UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
			SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
			SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-36502


			COMMERCE BANCSHARES, INC.
(Exact name of registrant as specified in its charter)


Missouri		43-0889454
(State of Incorporation)		(IRS Employer Identification No.)
1000 Walnut
Kansas City,	MO	64106
(Address of principal executive offices)		(Zip Code)

(816) 234-2000

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:

Title of class	Trading symbol(s)	Name of exchange on which registered
$5 Par Value Common Stock	CBSH	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of ~~May~~November 2, 2022, the registrant had outstanding ~~120,734,318~~119,352,570 shares of its $5 par value common stock, registrant’s only class of common stock.

Commerce Bancshares, Inc. and Subsidiaries

Form 10-Q


			Page
INDEX
Part I	Financial Information
	Item 1.	Financial Statements
		Consolidated Balance Sheets as of ~~March 31,~~September 30, 2022 (unaudited) and December 31, 2021	3
		Consolidated Statements of Income for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021 (unaudited)	4
		Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and ~~202~~1 2021 (unaudited)	5
		Consolidated Statements of Changes in Equity for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021 (unaudited)	6
		Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2022 and 2021 (unaudited)	78
		Notes to Consolidated Financial Statements	89
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4145
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6169
	Item 4.	Controls and Procedures	6270

Part II	Other Information
	Item 1.	Legal Proceedings	6371
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6371
	Item 6.	Exhibits	6371
Signatures			6472

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Commerce Bancshares, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
		(In thousands)					(In thousands)
ASSETS	ASSETS					ASSETS
Loans	Loans	$	15,459,014	$	15,176,359	Loans	$	15,898,958	$	15,176,359
Allowance for credit losses on loans	Allowance for credit losses on loans	(134,710)		(150,044)		Allowance for credit losses on loans	(143,377)		(150,044)
Net loans	Net loans	15,324,304		15,026,315		Net loans	15,755,581		15,026,315
Loans held for sale (including $3,901,000 and $5,570,000 of residential mortgage loans carried at fair value at March 31, 2022 and December 31, 2021, respectively)		8,908		8,615
Loans held for sale (including $1,426,000 and $5,570,000 of residential mortgage loans carried at fair value at September 30, 2022 and December 31, 2021, respectively)						Loans held for sale (including $1,426,000 and $5,570,000 of residential mortgage loans carried at fair value at September 30, 2022 and December 31, 2021, respectively)	8,062		8,615
Investment securities:	Investment securities:					Investment securities:
Available for sale debt, at fair value (amortized cost of $15,425,954,000 and $14,419,133,000 at
March 31, 2022 and December 31, 2021, respectively, and allowance for credit losses of $—
at March 31, 2022 and December 31, 2021, respectively)		14,780,494		14,450,027
Available for sale debt, at fair value (amortized cost of $14,176,324,000 and $14,419,133,000 at						Available for sale debt, at fair value (amortized cost of $14,176,324,000 and $14,419,133,000 at
September 30, 2022 and December 31, 2021, respectively, and allowance for credit losses of $—						September 30, 2022 and December 31, 2021, respectively, and allowance for credit losses of $—
at both September 30, 2022 and December 31, 2021)						at both September 30, 2022 and December 31, 2021)	12,632,510		14,450,027
Trading debt	Trading debt	31,380		46,235		Trading debt	39,222		46,235
Equity	Equity	9,284		9,202		Equity	8,954		9,202
Other	Other	199,576		194,047		Other	222,742		194,047
Total investment securities	Total investment securities	15,020,734		14,699,511		Total investment securities	12,903,428		14,699,511
Federal funds sold and short-term securities purchased under agreements to resell		—		2,800
Federal funds sold						Federal funds sold	14,020		2,800
Securities purchased under agreements to resell	Securities purchased under agreements to resell	1,825,000		1,625,000		Securities purchased under agreements to resell	1,275,000		1,625,000
Interest earning deposits with banks	Interest earning deposits with banks	1,260,813		3,971,217		Interest earning deposits with banks	642,943		3,971,217
Cash and due from banks	Cash and due from banks	326,549		305,539		Cash and due from banks	344,178		305,539
Premises and equipment – net	Premises and equipment – net	394,028		388,738		Premises and equipment – net	407,833		388,738
Goodwill	Goodwill	138,921		138,921		Goodwill	138,921		138,921
Other intangible assets – net	Other intangible assets – net	15,885		15,570		Other intangible assets – net	15,599		15,570
Other assets	Other assets	671,651		506,862		Other assets	1,097,031		506,862
Total assets	Total assets	$	34,986,793	$	36,689,088	Total assets	$	32,602,596	$	36,689,088
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:	Deposits:					Deposits:
Non-interest bearing	Non-interest bearing	$	11,428,372	$	11,772,374	Non-interest bearing	$	10,468,591	$	11,772,374
Savings, interest checking and money market	Savings, interest checking and money market	16,751,632		16,598,085		Savings, interest checking and money market	16,014,487		16,598,085
Certificates of deposit of less than $100,000	Certificates of deposit of less than $100,000	422,992		435,960		Certificates of deposit of less than $100,000	391,145		435,960
Certificates of deposit of $100,000 and over	Certificates of deposit of $100,000 and over	716,345		1,006,654		Certificates of deposit of $100,000 and over	597,093		1,006,654
Total deposits	Total deposits	29,319,341		29,813,073		Total deposits	27,471,316		29,813,073
Federal funds purchased and securities sold under agreements to repurchase	Federal funds purchased and securities sold under agreements to repurchase	2,317,461		3,022,967		Federal funds purchased and securities sold under agreements to repurchase	2,314,590		3,022,967
Other borrowings	Other borrowings	9,057		12,560		Other borrowings	1,831		12,560
Other liabilities	Other liabilities	367,532		392,164		Other liabilities	443,752		392,164
Total liabilities	Total liabilities	32,013,391		33,240,764		Total liabilities	30,231,489		33,240,764
Commerce Bancshares, Inc. stockholders’ equity:	Commerce Bancshares, Inc. stockholders’ equity:					Commerce Bancshares, Inc. stockholders’ equity:

Common stock, $5 par value	Common stock, $5 par value					Common stock, $5 par value
Authorized 140,000,000; issued 122,160,705 shares		610,804		610,804
Authorized 140,000,000; issued 122,160,705 shares at September 30, 2022 and December 31, 2021						Authorized 140,000,000; issued 122,160,705 shares at September 30, 2022 and December 31, 2021	610,804		610,804
Capital surplus	Capital surplus	2,678,025		2,689,894		Capital surplus	2,683,631		2,689,894
Retained earnings	Retained earnings	178,504		92,493		Retained earnings	353,446		92,493
Treasury stock of 1,034,382 shares at March 31, 2022
Treasury stock of 2,553,242 shares at September 30, 2022						Treasury stock of 2,553,242 shares at September 30, 2022
and 476,392 shares at December 31, 2021, at cost	and 476,392 shares at December 31, 2021, at cost	(72,293)		(32,973)		and 476,392 shares at December 31, 2021, at cost	(176,943)		(32,973)
Accumulated other comprehensive income	Accumulated other comprehensive income	(434,400)		77,080		Accumulated other comprehensive income	(1,119,344)		77,080
Total Commerce Bancshares, Inc. stockholders' equity	Total Commerce Bancshares, Inc. stockholders' equity	2,960,640		3,437,298		Total Commerce Bancshares, Inc. stockholders' equity	2,351,594		3,437,298
Non-controlling interest	Non-controlling interest	12,762		11,026		Non-controlling interest	19,513		11,026
Total equity	Total equity	2,973,402		3,448,324		Total equity	2,371,107		3,448,324
Total liabilities and equity	Total liabilities and equity	$	34,986,793	$	36,689,088	Total liabilities and equity	$	32,602,596	$	36,689,088

See accompanying notes to consolidated financial statements.

Table of Contents

Commerce Bancshares, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME


		For the Three Months Ended March 31					For the Three Months Ended September 30						For the Nine Months Ended September 30
(In thousands, except per share data)	(In thousands, except per share data)		2022		2021			(In thousands, except per share data)	2022		2021			2022		2021
		(Unaudited)							(Unaudited)
INTEREST INCOME	INTEREST INCOME							INTEREST INCOME
Interest and fees on loans	Interest and fees on loans		$	132,075	$	146,338		Interest and fees on loans	$	171,272	$	142,887		$	445,873	$	433,809
Interest and fees on loans held for sale	Interest and fees on loans held for sale		150		304			Interest and fees on loans held for sale	159		187			470		736
Interest on investment securities	Interest on investment securities		73,105		51,557			Interest on investment securities	79,586		63,904			241,326		170,604
Interest on federal funds sold	Interest on federal funds sold		1		—			Interest on federal funds sold	94		1			114		3
Interest on securities purchased under agreements to resell	Interest on securities purchased under agreements to resell		5,300		11,128			Interest on securities purchased under agreements to resell	5,984		9,007			15,669		30,551
Interest on deposits with banks	Interest on deposits with banks		1,151		370			Interest on deposits with banks	5,571		995			9,150		2,108
Total interest income	Total interest income		211,782		209,697			Total interest income	262,666		216,981			712,602		637,811
INTEREST EXPENSE	INTEREST EXPENSE							INTEREST EXPENSE
Interest on deposits:	Interest on deposits:							Interest on deposits:
Savings, interest checking and money market	Savings, interest checking and money market		1,760		2,103			Savings, interest checking and money market	7,545		1,817			11,583		5,764
Certificates of deposit of less than $100,000	Certificates of deposit of less than $100,000		139		473			Certificates of deposit of less than $100,000	411		206			755		1,006
Certificates of deposit of $100,000 and over	Certificates of deposit of $100,000 and over		427		1,062			Certificates of deposit of $100,000 and over	871		450			1,768		2,173
Interest on federal funds purchased and securities sold under	Interest on federal funds purchased and securities sold under							Interest on federal funds purchased and securities sold under
agreements to repurchase	agreements to repurchase		689		312			agreements to repurchase	7,891		480			11,506		1,112
Interest on other borrowings	Interest on other borrowings		(19)		(1)			Interest on other borrowings	(425)		(9)			(554)		(11)
Total interest expense	Total interest expense		2,996		3,949			Total interest expense	16,293		2,944			25,058		10,044
Net interest income	Net interest income		208,786		205,748			Net interest income	246,373		214,037			687,544		627,767
Provision for credit losses	Provision for credit losses		(9,858)		(6,232)			Provision for credit losses	15,290		(7,385)			12,594		(59,272)
Net interest income after credit losses	Net interest income after credit losses		218,644		211,980			Net interest income after credit losses	231,083		221,422			674,950		687,039
NON-INTEREST INCOME	NON-INTEREST INCOME							NON-INTEREST INCOME
Trust fees								Trust fees	45,406		48,950			140,009		139,334
Bank card transaction fees	Bank card transaction fees		42,045		37,695			Bank card transaction fees	45,638		42,815			131,556		123,118
Trust fees			47,811		44,127
Deposit account charges and other fees	Deposit account charges and other fees		22,307		22,575			Deposit account charges and other fees	24,521		25,161			72,392		71,724
Consumer brokerage services								Consumer brokerage services	5,085		4,900			14,599		13,484
Capital market fees	Capital market fees		4,125		4,981			Capital market fees	3,393		3,794			10,845		12,102
Consumer brokerage services			4,446		4,081
Loan fees and sales	Loan fees and sales		4,235		10,184			Loan fees and sales	3,094		6,842			10,575		24,472
Other	Other		6,800		12,402			Other	11,377		5,044			29,734		28,460
Total non-interest income	Total non-interest income		131,769		136,045			Total non-interest income	138,514		137,506			409,710		412,694

INVESTMENT SECURITIES GAINS, NET	INVESTMENT SECURITIES GAINS, NET		7,163		9,853			INVESTMENT SECURITIES GAINS, NET	3,410		13,108			11,602		39,765
NON-INTEREST EXPENSE	NON-INTEREST EXPENSE							NON-INTEREST EXPENSE
Salaries and employee benefits	Salaries and employee benefits		135,953		129,033			Salaries and employee benefits	137,393		132,824			415,589		392,608
Data processing and software								Data processing and software	28,050		25,598			82,701		76,015
Net occupancy	Net occupancy		12,296		12,021			Net occupancy	12,544		12,329			37,343		35,877
Equipment	Equipment		4,568		4,353			Equipment	5,036		4,440			14,338		13,398
Supplies and communication	Supplies and communication		4,713		4,125			Supplies and communication	4,581		4,530			13,655		12,688
Data processing and software			27,016		25,463
Marketing	Marketing		6,344		5,158			Marketing	6,228		5,623			18,408		16,461
Other	Other		14,758		12,420			Other	19,052		26,276			50,003		55,272
Total non-interest expense	Total non-interest expense		205,648		192,573			Total non-interest expense	212,884		211,620			632,037		602,319
Income before income taxes	Income before income taxes		151,928		165,305			Income before income taxes	160,123		160,416			464,225		537,179
Less income taxes	Less income taxes		31,902		32,076			Less income taxes	33,936		34,662			97,859		111,947
Net income	Net income		120,026		133,229			Net income	126,187		125,754			366,366		425,232
Less non-controlling interest expense	Less non-controlling interest expense		1,872		2,257			Less non-controlling interest expense	3,364		3,193			9,595		9,373
Net income attributable to Commerce Bancshares, Inc.	Net income attributable to Commerce Bancshares, Inc.		$	118,154	$	130,972		Net income attributable to Commerce Bancshares, Inc.	$	122,823	$	122,561		$	356,771	$	415,859

Net income per common share — basic	Net income per common share — basic		$	.97	$	1.06		Net income per common share — basic	$	1.03	$	1.00		$	2.96	$	3.38
Net income per common share — diluted	Net income per common share — diluted		$	.97	$	1.06		Net income per common share — diluted	$	1.02	$	.99		$	2.95	$	3.37

See accompanying notes to consolidated financial statements.

Table of Contents

Commerce Bancshares, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


		For the Three Months Ended March 31					For the Three Months Ended September 30						For the Nine Months Ended September 30
(In thousands)	(In thousands)		2022		2021			(In thousands)	2022		2021			2022		2021
			(Unaudited)						(Unaudited)
Net income	Net income		$	120,026	$	133,229		Net income	$	126,187	$	125,754		$	366,366	$	425,232
Other comprehensive income (loss):	Other comprehensive income (loss):							Other comprehensive income (loss):

Net unrealized losses on available for sale debt securities	Net unrealized losses on available for sale debt securities		(507,265)		(158,676)			Net unrealized losses on available for sale debt securities	(345,565)		(57,068)			(1,181,031)		(160,019)
Pension loss amortization	Pension loss amortization		323		437			Pension loss amortization	302		451			947		1,326
Unrealized losses on cash flow hedge derivatives	Unrealized losses on cash flow hedge derivatives		(4,538)		(4,386)			Unrealized losses on cash flow hedge derivatives	(7,187)		(4,607)			(16,340)		(13,518)
Other comprehensive income (loss)	Other comprehensive income (loss)		(511,480)		(162,625)			Other comprehensive income (loss)	(352,450)		(61,224)			(1,196,424)		(172,211)
Comprehensive income (loss)	Comprehensive income (loss)		(391,454)		(29,396)			Comprehensive income (loss)	(226,263)		64,530			(830,058)		253,021
Less non-controlling interest expense	Less non-controlling interest expense		1,872		2,257			Less non-controlling interest expense	3,364		3,193			9,595		9,373
Comprehensive income (loss) attributable to Commerce Bancshares, Inc.	Comprehensive income (loss) attributable to Commerce Bancshares, Inc.		$	(393,326)	$	(31,653)		Comprehensive income (loss) attributable to Commerce Bancshares, Inc.	$	(229,627)	$	61,337		$	(839,653)	$	243,648

See accompanying notes to consolidated financial statements.

Table of Contents

Commerce Bancshares, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three Months Ended ~~March 31,~~September 30, 2022 and 2021


		Commerce Bancshares, Inc. Shareholders															Commerce Bancshares, Inc. Shareholders
(In thousands, except per share data)	(In thousands, except per share data)	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interest		Total		(In thousands, except per share data)	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interest		Total
		(Unaudited)															(Unaudited)
Balance December 31, 2021		$	610,804	$	2,689,894	$	92,493	$	(32,973)	$	77,080	$	11,026	$	3,448,324
Balance June 30, 2022																Balance June 30, 2022	$	610,804	$	2,682,161	$	262,363	$	(129,588)	$	(766,894)	$	16,467	$	2,675,313
Net income	Net income					118,154						1,872		120,026		Net income					122,823						3,364		126,187
Other comprehensive loss	Other comprehensive loss									(511,480)				(511,480)		Other comprehensive loss									(352,450)				(352,450)
Distributions to non-controlling interest	Distributions to non-controlling interest											(136)		(136)		Distributions to non-controlling interest											(318)		(318)
Purchases of treasury stock	Purchases of treasury stock							(55,855)						(55,855)		Purchases of treasury stock							(50,116)						(50,116)

Issuance of stock under purchase and equity compensation plans	Issuance of stock under purchase and equity compensation plans			$	(16,087)			16,535						448		Issuance of stock under purchase and equity compensation plans			(2,762)				2,761						(1)
Stock-based compensation	Stock-based compensation			4,218										4,218		Stock-based compensation			4,232										4,232
Cash dividends paid on common stock ($0.265 per share)	Cash dividends paid on common stock ($0.265 per share)					(32,143)								(32,143)		Cash dividends paid on common stock ($0.265 per share)					(31,740)								(31,740)

Balance March 31, 2022		$	610,804	$	2,678,025	$	178,504	$	(72,293)	$	(434,400)	$	12,762	$	2,973,402
Balance December 31, 2020		$	589,352	$	2,436,288	$	73,000	$	(32,970)	$	331,377	$	2,925	$	3,399,972
Net income						130,972						2,257		133,229
Balance September 30, 2022																Balance September 30, 2022	$	610,804	$	2,683,631	$	353,446	$	(176,943)	$	(1,119,344)	$	19,513	$	2,371,107
Balance June 30, 2021																Balance June 30, 2021	$	589,352	$	2,424,157	$	304,739	$	(53,018)	$	220,390	$	8,210	$	3,493,830

Net Income																Net Income					122,561						3,193		125,754
Other comprehensive loss	Other comprehensive loss									(162,625)				(162,625)		Other comprehensive loss									(61,224)				(61,224)
Distributions to non-controlling interest	Distributions to non-controlling interest											(387)		(387)		Distributions to non-controlling interest											(193)		(193)
Purchases of treasury stock	Purchases of treasury stock							(25,923)						(25,923)		Purchases of treasury stock							(40,165)						(40,165)
Sale of non-controlling interest of subsidiary																Sale of non-controlling interest of subsidiary			659								(659)		—
Issuance of stock under purchase and equity compensation plans	Issuance of stock under purchase and equity compensation plans			(19,828)				19,813						(15)		Issuance of stock under purchase and equity compensation plans			(1,137)				1,136						(1)
Stock-based compensation	Stock-based compensation			3,933										3,933		Stock-based compensation			3,865										3,865
Cash dividends paid on common stock ($.250 per share)	Cash dividends paid on common stock ($.250 per share)					(30,799)								(30,799)		Cash dividends paid on common stock ($.250 per share)					(30,645)								(30,645)

Balance March 31, 2021		$	589,352	$	2,420,393	$	173,173	$	(39,080)	$	168,752	$	4,795	$	3,317,385
Balance September 30, 2021																Balance September 30, 2021	$	589,352	$	2,427,544	$	396,655	$	(92,047)	$	159,166	$	10,551	$	3,491,221

See accompanying notes to consolidated financial statements.

Table of Contents

Commerce Bancshares, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Nine Months Ended September 30, 2022 and 2021


	Commerce Bancshares, Inc. Shareholders
(In thousands, except per share data)	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interest		Total
	(Unaudited)
Balance December 31, 2021	$	610,804	$	2,689,894	$	92,493	$	(32,973)	$	77,080	$	11,026	$	3,448,324


Net income					356,771						9,595		366,366
Other comprehensive loss									(1,196,424)				(1,196,424)
Distributions to non-controlling interest											(1,108)		(1,108)

Purchases of treasury stock							(163,321)						(163,321)

Issuance of stock under purchase and equity compensation plans			(18,904)				19,351						447
Stock-based compensation			12,641										12,641
Cash dividends on common stock ($.795 per share)					(95,818)								(95,818)

Balance September 30, 2022	$	610,804	$	2,683,631	$	353,446	$	(176,943)	$	(1,119,344)	$	19,513	$	2,371,107
Balance December 31, 2020	$	589,352	$	2,436,288	$	73,000	$	(32,970)	$	331,377	$	2,925	$	3,399,972



Net income					415,859						9,373		425,232
Other comprehensive loss									(172,211)				(172,211)
Distributions to non-controlling interest											(1,088)		(1,088)
Purchases of treasury stock							(80,052)						(80,052)
Sale of non-controlling interest of subsidiary			659								(659)		—
Issuance of stock under purchase and equity compensation plans			(20,991)				20,975						(16)
Stock-based compensation			11,588										11,588
Cash dividends on common stock ($.750 per share)					(92,204)								(92,204)

Balance September 30, 2021	$	589,352	$	2,427,544	$	396,655	$	(92,047)	$	159,166	$	10,551	$	3,491,221

See accompanying notes to consolidated financial statements.

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Commerce Bancshares, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS


		For the Three Months Ended March 31					For the Nine Months Ended September 30
(In thousands)	(In thousands)	2022		2021		(In thousands)	2022		2021
		(Unaudited)					(Unaudited)
OPERATING ACTIVITIES:	OPERATING ACTIVITIES:					OPERATING ACTIVITIES:
Net income	Net income	$	120,026	$	133,229	Net income	$	366,366	$	425,232
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	Provision for credit losses	(9,858)		(6,232)		Provision for credit losses	12,594		(59,272)
Provision for depreciation and amortization	Provision for depreciation and amortization	11,811		11,379		Provision for depreciation and amortization	35,350		33,554
Amortization of investment security premiums, net	Amortization of investment security premiums, net	4,932		22,079		Amortization of investment security premiums, net	8,565		51,822
Investment securities gains, net (A)	Investment securities gains, net (A)	(7,163)		(9,853)		Investment securities gains, net (A)	(11,602)		(39,765)
Net gains on sales of loans held for sale	Net gains on sales of loans held for sale	(1,302)		(7,381)		Net gains on sales of loans held for sale	(2,607)		(18,849)
Originations of loans held for sale	Originations of loans held for sale	(57,580)		(172,435)		Originations of loans held for sale	(114,765)		(442,853)
Proceeds from sales of loans held for sale	Proceeds from sales of loans held for sale	57,789		184,155		Proceeds from sales of loans held for sale	116,421		485,231
Net decrease in trading debt securities, excluding unsettled transactions		9,798		4,872
Net (increase) decrease in trading debt securities, excluding unsettled transactions						Net (increase) decrease in trading debt securities, excluding unsettled transactions	14,080		(9,093)
Purchase of interest rate floor						Purchase of interest rate floor	(16,849)		—
Stock-based compensation	Stock-based compensation	4,218		3,933		Stock-based compensation	12,641		11,588
(Increase) decrease in interest receivable	(Increase) decrease in interest receivable	(7,972)		444		(Increase) decrease in interest receivable	(21,959)		11,449
Increase (decrease) in interest payable	Increase (decrease) in interest payable	273		(1,804)		Increase (decrease) in interest payable	1,097		(3,168)
Increase in income taxes payable	Increase in income taxes payable	28,657		28,105		Increase in income taxes payable	168		19,831

Other changes, net	Other changes, net	(29,115)		11,178		Other changes, net	70,285		20,418
Net cash provided by operating activities	Net cash provided by operating activities	124,514		201,669		Net cash provided by operating activities	469,785		486,125
INVESTING ACTIVITIES:	INVESTING ACTIVITIES:					INVESTING ACTIVITIES:

Distributions received from equity-method investment	Distributions received from equity-method investment	400		—		Distributions received from equity-method investment	400		13,540
Proceeds from sales of investment securities (A)	Proceeds from sales of investment securities (A)	1,745		9,292		Proceeds from sales of investment securities (A)	55,690		10,060
Proceeds from maturities/pay downs of investment securities (A)	Proceeds from maturities/pay downs of investment securities (A)	805,355		938,527		Proceeds from maturities/pay downs of investment securities (A)	2,079,939		2,571,116
Purchases of investment securities (A)	Purchases of investment securities (A)	(1,812,434)		(1,194,891)		Purchases of investment securities (A)	(1,951,694)		(4,457,716)
Net increase in loans		(287,328)		(72,497)
Net (increase) decrease in loans						Net (increase) decrease in loans	(736,474)		1,166,769
Securities purchased under agreements to resell	Securities purchased under agreements to resell	(200,000)		—		Securities purchased under agreements to resell	(200,000)		(900,000)

Repayments of securities purchased under agreements to resell						Repayments of securities purchased under agreements to resell	550,000		—
Purchases of premises and equipment	Purchases of premises and equipment	(15,597)		(10,730)		Purchases of premises and equipment	(46,636)		(37,385)
Sales of premises and equipment	Sales of premises and equipment	175		2,568		Sales of premises and equipment	1,613		4,786
Net cash used in investing activities	Net cash used in investing activities	(1,507,684)		(327,731)		Net cash used in investing activities	(247,162)		(1,628,830)
FINANCING ACTIVITIES:	FINANCING ACTIVITIES:					FINANCING ACTIVITIES:
Net increase (decrease) in non-interest bearing, savings, interest checking and money market deposits	Net increase (decrease) in non-interest bearing, savings, interest checking and money market deposits	(208,358)		585,579		Net increase (decrease) in non-interest bearing, savings, interest checking and money market deposits	(2,078,327)		1,428,561
Net decrease in certificates of deposit	Net decrease in certificates of deposit	(303,277)		(73,000)		Net decrease in certificates of deposit	(454,376)		(228,916)

Net decrease in federal funds purchased and securities sold under agreements to repurchase		(705,506)		(160,273)
Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase						Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase	(708,377)		155,370

Net increase (decrease) in other borrowings	Net increase (decrease) in other borrowings	(3,503)		2,989		Net increase (decrease) in other borrowings	(10,729)		3,204

Purchases of treasury stock	Purchases of treasury stock	(55,855)		(25,923)		Purchases of treasury stock	(163,321)		(80,052)

Issuance of stock under equity compensation plans	Issuance of stock under equity compensation plans	448		(15)		Issuance of stock under equity compensation plans	447		(16)

Cash dividends paid on common stock	Cash dividends paid on common stock	(32,143)		(30,799)		Cash dividends paid on common stock	(95,818)		(92,204)

Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(1,308,194)		298,558		Net cash provided by (used in) financing activities	(3,510,501)		1,185,947
Increase (decrease) in cash, cash equivalents and restricted cash	Increase (decrease) in cash, cash equivalents and restricted cash	(2,691,364)		172,496		Increase (decrease) in cash, cash equivalents and restricted cash	(3,287,878)		43,242
Cash, cash equivalents and restricted cash at beginning of year	Cash, cash equivalents and restricted cash at beginning of year	4,296,954		2,208,328		Cash, cash equivalents and restricted cash at beginning of year	4,296,954		2,208,328
Cash, cash equivalents and restricted cash at March 31		$	1,605,590	$	2,380,824
Cash, cash equivalents and restricted cash at September 30						Cash, cash equivalents and restricted cash at September 30	$	1,009,076	$	2,251,570

Income tax payments, net	Income tax payments, net	$	1,640	$	2,510	Income tax payments, net	$	92,646	$	87,989
Interest paid on deposits and borrowings	Interest paid on deposits and borrowings	$	2,723	$	5,753	Interest paid on deposits and borrowings	$	23,961	$	13,213
Loans transferred to foreclosed real estate	Loans transferred to foreclosed real estate	$	25	$	115	Loans transferred to foreclosed real estate	$	457	$	172

(A) Available for sale debt securities, equity securities, and other securities.

See accompanying notes to consolidated financial statements.

Restricted cash is comprised of cash collateral posted by the Company to secure interest rate swap agreements. This balance is included in other assets in the consolidated balance sheets and totaled ~~$18.2~~$7.9 million and ~~$24.5~~$18.6 million at ~~March 31,~~September 30, 2022 and 2021, respectively.

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Commerce Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 2022 (Unaudited)

1. Principles of Consolidation and Presentation

The accompanying consolidated financial statements include the accounts of Commerce Bancshares, Inc. and all majority-owned subsidiaries (the Company). Most of the Company's operations are conducted by its subsidiary bank, Commerce Bank (the Bank). The consolidated financial statements in this report have not been audited by an independent registered public accounting firm, but in the opinion of management, all adjustments necessary to present fairly the financial position and the results of operations for the interim periods have been made. All such adjustments are of a normal recurring nature. All significant intercompany accounts and transactions have been eliminated. Certain reclassifications were made to 2021 data to conform to current year presentation. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance ~~sheet~~sheets and revenues and expenses for the ~~period.~~periods. Actual results could differ significantly from those estimates. Management has evaluated subsequent events for potential recognition or disclosure. The results of operations for the ~~three~~nine month period ended ~~March 31,~~September 30, 2022 are not necessarily indicative of results to be attained for the full year or any other interim period.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company's most recent Annual Report on Form 10-K, containing the latest audited consolidated financial statements and notes thereto.

2. Loans and Allowance for Credit Losses

Major classifications within the Company’s held for investment loan portfolio at ~~March 31,~~September 30, 2022 and December 31, 2021 are as follows:


(In thousands)	(In thousands)	March 31, 2022		December 31, 2021		(In thousands)	September 30, 2022		December 31, 2021
Commercial:	Commercial:					Commercial:
Business	Business	$	5,508,508	$	5,303,535	Business	$	5,528,895	$	5,303,535
Real estate – construction and land	Real estate – construction and land	1,144,411		1,118,266		Real estate – construction and land	1,206,955		1,118,266
Real estate – business	Real estate – business	3,109,668		3,058,837		Real estate – business	3,331,627		3,058,837
Personal Banking:	Personal Banking:					Personal Banking:
Real estate – personal	Real estate – personal	2,820,076		2,805,401		Real estate – personal	2,862,519		2,805,401
Consumer	Consumer	2,053,160		2,032,225		Consumer	2,116,371		2,032,225
Revolving home equity	Revolving home equity	264,401		275,945		Revolving home equity	286,026		275,945
Consumer credit card	Consumer credit card	544,579		575,410		Consumer credit card	563,349		575,410
Overdrafts	Overdrafts	14,211		6,740		Overdrafts	3,216		6,740
Total loans	Total loans	$	15,459,014	$	15,176,359	Total loans	$	15,898,958	$	15,176,359

Accrued interest receivable totaled ~~$32.1~~$46.2 million and $25.9 million at ~~March 31,~~September 30, 2022 and December 31, 2021, respectively, and was included within other assets on the consolidated balance sheets. For the three months ended ~~March 31,~~September 30, 2022, the Company wrote-off accrued interest by reversing interest income of ~~$29~~$48 thousand and ~~$899~~$699 thousand in the Commercial and Personal Banking portfolios, respectively. Similarly, for the ~~three~~nine months ended ~~March 31, 2021,~~September 30, 2022, the Company wrote-off accrued interest of ~~$125~~$103 thousand and ~~$2.0~~$2.4 million in the Commercial and Personal Banking portfolios, respectively.

At ~~March 31,~~September 30, 2022, loans of ~~$3.2~~$3.1 billion were pledged at the Federal Home Loan Bank as collateral for borrowings and letters of credit obtained to secure public deposits. Additional loans of $1.3 billion were pledged at the Federal Reserve Bank as collateral for discount window borrowings.

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Allowance for credit losses

The allowance for credit losses is measured using an average historical loss model which incorporates relevant information about past events (including historical credit loss experience on loans with similar risk characteristics), current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the loans. The allowance for credit losses is measured on a collective (pool) basis. Loans are aggregated into pools based on similar risk characteristics including borrower type, collateral type and expected credit loss patterns. Loans that do not share similar risk characteristics, primarily large loans on non-accrual status, are evaluated on an individual basis.

For loans evaluated for credit losses on a collective basis, average historical loss rates are calculated for each pool using the Company’s historical net charge-offs (combined charge-offs and recoveries by observable historical reporting period) and outstanding loan balances during a lookback period. Lookback periods can be different based on the individual pool and represent management’s credit expectations for the pool of loans over the remaining contractual life. In certain loan pools, if the Company’s own historical loss rate is not reflective of the loss expectations, the historical loss rate is augmented by industry and peer data. The calculated average net charge-off rate is then adjusted for current conditions and reasonable and supportable forecasts. These adjustments increase or decrease the average historical loss rate to reflect expectations of future losses given a single path economic forecast of key macroeconomic variables including GDP, disposable income, various interest rates, unemployment rate, consumer price index (CPI) inflation rate, housing price index (HPI), commercial real estate price index (CREPI) and market volatility. The adjustments are based on results from various regression models projecting the impact of the macroeconomic variables to loss rates. The forecast is used for a reasonable and supportable period before reverting back to historical averages using a straight-line method. The forecast adjusted loss rate is applied to the amortized cost of loans over the remaining contractual lives, adjusted for expected prepayments. The contractual term excludes expected extensions (except for contractual extensions at the option of the customer), renewals and modifications unless there is a reasonable expectation that a troubled debt restructuring will be executed. Credit cards and certain similar consumer lines of credit do not have stated maturities and therefore, for these loan classes, remaining contractual lives are determined by estimating future cash flows expected to be received from customers until payments have been fully allocated to outstanding balances. Additionally, the allowance for credit losses considers other qualitative factors not included in historical loss rates or macroeconomic forecast such as changes in portfolio composition, underwriting practices, or significant unique events or conditions.

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Key ~~model~~ assumptions in the Company’s allowance for credit loss model include the economic forecast, the reasonable and supportable period, forecasted macro-economic variables, prepayment assumptions and qualitative factors applied for portfolio composition changes, underwriting practices, or significant unique events or conditions. The assumptions utilized in estimating the Company’s allowance for credit losses at ~~March 31,~~September 30, 2022 and ~~December 31, 2021~~June 30, 2022 are discussed below.


Key Assumption	~~March 31,~~September 30, 2022	~~December 31, 2021~~June 30, 2022

Overall economic forecast	•~~Improving health situation supports positive economic momentum~~High inflation, rising interest rates, supply chain difficulties and a weaker job market create an expectation of a mild recession in ~~the short term~~2023 •~~Projects significant~~Continued monetary policy tightening to rein in inflation	•Positive economic momentum faced with continued COVID challenges, supply constraints and high inflation •Continued monetary policy tightening to rein in inflation •~~Projects continued high inflation~~ •Uncertainties related to supply chain issues	•~~Continued recovery from~~ and the ~~Global Coronavirus Recession (GCR)~~ •~~Assumes improving health conditions~~ •~~Assumes gradual easing~~timing and likelihood of ~~supply constraints~~ •~~Continued uncertainty regarding the health crisis~~ •~~Uncertainty regarding rising inflation~~a recession
Reasonable and supportable period and related reversion period	•One year for commercial and personal banking loans •Reversion to historical average loss rates within two quarters using straight-line method	•One year for commercial and personal banking loans •Reversion to historical average loss rates within two quarters using straight-line method
Forecasted macro-economic variables	•Unemployment rate ranging from ~~3.6%~~3.7% to ~~3.4%~~4.6% during the supportable forecast period •Real GDP growth ranging from ~~2.6%~~(.3)% to ~~3.7%~~.2% •Prime rate from ~~4.0%~~6.6% to ~~5.2%~~7.0% •BBB corporate yield from 5.03% to 5.7%	•Unemployment rate ranging from ~~4.1%~~3.5% to 3.7% during the supportable forecast period •Real GDP growth ~~ranges~~ranging from ~~5.0%~~1.5% to ~~3.4%~~2.7% •Prime rate ~~of 3.25% through the second quarter of 2022, increasing~~from 4.9% to ~~3.5% by the end of 2022~~6.2%
Prepayment assumptions	Commercial loans •5% for most loan pools Personal banking loans •Ranging from ~~28.3%~~16.5% to ~~16.5%~~28.1% for most loan pools •~~66.0%~~67.7% for consumer credit cards	Commercial loans •5% for most loan pools Personal banking loans •Ranging from ~~28.0%~~16.5% to ~~16.5%~~28.5% for most loan pools •~~64.1%~~67.0% for consumer credit cards
Qualitative factors	Added qualitative factors related to: •Certain portfolios sensitive to pandemic economic uncertainties •Changes in the composition of the loan portfolios •Uncertainty related to unusually high rate of inflation, geopolitical environment, and supply chain issues •Loans downgraded to special mention, substandard, or non-accrual status	Added ~~net reserves using~~ qualitative ~~processes~~factors related to: •~~Loans originated in our expansion markets, loans that are designated as shared national credits, and certain~~Certain portfolios sensitive to pandemic economic uncertainties •Changes in the composition of the loan portfolios •Uncertainty related to unusually high rate of inflation, geopolitical environment, and supply chain issues •Loans downgraded to special mention, substandard, or non-accrual status

The liability for unfunded lending commitments utilizes the same model as the allowance for credit losses on loans, however, the liability for unfunded lending commitments incorporates an assumption for the portion of unfunded commitments that are expected to be funded.

Sensitivity in the Allowance for Credit Loss model

The allowance for credit losses is an estimate that requires significant judgment including projections of the macro-economic environment. The forecasted macro-economic environment continuously changes which can cause fluctuations in estimated expected credit losses.

The current forecast projects a ~~continued recovery of the COVID-19 related health situation, which is expected~~mild recession in 2023 due to ~~create positive economic momentum. However, the higher~~high inflation, rising interest rates, supply chain difficulties and ~~Russia's~~a weaker job market. The Russian invasion of Ukraine ~~has~~ created ~~greater~~additional uncertainty inas the ~~forecast.~~world responds to the economic impact. The geopolitical environment, trends in health conditions and ~~ongoing~~impacted supply constraints could significantly modify economic projections used in the estimation of the allowance for credit ~~losses.~~losses and liability for unfunded lending commitments.

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A summary of the activity in the allowance for credit losses on loans and the liability for unfunded lending commitments during the three and nine months ended ~~March 31,~~September 30, 2022 and 2021, respectively, follows:


		For the Three Months Ended March 31, 2022						For the Three Months Ended September 30, 2022						For the Nine Months Ended September 30, 2022
(In thousands)	(In thousands)	Commercial		Personal Banking		Total			(In thousands)	Commercial		Personal Banking		Total		Commercial		Personal Banking		Total
ALLOWANCE FOR CREDIT LOSSES ON LOANS	ALLOWANCE FOR CREDIT LOSSES ON LOANS								ALLOWANCE FOR CREDIT LOSSES ON LOANS

Balance at beginning of period	Balance at beginning of period	$	97,776	$	52,268	$	150,044		Balance at beginning of period	$	99,525	$	38,514	$	138,039	$	97,776	$	52,268	$	150,044
Provision for credit losses on loans	Provision for credit losses on loans	(2,879)		(7,807)		(10,686)			Provision for credit losses on loans	4,014		6,136		10,150		5,851		900		6,751
Deductions:	Deductions:								Deductions:
Loans charged off	Loans charged off	177		7,285		7,462			Loans charged off	509		6,721		7,230		893		20,539		21,432
Less recoveries on loans	Less recoveries on loans	107		2,707		2,814			Less recoveries on loans	56		2,362		2,418		352		7,662		8,014
Net loan charge-offs (recoveries)		70		4,578		4,648
Balance March 31, 2022		$	94,827	$	39,883	$	134,710
Net loan charge-offs									Net loan charge-offs	453		4,359		4,812		541		12,877		13,418
Balance September 30, 2022									Balance September 30, 2022	$	103,086	$	40,291	$	143,377	$	103,086	$	40,291	$	143,377
LIABILITY FOR UNFUNDED LENDING COMMITMENTS	LIABILITY FOR UNFUNDED LENDING COMMITMENTS								LIABILITY FOR UNFUNDED LENDING COMMITMENTS

Balance at beginning of period	Balance at beginning of period	$	23,271	$	933	$	24,204		Balance at beginning of period	$	23,617	$	1,290	$	24,907	$	23,271	$	933	$	24,204
Provision for credit losses on unfunded lending commitments	Provision for credit losses on unfunded lending commitments	509		319		828			Provision for credit losses on unfunded lending commitments	5,182		(42)		5,140		5,528		315		5,843
Balance March 31, 2022		$	23,780	$	1,252	$	25,032
Balance September 30, 2022									Balance September 30, 2022	$	28,799	$	1,248	$	30,047	$	28,799	$	1,248	$	30,047
ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS	ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS	$	118,607	$	41,135	$	159,742		ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS	$	131,885	$	41,539	$	173,424	$	131,885	$	41,539	$	173,424


		For the Three Months Ended March 31, 2021						For the Three Months Ended September 30, 2021						For the Nine Months Ended September 30, 2021
(In thousands)	(In thousands)	Commercial		Personal Banking		Total			(In thousands)	Commercial		Personal Banking		Total		Commercial		Personal Banking		Total
ALLOWANCE FOR CREDIT LOSSES ON LOANS	ALLOWANCE FOR CREDIT LOSSES ON LOANS								ALLOWANCE FOR CREDIT LOSSES ON LOANS

Balance at beginning of period	Balance at beginning of period	$	121,549	$	99,285	$	220,834		Balance at beginning of period	$	98,038	$	74,357	$	172,395	$	121,549	$	99,285	$	220,834
Provision for credit losses on loans	Provision for credit losses on loans	(1,909)		(8,446)		(10,355)			Provision for credit losses on loans	186		(6,147)		(5,961)		(28,302)		(15,447)		(43,749)
Deductions:	Deductions:								Deductions:
Loans charged off	Loans charged off	232		12,709		12,941			Loans charged off	190		6,387		6,577		692		27,694		28,386
Less recoveries on loans	Less recoveries on loans	215		2,774		2,989			Less recoveries on loans	130		2,788		2,918		5,609		8,467		14,076
Net loan charge-offs		17		9,935		9,952
Balance March 31, 2021		$	119,623	$	80,904	$	200,527
Net loan charge-offs (recoveries)									Net loan charge-offs (recoveries)	60		3,599		3,659		(4,917)		19,227		14,310
Balance September 30, 2021									Balance September 30, 2021	$	98,164	$	64,611	$	162,775	$	98,164	$	64,611	$	162,775
LIABILITY FOR UNFUNDED LENDING COMMITMENTS	LIABILITY FOR UNFUNDED LENDING COMMITMENTS								LIABILITY FOR UNFUNDED LENDING COMMITMENTS

Balance at beginning of period	Balance at beginning of period	$	37,259	$	1,048	$	38,307		Balance at beginning of period	$	23,350	$	858	$	24,208	$	37,259	$	1,048	$	38,307
Provision for credit losses on unfunded lending commitments	Provision for credit losses on unfunded lending commitments	4,254		(131)		4,123			Provision for credit losses on unfunded lending commitments	(1,564)		140		(1,424)		(15,473)		(50)		(15,523)
Balance March 31, 2021		$	41,513	$	917	$	42,430
Balance September 30, 2021									Balance September 30, 2021	$	21,786	$	998	$	22,784	$	21,786	$	998	$	22,784
ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS	ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS	$	161,136	$	81,821	$	242,957		ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS	$	119,950	$	65,609	$	185,559	$	119,950	$	65,609	$	185,559

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Delinquent and non-accrual loans

The Company considers loans past due on the day following the contractual repayment date, if the contractual repayment was not received by the Company as of the end of the business day. The following table provides aging information on the Company’s past due and accruing loans, in addition to the balances of loans on non-accrual status, at ~~March 31,~~September 30, 2022 and December 31, 2021.


(In thousands)	(In thousands)	Current or Less Than 30 Days Past Due		30 – 89 Days Past Due		90 Days Past Due and Still Accruing		Non-accrual		Total		(In thousands)	Current or Less Than 30 Days Past Due		30 – 89 Days Past Due		90 Days Past Due and Still Accruing		Non-accrual		Total
March 31, 2022
September 30, 2022												September 30, 2022
Commercial:	Commercial:											Commercial:
Business	Business	$	5,494,664	$	6,747	$	341	$	6,756	$	5,508,508	Business	$	5,513,234	$	9,480	$	536	$	5,645	$	5,528,895
Real estate – construction and land	Real estate – construction and land	1,144,411		—		—		—		1,144,411		Real estate – construction and land	1,206,395		560		—		—		1,206,955
Real estate – business	Real estate – business	3,105,452		4,026		—		190		3,109,668		Real estate – business	3,307,921		23,557		—		149		3,331,627
Personal Banking:	Personal Banking:											Personal Banking:
Real estate – personal	Real estate – personal	2,811,330		5,076		2,281		1,389		2,820,076		Real estate – personal	2,847,665		10,506		2,958		1,390		2,862,519
Consumer	Consumer	2,031,680		18,890		2,590		—		2,053,160		Consumer	2,091,670		21,135		3,566		—		2,116,371
Revolving home equity	Revolving home equity	262,799		748		854		—		264,401		Revolving home equity	284,595		541		890		—		286,026
Consumer credit card	Consumer credit card	535,482		4,493		4,604		—		544,579		Consumer credit card	553,815		4,989		4,545		—		563,349
Overdrafts	Overdrafts	13,891		320		—		—		14,211		Overdrafts	2,830		343		43		—		3,216
Total	Total	$	15,399,709	$	40,300	$	10,670	$	8,335	$	15,459,014	Total	$	15,808,125	$	71,111	$	12,538	$	7,184	$	15,898,958
December 31, 2021	December 31, 2021											December 31, 2021
Commercial:	Commercial:											Commercial:
Business	Business	$	5,292,125	$	3,621	$	477	$	7,312	$	5,303,535	Business	$	5,292,125	$	3,621	$	477	$	7,312	$	5,303,535
Real estate – construction and land	Real estate – construction and land	1,117,434		832		—		—		1,118,266		Real estate – construction and land	1,117,434		832		—		—		1,118,266
Real estate – business	Real estate – business	3,058,566		57		—		214		3,058,837		Real estate – business	3,058,566		57		—		214		3,058,837
Personal Banking:	Personal Banking:											Personal Banking:
Real estate – personal	Real estate – personal	2,796,662		4,125		2,983		1,631		2,805,401		Real estate – personal	2,796,662		4,125		2,983		1,631		2,805,401
Consumer	Consumer	2,005,556		24,458		2,211		—		2,032,225		Consumer	2,005,556		24,458		2,211		—		2,032,225
Revolving home equity	Revolving home equity	274,372		772		801		—		275,945		Revolving home equity	274,372		772		801		—		275,945
Consumer credit card	Consumer credit card	565,335		4,821		5,254		—		575,410		Consumer credit card	565,335		4,821		5,254		—		575,410
Overdrafts	Overdrafts	6,425		315		—		—		6,740		Overdrafts	6,425		315		—		—		6,740
Total	Total	$	15,116,475	$	39,001	$	11,726	$	9,157	$	15,176,359	Total	$	15,116,475	$	39,001	$	11,726	$	9,157	$	15,176,359

At ~~March 31,~~September 30, 2022, the Company had ~~$4.9~~$4.1 million in non-accrual business loans that had no allowance for credit loss. At December 31, 2021, the Company had $5.3 million in non-accrual business loans that had no allowance for credit loss. The Company did not record any interest income on non-accrual loans during the three and nine months ended ~~March 31,~~September 30, 2022 and 2021, respectively.

Credit quality indicators

The following table provides information about the credit quality of the Commercial loan portfolio. The Company utilizes an internal risk rating system comprised of a series of grades to categorize loans according to perceived risk associated with the expectation of debt repayment based on borrower specific information including, but not limited to, current financial information, historical payment experience, industry information, collateral levels and collateral types. The “pass” category consists of a range of loan grades that reflect increasing, though still acceptable, risk. A loan is assigned the risk rating at origination and then monitored throughout the contractual term for possible risk rating changes. Movement of risk through the various grade levels in the “pass” category is monitored for early identification of credit deterioration. The “special mention” rating is applied to loans where the borrower exhibits negative financial trends due to borrower specific or systemic conditions that, if left uncorrected, threaten its capacity to meet its debt obligations. The borrower is believed to have sufficient financial flexibility to react to and resolve its negative financial situation. It is a transitional grade that is closely monitored for improvement or deterioration. The “substandard” rating is applied to loans where the borrower exhibits well-defined weaknesses that jeopardize its continued performance and are of a severity that the distinct possibility of default exists. Loans are placed on “non-accrual” when management does not expect to collect payments consistent with acceptable and agreed upon terms of repayment.

All loans are analyzed for risk rating updates annually. For larger loans, rating assessments may be more frequent if relevant information is obtained earlier through debt covenant monitoring or overall relationship management. Smaller loans

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are monitored as identified by the loan officer based on the risk profile of the individual borrower or if the loan becomes past due related to credit issues. Loans rated Special Mention, Substandard or Non-accrual are subject to quarterly review and monitoring processes. In addition to the regular monitoring performed by the lending personnel and credit committees, loans are subject to review by a credit review department which verifies the appropriateness of the risk ratings for the loans chosen as part of its risk-based review plan.

The risk category of loans in the Commercial portfolio as of ~~March 31,~~September 30, 2022 and December 31, 2021 are as follows:


		Term Loans Amortized Cost Basis by Origination Year																	Term Loans Amortized Cost Basis by Origination Year
(In thousands)	(In thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total		(In thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
March 31, 2022
September 30, 2022																		September 30, 2022
Business	Business																	Business
Risk Rating:	Risk Rating:																	Risk Rating:
Pass	Pass	$	305,308	$	1,246,520	$	644,426	$	533,462	$	219,320	$	368,615	$	2,106,483	$	5,424,134	Pass	$	1,167,741	$	902,680	$	519,179	$	396,052	$	188,319	$	255,455	$	2,041,998	$	5,471,424
Special mention	Special mention	2,622		976		83		1,315		11,452		8,138		2,806		27,392		Special mention	2,205		5,535		224		635		70		7,994		1,923		18,586
Substandard	Substandard	2,437		1,230		1,110		7,172		4,530		10,503		23,244		50,226		Substandard	6,600		5,409		794		3,690		2,817		10,064		3,866		33,240
Non-accrual	Non-accrual	302		86		—		—		1,462		4,906		—		6,756		Non-accrual	430		55		60		51		956		4,093		—		5,645
Total Business:	Total Business:	$	310,669	$	1,248,812	$	645,619	$	541,949	$	236,764	$	392,162	$	2,132,533	$	5,508,508	Total Business:	$	1,176,976	$	913,679	$	520,257	$	400,428	$	192,162	$	277,606	$	2,047,787	$	5,528,895
Real estate-construction	Real estate-construction																	Real estate-construction
Risk Rating:	Risk Rating:																	Risk Rating:
Pass	Pass	$	155,429	$	591,643	$	249,882	$	53,869	$	1,236	$	2,800	$	13,968	$	1,068,827	Pass	$	399,880	$	560,930	$	140,643	$	26,840	$	1,362	$	2,208	$	17,474	$	1,149,337
Special mention	Special mention	—		19,474		—		—		976		—		—		20,450		Special mention	—		—		—		—		—		—		—		—
Substandard	Substandard	—		15,486		11,600		—		14,891		13,157		—		55,134		Substandard	—		19,500		9,999		—		14,926		13,193		—		57,618

Total Real estate-construction:	Total Real estate-construction:	$	155,429	$	626,603	$	261,482	$	53,869	$	17,103	$	15,957	$	13,968	$	1,144,411	Total Real estate-construction:	$	399,880	$	580,430	$	150,642	$	26,840	$	16,288	$	15,401	$	17,474	$	1,206,955
Real estate-business	Real estate-business																	Real estate-business
Risk Rating:	Risk Rating:																	Risk Rating:
Pass	Pass	$	232,411	$	726,266	$	687,933	$	514,629	$	206,324	$	378,239	$	83,578	$	2,829,380	Pass	$	876,470	$	641,482	$	576,752	$	468,588	$	167,190	$	292,556	$	90,112	$	3,113,150
Special mention	Special mention	—		3,537		30,657		8,995		34,319		2,345		—		79,853		Special mention	2,854		3,447		632		9,854		985		526		—		18,298
Substandard	Substandard	589		15,589		62,170		12,993		4,867		103,044		993		200,245		Substandard	—		30,992		61,356		11,437		33,977		62,268		—		200,030
Non-accrual	Non-accrual	—		—		—		—		173		17		—		190		Non-accrual	—		—		—		—		140		9		—		149
Total Real estate-business:	Total Real estate-business:	$	233,000	$	745,392	$	780,760	$	536,617	$	245,683	$	483,645	$	84,571	$	3,109,668	Total Real estate-business:	$	879,324	$	675,921	$	638,740	$	489,879	$	202,292	$	355,359	$	90,112	$	3,331,627
Commercial loans	Commercial loans																	Commercial loans
Risk Rating:	Risk Rating:																	Risk Rating:
Pass	Pass	$	693,148	$	2,564,429	$	1,582,241	$	1,101,960	$	426,880	$	749,654	$	2,204,029	$	9,322,341	Pass	$	2,444,091	$	2,105,092	$	1,236,574	$	891,480	$	356,871	$	550,219	$	2,149,584	$	9,733,911
Special mention	Special mention	2,622		23,987		30,740		10,310		46,747		10,483		2,806		127,695		Special mention	5,059		8,982		856		10,489		1,055		8,520		1,923		36,884
Substandard	Substandard	3,026		32,305		74,880		20,165		24,288		126,704		24,237		305,605		Substandard	6,600		55,901		72,149		15,127		51,720		85,525		3,866		290,888
Non-accrual	Non-accrual	302		86		—		—		1,635		4,923		—		6,946		Non-accrual	430		55		60		51		1,096		4,102		—		5,794
Total Commercial loans:	Total Commercial loans:	$	699,098	$	2,620,807	$	1,687,861	$	1,132,435	$	499,550	$	891,764	$	2,231,072	$	9,762,587	Total Commercial loans:	$	2,456,180	$	2,170,030	$	1,309,639	$	917,147	$	410,742	$	648,366	$	2,155,373	$	10,067,477

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	Term Loans Amortized Cost Basis by Origination Year
(In thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
December 31, 2021
Business
Risk Rating:
Pass	$	1,473,869	$	704,157	$	554,759	$	248,739	$	159,238	$	270,454	$	1,795,073	$	5,206,289
Special mention	1,785		126		17,576		12,050		1,490		3,232		16,545		52,804
Substandard	836		1,191		8,855		4,936		1		10,775		10,536		37,130
Non-accrual	430		—		1		1,549		—		5,332		—		7,312
Total Business:	$	1,476,920	$	705,474	$	581,191	$	267,274	$	160,729	$	289,793	$	1,822,154	$	5,303,535
Real estate-construction
Risk Rating:
Pass	$	598,734	$	346,507	$	66,985	$	2,110	$	2,655	$	2,252	$	13,230	$	1,032,473
Special mention	44,649		—		—		985		—		—		—		45,634
Substandard	485		11,620		—		14,896		13,158		—		—		40,159

Total Real estate-construction:	$	643,868	$	358,127	$	66,985	$	17,991	$	15,813	$	2,252	$	13,230	$	1,118,266
Real estate- business
Risk Rating:
Pass	$	775,561	$	712,173	$	551,697	$	230,138	$	170,888	$	254,489	$	76,641	$	2,771,587
Special mention	4,011		30,322		10,500		37,576		2,068		2,103		1		86,581
Substandard	17,079		62,939		12,930		2,326		58,934		45,265		982		200,455
Non-accrual	—		—		—		189		—		25		—		214
Total Real-estate business:	$	796,651	$	805,434	$	575,127	$	270,229	$	231,890	$	301,882	$	77,624	$	3,058,837
Commercial loans
Risk Rating:
Pass	$	2,848,164	$	1,762,837	$	1,173,441	$	480,987	$	332,781	$	527,195	$	1,884,944	$	9,010,349
Special mention	50,445		30,448		28,076		50,611		3,558		5,335		16,546		185,019
Substandard	18,400		75,750		21,785		22,158		72,093		56,040		11,518		277,744
Non-accrual	430		—		1		1,738		—		5,357		—		7,526
Total Commercial loans:	$	2,917,439	$	1,869,035	$	1,223,303	$	555,494	$	408,432	$	593,927	$	1,913,008	$	9,480,638

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The credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided as of ~~March 31,~~September 30, 2022 and December 31, 2021 below:


		Term Loans Amortized Cost Basis by Origination Year																	Term Loans Amortized Cost Basis by Origination Year
(In thousands)	(In thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total		(In thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
March 31, 2022
September 30, 2022																		September 30, 2022
Real estate-personal	Real estate-personal																	Real estate-personal
Current to 90 days past due	Current to 90 days past due	$	144,994	$	668,179	$	853,063	$	328,209	$	150,144	$	661,855	$	9,962	$	2,816,406	Current to 90 days past due	$	422,198	$	602,071	$	795,233	$	299,702	$	138,681	$	590,278	$	10,008	$	2,858,171
Over 90 days past due	Over 90 days past due	—		192		962		126		114		887		—		2,281		Over 90 days past due	198		617		907		71		114		1,051		—		2,958
Non-accrual	Non-accrual	—		—		—		182		107		1,100		—		1,389		Non-accrual	—		—		—		172		104		1,114		—		1,390
Total Real estate-personal:	Total Real estate-personal:	$	144,994	$	668,371	$	854,025	$	328,517	$	150,365	$	663,842	$	9,962	$	2,820,076	Total Real estate-personal:	$	422,396	$	602,688	$	796,140	$	299,945	$	138,899	$	592,443	$	10,008	$	2,862,519
Consumer	Consumer																	Consumer
Current to 90 days past due	Current to 90 days past due	$	208,522	$	504,841	$	310,052	$	165,881	$	66,175	$	102,869	$	692,230	$	2,050,570	Current to 90 days past due	$	449,631	$	409,063	$	228,612	$	122,966	$	44,230	$	71,452	$	786,851	$	2,112,805
Over 90 days past due	Over 90 days past due	—		283		157		243		200		444		1,263		2,590		Over 90 days past due	50		344		784		183		325		274		1,606		3,566

Total Consumer:	Total Consumer:	$	208,522	$	505,124	$	310,209	$	166,124	$	66,375	$	103,313	$	693,493	$	2,053,160	Total Consumer:	$	449,681	$	409,407	$	229,396	$	123,149	$	44,555	$	71,726	$	788,457	$	2,116,371
Revolving home equity	Revolving home equity																	Revolving home equity
Current to 90 days past due	Current to 90 days past due	$	—	$	—	$	—	$	—	$	—	$	—	$	263,547	$	263,547	Current to 90 days past due	$	—	$	—	$	—	$	—	$	—	$	—	$	285,136	$	285,136
Over 90 days past due	Over 90 days past due	—		—		—		—		—		—		854		854		Over 90 days past due	—		—		—		—		—		—		890		890

Total Revolving home equity:	Total Revolving home equity:	$	—	$	—	$	—	$	—	$	—	$	—	$	264,401	$	264,401	Total Revolving home equity:	$	—	$	—	$	—	$	—	$	—	$	—	$	286,026	$	286,026
Consumer credit card	Consumer credit card																	Consumer credit card
Current to 90 days past due	Current to 90 days past due	$	—	$	—	$	—	$	—	$	—	$	—	$	539,975	$	539,975	Current to 90 days past due	$	—	$	—	$	—	$	—	$	—	$	—	$	558,804	$	558,804
Over 90 days past due	Over 90 days past due	—		—		—		—		—		—		4,604		4,604		Over 90 days past due	—		—		—		—		—		—		4,545		4,545

Total Consumer credit card:	Total Consumer credit card:	$	—	$	—	$	—	$	—	$	—	$	—	$	544,579	$	544,579	Total Consumer credit card:	$	—	$	—	$	—	$	—	$	—	$	—	$	563,349	$	563,349
Overdrafts	Overdrafts																	Overdrafts
Current to 90 days past due	Current to 90 days past due	$	14,211	$	—	$	—	$	—	$	—	$	—	$	—	$	14,211	Current to 90 days past due	$	3,173	$	—	$	—	$	—	$	—	$	—	$	—	$	3,173

Over 90 days past due																		Over 90 days past due	43		—		—		—		—		—		—		43

Total Overdrafts:	Total Overdrafts:	$	14,211	$	—	$	—	$	—	$	—	$	—	$	—	$	14,211	Total Overdrafts:	$	3,216	$	—	$	—	$	—	$	—	$	—	$	—	$	3,216
Personal banking loans	Personal banking loans																	Personal banking loans
Current to 90 days past due	Current to 90 days past due	$	367,727	$	1,173,020	$	1,163,115	$	494,090	$	216,319	$	764,724	$	1,505,714	$	5,684,709	Current to 90 days past due	$	875,002	$	1,011,134	$	1,023,845	$	422,668	$	182,911	$	661,730	$	1,640,799	$	5,818,089
Over 90 days past due	Over 90 days past due	—		475		1,119		369		314		1,331		6,721		10,329		Over 90 days past due	291		961		1,691		254		439		1,325		7,041		12,002
Non-accrual	Non-accrual	—		—		—		182		107		1,100		—		1,389		Non-accrual	—		—		—		172		104		1,114		—		1,390
Total Personal banking loans:	Total Personal banking loans:	$	367,727	$	1,173,495	$	1,164,234	$	494,641	$	216,740	$	767,155	$	1,512,435	$	5,696,427	Total Personal banking loans:	$	875,293	$	1,012,095	$	1,025,536	$	423,094	$	183,454	$	664,169	$	1,647,840	$	5,831,481

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	Term Loans Amortized Cost Basis by Origination Year
(In thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
December 31, 2021
Real estate-personal
Current to 90 days past due	$	690,058	$	888,631	$	354,292	$	157,485	$	149,391	$	551,460	$	9,470	$	2,800,787
Over 90 days past due	133		1,150		298		124		97		1,181		—		2,983
Non-accrual	115		—		251		109		—		1,156		—		1,631
Total Real estate-personal:	$	690,306	$	889,781	$	354,841	$	157,718	$	149,488	$	553,797	$	9,470	$	2,805,401
Consumer
Current to 90 days past due	$	571,455	$	348,774	$	192,076	$	79,887	$	47,401	$	78,088	$	712,333	$	2,030,014
Over 90 days past due	283		335		257		250		74		351		661		2,211

Total Consumer:	$	571,738	$	349,109	$	192,333	$	80,137	$	47,475	$	78,439	$	712,994	$	2,032,225
Revolving home equity
Current to 90 days past due	$	—	$	—	$	—	$	—	$	—	$	—	$	275,144	$	275,144
Over 90 days past due	—		—		—		—		—		—		801		801

Total Revolving home equity:	$	—	$	—	$	—	$	—	$	—	$	—	$	275,945	$	275,945
Consumer credit card
Current to 90 days past due	$	—	$	—	$	—	$	—	$	—	$	—	$	570,156	$	570,156
Over 90 days past due	—		—		—		—		—		—		5,254		5,254

Total Consumer credit card:	$	—	$	—	$	—	$	—	$	—	$	—	$	575,410	$	575,410
Overdrafts
Current to 90 days past due	$	6,740	$	—	$	—	$	—	$	—	$	—	$	—	$	6,740


Total Overdrafts:	$	6,740	$	—	$	—	$	—	$	—	$	—	$	—	$	6,740
Personal banking loans
Current to 90 days past due	$	1,268,253	$	1,237,405	$	546,368	$	237,372	$	196,792	$	629,548	$	1,567,103	$	5,682,841
Over 90 days past due	416		1,485		555		374		171		1,532		6,716		11,249
Non-accrual	115		—		251		109		—		1,156		—		1,631
Total Personal banking loans:	$	1,268,784	$	1,238,890	$	547,174	$	237,855	$	196,963	$	632,236	$	1,573,819	$	5,695,721

Collateral-dependent loans

The Company's collateral-dependent loans are comprised of large loans on non-accrual status. The Company requires that collateral-dependent loans are either over-collateralized or carry collateral equal to the amortized cost of the loan. The following table presents the amortized cost basis of collateral-dependent loans as of ~~March 31,~~September 30, 2022 and December 31, 2021.


(In thousands)	(In thousands)	Business Assets		Oil & Gas Assets		Total		(In thousands)	Business Assets		Oil & Gas Assets		Total
March 31, 2022
September 30, 2022								September 30, 2022
Commercial:	Commercial:							Commercial:
Business	Business	$	1,498	$	2,401	$	3,899	Business	$	1,156	$	1,966	$	3,122

Total	Total	$	1,498	$	2,401	$	3,899	Total	$	1,156	$	1,966	$	3,122
December 31, 2021	December 31, 2021							December 31, 2021
Commercial:	Commercial:							Commercial:
Business	Business	$	1,604	$	2,459	$	4,063	Business	$	1,604	$	2,459	$	4,063

Total	Total	$	1,604	$	2,459	$	4,063	Total	$	1,604	$	2,459	$	4,063

Other Personal Banking loan information

As noted above, the credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided in the table in the above section on "Credit quality indicators." In addition, FICO scores are obtained and updated on a quarterly basis for most of the loans in the Personal Banking portfolio. This is a published credit score designed to measure the risk of default by taking into account various factors from a borrower's financial history and is considered supplementary information utilized by the Company, as management does not consider this information in evaluating the allowance for credit losses on loans. The Bank normally obtains a FICO score at the loan's origination and renewal dates, and updates are obtained on a quarterly basis. Excluded from the table below are certain personal real estate

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loans for which FICO scores are not obtained because the loans generally pertain to commercial customer activities and are

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often underwritten with other collateral considerations. These loans totaled ~~$183.4~~$186.8 million at ~~March 31,~~September 30, 2022 and $185.6 million at December 31, 2021. The table also excludes consumer loans related to the Company's patient healthcare loan program, which totaled ~~$181.8~~$197.7 million at ~~March 31,~~September 30, 2022 and $186.6 million at December 31, 2021. As the healthcare loans are guaranteed by the hospital, customer FICO scores are not obtained for these loans. The personal real estate loans and consumer loans excluded below totaled less than 7% of the Personal Banking portfolio. For the remainder of loans in the Personal Banking portfolio, the table below shows the percentage of balances outstanding at ~~March 31,~~September 30, 2022 and December 31, 2021 by FICO score.


Personal Banking Loans	Personal Banking Loans									Personal Banking Loans
		% of Loan Category									% of Loan Category
		Real Estate - Personal		Consumer		Revolving Home Equity		Consumer Credit Card			Real Estate - Personal		Consumer		Revolving Home Equity		Consumer Credit Card
March 31, 2022
September 30, 2022										September 30, 2022
FICO score:	FICO score:									FICO score:
Under 600	Under 600	.9	%	1.9	%	0.9	%	3.4	%	Under 600	1.3	%	1.8	%	1.5	%	3.6	%
600 - 659	600 - 659	2.5		3.9		2.6		11.3		600 - 659	2.5		3.9		3.4		11.8
660 - 719	660 - 719	7.2		13.5		10.1		31.0		660 - 719	8.1		13.2		9.1		30.2
720 - 779	720 - 779	26.6		24.9		21.7		28.0		720 - 779	23.5		23.8		22.4		27.9
780 and over	780 and over	62.8		55.8		64.7		26.3		780 and over	64.6		57.3		63.6		26.5
Total	Total	100.0	%	100.0	%	100.0	%	100.0	%	Total	100.0	%	100.0	%	100.0	%	100.0	%
December 31, 2021	December 31, 2021									December 31, 2021
FICO score:	FICO score:									FICO score:
Under 600	Under 600	1.0	%	1.9	%	0.9	%	3.4	%	Under 600	1.0	%	1.9	%	0.9	%	3.4	%
600 - 659	600 - 659	2.4		3.9		2.6		11.3		600 - 659	2.4		3.9		2.6		11.3
660 - 719	660 - 719	7.4		13.8		9.4		29.9		660 - 719	7.4		13.8		9.4		29.9
720 - 779	720 - 779	25.2		25.3		20.4		28.2		720 - 779	25.2		25.3		20.4		28.2
780 and over	780 and over	64.0		55.1		66.7		27.2		780 and over	64.0		55.1		66.7		27.2
Total	Total	100.0	%	100.0	%	100.0	%	100.0	%	Total	100.0	%	100.0	%	100.0	%	100.0	%

Troubled debt restructurings

Restructured loans are those extended to borrowers who are experiencing financial difficulty and who have been granted a concession. Restructured loans are placed on non-accrual status if the Company does not believe it probable that amounts due under the contractual terms will be collected. Commercial performing restructured loans are primarily comprised of certain business, construction and business real estate loans classified as substandard but renewed at rates judged to be non-market. These loans are performing in accordance with their modified terms, and because the Company believes it probable that all amounts due under the modified terms of the agreements will be collected, interest on these loans is being recognized on an accrual basis. Troubled debt restructurings also include certain credit card and other small consumer loans under various debt management and assistance programs. Modifications to these loans generally involve removing the available line of credit, placing loans on amortizing status, and lowering the contractual interest rate. Certain personal real estate, revolving home equity, and consumer loans were classified as consumer bankruptcy troubled debt restructurings because they were not reaffirmed by the borrower in bankruptcy proceedings. Interest on these loans is being recognized on an accrual basis, as the borrowers are continuing to make payments. Other consumer loans classified as troubled debt restructurings consist of various other workout arrangements with consumer customers.


(In thousands)	(In thousands)		March 31, 2022		December 31, 2021		(In thousands)		September 30, 2022		December 31, 2021
Accruing restructured loans:	Accruing restructured loans:						Accruing restructured loans:
		Commercial	$	108,789	$	46,867		Commercial	$	140,564	$	46,867
		Assistance programs	5,865		6,146			Assistance programs	5,218		6,146

		Other consumer	4,681		4,787			Other consumer	4,289		4,787
Non-accrual loans	Non-accrual loans		6,457		7,087		Non-accrual loans		5,510		7,087
Total troubled debt restructurings	Total troubled debt restructurings		$	125,792	$	64,887	Total troubled debt restructurings		$	155,581	$	64,887

Section 4013 of the CARES Act was signed into law on March 27, 2020, and included a provision that short-term modifications are not troubled debt restructurings, if made on a good-faith basis in response to COVID-19 to borrowers who were current prior to December 31, 2019. The Company elected such option under the CARES Act when determining if a customer’s modification is subject to troubled debt restructuring classification. The initial guidance issued under the CARES Act was due to expire on December 31, 2020. During January 2021, the Consolidated Appropriations Act, 2021 was enacted

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and extended through the end of 2021 the relief offered under the CARES Act related to the accounting and disclosure

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requirements for troubled debt restructurings as a result of COVID-19. The Company elected to extend its application of this guidance through December 31, 2021. During the period covered by the CARES Act, if it was deemed that the loan modification was not short-term, not COVID-19 related or the customer does not meet the criteria under the guidance to be scoped out of troubled debt restructuring classification, the Company evaluated the loan modifications under its existing framework and accounted for the modification as a troubled debt restructuring.

The table below shows the balance of troubled debt restructurings by loan classification at ~~March 31,~~September 30, 2022, in addition to the outstanding balances of these restructured loans which the Company considers to have been in default at any time during the past twelve months. For purposes of this disclosure, the Company considers "default" to mean 90 days or more past due as to interest or principal.


(In thousands)	(In thousands)	March 31, 2022		Balance 90 days past due at any time during previous 12 months		(In thousands)	September 30, 2022		Balance 90 days past due at any time during previous 12 months
Commercial:	Commercial:					Commercial:
Business	Business	$	30,254	$	—	Business	$	10,958	$	—
Real estate - construction and land	Real estate - construction and land	10,101		—		Real estate - construction and land	10,054		—
Real estate - business	Real estate - business	73,804		—		Real estate - business	124,046		—
Personal Banking:	Personal Banking:					Personal Banking:
Real estate - personal	Real estate - personal	3,220		729		Real estate - personal	2,894		653
Consumer	Consumer	20		—		Consumer	18		—
Revolving home equity	Revolving home equity	2,637		282		Revolving home equity	2,394		270
Consumer credit card	Consumer credit card	5,756		518		Consumer credit card	5,217		364
Total troubled debt restructurings	Total troubled debt restructurings	$	125,792	$	1,529	Total troubled debt restructurings	$	155,581	$	1,287

For those loans on non-accrual status also classified as restructured, the modification did not create any further financial effect on the Company as those loans were already recorded at net realizable value. For those performing commercial loans classified as restructured, there were no concessions involving forgiveness of principal or interest and, therefore, there was no financial impact to the Company as a result of modification to these loans. However, the effects of modifications to loans under various debt management and assistance programs were estimated to decrease interest income by approximately ~~$649~~$663 thousand on an annual, pre-tax basis, compared to amounts contractually owed. Other modifications to consumer loans mainly involve extensions and other small modifications that did not include the forgiveness of principal or interest.

The allowance for credit losses related to troubled debt restructurings on non-accrual status is determined by individual evaluation, including collateral adequacy, using the same process as loans on non-accrual status which are not classified as troubled debt restructurings. Those performing loans classified as troubled debt restructurings are accruing loans which management expects to collect under contractual terms. Performing commercial loans having no other concessions granted other than being renewed at non-market interest rates are judged to have similar risk characteristics as non-troubled debt commercial loans and are collectively evaluated based on internal risk rating, loan type, delinquency, historical experience and current economic factors. Performing personal banking loans classified as troubled debt restructurings resulted from the borrower not reaffirming the debt during bankruptcy and have had no other concession granted, other than the Bank's future limitations on collecting payment deficiencies or in pursuing foreclosure actions. As such, they have similar risk characteristics as non-troubled debt personal banking loans and are evaluated collectively based on loan type, delinquency, historical experience and current economic factors.

If a troubled debt restructuring defaults and is already on non-accrual status, the allowance for credit losses continues to be based on individual evaluation, using discounted expected cash flows or the fair value of collateral. If an accruing troubled debt restructuring defaults, the loan's risk rating is downgraded to non-accrual status and the loan's related allowance for credit losses is determined based on individual evaluation, or if necessary, the loan is charged off and collection efforts begin.

The Company had commitments of $~~17.7~~22.0 million at ~~March 31,~~September 30, 2022 to lend additional funds to borrowers with restructured loans. Additionally, the Company had commitments at ~~March 31,~~September 30, 2022 of $24.0 million related to letters of credit with an internal risk rating below substandard.

Loans held for sale

The Company designates certain long-term fixed rate personal real estate loans as held for sale, and the Company has elected the fair value option for these loans. The election of the fair value option aligns the accounting for these loans with the

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related economic hedges discussed in Note 11. The loans are primarily sold to Federal Home Loan Mortgage Corporation

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(FHLMC) and Federal National Mortgage Association (FNMA). At ~~March 31,~~September 30, 2022, the fair value of these loans was ~~$3.9~~$1.4 million, and the unpaid principal balance was ~~$3.9~~$1.5 million.

The Company also designates certain student loan originations as held for sale. The borrowers are credit-worthy students who are attending colleges and universities. The loans are intended to be sold in the secondary market, and the Company maintains contracts with Sallie Mae to sell the loans within 210 days after the last disbursement to the student. These loans are carried at lower of cost or fair value, which at ~~March 31,~~September 30, 2022 totaled ~~$5.0~~$6.6 million.

At ~~March 31,~~September 30, 2022, none of the loans held for sale were on non-accrual status or 90 days past due and still accruing interest.

Foreclosed real estate/repossessed assets

The Company’s holdings of foreclosed real estate totaled ~~$296~~$354 thousand and $115 thousand at ~~March 31,~~September 30, 2022 and December 31, 2021, respectively. Personal property acquired in repossession, generally autos, totaled ~~$1.3~~$1.7 million and $1.1 million at ~~March 31,~~September 30, 2022 and December 31, 2021, respectively. Upon acquisition, these assets are recorded at fair value less estimated selling costs at the date of foreclosure, establishing a new cost basis. They are subsequently carried at the lower of this cost basis or fair value less estimated selling costs.

3. Investment Securities

Investment securities consisted of the following at ~~March 31,~~September 30, 2022 and December 31, 2021.


(In thousands)	(In thousands)	March 31, 2022		December 31, 2021		(In thousands)	September 30, 2022		December 31, 2021
Available for sale debt securities	Available for sale debt securities	$	14,780,494	$	14,450,027	Available for sale debt securities	$	12,632,510	$	14,450,027
Trading debt securities	Trading debt securities	31,380		46,235		Trading debt securities	39,222		46,235
Equity securities:	Equity securities:					Equity securities:
Readily determinable fair value	Readily determinable fair value	6,866		7,153		Readily determinable fair value	6,106		7,153
No readily determinable fair value	No readily determinable fair value	2,418		2,049		No readily determinable fair value	2,848		2,049
Other:	Other:					Other:
Federal Reserve Bank stock	Federal Reserve Bank stock	34,532		34,379		Federal Reserve Bank stock	34,707		34,379
Federal Home Loan Bank stock	Federal Home Loan Bank stock	10,199		10,428		Federal Home Loan Bank stock	10,260		10,428
Equity method investments	Equity method investments	1,434		1,834		Equity method investments	1,434		1,834
Private equity investments	Private equity investments	153,411		147,406		Private equity investments	176,341		147,406
Total investment securities (1)	Total investment securities (1)	$	15,020,734	$	14,699,511	Total investment securities (1)	$	12,903,428	$	14,699,511

(1)Accrued interest receivable totaled ~~$41.4~~$39.6 million and $39.5 million at ~~March 31,~~September 30, 2022 and December 31, 2021, respectively, and was included within other assets on the consolidated balance sheets.

The Company has elected to measure equity securities with no readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes for the identical or similar investment of the same issuer. This portfolio includes the Company's holdings of Visa Class B shares, which have a carrying value of zero, as there have not been observable price changes in orderly transactions for identical or similar investments of the same issuer. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company did not record any impairment or other adjustments to the carrying amount of its portfolio of equity securities with no readily determinable fair value.

Other investment securities include Federal Reserve Bank (FRB) stock, Federal Home Loan Bank (FHLB) stock, equity method investments, and investments in portfolio concerns held by the Company's private equity subsidiary. FRB stock and FHLB stock are held for debt and regulatory purposes. Investment in FRB stock is based on the capital structure of the investing bank, and investment in FHLB stock is tied to the asset size of the borrowing bank and the level of borrowings from the FHLB. These holdings are carried at cost. Additionally, the Company's equity method investments are carried at cost, adjusted to reflect the Company's portion of income, loss, or dividends of the investee. These adjustments are included in non-interest income on the Company's consolidated statements of income. The Company's private equity investments are carried at estimated fair value.

The majority of the Company’s investment portfolio is comprised of available for sale debt securities, which are carried at fair value with changes in fair value reported in accumulated other comprehensive income ~~(OCI)~~(AOCI). A summary of the available for sale debt securities by maturity groupings as of ~~March 31,~~September 30, 2022 is shown below. The investment portfolio includes agency mortgage-backed securities, which are guaranteed by agencies such as FHLMC, FNMA, and Government National

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Mortgage Association (GNMA), in addition to non-agency mortgage-backed securities, which have no guarantee but are collateralized by commercial and residential mortgages. Also included are certain other asset-backed securities, which are primarily collateralized by credit

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cards, automobiles, student loans, and commercial loans. These securities differ from traditional debt securities primarily in that they may have uncertain maturity dates and are priced based on estimated prepayment rates on the underlying collateral.


(In thousands)	(In thousands)	Amortized Cost		Fair Value		(In thousands)	Amortized Cost		Fair Value
U.S. government and federal agency obligations:	U.S. government and federal agency obligations:					U.S. government and federal agency obligations:
Within 1 year	Within 1 year	$	186,706	$	189,347	Within 1 year	$	159,019	$	158,319
After 1 but within 5 years	After 1 but within 5 years	746,460		746,770		After 1 but within 5 years	735,831		705,287
After 5 but within 10 years	After 5 but within 10 years	181,875		193,844		After 5 but within 10 years	190,134		172,719

Total U.S. government and federal agency obligations	Total U.S. government and federal agency obligations	1,115,041		1,129,961		Total U.S. government and federal agency obligations	1,084,984		1,036,325
Government-sponsored enterprise obligations:	Government-sponsored enterprise obligations:					Government-sponsored enterprise obligations:

After 5 but within 10 years	After 5 but within 10 years	5,000		5,000		After 5 but within 10 years	4,987		4,545
After 10 years	After 10 years	50,765		46,390		After 10 years	50,750		38,630
Total government-sponsored enterprise obligations	Total government-sponsored enterprise obligations	55,765		51,390		Total government-sponsored enterprise obligations	55,737		43,175
State and municipal obligations:	State and municipal obligations:					State and municipal obligations:
Within 1 year	Within 1 year	181,848		182,560		Within 1 year	197,465		196,380
After 1 but within 5 years	After 1 but within 5 years	735,420		730,637		After 1 but within 5 years	666,078		636,464
After 5 but within 10 years	After 5 but within 10 years	917,122		860,827		After 5 but within 10 years	936,136		787,205
After 10 years	After 10 years	326,616		298,241		After 10 years	221,305		183,204
Total state and municipal obligations	Total state and municipal obligations	2,161,006		2,072,265		Total state and municipal obligations	2,020,984		1,803,253
Mortgage and asset-backed securities:	Mortgage and asset-backed securities:					Mortgage and asset-backed securities:
Agency mortgage-backed securities	Agency mortgage-backed securities	5,774,953		5,441,374		Agency mortgage-backed securities	5,230,550		4,445,519
Non-agency mortgage-backed securities	Non-agency mortgage-backed securities	1,525,223		1,435,363		Non-agency mortgage-backed securities	1,449,021		1,235,584
Asset-backed securities	Asset-backed securities	4,121,388		4,011,361		Asset-backed securities	3,755,855		3,558,287
Total mortgage and asset-backed securities	Total mortgage and asset-backed securities	11,421,564		10,888,098		Total mortgage and asset-backed securities	10,435,426		9,239,390
Other debt securities:	Other debt securities:					Other debt securities:
Within 1 year	Within 1 year	121,215		121,629		Within 1 year	50,783		50,639
After 1 but within 5 years	After 1 but within 5 years	229,677		223,109		After 1 but within 5 years	272,029		249,688
After 5 but within 10 years	After 5 but within 10 years	312,426		285,620		After 5 but within 10 years	247,121		202,706
After 10 years	After 10 years	9,260		8,422		After 10 years	9,260		7,334
Total other debt securities	Total other debt securities	672,578		638,780		Total other debt securities	579,193		510,367
Total available for sale debt securities	Total available for sale debt securities	$	15,425,954	$	14,780,494	Total available for sale debt securities	$	14,176,324	$	12,632,510

Investments in U.S. government and federal agency obligations include U.S. Treasury inflation-protected securities, which totaled ~~$399.4~~$368.7 million, at fair value, at ~~March 31,~~September 30, 2022. Interest paid on these securities increases with inflation and decreases with deflation, as measured by the non-seasonally adjusted Consumer Price ~~Index.~~Index (CPI-U). At maturity, the principal paid is the greater of an inflation-adjusted principal or the original principal.

Allowance for credit losses on available for sale debt securities

The Company’s model for establishing its allowance for credit losses uses cash flows projected to be received over the estimated life of the securities, discounted to present value, and compared to the current amortized cost bases of the securities. Securities for which fair value is less than amortized cost are reviewed for impairment. Special emphasis is placed on securities whose credit rating has fallen below Baa3 (Moody's) or BBB- (Standard & Poor's), whose fair values have fallen more than 20% below purchase price, or who have been identified based on management’s judgment. These securities are placed on a watch list and cash flow analyses are prepared on an individual security basis. ~~Credit impairment is determined~~Certain securities are analyzed using a projected cash flow model, discounted to present value, and compared to the current amortized cost bases of the securities. The model uses input factors such as cash flow projections, contractual payments required, expected delinquency rates, credit support from other tranches, prepayment speeds, collateral loss severity rates (including loan to values), and various other information related to the underlying collateral. Securities not analyzed using the cash flow model are analyzed by reviewing risk ratings, credit support agreements, and industry knowledge to project future cash flows and any possible credit impairment.

At ~~March 31,~~September 30, 2022, the fair value of securities on this watch list was ~~$13.1 million~~$1.3 billion compared to $13.4 million at December 31, 2021.

~~Significant inputs~~ The majority of the securities included on the Company's watch list in the current quarter were experiencing unrealized loss positions due to the significant increase in interest rates and were analyzed outside of the cash flow ~~model used at March 31,~~model. At September 30, 2022, ~~to quantify credit losses were primarily credit support agreements, as~~ the securities on the Company's watch list ~~at March 31, 2022~~that were not deemed to be solely related to increasing interest rates were securities backed by government-guaranteed student loans and are expected to perform as contractually required. As of ~~March 31,~~September 30, 2022, the Company did not identify any securities for which a credit loss exists,

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and for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, the Company did not recognize a credit loss expense on any available for sale debt securities.

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The table below summarizes debt securities available for sale in an unrealized loss position, aggregated by length of loss period, for which an allowance for credit losses has not been recorded at ~~March 31,~~September 30, 2022 and December 31, 2021. Unrealized losses on these available for sale securities have not been recognized into income because after review, the securities were deemed not to be impaired. The unrealized losses on these securities are primarily attributable to changes in interest rates and current market conditions. Additionally, management does not intend to sell the securities, and it is more likely than not that management will not be required to sell the securities prior to their anticipated recovery.


		Less than 12 months				12 months or longer				Total					Less than 12 months				12 months or longer				Total
(In thousands)	(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2022
September 30, 2022														September 30, 2022
U.S. government and federal agency obligations	U.S. government and federal agency obligations	$	390,451	$	13,082	$	—	$	—	$	390,451	$	13,082	U.S. government and federal agency obligations	$	695,272	$	33,081	$	283,593	$	15,579	$	978,865	$	48,660
Government-sponsored enterprise obligations	Government-sponsored enterprise obligations	29,665		1,281		16,725		3,094		46,390		4,375		Government-sponsored enterprise obligations	29,954		5,964		13,221		6,598		43,175		12,562
State and municipal obligations	State and municipal obligations	1,204,526		80,379		136,076		15,435		1,340,602		95,814		State and municipal obligations	1,101,122		72,473		673,390		145,337		1,774,512		217,810
Mortgage and asset-backed securities:	Mortgage and asset-backed securities:													Mortgage and asset-backed securities:
Agency mortgage-backed securities	Agency mortgage-backed securities	4,009,914		242,976		987,082		96,265		4,996,996		339,241		Agency mortgage-backed securities	1,970,947		241,074		2,450,227		544,264		4,421,174		785,338
Non-agency mortgage-backed securities	Non-agency mortgage-backed securities	1,360,220		87,585		28,932		2,525		1,389,152		90,110		Non-agency mortgage-backed securities	417,434		63,282		811,318		150,299		1,228,752		213,581
Asset-backed securities	Asset-backed securities	3,439,877		106,785		149,894		6,339		3,589,771		113,124		Asset-backed securities	2,145,330		92,243		1,381,680		105,368		3,527,010		197,611
Total mortgage and asset-backed securities	Total mortgage and asset-backed securities	8,810,011		437,346		1,165,908		105,129		9,975,919		542,475		Total mortgage and asset-backed securities	4,533,711		396,599		4,643,225		799,931		9,176,936		1,196,530
Other debt securities	Other debt securities	326,917		17,622		148,487		16,683		475,404		34,305		Other debt securities	297,155		25,979		210,212		42,847		507,367		68,826
Total	Total	$	10,761,570	$	549,710	$	1,467,196	$	140,341	$	12,228,766	$	690,051	Total	$	6,657,214	$	534,096	$	5,823,641	$	1,010,292	$	12,480,855	$	1,544,388
December 31, 2021	December 31, 2021													December 31, 2021
U.S. government and federal agency obligations	U.S. government and federal agency obligations	$	296,492	$	2,241	$	—	$	—	$	296,492	$	2,241	U.S. government and federal agency obligations	$	296,492	$	2,241	$	—	$	—	$	296,492	$	2,241
Government-sponsored enterprise obligations	Government-sponsored enterprise obligations	—		—		18,899		919		18,899		919		Government-sponsored enterprise obligations	—		—		18,899		919		18,899		919
State and municipal obligations	State and municipal obligations	876,691		15,874		32,684		1,049		909,375		16,923		State and municipal obligations	876,691		15,874		32,684		1,049		909,375		16,923
Mortgage and asset-backed securities:	Mortgage and asset-backed securities:													Mortgage and asset-backed securities:
Agency mortgage-backed securities	Agency mortgage-backed securities	3,333,691		59,044		265,835		8,720		3,599,526		67,764		Agency mortgage-backed securities	3,333,691		59,044		265,835		8,720		3,599,526		67,764
Non-agency mortgage-backed securities	Non-agency mortgage-backed securities	1,285,611		17,222		1,948		19		1,287,559		17,241		Non-agency mortgage-backed securities	1,285,611		17,222		1,948		19		1,287,559		17,241
Asset-backed securities	Asset-backed securities	2,518,935		19,201		87,893		525		2,606,828		19,726		Asset-backed securities	2,518,935		19,201		87,893		525		2,606,828		19,726
Total mortgage and asset-backed securities	Total mortgage and asset-backed securities	7,138,237		95,467		355,676		9,264		7,493,913		104,731		Total mortgage and asset-backed securities	7,138,237		95,467		355,676		9,264		7,493,913		104,731
Other debt securities	Other debt securities	270,409		5,098		58,574		3,017		328,983		8,115		Other debt securities	270,409		5,098		58,574		3,017		328,983		8,115
Total	Total	$	8,581,829	$	118,680	$	465,833	$	14,249	$	9,047,662	$	132,929	Total	$	8,581,829	$	118,680	$	465,833	$	14,249	$	9,047,662	$	132,929

The entire available for sale debt portfolio included ~~$12.2~~$12.5 billion of securities that were in a loss position at ~~March 31,~~September 30, 2022, compared to $9.0 billion at December 31, 2021. The total amount of unrealized loss on these securities was ~~$690.1 million~~$1.5 billion at ~~March 31,~~September 30, 2022, an increase of ~~$557.1 million~~$1.4 billion compared to the unrealized loss at December 31, 2021. Securities with significant unrealized losses are discussed in the "Allowance for credit losses on available for sale debt securities" section above.

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For debt securities classified as available for sale, the following table shows the amortized cost, fair value, and allowance for credit losses of securities available for sale at ~~March 31,~~September 30, 2022 and December 31, 2021, and the corresponding amounts of gross unrealized gains and losses (pre-tax) in AOCI, by security type.


(In thousands)	(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value		(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
March 31, 2022
September 30, 2022												September 30, 2022
U.S. government and federal agency obligations	U.S. government and federal agency obligations	$	1,115,041	$	28,002	$	(13,082)	$	—	$	1,129,961	U.S. government and federal agency obligations	$	1,084,984	$	1	$	(48,660)	$	—	$	1,036,325
Government-sponsored enterprise obligations	Government-sponsored enterprise obligations	55,765		—		(4,375)		—		51,390		Government-sponsored enterprise obligations	55,737		—		(12,562)		—		43,175
State and municipal obligations	State and municipal obligations	2,161,006		7,073		(95,814)		—		2,072,265		State and municipal obligations	2,020,984		79		(217,810)		—		1,803,253
Mortgage and asset-backed securities:	Mortgage and asset-backed securities:											Mortgage and asset-backed securities:
Agency mortgage-backed securities	Agency mortgage-backed securities	5,774,953		5,662		(339,241)		—		5,441,374		Agency mortgage-backed securities	5,230,550		307		(785,338)		—		4,445,519
Non-agency mortgage-backed securities	Non-agency mortgage-backed securities	1,525,223		250		(90,110)		—		1,435,363		Non-agency mortgage-backed securities	1,449,021		144		(213,581)		—		1,235,584
Asset-backed securities	Asset-backed securities	4,121,388		3,097		(113,124)		—		4,011,361		Asset-backed securities	3,755,855		43		(197,611)		—		3,558,287
Total mortgage and asset-backed securities	Total mortgage and asset-backed securities	11,421,564		9,009		(542,475)		—		10,888,098		Total mortgage and asset-backed securities	10,435,426		494		(1,196,530)		—		9,239,390
Other debt securities	Other debt securities	672,578		507		(34,305)		—		638,780		Other debt securities	579,193		—		(68,826)		—		510,367
Total	Total	$	15,425,954	$	44,591	$	(690,051)	$	—	$	14,780,494	Total	$	14,176,324	$	574	$	(1,544,388)	$	—	$	12,632,510
December 31, 2021	December 31, 2021											December 31, 2021
U.S. government and federal agency obligations	U.S. government and federal agency obligations	$	1,035,477	$	47,484	$	(2,241)	$	—	$	1,080,720	U.S. government and federal agency obligations	$	1,035,477	$	47,484	$	(2,241)	$	—	$	1,080,720
Government-sponsored enterprise obligations	Government-sponsored enterprise obligations	50,773		1,901		(919)		—		51,755		Government-sponsored enterprise obligations	50,773		1,901		(919)		—		51,755
State and municipal obligations	State and municipal obligations	2,072,210		41,540		(16,923)		—		2,096,827		State and municipal obligations	2,072,210		41,540		(16,923)		—		2,096,827
Mortgage and asset-backed securities:	Mortgage and asset-backed securities:											Mortgage and asset-backed securities:
Agency mortgage-backed securities	Agency mortgage-backed securities	5,698,088		52,676		(67,764)		—		5,683,000		Agency mortgage-backed securities	5,698,088		52,676		(67,764)		—		5,683,000
Non-agency mortgage-backed securities	Non-agency mortgage-backed securities	1,383,037		681		(17,241)		—		1,366,477		Non-agency mortgage-backed securities	1,383,037		681		(17,241)		—		1,366,477
Asset-backed securities	Asset-backed securities	3,546,024		12,921		(19,726)		—		3,539,219		Asset-backed securities	3,546,024		12,921		(19,726)		—		3,539,219
Total mortgage and asset-backed securities	Total mortgage and asset-backed securities	10,627,149		66,278		(104,731)		—		10,588,696		Total mortgage and asset-backed securities	10,627,149		66,278		(104,731)		—		10,588,696
Other debt securities	Other debt securities	633,524		6,620		(8,115)		—		632,029		Other debt securities	633,524		6,620		(8,115)		—		632,029
Total	Total	$	14,419,133	$	163,823	$	(132,929)	$	—	$	14,450,027	Total	$	14,419,133	$	163,823	$	(132,929)	$	—	$	14,450,027

The following table presents proceeds from sales of securities and the components of investment securities gains and losses which have been recognized in earnings.


		For the Three Months Ended March 31					For the Nine Months Ended September 30
(In thousands)	(In thousands)	2022		2021		(In thousands)	2022		2021
Proceeds from sales of securities:	Proceeds from sales of securities:					Proceeds from sales of securities:

Available for sale debt securities						Available for sale debt securities	$	85,023	$	—

Other investments	Other investments	$	1,745	$	9,292	Other investments	3,907		10,060
Total proceeds	Total proceeds	$	1,745	$	9,292	Total proceeds	$	88,930	$	10,060

Investment securities gains (losses), net:	Investment securities gains (losses), net:					Investment securities gains (losses), net:
Available for sale debt securities:						Available for sale debt securities:

Losses realized on sales						Losses realized on sales	$	(20,274)	$	—

Equity securities:	Equity securities:					Equity securities:

Fair value adjustments, net	Fair value adjustments, net	$	(287)	$	(35)	Fair value adjustments, net	(1,048)		152
Other:	Other:					Other:
Gains realized on sales	Gains realized on sales	—		1,523		Gains realized on sales	104		1,611

Losses realized on sales						Losses realized on sales	(4,313)		—
Fair value adjustments, net	Fair value adjustments, net	7,450		8,365		Fair value adjustments, net	37,133		38,002
Total investment securities gains, net	Total investment securities gains, net	$	7,163	$	9,853	Total investment securities gains, net	$	11,602	$	39,765

Net gains on investment securities for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 were mainly comprised of losses of $20.3 million on sales of available for sale securities, net losses of ~~$287 thousand~~$4.3 million on sales of private equity investments, and net losses in fair value of $1.0 million on equity investments, offset by net gains in fair value of ~~$7.5~~$37.1 million on private equity investments, due to fair value adjustments.

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At ~~March 31,~~September 30, 2022, securities totaling ~~$5.2~~$4.8 billion in fair value were pledged to secure public fund deposits, securities sold under agreements to repurchase, trust funds, and borrowings at the FRB and FHLB, compared to $6.4 billion at December 31, 2021. Securities pledged under agreements pursuant to which the collateral may be sold or re-pledged by the secured parties approximated ~~$201.0~~$208.3 million, while the remaining securities were pledged under agreements pursuant to which the secured

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parties may not sell or re-pledge the collateral. Except for obligations of the U.S. Treasury and various government-sponsored enterprises such as FNMA, FHLB and FHLMC, no investment in a single issuer exceeded 10% of stockholders’ equity.

4. Goodwill and Other Intangible Assets

The following table presents information about the Company's intangible assets which have estimable useful lives.


		March 31, 2022								December 31, 2021									September 30, 2022								December 31, 2021
(In thousands)	(In thousands)	Gross Carrying Amount		Accumulated Amortization		Valuation Allowance		Net Amount		Gross Carrying Amount		Accumulated Amortization		Valuation Allowance		Net Amount		(In thousands)	Gross Carrying Amount		Accumulated Amortization		Valuation Allowance		Net Amount		Gross Carrying Amount		Accumulated Amortization		Valuation Allowance		Net Amount
Amortizable intangible assets:	Amortizable intangible assets:																	Amortizable intangible assets:
Core deposit premium	Core deposit premium	$	31,270	$	(30,345)	$	—	$	925	$	31,270	$	(30,266)	$	—	$	1,004	Core deposit premium	$	31,270	$	(30,499)	$	—	$	771	$	31,270	$	(30,266)	$	—	$	1,004
Mortgage servicing rights	Mortgage servicing rights	21,490		(10,130)		—		11,360		20,870		(9,600)		(304)		10,966		Mortgage servicing rights	22,161		(10,933)		—		11,228		20,870		(9,600)		(304)		10,966
Total	Total	$	52,760	$	(40,475)	$	—	$	12,285	$	52,140	$	(39,866)	$	(304)	$	11,970	Total	$	53,431	$	(41,432)	$	—	$	11,999	$	52,140	$	(39,866)	$	(304)	$	11,970

Aggregate amortization expense on intangible assets was ~~$609~~$456 thousand and ~~$951~~$682 thousand for the three month periods ended ~~March 31,~~September 30, 2022 and ~~2021.~~2021, respectively, and $1.6 million and $2.4 million for the nine month periods ended September 30, 2022 and 2021, respectively. The following table shows the estimated annual amortization expense for the next five fiscal years. This expense is based on existing asset balances and the interest rate environment as of ~~March 31,~~September 30, 2022. The Company’s actual amortization expense in any given period may be different from the estimated amounts depending upon the acquisition of intangible assets, changes in mortgage interest rates, prepayment rates and other market conditions.


(In thousands)	(In thousands)			(In thousands)
2022	2022	$	1,785	2022	$	1,945
2023	2023	1,402		2023	1,389
2024	2024	1,240		2024	1,242
2025	2025	1,088		2025	1,098
2026	2026	945		2026	960

Changes in the carrying amount of goodwill and ~~net~~ other intangible assets for the ~~three~~nine month period ended ~~March 31,~~September 30, 2022 are as follows:


(In thousands)	(In thousands)	Goodwill		Easement		Core Deposit Premium		Mortgage Servicing Rights		(In thousands)	Goodwill		Easement		Core Deposit Premium		Mortgage Servicing Rights
Balance January 1, 2022	Balance January 1, 2022	$	138,921	$	3,600	$	1,004	$	10,966	Balance January 1, 2022	$	138,921	$	3,600	$	1,004	$	10,966

Originations, net of disposals	Originations, net of disposals	—		—		—		620		Originations, net of disposals	—		—		—		1,291
Amortization	Amortization	—		—		(79)		(530)		Amortization	—		—		(233)		(1,333)
Impairment recovery	Impairment recovery	—		—		—		304		Impairment recovery	—		—		—		304
Balance March 31, 2022		$	138,921	$	3,600	$	925	$	11,360
Balance September 30, 2022										Balance September 30, 2022	$	138,921	$	3,600	$	771	$	11,228

Goodwill allocated to the Company’s operating segments at ~~March 31,~~September 30, 2022 and December 31, 2021 is shown below.


(In thousands)
Consumer segment	$	70,721
Commercial segment	67,454
Wealth segment	746
Total goodwill	$	138,921

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5. Guarantees

The Company, as a provider of financial services, routinely issues financial guarantees in the form of financial and performance standby letters of credit. Standby letters of credit are contingent commitments issued by the Company generally to guarantee the payment or performance obligation of a customer to a third party. While these represent a potential outlay by the Company, a significant amount of the commitments may expire without being drawn upon. The Company has recourse against the customer for any amount it is required to pay to a third party under a standby letter of credit. The letters of credit are subject to the same credit policies, underwriting standards and approval process as loans made by the Company. Most of the standby letters of credit are secured, and in the event of nonperformance by customers, the Company has rights to the underlying collateral, which could include commercial real estate, physical plant and property, inventory, receivables, cash and marketable securities.

Upon issuance of standby letters of credit, the Company recognizes a liability for the fair value of the obligation undertaken, which is estimated to be equivalent to the amount of fees received from the customer over the life of the agreement. At ~~March 31,~~September 30, 2022, that net liability was ~~$4.2~~$3.6 million, which will be accreted into income over the remaining life of the respective commitments. The contractual amount of these letters of credit, which represents the maximum potential future payments guaranteed by the Company, was ~~$502.1~~$516.2 million at ~~March 31,~~September 30, 2022.

The Company periodically enters into credit risk participation agreements (RPAs) as a guarantor to other financial institutions, in order to mitigate those institutions’ credit risk associated with interest rate swaps with third parties. The RPA stipulates that, in the event of default by the third party on the interest rate swap, the Company will reimburse a portion of the loss borne by the financial institution. These interest rate swaps are normally collateralized (generally with real property, inventories and equipment) by the third party, which limits the credit risk associated with the Company’s RPAs. The third parties usually have other borrowing relationships with the Company. The Company monitors overall borrower collateral and at ~~March 31,~~September 30, 2022, believes sufficient collateral is available to cover potential swap losses. The RPAs are carried at fair value throughout their term with all changes in fair value, including those due to a change in the third party’s creditworthiness, recorded in current earnings. The terms of the RPAs, which correspond to the terms of the underlying swaps, range from 2 years to 15 years. At ~~March 31,~~September 30, 2022, the fair value of the Company's guarantee liabilities for RPAs was ~~$126~~$94 thousand, and the notional amount of the underlying swaps was ~~$347.9~~$376.4 million. The maximum potential future payment guaranteed by the Company cannot be readily estimated but is dependent upon the fair value of the interest rate swaps at the time of default.

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6. Leases

The Company has net investments in direct financing and sales-type leases to commercial, industrial, and tax-exempt entities. These leases are included within business loans on the Company's consolidated balance sheets. The Company primarily leases various types of equipment, trucks and trailers, and office furniture and fixtures. Lease agreements may include options for the lessee to renew or purchase the leased equipment at the end of the lease term. The Company has elected to adopt the lease component expedient in which the lease and nonlease components are combined into the total lease receivable. The Company also leases office space to third parties, and these leases are classified as operating leases. The leases may include options to renew or expand the leased space, and currently the leases have remaining terms of ~~3 months~~1 month to 6 years.

The following table provides the components of lease income.


		For the Three Months Ended March 31					For the Three Months Ended September 30						For the Nine Months Ended September 30
(in thousands)	(in thousands)		2022		2021			(in thousands)	2022		2021			2022		2021
Direct financing and sales-type leases	Direct financing and sales-type leases		$	5,247	$	6,121		Direct financing and sales-type leases	$	5,477	$	5,482		$	15,838	$	17,398
Operating leases(a)	Operating leases(a)		2,184		2,074			Operating leases(a)	2,175		1,717			6,517		5,721
Total lease income	Total lease income		$	7,431	$	8,195		Total lease income	$	7,652	$	7,199		$	22,355	$	23,119

(a) Includes rent from Tower Properties Company, a related party, of $19 thousand for the three month periods ended ~~March 31,~~September 30, 2022 and 2021, and $57 thousand for the nine months ended September 30, 2022 and 2021.

7. Pension

The amount of net pension cost is shown in the table below:


		For the Three Months Ended March 31					For the Three Months Ended September 30						For the Nine Months Ended September 30
(In thousands)	(In thousands)		2022		2021			(In thousands)	2022		2021			2022		2021
Service cost - benefits earned during the period	Service cost - benefits earned during the period		$	132	$	95		Service cost - benefits earned during the period	$	128	$	95		$	391	$	284
Interest cost on projected benefit obligation	Interest cost on projected benefit obligation		665		556			Interest cost on projected benefit obligation	713		514			2,043		1,626
Expected return on plan assets	Expected return on plan assets		(1,126)		(1,124)			Expected return on plan assets	(1,135)		(1,151)			(3,386)		(3,399)
Amortization of prior service cost	Amortization of prior service cost		(68)		(68)			Amortization of prior service cost	(68)		(67)			(203)		(203)
Amortization of unrecognized net loss	Amortization of unrecognized net loss		498		651			Amortization of unrecognized net loss	470		669			1,465		1,971
Net periodic pension cost	Net periodic pension cost		$	101	$	110		Net periodic pension cost	$	108	$	60		$	310	$	279

All benefits accrued under the Company’s defined benefit pension plan have been frozen since January 1, 2011. During the first ~~three~~nine months of 2022, the Company made 0no funding contributions to its defined benefit pension plan and made minimal funding contributions to a supplemental executive retirement plan (the CERP), which carries no segregated assets.

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8. Common Stock *

Presented below is a summary of the components used to calculate basic and diluted income per share. The Company applies the two-class method of computing income per share, as nonvested share-based awards that pay nonforfeitable common stock dividends are considered securities which participate in undistributed earnings with common stock. The two-class method requires the calculation of separate income per share amounts for the nonvested share-based awards and for common stock. Income per share attributable to common stock is shown in the table below. Nonvested share-based awards are further discussed in Note 13.


		For the Three Months Ended March 31					For the Three Months Ended September 30						For the Nine Months Ended September 30
(In thousands, except per share data)	(In thousands, except per share data)		2022		2021			(In thousands, except per share data)	2022		2021			2022		2021
Basic income per common share:	Basic income per common share:							Basic income per common share:
Net income attributable to Commerce Bancshares, Inc.	Net income attributable to Commerce Bancshares, Inc.		$	118,154	$	130,972		Net income attributable to Commerce Bancshares, Inc.	$	122,823	$	122,561		$	356,771	$	415,859
Less income allocated to nonvested restricted stock	Less income allocated to nonvested restricted stock		1,070		1,200			Less income allocated to nonvested restricted stock	1,119		1,114			3,241		3,792
Net income allocated to common stock	Net income allocated to common stock		$	117,084	$	129,772		Net income allocated to common stock	$	121,704	$	121,447		$	353,530	$	412,067
Weighted average common shares outstanding	Weighted average common shares outstanding		120,324		122,073			Weighted average common shares outstanding	118,895		121,628			119,619		121,889
Basic income per common share	Basic income per common share		$	.97	$	1.06		Basic income per common share	$	1.03	$	1.00		$	2.96	$	3.38
Diluted income per common share:	Diluted income per common share:							Diluted income per common share:
Net income attributable to Commerce Bancshares, Inc.	Net income attributable to Commerce Bancshares, Inc.		$	118,154	$	130,972		Net income attributable to Commerce Bancshares, Inc.	$	122,823	$	122,561		$	356,771	$	415,859
Less income allocated to nonvested restricted stock	Less income allocated to nonvested restricted stock		1,068		1,198			Less income allocated to nonvested restricted stock	1,118		1,112			3,236		3,785
Net income allocated to common stock	Net income allocated to common stock		$	117,086	$	129,774		Net income allocated to common stock	$	121,705	$	121,449		$	353,535	$	412,074
Weighted average common shares outstanding	Weighted average common shares outstanding		120,324		122,073			Weighted average common shares outstanding	118,895		121,628			119,619		121,889

Net effect of the assumed exercise of stock-based awards - based on the treasury stock method using the average market price for the respective periods	Net effect of the assumed exercise of stock-based awards - based on the treasury stock method using the average market price for the respective periods		292		329			Net effect of the assumed exercise of stock-based awards - based on the treasury stock method using the average market price for the respective periods	264		253			274		294
Weighted average diluted common shares outstanding	Weighted average diluted common shares outstanding		120,616		122,402			Weighted average diluted common shares outstanding	119,159		121,881			119,893		122,183
Diluted income per common share	Diluted income per common share		$	.97	$	1.06		Diluted income per common share	$	1.02	$	.99		$	2.95	$	3.37

Unexercised stock appreciation rights of ~~119~~167 thousand and 5499 thousand for the three month periods ended ~~March 31,~~September 30, 2022 and 2021, respectively, and 152 thousand and 61 thousand for the nine month periods ended September 30, 2022 and 2021, respectively, were excluded from the computation of diluted income per common share because their inclusion would have been anti-dilutive.

* All prior year share and per share amounts in this note have been restated for the 5% common stock dividend distributed in December 2021.

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9. Accumulated Other Comprehensive Income

The table below shows the activity and accumulated balances for components of other comprehensive income. Information about unrealized gains and losses on securities can be found in Note 3, and information about unrealized gains and losses on cash flow hedge derivatives is located in Note 11.


		Unrealized Gains (Losses) on Securities (1)		Pension Loss		Unrealized Gains (Losses) on Cash Flow Hedge Derivatives (2)		Total Accumulated Other Comprehensive Income (Loss)								Unrealized Gains (Losses) on Securities (1)		Pension Loss		Unrealized Gains (Losses) on Cash Flow Hedge Derivatives (2)		Total Accumulated Other Comprehensive Income (Loss)
(In thousands)	(In thousands)									(In thousands)

Balance January 1, 2022	Balance January 1, 2022	$	23,174							$	(20,668)	$	74,574	$	77,080		Balance January 1, 2022					$	23,174	$	(20,668)	$	74,574	$	77,080

Other comprehensive loss before reclassifications to current earnings	Other comprehensive loss before reclassifications to current earnings	(676,353)		—		—		(676,353)		Other comprehensive loss before reclassifications to current earnings						(1,594,981)		—		(3,464)		(1,598,445)
Amounts reclassified to current earnings from accumulated other comprehensive income	Amounts reclassified to current earnings from accumulated other comprehensive income	—		430		(6,050)		(5,620)		Amounts reclassified to current earnings from accumulated other comprehensive income						20,274		1,262		(18,322)		3,214
Current period other comprehensive income (loss), before tax	Current period other comprehensive income (loss), before tax	(676,353)		430		(6,050)		(681,973)		Current period other comprehensive income (loss), before tax						(1,574,707)		1,262		(21,786)		(1,595,231)
Income tax (expense) benefit	Income tax (expense) benefit	169,088		(107)		1,512		170,493		Income tax (expense) benefit						393,676		(315)		5,446		398,807
Current period other comprehensive income (loss), net of tax	Current period other comprehensive income (loss), net of tax	(507,265)		323		(4,538)		(511,480)		Current period other comprehensive income (loss), net of tax						(1,181,031)		947		(16,340)		(1,196,424)

Balance March 31, 2022		$	(484,091)	$	(20,345)	$	70,036	$	(434,400)
Balance September 30, 2022										Balance September 30, 2022						$	(1,157,857)	$	(19,721)	$	58,234	$	(1,119,344)
Balance January 1, 2021	Balance January 1, 2021	$	263,801	$	(25,118)	$	92,694	$	331,377	Balance January 1, 2021						$	263,801	$	(25,118)	$	92,694	$	331,377

Other comprehensive income (loss) before reclassifications to current earnings		(211,569)		—		—		(211,569)
Other comprehensive loss before reclassifications to current earnings										Other comprehensive loss before reclassifications to current earnings						(213,362)		—		—		(213,362)
Amounts reclassified to current earnings from accumulated other comprehensive income	Amounts reclassified to current earnings from accumulated other comprehensive income	—		583		(5,848)		(5,265)		Amounts reclassified to current earnings from accumulated other comprehensive income						—		1,768		(18,024)		(16,256)
Current period other comprehensive income (loss), before tax	Current period other comprehensive income (loss), before tax	(211,569)		583		(5,848)		(216,834)		Current period other comprehensive income (loss), before tax						(213,362)		1,768		(18,024)		(229,618)
Income tax (expense) benefit	Income tax (expense) benefit	52,893		(146)		1,462		54,209		Income tax (expense) benefit						53,343		(442)		4,506		57,407
Current period other comprehensive income (loss), net of tax	Current period other comprehensive income (loss), net of tax	(158,676)		437		(4,386)		(162,625)		Current period other comprehensive income (loss), net of tax						(160,019)		1,326		(13,518)		(172,211)

Balance March 31, 2021		$	105,125	$	(24,681)	$	88,308	$	168,752
Balance September 30, 2021										Balance September 30, 2021						$	103,782	$	(23,792)	$	79,176	$	159,166

(1) The pre-tax amounts reclassified from accumulated other comprehensive income to current earnings are included in "investment securities gains (losses), net" in the consolidated statements of income.

(2) The pre-tax amounts reclassified from accumulated other comprehensive income to current earnings are included in "interest and fees on loans" in the consolidated statements of income.

10. Segments

The Company segregates financial information for use in assessing its performance and allocating resources among 3three operating segments: Consumer, Commercial and Wealth. The Consumer segment consists of various consumer loan and deposit products offered through its retail branch network of approximately 150 locations. This segment also includes indirect and other consumer loan financing businesses, along with debit and credit card loan and fee businesses. Residential mortgage origination, sales and servicing functions are included in this Consumer segment, but residential mortgage loans retained by the Company are not considered part of this segment and are instead included in the Other/Elimination column. The Commercial segment provides corporate lending (including the Small Business Banking product line within the branch network), leasing, and international services, along with business and governmental deposit products and commercial cash management services. This segment also includes both merchant and commercial bank card products as well as the Capital Markets Group, which sells fixed income securities and provides securities safekeeping and accounting services to its business and correspondent bank customers. The Wealth segment provides traditional trust and estate planning, advisory and discretionary investment management, and brokerage services. This segment also provides various loan and deposit related services to its private banking customers.

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The following table presents selected financial information by segment and reconciliations of combined segment totals to consolidated totals. There were no material intersegment revenues between the three segments. Management periodically makes changes to methods of assigning costs and income to its business segments to better reflect operating results. If appropriate, these changes are reflected in prior year information presented below.


(In thousands)	(In thousands)	Consumer		Commercial		Wealth		Segment Totals		Other/Elimination		Consolidated Totals		(In thousands)	Consumer		Commercial		Wealth		Segment Totals		Other/Elimination		Consolidated Totals

Three Months Ended March 31, 2022
Three Months Ended September 30, 2022														Three Months Ended September 30, 2022
Net interest income	Net interest income	$	79,896	$	109,530	$	18,868	$	208,294	$	492	$	208,786	Net interest income	$	86,232	$	114,087	$	18,637	$	218,956	$	27,417	$	246,373
Provision for credit losses	Provision for credit losses	(4,498)		(82)		(26)		(4,606)		14,464		9,858		Provision for credit losses	(4,305)		(506)		5		(4,806)		(10,484)		(15,290)
Non-interest income	Non-interest income	28,354		53,651		53,206		135,211		(3,442)		131,769		Non-interest income	30,264		57,115		53,862		141,241		(2,727)		138,514
Investment securities gains, net	Investment securities gains, net	—		—		—		—		7,163		7,163		Investment securities gains, net	—		—		—		—		3,410		3,410
Non-interest expense	Non-interest expense	(72,994)		(89,524)		(36,286)		(198,804)		(6,844)		(205,648)		Non-interest expense	(76,832)		(91,372)		(36,194)		(204,398)		(8,486)		(212,884)
Income before income taxes	Income before income taxes	$	30,758	$	73,575	$	35,762	$	140,095	$	11,833	$	151,928	Income before income taxes	$	35,359	$	79,324	$	36,310	$	150,993	$	9,130	$	160,123

Three Months Ended March 31, 2021
Nine Months Ended September 30, 2022														Nine Months Ended September 30, 2022
Net interest income	Net interest income	$	77,939	$	110,565	$	17,457	$	205,961	$	(213)	$	205,748	Net interest income	$	249,761	$	333,263	$	56,731	$	639,755	$	47,789	$	687,544
Provision for credit losses	Provision for credit losses	(9,901)		(27)		5		(9,923)		16,155		6,232		Provision for credit losses	(12,727)		(651)		2		(13,376)		782		(12,594)
Non-interest income	Non-interest income	38,248		50,728		50,985		139,961		(3,916)		136,045		Non-interest income	89,542		167,581		161,051		418,174		(8,464)		409,710
Investment securities gains, net	Investment securities gains, net	—		—		—		—		9,853		9,853		Investment securities gains, net	—		—		—		—		11,602		11,602
Non-interest expense	Non-interest expense	(70,369)		(79,281)		(33,043)		(182,693)		(9,880)		(192,573)		Non-interest expense	(225,232)		(272,224)		(108,967)		(606,423)		(25,614)		(632,037)
Income before income taxes	Income before income taxes	$	35,917	$	81,985	$	35,404	$	153,306	$	11,999	$	165,305	Income before income taxes	$	101,344	$	227,969	$	108,817	$	438,130	$	26,095	$	464,225
Three Months Ended September 30, 2021														Three Months Ended September 30, 2021
Net interest income														Net interest income	$	80,411	$	115,529	$	18,075	$	214,015	$	22	$	214,037
Provision for loan losses														Provision for loan losses	(3,557)		(69)		9		(3,617)		11,002		7,385
Non-interest income														Non-interest income	35,758		52,092		55,241		143,091		(5,585)		137,506
Investment securities gains, net														Investment securities gains, net	—		—		—		—		13,108		13,108
Non-interest expense														Non-interest expense	(75,996)		(84,601)		(34,285)		(194,882)		(16,738)		(211,620)
Income before income taxes														Income before income taxes	$	36,616	$	82,951	$	39,040	$	158,607	$	1,809	$	160,416
Nine Months Ended September 30, 2021														Nine Months Ended September 30, 2021
Net interest income														Net interest income	$	239,157	$	340,279	$	53,186	$	632,622	$	(4,855)	$	627,767
Provision for credit losses														Provision for credit losses	(19,122)		4,856		10		(14,256)		73,528		59,272
Non-interest income														Non-interest income	110,911		155,079		158,731		424,721		(12,027)		412,694
Investment securities gains, net														Investment securities gains, net	—		—		—		—		39,765		39,765
Non-interest expense														Non-interest expense	(220,280)		(246,501)		(101,377)		(568,158)		(34,161)		(602,319)
Income before income taxes														Income before income taxes	$	110,666	$	253,713	$	110,550	$	474,929	$	62,250	$	537,179

The information presented above was derived from the internal profitability reporting system used by management to monitor and manage the financial performance of the Company. This information is based on internal management accounting procedures and methods, which have been developed to reflect the underlying economics of the businesses. The methodologies are applied in connection with funds transfer pricing and assignment of overhead costs among segments. Funds transfer pricing was used in the determination of net interest income by assigning a standard cost (credit) for funds used (provided by) assets and liabilities based on their maturity, prepayment and/or repricing characteristics.

The segment activity, as shown above, includes both direct and allocated items. Amounts in the “Other/Elimination” column include activity not related to the segments, such as that relating to administrative functions, the investment securities portfolio, and the effect of certain expense allocations to the segments. The provision for credit losses in this category contains the difference between net loan charge-offs assigned directly to the segments and the recorded provision for credit loss expense. Included in this category’s net interest income are earnings of the investment portfolio, which are not allocated to a segment.

The performance measurement of the operating segments is based on the management structure of the Company and is not necessarily comparable with similar information for any other financial institution. The information is also not necessarily indicative of the segments' financial condition and results of operations if they were independent entities.

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11. Derivative Instruments

The notional amounts of the Company’s derivative instruments are shown in the table below. These contractual amounts, along with other terms of the derivative, are used to determine amounts to be exchanged between counterparties and are not a measure of loss exposure. At ~~March 31,~~September 30, 2022, the Company’s derivative instruments are accounted for as free-standing derivatives, and changes in their fair value are recorded in current earnings.


(In thousands)	(In thousands)	March 31, 2022		December 31, 2021		(In thousands)	September 30, 2022		December 31, 2021
Interest rate swaps	Interest rate swaps	$	2,177,130	$	2,229,419	Interest rate swaps	$	1,980,368	$	2,229,419

Interest rate floors						Interest rate floors	500,000		—
Interest rate caps	Interest rate caps	221,293		152,058		Interest rate caps	152,784		152,058
Credit risk participation agreements	Credit risk participation agreements	475,944		485,633		Credit risk participation agreements	536,188		485,633
Foreign exchange contracts	Foreign exchange contracts	2,797		5,119		Foreign exchange contracts	7,435		5,119
Mortgage loan commitments	Mortgage loan commitments	19,638		21,787		Mortgage loan commitments	984		21,787
Mortgage loan forward sale contracts	Mortgage loan forward sale contracts	638		1,165		Mortgage loan forward sale contracts	669		1,165
Forward TBA contracts	Forward TBA contracts	18,500		21,000		Forward TBA contracts	1,000		21,000
Total notional amount	Total notional amount	$	2,915,940	$	2,916,181	Total notional amount	$	3,179,428	$	2,916,181

The largest group of notional amounts relate to interest rate swap contracts sold to commercial customers who wish to modify their interest rate sensitivity. The customers are engaged in a variety of businesses, including real estate, manufacturing, retail product distribution, education, and retirement communities. These interest rate swap contracts with customers are offset by matching interest rate swap contracts purchased by the Company from other financial institutions (dealers). Contracts with dealers that require central clearing are novated to a clearing agency who becomes the Company's counterparty. Because of the matching terms of the offsetting contracts, in addition to collateral provisions which mitigate the impact of non-performance risk, changes in fair value subsequent to initial recognition have a minimal effect on earnings.

Many of the Company’s interest rate swap contracts with large financial institutions contain contingent features relating to debt ratings or capitalization levels. Under these provisions, if the Company’s debt rating falls below investment grade or if the Company ceases to be “well-capitalized” under risk-based capital guidelines, certain counterparties can require immediate and ongoing collateralization on interest rate swaps in net liability positions or instant settlement of the contracts. The Company maintains debt ratings and capital well above these minimum requirements.

During the third quarter of 2022, the Company entered into an interest rate floor contract of $500.0 million to hedge the risk of declining interest rates on certain floating rate commercial loans. The premium paid for this floor totaled $16.8 million and is forward starting beginning on January 1, 2024. The interest rate floor matures on January 1, 2030. The interest rate floor qualified and was designated as a cash flow hedge and was assessed for effectiveness using regression analysis. The change in the fair value of the interest rate floor is recorded in AOCI, net of the amortization of the premium paid, which is recorded against fees on loans in the consolidated statements of income. As of September 30, 2022, net deferred losses on the interest rate floor totaled $3.5 million (pre-tax) and was recorded in AOCI in the consolidated balance sheet. As of September 30, 2022, over the next twelve months, it is expected that $2.3 million (pre-tax), representing the floor premium amortization, will be reclassified from AOCI into earnings.

During the year ended December 31, 2020, the Company monetized three interest rate floors that were previously classified as cash flow hedges with a combined notional balance of $1.5 billion and an asset fair value of $163.2 million. As of ~~March 31,~~September 30, 2022, the total realized gains on the monetized cash flow hedges remaining in AOCI was ~~$93.4~~$81.0 million (pre-tax), which will be reclassified into interest income over the next ~~4.7~~4.2 years. The estimated amount of net gains related to the cash flow hedges remaining in AOCI at ~~March 31,~~September 30, 2022 that is expected to be reclassified into income within the next 12 months is ~~$24.4~~$23.9 million.

The Company also contracts with other financial institutions, as a guarantor or beneficiary, to share credit risk associated with certain interest rate swaps through risk participation agreements. The Company’s risks and responsibilities as guarantor are further discussed in Note 5 on Guarantees. In addition, the Company enters into foreign exchange contracts, which are mainly comprised of contracts to purchase or deliver foreign currencies for customers at specific future dates.

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Under its program to sell residential mortgage loans in the secondary market, the Company designates certain newly-originated residential mortgage loans as held for sale. Derivative instruments arising from this activity include mortgage loan commitments and forward loan sale contracts. Changes in the fair values of the loan commitments and funded loans prior to sale that are due to changes in interest rates are economically hedged with forward contracts to sell residential mortgage-backed securities in the to-be-announced (TBA) market. These forward TBA contracts are also considered to be derivatives and are settled in cash at the security settlement date.

The fair values of the Company's derivative instruments, whose notional amounts are listed above, are shown in the table below. Information about the valuation methods used to determine fair value is provided in Note 17 on Fair Value Measurements in the 2021 Annual Report on Form 10-K.

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The Company's policy is to present its derivative assets and derivative liabilities on a gross basis in its consolidated balance sheets, and these are reported in other assets and other liabilities. Certain collateral posted to and from the Company's clearing counterparty has been applied to the fair values of the cleared swaps, such that at ~~March 31,~~September 30, 2022 in the table below, the positive fair values of cleared swaps were reduced by ~~$11.3 million and the negative fair values of cleared swaps were reduced by $5.5~~$30.7 million. At December 31, 2021, positive fair values of cleared swaps were reduced by $587 thousand and the negative fair values of cleared swaps were reduced by $29.7 million.


		Asset Derivatives				Liability Derivatives					Asset Derivatives				Liability Derivatives
		Mar. 31, 2022		Dec. 31, 2021		Mar. 31, 2022		Dec. 31, 2021			Sept. 30, 2022		Dec. 31, 2021		Sept. 30, 2022		Dec. 31, 2021
(In thousands)	(In thousands)	Fair Value				Fair Value				(In thousands)	Fair Value				Fair Value

Derivative instruments:
Derivatives designated as hedging instruments:										Derivatives designated as hedging instruments:
Interest rate floors										Interest rate floors	$	13,385	$	—	$	—	$	—
Total derivatives designated as hedging instruments										Total derivatives designated as hedging instruments	$	13,385	$	—	$	—	$	—
Derivative instruments not designated as hedging instruments:										Derivative instruments not designated as hedging instruments:
Interest rate swaps	Interest rate swaps	$	11,236	$	40,752	$	(17,075)	$	(11,606)	Interest rate swaps	$	22,256	$	40,752	$	(52,989)	$	(11,606)
Interest rate caps	Interest rate caps	1,137		147		(1,137)		(147)		Interest rate caps	2,524		147		(2,524)		(147)
Credit risk participation agreements	Credit risk participation agreements	68		84		(126)		(277)		Credit risk participation agreements	36		84		(94)		(277)
Foreign exchange contracts	Foreign exchange contracts	28		77		(11)		(45)		Foreign exchange contracts	191		77		(156)		(45)
Mortgage loan commitments	Mortgage loan commitments	302		764		(23)		—		Mortgage loan commitments	5		764		(5)		—
Mortgage loan forward sale contracts	Mortgage loan forward sale contracts	4		5		—		(1)		Mortgage loan forward sale contracts	5		5		—		(1)
Forward TBA contracts	Forward TBA contracts	355		13		(10)		(25)		Forward TBA contracts	58		13		—		(25)

Total derivatives not designated as hedging instruments										Total derivatives not designated as hedging instruments	$	25,075	$	41,842	$	(55,768)	$	(12,101)
Total	Total	$	13,130	$	41,842	$	(18,382)	$	(12,101)	Total	$	38,460	$	41,842	$	(55,768)	$	(12,101)

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The pre-tax effects of derivative instruments on the consolidated statements of income and consolidated statements of comprehensive income are shown in the tables below.


		Amount of Gain or (Loss) Recognized in OCI						Location of Gain (Loss) Reclassified from AOCI into Income	Amount of Gain (Loss) Reclassified from AOCI into Income							Amount of Gain or (Loss) Recognized in OCI						Location of Gain (Loss) Reclassified from AOCI into Income	Amount of Gain (Loss) Reclassified from AOCI into Income

(In thousands)	(In thousands)	Total		Included Component		Excluded Component			Total		Included Component		Excluded Component		(In thousands)	Total		Included Component		Excluded Component			Total		Included Component		Excluded Component
For the Three Months Ended March 31, 2022
For the Three Months Ended September 30, 2022															For the Three Months Ended September 30, 2022
Derivatives in cash flow hedging relationships:	Derivatives in cash flow hedging relationships:														Derivatives in cash flow hedging relationships:
Interest rate floors	Interest rate floors	$	—	$	—	$	—	Interest and fees on loans	$	(6,050)	$	(7,566)	$	1,516	Interest rate floors	$	(3,464)	$	—	$	(3,464)	Interest and fees on loans	$	(6,118)	$	(7,745)	$	1,627
Total	Total	$	—	$	—	$	—	Total	$	(6,050)	$	(7,566)	$	1,516	Total	$	(3,464)	$	—	$	(3,464)	Total	$	(6,118)	$	(7,745)	$	1,627

For the Three Months Ended March 31, 2021
For the Nine Months Ended September 30, 2022															For the Nine Months Ended September 30, 2022
Derivatives in cash flow hedging relationships:	Derivatives in cash flow hedging relationships:														Derivatives in cash flow hedging relationships:
Interest rate floors	Interest rate floors	$	—	$	—	$	—	Interest and fees on loans	$	(5,848)	$	(7,364)	$	1,516	Interest rate floors	$	(3,464)	$	—	$	(3,464)	Interest and fees on loans	$	(18,322)	$	(22,998)	$	4,676
Total	Total	$	—	$	—	$	—	Total	$	(5,848)	$	(7,364)	$	1,516	Total	$	(3,464)	$	—	$	(3,464)	Total	$	(18,322)	$	(22,998)	$	4,676

For the Three Months Ended September 30, 2021															For the Three Months Ended September 30, 2021
Derivatives in cash flow hedging relationships:															Derivatives in cash flow hedging relationships:
Interest rate floors															Interest rate floors	$	—	$	—	$	—	Interest and fees on loans	$	(6,141)	$	(7,691)	$	1,550
Total															Total	$	—	$	—	$	—	Total	$	(6,141)	$	(7,691)	$	1,550
For the Nine Months Ended September 30, 2021															For the Nine Months Ended September 30, 2021
Derivatives in cash flow hedging relationships:															Derivatives in cash flow hedging relationships:
Interest rate floors															Interest rate floors	$	—	$	—	$	—	Interest and fees on loans	$	(18,024)	$	(22,623)	$	4,599
Total															Total	$	—	$	—	$	—	Total	$	(18,024)	$	(22,623)	$	4,599


		Location of Gain or (Loss) Recognized in Consolidated Statements of Income		Amount of Gain or (Loss) Recognized in Income on Derivatives					Location of Gain or (Loss) Recognized in Consolidated Statements of Income	Amount of Gain or (Loss) Recognized in Income on Derivatives
			For the Three Months Ended March 31						For the Three Months Ended September 30					For the Nine Months Ended September 30
(In thousands)	(In thousands)			2022		2021		(In thousands)		2022		2021			2022		2021

Derivative instruments:	Derivative instruments:							Derivative instruments:
Interest rate swaps	Interest rate swaps	Other non-interest income		$	812	$	1,075	Interest rate swaps	Other non-interest income	$	88	$	24		$	1,770	$	1,974
Interest rate caps	Interest rate caps	Other non-interest income		16		15		Interest rate caps	Other non-interest income	—		—			16		15
Credit risk participation agreements	Credit risk participation agreements	Other non-interest income		(10)		365		Credit risk participation agreements	Other non-interest income	122		47			30		27
Foreign exchange contracts	Foreign exchange contracts	Other non-interest income		(14)		96		Foreign exchange contracts	Other non-interest income	3		(22)			3		62
Mortgage loan commitments	Mortgage loan commitments	Loan fees and sales		(485)		(1,372)		Mortgage loan commitments	Loan fees and sales	(230)		(309)			(764)		(1,716)
Mortgage loan forward sale contracts	Mortgage loan forward sale contracts	Loan fees and sales		—		39		Mortgage loan forward sale contracts	Loan fees and sales	5		(10)			1		18
Forward TBA contracts	Forward TBA contracts	Loan fees and sales		1,243		2,906		Forward TBA contracts	Loan fees and sales	117		(184)			1,783		1,676
Total	Total			$	1,562	$	3,124	Total		$	105	$	(454)		$	2,839	$	2,056

~~Table of Contents~~

The following table shows the extent to which assets and liabilities relating to derivative instruments have been offset in the consolidated balance sheets. It also provides information about these instruments which are subject to an enforceable master netting arrangement, irrespective of whether they are offset, and the extent to which the instruments could potentially be offset. Also shown is collateral received or pledged in the form of other financial instruments, which is generally cash or marketable securities. The collateral amounts in this table are limited to the outstanding balances of the related asset or liability (after netting is applied); thus, amounts of excess collateral are not shown. Most of the derivatives in the following table were transacted under master netting arrangements that contain a conditional right of offset, such as close-out netting, upon default.

While the Company is party to master netting arrangements with most of its swap derivative counterparties, the Company does not offset derivative assets and liabilities under these agreements on its consolidated balance sheets. Collateral exchanged between the Company and dealer bank counterparties is generally subject to thresholds and transfer minimums, and usually consists of marketable securities. By contract, these may be sold or re-pledged by the secured party until recalled at a

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subsequent valuation date by the pledging party. For those swap transactions requiring central clearing, the Company posts cash or securities to its clearing agent. Collateral positions are valued daily, and adjustments to amounts received and pledged by the Company are made as appropriate to maintain proper collateralization for these transactions. Swap derivative transactions with customers are generally secured by rights to non-financial collateral, such as real and personal property, which is not shown in the table below.


								Gross Amounts Not Offset in the Balance Sheet													Gross Amounts Not Offset in the Balance Sheet
(In thousands)	(In thousands)	Gross Amount Recognized		Gross Amounts Offset in the Balance Sheet		Net Amounts Presented in the Balance Sheet		Financial Instruments Available for Offset		Collateral Received/ Pledged		Net Amount		(In thousands)	Gross Amount Recognized		Gross Amounts Offset in the Balance Sheet		Net Amounts Presented in the Balance Sheet		Financial Instruments Available for Offset		Collateral Received/ Pledged		Net Amount
March 31, 2022
September 30, 2022														September 30, 2022
Assets:	Assets:													Assets:
Derivatives subject to master netting agreements	Derivatives subject to master netting agreements	$	12,805	$	—	$	12,805	$	(2,036)	$	(1,298)	$	9,471	Derivatives subject to master netting agreements	$	38,357	$	—	$	38,357	$	(113)	$	(35,763)	$	2,481
Derivatives not subject to master netting agreements	Derivatives not subject to master netting agreements	325		—		325								Derivatives not subject to master netting agreements	103		—		103
Total derivatives	Total derivatives	$	13,130	$	—	$	13,130							Total derivatives	$	38,460	$	—	$	38,460
Liabilities:	Liabilities:													Liabilities:
Derivatives subject to master netting agreements	Derivatives subject to master netting agreements	$	18,308	$	—	$	18,308	$	(2,036)	$	(1,035)	$	15,237	Derivatives subject to master netting agreements	$	55,681	$	—	$	55,681	$	(113)	$	—	$	55,568
Derivatives not subject to master netting agreements	Derivatives not subject to master netting agreements	74		—		74								Derivatives not subject to master netting agreements	87		—		87
Total derivatives	Total derivatives	$	18,382	$	—	$	18,382							Total derivatives	$	55,768	$	—	$	55,768
December 31, 2021	December 31, 2021													December 31, 2021
Assets:	Assets:													Assets:
Derivatives subject to master netting agreements	Derivatives subject to master netting agreements	$	40,970	$	—	$	40,970	$	(347)	$	—	$	40,623	Derivatives subject to master netting agreements	$	40,970	$	—	$	40,970	$	(347)	$	—	$	40,623
Derivatives not subject to master netting agreements	Derivatives not subject to master netting agreements	872		—		872								Derivatives not subject to master netting agreements	872		—		872
Total derivatives	Total derivatives	$	41,842	$	—	$	41,842							Total derivatives	$	41,842	$	—	$	41,842
Liabilities:	Liabilities:													Liabilities:
Derivatives subject to master netting agreements	Derivatives subject to master netting agreements	$	12,019	$	—	$	12,019	$	(347)	$	(10,146)	$	1,526	Derivatives subject to master netting agreements	$	12,019	$	—	$	12,019	$	(347)	$	(10,146)	$	1,526
Derivatives not subject to master netting agreements	Derivatives not subject to master netting agreements	82		—		82								Derivatives not subject to master netting agreements	82		—		82
Total derivatives	Total derivatives	$	12,101	$	—	$	12,101							Total derivatives	$	12,101	$	—	$	12,101

12. Resale and Repurchase Agreements

The Company regularly enters into resale and repurchase agreement transactions with other financial institutions and with its own customers. Resale and repurchase agreements are agreements to purchase/sell securities subject to an obligation to resell/repurchase the same or similar securities. They are accounted for as secured lending and collateralized borrowing (e.g. financing transactions), not as true sales and purchases of the underlying collateral securities. Some of the resale and repurchase agreements were transacted under master netting arrangements that contain a conditional right of offset, such as

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close-out netting, upon default. The security collateral accepted or pledged in resale and repurchase agreements with other financial institutions may be sold or re-pledged by the secured party, but is usually delivered to and held by third party trustees. The Company generally retains custody of securities pledged for repurchase agreements with its customers.

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The Company is party to agreements commonly known as collateral swaps. These agreements involve the exchange of collateral under simultaneous repurchase and resale agreements with the same financial institution counterparty. These repurchase and resale agreements have the same principal amounts, inception dates, and maturity dates and have been offset against each other in the consolidated balance sheets, as permitted under the netting provisions of ASC 210-20-45. The collateral swaps totaled $200.0 million at ~~March 31,~~September 30, 2022 and $400.0 million at December 31, 2021.

The following table shows the extent to which resale agreement assets and repurchase agreement liabilities with the same counterparty have been offset on the consolidated balance sheets, in addition to the extent to which they could potentially be offset. Also shown is collateral received or pledged, which consists of marketable securities. The collateral amounts in the table are limited to the outstanding balances of the related asset or liability (after offsetting is applied); thus amounts of excess collateral are not shown.


								Gross Amounts Not Offset in the Balance Sheet													Gross Amounts Not Offset in the Balance Sheet
(In thousands)	(In thousands)	Gross Amount Recognized		Gross Amounts Offset in the Balance Sheet		Net Amounts Presented in the Balance Sheet		Financial Instruments Available for Offset		Securities Collateral Received/Pledged		Unsecured Amount		(In thousands)	Gross Amount Recognized		Gross Amounts Offset in the Balance Sheet		Net Amounts Presented in the Balance Sheet		Financial Instruments Available for Offset		Securities Collateral Received/Pledged		Unsecured Amount
March 31, 2022
September 30, 2022														September 30, 2022
Total resale agreements, subject to master netting arrangements	Total resale agreements, subject to master netting arrangements	$	2,025,000	$	(200,000)	$	1,825,000	$	—	$	(1,825,000)	$	—	Total resale agreements, subject to master netting arrangements	$	1,475,000	$	(200,000)	$	1,275,000	$	—	$	(1,275,000)	$	—
Total repurchase agreements, subject to master netting arrangements	Total repurchase agreements, subject to master netting arrangements	2,500,146		(200,000)		2,300,146		—		(2,300,146)		—		Total repurchase agreements, subject to master netting arrangements	2,203,390		(200,000)		2,003,390		—		(2,003,390)		—
December 31, 2021	December 31, 2021													December 31, 2021
Total resale agreements, subject to master netting arrangements	Total resale agreements, subject to master netting arrangements	$	2,025,000	$	(400,000)	$	1,625,000	$	—	$	(1,625,000)	$	—	Total resale agreements, subject to master netting arrangements	$	2,025,000	$	(400,000)	$	1,625,000	$	—	$	(1,625,000)	$	—
Total repurchase agreements, subject to master netting arrangements	Total repurchase agreements, subject to master netting arrangements	3,379,582		(400,000)		2,979,582		—		(2,979,582)		—		Total repurchase agreements, subject to master netting arrangements	3,379,582		(400,000)		2,979,582		—		(2,979,582)		—

The table below shows the remaining contractual maturities of repurchase agreements outstanding at ~~March 31,~~September 30, 2022 and December 31, 2021, in addition to the various types of marketable securities that have been pledged by the Company as collateral for these borrowings.


		Remaining Contractual Maturity of the Agreements									Remaining Contractual Maturity of the Agreements
(In thousands)	(In thousands)	Overnight and continuous		Up to 90 days		Greater than 90 days		Total		(In thousands)	Overnight and continuous		Up to 90 days		Greater than 90 days		Total
March 31, 2022
September 30, 2022										September 30, 2022
Repurchase agreements, secured by:	Repurchase agreements, secured by:									Repurchase agreements, secured by:
U.S. government and federal agency obligations	U.S. government and federal agency obligations	$	353,708	$	23,631	$	6,258	$	383,597	U.S. government and federal agency obligations	$	420,541	$	8,759	$	21,828	$	451,128

Agency mortgage-backed securities	Agency mortgage-backed securities	1,572,433		1,207		209,245		1,782,885		Agency mortgage-backed securities	1,178,459		20,721		202,859		1,402,039
Non-agency mortgage-backed securities	Non-agency mortgage-backed securities	24,953		—		—		24,953		Non-agency mortgage-backed securities	42,141		—		—		42,141
Asset-backed securities	Asset-backed securities	290,783		—		—		290,783		Asset-backed securities	296,075		—		—		296,075
Other debt securities	Other debt securities	17,928		—		—		17,928		Other debt securities	12,007		—		—		12,007
Total repurchase agreements, gross amount recognized	Total repurchase agreements, gross amount recognized	$	2,259,805	$	24,838	$	215,503	$	2,500,146	Total repurchase agreements, gross amount recognized	$	1,949,223	$	29,480	$	224,687	$	2,203,390
December 31, 2021	December 31, 2021									December 31, 2021
Repurchase agreements, secured by:	Repurchase agreements, secured by:									Repurchase agreements, secured by:
U.S. government and federal agency obligations	U.S. government and federal agency obligations	$	600,866	$	33,373	$	9,259	$	643,498	U.S. government and federal agency obligations	$	600,866	$	33,373	$	9,259	$	643,498

Agency mortgage-backed securities	Agency mortgage-backed securities	1,844,652		3,908		400,250		2,248,810		Agency mortgage-backed securities	1,844,652		3,908		400,250		2,248,810
Non-agency mortgage-backed securities	Non-agency mortgage-backed securities	32,299		—		—		32,299		Non-agency mortgage-backed securities	32,299		—		—		32,299
Asset-backed securities	Asset-backed securities	422,525		—		—		422,525		Asset-backed securities	422,525		—		—		422,525
Other debt securities	Other debt securities	32,450		—		—		32,450		Other debt securities	32,450		—		—		32,450
Total repurchase agreements, gross amount recognized	Total repurchase agreements, gross amount recognized	$	2,932,792	$	37,281	$	409,509	$	3,379,582	Total repurchase agreements, gross amount recognized	$	2,932,792	$	37,281	$	409,509	$	3,379,582

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13. Stock-Based Compensation

The Company issues stock-based compensation in the form of nonvested restricted stock and stock appreciation rights (SARs). Historically, most of the awards have been issued during the first quarter of each year. The stock-based compensation expense ~~that has been~~ charged against income was $4.2 million and $3.9 million in the three months ended ~~March 31,~~September 30, 2022 and 2021, respectively, and $12.6 million and $11.6 million in the nine months ended September 30, 2022 and 2021, respectively.

Nonvested stock awards granted generally vest in 4 to 7 years and contain restrictions as to transferability, sale, pledging, or assigning, among others, prior to the end of the vesting period. Dividend and voting rights are conferred upon grant. A summary of the status of the Company’s nonvested share awards as of ~~March 31,~~September 30, 2022, and changes during the ~~three~~nine month period then ended, is presented below.


		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Nonvested at January 1, 2022	Nonvested at January 1, 2022	1,120,491	$55.58	Nonvested at January 1, 2022	1,120,491	$55.58
Granted	Granted	225,152	70.92	Granted	263,497	70.76
Vested	Vested	(238,899)	47.60	Vested	(262,579)	47.78
Forfeited	Forfeited	(3,088)	55.13	Forfeited	(23,145)	60.08

Nonvested at March 31, 2022		1,103,656	$60.44
Nonvested at September 30, 2022				Nonvested at September 30, 2022	1,098,264	$61.00

SARs are granted with exercise prices equal to the market price of the Company’s stock at the date of grant. SARs vest ratably over 4 years of continuous service and have contractual terms of 10 years. All SARs must be settled in stock under provisions of the plan. In determining compensation cost, the Black-Scholes option-pricing model is used to estimate the fair value of SARs on date of grant. The current year per share average fair value and the model assumptions are shown in the table below.


Weighted per share average fair value at grant date	$17.42
Assumptions:
Dividend yield	1.5	%
Volatility	28.4	%
Risk-free interest rate	1.6	%
Expected term	5.7 years

A summary of SAR activity during the first ~~three~~nine months of 2022 is presented below.


(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	Rights	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value		(Dollars in thousands, except per share data)	Rights	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2022	Outstanding at January 1, 2022	896,348	$	46.21				Outstanding at January 1, 2022	896,348	$	46.21
Granted	Granted	96,318	70.64					Granted	96,318	70.64
Forfeited	Forfeited	(1,797)	58.26					Forfeited	(8,135)	61.68
Expired	Expired	(257)	57.18					Expired	(2,350)	56.68
Exercised	Exercised	(23,137)	44.54					Exercised	(66,608)	40.54
Outstanding at March 31, 2022		967,475	$	48.65	6.0 years	$	22,190
Outstanding at September 30, 2022								Outstanding at September 30, 2022	915,573	$	49.02	5.5 years	$	16,367

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14. Revenue from Contracts with Customers

~~Revenue~~ASC 606 "Revenue from ~~contracts~~Contracts with ~~customers is recognized to reflect~~Customers" requires revenue recognition for 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. For the ~~three~~nine months ended ~~March 31,~~September 30, 2022, approximately ~~61%~~63% of the Company’s total revenue was comprised of net interest income, which is not within the scope of this guidance. Of the remaining revenue, those items that were subject to this guidance mainly included fees for bank card, trust, deposit account services and consumer brokerage services.

The following table disaggregates non-interest income subject to ASC 606 by major product line.


		Three Months Ended March 31					Three Months Ended September 30						Nine Months Ended September 30
(In thousands)	(In thousands)		2022		2021			(In thousands)	2022		2021			2022		2021
Bank card transaction fees	Bank card transaction fees		$	42,045	$	37,695		Bank card transaction fees	$	45,638	$	42,815		$	131,556	$	123,118
Trust fees	Trust fees		47,811		44,127			Trust fees	45,406		48,950			140,009		139,334
Deposit account charges and other fees	Deposit account charges and other fees		22,307		22,575			Deposit account charges and other fees	24,521		25,161			72,392		71,724
Consumer brokerage services	Consumer brokerage services		4,446		4,081			Consumer brokerage services	5,085		4,900			14,599		13,484
Other non-interest income	Other non-interest income		4,495		7,696			Other non-interest income	9,360		2,510			24,605		17,168
Total non-interest income from contracts with customers	Total non-interest income from contracts with customers		121,104		116,174			Total non-interest income from contracts with customers	130,010		124,336			383,161		364,828
Other non-interest income (1)	Other non-interest income (1)		10,665		19,871			Other non-interest income (1)	8,504		13,170			26,549		47,866
Total non-interest income	Total non-interest income		$	131,769	$	136,045		Total non-interest income	$	138,514	$	137,506		$	409,710	$	412,694

(1) This revenue is not within the scope of ASC 606, and includes fees relating to capital market activities, loan fees and sales, derivative instruments, standby letters of credit and various other transactions.

For bank card transaction fees, ~~the majority~~nearly all of debit and credit card fees are earned in the Consumer segment, while corporate card and merchant fees are earned in the Commercial segment. The Consumer and Commercial segments contribute approximately ~~39%~~41% and ~~60%~~58%, respectively, of the Company's deposit account charge revenue. All trust fees and nearly all consumer brokerage services income are earned in the Wealth segment.

The following table presents the opening and closing receivable balances for the ~~three~~nine month periods ended ~~March 31,~~September 30, 2022 and 2021 for the Company’s significant revenue categories subject to ASC 606.


(In thousands)	(In thousands)	March 31, 2022		December 31, 2021		March 31, 2021		December 31, 2020		(In thousands)	September 30, 2022		December 31, 2021		September 30, 2021		December 31, 2020
Bank card transaction fees	Bank card transaction fees	$	14,171	$	16,424	$	12,437	$	14,199	Bank card transaction fees	$	14,167	$	16,424	$	13,349	$	14,199
Trust fees	Trust fees	2,094		2,222		2,017		2,071		Trust fees	2,073		2,222		2,211		2,071
Deposit account charges and other fees	Deposit account charges and other fees	5,452		6,702		5,281		6,933		Deposit account charges and other fees	5,658		6,702		5,969		6,933
Consumer brokerage services	Consumer brokerage services	324		391		323		432		Consumer brokerage services	632		391		513		432

For these revenue categories, none of the transaction price has been allocated to performance obligations that are unsatisfied as of the end of a reporting period.

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15. Fair Value Measurements

The Company uses fair value measurements to record fair value adjustments to certain financial and nonfinancial assets and liabilities and to determine fair value disclosures. Various financial instruments such as available for sale debt securities, equity securities, trading debt securities, certain investments relating to private equity activities, and derivatives are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets and liabilities on a nonrecurring basis, such as mortgage servicing rights and certain other investment securities. These nonrecurring fair value adjustments typically involve lower of cost or fair value accounting or write-downs of individual assets.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating fair value. For accounting disclosure purposes, a three-level valuation hierarchy of fair value measurements has been established. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

•Level 1 – inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

•Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and inputs that are observable for the assets or liabilities, either directly or indirectly (such as interest rates, yield curves, and prepayment speeds).

•Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value. These may be internally developed, using the Company’s best information and assumptions that a market participant would consider.

The valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis are described in the Fair Value Measurements note in the Company's 2021 Annual Report on Form 10-K. There have been no significant changes in these methodologies since then.

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Instruments Measured at Fair Value on a Recurring Basis

The table below presents the ~~March 31,~~September 30, 2022 and December 31, 2021 carrying values of assets and liabilities measured at fair value on a recurring basis. There were no transfers among levels during the first ~~three~~nine months of 2022 or the year ended December 31, 2021.


				Fair Value Measurements Using									Fair Value Measurements Using
(In thousands)	(In thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		(In thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2022
September 30, 2022										September 30, 2022
Assets:	Assets:									Assets:
Residential mortgage loans held for sale	Residential mortgage loans held for sale	$	3,901	$	—	$	3,901	$	—	Residential mortgage loans held for sale	$	1,426	$	—	$	1,426	$	—
Available for sale debt securities:	Available for sale debt securities:									Available for sale debt securities:
U.S. government and federal agency obligations	U.S. government and federal agency obligations	1,129,961		1,129,961		—		—		U.S. government and federal agency obligations	1,036,325		1,036,325		—		—
Government-sponsored enterprise obligations	Government-sponsored enterprise obligations	51,390		—		51,390		—		Government-sponsored enterprise obligations	43,175		—		43,175		—
State and municipal obligations	State and municipal obligations	2,072,265		—		2,070,363		1,902		State and municipal obligations	1,803,253		—		1,801,395		1,858
Agency mortgage-backed securities	Agency mortgage-backed securities	5,441,374		—		5,441,374		—		Agency mortgage-backed securities	4,445,519		—		4,445,519		—
Non-agency mortgage-backed securities	Non-agency mortgage-backed securities	1,435,363		—		1,435,363		—		Non-agency mortgage-backed securities	1,235,584		—		1,235,584		—
Asset-backed securities	Asset-backed securities	4,011,361		—		4,011,361		—		Asset-backed securities	3,558,287		—		3,558,287		—
Other debt securities	Other debt securities	638,780		—		638,780		—		Other debt securities	510,367		—		510,367		—
Trading debt securities	Trading debt securities	31,380		—		31,380		—		Trading debt securities	39,222		—		39,222		—
Equity securities	Equity securities	6,866		6,866		—		—		Equity securities	6,106		6,106		—		—
Private equity investments	Private equity investments	153,411		—		—		153,411		Private equity investments	176,341		—		—		176,341
Derivatives *	Derivatives *	13,130		—		12,760		370		Derivatives *	38,460		—		38,419		41
Assets held in trust for deferred compensation plan	Assets held in trust for deferred compensation plan	20,403		20,403		—		—		Assets held in trust for deferred compensation plan	16,588		16,588		—		—
Total assets	Total assets	15,009,585		1,157,230		13,696,672		155,683		Total assets	12,910,653		1,059,019		11,673,394		178,240
Liabilities:	Liabilities:									Liabilities:
Derivatives *	Derivatives *	18,382		—		18,233		149		Derivatives *	55,768		—		55,669		99
Liabilities held in trust for deferred compensation plan	Liabilities held in trust for deferred compensation plan	20,403		20,403		—		—		Liabilities held in trust for deferred compensation plan	16,588		16,588		—		—
Total liabilities	Total liabilities	$	38,785	$	20,403	$	18,233	$	149	Total liabilities	$	72,356	$	16,588	$	55,669	$	99
December 31, 2021	December 31, 2021									December 31, 2021
Assets:	Assets:									Assets:
Residential mortgage loans held for sale	Residential mortgage loans held for sale	$	5,570	$	—	$	5,570	$	—	Residential mortgage loans held for sale	$	5,570	$	—	$	5,570	$	—
Available for sale debt securities:	Available for sale debt securities:									Available for sale debt securities:
U.S. government and federal agency obligations	U.S. government and federal agency obligations	1,080,720		1,080,720		—		—		U.S. government and federal agency obligations	1,080,720		1,080,720		—		—
Government-sponsored enterprise obligations	Government-sponsored enterprise obligations	51,755		—		51,755		—		Government-sponsored enterprise obligations	51,755		—		51,755		—
State and municipal obligations	State and municipal obligations	2,096,827		—		2,094,843		1,984		State and municipal obligations	2,096,827		—		2,094,843		1,984
Agency mortgage-backed securities	Agency mortgage-backed securities	5,683,000		—		5,683,000		—		Agency mortgage-backed securities	5,683,000		—		5,683,000		—
Non-agency mortgage-backed securities	Non-agency mortgage-backed securities	1,366,477		—		1,366,477		—		Non-agency mortgage-backed securities	1,366,477		—		1,366,477		—
Asset-backed securities	Asset-backed securities	3,539,219		—		3,539,219		—		Asset-backed securities	3,539,219		—		3,539,219		—
Other debt securities	Other debt securities	632,029		—		632,029		—		Other debt securities	632,029		—		632,029		—
Trading debt securities	Trading debt securities	46,235		—		46,235		—		Trading debt securities	46,235		—		46,235		—
Equity securities	Equity securities	7,153		7,153		—		—		Equity securities	7,153		7,153		—		—
Private equity investments	Private equity investments	147,406		—		—		147,406		Private equity investments	147,406		—		—		147,406
Derivatives *	Derivatives *	41,842		—		40,994		848		Derivatives *	41,842		—		40,994		848
Assets held in trust for deferred compensation plan	Assets held in trust for deferred compensation plan	21,794		21,794		—		—		Assets held in trust for deferred compensation plan	21,794		21,794		—		—
Total assets	Total assets	14,720,027		1,109,667		13,460,122		150,238		Total assets	14,720,027		1,109,667		13,460,122		150,238
Liabilities:	Liabilities:									Liabilities:
Derivatives *	Derivatives *	12,101		—		11,824		277		Derivatives *	12,101		—		11,824		277
Liabilities held in trust for deferred compensation plan	Liabilities held in trust for deferred compensation plan	21,794		21,794		—		—		Liabilities held in trust for deferred compensation plan	21,794		21,794		—		—
Total liabilities	Total liabilities	$	33,895	$	21,794	$	11,824	$	277	Total liabilities	$	33,895	$	21,794	$	11,824	$	277

* The fair value of each class of derivative is shown in Note 11.

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The changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows:


		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)									Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(In thousands)	(In thousands)	State and Municipal Obligations		Private Equity Investments		Derivatives		Total		(In thousands)	State and Municipal Obligations		Private Equity Investments		Derivatives		Total
For the three months ended September 30, 2022										For the three months ended September 30, 2022
Balance June 30, 2022										Balance June 30, 2022	$	1,816	$	161,771	$	154	$	163,741
Total gains or losses (realized/unrealized):										Total gains or losses (realized/unrealized):
Included in earnings										Included in earnings	—		14,050		(108)		13,942
Included in other comprehensive income *										Included in other comprehensive income *	40		—		—		40

Discount accretion										Discount accretion	2		—		—		2
Purchases of private equity investments										Purchases of private equity investments	—		899		—		899
Sale/pay down of private equity investments										Sale/pay down of private equity investments	—		(423)		—		(423)
Capitalized interest/dividends										Capitalized interest/dividends	—		44		—		44

For the three months ended March 31, 2022
Sale of risk participation agreements										Sale of risk participation agreements	—		—		(104)		(104)
Balance September 30, 2022										Balance September 30, 2022	$	1,858	$	176,341	$	(58)	$	178,141
Total gains or losses for the three months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2022										Total gains or losses for the three months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2022	$	—	$	14,050	$	122	$	14,172
*Total gains or losses for the three months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2022										*Total gains or losses for the three months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2022	$	40	$	—	$	—	$	40
For the nine months ended September 30, 2022										For the nine months ended September 30, 2022
Balance January 1, 2022	Balance January 1, 2022	$	1,984	$	147,406	$	571	$	149,961	Balance January 1, 2022	$	1,984	$	147,406	$	571	$	149,961
Total gains or losses (realized/unrealized):	Total gains or losses (realized/unrealized):									Total gains or losses (realized/unrealized):
Included in earnings	Included in earnings	—		7,450		(495)		6,955		Included in earnings	—		37,133		(734)		36,399
Included in other comprehensive income *	Included in other comprehensive income *	(83)		—		—		(83)		Included in other comprehensive income *	(130)		—		—		(130)

Discount accretion	Discount accretion	1		—		—		1		Discount accretion	4		—		—		4
Purchases of private equity investments	Purchases of private equity investments	—		300		—		300		Purchases of private equity investments	—		2,021		—		2,021
Sale/pay down of private equity investments	Sale/pay down of private equity investments	—		(1,745)		—		(1,745)		Sale/pay down of private equity investments	—		(10,263)		—		(10,263)

Capitalized interest/dividends										Capitalized interest/dividends	—		44		—		44
Purchase of risk participation agreement	Purchase of risk participation agreement	—		—		145		145		Purchase of risk participation agreement	—		—		459		459

Balance March 31, 2022		$	1,902	$	153,411	$	221	$	155,534
Total gains or losses for the three months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2022		$	—	$	7,450	$	267	$	7,717
*Total gains or losses for the three months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2022		$	(83)	$	—	$	—	$	(83)
Sale of risk participation agreement										Sale of risk participation agreement	—		—		(354)		(354)
Balance September 30, 2022										Balance September 30, 2022	$	1,858	$	176,341	$	(58)	$	178,141
Total gains or losses for the nine months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2022										Total gains or losses for the nine months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2022	$	—	$	37,083	$	28	$	37,111
*Total gains or losses for the nine months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2022										*Total gains or losses for the nine months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2022	$	(130)	$	—	$	—	$	(130)

For the three months ended March 31, 2021
Balance January 1, 2021 $ 7,968 $ 94,368 $ 2,741 $ 105,077
Total gains or losses (realized/unrealized):
Included in earnings — 8,365 (1,007) 7,358
Included in other comprehensive income * (1) — — (1)
Discount accretion 3 — — 3
Sale/pay down of private equity investments — (8,476) — (8,476)
Sale of risk participation agreement — — (98) (98)
Balance March 31, 2021 $ 7,970 $ 94,257 $ 1,636 $ 103,863
Total gains or losses for the three months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2021 $ — $ 8,365 $ 2,050 $ 10,415
*Total gains or losses for the three months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2021 $ (1) $ — $ — $ (1)

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	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(In thousands)	State and Municipal Obligations		Private Equity Investments		Derivatives		Total
For the three months ended September 30, 2021
Balance June 30, 2021	$	7,991	$	116,246	$	1,629	$	125,866
Total gains or losses (realized/unrealized):
Included in earnings	—		12,971		(262)		12,709
Included in other comprehensive income *	(175)		—		—		(175)
Investment securities called	(6,000)		—		—		(6,000)
Discount accretion	179		—		—		179
Purchases of private equity investments	—		8,835		—		8,835



Sale of risk participation agreement	—		—		(27)		(27)
Balance September 30, 2021	$	1,995	$	138,052	$	1,340	$	141,387
Total gains or losses for the three months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2021	$	—	$	12,971	$	1,557	$	14,528
*Total gains or losses for the three months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2021	$	2	$	—	$	—	$	2
For the nine months ended September 30, 2021
Balance January 1, 2021	$	7,968	$	94,368	$	2,741	$	105,077
Total gains or losses (realized/unrealized):
Included in earnings	—		38,002		(1,689)		36,313
Included in other comprehensive income *	(158)		—		—		(158)
Investment securities called	(6,000)		—		—		(6,000)
Discount accretion	185		—		—		185
Purchases of private equity investments	—		14,491		—		14,491
Sale/pay down of private equity investments	—		(8,832)		—		(8,832)
Capitalized interest/dividends	—		23		—		23
Purchase of risk participation agreement	—		—		445		445
Sale of risk participation agreement	—		—		(157)		(157)
Balance September 30, 2021	$	1,995	$	138,052	$	1,340	$	141,387
Total gains or losses for the nine months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2021	$	—	$	38,002	$	1,367	$	39,369
*Total gains or losses for the nine months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2021	$	23	$	—	$	—	$	23

* Included in "net unrealized gains (losses) on ~~other~~available for sale debt securities" in the consolidated statements of comprehensive income.

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Gains and losses included in earnings for the Level 3 assets and liabilities in the previous table are reported in the following line items in the consolidated statements of income:

(In thousands) Loan Fees and Sales Other Non-Interest Income Investment Securities Gains (Losses), Net Total
For the three months ended March 31, 2022
Total gains or losses included in earnings $ (485) $ (10) $ 7,450 $ 6,955
Change in unrealized gains or losses relating to assets still held at March 31, 2022 $ 279 $ (12) $ 7,450 $ 7,717
For the three months ended March 31, 2021
Total gains or losses included in earnings $ (1,372) $ 365 $ 8,365 $ 7,358
Change in unrealized gains or losses relating to assets still held at March 31, 2021 $ 1,855 $ 195 $ 8,365 $ 10,415


(In thousands)	Loan Fees and Sales		Other Non-Interest Income		Investment Securities Gains (Losses), Net		Total
For the three months ended September 30, 2022
Total gains or losses included in earnings	$	(230)	$	122	$	14,050	$	13,942
Change in unrealized gains or losses relating to assets still held at September 30, 2022	$	—	$	122	$	14,050	$	14,172
For the nine months ended September 30, 2022
Total gains or losses included in earnings	$	(764)	$	30	$	37,133	$	36,399
Change in unrealized gains or losses relating to assets still held at September 30, 2022	$	—	$	28	$	37,083	$	37,111
For the three months ended September 30, 2021
Total gains or losses included in earnings	$	(309)	$	47	$	12,971	$	12,709
Change in unrealized gains or losses relating to assets still held at September 30, 2021	$	1,510	$	47	$	12,971	$	14,528
For the nine months ended September 30, 2021
Total gains or losses included in earnings	$	(1,716)	$	27	$	38,002	$	36,313
Change in unrealized gains or losses relating to assets still held at September 30, 2021	$	1,510	$	(143)	$	38,002	$	39,369

Level 3 Inputs

The Company's significant Level 3 measurements, which employ unobservable inputs that are readily quantifiable, pertain to auction rate securities (ARS), investments in portfolio concerns held by the Company's private equity subsidiaries, and held for sale residential mortgage loan commitments. ARS are included in state and municipal securities and totaled $1.9 million at ~~March 31,~~September 30, 2022, while private equity investments, included in other securities, totaled ~~$153.4~~$176.3 million.

~~Table of Contents~~

Information about these inputs is presented in the table below.


Quantitative Information about Level 3 Fair Value Measurements	Quantitative Information about Level 3 Fair Value Measurements						Weighted	Quantitative Information about Level 3 Fair Value Measurements						Weighted
		Valuation Technique	Unobservable Input	Range			Average*		Valuation Technique	Unobservable Input	Range			Average*
Auction rate securities	Auction rate securities	Discounted cash flow	Estimated market recovery period			5 years	5 years	Auction rate securities	Discounted cash flow	Estimated market recovery period			5 years	5 years
			Estimated market rate	2.5%	-	3.0%	2.8%			Estimated market rate	5.8%	-	6.5%	6.1%
Private equity investments	Private equity investments	Market comparable companies	EBITDA multiple	4.0	-	6.0	5.4	Private equity investments	Market comparable companies	EBITDA multiple	4.0	-	7.0	5.5
Mortgage loan commitments	Mortgage loan commitments	Discounted cash flow	Probability of funding	68.2%	-	100.0%	90.2%	Mortgage loan commitments	Discounted cash flow	Probability of funding	87.7%	-	100.0%	91.1%
			Embedded servicing value	—%	-	1.4%	1.1%			Embedded servicing value	1.0%	-	1.5%	1.3%

* Unobservable inputs were weighted by the relative fair value of the instruments.

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Instruments Measured at Fair Value on a Nonrecurring Basis

For assets measured at fair value on a nonrecurring basis during the first ~~three~~nine months of 2022 and 2021, and still held as of ~~March 31,~~September 30, 2022 and 2021, the following table provides the adjustments to fair value recognized during the respective periods, the level of valuation inputs used to determine each adjustment, and the carrying value of the related individual assets or portfolios at ~~March 31,~~September 30, 2022 and 2021.


				Fair Value Measurements Using											Fair Value Measurements Using
(In thousands)	(In thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses) Recognized During the Three Months Ended March 31		(In thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses) Recognized During the Nine Months Ended September 30
March 31, 2022

September 30, 2022												September 30, 2022
Collateral dependent loans												Collateral dependent loans	$	200	$	—	$	—	$	200	$	(394)

Mortgage servicing rights	Mortgage servicing rights	11,360		—		—		11,360		304		Mortgage servicing rights	11,228		—		—		11,228		304

Long-lived assets	Long-lived assets	497		—		—		497		(965)		Long-lived assets	480		—		—		480		(965)

March 31, 2021
September 30, 2021												September 30, 2021
Collateral dependent loans	Collateral dependent loans	$	11,233	$	—	$	—	$	11,233	$	(2,926)	Collateral dependent loans	$	2,057	$	—	$	—	$	2,057	$	(349)

Mortgage servicing rights	Mortgage servicing rights	8,234		—		—		8,234		1,055		Mortgage servicing rights	9,774		—		—		9,774		1,120

Long- lived assets												Long- lived assets	1,393		—		—		1,393		(726)

The Company's significant Level 3 measurements that are measured on a nonrecurring basis pertain to the Company's mortgage servicing rights retained on certain fixed rate personal real estate loan originations. Mortgage servicing rights are included in other intangible assets-net on the consolidated balance sheets, and information about these inputs at September 30, 2022 is presented in the table below.


Quantitative Information about Level 3 Fair Value Measurements	Quantitative Information about Level 3 Fair Value Measurements										Weighted			Quantitative Information about Level 3 Fair Value Measurements										Weighted
		Valuation Technique	Unobservable Input	Range							Average*				Valuation Technique	Unobservable Input	Range							Average*
Mortgage servicing rights	Mortgage servicing rights	Discounted cash flow	Discount rate	9.01		%	-	9.34		%	9.12		%	Mortgage servicing rights	Discounted cash flow	Discount rate	9.51		%	-	9.81		%	9.61		%
			Prepayment speeds (CPR)*	6.22		%	-	9.41		%	6.65		%			Prepayment speeds (CPR)*	6.25		%	-	6.53		%	6.32		%
			Loan servicing costs - annually per loan													Loan servicing costs - annually per loan
			Performing loans	$	70		-	$	72		$	71				Performing loans	$	70		-	$	72		$	71
			Delinquent loans	$	200		-	$	750							Delinquent loans	$	200		-	$	750
			Loans in foreclosure	$	1,000											Loans in foreclosure	$	1,000

*Ranges and weighted averages based on interest rate tranches.

The significant unobservable inputs used in the fair value measurement of the Company’s mortgage servicing rights are updated periodically for changes in market conditions. Actual rates may differ from our estimates. Increases in prepayment speed and discount rates negatively impact the fair value of our mortgage servicing rights.

~~Table of Contents~~

16. Fair Value of Financial Instruments

The carrying amounts and estimated fair values of financial instruments held by the Company are set forth below. Fair value estimates are made at a specific point in time based on relevant market information. They do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for many of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, risk characteristics and economic conditions. These estimates are subjective, involve uncertainties, and cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Table of Contents

The estimated fair values of the Company’s financial instruments and the classification of their fair value measurement within the valuation hierarchy are as follows at ~~March 31,~~September 30, 2022 and December 31, 2021:


		Carrying Amount		Estimated Fair Value at March 31, 2022									Carrying Amount		Estimated Fair Value at September 30, 2022
(In thousands)	(In thousands)			Level 1		Level 2		Level 3		Total		(In thousands)			Level 1		Level 2		Level 3		Total
Financial Assets	Financial Assets											Financial Assets
Loans:	Loans:											Loans:
Business	Business	$	5,508,508	$	—	$	—	$	5,406,516	$	5,406,516	Business	$	5,528,895	$	—	$	—	$	5,384,563	$	5,384,563
Real estate - construction and land	Real estate - construction and land	1,144,411		—		—		1,129,894		1,129,894		Real estate - construction and land	1,206,955		—		—		1,191,317		1,191,317
Real estate - business	Real estate - business	3,109,668		—		—		3,059,118		3,059,118		Real estate - business	3,331,627		—		—		3,214,321		3,214,321
Real estate - personal	Real estate - personal	2,820,076		—		—		2,777,860		2,777,860		Real estate - personal	2,862,519		—		—		2,628,213		2,628,213
Consumer	Consumer	2,053,160		—		—		2,043,692		2,043,692		Consumer	2,116,371		—		—		2,072,740		2,072,740
Revolving home equity	Revolving home equity	264,401		—		—		261,985		261,985		Revolving home equity	286,026		—		—		282,993		282,993
Consumer credit card	Consumer credit card	544,579		—		—		508,944		508,944		Consumer credit card	563,349		—		—		525,940		525,940
Overdrafts	Overdrafts	14,211		—		—		13,985		13,985		Overdrafts	3,216		—		—		3,160		3,160
Total loans	Total loans	15,459,014		—		—		15,201,994		15,201,994		Total loans	15,898,958		—		—		15,303,247		15,303,247
Loans held for sale	Loans held for sale	8,908		—		8,908		—		8,908		Loans held for sale	8,062		—		8,062		—		8,062

Investment securities	Investment securities	15,016,882		1,136,827		13,680,011		200,044		15,016,882		Investment securities	12,899,146		1,042,431		11,633,549		223,166		12,899,146

Federal funds sold												Federal funds sold	14,020		14,020		—		—		14,020
Securities purchased under agreements to resell	Securities purchased under agreements to resell	1,825,000		—		—		1,801,227		1,801,227		Securities purchased under agreements to resell	1,275,000		—		—		1,243,913		1,243,913
Interest earning deposits with banks	Interest earning deposits with banks	1,260,813		1,260,813		—		—		1,260,813		Interest earning deposits with banks	642,943		642,943		—		—		642,943
Cash and due from banks	Cash and due from banks	326,549		326,549		—		—		326,549		Cash and due from banks	344,178		344,178		—		—		344,178
Derivative instruments	Derivative instruments	13,130		—		12,760		370		13,130		Derivative instruments	38,460		—		38,419		41		38,460
Assets held in trust for deferred compensation plan	Assets held in trust for deferred compensation plan	20,403		20,403		—		—		20,403		Assets held in trust for deferred compensation plan	16,588		16,588		—		—		16,588
Total	Total	$	33,930,699	$	2,744,592	$	13,701,679	$	17,203,635	$	33,649,906	Total	$	31,137,355	$	2,060,160	$	11,680,030	$	16,770,367	$	30,510,557
Financial Liabilities	Financial Liabilities											Financial Liabilities
Non-interest bearing deposits	Non-interest bearing deposits	$	11,428,372	$	11,428,372	$	—	$	—	$	11,428,372	Non-interest bearing deposits	$	10,468,591	$	10,468,591	$	—	$	—	$	10,468,591
Savings, interest checking and money market deposits	Savings, interest checking and money market deposits	16,751,632		16,751,632		—		—		16,751,632		Savings, interest checking and money market deposits	16,014,487		16,014,487		—		—		16,014,487
Certificates of deposit	Certificates of deposit	1,139,337		—		—		1,124,978		1,124,978		Certificates of deposit	988,238		—		—		972,605		972,605
Federal funds purchased	Federal funds purchased	17,315		17,315		—		—		17,315		Federal funds purchased	311,200		311,200		—		—		311,200
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	2,300,146		—		—		2,300,267		2,300,267		Securities sold under agreements to repurchase	2,003,390		—		—		2,004,755		2,004,755
Other borrowings	Other borrowings	8,990		—		8,990		—		8,990		Other borrowings	985		—		985		—		985
Derivative instruments	Derivative instruments	18,382		—		18,233		149		18,382		Derivative instruments	55,768		—		55,669		99		55,768
Liabilities held in trust for deferred compensation plan	Liabilities held in trust for deferred compensation plan	20,403		20,403		—		—		20,403		Liabilities held in trust for deferred compensation plan	16,588		16,588		—		—		16,588
Total	Total	$	31,684,577	$	28,217,722	$	27,223	$	3,425,394	$	31,670,339	Total	$	29,859,247	$	26,810,866	$	56,654	$	2,977,459	$	29,844,979

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	Carrying Amount		Estimated Fair Value at December 31, 2021
(In thousands)			Level 1		Level 2		Level 3		Total
Financial Assets
Loans:
Business	$	5,303,535	$	—	$	—	$	5,229,153	$	5,229,153
Real estate - construction and land	1,118,266		—		—		1,099,747		1,099,747
Real estate - business	3,058,837		—		—		3,054,481		3,054,481
Real estate - personal	2,805,401		—		—		2,809,490		2,809,490
Consumer	2,032,225		—		—		2,031,408		2,031,408
Revolving home equity	275,945		—		—		273,450		273,450
Consumer credit card	575,410		—		—		536,468		536,468
Overdrafts	6,740		—		—		6,458		6,458
Total loans	15,176,359		—		—		15,040,655		15,040,655
Loans held for sale	8,615		—		8,615		—		8,615




Investment securities	14,695,628		1,087,873		13,413,558		194,197		14,695,628
Federal funds sold	2,800		2,800		—		—		2,800
Securities purchased under agreements to resell	1,625,000		—		—		1,623,856		1,623,856
Interest earning deposits with banks	3,971,217		3,971,217		—		—		3,971,217
Cash and due from banks	305,539		305,539		—		—		305,539
Derivative instruments	41,842		—		40,994		848		41,842
Assets held in trust for deferred compensation plan	21,794		21,794		—		—		21,794
Total	$	35,848,794	$	5,389,223	$	13,463,167	$	16,859,556	$	35,711,946
Financial Liabilities
Non-interest bearing deposits	$	11,772,374	$	11,772,374	$	—	$	—	$	11,772,374
Savings, interest checking and money market deposits	16,598,085		16,598,085		—		—		16,598,085
Certificates of deposit	1,442,614		—		—		1,438,919		1,438,919
Federal funds purchased	43,385		43,385		—		—		43,385
Securities sold under agreements to repurchase	2,979,582		—		—		2,979,677		2,979,677
Other borrowings	12,514		—		12,514		—		12,514
Derivative instruments	12,101		—		11,824		277		12,101
Liabilities held in trust for deferred compensation plan	21,794		21,794		—		—		21,794
Total	$	32,882,449	$	28,435,638	$	24,338	$	4,418,873	$	32,878,849

17. Legal and Regulatory Proceedings

The Company has various legal proceedings pending at ~~March 31,~~September 30, 2022, arising in the normal course of business. While some matters pending against the Company specify damages claimed by plaintiffs, others do not seek a specified amount of damages or are at early stages of the legal process. The Company records a loss accrual for all legal and regulatory matters for which it deems a loss is probable and can be reasonably estimated. Some matters, which are in the early stages, have not yet progressed to the point where a loss amount can be determined to be probable and estimable.

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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes and with the statistical information and financial data appearing in this report as well as the Company's 2021 Annual Report on Form 10-K. Results of operations for the ~~three~~nine month periods ended ~~March 31,~~September 30, 2022 are not necessarily indicative of results to be attained for any other period.

Forward-Looking Information

This report may contain "forward-looking statements" that are subject to risks and uncertainties and include information about possible or assumed future results of operations. Many possible events or factors could affect the future financial results and performance of the Company. This could cause results or performance to differ materially from those expressed in the forward-looking statements. Words such as "expects", "anticipates", "believes", "estimates", variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed throughout this report. Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events. Such possible events or factors include: changes in economic conditions in the Company's market area, the effects of the COVID-19 pandemic, changes in policies by regulatory agencies, governmental legislation and regulation, fluctuations in interest rates, changes in liquidity requirements, demand for loans in the Company's market area, changes in accounting and tax principles, estimates made on income taxes, competition with other entities that offer financial services, cybersecurity threats, and such other factors as discussed in Part I Item 1A - "Risk Factors" and Part II Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2021 Annual Report on Form ~~10-K and in Part II Item 1A of this Quarterly Report on Form 10-Q.~~10-K. During the quarter ended ~~March 31,~~September 30, 2022, there were no material changes to the Risk Factors disclosed in the Company's 2021 Annual Report on Form 10-K.

Critical Accounting Estimates and Related Policies

The Company has identified certain policies as being critical because they require management to make particularly difficult, subjective and/or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions. These estimates and related policies are the Company's allowance for credit losses and fair value measurement policies. A discussion of these estimates and related policies can be found in the sections captioned "Critical Accounting Policies" and "Allowance for Credit Losses on Loans and Liability for Unfunded Lending Commitments" in Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's 2021 Annual Report on Form 10-K. There have been no changes in the Company's application of critical accounting policies since December 31, 2021.

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Selected Financial Data


		Three Months Ended March 31						Three Months Ended September 30								Nine Months Ended September 30
			2022			2021				2022			2021				2022			2021
Per Share Data	Per Share Data								Per Share Data
Net income per common share — basic	Net income per common share — basic		$	.97		$	1.06	*	Net income per common share — basic	$	1.03		$	1.00	*		$	2.96		$	3.38	*
Net income per common share — diluted	Net income per common share — diluted		.97			1.06		*	Net income per common share — diluted	1.02			.99		*		2.95			3.37		*
Cash dividends on common stock	Cash dividends on common stock		.265			.250		*	Cash dividends on common stock	.265			.250		*		.795			.750		*
Book value per common share	Book value per common share		24.60			26.99		*	Book value per common share								19.86			28.58		*
Market price	Market price		71.59			72.96		*	Market price								66.16			66.36		*
Selected Ratios	Selected Ratios								Selected Ratios
(Based on average balance sheets)	(Based on average balance sheets)								(Based on average balance sheets)
Loans to deposits (1)	Loans to deposits (1)		51.90		%	61.79		%	Loans to deposits (1)	56.40		%	54.44		%		54.05		%	57.91		%
Non-interest bearing deposits to total deposits	Non-interest bearing deposits to total deposits		39.34			39.41			Non-interest bearing deposits to total deposits	38.76			40.90				39.04			40.15
Equity to loans (1)	Equity to loans (1)		21.83			20.68			Equity to loans (1)	17.45			23.17				19.19			21.68
Equity to deposits	Equity to deposits		11.33			12.78			Equity to deposits	9.84			12.62				10.37			12.56
Equity to total assets	Equity to total assets		9.26			10.37			Equity to total assets	8.31			10.22				8.66			10.22
Return on total assets	Return on total assets		1.33			1.63			Return on total assets	1.48			1.40				1.39			1.65

Return on common equity			14.41			15.69
Return on equity									Return on equity	17.84			13.74				16.08			16.14
(Based on end-of-period data)	(Based on end-of-period data)								(Based on end-of-period data)
Non-interest income to revenue (2)	Non-interest income to revenue (2)		38.69			39.80			Non-interest income to revenue (2)	35.99			39.11				37.34			39.66
Efficiency ratio (3)	Efficiency ratio (3)		60.29			56.37			Efficiency ratio (3)	55.19			59.95				57.48			57.76
Tier I common risk-based capital ratio	Tier I common risk-based capital ratio		13.92			13.76			Tier I common risk-based capital ratio								13.97			14.02
Tier I risk-based capital ratio	Tier I risk-based capital ratio		13.92			13.76			Tier I risk-based capital ratio								13.97			14.02
Total risk-based capital ratio	Total risk-based capital ratio		14.61			14.79			Total risk-based capital ratio								14.69			14.83
Tangible common equity to tangible assets ratio (4)	Tangible common equity to tangible assets ratio (4)		8.09			9.57			Tangible common equity to tangible assets ratio (4)								6.80			9.71
Tier I leverage ratio	Tier I leverage ratio		9.07			9.38			Tier I leverage ratio								9.87			9.31

* Restated for the 5% stock dividend distributed in December 2021.

(1) Includes loans held for sale.

(2) Revenue includes net interest income and non-interest income.

(3) The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of revenue.

(4) The tangible common equity to tangible assets ratio is a measurement which management believes is a useful indicator of capital adequacy and utilization.

It provides a meaningful basis for period to period and company to company comparisons, and also assists regulators, investors and analysts in analyzing the financial position of the Company. Tangible common equity and tangible assets are non-GAAP measures and should not be viewed as substitutes for, or superior to, data prepared in accordance with GAAP.

The following table is a reconciliation of the GAAP financial measures of total equity and total assets to the non-GAAP measures of total tangible common equity and total tangible assets.


		March 31							September 30
(Dollars in thousands)	(Dollars in thousands)	2022			2021			(Dollars in thousands)	2022			2021
Total equity	Total equity	$	2,973,402		$	3,317,385		Total equity	$	2,371,107		$	3,491,221
Less non-controlling interest	Less non-controlling interest	12,762			4,795			Less non-controlling interest	19,513			10,551

Less goodwill	Less goodwill	138,921			138,921			Less goodwill	138,921			138,921
Less core deposit premium		4,525			4,864
Less intangible assets*								Less intangible assets*	4,371			4,684
Total tangible common equity (a)	Total tangible common equity (a)	$	2,817,194		$	3,168,805		Total tangible common equity (a)	$	2,208,302		$	3,337,065
Total assets	Total assets	$	34,986,793		$	33,269,786		Total assets	$	32,602,596		$	34,497,543
Less goodwill	Less goodwill	138,921			138,921			Less goodwill	138,921			138,921
Less core deposit premium		4,525			4,864
Less intangible assets*								Less intangible assets*	4,371			4,684
Total tangible assets (b)	Total tangible assets (b)	$	34,843,347		$	33,126,001		Total tangible assets (b)	$	32,459,304		$	34,353,938
Tangible common equity to tangible assets ratio (a)/(b)	Tangible common equity to tangible assets ratio (a)/(b)	8.09		%	9.57		%	Tangible common equity to tangible assets ratio (a)/(b)	6.80		%	9.71		%

* Intangible assets other than mortgage servicing rights.

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Results of Operations

Summary


		Three Months Ended March 31				Increase (Decrease)					Three Months Ended September 30						Nine Months Ended September 30
(Dollars in thousands)	(Dollars in thousands)	2022		2021			Amount		% change			(Dollars in thousands)	2022		2021		% change		2022		2021		% change
Net interest income	Net interest income	$	208,786	$	205,748		$	3,038	1.5	%		Net interest income	$	246,373	$	214,037	15.1	%	$	687,544	$	627,767	9.5	%
Provision for credit losses	Provision for credit losses	9,858		6,232			(3,626)		58.2			Provision for credit losses	(15,290)		7,385		307.0		(12,594)		59,272		121.2
Non-interest income	Non-interest income	131,769		136,045			(4,276)		(3.1)			Non-interest income	138,514		137,506		.7		409,710		412,694		(.7)
Investment securities gains, net	Investment securities gains, net	7,163		9,853			(2,690)		(27.3)			Investment securities gains, net	3,410		13,108		(74.0)		11,602		39,765		(70.8)
Non-interest expense	Non-interest expense	(205,648)		(192,573)			13,075		6.8			Non-interest expense	(212,884)		(211,620)		.6		(632,037)		(602,319)		4.9
Income taxes	Income taxes	(31,902)		(32,076)			(174)		(.5)			Income taxes	(33,936)		(34,662)		(2.1)		(97,859)		(111,947)		(12.6)
Non-controlling interest expense	Non-controlling interest expense	(1,872)		(2,257)			(385)		(17.1)			Non-controlling interest expense	(3,364)		(3,193)		5.4		(9,595)		(9,373)		2.4
Net income attributable to Commerce Bancshares, Inc.	Net income attributable to Commerce Bancshares, Inc.	$	118,154	$	130,972		(12,818)		(9.8)	%		Net income attributable to Commerce Bancshares, Inc.	$	122,823	$	122,561	.2	%	$	356,771	$	415,859	(14.2	%)

For the quarter ended ~~March 31,~~September 30, 2022, net income attributable to Commerce Bancshares, Inc. (net income) amounted to ~~$118.2~~$122.8 million, ~~a decrease~~an increase of ~~$12.8 million,~~$262 thousand, or ~~9.8%~~.2%, compared to the ~~first~~third quarter of the previous year. For the current quarter, the annualized return on average assets was ~~1.33%~~1.48%, the annualized return on average equity was ~~14.41%~~17.84%, and the efficiency ratio was ~~60.29%~~55.19%. Diluted earnings per common share was ~~$.97, a decrease~~$1.02, an increase of ~~8.5%~~3.0% compared to ~~$1.06~~$0.99 per share in the ~~first~~third quarter of 2021, and increased ~~3.2%~~6.3% compared to ~~$.94~~$.96 per share in the previous quarter.

Compared to the ~~first~~third quarter of last year, net interest income increased ~~$3.0~~$32.3 million, or ~~1.5%~~15.1%, mainly due to ~~an increase~~increases of ~~$21.5~~$28.4 million in interest income on loans and $15.7 million in interest income on investment securities, partly offset by ~~decreases~~an increase in ~~loan~~deposits and borrowings interest ~~and interest on securities purchased under agreements to resell~~expense of ~~$14.4 million and $5.8 million, respectively.~~$13.3 million. The provision for credit losses ~~declined $3.6~~increased $22.7 million due to ~~a decrease~~an increase in the estimate of the allowance for credit losses on loans and unfunded lending commitments and ~~lower~~higher net loan ~~charge-offs.~~ charge-offs, coupled with the release of allowances associated with certain pandemic-related estimates in the third quarter of 2021.Non-interest income ~~decreased $4.3~~increased $1.0 million, or ~~3.1%~~.7%, compared to the ~~first~~third quarter of 2021, mainly due to increases in net bank card fees and cash sweep commissions, partly offset by lower loan fees and sales ~~and income from branch sales, partly offset by growth in net bank card~~ and trust fees. Net gains on investment securities totaled ~~$7.2~~$3.4 million in the current quarter compared to net gains of ~~$9.9~~$13.1 million in the same quarter of last year. Net securities gains in the current quarter primarily resulted from ~~unrealized~~net fair value gains of ~~$7.5~~$14.1 million in the Company's private equity investment ~~portfolio.~~portfolio, partly offset by a loss of $10.7 million on the sale of an available for sale security. Non-interest expense increased ~~$13.1~~$1.3 million, or ~~6.8%~~.6%, over the ~~first~~third quarter of 2021 mainly due to higher salaries ~~and employee benefits,~~expense, data processing and software ~~marketing,~~expense and travel and entertainment ~~expense.~~expense, partly offset by $8.2 million in litigation settlement costs recorded in 2021.

Net income for the first nine months of 2022 was $356.8 million, a decrease of $59.1 million, or 14.2%, from the same period last year. Diluted earnings per common share was $2.95, a decrease of 12.5% compared to $3.37 per share in the same period last year. For the first nine months of 2022, the annualized return on average assets was 1.39%, the annualized return on average equity was 16.08%, and the efficiency ratio was 57.48%. Net interest income increased $59.8 million, or 9.5%, over the same period last year. This growth was due to increases of $70.7 million in interest income on investment securities, $11.8 million in interest income on loans and $7.0 million in interest earned on balances with the Federal Reserve, partly offset by a decrease in interest income on securities purchased under agreements to resell of $14.9 million and an increase in deposits and borrowings interest expense of $15.0 million. The provision for credit losses was expense of $12.6 million for the first nine months of 2022, compared to a recovery of $59.3 million in the same period last year, resulting in an increase in provision expense of $71.9 million. Non-interest income decreased $3.0 million, or .7%, from the first nine months of last year mainly due to lower loan fees and sales, partly offset by higher net bank card fees. Non-interest expense increased $29.7 million, or 4.9%, over the first nine months of last year mainly due to increases in salaries and benefits expense and data processing and software expense.

Table of Contents

Net Interest Income

The following table summarizes the changes in net interest income on a fully ~~taxable equivalent~~taxable-equivalent basis, by major category of interest earning assets and interest bearing liabilities, identifying changes related to volumes and rates. Changes not solely due to volume or rate changes are allocated to rate.

Analysis of Changes in Net Interest Income


		Three Months Ended March 31, 2022 vs. 2021						Three Months Ended September 30, 2022 vs. 2021							Nine Months Ended September 30, 2022 vs. 2021
		Change due to							Change due to								Change due to
(In thousands)	(In thousands)	Average Volume		Average Rate		Total				(In thousands)	Average Volume		Average Rate		Total			Average Volume		Average Rate		Total
Interest income, fully taxable equivalent basis:	Interest income, fully taxable equivalent basis:									Interest income, fully taxable equivalent basis:
Loans:	Loans:									Loans:
Business	Business	$	(9,222)	$	(2,060)	$	(11,282)			Business	$	(851)	$	6,632	$	5,781		$	(17,148)	$	5,205	$	(11,943)
Real estate - construction and land	Real estate - construction and land	375		609		984				Real estate - construction and land	1,063		5,744		6,807			2,655		7,955		10,610
Real estate - business	Real estate - business	626		(1,069)		(443)				Real estate - business	2,401		7,693		10,094			4,334		8,267		12,601
Real estate - personal	Real estate - personal	(144)		(858)		(1,002)				Real estate - personal	567		644		1,211			612		(523)		89
Consumer	Consumer	921		(2,141)		(1,220)				Consumer	564		2,461		3,025			2,100		(776)		1,324
Revolving home equity	Revolving home equity	(213)		65		(148)				Revolving home equity	(7)		964		957			(348)		1,209		861
Consumer credit card	Consumer credit card	(1,837)		501		(1,336)				Consumer credit card	(465)		1,064		599			(3,384)		1,716		(1,668)
Overdrafts	Overdrafts	—		—		—				Overdrafts	—		—		—			—		—		—
Total interest on loans	Total interest on loans	(9,494)		(4,953)		(14,447)				Total interest on loans	3,272		25,202		28,474			(11,179)		23,053		11,874
Loans held for sale	Loans held for sale	(201)		47		(154)				Loans held for sale	(70)		42		(28)			(413)		147		(266)
Investment securities:	Investment securities:									Investment securities:
U.S. government and federal agency securities	U.S. government and federal agency securities	2,370		2,405		4,775				U.S. government and federal agency securities	5,583		(3,444)		2,139			13,376		(2,604)		10,772
Government-sponsored enterprise obligations	Government-sponsored enterprise obligations	6		(3)		3				Government-sponsored enterprise obligations	29		8		37			64		13		77
State and municipal obligations	State and municipal obligations	722		(897)		(175)				State and municipal obligations	77		(381)		(304)			1,742		(1,866)		(124)
Mortgage-backed securities	Mortgage-backed securities	1,090		10,681		11,771				Mortgage-backed securities	(1,032)		6,894		5,862			1,740		33,031		34,771
Asset-backed securities	Asset-backed securities	6,332		(2,475)		3,857				Asset-backed securities	2,294		5,283		7,577			12,360		4,424		16,784
Other securities	Other securities	1,501		(402)		1,099				Other securities	379		(130)		249			3,374		4,489		7,863
Total interest on investment securities	Total interest on investment securities	12,021		9,309		21,330				Total interest on investment securities	7,330		8,230		15,560			32,656		37,487		70,143
Federal funds sold	Federal funds sold	1		—		1				Federal funds sold	18		75		93			23		88		111
Securities purchased under agreements to resell	Securities purchased under agreements to resell	11,573		(17,401)		(5,828)				Securities purchased under agreements to resell	(1,401)		(1,622)		(3,023)			12,316		(27,198)		(14,882)
Interest earning deposits with banks	Interest earning deposits with banks	278		503		781				Interest earning deposits with banks	(613)		5,189		4,576			(599)		7,641		7,042
Total interest income	Total interest income	14,178		(12,495)		1,683				Total interest income	8,536		37,116		45,652			32,804		41,218		74,022
Interest expense:	Interest expense:									Interest expense:
Deposits:	Deposits:									Deposits:
Savings	Savings	45		(144)		(99)				Savings	22		(134)		(112)			95		(426)		(331)
Interest checking and money market	Interest checking and money market	317		(561)		(244)				Interest checking and money market	183		5,657		5,840			720		5,430		6,150
Certificates of deposit of less than $100,000	Certificates of deposit of less than $100,000	(81)		(253)		(334)				Certificates of deposit of less than $100,000	(30)		235		205			(163)		(88)		(251)
Certificates of deposit of $100,000 and over	Certificates of deposit of $100,000 and over	64		(699)		(635)				Certificates of deposit of $100,000 and over	(156)		577		421			(269)		(136)		(405)
Total interest on deposits	Total interest on deposits	345		(1,657)		(1,312)				Total interest on deposits	19		6,335		6,354			383		4,780		5,163
Federal funds purchased	Federal funds purchased	(2)		4		2				Federal funds purchased	10		302		312			17		518		535
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	86		289		375				Securities sold under agreements to repurchase	(30)		7,129		7,099			95		9,764		9,859
Other borrowings	Other borrowings	—		(1)		(1)				Other borrowings	5		3		8			9		8		17
Total interest expense	Total interest expense	429		(1,365)		(936)				Total interest expense	4		13,769		13,773			504		15,070		15,574
Net interest income, tax equivalent basis	Net interest income, tax equivalent basis	$	13,749	$	(11,130)	$	2,619			Net interest income, tax equivalent basis	$	8,532	$	23,347	$	31,879		$	32,300	$	26,148	$	58,448

Net interest income in the ~~first~~third quarter of 2022 was ~~$208.8~~$246.4 million, an increase of ~~$3.0~~$32.3 million over the ~~first~~third quarter of 2021. On a ~~tax equivalent (T/E)~~fully taxable-equivalent (FTE) basis, net interest income totaled ~~$211.4~~$248.7 million in the ~~first~~third quarter of 2022, up ~~$2.6~~$31.9 million over the same period last year and up ~~$969 thousand~~$13.7 million over the previous quarter. The increase in net interest income ~~compared to the first~~

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compared to the third quarter of 2021 was mainly due to higher interest income earned on onloans (FTE) of $28.5 million and investment securities ~~(T/E)~~(FTE) of ~~$21.3~~$15.6 million, partly offset by ~~lower~~higher interest ~~earned~~expense on ~~loans (T/E)~~deposits and borrowings of ~~$14.4 million and securities purchased under agreements to resell of $5.8~~$13.8 million. The increase ~~in interest earned on investment securities (T/E) was mainly due to higher average balances and rates earned. The decrease~~ in total interest earned on loans ~~(T/E)~~(FTE) was the result of ~~declines~~higher loan yields on all loan products, especially commercial loans, many of which have variable rates, coupled with higher average balances. The increase in interest on investment securities (FTE) was the result of higher average rates earned and average balances, ~~and rates earned,~~ while the ~~decrease~~increase in ~~securities purchased under agreements to resell declined~~interest expense was due to ~~lower average~~higher rates ~~partly offset by higher average balances.~~paid on deposits and borrowings. The Company's net yield on earning assets ~~(T/E)~~(FTE) was ~~2.45%~~3.01% in the current quarter compared to ~~2.71%~~2.58% in the ~~first~~third quarter of 2021.

Total interest income ~~(T/E)~~(FTE) increased ~~$1.7~~$45.7 million over the ~~first~~third quarter of 2021. Interest income on loans ~~(T/E)~~(FTE) was ~~$133.0~~$172.4 million during the ~~first~~third quarter of 2022, ~~a decrease~~an increase of ~~$14.4~~$28.5 million, or ~~9.8%~~19.8%, ~~from~~over the same quarter last year. The ~~decrease~~increase in interest income ~~from~~over the same quarter last year was primarily due to ~~a decline~~an increase of ~~$1.1 billion, or 6.8%, in average loan balances, coupled with a decrease of 12~~63 basis points in the average rate ~~earned.~~earned and growth of $386.9 million, or 2.5%, in average loan balances. Most of the ~~decrease~~increase in interest income occurred in the business, business real estate, construction and consumer ~~credit card, consumer, and personal~~loan categories. The largest increase to interest income occurred in business real estate loan ~~categories. These decreases were partly offset by an increase in~~ interest, ~~income in the construction and land loan category. Business loan interest income decreased $11.3~~which grew $10.1 million due to a decline of $1.2 billion in average balances and a decrease of 16 basis points in the average rate earned. The decline in business loan average balances was mainly due to a decrease of $1.3 billion in Paycheck Protection Program (PPP) loans, while interest earned on PPP loans declined $10.0 million from the same quarter last year. Consumer credit card loan interest decreased $1.3 million mainly due to a decline of $67.9 million in average balances, partly offset by a 3894 basis point increase in the average rate ~~earned. Consumer~~earned, coupled with growth in average balances of $275.3 million, or 9.2%. Business loan interest ~~declined $1.2~~income increased $5.8 million due to ~~a decrease~~an increase of 4351 basis points in the average rate earned, partly offset by a ~~$92.9~~decline of $119.8 million ~~or 4.8%, increase~~ in average balances. ~~Personal real estate~~Construction and land loan interest ~~income fell $1.0~~grew $6.8 million due to a 12176 basis point ~~decrease~~increase in the average rate earned and ~~lower~~growth of $120.2 million, or 10.3%, in average ~~balances of $17.1 million. These decreases to~~loan balances. Consumer loan interest ~~income (T/E) were partly offset by an increase of $984 thousand in interest earned on construction and land loans,~~increased $3.0 million due to an increase of 2246 basis points in the average rate earned and growth in average balances of ~~$42.9~~$60.4 million, or ~~3.9%, in average loan balances.~~3.0%.

Interest income on investment securities ~~(T/E)~~(FTE) was ~~$74.8~~$81.3 million during the ~~first~~third quarter of 2022, which was an increase of ~~$21.3~~$15.6 million over the same quarter last year. The increase in interest income occurred mainly in interest earned on asset-backed securities, which rose $7.6 million due to an increase of 54 basis points in the average rate earned, coupled with higher average balances of $842.9 million, or 27.8%. Interest income earned on mortgage-backed securities ~~which~~ increased ~~$11.8~~$5.9 million ~~partly~~ due to an increase in the average rate earned of 40 basis points, partly offset by a ~~$7.5~~decline of $267.5 million, or 3.8%, in the average balance. In addition, a $1.5 million increase in premium amortization, reflecting slower forward prepayment speed estimates was recorded in the current quarter, compared to a premium amortization adjustment increase of ~~$4.1~~$5.0 million in the prior year. ~~In addition, the average rate earned increased 59 basis points and the average balance increased $318.1 million, or 4.5%.~~ Interest on U.S. government and federal agency obligations grew ~~$4.8~~$2.1 million mainly due to higher average balances of $385.9 million, or 53.0%, and an increase in inflation income on the Company's U.S. Treasury inflation-protected securities (TIPS)., while a decrease of 123 basis points in the average rate earned partly offset these increases in income. Interest income related to TIPS, which is tied to the non-seasonally adjusted Consumer Price Index (CPI-U), increased ~~$4.4~~$1.8 million over the same quarter last year. The average balance of U.S. government and federal agency obligations also increased $378.4 million, or 52.2%. Interest on asset-backed securities rose $3.9 million due to higher average balances of $1.8 billion, partly offset by a decrease of 26 basis points in the average rate earned. The average balance of the total investment portfolio (excluding unrealized fair value adjustments on available for sale debt securities) was ~~$15.4~~$14.8 billion in the ~~first~~third quarter of 2022, compared to ~~$12.6~~$13.8 billion in the ~~first~~third quarter of 2021.

Interest income on securities purchased under agreements to resell decreased ~~$5.8~~$3.0 million from the same quarter last year, due to a decrease of ~~407~~47 basis points in the average rate earned ~~partly offset by growth~~and a decline of ~~$883.9~~$253.9 million in the average balance. Interest income on balances at the Federal Reserve grew ~~$781 thousand~~$4.6 million due to an increase of ~~$1.1 billion in the average balance invested and an increase of eight~~210 basis points in the average rate ~~earned.~~earned, partly offset by a decrease of $1.6 billion in the average balance invested.

The average ~~tax equivalent~~fully taxable-equivalent yield on total interest earning assets was ~~2.49%~~3.21% in the ~~first~~third quarter of 2022, ~~down~~up from ~~2.76%~~2.62% in the ~~first~~third quarter of 2021.

Total interest expense ~~decreased $936 thousand~~increased $13.8 million compared to the ~~first~~third quarter of 2021 due to ~~a $1.3 million decrease~~increases in interest expense of $6.4 million on interest bearing deposits ~~partly offset by a $376 thousand increase in interest expense~~and $7.4 million on borrowings. The ~~decrease~~increase in deposit interest expense resulted mainly from ~~a four basis point decline in the overall average rate paid. Interest expense on certificates~~an increase of ~~deposit (CD's) declined $969 thousand due to an 18 basis point decrease in the average rate paid, coupled with a decrease of $454.7~~$5.8 million in ~~the average balance. Interest~~interest expense on interest checking and money market deposit accounts ~~declined $244 thousand,~~ due to a ~~two~~15 basis point ~~decrease~~increase in the average rate paid ~~partly offset by~~and higher average balances of ~~$2.0~~$1.1 billion. Interest expense on borrowings was higher due to an increase of ~~four~~129 basis points in the average rate paid on customer repurchase agreements. The overall average rate incurred on all interest bearing liabilities was ~~.06%~~.34% and ~~.09%~~.06% in the ~~first~~third quarters of 2022 and 2021, respectively.

Net interest income (FTE) for the first nine months of 2022 was $695.1 million compared to $636.7 million for the same period in 2021. For the first nine months of 2022, the net interest margin was 2.75% compared to 2.63% for the same period in 2021.

Total interest income (FTE) for the first nine months of 2022 increased $58.4 million over the same period last year mainly due to higher interest income on investment securities (FTE) and loans (FTE), partly offset by lower interest earned on securities purchased under agreements to resell and higher interest expense. Loan interest income (FTE) grew $11.9 million, or 2.7%, due to a 20 basis point increase in the average rate earned, partly offset by a $403.8 million decrease in average loan balances. Most of the increase in loan interest occurred in the business real estate and construction loan categories due to

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higher average rates and balances. In addition, consumer loan interest increased due to higher average balances, partly offset by lower rates earned. These increases were partly offset by lower interest earned on business and credit card loans due to lower average balances, partly offset by higher rates earned. Interest income on investment securities (T/E) increased $70.1 million due to a 37 basis point increase in the average rate earned and a $2.1 billion increase in average balances. Interest earned on U.S. government and federal agency obligations increased $10.8 million, mainly due to higher TIPS interest income. Interest earned on mortgage-backed securities increased $34.8 million mainly due to higher average rates earned, while interest on asset-backed securities increased $16.8 million due to higher average balances and average rates earned. Interest earned on other securities increased $7.9 million mainly due to the receipt of $6.5 million in non-accrual interest on the sale of a private equity investment in the second quarter of 2022. Interest income on securities purchased under agreements to resell decreased $14.9 million due to lower rates earned, partly offset by higher average balances, while interest income on balances at the Federal Reserve increased $7.0 million due to higher average rates earned.

Total interest expense for the first nine months of 2022 increased $15.6 million compared to the same period last year. Interest on deposits increased $5.2 million, mainly due to a four basis point increase in the overall rate. Interest expense on interest checking and money market accounts increased $6.2 million due to a five basis point increase in the average rate and higher average balances. Interest expense on borrowings increased $10.4 million, mainly due to higher rates paid on customer repurchase agreements. The overall cost of total interest bearing liabilities increased to .17% compared to .07% in the same period last year.

Summaries of average assets and liabilities and the corresponding average rates earned/paid appear on the last page of this discussion.

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Non-Interest Income


		Three Months Ended March 31						Increase (Decrease)					Three Months Ended September 30	Increase (Decrease)								Nine Months Ended September 30				Increase (Decrease)
(Dollars in thousands)	(Dollars in thousands)	2022			2021				Amount		% change				(Dollars in thousands)	2022			2021			Amount		% change			2022			2021			Amount	% change
Trust fees															Trust fees	$	45,406		$	48,950		(3,544)		(7.2)	%		$	140,009		$	139,334		675	.5	%
Bank card transaction fees	Bank card transaction fees	$	42,045		$	37,695			$	4,350	11.5	%			Bank card transaction fees	45,638			42,815			2,823		6.6			131,556			123,118			8,438	6.9
Trust fees		47,811			44,127				3,684		8.3
Deposit account charges and other fees	Deposit account charges and other fees	22,307			22,575				(268)		(1.2)				Deposit account charges and other fees	24,521			25,161			(640)		(2.5)			72,392			71,724			668	.9
Consumer brokerage services															Consumer brokerage services	5,085			4,900			185		3.8			14,599			13,484			1,115	8.3
Capital market fees	Capital market fees	4,125			4,981				(856)		(17.2)				Capital market fees	3,393			3,794			(401)		(10.6)			10,845			12,102			(1,257)	(10.4)
Consumer brokerage services		4,446			4,081				365		8.9
Loan fees and sales	Loan fees and sales	4,235			10,184				(5,949)		(58.4)				Loan fees and sales	3,094			6,842			(3,748)		(54.8)			10,575			24,472			(13,897)	(56.8)
Other	Other	6,800			12,402				(5,602)		(45.2)				Other	11,377			5,044			6,333		125.6			29,734			28,460			1,274	4.5
Total non-interest income	Total non-interest income	$	131,769		$	136,045			$	(4,276)	(3.1)	%			Total non-interest income	$	138,514		$	137,506		$	1,008	.7	%		$	409,710		$	412,694		(2,984)	(.7	%)
Non-interest income as a % of total revenue*	Non-interest income as a % of total revenue*	38.7		%	39.8		%								Non-interest income as a % of total revenue*	36.0		%	39.1		%						37.3		%	39.7		%

* Total revenue includes net interest income and non-interest income.

The table below is a summary of net bank card transaction fees for the three and nine month periods ended ~~March 31,~~September 30, 2022 and 2021.


		Three Months Ended March 31								Three Months Ended September 30										Nine Months Ended September 30
(Dollars in thousands)	(Dollars in thousands)	2022		2021		$ change		% change			(Dollars in thousands)	2022		2021		$ change		% change			2022		2021		$ change		% change
Net debit card fees	Net debit card fees	$	9,552	$	9,367	$	185	2.0	%		Net debit card fees	$	10,508	$	10,402	$	106	1.0	%		$	30,593	$	30,274	$	319	1.1	%
Net credit card fees	Net credit card fees	3,722		3,421		301		8.8			Net credit card fees	3,597		3,863		(266)		(6.9)			11,031		11,389		(358)		(3.1)
Net merchant fees	Net merchant fees	4,980		4,614		366		7.9			Net merchant fees	5,232		5,202		30		.6			15,146		14,711		435		3.0
Net corporate card fees	Net corporate card fees	23,791		20,293		3,498		17.2			Net corporate card fees	26,301		23,348		2,953		12.6			74,786		66,744		8,042		12.0
Total bank card transaction fees	Total bank card transaction fees	$	42,045	$	37,695	$	4,350	11.5	%		Total bank card transaction fees	$	45,638	$	42,815	$	2,823	6.6	%		$	131,556	$	123,118	$	8,438	6.9	%

For the ~~first~~third quarter of 2022, total non-interest income amounted to ~~$131.8~~$138.5 million compared to ~~$136.0~~$137.5 million in the same quarter last year, which was ~~a decrease~~an increase of ~~$4.3~~$1.0 million, or ~~3.1%~~.7%. The ~~decrease~~increase was mainly due to ~~lower loan fees~~higher bank card and ~~sales and a decline in~~ other non-interest income, partly offset by ~~higher net bank card~~lower trust fees and ~~trust fees.~~loan fees and sales. Bank card transaction fees for the current quarter grew ~~$4.4~~$2.8 million, or ~~11.5%~~6.6%, over the same period last year, mainly due to growth of ~~$3.5~~$3.0 million in net corporate ~~card fees, $366 thousand in net merchant card fees, $301 thousand in net credit card fees, and $185 thousand in net debit~~ card fees. The growth in net corporate ~~credit and debit~~ card fees was mainly due to higher interchange income, partly offset by higher rewards expense. ~~The growth in net merchant fees was mostly due to higher merchant fees, partly offset by higher network expense.~~ Trust fees for the quarter ~~increased $3.7~~decreased $3.5 million, or ~~8.3%~~7.2%, ~~over~~from the same quarter last year, resulting from ~~higher~~lower private client fees ~~which were up 10.1%.~~and institutional trust fees. Compared to the ~~same period~~third quarter of last year, deposit account fees decreased ~~$268~~$640 thousand, or ~~1.2%~~2.5%, mainly due to lower ~~personal deposit account~~overdraft and return item fees. In September 2022, the Company implemented enhancements to consumer checking accounts that eliminate return item fees ~~partly offset by higher corporate cash management fees. Capital market~~and are expected to lower overdraft fees ~~decreased $856 thousand, or 17.2%, while consumer~~for our customers. Consumer brokerage service fees increased ~~$365~~$185 thousand, or ~~8.9%~~3.8%, due to growth in ~~advisory fees. Loan~~annuity and mutual fund fees, while loan fees and sales decreased ~~$5.9~~$3.7 million, or ~~58.4%~~54.8%, ~~compared to the same quarter last year, mainly~~ due to a decline in mortgage banking revenue. Other non-interest income ~~decreased $5.6~~increased $6.3 million, or ~~45.2%~~125.6%, mainly due to higher cash sweep commissions and tax credit sales fees of $3.4 million and $1.1 million, respectively. Additionally, a ~~gain~~$2.0 million loss on an equity method investment was recorded in the third quarter of ~~$2.4~~2021.

Non-interest income for the first nine months of 2022 was $409.7 million, compared to $412.7 million in the first nine months of 2021, resulting in a decrease of $3.0 million, or .7%. Bank card fees increased $8.4 million, or 6.9%, mainly due to growth of $8.0 million in net corporate card fees. Trust fees increased $675 thousand, or .5%, mainly due to growth in private client trust fees, partly offset by lower institutional trust fees. Deposit account fees increased $668 thousand, or .9%, mainly due to higher corporate cash management fees, partly offset by lower personal account deposit fees. Capital market fees declined $1.3 million, or 10.4%, while consumer brokerage service fees increased $1.1 million, or 8.3%, due to higher annuity and mutual fund fees, partly offset by lower advisory fees. Loan fees and sales decreased $13.9 million, or 56.8%, due to lower mortgage banking revenue. Other income increased $1.3 million, or 4.5%, mainly due to higher cash sweep commissions of $5.3 million and tax credit sales fees of $1.2 million, income of $2.2 million from a life insurance death benefit recorded in the second quarter of 2022, a $2.6 million loss on ~~the sale~~an equity method investment recorded in 2021 and a lease impairment of a$1.1 million recorded in 2021. These increases were partly offset by gains of $3.7 million recorded on branch ~~location recorded~~sales last year coupled with a write-down of $965 thousand on a branch location recorded in the ~~current quarter.~~first quarter of 2022. In addition, ~~swap fees, cash sweep commissions and tax credit sales fees declined $637 thousand, $403 thousand and $394 thousand, respectively. Fair~~a decrease of $6.8 million in fair value adjustments was recorded on the Company's deferred compensation plan assets, which are held in a trust, ~~and~~ recorded as both an asset and a liability, ~~decreased $1.9 million from the same quarter last year, affecting~~and affect both other income and other expense.

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Investment Securities Gains (Losses), Net


		Three Months Ended March 31					Three Months Ended September 30						Nine Months Ended September 30
(In thousands)	(In thousands)		2022		2021			(In thousands)	2022		2021			2022		2021
Net losses on sales of available for sale debt securities								Net losses on sales of available for sale debt securities	$	(10,692)	$	—		$	(20,274)	$	—

Fair value adjustments on equity securities, net								Fair value adjustments on equity securities, net	(25)		137			(1,048)		152
Net gains (losses) on sales of private equity investments								Net gains (losses) on sales of private equity investments	77		—			(4,209)		1,611
Fair value adjustments on private equity investments								Fair value adjustments on private equity investments	14,050		12,971			37,133		38,002

Net gains (losses) on sales and fair value adjustments of private equity investments			$	7,450	$	9,888

Fair value adjustments on equity securities, net			(287)		(35)

Total investment securities gains, net	Total investment securities gains, net		$	7,163	$	9,853		Total investment securities gains, net	$	3,410	$	13,108		$	11,602	$	39,765

Net gains on investment securities, which were recognized in earnings during the three months ended ~~March 31,~~September 30, 2022 and 2021, are shown in the table above. Net securities gains of ~~$7.2~~$3.4 million were reported in the ~~first~~third quarter of 2022, compared to net gains of ~~$9.9~~$13.1 million in the same period last year. The net gains in the ~~first~~third quarter of 2022 were primarily comprised of ~~$7.5~~$14.1 million of net gains in fair value on the Company’s private equity ~~investments.~~investments, partially offset by a loss of $10.7 million on the sale of an available for sale security. The net gains on investment securities for the same quarter last year were mainly comprised of $13.0 million of net gains in fair value on the Company’s private equity investments.

Net gains on investment securities of $11.6 million were recognized in earnings for the nine months ended September 30, 2022, compared to net gains of $39.8 million for the same period in 2021. Net gains in the first nine months of 2022 were mainly comprised of net gains of $37.1 million on private equity investments, due to fair value adjustments, offset by losses of $20.3 million on sales of available for sale securities, net losses of $4.2 million on sales of private equity investments, and net losses in fair value of $1.0 million on equity investments. Net gains in the first nine months of 2021 were mainly comprised of a ~~net~~ gain of ~~$1.5~~$1.6 million ~~realized~~ on the sale of a private equity investment and ~~$8.4~~$38.0 million of net gains in fair value on ~~the Company’s~~ private equity investments. The portion of private equity activity attributable to minority interests is reported as non-controlling interest in the consolidated statements of income and resulted in expense of ~~$1.5~~$6.6 million during the first ~~three~~nine months of 2022 and expense of ~~$2.0~~$7.7 million during the first ~~three~~nine months of 2021.

Non-Interest Expense


		Three Months Ended March 31				Increase (Decrease)					Three Months Ended September 30		Increase (Decrease)								Nine Months Ended September 30	Increase (Decrease)
(Dollars in thousands)	(Dollars in thousands)	2022		2021			Amount		% change			(Dollars in thousands)	2022		2021		Amount		% change				2022		2021		Amount		% change
Salaries and employee benefits	Salaries and employee benefits	$	135,953	$	129,033		$	6,920	5.4	%		Salaries and employee benefits	$	137,393	$	132,824	$	4,569	3.4	%			$	415,589	$	392,608	$	22,981	5.9	%
Data processing and software												Data processing and software	28,050		25,598		2,452		9.6				82,701		76,015		6,686		8.8
Net occupancy	Net occupancy	12,296		12,021			275		2.3			Net occupancy	12,544		12,329		215		1.7				37,343		35,877		1,466		4.1
Equipment	Equipment	4,568		4,353			215		4.9			Equipment	5,036		4,440		596		13.4				14,338		13,398		940		7.0
Supplies and communication	Supplies and communication	4,713		4,125			588		14.3			Supplies and communication	4,581		4,530		51		1.1				13,655		12,688		967		7.6
Data processing and software		27,016		25,463			1,553		6.1
Marketing	Marketing	6,344		5,158			1,186		23.0			Marketing	6,228		5,623		605		10.8				18,408		16,461		1,947		11.8
Other	Other	14,758		12,420			2,338		18.8			Other	19,052		26,276		(7,224)		(27.5)				50,003		55,272		(5,269)		(9.5)
Total non-interest expense	Total non-interest expense	$	205,648	$	192,573		$	13,075	6.8	%		Total non-interest expense	$	212,884	$	211,620	$	1,264	.6	%			$	632,037	$	602,319	$	29,718	4.9	%

Non-interest expense for the ~~first~~third quarter of 2022 amounted to ~~$205.6~~$212.9 million, an increase of ~~$13.1~~$1.3 million, or ~~6.8%~~.6%, compared to expense of ~~$192.6~~$211.6 million in the ~~first~~third quarter of last year. The increase in expense over the same period last year was mainly due to higher salaries expense and ~~benefits expense,~~ data processing and software expense, ~~marketing expense and~~partly offset by lower other non-interest expense. Salaries and benefits expense increased ~~$4.4~~$4.6 million, or ~~4.1%~~3.4%, ~~driven~~due to higher full-time salaries expense of $5.6 million, or 6.4%, partly offset by ~~growth in full-time salary costs and~~lower incentive ~~compensation. Employee benefits~~compensation expense ~~totaled $24.2 million, reflecting growth~~ of $2.5 ~~million, or 11.5%, mainly as a result of higher healthcare expense, payroll taxes and retirement expense.~~million. Full-time equivalent employees totaled ~~4,563~~4,595 at ~~March 31,~~September 30, 2022, compared to ~~4,619~~4,582 at ~~March 31,~~September 30, 2021. ~~Supplies~~Data processing and ~~communication~~software expense increased ~~$588~~$2.5 million, or 9.6%, due to higher software amortization, bank card processing fees and increased costs for service providers. Occupancy expense increased $215 thousand, or ~~14.3%~~1.7%, and equipment expense increased $596 thousand, or 13.4%, mainly due to higher ~~postage~~equipment repair expense and ~~courier expense, while marketing~~depreciation expense. Marketing expense increased ~~$1.2~~$605 thousand, or 10.8%, while other non-interest expense decreased $7.2 million, or ~~23.0%,~~27.5%. This decrease was mainly due to ~~an expansion of marketing efforts~~$8.2 million in litigation settlement costs recorded in the third quarter of 2021, lower legal and professional fees of $1.1 million and higher deferred loan origination costs of $755 thousand. These decreases to expense were partly offset by increases in travel and entertainment expense of $1.5 million and insurance expense of $619 thousand.

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Non-interest expense amounted to $632.0 million for the first ~~quarter~~nine months of 2022, an increase of $29.7 million, or 4.9%, over the first nine months of 2021. Salaries and benefits expense increased $23.0 million, or 5.9%, mainly due to higher costs for salaries, incentive compensation, payroll taxes and 401(k) expense. Salaries expense included expense of $5.4 million for special bonuses paid to non-incentivized full-time and part-time employees in the second half of 2022. Data processing and software expense increased ~~$1.6~~$6.7 million, or ~~6.1%~~8.8%, due to higher ~~software amortization, including expense related to the completed implementation of the Company's new core customer and deposit system placed into service in January 2022, as well as increased~~ costs for service providers, software amortization and bank card processing fees. ~~Other non-interest~~Occupancy expense increased ~~$2.3~~$1.5 million, or 4.1%, mainly due to higher rent and outside services expense. Equipment expense increased $940 thousand, or 7.0%, mainly due to higher equipment repair and depreciation expense. Supplies and communication expense increased $967 thousand, or 7.6%, mainly due to higher bank card reissuance fees and courier expense, while marketing expense increased $1.9 million, or 11.8%. Other non-interest expense decreased $5.3 million, or 9.5%, mainly due to the litigation settlement mentioned above, coupled with a decline of $6.8 million in fair value equity adjustments on the Company's deferred compensation plan assets. These decreases were partly offset by increases in travel and entertainment expense of ~~$1.1~~$3.9 million ~~lower deferred origination costs~~and insurance expense of ~~$1.1 million, partly offset by a $1.9 million decline in the Company's deferred compensation liability, as previously mentioned.~~$1.2 million.

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Provision and Allowance for Credit Losses on Loans and Liability for Unfunded Lending Commitments


		Three Months Ended						Three Months Ended								Nine Months Ended September 30
		Mar. 31, 2022		Dec. 31, 2021		Mar. 31, 2021				Sept. 30, 2022		June 30, 2022		Sept. 30, 2021			2022		2021
ALLOWANCE FOR CREDIT LOSSES ON LOANS	ALLOWANCE FOR CREDIT LOSSES ON LOANS								ALLOWANCE FOR CREDIT LOSSES ON LOANS

Balance at beginning of period	Balance at beginning of period	$	150,044	$	162,775	$	220,834		Balance at beginning of period	$	138,039	$	134,710	$	172,395		$	150,044	$	220,834
Provision for credit losses on loans	Provision for credit losses on loans	(10,686)		(8,474)		(10,355)			Provision for credit losses on loans	10,150		7,287		(5,961)			$	6,751	$	(43,749)
Net loan charge-offs (recoveries):	Net loan charge-offs (recoveries):								Net loan charge-offs (recoveries):
Commercial:	Commercial:								Commercial:
Business	Business	77		90		(4)			Business	461		19		65			557		(4,848)
Real estate-construction and land	Real estate-construction and land	—		—		1			Real estate-construction and land	—		—		—			—		1
Real estate-business	Real estate-business	(7)		6		20			Real estate-business	(8)		(1)		(5)			(16)		(70)
Commercial net loan charge-offs (recoveries)	Commercial net loan charge-offs (recoveries)	70		96		17			Commercial net loan charge-offs (recoveries)	453		18		60			541		(4,917)
Personal Banking:	Personal Banking:								Personal Banking:
Real estate-personal	Real estate-personal	22		(71)		15			Real estate-personal	(15)		(41)		(26)			(34)		(27)
Consumer	Consumer	808		919		763			Consumer	827		633		496			2,268		1,637
Revolving home equity	Revolving home equity	18		(26)		23			Revolving home equity	(38)		(14)		(22)			(34)		29
Consumer credit card	Consumer credit card	3,372		2,964		8,981			Consumer credit card	2,882		2,937		2,908			9,191		17,044
Overdrafts	Overdrafts	358		375		153			Overdrafts	703		425		243			1,486		544
Personal banking net loan charge-offs (recoveries)		4,578		4,161		9,935
Personal banking net loan charge-offs									Personal banking net loan charge-offs	4,359		3,940		3,599			12,877		19,227
Total net loan charge-offs	Total net loan charge-offs	4,648		4,257		9,952			Total net loan charge-offs	4,812		3,958		3,659			13,418		14,310
Balance at end of period	Balance at end of period	$	134,710	$	150,044	$	200,527		Balance at end of period	$	143,377	$	138,039	$	162,775		$	143,377	$	162,775
LIABILITY FOR UNFUNDED LENDING COMMITMENTS	LIABILITY FOR UNFUNDED LENDING COMMITMENTS								LIABILITY FOR UNFUNDED LENDING COMMITMENTS

Balance at beginning of period	Balance at beginning of period	24,204		22,784		38,307			Balance at beginning of period	24,907		25,032		24,208			24,204		38,307
Provision for credit losses on unfunded lending commitments	Provision for credit losses on unfunded lending commitments	828		1,420		4,123			Provision for credit losses on unfunded lending commitments	5,140		(125)		(1,424)			5,843		(15,523)
Balance at end of period	Balance at end of period	25,032		24,204		42,430			Balance at end of period	30,047		24,907		22,784			30,047		22,784
ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS	ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS	$	159,742	$	174,248	$	242,957		ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS	$	173,424	$	162,946	$	185,559		$	173,424	$	185,559


		Three Months Ended						Three Months Ended								Nine Months Ended September 30
		Mar. 31, 2022		Dec. 31, 2021		Mar. 31, 2021				Sept. 30, 2022		June 30, 2022		Sept. 30, 2021			2022		2021
Annualized net loan charge-offs (recoveries)*:	Annualized net loan charge-offs (recoveries)*:								Annualized net loan charge-offs (recoveries)*:
Commercial:	Commercial:								Commercial:
Business	Business	.01	%	.01	%	—	%		Business	.03	%	—	%	—	%		.01	%	(.11	%)
Real estate-construction and land	Real estate-construction and land	—		—		—			Real estate-construction and land	—		—		—			—		—
Real estate-business	Real estate-business	—		—		—			Real estate-business	—		—		—			—		—
Commercial net loan charge-offs		—		—		—
Commercial net loan charge-offs (recoveries)									Commercial net loan charge-offs (recoveries)	.02		—		—			.01		(.06)
Personal Banking:	Personal Banking:								Personal Banking:
Real estate-personal	Real estate-personal	—		(.01)		—			Real estate-personal	—		(.01)		—			—		—
Consumer	Consumer	.16		.18		.16			Consumer	.16		.12		.10			.15		.11
Revolving home equity	Revolving home equity	.03		(.04)		.03			Revolving home equity	(.05)		(.02)		(.03)			(.02)		.01
Consumer credit card	Consumer credit card	2.53		2.10		5.98			Consumer credit card	2.08		2.19		2.04			2.26		3.91
Overdrafts	Overdrafts	28.04		30.20		17.50			Overdrafts	62.85		30.86		18.87			39.39		17.59
Personal banking net loan charge-offs (recoveries)		.33		.29		.71
Personal banking net loan charge-offs									Personal banking net loan charge-offs	.30		.28		.25			.30		.45
Total annualized net loan charge-offs	Total annualized net loan charge-offs	.12	%	.11	%	.25	%		Total annualized net loan charge-offs	.12	%	.10	%	.10	%		.12	%	.12	%

* as a percentage of average loans (excluding loans held for sale)

~~The Company has an established process to~~

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To determine the amount of the allowance for credit losses on loans and the liability for unfunded lending commitments, the Company has an established process which assesses the risks and losses expected in its portfolios. This process provides an allowance based on estimates of allowances for pools of loans and unfunded lending commitments, as well as a second, smaller component based on certain individually evaluated loans and unfunded lending commitments. The Company's policies and

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processes for determining the allowance for credit losses on loans and the liability for unfunded lending commitments are discussed in Note 1 to the consolidated financial statements and in the "Allowance for Credit Losses" discussion within Critical Accounting Estimates and Related Policies in Item 7 of the 2021 Annual Report on Form 10-K.

Net loan charge-offs in the ~~first~~third quarter of 2022 amounted to ~~$4.6~~$4.8 million, compared to ~~$4.3~~$4.0 million in the prior quarter and ~~$10.0~~$3.7 million in the ~~first~~third quarter of last year. During the ~~first~~third quarter of 2022, the Company recorded net charge-offs on commercial loans of ~~$70~~$453 thousand, compared to net charge-offs of ~~$96~~$18 thousand in the prior ~~quarter. Consumer credit card~~quarter and $60 thousand in the third quarter of 2021. Business loan net charge-offs increased ~~$408~~$442 thousand in the ~~first~~third quarter of 2022, compared to the prior quarte~~r, but declined $5.6 million compared to the same quarter in the prior year.~~r. Compared to the same period last year, total net loan charge-offs in the ~~first~~third quarter of 2022 ~~decreased $5.4 million, primarily~~increased $1.2 million. This increase was driven by ~~the decrease~~increases in net charge-offs on overdraft, business, and consumer ~~credit card~~ loans.

For the three months ended ~~March 31,~~September 30, 2022, annualized net charge-offs on average consumer credit card loans totaled ~~2.53%~~2.08%, compared to ~~2.10%~~2.19% in the previous quarter and ~~5.98%~~2.04% in the same period last year. Consumer loan annualized net charge-offs in the current quarter amounted to .16%, compared to ~~.18%~~.12% in the prior quarter and ~~.16%~~.10% in the same period last year. In the ~~first~~third quarter of 2022, total annualized net loan charge-offs were .12%, compared to ~~.11%~~.10% in the previous quarter and ~~.25%~~.10% in the same period last year.

For the nine months ended September 30, 2022, net loan charge-offs amounted to $13.4 million, compared to $14.3 million during the same period in the prior year. The ~~continued recovery~~decrease in net loan charge-offs in the nine months ended September 30, 2022 was primarily due to a $7.9 million decline in net charge-offs on consumer credit card loans, which was mostly offset by a $5.4 million increase in net charge-offs on business loans driven by two large non-recurring recoveries in 2021. Net charge-offs on overdraft and consumer loans also increased $942 thousand and $631 thousand, respectively. For the nine months ended September 30, 2022, annualized net charge-offs on average consumer credit card loans totaled 2.26%, compared to 3.91% during the same period last year, while consumer loan annualized net charge-offs in the nine months ended September 30, 2022 amounted to .15%, compared to .11% during the same period last year. During first nine months of 2022, total annualized net loan charge-offs were .12%, unchanged from the same period last year.

The provision for credit losses on loans was $10.2 million in the current quarter, which was a $2.9 million increase over the $7.3 million provision recorded in the prior quarter and a $16.1 million increase over the $6.0 million benefit recorded for the nine months ended September 30, 2021. The increase in the provision from the prior quarter was due to a slightly less optimistic forecast, which includes a mild recession in the first half of 2023. The provision for credit losses on loans for the third quarter of the prior year reflected lower than projected net charge-offs and an improved forecast at that point in time, resulting in the release of reserves established for uncertainties related to the pandemic during that quarter. For the nine months ended September 30, 2022, the provision for credit losses on loans iswas $6.8 million, compared to a recovery of $43.7 million during the ~~result of an improved forecast coupled with lower than projected net charge-offs.~~ same period in the prior year.

For the ~~quarter~~nine months ended ~~March 31, 2021,~~September 30, 2022, the allowance for credit losses on loans decreased ~~$15.3~~$6.7 million, compared to the allowance for credit losses on loans as of December 31, 2021. The decrease was primarily ~~due~~the net result of reducing the allowance as pandemic economic concerns lessened compared to December 31, 2021, slightly offset by an emerging mild recession uncertainty related to the ~~improved economic forecast utilized in~~geopolitical environment, high inflation, and supply constraints on the ~~Company's estimate of future credit losses at March 31, 2022, coupled with lower than projected net loan charge-offs during the first quarter of 2022.~~economy. The allowance for credit losses on commercial loans ~~decreased slightly~~increased by ~~$2.9~~$5.3 million, while the allowance for credit losses related to personal banking loans, including consumer credit card loans, decreased ~~$12.4 million.~~ ~~As a result, the provision for~~$12.0 million, mostly related to decreases in consumer credit ~~losses on~~card loans ~~was a recovery of~~ ~~$10.7 million~~experienced in the current quarter, which was a $2.2 million increase from the $8.5 million benefit recorded in the prior quarter. The recovery of the provision for credit losses on loans in the current quarter was $331 thousand more than the recovery recorded in the thirdfirst quarter of ~~2020~~2022..

While the forecast reflects a continued recovery from the COVID-19 pandemic, the allowance considered the uncertainty of disruptions caused by higher inflation, the geopolitical environment, and ongoing supply constraints on the economy and on the consumer and commercial loan portfolios. At ~~March 31,~~September 30, 2022, the allowance for credit losses on loans amounted to ~~$134.7~~$143.4 million, compared to ~~$150.0 million and $200.5~~$138.0 million at ~~December 31,~~June 30, 2022. This increase in the allowance for credit losses on loans compared to the prior quarter is due to a less optimistic forecast with a mild recession in the first half of 2023. The current period estimation for credit losses continues to consider the uncertainty in the economy as inflation rises and supply chain issues continue. The allowance for credit losses on loans was $162.8 million at September 30, 2021, reflecting pandemic uncertainties and ~~March 31, 2021, respectively,~~the economic forecast at that point in time, and was ~~.87%~~.90%, ~~.99%~~.88% and ~~1.22%~~1.07% of total loans at ~~March 31,~~September 30, 2022, ~~December 31, 2021~~June 30, 2022 and ~~March 31,~~September 30, 2021, respectively.

In the current quarter, the provision for credit losses on unfunded lending commitments was ~~$828~~$5.1 million, compared to a benefit of $125 thousand ~~reflecting a $592 thousand decrease over the provision~~ in the prior quarter and a ~~$3.3~~benefit of $1.4 million ~~decrease compared to~~in the ~~first~~third quarter of 2021. For the nine months ended September 30, 2022, the provision for credit losses on unfunded lending commitments was $5.8 million, compared to a benefit of $15.5 million during the same period in the prior year. At ~~March 31,~~September 30, 2022, the liability for unfunded lending

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commitments was ~~$25.0~~$30.0 million, compared to ~~$24.2~~$24.9 million at ~~December 31, 2021~~June 30, 2022 and ~~$42.4~~$22.8 million at ~~March 31,~~September 30, 2021. The Company's unfunded lending commitments primarily relate to construction loans, and the Company's estimate for credit losses in its unfunded lending commitments utilizes the same model and forecast as its estimate for credit losses on loans. See Note 2 for further discussion of the model inputs utilized in the Company's estimate of credit losses.

The Company considers the allowance for credit losses on loans and the liability for unfunded commitments adequate to cover losses expected in the loan portfolio, including unfunded commitments, at ~~March 31,~~September 30, 2022.

The allowance for credit losses on loans and the liability for unfunded lending commitments are estimates that require significant judgment including projections of the macro-economic environment. The Company utilizes a third-party macro-economic forecast that continuously changes due to economic conditions and events. These changes in the forecast cause fluctuations in the allowance for credit losses on loans and the liability for unfunded lending commitments. The Company uses its best judgment to assess the macro-economic forecast and internal loss data in estimating the allowance for credit losses on loans and the liability for unfunded lending commitments. These estimates are subject to periodic refinement based on changes in the underlying external and internal data.

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Risk Elements of Loan Portfolio

The following table presents non-performing assets and loans which are past due 90 days and still accruing interest. Non-performing assets include non-accruing loans and foreclosed real estate. Loans are placed on non-accrual status when management does not expect to collect payments consistent with acceptable and agreed upon terms of repayment. Loans that are 90 days past due as to principal and/or interest payments are generally placed on non-accrual, unless they are both well-secured and in the process of collection, or they are personal banking loans that are exempt under regulatory rules from being classified as non-accrual.


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

Non-accrual loans	Non-accrual loans	$	8,335		$	9,157		Non-accrual loans	$	7,184		$	9,157
Foreclosed real estate	Foreclosed real estate	296			115			Foreclosed real estate	354			115
Total non-performing assets	Total non-performing assets	$	8,631		$	9,272		Total non-performing assets	$	7,538		$	9,272
Non-performing assets as a percentage of total loans	Non-performing assets as a percentage of total loans	.06		%	.06		%	Non-performing assets as a percentage of total loans	.05		%	.06		%
Non-performing assets as a percentage of total assets	Non-performing assets as a percentage of total assets	.02		%	.03		%	Non-performing assets as a percentage of total assets	.02		%	.03		%

Total loans past due 90 days and still accruing interest	Total loans past due 90 days and still accruing interest	$	10,670		$	11,726		Total loans past due 90 days and still accruing interest	$	12,538		$	11,726

Non-accrual loans totaled ~~$8.3~~$7.2 million at ~~March 31,~~September 30, 2022, a decrease of ~~$822 thousand~~$2.0 million from the balance at December 31, 2021. The decrease occurred mainly in business loans which decreased ~~$556 thousand.~~$1.7 million. At ~~March 31,~~September 30, 2022, non-accrual loans were comprised of business ~~(81.1%~~(78.6%), personal real estate ~~(16.6%~~(19.3%), and business real estate ~~(2.3%~~(2.1%) loans. Foreclosed real estate totaled ~~$296~~$354 thousand at ~~March 31,~~September 30, 2022, an increase of ~~$181~~$239 thousand when compared to December 31, 2021. Total loans past due 90 days or more and still accruing interest were ~~$10.7~~$12.5 million as of ~~March 31,~~September 30, 2022, ~~a decrease~~an increase of ~~$1.1 million~~$812 thousand from December 31, 2021. Balances by class for non-accrual loans and loans past due 90 days and still accruing interest are shown in the "Delinquent and non-accrual loans" section in Note 2 to the consolidated financial statements.

In addition to the non-performing and past due loans mentioned above, the Company also has identified loans for which management has concerns about the ability of the borrowers to meet existing repayment terms. They are classified as substandard under the Company's internal rating system. The loans are generally secured by either real estate or other borrower assets, reducing the potential for loss should they become non-performing. Although these loans are generally identified as potential problem loans, they may never become non-performing. Such loans totaled ~~$306.6~~$292.5 million at ~~March 31,~~September 30, 2022 compared with $278.7 million at December 31, 2021, resulting in an increase of ~~$27.9~~$13.8 million, or ~~10.0%~~4.9%.


(In thousands)	(In thousands)	March 31, 2022		December 31, 2021		(In thousands)	September 30, 2022		December 31, 2021
Potential problem loans:	Potential problem loans:					Potential problem loans:
Business	Business	$	50,198	$	37,143	Business	$	33,249	$	37,143
Real estate – construction and land	Real estate – construction and land	55,274		40,259		Real estate – construction and land	57,647		40,259
Real estate – business	Real estate – business	200,631		200,766		Real estate – business	200,418		200,766
Real estate – personal	Real estate – personal	533		526		Real estate – personal	1,140		526

Total potential problem loans	Total potential problem loans	$	306,636	$	278,694	Total potential problem loans	$	292,454	$	278,694

At ~~March 31,~~September 30, 2022, the Company had ~~$125.8~~$155.6 million of loans whose terms have been modified or restructured under a troubled debt restructuring. These loans have been extended to borrowers who are experiencing financial difficulty and who have been granted a concession, as defined by accounting guidance, and are further discussed in the "Troubled debt restructurings" section in Note 2 to the consolidated financial statements. This balance includes certain commercial loans totaling ~~$108.8~~$140.6 million which are classified as substandard and included in the table above because of this classification.

Loans with Special Risk Characteristics

Management relies primarily on an internal risk rating system, in addition to delinquency status, to assess risk in the loan portfolio, and these statistics are presented in Note 2 to the consolidated financial statements. However, certain types of loans are considered at high risk of loss due to their terms, location, or special conditions. Additional information about the major types of loans in these categories and their risk features are provided below. Information based on loan-to-value (LTV) ratios was generally calculated with valuations at loan origination date. The Company normally obtains an updated appraisal or valuation at the time a loan is renewed or modified, or if the loan becomes significantly delinquent or is in the process of being foreclosed upon.

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Real Estate – Construction and Land Loans

The Company's portfolio of construction and land loans, as shown in the table below, amounted to ~~7.4%~~7.6% of total loans outstanding at ~~March 31,~~September 30, 2022. The largest component of construction and land loans was commercial construction, which increased ~~$17.1~~$55.1 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2022. At ~~March 31,~~September 30, 2022, multi-family residential construction loans totaled approximately ~~$180.5~~$247.4 million, or ~~19.2%~~25.3%, of the commercial construction loan portfolio, compared to $155.9 million, or 16.9%, at December 31, 2021.


(Dollars in thousands)	(Dollars in thousands)	March 31, 2022		% of Total		% of Total Loans		December 31, 2021		% of Total		% of Total Loans		(Dollars in thousands)	September 30, 2022		% of Total		% of Total Loans		December 31, 2021		% of Total		% of Total Loans
Commercial construction	Commercial construction	$	939,785	82.1	%	6.1	%	$	922,654	82.5	%	6.1	%	Commercial construction	$	977,771	81.0	%	6.1	%	$	922,654	82.5	%	6.1	%
Residential construction	Residential construction	115,079		10.1		.7		96,618		8.6		.7		Residential construction	138,799		11.5		.9		96,618		8.6		.7
Commercial land and land development	Commercial land and land development	45,827		4.0		.3		48,481		4.3		.3		Commercial land and land development	50,145		4.2		.3		48,481		4.3		.3
Residential land and land development	Residential land and land development	43,720		3.8		.3		50,513		4.6		.3		Residential land and land development	40,240		3.3		.3		50,513		4.6		.3
Total real estate - construction and land loans	Total real estate - construction and land loans	$	1,144,411	100.0	%	7.4	%	$	1,118,266	100.0	%	7.4	%	Total real estate - construction and land loans	$	1,206,955	100.0	%	7.6	%	$	1,118,266	100.0	%	7.4	%

Real Estate – Business Loans

Total business real estate loans were ~~$3.1~~$3.3 billion at ~~March 31,~~September 30, 2022 and comprised ~~20.1%~~21.0% of the Company's total loan portfolio. These loans include properties such as manufacturing and warehouse buildings, small office and medical buildings, churches, hotels and motels, shopping centers, and other commercial properties. At ~~March 31,~~September 30, 2022, ~~38.0%~~35.7% of business real estate loans were for owner-occupied real estate properties, which have historically resulted in lower net charge-off rates than non-owner-occupied commercial real estate loans.


(Dollars in thousands)	(Dollars in thousands)	March 31, 2022		% of Total		% of Total Loans		December 31, 2021		% of Total		% of Total Loans		(Dollars in thousands)	September 30, 2022		% of Total		% of Total Loans		December 31, 2021		% of Total		% of Total Loans
Owner-occupied	Owner-occupied	$	1,180,589	38.0	%	7.6	%	$	1,188,469	38.9	%	7.8	%	Owner-occupied	$	1,188,189	35.7	%	7.5	%	$	1,188,469	38.9	%	7.8	%
Office	Office	419,430		13.5		2.7		380,101		12.4		2.5		Office	512,752		15.4		3.2		380,101		12.4		2.5
Retail														Retail	330,033		9.9		2.1		339,874		11.1		2.2
Multi-family	Multi-family	350,567		11.3		2.3		354,282		11.6		2.3		Multi-family	313,740		9.4		2.0		354,282		11.6		2.3
Retail		336,142		10.8		2.2		339,874		11.1		2.2
Industrial														Industrial	313,230		9.4		2.0		99,800		3.3		.7
Hotels	Hotels	232,470		7.5		1.5		234,673		7.7		1.5		Hotels	218,319		6.6		1.4		234,673		7.7		1.5
Farm	Farm	188,130		6.0		1.2		178,780		5.8		1.2		Farm	198,864		6.0		1.3		178,780		5.8		1.2
Senior living	Senior living	177,534		5.7		1.1		174,871		5.7		1.2		Senior living	147,455		4.4		.9		174,871		5.7		1.2
Industrial		111,467		3.6		.7		99,800		3.3		.7
Other	Other	113,339		3.6		.8		107,987		3.5		.8		Other	109,045		3.2		.6		107,987		3.5		.8
Total real estate - business loans	Total real estate - business loans	$	3,109,668	100.0	%	20.1	%	$	3,058,837	100.0	%	20.2	%	Total real estate - business loans	$	3,331,627	100.0	%	21.0	%	$	3,058,837	100.0	%	20.2	%

Revolving Home Equity Loans

The Company had ~~$264.4~~$286.0 million in revolving home equity loans at ~~March 31,~~September 30, 2022 that were generally collateralized by residential real estate. Most of these loans ~~(92.8%~~(91.7%) are written with terms requiring interest-only monthly payments. These loans are offered in three main product lines: LTV up to 80%, 80% to 90%, and 90% to 100%. As of ~~March 31,~~September 30, 2022, the outstanding principal of loans with an original LTV higher than 80% was ~~$30.7~~$30.1 million, or ~~11.6%~~10.5% of the portfolio, compared to $30.9 million as of December 31, 2021. Total revolving home equity loan balances over 30 days past due were $1.4 million at September 30, 2022 and $1.6 million at ~~March 31, 2022 and~~ December 31, 2021, and there were no revolving home equity loans on non-accrual status at ~~March 31,~~September 30, 2022 or December 31, 2021. The weighted average FICO score for the total current portfolio balance is ~~790.~~788. At maturity, the accounts are re-underwritten, and if they qualify under the Company's credit, collateral and capacity policies, the borrower is given the option to renew the line of credit or convert the outstanding balance to an amortizing loan. If criteria are not met, amortization is required, or the borrower may pay off the loan. During the remainder of 2022 through 2024, approximately ~~17%~~12% of the Company's current outstanding balances are expected to mature. Of these balances, approximately ~~81%~~85% have a FICO score of 700 or higher. The Company does not expect a significant increase in losses as these loans mature, due to their high FICO scores, low LTVs, and low historical loss levels.

Consumer Loans

Within the consumer loan portfolio are several direct and indirect product lines, which include loans for the purchase of automobiles, motorcycles, marine and RVs. Auto loans comprised ~~40%~~38.1% of the consumer loan portfolio at ~~March 31,~~September 30, 2022, and outstanding balances for auto loans were ~~$830.7~~$805.6 million and $855.4 million at ~~March 31,~~September 30, 2022 and December 31, ~~2021,~~

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2021, respectively. The balances over 30 days past due amounted to ~~$6.9~~$7.4 million at ~~March 31,~~September 30, 2022 and $9.0 million at December 31, 2021, respectively and comprised ~~.8%~~0.9% of the outstanding balances of these loans at ~~March 31,~~September 30, 2022 and 1.1% at December 31, 2021, respectively. For the ~~three~~nine months ended ~~March 31,~~September 30, 2022, ~~$84.7~~$257.5 million of new auto loans were originated, compared to ~~$106.2~~$324.5 million during the first ~~three~~nine months of 2021. At ~~March 31,~~September 30, 2022, the automobile loan portfolio had a weighted average FICO score of ~~755,~~756, and net charge-offs on auto loans were ~~.1%~~.2% of average auto loans.

The Company's consumer loan portfolio also includes fixed rate home equity loans, typically for home repair or remodeling, and these loans comprised ~~11%~~10.9% of the consumer loan portfolio at ~~March 31,~~September 30, 2022. Losses on these loans have historically been low, and the Company saw net recoveries of ~~$28~~$29 thousand for the first ~~three~~nine months of 2022. Private banking loans comprised ~~31%~~33.5% of the consumer loan portfolio at ~~March 31,~~September 30, 2022. The Company's private banking loans are generally well-collateralized, and at ~~March 31,~~September 30, 2022 were secured primarily by assets held by the Company's trust department. The remaining portion of the Company's consumer loan portfolio is comprised of health services financing, motorcycles, marine and RV loans. Net charge-offs on private banking, health services financing, motorcycle and marine and RV loans totaled ~~$428 thousand~~$1.1 million in the first ~~three~~nine months of 2022 and were ~~.2%~~0.1% of the average balances of these loans at ~~March 31,~~September 30, 2022.

Consumer Credit Card Loans

The Company offers low promotional rates on selected consumer credit card products. Out of a portfolio at ~~March 31,~~September 30, 2022 of ~~$544.6~~$563.3 million in consumer credit card loans outstanding, approximately ~~$84.3~~$95.7 million, or ~~15.5%~~17.0%, carried a low promotional rate. Within the next six months, ~~$32.7~~$32.2 million of these loans are scheduled to convert to the ongoing higher contractual rate. To mitigate some of the risk involved with this credit card product, the Company performs credit checks and detailed analysis of the customer borrowing profile before approving the loan application. Management believes that the risks in the consumer loan portfolio are reasonable and the anticipated loss ratios are within acceptable parameters.

Oil and Gas Energy Lending

The Company's energy lending portfolio is comprised of lending to the petroleum and natural gas sectors and totaled ~~$275.8~~$279.6 million, or 1.8% of total loans at ~~March 31,~~September 30, 2022, an increase of ~~$15.1~~$18.9 million from year end 2021, as shown in the table below.

(In thousands) March 31, 2022 December 31, 2021 Unfunded commitments at March 31, 2022
Extraction $ 201,185 $ 184,840 $ 165,853
Mid-stream shipping and storage 38,413 36,850 67,878
Downstream distribution and refining 22,067 24,915 19,899
Support activities 14,103 14,039 17,843
Total energy lending portfolio $ 275,768 $ 260,644 $ 271,473

~~Information about the credit quality of the Company's energy lending portfolio as of March 31, 2022 and December 31, 2021 is provided in the table below.~~

(Dollars in thousands) March 31, 2022 % of Energy Lending December 31, 2021 % of Energy Lending
Pass $ 271,368 98.4 % $ 256,186 98.3 %
Special mention 1,999 .7 1,999 .8
Non-accrual 2,401 .9 2,459 .9
Total $ 275,768 100.0 % $ 260,644 100.0 %

Energy lending balances classified as substandard and non-accrual represented 0.9% of total energy lending loan balances at March 31, 2022. The Company saw a small recovery on energy loans during the three months ended March 31, 2022. The Company recorded $10 thousand of recoveries on energy loans for the year ended December 31, 2021.


(In thousands)	September 30, 2022		December 31, 2021		Unfunded commitments at September 30, 2022
Extraction	$	215,919	$	184,840	$	136,194
Mid-stream shipping and storage	42,080		36,850		94,749
Downstream distribution and refining	11,662		24,915		19,844
Support activities	9,916		14,039		9,749
Total energy lending portfolio	$	279,577	$	260,644	$	260,536

Shared National Credits

The Company participates in credits of large, publicly traded companies which are defined by regulation as shared national credits, or SNCs. Regulations define SNCs as loans exceeding $100 million that are shared by three or more financial institutions. The Company typically participates in these loans when business operations are maintained in the local communities or regional markets and opportunities to provide other banking services are present. The balance of SNC loans

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totaled $1.3 billion at September 30, 2022, compared to $1.2 billion at ~~March 31, 2022 and~~ December 31, 2021. Additional unfunded commitments at ~~March 31,~~September 30, 2022 totaled ~~$1.8~~$1.7 billion.

Income Taxes

Income tax expense was ~~$31.9~~$33.9 million in the ~~first~~third quarter of 2022, compared to ~~$33.8~~$32.0 million in the ~~fourth~~second quarter of ~~2021~~2022 and ~~$32.1~~$34.7 million in the ~~first~~third quarter of 2021. The Company's effective tax rate, including the effect of non-controlling interest, was ~~21.3%~~21.7% in the ~~first~~third quarter of 2022, compared to ~~22.7%~~21.7% in the ~~fourth~~second quarter of ~~2021~~2022 and ~~19.7%~~22.1% in the ~~first~~third quarter of 2021. ~~The~~For the nine months ended September 30, 2022, income tax expense was $97.9 million, compared to $111.9 million for the same period during the previous year, resulting in effective tax ~~rate in the first quarter has historically been lower than other quarters due to the recognition~~rates of share-based excess tax benefits as a reduction to income tax expense. These benefits result from transactions relating to equity award vesting, most of which occur in the first quarter of each year. The effective tax rate in the first quarter of 2022 increased compared to the effective tax rate in the first quarter of 2021 mainly due to executive compensation limitations on stock-based compensation.21.5% and 21.2%, respectively.

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Financial Condition

Balance Sheet

Total assets of the Company were ~~$35.0~~$32.6 billion at ~~March 31,~~September 30, 2022 and $36.7 billion at December 31, 2021. Earning assets (excluding the allowance for credit losses on loans and fair value adjustments on debt securities) amounted to ~~$34.2~~$32.3 billion at ~~March 31,~~September 30, 2022 and $35.5 billion at December 31, 2021, and consisted of ~~45%~~49% in loans and ~~46%~~45% in investment securities at ~~March 31,~~September 30, 2022.

~~During the first quarter of~~At September 30, 2022, ~~average~~total loans ~~totaled $15.2 billion, an~~increased $722.6 million, or 4.8%, compared to balances at December 31, 2021. The increase ~~of $130.1 million over the prior quarter, and declined $1.1 billion, or 6.8%, from the same quarter last year. Compared~~was mainly due to ~~the previous quarter, average balances of business loans grew $132.3 million (includes a decline of $132.0 million~~growth in ~~Paycheck Protection Program (PPP) average loan balances). Average~~ business real estate, ~~loan balances grew $91.6~~business, and construction loans of $272.8 million, ~~while construction loan balances declined $93.3 million. Period end loans increased $282.7~~$225.4 million, ~~compared to the prior quarter, including PPP loan balances that decreased $75.7~~and $88.7 million, ~~this quarter and totaled $53.4 million at March 31, 2022. Excluding PPP loans, period end~~respectively. The growth in business loans increased $280.7 million. As of March 31, 2022, 97% of PPP loan balances have been forgiven. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $55.6 million, compared to $119.3 million in the prior quarter.

~~Total average available for sale debt securities increased $418.0 million over the previous quarter to $14.9 billion, at fair value. The increase in investment securities~~ was mainly the result of increased commercial and industrial, lease and commercial card lending, partly offset by a decline in tax free loans. Personal real estate loans increased $57.1 million. Consumer loans, which includes automobile, marine and RV, fixed rate home equity and other consumer loans, increased $84.1 million, as growth in ~~asset-backed securities. During the current quarter, purchases~~other consumer loans was partly offset by a decline in auto loans. These increases in loan balances were partly offset by a decline in consumer credit card loans of $12.1 million.

Available for sale debt securities, excluding fair value adjustments, decreased $242.8 million at September 30, 2022 compared to December 31, 2021. Purchases of securities during this period totaled ~~$1.8~~$1.9 billion, ~~with a weighted average yield of approximately 2.06%. Maturities~~offset by sales, maturities and pay downs of $2.2 billion. The largest declines in outstanding balances occurred in agency mortgage-backed securities, state and municipal obligations, and other debt securities, which decreased $467.5 million, $51.2 million, and $54.3 million, respectively. These decreases were ~~$806.5 million.~~partially offset by increases in asset-backed securities and non-agency mortgage-backed securities, which increased $209.8 million and $66.0 million, respectively, at September 30, 2022 compared to December 31, 2021. At ~~March 31,~~September 30, 2022, the duration of the investment portfolio was ~~3.6~~3.9 years, and maturities and pay downs of approximately ~~$3.1~~$2.4 billion are expected to occur during the next 12 months.

Total ~~average~~ deposits ~~increased $501.7 million this quarter~~at September 30, 2022 amounted to $27.5 billion, a decrease of $2.3 billion compared to ~~the previous quarter.~~December 31, 2021. The ~~increase~~decline in deposits ~~mostly~~largely resulted from ~~growth~~a decrease in ~~interest checking~~demand deposits, mainly in business demand deposits (decrease of $1.7 billion). Additionally, certificates of deposit decreased $454.4 million and money market deposits ~~of $1.1 billion, partially~~decreased $650.3 million. These decreases were partly offset by ~~declines~~growth in government demand ~~deposit and certificates~~deposits of ~~deposit balances of $374.6~~$325.4 million and ~~$255.3~~interest checking deposits of $58.4 million ~~respectively. Compared~~at September 30, 2022 compared to ~~the previous quarter, total average consumer and wealth deposits grew $290.2~~balances at December 31, 2021. The Company's borrowings totaled $2.3 billion at September 30, 2022, a decrease of $719.1 million ~~and $213.6 million, respectively. The average loans~~from balances at December 31, 2021, mainly due to ~~deposits ratio was 51.9%~~a decline in ~~the current quarter and 52.4% in the prior quarter. The Company’s average borrowings, which include~~ customer repurchase agreements, ~~were $2.7 billion~~partly offset by an increase in ~~the first quarter of 2022 and $2.6 billion in the prior quarter.~~federal funds purchased.

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Liquidity and Capital Resources

Liquidity Management

The Company’s most liquid assets are comprised of available for sale debt securities, federal funds sold, securities purchased under agreements to resell (resale agreements), and balances at the Federal Reserve Bank, as follows:


(In thousands)	(In thousands)	March 31, 2022		March 31, 2021		December 31, 2021		(In thousands)	September 30, 2022		September 30, 2021		December 31, 2021
Liquid assets:	Liquid assets:							Liquid assets:
Available for sale debt securities	Available for sale debt securities	$	14,780,494	$	12,528,203	$	14,450,027	Available for sale debt securities	$	12,632,510	$	14,165,656	$	14,450,027
Federal funds sold	Federal funds sold	—		500		2,800		Federal funds sold	14,020		—		2,800
Securities purchased under agreements to resell	Securities purchased under agreements to resell	1,825,000		850,000		1,625,000		Securities purchased under agreements to resell	1,275,000		1,750,000		1,625,000
Balances at the Federal Reserve Bank	Balances at the Federal Reserve Bank	1,260,813		2,017,128		3,971,217		Balances at the Federal Reserve Bank	642,943		1,888,545		3,971,217
Total	Total	$	17,866,307	$	15,395,831	$	20,049,044	Total	$	14,564,473	$	17,804,201	$	20,049,044

~~There were no federal~~Federal funds sold, ~~at March 31, 2022,~~ which are funds lent to the Company's correspondent bank customers with overnight ~~maturities.~~maturities, totaled $14.0 million as of September 30, 2022. Resale agreements, maturing through ~~2024,~~2025, totaled ~~$1.8~~$1.3 billion at ~~March 31,~~September 30, 2022. Under these agreements, the Company lends funds to upstream financial institutions and holds marketable securities, safe-kept by a third-party custodian, as collateral. This collateral totaled ~~$1.9~~$1.3 billion in fair value at ~~March 31,~~September 30, 2022. Interest earning balances at the Federal Reserve Bank, which have overnight maturities and are used for general liquidity purposes, totaled ~~$1.3 billion~~$642.9 million at ~~March 31,~~September 30, 2022. The fair value of the available for sale debt portfolio was ~~$14.8~~$12.6 billion at ~~March 31,~~September 30, 2022 and included an unrealized net loss of ~~$645.5 million.~~$1.5 billion.

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Approximately ~~$3.1~~$2.4 billion of the available for sale debt portfolio is expected to mature or pay down during the next 12 months, and these funds offer substantial resources to meet new loan demand or help offset potential reductions in the Company's deposit funding base. The Company pledges portions of its investment securities portfolio to secure public fund deposits, securities sold under agreements to repurchase, trust funds, letters of credit issued by the FHLB, and borrowing capacity at the Federal Reserve Bank. Total investment securities pledged for these purposes were as follows:


(In thousands)	(In thousands)	March 31, 2022		March 31, 2021		December 31, 2021		(In thousands)	September 30, 2022		September 30, 2021		December 31, 2021
Investment securities pledged for the purpose of securing:	Investment securities pledged for the purpose of securing:							Investment securities pledged for the purpose of securing:
Federal Reserve Bank borrowings	Federal Reserve Bank borrowings	$	16,260	$	39,586	$	17,465	Federal Reserve Bank borrowings	$	13,446	$	18,566	$	17,465
FHLB borrowings and letters of credit	FHLB borrowings and letters of credit	2,798		4,874		3,218		FHLB borrowings and letters of credit	2,033		3,736		3,218
Securities sold under agreements to repurchase *	Securities sold under agreements to repurchase *	2,575,444		2,170,744		3,475,589		Securities sold under agreements to repurchase *	2,275,924		2,511,891		3,475,589
Other deposits and swaps	Other deposits and swaps	2,606,141		2,477,132		2,897,576		Other deposits and swaps	2,483,636		3,210,326		2,897,576
Total pledged securities	Total pledged securities	5,200,643		4,692,336		6,393,848		Total pledged securities	4,775,039		5,744,519		6,393,848
Unpledged and available for pledging	Unpledged and available for pledging	8,426,648		6,490,351		6,913,721		Unpledged and available for pledging	6,905,006		7,123,799		6,913,721
Ineligible for pledging	Ineligible for pledging	1,153,203		1,345,516		1,142,458		Ineligible for pledging	952,465		1,297,338		1,142,458
Total available for sale debt securities, at fair value	Total available for sale debt securities, at fair value	$	14,780,494	$	12,528,203	$	14,450,027	Total available for sale debt securities, at fair value	$	12,632,510	$	14,165,656	$	14,450,027

* Includes securities pledged for collateral swaps, as discussed in Note 12 to the consolidated financial statements.

Liquidity is also available from the Company's large base of core customer deposits, defined as non-interest bearing, interest checking, savings, and money market deposit accounts. At ~~March 31,~~September 30, 2022, such deposits totaled ~~$28.2~~$26.5 billion and represented ~~96.1%~~96.4% of total deposits. These core deposits are normally less volatile, as they are often with customer relationships tied to other products offered by the Company, promoting long lasting relationships and stable funding sources. Certificates of deposit of $100,000 and over totaled ~~$716.3~~$597.1 million at ~~March 31,~~September 30, 2022. These accounts are normally considered more volatile with higher cost and comprised ~~2.4%~~2.2% of total deposits at ~~March 31,~~September 30, 2022.


(In thousands)	(In thousands)	March 31, 2022		March 31, 2021		December 31, 2021		(In thousands)	September 30, 2022		September 30, 2021		December 31, 2021
Core deposit base:	Core deposit base:							Core deposit base:
Non-interest bearing	Non-interest bearing	$	11,428,372	$	11,076,556	$	11,772,374	Non-interest bearing	$	10,468,591	$	11,622,855	$	11,772,374
Interest checking	Interest checking	3,301,315		2,180,434		3,227,822		Interest checking	3,236,160		2,202,422		3,227,822
Savings and money market	Savings and money market	13,450,317		12,391,944		13,370,263		Savings and money market	12,778,327		12,705,232		13,370,263
Total	Total	$	28,180,004	$	25,648,934	$	28,370,459	Total	$	26,483,078	$	26,530,509	$	28,370,459

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Other important components of liquidity are the level of borrowings from third party sources and the availability of future credit. The Company's outside borrowings are mainly comprised of federal funds purchased and repurchase agreements, as follows:


(In thousands)	(In thousands)	March 31, 2022		March 31, 2021		December 31, 2021		(In thousands)	September 30, 2022		September 30, 2021		December 31, 2021
Borrowings:	Borrowings:							Borrowings:
Federal funds purchased	Federal funds purchased	$	17,315	$	28,490	$	43,385	Federal funds purchased	$	311,200	$	11,345	$	43,385
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	2,300,146		1,909,620		2,979,582		Securities sold under agreements to repurchase	2,003,390		2,242,408		2,979,582

Other debt	Other debt	9,057		3,791		12,560		Other debt	1,831		4,006		12,560
Total	Total	$	2,326,518	$	1,941,901	$	3,035,527	Total	$	2,316,421	$	2,257,759	$	3,035,527

Federal funds purchased are unsecured overnight borrowings obtained mainly from upstream correspondent banks with which the Company maintains approved lines of credit. Repurchase agreements are borrowings by the Company from its customers in the form of securities sold under agreements to repurchase. These repurchase agreements, which generally mature overnight, are comprised of non-insured customer funds totaling $2.0 billion at September 30, 2022 and are collateralized by securities in the Company's investment ~~portfolio and are comprised~~portfolio. At September 30, 2022, the value of ~~non-insured customer funds totaling $2.3 billion, which generally mature overnight.~~the collateral pledged for the benefit of customers was $2.0 billion. The Company also borrows on a secured basis through advances from the FHLB. The advances are generally short-term, fixed interest rate borrowings. There were no advances outstanding from the FHLB at ~~March 31,~~September 30, 2022.

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The Company pledges certain assets, including loans and investment securities, to both the Federal Reserve Bank and the FHLB as security to establish lines of credit and borrow from these entities. Based on the amount and type of collateral pledged, the FHLB establishes a collateral value from which the Company may draw advances against the collateral. Also, this collateral is used to enable the FHLB to issue letters of credit in favor of public fund depositors of the Company. The Federal Reserve Bank also establishes a collateral value of assets pledged and permits borrowings from the discount window. The following table reflects the collateral value of assets pledged, borrowings, and letters of credit outstanding, in addition to the estimated future funding capacity available to the Company at ~~March 31,~~September 30, 2022.


		March 31, 2022							September 30, 2022
(In thousands)	(In thousands)	FHLB		Federal Reserve		Total		(In thousands)	FHLB		Federal Reserve		Total
Collateral value established by FHLB and FRB		$	1,949,603	$	1,011,829	$	2,961,432
Total collateral value established by FHLB and FRB								Total collateral value established by FHLB and FRB	$	1,905,444	$	957,517	$	2,862,961

Letters of credit issued	Letters of credit issued	(199,250)		—		(199,250)		Letters of credit issued	(259,470)		—		(259,470)
Available for future advances	Available for future advances	$	1,750,353	$	1,011,829	$	2,762,182	Available for future advances	$	1,645,974	$	957,517	$	2,603,491

In addition to those mentioned above, several other sources of liquidity are available. No commercial paper has been issued or outstanding during the past ten years. The Company has no subordinated debt or hybrid instruments which could affect future borrowing capacity. Because of its lack of significant long-term debt, the Company believes that through its Capital Markets Group or in other public debt markets, it could generate additional liquidity from sources such as jumbo certificates of deposit or privately placed corporate notes or other forms of debt. The Company receives strong outside rankings from both Standard & Poor's and Moody's on both the consolidated company level and its subsidiary bank, Commerce Bank, which would support future financing efforts, should the need arise. These ratings are as follows:


	Standard & Poor’s	Moody’s
Commerce Bancshares, Inc.
Issuer rating	A-

Rating outlook	Stable

Commerce Bank
Issuer rating	A	A2
Baseline credit assessment		a1
Short-term rating	A-1	P-1
Rating outlook	Stable	Stable

The cash flows from the operating, investing and financing activities of the Company resulted in a net decrease in cash, cash equivalents and restricted cash of ~~$2.7~~$3.3 billion during the first ~~three~~nine months of 2022, as reported in the consolidated statements of cash flows in this report. Operating activities, consisting mainly of net income adjusted for certain non-cash items, provided cash flow of ~~$124.5~~$469.8 million and has historically been a stable source of funds. Investing activities, which occur mainly in the

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loan and investment securities portfolios, used cash of ~~$1.5 billion.~~$247.2 million. Activity in the investment securities portfolio ~~used~~provided cash of ~~$1.0 billion~~$183.9 million from purchases (net of sales, maturities and pay downs), securities purchased under agreements to resell used cash of $200.0 million, and an increase in the loan portfolio ~~which~~ used cash of ~~$287.3~~$736.5 million. These cash outflows were partially offset by repayments related to securities purchased under agreements to resell, which provided cash of $550.0 million. Financing activities used cash of ~~$1.3~~$3.5 billion, largely resulting from a a decrease in deposits of $2.5 billion, paired with a decrease in federal funds purchased and securities sold under agreements to repurchase of ~~$705.5 million, paired with a decrease in deposits of $511.6~~$708.4 million.

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Capital Management

The Company met all capital adequacy requirements and had regulatory capital ratios in excess of the levels established for well-capitalized institutions at ~~March 31,~~September 30, 2022 and December 31, 2021, as shown in the following table.


(Dollars in thousands)	(Dollars in thousands)	March 31, 2022			December 31, 2021			Minimum Ratios under Capital Adequacy Guidelines		Minimum Ratios for Well-Capitalized Banks *		(Dollars in thousands)	September 30, 2022			December 31, 2021			Minimum Ratios under Capital Adequacy Guidelines		Minimum Ratios for Well-Capitalized Banks *
Risk-adjusted assets	Risk-adjusted assets	$	23,415,739		$	22,483,748						Risk-adjusted assets	$	23,885,207		$	22,483,748
Tier I common risk-based capital	Tier I common risk-based capital	3,259,861			3,225,044							Tier I common risk-based capital	3,335,957			3,225,044
Tier I risk-based capital	Tier I risk-based capital	3,259,861			3,225,044							Tier I risk-based capital	3,335,957			3,225,044
Total risk-based capital	Total risk-based capital	3,420,044			3,399,880							Total risk-based capital	3,509,822			3,399,880
Tier I common risk-based capital ratio	Tier I common risk-based capital ratio	13.92		%	14.34		%	7.00	%	6.50	%	Tier I common risk-based capital ratio	13.97		%	14.34		%	7.00	%	6.50	%
Tier I risk-based capital ratio	Tier I risk-based capital ratio	13.92			14.34			8.50		8.00		Tier I risk-based capital ratio	13.97			14.34			8.50		8.00
Total risk-based capital ratio	Total risk-based capital ratio	14.61			15.12			10.50		10.00		Total risk-based capital ratio	14.69			15.12			10.50		10.00
Tier I leverage ratio	Tier I leverage ratio	9.07			9.13			4.00		5.00		Tier I leverage ratio	9.87			9.13			4.00		5.00

*Under Prompt Corrective Action requirements

The Company is subject to a 2.5% capital conservation buffer, which is an amount above the minimum ratios under capital adequacy guidelines, and is required under Basel III. The capital conservation buffer is intended to absorb losses during periods of economic stress. Failure to maintain the buffer will result in constraints on dividends, share repurchases, and executive compensation.

In the first quarter of 2020, the interim final rule of the Federal Reserve Bank and other U.S. banking agencies became effective, providing banks that adopt CECL (ASU 2016-13) during the 2020 calendar year the option to delay recognizing the estimated impact on regulatory capital until after a two year deferral period, followed by a three year transition period. In connection with the adoption of CECL on January 1, 2020, the Company elected to utilize this option. As a result, the two year deferral period for the Company ~~extends~~extended through December 31, 2021. Beginning on January 1, 2022, the Company began to phase in 25% of the previously deferred estimated capital impact of CECL, with an additional 25% to be phased in at the beginning of each subsequent year until fully phased in by the first quarter of 2025.

The Company maintains a treasury stock buyback program under authorizations by its Board of Directors (the Board) and normally purchases stock in the open market. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company purchased ~~795,387~~2,352,489 shares at an average price of ~~$70.22~~$69.42 in open market purchases and through stock-based compensation transactions. At ~~March 31,~~September 30, 2022, ~~941,935~~3,444,236 shares remained available for purchase under the current Board authorization. ~~On April 20, 2022, the share repurchase authorization was increased to 5,000,000 shares.~~

The Company's common stock dividend policy reflects its earnings outlook, desired payout ratios, the need to maintain adequate capital and liquidity levels, and alternative investment options. The Company paid a $.265 per share cash dividend on its common stock in the ~~first~~third quarter of 2022, which was a 6.0% increase compared to its 2021 quarterly dividend.

Material Cash Requirements, Commitments, Off-Balance Sheet Arrangements and Contingencies

The Company's material cash requirements include commitments for contractual obligations (both short-term and long-term), commitments to extend credit, and off-balance sheet arrangements. The Company's material cash requirements for the next 12 months are primarily to fund loan growth. Additionally, the Company will utilize cash to fund deposit maturities and withdrawals that may occur in the next 12 months. Other contractual obligations, purchase commitments, lease obligations, and unfunded commitments may require cash payments by the Company, and these are further discussed in the Company's 2021 Annual Report on Form 10-K. There have been no changes in the Company's material cash requirements since December 31, 2021. Further discussion of the Company's longer-term material cash obligations is below.

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In the normal course of business, various commitments and contingent liabilities arise which are not required to be recorded on the balance sheet. The most significant of these are loan commitments, which at ~~March 31,~~September 30, 2022 totaled ~~$13.0~~$13.9 billion (including ~~$5.0~~$5.1 billion in unused, approved credit card lines). In addition, the Company enters into standby and commercial letters of credit. These contracts totaled ~~$502.1~~$516.2 million and ~~$1.4~~$1.2 million, respectively, at ~~March 31,~~September 30, 2022. As many commitments expire unused or only partially used, these totals do not necessarily reflect future cash requirements. The carrying value of the guarantee obligations associated with the standby letters of credit, which has been recorded as a liability on the consolidated balance sheet, amounted to ~~$4.2~~$3.6 million at ~~March 31,~~September 30, 2022. The allowance for these commitments is recorded

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in the Company’s liability for unfunded lending commitments within other liabilities on its consolidated balance sheets. At ~~March 31,~~September 30, 2022, the liability for unfunded commitments totaled ~~$25.0~~$30.0 million. See further discussion of the liability for unfunded lending commitments in Note 2 to the consolidated financial statements.

During the third quarter of 2020, the Company signed a $106.7 million agreement with U.S. Capital Development to develop a 280,000 square foot commercial office building in a two building complex in Clayton, Missouri, which is expected to be completed ~~near the end of 2022.~~in January 2023. As of ~~March 31,~~September 30, 2022, the Company has made payments totaling ~~$63.3~~$83.8 million. While the Company intends to occupy a portion of the office building for executive offices, a 15 year lease agreement has been signed by an anchor tenant to lease approximately 50% of the office building.

The Company regularly purchases various state tax credits arising from third party property redevelopment. These credits are either resold to third parties at a profit or retained for use by the Company. During the first ~~three~~nine months of 2022, purchases and sales of tax credits amounted to ~~$52.1~~$95.7 million and ~~$22.1~~$99.9 million, respectively. Fees from sales of tax credits were ~~$783 thousand~~$4.4 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022, compared to ~~$1.2~~$3.2 million in the same period last year. At ~~March 31,~~September 30, 2022, the Company expected to fund outstanding purchase commitments of ~~$167.3~~$12.0 million during the remainder of 2022.

The Company's sound equity base, along with its long-term low debt level, common and preferred stock availability, and excellent debt ratings, provide several alternatives for future financing. Future acquisitions may utilize partial funding through one or more of these options. Through the various sources of liquidity described above, the Company maintains a liquidity position that it believes will adequately satisfy its financial obligations. The Company is not aware of any trends, events, or commitments that are reasonably likely to increase or decrease its liquidity in a material way.

Segment Results

The table below is a summary of segment pre-tax income results for the first ~~three~~nine months of 2022 and 2021.


(Dollars in thousands)	(Dollars in thousands)	Consumer			Commercial			Wealth			Segment Totals			Other/ Elimination			Consolidated Totals			(Dollars in thousands)	Consumer			Commercial			Wealth			Segment Totals			Other/ Elimination			Consolidated Totals
Three Months Ended March 31, 2022
Nine Months Ended September 30, 2022																				Nine Months Ended September 30, 2022
Net interest income	Net interest income	$	79,896		$	109,530		$	18,868		$	208,294		$	492		$	208,786		Net interest income	$	249,761		$	333,263		$	56,731		$	639,755		$	47,789		$	687,544
Provision for credit losses	Provision for credit losses	(4,498)			(82)			(26)			(4,606)			14,464			9,858			Provision for credit losses	(12,727)			(651)			2			(13,376)			782			(12,594)
Non-interest income	Non-interest income	28,354			53,651			53,206			135,211			(3,442)			131,769			Non-interest income	89,542			167,581			161,051			418,174			(8,464)			409,710
Investment securities gains, net	Investment securities gains, net	—			—			—			—			7,163			7,163			Investment securities gains, net	—			—			—			—			11,602			11,602
Non-interest expense	Non-interest expense	(72,994)			(89,524)			(36,286)			(198,804)			(6,844)			(205,648)			Non-interest expense	(225,232)			(272,224)			(108,967)			(606,423)			(25,614)			(632,037)
Income before income taxes	Income before income taxes	$	30,758		$	73,575		$	35,762		$	140,095		$	11,833		$	151,928		Income before income taxes	$	101,344		$	227,969		$	108,817		$	438,130		$	26,095		$	464,225
Three Months Ended March 31, 2021
Nine Months Ended September 30, 2021																				Nine Months Ended September 30, 2021
Net interest income	Net interest income	$	77,939		$	110,565		$	17,457		$	205,961		$	(213)		$	205,748		Net interest income	$	239,157		$	340,279		$	53,186		$	632,622		$	(4,855)		$	627,767
Provision for credit losses	Provision for credit losses	(9,901)			(27)			5			(9,923)			16,155			6,232			Provision for credit losses	(19,122)			4,856			10			(14,256)			73,528			59,272
Non-interest income	Non-interest income	38,248			50,728			50,985			139,961			(3,916)			136,045			Non-interest income	110,911			155,079			158,731			424,721			(12,027)			412,694
Investment securities gains, net	Investment securities gains, net	—			—			—			—			9,853			9,853			Investment securities gains, net	—			—			—			—			39,765			39,765
Non-interest expense	Non-interest expense	(70,369)			(79,281)			(33,043)			(182,693)			(9,880)			(192,573)			Non-interest expense	(220,280)			(246,501)			(101,377)			(568,158)			(34,161)			(602,319)
Income before income taxes	Income before income taxes	$	35,917		$	81,985		$	35,404		$	153,306		$	11,999		$	165,305		Income before income taxes	$	110,666		$	253,713		$	110,550		$	474,929		$	62,250		$	537,179
Increase (decrease) in income before income taxes:
Decrease in income before income taxes:																				Decrease in income before income taxes:
Amount	Amount	$	(5,159)		$	(8,410)		$	358		$	(13,211)		$	(166)		$	(13,377)		Amount	$	(9,322)		$	(25,744)		$	(1,733)		$	(36,799)		$	(36,155)		$	(72,954)
Percent	Percent	(14.4		%)	(10.3		%)	1.0		%	(8.6		%)	(1.4		%)	(8.1		%)	Percent	(8.4		%)	(10.1		%)	(1.6		%)	(7.7		%)	(58.1		%)	(13.6		%)

Consumer

For the ~~three~~nine months ended ~~March 31,~~September 30, 2022, income before income taxes for the Consumer segment decreased ~~$5.2~~$9.3 million, or ~~14.4%~~8.4%, compared to the first ~~three~~nine months of 2021. The decrease in income before income taxes was mainly due to a decline

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in non-interest income of ~~$9.9~~$21.4 million, or ~~25.9%~~19.3%, and higher non-interest expense of ~~$2.6~~$5.0 million, or ~~3.7%~~2.2%. These decreases to income were partly offset by growth in net interest income of ~~$2.0~~$10.6 million, or ~~2.5%~~4.4%, and a decrease in the provision for ~~loan~~credit losses of ~~$5.4~~$6.4 million, or ~~54.6%~~33.4%. Net interest income increased due to a ~~$3.7~~$13.0 million increase in net allocated funding credits assigned to the Consumer segment's loan and deposit portfolios and a ~~$968 thousand~~$1.6 million decrease in deposit interest expense. These increases to income were partly offset by a ~~$2.7~~$4.0 million decline in loan interest income. Non-interest income decreased mainly due to a decline of ~~$9.5~~$19.6 million in mortgage banking revenue. ~~Personal deposit account fees also declined from the prior year, while net credit and debit card fees were higher.~~ Non-interest expense increased over

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the same period in the previous year mainly due to higher ~~full-time~~ salaries expense, marketing expense, and allocated service and support costs (mainly bank card fraud operations and information technology), partly offset by lower allocated service costs for ~~information technology. In addition, impairment expense on~~branch employees and mortgage ~~servicing rights (MSR) increased, while MSR amortization expense declined.~~operations. The provision for credit losses totaled ~~$4.5~~$12.7 million, a ~~$5.4~~$6.4 million decrease from the first ~~three~~nine months of 2021, mainly due to lower credit card loan net charge-offs.

Commercial

For the ~~three~~nine months ended ~~March 31,~~September 30, 2022, income before income taxes for the Commercial segment decreased ~~$8.4~~$25.7 million, or ~~10.3%~~10.1%, compared to the same period in the previous year. This decrease was mainly due to an increase in non-interest expense and ~~and~~ a decline in net interest income, partly offset by an increase in non-interest income. Net interest income decreased ~~$1.0~~$7.0 million, or ~~.9%~~2.1%, due ~~to lower loan interest income of $11.3 million and~~ higher interest expense on customer repurchase agreements and deposits of ~~$378 thousand,~~$10.0 million and $7.3 million, respectively. These decreases to income were partly offset by a ~~$10.5~~$9.4 million increase in ~~net allocated funding credits.~~loan interest income. Non-interest income increased ~~$2.9~~$12.5 million, or ~~5.8%~~8.1%, over the previous year mainly due to growth in net bank card fees (mainly corporate card fees) ~~and~~, deposit account fees (mainly corporate cash management fees)~~. These increases were~~ and cash sweep commissions, partly offset by ~~declines~~a decline in capital market ~~fees and swap~~ fees. Non-interest expense increased ~~$10.2~~$25.7 million, or ~~12.9%~~10.4%, mainly due to higher salaries and benefits expense, ~~data processing~~travel and ~~software~~entertainment expense, and allocated service and support costs ~~for~~(mainly bank operations, branch employees, information technology and ~~lower deferred origination costs.~~commercial payments). The provision for credit losses increased ~~$55 thousand~~$5.5 million over the same period last year, mainly due to ~~higher commercial card loan~~ net ~~charge-offs.~~charge-offs on business loans in the current year compared to net recoveries in the prior year.

Wealth

Wealth segment pre-tax profitability for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 ~~increased $358 thousand,~~decreased $1.7 million, or ~~1.0%~~1.6%, ~~over~~from the same period in the previous year. Net interest income increased ~~$1.4~~$3.5 million, or ~~8.1%~~6.7%, mainly due to ~~a $1.0~~an $8.4 million increase in loan interest ~~income.~~income, partly offset by a $5.3 million decrease in net allocated funding credits assigned to the Wealth segment's loan and deposit portfolios. Non-interest income increased ~~$2.2~~$2.3 million, or ~~4.4%~~1.5%, over the prior year largely due to higher ~~trust fees (mainly~~cash sweep commissions, private client trust ~~fees)~~fees, and brokerage ~~fees,~~fees. These increases were partly offset by lower mortgage banking ~~revenue.~~revenue and institutional trust fees. Non-interest expense increased ~~$3.2~~$7.6 million, or ~~9.8%~~7.5%, mainly due to higher salaries and benefits ~~expense. In addition,~~expense, travel and entertainment expense, and marketing ~~expense also increased.~~expense. The provision for credit losses increased ~~$31~~$8 thousand over the same period last year, ~~mainly~~ due to higher overdraft loan net ~~charge-offs on personal real estate loans.~~charge-offs.

The Other/Elimination category in the preceding table includes the activity of various support and overhead operating units of the Company, in addition to the investment securities portfolio and other items not allocated to the segments. In accordance with the Company’s transfer pricing procedures, the difference between the total provision for credit losses and total net charge-offs/recoveries is not allocated to a business segment and is included in this category. The pre-tax profitability of this category was lower than in the same period last year by ~~$166 thousand.~~$36.2 million. ~~This decrease was partly due to higher non-interest expense of $3.0 million, partly offset by higher net interest income of $705 thousand and non-interest income of $474 thousand.~~ Unallocated securities gains were ~~$7.2~~$11.6 million in the first ~~three~~nine months of 2022 compared to gains of ~~$9.9~~$39.8 million in 2021. Also, the unallocated provision for credit losses increased ~~$1.7~~by $72.7 million, primarily driven by ~~an increase~~increases in the liability for unfunded lending commitments and ~~an increase~~ in the provision for credit losses on loans, which are both not allocated to the segments for management reporting purposes. Net charge-offs are allocated to the segments when incurred for management reporting purposes. The provision for credit losses on loans was ~~$15.3~~$6.7 million lower than net charge-offs in 2022, while the provision was $58.1 million lower than net charge-offs, as the provision was a benefit in ~~2022, while the provision was $20.3 million lower than net charge-offs, as the provision was also a benefit in~~ 2021. For the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company's provision on unfunded lending commitments was expense of ~~$828 thousand.~~$5.8 million. These decreases to pre-tax profitability were partly offset by higher net interest income of $52.6 million, non-interest income of $3.6 million, and lower non-interest expense of $8.5 million.

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Impact of Recently Issued Accounting Standards

Reference Rate ReformThe ~~FASB~~Financial Accounting Standards Board ("FASB") issued ASU 2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting", in March 2020, and has been followed by additional clarifying guidance related to derivatives that are modified as a result of reference rate reform. The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if they reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Further, the guidance applies to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The expedients and exceptions provided by the new guidance do not apply to contract modifications made and hedging relationships entered into or evaluated for effectiveness after December 31, 2022, except for certain hedging relationships existing as of December 31, 2022. In April 2022, the FASB proposed extending the sunset date under Topic 848 to December 31, 2024. The change is to align the temporary accounting relief guidance with the expected cessation date of LIBOR, which was postponed by administrators earlier this year to June 2023, a year after the current sunset date of ASU 2020-04.

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In order to assess the impact of transition and ensure a successful transition process, the Company established a LIBOR Transition Program led by the LIBOR Transition Steering Committee (the Committee), which is an internal, cross-functional team with representatives from all relevant business lines, support functions and legal counsel. A LIBOR impact and risk assessment has been performed, and the Committee has developed and prioritized action items. All financial contracts that reference LIBOR have been identified and LIBOR fallback language has been included in key loan provisions of new and renewed loans in preparation from transition from LIBOR. The Company ceased originating new loans with LIBOR as a reference rate at the end of 2021 and is actively working with customers to modify existing loans that reference LIBOR to a new reference rate. ~~Additionally, changes~~The Company plans to finish transitioning the ~~Company's systems have been identified, and the process~~impacted loans by late spring of ~~installing and testing code was started in the third quarter of 2021. The installation and testing process is expected to be completed in 2022.~~2023.

Credit Losses The FASB issued ASU ~~2022-01,~~2022-02, "Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures", in March 2022. This ASU eliminates the troubled debt restructuring recognition and measurement guidance and, instead, requires that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. The amendments require that an entity disclose current period gross write-offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20. The guidance is effective January 1, 2023. The Company ~~is evaluating the guidance~~expects no material impact to ~~determine the impact on the Company's~~its consolidated financial ~~statements.~~statements from adoption of this ASU.

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AVERAGE BALANCE SHEETS — AVERAGE RATES AND YIELDS

Three Months Ended ~~March 31,~~September 30, 2022 and 2021


		First Quarter 2022						First Quarter 2021							Third Quarter 2022						Third Quarter 2021
(Dollars in thousands)	(Dollars in thousands)	Average Balance		Interest Income/Expense		Avg. Rates Earned/Paid		Average Balance		Interest Income/Expense		Avg. Rates Earned/Paid		(Dollars in thousands)	Average Balance		Interest Income/Expense		Avg. Rates Earned/Paid		Average Balance		Interest Income/Expense		Avg. Rates Earned/Paid
ASSETS:	ASSETS:													ASSETS:
Loans:	Loans:													Loans:
Business(A)	Business(A)	$	5,324,172	$	38,416	2.93	%	$	6,532,921	$	49,698	3.09	%	Business(A)	$	5,317,696	$	52,813	3.94	%	$	5,437,498	$	47,032	3.43	%
Real estate — construction and land	Real estate — construction and land	1,134,902		10,526		3.76		1,091,969		9,542		3.54		Real estate — construction and land	1,288,721		17,133		5.27		1,168,566		10,326		3.51
Real estate — business	Real estate — business	3,095,068		25,801		3.38		3,022,979		26,244		3.52		Real estate — business	3,258,128		36,121		4.40		2,982,847		26,027		3.46
Real estate — personal	Real estate — personal	2,808,980		22,696		3.28		2,826,112		23,698		3.40		Real estate — personal	2,844,376		24,065		3.36		2,775,638		22,854		3.27
Consumer	Consumer	2,040,200		18,084		3.59		1,947,322		19,304		4.02		Consumer	2,101,622		22,110		4.17		2,041,263		19,085		3.71
Revolving home equity	Revolving home equity	273,859		2,347		3.48		299,371		2,495		3.38		Revolving home equity	280,923		3,413		4.82		281,689		2,456		3.46
Consumer credit card	Consumer credit card	540,844		15,130		11.35		608,747		16,466		10.97		Consumer credit card	550,058		16,711		12.05		566,406		16,112		11.29
Overdrafts	Overdrafts	5,178		—		—		3,546		—		—		Overdrafts	4,438		—		—		5,110		—		—
Total loans	Total loans	15,223,203		133,000		3.54		16,332,967		147,447		3.66		Total loans	15,645,962		172,366		4.37		15,259,017		143,892		3.74
Loans held for sale	Loans held for sale	9,383		150		6.48		35,814		304		3.44		Loans held for sale	7,170		159		8.80		16,021		187		4.63
Investment securities:	Investment securities:													Investment securities:
U.S. government and federal agency obligations	U.S. government and federal agency obligations	1,103,749		9,317		3.42		725,367		4,542		2.54		U.S. government and federal agency obligations	1,113,442		12,664		4.51		727,566		10,525		5.74
Government-sponsored enterprise obligations	Government-sponsored enterprise obligations	51,770		298		2.33		50,801		295		2.36		Government-sponsored enterprise obligations	55,753		332		2.36		50,785		295		2.30
State and municipal obligations(A)	State and municipal obligations(A)	2,077,600		11,708		2.29		1,958,637		11,883		2.46		State and municipal obligations(A)	2,052,908		11,758		2.27		2,039,942		12,062		2.35
Mortgage-backed securities	Mortgage-backed securities	7,316,609		35,770		1.98		6,998,521		23,999		1.39		Mortgage-backed securities	6,847,912		33,323		1.93		7,115,419		27,461		1.53
Asset-backed securities	Asset-backed securities	3,933,061		10,984		1.13		2,085,491		7,127		1.39		Asset-backed securities	3,870,953		15,782		1.62		3,028,076		8,205		1.08
Other debt securities	Other debt securities	636,247		3,134		2.00		570,115		3,020		2.15		Other debt securities	587,026		2,852		1.93		608,642		3,125		2.04
Trading debt securities(A)	Trading debt securities(A)	40,686		185		1.84		32,320		86		1.08		Trading debt securities(A)	35,621		246		2.74		32,238		82		1.01
Equity securities(A)	Equity securities(A)	9,498		609		26.00		4,321		528		49.56		Equity securities(A)	8,838		604		27.11		8,756		528		23.92
Other securities(A)	Other securities(A)	192,311		2,802		5.91		154,030		1,997		5.26		Other securities(A)	208,708		3,729		7.09		183,397		3,447		7.46
Total investment securities	Total investment securities	15,361,531		74,807		1.97		12,579,603		53,477		1.72		Total investment securities	14,781,161		81,290		2.18		13,794,821		65,730		1.89
Federal funds sold	Federal funds sold	1,053		1		.39		7		—		—		Federal funds sold	13,486		94		2.77		792		1		.50
Securities purchased under agreements to resell	Securities purchased under agreements to resell	1,733,887		5,300		1.24		849,999		11,128		5.31		Securities purchased under agreements to resell	1,379,341		5,984		1.72		1,633,205		9,007		2.19
Interest earning deposits with banks	Interest earning deposits with banks	2,608,029		1,151		.18		1,480,331		370		.10		Interest earning deposits with banks	980,273		5,571		2.25		2,602,896		995		.15
Total interest earning assets	Total interest earning assets	34,937,086		214,409		2.49		31,278,721		212,726		2.76		Total interest earning assets	32,807,393		265,464		3.21		33,306,752		219,812		2.62
Allowance for credit losses on loans	Allowance for credit losses on loans	(149,685)						(220,512)						Allowance for credit losses on loans	(137,833)						(172,112)
Unrealized gain (loss) on debt securities	Unrealized gain (loss) on debt securities	(174,297)						283,511						Unrealized gain (loss) on debt securities	(1,064,534)						230,058
Cash and due from banks	Cash and due from banks	340,242						354,569						Cash and due from banks	310,713						329,129
Premises and equipment, net	Premises and equipment, net	407,000						401,230						Premises and equipment, net	408,884						408,966
Other assets	Other assets	557,158						552,306						Other assets	536,901						523,182
Total assets	Total assets	$	35,917,504					$	32,649,825					Total assets	$	32,861,524					$	34,625,975
LIABILITIES AND EQUITY:	LIABILITIES AND EQUITY:													LIABILITIES AND EQUITY:
Interest bearing deposits:	Interest bearing deposits:													Interest bearing deposits:
Savings	Savings	$	1,563,093	178		.05		$	1,333,177	277		.08		Savings	$	1,595,857	177		.04		$	1,484,923	289		.08
Interest checking and money market	Interest checking and money market	14,949,727		1,582		.04		12,970,629		1,826		.06		Interest checking and money market	14,423,713		7,368		.20		13,343,180		1,528		.05
Certificates of deposit of less than $100,000	Certificates of deposit of less than $100,000	429,852		139		.13		516,728		473		.37		Certificates of deposit of less than $100,000	397,071		411		.41		464,367		206		.18
Certificates of deposit of $100,000 and over	Certificates of deposit of $100,000 and over	862,232		427		.20		1,230,075		1,062		.35		Certificates of deposit of $100,000 and over	578,158		871		.60		1,289,665		450		.14
Total interest bearing deposits	Total interest bearing deposits	17,804,904		2,326		.05		16,050,609		3,638		.09		Total interest bearing deposits	16,994,799		8,827		.21		16,582,135		2,473		.06
Borrowings:	Borrowings:													Borrowings:
Federal funds purchased	Federal funds purchased	$	23,356	$	7	.12		37,034		$	5	.05		Federal funds purchased	$	51,929	$	315	2.41		13,606		$	3	.10
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	2,712,468		682		.10		2,129,038		307		.06		Securities sold under agreements to repurchase	2,199,866		7,576		1.37		2,347,270		477		.08
Other borrowings(B)	Other borrowings(B)	768		1		.53		831		2		.98		Other borrowings(B)	2,010		9		1.78		347		1		1.14
Total borrowings	Total borrowings	2,736,592		690		.10		2,166,903		314		.06		Total borrowings	2,253,805		7,900		1.39		2,361,223		481		.08
Total interest bearing liabilities	Total interest bearing liabilities	20,541,496		3,016		.06	%	18,217,512		3,952		.09	%	Total interest bearing liabilities	19,248,604		16,727		.34	%	18,943,358		2,954		.06	%
Non-interest bearing deposits	Non-interest bearing deposits	11,544,701						10,438,637						Non-interest bearing deposits	10,758,353						11,475,113
Other liabilities	Other liabilities	505,644						608,212						Other liabilities	123,691						667,786
Equity	Equity	3,325,663						3,385,464						Equity	2,730,876						3,539,718
Total liabilities and equity	Total liabilities and equity	$	35,917,504					$	32,649,825					Total liabilities and equity	$	32,861,524					$	34,625,975
Net interest margin (T/E)				$	211,393					$	208,774
Net interest margin (FTE)														Net interest margin (FTE)			$	248,737					$	216,858
Net yield on interest earning assets	Net yield on interest earning assets					2.45	%					2.71	%	Net yield on interest earning assets					3.01	%					2.58	%

(A) Stated on a ~~tax equivalent~~fully taxable-equivalent basis using a federal income tax rate of 21%.

(B) Interest expense capitalized on construction projects is not deducted from the interest expense shown above.

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AVERAGE BALANCE SHEETS — AVERAGE RATES AND YIELDS

Nine Months Ended September 30, 2022 and 2021



	Nine Months 2022						Nine Months 2021
(Dollars in thousands)	Average Balance		Interest Income/Expense		Avg. Rates Earned/Paid		Average Balance		Interest Income/Expense		Avg. Rates Earned/Paid
ASSETS:
Loans:
Business(A)	$	5,342,326	$	133,631	3.34	%	$	6,056,664	$	145,574	3.21	%
Real estate — construction and land	1,216,860		40,148		4.41		1,116,603		29,538		3.54
Real estate — business	3,172,832		91,095		3.84		3,006,780		78,494		3.49
Real estate — personal	2,826,441		69,804		3.30		2,801,861		69,715		3.33
Consumer	2,071,019		58,891		3.80		1,998,081		57,567		3.85
Revolving home equity	275,713		8,267		4.01		289,299		7,406		3.42
Consumer credit card	542,895		47,011		11.58		583,471		48,679		11.15
Overdrafts	5,044		—		—		4,136		—		—
Total loans	15,453,130		448,847		3.88		15,856,895		436,973		3.68
Loans held for sale	8,154		470		7.71		25,002		736		3.94
Investment securities:
U.S. government and federal agency obligations	1,112,201		35,751		4.30		724,269		24,979		4.61
Government-sponsored enterprise obligations	54,443		962		2.36		50,793		885		2.33
State and municipal obligations(A)	2,085,539		35,655		2.29		1,988,715		35,779		2.41
Mortgage-backed securities	7,105,874		104,695		1.97		6,933,544		69,924		1.35
Asset-backed securities	3,947,148		40,378		1.37		2,592,618		23,594		1.22
Other debt securities	622,065		9,143		1.97		594,984		9,263		2.08
Trading debt securities(A)	40,052		700		2.34		33,171		272		1.10
Equity securities(A)	9,141		1,823		26.66		6,013		1,584		35.22
Other securities(A)	198,763		17,417		11.72		164,911		10,101		8.19
Total investment securities	15,175,226		246,524		2.17		13,089,018		176,381		1.80
Federal funds sold	6,315		114		2.41		715		3		.56
Securities purchased under agreements to resell	1,604,300		15,669		1.31		1,143,061		30,551		3.57
Interest earning deposits with banks	1,606,452		9,150		.76		2,273,448		2,108		.12
Total interest earning assets	33,853,577		720,774		2.85		32,388,139		646,752		2.67
Allowance for credit losses on loans	(140,686)						(197,631)
Unrealized gain (loss) on debt securities	(699,908)						236,702
Cash and due from banks	321,994						337,595
Premises and equipment, net	405,856						404,697
Other assets	538,438						533,660
Total assets	$	34,279,271					$	33,703,162
LIABILITIES AND EQUITY:
Interest bearing deposits:
Savings	$	1,589,668	512		.04		$	1,431,386	843		.08
Interest checking and money market	14,738,322		11,071		.10		13,200,461		4,921		.05
Certificates of deposit of less than $100,000	412,739		755		.24		490,655		1,006		.27
Certificates of deposit of $100,000 and over	695,332		1,768		.34		1,291,693		2,173		.22
Total interest bearing deposits	17,436,061		14,106		.11		16,414,195		8,943		.07
Borrowings:
Federal funds purchased	$	62,909	$	546	1.16		$	24,558	11		.06
Securities sold under agreements to repurchase	2,388,295		10,960		.61		2,207,037		1,101		.07
Other borrowings(B)	1,607		22		1.83		717		5		.93
Total borrowings	2,452,811		11,528		.63		2,232,312		1,117		.07
Total interest bearing liabilities	19,888,872		25,634		.17	%	18,646,507		10,060		.07	%
Non-interest bearing deposits	11,168,031						11,011,446
Other liabilities	255,041						601,352
Equity	2,967,327						3,443,857
Total liabilities and equity	$	34,279,271					$	33,703,162
Net interest margin (FTE)			$	695,140					$	636,692
Net yield on interest earning assets					2.75	%					2.63	%

(A) Stated on a fully taxable-equivalent basis using a federal income tax rate of 21%.

(B) Interest expense capitalized on construction projects is not deducted from the interest expense shown above.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk management focuses on maintaining consistent growth in net interest income within Board-approved policy limits. The Company primarily uses earnings simulation models to analyze net interest income sensitivity to movement in interest rates. The Company performs monthly simulations that model interest rate movements and risk in accordance with changes to its balance sheet composition. For further discussion of the Company’s market risk, see the Interest Rate Sensitivity section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s 2021 Annual Report on Form 10-K.

The tables below show the effects of gradual shifts in interest rates over a twelve month period on the Company’s net interest income versus the Company's net interest income in a flat rate scenario. Simulation A presents three rising rate scenarios and three falling rate scenarios, and in each scenario, rates are assumed to change evenly over 12 months. In these scenarios, the balance sheet remains flat.

The sensitivity of deposit balances to changes in rates is particularly difficult to estimate in ~~exceptionally~~ low interest rate environments. Since the future effects of changes in rates on deposit balances cannot be known with certainty, the Company conservatively models alternate scenarios with deposit attrition as rates rise. Simulation B illustrates results from these higher attrition scenarios to provide added perspective on potential effects of higher rates.

The Company utilizes these simulations both for monitoring interest rate risk and for liquidity planning purposes. While the future effects of rising and falling rates on deposit balances cannot be known, the Company maintains a practice of running multiple rate scenarios to better understand interest rate risk and its effect on the Company’s performance.


Simulation A	Simulation A	March 31, 2022						December 31, 2021						Simulation A	September 30, 2022						June 30, 2022
(Dollars in millions)	(Dollars in millions)	$ Change in Net Interest Income		% Change in Net Interest Income		Assumed Deposit (Attrition)/Growth		$ Change in Net Interest Income		% Change in Net Interest Income		Assumed Deposit (Attrition)/Growth		(Dollars in millions)	$ Change in Net Interest Income		% Change in Net Interest Income		Assumed Deposit (Attrition)/Growth		$ Change in Net Interest Income		% Change in Net Interest Income		Assumed Deposit (Attrition)/Growth
300 basis points rising	300 basis points rising	$	75.3	9.21	%	$	—	$	105.2	14.44	%	$	—	300 basis points rising	$	3.3	.32	%	$	—	$	45.2	4.91	%	$	—
200 basis points rising	200 basis points rising	57.5		7.03		—		76.0		10.44		—		200 basis points rising	7.7		.75		—		36.9		4.01		—
100 basis points rising	100 basis points rising	31.5		3.86		—		39.5		5.42		—		100 basis points rising	9.9		.97		—		23.5		2.55		—
100 basis points falling														100 basis points falling	(28.5)		(2.80)		—		(35.3)		(3.83)		—
200 basis points falling														200 basis points falling	(62.5)		(6.14)		—		—		—		—
300 basis points falling														300 basis points falling	(101.1)		(9.94)		—		—		—		—


Simulation B	Simulation B	March 31, 2022						December 31, 2021						Simulation B	September 30, 2022						June 30, 2022
(Dollars in millions)	(Dollars in millions)	$ Change in Net Interest Income		% Change in Net Interest Income		Assumed Deposit (Attrition)/Growth		$ Change in Net Interest Income		% Change in Net Interest Income		Assumed Deposit (Attrition)/Growth		(Dollars in millions)	$ Change in Net Interest Income		% Change in Net Interest Income		Assumed Deposit (Attrition)/Growth		$ Change in Net Interest Income		% Change in Net Interest Income		Assumed Deposit (Attrition)/Growth
300 basis points rising	300 basis points rising	$	7.6	.94	%	$	(2,001.8)	$	60.8	8.35	%	$	(1,611.1)	300 basis points rising	$	(49.4)	(5.06)	%	$	(848.9)	$	(35.2)	(4.01	%)	$	(1,770.5)
200 basis points rising	200 basis points rising	14.1		1.73		(1,414.9)		51.8		7.11		(950.7)		200 basis points rising	(34.5)		(3.54)		(716.2)		(14.2)		(1.62)		(1,208.0)
100 basis points rising	100 basis points rising	12.9		1.58		(673.4)		33.5		4.59		(263.6)		100 basis points rising	(14.0)		(1.43)		(405.7)		(2.7)		(.31)		(612.5)
100 basis points falling														100 basis points falling	(6.0)		(.62)		403.2		(2.7)		(.31)		1,086.4
200 basis points falling														200 basis points falling	(26.5)		(2.72)		849.4		—		—		—
300 basis points falling														300 basis points falling	(58.7)		(6.02)		1,446.4		—		—		—

Under Simulation A, in the three rising rate scenarios and three falling rate scenarios, interest rate risk is less asset sensitive than the previous quarter, ~~which is~~ primarily due to ~~a decrease in interest earning balances at the Federal Reserve coupled with~~ an increase in ~~interest~~the Federal funds rate, which increases non-maturity deposit rates. Deposit attrition was removed from the simulation in both the current and previous quarters. ~~The Company did not model a 100 basis point falling scenario due to the already low interest rate environment.~~

In Simulation B, the assumed levels of deposit attrition were modeled to capture the results of a shrinking balance sheet. Under this Simulation, in the three rising rate scenarios and three falling rate scenarios, interest rate risk is ~~less asset~~more liability sensitive than in the previous ~~quarter, also~~quarter. This was primarily due to ~~a decrease in interest earning balances at the Federal Reserve coupled with~~ an increase in ~~interest~~the Federal funds rate, which impacts surge deposit runoff and puts upward pressure on non-maturity deposit rates.

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Projecting deposit activity in a period of historically low interest rates is difficult, and the Company cannot predict how deposits will actually react to shifting rates. The comparisons above provide insight into potential effects of changes in rates and deposit levels on net interest income. The Company believes that its approach to interest rate risk has appropriately considered its susceptibility to both rising and falling rates and has adopted strategies which minimize the impact of interest rate risk.

~~Table of Contents~~

Item 4. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of ~~March 31,~~September 30, 2022. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective. There were no changes in the Company's internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II: OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The information required by this item is set forth in Part I, Item 1 under Note 17, Legal and Regulatory Proceedings.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth information about the Company's purchases of its $5 par value common stock, its only class of common stock registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.

Period
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as part of Publicly Announced Program Maximum Number that May Yet Be Purchased Under the Program
January 1 - 31, 2022 178,380 $ 68.44 178,380 1,558,942
February 1 - 28, 2022 330,983 $ 70.81 330,983 1,227,959
March 1 - 31, 2022 286,024 $ 70.66 286,024 941,935
Total 795,387 $ 70.22 795,387 941,935


Period	Total Number of Shares Purchased	Average Price Paid per Share			Total Number of Shares Purchased as part of Publicly Announced Program	Maximum Number that May Yet Be Purchased Under the Program
July 1 - 31, 2022	96,180		$	69.16	96,180	4,058,935
August 1 - 31, 2022	388,724		$	71.32	388,724	3,670,211
September 1 - 30, 2022	225,975		$	69.65	225,975	3,444,236
Total	710,879		$	70.50	710,879	3,444,236

The Company's stock purchases shown above were made under authorizations by the Board of Directors. ~~At March 31,~~Under the most recent authorization in April 2022 ~~941,935~~of 5,000,000 shares, 3,444,236 shares remained available for ~~purchase. On April 20, 2022, the share repurchase authorization was increased to 5,000,000 shares.~~purchase at September 30, 2022.

Item 6. EXHIBITS

31.1 — Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 — Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32 — Certifications of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101 — Interactive data files in Inline XBRL pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

104 — Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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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.


	COMMERCE BANCSHARES, INC.



	By	/s/ MARGARET M. ROWE
		Margaret M. Rowe
Date: ~~May 5,~~November 4, 2022		Vice President & Secretary


	By	/s/ PAUL A. STEINER
		Paul A. Steiner
		Controller
Date: ~~May 5,~~November 4, 2022		(Chief Accounting Officer)

6472


(Dollars in thousands)	March 31, 2022		% of Energy Lending		December 31, 2021		% of Energy Lending
Pass	$	271,368	98.4	%	$	256,186	98.3	%
Special mention	1,999		.7		1,999		.8

Non-accrual	2,401		.9		2,459		.9
Total	$	275,768	100.0	%	$	260,644	100.0	%