences

Additionally, the Company's equity method investments are carried at cost, adjusted to reflect the Company's portion of income, loss, or dividends of the investee.

These adjustments are included in non-interest income on the Company's income statement.

These adjustments are included in non-interest income on the Company's income

The Company's private equity investments, in the absence of readily ascertainable market values, are carried at estimated fair value.

The majority of the Company’s investment portfolio is comprised of available for sale debt securities, which are carried at fair value with changes in fair value reported in accumulated other comprehensive income (AOCI).

A summary of the available for sale debt securities by maturity groupings as of June 30, 2021 is shown below.

The investment portfolio includes agency mortgage-backed securities, which are guaranteed by agencies such as the FHLMC, FNMA, and GNMA, in addition to non-

agency mortgage-backed securities, which have no guarantee but are collateralized by commercial and residential mortgages.

A summary of the available for sale debt securities by maturity groupings as of September 30, 2021 is shown below.

The investment portfolio includes agency mortgage-backed securities, which are guaranteed by agencies such as FHLMC, FNMA, and Government National Mortgage Association (GNMA), in addition to non-agency mortgage-backed securities, which have no guarantee but are collateralized by commercial and residential mortgages.

Also included are certain other asset-backed securities, which are primarily collateralized by credit cards, automobiles, student loans, and commercial loans.

29 unchanged sentences

government and federal agency obligations include U.S.

Treasury inflation-protected securities, which totaled $ 381.5 million, at fair value, at June 30, 2021.

Treasury inflation-protected securities, which totaled $ 387.1 million, at fair value, at September 30, 2021.

Interest paid on these securities increases with inflation and decreases with deflation, as measured by the Consumer Price Index.

3 unchanged sentences

The adoption of ASU 2016-13 had no impact to the Company's available for sale securities reported in its consolidated financial statements at January 1, 2020.

For the six months ended June 30, 2021 and 2020, the Company did not recognize a credit loss expense on any available for sale debt securities.

For the nine months ended September 30, 2021 and 2020, the Company did not recognize a credit loss expense on any available for sale debt securities.

The Company’s model for establishing its allowance for credit losses uses cash flows projected to be received over the estimated life of the securities, discounted to present value, and compared to the current amortized cost bases of the securities.

1 unchanged sentence

Special emphasis is placed on securities whose credit rating has fallen below Baa3 (Moody's) or BBB- (Standard & Poor's), whose fair values have fallen more than 20 % below purchase price, or who have been identified based on management’s judgment.

These securities are placed on a watch list and cash flow analyses are prepared on an individual security basis.

These securities are placed on a

watch list and cash flow analyses are prepared on an individual security basis.

Credit impairment is determined using input factors such as cash flow projections, contractual payments required, expected delinquency rates, credit support from other tranches, prepayment speeds, collateral loss severity rates (including loan to values), and various other information related to the underlying collateral.

At June 30, 2021, the fair value of securities on this watch list was $ 14.0 million compared to $ 31.0 million at December 31, 2020.

Significant inputs to the cash flow model used at June 30, 2021 to quantify credit losses were primarily credit support agreements, as the securities on the Company's watch list at June 30, 2021 were securities backed by government-guaranteed student loans and are expected to perform as contractually required.

As of June 30, 2021, the Company did not identify any securities for which a credit loss exists.

The table below summarizes debt securities available for sale in an unrealized loss position, aggregated by length of loss period, for which an allowance for credit losses has not been recorded at June 30, 2021 and December 31, 2020.

At September 30, 2021, the fair value of securities on this watch list was $ 13.7 million compared to $ 31.0 million at December 31, 2020.

Significant inputs to the cash flow model used at September 30, 2021 to quantify credit losses were primarily credit support agreements, as the securities on the Company's watch list at September 30, 2021 were securities backed by government-guaranteed student loans and are expected to perform as contractually required.

As of September 30, 2021, the Company did not identify any securities for which a credit loss exists.

Unrealized losses on these available for sale securities have not been recognized into income because after review, the securities were deemed not to be impaired.

6 unchanged sentences

Losses Fair Value Unrealized

June 30, 2021

September 30, 2021

Government-sponsored enterprise obligations $ 19,249 $ 569 $ — $ — $ 19,249 $ 569

17 unchanged sentences

Total $ 694,458 $ 3,741 $ 253,734 $ 2,617 $ 948,192 $ 6,358

The entire available for sale debt portfolio included $ 4.1 billion of securities that were in a loss position at June 30, 2021, compared to $ 948.2 million at December 31, 2020.

