What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-08 · 273 added, 250 removed, 813 unchanged (39% of the section changed)

3 unchanged sentences

Balance Sheets (unaudited)

September 30,

(In thousands, except share and per share data)

21 unchanged sentences

Preferred stock, $ 0.01

Authorized 2,500,000 shares at June 30, 2022 and December 31, 2021

Authorized 2,500,000 shares at September 30 , 2022 and December 31, 2021

Common stock, $ 0.01

Authorized 100,000,000 shares at June 30, 2022 and December 31, 2021;

issued 49,651,493 at June 30, 2022 and December 31, 2021

Authorized 100,000,000 shares at September 30 , 2022 and December 31, 2021 ;

issued 49,651,493 at September 30 , 2022 and

December 31, 2021

Additional paid-in-capital

1 unchanged sentence

Accumulated other comprehensive loss

Common stock in treasury, at cost, 6,815,087 and 6,483,481 shares at June 30, 2022 and December 31, 2021, respectively

Common stock in treasury, at cost, 6,812,238 and 6,483,481 shares at September 30 , 2022 and

December 31, 2021 , respectively

Total stockholders’ equity

5 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30 ,

(In thousands, except per share data)

36 unchanged sentences

and Subsidiaries

Statements of Comprehensive Income (unaudited)

Statements of Comprehensive Income (Loss) (unaudited)

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30 ,

(In thousands)

14 unchanged sentences

Total pension and other benefits, net

Total other comprehensive (loss) income

Comprehensive income (loss)

Total other comprehensive (loss)

Comprehensive (loss) income

See accompanying notes to unaudited interim consolidated financial statements.

5 unchanged sentences

(In thousands, except share and per share data)

Balance at March 31, 2022

Balance at June 30, 2022

Cash dividends - $ 0.30

Purchase of 182,900

treasury shares

Net issuance of 2,849

2 unchanged sentences

Other comprehensive (loss)

Balance at September 30 , 2022

Balance at June 30, 2021

Balance at March 31, 2021

Cash dividends - $ 0.28

Purchase of 23,627 treasury

Purchase of 119,342 treasury shares

Net issuance of 1,672

1 unchanged sentence

Stock-based compensation

Other comprehensive income

Balance at June 30 , 2021

Other comprehensive (loss)

Balance at September 30 , 2021

Comprehensive

9 unchanged sentences

Other comprehensive (loss)

Balance at June 30 , 2022

Balance at September 30 , 2022

Balance at December 31, 2020

6 unchanged sentences

Other comprehensive (loss)

Balance at June 30 , 2021

Balance at September 30 , 2021

See accompanying notes to unaudited interim consolidated financial statements.

3 unchanged sentences

Cash Flows (unaudited)

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

48 unchanged sentences

Consolidated Statements of Cash Flows (unaudited) (continued)

Six Months Ended

Nine Months Ended

September 30,

Supplemental disclosure of cash flow information

9 unchanged sentences

and Subsidiaries

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2022

Notes to Unaudited Interim Consolidated

Financial Statements

September 30, 2022

Description of Business

23 unchanged sentences

the “Company”.

In the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods in accordance with generally accepted

In the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods in accordance with generally accepted

accounting principles in the United States of America (“GAAP”) and in accordance with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”).

45 unchanged sentences

(In thousands)

As of June 30 , 2022

As of September 30 , 2022

Federal agency

18 unchanged sentences

There was no allowance for credit losses on AFS

securities as of June 30, 2022 and December 31, 2021.

During the three and six months ended June 30, 2022 and 2021 there were no

gains or losses reclassified out of accumulated other comprehensive income (loss) (“AOCI”) and into earnings.

securities as of September 30, 2022 and December 31, 2021.

During the three and nine months ended September 30, 2022 and 2021 there were no gains or losses reclassified out of accumulated other comprehensive income (loss) (“AOCI”) and into earnings.

The amortized cost, estimated fair value and unrealized gains and losses of HTM securities are as follows:

(In thousands)

As of June 30 , 2022

As of September 30 , 2022

Federal agency

17 unchanged sentences

Total HTM securities

At June 30, 2022 and December 31, 2021, all of the mortgaged-backed HTM securities were comprised of U.S.

At September 30, 2022 and December 31, 2021, all of the mortgaged-backed HTM securities were comprised of U.S.

government agency and government-sponsored enterprises

There was no allowance for credit losses on HTM

securities as of June 30, 2022 and December 31, 2021 because the expectation of nonrepayment of the amortized cost is zero, except for state & municipal securities, which such expected losses are immaterial .

The Company recorded no gains from calls on HTM securities for the three months ended June 30, 2022 and 2021.

I ncluded in net realized gains (losses), the Company recorded gains from calls on HTM securities of approximately $ 4 thousand and $ 15 thousand

for the six months ended June 30, 2022 and 2021, respectively.

securities as of September 30, 2022 and December 31, 2021 because the expectation of nonrepayment of the amortized cost is zero, except for state & municipal securities, which such expected losses from nonrepayment are immaterial .

T he Company recorded no gains from calls on HTM securities for the three months ended September 30, 2022.

Included in net realized gains (losses), the Company recorded gains from calls on HTM securities of

approximately $ 14 thousand for the three months ended September 30, 2021.

Included in net realized gains (losses), the Company recorded

gains from calls on HTM securities of approximately $ 4 thousand and $ 29 thousand for the nine months ended September 30, 2022 and 2021, respectively.

AFS and HTM securities with amortized costs totaling $ 1.74

billion at June 30, 2022 and $ 1.6 billion at December 31, 2021 were pledged to secure public deposits and for other purposes required or

permitted by law.

Additionally, at June 30, 2022 and December 31, 2021, AFS and HTM securities with an amortized cost of $ 137.0 million and

$ 162.1 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

billion at September 30, 2022 and $ 1.63 billion at

December 31, 2021 were pledged to secure public deposits and for other purposes required or permitted by law.

Additionally, at September 30, 2022 and

December 31, 2021, AFS and HTM securities with an amortized cost of $ 126.2 million and $ 162.1 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

The following tables set forth information with regard to gains and (losses) on equity securities:

Three Months Ended

September 30,

(In thousands)

2 unchanged sentences

Unrealized (losses) and gains recognized on equity securities still held

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

2 unchanged sentences

Unrealized (losses) and gains recognized on equity securities still held

As of June 30, 2022 and December 31, 2021, the carrying value of equity securities without readily

determinable fair values was $ 1.0 million.

The Company performed a qualitative assessment to determine whether the investments were

impaired and identified no areas of concern as of June 30, 2022 and 2021.

There were no impairments, downward or upward adjustments

recognized for equity securities without readily determinable fair values during the three and six months ended June 30, 2022 and 2021.

The following table sets forth information with regard to contractual maturities of debt securities at June 30, 2022:

As of September

30, 2022 and December 31, 2021, the carrying value of equity securities without readily determinable fair values was $ 1.0

The Company performed a qualitative assessment to determine whether the investments were impaired and identified no areas of concern as of September 30, 2022 and 2021.

There were no impairments, downward or upward adjustments recognized for equity securities without readily determinable fair values

during the three and nine months ended September 30, 2022 and 2021.

The following table sets forth information with regard to contractual maturities of debt securities at September 30, 2022:

(In thousands)

15 unchanged sentences

Except for U.S.

government securities and government-sponsored enterprises securities , there were no holdings, when taken in the aggregate, of any single issuer that exceeded 10% of consolidated stockholders’ equity at June 30, 2022 and December

December 31, 2021.

The following table sets forth information with regard to investment securities with unrealized losses, for which an allowance for credit losses has not been recorded,

3 unchanged sentences

(In thousands)

As of June 30 , 2022

As of September 30 , 2022

AFS securities:

23 unchanged sentences

Total securities with unrealized losses

The Company does not believe the AFS securities that were in an unrealized loss position as of June 30, 2022 and December 31, 2021, which consisted of 373 and 149 individual securities,

The Company does not believe the AFS securities that were in an unrealized loss position as of September 30, 2022 and December 31, 2021, which consisted of 415 and 149 individual securities,

respectively, represented a credit loss impairment.

AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly.

As of June 30, 2022 and December 31, 2021, the majority of the AFS

As of September 30, 2022 and December 31, 2021, the majority of the AFS

securities in an unrealized loss position consisted of debt securities issued by U.S.

9 unchanged sentences

AIR on AFS debt securities totaled $ 4.3 million at

June 30, 2022 and $ 3.9 million at December 31, 2021 and is excluded from the estimate of credit losses and reported in the financial

September 30, 2022 and $ 3.9 million at December 31, 2021 and is excluded from the estimate of credit losses and reported in the financial

statement line for other assets.

None of the Bank’s HTM debt securities were past due

or on nonaccrual status as of June 30, 2022 and December 31, 2021.

There was no accrued interest reversed against interest income for

the three and six months ended June 30, 2022 or the year ended December 31, 2021 as all securities remained on accrual status.

In addition, there were no

collateral-dependent HTM debt securities as of June 30, 2022 and December 31, 2021.

As of June 30, 2022 and December 31, 2021, 69 % and 56 %, respectively, of the Company’s HTM debt securities were issued by U.S.

or on nonaccrual status as of September 30, 2022 and December 31, 2021.

There was no accrued interest reversed against interest income

for the three and nine months ended September 30, 2022 or the year ended December 31, 2021 as all securities remained on accrual status.

In addition, there were no collateral-dependent HTM debt securities as of September 30, 2022 and December 31, 2021.

As of September 30, 2022 and December 31, 2021, 69 % and 56 %, respectively, of the Company’s HTM debt securities

were issued by U.S.

government agencies or U.S.

government-sponsored enterprises.

These securities

carry the explicit and/or implicit guarantee of the U.S.

government, are widely recognized as “risk free,” and have a long history of zero credit losses.

Therefore, the Company did not record an allowance for credit losses for these securities as of

June 30, 2022 and December 31, 2021.

The remaining HTM debt securities at June 30, 2022 and December 31, 2021 were comprised of state and municipal obligations with bond ratings of A to AAA.

Utilizing the Current Expected Credit Losses (“CECL”)

approach, the Company determined that the expected credit loss on its HTM municipal bond portfolio was immaterial and therefore no allowance for credit loss was recorded as of June 30, 2022 and December 31, 2021.

AIR on HTM debt securities totaled $ 3.2 million at June 30, 2022 and $ 2.7

million at December 31, 2021 and is excluded from the estimate of credit losses and reported in the other assets financial statement line.

These securities carry the explicit and/or implicit guarantee of the U.S.

government, are widely recognized as “risk free,” and have a long history of zero credit

Therefore, the Company did not record an allowance for credit losses for these securities as of September 30, 2022 and December 31, 2021.

The remaining HTM debt securities at September 30, 2022 and December 31, 2021 were comprised of state

and municipal obligations with bond ratings of A to AAA.

Utilizing the Current Expected Credit Losses (“CECL”) approach, the Company determined that the expected credit loss on its HTM municipal bond portfolio was immaterial and therefore no

allowance for credit loss was recorded as of September 30, 2022 and December 31, 2021.

AIR on HTM debt securities totaled $ 3.3 million at

September 30, 2022 and $ 2.7 million at December 31, 2021 and is excluded from the estimate of credit losses and reported in the other

assets financial statement line.

Allowance for Credit Losses and Credit Quality of Loans

The allowance for credit losses totaled $ 96.8 million at

June 30, 2022, compared to $ 92.0 million at December 31, 2021.

The allowance for credit losses as a percentage of loans was 1.20 % at June 30, 2022, compared to 1.23 % at

December 31, 2021.

September 30, 2022, compared to $ 92.0 million at December 31, 2021.

The allowance for credit losses as a percentage of loans was 1.22 % at September 30, 2022, compared to 1.23 %

at December 31, 2021.

The allowance for credit losses calculation incorporated a 6-quarter forecast period to account for forecast economic conditions under each scenario utilized in the

For periods beyond the 6-quarter forecast, the model reverts to long-term economic conditions over a 4-quarter reversion period on a straight-line basis.

The Company considers a baseline, upside, and downside economic forecast in measuring

the allowance.

The Company considers a baseline, upside and downside economic forecast in

measuring the allowance.

The quantitative

model as of June 30, 2022 incorporated a baseline economic outlook along with an alternative downside scenario sourced from a reputable third-party to accommodate other potential economic conditions in the model, particularly significant unknowns

relating to downside risks as of the measurement date.

The baseline outlook reflected an unemployment rate environment initially at pre-coronavirus (“COVID-19”) pandemic levels of 3.8% but falling below pre-COVID-19 pandemic levels by the end of

the forecast period to a low of 3.4%.

Northeast GDP’s annualized growth (on a quarterly basis) is expected to start the third quarter of 2022 at about 9.5% and hover around 5% by the end of the forecast period.

Other utilized economic variables

worsened overall during the quarter, with outlooks for annualized growth in retail sales and business output declining from the prior quarter along with housing starts.

Key assumptions in the baseline economic outlook included the containment of

the European conflict to only Russia and Ukraine, further interest rate hikes by the Federal Reserve, and achievement of full employment by the end of 2022.

The alternative downside scenario assumed deteriorated economic and pandemic related

conditions from the baseline outlook.

model as of September 30, 2022 incorporated a baseline economic outlook along with an alternative downside scenario sourced

from a reputable third-party to accommodate other potential economic conditions in the model, particularly significant unknowns relating to downside risks as of the measurement date.

The baseline outlook reflected an unemployment rate

environment at pre-coronavirus (“COVID-19”) pandemic levels of 3.8% and maintaining those levels to the end of the forecast period.

Northeast GDP’s

annualized growth (on a quarterly basis) is expected to start the fourth quarter of 2022 at about 4.5% and hover around that level across the forecast period.

Other utilized economic variables worsened overall during the fourth quarter of

the forecast, with outlooks for annualized growth in retail sales and business output declining from the prior quarter along with housing starts.

Key assumptions in the baseline economic outlook included the economy reaching full employment

in the coming quarters, further interest rate increases by the Federal Reserve, and the global oil market remaining relatively balanced into 2023.

The alternative downside scenario assumed deteriorated economic conditions from the baseline

Under this scenario, northeast unemployment rises from 4.0% in the third quarter of 2022 to a peak of 6.9% in the fourth quarter of 2023.

The alternative upside scenario incorporated a more optimistic outlook than the baseline

scenario, with an imminent return to full employment and northeast unemployment declining to 3.3% by the end of the forecast period.

These scenarios and their respective weightings are evaluated at each measurement date and reflect

management’s expectations as of September 30, 2022.

At September 30, 2022, the weightings were 50%, 0% and 50% for the baseline, upside and downside economic forecasts, respectively.

Qualitative adjustments were made for isolated model

limitations related to modeled inputs and outputs given abnormally high retail sales and business output growth rates in prior quarters.

Additionally, a qualitative adjustment for inflation was added to adjust for potential model

limitations arising from the use of a macroeconomic variable denominated in nominal dollar terms.

These factors were considered through separate quantitative processes and incorporated into the estimate of current expected credit losses at

September 30, 2022.

The quantitative

model as of June 30, 2022 incorporated a baseline economic outlook along with an alternative downside scenario sourced from a

reputable third-party to accommodate other potential economic conditions in the model, particularly significant unknowns relating to downside risks as of the measurement date.

The baseline outlook reflected an unemployment rate environment

initially at pre-COVID-19 levels of 3.8% but falling below pre-COVID-19 levels by the end of the forecast period to a low of 3.4%.

Northeast GDP’s

annualized growth (on a quarterly basis) is expected to start the third quarter of 2022 at about 9.5% and hover around 5% by the end of the forecast period.

Other utilized economic variables worsened overall during the quarter, with

outlooks for annualized growth in retail sales and business output declining from the prior quarter along with housing starts.

Key assumptions in the baseline economic outlook included the containment of the European conflict to only Russia

and Ukraine, further interest rate increases by the Federal Reserve, and achievement of full employment by the end of 2022.

The alternative downside scenario assumed deteriorated economic and pandemic related conditions from the baseline

Under this scenario, northeast unemployment rises from 4.2% in the second quarter of 2022 to a peak of 7.0% in the third quarter of 2023.

The alternative upside scenario incorporated a more optimistic outlook

than the baseline scenario, with an imminent return to full employment, with northeast unemployment declining to 2.9% by the end of the forecast period.

These scenarios and their respective weightings are evaluated at each measurement date and

reflect management’s expectations as of June 30, 2022.

The alternative upside scenario incorporated a more optimistic outlook than the baseline

scenario, with an imminent return to full employment, with northeast unemployment declining to 2.9% by the end of the forecast period.

These scenarios and their respective weightings are evaluated at each measurement date and reflect

management’s expectations as of June 30, 2022.

At June 30, 2022, the weightings were 50%, 0% and 50% for the baseline, upside and downside economic forecasts, respectively.

Additionally, qualitative adjustments were made for isolated

model limitations related to modeled outputs given abnormally high retail sales and business output growth rates in prior quarters.

Additionally, qualitative adjustments were made for isolated model

limitations related to modeled outputs given abnormally high retail sales and business output growth rates in prior quarters.

These factors were considered through separate quantitative processes and incorporated into the estimate of

current expected credit losses at June 30, 2022.

The quantitative

model as of March 31, 2022 incorporated a baseline economic outlook along with an alternative downside scenario sourced from a reputable third-party to accommodate other potential economic conditions in the model, particularly significant

unknowns relating to downside risks as of the measurement date.

The baseline outlook reflected an unemployment rate environment initially above pre-COVID-19 levels at 4.3% but falling below pre-coronavirus pandemic levels by the fourth quarter of

the forecast period and to a low of 3.4%.

Northeast GDP’s annualized growth (on a quarterly basis) was expected to start the second quarter of 2022 at approximately 9% and hover around 5.5% by the middle and end of the forecast period.

utilized economic variables either improved or remained relatively flat, with retail sales and business output remaining steady from the prior quarter and housing starts increasing from the prior quarter’s forecast.

Key assumptions in the

baseline economic outlook included continued abatement of COVID-19, the containment of the European conflict to only Russia and Ukraine, further increase of interest rates by the Federal Reserve, and achievement of full employment by the end of

The alternative downside scenario assumed deteriorated economic and pandemic related conditions from the baseline outlook.

Under this scenario, northeast unemployment rises from 4.8% in the first quarter of 2022 to a peak of 7.15% in the

second quarter of 2023.

The alternative upside scenario incorporated a more optimistic outlook than the baseline scenario, with an imminent return to full employment with northeast unemployment declining to 2.99% by the end of the forecast

These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of March 31, 2022.

At March 31, 2022, the weightings were 60%, 0% and 40% for the baseline, upside and

downside economic forecasts, respectively.

The Company also continued to monitor the level of criticized and classified loans in the first quarter of 2022 compared to the level contemplated by the model during similar, historical economic

conditions, and determined that an adjustment was no longer required.

The quantitative model as

of December 31, 2021 incorporated a baseline economic outlook along with alternative upside and downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model.

The baseline outlook reflected an

unemployment rate environment initially above pre-COVID-19 levels at 4.8% but falling below pre-COVID-19 levels by the end of the forecast period to 3.5%.

Northeast GDP’s annualized growth (on a quarterly basis) was expected to start the first

quarter of 2022 at approximately 9% and hover around 5% by the middle and end of the forecast period.

The quantitative model

as of December 31, 2021 incorporated a baseline economic outlook along with alternative upside and downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model.

The baseline outlook

reflected an unemployment rate environment initially above pre-COVID-19 levels at 4.8% but falling below pre-COVID-19 levels by the end of the forecast period to 3.5%.

Northeast GDP’s annualized growth (on a quarterly basis) was expected to start

the first quarter of 2022 at approximately 9% and hover around 5% by the middle and end of the forecast period.

The alternative downside scenario assumed deteriorated economic and pandemic related conditions from the baseline outlook.

Under this scenario,

northeast unemployment rose from 5.7% in the fourth quarter of 2021 to a peak of 8% in the first quarter of 2023, remaining around or above 7% for the entire forecast period.

The alternative upside scenario incorporated a more optimistic outlook than

the baseline scenario, with a swift return to full employment by the second quarter of 2022 and with northeast unemployment moving down to 3.1% by the end of the forecast period.

These scenarios and their respective weightings are evaluated at each

measurement date and reflect management’s expectations as of December 31, 2021.

scenario, northeast unemployment rose from 5.7% in the fourth quarter of 2021 to a peak of 8% in the first quarter of 2023, remaining around or above 7% for the entire forecast period.

The alternative upside scenario incorporated a more optimistic

outlook than the baseline scenario, with a swift return to full employment by the second quarter of 2022 and with northeast unemployment moving down to 3.1% by the end of the forecast period.

These scenarios and their respective weightings are

evaluated at each measurement date and reflect management’s expectations as of December 31, 2021.

At December 31, 2021, the weightings were 60%, 10% and 30% for the baseline, upside and downside economic forecasts, respectively.

Additional adjustments were made for

COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in the second and third quarters of 2020, including direct payments to individuals, increased unemployment benefits, the Company’s

loan deferral and modification initiatives and various government sponsored loan programs.

The Company also continued to monitor the level of criticized and classified loans in the fourth quarter of 2021 compared to the level contemplated by the

model during similar, historical economic conditions, and an adjustment was made to estimate potential additional losses above modeled losses.

Additionally, qualitative adjustments were made for Moody’s baseline economic forecast to include impacts

of the Build Back Better Act not passing by December 31, 2021 and to address potential economic deterioration due to Omicron, as well as isolated model limitations related to modeled outputs given abnormally high retail sales and business output

growth rates in historical periods.

adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in the second and third quarters of 2020, including direct payments to individuals, increased unemployment

benefits, the Company’s loan deferral and modification initiatives and various government sponsored loan programs.

The Company also continued to monitor the level of criticized and classified loans in the fourth quarter of 2021 compared to the

level contemplated by the model during similar, historical economic conditions, and an adjustment was made to estimate potential additional losses above modeled losses.

Additionally, qualitative adjustments were made for Moody’s baseline economic

forecast to include impacts of the Build Back Better Act not passing by December 31, 2021 and to address potential economic deterioration due to Omicron, as well as isolated model limitations related to modeled outputs given abnormally high retail

sales and business output growth rates in historical periods.

These factors were considered through separate quantitative processes and incorporated into the estimate of current expected credit losses at December 31, 2021.

There were no loans purchased with credit deterioration during the six months ended June 30, 2022 or the year ended December 31, 2021.

There were no loans purchased with credit deterioration during the nine months ended September 30, 2022 or the year ended December 31, 2021.

2022, the Company purchased $ 8.0 million of residential loans at a slight discount and $ 50.1 million in consumer loans at par.

3 unchanged sentences

The Company made a policy election to report AIR in the other assets line item on the balance sheet.

AIR on loans totaled $ 19.6 million at June 30, 2022 and $ 19.5 million at December 31, 2021 and there was no estimated allowance for credit losses related to AIR as of June 30, 2022 and December 31, 2021.

AIR on loans totaled $ 21.2 million at September 30, 2022 and $ 19.5 million at December 31, 2021 and there was no estimated allowance for credit losses related to AIR as of September 30, 2022 and December 31, 2021.

The following tables present the activity in the allowance for credit losses by portfolio segment:

(In thousands)

Balance as of March 31, 2022

Ending balance as of June 30, 2022

Balance as of March 31, 2021

Ending balance as of June 30 , 2021

Balance as of June 30, 2022

Ending balance as of September 30, 2022

Balance as of June 30, 2021

Ending balance as of September 30 , 2021

(In thousands)

Balance as of December 31, 2021

Ending balance as of June 30, 2022

Ending balance as of September 30, 2022

Balance as of December 31, 2020

Ending balance as of June 30 , 2021

The increase in the allowance for credit

losses from December 31, 2021 and March 31, 2022 to June 30, 2022 was due to an increase in loan balances, an additional specific reserve established during the second quarter and a modest deterioration in the economic forecast.

The decrease in the allowance for credit losses

from December 31, 2020 and March 31, 2021 to June 30, 2021 was primarily due to an improvement in the economic forecast.

Ending balance as of September 30 , 2021

The increase in the allowance for credit losses from December 31, 2021 and June 30, 2022 to September 30, 2022 was due to an increase in loan balances and a modest deterioration in the economic

The decrease in the allowance for credit losses from December 31, 2020 and June 30, 2021 to September 30, 2021 was primarily due to an improvement in the economic forecast.

Individually Evaluated Loans

As of June 30, 2022, there were five relationships

identified to be evaluated for loss on an individual basis which, in aggregate, had an amortized cost basis of $ 9.3 million, with an

allowance for credit loss of $ 0.8 million, which was deemed collateral dependent, and therefore determined by an estimate of the fair value

of the collateral which consisted of business assets (accounts receivable, inventory, machinery and equipment).

As of December 31, 2021, these same five

relationships were identified to be evaluated for loss on an individual basis with an aggregate amortized cost basis of $ 10.2 million and no allowance for credit loss.

As of September 30, 2022, there were four relationships

identified to be evaluated for loss on an individual basis which, in aggregate, had an amortized cost basis of $ 4.3 million, with no allowance for credit loss.

As of December 31, 2021, there were five relationships identified to be evaluated for loss on an individual basis with an aggregate amortized cost basis of $ 10.2

million and no allowance for credit loss.

The decrease in the amortized cost basis on an individual basis from December 31, 2021 to

September 30, 2022 was primarily due to principal payments and resolution of one relationship in which the cost basis was substantially

collected and the related $ 0.8 million allowance for credit losses was reversed.

The following table sets forth information with regard to past due and nonperforming loans by loan segment:

(In thousands)

As of June 30 , 2022

As of September 30 , 2022

Commercial loans:

10 unchanged sentences

Total consumer loans

As of June 30, 2022 and December 31, 2021, there were no

loans in non-accrual without an allowance for credit losses.

As of September 30, 2022 and December 31, 2021, there were no

loans in nonaccrual without an allowance for credit losses.

Credit Quality Indicators

7 unchanged sentences

quantifiable and measurable characteristics when available.

This includes comparison of financial strength to available industry averages, comparison of transaction factors (loan terms and conditions) to loan policy and comparison of credit history to

stated repayment terms and industry averages.

This includes comparison of financial strength to available industry averages, comparison of transaction factors (loan terms and conditions) to loan policy and comparison of credit history

to stated repayment terms and industry averages.

Some grading factors are necessarily more subjective such as economic and industry factors, regulatory environment and management.

C&I and CRE loans are graded Doubtful, Substandard, Special Mention and

C&I and CRE loans are graded Doubtful, Substandard, Special

Mention and Pass.

A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its

1 unchanged sentence

Doubtful borrowers are usually in default, lack adequate liquidity or capital and lack the resources necessary to remain an operating entity.

Pending events can include mergers, acquisitions, liquidations, capital

injections, the perfection of liens on additional collateral, the valuation of collateral and refinancing.

Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new information.

Pending events can include mergers, acquisitions, liquidations,

capital injections, the perfection of liens on additional collateral, the valuation of collateral and refinancing.

Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new

Nonaccrual treatment is required for Doubtful assets because of the high probability of loss.

Substandard loans have a high probability of payment default or they have other well-defined weaknesses.

They require more intensive supervision by bank

They require more intensive supervision by

bank management.

Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity and/or marginal capitalization.

Repayment may depend on collateral or other credit risk

Repayment may depend on collateral or other credit

risk mitigants.

For some Substandard loans, the likelihood of full collection of interest and principal may be in doubt and those loans should be placed on nonaccrual.

Although Substandard assets, in the aggregate, will have a distinct potential for loss,

an individual asset’s loss potential does not have to be distinct for the asset to be rated Substandard.

Although Substandard assets, in the aggregate, will have a distinct potential for

loss, an individual asset’s loss potential does not have to be distinct for the asset to be rated Substandard.

Special Mention

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ill-proportioned balance sheet (e.g., increasing inventory without an increase in sales, high leverage, and/or tight liquidity).

Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a

Special Mention rating.

Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support

a Special Mention rating.

Although a Special Mention loan has a higher probability of default than a Pass asset, its default is not imminent.

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(In thousands)

As of June 30 , 2022

As of September 30 , 2022

By internally assigned grade:

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The allowance for losses on unfunded commitments totaled $ 5.3

million as of June 30, 2022 and December 31, 2021.

million as of September 30, 2022, compared to $ 5.1 million as of December 31, 2021.

Troubled Debt Restructuring

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If management determines that the value of the modified loan is less than the recorded investment in the loan, an impairment charge would be recorded.

TheCompany began offering loan modifications to assist borrowers

during the COVID-19 national emergency.

The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), along with a joint agency statement issued by banking regulatory agencies, provides that modifications made in response to COVID-19 do not

need to be accounted for as a TDR.

The Company evaluated the modification programs provided to its borrowers and concluded the modifications were generally made in accordance with the CARES Act guidance to borrowers who were in good standing prior to

the COVID-19 pandemic and are not required to be designated as TDRs.

The Company began offering loan modifications to assist

borrowers during the COVID-19 national emergency.

The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), along with a joint agency statement issued by banking regulatory agencies, provides that modifications made in response to

COVID-19 do not need to be accounted for as a TDR.

The Company evaluated the modification programs provided to its borrowers and concluded the modifications were generally made in accordance with the CARES Act guidance to borrowers who were in good

standing prior to the COVID-19 pandemic and are not required to be designated as TDRs.

The following tables illustrate the recorded investment and number of modifications designated as TDRs, including the recorded investment in the loans prior to a

modification and the recorded investment in the loans after restructuring:

Three Months Ended June 30, 2022

Three Months Ended June 30 ,

Three Months Ended September 30,

Three Months Ended September 30 , 2021

(Dollars in thousands)

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Total consumer loans

Six Months Ended June 30, 2022

Ended June 30 , 2021

Nine Months Ended September 30, 2022

Ended September 30 , 2021

(Dollars in thousands)

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Total consumer loans

The following table illustrates the recorded investment and number of modifications for TDRs where a concession has been made and subsequently defaulted during the period:

The following table illustrates the recorded investment and number of modifications for TDRs where a concession has been made and subsequently defaulted during the

Three Months Ended

June 30, 2022

September 30, 2022

Three Months Ended

June 30, 2021

September 30, 2021

(Dollars in thousands)

Six Months Ended

June 30, 2022

Six Months Ended

June 30, 2021

Commercial loans:

Total commercial loans

Nine Months Ended

September 30, 2022

Nine Months Ended

September 30, 2021

(Dollars in thousands)

Commercial loans:

Total commercial loans

Consumer loans:

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Defined Benefit Post-Retirement Plans

The Company has a qualified, noncontributory, defined benefit pension plan (the “Plan”) covering substantially all of its employees at June 30, 2022.

Benefits paid from

the Plan are based on age, years of service, compensation and social security benefits and are determined in accordance with defined formulas.

The Company has a qualified, noncontributory, defined benefit pension plan (the “Plan”) covering substantially all of its employees at September 30, 2022.

Benefits paid

from the Plan are based on age, years of service, compensation and social security benefits and are determined in accordance with defined formulas.

The Company’s policy is to fund the Plan in accordance with Employee Retirement Income Security Act of

1974 standards.

Assets of the Plan are invested in publicly traded stocks and mutual funds.

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that were employed by the Company on or before January 1, 2000 are eligible to receive post-retirement health care benefits.

In addition, the Company assumed post-retirement medical life insurance benefits for certain Alliance employees, retirees and

their spouses, if applicable, in the Alliance acquisition.

In addition, the Company assumed post-retirement medical and life insurance benefits for certain Alliance employees, retirees

and their spouses, if applicable, in the Alliance acquisition.

These post-retirement benefits are referred to herein as “Other Benefits”.

The Company made no voluntary contributions to the

pension and other benefits plans during the three and six months ended June 30, 2022 and 2021.

pension and other benefits plans during the three and nine months ended September 30, 2022 and 2021.

The components of expense for Pension Benefits and Other Benefits are set forth below:

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Three Months Ended

September 30,

Three Months Ended

September 30,

(In thousands)

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Other Benefits

Six Months Ended

Nine Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

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Three Months Ended

September 30,

(In thousands, except per share data)

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Net income available to common stockholders

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

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Net income available to common stockholders

There was a nominal number of weighted average stock options outstanding for the three and six months ended June 30, 2022 and June 30, 2021, that were not considered in

the calculation of diluted EPS since the stock options’ exercise prices were greater than the average market price during these periods.

There was a nominal number of weighted average stock options outstanding for the three and nine months ended September 30, 2022 and September 30, 2021, that were not

considered in the calculation of diluted EPS since the stock options’ exercise prices were greater than the average market price during these periods.

Reclassification Adjustments Out of Other Comprehensive Income (Loss)

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(In thousands)

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

AFS securities:

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Comprehensive Income (Loss)

Six Months Ended

Nine Months Ended

(In thousands)

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

AFS securities:

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As a result, the total fair values of loan level derivative assets and liabilities recognized on the Company’s financial statements are not equal and offsetting.

As of June 30, 2022 and December 31, 2021, the Company had sixteen and eighteen risk participation agreements, respectively, with financial institution counterparties for interest rate swaps related to participated loans.

Risk participation agreements provide credit protection to the

financial institution that originated the swap transaction should the borrower fail to perform on its obligation.

The Company enters into both risk participation agreements in which it purchases credit protection from other financial institutions

and those in which it provides credit protection to other financial institutions.

As of September 30, 2022 and December 31, 2021, the Company had fifteen and eighteen risk participation agreements, respectively, with financial institution counterparties for interest rate swaps related to participated loans.

Risk participation agreements provide credit

protection to the financial institution that originated the swap transaction should the borrower fail to perform on its obligation.

The Company enters into both risk participation agreements in which it purchases credit protection from other

financial institutions and those in which it provides credit protection to other financial institutions.

Derivatives Designated as Hedging Instruments

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(In thousands)

As of June 30, 2022

As of September 30, 2022

Derivatives not designated as hedging instruments

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reflected above.

F or derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss

on the derivative is recorded in AOCI and subsequently reclassified into interest expense in the same period during which the hedge transaction affects earnings.

Amounts reported in AOCI related to derivatives will be reclassified to interest

expense as interest payments are made on the Company’s short-term rate borrowings.

During the three months ended March 31, 2021 the Company’s final cash flow hedge of interest rate risk matured and the remaining balance was reclassified from AOCI

as a reduction to interest expense.

There is no additional amount

that will be reclassified from AOCI as a reduction to interest expense .

F or derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCI and

subsequently reclassified into interest expense in the same period during which the hedge transaction affects earnings.

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the

Company’s short-term rate borrowings.

During the three months ended March 31, 2021 the Company’s final cash flow hedge of interest rate risk matured and the remaining balance was reclassified from AOCI as a reduction to interest expense.

There is no additional amount that will be reclassified from AOCI as a reduction to interest

The following table indicates

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Three Months Ended

September 30,

September 30 ,

(In thousands)

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Three Months Ended

September 30,

September 30 ,

(In thousands)

Derivatives not designated as hedging instruments:

(Decrease) increase in other income

(Decrease) in other income

Fair Value Measurements and Fair Value of Financial Instruments

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Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs that are observable, either directly

or indirectly, for substantially the full term of the asset or liability;

Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs that are observable, either

directly or indirectly, for substantially the full term of the asset or liability;

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (e.g., supported by little or no

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Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices).

Other investment securities are

reported at fair value utilizing Level 1 and Level 2 inputs.

The prices for Level 2 instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases and

sales of investment securities.

Other investment securities

are reported at fair value utilizing Level 1 and Level 2 inputs.

The prices for Level 2 instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases

and sales of investment securities.

Prices obtained from these sources include prices derived from market quotations and matrix pricing.

The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the

The fair value measurements consider observable data that may include dealer quotes, market spreads, cash

flows, the U.S.

Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.

Management reviews the methodologies used by its third-party

providers in pricing the securities.

Management reviews the methodologies used by its

third-party providers in pricing the securities.

Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions.

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(In thousands)

June 30, 2022

September 30, 2022

AFS securities

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Equity securities

G AAP requires disclosure of assets and liabilities measured and recorded at fair value on a non-recurring basis such as goodwill, loans held for sale, other

real estate owned, collateral-dependent impaired loans and HTM securities.

The non-recurring fair value measurements recorded during the three and six month periods ended June 30, 2022 and the year ended December 31, 2021 were related to impaired

loans, write-downs of other real estate owned and write-down of branch assets to fair value.

The Company uses the fair value of underlying collateral, less costs to sell, to estimate the allowance for credit losses for individually evaluated

collateral dependent loans.

The appraisals may be adjusted by management for qualitative factors such

as economic conditions and estimated liquidation expenses ranging from 10 % to 50 %.

Based on the valuation

techniques used, the fair value measurements for collateral dependent individually evaluated loans are classified as Level 3.

As of June 30, 2022,

the Company had collateral dependent individually evaluated loans with a carrying value of $ 9.3 million, which had an estimated allowance

for credit loss of $ 0.8 million.

As of December 31, 2021, the Company had collateral dependent individually evaluated loans with a

carrying value of $ 10.2 million, which had no

estimated allowance for credit loss.

G AAP requires disclosure of assets and liabilities measured and

recorded at fair value on a non-recurring basis such as goodwill, loans held for sale, other real estate owned, collateral-dependent impaired loans and HTM securities.

The non-recurring fair value measurements recorded during the three and nine

month periods ended September 30, 2022 and the year ended December 31, 2021 were related to impaired loans, write-downs of other real estate owned and write-down of branch assets to fair value.

The Company uses the fair value of underlying

collateral, less costs to sell, to estimate the allowance for credit losses for individually evaluated collateral dependent loans.

The appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses ranging from 10 % to 50 %.

Based on the valuation techniques used, the fair value measurements for collateral dependent individually evaluated loans are classified as Level

The following table sets forth information with regard to estimated fair values of financial instruments.

This table excludes financial instruments for which the carrying

amount approximates fair value.

Financial instruments for which the fair value approximates carrying value include cash and cash equivalents, AFS securities, equity securities, accrued interest receivable, non-maturity deposits, short-term borrowings,

accrued interest payable and derivatives.

June 30, 2022

This table excludes financial instruments for which the

carrying amount approximates fair value.

borrowings, accrued interest payable and derivatives.

September 30, 2022

December 31, 2021

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instrument and its value has not been incorporated into the fair value estimates.

Other significant assets and liabilities include the benefits resulting from the low-cost funding of deposit liabilities as compared to the cost of borrowing funds in the

market and premises and equipment.

Other significant assets and liabilities include the benefits resulting from the low-cost funding of deposit liabilities as compared to the cost of borrowing funds in

the market and premises and equipment.

In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimate of fair value.

1 unchanged sentence

The fair value of the Company’s HTM securities is primarily measured using information from a third-party pricing service.

The fair value measurements consider observable

data that may include dealer quotes, market spreads, cash flows, the U.S.

Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.

The fair value measurements consider

observable data that may include dealer quotes, market spreads, cash flows, the U.S.

Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among

other things.

Net loans include portfolio loans and loans held for sale.

Loans were first segregated by type and then further segmented into fixed and variable rate and loan quality

Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments, which also includes credit risk, illiquidity risk and other market factors to calculate the exit price fair value in accordance

with ASC 820.

Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments, including credit risk, illiquidity risk and other market factors to calculate the exit price fair value in accordance with ASC

Time Deposits

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Collateral may be obtained based on management’s assessment of the customer’s credit worthiness.

Commitments to extend credit and unused lines of credit totaled $ 2.4 billion at June 30, 2022 and $ 2.3 billion at December 31, 2021.

Commitments to extend credit and unused lines of credit totaled $ 2.40 billion at September 30, 2022 and $ 2.30 billion at December 31, 2021.

Since many loan commitments, standby letters of credit and guarantees and indemnification contracts expire without being funded in whole or in part, the contract amounts

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therefore, the total amounts do not necessarily represent future cash requirements.

Standby letters of credit totaled $ 56.2 million at June 30, 2022 and $ 55.1 million at December 31, 2021.

A s of June 30, 2022 and December 31, 2021 , the fair value of the Company’s standby letters of credit was not significant.

Standby letters of credit totaled $ 54.3 million at September 30, 2022 and $ 55.1 million at December 31, 2021.

A s of September 30, 2022 and December 31, 2021 , the fair value of the Company’s standby letters of credit was not significant.

NBT BANCORP INC.

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements