20 unchanged sentences
Critical Audit Matter
−Removed: The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:
−Removed: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
+Added: The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:
+Added: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Allowance for credit losses
16 unchanged sentences
Procedures performed included testing the completeness and accuracy of management’s population and testing the calculation of the allowance on individually evaluated loans.
+Added: Annual Goodwill Impairment Analysis
+Added: Description of the Matter As described in Note 1 and Note 5 to the consolidated financial statements, the Company’s goodwill balance totaled $985 million as of December 31, 2023.
+Added: The Company evaluates goodwill for impairment at least annually, or more often if warranted, using either a qualitative or quantitative impairment approach.
+Added: The quantitative impairment test compares the book value of equity to the fair value of the Company’s single reporting unit and if the book value exceeds the fair value, an impairment is charged to net income.
+Added: The Company’s annual analysis as of August 31, 2023 used a quantitative impairment approach which included a comparison of the reporting unit’s book value to the implied fair value using both a comparable analysis of relevant price multiples in recent market transactions and a discounted cash flow analysis.
+Added: As a result of the annual analysis, management determined that goodwill for the reporting unit was not impaired.
+Added: Auditing the Company's goodwill impairment analysis for the reporting unit was complex due to the estimation involved in determining the fair value.
+Added: In particular, the fair value was highly sensitive to certain key assumptions including projected financial information developed by management and the discount rate.
+Added: How we addressed the matter in our audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s goodwill impairment analysis process, which included, among others, controls over the appropriateness of the methodology, management’s evaluation and oversight of external specialists, and management’s identification and review of key assumptions utilized in the quantitative impairment test.
+Added: With the assistance of EY Specialists, we tested management’s quantitative impairment analysis including evaluating the impairment methodology and testing the key assumptions and the underlying data used by the Company in its analysis.
+Added: We compared the key assumptions used by management to recent financial performance, the company's peer group and economic trends.
+Added: We assessed the historical accuracy of management's estimates and performed sensitivity analyses for key assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions.
+Added: In addition, we tested management's reconciliation of the fair value of the reporting unit to the market capitalization of the Company.
/s/ Ernst & Young LLP
40 unchanged sentences
Federal Home Loan Bank borrowings 1,105,541 637
−Removed: Long-term borrowings — 14,063
Junior subordinated debentures (less unamortized debt issuance costs of $ 30 and $ 33 )
19 unchanged sentences
Retained earnings 1,077,488 934,442
−Removed: Accumulated other comprehensive income (loss), net of tax ( 163,084 ) 2,183
+Added: Accumulated other comprehensive loss, net of tax ( 114,827 ) ( 163,084 )
Total stockholders' equity 2,895,251 2,886,701
34 unchanged sentences
Data processing & facilities management 9,884 9,320 6,899
+Added: Software maintenance 13,115 10,961 8,149
FDIC assessment 11,953 6,951 3,980
+Added: Debit card expense 9,003 7,670 5,144
Consulting expense 8,954 9,617 8,271
Amortization of intangible assets 6,878 7,655 5,715
−Removed: Debit card expense 7,670 5,144 4,374
−Removed: Lease impairment — — 4,163
−Removed: Loss on sale of other equity investments — — 1,033
−Removed: Loss on termination of derivatives — — 684
Merger and acquisition expense — 7,100 40,840
−Removed: Software maintenance 10,961 8,149 7,264
Other noninterest expenses 60,242 59,836 44,680
16 unchanged sentences
Net income $ 239,502 $ 263,813 $ 120,992
−Removed: Other comprehensive (loss) income, net of tax
+Added: Other comprehensive income (loss), net of tax
Net change in fair value of securities available for sale 32,426 ( 118,990 ) ( 22,922 )
1 unchanged sentence
Net change in other comprehensive income for defined benefit postretirement plans ( 224 ) 4,490 3,549
−Removed: Total other comprehensive (loss) income ( 165,267 ) ( 38,512 ) 22,526
+Added: Total other comprehensive income (loss) 48,257 ( 165,267 ) ( 38,512 )
Total comprehensive income $ 287,759 $ 98,546 $ 82,480
5 unchanged sentences
Balance December 31, 2020 32,965,692 $ 328 $ ( 3,066 ) $ 3,066 $ 945,638 $ 716,024 $ 40,695 $ 1,702,685
−Removed: Cumulative effect accounting adjustment (1) — — — — — 1,553 — 1,553
Net income — — — — — 120,992 — 120,992
−Removed: Other comprehensive income — — — — — — 22,526 22,526
+Added: Other comprehensive loss — — — — — — ( 38,512 ) ( 38,512 )
Common dividend declared ($ 1.92 per share)
— — — — — ( 70,300 ) — ( 70,300 )
+Added: Common stock issued for acquisition 14,299,720 143 — — 1,298,415 — — 1,298,558
Proceeds from exercise of stock options, net of cash paid 4,744 — — — ( 57 ) — — ( 57 )
2 unchanged sentences
Shares issued under direct stock purchase plan 25,854 — — — 2,023 — — 2,023
−Removed: Shares repurchased under share repurchase program ( 1,500,000 ) ( 15 ) — — ( 95,076 ) — — ( 95,091 )
Deferred compensation and other retirement benefit obligations — — ( 80 ) 80 — — — —
4 unchanged sentences
— — — — — ( 96,087 ) — ( 96,087 )
−Removed: Common stock issued for acquisition 14,299,720 143 — — 1,298,415 — — 1,298,558
−Removed: Proceeds from exercise of stock options, net of cash paid 4,744 — — — ( 57 ) — — ( 57 )
Stock based compensation — — — — 4,464 — — 4,464
1 unchanged sentence
Shares issued under direct stock purchase plan 29,409 — — — 2,359 — — 2,359
+Added: Shares repurchased under share repurchase program ( 1,786,965 ) ( 18 ) — — ( 139,928 ) — — ( 139,946 )
Deferred compensation and other retirement benefit obligations — — ( 81 ) 81 — — — —
1 unchanged sentence
Net income — — — — — 239,502 — 239,502
−Removed: Other comprehensive loss — — — — — — ( 165,267 ) ( 165,267 )
+Added: Other comprehensive income — — — — — — 48,257 48,257
Common dividend declared ($ 2.20 per share)
— — — — — ( 96,456 ) — ( 96,456 )
+Added: Proceeds from exercise of stock options, net of cash paid 3,238 — — — 81 — — 81
Stock based compensation — — — — 6,377 — — 6,377
4 unchanged sentences
Balance December 31, 2023 42,873,187 $ 427 $ ( 3,298 ) $ 3,298 $ 1,932,163 $ 1,077,488 $ ( 114,827 ) $ 2,895,251
−Removed: (1) Represents adjustment needed to reflect the cumulative impact on retained earnings pursuant to the Company's adoption of Accounting Standards Update 2016-13.
−Removed: The adjustment presented includes $ 1.1 million ($ 817,000 , net of tax) attributable to the change in accounting methodology for estimating the allowance for credit losses and $ 1.0 million ($ 736,000 , net of tax) related to the reserve for unfunded commitments resulting from the Company's adoption of the standard.
−Removed: Amount shown in the table above is presented net of tax.
+Added: (1) Inclusive of $ 1.8 million impact of excise tax attributable to shares repurchased under the share repurchase program during the year ended December 31, 2023.
The accompanying notes are an integral part of these consolidated financial statements.
9 unchanged sentences
Change in unamortized net loan costs and fees ( 1,856 ) ( 7,119 ) ( 24,785 )
−Removed: Amortization (accretion) of acquired loans 175 ( 6,882 ) ( 6,286 )
+Added: (Accretion) amortization of acquired loans ( 2,251 ) 175 ( 6,882 )
Provision for credit losses 23,250 6,500 18,205
−Removed: Deferred income tax (benefit) expense ( 1,254 ) 3,090 ( 17,506 )
−Removed: Net loss (gain) on equity securities 3,061 ( 554 ) ( 528 )
−Removed: Net (gain) loss on bank premises and equipment ( 584 ) 139 372
−Removed: Lease impairment — — 4,163
−Removed: Loss on termination of derivatives — — 684
+Added: Deferred income tax expense (benefit) 2,738 ( 1,254 ) 3,090
+Added: Net (gain) loss on equity securities ( 1,180 ) 3,061 ( 554 )
+Added: Net loss (gain) on bank premises and equipment 310 ( 584 ) 139
Realized gain on sale leaseback transaction ( 193 ) ( 578 ) ( 578 )
18 unchanged sentences
Purchases of securities held to maturity — ( 804,105 ) ( 606,543 )
−Removed: Net redemption of Federal Home Loan Bank stock 6,189 25,027 4,174
+Added: Net (purchases) redemption of Federal Home Loan Bank stock ( 38,339 ) 6,189 25,027
Investments in low income housing projects ( 31,073 ) ( 33,232 ) ( 22,496 )
5 unchanged sentences
Proceeds from the sale of bank premises and equipment 113 3,344 169
−Removed: Payments on early termination of hedging relationship — — ( 684 )
Net cash used in investing activities ( 211,650 ) ( 1,000,474 ) ( 63,136 )
Cash flows (used in) provided by financing activities
−Removed: Net decrease in time deposits ( 334,381 ) ( 235,577 ) ( 444,276 )
+Added: Net increase (decrease) in time deposits 985,567 ( 334,381 ) ( 235,577 )
Net (decrease) increase in other deposits ( 1,999,198 ) ( 702,628 ) 1,719,398
−Removed: Net repayments of short-term Federal Home Loan Bank borrowings ( 25,000 ) — ( 45,000 )
+Added: Net advances from (repayments of) short-term Federal Home Loan Bank borrowings 1,105,000 ( 25,000 ) —
Repayments of long-term Federal Home Loan Bank borrowings — — ( 586,088 )
3 unchanged sentences
Proceeds from shares issued under direct stock purchase plan 2,662 2,359 2,023
−Removed: Payments for shares repurchased under direct stock purchase plan ( 139,946 ) — ( 95,091 )
+Added: Payments for shares repurchased under share repurchase program ( 188,910 ) ( 139,946 ) —
Common dividends paid ( 98,006 ) ( 93,734 ) ( 62,736 )
43 unchanged sentences
Actual results could vary from these estimates.
−Removed: Material estimates that are particularly susceptible to significant changes in the near-term relate to the determination of the allowance for expected credit losses on loans held for investment, income taxes, and valuation and allowance for expected credit losses on investment securities.
+Added: Material estimates that are particularly susceptible to significant changes in the near-term relate to the determination of the allowance for expected credit losses on loans held for investment, income taxes, valuation and allowance for expected credit losses on investment securities, and the valuation of goodwill and other intangible assets and their respective analyses of impairment.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: Significant Concentrations of Credit Risk
+Added: Concentrations of Credit Risk
The vast majority of the Bank’s lending activities are conducted in New England.
The Bank originates commercial and industrial loans, commercial and residential real estate loans, including construction loans, small business loans, home equity loans, and other consumer loans for its portfolio.
−Removed: The Bank tracks concentrations of credit across numerous categories and segments including any particular industries where the aggregate credit exposure exceeds 25% of the Bank's tier one capital.
−Removed: Aggregate credit exposure includes direct, indirect or contingent obligations to a borrower, an affiliated group of borrowers or a non-affiliated group of borrowers engaged in one industry.
−Removed: Loans originated by the Bank to lessors of nonresidential buildings, lessors of residential buildings, building construction, and within the accommodations industry represented 21.3 %, 14.3 %, 5.9 %, and 3.9 % of the Bank's aggregate credit exposure, respectively, at December 31, 2022.
−Removed: Within these concentration categories, the Company believes it is well diversified among collateral property types and tenant industries.
+Added: The Bank tracks concentrations of credit across numerous categories and segments based on aggregate credit exposure, which includes direct, indirect or contingent obligations to a borrower or group of borrowers engaged in one industry and by property type.
+Added: The Bank considers a concentration to exist when aggregate credit exposure of a category or segment exceeds 25% of the Bank's total risk-based capital (inclusive of Tier 2 capital instruments).
Business Combinations
22 unchanged sentences
If either of these criteria are met, the Company will record a write-down of the security's amortized cost basis to fair value through income.
−Removed: For those available for
+Added: For those available for sale securities which do not meet the intent or requirement to sell criteria, management will evaluate whether the decline in fair value is a result of credit related matters or other factors.
+Added: In performing this assessment, management considers the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: sale securities which do not meet the intent or requirement to sell criteria, management will evaluate whether the decline in fair value is a result of credit related matters or other factors.
−Removed: In performing this assessment, management considers the creditworthiness of the issuer including whether the security is guaranteed by the U.S.
+Added: creditworthiness of the issuer including whether the security is guaranteed by the U.S.
Federal Government or other government agency, the extent to which fair value is less than amortized cost, and changes in credit rating during the period, among other factors.
27 unchanged sentences
Income accruals are suspended on all nonaccrual loans in a timely manner 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.
+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.
When doubt exists as to the collectability of a loan, any payments received are applied to reduce the amortized cost of the loan to the extent necessary to eliminate such doubt.
1 unchanged sentence
This determination is made based on management's review of specific facts and circumstances of the individual loan, including assessing the viability of the customer’s business or project as a going concern, the expected cash flows to repay the loan, the value of the collateral and the ability and willingness of any guarantors to perform.
−Removed: In cases where a borrower experiences financial difficulties and the Company makes certain concessionary modifications to contractual terms, the loan is classified as a troubled debt restructuring ("TDR").
−Removed: Modifications may include adjustments to interest rates, extensions of maturity, consumer loans where the borrower's obligations have been effectively discharged
+Added: In the course of resolving problem loans, the Company may choose to modify the contractual terms of certain loans.
+Added: The Company attempts to work out an alternative payment schedule with the borrower in order to avoid or cure a default.
+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.
+Added: If such efforts by the Bank
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: 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.
−Removed: The recorded investment of loans classified as TDRs is adjusted to reflect the changes in value, if any, resulting from the granting of a concession.
−Removed: Nonaccrual loans that are restructured remain on nonaccrual for a period of six months to demonstrate that the borrower can meet the restructured terms.
−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: If the borrower’s ability to meet the revised payment schedule is not reasonably assured, the loan is classified as a nonaccrual loan.
−Removed: Loans classified as TDRs remain classified as such for the life of the loan, except in limited circumstances, when it is determined that the borrower is performing under the 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: do not result in satisfactory performance, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated.
+Added: 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.
+Added: Any loans that are modified are reviewed by the Company to determine whether the modification is the direct result of a borrower experiencing financial difficulty, as the Company adopted the accounting and disclosure requirements for loan modifications made to borrowers experiencing financial difficulty and ceased to recognize troubled debt restructurings ("TDRs") effective January 1, 2023.
+Added: Prior to this adoption, the Company would classify loans as TDRs in cases where a borrower was experiencing financial difficult and where the Company made certain concessionary modifications to contractual terms.
+Added: Modifications included adjustments to interest rates, extensions of maturity, consumer loans where the borrower's obligations had been effectively discharged through Chapter 7 Bankruptcy and the borrower had not reaffirmed the debt to the Bank, and other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral.
+Added: Under the previously applicable guidance, loans classified as TDRs would have remained classified as such for the life of the loan, except in limited circumstances, when it was determined that the borrower was performing under the 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.
Allowance for Credit Losses - Loans Held for Investment
21 unchanged sentences
The latter approach is used for loans deemed to be collateral dependent or when foreclosure is probable.
+Added: Loan modifications made to borrowers experiencing financial difficulty are evaluated on a collective basis with loans sharing similar risk characteristics in accordance with the CECL methodology.
+Added: Under previously applicable accounting guidance, the Company determined the amount of allowance for credit losses on TDRs using a discounted cash flow analysis or a fair value of collateral approach if the loan was determined to be individually evaluated.
+Added: This change in methodology did not have a material impact on the Company's allowance for credit loss estimate.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Accrued interest receivable amounts are excluded from balances of loans held at amortized cost and are included within other assets on the consolidated balance sheets.
5 unchanged sentences
The reserve for unfunded lending commitments is included in other liabilities on the Consolidated Balance Sheets.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Acquired Loans
Loans acquired through purchase or a business combination are recorded at their fair value at the acquisition date.
−Removed: The Company performs an assessment of acquired loans to first determine if such loans have experienced a more than insignificant deterioration in credit quality since their origination and thus should be classified and accounted for as purchased credit deteriorated (“PCD”) loan.
+Added: The Company performs an assessment of acquired loans to first determine if such loans have experienced a more than insignificant deterioration in credit quality since their origination and thus should be classified and accounted for as PCD loan.
For loans that have not experienced a more than insignificant deterioration in credit quality since origination, referred to as non-PCD loans, the Company records such loans at fair value, with any resulting discount or premium accreted or amortized into interest income over the remaining life of the loan using the interest method.
18 unchanged sentences
If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the allowance may be recorded as an increase to income.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Servicing fee income is recorded for fees earned for servicing loans for investors.
1 unchanged sentence
The amortization of mortgage servicing rights is recorded as a reduction of loan servicing fee income.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Company is also a party to certain instruments with off-balance-sheet risk including certain residential loans sold to investors with recourse.
11 unchanged sentences
Expected terms include lease option periods to the extent that the exercise of such options is reasonably assured, not to exceed fifteen years .
+Added: The Company leases office space, space for ATM and parking locations, and certain branch locations under noncancelable operating leases, several of which have renewal options to extend lease terms.
+Added: Upon commencement of a new lease, the Company will recognize a right of use ("ROU") asset and corresponding lease liability.
+Added: The Company makes the decision on whether to renew an option to extend a lease by considering various factors.
+Added: The Company will recognize an adjustment to its ROU asset and lease liability when lease agreements are amended and executed, or in an event where the Company is reasonably certain that a renewal option will be exercised.
+Added: The discount rate used in determining the present value of lease payments is based on the Company's incremental borrowing rate for borrowings with terms similar to each lease at commencement date.
+Added: The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.
+Added: For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance, are not included in the measurement of the lease liability since they are generally able to be segregated.
+Added: The Company has elected the short-term lease recognition exemption for all leases that qualify.
+Added: The Company may also assume lease obligations in connection with its acquisition activities, which may result in a market-based favorable or unfavorable lease position, resulting in an intangible lease asset.
+Added: These intangible lease assets are amortized over the estimated remaining lease term.
+Added: The Company is a party to certain equipment lease transactions where it has assumed the role of lessor for purchased assets.
+Added: These lease transactions are classified by the Company as either operating leases or direct financing leases for accounting purposes, depending upon the nature of the underlying lease agreements.
+Added: Under operating lease arrangements, the leased asset value is recorded within fixed assets and the Company recognizes rental income over the life of the lease.
+Added: Under direct financing lease arrangements, the leased asset value is de-recognized and offset with the recognition of a lease receivable that is evaluated for impairment in a manner similar to loans.
Goodwill and Other Intangible Assets
6 unchanged sentences
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: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Other intangible assets subject to amortization consist of core deposit intangibles, customer lists, and non-compete agreements that are amortized over the estimated lives of the intangibles using a method that approximates the amount of economic benefits that are realized by the Company.
13 unchanged sentences
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.
−Removed: Subsequent declines in the fair value of the foreclosed asset below the new cost basis
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: are recorded through the use of a valuation allowance.
+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.
Subsequent increases in the fair value are recorded as reductions in the valuation allowance, but not below zero.
1 unchanged sentence
Any excess of sale proceeds over the carrying value of the foreclosed asset is first applied as a recovery to the valuation allowance, if any, with the remainder being recognized as a gain on sale.
−Removed: Operating expenses and changes in the valuation allowance relating to foreclosed assets are included in other noninterest expense.
+Added: Operating expenses and changes in the valuation allowance relating to foreclosed assets are recorded in other noninterest expense.
Derivative instruments are carried at fair value in the Company’s financial statements.
3 unchanged sentences
Documentation includes linking all derivatives designated as fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific forecasted transactions.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
For those derivative instruments that are designated and qualify for special hedge accounting, the Company designates the hedging instrument, based upon the exposure being hedged, as either a fair value hedge or a cash flow hedge.
17 unchanged sentences
The underfunded status of the plans is recorded as a liability on the balance sheet.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The multiemployer pension plans' assets are determined based on fair value, generally representing observable market prices.
7 unchanged sentences
All funds under both of these plans are held in a rabbi trust.
−Removed: The plans do not permit diversification after initial election and therefore elections made to defer into Company stock result in both the investment and obligation recognized within Stockholders' Equity.
+Added: The plans do not permit
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
+Added: diversification after initial election and therefore elections made to defer into Company stock result in both the investment and obligation recognized within Stockholders' Equity.
Alternatively, investments not in Company stock are included in trading securities, with the correlating obligation classified as a liability.
17 unchanged sentences
Additionally, a liability for unrecognized tax benefits is recorded for 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.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Low Income Housing Tax Credits
9 unchanged sentences
Basic earnings per share is calculated using the two-class method.
−Removed: The two-class method is an earnings allocation formula under which earnings per share is calculated from common stock and participating securities according to dividends declared and participation rights in undistributed earnings.
+Added: The two-class method is an earnings allocation formula under which earnings per share is calculated from common stock and participating securities according to dividends
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
+Added: declared and participation rights in undistributed earnings.
Under this method, all earnings, distributed and undistributed, are allocated to participating securities and common shares based on their respective rights to receive dividends.
11 unchanged sentences
These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters.
−Removed: The Company leases office space, space for ATM and parking locations, and certain branch locations under noncancelable operating leases, several of which have renewal options to extend lease terms.
−Removed: Upon commencement of a new lease, the Company will recognize a right of use ("ROU") asset and corresponding lease liability.
−Removed: The Company makes the decision on whether to renew an option to extend a lease by considering various factors.
−Removed: The Company will recognize an adjustment to its ROU asset and lease liability when lease agreements are amended and executed, or in an event where the Company is reasonably certain that a renewal option will be exercised.
−Removed: The discount rate used in determining the present value of lease payments is based on the Company's incremental borrowing rate for borrowings with terms similar to each lease at commencement date.
−Removed: The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.
−Removed: For real estate leases, non-lease components and other non-components, such as common area maintenance
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: charges, real estate taxes, and insurance, are not included in the measurement of the lease liability since they are generally able to be segregated.
−Removed: The Company has elected the short-term lease recognition exemption for all leases that qualify.
−Removed: The Company may also assume lease obligations in connection with its acquisition activities, which may result in a market-based favorable or unfavorable lease position, resulting in an intangible lease asset.
−Removed: These intangible lease assets are amortized over the estimated remaining lease term.
−Removed: The Company is a party to certain equipment lease transactions where it has assumed the role of lessor for purchased assets.
−Removed: These lease transactions are classified by the Company as either operating leases or direct financing leases for accounting purposes, depending upon the nature of the underlying lease agreements.
−Removed: Under operating lease arrangements, the leased asset value is recorded within fixed assets and the Company recognizes rental income over the life of the lease.
−Removed: Under direct financing lease arrangements, the leased asset value is de-recognized and offset with the recognition of a lease receivable that is evaluated for impairment in a manner similar to loans.
Recent Accounting Standards
−Removed: Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 848 "Reference Rate Reform" Update No.
−Removed: 2020-04 was issued in March 2020 to provide optional expedients and exceptions for applying GAAP to certain contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.
−Removed: The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform.
−Removed: The amendments will not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022 for which an entity has elected certain optional expedients that are retained through the end of the hedging relationship.
−Removed: The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022 and do not apply to contract modifications made after December 31, 2022.
−Removed: FASB ASC Topic 848 "Reference Rate Reform" Update No.
−Removed: 2021-01 was subsequently issued in January 2021 and expanded application of the optional expedients to derivative transactions affected by the discounting transition.
−Removed: FASB ASC Topic 848 " Reference Rate Reform" Update No.
−Removed: 2022-06 was subsequently issued in December 2022 and defers the sunset date of the standard from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief offered in the standard.
−Removed: The Company has elected to apply certain optional expedients related to hedge accounting and contract modifications, with no material impact to the Company's financial statements.
−Removed: Additionally, the Company has established a working group to guide the Company’s transition from LIBOR and has begun efforts to transition off the LIBOR index consistent with industry timelines.
−Removed: The working group has identified the Company's products that utilize LIBOR, implemented fallback language into applicable contracts, and has selected the Secured Overnight Funding Rate (“SOFR”) as its preferred alternative rate index.
−Removed: FASB ASC Topic 815 "Derivatives and Hedging" Update No.
−Removed: 2022-01 was issued in March 2022 and its amendments allow for nonprepayable financial assets to also be included in a closed portfolio hedged using the portfolio layer method.
−Removed: The expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and nonprepayable financial assets resulting in more consistent accounting for similar hedges.
−Removed: All amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.
−Removed: The Company has assessed the impact of the adoption of this standard and does not expect it to have a material impact on the Company's financial statements.
−Removed: FASB ASC Topic 326 "Financial Instruments - Credit Losses" Update No.
−Removed: 2022-02 was issued in March 2022 and applies to public entities that have adopted ASU Topic 326.
−Removed: The amendments in this update eliminate the existing accounting guidance for troubled debt restructures ("TDRs") by creditors in Subtopic 310-40, Receivables - Troubled Debt Restructurings by Creditors and instead require that an entity evaluate whether a modification represents a new loan or a continuation of an existing loan.
−Removed: The amendments also enhance disclosure requirements for certain loan refinancing and restructuring by creditors when a borrower is experiencing financial difficulty.
−Removed: ASU 2022-02 also requires additional disclosure of current period gross write-offs by year of origination for financing receivables to be included in the entity's vintage disclosure, as currently required under Topic 326.
−Removed: All amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.
−Removed: The Company adopted ASU 2022-02 effective January 1, 2023 and the adoption did not have a material impact on the Company's financial statements.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: NOTE 2 ACQUISITIONS
−Removed: Meridian Bancorp, Inc.
−Removed: On November 12, 2021, the Company completed the acquisition of Meridian Bancorp, Inc., parent of East Boston Savings Bank (collectively, "Meridian").
−Removed: The transaction qualified as a tax-free reorganization for federal income tax purposes and provided a tax-free exchange to Meridian Bancorp, Inc.
−Removed: stockholders with respect to the common stock received in the merger.
−Removed: For each share of Meridian Bancorp, Inc.
−Removed: common stock, stockholders received 0.2750 shares of the Company's stock, with cash paid in lieu of fractional shares.
−Removed: Total consideration of $ 1.3 billion consisted of 14.3 million shares of the Company's common stock issued, as well as $ 11.2 million in cash paid for stock option cancellations and in lieu of fractional shares.
−Removed: In addition to increasing its loan and deposit base, the acquisition enabled the Company to provide a deeper product set to Meridian's customers, as well as benefit from increased operating synergies, which are expected to improve the long-term operating and financial results of the Company.
−Removed: The Company accounted for the Meridian acquisition using the acquisition method pursuant to the Business Combinations Topic of the FASB ASC.
−Removed: Accordingly, the Company recorded pre-tax merger and acquisition expenses of $ 40.8 million during the twelve months ended December 31, 2021 related to the Meridian acquisition.
−Removed: Additionally, the acquisition method requires the acquirer to recognize the assets acquired and the liabilities assumed at their fair values as of the acquisition date.
−Removed: The Company used third party valuation specialists to assist in the determination of the fair value of certain assets and liabilities at the acquisition date, including loans, core deposit intangibles and time deposits.
−Removed: The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the date of the acquisition:
−Removed: Net Assets Acquired at Fair Value
−Removed: (Dollars in thousands)
−Removed: Cash $ 798,470
−Removed: Investments 266
−Removed: Loans (including loans held for sale) 4,908,949
−Removed: Allowance for credit losses on PCD loans ( 16,540 )
−Removed: Bank Premises and equipment 66,825
−Removed: Goodwill 478,866
−Removed: Core deposit and other intangibles 10,300
−Removed: Other assets 125,543
−Removed: Total assets acquired 6,372,679
−Removed: Deposits 4,440,432
−Removed: Borrowings 576,088
−Removed: Other liabilities 46,432
−Removed: Total liabilities assumed 5,062,952
−Removed: Purchase price $ 1,309,727
−Removed: Fair value adjustments to assets acquired and liabilities assumed are generally amortized using either an effective yield or straight-line basis over periods consistent with the average life, useful life and/or contractual term of the related assets and liabilities.
−Removed: Fair values of the major categories of assets acquired and liabilities assumed were determined as follows:
−Removed: Cash and Cash Equivalents
−Removed: The fair values of cash and cash equivalents approximate the respective carrying amounts because the instruments are payable on demand or have short-term maturities.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: The loans acquired were recorded at fair value without a carryover of the allowance for credit losses.
−Removed: Fair value of the loans is determined using market participant assumptions in estimating the amount and timing of both principal and interest cash flows expected to be collected, as adjusted for an estimate of future credit losses and prepayments, and then applying a market-based discount rate to those cash flows.
−Removed: Acquired loans were reviewed to determine if any had experienced a more-than-insignificant deterioration in credit quality since origination.
−Removed: Loans meeting established criteria to indicate more-than-insignificant deterioration were identified as PCD loans, and an allowance for credit losses was calculated using management's best estimate of projected losses over the remaining life of the loan in accordance with CECL methodology.
−Removed: In connection with the Meridian acquisition, the Company recorded an allowance for credit losses on PCD loans of approximately $ 16.5 million, which was added to the amortized cost of the loans.
−Removed: For PCD loans acquired from Meridian, a reconciliation of the difference between the purchase price and par value of the assets acquired is presented below:
−Removed: As of November 12, 2021
−Removed: (Dollars in thousands)
−Removed: Gross amortized cost basis at November 12, 2021 $ 768,018
−Removed: Allowance for credit losses on PCD loans ( 16,540 )
−Removed: Interest and liquidity premium 8,560
−Removed: Purchase price of PCD loans (at fair value) $ 760,038
−Removed: For loans acquired without evidence of more-than-insignificant deterioration in credit quality since origination, also referred to as non-PCD loans, the Company estimated an allowance for credit losses based on the Company's methodology for determining the allowance under CECL.
−Removed: The resulting allowance on non-PCD loans was $ 50.7 million, which was recorded through a charge to provision for credit losses on the date of acquisition.
−Removed: Premises and Equipment
−Removed: The fair value of the premises, including land, buildings and improvements, was determined based upon appraisals by licensed real estate appraisers.
−Removed: The appraisals were based upon the best and highest use of the property with final values determined based upon an analysis of the cost, sales comparison and income capitalization approaches for each property appraised.
−Removed: Lease Assets and Lease Liabilities
−Removed: Lease assets and liabilities were measured using a methodology to estimate the future rental payments over the remaining lease term with discounting using the Company’s incremental borrowing rate.
−Removed: The lease term was determined for individual leases based on the Company’s assessment of the probability of exercising renewal options.
−Removed: The net effect of any off-market terms in a lease were also discounted and applied to the balance of the lease asset.
−Removed: Core Deposit Intangible
−Removed: The fair value of the core deposit intangible is derived by comparing the interest rate and servicing costs that the financial institution pays on the core deposit liability versus the current market rate for alternative sources of financing, while factoring in estimates over the remaining life and attrition rate of the deposit accounts.
−Removed: The intangible asset represents the stable and relatively low cost source of funds that the deposits and accompanying relationships provide the Company, when compared to alternative funding sources.
−Removed: The fair value of acquired savings and transaction deposit accounts was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand.
−Removed: The fair value of time deposits was determined based on the present value of the contractual cash flows over the remaining period to maturity using a market interest rate.
+Added: FASB ASC Topic 740 "Income Taxes" Update No.
+Added: 2023-09 was issued in December 2023 and aims to enhance the transparency and decision usefulness of income tax disclosures by requiring disaggregated information related to the effective tax rate reconciliation as well as information on income taxes paid.
+Added: This standard is effective for annual periods beginning after December 15, 2024 and requires prospective application with the option to apply retrospectively.
+Added: The adoption of this standard will not have an impact on the Company's financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: The fair values of borrowings were derived based upon the present value of the principal and interest payments using a current market discount rate.
−Removed: Immediately after the closing, the Company paid off the acquired borrowings of $576.1 million in full.
−Removed: Selected Pro Forma Results
−Removed: The following summarizes the unaudited pro forma results of operations as if the Company acquired Meridian on January 1, 2021 (2020 amounts represent combined results for the Company and Meridian).
−Removed: The selected pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the financial results of the combined companies had the acquisition actually been completed at the beginning of the period presented, nor does it indicate future results for any other interim or full-year period.
−Removed: (Dollars in thousands)
−Removed: Net interest income after provision for credit losses $ 565,360 $ 560,461
−Removed: Net income $ 178,936 $ 186,218
−Removed: Included in the pro forma net income for the twelve months ended December 31, 2021 are merger-related costs of $ 42.2 million, net of tax, recognized by the Company and Meridian, in the aggregate.
−Removed: These costs were primarily made up of severance, contract terminations due to the change in control, professional and legal fees, facilities conversion and termination costs and other integration costs.
NOTE 2 SECURITIES
9 unchanged sentences
(Dollars in thousands)
−Removed: Net (losses) gains recognized during the period on equity securities $ ( 3,061 ) $ 554 $ 528
+Added: Net gains (losses) recognized during the period on equity securities $ 1,180 $ ( 3,061 ) $ 554
net gains recognized during the period on equity securities sold during the period 197 — 192
−Removed: Unrealized (losses) gains recognized during the reporting period on equity securities still held at the reporting date $ ( 3,061 ) $ 362 $ 514
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
+Added: Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date $ 983 $ ( 3,061 ) $ 362
Available for Sale Securities
12 unchanged sentences
State, county, and municipal securities 195 — ( 5 ) — 190 193 — ( 2 ) — 191
−Removed: Single issuer trust preferred securities issued by banks — — — — — 489 2 — — 491
Pooled trust preferred securities issued by banks and insurers 1,188 — ( 170 ) — 1,018 1,203 — ( 169 ) — 1,034
1 unchanged sentence
Total available for sale securities $ 1,459,862 $ 30 $ ( 125,636 ) $ — $ 1,334,256 $ 1,566,779 $ 54 $ ( 167,679 ) $ — $ 1,399,154
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Excluded from the table above is accrued interest on available for sale securities of $ 3.4 million and $ 3.6 million at December 31, 2023 and 2022, respectively, which is included within other assets on the consolidated balance sheets.
2 unchanged sentences
When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale.
−Removed: The Company had no sales of securities available for sale for the years ended December 31, 2022 and 2021, and therefore no gains or losses were realized for the periods presented.
+Added: The Company had no sales of securities available for sale for the years ended December 31, 2023 and 2022, and therefore no gains or losses were realized during the periods presented.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: The following tables shows the gross unrealized losses and fair value of the Company’s available for sale securities in an unrealized loss position, and for which the Company has not recorded a provision for credit losses, as of the dates indicated.
+Added: The following tables show the gross unrealized losses and fair value of the Company’s available for sale securities in an unrealized loss position as of the dates indicated.
These available for sale securities are aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position:
22 unchanged sentences
Agency collateralized mortgage obligations 13 38,843 ( 3,031 ) — — 38,843 ( 3,031 )
+Added: State, county, and municipal securities 1 191 ( 2 ) — — 191 ( 2 )
Pooled trust preferred securities issued by banks and insurers 1 — — 1,034 ( 169 ) 1,034 ( 169 )
+Added: Small business administration pooled securities 8 34,511 ( 3,550 ) 17,246 ( 4,163 ) 51,757 ( 7,713 )
Total impaired available for sale securities 173 $ 333,099 $ ( 35,411 ) $ 1,062,964 $ ( 132,268 ) $ 1,396,063 $ ( 167,679 )
4 unchanged sentences
As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the table above by category were as follows at December 31, 2023:
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Government Agency Securities, U.S.
4 unchanged sentences
Government or one of its agencies.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
• State, County and Municipal Securities :
2 unchanged sentences
• Pooled Trust Preferred Securities:
−Removed: This portfolio consists of one below investment grade security which is performing.
+Added: This portfolio consists of one security which is performing.
The unrealized loss on this security is attributable to the illiquid nature of the trust preferred market in the current economic and regulatory environment.
24 unchanged sentences
When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale.
−Removed: The Company had no sales of held to maturity securities for the years ended December 31, 2022 and 2021, and therefore no gains or losses were realized for such periods.
+Added: The Company had no sales of held to maturity securities for the years ended December 31, 2023 and 2022, and therefore no gains or losses were realized during the periods presented.
The Company monitors the credit quality of held to maturity securities through the use of credit ratings.
29 unchanged sentences
Included in the table above is $ 25.4 million of callable securities at December 31, 2023.
−Removed: The carrying value of securities pledged to secure public funds, trust deposits, repurchase agreements and for other purposes, as required or permitted by law, was $ 959.8 million and $ 740.6 million at December 31, 2022 and 2021, respectively.
+Added: The carrying value of securities pledged to secure public funds, trust deposits, and for other purposes, as required or permitted by law, was $ 1.7 billion and $ 959.8 million at December 31, 2023 and 2022, respectively.
+Added: The elevated balance at December 31, 2023 was primarily attributable to additional securities pledged during the year as part of the Company's strategy to bolster off-balance sheet liquidity.
At December 31, 2023 and 2022, the Company had no investments in obligations of individual states, counties, or municipalities which exceeded 10% of stockholders’ equity.
15 unchanged sentences
Recoveries 145 — — 92 — 62 1,036 1,335
−Removed: Provision for credit loss expense 13,108 ( 5,958 ) ( 1,554 ) ( 627 ) 6,489 ( 6,481 ) 1,523 6,500
+Added: Provision for credit losses 15,103 4,204 ( 3,079 ) 1,521 2,664 1,278 1,559 23,250
Ending balance (1) $ 19,243 $ 74,148 $ 7,683 $ 3,963 $ 23,637 $ 12,797 $ 751 $ 142,222
11 unchanged sentences
Recoveries 49 333 — 149 — 121 997 1,649
−Removed: Initial reserve on PCD loans 166 14,397 1,019 — 429 163 366 16,540
−Removed: Provision for credit loss expense ( 6,062 ) 24,023 5,900 ( 1,466 ) ( 221 ) ( 4,417 ) 448 18,205
+Added: Provision for credit losses 13,108 ( 5,958 ) ( 1,554 ) ( 627 ) 6,489 ( 6,481 ) 1,523 6,500
Ending balance (1) $ 27,559 $ 77,799 $ 10,762 $ 2,834 $ 20,973 $ 11,504 $ 988 $ 152,419
8 unchanged sentences
Allowance for credit losses
−Removed: Beginning balance, pre adoption of ASU 2016-13 $ 17,594 $ 32,935 $ 6,053 $ 1,746 $ 3,440 $ 5,576 $ 396 $ 67,740
−Removed: Cumulative effect accounting adjustment (2) ( 1,984 ) ( 13,048 ) ( 3,652 ) 495 9,828 7,012 212 ( 1,137 )
−Removed: Cumulative effect accounting adjustment (3) 49 337 — — 423 319 29 1,157
+Added: Beginning balance $ 21,086 $ 45,009 $ 5,397 $ 5,095 $ 14,275 $ 22,060 $ 470 $ 113,392
Charge-offs ( 3,474 ) — — ( 219 ) — ( 69 ) ( 1,182 ) ( 4,944 )
Recoveries 2,686 57 — 98 1 249 638 3,729
−Removed: Provision (benefit) 7,447 28,661 2,996 3,201 687 9,085 423 52,500
+Added: Initial reserve on PCD loans 166 14,397 1,019 — 429 163 366 16,540
+Added: Provision for credit losses ( 6,062 ) 24,023 5,900 ( 1,466 ) ( 221 ) ( 4,417 ) 448 18,205
Ending balance (1) $ 14,402 $ 83,486 $ 12,316 $ 3,508 $ 14,484 $ 17,986 $ 740 $ 146,922
(1) Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $ 60.2 million, $ 50.8 million, and $ 43.7 million at December 31, 2023, 2022, and 2021, respectively.
−Removed: (2) Represents adjustment needed to reflect the cumulative day one impact pursuant to the Company's adoption of Accounting Standards Update 2016-13 on January 1, 2020.
−Removed: The adjustment represents a $ 1.1 million decrease to the allowance attributable to the change in accounting methodology for estimating the allowance for credit losses resulting from the Company's adoption of the standard.
−Removed: (3) Represents adjustment needed to reflect the day one reclassification of the Company's purchased credit impaired ("PCI") loan balances to PCD and the associated gross-up, pursuant to the Company's adoption of Accounting Standards Update 2016-13.
−Removed: The adjustment represents a $ 1.2 million increase to the allowance resulting from the day one reclassification.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: The balance of allowance for credit losses of $ 152.4 million at December 31, 2022 increased by $ 5.5 million, or 3.7 % from the prior year driven primarily by 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, partially offset by a stabilized credit environment and continued strong asset quality metrics.
+Added: The balance of allowance for credit losses of $ 142.2 million at December 31, 2023 decreased by $ 10.2 million, or 6.7 % from the prior year driven primarily by isolated charge-offs within the commercial portfolios, partially offset by general provisioning during the year.
For the purpose of estimating the allowance for credit losses, management segregated the loan portfolio into the portfolio segments detailed in the above tables.
1 unchanged sentence
Some of the characteristics unique to each loan category include:
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Commercial Portfolio
• Commercial and Industrial :
−Removed: Consists of revolving and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment.
+Added: Consists of revolving, non-revolving, and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment.
Collateral generally consists of accounts receivable, inventory, plant and equipment, real estate, or other business assets.
1 unchanged sentence
• Commercial Real Estate :
−Removed: Consists of mortgage loans to finance investment in real property such as multi-family residential, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties and is inclusive of owner-occupied commercial properties.
+Added: Consists of mortgage loans to finance investment in real property such as multi-family residential, commercial/retail, office, industrial, hotels, educational and healthcare facilities, as well as other specific use properties and is inclusive of owner-occupied commercial properties.
Loans are typically written with amortizing payment structures.
4 unchanged sentences
Consists of short-term construction loans, revolving and nonrevolving credit lines and construction/permanent loans to finance the acquisition, development and construction or rehabilitation of real property.
−Removed: Project types include residential land development, one-to-four family, condominium, and multi-family home construction, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties.
+Added: Project types include residential land development, one-to-four family, condominium, and multi-family home construction, commercial/retail, office, industrial, hotels, educational and healthcare facilities as well as other specific use properties.
Loans may be written with nonamortizing or hybrid payment structures depending upon the type of project.
6 unchanged sentences
The primary source of repayment is operating cash flows and, secondarily, liquidation of assets.
−Removed: For the commercial portfolio, the Bank typically will obtain security interests in collateral and obtain personal guarantees for payment from individuals holding material ownership interests in the borrowing entities.
+Added: For the commercial portfolio the Company typically obtains personal guarantees for payment from individuals holding material ownership interests in the borrowing entities.
Consumer Portfolio
4 unchanged sentences
• Home Equity :
−Removed: Home equity loans and credit lines are made to qualified individuals and are primarily secured by senior or junior mortgage liens on owner-occupied one-to-four family homes, condominiums or vacation homes.
+Added: Home equity loans and credit lines are made to qualified individuals and are primarily secured by senior or junior mortgage liens on one-to-four family homes, condominiums or vacation homes.
Each home equity loan has a fixed rate and is billed in equal payments comprised of principal and interest.
7 unchanged sentences
These loans may be secured or unsecured.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Credit Quality
1 unchanged sentence
Based on this information, loans demonstrating certain payment issues or other weaknesses may be categorized as adversely risk-rated, delinquent, nonperforming and/or put on nonaccrual status.
−Removed: Additionally, 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.
+Added: Additionally, in the course of resolving such loans, the Company may choose to modify the contractual terms of certain loans to match the borrower’s ability to repay the loan based on their current financial condition.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Company reviews numerous credit quality indicators when assessing the risk in its loan portfolio.
2 unchanged sentences
The risk-rating categories for the commercial portfolio are defined as follows:
−Removed: Risk-rating “1” through “6” comprises of loans ranging from ‘Substantially Risk Free’ which indicates borrowers are of unquestioned credit standing and the pinnacle of credit quality, well established companies with a very strong financial condition, and loans fully secured by cash collateral, through ‘Acceptable Risk’, which indicates borrowers may exhibit declining earnings, strained cash flow, increasing or above average leverage and/or weakening market fundamentals that indicate below average asset quality, margins and market share.
+Added: Risk-rating “1” through “6” comprises loans ranging from ‘Substantially Risk Free’ which indicates borrowers are of unquestioned credit standing and the pinnacle of credit quality, well established companies with a very strong financial condition, and loans fully secured by cash collateral, through ‘Acceptable Risk,’ which indicates borrowers may exhibit declining earnings, strained cash flow, increasing or above average leverage and/or weakening market fundamentals that indicate below average asset quality, margins and market share.
Collateral coverage is protective.
−Removed: • Potential Weakness:
+Added: • Special Mention:
Borrowers exhibit potential credit weaknesses or downward trends deserving management’s close attention.
2 unchanged sentences
no loss of principal or interest is envisioned.
−Removed: • Definite Weakness Loss Unlikely:
+Added: • Substandard:
Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt.
3 unchanged sentences
Collateral coverage may be inadequate to cover the principal obligation.
−Removed: • Partial Loss Probable:
Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt with the added provision that the weaknesses make collection of the debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
Serious problems exist to the point where partial loss of principal is likely.
−Removed: • Definite Loss:
Borrowers deemed incapable of repayment.
10 unchanged sentences
Under this structure, consumer loans less than 90 days past due are assigned a "pass" rating, while any consumer loans 90 days or more past due are assigned a "default" rating.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table details the amortized cost balances of the Company's loan portfolios, presented by credit quality indicator and origination year as of the dates indicated below:
4 unchanged sentences
Pass $ 329,892 $ 165,003 $ 86,982 $ 64,483 $ 45,867 $ 110,135 $ 692,918 $ 90 $ 1,495,370
−Removed: Potential weakness 4,836 925 1,023 1,744 467 623 17,122 — 26,740
−Removed: Definite weakness - loss unlikely 2,389 1,681 180 618 — — 3,623 — 8,491
−Removed: Partial loss probable — — — — — — 23,167 — 23,167
−Removed: Definite loss — — — — — — — — —
+Added: Special Mention 4,188 668 528 9,358 22 121 28,218 — 43,103
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
+Added: Substandard 1,867 1,329 902 110 917 3,660 32,728 — 41,513
+Added: Doubtful — — — — — — — — —
+Added: Loss — — — — — — — — —
Total commercial and industrial $ 335,947 $ 167,000 $ 88,412 $ 73,951 $ 46,806 $ 113,916 $ 753,864 $ 90 $ 1,579,986
+Added: Current-period gross write-offs $ — $ 91 $ — $ — $ — $ 34 $ 23,439 $ — $ 23,564
Commercial real estate
Pass $ 1,116,730 $ 1,197,017 $ 1,300,140 $ 1,276,967 $ 592,058 $ 2,078,644 $ 79,360 $ 3,359 $ 7,644,275
−Removed: Potential weakness 42,005 65,603 39,740 14,167 58,190 183,468 — — 403,173
−Removed: Definite weakness - loss unlikely 42,629 3,843 4,774 4,066 3,553 21,162 — — 80,027
−Removed: Partial loss probable — — — — — 175 — — 175
−Removed: Definite loss — — — — — — — — —
+Added: Special Mention 62,337 37,510 51,555 13,269 1,859 118,526 — — 285,056
+Added: Substandard 37,302 18,321 22,844 4,556 7,881 12,923 — — 103,827
+Added: Doubtful — — — — 8,350 — — — 8,350
+Added: Loss — — — — — — — — —
Total commercial real estate $ 1,216,369 $ 1,252,848 $ 1,374,539 $ 1,294,792 $ 610,148 $ 2,210,093 $ 79,360 $ 3,359 $ 8,041,508
+Added: Current-period gross write-offs $ — $ 5,072 $ — $ — $ 2,783 $ — $ — $ — $ 7,855
Commercial construction
Pass $ 180,045 $ 381,352 $ 127,431 $ 44,953 $ 23,823 $ 1,561 $ 17,503 $ — $ 776,668
−Removed: Potential weakness 33,000 1,775 3,347 — — — — — 38,122
−Removed: Definite weakness - loss unlikely 18,980 9,858 — — — — — — 28,838
−Removed: Partial loss probable — — — — — — — — —
−Removed: Definite loss — — — — — — — — —
+Added: Special Mention 12,106 — 5,292 — — — — — 17,398
+Added: Substandard 10,955 26,146 18,419 — — — — — 55,520
+Added: Doubtful — — — — — — — — —
+Added: Loss — — — — — — — — —
Total commercial construction $ 203,106 $ 407,498 $ 151,142 $ 44,953 $ 23,823 $ 1,561 $ 17,503 $ — $ 849,586
+Added: Current-period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Small business
Pass $ 50,734 $ 51,157 $ 39,435 $ 25,643 $ 12,944 $ 22,412 $ 46,130 $ — $ 248,455
−Removed: Potential weakness — 152 373 366 191 117 686 — 1,885
−Removed: Definite weakness - loss unlikely 139 98 417 — — 401 629 — 1,684
−Removed: Partial loss probable — — — — — — — — —
−Removed: Definite loss — — — — — — — — —
+Added: Special Mention — — — 154 — 184 314 — 652
+Added: Substandard 530 282 90 475 — 669 803 — 2,849
+Added: Doubtful — — — — — — — — —
+Added: Loss — — — — — — — — —
Total small business $ 51,264 $ 51,439 $ 39,525 $ 26,272 $ 12,944 $ 23,265 $ 47,247 $ — $ 251,956
+Added: Current-period gross write-offs $ — $ — $ 54 $ 40 $ — $ — $ 390 $ — $ 484
Residential real estate
2 unchanged sentences
Total residential real estate $ 505,517 $ 638,223 $ 405,386 $ 184,833 $ 89,327 $ 601,468 $ — $ — $ 2,424,754
+Added: Current-period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Pass $ 28,903 $ 38,401 $ 54,944 $ 49,803 $ 29,103 $ 121,286 $ 770,074 $ 4,583 $ 1,097,097
Default — — — — — 63 324 142 529
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Total home equity $ 28,903 $ 38,401 $ 54,944 $ 49,803 $ 29,103 $ 121,349 $ 770,398 $ 4,725 $ 1,097,626
+Added: Current-period gross write-offs $ — $ — $ — $ — $ — $ — $ 47 $ — $ 47
Other consumer (2)
2 unchanged sentences
Total other consumer $ 639 $ 263 $ 1,178 $ 706 $ 257 $ 1,835 $ 27,776 $ — $ 32,654
+Added: Current-period gross write-offs $ 2,766 $ — $ — $ — $ — $ 49 $ 17 $ — $ 2,832
Total $ 2,341,745 $ 2,555,672 $ 2,115,126 $ 1,675,310 $ 812,408 $ 3,073,487 $ 1,696,148 $ 8,174 $ 14,278,070
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
+Added: Total current-period gross write-offs $ 2,766 $ 5,163 $ 54 $ 40 $ 2,783 $ 83 $ 23,893 $ — $ 34,782
December 31, 2022
3 unchanged sentences
Pass $ 350,036 $ 137,832 $ 113,020 $ 59,936 $ 79,391 $ 18,197 $ 815,128 $ 3,165 $ 1,576,705
−Removed: Potential weakness 779 6,874 1,627 109 908 287 5,401 — 15,985
−Removed: Definite weakness - loss unlikely 766 317 962 515 2,570 258 7,910 — 13,298
−Removed: Partial loss probable — — — — — — — — —
−Removed: Definite loss — — — — — — — — —
+Added: Special Mention 4,836 925 1,023 1,744 467 623 17,122 — 26,740
+Added: Substandard 2,389 1,681 180 618 — — 3,623 — 8,491
+Added: Doubtful — — — — — — 23,167 — 23,167
+Added: Loss — — — — — — — — —
Total commercial and industrial $ 357,261 $ 140,438 $ 114,223 $ 62,298 $ 79,858 $ 18,820 $ 859,040 $ 3,165 $ 1,635,103
1 unchanged sentence
Pass $ 1,277,333 $ 1,487,333 $ 1,213,984 $ 723,794 $ 696,166 $ 1,833,099 $ 44,477 $ 669 $ 7,276,855
−Removed: Potential weakness 51,024 86,781 53,250 69,137 53,455 185,847 13,617 — 513,111
−Removed: Definite weakness - loss unlikely 20,078 4,106 3,380 1,663 35,727 22,647 — — 87,601
−Removed: Partial loss probable — — — — — — — — —
−Removed: Definite loss — — — — — — — — —
+Added: Special Mention 42,005 65,603 39,740 14,167 58,190 183,468 — — 403,173
+Added: Substandard 42,629 3,843 4,774 4,066 3,553 21,162 — — 80,027
+Added: Doubtful — — — — — 175 — — 175
+Added: Loss — — — — — — — — —
Total commercial real estate $ 1,361,967 $ 1,556,779 $ 1,258,498 $ 742,027 $ 757,909 $ 2,037,904 $ 44,477 $ 669 $ 7,760,230
1 unchanged sentence
Pass $ 504,932 $ 327,194 $ 169,838 $ 56,693 $ 3,135 $ 1,588 $ 23,122 $ 951 $ 1,087,453
−Removed: Potential weakness 9,646 2,550 — — — 12,811 — — 25,007
−Removed: Definite weakness - loss unlikely 4,561 — — — — — — — 4,561
−Removed: Partial loss probable — — — — — — — — —
−Removed: Definite loss — — — — — — — — —
+Added: Special Mention 33,000 1,775 3,347 — — — — — 38,122
+Added: Substandard 18,980 9,858 — — — — — — 28,838
+Added: Doubtful — — — — — — — — —
+Added: Loss — — — — — — — — —
Total commercial construction $ 556,912 $ 338,827 $ 173,185 $ 56,693 $ 3,135 $ 1,588 $ 23,122 $ 951 $ 1,154,413
1 unchanged sentence
Pass $ 54,876 $ 44,811 $ 31,051 $ 16,588 $ 9,882 $ 18,891 $ 39,434 $ — $ 215,533
−Removed: Potential weakness 210 456 379 198 4 285 803 — 2,335
−Removed: Definite weakness - loss unlikely — 619 32 9 4 278 514 — 1,456
−Removed: Partial loss probable — — — — — — — — —
−Removed: Definite loss — — — — — — — — —
+Added: Special Mention — 152 373 366 191 117 686 — 1,885
+Added: Substandard 139 98 417 — — 401 629 — 1,684
+Added: Doubtful — — — — — — — — —
+Added: Loss — — — — — — — — —
Total small business $ 55,015 $ 45,061 $ 31,841 $ 16,954 $ 10,073 $ 19,409 $ 40,749 $ — $ 219,102
3 unchanged sentences
Total residential real estate $ 665,407 $ 419,665 $ 194,615 $ 94,223 $ 94,425 $ 567,189 $ — $ — $ 2,035,524
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Pass $ 43,917 $ 60,103 $ 54,802 $ 32,014 $ 26,414 $ 118,367 $ 748,294 $ 3,874 $ 1,087,785
7 unchanged sentences
(1) Loans origination dates in the tables above reflect the original date, or the date of a material modification of a previously originated loan, for both organic originations and acquired loans.
−Removed: (2) Loans originated as part of the Paycheck Protection Program ("PPP") established by the Coronavirus, Aid, Relief and Economic Security Act ("CARES Act") are reported as commercial and industrial under the 2021 and 2020 vintage years and "Pass" category as these loans are 100% guaranteed by the U.S.
−Removed: Outstanding PPP loans totaled $ 9.1 million and $ 216.2 million at December 31, 2022 and 2021, respectively.
+Added: (2) Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances and the associated gross write-offs.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower.
1 unchanged sentence
Current FICO data is purchased and appended to all consumer loans on a regular basis.
−Removed: In addition, automated valuation services and broker opinions of value are used to supplement original value data for the residential and home equity portfolios, periodically.
+Added: In addition, automated valuation services and broker opinions of value are used to supplement original value data for the residential real estate and home equity portfolios, periodically.
The following table shows the weighted average FICO scores and the weighted average combined LTV ratios at the dates indicated below:
15 unchanged sentences
Management evaluates the need for a reserve on unfunded lending commitments in a manner consistent with loans held for investment.
−Removed: At December 31, 2022 and 2021, the Company's estimated reserve for unfunded commitments amounted to $ 1.3 million and $ 1.5 million.
+Added: At December 31, 2023 and 2022, the Company's estimated reserve for unfunded commitments amounted to $ 1.5 million and $ 1.3 million, respectively.
Asset Quality
3 unchanged sentences
The Company also may use discretion regarding other loans 90 days or more delinquent if the loan is well secured and/or in process of collection.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: In response to the COVID-19 pandemic, the Company granted loan modifications to allow deferral of payments for borrowers negatively impacted by the pandemic.
−Removed: The balance of loans with active deferrals decreased to $ 55.6 million at December 31, 2022, compared to $ 383.1 million at December 31, 2021 as granted deferrals continued to reach maturity.
−Removed: The majority of these loans with active deferrals continue to be characterized as current loans.
−Removed: In accordance with regulatory guidance, these modifications were not considered to be troubled debt restructurings ("TDRs") if they were performing prior to December 31, 2019.
−Removed: Additionally, a majority of these loans were characterized as current and therefore were not impacting nonaccrual or delinquency totals at December 31, 2022 and 2021.
−Removed: The Company does, however, consider all active deferrals when estimating loss reserves.
−Removed: As loans reach their deferral maturity date, consideration of TDR and delinquency status will resume in accordance with the Company's accounting po licy.
The following table shows information regarding nonaccrual loans at the dates indicated:
10 unchanged sentences
Total nonaccrual loans $ 43,040 $ 11,343 $ 54,383 $ 51,809 $ 3,072 $ 54,881
−Removed: (1) Included in these amounts are $ 11.5 million and $ 2.0 million of nonaccruing TDRs at December 31, 2022 and December 31, 2021, respectively .
−Removed: It is the Company's policy to reverse any accrued interest when a loan is put on nonaccrual status, and, as such, the Company did not record any interest income on nonaccrual loans for the years ended December 31, 2022, 2021, and 2020.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
+Added: (1) N onaccrual balances at December 31, 2022 included $ 11.5 million of nonaccruing TDRs.
+Added: (2) Nonaccrual balances reported above without an allowance for credit losses are attributable to loans evaluated on an individual basis where it was determined that there was no risk of loss due to sufficient underlying collateral values.
+Added: It is the Company's policy to reverse any accrued interest when a loan is put on nonaccrual status, and, as such, the Company did not record any interest income on nonaccrual loans for the years ended December 31, 2023, 2022, and 2021, except for instances where nonaccrual loans were paid off in excess of the recorded book balance.
+Added: Total accrued interest reversed against interest income amounted to $ 1.0 million, $ 1.4 million, and $ 180,000 for the years ended December 31, 2023, 2022, and 2021, respectively.
The following table shows information regarding foreclosed residential real estate property at the dates indicated:
16 unchanged sentences
(Dollars in thousands)
−Removed: Loan Portfolio
Commercial and industrial 6 $ 398 1 $ 17,538 2 $ 673 9 $ 18,609 $ 1,561,377 $ 1,579,986
6 unchanged sentences
Total 480 $ 23,616 29 $ 29,433 40 $ 10,305 549 $ 63,354 $ 14,214,716 $ 14,278,070
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
December 31, 2022
10 unchanged sentences
(Dollars in thousands)
−Removed: Loan Portfolio
Commercial and industrial 3 $ 49 1 $ 175 3 $ 23,726 7 $ 23,950 $ 1,611,153 $ 1,635,103
7 unchanged sentences
(1) Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances.
−Removed: (2) The amount of net deferred costs on originated loans included in the ending balance was $ 5.0 million at December 31, 2022 compared to net deferred fees of $ 159,000 at December 31, 2021.
−Removed: Net unamortized discounts on acquired loans included in the ending balance was $ 10.4 million at both December 31, 2022 and 2021.
−Removed: Troubled Debt Restructurings
−Removed: In the course of resolving nonperforming loans, the Bank may choose to restructure the contractual terms of certain loans.
−Removed: The Bank attempts to work out an alternative payment schedule with the borrower in order to avoid foreclosure actions.
−Removed: Exclusive of loans modified under provisions of the CARES Act, any loans that are modified are reviewed by the Bank to identify if a TDR has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider.
−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 the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two.
−Removed: The following table shows the Company’s total TDRs and other pertinent information at the dates indicated:
−Removed: December 31, 2022 December 31, 2021
−Removed: (Dollars in thousands)
−Removed: TDRs on accrual status $ 11,278 $ 14,635
−Removed: TDRs on nonaccrual 11,520 1,993
−Removed: Total TDRs $ 22,798 $ 16,628
−Removed: Additional commitments to lend to a borrower who has been a party to a TDR $ 64 $ 190
−Removed: The Company’s policy is to have any restructured loan which is on nonaccrual status prior to being modified remain on nonaccrual status for six months subsequent to being modified before management considers its 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: Additionally, loans classified as TDRs are adjusted to reflect the changes in value of the recorded investment in the loan, if any, resulting from the granting of a concession.
−Removed: For all residential loan modifications, the borrower must perform during a 90 day trial period before the modification is finalized.
+Added: (2) The amount of net deferred costs on originated loans included in the ending balance was $ 6.4 million at December 31, 2023, compared to net deferred fees of $ 5.0 million at December 31, 2022.
+Added: Net unamortized discounts on acquired loans included in the ending balance was $8.6 million and $10.4 million at December 31, 2023 and 2022, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: The following table shows the troubled debt restructurings which occurred for the periods indicated and the change in the recorded investment subsequent to the modifications occurring:
−Removed: December 31, 2022
−Removed: Contracts Pre-Modification
−Removed: Investment Post-Modification
−Removed: Troubled debt restructurings (Dollars in thousands)
+Added: Loan Modifications
+Added: The following tables present the amortized cost basis as of December 31, 2023 of loans modified to borrowers experiencing financial difficulty during the twelve months then ended, disaggregated by class of financing receivable and type of modification granted :
+Added: Year Ended December 31, 2023
+Added: Term Extension
+Added: Amortized Cost Basis % of Total Class of Financing Receivable
+Added: (Dollars in thousands)
Commercial and industrial $ 11,010 0.70 %
2 unchanged sentences
Total $ 28,748
−Removed: December 31, 2021
−Removed: Contracts Pre-Modification
−Removed: Investment Post-Modification
−Removed: Troubled debt restructurings (Dollars in thousands)
+Added: Combination - Interest Rate Reduction and Term Extension
+Added: Amortized Cost Basis % of Total Class of Financing Receivable
+Added: (Dollars in thousands)
Commercial and industrial $ 85 0.01 %
+Added: Small business $ 38 0.02 %
+Added: Combination - Term Extension and Other-Than-Insignificant Payment Delay
+Added: Amortized Cost Basis % of Total Class of Financing Receivable
+Added: (Dollars in thousands)
+Added: Commercial and industrial $ 1,865 0.12 %
Commercial real estate 6,505 0.08 %
+Added: Total $ 8,370
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
+Added: The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty for the year ended December 31, 2023:
+Added: Term Extension
+Added: Financial Effect
+Added: Commercial and industrial Added a weighted-average contractual term of 2 months to the life of the loans
+Added: Commercial real estate Added a weighted-average contractual term of 1.9 years to the life of the loans
+Added: Small business Added a weighted-average contractual term of 4.7 years to the life of the loans
+Added: Interest Rate Reduction
+Added: Financial Effect
+Added: Commercial and industrial Reduced contractual rate on one loan from 10.00 % to 7.00 %
+Added: Small business Reduced contractual rate on one loan from 10.00 % to 6.50 %
+Added: The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.
+Added: The following table depicts the amortized cost and payment status of loans that have been modified in the last 12 months as of December 31, 2023:
+Added: Current (1) 30-89 Days Past Due 90+ Days Past Due Total
+Added: (Dollars in thousands)
+Added: Commercial and industrial $ 12,585 $ — $ 375 $ 12,960
+Added: Commercial real estate 23,899 — 136 24,035
Small business 246 — — 246
Total $ 36,730 $ — $ 511 $ 37,241
−Removed: December 31, 2020
−Removed: Contracts Pre-Modification
−Removed: Investment Post-Modification
−Removed: Troubled debt restructurings (Dollars in thousands)
+Added: (1) Current category is inclusive of $8.4 million in nonaccrual loans which have yet to reach the six consecutive months of performance required to return to accruing status in accordance with the Company's accounting policy for nonaccrual loans
+Added: The Company considers a loan to have defaulted when it reaches 90 days past due.
+Added: The table below shows the amortized cost basis of financing receivables modified during the twelve months ended December 31, 2023 that subsequently defaulted:
+Added: Term Extension Combination - Term Extension and Other Than Insignificant Payment Delay Total
+Added: (Dollars in thousands)
Commercial and industrial $ 374 $ — $ 374
Commercial real estate 136 6,505 6,641
+Added: Total $ 510 $ 6,505 $ 7,015
+Added: At December 31, 2023, the Company did not have any additional commitments to lend to borrowers experiencing financial difficulty who were party to a loan modification.
+Added: The Company adopted the accounting and disclosure requirements for loan modifications made to borrowers experiencing financial difficulty and ceased to recognize TDRs effective January 1, 2023.
+Added: As such, there are no current year TDRs and the prior period amounts are shown in the tables below.
+Added: The following table shows the Company’s total TDRs and other pertinent TDR information as of December 31, 2022:
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
+Added: (Dollars in thousands)
+Added: TDRs on accrual status $ 11,278
+Added: TDRs on nonaccrual 11,520
+Added: Total TDRs $ 22,798
+Added: Additional commitments to lend to a borrower who has been a party to a TDR $ 64
+Added: The following table shows the troubled debt restructurings which occurred for the periods indicated and the change in the recorded investment subsequent to the modifications occurring:
+Added: Year Ended December 31, 2022
+Added: Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment
+Added: (Dollars in thousands)
+Added: Commercial and industrial 4 $ 3,466 $ 3,465
+Added: Commercial real estate 1 7,850 7,850
+Added: Total (1) 5 $ 11,316 $ 11,315
+Added: Year Ended December 31, 2021
+Added: Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment
+Added: (Dollars in thousands)
+Added: Commercial and industrial 1 $ 14,148 $ 14,148
+Added: Commercial real estate 5 3,964 3,964
Small business 2 189 189
−Removed: Residential real estate 2 559 642
Total (1) 8 $ 18,301 $ 18,301
(1) The pre-modification and post-modification balances represent the legal principal balance of the loan.
−Removed: Activity presented in the tables above includes $ 14.3 million, and $ 1.9 million of modifications on existing TDRs during the years ended December 31, 2021 and 2020, respectively.
−Removed: The following table shows the Company’s post-modification balance of TDRs listed by type of modification for the periods indicated:
−Removed: 2022 2021 2020
+Added: Activity presented in the tables above includes $14.3 million of modifications on existing TDRs during the year ended December 31, 2021.
+Added: The following table shows the Company's post-modification balance of TDR's listed by type of modification for the periods indicated:
+Added: Year Ended December 31
+Added: (Dollars in thousands)
Extended maturity $ 11,315 $ 4,153
−Removed: Adjusted interest rate — — 822
Combination rate and maturity — 14,148
−Removed: Court ordered concession — — 25
Total $ 11,315 $ 18,301
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: The Company considers a loan to have defaulted when it reaches 90 days past due.
During the twelve months ended December 31, 2022 and 2021, respectively, there were no loans modified during the prior twelve months that subsequently defaulted during the respective periods.
−Removed: The Company determines the amount of allowance on accruing TDRs using a discounted cash flow approach, or a fair value of collateral approach if the loan is determined to be individually evaluated.
−Removed: The allowance on nonaccrual TDR's is estimated in accordance with the CECL methodology for loans measured on a collective basis.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
14 unchanged sentences
The leased equipment is subject to a master lease agreement entered into during 2021 with a third party lessee and the Company assumes the role of lessor in the transaction, which is deemed an operating lease for accounting purposes.
−Removed: The Company recognized rental income of $ 6.1 million, $ 890,000 and $ 1.5 million for the years ended December 31, 2022, 2021 and 2020, respectively .
+Added: The Company recognized rental income of $ 6.4 million, $ 6.1 million and $ 890,000 for the years ended December 31, 2023, 2022 and 2021, respectively .
NOTE 5 GOODWILL AND OTHER INTANGIBLE ASSETS
8 unchanged sentences
Total goodwill and other intangible assets $ 1,003,262 $ 1,010,140
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The changes in the carrying value of goodwill for the periods indicated were as follows:
+Added: 2023 2022 2021
(Dollars in thousands)
3 unchanged sentences
The gross carrying amount and accumulated amortization of other intangible assets were as follows at the dates indicated:
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Amount Accumulated
19 unchanged sentences
Total (1) $ 2,181,479 100.0 % $ 1,195,741 100.0 %
−Removed: The amount of overdraft deposits that were reclassified to the loan category were $ 2.8 million and $ 1.5 million at December 31, 2022 and 2021, respectively.
+Added: (1) The total amount of time deposit accounts with balances equal to or greater than $250,000 at December 31, 2023 and 2022 was $ 571.2 million and $ 251.1 million, respectively.
The Company had pledged assets as collateral covering certain deposits in the amount of $ 900.2 million and $ 952.7 million at December 31, 2023 and 2022, respectively.
1 unchanged sentence
The FDIC offers insurance coverage on deposits up to the federally insured limit of $250,000.
−Removed: The total amount of time deposit accounts with balances equal to or greater than $250,000 at December 31, 2022 and 2021 was $ 251.1 million and $ 339.3 million, respectively.
NOTE 7 BORROWINGS
Federal Home Loan Bank Borrowings
−Removed: The Company typically utilizes FHLB advances for certain short-term and long-term borrowing needs, as deemed necessary.
−Removed: The Company had short-term borrowings outstanding with the FHLB of $ 25.0 million at December 31, 2021, with a contractual rate of 0.34 %.
−Removed: This borrowing matured during the third quarter of 2022 resulting in no outstanding short-term borrowings with the FHLB at December 31, 2022.
−Removed: To manage the interest rate risk of these advances, the Company may enter into interest rate swap agreements which effectively fixes the rate of the borrowing.
−Removed: Inclusive of the impact of these swap arrangements, the weighted average rate of the Company's borrowings at December 31, 2021 was 2.05 %.
−Removed: In addition to these short-term advances, the Company may also utilize longer term amortizing advances, of which $ 637,000 and $ 667,000 were outstanding at December 31, 2022 and 2021, respectively.
+Added: During the twelve months ended December 31, 2023, the Company utilized FHLB advances for certain short-term and long-term borrowing needs, as deemed necessary.
+Added: To manage the interest rate risk of these advances, the Company may enter into interest rate swap agreements which effectively fixes the rate of the borrowings.
+Added: The table below shows the outstanding borrowings December 31, 2023, as well as the contractual rates and effective rates, net of any swap impact:
+Added: Average Effective Rate,
+Added: Total Contractual Net of
+Added: Outstanding Rate Swap Impact
+Added: (Dollars in thousands)
+Added: Overnight Borrowings $ 705,000 5.54 % n/a
+Added: 1-Month Term 400,000 5.50 % 3.83 %
+Added: Amortizing 541 1.40 % n/a
+Added: Total $ 1,105,541
+Added: At December 31, 2022, the Company had no outstanding short-term borrowings with the FHLB and $ 637,000 of longer term amortizing advances bearing a weighted average contractual rate of 1.65 %.
At December 31, 2023 and 2022, the Company had sufficient collateral at the FHLB to support its obligations and was in compliance with the FHLB's collateral pledging program.
The Company’s FHLB advances are collateralized by a blanket pledge agreement on the Bank’s FHLB stock, certain qualified investment securities, deposits at the FHLB, residential mortgages, and by certain commercial real estate loans held in the Bank’s portfolio.
−Removed: The carrying value of loans pledged as collateral for these borrowings totaled $ 2.7 billion and $ 2.3 billion at December 31, 2022 and 2021, respectively, resulting in available borrowing capacity with the FHLB of $ 1.8 billion and $ 1.6 billion at December 31, 2022, and 2021, respectively.
+Added: The carrying value of loans pledged as collateral for these borrowings totaled $ 3.9 billion and $ 2.7 billion at December 31, 2023 and 2022, respectively, resulting in total borrowing capacity with the FHLB of $ 2.7 billion and $ 1.8 billion, of which $ 1.6 billion and $ 1.8 billion remained available as of December 31, 2023, and 2022, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
2 unchanged sentences
(Dollars in thousands)
−Removed: Long term borrowings, net $ — $ 14,063
Junior subordinated debentures
5 unchanged sentences
The interest expense on long-term debt was $ 6.8 million, $ 4.6 million, and $ 4.5 million for the years ended December 31, 2023, 2022, and 2021, respectively.
−Removed: Long-term borrowings:
−Removed: The Company had no outstanding long-term borrowings as of December 31, 2022 and long-term borrowings of $ 14.1 million as of December 31, 2021 related to a senior unsecured term loan credit facility entered into during 2019.
−Removed: The credit facility was re-paid in full during the first quarter of 2022.
Junior Subordinated Debentures :
2 unchanged sentences
The proceeds from the sale of the securities and the issuance of common stock by these trusts were invested in these Junior Subordinated Debentures issued by the Company.
−Removed: These trust preferred securities bear interest at a rate of three-month LIBOR ( 4.77 % at December 31, 2022) plus applicable spread, or equivalent alternate rate.
+Added: These trust preferred securities bear interest at a rate of three-month Secured Overnight Financing Rate ("SOFR") plus the London Interbank Offered Rate ("LIBOR") credit spread (combined 5.65 % at December 31, 2023), plus an applicable credit spread.
Information relating to these trust preferred securities at December 31, 2023 is as follows:
−Removed: Trust Principal Amount Maturity Date Interest Rate Spread All-in Rate
+Added: Trust Principal Amount Maturity Date Credit Spread All-in Rate
(Dollars in thousands)
7 unchanged sentences
However, with regulatory approval, the Company may redeem the subordinated debentures without penalty at any scheduled payment date on or after March 15, 2024 with 30 days' notice.
−Removed: The subordinated debentures carry a fixed rate of interest of 4.75 % through March 15, 2024, after which interest converts to a variable rate of the then current three-month LIBOR rate plus 219 basis points, or equivalent alternate rate.
−Removed: At December 31, 2022, the Company held no borrowings scheduled to mature within the next 5 years.
+Added: The subordinated debentures carry a fixed rate of interest of 4.75 % through March 15, 2024, after which interest converts to a variable rate of the then current three-month SOFR rate plus 219 basis points.
+Added: At December 31, 2023, the Company held no long-term debt scheduled to mature within the next 5 years.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE 8 STOCK BASED COMPENSATION
−Removed: The Company's stock based plans include the Second Amended and Restated 2005 Employee Stock Plan (the "2005 Plan") and the 2018 Non-Employee Director Stock Plan (the "2018 Plan"), which have been approved by the Company’s Board of Directors and shareholders.
−Removed: These shares may be awarded as either stock option awards or restricted stock awards from its pool of authorized but unissued shares.
+Added: The Company's stock based plans include the 2018 Non-Employee Director St ock Plan (the "2018 Plan") and the 2023 Omnibus Incentive Plan (the "2023 Plan"), which have been approved by the Company’s Board of Directors and shareholders.
+Added: Shares from the 2018 Plan may be awarded in the form of stock options or restricted stock, and shares from the 2023 Plan may be awarded in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, or other stock-based awards from its pool of authorized but unissued shares.
+Added: Upon adoption of the 2023 Plan on May 18, 2023, the Second Amended and Restated 2005 Employee Stock Plan (the "2005 Plan") was terminated in its entirety and the Company will no longer grant awards under the 2005 Plan, however awards outstanding under the 2005 Plan will continue to remain outstanding in accordance with their terms.
The following table presents the amount of cumulatively granted stock option awards and restricted stock awards, net of forfeitures and expirations, granted through December 31, 2023:
2 unchanged sentences
Option Awards Restricted
+Added: 2005 Plan 1,650,000 387,258 1,060,821 1,448,079 n/a
2018 Plan 300,000 — 50,767 50,767 249,233
16 unchanged sentences
and, that (2) any stock options which vest pursuant to a Change of Control, which is an event described in Section 280G of the Internal Revenue Code of 1986, will be cashed out at the difference between the acquisition price and the exercise price of the stock option.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Stock Options
6 unchanged sentences
• Forfeitures on stock compensation are recognized when they occur.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
For the years ended December 31, 2023, 2022 and 2021, there were no awards granted by the Company of nonqualified options to purchase shares of common stock.
20 unchanged sentences
For the year ended December 31, 2023, all outstanding stock option awards are vested and there is no unrecognized compensation expense related to those options.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Restricted Stock
4 unchanged sentences
The holders of all restricted stock awards are not required to pay any consideration to the Company for the awards.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
During the years ended December 31, 2023, 2022, and 2021 the Company made the following restricted stock award grants:
1 unchanged sentence
2/16/2023 77,525 2005 $ 80.65 Ratably over 3 years from grant date
+Added: 2/16/2023 12,309 2005 $ 80.65 Ratably over 5 years beginning on February 6, 2023
+Added: 5/15/2023 1,080 2005 $ 46.21 Ratably over 3 years from grant date
5/23/2023 12,410 2018 $ 48.35 Immediately upon grant date
1 unchanged sentence
9/15/2023 5,270 2023 $ 51.44 Ratably over 5 years from grant date
−Removed: 5/25/2021 7,680 2018 $ 78.18 Immediately upon grant date
+Added: 9/15/2023 3,020 2023 $ 51.44 Ratably over 3 years from grant date
+Added: 12/15/2023 460 2023 $ 66.24 Ratably over 3 years from grant date
+Added: 2/17/2022 52,100 2005 $ 84.70 Ratably over 5 years from grant date
5/24/2022 8,099 2018 $ 80.39 Immediately upon grant date
2 unchanged sentences
5/25/2021 7,680 2018 $ 78.18 Immediately upon grant date
+Added: 9/1/2021 640 2018 $ 76.78 Immediately upon grant date
Performance-based
8 unchanged sentences
or, March 31, 2024.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table presents the fair value of restricted stock awards that vested during the periods presented:
3 unchanged sentences
Fair value of restricted stock awards upon vesting $ 5,003 $ 5,148 $ 5,754
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table presents a summary of restricted stock award activity for the year ended December 31, 2023:
9 unchanged sentences
Weighted average remaining recognition period (years) 2.48 years
+Added: (1) Forfeited amounts are inclusive of 3,220 performance-based shares that were not vested based on performance objective criteria results, and 17,405 performance-based shares that were cancelled based on the departure of certain executives of the Company.
(2) There are no unvested restricted stock awards outstanding to Directors and therefore no related unrecognized compensation cost for Directors.
−Removed: (2) Forfeited amounts are inclusive of 7,450 performance-based shares that were not vested based on performance objective criteria results.
NOTE 9 DERIVATIVES AND HEDGING ACTIVITIES
16 unchanged sentences
Weighted Average Rate
−Removed: Notional Amount Average Maturity Current Rate Paid Receive Fixed
+Added: Notional Amount Weighted Average Maturity Current
+Added: Received Pay Fixed
Swap Rate Fair Value
(in thousands) (in years) (in thousands)
+Added: Interest rate swaps on borrowings $ 400,000 2.58 5.34 % 3.67 % $ 1,901
+Added: Current Rate Paid Receive Fixed
Interest rate swaps on loans $ 850,000 2.50 5.36 % 2.72 % $ ( 27,350 )
8 unchanged sentences
(in thousands) (in years) (in thousands)
−Removed: Interest rate swaps on borrowings $ 25,000 0.62 0.16 % 1.88 % $ ( 294 )
−Removed: Current Rate Paid Receive Fixed
Interest rate swaps on loans 1,050,000 2.97 4.24 % 2.66 % ( 42,005 )
4 unchanged sentences
For derivative instruments that are designated and qualify as cash flow hedging instruments, the effective portion of the gains or losses is reported as a component of other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.
−Removed: The Company expects approximately $ 28.6 million (pre-tax) to be reclassified as an increase to interest expense, from OCI related to the Company’s cash flow hedges in the next twelve months following December 31, 2022.
+Added: The Company expects approximately $ 3.9 million (pre-tax) to be reclassified as an increase to interest income and $ 19.9 million (pre-tax) to be reclassified as an increase to interest expense, from OCI related to the Company’s cash flow hedges in the twelve months following December 31, 2023.
This reclassification is due to anticipated payments that will be made and/or received on the swaps based upon the forward curve at December 31, 2023.
−Removed: During the year ended December 31, 2020, the Company accelerated the reclassification of a loss of approximately
−Removed: $684,000 from OCI to earnings as a result of the termination of one of its cash flow hedges.
−Removed: The Company exited the hedge
−Removed: and paid off the associated borrowing in 2020.
−Removed: The Company did not terminate any of its cash flow hedges during the years ended December 31, 2022 and 2021.
The Company had no fair value hedges for the years ended December 31, 2023 and 2022.
47 unchanged sentences
Mortgage Derivatives
−Removed: The Company enters into commitments to fund residential mortgage loans at specified rates and times in the future, with the intention that loans will likely be sold subsequently in the secondary market.
+Added: The Company enters into commitments to fund residential mortgage loans at specified rates and times in the future, with the intention that loans may be sold subsequently in the secondary market.
Mortgage loan commitments are referred to as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding.
2 unchanged sentences
The change in fair value of loans held for sale is recorded in current period earnings as a component of mortgage banking income in accordance with the Company's fair value election.
−Removed: The change in fair value associated with loans held for sale was a decrease of $ 452,000 , a decrease of $ 1.7 million and an increase of $ 1.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.
+Added: The fair value of loans held for sale increased by $ 97,000 for the year ended December 31, 2023 and decreased by $ 452,000 and $ 1.7 million for the years ended December 31, 2022 and 2021, respectively.
These amounts were offset in earnings by the change in the fair value of mortgage derivatives.
18 unchanged sentences
The Company expects that these best efforts forward loan sale commitments will experience a net neutral shift in fair value with related derivative loan commitments.
−Removed: The aggregate amount of net realized gains or losses on sales of loans included within mortgage banking income was $ 562,000 , $ 19.9 million and $ 30.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.
+Added: The aggregate amount of net realized gains on sales of mortgage loans included within mortgage banking income was $ 1.0 million, $ 562,000 and $ 19.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Balance Sheet Offsetting
21 unchanged sentences
Forward sale loan commitments 17 30 — —
−Removed: Forward sale hedge commitments — — — 57
Total derivatives not designated as hedges 102,021 127,958 101,778 127,667
7 unchanged sentences
(2) All liability derivatives are located in other liabilities on the balance sheet .
−Removed: (3) Approximately $ 2.2 million of accrued interest receivable is included in the fair value of the loan level asset derivatives at December 31, 2022, in comparison to accrued interest receivable of approximately $ 1.2 million and $ 1.5 million included in the fair value of interest rate and loan level derivative assets, respectively, at December 31, 2021.
−Removed: (4) Approximately $ 1.3 million and $ 2.2 million of accrued interest payable is included in the fair value of interest rate and loan level derivative liabilities, respectively, at December 31, 2022, in comparison to accrued interest payable of approximately $ 5,000 and $ 1.5 million, respectively, at December 31, 2021.
+Added: (3) As of December 31, 2023, approximately $ 316,000 and $ 3.0 million of accrued interest receivable is included in the fair value of interest rate and loan level derivative assets, respectively.
+Added: Accrued interest receivable of approximately $ 2.2 million is included in the fair value of loan level derivative assets at December 31, 2022.
+Added: (4) Approximately $ 1.9 million and $ 3.0 million of accrued interest payable is included in the fair value of interest rate and loan level derivative liabilities, respectively, at December 31, 2023, in comparison to accrued interest payable of approximately $ 1.3 million and $ 2.2 million, respectively, at December 31, 2022.
(5) Netting adjustments represent the amounts recorded to convert derivative assets and liabilities cleared through CME from a gross basis to a net basis, inclusive of the variation margin payments, in accordance with applicable accounting guidance.
−Removed: As displayed in the table above, derivatives that cleared through the CME were either in a net asset position or a net liability position as of December 31, 2022 and 2021.
(6) Reflects offsetting derivative positions with the same counterparty that are not netted on the balance sheet.
5 unchanged sentences
Derivatives designated as hedges
−Removed: (Loss) gain in OCI on derivatives (effective portion), net of tax $ ( 50,767 ) $ ( 19,139 ) $ 16,797
−Removed: Gain reclassified from OCI into interest income or interest expense (effective portion) $ 5,054 $ 18,691 $ 14,306
−Removed: Loss reclassified from OCI into noninterest expense (loss on termination) $ — $ — $ ( 684 )
+Added: Gain (loss) in OCI on derivatives (effective portion), net of tax $ 16,055 $ ( 50,767 ) $ ( 19,139 )
+Added: (Loss) gain reclassified from OCI into interest income or interest expense (effective portion) $ ( 27,414 ) $ 5,054 $ 18,691
Derivatives not designated as hedges
7 unchanged sentences
If the Company fails to meet these conditions, the counterparties could request the Company make immediate payment or demand that the Company provide immediate and ongoing full collateralization on derivative positions in net liability positions.
−Removed: All derivative instruments with credit-risk related contingent features were in a net asset position at December 31, 2022.
−Removed: At December 31, 2021, the aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a net liability position was $ 34.8 million.
−Removed: Although none of the contingency provisions have applied at December 31, 2022 and December 31, 2021, the Company posted collateral to offset the net liability exposure with institutional counterparties at December 31, 2021.
+Added: All derivative instruments with credit-risk related contingent features were in a net asset position at December 31, 2023 and December 31, 2022.
By using derivatives, the Company is exposed to credit risk to the extent that counterparties to the derivative contracts do not perform as required.
6 unchanged sentences
The Company’s exposure relating to customer counterparties was approximately $ 5.6 million and $ 2.2 million at December 31, 2023 and 2022, respectively.
−Removed: Credit exposure may be reduced by the amount of collateral pledged by the counterparty.
+Added: Credit exposure may be reduced by the value of collateral pledged by the counterparty.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
23 unchanged sentences
Increase (decrease) in uncertain positions ( 655 ) ( 0.21 ) % ( 1,035 ) ( 0.30 ) % 50 0.03 %
+Added: Revaluation of net deferred tax assets 255 0.08 % — — % — — %
Stock-based compensation ( 127 ) ( 0.04 ) % ( 202 ) ( 0.06 ) % ( 372 ) ( 0.24 ) %
−Removed: CARES Act - net operating loss carryback (1) — — % — — % ( 4,809 ) ( 3.15 ) %
Change in valuation allowance 109 0.03 % 52 0.01 % 26 0.02 %
+Added: Other tax credits ( 76 ) ( 0.02 ) % — — % — — %
Merger and other related costs (non-deductible) — — % — — % 630 0.40 %
1 unchanged sentence
Total expense $ 75,632 24.00 % $ 83,941 24.14 % $ 35,683 22.78 %
−Removed: (1) On March 27, 2020 the CARES Act was signed into law, allowing the Company to realize a $ 4.8 million discrete tax benefit.
−Removed: This discrete benefit was associated with revised net operating loss (NOL) carryback provisions.
−Removed: The difference in enacted tax rates between the year of carryback versus carryforward resulted in a benefit recognized in income during the period that included the enactment date.
−Removed: Accordingly, the discrete benefit was fully recognized during the first quarter of 2020.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
40 unchanged sentences
Reduction of tax positions for prior years $ ( 29 )
+Added: Increase for current year tax positions $ 2,433
Balance at December 31, 2021 $ 2,878
Reduction of tax positions for prior years ( 1,047 )
+Added: Increase for prior year tax position 128
Increase for current year tax positions 761
1 unchanged sentence
Reduction of tax positions for prior years ( 959 )
−Removed: Increase for prior year tax positions 128
−Removed: Increase for current year tax positions 761
Balance at December 31, 2023 $ 1,761
10 unchanged sentences
Ending Balance $ 689 $ 585 $ 920
−Removed: (1) Represents balances of accrued interest and penalties assumed by the Company in connection with the Meridian acquisition.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
52 unchanged sentences
Years Ended December 31
+Added: 2023 2022 2021
(Dollars in thousands)
4 unchanged sentences
Benefits paid ( 766 ) ( 2,084 ) ( 556 )
−Removed: Settlement payments — —
Fair value of plan assets at end of year $ 9,632 $ 9,889 $ 14,099
2 unchanged sentences
Interest cost 420 366 344
−Removed: Actuarial gain ( 3,505 ) ( 901 )
+Added: Actuarial loss (gain) 15 ( 3,505 ) ( 901 )
Benefits paid ( 766 ) ( 2,084 ) ( 556 )
−Removed: Settlement payments — —
Benefit obligation at end of year $ 8,385 $ 8,716 $ 13,939
1 unchanged sentence
At December 31, 2023 and 2022, the discount rate used to determine the benefit obligation was 4.77 % and 4.97 %, respectively.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: The components of net period pension benefit are as follows:
+Added: The components of net period pension expense (benefit) are as follows:
Years Ended December 31
+Added: 2023 2022 2021
(Dollars in thousands)
1 unchanged sentence
Expected return on plan assets ( 144 ) ( 966 ) ( 891 )
−Removed: Amortization of net actuarial loss 28 208
+Added: Amortization of net actuarial (gain) loss ( 17 ) 28 208
Settlement gain ( 25 ) ( 31 ) —
−Removed: Net period pension benefit $ ( 603 ) $ ( 339 )
−Removed: The discount rate used to determine net periodic pension cost for the years ended December 31, 2022 and 2021 was 2.68 % and 2.35 %, respectively.
−Removed: The expected long-term rate of return on plan assets used to determine the net periodic pension cost for the years ended December 31, 2022 and 2021 was 7.00 %.
+Added: Net period pension expense (benefit) $ 234 $ ( 603 ) $ ( 339 )
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
+Added: The key assumptions used to determine net periodic pension expense (benefit) are as follows:
+Added: Years Ended December 31
+Added: 2023 2022 2021
+Added: Discount rate 4.97 % 2.68 % 2.35 %
+Added: Expected long-term rate of return on plan assets 1.50 % 7.00 % 7.00 %
Assumptions with respect to the expected long-term rate of return are based on prevailing yields on high-quality, fixed-income investments increased by a premium for equity return expectations.
During the year ended December 31, 2022, the Company's Board of Directors voted to terminate the BHB Plan.
−Removed: As a result, the assets of the BHB plan were transferred to a money market account until the termination is approved by all regulatory bodies.
−Removed: Prior to all assets being held in a money market account and classified within Level 1 of the fair value hierarchy, SBERA offered a common and collective trust as the underlying investment structure for pension plans participating in SBERA.
−Removed: As of December 31, 2021 the target allocation mix for the common and collective trust portfolio called for an equity-based investment range from 49 % to 63 % of total portfolio assets.
−Removed: The remainder of the portfolio was allocated to fixed income securities with a target range of 28 % to 42 % and other investments including global asset allocation and hedge funds from 3 % to 15 %.
−Removed: The Trustees of SBERA, through the Association's Investment Committee ("AIC"), selected investment managers for the common and collective trust portfolio.
−Removed: A professional investment advisory firm is retained by the AIC to provide allocation analysis, performance measurement and to assist with manager searches.
−Removed: The overall investment objective was to diversify equity investments across a spectrum of investment types to limit risks from large market swings.
−Removed: The fair value of major categories of the BHB Plan assets as of December 31, 2021 are summarized below:
−Removed: Fair Value Measurements at Reporting Date Using
−Removed: Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs
−Removed: December 31, 2021
−Removed: (Dollars in thousands)
−Removed: Collective funds $ 1,542 1,542 $ — $ —
−Removed: Equity securities 3,391 3,391 — —
−Removed: Mutual funds 1,702 1,702 — —
−Removed: Total investments in the fair value hierarchy $ 6,635 $ 6,635 $ — $ —
−Removed: Investments measured at net asset value (1) 7,464
−Removed: (1) Under the Fair Value Measurements and Disclosure Topic of the FASB ASC, certain investments that were measured at fair value at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.
−Removed: The fair value hierarchy above was received from SBERA, the plan administrator.
−Removed: The BHB Plan assets measured at fair value in Level 1 are based on quoted market prices in an active exchange market.
−Removed: BHB Plan assets measured at fair value in Level 2, as applicable, are based on pricing models that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data.
−Removed: BHB Plan assets measured at fair value in Level 3, as applicable, are based on unobservable inputs, which include the SBERA’s assumptions and the best information available under the circumstance.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
+Added: As a result, the assets of the BHB plan were transferred to a money market account until the termination is approved by all regulatory bodies, which resulted in a lower long term rate of return on plan assets.
Presented in the table below are the e stimated future benefit payments for the BHB Plan.
2 unchanged sentences
2029-2033 $ 2,600
−Removed: The Company’s total defined benefit plan expense was $ 562,000 , $ 1.2 million, and $ 1.9 million, for the years ending December 31, 2022, 2021, and 2020, respectively.
+Added: The Company’s total defined benefit plan expense was $ 487,000 , $ 562,000 , and $ 1.2 million, for the years ending December 31, 2023, 2022, and 2021, respectively.
Supplemental Executive Retirement Plans
9 unchanged sentences
Benefits paid $ 450 $ 475 $ 475
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Expected future benefit payments for the defined benefit supplemental executive retirement plans are presented below:
15 unchanged sentences
Interest cost 761 492 424
−Removed: Actuarial (gain) loss ( 4,365 ) ( 1,777 ) 2,843
+Added: Actuarial gain ( 8 ) ( 4,365 ) ( 1,777 )
Benefits paid ( 450 ) ( 475 ) ( 475 )
19 unchanged sentences
Amortization of prior service cost 22 22 174
−Removed: Recognized net actuarial loss 606 1,103 471
+Added: Recognized net actuarial (gain) loss ( 460 ) 606 1,103
Net periodic benefit cost $ 703 $ 1,681 $ 2,275
37 unchanged sentences
Under the plan that took effect January 1, 2019, participating directors may defer all or a portion of their cash compensation into a choice of diversified investment portfolios comprised of stocks, bonds and cash.
−Removed: The amount of compensation deferred during 2022, 2021, and 2020 was $ 113,000 , $ 84,000 , and $ 101,000 , respectively.
+Added: There was no compensation deferred during 2023 and compensation of $ 113,000 and $ 84,000 was deferred during 2022 and 2021, respectively.
NOTE 13 FAIR VALUE MEASUREMENTS
55 unchanged sentences
Additionally, in conjunction with fair value measurement guidance, the Company has made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.
−Removed: Although the Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties.
+Added: Although the Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its interest rate derivatives and risk participation agreements may also utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties.
However, as of December 31, 2023 and 2022, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.
−Removed: As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2.
+Added: As a result, the Company has determined that its derivative valuations in their entirety are properly classified as Level 2.
Mortgage Derivatives
17 unchanged sentences
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: Assets and liabilities measured at fair value on a recurring and nonrecurring basis were as follows as of the dates indicated:
+Added: Assets and liabilities measured at fair value on a recurring and nonrecurring basis were as follows at the dates indicated:
Fair Value Measurements at Reporting Date Using
42 unchanged sentences
State, county, and municipal securities 191 — 191 —
−Removed: Single issuer trust preferred securities issued by banks and insurers 491 — 491 —
Pooled trust preferred securities issued by banks and insurers 1,034 — 1,034 —
12 unchanged sentences
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: The estimated fair values and related carrying amounts for assets and liabilities for which fair value is only disclosed are shown below as of the dates indicated:
+Added: The estimated fair values and related carrying amounts for assets and liabilities for which fair value is only disclosed are shown below at the dates indicated:
Fair Value Measurements at Reporting Date Using
40 unchanged sentences
Federal Home Loan Bank borrowings (f) 637 563 — 563 —
−Removed: Long-term borrowings (f) 14,063 13,989 — 13,989 —
Junior subordinated debentures (g) 62,855 60,002 — 60,002 —
14 unchanged sentences
Also excluded from the summary are financial instruments measured at fair value on a recurring and nonrecurring basis, as previously described.
−Removed: The Company considers its financial instruments' current use to be the highest and best use of the instruments.
+Added: The Company considers its current use of financial instruments to be the highest and best use of the instruments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
1 unchanged sentence
A portion of the Company's noninterest income is derived from contracts with customers, and as such, the revenue recognized depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
−Removed: The Company considers the terms of the contract and all relevant facts and circumstances when applying this guidance.
+Added: The Company accounts for such revenues in accordance with ASC 606 - Revenue from Contracts with Customers and considers the terms of the contract and all relevant facts and circumstances when applying this guidance.
To ensure its alignment with this core principle, the Company measures revenue and the timing of recognition by applying the following five steps:
14 unchanged sentences
Investment management - retail investments and insurance revenue 5,603 4,058 3,691
−Removed: Merchant processing income 1,534 1,362 1,299
+Added: Payment processing income 1,675 1,534 1,362
Credit card income 2,119 1,833 1,231
Other noninterest income 5,684 6,099 5,312
−Removed: Total noninterest income in-scope of ASC 606 Revenue Recognition 84,415 71,809 65,905
−Removed: Total noninterest income out-of-scope of ASC 606 Revenue Recognition 30,252 34,041 45,535
+Added: Total noninterest income in-scope of ASC 606 89,263 84,415 71,809
+Added: Total noninterest income out-of-scope of ASC 606 35,346 30,252 34,041
Total noninterest income $ 124,609 $ 114,667 $ 105,850
8 unchanged sentences
For example, the Company may assess monthly fixed service fees associated with the customer having access to the deposit account, which can vary depending on the account type and daily account balance.
−Removed: In addition, the Company may also assess separate fixed fees associated with and at the time specific transactions are entered in to by the customer.
+Added: In addition, the Company may also assess separate fixed fees associated with and at the time specific transactions are entered into by the customer.
As such, the Company considers its performance obligations to be met concurrently with providing the account access or completing the requested deposit transaction.
36 unchanged sentences
In general, the Company recognizes commission revenue at the point of sale, and for certain insurance products, may also earn and recognize annual residual commissions commensurate with annual premiums being paid.
−Removed: Merchant Processing Income
−Removed: The Company refers customers to third party merchant processing partners in exchange for commission and fee income.
+Added: Payment Processing Income
+Added: The Company refers customers to third party payment processing partners in exchange for commission and fee income.
The income earned is comprised of multiple components, including a fixed referral fee per each referred customer, a rebate amount determined primarily as a percentage of net revenue earned by the third party from services provided to each referred customer, and overall production bonus commissions if certain new account production thresholds are met.
−Removed: Merchant processing income is recognized in conjunction with either completing the referral to earn the fixed fee amount or as the merchant activity is processed to derive the Company's rebate and/or production bonus amounts.
+Added: Payment processing income is recognized in conjunction with either completing the referral to earn the fixed fee amount or as the merchant activity is processed to derive the Company's rebate and/or production bonus amounts.
Credit Card Income
11 unchanged sentences
Fee income is recognized in conjunction with completing the exchange transactions.
+Added: The like-kind exchange services provided in connection with this revenue stream ceased during 2023.
Foreign Currency
12 unchanged sentences
Change in fair value of cash flow hedges ( 5,078 ) 1,428 ( 3,650 )
−Removed: net cash flow hedge gains reclassified into interest income or interest expense 5,054 ( 1,421 ) 3,633
+Added: net cash flow hedge losses reclassified into interest income or interest expense ( 27,414 ) 7,709 ( 19,705 )
Net change in fair value of cash flow hedges 22,336 ( 6,281 ) 16,055
Net unamortized gain related to defined benefit pension and other postretirement adjustments arising during the period 210 ( 59 ) 151
−Removed: Amortization of net actuarial losses 635 ( 179 ) 456
+Added: Amortization of net actuarial gains ( 536 ) 151 ( 385 )
Amortization of net prior service costs 39 ( 11 ) 28
1 unchanged sentence
Net change in other comprehensive income for defined benefit postretirement plans (1) ( 312 ) 88 ( 224 )
−Removed: Total other comprehensive loss $ ( 219,431 ) $ 54,164 $ ( 165,267 )
+Added: Total other comprehensive income $ 64,043 $ ( 15,786 ) $ 48,257
Year Ended December 31, 2022
11 unchanged sentences
Amortization of net prior service costs 39 ( 11 ) 28
+Added: Amortization of net settlement credits ( 31 ) 9 ( 22 )
Net change in other comprehensive income for defined benefit postretirement plans (1) 6,246 ( 1,756 ) 4,490
10 unchanged sentences
net cash flow hedge gains reclassified into interest income or interest expense 18,691 ( 5,256 ) 13,435
−Removed: loss on termination of hedge reclassified into noninterest expense ( 684 ) 192 ( 492 )
Net change in fair value of cash flow hedges ( 26,629 ) 7,490 ( 19,139 )
−Removed: Net unamortized loss related to defined benefit pension and other postretirement adjustments arising during the period ( 5,785 ) 1,627 ( 4,158 )
+Added: Net unamortized gain related to defined benefit pension and other postretirement adjustments arising during the period 3,414 ( 960 ) 2,454
Amortization of net actuarial losses 1,331 ( 374 ) 957
Amortization of net prior service costs 192 ( 54 ) 138
−Removed: Amortization of net settlement costs 176 ( 50 ) 126
Net change in other comprehensive income for defined benefit postretirement plans (1) 4,937 ( 1,388 ) 3,549
−Removed: Total other comprehensive income $ 30,707 $ ( 8,181 ) $ 22,526
+Added: Total other comprehensive loss $ ( 51,687 ) $ 13,175 $ ( 38,512 )
(1) The amortization of prior service costs is included in the computation of net periodic pension costs as disclosed in Note 12 - Employee Benefit Plans within the Notes to the Consolidated Financial Statements in Item 8.
16 unchanged sentences
As of December 31, 2023, the Company had entered into 119 noncancellable operating lease agreements for office space, parking , space for ATM locations and certain branch locations, several of which contain renewal options to extend lease terms for a period of 1 to 20 years.
−Removed: The Company has no financing leases outstanding and no leases with residual value guarantees.
+Added: The Company has no material financing leases outstanding and no leases with residual value guarantees.
As of December 31, 2023, the Company did not have any material sub-lease agreements.
The Company's right-of-use asset related to operating leases totaled $ 54.1 million and $ 58.9 million at December 31, 2023 and 2022, respectively, and is recognized in the Company's Consolidated Balance Sheet within other assets .
−Removed: When a decision is made to exit a leased location, the Company may perform a review for lease impairment and/or recognize termination costs associated with the exit.
−Removed: As a result of such exited locations, the Company recognized $ 4.4 million in termination costs during the year ended December 31, 2022, and impairment charges of $ 2.3 million and $ 4.2 million for the years ended December 31, 2021 and 2020, respectively.
−Removed: Exited locations related to the Meridian acquisition were recorded within merger and acquisition expense in the consolidated income statement.
+Added: When a decision is made to exit a leased location, the Company may incur certain termination costs and/or lease impairment charges, if applicable.
+Added: Accordingly, the Company recognized $ 589,000 , $ 4.4 million, and $ 2.3 million of such exit costs during the years ended December 31, 2023, 2022, and 2021, respectively, with the 2022 and 2021 costs recorded through merger and acquisition expense within the consolidated income statements in relation to the Meridian acquisition.
The following table provides information related to the Company's lease costs for the periods indicated:
8 unchanged sentences
Weighted-average discount rate - operating leases 2.98 % 2.43 % 1.97 %
−Removed: (1) Operating lease cost for the years ended December 31, 2021 and 2020, respectively, is inclusive of impairment charges recognized by the Company in relation to branch closure decisions made during each year.
−Removed: There were no impairment charges recognized by the Company in the year ended December 31, 2022.
+Added: (1) Operating lease costs for the periods presented are inclusive of lease exit costs noted above.
The following table sets forth the undiscounted cash flows of base rent related to operating leases outstanding at December 31, 2023 with payments scheduled over the next five years and thereafter, including a reconciliation to the operating lease liability recognized in the Company's Consolidated Balance Sheet in other liabilities:
85 unchanged sentences
Massachusetts Bank Commissioner approval is required if the total of all dividends declared by the Bank in any calendar year would exceed the total of its net profits for that year combined with its retained net profits of the preceding two years, less any required transfer to surplus or a fund for the retirement of any preferred stock.
−Removed: Dividends paid by the Bank to the Company for the year ended December 31, 2022 and 2021 totaled $ 209.2 million and $ 77.6 million, respectively.
+Added: Dividends paid by the Bank to the Company for the years ended December 31, 2023 and 2022 totaled $ 228.9 million and $ 209.2 million, respectively.
Trust Preferred Securities
2 unchanged sentences
For regulatory purposes, bank holding companies are allowed to include trust preferred securities in Tier 1 capital up to a certain limit.
−Removed: Provisions in the Dodd-Frank Act generally exclude trust preferred securities from Tier 1 capital, however, holding companies with consolidated assets of less than $15 billion at December 31, 2009, are able to permanently to include these instruments in Tier 1 capital, unless the Company crosses the consolidated assets threshold as a result of merger and acquisition activity.
+Added: Provisions in the Dodd-Frank Act generally exclude trust preferred securities from Tier 1 capital, however, holding companies with consolidated assets of less than $15 billion at December 31, 2009, are able to permanently include these instruments in Tier 1 capital, unless the Company crosses the consolidated assets threshold as a result of merger and acquisition activity.
Accordingly, as the Company’s 2021 acquisition of Meridian resulted in the crossing of $15 billion in its consolidated assets, its trust preferred securities were phased out of Tier 1 capital and included within Tier 2 capital as of December 31, 2021, in accordance with applicable regulatory guidance.
14 unchanged sentences
Dividends payable $ 23,580 $ 25,103
−Removed: Long-term borrowings — 14,063
Junior subordinated debentures (less unamortized debt issuance costs of $ 30 and $ 33 )
20 unchanged sentences
Income of parent company 221,846 204,682 74,421
−Removed: Equity (deficit) in undistributed income of subsidiaries 59,131 46,571 ( 40,933 )
+Added: Equity in undistributed income of subsidiaries 17,656 59,131 46,571
Net income $ 239,502 $ 263,813 $ 120,992
−Removed: (1) Majority of balance eliminates in consolidation.
+Added: (1) Majority of balance eliminated in consolidation.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
10 unchanged sentences
Change in other liabilities 52 143 ( 1,873 )
−Removed: (Equity) deficit in undistributed income of subsidiaries ( 59,131 ) ( 46,571 ) 40,933
+Added: Equity in undistributed income of subsidiaries ( 17,656 ) ( 59,131 ) ( 46,571 )
Net cash provided by operating activities 224,127 204,326 72,468
6 unchanged sentences
Net proceeds from exercise of stock options 80 — ( 57 )
−Removed: Proceeds from shares issued under the direct stock purchase plan 2,359 2,023 2,132
−Removed: Payments for shares repurchased under share repurchase program ( 139,946 ) — ( 95,091 )
+Added: Proceeds from shares issued under direct stock purchase plan 2,662 2,359 2,023
+Added: Payments for shares repurchased under share repurchase programs ( 188,910 ) ( 139,946 ) —
Common dividends paid ( 98,006 ) ( 93,734 ) ( 62,736 )
7 unchanged sentences
In the opinion of management, such transactions are consistent with prudent banking practices and are within applicable banking regulations.
−Removed: Further details relating to certain related party transactions are outlined below:
Lending Activities
8 unchanged sentences
(1) The 2021 amount includes $ 10.6 million of loans associated with a new director, which represent the outstanding loans balances at the effective date of appointment.
−Removed: At December 31, 2022 and 2021, there were no loans to related parties which were past due, on nonaccrual status or that had been restructured as part of a troubled debt restructuring.
+Added: At December 31, 2023 and 2022, there were no loans to related parties which were past due, on nonaccrual status or that had been restructured due to financial difficulty.
At December 31, 2023 and 2022, the amount of deposit balances of related parties totaled $ 3.9 million and $ 18.5 million, respectively.
3 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.