The total amount of unrealized loss on these securities was $ 40.8 million at June 30, 2021, an increase of $ 34.4 million compared to the loss at December 31, 2020.

The entire available for sale debt portfolio included $ 6.2 billion of securities that were in a loss position at September 30, 2021, compared to $ 948.2 million at December 31, 2020.

The total amount of unrealized loss on these securities was $ 72.0 million at September 30, 2021, an increase of $ 65.7 million compared to the loss at December 31, 2020.

Securities with significant unrealized losses are discussed in the "Allowance for credit losses on available for sale debt securities" section above.

For debt securities classified as available for sale, the following tables show the amortized cost, fair value, and allowance for credit losses of securities available for sale at June 30, 2021 and December 31, 2020, and the corresponding amounts of gross unrealized gains and losses (pre-tax) in AOCI, by security type.

For debt securities classified as available for sale, the following tables show the amortized cost, fair value, and allowance for credit losses of securities available for sale at September 30, 2021 and December 31, 2020, and the corresponding amounts of gross unrealized gains and losses (pre-tax) in AOCI, by security type.

(In thousands)

1 unchanged sentence

Losses Allowance for Credit Losses Fair Value

June 30, 2021

September 30, 2021

government and federal agency obligations $ 732,114 $ 52,076 $ — $ — $ 784,190

20 unchanged sentences

The following tables present proceeds from sales of securities and the components of investment securities gains and losses which have been recognized in earnings.

For the Six Months Ended June 30

For the Nine Months Ended September 30

(In thousands) 2021 2020

14 unchanged sentences

Total investment securities gains (losses), net $ 39,765 $ ( 1,275 )

Net gains on investment securities for the six months ended June 30, 2021 were mainly comprised of gains of $ 1.6 million realized on the sale of a private equity investment and net gains in fair value of $ 25.0 million on private equity investments due to fair value adjustments.

At June 30, 2021, securities totaling $ 5.6 billion in fair value were pledged to secure public fund deposits, securities sold under agreements to repurchase, trust funds, and borrowings at the FRB and FHLB, compared to $ 4.8 billion at December 31, 2020.

Net gains on investment securities for the nine months ended September 30, 2021 were mainly comprised of gains of $ 1.6 million realized on the sale of a private equity investment and net gains in fair value of $ 38.0 million on private equity investments due to fair value adjustments.

At September 30, 2021, securities totaling $ 5.7 billion in fair value were pledged to secure public fund deposits, securities sold under agreements to repurchase, trust funds, and borrowings at the FRB and FHLB, compared to $ 4.8 billion at December 31, 2020.

Securities pledged under agreements pursuant to which the collateral may be sold or re-pledged by the secured parties approximated $ 213.1 million, while the remaining securities were pledged under agreements pursuant to which the secured parties may not sell or re-pledge the collateral.

2 unchanged sentences

The following table presents information about the Company's intangible assets which have estimable useful lives.

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(In thousands)

4 unchanged sentences

Total $ 51,017 $ ( 39,176 ) $ ( 983 ) $ 10,858 $ 46,508 $ ( 36,798 ) $ ( 2,103 ) $ 7,607

Aggregate amortization expense on intangible assets was $ 745 thousand and $ 442 thousand for the three month periods ended June 30, 2021 and 2020, respectively, and $ 1.7 million and $ 710 thousand for the six month periods ended June 30, 2021 and 2020, respectively.

Aggregate amortization expense on intangible assets was $ 682 thousand and $ 859 thousand for the three month periods ended September 30, 2021 and 2020, respectively, and $ 2.4 million and $ 1.6 million for the nine month periods ended September 30, 2021 and 2020, respectively.

The following table shows the estimated annual amortization expense for the next five fiscal years.

This expense is based on existing asset balances and the interest rate environment as of June 30, 2021.

This expense is based on existing asset balances and the interest rate environment as of September 30, 2021.

The Company’s actual amortization expense in any given period may be different from the estimated amounts depending upon the acquisition of intangible assets, changes in mortgage interest rates, prepayment rates and other market conditions.

(In thousands)

Changes in the carrying amount of goodwill and net other intangible assets for the six month period ended June 30, 2021 are as follows:

Changes in the carrying amount of goodwill and net other intangible assets for the nine month period ended September 30, 2021 are as follows:

(In thousands) Goodwill Easement Core Deposit Premium Mortgage Servicing Rights

4 unchanged sentences

Impairment reversal — — — 1,120

Balance June 30, 2021 $ 138,921 $ 3,600 $ 1,172 $ 9,376

Goodwill allocated to the Company’s operating segments at June 30, 2021 and December 31, 2020 is shown below.

Balance September 30, 2021 $ 138,921 $ 3,600 $ 1,084 $ 9,774

Goodwill allocated to the Company’s operating segments at September 30, 2021 and December 31, 2020 is shown below.

(In thousands)

10 unchanged sentences

Upon issuance of standby letters of credit, the Company recognizes a liability for the fair value of the obligation undertaken, which is estimated to be equivalent to the amount of fees received from the customer over the life of the agreement.

At June 30, 2021, that net liability was $ 2.9 million, which will be accreted into income over the remaining life of the respective commitments.

The contractual amount of these letters of credit, which represents the maximum potential future payments guaranteed by the Company, was $ 412.7 million at June 30, 2021.

At September 30, 2021, that net liability was $ 3.1 million, which will be accreted into income over the remaining life of the respective commitments.

The contractual amount of these letters of credit, which represents the maximum potential future payments guaranteed by the Company, was $ 423.6 million at September 30, 2021.

The Company periodically enters into credit risk participation agreements (RPAs) as a guarantor to other financial institutions, in order to mitigate those institutions’ credit risk associated with interest rate swaps with third parties.

2 unchanged sentences

The third parties usually have other borrowing relationships with the Company.

The Company monitors overall borrower collateral and at June 30, 2021, believes sufficient collateral is available to cover potential swap losses.

The Company monitors overall borrower collateral and at September 30, 2021, believes sufficient collateral is available to cover potential swap losses.

The RPAs are carried at fair value throughout their term with all changes in fair value, including those due to a change in the third party’s creditworthiness, recorded in current earnings.

The terms of the RPAs, which correspond to the terms of the underlying swaps, range from 2 years to 15 years.

At June 30, 2021, the fair value of the Company's guarantee liabilities for RPAs was $ 333 thousand, and the notional amount of the underlying swaps was $ 265.6 million.

At September 30, 2021, the fair value of the Company's guarantee liabilities for RPAs was $ 283 thousand, and the notional amount of the underlying swaps was $ 268.1 million.

The maximum potential future payment guaranteed by the Company cannot be readily estimated but is dependent upon the fair value of the interest rate swaps at the time of default.

5 unchanged sentences

The Company also leases office space to third parties, and these leases are classified as operating leases.

The leases may include options to renew or expand the leased space, and currently the leases have remaining terms of 1 month to 6 years.

The leases may include options to renew or expand the leased space, and currently the leases have remaining terms of 3 months to 6 years.

The following table provides the components of lease income.

For the Three Months Ended June 30 For the Six Months Ended June 30

For the Three Months Ended September 30 For the Nine Months Ended September 30

(in thousands) 2021 2020 2021 2020

3 unchanged sentences

Total lease income $ 7,199 $ 8,707 $ 23,119 $ 25,590

(a) Includes rent from Tower Properties Company, a related party, of $ 19 thousand for the three month periods ended June 30, 2021 and 2020, and $ 38 thousand for the six months ended June 30, 2021 and 2020.

(a) Includes rent from Tower Properties Company, a related party, of $ 19 thousand for the three month periods ended September 30, 2021 and 2020, and $ 57 thousand for the nine months ended September 30, 2021 and 2020.

The amount of net pension cost is shown in the table below:

For the Three Months Ended June 30 For the Six Months Ended June 30

For the Three Months Ended September 30 For the Nine Months Ended September 30

(In thousands) 2021 2020 2021 2020

6 unchanged sentences

All benefits accrued under the Company’s defined benefit pension plan have been frozen since January 1, 2011.

During the first six months of 2021, the Company made no funding contributions to its defined benefit pension plan and made minimal funding contributions to a supplemental executive retirement plan (the CERP), which carries no segregated assets.

During the first nine months of 2021, the Company made no funding contributions to its defined benefit pension plan and made minimal funding contributions to a supplemental executive retirement plan (the CERP), which carries no segregated assets.

Common Stock *

4 unchanged sentences

Nonvested share-based awards are further discussed in Note 13.

For the Three Months Ended June 30 For the Six Months Ended June 30

For the Three Months Ended September 30 For the Nine Months Ended September 30

(In thousands, except per share data) 2021 2020 2021 2020

17 unchanged sentences

Diluted income per common share $ 1.05 $ 1.06 $ 3.54 $ 1.80

Unexercised stock appreciation rights of 72 thousand and 321 thousand for the three month periods ended June 30, 2021 and 2020, respectively, and 51 thousand and 276 thousand for the six month periods ended June 30, 2021 and 2020, respectively, were excluded from the computation of diluted income per common share because their inclusion would have been anti-dilutive.

Unexercised stock appreciation rights of 94 thousand and 413 thousand for the three month periods ended September 30, 2021 and 2020, respectively, and 58 thousand and 295 thousand for the nine month periods ended September 30, 2021 and 2020, respectively, were excluded from the computation of diluted income per common share because their inclusion would have been anti-dilutive.

On September 1, 2020, the Company redeemed all outstanding shares of its 6.00 % Series B Non-Cumulative Perpetual Preferred Stock, $ 1.00 par value per share (Series B Preferred Stock) and the corresponding depositary shares representing fractional interests in the Series B Preferred Stock (Series B Depositary Shares).

16 unchanged sentences

Current period other comprehensive income (loss), net of tax ( 160,019 ) 1,326 ( 13,518 ) ( 172,211 )

Balance June 30, 2021

Balance September 30, 2021

$ 103,782 $ ( 23,792 ) $ 79,176 $ 159,166

6 unchanged sentences

Current period other comprehensive income, net of tax 165,464 1,038 66,489 232,991

Balance June 30, 2020

Balance September 30, 2020

$ 267,537 $ ( 20,902 ) $ 96,800 $ 343,435

16 unchanged sentences

Consumer Commercial Wealth Segment Totals Other/Elimination Consolidated Totals

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Net interest income $ 80,411 $ 115,536 $ 18,075 $ 214,022 $ 15 $ 214,037

4 unchanged sentences

Income before income taxes $ 36,789 $ 82,955 $ 39,039 $ 158,783 $ 1,633 $ 160,416

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Net interest income $ 239,159 $ 340,345 $ 53,186 $ 632,690 $ ( 4,923 ) $ 627,767

4 unchanged sentences

Income before income taxes $ 110,672 $ 253,778 $ 110,550 $ 475,000 $ 62,179 $ 537,179

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Net interest income $ 80,944 $ 111,527 $ 15,303 $ 207,774 $ 8,188 $ 215,962

1 unchanged sentence

Non-interest income 37,115 47,920 47,701 132,736 ( 3,164 ) 129,572

Investment securities losses, net — — — — ( 4,129 ) ( 4,129 )

Investment securities gains, net — — — — 16,155 16,155

Non-interest expense ( 73,075 ) ( 78,277 ) ( 30,933 ) ( 182,285 ) ( 8,573 ) ( 190,858 )

Income before income taxes $ 37,330 $ 80,970 $ 32,084 $ 150,384 $ 17,346 $ 167,730

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Net interest income $ 241,195 $ 300,301 $ 41,686 $ 583,182 $ 36,902 $ 620,084

17 unchanged sentences

These contractual amounts, along with other terms of the derivative, are used to determine amounts to be exchanged between counterparties and are not a measure of loss exposure.

At June 30, 2021, the Company’s derivative instruments are accounted for as free-standing derivatives, and changes in their fair value are recorded in current earnings.

At September 30, 2021, the Company’s derivative instruments are accounted for as free-standing derivatives, and changes in their fair value are recorded in current earnings.

(In thousands)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Interest rate swaps $ 2,236,974 $ 2,367,017

17 unchanged sentences

The unrealized gains will be reclassified into interest income as the underlying forecasted transactions impact earnings through the original maturity dates of the hedged forecasted transactions.

As of June 30, 2021, the total realized gains on the monetized cash flow hedges remaining in AOCI was $ 111.7 million (pre-tax), which will be reclassified into interest income over the next 5.5 years.

As of September 30, 2021, the total realized gains on the monetized cash flow hedges remaining in AOCI was $ 105.6 million (pre-tax), which will be reclassified into interest income over the next 5.2 years.

The Company also contracts with other financial institutions, as a guarantor or beneficiary, to share credit risk associated with certain interest rate swaps through risk participation agreements.

8 unchanged sentences

The Company's policy is to present its derivative assets and derivative liabilities on a gross basis in its consolidated balance sheets, and these are reported in other assets and other liabilities.

Certain collateral posted to and from the Company's clearing counterparty has been applied to the fair values of the cleared swaps, such that at June 30, 2021 in the table below, the positive fair values of cleared swaps were reduced by $ 207 thousand and the negative fair values of cleared swaps were reduced by $ 46.6 million.

Certain collateral posted to and from the Company's clearing counterparty has been applied to the fair values of the cleared swaps, such that at September 30, 2021 in the table below, the positive fair values of cleared swaps were reduced by $ 224 thousand and the negative fair values of cleared swaps were reduced by $ 41.2 million.

At December 31, 2020, there were no reductions to the positive fair values of cleared swaps and the negative fair values of cleared swaps were reduced by $ 69.2 million.

Asset Derivatives Liability Derivatives

June 30, 2021 Dec.

31, 2020 June 30, 2021 Dec.

30, 2021 Dec.

31, 2020 Sept.

30, 2021 Dec.

(In thousands )

13 unchanged sentences

(In thousands) Total Included Component Excluded Component Total Included Component Excluded Component

For the Three Months Ended June 30, 2020

For the Three Months Ended September 30, 2020

Derivatives in cash flow hedging relationships:

1 unchanged sentence

Total $ ( 4,481 ) $ ( 4,087 ) $ ( 394 ) Total $ 4,163 $ 5,509 $ ( 1,346 )

For the Six Months Ended June 30, 2020

For the Nine Months Ended September 30, 2020

Derivatives in cash flow hedging relationships:

2 unchanged sentences

Location of Gain or (Loss) Recognized in Income on Derivatives Amount of Gain or (Loss) Recognized in Income on Derivatives

For the Three Months Ended June 30 For the Six Months Ended June 30

For the Three Months Ended September 30 For the Nine Months Ended September 30

(In thousands) 2021 2020 2021 2020

9 unchanged sentences

The following table shows the extent to which assets and liabilities relating to derivative instruments have been offset in the consolidated balance sheets.

It also provides information about these instruments which are subject to an enforceable master netting arrangement, irrespective of whether they are offset, and the extent to which the instruments could potentially be offset.

Also shown is collateral received or pledged in the form of other financial instruments, which is generally cash or marketable

It also provides information about these instruments which are subject to an enforceable master

netting arrangement, irrespective of whether they are offset, and the extent to which the instruments could potentially be offset.

Also shown is collateral received or pledged in the form of other financial instruments, which is generally cash or marketable securities.

The collateral amounts in this table are limited to the outstanding balances of the related asset or liability (after netting is applied);

8 unchanged sentences

Gross Amounts Not Offset in the Balance Sheet

(In thousands) Gross Amount Recognized Gross Amounts Offset in the Balance Sheet Net Amounts Presented in the Balance Sheet Financial Instruments Available for Offset Collateral Received/Pledged Net Amount

June 30, 2021

(In thousands) Gross Amount Recognized Gross Amounts Offset in the Balance Sheet Net Amounts Presented in the Balance Sheet Financial Instruments Available for Offset Collateral

Pledged Net Amount

September 30, 2021

Derivatives subject to master netting agreements

30 unchanged sentences

These repurchase and resale agreements have the same principal amounts, inception dates, and maturity dates and have been offset against each other in the consolidated balance sheets, as permitted under the netting provisions of ASC 210-20-45.

The collateral swaps totaled $ 200.0 million at June 30, 2021 and December 31, 2020.

At June 30, 2021, the Company had posted collateral of $ 203.5 million in marketable securities, consisting of agency mortgage-backed bonds, and had accepted $ 209.2 million in agency mortgage-backed bonds.

The collateral swaps totaled $ 200.0 million at September 30, 2021 and December 31, 2020.

At September 30, 2021, the Company had posted collateral of $ 202.5 million in marketable securities, consisting of agency mortgage-backed bonds, and had accepted $ 209.1 million in agency mortgage-backed bonds.

Gross Amounts Not Offset in the Balance Sheet

(In thousands) Gross Amount Recognized Gross Amounts Offset in the Balance Sheet Net Amounts Presented in the Balance Sheet Financial Instruments Available for Offset Securities Collateral Received/Pledged Net Amount

June 30, 2021

September 30, 2021

Total resale agreements, subject to master netting arrangements

7 unchanged sentences

2,256,113 ( 200,000 ) 2,056,113 — ( 2,056,113 ) —

The table below shows the remaining contractual maturities of repurchase agreements outstanding at June 30, 2021 and December 31, 2020, in addition to the various types of marketable securities that have been pledged by the Company as collateral for these borrowings.

The table below shows the remaining contractual maturities of repurchase agreements outstanding at September 30, 2021 and December 31, 2020, in addition to the various types of marketable securities that have been pledged by the Company as collateral for these borrowings.

Remaining Contractual Maturity of the Agreements

(In thousands) Overnight and continuous Up to 90 days Greater than 90 days Total

June 30, 2021

September 30, 2021

Repurchase agreements, secured by:

15 unchanged sentences

The Company issues stock-based compensation in the form of nonvested restricted stock and stock appreciation rights (SARs).

Most of the awards are issued during the first quarter of each year.

The stock-based compensation expense that has been charged against income was $ 3.8 million and $ 3.7 million in the three months ended June 30, 2021 and 2020, respectively, and $ 7.7 million and $ 7.5 million in the six months ended June 30, 2021 and 2020, respectively.

Historically, most of the awards have been issued during the first quarter of each year.

The stock-based compensation expense that has been charged against income was $ 3.9 million and $ 3.8 million in the three months ended September 30, 2021 and 2020, respectively, and $ 11.6 million and $ 11.2 million in the nine months ended September 30, 2021 and 2020, respectively.

Nonvested stock awards granted generally vest in 4 to 7 years and contain restrictions as to transferability, sale, pledging, or assigning, among others, prior to the end of the vesting period.

Dividend and voting rights are conferred upon grant.

A summary of the status of the Company’s nonvested share awards as of June 30, 2021, and changes during the six month period then ended, is presented below.

A summary of the status of the Company’s nonvested share awards as of September 30, 2021, and changes during the nine month period then ended, is presented below.

Shares Weighted Average Grant Date Fair Value

3 unchanged sentences

Forfeited ( 20,297 ) 58.68

Nonvested at June 30, 2021 1,061,496 $ 57.74

Nonvested at September 30, 2021 1,061,766 $ 58.14

SARs are granted with exercise prices equal to the market price of the Company’s stock at the date of grant.

7 unchanged sentences

Expected term

A summary of SAR activity during the first six months of 2021 is presented below.

A summary of SAR activity during the first nine months of 2021 is presented below.

(Dollars in thousands, except per share data)

7 unchanged sentences

Exercised ( 214,651 ) 39.59

Outstanding at June 30, 2021

Outstanding at September 30, 2021

857,018 $ 48.55 6.0 years $ 18,372

1 unchanged sentence

The core principle of ASU 2014-09, "Revenue from Contracts with Customers," is that an entity should recognize revenue to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

For the six months ended June 30, 2021, approximately 60 % of the Company’s total revenue was comprised of net interest income, which is not within the scope of this guidance.

For the nine months ended September 30, 2021, approximately 60 % of the Company’s total revenue was comprised of net interest income, which is not within the scope of this guidance.

Of the remaining revenue, those items that were subject to this guidance mainly included fees for bank card, trust, deposit account services and consumer brokerage services.

The following table disaggregates non-interest income subject to ASU 2014-09 by major product line.

Three Months Ended June 30 Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

(In thousands) 2021 2020 2021 2020

12 unchanged sentences

All trust fees and consumer brokerage services income are earned in the Wealth segment.

The following table presents the opening and closing receivable balances for the six month periods ended June 30, 2021 and 2020 for the Company’s significant revenue categories subject to ASU 2014-09.

(In thousands) June 30, 2021 December 31, 2020 June 30, 2020 December 31, 2019

The following table presents the opening and closing receivable balances for the nine month periods ended September 30, 2021 and 2020 for the Company’s significant revenue categories subject to ASU 2014-09.

(In thousands) September 30, 2021 December 31, 2020 September 30, 2020 December 31, 2019

Bank card transaction fees $ 13,349 $ 14,199 $ 11,501 $ 13,915

20 unchanged sentences

Instruments Measured at Fair Value on a Recurring Basis

The table below presents the June 30, 2021 and December 31, 2020 carrying values of assets and liabilities measured at fair value on a recurring basis.

There were no transfers among levels during the first six months of 2021 or the year ended December 31, 2020.

The table below presents the September 30, 2021 and December 31, 2020 carrying values of assets and liabilities measured at fair value on a recurring basis.

There were no transfers among levels during the first nine months of 2021 or the year ended December 31, 2020.

Fair Value Measurements Using

2 unchanged sentences

(Level 2) Significant Unobservable Inputs

June 30, 2021

September 30, 2021

Residential mortgage loans held for sale $ 11,982 $ — $ 11,982 $ —

46 unchanged sentences

Derivatives Total

For the three months ended June 30, 2021

Balance March 31, 2021 $ 7,970 $ 94,257 $ 1,636 $ 103,863

For the three months ended September 30, 2021

Balance June 30, 2021 $ 7,991 $ 116,246 $ 1,629 $ 125,866

Total gains or losses (realized/unrealized):

1 unchanged sentence

Included in other comprehensive income * ( 175 ) — — ( 175 )

Investment securities called ( 6,000 ) — — ( 6,000 )

Discount accretion 179 — — 179

Purchases of private equity investments — 8,835 — 8,835

Sale/pay down of private equity investments — ( 356 ) — ( 356 )

Capitalized interest/dividends — 23 — 23

Purchase of risk participation agreement — — 445 445

Sale of risk participation agreements — — ( 27 ) ( 27 )

Balance June 30, 2021 $ 7,991 $ 116,246 $ 1,629 $ 125,866

Total gains or losses for the three months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2021

Balance September 30, 2021 $ 1,995 $ 138,052 $ 1,340 $ 141,387

Total gains or losses for the three months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2021

$ — $ 12,971 $ 1,557 $ 14,528

Total gains or losses for the three months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2021

Total gains or losses for the three months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2021

$ 2 $ — $ — $ 2

For the six months ended June 30, 2021

For the nine months ended September 30, 2021

Balance January 1, 2021

3 unchanged sentences

Included in other comprehensive income * ( 158 ) — — ( 158 )

Investment securities called ( 6,000 ) — — ( 6,000 )

Discount accretion 185 — — 185

4 unchanged sentences

Sale of risk participation agreement — — ( 157 ) ( 157 )

Balance June 30, 2021 $ 7,991 $ 116,246 $ 1,629 $ 125,866

Total gains or losses for the six months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2021

Balance September 30, 2021 $ 1,995 $ 138,052 $ 1,340 $ 141,387

Total gains or losses for the nine months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2021

$ — $ 38,002 $ 1,367 $ 39,369

Total gains or losses for the six months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2021

Total gains or losses for the nine months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2021

$ 23 $ — $ — $ 23

4 unchanged sentences

Derivatives Total

For the three months ended June 30, 2020

Balance March 31, 2020

For the three months ended September 30, 2020

Balance June 30, 2020

$ 9,490 $ 73,846 $ 1,888 $ 85,224

2 unchanged sentences

Included in other comprehensive income * 271 — — 271

Investment securities called ( 2,000 ) — — ( 2,000 )

Discount accretion 105 — — 105

Purchases of private equity investments — 2,522 — 2,522

Capitalized interest/dividends — 29 — 29

Sale of risk participation agreement — — ( 369 ) ( 369 )

Balance June 30, 2020 $ 9,490 $ 73,846 $ 1,888 $ 85,224

Total gains or losses for the three months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2020

Sale/pay down of private equity investments — ( 295 ) — ( 295 )

Balance September 30, 2020 $ 7,866 $ 78,462 $ 2,392 $ 88,720

Total gains or losses for the three months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2020

$ — $ 2,409 $ 3,050 $ 5,459

Total gains or losses for the three months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2020

Total gains or losses for the three months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2020

$ 258 $ — $ — $ 258

For the six months ended June 30, 2020

For the nine months ended September 30, 2020

Balance January 1, 2020

3 unchanged sentences

Included in other comprehensive income * ( 101 ) — — ( 101 )

Investment securities called ( 2,000 ) — — ( 2,000 )

Discount accretion 114 — — 114

3 unchanged sentences

Sale of risk participation agreement — — ( 809 ) ( 809 )

Balance June 30, 2020 $ 9,490 $ 73,846 $ 1,888 $ 85,224

Total gains or losses for the six months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2020

Balance September 30, 2020 $ 7,866 $ 78,462 $ 2,392 $ 88,720

Total gains or losses for the nine months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2020

$ — $ ( 18,096 ) $ 3,262 $ ( 14,834 )

Total gains or losses for the six months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2020

Total gains or losses for the nine months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2020

$ ( 52 ) $ — $ — $ ( 52 )

2 unchanged sentences

(In thousands) Loan Fees and Sales Other Non-Interest Income Investment Securities Gains (Losses), Net Total

For the three months ended June 30, 2021

For the three months ended September 30, 2021

Total gains or losses included in earnings $ ( 309 ) $ 47 $ 12,971 $ 12,709

Change in unrealized gains or losses relating to assets still held at June 30, 2021

Change in unrealized gains or losses relating to assets still held at September 30, 2021

$ 1,510 $ 47 $ 12,971 $ 14,528

For the six months ended June 30, 2021

For the nine months ended September 30, 2021

Total gains or losses included in earnings $ ( 1,716 ) $ 27 $ 38,002 $ 36,313

Change in unrealized gains or losses relating to assets still held at June 30, 2021

Change in unrealized gains or losses relating to assets still held at September 30, 2021

$ 1,510 $ ( 143 ) $ 38,002 $ 39,369

For the three months ended June 30, 2020

For the three months ended September 30, 2020

Total gains or losses included in earnings $ 591 $ ( 87 ) $ 2,389 $ 2,893

Change in unrealized gains or losses relating to assets still held at June 30, 2020

Change in unrealized gains or losses relating to assets still held at September 30, 2020

$ 3,137 $ ( 87 ) $ 2,409 $ 5,459

For the six months ended June 30, 2020

For the nine months ended September 30, 2020

Total gains or losses included in earnings $ 2,679 $ 153 $ ( 18,116 ) $ ( 15,284 )

Change in unrealized gains or losses relating to assets still held at June 30, 2020

Change in unrealized gains or losses relating to assets still held at September 30, 2020

$ 3,137 $ 125 $ ( 18,096 ) $ ( 14,834 )

1 unchanged sentence

The Company's significant Level 3 measurements, which employ unobservable inputs that are readily quantifiable, pertain to auction rate securities (ARS), investments in portfolio concerns held by the Company's private equity subsidiaries, and held for sale residential mortgage loan commitments.

ARS are included in state and municipal securities and totaled $ 8.0 million at June 30, 2021, while private equity investments, included in other securities, totaled $ 116.2 million.

ARS are included in state and municipal securities and totaled $ 2.0 million at September 30, 2021, while private equity investments, included in other securities, totaled $ 138.1 million.

Information about these inputs is presented in the table below.

8 unchanged sentences

Instruments Measured at Fair Value on a Nonrecurring Basis

For assets measured at fair value on a nonrecurring basis during the first six months of 2021 and 2020, and still held as of June 30, 2021 and 2020, the following table provides the adjustments to fair value recognized during the respective periods, the level of valuation inputs used to determine each adjustment, and the carrying value of the related individual assets or portfolios at June 30, 2021 and 2020.

For assets measured at fair value on a nonrecurring basis during the first nine months of 2021 and 2020, and still held as of September 30, 2021 and 2020, the following table provides the adjustments to fair value recognized during the respective periods, the level of valuation inputs used to determine each adjustment, and the carrying value of the related individual assets or portfolios at September 30, 2021 and 2020.

Fair Value Measurements Using

3 unchanged sentences

Significant Unobservable Inputs

Total Gains (Losses) Recognized During the Six Months Ended June 30

June 30, 2021

Total Gains (Losses) Recognized During the Nine Months Ended September 30

September 30, 2021

Collateral dependent loans $ 2,057 $ — $ — $ 2,057 $ ( 349 )

Mortgage servicing rights 9,774 — — 9,774 1,120

Long-lived assets 1,393 — — 1,393 ( 726 )

June 30, 2020

September 30, 2020

Collateral dependent loans $ 11,772 $ — $ — $ 11,772 $ ( 3,214 )

Mortgage servicing rights 5,731 — — 5,731 ( 1,823 )

Long-lived assets 348 — — 348 ( 5 )

The Company's significant Level 3 measurements that are measured on a nonrecurring basis pertain to the Company's mortgage servicing rights retained on certain fixed rate personal real estate loan originations.

19 unchanged sentences

Changes in assumptions could significantly affect the estimates.

The estimated fair values of the Company’s financial instruments and the classification of their fair value measurement within the valuation hierarchy are as follows at June 30, 2021 and December 31, 2020:

Carrying Amount Estimated Fair Value at June 30, 2021

The estimated fair values of the Company’s financial instruments and the classification of their fair value measurement within the valuation hierarchy are as follows at September 30, 2021 and December 31, 2020:

Carrying Amount Estimated Fair Value at September 30, 2021

(In thousands)

15 unchanged sentences

Investment securities 14,395,504 791,308 13,419,585 184,611 14,395,504

Federal funds sold 5,945 5,945 — — 5,945

Securities purchased under agreements to resell 1,750,000 — — 1,757,410 1,757,410

48 unchanged sentences

Legal and Regulatory Proceedings

The Company has various legal proceedings pending at June 30, 2021, arising in the normal course of business.

The Company has various legal proceedings pending at September 30, 2021, arising in the normal course of business.

While some matters pending against the Company specify damages claimed by plaintiffs, others do not seek a specified amount of damages or are at early stages of the legal process.

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-Q

Item 1. Financial Statements