9 unchanged sentences
These metrics are used by management to make key decisions regarding the Company's balance sheet, liquidity, interest rate sensitivity, and capital resources and assist with identifying opportunities for improving the Company's financial position or operating results.
−Removed: The Company maintains an asset-sensitive profile and, accordingly, has benefited from recent interest rate increases.
−Removed: While asset quality remains strong, management is closely monitoring the economic environment, including elevated inflationary pressures, supply chain issues, and labor shortages being experienced in the current operating environment across various industries.
The Company focuses on organic growth, but will also consider growth through acquisition.
Any potential acquisition opportunities are evaluated for the potential to provide a satisfactory financial return as well as other criteria (ease of integration, synergies, geographical location).
−Removed: Recent acquisitions include Meridian Bancorp, Inc.
−Removed: ("Meridian") and its subsidiary, East Boston Savings Bank ("EBSB"), which closed in the fourth quarter of 2021.
−Removed: Net income for the year ended December 31, 2022 was $263.8 million, or $5.69 on a diluted earnings per share basis, as compared to $121.0 million, or $3.47 on a diluted earnings per share basis for the year ended December 31, 2021, representing increases of 118.0% and 64.0%, respectively.
−Removed: Full year 2022 results reflect pre-tax merger and acquisition-related costs of $7.1 million associated with the Meridian acquisition, as compared to $40.8 million of such costs during the same prior year period.
−Removed: Excluding these merger and acquisition-related costs, operating net income was $268.9 million, or $5.80 on a diluted per share
−Removed: basis, for the year ended December 31, 2022, as compared to $187.6 million, or $5.38 on a diluted per share basis for the year ended December 31, 2021, representing increases of 43.3% and 7.8%, respectively.
+Added: Net income for the year ended December 31, 2023 was $239.5 million, or $5.42 on a diluted earnings per share basis, as compared to $263.8 million, or $5.69 on a diluted earnings per share basis for the year ended December 31, 2022, representing decreases of 9.2% and 4.7%, respectively.
+Added: Full year 2023 operating net income was also $239.5 million, or $5.42, on a diluted earnings per share basis, as no adjustments were recognized, while full year 2022 operating results reflect pre-tax merger and acquisition-related costs of $7.1 million associated with the fourth quarter 2021 acquisition of Meridian Bancorp, Inc.
+Added: ("Meridian") and its subsidiary, East Boston Savings Bank.
+Added: Excluding these merger and acquisition-related costs, operating net income was $268.9 million, or $5.80 on a diluted per share basis for the year ended December 31, 2022, representing decreases of 10.9% and 6.6%, respectively.
See "Non-GAAP Measures" below for a reconciliation of non-GAAP measures.
Full year 2023 results reflected the following key drivers:
−Removed: • Improvement in the net interest margin of 44 basis points;
−Removed: • 4.1% net loan growth, excluding Paycheck Protection Program ("PPP") runoff;
−Removed: • Deployment of excess cash balances into investment portfolio and paydowns of outstanding borrowings;
−Removed: • Low deposit betas, with total cost of deposits contained at 15 basis points for the year;
−Removed: • Relatively modest provision for credit loss, reflecting increase in nonperforming assets and a specific reserve allocation;
+Added: • Net interest margin increased by 8 basis points as compared to the full year 2022;
+Added: • Disciplined loan growth;
+Added: • Stable asset quality;
+Added: provision for credit loss primarily impacted by loss exposure in the commercial portfolios;
• Strong fee income;
+Added: • Prudent expense management;
54% efficiency ratio for the year;
−Removed: • Completion of the Company's share repurchase program announced in January 2022, resulting in the repurchase of 1.8 million shares for approximately $140 million.
+Added: • Strong tangible book value growth of 7.3%;
+Added: • Robust capital levels;
+Added: Company active under two authorized stock buyback programs, repurchasing 2.9 million shares for $189 million during the year.
Interest-Earning Assets
The results depicted in the following table reflect the trend of the Company's interest-earning assets over the past five years and reflect a longer term overall strategy that typically emphasizes loan growth commensurate with overall economic growth.
−Removed: Compared to the prior year, the composition of interest-earnings assets at December 31, 2022 primarily reflects reduced cash balances driven largely by decreased deposit balances and additional securities purchases.
−Removed: The following table summarizes the Company's interest-earning assets as of December 31st for each year presented:
+Added: Compared to the prior year, the composition of interest-earnings assets at December 31, 2023 primarily reflects growth in the residential real estate loan portfolio, decreased securities balances reflecting paydowns, calls and maturities, and also reduced cash balances commensurate with deposit balance reductions.
+Added: The following table summarizes the Company's average interest-earning assets for each year presented:
Management strives to be disciplined about loan pricing and considers interest rate sensitivity when generating loan assets.
2 unchanged sentences
The Company's overall sources of funding reflect strong business and retail deposit growth with a management emphasis on core deposit growth to fund loans.
−Removed: The following chart shows the sources of funding and the percentage of core deposits to total deposits as of December 31st for the trailing five years:
+Added: Total borrowings increased by $1.1 billion at December 31, 2023 as compared to December 31, 2022, primarily in response to deposit balance reductions and to fund the Company's stock buyback activity.
+Added: For further details surrounding the Company’s liquidity risks and related strategy, see “Risk Management – Liquidity Risk” section below within Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations within this Report.
+Added: The following chart shows the sources of funding for the trailing five years:
+Added: The Company's ratio of core deposits to total deposits decreased during 2023, primarily attributable to core deposit outflows in conjunction with existing deposit balances shifting into higher cost time deposits.
+Added: The following chart shows the percentage of core deposits to total deposits for the trailing five years:
+Added: (1) The percentage of core deposits to total deposits presented above is inclusive of reciprocal money market deposits collected through the Company's participation in the IntraFi Network.
The following table shows the net interest margin and cost of deposits trends for the trailing five year period:
8 unchanged sentences
The Company's approach with respect to revenue and expense is designed to promote long-term earnings growth, which in turn contributes to capital growth.
−Removed: Strong earnings retention has contributed to capital growth, both on an absolute level and per share basis, which has been offset in the last year by share repurchases and other comprehensive losses.
+Added: Capital balances during 2023 were impacted primarily by earnings retention, dividends, changes in other comprehensive income, and opportunistic share repurchases.
The following chart shows the Company's book value and tangible book value per share over the past five years:
1 unchanged sentence
Cash dividends declared by the Company increased from an aggregate of $2.08 per share in 2022 to $2.20 per share in 2023, representing an increase of 5.8%.
−Removed: In 2022, the Company repurchased a total of 1.8 million shares of its common stock at an average price of $78.32 under the January 2022 program which was completed in the third quarter of 2022.
−Removed: In consideration of the Company's strong current capital position, on October 20, 2022 the Company announced a new share repurchase program, which authorizes repurchases by the Company of up to $120 million in common stock.
−Removed: The new plan will be in effect through October 19, 2023 and no repurchases had been executed by the Company under the plan as of December 31, 2022.
+Added: During the first quarter of 2023, the Company repurchased 1.6 million shares of its common stock for $120.0 million at an average price of $74.18, marking the full completion of its stock repurchase program announced in October 2022.
+Added: Additionally, in consideration of the Company's strong capital position, the Company announced another stock repurchase plan in October 2023 which authorized repurchases by the Company of up to $100 million in common stock.
+Added: Under this new plan, the Company repurchased an additional 1.3 million shares of common stock for $69.0 million at an average price per share of $53.73 during the fourth quarter of 2023.
Non-GAAP Measures
When management assesses the Company’s financial performance for purposes of making day-to-day and strategic decisions, it does so based upon the performance of its core banking business, which is primarily derived from the combination of net interest income and noninterest or fee income, reduced by operating expenses, the provision for credit losses, and the impact of income taxes and other noncore items shown in the table that follows.
−Removed: There are items that impact the Company's results that management believes are unrelated to its core banking business such as gains or losses on the sales of securities, merger and acquisition expenses, provision for credit losses on acquired portfolios, loss on extinguishment of debt, impairment, and other items, such as one-time adjustments as a result of changes in laws and regulations.
+Added: There are items that impact the Company's results that management believes are unrelated to its core banking business such as gains or losses on the sales of securities, merger and acquisition expenses, provision for credit losses on acquired portfolios, loss on extinguishment of debt, impairment and other items.
Management, therefore, excludes items management considers to be noncore when computing the Company’s non-GAAP operating earnings and operating EPS, noninterest income on an operating basis and efficiency ratio on an operating basis.
14 unchanged sentences
Non-GAAP adjustments
−Removed: Provision for non-PCD acquired loans — 50,705 — 1.45
Noninterest expense components
19 unchanged sentences
Total operating revenue (non-GAAP) $ 731,130 $ 727,916 $ 507,409 $ 479,168 $ 507,478 (a+c)
−Removed: Noninterest income as a % of revenue 15.75 % 20.86 % 23.26 % 22.68 % 22.89 % (b/(a+b))
−Removed: Noninterest income as a % of revenue on an operating basis (non-GAAP) 15.75 % 20.86 % 23.26 % 22.53 % 22.89 % (c/(a+c))
−Removed: Efficiency ratio (GAAP) 51.33 % 65.53 % 57.15 % 55.92 % 58.44 % (d/(a+b))
−Removed: Efficiency ratio on an operating basis (non-GAAP) 50.36 % 57.49 % 57.00 % 50.82 % 55.55 % (e/(a+c))
+Added: Noninterest income as a % of total revenue (GAAP) (calculated by dividing total noninterest income by total revenue) 17.04 % 15.75 % 20.86 % 23.26 % 22.68 % (b/(a+b))
+Added: Noninterest income as a % of total revenue on an operating basis (Non-GAAP) (calculated by dividing total noninterest income on an operating basis by total revenue) 17.04 % 15.75 % 20.86 % 23.26 % 22.53 % (c/(a+c))
+Added: Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue) 53.72 % 51.33 % 65.53 % 57.15 % 55.92 % (d/(a+b))
+Added: Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue) 53.72 % 50.36 % 57.49 % 57.00 % 50.82 % (e/(a+c))
The following table summarizes the calculation of the Company's tangible common equity ratio and tangible book value per share for the periods indicated:
74 unchanged sentences
Interest and principal payments generated from securities provide a source of liquidity to fund loans and meet short-term cash needs.
−Removed: Total securities increased by $464.4 million, or 17.4%, at December 31, 2022 as compared to December 31, 2021, reflecting $927.4 million of purchases, partially offset by unrealized losses of $155.0 million related to the available for sale portfolio, as well as paydowns, calls and maturities.
−Removed: The ratio of securities to total assets increased to 16.2% at December 31, 2022 as compared to 13.1% at December 31, 2021, reflecting the Company's strategy to deploy excess cash balances into investment securities.
−Removed: The Company estimates expected credit losses for its available for sale and held to maturity securities in accordance with the CECL methodology.
−Removed: Further details regarding the Company's measurement of expected credit losses on investment securities can be found in Note 1, "Summary of Significant Accounting Policies" within the Notes to Consolidated Financial Statements included in Item 8 of this Report.
+Added: Total securities decreased by $198.4 million, or 6.3%, at December 31, 2023 as compared to December 31, 2022, primarily reflecting the impact of paydowns, calls, and maturities, partially offset by unrealized gains of $42.0 million related to the available for sale portfolio.
+Added: The ratio of securities to total assets decreased to 15.1% at December 31, 2023 as compared to 16.2% at December 31, 2022.
+Added: The Company estimates expected credit losses for its available for sale and held to maturity securities in accordance with the CECL methodology, as described in Note 1, "Summary of Significant Accounting Policies" within the Notes to Consolidated Financial Statements included in Item 8 of this Report.
The following table sets forth the fair value of available for sale securities and the amortized cost of held to maturity securities along with the percentage distribution:
8 unchanged sentences
State, county and municipal securities 190 — % 191 — %
−Removed: Single issuer trust preferred securities issued by banks — — % 491 — %
Pooled trust preferred securities issued by banks and insurers 1,018 0.1 % 1,034 0.1 %
13 unchanged sentences
At December 31, 2023 and 2022, the Company had no securities categorized as level 3 within the fair value hierarchy.
−Removed: The following table sets forth the weighted average yield for each range of contractual maturities of the Bank’s held to maturity securities portfolio at December 31, 2022.
+Added: The following table sets forth the weighted average yield for each range of contractual maturities of the Bank’s available for sale and held to maturity securities portfolios at December 31, 2023.
Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
3 unchanged sentences
Weighted Average Yield
−Removed: (Dollars in thousands)
+Added: Securities available for sale:
government agency securities — 1.2 % 1.6 % — 1.3 %
2 unchanged sentences
Agency collateralized mortgage obligations — — 2.1 % 3.6 % 3.5 %
+Added: State, county, and municipal securities — 3.0 % — — 3.0 %
Single issuer trust preferred securities issued by banks — — — 3.7 % 3.7 %
+Added: Pooled trust preferred securities issued by banks and insurers — — — 6.1 % 6.1 %
Small business administration pooled securities — — — 2.2 % 2.2 %
+Added: Total available for sale securities 0.4 % 1.1 % 1.8 % 2.3 % 1.2 %
+Added: Securities held to maturity:
+Added: government agency securities:
+Added: 0.5 % — — — 0.5 %
+Added: treasury securities — 1.3 % 1.5 % — 1.3 %
+Added: Agency mortgage-backed securities — 2.9 % 2.4 % 3.2 % 2.8 %
+Added: Agency collateralized mortgage obligations — 2.5 % 1.1 % 1.6 % 1.7 %
+Added: Single issuer trust preferred securities issued by banks — 8.3 % — — 8.3 %
+Added: Small business administration pooled securities — — 2.2 % 4.1 % 4.0 %
+Added: Total held to maturity securities 0.5 % 2.6 % 2.3 % 2.5 % 2.5 %
Total 0.4 % 1.6 % 2.2 % 2.4 % 1.8 %
As of December 31, 2023, the weighted average life of the securities portfolio was 4.1 years and the modified duration was 3.6 years.
−Removed: At December 31, 2022, the aggregate book value of securities issued by Fannie Mae and Freddie Mac exceeded 10% of stockholders' equity, accordingly the following table disclosed the aggregate book value and market value of these securities at December 31, 2022:
+Added: At December 31, 2023, the aggregate book value of securities issued by Fannie Mae, Freddie Mac and the U.S.
+Added: Department of the Treasury exceeded 10% of stockholders' equity.
+Added: Accordingly, the following table discloses the aggregate book value and market value of these securities at December 31, 2023:
Table 4 - Aggregate Book Value and Market Value of Select Securities
4 unchanged sentences
Freddie Mac 439,502 390,877
+Added: Department of the Treasury 925,309 860,637
Total $ 2,580,047 $ 2,340,708
3 unchanged sentences
For the remainder of the sold loans for which the Company retains the servicing, a mortgage servicing asset is recognized.
−Removed: Additionally, as part of its asset/liability management strategy, the Bank may opt to retain certain adjustable rate and fixed rate residential real estate loan originations for its portfolio.
+Added: Additionally, as part of its asset/liability management strategy, the Bank may opt to retain certain residential real estate loan originations for its portfolio.
When a loan is sold, the Company enters into agreements that contain representations and warranties about the characteristics of the loans sold and their origination.
1 unchanged sentence
The Company incurred no material losses related to mortgage repurchases during the years ended December 31, 2023, 2022, and 2021.
−Removed: For the year ended December 31, 2022, a larger portion of new residential real estate closings were retained in the portfolio rather than sold into the secondary market as compared to prior year periods.
+Added: The Company experienced a lower volume of residential real estate loan sales for the years ended December 31, 2023 and 2022, as compared to 2021, driven primarily by reduced customer demand in the rising interest rate environment.
The following table shows the total residential loans that were closed and whether the amounts were held in the portfolio or sold (or held for sale) in the secondary market for the periods indicated:
6 unchanged sentences
Total closed loans $ 592,656 $ 773,695 $ 1,167,875
+Added: Additionally, during the years ended December 31, 2023 and 2022, a larger portion of new residential real estate closings were retained in the portfolio rather than sold into the secondary market as compared to prior year periods driven mainly by the current interest-rate environment.
+Added: When a loan is sold, the Company may decide to also sell the servicing of sold loans for a servicing release premium, simultaneously with the sale of the loan, or the Company may opt to sell the loan and retain the servicing.
The table below reflects additional information related to loans which were sold during the periods indicated:
6 unchanged sentences
Total loans sold $ 76,197 $ 104,084 $ 783,350
−Removed: (1) All loans sold with servicing rights retained during the years ended December 31, 2022 and 2021 were sold without recourse.
−Removed: When a loan is sold, the Company may decide to also sell the servicing of sold loans for a servicing release premium, simultaneously with the sale of the loan, or the Company may opt to sell the loan and retain the servicing.
+Added: (1) All loans sold with servicing rights retained during the above periods were sold without recourse.
In the event of a sale with servicing rights retained, a mortgage servicing asset is established, which represents the then current estimated fair value based on market prices for comparable mortgage servicing contracts, when available, or alternatively is based on a valuation model that calculates the present value of estimated future net servicing income.
10 unchanged sentences
Additions 5 8
−Removed: Acquired portfolio — 493
Amortization (485) (649)
3 unchanged sentences
Loan Portfolio The Company’s loan portfolio at December 31, 2023 increased by $349.4 million, or 2.5%, when compared to December 31, 2022.
−Removed: Excluding $207.1 million of net paydowns associated with PPP loans during the twelve months ended December 31, 2022, the loan portfolio increased by $548.5 million, or 4.1%, compared to December 31, 2021.
−Removed: Organic loan growth was driven primarily by strong consumer loan activity, as the majority of residential real estate loan closings were retained on the balance sheet, while increased demand and line utilization fueled growth in home equity balances.
−Removed: Excluding the net reduction in PPP loans, the commercial portfolio increased $61.7 million, or 0.58% at December 31, 2022 in comparison to December 31, 2021, primarily driven by increased line utilization and higher closing volumes within the commercial and industrial category, which grew by $278.9 million, or 20.7%, which was partially offset by elevated levels of attrition within the commercial real estate portfolio.
+Added: Loan growth was driven primarily by strong consumer real estate activity in 2023, with the majority of residential real estate originations retained on the balance sheet, leading to an increase of $389.2 million, or 19.1%, within the residential portfolio.
+Added: Total commercial loans decreased by $45.8 million, or 0.4% compared to December 31, 2022, reflecting disciplined origination activity and decreased line utilizations as compared to prior year.
The following table sets forth information concerning the composition of the Bank’s loan portfolio by loan type at the dates indicated:
12 unchanged sentences
Net loans $ 14,135,848 $ 13,776,256
−Removed: The following table sets forth the scheduled contractual amortization of the Bank’s loan portfolio at December 31, 2022.
−Removed: Loans having no schedule of repayments or no stated maturity are reported as being due in greater than five years.
−Removed: The following table also sets forth the rate structure of loans scheduled to mature after one year:
+Added: The following table summarizes loans by contractual maturity as of December 31, 2023, along with the indication of whether interest rates are fixed or adjustable:
Table 9 - Scheduled Contractual Loan Amortization
December 31, 2023
−Removed: Commercial and Industrial Commercial
−Removed: Real Estate Commercial
−Removed: Construction (1) Small
−Removed: Business Residential
−Removed: Home Equity Other Consumer Total
+Added: 1 Year or Less 1 - 5 Years 5 - 15 years (2) After 15 Years Total
(Dollars in thousands)
−Removed: Amounts due in:
−Removed: One year or less $ 526,567 $ 1,159,234 $ 477,991 $ 38,963 $ 55,698 $ 94,447 $ 19,474 $ 2,372,374
−Removed: After one year through five years 663,369 2,156,933 219,769 82,185 282,299 325,985 15,578 $ 3,746,118
−Removed: After five years through fifteen years 421,478 3,256,757 329,968 97,750 856,133 668,319 500 $ 5,630,905
−Removed: After fifteen years 23,689 1,187,305 126,685 204 841,395 — — $ 2,179,278
−Removed: Total $ 1,635,103 $ 7,760,229 $ 1,154,413 $ 219,102 $ 2,035,525 $ 1,088,751 $ 35,552 $ 13,928,675
−Removed: Interest rate terms on amounts due after one year:
−Removed: Fixed rate $ 350,486 $ 2,563,703 $ 385,124 $ 132,453 $ 1,648,089 $ 292,014 $ 16,078 $ 5,387,947
+Added: Commercial and industrial $ 90,311 $ 177,213 $ 184,051 $ 25,307 $ 476,882
+Added: Commercial real estate 400,055 1,317,637 1,204,155 261,597 3,183,444
+Added: Commercial construction (1) 77,995 30,809 95,739 36,220 240,763
+Added: Small business 24,858 78,616 75,858 1,178 180,510
+Added: Residential real estate 49,968 252,754 788,936 767,654 1,859,312
+Added: Home equity 25,076 103,245 192,620 3,164 324,105
+Added: Other consumer 1,966 2,297 283 — 4,546
+Added: Total fixed rate loans 670,229 1,962,571 2,541,642 1,095,120 6,269,562
Adjustable rate
+Added: Commercial and industrial 385,505 430,283 241,294 46,022 1,103,104
+Added: Commercial real estate 933,306 1,641,027 1,760,701 523,030 4,858,064
+Added: Commercial construction (1) 276,360 111,490 148,689 72,284 608,823
+Added: Small business 19,940 22,644 28,687 175 71,446
+Added: Residential real estate 12,887 78,694 225,985 247,876 565,442
+Added: Home equity 68,076 188,348 508,335 8,762 773,521
+Added: Other consumer 16,836 11,272 — — 28,108
+Added: Total adjustable rate loans 1,712,910 2,483,758 2,913,691 898,149 8,008,508
+Added: Total loans $ 2,383,139 $ 4,446,329 $ 5,455,333 $ 1,993,269 $ 14,278,070
(1) Includes certain construction loans that will convert to commercial mortgages and will be reclassified to commercial real estate upon the completion of the construction phase.
+Added: (2) Loans having no schedule of repayments or no stated maturity are reported as being due in the 5-15 years category above.
Generally, the actual maturity of loans is substantially shorter than their contractual maturity due to prepayments and, in the case of real estate loans, due-on-sale clauses, which generally give the Bank the right to declare a loan immediately due and payable in the event that, among other things, the borrower sells the property subject to the mortgage and the loan is not repaid.
4 unchanged sentences
Based on this assessment, loans demonstrating certain payment issues or other weaknesses may be categorized as delinquent, nonperforming and/or put on nonaccrual status.
−Removed: In the course of resolving such loans, the Company may choose to restructure the contractual terms of certain loans to match the borrower’s ability to repay the loan based on their current financial condition.
−Removed: If a restructured loan meets certain criteria, it may be categorized as a troubled debt restructuring ("TDR").
−Removed: In addition, in response to the COVID-19 pandemic, but prior to January 1, 2022, the Company offered need-based payment relief options for commercial and small business loans, residential mortgages, and home equity loans and lines of credit.
−Removed: In accordance with the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), these modifications are not accounted for as TDRs or reflected as delinquent or non-accrual loans if the borrower was in compliance with the loan terms as of December 31, 2019.
+Added: Further details surrounding relevant asset quality categories are summarized below:
Delinquency The Company’s philosophy toward managing its loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations.
The Company seeks to make arrangements to resolve any delinquent or default situation over the shortest possible time frame.
−Removed: Generally, the Company requires that a delinquency notice be mailed to a borrower upon expiration of a grace period (typically no longer than 15 days beyond the due date).
+Added: Generally, the Company requires that a delinquency notice be mailed to a borrower upon expiration of a grace period (typically no longer than 15 days beyond the due
Reminder notices may be sent and telephone calls may be made prior to the expiration of the grace period.
If the delinquent status is not resolved within a reasonable time frame following the mailing of a delinquency notice, the Bank’s personnel charged with managing its loan portfolios contacts the borrower to ascertain the reasons for delinquency and the prospects for payment.
−Removed: Any subsequent actions taken to resolve the delinquency will depend upon the nature of the loan and
−Removed: the length of time that the loan has been delinquent.
+Added: Any subsequent actions taken to resolve the delinquency will depend upon the nature of the loan and the length of time that the loan has been delinquent.
The borrower’s needs are considered as much as reasonably possible without jeopardizing the Bank’s position.
3 unchanged sentences
Income accruals are suspended on all nonaccrual loans and all previously accrued and uncollected interest is reversed against current income.
−Removed: A loan remains on nonaccrual status until it becomes current with respect to principal and interest (and in certain instances remains current for up to six months), the loan is liquidated, or when the loan is determined to be uncollectible and is charged-off against the allowance for credit losses.
−Removed: Troubled Debt Restructurings In the course of resolving problem loans, the Company may choose to restructure the contractual terms of certain loans.
+Added: A loan remains on nonaccrual status until it becomes current with respect to principal and interest and remains current for a minimum period of six months, the loan is liquidated, or when the loan is determined to be uncollectible and is charged-off against the allowance for credit losses.
+Added: Loan Modifications In the course of resolving problem loans, the Company may choose to modify the contractual terms of certain loans.
The Company attempts to work out an alternative payment schedule with the borrower in order to avoid or cure a default.
−Removed: Loans that are modified are reviewed by the Company to identify if a TDR has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider.
−Removed: Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include adjustments to interest rates, extensions of maturity, consumer loans where the borrower's obligations have been effectively discharged through Chapter 7 Bankruptcy and the borrower has not reaffirmed the debt to the Bank, and other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral.
+Added: Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and may include adjustments to term extensions, interest rates, other than insignificant payment delays and/or a combination thereof.
+Added: These actions are intended to minimize economic loss and avoid foreclosure or repossession of collateral.
If such efforts by the Bank do not result in satisfactory performance, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated.
At any time prior to a sale of the property at foreclosure, the Bank may terminate foreclosure proceedings if the borrower is able to work out a satisfactory payment plan.
−Removed: It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being modified remain on nonaccrual status for six months, subsequent to being modified, before management considers their return to accrual status.
−Removed: If the restructured loan is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status.
−Removed: Loans that are considered TDRs are classified as performing, unless they are on nonaccrual status or are delinquent for 90 days or more.
−Removed: Loans classified as TDRs remain classified as such for the life of the loan, except in limited circumstances, when it may be determined that the borrower is performing under modified terms and the restructuring agreement specified an interest rate greater than or equal to an acceptable market rate for a comparable new loan at the time of the restructuring.
+Added: All loan modifications are reviewed by the Company to identify if a borrower is deemed to be experiencing financial difficulty at time of the modification.
Purchased Credit Deteriorated Loans Purchased Credit Deteriorated ("PCD") loans are acquired loans which have shown a more-than-insignificant deterioration in credit quality since origination.
2 unchanged sentences
Nonperforming loans consist of nonaccrual loans and loans that are 90 days or more past due but still accruing interest.
+Added: OREO consists of real estate properties, which have primarily served as collateral to secure loans, that are controlled or owned by the Bank.
+Added: These properties are recorded at fair value less estimated costs to sell at the date control is established, resulting in a new cost basis.
+Added: The amount by which the recorded investment in the loan exceeds the fair value (net of estimated costs to sell) of the foreclosed asset is charged to the allowance for credit losses.
+Added: Subsequent declines in the fair value of the foreclosed asset below the new cost basis are recorded through the use of a valuation allowance.
+Added: Subsequent increases in the fair value are recorded as reductions in the valuation allowance, but not below zero.
+Added: All costs incurred thereafter in maintaining the property are generally charged to noninterest expense.
+Added: In the event the real estate is utilized as a rental property, net rental income and expenses are recorded as incurred within noninterest expense.
The following table sets forth information regarding nonperforming assets held by the Bank at the dates indicated:
9 unchanged sentences
Total nonperforming loans (1) 54,383 54,881
+Added: Other real estate owned 110 —
+Added: Total nonperforming assets (1) $ 54,493 $ 54,881
Nonperforming loans as a percent of gross loans 0.38 % 0.39 %
Nonperforming assets as a percent of total assets 0.28 % 0.28 %
−Removed: (1) Included in these amounts were nonaccrual TDRs of $11.5 million and $2.0 million at December 31, 2022 and 2021, respectively.
−Removed: (2) There were no nonperforming loans that were not on nonaccrual status and no other real estate owned as of December 31, 2022 and 2021.
+Added: (1) Nonaccrual balances at December 31, 2022 included $11.5 million of nonaccruing TDRs.
The following table summarizes the changes in nonperforming assets for the periods indicated:
2 unchanged sentences
Nonperforming assets beginning balance $ 54,881 $ 27,820
−Removed: Acquired nonperforming loans — 4,463
New to nonperforming 58,712 72,960
Loans charged-off (34,782) (2,652)
−Removed: Loans paid-off /sold (35,622) (39,039)
+Added: Loans paid-off (19,719) (35,622)
+Added: Loans transferred to other real estate owned/other assets (110) —
Loans restored to accrual status (4,994) (7,652)
+Added: New to other real estate owned 110 —
Nonperforming assets ending balance $ 54,493 $ 54,881
−Removed: The following table sets forth information regarding TDR loans at the dates indicated:
−Removed: Table 12 - Troubled Debt Restructurings
−Removed: (Dollars in thousands)
−Removed: Performing troubled debt restructurings $ 11,278 $ 14,635
−Removed: Nonaccrual troubled debt restructurings 11,520 1,993
−Removed: Total $ 22,798 $ 16,628
−Removed: Performing troubled debt restructurings as a % of total loans 0.08 % 0.11 %
−Removed: Nonaccrual troubled debt restructurings as a % of total loans 0.08 % 0.01 %
−Removed: Total troubled debt restructurings as a % of total loans 0.16 % 0.12 %
−Removed: The following table summarizes changes in TDRs for the periods indicated:
−Removed: Table 13 - Activity in Troubled Debt Restructurings
−Removed: (Dollars in thousands)
−Removed: TDRs beginning balance $ 16,628 $ 39,192
−Removed: New to TDR status 10,153 3,918
−Removed: Paydowns/sold loans (3,983) (26,466)
−Removed: Charge-offs — (16)
−Removed: TDRs ending balance $ 22,798 $ 16,628
−Removed: Income accruals are suspended on all nonaccrual loans and all previously accrued and uncollected interest is reversed against current income.
−Removed: The table below shows interest income that was recognized or collected on all nonaccrual loans and TDRs as of the dates indicated:
−Removed: Table 14 - Interest Income - Nonaccrual Loans and Troubled Debt Restructurings
−Removed: Years Ended December 31
−Removed: 2022 2021 2020
−Removed: (Dollars in thousands)
−Removed: The amount of incremental gross interest income that would have been recorded if nonaccrual loans had been current in accordance with their original terms $ 7,046 $ 2,721 $ 2,604
−Removed: The amount of interest income on nonaccrual loans and performing TDRs that was included in net income $ 2,779 $ 895 $ 1,720
−Removed: Potential problem loans are any loans which are not included in nonaccrual or nonperforming loans, where known information about possible credit problems of the borrowers causes management to have concerns as to the ability of such borrowers to comply with present loan repayment terms.
−Removed: At December 31, 2022, there were 50 relationships, with an aggregate balance of $168.1 million, deemed to be potential problem loans.
−Removed: These potential problem loans continued to perform with respect to payments.
−Removed: Management actively monitors these loans and strives to minimize any possible adverse impact to the Company.
−Removed: As previously noted, the Company has offered need-based payment relief options to its customers in response to the COVID-19 pandemic, primarily in the form of payment deferrals, all of which were granted prior to January 1, 2022.
−Removed: Loans that were modified are not accounted for as TDRs or reflected as delinquent or nonaccrual loans if the borrower was in compliance with their loan terms as of December 31, 2019.
−Removed: The Company held $55.6 million of loans with active deferrals at December 31, 2022, of which $46.9 million are scheduled to mature during 2023.
Allowance for Credit Losses The allowance for credit losses is maintained at a level that management considers appropriate to provide for the Company's current estimate of expected lifetime credit losses on loans measured at amortized cost.
3 unchanged sentences
Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period of one year, beyond which is a reversion to the Company's historical long-run average for a period of six months.
−Removed: The Company's qualitative assessment is structured based upon nine environmental factors impacting the expected risk of loss within the loan portfolio.
+Added: The Company's qualitative assessment is structured based upon nine environmental factors impacting the expected risk of loss within the loan portfolio, with an additional factor designed to capture model imprecision.
Loans that do not share similar risk characteristics with any pools of assets are subject to individual assessment and are removed from the collectively assessed pools to avoid double counting.
−Removed: For the loans that will be individually assessed, the Company uses either a discounted cash flow (“DCF”) approach or a fair value of collateral approach.
+Added: For the loans that will be individually assessed, the Company uses either a discounted cash flow (“DCF”) approach
+Added: or a fair value of collateral approach.
The latter approach is used for loans deemed to be collateral dependent or when foreclosure is probable.
−Removed: The allowance for credit losses of $152.4 million at December 31, 2022 represents an increase of $5.5 million, or 3.7% compared to December 31, 2021.
−Removed: An additional reserve allocation associated with a single large commercial and industrial credit that migrated to nonperforming status during 2022, as well as additional provisioning for net loan growth contributed to an overall higher quantitative allowance at December 31, 2022.
−Removed: This increase was offset partially by a stabilized credit environment and continued strong asset quality metrics experienced during the year.
−Removed: Management's forecast anticipates that the federal funds rates will rise in the near term, that supply chain issues will persist, inflation will remain elevated, and the military conflict between Russia and Ukraine will persist for the foreseeable future, potentially impacting the production of chips, semiconductors and the supply chain more generally.
−Removed: The forecast used by management also anticipates that the U.S.
−Removed: economy will fall into a mild recession during the first quarter of 2023 and that the recession will persist for the short term.
+Added: Management's allowance for credit loss estimate incorporates an economic forecast over a reasonable and supportable period of 12 months.
+Added: As of December 31, 2023, the forecast selected by management assumes that the Federal Reserve will begin easing rates gradually in mid-2024, inflation will return to 2% target by the end of 2024, job growth will slow in 2024 with unemployment peaking at 4.1%, home prices will decline slightly in 2024, and that prices for office real estate will generally decrease as uncertainty over occupancy and operating cash flows persists.
Additionally, the allowance for credit losses is qualitatively adjusted on a quarterly basis in order to ensure coverage for relationships that are deemed to be more at risk within certain industries, specific collateral types, or other specific characteristics that may be highly impacted by the current economic environment.
1 unchanged sentence
Table 12 - Summary Net Charge-Offs to Average Loans Outstanding
−Removed: Net Charge-Offs (Recoveries) Average Amount Outstanding Ratio of Annualized Net Charge-Offs/(Recoveries) to Average Loans
+Added: Net Charge-Offs (Recoveries) Average Amount Outstanding Ratio of Net Charge-Offs/(Recoveries) to Average Loans
(Dollars in thousands)
26 unchanged sentences
Total $ 1,215 $ 9,658,934 0.01 %
−Removed: For purposes of the allowance for credit losses, management segregates the loan portfolio into the portfolio segments detailed in the table below.
+Added: (1) Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances and the associated net charge-offs.
+Added: For purposes of the allowance for credit losses, management segregates the portfolio based upon loans sharing similar risk characteristics.
The allocation of the allowance for credit losses is made to each loan category using the analytical techniques and estimation methods described in this Report.
4 unchanged sentences
Table 13 - Summary of Allocation of Allowance for Credit Losses
−Removed: Amount Percent of Loans In Category of Total Loans Allowance
−Removed: Amount Percent of Loans In Category of Total Loans
+Added: Amount Percent of Allowance of Total Allowance Percent of Loans In Category of Total Loans Allowance
+Added: Amount Percent of Allowance of Total Allowance Percent of Loans In Category of Total Loans
(Dollars in thousands)
7 unchanged sentences
Total $ 142,222 100.0 % 100.0 % $ 152,419 100.0 % 100.0 %
−Removed: (1) Total loans in this category are inclusive of $9.1 million and $216.2 million in loans, at December 31, 2022 and 2021, respectively, which were originated as part of the PPP established by the CARES Act.
−Removed: These loans have been excluded from the credit loss calculations as these loans are 100% guaranteed by the U.S.
To determine if a loan should be charged-off, all possible sources of repayment are analyzed.
9 unchanged sentences
The Company views the holdings as a necessary long-term investment for the purpose of balance sheet liquidity and not for investment return.
−Removed: The Bank held an investment in FHLB of Boston, of $5.2 million and $11.4 million at December 31, 2022 and December 31, 2021, respectively, reflecting redemption activity occurring during 2022.
−Removed: Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets were $1.0 billion at both December 31, 2022 and December 31, 2021, respectively.
−Removed: The Company typically performs its annual goodwill impairment testing during the third quarter of the year, unless certain indicators suggest earlier testing to be warranted.
−Removed: Accordingly, the Company last performed its annual goodwill impairment testing during the third quarter of 2022 and determined that the Company's goodwill was not impaired as of September 30, 2022.
+Added: The Company's investments in FHLB of Boston stock increased to $43.6 million at December 31, 2023 compared to $5.2 million at December 31, 2022, reflecting a net increase in FHLB borrowings of $1.1 billion during the year ended 2023.
+Added: Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets were $1.0 billion at both December 31, 2023 and December 31, 2022.
+Added: The Company typically performs its annual goodwill impairment testing during the third quarter of the year, unless certain indicators suggest earlier testing to be warranted, using a combined qualitative and quantitative approach.
+Added: The initial qualitative approach assesses whether the existence of events or circumstances led to a determination that it is more likely than not that the fair value of the Company's single reporting unit is less than its carrying amount.
+Added: If, after assessing the totality of events and circumstances, the Company determines it is more likely than not that the fair value is less than carrying value, a quantitative impairment test is performed to compare carrying value to the fair value of the reporting unit.
+Added: If the carrying amount of the reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
+Added: The Company's annual impairment test was performed as of August 31, 2023 using a quantitative impairment test which leveraged a combination of income and market valuation approaches to determine the implied fair value of the reporting unit.
+Added: The income valuation approach utilized a discounted cash flow analysis, while the market approach utilized a guideline public company approach whereby market multiples were derived from market prices of stocks of public companies that are engaged in the same or similar lines of business.
+Added: The results of the annual assessment determined that the Company’s goodwill was not impaired, however the fair value of its reporting unit was in excess of its carrying value by less than 10%, indicating that goodwill may be at risk of impairment.
+Added: Events or circumstances that could negatively impact the fair value of the Company’s reporting unit in the future include a sustained decrease in the Company’s stock price, continued decline in industry peer multiples, and further deterioration of the Company’s financial projections.
+Added: The quantitative impairment test relied upon certain key assumptions, including projected financial information deemed by management to be reasonable based on the Company’s past and expected future performance, as well as a discount rate consistent with the Company’s cost of capital.
+Added: Additionally, management performed sensitivity analyses over various financial assumptions used in the model noting results which further corroborated the conclusions reached.
Other intangible assets are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
−Removed: There were no events or changes that indicated impairment of other intangible assets.
+Added: There were no other events or changes during the fourth quarter of 2023 that indicated impairment of goodwill and other intangible assets.
For additional information regarding the goodwill and other intangible assets, see Note 5, "Goodwill and Other Intangible Assets " within the Notes to Consolidated Financial Statements included in Item 8 hereof.
2 unchanged sentences
The Company recorded tax exempt income from life insurance policies in the amounts of $7.9 million, $7.7 million, and $6.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.
−Removed: The Company also recorded gains on life insurance benefits of $1.3 million, $258,000, and $1.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.
−Removed: Deposits At December 31, 2022, total deposits were $15.9 billion, representing a decrease of $1.0 billion, or 6.1% compared to December 31, 2021, fueled by a combination of overall reductions in excess customer liquidity and market pricing pressures in the rising rate environment .
−Removed: The total cost of deposits was 0.15% for the year ended December 31, 2022, representing an increase from the prior year of eight basis points.
−Removed: As part of a strategy to contain its cost of deposits, the Company strives to maintain elevated levels of core deposit balances relative to total deposit balances.
−Removed: The Company's ratio of core deposits to total deposits increased to 87.9% at December 31, 2022 from 84.5% at December 31, 2021.
−Removed: In addition to its core deposits, the Company also participates in the IntraFi Network, allowing the Bank to provide easy access to multi-million dollar Federal Deposit Insurance Corporation ("FDIC") deposit insurance protection on certificate of deposit and money market investments for consumers, businesses and public entities.
−Removed: This channel allows the Company to seek additional funding in potentially large quantities by attracting deposits from outside the Bank’s core market and amounted to $653.6 million and $998.1 million in deposits, at December 31, 2022 and December 31, 2021, respectively.
−Removed: In addition, the Company may occasionally raise funds through the use of brokered deposits outside of the IntraFi Network, which amounted to $102.6 million and $141.6 million, at December 31, 2022 and December 31, 2021, respectively.
+Added: The Company also recorded gains on life insurance benefits of $2.3 million, $1.3 million, and $258,000 for the years ended December 31, 2023, 2022 and 2021, respectively.
+Added: Deposits At December 31, 2023, total deposits were $14.9 billion, representing a decrease of $1.0 billion, or 6.4% compared to December 31, 2022, primarily reflective of industry wide dislocations occurring during the first quarter of 2023, coupled with an overall competitive rate environment and a redeployment of customer excess liquidity due to inflation and other factors.
+Added: The total cost of deposits was 0.96% for the year ended December 31, 2023, representing an increase from the prior year of 81 basis points, fueled primarily by the higher rate environment driven by the Federal Reserve's rate hikes over the latter half of 2022 and 2023.
+Added: The Company's deposits are comprised primarily of core deposits (demand, savings and money market), as well as time deposits.
+Added: The Company's ratio of core deposits, inclusive of reciprocal money market deposits, to total deposits represented 84.6% at December 31, 2023 compared to 91.8% at December 31, 2022, with the 2023 decrease driven primarily by core deposit outflows in conjunction with growth in higher yielding time deposits.
+Added: In addition, the Company may also utilize brokered deposit sources, as needed, with balances of $100.9 million and $102.6 million outstanding at December 31, 2023 and December 31, 2022, respectively.
+Added: The Company's deposit accounts are insured to the maximum extent permitted by the Deposit Insurance Fund which is administered by the Federal Deposit Insurance Corporation ("FDIC").
+Added: The FDIC offers insurance coverage on deposits up to the federally insured limit of $250,000.
+Added: The Company participates in the IntraFi Network, allowing it to provide easy access to multi-million dollar FDIC deposit insurance protection on certificate of deposit and money market investments for consumers, businesses and public entities.
+Added: This channel allows the Company to access a reciprocal deposit exchange that can be used to benefit customers seeking increased FDIC insurance protection, and amounted to $959.1 million and $653.6 million in deposits, at December 31, 2023 and December 31, 2022, respectively.
+Added: The estimated balance of uninsured deposits at the Bank were $4.6 billion and $5.4 billion as of December 31, 2023 and December 31, 2022, respectively.
+Added: Included in these amounts are $720.5 million and $605.0 million of collateralized deposits, which offer additional protection to the customer.
Scheduled maturities of time deposits not covered by deposit insurance at December 31, 2023, were as follows:
6 unchanged sentences
Due after 12 months 65,032
−Removed: Total uninsured deposits (1) 243,438
+Added: Total uninsured time deposits (1) 352,925
(1) Amounts of uninsured time deposits presented in the table above are estimates determined based upon a relative proportion of customer account balances in excess of FDIC insurance limits, and in a manner consistent with the Company's regulatory reporting requirements.
−Removed: Borrowings The Company's borrowings typically consist of both short-term and long-term borrowings and provide the Bank with one of its primary sources of funding.
+Added: Borrowings The Company's borrowings consist of both short-term and long-term borrowings and provide the Bank with one of its primary sources of funding.
Maintaining available borrowing capacity provides the Bank with a contingent source of liquidity.
−Removed: Borrowings decreased by $39.0 million, or 25.6%, at December 31, 2022, as compared to December 31, 2021, due primarily to the re-payment of a revolving loan credit facility during the first quarter of 2022 and the maturity of a short term FHLB borrowing during the third quarter of 2022.
+Added: Borrowings increased by $1.1 billion, or 974.6%, at December 31, 2023, as compared to December 31, 2022, due primarily to deposit outflows experienced during 2023 as well as to fund stock buyback activity during the fourth quarter of 2023.
See Note 7, "Borrowings" within the Notes to Consolidated Financial Statements included in Item 8 of this Report for more information regarding borrowings.
1 unchanged sentence
The liquidity position of the Company is continuously monitored by management and adjustments are made to appropriately balance sources and uses of funds, as needed.
−Removed: For further details surrounding the Company’s liquidity risks and related strategy, see “Risk Management
−Removed: – Liquidity Risk” section below within Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations within this Report.
−Removed: The Federal Reserve Board ("Federal Reserve"), the FDIC, and other regulatory agencies have established risk-based capital guidelines for banks and bank holding companies that require banks to meet a minimum Common Equity Tier 1 capital ratio of 4.5%, a Tier 1 capital ratio of 6.0% and a total capital ratio of 8.0%.
−Removed: A minimum requirement of 4.0% Tier 1 leverage capital is also mandated.
−Removed: In addition, the Company is required to maintain a minimum capital conservation buffer of 2.5%, in the form of common equity, in order to avoid restrictions on capital distributions and discretionary bonuses.
+Added: In response to the banking industry turmoil experienced during the year, management took immediate actions during the first quarter by proactively borrowing under its existing FHLB capacity to increase on balance sheet liquidity, as well as pledging additional assets to increase overall off balance sheet liquidity.
+Added: For further details surrounding the Company’s liquidity risks and related strategy, see the " Risk Management – Liquidity Risk" section below within Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations within this Report.
At December 31, 2023, the Company and the Bank exceeded the minimum requirements for Common Equity Tier 1 capital, Tier 1 capital, total capital, and Tier 1 leverage capital, inclusive of the capital conservation buffer.
1 unchanged sentence
Investment Management
+Added: The following table presents total assets under administrations and number of accounts held by the Rockland Trust Investment Management Group at the following dates:
+Added: Table15 - Assets Under Administration
+Added: 2023 December 31
+Added: 2022 December 31
+Added: (Dollars in thousands)
+Added: Assets under administration $ 6,537,905 $ 5,792,857 $ 5,726,368
+Added: Number of trust, fiduciary and agency accounts 6,550 6,459 6,379
The Company's Investment Management Group provides investment management and trust services to individuals, institutions, small businesses, and charitable institutions.
2 unchanged sentences
The Bank receives fees dependent upon the level and type of service(s) provided.
−Removed: The Investment Management Group generated gross fee revenues of $32.8 million, $31.6 million, and $27.2 million for the year ended December 31, 2022, 2021, and 2020, respectively.
−Removed: Total assets under administration as of December 31, 2022 were $5.8 billion, including $603.7 million of investment solutions designed by Rockland Trust that are administered and executed through its agreement with LPL Financial ("LPL"), compared to $5.7 billion and $372.2 million, respectively, at December 31, 2021.
+Added: The Investment Management Group generated gross fee revenues of $34.6 million, $32.8 million, and $31.6 million for the years ended December 31, 2023, 2022, and 2021, respectively.
+Added: assets under administration as of December 31, 2023 were $6.5 billion, including $622.9 million of investment solutions designed by Rockland Trust that are administered and executed through its agreement with LPL Financial ("LPL"), compared to $5.8 billion and $603.7 million, respectively, at December 31, 2022.
The Company also has a subsidiary that is a registered investment advisor, Bright Rock Capital Management, LLC, which provides institutional quality investment management services to both institutional and high net worth clients.
5 unchanged sentences
These same agents are also approved and appointed with various other Broker General Agents for the purposes of processing insurance solutions for clients.
−Removed: The retail investments and insurance group generated gross fee revenues of $4.1 million, $3.7 million, and $2.3 million for the years ended December 31, 2022, 2021, and 2020, respectively.
+Added: The retail investments and insurance revenues were $5.6 million, $4.1 million, and $3.7 million for the years ended December 31, 2023, 2022, and 2021, respectively.
Results of Operations
1 unchanged sentence
Years Ended December 31
+Added: 2023 2022 2021
(Dollars in thousands, except per share data)
6 unchanged sentences
Net Interest Income The amount of net interest income is affected by changes in interest rates and by the volume, mix, and interest rate sensitivity of interest-earning assets and interest-bearing liabilities.
−Removed: On a fully tax-equivalent basis, net interest income was $617.3 million for the year ended December 31, 2022, representing a 53.2% increase from net interest income of $402.9 million for the year ended December 31, 2021.
−Removed: The year-over-year increase in net interest income was primarily attributable to the full year impact of the Meridian acquisition which closed during the fourth quarter of 2021, along with the positive impact of asset repricing in the rising rate environment in conjunction with relatively stable funding costs.
+Added: On a fully tax-equivalent basis, net interest income was $611.0 million for the year ended December 31, 2023, representing a 1.0% decrease from net interest income of $617.3 million for the year ended December 31, 2022.
The following table presents the Company’s average balances, net interest income, interest rate spread, and net interest margin for the years ended December 31, 2023, 2022 and 2021.
51 unchanged sentences
Cost of total funding liabilities 1.18 % 0.18 % 0.11 %
−Removed: (1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $4.0 million, $1.3 million, and $927,000 for 2022, 2021 and 2020, respectively.
+Added: (1) The total amount of adjustment to present interest income and yield on a fully tax-equivalent basis is $4.5 million, $4.0 million, and $1.3 million for 2023, 2022 and 2021, respectively.
(2) Includes average nonaccruing loans.
43 unchanged sentences
The Company's provision for credit losses totaled $23.3 million, $6.5 million and $18.2 million for the years ended December 31, 2023, 2022, and 2021, respectively.
−Removed: The provision for credit losses recorded for 2022 was largely attributable to an additional reserve allocation associated with a large commercial and industrial credit that migrated to nonperforming status during 2022 as well as additional provisioning for net loan growth, partially offset by a stabilized credit environment and continued strong asset quality metrics.
−Removed: The elevated provision for credit losses for the year ended December 31, 2021 was driven primarily by the initial provision required to establish an allowance for credit losses on non-purchased deteriorated loans acquired from Meridian in 2021, while the 2020 provision was driven primarily by anticipated credit losses associated with the COVID-19 pandemic.
+Added: The provision for credit losses for the years ended December 31, 2023, 2022, and 2021, respectively has been driven primarily by idiosyncratic events within the commercial portfolios.
The Company’s allowance for credit losses, as a percentage of total loans, was 1.00%, 1.09% and 1.08% at December 31, 2023, 2022 and 2021, respectively.
15 unchanged sentences
The primary reasons for significant variances in the noninterest income categories shown in the preceding table are noted below:
−Removed: Deposit account fees and interchange and ATM fees increased year over year due primarily to increased transaction volume attributable to the larger customer base as a result of the Meridian acquisition.
−Removed: Investment management revenue increased as a result of growth in overall assets under administration, which increased from $5.7 billion at December 31, 2021 to $5.8 billion at December 31, 2022, reflecting healthy new asset inflows and strong retail and insurance commission income, offset partially by a decline in market valuations.
−Removed: The income for 2022 was also inclusive of a one-time incentive of $649,000.
−Removed: Mortgage banking income decreased in comparison to the prior year, due primarily to overall reduced activity resulting from increased interest rates, as well as elevated levels of new residential originations being retained in the Company's portfolio versus sold in the secondary market.
−Removed: The cash surrender value of life insurance increased primarily due to the impact of policies acquired from Meridian.
−Removed: The Company also received elevated levels of proceeds on life insurance policies during 2022 resulting in an increase of $1.0 million compared to the prior year.
+Added: • Interchange and ATM fees increased year over year due primarily to higher debit card service charges driven by increased transaction volume.
+Added: • Investment management revenue increased due in part to growth in overall assets under administration, which increased from $5.8 billion at December 31, 2022 to $6.5 billion at December 31, 2023, reflecting healthy new asset inflows and increased market valuations, as well as due to higher retail and insurance commission income recognized during 2023.
+Added: • Mortgage banking income decreased in comparison to the prior year, primarily attributable to overall reduced saleable volumes as a result of the rising interest rate environment in 2023.
+Added: • Gain on life insurance benefits was higher in 2023 due to elevated proceeds on life insurance policies received in comparison to the prior year.
• The changes in loan level derivative income primarily reflect customer demand during the respective periods.
−Removed: Other noninterest income increased during the year, primarily due to increases in equipment rental income, gain on the sale of a closed branch facility which was consolidated in conjunction with the Meridian acquisition, discounted purchases of Massachusetts historical tax credits, and foreign currency exchange fees, offset partially by decreases in income from other investments, and income from like-kind exchanges.
+Added: • Other noninterest income increased during the year, primarily due to increases in FHLB dividend income, unrealized gains on equity securities, outsized loan fees, and discounted purchases of Massachusetts historical tax credits, partially offset by decreases in gains on sales of fixed assets, equity capital gain distributions, and income from like-kind exchanges.
Noninterest Expense The following table sets forth information regarding noninterest expense for the periods shown:
6 unchanged sentences
Data processing and facilities management 9,884 9,320 564 6.1 %
+Added: Software maintenance 13,115 10,961 2,154 19.7 %
FDIC assessment 11,953 6,951 5,002 72.0 %
+Added: Debit card expense 9,003 7,670 1,333 17.4 %
Consulting 8,954 9,617 (663) (6.9) %
Amortization of intangible assets 6,878 7,655 (777) (10.2) %
−Removed: Debit card expense 7,670 5,144 2,526 49.1 %
Merger & acquisitions — 7,100 (7,100) (100.0) %
−Removed: Software maintenance 10,961 8,149 2,812 34.5 %
Other noninterest expense 60,242 59,836 406 0.7 %
1 unchanged sentence
The primary reasons for significant variances in the noninterest expense categories shown in the preceding tables are noted below:
−Removed: The increase in salaries and employee benefits in comparison to the prior year was primarily attributable to the Company's increased workforce base following the Meridian acquisition.
−Removed: Occupancy and equipment expense increased year-over-year, primarily driven by costs associated with the Company's expanded branch network, real estate and other fixed assets resulting from the Meridian acquisition as well as increased depreciation on leased equipment.
+Added: • The increase in salaries and employee benefits in comparison to the prior year was primarily attributable to non-recurring CEO transition expenses incurred during the first quarter of 2023, as well as increases in general salaries, equity compensation, severance and medical plan insurance, partially offset by decreases in incentive programs and payroll taxes.
+Added: • Occupancy and equipment expense increased year-over-year, primarily driven by costs associated with the Company's leased real estate, including one-time lease exit costs associated with two leased locations related to the 2021 Meridian acquisition, as well as increased utilities costs, partially offset by reduced snow removal costs as compared to the prior year.
• Data processing and facilities management expenses increased primarily due to the timing of certain initiatives and general increases associated with higher transaction volumes.
−Removed: FDIC assessment expense increased in comparison to the prior year due primarily to an increased assessment base following the Meridian acquisition.
−Removed: Consulting expense increased year-over-year in conjunction with the Company's overall growth and implementation of strategic initiatives.
−Removed: The Company incurred merger and acquisition costs related to the Meridian acquisition of $7.1 million during the first quarter of 2022, primarily related to lease terminations associated with exited branch locations, along with additional integration costs and professional fees.
−Removed: Merger and acquisition expenses in 2021 were also attributable to the Meridian acquisition and largely comprised of change-in-control contracts, severance, branch closure and conversion costs, contract terminations costs and other integration costs.
• Software maintenance increased primarily due to the Company's continued investment in its technology infrastructure.
−Removed: Other noninterest expenses increased year-over year due primarily to increased advertising costs, customer fraud reimbursements, unrealized losses on equity securities, internet banking costs, insurance, telecommunications, and postage costs.
+Added: • FDIC assessment expense increased in comparison to the prior year due an increased assessment base as well as an estimated $1.1 million special assessment based on rules implemented by the FDIC to recover losses incurred by the Deposit Insurance Fund in 2023.
+Added: • Consulting expense decreased year-over-year due primarily to the timing of strategic initiatives.
+Added: • The Company incurred merger and acquisition costs related to the Meridian acquisition of $7.1 million during the first quarter of 2022, primarily related to lease terminations associated with exited branch locations, along with additional integration costs and professional fees.
+Added: No such costs were incurred during 2023.
+Added: • Other noninterest expenses increased year-over year due primarily to increased interest paid on cash collateral accounts, loan workout costs, sponsorships, and internet banking costs, partially offset by decreases in unrealized losses on equity securities, telecommunications costs, and mortgage operations expense.
Income Taxes The tax effect of all income and expense transactions is recognized by the Company in each year’s consolidated statements of income, regardless of the year in which the transactions are reported for income tax purposes.
7 unchanged sentences
Blended Statutory tax rate 27.91 % 27.85 % 27.92 %
−Removed: The Company’s effective tax rate for 2022 is higher as compared to the year ago period primarily due to higher pre-tax net income, as well as the impact of discrete items, such as provision to return adjustments, changes in uncertain tax positions, and excess benefits from equity compensation, which are subject to fluctuation year over year.
+Added: The Company’s effective tax rate for 2023 is lower as compared to the year ago period primarily due to lower pre-tax net income, as well as the impact of discrete items, such as provision to return adjustments, changes in uncertain tax positions, and excess benefits from equity compensation, which are subject to fluctuation year over year.
The effective tax rates reported in the table above are lower than the blended statutory tax rates due to the aforementioned discrete items as well as certain tax preference assets such as life insurance policies, tax exempt bonds, and federal tax credits.
10 unchanged sentences
2021 For a discussion of our results for the year ended December 31, 2022 compared to the year ended December 31, 2021, please see Item 7.
−Removed: " Management's Discussion and Analysis of Financial Condition and Results of Operations" i n our Annual Report on Form 10-K filed with the SEC on February 2 8 , 202 2 .
+Added: " Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the SEC on February 28, 2023 .
Risk Management
7 unchanged sentences
As risks must be taken to create value, the Board of Directors has approved a Risk Appetite Statement that defines the acceptable residual risk tolerances for the Company and the nine major risk types identified as having the potential to create significant adverse impacts on the Company, such as financial losses, reputational damage, legal or regulatory actions, failure to achieve strategic objectives, diminished customer experience, and/or cultural erosion.
−Removed: The nine major risk types identified by the Company and addressed in the Risk Appetite Statement are strategic and emerging risk, culture risk, credit risk, liquidity risk, interest rate risk, operational risk, reputation risk, compliance risk, and technology risk, each of which is discussed below.
+Added: The nine major risk categories identified by the Company and addressed in the Risk Appetite Statement are strategic and emerging risk, culture risk, credit risk, liquidity risk, interest rate risk, operational risk, reputation risk, compliance risk, and technology risk, each of which is discussed below.
Strategic and Emerging Risk Strategic and emerging risk is the risk arising from adverse strategic or business decisions, misalignment of strategic direction with the Company’s mission and values, failure to execute strategies or tactics, or an inadequate adaptation or lack of responsiveness to industry and/or operating environment changes.
14 unchanged sentences
The Company’s primary measure of short-term liquidity is the Total Basic Surplus/Deficit as a percentage of assets.
−Removed: This ratio, which is an analysis of the relationship between liquid assets plus available Federal Home Loan Bank funding, less short-term liabilities relative to total assets, was within policy limits at December 31, 2022.
+Added: This ratio, which is an analysis of the relationship between liquid assets plus available FHLB funding, less short-term liabilities relative to total assets, was within policy limits at December 31, 2023.
The Total Basic Surplus/Deficit measure is affected primarily by changes in deposits, securities and short-term investments, loans, and borrowings.
An increase in deposits, without a corresponding increase in nonliquid assets, will improve the Total Basic Surplus/Deficit measure, whereas, an increase in loans, with no increase in deposits, will decrease the measure.
−Removed: Other factors affecting the Total Basic Surplus/Deficit include Federal Home Loan Bank collateral requirements, securities portfolio changes, and the mix of deposits.
−Removed: The Company seeks to increase deposits without adversely impacting its weighted average funding cost.
−Removed: As a result of PPP loan fundings, government stimulus programs, and a customer focus on retaining liquidity, the Company experienced significant deposit growth and a buildup of liquidity in recent years, which began to normalize and run off throughout 2022, contributing to an overall decline in deposit balances at December 31, 2022.
−Removed: However, the Company also maintains a variety of liquidity sources, including Federal Home Loan Bank advances, Federal Reserve borrowing capacity, and repurchase agreement lines.
+Added: Other factors affecting the Total Basic Surplus/Deficit include FHLB collateral requirements, securities portfolio changes, and the mix of deposits.
+Added: The Company prioritizes core deposits as a primary funding source and continues to maintain a variety of available liquidity sources, including FHLB advances, and Federal Reserve borrowing capacity.
These funding sources serve as a contingent source of liquidity and, when profitable lending and investment opportunities exist, the Company may access them to provide the liquidity needed to grow the balance sheet.
−Removed: The amount and type of assets that the Company has available to pledge affects the Company's Federal Home Loan Bank and Federal Reserve borrowing capacity.
−Removed: For example, a prime one-to-four family residential loan may provide 75 cents of borrowing capacity for
−Removed: every $1.00 pledged, whereas a pledged commercial loan may increase borrowing capacity in a lower amount.
+Added: The amount and type of assets that the Company has available to pledge affects the Company's FHLB and Federal Reserve borrowing capacity.
+Added: For example, a prime one-to-four family residential loan may provide 75 cents of borrowing capacity for every $1.00 pledged, whereas a pledged commercial loan may increase borrowing capacity in a lower amount.
The Company’s lending decisions, therefore, can also affect its liquidity position.
13 unchanged sentences
Line of Credit — 85,000 — 85,000
−Removed: Long-term borrowings (3) — — 14,063 —
Junior subordinated debentures (3) 62,858 — 62,855 —
3 unchanged sentences
$ 2,278,370 $ 5,928,807 $ 869,658 $ 5,248,415
−Removed: (1) Loans with a carrying value of $2.7 billion and $2.3 billion at December 31, 2022 and 2021, respectively, have been pledged to the Federal Home Loan Bank of Boston resulting in this additional borrowing capacity.
−Removed: (2) Loans with a carrying value of $1.7 billion and $1.8 billion at December 31, 2022 and 2021, respectively, have been pledged to the Federal Reserve Bank of Boston resulting in this additional unused borrowing capacity.
+Added: (1) Assets with a carrying value of $3.9 billion and $2.7 billion at December 31, 2023 and 2022, respectively, were pledged to the Federal Home Loan Bank of Boston.
+Added: (2) Loans with a carrying value of $4.6 billion and $1.7 billion at December 31, 2023 and 2022, respectively, were pledged to the Federal Reserve Bank of Boston.
(3) The additional borrowing capacity has not been assessed for these categories.
4 unchanged sentences
In a period of perceived heightened liquidity risk, the Liquidity Contingency Plan provides for the establishment of a Liquidity Crisis Task Force to monitor the potential for a liquidity crisis and execute an appropriate response.
−Removed: Interest Rate Risk Interest rate risk is the risk arising from changes in interest rates and the value of investments due to market conditions or other external factors or events.
−Removed: Interest rate risk includes market risk.
+Added: In response to the banking industry turmoil experienced in 2023, the Company operated under the parameters of its Liquidity Contingency Plan, which resulted in various immediate action items taken during the first quarter.
+Added: From a liquidity management perspective, the Company proactively borrowed under its existing FHLB capacity to increase current cash on hand, while also pledging additional assets to increase overall borrowing capacity.
+Added: On an ongoing basis, the Company continues to monitor both on and off balance sheet liquidity sources to understand vulnerabilities through the application of various stress testing scenarios and other analyses.
+Added: Market and Interest Rate Risk Market risk refers to the risk of potential losses arising from changes in interest rates and the value of investments due to market conditions or other external factors or events.
+Added: Interest rate risk is the most significant market risk to which the Company has exposure to due to the nature of its operations.
Interest rate risk is the sensitivity of income to changes in interest rates.
−Removed: Interest rate changes, as well as fluctuations in the level and duration of assets and liabilities, affect net interest income, the Company’s primary source of revenue.
+Added: Interest rate changes, as well as fluctuations in the level and duration of assets and liabilities, affect net interest income, which is the Company’s primary source of revenue.
Interest rate risk arises directly from the Company’s core banking activities.
2 unchanged sentences
The Company attempts to manage interest rate risk by identifying, quantifying, and, where appropriate, hedging exposure.
−Removed: If assets and liabilities do not re-price
−Removed: simultaneously and in equal volume, the potential for interest rate exposure exists.
−Removed: It is the Company's objective to maintain stability in the growth of net interest income through the maintenance of an appropriate mix of interest-earning assets and interest-bearing liabilities and, when necessary within limits management deems prudent, with off-balance sheet hedging instruments such as interest rate swaps, floors, and caps.
+Added: If assets and liabilities do not re-price simultaneously and in equal volume, the potential for interest rate exposure exists.
+Added: It is the Company's objective to maintain stability in the growth of net interest income through the maintenance of an appropriate mix of interest-earning assets and interest-bearing liabilities and, when necessary within limits management deems prudent, with hedging instruments such as interest rate swaps, floors, and caps.
The Company quantifies its interest rate exposures using net interest income simulation models, as well as simpler gap analysis, and an Economic Value of Equity analysis.
1 unchanged sentence
The most material assumptions relate to the prepayment of mortgage assets (including mortgage loans and mortgage-backed securities) and the life and sensitivity of non-maturity deposits ( e.g.
−Removed: , demand deposit, negotiable order of withdrawal, savings, and money market accounts).
+Added: , demand deposit, savings, and money market accounts).
In the case of prepayment of mortgage assets, assumptions are derived from published median prepayment estimates for comparable mortgage loans.
1 unchanged sentence
Since future prepayment behavior of loan customers is uncertain, interest rate sensitivity of loans cannot be determined with precision and actual behavior may differ from assumptions to a significant degree.
−Removed: Based upon the net interest income simulation models, the Company anticipates that assets will re-price faster than liabilities.
−Removed: As a result, net interest income will be positively impacted as market rates increase and negatively impacted if market rates decrease.
+Added: Non-maturity deposits, assumptions over customer behavior, shifts in deposits categories, and magnitude of impact to the cost of deposits all may differ from what is currently anticipated by the models or analyses.
+Added: Given the volatility associated with market rates, and the uncertainty surrounding future rate movements, management has been proactive in achieving a more neutral interest rate risk position as compared to the prior year.
+Added: In 2023, management continued to increase the duration of its assets by marginally increasing exposure to fixed rate loans while deposit attrition reduced the amount of rate sensitive cash on hand at the Federal Reserve Bank.
The Company runs several scenarios to quantify and effectively assist in managing interest rate risk, including instantaneous parallel shifts in market rates as well as gradual (12-24 months) shifts in market rates, and may also include other alternative scenarios as management deems necessary given the interest rate environment.
4 unchanged sentences
Parallel rate shocks (basis points)
−Removed: -300 (10.0)% n/a
−Removed: -200 (5.7)% n/a
-300 (1.7)% (10.0)%
3 unchanged sentences
+200 0.8% 2.4%
+Added: +300 (1.0)% 4.0%
Gradual rate shifts (basis points)
−Removed: -200 over 12 months (2.3)% n/a
-200 over 12 months (0.1)% (2.3)%
1 unchanged sentence
+200 over 12 months (0.3)% 1.4%
+Added: +400 over 24 months n/a 1.4%
Alternative scenarios
−Removed: Steep down 200 basis points scenario (0.5)% n/a
−Removed: The results depicted in the table above are dependent on material assumptions.
−Removed: For instance, asymmetrical rate behavior can have a material impact on the simulation results.
−Removed: If competition for deposits prompts the Company to raise rates on those liabilities more quickly than is assumed in the simulation analysis without a corresponding increase in asset yields, net interest income would be negatively affected.
−Removed: Alternatively, if the Company were able to lag increases in deposit rates as loans re-price upward, net interest income would be positively impacted.
−Removed: The most significant market factors affecting the Company’s net interest income during the year ended December 31, 2022 were the shape of the U.S.
+Added: Steep down 200 basis points scenario 1.2% (0.5)%
+Added: The results depicted in the table above are dependent on material assumptions, such as prepayment rates, decay rates, pricing decisions on loans and deposits, and other factors, which management believes are reasonable.
+Added: These assumptions may be impacted by customer preferences or competitive influences and therefore actual experience may differ from the assumptions in the model.
+Added: Accordingly, although the tables provide an indication of the Company's interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates, and actual results may differ.
+Added: The most significant market factors affecting the Company’s net interest income during the twelve months ended December 31, 2023 were the shape of the U.S.
Government securities and interest rate swap yield curve, the U.S.
−Removed: prime, LIBOR, SOFR, and interest rates offered on long-term fixed rate loans.
+Added: prime interest rate, the secured overnight financing rate ("SOFR"), and other interest rates offered on long-term fixed rate loans.
The Company manages the interest rate risk inherent in both its loan and borrowing portfolios by using interest rate swap agreements and interest rate caps and floors.
13 unchanged sentences
Management seeks to mitigate reputational risk through actions that include a structured process of customer complaint resolution and ongoing reputational monitoring.
−Removed: Compliance Risk Compliance risk is the risk arising from violations of laws or regulations, non-conformance with prescribed practices, internal bank policies and procedures, or ethical standards.
+Added: Regulatory and Compliance Risk Regulatory and Compliance risk is the risk arising from violations of laws or regulations, non-conformance with prescribed practices, internal bank policies and procedures, or ethical standards.
Compliance risk includes consumer compliance risk, legal risk, and regulatory compliance risk.
Management seeks to mitigate compliance risk through compliance training and regulatory change management processes.
−Removed: Technology Risk Technology risk is the risk of losses or other impacts arising from the failure of technology systems to function in accordance with expectations and business requirements.
−Removed: Technology risk includes information technology risk, information security risk, and cyber security.
+Added: Technology and Cyber Risk Technology and Cyber risk is the risk of losses or other impacts arising from the failure of technology systems to function in accordance with expectations and business requirements.
Technology risks include technical failures, unlawful tampering with technical systems, cyber security, terrorist activities, ineffectiveness or exposure due to interruption in third party support.
Management seeks to mitigate technology risk through appropriate security and controls over data and its technological environment.
+Added: The Bank manages cybersecurity threats proactively and maintains robust controls to protect its critical systems and data by investing in secure, reliable and resilient technology infrastructure, fostering a culture of technology risk awareness and continuously improving its technology risk management practices.
Contractual Obligations, Commitments, Contingencies and Off-Balance Sheet Obligations
8 unchanged sentences
However, inflation does affect the Company because, as prices increase, the money supply grows and interest rates are affected by inflationary expectations.
−Removed: The impact on the Company is a noted increase in the size of loan
−Removed: requests with resulting growth in total assets.
+Added: The impact on the Company is a noted increase in the size of loan requests with resulting growth in total assets.
In addition, operating expenses may increase without a corresponding increase in productivity.
18 unchanged sentences
Management performs periodic sensitivity and stress testing using available economic forecasts in order to evaluate the adequacy of the allowance for credit losses under varying scenarios.
−Removed: Given the Company's benign loss history, the analyses performed have not resulted in a material change to the quantitative allowance but has informed management's determination of qualitative adjustments and act as corroborating evidence as to the appropriateness of the allowance as a whole.
+Added: Given the Company's benign loss history, the analyses
+Added: performed have not resulted in a material change to the quantitative allowance but has informed management's determination of qualitative adjustments and act as corroborating evidence as to the appropriateness of the allowance as a whole.
For additional discussion of the Company’s methodology of assessing the appropriateness of the allowance for credit losses, see Note 3, "Loans, Allowance for Credit Losses and Credit Quality " within the Notes to Consolidated Financial Statements included in Item 8 of this Report.
9 unchanged sentences
Additionally, deferred tax assets and liabilities are calculated based on tax rates expected to be in effect in future periods.
−Removed: recorded tax assets and liabilities need to be adjusted when the expected date of the future event is revised based upon current information.
+Added: Previously recorded tax assets and liabilities need to be adjusted when the expected date of the future event is revised based upon current information.
The Company may also record an unrecognized tax benefit related to uncertain tax positions taken by the Company on its tax returns for which there is less than a 50% likelihood of being recognized upon a tax examination.
1 unchanged sentence
Taxes are discussed in more detail in Note 10, "Income Taxes" within the Notes to the Consolidated Financial Statements included in Item 8 of this Report.
+Added: Valuation of Goodwill/Intangible Assets and Analysis for Impairment The Company has increased its market share through the acquisition of entire financial institutions accounted for under the acquisition method of accounting, as well as from the acquisition of branches (not the entire institution) and other nonbanking entities.
+Added: For all acquisitions, the Company is required to record assets acquired and liabilities assumed at their fair value, which is an estimate determined by the use of internal or other valuation techniques, which may include the use of third party specialists.
+Added: Goodwill is evaluated for impairment at least annually, or more often if warranted, using a combined qualitative and quantitative impairment approach.
+Added: The initial qualitative approach assesses whether the existence of events or circumstances led to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
+Added: If, after assessing the totality of events and circumstances, the Company determines it is more likely than not that the fair value is less than carrying value, a quantitative impairment test is performed to compare carrying value to the fair value of the reporting unit.
+Added: If the carrying amount of the reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
+Added: The Company completed its annual impairment test as of August 31, 2023, using the quantitative impairment test, and determined that the Company's goodwill was not impaired.
+Added: There were no other events or changes during the fourth quarter of 2023 that indicated impairment of goodwill and other intangible assets.
+Added: The Company’s goodwill relates to acquisitions that are fully integrated into the retail banking operations, which management does not consider to be at risk of failing step one in the near future.
+Added: The Company’s other intangible assets are subject to amortization and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
+Added: When applicable, the Company tests each of the other intangibles by comparing the carrying value of the intangible to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.
+Added: There were no other events or changes during the fourth quarter of 2023 that indicated impairment of goodwill and other intangible assets.
Valuation of Investment Securities Securities that the Company has the ability and intent to hold until maturity are classified as securities held-to-maturity and are accounted for using historical cost, adjusted for amortization of premium and accretion of discount.
1 unchanged sentence
All other securities are classified as securities available-for-sale and are carried at fair market value.
−Removed: The fair values of securities are based on either quoted market price or third party pricing services.
+Added: The fair values of securities is based on either quoted market price or third party pricing services.
In general, the third-party pricing services employ various methodologies, including but not limited to, broker quotes and proprietary models.
Management does not typically adjust the prices received from third-party pricing services.
−Removed: Depending upon the type of security, management employs various techniques to analyze the pricing it receives from third-parties, such as reviewing model inputs, reviewing comparable trades, analyzing changes in market yields and, in certain instances, reviewing the underlying collateral of the security.
+Added: Depending upon the type of security, management employs various techniques to analyze the pricing it receives from third-parties, such as reviewing model inputs, reviewing
+Added: comparable trades, analyzing changes in market yields and, in certain instances, reviewing the underlying collateral of the security.
Management reviews changes in fair values from period to period and performs testing to ensure that the prices received from the third parties are consistent with their expectation of the market.
8 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.