COMMUNITY FINANCIAL SYSTEM, INC. 10-Q

Item 1. Financial Statements COMMUNITY BANK SYSTEM, INC. CONSOLIDATED STATEMENTS OF CONDITION (Unaudited) (In Thousands, Except Share Data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2024 2023 Assets: ​ ​ ​ Cash and cash equivalents ​ $ 338,381 ​ $ 190,962 Available-for-sale investment securities, includes pledged securities that can be sold or repledged of $ 393,453 and $ 598,873 , respectively (cost of $ 3,287,497 and $ 3,301,607 , respectively) ​ 2,863,864 ​ 2,919,992 Held-to-maturity securities (fair value of $ 1,131,615 and $ 1,121,816 , respectively) ​ ​ 1,217,472 ​ ​ 1,172,174 Equity and other securities (cost of $ 69,892 and $ 72,275 , respectively) ​ 70,778 ​ 73,146 ​ ​ ​ ​ ​ ​ ​ Loans ​ 9,883,500 ​ 9,704,598 Allowance for credit losses ​ ( 70,091 ) ​ ( 66,669 ) Loans, net of allowance for credit losses ​ 9,813,409 ​ 9,637,929 ​ ​ ​ ​ ​ ​ Goodwill ​ 849,790 ​ 845,396 Core deposit intangibles, net ​ 7,248 ​ 8,159 Other intangibles, net ​ 47,401 ​ 44,432 Goodwill and intangible assets, net ​ 904,439 ​ 897,987 ​ ​ ​ ​ ​ ​ ​ Premises and equipment, net ​ ​ 170,974 ​ ​ 173,418 Accrued interest and fees receivable ​ 53,762 ​ 54,534 Other assets ​ 425,591 ​ 435,611 ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 15,858,670 ​ $ 15,555,753 ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ Noninterest-bearing deposits ​ $ 3,554,686 ​ $ 3,638,527 Interest-bearing deposits ​ 9,797,336 ​ 9,289,594 Total deposits ​ 13,352,022 ​ 12,928,121 ​ ​ ​ ​ ​ ​ ​ Overnight borrowings ​ 0 ​ 53,000 Securities sold under agreement to repurchase, short-term ​ 287,241 ​ 304,595 Other Federal Home Loan Bank borrowings ​ 395,122 ​ 407,603 Accrued interest and other liabilities ​ 167,330 ​ 164,497 Total liabilities ​ 14,201,715 ​ 13,857,816 ​ ​ ​ ​ ​ Commitments and contingencies (See Note J) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity: ​ ​ ​ ​ ​ ​ Preferred stock, $ 1.00 par value, 500,000 shares authorized, 0 shares issued ​ 0 ​ 0 Common stock, $ 1.00 par value, 75,000,000 shares authorized; 54,540,107 and 54,372,292 shares issued, respectively ​ 54,540 ​ 54,372 Additional paid-in capital ​ 1,063,508 ​ 1,060,289 Retained earnings ​ 1,205,994 ​ 1,188,869 Accumulated other comprehensive loss ​ ( 583,816 ) ​ ( 556,892 ) Treasury stock, at cost ( 1,775,546 shares, including 100,870 shares held by deferred compensation arrangements at March 31, 2024 and 1,045,232 shares including 120,556 shares held by deferred compensation arrangements at December 31, 2023) ​ ( 89,027 ) ​ ( 55,592 ) Deferred compensation arrangements ( 100,870 and 120,556 shares, respectively) ​ 5,756 ​ 6,891 Total shareholders’ equity ​ 1,656,955 ​ 1,697,937 ​ ​ ​ ​ ​ ​ ​ Total liabilities and shareholders’ equity ​ $ 15,858,670 ​ $ 15,555,753 ​ See accompanying notes to consolidated financial statements (unaudited). ​ 3 Table of Contents COMMUNITY BANK SYSTEM, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In Thousands, Except Per-Share Data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ 2024 2023 Interest income: ​ ​ Interest and fees on loans ​ $ 127,498 ​ $ 100,362 Interest and dividends on taxable investments ​ 21,902 ​ 21,938 Interest and dividends on nontaxable investments ​ 3,259 ​ 3,582 Total interest income ​ 152,659 ​ 125,882 ​ ​ ​ ​ ​ ​ ​ Interest expense: ​ ​ ​ ​ Interest on deposits ​ 36,785 ​ 9,928 Interest on borrowings ​ 8,884 ​ 4,924 Total interest expense ​ 45,669 ​ 14,852 ​ ​ ​ ​ ​ ​ ​ Net interest income ​ 106,990 ​ 111,030 Provision for credit losses ​ 6,148 ​ 3,500 Net interest income after provision for credit losses ​ 100,842 ​ 107,530 ​ ​ ​ ​ ​ ​ ​ Noninterest revenues: ​ ​ ​ ​ Deposit service fees ​ 14,251 ​ 12,896 Mortgage banking ​ ​ 345 ​ 275 Other banking services ​ 3,656 ​ 3,260 Employee benefit services ​ 31,698 ​ 29,384 Insurance services ​ 11,109 ​ 11,522 Wealth management services ​ 9,210 ​ ​ 8,245 Loss on sales of investment securities ​ ​ 0 ​ ​ ( 52,329 ) Gain on debt extinguishment ​ ​ 0 ​ ​ 242 Unrealized gain on equity securities ​ 16 ​ ​ 0 Total noninterest revenues ​ 70,285 ​ 13,495 ​ ​ ​ ​ ​ ​ ​ Noninterest expenses: ​ ​ ​ ​ Salaries and employee benefits ​ 73,063 ​ 71,487 Data processing and communications ​ 14,348 ​ 13,129 Occupancy and equipment ​ 11,362 ​ 11,024 Amortization of intangible assets ​ 3,576 ​ 3,667 Legal and professional fees ​ 4,341 ​ 5,201 Business development and marketing ​ 3,045 ​ 2,901 Litigation accrual ​ ​ 119 ​ ​ 0 Acquisition expenses ​ ​ 35 ​ ​ 57 Other expenses ​ 8,195 ​ 6,586 Total noninterest expenses ​ 118,084 ​ 114,052 ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 53,043 ​ 6,973 Income taxes ​ 12,171 ​ 1,175 Net income ​ $ 40,872 ​ $ 5,798 ​ ​ ​ ​ ​ ​ ​ Basic earnings per share ​ $ 0.77 ​ $ 0.11 Diluted earnings per share ​ $ 0.76 ​ $ 0.11 ​ See accompanying notes to consolidated financial statements (unaudited). 4 Table of Contents COMMUNITY BANK SYSTEM, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (In Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ 2024 2023 Pension and other post-retirement obligations: ​ ​ ​ Amortization of actuarial losses (gains) included in net periodic pension cost, gross ​ $ 290 ​ $ ( 549 ) Tax effect ​ ( 71 ) ​ 134 Amortization of actuarial losses (gains) included in net periodic pension cost, net ​ 219 ​ ( 415 ) ​ ​ ​ ​ ​ ​ ​ Amortization of prior service cost included in net periodic pension cost, gross ​ 160 ​ 160 Tax effect ​ ( 39 ) ​ ( 39 ) Amortization of prior service cost included in net periodic pension cost, net ​ 121 ​ 121 ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss) related to pension and other post-retirement obligations, net of taxes ​ 340 ​ ( 294 ) ​ ​ ​ ​ ​ ​ ​ Net unrealized (losses) gains on investment securities: ​ ​ ​ ​ Net unrealized holding (losses) gains on investment securities, gross ​ ( 36,066 ) ​ 91,260 Tax effect ​ 8,802 ​ ( 22,227 ) Net unrealized holding (losses) gains on investment securities, net ​ ( 27,264 ) ​ 69,033 ​ ​ ​ ​ ​ ​ ​ Reclassification adjustment for net losses included in net income, gross ​ 0 ​ 52,329 Tax effect ​ 0 ​ ( 12,714 ) Reclassification adjustment for net losses included in net income, net ​ 0 ​ 39,615 ​ ​ ​ ​ ​ ​ ​ Other comprehensive (loss) gain related to unrealized (losses) gains on investment securities, net of taxes ​ ( 27,264 ) ​ 108,648 ​ ​ ​ ​ ​ ​ ​ Other comprehensive (loss) income, net of tax ​ ( 26,924 ) ​ 108,354 Net income ​ 40,872 ​ 5,798 Comprehensive income ​ $ 13,948 ​ $ 114,152 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ ​ March 31, ​ December 31, ​ 2024 2023 Accumulated Other Comprehensive Loss by Component: ​ ​ ​ ​ ​ Unrecognized prior service cost and net actuarial losses on pension and other post-retirement obligations $ ( 35,668 ) ​ $ ( 36,118 ) Tax effect 8,804 ​ 8,914 Net unrecognized prior service cost and net actuarial losses on pension and other post-retirement obligations ( 26,864 ) ​ ( 27,204 ) ​ ​ ​ ​ ​ ​ ​ Unrealized loss on investment securities ( 735,056 ) ​ ( 698,990 ) Tax effect 178,104 ​ 169,302 Net unrealized loss on investment securities ( 556,952 ) ​ ( 529,688 ) ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive loss $ ( 583,816 ) ​ $ ( 556,892 ) ​ See accompanying notes to consolidated financial statements (unaudited). ​ ​ 5 Table of Contents COMMUNITY BANK SYSTEM, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited) Three months ended March 31, 2024 and 2023 (In Thousands, Except Share Data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ Deferred ​ ​ ​ ​ ​ Shares ​ Amount ​ Paid-In ​ Retained ​ Comprehensive ​ Treasury ​ Compensation ​ ​ ​ Outstanding Issued Capital Earnings Loss Stock Arrangements Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2023 ​ 53,327,060 ​ $ 54,372 ​ $ 1,060,289 ​ $ 1,188,869 ​ $ ( 556,892 ) ​ $ ( 55,592 ) ​ $ 6,891 ​ $ 1,697,937 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ ​ ​ ​ ​ ​ 40,872 ​ ​ ​ ​ ​ ​ ​ 40,872 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive loss, net of tax ​ ​ ​ ​ ​ ​ ​ ​ ( 26,924 ) ​ ​ ​ ​ ​ ( 26,924 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dividends declared: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common, $ 0.45 per share ​ ​ ​ ​ ​ ​ ( 23,747 ) ​ ​ ​ ​ ​ ​ ​ ( 23,747 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock activity under employee stock plans 167,815 ​ 168 ​ 788 ​ ​ ​ ​ ​ ​ ​ ​ ​ 956 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock-based compensation ​ ​ ​ ​ 2,378 ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,378 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Distribution of stock under deferred compensation arrangements 20,769 ​ ​ ​ 53 ​ ​ ​ ​ ​ ​ ​ 1,082 ​ ( 1,135 ) ​ 0 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Treasury stock purchased ​ ( 751,083 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 34,517 ) ​ ​ ​ ​ ​ ( 34,517 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at March 31, 2024 ​ 52,764,561 ​ $ 54,540 ​ $ 1,063,508 ​ $ 1,205,994 ​ $ ( 583,816 ) ​ $ ( 89,027 ) ​ $ 5,756 ​ $ 1,656,955 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2022 ​ 53,737,249 ​ $ 54,190 ​ $ 1,050,231 ​ $ 1,152,452 ​ $ ( 686,439 ) ​ $ ( 26,485 ) ​ $ 7,756 ​ $ 1,551,705 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 5,798 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 5,798 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income, net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 108,354 ​ ​ ​ ​ ​ ​ ​ ​ 108,354 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dividends declared: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common, $ 0.44 per share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 23,723 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 23,723 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock activity under employee stock plans ​ 169,333 ​ ​ 170 ​ ​ 343 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 513 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock-based compensation ​ ​ ​ ​ ​ ​ ​ 2,272 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,272 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Distribution of stock under deferred compensation arrangements ​ 19,264 ​ ​ ​ ​ ​ ( 44 ) ​ ​ ​ ​ ​ ​ ​ ​ 1,126 ​ ​ ( 1,082 ) ​ ​ 0 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Treasury stock purchased ​ ( 200,929 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 10,966 ) ​ ​ 60 ​ ​ ( 10,906 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at March 31, 2023 53,724,917 ​ $ 54,360 ​ $ 1,052,802 ​ $ 1,134,527 ​ $ ( 578,085 ) ​ $ ( 36,325 ) ​ $ 6,734 ​ $ 1,634,013 ​ See accompanying notes to consolidated financial statements (unaudited). ​ ​ ​ ​ ​ 6 Table of Contents COMMUNITY BANK SYSTEM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ 2024 2023 Operating activities: ​ ​ Net income ​ $ 40,872 ​ $ 5,798 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ Depreciation ​ 3,280 ​ 3,304 Amortization of intangible assets ​ 3,576 ​ 3,667 Net amortization on securities, loans and borrowings ​ 2,195 ​ 508 Stock-based compensation ​ 2,378 ​ 2,272 Gain on debt extinguishment ​ ​ 0 ​ ​ ( 242 ) Provision for credit losses ​ 6,148 ​ 3,500 Amortization of mortgage servicing rights ​ 188 ​ 233 Loss on sales of investment securities ​ ​ 0 ​ ​ 52,329 Unrealized gain on equity securities ​ ​ ( 16 ) ​ ​ 0 Income from bank-owned life insurance policies ​ ( 613 ) ​ ( 587 ) Net gain on sale of assets ​ ( 873 ) ​ ( 399 ) Change in other assets and liabilities ​ 22,758 ​ 6,991 Net cash provided by operating activities ​ 79,893 ​ 77,374 Investing activities: ​ ​ Proceeds from maturities, calls, and paydowns of available-for-sale investment securities ​ 16,177 ​ 20,543 Proceeds from maturities, calls, and paydowns of held-to-maturity investment securities ​ ​ 498 ​ ​ 10 Proceeds from maturities and redemptions of equity and other investment securities, net ​ 2,671 ​ 32,148 Proceeds from sales of available-for-sale investment securities ​ ​ 0 ​ ​ 733,789 Purchases of held-to-maturity investment securities ​ ​ ( 38,448 ) ​ ​ ( 3,310 ) Purchases of equity and other securities ​ ( 287 ) ​ ( 3,319 ) Net increase in loans ​ ( 187,949 ) ​ ( 179,292 ) Cash paid for acquisitions ​ ( 5,995 ) ​ ( 2,061 ) Proceeds from sales of premises, equipment and other assets ​ ​ 1,216 ​ ​ 1,634 Purchases of premises and equipment ​ ( 2,559 ) ​ ( 4,070 ) Net cash (used in) provided by investing activities ​ ( 214,676 ) ​ 596,072 Financing activities: ​ ​ Net increase in deposits ​ ​ 423,901 ​ ​ 98,364 Net decrease in overnight borrowings ​ ( 53,000 ) ​ ( 710,000 ) Net decrease in securities sold under agreement to repurchase, short-term ​ ​ ( 17,354 ) ​ ​ ( 42,045 ) Payments on and maturities of other Federal Home Loan Bank borrowings ​ ​ ( 12,511 ) ​ ​ ( 2,215 ) Redemption of subordinated notes payable ​ ​ 0 ​ ​ ( 3,000 ) Proceeds from the issuance of common stock ​ 956 ​ 513 Purchases of treasury stock ​ ( 34,517 ) ​ ( 10,966 ) Increase in deferred compensation arrangements ​ 0 ​ 60 Cash dividends paid ​ ( 24,028 ) ​ ( 23,708 ) Withholding taxes paid on share-based compensation ​ ( 1,245 ) ​ ( 1,047 ) Net cash provided by (used in) financing activities ​ 282,202 ​ ( 694,044 ) Change in cash and cash equivalents ​ 147,419 ​ ( 20,598 ) Cash and cash equivalents at beginning of period ​ 190,962 ​ 209,896 Cash and cash equivalents at end of period ​ $ 338,381 ​ $ 189,298 Supplemental disclosures of cash flow information: ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 44,997 ​ $ 14,815 Cash paid for income taxes ​ 3,362 ​ 1,065 Supplemental disclosures of noncash financing and investing activities: ​ ​ ​ ​ ​ ​ Dividends declared and unpaid ​ 23,887 ​ 23,778 Transfers from loans to other real estate ​ 693 ​ 18 Transfers from premises and equipment, net to other assets ​ ​ 0 ​ ​ 1,443 Acquisitions: ​ ​ ​ ​ ​ ​ Fair value of assets acquired, excluding acquired cash and intangibles ​ 32 ​ 32 Fair value of liabilities assumed ​ 999 ​ 9 Contingent consideration in exchange for acquired assets ​ ​ 3,066 ​ ​ 0 ​ See accompanying notes to consolidated financial statements (unaudited). ​ ​ 7 Table of Contents COMMUNITY BANK SYSTEM, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) MARCH 31, 2024 NOTE A: BASIS OF PRESENTATION The interim financial data as of and for the three months ended March 31, 2024 is unaudited; however, in the opinion of Community Bank System, Inc. (the “Company”), the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the results for the interim periods in conformity with generally accepted accounting principles in the United States of America (“GAAP”) and Article 10 of Regulation S-X. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period. The Company’s unaudited interim consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”) on February 29, 2024. ​ NOTE B: ACQUISITIONS Subsequent Period Acquisition On April 1, 2024, the Company, through its subsidiary OneGroup NY, Inc. (“OneGroup”), completed the acquisition of a New York based insurance agency for $ 4.2 million in cash plus contingent consideration with an estimated fair value of $ 1.0 million at acquisition date. The effects of the acquisition will be included in the consolidated financial statements from that date. Current and Prior Period Acquisitions On February 1, 2024, the Company, through its subsidiary Benefit Plans Administrative Services, LLC (“BPA”), completed the acquisition of certain assets of Creative Plan Designs Limited (“CPD”), a financial services company that provides employee benefit plan design, administration and consulting services. Total consideration was $ 5.9 million in cash plus contingent consideration with an estimated fair value of $ 3.0 million at acquisition date. The effects of the acquired assets are included in the consolidated financial statements from that date. Revenues and direct expenses included in the consolidated statement of income for the three months ended March 31, 2024 were immaterial. The acquisition of CPD includes contingent consideration arrangements that require additional consideration to be paid by the Company based on the future revenue levels of CPD over approximately three year s and a contract holdback payment. The contract holdback will be paid upon satisfaction of certain customer retention requirements, and will be prorated based on actual results. The contract holdback amount was estimated at the maximum level of $ 1.5 million at the acquisition date. The revenue-based contingent consideration is payable in four installments, based on future revenue levels of CPD in 2024, 2025, 2026 and the first quarter of 2027. The range of undiscounted amounts the Company could pay under the contingent consideration agreement is between zero and $ 2.0 million for the first three payments in total and a variable amount for the fourth payment, which is between zero and a percentage of annualized revenue above a threshold for a particular revenue stream in the first quarter of 2027. The fair value of the contingent consideration recognized on the acquisition date of $ 3.0 million was estimated by applying the income approach, a measure that is based on significant Level 3 inputs not readily observable in the market. Key assumptions at the date of acquisition include (1) a discount rate range of 15.1 % to 19.1 % to present value the payments and (2) probability of achievement of future revenue levels of 82 %. During 2023, the Company, through its subsidiaries OneGroup, OneGroup Wealth Partners, Inc. (“Wealth Partners”) and Benefit Plans Administrative Services, Inc. (“BPAS”), completed the acquisition of certain assets of financial services companies. The acquired companies provide insurance, wealth management and benefit plan recordkeeping services and are headquartered in New York, Pennsylvania, and Florida. Total aggregate consideration for these acquisitions was $ 8.1 million, including $ 6.7 million in cash and $ 1.4 million in contingent consideration arrangements. The contingent consideration arrangements are based on achieving certain levels of retained revenue over a period ranging from two to five years . The fair value of these arrangements has been recorded based on the assumption that retained revenue levels will meet or exceed the required threshold for the maximum contingent consideration payments. Aggregate assets acquired were $ 5.1 million, including $ 4.9 million of customer list intangible assets, and the Company recorded goodwill of $ 3.0 million. The effects of the acquired assets have been included in the consolidated financial statements since the date of acquisition. The operations of these acquisitions have been integrated into the Company and discrete reporting of revenues and direct expenses for the three months ended March 31, 2024 and 2023 is not practicable. 8 Table of Contents On March 1, 2023, the Company, through its subsidiary Community Bank, N.A. (“CBNA”), completed the acquisition of certain assets of Axiom Realty Group, which includes Axiom Capital Corp., Axiom Realty Management, LLC and Axiom Realty Advisors, LLC (collectively referred to as “Axiom”), a commercial real estate finance and advisory firm, for $ 1.8 million in cash. The Company recorded a $ 1.2 million customer list intangible and recognized $ 0.6 million of goodwill in conjunction with the acquisition. The effects of the acquired assets have been included in the consolidated financial statements since that date. Revenues of approximately $ 0.6 million and $ 0.1 million and direct expenses of approximately $ 0.7 million and $ 0.2 million were included in the consolidated statements of income for the three months ended March 31, 2024 and 2023, respectively. The assets and liabilities assumed in the acquisitions were recorded at their estimated fair values based on management’s best estimates using information available at the dates of the acquisitions, and are subject to adjustment based on updated information not available at the time of the acquisitions. During the first quarter of 2024, an additional cash consideration payment of $ 0.1 million was made associated with a 2023 acquisition based upon the receipt of new information resulting in a $ 0.1 million increase to the carrying value of other intangibles and had no impact on the carrying value of goodwill. The Axiom acquisition generally expanded the Company’s lending presence nationwide. The OneGroup and Wealth Partners acquisitions generally expanded the Company’s insurance and wealth management presence in New York, Florida and Pennsylvania. The BPAS and BPA acquisitions generally expanded the Company’s employee benefit services presence in New York. Management expects that the Company will benefit from greater geographic diversity and the advantages of other synergistic business development opportunities. The following table summarizes the estimated fair value of the assets acquired and liabilities assumed after considering the measurement period adjustments described above: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 (000s omitted) CPD Axiom Other (1) Total Consideration: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash ​ $ 5,861 ​ $ 1,819 ​ $ 6,832 ​ $ 8,651 Contingent consideration ​ ​ 3,066 ​ ​ 0 ​ ​ 1,450 ​ ​ 1,450 Total net consideration ​ ​ 8,927 ​ ​ 1,819 ​ ​ 8,282 ​ ​ 10,101 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recognized amounts of identifiable assets acquired and liabilities assumed: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Premises and equipment, net ​ ​ 6 ​ ​ 25 ​ ​ 41 ​ ​ 66 Other assets ​ ​ 26 ​ ​ 2 ​ ​ 175 ​ ​ 177 Other intangibles ​ ​ 5,500 ​ ​ 1,176 ​ ​ 5,064 ​ ​ 6,240 Other liabilities ​ ​ ( 999 ) ​ ​ ( 9 ) ​ ​ ( 9 ) ​ ​ ( 18 ) Total identifiable assets, net ​ ​ 4,533 ​ ​ 1,194 ​ ​ 5,271 ​ ​ 6,465 Goodwill ​ $ 4,394 ​ $ 625 ​ $ 3,011 ​ $ 3,636 (1) Includes amounts for all OneGroup, Wealth Partners and BPAS acquisitions completed in 2023. The other intangibles related to the CPD acquisition are being amortized using an accelerated method over an estimated useful life of twelve years . The other intangibles related to the OneGroup, Wealth Partners and BPAS acquisitions completed in 2023 and the Axiom acquisition are being amortized using an accelerated method over an estimated useful life of eight years . The goodwill, which is not amortized for book purposes, was assigned to the Employee Benefit Services segment for the CPD acquisition and the BPAS acquisition completed in 2023, the Insurance segment for the OneGroup acquisitions completed in 2023, the Wealth Management segment for the Wealth Partners acquisition completed in 2023, and the Banking and Corporate segment for the Axiom acquisition. Goodwill arising from all of the acquisitions completed in the first quarter of 2024 and 2023 is deductible for tax purposes. ​ Direct costs related to the acquisitions were expensed as incurred. Merger and acquisition integration-related expenses were immaterial during both the three months ended March 31, 2024 and 2023 and have been separately stated in the consolidated statements of income. ​ ​ 9 Table of Contents NOTE C: ACCOUNTING POLICIES The accounting policies of the Company, as applied in the consolidated interim financial statements presented herein, are substantially the same as those followed on an annual basis as presented on pages 84 through 97 of the Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”) on February 29, 2024 except as noted below. Contract Balances A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Company’s noninterest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of March 31, 2024, $ 30.2 million of accounts receivable, including $ 8.7 million of unbilled fee revenue, and $ 3.6 million of unearned revenue, was recorded in the consolidated statements of condition. As of December 31, 2023, $ 41.7 million of accounts receivable, including $ 8.1 million of unbilled fee revenue, and $ 0.8 million of unearned revenue, was recorded in the consolidated statements of condition. Segment Information Effective January 1, 2024, the Company changed its determination of reportable segments and reportable measure of segment profit or loss in connection with the appointment of the Company’s new President and Chief Executive Officer, who serves as the Company’s chief operating decision maker (“CODM”), and changes in the information the CODM regularly reviews and uses to allocate resources and assess performance. The appointment of the Company’s new President and Chief Executive Officer followed the retirement of the Company’s former President and Chief Executive Officer, who previously served as the Company’s CODM until December 31, 2023. The change in determination of reportable segments was also driven by a change in the disaggregation of segment information that management believes would be useful to readers of the financial statements and to also align its reportable segments with financial information communicated to external parties, the Board of Directors and the business leaders who regularly meet with the CODM that also review this information at the same level of disaggregation. The change in reportable measure of segment profit or loss aligns with a change in the measurement principles of the internal reporting package used by the CODM to allocate resources and assess performance, which is presented on an operating basis excluding certain items considered non-core to the underlying business. Effective January 1, 2024, the Company has identified (1) Banking and Corporate; (2) Employee Benefit Services; (3) Insurance; and (4) Wealth Management as its reportable segments and determined that operating income before income taxes is the reportable measure of segment profit or loss that the CODM regularly reviews and uses to allocate resources and assess performance. The Company’s insurance services revenue and wealth management services revenue are reported separately in the Insurance reportable segment and Wealth Management reportable segment, respectively. The prior period has been recast to conform to the new current period presentation. See Note L for more detail on segment information. Reclassifications Certain reclassifications have been made to prior period balances to conform to the current period’s presentation. ​ Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , to update reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance by the CODM. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted this guidance as of January 1, 2024 and the enhanced disclosures are expected to be initially provided in its December 31, 2024 Form 10-K in alignment with the mandatory effective dates of the ASU. ​ 10 Table of Contents New Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. The update requires enhancements to the rate reconciliation, including disclosure of specific categories and additional information for reconciling items meeting a quantitative threshold as well as disclosure of income taxes paid disaggregated by federal, state and foreign taxes, and individual jurisdictions meeting a quantitative threshold. The amendments in this update are effective for fiscal years beginning after December 15, 2024 and early adoption is permitted. The Company is evaluating the impact this will have on the consolidated financial statements. ​ NOTE D: INVESTMENT SECURITIES The amortized cost and estimated fair value of investment securities as of March 31, 2024 and December 31, 2023 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 ​ December 31, 2023 ​ ​ ​ ​ ​ Gross ​ Gross ​ ​ ​ ​ ​ ​ ​ Gross ​ Gross ​ ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair ​ Amortized ​ Unrealized ​ Unrealized ​ Fair (000’s omitted) Cost Gains Losses Value Cost Gains Losses Value Available-for-Sale Portfolio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury and agency securities ​ $ 2,382,653 ​ $ 0 ​ $ 327,136 ​ $ 2,055,517 ​ $ 2,381,168 ​ $ 0 ​ $ 300,385 ​ $ 2,080,783 Obligations of state and political subdivisions ​ 496,983 ​ 630 ​ 37,464 ​ 460,149 ​ 502,879 ​ 1,469 ​ 29,985 ​ 474,363 Government agency mortgage-backed securities ​ 391,020 ​ 46 ​ 58,587 ​ 332,479 ​ 400,062 ​ 76 ​ 51,612 ​ 348,526 Corporate debt securities ​ 8,000 ​ 0 ​ 560 ​ 7,440 ​ 8,000 ​ 0 ​ 606 ​ 7,394 Government agency collateralized mortgage obligations ​ 8,841 ​ 0 ​ 562 ​ 8,279 ​ 9,498 ​ 0 ​ 572 ​ 8,926 Total available-for-sale portfolio ​ $ 3,287,497 ​ $ 676 ​ $ 424,309 ​ $ 2,863,864 ​ $ 3,301,607 ​ $ 1,545 ​ $ 383,160 ​ $ 2,919,992 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Held-to-Maturity Portfolio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury and agency securities ​ $ 1,116,458 ​ $ 0 ​ $ 85,460 ​ $ 1,030,998 ​ $ 1,109,101 ​ $ 0 ​ $ 50,866 ​ $ 1,058,235 Government agency mortgage-backed securities ​ ​ 101,014 ​ ​ 477 ​ ​ 874 ​ ​ 100,617 ​ ​ 63,073 ​ ​ 688 ​ ​ 180 ​ ​ 63,581 Total held-to-maturity portfolio ​ $ 1,217,472 ​ $ 477 ​ $ 86,334 ​ $ 1,131,615 ​ $ 1,172,174 ​ $ 688 ​ $ 51,046 ​ $ 1,121,816 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity and Other Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity securities, at fair value ​ $ 252 ​ $ 136 ​ $ 0 ​ $ 388 ​ $ 251 ​ $ 121 ​ $ 0 ​ $ 372 Federal Home Loan Bank common stock ​ 29,866 ​ 0 ​ 0 ​ 29,866 ​ 32,526 ​ 0 ​ 0 ​ 32,526 Federal Reserve Bank common stock ​ 33,568 ​ 0 ​ 0 ​ 33,568 ​ 33,568 ​ 0 ​ 0 ​ 33,568 Other equity securities, at adjusted cost ​ 6,206 ​ 750 ​ 0 ​ 6,956 ​ 5,930 ​ 750 ​ 0 ​ 6,680 Total equity and other securities ​ $ 69,892 ​ $ 886 ​ $ 0 ​ $ 70,778 ​ $ 72,275 ​ $ 871 ​ $ 0 ​ $ 73,146 ​ Included in the Company’s investment securities portfolio is Federal Reserve Bank (“FRB”) common stock with a carrying value of $ 33.6 million at both March 31, 2024 and December 31, 2023. The investment in FRB stock represents approximately half of the total required subscription, and the remaining half is unpaid and remains subject to call by the FRB. ​ 11 Table of Contents A summary of investment securities that have been in a continuous unrealized loss position is as follows: As of March 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 12 Months 12 Months or Longer Total ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross ​ ​ Fair ​ Unrealized ​ Fair ​ Unrealized ​ Fair ​ Unrealized (000’s omitted) Value Losses Value Losses Value Losses Available-for-Sale Portfolio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury and agency securities ​ $ 0 ​ $ 0 ​ $ 2,055,517 ​ $ 327,136 ​ $ 2,055,517 ​ $ 327,136 Obligations of state and political subdivisions ​ 85,364 ​ 1,635 ​ 313,287 ​ 35,829 ​ 398,651 ​ 37,464 Government agency mortgage-backed securities ​ 2,642 ​ 41 ​ 326,890 ​ 58,546 ​ 329,532 ​ 58,587 Corporate debt securities ​ ​ 0 ​ ​ 0 ​ ​ 7,440 ​ ​ 560 ​ ​ 7,440 ​ ​ 560 Government agency collateralized mortgage obligations ​ 0 ​ 0 ​ 8,262 ​ 562 ​ 8,262 ​ 562 Total available-for-sale investment portfolio ​ $ 88,006 ​ $ 1,676 ​ $ 2,711,396 ​ $ 422,633 ​ $ 2,799,402 ​ $ 424,309 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Held-to-Maturity Portfolio: ​ ​ ​ ​ ​ ​ U.S Treasury and agency securities ​ $ 527,314 ​ $ 28,776 ​ $ 503,684 ​ $ 56,684 ​ $ 1,030,998 ​ $ 85,460 Government agency mortgage-backed securities ​ ​ 68,342 ​ ​ 832 ​ 1,367 ​ ​ 42 ​ 69,709 ​ ​ 874 Total held-to-maturity portfolio ​ $ 595,656 ​ $ 29,608 $ 505,051 ​ $ 56,726 $ 1,100,707 ​ $ 86,334 ​ As of December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 12 Months 12 Months or Longer Total ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross ​ ​ Fair ​ Unrealized ​ Fair ​ Unrealized ​ Fair ​ Unrealized (000’s omitted) Value Losses Value Losses Value Losses Available-for-Sale Portfolio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury and agency securities ​ $ 0 ​ $ 0 ​ $ 2,080,783 ​ $ 300,385 ​ $ 2,080,783 ​ $ 300,385 Obligations of state and political subdivisions ​ 63,541 ​ 878 ​ 287,191 ​ 29,107 ​ 350,732 ​ 29,985 Government agency mortgage-backed securities ​ 8,586 ​ 55 ​ 336,266 ​ 51,557 ​ 344,852 ​ 51,612 Corporate debt securities ​ ​ 0 ​ ​ 0 ​ ​ 7,394 ​ ​ 606 ​ ​ 7,394 ​ ​ 606 Government agency collateralized mortgage obligations ​ 0 ​ 0 ​ 8,907 ​ 572 ​ 8,907 ​ 572 Total available-for-sale investment portfolio ​ $ 72,127 ​ $ 933 ​ $ 2,720,541 ​ $ 382,227 ​ $ 2,792,668 ​ $ 383,160 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Held-to-Maturity Portfolio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S Treasury and agency securities ​ $ 536,885 ​ $ 15,953 ​ $ 521,350 ​ $ 34,913 ​ $ 1,058,235 ​ $ 50,866 Government agency mortgage-backed securities ​ ​ 18,951 ​ ​ 158 ​ ​ 1,393 ​ ​ 22 ​ ​ 20,344 ​ ​ 180 Total held-to-maturity portfolio ​ $ 555,836 ​ $ 16,111 ​ $ 522,743 ​ $ 34,935 ​ $ 1,078,579 ​ $ 51,046 ​ The unrealized losses reported pertaining to available-for-sale securities issued by the U.S. government and its sponsored entities include treasuries, agencies, and mortgage-backed securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac, which are currently rated AAA by Moody’s Investor Services, AA+ by Standard & Poor’s and are guaranteed by the U.S. government. The majority of the obligations of state and political subdivisions carry a credit rating of A or better. Additionally, a portion of the obligations of state and political subdivisions carry a secondary level of credit enhancement. The Company holds two corporate debt securities in an unrealized loss position and, based on an analysis of the financial position of the issuers including financial performance, liquidity and regulatory capital ratios, the issuers of the securities show a remote risk of default. Timely interest payments continue to be made on the securities. The unrealized losses in the portfolios are primarily attributable to changes in interest rates. As such, management does not believe any individual unrealized loss as of March 31, 2024 represents credit losses and no unrealized losses have been recognized in the provision for credit losses. Accordingly, there is no allowance for credit losses on the Company’s available-for-sale portfolio as of March 31, 2024. Accrued interest receivable on available-for-sale debt securities, included in accrued interest and fees receivable on the consolidated statements of condition, totaled $ 11.6 million at March 31, 2024 and is excluded from the estimate of credit losses. 12 Table of Contents Securities classified as held-to-maturity are included under the Current Expected Credit Loss (“CECL”) methodology. Calculation of expected credit loss under CECL is done on a collective (“pooled”) basis, with assets grouped when similar risk characteristics exist. The Company notes that at March 31, 2024 all securities in the held-to-maturity classification are U.S. Treasury securities and government agency mortgage-backed securities; therefore, they share the same risk characteristics and can be evaluated on a collective basis. The expected credit loss on these securities is evaluated based on historical credit losses of this security type and the expected possibility of default in the future, and these securities are guaranteed by the U.S. government. U.S. Treasury securities and government agency mortgage-backed securities often receive the highest credit rating by rating agencies and the Company has concluded that the possibility of default is considered remote. The U.S. Treasury securities and government agency mortgage-backed securities held by the Company in the held-to-maturity category carry an AA+ rating from Standard & Poor’s, AAA from Moody’s Investor Services, and AA+ from Fitch. The Company concludes that the long history with no credit losses for these securities (adjusted for current conditions and reasonable and supportable forecasts) indicates an expectation that nonpayment of the amortized cost basis is zero. Management has concluded that the prepayment risk associated with these securities is insignificant and it is expected to recover the recorded investment. Accordingly, there is no allowance for credit losses on the Company’s held-to-maturity debt portfolio as of March 31, 2024. Accrued interest receivable on held-to-maturity debt securities, included in accrued interest and fees receivable on the consolidated statements of condition, totaled $ 3.3 million at March 31,2024 and is excluded from the estimate of credit losses. The Company has the intent and ability to hold the securities to maturity. The amortized cost and estimated fair value of debt securities at March 31, 2024, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, including government agency mortgage-backed securities and government agency collateralized mortgage obligations, are shown separately. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Held-to-Maturity ​ Available-for-Sale ​ ​ Amortized ​ Fair ​ Amortized ​ Fair (000’s omitted) Cost Value Cost Value Due in one year or less ​ $ 0 ​ $ 0 ​ $ 14,764 ​ $ 14,603 Due after one through five years ​ 0 ​ 0 ​ ​ 1,682,697 ​ ​ 1,517,578 Due after five years through ten years ​ 556,091 ​ 527,314 ​ ​ 492,385 ​ ​ 438,082 Due after ten years ​ 560,367 ​ 503,684 ​ ​ 697,790 ​ ​ 552,843 Subtotal ​ 1,116,458 ​ 1,030,998 ​ ​ 2,887,636 ​ ​ 2,523,106 Government agency mortgage-backed securities ​ 101,014 ​ 100,617 ​ ​ 391,020 ​ ​ 332,479 Government agency collateralized mortgage obligations ​ 0 ​ 0 ​ ​ 8,841 ​ ​ 8,279 Total ​ $ 1,217,472 ​ $ 1,131,615 ​ $ 3,287,497 ​ $ 2,863,864 ​ Investment securities with a carrying value of $ 2.76 billion and $ 2.14 billion at March 31, 2024 and December 31, 2023, respectively, were pledged to collateralize certain deposits and borrowings. Securities pledged to collateralize certain deposits and borrowings included $ 393.5 million and $ 598.9 million of U.S. Treasury securities that were pledged as collateral for securities sold under agreement to repurchase at March 31, 2024 and December 31, 2023, respectively. All securities sold under agreement to repurchase as of March 31, 2024 and December 31, 2023 have an overnight and continuous maturity. During the first quarter of 2023, the Company sold $ 786.1 million in book value of available-for-sale U.S. Treasury and agency securities, recognizing $ 52.3 million of gross realized losses. The sales were completed in January and February 2023 as part of a strategic balance sheet repositioning and were unrelated to the negative developments in the banking industry that occurred in March 2023. The proceeds from these sales of $ 733.8 million were redeployed entirely towards paying off existing overnight borrowings. ​ 13 Table of Contents NOTE E: LOANS AND ALLOWANCE FOR CREDIT LOSSES The segments of the Company’s loan portfolio are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, (000’s omitted) 2024 2023 CRE – multifamily ​ $ 658,278 ​ $ 619,794 CRE – owner occupied ​ ​ 777,302 ​ ​ 752,774 CRE – non-owner occupied ​ ​ 1,750,038 ​ ​ 1,711,198 Commercial & industrial and other business loans ​ ​ 1,034,581 ​ ​ 1,000,630 Consumer mortgage ​ 3,317,467 ​ 3,285,018 Consumer indirect ​ 1,716,028 ​ 1,703,440 Consumer direct ​ 183,750 ​ 185,229 Home equity ​ 446,056 ​ 446,515 Gross loans, including deferred origination costs ​ 9,883,500 ​ 9,704,598 Allowance for credit losses ​ ( 70,091 ) ​ ( 66,669 ) Loans, net of allowance for credit losses ​ $ 9,813,409 ​ $ 9,637,929 ​ The following table presents the aging of the amortized cost basis of the Company’s past due loans by segment as of March 31, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Past Due ​ 90+ Days Past ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (000’s omitted) ​ 30 – 89 ​ Due and ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ March 31, 2024 Days Still Accruing Nonaccrual Past Due Current Total Loans CRE – multifamily ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 658,278 ​ $ 658,278 CRE – owner occupied ​ 1,602 ​ 0 ​ 1,536 ​ 3,138 ​ 774,164 ​ 777,302 CRE – non-owner occupied ​ ​ 247 ​ ​ 0 ​ ​ 13,368 ​ ​ 13,615 ​ ​ 1,736,423 ​ ​ 1,750,038 Commercial & industrial and other business loans ​ ​ 1,402 ​ ​ 0 ​ ​ 647 ​ ​ 2,049 ​ ​ 1,032,532 ​ ​ 1,034,581 Consumer mortgage ​ ​ 17,265 ​ ​ 3,115 ​ ​ 27,066 ​ ​ 47,446 ​ ​ 3,270,021 ​ ​ 3,317,467 Consumer indirect ​ 16,604 ​ 865 ​ 0 ​ 17,469 ​ 1,698,559 ​ 1,716,028 Consumer direct ​ 1,163 ​ 72 ​ 21 ​ 1,256 ​ 182,494 ​ 183,750 Home equity ​ 3,848 ​ 502 ​ 2,266 ​ 6,616 ​ 439,440 ​ 446,056 Total ​ $ 42,131 ​ $ 4,554 ​ $ 44,904 ​ $ 91,589 ​ $ 9,791,911 ​ $ 9,883,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Past Due ​ 90+ Days Past ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (000’s omitted) ​ 30 – 89 ​ Due and ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ December 31, 2023 Days Still Accruing Nonaccrual Past Due Current Total Loans CRE – multifamily ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 619,794 ​ $ 619,794 CRE – owner occupied ​ ​ 1,477 ​ ​ 0 ​ ​ 1,953 ​ ​ 3,430 ​ ​ 749,344 ​ ​ 752,774 CRE – non-owner occupied ​ ​ 2,311 ​ ​ 0 ​ ​ 17,964 ​ ​ 20,275 ​ ​ 1,690,923 ​ ​ 1,711,198 Commercial & industrial and other business loans ​ ​ 880 ​ ​ 0 ​ ​ 336 ​ ​ 1,216 ​ ​ 999,414 ​ ​ 1,000,630 Consumer mortgage ​ 18,434 ​ 4,559 ​ 26,043 ​ 49,036 ​ 3,235,982 ​ 3,285,018 Consumer indirect ​ 20,215 ​ 776 ​ 0 ​ 20,991 ​ 1,682,449 ​ 1,703,440 Consumer direct ​ 1,579 ​ 135 ​ 23 ​ 1,737 ​ 183,492 ​ 185,229 Home equity ​ 3,546 ​ 416 ​ 2,368 ​ 6,330 ​ 440,185 ​ 446,515 Total ​ $ 48,442 ​ $ 5,886 ​ $ 48,687 ​ $ 103,015 ​ $ 9,601,583 ​ $ 9,704,598 ​ No interest income on nonaccrual loans was recognized during the three months ended March 31, 2024 and 2023. An immaterial amount of accrued interest was written off on nonaccrual loans by reversing interest income. 14 Table of Contents The Company uses several credit quality indicators to assess credit risk in an ongoing manner. The Company’s primary credit quality indicator for its business lending portfolio is an internal credit risk rating system that categorizes loans as “pass”, “special mention”, “substandard”, or “doubtful”. Credit risk ratings are applied to loans individually based on a case-by-case evaluation. In general, the following are the definitions of the Company’s credit quality indicators: ​ ​ ​ Pass The condition of the borrower and the performance of the loans are satisfactory or better. Special Mention ​ The condition of the borrower has deteriorated and the loan has potential weaknesses, although the loan performs as agreed. Loss may be incurred at some future date if conditions deteriorate further. Substandard ​ The condition of the borrower has significantly deteriorated and the loan has a well-defined weakness or weaknesses. The performance of the loan could further deteriorate and incur loss if deficiencies are not corrected. Doubtful ​ The condition of the borrower has deteriorated to the point that collection of the balance is improbable based on current facts and conditions and loss is likely. ​ 15 Table of Contents The following tables show the amount of business lending loans by credit quality category at March 31, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ Revolving ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ Loans ​ ​ ​ (000’s omitted) ​ Term Loans Amortized Cost Basis by Origination Year ​ Amortized ​ Converted ​ ​ ​ March 31, 2024 2024 2023 2022 2021 2020 Prior Cost Basis to Term Total CRE – multifamily: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 4,033 ​ $ 90,550 ​ $ 145,314 ​ $ 54,120 ​ $ 19,298 ​ $ 148,210 ​ $ 27,281 ​ $ 120,765 ​ $ 609,571 Special mention ​ 0 ​ 13,175 ​ 7,298 ​ 0 ​ 64 ​ 5,322 ​ 0 ​ ​ 8,258 ​ 34,117 Substandard ​ 0 ​ 0 ​ 0 ​ 504 ​ 0 ​ 1,825 ​ 149 ​ ​ 12,112 ​ 14,590 Doubtful ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ ​ 0 ​ 0 Total CRE – multifamily ​ $ 4,033 ​ $ 103,725 ​ $ 152,612 ​ $ 54,624 ​ $ 19,362 ​ $ 155,357 ​ $ 27,430 ​ $ 141,135 ​ $ 658,278 Current period gross charge-offs ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CRE – owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 24,861 ​ $ 57,943 ​ $ 86,027 ​ $ 56,267 ​ $ 45,668 ​ $ 262,877 ​ $ 27,624 ​ $ 172,799 ​ $ 734,066 Special mention ​ 0 ​ 3,193 ​ 2,328 ​ 2,130 ​ 627 ​ 13,392 ​ 706 ​ ​ 2,797 ​ 25,173 Substandard ​ 0 ​ 874 ​ 2,672 ​ 895 ​ 1,496 ​ 6,890 ​ 367 ​ ​ 4,869 ​ 18,063 Doubtful ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ ​ 0 ​ 0 Total CRE – owner occupied ​ $ 24,861 ​ $ 62,010 ​ $ 91,027 ​ $ 59,292 ​ $ 47,791 ​ $ 283,159 ​ $ 28,697 ​ $ 180,465 ​ $ 777,302 Current period gross charge-offs ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CRE – non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 46,146 ​ $ 142,425 ​ $ 253,828 ​ $ 109,985 ​ $ 85,180 ​ $ 321,511 ​ $ 393,412 ​ $ 268,762 ​ $ 1,621,249 Special mention ​ 160 ​ 41 ​ 819 ​ 15,879 ​ 1,292 ​ 31,513 ​ 18,976 ​ ​ 5,781 ​ 74,461 Substandard ​ 0 ​ 947 ​ 135 ​ 157 ​ 303 ​ 24,366 ​ 100 ​ ​ 27,354 ​ 53,362 Doubtful ​ 0 ​ 0 ​ 0 ​ 966 ​ 0 ​ 0 ​ 0 ​ ​ 0 ​ 966 Total CRE – non-owner occupied ​ $ 46,306 ​ $ 143,413 ​ $ 254,782 ​ $ 126,987 ​ $ 86,775 ​ $ 377,390 ​ $ 412,488 ​ $ 301,897 ​ $ 1,750,038 Current period gross charge-offs ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial & industrial and other business loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 49,198 ​ $ 127,095 ​ $ 126,984 ​ $ 85,922 ​ $ 31,062 ​ $ 126,058 ​ $ 361,048 ​ $ 58,138 ​ $ 965,505 Special mention ​ 579 ​ 14,812 ​ 2,134 ​ 2,101 ​ 1,412 ​ 4,416 ​ 16,650 ​ ​ 2,250 ​ 44,354 Substandard ​ 14 ​ 36 ​ 944 ​ 597 ​ 392 ​ 912 ​ 15,766 ​ ​ 6,061 ​ 24,722 Doubtful ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ ​ 0 ​ 0 Total commercial & industrial and other business loans ​ $ 49,791 ​ $ 141,943 ​ $ 130,062 ​ $ 88,620 ​ $ 32,866 ​ $ 131,386 ​ $ 393,464 ​ $ 66,449 ​ $ 1,034,581 Current period gross charge-offs ​ $ 0 ​ $ 64 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 195 ​ $ 2 ​ $ 261 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total business lending: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 124,238 ​ $ 418,013 ​ $ 612,153 ​ $ 306,294 ​ $ 181,208 ​ $ 858,656 ​ $ 809,365 ​ $ 620,464 ​ $ 3,930,391 Special mention ​ 739 ​ 31,221 ​ 12,579 ​ 20,110 ​ 3,395 ​ 54,643 ​ 36,332 ​ ​ 19,086 ​ 178,105 Substandard ​ 14 ​ 1,857 ​ 3,751 ​ 2,153 ​ 2,191 ​ 33,993 ​ 16,382 ​ ​ 50,396 ​ 110,737 Doubtful ​ 0 ​ 0 ​ 0 ​ 966 ​ 0 ​ 0 ​ 0 ​ ​ 0 ​ 966 Total business lending ​ $ 124,991 ​ $ 451,091 ​ $ 628,483 ​ $ 329,523 ​ $ 186,794 ​ $ 947,292 ​ $ 862,079 ​ $ 689,946 ​ $ 4,220,199 Current period gross charge-offs ​ $ 0 ​ $ 64 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 195 ​ $ 2 ​ $ 261 ​ 16 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ Revolving ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ Loans ​ ​ ​ (000’s omitted) ​ Term Loans Amortized Cost Basis by Origination Year ​ Amortized ​ Converted ​ ​ ​ December 31, 2023 2023 2022 2021 2020 2019 Prior Cost Basis to Term Total CRE – multifamily: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 90,888 ​ $ 145,337 ​ $ 52,058 ​ $ 19,982 ​ $ 41,992 ​ $ 112,287 ​ $ 3,237 ​ $ 106,580 ​ $ 572,361 Special mention ​ 13,175 ​ 7,317 ​ 0 ​ 65 ​ 0 ​ 3,522 ​ 0 ​ ​ 8,289 ​ 32,368 Substandard ​ 0 ​ 959 ​ 0 ​ 0 ​ 551 ​ 1,293 ​ 150 ​ ​ 12,112 ​ 15,065 Doubtful ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ ​ 0 ​ 0 Total CRE – multifamily ​ $ 104,063 ​ $ 153,613 ​ $ 52,058 ​ $ 20,047 ​ $ 42,543 ​ $ 117,102 ​ $ 3,387 ​ $ 126,981 ​ $ 619,794 Current period gross charge-offs ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CRE – owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 58,544 ​ $ 89,616 ​ $ 58,798 ​ $ 46,465 ​ $ 80,361 ​ $ 192,345 ​ $ 28,023 ​ $ 158,652 ​ $ 712,804 Special mention ​ 3,258 ​ 2,384 ​ 649 ​ 639 ​ 1,472 ​ 11,962 ​ 743 ​ ​ 6,064 ​ 27,171 Substandard ​ 880 ​ 108 ​ 922 ​ 1,480 ​ 514 ​ 7,531 ​ 941 ​ ​ 423 ​ 12,799 Doubtful ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ ​ 0 ​ 0 Total CRE – owner occupied ​ $ 62,682 ​ $ 92,108 ​ $ 60,369 ​ $ 48,584 ​ $ 82,347 ​ $ 211,838 ​ $ 29,707 ​ $ 165,139 ​ $ 752,774 Current period gross charge-offs ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 19 ​ $ 0 ​ $ 19 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CRE – non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 143,106 ​ $ 255,699 ​ $ 111,306 ​ $ 86,560 ​ $ 60,646 ​ $ 275,458 ​ $ 387,559 ​ $ 265,348 ​ $ 1,585,682 Special mention ​ 42 ​ 827 ​ 16,109 ​ 1,311 ​ 109 ​ 29,648 ​ 18,806 ​ ​ 3,506 ​ 70,358 Substandard ​ 947 ​ 136 ​ 1,123 ​ 2,996 ​ 1,248 ​ 20,578 ​ 100 ​ ​ 27,542 ​ 54,670 Doubtful ​ 0 ​ 0 ​ 0 ​ 488 ​ 0 ​ 0 ​ 0 ​ ​ 0 ​ 488 Total CRE – non-owner occupied ​ $ 144,095 ​ $ 256,662 ​ $ 128,538 ​ $ 91,355 ​ $ 62,003 ​ $ 325,684 ​ $ 406,465 ​ $ 296,396 ​ $ 1,711,198 Current period gross charge-offs ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial & industrial and other business loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 146,627 ​ $ 133,529 ​ $ 94,764 ​ $ 34,572 ​ $ 34,714 ​ $ 99,525 ​ $ 337,388 ​ $ 55,222 ​ $ 936,341 Special mention ​ 15,306 ​ 2,071 ​ 1,491 ​ 1,557 ​ 2,553 ​ 1,854 ​ 16,341 ​ ​ 8,045 ​ 49,218 Substandard ​ 38 ​ 800 ​ 558 ​ 477 ​ 323 ​ 1,305 ​ 10,800 ​ ​ 770 ​ 15,071 Doubtful ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ 0 ​ ​ 0 ​ 0 Total commercial & industrial and other business loans ​ $ 161,971 ​ $ 136,400 ​ $ 96,813 ​ $ 36,606 ​ $ 37,590 ​ $ 102,684 ​ $ 364,529 ​ $ 64,037 ​ $ 1,000,630 Current period gross charge-offs ​ $ 0 ​ $ 160 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 36 ​ $ 569 ​ $ 0 ​ $ 765 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total business lending: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 439,165 ​ $ 624,181 ​ $ 316,926 ​ $ 187,579 ​ $ 217,713 ​ $ 679,615 ​ $ 756,207 ​ $ 585,802 ​ $ 3,807,188 Special mention ​ 31,781 ​ 12,599 ​ 18,249 ​ 3,572 ​ 4,134 ​ 46,986 ​ 35,890 ​ ​ 25,904 ​ 179,115 Substandard ​ 1,865 ​ 2,003 ​ 2,603 ​ 4,953 ​ 2,636 ​ 30,707 ​ 11,991 ​ ​ 40,847 ​ 97,605 Doubtful ​ 0 ​ 0 ​ 0 ​ 488 ​ 0 ​ 0 ​ 0 ​ ​ 0 ​ 488 Total business lending ​ $ 472,811 ​ $ 638,783 ​ $ 337,778 ​ $ 196,592 ​ $ 224,483 ​ $ 757,308 ​ $ 804,088 ​ $ 652,553 ​ $ 4,084,396 Current period gross charge-offs ​ $ 0 ​ $ 160 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 36 ​ $ 588 ​ $ 0 ​ $ 784 ​ All other loans are underwritten and structured using standardized criteria and characteristics, primarily payment performance, and are monitored collectively on a monthly basis. These are typically loans to individuals in the consumer categories and are delineated as either performing or nonperforming. Performing loans include loans classified as current as well as those classified as 30 - 89 days past due. Nonperforming loans include 90+ days past due and still accruing and nonaccrual loans. 17 Table of Contents The following tables detail the balances in all other loan categories at March 31, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ Revolving ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ Loans ​ ​ ​ (000’s omitted) ​ Term Loans Amortized Cost Basis by Origination Year ​ Amortized ​ Converted ​ ​ ​ March 31, 2024 2024 2023 2022 2021 2020 Prior Cost Basis to Term Total Consumer mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FICO AB (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ $ 64,407 ​ $ 349,747 ​ $ 347,072 ​ $ 448,044 ​ $ 195,758 ​ $ 740,946 ​ $ 0 ​ $ 93,588 ​ $ 2,239,562 Nonperforming ​ 0 ​ 0 ​ 435 ​ 599 ​ 599 ​ 5,037 ​ 0 ​ ​ 191 ​ 6,861 Total FICO AB ​ 64,407 ​ 349,747 ​ 347,507 ​ 448,643 ​ 196,357 ​ 745,983 ​ 0 ​ ​ 93,779 ​ 2,246,423 FICO CDE (2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ 27,228 ​ 148,818 ​ 146,921 ​ 162,313 ​ 100,186 ​ 390,278 ​ 37,639 ​ ​ 34,341 ​ 1,047,724 Nonperforming ​ 0 ​ 559 ​ 2,843 ​ 1,837 ​ 2,253 ​ 14,418 ​ 360 ​ ​ 1,050 ​ 23,320 Total FICO CDE ​ 27,228 ​ 149,377 ​ 149,764 ​ 164,150 ​ 102,439 ​ 404,696 ​ 37,999 ​ ​ 35,391 ​ 1,071,044 Total consumer mortgage ​ $ 91,635 ​ $ 499,124 ​ $ 497,271 ​ $ 612,793 ​ $ 298,796 ​ $ 1,150,679 ​ $ 37,999 ​ $ 129,170 ​ $ 3,317,467 Current period gross charge-offs ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 93 ​ $ 0 ​ $ 0 ​ $ 93 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer indirect: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ $ 163,183 ​ $ 640,930 ​ $ 524,062 ​ $ 240,137 ​ $ 60,246 ​ $ 86,605 ​ $ 0 ​ $ 0 ​ $ 1,715,163 Nonperforming ​ 0 ​ 240 ​ 289 ​ 78 ​ 19 ​ 239 ​ 0 ​ ​ 0 ​ 865 Total consumer indirect ​ $ 163,183 ​ $ 641,170 ​ $ 524,351 ​ $ 240,215 ​ $ 60,265 ​ $ 86,844 ​ $ 0 ​ $ 0 ​ $ 1,716,028 Current period gross charge-offs ​ $ 0 ​ $ 943 ​ $ 1,282 ​ $ 393 ​ $ 175 ​ $ 267 ​ $ 0 ​ $ 0 ​ $ 3,060 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer direct: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ $ 22,640 ​ $ 69,889 ​ $ 46,515 ​ $ 22,634 ​ $ 6,682 ​ $ 8,574 ​ $ 6,722 ​ $ 1 ​ $ 183,657 Nonperforming ​ 0 ​ 26 ​ 17 ​ 0 ​ 0 ​ 25 ​ 25 ​ ​ 0 ​ 93 Total consumer direct ​ $ 22,640 ​ $ 69,915 ​ $ 46,532 ​ $ 22,634 ​ $ 6,682 ​ $ 8,599 ​ $ 6,747 ​ $ 1 ​ $ 183,750 Current period gross charge-offs ​ $ 0 ​ $ 274 ​ $ 254 ​ $ 227 ​ $ 17 ​ $ 41 ​ $ 60 ​ $ 0 ​ $ 873 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Home equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ $ 11,042 ​ $ 59,649 ​ $ 61,180 ​ $ 61,104 ​ $ 30,104 ​ $ 66,718 ​ $ 125,865 ​ $ 27,626 ​ $ 443,288 Nonperforming ​ 0 ​ 225 ​ 176 ​ 38 ​ 357 ​ 683 ​ 908 ​ ​ 381 ​ 2,768 Total home equity ​ $ 11,042 ​ $ 59,874 ​ $ 61,356 ​ $ 61,142 ​ $ 30,461 ​ $ 67,401 ​ $ 126,773 ​ $ 28,007 ​ $ 446,056 Current period gross charge-offs ​ $ 0 ​ $ 0 ​ $ 23 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 23 (1) FICO AB refers to higher tiered loans with FICO scores greater than or equal to 720 at origination. (2) FICO CDE refers to loans with FICO scores less than 720 at origination and potentially higher risk. ​ 18 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ Revolving ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ Loans ​ ​ ​ (000’s omitted) ​ Term Loans Amortized Cost Basis by Origination Year ​ Amortized ​ Converted ​ ​ ​ December 31, 2023 2023 2022 2021 2020 2019 Prior Cost Basis to Term Total Consumer mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FICO AB (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ $ 354,967 ​ $ 353,185 ​ $ 456,871 ​ $ 199,429 ​ $ 157,159 ​ $ 606,591 ​ $ 0 ​ $ 86,067 ​ $ 2,214,269 Nonperforming ​ 0 ​ 371 ​ 764 ​ 605 ​ 279 ​ 5,187 ​ 0 ​ ​ 195 ​ 7,401 Total FICO AB ​ 354,967 ​ 353,556 ​ 457,635 ​ 200,034 ​ 157,438 ​ 611,778 ​ 0 ​ ​ 86,262 ​ 2,221,670 FICO CDE (2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ 148,443 ​ 150,585 ​ 164,839 ​ 103,003 ​ 71,710 ​ 331,839 ​ 39,630 ​ ​ 30,098 ​ 1,040,147 Nonperforming ​ 53 ​ 2,629 ​ 2,477 ​ 1,629 ​ 1,785 ​ 13,201 ​ 367 ​ ​ 1,060 ​ 23,201 Total FICO CDE ​ 148,496 ​ 153,214 ​ 167,316 ​ 104,632 ​ 73,495 ​ 345,040 ​ 39,997 ​ ​ 31,158 ​ 1,063,348 Total consumer mortgage ​ $ 503,463 ​ $ 506,770 ​ $ 624,951 ​ $ 304,666 ​ $ 230,933 ​ $ 956,818 ​ $ 39,997 ​ $ 117,420 ​ $ 3,285,018 Current period gross charge-offs ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 85 ​ $ 584 ​ $ 0 ​ $ 0 ​ $ 669 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer indirect: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ $ 681,824 ​ $ 572,799 ​ $ 273,035 ​ $ 71,428 ​ $ 45,203 ​ $ 58,375 ​ $ 0 ​ $ 0 ​ $ 1,702,664 Nonperforming ​ 84 ​ 443 ​ 101 ​ 42 ​ 19 ​ 87 ​ 0 ​ ​ 0 ​ 776 Total consumer indirect ​ $ 681,908 ​ $ 573,242 ​ $ 273,136 ​ $ 71,470 ​ $ 45,222 ​ $ 58,462 ​ $ 0 ​ $ 0 ​ $ 1,703,440 Current period gross charge-offs ​ $ 926 ​ $ 3,595 ​ $ 1,969 ​ $ 1,171 ​ $ 570 ​ $ 1,121 ​ $ 0 ​ $ 0 ​ $ 9,352 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer direct: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ $ 80,169 ​ $ 52,826 ​ $ 26,617 ​ $ 8,282 ​ $ 4,604 ​ $ 5,697 ​ $ 6,875 ​ $ 1 ​ $ 185,071 Nonperforming ​ 33 ​ 41 ​ 47 ​ 0 ​ 2 ​ 23 ​ 12 ​ ​ 0 ​ 158 Total consumer direct ​ $ 80,202 ​ $ 52,867 ​ $ 26,664 ​ $ 8,282 ​ $ 4,606 ​ $ 5,720 ​ $ 6,887 ​ $ 1 ​ $ 185,229 Current period gross charge-offs ​ $ 206 ​ $ 813 ​ $ 450 ​ $ 110 ​ $ 110 ​ $ 159 ​ $ 161 ​ $ 0 ​ $ 2,009 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Home equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ $ 61,065 ​ $ 62,801 ​ $ 63,102 ​ $ 31,094 ​ $ 25,721 ​ $ 44,832 ​ $ 126,939 ​ $ 28,177 ​ $ 443,731 Nonperforming ​ 0 ​ 162 ​ 10 ​ 253 ​ 260 ​ 533 ​ 1,053 ​ ​ 513 ​ 2,784 Total home equity ​ $ 61,065 ​ $ 62,963 ​ $ 63,112 ​ $ 31,347 ​ $ 25,981 ​ $ 45,365 ​ $ 127,992 ​ $ 28,690 ​ $ 446,515 Current period gross charge-offs ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 64 ​ $ 0 ​ $ 44 ​ $ 11 ​ $ 0 ​ $ 119 (1) FICO AB refers to higher tiered loans with FICO scores greater than or equal to 720 at origination. (2) FICO CDE refers to loans with FICO scores less than 720 at origination and potentially higher risk. ​ Business lending loans greater than $ 0.5 million that are on nonaccrual are individually assessed and, if necessary, a specific allocation of the allowance for credit losses is provided. A summary of individually assessed business loans as of March 31, 2024 and December 31, 2023 follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, (000’s omitted) 2024 2023 Loans with allowance allocation ​ $ 10,189 ​ $ 3,484 Loans without allowance allocation ​ 4,322 ​ 15,750 Carrying balance ​ 14,511 ​ 19,234 Contractual balance ​ 14,645 ​ 19,249 Specifically allocated allowance ​ 965 ​ 470 ​ The average carrying balance of individually assessed loans was $ 14.5 million and $ 3.1 million for the three months ended March 31, 2024 and 2023, respectively. No interest income was recognized on individually assessed loans for the three months ended March 31, 2024 and 2023. Occasionally, the Company modifies loans to borrowers experiencing financial difficulty by providing principal forgiveness, term extension, payment delay, or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses. 19 Table of Contents In some cases, the Company provides multiple types of modifications on one loan. Typically, one type of modification, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another modification, such as principal forgiveness, may be granted. Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. The estimate of allowance for credit losses includes historical losses from loans that were modified due to borrower financial difficulty, therefore a charge to the allowance for credit losses is generally not recorded upon modification. The following table presents the amortized cost basis of loans at March 31, 2024 that were both experiencing financial difficulty and modified during the three months ended March 31, 2024, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of financing receivable is also presented below. The Company did not have any modifications to borrowers experiencing financial difficulty other than term extensions. During the three months ended March 31, 2023, the amount of loans that were modified to borrowers experiencing financial difficulty was immaterial. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, 2024 ​ ​ ​ ​ ​ Total Class of ​ ​ Term ​ Financing (000s omitted except for percentages) Extension Receivable CRE – owner occupied ​ $ 353 0.05 % CRE – non-owner occupied ​ ​ 224 ​ 0.01 % Commercial & industrial and other business loans ​ ​ 108 ​ 0.00 % Total ​ $ 685 0.01 % ​ The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance of such loans that have been modified in the last 12 months. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ 90+ Days Past ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Past Due 30 – ​ Due and Still ​ Non- ​ ​ ​ (000s omitted) Current 89 Days Accruing Accrual Total CRE – owner occupied ​ $ 1,686 ​ $ 0 ​ $ 0 ​ $ 0 ​ $ 1,686 CRE – non-owner occupied ​ ​ 886 ​ ​ 0 ​ ​ 0 ​ ​ 0 ​ ​ 886 Commercial & industrial and other business loans ​ ​ 108 ​ ​ 0 ​ ​ 0 ​ ​ 0 ​ ​ 108 Consumer mortgage ​ 0 ​ 0 ​ 0 ​ 279 ​ 279 Home equity ​ 31 ​ 0 ​ 0 ​ 0 ​ 31 Total ​ $ 2,711 ​ $ 0 ​ $ 0 ​ $ 279 ​ $ 2,990 ​ The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the three months ended March 31, 2024: ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, 2024 ​ ​ Weighted-Average ​ Term Extension (Years) CRE – owner occupied 1.7 CRE – non-owner occupied 8.5 Commercial & industrial and other business loans 3.8 Total 4.2 ​ There were no loans modified to borrowers with financial difficulty that had a payment default subsequent to modification during the three months ended March 31, 2024 and 2023. ​ 20 Table of Contents Allowance for Credit Losses The following presents by loan segment the activity in the allowance for credit losses during the three months ended March 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2024 ​ ​ Beginning ​ Charge- ​ ​ ​ ​ ​ ​ ​ Ending (000’s omitted) balance offs Recoveries Provision balance Business lending ​ $ 26,854 ​ $ ( 261 ) ​ $ 39 ​ $ 2,739 ​ $ 29,371 Consumer mortgage ​ 15,333 ​ ( 93 ) ​ 3 ​ ( 753 ) ​ 14,490 Consumer indirect ​ 18,585 ​ ( 3,060 ) ​ 1,209 ​ 3,560 ​ 20,294 Consumer direct ​ 3,269 ​ ( 873 ) ​ 215 ​ 744 ​ 3,355 Home equity ​ 1,628 ​ ( 23 ) ​ 3 ​ ( 27 ) ​ 1,581 Unallocated ​ 1,000 ​ 0 ​ 0 ​ 0 ​ 1,000 Allowance for credit losses – loans ​ 66,669 ​ ( 4,310 ) ​ 1,469 ​ 6,263 ​ 70,091 Liabilities for off-balance-sheet credit exposures ​ 913 ​ 0 ​ 0 ​ ( 115 ) ​ 798 Total allowance for credit losses ​ $ 67,582 ​ $ ( 4,310 ) ​ $ 1,469 ​ $ 6,148 ​ $ 70,889 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2023 ​ ​ Beginning ​ Charge- ​ ​ ​ ​ ​ ​ ​ Ending (000’s omitted) balance offs Recoveries Provision balance Business lending ​ $ 23,297 ​ $ ( 175 ) ​ $ 172 ​ $ 1,933 ​ $ 25,227 Consumer mortgage ​ ​ 14,343 ​ ​ ( 19 ) ​ ​ 7 ​ ​ ( 53 ) ​ ​ 14,278 Consumer indirect ​ 17,852 ​ ( 2,531 ) ​ 1,347 ​ 1,379 ​ 18,047 Consumer direct ​ 2,973 ​ ( 505 ) ​ 187 ​ 375 ​ 3,030 Home equity ​ 1,594 ​ 0 ​ 6 ​ ( 12 ) ​ 1,588 Unallocated ​ 1,000 ​ 0 ​ 0 ​ 0 ​ 1,000 Allowance for credit losses – loans ​ 61,059 ​ ( 3,230 ) ​ 1,719 ​ 3,622 ​ 63,170 Liabilities for off-balance-sheet credit exposures ​ 1,123 ​ 0 ​ 0 ​ ( 122 ) ​ 1,001 Total allowance for credit losses ​ $ 62,182 ​ $ ( 3,230 ) ​ $ 1,719 ​ $ 3,500 ​ $ 64,171 ​ The allowance for credit losses increased to $ 70.1 million at March 31, 2024 compared to $ 66.7 million at December 31, 2023 and $ 63.2 million at March 31, 2023, reflective of an increase in loans outstanding, a stable economic forecast and an increase in the qualitative assessment of future uncertainty primarily concerning the business lending and consumer indirect portfolios. Accrued interest receivable on loans, included in accrued interest and fees receivable on the consolidated statements of condition, totaled $ 34.4 million at March 31, 2024, and is excluded from the estimate of credit losses and amortized cost basis of loans. Under ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) , also referred to as CECL, the Company utilizes the historical loss rate on its loan portfolio as the initial basis for the estimate of credit losses using the cumulative loss, vintage loss and line loss methods, which is derived from the Company’s historical loss experience. Adjustments to historical loss experience were made for differences in current loan-specific risk characteristics and to address current period delinquencies, charge-off rates, risk ratings, lack of loan level data through an entire economic cycle, changes in loan sizes and underwriting standards as well as the addition of acquired loans which were not underwritten by the Company. The Company considered historical losses immediately prior, through and following the Great Recession compared to the historical period used for modeling to adjust the historical information to account for longer-term expectations for loan credit performance. Under CECL, the Company is required to consider future economic conditions to determine current expected credit losses. Management selected an eight-quarter reasonable and supportable forecast period with a four-quarter reversion to the historical mean to use as part of the economic forecast, and utilizes a two-quarter lag adjustment for economic factors that are not dependent on collateral values, and no lag for factors that utilize collateral values. Management determined that these qualitative adjustments were needed to adjust historical information for expected losses and to reflect changes as a result of current conditions. 21 Table of Contents For qualitative macroeconomic adjustments, the Company uses third party forecasted economic data scenarios utilizing a base scenario and two alternative scenarios that are weighted, with forecasts available as of March 31, 2024. These forecasts were factored into the qualitative portion of the calculation of the estimated credit losses and include the impact of a decline in residential real estate and vehicle prices as well as inflation. The scenarios utilized forecast stable unemployment levels, modest GDP and real household income growth, offset by some declines in auto, housing and commercial real estate prices. Management developed expected loss estimates considering factors for segments as outlined below: ● Business lending – non real estate: The Company selected projected unemployment and GDP as indicators of forecasted losses related to business lending and utilize both factors in an even weight for the calculation. The Company also considered delinquencies, risk rating changes, recent charge-off history and acquired loans as part of the review of estimated losses. ● Business lending – real estate: The Company selected projected unemployment and commercial real estate values as indicators of forecasted losses related to commercial real estate loans and utilize both factors in an even weight for the calculation. The Company also considered the factors noted in business lending – non real estate. ● Consumer mortgages and home equity: The Company selected projected unemployment and residential real estate values as indicators of forecasted losses related to mortgage lending and utilize both factors in an even weight for the calculation. In addition, current delinquencies, charge-offs and acquired loans were considered. ● Consumer indirect: The Company selected projected unemployment and vehicle valuation indices as indicators of forecasted losses related to indirect lending and utilize both factors in an even weight for the calculation. In addition, current delinquencies, charge-offs and acquired loans were considered. ● Consumer direct: The Company selected projected unemployment and inflation-adjusted household income as indicators of forecasted losses related to consumer direct lending and utilize both factors in an even weight for the calculation. In addition, current delinquencies, charge-offs and acquired loans were considered. At March 31, 2024, loans with a carrying amount of approximately $ 4.44 billion were pledged for the availability to secure certain borrowings with the FHLB and FRB. There were $ 394.4 million of borrowings outstanding under these arrangements at March 31, 2024. At March 31, 2024 and December 31, 2023, there were foreclosures in process of $ 5.2 million and $ 5.8 million, respectively. During the three months ended March 31, 2024, the Company did not purchase any loans, while the Company sold $ 1.2 million of secondary market eligible residential consumer mortgage loans during the period. NOTE F: GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS The gross carrying amount and accumulated amortization for each type of identifiable intangible asset are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 December 31, 2023 ​ ​ Gross ​ ​ ​ ​ Net ​ Gross ​ ​ ​ ​ Net ​ Carrying Accumulated Carrying Carrying Accumulated Carrying (000’s omitted) ​ Amount Amortization Amount Amount Amortization Amount Amortizing intangible assets: ​ ​ ​ ​ ​ ​ ​ Core deposit intangibles ​ $ 77,373 ​ $ ( 70,125 ) ​ $ 7,248 ​ $ 77,373 ​ $ ( 69,214 ) ​ $ 8,159 Other intangibles ​ 131,553 ​ ( 84,152 ) ​ 47,401 ​ 125,919 ​ ( 81,487 ) ​ 44,432 Total amortizing intangibles ​ $ 208,926 ​ $ ( 154,277 ) ​ $ 54,649 ​ $ 203,292 ​ $ ( 150,701 ) ​ $ 52,591 ​ 22 Table of Contents The estimated aggregate amortization expense for each of the five succeeding fiscal years ended December 31 is as follows: ​ ​ ​ ​ ​ (000’s omitted) Apr - Dec 2024 ​ $ 9,940 2025 ​ ​ 11,604 2026 ​ 10,216 2027 ​ 4,564 2028 ​ 3,434 Thereafter ​ 14,891 Total ​ $ 54,649 ​ Shown below are the components of the Company’s goodwill at December 31, 2023 and March 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (000’s omitted) December 31, 2023 Additions March 31, 2024 Goodwill ​ $ 845,396 ​ $ 4,394 ​ $ 849,790 ​ ​ ​ NOTE G: BORROWINGS During January 2024, the Company secured $ 300.0 million in short-term borrowings through the Bank Term Funding Program at the Federal Reserve at a rate of 4.87 % , to fund expected net loan growth. These short-term borrowings matured during March 2024 and the Bank Term Funding Program has ceased making new loans as of March 11, 2024. ​ NOTE H: BENEFIT PLANS The Company provides a qualified defined benefit pension to eligible employees and retirees, other post-retirement health and life insurance benefits to certain retirees, an unfunded supplemental pension plan for certain key executives, and an unfunded stock balance plan for certain of its nonemployee directors. The Company accrues for the estimated cost of these benefits through charges to expense during the years that employees earn these benefits. The service cost component of net periodic benefit income is included in the salaries and employee benefits line of the consolidated statements of income, while the other components of net periodic benefit income are included in other expenses. The Company made a $ 4.0 million contribution to its defined benefit pension plan in the first quarter of 2024. The Company did no t make a contribution to its defined benefit pension plan in the first quarter of 2023. The post-retirement benefits component of net periodic benefit cost for the three months ended March 31, 2024 and 2023 is immaterial. The pension benefits component of net periodic benefit cost for the three months ended March 31, 2024 and 2023 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension Benefits ​ ​ Three Months Ended ​ ​ March 31, (000’s omitted) 2024 2023 Service cost ​ $ 1,173 ​ $ 1,108 Interest cost ​ ​ 1,898 ​ ​ 1,890 Expected return on plan assets ​ ( 4,600 ) ​ ( 4,020 ) Amortization of unrecognized net loss (gain) ​ 283 ​ ( 555 ) Amortization of prior service cost ​ 205 ​ 205 Net periodic benefit ​ $ ( 1,041 ) ​ $ ( 1,372 ) ​ ​ NOTE I: EARNINGS PER SHARE The two class method is used in the calculations of basic and diluted earnings per share. Under the two class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared and participation rights in undistributed earnings. The Company has determined that all of its outstanding non-vested stock awards are participating securities as of March 31, 2024. ​ 23 Table of Contents Basic earnings per share are computed based on the weighted-average of the common shares outstanding for the period. Diluted earnings per share are based on the weighted-average of the shares outstanding and the assumed exercise of stock options during the year. The dilutive effect of options is calculated using the treasury stock method of accounting. The treasury stock method determines the number of common shares that would be outstanding if all the dilutive options were exercised and the proceeds were used to repurchase common shares in the open market at the average market price for the applicable time period. At March 31, 2024 and 2023, weighted-average anti-dilutive stock options outstanding were immaterial. The following is a reconciliation of basic to diluted earnings per share for the three months ended March 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, (000’s omitted, except per share data) 2024 2023 Net income ​ $ 40,872 ​ $ 5,798 Income attributable to unvested stock-based compensation awards ​ ( 111 ) ​ ( 17 ) Income available to common shareholders ​ $ 40,761 ​ $ 5,781 ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding – basic ​ 53,228 ​ 53,843 Basic earnings per share ​ $ 0.77 ​ $ 0.11 ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 40,872 ​ $ 5,798 Income attributable to unvested stock-based compensation awards ​ ( 111 ) ​ ( 17 ) Income available to common shareholders ​ $ 40,761 ​ $ 5,781 ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding – basic ​ 53,228 ​ 53,843 Assumed exercise of stock options ​ 93 ​ 207 Weighted-average common shares outstanding – diluted ​ 53,321 ​ 54,050 Diluted earnings per share ​ $ 0.76 ​ $ 0.11 ​ Stock Repurchase Program At its December 2023 meeting, the Board of Directors of the Company (the “Board”) approved a new stock repurchase program authorizing the repurchase, at the discretion of senior management, of up to 2,697,000 shares of the Company’s common stock, in accordance with securities and banking laws and regulations, during the twelve-month period starting January 1, 2024. Any repurchased shares will be used for general corporate purposes, including those related to stock plan activities. The timing and extent of repurchases will depend on market conditions and other corporate considerations as determined at the Company’s discretion. There were 750,000 shares of treasury stock purchases made under this authorization during the first quarter of 2024 with an average price paid per share of $ 45.95 . At its December 2022 meeting, the Board approved a stock repurchase program authorizing the repurchase, at the discretion of senior management, of up to 2,697,000 shares of the Company’s common stock, in accordance with securities and banking laws and regulations, during the twelve-month period starting January 1, 2023. There were 607,161 shares of treasury stock purchases made under this authorization during 2023 with an average price paid per share of $ 49.44 , including 200,000 shares of treasury stock purchases made under this authorization during the first quarter of 2023 with an average price paid per share of $ 54.53 . ​ 24 Table of Contents NOTE J: COMMITMENTS, CONTINGENT LIABILITIES AND RESTRICTIONS The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments consist primarily of commitments to extend credit and standby letters of credit. Commitments to extend credit are agreements to lend to customers, generally having fixed expiration dates or other termination clauses that may require payment of a fee. These commitments consist principally of unused commercial and consumer credit lines. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of an underlying contract with a third party. The credit risks associated with commitments to extend credit and standby letters of credit are essentially the same as that involved with extending loans to customers and are subject to the Company’s normal credit policies. Collateral may be obtained based on management’s assessment of the customer’s creditworthiness. The fair value of the standby letters of credit is immaterial for disclosure. The contract amounts of commitments and contingencies are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, (000’s omitted) ​ 2024 ​ 2023 Commitments to extend credit ​ $ 1,550,998 ​ $ 1,494,549 Standby letters of credit ​ 64,901 ​ 61,352 Total ​ $ 1,615,899 ​ $ 1,555,901 ​ On November 16, 2023, the FDIC issued a final rulemaking that implemented a special assessment to recover the uninsured deposit losses from bank failures that occurred during 2023. The final rule anticipates collecting the special assessment over eight quarterly assessment periods beginning in 2024 at an annual rate of approximately 13.4 basis points of uninsured deposits that exceeded $ 5.0 billion as of December 31, 2022. The FDIC has indicated that the amount of the special assessment will be adjusted as their loss estimates change. The Company accrued $ 1.5 million of expense related to the FDIC special assessment in 2023. During the three months ended March 31, 2024, the Company accrued an additional $ 0.4 million associated with an expected increase to the FDIC special assessment based on the receipt of new information. Total FDIC insurance expense was $ 2.6 million and $ 2.1 million for the three months ended March 31, 2024 and 2023, respectively. ​ Legal Contingencies On at least a quarterly basis, the Company assesses its liabilities and contingencies in connection with pending or threatened legal proceedings or other matters in which claims for monetary damages are asserted. For those matters where it is probable that the Company will incur losses and the amounts of the losses are reasonably estimable, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent such matters could result in exposure in excess of that liability, the amount of such excess is not currently estimable. The range of losses that are reasonably possible for matters where an exposure is not currently estimable or considered probable is not believed to be material in the aggregate. This is based on information currently available to the Company and involves elements of judgment and significant uncertainties. The Company recorded a loss contingency in 2023 related to the anticipated settlement, following mediation, of a threatened collective and class action asserted against CBNA on behalf of certain nonexempt branch employees, regarding unpaid wages under the Fair Labor Standards Act and applicable state labor laws. On February 5, 2024, following a mediation held on February 1, 2024, the Company agreed to a settlement in the amount of $ 5.8 million. A settlement agreement has been executed by the parties and the terms of the settlement have been approved by the Court. The Company recorded a $ 5.8 million litigation accrual at December 31, 2023 and there was no change as of March 31, 2024. ​ 25 Table of Contents NOTE K: FAIR VALUE Accounting standards establish a framework for measuring fair value and require certain disclosures about such fair value instruments. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. exit price). Inputs used to measure fair value are classified into the following hierarchy: ​ ​ ​ ● Level 1 - Quoted prices in active markets for identical assets or liabilities. ● Level 2 - Quoted prices in active markets for similar assets or liabilities, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability. ● Level 3 - Significant valuation assumptions not readily observable in a market. ​ A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following tables set forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis. There were no transfers between any of the levels for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Fair (000’s omitted) Level 1 Level 2 Level 3 Value Available-for-sale investment securities: ​ ​ ​ ​ U.S. Treasury and agency securities ​ $ 1,995,421 ​ $ 60,096 ​ $ 0 ​ $ 2,055,517 Obligations of state and political subdivisions ​ 0 ​ 460,149 ​ 0 ​ 460,149 Government agency mortgage-backed securities ​ 0 ​ 332,479 ​ 0 ​ 332,479 Corporate debt securities ​ 0 ​ 7,440 ​ 0 ​ 7,440 Government agency collateralized mortgage obligations ​ 0 ​ 8,279 ​ 0 ​ 8,279 Total available-for-sale investment securities ​ 1,995,421 ​ 868,443 ​ 0 ​ 2,863,864 Equity securities ​ 388 ​ 0 ​ 0 ​ 388 Mortgage loans held for sale ​ ​ 0 ​ ​ 88 ​ ​ 0 ​ ​ 88 Commitments to originate real estate loans for sale ​ ​ 0 ​ ​ 0 ​ ​ 32 ​ ​ 32 Forward sales commitments ​ ​ 0 ​ ​ 37 ​ ​ 0 ​ ​ 37 Total ​ $ 1,995,809 ​ $ 868,568 ​ $ 32 ​ $ 2,864,409 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Fair (000’s omitted) Level 1 Level 2 Level 3 Value Available-for-sale investment securities: ​ ​ ​ ​ U.S. Treasury and agency securities ​ $ 2,019,089 ​ $ 61,694 ​ $ 0 ​ $ 2,080,783 Obligations of state and political subdivisions ​ 0 ​ 474,363 ​ 0 ​ 474,363 Government agency mortgage-backed securities ​ 0 ​ 348,526 ​ 0 ​ 348,526 Corporate debt securities ​ 0 ​ 7,394 ​ 0 ​ 7,394 Government agency collateralized mortgage obligations ​ 0 ​ 8,926 ​ 0 ​ 8,926 Total available-for-sale investment securities ​ 2,019,089 ​ 900,903 ​ 0 ​ 2,919,992 Equity securities ​ 372 ​ 0 ​ 0 ​ 372 Mortgage loans held for sale ​ 0 ​ 414 ​ 0 ​ 414 Commitments to originate real estate loans for sale ​ ​ 0 ​ ​ 0 ​ ​ 2 ​ ​ 2 Forward sales commitments ​ ​ 0 ​ ​ 6 ​ ​ 0 ​ ​ 6 Total ​ $ 2,019,461 ​ $ 901,323 ​ $ 2 ​ $ 2,920,786 ​ ​ 26 Table of Contents The valuation techniques used to measure fair value for the items in the table above are as follows: ● Available-for-sale investment securities and equity securities – The fair values of available-for-sale investment securities are based upon quoted prices, if available. If quoted prices are not available, fair values are measured using quoted market prices for similar securities or model-based valuation techniques. Level 1 securities include U.S. Treasury obligations and marketable equity securities that are traded by dealers or brokers in active over-the-counter markets. Level 2 securities include U.S. agency securities, mortgage-backed securities issued by government-sponsored entities, municipal securities and corporate debt securities that are valued by reference to prices for similar securities or through model-based techniques in which all significant inputs, such as reported trades, trade execution data, interest rate swap yield curves, market prepayment speeds, credit information, market spreads, and security’s terms and conditions, are observable. See Note D for further disclosure of the fair value of investment securities. ● Mortgage loans held for sale – The Company has elected to value loans held for sale at fair value in order to more closely match the gains and losses associated with loans held for sale with the gains and losses on forward sales contracts. Accordingly, the impact on the valuation will be recognized in the Company’s consolidated statements of income. All mortgage loans held for sale are current and in performing status. The fair value of mortgage loans held for sale is determined using quoted secondary-market prices of loans with similar characteristics and, as such, has been classified as a Level 2 valuation. The unpaid principal value of mortgage loans held for sale was approximately $ 0.1 million at March 31, 2024 and $ 0.4 million at December 31, 2023. Mortgage loans held for sale are included in other assets in the consolidated statements of condition. The unrealized gain on mortgage loans held for sale was recognized in mortgage banking revenues in the consolidated statements of income and is immaterial. ● Forward sales commitments – The Company enters into forward sales commitments to sell certain residential real estate loans. Such commitments are considered to be derivative financial instruments and, therefore, are carried at estimated fair value in the other asset or other liability section of the consolidated statements of condition. The fair value of these forward sales commitments is primarily measured by obtaining pricing from certain government-sponsored entities and reflects the underlying price the entity would pay the Company for an immediate sale on these mortgages. As such, these instruments are classified as Level 2 in the fair value hierarchy. ● Commitments to originate real estate loans for sale – The Company enters into various commitments to originate residential real estate loans for sale. Such commitments are considered to be derivative financial instruments and, therefore, are carried at estimated fair value in the other asset or other liability section of the consolidated statements of condition. The estimated fair value of these commitments is determined using quoted secondary market prices obtained from certain government-sponsored entities. Additionally, accounting guidance requires the expected net future cash flows related to the associated servicing of the loan to be included in the fair value measurement of the derivative. The expected net future cash flows are based on a valuation model that calculates the present value of estimated net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income. Such assumptions include estimates of the cost of servicing loans, appropriate discount rate and prepayment speeds. The determination of expected net cash flows is considered a significant unobservable input contributing to the Level 3 classification of commitments to originate real estate loans for sale. The changes in Level 3 assets measured at fair value on a recurring basis are immaterial. The fair value information of assets and liabilities measured on a non-recurring basis presented below is not as of the period-end, but rather as of the date the fair value adjustment was recorded closest to the date presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 ​ December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ Total Fair ​ ​ ​ ​ ​ ​ Total Fair (000’s omitted) ​ Level 1 ​ Level 2 ​ Level 3 ​ Value ​ Level 1 ​ Level 2 ​ Level 3 ​ Value Individually assessed loans ​ $ 0 ​ $ 0 ​ $ 9,224 $ 9,224 ​ $ 0 ​ $ 0 ​ $ 3,014 $ 3,014 Other real estate owned ​ ​ 0 ​ ​ 0 ​ ​ 1,742 ​ 1,742 ​ ​ 0 ​ ​ 0 ​ ​ 1,159 ​ 1,159 Mortgage servicing rights ​ 0 ​ 0 ​ 76 76 ​ 0 ​ 0 ​ 162 162 Contingent consideration ​ ​ 0 ​ ​ 0 ​ ​ ( 8,216 ) ​ ​ ( 8,216 ) ​ ​ 0 ​ ​ 0 ​ ​ ( 5,150 ) ​ ​ ( 5,150 ) Total ​ $ 0 ​ $ 0 ​ $ 2,826 $ 2,826 ​ $ 0 ​ $ 0 ​ $ ( 815 ) $ ( 815 ) ​ 27 Table of Contents Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans calculated when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using independent appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace, adjusted for non-observable inputs. Thus, the resulting nonrecurring fair value measurements are generally classified as Level 3. Estimates of fair value used for other collateral supporting commercial loans generally are based on assumptions not observable in the marketplace and, therefore, such valuations classify as Level 3. Other real estate owned (“OREO”) is valued at the time the loan is foreclosed upon and the asset is transferred to OREO. The value is based primarily on third party appraisals, less estimated costs to sell. The appraisals are sometimes further discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the customer and customer’s business. Such discounts are significant, ranging from 9.0 % to 73.8 % at March 31, 2024 and result in a Level 3 classification of the inputs for determining fair value. OREO is reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors identified above. The Company recovers the carrying value of OREO through the sale of the property. The ability to affect future sales prices is subject to market conditions and factors beyond the Company’s control and may impact the estimated fair value of a property. Originated mortgage servicing rights are recorded at their fair value at the time of sale of the underlying loan, and are amortized in proportion to and over the estimated period of net servicing income. The fair value of mortgage servicing rights is based on a valuation model incorporating inputs that market participants would use in estimating future net servicing income. Such inputs include estimates of the cost of servicing loans, appropriate discount rate and prepayment speeds and are considered to be unobservable and contribute to the Level 3 classification of mortgage servicing rights. In accordance with GAAP, the Company must record impairment charges, on a nonrecurring basis, when the carrying value of a stratum exceeds its estimated fair value. Impairment is recognized through a valuation allowance. There is a valuation allowance of approximately $ 1.2 million at March 31, 2024 and December 31, 2023. The Company has recorded contingent consideration liabilities that arise from acquisition activity. The contingent consideration is recorded at fair value at the date of acquisition. The valuation of contingent consideration is calculated using an income approach method, which provides an estimation of the fair value of an asset or liability based on future cash flows over a discrete projection period, discounted to present value using an appropriate rate of return. The assumptions used in the valuation calculation are based on significant unobservable inputs, therefore such valuations classify as Level 3. The contingent consideration related to the FBD acquisition completed in 2021 was revalued at December 31, 2023. The remaining contingent consideration accrual was adjusted to the maximum potential amount of $ 2.7 million, using a potential probability of achievement of 100 %. The first of the two required payments were made on the TGA contingent consideration in the third quarter of 2023 in the amount of $ 2.4 million, based on actual retained revenue results. The remaining contingent consideration liability related to the TGA acquisition was revalued at December 31, 2023 for an adjusted fair value of $ 1.0 million. 28 Table of Contents The Company determines fair values based on quoted market values, where available, estimates of present values, or other valuation techniques. Those techniques are significantly affected by the assumptions used, including, but not limited to, the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in immediate settlement of the instrument. The significant unobservable inputs used in the determination of fair value of assets classified as Level 3 on a recurring or non-recurring basis are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Significant Unobservable ​ ​ Fair Value at ​ ​ ​ ​ ​ Input Range ​ (000’s omitted, except per loan data) ​ March 31, 2024 ​ Valuation Technique ​ Significant Unobservable Inputs (Weighted Average) ​ Individually assessed loans ​ $ 9,224 Fair value of collateral Estimated cost of disposal/market adjustment ​ 27.2 % Other real estate owned ​ ​ 1,742 Fair value of collateral Estimated cost of disposal/market adjustment ​ 9.0 % - 73.8 % ( 58.8 %) ​ Commitments to originate real estate loans for sale ​ 32 Discounted cash flow Embedded servicing value ​ 1.0 % Mortgage servicing rights ​ 76 Discounted cash flow Weighted average constant prepayment rate ​ 5.0 % - 14.4 % ( 5.2 %) ​ ​ ​ ​ ​ ​ ​ ​ Weighted average discount rate ​ ​ 5.0 % - 5.2 % ( 5.2 %) ​ ​ ​ ​ ​ ​ ​ ​ Adequate compensation ​ $ 7 /loan ​ Contingent consideration ​ ​ ( 8,216 ) ​ Discounted cash flow ​ Discount rate ​ ​ 6.7 % - 19.1 % ( 12.1 %) ​ ​ ​ ​ ​ ​ ​ ​ Probability of achievement ​ ​ 82.0 % - 100.0 % ( 94.1 %) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Significant Unobservable ​ ​ ​ Fair Value at ​ ​ ​ ​ ​ Input Range ​ (000's omitted, except per loan data) ​ December 31, 2023 ​ Valuation Technique ​ Significant Unobservable Inputs ​ (Weighted Average) Individually assessed loans ​ $ 3,014 Fair value of collateral Estimated cost of disposal/market adjustment ​ 27.2 % Other real estate owned ​ ​ 1,159 Fair value of collateral Estimated cost of disposal/market adjustment ​ 9.0 % - 73.8 % ( 45.8 %) ​ Commitments to originate real estate loans for sale ​ ​ 2 ​ Discounted cash flow ​ Embedded servicing value ​ ​ 1.0 % Mortgage servicing rights ​ 162 Discounted cash flow Weighted average constant prepayment rate ​ 4.2 % - 5.1 % ( 4.2 %) ​ ​ ​ ​ Weighted average discount rate ​ 4.6 % - 5.0 % ( 4.9 %) ​ ​ ​ ​ ​ ​ ​ Adequate compensation ​ $ 7 /loan ​ Contingent consideration ​ ​ ( 5,150 ) ​ Discounted cash flow ​ Discount rate ​ ​ 6.7 % - 6.9 % ( 6.9 %) ​ ​ ​ ​ ​ ​ ​ ​ Probability of achievement ​ ​ 100 % ​ ​ The significant unobservable inputs used in the determination of the fair value of assets classified as Level 3 have an inherent measurement uncertainty that, if changed, could result in higher or lower fair value measurements of these assets as of the reporting date. The weighted average of the estimated cost of disposal/market adjustment for individually assessed loans was calculated by dividing the total of the book value of the collateral of the individually assessed loans classified as Level 3 by the total of the fair value of the collateral of the individually assessed loans classified as Level 3. The weighted average of the estimated cost of disposal/market adjustment for other real estate owned was calculated by dividing the total of the differences between the appraisal values of the real estate and the book values of the real estate divided by the totals of the appraisal values of the real estate. The weighted average of the constant prepayment rate for mortgage servicing rights was calculated by adding the constant prepayment rates used in each loan pool weighted by the balance in each loan pool. The weighted average of the discount rate for mortgage servicing rights was calculated by adding the discount rates used in each loan pool weighted by the balance in each loan pool. The weighted average of the discount rate for the contingent consideration was calculated by adding the discount rates used for the calculation of the fair value of each payment of contingent consideration, weighted by the amount of the payment as part of the total fair value of contingent consideration. The weighted average of the probability of achievement was determined by calculating the proportion of the probability-weighted payment of the total maximum payment, weighted by the amount of the payment as part of the total fair value of contingent consideration. 29 Table of Contents Certain financial instruments and all nonfinancial instruments are excluded from fair value disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The carrying amounts and estimated fair values of the Company’s other financial instruments that are not accounted for at fair value at March 31, 2024 and December 31, 2023 are presented below. The table presented below excludes other financial instruments for which the carrying value approximates fair value including cash and cash equivalents, accrued interest receivable and accrued interest payable. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 ​ December 31, 2023 ​ Carrying Fair Carrying Fair (000’s omitted) ​ Value ​ Value ​ Value ​ Value Financial assets: ​ ​ ​ ​ Net loans ​ $ 9,813,409 ​ $ 9,366,599 ​ $ 9,637,929 ​ $ 9,293,902 Held-to-maturity securities ​ ​ 1,217,472 ​ ​ 1,131,615 ​ ​ 1,172,174 ​ ​ 1,121,816 Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ 13,352,022 ​ 13,326,950 ​ 12,928,121 ​ 12,907,605 Overnight borrowings ​ 0 ​ 0 ​ 53,000 ​ 53,000 Securities sold under agreement to repurchase, short-term ​ 287,241 ​ 287,241 ​ 304,595 ​ 304,595 Other Federal Home Loan Bank borrowings ​ 395,122 ​ 391,311 ​ 407,603 ​ 410,385 ​ The following is a further description of the principal valuation methods used by the Company to estimate the fair values of its financial instruments. Loans have been classified as a Level 3 valuation. Fair values for variable rate loans that reprice frequently are based on carrying values. Fair values for fixed rate loans are estimated using discounted cash flows and interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Held-to-maturity U.S. Treasury and agency securities have been classified as a Level 1 valuation. The fair values of held-to-maturity U.S. Treasury and agency investment securities are based upon quoted prices, if available. If quoted prices are not available, fair values are measured using quoted market prices for similar securities or model-based valuation techniques. Held-to-maturity government agency mortgage-backed securities have been classified as a Level 2 valuation. The fair values of held-to-maturity government agency mortgage-backed securities are based on current market rates for similar products. Deposits have been classified as a Level 2 valuation. The fair value of demand deposits, interest-bearing checking deposits, savings accounts and money market deposits is the amount payable on demand at the reporting date. The fair value of time deposit obligations are based on current market rates for similar securities. Borrowings have been classified as a Level 2 valuation. The fair value of overnight borrowings and securities sold under agreement to repurchase, short-term, is the amount payable on demand at the reporting date. Fair values for other FHLB borrowings are estimated using discounted cash flows and interest rates currently being offered on similar securities. Other financial assets and liabilities – Cash and cash equivalents have been classified as a Level 1 valuation, while accrued interest receivable and accrued interest payable have been classified as a Level 2 valuation. The fair values of each approximate the respective carrying values because the instruments are payable on demand or have short-term maturities and present relatively low credit risk and interest rate risk. ​ NOTE L: SEGMENT INFORMATION Operating segments are components of an enterprise, which are evaluated regularly by the CODM in deciding how to allocate resources and assess performance. The Company’s CODM is the President and Chief Executive Officer of the Company. Effective January 1, 2024, the Company has identified (1) Banking and Corporate; (2) Employee Benefit Services; (3) Insurance; and (4) Wealth Management as its reportable segments and determined that operating income before income taxes is the reportable measure of segment profit or loss that the CODM regularly reviews and uses to allocate resources and assess performance. See Note C for further detail on the factors used to identify the Company’s reportable segments and reportable measure of segment profit or loss. 30 Table of Contents CBNA operates the Banking and Corporate segment that provides a wide array of lending and depository-related products and services to individuals, businesses, and governmental units with branch locations in Upstate New York as well as Northeastern Pennsylvania, Vermont and Western Massachusetts. In addition to these general intermediation services, the Banking and Corporate segment provides treasury management solutions and payment processing services. The Banking and Corporate segment also includes certain corporate overhead-related expenses. The Employee Benefit Services segment, which includes the operating subsidiaries of Benefit Plans Administrative Services, LLC, BPAS Actuarial and Pension Services, LLC, BPAS Trust Company of Puerto Rico, Fringe Benefits Design of Minnesota, Inc. (“FBD”), Northeast Retirement Services, LLC (“NRS”), Global Trust Company, Inc. (“GTC”), and Hand Benefits & Trust Company, provides employee benefit trust, collective investment fund, retirement plan and health savings account administration, fund administration, transfer agency, actuarial, and health and welfare consulting services. The Insurance segment is comprised of personal and commercial lines of insurance and other risk management products and services provided by OneGroup NY, Inc. The Wealth Management segment is comprised of wealth management services including trust services provided by the Nottingham Trust division within the Bank, broker-dealer and investment advisory services provided by Community Investment Services, Inc., The Carta Group, Inc. and OneGroup Wealth Partners, Inc. as well as asset management services provided by Nottingham Advisors, Inc. The accounting policies used in the disclosure of business segments are the same as those described in the summary of significant accounting policies (See Note A, Summary of Significant Accounting Policies of the most recent Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024) except as follows. Operating noninterest revenues exclude certain items considered non-core to the underlying business including realized and unrealized gains or losses on investment securities and gains or losses on debt extinguishment. Operating noninterest expenses also exclude certain items considered non-core to the underlying business including amortization of intangible assets, acquisition expenses, acquisition-related contingent consideration adjustments, litigation accrual and restructuring expenses. Both operating noninterest revenues and operating noninterest expenses include certain intersegment activity associated with transactions between the segments and are eliminated in consolidation. Segment assets include certain segment cash balances held as deposits with CBNA and are eliminated in consolidation. 31 Table of Contents Information about reportable segments and reconciliation of the information to the consolidated financial statements follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Banking and ​ Employee ​ ​ ​ ​ Wealth ​ ​ (000’s omitted) Corporate Benefit Services Insurance Management Total Three Months Ended March 31, 2024 ​ ​ ​ ​ ​ Net interest income ​ $ 106,214 ​ $ 623 ​ $ 27 ​ $ 126 ​ $ 106,990 Provision for credit losses ​ 6,148 ​ 0 ​ 0 ​ 0 ​ 6,148 Operating noninterest revenues ​ 18,185 ​ 32,570 ​ 11,127 ​ 9,636 ​ 71,518 Operating noninterest expenses ​ ​ 78,227 ​ ​ 20,333 ​ ​ 10,123 ​ ​ 6,920 ​ ​ 115,603 Operating income before income taxes ​ $ 40,024 ​ $ 12,860 ​ $ 1,031 ​ $ 2,842 ​ $ 56,757 Assets ​ $ 15,632,930 ​ $ 254,668 ​ $ 64,337 ​ $ 35,138 ​ $ 15,987,073 Goodwill ​ $ 732,598 ​ $ 89,778 ​ $ 23,979 ​ $ 3,435 ​ $ 849,790 Core deposit intangibles & Other intangibles, net ​ $ 8,143 ​ $ 30,792 ​ $ 13,757 ​ $ 1,957 ​ $ 54,649 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of total segment operating income before income taxes to total consolidated income before income taxes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment operating income before income taxes ​ $ 40,024 ​ $ 12,860 ​ $ 1,031 ​ $ 2,842 ​ $ 56,757 Unrealized gain on equity securities ​ ​ 16 ​ ​ 0 ​ ​ 0 ​ ​ 0 ​ ​ 16 Amortization of intangible assets ​ ​ ( 973 ) ​ ​ ( 1,725 ) ​ ​ ( 673 ) ​ ​ ( 205 ) ​ ​ ( 3,576 ) Acquisition expenses ​ ​ 0 ​ ​ ( 35 ) ​ ​ 0 ​ ​ 0 ​ ​ ( 35 ) Litigation accrual ​ ​ 0 ​ ​ 0 ​ ​ ( 119 ) ​ ​ 0 ​ ​ ( 119 ) Total consolidated income before income taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 53,043 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of total segment operating noninterest revenues to total consolidated noninterest revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment operating noninterest revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 71,518 Elimination of intersegment revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 1,249 ) Unrealized gain on equity securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 16 Total consolidated noninterest revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 70,285 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of total segment operating noninterest expenses to total consolidated noninterest expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment operating noninterest expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 115,603 Elimination of intersegment expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 1,249 ) Amortization of intangible assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,576 Acquisition expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 35 Litigation accrual ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 119 Total consolidated noninterest expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 118,084 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of total segment assets to total consolidated assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 15,987,073 Elimination of intersegment cash and deposits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 128,403 ) Total consolidated assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 15,858,670 ​ 32 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Banking and ​ Employee ​ ​ ​ ​ Wealth ​ ​ (000's omitted) Corporate Benefit Services Insurance Management Total Three Months Ended March 31, 2023 ​ ​ ​ ​ ​ Net interest income ​ $ 110,682 ​ $ 254 ​ $ 35 ​ $ 59 ​ $ 111,030 Provision for credit losses ​ 3,500 ​ 0 ​ 0 ​ 0 ​ 3,500 Operating noninterest revenues ​ 16,445 ​ 30,187 ​ 11,548 ​ 8,637 ​ 66,817 Operating noninterest expenses ​ ​ 78,413 ​ ​ 18,274 ​ ​ 8,781 ​ ​ 6,095 ​ ​ 111,563 Operating income before income taxes ​ $ 45,214 ​ $ 12,167 ​ $ 2,802 ​ $ 2,601 ​ $ 62,784 Assets ​ $ 15,045,902 ​ $ 229,091 ​ $ 61,244 ​ $ 29,123 ​ $ 15,365,360 Goodwill ​ $ 733,064 ​ $ 85,384 ​ $ 21,990 ​ $ 2,498 ​ $ 842,936 Core deposit intangibles & Other intangibles, net ​ $ 11,629 ​ $ 31,778 ​ $ 13,040 ​ $ 1,531 ​ $ 57,978 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of total segment operating income before income taxes to total consolidated income before income taxes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment operating income before income taxes ​ $ 45,214 ​ $ 12,167 ​ $ 2,802 ​ $ 2,601 ​ $ 62,784 Loss on sales of investment securities ​ ​ ( 52,329 ) ​ ​ 0 ​ ​ 0 ​ ​ 0 ​ ​ ( 52,329 ) Gain on debt extinguishment ​ ​ 242 ​ ​ 0 ​ ​ 0 ​ ​ 0 ​ ​ 242 Amortization of intangible assets ​ ​ ( 1,206 ) ​ ​ ( 1,633 ) ​ ​ ( 630 ) ​ ​ ( 198 ) ​ ​ ( 3,667 ) Acquisition expenses ​ ​ ( 17 ) ​ ​ 0 ​ ​ ( 40 ) ​ ​ 0 ​ ​ ( 57 ) Total consolidated income before income taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 6,973 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of total segment operating noninterest revenues to total consolidated noninterest revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment operating noninterest revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 66,817 Elimination of intersegment revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 1,235 ) Loss on sales of investment securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 52,329 ) Gain on debt extinguishment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 242 Total consolidated noninterest revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 13,495 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of total segment operating noninterest expenses to total consolidated noninterest expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment operating noninterest expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 111,563 Elimination of intersegment expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 1,235 ) Amortization of intangible assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,667 Acquisition expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 57 Total consolidated noninterest expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 114,052 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of total segment assets to total consolidated assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total segment assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 15,365,360 Elimination of intersegment cash and deposits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 109,407 ) Total consolidated assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 15,255,953 ​ ​ ​ ​ ​ 33 Table of Contents