Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 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 Number: 0-7617

UNIVEST FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)


Pennsylvania						23-1886144
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

14 North Main Street, Souderton, Pennsylvania 18964

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (215) 721-2400

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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


Title of class	Trading symbol	Name of exchange on which registered
Common Stock, $5 par value	UVSP	The NASDAQ Stock 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 ☒ No ☐

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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.


Large accelerated filer	☐☒	Accelerated filer	☒☐
Non-accelerated filer	☐	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 ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Common Stock, $5 par value						~~29,449,012~~29,593,105
(Title of Class)						(Number of shares outstanding at ~~November 1, 2021)~~May 2, 2022)

Table of Contents

UNIVEST FINANCIAL CORPORATION AND SUBSIDIARIES

INDEX


			Page Number
Part I.	Financial Information:

	Item 1.	Financial Statements (Unaudited)

		Condensed Consolidated Balance Sheets at ~~September 30, 2021~~March 31 ,202 2 and December 31, 202021	2

		Condensed Consolidated Statements of Income for the ~~Three~~ ~~and~~ ~~Nine~~Three Months Ended ~~September~~March 31, 2022 and 2 30 ~~, 20~~21 ~~and 20~~20021	3

		Condensed Consolidated Statements of Comprehensive Income for the Three ~~and~~ ~~Nine~~Months Ended ~~September~~March 31, 2022 and 3 0 , 20 21 ~~and 20~~20	4

		Condensed Consolidated Statements of Changes in Shareholders’ Equity for the ~~Three~~ ~~and~~ ~~Nine~~Three Months Ended ~~September~~ 3 0 ~~, 20~~21 March 31, 2022 and 202021	65

		Condensed Consolidated Statements of Cash Flows for the N ~~ine~~Three Months Ended ~~September~~ 30 ~~, 20~~21 March 31, 2022 and 202021	86

		Notes to Condensed Consolidated Financial Statements	107

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4841

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6556

	Item 4.	Controls and Procedures	6556

Part II.	Other Information

	Item 1.	Legal Proceedings	6556

	Item 1A.	Risk Factors	6656

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6657

	Item 3.	Defaults Upon Senior Securities	6657

	Item 4.	Mine Safety Disclosures	6657

	Item 5.	Other Information	6657

	Item 6.	Exhibits	6758

Signatures			6859

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

UNIVEST FINANCIAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS


		(UNAUDITED)					(UNAUDITED)
(Dollars in thousands, except share data)	(Dollars in thousands, except share data)	At September 30, 2021		At December 31, 2020		(Dollars in thousands, except share data)	At March 31, 2022		At December 31, 2021
ASSETS	ASSETS					ASSETS
Cash and due from banks	Cash and due from banks	$	67,517	$	62,555	Cash and due from banks	$	57,307	$	49,202
Interest-earning deposits with other banks	Interest-earning deposits with other banks	834,840		157,303		Interest-earning deposits with other banks	716,474		840,948
Cash and cash equivalents	Cash and cash equivalents	902,357		219,858		Cash and cash equivalents	773,781		890,150

Investment securities held-to-maturity (fair value $115,661 and $156,325 at September 30, 2021 and December 31, 2020, respectively)		112,643		151,257
Investment securities available-for-sale (amortized cost $278,923 and $221,254, net of allowance for credit losses of $815 and $869 at September 30, 2021 and December 31, 2020, respectively)		277,773		218,640
Investment securities held-to-maturity (fair value $157,924 and $178,402 at March 31, 2022 and December 31, 2021, respectively)						Investment securities held-to-maturity (fair value $157,924 and $178,402 at March 31, 2022 and December 31, 2021, respectively)	166,339		176,983
Investment securities available-for-sale (amortized cost $372,860 and $319,474, net of allowance for credit losses of $1,275 and $929 at March 31, 2022 and December 31, 2021, respectively)						Investment securities available-for-sale (amortized cost $372,860 and $319,474, net of allowance for credit losses of $1,275 and $929 at March 31, 2022 and December 31, 2021, respectively)	349,994		317,007
Investments in equity securities	Investments in equity securities	2,961		3,279		Investments in equity securities	2,569		2,999
Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost	Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost	28,679		28,183		Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost	26,330		28,186
Loans held for sale	Loans held for sale	29,093		37,039		Loans held for sale	14,521		21,600
Loans and leases held for investment	Loans and leases held for investment	5,252,045		5,306,841		Loans and leases held for investment	5,400,786		5,310,017
Less: Allowance for credit losses, loans and leases	Less: Allowance for credit losses, loans and leases	(70,146)		(83,044)		Less: Allowance for credit losses, loans and leases	(68,286)		(71,924)
Net loans and leases held for investment	Net loans and leases held for investment	5,181,899		5,223,797		Net loans and leases held for investment	5,332,500		5,238,093
Premises and equipment, net	Premises and equipment, net	55,354		55,636		Premises and equipment, net	50,429		56,882
Operating lease right-of-use assets	Operating lease right-of-use assets	31,570		34,325		Operating lease right-of-use assets	30,498		30,407
Goodwill	Goodwill	172,559		172,559		Goodwill	175,510		175,510
Other intangibles, net of accumulated amortization	Other intangibles, net of accumulated amortization	9,359		8,866		Other intangibles, net of accumulated amortization	11,784		11,848
Bank owned life insurance	Bank owned life insurance	117,981		117,718		Bank owned life insurance	119,398		118,699
Accrued interest receivable and other assets	Accrued interest receivable and other assets	57,624		65,339		Accrued interest receivable and other assets	54,087		54,057
Total assets	Total assets	$	6,979,852	$	6,336,496	Total assets	$	7,107,740	$	7,122,421
LIABILITIES	LIABILITIES					LIABILITIES
Noninterest-bearing deposits	Noninterest-bearing deposits	$	1,861,007	$	1,690,663	Noninterest-bearing deposits	$	2,136,467	$	2,065,423
Interest-bearing deposits	Interest-bearing deposits	4,077,147		3,552,052		Interest-bearing deposits	3,911,465		3,989,701
Total deposits	Total deposits	5,938,154		5,242,715		Total deposits	6,047,932		6,055,124
Short-term borrowings	Short-term borrowings	14,101		17,906		Short-term borrowings	18,976		20,106
Long-term debt	Long-term debt	95,000		110,000		Long-term debt	95,000		95,000
Subordinated notes	Subordinated notes	98,797		183,515		Subordinated notes	98,952		98,874
Operating lease liabilities	Operating lease liabilities	34,641		37,690		Operating lease liabilities	33,566		33,453
Accrued interest payable and other liabilities	Accrued interest payable and other liabilities	43,136		52,198		Accrued interest payable and other liabilities	39,459		46,070
Total liabilities	Total liabilities	6,223,829		5,644,024		Total liabilities	6,333,885		6,348,627
SHAREHOLDERS’ EQUITY	SHAREHOLDERS’ EQUITY					SHAREHOLDERS’ EQUITY
Common stock, $5 par value: 48,000,000 shares authorized at September 30, 2021 and December 31, 2020; 31,556,799 shares issued at September 30, 2021 and December 31, 2020; 29,438,402 and 29,295,052 shares outstanding at September 30, 2021 and December 31, 2020, respectively		157,784		157,784
Common stock, $5 par value: 48,000,000 shares authorized at March 31, 2022 and December 31, 2021; 31,556,799 shares issued at March 31, 2022 and December 31, 2021; 29,636,425 and 29,500,542 shares outstanding at March 31, 2022 and December 31, 2021, respectively						Common stock, $5 par value: 48,000,000 shares authorized at March 31, 2022 and December 31, 2021; 31,556,799 shares issued at March 31, 2022 and December 31, 2021; 29,636,425 and 29,500,542 shares outstanding at March 31, 2022 and December 31, 2021, respectively	157,784		157,784
Additional paid-in capital	Additional paid-in capital	298,033		296,186		Additional paid-in capital	297,945		299,181
Retained earnings	Retained earnings	363,607		306,899		Retained earnings	389,332		375,124
Accumulated other comprehensive loss, net of tax benefit	Accumulated other comprehensive loss, net of tax benefit	(20,073)		(22,144)		Accumulated other comprehensive loss, net of tax benefit	(31,909)		(16,353)
Treasury stock, at cost; 2,118,397 and 2,261,747 shares at September 30, 2021 and December 31, 2020, respectively		(43,328)		(46,253)
Treasury stock, at cost; 1,920,374 and 2,056,257 shares at March 31, 2022 and December 31, 2021, respectively						Treasury stock, at cost; 1,920,374 and 2,056,257 shares at March 31, 2022 and December 31, 2021, respectively	(39,297)		(41,942)
Total shareholders’ equity	Total shareholders’ equity	756,023		692,472		Total shareholders’ equity	773,855		773,794
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	6,979,852	$	6,336,496	Total liabilities and shareholders’ equity	$	7,107,740	$	7,122,421

Note: See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

UNIVEST FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	2021		2020		2021		2020		(Dollars in thousands, except per share data)	2022		2021
Interest income	Interest income									Interest income
Interest and fees on loans and leases	Interest and fees on loans and leases	$	51,476	$	48,310	$	151,727	$	143,669	Interest and fees on loans and leases	$	48,106	$	49,663
Interest and dividends on investment securities:	Interest and dividends on investment securities:									Interest and dividends on investment securities:
Taxable	Taxable	1,552		1,646		4,254		6,569		Taxable	2,365		1,303
Exempt from federal income taxes	Exempt from federal income taxes	20		137		155		573		Exempt from federal income taxes	15		87
Interest on deposits with other banks	Interest on deposits with other banks	189		100		291		492		Interest on deposits with other banks	357		56
Interest and dividends on other earning assets	Interest and dividends on other earning assets	334		419		1,042		1,308		Interest and dividends on other earning assets	355		348
Total interest income	Total interest income	53,571		50,612		157,469		152,611		Total interest income	51,198		51,457
Interest expense	Interest expense									Interest expense
Interest on deposits	Interest on deposits	3,230		4,028		9,789		15,806		Interest on deposits	2,891		3,400
Interest on short-term borrowings	Interest on short-term borrowings	2		97		7		325		Interest on short-term borrowings	2		2
Interest on long-term debt and subordinated notes	Interest on long-term debt and subordinated notes	1,652		2,633		6,815		6,640		Interest on long-term debt and subordinated notes	1,645		2,641
Total interest expense	Total interest expense	4,884		6,758		16,611		22,771		Total interest expense	4,538		6,043
Net interest income	Net interest income	48,687		43,854		140,858		129,840		Net interest income	46,660		45,414
(Reversal of provision) provision for credit losses		(182)		3,935		(11,524)		49,515
Reversal of provision for credit losses										Reversal of provision for credit losses	(3,450)		(11,283)
Net interest income after provision for credit losses	Net interest income after provision for credit losses	48,869		39,919		152,382		80,325		Net interest income after provision for credit losses	50,110		56,697
Noninterest income	Noninterest income									Noninterest income
Trust fee income	Trust fee income	2,126		1,915		6,317		5,729		Trust fee income	2,102		2,034
Service charges on deposit accounts	Service charges on deposit accounts	1,422		1,187		4,018		3,474		Service charges on deposit accounts	1,504		1,282
Investment advisory commission and fee income	Investment advisory commission and fee income	4,796		4,005		14,051		11,800		Investment advisory commission and fee income	5,152		4,697
Insurance commission and fee income	Insurance commission and fee income	3,837		3,776		12,631		12,575		Insurance commission and fee income	5,570		4,955
Other service fee income	Other service fee income	2,576		2,093		7,516		5,451		Other service fee income	2,756		2,192
Bank owned life insurance income	Bank owned life insurance income	925		741		3,262		2,207		Bank owned life insurance income	699		717
Net gain on sales of investment securities	Net gain on sales of investment securities	21		57		140		817		Net gain on sales of investment securities	30		65
Net gain on mortgage banking activities	Net gain on mortgage banking activities	3,224		5,860		12,623		12,119		Net gain on mortgage banking activities	1,929		5,938
Other income	Other income	1,625		2,171		3,474		4,017		Other income	728		1,370
Total noninterest income	Total noninterest income	20,552		21,805		64,032		58,189		Total noninterest income	20,470		23,250
Noninterest expense	Noninterest expense									Noninterest expense
Salaries, benefits and commissions	Salaries, benefits and commissions	26,641		24,059		76,817		69,595		Salaries, benefits and commissions	28,245		24,780
Net occupancy	Net occupancy	2,525		2,609		7,920		7,661		Net occupancy	2,716		2,739
Equipment	Equipment	1,000		972		2,914		2,890		Equipment	982		946
Data processing	Data processing	3,274		2,862		9,388		8,372		Data processing	3,567		3,050
Professional fees	Professional fees	2,174		1,321		5,937		3,902		Professional fees	2,138		1,748
Marketing and advertising	Marketing and advertising	539		463		1,380		1,400		Marketing and advertising	425		280
Deposit insurance premiums	Deposit insurance premiums	765		707		2,014		1,826		Deposit insurance premiums	893		636
Intangible expenses	Intangible expenses	214		283		712		934		Intangible expenses	341		249

Other expense	Other expense	6,116		5,251		16,992		16,684		Other expense	6,105		5,112
Total noninterest expense	Total noninterest expense	43,248		38,527		124,074		113,264		Total noninterest expense	45,412		39,540
Income before income taxes	Income before income taxes	26,173		23,197		92,340		25,250		Income before income taxes	25,168		40,407
Income tax expense	Income tax expense	5,262		5,078		17,951		4,208		Income tax expense	4,851		7,804
Net income	Net income	$	20,911	$	18,119	$	74,389	$	21,042	Net income	$	20,317	$	32,603
Net income per share:	Net income per share:									Net income per share:
Basic	Basic	$	0.71	$	0.62	$	2.53	$	0.72	Basic	$	0.69	$	1.11
Diluted	Diluted	0.71		0.62		2.52		0.72		Diluted	0.68		1.11

Note: See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

UNIVEST FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


		Three Months Ended September 30,													Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2021						2020						(Dollars in thousands)	2022						2021
		Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount		Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount			Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount		Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount
Income	Income	$	26,173	$	5,262	$	20,911	$	23,197	$	5,078	$	18,119	Income	$	25,168	$	4,851	$	20,317	$	40,407	$	7,804	$	32,603
Other comprehensive income:	Other comprehensive income:													Other comprehensive income:
Net unrealized (losses) gains on available-for-sale investment securities:	Net unrealized (losses) gains on available-for-sale investment securities:													Net unrealized (losses) gains on available-for-sale investment securities:
Net unrealized holding (losses) gains arising during the period	Net unrealized holding (losses) gains arising during the period	(1,378)		(292)		(1,086)		726		153		573		Net unrealized holding (losses) gains arising during the period	(20,369)		(4,278)		(16,091)		2,194		461		1,733
Provision (reversal of provision) for credit losses	Provision (reversal of provision) for credit losses	330		70		260		(163)		(35)		(128)		Provision (reversal of provision) for credit losses	346		73		273		(384)		(81)		(303)
Less: reclassification adjustment for net gains on sales realized in net income (1)	Less: reclassification adjustment for net gains on sales realized in net income (1)	(21)		(4)		(17)		(57)		(12)		(45)		Less: reclassification adjustment for net gains on sales realized in net income (1)	(30)		(6)		(24)		(65)		(14)		(51)

Total net unrealized (losses) gains on available-for-sale investment securities	Total net unrealized (losses) gains on available-for-sale investment securities	(1,069)		(226)		(843)		506		106		400		Total net unrealized (losses) gains on available-for-sale investment securities	(20,053)		(4,211)		(15,842)		1,745		366		1,379
Net unrealized gains on interest rate swaps used in cash flow hedges:	Net unrealized gains on interest rate swaps used in cash flow hedges:													Net unrealized gains on interest rate swaps used in cash flow hedges:
Net unrealized holding (losses) gains arising during the period		(7)		(1)		(6)		5		2		3
Net unrealized holding gains arising during the period														Net unrealized holding gains arising during the period	76		16		60		6		1		5
Less: reclassification adjustment for net losses realized in net income (2)	Less: reclassification adjustment for net losses realized in net income (2)	77		16		61		78		16		62		Less: reclassification adjustment for net losses realized in net income (2)	68		14		54		76		16		60
Total net unrealized gains on interest rate swaps used in cash flow hedges	Total net unrealized gains on interest rate swaps used in cash flow hedges	70		15		55		83		18		65		Total net unrealized gains on interest rate swaps used in cash flow hedges	144		30		114		82		17		65
Defined benefit pension plans:	Defined benefit pension plans:													Defined benefit pension plans:
Amortization of net actuarial loss included in net periodic pension costs (3)	Amortization of net actuarial loss included in net periodic pension costs (3)	329		69		260		307		65		242		Amortization of net actuarial loss included in net periodic pension costs (3)	218		46		172		329		69		260

Total defined benefit pension plans	Total defined benefit pension plans	329		69		260		307		65		242		Total defined benefit pension plans	218		46		172		329		69		260
Other comprehensive (loss) income	Other comprehensive (loss) income	(670)		(142)		(528)		896		189		707		Other comprehensive (loss) income	(19,691)		(4,135)		(15,556)		2,156		452		1,704
Total comprehensive income	Total comprehensive income	$	25,503	$	5,120	$	20,383	$	24,093	$	5,267	$	18,826	Total comprehensive income	$	5,477	$	716	$	4,761	$	42,563	$	8,256	$	34,307

(1) Included in net gain on sales of investment securities on the condensed consolidated statements of income (before tax amount).

(2) Included in interest expense on demand deposits on the condensed consolidated statements of income (before tax amount).

(3) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (before tax amount). See Note 8, "Retirement Plans and Other Postretirement Benefits" for additional details.

Note: See accompanying notes to the unaudited condensed consolidated financial statements.

~~Table of Contents~~

Nine Months Ended September 30,
(Dollars in thousands) 2021 2020
Before
Tax
Amount Tax
Expense
(Benefit) Net of
Tax
Amount Before
Tax
Amount Tax
Expense
(Benefit) Net of
Tax
Amount
Income $ 92,340 $ 17,951 $ 74,389 $ 25,250 $ 4,208 $ 21,042
Other comprehensive income:
Net unrealized gains on available-for-sale investment securities:
Net unrealized holding gains arising during the period 1,604 336 1,268 2,930 615 2,315
(Reversal of provision) provision for credit losses (54) (11) (43) 392 82 310
Less: reclassification adjustment for net gains on sales realized in net income (1) (140) (29) (111) (817) (172) (645)
Total net unrealized gains on available-for-sale investment securities 1,410 296 1,114 2,505 525 1,980
Net unrealized gains (losses) on interest rate swaps used in cash flow hedges:
Net unrealized holding losses arising during the period (5) (1) (4) (554) (116) (438)
Less: reclassification adjustment for net losses realized in net income (2) 229 48 181 176 37 139
Total net unrealized gains (losses) on interest rate swaps used in cash flow hedges 224 47 177 (378) (79) (299)
Defined benefit pension plans:
Amortization of net actuarial loss included in net periodic pension costs (3) 987 207 780 901 189 712
Total defined benefit pension plans 987 207 780 901 189 712
Other comprehensive income 2,621 550 2,071 3,028 635 2,393
Total comprehensive income $ 94,961 $ 18,501 $ 76,460 $ 28,278 $ 4,843 $ 23,435

~~(1) Included in net gain on sales of investment securities on the consolidated statements of income (before tax amount).~~

~~(2) Included in interest expense on demand deposits on the consolidated statements of income (before tax amount).~~

~~Note: See accompanying notes to the unaudited condensed consolidated financial statements.~~

UNIVEST FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	Common Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Total		(Dollars in thousands, except per share data)	Common Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total
Three Months Ended September 30, 2021
Balance at June 30, 2021		29,411,731	$	157,784	$	297,208	$	348,579	$	(19,545)	$	(44,028)	$	739,998
Three Months Ended March 31, 2022															Three Months Ended March 31, 2022
Balance at December 31, 2021															Balance at December 31, 2021	29,500,542	$	157,784	$	299,181	$	375,124	$	(16,353)	$	(41,942)	$	773,794
Net income	Net income	—	—		—		20,911		—		—		20,911		Net income	—	—		—		20,317		—		—		20,317
Other comprehensive loss, net of income tax benefit	Other comprehensive loss, net of income tax benefit	—	—		—		—		(528)		—		(528)		Other comprehensive loss, net of income tax benefit	—	—		—		—		(15,556)		—		(15,556)
Cash dividends declared ($0.20 per share)	Cash dividends declared ($0.20 per share)	—	—		—		(5,883)		—		—		(5,883)		Cash dividends declared ($0.20 per share)	—	—		—		(5,905)		—		—		(5,905)
Stock-based compensation	Stock-based compensation	—	—		852		—		—		1		853		Stock-based compensation	—	—		1,073		(204)		—		—		869
Stock issued under dividend reinvestment and employee stock purchase plans	Stock issued under dividend reinvestment and employee stock purchase plans	22,327	—		—		—		—		610		610		Stock issued under dividend reinvestment and employee stock purchase plans	21,843	—		59		—		—		564		623
Vesting of restricted stock units	Vesting of restricted stock units	1,344	—		(27)		—		—		27		—		Vesting of restricted stock units	88,259	—		(2,418)		—		—		1,555		(863)

Exercise of stock options	Exercise of stock options	3,000	—		—		—		—		62		62		Exercise of stock options	25,781	—		50		—		—		526		576

Balance at September 30, 2021		29,438,402	$	157,784	$	298,033	$	363,607	$	(20,073)	$	(43,328)	$	756,023
Balance at March 31, 2022															Balance at March 31, 2022	29,636,425	$	157,784	$	297,945	$	389,332	$	(31,909)	$	(39,297)	$	773,855

(Dollars in thousands, except per share data) Common
Shares
Outstanding Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Treasury
Stock Total
Three Months Ended September 30, 2020
Balance at June 30, 2020 29,201,985 $ 157,784 $ 296,028 $ 268,751 $ (19,807) $ (47,883) $ 654,873
Net income — — — 18,119 — — 18,119
Other comprehensive income, net of income tax — — — — 707 — 707
Cash dividends declared ($0.20 per share) — — — (5,845) — — (5,845)
Stock-based compensation — — 658 1 — — 659
Stock issued under dividend reinvestment and employee stock purchase plans 39,317 — (87) — — 681 594
Balance at September 30, 2020 29,241,302 $ 157,784 $ 296,599 $ 281,026 $ (19,100) $ (47,202) $ 669,107

(Dollars in thousands, except per share data) Common
Shares
Outstanding Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
(Loss) Income Treasury
Stock Total
Nine Months Ended September 30, 2021
Balance at December 31, 2020 29,295,052 $ 157,784 $ 296,186 $ 306,899 $ (22,144) $ (46,253) $ 692,472
Net income — — — 74,389 — — 74,389
Other comprehensive income, net of income tax — — — — 2,071 — 2,071
Cash dividends declared ($0.60 per share) — — — (17,624) — — (17,624)
Stock-based compensation — — 2,552 (56) — — 2,496
Stock issued under dividend reinvestment and employee stock purchase plans 67,553 — 90 (1) — 1,735 1,824
Vesting of restricted stock units, net of shares withheld to cover taxes 43,963 — (1,153) — — 798 (355)
Exercise of stock options 49,527 — 31 — — 1,014 1,045
Cancellation of performance-based restricted stock awards (7,199) — 327 — — (327) —
Purchases of treasury stock (10,494) — — — — (295) (295)
Balance at September 30, 2021 29,438,402 $ 157,784 $ 298,033 $ 363,607 $ (20,073) $ (43,328) $ 756,023


(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	Common Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total		(Dollars in thousands, except per share data)	Common Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Total
Nine Months Ended September 30, 2020
Balance at December 31, 2019		29,334,629	$	157,784	$	294,999	$	288,803	$	(21,730)	$	(44,734)	$	675,122
Adjustment to initially apply ASU No. 2016-13 for CECL		—	—		—		(11,284)		237		—		(11,047)
Three Months Ended March 31, 2021															Three Months Ended March 31, 2021
Balance at December 31, 2020															Balance at December 31, 2020	29,295,052	$	157,784	$	296,186	$	306,899	$	(22,144)	$	(46,253)	$	692,472
Net income	Net income	—	—		—		21,042		—		—		21,042		Net income	—	—		—		32,603		—		—		32,603
Other comprehensive income, net of income tax	Other comprehensive income, net of income tax	—	—		—		—		2,393		—		2,393		Other comprehensive income, net of income tax	—	—		—		—		1,704		—		1,704
Cash dividends declared ($0.60 per share)		—	—		—		(17,522)		—		—		(17,522)
Cash dividends declared ($0.20 per share)															Cash dividends declared ($0.20 per share)	—	—		—		(5,864)		—		—		(5,864)
Stock-based compensation	Stock-based compensation	—	—		1,733		(13)		—		—		1,720		Stock-based compensation	—	—		878		(56)		—		—		822
Stock issued under dividend reinvestment and employee stock purchase plans	Stock issued under dividend reinvestment and employee stock purchase plans	103,471	—		(198)		—		—		1,955		1,757		Stock issued under dividend reinvestment and employee stock purchase plans	23,311	—		65		(1)		—		545		609
Vesting of restricted stock units		17,035	—		(346)		—		—		346		—
Vesting of restricted stock units, net of shares withheld to cover income taxes															Vesting of restricted stock units, net of shares withheld to cover income taxes	42,619	—		(1,126)		—		—		771		(355)

Exercise of stock options	Exercise of stock options	5,000	—		(7)		—		—		101		94		Exercise of stock options	36,286	—		17		—		—		742		759
Cancellation of performance-based restricted stock awards		(14,777)	—		418		—		—		(418)		—
Cancellations of performance-based restricted stock awards															Cancellations of performance-based restricted stock awards	(7,199)	—		157		—		—		(157)		—
Purchases of treasury stock	Purchases of treasury stock	(204,056)	—		—		—		—		(4,452)		(4,452)		Purchases of treasury stock	(10,494)	—		—		—		—		(295)		(295)
Balance at September 30, 2020		29,241,302	$	157,784	$	296,599	$	281,026	$	(19,100)	$	(47,202)	$	669,107

Balance at March 31, 2021															Balance at March 31, 2021	29,379,575	$	157,784	$	296,177	$	333,581	$	(20,440)	$	(44,647)	$	722,455

Note: See accompanying note to the unaudited condensed consolidated financial statements.

UNIVEST FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
Nine Months Ended September 30,
(Dollars in thousands) 2021 2020
Cash flows from operating activities:
Net income $ 74,389 $ 21,042
Adjustments to reconcile net income to net cash provided by operating activities:
(Reversal of provision) provision for credit losses (11,524) 49,515
Depreciation of premises and equipment 3,523 3,620
Net amortization of investment securities premiums and discounts 2,078 1,755
Net gain on sales of investment securities (140) (817)
Net gain on mortgage banking activities (12,623) (12,119)
Bank owned life insurance income (3,262) (2,207)
Stock-based compensation 2,674 1,853
Intangible expenses 712 934
Other adjustments to reconcile net income to cash used in operating activities (4,956) (3,392)
Originations of loans held for sale (396,418) (322,135)
Proceeds from the sale of loans held for sale 417,920 321,233
Contributions to pension and other postretirement benefit plans (198) (203)
Increase in accrued interest receivable and other assets (882) (18,774)
(Decrease) increase in accrued interest payable and other liabilities (5,750) 5,786
Net cash provided by operating activities 65,543 46,091
Cash flows from investing activities:
Purchases of premises and equipment (3,241) (2,363)
Proceeds from maturities, calls and principal repayments of securities held-to-maturity 52,121 56,933
Proceeds from maturities, calls and principal repayments of securities available-for-sale 40,088 43,853
Proceeds from sales of securities available-for-sale 4,135 65,621
Purchases of investment securities held-to-maturity (14,852) (43,116)
Purchases of investment securities available-for-sale (102,585) (49,329)
Proceeds from sales of money market mutual funds 5,818 10,487
Purchases of money market mutual funds (5,336) (10,971)
Net decrease in other investments (496) (1,469)
Proceeds from sale of loans originally held-for-investment 996 —
Proceeds from sale of portfolio loans — 14,416
Net decrease (increase) in loans and leases 54,661 (851,403)
Proceeds from sales of other real estate owned 7,255 75
Proceeds from bank owned life insurance 2,302 —
Net cash provided by (used in) investing activities 40,866 (767,266)
Cash flows from financing activities:
Net increase in deposits 695,414 851,521
Net decrease in short-term borrowings (3,805) (999)
Proceeds from issuance of long-term debt — 125,000
Repayment of long-term debt (15,000) (70,000)
Proceeds from issuance of subordinated notes — 98,448
Repayment of subordinated debt (85,000) —
Payment of contingent consideration on acquisitions (58) (91)
Purchases of treasury stock (650) (4,452)
Stock issued under dividend reinvestment and employee stock purchase plans 1,824 1,757
Proceeds from exercise of stock options 1,045 94
Cash dividends paid (17,680) (17,555)
Net cash provided by financing activities 576,090 983,723
Net increase in cash and cash equivalents 682,499 262,548
Cash and cash equivalents at beginning of year 219,858 125,128
Cash and cash equivalents at end of period $ 902,357 $ 387,676


		Nine Months Ended September 30,					Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		(Dollars in thousands)	2022		2021
Cash flows from operating activities:						Cash flows from operating activities:
Net income						Net income	$	20,317	$	32,603
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Reversal of provision for credit losses						Reversal of provision for credit losses	(3,450)		(11,283)
Depreciation of premises and equipment						Depreciation of premises and equipment	1,101		1,173
Net amortization of investment securities premiums and discounts						Net amortization of investment securities premiums and discounts	472		768
Net gain on sales of investment securities						Net gain on sales of investment securities	(30)		(65)
Net gain on mortgage banking activities						Net gain on mortgage banking activities	(1,929)		(5,938)

Bank owned life insurance income						Bank owned life insurance income	(699)		(717)
Stock-based compensation						Stock-based compensation	934		874
Intangible expenses						Intangible expenses	341		249
Other adjustments to reconcile net income to cash used in operating activities						Other adjustments to reconcile net income to cash used in operating activities	(910)		(2,036)

Originations of loans held for sale						Originations of loans held for sale	(73,541)		(142,877)
Proceeds from the sale of loans held for sale						Proceeds from the sale of loans held for sale	82,616		163,052
Contributions to pension and other postretirement benefit plans						Contributions to pension and other postretirement benefit plans	(63)		(66)
Decrease (increase) in accrued interest receivable and other assets						Decrease (increase) in accrued interest receivable and other assets	4,316		(5,488)
Decrease in accrued interest payable and other liabilities						Decrease in accrued interest payable and other liabilities	(5,535)		(376)
Net cash provided by operating activities						Net cash provided by operating activities	23,940		29,873
Cash flows from investing activities:						Cash flows from investing activities:

Proceeds from sale of premises and equipment						Proceeds from sale of premises and equipment	6,170		—
Purchases of premises and equipment						Purchases of premises and equipment	(676)		(1,311)
Proceeds from maturities, calls and principal repayments of securities held-to-maturity						Proceeds from maturities, calls and principal repayments of securities held-to-maturity	14,335		20,197
Proceeds from maturities, calls and principal repayments of securities available-for-sale						Proceeds from maturities, calls and principal repayments of securities available-for-sale	8,501		12,708
Proceeds from sales of securities available-for-sale						Proceeds from sales of securities available-for-sale	1,530		1,563
Purchases of investment securities held-to-maturity						Purchases of investment securities held-to-maturity	(3,936)		(4,625)
Purchases of investment securities available-for-sale						Purchases of investment securities available-for-sale	(63,634)		(32,540)
Proceeds from sales of money market mutual funds						Proceeds from sales of money market mutual funds	2,508		2,020
Purchases of money market mutual funds						Purchases of money market mutual funds	(2,077)		(2,150)
Net decrease in other investments						Net decrease in other investments	1,856		2,612

Net increase in loans and leases						Net increase in loans and leases	(90,783)		(108,296)

Net cash used in investing activities						Net cash used in investing activities	(126,206)		(109,822)
Cash flows from financing activities:						Cash flows from financing activities:
Net (decrease) increase in deposits						Net (decrease) increase in deposits	(7,200)		68,869
Net (decrease) increase in short-term borrowings						Net (decrease) increase in short-term borrowings	(1,130)		8,770

Repayment of long-term debt						Repayment of long-term debt	—		(15,000)

Repayment of subordinated debt						Repayment of subordinated debt	—		(10,000)

Payment of contingent consideration on acquisitions						Payment of contingent consideration on acquisitions	—		(29)

Payment for shares withheld to cover taxes on vesting of restricted stock units						Payment for shares withheld to cover taxes on vesting of restricted stock units	(863)		(355)
Purchases of treasury stock						Purchases of treasury stock	—		(295)
Stock issued under dividend reinvestment and employee stock purchase plans						Stock issued under dividend reinvestment and employee stock purchase plans	623		609
Proceeds from exercise of stock options						Proceeds from exercise of stock options	576		759
Cash dividends paid						Cash dividends paid	(6,109)		(5,920)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(14,103)		47,408
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(116,369)		(32,541)
Cash and cash equivalents at beginning of year						Cash and cash equivalents at beginning of year	890,150		219,858
Cash and cash equivalents at end of period						Cash and cash equivalents at end of period	$	773,781	$	187,317

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid for interest	Cash paid for interest	$	18,516	$	23,089	Cash paid for interest	$	5,559	$	6,856
Cash paid for income taxes, net of refunds	Cash paid for income taxes, net of refunds	22,327		12,014		Cash paid for income taxes, net of refunds	28		130
Non cash transactions:	Non cash transactions:					Non cash transactions:
Transfer of loans to other real estate owned	Transfer of loans to other real estate owned	$	126	$	8,125	Transfer of loans to other real estate owned	$	—	$	126
Transfer of loans to loans held for sale		996		14,416

Note: See accompanying notes to the unaudited condensed consolidated financial statements.

UNIVEST FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Univest Financial Corporation (the Corporation) and its wholly owned subsidiaries. The Corporation’s direct subsidiary is Univest Bank and Trust Co. (the Bank). All significant intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations for interim financial information. The accompanying unaudited consolidated financial statements reflect all adjustments, which are of a normal recurring nature and are, in the opinion of management, necessary for a fair presentation of the financial statements for the interim periods presented. Certain prior period amounts have been reclassified to conform to the current-period presentation. Operating results for the three-month ~~or nine-month periods~~period ended ~~September 30, 2021~~March 31, 2022 are not necessarily indicative of the results that may be expected for the year ended December 31, ~~2021~~2022 or for any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, which was filed with the SEC on February ~~26, 2021.~~25, 2022.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant changes include the fair value measurement of investment securities available-for-sale and the calculation of the allowance for credit losses.

Accounting Pronouncements Adopted in ~~2021~~

~~In August 2018, the FASB issued ASU No. 2018-14, "Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans."~~ The amendments in this ASU modify the disclosure requirements for employers that sponsor defined benefit plans or other postretirement plans. Disclosures removed by this ASU include the following: (1) amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year; (2) the amount and timing of plan assets expected to be returned to the employer; and (3) the effects of a one percentage point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for postretirement health care benefits. Additional disclosures required by this ASU include: (1) the weighted-average interest crediting rates used in an entity's cash balance pension plans and other similar plans and (2) explanations for reasons for significant changes in the benefit obligation or plan assets. These amendments are to be applied retrospectively. This ASU became effective on January 1, 2021 for the Corporation. The adoption of this ASU did not have a material impact on the Corporation's financial statement disclosures but will result in the elimination of certain disclosures for retirement plans and other postretirement benefits in the Form 10-K.

~~In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes."~~ The ASU adds new guidance to simplify accounting for income taxes, changes the accounting for certain income tax transactions and makes minor improvements to the codification. This ASU became effective on January 1, 2021 for the Corporation. The adoption of this ASU did not have a material impact on the Corporation's financial statements.

~~Recent Accounting Pronouncements Yet to Be Adopted~~2022

In January 2020, the FASB issued ASU No. 2020-01, "Investments—Equity Securities (Topic 321): Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815." This ASU 2020-01 clarifies the interactions between ASC 321, ASC 323 and ASC 815 and addresses accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments. This ASU isbecame effective ~~for fiscal years beginning after December 15, 2021 or~~on January 1, 2022 for the Corporation. The ~~Corporation does not expect the~~ adoption of this ASU ~~will have a material impact on the Corporation's financial statements.~~

~~In March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting."~~ The guidance allows companies to: (1) account for certain contract modifications as a continuation of the existing contract without additional analysis; (2) continue hedge accounting when certain critical terms of a hedging relationship change and assess effectiveness in ways that disregard certain potential sources of ineffectiveness; and (3) make a one-time sale and/or transfer of certain debt securities from held-to-maturity to available-for-sale or trading. This ASU is available for adoption effective immediately, or as of January 1, 2020 or any date thereafter for the Corporation, and applies prospectively to contract modifications and hedging relationships. The one-time election to sell and/or transfer debt securities classified as held-to-maturity may be made at any time after March 12, 2020. The Corporation anticipates adopting this ASU and will continue to analyze the provisions of the ASU in connection with ongoing procedures to monitor the work of the Alternative Rates Committee of the FRB and Federal Reserve Bank of New York in identifying an alternative U.S. dollar reference interest rate. It is too early to predict whether a new rate index replacement and the adoption of the ASU willdid not have a material impact on the Corporation's financial statements.

In August 2020, the FASB issued ASU No. 2020-06, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)." This guidance simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. In addition, the amendments in the ASU also simplify the guidance in ASC 815-40 by removing certain criteria that must be satisfied in order to classify a contract as equity, which is expected to decrease the number of freestanding instruments and embedded derivatives accounted for as assets or liabilities. Finally, the amendments revise the guidance on calculating earnings per share, requiring use of the if-converted method for all convertible instruments and require entities to presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. This ASU became effective on January 1, 2022 for the Corporation. The adoption of this ASU did not have a material impact on the Corporation's financial statements.

In March 2022, the FASB issued ASU No. 2022-01, "Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method." ASU 2022-01 addresses and clarifies the guidance in ASC 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets. This ASU amends the guidance in ASU 2017-12 that established the "last-of-layer" method for making the fair value hedge accounting for these portfolios more accessible. ASU 2022-01 renames that method the "portfolio layer" method and addresses feedback from stakeholders regarding its application. This ASU allows entities to designate multiple hedging relationships with a single closed portfolio, including both prepayable and non-prepayable financial assets, and therefore a larger portion of the interest rate risk associated with such a portfolio is eligible to be hedged.

This ASU is effective for fiscal years beginning after December 15, ~~2021~~2022 or January 1, ~~2022~~2023 for the ~~Corporation.~~Corporation, including interim periods within those fiscal years. Early adoption, however, is permitted if an entity has adopted the amendments in ASU 2017-12. The Corporation has elected to early adopt this ASU, and the adoption of this ASU did not have a material impact on the Corporation's financial statements.

Recent Accounting Pronouncements Yet to Be Adopted

In March 2022, the FASB issued ASU No. 2022-02, "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted CECL and enhance the disclosure requirements for modifications of receivables made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current period gross write-offs by year of origination for financing receivables and net investment in leases in the existing vintage disclosures. This ASU is effective for fiscal years beginning after December 15, 2022 or January 1, 2023 for the Corporation, including interim periods within those fiscal years for entities that have adopted CECL. Early adoption is permitted if an entity has adopted CECL. The Corporation is in the process of evaluating the amendments but does not expect the adoption of this ASU will have a material impact on the Corporation's financial statements.

~~In January 2021, the FASB issued ASU No. 2021-01, which refines the scope of ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting",~~ and clarifies some of its guidance as part of the Board’s monitoring of global reference rate reform activities. The ASU permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, for computing variation margin settlements, and for calculating price alignment interest in connection with reference rate reform activities under way in global financial markets (the “discounting transition”). This ASU is available for adoption retrospective to March 12, 2020, or prospectively from January 7, 2021 through December 31, 2022, at which time transition is expected to be complete. The Corporation will analyze the potential impact of the provisions of this ASU in connection with its ongoing evaluation of ASU No. 2020-04.

Note 2. Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share. For additional information on the calculation of basic and diluted earnings per share, see Note 1, "Summary of Significant Accounting Policies - Earnings per Share" of the Corporation's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
(Dollars and shares in thousands, except per share data)	(Dollars and shares in thousands, except per share data)	2021		2020		2021		2020		(Dollars and shares in thousands, except per share data)	2022		2021
Numerator:	Numerator:									Numerator:
Net income	Net income	$	20,911	$	18,119	$	74,389	$	21,042	Net income	$	20,317	$	32,603
Net income allocated to unvested restricted stock awards	Net income allocated to unvested restricted stock awards	—		(23)		(28)		(29)		Net income allocated to unvested restricted stock awards	—		(37)
Net income allocated to common shares	Net income allocated to common shares	$	20,911	$	18,096	$	74,361	$	21,013	Net income allocated to common shares	$	20,317	$	32,566
Denominator:	Denominator:									Denominator:
Weighted average shares outstanding	Weighted average shares outstanding	29,420		29,227		29,380		29,233		Weighted average shares outstanding	29,542		29,329
Average unvested restricted stock awards	Average unvested restricted stock awards	—		(38)		(10)		(47)		Average unvested restricted stock awards	—		(32)
Denominator for basic earnings per share—weighted-average shares outstanding	Denominator for basic earnings per share—weighted-average shares outstanding	29,420		29,189		29,370		29,186		Denominator for basic earnings per share—weighted-average shares outstanding	29,542		29,297
Effect of dilutive securities—employee stock options and restricted stock units	Effect of dilutive securities—employee stock options and restricted stock units	142		28		143		32		Effect of dilutive securities—employee stock options and restricted stock units	196		135
Denominator for diluted earnings per share—adjusted weighted-average shares outstanding	Denominator for diluted earnings per share—adjusted weighted-average shares outstanding	29,562		29,217		29,513		29,218		Denominator for diluted earnings per share—adjusted weighted-average shares outstanding	29,738		29,432
Basic earnings per share	Basic earnings per share	$	0.71	$	0.62	$	2.53	$	0.72	Basic earnings per share	$	0.69	$	1.11
Diluted earnings per share	Diluted earnings per share	$	0.71	$	0.62	$	2.52	$	0.72	Diluted earnings per share	$	0.68	$	1.11
Average antidilutive options and restricted stock units excluded from computation of diluted earnings per share	Average antidilutive options and restricted stock units excluded from computation of diluted earnings per share	286		526		289		509		Average antidilutive options and restricted stock units excluded from computation of diluted earnings per share	249		315

128

Note 3. Investment Securities

The following table shows the amortized cost, the estimated fair value and the allowance for credit losses of the held-to-maturity securities and available-for-sale securities at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, by contractual maturity within each type:


		At September 30, 2021											At March 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value		(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Securities Held-to-Maturity	Securities Held-to-Maturity											Securities Held-to-Maturity
U.S. government corporations and agencies:	U.S. government corporations and agencies:											U.S. government corporations and agencies:
Within 1 year	Within 1 year	$	6,999	$	72	$	—	$	—	$	7,071	Within 1 year	$	2,000	$	8	$	—	$	—	$	2,008

		6,999		72		—		—		7,071			2,000		8		—		—		2,008
Residential mortgage-backed securities:	Residential mortgage-backed securities:											Residential mortgage-backed securities:
After 1 year to 5 years												After 1 year to 5 years	1,188		—		(16)		—		1,172
After 5 years to 10 years	After 5 years to 10 years	5,761		251		—		—		6,012		After 5 years to 10 years	5,858		7		(32)		—		5,833
Over 10 years	Over 10 years	99,883		3,067		(372)		—		102,578		Over 10 years	157,293		268		(8,650)		—		148,911
		105,644		3,318		(372)		—		108,590			164,339		275		(8,698)		—		155,916

Total	Total	$	112,643	$	3,390	$	(372)	$	—	$	115,661	Total	$	166,339	$	283	$	(8,698)	$	—	$	157,924
Securities Available-for-Sale	Securities Available-for-Sale											Securities Available-for-Sale

State and political subdivisions:	State and political subdivisions:											State and political subdivisions:

After 1 year to 5 years	After 1 year to 5 years	$	2,325	$	8	$	—	$	—	$	2,333	After 1 year to 5 years	$	2,326	$	1	$	(15)	$	—	$	2,312

		2,325		8		—		—		2,333			2,326		1		(15)		—		2,312
Residential mortgage-backed securities:	Residential mortgage-backed securities:											Residential mortgage-backed securities:

Within 1 year												Within 1 year	21		—		—		—		21
After 1 year to 5 years	After 1 year to 5 years	214		7		—		—		221		After 1 year to 5 years	370		—		(4)		—		366
After 5 years to 10 years	After 5 years to 10 years	1,785		73		—		—		1,858		After 5 years to 10 years	3,533		—		(48)		—		3,485
Over 10 years	Over 10 years	179,675		1,101		(2,013)		—		178,763		Over 10 years	271,817		32		(19,033)		—		252,816
		181,674		1,181		(2,013)		—		180,842			275,741		32		(19,085)		—		256,688
Collateralized mortgage obligations:	Collateralized mortgage obligations:											Collateralized mortgage obligations:

After 5 years to 10 years	After 5 years to 10 years	528		13		—		—		541		After 5 years to 10 years	439		—		(7)		—		432
Over 10 years	Over 10 years	3,158		9		—		—		3,167		Over 10 years	2,631		—		(116)		—		2,515
		3,686		22		—		—		3,708			3,070		—		(123)		—		2,947
Corporate bonds:	Corporate bonds:											Corporate bonds:
Within 1 year	Within 1 year	3,500		15		—		—		3,515		Within 1 year	1,500		—		—		—		1,500
After 1 year to 5 years	After 1 year to 5 years	27,738		1,056		(14)		(23)		28,757		After 1 year to 5 years	29,726		64		(561)		(85)		29,144
After 5 years to 10 years	After 5 years to 10 years	60,000		—		(590)		(792)		58,618		After 5 years to 10 years	60,497		—		(1,904)		(1,190)		57,403

		91,238		1,071		(604)		(815)		90,890			91,723		64		(2,465)		(1,275)		88,047
Total	Total	$	278,923	$	2,282	$	(2,617)	$	(815)	$	277,773	Total	$	372,860	$	97	$	(21,688)	$	(1,275)	$	349,994

139


		At December 31, 2020											At December 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value		(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Securities Held-to-Maturity	Securities Held-to-Maturity											Securities Held-to-Maturity
U.S. government corporations and agencies:	U.S. government corporations and agencies:											U.S. government corporations and agencies:
After 1 year to 5 years		$	6,998	$	171	$	—	$	—	$	7,169
Within 1 year												Within 1 year	$	6,999	$	34	$	—	$	—	$	7,033

		6,998		171		—		—		7,169			6,999		34		—		—		7,033
Residential mortgage-backed securities:	Residential mortgage-backed securities:											Residential mortgage-backed securities:
After 5 years to 10 years	After 5 years to 10 years	6,325		253		—		—		6,578		After 5 years to 10 years	5,208		194		—		—		5,402
Over 10 years	Over 10 years	137,934		4,644		—		—		142,578		Over 10 years	164,776		2,175		(984)		—		165,967
		144,259		4,897		—		—		149,156			169,984		2,369		(984)		—		171,369

Total	Total	$	151,257	$	5,068	$	—	$	—	$	156,325	Total	$	176,983	$	2,403	$	(984)	$	—	$	178,402
Securities Available-for-Sale	Securities Available-for-Sale											Securities Available-for-Sale

State and political subdivisions:	State and political subdivisions:											State and political subdivisions:

After 1 year to 5 years	After 1 year to 5 years	$	3,560	$	33	$	—	$	—	$	3,593	After 1 year to 5 years	$	2,326	$	7	$	—	$	—	$	2,333
After 5 years to 10 years		9,881		63		—		—		9,944

		13,441		96		—		—		13,537			2,326		7		—		—		2,333
Residential mortgage-backed securities:	Residential mortgage-backed securities:											Residential mortgage-backed securities:

Within 1 year												Within 1 year	31		—		—		—		31
After 1 year to 5 years	After 1 year to 5 years	323		10		—		—		333		After 1 year to 5 years	153		5		—		—		158
After 5 years to 10 years	After 5 years to 10 years	1,664		58		—		—		1,722		After 5 years to 10 years	2,286		82		—		—		2,368
Over 10 years	Over 10 years	110,018		2,153		(63)		—		112,108		Over 10 years	220,153		671		(2,276)		—		218,548
		112,005		2,221		(63)		—		114,163			222,623		758		(2,276)		—		221,105
Collateralized mortgage obligations:	Collateralized mortgage obligations:											Collateralized mortgage obligations:

After 5 years to 10 years	After 5 years to 10 years	754		21		—		—		775		After 5 years to 10 years	481		7		—		—		488
Over 10 years	Over 10 years	4,561		—		(15)		—		4,546		Over 10 years	2,813		—		(23)		—		2,790
		5,315		21		(15)		—		5,321			3,294		7		(23)		—		3,278
Corporate bonds:	Corporate bonds:											Corporate bonds:
Within 1 year	Within 1 year	499		2		—		—		501		Within 1 year	2,500		4		—		—		2,504
After 1 year to 5 years	After 1 year to 5 years	29,498		1,440		—		(16)		30,922		After 1 year to 5 years	28,731		755		(67)		(51)		29,368
After 5 years to 10 years	After 5 years to 10 years	60,496		3		(5,450)		(853)		54,196		After 5 years to 10 years	60,000		—		(703)		(878)		58,419

		90,493		1,445		(5,450)		(869)		85,619			91,231		759		(770)		(929)		90,291
Total	Total	$	221,254	$	3,783	$	(5,528)	$	(869)	$	218,640	Total	$	319,474	$	1,531	$	(3,069)	$	(929)	$	317,007

Expected maturities may differ from contractual maturities because debt issuers may have the right to call or prepay obligations without call or prepayment penalties and mortgage-backed securities typically prepay at a rate faster than contractually due.

Securities with a carrying value of ~~$298.4~~$439.9 million and ~~$249.6~~$281.7 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, were pledged to secure public funds deposits and other contractual obligations. ~~In addition,~~There were no pledged securities to secure credit derivatives and interest rate swaps at March 31, 2022. Securities of ~~$25.1 million and $32.6~~$23.0 million were pledged to secure credit derivatives and interest rate swaps at ~~September 30, 2021 and~~ December 31, ~~2020, respectively.~~2021. See Note 11, "Derivative Instruments and Hedging Activities" for additional information.

The following table presents information related to sales of securities available-for-sale during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Nine Months Ended September 30,					Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		(Dollars in thousands)	2022		2021
Securities available-for-sale:	Securities available-for-sale:					Securities available-for-sale:
Proceeds from sales	Proceeds from sales	$	4,135	$	65,621	Proceeds from sales	$	1,530	$	1,563
Gross realized gains on sales	Gross realized gains on sales	140		831		Gross realized gains on sales	30		65
Gross realized losses on sales		—		14

Tax expense related to net realized gains on sales	Tax expense related to net realized gains on sales	29		172		Tax expense related to net realized gains on sales	6		14

At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, there were no reportable investments in any single issuer representing more than 10% of shareholders’ equity.

1410

The following table shows the fair value of securities that were in an unrealized loss position for which an allowance for credit losses has not been recorded at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, by the length of time those securities were in a continuous loss position.


		Less than Twelve Months				Twelve Months or Longer				Total					Less than Twelve Months				Twelve Months or Longer				Total
(Dollars in thousands)	(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At September 30, 2021
At March 31, 2022														At March 31, 2022
Securities Held-to-Maturity														Securities Held-to-Maturity

Residential mortgage-backed securities														Residential mortgage-backed securities	$	129,937	$	(8,276)	$	3,872	$	(422)	$	133,809	$	(8,698)

Total														Total	$	129,937	$	(8,276)	$	3,872	$	(422)	$	133,809	$	(8,698)
Securities Available-for-Sale														Securities Available-for-Sale

State and political subdivisions														State and political subdivisions	$	1,281	$	(15)	$	—	$	—	$	1,281	$	(15)
Residential mortgage-backed securities														Residential mortgage-backed securities	205,772		(13,887)		48,596		(5,198)		254,368		(19,085)
Collateralized mortgage obligations														Collateralized mortgage obligations	2,947		(123)		—		—		2,947		(123)
Corporate bonds														Corporate bonds	1,280		(1)		—		—		1,280		(1)
Total														Total	$	211,280	$	(14,026)	$	48,596	$	(5,198)	$	259,876	$	(19,224)
At December 31, 2021														At December 31, 2021
Securities Held-to-Maturity	Securities Held-to-Maturity													Securities Held-to-Maturity

Residential mortgage-backed securities	Residential mortgage-backed securities	$	14,360	$	(372)	$	—	$	—	$	14,360	$	(372)	Residential mortgage-backed securities	$	89,837	$	(984)	$	—	$	—	$	89,837	$	(984)

Total	Total	$	14,360	$	(372)	$	—	$	—	$	14,360	$	(372)	Total	$	89,837	$	(984)	$	—	$	—	$	89,837	$	(984)
Securities Available-for-Sale	Securities Available-for-Sale													Securities Available-for-Sale

Residential mortgage-backed securities	Residential mortgage-backed securities	$	133,703	$	(1,878)	$	3,124	$	(135)	$	136,827	$	(2,013)	Residential mortgage-backed securities	$	164,326	$	(1,816)	$	12,097	$	(460)	$	176,423	$	(2,276)

Collateralized mortgage obligations														Collateralized mortgage obligations	2,790		(23)		—		—		2,790		(23)
Corporate bonds	Corporate bonds	1,412		(1)		—		—		1,412		(1)		Corporate bonds	779		(1)		—		—		779		(1)
Total	Total	$	135,115	$	(1,879)	$	3,124	$	(135)	$	138,239	$	(2,014)	Total	$	167,895	$	(1,840)	$	12,097	$	(460)	$	179,992	$	(2,300)
At December 31, 2020
Securities Held-to-Maturity

Total		$	—	$	—	$	—	$	—	$	—	$	—
Securities Available-for-Sale

Residential mortgage-backed securities		$	13,677	$	(62)	$	31	$	(1)	$	13,708	$	(63)
Collateralized mortgage obligations		4,545		(15)		—		—		4,545		(15)

Total		$	18,222	$	(77)	$	31	$	(1)	$	18,253	$	(78)

At ~~September 30, 2021,~~March 31, 2022, the fair value of held-to-maturity securities in an unrealized loss position for which an allowance for credit losses has not been recorded was ~~$14.4~~$133.8 million, including unrealized losses of ~~$372 thousand.~~$8.7 million. These holdings were comprised of ~~six~~fifty-nine federal agency mortgage-backed securities, which are U.S. government entities and agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The Corporation did not recognize any credit losses on held-to-maturity debt securities for the ~~nine~~three months ended ~~September 30, 2021 or September 30, 2020.~~March 31, 2022. Accrued interest receivable on held-to-maturity debt securities totaled ~~$286~~$351 thousand at ~~September 30, 2021~~March 31, 2022 and is included within Accrued interest receivable and other assets on the condensed consolidated balance sheet. This amount is excluded from the estimate of expected credit losses.

At ~~September 30, 2021,~~March 31, 2022, the fair value of available-for-sale securities in an unrealized loss position for which an allowance for credit losses has not been recorded was ~~$138.2~~$259.9 million, including unrealized losses of ~~$2.0~~$19.2 million. These holdings were comprised of ~~twenty-nine~~(1) eighty-seven federal agency mortgage-backed securities, which are U.S. government entities and agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses, ~~and~~(2) three investment grade corporate ~~bonds.~~bonds, (3) two collateralized mortgage obligation bonds and (4) one state and political subdivisions bond. The Corporation does not intend to sell the securities in an unrealized loss position and is unlikely to be required to sell these securities before a recovery of fair value, which may be maturity. The Corporation concluded that the decline in fair value of these securities was not indicative of a credit loss. Accrued interest receivable on available-for-sale debt securities totaled ~~$593~~$821 thousand at ~~September 30, 2021~~March 31, 2022 and is included within Accrued interest receivable and other assets on the condensed consolidated balance sheet. This amount is excluded from the estimate of expected credit losses.

1511

The table below presents a rollforward by major security type for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 of the allowance for credit losses on securities available-for-sale.


(Dollars in thousands)	Corporate Bonds
~~Nine~~Three months ended ~~September 30,~~March 31, 2022
Securities Available-for-Sale
Beginning balance	$	(929)
Additions for securities for which no previous expected credit losses were recognized	(45)
Change in securities for which a previous expected credit loss was recognized	(301)
Ending balance	$	(1,275)
Three months ended March 31, 2021
Securities Available-for-Sale
Beginning balance	$	(869)
Additions for securities for which no previous expected credit losses were recognized	~~(22)~~(19)
Change in securities for which a previous expected credit loss was recognized	76403
Ending balance	$	~~(815)~~
~~Nine months ended September 30, 2020~~
~~Securities Available-for-Sale~~
~~Beginning balance~~	$	—
~~Adjustment to initially apply ASU No. 2016-13 for CECL~~	~~(300)~~
~~Additions for securities for which no previous expected credit losses were recognized~~	~~(1)~~
~~Change in securities for which a previous expected credit loss was recognized~~	~~(391)~~
~~Ending balance~~	$	~~(692)~~(485)

At ~~September 30, 2021,~~March 31, 2022, the fair value of available-for-sale securities in an unrealized loss position for which an allowance for credit losses has been recorded was ~~$62.6~~$74.1 million, including unrealized losses of ~~$1.4~~$3.7 million, and allowance for credit losses of ~~$815 thousand.~~$1.3 million. These holdings were comprised of 14NaN investment grade corporate bonds which fluctuate in value based on changes in market conditions. For these securities, fluctuations were primarily due to changes in the interest rate environment. The Corporation does not have the intent to sell these securities and it is not likely that it will be required to sell the securities before their anticipated recovery. The underlying issuers continue to make timely principal and interest payments on the securities. The reversal of the provision for credit losses of $76 thousand for the nine months ended September 30, 2021 was primarily related to the improvement in fair value of six securities that are tied to the 10-year swap curve, which had steepened during 2021.

The Corporation recognized a ~~$164~~$1 thousand and a $115 thousand net gain ~~and a $321 thousand net loss~~ on equity securities during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively, in other noninterest income. There were no sales of equity securities during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 or ~~September 30, 2020.~~2021.

Note 4. Loans and Leases

Summary of Major Loan and Lease Categories


(Dollars in thousands)	(Dollars in thousands)	At September 30, 2021		At December 31, 2020		(Dollars in thousands)	At March 31, 2022		At December 31, 2021
Commercial, financial and agricultural	Commercial, financial and agricultural	$	927,015	$	892,665	Commercial, financial and agricultural	$	932,485	$	956,396
Paycheck Protection Program	Paycheck Protection Program	85,601		483,773		Paycheck Protection Program	10,298		31,748
Real estate-commercial	Real estate-commercial	2,669,898		2,458,872		Real estate-commercial	2,816,737		2,718,535
Real estate-construction	Real estate-construction	260,874		243,355		Real estate-construction	285,083		283,918
Real estate-residential secured for business purpose	Real estate-residential secured for business purpose	412,001		381,446		Real estate-residential secured for business purpose	412,486		409,900
Real estate-residential secured for personal purpose	Real estate-residential secured for personal purpose	535,705		487,600		Real estate-residential secured for personal purpose	568,735		540,566
Real estate-home equity secured for personal purpose	Real estate-home equity secured for personal purpose	159,029		166,609		Real estate-home equity secured for personal purpose	160,134		158,909
Loans to individuals	Loans to individuals	26,458		27,482		Loans to individuals	26,249		25,504
Lease financings	Lease financings	175,464		165,039		Lease financings	188,579		184,541
Total loans and leases held for investment, net of deferred income	Total loans and leases held for investment, net of deferred income	$	5,252,045	$	5,306,841	Total loans and leases held for investment, net of deferred income	$	5,400,786	$	5,310,017
Less: Allowance for credit losses, loans and leases	Less: Allowance for credit losses, loans and leases	(70,146)		(83,044)		Less: Allowance for credit losses, loans and leases	(68,286)		(71,924)
Net loans and leases held for investment	Net loans and leases held for investment	$	5,181,899	$	5,223,797	Net loans and leases held for investment	$	5,332,500	$	5,238,093
Imputed interest on lease financings, included in the above table	Imputed interest on lease financings, included in the above table	$	(18,445)	$	(17,670)	Imputed interest on lease financings, included in the above table	$	(19,204)	$	(19,104)
Net deferred costs (fees), included in the above table		1,696		(2,903)
Net deferred costs, included in the above table						Net deferred costs, included in the above table	4,324		3,408
Overdraft deposits included in the above table	Overdraft deposits included in the above table	3,267		948		Overdraft deposits included in the above table	3,286		4,268

1612

Age Analysis of Past Due Loans and Leases

The following presents, by class of loans and leases held for investment, an aging of past due loans and leases, loans and leases which are current and nonaccrual loans and leases at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


		Accruing Loans and Leases																	Accruing Loans and Leases
(Dollars in thousands)	(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or more Past Due		Total Past Due		Current		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases Held for Investment		(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or more Past Due		Total Past Due		Current		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases Held for Investment
At September 30, 2021
At March 31, 2022																		At March 31, 2022
Commercial, financial and agricultural	Commercial, financial and agricultural	$	1,177	$	49	$	2,000	$	3,226	$	922,856	$	926,082	$	933	$	927,015	Commercial, financial and agricultural	$	4,880	$	—	$	—	$	4,880	$	927,157	$	932,037	$	448	$	932,485
Paycheck Protection Program	Paycheck Protection Program	95		—		—		95		85,506		85,601		—		85,601		Paycheck Protection Program	—		—		—		—		10,298		10,298		—		10,298
Real estate—commercial real estate and construction:	Real estate—commercial real estate and construction:																	Real estate—commercial real estate and construction:
Commercial real estate	Commercial real estate	1,343		—		—		1,343		2,640,259		2,641,602		28,296		2,669,898		Commercial real estate	2,833		—		—		2,833		2,787,493		2,790,326		26,411		2,816,737
Construction	Construction	—		—		—		—		260,874		260,874		—		260,874		Construction	—		—		—		—		285,083		285,083		—		285,083
Real estate—residential and home equity:	Real estate—residential and home equity:																	Real estate—residential and home equity:
Residential secured for business purpose	Residential secured for business purpose	789		344		—		1,133		408,399		409,532		2,469		412,001		Residential secured for business purpose	294		89		—		383		410,983		411,366		1,120		412,486
Residential secured for personal purpose	Residential secured for personal purpose	2,025		—		—		2,025		531,601		533,626		2,079		535,705		Residential secured for personal purpose	1,112		—		—		1,112		565,364		566,476		2,259		568,735
Home equity secured for personal purpose	Home equity secured for personal purpose	301		42		—		343		157,965		158,308		721		159,029		Home equity secured for personal purpose	77		20		—		97		159,548		159,645		489		160,134
Loans to individuals	Loans to individuals	215		16		58		289		26,169		26,458		—		26,458		Loans to individuals	34		14		185		233		26,016		26,249		—		26,249
Lease financings	Lease financings	655		654		146		1,455		173,979		175,434		30		175,464		Lease financings	221		124		89		434		187,996		188,430		149		188,579
Total	Total	$	6,600	$	1,105	$	2,204	$	9,909	$	5,207,608	$	5,217,517	$	34,528	$	5,252,045	Total	$	9,451	$	247	$	274	$	9,972	$	5,359,938	$	5,369,910	$	30,876	$	5,400,786


		Accruing Loans and Leases																	Accruing Loans and Leases
(Dollars in thousands)	(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or more Past Due		Total Past Due		Current		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases Held for Investment		(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or more Past Due		Total Past Due		Current		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases Held for Investment
At December 31, 2020
At December 31, 2021																		At December 31, 2021
Commercial, financial and agricultural	Commercial, financial and agricultural	$	1,104	$	279	$	50	$	1,433	$	888,405	$	889,838	$	2,827	$	892,665	Commercial, financial and agricultural	$	3,407	$	894	$	—	$	4,301	$	951,647	$	955,948	$	448	$	956,396
Paycheck Protection Program	Paycheck Protection Program	—		—		—		—		483,773		483,773		—		483,773		Paycheck Protection Program	367		—		—		367		31,381		31,748		—		31,748
Real estate—commercial real estate and construction:	Real estate—commercial real estate and construction:																	Real estate—commercial real estate and construction:
Commercial real estate	Commercial real estate	3,230		859		945		5,034		2,431,099		2,436,133		22,739		2,458,872		Commercial real estate	234		—		—		234		2,690,401		2,690,635		27,900		2,718,535
Construction	Construction	361		—		—		361		242,994		243,355		—		243,355		Construction	—		—		—		—		283,918		283,918		—		283,918
Real estate—residential and home equity:	Real estate—residential and home equity:																	Real estate—residential and home equity:
Residential secured for business purpose	Residential secured for business purpose	3,726		603		—		4,329		374,331		378,660		2,786		381,446		Residential secured for business purpose	542		—		216		758		406,955		407,713		2,187		409,900
Residential secured for personal purpose	Residential secured for personal purpose	6,057		80		—		6,137		479,377		485,514		2,086		487,600		Residential secured for personal purpose	2,976		162		—		3,138		535,379		538,517		2,049		540,566
Home equity secured for personal purpose	Home equity secured for personal purpose	607		32		—		639		164,923		165,562		1,047		166,609		Home equity secured for personal purpose	646		129		—		775		157,589		158,364		545		158,909
Loans to individuals	Loans to individuals	190		74		185		449		27,033		27,482		—		27,482		Loans to individuals	90		27		180		297		25,207		25,504		—		25,504
Lease financings	Lease financings	898		291		212		1,401		163,431		164,832		207		165,039		Lease financings	774		397		102		1,273		183,187		184,460		81		184,541
Total	Total	$	16,173	$	2,218	$	1,392	$	19,783	$	5,255,366	$	5,275,149	$	31,692	$	5,306,841	Total	$	9,036	$	1,609	$	498	$	11,143	$	5,265,664	$	5,276,807	$	33,210	$	5,310,017

1713

Nonperforming Loans and Leases

The following presents, by class of loans and leases, nonperforming loans and leases at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.


		At September 30, 2021								At December 31, 2020									At March 31, 2022								At December 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Nonaccrual Loans and Leases*		Accruing Troubled Debt Restructured Loans and Lease Modifications		Loans and Leases 90 Days or more Past Due and Accruing Interest		Total Nonperforming Loans and Leases		Nonaccrual Loans and Leases*		Accruing Troubled Debt Restructured Loans and Lease Modifications		Loans and Leases 90 Days or more Past Due and Accruing Interest		Total Nonperforming Loans and Leases		(Dollars in thousands)	Nonaccrual Loans and Leases*		Accruing Troubled Debt Restructured Loans and Lease Modifications		Loans and Leases 90 Days or more Past Due and Accruing Interest		Total Nonperforming Loans and Leases		Nonaccrual Loans and Leases*		Accruing Troubled Debt Restructured Loans and Lease Modifications		Loans and Leases 90 Days or more Past Due and Accruing Interest		Total Nonperforming Loans and Leases

Commercial, financial and agricultural	Commercial, financial and agricultural	$	933	$	—	$	2,000	$	2,933	$	2,827	$	—	$	50	$	2,877	Commercial, financial and agricultural	$	448	$	—	$	—	$	448	$	448	$	—	$	—	$	448
Real estate—commercial real estate and construction:	Real estate—commercial real estate and construction:																	Real estate—commercial real estate and construction:
Commercial real estate	Commercial real estate	28,296		—		—		28,296		22,739		—		945		23,684		Commercial real estate	26,411		—		—		26,411		27,900		—		—		27,900

Real estate—residential and home equity:	Real estate—residential and home equity:																	Real estate—residential and home equity:
Residential secured for business purpose	Residential secured for business purpose	2,469		—		—		2,469		2,786		—		—		2,786		Residential secured for business purpose	1,120		—		—		1,120		2,187		—		216		2,403
Residential secured for personal purpose	Residential secured for personal purpose	2,079		—		—		2,079		2,086		—		—		2,086		Residential secured for personal purpose	2,259		—		—		2,259		2,049		—		—		2,049
Home equity secured for personal purpose	Home equity secured for personal purpose	721		51		—		772		1,047		53		—		1,100		Home equity secured for personal purpose	489		51		—		540		545		51		—		596
Loans to individuals	Loans to individuals	—		—		58		58		—		—		185		185		Loans to individuals	—		—		185		185		—		—		180		180
Lease financings	Lease financings	30		—		146		176		207		—		212		419		Lease financings	149		—		89		238		81		—		102		183
Total	Total	$	34,528	$	51	$	2,204	$	36,783	$	31,692	$	53	$	1,392	$	33,137	Total	$	30,876	$	51	$	274	$	31,201	$	33,210	$	51	$	498	$	33,759

*Includes nonaccrual troubled debt restructured loans of ~~$2.4 million~~$830 thousand and ~~$14.1 million~~$758 thousand at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

1814

The following table presents the amortized cost basis of loans and leases held for investment on nonaccrual status and loans and leases held for investment 90 days or more past due and still accruing as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.


