What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-06 · 254 added, 225 removed, 1189 unchanged (29% of the section changed)

4 unchanged sentences

(Dollars in thousands, except par value)

September 30,

2024 December 31,

2 unchanged sentences

Mortgage loans held for sale, at fair value 20,864 20,077

Available for sale debt securities, at fair value (amortized cost of $ 1,117,819 , net of allowance for credit losses on securities of $ 0 at June 30, 2024;

Available for sale debt securities, at fair value (amortized cost of $ 1,098,649 , net of allowance for credit losses on securities of $ 0 at September 30, 2024;

and amortized cost of $ 1,152,629 ;

24 unchanged sentences

authorized 60,000,000 shares;

17,363,457 shares issued and 17,058,411 shares outstanding at June 30, 2024 and 17,363,457 shares issued and 17,030,987 shares outstanding at December 31, 2023

17,363,457 shares issued and 17,058,413 shares outstanding at September 30, 2024 and 17,363,457 shares issued and 17,030,987 shares outstanding at December 31, 2023

Paid-in capital 126,698 126,150

1 unchanged sentence

Accumulated other comprehensive loss ( 117,158 ) ( 141,153 )

Treasury stock, at cost;

305,046 shares at June 30, 2024 and 332,470 shares at December 31, 2023

Treasury stock, at cost, 305,044 shares at September 30, 2024 and 332,470 shares at December 31, 2023

( 14,050 ) ( 15,313 )

6 unchanged sentences

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

Three Months Six Months

Periods ended June 30, 2024 2023 2024 2023

Three Months Nine Months

Periods ended September 30, 2024 2023 2024 2023

Interest income:

48 unchanged sentences

(Dollars in thousands)

Three Months Six Months

Periods ended June 30, 2024 2023 2024 2023

Three Months Nine Months

Periods ended September 30, 2024 2023 2024 2023

Net income $ 10,981 $ 11,161 $ 32,732 $ 35,229

4 unchanged sentences

Total other comprehensive income (loss), net of tax 29,168 ( 29,907 ) 23,995 ( 20,934 )

Total comprehensive income $ 13,402 $ 4,189 $ 16,578 $ 33,041

Total comprehensive income (loss) $ 40,149 ($ 18,746 ) $ 56,727 $ 14,295

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, 2024 Common

For the three months ended September 30, 2024 Common

Shares Outstanding Common

4 unchanged sentences

Loss Treasury Stock Total

Balance at March 31, 2024 17,033 $ 1,085 $ 126,785 $ 503,175 ($ 148,913 ) ($ 15,212 ) $ 466,920

Balance at June 30, 2024 17,058 $ 1,085 $ 125,898 $ 504,350 ($ 146,326 ) ($ 14,050 ) $ 470,957

— — — 10,981 — — 10,981

3 unchanged sentences

Share-based compensation — — 800 — — — 800

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

25 — ( 1,411 ) — — 1,162 ( 249 )

Balance at June 30, 2024 17,058 $ 1,085 $ 125,898 $ 504,350 ($ 146,326 ) ($ 14,050 ) $ 470,957

For the six months ended June 30, 2024 Common

Balance at September 30, 2024 17,058 $ 1,085 $ 126,698 $ 505,654 ($ 117,158 ) ($ 14,050 ) $ 502,229

For the nine months ended September 30, 2024 Common

Shares Outstanding Common

6 unchanged sentences

— — — 32,732 — — 32,732

Total other comprehensive loss, net of tax — — — — ( 5,173 ) — ( 5,173 )

Total other comprehensive income, net of tax — — — — 23,995 — 23,995

Cash dividends declared ($ 1.68 per share)

3 unchanged sentences

27 — ( 1,530 ) — — 1,263 ( 267 )

Balance at June 30, 2024 17,058 $ 1,085 $ 125,898 $ 504,350 ($ 146,326 ) ($ 14,050 ) $ 470,957

Balance at September 30, 2024 17,058 $ 1,085 $ 126,698 $ 505,654 ($ 117,158 ) ($ 14,050 ) $ 502,229

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 in thousands)

Six months ended June 30, 2024 2023

Nine months ended September 30, 2024 2023

Cash flows from operating activities:

$ 21,751 $ 24,068

Net income $ 32,732 $ 35,229

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

7 unchanged sentences

Income from bank-owned life insurance ( 2,262 ) ( 2,754 )

( 1,492 ) ( 2,044 )

Net gains on loan sales, including changes in fair value ( 6,599 ) ( 3,446 )

Proceeds from sales of loans, net 296,376 169,392

178,728 86,762

Loans originated for sale ( 291,647 ) ( 168,892 )

( 181,608 ) ( 97,701 )

Decrease (increase) in operating lease right-of-use assets 1,752 ( 726 )

(Decrease) increase in operating lease liabilities ( 1,790 ) 996

Increase in other assets ( 746 ) ( 23,820 )

Decrease in other liabilities ( 3,673 ) ( 1,113 )

Net cash provided by (used in) operating activities 13,129 ( 9,902 )

Decrease (increase) in other assets 4,616 ( 38,002 )

(Decrease) increase in other liabilities ( 1,161 ) 19,913

Net cash provided by operating activities 38,848 19,953

Cash flows from investing activities:

12 unchanged sentences

Purchases of loans ( 743 ) ( 5,428 )

( 597 ) ( 3,653 )

Proceeds from the sale of property acquired through foreclosure or repossession 680 —

Purchases of premises and equipment ( 3,519 ) ( 3,524 )

( 2,246 ) ( 3,020 )

Net proceeds from the sale of bank-owned property 1,669 —

6 unchanged sentences

Proceeds from Federal Home Loan Bank advances 1,970,000 2,895,000

1,770,000 1,985,000

Repayments of Federal Home Loan Bank advances ( 1,860,000 ) ( 2,755,000 )

1 unchanged sentence

Net proceeds from stock option exercises and issuance of other equity awards, net of awards surrendered ( 267 ) ( 637 )

( 267 ) ( 638 )

Cash dividends paid ( 28,838 ) ( 29,063 )

( 19,278 ) ( 19,512 )

Net cash (used in) provided by financing activities ( 95,375 ) 498,160

Net increase in cash and cash equivalents 17,347 9,894

Net increase (decrease) in cash and cash equivalents 120,559 ( 5,413 )

Cash and cash equivalents at beginning of period 90,184 118,422

90,184 118,422

Cash and cash equivalents at end of period $ 210,743 $ 113,009

$ 107,531 $ 128,316

Noncash Activities:

15 unchanged sentences

The accounting and reporting policies of the Washington Trust conform to GAAP and to general practices of the banking industry.

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.

The Corporation’s 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.

Through consolidation, intercompany balances and transactions have been eliminated.

27 unchanged sentences

(Dollars in thousands)

June 30, 2024 Amortized Cost Unrealized Gains Unrealized Losses ACL

September 30, 2024 Amortized Cost Unrealized Gains Unrealized Losses ACL

Available for Sale Debt Securities:

6 unchanged sentences

825,046 475 ( 106,614 ) — 718,907

Obligations of states and political subdivisions

650 14 — — 664

Individual name issuer trust preferred debt securities

18 unchanged sentences

Total available for sale debt securities $ 1,152,629 $ 261 ($ 152,510 ) $ — $ 1,000,380

Available for sale debt securities balances exclude accrued interest receivable of $ 3.6 million and $ 3.7 million, respectively, as of June 30, 2024 and December 31, 2023.

At June 30, 2024 and December 31, 2023, securities with a fair value of $ 298.9 million and $ 311.9 million, respectively, were pledged as collateral for FHLB borrowings, potential borrowings with the FRBB, certain public deposits, and for other purposes.

Available for sale debt securities balances exclude accrued interest receivable of $ 2.9 million and $ 3.7 million, respectively, as of September 30, 2024 and December 31, 2023.

At September 30, 2024 and December 31, 2023, securities with a fair value of $ 302.3 million and $ 311.9 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.

4 unchanged sentences

(Dollars in thousands)

June 30, 2024 Amortized Cost Fair Value

September 30, 2024 Amortized Cost Fair Value

Due in one year or less $ 98,591 $ 86,486

8 unchanged sentences

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Included in the above table are debt securities with an amortized cost balance of $ 252.9 million and a fair value of $ 226.7 million at June 30, 2024 that are callable at the discretion of the issuers.

Final maturities of the callable securities range from 1 year to 13 years, with call features ranging from 1 month to 5 months.

Included in the above table are debt securities with an amortized cost balance of $ 253.6 million and a fair value of $ 234.3 million at September 30, 2024 that are callable at the discretion of the issuers.

Final maturities of the callable securities range from 10 months to 20 years, with call features ranging from 1 month to 9 years.

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, 2024 # Fair

September 30, 2024 # Fair

Value Unrealized

31 unchanged sentences

9 $ 63,711 ($ 438 ) 181 $ 914,700 ($ 152,072 ) 190 $ 978,411 ($ 152,510 )

There were no debt securities on nonaccrual status at June 30, 2024 and 2023 and, therefore there was no accrued interest related to debt securities reversed against interest income for the three and six months ended June 30, 2024 and 2023.

As of June 30, 2024, 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 will not be required to sell each security before the recovery of its amortized cost basis.

There were no debt securities on nonaccrual status at September 30, 2024 and 2023 and, therefore there was no accrued interest related to debt securities reversed against interest income for the three and nine months ended September 30, 2024 and 2023.

As of September 30, 2024, 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 will not be required to sell each security before the recovery of its amortized cost basis.

In addition, management does not believe that any of the 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.

Therefore, no ACL was recorded at both June 30, 2024 and December 31, 2023.

Therefore, no ACL was recorded at both September 30, 2024 and December 31, 2023.

Obligations of U.S.

2 unchanged sentences

The contractual cash flows for these securities are either explicitly or implicitly guaranteed by the U.S.

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

The issuers of these securities

government, are

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

continue to make timely principal and interest payments, and none of these securities were past due at June 30, 2024.

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 September 30, 2024.

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, 2024 included three trust preferred securities issued by three individual companies in the banking sector.

These securities in an unrealized loss position at September 30, 2024 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, 2024, there was one individual name issuer trust preferred debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 176 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between June 30, 2024 and the filing date of this report.

As of September 30, 2024, there was one individual name issuer trust preferred debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 140 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between September 30, 2024 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, 2024 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, 2024 included four corporate bond holdings issued by three individual companies in the financial services industry.

As of June 30, 2024, there was one corporate bond debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 35 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between June 30, 2024 and the filing date of this report.

As of September 30, 2024, there was one corporate bond debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 25 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between September 30, 2024 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.

Note 4 - Loans

The following table presents a summary of loans:

(Dollars in thousands) June 30,

The following table presents the carrying value of loans, segregated by class of loans:

(Dollars in thousands) September 30,

2024 December 31, 2023

16 unchanged sentences

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

Also, includes a $ 19 thousand negative basis adjustment associated with fair value hedges at September 30, 2024.

See Note 6 for additional disclosure.

(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 $ 13.3 million and $ 13.0 million, respectively, at June 30, 2024 and December 31, 2023 and net unamortized premiums on loans purchased from and serviced by other financial institutions of $ 262 thousand and $ 286 thousand, respectively, at June 30, 2024 and December 31, 2023.

Loan balances exclude accrued interest receivable of $ 23.5 million and $ 22.9 million, respectively, as of June 30, 2024 and December 31, 2023.

(5) Includes net unamortized loan origination costs of $ 13.4 million and $ 13.0 million, respectively, at September 30, 2024 and December 31, 2023 and net unamortized premiums on loans purchased from and serviced by other financial institutions of $ 249 thousand and $ 286 thousand, respectively, at September 30, 2024 and December 31, 2023.

The carrying value of loans excludes accrued interest receivable of $ 22.6 million and $ 22.9 million, respectively, as of September 30, 2024 and December 31, 2023.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

As of June 30, 2024 and December 31, 2023, loans amounting to $ 3.6 billion and $ 3.4 billion, respectively, were pledged as collateral to the FHLB under a blanket pledge agreement and to the FRBB for the discount window.

As of September 30, 2024 and December 31, 2023, loans amounting to $ 3.3 billion and $ 3.4 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.

7 unchanged sentences

(Dollars in thousands) Days Past Due

June 30, 2024 Current 30-59 60-89 90 or More Total Past Due Total Loans

September 30, 2024 Current 30-59 60-89 90 or More Total Past Due Total Loans

Commercial real estate

7 unchanged sentences

17,649 75 — — 75 17,724

18,451 18 2 — 20 18,471

Total consumer 314,228 1,595 533 747 2,875 317,103

14 unchanged sentences

Total loans $ 5,636,361 $ 6,748 $ 1,853 $ 2,744 $ 11,345 $ 5,647,706

Included in past due loans as of June 30, 2024 and December 31, 2023, were nonaccrual loans of $ 8.4 million and $ 6.9 million, respectively.

In addition, all loans 90 days or more past due at June 30, 2024 and December 31, 2023 were classified as nonaccrual.

Included in past due loans as of September 30, 2024 and December 31, 2023, were nonaccrual loans of $ 18.1 million and $ 6.9 million, respectively.

In addition, all loans 90 days or more past due at September 30, 2024 and December 31, 2023 were classified as nonaccrual.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

7 unchanged sentences

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

(Dollars in thousands) June 30, 2024 December 31, 2023

(Dollars in thousands) September 30, 2024 December 31, 2023

Nonaccrual Loans Nonaccrual Loans

12 unchanged sentences

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

Nonaccrual loans of $ 22.1 million and $ 37.7 million, respectively, at June 30, 2024 and December 31, 2023 were current as to the payment of principal and interest.

As of June 30, 2024 and December 31, 2023, nonaccrual loans secured by one- to four-family residential property amounting to $ 3.7 million and $ 960 thousand, 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, 2024.

Nonaccrual loans of $ 13.0 million and $ 37.7 million, respectively, at September 30, 2024 and December 31, 2023 were current as to the payment of principal and interest.

As of September 30, 2024 and December 31, 2023, nonaccrual loans secured by one- to four-family residential property amounting to $ 2.4 million and $ 960 thousand, 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, 2024.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents interest income recognized on nonaccrual loans:

(Dollars in thousands) Three Months Six Months

Periods ended June 30, 2024 2023 2024 2023

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2024 2023 2024 2023

Commercial real estate

14 unchanged sentences

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.

TLMs are reported as such for at least one year from the date of the modification.

If the TLM performs in accordance with the modified contractual terms for that period of time, it would be removed from this classification.

The following tables present the carrying value at June 30, 2024, of TLMs made during the periods indicated, segregated by class of loans and type of concession granted:

If the TLM successfully meets all repayment terms according to the modification documents for a specified period of time (generally 12 months) and the borrower is no longer experiencing financial difficulty, it would be declassified from TLM status.

In addition, if a TLM is subsequently modified and the borrower is no longer experiencing financial difficulty, it would be declassified from TLM status.

During the three months ended September 30, 2024, there were no loans modified as a TLM.

The following table presents the carrying value of TLMs made during the nine months ended September 30, 2024, segregated by class of loans and type of concession granted:

(Dollars in thousands)

Three months ended June 30, 2024

Other-than-Insignificant Payment Delay Total % of Loan Class (1)

Maturity Extension Other-than-Insignificant Payment Delay Total % of Loan Class (1)

Commercial real estate $ — $ — $ — — %

Commercial & industrial 616 — 616 —

Total commercial 616 — 616 —

Residential Real Estate:

3 unchanged sentences

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents the carrying value of TLMs made during the three and nine months ended September 30, 2023, segregated by class of loans and type of concession granted:

(Dollars in thousands)

Six months ended June 30, 2024

Maturity Extension Other-than-Insignificant Payment Delay Total % of Loan Class (1)

Maturity Extension Total % of Loan Class (1)

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

1 unchanged sentence

Total commercial 13,963 13,963 1

Residential Real Estate:

Residential real estate — 267 267 —

Total $ 13,963 $ 13,963 — %

(1) Percentage of TLMs to the total loans outstanding within the respective loan class.

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

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

Three months ended June 30, 2024

Financial Effect

Other-than-Insignificant Payment Delay:

Residential real estate Provided payment delay for a weighted average period of 6 months

Six months ended June 30, 2024

The following table describes the financial effect of TLMs made during the nine months ended September 30, 2024, segregated by class of loans:

Nine months ended September 30, 2024

Financial Effect

3 unchanged sentences

Residential real estate Provided payment delay for a weighted average period of 6 months

The following table describes the financial effect of TLMs made during the three and nine months ended September 30, 2023, segregated by class of loans:

Financial Effect

Maturity Extension:

Commercial real estate Extended maturity by a weighted average period of 9 months

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

1 unchanged sentence

(Dollars in thousands) Days Past Due

June 30, 2024 Current 30-59 60-89 90 or More Total Past Due Total Loans

September 30, 2024 Current 30-59 60-89 90 or More Total Past Due Total Loans

Commercial real estate

8 unchanged sentences

There were no TLMs made in the previous 12 months for which there was a subsequent payment default.

There were no significant commitments to lend additional funds to borrowers experiencing financial difficulty whose loans were TLMs at June 30, 2024.

There were no significant commitments to lend additional funds to borrowers experiencing financial difficulty whose loans were TLMs at September 30, 2024.

Individually Analyzed Loans

Individually analyzed loans are individually assessed for credit impairment and include nonaccrual commercial loans, TLMs, as well as certain other loans based on the underlying risk characteristics and the discretion of management to individually

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

analyze such loans.

As of June 30, 2024 and December 31, 2023, individually analyzed loans amounted to $ 20.4 million and $ 34.6 million, respectively, all of which were considered collateral dependent.

As of September 30, 2024 and December 31, 2023, individually analyzed loans amounted to $ 19.9 million and $ 34.6 million, respectively, all of which were considered collateral dependent.

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, 2024 December 31, 2023

(Dollars in thousands) September 30, 2024 December 31, 2023

Carrying Value Related Allowance Carrying Value Related Allowance

30 unchanged sentences

The loans are closely watched and are either already on nonaccrual status or may be placed on nonaccrual status when management determines there is uncertainty of collectability.

A “doubtful” loan is

A “doubtful” loan is placed on nonaccrual status and has a high probability of loss, but the extent of the loss is difficult to quantify due to

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

dependency upon collateral having a value that is difficult to determine or upon some near-term event which lacks certainty.

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

12 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, 2024:

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, 2024:

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

4 unchanged sentences

123,469 419,332 595,793 363,292 126,092 460,413 12,702 998 2,102,091

89,158 398,322 625,220 416,934 160,985 487,134 13,234 1,009 2,191,996

Gross charge-offs — — — — — — — — —

3 unchanged sentences

37,209 51,886 138,510 25,400 46,954 174,703 91,117 500 566,279

20,415 52,570 121,051 37,888 48,225 178,984 98,414 528 558,075

Gross charge-offs 24 — — — — — — — 24

2 unchanged sentences

61,973 412,283 780,622 633,280 239,234 395,077 — — 2,522,469

— — — — 880 7,654 — — 8,534

Past due — 288 — — 510 6,149 — — 6,947

Total residential real estate 61,973 412,571 780,622 633,280 239,744 401,226 — — 2,529,416

41,093 419,268 792,516 643,854 245,366 416,436 — — 2,558,533

Gross charge-offs — — — — — — — — —

10,553 18,968 13,186 6,298 2,368 4,580 227,817 12,809 296,579

— — — — 142 795 818 1,569 3,324

Past due — 196 100 — 142 873 899 590 2,800

Total home equity

2 unchanged sentences

3,266 4,774 3,046 2,241 857 3,228 237 — 17,649

19 — — — — 1 — — 20

Past due 41 — 24 9 — 1 — — 75

3,307 4,774 3,070 2,250 857 3,229 237 — 17,724

Gross charge-offs 153 — — — 2 3 — — 158

Total loans $ 160,666 $ 895,688 $ 1,555,941 $ 1,107,519 $ 458,035 $ 1,091,928 $ 344,965 $ 14,360 $ 5,629,102

Total loans, amortized cost $ 236,511 $ 907,727 $ 1,531,281 $ 1,030,520 $ 416,157 $ 1,045,024 $ 332,772 $ 14,897 $ 5,514,889

Total gross charge-offs $ 177 $ — $ — $ — $ 2 $ 3 $ — $ — $ 182

(1) Excludes a $ 19 thousand negative basis adjustment associated with fair value hedges.

See Note 6 for additional disclosure.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

6 unchanged sentences

348,969 598,946 414,898 168,451 181,982 349,986 42,095 1,032 2,106,359

Gross charge-offs — — — — — 373 — — 373

3 unchanged sentences

66,726 125,712 52,471 49,812 73,739 145,361 90,664 587 605,072

Gross charge-offs 37 — — — — — — — 37

2 unchanged sentences

431,563 808,442 666,447 255,554 113,462 320,894 — — 2,596,362

— — — 886 594 6,636 — — 8,116

Past due — — — 886 594 6,636 — — 8,116

Total residential real estate

2 unchanged sentences

24,925 14,997 6,829 2,919 1,982 3,696 241,459 12,591 309,398

— — — — 130 829 1,301 936 3,196

Past due — — — — 130 829 1,301 936 3,196

Total home equity

2 unchanged sentences

6,777 3,530 3,685 1,001 120 3,824 243 — 19,180

21 — — — — — 2 — 23

Past due 21 — — — — — 2 — 23

6,798 3,530 3,685 1,001 120 3,824 245 — 19,203

Gross charge-offs 159 — 8 — — — — — 167

Total Loans $ 878,981 $ 1,551,627 $ 1,144,330 $ 478,623 $ 372,009 $ 831,226 $ 375,764 $ 15,146 $ 5,647,706

Total loans, amortized cost $ 878,981 $ 1,551,627 $ 1,144,330 $ 478,623 $ 372,009 $ 831,226 $ 375,764 $ 15,146 $ 5,647,706

Total gross charge-offs $ 196 $ — $ 8 $ — $ — $ 373 $ — $ — $ 577

6 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, 2024:

The following table presents the activity in the ACL on loans for the three months ended September 30, 2024:

(Dollars in thousands) Commercial Consumer

5 unchanged sentences

Ending Balance $ 25,758 $ 7,403 $ 33,161 $ 8,063 $ 1,086 $ 320 $ 1,406 $ 42,630

The following table presents the activity in the ACL on loans for the six months ended June 30, 2024:

The following table presents the activity in the ACL on loans for the nine months ended September 30, 2024:

(Dollars in thousands) Commercial Consumer

5 unchanged sentences

Ending Balance $ 25,758 $ 7,403 $ 33,161 $ 8,063 $ 1,086 $ 320 $ 1,406 $ 42,630

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

6 unchanged sentences

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

14 unchanged sentences

Interest rate risk management agreements, such as swaps, caps, floors, and collars, are used from time to time as part of the Corporation’s interest rate risk management strategy.

Interest rate swaps are agreements in which the Corporation and another party agree to exchange interest payments (e.g., fixed-rate for variable-rate payments) computed on a notional principal amount.

Interest rate swaps are agreements in which the Corporation and another party agree to exchange interest payments (e.g., fixed-rate for variable-rate payments or variable-rate for fixed-rate payments) computed on a notional principal amount.

Interest rate caps and floors represent options purchased by the Corporation to manage the interest rate paid throughout the term of the option contract.

4 unchanged sentences

Cash Flow Hedging Instruments

As of June 30, 2024 and December 31, 2023, the Corporation had interest rate swap contracts that were designated as cash flow hedges.

In addition, at June 30, 2024, the Corporation had an interest rate collar that was designated as a cash flow hedge.

As of September 30, 2024 and December 31, 2023, the Corporation had interest rate swap contracts that were designated as cash flow hedges.

In addition, at September 30, 2024, the Corporation had an interest rate collar that was designated as a cash flow hedge.

These cash flow hedges were executed to hedge the interest rate risk associated with short-term borrowings.

See Note 9 for additional disclosure on borrowings.

The Corporation also 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.

On March 31, 2023, the Corporation terminated 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 the termination date, 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 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, 2024, the remaining unamortized balance of the loss included in the AOCL component of shareholders’ equity was $ 15.8 million, or $ 11.7 million after tax.

At September 30, 2024, the remaining unamortized balance of the loss included in the AOCL component of shareholders’ equity was $ 13.6 million, or $ 10.1 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.

Fair Value Hedging Instruments

As of September 30, 2024, the Corporation had interest rate swap contracts that were designated as fair value hedges.

The fair value hedges were executed to hedge the interest rate risk associated with a closed-pool of fixed-rate residential real estate loans (the “hedged item”).

See Note 4 for additional disclosure on residential real estate loans.

The hedged item is measured at fair value through a basis adjustment recognized on the balance sheet.

The changes in fair

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

value of derivatives designated as fair value hedges, as well as the offsetting changes in fair value of the hedged item are recognized in earnings.

Loan Related Derivative Contracts

3 unchanged sentences

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

For interest rate swaps, the third party

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

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

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

15 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, 2024 December 31, 2023

(Dollars in thousands) September 30, 2024 December 31, 2023

Fair Value Fair Value

5 unchanged sentences

Interest rate collar 50,000 — 198 — — —

Derivatives Designated as Fair Value Hedging Instruments:

Interest rate risk management contracts:

Interest rate swaps 100,000 33 14 — — —

Derivatives not Designated as Hedging Instruments:

16 unchanged sentences

Net amounts $ 37,047 $ 38,545 $ 51,966 $ 52,814

(1) The fair value of derivative assets includes accrued interest receivable of $ 232 thousand and $ 239 thousand, respectively, at June 30, 2024 and December 31, 2023.

There was no accrued interest payable included in the fair value of derivative liabilities at June 30, 2024 or at December 31, 2023.

(1) The fair value of derivative assets includes accrued interest receivable of $ 218 thousand and $ 239 thousand, respectively, at September 30, 2024 and December 31, 2023.

There was no accrued interest payable included in the fair value of derivative liabilities at September 30, 2024 or at December 31, 2023.

(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, 2024 2023 2024 2023

Three Months Nine Months

Periods ended September 30, 2024 2023 2024 2023

Derivatives Designated as Cash Flow Hedging Instruments:

4 unchanged sentences

Total ($ 1,108 ) $ 2,833 $ 3,912 $ 8,345

For derivatives designated as cash flow hedging instruments, see Note 14 for additional disclosure pertaining to the amounts and location of reclassifications from AOCL into earnings.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

1 unchanged sentence

(Dollars in thousands) Amount of Gain (Loss)

Recognized in Noninterest Income

Three Months Six Months

Periods ended June 30, Statement of Income Location 2024 2023 2024 2023

Recognized in the Unaudited Consolidated Statements of Income

Three Months Nine Months

Periods ended September 30, Statement of Income Location 2024 2023 2024 2023

Derivatives Designated as Cash Flow Hedging Instruments:

Interest rate risk management contracts:

Interest rate swaps Interest income:

Interest and fees on loans ( 2,164 ) ( 2,164 ) ( 6,441 ) ( 7,065 )

Interest rate swaps Interest expense:

FHLB advances

487 631 1,475 1,022

Derivatives Designated as Fair Value Hedging Instruments:

Interest rate risk management contracts:

Interest rate swaps Interest income:

Interest and fees on loans 19 — 19 —

Hedged item Interest income:

Interest and fees on loans ( 19 ) — ( 19 ) —

Derivatives not Designated as Hedging Instruments:

10 unchanged sentences

Total ($ 2,003 ) ($ 12 ) ($ 4,516 ) ($ 3,777 )

For derivatives designated as cash flow hedging instruments in the table above, the amounts represent the pre-tax reclassifications from AOCL into earnings.

Note 7 - Fair Value Measurements

15 unchanged sentences

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

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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,

2024 December 31,

4 unchanged sentences

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

Changes in fair value amounted to decreases in mortgage banking revenues of $ 22 thousand and $ 91 thousand, respectively, for the three and six months ended June 30, 2024.

This compared to a decrease in mortgage banking revenues of $ 6 thousand for the three months ended

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

June 30, 2023 and an increase of $ 18 thousand for the six months ended June 30, 2023.

There were no mortgage loans held for sale 90 days or more past due as of June 30, 2024 and December 31, 2023.

Changes in fair value amounted to decreases in mortgage banking revenues of $ 31 thousand and $ 122 thousand, respectively, for the three and nine months ended September 30, 2024.

This compared to decreases in mortgage banking revenues of $ 39 thousand and $ 21 thousand, respectively, for the three and nine months ended September 30, 2023.

There were no mortgage loans held for sale 90 days or more past due as of September 30, 2024 and December 31, 2023.

Valuation Techniques

3 unchanged sentences

such items are classified as Level 1.

There were no Level 1 debt securities held at June 30, 2024 and December 31, 2023.

There were no Level 1 debt securities held at September 30, 2024 and December 31, 2023.

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

3 unchanged sentences

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

There were no Level 3 debt securities held at June 30, 2024 and December 31, 2023.

There were no Level 3 debt securities held at September 30, 2024 and December 31, 2023.

Mortgage Loans Held for Sale

9 unchanged sentences

Collateral dependent individually analyzed loans are categorized as Level 3.

Loan Servicing Rights

Loans sold with the retention of servicing result in the recognition of loan servicing rights.

Loan servicing rights are included in other assets in the Unaudited Consolidated Balance Sheets and are amortized as an offset to mortgage banking revenues over the estimated period of servicing.

Loan servicing rights are evaluated quarterly for impairment based on their fair value.

Impairment exists if the carrying value exceeds the estimated fair value.

Impairment is measured on an aggregated basis by stratifying the loan servicing rights based on homogeneous characteristics such as note rate and loan type.

The fair value is estimated using an independent valuation model that estimates the present value of expected cash flows, incorporating assumptions for discount rates and prepayment rates.

Any impairment is recognized through a valuation allowance and as a reduction to mortgage banking revenues.

Loan servicing rights are categorized as Level 3.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

5 unchanged sentences

However, the credit valuation adjustments utilize Level 3 inputs.

As of June 30, 2024 and December 31, 2023, 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, 2024 and December 31, 2023, the Corporation has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation.

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

4 unchanged sentences

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

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Items Recorded at Fair Value on a Recurring Basis

3 unchanged sentences

(Level 2) Significant Unobservable Inputs

June 30, 2024

September 30, 2024

Available for sale debt securities:

6 unchanged sentences

718,907 — 718,907 —

Obligations of states and political subdivisions

Individual name issuer trust preferred debt securities

7 unchanged sentences

Total liabilities at fair value on a recurring basis $ 38,545 $ — $ 38,545 $ —

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

20 unchanged sentences

Items Recorded at Fair Value on a Nonrecurring Basis

There were no assets written down to fair value during the six months ended June 30, 2024.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents the carrying value of assets held at September 30, 2024, which were written down to fair value

during the nine months ended September 30, 2024:

(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 $ 9,976 $ — $ — $ 9,976

Loan servicing rights 7,773 — — 7,773

Total assets at fair value on a nonrecurring basis $ 17,749 $ — $ — $ 17,749

The following table presents the carrying value of assets held at December 31, 2023, which were written down to fair value during the year ended December 31, 2023.

5 unchanged sentences

Total assets at fair value on a nonrecurring basis $ 16,562 $ — $ — $ 16,562

The following table presents valuation techniques and unobservable inputs for assets measured at fair value on a nonrecurring

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following tables present 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)

September 30, 2024

Collateral dependent individually analyzed loan $ 9,976 Appraisals of collateral Discount for costs to sell 2 %

Appraisal adjustments 0 %

Loan servicing rights 7,773 Discounted cash flow Discount rates 10 % - 14 % ( 10 %)

Prepayment rates 5 % - 42 % ( 9 %)

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

8 unchanged sentences

(Dollars in thousands)

June 30, 2024 Carrying Amount Total

September 30, 2024 Carrying Amount Total

Fair Value Quoted Prices in Active Markets for Identical Assets

5 unchanged sentences

5,472,240 5,297,579 — — 5,297,579

57,439 57,439 — 57,439 —

Investment in BOLI

6 unchanged sentences

Junior subordinated debentures 22,681 19,254 — 19,254 —

(1) The estimated fair value excludes a $ 19 thousand negative basis adjustment associated with fair value hedges.

See Note 6 for additional disclosure.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

18 unchanged sentences

The following table presents a summary of deposits:

(Dollars in thousands) June 30,

(Dollars in thousands) September 30,

2024 December 31,

10 unchanged sentences

Total deposits $ 5,171,890 $ 5,348,160

(1) Includes wholesale brokered time deposit balances of $ 339.2 million and $ 654.1 million, respectively, as of June 30, 2024 and December 31, 2023.

(1) Includes wholesale brokered time deposit balances of $ 380.0 million and $ 654.1 million, respectively, as of September 30, 2024 and December 31, 2023.

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

(Dollars in thousands) Scheduled Maturity Weighted Average Rate

July 1, 2024 to December 31, 2024 $ 963,519 4.61 %

October 1, 2024 to December 31, 2024 $ 566,377 4.41 %

2025 860,815 4.46

3 unchanged sentences

2029 and thereafter 4,884 2.75

Balance at June 30, 2024 $ 1,504,056 4.35 %

Time certificates of deposit in denominations of $250 thousand or more totaled $ 273.3 million and $ 271.2 million, respectively, at June 30, 2024 and December 31, 2023.

Balance at September 30, 2024 $ 1,587,623 4.32 %

Time certificates of deposit in denominations of $250 thousand or more totaled $ 330.9 million and $ 271.2 million, respectively, at September 30, 2024 and December 31, 2023.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 9 - Borrowings

Advances payable to the FHLB amounted to $ 1.6 billion and $ 1.2 billion, respectively, at June 30, 2024 and December 31, 2023.

At June 30, 2024, the Corporation has interest rate swaps with a notional amount of $ 120.0 million, as well as an interest rate collar with a notional amount of $ 50.0 million, that were designated as cash flow hedges to hedge the interest rate risk associated with short-term FHLB advances.

Advances payable to the FHLB amounted to $ 1.3 billion and $ 1.2 billion, respectively, at September 30, 2024 and December 31, 2023.

At September 30, 2024, the Corporation had interest rate swaps with a notional amount of $ 120.0 million, as well as an interest rate collar with a notional amount of $ 50.0 million, that were designated as cash flow hedges to hedge the interest rate risk associated with short-term FHLB advances.

See Note 6 for additional disclosure on derivatives.

As of June 30, 2024 and December 31, 2023, the Bank had access to a $ 40.0 million unused line of credit with the FHLB.

Additionally, the Bank had standby letters of credit with the FHLB of $ 66.0 million and $ 65.0 million, respectively, at June 30, 2024 and December 31, 2023.

The standby letters of credit collateralize institutional deposits.

The Bank had remaining available borrowing capacity of $ 801.5 million and $ 1.1 billion, respectively, with the FHLB at June 30, 2024 and December 31, 2023.

The Bank had available borrowing capacity of $ 931.0 million and $ 1.1 billion, respectively, with the FHLB at September 30, 2024 and December 31, 2023.

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, 2024:

In addition, the Bank had access to a $ 40.0 million unused line of credit with the FHLB at both September 30, 2024 and December 31, 2023.

Furthermore, the Bank had standby letters of credit with the FHLB of $ 66.0 million and $ 65.0 million, respectively, at September 30, 2024 and December 31, 2023, to collateralize institutional deposits.

The following table presents maturities and weighted average interest rates on FHLB advances outstanding as of September 30, 2024:

(Dollars in thousands) Scheduled

Maturity Weighted

July 1, 2024 to December 31, 2024 $ 700,000 5.43 %

October 1, 2024 to December 31, 2024 $ 450,000 5.38 %

2025 475,000 5.06

3 unchanged sentences

2029 and thereafter 80,000 3.82

Balance at June 30, 2024 $ 1,550,000 5.05 %

Balance at September 30, 2024 $ 1,300,000 4.96 %

Note 10 - Shareholders' Equity

Stock Repurchase Program

The 2024 Repurchase Program authorizes the repurchase of up to 850,000 shares, or approximately 5 %, of the Corporation’s outstanding common stock.

The 2024 Repurchase Program authorizes the repurchase of up to 850,000 shares, or approximately 5 %, of the Bancorp’s outstanding common stock.

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

1 unchanged sentence

The 2024 Repurchase Program commenced on January 1, 2024 and expires on December 31, 2024, and may be modified, suspended, or discontinued at any time.

As of June 30, 2024, no shares have been repurchased under the 2024 Repurchase Program.

As of September 30, 2024, no shares have been repurchased under the 2024 Repurchase Program.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Regulatory Capital Requirements

Capital levels at June 30, 2024 exceeded the regulatory minimum levels to be considered “well capitalized.”

Capital levels at September 30, 2024 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, 2024

September 30, 2024

Total Capital (to Risk-Weighted Assets):

26 unchanged sentences

The Corporation and the Bank must maintain the capital conservation buffer to avoid restrictions on the ability to pay dividends and discretionary bonuses.

The Corporation’s and the Bank’s capital levels exceeded the minimum regulatory capital requirements plus the capital conservation buffer at June 30, 2024 and December 31, 2023.

The Corporation’s and the Bank’s capital levels exceeded the minimum regulatory capital requirements plus the capital conservation buffer at September 30, 2024 and December 31, 2023.

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, 2024 and December 31, 2023, $ 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, 2024 and December 31, 2023, $ 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.

5 unchanged sentences

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

For the three months ended June 30, 2024 2023

For the three months ended September 30, 2024 2023

(Dollars in thousands) Revenue (1)

11 unchanged sentences

Loan related derivative income

126 — 1,082 —

Income from bank-owned life insurance

4 unchanged sentences

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

For the six months ended June 30, 2024 2023

For the nine months ended September 30, 2024 2023

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

15 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, 2024 2023 2024 2023

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2024 2023 2024 2023

Revenue recognized at a point in time:

11 unchanged sentences

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 $ 5.9 million and $ 5.5 million, respectively, at June 30, 2024 and December 31, 2023 and were included in other assets in the Unaudited Consolidated Balance Sheets.

Receivables amounted to $ 5.9 million and $ 5.5 million, respectively, at September 30, 2024 and December 31, 2023 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, 2024 and December 31, 2023 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 balances of contract liabilities were insignificant at both September 30, 2024 and December 31, 2023 and were included in other liabilities in the Unaudited Consolidated Balance Sheets.

For commission and incentive costs 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 $ 2.0 million, respectively at June 30, 2024 and December 31, 2023 and were included in other assets in the Unaudited Consolidated Balance Sheets.

The carrying value of contract cost assets amounted to $ 2.0 million at both September 30, 2024 and December 31, 2023 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.

4 unchanged sentences

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

Work on the qualified pension plan termination process has commenced and the qualified pension plan’s assets are expected to be distributed in 2025, pending completion of applicable regulatory approvals.

Work on the qualified pension plan termination process continues to progress and the qualified pension plan’s assets are expected to be distributed in 2025, pending completion of applicable regulatory approvals.

The qualified pension plan liability is expected to be settled in 2025 through a combination of lump sum payments to participants and purchase of a group annuity contract from a highly-rated insurance company.

4 unchanged sentences

(Dollars in thousands) Qualified Pension Plan Non-Qualified Retirement Plans

Three Months Six Months Three Months Six Months

Periods ended June 30, 2024 2023 2024 2023 2024 2023 2024 2023

Three Months Nine Months Three Months Nine Months

Periods ended September 30, 2024 2023 2024 2023 2024 2023 2024 2023

Net Periodic Benefit Cost:

13 unchanged sentences

Qualified Pension Plan Non-Qualified Retirement Plans

For the six months ended June 30, 2024 2023 2024 2023

For the nine months ended September 30, 2024 2023 2024 2023

Measurement date Dec 31, 2023 Dec 31, 2022 Dec 31, 2023 Dec 31, 2022

25 unchanged sentences

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

Three months ended June 30, 2024 2023 2024 2023 2024 2023

Three months ended September 30, 2024 2023 2024 2023 2024 2023

Net interest income $ 32,262 $ 33,741 $ — $ 10 $ 32,262 $ 33,751

13 unchanged sentences

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

Six months ended June 30, 2024 2023 2024 2023 2024 2023

Nine months ended September 30, 2024 2023 2024 2023 2024 2023

Net interest income $ 95,512 $ 104,407 $ — $ 37 $ 95,512 $ 104,444

13 unchanged sentences

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

Three months ended June 30, 2024 2023

Three months ended September 30, 2024 2023

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

4 unchanged sentences

Net cash flow hedge losses reclassified into earnings 1,677 ( 427 ) 1,250 1,533 ( 369 ) 1,164

1,645 ( 419 ) 1,226 1,875 ( 449 ) 1,426

Net change in fair value of cash flow hedges ( 1,487 ) 379 ( 1,108 ) 3,729 ( 896 ) 2,833

1 unchanged sentence

Amortization of net actuarial losses 31 ( 9 ) 22 59 ( 14 ) 45

30 ( 7 ) 23 60 ( 15 ) 45

Total other comprehensive income (loss) $ 39,152 ($ 9,984 ) $ 29,168 ($ 39,351 ) $ 9,444 ($ 29,907 )

(1) The pre-tax amounts reclassified into earnings in the Unaudited Consolidated Statements of Income included reductions of $ 2.1 million included in interest and fees on loans for both the three months ended June 30, 2024 and 2023, as well as reductions of $ 495 thousand and $ 264 thousand, respectively, included 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, 2024 2023

Nine months ended September 30, 2024 2023

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

5 unchanged sentences

Net cash flow hedge losses reclassified into earnings 4,966 ( 1,264 ) 3,702 6,043 ( 1,451 ) 4,592

3,291 ( 839 ) 2,452 4,510 ( 1,082 ) 3,428

Net change in fair value of cash flow hedges 5,249 ( 1,337 ) 3,912 10,981 ( 2,636 ) 8,345

1 unchanged sentence

Amortization of net actuarial losses 92 ( 24 ) 68 178 ( 43 ) 135

61 ( 15 ) 46 119 ( 29 ) 90

Total other comprehensive (loss) income ($ 6,932 ) $ 1,759 ($ 5,173 ) $ 11,807 ($ 2,834 ) $ 8,973

(1) For the six months ended June 30, 2024 and 2023, the pre-tax amounts reclassified into earnings in the Unaudited Consolidated Statements of Income included reductions of $ 4.3 million and $ 4.9 million, respectively, included in interest and fees on loans, as well as reductions of $ 988 thousand and $ 391 thousand, respectively, included in FHLB interest expense.

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

Total other comprehensive income (loss) $ 32,207 ($ 8,212 ) $ 23,995 ($ 27,544 ) $ 6,610 ($ 20,934 )

The following tables present the changes in AOCL by component, net of tax:

(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, 2024

Balance at March 31, 2024 ($ 127,579 ) ($ 12,414 ) ($ 8,920 ) ($ 148,913 )

Other comprehensive income before reclassifications 749 589 — 1,338

For the three months ended September 30, 2024

Balance at June 30, 2024 ($ 126,830 ) ($ 10,599 ) ($ 8,897 ) ($ 146,326 )

Other comprehensive income (loss) before reclassifications 30,254 ( 2,358 ) — 27,896

Amounts reclassified from AOCL

— 1,250 22 1,272

Net other comprehensive income 749 1,815 23 2,587

Balance at June 30, 2024 ($ 126,830 ) ($ 10,599 ) ($ 8,897 ) ($ 146,326 )

Net other comprehensive income (loss) 30,254 ( 1,108 ) 22 29,168

Balance at September 30, 2024 ($ 96,576 ) ($ 11,707 ) ($ 8,875 ) ($ 117,158 )

(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, 2024

For the nine months ended September 30, 2024

Balance at December 31, 2023 ($ 116,591 ) ($ 15,619 ) ($ 8,943 ) ($ 141,153 )

Other comprehensive (loss) income before reclassifications ( 10,239 ) 2,568 — ( 7,671 )

Other comprehensive income before reclassifications 20,015 210 — 20,225

Amounts reclassified from AOCL

— 3,702 68 3,770

Net other comprehensive (loss) income ( 10,239 ) 5,020 46 ( 5,173 )

Balance at June 30, 2024 ($ 126,830 ) ($ 10,599 ) ($ 8,897 ) ($ 146,326 )

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Net other comprehensive income 20,015 3,912 68 23,995

Balance at September 30, 2024 ($ 96,576 ) ($ 11,707 ) ($ 8,875 ) ($ 117,158 )

(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 )

2 unchanged sentences

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 )

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 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

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

Amounts reclassified from AOCL

— 4,592 135 4,727

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

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

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 )

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, 2024 2023 2024 2023

Three Months Nine Months

Periods ended September 30, 2024 2023 2024 2023

Earnings for basic and diluted earnings per common share:

10 unchanged sentences

$ 0.64 $ 0.65 $ 1.91 $ 2.06

Weighted average common stock equivalents, not included in common stock equivalents above because they were anti-dilutive, totaled 458,539 and 459,100 , respectively, for the three and six months ended June 30, 2024, compared to 478,490 and 377,989 , respectively, for the same periods in 2023.

Weighted average common stock equivalents, not included in common stock equivalents above because they were anti-dilutive, totaled 403,995 and 450,943 , respectively, for the three and nine months ended September 30, 2024, compared to 468,524 and 452,472 , respectively, for the same periods in 2023.

Note 16 - Commitments and Contingencies

1 unchanged sentence

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

These financial

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

instruments include commitments to extend credit and standby letters of credit, as well as derivative financial instruments, such as mortgage loan commitments, loan related derivative contracts and interest rate risk management contracts.

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

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

5 unchanged sentences

Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.

Since some of the commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements.

Since some of the commitments are expected to expire without being drawn upon, total commitment

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

amounts do not necessarily represent future cash requirements.

Each borrower’s creditworthiness is evaluated on a case-by-case basis.

6 unchanged sentences

Most standby letters of credit extend for one year.

At June 30, 2024 and December 31, 2023, there were no liabilities to beneficiaries resulting from standby letters of credit.

At September 30, 2024 and December 31, 2023, 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.

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,

2024 December 31,

4 unchanged sentences

The ACL on unfunded commitments is management’s estimate of expected lifetime credit losses over the expected contractual term in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Corporation.

The activity in the ACL on unfunded commitments for the three months ended June 30, 2024 is presented below:

The activity in the ACL on unfunded commitments for the three months ended September 30, 2024 is presented below:

(Dollars in thousands) Commercial Consumer

3 unchanged sentences

Ending Balance $ 830 $ 777 $ 1,607 $ 22 $ — $ 11 $ 11 $ 1,640

The activity in the ACL on unfunded commitments for the six months ended June 30, 2024 is presented below:

The activity in the ACL on unfunded commitments for the nine months ended September 30, 2024 is presented below:

(Dollars in thousands) Commercial Consumer

3 unchanged sentences

Ending Balance $ 830 $ 777 $ 1,607 $ 22 $ — $ 11 $ 11 $ 1,640

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

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

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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

(Dollars in thousands) Commercial Consumer

8 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements