What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-04 compared with 2022-11-04 · 358 added, 351 removed, 1170 unchanged (38% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2023 December 31, 2022

3 unchanged sentences

Net loans 16,376,205 16,152,995

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)

Loans held for sale (including $ 684,000 and $ — of residential mortgage loans carried at fair value at March 31, 2023 and December 31, 2022, respectively)

Investment securities:

Available for sale debt, at fair value (amortized cost of $ 12,538,550,000 and $ 13,738,206,000 at

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

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

March 31, 2023 and December 31, 2022, respectively, and allowance for credit losses of $ —

at both March 31, 2023 and December 31, 2022)

11,228,616 12,238,316

26 unchanged sentences

Authorized 140,000,000 ;

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

issued 125,863,879 shares at March 31, 2023 and December 31, 2022

629,319 629,319

1 unchanged sentence

Retained earnings 117,313 31,620

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

Treasury stock of 883,736 shares at March 31, 2023

and 605,142 shares at December 31, 2022, at cost

( 59,670 ) ( 41,743 )

Accumulated other comprehensive income ( 1,119,344 ) 77,080

Accumulated other comprehensive income (loss) ( 940,498 ) ( 1,086,864 )

Total Commerce Bancshares, Inc.

7 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) 2023 2022

12 unchanged sentences

Certificates of deposit of $100,000 and over 6,627 427

Interest on federal funds purchased and securities sold under

agreements to repurchase 7,891 480 11,506 1,112

Interest on federal funds purchased 5,586 7

Interest on securities sold under agreements to repurchase 17,495 682

Interest on other borrowings 5,950 ( 19 )

12 unchanged sentences

Total non-interest income 137,612 131,769

INVESTMENT SECURITIES GAINS, NET 3,410 13,108 11,602 39,765

INVESTMENT SECURITIES GAINS (LOSSES), NET ( 306 ) 7,163

NON-INTEREST EXPENSE

10 unchanged sentences

Net income 120,553 120,026

Less non-controlling interest expense 3,364 3,193 9,595 9,373

Less non-controlling interest expense (income) 1,101 1,872

Net income attributable to Commerce Bancshares, Inc.

6 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) 2023 2022

1 unchanged sentence

Other comprehensive income (loss):

Net unrealized losses on available for sale debt securities ( 345,565 ) ( 57,068 ) ( 1,181,031 ) ( 160,019 )

Pension loss amortization

302 451 947 1,326

Unrealized losses on cash flow hedge derivatives ( 7,187 ) ( 4,607 ) ( 16,340 ) ( 13,518 )

Net unrealized gains (losses) on available for sale debt securities 142,466 ( 507,265 )

Change in pension loss 270 323

Unrealized gains (losses) on cash flow hedge derivatives 3,630 ( 4,538 )

Other comprehensive income (loss) 146,366 ( 511,480 )

Comprehensive income (loss) 266,919 ( 391,454 )

Less non-controlling interest expense 3,364 3,193 9,595 9,373

Less non-controlling interest (income) expense 1,101 1,872

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

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three Months Ended September 30, 2022 and 2021

Commerce Bancshares, Inc.

(In thousands, except per share data)

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

Balance June 30, 2022

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

Net income 122,823 3,364 126,187

Other comprehensive loss ( 352,450 ) ( 352,450 )

Distributions to non-controlling interest ( 318 ) ( 318 )

Purchases of treasury stock ( 50,116 ) ( 50,116 )

Issuance of stock under purchase and equity

compensation plans ( 2,762 ) 2,761 ( 1 )

Stock-based compensation 4,232 4,232

Cash dividends paid on common stock

($ 0.265 per share)

( 31,740 ) ( 31,740 )

Balance September 30, 2022

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

Balance June 30, 2021

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

Net Income 122,561 3,193 125,754

Other comprehensive loss ( 61,224 ) ( 61,224 )

Distributions to non-controlling interest ( 193 ) ( 193 )

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

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

Issuance of stock under purchase and equity

compensation plans ( 1,137 ) 1,136 ( 1 )

Stock-based compensation 3,865 3,865

Cash dividends paid on common stock

($ .250 per share)

( 30,645 ) ( 30,645 )

Balance September 30, 2021

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

See accompanying notes to consolidated financial statements.

Commerce Bancshares, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Nine Months Ended September 30, 2022 and 2021

Three Months Ended March 31, 2023 and 2022

Commerce Bancshares, Inc.

4 unchanged sentences

Net income 119,452 1,101 120,553

Other comprehensive loss ( 1,196,424 ) ( 1,196,424 )

Other comprehensive income (loss) 146,366 146,366

Distributions to non-controlling interest ( 453 ) ( 453 )

Purchases of treasury stock ( 36,245 ) ( 36,245 )

Issuance of stock under purchase and equity compensation plans ( 18,904 ) 19,351 447

Sale of non-controlling interest of subsidiary 46 ( 46 ) —

Issuance under stock purchase and equity compensation plans ( 18,318 ) 18,318 —

Stock-based compensation 4,373 4,373

Cash dividends on common stock ($ .795 per share)

Cash dividends paid on common stock ($ .270 per share)

( 33,759 ) ( 33,759 )

Balance September 30, 2022

Balance March 31, 2023

$ 629,319 $ 2,919,060 $ 117,313 $ ( 59,670 ) $ ( 940,498 ) $ 16,888 $ 2,682,412

2 unchanged sentences

Net income 118,154 1,872 120,026

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

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

Distributions to non-controlling interest ( 136 ) ( 136 )

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

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

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

Issuance under stock purchase and equity compensation plans ( 16,087 ) 16,535 448

Stock-based compensation 4,218 4,218

Cash dividends on common stock ($ .750 per share)

Cash dividends paid on common stock ($ .252 per share)

( 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

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30

For the Three Months Ended March 31

(In thousands) 2023 2022

5 unchanged sentences

Amortization of investment security premiums, net 7,654 4,932

Investment securities gains, net (A) ( 11,602 ) ( 39,765 )

Net gains on sales of loans held for sale ( 2,607 ) ( 18,849 )

Investment securities (gains) losses, net (A) 306 ( 7,163 )

Net (gains) losses on sales of loans held for sale ( 137 ) ( 1,302 )

Originations of loans held for sale ( 9,931 ) ( 57,580 )

5 unchanged sentences

Increase (decrease) in interest payable 10,025 273

Increase in income taxes payable 168 19,831

Increase (decrease) in income taxes payable 26,970 28,657

Other changes, net ( 60,270 ) ( 29,115 )

7 unchanged sentences

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

Repayments of securities purchased under agreements to resell 550,000 —

Purchases of premises and equipment ( 20,044 ) ( 15,597 )

Sales of premises and equipment 6 175

Net cash used in investing activities ( 247,162 ) ( 1,628,830 )

Net cash provided by (used in) investing activities 888,237 ( 1,507,684 )

FINANCING ACTIVITIES:

Net increase (decrease) in non-interest bearing, savings, interest checking and money market deposits ( 2,137,278 ) ( 208,358 )

Net decrease in certificates of deposit ( 454,376 ) ( 228,916 )

Net increase (decrease) in certificates of deposit 584,382 ( 303,277 )

Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase ( 57,175 ) ( 705,506 )

3 unchanged sentences

Cash dividends paid on common stock ( 33,759 ) ( 32,143 )

Net cash provided by (used in) financing activities ( 3,510,501 ) 1,185,947

Net cash used in financing activities ( 181,971 ) ( 1,308,194 )

Increase (decrease) in cash, cash equivalents and restricted cash 822,323 ( 2,691,364 )

Cash, cash equivalents and restricted cash at beginning of year 897,801 4,296,954

Cash, cash equivalents and restricted cash at September 30

Cash, cash equivalents and restricted cash at March 31

$ 1,720,124 $ 1,605,590

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 $ 7.9 million and $ 18.6 million at September 30, 2022 and 2021, respectively.

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

The Company had no restricted cash at March 31, 2023.

Commerce Bancshares, Inc.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited)

March 31, 2023 (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 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 results of operations for the three months ended March 31, 2023 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.

Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company's most recent Annual Report on Form 10-K, containing the latest audited consolidated financial statements and notes thereto.

The Company adopted ASU 2022-02 Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures on January 1, 2023, using the prospective transition method.

This ASU eliminates the troubled debt restructuring recognition and measurement guidance and requires an entity to present gross write-offs by year of origination.

The amendments also enhance disclosure requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

With the exception of enhanced disclosures, there was no material impact to the consolidated financial statements from adoption of this ASU.

As of the Company's adoption date, all restructurings are evaluated to determine whether they are modifications to a borrower experiencing financial difficulty.

Loans that were accounted for under the troubled debt restructuring method as of December 31, 2022 will continue to be accounted for under that method until they are paid off or modified.

The following significant accounting policies have been updated since the Company's 2022 Annual Report on Form 10-K to reflect the adoption of ASU 2022-02.

Troubled Debt Restructurings

Prior to the Company's adoption of ASU 2022-02, a loan was accounted for as a troubled debt restructuring if the Company, for economic or legal reasons related to the borrower's financial difficulties, granted a concession to the borrower that it would not otherwise consider.

A troubled debt restructuring typically involves (1) modification of terms such as a reduction of the stated interest rate, loan principal, or accrued interest, (2) a loan renewal at a stated interest rate lower than the current market rate for a new loan with similar risk, or (3) debt that was not reaffirmed in bankruptcy.

Business, business real estate, construction and land real estate and personal real estate troubled debt restructurings with impairment charges are placed on non-accrual status.

The Company measures the impairment loss of a troubled debt restructuring at the time of modification based on the present value of expected future cash flows.

Subsequent to modification, troubled debt restructurings are subject to the Company’s allowance for credit loss model, which is discussed below and in Note 2, Loans and Allowance for Credit Losses.

Troubled debt restructurings that are performing under their contractual terms continue to accrue interest, which is recognized in current earnings.

Loans that were accounted as troubled debt restructurings at of December 31, 2022 will continue to be accounted for under that method until they are either paid off or modified.

Modifications for Borrowers Experiencing Financial Difficulty

The Company may renegotiate the terms of existing loans for a variety of reasons.

When refinancing or restructuring a loan, the Company evaluates where the borrower is experiencing financial difficulty.

In making this determination, the Company considers whether the borrower is currently in default on any of its debt.

In addition, the Company evaluates whether it is probable that the borrower would be in payment default on any of its debt in the foreseeable future without the modification and if the borrower (without the current modification) could obtain equivalent financing from another creditor at a market rate for

similar debt.

Modifications of loans to borrowers in these situations may indicate that the borrower is facing financial difficulty.

Modifications of loans to borrowers experiencing financial difficulty that are in the form of principal forgiveness, interest rate reductions, other-than-insignificant payment delays, or a term extension (or a combination thereof) require disclosure.

The Company's disclosures are included in Note 2, Loans and Allowance for Credit Losses.

Loans and Allowance for Credit Losses

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

Major classifications within the Company’s held for investment loan portfolio at March 31, 2023 and December 31, 2022 are as follows:

(In thousands)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Business $ 5,704,467 $ 5,661,725

8 unchanged sentences

Total loans $ 16,535,522 $ 16,303,131

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.

Accrued interest receivable totaled $ 61.9 million and $ 55.5 million at March 31, 2023 and December 31, 2022, respectively, and was included within other assets on the consolidated balance sheets.

For the three months ended March 31, 2023, the Company wrote-off accrued interest by reversing interest income of $ 34 thousand and $ 1.1 million in the Commercial and Personal Banking portfolios, respectively.

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

At March 31, 2023, loans of $ 3.3 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.

13 unchanged sentences

The contractual term excludes expected extensions (except for contractual extensions at the option of the customer), renewals and modifications unless there is a reasonable expectation that a troubled debt restructuring will be executed.

Credit cards and certain similar consumer lines of credit do not have stated maturities and therefore, for these loan classes, remaining contractual lives are determined by estimating future cash flows expected to be received from customers until payments have been fully allocated to outstanding balances.

Credit cards and certain similar consumer lines of credit do not have stated

maturities and therefore, for these loan classes, remaining contractual lives are determined by estimating future cash flows expected to be received from customers until payments have been fully allocated to outstanding balances.

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 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 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

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

• Reversion to historical average loss rates within two quarters using straight-line method

• One year for commercial and personal banking loans

• Reversion to historical average loss rates within two quarters using straight-line method

Forecasted macro-economic variables • Unemployment rate ranging from 3.7% to 4.6% during the supportable forecast period

• Real GDP growth ranging from (.3)% to .2%

• Prime rate from 6.6% to 7.0%

The assumptions utilized in estimating the Company’s allowance for credit losses at March 31, 2023 and December 31, 2022 are discussed below.

Key Assumption March 31, 2023 December 31, 2022

Overall economic forecast • Mild recession to start 3rd quarter of 2023

• Assume the Federal Reserve will continue raising interest rates

• Mild recession is expected to weaken employment

• Continued high inflation and higher cost of borrowing create a mild recession in 2023 with stalled job growth and possible job losses

• Assumes interest rates hikes will taper

Reasonable and supportable period and related reversion period • Reasonable and supportable period of one year

• Reversion to historical average loss within 2 quarters using straight-line method

• Reasonable and supportable period of one year

• Reversion to historical average loss within 2 quarters using straight-line method

Forecasted macro-economic variables • Unemployment rate ranges from 3.7% to 5.3% during the supportable forecast period

• Real GDP growth ranges from (.5)% to 2.0%

• BBB corporate yield from 5.3% to 5.8%

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

• House Price Index from 280.2 to 282.0

• Unemployment rate ranges from 3.8% to 4.7% during the supportable forecast period

• Real GDP growth ranging from (.9)% to 1.3%

• Prime rate from 4.9% to 6.2%

• BBB corporate yield from 5.1% to 5.8%

• House Price Index from 280.9 to 284.6

Prepayment assumptions Commercial loans

2 unchanged sentences

• Ranging from 6.45% to 22.4% for most loan pools

• 67.7% for consumer credit cards

• Consumer credit cards 67.5%

Commercial loans

2 unchanged sentences

• Ranging from 8.3% to 24.8% for most loan pools

• 67.0% for consumer credit cards

• Consumer credit cards 67.9%

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

• Certain portfolios sensitive to pandemic economic uncertainties

• Certain portfolios sensitive to unusually high rate of inflation and supply chain issues

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

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

• Certain portfolios sensitive to pandemic economic uncertainties

• Certain portfolios sensitive to unusually high rate of inflation and supply chain issues

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

3 unchanged sentences

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

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 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

The current forecast projects a mild recession to start in the third quarter of 2023 as the economy continues to face high inflation, higher interest rates and a weaker job market.

The impacts of the market's response to unusual events or trends including high inflation, supply chain stresses, trends in health conditions and changes in the geopolitical environment could significantly modify economic projections used in the estimation of the ACL.

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, 2023 and 2022, respectively, follows:

For the Three Months Ended March 31, 2023

(In thousands) Commercial Personal Banking

Commercial Personal Banking

ALLOWANCE FOR CREDIT LOSSES ON LOANS

3 unchanged sentences

Less recoveries on loans 66 2,215 2,281

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

Net loan charge-offs (recoveries) 226 6,541 6,767

Balance March 31, 2023 $ 108,615 $ 50,702 $ 159,317

LIABILITY FOR UNFUNDED LENDING COMMITMENTS

1 unchanged sentence

Provision for credit losses on unfunded lending commitments ( 4,638 ) 146 ( 4,492 )

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

Balance March 31, 2023 $ 27,105 $ 1,523 $ 28,628

ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS $ 135,720 $ 52,225 $ 187,945

For the Three Months Ended September 30, 2021

For the Nine Months Ended September 30, 2021

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

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, 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 March 31, 2023 and December 31, 2022.

(In thousands)

2 unchanged sentences

90 Days Past Due and Still Accruing Non-accrual

September 30, 2022

March 31, 2023

Business $ 5,692,966 $ 4,644 $ 496 $ 6,361 $ 5,704,467

19 unchanged sentences

Total $ 16,229,187 $ 49,808 $ 15,830 $ 8,306 $ 16,303,131

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 nine months ended September 30, 2022 and 2021, respectively.

At March 31, 2023, the Company had $ 3.5 million in non-accrual business loans that had no allowance for credit loss, compared to $ 3.8 million in non-accrual business loans that had no allowance for credit loss at December 31, 2022.

The Company did not record any interest income on non-accrual loans during the three months ended March 31, 2023 and 2022, 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, 2022 and December 31, 2021 are as follows:

The risk category of loans in the Commercial portfolio as of March 31, 2023 and December 31, 2022 are as follows:

Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total

September 30, 2022

March 31, 2023

Pass $ 526,988 $ 1,268,330 $ 716,669 $ 374,953 $ 334,438 $ 369,983 $ 2,008,711 $ 5,600,072

4 unchanged sentences

$ 542,171 $ 1,276,282 $ 733,006 $ 399,577 $ 335,455 $ 386,638 $ 2,031,338 $ 5,704,467

Gross write-offs for the three months ended March 31, 2023

$ — $ — $ — $ — $ — $ — $ 292 $ 292

Real estate-construction

4 unchanged sentences

$ 163,916 $ 554,793 $ 549,106 $ 83,653 $ 27,431 $ 30,973 $ 27,547 $ 1,437,419

Gross write-offs for the three months ended March 31, 2023

$ — $ — $ — $ — $ — $ — $ — $ —

Real estate-business

5 unchanged sentences

$ 229,043 $ 1,143,969 $ 604,164 $ 512,099 $ 410,432 $ 477,347 $ 109,489 $ 3,486,543

Gross write-offs for the three months ended March 31, 2023

$ — $ — $ — $ — $ — $ — $ — $ —

Commercial loans

5 unchanged sentences

$ 935,130 $ 2,975,044 $ 1,886,276 $ 995,329 $ 773,318 $ 894,958 $ 2,168,374 $ 10,628,429

Gross write-offs for the three months ended March 31, 2023

$ — $ — $ — $ — $ — $ — $ 292 $ 292

Term Loans Amortized Cost Basis by Origination Year

27 unchanged sentences

$ 3,096,706 $ 2,060,412 $ 1,219,682 $ 834,144 $ 393,625 $ 566,436 $ 2,258,796 $ 10,429,801

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:

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, 2023 and December 31, 2022 below.

Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total

September 30, 2022

March 31, 2023

Real estate-personal

4 unchanged sentences

$ 113,590 $ 513,235 $ 579,915 $ 771,176 $ 285,002 $ 678,915 $ 10,209 $ 2,952,042

Gross write-offs for the three months ended March 31, 2023

$ — $ — $ — $ — $ — $ 18 $ — $ 18

Current to 90 days past due $ 158,392 $ 430,621 $ 345,779 $ 183,261 $ 91,521 $ 82,898 $ 800,002 $ 2,092,474

2 unchanged sentences

$ 158,392 $ 430,964 $ 346,089 $ 183,376 $ 91,583 $ 83,341 $ 800,644 $ 2,094,389

Gross write-offs for the three months ended March 31, 2023 $ — $ 519 $ 505 $ 279 $ 127 $ 159 $ 270 $ 1,859

Revolving home equity

3 unchanged sentences

$ — $ — $ — $ — $ — $ — $ 295,478 $ 295,478

Gross write-offs for the three months ended March 31, 2023

$ — $ — $ — $ — $ — $ — $ — $ —

Consumer credit card

3 unchanged sentences

$ — $ — $ — $ — $ — $ — $ 558,669 $ 558,669

Gross write-offs for the three months ended March 31, 2023

$ — $ — $ — $ — $ — $ — $ 5,684 $ 5,684

Current to 90 days past due $ 6,515 $ — $ — $ — $ — $ — $ — $ 6,515

2 unchanged sentences

$ 6,515 $ — $ — $ — $ — $ — $ — $ 6,515

Gross write-offs for the three months ended March 31, 2023

$ 1,195 $ — $ — $ — $ — $ — $ — $ 1,195

Personal banking loans

4 unchanged sentences

$ 278,497 $ 944,199 $ 926,004 $ 954,552 $ 376,585 $ 762,256 $ 1,665,000 $ 5,907,093

Gross write-offs for the three months ended March 31, 2023

$ 1,195 $ 519 $ 505 $ 279 $ 127 $ 177 $ 5,954 $ 8,756

Term Loans Amortized Cost Basis by Origination Year

22 unchanged sentences

Current to 90 days past due $ 14,737 $ — $ — $ — $ — $ — $ — $ 14,737

Over 90 days past due 220 — — — — — — 220

Total Overdrafts:

9 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, 2022 and December 31, 2021.

The following table presents the amortized cost basis of collateral-dependent loans as of March 31, 2023 and December 31, 2022.

(In thousands) Business Assets Oil & Gas Assets Total

September 30, 2022

March 31, 2023

Business $ 2,611 $ 1,671 $ 4,282

9 unchanged sentences

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.

These loans totaled $ 178.1 million at March 31, 2023 and $ 179.2 million at December 31, 2022.

The table also excludes consumer loans related to the Company's patient healthcare loan program, which totaled $ 195.5 million at March 31, 2023 and $ 197.5 million at December 31, 2022.

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, 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 March 31, 2023 and December 31, 2022 by FICO score.

Personal Banking Loans

1 unchanged sentence

Real Estate - Personal Consumer Revolving Home Equity Consumer Credit Card

September 30, 2022

March 31, 2023

Under 600 1.8 % 2.6 % 1.8 % 4.2 %

11 unchanged sentences

Total 100.0 % 100.0 % 100.0 % 100.0 %

Troubled debt restructurings

Modifications for borrowers experiencing financial difficulty

When borrowers are experiencing financial difficulty, the Company may agree to modify the contractual terms of a loan to a borrower in order to assist the borrower in repaying principal and interest owed to the Company.

The Company's modifications of loans to borrowers experiencing financial difficulty are generally in the form of term extensions, repayment plans, payment deferrals, forbearance agreements, interest rate reductions, forgiveness of interest and/or fees, or any combination thereof.

Commercial loans modified to borrowers experiencing financial difficulty are primarily loans that are substandard or non-accrual, where the maturity date was extended.

Modifications on personal real estate loans are primarily those placed on forbearance plans, repayment plans, or deferral plans where monthly payments are suspended for a period of time or past due amounts are paid off over a certain period of time in the future or set up as a balloon payment at maturity.

Modifications to certain credit card and other small consumer loans are often modified under debt counseling programs that can reduce the contractual rate or, in certain instances, forgive certain fees and interest charges.

Other consumer loans modified to borrowers experiencing financial difficulty consist of various other workout arrangements with consumer customers.

The following table presents the amortized cost at March 31, 2023 of loans that were modified during the three months ended March 31, 2023.

Three Months Ended March 31, 2023

(Dollars in thousands)

Term Extension Payment Delay Interest Rate Reduction Interest/Fees Forgiven Other

Total % of Total Loan Category

March 31, 2023

Business $ 3,104 $ — $ — $ — $ — $ 3,104 0.1 %

Real estate – business 23,039 — — — — 23,039 0.7

Personal Banking:

Real estate – personal — 1,666 — — — 1,666 0.1

Consumer — 58 16 — 55 129 —

Consumer credit card — — 618 275 — 893 0.2

Total $ 26,143 $ 1,724 $ 634 $ 275 $ 55 $ 28,831 0.2 %

The estimate of lifetime expected losses utilized in the allowance for credit losses model is developed using average historical experience on loans with similar risk characteristics, which includes losses from modifications of loans to borrowers experiencing financial difficulty.

As a result, a change to the allowance for credit losses is generally not recorded upon modification.

For modifications to loans made to borrowers experiencing financial difficulty that are placed on non-accrual status, the Company determines the allowance for credit losses on an individual evaluation, using the same process that it utilizes for other loans on non-accrual status.

Modifications made to commercial loans which are not on non-accrual status for borrowers experiencing financial difficulty are collectively evaluated based on internal risk rating, loan type, delinquency, historical experience, and current economic factors.

Modifications made to borrowers experiencing financial difficulty for personal banking loans which are not on non-accrual status are collectively evaluated based on loan type, delinquency, historical experience, and current economic factors.

If a loan to a borrower experiencing financial difficulty is modified and subsequently deemed uncollectible, the allowance for credit losses continues to be based on individual evaluation, if that loan is already on non-accrual status.

For those loans, the allowance for credit losses is estimated using discounted expected cash flows or the fair value of collateral.

If an accruing loan made to a borrower experiencing financial difficulty is modified and subsequently deemed uncollectible, 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 following table summarizes the financial impact of loan modifications and payment deferrals during the three months ended March 31, 2023.

The qualitative impact of forbearance and repayment plans is the deferral of payments for 3 months up to 30 years, and therefore, those modifications are excluded from the table below.

Term Extension

Three Months Ended March 31, 2023

Business Added a weighted-average of 12 months to the life of loans.

Real estate – business Added a weighted-average of 17 months to the life of loans.

Payment Delay

Three Months Ended March 31, 2023

Personal Banking:

Real estate – personal Deferred past due monthly payments to maturity as a balloon payment.

Deferral delayed payments a weighted average of 27 years.

Consumer Deferred past due monthly payments to maturity as a balloon payment.

Deferral delayed payments a weighted average of 11 years.

Interest Rate Reduction

Three Months Ended March 31, 2023

Personal Banking:

Consumer Reduced weighted-average contractual interest by 14 %.

Consumer credit card Reduced weighted-average contractual interest by 14 %.

Forgiveness of Interest/Fees

Three Months Ended March 31, 2023

Personal Banking:

Consumer credit card Approximately $14 thousand of interest and fees forgiven.

The Company had commitments of $ 532 thousand at March 31, 2023 to lend additional funds to borrowers with restructured loans.

The following table provides the amortized cost basis of loans to borrowers experiencing financial difficulty that had a payment default during the three months ended March 31, 2023 and were modified on or after January 1, 2023 (the date we adopted ASU 2022-02) through March 31, 2023.

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

In addition to the loans below, the Company charged off $ 25 thousand of consumer credit card loans during the three months ended March 31, 2023 that were modified during the period.

(Dollars in thousands)

Interest Rate Reduction Interest/Fees Forgiven Total

March 31, 2023

Personal Banking:

Consumer $ 8 $ — $ 8

Consumer credit card 63 12 75

Total $ 71 $ 12 $ 83

The following table presents the amortized cost basis at March 31, 2023 of loans that have been modified on or after January 1, 2023 (the date we adopted ASU 2022-02) through March 31, 2023.

(In thousands)

Current 30-89 Days Past Due

90 Days Past Due Total

March 31, 2023

Business $ 3,104 $ — $ — $ 3,104

Real estate – business 23,039 — — 23,039

Personal Banking:

Real estate – personal 1,061 605 — 1,666

Consumer 75 46 8 129

Consumer credit card 645 173 75 893

Total $ 27,924 $ 824 $ 83 $ 28,831

Troubled debt restructuring disclosures prior to the Company's adoption of ASU 2022-02

Restructured loans are those extended to borrowers who are experiencing financial difficulty and who have been granted a concession.

Restructured loans are placed on non-accrual status if the Company does not believe it probable that amounts due under the contractual terms will be collected.

Commercial performing restructured loans are primarily comprised of certain business, construction and business real estate loans classified as substandard but renewed at rates judged to be non-market.

Commercial performing restructured loans are primarily comprised of certain

business, construction and business real estate loans classified as substandard but renewed at rates judged to be non-market.

These loans are performing in accordance with their modified terms, and because the Company believes it probable that all amounts due under the modified terms of the agreements will be collected, interest on these loans is being recognized on an accrual basis.

4 unchanged sentences

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

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

(In thousands) December 31, 2022

Accruing restructured loans:

$ 140,564 $ 46,867

Assistance programs

2 unchanged sentences

Total troubled debt restructurings

$ 155,581 $ 64,887

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.

1 unchanged sentence

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 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.

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

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

Business $ 12,311 $ —

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.

However, the effects of modifications to loans under various debt management and assistance programs were estimated to decrease interest income by approximately $ 663 thousand on an annual, pre-tax basis, compared to amounts contractually owed.

However, the effects of modifications to loans under various debt management and assistance programs at December 31, 2022 were estimated to decrease interest income by approximately $ 661 thousand on an annual, pre-tax basis, compared to amounts contractually owed.

Other modifications to consumer loans mainly involve extensions and other small modifications that did not include the forgiveness of principal or interest.

6 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 $ 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.

The Company had commitments of $ 12.6 million at December 31, 2022 to lend additional funds to borrowers with restructured loans.

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 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.

At March 31, 2023, the fair value of these loans was $ 684 thousand, and the unpaid principal balance was $ 666 thousand.

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, 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.

These loans are carried at lower of cost or fair value, which at March 31, 2023 totaled $ 5.3 million.

At March 31, 2023, 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 $ 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.

The Company’s holdings of foreclosed real estate totaled $ 167 thousand and $ 96 thousand at March 31, 2023 and December 31, 2022, respectively, and included in those amounts were $ 167 thousand and $ 96 thousand at March 31, 2023 and December 31, 2022, respectively, of foreclosed residential real estate properties held as a result of obtaining physical possession.

Personal property acquired in repossession, generally autos, totaled $ 1.4 million and $ 1.6 million at March 31, 2023 and December 31, 2022, 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, 2022 and December 31, 2021.

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

Investment securities consisted of the following at March 31, 2023 and December 31, 2022.

(In thousands) March 31, 2023 December 31, 2022

Available for sale debt securities $ 11,228,616 $ 12,238,316

9 unchanged sentences

$ 11,551,145 $ 12,519,177

(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.

(1) Accrued interest receivable totaled $ 32.7 million and $ 38.8 million at March 31, 2023 and December 31, 2022, 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 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.

During the three months ended March 31, 2023, 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.

6 unchanged sentences

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.

A summary of the available for sale debt securities by maturity groupings as of March 31, 2023 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.

30 unchanged sentences

government and federal agency obligations include U.S.

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).

Treasury inflation-protected securities, which totaled $ 402.3 million, at fair value, at March 31, 2023.

Interest earned 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.

1 unchanged sentence

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

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.

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 which 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.

2 unchanged sentences

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.

At March 31, 2023, the fair value of securities on this watch list was $ 676.0 million compared to $ 1.3 billion at December 31, 2022.

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.

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, 2022 and December 31, 2021.

At March 31, 2023, 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 March 31, 2023, the Company did not identify any securities for which a credit loss exists, and for the three months ended March 31, 2023 and 2022, 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.

The unrealized losses on these securities are primarily attributable to changes in interest rates and current market conditions.

Additionally, management does not intend to sell the securities, and it is more likely than not that management will not be required to sell the securities prior to their anticipated recovery.

At March 31, 2023, the Company does not intend to sell the securities, nor is it anticipated that it would be required to sell any of these securities at a loss.

Less than 12 months 12 months or longer Total

3 unchanged sentences

Losses Fair Value Unrealized

September 30, 2022

March 31, 2023

government and federal agency obligations $ 532,588 $ 9,565 $ 386,394 $ 20,444 $ 918,982 $ 30,009

19 unchanged sentences

Total $ 4,402,724 $ 250,660 $ 7,625,021 $ 1,249,972 $ 12,027,745 $ 1,500,632

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.

The entire available for sale debt portfolio included $ 11.0 billion of securities that were in a loss position at March 31, 2023, compared to $ 12.0 billion at December 31, 2022.

The total amount of unrealized loss on these securities was $ 1.3 billion at March 31, 2023, a decrease of $ 188.7 million compared to the unrealized loss at December 31, 2022.

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 September 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 March 31, 2023 and December 31, 2022, 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, 2022

March 31, 2023

government and federal agency obligations $ 1,048,755 $ 1,477 $ ( 30,009 ) $ — $ 1,020,223

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 Nine Months Ended September 30

For the Three Months Ended March 31

(In thousands) 2023 2022

1 unchanged sentence

Available for sale debt securities

$ 812,176 $ —

Other investments

8 unchanged sentences

Gains realized on sales

Losses realized on sales

Fair value adjustments, net 2,251 7,450

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

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.

Total investment securities gains (losses), net $ ( 306 ) $ 7,163

Net losses on investment securities for the three months ended March 31, 2023 were mainly comprised of losses of $ 3.1 million on sales of available for sale securities, and net losses in fair value of $ 127 thousand on equity investments, offset by net gains in private equity securities due to sales and fair value adjustments of $ 658 thousand and $ 2.3 million, respectively.

At March 31, 2023, securities totaling $ 8.1 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 $ 4.7 billion at December 31, 2022.

Securities pledged under agreements pursuant to which the collateral may be sold or re-pledged by the secured parties approximated $ 211.5 million, while the remaining securities were pledged under agreements pursuant to which the secured parties may not sell or re-pledge the collateral.

3 unchanged sentences

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(In thousands)

4 unchanged sentences

Total $ 27,777 $ ( 16,459 ) $ — $ 11,318 $ 53,457 $ ( 41,823 ) $ — $ 11,634

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.

Aggregate amortization expense on intangible assets was $ 356 thousand and $ 609 thousand for the three month periods ended March 31, 2023 and 2022, 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 September 30, 2022.

This expense is based on existing asset balances and the interest rate environment as of March 31, 2023.

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 other intangible assets for the nine month period ended September 30, 2022 are as follows:

During the first quarter of 2023, the Company wrote off $ 25.7 million of core deposit intangible assets that were fully amortized.

Other c hanges in the carrying amount of goodwill and other intangible assets for the three month period ended March 31, 2023 are as follows:

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

3 unchanged sentences

Amortization — — ( 66 ) ( 290 )

Impairment recovery — — — 304

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.

Balance March 31, 2023 $ 138,921 $ 3,600 $ 639 $ 10,679

Goodwill allocated to the Company’s operating segments at March 31, 2023 and December 31, 2022 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 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.

At March 31, 2023, that net liability was $ 4.9 million, which will be accreted into income over the remaining life of the respective commitments.

The contractual amount of these letters of credit, which represents the maximum potential future payments guaranteed by the Company, was $ 625.9 million at March 31, 2023.

A portion of this amount has been conveyed to others.

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, 2022, believes sufficient collateral is available to cover potential swap losses.

The Company monitors overall borrower collateral and at March 31, 2023, 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, 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.

At March 31, 2023, the fair value of the Company's guarantee liabilities for RPAs was $ 148 thousand, and the notional amount of the underlying swaps was $ 419.9 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.

5 unchanged sentences

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

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

The leases may include options to renew or expand the leased space, and currently the leases have remaining terms of 3 months to 16 years.

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) 2023 2022

1 unchanged sentence

Operating leases (a)

2,175 1,717 6,517 5,721

Total lease income $ 9,089 $ 7,431

(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 .

(a) Includes rent from Tower Properties Company, a related party, of $ 19 thousand for the three month periods ended March 31, 2023 and 2022 .

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) 2023 2022

Service cost - benefits earned during the period $ 128 $ 95 $ 391 $ 284

Service cost $ 116 $ 132

Interest cost on projected benefit obligation 1,158 665

4 unchanged sentences

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

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.

During the first three months of 2023, 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) 2023 2022

15 unchanged sentences

Diluted income per common share $ .95 $ .92

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.

Unexercised stock appreciation rights of 216 thousand and 125 thousand for the three month periods ended March 31, 2023 and 2022, respectively, were excluded from the computation of diluted income per common share because their inclusion would have been anti-dilutive.

In the Annual Meeting of the Shareholders, held on April 19, 2023, a proposal to increase the shares of the Company's common stock authorized for issuance under its articles of incorporation was approved.

This approval increased the authorized shares from 140,000,000 to 190,000,000 .

* All prior year share and per share amounts in this note have been restated for the 5% common stock dividend distributed in December 2022.

6 unchanged sentences

$ ( 1,124,915 ) $ ( 17,186 ) $ 55,237 $ ( 1,086,864 )

Other comprehensive loss before reclassifications to current earnings ( 1,594,981 ) — ( 3,464 ) ( 1,598,445 )

Other comprehensive income (loss) before reclassifications to current earnings 186,868 — 9,225 196,093

Amounts reclassified to current earnings from accumulated other comprehensive income 3,088 360 ( 4,385 ) ( 937 )

2 unchanged sentences

Current period other comprehensive income (loss), net of tax 142,466 270 3,630 146,366

Balance September 30, 2022

Balance March 31, 2023

$ ( 982,449 ) $ ( 16,916 ) $ 58,867 $ ( 940,498 )

1 unchanged sentence

$ 23,174 $ ( 20,668 ) $ 74,574 $ 77,080

Other comprehensive loss before reclassifications to current earnings ( 213,362 ) — — ( 213,362 )

Other comprehensive income (loss) before reclassifications to current earnings ( 676,353 ) — — ( 676,353 )

Amounts reclassified to current earnings from accumulated other comprehensive income — 430 ( 6,050 ) ( 5,620 )

2 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 )

5 unchanged sentences

This segment also includes indirect and other consumer loan financing businesses, along with debit and credit card loan and fee businesses.

Residential mortgage origination, sales and servicing functions are included in this Consumer segment, but residential mortgage loans retained by the Company are not considered part of this segment and are instead included in the Other/Elimination column.

In order to reflect a change in the Company's management of its portfolio of residential mortgage loans that it retains, the Company began including those loans in the Consumer segment on January 1, 2023.

These loans had previously been included in the Other/Elimination column.

As a result of this change, approximately $1.9 billion of loans were reclassified from the Other/Elimination column into the Consumer segment, and prior periods presented below were restated to also reflect this change.

The Commercial segment provides corporate lending (including the Small Business Banking product line within the branch network), leasing, and international services, along with business and governmental deposit products and commercial cash management services.

8 unchanged sentences

Consumer Commercial Wealth Segment Totals Other/Elimination Consolidated Totals

Three Months Ended September 30, 2022

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

Provision for credit losses ( 4,305 ) ( 506 ) 5 ( 4,806 ) ( 10,484 ) ( 15,290 )

Non-interest income 30,264 57,115 53,862 141,241 ( 2,727 ) 138,514

Investment securities gains, net — — — — 3,410 3,410

Non-interest expense ( 76,832 ) ( 91,372 ) ( 36,194 ) ( 204,398 ) ( 8,486 ) ( 212,884 )

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

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Net interest income $ 96,854 $ 116,166 $ 17,540 $ 230,560 $ 21,063 $ 251,623

1 unchanged sentence

Non-interest income 24,303 58,324 52,944 135,571 2,041 137,612

Investment securities gains, net — — — — 11,602 11,602

Non-interest expense ( 225,232 ) ( 272,224 ) ( 108,967 ) ( 606,423 ) ( 25,614 ) ( 632,037 )

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

Three Months Ended September 30, 2021

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

Provision for loan losses ( 3,557 ) ( 69 ) 9 ( 3,617 ) 11,002 7,385

Non-interest income 35,758 52,092 55,241 143,091 ( 5,585 ) 137,506

Investment securities gains, net — — — — 13,108 13,108

Investment securities gains (losses), net — — — — ( 306 ) ( 306 )

Non-interest expense ( 77,326 ) ( 93,623 ) ( 39,636 ) ( 210,585 ) ( 13,522 ) ( 224,107 )

Income before income taxes $ 37,525 $ 80,474 $ 30,835 $ 148,834 $ 4,532 $ 153,366

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Net interest income $ 86,818 $ 108,953 $ 18,869 $ 214,640 $ ( 5,854 ) $ 208,786

1 unchanged sentence

Non-interest income 26,415 53,651 53,206 133,272 ( 1,503 ) 131,769

Investment securities gains, net — — — — 39,765 39,765

Investment securities gains (losses), net — — — — 7,163 7,163

Non-interest expense ( 74,823 ) ( 89,506 ) ( 36,288 ) ( 200,617 ) ( 5,031 ) ( 205,648 )

13 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, 2022, the Company’s derivative instruments are accounted for as free-standing derivatives, and changes in their fair value are recorded in current earnings.

With the exception of the interest rate floors (discussed below), 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, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Interest rate swaps $ 1,987,051 $ 1,981,821

15 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.

As of March 31, 2023, the Company holds three interest rate floors with a combined notional value of $ 1.5 billion to hedge the risk of declining interest rates on certain floating rate commercial loans.

The first floor was purchased during the third quarter of 2022, has a purchased strike rate of 2.50%, is forward-starting beginning on January 1, 2024 and matures on January 1, 2030.

In the event that the index rate falls below zero, the maximum rate spread the Company can earn on the notional amount is limited to 2.50%.

The second floor was purchased during the fourth quarter of 2022, has a purchased strike rate of 3.00%, is forward-starting beginning on April 1, 2024 and matures on April 1, 2030.

In the event that the index rate falls below zero, the maximum rate the Company can earn on the notional amount is limited to 3.00%.

The third floor was purchased during the first quarter of 2023, has a purchased strike rate of 3.50%, is forward-starting beginning on July 1, 2024 and matures on July 1, 2030.

In the event that the index rate falls below zero, the maximum rate the Company can earn on the notional amount is limited to 3.50%.

The premium paid for these floors totaled $ 61.7 million.

As of March 31, 2023, the maximum length of time over which the Company is hedging its exposure to lower rates is approximately 6 years.

These interest rate floors qualified and were designated as cash flow hedges and were assessed for effectiveness using regression analysis.

The change in the fair value of these interest rate floors is recorded in AOCI, net of the amortization of the premiums paid, which are recorded against interest and fees on loans in the consolidated statements of income.

As of March 31, 2023, net deferred gains on the interest rate floors totaled $ 6.8 million (pre-tax) and were recorded in AOCI in the consolidated balance sheet.

As of March 31, 2023, it is expected that $ 7.3 million (pre-tax) interest rate floor premium amortization will be reclassified from AOCI into earnings over the next 12 months.

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 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.

As of March 31, 2023, the total realized gains on the monetized cash flow hedges remaining in AOCI was $ 69.0 million (pre-tax), which will be reclassified into interest income over the next 3.7 years.

The estimated amount of net gains related to the cash flow hedges remaining in AOCI at March 31, 2023 that is expected to be reclassified into income within the next 12 months is $ 23.3 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.

The Company’s risks and responsibilities as guarantor are further discussed in Note 5 on Guarantees.

In addition, the Company enters into foreign exchange contracts, which are mainly comprised of contracts to purchase or deliver foreign currencies for customers at specific future dates.

In addition, the Company enters into foreign exchange contracts, which are mainly comprised of contracts with customers to purchase or deliver specific foreign currencies at specific future dates.

Under its program to sell residential mortgage loans in the secondary market, the Company designates certain newly-originated residential mortgage loans as held for sale.

2 unchanged sentences

These forward TBA contracts are also considered to be derivatives and are settled in cash at the security settlement date.

In late 2022, the Company temporarily paused sales of these loans and halted entering into the forward contracts, as lower demand for mortgage loans coupled with volatility in the TBA market made it difficult to effectively hedge the Company's mortgage loan production.

The Company resumed sales during the first quarter of 2023.

The fair values of the Company's derivative instruments, whose notional amounts are listed above, are shown in the table below.

Information about the valuation methods used to determine fair value is provided in Note 17 on Fair Value Measurements in the 2021 Annual Report on Form 10-K.

Information about the valuation methods used to determine fair value is provided in Note 15 on Fair Value Measurements.

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, 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.

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, 2023 in the table below, the positive fair values of cleared swaps were reduced by $ 11.4 million.

At December 31, 2022, positive fair values of cleared swaps were reduced by $ 27.8 million.

Asset Derivatives Liability Derivatives

31, 2023 Dec.

31, 2021 Sept.

31, 2022 Mar.

31, 2023 Dec.

14 unchanged sentences

Total $ 100,157 $ 60,492 $ ( 43,068 ) $ ( 54,984 )

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.

The Company made an election to exclude the initial premiums paid on the interest rate floors from the hedge effectiveness measurement.

Those initial premiums are amortized over the periods between the premium payment month and the contract maturity month.

The pre-tax effects of the gains and losses (both the included and excluded amounts for hedge effectiveness assessment) recognized in the other comprehensive income from the cash flow hedging instruments and the amounts reclassified from accumulated other comprehensive income into income (both included and excluded amounts for hedge effectiveness measurement) are shown in the table 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, 2022

Derivatives in cash flow hedging relationships:

Interest rate floors $ ( 3,464 ) $ — $ ( 3,464 ) Interest and fees on loans $ ( 6,118 ) $ ( 7,745 ) $ 1,627

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

For the Nine Months Ended September 30, 2022

Derivatives in cash flow hedging relationships:

Interest rate floors $ ( 3,464 ) $ — $ ( 3,464 ) Interest and fees on loans $ ( 18,322 ) $ ( 22,998 ) $ 4,676

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

For the Three Months Ended September 30, 2021

For the Three Months Ended March 31, 2023

Derivatives in cash flow hedging relationships:

1 unchanged sentence

Total $ 9,225 $ — $ 9,225 Total $ 4,385 $ 7,444 $ ( 3,059 )

For the Nine Months Ended September 30, 2021

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 )

The gain and loss recognized through various derivative instruments on the consolidated statements of income are shown in the table below.

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 September 30 For the Nine Months Ended September 30

For the Three Months Ended March 31

(In thousands) 2023 2022

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.

Collateral positions are valued daily, and adjustments to amounts received and pledged by the Company are made as appropriate to maintain proper collateralization for these transactions.

Swap derivative transactions with customers are generally secured by rights to non-financial collateral, such as real and personal property, which is not shown in the table below.

Swap derivative

transactions with customers are generally secured by rights to non-financial collateral, such as real and personal property, which is not shown in the table below.

Gross Amounts Not Offset in the Balance Sheet

1 unchanged sentence

Pledged Net Amount

September 30, 2022

March 31, 2023

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 September 30, 2022 and $ 400.0 million at December 31, 2021.

The collateral swaps totaled $ 200.0 million at March 31, 2023 and December 31, 2022.

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

September 30, 2022

March 31, 2023

Total resale agreements, subject to master netting arrangements

7 unchanged sentences

2,881,874 ( 200,000 ) 2,681,874 — ( 2,681,874 ) —

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.

The table below shows the remaining contractual maturities of repurchase agreements outstanding at March 31, 2023 and December 31, 2022, 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, 2022

March 31, 2023

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 $ 3.9 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.

The stock-based compensation expense charged against income was $ 4.4 million and $ 4.2 million in the three months ended March 31, 2023 and 2022, 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, 2022, 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, 2023, and changes during the three month period then ended, is presented below.

Shares Weighted Average Grant Date Fair Value

3 unchanged sentences

Forfeited ( 2,238 ) 61.82

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

Nonvested at March 31, 2023 1,108,917 $ 61.79

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 2022 is presented below.

A summary of SAR activity during the first three months of 2023 is presented below.

(Dollars in thousands, except per share data)

5 unchanged sentences

Forfeited ( 555 ) 60.00

Expired ( 2,350 ) 56.68

Exercised ( 40,976 ) 25.88

Outstanding at September 30, 2022

Outstanding at March 31, 2023

997,025 $ 49.37 5.6 years $ 11,094

Revenue from Contracts with Customers

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 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.

Revenue from contracts with customers, Accounting Standard Codification 606 ("ASC 606"), 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 three months ended March 31, 2023, approximately 65 % 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 September 30 Nine Months Ended September 30

The following table disaggregates revenue from contracts with customers by major product line.

Three Months Ended March 31

(In thousands) 2023 2022

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 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

The following table presents the opening and closing receivable balances for the three month periods ended March 31, 2023 and 2022 for the Company’s significant revenue from contracts with customers.

(In thousands) March 31, 2023 December 31, 2022 March 31, 2022 December 31, 2021

Bank card transaction fees $ 15,585 $ 17,254 $ 14,171 $ 16,424

20 unchanged sentences

Instruments Measured at Fair Value on a Recurring Basis

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.

The table below presents the March 31, 2023 and December 31, 2022 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 2023 or the year ended December 31, 2022.

Fair Value Measurements Using

2 unchanged sentences

(Level 2) Significant Unobservable Inputs

September 30, 2022

March 31, 2023

Residential mortgage loans held for sale $ 684 $ — $ 684 $ —

46 unchanged sentences

Derivatives Total

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):

Included in earnings — 14,050 ( 108 ) 13,942

Included in other comprehensive income * 40 — — 40

Discount accretion 2 — — 2

Purchases of private equity investments — 899 — 899

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

Capitalized interest/dividends — 44 — 44

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

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 September 30, 2022

$ 40 $ — $ — $ 40

For the nine months ended September 30, 2022

For the three months ended March 31, 2023

Balance January 1, 2023

3 unchanged sentences

Included in other comprehensive income * 26 — — 26

Discount accretion 4 — — 4

Purchases of private equity investments — 2,021 — 2,021

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 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 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 )

Fair Value Measurements Using

Significant Unobservable Inputs

(In thousands)

State and Municipal Obligations Private Equity

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 ( 1,000 ) — — ( 1,000 )

1 unchanged sentence

Purchases of private equity investments — 10,532 — 10,532

Sale of risk participation agreement — — ( 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

Sale/pay down of private equity investments — ( 27,492 ) — ( 27,492 )

Balance March 31, 2023 $ 914 $ 163,418 $ ( 27 ) $ 164,305

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, 2023

$ — $ 2,251 $ 58 $ 2,309

*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

*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, 2023

$ 4 $ — $ — $ 4

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

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 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

*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 )

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, 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 September 30, 2022

$ — $ 122 $ 14,050 $ 14,172

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 September 30, 2022

$ — $ 28 $ 37,083 $ 37,111

For the three months ended September 30, 2021

For the three months ended March 31, 2023

Total gains or losses included in earnings $ 77 $ ( 19 ) $ 2,251 $ 2,309

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

Change in unrealized gains or losses relating to assets still held at March 31, 2023

$ 77 $ ( 19 ) $ 2,251 $ 2,309

For the nine months ended September 30, 2021

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, 2021

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

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

Level 3 Inputs

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 $ 1.9 million at September 30, 2022, while private equity investments, included in other securities, totaled $ 176.3 million.

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

Information about these inputs is presented in the table below.

1 unchanged sentence

Valuation Technique Unobservable Input Range Average*

Auction rate securities Discounted cash flow Estimated market recovery period 5 years 5 years

Estimated market rate 5.8 % - 6.5 % 6.1 %

Private equity investments Market comparable companies EBITDA multiple 4.0 - 6.0 5.2

3 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 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.

For assets measured at fair value on a nonrecurring basis during the first three months of 2023 and 2022, and still held as of March 31, 2023 and 2022, 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, 2023 and 2022.

Fair Value Measurements Using

3 unchanged sentences

Significant Unobservable Inputs

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 )

September 30, 2021

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

March 31, 2023

Collateral dependent loans $ 1,819 $ — $ — $ 1,819 $ 425

March 31, 2022

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

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 September 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 March 31, 2023 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, 2022 and December 31, 2021:

Carrying Amount Estimated Fair Value at September 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 March 31, 2023 and December 31, 2022:

Carrying Amount Estimated Fair Value at March 31, 2023

(In thousands)

68 unchanged sentences

Legal and Regulatory Proceedings

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

The Company has various legal proceedings pending at March 31, 2023, 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