What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-05 · 242 added, 374 removed, 1146 unchanged (35% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2022 December 31, 2021

3 unchanged sentences

Net loans 15,324,304 15,026,315

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

Loans held for sale (including $ 3,901,000 and $ 5,570,000 of residential mortgage loans carried at fair value at March 31, 2022 and December 31, 2021, respectively)

Investment securities:

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 September 30, 2021 and December 31, 2020, respectively)

Available for sale debt, at fair value (amortized cost of $ 15,425,954,000 and $ 14,419,133,000 at

March 31, 2022 and December 31, 2021, respectively, and allowance for credit losses of $ —

at March 31, 2022 and December 31, 2021, respectively)

14,780,494 14,450,027

3 unchanged sentences

Total investment securities 15,020,734 14,699,511

Federal funds sold and short-term securities purchased under agreements to resell — 2,800

Securities purchased under agreements to resell 1,825,000 1,625,000

6 unchanged sentences

Total assets $ 34,986,793 $ 36,689,088

LIABILITIES AND EQUITY

LIABILITIES AND STOCKHOLDERS' EQUITY

Non-interest bearing $ 11,428,372 $ 11,772,374

15 unchanged sentences

Retained earnings 178,504 92,493

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

Treasury stock of 1,034,382 shares at March 31, 2022

and 476,392 shares at December 31, 2021, at cost

10 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

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

For the Three Months Ended March 31

(In thousands, except per share data) 2022 2021

28 unchanged sentences

Total non-interest income 131,769 136,045

INVESTMENT SECURITIES GAINS (LOSSES), NET 13,108 16,155 39,765 ( 1,275 )

INVESTMENT SECURITIES GAINS, NET 7,163 9,853

NON-INTEREST EXPENSE

10 unchanged sentences

Net income 120,026 133,229

Less non-controlling interest expense (income) 3,193 907 9,373 ( 2,479 )

Less non-controlling interest expense 1,872 2,257

Net income attributable to Commerce Bancshares, Inc.

$ 118,154 $ 130,972

Less preferred stock dividends — 7,466 — 11,966

Net income available to common shareholders $ 122,561 $ 124,982 $ 415,859 $ 212,202

Net income per common share — basic $ .97 $ 1.06

4 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

For the Three Months Ended March 31

(In thousands) 2022 2021

1 unchanged sentence

Other comprehensive income (loss):

Net unrealized gains (losses) on available for sale debt securities ( 57,068 ) 330 ( 160,019 ) 165,464

Net unrealized losses on available for sale debt securities ( 507,265 ) ( 158,676 )

Pension loss amortization

451 327 1,326 1,038

Unrealized gains (losses) on cash flow hedge derivatives ( 4,607 ) ( 6,483 ) ( 13,518 ) 66,489

Unrealized losses on cash flow hedge derivatives ( 4,538 ) ( 4,386 )

Other comprehensive income (loss) ( 511,480 ) ( 162,625 )

Comprehensive income 64,530 127,529 253,021 454,680

Less non-controlling interest expense (income) 3,193 907 9,373 ( 2,479 )

Comprehensive income attributable to Commerce Bancshares, Inc.

Comprehensive income (loss) ( 391,454 ) ( 29,396 )

Less non-controlling interest expense 1,872 2,257

Comprehensive income (loss) attributable to Commerce Bancshares, Inc.

$ ( 393,326 ) $ ( 31,653 )

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three Months Ended September 30, 2021 and 2020

Three Months Ended March 31, 2022 and 2021

Commerce Bancshares, Inc.

(In thousands, except per share data)

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

Balance June 30, 2021

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

Balance December 31, 2021

$ 610,804 $ 2,689,894 $ 92,493 $ ( 32,973 ) $ 77,080 $ 11,026 $ 3,448,324

3 unchanged sentences

Purchases of treasury stock ( 55,855 ) ( 55,855 )

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

Issuance of stock under purchase and equity

4 unchanged sentences

( 32,143 ) ( 32,143 )

Balance September 30, 2021

Balance March 31, 2022

$ 610,804 $ 2,678,025 $ 178,504 $ ( 72,293 ) $ ( 434,400 ) $ 12,762 $ 2,973,402

Balance June 30, 2020

Balance December 31, 2020

$ 589,352 $ 2,436,288 $ 73,000 $ ( 32,970 ) $ 331,377 $ 2,925 $ 3,399,972

2 unchanged sentences

Distributions to non-controlling interest ( 387 ) ( 387 )

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

Purchases of treasury stock ( 25,923 ) ( 25,923 )

5 unchanged sentences

( 30,799 ) ( 30,799 )

Cash dividends paid on preferred stock

($ .375 per depositary share)

( 2,250 ) ( 2,250 )

Balance September 30, 2020

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

See accompanying notes to consolidated financial statements.

Commerce Bancshares, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Nine Months Ended September 30, 2021 and 2020

Commerce Bancshares, Inc.

(In thousands, except per share data)

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

Balance December 31, 2020

$ — $ 589,352 $ 2,436,288 $ 73,000 $ ( 32,970 ) $ 331,377 $ 2,925 $ 3,399,972

Net income 415,859 9,373 425,232

Other comprehensive loss ( 172,211 ) ( 172,211 )

Distributions to non-controlling interest ( 1,088 ) ( 1,088 )

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 )

Stock-based compensation 11,588 11,588

Cash dividends on common stock ($ .788 per share)

( 92,204 ) ( 92,204 )

Balance September 30, 2021

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

Balance December 31, 2019

$ 144,784 $ 563,978 $ 2,151,464 $ 201,562 $ ( 37,548 ) $ 110,444 $ 3,788 $ 3,138,472

Adoption of ASU 2016-13 3,766 3,766

Balance December 31, 2019, adjusted

144,784 563,978 2,151,464 205,328 ( 37,548 ) 110,444 3,788 3,142,238

Net income 224,168 ( 2,479 ) 221,689

Other comprehensive income 232,991 232,991

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 )

Issuance of stock under purchase and equity compensation plans ( 22,285 ) 22,258 ( 27 )

Stock-based compensation 11,231 11,231

Cash dividends on common stock ($ .771 per share)

( 90,640 ) ( 90,640 )

Cash dividends on preferred stock ($ 1.125 per depositary share)

( 6,750 ) ( 6,750 )

Balance September 30, 2020

Balance March 31, 2021

$ 589,352 $ 2,420,393 $ 173,173 $ ( 39,080 ) $ 168,752 $ 4,795 $ 3,317,385

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30

For the Three Months Ended March 31

(In thousands) 2022 2021

5 unchanged sentences

Amortization of investment security premiums, net 4,932 22,079

Investment securities (gains) losses, net (A) ( 39,765 ) 1,275

Investment securities gains, net (A) ( 7,163 ) ( 9,853 )

Net gains on sales of loans held for sale ( 1,302 ) ( 7,381 )

1 unchanged sentence

Proceeds from sales of loans held for sale 57,789 184,155

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

Net decrease in trading debt securities, excluding unsettled transactions 9,798 4,872

Stock-based compensation 4,218 3,933

(Increase) decrease in interest receivable ( 7,972 ) 444

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

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

Proceeds from terminated interest rate floors — 110,640

Increase (decrease) in interest payable 273 ( 1,804 )

Increase in income taxes payable 28,657 28,105

Other changes, net ( 29,115 ) 11,178

1 unchanged sentence

INVESTING ACTIVITIES:

Disbursements received from equity-method investment 13,540 —

Distributions received from equity-method investment 400 —

Proceeds from sales of investment securities (A) 1,745 9,292

1 unchanged sentence

Purchases of investment securities (A) ( 1,812,434 ) ( 1,194,891 )

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

Net increase in loans ( 287,328 ) ( 72,497 )

Securities purchased under agreements to resell ( 200,000 ) —

3 unchanged sentences

FINANCING ACTIVITIES:

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

Net increase (decrease) in non-interest bearing, savings, interest checking and money market deposits ( 208,358 ) 585,579

Net decrease in certificates of deposit ( 303,277 ) ( 73,000 )

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 )

Net decrease in federal funds purchased and securities sold under agreements to repurchase ( 705,506 ) ( 160,273 )

Net increase (decrease) in other borrowings ( 3,503 ) 2,989

Purchases of treasury stock ( 55,855 ) ( 25,923 )

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

Issuance of stock under equity compensation plans 448 ( 15 )

Cash dividends paid on common stock ( 32,143 ) ( 30,799 )

Cash dividends paid on preferred stock — ( 6,750 )

Net cash provided by financing activities 1,185,947 4,620,228

Increase in cash, cash equivalents and restricted cash 43,242 649,668

Net cash provided by (used in) financing activities ( 1,308,194 ) 298,558

Increase (decrease) in cash, cash equivalents and restricted cash ( 2,691,364 ) 172,496

Cash, cash equivalents and restricted cash at beginning of year 4,296,954 2,208,328

Cash, cash equivalents and restricted cash at September 30

Cash, cash equivalents and restricted cash at March 31

$ 1,605,590 $ 2,380,824

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 $ 18.6 million and $ 25.9 million at September 30, 2021 and 2020, respectively.

This balance is included in other assets in the consolidated balance sheets and totaled $ 18.2 million and $ 24.5 million at March 31, 2022 and 2021, respectively.

Commerce Bancshares, Inc.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited)

March 31, 2022 (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 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 results of operations for the three month period ended March 31, 2022 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 September 30, 2021 and December 31, 2020 are as follows:

Major classifications within the Company’s held for investment loan portfolio at March 31, 2022 and December 31, 2021 are as follows:

(In thousands)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Business $ 5,508,508 $ 5,303,535

8 unchanged sentences

Total loans $ 15,459,014 $ 15,176,359

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.

Accrued interest receivable totaled $ 32.1 million and $ 25.9 million at March 31, 2022 and December 31, 2021, respectively, and was included within other assets on the consolidated balance sheets.

For the three months ended March 31, 2022, the Company wrote-off accrued interest by reversing interest income of $ 29 thousand and $ 899 thousand in the Commercial and Personal Banking portfolios, respectively.

Similarly, for the three months ended March 31, 2021, the Company wrote-off accrued interest of $ 125 thousand and $ 2.0 million in the Commercial and Personal Banking portfolios, respectively.

At March 31, 2022, loans of $ 3.2 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.

8 unchanged sentences

The calculated average net charge-off rate is then adjusted for current conditions and reasonable and supportable forecasts.

These adjustments increase or decrease the average historical loss rate to reflect expectations of future losses given a single path economic forecast of key macroeconomic variables including GDP, disposable income, unemployment rate, various interest rates, CPI inflation rate, HPI, CREPI and market volatility.

These adjustments increase or decrease the average historical loss rate to reflect expectations of future losses given a single path economic forecast of key macroeconomic variables including GDP, disposable income, various interest rates, unemployment rate, consumer price index (CPI) inflation rate, housing price index (HPI), commercial real estate price index (CREPI) and market volatility.

The adjustments are based on results from various regression models projecting the impact of the macroeconomic variables to loss rates.

4 unchanged sentences

Additionally, the allowance for credit losses considers other qualitative factors not included in historical loss rates or macroeconomic forecast such as changes in portfolio composition, underwriting practices, or significant unique events or conditions.

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 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

Key model assumptions in the Company’s allowance for credit loss model include the economic forecast, the reasonable and supportable period, forecasted macro-economic variables, 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 March 31, 2022 and December 31, 2021 are discussed below.

Key Assumption March 31, 2022 December 31, 2021

Overall economic forecast • Improving health situation supports positive economic momentum in the short term

• Projects significant monetary policy tightening to rein in inflation

• Projects continued high inflation

• Uncertainties related to supply chain issues

• Continued recovery from the Global Coronavirus Recession (GCR)

• Assumes improving health conditions

• Assumes gradual easing of supply constraints

• Continued uncertainty regarding the assumptions related to the health crisis

• Uncertainty regarding rising inflation

• An optimistic recovery from the GCR continues

• Assumes improving health conditions and expanding vaccine distribution

• Further fiscal stimulus assumed

• Continued uncertainty regarding the assumptions related to the health crisis

• Continued uncertainty regarding the health crisis

• Uncertainty regarding rising inflation

5 unchanged sentences

• Real GDP growth ranging from 2.6% to 3.7%

• Prime rate of 3.25%

• Prime rate from 4.0% to 5.2%

• Unemployment rate ranging from 4.1% to 3.7% during the supportable forecast period

• Real GDP growth ranging from 10.7% to 1.7%

• Prime rate of 3.25%

• Real GDP growth ranges from 5.0% to 3.4%

• Prime rate of 3.25% through the second quarter of 2022, increasing to 3.5% by the end of 2022

Prepayment assumptions Commercial loans

8 unchanged sentences

• 64.1% for consumer credit cards

Qualitative factors Added net reserves using qualitative processes related to:

• Loans originated in our expansion markets, loans that are designated as shared national credits, and certain portfolios considered to be COVID-19 impacted

Qualitative factors Added qualitative factors related to:

• Certain portfolios sensitive to pandemic economic uncertainties

• Changes in the composition of the loan portfolios

• Uncertainty related to unusually high rate of inflation, geopolitical environment, and supply chain issues

• Loans downgraded to special mention, substandard, or non-accrual status

Added net reserves using qualitative processes related to:

• Loans originated in our expansion markets, loans that are designated as shared national credits, and certain portfolios considered to be COVID-19 impacted

• Loans originated in our expansion markets, loans that are designated as shared national credits, and certain portfolios sensitive to pandemic economic uncertainties

• Changes in the composition of the loan portfolios

4 unchanged sentences

The forecasted macro-economic environment continuously changes which can cause fluctuations in estimated expected losses.

The current forecast projects a continued recovery of the COVID-19 pandemic induced recession.

This pandemic is unprecedented and information that could be used in the estimation of the allowance for credit losses changes frequently.

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 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

The current forecast projects a continued recovery of the COVID-19 related health situation, which is expected to create positive economic momentum.

However, the higher inflation and Russia's invasion of Ukraine has created greater uncertainty in the forecast.

The geopolitical environment, trends in health conditions, and ongoing supply constraints 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 months ended March 31, 2022 and 2021, respectively, follows:

For the Three Months Ended March 31, 2022

(In thousands) Commercial Personal Banking

Commercial Personal Banking

ALLOWANCE FOR CREDIT LOSSES ON LOANS

4 unchanged sentences

Net loan charge-offs (recoveries) 70 4,578 4,648

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

Balance March 31, 2022 $ 94,827 $ 39,883 $ 134,710

LIABILITY FOR UNFUNDED LENDING COMMITMENTS

1 unchanged sentence

Provision for credit losses on unfunded lending commitments 509 319 828

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

Balance March 31, 2022 $ 23,780 $ 1,252 $ 25,032

ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS $ 118,607 $ 41,135 $ 159,742

For the Three Months Ended September 30, 2020

For the Nine Months Ended September 30, 2020

For the Three Months Ended March 31, 2021

(In thousands) Commercial Personal Banking

Commercial Personal Banking

ALLOWANCE FOR CREDIT LOSSES ON LOANS

Balance at end of prior period $ 130,553 $ 110,191 $ 240,744 $ 91,760 $ 68,922 $ 160,682

Adoption of ASU 2016-13 — — — ( 29,711 ) 8,672 ( 21,039 )

Balance at beginning of period $ 121,549 $ 99,285 $ 220,834

3 unchanged sentences

Net loan charge-offs 17 9,935 9,952

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

Balance March 31, 2021 $ 119,623 $ 80,904 $ 200,527

LIABILITY FOR UNFUNDED LENDING COMMITMENTS

Balance at end of prior period $ 34,052 $ 1,247 $ 35,299 $ 399 $ 676 $ 1,075

Adoption of ASU 2016-13 — — — 16,057 33 16,090

Balance at beginning of period $ 37,259 $ 1,048 $ 38,307

Provision for credit losses on unfunded lending commitments 4,254 ( 131 ) 4,123

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

Balance March 31, 2021 $ 41,513 $ 917 $ 42,430

ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS $ 161,136 $ 81,821 $ 242,957

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 September 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 March 31, 2022 and December 31, 2021.

(In thousands)

2 unchanged sentences

90 Days Past Due and Still Accruing Non-accrual

September 30, 2021

March 31, 2022

Business $ 5,494,664 $ 6,747 $ 341 $ 6,756 $ 5,508,508

19 unchanged sentences

Total $ 15,116,475 $ 39,001 $ 11,726 $ 9,157 $ 15,176,359

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

At March 31, 2022, the Company had $ 4.9 million in non-accrual business loans that had no allowance for credit loss.

At December 31, 2021, the Company had $ 5.3 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 nine months ended September 30, 2021 and 2020, respectively.

The Company did not record any interest income on non-accrual loans during the three months ended March 31, 2022 and 2021, 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 September 30, 2021 and December 31, 2020 are as follows:

The risk category of loans in the Commercial portfolio as of March 31, 2022 and December 31, 2021 are as follows:

Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total

September 30, 2021

March 31, 2022

Pass $ 305,308 $ 1,246,520 $ 644,426 $ 533,462 $ 219,320 $ 368,615 $ 2,106,483 $ 5,424,134

53 unchanged sentences

$ 2,917,439 $ 1,869,035 $ 1,223,303 $ 555,494 $ 408,432 $ 593,927 $ 1,913,008 $ 9,480,638

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:

The credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided as of March 31, 2022 and December 31, 2021 below:

Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total

September 30, 2021

March 31, 2022

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 September 30, 2021 and December 31, 2020.

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

September 30, 2021

The following table presents the amortized cost basis of collateral-dependent loans as of March 31, 2022 and December 31, 2021.

(In thousands) Business Assets Oil & Gas Assets Total

March 31, 2022

Business $ 1,498 $ 2,401 $ 3,899

2 unchanged sentences

Business $ 1,604 $ 2,459 $ 4,063

Real estate - business — 986 — 986

Total $ 1,604 $ 2,459 $ 4,063

2 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 $ 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.

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 $ 183.4 million at March 31, 2022 and $ 185.6 million at December 31, 2021.

The table also excludes consumer loans related to the Company's patient healthcare loan program, which totaled $ 181.8 million at March 31, 2022 and $ 186.6 million at December 31, 2021.

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 September 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 March 31, 2022 and December 31, 2021 by FICO score.

Personal Banking Loans

1 unchanged sentence

Real Estate - Personal Consumer Revolving Home Equity Consumer Credit Card

September 30, 2021

March 31, 2022

Under 600 .9 % 1.9 % 0.9 % 3.4 %

21 unchanged sentences

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

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

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

Accruing restructured loans:

1 unchanged sentence

Assistance programs

Consumer bankruptcy

Other consumer

2 unchanged sentences

$ 125,792 $ 64,887

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.

Section 4013 of the CARES Act was signed into law on March 27, 2020, and included 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 elected such option under the CARES Act when determining if a customer’s modification is subject to troubled debt restructuring classification.

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

During January 2021, the Consolidated Appropriations Act, 2021 was enacted and extended through the end of 2021 the relief offered under the CARES Act related to the accounting and disclosure requirements for troubled debt restructurings as a result of COVID-19.

The Company elected to adopt the extension of this guidance.

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.

During January 2021, the Consolidated Appropriations Act, 2021 was enacted and extended through the end of 2021 the relief offered under the CARES Act related to the accounting and disclosure

requirements for troubled debt restructurings as a result of COVID-19.

The Company elected to extend its application of this guidance through December 31, 2021.

During the period covered by the CARES Act, if it was deemed that the loan modification was 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 evaluated the loan modifications under its existing framework and accounted for the modification as a troubled debt restructuring.

The table below shows the balance of troubled debt restructurings by loan classification at March 31, 2022, 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) September 30, 2021 Balance 90 days past due at any time during previous 12 months

(In thousands) March 31, 2022 Balance 90 days past due at any time during previous 12 months

Business $ 30,254 $ —

9 unchanged sentences

For those performing commercial loans classified as restructured, there were no concessions involving forgiveness of principal or interest and, therefore, there was no financial impact to the Company as a result of modification to these loans.

No financial impact resulted from those performing loans where the debt was not reaffirmed in bankruptcy, as no changes to loan terms occurred in that process.

However, the effects of modifications to loans under various debt management and assistance programs were estimated to decrease interest income by approximately $ 649 thousand on an annual, pre-tax basis, compared to amounts contractually owed.

7 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 $ 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.

The Company had commitments of $ 17.7 million at March 31, 2022 to lend additional funds to borrowers with restructured loans.

Additionally, the Company had commitments at March 31, 2022 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 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 loans are primarily sold to Federal Home Loan Mortgage Corporation

(FHLMC) and Federal National Mortgage Association (FNMA).

At March 31, 2022, the fair value of these loans was $ 3.9 million, and the unpaid principal balance was $ 3.9 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 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.

These loans are carried at lower of cost or fair value, which at March 31, 2022 totaled $ 5.0 million.

At March 31, 2022, none of the loans held for sale were on non-accrual status or 90 days past due and still accruing interest.

Foreclosed real estate/repossessed assets

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.

The Company’s holdings of foreclosed real estate totaled $ 296 thousand and $ 115 thousand at March 31, 2022 and December 31, 2021, respectively.

Personal property acquired in repossession, generally autos, totaled $ 1.3 million and $ 1.1 million at March 31, 2022 and December 31, 2021, 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 September 30, 2021 and December 31, 2020.

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

Investment securities consisted of the following at March 31, 2022 and December 31, 2021.

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

Available for sale debt securities $ 14,780,494 $ 14,450,027

9 unchanged sentences

$ 15,020,734 $ 14,699,511

(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.

(1) Accrued interest receivable totaled $ 41.4 million and $ 39.5 million at March 31, 2022 and December 31, 2021, respectively, and was included within other assets on the consolidated balance sheets.

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.

This portfolio includes the Company's holdings of Visa Class B shares, which have a carrying value of zero, as there have not been observable price changes in orderly transactions for identical or similar investments of the same issuer.

During the period, the Company did not record any impairment or other adjustments to the carrying amount of its portfolio of equity securities with no readily determinable fair value.

During the three months ended March 31, 2022, the Company did not record any impairment or other adjustments to the carrying amount of its portfolio of equity securities with no readily determinable fair value.

Other investment securities include Federal Reserve Bank (FRB) stock, Federal Home Loan Bank (FHLB) stock, equity method investments, and investments in portfolio concerns held by the Company's private equity subsidiary.

FRB stock and FHLB stock are held for debt and regulatory purposes.

Investment in FRB stock is based on the capital structure of the investing bank, and investment in FHLB stock is tied to the level of borrowings from the FHLB.

Investment in FRB stock is based on the capital structure of the investing bank, and investment in FHLB stock is tied to the asset size of the borrowing bank and the level of borrowings from the FHLB.

These holdings are carried at cost.

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

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 September 30, 2021 is shown below.

These adjustments are included in non-interest income on the Company's consolidated statements of income.

The Company's private equity investments 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 other comprehensive income (OCI).

A summary of the available for sale debt securities by maturity groupings as of March 31, 2022 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.

Also included are certain other asset-backed securities, which are primarily collateralized by credit

cards, automobiles, student loans, and commercial loans.

These securities differ from traditional debt securities primarily in that they may have uncertain maturity dates and are priced based on estimated prepayment rates on the underlying collateral.

6 unchanged sentences

Government-sponsored enterprise obligations:

After 5 but within 10 years 5,000 5,000

After 10 years 50,765 46,390

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government and federal agency obligations include U.S.

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

Treasury inflation-protected securities, which totaled $ 399.4 million, at fair value, at March 31, 2022.

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

1 unchanged sentence

Allowance for credit losses on available for sale debt securities

The Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments, on January 1, 2020.

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 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.

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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 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.

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 September 30, 2021 and December 31, 2020.

At March 31, 2022, the fair value of securities on this watch list was $ 13.1 million compared to $ 13.4 million at December 31, 2021.

Significant inputs to the cash flow model used at March 31, 2022 to quantify credit losses were primarily credit support agreements, as the securities on the Company's watch list at March 31, 2022 were securities backed by government-guaranteed student loans and are expected to perform as contractually required.

As of March 31, 2022, the Company did not identify any securities for which a credit loss exists, and for the three months ended March 31, 2022 and 2021, the Company did not recognize a credit loss expense on any available for sale debt securities.

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

September 30, 2021

March 31, 2022

government and federal agency obligations $ 390,451 $ 13,082 $ — $ — $ 390,451 $ 13,082

Government-sponsored enterprise obligations 29,665 1,281 16,725 3,094 46,390 4,375

8 unchanged sentences

December 31, 2021

government and federal agency obligations $ 296,492 $ 2,241 $ — $ — $ 296,492 $ 2,241

Government-sponsored enterprise obligations — — 18,899 919 18,899 919

7 unchanged sentences

Total $ 8,581,829 $ 118,680 $ 465,833 $ 14,249 $ 9,047,662 $ 132,929

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.

The entire available for sale debt portfolio included $ 12.2 billion of securities that were in a loss position at March 31, 2022, compared to $ 9.0 billion at December 31, 2021.

The total amount of unrealized loss on these securities was $ 690.1 million at March 31, 2022, an increase of $ 557.1 million compared to the unrealized loss at December 31, 2021.

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 September 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 table shows the amortized cost, fair value, and allowance for credit losses of securities available for sale at March 31, 2022 and December 31, 2021, 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

September 30, 2021

March 31, 2022

government and federal agency obligations $ 1,115,041 $ 28,002 $ ( 13,082 ) $ — $ 1,129,961

19 unchanged sentences

Total $ 14,419,133 $ 163,823 $ ( 132,929 ) $ — $ 14,450,027

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 Nine Months Ended September 30

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

For the Three Months Ended March 31

(In thousands) 2022 2021

Proceeds from sales of securities:

Available for sale debt securities

Other investments

$ 1,745 $ 9,292

Equity securities

Total proceeds

1 unchanged sentence

Investment securities gains (losses), net:

Available for sale debt securities:

Gains realized on sales $ — $ 16,965

Equity securities:

Gains realized on sales — 2

Fair value adjustments, net

$ ( 287 ) $ ( 35 )

Gains realized on sales

Fair value adjustments, net 7,450 8,365

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

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.

Total investment securities gains, net $ 7,163 $ 9,853

Net gains on investment securities for the three months ended March 31, 2022 were mainly comprised of net losses of $ 287 thousand on equity investments, offset by net gains in fair value of $ 7.5 million on private equity investments, due to fair value adjustments.

At March 31, 2022, securities totaling $ 5.2 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 $ 6.4 billion at December 31, 2021.

Securities pledged under agreements pursuant to which the collateral may be sold or re-pledged by the secured parties approximated $ 201.0 million, while the remaining securities were pledged under agreements pursuant to which the secured

parties may not sell or re-pledge the collateral.

Except for obligations of various government-sponsored enterprises such as FNMA, FHLB and FHLMC, no investment in a single issuer exceeded 10 % of stockholders’ equity.

1 unchanged sentence

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(In thousands)

4 unchanged sentences

Total $ 52,760 $ ( 40,475 ) $ — $ 12,285 $ 52,140 $ ( 39,866 ) $ ( 304 ) $ 11,970

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.

Aggregate amortization expense on intangible assets was $ 609 thousand and $ 951 thousand for the three month periods ended March 31, 2022 and 2021.

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 September 30, 2021.

This expense is based on existing asset balances and the interest rate environment as of March 31, 2022.

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 nine month period ended September 30, 2021 are as follows:

Changes in the carrying amount of goodwill and net other intangible assets for the three month period ended March 31, 2022 are as follows:

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

1 unchanged sentence

$ 138,921 $ 3,600 $ 1,004 $ 10,966

Originations — — — 4,509

Originations, net of disposals — — — 620

Amortization — — ( 79 ) ( 530 )

Impairment reversal — — — 1,120

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.

Impairment recovery — — — 304

Balance March 31, 2022 $ 138,921 $ 3,600 $ 925 $ 11,360

Goodwill allocated to the Company’s operating segments at March 31, 2022 and December 31, 2021 is shown below.

(In thousands)

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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 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.

At March 31, 2022, that net liability was $ 4.2 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 $ 502.1 million at March 31, 2022.

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 September 30, 2021, believes sufficient collateral is available to cover potential swap losses.

The Company monitors overall borrower collateral and at March 31, 2022, 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 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.

At March 31, 2022, the fair value of the Company's guarantee liabilities for RPAs was $ 126 thousand, and the notional amount of the underlying swaps was $ 347.9 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.

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The following table provides the components of lease income.

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

For the Three Months Ended March 31

(in thousands) 2022 2021

1 unchanged sentence

Operating leases (a)

1,717 2,270 5,721 6,491

Total lease income $ 7,431 $ 8,195

(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.

(a) Includes rent from Tower Properties Company, a related party, of $ 19 thousand for the three month periods ended March 31, 2022 and 2021 .

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

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

For the Three Months Ended March 31

(In thousands) 2022 2021

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

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.

During the first three months of 2022, 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 September 30 For the Nine Months Ended September 30

For the Three Months Ended March 31

(In thousands, except per share data) 2022 2021

2 unchanged sentences

$ 118,154 $ 130,972

Less preferred stock dividends — 7,466 — 11,966

Net income available to common shareholders 122,561 124,982 415,859 212,202

Less income allocated to nonvested restricted stock 1,070 1,200

3 unchanged sentences

Diluted income per common share:

Net income available to common shareholders $ 122,561 $ 124,982 $ 415,859 $ 212,202

Net income attributable to Commerce Bancshares, Inc.

$ 118,154 $ 130,972

Less income allocated to nonvested restricted stock 1,068 1,198

1 unchanged sentence

Weighted average common shares outstanding 120,324 122,073

Net effect of the assumed exercise of stock-based awards - based on the

treasury stock method using the average market price for the respective periods 241 188 280 219

Net effect of the assumed exercise of stock-based awards - based on the treasury stock method using the average market price for the respective periods 292 329

Weighted average diluted common shares outstanding 120,616 122,402

Diluted income per common share $ .97 $ 1.06

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).

Unexercised stock appreciation rights of 119 thousand and 54 thousand for the three month periods ended March 31, 2022 and 2021, respectively, were excluded from the computation of diluted income per common share because their inclusion would have been anti-dilutive.

* All prior year share and per share amounts in this note have been restated for the 5% common stock dividend distributed in December 2021.

1 unchanged sentence

The table below shows the activity and accumulated balances for components of other comprehensive income.

The largest component is the unrealized holding gains and losses on available for sale debt securities.

Another component is the amortization from other comprehensive income of losses associated with pension benefits, which occurs as the losses are included in current net periodic pension cost.

The remaining component is gains and losses in fair value on certain interest rate floors that have been designated as cash flow hedging instruments.

The interest rate floors were terminated during 2020, and the realized gains will be amortized into interest income through the original maturity dates of the interest rate floors.

Information about unrealized gains and losses on securities can be found in Note 3, and information about unrealized gains and losses on cash flow hedge derivatives is located in Note 11.

8 unchanged sentences

Current period other comprehensive income (loss), net of tax ( 507,265 ) 323 ( 4,538 ) ( 511,480 )

Balance September 30, 2021

Balance March 31, 2022

$ ( 484,091 ) $ ( 20,345 ) $ 70,036 $ ( 434,400 )

1 unchanged sentence

$ 263,801 $ ( 25,118 ) $ 92,694 $ 331,377

Other comprehensive income before reclassifications to current earnings 237,583 — 94,702 332,285

Other comprehensive income (loss) before reclassifications to current earnings ( 211,569 ) — — ( 211,569 )

Amounts reclassified to current earnings from accumulated other comprehensive income — 583 ( 5,848 ) ( 5,265 )

Current period other comprehensive income, before tax 220,618 1,384 88,652 310,654

Income tax expense ( 55,154 ) ( 346 ) ( 22,163 ) ( 77,663 )

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

Balance September 30, 2020

Current period other comprehensive income (loss), before tax ( 211,569 ) 583 ( 5,848 ) ( 216,834 )

Income tax (expense) benefit 52,893 ( 146 ) 1,462 54,209

Current period other comprehensive income (loss), net of tax ( 158,676 ) 437 ( 4,386 ) ( 162,625 )

Balance March 31, 2021

$ 105,125 $ ( 24,681 ) $ 88,308 $ 168,752

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Consumer Commercial Wealth Segment Totals Other/Elimination Consolidated Totals

Three Months Ended September 30, 2021

Three Months Ended March 31, 2022

Net interest income $ 79,896 $ 109,530 $ 18,868 $ 208,294 $ 492 $ 208,786

4 unchanged sentences

Income before income taxes $ 30,758 $ 73,575 $ 35,762 $ 140,095 $ 11,833 $ 151,928

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2021

Net interest income $ 77,939 $ 110,565 $ 17,457 $ 205,961 $ ( 213 ) $ 205,748

4 unchanged sentences

Income before income taxes $ 35,917 $ 81,985 $ 35,404 $ 153,306 $ 11,999 $ 165,305

Three Months Ended September 30, 2020

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

Provision for loan losses ( 7,654 ) ( 200 ) 13 ( 7,841 ) 4,740 ( 3,101 )

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

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

Nine Months Ended September 30, 2020

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

Provision for credit losses ( 23,885 ) ( 3,122 ) 10 ( 26,997 ) ( 114,596 ) ( 141,593 )

Non-interest income 107,489 143,746 139,700 390,935 ( 20,185 ) 370,750

Investment securities losses, net — — — — ( 1,275 ) ( 1,275 )

Non-interest expense ( 225,791 ) ( 237,327 ) ( 92,915 ) ( 556,033 ) ( 16,035 ) ( 572,068 )

Income before income taxes $ 99,008 $ 203,598 $ 88,481 $ 391,087 $ ( 115,189 ) $ 275,898

The information presented above was derived from the internal profitability reporting system used by management to monitor and manage the financial performance of the Company.

11 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 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.

At March 31, 2022, 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)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Interest rate swaps $ 2,177,130 $ 2,229,419

9 unchanged sentences

The customers are engaged in a variety of businesses, including real estate, manufacturing, retail product distribution, education, and retirement communities.

These customer swaps are offset by matching contracts purchased by the Company from other financial dealer institutions.

These interest rate swap contracts with customers are offset by matching interest rate swap contracts purchased by the Company from other financial institutions (dealers).

Contracts with dealers that require central clearing are novated to a clearing agency who becomes the Company's counterparty.

4 unchanged sentences

During the year ended December 31, 2020, the Company monetized three interest rate floors that were previously classified as cash flow hedges with a combined notional balance of $ 1.5 billion and an asset fair value of $ 163.2 million.

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 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.

As of March 31, 2022, the total realized gains on the monetized cash flow hedges remaining in AOCI was $ 93.4 million (pre-tax), which will be reclassified into interest income over the next 4.7 years.

The estimated amount of net gains related to the cash flow hedges remaining in AOCI at March 31, 2022 that is expected to be reclassified into income within the next 12 months is $ 24.4 million.

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 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.

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 March 31, 2022 in the table below, the positive fair values of cleared swaps were reduced by $ 11.3 million and the negative fair values of cleared swaps were reduced by $ 5.5 million.

At December 31, 2021, positive fair values of cleared swaps were reduced by $ 587 thousand and the negative fair values of cleared swaps were reduced by $ 29.7 million.

Asset Derivatives Liability Derivatives

31, 2022 Dec.

31, 2020 Sept.

31, 2021 Mar.

31, 2022 Dec.

10 unchanged sentences

Total $ 13,130 $ 41,842 $ ( 18,382 ) $ ( 12,101 )

The pre-tax effects of derivative instruments on the consolidated statements of income are shown in the tables below.

The pre-tax effects of derivative instruments on the consolidated statements of income and consolidated statements of comprehensive income are shown in the tables below.

Amount of Gain or (Loss) Recognized in OCI

1 unchanged sentence

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

For the Three Months Ended September 30, 2020

For the Three Months Ended March 31, 2022

Derivatives in cash flow hedging relationships:

1 unchanged sentence

Total $ — $ — $ — Total $ ( 6,050 ) $ ( 7,566 ) $ 1,516

For the Nine Months Ended September 30, 2020

For the Three Months Ended March 31, 2021

Derivatives in cash flow hedging relationships:

1 unchanged sentence

Total $ — $ — $ — Total $ ( 5,848 ) $ ( 7,364 ) $ 1,516

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 September 30 For the Nine Months Ended September 30

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

For the Three Months Ended March 31

(In thousands) 2022 2021

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.

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.

2 unchanged sentences

Most of the derivatives in the following table were transacted under master netting arrangements that contain a conditional right of offset, such as close-out netting, upon default.

While the Company is party to master netting arrangements with most of its swap derivative counterparties, the Company does not offset derivative assets and liabilities under these agreements on its consolidated balance sheet.

Collateral exchanged between the Company and dealer bank counterparties is generally subject to thresholds and transfer minimums, and usually consists of marketable securities.

6 unchanged sentences

Pledged Net Amount

September 30, 2021

March 31, 2022

Derivatives subject to master netting agreements

1 unchanged sentence

Derivatives not subject to master netting agreements

1,692 — 1,692

Total derivatives $ 13,130 $ — $ 13,130

7 unchanged sentences

Derivatives not subject to master netting agreements

3,392 — 3,392

Total derivatives $ 41,842 $ — $ 41,842

4 unchanged sentences

Resale and Repurchase Agreements

The following table shows the extent to which assets and liabilities relating to securities purchased under agreements to resell (resale agreements) and securities sold under agreements to repurchase (repurchase agreements) have been offset in the consolidated balance sheets, in addition to the extent to which they could potentially be offset.

Also shown is collateral received or pledged, which consists of marketable securities.

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

thus, amounts of excess collateral are not shown.

The agreements in the following table were transacted under master netting arrangements that contain a conditional right of offset, such as close-out netting, upon default.

The Company regularly enters into resale and repurchase agreement transactions with other financial institutions and with its own customers.

Resale and repurchase agreements are agreements to purchase/sell securities subject to an obligation to resell/repurchase the same or similar securities.

They are accounted for as collateralized financing transactions, not as sales and purchases of the securities portfolio.

The securities collateral accepted or pledged in resale and repurchase agreements with other financial institutions also may be sold or re-pledged by the secured party but is usually delivered to and held by third party trustees.

The Company generally retains custody of securities pledged for repurchase agreements with customers.

They are accounted for as secured lending and collateralized borrowing (e.g.

financing transactions), not as true sales and purchases of the underlying collateral securities.

Some of the resale and repurchase agreements were transacted under master netting arrangements that contain a conditional right of offset, such as

close-out netting, upon default.

The security collateral accepted or pledged in resale and repurchase agreements with other financial institutions may be sold or re-pledged by the secured party, but is usually delivered to and held by third party trustees.

The Company generally retains custody of securities pledged for repurchase agreements with its customers.

The Company is party to agreements commonly known as collateral swaps.

1 unchanged sentence

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 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.

The collateral swaps totaled $ 200.0 million at March 31, 2022 and $ 400.0 million at December 31, 2021.

The following table shows the extent to which resale agreement assets and repurchase agreement liabilities with the same counterparty have been offset on the consolidated balance sheets, in addition to the extent to which they could potentially be offset.

Also shown is collateral received or pledged, which consists of marketable securities.

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

thus amounts of excess collateral are not shown.

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

September 30, 2021

March 31, 2022

Total resale agreements, subject to master netting arrangements

7 unchanged sentences

3,379,582 ( 400,000 ) 2,979,582 — ( 2,979,582 ) —

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.

The table below shows the remaining contractual maturities of repurchase agreements outstanding at March 31, 2022 and December 31, 2021, 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

September 30, 2021

March 31, 2022

Repurchase agreements, secured by:

16 unchanged sentences

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.

The stock-based compensation expense that has been charged against income was $ 4.2 million and $ 3.9 million in the three months ended March 31, 2022 and 2021, 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 September 30, 2021, and changes during the nine month period then ended, is presented below.

A summary of the status of the Company’s nonvested share awards as of March 31, 2022, and changes during the three month period then ended, is presented below.

Shares Weighted Average Grant Date Fair Value

3 unchanged sentences

Forfeited ( 3,088 ) 55.13

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

Nonvested at March 31, 2022 1,103,656 $ 60.44

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 nine months of 2021 is presented below.

A summary of SAR activity during the first three months of 2022 is presented below.

(Dollars in thousands, except per share data)

7 unchanged sentences

Exercised ( 23,137 ) 44.54

Outstanding at September 30, 2021

Outstanding at March 31, 2022

967,475 $ 48.65 6.0 years $ 22,190

Revenue from Contracts with Customers

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 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.

Revenue from contracts with customers is recognized 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 three months ended March 31, 2022, approximately 61 % 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 September 30 Nine Months Ended September 30

The following table disaggregates non-interest income subject to ASC 606 by major product line.

Three Months Ended March 31

(In thousands) 2022 2021

8 unchanged sentences

Total non-interest income $ 131,769 $ 136,045

(1) This revenue is not within the scope of ASU 2014-09, and includes fees relating to capital market activities, loan fees and sales, derivative instruments, standby letters of credit and various other transactions.

(1) This revenue is not within the scope of ASC 606, and includes fees relating to capital market activities, loan fees and sales, derivative instruments, standby letters of credit and various other transactions.

For bank card transaction fees, the majority of debit and credit card fees are earned in the Consumer segment, while corporate card and merchant fees are earned in the Commercial segment.

The Consumer and Commercial segments each contribute approximately half of the Company's deposit account charge revenue.

The Consumer and Commercial segments contribute approximately 39 % and 60 %, respectively, of the Company's deposit account charge revenue.

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 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

The following table presents the opening and closing receivable balances for the three month periods ended March 31, 2022 and 2021 for the Company’s significant revenue categories subject to ASC 606.

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

Bank card transaction fees $ 14,171 $ 16,424 $ 12,437 $ 14,199

20 unchanged sentences

Instruments Measured at Fair Value on a Recurring Basis

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.

The table below presents the March 31, 2022 and December 31, 2021 carrying values of assets and liabilities measured at fair value on a recurring basis.

There were no transfers among levels during the first three months of 2022 or the year ended December 31, 2021.

Fair Value Measurements Using

2 unchanged sentences

(Level 2) Significant Unobservable Inputs

September 30, 2021

March 31, 2022

Residential mortgage loans held for sale $ 3,901 $ — $ 3,901 $ —

46 unchanged sentences

Derivatives Total

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):

Included in earnings — 12,971 ( 262 ) 12,709

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

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 September 30, 2021

$ 2 $ — $ — $ 2

For the nine months ended September 30, 2021

For the three months ended March 31, 2022

Balance January 1, 2022

3 unchanged sentences

Included in other comprehensive income * ( 83 ) — — ( 83 )

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

Discount accretion 1 — — 1

1 unchanged sentence

Sale/pay down of private equity investments — ( 1,745 ) — ( 1,745 )

Capitalized interest/dividends — 23 — 23

Purchase of risk participation agreement — — 145 145

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

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 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

Fair Value Measurements Using

Significant Unobservable Inputs

(In thousands)

State and Municipal Obligations Private Equity

Derivatives Total

For the three months ended September 30, 2020

Balance June 30, 2020

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

Total gains or losses (realized/unrealized):

Included in earnings — 2,389 504 2,893

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

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

Balance March 31, 2022 $ 1,902 $ 153,411 $ 221 $ 155,534

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 March 31, 2022

$ — $ 7,450 $ 267 $ 7,717

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

*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 March 31, 2022

$ ( 83 ) $ — $ — $ ( 83 )

For the nine months ended September 30, 2020

For the three months ended March 31, 2021

Balance January 1, 2021

3 unchanged sentences

Included in other comprehensive income * ( 1 ) — — ( 1 )

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

Discount accretion 3 — — 3

Purchases of private equity investments — 2,791 — 2,791

Sale/pay down of private equity investments — ( 8,476 ) — ( 8,476 )

Capitalized interest/dividends — 29 — 29

Sale of risk participation agreement — — ( 98 ) ( 98 )

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

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

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 March 31, 2021

$ — $ 8,365 $ 2,050 $ 10,415

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

*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 March 31, 2021

$ ( 1 ) $ — $ — $ ( 1 )

2 unchanged sentences

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

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 September 30, 2021

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

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 September 30, 2021

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

For the three months ended September 30, 2020

For the three months ended March 31, 2022

Total gains or losses included in earnings $ ( 485 ) $ ( 10 ) $ 7,450 $ 6,955

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

Change in unrealized gains or losses relating to assets still held at March 31, 2022

$ 279 $ ( 12 ) $ 7,450 $ 7,717

For the nine months ended September 30, 2020

For the three months ended March 31, 2021

Total gains or losses included in earnings $ ( 1,372 ) $ 365 $ 8,365 $ 7,358

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

Change in unrealized gains or losses relating to assets still held at March 31, 2021

$ 1,855 $ 195 $ 8,365 $ 10,415

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 $ 2.0 million at September 30, 2021, while private equity investments, included in other securities, totaled $ 138.1 million.

ARS are included in state and municipal securities and totaled $ 1.9 million at March 31, 2022, while private equity investments, included in other securities, totaled $ 153.4 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 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.

For assets measured at fair value on a nonrecurring basis during the first three months of 2022 and 2021, and still held as of March 31, 2022 and 2021, 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 March 31, 2022 and 2021.

Fair Value Measurements Using

3 unchanged sentences

Significant Unobservable Inputs

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

September 30, 2021

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

Total Gains (Losses) Recognized During the Three Months Ended March 31

March 31, 2022

Mortgage servicing rights 11,360 — — 11,360 304

Long-lived assets 497 — — 497 ( 965 )

September 30, 2020

March 31, 2021

Collateral dependent loans $ 11,233 $ — $ — $ 11,233 $ ( 2,926 )

1 unchanged sentence

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.

Mortgage servicing rights are included in other assets on the consolidated balance sheet, and information about these inputs is presented in the table below.

Mortgage servicing rights are included in other intangible assets-net on the consolidated balance sheets, and information about these inputs is presented in the table below.

Quantitative Information about Level 3 Fair Value Measurements Weighted

17 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 September 30, 2021 and December 31, 2020:

Carrying Amount Estimated Fair Value at September 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 March 31, 2022 and December 31, 2021:

Carrying Amount Estimated Fair Value at March 31, 2022

(In thousands)

49 unchanged sentences

Investment securities 14,695,628 1,087,873 13,413,558 194,197 14,695,628

Federal funds sold 2,800 2,800 — — 2,800

Securities purchased under agreements to resell 1,625,000 — — 1,623,856 1,623,856

10 unchanged sentences

Securities sold under agreements to repurchase 2,979,582 — — 2,979,677 2,979,677

Other borrowings 12,514 — 12,514 — 12,514

Derivative instruments 12,101 — 11,824 277 12,101

2 unchanged sentences

Legal and Regulatory Proceedings

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

The Company has various legal proceedings pending at March 31, 2022, 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