What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-04 compared with 2022-05-05 · 321 added, 167 removed, 1116 unchanged (30% of the section changed)

8 unchanged sentences

Mortgage loans held for sale, at fair value 22,656 40,196

15,612 40,196

Available for sale debt securities, at fair value (amortized cost of $ 1,082,203 , net of allowance for credit losses on securities of $ 0 at March 31, 2022;

Available for sale debt securities, at fair value (amortized cost of $ 1,141,781 , net of allowance for credit losses on securities of $ 0 at June 30, 2022;

and amortized cost of $ 1,051,800 ;

2 unchanged sentences

Federal Home Loan Bank stock, at cost 16,300 13,031

4,283,852 4,272,925

Total loans 4,479,822 4,272,925

allowance for credit losses on loans 36,317 39,088

39,236 39,088

4,244,616 4,233,837

Net loans 4,443,505 4,233,837

Premises and equipment, net 29,694 28,908

4 unchanged sentences

Other assets 153,849 125,196

$ 5,847,999 $ 5,851,127

Total assets $ 5,982,891 $ 5,851,127

Noninterest-bearing deposits $ 888,981 $ 945,229

$ 911,990 $ 945,229

Interest-bearing deposits 4,117,648 4,034,822

4,215,960 4,034,822

Total deposits 5,006,629 4,980,051

5,127,950 4,980,051

Federal Home Loan Bank advances 328,000 145,000

3 unchanged sentences

Total liabilities 5,506,257 5,286,319

5,334,807 5,286,319

Commitments and contingencies (Note 17)

2 unchanged sentences

authorized 60,000,000 shares;

17,363,457 shares issued and 17,331,555 shares outstanding at March 31, 2022 and 17,363,457 shares issued and 17,330,818 shares outstanding at December 31, 2021

17,363,457 shares issued and 17,189,901 shares outstanding at June 30, 2022 and 17,363,457 shares issued and 17,330,818 shares outstanding at December 31, 2021

Paid-in capital 126,079 126,511

2 unchanged sentences

Treasury stock, at cost;

31,902 shares at March 31, 2022 and 32,639 shares at December 31, 2021

173,556 shares at June 30, 2022 and 32,639 shares at December 31, 2021

( 8,378 ) ( 1,117 )

Total shareholders’ equity 476,634 564,808

513,192 564,808

Total liabilities and shareholders’ equity $ 5,982,891 $ 5,851,127

$ 5,847,999 $ 5,851,127

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

3 unchanged sentences

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

Three months ended March 31, 2022 2021

Three Months Six Months

Periods ended June 30, 2022 2021 2022 2021

Interest income:

Interest and fees on loans $ 36,602 $ 34,820 $ 70,532 $ 68,979

$ 33,930 $ 34,159

Interest on mortgage loans held for sale 258 405 490 846

3 unchanged sentences

Total interest and dividend income 42,029 38,808 80,566 76,816

38,537 38,008

Interest expense:

Deposits 3,963 2,961 7,066 6,624

Federal Home Loan Bank advances 413 1,001 657 2,381

11 unchanged sentences

Income from bank-owned life insurance 615 607 1,216 1,163

Other income 354 438 747 1,825

Total noninterest income 15,852 20,593 33,011 46,567

17,159 25,974

Noninterest expense:

Salaries and employee benefits 20,381 22,082 41,383 43,609

21,002 21,527

Outsourced services 3,375 3,217 6,617 6,417

Net occupancy 2,174 2,042 4,474 4,170

Equipment 938 975 1,856 1,969

Legal, audit and professional fees 677 678 1,447 1,275

5 unchanged sentences

Total noninterest expense 31,077 33,012 62,296 67,725

31,219 34,713

Income before income taxes 25,290 22,335 46,221 48,467

Income tax expense 5,333 4,875 9,781 10,536

$ 16,483 $ 20,471

Net income $ 19,957 $ 17,460 $ 36,440 $ 37,931

Net income available to common shareholders $ 19,900 $ 17,408 $ 36,329 $ 37,823

9 unchanged sentences

(Dollars in thousands)

Three months ended March 31, 2022 2021

Three Months Six Months

Periods ended June 30, 2022 2021 2022 2021

Net income $ 19,957 $ 17,460 $ 36,440 $ 37,931

Other comprehensive income (loss), net of tax:

Other comprehensive (loss) income, net of tax:

Net change in fair value of available for sale debt securities ( 35,942 ) 4,134 ( 85,402 ) ( 9,185 )

( 49,460 ) ( 13,319 )

Net change in fair value of cash flow hedges ( 2,973 ) 70 ( 13,308 ) 367

( 10,335 ) 297

Net change in defined benefit plan obligations 325 674 650 1,081

Total other comprehensive loss, net of tax ( 59,470 ) ( 12,615 )

Total other comprehensive (loss) income, net of tax ( 38,590 ) 4,878 ( 98,060 ) ( 7,737 )

Total comprehensive (loss) income ($ 18,633 ) $ 22,338 ($ 61,620 ) $ 30,194

4 unchanged sentences

(Dollars and shares in thousands)

For the three months ended March 31, 2022 Common

For the three months ended June 30, 2022 Common

Shares Outstanding Common

4 unchanged sentences

Loss Treasury Stock Total

Balance at March 31, 2022 17,332 $ 1,085 $ 127,355 $ 465,295 ($ 79,451 ) ($ 1,092 ) $ 513,192

— — — 19,957 — — 19,957

Total other comprehensive loss, net of tax — — — — ( 38,590 ) — ( 38,590 )

Cash dividends declared ($ 0.54 per share)

— — — ( 9,363 ) — — ( 9,363 )

Share-based compensation — — 725 — — — 725

Exercise of stock options, issuance of other compensation-related equity awards, net of awards surrendered

33 — ( 2,001 ) — — 1,297 ( 704 )

Treasury stock purchased under 2021 Stock Repurchase Program ( 175 ) — — — — ( 8,583 ) ( 8,583 )

Balance at June 30, 2022 17,190 $ 1,085 $ 126,079 $ 475,889 ($ 118,041 ) ($ 8,378 ) $ 476,634

For the six months ended June 30, 2022 Common

Shares Outstanding Common

Stock Paid-in

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury Stock Total

Balance at December 31, 2021 17,331 $ 1,085 $ 126,511 $ 458,310 ($ 19,981 ) ($ 1,117 ) $ 564,808

6 unchanged sentences

34 — ( 2,045 ) — — 1,322 ( 723 )

Treasury stock purchased under 2021 Stock Repurchase Program ( 175 ) — — — — ( 8,583 ) ( 8,583 )

Balance at June 30, 2022 17,190 $ 1,085 $ 126,079 $ 475,889 ($ 118,041 ) ($ 8,378 ) $ 476,634

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

Washington Trust Bancorp, Inc.

and Subsidiaries

Consolidated Statements of Changes in Shareholders' Equity (unaudited)

(Dollars and shares in thousands)

For the three months ended June 30, 2021 Common

Shares Outstanding Common

Stock Paid-in

Capital Retained

Earnings Accumulated

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

For the three months ended March 31, 2021 Common

— — — 17,460 — — 17,460

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

Cash dividends declared ($ 0.52 per share)

— — — ( 9,131 ) — — ( 9,131 )

Share-based compensation — — 964 — — — 964

Exercise of stock options, issuance of other compensation-related equity awards, net of awards surrendered

14 — ( 404 ) — — 490 86

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

Shares Outstanding Common

12 unchanged sentences

55 — ( 2,050 ) — — 1,885 ( 165 )

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

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

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

3 unchanged sentences

(Dollars in thousands)

Three months ended March 31, 2022 2021

Six months ended June 30, 2022 2021

Cash flows from operating activities:

$ 36,440 $ 37,931

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses

14 unchanged sentences

Increase (decrease) in operating lease liabilities 1,481 ( 1,159 )

Decrease in other assets 21,289 30,504

(Decrease) in other liabilities ( 25,100 ) ( 35,544 )

Net cash provided by (used in) operating activities 38,562 ( 3,366 )

(Increase) decrease in other assets ( 3,346 ) 26,859

Increase (decrease) in other liabilities 218 ( 34,102 )

Net cash provided by operating activities 51,600 59,426

Cash flows from investing activities:

9 unchanged sentences

Other — 20,500

Net redemption of Federal Home Loan Bank stock 4,579 5,513

Net (purchases) redemption of Federal Home Loan Bank stock ( 3,269 ) 7,528

Purchases of other equity investments ( 375 ) —

Net (increase) decrease in loans ( 8,700 ) 7,570

Net increase in loans ( 203,926 ) ( 56,094 )

Purchases of loans

2 unchanged sentences

( 2,481 ) ( 1,828 )

Purchases of bank-owned life insurance

( 7,000 ) ( 7,000 )

Equity investment in real estate limited partnership

Net cash used in investing activities

6 unchanged sentences

( 597,000 ) ( 1,194,267 )

Treasury stock purchased

Net proceeds from stock option exercises and issuance of other equity awards, net of awards surrendered

4 unchanged sentences

181,247 143,608

Net increase (decrease) in cash and cash equivalents 49,603 ( 31,525 )

Net decrease in cash and cash equivalents ( 79,870 ) ( 70,062 )

Cash and cash equivalents at beginning of period

4 unchanged sentences

Loans charged off $ 59 $ 381

Commitment for equity investment in real estate limited partnership 8,360 —

Supplemental Disclosures:

34 unchanged sentences

The provisions under ASU 2022-02 should be applied on a prospective basis.

However, the Corporation has the option to use a modified retrospective transition method related to the change in accounting treatment for TDRs with a cumulative effect of the the change in accounting principle recognized in the opening balance of retained earnings as of the adoption date.

However, the Corporation has the option to use a modified retrospective transition method related to the change in accounting treatment for TDRs with a cumulative effect of the change in accounting principle recognized in the opening balance of retained earnings as of the adoption date.

The Corporation is currently evaluating this ASU and has not yet determined the impact that the adoption of ASU 2022-02 will have on its consolidated financial statements.

4 unchanged sentences

(Dollars in thousands)

March 31, 2022 Amortized Cost Unrealized Gains Unrealized Losses ACL

June 30, 2022 Amortized Cost Unrealized Gains Unrealized Losses ACL

Available for Sale Debt Securities:

27 unchanged sentences

The Corporation excludes accrued interest from the amortized cost basis of debt securities and reports accrued interest in other assets in the Unaudited Consolidated Balance Sheets.

Accrued interest receivable on available for sale debt securities totaled $ 2.2 million and $ 2.3 million, respectively, as of March 31, 2022 and December 31, 2021.

As of March 31, 2022 and December 31, 2021, securities with a fair value of $ 301.8 million and $ 332.0 million, respectively, were pledged as collateral for FHLB borrowings, potential borrowings with the FRBB, certain public deposits and for other purposes.

Accrued interest receivable on available for sale debt securities totaled $ 2.6 million and $ 2.3 million, respectively, as of June 30, 2022 and December 31, 2021.

As of June 30, 2022 and December 31, 2021, securities with a fair value of $ 292.9 million and $ 332.0 million, respectively, were pledged as collateral for FHLB borrowings, potential borrowings with the FRBB, certain public deposits and for other purposes.

See Note 7 for additional disclosure on FHLB borrowings.

4 unchanged sentences

(Dollars in thousands)

March 31, 2022 Amortized Cost Fair Value

June 30, 2022 Amortized Cost Fair Value

Due in one year or less $ 143,283 $ 127,940

8 unchanged sentences

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Included in the above table are debt securities with an amortized cost balance of $ 223.0 million and a fair value of $ 205.9 million at March 31, 2022 that are callable at the discretion of the issuers.

Included in the above table are debt securities with an amortized cost balance of $ 233.0 million and a fair value of $ 208.9 million at June 30, 2022 that are callable at the discretion of the issuers.

Final maturities of the callable securities range from 2 years to 15 years, with call features ranging from 1 month to 1 year.

1 unchanged sentence

Management assesses the decline in fair value of investment securities on a regular basis.

Unrealized losses on debt securities may occur from current market conditions, increases in interest rates since the time of purchase, a structural change in an investment, vol atility of earnings of a specific issuer, or deterioration in credit quality of the issuer.

Unrealized losses on debt securities may occur from current market conditions, increases in interest rates since the time of purchase, a structural change in an investment, volatility of earnings of a specific issuer, or deterioration in credit quality of the issuer.

Management evaluates both qualitative and quantitative factors to assess whether an impairment exists.

1 unchanged sentence

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

There were no debt securities on nonaccrual status at March 31, 2022 and 2021 and, therefore there was no accrued interest related to debt securities reversed against interest income for the three months ended March 31, 2022 and 2021.

There were no debt securities on nonaccrual status at June 30, 2022 and 2021 and, therefore there was no accrued interest related to debt securities reversed against interest income for the three and six months ended June 30, 2022 and 2021.

The following tables summarize available for sale debt securities in an unrealized loss position, for which an ACL 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

March 31, 2022 # Fair

June 30, 2022 # Fair

Value Unrealized

43 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 March 31, 2022.

The issuers of these securities continue to make timely principal and interest payments and none of these securities were past due at June 30, 2022.

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 March 31, 2022.

Therefore, no allowance for credits losses on securities was recorded at June 30, 2022.

Individual Name Issuer Trust Preferred Debt Securities

Included in debt securities in an unrealized loss position at March 31, 2022 were three trust preferred securities issued by three individual companies in the banking sector.

Included in debt securities in an unrealized loss position at June 30, 2022 were three trust preferred securities issued by three individual companies in the banking sector.

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 March 31, 2022, there was one individual name issuer trust preferred debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 77 thousand that was rated below investment grade by S&P.

We noted no additional downgrades to below investment grade between March 31, 2022 and the filing date of this report.

As of June 30, 2022, there was one individual name issuer trust preferred debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 154 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between June 30, 2022 and the filing date of this report.

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.

2 unchanged sentences

Therefore, no ACL on securities was recorded at March 31, 2022.

Therefore, no ACL on securities was recorded at June 30, 2022.

Corporate Bonds

At March 31, 2022, the Corporation had four corporate bond holdings with unrealized losses totaling $ 996 thousand.

Included in debt securities in an unrealized loss position at June 30, 2022 were four corporate bond holdings issued by three individual companies in the financial services industry.

As of March 31, 2022, there was one corporate bond debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 50 thousand that was rated below investment grade by S&P.

We noted no additional downgrades to below investment grade between March 31, 2022 and the filing date of this report.

As of June 30, 2022, there was one corporate bond debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 136 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between June 30, 2022 and the filing date of this report.

Based on the information available through the filing date of this report, all corporate bond 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.

2 unchanged sentences

Therefore, no ACL was recorded at March 31, 2022.

Therefore, no ACL was recorded at June 30, 2022.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

1 unchanged sentence

The following table presents a summary of loans:

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2022 December 31, 2021

15 unchanged sentences

(2) 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 $ 12.5 million and $ 38.0 million, respectively, of PPP loans as of March 31, 2022 and December 31, 2021.

C&I also includes $ 1.9 million and $ 38.0 million, respectively, of PPP loans as of June 30, 2022 and December 31, 2021.

(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 $ 8.3 million and $ 6.7 million, respectively, at March 31, 2022 and December 31, 2021 and net unamortized premiums on purchased loans of $ 389 thousand and $ 414 thousand, respectively, at March 31, 2022 and December 31, 2021.

Loan balances exclude accrued interest receivable of $ 10.6 million and $ 10.3 million, respectively, as of March 31, 2022 and December 31, 2021.

As of both March 31, 2022 and December 31, 2021, loans amounting to $ 2.2 billion were pledged as collateral to the FHLB under a blanket pledge agreement and to the FRBB for the discount window.

(5) Includes net unamortized loan origination costs of $ 10.0 million and $ 6.7 million, respectively, at June 30, 2022 and December 31, 2021 and net unamortized premiums on purchased loans of $ 359 thousand and $ 414 thousand, respectively, at June 30, 2022 and December 31, 2021.

Loan balances exclude accrued interest receivable of $ 11.6 million and $ 10.3 million, respectively, as of June 30, 2022 and December 31, 2021.

As of both June 30, 2022 and December 31, 2021, loans amounting to $ 2.2 billion were pledged as collateral to the FHLB under a blanket pledge agreement and to the FRBB for the discount window.

See Note 7 for additional disclosure regarding borrowings.

1 unchanged sentence

Eligible loan modifications from March 1, 2020 through January 1, 2022 made in response to the COVID-19 pandemic were not required to be classified as TDRs.

During this period of time, we processed loan payment deferral modifications, or “deferments”, on 654 loans totaling $ 727.7 million.

The vast majority of the deferments qualified as eligible loan modifications and were not classified as TDRs.

As of March 31, 2022, all of these loans have exited their payment deferral period.

The vast majority of the loan payment deferral modifications, or “deferments,” qualified as eligible loan modifications and were not classified as TDRs.

All of these loans with qualified deferments exited their payment deferral period prior to March 31, 2022.

Concentrations of Credit Risk

7 unchanged sentences

(Dollars in thousands) Days Past Due

March 31, 2022 30-59 60-89 Over 90 Total Past Due Current Total Loans

June 30, 2022 30-59 60-89 Over 90 Total Past Due Current Total Loans

Commercial real estate

24 unchanged sentences

Total loans $ 2,388 $ 3,253 $ 4,770 $ 10,411 $ 4,262,514 $ 4,272,925

Included in past due loans as of March 31, 2022 and December 31, 2021, were nonaccrual loans of $ 5.7 million and $ 9.4 million, respectively.

In addition, all loans 90 days or more past due at March 31, 2022 and December 31, 2021 were classified as nonaccrual.

Included in past due loans as of June 30, 2022 and December 31, 2021, were nonaccrual loans of $ 6.8 million and $ 9.4 million, respectively.

In addition, all loans 90 days or more past due at June 30, 2022 and December 31, 2021 were classified as nonaccrual.

Nonaccrual Loans

7 unchanged sentences

The following table is a summary of nonaccrual loans, segregated by class of loans:

(Dollars in thousands) Mar 31,

(Dollars in thousands) Jun 30,

Commercial real estate

7 unchanged sentences

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

No ACL was deemed necessary on nonaccrual loans with carrying values of $ 4.2 million as of both March 31, 2022 and December 31, 2021.

Nonaccrual loans of $ 6.9 million and $ 4.8 million, respectively, at March 31, 2022 and December 31, 2021 were current as to the payment of principal and interest.

As of March 31, 2022 and December 31, 2021, nonaccrual loans secured by one- to four-family residential property amounting to $ 1.7 million and $ 1.5 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 March 31, 2022.

No ACL was deemed necessary on nonaccrual loans with carrying values of $ 4.3 million and $ 4.2 million, respectively as of June 30, 2022 and December 31, 2021.

Nonaccrual loans of $ 5.6 million and $ 4.8 million, respectively, at June 30, 2022 and December 31, 2021 were current as to the payment of principal and interest.

As of June 30, 2022 and December 31, 2021, nonaccrual loans secured by one- to four-family residential property amounting to $ 4.2 million and $ 1.5 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, 2022.

The following table presents interest income recognized on nonaccrual loans:

(Dollars in thousands)

Three months ended March 31, 2022 2021

(Dollars in thousands) Three Months Six Months

Periods ended June 30, 2022 2021 2022 2021

Commercial real estate

$ — $ — $ — $ —

Commercial & industrial

2 unchanged sentences

Residential real estate

69 72 167 129

Total consumer 10 13 17 36

20 unchanged sentences

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

(Dollars in thousands) Mar 31,

(Dollars in thousands) Jun 30,

Accruing TDRs

5 unchanged sentences

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

During the three months ended March 31, 2022 and 2021, there were no loans modified in a TDR.

The following tables present information on TDRs modified within the previous 12 months for which there was a payment default:

During the three and six months ended June 30, 2022 and 2021, there were no loans modified in a TDR.

For the three months ended June 30, 2022 and 2021, there were no TDRs modified within the previous 12 months for which there was a payment default.

The following tables presents information on TDRs modified within the previous 12 months for which there was a payment default:

(Dollars in thousands) # of Loans Recorded Investment

Three months ended March 31, 2022 2021 2022 2021

Six months ended June 30, 2022 2021 2022 2021

TDRs with a Payment Default:

Residential real estate — 1 $ — $ 396

Home equity — — — —

Totals — 1 $ — $ 396

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 March 31, 2022, the carrying value of individually analyzed loans amounted to $ 21.0 million, of which $ 14.4 million were considered collateral dependent.

As of June 30, 2022, the carrying value of individually analyzed loans amounted to $ 14.4 million, of which $ 7.8 million were considered collateral dependent.

As of December 31, 2021, the carrying value of individually analyzed loans amounted to $ 21.1 million, of which $ 14.4 million were considered collateral dependent.

2 unchanged sentences

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

(Dollars in thousands) March 31, 2022 December 31, 2021

(Dollars in thousands) June 30, 2022 December 31, 2021

Carrying Value Related Allowance Carrying Value Related Allowance

49 unchanged sentences

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 March 31, 2022:

The following table summarizes the Corporation’s loan portfolio by credit quality indicator and loan portfolio segment as of June 30, 2022:

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

58 unchanged sentences

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.

Historical credit loss experience provides the basis for the calculation of loss given default and the estimation of expected credit losses.

Qualitative adjustments are made for differences in specific risk characteristics, such as differences in underwriting standards, portfolio mix, delinquency level, or term, as well as for changes in environmental conditions, that may not be reflected in historical loss rates.

The following table presents the activity in the ACL on loans for the three months ended March 31, 2022:

In accordance with the Corporation’s ACL policy, the methodology is reviewed no less than annually.

The methodology incorporates a probability of default and loss given default framework.

Loss given default is estimated based on historical credit loss experience.

Probability of default is estimated using a regression model that incorporates econometric factors.

Econometric factors are selected based on the correlation of the factor to historical credit losses for each portfolio segment.

The following table summarizes the econometric factors utilized for each loan portfolio segment as of the dates indicated:

Econometric Factors

Loan portfolio segment At June 30, 2022 At December 31, 2021

Residential real estate NUR & HPI

Home equity NUR & HPI

Other consumer GDP

The following table presents the activity in the ACL on loans for the three months ended June 30, 2022:

(Dollars in thousands) Commercial Consumer

5 unchanged sentences

Ending Balance $ 17,197 $ 10,332 $ 27,529 $ 7,308 $ 1,040 $ 440 $ 1,480 $ 36,317

The following table presents the activity in the ACL on loans for the three months ended March 31, 2021:

The following table presents the activity in the ACL on loans for the six months ended June 30, 2022:

(Dollars in thousands) Commercial Consumer

CRE C&I Total Commercial Residential Real Estate Home Equity Other Total Consumer Total

Beginning Balance $ 18,933 $ 10,832 $ 29,765 $ 7,860 $ 1,069 $ 394 $ 1,463 $ 39,088

Charge-offs — ( 9 ) ( 9 ) — — ( 50 ) ( 50 ) ( 59 )

Recoveries 145 21 166 21 4 26 30 217

Provision ( 1,881 ) ( 512 ) ( 2,393 ) ( 573 ) ( 33 ) 70 37 ( 2,929 )

Ending Balance $ 17,197 $ 10,332 $ 27,529 $ 7,308 $ 1,040 $ 440 $ 1,480 $ 36,317

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

(Dollars in thousands) Commercial Consumer

Total Commercial Residential Real Estate Home Equity Other Total Consumer Total

4 unchanged sentences

Ending Balance $ 21,450 $ 11,717 $ 33,167 $ 6,877 $ 1,340 $ 495 $ 1,835 $ 41,879

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

(Dollars in thousands) Commercial Consumer

CRE C&I Total Commercial Residential Real Estate Home Equity Other Total Consumer Total

Beginning Balance $ 22,065 $ 12,228 $ 34,293 $ 8,042 $ 1,300 $ 471 $ 1,771 $ 44,106

Charge-offs — ( 306 ) ( 306 ) ( 50 ) — ( 25 ) ( 25 ) ( 381 )

Recoveries — 3 3 80 6 16 22 105

Provision ( 615 ) ( 208 ) ( 823 ) ( 1,195 ) 34 33 67 ( 1,951 )

Ending Balance $ 21,450 $ 11,717 $ 33,167 $ 6,877 $ 1,340 $ 495 $ 1,835 $ 41,879

Note 6 - Deposits

The following table presents a summary of deposits:

(Dollars in thousands) Mar 31, 2022 Dec 31, 2021

(Dollars in thousands) Jun 30, 2022 Dec 31, 2021

Noninterest-bearing demand deposits $ 888,981 $ 945,229

Interest-bearing demand deposits (1)

289,454 251,032

NOW accounts 887,678 867,138

4 unchanged sentences

Total deposits $ 5,006,629 $ 4,980,051

(1) Includes wholesale brokered time deposit balances of $ 401,785 and $ 515,228 , respectively, as of March 31, 2022 and December 31, 2021.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

(1) Includes wholesale brokered demand deposit balances of $ 31,003 and $ 0 , respectively, as of June 30, 2022 and December 31, 2021.

(2) Includes wholesale brokered time deposit balances of $ 427,691 and $ 515,228 , respectively, as of June 30, 2022 and December 31, 2021.

Note 7 - Borrowings

Advances payable to the FHLB amounted to $ 55.0 million and $ 145.0 million, respectively, at March 31, 2022 and December 31, 2021.

As of March 31, 2022 and December 31, 2021, the Bank had access to a $ 40.0 million unused line of credit with the FHLB.

Additionally, the Bank had a $ 102.0 million standby letter of credit with the FHLB at March 31, 2022.

The Bank had remaining available borrowing capacity of $ 1.6 billion with the FHLB at both March 31, 2022 and December 31, 2021.

Advances payable to the FHLB amounted to $ 328.0 million and $ 145.0 million, respectively, at June 30, 2022 and December 31, 2021.

As of June 30, 2022 and December 31, 2021, the Bank had access to a $ 40.0 million unused line of credit with the FHLB.

Additionally, the Bank had a $ 102.0 million standby letter of credit with the FHLB at June 30, 2022.

The Bank had remaining available borrowing capacity of $ 1.3 billion and $ 1.6 billion, respectively, with the FHLB at June 30, 2022 and December 31, 2021.

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 March 31, 2022:

The following table presents maturities and weighted average interest rates on FHLB advances outstanding as of June 30, 2022:

(Dollars in thousands) Scheduled

Maturity Weighted

April 1, 2022 to December 31, 2022 $ 20,000 0.65 %

July 1, 2022 to December 31, 2022 $ 293,000 1.69 %

2023 35,000 0.45

2027 and thereafter — —

Balance at March 31, 2022 $ 55,000 0.52 %

Balance at June 30, 2022 $ 328,000 1.56 %

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 8 - Shareholders' Equity

4 unchanged sentences

The 2021 Repurchase Program expires on December 31, 2022 and may be modified, suspended, or discontinued at any time.

As of March 31, 2022, no shares have been repurchased under the 2021 Repurchase Program.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The Corporation has repurchased 175,408 shares, at an average price of $ 48.93 and a total cost of $ 8.6 million, under its 2021 Repurchase Program, all of which were repurchased in the second quarter of 2022.

Regulatory Capital Requirements

Capital levels at March 31, 2022 exceeded the regulatory minimum levels to be considered “well capitalized.”

Capital levels at June 30, 2022 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

March 31, 2022

June 30, 2022

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 March 31, 2022 and December 31, 2021.

The Corporation’s capital levels exceeded the minimum regulatory capital requirements plus the capital conservation buffer at June 30, 2022 and December 31, 2021.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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 March 31, 2022 and December 31, 2021, $ 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 capital adequacy guidelines of the Board of Governors of the Federal Reserve System.

At both June 30, 2022 and December 31, 2021, $ 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 capital adequacy guidelines of the Board of Governors of the Federal Reserve System.

In accordance with regulatory capital rules, the Corporation elected the option to delay the estimated impact of 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 exclude the full impact of the increased ACL on loans and unfunded loan commitments attributed to the adoption of ASC 326, adjusted for an approximation of the after-tax provision for credit losses attributable to ASC 326

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

relative to the incurred loss methodology during the two-year deferral period.

The cumulative difference at the end of the deferral period is being phased-in to regulatory capital over the three-year transition period, which began January 1, 2022.

12 unchanged sentences

Cash Flow Hedging Instruments

As of March 31, 2022 and December 31, 2021, the Corporation had an interest rate swap contract with a total notional amount of $ 20.0 million that was designated as a cash flow hedge to hedge the interest rate risk associated with short-term variable rate FHLB advances.

As of June 30, 2022 and December 31, 2021, the Corporation had an interest rate swap contract with a total notional amount of $ 20.0 million that was designated as a cash flow hedge to hedge the interest rate risk associated with short-term variable rate FHLB advances.

The interest rate swap on borrowings matures in December 2023.

As of March 31, 2022 and December 31, 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.

As of June 30, 2022 and December 31, 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 matures in May 2026.

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

As of March 31, 2022 and December 31, 2021, Washington Trust had interest rate swap contracts with commercial loan borrowers with notional amounts of $ 979.4 million and $ 1.0 billion, respectively, and equal amounts of “mirror” swap contracts with third party financial institutions.

As of June 30, 2022 and December 31, 2021, Washington Trust had interest rate swap contracts with commercial loan borrowers with notional amounts of $ 961.3 million and $ 1.0 billion, 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.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Risk Participation Agreements

3 unchanged sentences

Under a risk participation-out agreement, a derivative asset, the Corporation participates out a portion of the credit risk associated with the interest rate swap position executed with the commercial borrower for a fee paid to the participating bank.

Under a risk participation-in agreement, a derivative liability, the Corporation assumes, or participates in, a portion of the

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

credit risk associated with the interest rate swap position with the commercial borrower for a fee received from the other bank.

As of March 31, 2022, the notional amounts of risk participation-out agreements and risk participation-in agreements were $ 73.8 million and $ 162.8 million, respectively, compared to $ 74.2 million and $ 163.2 million, respectively, as of December 31, 2021.

Under a risk participation-in agreement, a derivative liability, the Corporation assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower for a fee received from the other bank.

As of June 30, 2022, the notional amounts of risk participation-out agreements and risk participation-in agreements were $ 73.3 million and $ 177.4 million, respectively, compared to $ 74.2 million and $ 163.2 million, respectively, as of December 31, 2021.

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 March 31, 2022, the notional amounts of interest rate lock commitments and forward sale commitments were $ 40.1 million and $ 67.6 million, respectively, compared to $ 49.8 million and $ 103.6 million, respectively, as of December 31, 2021.

As of June 30, 2022, the notional amounts of interest rate lock commitments and forward sale commitments were $ 35.4 million and $ 68.5 million, respectively, compared to $ 49.8 million and $ 103.6 million, respectively, as of December 31, 2021.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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 Mar 31, 2022 Dec 31, 2021 Balance Sheet Location Mar 31, 2022 Dec 31, 2021

Balance Sheet Location Jun 30, 2022 Dec 31, 2021 Balance Sheet Location Jun 30, 2022 Dec 31, 2021

Derivatives Designated as Cash Flow Hedging Instruments:

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Washington Trust may need to post additional collateral in the future in proportion to potential increases in unrealized loss positions.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents the effect of derivative instruments in the Unaudited Consolidated Statements of Changes in Shareholders’ Equity and Unaudited Consolidated Statements of Income:

1 unchanged sentence

Other Comprehensive Income (Loss), Net of Tax

Three months ended March 31, 2022 2021

Three Months Six Months

Periods ended June 30, 2022 2021 2022 2021

Derivatives Designated as Cash Flow Hedging Instruments:

4 unchanged sentences

For derivatives designated as cash flow hedging instruments, see Note 15 for additional disclosure pertaining to the amounts and location of reclassifications from AOCL into earnings.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

(Dollars in thousands) Amount of Gain (Loss)

Recognized in Income on Derivatives

Three months ended March 31, Statement of Income Location 2022 2021

Three Months Six Months

Periods ended June 30, Statement of Income Location 2022 2021 2022 2021

Derivatives not Designated as Hedging Instruments:

12 unchanged sentences

Total $ 1,621 ($ 1,068 ) $ 3,979 $ 2,155

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 10 - Fair Value Measurements

17 unchanged sentences

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

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2022 December 31,

4 unchanged sentences

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 a decrease to mortgage banking revenues of $ 1.1 million and $ 1.5 million, respectively, for the three months ended March 31, 2022 and 2021.

There were no mortgage loans held for sale 90 days or more past due as of March 31, 2022 and December 31, 2021.

Changes in fair value amounted to an increase to mortgage banking revenues of $ 327 thousand for the three months ended June 30, 2022 and a decrease of

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

$ 748 thousand for the six months ended June 30, 2022.

This compared to an increase to mortgage banking revenues 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.

There were no mortgage loans held for sale 90 days or more past due as of June 30, 2022 and December 31, 2021.

Valuation Techniques

3 unchanged sentences

such items are classified as Level 1.

There were no Level 1 debt securities held at March 31, 2022 and December 31, 2021.

There were no Level 1 debt securities held at June 30, 2022 and December 31, 2021.

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

2 unchanged sentences

government-sponsored enterprises, including mortgage-backed securities, individual name issuer trust preferred debt securities and corporate bonds.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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 March 31, 2022 and December 31, 2021.

There were no Level 3 debt securities held at June 30, 2022 and December 31, 2021.

Mortgage Loans Held for Sale

14 unchanged sentences

However, the credit valuation adjustments utilize Level 3 inputs.

As of March 31, 2022 and December 31, 2021, 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 June 30, 2022 and December 31, 2021, 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

March 31, 2022

June 30, 2022

Available for sale debt securities:

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Items Recorded at Fair Value on a Nonrecurring Basis

There were no assets written down to fair value during the three months ended March 31, 2022.

There were no assets written down to fair value during the six months ended June 30, 2022.

During 2021, two collateral dependent individually analyzed loans were written down to fair value.

14 unchanged sentences

(Dollars in thousands)

March 31, 2022 Carrying Amount Total

June 30, 2022 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 March 31, 2022 2021

For the three months ended June 30, 2022 2021

(Dollars in thousands) Revenue (1)

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Loan related derivative income

669 — 1,175 —

Income from bank-owned life insurance

4 unchanged sentences

(2) Revenue from contracts with customers in scope of ASC 606.

For the six months ended June 30, 2022 2021

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

Revenue (1) ASC 606 Revenue (2)

Net interest income $ 72,606 $ — $ 67,625 $ —

Noninterest income:

Asset-based wealth management revenues

19,852 19,852 19,574 19,574

Transaction-based wealth management revenues

745 745 749 749

Total wealth management revenues

20,597 20,597 20,323 20,323

Mortgage banking revenues

5,583 — 17,921 —

Card interchange fees

2,467 2,467 2,449 2,449

Service charges on deposit accounts

1,431 1,431 1,244 1,244

Loan related derivative income

970 — 1,642 —

Income from bank-owned life insurance

1,216 — 1,163 —

747 564 1,825 1,524

Total noninterest income 33,011 25,059 46,567 25,540

Total revenues $ 105,617 $ 25,059 $ 114,192 $ 25,540

(1) As reported in the Unaudited Consolidated Statements of Income.

(2) Revenue from contracts with customers in scope of ASC 606.

The Corporation recognizes revenue that is transactional in nature and such revenue is earned at a point in time.

1 unchanged sentence

Such revenue is derived from transactional information and is recognized as revenue immediately as the transactions occur or upon providing the service to complete the customer’s transaction.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The Corporation recognizes revenue over a period of time, generally monthly, as services are performed and performance obligations are satisfied.

4 unchanged sentences

Fee revenue from service charges on deposit accounts represent service charges assessed to customers who hold deposit accounts at the Bank.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

(Dollars in thousands)

Three months ended March 31, 2022 2021

(Dollars in thousands) Three Months Six Months

Periods ended June 30, 2022 2021 2022 2021

Revenue recognized at a point in time:

4 unchanged sentences

Wealth management revenues

10,066 10,428 20,597 20,323

Service charges on deposit accounts

158 131 277 259

Total revenues from contracts in scope of Topic 606 $ 12,410 $ 12,658 $ 25,059 $ 25,540

Receivables for revenue from contracts with customers primarily consist of amounts due for wealth management services performed for which the Corporation’s performance obligations have been fully satisfied.

Receivables amounted to $ 4.9 million and $ 6.6 million, respectively, at March 31, 2022 and December 31, 2021 and were included in other assets in the Unaudited Consolidated Balance Sheets.

Receivables amounted to $ 4.6 million and $ 6.6 million, respectively, at June 30, 2022 and December 31, 2021 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 March 31, 2022 and December 31, 2021 and were included in other liabilities in the Unaudited Consolidated Balance Sheets.

The balances of contract liabilities were insignificant at both June 30, 2022 and December 31, 2021 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 $ 2.0 million at March 31, 2022, compared to $ 1.9 million at December 31, 2021 and were included in other assets in the Unaudited Consolidated Balance Sheets.

The carrying value of contract cost assets amounted to $ 1.9 million at both June 30, 2022 and December 31, 2021 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.

7 unchanged sentences

Pension Plan Non-Qualified Retirement Plans

Three months ended March 31, 2022 2021 2022 2021

Three Months Six Months Three Months Six Months

Periods ended June 30, 2022 2021 2022 2021 2022 2021 2022 2021

Net Periodic Benefit Cost:

12 unchanged sentences

Qualified Pension Plan Non-Qualified Retirement Plans

For the three months ended March 31, 2022 2021 2022 2021

For the six months ended June 30, 2022 2021 2022 2021

Measurement date Dec 31, 2021 Dec 31, 2020 Dec 31, 2021 Dec 31, 2020

10 unchanged sentences

Note 13 - Share-Based Compensation Arrangements

During the three months ended March 31, 2022, the Corporation granted performance share unit and restricted stock unit awards.

The 2022 Long Term Incentive Plan was approved by the shareholders on April 26, 2022.

The maximum number of shares of common stock that may be issued under the 2022 Long Term Incentive Plan is 600,000 .

The type of permitted equity awards under the 2022 Long Term Incentive Plan include stock options (both incentive and non-qualified options), stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, cash-based awards, and dividend equivalent rights.

On February 18, 2022, the Corporation’s Board of Directors voted that no further awards would be granted under the 2013 Stock Option and Incentive Plan following shareholder approval of the 2022 Long Term Incentive Plan.

During the six months ended June 30, 2022, the Corporation granted performance share unit and restricted stock unit awards.

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

2 unchanged sentences

Based on the most recent performance assumption available, it is estimated that 42,728 shares will be earned.

In addition, the Corporation granted to certain key employees 3,157 restricted stock units with 3 -year cliff vesting.

In addition, the Corporation granted to certain key employees and non-executive directors 10,717 restricted stock units with 3 -year cliff vesting.

The weighted average grant date fair value of the restricted stock units was $ 51.57 .

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 14 - Business Segments

3 unchanged sentences

Indirect activities, such as corporate, technology and other support functions, are allocated to business segments primarily based upon full-time equivalent employee computations.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Commercial Banking

13 unchanged sentences

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

Three months ended March 31, 2022 2021 2022 2021 2022 2021

Three months ended June 30, 2022 2021 2022 2021 2022 2021

Net interest income (expense) $ 37,563 $ 34,768 ($ 48 ) ($ 14 ) $ 37,515 $ 34,754

11 unchanged sentences

Expenditures for long-lived assets 1,558 883 89 34 1,647 917

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

Six months ended June 30, 2022 2021 2022 2021 2022 2021

Net interest income (expense) $ 72,671 $ 67,652 ($ 65 ) ($ 27 ) $ 72,606 $ 67,625

Provision for credit losses ( 2,900 ) ( 2,000 ) — — ( 2,900 ) ( 2,000 )

Net interest income (expense) after provision for credit losses 75,571 69,652 ( 65 ) ( 27 ) 75,506 69,625

Noninterest income 12,131 25,070 20,880 21,497 33,011 46,567

Noninterest expenses:

Depreciation and amortization expense 1,418 1,365 685 753 2,103 2,118

Other noninterest expenses 45,114 50,887 15,079 14,720 60,193 65,607

Total noninterest expenses 46,532 52,252 15,764 15,473 62,296 67,725

Income before income taxes 41,170 42,470 5,051 5,997 46,221 48,467

Income tax expense 8,545 9,085 1,236 1,451 9,781 10,536

Net income $ 32,625 $ 33,385 $ 3,815 $ 4,546 $ 36,440 $ 37,931

Total assets at period end $ 5,908,644 $ 5,778,879 $ 74,247 $ 73,101 $ 5,982,891 $ 5,851,980

Expenditures for long-lived assets 2,288 1,717 193 111 2,481 1,828

Note 15 - Other Comprehensive Income (Loss)

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

Three months ended March 31, 2022 2021

Three months ended June 30, 2022 2021

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

Securities available for sale:

Changes in fair value of available for sale debt securities

Change in fair value of available for sale debt securities ($ 47,293 ) ($ 11,351 ) ($ 35,942 ) $ 5,440 $ 1,306 $ 4,134

Cash flow hedges:

Change in fair value of cash flow hedges

( 3,943 ) ( 946 ) ( 2,997 ) 158 38 120

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

32 8 24 ( 65 ) ( 15 ) ( 50 )

Net change in fair value of cash flow hedges ( 3,911 ) ( 938 ) ( 2,973 ) 93 23 70

Defined benefit plan obligations:

Amortization of net actuarial losses (2)

428 103 325 877 203 674

Total other comprehensive (loss) income ($ 50,776 ) ($ 12,186 ) ($ 38,590 ) $ 6,410 $ 1,532 $ 4,878

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

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Six months ended June 30, 2022 2021

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

Securities available for sale:

Change in fair value of available for sale debt securities ($ 112,371 ) ($ 26,969 ) ($ 85,402 ) ($ 12,085 ) ($ 2,900 ) ($ 9,185 )

Cash flow hedges:

8 unchanged sentences

Total other comprehensive loss ($ 129,026 ) ($ 30,966 ) ($ 98,060 ) ($ 10,180 ) ($ 2,443 ) ($ 7,737 )

(1) The pre-tax amounts for the three months ended March 31, 2022 are included in interest expense on FHLB advances and interest and fees on loans in the Unaudited Consolidated Statements of Income.

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

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

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

For the three months ended June 30, 2022

Balance at March 31, 2022 ($ 56,255 ) ($ 14,348 ) ($ 8,848 ) ($ 79,451 )

Other comprehensive loss before reclassifications ( 35,942 ) ( 2,997 ) — ( 38,939 )

Amounts reclassified from accumulated other comprehensive loss — 24 325 349

Net other comprehensive (loss) income ( 35,942 ) ( 2,973 ) 325 ( 38,590 )

Balance at June 30, 2022 ($ 92,197 ) ($ 17,321 ) ($ 8,523 ) ($ 118,041 )

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

For the three months ended March 31, 2022

For the six months ended June 30, 2022

Balance at December 31, 2021 ($ 6,795 ) ($ 4,013 ) ($ 9,173 ) ($ 19,981 )

2 unchanged sentences

Net other comprehensive (loss) income ( 85,402 ) ( 13,308 ) 650 ( 98,060 )

Balance at June 30, 2022 ($ 92,197 ) ($ 17,321 ) ($ 8,523 ) ($ 118,041 )

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 Net Unrealized Losses on Defined Benefit Plan Obligations Total

For the three months ended June 30, 2021

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

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

For the three months ended March 31, 2021

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

Other comprehensive (loss) income before reclassifications ( 13,319 ) 83 — ( 13,236 )

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

Amounts reclassified from accumulated other comprehensive loss — ( 50 ) 674 624

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

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

For the six months ended June 30, 2021

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

Other comprehensive income (loss) before reclassifications

( 9,185 ) 203 — ( 8,982 )

Amounts reclassified from accumulated other comprehensive income

— 164 1,081 1,245

Net other comprehensive (loss) income ( 9,185 ) 367 1,081 ( 7,737 )

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

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

Note 16 - Earnings per Common Share

1 unchanged sentence

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

Three months ended March 31, 2022 2021

Three Months Six Months

Periods ended June 30, 2022 2021 2022 2021

Earnings for basic and diluted earnings per common share:

5 unchanged sentences

Dilutive effect of common stock equivalents

111 122 134 150

Weighted average diluted common shares 17,414 17,436 17,451 17,445

2 unchanged sentences

Diluted earnings per common share $ 1.14 $ 1.00 $ 2.08 $ 2.17

Weighted average common stock equivalents, not included in common stock equivalents above because they were anti-dilutive, totaled 94,175 and 149,575 , respectively, for the three months ended March 31, 2022 and 2021.

Weighted average common stock equivalents, not included in common stock equivalents above because they were anti-dilutive, totaled 196,943 and 141,043 , respectively, for the three and six months ended June 30, 2022, compared to 87,924 and 149,650 , respectively, for the same periods in 2021.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 17 - Commitments and Contingencies

1 unchanged sentence

The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and to manage the Corporation’s exposure to fluctuations in interest rates.

These financial

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

instruments include commitments to extend credit, standby letters of credit, forward loan commitments, loan related derivative contracts and interest rate risk management contracts.

These financial instruments include commitments to extend credit, standby letters of credit, forward loan commitments, loan related derivative contracts and interest rate risk management contracts.

These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Unaudited Consolidated Balance Sheets.

13 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 $ 11.8 million as of March 31, 2022 and December 31, 2021, respectively.

At March 31, 2022 and December 31, 2021, there were no liabilities to beneficiaries resulting from standby letters of credit.

Fee income on standby letters of credit was insignificant for the three months ended March 31, 2022 and 2021.

The maximum potential amount of undiscounted future payments, not reduced by amounts that may be recovered, totaled $ 10.8 million and $ 11.8 million, respectively, as of June 30, 2022 and December 31, 2021.

At June 30, 2022 and December 31, 2021, 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, 2022 and 2021.

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

11 unchanged sentences

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

(Dollars in thousands) Mar 31,

(Dollars in thousands) Jun 30,

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

31 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 March 31, 2022 is presented below:

The activity in the ACL on unfunded commitments for the three months ended June 30, 2022 is presented below:

(Dollars in thousands) Commercial Consumer

4 unchanged sentences

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The activity in the ACL on unfunded commitments for the three months ended March 31, 2021 is presented below:

The activity in the ACL on unfunded commitments for the six months ended June 30, 2022 is presented below:

(Dollars in thousands) Commercial Consumer

CRE C&I Total Commercial Residential Real Estate Home Equity Other Total Consumer Total

Beginning Balance $ 1,267 $ 816 $ 2,083 $ 62 $ — $ 16 $ 16 $ 2,161

Provision 12 18 30 ( 4 ) — 3 3 29

Ending Balance $ 1,279 $ 834 $ 2,113 $ 58 $ — $ 19 $ 19 $ 2,190

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

(Dollars in thousands) Commercial Consumer

Total Commercial Residential Real Estate Home Equity Other Total Consumer Total

2 unchanged sentences

Ending Balance $ 1,214 $ 1,045 $ 2,259 $ 56 $ — $ 18 $ 18 $ 2,333

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

(Dollars in thousands) Commercial Consumer

CRE C&I Total Commercial Residential Real Estate Home Equity Other Total Consumer Total

Beginning Balance $ 907 $ 1,402 $ 2,309 $ 54 $ — $ 19 $ 19 $ 2,382

Provision 307 ( 357 ) ( 50 ) 2 — ( 1 ) ( 1 ) ( 49 )

Ending Balance $ 1,214 $ 1,045 $ 2,259 $ 56 $ — $ 18 $ 18 $ 2,333

Other Contingencies

1 unchanged sentence

Management is of the opinion, based on its review with counsel of the development of such matters to date, that the ultimate disposition of such matters will not materially affect the consolidated balance sheets or statements of income of the Corporation.

Note 18 - Subsequent Events

On April 26, 2022, the Bancorp's shareholders approved the 2022 Incentive Plan.

The maximum number of shares of common stock that may be issued under the 2022 Incentive Plan is 600,000 .

The type of permitted equity awards under the 2022 Incentive Plan include stock options (both incentive and non-qualified options), stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, cash-based awards, and dividend equivalent rights.

Management's Discussion and Analysis

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