What changed in this filing

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Item 1. Financial Statements

2023-08-03 compared with 2023-05-04 · 285 added, 148 removed, 1076 unchanged (29% of the section changed)

8 unchanged sentences

Mortgage loans held for sale, at fair value 20,872 8,987

Available for sale debt securities, at fair value (amortized cost of $ 1,209,794 , net of allowance for credit losses on securities of $ 0 at March 31, 2023;

Available for sale debt securities, at fair value (amortized cost of $ 1,190,434 , net of allowance for credit losses on securities of $ 0 at June 30, 2023;

and amortized cost of $ 1,166,340 ;

24 unchanged sentences

authorized 60,000,000 shares;

17,363,457 shares issued and 16,985,872 shares outstanding at March 31, 2023 and 17,363,457 shares issued and 17,182,753 shares outstanding at December 31, 2022

17,363,457 shares issued and 17,019,238 shares outstanding at June 30, 2023 and 17,363,457 shares issued and 17,182,753 shares outstanding at December 31, 2022

Paid-in capital 125,685 127,056

2 unchanged sentences

Treasury stock, at cost;

377,585 shares at March 31, 2023 and 180,704 shares at December 31, 2022

344,219 shares at June 30, 2023 and 180,704 shares at December 31, 2022

( 15,778 ) ( 8,715 )

6 unchanged sentences

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

Three months ended March 31, 2023 2022

Three Months Six Months

Periods ended June 30, 2023 2022 2023 2022

Interest income:

47 unchanged sentences

(Dollars in thousands)

Three months ended March 31, 2023 2022

Three Months Six Months

Periods ended June 30, 2023 2022 2023 2022

Net income $ 11,256 $ 19,957 $ 24,068 $ 36,440

3 unchanged sentences

Net change in defined benefit plan obligations 45 325 90 650

Total other comprehensive income (loss), net of tax 16,040 ( 59,470 )

Total other comprehensive (loss) income, net of tax ( 7,067 ) ( 38,590 ) 8,973 ( 98,060 )

Total comprehensive income (loss) $ 4,189 ($ 18,633 ) $ 33,041 ($ 61,620 )

4 unchanged sentences

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

For the three months ended March 31, 2023 Common

For the three months ended June 30, 2023 Common

Shares Outstanding Common

3 unchanged sentences

Comprehensive

(Loss) Income Treasury Stock Total

Loss Treasury Stock Total

Balance at March 31, 2023 16,986 $ 1,085 $ 127,734 $ 495,231 ($ 141,760 ) ($ 17,307 ) $ 464,983

— — — 11,256 — — 11,256

Total other comprehensive loss, net of tax — — — — ( 7,067 ) — ( 7,067 )

Cash dividends declared ($ 0.56 per share)

— — — ( 9,491 ) — — ( 9,491 )

Share-based compensation — — 87 — — — 87

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

33 — ( 2,136 ) — — 1,529 ( 607 )

Balance at June 30, 2023 17,019 $ 1,085 $ 125,685 $ 496,996 ($ 148,827 ) ($ 15,778 ) $ 459,161

For the six months ended June 30, 2023 Common

Shares Outstanding Common

Stock Paid-in

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury Stock Total

Balance at December 31, 2022 17,183 $ 1,085 $ 127,056 $ 492,043 ($ 157,800 ) ($ 8,715 ) $ 453,669

8 unchanged sentences

( 200 ) — — — — ( 8,741 ) ( 8,741 )

Balance at June 30, 2023 17,019 $ 1,085 $ 125,685 $ 496,996 ($ 148,827 ) ($ 15,778 ) $ 459,161

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, except per share amounts)

For the three months ended June 30, 2022 Common

Shares Outstanding Common

Stock Paid-in

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury Stock Total

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

For the three months ended March 31, 2022 Common

— — — 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 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

12 unchanged sentences

34 — ( 2,045 ) — — 1,322 ( 723 )

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

Treasury stock purchased under 2021 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.

3 unchanged sentences

(Dollars in thousands)

Three months ended March 31, 2023 2022

Six months ended June 30, 2023 2022

Cash flows from operating activities:

2 unchanged sentences

Provision for credit losses

1,500 ( 2,900 )

Depreciation of premises and equipment

10 unchanged sentences

( 97,701 ) ( 173,983 )

Decrease (increase) in operating lease right-of-use assets 986 ( 2,124 )

(Decrease) increase in operating lease liabilities ( 936 ) 2,160

(Increase) decrease in other assets ( 4,917 ) 21,289

Decrease in other liabilities ( 176 ) ( 25,100 )

Net cash provided by operating activities 11,094 38,562

Increase in operating lease right-of-use assets ( 1,477 ) ( 1,406 )

Increase in operating lease liabilities 1,744 1,481

Increase in other assets ( 23,820 ) ( 3,346 )

(Increase) decrease in other liabilities ( 1,113 ) 218

Net cash (used in) provided by operating activities ( 9,902 ) 51,600

Cash flows from investing activities:

8 unchanged sentences

Available for sale debt securities:

Net redemptions of Federal Home Loan Bank stock 962 4,579

Net purchases of Federal Home Loan Bank stock ( 2,405 ) ( 3,269 )

Purchases of other equity investments, net ( 188 ) ( 375 )

4 unchanged sentences

( 3,020 ) ( 2,481 )

Purchases of bank-owned life insurance

Proceeds from bank-owned life insurance 1,566 —

14 unchanged sentences

326,625 181,247

Net increase in cash and cash equivalents 19,858 49,603

Net increase (decrease) in cash and cash equivalents 9,894 ( 79,870 )

Cash and cash equivalents at beginning of period

24 unchanged sentences

The Unaudited Consolidated Financial Statements include the accounts of the Bancorp and its wholly-owned subsidiaries, except subsidiaries that are not deemed necessary to be consolidated.

