What changed in this filing

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Item 1. Financial Statements

2022-11-04 compared with 2022-08-05 · 225 added, 200 removed, 1296 unchanged (25% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2022 December 31, 2021

3 unchanged sentences

Net loans 15,755,581 15,026,315

Loans held for sale (including $ 1,036,000 and $ 5,570,000 of residential mortgage loans carried at fair value at June 30, 2022 and December 31, 2021, respectively)

Loans held for sale (including $ 1,426,000 and $ 5,570,000 of residential mortgage loans carried at fair value at September 30, 2022 and December 31, 2021, respectively)

Investment securities:

Available for sale debt, at fair value (amortized cost of $ 14,176,324,000 and $ 14,419,133,000 at

June 30, 2022 and December 31, 2021, respectively, and allowance for credit losses of $ —

at both June 30, 2022 and December 31, 2021)

September 30, 2022 and December 31, 2021, respectively, and allowance for credit losses of $ —

at both September 30, 2022 and December 31, 2021)

12,632,510 14,450,027

26 unchanged sentences

Authorized 140,000,000 ;

issued 122,160,705 shares at June 30, 2022 and December 31, 2021

issued 122,160,705 shares at September 30, 2022 and December 31, 2021

610,804 610,804

1 unchanged sentence

Retained earnings 353,446 92,493

Treasury stock of 1,881,806 shares at June 30, 2022

Treasury stock of 2,553,242 shares at September 30, 2022

and 476,392 shares at December 31, 2021, 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) 2022 2021 2022 2021

20 unchanged sentences

NON-INTEREST INCOME

Bank card transaction fees 43,873 42,608 85,918 80,303

Trust fees 45,406 48,950 140,009 139,334

Bank card transaction fees 45,638 42,815 131,556 123,118

Deposit account charges and other fees 24,521 25,161 72,392 71,724

Capital market fees 3,327 3,327 7,452 8,308

Consumer brokerage services 5,085 4,900 14,599 13,484

Capital market fees 3,393 3,794 10,845 12,102

Loan fees and sales 3,094 6,842 10,575 24,472

4 unchanged sentences

Salaries and employee benefits 137,393 132,824 415,589 392,608

Data processing and software 28,050 25,598 82,701 76,015

Net occupancy 12,544 12,329 37,343 35,877

1 unchanged sentence

Supplies and communication 4,581 4,530 13,655 12,688

Data processing and software 27,635 24,954 54,651 50,417

Marketing 6,228 5,623 18,408 16,461

13 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) 2022 2021 2022 2021

14 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three Months Ended June 30, 2022 and 2021

Three Months Ended September 30, 2022 and 2021

Commerce Bancshares, Inc.

1 unchanged sentence

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

Balance March 31, 2022

Balance June 30, 2022

$ 610,804 $ 2,682,161 $ 262,363 $ ( 129,588 ) $ ( 766,894 ) $ 16,467 $ 2,675,313

9 unchanged sentences

( 31,740 ) ( 31,740 )

Balance June 30, 2022

Balance September 30, 2022

$ 610,804 $ 2,683,631 $ 353,446 $ ( 176,943 ) $ ( 1,119,344 ) $ 19,513 $ 2,371,107

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

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Six Months Ended June 30, 2022 and 2021

Nine Months Ended September 30, 2022 and 2021

Commerce Bancshares, Inc.

11 unchanged sentences

( 95,818 ) ( 95,818 )

Balance June 30, 2022

Balance September 30, 2022

$ 610,804 $ 2,683,631 $ 353,446 $ ( 176,943 ) $ ( 1,119,344 ) $ 19,513 $ 2,371,107

5 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

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30

For the Nine Months Ended September 30

(In thousands) 2022 2021

9 unchanged sentences

Proceeds from sales of loans held for sale 116,421 485,231

Net decrease in trading debt securities, excluding unsettled transactions 870 1,287

Net (increase) decrease in trading debt securities, excluding unsettled transactions 14,080 ( 9,093 )

Purchase of interest rate floor ( 16,849 ) —

Stock-based compensation 12,641 11,588

1 unchanged sentence

Increase (decrease) in interest payable 1,097 ( 3,168 )

Increase (decrease) in income taxes payable ( 1,855 ) 19,095

Increase in income taxes payable 168 19,831

Other changes, net 70,285 20,418

22 unchanged sentences

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

Cash, cash equivalents and restricted cash at June 30

Cash, cash equivalents and restricted cash at September 30

$ 1,009,076 $ 2,251,570

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 $ 5.4 million and $ 20.6 million at June 30, 2022 and 2021, respectively.

This balance is included in other assets in the consolidated balance sheets and totaled $ 7.9 million and $ 18.6 million at September 30, 2022 and 2021, respectively.

Commerce Bancshares, Inc.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited)

September 30, 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 six month period ended June 30, 2022 are not necessarily indicative of results to be attained for the full year or any other interim period.

The results of operations for the nine month period ended September 30, 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 June 30, 2022 and December 31, 2021 are as follows:

Major classifications within the Company’s held for investment loan portfolio at September 30, 2022 and December 31, 2021 are as follows:

(In thousands)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Business $ 5,528,895 $ 5,303,535

8 unchanged sentences

Total loans $ 15,898,958 $ 15,176,359

Accrued interest receivable totaled $ 36.1 million and $ 25.9 million at June 30, 2022 and December 31, 2021, respectively, and was included within other assets on the consolidated balance sheets.

For the three months ended June 30, 2022, the Company wrote-off accrued interest by reversing interest income of $ 26 thousand and $ 762 thousand in the Commercial and Personal Banking portfolios, respectively.

Similarly, for the six months ended June 30, 2022, the Company wrote-off accrued interest of $ 55 thousand and $ 1.7 million in the Commercial and Personal Banking portfolios, respectively.

At June 30, 2022, loans of $ 3.1 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 $ 46.2 million and $ 25.9 million at September 30, 2022 and December 31, 2021, respectively, and was included within other assets on the consolidated balance sheets.

For the three months ended September 30, 2022, the Company wrote-off accrued interest by reversing interest income of $ 48 thousand and $ 699 thousand in the Commercial and Personal Banking portfolios, respectively.

Similarly, for the nine months ended September 30, 2022, the Company wrote-off accrued interest of $ 103 thousand and $ 2.4 million in the Commercial and Personal Banking portfolios, respectively.

At September 30, 2022, loans of $ 3.1 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 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 June 30, 2022 and March 31, 2022 are discussed below.

Key Assumption June 30, 2022 March 31, 2022

Overall economic forecast • Positive economic momentum faced with continued COVID challenges, supply constraints and high inflation

The assumptions utilized in estimating the Company’s allowance for credit losses at September 30, 2022 and June 30, 2022 are discussed below.

Key Assumption September 30, 2022 June 30, 2022

Overall economic forecast • High inflation, rising interest rates, supply chain difficulties and a weaker job market create an expectation of a mild recession in 2023

• Continued monetary policy tightening to rein in inflation

• Positive economic momentum faced with continued COVID challenges, supply constraints and high inflation

• Continued monetary policy tightening to rein in inflation

• Uncertainties related to supply chain issues and the timing and likelihood of a recession

• 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

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

5 unchanged sentences

• Prime rate from 6.6% to 7.0%

• BBB corporate yield from 5.03% to 5.7%

• Unemployment rate ranging from 3.5% to 3.7% during the supportable forecast period

25 unchanged sentences

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

The current forecast projects a continued positive economic momentum faced with pandemic complications, high inflation, supply chain constraints, and uncertainty related to the Russian invasion of Ukraine.

The current forecast projects a mild recession in 2023 due to high inflation, rising interest rates, supply chain difficulties and a weaker job market.

The Russian invasion of Ukraine created additional uncertainty as the world responds to the economic impact.

The geopolitical environment, trends in health conditions and impacted supply constraints could significantly modify economic projections used in the estimation of the allowance for credit losses and liability for unfunded lending commitments.

A summary of the activity in the allowance for credit losses on loans and the liability for unfunded lending commitments during the six months ended June 30, 2022 and 2021, respectively, follows:

For the Three Months Ended June 30, 2022

For the Six Months Ended June 30, 2022

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, 2022 and 2021, respectively, follows:

For the Three Months Ended September 30, 2022

For the Nine Months Ended September 30, 2022

(In thousands) Commercial Personal Banking

5 unchanged sentences

Less recoveries on loans 56 2,362 2,418 352 7,662 8,014

Net loan charge-offs (recoveries) 18 3,940 3,958 88 8,518 8,606

Balance June 30, 2022 $ 99,525 $ 38,514 $ 138,039 $ 99,525 $ 38,514 $ 138,039

Net loan charge-offs 453 4,359 4,812 541 12,877 13,418

Balance September 30, 2022 $ 103,086 $ 40,291 $ 143,377 $ 103,086 $ 40,291 $ 143,377

LIABILITY FOR UNFUNDED LENDING COMMITMENTS

1 unchanged sentence

Provision for credit losses on unfunded lending commitments 5,182 ( 42 ) 5,140 5,528 315 5,843

Balance June 30, 2022 $ 23,617 $ 1,290 $ 24,907 $ 23,617 $ 1,290 $ 24,907

Balance September 30, 2022 $ 28,799 $ 1,248 $ 30,047 $ 28,799 $ 1,248 $ 30,047

ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS $ 131,885 $ 41,539 $ 173,424 $ 131,885 $ 41,539 $ 173,424

For the Three Months Ended June 30, 2021

For the Six Months Ended June 30, 2021

For the Three Months Ended September 30, 2021

For the Nine Months Ended September 30, 2021

(In thousands) Commercial Personal Banking

5 unchanged sentences

Less recoveries on loans 130 2,788 2,918 5,609 8,467 14,076

Net loan charge-offs ( 4,994 ) 5,693 699 ( 4,977 ) 15,628 10,651

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

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

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

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, 2022 and December 31, 2021.

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, 2022 and December 31, 2021.

(In thousands)

2 unchanged sentences

90 Days Past Due and Still Accruing Non-accrual

June 30, 2022

September 30, 2022

Business $ 5,513,234 $ 9,480 $ 536 $ 5,645 $ 5,528,895

19 unchanged sentences

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

At June 30, 2022, the Company had $ 4.5 million in non-accrual business loans that had no allowance for credit loss.

At September 30, 2022, the Company had $ 4.1 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 six months ended June 30, 2022 and 2021, respectively.

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

The risk category of loans in the Commercial portfolio as of September 30, 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

June 30, 2022

September 30, 2022

Pass $ 1,167,741 $ 902,680 $ 519,179 $ 396,052 $ 188,319 $ 255,455 $ 2,041,998 $ 5,471,424

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 June 30, 2022 and December 31, 2021 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, 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

June 30, 2022

September 30, 2022

Real estate-personal

63 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, 2022 and December 31, 2021.

The following table presents the amortized cost basis of collateral-dependent loans as of September 30, 2022 and December 31, 2021.

(In thousands) Business Assets Oil & Gas Assets Total

June 30, 2022

September 30, 2022

Business $ 1,156 $ 1,966 $ 3,122

7 unchanged sentences

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 June 30, 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 $ 186.6 million at June 30, 2022 and $ 186.6 million at December 31, 2021.

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 $ 186.8 million at September 30, 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 $ 197.7 million at September 30, 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 June 30, 2022 and December 31, 2021 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, 2022 and December 31, 2021 by FICO score.

Personal Banking Loans

1 unchanged sentence

Real Estate - Personal Consumer Revolving Home Equity Consumer Credit Card

June 30, 2022

September 30, 2022

Under 600 1.3 % 1.8 % 1.5 % 3.6 %

21 unchanged sentences

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

(In thousands) June 30, 2022 December 31, 2021

(In thousands) September 30, 2022 December 31, 2021

Accruing restructured loans:

8 unchanged sentences

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.

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 June 30, 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.

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

(In thousands) September 30, 2022 Balance 90 days past due at any time during previous 12 months

Business $ 10,958 $ —

18 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 $ 15.2 million at June 30, 2022 to lend additional funds to borrowers with restructured loans.

Additionally, the Company had commitments at June 30, 2022 of $ 24.0 million related to letters of credit with an internal risk rating below substandard.

The Company had commitments of $ 22.0 million at September 30, 2022 to lend additional funds to borrowers with restructured loans.

Additionally, the Company had commitments at September 30, 2022 of $ 24.0 million related to letters of credit with an internal risk rating below substandard.

Loans held for sale

The Company designates certain long-term fixed rate personal real estate loans as held for sale, and the Company has elected the fair value option for these loans.

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 June 30, 2022, the fair value of these loans was $ 1.0 million, and the unpaid principal balance was $ 1.0 million.

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, 2022, the fair value of these loans was $ 1.4 million, and the unpaid principal balance was $ 1.5 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, 2022 totaled $ 5.4 million.

At June 30, 2022, none of the loans held for sale were on non-accrual status or 90 days past due and still accruing interest.

These loans are carried at lower of cost or fair value, which at September 30, 2022 totaled $ 6.6 million.

At September 30, 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 $ 296 thousand and $ 115 thousand at June 30, 2022 and December 31, 2021, respectively.

Personal property acquired in repossession, generally autos, totaled $ 1.1 million at both June 30, 2022 and December 31, 2021.

The Company’s holdings of foreclosed real estate totaled $ 354 thousand and $ 115 thousand at September 30, 2022 and December 31, 2021, respectively.

Personal property acquired in repossession, generally autos, totaled $ 1.7 million and $ 1.1 million at September 30, 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 June 30, 2022 and December 31, 2021.

(In thousands) June 30, 2022 December 31, 2021

Investment securities consisted of the following at September 30, 2022 and December 31, 2021.

(In thousands) September 30, 2022 December 31, 2021

Available for sale debt securities $ 12,632,510 $ 14,450,027

9 unchanged sentences

$ 12,903,428 $ 14,699,511

(1) Accrued interest receivable totaled $ 41.5 million and $ 39.5 million at June 30, 2022 and December 31, 2021, respectively, and was included within other assets on the consolidated balance sheets.

(1) Accrued interest receivable totaled $ 39.6 million and $ 39.5 million at September 30, 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 six months ended June 30, 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.

During the nine months ended September 30, 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.

5 unchanged sentences

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 June 30, 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.

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, 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.

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.

29 unchanged sentences

government and federal agency obligations include U.S.

Treasury inflation-protected securities, which totaled $ 383.7 million, at fair value, at June 30, 2022.

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

Treasury inflation-protected securities, which totaled $ 368.7 million, at fair value, at September 30, 2022.

Interest paid on these securities increases with inflation and decreases with deflation, as measured by the non-seasonally adjusted Consumer Price Index (CPI-U).

At maturity, the principal paid is the greater of an inflation-adjusted principal or the original principal.

Allowance for credit losses on 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.

Securities for which fair value is less than amortized cost are reviewed for impairment.

1 unchanged sentence

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, 2022, the fair value of securities on this watch list was $ 106.4 million compared to $ 13.4 million at December 31, 2021.

Significant inputs to the cash flow model used at June 30, 2022 to quantify credit losses were primarily credit support agreements, as the securities on the Company's watch list at June 30, 2022 were securities backed by government-guaranteed student loans and are expected to perform as contractually required.

As of June 30, 2022, the Company did not identify any securities for which a credit loss exists, and for the six months ended June 30, 2022 and 2021, the Company did not recognize a credit loss expense on any available for sale debt securities.

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, 2022 and December 31, 2021.

Certain securities are analyzed using a projected cash flow model, discounted to present value, and compared to the current amortized cost bases of the securities.

The model uses 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.

Securities not analyzed using the cash flow model are analyzed by reviewing risk ratings, credit support agreements, and industry knowledge to project future cash flows and any possible credit impairment.

At September 30, 2022, the fair value of securities on this watch list was $ 1.3 billion compared to $ 13.4 million at December 31, 2021.

The majority of the securities included on the Company's watch list in the current quarter were experiencing unrealized loss positions due to the significant increase in interest rates and were analyzed outside of the cash flow model.

At September 30, 2022, the securities on the Company's watch list that were not deemed to be solely related to increasing interest rates were securities backed by government-guaranteed student loans and are expected to perform as contractually required.

As of September 30, 2022, the Company did not identify any securities for which a credit loss exists,

and for the nine months ended September 30, 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

June 30, 2022

September 30, 2022

government and federal agency obligations $ 695,272 $ 33,081 $ 283,593 $ 15,579 $ 978,865 $ 48,660

19 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 $ 12.4 billion of securities that were in a loss position at June 30, 2022, compared to $ 9.0 billion at December 31, 2021.

The total amount of unrealized loss on these securities was $ 1.1 billion at June 30, 2022, an increase of $ 959.2 million compared to the unrealized loss at December 31, 2021.

The entire available for sale debt portfolio included $ 12.5 billion of securities that were in a loss position at September 30, 2022, compared to $ 9.0 billion at December 31, 2021.

The total amount of unrealized loss on these securities was $ 1.5 billion at September 30, 2022, an increase of $ 1.4 billion 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 table shows the amortized cost, fair value, and allowance for credit losses of securities available for sale at June 30, 2022 and December 31, 2021, 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 September 30, 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

June 30, 2022

September 30, 2022

government and federal agency obligations $ 1,084,984 $ 1 $ ( 48,660 ) $ — $ 1,036,325

20 unchanged sentences

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 Six Months Ended June 30

For the Nine Months Ended September 30

(In thousands) 2022 2021

9 unchanged sentences

Fair value adjustments, net

( 1,048 ) 152

Gains realized on sales

2 unchanged sentences

Total investment securities gains, net $ 11,602 $ 39,765

Net gains on investment securities for the six months ended June 30, 2022 were mainly comprised of losses of $ 9.6 million on sales of available for sale securities, net losses of $ 4.3 million on sales of private equity investments, and net losses in fair value of $ 1.0 million on equity investments, offset by net gains in fair value of $ 23.1 million on private equity investments, due to fair value adjustments.

At June 30, 2022, securities totaling $ 5.3 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.

Net gains on investment securities for the nine months ended September 30, 2022 were mainly comprised of losses of $ 20.3 million on sales of available for sale securities, net losses of $ 4.3 million on sales of private equity investments, and net losses in fair value of $ 1.0 million on equity investments, offset by net gains in fair value of $ 37.1 million on private equity investments, due to fair value adjustments.

At September 30, 2022, securities totaling $ 4.8 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 $ 208.3 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.

Except for obligations of the U.S.

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

Goodwill and Other Intangible Assets

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(In thousands)

4 unchanged sentences

Total $ 53,431 $ ( 41,432 ) $ — $ 11,999 $ 52,140 $ ( 39,866 ) $ ( 304 ) $ 11,970

Aggregate amortization expense on intangible assets was $ 501 thousand and $ 745 thousand for the three month periods ended June 30, 2022 and 2021, respectively, and $ 1.1 million and $ 1.7 million for the six month periods ended June 30, 2022 and 2021, respectively.

Aggregate amortization expense on intangible assets was $ 456 thousand and $ 682 thousand for the three month periods ended September 30, 2022 and 2021, respectively, and $ 1.6 million and $ 2.4 million for the nine month periods ended September 30, 2022 and 2021, 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, 2022.

This expense is based on existing asset balances and the interest rate environment as of September 30, 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 six month period ended June 30, 2022 are as follows:

Changes in the carrying amount of goodwill and other intangible assets for the nine month period ended September 30, 2022 are as follows:

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

4 unchanged sentences

Impairment recovery — — — 304

Balance June 30, 2022 $ 138,921 $ 3,600 $ 846 $ 11,407

Goodwill allocated to the Company’s operating segments at June 30, 2022 and December 31, 2021 is shown below.

Balance September 30, 2022 $ 138,921 $ 3,600 $ 771 $ 11,228

Goodwill allocated to the Company’s operating segments at September 30, 2022 and December 31, 2021 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, 2022, that net liability was $ 4.0 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 $ 504.0 million at June 30, 2022.

At September 30, 2022, that net liability was $ 3.6 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 $ 516.2 million at September 30, 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 June 30, 2022, believes sufficient collateral is available to cover potential swap losses.

The Company monitors overall borrower collateral and at September 30, 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 June 30, 2022, the fair value of the Company's guarantee liabilities for RPAs was $ 162 thousand, and the notional amount of the underlying swaps was $ 366.2 million.

At September 30, 2022, the fair value of the Company's guarantee liabilities for RPAs was $ 94 thousand, and the notional amount of the underlying swaps was $ 376.4 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 3 months to 5 years.

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 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) 2022 2021 2022 2021

3 unchanged sentences

Total lease income $ 7,652 $ 7,199 $ 22,355 $ 23,119

(a) Includes rent from Tower Properties Company, a related party, of $ 19 thousand for the three month periods ended June 30, 2022 and 2021, and $ 38 thousand for the six months ended June 30, 2022 and 2021 .

(a) Includes rent from Tower Properties Company, a related party, of $ 19 thousand for the three month periods ended September 30, 2022 and 2021, and $ 57 thousand for the nine months ended September 30, 2022 and 2021 .

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) 2022 2021 2022 2021

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 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.

During the first nine 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 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) 2022 2021 2022 2021

15 unchanged sentences

Diluted income per common share $ 1.02 $ .99 $ 2.95 $ 3.37

Unexercised stock appreciation rights of 168 thousand and 76 thousand for the three month periods ended June 30, 2022 and 2021, respectively, and 144 thousand and 53 thousand for the six month periods ended June 30, 2022 and 2021, 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 167 thousand and 99 thousand for the three month periods ended September 30, 2022 and 2021, respectively, and 152 thousand and 61 thousand for the nine month periods ended September 30, 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.

11 unchanged sentences

Current period other comprehensive income (loss), net of tax ( 1,181,031 ) 947 ( 16,340 ) ( 1,196,424 )

Balance June 30, 2022

Balance September 30, 2022

$ ( 1,157,857 ) $ ( 19,721 ) $ 58,234 $ ( 1,119,344 )

6 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

16 unchanged sentences

Consumer Commercial Wealth Segment Totals Other/Elimination Consolidated Totals

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Net interest income $ 86,232 $ 114,087 $ 18,637 $ 218,956 $ 27,417 $ 246,373

4 unchanged sentences

Income before income taxes $ 35,359 $ 79,324 $ 36,310 $ 150,993 $ 9,130 $ 160,123

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Net interest income $ 249,761 $ 333,263 $ 56,731 $ 639,755 $ 47,789 $ 687,544

4 unchanged sentences

Income before income taxes $ 101,344 $ 227,969 $ 108,817 $ 438,130 $ 26,095 $ 464,225

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Net interest income $ 80,411 $ 115,529 $ 18,075 $ 214,015 $ 22 $ 214,037

4 unchanged sentences

Income before income taxes $ 36,616 $ 82,951 $ 39,040 $ 158,607 $ 1,809 $ 160,416

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Net interest income $ 239,157 $ 340,279 $ 53,186 $ 632,622 $ ( 4,855 ) $ 627,767

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, 2022, 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, 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)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Interest rate swaps $ 1,980,368 $ 2,229,419

Interest rate floors 500,000 —

Interest rate caps 152,784 152,058

13 unchanged sentences

The Company maintains debt ratings and capital well above these minimum requirements.

During the third quarter of 2022, the Company entered into an interest rate floor contract of $ 500.0 million to hedge the risk of declining interest rates on certain floating rate commercial loans.

The premium paid for this floor totaled $ 16.8 million and is forward starting beginning on January 1, 2024 .

The interest rate floor matures on January 1, 2030 .

The interest rate floor qualified and was designated as a cash flow hedge and was assessed for effectiveness using regression analysis.

The change in the fair value of the interest rate floor is recorded in AOCI, net of the amortization of the premium paid, which is recorded against fees on loans in the consolidated statements of income.

As of September 30, 2022, net deferred losses on the interest rate floor totaled $ 3.5 million (pre-tax) and was recorded in AOCI in the consolidated balance sheet.

As of September 30, 2022, over the next twelve months, it is expected that $ 2.3 million (pre-tax), representing the floor premium amortization, will be reclassified from AOCI into earnings.

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.

As of June 30, 2022, the total realized gains on the monetized cash flow hedges remaining in AOCI was $ 87.2 million (pre-tax), which will be reclassified into interest income over the next 4.5 years.

The estimated amount of net gains related to the cash flow hedges remaining in AOCI at June 30, 2022 that is expected to be reclassified into income within the next 12 months is $ 24.2 million.

As of September 30, 2022, the total realized gains on the monetized cash flow hedges remaining in AOCI was $ 81.0 million (pre-tax), which will be reclassified into interest income over the next 4.2 years.

The estimated amount of net gains related to the cash flow hedges remaining in AOCI at September 30, 2022 that is expected to be reclassified into income within the next 12 months is $ 23.9 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 June 30, 2022 in the table below, the positive fair values of cleared swaps were reduced by $ 16.3 million and the negative fair values of cleared swaps were reduced by $ 929 thousand.

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, 2022 in the table below, the positive fair values of cleared swaps were reduced by $ 30.7 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

June 30, 2022 Dec.

31, 2021 June 30, 2022 Dec.

30, 2022 Dec.

31, 2021 Sept.

30, 2022 Dec.

(In thousands )

Fair Value Fair Value

Derivative instruments:

Derivatives designated as hedging instruments:

Interest rate floors $ 13,385 $ — $ — $ —

Total derivatives designated as hedging instruments $ 13,385 $ — $ — $ —

Derivative instruments not designated as hedging instruments:

Interest rate swaps $ 22,256 $ 40,752 $ ( 52,989 ) $ ( 11,606 )

5 unchanged sentences

Forward TBA contracts 58 13 — ( 25 )

Total derivatives not designated as hedging instruments $ 25,075 $ 41,842 $ ( 55,768 ) $ ( 12,101 )

Total $ 38,460 $ 41,842 $ ( 55,768 ) $ ( 12,101 )

3 unchanged sentences

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

For the Three Months Ended June 30, 2022

For the Three Months Ended September 30, 2022

Derivatives in cash flow hedging relationships:

1 unchanged sentence

Total $ ( 3,464 ) $ — $ ( 3,464 ) Total $ ( 6,118 ) $ ( 7,745 ) $ 1,627

For the Six Months Ended June 30, 2022

For the Nine Months Ended September 30, 2022

Derivatives in cash flow hedging relationships:

1 unchanged sentence

Total $ ( 3,464 ) $ — $ ( 3,464 ) Total $ ( 18,322 ) $ ( 22,998 ) $ 4,676

For the Three Months Ended June 30, 2021

For the Three Months Ended September 30, 2021

Derivatives in cash flow hedging relationships:

1 unchanged sentence

Total $ — $ — $ — Total $ ( 6,141 ) $ ( 7,691 ) $ 1,550

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2021

Derivatives in cash flow hedging relationships:

2 unchanged sentences

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 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) 2022 2021 2022 2021

16 unchanged sentences

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

By contract, these may be sold or re-pledged by the secured party until recalled at a subsequent valuation date by the pledging party.

By contract, these may be sold or re-pledged by the secured party until recalled at a

subsequent valuation date by the pledging party.

For those swap transactions requiring central clearing, the Company posts cash or securities to its clearing agent.

4 unchanged sentences

Pledged Net Amount

June 30, 2022

September 30, 2022

Derivatives subject to master netting agreements

26 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, 2022 and $ 400.0 million at December 31, 2021.

The collateral swaps totaled $ 200.0 million at September 30, 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.

4 unchanged sentences

(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 Unsecured Amount

June 30, 2022

September 30, 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 June 30, 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.

The table below shows the remaining contractual maturities of repurchase agreements outstanding at September 30, 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

June 30, 2022

September 30, 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 charged against income was $ 4.2 million and $ 3.8 million in the three months ended June 30, 2022 and 2021, respectively, and $ 8.4 million and $ 7.7 million in the six months ended June 30, 2022 and 2021, respectively.

The stock-based compensation expense charged against income was $ 4.2 million and $ 3.9 million in the three months ended September 30, 2022 and 2021, respectively, and $ 12.6 million and $ 11.6 million in the nine months ended September 30, 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 June 30, 2022, 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, 2022, and changes during the nine month period then ended, is presented below.

Shares Weighted Average Grant Date Fair Value

3 unchanged sentences

Forfeited ( 23,145 ) 60.08

Nonvested at June 30, 2022 1,090,738 $ 60.62

Nonvested at September 30, 2022 1,098,264 $ 61.00

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 2022 is presented below.

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

(Dollars in thousands, except per share data)

7 unchanged sentences

Exercised ( 66,608 ) 40.54

Outstanding at June 30, 2022

Outstanding at September 30, 2022

915,573 $ 49.02 5.5 years $ 16,367

1 unchanged sentence

ASC 606 "Revenue from Contracts with Customers" requires revenue recognition for 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, 2022, approximately 62 % 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, 2022, approximately 63 % 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 ASC 606 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) 2022 2021 2022 2021

12 unchanged sentences

All trust fees and nearly all 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, 2022 and 2021 for the Company’s significant revenue categories subject to ASC 606.

(In thousands) June 30, 2022 December 31, 2021 June 30, 2021 December 31, 2020

The following table presents the opening and closing receivable balances for the nine month periods ended September 30, 2022 and 2021 for the Company’s significant revenue categories subject to ASC 606.

(In thousands) September 30, 2022 December 31, 2021 September 30, 2021 December 31, 2020

Bank card transaction fees $ 14,167 $ 16,424 $ 13,349 $ 14,199

20 unchanged sentences

Instruments Measured at Fair Value on a Recurring Basis

The table below presents the June 30, 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 six months of 2022 or the year ended December 31, 2021.

The table below presents the September 30, 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 nine months of 2022 or the year ended December 31, 2021.

Fair Value Measurements Using

2 unchanged sentences

(Level 2) Significant Unobservable Inputs

June 30, 2022

September 30, 2022

Residential mortgage loans held for sale $ 1,426 $ — $ 1,426 $ —

46 unchanged sentences

Derivatives Total

For the three months ended June 30, 2022

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

For the three months ended September 30, 2022

Balance June 30, 2022 $ 1,816 $ 161,771 $ 154 $ 163,741

Total gains or losses (realized/unrealized):

4 unchanged sentences

Sale/pay down of private equity investments — ( 423 ) — ( 423 )

Purchase of risk participation agreement — — 314 314

Capitalized interest/dividends — 44 — 44

Sale of risk participation agreements — — ( 104 ) ( 104 )

Balance June 30, 2022 $ 1,816 $ 161,771 $ 154 $ 163,741

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, 2022

Balance September 30, 2022 $ 1,858 $ 176,341 $ ( 58 ) $ 178,141

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, 2022

$ — $ 14,050 $ 122 $ 14,172

*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, 2022

*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, 2022

$ 40 $ — $ — $ 40

For the six months ended June 30, 2022

For the nine months ended September 30, 2022

Balance January 1, 2022

6 unchanged sentences

Sale/pay down of private equity investments — ( 10,263 ) — ( 10,263 )

Capitalized interest/dividends — 44 — 44

Purchase of risk participation agreement — — 459 459

Sale of risk participation agreement — — ( 354 ) ( 354 )

Balance June 30, 2022 $ 1,816 $ 161,771 $ 154 $ 163,741

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, 2022

Balance September 30, 2022 $ 1,858 $ 176,341 $ ( 58 ) $ 178,141

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, 2022

$ — $ 37,083 $ 28 $ 37,111

*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, 2022

*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, 2022

$ ( 130 ) $ — $ — $ ( 130 )

4 unchanged sentences

Derivatives Total

For the three months ended June 30, 2021

Balance March 31, 2021

For the three months ended September 30, 2021

Balance June 30, 2021

$ 7,991 $ 116,246 $ 1,629 $ 125,866

2 unchanged sentences

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 agreement — — ( 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

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, 2022

For the three months ended September 30, 2022

Total gains or losses included in earnings $ ( 230 ) $ 122 $ 14,050 $ 13,942

Change in unrealized gains or losses relating to assets still held at June 30, 2022

Change in unrealized gains or losses relating to assets still held at September 30, 2022

$ — $ 122 $ 14,050 $ 14,172

For the six months ended June 30, 2022

For the nine months ended September 30, 2022

Total gains or losses included in earnings $ ( 764 ) $ 30 $ 37,133 $ 36,399

Change in unrealized gains or losses relating to assets still held at June 30, 2022

Change in unrealized gains or losses relating to assets still held at September 30, 2022

$ — $ 28 $ 37,083 $ 37,111

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

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 $ 1.8 million at June 30, 2022, while private equity investments, included in other securities, totaled $ 161.8 million.

ARS are included in state and municipal securities and totaled $ 1.9 million at September 30, 2022, while private equity investments, included in other securities, totaled $ 176.3 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 2022 and 2021, and still held as of June 30, 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 June 30, 2022 and 2021.

For assets measured at fair value on a nonrecurring basis during the first nine months of 2022 and 2021, and still held as of September 30, 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 September 30, 2022 and 2021.

Fair Value Measurements Using

3 unchanged sentences

Significant Unobservable Inputs

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

June 30, 2022

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

September 30, 2022

Collateral dependent loans $ 200 $ — $ — $ 200 $ ( 394 )

Mortgage servicing rights 11,228 — — 11,228 304

Long-lived assets 480 — — 480 ( 965 )

June 30, 2021

September 30, 2021

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

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

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 intangible assets-net on the consolidated balance sheets, and information about these inputs at June 30, 2022 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 at September 30, 2022 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 June 30, 2022 and December 31, 2021:

Carrying Amount Estimated Fair Value at June 30, 2022

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, 2022 and December 31, 2021:

Carrying Amount Estimated Fair Value at September 30, 2022

(In thousands)

68 unchanged sentences

Legal and Regulatory Proceedings

The Company has various legal proceedings pending at June 30, 2022, arising in the normal course of business.

The Company has various legal proceedings pending at September 30, 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