What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-08 compared with 2021-08-05 · 194 added, 185 removed, 1436 unchanged (21% of the section changed)

4 unchanged sentences

(Dollars in thousands, except par value)

September 30,

2021 December 31,

3 unchanged sentences

48,705 61,614

Available for sale debt securities, at fair value (amortized cost of $ 1,051,661 , net of allowance for credit losses on securities of $ 0 at June 30, 2021;

Available for sale debt securities, at fair value (amortized cost of $ 1,049,044 , net of allowance for credit losses on securities of $ 0 at September 30, 2021;

and amortized cost of $ 881,570 ;

29 unchanged sentences

authorized 60,000,000 shares;

17,363,457 shares issued and 17,320,446 shares outstanding at June 30, 2021 and 17,363,457 shares issued and 17,265,337 shares outstanding at December 31, 2020

17,363,457 shares issued and 17,320,449 shares outstanding at September 30, 2021 and 17,363,457 shares issued and 17,265,337 shares outstanding at December 31, 2020

Paid-in capital 126,265 125,610

2 unchanged sentences

Treasury stock, at cost;

43,011 shares at June 30, 2021 and 98,120 shares at December 31, 2020

43,008 shares at September 30, 2021 and 98,120 shares at December 31, 2020

( 1,470 ) ( 3,355 )

8 unchanged sentences

(Dollars and shares in thousands, except per share amounts)

Three Months Six Months

Periods ended June 30, 2021 2020 2021 2020

Three Months Nine Months

Periods ended September 30, 2021 2020 2021 2020

Interest income:

8 unchanged sentences

Other interest income

56 39 121 424

Total interest and dividend income

45 unchanged sentences

Debt prepayment penalties

895 — 4,230 —

Other expenses

16 unchanged sentences

(Dollars in thousands)

Three Months Six Months

Periods ended June 30, 2021 2020 2021 2020

Three Months Nine Months

Periods ended September 30, 2021 2020 2021 2020

Net income $ 18,751 $ 18,322 $ 56,682 $ 51,263

6 unchanged sentences

540 410 1,621 1,229

Total other comprehensive income (loss), net of tax 4,878 ( 1,391 ) ( 7,737 ) 10,775

Total other comprehensive (loss) income, net of tax ( 3,000 ) ( 2,941 ) ( 10,737 ) 7,834

Total comprehensive income $ 15,751 $ 15,381 $ 45,945 $ 59,097

4 unchanged sentences

(Dollars and shares in thousands)

For the three months ended June 30, 2021 Common

For the three months ended September 30, 2021 Common

Shares Outstanding Common

3 unchanged sentences

Comprehensive

(Loss) Income Treasury Stock Total

Balance at March 31, 2021 17,306 $ 1,085 $ 124,882 $ 429,598 ($ 20,006 ) ($ 1,960 ) $ 533,599

Loss Treasury Stock Total

Balance at June 30, 2021 17,320 $ 1,085 $ 125,442 $ 437,927 ($ 15,128 ) ($ 1,470 ) $ 547,856

— — — 18,751 — — 18,751

Total other comprehensive income, net of tax — — — — 4,878 — 4,878

Total other comprehensive loss, net of tax — — — — ( 3,000 ) — ( 3,000 )

Cash dividends declared ($ 0.52 per share)

3 unchanged sentences

— — — — — — —

Balance at June 30, 2021 17,320 $ 1,085 $ 125,442 $ 437,927 ($ 15,128 ) ($ 1,470 ) $ 547,856

For the six months ended June 30, 2021 Common

Balance at September 30, 2021 17,320 $ 1,085 $ 126,265 $ 447,566 ($ 18,128 ) ($ 1,470 ) $ 555,318

For the nine months ended September 30, 2021 Common

Shares Outstanding Common

12 unchanged sentences

55 — ( 2,050 ) — — 1,885 ( 165 )

Balance at June 30, 2021 17,320 $ 1,085 $ 125,442 $ 437,927 ($ 15,128 ) ($ 1,470 ) $ 547,856

Balance at September 30, 2021 17,320 $ 1,085 $ 126,265 $ 447,566 ($ 18,128 ) ($ 1,470 ) $ 555,318

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

3 unchanged sentences

(Dollars and shares in thousands)

For the three months ended June 30, 2020 Common

For the three months ended September 30, 2020 Common

Shares Outstanding Common

3 unchanged sentences

Comprehensive

Income (Loss) Treasury Stock Total

Balance at March 31, 2020 17,252 $ 1,085 $ 123,167 $ 387,243 $ 929 ($ 3,827 ) $ 508,597

Loss Treasury Stock Total

Balance at June 30, 2020 17,260 $ 1,085 $ 123,684 $ 399,386 ($ 462 ) ($ 3,530 ) $ 520,163

— — — 18,322 — — 18,322

5 unchanged sentences

— — 1 — — — 1

Balance at June 30, 2020 17,260 $ 1,085 $ 123,684 $ 399,386 ($ 462 ) ($ 3,530 ) $ 520,163

For the six months ended June 30, 2020 Common

Balance at September 30, 2020 17,260 $ 1,085 $ 124,768 $ 408,773 ($ 3,403 ) ($ 3,530 ) $ 527,693

For the nine months ended September 30, 2020 Common

Shares Outstanding Common

5 unchanged sentences

Balance at December 31, 2019 17,363 $ 1,085 $ 123,281 $ 390,363 ($ 11,237 ) $ — $ 503,492

Cumulative effect of change in accounting principle - Topic 326 — — — ( 6,108 ) — — ( 6,108 )

Cumulative effect of change in accounting principle - ASC 326 — — — ( 6,108 ) — — ( 6,108 )

— — — 51,263 — — 51,263

6 unchanged sentences

Treasury stock purchased under the 2019 Stock Repurchase Program ( 125 ) — — — — ( 4,322 ) ( 4,322 )

Balance at June 30, 2020 17,260 $ 1,085 $ 123,684 $ 399,386 ($ 462 ) ($ 3,530 ) $ 520,163

Balance at September 30, 2020 17,260 $ 1,085 $ 124,768 $ 408,773 ($ 3,403 ) ($ 3,530 ) $ 527,693

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

3 unchanged sentences

(Dollars in thousands)

Six months ended June 30, 2021 2020

Nine months ended September 30, 2021 2020

Cash flows from operating activities:

10 unchanged sentences

( 1,781 ) ( 1,922 )

Net gains on loan sales, including fair value adjustments

( 17,876 ) ( 21,074 )

Net gains on loan sales, including changes in fair value ( 24,093 ) ( 33,799 )

Proceeds from sales of loans, net

36 unchanged sentences

Proceeds from Payment Protection Program Lending Facility

Repayment of Payment Protection Program Lending Facility — ( 94,882 )

Treasury stock purchased

5 unchanged sentences

281,049 433,555

Net (decrease) increase in cash and cash equivalents ( 70,062 ) 84,885

Net increase in cash and cash equivalents 98,120 73,560

Cash and cash equivalents at beginning of period

51 unchanged sentences

Accounting Standards Pending Adoption

There were no recently issued accounting pronouncements, applicable to the Corporation, that are pending adoption as of June 30, 2021.

There were no recently issued accounting pronouncements, applicable to the Corporation, that are pending adoption as of September 30, 2021.

Note 3 - Cash and Due from Banks

2 unchanged sentences

Effective March 26, 2020, the FRB reduced the reserve requirement ratios to zero percent to eliminate the need for depository institutions, such as the Bank, to maintain balances in accounts at the FRB to satisfy reserve requirements.

As a result, there were no reserve balances included in cash and due from banks in the Unaudited Consolidated Balance Sheets at June 30, 2021 and December 31, 2020.

Cash and due from banks included interest-bearing deposits in other banks of $ 93.9 million and $ 138.4 million, respectively, at June 30, 2021 and December 31, 2020.

As a result, there were no reserve balances included in cash and due from banks in the Unaudited Consolidated Balance Sheets at September 30, 2021 and December 31, 2020.

Cash and due from banks included interest-bearing deposits in other banks of $ 260.3 million and $ 138.4 million, respectively, at September 30, 2021 and December 31, 2020.

Cash and due from banks balances also include cash collateral pledged to derivative counterparties.

See Note 10 for additional disclosure regarding cash collateral pledged to derivative counterparties.

3 unchanged sentences

(Dollars in thousands)

June 30, 2021 Amortized Cost Unrealized Gains Unrealized Losses Allowance for Credit Losses Fair Value

September 30, 2021 Amortized Cost Unrealized Gains Unrealized Losses Allowance for Credit Losses Fair Value

Available for Sale Debt Securities:

26 unchanged sentences

Total available for sale debt securities $ 881,570 $ 15,570 ($ 2,569 ) $ — $ 894,571

Amortized cost of available for sale debt securities excludes accrued interest receivable of $ 2.6 million and $ 2.4 million, respectively, as of June 30, 2021 and December 31, 2020.

Accrued interest receivable is included in other assets in the Unaudited Consolidated Balance Sheets.

Amortized cost of available for sale debt securities excludes accrued interest receivable of $ 2.2 million and $ 2.4 million, respectively, as of September 30, 2021 and December 31, 2020.

Accrued interest receivable is included in other assets in the

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

As of June 30, 2021 and December 31, 2020, debt securities with a fair value of $ 333.5 million and $ 291.9 million, respectively, were pledged as collateral for Federal Home Loan Bank of Boston (“FHLB”) borrowings, potential borrowings with the FRB’s discount window, certain public deposits and for other purposes.

Unaudited Consolidated Balance Sheets.

As of September 30, 2021 and December 31, 2020, debt securities with a fair value of $ 344.3 million and $ 291.9 million, respectively, were pledged as collateral for Federal Home Loan Bank of Boston (“FHLB”) borrowings, potential borrowings with the FRB’s discount window, certain public deposits and for other purposes.

See Note 8 for additional disclosure on FHLB borrowings.

4 unchanged sentences

(Dollars in thousands)

June 30, 2021 Amortized Cost Fair Value

September 30, 2021 Amortized Cost Fair Value

Due in one year or less $ 177,689 $ 177,731

7 unchanged sentences

$ 1,049,044 $ 1,045,833

Included in the above table are debt securities with an amortized cost balance of $ 209.8 million and a fair value of $ 206.7 million at June 30, 2021 that are callable at the discretion of the issuers.

Included in the above table are debt securities with an amortized cost balance of $ 204.8 million and a fair value of $ 201.3 million at September 30, 2021 that are callable at the discretion of the issuers.

Final maturities of the callable securities range from 3 years to 15 years, with call features ranging from 1 month to 1 year.

5 unchanged sentences

Accrued interest for a debt security placed on nonaccrual is reversed against interest income.

There were no debt securities on nonaccrual status at June 30, 2021 and 2020 and, therefore there was no accrued interest related to debt securities reversed against interest income for the three and six months ended June 30, 2021 and 2020.

There were no debt securities on nonaccrual status at September 30, 2021 and 2020 and, therefore there was no accrued interest related to debt securities reversed against interest income for the three and nine months ended September 30, 2021 and 2020.

The following tables summarize available for sale debt securities in an unrealized loss position, for which an allowance for credit losses on securities has not been recorded, segregated by length of time that the securities have been in a continuous unrealized loss position:

(Dollars in thousands) Less than 12 Months 12 Months or Longer Total

June 30, 2021 # Fair

September 30, 2021 # Fair

Value Unrealized

42 unchanged sentences

government-sponsored enterprises.

The issuers of these securities continue to make timely principal and interest payments and none of these securities were past due at June 30, 2021.

The issuers of these securities continue to make timely principal and interest payments and none of these securities were past due at September 30, 2021.

Management believes that the unrealized losses on these debt securities are a function of changes in investment spreads and interest rate movements and not changes in credit quality.

1 unchanged sentence

Furthermore, the Corporation does not intend to sell these securities and it is likely that the Corporation will not be required to sell these securities before recovery of their cost basis, which may be maturity.

Therefore, no allowance for credits losses on securities was recorded at June 30, 2021.

Therefore, no allowance for credits losses on securities was recorded at September 30, 2021.

Individual Name Issuer Trust Preferred Debt Securities

Included in debt securities in an unrealized loss position at June 30, 2021 were four trust preferred securities issued by four individual companies in the banking sector.

Included in debt securities in an unrealized loss position at September 30, 2021 were three trust preferred securities issued by three individual companies in the banking sector.

Based on the information available through the filing date of this report, all individual name issuer trust preferred debt securities held in our portfolio continue to accrue interest and make payments as expected with no payment deferrals or defaults on the part of the issuers.

Management reviewed the collectability of these securities taking into consideration such factors as the financial condition of the issuers, reported regulatory capital ratios of the issuers, credit ratings, including ratings in effect as of the reporting period date, as well as credit rating changes between the reporting period date and the filing date of this report, and other information.

As of June 30, 2021, there were two individual name issuer trust preferred debt securities with an amortized cost of $ 4.0 million and unrealized losses of $ 169 thousand that were rated below investment grade by Standard & Poors, Inc.

We noted no additional downgrades to below investment grade between June 30, 2021 and the filing date of this report.

As of September 30, 2021, there were two individual name issuer trust preferred debt securities with an amortized cost of $ 4.0 million and unrealized losses of $ 140 thousand that were rated below investment grade by Standard & Poors, Inc.

We noted no additional downgrades to below investment grade between September 30, 2021 and the filing date of this report.

Management believes the unrealized losses on these debt securities are primarily attributable to changes in the investment spreads and interest rates and not changes in the credit quality of the issuers of the debt securities.

1 unchanged sentence

Therefore, no allowance for credit losses on securities was recorded at June 30, 2021.

Therefore, no allowance for credit losses on securities was recorded at September 30, 2021.

Corporate Bonds

At June 30, 2021, the Corporation had four corporate bond holdings with unrealized losses totaling $ 928 thousand.

At September 30, 2021, the Corporation had four corporate bond holdings with unrealized losses totaling $ 782 thousand.

These investment grade corporate bonds were issued by large corporations in the financial services industry.

The issuers of these securities continue to make timely principal and interest payments and none of these securities were past due at June 30, 2021.

The issuers of these securities continue to make timely principal and interest payments and none of these securities were past due at September 30, 2021.

Management believes the unrealized losses on these debt securities are primarily attributable to changes in

Management believes the unrealized losses on these debt securities are primarily attributable

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

the investment spreads and interest rates and not changes in the credit quality of the issuers of the debt securities.

to changes in the investment spreads and interest rates and not changes in the credit quality of the issuers of the debt securities.

Management expects to recover the entire amortized cost basis of these securities.

Therefore, no allowance for credit losses was recorded at June 30, 2021.

Therefore, no allowance for credit losses was recorded at September 30, 2021.

Note 5 - Loans

The following is a summary of loans:

(Dollars in thousands) June 30,

(Dollars in thousands) September 30,

2021 December 31, 2020

15 unchanged sentences

(2) Commercial and industrial (“C&I”) consists of loans to businesses and individuals, a portion of which are fully or partially collateralized by real estate.

C&I also includes $ 147.0 million and $ 199.8 million, respectively, of PPP loans as of June 30, 2021 and December 31, 2020.

C&I also includes $ 77.4 million and $ 199.8 million, respectively, of PPP loans as of September 30, 2021 and December 31, 2020.

(3) Residential real estate consists of mortgage and homeowner construction loans secured by one- to four-family residential properties.

(4) Other consists of loans to individuals secured by general aviation aircraft and other personal installment loans.

(5) Includes net unamortized loan origination costs of $ 2.1 million and $ 1.5 million, respectively, at June 30, 2021 and December 31, 2020 and net unamortized premiums on purchased loans of $ 558 thousand and $ 787 thousand, respectively, at June 30, 2021 and December 31, 2020.

Loan balances exclude accrued interest receivable of $ 11.5 million and $ 11.3 million, respectively, as of June 30, 2021 and December 31, 2020.

(5) Includes net unamortized loan origination costs of $ 5.0 million and $ 1.5 million, respectively, at September 30, 2021 and December 31, 2020 and net unamortized premiums on purchased loans of $ 489 thousand and $ 787 thousand, respectively, at September 30, 2021 and December 31, 2020.

Loan balances exclude accrued interest receivable of $ 11.1 million and $ 11.3 million, respectively, as of September 30, 2021 and December 31, 2020.

Accrued interest receivable is included in other assets in the Unaudited Consolidated Balance Sheets.

As of June 30, 2021 and December 31, 2020, loans amounting to $ 2.0 billion and $ 2.1 billion, respectively, were pledged as collateral to the FHLB under a blanket pledge agreement and to the FRB.

As of September 30, 2021 and December 31, 2020, loans amounting to $ 2.2 billion and $ 2.1 billion, respectively, were pledged as collateral to the FHLB under a blanket pledge agreement and to the FRB.

See Note 8 for additional disclosure regarding borrowings.

Loan Modifications Under the CARES Act

The Corporation has elected to account for eligible loan modifications under Section 4013 of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), as amended by the Coronavirus Response and Relief Supplemental Appropriations Act (the “CRRSA Act”).

The Corporation elected to account for eligible loan modifications under Section 4013 of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), as amended by the Coronavirus Response and Relief Supplemental Appropriations Act.

To be eligible, a loan modification must be (1) related to the COVID-19 pandemic;

3 unchanged sentences

Interest income will continue to be recognized unless the loan is placed on nonaccrual status in accordance with the nonaccrual loans accounting policy described below.

Washington Trust has processed loan payment deferral modifications, or "deferments", on 654 loans totaling $ 728 million since the beginning of the second quarter of 2020, in response to the COVID-19 pandemic The majority of these deferments qualified as eligible loan modifications under Section 4013 of the CARES Act, as amended.

As of June 30, 2021, we had active deferments on 22 loans totaling $ 93.4 million, or 2 % of total loans excluding Paycheck Protection Program (“PPP”) loans.

The majority of these deferments qualified as eligible loan modifications under Section 4013 of the CARES Act, as amended.

As of September 30, 2021, we had active deferments on five loans totaling $ 38.0 million, or 1 % of total loans excluding Paycheck Protection Program (“PPP”) loans.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

7 unchanged sentences

(Dollars in thousands) Days Past Due

June 30, 2021 30-59 60-89 Over 90 Total Past Due Current Total Loans

September 30, 2021 30-59 60-89 Over 90 Total Past Due Current Total Loans

Commercial real estate

24 unchanged sentences

Total loans $ 5,649 $ 839 $ 5,904 $ 12,392 $ 4,183,598 $ 4,195,990

Included in past due loans as of June 30, 2021 and December 31, 2020, were nonaccrual loans of $ 5.8 million and $ 8.5 million, respectively.

All loans 90 days or more past due at June 30, 2021 and December 31, 2020 were classified as nonaccrual.

Included in past due loans as of September 30, 2021 and December 31, 2020, were nonaccrual loans of $ 6.9 million and $ 8.5 million, respectively.

All loans 90 days or more past due at September 30, 2021 and December 31, 2020 were classified as nonaccrual.

Nonaccrual Loans

Loans, with the exception of certain well-secured loans that are in the process of collection, are placed on nonaccrual status and interest recognition is suspended when such loans are 90 days or more overdue with respect to principal and/or interest, or sooner if considered appropriate by management.

Well-secured loans are permitted to remain on accrual status provided that full collection of principal and interest is assured and the loan is in the process of collection.

Loans are also placed on

Well-secured loans are permitted to remain on accrual status provided

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

nonaccrual status when, in the opinion of management, full collection of principal and interest is doubtful.

that full collection of principal and interest is assured and the loan is in the process of collection.

Loans are also placed on nonaccrual status when, in the opinion of management, full collection of principal and interest is doubtful.

When loans are placed on nonaccrual status, interest previously accrued but not collected is reversed against current period income.

2 unchanged sentences

The following table presents the carrying value of nonaccrual loans:

(Dollars in thousands) Jun 30,

(Dollars in thousands) Sep 30,

Commercial real estate

3 unchanged sentences

Residential real estate

10,321 11,981

Total consumer 655 1,216

1 unchanged sentence

Accruing loans 90 days or more past due $ — $ —

Nonaccrual loans of $ 4.7 million at both June 30, 2021 and December 31, 2020 were current as to the payment of principal and interest.

No ACL was deemed necessary on nonaccrual loans with a carrying value of $ 3.7 million and $ 3.0 million, respectively, as of June 30, 2021 and December 31, 2020.

As of June 30, 2021 and December 31, 2020, nonaccrual loans secured by one- to four-family residential property amounting to $ 2.5 million and $ 3.4 million, respectively, were in process of foreclosure.

There were no significant commitments to lend additional funds to borrowers whose loans were on nonaccrual status at June 30, 2021.

Nonaccrual loans of $ 4.0 million and $ 4.7 million, respectively, at September 30, 2021 and December 31, 2020 were current as to the payment of principal and interest.

No ACL was deemed necessary on nonaccrual loans with a carrying value of $ 4.0 million and $ 3.0 million, respectively, as of September 30, 2021 and December 31, 2020.

As of September 30, 2021 and December 31, 2020, nonaccrual loans secured by one- to four-family residential property amounting to $ 1.5 million and $ 3.4 million, respectively, were in process of foreclosure.

There were no significant commitments to lend additional funds to borrowers whose loans were on nonaccrual status at September 30, 2021.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents interest income recognized on nonaccrual loans:

(Dollars in thousands) Three Months Six Months

Periods ended June 30, 2021 2020 2021 2020

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2021 2020 2021 2020

Commercial real estate

26 unchanged sentences

The following table presents the recorded investment in TDRs and other pertinent information:

(Dollars in thousands) Jun 30,

(Dollars in thousands) Sep 30,

Accruing TDRs $ 8,047 $ 13,418

6 unchanged sentences

# of Loans Pre-Modifications Post-Modifications

Three months ended June 30, 2021 2020 2021 2020 2021 2020

Three months ended September 30, 2021 2020 2021 2020 2021 2020

Commercial real estate

1 unchanged sentence

Commercial & industrial

— 2 — 460 — 460

Total commercial — — — — — —

7 unchanged sentences

# of Loans Pre-Modifications Post-Modifications

Six months ended June 30, 2021 2020 2021 2020 2021 2020

Nine months ended September 30, 2021 2020 2021 2020 2021 2020

Commercial real estate

11 unchanged sentences

The following table presents TDRs occurring during the period indicated by type of modification:

(Dollars in thousands) Three Months Six Months

Periods ended June 30, 2021 2020 2021 2020

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2021 2020 2021 2020

Below-market interest rate concession $ — $ — $ — $ —

7 unchanged sentences

(Dollars in thousands) # of Loans Recorded Investment

Three months ended June 30, 2021 2020 2021 2020

Three months ended September 30, 2021 2020 2021 2020

TDRs with a Payment Default:

Residential real estate 1 1 $ 330 $ 903

Home equity — 1 — 47

Totals 1 2 $ 330 $ 950

(Dollars in thousands) # of Loans Recorded Investment

Six months ended June 30, 2021 2020 2021 2020

Nine months ended September 30, 2021 2020 2021 2020

TDRs with a Payment Default:

1 unchanged sentence

Home equity — 1 — 47

Totals 1 2 $ 330 $ 950

Individually Analyzed Loans

Individually analyzed loans include nonaccrual commercial loans, reasonably expected TDRs and executed TDRs, as well as certain other loans based on the underlying risk characteristics and the discretion of management to individually analyze such loans.

As of June 30, 2021, the carrying value of individually analyzed loans amounted to $ 13.4 million, of which $ 4.3 million were considered collateral dependent.

As of September 30, 2021, the carrying value of individually analyzed loans amounted to $ 15.5 million, of which $ 7.7 million were considered collateral dependent.

As of December 31, 2020, the carrying value of individually analyzed loans amounted to $ 18.3 million, of which $ 8.4 million were considered collateral dependent.

3 unchanged sentences

The following table presents the carrying value of collateral dependent individually analyzed loans:

(Dollars in thousands) June 30, 2021 December 31, 2020

(Dollars in thousands) September 30, 2021 December 31, 2020

Carrying Value Related Allowance Carrying Value Related Allowance

7 unchanged sentences

Home equity (3)

394 183 254 183

Total consumer — — 254 183

37 unchanged sentences

LTV is estimated based on such factors as geographic location, the original appraised value and changes in median home prices, and takes into consideration the age of the loan.

The results of these analyses and other credit review procedures, including selected targeted internal reviews, are taken into consideration in the determination of qualitative loss factors for residential real estate and home equity consumer credits.

The results of these analyses and other credit review procedures, including selected targeted internal reviews, are taken into account in the determination of qualitative loss factors for residential real estate and home equity consumer credits.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table summarizes the Corporation’s loan portfolio by credit quality indicator and loan portfolio segment as of June 30, 2021:

The following table summarizes the Corporation’s loan portfolio by credit quality indicator and loan portfolio segment as of September 30, 2021:

(Dollars in thousands) Term Loans Amortized Cost by Origination Year

56 unchanged sentences

Note 6 - Allowance for Credit Losses on Loans

The ACL on loans is management’s estimate of expected credit losses over the expected life of the loans at the reporting date.

The ACL on loans is management’s current estimate of expected credit losses over the expected life of the loans.

The level of the ACL on loans is based on management’s ongoing review of all relevant information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts.

9 unchanged sentences

Prior to January 1, 2021, solely the NUR was used in the determination of the probability of default for each loan portfolio segment.

The following table presents the activity in the ACL on loans for the three months ended June 30, 2021:

The following table presents the activity in the ACL on loans for the three months ended September 30, 2021:

(Dollars in thousands) Commercial Consumer

5 unchanged sentences

Ending Balance $ 20,837 $ 11,327 $ 32,164 $ 7,956 $ 1,118 $ 473 $ 1,591 $ 41,711

The following table presents the activity in the ACL on loans for the six months ended June 30, 2021:

The following table presents the activity in the ACL on loans for the nine months ended September 30, 2021:

(Dollars in thousands) Commercial Consumer

5 unchanged sentences

Ending Balance $ 20,837 $ 11,327 $ 32,164 $ 7,956 $ 1,118 $ 473 $ 1,591 $ 41,711

The following table presents the activity in the allowance for loan losses for the three months ended June 30, 2020:

The following table presents the activity in the allowance for loan losses for the three months ended September 30, 2020:

(Dollars in thousands) Commercial Consumer

6 unchanged sentences

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents the activity in the allowance for loan losses for the six months ended June 30, 2020:

The following table presents the activity in the allowance for loan losses for the nine months ended September 30, 2020:

(Dollars in thousands) Commercial Consumer

8 unchanged sentences

The Corporation has committed to rent premises used in business operations under non-cancelable operating leases and determines if an arrangement meets the definition of a lease upon inception.

Operating lease right-of-use (“ROU”) assets amounted to $ 28.3 million and $ 29.5 million, respectively, as of June 30, 2021 and December 31, 2020.

Operating lease liabilities totaled $ 30.6 million and $ 31.7 million, respectively, as of June 30, 2021 and December 31, 2020.

As of June 30, 2021, there was one operating lease that had not yet commenced.

Operating lease right-of-use (“ROU”) assets amounted to $ 27.5 million and $ 29.5 million, respectively, as of September 30, 2021 and December 31, 2020.

Operating lease liabilities totaled $ 29.8 million and $ 31.7 million, respectively, as of September 30, 2021 and December 31, 2020.

As of September 30, 2021, there were three operating leases that had not yet commenced.

As of December 31, 2020, there were no operating leases that had not yet commenced.

Rental expense for operating leases is recognized on a straight-line bas is over the lease term and amounted to $ 1.0 million and $ 2.0 million respectively, for the three and six months ended June 30, 2021, compared to $ 973 thousand and $ 1.9 million, respectively, for the same periods in 2020.

Rental expense for operating leases is recognized on a straight-line bas is over the lease term and amounted to $ 1.0 million and $ 3.1 million respectively, for the three and nine months ended September 30, 2021, compared to $ 1.0 million and $ 3.0 million, respectively, for the same periods in 2020.

V ariable lease components, such as consumer price index adjustments, are expensed as incurred and not included in ROU assets and operating lease liabilities.

The following table presents information regarding the Corporation’s operating leases:

Jun 30, 2021 Dec 31, 2020

Sep 30, 2021 Dec 31, 2020

Weighted average discount rate 3.35 % 3.34 %

Range of lease expiration dates 1 year - 20 years

Range of lease expiration dates 10 months - 19 years

7 months - 20 years

4 unchanged sentences

13.0 years 13.4 years

The following table presents the undiscounted annual lease payments under the terms of the Corporation’s operating leases at June 30, 2021, including a reconciliation to the present value of operating lease liabilities recognized in the Unaudited Consolidated Balance Sheets:

The following table presents the undiscounted annual lease payments under the terms of the Corporation’s operating leases at September 30, 2021, including a reconciliation to the present value of operating lease liabilities recognized in the Unaudited Consolidated Balance Sheets:

(Dollars in thousands)

July 1, 2021 to December 31, 2021 $ 1,972

October 1, 2021 to December 31, 2021 $ 978

2026 and thereafter 22,099

6 unchanged sentences

The following table presents the components of total lease expense and operating cash flows:

(Dollars in thousands) Three Months Six Months

Periods ended June 30, 2021 2020 2021 2020

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2021 2020 2021 2020

Lease Expense:

8 unchanged sentences

Note 8 - Federal Home Loan Bank Advances

Advances payable to the FHLB amounted to $ 408.6 million and $ 593.9 million, respectively, at June 30, 2021 and December 31, 2020.

As of June 30, 2021 and December 31, 2020, the Bank had access to a $ 40.0 million unused line of credit and also had remaining available borrowing capacity of $ 1.2 billion and $ 969.7 million, respectively, with the FHLB.

Advances payable to the FHLB amounted to $ 222.6 million and $ 593.9 million, respectively, at September 30, 2021 and December 31, 2020.

As of September 30, 2021 and December 31, 2020, the Bank had access to a $ 40.0 million unused line of credit and also had remaining available borrowing capacity of $ 1.5 billion and $ 969.7 million, respectively, with the FHLB.

The Bank pledges certain qualified investment securities and loans as collateral to the FHLB.

The following table presents maturities and weighted average interest rates on FHLB advances outstanding as of June 30, 2021:

The following table presents maturities and weighted average interest rates on FHLB advances outstanding as of September 30, 2021:

(Dollars in thousands) Scheduled

Maturity Weighted

July 1, 2021 to December 31, 2021 $ 328,450 0.39 %

October 1, 2021 to December 31, 2021 $ 142,450 0.39 %

2023 35,000 0.45

1 unchanged sentence

2026 and thereafter 10,142 3.06

Balance at June 30, 2021 $ 408,592 0.64 %

Balance at September 30, 2021 $ 222,592 0.84 %

Note 9 - Shareholders' Equity

2 unchanged sentences

This authority may be exercised from time to time and in such amounts as market conditions warrant, and subject to regulatory considerations.

The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities.

The 2020 Repurchase Program expires on October 31, 2021 and may be modified, suspended, or discontinued at any time.

As of June 30, 2021, no shares have been repurchased under the 2020 Repurchase Program.

The timing and actual number of shares repurchased depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities.

The 2020 Repurchase Program expired on October 31, 2021 and no shares were repurchased under this program.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Regulatory Capital Requirements

Capital levels at June 30, 2021 exceeded the regulatory minimum levels to be considered “well capitalized.”

Capital levels at September 30, 2021 exceeded the regulatory minimum levels to be considered “well capitalized.”

The following table presents the Corporation’s and the Bank’s actual capital amounts and ratios, as well as the corresponding minimum and well capitalized regulatory amounts and ratios that were in effect during the respective periods:

1 unchanged sentence

Amount Ratio Amount Ratio Amount Ratio

June 30, 2021

September 30, 2021

Total Capital (to Risk-Weighted Assets):

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In addition to the minimum regulatory capital required for capital adequacy purposes outlined in the table above, the Corporation is required to maintain a minimum capital conservation buffer, in the form of common equity, of 2.50% in order to avoid restrictions on capital distributions and discretionary bonuses.

The Corporation’s capital levels exceeded the minimum regulatory capital requirements plus the capital conservation buffer at June 30, 2021 and December 31, 2020.

The Corporation’s capital levels exceeded the minimum regulatory capital requirements plus the capital conservation buffer at September 30, 2021 and December 31, 2020.

The Bancorp owns the common stock of two capital trusts, which have issued trust preferred securities.

In accordance with GAAP, the capital trusts are treated as unconsolidated subsidiaries.

At both June 30, 2021 and December 31, 2020, $ 22.0 million in trust preferred securities were included in the Tier 1 Capital of the Corporation for regulatory capital reporting purposes pursuant to the FRB’s capital adequacy guidelines.

In accordance with regulatory capital rules, the Corporation has elected the option to delay the estimated impact of Accounting Standards Codification (“ASC”) 326 on its regulatory capital over a two-year deferral and subsequent three-year transition period ending December 31, 2024.

As a result, capital ratios and amounts as of June 30, 2021 and December 31, 2020 exclude the impact of the increased ACL on loans and unfunded loan commitments attributed to the adoption of ASC 326, which was effective January 1, 2020, adjusted for an approximation of the after-tax provision for credit losses

At both September 30, 2021 and December 31, 2020, $ 22.0 million in trust preferred securities were included in the Tier 1 capital of the Corporation for regulatory capital reporting purposes pursuant to the FRB’s capital adequacy guidelines.

In accordance with regulatory capital rules, the Corporation elected the option to delay the estimated impact of Accounting Standards Codification (“ASC”) 326 on its regulatory capital over a two-year deferral and subsequent three-year transition period ending December 31, 2024.

As a result, capital ratios and amounts as of September 30, 2021 and December 31, 2020 exclude the impact of the increased ACL on loans and unfunded loan commitments attributed to the adoption of ASC 326, which was effective January 1, 2020, adjusted for an approximation of the after-tax provision for credit losses attributable to

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

attributable to ASC 326 relative to the incurred loss methodology during the deferral period.

The cumulative difference at the end of the deferral period will then be phased-in to regulatory capital over a three-year transition period beginning in 2022.

ASC 326 relative to the incurred loss methodology during the deferral period.

The cumulative difference at the end of the deferral period will be phased-in to regulatory capital over a three-year transition period beginning in 2022.

Note 10 - Derivative Financial Instruments

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Cash Flow Hedging Instruments

As of June 30, 2021 and December 31, 2020, the Corporation had interest rate swap contracts with a total notional amount of $ 60.0 million that were designated as cash flow hedges to hedge the interest rate risk associated with short-term variable rate FHLB advances.

As of September 30, 2021 and December 31, 2020, the Corporation had interest rate swap contracts with a total notional amount of $ 60.0 million that were designated as cash flow hedges to hedge the interest rate risk associated with short-term variable rate FHLB advances.

The interest rate swaps on borrowings mature in December of 2021 and December of 2023.

As of June 30, 2021, the Corporation has an interest rate swap with a total notional amount of $ 300.0 million that was designated as a cash flow hedge to hedge the interest rate risk associated with a pool of variable rate commercial loans.

As of September 30, 2021, the Corporation had an interest rate swap contract with a total notional amount of $ 300.0 million that was designated as a cash flow hedge to hedge the interest rate risk associated with a pool of variable rate commercial loans.

The interest rate swap on loans was executed in the second quarter of 2021 and matures in May of 2026.

7 unchanged sentences

The Corporation retains the risk that is associated with the potential failure of counterparties and the risk inherent in originating loans.

As of June 30, 2021 and December 31, 2020, Washington Trust had interest rate swap contracts with commercial loan borrowers with notional amounts of $ 993.0 million and $ 991.0 million, respectively, and equal amounts of “mirror” swap contracts with third party financial institutions.

As of September 30, 2021 and December 31, 2020, Washington Trust had interest rate swap contracts with commercial loan borrowers with notional amounts of $ 998.5 million and $ 991.0 million, respectively, and equal amounts of “mirror” swap contracts with third party financial institutions.

These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings.

6 unchanged sentences

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

As of June 30, 2021, the notional amounts of risk participation-out agreements and risk participation-in agreements were $ 67.6 million and $ 147.7 million, respectively, compared to $ 61.6 million and $ 92.7 million, respectively, as of December 31, 2020.

As of September 30, 2021, the notional amounts of risk participation-out agreements and risk participation-in agreements were $ 74.6 million and $ 147.4 million, respectively, compared to $ 61.6 million and $ 92.7 million, respectively, as of December 31, 2020.

Mortgage Loan Commitments

3 unchanged sentences

Both interest rate lock commitments and forward sale commitments are derivative financial instruments, but do not meet criteria for hedge accounting and therefore, the changes in fair value of these commitments are reflected in earnings.

As of June 30, 2021, the notional amounts of interest rate lock commitments and forward sale commitments were $ 82.1 million and $ 155.9 million, respectively, compared to $ 167.7 million and $ 279.7 million, respectively, as of December 31, 2020.

As of September 30, 2021, the notional amounts of interest rate lock commitments and forward sale commitments were $ 97.9 million and $ 195.1 million, respectively, compared to $ 167.7 million and $ 279.7 million, respectively, as of December 31, 2020.

The following table presents the fair values of derivative instruments in the Unaudited Consolidated Balance Sheets:

1 unchanged sentence

Fair Value Fair Value

Balance Sheet Location Jun 30, 2021 Dec 31, 2020 Balance Sheet Location Jun 30, 2021 Dec 31, 2020

Balance Sheet Location Sep 30, 2021 Dec 31, 2020 Balance Sheet Location Sep 30, 2021 Dec 31, 2020

Derivatives Designated as Cash Flow Hedging Instruments:

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Other Comprehensive Income, Net of Tax

Three Months Six Months

Periods ended June 30, 2021 2020 2021 2020

Three Months Nine Months

Periods ended September 30, 2021 2020 2021 2020

Derivatives Designated as Cash Flow Hedging Instruments:

11 unchanged sentences

Recognized in Income on Derivatives

Three Months Six Months

Periods ended June 30, Statement of Income Location 2021 2020 2021 2020

Three Months Nine Months

Periods ended September 30, Statement of Income Location 2021 2020 2021 2020

Derivatives not Designated as Hedging Instruments:

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The following table presents a summary of mortgage loans held for sale accounted for under the fair value option:

(Dollars in thousands) June 30,

(Dollars in thousands) September 30,

2021 December 31,

3 unchanged sentences

Difference between fair value and principal balance $ 1,241 $ 2,301

Changes in fair value of mortgage loans held for sale accounted for under the fair value option election (“fair value option adjustments”) are included in mortgage banking revenues in the Unaudited Consolidated Statements of Income.

Fair value option adjustments amounted to an increase of $ 38 thousand for the three months ended June 30, 2021 and a decrease of $ 1.4 million for the six months ended June 30, 2021, compared to increases of $ 149 thousand and $ 1.0 million, respectively, in the three and six months ended June 30, 2020.

There were no mortgage loans held for sale 90 days or more past due as of June 30, 2021 and December 31, 2020.

Changes in fair value of mortgage loans held for sale accounted for under the fair value option election are included in mortgage banking revenues in the Unaudited Consolidated Statements of Income.

Changes in fair value amounted to an increase to mortgage banking revenues of $ 372 thousand for the three months ended September 30, 2021 and a decrease to mortgage banking revenues of $ 1.1 million for the nine months ended September 30, 2021.

This compared to increases to mortgage banking revenues of $ 1.1 million and $ 2.2 million, respectively, in the three and nine months ended September 30, 2020.

There were no mortgage loans held for sale 90 days or more past due as of September 30, 2021 and December 31, 2020.

Valuation Techniques

3 unchanged sentences

such items are classified as Level 1.

There were no Level 1 debt securities held at June 30, 2021 and December 31, 2020.

There were no Level 1 debt securities held at September 30, 2021 and December 31, 2020.

Level 2 debt securities are traded less frequently than exchange-traded instruments.

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Debt securities not actively traded whose fair value is determined through the use of cash flows utilizing inputs that are unobservable are classified as Level 3.

There were no Level 3 debt securities held at June 30, 2021 and December 31, 2020.

There were no Level 3 debt securities held at September 30, 2021 and December 31, 2020.

Mortgage Loans Held for Sale

17 unchanged sentences

Interest rate swaps, caps and floors are traded in over-the-counter markets where quoted market prices are not readily available.

Fair value measurements are determined using independent valuation software, which considers the present value of future cash flows discounted using market observable inputs such as forward rate assumptions.

Fair value measurements are determined using independent valuation software, which utilizes the present value of future cash flows discounted using market observable inputs such as forward rate assumptions.

The Corporation evaluates the credit risk of its counterparties, as well as that of the Corporation.

3 unchanged sentences

However, the credit valuation adjustments utilize Level 3 inputs.

As of June 30, 2021 and December 31, 2020, the Corporation has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

As of September 30, 2021 and December 31, 2020, the Corporation has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

As a result, the Corporation has classified its derivative valuations in their entirety as Level 2.

10 unchanged sentences

(Level 2) Significant Unobservable Inputs

June 30, 2021

September 30, 2021

Available for sale debt securities:

37 unchanged sentences

Items Recorded at Fair Value on a Nonrecurring Basis

The following table presents the carrying value of assets held at June 30, 2021, which were written down to fair value during the six months ended June 30, 2021:

The following table presents the carrying value of assets held at September 30, 2021, which were written down to fair value during the nine months ended September 30, 2021:

(Dollars in thousands) Total Quoted Prices in Active Markets for Identical Assets

14 unchanged sentences

(Weighted Average)

June 30, 2021

September 30, 2021

Collateral dependent individually analyzed loans $ 3,563 Appraisals of collateral Discount for costs to sell 0 % - 14 % ( 11 %)

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(Dollars in thousands)

June 30, 2021 Carrying Amount Total

September 30, 2021 Carrying Amount Total

Fair Value Quoted Prices in Active Markets for Identical Assets

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As shown below, a substantial portion of our revenues are specifically excluded from the scope of ASC 606.

For the three months ended June 30, 2021 2020

For the three months ended September 30, 2021 2020

(Dollars in thousands) Revenue (1)

16 unchanged sentences

Loan related derivative income

728 — 1,264 —

Income from bank-owned life insurance

5 unchanged sentences

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

For the six months ended June 30, 2021 2020

For the nine months ended September 30, 2021 2020

(Dollars in thousands) Revenue (1) ASC 606 Revenue (2)

33 unchanged sentences

The following table presents revenue from contracts with customers based on the timing of revenue recognition:

(Dollars in thousands) Three Months Six Months

Periods ended June 30, 2021 2020 2021 2020

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2021 2020 2021 2020

Revenue recognized at a point in time:

7 unchanged sentences

142 151 401 487

63 50 156 131

Total revenues from contracts in scope of Topic 606 $ 12,703 $ 11,204 $ 38,243 $ 32,388

2 unchanged sentences

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

$ 5.2 million at June 30, 2021, compared to $ 4.8 million at December 31, 2020 and were included in other assets in the Unaudited Consolidated Balance Sheets.

$ 4.8 million at both September 30, 2021 and December 31, 2020 and were included in other assets in the Unaudited Consolidated Balance Sheets.

Deferred revenues, which are considered contract liabilities under ASC 606, represent advance consideration received from customers for which the Corporation has a remaining performance obligation to fulfill.

Contract liabilities are recognized as revenue over the life of the contract as the performance obligations are satisfied.

The balances of contract liabilities were insignificant at both June 30, 2021 and June 30, 2020 and were included in other liabilities in the Unaudited Consolidated Balance Sheets.

The balances of contract liabilities were insignificant at both September 30, 2021 and December 31, 2020 and were included in other liabilities in the Unaudited Consolidated Balance Sheets.

For commissions and incentives that are in scope of ASC 606, such as those paid to employees in our wealth management services and commercial banking segments in order to obtain customer contracts, contract cost assets are established.

The contract cost assets are capitalized and amortized over the estimated useful life that the asset is expected to generate benefits.

The carrying value of contract cost assets amounted to $ 1.5 million at both June 30, 2021 and December 31, 2020 and were included in other assets in the Unaudited Consolidated Balance Sheets.

The carrying value of contract cost assets amounted to $ 1.6 million at September 30, 2021, compared to $ 1.5 million at December 31, 2020 and were included in other assets in the Unaudited Consolidated Balance Sheets.

The amortization of contract cost assets is recorded within salaries and employee benefits expense in the Unaudited Consolidated Statements of Income.

6 unchanged sentences

Pension Plan Non-Qualified Retirement Plans

Three Months Six Months Three Months Six Months

Periods ended June 30, 2021 2020 2021 2020 2021 2020 2021 2020

Three Months Nine Months Three Months Nine Months

Periods ended September 30, 2021 2020 2021 2020 2021 2020 2021 2020

Net Periodic Benefit Cost:

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Qualified Pension Plan Non-Qualified Retirement Plans

For the six months ended June 30, 2021 2020 2021 2020

For the nine months ended September 30, 2021 2020 2021 2020

Measurement date Dec 31, 2020 Dec 31, 2019 Dec 31, 2020 Dec 31, 2019

11 unchanged sentences

Note 14 - Share-Based Compensation Arrangements

During the six months ended June 30, 2021, the Corporation granted performance share unit awards and nonvested share unit awards.

The Corporation granted performance share unit awards to certain key employees providing the opportunity to earn shares of common stock over a 3 -year performance period.

During the nine months ended September 30, 2021, the Corporation granted performance share unit awards and nonvested share unit awards.

Performance share unit awards were granted to certain key employees providing the opportunity to earn shares of common stock over a 3 -year performance period.

The weighted average fair value of the performance share unit awards was $ 46.15 .

1 unchanged sentence

Based on the most recent performance assumption available, it is estimated that 51,156 shares will be earned.

The Corporation granted to certain key employees and non-executive directors 8,360 nonvested share units with 3 -year cliff vesting.

In addition, the Corporation granted to certain key employees and non-executive directors 8,360 nonvested share units with 3 -year cliff vesting.

The weighted average grant date fair value of the nonvested share units was $ 50.81 .

27 unchanged sentences

(Dollars in thousands) Commercial Banking Wealth Management Services Corporate Consolidated Total

Three months ended June 30, 2021 2020 2021 2020 2021 2020 2021 2020

Three months ended September 30, 2021 2020 2021 2020 2021 2020 2021 2020

Net interest income (expense) $ 35,732 $ 33,103 ($ 25 ) ($ 24 ) $ 363 ($ 1,425 ) $ 36,070 $ 31,654

17 unchanged sentences

(Dollars in thousands) Commercial Banking Wealth Management Services Corporate Consolidated Total

Six months ended June 30, 2021 2020 2021 2020 2021 2020 2021 2020

Nine months ended September 30, 2021 2020 2021 2020 2021 2020 2021 2020

Net interest income (expense) $ 105,579 $ 94,692 ($ 72 ) ($ 117 ) ($ 1,812 ) $ 626 $ 103,695 $ 95,201

20 unchanged sentences

The following tables present the activity in other comprehensive income (loss):

Three months ended June 30, 2021 2020

Three months ended September 30, 2021 2020

(Dollars in thousands) Pre-tax Amounts Income Taxes Net of Tax Pre-tax Amounts Income Taxes Net of Tax

11 unchanged sentences

711 171 540 535 125 410

Total other comprehensive income (loss) $ 6,410 $ 1,532 $ 4,878 ($ 1,817 ) ($ 426 ) ($ 1,391 )

(1) The pre-tax amounts for the three months ended June 30, 2021 are included in interest expense on FHLB advances and interest and fees on loans in the Unaudited Consolidated Statements of Income.

(2) The pre-tax amounts for the three months ended June 30, 2020 are included in interest expense on FHLB advances, interest expense on junior subordinated debentures and interest and fees on loans in the Unaudited Consolidated Statements of Income.

Total other comprehensive loss ($ 3,947 ) ($ 947 ) ($ 3,000 ) ($ 3,849 ) ($ 908 ) ($ 2,941 )

(1) The pre-tax amounts for the three months ended September 30, 2021 are included in interest expense on FHLB advances and interest and fees on loans in the Unaudited Consolidated Statements of Income.

(2) The pre-tax amounts for the three months ended September 30, 2020 are included in interest expense on FHLB advances, interest expense on junior subordinated debentures and interest and fees on loans in the Unaudited Consolidated Statements of Income.

(3) The pre-tax amounts are included in other expenses in the Unaudited Consolidated Statements of Income.

Six months ended June 30, 2021 2020

Nine months ended September 30, 2021 2020

(Dollars in thousands) Pre-tax Amounts Income Taxes Net of Tax Pre-tax Amounts Income Taxes Net of Tax

5 unchanged sentences

( 21 ) ( 5 ) ( 16 ) ( 1,994 ) ( 473 ) ( 1,521 )

Net cash flow hedge gains reclassified into earnings (1) (2)

Net cash flow hedge (losses) gains reclassified into earnings (1) (2)

( 27 ) ( 7 ) ( 20 ) 829 196 633

4 unchanged sentences

Total other comprehensive (loss) income ($ 14,127 ) ($ 3,390 ) ($ 10,737 ) $ 10,235 $ 2,401 $ 7,834

(1) The pre-tax amounts for the six months ended June 30, 2021 are included in interest expense on FHLB advances and interest and fees on loans in the Unaudited Consolidated Statements of Income.

(2) The pre-tax amounts for the six months ended June 30, 2020 are included in interest expense on FHLB advances, interest expense on junior subordinated debentures and interest and fees on loans in the Unaudited Consolidated Statements of Income.

(1) The pre-tax amounts for the nine months ended September 30, 2021 are included in interest expense on FHLB advances and interest and fees on loans in the Unaudited Consolidated Statements of Income.

(2) The pre-tax amounts for the nine months ended September 30, 2020 are included in interest expense on FHLB advances, interest expense on junior subordinated debentures and interest and fees on loans in the Unaudited Consolidated Statements of Income.

(3) The pre-tax amounts are included in other expenses in the Unaudited Consolidated Statements of Income.

The following tables present the changes in accumulated other comprehensive income (loss) by component, net of tax:

(Dollars in thousands) Net Unrealized (Losses) Gains on Available For Sale Debt Securities Net Unrealized (Losses) Gains on Cash Flow Hedges Defined Benefit Pension Plan Adjustment Total

For the three months ended June 30, 2021

Balance at March 31, 2021 ($ 3,438 ) ($ 1,150 ) ($ 15,418 ) ($ 20,006 )

Other comprehensive income before reclassifications 4,134 120 — 4,254

(Dollars in thousands) Net Unrealized Gains (Losses) on Available For Sale Debt Securities Net Unrealized Losses on Cash Flow Hedges Defined Benefit Pension Plan Adjustment Total

For the three months ended September 30, 2021

Balance at June 30, 2021 $ 696 ($ 1,080 ) ($ 14,744 ) ($ 15,128 )

Other comprehensive loss before reclassifications ( 3,137 ) ( 219 ) — ( 3,356 )

Amounts reclassified from accumulated other comprehensive income

— ( 184 ) 540 356

Net other comprehensive income 4,134 70 674 4,878

Balance at June 30, 2021 $ 696 ($ 1,080 ) ($ 14,744 ) ($ 15,128 )

Net other comprehensive (loss) income ( 3,137 ) ( 403 ) 540 ( 3,000 )

Balance at September 30, 2021 ($ 2,441 ) ($ 1,483 ) ($ 14,204 ) ($ 18,128 )

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

(Dollars in thousands) Net Unrealized Gains (Losses) on Available For Sale Debt Securities Net Unrealized (Losses) Gains on Cash Flow Hedges Defined Benefit Pension Plan Adjustment Total

For the six months ended June 30, 2021

(Dollars in thousands) Net Unrealized Gains (Losses) on Available For Sale Debt Securities Net Unrealized Losses on Cash Flow Hedges Defined Benefit Pension Plan Adjustment Total

For the nine months ended September 30, 2021

Balance at December 31, 2020 $ 9,881 ($ 1,447 ) ($ 15,825 ) ($ 7,391 )

Other comprehensive (loss) income before reclassifications ( 9,185 ) 203 — ( 8,982 )

Other comprehensive loss before reclassifications ( 12,322 ) ( 16 ) — ( 12,338 )

Amounts reclassified from accumulated other comprehensive income

1 unchanged sentence

Net other comprehensive (loss) income ( 12,322 ) ( 36 ) 1,621 ( 10,737 )

Balance at June 30, 2021 $ 696 ($ 1,080 ) ($ 14,744 ) ($ 15,128 )

Balance at September 30, 2021 ($ 2,441 ) ($ 1,483 ) ($ 14,204 ) ($ 18,128 )

(Dollars in thousands) Net Unrealized Gains (Losses) on Available For Sale Debt Securities Net Unrealized (Losses) Gains on Cash Flow Hedges Defined Benefit Pension Plan Adjustment Total

For the three months ended June 30, 2020

Balance at March 31, 2020 $ 16,032 ($ 1,843 ) ($ 13,260 ) $ 929

For the three months ended September 30, 2020

Balance at June 30, 2020 $ 14,224 ($ 1,835 ) ($ 12,851 ) ($ 462 )

Other comprehensive loss before reclassifications ( 3,505 ) ( 107 ) — ( 3,612 )

2 unchanged sentences

Net other comprehensive (loss) income ( 3,505 ) 154 410 ( 2,941 )

Balance at June 30, 2020 $ 14,224 ($ 1,835 ) ($ 12,851 ) ($ 462 )

Balance at September 30, 2020 $ 10,719 ($ 1,681 ) ($ 12,441 ) ($ 3,403 )

(Dollars in thousands) Net Unrealized Gains on Available For Sale Debt Securities Net Unrealized (Losses) Gains on Cash Flow Hedges Defined Benefit Pension Plan Adjustment Total

For the six months ended June 30, 2020

For the nine months ended September 30, 2020

Balance at December 31, 2019 $ 3,226 ($ 793 ) ($ 13,670 ) ($ 11,237 )

5 unchanged sentences

7,493 ( 888 ) 1,229 7,834

Balance at June 30, 2020 $ 14,224 ($ 1,835 ) ($ 12,851 ) ($ 462 )

Balance at September 30, 2020 $ 10,719 ($ 1,681 ) ($ 12,441 ) ($ 3,403 )

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

2 unchanged sentences

(Dollars and shares in thousands, except per share amounts)

Three Months Six Months

Periods ended June 30, 2021 2020 2021 2020

Three Months Nine Months

Periods ended September 30, 2021 2020 2021 2020

Earnings per common share - basic:

18 unchanged sentences

Earnings per common share - diluted $ 1.07 $ 1.06 $ 3.24 $ 2.95

Weighted average common stock equivalents, not included in common stock equivalents above because they were anti-dilutive, totaled 87,924 and 149,650 , respectively, for the three and six months ended June 30, 2021, compared to 256,721 and 220,305 , respectively, for the same periods in 2020.

Weighted average common stock equivalents, not included in common stock equivalents above because they were anti-dilutive, totaled 148,542 and 149,675 , respectively, for the three and nine months ended September 30, 2021, compared to 223,210 and 221,047 , respectively, for the same periods in 2020.

Note 18 - Commitments and Contingencies

17 unchanged sentences

Most standby letters of credit extend for one year.

The maximum potential amount of undiscounted future payments, not reduced by amounts that may be recovered, totaled $ 11.9 million and $ 11.7 million, respectively, as of June 30, 2021 and December 31, 2020.

At June 30, 2021 and December 31, 2020, there were no liabilities to beneficiaries resulting from standby letters of credit.

Fee income on standby letters of credit was insignificant for the three and six months ended June 30, 2021 and 2020.

The maximum potential amount of undiscounted future payments, not reduced by amounts that may be recovered, totaled $ 12.1 million and $ 11.7 million, respectively, as of September 30, 2021 and December 31, 2020.

At September 30, 2021 and December 31, 2020, there were no liabilities to beneficiaries resulting from

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

standby letters of credit.

Fee income on standby letters of credit was insignificant for the three and nine months ended September 30, 2021 and 2020.

A substantial portion of the standby letters of credit were supported by pledged collateral.

10 unchanged sentences

The following table presents the contractual and notional amounts of financial instruments with off-balance sheet risk:

(Dollars in thousands) Jun 30,

(Dollars in thousands) Sep 30,

Financial instruments whose contract amounts represent credit risk (unfunded commitments):

32 unchanged sentences

The ACL on unfunded commitments is adjusted through a provision for credit losses recognized in the Unaudited Consolidated Statements of Income.

The activity in the ACL on unfunded commitments for the three months ended June 30, 2021 is presented below:

The activity in the ACL on unfunded commitments for the three months ended September 30, 2021 is presented below:

(Dollars in thousands) Commercial Consumer

3 unchanged sentences

Ending Balance $ 1,218 $ 1,037 $ 2,255 $ 60 $ — $ 18 $ 18 $ 2,333

The activity in the ACL on unfunded commitments for the six months ended June 30, 2021 is presented below:

The activity in the ACL on unfunded commitments for the nine months ended September 30, 2021 is presented below:

(Dollars in thousands) Commercial Consumer

3 unchanged sentences

Ending Balance $ 1,218 $ 1,037 $ 2,255 $ 60 $ — $ 18 $ 18 $ 2,333

The activity in the ACL on unfunded commitments for the three months ended June 30, 2020 is presented below:

The activity in the ACL on unfunded commitments for the three months ended September 30, 2020 is presented below:

(Dollars in thousands) Commercial Consumer

3 unchanged sentences

Ending Balance $ 857 $ 1,267 $ 2,124 $ 37 $ — $ 19 $ 19 $ 2,180

The activity in the ACL on unfunded commitments for the six months ended June 30, 2020 is presented below:

The activity in the ACL on unfunded commitments for the nine months ended September 30, 2020 is presented below:

(Dollars in thousands) Commercial Consumer

9 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements