What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-06 compared with 2023-08-03 · 242 added, 164 removed, 1197 unchanged (25% of the section changed)

4 unchanged sentences

(Dollars in thousands, except par value)

September 30,

2023 December 31,

2 unchanged sentences

Mortgage loans held for sale, at fair value 10,550 8,987

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;

Available for sale debt securities, at fair value (amortized cost of $ 1,170,105 , net of allowance for credit losses on securities of $ 0 at September 30, 2023;

and amortized cost of $ 1,166,340 ;

24 unchanged sentences

authorized 60,000,000 shares;

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

17,363,457 shares issued and 17,019,239 shares outstanding at September 30, 2023 and 17,363,457 shares issued and 17,182,753 shares outstanding at December 31, 2022

Paid-in capital 126,310 127,056

2 unchanged sentences

Treasury stock, at cost;

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

344,218 shares at September 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 Six Months

Periods ended June 30, 2023 2022 2023 2022

Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022

Interest income:

47 unchanged sentences

(Dollars in thousands)

Three Months Six Months

Periods ended June 30, 2023 2022 2023 2022

Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022

Net income $ 11,161 $ 18,668 $ 35,229 $ 55,108

3 unchanged sentences

Net change in defined benefit plan obligations 45 326 135 976

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 )

Total other comprehensive loss, net of tax ( 29,907 ) ( 53,714 ) ( 20,934 ) ( 151,774 )

Total comprehensive (loss) income ($ 18,746 ) ($ 35,046 ) $ 14,295 ($ 96,666 )

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

3 unchanged sentences

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

For the three months ended June 30, 2023 Common

For the three months ended September 30, 2023 Common

Shares Outstanding Common

4 unchanged sentences

Loss Treasury Stock Total

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

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

— — — 11,161 — — 11,161

5 unchanged sentences

— — 1 — — — 1

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

Balance at September 30, 2023 17,019 $ 1,085 $ 126,310 $ 498,521 ($ 178,734 ) ($ 15,778 ) $ 431,404

For the nine months ended September 30, 2023 Common

Shares Outstanding Common

6 unchanged sentences

— — — 35,229 — — 35,229

Total other comprehensive income, net of tax — — — — 8,973 — 8,973

Total other comprehensive loss, net of tax — — — — ( 20,934 ) — ( 20,934 )

Cash dividends declared ($ 1.68 per share)

5 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

Balance at September 30, 2023 17,019 $ 1,085 $ 126,310 $ 498,521 ($ 178,734 ) ($ 15,778 ) $ 431,404

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

3 unchanged sentences

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

For the three months ended June 30, 2022 Common

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

33 — ( 2,001 ) — — 1,297 ( 704 )

Treasury stock purchased under 2021 Repurchase Program

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

( 19 ) — — — — ( 896 ) ( 896 )

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

13 unchanged sentences

Treasury stock purchased under 2021 Repurchase Program

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

( 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.

3 unchanged sentences

(Dollars in thousands)

Six months ended June 30, 2023 2022

Nine months ended September 30, 2023 2022

Cash flows from operating activities:

7 unchanged sentences

Share-based compensation

Tax (expense) benefit from stock option exercises and other equity awards ( 5 ) 64

Tax benefit from stock option exercises and other equity awards — 71

Income from bank-owned life insurance

8 unchanged sentences

Increase in other assets ( 38,002 ) ( 27,734 )

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

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

Increase in other liabilities 19,913 25,451

Net cash provided by operating activities 19,953 71,845

Cash flows from investing activities:

32 unchanged sentences

498,160 606,262

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

Net decrease in cash and cash equivalents ( 5,413 ) ( 45,654 )

Cash and cash equivalents at beginning of period

44 unchanged sentences

The adoption of this ASU did not have a material impact on the consolidated financial statements.

See Note 4 for additional information regarding modifications to borrowers experiencing financial difficulty.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

11 unchanged sentences

(Dollars in thousands)

June 30, 2023 Amortized Cost Unrealized Gains Unrealized Losses ACL

September 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 $ 3.6 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.

Accrued interest receivable on available for sale debt securities totaled $ 3.1 million as of both September 30, 2023 and December 31, 2022.

As of September 30, 2023 and December 31, 2022, securities with a fair value of $ 291.7 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.