Intercompany balances and transactions have been eliminated in consolidation.

Through consolidation, intercompany balances and transactions have been eliminated.

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

14 unchanged sentences

ASU 2022-02 also provides an update to the existing credit quality indicators “vintage” tabular disclosure requiring current period gross write-offs to be disclosed by year of origination for each loan segment.

The provisions of ASU 2022-02 were effective January 1, 2023 and the Corporation adopted the provisions on a prospective basis.

The Corporation adopted the provisions of ASU 2022-02 on January 1, 2023 on a prospective basis.

Historical disclosures on TDRs were removed from this report in accordance with the provisions of this ASU.

5 unchanged sentences

The provisions of ASU 2021-08 clarify that contract cost assets and contract liabilities acquired in a business combination should be accounted for in accordance with ASC 606, as if the acquirer had originated the contracts.

The provisions of ASU 2021-08 were effective January 1, 2023 and the Corporation adopted the provisions on a prospective basis.

The Corporation adopted the provisions of ASU 2021-08 on January 1, 2023 on a prospective basis.

The adoption of ASU 2021-08 did not have a material impact on the Corporation’s consolidated financial statements.

5 unchanged sentences

(Dollars in thousands)

March 31, 2023 Amortized Cost Unrealized Gains Unrealized Losses ACL

June 30, 2023 Amortized Cost Unrealized Gains Unrealized Losses ACL

Available for Sale Debt Securities:

26 unchanged sentences

Total available for sale debt securities $ 1,166,340 $ 270 ($ 172,682 ) $ — $ 993,928

Accrued interest receivable on available for sale debt securities totaled $ 3.1 million as of both March 31, 2023 and December 31, 2022.

As of March 31, 2023 and December 31, 2022, securities with a fair value of $ 306.6 million and $ 294.8 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 $ 3.6 million and $ 3.1 million, respectively, as of June 30, 2023 and December 31, 2022.

As of June 30, 2023 and December 31, 2022, securities with a fair value of $ 285.2 million and $ 294.8 million, respectively, were pledged as collateral for FHLB borrowings, potential borrowings with the FRBB, certain public deposits and for other purposes.

See Note 9 for additional disclosure on FHLB borrowings.

6 unchanged sentences

(Dollars in thousands)

March 31, 2023 Amortized Cost Fair Value

June 30, 2023 Amortized Cost Fair Value

Due in one year or less $ 105,625 $ 90,019

7 unchanged sentences

$ 1,190,434 $ 1,022,458

Included in the above table are debt securities with an amortized cost balance of $ 273.0 million and a fair value of $ 242.4 million at March 31, 2023 that are callable at the discretion of the issuers.

Included in the above table are debt securities with an amortized cost balance of $ 273.0 million and a fair value of $ 240.8 million at June 30, 2023 that are callable at the discretion of the issuers.

Final maturities of the callable securities range from 1 year to 14 years, with call features ranging from 1 month to 13 months.

5 unchanged sentences

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

March 31, 2023 # Fair

June 30, 2023 # Fair

Value Unrealized

31 unchanged sentences

99 $ 308,892 ($ 25,598 ) 91 $ 661,065 ($ 147,084 ) 190 $ 969,957 ($ 172,682 )

There were no debt securities on nonaccrual status at March 31, 2023 and 2022 and, therefore there was no accrued interest related to debt securities reversed against interest income for the three months ended March 31, 2023 and 2022.

There were no debt securities on nonaccrual status at June 30, 2023 and 2022 and, therefore there was no accrued interest related to debt securities reversed against interest income for the three and six months ended June 30, 2023 and 2022.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

As of March 31, 2023, the Corporation does not intend to sell these debt securities and has determined that it is more-likely-than-not that the Corporation would not be required to sell each security before the recovery of its amortized cost basis.

As of June 30, 2023, the Corporation does not intend to sell these debt securities and has determined that it is more-likely-than-not that the Corporation would not be required to sell each security before the recovery of its amortized cost basis.

In addition, management does not believe that any of these debt securities are impaired due to reasons of credit quality.

As further described below, management believes the unrealized losses on these debt securities are primarily attributable to changes in the investment spreads and interest rates.

As a result, there was no ACL recorded at both March 31, 2023 and December 31, 2022.

As a result, there was no ACL recorded at both June 30, 2023 and December 31, 2022.

Obligations of U.S.

3 unchanged sentences

government, are highly rated by major credit rating agencies and have a long history of no credit losses.

The issuers of these securities continue to make timely principal and interest payments and none of these securities were past due at March 31, 2023.

The issuers of these securities continue to make timely principal and interest payments and none of these securities were past due at June 30, 2023.

Additionally, the Corporation utilizes a zero credit loss estimate for these securities.

Individual Name Issuer Trust Preferred Debt Securities

These securities in an unrealized loss position at March 31, 2023 included three trust preferred securities issued by three individual companies in the banking sector.

These securities in an unrealized loss position at June 30, 2023 included 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, 2023, there was one individual name issuer trust preferred debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 135 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between March 31, 2023 and the filing date of this report.

As of June 30, 2023, there was one individual name issuer trust preferred debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 278 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between June 30, 2023 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 continue to accrue interest and make payments as expected with no payment deferrals or defaults on the part of the issuers.

Corporate Bonds

These securities in an unrealized loss position at March 31, 2023 included four corporate bond holdings issued by three individual companies in the financial services industry.

These securities in an unrealized loss position at June 30, 2023 included four corporate bond holdings issued by three individual companies in the financial services industry.

As of March 31, 2023, there was one corporate bond debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 160 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between March 31, 2023 and the filing date of this report.

As of June 30, 2023, there was one corporate bond debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 122 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between June 30, 2023 and the filing date of this report.

Based on the information available through the filing date of this report, all corporate bond debt securities continue to accrue interest and make payments as expected with no payment deferrals or defaults on the part of the issuers.

2 unchanged sentences

The following table presents a summary of loans:

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2023 December 31, 2022

17 unchanged sentences

(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 $ 11.9 million and $ 11.6 million, respectively, at March 31, 2023 and December 31, 2022 and net unamortized premiums on loans purchased from and serviced by other financial institutions of $ 310 thousand and $ 318 thousand, respectively, at March 31, 2023 and December 31, 2022.

Loan balances exclude accrued interest receivable of $ 19.0 million and $ 17.6 million, respectively, as of March 31, 2023 and December 31, 2022.

As of March 31, 2023 and December 31, 2022, loans amounting to $ 2.6 billion and $ 2.4 billion, respectively, 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 $ 12.5 million and $ 11.6 million, respectively, at June 30, 2023 and December 31, 2022 and net unamortized premiums on loans purchased from and serviced by other financial institutions of $ 302 thousand and $ 318 thousand, respectively, at June 30, 2023 and December 31, 2022.

Loan balances exclude accrued interest receivable of $ 20.2 million and $ 17.6 million, respectively, as of June 30, 2023 and December 31, 2022.

As of June 30, 2023 and December 31, 2022, loans amounting to $ 2.9 billion and $ 2.4 billion, respectively, were pledged as collateral to the FHLB under a blanket pledge agreement and to the FRBB for the discount window.

See Note 9 for additional disclosure regarding borrowings.

8 unchanged sentences

(Dollars in thousands) Days Past Due

March 31, 2023 30-59 60-89 Over 90 Total Past Due Current Total Loans

June 30, 2023 30-59 60-89 Over 90 Total Past Due Current Total Loans

Commercial real estate

24 unchanged sentences

Total loans $ 7,364 $ 435 $ 3,779 $ 11,578 $ 5,098,561 $ 5,110,139

Included in past due loans as of March 31, 2023 and December 31, 2022, were nonaccrual loans of $ 5.6 million and $ 7.2 million, respectively.

In addition, all loans 90 days or more past due at March 31, 2023 and December 31, 2022 were classified as nonaccrual.

Included in past due loans as of June 30, 2023 and December 31, 2022, were nonaccrual loans of $ 3.7 million and $ 7.2 million, respectively.

In addition, all loans 90 days or more past due at June 30, 2023 and December 31, 2022 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) June 30,

2023 December 31,

Commercial real estate

3 unchanged sentences

Residential real estate

10,470 11,894

Total consumer 966 952

1 unchanged sentence

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

No ACL was deemed necessary on nonaccrual loans with carrying values of $ 7.1 million and $ 6.5 million, respectively, as of March 31, 2023 and December 31, 2022.

Nonaccrual loans of $ 8.3 million and $ 5.7 million, respectively, at March 31, 2023 and December 31, 2022 were current as to the payment of principal and interest.

As of March 31, 2023 and December 31, 2022, nonaccrual loans secured by one- to four-family residential property amounting to $ 763 thousand and $ 2.9 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, 2023.

No ACL was deemed necessary on nonaccrual loans with carrying values of $ 2.0 million and $ 6.5 million, respectively, as of June 30, 2023 and December 31, 2022.

Nonaccrual loans of $ 6.7 million and $ 5.7 million, respectively, at June 30, 2023 and December 31, 2022 were current as to the payment of principal and interest.

As of June 30, 2023 and December 31, 2022, nonaccrual loans secured by one- to four-family residential property amounting to $ 763 thousand and $ 2.9 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, 2023.

The following table presents interest income recognized on nonaccrual loans:

(Dollars in thousands)

Three months ended March 31, 2023 2022

(Dollars in thousands) Three Months Six Months

Periods ended June 30, 2023 2022 2023 2022

Commercial real estate

$ — $ — $ — $ —

Commercial & industrial

2 unchanged sentences

Residential real estate

89 69 182 167

Total consumer 21 10 44 17

9 unchanged sentences

If each of the aforementioned criteria are met, then the modification is considered a TLM and subject to the enhanced disclosure requirements.

During the three months ended March 31, 2023, there were no TLMs.

During the three and six months ended June 30, 2023, there were no TLMs.

Individually Analyzed Loans

1 unchanged sentence

Prior to January 1, 2023, individually analyzed loans also included TDRs.

As of March 31, 2023, individually analyzed loans amounted to $ 8.2 million, all of which were considered collateral dependent.

As of June 30, 2023, individually analyzed loans amounted to $ 2.0 million, all of which were considered collateral dependent.

As of December 31, 2022, individually analyzed loans amounted to $ 10.0 million, of which $ 8.5 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, 2023 December 31, 2022

(Dollars in thousands) June 30, 2023 December 31, 2022

Carrying Value Related Allowance Carrying Value Related Allowance

48 unchanged sentences

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table includes information on credit quality indicators and gross charge-offs for the Corporation’s loan portfolio, segregated by class of loans as of March 31, 2023:

The following table includes information on credit quality indicators and gross charge-offs for the Corporation’s loan portfolio, segregated by class of loans as of June 30, 2023:

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

68 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.

The following table presents the activity in the ACL on loans for the three months ended March 31, 2023:

The following table presents the activity in the ACL on loans for the three months ended June 30, 2023:

(Dollars in thousands) Commercial Consumer

5 unchanged sentences

Ending Balance $ 22,026 $ 9,428 $ 31,454 $ 6,442 $ 1,039 $ 408 $ 1,447 $ 39,343

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

The following table presents the activity in the ACL on loans for the six months ended June 30, 2023:

(Dollars in thousands) Commercial Consumer

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

Beginning Balance $ 18,435 $ 10,356 $ 28,791 $ 7,740 $ 1,115 $ 381 $ 1,496 $ 38,027

Charge-offs — ( 20 ) ( 20 ) — — ( 93 ) ( 93 ) ( 113 )

Recoveries — 9 9 — 3 17 20 29

Provision 3,591 ( 917 ) 2,674 ( 1,298 ) ( 79 ) 103 24 1,400

Ending Balance $ 22,026 $ 9,428 $ 31,454 $ 6,442 $ 1,039 $ 408 $ 1,447 $ 39,343

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

(Dollars in thousands) Commercial Consumer

Total Commercial Residential Real Estate Home Equity Other Total Consumer Total

4 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 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

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 6 - Derivative Financial Instruments

12 unchanged sentences

Cash Flow Hedging Instruments

As of March 31, 2023 and December 31, 2022, the Corporation had an interest rate swap contract 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.

In addition, at December 31, 2022, the Corporation had an interest rate swap contract that was designated as a cash flow hedge to hedge the interest rate risk associated with a pool of variable rate

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

commercial loans.

As of June 30, 2023 and December 31, 2022, the Corporation had interest rate swap contracts that were designated as cash flow hedges to hedge the interest rate risk associated with short-term borrowings.

Additionally, the Corporation had an interest rate swap contract that was designated as a cash flow hedge to hedge the interest rate risk associated with a pool of variable rate commercial loans.

On March 31, 2023, the Corporation terminated this interest rate swap contract and the derivative liability was derecognized.

The loss on this interest rate swap included in the AOCL component of shareholders’ equity was updated to its termination date fair value of $ 26.5 million, or $ 20.1 million after tax.

This loss will be amortized into earnings as a reduction of interest income on a straight-line basis over the remaining life of the original interest rate swap term, or through May 1, 2026.

This loss is being amortized into earnings as a reduction of interest income on a straight-line basis over the remaining life of the original interest rate swap term, or through May 1, 2026.

At June 30, 2023, the remaining unamortized balance of the loss included in the AOCL component of shareholders’ equity was $ 24.4 million, or $ 18.5 million after tax.

The changes in fair value of derivatives designated as cash flow hedges are recorded in other comprehensive income (loss) and subsequently reclassified to earnings when gains or losses are realized.

13 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.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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 recognized in earnings.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

(Dollars in thousands) March 31, 2023 December 31, 2022

(Dollars in thousands) June 30, 2023 December 31, 2022

Fair Value Fair Value

22 unchanged sentences

Net amounts $ 68,890 $ 66,802 $ 45,055 $ 68,292

(1) The fair value of derivative assets includes accrued interest receivable of $ 25 thousand and $ 24 thousand, respectively, at March 31, 2023 and December 31, 2022.

(1) The fair value of derivative assets includes accrued interest receivable of $ 153 thousand and $ 24 thousand, respectively, at June 30, 2023 and December 31, 2022.

The fair value of derivative liabilities includes accrued interest payable $ 856 thousand at December 31, 2022.

5 unchanged sentences

Other Comprehensive Income (Loss), Net of Tax

Three months ended March 31, 2023 2022

Three Months Six Months

Periods ended June 30, 2023 2022 2023 2022

Derivatives Designated as Cash Flow Hedging Instruments:

8 unchanged sentences

Recognized in Noninterest Income

Three months ended March 31, Statement of Income Location 2023 2022

Three Months Six Months

Periods ended June 30, Statement of Income Location 2023 2022 2023 2022

Derivatives not Designated as Hedging Instruments:

29 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,

2023 December 31,

3 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 $ 24 thousand for the three months ended March 31, 2023, compared to a decrease

Changes in fair value amounted to a decrease of $ 6 thousand to mortgage banking revenues for the three months ended June 30, 2023 and an increase of

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

to mortgage banking revenues of $ 1.1 million for the same period in 2022.

There were no mortgage loans held for sale 90 days or more past due as of March 31, 2023 and December 31, 2022.

$ 18 thousand for the six months ended June 30, 2023.

This compared to an increase of $ 327 thousand to mortgage banking revenues for the three months ended June 30, 2022 and a decrease of $ 748 thousand for the six months ended June 30, 2022.

There were no mortgage loans held for sale 90 days or more past due as of June 30, 2023 and December 31, 2022.

Valuation Techniques

3 unchanged sentences

such items are classified as Level 1.

There were no Level 1 debt securities held at March 31, 2023 and December 31, 2022.

There were no Level 1 debt securities held at June 30, 2023 and December 31, 2022.

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 March 31, 2023 and December 31, 2022.

There were no Level 3 debt securities held at June 30, 2023 and December 31, 2022.

Mortgage Loans Held for Sale

16 unchanged sentences

However, the credit valuation adjustments utilize Level 3 inputs.

As of March 31, 2023 and December 31, 2022, 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 of June 30, 2023 and December 31, 2022, 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.

10 unchanged sentences

(Level 2) Significant Unobservable Inputs

March 31, 2023

June 30, 2023

Available for sale debt securities:

36 unchanged sentences

Total liabilities at fair value on a recurring basis $ 76,008 $ — $ 76,008 $ —

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Items Recorded at Fair Value on a Nonrecurring Basis

The following table presents the carrying value of assets held at March 31, 2023, which were written down to fair value during the three months ended March 31, 2023:

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

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

Collateral dependent individually analyzed loans $ 1,292 $ — $ — $ 1,292

Total assets at fair value on a nonrecurring basis $ 1,292 $ — $ — $ 1,292

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

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:

(Dollars in thousands) Fair Value Valuation Technique Unobservable Input Range of Inputs Utilized

(Weighted Average)

March 31, 2023

Collateral dependent individually analyzed loans $ 1,292 Appraisals of collateral Discount for costs to sell 0 % - 47 % ( 43 %)

Appraisal adjustments 0 % - 100 % ( 9 %)

Valuation of Financial Instruments

There were no assets written down to fair value during the six months ended June 30, 2023 or during the twelve months ended December 31, 2022.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Items for which Fair Value is Only Disclosed

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.

3 unchanged sentences

(Dollars in thousands)

March 31, 2023 Carrying Amount Total

June 30, 2023 Carrying Amount Total

Fair Value Quoted Prices in Active Markets for Identical Assets

7 unchanged sentences

Junior subordinated debentures 22,681 18,523 — 18,523 —

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

(Dollars in thousands)

9 unchanged sentences

Junior subordinated debentures 22,681 18,963 — 18,963 —

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 8 - Deposits

The following table presents a summary of deposits:

(Dollars in thousands) Mar 31, 2023 Dec 31, 2022

(Dollars in thousands) June 30,

2023 December 31,

Noninterest-bearing:

10 unchanged sentences

Total deposits $ 5,314,478 $ 5,018,962

(1) Includes wholesale brokered demand deposit balances of $ 1,233 and $ 31,153 , respectively, as of March 31, 2023 and December 31, 2022.

(2) Includes wholesale brokered time deposit balances of $ 607,329 and $ 327,044 , respectively, as of March 31, 2023 and December 31, 2022.

(1) Includes wholesale brokered demand deposit balances of $ 0 and $ 31,153 , respectively, as of June 30, 2023 and December 31, 2022.

(2) Includes wholesale brokered time deposit balances of $ 601,481 and $ 327,044 , respectively, as of June 30, 2023 and December 31, 2022.

The following table presents scheduled maturities of time certificates of deposit:

(Dollars in thousands) Scheduled Maturity Weighted Average Rate

April 1, 2023 to December 31, 2023 $ 945,304 3.44 %

July 1, 2023 to December 31, 2023 $ 925,315 4.02 %

2024 569,983 4.28

3 unchanged sentences

2028 and thereafter 6,406 3.40

Balance at December 31, 2023 $ 1,531,835 3.46 %

Time certificates of deposit in denominations of $250 thousand or more totaled $ 241.8 million and $ 200.9 million, respectively, at December 31, 2023 and 2022.

Balance at June 30, 2023 $ 1,650,301 3.99 %

Time certificates of deposit in denominations of $250 thousand or more totaled $ 273.9 million and $ 200.9 million, respectively, at June 30, 2023 and December 31, 2022.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 9 - Borrowings

Advances payable to the FHLB amounted to $ 925.0 million and $ 980.0 million, respectively, at March 31, 2023 and December 31, 2022.

As of March 31, 2023 and December 31, 2022, the Bank had access to a $ 40.0 million unused line of credit with the FHLB.

Additionally, the Bank had a $ 215.0 million standby letter of credit with the FHLB at March 31, 2023 and December 31, 2022.

Advances payable to the FHLB amounted to $ 1.0 billion and $ 980.0 million, respectively, at June 30, 2023 and December 31, 2022.

As of June 30, 2023 and December 31, 2022, the Bank had access to a $ 40.0 million unused line of credit with the FHLB.

Additionally, the Bank had a $ 215.0 million standby letter of credit with the FHLB at June 30, 2023 and December 31, 2022.

This standby letter of credit was executed in 2022 to collateralize an institutional deposit.

The Bank had remaining available borrowing capacity of $ 859.6 million and $ 668.3 million, respectively, with the FHLB at March 31, 2023 and December 31, 2022.

The Bank had remaining available borrowing capacity of $ 968.0 million and $ 668.3 million, respectively, with the FHLB at June 30, 2023 and December 31, 2022.

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, 2023:

The following table presents maturities and weighted average interest rates on FHLB advances outstanding as of June 30, 2023:

(Dollars in thousands) Scheduled

Maturity Weighted

April 1, 2023 to December 31, 2023 $ 665,000 4.72 %

July 1, 2023 to December 31, 2023 $ 440,000 5.20 %

2024 220,000 4.94

3 unchanged sentences

2028 and thereafter 55,000 4.17

Balance at March 31, 2023 $ 925,000 4.60 %

Balance at June 30, 2023 $ 1,040,000 4.86 %

Note 10 - Shareholders' Equity

4 unchanged sentences

The 2023 Repurchase Program commenced on January 1, 2023 and expires on December 31, 2023, and may be modified, suspended, or discontinued at any time.

During the three months ended March 31, 2023, the Corporation repurchased 200,000 shares, at an average price of $ 43.70 and a total cost of $ 8.7 million.

Regulatory Capital Requirements

Capital levels at March 31, 2023 exceeded the regulatory minimum levels to be considered “well capitalized.”

During the six months ended June 30, 2023, the Corporation repurchased 200,000 shares, at an average price of $ 43.70 and a total cost of $ 8.7 million, all of which was repurchased in January and February.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Regulatory Capital Requirements

Capital levels at June 30, 2023 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, 2023

June 30, 2023

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 March 31, 2023 and December 31, 2022.

The Corporation’s capital levels exceeded the minimum regulatory capital requirements plus the capital conservation buffer at June 30, 2023 and December 31, 2022.

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, 2023 and December 31, 2022, $ 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.

At both June 30, 2023 and December 31, 2022, $ 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.

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 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.

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.

Note 11 - Revenue from Contracts with Customers

1 unchanged sentence

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, 2023 2022

For the three months ended June 30, 2023 2022

(Dollars in thousands) Revenue (1)

11 unchanged sentences

Loan related derivative income

Income from bank-owned life insurance

463 344 354 278

Total noninterest income 14,325 11,327 15,852 12,410

Total revenues $ 47,825 $ 11,327 $ 53,367 $ 12,410

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

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

For the six months ended June 30, 2023 2022

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

Revenue (1) ASC 606 Revenue (2)

Net interest income $ 70,693 $ — $ 72,606 $ —

Noninterest income:

Wealth management revenues 17,711 17,711 20,597 20,597

Mortgage banking revenues

2,998 — 5,583 —

Card interchange fees

2,400 2,400 2,467 2,467

Service charges on deposit accounts

1,444 1,444 1,431 1,431

Loan related derivative income

Income from bank-owned life insurance

5 unchanged sentences

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

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, 2023 2022

(Dollars in thousands) Three Months Six Months

Periods ended June 30, 2023 2022 2023 2022

Revenue recognized at a point in time:

4 unchanged sentences

Wealth management revenues

9,048 10,066 17,711 20,597

Service charges on deposit accounts

242 158 461 277

63 64 123 121

Total revenues from contracts in scope of Topic 606 $ 11,327 $ 12,410 $ 22,175 $ 25,059

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 $ 6.6 million and $ 5.1 million, respectively, at March 31, 2023 and December 31, 2022 and were included in other assets in the Unaudited Consolidated Balance Sheets.

Receivables amounted to $ 5.6 million and $ 5.1 million, respectively, at June 30, 2023 and December 31, 2022 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, 2023 and December 31, 2022 and were included in other liabilities in the Unaudited Consolidated Balance Sheets.

The balances of contract liabilities were insignificant at both June 30, 2023 and December 31, 2022 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 and $ 2.1 million, respectively, at March 31, 2023 and

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

December 31, 2022 and were included in other assets in the Unaudited Consolidated Balance Sheets.

The carrying value of contract cost assets amounted to $ 1.9 million and $ 2.1 million, respectively, at June 30, 2023 and December 31, 2022 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.

3 unchanged sentences

The defined benefit pension plans were previously amended to freeze benefit accruals after a 10-year transition period ending in December 2023.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss), on a pre-tax basis:

1 unchanged sentence

Pension Plan Non-Qualified Retirement Plans

Three months ended March 31, 2023 2022 2023 2022

Three Months Six Months Three Months Six Months

Periods ended June 30, 2023 2022 2023 2022 2023 2022 2023 2022

Net Periodic Benefit Cost:

6 unchanged sentences

Recognized net actuarial loss (2)

— 255 — 510 60 173 119 346

Net periodic benefit cost $ 89 $ 204 $ 177 $ 408 $ 276 $ 334 $ 550 $ 667

3 unchanged sentences

Qualified Pension Plan Non-Qualified Retirement Plans

For the three months ended March 31, 2023 2022 2023 2022

For the six months ended June 30, 2023 2022 2023 2022

Measurement date Dec 31, 2022 Dec 31, 2021 Dec 31, 2022 Dec 31, 2021

23 unchanged sentences

and institutional trust services, including custody and fiduciary services.

The following table presents the statement of operations and total assets for Washington Trust’s reportable segments:

The following tables present the statement of operations and total assets for Washington Trust’s reportable segments:

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

Three months ended March 31, 2023 2022 2023 2022 2023 2022

Three months ended June 30, 2023 2022 2023 2022 2023 2022

Net interest income (expense) $ 33,486 $ 37,563 $ 14 ($ 48 ) $ 33,500 $ 37,515

12 unchanged sentences

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

Six months ended June 30, 2023 2022 2023 2022 2023 2022

Net interest income (expense) $ 70,666 $ 72,671 $ 27 ($ 65 ) $ 70,693 $ 72,606

Provision for credit losses 1,500 ( 2,900 ) — — 1,500 ( 2,900 )

Net interest income (expense) after provision for credit losses 69,166 75,571 27 ( 65 ) 69,193 75,506

Noninterest income 9,573 12,131 18,035 20,880 27,608 33,011

Noninterest expenses:

Depreciation and amortization expense 1,690 1,418 713 685 2,403 2,103

Other noninterest expenses 49,082 45,114 15,095 15,079 64,177 60,193

Total noninterest expenses 50,772 46,532 15,808 15,764 66,580 62,296

Income before income taxes 27,967 41,170 2,254 5,051 30,221 46,221

Income tax expense 5,605 8,545 548 1,236 6,153 9,781

Net income $ 22,362 $ 32,625 $ 1,706 $ 3,815 $ 24,068 $ 36,440

Total assets at period end $ 6,938,357 $ 5,908,644 $ 73,403 $ 74,247 $ 7,011,760 $ 5,982,891

Expenditures for long-lived assets 2,995 2,288 25 193 3,020 2,481

Note 14 - Other Comprehensive Income (Loss)

The following table presents the activity in other comprehensive income (loss):

Three months ended March 31, 2023 2022

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

Three months ended June 30, 2023 2022

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

3 unchanged sentences

Change in fair value of cash flow hedges 1,696 ( 407 ) 1,289 ( 3,943 ) 946 ( 2,997 )

Net cash flow hedge losses reclassified into earnings (1)

1,875 ( 449 ) 1,426 32 ( 8 ) 24

Net change in fair value of cash flow hedges 3,571 ( 856 ) 2,715 ( 3,911 ) 938 ( 2,973 )

Defined Benefit Plan Obligations:

Amortization of net actuarial losses (2)

60 ( 15 ) 45 428 ( 103 ) 325

Total other comprehensive loss ($ 9,298 ) $ 2,231 ($ 7,067 ) ($ 50,776 ) $ 12,186 ($ 38,590 )

(1) For the three months ended June 30, 2023 and 2022, the pre-tax amounts reclassified into earnings in the Unaudited Consolidated Statements of Income include a reduction of $ 2.1 million and an increase of $ 25 thousand, respectively, in interest and fees on loans, as well as a reduction of $ 264 thousand and an increase of $ 57 thousand, respectively, in FHLB interest expense.

(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, 2023 2022

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

Securities available for sale:

Change in fair value of available for sale debt securities $ 4,436 ($ 1,065 ) $ 3,371 ($ 112,371 ) $ 26,969 ($ 85,402 )

Cash flow hedges:

Change in fair value of cash flow hedges

2,742 ( 658 ) 2,084 ( 17,144 ) 4,114 ( 13,030 )

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

5 unchanged sentences

Total other comprehensive income (loss) $ 11,807 ($ 2,834 ) $ 8,973 ($ 129,026 ) $ 30,966 ($ 98,060 )

(1) For the three months ended March 31, 2023 and 2022, the pre-tax amounts reclassified into earnings in the Unaudited Consolidated Statements of Income include a reduction of $ 2.8 million and an increase of $ 493 thousand, respectively, in interest and fees on loans, as well as a reduction of $ 127 thousand and an increase of $ 94 thousand, respectively, in FHLB interest expense.

(1) For the six months ended June 30, 2023 and 2022, the pre-tax amounts reclassified into earnings in the Unaudited Consolidated Statements of Income include a reduction of $ 4.9 million and an increase of $ 518 thousand, respectively, in interest and fees on loans, as well as a reduction of $ 391 thousand and an increase of $ 151 thousand, respectively, in FHLB interest expense.

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

1 unchanged sentence

(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, 2023

For the three months ended June 30, 2023

Balance at March 31, 2023 ($ 117,835 ) ($ 19,848 ) ($ 4,077 ) ($ 141,760 )

Other comprehensive (loss) income before reclassifications ( 9,827 ) 1,289 — ( 8,538 )

Amounts reclassified from accumulated other comprehensive (loss) income — 1,426 45 1,471

Net other comprehensive (loss) income ( 9,827 ) 2,715 45 ( 7,067 )

Balance at June 30, 2023 ($ 127,662 ) ($ 17,133 ) ($ 4,032 ) ($ 148,827 )

(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, 2023

Balance at December 31, 2022 ($ 131,033 ) ($ 22,645 ) ($ 4,122 ) ($ 157,800 )

Other comprehensive income before reclassifications 3,371 2,084 — 5,455

Amounts reclassified from accumulated other comprehensive loss — 2,002 45 2,047

Amounts reclassified from accumulated other comprehensive income — 3,428 90 3,518

Net other comprehensive income 3,371 5,512 90 8,973

Balance at March 31, 2023 ($ 117,835 ) ($ 19,848 ) ($ 4,077 ) ($ 141,760 )

Balance at June 30, 2023 ($ 127,662 ) ($ 17,133 ) ($ 4,032 ) ($ 148,827 )

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

(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

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

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 )

1 unchanged sentence

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

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

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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 six months ended June 30, 2022

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

Other comprehensive income (loss) before reclassifications

( 85,402 ) ( 13,030 ) — ( 98,432 )

Amounts reclassified from accumulated other comprehensive income (loss) — ( 278 ) 650 372

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 )

Note 15 - Earnings per Common Share

1 unchanged sentence

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

Three months ended March 31, 2023 2022

Three Months Six Months

Periods ended June 30, 2023 2022 2023 2022

Earnings for basic and diluted earnings per common share:

4 unchanged sentences

Dilutive effect of common stock equivalents

19 111 43 134

Weighted average diluted common shares outstanding 17,030 17,414 17,085 17,451

2 unchanged sentences

Diluted earnings per common share $ 0.66 $ 1.14 $ 1.41 $ 2.08

Weighted average common stock equivalents, not included in common stock equivalents above because they were anti-dilutive, totaled 303,982 for the three months ended March 31, 2023, compared to 94,175 for the same period in 2022.

Weighted average common stock equivalents, not included in common stock equivalents above because they were anti-dilutive, totaled 478,490 and 377,989 , respectively, for the three and six months ended June 30, 2023, compared to 196,943 and 141,043 , respectively, for the same periods in 2022.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 16 - Commitments and Contingencies

17 unchanged sentences

Most standby letters of credit extend for one year.

At March 31, 2023 and December 31, 2022, there were no liabilities to beneficiaries resulting from standby letters of credit.

At June 30, 2023 and December 31, 2022, there were no liabilities to beneficiaries resulting from standby letters of credit.

Should the Corporation be required to make payments to the beneficiary, repayment from the customer to the Corporation is required.

2 unchanged sentences

Interest rate lock commitments are extended to borrowers and relate to the origination of mortgage loans held for sale.

To mitigate the interest rate risk and pricing risk associated with these rate locks and mortgage loans held for sale, the

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Corporation enters into forward sale commitments.

To mitigate the interest rate risk and pricing risk associated with these rate locks and mortgage loans held for sale, the Corporation enters into forward sale commitments.

Both interest rate lock commitments and forward sale commitments are derivative financial instruments.

6 unchanged sentences

To minimize this risk, the Corporation enters into interest rate agreements only with highly rated counterparties that management believes to be creditworthy.

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) Mar 31,

(Dollars in thousands) June 30,

2023 December 31,

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

Commitments to extend credit $ 1,358,666 $ 1,308,873

$ 1,409,788 $ 1,308,873

Standby letters of credit 8,896 9,028

20 unchanged sentences

The estimated funding factor applied to unfunded commitments represents the likelihood that the funding will occur and is based upon the Corporation’s average historical utilization rate for each portfolio.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The activity in the ACL on unfunded commitments for the three months ended March 31, 2023 is presented below:

The activity in the ACL on unfunded commitments for the three months ended June 30, 2023 is presented below:

(Dollars in thousands) Commercial Consumer

3 unchanged sentences

Ending Balance $ 1,483 $ 877 $ 2,360 $ 15 $ — $ 15 $ 15 $ 2,390

The activity in the ACL on unfunded commitments for the three months ended March 31, 2022 is presented below:

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The activity in the ACL on unfunded commitments for the six months ended June 30, 2023 is presented below:

(Dollars in thousands) Commercial Consumer

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

Beginning Balance $ 1,236 $ 988 $ 2,224 $ 50 $ — $ 16 $ 16 $ 2,290

Provision 247 ( 111 ) 136 ( 35 ) — ( 1 ) ( 1 ) 100

Ending Balance $ 1,483 $ 877 $ 2,360 $ 15 $ — $ 15 $ 15 $ 2,390

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

(Dollars in thousands) Commercial Consumer

Total Commercial Residential Real Estate Home Equity Other Total Consumer Total

2 unchanged sentences

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

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

Other Contingencies

3 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements