What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-02 compared with 2023-08-03 · 132 added, 141 removed, 1297 unchanged (17% of the section changed)

53 unchanged sentences

issued and outstanding:

44,130,901 shares at June 30, 2023 and 45,641,238 shares at December 31, 2022 (includes 168,934 and 135,712 shares of unvested participating restricted stock awards, respectively)

44,141,973 shares at September 30, 2023 and 45,641,238 shares at December 31, 2022 (includes 162,464 and 135,712 shares of unvested participating restricted stock awards, respectively)

Value of shares held in rabbi trust at cost:

80,955 shares at June 30, 2023 and 80,965 shares at December 31, 2022

81,943 shares at September 30, 2023 and 80,965 shares at December 31, 2022

( 3,335 ) ( 3,227 )

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

2023 2022 2023 2022

11 unchanged sentences

Net interest income 149,880 162,601 461,424 444,894

Provision for (release of) credit losses 5,000 — 12,250 ( 2,000 )

Provision for credit losses 5,500 3,000 17,750 1,000

Net interest income after provision for credit losses 144,380 159,601 443,674 443,894

34 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

2023 2022 2023 2022

9 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended June 30, 2023 and 2022

Three Months Ended September 30, 2023 and 2022

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

1 unchanged sentence

Comprehensive Loss Total

Balance March 31, 2023 44,114,827 $ 439 $ ( 3,286 ) $ 3,286 $ 1,995,077 $ 971,338 $ ( 135,945 ) $ 2,830,909

Balance June 30, 2023 44,130,901 $ 440 $ ( 3,289 ) $ 3,289 $ 1,997,674 $ 1,009,735 $ ( 152,935 ) $ 2,854,914

Net income — — — — — 60,808 — 60,808

2 unchanged sentences

— — — — — ( 24,277 ) — ( 24,277 )

Proceeds from exercise of stock options, net of cash paid 1,572 — — — 1 — — 1

Stock based compensation — — — — 1,128 — — 1,128

2 unchanged sentences

Deferred compensation and other retirement benefit obligations — — ( 46 ) 46 — — — —

Balance September 30, 2023 44,141,973 $ 440 $ ( 3,335 ) $ 3,335 $ 1,999,448 $ 1,046,266 $ ( 160,746 ) $ 2,885,408

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

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

Net income — — — — — 71,897 — 71,897

7 unchanged sentences

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

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

INDEPENDENT BANK CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Six Months Ended June 30, 2023 and 2022

Nine Months Ended September 30, 2023 and 2022

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

13 unchanged sentences

Deferred compensation and other retirement benefit obligations — — ( 108 ) 108 — — — —

Balance June 30, 2023 44,130,901 $ 440 $ ( 3,289 ) $ 3,289 $ 1,997,674 $ 1,009,735 $ ( 152,935 ) $ 2,854,914

Balance September 30, 2023 44,141,973 $ 440 $ ( 3,335 ) $ 3,335 $ 1,999,448 $ 1,046,266 $ ( 160,746 ) $ 2,885,408

Balance December 31, 2021 47,349,778 $ 472 $ ( 3,146 ) $ 3,146 $ 2,249,078 $ 766,716 $ 2,183 $ 3,018,449

8 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

(1) Inclusive of $ 1.2 million impact of excise tax attributable to shares repurchased under the share repurchase program during the six months ended June 30, 2023 .

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

(1) Inclusive of $ 1.2 million impact of excise tax attributable to shares repurchased under the share repurchase program during the nine months ended September 30, 2023 .

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 fees ( 1,199 ) ( 6,397 )

(Accretion) amortization of acquired loans ( 688 ) 578

Provision for (release of) credit losses 12,250 ( 2,000 )

Accretion of acquired loans ( 1,057 ) ( 65 )

Provision for credit losses 17,750 1,000

Deferred income tax expense 13 271

15 unchanged sentences

Cash flows used in investing activities

Proceeds from sales of equity securities — 30

Purchases of equity securities ( 440 ) ( 471 )

14 unchanged sentences

Net decrease in other deposits ( 1,636,503 ) ( 225,519 )

Net advances from short-term Federal Home Loan Bank borrowings 787,860 —

Net advances from (repayments of) short-term Federal Home Loan Bank borrowings 887,000 ( 25,000 )

Repayments of long-term debt, net of issuance costs — ( 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, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any other interim period.

Results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 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, 2022, filed with the Securities and Exchange Commission (the "2022 Form 10-K").

NOTE 2 - RECENT ACCOUNTING STANDARDS UPDATES

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 848 "Reference Rate Reform" Update No.

2020-04 was issued in March 2020 to provide optional expedients and exceptions for applying GAAP to certain contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform.

The amendments did not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022 for which an entity elected certain optional expedients that are retained through the end of the hedging relationship.

The amendments in this update were effective for all entities as of March 12, 2020 through December 31, 2022 and do not apply to contract modifications made after December 31, 2022.

FASB ASC Topic 848 "Reference Rate Reform" Update No.

2021-01 was subsequently issued in January 2021 and expanded application of the optional expedients to derivative transactions affected by the discounting transition.

The Company established a working group to guide the Company’s transition from LIBOR, whose responsibilities included the identification of products utilizing LIBOR, the implementation of fallback language into the applicable contracts, the evaluation of platforms and systems, as well as the determination of an alternative index to be offered for new and existing products.

The Company has determined that the transition from LIBOR, which reached its final retirement date on June 30, 2023, did not have a material impact on the Company's financial statements.

NOTE 2 - SECURITIES

Trading Securities

The Company had trading securities of $ 4.5 million and $ 3.9 million as of June 30, 2023 and December 31, 2022, respectively.

The Company had trading securities of $ 4.5 million and $ 3.9 million as of September 30, 2023 and December 31, 2022, 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 $ 21.8 million and $ 21.1 million as of June 30, 2023 and December 31, 2022, respectively.

The Company had equity securities of $ 21.5 million and $ 21.1 million as of September 30, 2023 and December 31, 2022, 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

2023 2022 2023 2022

Dollars in thousands

Net gains (losses) recognized during the period on equity securities $ 267 $ ( 1,450 ) 635 ( 2,077 )

net gains recognized during the period on equity securities sold during the period — 4 1 8

Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date $ 267 $ ( 1,454 ) $ 634 $ ( 2,085 )

Net (losses) gains recognized during the period on equity securities $ ( 363 ) $ ( 742 ) 272 ( 2,819 )

net (losses) gains recognized during the period on equity securities sold during the period ( 34 ) — ( 33 ) 8

Unrealized (losses) gains recognized during the reporting period on equity securities still held at the reporting date $ ( 329 ) $ ( 742 ) $ 305 $ ( 2,827 )

Available for Sale Securities

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, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Gains Gross Unrealized

12 unchanged sentences

Total available for sale securities $ 1,524,555 $ 2 $ ( 170,813 ) $ — $ 1,353,744 $ 1,566,779 $ 54 $ ( 167,679 ) $ — $ 1,399,154

Excluded from the table above is accrued interest on available for sale securities of $ 2.8 million and $ 3.6 million at June 30, 2023 and December 31, 2022, 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 six months ended June 30, 2023 and 2022.

Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status at June 30, 2023 and December 31, 2022.

Excluded from the table above is accrued interest on available for sale securities of $ 3.9 million and $ 3.6 million at September 30, 2023 and December 31, 2022, 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, 2023 and 2022.

Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status at September 30, 2023 and December 31, 2022.

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, 2023 and 2022, 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, 2023 and 2022, 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 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, 2023

September 30, 2023

Less than 12 months 12 months or longer Total

29 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, 2023 and 2022.

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, 2023 and 2022.

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, 2023:

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, 2023:

Government Agency Securities, U.S.

16 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 at the dates indicated:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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, 2023 and 2022.

Excluded from the table above is accrued interest on held to maturity securities of $ 4.4 million as of June 30, 2023 and December 31, 2022, 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, 2023 and 2022.

Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status at June 30, 2023 and December 31, 2022.

Excluded from the table above is accrued interest on held to maturity securities of $ 4.6 million and $ 4.4 million as of September 30, 2023 and December 31, 2022, 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, 2023 and 2022.

Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status at September 30, 2023 and December 31, 2022.

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, 2023 and 2022, and therefore no gains or losses were realized for such periods.

The Company had no sales of held to maturity securities during the three and nine months ended September 30, 2023 and 2022, and therefore no gains or losses were realized for such periods.

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, 2023, all held to maturity securities held by the Company were rated investment grade or higher.

As of September 30, 2023, 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, 2023 is presented below:

A schedule of the contractual maturities of available for sale and held to maturity securities as of September 30, 2023 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

22 unchanged sentences

Total $ 207,026 $ 202,457 $ 1,406,657 $ 1,263,225 $ 544,151 $ 458,222 $ 961,000 $ 814,270 $ 3,118,834 $ 2,738,174

Included in the table above are $ 24.9 million of callable securities at June 30, 2023.

The carrying value of securities pledged to secure public funds, trust deposits, and for other purposes, as required or permitted by law, was $ 1.8 billion and $ 959.8 million at June 30, 2023 and December 31, 2022, respectively.

At June 30, 2023 and December 31, 2022, 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 $ 24.7 million of callable securities at September 30, 2023.

The carrying value of securities pledged to secure public funds, trust deposits, and for other purposes, as required or permitted by law, was $ 1.8 billion and $ 959.8 million at September 30, 2023 and December 31, 2022, respectively.

At September 30, 2023 and December 31, 2022, the Company had no investments in obligations of individual states, counties, or municipalities which exceeded 10% of consolidated stockholders’ equity.

NOTE 3 - 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, 2023

Three Months Ended September 30, 2023

(Dollars in thousands)

11 unchanged sentences

Ending balance (1) $ 16,934 $ 74,402 $ 8,830 $ 3,914 $ 23,147 $ 12,546 $ 796 $ 140,569

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

(Dollars in thousands)

11 unchanged sentences

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

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

(Dollars in thousands)

11 unchanged sentences

Ending balance (1) $ 16,934 $ 74,402 $ 8,830 $ 3,914 $ 23,147 $ 12,546 $ 796 $ 140,569

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

(Dollars in thousands)

11 unchanged sentences

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

(1) Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $ 54.0 million and $ 39.0 million as of June 30, 2023 and June 30, 2022, respectively.

The balance of allowance for credit losses decreased to $ 140.6 million as of June 30, 2023 compared to $ 152.4 million at December 31, 2022.

The decrease was driven primarily by outsized charge-offs and specific reserve allocations over certain commercial loans.

(1) Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $ 58.1 million and $ 42.7 million as of September 30, 2023 and September 30, 2022, respectively.

The balance of allowance for credit losses decreased to $ 140.6 million as of September 30, 2023 compared to $ 152.4 million at December 31, 2022, driven primarily by outsized charge-offs on two large commercial loans, partially offset by net loan growth during the nine months ended September 30, 2023.

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

48 unchanged sentences

The risk-rating categories for the commercial portfolio are defined as follows:

Risk-rating “1” through “6” comprises of loans ranging from ‘Substantially Risk Free’ which indicates borrowers are of unquestioned credit standing and the pinnacle of credit quality, well established companies with a very strong financial condition, and loans fully secured by cash collateral, through ‘Acceptable Risk’, which indicates borrowers may exhibit declining earnings, strained cash flow, increasing or above average leverage and/or weakening market fundamentals that indicate below average asset quality, margins and market share.

Risk-rating “1” through “6” comprises loans ranging from ‘Substantially Risk Free’ which indicates borrowers are of unquestioned credit standing and the pinnacle of credit quality, well established companies with a very strong financial condition, and loans fully secured by cash collateral, through ‘Acceptable Risk,’ which indicates borrowers may exhibit declining earnings, strained cash flow, increasing or above average leverage and/or weakening market fundamentals that indicate below average asset quality, margins and market share.

Collateral coverage is protective.

27 unchanged sentences

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, 2023

September 30, 2023

2023 2022 2021 2020 2019 Prior Revolving Loans Revolving converted to Term Total (1)

48 unchanged sentences

Total current-period gross write-offs $ 1,836 $ 5,072 $ 22 $ 37 $ — $ 41 $ 23,592 $ — $ 30,600

June 30, 2022

September 30, 2022

2022 2021 2020 2019 2018 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 Coronavirus Aid, Relief and Economic Security Act (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 $ 5.7 million and $ 30.6 million as of June 30, 2023 and 2022, respectively.

Outstanding PPP loans totaled $ 5.1 million and $ 11.1 million as of September 30, 2023 and 2022, respectively.

(3) Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances and the associated gross write-offs.

11 unchanged sentences

LTV (re-valued)(2)(3) 43.1 % 41.3 %

(1) The average FICO scores at June 30, 2023 are based upon rescores from June 2023, as available for previously originated loans, or origination score data for loans booked in June 2023.

(1) The average FICO scores at September 30, 2023 are based upon rescores from September 2023, as available for previously originated loans, or origination score data for loans booked in September 2023.

The average FICO scores at December 31, 2022 were based upon rescores available from December 2022, as available for previously originated loans, or origination score data for loans booked in December 2022.

(2) The combined LTV ratios for June 30, 2023 are based upon updated automated valuations as of May 2023, when available, and/or the most current valuation data available.

(2) The combined LTV ratios for September 30, 2023 are based upon updated automated valuations as of August 2023, when available, and/or the most current valuation data available.

The combined LTV ratios for December 31, 2022 were based upon updated automated valuations as of November 2022, 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, 2023 and December 31, 2022, the Company's estimated reserve for unfunded commitments amounted to $ 1.5 million and $ 1.3 million, respectively.

At September 30, 2023 and December 31, 2022, the Company's estimated reserve for unfunded commitments amounted to $ 1.5 million and $ 1.3 million, respectively.

Asset Quality

5 unchanged sentences

Nonaccrual Balances

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

With Allowance for Credit Losses Without Allowance for Credit Losses (2) Total With Allowance for Credit Losses Without Allowance for Credit Losses (2) Total (1)

8 unchanged sentences

(1) Nonaccrual balances at December 31, 2022 included $ 11.5 million of nonaccruing troubled debt restructures ("TDRs").

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, 2023 and 2022, except for instances where nonaccrual loans were paid off in excess of the recorded book balance.

(2) Nonaccrual balances reported above without an allowance for credit losses are attributable to loans evaluated on an individual basis where it was determined that there was no risk of loss due to sufficient underlying collateral values.

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, 2023 and 2022, except for instances where nonaccrual loans were paid off in excess of the recorded book balance.

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(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, 2023

September 30, 2023

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

40 unchanged sentences

(1) Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances.

(2) The amount of net deferred costs on originated loans included in the ending balance was $ 6.1 million and $ 5.0 million at June 30, 2023 and December 31, 2022, respectively.

(2) The amount of net deferred costs on originated loans included in the ending balance was $ 6.1 million and $ 5.0 million at September 30, 2023 and December 31, 2022, respectively.

Loan Modifications

6 unchanged sentences

This change in methodology did not have a material impact on the Company's allowance for credit loss estimate.

The following table presents the amortized cost basis of loans modified to borrowers experiencing financial difficulty during the three and six month periods ended June 30, 2023, disaggregated by class of financing receivable and type of modification granted:

Three Months Ended June 30, 2023 Six Months Ended June 30, 2023

The following tables present the amortized cost basis of loans modified to borrowers experiencing financial difficulty during the periods presented, disaggregated by class of financing receivable and type of modification granted.

The amortized cost basis amounts presented in these tables are as of the modification date and, in certain instances, may include multiple modifications of the same loan during the periods presented.

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Term Extension

23 unchanged sentences

Total $ — $ 8,822

The table above is reflective of all modifications during the periods presented, which may in certain instances include multiple modifications of the same loan.

As such, the above amounts may not reflect outstanding balances at period end.

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty for the three and six months ending June 30, 2023:

Three Months Ended June 30, 2023

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty for the periods indicated:

Three Months Ended September 30, 2023

Term Extension

Loan Category Financial Effect

Commercial and industrial Added a weighted-average contractual term of 1 month to the life of the loans

Commercial and industrial Added a weighted-average contractual term of 2 months to the life of the loans

Commercial real estate Added a weighted-average contractual term of 2.9 years to the life of the loans

Commercial construction Added a weighted-average contractual term of 2 months to the life of the loans

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Term Extension

Loan Category Financial Effect

Commercial and industrial Added a weighted-average contractual term of 1 month to the life of the loans

Commercial and industrial Added a weighted-average contractual term of 2 months to the life of the loans

Commercial real estate Added a weighted-average contractual term of 1.8 years to the life of the loans

Commercial construction Added a weighted-average contractual term of 2 months to the life of the loans

Small business Added a weighted-average contractual term of 4.3 years to the life of the loans

Interest Rate Reduction

Combination - Interest Rate Reduction and Term Extension

Loan Category Financial Effect

Small business Reduced weighted-average contractual interest rate from 10.00 % to 6.50 %

Small business Reduced weighted-average contractual interest rate from 10.00 % to 6.50 % and added a weighted-average contractual term of 4.3 years to the life of the loan

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table depicts the performance of loans that have been modified in the last 12 months as of June 30, 2023:

June 30, 2023

The following table depicts the amortized cost and payment status of loans that have been modified in the last 12 months as of September 30, 2023:

Payment Status (Amortized Cost Basis)

Current (1) 30-89 Days Past Due 90+ Days Past Due

Current 30-89 Days Past Due 90+ Days Past Due Nonaccrual Status

(Dollars in thousands)

1 unchanged sentence

Commercial real estate 16,252 660 — 6,850

Commercial construction 2,369 — —

Small business 140 — — —

Total $ 23,801 $ 1,164 $ — $ 9,296

(1) Current amounts above are inclusive of $ 19.6 million of loans on nonaccrual status as it is the Company's policy for loans to remain current with respect to principal and interest for up to six months prior being restored to accrual status.

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

During the six months ended June 30, 2023, there were no loans modified to borrowers experiencing financial difficulty within the previous 12 months that subsequently defaulted, and during the six months ended June 30, 2022 there were no TDRs modified during the previous 12 months that subsequently defaulted.

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

December 31, 2022

During the three and nine months ended September 30, 2023, there was one commercial real estate loan that had a payment default and was modified within the previous 12 months as a combination term extension and other-than-insignificant payment delay, which had an amortized cost

basis of $ 6.7 million at September 30, 2022.

During the nine months ended September 30, 2022 there were no TDRs modified during the previous 12 months that subsequently defaulted.

At September 30, 2023, the Company did not have any additional commitments to lend to borrowers experiencing financial difficulty who were party to a loan modification.

As previously noted, the Company adopted the accounting and disclosure requirements for loan modifications made to borrowers experiencing financial difficulty and ceased to recognize TDRs effective January 1, 2023.

As such, t he following table and related disclosures show the Company’s total TDRs and other pertinent TDR information as of December 31, 2022 and for the prior applicable periods:

(Dollars in thousands)

2 unchanged sentences

Total TDRs $ 22,798

There were no new TDRs during the three or six months ended June 30, 2022.

At June 30, 2023, the Company did not have any additional commitments to lend to borrowers experiencing financial difficulty who were party to a loan modification.

During the three and nine months ended September 30, 2022, one new TDR occurred within the commercial and industrial category and was comprised of an extended maturity modification, with a pre-modification outstanding recorded investment of $ 68,000 and a post-modification outstanding recorded investment of $ 67,000 .

At December 31, 2022, the Company had additional commitments to lend to borrowers who had been a party to a TDR of $ 64,000 .

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Federal Home Loan Bank Borrowings

The Company typically utilizes FHLB advances for certain short-term and long-term borrowing needs, as deemed necessary.

During the first quarter of 2023, the Company entered into net advances with the Federal Home Loan Bank ("FHLB") of $ 879.0 million, due primarily to deposit balance reductions, share repurchase activity, and a proactive strategy to bolster on-balance sheet liquidity at March 31, 2023.

During the second quarter, the Company experienced a stabilizing deposit base, lowered the amount of on balance sheet liquidity maintained, and as a result reduced the total amount of outstanding FHLB borrowings at June 30, 2023 to $ 788.5 million.

The June 30, 2023 FHLB balances were comprised of the following:

During the nine months ended September 30, 2023, the Company began utilizing FHLB advances for certain short-term and long-term borrowing needs, as deemed necessary, which were comprised of the following as of September 30, 2023 :

Average Effective Rate,

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Total $ 887,548

At June 30, 2023 and December 31, 2022, the Company had sufficient collateral at the FHLB to support its obligations and was in compliance with the FHLB's collateral pledging program.

At September 30, 2023 and December 31, 2022, the Company had sufficient collateral at the FHLB to support its obligations and was in compliance with the FHLB's collateral pledging program.

The Company’s FHLB advances are collateralized by a blanket pledge agreement on the Bank’s FHLB stock, certain qualified investment securities, deposits at the FHLB, residential mortgages, and by certain commercial real estate loans held in the Bank’s portfolio.

The carrying value of loans pledged as collateral for these borrowings totaled $ 3.7 billion and $ 2.7 billion at June 30, 2023 and December 31, 2022, respectively, resulting in available borrowing capacity with the FHLB of $ 1.8 billion both June 30, 2023 and December 31, 2022.

The carrying value of loans pledged as collateral for these borrowings totaled $ 3.8 billion and $ 2.7 billion at September 30, 2023 and December 31, 2022, respectively, resulting in available borrowing capacity with the FHLB of $ 1.8 billion both September 30, 2023 and December 31, 2022

Long-Term Debt

The following table summarizes long-term debt, net of debt issuances costs, at the dates indicated:

June 30 December 31

September 30 December 31

(Dollars in thousands)

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Total long-term debt $ 112,814 $ 112,740

The interest expense on long-term debt was $ 3.3 million and $ 1.9 million for the six months ended June 30, 2023 and 2022, respectively.

The interest expense on long-term debt was $ 1.8 million and $ 5.0 million for the three and nine months ended September 30, 2023, respectively, and $ 1.2 million and $ 3.2 million for the three and nine months ended September 30, 2022, respectively.

Junior Subordinated Debentures :

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The proceeds from the sale of the securities and the issuance of common stock by these trusts were invested in these Junior Subordinated Debentures issued by the Company.

These trust preferred securities bear interest at a rate of three-month LIBOR ( 5.55 % at June 30, 2023) plus applicable spread, or equivalent alternate rate.

Information relating to these trust preferred securities at June 30, 2023 is as follows:

These trust preferred securities bear interest at a rate of three-month Secured Overnight Financing Rate ("SOFR") ( 5.41 % at September 30, 2023) plus applicable spread.

Information relating to these trust preferred securities at September 30, 2023 is as follows:

Trust Principal Amount Maturity Date Interest Rate Spread All-in Rate

5 unchanged sentences

Subordinated Debentures :

On March 14, 2019 the Company issued subordinated debentures with an aggregate principal amount of $ 50.0 million in a private placement transaction to institutional accredited investors, which remained outstanding at June 30, 2023 and December 31, 2022.

The subordinated debentures mature on March 15, 2029.

However, with regulatory approval, the Company may redeem the subordinated debentures without penalty at any scheduled payment date on or after March 15, 2024 with 30 days' notice.

The subordinated debentures carry a fixed rate of interest of 4.75 % through March 15, 2024, after which interest converts to a variable rate of the then current three-month LIBOR rate plus 219 basis points, or equivalent alternate rate.

At June 30, 2023, the Company held no long-term debt scheduled to mature within the next 5 years.

The subordinated debentures carry a fixed rate of interest of 4.75 % through March 15, 2024, after which interest converts to a variable rate of the then current three-month SOFR rate plus 219 basis points.

At September 30, 2023, the Company held no long-term debt scheduled to mature within the next 5 years.

NOTE 5 - STOCK BASED COMPENSATION

During the six months ended June 30, 2023, the Company had the following activity related to stock based compensation:

During the nine months ended September 30, 2023, the Company had the following activity related to stock based compensation:

Time Vested Restricted Stock Awards

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5/30/2023 890 2023 Omnibus Incentive Plan (1) $ 45.09 Ratably over 3 years from grant date

9/15/2023 5,270 2023 Omnibus Incentive Plan (1) $ 51.44 Ratably over 5 years from grant date

9/15/2023 3,020 2023 Omnibus Incentive Plan (1) $ 51.44 Ratably over 3 years from grant date

(1) The 2023 Omnibus Incentive Plan was approved by the Company's shareholders on May 18, 2023 and replaces the Company's Second Amended and Restated 2005 Employee Stock Plan.

20 unchanged sentences

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

June 30, 2023

September 30, 2023

Weighted Average Rate

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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 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 an increase to interest income and $ 30.0 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 June 30, 2023.

This reclassification is due to anticipated payments that will be made and/or received on the swaps based upon the forward curve at June 30, 2023.

The Company had no fair value hedges as of June 30, 2023 or December 31, 2022.

The Company expects approximately $ 6.4 million (pre-tax) to be reclassified as an increase to interest income and $ 28.1 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, 2023.

This reclassification is due to anticipated payments that will be made and/or received on the swaps based upon the forward curve at September 30, 2023.

The Company had no fair value hedges as of September 30, 2023 or December 31, 2022.

Customer Related Positions

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

June 30, 2023

September 30, 2023

(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 increased by $ 14,000 and $ 122,000 for the three months ended June 30, 2023 and 2022, respectively, and decreased by $ 3,000 and $ 426,000 for the six months ended June 30, 2023 and 2022, respectively.

The fair value of loans held for sale decreased by $ 28,000 and $ 194,000 for the three months ended September 30, 2023 and 2022, respectively, and decreased by $ 31,000 and $ 620,000 for the nine months ended September 30, 2023 and 2022, 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 gains of $ 170,000 and net realized losses of $ 278,000 for the three months ended June 30, 2023 and 2022, respectively and net realized gains of $ 344,000 and $ 321,000 for the six months ended June 30, 2023 and 2022, respectively.

The aggregate amount of net realized gains on sales of such loans included within mortgage banking income was $ 333,000 and $ 229,000 for the three months ended September 30, 2023 and 2022, respectively, and $ 677,000 and $ 550,000 for the nine months ended September 30, 2023 and 2022, respectively.

Balance Sheet Offsetting

9 unchanged sentences

2023 December 31

2022 September 30

2023 December 31

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

(3) As of June 30, 2023, approximately $ 323,000 and $ 2.8 million of accrued interest receivable is included in the fair value of interest rate and loan level derivative assets, respectively.

(3) As of September 30, 2023, approximately $ 405,000 and $ 3.2 million of accrued interest receivable is included in the fair value of interest rate and loan level derivative assets, respectively.

Accrued interest receivable of approximately $ 2.2 million is included in the fair value of loan level derivative assets at December 31, 2022.

(4) Approximately $ 2.1 million and $ 2.8 million of accrued interest payable is included in the fair value of interest rate and loan level derivative liabilities, respectively, at June 30, 2023, in comparison to accrued interest payable of approximately $ 1.3 million and $ 2.2 million, respectively, at December 31, 2022.

(4) Approximately $ 2.0 million and $ 3.2 million of accrued interest payable is included in the fair value of interest rate and loan level derivative liabilities, respectively, at September 30, 2023, in comparison to accrued interest payable of approximately $ 1.3 million and $ 2.2 million, respectively, at December 31, 2022.

(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.

1 unchanged sentence

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

2023 2022 2023 2022

1 unchanged sentence

Derivatives designated as hedges

(Loss) gain in OCI on derivatives (effective portion), net of tax $ ( 5,448 ) $ ( 7,649 ) $ 4,715 $ ( 25,599 )

Gain (loss) in OCI on derivatives (effective portion), net of tax $ 202 $ ( 27,144 ) $ 4,917 $ ( 52,743 )

(Loss) gain reclassified from OCI into interest income or interest expense (effective portion) $ ( 7,547 ) $ 407 $ ( 20,806 ) $ 8,427

8 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.

All derivative instruments with credit-risk contingent features were in a net asset position at June 30, 2023 and December 31, 2022.

All derivative instruments with credit-risk contingent features were in a net asset position at September 30, 2023 and December 31, 2022.

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

4 unchanged sentences

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

The Company's exposure relating to institutional counterparties was $ 126.6 million and $ 121.2 million at June 30, 2023 and December 31, 2022, respectively.

The Company’s exposure relating to customer counterparties was approximately $ 2.1 million and $ 2.2 million at June 30, 2023 and December 31, 2022, respectively.

The Company's exposure relating to institutional counterparties was $ 157.1 million and $ 121.2 million at September 30, 2023 and December 31, 2022, respectively.

The Company’s exposure relating to customer counterparties was approximately $ 4,000 and $ 2.2 million at September 30, 2023 and December 31, 2022, respectively.

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

17 unchanged sentences

Valuation Techniques

There were no changes in the valuation techniques used during the six months ended June 30, 2023.

There were no changes in the valuation techniques used during the nine months ended September 30, 2023.

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, 2023 and December 31, 2022, 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, 2023 and December 31, 2022, 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

June 30, 2023

September 30, 2023

(Dollars in thousands)

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(Level 2) Significant

June 30, 2023

September 30, 2023

(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

2023 September 30

2022 September 30

2023 September 30

(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:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(Dollars in thousands)

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Three Months Ended

June 30, 2023 Six Months Ended

June 30, 2023

September 30, 2023 Nine Months Ended

September 30, 2023

Amount Tax (Expense)

15 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)

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Ending balance:

June 30, 2023 $ ( 123,040 ) $ ( 31,915 ) $ 2,020 $ ( 152,935 )

September 30, 2023 $ ( 130,961 ) $ ( 31,713 ) $ 1,928 $ ( 160,746 )

Beginning balance:

2 unchanged sentences

Ending balance:

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

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

NOTE 10 - COMMITMENTS AND CONTINGENCIES

17 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(Dollars in thousands)

9 unchanged sentences

Other Contingencies

At June 30, 2023, the Bank was involved in pending lawsuits that arose in the ordinary course of business.

At September 30, 2023, 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

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