2 unchanged sentences

All other debt securities are included based on contractual maturities.

Actual maturities may differ from amounts presented because certain issuers have the right to call or

Actual maturities may differ from amounts presented because certain issuers have the right to call or prepay obligations with or without call or prepayment penalties.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

prepay obligations with or without call or prepayment penalties.

(Dollars in thousands)

June 30, 2023 Amortized Cost Fair Value

September 30, 2023 Amortized Cost Fair Value

Due in one year or less $ 103,283 $ 83,196

7 unchanged sentences

$ 1,170,105 $ 958,990

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.

Included in the above table are debt securities with an amortized cost balance of $ 253.0 million and a fair value of $ 217.2 million at September 30, 2023 that are callable at the discretion of the issuers.

Final maturities of the callable securities range from 9 months to 13 years, with call features ranging from 1 month to 10 months.

Assessment of Available for Sale Debt Securities for Impairment

4 unchanged sentences

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

June 30, 2023 # Fair

September 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 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.

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

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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.

As of September 30, 2023, the Corporation does not intend to sell the debt securities in an unrealized loss position 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 June 30, 2023 and December 31, 2022.

As a result, there was no ACL recorded at both September 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 June 30, 2023.

The issuers of these securities continue to make timely principal and interest payments and none of these securities were past due at September 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 June 30, 2023 included three trust preferred securities issued by three individual companies in the banking sector.

These securities in an unrealized loss position at September 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 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.

As of September 30, 2023, there was one individual name issuer trust preferred debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 216 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between September 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 June 30, 2023 included four corporate bond holdings issued by three individual companies in the financial services industry.

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

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.

As of September 30, 2023, there was one corporate bond debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 98 thousand that was rated below investment grade by S&P.

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

(Dollars in thousands) September 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 $ 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.

(5) Includes net unamortized loan origination costs of $ 12.8 million and $ 11.6 million, respectively, at September 30, 2023 and December 31, 2022 and net unamortized premiums on loans purchased from and serviced by other financial institutions of $ 296 thousand and $ 318 thousand, respectively, at September 30, 2023 and December 31, 2022.

Loan balances exclude accrued interest receivable of $ 22.0 million and $ 17.6 million, respectively, as of September 30, 2023 and December 31, 2022.

As of September 30, 2023 and December 31, 2022, loans amounting to $ 3.0 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

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

September 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 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.

Included in past due loans as of September 30, 2023 and December 31, 2022, were nonaccrual loans of $ 5.7 million and $ 7.2 million, respectively.

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

(Dollars in thousands) September 30,

2023 December 31,

7 unchanged sentences

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

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.

No ACL was deemed necessary on nonaccrual loans with carrying values of $ 15.8 million and $ 6.5 million, respectively, as of September 30, 2023 and December 31, 2022.

Nonaccrual loans of $ 27.9 million and $ 5.7 million, respectively, at September 30, 2023 and December 31, 2022 were current as to the payment of principal and interest.

As of September 30, 2023 and December 31, 2022, nonaccrual loans secured by one- to four-family residential property amounting to $ 803 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 September 30, 2023.

The following table presents interest income recognized on nonaccrual loans:

(Dollars in thousands) Three Months Six Months

Periods ended June 30, 2023 2022 2023 2022

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022

Commercial real estate

9 unchanged sentences

As disclosed in Note 2, the Corporation adopted ASU 2022-02, which eliminated the accounting guidance for TDRs and added enhanced disclosures with respect to certain modifications for borrowers experiencing financial difficulty.

Effective January 1, 2023, a loan that has been modified is considered a troubled loan modification, or TLM, when the following conditions are met:

(1) the modification is considered a continuation of an existing loan and not a new loan in accordance

Effective January 1, 2023, a loan that has been modified is considered a TLM when the modification is made to a borrower experiencing financial difficulty and the modification has a direct impact to the contractual cash flows.

If both of the

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

with GAAP, (2) the modification is made to a borrower experiencing financial difficulty and (3) the modification has a direct impact to the contractual cash flows.

Modifications with direct impact to contractual cash flows are defined as:

principal forgiveness, interest rate reductions, maturity extensions, other-than-insignificant payment delays, or any combination thereof.

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

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

In the course of resolving problem loans, the Corporation may choose to modify the contractual terms of loans to borrowers who are experiencing financial difficulty.

Such modifications to borrowers experiencing financial difficulty may include modified contractual terms that have a direct impact to contractual cash flows, including principal forgiveness, interest rate reductions, maturity extensions, other-than-insignificant payment delays, or any combination thereof.

The following is a description of each of these types of modifications:

• Principal forgiveness results in the reduction in the outstanding principal balance of the loan and can result voluntarily through renegotiated contractual terms with the borrower or involuntarily through a bankruptcy proceeding.

• An interest rate reduction results in the contractual interest rate being reduced from the original agreement.

• A maturity extension represents an extension of the term of the loan beyond its original contractual maturity date.

• An other-than-insignificant payment delay is a deferral arrangement with the borrower, which allows them to delay a scheduled loan payment to a later date.

The Corporation considers that a three months or less payment delay generally would be considered insignificant.

• A combination includes loans that have undergone more than one of the above loan modification types.

The following tables present the carrying value at September 30, 2023, of TLMs made during the periods indicated, segregated by class of loans and type of concession granted:

(Dollars in thousands)

Three months ended September 30, 2023

Maturity Extension Total % (1)

Commercial real estate $ 13,963 $ 13,963 1 %

Commercial & industrial — — —

Total commercial 13,963 13,963 1

Total $ 13,963 $ 13,963 — %

(1) Represents the period end total carrying value of TLMs as a percentage of the period end total loan balance by class.

(Dollars in thousands)

Nine months ended September 30, 2023

Maturity Extension Total % (1)

Commercial real estate $ 13,963 $ 13,963 1 %

Commercial & industrial — — —

Total commercial 13,963 13,963 1

Total $ 13,963 $ 13,963 — %

(1) Represents the period end total carrying value of TLMs as a percentage of the period end total loan balance by class.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following tables present the financial effect of TLMs made during the periods indicated, segregated by class of loans:

Three months ended September 30, 2023

Weighted Average Maturity Extension

Commercial real estate 9

Commercial & industrial 0

Total commercial 9

Nine months ended September 30, 2023

Weighted Average Maturity Extension

Commercial real estate 9

Commercial & industrial 0

Total commercial 9

Management closely monitors the performance of TLMs to understand the effectiveness of the modifications.

The following table presents an aging analysis as of the date indicated, of TLMs that have been modified in the past nine months:

(Dollars in thousands) Days Past Due

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

Commercial real estate

$ — $ — $ — $ — $ 13,963 $ 13,963

Commercial & industrial

Total commercial — — — — 13,963 13,963

Total loans $ — $ — $ — $ — $ 13,963 $ 13,963

There were no TLMs made in the previous nine months for which there was a subsequent payment default.

Nonaccrual loans that become TLMs generally remain on nonaccrual status for six months, subsequent to being modified, before management considers their return to accrual status.

If a TLM is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status.

There were no significant commitments to lend additional funds to borrowers experiencing financial difficulty whose loans were TLMs at September 30, 2023.

Individually Analyzed Loans

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

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

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

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

As of September 30, 2023, individually analyzed loans amounted to $ 24.4 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.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

For collateral dependent loans where management has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and repayment of the loan is to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date.

1 unchanged sentence

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

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

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

Carrying Value Related Allowance Carrying Value Related Allowance

21 unchanged sentences

Pass - Loans with acceptable credit quality, defined as ranging from superior or very strong to a status of lesser stature.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Superior or very strong credit quality is characterized by a high degree of cash collateralization or strong balance sheet liquidity.

6 unchanged sentences

Classified - Loans identified as “substandard,” “doubtful” or “loss” based on criteria consistent with guidelines provided by banking regulators.

A “substandard” loan has defined weaknesses which make payment default or principal exposure likely, but not yet certain.

A “substandard” loan has defined weaknesses which make payment default or principal exposure likely,

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

but not yet certain.

Such loans are apt to be dependent upon collateral liquidation, a secondary source of repayment or an event outside of the normal course of business.

15 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 June 30, 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 September 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 June 30, 2023:

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

(Dollars in thousands) Commercial Consumer

5 unchanged sentences

Ending Balance $ 23,685 $ 8,422 $ 32,107 $ 6,718 $ 992 $ 396 $ 1,388 $ 40,213

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

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

(Dollars in thousands) Commercial Consumer

5 unchanged sentences

Ending Balance $ 23,685 $ 8,422 $ 32,107 $ 6,718 $ 992 $ 396 $ 1,388 $ 40,213

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

20 unchanged sentences

Cash Flow Hedging Instruments

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.

As of September 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.

2 unchanged sentences

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.

At September 30, 2023, the remaining unamortized balance of the loss included in the AOCL component of shareholders’ equity was $ 22.2 million, or $ 16.9 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.

20 unchanged sentences

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

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

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

Fair Value Fair Value

22 unchanged sentences

Net amounts $ 84,441 $ 80,817 $ 45,055 $ 68,292

(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.

(1) The fair value of derivative assets includes accrued interest receivable of $ 262 thousand and $ 24 thousand, respectively, at September 30, 2023 and December 31, 2022.

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

(2) Interest rate risk management contracts and loan related derivative contracts with counterparties are subject to master netting arrangements.

4 unchanged sentences

Other Comprehensive Income (Loss), Net of Tax

Three Months Six Months

Periods ended June 30, 2023 2022 2023 2022

Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022

Derivatives Designated as Cash Flow Hedging Instruments:

8 unchanged sentences

Recognized in Noninterest Income

Three Months Six Months

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

Three Months Nine Months

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

Derivatives not Designated as Hedging Instruments:

13 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, 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.

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

Fair value is a market-based measurement, not an entity-specific measurement.

12 unchanged sentences

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,

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

Changes in fair value amounted to decreases to mortgage banking revenues of $ 39 thousand for the three months ended September 30, 2023 and $ 21 thousand for the nine months ended September 30, 2023.

This compared to decreases to mortgage banking revenues of $ 521 thousand

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

$ 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.

for the three months ended September 30, 2022 and $ 1.3 million for the nine months ended September 30, 2022.

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

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

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

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

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

There were no Level 3 debt securities held at September 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 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 of September 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.

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(Level 2) Significant Unobservable Inputs

June 30, 2023

September 30, 2023

Available for sale debt securities:

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Items Recorded at Fair Value on a Nonrecurring Basis

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

The following table presents the carrying value of assets held at September 30, 2023, which were written down to fair value during the nine months ended September 30, 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 loan $ 8,050 $ — $ — $ 8,050

Total assets at fair value on a nonrecurring basis $ 8,050 $ — $ — $ 8,050

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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.

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

(Weighted Average)

September 30, 2023

Collateral dependent individually analyzed loan $ 8,050 Appraisals of collateral Discount for costs to sell 0 %

Appraisal adjustments 0 %

Items for which Fair Value is Only Disclosed

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(Dollars in thousands)

June 30, 2023 Carrying Amount Total

September 30, 2023 Carrying Amount Total

Fair Value Quoted Prices in Active Markets for Identical Assets

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The following table presents a summary of deposits:

(Dollars in thousands) June 30,

(Dollars in thousands) September 30,

2023 December 31,

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Total deposits $ 5,415,563 $ 5,018,962

(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.

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

(2) Includes wholesale brokered time deposit balances of $ 668,042 and $ 327,044 , respectively, as of September 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

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

October 1, 2023 to December 31, 2023 $ 1,198,713 4.51 %

2024 430,047 4.08

3 unchanged sentences

2028 and thereafter 3,038 2.97

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.

Balance at September 30, 2023 $ 1,779,984 4.27 %

Time certificates of deposit in denominations of $250 thousand or more totaled $ 292.1 million and $ 200.9 million, respectively, at September 30, 2023 and December 31, 2022.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 9 - Borrowings

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.

Advances payable to the FHLB amounted to $ 1.1 billion and $ 980.0 million, respectively, at September 30, 2023 and December 31, 2022.

As of September 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 standby letter of credit with the FHLB of $ 115.0 million and $ 215.0 million, respectively, at September 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 $ 968.0 million and $ 668.3 million, respectively, with the FHLB at June 30, 2023 and December 31, 2022.

The Bank had remaining available borrowing capacity of $ 1.0 billion and $ 668.3 million, respectively, with the FHLB at September 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 June 30, 2023:

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

(Dollars in thousands) Scheduled

Maturity Weighted

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

October 1, 2023 to December 31, 2023 $ 215,000 5.53 %

2024 265,000 5.03

3 unchanged sentences

2028 and thereafter 125,000 4.15

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

Balance at September 30, 2023 $ 1,120,000 4.90 %

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 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.

During the nine months ended September 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.”

Capital levels at September 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

June 30, 2023

September 30, 2023

Total Capital (to Risk-Weighted Assets):

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

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

The Corporation’s capital levels exceeded the minimum regulatory capital requirements plus the capital conservation buffer at September 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 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.

At both September 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.

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

For the three months ended June 30, 2023 2022

For the three months ended September 30, 2023 2022

(Dollars in thousands) Revenue (1)

11 unchanged sentences

Loan related derivative income

1,082 — 1,041 —

Income from bank-owned life insurance

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

For the six months ended June 30, 2023 2022

For the nine months ended September 30, 2023 2022

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

10 unchanged sentences

Loan related derivative income

1,278 — 2,011 —

Income from bank-owned life insurance

7 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, 2023 2022 2023 2022

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022

Revenue recognized at a point in time:

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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 $ 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.

Receivables amounted to $ 6.4 million and $ 5.1 million, respectively, at September 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 June 30, 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 September 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 $ 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 carrying value of contract cost assets amounted to $ 1.9 million and $ 2.1 million, respectively, at September 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.

2 unchanged sentences

Washington Trust also has non-qualified retirement plans to provide supplemental retirement benefits to certain employees, as defined in the plans.

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

These defined benefit pension plans were previously amended to freeze benefit accruals after a 10-year transition period.

This transition period will end in December 2023.

In the fourth quarter of 2023, the Corporation’s Board of Directors approved a resolution to terminate the qualified pension plan.

Work on the qualified pension plan termination process has commenced and the qualified pension plan’s assets are expected to be distributed in fiscal year 2025, pending completion of applicable regulatory approvals, including receipt of a determination letter from the Internal Revenue Service.

The qualified pension plan liability is expected to be settled through a combination of lump sum payments to participants and purchase of a group annuity contract from a highly-rated insurance company.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

2 unchanged sentences

Pension Plan Non-Qualified Retirement Plans

Three Months Six Months Three Months Six Months

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

Three Months Nine Months Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022 2023 2022 2023 2022

Net Periodic Benefit Cost:

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Qualified Pension Plan Non-Qualified Retirement Plans

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

For the nine months ended September 30, 2023 2022 2023 2022

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

20 unchanged sentences

holistic financial planning services;

personal trust and estate services, including services as trustee, personal representative, custodian and guardian;

personal trust and estate services, including services as trustee, personal representative and custodian;

settlement of decedents’ estates;

2 unchanged sentences

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

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

Three months ended September 30, 2023 2022 2023 2022 2023 2022

Net interest income $ 33,741 $ 42,038 $ 10 $ 4 $ 33,751 $ 42,042

Provision for credit losses 500 800 — — 500 800

Net interest income (expense) after provision for credit losses 32,786 40,563 14 ( 48 ) 32,800 40,515

Net interest income after provision for credit losses 33,241 41,238 10 4 33,251 41,242

Noninterest income 6,105 6,043 9,121 9,760 15,226 15,803

10 unchanged sentences

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

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

Nine months ended September 30, 2023 2022 2023 2022 2023 2022

Net interest income (expense) $ 104,407 $ 114,709 $ 37 ($ 61 ) $ 104,444 $ 114,648

13 unchanged sentences

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

Three months ended June 30, 2023 2022

Three months ended September 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

10 unchanged sentences

Total other comprehensive loss ($ 39,351 ) $ 9,444 ($ 29,907 ) ($ 70,678 ) $ 16,964 ($ 53,714 )

(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.

(1) For the three months ended September 30, 2023 and 2022, the pre-tax amounts reclassified into earnings in the Unaudited Consolidated Statements of Income include reductions of $ 2.2 million and $ 1.1 million, respectively, in interest and fees on loans, as well as reductions of $ 631 thousand and $ 3 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

Nine months ended September 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

10 unchanged sentences

178 ( 43 ) 135 1,284 ( 308 ) 976

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

(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.

Total other comprehensive loss ($ 27,544 ) $ 6,610 ($ 20,934 ) ($ 199,703 ) $ 47,929 ($ 151,774 )

(1) For the nine months ended September 30, 2023 and 2022, the pre-tax amounts reclassified into earnings in the Unaudited Consolidated Statements of Income include reductions of $ 7.1 million and $ 561 thousand, respectively, in interest and fees on loans, as well as a reduction of $ 1.0 million and an increase of $ 148 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 June 30, 2023

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

For the three months ended September 30, 2023

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

Other comprehensive (loss) income before reclassifications ( 32,785 ) 1,669 — ( 31,116 )

1 unchanged sentence

Net other comprehensive (loss) income ( 32,785 ) 2,833 45 ( 29,907 )

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

Balance at September 30, 2023 ($ 160,447 ) ($ 14,300 ) ($ 3,987 ) ($ 178,734 )

(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

For the nine months ended September 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 income — 3,428 90 3,518

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

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

Other comprehensive (loss) income before reclassifications ( 29,414 ) 3,753 — ( 25,661 )

Amounts reclassified from accumulated other comprehensive (loss) income — 4,592 135 4,727

Net other comprehensive (loss) income ( 29,414 ) 8,345 135 ( 20,934 )

Balance at September 30, 2023 ($ 160,447 ) ($ 14,300 ) ($ 3,987 ) ($ 178,734 )

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 June 30, 2022

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

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 )

Other comprehensive income (loss) before reclassifications

( 85,402 ) ( 13,030 ) — ( 98,432 )

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

Other comprehensive loss before reclassifications ( 132,469 ) ( 20,820 ) — ( 153,289 )

Amounts reclassified from accumulated other comprehensive loss — 539 976 1,515

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 )

Note 15 - Earnings per Common Share

1 unchanged sentence

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

Three Months Six Months

Periods ended June 30, 2023 2022 2023 2022

Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022

Earnings for basic and diluted earnings per common share:

9 unchanged sentences

Diluted earnings per common share $ 0.65 $ 1.08 $ 2.06 $ 3.16

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.

Weighted average common stock equivalents, not included in common stock equivalents above because they were anti-dilutive, totaled 468,524 and 452,472 , respectively, for the three and nine months ended September 30, 2023, compared to 137,886 and 140,777 , respectively, for the same periods in 2022.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

18 unchanged sentences

Most standby letters of credit extend for one year.

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

At September 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.

13 unchanged sentences

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

(Dollars in thousands) June 30,

(Dollars in thousands) September 30,

2023 December 31,

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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.

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

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

(Dollars in thousands) Commercial Consumer

3 unchanged sentences

Ending Balance $ 1,096 $ 868 $ 1,964 $ 14 $ — $ 12 $ 12 $ 1,990

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:

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

(Dollars in thousands) Commercial Consumer

3 unchanged sentences

Ending Balance $ 1,096 $ 868 $ 1,964 $ 14 $ — $ 12 $ 12 $ 1,990

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

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The activity in the ACL on unfunded commitments for the three 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 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

6 unchanged sentences

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

Other Matters

On September 27, 2023, the Bank entered into a settlement with the DOJ through an agreement to resolve allegations that it violated fair lending laws in the state of Rhode Island from 2016 to 2021.

Under the settlement, the Bank will provide $ 7.0 million in loan subsidies over a five-year period with the goal of increasing home mortgage loans, home improvement loans, and home refinance loans in specific census tracts in Rhode Island.

Loan subsidies may include originating a loan for a home purchase, refinancing or home improvement at an interest rate below the otherwise prevailing market interest rate offered by Washington Trust and payment of the initial mortgage insurance premium on loans subject to such mortgage insurance.

The cost of such subsidies will generally be recognized over the life of the respective loans.

Loan subsidies may also include down payment assistance and closing cost assistance.

The Bank also will commit $ 2.0 million for focused community outreach and marketing efforts over a five-year period.

The expenses associated with community outreach and marketing efforts will be recorded in the period in which the activities occur and are consistent with historical spending levels.

In addition, the Bank will commit to opening two full-service branches in specific census tracts in Rhode Island, including the previously announced new branch in Olneyville, Rhode Island.

The settlement included no civil penalties levied against the Bank.

The United States District Court for the District of Rhode Island approved the settlement on October 31, 2023.

The settlement resolves all claims made by the DOJ against the Bank related to its lending practices in the state of Rhode Island from 2016 to 2021 .

Management's Discussion and Analysis

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

What changed 10-Q

Item 1. Financial Statements