What changed in this filing

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Item 1. Financial Statements

2022-11-07 compared with 2022-08-04 · 222 added, 199 removed, 1238 unchanged (25% of the section changed)

4 unchanged sentences

(Dollars in thousands, except par value)

September 30,

2022 December 31,

2 unchanged sentences

Mortgage loans held for sale, at fair value 24,054 40,196

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;

Available for sale debt securities, at fair value (amortized cost of $ 1,165,816 , net of allowance for credit losses on securities of $ 0 at September 30, 2022;

and amortized cost of $ 1,051,800 ;

24 unchanged sentences

authorized 60,000,000 shares;

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

17,363,457 shares issued and 17,171,147 shares outstanding at September 30, 2022 and 17,363,457 shares issued and 17,330,818 shares outstanding at December 31, 2021

Paid-in capital 127,055 126,511

2 unchanged sentences

Treasury stock, at cost;

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

192,310 shares at September 30, 2022 and 32,639 shares at December 31, 2021

( 9,274 ) ( 1,117 )

6 unchanged sentences

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

Three Months Six Months

Periods ended June 30, 2022 2021 2022 2021

Three Months Nine Months

Periods ended September 30, 2022 2021 2022 2021

Interest income:

48 unchanged sentences

(Dollars in thousands)

Three Months Six Months

Periods ended June 30, 2022 2021 2022 2021

Three Months Nine Months

Periods ended September 30, 2022 2021 2022 2021

Net income $ 18,668 $ 18,751 $ 55,108 $ 56,682

3 unchanged sentences

Net change in defined benefit plan obligations 326 540 976 1,621

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

Total other comprehensive loss, net of tax ( 53,714 ) ( 3,000 ) ( 151,774 ) ( 10,737 )

Total comprehensive (loss) income ($ 35,046 ) $ 15,751 ($ 96,666 ) $ 45,945

3 unchanged sentences

Consolidated Statements of Changes in Shareholders' Equity (unaudited)

(Dollars and shares in thousands)

For the three months ended June 30, 2022 Common

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

For the three months ended September 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

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

— — — 18,668 — — 18,668

3 unchanged sentences

Share-based compensation — — 976 — — — 976

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

Treasury stock purchased under 2021 Repurchase Program

( 19 ) — — — — ( 896 ) ( 896 )

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

Balance at September 30, 2022 17,171 $ 1,085 $ 127,055 $ 485,163 ($ 171,755 ) ($ 9,274 ) $ 432,274

For the nine months ended September 30, 2022 Common

Shares Outstanding Common

12 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

Treasury stock purchased under 2021 Repurchase Program

( 194 ) — — — — ( 9,479 ) ( 9,479 )

Balance at September 30, 2022 17,171 $ 1,085 $ 127,055 $ 485,163 ($ 171,755 ) ($ 9,274 ) $ 432,274

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

2 unchanged sentences

Consolidated Statements of Changes in Shareholders' Equity (unaudited)

(Dollars and shares in thousands)

For the three months ended June 30, 2021 Common

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

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)

1 unchanged sentence

Share-based compensation — — 823 — — — 823

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

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 in thousands)

Six months ended June 30, 2022 2021

Nine months ended September 30, 2022 2021

Cash flows from operating activities:

56 unchanged sentences

606,262 281,049

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

Net (decrease) increase in cash and cash equivalents ( 45,654 ) 98,120

Cash and cash equivalents at beginning of period

48 unchanged sentences

(Dollars in thousands)

June 30, 2022 Amortized Cost Unrealized Gains Unrealized Losses ACL

September 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 $ 2.6 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.

Accrued interest receivable on available for sale debt securities totaled $ 2.7 million and $ 2.3 million, respectively, as of September 30, 2022 and December 31, 2021.

As of September 30, 2022 and December 31, 2021, securities with a fair value of $ 302.7 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)

June 30, 2022 Amortized Cost Fair Value

September 30, 2022 Amortized Cost Fair Value

Due in one year or less $ 122,305 $ 102,490

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 $ 233.0 million and a fair value of $ 208.9 million at June 30, 2022 that are callable at the discretion of the issuers.

Included in the above table are debt securities with an amortized cost balance of $ 253.0 million and a fair value of $ 217.6 million at September 30, 2022 that are callable at the discretion of the issuers.

Final maturities of the callable securities range from 2 years to 14 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, 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.

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

June 30, 2022 # Fair

September 30, 2022 # Fair

Value Unrealized

31 unchanged sentences

53 $ 667,152 ($ 10,583 ) 34 $ 173,628 ($ 5,220 ) 87 $ 840,780 ($ 15,803 )

Deterioration in credit quality of the underlying issuers of the securities, deterioration in the condition of the financial services industry, worsening of the current economic environment, or declines in real estate values, among other things, may further affect the fair value of these securities and increase the potential that certain unrealized losses be designated as credit losses, and the Corporation may incur write-downs.

Obligations of U.S.

9 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, 2022.

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

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

Individual Name Issuer Trust Preferred Debt Securities

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.

Included in debt securities in an unrealized loss position at September 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 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.

As of September 30, 2022, there was one individual name issuer trust preferred debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 132 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between September 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 June 30, 2022.

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

Corporate Bonds

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.

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

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.

As of September 30, 2022, there was one corporate bond debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 121 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between September 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 June 30, 2022.

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

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

1 unchanged sentence

The following table presents a summary of loans:

(Dollars in thousands) June 30,

(Dollars in thousands) September 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 $ 1.9 million and $ 38.0 million, respectively, of PPP loans as of June 30, 2022 and December 31, 2021.

C&I also includes $ 1.4 million and $ 38.0 million, respectively, of PPP loans as of September 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 $ 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.

(5) Includes net unamortized loan origination costs of $ 10.7 million and $ 6.7 million, respectively, at September 30, 2022 and December 31, 2021 and net unamortized premiums on purchased loans of $ 329 thousand and $ 414 thousand, respectively, at September 30, 2022 and December 31, 2021.

Loan balances exclude accrued interest receivable of $ 14.6 million and $ 10.3 million, respectively, as of September 30, 2022 and December 31, 2021.

As of September 30, 2022 and December 31, 2021, loans amounting to $ 2.3 billion and $ 2.2 billion, respectively, 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.

12 unchanged sentences

(Dollars in thousands) Days Past Due

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

September 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 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.

Included in past due loans as of September 30, 2022 and December 31, 2021, were nonaccrual loans of $ 7.1 million and $ 9.4 million, respectively.

In addition, all loans 90 days or more past due at September 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) Jun 30,

(Dollars in thousands) Sep 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 $ 4.3 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.

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

Nonaccrual loans of $ 5.1 million and $ 4.8 million, respectively, at September 30, 2022 and December 31, 2021 were current as to the payment of principal and interest.

As of September 30, 2022 and December 31, 2021, nonaccrual loans secured by one- to four-family residential property amounting to $ 4.4 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 September 30, 2022.

The following table presents interest income recognized on nonaccrual loans:

(Dollars in thousands) Three Months Six Months

Periods ended June 30, 2022 2021 2022 2021

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2022 2021 2022 2021

Commercial real estate

27 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

4 unchanged sentences

Additional commitments to lend to borrowers with TDRs

The following tables present TDRs occurring during the period indicated and the recorded investment pre- and post-modification:

(Dollars in thousands) Outstanding Recorded Investment

# of Loans Pre-Modifications Post-Modifications

Three months ended September 30, 2022 2021 2022 2021 2022 2021

Commercial real estate

— — $ — $ — $ — $ —

Commercial & industrial

2 — 844 — 844 —

Total commercial 2 — 844 — 844 —

Total 2 — $ 844 $ — $ 844 $ —

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

Six months ended June 30, 2022 2021 2022 2021

(Dollars in thousands) Outstanding Recorded Investment

# of Loans Pre-Modifications Post-Modifications

Nine months ended September 30, 2022 2021 2022 2021 2022 2021

Commercial real estate

— — $ — $ — $ — $ —

Commercial & industrial

2 — 844 — 844 —

Total commercial 2 — 844 — 844 —

Total 2 — $ 844 $ — $ 844 $ —

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

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2022 2021 2022 2021

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

Payment deferral — — — —

Maturity / amortization concession — — — —

Interest only payments — — — —

Combination (1)

Total $ 844 $ — $ 844 $ —

(1) Loans included in this classification were modified with a combination of any two of the concessions listed in this table.

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

(Dollars in thousands) Three Months Nine Months

# of Loans Recorded Investment # of Loans Recorded Investment

Periods ended September 30, 2022 2021 2022 2021 2022 2021 2022 2021

TDRs with a Payment Default:

2 unchanged sentences

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

As of September 30, 2022, the carrying value of individually analyzed loans amounted to $ 12.0 million, of which $ 8.3 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.

1 unchanged sentence

See Note 10 for additional disclosure regarding fair value of individually analyzed collateral dependent loans.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

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

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

Carrying Value Related Allowance Carrying Value Related Allowance

10 unchanged sentences

(1) Secured by income-producing property.

(2) Secured by business assets.

(2) Secured by one- to four-family residential properties.

3 unchanged sentences

This scale can be assigned to three broad categories including “pass” for ratings 1 through 6, “special mention” for 7-rated loans, and “classified” for loans rated 8, 9 or 10.

The loan risk rating system takes into consideration parameters

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

including the borrower’s financial condition, the borrower’s performance with respect to loan terms, the adequacy of collateral, the adequacy of guarantees and other credit quality characteristics.

The loan risk rating system takes into consideration parameters including the borrower’s financial condition, the borrower’s performance with respect to loan terms, the adequacy of collateral, the adequacy of guarantees and other credit quality characteristics.

The Corporation takes the risk rating into consideration along with other credit attributes in the establishment of an appropriate allowance for loan losses.

14 unchanged sentences

A “doubtful” loan is placed on nonaccrual status and has a high probability of loss, but the extent of the loss is difficult to quantify due to dependency upon collateral having a value that is difficult to determine or upon some near-term event which lacks certainty.

A loan in the “loss” category is considered generally uncollectible or the timing or amount of payments cannot be determined.

A loan in the “loss” category is considered generally uncollectible or the timing or amount of payments cannot be

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

“Loss” is not intended to imply that the loan has no recovery value, but rather, it is not practical or desirable to continue to carry the asset.

11 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 June 30, 2022:

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

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

65 unchanged sentences

Econometric Factors

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

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

Residential real estate NUR & HPI

1 unchanged sentence

Other consumer GDP

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

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

(Dollars in thousands) Commercial Consumer

5 unchanged sentences

Ending Balance $ 17,611 $ 10,347 $ 27,958 $ 7,447 $ 1,071 $ 387 $ 1,458 $ 36,863

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

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

(Dollars in thousands) Commercial Consumer

5 unchanged sentences

Ending Balance $ 17,611 $ 10,347 $ 27,958 $ 7,447 $ 1,071 $ 387 $ 1,458 $ 36,863

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

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

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:

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

(Dollars in thousands) Commercial Consumer

7 unchanged sentences

The following table presents a summary of deposits:

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

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

Noninterest-bearing demand deposits $ 938,572 $ 945,229

7 unchanged sentences

Total deposits $ 5,069,857 $ 4,980,051

(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.

(1) Includes wholesale brokered demand deposit balances of $ 31,044 and $ 0 , respectively, as of September 30, 2022 and December 31, 2021.

(2) Includes wholesale brokered time deposit balances of $ 412,127 and $ 515,228 , respectively, as of September 30, 2022 and December 31, 2021.

Note 7 - Borrowings

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.

Advances payable to the FHLB amounted to $ 700.0 million and $ 145.0 million, respectively, at September 30, 2022 and December 31, 2021.

As of September 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 September 30, 2022.

The Bank had remaining available borrowing capacity of $ 967.1 million and $ 1.6 billion, respectively, with the FHLB at September 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 June 30, 2022:

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

(Dollars in thousands) Scheduled

Maturity Weighted

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

October 1, 2022 to December 31, 2022 $ 625,000 2.96 %

2023 55,000 1.92

2024 20,000 4.48

2027 and thereafter — —

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

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Balance at September 30, 2022 $ 700,000 2.92 %

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.

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.

In the nine months ended September 30, 2022, the Corporation has repurchased 194,162 shares, at an average price of $ 48.82 and a total cost of $ 9.5 million, under its 2021 Repurchase Program.

Regulatory Capital Requirements

Capital levels at June 30, 2022 exceeded the regulatory minimum levels to be considered “well capitalized.”

Capital levels at September 30, 2022 exceeded the regulatory minimum levels to be considered “well capitalized.”

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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, 2022

September 30, 2022

Total Capital (to Risk-Weighted Assets):

25 unchanged sentences

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, 2022 and December 31, 2021.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

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, 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 September 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 Federal Reserve.

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.

1 unchanged sentence

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.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 9 - Derivative Financial Instruments

11 unchanged sentences

Cash Flow Hedging Instruments

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.

As of September 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 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.

As of September 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.

1 unchanged sentence

Loan Related Derivative Contracts

Interest Rate Swap Contracts with Customers

The Corporation enters into interest rate swap contracts to help commercial loan borrowers manage their interest rate risk.

The interest rate swap contracts with commercial loan borrowers allow them to convert variable-rate loan payments to fixed-rate loan payments.

When the Corporation enters into an interest rate swap contract with a commercial loan borrower, it simultaneously enters into a “mirror” swap contract with a third party.

The third party exchanges the client’s fixed-rate loan payments for variable-rate loan payments.

Interest Rate Derivative Contracts with Customers

The Corporation enters into interest rate swap and interest rate cap contracts to help commercial loan borrowers manage their interest rate risk.

These interest rate swap contracts allow borrowers to convert variable-rate loan payments to fixed-rate loan payments, while interest rate cap contracts allow borrowers to limit their interest rate exposure in a rising rate environment.

When the Corporation enters into an interest rate derivative contract with a commercial loan borrower, it simultaneously enters into a “mirror” interest rate contract with a third party.

For interest rate swaps, the third party exchanges the client’s fixed-rate loan payments for variable-rate loan payments.

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, 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.

As of September 30, 2022 and December 31, 2021, Washington Trust had interest rate derivative contracts with commercial loan borrowers (predominantly interest rate swap contracts) with notional amounts of $ 962.4 million and $ 1.0 billion, respectively, and equal amounts of “mirror” 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

4 unchanged sentences

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.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

As of September 30, 2022, the notional amounts of risk participation-out agreements and risk participation-in agreements were $ 66.9 million and $ 177.0 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 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)

As of September 30, 2022, the notional amounts of interest rate lock commitments and forward sale commitments were $ 27.4 million and $ 64.1 million, respectively, compared to $ 49.8 million and $ 103.6 million, respectively, as of December 31, 2021.

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

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

Derivatives Designated as Cash Flow Hedging Instruments:

3 unchanged sentences

Loan related derivative contracts:

Interest rate swaps with customers

Other assets 2,212 32,361 Other liabilities 38,898 2,015

Mirror swaps with counterparties

Other assets 38,617 2,001 Other liabilities 2,260 32,480

Interest rate contracts with customers Other assets 122 32,361 Other liabilities 71,028 2,015

Mirror contracts with counterparties Other assets 70,679 2,001 Other liabilities 122 32,480

Risk participation agreements

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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 Six Months

Periods ended June 30, 2022 2021 2022 2021

Three Months Nine Months

Periods ended September 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 Six Months

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

Three Months Nine Months

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

Derivatives not Designated as Hedging Instruments:

Loan related derivative contracts:

Interest rate swaps with customers

Loan related derivative income ($ 18,800 ) $ 11,665 ($ 59,622 ) ($ 18,566 )

Mirror swaps with counterparties

Loan related derivative income 19,421 ( 11,068 ) 60,543 19,615

Interest rate contracts with customers Loan related derivative income ($ 33,605 ) ($ 2,715 ) ($ 93,227 ) ($ 21,281 )

Mirror contracts with counterparties Loan related derivative income 34,646 3,558 95,189 23,173

Risk participation agreements

9 unchanged sentences

Items recorded at fair value on a recurring basis include securities available for sale, mortgage loans held for sale and derivatives.

Additionally, from time to time, we may be required to record at fair value other assets on a nonrecurring basis, such as collateral dependent individually analyzed loans, property acquired through foreclosure or repossession and mortgage servicing rights.

Additionally, from time to time, we may be required to record at fair value other assets on a nonrecurring basis, such as collateral dependent individually analyzed loans, OREO and mortgage servicing rights.

These nonrecurring fair value adjustments typically involve the application of lower of cost or market accounting or write-downs of individual assets.

10 unchanged sentences

Fair Value Option Election

GAAP allows for the irrevocable option to elect fair value accounting for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis.

GAAP allows for the irrevocable option to elect fair value accounting for the initial and subsequent measurement for certain

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

financial assets and liabilities on a contract-by-contract basis.

The Corporation has elected the fair value option for mortgage loans held for sale to better match changes in fair value of the loans with changes in the fair value of the forward sale commitment contracts used to economically hedge them.

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,

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 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.

Changes in fair value amounted to decreases to mortgage banking revenues of $ 521 thousand for the three months ended September 30, 2022 and $ 1.3 million for the nine months ended September 30, 2022.

This compared to an increase to mortgage banking revenues of $ 372 thousand for the three months ended September 30, 2021 and a decrease of $ 1.1 million for the nine months ended September 30, 2021.

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

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

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

3 unchanged sentences

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, 2022 and December 31, 2021.

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

Mortgage Loans Held for Sale

7 unchanged sentences

Collateral dependent individually analyzed loans are categorized as Level 3.

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

Interest rate derivative contracts 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 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.

Accordingly, factors such as the likelihood of default by the Corporation and its counterparties, its net exposures and remaining contractual life are considered in determining if any fair value adjustments related to credit risk are required.

Accordingly, factors such as the likelihood of default by the Corporation and its counterparties, its net exposures and remaining contractual life are considered in determining if

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

any fair value adjustments related to credit risk are required.

Counterparty exposure is evaluated by netting positions that are subject to master netting agreements, as well as considering the amount of collateral securing the position, if any.

1 unchanged sentence

However, the credit valuation adjustments utilize Level 3 inputs.

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 of September 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.

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

4 unchanged sentences

As a result, the Corporation has classified its interest rate lock commitments as Level 2.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Items Recorded at Fair Value on a Recurring Basis

3 unchanged sentences

(Level 2) Significant Unobservable Inputs

June 30, 2022

September 30, 2022

Available for sale debt securities:

15 unchanged sentences

Total liabilities at fair value on a recurring basis $ 79,967 $ — $ 79,967 $ —

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

20 unchanged sentences

Items Recorded at Fair Value on a Nonrecurring Basis

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

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

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

1 unchanged sentence

The second loan with a carrying value of $ 533 thousand was fully reserved for as of December 31, 2021.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents valuation techniques and unobservable inputs for assets measured at fair value on a nonrecurring basis for which the Corporation has utilized Level 3 inputs to determine fair value:

4 unchanged sentences

Appraisal adjustments 100 %

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Valuation of Financial Instruments

The estimated fair values and related carrying amounts for financial instruments for which fair value is only disclosed are presented below as of the periods indicated.

The tables exclude financial instruments for which the carrying value approximates fair value such as cash and cash equivalents, FHLB stock, accrued interest receivable, bank-owned life insurance, non-maturity deposits and accrued interest payable.

The tables exclude financial instruments for which the carrying value approximates fair value such as cash and cash equivalents, FHLB stock, accrued interest receivable, BOLI, non-maturity deposits and accrued interest payable.

The Corporation considers cash and cash equivalents, accrued interest receivable and accrued interest payable as level 1 measurements within the fair value hierarchy.

The Corporation considers FHLB stock, bank-owned life insurance and non-maturity deposits as level 2 measurements.

The Corporation considers FHLB stock, BOLI and non-maturity deposits as level 2 measurements.

(Dollars in thousands)

June 30, 2022 Carrying Amount Total

September 30, 2022 Carrying Amount Total

Fair Value Quoted Prices in Active Markets for Identical Assets

22 unchanged sentences

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, 2022 2021

For the three months ended September 30, 2022 2021

(Dollars in thousands) Revenue (1)

23 unchanged sentences

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

For the six months ended June 30, 2022 2021

For the nine months ended September 30, 2022 2021

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

34 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, 2022 2021 2022 2021

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2022 2021 2022 2021

Revenue recognized at a point in time:

7 unchanged sentences

191 142 468 401

67 63 188 156

Total revenues from contracts in scope of Topic 606 $ 11,947 $ 12,703 $ 37,006 $ 38,243

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 $ 4.6 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.

Receivables amounted to $ 5.6 million and $ 6.6 million, respectively, at September 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 June 30, 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 September 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 $ 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 carrying value of contract cost assets amounted to $ 2.0 million and $ 1.9 million, respectively, at September 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 Six Months Three Months Six Months

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

Three Months Nine Months Three Months Nine Months

Periods ended September 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 six months ended June 30, 2022 2021 2022 2021

For the nine months ended September 30, 2022 2021 2022 2021

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

11 unchanged sentences

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

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.

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

During the nine months ended September 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.

25 unchanged sentences

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

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

Three months ended September 30, 2022 2021 2022 2021 2022 2021

Net interest income (expense) $ 42,038 $ 36,085 $ 4 ($ 15 ) $ 42,042 $ 36,070

13 unchanged sentences

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

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

Nine months ended September 30, 2022 2021 2022 2021 2022 2021

Net interest income (expense) $ 114,709 $ 103,737 ($ 61 ) ($ 42 ) $ 114,648 $ 103,695

13 unchanged sentences

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

Three months ended June 30, 2022 2021

Three months ended September 30, 2022 2021

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

10 unchanged sentences

428 102 326 711 171 540

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.

Total other comprehensive loss ($ 70,678 ) ($ 16,964 ) ($ 53,714 ) ($ 3,947 ) ($ 947 ) ($ 3,000 )

(1) The pre-tax amounts are included in interest and fees on loans and FHLB interest expense 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

Nine months ended September 30, 2022 2021

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

4 unchanged sentences

( 27,394 ) ( 6,574 ) ( 20,820 ) ( 21 ) ( 5 ) ( 16 )

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

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

709 170 539 ( 27 ) ( 7 ) ( 20 )

4 unchanged sentences

Total other comprehensive loss ($ 199,703 ) ($ 47,929 ) ($ 151,774 ) ($ 14,127 ) ($ 3,390 ) ($ 10,737 )

(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.

(1) The pre-tax amounts are included in interest and fees on loans and FHLB interest expense in the Unaudited Consolidated Statements of Income.

(2) 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 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 )

(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 September 30, 2022

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

Other comprehensive loss before reclassifications ( 47,067 ) ( 7,790 ) — ( 54,857 )

1 unchanged sentence

Net other comprehensive (loss) income ( 47,067 ) ( 6,973 ) 326 ( 53,714 )

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

Balance at September 30, 2022 ($ 139,264 ) ($ 24,294 ) ($ 8,197 ) ($ 171,755 )

(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 six months ended June 30, 2022

For the nine months ended September 30, 2022

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

2 unchanged sentences

Net other comprehensive (loss) income ( 132,469 ) ( 20,281 ) 976 ( 151,774 )

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

Balance at September 30, 2022 ($ 139,264 ) ($ 24,294 ) ($ 8,197 ) ($ 171,755 )

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 September 30, 2021

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

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

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

Amounts reclassified from accumulated other comprehensive income (loss) — ( 184 ) 540 356

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

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

For the six months ended June 30, 2021

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 on Cash Flow Hedges Net Unrealized Losses on Defined Benefit Plan Obligations Total

For the nine months ended September 30, 2021

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

1 unchanged sentence

( 12,322 ) ( 16 ) — ( 12,338 )

Amounts reclassified from accumulated other comprehensive income

— 164 1,081 1,245

Amounts reclassified from accumulated other comprehensive income (loss) — ( 20 ) 1,621 1,601

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 )

Note 16 - Earnings per Common Share

1 unchanged sentence

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

Three Months Six Months

Periods ended June 30, 2022 2021 2022 2021

Three Months Nine Months

Periods ended September 30, 2022 2021 2022 2021

Earnings for basic and diluted earnings per common share:

10 unchanged sentences

Diluted earnings per common share $ 1.08 $ 1.07 $ 3.16 $ 3.24

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.

Weighted average common stock equivalents, not included in common stock equivalents above because they were anti-dilutive, totaled 137,886 and 140,777 , respectively, for the three and nine months ended September 30, 2022, compared to 148,542 and 149,675 , respectively, for the same periods in 2021.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

18 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 $ 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.

The maximum potential amount of undiscounted future payments, not reduced by amounts that may be recovered, totaled $ 9.9 million and $ 11.8 million, respectively, as of September 30, 2022 and December 31, 2021.

At September 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 nine months ended September 30, 2022 and 2021.

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

7 unchanged sentences

Loan Related Derivative Contracts

The Corporation’s credit policies with respect to interest rate swap agreements with commercial borrowers are similar to those used for loans.

The interest rate swaps with other counterparties are generally subject to bilateral collateralization terms.

The Corporation’s credit policies with respect to interest rate contracts with commercial borrowers are similar to those used for loans.

The interest rate contracts with other counterparties are generally subject to bilateral collateralization terms.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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):

13 unchanged sentences

Loan related derivative contracts:

Interest rate swaps with customers

961,323 1,022,388

Mirror swaps with counterparties

961,323 1,022,388

Interest rate contracts with customers 962,381 1,022,388

Mirror contracts with counterparties 962,381 1,022,388

Risk participation-in agreements

12 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, 2022 is presented below:

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

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

(Dollars in thousands) Commercial Consumer

3 unchanged sentences

Ending Balance $ 1,464 $ 859 $ 2,323 $ 50 $ — $ 17 $ 17 $ 2,390

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

8 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements