1 unchanged sentence
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) primarily reviews the financial condition and results of operations of Community Bank System, Inc.
−Removed: (the “Company” or “CBSI”) as of and for the three and six months ended June 30, 2022 and 2021, although in some circumstances the first quarter of 2022 is also discussed in order to more fully explain recent trends.
+Added: (the “Company” or “CBSI”) as of and for the three and nine months ended September 30, 2022 and 2021, although in some circumstances the second and first quarters of 2022 are also discussed in order to more fully explain recent trends.
The following discussion and analysis should be read in conjunction with the Company’s Consolidated Financial Statements and related notes that appear on pages 3 through 32.
All references in the discussion of the financial condition and results of operations refer to the consolidated position and results of the Company and its subsidiaries taken as a whole.
−Removed: Unless otherwise noted, the term “this year” and equivalent terms refers to results in calendar year 2022, “last year” and equivalent terms refer to calendar year 2021, “second quarter” refers to the three months ended June 30, 2022, “YTD” refers to the six months ended June 30, 2022, and earnings per share (“EPS”) figures refer to diluted EPS.
+Added: Unless otherwise noted, the term “this year” and equivalent terms refers to results in calendar year 2022, “last year” and equivalent terms refer to calendar year 2021, “third quarter” refers to the three months ended September 30, 2022, “YTD” refers to the nine months ended September 30, 2022, and earnings per share (“EPS”) figures refer to diluted EPS.
This MD&A contains certain forward-looking statements with respect to the financial condition, results of operations, and business of the Company.
9 unchanged sentences
A summary of the accounting policies used by management is disclosed in Note A, “Summary of Significant Accounting Policies” on pages 76-88 of the most recent Form 10-K (fiscal year ended December 31, 2021) filed with the Securities and Exchange Commission (“SEC”) on March 1, 2022.
−Removed: A summary of new accounting policies used by management is disclosed in Note C, “Accounting Policies” on pages 12 and 13 of this Form 10-Q.
+Added: A summary of new accounting policies used by management is disclosed in Note C, “Accounting Policies” on pages 12-13 of this Form 10-Q.
Supplemental Reporting of Non-GAAP Results of Operations
−Removed: The Company also provides supplemental reporting of its results on an “operating,” “adjusted” and “tangible” basis, from which it excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts), accretion on acquired non-purchased credit deteriorated (“PCD”) loans, acquisition expenses, acquisition-related contingent consideration adjustments and the unrealized gain (loss) on equity securities.
+Added: The Company also provides supplemental reporting of its results on an “operating,” “adjusted” and “tangible” basis, from which it excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts), accretion on acquired non-purchased credit deteriorated (“PCD”) loans, acquisition expenses, acquisition-related contingent consideration adjustments, litigation accrual expenses and the unrealized gain (loss) on equity securities.
Although these items are non-GAAP measures, the Company’s management believes this information helps investors and analysts measure underlying core performance and improves comparability to other organizations that have not engaged in acquisitions.
−Removed: In addition, the Company provides supplemental reporting for “adjusted pre-tax, pre-provision net revenues,” which excludes the provision for credit losses, acquisition expenses, acquisition-related contingent consideration adjustments and the unrealized gain (loss) on equity securities from income before income taxes.
+Added: In addition, the Company provides supplemental reporting for “adjusted pre-tax, pre-provision net revenues,” which excludes the provision for credit losses, acquisition expenses, acquisition-related contingent consideration adjustments, litigation accrual expenses and the unrealized gain (loss) on equity securities from income before income taxes.
Although adjusted pre-tax, pre-provision net revenue is a non-GAAP measure, the Company’s management believes this information helps investors and analysts measure and compare the Company’s performance through a credit cycle by excluding the volatility in the provision for credit losses associated with the adoption of the Current Expected Credit Losses (“CECL”) model and the economic uncertainty caused by the COVID-19 pandemic.
−Removed: Earnings per share were $0.73 in the second quarter of 2022, down $0.15, or 17.0%, from the second quarter of 2021.
−Removed: Diluted adjusted net earnings per share, a non-GAAP measure, were $0.89 in the second quarter of 2022, compared to $0.91 in the second quarter of 2021, a $0.02 per share, or 2.2%, decrease.
−Removed: Adjusted pre-tax, pre-provision net revenue, a non-GAAP measure, was $1.13 per share in the second quarter of 2022, up $0.07, or 6.6%, from the second quarter of 2021.
+Added: Earnings per share were $0.90 in the third quarter of 2022, up $0.07, or 8.4%, from the third quarter of 2021.
+Added: Diluted adjusted net earnings per share, a non-GAAP measure, were $0.94 in the third quarter of 2022, compared to $0.87 in the third quarter of 2021, a $0.07 per share, or 8.0%, increase.
+Added: Adjusted pre-tax, pre-provision net revenue, a non-GAAP measure, was $1.25 per weighted average diluted share in the third quarter of 2022, up $0.21, or 20.2%, from the third quarter of 2021.
Reconciliations of GAAP amounts with corresponding non-GAAP amounts are presented in Table 10.
8 unchanged sentences
The Company’s core operating objectives are:
−Removed: (i) optimize the branch network and digital banking delivery systems, primarily through disciplined acquisition strategies and divestitures/consolidations, (ii) build profitable loan and deposit volume using both organic and acquisition strategies, (iii) manage an investment securities portfolio to complement the Company’s loan and deposit strategies and optimize interest rate risk, yield and liquidity, (iv) increase the noninterest component of total revenues through growth in existing financial services business units, and the acquisition of additional financial services and banking businesses, and (v) utilize technology to deliver customer-responsive products and services and improve efficiencies.
+Added: (i) optimize the branch network and digital banking delivery systems, primarily through disciplined acquisition strategies and divestitures/consolidations, (ii) build profitable loan and deposit volume using both organic and acquisition strategies, (iii) manage an investment securities portfolio to complement the Company’s loan and deposit strategies and optimize interest rate risk, yield and liquidity, (iv) increase the noninterest component of total revenues through growth in existing banking, employee benefit, insurance and wealth management services business units, and the acquisition of additional financial services and banking businesses, and (v) utilize technology to deliver customer-responsive products and services and improve efficiencies.
Significant factors reviewed by management to evaluate achievement of the Company’s operating objectives and its operating results and financial condition include, but are not limited to:
17 unchanged sentences
The merger enhanced the Company’s presence in five counties in New York’s Southern Tier and Finger Lakes regions.
−Removed: In connection with the merger, the Company added eight full-service offices to its branch service network and acquired approximately $576.4 million of assets, including $437.0 million of loans and $11.3 million of investment securities, as well as $522.3 million of deposits.
−Removed: Preliminary goodwill of $50.7 million and an $8.0 million core deposit intangible asset were recognized as a result of the merger.
−Removed: Second quarter and YTD net income decreased compared to the equivalent 2021 timeframes by $8.1 million, or 17.0%, and $13.9 million, or 13.8%, respectively.
−Removed: Earnings per share of $0.73 for the second quarter of 2022 was $0.15 less than the second quarter of 2021, and 2022 YTD earnings per share of $1.60 was $0.25 lower than 2021 YTD earnings per share.
−Removed: The decreases in net income and earnings per share were due to increases in operating expenses and the provision for credit losses, including the impacts from the Elmira acquisition, partially offset by increases in net interest income and noninterest revenues and decreases in income taxes and fully-diluted shares outstanding.
−Removed: Second quarter and YTD net income adjusted to exclude acquisition expenses, acquisition-related contingent consideration adjustments, acquisition-related provision for credit losses and the unrealized gain (loss) on equity securities (“operating net income”), a non-GAAP measure, decreased $1.6 million, or 3.4%, as compared to the second quarter of 2021 and decreased $7.2 million, or 7.1%, compared to June YTD 2021.
−Removed: Earnings per share adjusted to exclude acquisition expenses, acquisition-related contingent consideration adjustments, acquisition-related provision for credit losses and the unrealized gain (loss) on equity securities (“operating earnings per share”), a non-GAAP measure, of $0.85 for the second quarter decreased $0.03 compared to the second quarter of 2021.
−Removed: Operating earnings per share of $1.72 for the first six months of 2022 decreased $0.13 compared to the prior year period.
+Added: In connection with the merger, the Company added eight full-service offices to its branch service network and acquired approximately $579.0 million of identifiable assets, including $437.0 million of loans, $11.3 million of investment securities and $8.0 million of core deposit intangibles, as well as $522.3 million of deposits.
+Added: Preliminary goodwill of $45.8 million was recognized as a result of the merger.
+Added: Third quarter net income increased compared to last year’s third quarter by $3.4 million, or 7.4%, while YTD net income decreased compared to the equivalent 2021 timeframe by $10.6 million, or 7.2%.
+Added: Earnings per share of $0.90 for the third quarter of 2022 was $0.07 more than the third quarter of 2021, whereas 2022 YTD earnings per share of $2.49 was $0.19 lower than 2021 YTD earnings per share.
+Added: The increases in net income and earnings per share between the quarters were due to increases in net interest income and noninterest revenues and a decrease in fully-diluted average shares outstanding, offset, in part, by higher noninterest expenses and increases in the provision for credit losses and income taxes.
+Added: The decreases in net income and earnings per share between the YTD periods were due to increases in noninterest expenses and the provision for credit losses, including the impacts from the Elmira acquisition, partially offset by increases in net interest income and noninterest revenues and decreases in income taxes and fully-diluted shares outstanding.
+Added: Third quarter and YTD net income adjusted to exclude acquisition expenses, acquisition-related contingent consideration adjustments, acquisition-related provision for credit losses, litigation accrual expenses and the unrealized gain (loss) on equity securities (“operating net income”), a non-GAAP measure, increased $3.7 million, or 8.1%, as compared to the third quarter of 2021 and decreased $3.5 million, or 2.4%, compared to September YTD 2021.
+Added: Earnings per share adjusted to exclude acquisition expenses, acquisition-related contingent consideration adjustments, acquisition-related provision for credit losses, litigation accrual expenses and the unrealized gain (loss) on equity securities (“operating earnings per share”), a non-GAAP measure, of $0.90 for the third quarter of 2022 increased $0.07 compared to the third quarter of 2021.
+Added: Operating earnings per share of $2.62 for the first nine months of 2022 decreased $0.06 compared to the prior year period.
2021 results were enhanced by a net benefit recorded in the provision for credit losses and higher Paycheck Protection Program (“PPP”)-related revenues than the comparable periods of 2022, which, net of tax, were responsible for a $0.14 decrease in fully-diluted operating earnings per share between the comparable quarters and a $0.45 decrease between the comparable YTD periods.
Reconciliations of GAAP amounts with corresponding non-GAAP amounts are presented in Table 10.
−Removed: Net income adjusted to exclude income taxes, provision for credit losses, acquisition expenses, acquisition-related contingent consideration adjustments and the unrealized gain (loss) on equity securities (“adjusted pre-tax, pre-provision net revenue”), a non-GAAP measure, of $61.2 million for the second quarter increased $3.2 million, or 5.5%, as compared to the second quarter of 2021.
−Removed: Adjusted pre-tax, pre-provision net revenue of $122.2 million for the first six months of 2022 increased $5.0 million, or 4.2%, as compared to the first six months of 2021.
−Removed: Earnings per share adjusted to exclude income taxes, provision for credit losses, acquisition expenses, acquisition-related contingent consideration adjustments and the unrealized gain (loss) on equity securities (“adjusted pre-tax, pre-provision net revenue per share”), a non-GAAP measure, of $1.13 for the second quarter of 2022 was $0.07 higher than the second quarter of 2021, and 2022 YTD adjusted pre-tax, pre-provision net revenue per share of $2.24 was $0.09 higher than the prior YTD period as the increases in revenues outpaced the increase in operating expenses between the periods.
+Added: Net income adjusted to exclude income taxes, provision for credit losses, acquisition expenses, acquisition-related contingent consideration adjustments, litigation accrual expenses and the unrealized gain (loss) on equity securities (“adjusted pre-tax, pre-provision net revenue”), a non-GAAP measure, of $67.9 million for the third quarter increased $11.4 million, or 20.1%, as compared to the third quarter of 2021.
+Added: Adjusted pre-tax, pre-provision net revenue of $190.1 million for the first nine months of 2022 increased $16.3 million, or 9.4%, as compared to the first nine months of 2021.
+Added: Earnings per share adjusted to exclude income taxes, provision for credit losses, acquisition expenses, acquisition-related contingent consideration adjustments, litigation accrual expenses and the unrealized gain (loss) on equity securities (“adjusted pre-tax, pre-provision net revenue per share”), a non-GAAP measure, of $1.25 for the third quarter of 2022 was $0.21 higher than the third quarter of 2021, and 2022 YTD adjusted pre-tax, pre-provision net revenue per share of $3.49 was $0.30 higher than the prior YTD period as the increases in revenues outpaced the increase in operating expenses between the periods.
Reconciliations of GAAP amounts with corresponding non-GAAP amounts are presented in Table 10.
−Removed: Loans and deposits increased on both an ending and average basis as compared to the prior year second quarter, reflective of large net inflows of funds from government stimulus programs and PPP lending, along with the Company’s enhanced focus on organic loan generation and the second quarter 2022 acquisition of Elmira.
−Removed: The average yield on interest-earning assets increased eight basis points compared to the prior year second quarter, while on a YTD basis the average yield on interest-earning assets decreased 12 basis points, as the average yield on investments increased while the average yield on loans decreased.
−Removed: The average yield on investments, including cash equivalents, increased 39 basis points compared to the prior year’s second quarter and increased 25 basis points compared to the prior YTD, as the Company meaningfully shifted the composition of earning assets away from low-yield cash equivalents to higher yielding investment securities between the periods.
−Removed: The average yield on loans for the second quarter decreased by 11 basis points compared to the second quarter of 2021 and decreased 26 basis points on a YTD basis driven by a decline in PPP-related interest income between the periods, which declined $2.8 million on a quarterly basis and $8.0 million on a YTD basis.
−Removed: The Company’s total cost of funds for the first six months of 2022 decreased two basis points from the year earlier period, as the Company’s deposit funding cost and the rate on borrowings both decreased from the prior year period.
+Added: Loans and deposits increased on both an ending and average basis as compared to the prior year third quarter, reflective of large net inflows of funds from government stimulus programs and PPP lending, along with the Company’s continued enhanced focus on organic loan generation and the second quarter 2022 acquisition of Elmira.
+Added: The yield on average interest-earning assets increased 35 basis points compared to the prior year third quarter as the yields on average investments including cash equivalents and average loans both increased, while on a YTD basis the yield on average interest-earning assets increased four basis points as the yield on average investments including cash equivalents increased while the yield on average loans decreased.
+Added: The yield on average investments, including cash equivalents, increased 50 basis points compared to the prior year’s third quarter and increased 33 basis points compared to the prior YTD, as the Company meaningfully shifted the composition of earning assets away from cash equivalents that were earning a low yield in the prior year to higher yielding investment securities between the periods.
+Added: The yield on average loans for the third quarter increased by seven basis points compared to the third quarter of 2021 and decreased 14 basis points on a YTD basis.
+Added: The yield on average loans included a decline in PPP-related interest income between the periods, which declined $3.9 million on a quarterly basis and $11.9 million on a YTD basis.
+Added: The Company’s total cost of funds for the first nine months of 2022 remained consistent with the year earlier period, as the decrease in the Company’s deposit funding cost was offset by an increase in the rate on borrowings from the prior year period.
The majority of borrowings are customer repurchase agreements, rather than wholesale borrowings obtained through capital markets and correspondent banks.
−Removed: Customer repurchase agreements have deposit-like features and typically bear lower rates of interest than other types of wholesale borrowings.
−Removed: The provision for credit losses of $6.0 million for the second quarter and $6.9 million for YTD 2022 resulted in a $10.4 million and $17.0 million higher provision for credit losses than comparable prior year periods, respectively.
−Removed: The second quarter and YTD 2022 provision for credit losses was reflective of a moderate deterioration in the economic outlook, continued low levels of net charge-offs, delinquent loans and nonperforming loans, an increase in loans outstanding and included $3.9 million of acquisition-related provision for credit losses due to the Elmira acquisition.
−Removed: Comparatively, at the end of the second quarter of 2021, economic forecasts reflected a post-vaccine economic recovery and loans outstanding remaining on pandemic-related payment deferral decreased significantly, resulting in a release of reserves in that period.
−Removed: Net charge-offs were $0.4 million for the second quarter and $0.9 million for the first six months of 2022, compared to net recoveries of $0.6 million for the prior year second quarter and $0.2 million for the first six months of 2021.
−Removed: Second quarter 2022 nonperforming and delinquent loan ratios improved in comparison to the second quarter of 2021 largely attributable to the upgrade of several large business loans primarily operating in the hospitality industry from nonaccrual status to accruing status during the fourth quarter of 2021 and first quarter of 2022 whose operations were temporarily negatively impacted by the pandemic .
+Added: Customer repurchase agreements have deposit-like features and typically have lower rates of interest than other types of wholesale borrowings.
+Added: The provision for credit losses of $5.1 million for the third quarter and $12.0 million for YTD 2022 were up $6.0 million and $23.0 million from the comparable prior year periods, respectively.
+Added: The third quarter and YTD 2022 provision for credit losses was reflective of a weaker economic forecast and an increase in loans outstanding, partially offset by continued low levels of net charge-offs, delinquent loans and nonperforming loans.
+Added: The second quarter provision for credit losses included $3.9 million of acquisition-related provision for credit losses due to the Elmira acquisition.
+Added: Comparatively, at the end of the third quarter of 2021, economic forecasts reflected a post-vaccine economic recovery and included the continuation of elevated real estate and vehicle collateral values, resulting in a release of reserves for the quarter and on a YTD basis.
+Added: Net charge-offs were $0.4 million for the third quarter and $1.3 million for the first nine months of 2022, compared to net charge-offs of $1.4 million for the prior year third quarter and $1.1 million for the first nine months of 2021.
+Added: Third quarter 2022 nonperforming and delinquent loan ratios improved in comparison to the third quarter of 2021 largely attributable to the upgrade of several large business loans, primarily customers operating in the hospitality industry whose operations were negatively impacted during the height of the pandemic, from nonaccrual status to accruing status during the fourth quarter of 2021 and first quarter of 2022 .
Net Income and Profitability
−Removed: As shown in Table 1, net income for the second quarter and June YTD of $39.8 million and $86.9 million, respectively, decreased $8.1 million, or 17.0%, as compared to the second quarter of 2021 and decreased $13.9 million, or 13.8%, compared to June YTD 2021.
−Removed: Earnings per share of $0.73 for the second quarter was $0.15 lower than the second quarter of 2021, while earnings per share for the first six months of 2022 of $1.60 was $0.25 lower than the first six months of 2021.
−Removed: The decrease in net income and earnings per share for the quarter and YTD are the result of increases in operating expenses and the provision for credit losses, including the impacts from the Elmira acquisition, partially offset by increases in net interest income and noninterest revenues and decreases in income taxes and fully-diluted shares outstanding.
−Removed: Operating net income, a non-GAAP measure, of $46.3 million and $93.6 million for the second quarter and June YTD, respectively, decreased $1.6 million, or 3.4%, as compared to the second quarter of 2021 and decreased $7.2 million, or 7.1%, compared to June YTD 2021.
−Removed: Operating earnings per share, a non-GAAP measure, of $0.85 for the second quarter was down $0.03 compared to the second quarter of 2021, while operating earnings per share of $1.72 for the first six months of 2022 was down $0.13 compared to the first six months of 2021.
+Added: As shown in Table 1, net income for the third quarter and September YTD of $48.7 million and $135.6 million, respectively, increased $3.4 million, or 7.4%, as compared to the third quarter of 2021 and decreased $10.6 million, or 7.2%, compared to September YTD 2021.
+Added: Earnings per share of $0.90 for the third quarter was $0.07 higher than the third quarter of 2021, while earnings per share for the first nine months of 2022 of $2.49 was $0.19 lower than the first nine months of 2021.
+Added: The increases in net income and earnings per share between the quarters were due to increases in net interest income and noninterest revenues and a decrease in fully-diluted average shares outstanding, partially offset by higher noninterest expenses and increases in the provision for credit losses and income taxes.
+Added: The decreases in net income and earnings per share between the YTD periods were due to increases in noninterest expenses and the provision for credit losses, including the impacts from the Elmira acquisition, partially offset by increases in net interest income and noninterest revenues and decreases in income taxes and fully-diluted shares outstanding.
+Added: Operating net income, a non-GAAP measure, of $49.0 million and $142.6 million for the third quarter and September YTD, respectively, increased $3.7 million, or 8.1%, as compared to the third quarter of 2021 and decreased $3.5 million, or 2.4%, compared to September YTD 2021.
+Added: Operating earnings per share, a non-GAAP measure, of $0.90 for the third quarter was up $0.07 compared to the third quarter of 2021, while operating earnings per share of $2.62 for the first nine months of 2022 was down $0.06 compared to the first nine months of 2021.
2021 results were enhanced by a net benefit recorded in the provision for credit losses and higher PPP-related revenues than the comparable periods of 2022, which, net of tax, were responsible for a $0.14 decrease in fully-diluted operating earnings per share between the comparable quarters and a $0.45 decrease between the comparable YTD periods.
See Table 10 for Reconciliation of GAAP to Non-GAAP Measures.
−Removed: As reflected in Table 1, second quarter net interest income of $103.1 million was up $11.0 million, or 12.0%, from the comparable prior year period.
−Removed: The quarterly improvement resulted from an increase in interest-earning asset balances, an increase in the yield on interest-earning assets and a decrease in the average rate paid on interest-bearing liabilities, partially offset by an increase in interest-bearing liability balances.
−Removed: Net interest income for the first six months of 2022 increased $12.0 million, or 6.4%, versus the first six months of 2021.
−Removed: The year-over-year improvement resulted from an increase in interest-earning asset balances and a decrease in the average rate paid on interest-bearing liabilities, partially offset by a decrease in the yield on interest-earning assets and an increase in interest-bearing liability balances.
−Removed: The provision for credit losses for the second quarter and June YTD increased $10.4 million and $17.0 million as compared to the second quarter and first six months of 2021, respectively.
−Removed: The second quarter and YTD 2022 provision for credit losses was reflective of a moderated economic outlook, continued low levels of net charge-offs, delinquent loans and nonperforming loans, an increase in loans outstanding and included $3.9 million of acquisition-related provision for credit losses due to the Elmira acquisition.
−Removed: Second quarter and year-to-date noninterest revenues were $64.1 million and $129.8 million, respectively, up $4.6 million, or 7.8%, from the second quarter of 2021 and up $11.8 million, or 10.0%, from the first six months of 2021.
−Removed: The increase compared to the prior year’s second quarter was a result of increases in deposit service charges and fees, insurance services revenue and employee benefit services revenue, partially offset by decreases in other banking revenue, wealth management services revenue, mortgage banking revenue and unrealized gains and losses on equity securities, while debit interchange and ATM fees were consistent.
−Removed: The YTD increase was due to increases in employee benefit services revenue, insurance services revenue, deposit service charges and fees, debit interchange and ATM fees and wealth management services revenue, partially offset by decreases in mortgage banking revenue, other banking revenue and unrealized gains and losses on equity securities.
−Removed: Noninterest expenses of $110.4 million and $210.2 million for the second quarter and June YTD periods, respectively, reflected an increase of $16.9 million, or 18.0%, from the second quarter of 2021 and an increase of $23.4 million, or 12.5%, from the first six months of 2021.
−Removed: The increase in noninterest expenses for the quarter was due to increases in salaries and benefits, acquisition expenses, other expenses, business development and marketing expenses, legal and professional fees, data processing and communications expenses, amortization of intangible assets, acquisition-related contingent consideration adjustments and occupancy and equipment expenses.
−Removed: The YTD increase in noninterest expenses was due to increases in salaries and benefits, acquisition expenses, other expenses, business development and marketing expenses, legal and professional fees, data processing and communications expenses, amortization of intangible assets and acquisition-related contingent consideration adjustments, partially offset by a decrease in occupancy and equipment expenses.
−Removed: Excluding acquisition expenses and acquisition-related contingent consideration adjustments, 2022 operating expenses were $12.5 million, or 13.4%, higher for the second quarter and $18.8 million, or 10.1%, higher for the year-to-date timeframe.
−Removed: The effective income tax rates were 21.6% and 21.5% for the second quarter and YTD 2022, respectively, as compared to 23.1% and 20.8% for the comparable prior year periods.
−Removed: The effective tax rate in the second quarter of 2021 was driven up by an increase in certain state income tax rates that were enacted during that period.
−Removed: The increase in the YTD effective tax rate was primarily attributable to lower levels of tax benefits related to stock-based compensation activity.
+Added: As reflected in Table 1, third quarter net interest income of $110.4 million was up $17.8 million, or 19.2%, from the comparable prior year period.
+Added: Net interest income for the first nine months of 2022 increased $29.7 million, or 10.7%, versus the first nine months of 2021.
+Added: The quarterly and year-over-year improvements resulted from an increase in the yield on interest-earning assets and an increase in interest-earning asset balances, partially offset by an increase in the average rate paid on interest-bearing liabilities and an increase in interest-bearing liability balances.
+Added: The provision for credit losses for the third quarter and September YTD increased $6.0 million and $23.0 million as compared to the third quarter and first nine months of 2021, respectively.
+Added: The third quarter and YTD 2022 provision for credit losses was reflective of a weaker economic forecast and an increase in loans outstanding, partially offset by continued low levels of net charge-offs, delinquent loans and nonperforming loans.
+Added: The second quarter provision for credit losses included $3.9 million of acquisition-related provision for credit losses due to the Elmira acquisition.
+Added: Third quarter and year-to-date noninterest revenues were $65.2 million and $195.0 million, respectively, up $0.9 million, or 1.5%, from the third quarter of 2021 and up $12.7 million, or 7.0%, from the first nine months of 2021.
+Added: The increase compared to the prior year’s third quarter was a result of increases in insurance services revenue, deposit service charges and fees, debit interchange and ATM fees and unrealized gains and losses on equity securities, partially offset by decreases in employee benefit services revenue, wealth management services revenue, mortgage banking revenue and other banking revenue.
+Added: The YTD increase was due to increases in insurance services revenue, deposit service charges and fees, employee benefit services revenue and debit interchange and ATM fees, partially offset by decreases in mortgage banking revenue, wealth management services revenue, other banking revenue and unrealized gains and losses on equity securities.
+Added: Noninterest expenses of $108.2 million and $318.4 million for the third quarter and September YTD periods, respectively, reflected an increase of $7.8 million, or 7.7%, from the third quarter of 2021 and an increase of $31.2 million, or 10.9%, from the first nine months of 2021.
+Added: The increase in noninterest expenses for the quarter was due to increases in salaries and benefits, business development and marketing expenses, data processing and communications expenses, other expenses, occupancy and equipment expenses, acquisition expenses, amortization of intangible assets and the absence of a litigation accrual expense adjustment, partially offset by a decrease in legal and professional fees.
+Added: The YTD increase in noninterest expenses was due to increases in salaries and benefits, acquisition expenses, other expenses, business development and marketing expenses, data processing and communications expenses, legal and professional fees, amortization of intangible assets, acquisition-related contingent consideration adjustments, occupancy and equipment expenses and the absence of a negative litigation accrual expense adjustment.
+Added: Excluding acquisition expenses, acquisition-related contingent consideration adjustments and litigation accrual expenses, 2022 operating expenses were $7.3 million, or 7.3%, higher for the third quarter and $26.2 million, or 9.1%, higher for the year-to-date timeframe, in part due to the acquisition of Elmira Savings Bank in the second quarter of 2022 and financial services acquisitions.
+Added: The effective income tax rates were 22.0% and 21.6% for the third quarter and YTD 2022, respectively, as compared to 21.1% and 20.9% for the comparable prior year periods.
+Added: The effective tax rate in the third quarter of 2021 was driven down by a decrease in the Company’s full year effective tax rate projection.
+Added: The increase in the YTD effective tax rate was fully attributable to lower levels of tax benefits related to stock-based compensation activity.
+Added: The effective tax rates adjusted to exclude stock-based compensation tax benefits for both YTD periods were 22.0%.
A condensed income statement is as follows:
1 unchanged sentence
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
(000’s omitted, except per share data)
7 unchanged sentences
Net Interest Income
−Removed: Net interest income is the amount by which interest and fees on interest-earning assets (loans, investments and cash equivalents) exceeds the cost of funds, which consists primarily of interest paid to the Company’s depositors and on borrowings.
+Added: Net interest income is the amount by which interest and fees on interest-earning assets (loans, investments and cash equivalents) exceeds the cost of funds, which consists primarily of interest paid to the Company’s depositors and on customer and external borrowings.
Net interest margin is the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities as a percentage of interest-earning assets.
−Removed: As shown in Table 2a, net interest income (with nontaxable income converted to a fully tax-equivalent basis) for the second quarter was $104.1 million, an increase of $11.2 million, or 12.0%, compared to the same period last year.
−Removed: This was driven by a $1.10 billion increase in average interest-earning assets, an eight basis point increase in the average yield on interest-earnings assets and a two basis point decrease in the average rate paid on interest-bearing liabilities, offset by a $740.9 million increase in average interest-bearing liabilities in comparison to the second quarter of 2021.
−Removed: As reflected in Table 3, net interest income was favorably impacted by $8.1 million due to the volume increase in interest-earning assets, $2.9 million due to the increase in the average yield on interest-earning assets and $0.5 million due to a decrease in the average rate paid on interest-bearing liabilities, partially offset by the unfavorable impact on net interest income of $0.3 million due to the volume increase in interest-bearing liabilities.
−Removed: June YTD net interest income (with nontaxable income converted to a fully tax-equivalent basis), as reflected in Table 2b, of $199.8 million, increased $12.0 million, or 6.4%, from the year-earlier period.
−Removed: The June YTD increase resulted from a $1.32 billion increase in average interest-earning assets and a four basis point decrease in the average rate paid on interest-bearing liabilities, partially offset by a 12 basis point decrease in the average yield on interest-earning assets and an $876.5 million increase in average interest-bearing liabilities.
−Removed: As reflected in Table 3, for June YTD, the volume increase in interest-earning assets and the decrease in the average rate paid on interest-bearing liabilities had favorable impacts on net interest income of $19.1 million and $1.8 million, respectively, partially offset by the decrease in the average yield on interest-earning assets having an unfavorable impact on net interest income of $8.2 million and the volume increase in interest-bearing liabilities having a negative impact of $0.7 million.
−Removed: The net interest margin of 2.89% for the second quarter of 2022 was 10 basis points higher as compared to the second quarter of 2021.
−Removed: The increase was the result of an eight basis point increase in the interest-earning asset yield and a two basis point decrease in the average rate on interest-bearing liabilities.
−Removed: The net interest margin of 2.81% for the first six months of 2022 was 10 basis points lower than the comparable period of 2021.
−Removed: The yield on interest-earning assets decreased 12 basis points, while the rate on interest-bearing liabilities decreased by four basis points for the first six months of 2022 as compared to the prior year period.
−Removed: The eight basis point increase in the average yield on interest-earning assets for the quarter was the result of an increase in the average yield on investments, partially offset by a decrease in the average yield on loans.
−Removed: For the second quarter, the average yield on investments, including cash equivalents, increased 39 basis points, while the average yield on loans decreased by 11 basis points compared to the prior year.
−Removed: The 12 basis point decrease in the yield on interest-earning assets for the first six months of 2022 was the result of a 26 basis point decrease in the average yield on loans, partially offset by a 25 basis point increase in the average yield on investments, including cash equivalents, compared to the prior year.
−Removed: The decrease in the loan yields were reflective of declines in PPP-related interest income between the periods.
−Removed: During the second quarter of 2022, the Company recorded $1.1 million of PPP-related interest income, a decrease of $2.8 million from the prior year’s second quarter, while during the first six months of 2022, the Company recorded $2.8 million of PPP-related interest income, a decrease of $8.0 million from the first six months of 2021.
−Removed: The increase in investment yields were primarily driven by the Company meaningfully shifting the composition of earning assets away from low-yield cash equivalents to higher yield investment securities between the periods.
−Removed: The average rate on interest-bearing liabilities decreased by two basis points compared to the prior year quarter as the average rate paid on interest-bearing deposits decreased two basis points and the average rate paid on external borrowings decreased one basis point from the comparable prior period.
−Removed: For the first six months of 2022, the average rate on interest-bearing liabilities decreased by four basis points from the comparable prior year period as the average rate on interest-bearing deposits decreased three basis points and the average rate on external borrowings decreased 21 basis points.
−Removed: The decrease in the average rate paid on interest-bearing deposits was driven by a decrease in the interest rate paid on time deposits.
−Removed: The decrease in the average cost of borrowings was primarily the result of the redemption of certain higher rate subordinated debt instruments in the first quarter of 2021, as well as the decrease in the rates paid on customer repurchase agreements in response to market conditions.
−Removed: The second quarter and YTD average balance of investments, including cash equivalents, increased $714.9 million and $1.11 billion, respectively, as compared to the corresponding prior year periods.
−Removed: Investment security purchases outpaced maturities, calls and principal payments during second quarter and YTD.
−Removed: The cash equivalents component of average earning assets decreased $1.60 billion and $1.17 billion for the second quarter and YTD periods, respectively, compared to the prior year periods.
−Removed: The decrease in cash equivalents was primarily due to the Company meaningfully shifting the composition of earning assets away from low-yield cash equivalents to higher yielding investment securities and loans.
−Removed: Average loan balances increased $383.9 million for the quarter and $208.1 million YTD as compared to the prior year, with organic and acquired growth during both periods, including the Elmira acquisition in May 2022, despite declines in average PPP loan balances.
+Added: As shown in Table 2a, net interest income (with nontaxable income converted to a fully tax-equivalent basis) for the third quarter was $111.5 million, an increase of $18.1 million, or 19.4%, compared to the same period last year.
+Added: This was driven by a 35 basis point increase in the average yield on interest-earnings assets and a $1.08 billion increase in average interest-earning assets, partially offset by a nine basis point increase in the average rate paid on interest-bearing liabilities and a $724.5 million increase in average interest-bearing liabilities in comparison to the third quarter of 2021.
+Added: As reflected in Table 3, net interest income was favorably impacted by $12.5 million due to the increase in the average yield on interest-earning assets and $8.1 million due to the volume increase in interest-earning assets, partially offset by the unfavorable impacts on net interest income of $2.2 million due to an increase in the average rate paid on interest-bearing liabilities and $0.3 million due to the volume increase in interest-bearing liabilities.
+Added: September YTD net interest income (with nontaxable income converted to a fully tax-equivalent basis), as reflected in Table 2b, of $311.4 million, increased $30.1 million, or 10.7%, from the year-earlier period.
+Added: The September YTD increase resulted from a $1.24 billion increase in average interest-earning assets and a four basis point increase in the average yield on interest-earning assets, partially offset by an $825.3 million increase in average interest-bearing liabilities and a one basis point increase in the average rate paid on interest-bearing liabilities.
+Added: As reflected in Table 3, for September YTD, the volume increase in interest-earning assets and the increase in the average yield on interest-earning assets had favorable impacts on net interest income of $27.6 million and $3.8 million, respectively, partially offset by the volume increase in interest-bearing liabilities and the increase in the average rate paid on interest-bearing liabilities having unfavorable impacts on net interest income of $0.9 million and $0.4 million, respectively.
+Added: The net interest margin of 3.03% for the third quarter of 2022 was 29 basis points higher as compared to the third quarter of 2021.
+Added: The increase was the result of a 35 basis point increase in the interest-earning asset yield, partially offset by a nine basis point increase in the rate on interest-bearing liabilities.
+Added: The net interest margin of 2.88% for the first nine months of 2022 was three basis points higher than the comparable period of 2021.
+Added: The yield on interest-earning assets increased four basis points, while the rate on interest-bearing liabilities increased by one basis point for the first nine months of 2022 as compared to the prior year period.
+Added: The 35 basis point increase in the average yield on interest-earning assets for the quarter was the result of increases in the average yield on investments and cash equivalents and the average yield on loans.
+Added: For the third quarter, the average yield on investments, including cash equivalents, increased 50 basis points and the average yield on loans increased by seven basis points compared to the prior year.
+Added: The four basis point increase in the yield on interest-earning assets for the first nine months of 2022 was the result of a 33 basis point increase in the average yield on investments, including cash equivalents, partially offset by a 14 basis point decrease in the average yield on loans as compared to the prior year.
+Added: The changes in the loan yields included declines in PPP-related interest income between the periods.
+Added: During the third quarter of 2022, the Company recorded $0.5 million of PPP-related interest income, a decrease of $3.9 million from the prior year’s third quarter, while during the first nine months of 2022, the Company recorded $3.2 million of PPP-related interest income, a decrease of $11.9 million from the first nine months of 2021.
+Added: The increase in investment yields were primarily driven by the Company meaningfully shifting the composition of earning assets away from cash equivalents that were earning a low yield at the time to higher yielding investment securities between the periods.
+Added: The average rate on interest-bearing liabilities increased by nine basis points compared to the prior year quarter as the average rate paid on interest-bearing deposits increased four basis points and the average rate paid on external borrowings increased 95 basis points from the comparable prior year period.
+Added: For the first nine months of 2022, the average rate on interest-bearing liabilities increased by one basis point from the comparable prior year period as the average rate on interest-bearing deposits decreased one basis point, while the average rate on external borrowings increased 27 basis points.
+Added: The changes in the average rates paid on interest-bearing deposits were driven by increases in the interest rates paid on interest checking and money market deposits, while the interest rate paid on time deposits decreased.
+Added: The increases in the average cost of borrowings were primarily the result of higher market interest rates and the Company entering into an overnight borrowing position during in the second quarter of 2022.
+Added: The third quarter and YTD average balance of investments, including cash equivalents, increased $16.0 million and $742.7 million, respectively, as compared to the corresponding prior year periods.
+Added: Investment security maturities, calls and principal payments outpaced purchases during the third quarter while investment security purchases outpaced maturities, calls and principal payments during the YTD period.
+Added: The cash equivalents component of average earning assets decreased $2.05 billion and $1.47 billion for the third quarter and YTD periods, respectively, compared to the prior year periods.
+Added: The decrease in cash equivalents was primarily due to the Company meaningfully shifting the composition of earning assets away from cash equivalents that at the time were earning a low yield to higher yielding investment securities and loans.
+Added: Average loan balances increased $1.06 billion for the quarter and $496.7 million YTD as compared to the prior year, driven by organic and acquired growth during both periods, including the Elmira acquisition in May 2022, despite declines in average PPP loan balances.
The change in average loan balances for the quarter and YTD periods included a $215.4 million and $300.1 million decrease in average PPP loans, respectively.
Average interest-bearing deposits increased $479.9 million compared to the prior year quarter and $733.7 million compared to the prior YTD period.
−Removed: The increase in average interest-bearing deposits was due to increases in interest checking, savings and money market deposits due primarily to large inflows of government stimulus-related deposit funding and the Elmira acquisition in May 2022, partially offset by decreases in time deposits.
−Removed: The average borrowing balance, including borrowings at the Federal Home Loan Bank of New York and the Federal Home Loan Bank of Boston (collectively referred to as “FHLB”), overnight borrowings at the Federal Reserve Bank of New York (“Federal Reserve”), subordinated notes payable, subordinated debt held by unconsolidated subsidiary trusts and securities sold under agreement to repurchase (customer repurchase agreements), increased $53.7 million and $13.8 million for the quarter and YTD periods respectively.
−Removed: The increase in average borrowings from the prior year quarter and YTD periods was primarily due to an increase in average customer repurchase agreements, while the increase from the prior YTD period was partially offset by the redemption of certain higher rate subordinated debt instruments in the first quarter of 2021.
−Removed: Tables 2a and 2b below sets forth information related to average interest-earning assets and interest-bearing liabilities and their associated yields and rates for the periods indicated.
−Removed: Interest income and yields are on a fully tax-equivalent basis (“FTE”) using a marginal income tax rate of 24.2% in both 2022 and 2021.
+Added: The quarterly increase in average interest-bearing deposits was due to increases in all deposit categories, due primarily to large inflows of government stimulus-related deposit funding and the Elmira acquisition in May 2022.
+Added: The YTD increase in average interest-bearing deposits was due to increases in savings, interest checking and money market deposits, while time deposits declined.
+Added: The average borrowing balance, including borrowings at the Federal Home Loan Bank of New York and the Federal Home Loan Bank of Boston (collectively referred to as “FHLB”), overnight borrowings at the Federal Reserve Bank of New York (“Federal Reserve”) and FHLB, subordinated notes payable, subordinated debt held by unconsolidated subsidiary trusts and securities sold under agreement to repurchase (customer repurchase agreements), increased $244.5 million and $91.5 million for the quarter and YTD periods, respectively.
+Added: The increases in average borrowings from the prior year quarter and YTD periods were primarily due to increases in average overnight borrowings and customer repurchase agreements.
+Added: Tables 2a and 2b below set forth information related to average interest-earning assets and interest-bearing liabilities and their associated yields and rates for the periods indicated.
+Added: Interest income and yields are on a fully tax-equivalent basis (“FTE”) using a marginal income tax rate of 24.1% and 24.2% in 2022 and 2021, respectively.
Average balances are computed by totaling the daily ending balances in a period and dividing by the number of days in that period.
4 unchanged sentences
Three Months Ended
−Removed: June 30, 2022
−Removed: June 30, 2021
+Added: September 30, 2022
+Added: September 30, 2021
(000’s omitted except yields and rates)
10 unchanged sentences
Customer repurchase agreements
−Removed: Overnight FRB borrowings
+Added: Overnight borrowings
FHLB borrowings
16 unchanged sentences
Year-to-Date Average Balance Sheet
−Removed: Six Months Ended
−Removed: Six Months Ended
−Removed: June 30, 2022
−Removed: June 30, 2021
+Added: Nine Months Ended
+Added: Nine Months Ended
+Added: September 30, 2022
+Added: September 30, 2021
(000’s omitted except yields and rates)
10 unchanged sentences
Customer repurchase agreements
−Removed: Overnight FRB borrowings
+Added: Overnight borrowings
FHLB borrowings
16 unchanged sentences
The adjustment attempts to enhance the comparability of the performance of assets that have different tax liabilities.
−Removed: As discussed above and disclosed in Table 3 below, the change in net interest income (fully tax-equivalent basis) may be analyzed by segregating the volume and rate components of the changes in interest income and interest expense for each underlying category.
−Removed: Three months ended June 30, 2022
−Removed: Six months ended June 30, 2022
−Removed: versus June 30, 2021
−Removed: versus June 30, 2021
+Added: As discussed above and disclosed in Table 3 below, the change in net interest income (FTE basis) may be analyzed by segregating the volume and rate components of the changes in interest income and interest expense for each underlying category.
+Added: Three months ended September 30, 2022
+Added: Nine months ended September 30, 2022
+Added: versus September 30, 2021
+Added: versus September 30, 2021
Increase (Decrease) Due to Change in (1)
10 unchanged sentences
Customer repurchase agreements
−Removed: Overnight FRB borrowings
+Added: Overnight borrowings
FHLB borrowings
13 unchanged sentences
and 4) insurance and risk management products and services (performed by OneGroup).
−Removed: Additionally, the Company has other transactions, including unrealized gains or losses on equity securities.
+Added: Additionally, the Company has other transactions that impact noninterest revenues, including unrealized gains or losses on equity securities.
Noninterest Revenues
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
(000’s omitted)
Employee benefit services
−Removed: Deposit service charges and fees
−Removed: Mortgage banking
−Removed: Debit interchange and ATM fees
Insurance services
Wealth management services
+Added: Deposit service charges and fees
+Added: Debit interchange and ATM fees
+Added: Mortgage banking
Other banking revenues
3 unchanged sentences
(1) For purposes of this ratio noninterest revenues excludes unrealized gains and losses on equity securities.
−Removed: Operating revenues, a non-GAAP measure, is defined as net interest income on a fully-tax equivalent basis excluding acquired non-PCD loan accretion plus noninterest revenues excluding unrealized gains and losses on equity securities.
+Added: Operating revenues, a non-GAAP measure, is defined as net interest income on a FTE basis excluding acquired non-PCD loan accretion plus noninterest revenues excluding unrealized gains and losses on equity securities.
See Table 10 for Reconciliation of GAAP to Non-GAAP Measures.
−Removed: As displayed in Table 4, noninterest revenues, excluding unrealized gain (loss) on equity securities, were $64.1 million for the second quarter of 2022 and $129.8 million for the first six months of 2022.
+Added: As displayed in Table 4, noninterest revenues, excluding unrealized gain (loss) on equity securities, were $65.3 million for the third quarter of 2022 and $195.0 million for the first nine months of 2022.
This represents an increase of $0.9 million, or 1.5%, for the quarter and an increase of $12.8 million, or 7.0%, for the YTD period in comparison to the equivalent 2021 periods.
−Removed: The increase for the quarterly period was driven by increases in banking noninterest revenue, insurance services revenue and employee benefit services revenue, partially offset by a decrease in wealth management services revenue.
−Removed: The increase for the YTD period was due to increases in employee benefit services revenue, insurance services revenue, banking noninterest revenue and wealth management services revenue.
−Removed: Banking noninterest revenue of $17.3 million for the second quarter and $34.3 million for the first six months of 2022 increased $1.7 million, or 11.1%, and increased $3.2 million, or 10.1%, respectively, as compared to the corresponding prior year periods.
−Removed: The quarterly increase was driven by an increase in deposit service charges and fees, partially offset by decreases in mortgage banking revenues and other banking revenues, while debit interchange and ATM fees were consistent.
−Removed: The YTD increase was driven by increases in deposit service charges and fees and debit interchange and ATM fees, partially offset by decreases in mortgage banking revenues and other banking revenues.
+Added: The increase for the quarterly period was driven by increases in insurance services revenue and banking noninterest revenue, partially offset by declines in employee benefit services revenue and wealth management services revenue.
+Added: The increase for the YTD period was due to increases in insurance services revenue, banking noninterest revenue and employee benefit services revenue, partially offset by a decline in wealth management services revenue.
+Added: Banking noninterest revenue of $18.5 million for the third quarter and $52.9 million for the first nine months of 2022 increased $1.6 million, or 9.7%, and increased $4.8 million, or 10.0%, respectively, as compared to the corresponding prior year periods.
+Added: The quarterly and YTD increases were driven by increases in deposit service charges and fees and debit interchange and ATM fees, partially offset by decreases in mortgage banking revenues and other banking revenues.
The increases in deposit service charges and fees were reflective of increased post-pandemic transaction activity, including the addition of new deposit relationships from the Elmira acquisition in May 2022.
−Removed: The Company is continuing to evaluate its deposit offerings and associated deposit services charges and fees.
−Removed: Employee benefit services revenue increased $1.4 million, or 5.3%, and $4.5 million, or 8.3%, for the three and six months ended June 30, 2022, respectively, as compared to the equivalent prior year periods.
−Removed: This growth primarily related to increases in employee benefit trust and custodial fees, as well as incremental revenues from the acquisition of Fringe Benefits Design of Minnesota, Inc.
+Added: The Company expects to make modifications to its deposit service charges and fees over the next several quarters in order to better align with industry trends and to ensure the Company continues to provide customers with affordable and competitive banking options.
+Added: Employee benefit services revenue decreased $2.0 million, or 6.8%, but increased $2.5 million, or 2.9%, for the three and nine months ended September 30, 2022, respectively, as compared to the equivalent prior year periods.
+Added: The decline in quarterly revenues was driven by decreases in employee benefit trust and custodial fees, reflecting the adverse impact from market-related headwinds, while the growth on a YTD basis was primarily driven by incremental revenues from the acquisition of Fringe Benefits Design of Minnesota, Inc.
(“FBD”) during the third quarter of 2021.
−Removed: Insurance services revenue was up $1.6 million, or 19.1%, and $3.8 million, or 23.4%, for the second quarter and YTD periods, respectively, driven by organic expansion, as well as the second quarter 2021 acquisition of a Florida-based personal lines insurance agency and third quarter 2021 acquisition of a Boston-based specialty-lines insurance practice.
−Removed: Wealth management services revenue was down $0.1 million, or 1.0%, for the second quarter of 2022 and was up $0.3 million, or 2.1%, for June 2022 YTD as compared to the same time periods of 2021, despite market-related headwinds which negatively impacted fiduciary-related revenues during the first six months of 2022.
−Removed: The ratio of noninterest revenues to operating revenues (FTE basis), as defined in footnote 1 of Table 4 above, was 38.3% for the quarter and 39.6% for the six months ended June 30, 2022, respectively, versus 39.3% and 38.9% for the comparable periods of 2021.
−Removed: The increase for the year-to-date period is a function of a 10.0% increase in adjusted noninterest revenues while adjusted net interest income (FTE basis) increased 6.4%.
+Added: Insurance services revenue was up $2.2 million, or 23.5%, and $6.0 million, or 23.4%, for the third quarter and YTD periods, respectively, driven by organic expansion, as well as the second quarter 2021 acquisition of a Florida-based personal lines insurance agency, the third quarter 2021 acquisition of a Boston-based specialty-lines insurance broker and the first quarter 2022 acquisitions of three other insurance agencies.
+Added: Wealth management services revenue was down $0.8 million, or 9.9%, for the third quarter of 2022 and $0.5 million, or 1.9%, for September 2022 YTD as compared to the same time periods of 2021, primarily driven by more challenging investment market conditions.
+Added: The ratio of noninterest revenues to operating revenues (FTE basis), as defined in footnote 1 of Table 4 above, was 37.2% for the quarter and 38.8% for the nine months ended September 30, 2022, respectively, versus 41.0% and 39.6% for the comparable periods of 2021.
+Added: The decrease for the year-to-date period is a function of a 7.0% increase in adjusted noninterest revenues while adjusted net interest income (FTE basis) increased 10.7%.
+Added: The decrease for the quarterly periods is reflective of a 1.5% increase in adjusted noninterest revenues while adjusted net interest income (FTE basis) increased 19.2%.
Noninterest Expenses
2 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
(000’s omitted)
5 unchanged sentences
Business development and marketing
+Added: Litigation accrual
Acquisition expenses
3 unchanged sentences
Efficiency ratio (2)
−Removed: (1) Operating expenses, a non-GAAP measure, is calculated as total noninterest expenses less acquisition expenses, acquisition-related contingent consideration adjustment and amortization of intangibles.
+Added: (1) Operating expenses, a non-GAAP measure, is calculated as total noninterest expenses less acquisition expenses, acquisition-related contingent consideration adjustment, litigation accrual expenses and amortization of intangibles.
See Table 10 for Reconciliation of GAAP to Non-GAAP Measures.
−Removed: (2) Efficiency ratio, a non-GAAP measure, is calculated as operating expenses as defined in (1) above divided by net interest income on a fully tax-equivalent basis excluding acquired non-PCD loan accretion plus noninterest revenues excluding unrealized gains and losses on equity securities.
+Added: (2) Efficiency ratio, a non-GAAP measure, is calculated as operating expenses as defined in (1) above divided by net interest income on a FTE basis excluding acquired non-PCD loan accretion plus noninterest revenues excluding unrealized gains and losses on equity securities.
See Table 10 for Reconciliation of GAAP to Non-GAAP Measures.
−Removed: As shown in Table 5, the Company recorded noninterest expenses of $110.4 million and $210.2 million for the second quarter and YTD periods of 2022, respectively, representing an increase of $16.9 million, or 18.0%, and an increase of $23.4 million, or 12.5%, from the prior year periods.
−Removed: Acquisition expenses and acquisition-related contingent consideration adjustments of $4.4 million and $4.7 million are included in second quarter and YTD 2022 noninterest expenses, respectively.
−Removed: Salaries and employee benefits increased $7.5 million, or 13.0%, and $11.5 million, or 10.0%, for the second quarter and YTD periods of 2022, respectively, as compared to the corresponding periods of 2021.
−Removed: The increase in salaries and benefits was driven by increases in merit and incentive-related employee wages, acquisition-related staffing increases, higher payroll taxes and higher employee benefit-related expenses.
−Removed: The remaining change to noninterest expenses are attributed to occupancy and equipment (up $0.2 million for the quarter and down $0.2 million YTD), data processing and communications (up $0.8 million for the quarter and $1.1 million YTD), amortization of intangible assets (up $0.6 million for the quarter and $1.0 million YTD), legal and professional fees (up $0.9 million for the quarter and $1.5 million YTD), business development and marketing (up $1.0 million for the quarter and $1.7 million YTD) and other expenses (up $1.6 million for the quarter and $2.2 million YTD).
−Removed: Noninterest expenses were generally up due to the increase in the level of business activities and incremental expenses associated with operating an expanded franchise subsequent to the Elmira acquisition, including increases in business development and marketing expenses, insurance, professional fees and travel-related expenses.
−Removed: The increase in data processing and communications expenses was due to the Company’s implementation of new customer-facing digital technologies and back office systems between the comparable periods.
−Removed: The Company’s efficiency ratio (as defined in the table above) was 61.1% for the second quarter, 1.4 percentage points unfavorable to the comparable quarter of 2021.
+Added: As shown in Table 5, the Company recorded noninterest expenses of $108.2 million and $318.4 million for the third quarter and YTD periods of 2022, respectively, representing increases of $7.8 million, or 7.7%, and $31.2 million, or 10.9%, from the prior year periods, respectively.
+Added: Acquisition expenses and acquisition-related contingent consideration adjustments of $0.4 million and $5.1 million are included in third quarter and YTD 2022 noninterest expenses, respectively.
+Added: Salaries and employee benefits increased $3.3 million, or 5.3%, and $14.8 million, or 8.3%, for the third quarter and YTD periods of 2022, respectively, as compared to the corresponding periods of 2021.
+Added: The increase in salaries and benefits expense was driven by increases in merit-related employee wages, acquisition-related additions to staffing, higher payroll taxes and higher employee benefit-related expenses.
+Added: The remaining change to noninterest expenses are attributed to occupancy and equipment (up $0.5 million for the quarter and up $0.3 million YTD), data processing and communications (up $1.2 million for the quarter and $2.3 million YTD), amortization of intangible assets (up $0.1 million for the quarter and $1.1 million YTD), legal and professional fees (down $0.2 million for the quarter and up $1.3 million YTD), business development and marketing (up $1.2 million for the quarter and $2.9 million YTD) and other expenses (up $1.1 million for the quarter and $3.4 million YTD).
+Added: Noninterest expenses were generally up due to the increase in the level of business activities and incremental expenses due to the end of most pandemic-related restrictions as well as the costs associated with operating an expanded franchise subsequent to the Elmira and financial services acquisitions, including increases in business development and marketing expenses, insurance and travel-related expenses.
+Added: The increase in data processing and communications expenses was due to the Company’s continued investment in customer-facing and back office digital technologies between the comparable periods.
+Added: The slight increase in occupancy and equipment expense was driven by inflationary pressures, partially offset by branch office consolidations between the periods.
+Added: The Company’s efficiency ratio (as defined in the table above) was 59.3% for the third quarter, 2.4 percentage points favorable to the comparable quarter of 2021.
This resulted from operating expenses (as described above) increasing 7.5%, while operating revenues (as described above) increased 11.8%.
−Removed: The efficiency ratio of 60.4% for the first six months of 2022 was 1.0 percentage point unfavorable compared to the first six months of 2021 due to 9.9% higher operating expenses (as described above), while operating revenues (as described above) increased by 8.0%.
−Removed: Current year operating expenses, excluding amortization of intangible assets, acquisition expenses and acquisition-related contingent consideration adjustments, as a percentage of average assets increased 0.19 percentage points versus the prior year quarter and increased 0.05 percentage points versus the prior year-to-date period as operating expenses (as defined above) increased at a faster rate than average assets.
−Removed: Operating expenses (as defined above) increased 13.2% for the quarter and increased 9.9% for the year-to-date period, while average assets increased 5.0% for the quarter and increased 7.5% for the year-to-date period.
−Removed: The second quarter and YTD 2022 effective income tax rates were 21.6% and 21.5%, respectively, as compared to 23.1% and 20.8% for the comparable periods of 2021.
−Removed: The decrease in the second quarter 2022 effective income tax rate is primarily attributable to an increase in certain state income tax rates that were enacted in the second quarter of 2021.
−Removed: The increase in the YTD 2022 effective income tax rates is primarily attributable to a lower level of benefit derived from stock based compensation activity during YTD 2022.
+Added: The efficiency ratio of 60.0% for the first nine months of 2022 was 0.1 percentage point favorable compared to the first nine months of 2021 due to 9.0% higher operating expenses (as described above), while operating revenues (as described above) increased by 9.3%.
+Added: Current year operating expenses, excluding amortization of intangible assets, acquisition expenses, acquisition-related contingent consideration adjustments and litigation accrual expenses, as a percentage of average assets increased 0.10 percentage points versus the prior year quarter and increased 0.07 percentage points versus the prior year-to-date period as operating expenses (as defined above) increased at a faster rate than average assets.
+Added: Operating expenses (as defined above) increased 7.5% for the quarter and increased 9.0% for the year-to-date period, while average assets increased 3.5% for the quarter and increased 6.1% for the year-to-date period as the strong growth of the book value of earning assets was partially offset by a significant decline in the pre-tax market value adjustment on the investment portfolio.
+Added: The third quarter and YTD 2022 effective income tax rates were 22.0% and 21.6%, respectively, as compared to 21.1% and 20.9% for the comparable periods of 2021.
+Added: The effective tax rate in the third quarter of 2021 was driven down by a decrease in the Company’s full year effective tax rate projection.
+Added: The increase in the YTD effective tax rate was fully attributable to lower levels of tax benefits related to stock-based compensation activity.
The Company recorded a $0.6 million and $2.0 million reduction in income tax expense associated with stock-based compensation tax benefits for YTD 2022 and YTD 2021, respectively.
−Removed: The effective tax rates adjusted to exclude stock-based compensation tax benefits for the second quarter and YTD 2022 were 21.6% and 22.0%, respectively, as compared to 23.4% and 22.4%, for the comparable periods of 2021.
+Added: The effective tax rates adjusted to exclude stock-based compensation tax benefits for the third quarter and YTD 2022 were both 22.0%, as compared to 21.1% and 22.0%, for the comparable periods of 2021, respectively.
Investment Securities
−Removed: The carrying value of investment securities (including unrealized gains and losses) was $5.64 billion at the end of the second quarter, an increase of $663.9 million from December 31, 2021 and $1.59 billion higher than June 30, 2021.
−Removed: The carrying value of cash equivalents was $20.3 million at the end of the second quarter, a decrease of $1.70 billion from December 31, 2021 and $2.00 billion from June 30, 2021.
−Removed: The book value of investment securities (excluding unrealized gains and losses) of $6.31 billion at the end of the second quarter increased $1.28 billion from December 31, 2021 and increased $2.22 billion from June 30, 2021.
−Removed: During the first six months of 2022, the Company purchased $1.14 billion of U.S.
+Added: The carrying value of investment securities (including unrealized gains and losses) was $5.23 billion at the end of the third quarter, an increase of $248.2 million from December 31, 2021 and $823.9 million higher than September 30, 2021.
+Added: The carrying value of cash equivalents was $30.0 million at the end of the third quarter, a decrease of $1.69 billion from December 31, 2021 and $2.07 billion from September 30, 2021.
+Added: The book value of investment securities (excluding unrealized gains and losses) of $6.19 billion at the end of the third quarter increased $1.17 billion from December 31, 2021 and increased $1.74 billion from September 30, 2021.
+Added: During the first nine months of 2022, the Company purchased $1.14 billion of U.S.
Treasury and agency securities with an average yield of 1.62%, $34.6 million of government agency mortgage-backed securities with an average yield of 2.75%, and $182.0 million of obligations of state and political subdivisions with an average yield of 3.96%.
Additionally, the Company acquired $11.3 million of investments from Elmira during the second quarter of 2022.
−Removed: These additions were partially offset by $86.9 million of investment maturities, calls and principal payments during the first six months of 2022.
−Removed: Additionally, there was $9.8 million of net accretion on investment securities during the first six months of 2022.
−Removed: The effective duration of the investment securities portfolio was 6.7 years at the end of the second quarter of 2022, as compared to 7.5 years at the end of 2021 and 7.7 years at the end of the second quarter of 2021.
+Added: These additions were partially offset by $212.4 million of investment maturities, calls and principal payments during the first nine months of 2022.
+Added: Additionally, there was $14.8 million of net accretion on investment securities during the first nine months of 2022.
+Added: The effective duration of the investment securities portfolio was 6.5 years at the end of the third quarter of 2022, as compared to 7.5 years at the end of 2021 and 7.6 years at the end of the third quarter of 2021.
The change in the carrying value of investment securities is also impacted by the amount of net unrealized gains or losses.
−Removed: At June 30, 2022, the portfolio had a $663.9 million net unrealized loss, as compared to a $44.9 million net unrealized loss at December 31, 2021 and a $26.3 million net unrealized loss at June 30, 2021.
+Added: At September 30, 2022, the portfolio had a $964.9 million net unrealized loss, as compared to a $44.9 million net unrealized loss at December 31, 2021 and a $47.5 million net unrealized loss at September 30, 2021.
These changes in the net unrealized position of the portfolio were principally driven by the movements in medium to long-term interest rates, as well as the volume and rates associated with the securities purchases and maturities that have occurred over the past 12 months.
1 unchanged sentence
Investment Securities
+Added: September 30,
+Added: September 30,
(000’s omitted)
13 unchanged sentences
Total investments
−Removed: Loans ended the second quarter at $8.14 billion, an increase of $900.5 million, or 12.4%, from one year earlier and an increase of $771.1 million, or 10.5%, from the end of 2021.
+Added: Loans ended the third quarter at $8.54 billion, an increase of $1.26 billion, or 17.3%, from one year earlier and an increase of $1.17 billion, or 15.9%, from the end of 2021.
The increase during the last twelve months was driven by increases in all loan categories, including consumer mortgage, business lending, consumer indirect, home equity and consumer direct loans, due to the Elmira acquisition and net organic growth, despite a $156.2 million decrease in PPP loans due to loan forgiveness activities.
−Removed: Excluding loans acquired in connection with the Elmira acquisition and PPP loans, ending loans increased $313.4 million, or 4.2%, during the quarter.
The business lending portfolio consists of general-purpose business lending to commercial, industrial, non-profit and municipal customers, mortgages on commercial property and dealer floor plan financing.
−Removed: The business lending portfolio increased $145.5 million, or 4.6%, from June 30, 2021 and increased $256.1 million, or 8.3%, from December 31, 2021, driven by the Elmira acquisition and organic growth despite decreases in PPP loans.
−Removed: The Company participated in both rounds of the PPP, a specialized low-interest loan program funded by the U.S.
−Removed: Treasury Department and administered by the United States Small Business Administration (“SBA”).
−Removed: As of June 30, 2022, the Company’s business lending portfolio included PPP loans with a total balance of $15.4 million, as compared to $87.9 million at December 31, 2021 and $284.8 million at June 30, 2021.
−Removed: Highly competitive conditions for business lending continue to prevail in both the digital marketplace and geographic regions in which the Company operates.
+Added: The business lending portfolio increased $402.2 million, or 13.0%, from September 30, 2021 and increased $418.5 million, or 13.6%, from December 31, 2021, including $125.3 million of loans acquired from Elmira in the second quarter of 2022.
+Added: The increase in the business lending portfolio was driven by the Elmira acquisition and organic growth despite decreases in PPP loans of $156.2 million from September 30, 2021 and $82.0 million from December 31, 2021.
+Added: Competitive conditions for business lending continue to prevail in both the digital marketplace and geographic regions in which the Company operates.
The Company strives to generate growth in its business portfolio in a manner that adheres to its goals of maintaining strong asset quality and producing profitable margins.
1 unchanged sentence
Consumer mortgages increased $504.5 million, or 20.4%, from one year ago and increased $419.4 million, or 16.4%, from December 31, 2021, including $271.4 million of loans acquired from Elmira in the second quarter of 2022.
−Removed: In addition to the Elmira acquisition, the increase in consumer mortgages was driven by refinance activities, strong housing demand, and the Company’s competitive product offerings and business development efforts.
+Added: In addition to the Elmira acquisition, the increase in consumer mortgages was driven by refinance activities late last year and early this year, the Company’s competitive product offerings and business development efforts, in addition to strong housing demand throughout the past twelve months.
Interest rate levels, secondary market premiums, expected duration and ALCO strategies continue to be the most significant factors in determining whether the Company chooses to retain, versus sell and service, portions of its new mortgage production.
1 unchanged sentence
Home equity loans increased $37.6 million, or 9.5%, from one year ago, and increased $35.0 million, or 8.8%, from December 31, 2021, including $18.4 million of loans acquired from Elmira in the second quarter of 2022.
−Removed: Consumer installment loans, both those originated directly in the branches (referred to as “consumer direct”) and indirectly in automobile, marine, and recreational vehicle dealerships (referred to as “consumer indirect”), increased $225.4 million, or 17.9%, from one year ago and increased $139.9 million, or 10.4%, from December 31, 2021, including $21.9 million of loans acquired from Elmira in the second quarter of 2022.
−Removed: Despite national vehicle supply shortages, the Company’s market area and dealer network have experienced robust sales activity, which combined with higher collateral values have resulted in significant growth in the Company’s consumer indirect portfolio.
+Added: Consumer installment loans, both those originated directly in the branches (referred to as “consumer direct”) and indirectly in automobile, marine and other recreational vehicle dealerships (referred to as “consumer indirect”), increased $316.7 million, or 23.9%, from one year ago and increased $297.1 million, or 22.1%, from December 31, 2021, including $21.9 million of loans acquired from Elmira in the second quarter of 2022.
+Added: Despite national vehicle supply shortages, the Company’s market area and dealer network have experienced robust sales activity, which, combined with higher sales prices, have resulted in significant growth in the Company’s consumer indirect portfolio.
Although the consumer indirect loan market is highly competitive, the Company is focused on maintaining a profitable in-market and contiguous market indirect portfolio, while continuing to pursue the expansion of its dealer network.
6 unchanged sentences
The allocation of the allowance to each category does not restrict the use of the allowance to absorb losses in any category.
−Removed: As shown in Table 7, total allowance for credit losses at the end of the second quarter was $55.5 million, an increase of $3.8 million, or 7.3%, from one year earlier and an increase of $5.7 million, or 11.4%, from the end of 2021.
+Added: As shown in Table 7, the total allowance for credit losses at the end of the third quarter was $60.4 million, an increase of $10.9 million, or 21.9%, from one year earlier and an increase of $10.5 million, or 21.0%, from the end of 2021, driven primarily by significant loan growth during the intervening period.
Allowance for Credit Losses by Loan Type
−Removed: June 30, 2022
+Added: September 30, 2022
December 31, 2021
−Removed: June 30, 2021
+Added: September 30, 2021
(000’s omitted except for ratios)
5 unchanged sentences
The unallocated allowance is maintained for potential inherent losses in the specific portfolios that are not captured due to model imprecision.
−Removed: The unallocated allowance of $1.0 million at June 30, 2022 was consistent with December 31, 2021 and June 30, 2021.
+Added: The unallocated allowance of $1.0 million at September 30, 2022 was consistent with December 31, 2021 and September 30, 2021.
The changes in allowance allocations reflect management’s continued refinement of its loss estimation techniques.
3 unchanged sentences
Allowance for credit losses and loan net charge-off ratios are as follows:
+Added: September 30,
+Added: September 30,
Allowance for credit losses/total loans
7 unchanged sentences
Consumer direct
−Removed: Net charge-offs during the second quarter of 2022 were $0.4 million, an increase of $1.0 million compared to the second quarter of 2021.
−Removed: The consumer mortgage and home equity portfolios experienced lower net charge-offs during the second quarter of 2022 as compared to the second quarter of 2021, while the business lending, consumer direct, and consumer indirect portfolios experienced higher net charge-offs than the equivalent prior year period.
−Removed: The total net charge-off ratio (net charge-offs annualized as a percentage of average loans outstanding for the quarter) for the second quarter was 0.02%, seven basis points lower than the ratio at December 31, 2021 and five basis points higher than the ratio at June 30, 2021.
−Removed: Net charge-off ratios for the second quarter of 2022 for the business lending, consumer mortgage, consumer direct, and home equity portfolios were below the Company’s average for the trailing eight quarters, while the net charge-off ratio for the consumer indirect portfolio was above the Company’s average for the trailing eight quarters.
−Removed: The Company believes that its credit-related losses have recently been below longer-term historical levels in part due to the extraordinary Federal and State Government financial assistance provided to consumers throughout the pandemic, as well as the funding support to business customers who participated in PPP lending.
−Removed: Other real estate owned (“OREO”) at June 30, 2022 was $0.6 million.
−Removed: This compares to $0.7 million at December 31, 2021 and $0.9 million at June 30, 2021.
−Removed: At June 30, 2022, OREO consisted of nine residential properties with a total value of $0.5 million and one commercial property with a value of $0.1 million.
−Removed: This compares to two residential properties with a total value of $0.1 million and one commercial property with a value of $0.6 million at December 31, 2021, and four residential properties with a total value of $0.3 million and one commercial property with a value of $0.6 million at June 30, 2021.
−Removed: Approximately 29% of the nonperforming loans at June 30, 2022 were related to the business lending portfolio, which is comprised of business loans broadly diversified by industry type.
+Added: Net charge-offs during the third quarter of 2022 were $0.4 million, a decrease of $1.0 million compared to the third quarter of 2021.
+Added: The business lending, consumer indirect and consumer mortgage portfolios experienced lower net charge-offs during the third quarter of 2022 as compared to the third quarter of 2021, while the consumer direct portfolio experienced higher net charge-offs as compared to the prior year third quarter, and the net charge-offs in the home equity portfolio were consistent with the equivalent prior year period.
+Added: The total net charge-off ratio (net charge-offs annualized as a percentage of average loans outstanding for the quarter) for the third quarter was 0.02%, seven and five basis points lower than the ratios for the fourth and third quarters of 2021, respectively.
+Added: Net charge-off ratios for the third quarter of 2022 for the business lending, consumer indirect and consumer mortgage portfolios were below the Company’s average for the trailing eight quarters, while the net charge-off ratios for the consumer direct and home equity portfolios were above the Company’s average for the trailing eight quarters.
+Added: Other real estate owned (“OREO”) at September 30, 2022 was $0.5 million.
+Added: This compares to $0.7 million at December 31, 2021 and $0.9 million at September 30, 2021.
+Added: At September 30, 2022, OREO consisted of eight residential properties with a total value of $0.5 million.
+Added: This compares to two residential properties with a total value of $0.1 million and one commercial property with a value of $0.6 million at December 31, 2021, and five residential properties with a total value of $0.3 million and one commercial property with a value of $0.6 million at September 30, 2021.
+Added: Approximately 15% of the nonperforming loans at September 30, 2022 were related to the business lending portfolio, which is comprised of business loans broadly diversified by industry type.
The level of nonperforming business loans decreased significantly from the prior year as the economic environment improved and businesses resumed normal operations.
−Removed: The Company upgraded several large business loans that had previously requested extended loan repayment forbearance due to pandemic-related hardship from nonaccrual to accruing status during the first quarter of 2022 and fourth quarter of 2021.
−Removed: These borrowers had successfully restored all past due payment to current status, resumed their pre-forbearance payment obligations for a period of at least six months, and demonstrated sufficient repayment capacity and cash reserves to be reclassified to accruing status.
−Removed: Approximately 62% of nonperforming loans at June 30, 2022 were comprised of consumer mortgages.
+Added: The Company upgraded several large business loans for customers in the hospitality industry that had previously requested extended loan repayment forbearance due to pandemic-related hardship from nonaccrual to accruing status during the first quarter of 2022 and fourth quarter of 2021.
+Added: These borrowers had successfully restored all past due payment to current status, resumed their pre-forbearance payment obligations for a period of at least nine months, and demonstrated sufficient repayment capacity and cash reserves to be reclassified to accruing status.
+Added: Approximately 77% of nonperforming loans at September 30, 2022 were comprised of consumer mortgages.
Collateral values of residential properties within the Company’s geographic footprint have generally remained stable or have increased over the past several years.
−Removed: Additionally, strong economic conditions prior to COVID-19 and the recent economic recovery, including lower unemployment levels, has positively impacted consumers and has resulted in more favorable nonperforming consumer mortgage ratios.
−Removed: The Company will continue to closely monitor the impact that economic conditions could have on its level of delinquent loans, nonperforming assets and ultimately credit-related losses and proactively engage with our customers to strive to limit the potential losses.
+Added: Additionally, strong economic conditions prior to COVID-19 and the generally positive economic recovery following, including low unemployment levels, have positively impacted consumers and resulted in generally more favorable nonperforming consumer mortgage ratios throughout the past few years.
The remaining 8% of nonperforming loans relate to consumer installment and home equity loans, with home equity nonperforming loan levels being driven by the same factors that were identified for consumer mortgages.
−Removed: The allowance for credit losses to nonperforming loans ratio, a general measure of coverage adequacy, was 150% at the end of the second quarter, as compared to 110% at year-end 2021 and 74% at June 30, 2021.
−Removed: The increase in this ratio between the annual quarterly periods was primarily driven by the decrease in nonperforming business loans noted above.
+Added: The allowance for credit losses to nonperforming loans ratio, a general measure of coverage adequacy, was 186% at the end of the third quarter, as compared to 110% at year-end 2021 and 73% at September 30, 2021.
+Added: The increase in this ratio between the annual quarterly periods was primarily driven by the decrease in nonperforming business loans noted above combined with a $10.9 million increase in the allowance for credit losses.
+Added: The Company will continue to closely monitor the impact that forecasted weakening economic conditions could have on its level of delinquent loans, nonperforming assets and ultimately credit-related losses and proactively engage with our customers to strive to limit the potential losses.
The Company’s senior management, special asset officers and lenders review all delinquent and nonaccrual loans and OREO regularly in order to identify deteriorating situations, monitor known problem credits and discuss any needed changes to collection efforts, if warranted.
1 unchanged sentence
This plan could include foreclosure, restructuring loans, issuing demand letters or other actions.
−Removed: The Company’s larger criticized credits are also reviewed on a quarterly basis by senior credit administration management, special assets officers and commercial lending management to monitor their status and discuss relationship management plans.
−Removed: Commercial lending management reviews the criticized business loan portfolio on a monthly basis.
−Removed: Delinquent loans (30 days past due through nonaccruing) as a percent of total loans was 0.75% at the end of the second quarter, 25 basis points below the 1.00% at year-end 2021 and 47 basis points below the 1.22% at June 30, 2021.
−Removed: The business lending delinquency ratio at the end of the second quarter of 0.40% was 57 basis points below the level of 0.97% at December 31, 2021 and 120 basis points below the level of 1.60% at June 30, 2021, largely attributable to the reclassification of certain business loans’ status from nonaccrual to accruing during the fourth quarter of 2021 and first quarter of 2022.
−Removed: The delinquency rates for the consumer indirect and home equity portfolios decreased as compared to the levels at December 31, 2021 while consumer direct increased and consumer mortgage remained consistent.
−Removed: The delinquency rates for the consumer direct, consumer indirect, home equity, and consumer mortgage all increased compared to the levels at June 30, 2021.
−Removed: Prediction of future delinquency and credit loss performance is difficult, because although recent economic growth has been above average and restrictions initially put in place during the pandemic have been lifted, there remains uncertainty regarding the economic fallout created by supply chain constraints and inflationary pressures.
+Added: The Company’s larger criticized credits are also reviewed on a quarterly basis by senior credit administration management, special assets officers and business lending management to monitor their status and discuss relationship management plans.
+Added: Business lending management reviews the criticized business loan portfolio on a monthly basis.
+Added: Delinquent loans (30 days past due through nonaccruing) as a percent of total loans was 0.71% at the end of the third quarter, 29 basis points below the 1.00% at year-end 2021 and 57 basis points below the 1.28% at September 30, 2021.
+Added: The business lending delinquency ratio at the end of the third quarter of 0.17% was 80 basis points below the level of 0.97% at December 31, 2021 and 155 basis points below the level of 1.72% at September 30, 2021, largely attributable to the reclassification of certain business loans’ status from nonaccrual to accruing during the fourth quarter of 2021 and first quarter of 2022.
+Added: The delinquency ratio for the home equity portfolio decreased as compared to the levels at both December 31, 2021 and September 30, 2021, while consumer installment and consumer mortgage increased slightly relative to those same periods.
+Added: Prediction of future delinquency and credit loss performance is difficult, because although, until recently, economic growth had been above average for most of 2021 and the unemployment rate remains low, there continues to be uncertainty regarding the economic fallout created by supply chain constraints and inflationary pressures, as well as a rising interest rate environment.
Due to the Company’s continued focus on maintaining strict underwriting standards and the effective utilization of its collection capabilities, the Company expects that its credit performance will eventually return to levels consistent with its average long-term historical results once public health, government intervention, and economic conditions return to a more normalized state.
−Removed: The Company recorded a $6.0 million provision for credit losses in the second quarter of 2022, $3.9 million of which was due to the acquisition of Elmira and $0.3 million related to off-balance sheet credit exposures.
−Removed: The second quarter provision for credit losses was $10.3 million higher than the equivalent prior year period’s net benefit in the provision for credit losses of $4.3 million, which was reflective of a post-vaccine economic recovery and a significant decrease in loans on pandemic-related payment deferral.
−Removed: The allowance for credit losses of $55.5 million as of June 30, 2022 increased $5.6 million compared to December 31, 2021 and increased $3.7 million compared to June 30, 2021, due in part to a $750.4 million increase in non-PPP loans outstanding, including $437.0 million of loans acquired from Elmira, combined with economic forecasts moderating during the second quarter of 2022.
−Removed: The allowance for credit losses to total loans ratio was 0.68% at June 30, 2022, consistent with the level at December 31, 2021 and three basis points lower than the level at June 30, 2021.
+Added: The Company recorded a $5.1 million provision for credit losses in the third quarter of 2022, including a $0.1 million net benefit related to off-balance sheet credit exposures.
+Added: The third quarter provision for credit losses was $6.0 million higher than the equivalent prior year period’s net benefit in the provision for credit losses of $0.9 million, which was reflective of an economic recovery related to the cessation of most pandemic-related restrictions and included the continuation of elevated real estate and vehicle collateral values, resulting in a release of reserves in that quarter.
+Added: The allowance for credit losses of $60.4 million as of September 30, 2022 increased $10.5 million compared to December 31, 2021 and increased $10.9 million compared to September 30, 2021, due in part to increases in non-PPP loans outstanding, including $437.0 million of loans acquired from Elmira in the second quarter of 2022, combined with weaker economic forecasts during the third quarter of 2022.
+Added: The allowance for credit losses to total loans ratio was 0.71% at September 30, 2022, an increase of three basis points from the levels at both December 31, 2021 and September 30, 2021.
Refer to Note E:
Loans of the Consolidated Financial Statements for a discussion of management’s methodology used to estimate the allowance for credit losses.
−Removed: As of June 30, 2022, the net purchase discount related to the $1.36 billion of remaining non-PCD acquired loan balances was approximately $27.0 million, or 1.98% of that portfolio.
−Removed: As shown in Table 9, average deposits of $13.33 billion in the second quarter were $1.03 billion, or 8.4%, higher than the second quarter of 2021, primarily due to larger than anticipated net inflows of funds related to government stimulus and PPP programs and the addition of acquired Elmira deposit liabilities during the second quarter of 2022.
+Added: As of September 30, 2022, the net purchase discount related to the $1.28 billion of remaining non-PCD acquired loan balances was approximately $25.6 million, or 1.99% of that portfolio.
+Added: As shown in Table 9, average deposits of $13.33 billion in the third quarter were $830.9 million, or 6.6%, higher than the third quarter of 2021, primarily due to larger than anticipated net inflows of funds related to government stimulus and PPP programs in 2021 and the addition of acquired Elmira deposit liabilities during the second quarter of 2022.
The Company acquired $522.3 million of deposits in the Elmira acquisition, including $356.5 million of non-time deposits and $165.8 million of time deposits.
−Removed: Total average deposit balances increased $498.5 million, or 3.9%, from the fourth quarter of last year, due to continued net inflows of deposits and the addition of acquired Elmira deposit liabilities between the periods.
−Removed: Average noninterest checking deposits as a percentage of average total deposits was 30.5% in the second quarter compared to 30.2% in the second quarter of 2021 and 30.7% in the fourth quarter of last year.
−Removed: Non-maturity deposits (noninterest checking, interest checking, savings and money markets) represent 92.9% of the Company’s deposit funding base, while time deposits represent 7.1% of total average deposits.
−Removed: The quarterly average cost of deposits was 0.08% for the second quarter of 2022, compared to 0.08% for the fourth quarter of 2021 and 0.10% in the second quarter of 2021, reflective of a decrease in the interest rate paid on time deposits.
+Added: Total average deposit balances increased $502.8 million, or 3.9%, from the fourth quarter of last year, primarily due to the addition of acquired Elmira deposit liabilities between the periods.
+Added: Average noninterest checking deposits as a percentage of average total deposits was 31.4% in the third quarter compared to 30.7% in the third quarter of 2021 and the fourth quarter of last year.
+Added: Non-maturity deposits (noninterest checking, interest checking, savings and money markets) represent 92.8% of the Company’s average deposit funding base during the third quarter of 2022, while time deposits represent 7.2% of total average deposits.
+Added: The quarterly average cost of deposits was 0.11% for the third quarter of 2022, compared to 0.08% for the fourth quarter of 2021 and 0.09% in the third quarter of 2021, reflective of increases in the interest rates paid on interest checking and money market deposits, while the interest rate paid on time deposits decreased.
The Company continues to focus on expanding its core deposit relationship base through its proactive marketing efforts, competitive product offerings and high quality customer service.
−Removed: Average nonpublic fund deposits for the second quarter of 2022 increased $525.9 million, or 4.7%, versus the fourth quarter of 2021 and increased $921.8 million, or 8.6%, versus the year-earlier period.
−Removed: Average public fund deposits for the second quarter decreased $27.4 million, or 1.6%, from the fourth quarter of 2021 and increased $107.5 million, or 7.0%, from the second quarter of 2021.
−Removed: Average public fund deposits as a percentage of total average deposits decreased slightly from 12.4% in the second quarter of 2021 to 12.3% in the second quarter of 2022 .
+Added: Average nonpublic fund deposits for the third quarter of 2022 increased $839.6 million, or 7.5%, versus the fourth quarter of 2021 and increased $983.5 million, or 8.9%, versus the year-earlier period.
+Added: Average public fund deposits for the third quarter decreased $336.8 million, or 20.2%, from the fourth quarter of 2021 and decreased $152.6 million, or 10.3%, from the third quarter of 2021.
+Added: Average public fund deposits as a percentage of total average deposits decreased from 11.9% in the third quarter of 2021 to 10.0% in the third quarter of 2022 .
Quarterly Average Deposits
+Added: September 30,
+Added: September 30,
(000’s omitted)
8 unchanged sentences
Total deposits
−Removed: Borrowings, excluding securities sold under agreement to repurchase, at the end of the second quarter of 2022 totaled $88.7 million.
−Removed: This was $83.6 million higher than borrowings at December 31, 2021 and $82.5 million above the level at the end of the second quarter of 2021.
−Removed: The increases were primarily due to an increase in overnight Federal Reserve borrowings of $66.0 million for liquidity funding and $17.6 million of FHLB borrowings acquired from the Elmira acquisition during the second quarter of 2022.
+Added: Borrowings, excluding securities sold under agreement to repurchase, at the end of the third quarter of 2022 totaled $142.5 million.
+Added: This was $137.4 million higher than borrowings at December 31, 2021 and $136.3 million above the level at the end of the third quarter of 2021.
+Added: The increases were primarily due to an increase in overnight borrowings of $119.8 million to support the funding of strong loan growth and $17.6 million of FHLB borrowings acquired from the Elmira acquisition during the second quarter of 2022.
Securities sold under agreement to repurchase, also referred to as customer repurchase agreements, represent collateralized municipal and commercial customer accounts that price and operate similar to a deposit instrument.
−Removed: Customer repurchase agreements were $223.8 million at the end of the second quarter of 2022, a decrease of $101.0 million from December 31, 2021 due primarily to the seasonal characteristics of this portfolio, and were $28.9 million above their level at June 30, 2021.
+Added: Customer repurchase agreements were $352.8 million at the end of the third quarter of 2022, an increase of $28.1 million and $36.0 million from their levels at December 31, 2021 and September 30, 2021, respectively.
Shareholders’ Equity and Regulatory Capital
−Removed: Total shareholders’ equity was $1.66 billion at the end of the second quarter, down $439.1 million from the balance at December 31, 2021.
+Added: Total shareholders’ equity was $1.46 billion at the end of the third quarter, down $639.6 million from the balance at December 31, 2021.
The decrease was driven by $695.7 million of other comprehensive loss, net of tax, dividends declared of $70.2 million and common stock repurchased of $16.4 million, partially offset by net income of $135.6 million, net activity under the Company’s employee stock plan of $1.6 million, and $5.5 million recognized from employee stock options earned.
−Removed: The other comprehensive loss, net of tax, was comprised of a $468.6 million decrease in the after-tax market value adjustment on the available-for-sale investment portfolio as market interest rates increased between the periods, partially offset by a positive $0.5 million adjustment to the funded status of the Company’s retirement plans.
+Added: The other comprehensive loss, net of tax, was comprised of a $696.5 million decrease in the after-tax market value adjustment on the available-for-sale investment portfolio due to a significant amount of securities being purchased and a meaningful upward movement in market interest rates between the periods, partially offset by a positive $0.8 million adjustment to the funded status of the Company’s retirement plans.
Over the past 12 months, total shareholders’ equity decreased $608.8 million, as a decrease in the market value adjustment on investments, dividends declared and common stock repurchase activity more than offset net income, the issuance of common stock in association with the employee stock plan and the Company’s benefit plans, and the change in the funded status of the Company’s defined benefit pension and other postretirement plans.
−Removed: The dividend payout ratio (dividends declared divided by net income) for the first six months of 2022 was 53.5%, compared to 44.9% for the six months ended June 30, 2021.
−Removed: Dividends declared for the first six months of 2022 increased 2.8% compared to the first six months of 2021, as the Company’s quarterly dividend per share was raised from $0.42 to $0.43 in July 2021, while net income decreased 13.8% versus the equivalent year-to-date period due to increases in the provision for credit losses, acquisition-related provision for credit losses, and operating expenses partially offset by increases in net interest income and noninterest revenues.
+Added: The dividend payout ratio (dividends declared divided by net income) for the first nine months of 2022 was 51.8%, compared to 46.8% for the nine months ended September 30, 2021.
+Added: Dividends declared for the first nine months of 2022 increased 2.7% compared to the first nine months of 2021, as the Company’s quarterly dividend per share was raised from $0.43 to $0.44 in the third quarter of 2022, while net income decreased 7.2% versus the equivalent year-to-date period due to increases in the provision for credit losses, acquisition-related provision for credit losses and noninterest expenses, including a $4.9 million increase in acquisition-related noninterest expenses, partially offset by increases in net interest income and noninterest revenues.
The 2022 dividend increase marked the Company’s 30 th consecutive year of increased dividend payouts to common shareholders.
−Removed: Additionally, the number of common shares outstanding decreased 0.3% over the last twelve months, as common stock repurchases outweighed activity in the Company’s employee stock plans.
+Added: Additionally, the number of common shares outstanding decreased 0.4% over the last twelve months, as common stock repurchases outweighed issuance activity in the Company’s employee stock plans.
The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies.
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The Company and the Bank are required to maintain a “capital conservation buffer,” composed entirely of common equity Tier 1 capital, in addition to minimum risk-based capital ratios.
−Removed: The required capital conservation buffer is 2.5% as of June 30, 2022 and December 31, 2021.
−Removed: Therefore, to satisfy both the minimum risk-based capital ratios and the capital conservation buffer as of June 30, 2022 and December 31, 2021, the Company and the Bank must maintain:
+Added: The required capital conservation buffer is 2.5% as of September 30, 2022 and December 31, 2021.
+Added: Therefore, to satisfy both the minimum risk-based capital ratios and the capital conservation buffer as of September 30, 2022 and December 31, 2021, the Company and the Bank must maintain:
(i) Common equity Tier 1 capital to total risk-weighted assets (“Common equity tier 1 capital ratio”) of at least 7.0%,
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In addition, the Company and Bank must maintain a ratio of ending Tier 1 capital to adjusted quarterly average assets (“Tier 1 leverage ratio”) of at least 5.0% to be considered “well capitalized” under the regulatory framework for prompt corrective action.
−Removed: Management believes, as of June 30, 2022 and December 31, 2021, the Company and Bank meet all applicable capital adequacy requirements to be considered “well capitalized”.
−Removed: As of June 30, 2022 and December 31, 2021, the regulatory capital ratios for the Company and Bank are presented below.
−Removed: June 30, 2022
+Added: As of September 30, 2022 and December 31, 2021, the Company and Bank meet all applicable capital adequacy requirements to be considered “well capitalized”.
+Added: As of September 30, 2022 and December 31, 2021, the regulatory capital ratios for the Company and Bank are presented below.
+Added: September 30, 2022
December 31, 2021
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Common equity Tier 1 capital ratio
−Removed: The Company’s Tier 1 leverage ratio was 8.65% at the end of the second quarter, down 44 basis points from year-end 2021 and 71 basis points below its level one year earlier.
−Removed: The decrease in the Tier 1 leverage ratio in comparison to December 31, 2021 was the result of ending shareholders’ equity, excluding intangibles and other comprehensive income items, decreasing 1.8%, as the impact of the Elmira acquisition and share repurchases outweighed net earnings retention, while average assets, excluding intangibles and the market value adjustment on investments, increased 3.3%, primarily due to continued inflows of customer deposits and the Elmira acquisition.
−Removed: The Tier 1 leverage ratio decreased compared to the prior year’s second quarter as shareholders’ equity, excluding intangibles and other comprehensive income, decreased 0.2%, as the impact of the Elmira acquisition and share repurchases outweighed earnings retention, while average assets excluding intangibles and the market value adjustment on investments, increased 8.0% primarily due to continued inflows of customer deposits and the acquisition of Elmira.
−Removed: The net tangible equity-to-assets ratio (a non-GAAP measure) of 5.40% decreased 3.29 percentage points from December 31, 2021 and decreased 3.62 percentage points versus June 30, 2021 (See Table 10 for Reconciliation of Quarterly GAAP to Non-GAAP Measures).
−Removed: The decrease in the net tangible equity to net tangible assets ratio (non-GAAP) from one year prior was primarily driven by a $473.3 million, or 37.5%, decrease in tangible equity due to the decline in the after-tax market value adjustment on available-for-sale investment securities and a $75.2 million net increase in intangible assets due to the Elmira acquisition and a $612.6 million, or 4.4%, increase in tangible assets due to the Elmira acquisition and net inflows of deposits.
−Removed: The decrease in the net tangible equity to net tangible assets ratio (non-GAAP) from the fourth quarter of 2021 was driven by a $491.5 million decrease in tangible equity due to the impact of the Elmira acquisition and higher market interest rates on the after-tax market value adjustment on available-for-sale investment securities, while tangible assets decreased $117.2 million.
+Added: The Company’s Tier 1 leverage ratio was 8.78% at the end of the third quarter, down 31 basis points from year-end 2021 and 44 basis points below its level one year earlier.
+Added: The decrease in the Tier 1 leverage ratio in comparison to December 31, 2021 was the result of ending shareholders’ equity, excluding intangibles and other comprehensive income, increasing 1.2%, as the impact of net earnings retention outweighed the intangible assets added from the Elmira acquisition and share repurchases, while average assets, excluding intangibles and the market value adjustment on investments, increased 4.8%, primarily due to strong organic loan growth and the Elmira acquisition.
+Added: The Tier 1 leverage ratio decreased compared to the prior year’s third quarter as shareholders’ equity, excluding intangibles and other comprehensive income, increased 2.9%, as the impact of earnings retention outweighed Elmira acquisition-related intangible assets and share repurchases, while average assets excluding intangibles and the market value adjustment on investments, increased 8.1% primarily due to continued inflows of customer deposits, organic loan growth and the acquisition of Elmira.
+Added: The net tangible equity-to-assets ratio (a non-GAAP measure) of 4.08% decreased 4.61 percentage points from December 31, 2021 and decreased 4.51 percentage points versus September 30, 2021 (See Table 10 for Reconciliation of Quarterly GAAP to Non-GAAP Measures).
+Added: The decrease in the net tangible equity to net tangible assets ratio (non-GAAP) from one year prior was primarily driven by a $644.8 million, or 51.8%, decrease in tangible equity due to the decline in the after-tax market value adjustment on available-for-sale investment securities and a $41.1 million net increase in intangible assets due primarily to the Elmira acquisition and a $227.5 million, or 1.6%, increase in tangible assets due to the Elmira acquisition and net inflows of deposits.
+Added: The decrease in the net tangible equity to net tangible assets ratio (non-GAAP) from the fourth quarter of 2021 was driven by a $679.8 million decrease in tangible equity due to the impact of the Elmira acquisition, the purchase of securities in late 2021 and early 2022 and higher market interest rates on the after-tax market value adjustment on available-for-sale investment securities, while tangible assets increased $1.7 million.
Liquidity risk is a measure of the Company’s ability to raise cash when needed at a reasonable cost and minimize any loss.
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Other funding alternatives may also be appropriate from time to time, including wholesale and retail repurchase agreements, large certificates of deposit and the brokered CD market.
−Removed: The primary source of non-deposit funds are FHLB or Federal Reserve overnight advances, of which there were $66.0 million of outstanding borrowings at June 30, 2022.
+Added: The primary source of non-deposit funds are FHLB or Federal Reserve overnight advances, of which there were $119.8 million of outstanding borrowings at September 30, 2022.
The Company’s primary sources of liquidity are its liquid assets, as well as unencumbered loans and securities that can be used to collateralize additional funding.
−Removed: At June 30, 2022, the Bank had $197.6 million of cash and cash equivalents of which $20.3 million are interest-earning deposits held at the Federal Reserve, FHLB and other correspondent banks.
+Added: At September 30, 2022, the Bank had $247.4 million of cash and cash equivalents of which $30.0 million are interest-earning deposits held at the Federal Reserve, FHLB and other correspondent banks.
The Company also had $1.76 billion in unused FHLB borrowing capacity based on the Company’s quarter-end loan collateral levels and had $487.7 million of funding availability at the Federal Reserve’s discount window.
5 unchanged sentences
and second, a projection of subsequent cash availability over an additional 60 days.
−Removed: As of June 30, 2022, this ratio was 19.4% for 30-days and 19.6% for 90-days, excluding the Company’s capacity to borrow additional funds from the FHLB and other sources.
+Added: As of September 30, 2022, this ratio was 15.1% for 30-days and 15.3% for 90-days, excluding the Company’s capacity to borrow additional funds from the FHLB and other sources.
This is considered to be a sufficient amount of liquidity based on the Company’s internal policy requirement of 7.5%.
A sources and uses statement is used by the Company to measure intermediate liquidity risk over the next twelve months.
−Removed: As of June 30, 2022, there is more than enough liquidity available during the next year to cover projected cash outflows.
+Added: As of September 30, 2022, there is more than enough liquidity available during the next year to cover projected cash outflows.
In addition, stress tests on the cash flows are performed in various scenarios ranging from high probability events with a low impact on the liquidity position to low probability events with a high impact on the liquidity position.
−Removed: The results of the stress tests as of June 30, 2022 indicate the Company has sufficient sources of funds for the next year in all simulated stressed scenarios.
+Added: The results of the stress tests as of September 30, 2022 indicate the Company has sufficient sources of funds for the next year in all simulated stressed scenarios.
To measure longer-term liquidity, a baseline projection of loan and deposit growth for five years is made to reflect how liquidity levels could change over time.
14 unchanged sentences
Factors that could cause actual results to differ from those discussed in the forward-looking statements include:
−Removed: (1) the macroeconomic and other challenges and uncertainties related to the COVID-19 pandemic, variants of COVID-19, related vaccine rollout and efficacy, and government measures taken in response thereto, including the negative impacts and disruptions on public health, the Company’s corporate and consumer customers, the communities the Company serves, and the domestic and global economy, which may have an adverse effect on the Company’s business;
+Added: (1) the macroeconomic and other challenges and uncertainties related to the COVID-19 pandemic, variants of COVID-19, related vaccine and booster rollouts and efficacies, and government measures taken in response thereto, including the negative impacts and disruptions on public health, the Company’s corporate and consumer customers, the communities the Company serves, and the domestic and global economy, which may have an adverse effect on the Company’s business;
(2) current and future economic and market conditions, including the effects of changes in housing or vehicle prices, unemployment rates, labor shortages, supply chain disruption, inability to obtain raw materials and supplies, U.S.
30 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
(000’s omitted)
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Unrealized loss (gain) on equity securities
+Added: Litigation accrual
Adjusted pre-tax, pre-provision net revenue (non-GAAP)
7 unchanged sentences
Unrealized loss (gain) on equity securities
+Added: Litigation accrual
Adjusted pre-tax, pre-provision net revenue per share (non-GAAP)
11 unchanged sentences
Tax effect of unrealized loss (gain) on equity securities
+Added: Subtotal (non-GAAP)
+Added: Litigation accrual
+Added: Tax effect of litigation accrual
Operating net income (non-GAAP)
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Adjusted net income (non-GAAP)
+Added: Three Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
+Added: (000's omitted)
Return on average assets
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Adjusted return on average equity (non-GAAP)
−Removed: Three Months Ended
−Removed: Six Months Ended
−Removed: (000's omitted)
Earnings per common share
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Tax effect of unrealized loss (gain) on equity securities
+Added: Subtotal (non-GAAP)
+Added: Litigation accrual
+Added: Tax effect of litigation accrual
Operating earnings per share (non-GAAP)
10 unchanged sentences
Acquisition-related contingent consideration adjustment
+Added: Litigation accrual
Total adjusted noninterest expenses (non-GAAP)
7 unchanged sentences
Efficiency ratio (non-GAAP)
+Added: September 30,
+Added: September 30,
(000’s omitted)
14 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.