What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-03 compared with 2022-08-04 · 140 added, 128 removed, 1274 unchanged (17% of the section changed)

54 unchanged sentences

issued and outstanding:

46,069,761 shares at June 30, 2022 and 47,349,778 shares at December 31, 2021 (includes 136,608 and 135,273 shares of unvested participating restricted stock awards, respectively)

45,634,626 shares at September 30, 2022 and 47,349,778 shares at December 31, 2021 (includes 136,904 and 135,273 shares of unvested participating restricted stock awards, respectively)

Value of shares held in rabbi trust at cost:

82,082 shares at June 30, 2022 and 82,565 shares at December 31, 2021

82,617 shares at September 30, 2022 and 82,565 shares at December 31, 2021

( 3,239 ) ( 3,146 )

9 unchanged sentences

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

Three Months Ended Six Months Ended

June 30 June 30

Three Months Ended Nine Months Ended

September 30 September 30

2022 2021 2022 2021

11 unchanged sentences

Net interest income 162,601 90,091 444,894 279,029

Release of provision for credit losses — ( 5,000 ) ( 2,000 ) ( 7,500 )

Provision for (release of) credit losses 3,000 ( 10,000 ) 1,000 ( 17,500 )

Net interest income after provision for credit losses 159,601 100,091 443,894 296,529

13 unchanged sentences

Data processing and facilities management 2,259 1,673 6,878 5,024

Merger and acquisition expense — 1,731 7,100 1,731

Consulting expense 2,547 1,560 7,057 5,443

Software maintenance 2,497 2,018 7,706 5,903

Debit card expense 1,936 1,347 5,562 3,693

Amortization of intangible assets 1,898 1,310 5,801 4,037

FDIC assessment 1,677 980 5,225 2,805

Debit card expense 1,861 1,165 3,626 2,346

Consulting expense 2,760 1,492 4,510 3,883

Merger and acquisition expense — 1,943 7,100 3,674

Other noninterest expenses 14,890 10,789 45,249 33,522

13 unchanged sentences

(Unaudited—Dollars in thousands)

Three Months Ended Six Months Ended

June 30 June 30

Three Months Ended Nine Months Ended

September 30 September 30

2022 2021 2022 2021

4 unchanged sentences

Net change in other comprehensive income for defined benefit postretirement plans 121 280 363 1,309

Total other comprehensive income (loss) ( 31,262 ) 2,410 ( 111,647 ) ( 11,128 )

Total other comprehensive loss ( 69,605 ) ( 11,000 ) ( 181,252 ) ( 22,128 )

Total comprehensive income $ 2,292 $ 29,007 $ 5,518 $ 97,162

2 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended June 30, 2022 and 2021

Three Months Ended September 30, 2022 and 2021

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

1 unchanged sentence

Comprehensive Income (Loss) Total

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

Balance June 30, 2022 46,069,761 $ 459 $ ( 3,196 ) $ 3,196 $ 2,146,333 $ 833,857 $ ( 109,464 ) $ 2,871,185

Net income — — — — — 71,897 — 71,897

7 unchanged sentences

Deferred compensation and other retirement benefit obligations — — ( 43 ) 43 — — — —

Balance September 30, 2022 45,634,626 $ 454 $ ( 3,239 ) $ 3,239 $ 2,113,313 $ 882,503 $ ( 179,069 ) $ 2,817,201

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

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

Net income — — — — — 40,007 — 40,007

Other comprehensive income — — — — — — 2,410 2,410

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

Common dividend declared ($ 0.48 per share)

4 unchanged sentences

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

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

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

INDEPENDENT BANK CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Six Months Ended June 30, 2022 and 2021

Nine Months Ended September 30, 2022 and 2021

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

12 unchanged sentences

Deferred compensation and other retirement benefit obligations — — ( 93 ) 93 — — — —

Balance June 30, 2022 46,069,761 $ 459 $ ( 3,196 ) $ 3,196 $ 2,146,333 $ 833,857 $ ( 109,464 ) $ 2,871,185

Balance September 30, 2022 45,634,626 $ 454 $ ( 3,239 ) $ 3,239 $ 2,113,313 $ 882,503 $ ( 179,069 ) $ 2,817,201

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

8 unchanged sentences

Deferred compensation and other retirement benefit obligations — — ( 91 ) 91 — — — —

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

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

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

2 unchanged sentences

(Unaudited—Dollars in thousands)

Six Months Ended

Nine Months Ended

Cash flow from operating activities

3 unchanged sentences

Change in unamortized net loan costs and premiums ( 6,397 ) ( 17,217 )

Amortization (accretion) of acquired loans 578 ( 3,422 )

Release of provision for credit losses ( 2,000 ) ( 7,500 )

Accretion of fair value mark of acquired loans ( 65 ) ( 5,349 )

Provision for (release of) credit losses 1,000 ( 17,500 )

Deferred income tax expense 271 271

33 unchanged sentences

Net (decrease) increase in other deposits ( 225,519 ) 1,432,037

Repayments of short-term Federal Home Loan Bank borrowings ( 25,000 ) —

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

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

22 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 six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or any other interim period.

Results for the nine months ended September 30, 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").

32 unchanged sentences

Trading Securities

The Company had trading securities of $ 3.6 million and $ 3.7 million as of June 30, 2022 and December 31, 2021, respectively.

The Company had trading securities of $ 3.5 million and $ 3.7 million as of September 30, 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 $ 21.2 million and $ 23.2 million as of June 30, 2022 and December 31, 2021, respectively.

The Company had equity securities of $ 20.4 million and $ 23.2 million as of September 30, 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 Six Months Ended

June 30 June 30

Three Months Ended Nine Months Ended

September 30 September 30

2022 2021 2022 2021

5 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:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Gains Gross Unrealized

14 unchanged sentences

Total available for sale securities $ 1,605,913 $ 55 $ ( 180,457 ) $ — $ 1,425,511 $ 1,583,736 $ 8,808 $ ( 21,396 ) $ — $ 1,571,148

Excluded from the table above is accrued interest on available for sale securities of $ 3.0 million as of June 30, 2022 and December 31, 2021, 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 six months ended

June 30, 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 June 30, 2022 and December 31, 2021.

Excluded from the table above is accrued interest on available for sale securities of $ 3.3 million and $ 3.0 million as of September 30, 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 and nine months ended September 30, 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 September 30, 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 and six months ended June 30, 2022 and 2021, 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 and nine months ended September 30, 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 dates 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:

June 30, 2022

September 30, 2022

Less than 12 months 12 months or longer Total

8 unchanged sentences

Agency collateralized mortgage obligations 11 39,291 ( 2,890 ) — — 39,291 ( 2,890 )

Single issuer trust preferred securities issued by banks and insurers 1 468 ( 21 ) — — 468 ( 21 )

State, county, and municipal securities 1 187 ( 6 ) — — 187 ( 6 )

Pooled trust preferred securities issued by banks and insurers 1 — — 999 ( 203 ) 999 ( 203 )

16 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 six months ended June 30, 2022 and 2021.

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, 2022 and 2021, respectively.

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 June 30, 2022:

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, 2022:

Government Agency Securities, U.S.

4 unchanged sentences

Government or one of its agencies.

• Single Issuer Trust Preferred Securities:

This portfolio consists of one security, which is investment grade.

The unrealized loss on this security is attributable to the illiquid nature of the trust preferred market in the current economic environment.

Management evaluates various financial metrics for the issuers, including regulatory capital ratios of the issuers.

• State, County and Municipal Securities:

This portfolio has 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.

The decline in market value of these securities is attributable to changes in interest rates and not credit quality.

• Pooled Trust Preferred Securities:

5 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:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Gains Gross Unrealized

13 unchanged sentences

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 and six months ended June 30, 2022 and 2021.

Excluded from the table above is accrued interest on held to maturity securities of $ 2.9 million and $ 2.0 million as of June 30, 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 and six months ended June 30, 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 June 30, 2022 and December 31, 2021.

Excluded from the table above is accrued interest on held to maturity securities of $ 4.3 million and $ 2.0 million as of September 30, 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 and nine months ended September 30, 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 September 30, 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 six months ended June 30, 2022 and 2021, 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 and nine months ended September 30, 2022 and 2021, respectively, 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 June 30, 2022, all held to maturity securities held by the Company were rated investment grade or higher.

As of September 30, 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 June 30, 2022 is presented below:

A schedule of the contractual maturities of available for sale and held to maturity securities as of September 30, 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 $ 19,886 $ 19,843 $ 1,132,668 $ 1,039,617 $ 1,061,045 $ 915,523 $ 1,089,949 $ 960,513 $ 3,303,548 $ 2,935,496

Included in the table above are $ 25.8 million of callable securities at June 30, 2022.

The carrying value of securities pledged to secure public funds, trust deposits, and for other purposes, as required or permitted by law, was $ 876.4 million and $ 740.6 million at June 30, 2022 and December 31, 2021, respectively.

At June 30, 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.

Included in the table above are $ 24.8 million of callable securities at September 30, 2022.

The carrying value of securities pledged to secure public funds, trust deposits, and for other purposes, as required or permitted by law, was $ 963.9 million and $ 740.6 million at September 30, 2022 and December 31, 2021, respectively.

At September 30, 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 June 30, 2022

Three Months Ended September 30, 2022

(Dollars in thousands)

9 unchanged sentences

Recoveries 2 330 — 88 — 65 251 735

(Release of) provision for credit losses ( 91 ) ( 980 ) ( 157 ) ( 397 ) 1,362 74 189 —

Provision for (release of) credit losses 6,060 ( 3,688 ) ( 291 ) ( 248 ) 852 ( 154 ) 469 3,000

Ending balance (1) $ 20,169 $ 80,036 $ 11,419 $ 2,624 $ 20,602 $ 11,651 $ 812 $ 147,313

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

(Dollars in thousands)

9 unchanged sentences

Recoveries 1 — — 50 — 49 121 221

(Release of) provision for credit losses ( 3,068 ) ( 23 ) ( 403 ) 22 ( 942 ) ( 605 ) 19 ( 5,000 )

Provision for (release of) credit losses ( 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

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

(Dollars in thousands)

9 unchanged sentences

Recoveries 44 333 — 147 — 105 754 1,383

(Release of) provision for credit losses ( 337 ) ( 33 ) ( 606 ) ( 724 ) 5,266 ( 6,164 ) 598 ( 2,000 )

Provision for (release of) credit losses 5,723 ( 3,721 ) ( 897 ) ( 972 ) 6,118 ( 6,318 ) 1,067 1,000

Ending balance (1) $ 20,169 $ 80,036 $ 11,419 $ 2,624 $ 20,602 $ 11,651 $ 812 $ 147,313

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

(Dollars in thousands)

9 unchanged sentences

Recoveries 100 57 — 65 1 107 523 853

(Release of) provision for credit losses ( 680 ) ( 741 ) ( 532 ) ( 1,397 ) ( 2,262 ) ( 1,962 ) 74 ( 7,500 )

Provision for (release of) credit losses ( 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

(1) Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $ 39.0 million and $ 29.9 million as of June 30, 2022 and June 30, 2021, respectively.

The balance of allowance for credit losses of $ 144.3 million as of June 30, 2022 represents a decrease of $ 2.6 million, or 1.8 %, 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 first quarter of 2022, reflecting a stabilized credit quality environment and continued strong asset quality metrics and attrition experienced during the second quarter of 2022, which were offset by increased reserves on individually evaluated loans and net loan growth, resulting in a zero provision recorded for the three months ended June 30, 2022.

(1) Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $ 42.7 million and $ 36.7 million as of September 30, 2022 and September 30, 2021, respectively.

The balance of allowance for credit losses of $ 147.3 million as of September 30, 2022 remained relatively flat compared to $ 146.9 million at December 31, 2021.

The nominal change in the Company's allowance for credit losses for the nine months ended September 30, 2022 primarily reflects increased reserves attributable to category shifts on nonperforming loans and net loan growth, offset by a stabilized credit environment and continued strong asset quality metrics.

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

77 unchanged sentences

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

As a result, for this portfolio the Company utilizes a pass/default risk-rating system, based on an age

analysis (i.e., days past due) associated with each consumer loan.

As a result, for this portfolio the Company utilizes a pass/default risk-rating system, based on an age analysis (i.e., days past due) associated with each consumer loan.

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.

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:

June 30, 2022

September 30, 2022

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

40 unchanged sentences

Total $ 2,347,498 $ 2,617,135 $ 1,958,359 $ 1,065,396 $ 1,069,133 $ 2,968,288 $ 1,666,287 $ 8,254 $ 13,700,350

June 30, 2021

September 30, 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 $ 30.6 million and $482.7 million as of June 30, 2022 and 2021, respectively.

Outstanding PPP loans totaled $ 11.1 million and $ 383.6 million as of September 30, 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) 40.9 % 42.4 %

(1) The average FICO scores at June 30, 2022 are based upon rescores from June 2022, as available for previously originated loans, or origination score data for loans booked in June 2022.

(1) The average FICO scores at September 30, 2022 are based upon rescores from June 2022, as available for previously originated loans, or origination score data for loans booked since June 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 June 30, 2022 are based upon updated automated valuations as of May 2022, when available, and/or the most current valuation data available.

(2) The combined LTV ratios for September 30, 2022 are based upon updated automated valuations as of August 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 June 30, 2022 and December 31, 2021, the Company's estimated reserve for unfunded commitments amounted to $ 1.3 million and $ 1.5 million, respectively.

At September 30, 2022 and December 31, 2021, the Company's estimated reserve for unfunded commitments amounted to $ 1.3 million and $ 1.5 million, respectively.

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 June 30, 2022 and December 31, 2021 was $ 197.4 million and $ 383.1 million, respectively.

The majority of these loans with active deferrals as of June 30, 2022 continue to be characterized as current loans.

The balance of loans with active deferrals as of September 30, 2022 and December 31, 2021 was $ 193.3 million and $ 383.1 million, respectively.

The majority of these loans with active deferrals as of September 30, 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 June 30, 2022 and December 31, 2021.

Additionally, a majority of these modified loans are characterized as current and therefore are not impacting nonaccrual or delinquency totals as of September 30, 2022 and December 31, 2021.

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

2 unchanged sentences

Nonaccrual Balances

June 30, 2022 December 31, 2021

September 30, 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) $ 55,998 $ 19 $ 56,017 $ 27,199 $ 621 $ 27,820

(1) Included in these amounts were $ 1.7 million and $ 2.0 million of nonaccruing TDRs at June 30, 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 six months ended June 30, 2022 and 2021.

(1) Included in these amounts were $ 1.5 million and $ 2.0 million of nonaccruing TDRs at September 30, 2022 and December 31, 2021, respectively.

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

June 30, 2022 December 31, 2021

September 30, 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:

June 30, 2022

September 30, 2022

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

46 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(Dollars in thousands)

7 unchanged sentences

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 or six months ended June 30, 2022.

The following table shows the TDRs which occurred during the three and six months ended June 30, 2021 and the change in the recorded investment subsequent to the modifications occurring:

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2021

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, 2022 September 30, 2022

Contracts Pre-Modification

3 unchanged sentences

Investment Post-Modification

(Dollars in thousands) (Dollars in thousands)

Troubled debt restructurings

Commercial and industrial 1 $ 68 $ 67 1 68 67

Total (1) 1 $ 68 $ 67 1 68 67

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)

5 unchanged sentences

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

Activity presented in the table above includes $ 14.3 million of modifications on existing TDR's occurring during the six months ended June 30, 2021.

Activity presented in the table above includes $ 14.3 million of modifications on existing TDRs occurring during the nine months ended September 30, 2021.

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

Three Months Ended Six Months Ended

June 30 June 30

Three Months Ended Nine Months Ended

September 30 September 30

2022 2021 2022 2021

(Dollars in thousands)

3 unchanged sentences

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

During the six months ended June 30, 2022 and June 30, 2021, there were no loans modified during the prior twelve months that subsequently defaulted during the respective periods.

During the nine months ended September 30, 2022 and September 30, 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 six months ended June 30, 2022, the Company had the following activity related to stock based compensation:

During the nine months ended September 30, 2022, the Company had the following activity related to stock based compensation:

Time Vested Restricted Stock Awards

3 unchanged sentences

5/24/2022 8,099 2018 Non-Employee Director Stock Plan $ 80.39 Shares vested immediately

9/15/2022 646 2005 Employee Stock Plan $ 77.44 Ratably over 5 years from grant date

Performance-Based Restricted Stock Awards

2 unchanged sentences

The number of shares to be vested are contingent upon the Company's attainment of certain performance criteria to be measured at the end of a three year performance period, ending December 31, 2024.

The awards will

vest upon the earlier of the date on which it is determined if the performance goal is achieved subsequent to the performance period or March 31, 2025.

The awards will vest upon the earlier of the date on which it is determined if the performance goal is achieved subsequent to the performance period or March 31, 2025.

On March 10, 2022, the performance-based restricted stock awards that were awarded on February 21, 2019 vested at 50 % of the maximum target shares awarded, or 7,450 shares.

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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:

June 30, 2022

September 30, 2022

Weighted Average Rate

Notional Amount Average Maturity Current

Received Pay Fixed

Notional Amount Average Maturity Current Rate Paid Receive Fixed

Swap Rate Fair Value

(in thousands) (in years) (in thousands)

Interest rate swaps on borrowings $ 25,000 0.13 1.46 % 1.88 % $ ( 27 )

Current Rate Paid Receive Fixed

Interest rate swaps on loans $ 1,050,000 3.23 2.72 % 2.66 % $ ( 43,365 )

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For derivative instruments that are designated and qualify as cash flow hedging instruments, the effective portion of the gains or losses is reported as a component of other comprehensive income ("OCI"), and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

The Company expects approximately $ 6.1 million (pre-tax) to be reclassified as a decrease to interest income and $ 13,000 (pre-tax) to be reclassified as an increase to interest expense, from OCI related to the Company’s cash flow hedges in the twelve months following June 30, 2022.

This reclassification is due to anticipated payments that will be made and/or received on the swaps based upon the forward curve as of June 30, 2022.

The Company had no fair value hedges as of June 30, 2022 or December 31, 2021.

The Company expects approximately $ 22.5 million (pre-tax) to be reclassified as an increase to interest expense, from OCI related to the Company’s cash flow hedges in the twelve months following September 30, 2022.

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, 2022.

The Company had no fair value hedges as of September 30, 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

June 30, 2022

September 30, 2022

(Dollars in thousands)

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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 increased by $ 122,000 and $ 305,000 for the three months ended June 30, 2022 and 2021, respectively.

The fair value of loans held for sale decreased by $ 426,000 and $ 1.5 million for the six months ended June 30, 2022 and 2021, respectively.

The fair value of loans held for sale decreased by $ 194,000 and $ 75,000 for the three months ended September 30, 2022 and 2021, respectively.

The fair value of loans held for sale decreased by $ 620,000 and $ 1.5 million for the nine months ended September 30, 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 net realized losses of $ 278,000 and net realized gains of $ 4.2 million for the three months ended June 30, 2022 and 2021, respectively, and net realized gains of $ 321,000 and $ 12.3 million for the six months ended June 30, 2022 and 2021, respectively.

The aggregate amount of net realized gains on sales of such loans included within mortgage banking income was $ 229,000 and $ 4.9 million for the three months ended September 30, 2022 and 2021, respectively, and $ 550,000 and $ 17.2 million for the nine months ended September 30, 2022 and 2021, respectively.

Balance Sheet Offsetting

9 unchanged sentences

2022 December 31

2021 September 30

2022 December 31

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

(3) Approximately $ 306,000 of accrued interest receivable is included in the fair value of interest rate derivative assets and $ 401,000 of accrued interest payable is included in the fair value of the loan level derivative assets at June 30, 2022, in comparison to accrued interest receivable of approximately $ 1.2 million and $ 1.5 million in included in the fair value of interest rate and loan level derivative assets, respectively, at December 31, 2021.

(4) Approximately $ 532,000 and $ 401,000 of accrued interest receivable is included in the fair value of interest rate and loan level derivative liabilities, respectively, at June 30, 2022.

(3) Approximately $ 660,000 of accrued interest receivable is included in the fair value of the loan level derivative assets at September 30, 2022, in comparison to accrued interest receivable of approximately $ 1.2 million and $ 1.5 million in included in the fair value of interest rate and loan level derivative assets, respectively, at December 31, 2021.

(4) Approximately $ 36,000 and $ 660,000 of accrued interest payable is included in the fair value of interest rate and loan level derivative liabilities, respectively, at September 30, 2022.

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, at 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 at June 30, 2022.

As displayed in the table above, derivatives that cleared through the CME were either in a net asset position or a net liability position at September 30, 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 Six Months Ended

June 30 June 30

Three Months Ended Nine Months Ended

September 30 September 30

2022 2021 2022 2021

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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.

All derivative instruments with credit-risk contingent features were in a net asset position at June 30, 2022.

All derivative instruments with credit-risk contingent features were in a net asset position at September 30, 2022.

At December 31, 2021, the aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a net liability position was $ 34.8 million.

Although none of the contingency provisions have applied as of June 30, 2022 and December 31, 2021, the Company posted collateral to offset the net liability exposure with institutional counterparties at December 31, 2021.

Although none of the contingency provisions have applied as of September 30, 2022 and December 31, 2021, the Company posted collateral to offset the net liability exposure with institutional counterparties at December 31, 2021.

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

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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 $ 72.9 million and $ 28.3 million at June 30, 2022 and December 31, 2021, respectively.

The Company’s exposure relating to customer counterparties was approximately $ 2.0 million and $ 62.4 million at June 30, 2022 and December 31, 2021, respectively.

The Company's exposure relating to institutional counterparties was $ 127.6 million and $ 28.3 million at September 30, 2022 and December 31, 2021, respectively.

The Company’s exposure relating to customer counterparties was approximately $ 8,000 and $ 62.4 million at September 30, 2022 and December 31, 2021, respectively.

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

18 unchanged sentences

Valuation Techniques

There have been no changes in the valuation techniques used during the six months ended June 30, 2022.

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

However, as of September 30, 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.

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(Level 2) Significant

June 30, 2022

September 30, 2022

(Dollars in thousands)

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(Level 2) Significant

June 30, 2022

September 30, 2022

(Dollars in thousands)

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

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

2022 September 30

2021 September 30

2022 September 30

(Dollars in thousands)

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(Dollars in thousands)

28 unchanged sentences

Three Months Ended

June 30, 2022 Six Months Ended

June 30, 2022

September 30, 2022 Nine Months Ended

September 30, 2022

Amount Tax (Expense)

15 unchanged sentences

Three Months Ended

June 30, 2021 Six Months Ended

June 30, 2021

September 30, 2021 Nine Months Ended

September 30, 2021

Amount Tax (Expense)

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Net change in other comprehensive income for defined benefit postretirement plans (1) 390 ( 110 ) 280 1,821 ( 512 ) 1,309

Total other comprehensive income (loss) $ 3,184 $ ( 774 ) $ 2,410 $ ( 15,197 ) $ 4,069 $ ( 11,128 )

Total other comprehensive loss $ ( 14,654 ) $ 3,654 $ ( 11,000 ) $ ( 29,851 ) $ 7,723 $ ( 22,128 )

(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.

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Ending balance:

June 30, 2022 $ ( 95,957 ) $ ( 11,462 ) $ ( 2,045 ) $ ( 109,464 )

September 30, 2022 $ ( 138,539 ) $ ( 38,606 ) $ ( 1,924 ) $ ( 179,069 )

Beginning balance:

2 unchanged sentences

Ending balance:

June 30, 2021 $ 9,274 $ 25,100 $ ( 4,807 ) $ 29,567

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

NOTE 10 - COMMITMENTS AND CONTINGENCIES

17 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(Dollars in thousands)

11 unchanged sentences

Other Contingencies

At June 30, 2022, the Bank was involved in pending lawsuits that arose in the ordinary course of business.

At September 30, 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.

1 unchanged sentence

NOTE 11 - LOW INCOME HOUSING PROJECT INVESTMENTS

The Company has invested in low income housing projects that generate Low Income Housing Tax Credits (“LIHTC”) which provide the Company with tax credits and operating loss tax benefits over a period of approximately 15 years.

The Company has invested in low income housing projects that generate Low Income Housing Tax Credits which provide the Company with tax credits and operating loss tax benefits over a period of approximately 15 years.

None of the original investment is expected to be repaid.

10 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements