What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-04 · 159 added, 276 removed, 1158 unchanged (27% of the section changed)

36 unchanged sentences

Money market 3,579,820 3,556,375

Time certificates of deposit of $ 100,000 and over

412,129 525,424

Other time certificates of deposits 373,433 425,205

Time certificates of deposit 1,398,610 1,531,150

Total deposits 16,763,392 16,917,044

Federal Home Loan Bank borrowings 25,660 25,667

Long-term borrowings (less unamortized debt issuance costs of $ 0 and $ 40 )

18,750 32,773

Long-term borrowings — 14,063

Junior subordinated debentures (less unamortized debt issuance costs of $ 34 and $ 35 )

12 unchanged sentences

issued and outstanding:

33,043,812 shares at September 30, 2021 and 32,965,692 shares at December 31, 2020 (includes 135,485 and 135,205 shares of unvested participating restricted stock awards, respectively)

47,377,125 shares at March 31, 2022 and 47,349,778 shares at December 31, 2021 (includes 144,733 and 135,273 shares of unvested participating restricted stock awards, respectively)

Value of shares held in rabbi trust at cost:

84,207 shares at September 30, 2021 and 84,126 shares at December 31, 2020

82,223 shares at March 31, 2022 and 82,565 shares at December 31, 2021

( 3,179 ) ( 3,146 )

2 unchanged sentences

Retained earnings 795,651 766,716

Accumulated other comprehensive income, net of tax 18,567 40,695

Accumulated other comprehensive income (loss), net of tax ( 78,202 ) 2,183

Total stockholders’ equity 2,965,439 3,018,449

4 unchanged sentences

(Unaudited—Dollars in thousands, except per share data)

Three Months Ended Nine Months Ended

September 30 September 30

2021 2020 2021 2020

Three Months Ended

Interest income

10 unchanged sentences

Net interest income 137,432 95,584

Provision for credit losses ( 10,000 ) 7,500 ( 17,500 ) 52,500

(Release of) provision for credit losses ( 2,000 ) ( 2,500 )

Net interest income after provision for credit losses 139,432 98,084

7 unchanged sentences

Loan level derivative income 604 173

Unrealized gain on equity securities — 308 723 1,694

Other noninterest income 4,736 3,144

4 unchanged sentences

Data processing and facilities management 2,372 1,665

FDIC assessment 980 1,034 2,805 1,537

Advertising 884 1,215 2,949 3,107

Consulting expense 1,560 1,305 5,443 4,244

Amortization of intangible assets 1,310 1,449 4,037 4,704

Debit card expense 1,347 1,105 3,693 3,312

Loss on termination of derivatives — 684 — 684

Merger and acquisition expense 7,100 —

Software maintenance 2,564 1,970

Amortization of intangible assets 2,001 1,413

FDIC assessment 1,805 1,050

Debit card expense 1,765 1,181

Consulting expense 1,750 2,391

Other noninterest expenses 14,130 10,850

13 unchanged sentences

(Unaudited—Dollars in thousands)

Three Months Ended Nine Months Ended

September 30 September 30

2021 2020 2021 2020

Three Months Ended

Net income $ 53,097 $ 41,711

4 unchanged sentences

Total other comprehensive income (loss) ( 80,385 ) ( 13,538 )

Total comprehensive income $ 29,007 $ 31,660 $ 97,162 $ 116,989

Total comprehensive income (loss) $ ( 27,288 ) $ 28,173

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended September 30, 2021 and 2020

(Unaudited—Dollars in thousands, except per share data)

Common Stock Outstanding Common Stock Value of Shares Held in Rabbi Trust at Cost Deferred Compensation Obligation Additional Paid in Capital Retained Earnings Accumulated Other

Comprehensive Income Total

Balance June 30, 2021 33,037,859 $ 329 $ ( 3,116 ) $ 3,116 $ 948,130 $ 763,596 $ 29,567 $ 1,741,622

Net income — — — — — 40,007 — 40,007

Other comprehensive loss — — — — — — ( 11,000 ) ( 11,000 )

Common dividend declared ($ 0.48 per share)

— — — — — ( 15,861 ) — ( 15,861 )

Stock based compensation — — — — 707 — — 707

Restricted stock awards issued, net of awards surrendered ( 763 ) — — — ( 3 ) — — ( 3 )

Shares issued under direct stock purchase plan 6,716 — — — 482 — — 482

Deferred compensation and other retirement benefit obligations — — ( 41 ) 41 — — — —

Balance September 30, 2021 33,043,812 $ 329 $ ( 3,157 ) $ 3,157 $ 949,316 $ 787,742 $ 18,567 $ 1,755,954

Balance June 30, 2020 32,942,110 $ 328 $ ( 4,649 ) $ 4,649 $ 942,685 $ 676,834 $ 51,845 $ 1,671,692

Net income — — — — — 34,873 — 34,873

Other comprehensive income — — — — — — ( 3,213 ) ( 3,213 )

Common dividend declared ($ 0.46 per share)

— — — — — ( 15,161 ) — ( 15,161 )

Proceeds from exercise of stock options, net of cash paid 5,000 — — — 140 — — 140

Stock based compensation — — — — 868 — — 868

Restricted stock awards issued, net of awards surrendered ( 43 ) — — — ( 3 ) — — ( 3 )

Shares issued under direct stock purchase plan 8,480 — — — 528 — — 528

Deferred compensation and other retirement benefit obligations — — ( 63 ) 63 — — — —

Balance September 30, 2020 32,955,547 $ 328 $ ( 4,712 ) $ 4,712 $ 944,218 $ 696,546 $ 48,632 $ 1,689,724

INDEPENDENT BANK CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2021 and 2020

Three Months Ended March 31, 2022 and 2021

(Unaudited—Dollars in thousands, except per share data)

Common Stock Outstanding Common Stock Value of Shares Held in Rabbi Trust at Cost Deferred Compensation Obligation Additional Paid in Capital Retained Earnings Accumulated Other

Common Stock Outstanding Common Stock Value of Shares Held in Rabbi

Trust at Cost Deferred Compensation Obligation Additional Paid in Capital Retained Earnings Accumulated Other

Comprehensive Income (Loss) Total

4 unchanged sentences

— — — — — ( 24,162 ) — ( 24,162 )

Proceeds from exercise of stock options, net of cash paid 4,744 — — — ( 57 ) — — ( 57 )

Stock based compensation — — — — 834 — — 834

1 unchanged sentence

Shares issued under direct stock purchase plan 6,602 — — — 571 — — 571

Shares repurchased under share repurchase program ( 23,824 ) — — — ( 1,902 ) — — ( 1,902 )

Deferred compensation and other retirement benefit obligations — — ( 33 ) 33 — — — —

Balance September 30, 2021 33,043,812 $ 329 $ ( 3,157 ) $ 3,157 $ 949,316 $ 787,742 $ 18,567 $ 1,755,954

Balance March 31, 2022 47,377,125 $ 472 $ ( 3,179 ) $ 3,179 $ 2,247,518 $ 795,651 $ ( 78,202 ) $ 2,965,439

Balance December 31, 2020 32,965,692 $ 328 $ ( 3,066 ) $ 3,066 $ 945,638 $ 716,024 $ 40,695 $ 1,702,685

Cumulative effect accounting adjustment (1) — — — — — 1,553 — 1,553

Net income — — — — — 41,711 — 41,711

Other comprehensive income — — — — — — 30,463 30,463

Other comprehensive loss — — — — — — ( 13,538 ) ( 13,538 )

Common dividend declared ($ 0.48 per share)

4 unchanged sentences

Shares issued under direct stock purchase plan 6,340 — — — 492 — — 492

Shares repurchased under share repurchase program ( 1,500,000 ) ( 15 ) — — ( 95,076 ) — — ( 95,091 )

Deferred compensation and other retirement benefit obligations — — ( 14 ) 14 — — — —

Balance September 30, 2020 32,955,547 $ 328 $ ( 4,712 ) $ 4,712 $ 944,218 $ 696,546 $ 48,632 $ 1,689,724

(1) Represents adjustment needed to reflect the cumulative impact on retained earnings pursuant to the Company's adoption of Accounting Standards Update 2016-13.

The adjustment presented includes $ 1.1 million ($ 817,000 , net of tax) attributable to the change in accounting methodology for estimating the allowance for credit losses and $ 1.0 million ($ 736,000 , net of tax) related to the reserve for unfunded commitments resulting from the Company's adoption of the standard.

Amount shown in the table above is presented net of tax.

Balance March 31, 2021 33,024,882 $ 329 $ ( 3,080 ) $ 3,080 $ 946,002 $ 741,883 $ 27,157 $ 1,715,371

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.

2 unchanged sentences

(Unaudited—Dollars in thousands)

Nine Months Ended

Three Months Ended

Cash flow from operating activities

Net income $ 53,097 $ 41,711

Adjustments to reconcile net income to net cash provided by (used in) operating activities

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization 10,119 8,228

Change in unamortized net loan costs and premiums ( 3,666 ) ( 8,594 )

Accretion of acquired loans ( 84 ) ( 1,724 )

Provision for credit losses ( 2,000 ) ( 2,500 )

2 unchanged sentences

Net loss on bank premises and equipment 406 4

Loss on termination of derivatives — 684

Realized gain on sale leaseback transaction ( 145 ) ( 145 )

3 unchanged sentences

Operating lease payments ( 9,030 ) ( 3,077 )

Operating lease termination payments ( 4,750 ) —

Change in fair value on loans held for sale 548 1,764

7 unchanged sentences

Cash flows used in investing activities

Proceeds from sales of equity securities 1,164 —

Purchases of equity securities ( 184 ) ( 124 )

3 unchanged sentences

Purchases of securities held to maturity ( 266,972 ) ( 149,453 )

Net redemption (purchases) of Federal Home Loan Bank stock 1,584 ( 666 )

Investments in low income housing projects ( 6,405 ) ( 6,632 )

1 unchanged sentence

Proceeds from life insurance policies — 576

Net decrease (increase) in loans 603,773 ( 525,626 )

Net decrease in loans 10,605 153,150

Purchases of bank premises and equipment ( 8,335 ) ( 2,524 )

Proceeds from the sale of bank premises and equipment — 4

Payments on early termination of hedging relationship — ( 684 )

Net cash used in investing activities ( 283,631 ) ( 174,493 )

Cash flows provided by financing activities

Cash flows provided by (used in) financing activities

Net decrease in time deposits ( 131,925 ) ( 82,569 )

Net increase in other deposits 1,432,037 2,040,615

Net advances of short-term Federal Home Loan Bank borrowings — 55,000

Repayments of long-term Federal Home Loan Bank borrowings ( 10,000 ) ( 25,000 )

Net increase (decrease) in other deposits ( 21,112 ) 682,938

Repayments of long-term debt, net of issuance costs ( 14,063 ) ( 4,688 )

4 unchanged sentences

Common dividends paid ( 22,728 ) ( 15,164 )

Net cash provided by financing activities 1,196,259 1,556,602

Net increase in cash and cash equivalents 711,195 1,117,063

Net cash provided by (used in) financing activities ( 192,222 ) 579,732

Net increase (decrease) in cash and cash equivalents ( 400,325 ) 472,703

Cash and cash equivalents at beginning of year 2,240,684 1,296,636

1 unchanged sentence

Supplemental schedule of noncash activities

Net increase in capital commitments relating to low income housing project investments $ 34,127 $ 28,027

Net increase (decrease) in capital commitments relating to low income housing project investments $ ( 718 ) $ 24,014

Right-of-use assets obtained in exchange for new lease obligations $ 1,549 $ —

5 unchanged sentences

The Company is the sole stockholder of Rockland Trust Company (“Rockland Trust” or the “Bank”), a Massachusetts trust company chartered in 1907.

As announced on April 22, 2021, the Company has signed a definitive merger agreement under which the Company will acquire Meridian Bancorp, Inc.

(“Meridian”), with the Company as the surviving entity, and East Boston Savings Bank will merge with and into Rockland trust.

The Company anticipates the merger to close during the fourth quarter of 2021.

All material intercompany balances and transactions have been eliminated in consolidation.

3 unchanged sentences

In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, primarily consisting of normal recurring adjustments, have been included.

Results for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or any other interim period.

Results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or any other interim period.

For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (the "2021 Form 10-K").

10 unchanged sentences

The Company is also evaluating existing platforms and systems as well as alternative indices in its preparation to offer new products tied to the alternative indices.

The Company does not anticipate that the adoption of these updates will have a material impact on the Company's financial statements.

FASB ASC Topic 260 "Earnings Per Share" Update No.

In August 2020, the FASB issued update No.

2020-06 ("ASU 2020-06").

ASU 2020-06 included amendments to ASC 260 related to the earnings per share calculation, which were designed to simplify and improve consistency of the diluted earnings per share calculation.

ASU 2020-06 is effective for public entities for annual periods beginning after December 15, 2021 and interim periods therein.

Accordingly, the Company adopted ASU 2020-06 effective January 1, 2022 and the adoption did not have a material impact on the Company's financial statements.

FASB ASC Topic 815 "Derivatives and Hedging" Update No.

2022-01 was issued in March 2022 and its amendments allow for nonprepayable financial assets to also be included in a closed portfolio hedged using the portfolio layer method.

The expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and nonprepayable financial assets resulting in more consistent accounting for similar hedges.

All amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The Company is currently assessing the impact of the adoption of this standard on the Company's financial statements.

FASB ASC Topic 326 "Financial Instruments - Credit Losses" Update No.

2022-02 was issued in March 2022 and applies to public entities that have adopted ASU Topic 326.

The amendments in this update eliminate the existing accounting guidance for troubled debt restructures ("TDRs") by creditors in Subtopic 310-40, Receivables - Troubled Debt Restructurings by Creditors and instead requires that an entity evaluate whether a modification

represents a new loan or a continuation of an existing loan.

The amendments also enhance disclosure requirements for certain loans refinancing and restructuring by creditors when a borrower is experiencing financial difficulty.

ASU 2022-02 also requires additional disclosure of current period gross write-offs by year of origination for financing receivables to be included in the entity's vintage disclosure, as currently required under Topic 326.

All amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The Company is currently assessing the impact of the adoption of this standard on the Company's financial statements.

NOTE 3 - SECURITIES

Trading Securities

The Company had trading securities of $ 3.5 million and $ 2.8 million as of September 30, 2021 and December 31, 2020, respectively.

The Company had trading securities of $ 4.0 million and $ 3.7 million as of March 31, 2022 and December 31, 2021, respectively.

These securities are held in a rabbi trust and will be used for future payments associated with the Company’s non-qualified 401(k) Restoration Plan and Non-qualified Deferred Compensation Plan.

Equity Securities

The Company had equity securities of $ 22.8 million and $ 22.1 million as of September 30, 2021 and December 31, 2020, respectively.

The Company had equity securities of $ 22.6 million and $ 23.2 million as of March 31, 2022 and December 31, 2021, respectively.

These securities consist primarily of mutual funds held in a rabbi trust and will be used for future payments associated with the Company’s supplemental executive retirement plans.

The following table represents a summary of the gains and losses recognized within non-interest income and non-interest expense within the consolidated statements of income that relate to equity securities for the periods indicated:

Three Months Ended Nine Months Ended

September 30 September 30

2021 2020 2021 2020

Three Months Ended

Dollars in thousands

4 unchanged sentences

The following table summarizes the amortized cost, allowance for credit losses, and fair value of available for sale securities and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) as of the dates indicated:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Gains Gross Unrealized

14 unchanged sentences

Total available for sale securities $ 1,646,938 $ 809 $ ( 95,016 ) $ — $ 1,552,731 $ 1,583,736 $ 8,808 $ ( 21,396 ) $ — $ 1,571,148

The Company did not record a provision for estimated credit losses on any available for sale securities during the three and nine months ended September 30, 2021 and 2020.

Excluded from the table above is accrued interest on available for sale securities of $ 3.3 million and $ 1.2 million as of September 30, 2021 and December 31, 2020, respectively, which is included within other assets on the consolidated balance sheets.

Additionally, the Company did not record any write-offs of accrued interest income on available for sale securities during the three and nine months ended September 30, 2021 and 2020.

Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status as of September 30, 2021 and December 31, 2020.

Excluded from the table above is accrued interest on available for sale securities of $ 3.4 million and $ 3.0 million as of March 31, 2022 and December 31, 2021, respectively, which is included within other assets on the consolidated balance sheets.

Additionally, the Company did not record any write-offs of accrued interest income on available for sale securities during the three months ended March 31, 2022 and 2021.

Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status as of March 31, 2022 and December 31, 2021.

When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale.

The Company had no sales of securities available for sale during the three or nine months ended September 30, 2021 and 2020, and therefore no gains or losses were realized during the periods presented.

The Company had no sales of securities available for sale during the three months ended March 31, 2022 and 2021, and therefore no gains or losses were realized during the periods presented.

The following tables show the gross unrealized losses and fair value of the Company’s available for sale securities in an unrealized loss position, and for which the Company has not recorded a provision for credit losses, as of the dated indicated.

These available for sale securities are aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position:

September 30, 2021

March 31, 2022

Less than 12 months 12 months or longer Total

9 unchanged sentences

Pooled trust preferred securities issued by banks and insurers 1 — — 999 ( 200 ) 999 ( 200 )

Small business administration pooled securities 7 60,416 ( 2,715 ) — — 60,416 ( 2,715 )

Total impaired available for sale securities 117 $ 1,350,989 $ ( 82,115 ) $ 112,467 $ ( 12,901 ) $ 1,463,456 $ ( 95,016 )

6 unchanged sentences

(Dollars in thousands)

government agency securities 6 $ 160,913 $ ( 2,901 ) $ — $ — $ 160,913 $ ( 2,901 )

treasury securities 17 811,993 ( 12,191 ) — — 811,993 ( 12,191 )

Agency mortgage-backed securities 12 214,678 ( 5,534 ) — — 214,678 ( 5,534 )

Agency collateralized mortgage obligations 1 22,960 ( 571 ) — — 22,960 ( 571 )

Single issuer trust preferred securities issued by banks and insurers 1 488 ( 1 ) — — 488 ( 1 )

Pooled trust preferred securities issued by banks and insurers 1 — — 1,000 ( 199 ) 1,000 ( 199 )

2 unchanged sentences

In addition, management does not believe that any of the securities are impaired due to reasons of credit quality.

As a result, the Company did not recognize a provision for credit losses on these investments during the three and nine months ended September 30, 2021 and 2020.

As a result, the Company did not recognize a provision for credit losses on these investments during the three months ended March 31, 2022 and 2021.

The Company made this determination by reviewing various qualitative and quantitative factors regarding each investment category, such as current market conditions, extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, and current analysts’ evaluations.

As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the table above by category were as follows at September 30, 2021:

As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the table above by category were as follows at March 31, 2022:

Government Agency Securities, U.S.

Treasury Securities, Agency Mortgage-Backed Securities and Agency Collateralized Mortgage Obligations:

Treasury Securities, Agency Mortgage-Backed Securities, Agency Collateralized Mortgage Obligations and Small Business Administration Pooled Securities:

These portfolios have contractual terms that generally do not permit the issuer to settle the securities at a price less than the current par value of the investment.

9 unchanged sentences

The following table summarizes the amortized cost, fair value and allowance for credit losses of held to maturity securities and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) as of the dates indicated:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Gains Gross Unrealized

11 unchanged sentences

Total held to maturity securities $ 1,282,441 $ 1,040 $ ( 72,543 ) $ — $ 1,210,938 $ 1,066,818 $ 12,474 $ ( 15,159 ) $ — $ 1,064,133

The Company did not record a provision for estimated credit losses on any held to maturity securities during the three and nine months ended September 30, 2021 and 2020.

Excluded from the table above is accrued interest on held to maturity securities of $ 2.2 million and $ 1.5 million as of September 30, 2021 and December 31, 2020, respectively, which is included within other assets on the consolidated balance sheets.

Additionally, the Company did not record any write-offs of accrued interest income on held to maturity securities during the three and nine months ended September 30, 2021 and 2020.

Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status as of September 30, 2021 and December 31, 2020.

Substantially all held to maturity securities held by the Company are guaranteed by the U.S.

federal government or other government sponsored agencies and have a long history of no credit losses.

As a result, management has determined these securities to have a zero loss expectation and therefore the Company did not record a provision for estimated credit losses on any held to maturity securities during the three months ended March 31, 2022 and 2021.

Excluded from the table above is accrued interest on held to maturity securities of $ 2.6 million and $ 2.0 million as of March 31, 2022 and December 31, 2021, respectively, which is included within other assets on the consolidated balance sheets.

Additionally, the Company did not record any write-offs of accrued interest income on held to maturity securities during the three months ended March 31, 2022 and 2021.

Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status as of March 31, 2022 and December 31, 2021.

When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale.

The Company had no sales of held to maturity securities during the three and nine months ended September 30, 2021 and 2020, and therefore no gains or losses were realized during the periods presented.

The Company had no sales of held to maturity securities during the three months ended March 31, 2022 and 2021, and therefore no gains or losses were realized during the periods presented.

The Company monitors the credit quality of held to maturity securities through the use of credit ratings.

Credit ratings are monitored by the Company on at least a quarterly basis.

As of September 30, 2021, all held to maturity securities held by the Company were rated investment grade or higher.

As of March 31, 2022, all held to maturity securities held by the Company were rated investment grade or higher.

The actual maturities of certain available for sale or held to maturity securities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

A schedule of the contractual maturities of available for sale and held to maturity securities as of September 30, 2021 is presented below:

A schedule of the contractual maturities of available for sale and held to maturity securities as of March 31, 2022 is presented below:

Due in one year or less Due after one year to five years Due after five to ten years Due after ten years Total

23 unchanged sentences

Total $ 19,824 $ 19,844 $ 906,381 $ 861,443 $ 988,746 $ 917,549 $ 1,014,428 $ 964,833 $ 2,929,379 $ 2,763,669

Included in the table above are $ 3.2 million of callable securities at September 30, 2021.

The carrying value of securities pledged to secure public funds, trust deposits, and for other purposes, as required or permitted by law, was $ 678.4 million and $ 419.6 million at September 30, 2021 and December 31, 2020, respectively.

At September 30, 2021 and December 31, 2020, the Company had no investments in obligations of individual states, counties, or municipalities which exceeded 10% of consolidated stockholders’ equity.

Included in the table above are $ 26.2 million of callable securities at March 31, 2022.

The carrying value of securities pledged to secure public funds, trust deposits, and for other purposes, as required or permitted by law, was $ 778.7 million and $ 740.6 million at March 31, 2022 and December 31, 2021, respectively.

At March 31, 2022 and December 31, 2021, the Company had no investments in obligations of individual states, counties, or municipalities which exceeded 10% of consolidated stockholders’ equity.

NOTE 4 - LOANS, ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

1 unchanged sentence

The following table summarizes the change in allowance for credit losses by loan category, and bifurcates the amount of loans allocated to each loan category for the period indicated:

Three Months Ended September 30, 2021

Three Months Ended March 31, 2022

(Dollars in thousands)

9 unchanged sentences

Recoveries 13 3 — 26 — 26 234 302

Provision for credit loss expense ( 1,018 ) ( 6,527 ) ( 397 ) 88 ( 967 ) ( 1,268 ) 89 ( 10,000 )

Ending balance (1) $ 16,014 $ 37,798 $ 4,468 $ 3,667 $ 11,047 $ 18,868 $ 384 $ 92,246

Three Months Ended September 30, 2020

(Dollars in thousands)

Commercial and

Industrial Commercial

Real Estate Commercial

Construction Small

Business Residential

Real Estate Home Equity Other Consumer Total

Allowance for credit losses

Beginning balance $ 25,662 $ 36,956 $ 4,501 $ 4,561 $ 15,046 $ 24,860 $ 590 $ 112,176

Charge-offs ( 185 ) ( 3,885 ) — ( 49 ) — — ( 185 ) ( 4,304 )

Recoveries 1 9 — 2 1 21 219 253

Provision for credit loss expense 2,741 6,306 709 79 ( 884 ) ( 1,309 ) ( 142 ) 7,500

(Release of) provision for credit losses ( 246 ) 947 ( 449 ) ( 327 ) 3,904 ( 6,238 ) 409 ( 2,000 )

Ending balance (1) $ 14,169 $ 84,436 $ 11,867 $ 3,159 $ 18,388 $ 11,750 $ 749 $ 144,518

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2021

(Dollars in thousands)

9 unchanged sentences

Recoveries 64 57 — 11 1 13 197 343

Provision for credit loss expense ( 1,698 ) ( 7,268 ) ( 929 ) ( 1,309 ) ( 3,229 ) ( 3,230 ) 163 ( 17,500 )

Ending balance (1) $ 16,014 $ 37,798 $ 4,468 $ 3,667 $ 11,047 $ 18,868 $ 384 $ 92,246

Nine Months Ended September 30, 2020

(Dollars in thousands)

Commercial and

Industrial Commercial

Real Estate Commercial

Construction Small

Business Residential

Home Equity Other Consumer Total

Allowance for credit losses

Beginning balance, pre adoption of ASU 2016-13 $ 17,594 $ 32,935 $ 6,053 $ 1,746 $ 3,440 $ 5,576 $ 396 $ 67,740

Cumulative effect accounting adjustment (2) ( 1,984 ) ( 13,048 ) ( 3,652 ) 495 9,828 7,012 212 ( 1,137 )

Cumulative effect accounting adjustment (3) 49 337 — — 423 319 29 1,157

Charge-offs ( 185 ) ( 3,885 ) — ( 194 ) — ( 142 ) ( 1,342 ) ( 5,748 )

Recoveries 47 9 — 8 2 174 873 1,113

Provision for credit loss expense 12,698 23,038 2,809 2,538 470 10,633 314 52,500

(Release of) provision for credit losses 2,388 ( 718 ) ( 129 ) ( 1,419 ) ( 1,320 ) ( 1,357 ) 55 ( 2,500 )

Ending balance (1) $ 20,207 $ 44,348 $ 5,268 $ 3,621 $ 12,956 $ 20,716 $ 433 $ 107,549

(1) Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $ 29.1 million and $ 36.7 million as of September 30, 2021 and September 30, 2020, respectively.

(2) Represents adjustment needed to reflect the cumulative day one impact pursuant to the Company's adoption of Accounting Standards Update 2016-13.

The adjustment represents a $ 1.1 million decrease to the allowance attributable to the change in accounting methodology for estimating the allowance for credit losses resulting from the Company's adoption of the standard.

(3) Represents adjustment needed to reflect the day one reclassification of the Company's PCI loan balances to PCD and the associated gross-up, pursuant to the Company's adoption of Accounting Standards Update 2016-13.

The adjustment represents a $ 1.2 million increase to the allowance resulting from the day one reclassification.

The balance of allowance for credit losses of $ 92.2 million as of September 30, 2021 represents a decrease of $ 10.1 million, or 9.9 %, compared to June 30, 2021.

The decrease in the allowance was primarily driven by a release of the provision for credit losses of $ 10.0 million recorded during the quarter, reflecting improvements in expected overall macro-economic forecast assumptions and continued strong asset quality metrics, along with lower loan levels.

While management is unable to know with certainty the direct, indirect, and future impacts of the COVID-19 pandemic, it is expected that the pandemic could have a significant adverse impact on future losses across a broad range of loan segments.

As such, the allowance for credit losses at September 30, 2021 continues to reflect increased reserve allocations to loan segments that are considered to have elevated loss exposure associated with the COVID-19 pandemic, in addition to other economic uncertainties, including labor and supply shortages, as well as inflationary factors.

These loan segments primarily include commercial relationships within industries that have been subject to mandated closures and capacity limits that have impeded and could potentially impede the borrowers’ ability to make loan payments, including loans in the following industry sections:

Accommodations, Food Services, Retail Trade, Other Services (excluding Public Administration), and Arts, Entertainment and Recreation.

In addition to these industry exposures, additional risk of loss was attributable to non-owner occupied real estate borrowers with significant retail tenant exposure, as well as home equity loans within a junior lien position.

Leveraging actual historical loss given default (LGD) rates combined with stressing of assumptions over probability of default rates over these higher risk segments, qualitative adjustments were made to the initially model-driven calculated loss reserves.

(1) Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $ 39.4 million and $ 33.4 million as of March 31, 2022 and March 31, 2021, respectively.

The balance of allowance for credit losses of $ 144.5 million as of March 31, 2022 represents a decrease of $ 2.4 million, or 1.6 %, compared to December 31, 2021.

The decrease in the allowance was primarily driven by a release of the provision for credit losses of $ 2.0 million recorded during the quarter, reflecting a stabilized credit quality environment.

For the purpose of estimating the allowance for credit losses, management segregated the loan portfolio into the portfolio segments detailed in the above tables.

14 unchanged sentences

• Commercial Construction :

Loans in this category consist of short-term construction loans, revolving and nonrevolving credit lines and construction/permanent loans to finance the acquisition, development and construction or rehabilitation of real property.

Project types include residential land development, 1-4 family, condominium, and multi-family home construction, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties.

real property.

Project types include residential land development, one-to-four family, condominium, and multi-family home construction, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties.

Loans may be written with nonamortizing or hybrid payment structures depending upon the type of project.

10 unchanged sentences

Residential mortgage loans held in the Company’s portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors such as current and expected income, employment status, current assets, other financial resources, credit history and the value of the collateral.

Collateral consists of mortgage liens on 1-4 family residential properties.

Residential mortgage loans also include loans to construct owner-occupied 1-4 family residential properties.

Collateral consists of mortgage liens on one-to-four family residential properties.

Residential mortgage loans also include loans to construct owner-occupied one-to-four family residential properties.

• Home Equity :

Home equity loans and credit lines are made to qualified individuals and are primarily secured by senior or junior mortgage liens on owner-occupied 1-4 family homes, condominiums or vacation homes.

Home equity loans and credit lines are made to qualified individuals and are primarily secured by senior or junior mortgage liens on owner-occupied one-to-four family homes, condominiums or vacation homes.

Each home equity loan has a fixed rate and is billed in equal payments comprised of principal and interest.

4 unchanged sentences

• Other Consumer:

Other consumer loan products include personal lines of credit and amortizing loans made to qualified individuals for various purposes such as education, debt consolidation, personal expenses or overdraft protection.

Other consumer loan products include personal lines of credit and amortizing loans made to qualified individuals for various purposes such as debt consolidation, personal expenses or overdraft protection.

Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines.

38 unchanged sentences

Under this structure, consumer loans less than 90 days past due are assigned a "pass" rating, while any consumer loans 90 days or more past due are assigned a "default" rating.

Consumer loan modifications granted by the Company allowing payment deferrals for qualifying borrowers in accordance with the CARES Act were not categorized as delinquent loans.

The following table details the amortized cost balances of the Company's loan portfolios, presented by credit quality indicator and origination year as of the dates indicated below:

September 30, 2021

March 31, 2022

2022 2021 2020 2019 2018 Prior Revolving Loans Revolving converted to Term Total (1)

40 unchanged sentences

Total $ 665,591 $ 2,892,632 $ 2,265,477 $ 1,265,677 $ 1,207,151 $ 3,612,192 $ 1,669,266 $ 2,041 $ 13,580,027

September 30, 2020

March 31, 2021

2021 2020 2019 2018 2017 Prior Revolving Loans Revolving converted to Term Total (1)

42 unchanged sentences

(2) Loans originated as part of the Paycheck Protection Program ("PPP") established by the CARES Act are included within commercial and industrial under the 2021 and 2020 vintage year and "pass" category as these loans are 100% guaranteed by the U.S.

Outstanding PPP loans totaled $ 383.6 million as of September 30, 2021, including $ 16.3 million and $ 367.3 million originated in 2020 and 2021, respectively, while outstanding PPP loans as of September 30, 2020 totaled $ 811.7 million .

Outstanding PPP loans totaled $ 99.6 million and $ 846.3 million as of March 31, 2022 and 2021, respectively.

For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower.

10 unchanged sentences

LTV (re-valued)(2)(3) 42.3 % 42.4 %

(1) The average FICO scores at September 30, 2021 are based upon rescores from September 2021, as available for previously originated loans, or origination score data for loans booked in September 2021.

(1) The average FICO scores at March 31, 2022 are based upon rescores from March 2022, as available for previously originated loans, or origination score data for loans booked in March 2022.

The average FICO scores at December 31, 2021 were based upon rescores available from December 2021, as available for previously originated loans, or origination score data for loans booked in December 2021.

(2) The combined LTV ratios for September 30, 2021 are based upon updated automated valuations as of August 2021, when available, and/or the most current valuation data available.

(2) The combined LTV ratios for March 31, 2022 are based upon updated automated valuations as of February 2022, when available, and/or the most current valuation data available.

The combined LTV ratios for December 31, 2021 were based upon updated automated valuations as of November 2021, when available, and/or the most current valuation data available as of such date.

4 unchanged sentences

Management evaluates the need for a reserve on unfunded lending commitments in a manner consistent with loans held for investment.

At September 30, 2021 and December 31, 2020, the Company's estimated reserve for unfunded commitments amounted to $ 1.3 million and $ 1.2 million, respectively.

At both March 31, 2022 and December 31, 2021, the Company's estimated reserve for unfunded commitments amounted to $ 1.5 million.

Asset Quality

4 unchanged sentences

In response to the COVID-19 pandemic, the Company has granted loan modifications to allow deferral of payments for borrowers negatively impacted by the pandemic.

The balance of loans with active deferrals as of September 30, 2021 and December 31, 2020 was $ 222.9 million and $ 173.6 million, respectively.

The majority of these loans with active deferrals as of September 30, 2021 continue to be characterized as current loans.

The balance of loans with active deferrals as of March 31, 2022 and December 31, 2021 was $ 304.5 million and $ 383.1 million, respectively.

The majority of these loans with active deferrals as of March 31, 2022 continue to be characterized as current loans.

In accordance with regulatory guidance, these modifications are not considered to be troubled debt restructures ("TDRs") if they were performing as of December 31, 2019.

Additionally, a majority of these modified loans are characterized as current and therefore are not impacting nonaccrual or delinquency totals as of September 30, 2021 and December 31, 2020.

Additionally, a majority of these modified loans are characterized as current and therefore are not impacting nonaccrual or delinquency totals as of March 31, 2022 and December 31, 2021.

The Company does, however, consider all active deferrals when estimating loss reserves.

2 unchanged sentences

Nonaccrual Balances

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

With Allowance for Credit Losses Without Allowance for Credit Losses Total With Allowance for Credit Losses Without Allowance for Credit Losses Total

7 unchanged sentences

Total nonaccrual loans (1) $ 31,368 $ 25,250 $ 56,618 $ 27,199 $ 621 $ 27,820

(1) Included in these amounts were $ 21.1 million and $ 22.2 million of nonaccruing TDRs at September 30, 2021 and December 31, 2020, respectively.

It is the Company's policy to reverse any accrued interest when a loan is put on nonaccrual status, and, as such, the Company did not record any interest income on nonaccrual loans during the nine months ended September 30, 2021 and September 30, 2020.

In accordance with government moratorium orders established in response to the COVID-19 pandemic, new foreclosures pursued by the Company were on hold through August 31, 2021, at which point such orders were lifted.

(1) Included in these amounts were $ 2.0 million of nonaccruing TDRs at both March 31, 2022 and December 31, 2021, respectively.

It is the Company's policy to reverse any accrued interest when a loan is put on nonaccrual status, and, as such, the Company did not record any interest income on nonaccrual loans during the three months ended March 31, 2022 and March 31, 2021.

The following table shows information regarding foreclosed residential real estate property at the dates indicated:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(Dollars in thousands)

2 unchanged sentences

The following tables show the age analysis of past due financing receivables as of the dates indicated:

September 30, 2021

March 31, 2022

30-59 days 60-89 days 90 days or more Total Past Due Total

43 unchanged sentences

The Bank attempts to work out an alternative payment schedule with the borrower in order to avoid foreclosure actions.

Any loans that are modified are reviewed by the Bank to identify if a TDR has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider.

Exclusive of loans modified under provisions of the CARES Act, any loans that are modified are reviewed by the Bank to identify if a TDR has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider.

Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two.

The following table shows the Company’s total TDRs and other pertinent information as of the dates indicated:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(Dollars in thousands)

6 unchanged sentences

Additionally, loans classified as TDRs are adjusted to reflect the changes in value of the recorded investment in the loan, if any, resulting from the granting of a concession.

For all residential real estate loan modifications, the borrower must perform during a 90 day trial period before the modification is finalized.

The following table shows the TDRs which occurred during the periods indicated and the change in the recorded investment subsequent to the modifications occurring:

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2021

Contracts Pre-Modification

Investment Post-Modification

Investment Number of

Contracts Pre-Modification

Investment Post-Modification

(Dollars in thousands)

Troubled debt restructurings

Commercial and industrial — $ — $ — 1 $ 14,148 $ 14,148

Commercial real estate — — — 5 3,964 3,964

Small business — — — 2 189 189

Total (1) — $ — $ — 8 $ 18,301 $ 18,301

Three Months Ended Nine Months Ended

September 30, 2020 September 30, 2020

Contracts Pre-Modification

Investment Post-Modification

Investment Number of

For all residential loan modifications, the borrower must perform during a 90 day trial period before the modification is finalized.

There were no new TDRs during the three months ended March 31, 2022.

The following table shows the TDRs which occurred during the three months ended March 31, 2021 and the change in the recorded investment subsequent to the modifications occurring:

Contracts Pre-Modification

5 unchanged sentences

Small business 1 100 100

Residential real estate — — — 2 559 642

Total (1) 7 $ 18,212 $ 18,212

(1) The pre-modification and post-modification balances represent the legal principal balance of the loan.

Activity presented in the tables above includes no modifications on existing TDRs during the three months ended September 30, 2021, $ 14.3 million of modifications on existing TDRs during the nine months ended September 30, 2021, and $ 83,000 and $ 1.5 million of modifications on existing TDRs during the three and nine months ended September 30, 2020, respectively.

The following table shows the Company’s post-modification balance of TDRs listed by type of modification for the periods indicated:

Three Months Ended Nine Months Ended

September 30 September 30

2021 2020 2021 2020

During the three months ended March 31, 2021, there were two relationships amounting to $ 14.3 million that related to additional modifications on previously existing TDRs.

The following table shows the Company’s post-modification balance of TDRs listed by type of modification for the three months ended March 31, 2021:

Post-Modification Balance of TDRs

(Dollars in thousands)

Adjusted interest rate — 218 $ — $ 822

Combination rate and maturity 14,148

Court ordered concession — — — 25

Extended maturity 4,064

1 unchanged sentence

The Company considers a loan to have defaulted when it reaches 90 days past due.

There was one commercial real estate loan modified during the preceding twelve months with a recorded investment of $ 3.2 million, which subsequently defaulted during the nine month period ended September 30, 2021.

There were no defaults on such loans modified during the prior twelve months for the three and nine month periods ended September 30, 2020, respectively.

During the three months ended March 31, 2022 and March 31, 2021, there were no loans modified during the prior twelve months that subsequently defaulted during the respective periods.

The Company determines the amount of allowance on TDRs in accordance with CECL methodology using a discounted cash flow approach, or a fair value of collateral approach if the loan is determined to be individually evaluated.

NOTE 5 - STOCK BASED COMPENSATION

During the nine months ended September 30, 2021, the Company had the following activity related to stock based compensation:

During the three months ended March 31, 2022, the Company had the following activity related to stock based compensation:

Time Vested Restricted Stock Awards

2 unchanged sentences

2/17/2022 52,100 2005 Employee Stock Plan $ 84.70 Ratably over 5 years from grant date

5/25/2021 7,680 2018 Non-Employee Director Stock Plan $ 78.18 Shares vested immediately

9/1/2021 640 2018 Non-Employee Director Stock Plan $ 76.78 Shares vested immediately

Performance-Based Restricted Stock Awards

On February 18, 2021, the Company granted 18,900 performance-based restricted stock awards to certain executive level employees.

On February 17, 2022, the Company granted 20,700 performance-based restricted stock awards, representing the maximum number of shares that may be earned under the awards, to certain executive level employees.

These performance-based restricted stock awards were issued from the 2005 Employee Stock Plan and were determined to have a grant date fair value per share of $ 84.70 .

17 unchanged sentences

The following tables reflect the Company's derivative positions as of the dates indicated below for interest rate derivatives which qualify as cash flow hedges for accounting purposes:

September 30, 2021

March 31, 2022

Weighted Average Rate

24 unchanged sentences

The Company expects approximately $ 4.1 million (pre-tax) to be reclassified as an increase to interest income and $ 80,000 (pre-tax) to be reclassified as an increase to interest expense, from OCI related to the Company’s cash flow hedges in the next twelve months.

This reclassification is due to anticipated payments that will be made and/or received on the swaps based upon the forward curve as of September 30, 2021.

The Company had no fair value hedges as of September 30, 2021 or December 31, 2020.

This reclassification is due to anticipated payments that will be made and/or received on the swaps based upon the forward curve as of March 31, 2022.

The Company had no fair value hedges as of March 31, 2022 or December 31, 2021.

Customer Related Positions

17 unchanged sentences

(1) Less than 1 year Less than 2 years Less than 3 years Less than 4 years Thereafter Total Fair Value

September 30, 2021

March 31, 2022

(Dollars in thousands)

31 unchanged sentences

The change in fair value of loans held for sale is recorded in current period earnings as a component of mortgage banking income in accordance with the Company's fair value election.

The fair value of loans held for sale decreased by $ 75,000 and increased by $ 413,000 for the three month periods ended September 30, 2021 and 2020, respectively.

The fair value of loans held for sale decreased by $ 1.5 million and increased by $ 1.3 million for the nine month periods ended September 30, 2021 and 2020, respectively.

The fair value of loans held for sale decreased by $ 548,000 and $ 1.8 million for the three month periods ended March 31, 2022 and 2021, respectively.

These amounts were offset in earnings by the change in the fair value of mortgage derivatives.

17 unchanged sentences

The Company expects that these best efforts forward loan sale commitments will experience a net neutral shift in fair value with related derivative loan commitments.

The aggregate amount of net realized gains or losses on sales of such loans included within mortgage banking income was $ 4.9 million and $ 10.0 million for the three month periods ended September 30, 2021 and 2020, respectively, and $ 17.2 million and $ 20.7 million for the nine months ended September 30, 2021 and 2020, respectively.

The aggregate amount of net realized gains or losses on sales of such loans included within mortgage banking income was $ 599,000 and $ 8.1 million for the three month periods ended March 31, 2022 and 2021, respectively.

Balance Sheet Offsetting

9 unchanged sentences

2022 December 31

2020 September 30

2021 March 31

2022 December 31

18 unchanged sentences

Net Derivative Amounts $ 24,289 $ 69,807 $ 44,757 $ 13,030

(1) All asset derivatives are located in other assets on the balance sheet.

(2) All liability derivatives are located in other liabilities on the balance sheet.

(3) Approximately $ 1.2 million and $ 1.6 million of accrued interest receivable is included in the fair value of the interest rate and loan level asset derivatives, respectively, as of September 30, 2021.

Accrued interest receivable of approximately $ 1.2 million and $ 2.0 million is included in the fair value of the interest rate and loan level asset derivatives, respectively, as of December 31, 2020.

(4) Approximately $ 60,000 and $ 1.6 million of accrued interest payable is included in the fair value of the interest rate and loan level liability derivatives, respectively, as of September 30, 2021.

(1) All asset derivatives are reflected in other assets on the balance sheet.

(2) All liability derivatives are reflected in other liabilities on the balance sheet.

(3) Approximately $ 878,000 and $ 226,000 of accrued interest receivable is included in the fair value of the interest rate and loan level asset derivatives, respectively, as of March 31, 2022, in comparison to accrued interest receivable of approximately $ 1.2 million and $ 1.5 million, respectively, as of December 31, 2021.

(4) As of March 31, 2022, approximately $ 216,000 of accrued interest receivable is included in the fair value of interest rate derivative liabilities and approximately $ 225,000 of accrued interest payable is included in the fair value of loan level liability derivatives.

Accrued interest payable of approximately $ 5,000 and $ 1.5 million is included in the fair value of the interest rate and loan level derivative liabilities, respectively, as of December 31, 2021.

(5) Netting adjustments represent the amounts recorded to convert derivative assets and liabilities cleared through CME from a gross basis to a net basis, inclusive of the variation margin payments, in accordance with applicable accounting guidance.

As displayed in the table above, derivatives that cleared through the CME were either in a net asset position or a net liability position as of September 30, 2021.

As displayed in the table above, derivatives that cleared through the CME were either in a net asset position or a net liability position as of March 31, 2022.

(6) Reflects offsetting derivative positions with the same counterparty that are not netted on the balance sheet.

The table below presents the effect of the Company’s derivative financial instruments included in OCI and current earnings for the periods indicated:

Three Months Ended Nine Months Ended

September 30 September 30

2021 2020 2021 2020

Three Months Ended

(Dollars in thousands)

Derivatives designated as hedges

Gain (loss) in OCI on derivatives (effective portion), net of tax $ ( 3,383 ) $ ( 2,729 ) $ ( 11,559 ) $ 20,452

Gain in OCI on derivatives (effective portion), net of tax $ ( 17,950 ) $ ( 6,583 )

Gain reclassified from OCI into interest income or interest expense (effective portion) $ 4,505 $ 4,380

12 unchanged sentences

If the Company fails to meet these conditions, the counterparties could request the Company make immediate payment or demand that the Company provide immediate and ongoing full collateralization on derivative positions in net liability positions.

The aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a net liability position was $ 35.9 million and $ 79.8 million at September 30, 2021 and December 31, 2020, respectively.

Although none of the contingency provisions have applied as of September 30, 2021 and December 31, 2020, the Company has posted collateral to offset the net liability exposure with institutional counterparties.

The aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a net liability position was $ 1.1 million and $ 34.8 million at March 31, 2022 and December 31, 2021, respectively.

Although none of the contingency provisions have applied as of March 31, 2022 and December 31, 2021, the Company has posted collateral to offset the net liability exposure with institutional counterparties.

By using derivatives, the Company is exposed to credit risk to the extent that counterparties to the derivative contracts do not perform as required.

3 unchanged sentences

As such, management believes the risk of incurring credit losses on derivative contracts with institutional counterparties is remote.

The Company's exposure relating to institutional counterparties was $ 37.1 million and $ 48.8 million at September 30, 2021 and December 31, 2020, respectively.

The Company’s exposure relating to customer counterparties was approximately $ 71.8 million and $ 127.2 million at September 30, 2021 and December 31, 2020, respectively.

The Company's exposure relating to institutional counterparties was $ 43.8 million and $ 28.3 million at March 31, 2022 and December 31, 2021, respectively.

The Company’s exposure relating to customer counterparties was approximately $ 11.8 million and $ 62.4 million at March 31, 2022 and December 31, 2021, respectively.

Credit exposure may be reduced by the value of collateral pledged by the counterparty.

5 unchanged sentences

When determining fair value, the Company considers pricing information and other inputs that are current as of the measurement date.

In periods of market dislocation, the observability of prices and other inputs

may be reduced for certain instruments, or not available at all.

In periods of market dislocation, the observability of prices and other inputs may be reduced for certain instruments, or not available at all.

The unavailability or reduced availability of pricing or other input information could cause an instrument to be reclassified from one level to another.

9 unchanged sentences

Valuation Techniques

There have been no changes in the valuation techniques used during the nine months ended September 30, 2021.

There have been no changes in the valuation techniques used during the three months ended March 31, 2022.

Trading and Equity Securities

34 unchanged sentences

Although the Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its interest rate derivatives and risk participation agreements may also utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties.

However, as of September 30, 2021 and December 31, 2020, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

However, as of March 31, 2022 and December 31, 2021, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

As a result, the Company has determined that its derivative valuations in their entirety are properly classified as Level 2.

22 unchanged sentences

(Level 2) Significant

September 30, 2021

March 31, 2022

(Dollars in thousands)

29 unchanged sentences

government agency securities 215,482 — 215,482 —

treasury securities 861,448 — 861,448 —

Agency mortgage-backed securities 363,933 — 363,933 —

11 unchanged sentences

Total nonrecurring fair value measurements $ 1,174 $ — $ — $ 1,174

(1) The fair value of individually assessed collateral dependent loans is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable.

(1) The carrying value of individually assessed collateral dependent loans is based on the lower of amortized cost or fair value of the underlying collateral less costs to sell.

The fair value of the underlying collateral is generally determined through independent appraisals, which generally include various Level 3 inputs which are not identifiable.

Appraisals may be adjusted by management for qualitative factors such as economic factors and estimated liquidation expenses.

5 unchanged sentences

(Level 2) Significant

September 30, 2021

March 31, 2022

(Dollars in thousands)

14 unchanged sentences

Federal Home Loan Bank borrowings (f) 25,660 25,626 — 25,626 —

Long-term borrowings (f) 18,750 18,571 — 18,571 —

Junior subordinated debentures (g) 62,854 63,654 — 63,654 —

8 unchanged sentences

Securities held to maturity (a)

government agency securities $ 32,987 $ 32,546 $ — $ 32,546 $ —

treasury securities 102,560 102,242 — 102,242 —

40 unchanged sentences

The following table presents the revenue streams that the Company has disaggregated as of the periods indicated:

Three Months Ended Nine Months Ended

2021 September 30

2020 September 30

2021 September 30

Three Months Ended

2022 March 31

(Dollars in thousands)

47 unchanged sentences

The following table provides the amount of investment management revenue earned but not received as of the dates indicated:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(Dollars in thousands)

28 unchanged sentences

Three Months Ended

September 30, 2021 Nine Months Ended

September 30, 2021

Amount Tax (Expense)

Benefit After Tax

Amount Pre Tax

March 31, 2022

Amount Tax (Expense)

7 unchanged sentences

Net change in fair value of cash flow hedges ( 24,985 ) 7,035 ( 17,950 )

Net unamortized gain related to defined benefit pension and other postretirement adjustments arising during the period — — — 653 ( 184 ) 469

Amortization of net actuarial losses 159 ( 45 ) 114

3 unchanged sentences

Three Months Ended

September 30, 2020 Nine Months Ended

September 30, 2020

Amount Tax (Expense)

Benefit After Tax

Amount Pre Tax

March 31, 2021

Amount Tax (Expense)

6 unchanged sentences

net cash flow hedge gains reclassified into interest income or interest expense 4,380 ( 1,232 ) 3,148

loss on termination of hedge reclassified into noninterest expense ( 684 ) 192 ( 492 ) ( 684 ) 192 ( 492 )

Net change in fair value of cash flow hedges ( 9,159 ) 2,576 ( 6,583 )

Net unamortized loss related to defined benefit pension and other postretirement adjustments arising during the period ( 2 ) 1 ( 1 ) ( 1,392 ) 392 ( 1,000 )

Net unamortized gain related to defined benefit pension and other postretirement adjustments arising during the period 653 ( 184 ) 469

Amortization of net actuarial losses 442 ( 124 ) 318

1 unchanged sentence

Net change in other comprehensive income for defined benefit postretirement plans (1) 1,139 ( 320 ) 819

Total other comprehensive income (loss) $ ( 4,343 ) $ 1,130 $ ( 3,213 ) $ 41,606 $ ( 11,143 ) $ 30,463

Total other comprehensive loss $ ( 18,381 ) $ 4,843 $ ( 13,538 )

(1) The amortization of prior service costs is included in the computation of net periodic pension cost as disclosed in Note 14 "Employee Benefit Plans" within the Notes to the Consolidated Financial Statements included in Item 8 of the Company's 2021 Form 10-K.

7 unchanged sentences

Ending balance:

September 30, 2021 $ 1,377 $ 21,717 $ ( 4,527 ) $ 18,567

March 31, 2022 $ ( 72,223 ) $ ( 3,813 ) $ ( 2,166 ) $ ( 78,202 )

Beginning balance:

2 unchanged sentences

Ending balance:

September 30, 2020 $ 14,731 $ 36,931 $ ( 3,030 ) $ 48,632

March 31, 2021 $ 5,481 $ 26,693 $ ( 5,017 ) $ 27,157

NOTE 10 - COMMITMENTS AND CONTINGENCIES

17 unchanged sentences

The following table summarizes the above financial instruments at the dates indicated:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(Dollars in thousands)

2 unchanged sentences

Deferred standby letter of credit fees 171 124

Loan exposures with recourse 208,833 303,265

Loan exposures sold with recourse 186,426 202,717

Lease Commitments

The Company leases office space, space for ATM locations, and certain branch locations under noncancellable operating leases.

Se veral of these leases contain renewal options to extend lease terms for a period of 3 to 10 years.

During the fourth quarter of 2020, the Company recognized $ 4.8 million in lease termination costs associated with two branch closure decisions.

These termination fees were paid by the Company during the second quarter of 2021.

Several of these leases contain renewal options to extend lease terms for a period of 1 to 20 years.

During the three months ended March 31, 2022, the Company recognized approximately $ 4.4 million in costs associated with several terminated leased locations acquired from Meridian that were subsequently exited.

These costs are reflected within merger and acquisition expense in the Consolidated Statement of Income.

There has been no significant change in the future minimum lease payments payable by the Company since December 31, 2021.

1 unchanged sentence

Other Contingencies

At September 30, 2021, the Bank was involved in pending lawsuits that arose in the ordinary course of business.

At March 31, 2022, the Bank was involved in pending lawsuits that arose in the ordinary course of business.

Management has reviewed these pending lawsuits with legal counsel and has taken into consideration the view of counsel as to their outcome.

In the opinion of management, the final disposition of pending lawsuits is not expected to have a material adverse effect on the Company’s financial position or results of operations.

Historically, the Bank was required to maintain certain reserve requirements of vault cash and/or deposits with the Federal Reserve Bank of Boston, however the reserve requirement was reduced to zero by the Federal Reserve during the first quarter of 2020 in response to the COVID-19 pandemic, and as such, there was no reserve requirement at September 30, 2021 or at December 31, 2020.

NOTE 11 - LOW INCOME HOUSING PROJECT INVESTMENTS

8 unchanged sentences

Tax credits and benefits 18,838 (1) 14,198

Discrete tax adjustment 1,572 (2) n/a

Adjusted tax credits and benefits 15,823 9,404

Amortization of investments 15,249 (1) 11,892

1 unchanged sentence

(1) Amounts shown represent the estimated full year impact for the year ended December 31 , 2022.

(2) Discrete adjustment recognized for difference in actual benefits as reported on Schedule K-1 versus estimated benefits for the year ended December 31, 2020.

NOTE 12 - SUBSEQUENT EVENTS

On October 29, 2021, the Company sold one large commercial and industrial loan relationship, the aggregate balance of which totaled $ 15.8 million as of September 30, 2021 and was included within non-performing assets.

The Company expects to recognize a gain of approximately $ 2.5 million based on proceeds from the sale.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements