0000776901false2024Q3December 31BORROWINGS On March 15, 2024 the Company fully redeemed its outstanding subordinated debentures with an aggregate principal amount of $50.0 million. 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目录

美国
证券交易委员会
华盛顿特区20549
___________________________________________________ 
表格 10-Q
___________________________________________________
☒根据13或15(d)条规定的季度报告
1934年证券交易法
截至季度结束 2024年9月30日
or
☐根据1934年证券交易法第13或15(d)节的转型报告书
从至过渡期
委员会档案号码:1-9047
___________________________________________________
Independent Bank Corp.
(根据其章程规定的注册人准确名称)
 ___________________________________________________
万事达04-2870273
（国家或其他管辖区的
公司成立或组织）		（IRS雇主
唯一识别号码）
办公地址：2036 Washington Street,汉诺威万事达02339
邮寄地址:288 Union Street,罗克兰德万事达02370
（总部地址，包括邮政编码）
(781) 878-6100
(注册人电话号码，包括区号)

在法案第12(b)条的规定下注册的证券：
各类别名称交易代码在其上注册的交易所的名称
普通股，每股价值0.01美元INDB纳斯达克全球精选市场

请勾选以下内容。申报人是否（1）在过去12个月内（或申报人需要报告这些报告的时间较短的期间内）已提交证券交易法规定的第13或15（d）条要求提交的所有报告；以及（2）过去90天内已被要求提交此类报告。    Yes x    否  o
请勾选以下内容。申报人是否已在过去12个月内（或申报人需要提交此类文件的时间较短的期间内）逐个以电子方式提交了根据规则405提交的互动数据文件。这章的交易中规定。    Yes  x    否  o

目录
发行普通股以供股票计划、员工购股计划
 
大型加速存取器x快速提交者☐
非加速申报人☐较小的报告公司☐
新兴成长公司☐
如果公司无法符合证券交易法第13(a)条规定，使用延长过渡期来遵守任何新的或修订的财务会计准则，请在复选框中指示。 o
用复选标记表明注册人是否为空壳公司（定义见《交易法》第12b-2条）。是的☐没有☒
截至2024年11月6日，发行人已发行股票 42,492,785 ，每股面值为$0.01。




目录
目录
 页码
合并财务报表附注 - 2024年9月30日
3
目录
4
目录
第一部分.财务信息
项目1：基本报表

独立银行股份有限公司。
基本报表
(未经审计—单位为千美元)
 
9月30日
2024		十二月三十一日
2023
资产
现金和存放在银行的款项$198,987 $178,861 
与银行进行的利息收入存款225,465 45,469 
证券
交易4,410 4,987 
股权21,639 22,510 
可供出售 (摊销成本 $1,334,733 和 $1,459,862)
1,247,211 1,334,256 
持有至到期 (公允价值 $1,377,465 和 $1,417,608)
1,492,315 1,569,107 
证券总计 2,765,575 2,930,860 
持有待售贷款 (按公允价值计量)16,259 6,368 
贷款
商业和工业1,577,861 1,579,986 
商业房地产8,162,020 8,041,508 
商业施工742,042 849,586 
小型企业270,018 251,956 
住宅房地产2,441,859 2,424,754 
房屋净值-第一位498,193 518,706 
房屋净值-次要位置632,242 578,920 
其他消费者36,572 32,654 
总贷款14,360,807 14,278,070 
减：信贷损失准备(163,696)(142,222)
净贷款14,197,111 14,135,848 
联邦住房贷款银行股份29,926 43,557 
银行房屋及设备账面价值净额192,197 193,049 
商誉985,072 985,072 
其他无形资产13,701 18,190 
人寿保险单的现金转出价值302,132 297,387 
其他资产481,692 512,712 
资产总额$19,408,117 $19,347,373 
负债和股东权益
存款
人形机器人-轴承非利息支票账户$4,519,492 $4,567,083 
储蓄和利息支票账户5,188,303 5,298,913 
货币市场2,969,809 2,818,072 
定期存款2,763,419 2,181,479 
存款总额15,441,023 14,865,547 
借款
联邦住房贷款银行借款600,521 1,105,541 
子公司次级次级债券（减少未摊销的债务发行成本为$29 和 $30)
62,859 62,858 
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次级债券（减去未摊销的债务发行成本$20)
— 49,980 
借款总额663,380 1,218,379 
其他负债326,566 368,196 
负债合计16,430,969 16,452,122 
承诺和 contingencies— — 
股东权益
优先股，$0.00010.01 面值，已授权：股；已发行：2024年 – 1,000,000 股票, 流通股: 无
— — 
普通股，每股面值为 $0.0001；0.01 面值，已授权：股；已发行：2024年 – 75,000,000股票，
已发行股份和流通股份: 42,480,765 年9月30日及 42,873,187 2023年12月31日股票数量（包括 202,940 和 162,812 未取得的参与限制性股票奖励的股份数分别是
423 427 
托管信托持有的股份价值为成本价值： 79,686 2024年9月30日的股份数为 80,222 2023年12月31日的股份数为
(3,399)(3,298)
长期报酬计划和其他养老福利责任3,399 3,298 
股票认购应收款项。1,907,012 1,932,163 
保留盈余1,146,915 1,077,488 
归属于母公司股东权益的累积其他综合收益（扣除所得税后）(77,202)(114,827)
股东权益总额2,977,148 2,895,251 
负债和股东权益合计$19,408,117 $19,347,373 
The accompanying notes are an integral part of these unaudited consolidated financial statements.

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INDEPENDENT BANK CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited—Dollars in thousands, except per share data)
Three Months EndedNine Months Ended
September 30September 30
 2024202320242023
Interest income
Interest and fees on loans$200,597 $187,145 $591,097 $537,830 
Taxable interest and dividends on securities14,064 14,817 42,287 45,707 
Nontaxable interest and dividends on securities1 1 4 4 
Interest on loans held for sale227 60 530 133 
Interest on federal funds sold and short-term investments1,635 905 2,515 4,882 
Total interest and dividend income216,524 202,928 636,433 588,556 
Interest expense
Interest on deposits66,985 40,713 182,774 95,297 
Interest on borrowings7,836 12,335 36,591 31,835 
Total interest expense74,821 53,048 219,365 127,132 
Net interest income141,703 149,880 417,068 461,424 
Provision for credit losses19,500 5,500 28,750 17,750 
Net interest income after provision for credit losses122,203 144,380 388,318 443,674 
Noninterest income
Deposit account fees6,779 5,936 19,339 17,360 
Interchange and ATM fees4,970 4,808 14,175 13,470 
Investment management and advisory11,033 10,246 31,961 30,373 
Mortgage banking income972 739 3,088 1,717 
Increase in cash surrender value of life insurance policies2,006 1,983 5,934 5,777 
Gain on life insurance benefits— 1,924 263 2,111 
Loan level derivative income1,125 842 1,678 2,525 
Other noninterest income6,664 7,065 19,384 19,209 
Total noninterest income33,549 33,543 95,822 92,542 
Noninterest expenses
Salaries and employee benefits60,108 54,797 174,444 165,747 
Occupancy and equipment expenses12,734 12,321 38,673 37,528 
Data processing and facilities management2,510 2,404 7,398 7,461 
Software and subscriptions4,736 3,324 13,305 9,407 
FDIC assessment2,628 2,727 8,304 8,011 
Consulting expense1,429 2,753 4,854 6,765 
Debit card expense614 2,319 4,694 6,707 
Amortization of intangible assets1,460 1,712 4,488 5,243 
Other noninterest expenses14,224 15,425 43,784 45,129 
Total noninterest expenses100,443 97,782 299,944 291,998 
Income before income taxes55,309 80,141 184,196 244,218 
Provision for income taxes12,362 19,333 42,149 59,519 
Net income$42,947 $60,808 $142,047 $184,699 
Basic earnings per share$1.01 $1.38 $3.34 $4.16 
Diluted earnings per share$1.01 $1.38 $3.34 $4.16 
Weighted average common shares (basic)42,481,441 44,135,487 42,501,199 44,419,731 
Common share equivalents11,622 11,417 9,602 12,851 
Weighted average common shares (diluted)42,493,063 44,146,904 42,510,801 44,432,582 
Cash dividends declared per common share$0.57 $0.55 $1.71 $1.65 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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INDEPENDENT BANK CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited—Dollars in thousands)
 
 Three Months EndedNine Months Ended
September 30September 30
 2024202320242023
Net income$42,947 $60,808 $142,047 $184,699 
Other comprehensive income (loss), net of tax
Net change in fair value of securities available for sale28,286 (7,921)28,670 (2,304)
Net change in fair value of cash flow hedges8,753 202 9,000 4,917 
Net change in other comprehensive income for defined benefit postretirement plans(16)(92)(45)(275)
Total other comprehensive income (loss)37,023 (7,811)37,625 2,338 
Total comprehensive income $79,970 $52,997 $179,672 $187,037 
The accompanying notes are an integral part of these unaudited consolidated financial statements.

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INDEPENDENT BANK CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Three Months Ended September 30, 2024 and 2023
(Unaudited—Dollars in thousands, except per share data)
Common Stock OutstandingCommon StockValue of Shares Held in Rabbi Trust at CostDeferred Compensation ObligationAdditional Paid in CapitalRetained EarningsAccumulated Other
Comprehensive Income (Loss)		Total
Balance June 30, 202442,469,867$423 $(3,353)$3,353 $1,904,869 $1,128,182 $(114,225)$2,919,249 
Net income— — — — — 42,947 — 42,947 
Other comprehensive income— — — — — — 37,023 37,023 
Common dividend declared ($0.57 per share)
— — — — — (24,214)— (24,214)
Stock based compensation— — — — 1,514 — — 1,514 
Restricted stock awards issued, net of awards surrendered(2,559)— — — (20)— — (20)
Shares issued under direct stock purchase plan13,457 — — — 649 — — 649 
Deferred compensation and other retirement benefit obligations— — (46)46 — — — — 
Balance September 30, 202442,480,765 $423 $(3,399)$3,399 $1,907,012 $1,146,915 $(77,202)$2,977,148 
Balance June 30, 202344,130,901 $440 $(3,289)$3,289 $1,997,674 $1,009,735 $(152,935)$2,854,914 
Net income— — — — — 60,808 — 60,808 
Other comprehensive loss— — — — — — (7,811)(7,811)
Common dividend declared ($0.55 per share)
— — — — — (24,277)— (24,277)
Proceeds from exercise of stock options, net of cash paid1,572 — — — 1 — — 1 
Stock based compensation— — — — 1,128 — — 1,128 
Restricted stock awards issued, net of awards surrendered(4,838)— — — (26)— — (26)
Shares issued under direct stock purchase plan14,338 — — — 671 — — 671 
Deferred compensation and other retirement benefit obligations— — (46)46 — — — — 
Balance September 30, 202344,141,973 $440 $(3,335)$3,335 $1,999,448 $1,046,266 $(160,746)$2,885,408 

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INDEPENDENT BANK CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Nine Months Ended September 30, 2024 and 2023
(Unaudited—Dollars in thousands, except per share data)

Common Stock OutstandingCommon StockValue of Shares Held in Rabbi 
Trust at Cost		Deferred Compensation ObligationAdditional Paid in CapitalRetained EarningsAccumulated Other
Comprehensive Income (Loss)		Total
Balance December 31, 202342,873,187$427 $(3,298)$3,298 $1,932,163 $1,077,488 $(114,827)$2,895,251 
Net income— — — — — 142,047 — 142,047 
Other comprehensive income— — — — — — 37,625 37,625 
Common dividend declared ($1.71 per share)
— — — — — (72,620)— (72,620)
Stock based compensation— — — — 4,953 — — 4,953 
Restricted stock awards issued, net of awards surrendered102,754 1 — — (782)— — (781)
Shares issued under direct stock purchase plan37,090 — — — 1,970 — — 1,970 
Shares repurchased under share repurchase program (1)(532,266)(5)— — (31,292)— — (31,297)
Deferred compensation and other retirement benefit obligations— — (101)101 — — — — 
Balance September 30, 202442,480,765 $423 $(3,399)$3,399 $1,907,012 $1,146,915 $(77,202)$2,977,148 
Balance December 31, 202245,641,238 $455 $(3,227)$3,227 $2,114,888 $934,442 $(163,084)$2,886,701 
Net income— — — — — 184,699 — 184,699 
Other comprehensive income— — — — — — 2,338 2,338 
Common dividend declared ($1.65 per share)
— — — — — (72,875)— (72,875)
Proceeds from exercise of stock options, net of cash paid3,238 — — — 81 — — 81 
Stock based compensation— — — — 4,721 — — 4,721 
Restricted stock awards issued, net of awards surrendered81,721 1 — — (1,137)— — (1,136)
Shares issued under direct stock purchase plan32,809 — — — 1,990 — — 1,990 
Shares repurchased under share repurchase program (1)(1,617,033)(16)— — (121,095)— — (121,111)
Deferred compensation and other retirement benefit obligations— — (108)108 — — — — 
Balance September 30, 202344,141,973 $440 $(3,335)$3,335 $1,999,448 $1,046,266 $(160,746)$2,885,408 
(1)     Inclusive of $311,000 and $1.2 million impact of excise tax attributable to shares repurchased under the share repurchase program during the nine months ended September 30, 2024 and September 30, 2023, respectively.
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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INDEPENDENT BANK CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited—Dollars in thousands)
 
 Nine Months Ended
September 30
20242023
Cash flow from operating activities
Net income$142,047 $184,699 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization31,500 27,575 
Change in unamortized net loan costs and fees(1,070)(1,199)
Accretion of acquired loans(393)(1,057)
Provision for credit losses28,750 17,750 
Deferred income tax expense5,102 13 
Net gain on equity securities(1,187)(272)
Net loss on bank premises and equipment68 304 
Realized gain on sale leaseback transaction— (193)
Stock based compensation4,953 4,721 
Increase in cash surrender value of life insurance policies(5,934)(5,786)
Gain on life insurance benefits(263)(2,111)
Operating lease payments(10,214)(10,381)
Operating lease termination payments(389)— 
Change in fair value on loans held for sale(167)31 
Net change in:
Trading assets577 (588)
Loans held for sale(9,724)(1,226)
Other assets31,942 (2,317)
Other liabilities(28,567)13,526 
Total adjustments44,984 38,790 
Net cash provided by operating activities187,031 223,489 
Cash flows provided by (used in) investing activities
Purchases of equity securities(498)(440)
Proceeds from maturities and principal repayments of securities available for sale172,701 42,087 
Purchases of securities available for sale(47,776)— 
Proceeds from maturities and principal repayments of securities held to maturity79,843 114,698 
Net redemptions (purchases) of Federal Home Loan Bank stock13,631 (38,660)
Investments in low income housing projects(22,245)(20,086)
Purchases of life insurance policies(114)(114)
Proceeds from life insurance policies1,566 3,934 
Net increase in loans(88,550)(322,904)
Purchases of bank premises and equipment(14,052)(9,541)
Proceeds from the sale of bank premises and equipment32 104 
Net cash provided by (used in) investing activities94,538 (230,922)
Cash flows used in financing activities
Net increase in time deposits581,845 816,896 
Net decrease in other deposits(6,464)(1,636,503)
Net (repayments of) advances from Federal Home Loan Bank borrowings(505,000)887,000 
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Repayments of subordinated debentures(50,000)— 
Net proceeds from exercise of stock options— 80 
Restricted stock awards issued, net of awards surrendered(813)(1,143)
Proceeds from shares issued under direct stock purchase plan1,957 1,977 
Payments for shares repurchased under share repurchase program(30,986)(119,951)
Common dividends paid(71,986)(73,728)
Net cash used in financing activities(81,447)(125,372)
Net increase (decrease) in cash and cash equivalents200,122 (132,805)
Cash and cash equivalents at beginning of year224,330 352,933 
Cash and cash equivalents at end of period$424,452 $220,128 
Supplemental schedule of noncash investing and financing activities
Net increase in capital commitments relating to low income housing project investments$29,282 $15,718 
Recognition of operating lease at commencement and/or at extension$5,620 $5,747 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION
Independent Bank Corp. (the “Company”) is a state chartered, federally registered bank holding company, incorporated in 1985. The Company is the sole stockholder of Rockland Trust Company (“Rockland Trust” or the “Bank”), a Massachusetts trust company chartered in 1907.
All material intercompany balances and transactions have been eliminated in consolidation. Certain previously reported amounts have been reclassified to conform to the current year’s presentation.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, primarily consisting of normal recurring adjustments, have been included. Results for the nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any other interim period.
For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “2023 Form 10-K”).

NOTE 2 - SECURITIES
    
Trading Securities
The Company had trading securities of $4.4 million and $5.0 million as of September 30, 2024 and December 31, 2023, respectively. These securities are held in a rabbi trust and will be used for future payments associated with the Company’s non-qualified 401(k) Restoration Plan and Non-qualified Deferred Compensation Plan.
Equity Securities
The Company had equity securities of $21.6 million and $22.5 million as of September 30, 2024 and December 31, 2023, respectively. These securities consist primarily of mutual funds held in a rabbi trust and will be used for future payments associated with the Company’s supplemental executive retirement plans.
The following table represents a summary of the gains and losses recognized within non-interest income and non-interest expense within the consolidated statements of income that relate to equity securities for the periods indicated:
Three Months EndedNine Months Ended
September 30September 30
2024202320242023
Dollars in thousands
Net gains (losses) recognized during the period on equity securities$685 $(363)1,187 272 
Less: net gains (losses) recognized during the period on equity securities sold during the period81 (34)519 (33)
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date$604 $(329)$668 $305 
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Available for Sale Securities
The following table summarizes the amortized cost, allowance for credit losses, and fair value of available for sale securities and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) at the dates indicated:
 September 30, 2024December 31, 2023
 Amortized
Cost		Gross
Unrealized
Gains		Gross Unrealized
Losses		Allowance for credit lossesFair
Value		Amortized
Cost		Gross
Unrealized
Gains		Gross Unrealized
Losses		Allowance for credit lossesFair
Value
 (Dollars in thousands)
U.S. government agency securities$229,642 $— $(16,558)$— $213,084 $230,198 $— $(23,060)$— $207,138 
U.S. treasury securities674,920 — (34,007)— 640,913 824,597 — (55,495)— 769,102 
Agency mortgage-backed securities346,931 60 (29,282)— 317,709 314,269 24 (37,246)— 277,047 
Agency collateralized mortgage obligations32,277 8 (1,646)— 30,639 35,713 6 (2,530)— 33,189 
State, county, and municipal securities196 — — — 196 195 — (5)— 190 
Pooled trust preferred securities issued by banks and insurers 1,180 — (153)— 1,027 1,188 — (170)— 1,018 
Small business administration pooled securities49,587 — (5,944)— 43,643 53,702 — (7,130)— 46,572 
Total available for sale securities$1,334,733 $68 $(87,590)$— $1,247,211 $1,459,862 $30 $(125,636)$— $1,334,256 

Excluded from the table above is accrued interest on available for sale securities of $3.1 million and $3.4 million at September 30, 2024 and December 31, 2023, respectively, which is included within other assets on the consolidated balance sheets. Additionally, the Company did not record any write-offs of accrued interest income on available for sale securities during the three and nine months ended September 30, 2024 and 2023. Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status at September 30, 2024 and December 31, 2023.

When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. The Company had no sales of securities available for sale during the three and nine months ended September 30, 2024 and 2023, and therefore no gains or losses were realized during the periods presented.
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The following tables show the gross unrealized losses and fair value of the Company’s available for sale securities in an unrealized loss position as of the dates indicated. These available for sale securities are aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position:
 September 30, 2024
  Less than 12 months12 months or longerTotal
 # of 
holdings		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
 (Dollars in thousands)
U.S. government agency securities9 $— $— $213,084 $(16,558)$213,084 $(16,558)
U.S. treasury securities14 — — 640,913 (34,007)640,913 (34,007)
Agency mortgage-backed securities104 47,479 (188)266,901 (29,094)314,380 (29,282)
Agency collateralized mortgage obligations9 — — 28,452 (1,646)28,452 (1,646)
Pooled trust preferred securities issued by banks and insurers1 — — 1,027 (153)1,027 (153)
Small business administration pooled securities8 — — 43,643 (5,944)43,643 (5,944)
Total 145 $47,479 $(188)$1,194,020 $(87,402)$1,241,499 $(87,590)
December 31, 2023
Less than 12 months12 months or longerTotal
# of 
holdings		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
(Dollars in thousands)
U.S. government agency securities9 $— $— $207,138 $(23,060)$207,138 $(23,060)
U.S. treasury securities17 — — 769,102 (55,495)769,102 (55,495)
Agency mortgage-backed securities115 1,091 (11)273,447 (37,235)274,538 (37,246)
Agency collateralized mortgage obligations12 339 (2)31,682 (2,528)32,021 (2,530)
State, county, and municipal securities1 190 (5)— — 190 (5)
Pooled trust preferred securities issued by banks and insurers1 — — 1,018 (170)1,018 (170)
Small business administration pooled securities8 — — 46,572 (7,130)46,572 (7,130)
Total 163 $1,620 $(18)$1,328,959 $(125,618)$1,330,579 $(125,636)
The Company does not intend to sell these investments and has determined, based upon available evidence, that it is more likely than not that the Company 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 a result, the Company did not recognize a provision for credit losses on these investments during the three and nine months ended September 30, 2024 and 2023. The Company made this determination by reviewing various qualitative and quantitative factors regarding each investment category, such as current market conditions, extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, and current analysts’ evaluations.
As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the table above by category were as follows at September 30, 2024:
•U.S. Government Agency Securities, U.S. Treasury Securities, Agency Mortgage-Backed Securities, Agency Collateralized Mortgage Obligations and Small Business Administration Pooled Securities: These portfolios have contractual terms that generally do not permit the issuer to settle the securities at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. Additionally, these securities are implicitly guaranteed by the U.S. Government or one of its agencies.
•Pooled Trust Preferred Securities: This portfolio consists of one security which is performing. The unrealized loss on this security is attributable to the illiquid nature of the trust preferred market in the current economic and regulatory environment. Management evaluates collateral credit and instrument structure, including current and
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expected deferral and default rates and timing. In addition, discount rates are determined by evaluating comparable spreads observed currently in the market for similar instruments.

Held to Maturity Securities
The following table summarizes the amortized cost, fair value and allowance for credit losses of held to maturity securities and the corresponding amounts of gross unrealized gains and losses recognized at the dates indicated:
 September 30, 2024December 31, 2023
 Amortized
Cost		Gross
Unrealized
Gains		Gross Unrealized
Losses		Allowance for credit lossesFair
Value		Amortized
Cost		Gross
Unrealized
Gains		Gross Unrealized
Losses		Allowance for credit lossesFair
Value
 (Dollars in thousands)
U.S. government agency securities$28,218 $— $(156)$— $28,062 $29,521 $— $(1,113)$— $28,408 
U.S. treasury securities100,772 — (6,582)— 94,190 100,712 — (9,177)— 91,535 
Agency mortgage-backed securities798,919 644 (48,044)— 751,519 829,431 175 (65,878)— 763,728 
Agency collateralized mortgage obligations437,552 — (57,209)— 380,343 477,517 — (69,606)— 407,911 
Single issuer trust preferred securities issued by banks1,500 — (49)— 1,451 1,500 — (127)— 1,373 
Small business administration pooled securities125,354 482 (3,936)— 121,900 130,426 384 (6,157)— 124,653 
Total held to maturity securities$1,492,315 $1,126 $(115,976)$— $1,377,465 $1,569,107 $559 $(152,058)$— $1,417,608 
Substantially all held to maturity securities held by the Company are guaranteed by the U.S. federal government or other government sponsored agencies and have a long history of no credit losses. As a result, management has determined these securities to have a zero loss expectation and therefore the Company did not record a provision for estimated credit losses on any held to maturity securities during the three and nine months ended September 30, 2024 and 2023. Excluded from the table above is accrued interest on held to maturity securities of $4.0 million and $4.3 million at September 30, 2024 and December 31, 2023, respectively, which is included within other assets on the consolidated balance sheets. Additionally, the Company did not record any write-offs of accrued interest income on held to maturity securities during the three and nine months ended September 30, 2024 and 2023. Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status at September 30, 2024 and December 31, 2023.

When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. The Company had no sales of held to maturity securities during the three and nine months ended September 30, 2024 and 2023, and therefore no gains or losses were realized for such periods.

The Company monitors the credit quality of held to maturity securities through the use of credit ratings. Credit ratings are monitored by the Company on at least a quarterly basis. As of September 30, 2024, all held to maturity securities held by the Company were rated investment grade or higher.
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The actual maturities of certain available for sale or held to maturity securities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. A schedule of the contractual maturities of securities available for sale and securities held to maturity at September 30, 2024 is presented below:
Due in one year or lessDue after one year to five yearsDue after five to ten yearsDue after ten yearsTotal
Amortized
Cost		Fair
Value		Amortized
Cost		Fair
Value		Amortized
Cost		Fair
Value		Amortized
Cost		Fair
Value		Amortized
Cost		Fair
Value
(Dollars in thousands)
Available for sale securities
U.S. government agency securities$— $— $229,642 $213,084 $— $— $— $— $229,642 $213,084 
U.S. treasury securities196,815 192,493 478,105 448,420 — — — — 674,920 640,913 
Agency mortgage-backed securities16 16 139,183 128,734 71,034 66,751 136,698 122,208 346,931 317,709 
Agency collateralized mortgage obligations— — — — 2,598 2,446 29,679 28,193 32,277 30,639 
State, county, and municipal securities— — 196 196 — — — — 196 196 
Pooled trust preferred securities issued by banks and insurers — — — — — — 1,180 1,027 1,180 1,027 
Small business administration pooled securities— — — — — — 49,587 43,643 49,587 43,643 
Total available for sale securities$196,831 $192,509 $847,126 $790,434 $73,632 $69,197 $217,144 $195,071 $1,334,733 $1,247,211 
Held to maturity securities
U.S. government agency securities$28,218 $28,062 $— $— $— $— $— $— $28,218 $28,062 
U.S. treasury securities— — 99,779 93,334 993 856 — — 100,772 94,190 
Agency mortgage-backed securities— — 463,840 441,693 158,938 142,894 176,141 166,932 798,919 751,519 
Agency collateralized mortgage obligations— — 63,176 60,049 17,779 16,183 356,597 304,111 437,552 380,343 
Single issuer trust preferred securities issued by banks— — 1,500 1,451 — — — — 1,500 1,451 
Small business administration pooled securities— — — — 7,076 6,643 118,278 115,257 125,354 121,900 
Total held to maturity securities$28,218 $28,062 $628,295 $596,527 $184,786 $166,576 $651,016 $586,300 $1,492,315 $1,377,465 
Total$225,049 $220,571 $1,475,421 $1,386,961 $258,418 $235,773 $868,160 $781,371 $2,827,048 $2,624,676 
Included in the table above are $26.2 million of callable securities at September 30, 2024.
The carrying value of securities pledged to secure public funds, trust deposits, and for other purposes, as required or permitted by law, was $2.2 billion and $1.7 billion at September 30, 2024 and December 31, 2023, respectively.
At September 30, 2024 and December 31, 2023, the Company had no investments in obligations of individual states, counties, or municipalities which exceeded 10% of consolidated stockholders’ equity.




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NOTE 3 - LOANS, ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY
Loans Held for Investment and Allowance for Credit Losses
The following table summarizes the change in allowance for credit losses by loan category, and bifurcates the amount of loans allocated to each loan category for the period indicated:
 Three Months Ended September 30, 2024
 (Dollars in thousands)
 Commercial and
Industrial		Commercial
Real Estate		Commercial
Construction		Small
Business		Residential
Real Estate		      
Home  Equity		Other ConsumerTotal
Allowance for credit losses
Beginning balance$20,884 $80,501 $7,804 $4,059 $24,836 $11,755 $1,020 $150,859 
Charge-offs(5,886)— — (163)— (38)(919)(7,006)
Recoveries3 — — 3 — 14 323 343 
Provision for (release of) credit losses936 19,121 (278)206 (333)(570)418 19,500 
Ending balance (1)$15,937 $99,622 $7,526 $4,105 $24,503 $11,161 $842 $163,696 
Three Months Ended September 30, 2023
(Dollars in thousands)
Commercial and
Industrial		Commercial
Real Estate		Commercial
Construction		Small
Business		Residential
Real Estate		Home  EquityOther ConsumerTotal
Allowance for credit losses
Beginning balance$15,142 $78,396 $9,038 $3,606 $21,465 $12,433 $567 $140,647 
Charge-offs— (5,072)— (112)— — (834)(6,018)
Recoveries111 — — 35 — 12 282 440 
Provision for (release of) credit losses1,681 1,078 (208)385 1,682 101 781 5,500 
Ending balance (1)$16,934 $74,402 $8,830 $3,914 $23,147 $12,546 $796 $140,569 
Nine Months Ended September 30, 2024
(Dollars in thousands)
Commercial and
Industrial		Commercial
Real Estate		Commercial
Construction		Small
Business		Residential
Real Estate		Home  EquityOther ConsumerTotal
Allowance for credit losses
Beginning balance$19,243 $74,148 $7,683 $3,963 $23,637 $12,797 $751 $142,222 
Charge-offs(5,886)— — (332)— (49)(2,428)(8,695)
Recoveries90 — — 54 — 295 980 1,419 
Provision for (release of) credit losses2,490 25,474 (157)420 866 (1,882)1,539 28,750 
Ending balance (1)$15,937 $99,622 $7,526 $4,105 $24,503 $11,161 $842 $163,696 
 Nine Months Ended September 30, 2023
 (Dollars in thousands)
 Commercial and
Industrial		Commercial
Real Estate		Commercial
Construction		Small
Business		Residential
Real Estate		      
Home  Equity		Other ConsumerTotal
Allowance for credit losses
Beginning balance$27,559 $77,799 $10,762 $2,834 $20,973 $11,504 $988 $152,419 
Charge-offs(23,471)(5,072)— (199)— — (1,858)(30,600)
Recoveries132 — — 74 — 38 756 1,000 
Provision for (release of) credit losses12,714 1,675 (1,932)1,205 2,174 1,004 910 17,750 
Ending balance (1)$16,934 $74,402 $8,830 $3,914 $23,147 $12,546 $796 $140,569 
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(1)Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $55.3 million and $58.1 million as of September 30, 2024 and September 30, 2023, respectively.

The balance of allowance for credit losses increased to $163.7 million as of September 30, 2024 compared to $142.2 million at December 31, 2023, driven primarily by specific reserve allocations on certain commercial loans during the nine months ended September 30, 2024.
For the purpose of estimating the allowance for credit losses, management segregated the loan portfolio into the portfolio segments detailed in the above tables.  Each of these loan categories possesses unique risk characteristics that are considered when determining the appropriate level of allowance for each segment.  Some of the characteristics unique to each loan category include:
Commercial Portfolio
•Commercial and Industrial: Consists of revolving, nonrevolving, and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment.  Collateral generally consists of accounts receivable, inventory, plant and equipment, real estate, or other business assets. The primary source of repayment is operating cash flow and, secondarily, liquidation of assets.
•Commercial Real Estate: Consists of mortgage loans to finance investment in real property such as multi-family residential, commercial/retail, office, industrial, hotels, educational and healthcare facilities, as well as other specific use properties and is inclusive of owner-occupied commercial properties.  Loans are typically written with amortizing payment structures.  Collateral values are determined based upon third party appraisals and evaluations.  Permissible loan to value ratios at origination are governed by Company policy and regulatory guidelines. The primary source of repayment is cash flow from operating leases and rents and, secondarily, liquidation of assets.
•Commercial Construction: Consists of short-term construction loans, revolving and nonrevolving credit lines and construction/permanent loans to finance the acquisition, development and construction or rehabilitation of real property.  Project types include residential land development, one-to-four family, condominium, and multi-family home construction, commercial/retail, office, industrial, hotels, educational and healthcare facilities as well as other specific use properties.  Loans may be written with non-amortizing or hybrid payment structures depending upon the type of project.  Collateral values are determined based upon third party appraisals and evaluations.  Permissible loan to value ratios at origination are governed by Company policy and regulatory guidelines.  Repayment sources vary depending upon the type of project and may consist of proceeds from the sale or lease of units, operating cash flows or liquidation of other assets.
•Small Business: Consists of revolving, term loan and mortgage obligations extended to sole proprietors and small businesses for purposes of financing working capital and/or capital investment.  Collateral generally consists of pledges of business assets including, but not limited to, accounts receivable, inventory, plant and equipment, or real estate if applicable.  The primary source of repayment is operating cash flows and, secondarily, liquidation of assets.
For the commercial portfolio the Company typically obtains personal guarantees for payment from individuals holding material ownership interests in the borrowing entities.
Consumer Portfolio
•Residential Real Estate: Residential mortgage loans held in the Company’s portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors such as current and expected income, employment status, current assets, other financial resources, credit history and the value of the collateral.  Collateral consists of mortgage liens on one-to-four family residential properties.  Residential mortgage loans also include loans to construct owner-occupied one-to-four family residential properties.
•Home Equity: Home equity loans and credit lines are made to qualified individuals and are primarily secured by senior or junior mortgage liens on one-to-four family homes, condominiums or vacation homes. Each home equity loan has a fixed rate and is billed in equal payments comprised of principal and interest. The majority of home equity lines of credit have a variable rate and are billed in interest-only payments during the draw period. At the end of the draw period, the home equity line of credit is billed as a percentage of the then outstanding principal balance plus all accrued interest over a predetermined repayment period, as set forth in the note. Additionally, the Company has the option of renewing each line of credit for additional draw periods.  Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan to value ratios within established policy guidelines.
•Other Consumer: Other consumer loan products include personal lines of credit and amortizing loans made to qualified individuals for various purposes such as debt consolidation, personal expenses or overdraft protection.  Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines.  These loans may be secured or unsecured.
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Credit Quality
The Company continually monitors the asset quality of the loan portfolio using all available information. Based on this information, loans demonstrating certain payment issues or other weaknesses may be categorized as adversely risk-rated, delinquent, nonperforming and/or put on nonaccrual status. Additionally, in the course of resolving such loans, the Company may choose to modify the contractual terms of certain loans to match the borrower’s ability to repay the loan based on their current financial condition.

The Company reviews numerous credit quality indicators when assessing the risk in its loan portfolio. For the commercial portfolio, the Company utilizes a 10-point credit risk-rating system, which assigns a risk-grade to each loan obligation based on a number of quantitative and qualitative factors associated with a commercial or small business loan transaction. Factors considered include industry and market conditions, position within the industry, earnings trends, operating cash flow, asset/liability values, debt capacity, guarantor strength, management and controls, financial reporting, collateral, and other considerations. The risk-rating categories for the commercial portfolio are defined as follows:
•Pass: Risk-rating “1” through “6” comprises loans ranging from ‘Substantially Risk Free’ which indicates borrowers are of unquestioned credit standing and the pinnacle of credit quality, well established companies with a very strong financial condition, and loans fully secured by cash collateral, through ‘Acceptable Risk,’ which indicates borrowers may exhibit declining earnings, strained cash flow, increasing or above average leverage and/or weakening market fundamentals that indicate below average asset quality, margins and market share. Collateral coverage is protective.
•Special Mention: Borrowers exhibit potential credit weaknesses or downward trends deserving management’s close attention. If not checked or corrected, these trends will weaken the Company’s asset and position. While potentially weak, currently these borrowers are marginally acceptable; no loss of principal or interest is envisioned.
•Substandard: Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt. Loans may be inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. However, there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Collateral coverage may be inadequate to cover the principal obligation.
•Doubtful: Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt with the added provision that the weaknesses make collection of the debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely.
•Loss: Borrowers deemed incapable of repayment. Loans to such borrowers are considered uncollectible and of such little value that continuation as active assets of the Company is not warranted.

The Company utilizes a comprehensive, continuous strategy for evaluating and monitoring commercial credit quality. Initially, credit quality is determined at loan origination and is re-evaluated when subsequent actions, such as renewals, modifications or reviews, occur. Actively managed commercial borrowers are required to provide updated financial information at least annually which is carefully evaluated for any changes in credit quality. Larger loan relationships are subject to a full annual credit review by experienced credit professionals, while continuous portfolio monitoring techniques are employed to evaluate changes in credit quality for smaller loan relationships. Any changes in credit quality are reflected in risk-rating changes. Additionally, the Company retains an independent loan review firm to evaluate the credit quality of the commercial loan portfolio. The independent loan review process achieves significant penetration into the commercial loan portfolio and reports the results of these reviews to the Audit Committee of the Board of Directors on a quarterly basis.

For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower. As a result, for this portfolio the Company utilizes a pass/default risk-rating system, based on an age analysis (i.e., days past due) associated with each consumer loan. Under this structure, consumer loans less than 90 days past due are assigned a “pass” rating, while any consumer loans 90 days or more past due are assigned a “default” rating.




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The following table details the amortized cost balances of the Company's loan portfolios, presented by credit quality indicator and origination year as of the dates indicated below:
 September 30, 2024
20242023202220212020PriorRevolving LoansRevolving converted to TermTotal (1)
 (Dollars in thousands)
Commercial and
industrial
Pass $282,973 $188,687 $133,680 $61,678 $41,639 $129,637 $682,099 $— $1,520,393 
Special mention11,775 194 946 346 — 113 4,702 — 18,076 
Substandard2,103 161 35 455 — 22 24,964 — 27,740 
Doubtful— — — — — — 11,652 — 11,652 
Loss— — — — — — — — — 
Total commercial and industrial$296,851 $189,042 $134,661 $62,479 $41,639 $129,772 $723,417 $— $1,577,861 
Current-period gross write-offs$— $— $— $— $— $— $5,886 $— $5,886 
Commercial real estate
Pass$744,344 $1,053,780 $1,179,121 $1,256,074 $1,151,010 $2,298,419 $96,822 $1,116 $7,780,686 
Special mention7,442 6,350 29,443 13,085 12,691 101,133 — — 170,144 
Substandard32,609 13,017 25,442 29,264 31,070 6,076 — — 137,478 
Doubtful— 54,637 — 11,660 — 7,415 — — 73,712 
Loss— — — — — — — — — 
Total commercial real estate$784,395 $1,127,784 $1,234,006 $1,310,083 $1,194,771 $2,413,043 $96,822 $1,116 $8,162,020 
Current-period gross write-offs$— $— $— $— $— $— $— $— $— 
Commercial construction
Pass$140,421 $176,796 $218,298 $89,854 $— $24,783 $27,213 $902 $678,267 
Special mention— 1,925 15,540 6,065 — — — — 23,530 
Substandard31,125 — 9,120 — — — — — 40,245 
Doubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total commercial construction$171,546 $178,721 $242,958 $95,919 $— $24,783 $27,213 $902 $742,042 
Current-period gross write-offs$— $— $— $— $— $— $— $— $— 
Small business
Pass$38,687 $45,927 $45,358 $34,503 $22,766 $29,356 $50,009 $51 $266,657 
Special mention— 104 27 174 — 224 784 — 1,313 
Substandard389 396 65 3 183 391 621 — 2,048 
Doubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total small business$39,076 $46,427 $45,450 $34,680 $22,949 $29,971 $51,414 $51 $270,018 
Current-period gross write-offs$48 $— $28 $— $— $— $256 $— $332 
Residential real estate
Pass$134,868 $482,280 $615,795 $387,127 $177,583 $640,992 $— $— $2,438,645 
Default— 213 — 659 — 2,342 — — 3,214 
Total residential real estate$134,868 $482,493 $615,795 $387,786 $177,583 $643,334 $— $— $2,441,859 
Current-period gross write-offs$— $— $— $— $— $— $— $— $— 
Home equity
Pass$14,034 $25,276 $34,092 $50,948 $46,614 $132,804 $813,118 $11,612 $1,128,498 
Default— — — — — 170 1,532 235 1,937 
Total home equity$14,034 $25,276 $34,092 $50,948 $46,614 $132,974 $814,650 $11,847 $1,130,435 
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Current-period gross write-offs$— $— $— $— $— $— $49 $— $49 
Other consumer (2)
Pass$559 $486 $159 $703 $300 $1,279 $33,071 $— $36,557 
Default— — — — — 14 1 — 15 
Total other consumer$559 $486 $159 $703 $300 $1,293 $33,072 $— $36,572 
Current-period gross write-offs $2,413 $— $— $— $— $— $15 $— $2,428 
Total$1,441,329 $2,050,229 $2,307,121 $1,942,598 $1,483,856 $3,375,170 $1,746,588 $13,916 $14,360,807 
Total current-period gross write-offs$2,461 $— $28 $— $— $— $6,206 $— $8,695 
September 30, 2023
20232022202120202019PriorRevolving LoansRevolving converted to TermTotal (1)
(Dollars in thousands)
Commercial and
industrial
Pass$303,838 $188,559 $94,714 $73,366 $45,741 $116,052 $737,335 $— $1,559,605 
Special mention6,511 2,417 614 10,278 90 132 46,706 — 66,748 
Substandard1,933 4,707 1,074 132 1,165 806 16,833 — 26,650 
Doubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total commercial and industrial$312,282 $195,683 $96,402 $83,776 $46,996 $116,990 $800,874 $— $1,653,003 
Current-period gross write-offs$— $— $— $— $— $34 $23,437 $— $23,471 
Commercial real estate
Pass$795,830 $1,160,497 $1,338,792 $1,312,240 $610,009 $2,188,221 $68,496 $858 $7,474,943 
Special mention62,572 37,695 57,987 14,662 2,945 118,830 — — 294,691 
Substandard30,667 27,504 23,568 4,321 19,211 21,325 — — 126,596 
Doubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total commercial real estate$889,069 $1,225,696 $1,420,347 $1,331,223 $632,165 $2,328,376 $68,496 $858 $7,896,230 
Current-period gross write-offs$— $5,072 $— $— $— $— $— $— $5,072 
Commercial construction
Pass$146,278 $491,098 $201,730 $9,939 $27,304 $1,569 $17,248 $— $895,166 
Special mention13,484 — 4,823 — — — — — 18,307 
Substandard9,440 26,199 16,330 — — — — — 51,969 
Doubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total commercial construction$169,202 $517,297 $222,883 $9,939 $27,304 $1,569 $17,248 $— $965,442 
Current-period gross write-offs$— $— $— $— $— $— $— $— $— 
Small business
Pass$40,551 $52,883 $40,706 $26,759 $13,759 $23,458 $43,759 $— $241,875 
Special mention— — — 155 — 186 295 — 636 
Substandard429 324 126 295 — 615 1,035 — 2,824 
Doubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total small business$40,980 $53,207 $40,832 $27,209 $13,759 $24,259 $45,089 $— $245,335 
Current-period gross write-offs$— $— $22 $37 $— $— $140 $— $199 
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Residential real estate
Pass$391,121 $645,593 $408,752 $186,334 $89,911 $612,878 $— $— $2,334,589 
Default219 — 393 135 942 1,824 — — 3,513 
Total residential real estate$391,340 $645,593 $409,145 $186,469 $90,853 $614,702 $— $— $2,338,102 
Current-period gross write-offs$— $— $— $— $— $— $— $— $— 
Home equity
Pass$21,729 $39,251 $56,216 $50,724 $30,039 $126,897 $765,079 $4,190 $1,094,125 
Default— — — — — — 1,289 141 1,430 
Total home equity$21,729 $39,251 $56,216 $50,724 $30,039 $126,897 $766,368 $4,331 $1,095,555 
Current-period gross write-offs$— $— $— $— $— $— $— $— $— 
Other consumer (2)
Pass$538 $320 $1,370 $912 $410 $2,154 $24,843 $— $30,547 
Default— — — — — 19 2 — 21 
Total other consumer$538 $320 $1,370 $912 $410 $2,173 $24,845 $— $30,568 
Current-period gross write-offs$1,836 $— $— $— $— $7 $15 $— $1,858 
Total$1,825,140 $2,677,047 $2,247,195 $1,690,252 $841,526 $3,214,966 $1,722,920 $5,189 $14,224,235 
Total current -period gross write-offs$1,836 $5,072 $22 $37 $— $41 $23,592 $— $30,600 
(1)Loan origination dates in the tables above reflect the original origination date, or the date of a material modification of a previously originated loan.
(2)Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances and the associated gross write-offs.
    For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower. However, the Company does supplement performance data with current Fair Isaac Corporation (“FICO”) scores and Loan to Value (“LTV”) estimates. Current FICO data is purchased and appended to all consumer loans on a regular basis. In addition, automated valuation services and broker opinions of value are used to supplement original value data for the residential real estate and home equity portfolios, periodically. The following table shows the weighted average FICO scores and the weighted average combined LTV ratios at the dates indicated below:
September 30
2024		December 31
2023
Residential real estate portfolio
FICO score (re-scored)(1)755 754 
LTV (re-valued)(2)57.9 %59.8 %
Home equity portfolio
FICO score (re-scored)(1)769 770 
LTV (re-valued)(2)(3)43.4 %43.3 %
(1)The average FICO scores at September 30, 2024 are based upon rescores from September 2024 as available for previously originated loans, or origination score data for loans booked in September 2024.  The average FICO scores at December 31, 2023 were based upon rescores available from December 2023, as available for previously originated loans, or origination score data for loans booked in December 2023.
(2)The combined LTV ratios for September 30, 2024 are based upon updated automated valuations as of August 2024, when available, and/or the most current valuation data available.  The combined LTV ratios for December 31, 2023 were based upon updated automated valuations as of November 2023, when available, and/or the most current valuation data available as of such date.  The updated automated valuations provide new information on loans that may be available since the previous valuation was obtained.  If no new information is available, the valuation will default to the previously obtained data or most recent appraisal.
(3)For home equity loans and lines in a subordinate lien, the LTV data represents a combined LTV, taking into account the senior lien data for loans and lines.
Unfunded Commitments
Management evaluates the need for a reserve on unfunded lending commitments in a manner consistent with loans held for investment. At September 30, 2024 and December 31, 2023, the Company's estimated reserve for unfunded commitments amounted to $1.4 million and $1.5 million, respectively.
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Asset Quality
The Company’s philosophy toward managing its loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations. Delinquent loans are managed by a team of collection specialists and the Company seeks to make arrangements to resolve any delinquent or default situation over the shortest possible time frame.  As a general rule, loans 90 days or more past due with respect to principal or interest are classified as nonaccrual loans. The Company also may use discretion regarding other loans 90 days or more delinquent if the loan is well secured and/or in process of collection.
The following table shows information regarding nonaccrual loans as of the dates indicated:
Nonaccrual Balances
September 30, 2024December 31, 2023
With Allowance for Credit LossesWithout Allowance for Credit Losses (1)TotalWith Allowance for Credit LossesWithout Allowance for Credit Losses (1)Total
 (Dollars in thousands)
Commercial and industrial$375 $11,652 $12,027 $19,890 $298 $20,188 
Commercial real estate77,951 — 77,951 11,911 11,041 22,952 
Small business501 — 501 394 4 398 
Residential real estate9,744 — 9,744 7,634 — 7,634 
Home equity3,992 — 3,992 3,171 — 3,171 
Other consumer33 — 33 40 — 40 
Total nonaccrual loans $92,596 $11,652 $104,248 $43,040 $11,343 $54,383 
(1)Nonaccrual balances reported above without an allowance for credit losses are attributable to loans evaluated on an individual basis where it was determined that there was no risk of loss due to sufficient underlying collateral values, or reflect partially charged-off loans, with no risk of further loss.
It is the Company's policy to reverse any accrued interest when a loan is put on nonaccrual status, and, as such, the Company did not record any interest income on nonaccrual loans during the three and nine months ended September 30, 2024 and 2023, respectively, except for instances where nonaccrual loans were paid off in excess of the recorded book balance. Total accrued interest reversed against interest income amounted to $95,000 and $62,000 for the three months ended September 30, 2024 and 2023, respectively, and $594,000 and $487,000 for the nine months ended September 30, 2024 and 2023, respectively.
The following table shows information regarding foreclosed residential real estate property at the dates indicated:
September 30, 2024December 31, 2023
(Dollars in thousands)
Foreclosed residential real estate property held by the creditor$110 $110 
Recorded investment in mortgage loans collateralized by residential real estate property that are in the process of foreclosure$1,686 $1,697 











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The following tables show the age analysis of past due financing receivables as of the dates indicated:
 September 30, 2024
 30-59 days60-89 days90 days or moreTotal Past Due Total
Financing
Receivables (2)
 Number
of Loans		Principal
Balance		Number
of Loans		Principal
Balance		Number
of Loans		Principal
Balance		Number
of Loans		Principal
Balance		Current
 (Dollars in thousands)
Loan Portfolio
Commercial and industrial3 $200 — $— 5 $12,005 8 $12,205 $1,565,656 $1,577,861 
Commercial real estate5 1,839 3 2,056 3 20,657 11 24,552 8,137,468 8,162,020 
Commercial construction— — — — — — — — 742,042 742,042 
Small business11 397 5 71 8 153 24 621 269,397 270,018 
Residential real estate19 3,624 8 1,597 9 1,617 36 6,838 2,435,021 2,441,859 
Home equity13 1,392 4 217 10 1,937 27 3,546 1,126,889 1,130,435 
Other consumer (1)421 264 7 24 2 15 430 303 36,269 36,572 
Total472 $7,716 27 $3,965 37 $36,384 536 $48,065 $14,312,742 $14,360,807 
 December 31, 2023
 30-59 days60-89 days90 days or moreTotal Past Due Total
Financing
Receivables (2)
 Number
of Loans		Principal
Balance		Number
of Loans		Principal
Balance		Number
of Loans		Principal
Balance		Number
of Loans		Principal
Balance		Current
 (Dollars in thousands)
Loan Portfolio
Commercial and industrial6 $398 1 $17,538 2 $673 9 $18,609 $1,561,377 $1,579,986 
Commercial real estate8 14,674 2 8,419 3 7,279 13 30,372 8,011,136 8,041,508 
Commercial construction— — — — — — — — 849,586 849,586 
Small business6 400 1 20 6 243 13 663 251,293 251,956 
Residential real estate24 6,216 7 2,187 13 1,573 44 9,976 2,414,778 2,424,754 
Home equity23 1,640 4 1,238 10 529 37 3,407 1,094,219 1,097,626 
Other consumer (1)413 288 14 31 6 8 433 327 32,327 32,654 
Total480 $23,616 29 $29,433 40 $10,305 549 $63,354 $14,214,716 $14,278,070 
(1)Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances.
(2)The amount of net deferred costs on originated loans included in the ending balance was $6.2 million and $6.4 million at September 30, 2024 and December 31, 2023, respectively. Net unamortized discounts on acquired loans included in the ending balance were $8.3 million and $8.6 million at September 30, 2024 and December 31, 2023, respectively.












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Loan Modifications

The following tables present the period end amortized cost basis of loans modified to borrowers experiencing financial difficulty during the periods indicated, disaggregated by class of financing receivable, type of modification granted and the financial effect of the modifications:

Three Months Ended September 30, 2024
Amortized Cost Basis% of Total Class of Financing ReceivableFinancial Effect
(Dollars in thousands)
Term Extension
Commercial and industrial$5,985 0.38 %
Added a weighted-average contractual term of 4 months to the life of the loans
Commercial real estate4,507 0.06 %
Added a weighted-average contractual term of 5 months to the life of the loans
Total$10,492 
Nine Months Ended September 30, 2024
Amortized Cost Basis% of Total Class of Financing ReceivableFinancial Effect
(Dollars in thousands)
Term Extension
Commercial and industrial$8,368 0.53%
Added a weighted-average contractual term of 7 months to the life of the loans
Commercial real estate37,380 0.46%
Added a weighted-average contractual term of 1 year to the life of the loans
Commercial construction3,488 0.47%
Added a weighted-average contractual term of 10 months to the life of the loans
Residential real estate297 0.01%
Extended the contractual term on one loan by 6.2 years
Total$49,533 
Interest Rate Reduction
Small business$42 0.02%
Reduced contractual rate on one loan from 11.00% to 8.20%
Home equity64 0.01%
Reduced contractual rate on one loan from 7.99% to 7.00%
Total$106 
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Term Extension and Interest Rate Reduction
Commercial and industrial$97 0.01%
Extended the contractual term on one loan by 1.5 years and reduced the interest rate from 10.10% to 7.20%
Small business34 0.01%
Extended the contractual term on one loan by 2.5 years and reduced the interest rate from 10.25% to 6.50%
Home equity69 0.01%
Extended the contractual term on one loan by 8.1 years and reduced the interest rate from 10.00% to 6.80%
Total$200 
Other Than Insignificant Payment Delay
Commercial and industrial$1,809 0.11%Modification was made with minimal financial effect
Commercial real estate6,350 0.08%Modification was made with minimal financial effect
Total$8,159 
Total Outstanding Modified$57,998 
Three Months Ended September 30, 2023
Amortized Cost Basis% of Total Class of Financing ReceivableFinancial Effect
(Dollars in thousands)
Term Extension
Commercial and industrial$7,915 0.48 %
Added a weighted-average contractual term of 2 months to the life of the loans
Commercial real estate719 0.01 %
Added a weighted-average contractual term of 2.9 years to the life of the loans
Total$8,634 
Nine Months Ended September 30, 2023
Amortized Cost Basis% of Total Class of Financing ReceivableFinancial Effect
(Dollars in thousands)
Term Extension
Commercial and industrial$16,108 0.97 %
Added a weighted-average contractual term of 2 months to the life of the loans
Commercial real estate19,180 0.24 %
Added a weighted-average contractual term of 1.8 years to the life of the loans
Commercial construction2,369 0.25 %
Added a weighted-average contractual term of 2 months to the life of the loans
Small business105 0.04 %
Added a weighted-average contractual term of 4.3 years to the life of the loans
Total$37,762 
Other Than Insignificant Payment Delay
Commercial and industrial$2,805 0.17 %Modification was made with minimal financial effect
Commercial real estate7,013 0.09 %Modification was made with minimal financial effect
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Total$9,818 
Term Extension and Interest Rate Reduction
Small business$44 0.02 %
Reduced the contractual interest rate on one loan from 10.00% to 6.50%; the financial effect of term extensions are included in term extension table shown above
Total$44 
Term Extension and Other Than Insignificant Payment Delay
Commercial and industrial$1,965 0.12 %The financial effects of term extensions are included in term extension table above, while the payment delay modifications had minimal financial effect
Commercial real estate6,857 0.09 %The financial effects of term extensions are included in term extension table above, while the payment delay modifications had minimal financial effect
Total$8,822 
Total Outstanding Modified$56,446 
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The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following tables depict the amortized cost and payment status of loans that were modified during the previous 12 months as of the periods indicated:

September 30, 2024
Payment Status (Amortized Cost Basis)
Current30-89 Days Past Due90+ Days Past Due
(Dollars in thousands)
Loan Type
Commercial and industrial$10,467 $— $— 
Commercial real estate43,731 — — 
Commercial construction3,488 — — 
Small business146 34 — 
Residential real estate297 — — 
Home equity133 — — 
Total$58,262 $34 $— 
September 30, 2023
Payment Status (Amortized Cost Basis)
Current30-89 Days Past Due90+ Days Past Due
(Dollars in thousands)
Loan Type
Commercial and industrial$7,409 $504 $— 
Commercial real estate16,252 660 — 
Small business140 — — 
Total$23,801 $1,164 $— 


The Company considers a loan to have defaulted when it reaches 90 days past due. At September 30, 2024, there were no loans modified to borrowers experiencing financial difficulty during the previous 12 months that subsequently defaulted during the three or nine months then ended. During the three and nine months ended September 30, 2023, there was one commercial real estate loan that had a payment default and was modified within the previous 12 months as a combination term extension and other-than-insignificant payment delay, which had an amortized cost basis of $6.7 million.

At both September 30, 2024 and September 30, 2023, the Company had no additional commitments to lend to borrowers experiencing financial difficulty whose loans were modified and included in the above tables for the three and nine months then ended.
    
Loan modifications to borrowers experiencing financial difficulty are evaluated on a collective basis with loans sharing similar risk characteristics in accordance with the current expected credit loss ("CECL") methodology.
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NOTE 4 - STOCK BASED COMPENSATION
During the nine months ended September 30, 2024, the Company had the following activity related to stock based compensation:
Time Vested Restricted Stock Awards
The Company made the following awards of time vested restricted stock:
DateShares GrantedPlanGrant Date Fair Value Per Share Vesting Period
2/22/2024106,200 2023 Omnibus Incentive Plan $52.73 Ratably over 3 years from grant date
4/15/20241,650 2023 Omnibus Incentive Plan$48.49 Ratably over 3 years from grant date
5/21/202411,340 2018 Non-Employee Director Stock Plan$52.94 Shares vested immediately
8/15/20243,703 2023 Omnibus Incentive Plan$59.42 Ratably over 3 years from grant date
Performance-Based Restricted Stock Awards
    On February 22, 2024, the Company granted 41,200 performance-based restricted stock awards, representing the maximum number of shares that may be earned under the awards, to certain executive level employees. These performance-based restricted stock awards were issued from the 2023 Omnibus Incentive Plan and were determined to have a grant date fair value per share of $52.73. The number of shares to be vested is contingent upon the Company's attainment of certain performance criteria to be measured at the end of a three-year performance period ending December 31, 2026. The awards will vest upon the earlier of the date on which it is determined if the performance goal is achieved subsequent to the performance period, or March 15, 2027.
    On March 14, 2024, the performance-based restricted stock awards that were awarded on February 18, 2021 vested at 80% of the maximum target shares awarded, or 11,874 shares, net of forfeitures.

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NOTE 5 - DERIVATIVE AND HEDGING ACTIVITIES
The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally to manage the Company’s interest rate risk. Additionally, the Company enters into interest rate derivatives, foreign exchange contracts and risk participation agreements to accommodate the business requirements of its customers (“customer related positions”). The Company minimizes the market and liquidity risks of customer related positions by entering into similar offsetting positions with broker-dealers. Derivative instruments are carried at fair value in the Company’s financial statements. The accounting for changes in the fair value of a derivative instrument is dependent upon whether or not it qualifies as a hedge for accounting purposes, and further, by the type of hedging relationship.
The Company does not enter into proprietary trading positions for any derivatives.
The Company is subject to over-the-counter derivative clearing requirements which require certain derivatives to be cleared through central clearing houses. Accordingly, the Company clears certain derivative transactions through the Chicago Mercantile Exchange Clearing House (“CME”). This clearing house requires the Company to post initial and variation margin to mitigate the risk of non-payment, the latter of which is received or paid daily based on the net asset or liability position of the contracts.
Interest Rate Positions
The Company may utilize various interest rate derivatives as hedging instruments against interest rate risk associated with the Company’s borrowings and loan portfolios. An interest rate derivative is an agreement whereby one party agrees to pay a floating rate of interest on a notional principal amount in exchange for receiving a fixed rate of interest on the same notional amount, for a predetermined period of time, from a second party. The amounts relating to the notional principal amount are not actually exchanged.

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The following tables reflect the Company’s derivative positions at the dates indicated below for interest rate swaps which qualify as cash flow hedges for accounting purposes:
September 30, 2024
Weighted Average Rate
Notional AmountAverage MaturityCurrent
Rate
Received		Pay Fixed
Swap Rate		Fair Value
(in thousands)(in years)(in thousands)
Interest rate swaps on borrowings$400,000 1.835.24 %3.67 %$(1,106)
Current Rate PaidReceive Fixed
Swap Rate
Interest rate swaps on loans 800,000 1.905.29 %2.70 %(15,035)
Current Rate PaidReceive Fixed Swap Rate
Cap - Floor
Interest rate collars on loans 200,000 1.685.43 %
3.40% - 2.09%
(965)
Total$1,400,000 $(17,106)
December 31, 2023
Weighted Average Rate
Notional AmountAverage MaturityCurrent
Rate
Received		Pay Fixed
Swap Rate		Fair Value
(in thousands)(in years)(in thousands)
Interest rate swaps on borrowings$400,000 2.585.34 %3.67 %$1,901 
Current Rate PaidReceive Fixed
Swap Rate
Interest rate swaps on loans 850,000 2.505.36 %2.72 %(27,350)
Current Rate PaidReceive Fixed Swap Rate
Cap - Floor
Interest rate collars on loans 350,000 1.485.45 %
3.09% - 2.12%
(4,714)
Total$1,600,000 $(30,163)

The maximum length of time over which the Company is currently hedging its exposure to the variability in future cash flows for forecasted transactions related to the payment of variable interest on existing financial instruments is 4.5 years.
For derivative instruments that are designated and qualify as cash flow hedging instruments, the effective portion of the gains or losses is reported as a component of other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.  The Company expects approximately $419,000 (pre-tax) to be reclassified as an increase to net interest income and $9.0 million (pre-tax) to be reclassified as a decrease to net interest income, from other comprehensive income related to the Company’s cash flow hedges in the twelve months following September 30, 2024.  This reclassification is due to anticipated payments that will be made and/or received on the swaps based upon the forward curve at September 30, 2024.
The Company had no fair value hedges as of September 30, 2024 or December 31, 2023.

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Customer Related Positions
Loan level derivatives, primarily interest rate swaps, offered to commercial borrowers through the Company’s loan level derivative program do not qualify as hedges for accounting purposes. The Company believes that its exposure to commercial customer derivatives is limited because these contracts are simultaneously matched at inception with an offsetting dealer transaction. Derivatives with dealer counterparties are then either cleared through a clearinghouse or settled directly with a single counterparty. The commercial customer derivative program allows the Company to retain variable-rate commercial loans while allowing the customer to synthetically fix the loan rate by entering into a variable-to-fixed interest rate swap. The amounts relating to the notional principal amount are not actually exchanged.
Foreign exchange contracts offered to commercial borrowers through the Company’s derivative program do not qualify as hedges for accounting purposes. The Company acts as a seller and buyer of foreign exchange contracts to accommodate its customers. To mitigate the market and liquidity risk associated with these derivatives, the Company enters into similar offsetting positions. The amounts relating to the notional principal amount are exchanged.
The Company has entered into risk participation agreements with other dealer banks in commercial loan agreements. Participating banks guarantee the performance on borrower-related interest rate swap contracts. These derivatives are not designated as hedges and, therefore, changes in fair value are recognized in earnings. Under a risk participation-out agreement, a derivative asset, the Company participates out a portion of the credit risk associated with the interest rate swap position executed with the commercial borrower for a fee paid to the participating bank. Under a risk participation-in agreement, a derivative liability, the Company assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower for a fee received from the other bank.

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The following tables reflect the Company’s customer related derivative positions at the dates indicated below for those derivatives not designated as hedging:
  Notional Amount Maturing 
 Number of  Positions 
(1)		Less than 1 yearLess than 2 yearsLess than 3 yearsLess than 4 yearsThereafterTotalFair Value
September 30, 2024
 (Dollars in thousands)
Loan level swaps
Receive fixed, pay variable275 $231,770 $209,148 $266,673 $140,679 $936,347 $1,784,617 $(54,720)
Pay fixed, receive variable275 231,770 209,148 266,673 140,679 936,347 1,784,617 54,590 
Foreign exchange contracts
Buys foreign currency, sells U.S. currency24 101,143 — — — — 101,143 1,374 
Buys U.S. currency, sells foreign currency24 101,143 — — — — 101,143 (1,325)
Risk participation agreements
Participation out18 23,802 — 17,874 30,654 91,422 163,752 168 
Participation in12 — 13,016 23,023 15,469 — 51,508 (32)
Notional Amount Maturing
Number of  Positions 
(1)		Less than 1 yearLess than 2 yearsLess than 3 yearsLess than 4 yearsThereafterTotalFair Value
December 31, 2023
 (Dollars in thousands)
Loan level swaps
Receive fixed, pay variable281 $80,682 $252,260 $223,928 $230,513 $997,108 $1,784,491 $(88,415)
Pay fixed, receive variable281 80,682 252,260 223,928 230,513 997,108 1,784,491 88,280 
Foreign exchange contracts
Buys foreign currency, sells U.S. currency22 65,586 12,957 — — — 78,543 2,197 
Buys U.S. currency, sells foreign currency22 65,586 12,957 — — — 78,543 (2,160)
Risk participation agreements
Participation out17 — 24,193 — 13,119 114,027 151,339 200 
Participation in8 — — 13,016 18,989 15,725 47,730 (44)
(1)The Company may enter into one dealer swap agreement which offsets multiple commercial borrower swap agreements.
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Mortgage Derivatives
The Company enters into commitments to fund residential mortgage loans at specified rates and times in the future, with the intention that loans may be sold subsequently in the secondary market. Mortgage loan commitments are referred to as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. These commitments are recognized at fair value on the consolidated balance sheet in other assets and other liabilities with changes in their fair values recorded within mortgage banking income. In addition, the Company has elected the fair value option to carry loans held for sale at fair value. The change in fair value of loans held for sale is recorded in current period earnings as a component of mortgage banking income in accordance with the Company’s fair value election. The fair value of loans held for sale decreased by $16,000 and $28,000 for the three months ended September 30, 2024 and 2023, respectively. For the respective nine months ended September 30, 2024 and 2023, the fair value of loans held for sale increased by $167,000 and decreased by $31,000. These amounts were offset in earnings by the change in the fair value of mortgage derivatives.
Outstanding loan commitments expose the Company to the risk that the price of the loans arising from exercise of the loan commitment might change from inception of the rate lock to funding of the loan due to changes in mortgage interest rates. If interest rates increase, the value of these loan commitments decreases. Conversely, if interest rates decrease, the value of these loan commitments increases. To protect against the price risk inherent in derivative loan commitments, the Company utilizes both “mandatory delivery” and “best efforts” forward loan sale commitments to mitigate the risk of potential decreases in the values of loans that would result from the exercise of the derivative loan commitments. Mandatory delivery contracts are accounted for as derivative instruments. Included in the mandatory delivery forward commitments are To Be Announced securities (“TBAs”). Certain assumptions, including pull through rates and rate lock periods, are used in managing the existing and future hedges. The accuracy of underlying assumptions will impact the ultimate effectiveness of any hedging strategies.
With mandatory delivery contracts, the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. If the Company fails to deliver the amount of mortgages necessary to fulfill the commitment by the specified date, it is obligated to pay a “pair-off” fee, based on then-current market prices, to the investor/counterparty to compensate the investor for the shortfall. Generally, the Company makes this type of commitment once mortgage loans have been funded and are held for sale, in order to minimize the risk of failure to deliver the requisite volume of loans to the investor and paying pair-off fees as a result. The Company also sells TBA securities to offset potential changes in the fair value of derivative loan commitments. Generally, the Company sells TBA securities by entering into derivative loan commitments for settlement in 30 to 90 days. The Company expects that mandatory delivery contracts, including TBA securities, will experience changes in fair value opposite to the changes in the fair value of derivative loan commitments.
With best effort contracts, the Company commits to deliver an individual mortgage loan of a specified principal amount and quality to an investor if the loan to the underlying borrower closes. Generally, best efforts cash contracts have no pair off risk regardless of market movement. The price the investor will pay the seller for an individual loan is specified prior to the loan being funded (e.g., on the same day the lender commits to lend funds to a potential borrower). The Company expects that these best efforts forward loan sale commitments will experience a net neutral shift in fair value with related derivative loan commitments.
The aggregate amount of net realized gains on sales of mortgage loans included within mortgage banking income was $1.7 million and $333,000 for the three months ended September 30, 2024 and 2023, respectively, and $3.2 million and $677,000 for the nine months ended September 30, 2024 and 2023, respectively.
Balance Sheet Offsetting
The Company does not offset fair value amounts recognized for derivative instruments. The Company does net the amount recognized for the right to reclaim cash collateral against the obligation to return cash collateral arising from derivative instruments executed with the same counterparty under a master netting arrangement. Collateral legally required to be maintained at dealer banks by the Company is monitored and adjusted as necessary.
A daily settlement occurs through the CME for changes in the fair value of centrally cleared derivatives. Not all of the derivatives are required to be cleared through the daily clearing agent. As a result, the total fair values of loan level derivative assets and liabilities recognized on the Company’s financial statements are not equal and offsetting.

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The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet and the potential effect of netting arrangements on its financial position, at the dates indicated:
 Asset Derivatives (1)Liability Derivatives (2)
Fair Value atFair Value atFair Value atFair Value at
 September 30
2024		December 31
2023		September 30
2024		December 31
2023
 (Dollars in thousands)
Derivatives designated as hedges
Interest rate derivatives$379 (3)$1,927 (3)$17,485 (4)$32,090 (4)
Derivatives not designated as hedges
Customer Related Positions
Loan level derivatives76,598 (3)99,416 (3)76,728 (4)99,551 (4)
Foreign exchange contracts1,405 2,220 1,356 2,183 
Risk participation agreements168 200 32 44 
Mortgage Derivatives
Interest rate lock commitments430 168 — — 
Forward sale loan commitments53 17 — — 
Forward sale hedge commitments— — 44 — 
Total derivatives not designated as hedges78,654 102,021 78,160 101,778 
Total79,033 103,948 95,645 133,868 
Netting Adjustments (5)(35,328)(48,253)15,820 25,360 
Net Derivatives on the Balance Sheet43,705 55,695 79,825 108,508 
Financial instruments (6)9,557 12,018 9,557 12,018 
Cash collateral pledged (received)(10,740)(17,076)2,796 — 
Net Derivative Amounts$23,408 $26,601 $67,472 $96,490 
(1)All asset derivatives are reflected in other assets on the balance sheet.
(2)All liability derivatives are reflected in other liabilities on the balance sheet.
(3)Approximately $96,000 of accrued interest payable and $2.1 million of accrued interest receivable is included in the fair value of interest rate and loan level derivative assets, respectively, at September 30, 2024, in comparison to accrued interest receivable of approximately $316,000 and $3.0 million, respectively, at December 31, 2023.
(4)Approximately $777,000 and $2.1 million of accrued interest payable is included in the fair value of interest rate and loan level derivative liabilities, respectively, at September 30, 2024, in comparison to accrued interest payable of approximately $1.9 million and $3.0 million, respectively, at December 31, 2023.
(5)Netting adjustments represent the amounts recorded to convert derivative assets and liabilities cleared through CME from a gross basis to a net basis, inclusive of the variation margin payments, in accordance with applicable accounting guidance.
(6)Reflects offsetting derivative positions with the same counterparty that are not netted on the balance sheet.












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The table below presents the effect of the Company’s derivative financial instruments included in OCI and current earnings for the periods indicated:
Three Months EndedNine Months Ended
September 30September 30
 2024202320242023
 (Dollars in thousands)
Derivatives designated as hedges
Gain in OCI on derivatives (effective portion), net of tax$8,753 $202 $9,000 $4,917 
Loss reclassified from OCI into interest income or interest expense (effective portion)$(4,902)$(7,547)$(15,788)$(20,806)
Derivatives not designated as hedges
Changes in fair value of customer related positions
Other income$76 $29 $142 $399 
Other expense(14)(300)(119)(585)
Changes in fair value of mortgage derivatives
Mortgage banking income (114)(6)254 146 
Total$(52)$(277)$277 $(40)

    The Company’s derivative agreements with institutional counterparties contain various credit-risk related contingent provisions, such as requiring the Company to maintain a well-capitalized capital position. If the Company fails to meet these conditions, the counterparties could request the Company make immediate payment or demand that the Company provide immediate and ongoing full collateralization on derivative positions in net liability positions. All derivative instruments with credit-risk contingent features were in a net asset position at September 30, 2024 and December 31, 2023.

    By using derivatives, the Company is exposed to credit risk to the extent that counterparties to the derivative contracts do not perform as required. Should a counterparty fail to perform under the terms of a derivative contract, the Company’s credit exposure on interest rate swaps is limited to the net positive fair value and accrued interest of all swaps with each counterparty. The Company seeks to minimize counterparty credit risk through credit approvals, limits, monitoring procedures, and obtaining collateral, where appropriate. Institutional counterparties must have an investment grade credit rating and be approved by the Company’s Board of Directors. In addition, certain derivative contracts executed bilaterally with a dealer counterparty in the over-the-counter market are cleared through a clearinghouse, whereby the clearinghouse becomes the counterparty to the transaction. As such, management believes the risk of incurring credit losses on derivative contracts with those counterparties is remote. The Company’s exposure relating to institutional counterparties was $66.0 million and $95.8 million at September 30, 2024 and December 31, 2023, respectively. The Company’s exposure relating to customer counterparties was approximately $11.0 million and $5.6 million at September 30, 2024 and December 31, 2023, respectively. Credit exposure may be reduced by the value of collateral pledged by the counterparty.


NOTE 6 - FAIR VALUE MEASUREMENTS
Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the assumptions applied by the Company when determining fair value reflect those that the Company determines market participants would use to price the asset or liability at the measurement date. If there has been a significant decrease in the volume and level of activity for the asset or liability, regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be received if the asset were to be sold or that would be paid if the liability were to be transferred in an orderly market transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. When determining fair value, the Company considers pricing information and other inputs that are current as of the measurement date. In periods of market dislocation, the observability of prices and other inputs may be reduced for certain instruments, or not available at all. The unavailability or reduced availability of pricing or other input information could cause an instrument to be reclassified from one level to another.
The Fair Value Measurements and Disclosures Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) defines fair value and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3
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measurements). The three levels of the fair value hierarchy under the Fair Value Measurements and Disclosures Topic of the FASB ASC are described below:
Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
Valuation Techniques
There were no changes in the valuation techniques used during the nine months ended September 30, 2024.
Securities
Trading and Equity Securities
These equity securities are valued based on market quoted prices. These securities are categorized in Level 1 as they are actively traded and no valuation adjustments have been applied.
U.S. Government Agency and U.S. Treasury Securities
Fair value is estimated using either multi-dimensional spread tables or benchmarks. The inputs used include benchmark yields, reported trades, and broker/dealer quotes. These securities are classified as Level 2.
Agency Mortgage-Backed Securities
Fair value is estimated using either a matrix or benchmarks. The inputs used include benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. These securities are categorized as Level 2.
Agency Collateralized Mortgage Obligations and Small Business Administration Pooled Securities
The valuation model for these securities is volatility-driven and ratings based, and uses multi-dimensional spread tables. The inputs used include benchmark yields, reported trades, new issue data, broker dealer quotes, and collateral performance. If there is at least one significant model assumption or input that is not observable, these securities are categorized as Level 3 within the fair value hierarchy; otherwise, they are classified as Level 2.
State, County, and Municipal Securities
The fair value is estimated using a valuation matrix with inputs including bond interest rate tables, recent transactions, and yield relationships. These securities are categorized as Level 2.
Single and Pooled Issuer Trust Preferred Securities
The fair value of trust preferred securities, including pooled and single issuer preferred securities, is estimated using external pricing models, discounted cash flow methodologies or similar techniques. The inputs used in these valuations include benchmark yields, reported trades, new issue data, broker dealer quotes, and collateral performance. If there is at least one significant model assumption or input that is not observable, these securities are classified as Level 3 within the fair value hierarchy; otherwise, they are classified as Level 2.
Loans Held for Sale
The Company has elected the fair value option to account for originated closed loans intended for sale. The fair value is measured on an individual loan basis using quoted market prices and when not available, comparable market value or discounted cash flow analysis may be utilized. These assets are typically classified as Level 2.
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Derivative Instruments
Derivatives
The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings. Additionally, in conjunction with fair value measurement guidance, the Company has made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. Although the Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its interest rate derivatives and risk participation agreements may also utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of September 30, 2024 and December 31, 2023, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are properly classified as Level 2.
Mortgage Derivatives
The fair value of mortgage derivatives is determined based on current market prices for similar assets in the secondary market and, therefore, classified as Level 2 within the fair value hierarchy.
Individually Assessed Collateral Dependent Loans
In accordance with the CECL standard, expected credit losses on individually assessed loans deemed to be collateral dependent are valued based upon the lower of amortized cost or fair value of the underlying collateral less costs to sell.  The inputs used in the appraisals of the collateral are not always observable, and in such cases the loans may be classified as Level 3 within the fair value hierarchy; otherwise, they are classified as Level 2.
Other Real Estate Owned and Other Foreclosed Assets
Other Real Estate Owned (“OREO”) and Other Foreclosed Assets, when applicable, are valued at the lower of cost or fair value of the property, less estimated costs to sell. The fair values are generally estimated based upon recent appraisal values of the property less costs to sell the property. Certain inputs used in appraisals are not always observable, and therefore OREO and Other Foreclosed Assets may be classified as Level 3 within the fair value hierarchy.
Goodwill and Other Intangible Assets
Goodwill and other intangible assets are subject to impairment testing. The Company conducts an annual impairment test of goodwill in the third quarter of each year, or more frequently if necessary. Other intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. To estimate the fair value of goodwill and, if necessary, other intangible assets, the Company utilizes both a comparable analysis of relevant price multiples in recent market transactions and a discounted cash flow analysis. Both valuation models require a significant degree of management judgment. In the event the fair value as determined by the valuation model is less than the carrying value, the intangibles may be impaired. If the impairment testing resulted in impairment, the Company would classify the impaired goodwill and other intangible assets subjected to nonrecurring fair value adjustments as Level 3.

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Assets and liabilities measured at fair value on a recurring and nonrecurring basis were as follows at the dates indicated:
  Fair Value Measurements at Reporting Date Using
BalanceQuoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
 September 30, 2024
 (Dollars in thousands)
Recurring fair value measurements
Assets
Trading securities$4,410 $4,410 $— $— 
Equity securities21,639 21,639 — — 
Securities available for sale
U.S. government agency securities213,084 — 213,084 — 
U.S. treasury securities640,913 — 640,913 — 
Agency mortgage-backed securities317,709 — 317,709 — 
Agency collateralized mortgage obligations30,639 — 30,639 — 
State, county, and municipal securities196 — 196 — 
Pooled trust preferred securities issued by banks and insurers1,027 — 1,027 — 
Small business administration pooled securities43,643 — 43,643 — 
Loans held for sale16,259 — 16,259 — 
Derivative instruments79,033 — 79,033 — 
Liabilities
Derivative instruments95,645 — 95,645 — 
Total recurring fair value measurements$1,272,907 $26,049 $1,246,858 $— 
Nonrecurring fair value measurements
Assets
Individually assessed collateral dependent loans (1)$50,772 $— $— $50,772 
Total nonrecurring fair value measurements$50,772 $— $— $50,772 
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  Fair Value Measurements at Reporting Date Using
BalanceQuoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
 December 31, 2023
 (Dollars in thousands)
Recurring fair value measurements
Assets
Trading securities$4,987 $4,987 $— $— 
Equity securities22,510 22,510 — — 
Securities available for sale
U.S. government agency securities207,138 — 207,138 — 
U.S. treasury securities769,102 — 769,102 — 
Agency mortgage-backed securities277,047 — 277,047 — 
Agency collateralized mortgage obligations33,189 — 33,189 — 
State, county, and municipal securities190 — 190 — 
Pooled trust preferred securities issued by banks and insurers1,018 — 1,018 — 
Small business administration pooled securities46,572 — 46,572 — 
Loans held for sale6,368 — 6,368 — 
Derivative instruments103,948 — 103,948 — 
Liabilities
Derivative instruments133,868 — 133,868 — 
Total recurring fair value measurements, net$1,338,201 $27,497 $1,310,704 $— 
Nonrecurring fair value measurements
Assets
Individually assessed collateral dependent loans (1)$28,881 $— $— $28,881 
Total nonrecurring fair value measurements$28,881 $— $— $28,881 
(1)    The carrying value of individually assessed collateral dependent loans is based on the lower of amortized cost or fair value of the underlying collateral less costs to sell. The fair value of the underlying collateral is generally determined through independent appraisals, which generally include various Level 3 inputs which are not identifiable. Appraisals may be adjusted by management for qualitative factors such as economic factors and estimated liquidation expenses. The range of these possible adjustments may vary.


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The estimated fair values and related carrying amounts for assets and liabilities for which fair value is only disclosed are shown below at the dates indicated:
   Fair Value Measurements at Reporting Date Using
 Carrying
Value		Fair
Value		Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
  
September 30, 2024
 (Dollars in thousands)
Financial assets
Securities held to maturity (a)
U.S. government agency securities$28,218 $28,062 $— $28,062 $— 
U.S. treasury securities100,772 94,190 — 94,190 — 
Agency mortgage-backed securities798,919 751,519 — 751,519 — 
Agency collateralized mortgage obligations437,552 380,343 — 380,343 — 
Single issuer trust preferred securities issued by banks1,500 1,451 — 1,451 — 
Small business administration pooled securities125,354 121,900 — 121,900 — 
Loans, net of allowance for credit losses (b)14,146,339 13,193,575 — — 13,193,575 
Federal Home Loan Bank stock (c)29,926 29,926 — 29,926 — 
Cash surrender value of life insurance policies (d)302,132 302,132 — 302,132 — 
Financial liabilities
Deposit liabilities, other than time deposits (e)$12,677,604 $12,677,604 $— $12,677,604 $— 
Time certificates of deposits (f)2,763,419 2,758,600 — 2,758,600 — 
Federal Home Loan Bank borrowings (f)600,521 600,733 — 600,733 — 
Junior subordinated debentures (g)62,859 61,160 — 61,160 — 
 
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   Fair Value Measurements at Reporting Date Using
 Carrying
Value		Fair
Value		Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
  
December 31, 2023
 (Dollars in thousands)
Financial assets
Securities held to maturity (a)
U.S. government agency securities$29,521 $28,408 $— $28,408 $— 
U.S. treasury securities100,712 91,535 — 91,535 — 
Agency mortgage-backed securities829,431 763,728 — 763,728 — 
Agency collateralized mortgage obligations477,517 407,911 — 407,911 — 
Single issuer trust preferred securities issued by banks1,500 1,373 — 1,373 — 
Small business administration pooled securities130,426 124,653 — 124,653 — 
Loans, net of allowance for credit losses (b)14,106,967 13,079,368 — — 13,079,368 
Federal Home Loan Bank stock (c)43,557 43,557 — 43,557 — 
Cash surrender value of life insurance policies (d)297,387 297,387 — 297,387 — 
Financial liabilities
Deposit liabilities, other than time deposits (e)$12,684,068 $12,684,068 $— $12,684,068 $— 
Time certificates of deposits (f)2,181,479 2,166,573 — 2,166,573 — 
Federal Home Loan Bank borrowings (f)1,105,541 1,103,845 — 1,103,845 — 
Junior subordinated debentures (g)62,858 58,911 — 58,911 — 
Subordinated debentures (f)49,980 49,613 — — 49,613 
(a)The fair values presented are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments and/or discounted cash flow analysis.
(b)Fair value of loans is measured using the exit price valuation method, determined primarily by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or cash flows, while incorporating liquidity and credit assumptions. Additionally, this amount excludes individually assessed collateral dependent loans, which are deemed to be marked to fair value on a nonrecurring basis.
(c)Federal Home Loan Bank stock has no quoted market value and is carried at cost; therefore, the carrying amount approximates fair value.
(d)Cash surrender value of life insurance policies is recorded at its cash surrender value (or the amount that can be realized upon surrender of the policy), therefore, carrying amount approximates fair value.
(e)Fair value of demand deposits, savings and interest checking accounts and money market deposits is the amount payable on demand at the reporting date.
(f)Fair value was determined by discounting anticipated future cash payments using rates currently available for instruments with similar remaining maturities.
(g)Fair value was determined based upon market prices of securities with similar terms and maturities.
This summary excludes certain financial assets and liabilities for which the carrying value approximates fair value. For financial assets, these may include cash and due from banks, federal funds sold and short-term investments. For financial liabilities, these may include federal funds purchased. These instruments would all be considered to be classified as Level 1 within the fair value hierarchy. Also excluded from the summary are financial instruments measured at fair value on a recurring and nonrecurring basis, as previously described.
The Company considers its current use of financial instruments to be the highest and best use of the instruments.

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NOTE 7 - REVENUE RECOGNITION

A portion of the Company’s noninterest income is derived from contracts with customers, and as such, the revenue recognized depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company accounts for such revenues in accordance with ASC 606 - Revenue from Contracts with Customers and considers the terms of the contract and all relevant facts and circumstances when applying this guidance. To ensure its alignment with this core principle, the Company measures revenue and the timing of recognition by applying the following five steps:

1.Identify the contract(s) with customers
2.Identify the performance obligations
3.Determine the transaction price
4.Allocate the transaction price to the performance obligations
5.Recognize revenue when (or as) the entity satisfies a performance obligation
    
The Company has disaggregated its revenue from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The following table presents the revenue streams that the Company has disaggregated as of the periods indicated:
Three Months EndedNine Months Ended
September 30
2024		September 30
2023		September 30
2024		September 30
2023
(Dollars in thousands)
Deposit account fees (inclusive of cash management fees)$6,779 $5,936 $19,339 $17,360 
Interchange fees3,259 3,026 9,255 8,822 
ATM fees1,241 1,202 3,449 3,140 
Investment management - wealth management and advisory services9,664 8,674 28,378 25,717 
Investment management - retail investments and insurance revenue1,369 1,572 3,583 4,656 
Payment processing income 434 370 1,421 1,272 
Credit card income592 536 1,721 1,584 
Other noninterest income1,519 1,407 3,999 4,412 
Total noninterest income in-scope of ASC 606 24,857 22,723 71,145 66,963 
Total noninterest income out-of-scope of ASC 606 8,692 10,820 24,677 25,579 
Total noninterest income$33,549 $33,543 $95,822 $92,542 

In each of the revenue streams identified above, there were no significant judgments made in determining or allocating the transaction price, as the consideration and service requirements are generally explicitly identified in the associated contracts. Additional information related to each of the revenue streams is further noted below.

Deposit Account Fees

The Company offers various deposit account products to its customers governed by specific deposit agreements applicable to either personal customers or business customers. These agreements identify the general conditions and obligations of both parties, and include standard information regarding deposit account related fees.

Deposit account services include providing access to deposit accounts as well as access to the various deposit transactional services of the Company. These transactional services are primarily those that are identified in the standard fee schedule, and include, but are not limited to, services such as overdraft protection, wire transfer, and check collection. Revenue is recognized in conjunction with the various services being provided. For example, the Company may assess monthly fixed service fees associated with the customer having access to a deposit account, which can vary depending on the account type and daily account balance. In addition, the Company may also assess separate fixed fees associated with and at the time specific transactions are entered into by the customer. As such, the Company considers its performance obligations to be met concurrently with providing the account access or completing the requested deposit transaction.

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Cash Management
        
Cash management services are a subset of the Deposit account fees revenue stream. These services primarily include ACH transaction processing, positive pay and remote deposit services. These services are also governed by separate agreements entered into with the customer. The fee arrangement for these services is structured to assess fees under one of two scenarios, either a per transaction fee arrangement or an earnings credit analysis arrangement. Under the per transaction fee arrangement, fixed fees are assessed concurrently with customers executing the transactions, and as such, the Company considers its performance obligations to be met concurrently with completing the requested transaction. Under the earnings credit analysis arrangement, the Company provides a monthly earnings credit to the customer that is negotiated and determined based on various factors. The credit is then available to absorb the per transaction fees that are assessed on the customer's deposit account activity for the month. Any amount of the transactional fees in excess of the earnings credit is recognized as revenue in that month.

Interchange Fees

The Company earns interchange revenue from its issuance of credit and debit cards granted through its membership in various card payment networks. The Company provides credit cards and debit cards to its customers which are authorized and settled through these payment networks, and in exchange, the Company earns revenue as determined by each payment network's interchange program. The revenue is recognized concurrently with the settlement of card transactions within each network.

ATM Fees

The Company deploys automated teller machines (ATMs) as part of its overall branch network. Certain transactions performed at the ATMs require customers to acknowledge and pay a fee for the requested service. Certain ATM fees are disclosed in the deposit account agreement fee schedules, whereas those assessed to non-Rockland Trust deposit holders are solely determined during the transaction at the machine.

The ATM fee is a fixed dollar per transaction amount, and as such, is recognized concurrently with the overall daily processing and settlement of the ATM activity.

Investment Management - Wealth Management and Advisory Services

The Company offers investment management and trust services to individuals, institutions, small businesses and charitable institutions. Each investment management product is governed by its own contract along with a separate identifiable fee schedule unique to that product. The Company also offers additional services, such as estate settlement, financial planning, tax services and other special services quoted at the client's request.

Asset management and/or custody fees are based upon a percentage of the monthly valuation of the principal assets in the customer's account, whereas fees for additional or special services are fixed in nature and are charged as services are rendered. As the fees are dependent on assets under management, which are susceptible to market factors outside of the Company’s control, this variable consideration is constrained and therefore no revenue is estimated at contract initiation. As such, all revenue is recognized in correlation to the monthly management fee determinations or as transactional services are provided. Due to the fact that payments are primarily made subsequent to the valuation period, the Company records a receivable for revenue earned but not received. The following table provides the amount of investment management revenue earned but not received as of the dates indicated:
September 30, 2024December 31, 2023
(Dollars in thousands)
Receivables, included in other assets $5,794 $5,509 

Investment Management - Retail Investments and Insurance Revenue

The Company offers the sale of mutual fund shares, unit investment trust shares, third party model portfolios, general securities, fixed and variable annuities and life insurance products through registered representatives who are both employed by the Company and licensed and contracted with various Broker General Agents to offer these products to the Company’s customer base. As such, the Company performs these services as an agent and earns a fixed commission on the sales of these
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products and services. To a lesser degree, production bonus commissions can also be earned based upon the Company meeting certain volume thresholds.

In general, the Company recognizes commission revenue at the point of sale, and for certain insurance products, may also earn and recognize annual residual commissions commensurate with annual premiums being paid.

Payment Processing Income
    
The Company refers customers to third party payment processing partners in exchange for commission and fee income. The income earned is comprised of multiple components, including a fixed referral fee per each referred customer, a rebate amount determined primarily as a percentage of net revenue earned by the third party from services provided to each referred customer, and overall production bonus commissions if certain new account production thresholds are met. Payment processing income is recognized in conjunction with either completing the referral to earn the fixed fee amount or as the merchant activity is processed to derive the Company’s rebate and/or production bonus amounts.

Credit Card Income

The Company provides consumer and business credit card solutions to its customers by soliciting new accounts on behalf of a third party credit card provider in exchange for a fee. The income earned is comprised of new account incentive payments as well as a percentage of interchange income earned by the third party provider offering the consumer and business purpose revolving credit accounts. The credit card income is recognized in conjunction with the establishment of each new credit card member or as the interchange is earned by the third party in connection with net purchase transactions made by the credit card member.
    
Other Noninterest Income

The Company earns various types of other noninterest income that fall within the scope of the new revenue recognition rules, and have been aggregated into one general revenue stream in the table noted above. This amount includes, but is not limited to, the following types of revenue with customers:

Safe Deposit Rent

    The Company rents out the use of safe deposit boxes to its customers, which can be accessed when the bank is open for business. The safe deposit box rental fee is paid upfront and is recognized as revenue ratably over the annual term of the contract.

Foreign Currency

    The Company earns fee income associated with various transactions related to foreign currency product offerings, including foreign currency bank notes and drafts and foreign currency wires. The majority of this income is derived from commissions earned related to customers executing the above-mentioned foreign currency transactions through arrangements with third party correspondents.
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NOTE 8 - OTHER COMPREHENSIVE INCOME (LOSS)
The following tables present a reconciliation of the changes in the components of other comprehensive income (loss) for the periods indicated, including the amount of income tax (expense) benefit allocated to each component of other comprehensive income (loss):
Three Months Ended
September 30, 2024		Nine Months Ended
September 30, 2024
Pre-Tax
Amount		Tax (Expense)
Benefit		After Tax
Amount		Pre-Tax
Amount		Tax (Expense)
Benefit		After Tax
Amount
 (Dollars in thousands)
Change in fair value of securities available for sale$36,678 $(8,392)$28,286 $38,084 $(9,414)$28,670 
Less: net security losses reclassified into other noninterest expense— — — — — — 
Net change in fair value of securities available for sale36,678 (8,392)28,286 38,084 (9,414)28,670 
Change in fair value of cash flow hedges7,144 (1,953)5,191 (3,402)930 (2,472)
Less: net cash flow hedge losses reclassified into interest income or interest expense (4,902)1,340 (3,562)(15,788)4,316 (11,472)
Net change in fair value of cash flow hedges12,046 (3,293)8,753 12,386 (3,386)9,000 
Amortization of net actuarial gains(24)6 (18)(74)20 (54)
Amortization of net prior service costs4 (2)2 13 (4)9 
Net change in other comprehensive income for defined benefit postretirement plans (1)(20)4 (16)(61)16 (45)
Total other comprehensive income (loss)$48,704 $(11,681)$37,023 $50,409 $(12,784)$37,625 
 Three Months Ended
September 30, 2023		Nine Months Ended
September 30, 2023
 Pre-Tax
Amount		Tax (Expense)
Benefit		After Tax
Amount		Pre-Tax
Amount		Tax (Expense)
Benefit		After Tax
Amount
 (Dollars in thousands)
Change in fair value of securities available for sale$(10,378)$2,457 $(7,921)$(3,186)$882 $(2,304)
Less: net security losses reclassified into other noninterest expense— — — — — — 
Net change in fair value of securities available for sale(10,378)2,457 (7,921)(3,186)882 (2,304)
Change in fair value of cash flow hedges(7,266)2,043 (5,223)(13,966)3,927 (10,039)
Less: net cash flow hedge losses reclassified into interest income or interest expense (7,547)2,122 (5,425)(20,806)5,850 (14,956)
Net change in fair value of cash flow hedges281 (79)202 6,840 (1,923)4,917 
Amortization of net actuarial gains(137)38 (99)(411)115 (296)
Amortization of net prior service costs10 (3)7 29 (8)21 
Net change in other comprehensive income for defined benefit postretirement plans (1)(127)35 (92)(382)107 (275)
Total other comprehensive (loss) income$(10,224)$2,413 $(7,811)$3,272 $(934)$2,338 

(1)The amortization of prior service costs is included in the computation of net periodic pension cost as disclosed in Note 12 - Employee Benefit Plans within the Notes to the Consolidated Financial Statements included in Item 8 of the Company’s 2023 Form 10-K.
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Information on the Company’s accumulated other comprehensive income (loss), net of tax, is comprised of the following components as of the dates indicated:
Unrealized Gain (Loss)
on Securities		Unrealized Gain (Loss) on Cash Flow HedgeDefined Benefit Postretirement PlansAccumulated Other Comprehensive Income (Loss)
(Dollars in thousands)
2024
Beginning balance: January 1, 2024$(96,231)$(20,575)$1,979 $(114,827)
Net change in other comprehensive income (loss)28,670 9,000 (45)37,625 
Ending balance: September 30, 2024$(67,561)$(11,575)$1,934 $(77,202)
 2023
Beginning balance: January 1, 2023$(128,657)$(36,630)$2,203 $(163,084)
Net change in other comprehensive (loss) income(2,304)4,917 (275)2,338 
Ending balance: September 30, 2023$(130,961)$(31,713)$1,928 $(160,746)


NOTE 9 - COMMITMENTS AND CONTINGENCIES
Financial Instruments with Off-Balance Sheet Risk
    In the normal course of business, the Company enters into various transactions to meet the financing needs of its customers, which, in accordance with GAAP, are not included in its consolidated balance sheets. These transactions include commitments to extend credit and standby letters of credit, and loan exposures with recourse, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. The Company minimizes its exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures.
    The Company enters into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Substantially all of these commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of loan funding.
The Company has certain loan exposures for which there is recourse. These loan relationships could require the Company to repurchase or cover certain losses per agreements for certain loans that are either sold or referred to third parties.
    Standby letters of credit are written conditional commitments issued to guarantee the performance of a customer to a third party. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount of the commitment. If the commitment were funded, the Company would be entitled to seek recovery from the customer. The Company’s policies generally require that standby letter of credit arrangements contain security and debt covenants similar to those contained in loan agreements.
    The fees collected in connection with the issuance of standby letters of credit are representative of the fair value of the Company's obligation undertaken in issuing the guarantee. In accordance with applicable accounting standards related to guarantees, fees collected in connection with the issuance of standby letters of credit are deferred. The fees are then recognized in income proportionately over the life of the standby letter of credit agreement. The deferred standby letter of credit fees represent the fair value of the Company's potential obligations under the standby letter of credit guarantees.
    The following table summarizes the above financial instruments at the dates indicated:
September 30, 2024December 31, 2023
 (Dollars in thousands)
Commitments to extend credit$4,751,358 $4,632,105 
Loan exposures sold with recourse144,251 153,850 
Standby letters of credit23,484 21,427 
Deferred standby letter of credit fees224 155 
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Lease Commitments
The Company leases space for offices, parking, and ATM locations, as well as certain branch locations under noncancellable operating leases. Several of these leases contain renewal options to extend lease terms for a period of 1 to 20 years.
There has been no significant change in the future minimum lease payments payable by the Company since December 31, 2023. See the Company's 2023 Form 10-K for information regarding leases and other commitments.
Other Contingencies
At September 30, 2024, the Bank was involved in pending lawsuits that arose in the ordinary course of business. Management has reviewed these pending lawsuits with legal counsel and has taken into consideration the view of counsel as to their outcome. In the opinion of management, the final disposition of pending lawsuits is not expected to have a material adverse effect on the Company’s financial position or results of operations.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements, notes and tables included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (the “2023 Form 10-K”).

Cautionary Statement Regarding Forward-Looking Statements

    This Quarterly Report on Form 10-Q (this “Report”), in Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by forward-looking terminology such as “should,” “could,” “will,” “may,” “expect,” “believe,” “forecast,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate,” “estimate,” “intend,” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties and our actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, in addition to those risk factors listed under the “Risk Factors” section of the 2023 Form 10-K, include but are not limited to:

•adverse economic conditions in the regional and local economies within the New England region and the Company’s market area;
•events impacting the financial services industry, including high profile bank failures, and any resulting decreased confidence in banks among depositors, investors, and other counterparties, as well as competition for deposits, significant disruption, volatility and depressed valuations of equity and other securities of banks in the capital markets;
•the effects to the Company of an increasingly competitive labor market, including the possibility that the Company will have to devote significant resources to attract and retain qualified personnel;
•the instability or volatility in financial markets and unfavorable domestic or global general economic, political or business conditions, whether caused by geopolitical concerns, including the Russia/Ukraine conflict, the conflict in Israel and surrounding areas and the possible expansion of such conflicts, political and policy uncertainties in connection with the U.S. presidential election, changes in U.S. and international trade policies, or other factors, and the potential impact of such factors on the Company and its customers, including the potential for decreases in deposits and loan demand, unanticipated loan delinquencies, loss of collateral and decreased service revenues;
•unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on the Company’s local economies or the Company's business caused by adverse weather conditions and natural disasters, changes in climate, public health crises or other external events and any actions taken by governmental authorities in response to any such events;
•adverse changes or volatility in the local real estate market;
•changes in interest rates and any resulting impact on interest earning assets and/or interest bearing liabilities, the level of voluntary prepayments on loans and the receipt of payments on mortgage-backed securities, decreased loan demand or increased difficulty in the ability of borrowers to repay variable rate loans;
•acquisitions may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles;
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•the effect of laws, regulations, new requirements or expectations, or additional regulatory oversight in the highly regulated financial services industry, including as a result of intensified regulatory scrutiny in the aftermath of regional bank failures and the resulting need to invest in technology to meet heightened regulatory expectations, increased costs of compliance or required adjustments to strategy;
•changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System;
•higher than expected tax expense, including as a result of failure to comply with general tax laws and changes in tax laws;
•increased competition in the Company’s market areas, including competition that could impact deposit gathering, retention of deposits and the cost of deposits, increased competition due to the demand for innovative products and service offerings, and competition from non-depository institutions which may be subject to fewer regulatory constraints and lower cost structures;
•a deterioration in the conditions of the securities markets;
•a deterioration of the credit rating for U.S. long-term sovereign debt or uncertainties surrounding the federal budget;
•inability to adapt to changes in information technology, including changes to industry accepted delivery models driven by a migration to the internet as a means of service delivery, including any inability to effectively implement new technology-driven products, such as artificial intelligence;
•electronic or other fraudulent activity within the financial services industry, especially in the commercial banking sector;
•adverse changes in consumer spending and savings habits;
•the effect of laws and regulations regarding the financial services industry, including the need to invest in technology to meet heightened regulatory expectations or introduction of new requirements or expectations resulting in increased costs of compliance or required adjustments to strategy;
•changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) generally applicable to the Company’s business and the associated costs of such changes;
•the Company’s potential judgments, claims, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory and government actions;
•changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters;
•operational risks related to the Company and its customers’ reliance on information technology; cyber threats, attacks, intrusions, and fraud; and outages or other issues impacting the Company or its third party service providers which could lead to interruptions or disruptions of the Company’s operating systems, including systems that are customer facing, and adversely impact the Company’s business;
•any unexpected material adverse changes in the Company’s operations or earnings; and
•the other risks described in the section entitled “Risk Factors” in Part I. Item 1A of the 2023 Form 10-K.

    Except as required by law, the Company disclaims any intent or obligation to update publicly any such forward-looking statements, whether in response to new information, future events or otherwise. Any public statements or disclosures by the Company following this Report which modify or impact any of the forward-looking statements contained in this Report will be deemed to modify or supersede such statements in this Report.
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Selected Quarterly Financial Data
The selected consolidated financial and other data of the Company set forth below does not purport to be complete and should be read in conjunction with, and is qualified in its entirety by, the more detailed information, including the Consolidated Financial Statements and related notes, appearing elsewhere in this Report.
Three Months Ended
September 30
2024		June 30
2024		March 31
2024		December 31
2023		September 30
2023
 (Dollars in thousands, except per share data)
Financial condition data
Securities$2,765,575 $2,765,723 $2,845,715 $2,930,860 $2,973,974 
Loans14,360,807 14,400,942 14,330,594 14,278,070 14,224,235 
Allowance for credit losses(163,696)(150,859)(146,948)(142,222)(140,569)
Goodwill and other intangible assets998,773 1,000,233 1,001,698 1,003,262 1,004,897 
Total assets19,408,117 19,411,037 19,324,613 19,347,373 19,368,109 
Total deposits15,441,023 15,409,587 15,043,221 14,865,547 15,059,526 
Total borrowings663,380 693,386 1,025,393 1,218,379 1,000,362 
Stockholders’ equity2,977,148 2,919,249 2,884,208 2,895,252 2,885,408 
Nonperforming loans104,248 57,451 56,941 54,383 39,171 
Nonperforming assets104,358 57,561 57,051 54,493 39,281 
Income statement
Interest income$216,524 $211,864 $208,045 $207,170 $202,928 
Interest expense74,821 73,938 70,606 62,074 53,048 
Net interest income141,703 137,926 137,439 145,096 149,880 
Provision for credit losses19,500 4,250 5,000 5,500 5,500 
Noninterest income33,549 32,330 29,943 32,067 33,543 
Noninterest expenses100,443 99,614 99,887 100,748 97,782 
Net income42,947 51,330 47,770 54,802 60,808 
Per share data
Net income—basic$1.01 $1.21 $1.12 $1.26 $1.38 
Net income—diluted1.01 1.21 1.12 1.26 1.38 
Cash dividends declared0.57 0.57 0.57 0.55 0.55 
Book value per share70.08 68.74 67.94 67.53 65.37 
Tangible book value per share (1)46.57 45.19 44.34 44.13 42.60 
Performance ratios
Return on average assets0.88 %1.07 %1.00 %1.13 %1.25 %
Return on average common equity5.75 %7.10 %6.63 %7.51 %8.35 %
Net interest margin (on a fully tax equivalent basis)3.29 %3.25 %3.23 %3.38 %3.47 %
Dividend payout ratio56.37 %47.14 %49.36 %44.30 %39.92 %
Asset Quality Ratios
Nonperforming loans as a percent of gross loans0.73 %0.40 %0.40 %0.38 %0.28 %
Nonperforming assets as a percent of total assets0.54 %0.30 %0.30 %0.28 %0.20 %
Allowance for credit losses as a percent of total loans1.14 %1.05 %1.03 %1.00 %0.99 %
Allowance for credit losses as a percent of nonperforming loans157.03 %262.59 %258.07 %261.52 %358.86 %
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Capital ratios
Equity to assets15.34 %15.04 %14.92 %14.96 %14.90 %
Tangible equity to tangible assets (1)10.75 %10.42 %10.27 %10.31 %10.24 %
Tier 1 leverage capital ratio11.22 %11.09 %10.95 %10.96 %11.12 %
Common equity tier 1 capital ratio14.57 %14.40 %14.16 %14.19 %14.41 %
Tier 1 risk-based capital ratio14.57 %14.40 %14.16 %14.19 %14.41 %
Total risk-based capital ratio15.95 %15.84 %15.57 %15.91 %16.12 %

(1)     Represents a non-GAAP measure. For reconciliation to GAAP book value per share, see Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Executive Level Overview - Non-GAAP Measures" below.



Executive Level Overview
    Management evaluates the Company's operating results and financial condition using measures that include net income, earnings per share, return on assets and equity, return on tangible common equity, net interest margin, tangible book value per share, asset quality indicators, and many others. These metrics are used by management to make key decisions regarding the Company's balance sheet, liquidity, interest rate sensitivity, and capital resources and assist with identifying opportunities for improving the Company's financial position or operating results. The Company focuses on organic growth, but will also consider growth through acquisition. Any potential acquisition opportunities are evaluated for the potential to provide a satisfactory financial return as well as other criteria (ease of integration, synergies, geographical location).

Third Quarter 2024 Results
    
Net income for the three months ended September 30, 2024 was $42.9 million, or $1.01 on a diluted earnings per share basis, as compared to $60.8 million, or $1.38 on a diluted earnings per share basis, for the three months ended September 30, 2023, representing decreases of 29.4% and 26.8%, respectively, due primarily to lower net interest income and the impact of an elevated provision for credit losses attributable to specific reserve allocations on one large commercial real estate loan. Despite a rise in the provision for credit losses, third quarter 2024 results reflected solid overall business activity amidst a continued challenging environment, including the following key drivers:

•Net interest margin expansion to 3.29%;
•Robust core deposit growth, with average deposits up $330.0 million (8.74% annualized) for the quarter;
•Strong fee income;
•Focused expense management; and
•Strong capital levels, with tangible book value per share growth of $1.38 for the quarter.



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Interest-Earning Assets

    The results depicted in the following table reflect the trend of the Company's interest-earning assets over the past five quarters. While the Company employs a longer term strategy that typically emphasizes loan growth commensurate with overall economic growth, changes over the five quarter period reflect relatively consistent balances of total interest-earning assets. The following table summarizes the Company's average interest-earning assets for each period presented:

2187

    Management strives to be disciplined about loan pricing and considers interest rate sensitivity when generating loan assets. In addition, management takes a disciplined approach to credit underwriting, seeking to avoid undue credit risk and credit losses.

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Funding and Net Interest Margin

    The Company's overall sources of funding reflect strong business and retail deposit growth with management's emphasis on core deposit growth to fund loans. In conjunction with deposit growth during the first nine months of 2024, total borrowings decreased by $555.0 million at September 30, 2024 as compared to December 31, 2023, primarily driven by a reduction in Federal Home Loan Bank borrowings, along with the full redemption of $50.0 million in subordinated debentures during the first quarter of 2024. The following chart shows sources of funding for the trailing five quarters:

3017
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The Company's ratio of core deposits to total deposits decreased over the last five quarters, primarily attributable to core deposit outflows in conjunction with existing deposit balances shifting into higher cost time deposits. The following chart shows the percentage of core deposits for the trailing five quarters:
3344
(1) The percentage of core deposits to total deposits presented above is inclusive of reciprocal deposits collected through the Company's participation in the IntraFi Network.


    The following table shows the net interest margin and cost of deposits trends for the trailing five quarters:
3632






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Noninterest Income

    Noninterest income is primarily comprised of deposit account fees, interchange and ATM fees, investment management fees and mortgage banking income. The following chart shows trends in the components of noninterest income over the past five quarters:

3914




























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Expense Control

    Management seeks to take a balanced approach to noninterest expense control by monitoring ongoing operating expenses while making needed capital expenditures and prudently investing in growth initiatives. The Company’s primary expenses arise from employee salaries and benefits, as well as expenses associated with buildings and equipment.

The following chart depicts the Company's efficiency ratio (calculated by dividing noninterest expense by the sum of noninterest income and net interest income) over the past five quarters:

4514


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Capital

    The Company's approach with respect to revenue and expense is designed to promote long-term earnings growth, which in turn contributes to capital growth. Capital is primarily impacted by earnings retention, dividends, changes in other comprehensive income, and opportunistic share repurchases. The following chart shows the Company's book value and tangible book value per share over the past five quarters:

4939
*See "Non-GAAP Measures" below for a reconciliation to GAAP financial measures.

    The Company declared a quarterly cash dividend of $0.57 per share for the third quarter of 2024, representing an increase of 3.6% from the 2023 third quarter dividend rate of $0.55.

Non-GAAP Measures
    When management assesses the Company’s financial performance for purposes of making day-to-day and strategic decisions, it does so based upon the performance of its core banking business, which is primarily derived from the combination of net interest income and noninterest or fee income, reduced by operating expenses, the provision for credit losses, and the impact of income taxes and other noncore items shown in the table that follows. There are items that impact the Company's results that management believes are unrelated to its core banking business such as gains or losses on the sales of securities, merger and acquisition expenses, provision for credit losses on acquired portfolios, loss on extinguishment of debt, impairment and other items. Management, therefore, excludes items management considers to be noncore when computing the Company’s non-GAAP operating earnings and operating EPS, noninterest income on an operating basis and efficiency ratio on an operating basis. Management believes excluding these items facilitates greater visibility into the Company’s core banking business and underlying trends that may, to some extent, be obscured by inclusion of such items.
    
Management also supplements its evaluation of financial performance with an analysis of tangible book value per share (which is computed by dividing stockholders' equity less goodwill and identifiable intangible assets, or tangible common equity, by common shares outstanding) and with the Company's tangible common equity ratio (which is computed by dividing tangible common equity by tangible assets) which are non-GAAP measures. The Company has included information on these tangible ratios because management believes that investors may find it useful to have access to the same analytical tools used by management to assess performance and identify trends.  The Company has recognized goodwill and other intangible assets in conjunction with merger and acquisition activities.  Excluding the impact of goodwill and other intangibles in measuring asset and capital values for the ratios provided, along with other bank standard capital ratios, facilitates comparison of the capital adequacy of the Company to other companies in the financial services industry.

These non-GAAP measures should not be viewed as a substitute for financial results determined in accordance with GAAP. An item which management deems to be noncore and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular period. The Company’s non-GAAP performance measures are not necessarily comparable to similarly named non-GAAP performance measures which may be presented by other companies.
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The following table summarizes the calculation of tangible common equity to tangible assets ratio and tangible book value per share and shows the reconciliation of non-GAAP measures:
September 30
2024		June 30
2024		March 31
2024		December 31
2023		September 30
2023
Tangible common equity(Dollars in thousands, except per share data)
Stockholders' equity (GAAP)$2,977,148 $2,919,249 $2,884,208 $2,895,251 $2,885,408 (a)
Less: Goodwill and other intangibles998,773 1,000,233 1,001,698 1,003,262 1,004,897 
Tangible common equity (Non-GAAP)1,978,375 1,919,016 1,882,510 1,891,989 1,880,511 (b)
Tangible assets
Assets (GAAP)19,408,117 19,411,037 19,324,613 19,347,373 19,368,109 (c)
Less: Goodwill and other intangibles998,773 1,000,233 1,001,698 1,003,262 1,004,897 
Tangible assets (Non-GAAP)$18,409,344 $18,410,804 $18,322,915 $18,344,111 $18,363,212 (d)
Common shares42,480,765 42,469,867 42,452,457 42,873,187 44,141,973 (e)
Common equity to assets ratio (GAAP)15.34 %15.04 %14.92 %14.96 %14.90 %(a/c)
Tangible common equity to tangible assets ratio (Non-GAAP)10.75 %10.42 %10.27 %10.31 %10.24 %(b/d)
Book value per share (GAAP)$70.08 $68.74 $67.94 $67.53 $65.37 (a/e)
Tangible book value per share (Non-GAAP)$46.57 $45.19 $44.34 $44.13 $42.60 (b/e)

Critical Accounting Estimates

Critical accounting policies are defined as those that are reflective of significant management judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. Certain estimates associated with these policies inherently have a greater reliance on the use of assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. These critical accounting estimates are defined as estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on financial condition or results of operations.
There have been no material changes in critical accounting estimates during the first nine months of 2024. Refer to “Critical Accounting Estimates” in Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the Company's 2023 Form 10-K for a complete listing of critical accounting policies.

FINANCIAL POSITION
Securities Portfolio The Company's securities portfolio primarily consists of U.S. Treasury, U.S. government agency securities, agency mortgage-backed securities, agency collateralized mortgage obligations, and small business administration pooled securities. Also included in the Company's securities portfolio are trading and equity securities related to certain employee benefit programs. The majority of these securities are investment grade debt obligations with average lives of five years or less. U.S. government agency securities entail a lesser degree of risk than loans made by the Bank by virtue of the guarantees that back them, require less capital under risk-based capital rules than noninsured or nonguaranteed mortgage loans, are more liquid than individual mortgage loans, and may be used to collateralize borrowings or other obligations of the Bank. The Bank views its securities portfolio as a source of income and liquidity. Interest and principal payments generated from securities provide a source of liquidity to fund loans and meet short-term cash needs.
Total securities decreased by $165.3 million, or 5.6%, at September 30, 2024 as compared to December 31, 2023, driven primarily by paydowns, calls and maturities, offset partially by new purchases of $48.3 million and $38.1 million of unrealized gains in the available for sale portfolio. As a result, the Company's ratio of securities to total assets decreased to 14.2% at September 30, 2024 compared to 15.1% at December 31, 2023. The Company estimates expected credit losses for its available for sale and held to maturity securities in accordance with the current expected credit loss ("CECL") methodology. Further details regarding the Company's measurement of expected credit losses on securities can be found in Note 2 “Securities” within the Notes to Consolidated Financial Statements included in Part I. Item 1 of this Report.
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Residential Mortgage Loan Sales The Bank’s residential mortgage loans are generally originated in compliance with terms, conditions and documentation which permit the sale of such loans to investors in the secondary market. Loan sales in the secondary market provide funds for additional lending and other banking activities. Depending on market conditions, the Bank may sell the servicing of the sold loans for a servicing released premium, simultaneous with the sale of the loan. For the remainder of the sold loans for which the Company retains the servicing, a mortgage servicing asset is recognized. Additionally, as part of its asset/liability management strategy, the Bank may opt to retain certain residential real estate loan originations for its portfolio. When a loan is sold, the Company enters into agreements that contain representations and warranties about the characteristics of the loans sold and their origination. The Company may be required to either repurchase mortgage loans or to indemnify the purchaser from losses if representations and warranties are found to be not accurate in all material respects. The Company incurred no material losses related to residential mortgage repurchases during the three and nine months ended September 30, 2024 and 2023, respectively.
    
     The Company experienced a lower volume of residential real estate loan sales for the three and nine months ended September 30, 2024 as compared to the same periods ended September 30, 2023, driven primarily by reduced customer demand in the current interest rate environment. The following table shows the total residential real estate loans closed and the breakdown of amounts held in portfolio or sold (or held for sale) in the secondary market during the periods indicated:
Table 1 - Closed Residential Real Estate Loans
 Three Months Ended September 30Nine Months Ended September 30
 2024202320242023
 (Dollars in thousands)
Held in portfolio$49,062 $147,079 $136,574 $395,915 
Sold or held for sale in the secondary market79,960 25,029 190,842 54,520 
Total closed loans$129,022 $172,108 $327,416 $450,435 
During the three and nine months ended September 30, 2024, a larger portion of new originations were sold in the secondary market versus retained in the Company's portfolio as compared to the same prior year periods, reflecting the Company's 2024 strategy to shift its residential production to the saleable market.



The table below reflects additional information related to the loans sold during the periods indicated and the sale or retention of the related servicing rights:

Table 2 - Residential Mortgage Loan Sales
Three Months Ended September 30Nine Months Ended September 30
2024202320242023
(Dollars in thousands)
Sold with servicing rights released$77,656 $27,579 $172,386 $53,293 
Sold with servicing rights retained (1)3,074 — 7,825 — 
Total loans sold$80,730 $27,579 $180,211 $53,293 
(1) All loans sold with servicing rights retained during the above periods were sold without recourse.

In the event of a sale with servicing rights retained, a mortgage servicing asset is established, which represents the then current estimated fair value based on market prices for comparable mortgage servicing contracts, when available, or alternatively is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. Servicing rights are recorded in other assets in the Consolidated Balance Sheets, are amortized in proportion to and over the period of estimated net servicing income, and are assessed for impairment based on fair value at each reporting date. Impairment is determined by stratifying the rights based on predominant characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance, to the extent that fair value is less than the capitalized amount. If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the allowance
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may be recorded as an increase to income. The principal balance of loans serviced by the Bank on behalf of investors was $286.4 million, $298.8 million and $304.7 million at September 30, 2024, December 31, 2023, and September 30, 2023, respectively.
    The following table shows the adjusted cost of the servicing rights associated with these loans and the changes for the periods indicated:
Table 3 - Mortgage Servicing Asset
 Three Months Ended September 30Nine Months Ended September 30
 2024202320242023
 (Dollars in thousands)
Balance at beginning of period$2,571 $2,772 $2,641 $2,947 
Additions20 — 56 — 
Amortization(100)(111)(306)(375)
Change in valuation allowance(14)124 86 213 
Balance at end of period $2,477 $2,785 $2,477 $2,785 
See Note 5, “Derivative and Hedging Activities” within the Notes to Consolidated Financial Statements included in Part I. Item 1 of this Report for more information on mortgage activity and mortgage related derivatives.
Loan Portfolio The Company's total loan portfolio at September 30, 2024 increased by $82.7 million, or 0.6% (0.8% on an annualized basis), when compared to December 31, 2023. The 2024 year-to-date growth was driven primarily by the consumer portfolio, which increased by $53.8 million, or 1.5%, during the period. Total commercial loans also increased by $28.9 million, or 0.27%, during the first nine months of 2024, fueled primarily by continued steady growth in the small business portfolio, which rose $18.1 million, or 7.2%, while the combined commercial real state and construction portfolios remained relatively flat, increasing by $13.0 million, or 0.1%.

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The Company’s commercial real estate loan portfolio, inclusive of commercial construction, is the Company’s largest loan type concentration. The Company believes that this portfolio is also well-diversified with loans secured by a variety of property types, such as owner-occupied and nonowner-occupied commercial, retail, office, industrial, warehouse, and other special purpose properties, such as hotels, motels, nursing homes, restaurants, churches, recreational facilities, marinas, and golf courses. Commercial real estate also includes loans secured by certain residential-related property types, including multi-family apartment buildings, residential development tracts and condominiums. The following pie chart shows the diversification of the commercial real estate loan portfolio as of September 30, 2024:
1408
(1) Included in the total commercial real estate portfolio is $1.4 billion of owner occupied commercial real estate loans.
(Dollars in thousands)
Average loan size$1,629 
Largest individual commercial real estate mortgage outstanding$60,909 
Commercial real estate nonperforming loans/commercial real estate loans0.88 %


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    Management considers the Company’s commercial and industrial portfolio to be well-diversified with loans to various types of industries. The following pie chart shows the diversification of the commercial and industrial portfolio as of September 30, 2024:
330
(Dollars in thousands)
Average loan size (excluding floor plan tranches) $400 
Largest individual commercial and industrial loan outstanding $35,995 
Commercial and industrial nonperforming loans/commercial and industrial loans0.76 %

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    The Company's consumer portfolio primarily consists of both fixed-rate and adjustable-rate residential real estate loans as well as residential construction lending related to single-home residential development within the Company's market area. The Company also provides home equity loans and lines of credit that may be made as a fixed-rate term loan or under a variable rate revolving line of credit secured by a first or junior mortgage on the borrower's residence or second home. Additionally, the Company makes loans for other personal needs. Other consumer loans primarily consist of installment loans and overdraft protections. The residential real estate, home equity and other consumer portfolios totaled $3.6 billion at September 30, 2024, as noted below:
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(Dollars in thousands)
Average loan size$115 
Largest individual consumer loan outstanding$5,290 
Consumer nonperforming loans/consumer loans0.38 %

Asset Quality   The Company continually monitors the asset quality of the loan portfolio using all available information. Based on this assessment, loans demonstrating certain payment issues or other weaknesses may be categorized as delinquent, nonperforming and/or put on nonaccrual status. Further details surrounding relevant asset quality categories are summarized below:
Delinquency     The Company’s philosophy toward managing its loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations.  The Company seeks to make arrangements to resolve any delinquent or default situation over the shortest possible time frame.  Generally, the Company requires that a delinquency notice be mailed to a borrower upon expiration of a grace period (typically no longer than 15 days beyond the due date).  Reminder notices may be sent and telephone calls may be made prior to the expiration of the grace period. If the delinquent status is not resolved within a reasonable time frame following the mailing of a delinquency notice, the Bank’s personnel charged with managing its loan portfolios contacts the borrower to ascertain the reasons for delinquency and the prospects for payment.  Any subsequent actions taken to resolve the delinquency will depend upon the nature of the loan and the length of time that the loan has been delinquent. The borrower’s needs are considered as much as reasonably possible without jeopardizing the Bank’s position. A late charge is usually assessed on loans upon expiration of the grace period.
Nonaccrual Loans     As a general rule, loans 90 days or more past due with respect to principal or interest are classified as nonaccrual loans. However, certain loans that are 90 days or more past due may be kept on an accruing status if the loans are well secured and in the process of collection. Income accruals are suspended on all nonaccrual loans and all previously accrued
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and uncollected interest is reversed against current income. A loan remains on nonaccrual status until it becomes current with respect to principal and interest and remains current for a minimum period of six months, the loan is liquidated, or when the loan is determined to be uncollectible and is charged-off against the allowance for credit losses.

Loan Modifications In the course of resolving problem loans, the Company may choose to modify the contractual terms of certain loans. The Company attempts to work out an alternative payment schedule with the borrower in order to avoid or cure a default. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and may include adjustments to term extensions, interest rates, other than insignificant payment delays and/or a combination thereof. These actions are intended to minimize economic loss and avoid foreclosure or repossession of collateral. If such efforts by the Bank do not result in satisfactory performance, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated. At any time prior to a sale of the property at foreclosure, the Bank may terminate foreclosure proceedings if the borrower is able to work out a satisfactory payment plan. All loan modifications are reviewed by the Company to identify if a borrower is deemed to be experiencing financial difficulty at time of the modification.
    Purchased Credit Deteriorated Loans    Purchased Credit Deteriorated ("PCD") loans are acquired loans which have shown a more-than-insignificant deterioration in credit quality since origination. PCD loans are recorded at amortized cost with an allowance for credit losses recorded upon purchase.
Nonperforming Assets     Nonperforming assets are typically comprised of nonperforming loans and other real estate owned ("OREO"). Nonperforming loans consist of nonaccrual loans and loans that are 90 days or more past due but still accruing interest.

OREO consists of real estate properties, which have primarily served as collateral to secure loans, that are controlled or owned by the Bank. These properties are recorded at fair value less estimated costs to sell at the date control is established, resulting in a new cost basis. The amount by which the recorded investment in the loan exceeds the fair value (net of estimated costs to sell) of the foreclosed asset is charged to the allowance for credit losses. Subsequent declines in the fair value of the foreclosed asset below the new cost basis are recorded through the use of a valuation allowance. Subsequent increases in the fair value are recorded as reductions in the valuation allowance, but not below zero. All costs incurred thereafter in maintaining the property are generally charged to noninterest expense. In the event the real estate is utilized as a rental property, net rental income and expenses are recorded as incurred within noninterest expense.

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The following table sets forth information regarding nonperforming assets held by the Company at the dates indicated:
Table 4 - Nonperforming Assets
September 30
2024		December 31
2023		September 30
2023
 (Dollars in thousands)
Loans accounted for on a nonaccrual basis
Commercial and industrial $12,027 $20,188 $2,953 
Commercial real estate77,951 22,952 23,867 
Small business501 398 372 
Residential real estate9,744 7,634 8,493 
Home equity3,992 3,171 3,411 
Other consumer33 40 72 
Total$104,248 $54,383 $39,168 
Loans past due 90 days or more but still accruing
Other consumer— — 3 
Total$— $— $3 
Total nonperforming loans$104,248 $54,383 $39,171 
Other real estate owned110 110 110 
Total nonperforming assets $104,358 $54,493 $39,281 
Nonperforming loans as a percent of gross loans0.73 %0.38 %0.28 %
Nonperforming assets as a percent of total assets0.54 %0.28 %0.20 %

    The following table summarizes the changes in nonperforming assets for the periods indicated:
Table 5 - Activity in Nonperforming Assets
Three Months EndedNine Months Ended
September 30
2024		September 30
2023		September 30
2024		September 30
2023
(Dollars in thousands)
Nonperforming assets beginning balance$57,561 $45,812 $54,493 $54,881 
New to nonperforming 57,197 3,455 82,656 26,889 
Loans charged-off(7,006)(6,018)(8,695)(30,600)
Loans paid-off(2,306)(2,915)(12,746)(8,814)
Loans restored to performing status(1,058)(1,428)(11,342)(3,460)
Other(30)375 (8)385 
Nonperforming assets ending balance$104,358 $39,281 $104,358 $39,281 

Allowance for Credit Losses  The allowance for credit losses is maintained at a level that management considers appropriate to provide for the Company's current estimate of expected lifetime credit losses on loans measured at amortized cost. The allowance is increased by providing for credit losses through a charge to expense and by credits for recoveries of loans previously charged-off and is reduced by loans being charged-off.
In accordance with the CECL methodology, the Company estimates credit losses for financial assets on a collective basis for loans sharing similar risk characteristics using a quantitative model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output. The model estimates expected credit losses using loan level data over the contractual life of the exposure, considering the effect of prepayments. Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period of one year, beyond
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which is a reversion to the Company's historical long-run average for a period of six months. The Company's qualitative assessment is structured based upon nine environmental factors impacting the expected risk of loss within the loan portfolio, with an additional factor designed to capture model imprecision. Loans that do not share similar risk characteristics with any pools of assets are subject to individual assessment and are removed from the collectively assessed pools to avoid double counting. For the loans that will be individually assessed, the Company uses either a discounted cash flow approach or a fair value of collateral approach. The latter approach is used for loans deemed to be collateral dependent or when foreclosure is probable.
Management's allowance for credit loss estimate incorporates an economic forecast over a reasonable and supportable period of 12 months. As of September 30, 2024, the forecast selected by management assumes that the Federal Reserve will cut the policy rate by 25 basis points during the fourth quarter of 2024, that inflation will stabilize and return to 2% target by early 2025, that new home sales will remain stable given the current national housing deficit, and that the outlook for office real estate will remain bearish as uncertainty over occupancy and operating cash flows persists. Additionally, the allowance for credit losses is qualitatively adjusted on a quarterly basis in order to ensure coverage for relationships that are deemed to be more at risk within certain industries, specific collateral types, or other specific characteristics that may be highly impacted by the current economic environment.

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The following table summarizes the ratio of net charge-offs to average loans outstanding within each major loan category for the periods presented:

Table 6 - Summary of Net Charge-Offs/(Recoveries) to Average Loans Outstanding
Net Charge-Offs/(Recoveries)Average Loans OutstandingRatio of Annualized Net Charge-Offs/(Recoveries) to Average LoansNet Charge-Offs/ (Recoveries)Average Loans OutstandingRatio of Annualized Net Charge-Offs/(Recoveries) to Average Loans
(Dollars in thousands)
Three Months Ended September 30, 2024Nine Months Ended September 30, 2024
Commercial and industrial $5,883 $1,585,801 1.48 %$5,796 $1,576,580 0.49 %
Commercial real estate— 8,170,031 — %— 8,131,317 — %
Commercial construction— 749,009 — %— 808,570 — %
Small business160 270,486 0.24 %278 264,283 0.14 %
Residential real estate— 2,443,488 — %— 2,429,963 — %
Home equity24 1,122,750 0.01 %(246)1,109,245 (0.03)%
Other consumer (1)596 35,331 6.71 %1,448 32,350 5.98 %
Total$6,663 $14,376,896 0.18 %$7,276 $14,352,308 0.07 %
Net Charge-Offs/ (Recoveries)Average Loans OutstandingRatio of Annualized Net Charge-Offs/(Recoveries) to Average LoansNet Charge-Offs/ (Recoveries)Average Loans OutstandingRatio of Annualized Net Charge-Offs/(Recoveries) to Average Loans
(Dollars in thousands)
Three Months Ended September 30, 2023Nine Months Ended September 30, 2023
Commercial and industrial $(111)$1,682,000 (0.03)%$23,339 $1,662,459 1.88 %
Commercial real estate5,072 7,823,525 0.26 %5,072 7,800,173 0.09 %
Commercial construction— 1,007,814 — %— 1,061,847 — %
Small business77 240,782 0.13 %125 231,299 0.07 %
Residential real estate— 2,276,882 — %— 2,163,130 — %
Home equity(12)1,093,479 — %(38)1,092,304 — %
Other consumer (1)552 30,775 7.12 %1,102 30,885 4.77 %
Total$5,578 $14,155,257 0.16 %$29,600 $14,042,097 0.28 %
(1)Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances and the associated net charge-offs.



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For purposes of the allowance for credit losses, management segregates the portfolio based upon loans sharing similar risk characteristics. The allocation of the allowance for credit losses is made to each loan category using the analytical techniques and estimation methods described in this Report. While these amounts represent management’s best estimate of credit losses at the evaluation dates, they are not necessarily indicative of either the categories in which actual losses may occur or the extent of such actual losses that may be recognized within each category. Each of these loan categories possess unique risk characteristics that are considered when determining the appropriate level of allowance for each segment. The total allowance is available to absorb losses from any segment of the loan portfolio.

The following table sets forth the allocation of the allowance for credit losses by loan category at the dates indicated:
Table 7 - Summary of Allocation of Allowance for Credit Losses
 
 September 30
2024		December 31
2023
 Allowance
Amount		Allowance Amount as a Percentage of Total AllowanceCategory of Loan as a Percentage of Total LoansAllowance
Amount		Allowance Amount as a Percentage of Total AllowanceCategory of Loan as a Percentage of Total Loans
(Dollars in thousands)
Commercial and industrial $15,937 9.7 %11.0 %$19,243 13.5 %11.1 %
Commercial real estate99,622 60.9 %56.7 %74,148 52.2 %56.3 %
Commercial construction7,526 4.6 %5.2 %7,683 5.4 %6.0 %
Small business4,105 2.5 %1.9 %3,963 2.8 %1.8 %
Residential real estate24,503 15.0 %17.0 %23,637 16.6 %16.9 %
Home equity11,161 6.8 %7.9 %12,797 9.0 %7.7 %
Other consumer842 0.5 %0.3 %751 0.5 %0.2 %
Total$163,696 100.0 %100.0 %$142,222 100.0 %100.0 %
To determine if a loan should be charged-off, all possible sources of repayment are analyzed. Possible sources of repayment include the potential for future cash flows, the value of the Bank’s collateral, and the strength of co-makers or guarantors. When available information confirms that specific loans or portions thereof are uncollectible, these amounts are promptly charged-off against the allowance for credit losses and any recoveries of such previously charged-off amounts are credited to the allowance.

Regardless of whether a loan is unsecured or collateralized, the Company charges off the amount of any confirmed loan loss in the period when the loans, or portions of loans, are deemed uncollectible. For troubled, collateral-dependent loans, loss-confirming events may include an appraisal or other valuation that reflects a shortfall between the value of the collateral and the carrying value of the loan or receivable, or a deficiency balance following the sale of the collateral.
For additional information regarding the Company’s allowance for credit losses, see Note 3 “Loans, Allowance for Credit Losses and Credit Quality” within the Notes to Consolidated Financial Statements included in Part I. Item 1 of this Report.
Federal Home Loan Bank Stock The Federal Home Loan Bank (“FHLB”) is a cooperative that provides services to its member banking institutions. The primary reason for the FHLB of Boston membership is to gain access to a reliable source of wholesale funding as a tool to manage liquidity and interest rate risk. The purchase of stock in the FHLB is a requirement for a member to gain access to funding. The Company either purchases additional FHLB stock or is subject to redemption of FHLB stock proportional to the volume of funding received. The Company views the holdings as a necessary long-term investment for the purpose of balance sheet liquidity and not for investment return. The Company's investments in FHLB of Boston stock decreased to $29.9 million at September 30, 2024 compared to $43.6 million at December 31, 2023, in conjunction with reduced levels of outstanding FHLB borrowings.
    Goodwill and Other Intangible Assets Goodwill and other intangible assets were $1.0 billion at both September 30, 2024 and December 31, 2023.
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The Company typically performs its annual goodwill impairment testing during the third quarter of the year, unless certain indicators suggest earlier testing to be warranted. Accordingly, the Company performed its annual goodwill impairment testing during the third quarter of 2024 and determined that the Company’s goodwill was not impaired as of September 30, 2024. Other intangible assets are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. There were no other events or changes during the third quarter of 2024 that indicated impairment of goodwill and other intangible assets.
Cash Surrender Value of Life Insurance Policies The Bank holds life insurance policies for the purpose of offsetting its future obligations to its employees under its retirement and benefits plans. The cash surrender value of life insurance policies was $302.1 million at September 30, 2024 compared to $297.4 million at December 31, 2023.
The Company recorded tax exempt income from life insurance policies of $2.0 million for each of the three months ended September 30, 2024 and 2023, and $5.9 million and $5.8 million for the nine months ended September 30, 2024 and 2023, respectively.
The Company recorded no gains on life insurance benefits for the three months ended September 30, 2024 as compared to gains of $1.9 million for the three months ended September 30, 2023, and recorded gains of $263,000, and $2.1 million for the nine months ended September 30, 2024 and 2023, respectively.
Deposits As of September 30, 2024, total deposits were $15.4 billion, representing a $575.5 million, or 3.9%, increase from December 31, 2023. This increase was primarily driven by continued consumer demand for higher cost time deposits, along with strong business and municipal deposit inflows. Total noninterest bearing demand deposits comprised 29.3% of total deposits at September 30, 2024, as compared to 30.7% at December 31, 2023. The total cost of deposits was 1.74% and 1.07% for the three months ended September 30, 2024 and 2023, respectively, and 1.62% and 0.84% for the nine months ended September 30, 2024 and 2023, respectively.
The Company's deposits are comprised primarily of core deposits (demand, savings and money market), as well as time deposits. The Company's ratio of core deposits to total deposits represented 81.7% and 84.6% of total deposits as of September 30, 2024 and December 31, 2023, respectively, with the decrease driven primarily by core deposit outflows in conjunction with growth in higher yielding time deposits. In addition, the Company may also utilize brokered deposit sources, as needed, with balances of $61.2 million and $100.9 million outstanding at September 30, 2024 and December 31, 2023, respectively.
The Company's deposit accounts are insured to the maximum extent permitted by the Deposit Insurance Fund which is administered by the Federal Deposit Insurance Corporation ("FDIC"). The FDIC offers insurance coverage on deposits up to the federally insured limit of $250,000. The Company participates in the IntraFi Network, allowing it to provide easy access to multi-million dollar FDIC deposit insurance protection on certificate of deposit and money market investments for consumers, businesses and public entities. This channel allows the Company to access a reciprocal deposit exchange that can be used to benefit customers seeking increased FDIC insurance protection, and amounted to $1.0 billion and $959.1 million at September 30, 2024 and December 31, 2023, respectively. The estimated balances of uninsured deposits at the Bank were $5.1 billion and $4.6 billion as of September 30, 2024 and December 31, 2023, respectively. Included in these amounts are $836.3 million and $720.5 million of collateralized deposits, which offer additional protection.
Borrowings  The Company's borrowings consist of both short-term and long-term borrowings and provide the Bank with one of its primary sources of funding. Maintaining available borrowing capacity provides the Bank with a contingent source of liquidity. Borrowings were $663.4 million at September 30, 2024, representing a decrease of $555.0 million as compared to December 31, 2023. This decrease was experienced primarily within Federal Home Loan Bank borrowings, which decreased $505.0 million in conjunction with deposit balance growth over the first nine months of 2024. Additionally, the Company fully redeemed its outstanding subordinated debentures with an aggregate principal amount of $50.0 million during the first quarter of 2024.
The Company had $8.8 billion and $8.5 billion of assets pledged as collateral against borrowings at September 30, 2024 and December 31, 2023, respectively. These assets are primarily pledged to the FHLB of Boston and the Federal Reserve Bank of Boston.

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Capital Resources On September 19, 2024 the Company’s Board of Directors declared a cash dividend of $0.57 per share to shareholders of record as of the close of business on September 30, 2024. This dividend was paid on October 4, 2024.
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of Total, Tier 1 Capital and Common Equity Tier 1 Capital (as defined for regulatory purposes) to risk weighted assets (as defined for regulatory purposes) and Tier 1 Capital to average assets (as defined for regulatory purposes). At September 30, 2024 and December 31, 2023, the Company and the Bank exceeded the minimum requirements for all applicable ratios that were in effect during the respective periods. The Company’s and the Bank’s capital amounts and ratios are presented in the following table, along with the applicable minimum requirements as of each date indicated:
Table 8 - Company and Bank's Capital Amounts and Ratios 
 ActualFor Capital Adequacy PurposesTo Be Well Capitalized Under Prompt
Corrective Action Provisions
 AmountRatioAmount RatioAmount Ratio
 September 30, 2024
 (Dollars in thousands)
Company (consolidated)
Total capital (to risk weighted assets)$2,266,382 15.95 %$1,136,645 ≥8.0 %N/AN/A
Common equity tier 1 capital
(to risk weighted assets)		2,070,213 14.57 %639,363 ≥4.5 %N/AN/A
Tier 1 capital (to risk weighted assets)2,070,213 14.57 %852,484 ≥6.0 %N/AN/A
Tier 1 capital (to average assets)2,070,213 11.22 %738,310 ≥4.0 %N/AN/A
Bank
Total capital (to risk weighted assets)$2,200,508 15.48 %$1,137,089 ≥8.0 %$1,421,361 ≥10.0 %
Common equity tier 1 capital
(to risk weighted assets)		2,065,339 14.53 %639,612 ≥4.5 %923,885 ≥6.5 %
Tier 1 capital (to risk weighted assets)2,065,339 14.53 %852,817 ≥6.0 %1,137,089 ≥8.0 %
Tier 1 capital (to average assets)2,065,339 11.19 %738,434 ≥4.0 %923,042 ≥5.0 %
 December 31, 2023
(Dollars in thousands)
Company (consolidated)
Total capital (to risk weighted assets)$2,268,863 15.91 %$1,140,554 ≥8.0 %N/AN/A
Common equity tier 1 capital
(to risk weighted assets)		2,022,873 14.19 %641,562 ≥4.5 %N/AN/A
Tier 1 capital (to risk weighted assets)2,022,873 14.19 %855,416 ≥6.0 %N/AN/A
Tier 1 capital (to average assets)2,022,873 10.96 %737,984 ≥4.0 %N/AN/A
Bank
Total capital (to risk weighted assets)$2,183,436 15.32 %$1,140,550 ≥8.0 %$1,425,687 ≥10.0 %
Common equity tier 1 capital
(to risk weighted assets)		2,048,426 14.37 %641,559 ≥4.5 %926,696 ≥6.5 %
Tier 1 capital (to risk weighted assets)2,048,426 14.37 %855,412 ≥6.0 %1,140,550 ≥8.0 %
Tier 1 capital (to average assets)2,048,426 11.10 %738,055 ≥4.0 %922,568 ≥5.0 %
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    In addition to the minimum risk-based capital requirements outlined in the table above, the Company is required to maintain a minimum capital conservation buffer, in the form of common equity, in order to avoid restrictions on capital distributions and discretionary bonuses. The required amount of the capital conservation buffer is 2.5%. At September 30, 2024, the Company's capital levels exceeded the buffer.
Dividend Restrictions The Company is subject to capital and dividend requirements administered by federal and state bank regulators, and the Company will not declare a cash dividend that would cause the Company to violate regulatory requirements. The Company is, in the ordinary course of business, dependent upon the receipt of cash dividends from the Bank to pay cash dividends to shareholders and satisfy the Company’s other cash needs. Federal and state law impose limits on capital distributions by the Bank. Massachusetts-chartered banks, such as the Bank, may declare from net profits cash dividends not more frequently than quarterly and non-cash dividends at any time. No dividends may be declared, credited, or paid if the Bank’s capital stock would be impaired. Massachusetts Bank Commissioner approval is required if the total of all dividends declared by the Bank in any calendar year would exceed the total of its net profits for that year combined with its retained net profits of the preceding two years, less any required transfer to surplus or a fund for the retirement of any preferred stock. Dividends paid by the Bank to the Company totaled $45.3 million and $56.0 million for the three months ended September 30, 2024 and 2023, respectively and totaled $138.5 million and $178.2 million for the nine months ended September 30, 2024 and 2023, respectively.
Trust Preferred Securities In accordance with the applicable accounting standard related to variable interest entities, the common stock of trusts which have issued trust preferred securities has not been included in the consolidated financial statements of the Company. At both September 30, 2024 and December 31, 2023 there were $61.0 million in trust preferred securities included in the Tier 2 capital of the Company for regulatory reporting purposes pursuant to the Federal Reserve's capital adequacy guidelines.
Investment Management The following table presents total assets under administration and number of accounts held by the Rockland Trust Investment Management Group at the following dates:
Table 9 - Assets Under Administration
September 30
2024		December 31
2023		September 30
2023
(Dollars in thousands)
Assets under administration$7,161,264 $6,537,905 $6,120,462 
Number of trust, fiduciary and agency accounts6,601 6,550 6,545 
The Company's Investment Management Group provides investment management and trust services to individuals, institutions, small businesses, and charitable institutions.
Accounts maintained by the Investment Management Group consist of managed and nonmanaged accounts. Managed accounts are those for which the Bank is responsible for administration and investment management and/or investment advice, while nonmanaged accounts are those for which the Bank acts solely as a custodian or directed trustee. The Bank receives fees dependent upon the level and type of service(s) provided. The Investment Management Group generated gross fee revenues of $9.7 million and $8.7 million for the three months ended September 30, 2024 and 2023, respectively and $28.4 million and $25.7 million for the nine months ended September 30, 2024 and 2023, respectively. Total assets under administration at September 30, 2024 were $7.2 billion, including $427.8 million of investment solutions designed by Rockland Trust that are administered and executed through its agreement with LPL Financial ("LPL"), compared to $6.5 billion and $383.0 million, respectively, at December 31, 2023. The Company also has a subsidiary that is a registered investment advisor, Bright Rock Capital Management, LLC ("Bright Rock"), which provides institutional quality investment management services to both institutional and high net worth clients. Included in these same amounts as of September 30, 2024 and December 31, 2023 are assets under administration of $501.6 million and $449.8 million, respectively, related to Bright Rock.
The administration of trust and fiduciary accounts is monitored by the Trust Committee of the Bank’s Board of Directors. The Trust Committee has delegated administrative responsibilities to three committees, one for investments, one for administration, and one for operations, all of which are comprised of Investment Management Group officers who meet no less than quarterly.
The Bank has an agreement with LPL and its affiliates and their insurance subsidiary, LPL Insurance Associates, Inc., to offer the sale of mutual fund shares, unit investment trust shares, general securities, fixed and variable annuities and life
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insurance. Registered representatives who are both employed by the Bank and licensed and contracted with LPL are onsite to offer these products to the Bank’s customer base. These same agents are also approved and appointed with various other Broker General Agents for the purposes of processing insurance solutions for clients. Retail investments and insurance revenue was $1.4 million and $1.6 million for the three months ended September 30, 2024 and 2023, respectively, and $3.6 million and $4.7 million for the nine months ended September 30, 2024 and 2023, respectively.

RESULTS OF OPERATIONS
    The following table provides a summary of results of operations for the three and nine months ended September 30, 2024 and 2023:
Table 10 - Summary of Results of Operations
 
 Three Months Ended September 30Nine Months Ended September 30
 2024202320242023
 (Dollars in thousands, except per share data)
Net income$42,947 $60,808 $142,047 $184,699 
Diluted earnings per share$1.01 $1.38 $3.34 $4.16 
Return on average assets0.88 %1.25 %0.98 %1.28 %
Return on average equity5.75 %8.35 %6.49 %8.58 %
Net interest margin3.29 %3.47 %3.26 %3.60 %

Net Interest Income The amount of net interest income is affected by changes in interest rates and by the volume, mix, and interest rate sensitivity of interest-earning assets and interest-bearing liabilities.
On a fully tax equivalent basis (“FTE”), net interest income for the third quarter of 2024 was $142.9 million, representing a decrease of $8.1 million, or 5.4%, when compared to the third quarter of 2023. For the nine months ended September 30, 2024, the net interest income on a FTE basis was $420.6 million, representing a decrease of $44.2 million, or 9.5%, when compared to the nine months ended September 30, 2023. These 2024 decreases in net interest income were primarily attributable to rising deposit costs, resulting in a net interest margin of 3.29% and 3.26% for the three and nine months ended September 30, 2024, respectively, representing decreases of 18 basis points and 34 basis points, respectively, compared to the same prior year periods.
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The following tables present the Company’s average balances, net interest income, interest rate spread, and net interest margin for the three and nine months ended September 30, 2024 and 2023. Nontaxable income from loans and securities is presented on a FTE basis by adjusting tax-exempt income upward by an amount equivalent to the prevailing income tax rate that would have been paid if the income had been fully taxable.
Table 11 - Average Balance, Interest Earned/Paid & Average Yields Quarter-to-Date
 Three Months Ended September 30
 20242023
 Average
Balance		Interest
Earned/
Paid		Yield/RateAverage
Balance		Interest
Earned/
Paid		Yield/Rate
 (Dollars in thousands)
Interest-earning assets
Interest-earning deposits with banks, federal funds sold, and short term investments$129,827 $1,635 5.01 %$89,449 $905 4.01 %
Securities
Securities - trading4,366 — — %4,546 — — %
Securities - taxable investments2,761,758 14,064 2.03 %3,000,736 14,817 1.96 %
Securities - nontaxable investments (1)194 1 2.05 %188 1 2.11 %
Total securities$2,766,318 $14,065 2.02 %$3,005,470 $14,818 1.96 %
Loans held for sale15,208 227 5.94 %4,072 60 5.85 %
Loans (2)
Commercial and industrial (1)1,585,801 28,834 7.23 %1,682,000 30,739 7.25 %
Commercial real estate (1)8,170,031 107,735 5.25 %7,823,525 94,861 4.81 %
Commercial construction749,009 13,778 7.32 %1,007,814 16,829 6.62 %
Small business270,486 4,486 6.60 %240,782 3,752 6.18 %
Total commercial10,775,327 154,833 5.72 %10,754,121 146,181 5.39 %
Residential real estate2,443,488 26,917 4.38 %2,276,882 23,197 4.04 %
Home equity1,122,750 19,372 6.86 %1,093,479 18,313 6.64 %
Total consumer real estate3,566,238 46,289 5.16 %3,370,361 41,510 4.89 %
Other consumer35,331 665 7.49 %30,775 608 7.84 %
Total loans$14,376,896 $201,787 5.58 %$14,155,257 $188,299 5.28 %
Total interest-earning assets$17,288,249 $217,714 5.01 %$17,254,248 $204,082 4.69 %
Cash and due from banks182,151 184,003 
Federal Home Loan Bank stock30,513 38,252 
Other assets1,839,389 1,859,099 
Total assets$19,340,302 $19,335,602 
Interest-bearing liabilities
Deposits
Savings and interest checking accounts$5,163,567 $17,978 1.39 %$5,393,209 $11,860 0.87 %
Money market2,998,672 18,986 2.52 %2,945,450 13,709 1.85 %
Time deposits2,740,982 30,021 4.36 %1,860,440 15,144 3.23 %
Total interest-bearing deposits$10,903,221 $66,985 2.44 %$10,199,099 $40,713 1.58 %
Borrowings
Federal Home Loan Bank borrowings$623,053 $6,692 4.27 %$869,646 $10,568 4.82 %
Junior subordinated debentures62,859 1,144 7.24 %62,857 1,150 7.26 %
Subordinated debentures— — — %49,944 617 4.90 %
Total borrowings$685,912 $7,836 4.54 %$982,447 $12,335 4.98 %
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Total interest-bearing liabilities$11,589,133 $74,821 2.57 %$11,181,546 $53,048 1.88 %
Noninterest bearing demand deposits4,442,858 4,883,009 
Other liabilities339,075 381,483 
Total liabilities$16,371,066 $16,446,038 
Stockholders' equity2,969,236 2,889,564 
Total liabilities and stockholders' equity$19,340,302 $19,335,602 
Net interest income (1)$142,893 $151,034 
Interest rate spread (3)2.44 %2.81 %
Net interest margin (4)3.29 %3.47 %
Supplemental information
Total deposits, including demand deposits$15,346,079 $66,985 $15,082,108 $40,713 
Cost of total deposits1.74 %1.07 %
Total funding liabilities, including demand deposits$16,031,991 $74,821 $16,064,555 $53,048 
Cost of total funding liabilities1.86 %1.31 %

(1)The total amount of adjustment to interest income and yield on a FTE basis was $1.2 million for each of the three months ended September 30, 2024 and 2023.
(2)Includes average nonaccruing loans.
(3)Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(4)Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

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Table 12 - Average Balance, Interest Earned/Paid & Average Yields Year-to-Date
 Nine Months Ended September 30
 20242023
 Average
Balance		Interest
Earned/
Paid		Yield/
Rate		Average
Balance		Interest
Earned/
Paid		Yield/
Rate
 (Dollars in thousands)
Interest-earning assets
Interest-earning deposits with banks, federal funds sold, and short-term investments$76,199 $2,515 4.41 %$144,558 $4,882 4.52 %
Securities
Securities - trading4,627 — — %4,377 — — %
Securities - taxable investments2,807,287 42,287 2.01 %3,062,745 45,707 2.00 %
Securities - nontaxable investments (1)191 5 3.50 %191 5 3.50 %
Total securities$2,812,105 $42,292 2.01 %$3,067,313 $45,712 1.99 %
Loans held for sale11,651 530 6.08 %3,180 133 5.59 %
Loans (2)
Commercial and industrial (1)1,576,580 84,746 7.18 %1,662,459 86,762 6.98 %
Commercial real estate (1)8,131,317 314,260 5.16 %7,800,173 276,255 4.74 %
Commercial construction808,570 44,650 7.38 %1,061,847 50,508 6.36 %
Small business264,283 13,022 6.58 %231,299 10,472 6.05 %
Total commercial10,780,750 456,678 5.66 %10,755,778 423,997 5.27 %
Residential real estate2,429,963 79,472 4.37 %2,163,130 63,498 3.92 %
Home equity1,109,245 56,642 6.82 %1,092,304 51,951 6.36 %
Total consumer real estate3,539,208 136,114 5.14 %3,255,434 115,449 4.74 %
Other consumer32,350 1,867 7.71 %30,885 1,751 7.58 %
Total loans$14,352,308 $594,659 5.53 %$14,042,097 $541,197 5.15 %
Total interest-earning assets$17,252,263 $639,996 4.96 %$17,257,148 $591,924 4.59 %
Cash and due from banks179,414 181,380 
Federal Home Loan Bank stock39,576 32,615 
Other assets1,841,696 1,843,564 
Total assets$19,312,949 $19,314,707 
Interest-bearing liabilities
Deposits
Savings and interest checking accounts$5,165,252 $49,163 1.27 %$5,545,951 $28,758 0.69 %
Money market2,917,693 52,386 2.40 %3,079,942 36,433 1.58 %
Time deposits2,539,915 81,225 4.27 %1,596,889 30,106 2.52 %
Total interest-bearing deposits$10,622,860 $182,774 2.30 %$10,222,782 $95,297 1.25 %
Borrowings
Federal Home Loan Bank borrowings$920,781 $32,652 4.74 %$747,640 $26,788 4.79 %
Junior subordinated debentures62,859 3,431 7.29 %62,856 3,195 6.80 %
Subordinated debentures13,501 508 5.03 %49,921 1,852 4.96 %
Total borrowings$997,141 $36,591 4.90 %$860,417 $31,835 4.95 %
Total interest-bearing liabilities$11,620,001 $219,365 2.52 %$11,083,199 $127,132 1.53 %
Noninterest bearing demand deposits4,414,392 4,990,869 
Other liabilities354,038 363,989 
Total liabilities$16,388,431 $16,438,057 
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Stockholders' equity2,924,518 2,876,650 
Total liabilities and stockholders' equity$19,312,949 $19,314,707 
Net interest income (1)$420,631 $464,792 
Interest rate spread (3)2.44 %3.06 %
Net interest margin (4)3.26 %3.60 %
Supplemental information
Total deposit, including demand deposits$15,037,252 $182,774 $15,213,651 $95,297 
Cost of total deposits1.62 %0.84 %
Total funding liabilities, including demand deposits$16,034,393 $219,365 $16,074,068 $127,132 
Cost of total funding liabilities1.83 %1.06 %

(1)The total amount of adjustment to present interest income and yield on a FTE basis was $3.6 million and $3.4 million for the nine months ended September 30, 2024 and 2023, respectively.
(2)Includes average nonaccruing loans.
(3)Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(4)Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

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The following table presents certain information on a FTE basis regarding changes in the Company’s interest income and interest expense for the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes attributable to: (1) changes in rate (change in rate multiplied by prior period volume), (2) changes in volume (change in volume multiplied by old rate), and (3) changes in volume/rate (change in volume multiplied by change in rate) which is allocated to the change due to rate column:
Table 13 - Volume Rate Analysis
Three Months Ended September 30Nine Months Ended September 30
2024 Compared To 20232024 Compared To 2023
Change
Due to
Rate 		Change
Due to
Volume		Total ChangeChange
Due to
Rate 		Change
Due to
Volume		Total Change
 (Dollars in thousands)
Income on interest-earning assets
Interest earning deposits, federal funds sold and short term investments$321 $409 $730 $(58)$(2,309)$(2,367)
Securities
Securities - taxable investments427 (1,180)(753)392 (3,812)(3,420)
Securities - nontaxable investments (1)— — — — — — 
Total securities(753)(3,420)
Loans held for sale3 164 167 42 355 397 
Loans
Commercial and industrial (1)(147)(1,758)(1,905)2,466 (4,482)(2,016)
Commercial real estate (1)8,673 4,201 12,874 26,277 11,728 38,005 
Commercial construction1,271 (4,322)(3,051)6,189 (12,047)(5,858)
Small business271 463 734 1,057 1,493 2,550 
Total commercial8,652 32,681 
Residential real estate2,023 1,697 3,720 8,141 7,833 15,974 
Home equity569 490 1,059 3,885 806 4,691 
Total consumer real estate4,779 20,665 
Other consumer(33)90 57 33 83 116 
Total loans (1)(2)13,488 53,462 
Total income of interest-earning assets$13,632 $48,072 
Expense of interest-bearing liabilities
Deposits
Savings and interest checking accounts$6,623 $(505)$6,118 $22,379 $(1,974)$20,405 
Money market5,029 248 5,277 17,872 (1,919)15,953 
Time certificates of deposits7,709 7,168 14,877 33,340 17,779 51,119 
Total interest bearing deposits26,272 87,477 
Borrowings
Federal Home Loan Bank borrowings(879)(2,997)(3,876)(340)6,204 5,864 
Long-term borrowings— — — — — — 
Junior subordinated debentures(6)— (6)236 — 236 
Subordinated debentures— (617)(617)7 (1,351)(1,344)
Total borrowings(4,499)4,756 
Total expense of interest-bearing liabilities21,773 92,233 
Change in net interest income$(8,141)$(44,161)
 
(1)Reflects income determined on a FTE basis. See footnote (1) to Tables 11 and 12 in this Report for the related adjustments.
(2)Loans include portfolio loans and nonaccrual loans; however, unpaid interest on nonaccrual loans has not been included for purposes of determining interest income.

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Provision For Credit Losses The provision for credit losses represents the charge to expense that is required to maintain an appropriate level of allowance for credit losses. The Company recorded a provision for credit loss of $19.5 million and $28.8 million for the three and nine months ended September 30, 2024, respectively, as compared to a provision for credit loss of $5.5 million and $17.8 million for the three and nine months ended September 30, 2023. The 2024 increase is primarily attributable to specific reserve allocations on commercial loans and, to a lesser extent, net loan growth over the first nine months of 2024.
The Company’s allowance for credit losses, as a percentage of total loans, was 1.14% at September 30, 2024, 1.00% at December 31, 2023, and 0.99% at September 30, 2023. Refer to Note 3, “Loans, Allowance for Credit Losses and Credit Quality” within the Notes to Consolidated Financial Statements included in Part I. Item 1 of this Report, for further details surrounding the primary drivers of the provision for credit losses for the period.
Noninterest Income The following table sets forth information regarding noninterest income for the periods shown:
Table 14 - Noninterest Income
Three Months Ended
 September 30Change
 20242023Amount%
 (Dollars in thousands)
Deposit account fees$6,779 $5,936 $843 14.20 %
Interchange and ATM fees4,970 4,808 162 3.37 %
Investment management and advisory11,033 10,246 787 7.68 %
Mortgage banking income972 739 233 31.53 %
Increase in cash surrender value of life insurance policies2,006 1,983 23 1.16 %
Gain on life insurance benefits— 1,924 (1,924)(100.00)%
Loan level derivative income1,125 842 283 33.61 %
Other noninterest income6,664 7,065 (401)(5.68)%
Total$33,549 $33,543 $6 0.02 %
Nine Months Ended
 September 30Change
 20242023Amount%
(Dollars in thousands) 
Deposit account fees$19,339 $17,360 $1,979 11.40 %
Interchange and ATM fees14,175 13,470 705 5.23 %
Investment management31,961 30,373 1,588 5.23 %
Mortgage banking income3,088 1,717 1,371 79.85 %
Increase in cash surrender value of life insurance policies5,934 5,777 157 2.72 %
Gain on life insurance benefits263 2,111 (1,848)(87.54)%
Loan level derivative income1,678 2,525 (847)(33.54)%
Other noninterest income19,384 19,209 175 0.91 %
Total$95,822 $92,542 $3,280 3.54 %

The primary reasons for the variances in the noninterest income categories shown in the preceding table include:
•Deposit account fees were higher for the three and nine months ended September 30, 2024 as compared to the same prior year periods primarily to increased overdraft and cash management fees.
•Interchange and ATM fees were higher for the three and nine months ended September 30, 2024 as compared to the same prior year periods due primarily to higher transaction volumes.
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•Investment management and advisory income increased, driven primarily by higher levels of assets under administration, which increased by $1.0 billion, or 17.0%, to $7.2 billion at September 30, 2024 as compared to $6.1 billion at September 30, 2023. This increase was partially offset by lower insurance commission income recognized in 2024 as compared to the same 2023 periods.
•Mortgage banking income increased for the three and nine months ended September 30, 2024 as compared to the same prior year periods due primarily to a greater portion of new originations being sold in the secondary market versus being retained in the Company's portfolio during 2024 as compared to the same 2023 periods.
•The Company received minimal proceeds on life insurance policies during the nine months ended September 30, 2024 as compared to $2.1 million for the nine months ended September 30, 2023.
•Loan level derivative income increased during the three months ended September 30, 2024 and decreased for the nine months ended September 30, 2024 in comparison to the same prior year periods, reflecting fluctuations in customer demand fueled by changes in the macroeconomic environment.
•Other noninterest income for the three months ended September 30, 2024 was lower than the same prior year period, primarily attributable to outsized commercial loan fees recorded during the third quarter of 2023, as well as decreased discounted purchases of Massachusetts historical tax credits, partially offset by unrealized gains on equity securities. Other noninterest income for the nine months ended September 30, 2024 was slightly higher than the same prior year period, primarily attributable to increased FHLB dividend income, realized gains on sales of equity securities, and commercial loan fees, partially offset by decreased discounted purchases of Massachusetts historical tax credits made during the first nine months of 2024.

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Noninterest Expense The following table sets forth information regarding non-interest expense for the periods shown:
Table 15 - Noninterest Expense
 Three Months Ended
September 30Change
 20242023Amount%
 (Dollars in thousands) 
Salaries and employee benefits$60,108 $54,797 $5,311 9.69 %
Occupancy and equipment expenses12,734 12,321 413 3.35 %
Data processing & facilities management2,510 2,404 106 4.41 %
Software and subscriptions4,736 3,324 1,412 42.48 %
FDIC assessment2,628 2,727 (99)(3.63)%
Consulting expense1,429 2,753 (1,324)(48.09)%
Debit card expense614 2,319 (1,705)(73.52)%
Amortization of intangible assets1,460 1,712 (252)(14.72)%
Other noninterest expenses14,224 15,425 (1,201)(7.79)%
Total$100,443 $97,782 $2,661 2.72 %
Nine Months Ended
 September 30Change
 20242023Amount%
 (Dollars in thousands) 
Salaries and employee benefits$174,444 $165,747 $8,697 5.25 %
Occupancy and equipment expenses38,673 37,528 1,145 3.05 %
Data processing & facilities management7,398 7,461 (63)(0.84)%
Software and subscriptions13,305 9,407 3,898 41.44 %
FDIC assessment8,304 8,011 293 3.66 %
Consulting expense4,854 6,765 (1,911)(28.25)%
Debit card expense4,694 6,707 (2,013)(30.01)%
Amortization of intangible assets4,488 5,243 (755)(14.40)%
Other noninterest expenses43,784 45,129 (1,345)(2.98)%
Total$299,944 $291,998 $7,946 2.72 %

The primary reasons for the variances in the noninterest expense categories shown in the preceding table include:
•Salaries and employee benefits increased for the three and nine months ended September 30, 2024, primarily attributable to increases in general salaries, incentive programs, medical plan insurance, and payroll taxes. The 2024 third quarter increase also reflected the impact of an outsized interest rate-driven valuation fluctuation related to the Company’s split-dollar bank-owned life insurance policies. These increases were partially offset by decreased commissions expense for the three and nine months ended September 30, 2024 as compared to the same prior year periods.
•Occupancy and equipment expenses increased for the three months ended September 30, 2024 as compared to the same prior year period due primarily to higher utilities costs and depreciation expense. Occupancy and equipment expenses were also higher for the nine months ended September 30, 2024 compared to the same prior year period, driven primarily by one-time lease exit costs associated with acquired leased locations as well as increased depreciation expense and cleaning costs, partially offset by decreased utilities costs.
•Software and subscriptions costs increased for both the three and nine months ended September 30, 2024 driven by the Company’s continued investment in its technology infrastructure.
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•FDIC assessment was relatively flat for the third quarter of 2024 as compared to the same prior year quarter, and increased for the nine months ended September 30, 2024 compared to the same prior year period due primarily to an increase in the estimated FDIC special assessment recognized by the Company during the first quarter of 2024.
•Debit card expense decreased for the three and nine months ended September 30, 2024, due primarily to a one-time credit of $1.1 million recognized during the third quarter of 2024 as well as reduced processing costs.
•Consulting expense decreased for the three and nine months ended September 30, 2024, due primarily to the timing of strategic initiatives.
•Other noninterest expense was lower for both the three and nine months ended September 30, 2024 compared to the same prior year periods. The 2024 third quarter decrease was driven primarily by decreased unrealized losses on equity securities, lower card issuance costs, recruitment expenses and other miscellaneous costs, partially offset by increased software and subscriptions, internet banking expenses and telecommunications costs. The 2024 year-to-date decrease was driven primarily by lower recruitment expenses, reduced gains on sale of fixed assets, decreased legal costs, partially offset by increases in software and subscriptions, internet banking, and telecommunications costs.

Income Taxes The tax effect of all income and expense transactions is recognized by the Company in each year’s consolidated statements of income, regardless of the year in which the transactions are reported for income tax purposes. The following table sets forth information regarding the Company’s tax provision and applicable tax rates for the periods indicated:
Table 16 - Tax Provision and Applicable Tax Rates
Three Months EndedNine Months Ended
 September 30September 30
 2024202320242023
 (Dollars in thousands)
Combined federal and state income tax provision$12,362 $19,333 $42,149 $59,519 
Effective income tax rate22.35 %24.12 %22.88 %24.37 %
Blended statutory tax rate27.91 %27.85 %27.91 %27.85 %

The Company’s effective tax rate for the third quarter of 2024 is lower as compared to the year ago period primarily due to lower pre-tax income as well as increased tax benefits from low income housing tax credits. The effective tax rates in the table above are lower than the blended statutory tax rates due to the impact of discrete items, including tax benefits related to low income housing tax credits and equity compensation, as well as certain tax preference assets such as life insurance policies, tax exempt bonds, and federal tax credits.

The Company invests in various low income housing projects, which are real estate limited partnerships that acquire, develop, own and operate low and moderate-income housing developments. As a limited partner in these operating partnerships, the Company will receive tax credits and tax deductions for losses incurred by the underlying properties. The investments are accounted for using the proportional amortization method and will be amortized over various periods through 2040, which represents the period that the tax credits and other tax benefits will be utilized. The total committed investment in these partnerships is $258.3 million, of which $192.5 million had been funded as of September 30, 2024. It is expected that the limited partnership investments will generate a net tax benefit of approximately $3.8 million for the fiscal year 2024 and a total of $37.3 million over the remaining life of the investments from the combination of the tax credits and operating losses.
Risk Management

The Board of Directors has approved an Enterprise Risk Management Policy and Risk Appetite Statement to state the Company’s goals and objectives in identifying, measuring, and managing the risks associated with the Company’s current and near future anticipated size and complexity. Management is responsible for comprehensive enterprise risk management, and continually strives to adopt and implement practices that strike an appropriate balance between risk and reward and permit the achievement of strategic goals in a controlled environment.

The Company has implemented the “three lines of defense” enterprise risk management framework. The first line of defense are the executives in charge of business units, operational areas, and corporate functions who, sometimes assisted by management committees, teams, and working groups, own and manage risks. The second line of defense monitors and
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provides risk management advice across all risk domains, and is comprised of the enterprise risk management department, with oversight from the Chief Risk Officer. The third line of defense is independent assurance performed by the Chief Internal Auditor, who reports to the Audit Committee of the Company's Board of Directors, and by the Company's internal audit department.

The Board of Directors, with the assistance of its Risk Committee, oversees management’s enterprise risk management practices. As risks must be taken to create value, the Board of Directors has approved a Risk Appetite Statement that defines the acceptable residual risk tolerances for the Company and the nine major risk types identified as having the potential to create significant adverse impacts on the Company, such as financial losses, reputational damage, legal or regulatory actions, failure to achieve strategic objectives, diminished customer experience, and/or cultural erosion. The nine major risk categories identified by the Company and addressed in the Risk Appetite Statement are strategic and emerging risk, culture risk, credit risk, liquidity risk, market and interest rate risk, operational risk, reputation risk, compliance risk, and technology and cyber risk, each of which is discussed below.

Strategic and Emerging Risk   Strategic and emerging risk is the risk arising from adverse strategic or business decisions, misalignment of strategic direction with the Company’s mission and values, failure to execute strategies or tactics, or an inadequate adaptation or lack of responsiveness to industry and/or operating environment changes. Management seeks to mitigate strategic risk through strategic planning, frequent executive review of strategic plan progress, monitoring of competitors and technology, assessment of new products, new branches, and new business initiatives, customer advocacy, and crisis management planning.

Culture Risk   Culture risk is the risk arising from failed leadership and/or ineffective colleague engagement and workplace management that causes the Company to lose sight of core values and, through acts or omissions, damage the relationship-based culture that has been one of the foundations of the Company’s consistent success. Management seeks to mitigate culture risk through effective employee relations, leadership that encourages continuous improvement, cultural development and reinforcement of core values, communication of clear ethical and behavioral standards, consistent enforcement of policies and programs, discipline of misbehavior, alignment of incentives and compensation, and by promoting diversity, equity, and inclusion.

Credit Risk   Credit risk is the risk arising from the failure of a borrower or a counterparty to a contract to make payments as agreed, and includes the risks arising from inadequate collateral and mismanagement of loan concentrations. While the collateral securing loans may be sufficient in some cases to recover the amount due, in other cases the Company may experience significant credit losses that could have an adverse effect on its operating results. The Company makes assumptions and judgments about the collectability of its loan portfolio, including the creditworthiness of its borrowers and counterparties and the value of collateral for the repayment of loans. For further discussion regarding the credit risk and the credit quality of the Company’s loan portfolio, see Note 3, “Loans, Allowance for Credit Losses and Credit Quality” within the Notes to Consolidated Financial Statements included in Part I. Item 1 of this Report.

Liquidity Risk      Liquidity risk is the risk arising from the Company being unable to meet obligations when due. Liquidity risk includes the inability to access funding sources or manage fluctuations in available funding levels. Liquidity risk also results from a failure to recognize or address market condition changes that affect the ability to liquidate assets quickly with minimal value loss.

The Company’s primary sources of funds are deposits, borrowings, and the amortization, prepayment, and maturities of loans and securities. The Bank utilizes its extensive branch network to access retail customers who provide a base of in-market core deposits. These funds are principally comprised of demand deposits, interest checking accounts, savings accounts, and money market accounts. Interest rates, economic conditions, and competitive factors greatly influence deposit levels.

The Company’s primary measure of short-term liquidity is the Total Basic Surplus/Deficit as a percentage of assets. This ratio, which is an analysis of the relationship between liquid assets plus available FHLB funding, less short-term liabilities relative to total assets, was within policy limits at September 30, 2024. The Total Basic Surplus/Deficit measure is affected primarily by changes in deposits, securities and short-term investments, loans, and borrowings. An increase in deposits, without a corresponding increase in nonliquid assets, will improve the Total Basic Surplus/Deficit measure, whereas, an increase in loans, with no increase in deposits, will decrease the measure. Other factors affecting the Total Basic Surplus/Deficit include FHLB collateral requirements, securities portfolio changes, and the mix of deposits.

The Company prioritizes core deposits as a primary funding source and continues to maintain a variety of available liquidity sources, including FHLB advances, and Federal Reserve borrowing capacity. These funding sources serve as a contingent source of liquidity and, when profitable lending and investment opportunities exist, the Company may access them
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to provide the liquidity needed to grow the balance sheet. The amount and type of assets that the Company has available to pledge affects the Company's FHLB and Federal Reserve borrowing capacity. For example, a prime one-to-four family residential loan may provide 75 cents of borrowing capacity for every $1.00 pledged, whereas a pledged commercial loan may increase borrowing capacity in a lower amount. The Company’s lending decisions, therefore, can also affect its liquidity position.

The Company may also have the ability to raise additional funds through the issuance of equity or unsecured debt privately or publicly and has done so in the past. Additionally, the Company is able to enter into repurchase agreements or acquire brokered deposits at its discretion. The availability and cost of equity or debt on an unsecured basis is dependent on many factors, including the Company’s financial position, the market environment, and the Company’s credit rating. The Company monitors the factors that could affect its ability to raise liquidity through these channels.

The following table depicts current and unused liquidity capacity from various sources as of the dates indicated:

Table 17 - Liquidity Sources
 September 30, 2024December 31, 2023
 OutstandingAdditional
Borrowing
Capacity		OutstandingAdditional
Borrowing  Capacity
 (Dollars in thousands)
Federal Home Loan Bank of Boston (1)$600,521 $2,121,680 $1,105,541 $1,577,746 
Federal Reserve Bank of Boston (2)— 3,624,805 — 3,078,179 
Unpledged Securities — 546,861 — 1,187,882 
Line of Credit — 85,000 — 85,000 
Junior subordinated debentures (3)62,859 — 62,858 — 
Subordinated debt (3)— — 49,980 — 
Reciprocal deposits (3)1,036,580 — 959,068 — 
Brokered deposits (3)61,216 — 100,923 — 
$1,761,176 $6,378,346 $2,278,370 $5,928,807 

(1)Loans and securities with a carrying value of $3.9 billion at each of September 30, 2024 and December 31, 2023, were pledged to the FHLB of Boston.
(2)Loans and securities with a carrying value of $5.0 billion at September 30, 2024, and loans with a carrying value of $4.6 billion at December 31, 2023, were pledged to the Federal Reserve Bank of Boston at each respective period.
(3)The additional borrowing capacity has not been assessed for these categories.

In addition to customary operational liquidity practices, the Board of Directors and management recognize the need to establish reasonable guidelines to manage a heightened liquidity risk environment. Catalysts for elevated liquidity risk can be Company-specific issues and/or systemic industry-wide events. Management is therefore responsible for instituting systems and controls designed to provide advanced detection of potentially significant funding shortages, establishing methods for assessing and monitoring risk levels, and instituting responses that may alleviate or circumvent a potential liquidity crisis. Management has established a Liquidity Contingency Plan to provide a framework to detect potential liquidity problems and appropriately address them in a timely manner. In a period of perceived heightened liquidity risk, the Liquidity Contingency Plan provides for the establishment of a Liquidity Crisis Task Force to monitor the potential for a liquidity crisis and execute an appropriate response.

The Company continually monitors both on and off balance sheet liquidity sources to understand vulnerabilities and when adjustments to the balance between sources and uses of funds may be necessary. Management regularly performs various liquidity stress testing scenarios and other analyses to assess potential liquidity outflows or funding concerns resulting from economic or industry disruptions, volatility in the financial markets, or unforeseen credit events. The results of these scenarios are used to inform the Company's Liquidity Contingency Plan and help provide the basis for its liquidity needs.
    
Market and Interest Rate Risk   Market risk refers to the risk of potential losses arising from changes in interest rates and the value of investments due to market conditions or other external factors or events. Interest rate risk is the most significant market risk to which the Company has exposure to due to the nature of its operations.

Interest rate risk is the sensitivity of income to changes in interest rates. Interest rate changes, as well as fluctuations in the level and duration of assets and liabilities, affect net interest income, which is the Company’s primary source of revenue.
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Interest rate risk arises directly from the Company’s core banking activities. In addition to directly affecting net interest income, changes in the level of interest rates can also affect the amount of loans originated, the timing of cash flows on loans and securities, and the fair value of securities and derivatives, and have other effects.

Management strives to control interest rate risk within limits approved by the Board of Directors that reflect the Company’s tolerance for interest rate risk over short-term and long-term horizons. The Company attempts to manage interest rate risk by identifying, quantifying, and, where appropriate, hedging exposure. If assets and liabilities do not re-price simultaneously and in equal volume, the potential for interest rate exposure exists. It is the Company's objective to maintain stability in the growth of net interest income through the maintenance of an appropriate mix of interest-earning assets and interest-bearing liabilities and, when necessary within limits management deems prudent, with hedging instruments such as interest rate swaps, floors, and caps.

The Company quantifies its interest rate exposures using net interest income simulation models, as well as simpler gap analysis, and an Economic Value of Equity analysis. Key assumptions in these analyses relate to behavior of interest rates and behavior of the Company’s deposit and loan customers. The most material assumptions relate to the prepayment of mortgage assets (including mortgage loans and mortgage-backed securities) and the life and sensitivity of non-maturity deposits (e.g., demand deposit, savings, and money market accounts). In the case of prepayment of mortgage assets, assumptions are derived from published median prepayment estimates for comparable mortgage loans. The risk of prepayment tends to increase when interest rates fall. Since future prepayment behavior of loan customers is uncertain, interest rate sensitivity of loans cannot be determined with precision and actual behavior may differ from assumptions to a significant degree. Non-maturity deposits, assumptions over customer behavior, shifts in deposits categories, and magnitude of impact to the cost of deposits all may differ from what is currently anticipated by the models or analyses.

Given the volatility associated with market rates, and the uncertainty surrounding future rate movements, management has been proactive in achieving a more neutral interest rate risk position as compared to the prior year. The Company runs several scenarios to quantify and effectively assist in managing interest rate risk, including instantaneous parallel shifts in market rates as well as gradual (12-24 months) shifts in market rates, and may also include other alternative scenarios as management deems necessary given the interest rate environment. The results of those scenarios are summarized in the following table:
Table 18 - Interest Rate Sensitivity
September 30
 20242023
Year 1Year 1
Parallel rate shocks (basis points)
-300(6.4)%(3.4)%
-200(3.9)%(1.9)%
-100(1.5)%(0.8)%
+1001.1 %0.2 %
+2002.0 %0.2 %
+3003.0 %0.7 %
+4004.1 %1.2 %
Gradual rate shifts (basis points)
-200 over 12 months(1.3)%(0.7)%
-100 over 12 months(0.6)%(0.3)%
+200 over 12 months0.9 %0.2 %

The results depicted in the table above are dependent on material assumptions, such as prepayment rates, decay rates, pricing decisions on loans and deposits, and other factors, which management believes are reasonable. These assumptions may be impacted by customer preferences or competitive influences and therefore actual experience may differ from the assumptions in the model. Accordingly, although the tables provide an indication of the Company's interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates, and actual results may differ.
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The most significant market factors affecting the Company’s net interest income during the three months ended September 30, 2024 were the shape of the U.S. Government securities and interest rate swap yield curve, the U.S. prime interest rate, the secured overnight financing rate, and other interest rates offered on long-term fixed rate loans.

The Company manages the interest rate risk inherent in both its loan and borrowing portfolios by using interest rate swap agreements and interest rate caps and floors. An interest rate swap is an agreement in which one party agrees to pay a floating rate of interest on a notional principal amount in exchange for receiving a fixed rate of interest on the same notional amount for a predetermined period from the other party. Interest rate caps and floors are agreements where one party agrees to pay a floating rate of interest on a notional principal amount for a predetermined period to a second party if certain market interest rate thresholds are realized. While interest is paid or received in swap, cap, and floors agreements, the notional principal amount is not exchanged. The Company may also manage the interest rate risk inherent in its mortgage banking operations by entering into forward sales contracts under which the Company agrees to deliver whole mortgage loans to various investors. See Note 5, “Derivative and Hedging Activities” within the Notes to Consolidated Financial Statements included in Part I. Item 1 of this Report for additional information regarding the Company’s derivative financial instruments.

Movements in foreign currency rates or commodity prices do not directly or materially affect the Company's earnings. Movements in equity prices may have a modest impact on earnings by affecting the volume of activity or the amount of fees from investment-related business lines. See Note 2, “Securities” within the Notes to Consolidated Financial Statements included in Part I. Item 1 of this Report.

Operational Risk Operational risk is the risk arising from human error or misconduct, transaction errors or delays, inadequate or failed internal systems or processes, data unavailability, loss, or poor quality, or adverse external events. Operational risk includes fraud risk and model risk. Potential operational risk exposure exists throughout the Company. The continued effectiveness of colleagues and operational infrastructure are integral to mitigating operational risk, and any shortcomings subject the Company to risks that vary in size, scale and scope.

Reputation Risk Reputation risk is the risk arising from negative public opinion of the Company and the Bank. Management seeks to mitigate reputational risk through actions that include a structured process of customer complaint resolution and ongoing reputational monitoring.

Regulatory and Compliance Risk Regulatory and Compliance risk is the risk arising from violations of laws or regulations, non-conformance with prescribed practices, internal bank policies and procedures, or ethical standards. Compliance risk includes consumer compliance risk, legal risk, and regulatory compliance risk. Management seeks to mitigate compliance risk through compliance training and regulatory change management processes.

Technology and Cyber Risk Technology and Cyber risk is the risk of losses or other impacts arising from the failure of technology systems to function in accordance with expectations and business requirements. Technology risks include technical failures, unlawful tampering with technical systems, cyber security, terrorist activities, ineffectiveness or exposure due to interruption in third party support. Management seeks to mitigate technology risk through appropriate security and controls over data and its technological environment. The Bank manages cybersecurity threats proactively and maintains robust controls to protect its critical systems and data by investing in secure, reliable and resilient technology infrastructure, fostering a culture of technology risk awareness and continuously improving its technology risk management practices.

Contractual Obligations, Commitments, Contingencies, and Off-Balance Sheet Financial Information
Off-Balance Sheet Arrangements There were no material changes in off-balance sheet arrangements during the three months ended September 30, 2024.
See Note 5, “Derivative and Hedging Activities” and Note 9, “Commitments and Contingencies” within the Notes to Consolidated Financial Statements included in Part I. Item 1 of this Report for more information relating to the Company's other off-balance sheet financial instruments.
Contractual Obligations, Commitments, and Contingencies There were no material changes in contractual obligations, commitments, or contingencies during the three months ended September 30, 2024.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information required by this Item 3 is included in the “Risk Management” section of Part I. Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of this Report and is incorporated herein by reference.

Item 4. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures.  The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.
Changes in Internal Control over Financial Reporting. There were no changes in the Company's internal control over financial reporting that occurred during the third quarter of 2024 that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item  1. Legal Proceedings
At September 30, 2024, the Bank was involved in pending lawsuits that arose in the ordinary course of business. Management has reviewed these pending lawsuits with legal counsel and has taken into consideration the view of counsel as to their outcome. In the opinion of management, the final disposition of pending lawsuits is not expected to have a material adverse effect on the Company’s financial position or results of operations.

Item 1A. Risk Factors

    The section titled Risk Factors in Part I, Item 1A of the 2023 Form 10-K, includes a discussion of the material risks and uncertainties the Company faces, any one or more of which could have a material adverse effect on the Company's business, results of operations, or financial condition (including capital and liquidity). As of the date of this Report, there have been no material changes with regard to the Risk Factors disclosed in Item 1A of the 2023 Form 10-K which are incorporated herein by reference.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) Not applicable.
(b) Not applicable.
(c) The following table sets forth information regarding the Company’s repurchases of its common stock during the three months ended September 30, 2024:
 Issuer Purchases of Equity Securities
 Total Number of Shares Purchased (1)Average Price Paid Per ShareTotal Number of
Shares Purchased as
Part of Publicly
Announced Plan or
Program		Maximum Number of Shares (or Approximate Dollar Value) That May Yet Be Purchased Under the Plan or Program
Period
July 1 to July 31, 2024— $— — $— 
August 1 to August 31, 2024— $— — $— 
September 1 to September 30, 2024336 $59.99 — $— 
Total336 $59.99 — 
(1)These shares were surrendered in connection with the vesting of equity compensation grants to satisfy related tax withholding obligations.

Item 3. Defaults Upon Senior Securities - None.

Item 4. Mine Safety Disclosures - Not Applicable.

Item 5. Other Information
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(a)None

(b)None

(c)Insider Rule 10b5-1 Trading Plans. During the quarter ended September 30, 2024, none of our directors or executive officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.

Item 6. Exhibits

Exhibit Index
 
No.Exhibit
31.1
31.2
32.1
32.2
101The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.*
104Cover page interactive data file (formatted as inline XBRL and contained in Exhibit 101).*

*Filed herewith
+Furnished herewith



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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
INDEPENDENT BANK CORP.
(registrant)
 
November 7, 2024 /s/ Jeffrey J. Tengel
 Jeffrey J. Tengel
President and
Chief Executive Officer
(Principal Executive Officer)
 
November 7, 2024 /s/ Mark J. Ruggiero
 Mark J. Ruggiero
Chief Financial Officer
(Principal Financial Officer)

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