(Dollars in thousands)	(Dollars in thousands)	Nonaccrual With No ACL		Nonaccrual With ACL		Total Nonaccrual		Loans 90 Days or more Past Due and Accruing Interest		(Dollars in thousands)	Nonaccrual With No ACL		Nonaccrual With ACL		Total Nonaccrual		Loans and Leases 90 Days or more Past Due and Accruing Interest
At September 30, 2021
At March 31, 2022										At March 31, 2022
Commercial, financial and agricultural	Commercial, financial and agricultural	$	933	$	—	$	933	$	2,000	Commercial, financial and agricultural	$	448	$	—	$	448	$	—
Real estate-commercial	Real estate-commercial	28,213		83		28,296		—		Real estate-commercial	21,597		4,814		26,411		—

Real estate-residential secured for business purpose	Real estate-residential secured for business purpose	2,469		—		2,469		—		Real estate-residential secured for business purpose	1,120		—		1,120		—
Real estate-residential secured for personal purpose	Real estate-residential secured for personal purpose	2,079		—		2,079		—		Real estate-residential secured for personal purpose	2,259		—		2,259		—
Real estate-home equity secured for personal purpose	Real estate-home equity secured for personal purpose	721		—		721		—		Real estate-home equity secured for personal purpose	489		—		489		—
Loans to individuals	Loans to individuals	—		—		—		58		Loans to individuals	—		—		—		185
Lease financings	Lease financings	—		30		30		146		Lease financings	—		149		149		89
Total	Total	$	34,415	$	113	$	34,528	$	2,204	Total	$	25,913	$	4,963	$	30,876	$	274
At December 31, 2020
At December 31, 2021										At December 31, 2021
Commercial, financial and agricultural	Commercial, financial and agricultural	$	2,187	$	640	$	2,827	$	50	Commercial, financial and agricultural	$	448	$	—	$	448	$	—
Real estate-commercial	Real estate-commercial	22,739		—		22,739		945		Real estate-commercial	27,818		82		27,900		—

Real estate-residential secured for business purpose	Real estate-residential secured for business purpose	2,663		123		2,786		—		Real estate-residential secured for business purpose	2,187		—		2,187		216
Real estate-residential secured for personal purpose	Real estate-residential secured for personal purpose	1,958		128		2,086		—		Real estate-residential secured for personal purpose	2,049		—		2,049		—
Real estate-home equity secured for personal purpose	Real estate-home equity secured for personal purpose	1,047		—		1,047		—		Real estate-home equity secured for personal purpose	545		—		545		—
Loans to individuals	Loans to individuals	—		—		—		185		Loans to individuals	—		—		—		180
Lease financings	Lease financings	—		207		207		212		Lease financings	—		81		81		102
Total	Total	$	30,594	$	1,098	$	31,692	$	1,392	Total	$	33,047	$	163	$	33,210	$	498

For the ~~nine~~three months ended ~~September 30, 2021, $9~~March 31, 2022, $14 thousand of interest income was recognized on nonaccrual loans and leases.

The following table presents, by class of loans and leases, the amortized cost basis of collateral-dependent nonaccrual loans ~~by class of loans~~and leases and type of collateral as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.


(Dollars in thousands)	(Dollars in thousands)	Real Estate		Other (1)		None (2)		Total		(Dollars in thousands)	Real Estate		Other (1)		None (2)		Total
At September 30, 2021
At March 31, 2022										At March 31, 2022
Commercial, financial and agricultural	Commercial, financial and agricultural	$	281	$	477	$	175	$	933	Commercial, financial and agricultural	$	273	$	—	$	175	$	448
Real estate-commercial	Real estate-commercial	28,296		—		—		28,296		Real estate-commercial	26,411		—		—		26,411

Real estate-residential secured for business purpose	Real estate-residential secured for business purpose	2,469		—		—		2,469		Real estate-residential secured for business purpose	1,120		—		—		1,120
Real estate-residential secured for personal purpose	Real estate-residential secured for personal purpose	2,079		—		—		2,079		Real estate-residential secured for personal purpose	2,259		—		—		2,259
Real estate-home equity secured for personal purpose	Real estate-home equity secured for personal purpose	721		—		—		721		Real estate-home equity secured for personal purpose	489		—		—		489

Lease financings										Lease financings	—		149		—		149
Total	Total	$	33,846	$	477	$	175	$	34,498	Total	$	30,552	$	149	$	175	$	30,876

(Dollars in thousands)	(Dollars in thousands)	Real Estate		Other (1)		None (3)		Total		(Dollars in thousands)	Real Estate		Other (1)		None (2)		Total
At December 31, 2020
At December 31, 2021										At December 31, 2021
Commercial, financial and agricultural	Commercial, financial and agricultural	$	1,351	$	1,194	$	282	$	2,827	Commercial, financial and agricultural	$	273	$	—	$	175	$	448
Real estate-commercial	Real estate-commercial	22,739		—		—		22,739		Real estate-commercial	27,900		—		—		27,900

Real estate-residential secured for business purpose	Real estate-residential secured for business purpose	2,786		—		—		2,786		Real estate-residential secured for business purpose	2,187		—		—		2,187
Real estate-residential secured for personal purpose	Real estate-residential secured for personal purpose	2,086		—		—		2,086		Real estate-residential secured for personal purpose	2,049		—		—		2,049
Real estate-home equity secured for personal purpose	Real estate-home equity secured for personal purpose	1,047		—		—		1,047		Real estate-home equity secured for personal purpose	545		—		—		545

Lease financings										Lease financings	—		81		—		81
Total	Total	$	30,009	$	1,194	$	282	$	31,485	Total	$	32,954	$	81	$	175	$	33,210

(1) Collateral consists of business assets, including accounts receivable, personal property and ~~personal property.~~equipment.

(2) Loans fully guaranteed by the SBA.

~~(3) Loans fully reserved given lack of collateral.~~

1915

Credit Quality Indicators

The Corporation categorizes risk based on relevant information about the ability of the borrower to service their debt. Loans with a relationship balance of less than $1 million are reviewed when necessary based on their performance, primarily when such loans are delinquent. Loans with relationships greater than $1 million are reviewed at least annually. Loan relationships with a higher risk profile or classified as special mention or substandard are reviewed at least quarterly. The Corporation reviews credit quality indicators on at least an annual basis and last completed this review in conjunction with the period ended December 31, ~~2020.~~2021. The following is a description of the internal risk ratings and the likelihood of loss related to the credit quality of Commercial, financial and agricultural loans, Paycheck Protection Program loans, ~~Real-estate commercial~~Real estate-commercial loans, ~~Real-estate construction~~Real estate-construction loans and ~~Real-estate residential~~Real estate-residential secured for a business purpose loans.

1.Pass—Loans considered satisfactory with no indications of deterioration

2.Special Mention—Potential weakness that deserves management's close attention

3.Substandard—Well-defined weakness or weaknesses that jeopardize the liquidation of the debt

4.Doubtful—Collection or liquidation in-full, on the basis of current existing facts, conditions and values, highly questionable and improbable

2016

Based on the most recent analysis performed, the following table presents the recorded investment in loans and leases held for investment for Commercial, financial and agricultural loans, Paycheck Protection Program loans, ~~Real-estate commercial~~Real estate-commercial loans, ~~Real-estate construction~~Real estate-construction loans and ~~Real-estate residential~~Real estate-residential secured for a business purpose loans by credit quality indicator at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands) 2021 2020 2019 2018 2017 Prior Revolving Loans Amortized Cost Basis Total
At September 30, 2021
Commercial, Financial and Agricultural
Risk Rating
1. Pass $ 148,549 $ 101,422 $ 75,241 $ 55,694 $ 25,859 $ 53,712 $ 436,226 $ 896,703
2. Special Mention — 5,257 2,560 440 487 1,372 14,609 24,725
3. Substandard — — 30 69 15 295 5,178 5,587
Total $ 148,549 $ 106,679 $ 77,831 $ 56,203 $ 26,361 $ 55,379 $ 456,013 $ 927,015
Paycheck Protection Program
Risk Rating
1. Pass $ 80,766 $ 4,835 $ — $ — $ — $ — $ — $ 85,601
2. Special Mention — — — — — — — —
3. Substandard — — — — — — — —
Total $ 80,766 $ 4,835 $ — $ — $ — $ — $ — $ 85,601
Real Estate-Commercial
Risk Rating
1. Pass $ 582,442 $ 927,367 $ 428,304 $ 167,225 $ 229,552 $ 197,290 $ 43,313 $ 2,575,493
2. Special Mention 2,490 9,963 25,574 3,421 919 5,691 1,323 49,381
3. Substandard — 32,071 3,405 2,038 1,849 5,554 107 45,024
Total $ 584,932 $ 969,401 $ 457,283 $ 172,684 $ 232,320 $ 208,535 $ 44,743 $ 2,669,898
Real Estate-Construction
Risk Rating
1. Pass $ 97,157 $ 66,437 $ 47,603 $ 16,330 $ 198 $ — $ 9,616 $ 237,341
2. Special Mention 3,033 500 — 20,000 — — — 23,533
3. Substandard — — — — — — — —
Total $ 100,190 $ 66,937 $ 47,603 $ 36,330 $ 198 $ — $ 9,616 $ 260,874
Real Estate-Residential Secured for Business Purpose
Risk Rating
1. Pass $ 131,220 $ 90,933 $ 55,887 $ 36,180 $ 31,894 $ 33,800 $ 26,619 $ 406,533
2. Special Mention — 1,078 214 — 74 1,100 — 2,466
3. Substandard — — — 46 29 2,350 577 3,002
Total $ 131,220 $ 92,011 $ 56,101 $ 36,226 $ 31,997 $ 37,250 $ 27,196 $ 412,001
Totals By Risk Rating
1. Pass $ 1,040,134 $ 1,190,994 $ 607,035 $ 275,429 $ 287,503 $ 284,802 $ 515,774 $ 4,201,671
2. Special Mention 5,523 16,798 28,348 23,861 1,480 8,163 15,932 100,105
3. Substandard — 32,071 3,435 2,153 1,893 8,199 5,862 53,613
Total $ 1,045,657 $ 1,239,863 $ 638,818 $ 301,443 $ 290,876 $ 301,164 $ 537,568 $ 4,355,389


	Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
At March 31, 2022
Commercial, Financial and Agricultural
Risk Rating
1. Pass	$	61,928	$	189,868	$	66,196	$	43,083	$	41,794	$	63,584	$	428,551	$	895,004
2. Special Mention	—		2,251		4,340		2,193		5,605		1,462		16,565		32,416
3. Substandard	—		—		—		—		—		200		4,865		5,065

Total	$	61,928	$	192,119	$	70,536	$	45,276	$	47,399	$	65,246	$	449,981	$	932,485

Paycheck Protection Program
Risk Rating
1. Pass	$	12	$	10,221	$	61	$	—	$	—	$	—	$	—	$	10,294
2. Special Mention	—		—		4		—		—		—		—		4
3. Substandard	—		—		—		—		—		—		—		—

Total	$	12	$	10,221	$	65	$	—	$	—	$	—	$	—	$	10,298

Real Estate-Commercial
Risk Rating
1. Pass	$	217,789	$	781,652	$	840,423	$	385,224	$	145,916	$	326,313	$	45,914	$	2,743,231
2. Special Mention	912		2,542		5,877		22,938		8,724		5,366		73		46,432
3. Substandard	—		—		22,087		3,499		237		1,251		—		27,074

Total	$	218,701	$	784,194	$	868,387	$	411,661	$	154,877	$	332,930	$	45,987	$	2,816,737

Real Estate-Construction
Risk Rating
1. Pass	$	27,984	$	120,060	$	42,327	$	35,566	$	—	$	273	$	9,913	$	236,123
2. Special Mention	—		23,889		500		4,571		20,000		—		—		48,960
3. Substandard	—		—		—		—		—		—		—		—

Total	$	27,984	$	143,949	$	42,827	$	40,137	$	20,000	$	273	$	9,913	$	285,083

Real Estate-Residential Secured for Business Purpose
Risk Rating
1. Pass	$	30,735	$	143,361	$	81,059	$	47,555	$	31,457	$	46,896	$	29,087	$	410,150
2. Special Mention	—		—		253		—		—		960		—		1,213
3. Substandard	—		—		—		—		43		929		151		1,123

Total	$	30,735	$	143,361	$	81,312	$	47,555	$	31,500	$	48,785	$	29,238	$	412,486

Totals By Risk Rating
1. Pass	$	338,448	$	1,245,162	$	1,030,066	$	511,428	$	219,167	$	437,066	$	513,465	$	4,294,802
2. Special Mention	912		28,682		10,974		29,702		34,329		7,788		16,638		129,025
3. Substandard	—		—		22,087		3,499		280		2,380		5,016		33,262

Total	$	339,360	$	1,273,844	$	1,063,127	$	544,629	$	253,776	$	447,234	$	535,119	$	4,457,089

2117


		Term Loans Amortized Cost Basis by Origination Year																	Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)	(Dollars in thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Total		(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
At December 31, 2020
At December 31, 2021																		At December 31, 2021
Commercial, Financial and Agricultural	Commercial, Financial and Agricultural																	Commercial, Financial and Agricultural
Risk Rating	Risk Rating																	Risk Rating
1. Pass	1. Pass	$	162,547	$	93,967	$	74,722	$	38,906	$	17,371	$	56,053	$	427,336	$	870,902	1. Pass	$	215,197	$	79,739	$	69,618	$	52,507	$	23,253	$	49,827	$	442,288	$	932,429
2. Special Mention	2. Special Mention	2,723		783		316		500		777		1,144		8,318		14,561		2. Special Mention	1,001		3,459		2,389		394		428		1,231		10,162		19,064
3. Substandard	3. Substandard	—		430		362		28		—		627		5,755		7,202		3. Substandard	—		—		—		—		16		200		4,687		4,903

Total	Total	$	165,270	$	95,180	$	75,400	$	39,434	$	18,148	$	57,824	$	441,409	$	892,665	Total	$	216,198	$	83,198	$	72,007	$	52,901	$	23,697	$	51,258	$	457,137	$	956,396

Paycheck Protection Program	Paycheck Protection Program																	Paycheck Protection Program
Risk Rating	Risk Rating																	Risk Rating
1. Pass	1. Pass	$	483,773	$	—	$	—	$	—	$	—	$	—	$	—	$	483,773	1. Pass	$	31,554	$	194	$	—	$	—	$	—	$	—	$	—	$	31,748
2. Special Mention	2. Special Mention	—		—		—		—		—		—		—		—		2. Special Mention	—		—		—		—		—		—		—		—
3. Substandard	3. Substandard	—		—		—		—		—		—		—		—		3. Substandard	—		—		—		—		—		—		—		—

Total	Total	$	483,773	$	—	$	—	$	—	$	—	$	—	$	—	$	483,773	Total	$	31,554	$	194	$	—	$	—	$	—	$	—	$	—	$	31,748

Real Estate-Commercial	Real Estate-Commercial																	Real Estate-Commercial
Risk Rating	Risk Rating																	Risk Rating
1. Pass	1. Pass	$	1,084,157	$	481,997	$	223,646	$	268,236	$	143,041	$	157,503	$	43,008	$	2,401,588	1. Pass	$	802,878	$	858,426	$	407,944	$	155,892	$	195,756	$	172,702	$	48,354	$	2,641,952
2. Special Mention	2. Special Mention	6,220		10,076		3,498		—		1,250		5,870		1,247		28,161		2. Special Mention	2,567		14,338		23,134		—		916		5,630		98		46,683
3. Substandard	3. Substandard	3,803		3,998		709		11,383		1,207		6,690		1,333		29,123		3. Substandard	—		22,055		3,405		1,995		1,110		1,335		—		29,900

Total	Total	$	1,094,180	$	496,071	$	227,853	$	279,619	$	145,498	$	170,063	$	45,588	$	2,458,872	Total	$	805,445	$	894,819	$	434,483	$	157,887	$	197,782	$	179,667	$	48,452	$	2,718,535

Real Estate-Construction	Real Estate-Construction																	Real Estate-Construction
Risk Rating	Risk Rating																	Risk Rating
1. Pass	1. Pass	$	116,840	$	59,507	$	39,009	$	113	$	2,950	$	—	$	3,711	$	222,130	1. Pass	$	137,622	$	59,952	$	38,592	$	9,995	$	198	$	—	$	8,543	$	254,902
2. Special Mention	2. Special Mention	21,225		—		—		—		—		—		—		21,225		2. Special Mention	4,684		500		3,832		20,000		—		—		—		29,016
3. Substandard	3. Substandard	—		—		—		—		—		—		—		—		3. Substandard	—		—		—		—		—		—		—		—

Total	Total	$	138,065	$	59,507	$	39,009	$	113	$	2,950	$	—	$	3,711	$	243,355	Total	$	142,306	$	60,452	$	42,424	$	29,995	$	198	$	—	$	8,543	$	283,918

Real Estate-Residential Secured for Business Purpose	Real Estate-Residential Secured for Business Purpose																	Real Estate-Residential Secured for Business Purpose
Risk Rating	Risk Rating																	Risk Rating
1. Pass	1. Pass	$	118,925	$	72,149	$	52,775	$	43,347	$	37,768	$	25,170	$	25,510	$	375,644	1. Pass	$	154,423	$	84,982	$	51,970	$	34,373	$	28,852	$	25,819	$	25,564	$	405,983
2. Special Mention	2. Special Mention	1,354		—		188		77		175		130		—		1,924		2. Special Mention	210		352		—		—		73		1,093		—		1,728
3. Substandard	3. Substandard	28		991		50		64		1,065		962		718		3,878		3. Substandard	—		—		—		45		24		1,549		571		2,189

Total	Total	$	120,307	$	73,140	$	53,013	$	43,488	$	39,008	$	26,262	$	26,228	$	381,446	Total	$	154,633	$	85,334	$	51,970	$	34,418	$	28,949	$	28,461	$	26,135	$	409,900

Totals By Risk Rating	Totals By Risk Rating																	Totals By Risk Rating
1. Pass	1. Pass	$	1,966,242	$	707,620	$	390,152	$	350,602	$	201,130	$	238,726	$	499,565	$	4,354,037	1. Pass	$	1,341,674	$	1,083,293	$	568,124	$	252,767	$	248,059	$	248,348	$	524,749	$	4,267,014
2. Special Mention	2. Special Mention	31,522		10,859		4,002		577		2,202		7,144		9,565		65,871		2. Special Mention	8,462		18,649		29,355		20,394		1,417		7,954		10,260		96,491
3. Substandard	3. Substandard	3,831		5,419		1,121		11,475		2,272		8,279		7,806		40,203		3. Substandard	—		22,055		3,405		2,040		1,150		3,084		5,258		36,992

Total	Total	$	2,001,595	$	723,898	$	395,275	$	362,654	$	205,604	$	254,149	$	516,936	$	4,460,111	Total	$	1,350,136	$	1,123,997	$	600,884	$	275,201	$	250,626	$	259,386	$	540,267	$	4,400,497

The Corporation had no revolving loans which were converted to term loans included within recorded investment in loans and leases held for investment at ~~September 30, 2021~~March 31, 2022 or December 31, ~~2020.~~2021. The Corporation had no loans with a risk rating of Doubtful included within recorded investment in loans and leases held for investment at ~~September 30, 2021~~March 31, 2022 or December 31, ~~2020.~~2021.

2218

The Corporation monitors the credit risk profile by payment activity for the following classifications of loans and leases: ~~Real-estate residential~~Real estate-residential secured for personal purpose loans, ~~Real-estate home~~Real estate-home equity secured for personal purpose loans, Loans to individuals and Lease financings. The Corporation reviews credit quality indicators on at least an annual basis and last completed this review in conjunction with the period ended December 31, ~~2020.~~2021. Loans and leases past due 90 days or more, loans and leases on nonaccrual status and troubled debt restructured loans and lease modifications are considered nonperforming. Nonperforming loans and leases are reviewed monthly. Performing loans and leases have a nominal to moderate risk of loss. Performing loans and leases are reviewed only if the loan becomes 60 days or more past due.

Based on the most recent analysis performed, the following table presents the recorded investment in loans and leases held for investment for ~~Real-estate residential~~Real estate-residential secured for personal purpose loans, ~~Real-estate home~~Real estate-home equity secured for personal purpose loans, Loans to individuals and Lease financings by credit quality indicator at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.


		Term Loans Amortized Cost Basis by Origination Year																	Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)	(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total		(Dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
At September 30, 2021
At March 31, 2022																		At March 31, 2022
Real Estate-Residential Secured for Personal Purpose	Real Estate-Residential Secured for Personal Purpose																	Real Estate-Residential Secured for Personal Purpose
Payment Performance	Payment Performance																	Payment Performance
1. Performing	1. Performing	$	174,244	$	171,641	$	38,776	$	27,575	$	26,533	$	94,642	$	215	$	533,626	1. Performing	$	54,140	$	216,048	$	156,027	$	29,247	$	20,629	$	90,321	$	64	$	566,476
2. Nonperforming	2. Nonperforming	54		643		—		371		—		1,011		—		2,079		2. Nonperforming	—		52		621		—		371		1,215		—		2,259
Total	Total	$	174,298	$	172,284	$	38,776	$	27,946	$	26,533	$	95,653	$	215	$	535,705	Total	$	54,140	$	216,100	$	156,648	$	29,247	$	21,000	$	91,536	$	64	$	568,735

Real Estate-Home Equity Secured for Personal Purpose	Real Estate-Home Equity Secured for Personal Purpose																	Real Estate-Home Equity Secured for Personal Purpose
Payment Performance	Payment Performance																	Payment Performance
1. Performing	1. Performing	$	641	$	953	$	478	$	514	$	887	$	1,811	$	152,973	$	158,257	1. Performing	$	302	$	943	$	665	$	359	$	340	$	2,086	$	154,899	$	159,594
2. Nonperforming	2. Nonperforming	—		—		—		182		—		65		525		772		2. Nonperforming	—		—		—		—		171		57		312		540
Total	Total	$	641	$	953	$	478	$	696	$	887	$	1,876	$	153,498	$	159,029	Total	$	302	$	943	$	665	$	359	$	511	$	2,143	$	155,211	$	160,134

Loans to Individuals	Loans to Individuals																	Loans to Individuals
Payment Performance	Payment Performance																	Payment Performance
1. Performing	1. Performing	$	1,337	$	1,019	$	850	$	543	$	157	$	1,982	$	20,512	$	26,400	1. Performing	$	387	$	1,169	$	785	$	560	$	368	$	1,569	$	21,226	$	26,064
2. Nonperforming	2. Nonperforming	—		—		—		—		—		58		—		58		2. Nonperforming	—		—		—		—		—		185		—		185
Total	Total	$	1,337	$	1,019	$	850	$	543	$	157	$	2,040	$	20,512	$	26,458	Total	$	387	$	1,169	$	785	$	560	$	368	$	1,754	$	21,226	$	26,249

Lease Financings	Lease Financings																	Lease Financings
Payment Performance	Payment Performance																	Payment Performance
1. Performing	1. Performing	$	59,726	$	57,225	$	32,465	$	19,328	$	5,838	$	706	$	—	$	175,288	1. Performing	$	21,441	$	78,330	$	46,930	$	25,318	$	13,314	$	3,008	$	—	$	188,341
2. Nonperforming	2. Nonperforming	23		16		66		12		5		54		—		176		2. Nonperforming	—		162		14		35		17		10		—		238
Total	Total	$	59,749	$	16	$	32,531	$	19,340	$	5,843	$	760	$	—	$	175,464	Total	$	21,441	$	78,492	$	46,944	$	25,353	$	13,331	$	3,018	$	—	$	188,579

Totals by Payment Performance	Totals by Payment Performance																	Totals by Payment Performance
1. Performing	1. Performing	$	235,948	$	230,838	$	72,569	$	47,960	$	33,415	$	99,141	$	173,700	$	893,571	1. Performing	$	76,270	$	296,490	$	204,407	$	55,484	$	34,651	$	96,984	$	176,189	$	940,475
2. Nonperforming	2. Nonperforming	77		659		66		565		5		1,188		525		3,085		2. Nonperforming	—		214		635		35		559		1,467		312		3,222
Total	Total	$	236,025	$	231,497	$	72,635	$	48,525	$	33,420	$	100,329	$	174,225	$	896,656	Total	$	76,270	$	296,704	$	205,042	$	55,519	$	35,210	$	98,451	$	176,501	$	943,697

2319


		Term Loans Amortized Cost Basis by Origination Year																	Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)	(Dollars in thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Total		(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
At December 31, 2020
At December 31, 2021																		At December 31, 2021
Real Estate-Residential Secured for Personal Purpose	Real Estate-Residential Secured for Personal Purpose																	Real Estate-Residential Secured for Personal Purpose
Payment Performance	Payment Performance																	Payment Performance
1. Performing	1. Performing	$	191,987	$	61,880	$	56,314	$	50,983	$	38,975	$	84,138	$	1,237	$	485,514	1. Performing	$	219,680	$	162,609	$	34,102	$	23,065	$	19,912	$	78,960	$	189	$	538,517
2. Nonperforming	2. Nonperforming	666		—		56		—		—		1,364		—		2,086		2. Nonperforming	53		634		—		371		—		991		—		2,049
Total	Total	$	192,653	$	61,880	$	56,370	$	50,983	$	38,975	$	85,502	$	1,237	$	487,600	Total	$	219,733	$	163,243	$	34,102	$	23,436	$	19,912	$	79,951	$	189	$	540,566

Real Estate-Home Equity Secured for Personal Purpose	Real Estate-Home Equity Secured for Personal Purpose																	Real Estate-Home Equity Secured for Personal Purpose
Payment Performance	Payment Performance																	Payment Performance
1. Performing	1. Performing	$	1,195	$	815	$	829	$	1,160	$	518	$	2,189	$	158,803	$	165,509	1. Performing	$	961	$	876	$	370	$	415	$	704	$	1,655	$	153,332	$	158,313
2. Nonperforming	2. Nonperforming	—		—		198		—		—		36		866		1,100		2. Nonperforming	—		—		—		173		—		60		363		596
Total	Total	$	1,195	$	815	$	1,027	$	1,160	$	518	$	2,225	$	159,669	$	166,609	Total	$	961	$	876	$	370	$	588	$	704	$	1,715	$	153,695	$	158,909

Loans to Individuals	Loans to Individuals																	Loans to Individuals
Payment Performance	Payment Performance																	Payment Performance
1. Performing	1. Performing	$	1,795	$	1,425	$	970	$	441	$	220	$	2,266	$	20,180	$	27,297	1. Performing	$	1,376	$	893	$	722	$	466	$	100	$	1,673	$	20,094	$	25,324
2. Nonperforming	2. Nonperforming	—		—		—		—		—		23		162		185		2. Nonperforming	—		—		—		—		—		180		—		180
Total	Total	$	1,795	$	1,425	$	970	$	441	$	220	$	2,289	$	20,342	$	27,482	Total	$	1,376	$	893	$	722	$	466	$	100	$	1,853	$	20,094	$	25,504

Lease Financings	Lease Financings																	Lease Financings
Payment Performance	Payment Performance																	Payment Performance
1. Performing	1. Performing	$	72,173	$	45,972	$	30,679	$	11,613	$	3,616	$	567	$	—	$	164,620	1. Performing	$	83,161	$	51,808	$	28,405	$	16,389	$	4,204	$	391	$	—	$	184,358
2. Nonperforming	2. Nonperforming	12		182		5		205		7		8		—		419		2. Nonperforming	—		14		64		58		7		40		—		183
Total	Total	$	72,185	$	46,154	$	30,684	$	11,818	$	3,623	$	575	$	—	$	165,039	Total	$	83,161	$	51,822	$	28,469	$	16,447	$	4,211	$	431	$	—	$	184,541

Totals by Payment Performance	Totals by Payment Performance																	Totals by Payment Performance
1. Performing	1. Performing	$	267,150	$	110,092	$	88,792	$	64,197	$	43,329	$	89,160	$	180,220	$	842,940	1. Performing	$	305,178	$	216,186	$	63,599	$	40,335	$	24,920	$	82,679	$	173,615	$	906,512
2. Nonperforming	2. Nonperforming	678		182		259		205		7		1,431		1,028		3,790		2. Nonperforming	53		648		64		602		7		1,271		363		3,008
Total	Total	$	267,828	$	110,274	$	89,051	$	64,402	$	43,336	$	90,591	$	181,248	$	846,730	Total	$	305,231	$	216,834	$	63,663	$	40,937	$	24,927	$	83,950	$	173,978	$	909,520

2420

Allowance for Credit Losses on Loans and Leases and Recorded Investment in Loans and Leases

The allowance for credit losses (ACL) on loans decreased during the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 primarily due to favorable changes in economic-related assumptions, which were impacted by the ongoing recovery from the COVID-19 pandemic, partially offset by loan ~~growth and a qualitative factor adjustment related to expected losses resulting from severe weather-related damages.~~growth. There were no changes to the reasonable and supportable forecast period, the reversion period, or any ~~other~~ significant methodology changes during the three ~~or nine~~ months ended ~~September 30, 2021.~~March 31, 2022. The following presents, by portfolio segment, a summary of the activity in the allowance for credit losses, loans and leases, for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


(Dollars in thousands)	(Dollars in thousands)	Beginning balance		Provision (reversal of provision) for credit losses		Charge-offs		Recoveries		Ending balance		(Dollars in thousands)	Beginning balance		Provision (reversal of provision) for credit losses		Charge-offs		Recoveries		Ending balance
Three Months Ended September 30, 2021
Three Months Ended March 31, 2022												Three Months Ended March 31, 2022
Allowance for credit losses, loans and leases:	Allowance for credit losses, loans and leases:											Allowance for credit losses, loans and leases:
Commercial, Financial and Agricultural	Commercial, Financial and Agricultural	$	11,734	$	450	$	(787)	$	789	$	12,186	Commercial, Financial and Agricultural	$	13,536	$	(1,671)	$	(214)	$	189	$	11,840
Paycheck Protection Program	Paycheck Protection Program	3		(1)		—		—		2		Paycheck Protection Program	2		(1)		—		—		1
Real Estate-Commercial	Real Estate-Commercial	43,194		(1,809)		(72)		193		41,506		Real Estate-Commercial	41,095		(669)		—		—		40,426
Real Estate-Construction	Real Estate-Construction	3,649		205		—		—		3,854		Real Estate-Construction	4,575		(941)		—		—		3,634
Real Estate-Residential Secured for Business Purpose	Real Estate-Residential Secured for Business Purpose	6,747		(218)		—		2		6,531		Real Estate-Residential Secured for Business Purpose	6,482		(328)		—		48		6,202
Real Estate-Residential Secured for Personal Purpose	Real Estate-Residential Secured for Personal Purpose	2,620		(129)		—		—		2,491		Real Estate-Residential Secured for Personal Purpose	2,403		189		—		—		2,592
Real Estate-Home Equity Secured for Personal Purpose	Real Estate-Home Equity Secured for Personal Purpose	1,124		(49)		—		1		1,076		Real Estate-Home Equity Secured for Personal Purpose	1,028		(53)		—		1		976
Loans to Individuals	Loans to Individuals	319		76		(59)		18		354		Loans to Individuals	363		57		(75)		24		369
Lease Financings	Lease Financings	1,815		204		(34)		24		2,009		Lease Financings	2,290		5		(59)		10		2,246
Unallocated	Unallocated	150		(13)		N/A		N/A		137		Unallocated	150		(150)		N /A		N/A		—
Total	Total	$	71,355	$	(1,284)	$	(952)	$	1,027	$	70,146	Total	$	71,924	$	(3,562)	$	(348)	$	272	$	68,286
Three Months Ended September 30, 2020
Three Months Ended March 31, 2021												Three Months Ended March 31, 2021
Allowance for credit losses, loans and leases:	Allowance for credit losses, loans and leases:											Allowance for credit losses, loans and leases:
Commercial, Financial and Agricultural	Commercial, Financial and Agricultural	$	16,736	$	(2,401)	$	(142)	$	354	$	14,547	Commercial, Financial and Agricultural	$	13,584	$	(3,078)	$	(338)	$	65	$	10,233
Real Estate-Commercial	Real Estate-Commercial	50,671		7,481		—		—		58,152		Real Estate-Commercial	52,230		(6,771)		—		—		45,459
Real Estate-Construction	Real Estate-Construction	4,130		355		—		—		4,485		Real Estate-Construction	3,298		(499)		—		—		2,799
Real Estate-Residential Secured for Business Purpose	Real Estate-Residential Secured for Business Purpose	8,180		251		(88)		23		8,366		Real Estate-Residential Secured for Business Purpose	7,317		(679)		—		54		6,692
Real Estate-Residential Secured for Personal Purpose	Real Estate-Residential Secured for Personal Purpose	2,669		47		—		—		2,716		Real Estate-Residential Secured for Personal Purpose	3,055		1		—		—		3,056
Real Estate-Home Equity Secured for Personal Purpose	Real Estate-Home Equity Secured for Personal Purpose	1,071		204		—		4		1,279		Real Estate-Home Equity Secured for Personal Purpose	1,176		79		—		2		1,257
Loans to Individuals	Loans to Individuals	771		(170)		(69)		17		549		Loans to Individuals	533		(58)		(56)		28		447
Lease Financings	Lease Financings	1,839		(149)		(149)		85		1,626		Lease Financings	1,701		(254)		(91)		48		1,404
Unallocated	Unallocated	150		—		N/A		N/A		150		Unallocated	150		—		N/A		N/A		150
Total	Total	$	86,217	$	5,618	$	(448)	$	483	$	91,870	Total	$	83,044	$	(11,259)	$	(485)	$	197	$	71,497

N/A – Not applicable

(Dollars in thousands) Beginning balance Adjustment to initially apply ASU No. 2016-13 for CECL (Reversal of provision) provision for credit losses Charge-offs Recoveries Ending balance
Nine Months Ended September 30, 2021
Allowance for credit losses, loans and leases:
Commercial, Financial and Agricultural $ 13,584 $ — $ (939) $ (1,475) $ 1,016 $ 12,186
Paycheck Protection Program — — 2 — — 2
Real Estate-Commercial 52,230 — (10,927) (595) 798 41,506
Real Estate-Construction 3,298 — 556 — — 3,854
Real Estate-Residential Secured for Business Purpose 7,317 — (637) (227) 78 6,531
Real Estate-Residential Secured for Personal Purpose 3,055 — (564) — — 2,491
Real Estate-Home Equity Secured for Personal Purpose 1,176 — (125) — 25 1,076
Loans to Individuals 533 — (127) (138) 86 354
Lease Financings 1,701 — 332 (143) 119 2,009
Unallocated 150 — (13) N/A N/A 137
Total $ 83,044 $ — $ (12,442) $ (2,578) $ 2,122 $ 70,146
Nine Months Ended September 30, 2020
Allowance for credit losses, loans and leases:
Commercial, Financial and Agricultural $ 8,759 $ 5,284 $ 1,195 $ (1,367) $ 676 $ 14,547
Real Estate-Commercial 15,750 6,208 38,961 (2,802) 35 58,152
Real Estate-Construction 2,446 29 2,010 — — 4,485
Real Estate-Residential Secured for Business Purpose 2,622 2,502 3,398 (187) 31 8,366
Real Estate-Residential Secured for Personal Purpose 2,713 (706) 709 — — 2,716
Real Estate-Home Equity Secured for Personal Purpose 1,076 (364) 555 — 12 1,279
Loans to Individuals 470 104 116 (197) 56 549
Lease Financings 1,311 (135) 737 (513) 226 1,626
Unallocated 184 — (34) N/A N/A 150
Total $ 35,331 $ 12,922 $ 47,647 $ (5,066) $ 1,036 $ 91,870

N~~/A – Not applicable~~

2621

The following presents, by portfolio segment, the balance in the ACL on loans and leases, disaggregated on the basis of whether the loan or lease was measured for credit loss as a pooled loan or lease or if it was individually analyzed for a reserve at ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Allowance for credit losses, loans and leases						Loans and leases held for investment									Allowance for credit losses, loans and leases						Loans and leases held for investment
(Dollars in thousands)	(Dollars in thousands)	Ending balance: individually analyzed		Ending balance: pooled		Total ending balance		Ending balance: individually analyzed		Ending balance: pooled		Loans measured at fair value		Total ending balance		(Dollars in thousands)	Ending balance: individually analyzed		Ending balance: pooled		Total ending balance		Ending balance: individually analyzed		Ending balance: pooled		Loans measured at fair value		Total ending balance
At September 30, 2021
At March 31, 2022																At March 31, 2022
Commercial, Financial and Agricultural	Commercial, Financial and Agricultural	$	—	$	12,186	$	12,186	$	933	$	926,082	$	—	$	927,015	Commercial, Financial and Agricultural	$	—	$	11,840	$	11,840	$	448	$	932,037	$	—	$	932,485
Paycheck Protection Program	Paycheck Protection Program	—		2		2		—		85,601		—		85,601		Paycheck Protection Program	—		1		1		—		10,298		—		10,298
Real Estate-Commercial	Real Estate-Commercial	15		41,491		41,506		28,296		2,641,520		82		2,669,898		Real Estate-Commercial	954		39,472		40,426		26,411		2,790,313		13		2,816,737
Real Estate-Construction	Real Estate-Construction	—		3,854		3,854		—		260,874		—		260,874		Real Estate-Construction	—		3,634		3,634		—		285,083		—		285,083
Real Estate-Residential Secured for Business Purpose	Real Estate-Residential Secured for Business Purpose	—		6,531		6,531		2,469		409,532		—		412,001		Real Estate-Residential Secured for Business Purpose	—		6,202		6,202		1,120		411,366		—		412,486
Real Estate-Residential Secured for Personal Purpose	Real Estate-Residential Secured for Personal Purpose	—		2,491		2,491		2,079		533,626		—		535,705		Real Estate-Residential Secured for Personal Purpose	—		2,592		2,592		2,259		566,476		—		568,735
Real Estate-Home Equity Secured for Personal Purpose	Real Estate-Home Equity Secured for Personal Purpose	—		1,076		1,076		721		158,308		—		159,029		Real Estate-Home Equity Secured for Personal Purpose	—		976		976		489		159,645		—		160,134
Loans to Individuals	Loans to Individuals	—		354		354		—		26,458		—		26,458		Loans to Individuals	—		369		369		—		26,249		—		26,249
Lease Financings	Lease Financings	—��		2,009		2,009		—		175,464		—		175,464		Lease Financings	—		2,246		2,246		—		188,579		—		188,579
Unallocated	Unallocated	N/A		137		137		N/A		N/A		N/A		N/A		Unallocated	N/A		—		—		N/A		N/A		N/A		N/A
Total	Total	$	15	$	70,131	$	70,146	$	34,498	$	5,217,465	$	82	$	5,252,045	Total	$	954	$	67,332	$	68,286	$	30,727	$	5,370,046	$	13	$	5,400,786
At September 30, 2020
At March 31, 2021																At March 31, 2021
Commercial, Financial and Agricultural	Commercial, Financial and Agricultural	$	891	$	13,656	$	14,547	$	3,809	$	890,505	$	—	$	894,314	Commercial, Financial and Agricultural	$	253	$	9,980	$	10,233	$	2,006	$	869,990	$	—	$	871,996
Paycheck Protection Program	Paycheck Protection Program	$	—	$	—	$	—	$	—	$	501,580	$	—	$	501,580	Paycheck Protection Program	—		—		—		—		528,452		—		528,452
Real Estate-Commercial	Real Estate-Commercial	19		58,133		58,152		20,464		2,349,006		221		2,369,691		Real Estate-Commercial	—		45,459		45,459		22,026		2,509,522		152		2,531,700
Real Estate-Construction	Real Estate-Construction	—		4,485		4,485		—		233,590		—		233,590		Real Estate-Construction	—		2,799		2,799		—		249,652		—		249,652
Real Estate-Residential Secured for Business Purpose	Real Estate-Residential Secured for Business Purpose	1		8,365		8,366		2,151		376,088		—		378,239		Real Estate-Residential Secured for Business Purpose	3		6,689		6,692		2,859		384,942		—		387,801
Real Estate-Residential Secured for Personal Purpose	Real Estate-Residential Secured for Personal Purpose	181		2,535		2,716		2,395		472,293		—		474,688		Real Estate-Residential Secured for Personal Purpose	25		3,031		3,056		1,867		492,482		—		494,349
Real Estate-Home Equity Secured for Personal Purpose	Real Estate-Home Equity Secured for Personal Purpose	—		1,279		1,279		948		171,500		—		172,448		Real Estate-Home Equity Secured for Personal Purpose	—		1,257		1,257		1,089		161,440		—		162,529
Loans to Individuals	Loans to Individuals	—		549		549		—		27,771		—		27,771		Loans to Individuals	—		447		447		—		25,468		—		25,468
Lease Financings	Lease Financings	—		1,626		1,626		—		159,535		—		159,535		Lease Financings	—		1,404		1,404		—		163,059		—		163,059
Unallocated	Unallocated	N/A		150		150		N/A		N/A		N/A		N/A		Unallocated	N/A		150		150		N/A		N/A		N/A		N/A
Total	Total	$	1,092	$	90,778	$	91,870	$	29,767	$	5,181,868	$	221	$	5,211,856	Total	$	281	$	71,216	$	71,497	$	29,847	$	5,385,007	$	152	$	5,415,006

N/A – Not applicable

2722

Troubled Debt Restructured Loans

The following presents, by class of loans, information regarding troubled debt restructurings of accruing and nonaccrual ~~loans:~~loans.


		Three Months Ended September 30, 2021					Three Months Ended September 30, 2020				Three Months Ended March 31, 2022					Three Months Ended March 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Number of Loans	Pre- Restructuring Outstanding Recorded Investment		Post- Restructuring Outstanding Recorded Investment			Number of Loans	Pre- Restructuring Outstanding Recorded Investment			Post- Restructuring Outstanding Recorded Investment		(Dollars in thousands)	Number of Loans	Pre- Restructuring Outstanding Recorded Investment		Post- Restructuring Outstanding Recorded Investment		Number of Loans	Pre- Restructuring Outstanding Recorded Investment		Post- Restructuring Outstanding Recorded Investment
Accruing Troubled Debt Restructured Loans:	Accruing Troubled Debt Restructured Loans:													Accruing Troubled Debt Restructured Loans:

Total	Total	—	$	—	$	—		—	$	—		$	—	Total	—	$	—	$	—	—	$	—	$	—
Nonaccrual Troubled Debt Restructured Loans:	Nonaccrual Troubled Debt Restructured Loans:													Nonaccrual Troubled Debt Restructured Loans:

Real estate—commercial real estate		3	$	200	$	198		—	$	—		$	—

Real estate—residential secured for personal purpose		—	—		—			1	544			544
Real estate—residential secured for business purpose														Real estate—residential secured for business purpose	1	$	87	$	87	—	—		—

Total	Total	3	$	200	$	198		1	$	544		$	544	Total	1	$	87	$	87	—	$	—	$	—

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
(Dollars in thousands) Number
of
Loans Pre-
Restructuring
Outstanding
Recorded
Investment Post-
Restructuring
Outstanding
Recorded
Investment Number
of
Loans Pre-
Restructuring
Outstanding
Recorded
Investment Post-
Restructuring
Outstanding
Recorded
Investment
Accruing Troubled Debt Restructured Loans:
Total — $ — $ — — $ — $ —
Nonaccrual Troubled Debt Restructured Loans:
Commercial, financial and agricultural — $ — $ — 1 $ 619 $ 619
Real estate—commercial real estate 3 200 198 — — —
Real estate—residential secured for personal purpose — — — 1 544 544
Total 3 $ 200 $ 198 2 $ 1,163 $ 1,163

The following presents, by class of loans, information regarding the types of concessions granted on accruing and nonaccrual loans that were restructured during the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

Amortization Period Extension
(Dollars in thousands) No. of
Loans Amount
Three Months Ended September 30, 2021
Accruing Troubled Debt Restructured Loans:
Total — $ —
Nonaccrual Troubled Debt Restructured Loans:
Real estate—commercial real estate 3 $ 198
Total 3 $ 198
Three Months Ended September 30, 2020
Accruing Troubled Debt Restructured Loans:
Total — $ —
Nonaccrual Troubled Debt Restructured Loans:
Real estate—residential secured for personal purpose 1 $ 544
Total 1 $ 544
Nine Months Ended September 30, 2021
Accruing Troubled Debt Restructured Loans:
Total — $ —
Nonaccrual Troubled Debt Restructured Loans:
Real estate—commercial real estate 3 $ 198
Total 3 $ 198
Nine Months Ended September 30, 2020
Accruing Troubled Debt Restructured Loans:
Total — $ —
Nonaccrual Troubled Debt Restructured Loans:
Commercial, financial and agricultural 1 $ 619
Real estate—residential secured for personal purpose 1 544
Total 2 $ 1,163


	Maturity Date Extension
(Dollars in thousands)		No. of Loans	Amount
Three Months Ended March 31, 2022
Accruing Troubled Debt Restructured Loans:




Total		—	$	—
Nonaccrual Troubled Debt Restructured Loans:


Real estate—residential secured for business purpose		1	$	87

Total		1	$	87
Three Months Ended March 31, 2021
Accruing Troubled Debt Restructured Loans:





Total		—	$	—
Nonaccrual Troubled Debt Restructured Loans:




Total		—	$	—

There were no accruing or nonaccrual troubled debt restructured loans for which there were payment defaults within twelve months of the restructuring date for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 or ~~September 30, 2020.~~March 31, 2021.

~~0The following presents the amount of~~There were no consumer mortgages collateralized by residential real estate property that were in the process of foreclosure at ~~September 30, 2021~~March 31, 2022 or December 31, ~~2020:~~2021.


~~(Dollars in thousands)~~	~~At September 30, 2021~~		~~At December 31, 2020~~
~~Real estate-residential secured for personal purpose~~	$	—	$	64

~~Total~~	$	—			$
	64

There was no foreclosed residential real estate property included in other real estate owned at ~~September 30, 2021~~March 31, 2022 or December 31, ~~2020.~~2021.

2923

Lease Financings

The following presents the schedule of minimum lease payments receivable:


(Dollars in thousands)	(Dollars in thousands)	At September 30, 2021		At December 31, 2020		(Dollars in thousands)	At March 31, 2022		At December 31, 2021
2021 (excluding the nine months ended September 30, 2021)		$	15,484	$	61,724
2022		63,076		49,970
2022 (excluding the three months ended March 31, 2022)						2022 (excluding the three months ended March 31, 2022)	$	53,014	$	67,458
2023	2023	48,916		35,631		2023	59,657		54,859
2024	2024	33,363		20,821		2024	43,803		39,019
2025	2025	19,605		8,319		2025	28,588		24,426
2026						2026	14,730		11,039
Thereafter	Thereafter	9,756		2,763		Thereafter	3,985		2,951
Total future minimum lease payments receivable	Total future minimum lease payments receivable	190,200		179,228		Total future minimum lease payments receivable	203,777		199,752
Plus: Unguaranteed residual	Plus: Unguaranteed residual	1,124		914		Plus: Unguaranteed residual	1,258		1,186
Plus: Initial direct costs	Plus: Initial direct costs	2,585		2,567		Plus: Initial direct costs	2,748		2,707
Less: Imputed interest	Less: Imputed interest	(18,445)		(17,670)		Less: Imputed interest	(19,204)		(19,104)
Lease financings	Lease financings	$	175,464	$	165,039	Lease financings	$	188,579	$	184,541

Note 5. Goodwill and Other Intangible Assets

The Corporation has goodwill from acquisitions which is deemed to be an indefinite intangible asset and is not amortized. Changes in the carrying amount of the Corporation's goodwill by business segment for the three months ended March 31, 2022 were as follows:


(Dollars in thousands)	Banking		Wealth Management		Insurance		Consolidated
Balance at December 31, 2021	$	138,476	$	15,434	$	21,600	$	175,510
Addition to goodwill from acquisitions	—		—		—		—
Balance at March 31, 2022	$	138,476	$	15,434	$	21,600	$	175,510

The Corporation also has core deposit and customer-related intangibles, ~~and servicing rights,~~ which are not deemed to have an indefinite life and therefore will continue to be amortized over their useful life using the present value of projected cash flows.

~~Changes in the carrying amount of the Corporation's goodwill by business segment for the nine months ended September 30, 2021 were as follows:~~

(Dollars in thousands) Banking Wealth Management Insurance Consolidated
Balance at December 31, 2020 $ 138,476 $ 15,434 $ 18,649 $ 172,559
Addition to goodwill from acquisitions — — — —
Balance at September 30, 2021 $ 138,476 $ 15,434 $ 18,649 $ 172,559

The following table reflects the components of intangible assets at the dates indicated:


		At September 30, 2021						At December 31, 2020							At March 31, 2022						At December 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Gross Carrying Amount		Accumulated Amortization (1)		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization (1)		Net Carrying Amount		(Dollars in thousands)	Gross Carrying Amount		Accumulated Amortization (1)		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization (1)		Net Carrying Amount
Amortized intangible assets:	Amortized intangible assets:													Amortized intangible assets:

Core deposit intangibles	Core deposit intangibles	$	6,788	$	5,277	$	1,511	$	6,788	$	4,787	$	2,001	Core deposit intangibles	$	6,788	$	5,566	$	1,222	$	6,788	$	5,425	$	1,363
Customer related intangibles	Customer related intangibles	6,017		5,779		238		7,604		7,147		457		Customer related intangibles	8,493		6,053		2,440		8,493		5,886		2,607
Servicing rights	Servicing rights	25,679		18,069		7,610		22,354		15,946		6,408		Servicing rights	27,274		19,152		8,122		26,560		18,682		7,878
Total amortized intangible assets	Total amortized intangible assets	$	38,484	$	29,125	$	9,359	$	36,746	$	27,880	$	8,866	Total amortized intangible assets	$	42,555	$	30,771	$	11,784	$	41,841	$	29,993	$	11,848

(1) Included within accumulated amortization is a valuation allowance of ~~$18~~$7 thousand and ~~$87~~$13 thousand on ~~mortgage~~ servicing rights at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

3024

The estimated aggregate amortization expense for core deposit and customer-related intangibles for the remainder of ~~2021~~2022 and the succeeding fiscal years is as follows:


Year	Year	(Dollars in thousands)	Amount		Year	(Dollars in thousands)	Amount
Remainder of 2021			$	214
2022			666
Remainder of 2022					Remainder of 2022		$	849
2023	2023		409		2023		845
2024	2024		267		2024		648
2025	2025		145		2025		469
2026					2026		319
Thereafter	Thereafter		48		Thereafter		532
Total	Total		$	1,749	Total		$	3,662

The aggregate fair value of ~~mortgage~~ servicing rights was ~~$10.1~~$15.1 million and ~~$6.7~~$11.3 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The fair value of ~~mortgage servicing~~these rights was determined using a discount rate of ~~10.0%~~10.2% at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

Changes in the servicing rights balance are summarized as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		2021		2020		(Dollars in thousands)	2022		2021
Beginning of period	Beginning of period	$	7,433	$	6,081	$	6,408	$	6,626	Beginning of period	$	7,878	$	6,408
Servicing rights capitalized	Servicing rights capitalized	872		900		3,325		2,261		Servicing rights capitalized	714		1,313

Amortization of servicing rights	Amortization of servicing rights	(678)		(834)		(2,192)		(2,402)		Amortization of servicing rights	(476)		(792)
Changes in valuation allowance	Changes in valuation allowance	(17)		132		69		(206)		Changes in valuation allowance	6		86
End of period	End of period	$	7,610	$	6,279	$	7,610	$	6,279	End of period	$	8,122	$	7,015
Loans serviced for others	Loans serviced for others	$	1,326,364	$	1,167,316	$	1,326,364	$	1,167,316	Loans serviced for others	$	1,440,562	$	1,255,124

Activity in the valuation allowance for ~~mortgage~~ servicing rights was as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		2021		2020		(Dollars in thousands)	2022		2021
Valuation allowance, beginning of period	Valuation allowance, beginning of period	$	(1)	$	(338)	$	(87)	$	—	Valuation allowance, beginning of period	$	(13)	$	(87)
Additions		(17)		—		—		(206)

Reductions	Reductions	—		132		69		—		Reductions	6		86

Valuation allowance, end of period	Valuation allowance, end of period	$	(18)	$	(206)	$	(18)	$	(206)	Valuation allowance, end of period	$	(7)	$	(1)

The estimated amortization expense of servicing rights for the remainder of ~~2021~~2022 and the succeeding fiscal years is as follows:


Year	Year	(Dollars in thousands)	Amount		Year	(Dollars in thousands)	Amount
Remainder of 2021			$	1,426
2022			1,174
Remainder of 2022					Remainder of 2022		$	1,130
2023	2023		964		2023		994
2024	2024		790		2024		871
2025	2025		646		2025		762
2026					2026		664
Thereafter	Thereafter		2,610		Thereafter		3,701
Total	Total		$	7,610	Total		$	8,122

3125

Note 6. Deposits

Deposits and their respective weighted average interest rate at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 consisted of the following:


		At September 30, 2021				At December 31, 2020					At March 31, 2022				At December 31, 2021
		Weighted Average Interest Rate		Amount		Weighted Average Interest Rate		Amount			Weighted Average Interest Rate		Amount		Weighted Average Interest Rate		Amount
		(Dollars in thousands)									(Dollars in thousands)
Noninterest-bearing deposits	Noninterest-bearing deposits	—	%	$	1,861,007	—	%	$	1,690,663	Noninterest-bearing deposits	—	%	$	2,136,467	—	%	$	2,065,423
Demand deposits	Demand deposits	0.20		2,588,316		0.22		2,070,183		Demand deposits	0.21		2,404,300		0.17		2,493,604
Savings deposits	Savings deposits	0.09		994,791		0.08		918,094		Savings deposits	0.08		1,040,890		0.04		1,011,931
Time deposits	Time deposits	1.12		494,040		1.30		563,775		Time deposits	1.05		466,275		1.06		484,166
Total	Total	0.20	%	$	5,938,154	0.24	%	$	5,242,715	Total	0.18	%	$	6,047,932	0.16	%	$	6,055,124

~~The aggregate amount of time deposits in denominations of $100 thousand or more was $253.7 million at September 30, 2021 and $296.7 million at December 31, 2020.~~

Deposits are insured up to applicable limits by the Deposit Insurance Fund of the ~~FDIC. Deposit insurance~~FDIC, which is currently up to $250 thousand per account ~~owner is currently $250 thousand.~~owner. The aggregate amount of time deposits in denominations over $250 thousand was ~~$122.5~~$110.6 million at ~~September 30, 2021~~March 31, 2022 and ~~$161.6~~$119.9 million at December 31, ~~2020.~~2021.

At ~~September 30, 2021,~~March 31, 2022, the scheduled maturities of time deposits are as follows:


Year	Year	(Dollars in thousands)	Amount		Year	(Dollars in thousands)	Amount
Remainder of 2021			$	6,973
2022			68,581
Remainder of 2022					Remainder of 2022		$	198,418
2023	2023		209,744		2023		181,608
2024	2024		145,565		2024		50,943
2025	2025		38,595		2025		15,075
2026					2026		3,576
Thereafter	Thereafter		24,582		Thereafter		16,655
Total	Total		$	494,040	Total		$	466,275

Note 7. Borrowings

The following is a summary of borrowings by type. Short-term borrowings consist of overnight borrowings and term borrowings with an original maturity of one year or less.


		At September 30, 2021				At December 31, 2020					At March 31, 2022				At December 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Balance at End of Period		Weighted Average Interest Rate at End of Period		Balance at End of Period		Weighted Average Interest Rate at End of Period		(Dollars in thousands)	Balance at End of Period		Weighted Average Interest Rate at End of Period		Balance at End of Period		Weighted Average Interest Rate at End of Period
Short-term borrowings:	Short-term borrowings:									Short-term borrowings:

Customer repurchase agreements	Customer repurchase agreements	$	14,101	0.05	%	$	17,906	0.05	%	Customer repurchase agreements	$	18,976	0.05	%	$	20,106	0.05	%

Long-term debt:	Long-term debt:									Long-term debt:
FHLB advances	FHLB advances	$	95,000	1.34	%	$	110,000	1.42	%	FHLB advances	$	95,000	1.34	%	$	95,000	1.34	%

Subordinated notes	Subordinated notes	$	98,797	5.31	%	$	183,515	4.96	%	Subordinated notes	$	98,952	5.31	%	$	98,874	5.31	%

The Corporation, through the Bank, has a credit facility with the Federal Home Loan Bank (the FHLB) with a maximum borrowing capacity of approximately ~~$2.4~~$2.5 billion. All borrowings and letters of credit from the FHLB are secured by qualifying commercial real estate and residential mortgage loans, investments and other assets. At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Bank had outstanding short-term letters of credit with the FHLB totaling ~~$937.6~~$620.0 million and ~~$669.7~~$831.8 million, respectively, which were utilized to collateralize public funds deposits and other secured deposits. The maximum borrowing capacity with the FHLB changes as a function of the Bank’s qualifying collateral assets as well as the FHLB’s internal credit rating of the Bank. The available borrowing capacity from the FHLB totaled ~~$1.4~~$1.8 billion at ~~September 30, 2021.~~March 31, 2022.

The Corporation, through the Bank, holds collateral at the Federal Reserve Bank of Philadelphia to provide access to the Discount Window Lending program. The collateral, consisting of investment securities, was valued at ~~$31.5~~$74.5 million and ~~$40.7~~ $28.8

million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Corporation had no outstanding borrowings under the Discount Window Lending program.

The Corporation has a $10.0 million committed line of credit with a correspondent bank. At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Corporation had no outstanding borrowings under this line.

The Corporation and the Bank had ~~$2.4~~$2.6 billion and ~~$2.2~~$2.5 billion of committed borrowing capacity at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, of which ~~$1.4~~$1.9 billion and ~~$1.5~~$1.6 billion was available as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The Corporation, through the Bank, also maintained uncommitted funding sources from correspondent banks of $400.0 million ~~and $460.0 million~~ at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020, respectively,~~2021, which were fully available. Future availability under these lines is subject to the prerogatives of the granting banks and may be withdrawn at will.

Long-term advances with the FHLB of Pittsburgh mature as follows:


(Dollars in thousands)	(Dollars in thousands)	As of September 30, 2021		Weighted Average Rate		(Dollars in thousands)	As of March 31, 2022		Weighted Average Rate
Remainder of 2021		$	—	—	%
2022		—		—
Remainder of 2022						Remainder of 2022	$	—	—	%
2023	2023	35,000		1.94		2023	35,000		1.94
2024	2024	60,000		0.98		2024	60,000		0.98
2025	2025	—		—		2025	—		—
2026						2026	—		—
Thereafter	Thereafter	—		—		Thereafter	—		—
Total	Total	$	95,000	1.34	%	Total	$	95,000	1.34	%

Note 8. Retirement Plans and Other Postretirement Benefits

Information with respect to the Retirement Plans and Other Postretirement Benefits follows:


		Three Months Ended September 30,									Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021		2022		2021
(Dollars in thousands)	(Dollars in thousands)	Retirement Plans				Other Post Retirement Benefits				(Dollars in thousands)	Retirement Plans				Other Post Retirement Benefits
Service cost	Service cost	$	164	$	117	$	36	$	27	Service cost	$	137	$	130	$	30	$	36
Interest cost	Interest cost	366		425		21		23		Interest cost	390		354		24		21
Expected return on plan assets		(946)		(816)		—		—
Expected loss on plan assets										Expected loss on plan assets	(933)		(892)		—		—
Amortization of net actuarial loss	Amortization of net actuarial loss	318		300		11		7		Amortization of net actuarial loss	204		317		14		12

Net periodic benefit (income) cost	Net periodic benefit (income) cost	$	(98)	$	26	$	68	$	57	Net periodic benefit (income) cost	$	(202)	$	(91)	$	68	$	69

Nine Months Ended September 30,
2021 2020 2021 2020
(Dollars in thousands) Retirement Plans Other Post Retirement
Benefits
Service cost $ 425 $ 350 $ 107 $ 82
Interest cost 1,073 1,259 64 72
Expected return on plan assets (2,739) (2,450) — —
Amortization of net actuarial loss 952 882 35 19
Net periodic benefit (income) cost $ (289) $ 41 $ 206 $ 173

The components of net periodic benefit cost other than the service cost component are included in other noninterest expense in the condensed consolidated statements of income.

The Corporation ~~previously disclosed in its financial statements for the year ended December 31, 2020 that it expected~~expects to make contributions of $156 thousand to ~~its non-qualified retirement plans~~the Retirement Plans and ~~$94~~$96 thousand to ~~its other postretirement benefit~~Other Postretirement Benefit plans in ~~2021.~~2022. During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Corporation contributed ~~$117~~$39 thousand to its non-qualified retirement plans and ~~$81~~$24 thousand to its other postretirement plans. During the ~~nine~~three months ended ~~September 30, 2021, $2.0 million~~March 31, 2022, $697 thousand was paid to participants from the retirement plans and ~~$81~~$24 thousand was paid to participants from the other postretirement plans.

Note 9. Stock-Based Incentive Plan

The Corporation maintains the 2013 Long-Term Incentive Plan, which replaced the expired 2003 Long-Term Incentive Plan. In December 2018, the Corporation's Board of Directors approved an Amended and Restated Univest 2013 Long-Term Incentive Plan (the Plan) to permit the issuance of restricted stock units.

Beginning in 2019, the Corporation issued to directors and employees ("grantees") restricted stock units rather than restricted stock awards or stock options, which were issued to grantees in prior reporting periods. Restricted stock units differ from restricted stock awards in that Corporation stock is not issued to grantees at the date of the grant and the grantee does not have voting or dividend rights during the vesting period. In the following schedules, issued restricted stock units have been combined with restricted stock awards, as the determination of the value at the grant date and methodology for recording stock-based compensation expense is the same.

The following is a summary of the Corporation's stock option activity and related information for the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:


(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	Shares Under Option	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value at September 30, 2021		(Dollars in thousands, except per share data)	Shares Under Option	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value at March 31, 2022
Outstanding at December 31, 2020		453,785	$	25.06
Outstanding at December 31, 2021								Outstanding at December 31, 2021	351,252	$	25.74

Expired								Expired	(1,500)	14.80
Forfeited	Forfeited	(9,500)	28.33					Forfeited	(3,000)	28.33
Exercised	Exercised	(49,527)	21.07					Exercised	(25,781)	22.33
Outstanding at September 30, 2021		394,758	25.48		5.2	$	1,015
Exercisable at September 30, 2021		394,758	25.48		5.2	1,015
Outstanding at March 31, 2022								Outstanding at March 31, 2022	320,971	26.05		4.8	$	610
Exercisable at March 31, 2022								Exercisable at March 31, 2022	320,971	26.05		4.8	610

~~The following is a summary of nonvested stock options at September 30, 2021 including changes during the nine months then ended:~~

(Dollars in thousands, except per share data) Nonvested Stock Options Weighted Average Grant Date Fair Value
Nonvested stock options at December 31, 2020 49,771 $ 6.46
Vested (49,771) 6.46
Nonvested stock options at September 30, 2021 — —

The Corporation did not issue stock options during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 or ~~September 30, 2020.~~March 31, 2021.

The following is a summary of nonvested restricted stock ~~awards and nonvested restricted stock~~ units at ~~September 30, 2021~~March 31, 2022 including changes during the ~~nine~~three months then ended:


(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	Nonvested Stock Awards and Units	Weighted Average Grant Date Fair Value		(Dollars in thousands, except per share data)	Nonvested Stock Units	Weighted Average Grant Date Fair Value
Nonvested stock awards and units at December 31, 2020		305,704	$	21.18
Nonvested stock units at December 31, 2021					Nonvested stock units at December 31, 2021	358,134	$	23.61
Granted	Granted	155,607	27.81		Granted	164,319	28.36
Cancelled by performance factor					Cancelled by performance factor	(555)	23.18
Vested	Vested	(87,075)	22.71		Vested	(118,834)	23.29
Cancelled		(14,396)	22.88

Nonvested stock units at September 30, 2021		359,840	23.61
Forfeited					Forfeited	(1,864)	25.17
Nonvested stock units at March 31, 2022					Nonvested stock units at March 31, 2022	401,200	$	25.61

Certain information regarding restricted stock ~~awards and~~ units is summarized below for the periods indicated:


		Nine Months Ended September 30,					Three Months Ended March 31,
(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	2021		2020		(Dollars in thousands, except per share data)	2022		2021
Restricted stock units granted	Restricted stock units granted	155,607		179,080		Restricted stock units granted	164,319		139,007
Weighted average grant date fair value	Weighted average grant date fair value	$	27.81	$	18.62	Weighted average grant date fair value	$	28.36	$	27.67
Intrinsic value of units granted	Intrinsic value of units granted	$	4,328	$	3,335	Intrinsic value of units granted	$	4,660	$	3,847
Restricted stock awards and units vested		87,075		59,855
Restricted stock units vested						Restricted stock units vested	118,834		85,731
Weighted average grant date fair value	Weighted average grant date fair value	$	22.71	$	27.17	Weighted average grant date fair value	$	23.29	$	22.68
Intrinsic value of awards and units vested		$	2,391	$	1,375
Intrinsic value of units vested						Intrinsic value of units vested	$	3,377	$	2,354

The total unrecognized compensation expense and the weighted average period over which unrecognized compensation expense is expected to be recognized related to nonvested restricted stock units at ~~September 30, 2021~~March 31, 2022 is presented below:


(Dollars in thousands)	(Dollars in thousands)	Unrecognized Compensation Cost		Weighted-Average Period Remaining (Years)	(Dollars in thousands)	Unrecognized Compensation Cost		Weighted-Average Period Remaining (Years)

Restricted stock units	Restricted stock units	$	5,484	2.0	Restricted stock units	$	8,241	2.3
		$	5,484	2.0

The following table presents information related to the Corporation’s compensation expense related to stock incentive plans recognized for the periods indicated:


		Nine Months Ended September 30,					Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		(Dollars in thousands)	2022		2021
Stock-based compensation expense:	Stock-based compensation expense:					Stock-based compensation expense:
Stock options	Stock options	$	62	$	274	Stock options	$	—	$	62
Restricted stock awards and units		2,612		1,579
Restricted stock units						Restricted stock units	934		812
Employee stock purchase plan	Employee stock purchase plan	72		65		Employee stock purchase plan	25		23
Total	Total	$	2,746	$	1,918	Total	$	959	$	897
Tax benefit on nonqualified stock option expense, restricted stock awards and disqualifying dispositions of incentive stock options		$	389	$	375
Tax benefit on nonqualified stock option expense and disqualifying dispositions of incentive stock options						Tax benefit on nonqualified stock option expense and disqualifying dispositions of incentive stock options	$	1	$	33

Note 10. Accumulated Other Comprehensive (Loss) Income

The following table shows the components of accumulated other comprehensive (loss) income, net of taxes, for the periods presented:

(Dollars in thousands) Net Unrealized
(Losses) Gains on
Available-for-Sale
Investment
Securities Net Change
Related to
Derivatives Used for Cash Flow Hedges Net Change
Related to
Defined Benefit
Pension Plans Accumulated
Other
Comprehensive
(Loss) Income
Balance, December 31, 2020 $ (1,379) $ (421) $ (20,344) $ (22,144)
Other comprehensive income 1,114 177 780 2,071
Balance, September 30, 2021 $ (265) $ (244) $ (19,564) $ (20,073)
Balance, December 31, 2019 $ (3,231) $ (185) $ (18,314) $ (21,730)
Adjustment to initially apply ASU No. 2016-13 for CECL 237 — — 237
Other comprehensive income (loss) 1,980 (299) 712 2,393
Balance, September 30, 2020 $ (1,014) $ (484) $ (17,602) $ (19,100)


(Dollars in thousands)	Net Unrealized (Losses) Gains on Available-for-Sale Investment Securities		Net Change Related to Derivatives Used for Cash Flow Hedges		Net Change Related to Defined Benefit Pension Plans		Accumulated Other Comprehensive (Loss) Income
Balance, December 31, 2021	$	(1,216)	$	(159)	$	(14,978)	$	(16,353)
Other comprehensive income	(15,842)		114		172		(15,556)
Balance, March 31, 2022	$	(17,058)	$	(45)	$	(14,806)	$	(31,909)

Balance, December 31, 2020	$	(1,379)	$	(421)	$	(20,344)	$	(22,144)
Other comprehensive income	1,379		65		260		1,704
Balance, March 31, 2021	$	—	$	(356)	$	(20,084)	$	(20,440)

Note 11. Derivative Instruments and Hedging Activities

Interest Rate Swaps

The Corporation periodically uses interest rate swap agreements to modify interest rate characteristics from variable to fixed or fixed to variable in order to reduce the impact of interest rate changes on future net interest income. The Corporation’s credit exposure on interest rate swaps includes fair value and any collateral that is held by a third party.

In 2014, the Corporation entered into an amortizing interest rate swap classified as a cash flow hedge with a notional amount of $20.0 million to hedge a portion of the debt financing of a pool of 10-year fixed rate loans that were originated in 2013 with balances totaling $29.1 million at time of the hedge. A brokered money market demand account with a balance exceeding the amortizing interest rate swap balance is being used for the cash flow hedge. Under the terms of the swap agreement, the Corporation pays a fixed rate of 2.10% and receives a floating rate of one-month LIBOR. The swap matures in November 2022. The Corporation performed an assessment of the hedge for effectiveness at the inception of the hedge and on a recurring basis to determine that the derivative has been and is expected to continue to be highly effective in offsetting changes in cash flows of the hedged item. At ~~September 30, 2021,~~March 31, 2022, approximately ~~$228~~$40 thousand in net deferred losses, net of tax, recorded in accumulated other comprehensive loss are expected to be reclassified into earnings during the next twelve months. This amount could differ from amounts actually recognized due to changes in interest rates, hedge de-designations, and the addition of other hedges subsequent to ~~September 30, 2021.~~March 31, 2022. At ~~September 30, 2021,~~March 31, 2022, the notional amount of the interest rate swap was ~~$14.8~~$14.4 million and the fair value was a liability of ~~$309~~$57 thousand.

The Corporation has an interest rate swap with a current notional amount of ~~$80~~$11 thousand, for a 15-year fixed rate loan that is earning interest at 7.43%. The Corporation pays a fixed rate of 7.43% and receives a floating rate based on the one-month LIBOR plus 224 basis points. The swap matures in April 2022. The interest rate swap is carried at fair value in accordance with FASB ASC 815 "Derivatives and Hedging." The loan is carried at fair value under the fair value option as permitted by FASB ASC 825 "Financial Instruments."

Credit Derivatives

The Corporation has agreements with third-party financial institutions whereby the third-party financial institution enters into interest rate derivative contracts with loan customers referred to them by the Corporation. By the terms of the agreements, the third-party financial institution has recourse to the Corporation for any exposure created under each swap contract in the event the customer defaults on the swap agreement and the agreement is in a paying position to the third-party financial institution. These transactions represent credit derivatives and are a customary arrangement that allows the Corporation to provide access to interest rate swap transactions for customers without issuing the swap.

At ~~September 30, 2021,~~March 31, 2022, the Corporation ~~reported 123~~had 126 variable-rate to fixed-rate interest rate swap transactions between the third-party financial institution and customers with a current notional amount of ~~$762.4~~$769.3 million and remaining maturities ranging from ~~6 months~~1 month to 1012 years. At ~~September 30, 2021,~~March 31, 2022, the fair value of the Corporation's interest rate swap credit derivatives was a liability of ~~$350~~$457 thousand. At ~~September 30, 2021,~~March 31, 2022, the fair value of the swaps to the customers was a net liability of ~~$18.2~~$2.1 million and all but one of these swaps were in paying positions to the third-party financial institution.

The maximum potential payments by the Corporation to the third-party financial institution under these credit derivatives are not estimable as they are contingent on future interest rates and the agreement does not provide for a limitation of the maximum potential payment amount.

Mortgage Banking Derivatives

Derivative loan commitments represent agreements for delayed delivery of financial instruments in which the buyer agrees to purchase and the seller agrees to deliver, at a specified future date, a specified instrument at a specified price or yield. The Corporation’s derivative loan commitments are commitments to sell loans secured by 1-to 4-family residential properties whose predominant risk characteristic is interest rate risk.

Derivatives Tables

The following table presents the notional amounts and fair values of derivatives designated as hedging instruments recorded on the condensed consolidated balance sheets at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. The Corporation

pledges cash or securities to cover the negative fair value of derivative instruments. Cash collateral associated with derivative instruments are not added to or netted against the fair value amounts.


				Derivative Assets			Derivative Liabilities						Derivative Assets			Derivative Liabilities
(Dollars in thousands)	(Dollars in thousands)	Notional Amount		Balance Sheet Classification	Fair Value		Balance Sheet Classification	Fair Value		(Dollars in thousands)	Notional Amount		Balance Sheet Classification	Fair Value		Balance Sheet Classification	Fair Value
At September 30, 2021
At March 31, 2022										At March 31, 2022
Interest rate swap - cash flow hedge	Interest rate swap - cash flow hedge	$	14,828		$	—	Other liabilities	$	309	Interest rate swap - cash flow hedge	$	14,393		$	—	Other liabilities	$	57

Total	Total	$	14,828		$	—		$	309	Total	$	14,393		$	—		$	57
At December 31, 2020
At December 31, 2021										At December 31, 2021
Interest rate swap - cash flow hedge	Interest rate swap - cash flow hedge	$	15,465		$	—	Other liabilities	$	533	Interest rate swap - cash flow hedge	$	14,611		$	—	Other liabilities	$	202

Total	Total	$	15,465		$	—		$	533	Total	$	14,611		$	—		$	202

The following table presents the notional amounts and fair values of derivatives not designated as hedging instruments recorded on the condensed consolidated balance sheets at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


				Derivative Assets			Derivative Liabilities						Derivative Assets			Derivative Liabilities
(Dollars in thousands)	(Dollars in thousands)	Notional Amount		Balance Sheet Classification	Fair Value		Balance Sheet Classification	Fair Value		(Dollars in thousands)	Notional Amount		Balance Sheet Classification	Fair Value		Balance Sheet Classification	Fair Value
At September 30, 2021
At March 31, 2022										At March 31, 2022
Interest rate swap	Interest rate swap	$	80		$	—	Other liabilities	$	2	Interest rate swap	$	11		$	—	Other liabilities	$	2
Credit derivatives	Credit derivatives	762,420			—		Other liabilities	350		Credit derivatives	769,329			—		Other liabilities	457
Interest rate locks with customers	Interest rate locks with customers	55,227		Other assets	1,256			—		Interest rate locks with customers	39,524			—		Other liabilities	245
Forward loan sale commitments	Forward loan sale commitments	84,320		Other assets	167			—		Forward loan sale commitments	54,045		Other assets	806			—
Total	Total	$	902,047		$	1,423		$	352	Total	$	862,909		$	806		$	704
At December 31, 2020
At December 31, 2021										At December 31, 2021
Interest rate swap	Interest rate swap	$	179		$	—	Other liabilities	$	8	Interest rate swap	$	46		$	—	Other liabilities	$	2
Credit derivatives	Credit derivatives	643,556			—		Other liabilities	535		Credit derivatives	755,576			—		Other liabilities	381
Interest rate locks with customers	Interest rate locks with customers	77,246		Other assets	2,894			—		Interest rate locks with customers	33,876		Other assets	765			—
Forward loan sale commitments	Forward loan sale commitments	112,690			—		Other liabilities	752		Forward loan sale commitments	55,476		Other assets	87			—
Total	Total	$	833,671		$	2,894		$	1,295	Total	$	844,974		$	852		$	383

The following table presents amounts included in the condensed consolidated statements of income for derivatives designated as hedging instruments for the periods indicated:


		Statement of Income Classification	Three Months Ended				Nine Months Ended					Statement of Income Classification	Three Months Ended
			September 30,				September 30,						March 31,
(Dollars in thousands)	(Dollars in thousands)		2021		2020		2021		2020		(Dollars in thousands)		2022		2021

Interest rate swap—cash flow hedge—net interest payments	Interest rate swap—cash flow hedge—net interest payments	Interest expense	$	77	$	78	$	229	$	176	Interest rate swap—cash flow hedge—net interest payments	Interest expense	$	68	$	76

Total net loss	Total net loss		$	(77)	$	(78)	$	(229)	$	(176)	Total net loss		$	(68)	$	(76)

The following table presents amounts included in the condensed consolidated statements of income for derivatives not designated as hedging instruments for the periods indicated:


		Statement of Income Classification	Three Months Ended				Nine Months Ended					Statement of Income Classification	Three Months Ended
			September 30,				September 30,						March 31,
(Dollars in thousands)	(Dollars in thousands)		2021		2020		2021		2020		(Dollars in thousands)		2022		2021

Credit derivatives	Credit derivatives	Other noninterest income	$	487	$	2,339	$	1,866	$	4,143	Credit derivatives	Other noninterest income	$	450	$	1,107
Interest rate locks with customers	Interest rate locks with customers	Net (loss) gain on mortgage banking activities	(406)		1,442		(1,637)		4,496		Interest rate locks with customers	Net loss on mortgage banking activities	(1,010)		(1,730)
Forward loan sale commitments	Forward loan sale commitments	Net gain (loss) on mortgage banking activities	434		108		919		(455)		Forward loan sale commitments	Net gain on mortgage banking activities	719		1,974
Total net gain	Total net gain		$	515	$	3,889	$	1,148	$	8,184	Total net gain		$	159	$	1,351

The following table presents amounts included in accumulated other comprehensive (loss) income for derivatives designated as hedging instruments at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


(Dollars in thousands)	(Dollars in thousands)	Accumulated Other Comprehensive (Loss) Income	At September 30, 2021		At December 31, 2020		(Dollars in thousands)	Accumulated Other Comprehensive (Loss) Income	At March 31, 2022		At December 31, 2021
Interest rate swap—cash flow hedge	Interest rate swap—cash flow hedge	Fair value, net of taxes	$	(244)	$	(421)	Interest rate swap—cash flow hedge	Fair value, net of taxes	$	(45)	$	(159)
Total	Total		$	(244)	$	(421)	Total		$	(45)	$	(159)

Note 12. Fair Value Disclosures

Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The Corporation determines the fair value of financial instruments based on the fair value hierarchy. The Corporation maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Corporation. Unobservable inputs are inputs that reflect the Corporation’s assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances, including assumptions about risk. Three levels of inputs are used to measure fair value. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement.

Level 1: Valuations are based on quoted prices in active markets for identical assets or liabilities that the Corporation can access at the measurement date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2: Valuations are based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3: Valuations are based on inputs that are unobservable and significant to the overall fair value measurement. Assets and liabilities utilizing Level 3 inputs include: financial instruments whose value is determined using pricing models, discounted cash-flow methodologies, or similar techniques, as well as instruments for which the fair value calculation requires significant management judgment or estimation.

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Investment Securities

Where quoted prices are available in an active market for identical instruments, investment securities are classified within Level 1 of the valuation hierarchy. Level 1 investment securities include U.S. Treasury securities, most equity securities and money market mutual funds. Mutual funds are registered investment companies which are valued at net asset value of shares on a market exchange at the end of each trading day. Level 2 of the valuation hierarchy includes securities issued by U.S. Government sponsored enterprises, mortgage-backed securities, collateralized mortgage obligations, corporate and municipal bonds and certain equity securities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. In cases where there is limited activity or less transparency around inputs to the valuation, investment securities are classified within Level 3 of the valuation hierarchy.

Fair values for securities are determined using independent pricing services and market-participating brokers. The Corporation’s independent pricing service utilizes evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information for structured securities, cash flow and, when available, loan performance data. Because many fixed income securities do not trade on a daily basis, the pricing service’s evaluated pricing applications apply information as applicable through processes, such as benchmarking of like securities, sector groupings, and matrix pricing, to prepare evaluations. If at any time, the pricing service determines that it does not have sufficient verifiable information to value a particular security, the Corporation will utilize valuations from another pricing service. Management has a sufficient understanding of the third-party service’s valuation models, assumptions and inputs used in determining the fair value of securities to enable management to maintain an appropriate system of internal control.

On a quarterly basis, the Corporation reviews changes, as submitted by the pricing service, in the market value of its security portfolio. Individual changes in valuations are reviewed for consistency with general interest rate movements and any known credit concerns for specific securities. If, upon the Corporation’s review or in comparing with another service, a material

difference between pricing evaluations were to exist, the Corporation may submit an inquiry to the current pricing service regarding the data used to determine the valuation of a particular security. If the Corporation determines there is market information that would support a different valuation than from the current pricing service’s evaluation, the Corporation may utilize and change the security's valuation. There were no material differences in valuations noted at ~~September 30, 2021.~~March 31, 2022.

Loans Held for Sale

The fair value of our loans held for sale is based on estimates using Level 2 inputs. These inputs are based on pricing information obtained from wholesale mortgage banks and brokers and applied to loans with similar interest rates and maturities.

Derivative Financial Instruments

The fair values of derivative financial instruments are based upon the estimated amount the Corporation would receive or pay to terminate the contracts or agreements, taking into account current interest rates and, when appropriate, the current creditworthiness of the counterparties. Interest rate swaps and mortgage banking derivative financial instruments are classified within Level 2 of the valuation hierarchy. Credit derivatives are valued based on credit worthiness of the underlying borrower which is a significant unobservable input and therefore classified in Level 3 of the valuation hierarchy.

One commercial loan associated with an interest rate swap is classified in Level 3 of the valuation hierarchy at ~~September 30, 2021~~March 31, 2022 since lending credit risk is not an observable input for this loan. ~~The unrealized gain on the 1 loan was $1 thousand at September 30, 2021.~~

Contingent Consideration Liability

The Corporation estimates the fair value of the contingent consideration liability by using a discounted cash flow model of future contingent payments based on projected revenue related to the acquired business. The estimated fair value of the contingent consideration liability is reviewed on a quarterly basis and any valuation adjustments resulting from a change of estimated future contingent payments based on projected revenue of the acquired business affecting the contingent consideration liability will be recorded through noninterest expense. Due to the significant unobservable input related to the projected revenue, the contingent consideration liability is classified within Level 3 of the valuation hierarchy. An increase in the projected revenue may result in a higher fair value of the contingent consideration liability. Alternatively, a decrease in the projected revenue may result in a lower estimated fair value of the contingent consideration liability.

3933

The following table presents the assets and liabilities measured at fair value on a recurring basis at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, classified using the fair value hierarchy:


		At September 30, 2021									At March 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Level 1		Level 2		Level 3		Assets/ Liabilities at Fair Value		(Dollars in thousands)	Level 1		Level 2		Level 3		Assets/ Liabilities at Fair Value
Assets:	Assets:									Assets:
Available-for-sale securities:	Available-for-sale securities:									Available-for-sale securities:

State and political subdivisions	State and political subdivisions	$	—	$	2,333	$	—	$	2,333	State and political subdivisions	$	—	$	2,312	$	—	$	2,312
Residential mortgage-backed securities	Residential mortgage-backed securities	—		180,842		—		180,842		Residential mortgage-backed securities	—		256,688		—		256,688
Collateralized mortgage obligations	Collateralized mortgage obligations	—		3,708		—		3,708		Collateralized mortgage obligations	—		2,947		—		2,947
Corporate bonds	Corporate bonds	—		81,265		9,625		90,890		Corporate bonds	—		88,047		—		88,047
Total available-for-sale securities	Total available-for-sale securities	—		268,148		9,625		277,773		Total available-for-sale securities	—		349,994		—		349,994
Equity securities:	Equity securities:									Equity securities:
Equity securities - financial services industry	Equity securities - financial services industry	982		—		—		982		Equity securities - financial services industry	980		—		—		980
Money market mutual funds	Money market mutual funds	1,979		—		—		1,979		Money market mutual funds	1,589		—		—		1,589
Total equity securities	Total equity securities	2,961		—		—		2,961		Total equity securities	2,569		—		—		2,569
Loans*	Loans*	—		—		82		82		Loans*	—		—		13		13
Loans held for sale	Loans held for sale	—		29,093		—		29,093		Loans held for sale	—		14,521		—		14,521

Interest rate locks with customers*		—		1,256		—		1,256

Forward loan sale commitments*	Forward loan sale commitments*	—		167		—		167		Forward loan sale commitments*	—		806		—		806
Total assets	Total assets	$	2,961	$	298,664	$	9,707	$	311,332	Total assets	$	2,569	$	365,321	$	13	$	367,903
Liabilities:	Liabilities:									Liabilities:

Contingent consideration liability										Contingent consideration liability	$	—	$	—	$	1,663	$	1,663
Interest rate swaps*	Interest rate swaps*	$	—	$	311	$	—	$	311	Interest rate swaps*	—		59		—		59
Credit derivatives*	Credit derivatives*	—		—		350		350		Credit derivatives*	—		—		457		457

Interest rate locks with customers*										Interest rate locks with customers*	—		245		—		245

Total liabilities	Total liabilities	$	—	$	311	$	350	$	661	Total liabilities	$	—	$	304	$	2,120	$	2,424

* Such financial instruments are recorded at fair value as further described in Note 11, "Derivative Instruments and Hedging Activities."

The $9.6 million of corporate bonds was comprised of one investment grade bond and the Corporation utilizes a third party to estimate fair value. The value is derived from a discounted cash flow analysis which utilizes a probability of default input. The $350$457 thousand of credit derivatives liability ~~represents~~represented the Credit Valuation Adjustment (CVA), which iswas obtained from real-time financial market data, of ~~123~~126 interest rate swaps with a ~~current~~ notional amount of ~~$762.4~~$769.3 million. The ~~September 30, 2021~~March 31, 2022 CVA ~~assumes~~assumed a zero-deal recovery percentage based on the most recent index credit curve.

The contingent consideration liability resulting from the Sheaffer acquisition was $1.6 million, which was calculated using a discount rate of 8.3%. The potential cash payments that could result from the contingent consideration arrangement for the acquisition ranged from $0 to a maximum of $1.9 million over the three-year period ending November 30, 2024.


		At December 31, 2020									At December 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Level 1		Level 2		Level 3		Assets/ Liabilities at Fair Value		(Dollars in thousands)	Level 1		Level 2		Level 3		Assets/ Liabilities at Fair Value
Assets:	Assets:									Assets:
Available-for-sale securities:	Available-for-sale securities:									Available-for-sale securities:

State and political subdivisions	State and political subdivisions	$	—	$	13,537	$	—	$	13,537	State and political subdivisions	$	—	$	2,333	$	—	$	2,333
Residential mortgage-backed securities	Residential mortgage-backed securities	—		114,163		—		114,163		Residential mortgage-backed securities	—		221,105		—		221,105
Collateralized mortgage obligations	Collateralized mortgage obligations	—		5,321		—		5,321		Collateralized mortgage obligations	—		3,278		—		3,278
Corporate bonds	Corporate bonds	—		76,019		9,600		85,619		Corporate bonds	—		90,291		—		90,291
Total available-for-sale securities	Total available-for-sale securities	—		209,040		9,600		218,640		Total available-for-sale securities	—		317,007		—		317,007
Equity securities:	Equity securities:									Equity securities:
Equity securities - financial services industry	Equity securities - financial services industry	818		—		—		818		Equity securities - financial services industry	979		—		—		979
Money market mutual funds	Money market mutual funds	2,461		—		—		2,461		Money market mutual funds	2,020		—		—		2,020
Total equity securities	Total equity securities	3,279		—		—		3,279		Total equity securities	2,999		—		—		2,999
Loans*	Loans*	—		—		187		187		Loans*	—		—		48		48
Loans held for sale	Loans held for sale	—		37,039		—		37,039		Loans held for sale	—		21,600		—		21,600
Interest rate locks with customers*	Interest rate locks with customers*	—		2,894		—		2,894		Interest rate locks with customers*	—		765		—		765

Forward loan sale commitments*										Forward loan sale commitments*	—		87		—		87
Total assets	Total assets	$	3,279	$	248,973	$	9,787	$	262,039	Total assets	$	2,999	$	339,459	$	48	$	342,506
Liabilities:	Liabilities:									Liabilities:
Contingent consideration liability	Contingent consideration liability	$	—	$	—	$	55	$	55	Contingent consideration liability	$	—	$	—	$	1,629	$	1,629
Interest rate swaps*	Interest rate swaps*	—		541		—		541		Interest rate swaps*	—		204		—		204
Credit derivatives*	Credit derivatives*	—		—		535		535		Credit derivatives*	—		—		381		381
Forward loan sale commitments*		—		752		—		752

Total liabilities	Total liabilities	$	—	$	1,293	$	590	$	1,883	Total liabilities	$	—	$	204	$	2,010	$	2,214

* Such financial instruments are recorded at fair value as further described in Note 11, "Derivative Instruments and Hedging Activities."

The $381 thousand of credit derivatives liability represented the Credit Valuation Adjustment (CVA), which was obtained from real-time financial market data, of 125 interest rate swaps with a notional amount of $755.6 million. The December 31, 2021 CVA assumed a zero-deal recovery percentage based on the most recent index credit curve.

The following table includes a ~~rollforward~~roll forward of corporate bonds, loans and credit derivatives for which the Corporation utilized Level 3 inputs to determine fair value on a recurring basis for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Nine Months Ended September 30, 2021
(Dollars in thousands) Balance at
December 31,
2020 Additions Payments received Increase (decrease) in value Balance at September 30, 2021
Corporate bonds $ 9,600 $ — $ — $ 25 $ 9,625
Loans 187 — (100) (5) 82
Credit derivatives (535) (1,681) — 1,866 (350)
Net total $ 9,252 $ (1,681) $ (100) $ 1,886 $ 9,357


		Nine Months Ended September 30, 2020						Three Months Ended March 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Balance at December 31, 2019		Additions		Payments received			Increase (decrease) in value		Balance at September 30, 2020		(Dollars in thousands)	Balance at December 31, 2021		Additions		Payments received		Increase (decrease) in value		Balance at March 31, 2022
Corporate bonds		$	—	$	—	$	—		$	—	$	—

Loans	Loans	317		—		(91)			(5)		221		Loans	$	48	$	—	$	(35)	$	—	$	13
Credit derivatives	Credit derivatives	(176)		(4,683)		—			4,143		(716)		Credit derivatives	(381)		(526)		—		450		(457)
Net total	Net total	$	141	$	(4,683)	$	(91)		$	4,138	$	(495)	Net total	$	(333)	$	(526)	$	(35)	$	450	$	(444)

4135


	Three Months Ended March 31, 2021
(Dollars in thousands)	Balance at December 31, 2020		Additions		Payments received		Increase (decrease) in value		Balance at March 31, 2021
Corporate bonds	$	9,600	$	—	$	—	$	—	$	9,600
Loans	187		—		(33)		(2)		152
Credit derivatives	(535)		(843)		—		1,107		(271)
Net total	$	9,252	$	(843)	$	(33)	$	1,105	$	9,481

The following table presents the change in the balance of the contingent consideration liability related to acquisitions for which the Corporation utilized Level 3 inputs to determine fair value on a recurring basis for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Nine Months Ended September 30, 2021											Three Months Ended March 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Balance at December 31, 2020		Contingent Consideration from New Acquisition		Payment of Contingent Consideration		Adjustment of Contingent Consideration		Balance at September 30, 2021		(Dollars in thousands)	Balance at December 31, 2021		Payment of Contingent Consideration		Adjustment of Contingent Consideration		Balance at March 31, 2022
Girard Partners		$	55	$	—	$	58	$	3	$	—
Paul I. Sheaffer Insurance Agency												Paul I. Sheaffer Insurance Agency	$	1,629	$	—	$	34	$	1,663
Total contingent consideration liability	Total contingent consideration liability	$	55	$	—	$	58	$	3	$	—	Total contingent consideration liability	$	1,629	$	—	$	34	$	1,663


		Nine Months Ended September 30, 2020											Three Months Ended March 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Balance at December 31, 2019		Contingent Consideration from New Acquisition		Payment of Contingent Consideration		Adjustment of Contingent Consideration		Balance at September 30, 2020		(Dollars in thousands)	Balance at December 31, 2020		Payment of Contingent Consideration		Adjustment of Contingent Consideration		Balance at March 31, 2021
Girard Partners	Girard Partners	$	160	$	—	$	91	$	14	$	83	Girard Partners	$	55	$	29	$	2	$	28
Total contingent consideration liability	Total contingent consideration liability	$	160	$	—	$	91	$	14	$	83	Total contingent consideration liability	$	55	$	29	$	2	$	28

The Corporation may be required to periodically measure certain assets and liabilities at fair value on a non-recurring basis in accordance with GAAP. These adjustments to fair value usually result from the application of lower of cost or market accounting or changes in the value of loans held for investment analyzed on an individual basis. The following table represents assets measured at fair value on a non-recurring basis at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


		At September 30, 2021									At March 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Level 1		Level 2		Level 3		Assets at Fair Value		(Dollars in thousands)	Level 1		Level 2		Level 3		Assets at Fair Value
Individually analyzed loans held for investment	Individually analyzed loans held for investment	$	—	$	—	$	34,483	$	34,483	Individually analyzed loans held for investment	$	—	$	—	$	29,773	$	29,773

Other real estate owned	Other real estate owned	—		—		279		279		Other real estate owned	—		—		279		279
Total	Total	$	—	$	—	$	34,762	$	34,762	Total	$	—	$	—	$	30,052	$	30,052


		At December 31, 2020									At December 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Level 1		Level 2		Level 3		Assets at Fair Value		(Dollars in thousands)	Level 1		Level 2		Level 3		Assets at Fair Value
Individually analyzed loans held for investment	Individually analyzed loans held for investment	$	—	$	—	$	30,900	$	30,900	Individually analyzed loans held for investment	$	—	$	—	$	33,118	$	33,118

Other real estate owned	Other real estate owned	—		—		7,355		7,355		Other real estate owned	—		—		279		279
Total	Total	$	—	$	—	$	38,255	$	38,255	Total	$	—	$	—	$	33,397	$	33,397

4236

The following table presents assets and liabilities not measured at fair value on a recurring or non-recurring basis in the Corporation’s condensed consolidated balance sheets but for which the fair value is required to be disclosed at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. The disclosed fair values are classified using the fair value hierarchy.


		At September 30, 2021											At March 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Level 1		Level 2		Level 3		Fair Value		Carrying Amount		(Dollars in thousands)	Level 1		Level 2		Level 3		Fair Value		Carrying Amount
Assets:	Assets:											Assets:
Cash and short-term interest-earning assets	Cash and short-term interest-earning assets	$	902,357	$	—	$	—	$	902,357	$	902,357	Cash and short-term interest-earning assets	$	773,781	$	—	$	—	$	773,781	$	773,781

Held-to-maturity securities	Held-to-maturity securities	—		115,661		—		115,661		112,643		Held-to-maturity securities	—		157,924		—		157,924		166,339
Federal Home Loan Bank, Federal Reserve Bank and other stock	Federal Home Loan Bank, Federal Reserve Bank and other stock	NA		NA		NA		NA		28,679		Federal Home Loan Bank, Federal Reserve Bank and other stock	NA		NA		NA		NA		26,330
Net loans and leases held for investment	Net loans and leases held for investment	—		—		5,223,709		5,223,709		5,147,334		Net loans and leases held for investment	—		—		5,290,440		5,290,440		5,302,714
Servicing rights	Servicing rights	—		—		10,336		10,336		7,610		Servicing rights	—		—		15,106		15,106		8,122
Total assets	Total assets	$	902,357	$	115,661	$	5,234,045	$	6,252,063	$	6,198,623	Total assets	$	773,781	$	157,924	$	5,305,546	$	6,237,251	$	6,277,286
Liabilities:	Liabilities:											Liabilities:
Deposits:	Deposits:											Deposits:
Demand and savings deposits, non-maturity	Demand and savings deposits, non-maturity	$	5,444,114	$	—	$	—	$	5,444,114	$	5,444,114	Demand and savings deposits, non-maturity	$	5,581,657	$	—	$	—	$	5,581,657	$	5,581,657
Time deposits	Time deposits	—		500,192		—		500,192		494,040		Time deposits	—		460,580		—		460,580		466,275
Total deposits	Total deposits	5,444,114		500,192		—		5,944,306		5,938,154		Total deposits	5,581,657		460,580		—		6,042,237		6,047,932
Short-term borrowings	Short-term borrowings	—		14,101		—		14,101		14,101		Short-term borrowings	—		18,976		—		18,976		18,976
Long-term debt	Long-term debt	—		96,762		—		96,762		95,000		Long-term debt	—		93,343		—		93,343		95,000
Subordinated notes	Subordinated notes	—		105,500		—		105,500		98,797		Subordinated notes	—		102,250		—		102,250		98,952
Total liabilities	Total liabilities	$	5,444,114	$	716,555	$	—	$	6,160,669	$	6,146,052	Total liabilities	$	5,581,657	$	675,149	$	—	$	6,256,806	$	6,260,860

At December 31, 2020
(Dollars in thousands) Level 1 Level 2 Level 3 Fair
Value Carrying
Amount
Assets:
Cash and short-term interest-earning assets $ 219,858 $ — $ — $ 219,858 $ 219,858
Held-to-maturity securities — 156,325 — 156,325 151,257
Federal Home Loan Bank, Federal Reserve Bank and other stock NA NA NA NA 28,183
Net loans and leases held for investment — — 5,338,782 5,338,782 5,192,710
Servicing rights — — 6,783 6,783 6,408
Total assets $ 219,858 $ 156,325 $ 5,345,565 $ 5,721,748 $ 5,598,416
Liabilities:
Deposits:
Demand and savings deposits, non-maturity $ 4,678,940 $ — $ — $ 4,678,940 $ 4,678,940
Time deposits — 574,018 — 574,018 563,775
Total deposits 4,678,940 574,018 — 5,252,958 5,242,715
Short-term borrowings — 17,906 — 17,906 17,906
Long-term debt — 112,968 — 112,968 110,000
Subordinated notes — 190,045 — 190,045 183,515
Total liabilities $ 4,678,940 $ 894,937 $ — $ 5,573,877 $ 5,554,136


	At December 31, 2021
(Dollars in thousands)	Level 1		Level 2		Level 3		Fair Value		Carrying Amount
Assets:
Cash and short-term interest-earning assets	$	890,150	$	—	$	—	$	890,150	$	890,150
Held-to-maturity securities	—		178,402		—		178,402		176,983
Federal Home Loan Bank, Federal Reserve Bank and other stock	NA		NA		NA		NA		28,186
Net loans and leases held for investment	—		—		5,244,504		5,244,504		5,204,927
Servicing rights	—		—		11,331		11,331		7,878
Total assets	$	890,150	$	178,402	$	5,255,835	$	6,324,387	$	6,308,124
Liabilities:
Deposits:
Demand and savings deposits, non-maturity	$	5,570,958	$	—	$	—	$	5,570,958	$	5,570,958
Time deposits	—		487,874		—		487,874		484,166
Total deposits	5,570,958		487,874		—		6,058,832		6,055,124
Short-term borrowings	—		20,106		—		20,106		20,106
Long-term debt	—		95,707		—		95,707		95,000
Subordinated notes	—		107,000		—		107,000		98,874
Total liabilities	$	5,570,958	$	710,687	$	—	$	6,281,645	$	6,269,104

4337

The following valuation methods and assumptions were used by the Corporation in estimating the fair value for financial instruments measured at fair value on a non-recurring basis and financial instruments not measured at fair value on a recurring or non-recurring basis in the Corporation’s condensed consolidated balance sheets but for which the fair value is required to be disclosed:

Cash and short-term interest-earning assets: The carrying amounts reported in the balance sheet for cash and due from banks, interest-earning deposits with other banks and other short-term investments is their stated value. Cash and short-term interest-earning assets are classified within Level 1 in the fair value hierarchy.

Held-to-maturity securities: Fair values for the held-to-maturity investment securities are estimated by using pricing models or quoted prices of securities with similar characteristics and are classified in Level 2 in the fair value hierarchy.

Federal Home Loan Bank, Federal Reserve Bank and other stock: It is not practical to determine the fair values of Federal Home Loan Bank, Federal Reserve Bank and other stock, due to restrictions placed on their transferability.

Loans held for sale: Loans held for sale are carried at the lower of cost or estimated fair value. The fair value of the Corporation’s mortgage loans held for sale are generally determined using a pricing model based on current market information obtained from external sources, including interest rates, bids or indications provided by market participants on specific loans that are actively marketed for sale. These loans are primarily residential mortgage loans and are generally classified in Level 2 due to the observable pricing data.

Loans and leases held for investment: The fair values for loans and leases held for investment are estimated using discounted cash flow analyses, using a discount rate based on current interest rates at which similar loans with similar terms would be made to borrowers, adjusted as appropriate to consider credit, liquidity and marketability factors to arrive at a fair value that represents the Corporation's exit price at which these instruments would be sold or transferred. Loans and leases are classified within Level 3 in the fair value hierarchy since credit risk is not an observable input.

Individually analyzed loans and leases held for investment: For individually analyzed loans and leases, the Corporation uses a variety of techniques to measure fair value, such as using the current appraised value of the collateral, agreements of sale, discounting the contractual cash flows, and analyzing market data that the Corporation may adjust due to specific characteristics of the loan/lease or collateral. At ~~September 30,~~March 31, 2022, individually analyzed loans held for investment had a carrying amount of $30.7 million with a valuation allowance of $954 thousand. At December 31, 2021, individually analyzed loans held for investment had a carrying amount of ~~$34.5~~$33.1 million with a valuation allowance of ~~$15 thousand. At December 31, 2020, individually analyzed loans held for investment had a carrying amount of $31.5 million with a valuation allowance of $585~~$11 thousand. The Corporation had no individually analyzed leases at ~~September 30, 2021~~March 31, 2022 or December 31, ~~2020.~~2021.

Servicing rights: The Corporation estimates the fair value of servicing rights using discounted cash flow models that calculate the present value of estimated future net servicing income. The model uses readily available prepayment speed assumptions for the interest rates of the portfolios serviced. Servicing rights are classified within Level 3 in the fair value hierarchy based upon management's assessment of the inputs. The Corporation reviews the servicing rights portfolio on a quarterly basis for impairment and the servicing rights are carried at the lower of amortized cost or estimated fair value. At ~~September 30,~~March 31, 2022, servicing rights had a net carrying amount of $8.1 million, which included a valuation allowance of $7 thousand. At December 31, 2021, servicing rights had a net carrying amount of ~~$7.6~~$7.9 million, which included a valuation allowance of ~~$18 thousand. At December 31, 2020, servicing rights had a net carrying amount of $6.5 million, which included a valuation allowance of $87~~$13 thousand.

Goodwill and other identifiable assets: Certain non-financial assets subject to measurement at fair value on a non-recurring basis include goodwill and other identifiable intangible assets. During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, there were no required valuation adjustments of goodwill and other identifiable intangible assets.

Other real estate owned: Other real estate owned (OREO) represents properties that the Corporation has acquired through foreclosure by either accepting a deed in lieu of foreclosure, or by taking possession of assets that were used as loan collateral. The Corporation reports OREO at the lower of cost or fair value less cost to sell, adjusted periodically based on a current appraisal or an executed agreement of sale. Capital improvement expenses associated with the construction or repair of the property are capitalized as part of the cost of the OREO asset. Write-downs and any gain or loss upon the sale of OREO is recorded in other noninterest income. OREO is reported in other assets on the condensed consolidated balance sheet. ~~During the nine months ended September 30, 2021, three commercial real estate properties were transferred to OREO with a carrying balance of $126 thousand.~~ At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, OREO had a carrying amount of $279 ~~thousand and $7.4 million, respectively. During the nine months ended September 30, 2021, a commercial real estate property with a carrying value of $7.1 million was sold.~~thousand. Other real estate owned is classified within Level 3 of the valuation hierarchy due to the unique characteristics of the collateral for each loan.

Deposit liabilities: The fair values for demand and savings accounts, with no stated maturities, is the amount payable on demand at the reporting date (carrying value) and are classified within Level 1 in the fair value hierarchy. The fair values for

time deposits with fixed maturities are estimated by discounting the final maturity using interest rates currently offered for deposits with similar remaining maturities. Time deposits are classified within Level 2 in the fair value hierarchy.

Short-term borrowings: The fair value of short-term borrowings are estimated using current market rates for similar borrowings and are classified within Level 2 in the fair value hierarchy.

Long-term debt: The fair value of long-term debt is estimated by using discounted cash flow analysis, based on current market rates for debt with similar terms and remaining maturities. Long-term debt is classified within Level 2 in the fair value hierarchy.

Subordinated notes: The fair value of the subordinated notes are estimated by discounting the principal balance using the treasury yield curve for the term to the call date as the Corporation has the option to call the subordinated notes. The subordinated notes are classified within Level 2 in the fair value hierarchy.

Note 13. Segment Reporting

At ~~September 30, 2021,~~March 31, 2022, the Corporation had 3 reportable business segments: Banking, Wealth Management and Insurance. The Corporation determines the segments based primarily upon product and service offerings, through the types of income generated and the regulatory environment. This is strategically how the Corporation operates and has positioned itself in the marketplace. Accordingly, significant operating decisions are based upon analysis of each of these segments. The parent holding company and intercompany eliminations are included in the "Other" segment.

Each segment generates revenue from a variety of products and services it provides. Examples of products and services provided for each reportable segment are indicated as follows:


●			The Banking segment provides financial services to individuals, businesses, municipalities and nonprofit organizations. These services include a full range of banking services such as deposit taking, loan origination and servicing, mortgage banking, other general banking services and equipment lease financing.
●			The Wealth Management segment offers investment advisory, financial planning, trust and brokerage services. The Wealth Management segment serves a diverse client base of private families and individuals, municipal pension plans, retirement plans, trusts and guardianships.
●			The Insurance segment includes a full-service insurance brokerage agency offering commercial property and casualty insurance, employee benefit solutions, personal insurance lines and human resources consulting.

The following table provides total assets by reportable business segment as of the dates indicated.


(Dollars in thousands)	(Dollars in thousands)	At September 30, 2021		At December 31, 2020		At September 30, 2020		(Dollars in thousands)	At March 31, 2022		At December 31, 2021		At March 31, 2021
Banking	Banking	$	6,868,525	$	6,234,336	$	6,277,894	Banking	$	6,997,081	$	7,005,952	$	6,313,108
Wealth Management	Wealth Management	51,280		48,646		47,550		Wealth Management	53,174		54,076		48,016
Insurance	Insurance	38,118		35,906		35,168		Insurance	42,240		40,649		37,075
Other	Other	21,929		17,608		22,219		Other	15,245		21,744		18,466
Consolidated assets	Consolidated assets	$	6,979,852	$	6,336,496	$	6,382,831	Consolidated assets	$	7,107,740	$	7,122,421	$	6,416,665

4539

The following tables provide reportable segment-specific information and reconciliations to consolidated financial information for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.


		Three Months Ended											Three Months Ended
		September 30, 2021											March 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Banking		Wealth Management		Insurance		Other		Consolidated		(Dollars in thousands)	Banking		Wealth Management		Insurance		Other		Consolidated
Interest income	Interest income	$	53,562	$	—	$	—	$	9	$	53,571	Interest income	$	51,189	$	1	$	—	$	8	$	51,198
Interest expense	Interest expense	3,556		—		—		1,328		4,884		Interest expense	3,180		30		—		1,328		4,538
Net interest income (expense)	Net interest income (expense)	50,006		—		—		(1,319)		48,687		Net interest income (expense)	48,009		(29)		—		(1,320)		46,660
Reversal of provision for credit losses	Reversal of provision for credit losses	(182)		—		—		—		(182)		Reversal of provision for credit losses	(3,450)		—		—		—		(3,450)
Noninterest income	Noninterest income	9,548		6,963		3,988		53		20,552		Noninterest income	7,370		7,305		5,764		31		20,470
Noninterest expense	Noninterest expense	34,378		4,922		3,232		716		43,248		Noninterest expense	36,488		4,709		3,865		350		45,412
Intersegment (revenue) expense*	Intersegment (revenue) expense*	(323)		164		159		—		—		Intersegment (revenue) expense*	(433)		211		222		—		—
Income (expense) before income taxes		25,681		1,877		597		(1,982)		26,173
Income (loss) before income taxes												Income (loss) before income taxes	22,774		2,356		1,677		(1,639)		25,168
Income tax expense (benefit)	Income tax expense (benefit)	5,196		391		123		(448)		5,262		Income tax expense (benefit)	4,543		492		358		(542)		4,851
Net income (loss)	Net income (loss)	$	20,485	$	1,486	$	474	$	(1,534)	$	20,911	Net income (loss)	$	18,231	$	1,864	$	1,319	$	(1,097)	$	20,317

Net capital expenditures	Net capital expenditures	$	431	$	4	$	5	$	15	$	455	Net capital expenditures	$	(5,592)	$	63	$	15	$	20	$	(5,494)


		Three Months Ended											Three Months Ended
		September 30, 2020											March 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Banking		Wealth Management		Insurance		Other		Consolidated		(Dollars in thousands)	Banking		Wealth Management		Insurance		Other		Consolidated
Interest income	Interest income	$	50,603	$	1	$	—	$	8	$	50,612	Interest income	$	51,449	$	—	$	—	$	8	$	51,457
Interest expense	Interest expense	4,867		—		—		1,891		6,758		Interest expense	3,719		31		—		2,293		6,043
Net interest income		45,736		1		—		(1,883)		43,854
Provision for credit losses		3,935		—		—		—		3,935
Net interest income (expense)												Net interest income (expense)	47,730		(31)		—		(2,285)		45,414
Reversal of provision for credit losses												Reversal of provision for credit losses	(11,283)		—		—		—		(11,283)
Noninterest income	Noninterest income	11,919		5,963		3,924		(1)		21,805		Noninterest income	11,230		6,773		5,105		142		23,250
Noninterest Expense		31,304		3,845		2,974		404		38,527
Noninterest expense												Noninterest expense	30,601		4,086		3,304		1,549		39,540
Intersegment (revenue) expense*	Intersegment (revenue) expense*	(296)		168		128		—		—		Intersegment (revenue) expense*	(323)		164		159		—		—
Income (loss) before income taxes	Income (loss) before income taxes	22,712		1,951		822		(2,288)		23,197		Income (loss) before income taxes	39,965		2,492		1,641		(3,692)		40,407
Income tax (benefit) expense		4,367		396		171		144		5,078
Income tax expense (benefit)												Income tax expense (benefit)	8,255		514		351		(1,316)		7,804
Net income (loss)	Net income (loss)	$	18,345	$	1,555	$	651	$	(2,432)	$	18,119	Net income (loss)	$	31,710	$	1,978	$	1,290	$	(2,376)	$	32,603

Net capital expenditures	Net capital expenditures	$	646	$	15	$	14	$	8	$	683	Net capital expenditures	$	1,111	$	5	$	9	$	62	$	1,187

Nine Months Ended
September 30, 2021
(Dollars in thousands) Banking Wealth Management Insurance Other Consolidated
Interest income $ 157,443 $ 1 $ — $ 25 $ 157,469
Interest expense 10,789 — — 5,822 16,611
Net interest income (expense) 146,654 1 — (5,797) 140,858
Reversal of provision for credit losses (11,524) — — — (11,524)
Noninterest income 30,211 20,492 13,083 246 64,032
Noninterest expense 97,977 13,499 9,686 2,912 124,074
Intersegment (revenue) expense* (969) 492 477 — —
Income (expense) before income taxes 91,381 6,502 2,920 (8,463) 92,340
Income tax expense (benefit) 18,373 1,347 613 (2,382) 17,951
Net income (loss) $ 73,008 $ 5,155 $ 2,307 $ (6,081) $ 74,389
Net capital expenditures $ 3,121 $ 16 $ 18 $ 86 $ 3,241

Nine Months Ended
September 30, 2020
(Dollars in thousands) Banking Wealth Management Insurance Other Consolidated
Interest income $ 152,578 $ 8 $ — $ 25 $ 152,611
Interest expense 18,399 — — 4,372 22,771
Net interest income 134,179 8 — (4,347) 129,840
Provision for credit losses 49,515 — — — 49,515
Noninterest income 27,755 17,654 13,020 (240) 58,189
Noninterest expense 91,097 11,752 9,095 1,320 113,264
Intersegment (revenue) expense* (852) 466 386 — —
(Loss) income before income taxes 22,174 5,444 3,539 (5,907) 25,250
Income tax (benefit) expense 2,944 1,109 749 (594) 4,208
Net income (loss) $ 19,230 $ 4,335 $ 2,790 $ (5,313) $ 21,042
Net capital expenditures $ 2,291 $ 21 $ 23 $ 28 $ 2,363

*Includes an allocation of general and administrative expenses from both the parent holding company and the Bank. These expenses are generally allocated based upon number of employees and square footage utilized.

Note 14. Contingencies

The Corporation is periodically subject to various pending and threatened legal actions, which involve claims for monetary relief. Based upon information presently available to the Corporation, it is the Corporation's opinion that any legal and financial responsibility arising from such claims will not have a material adverse effect on the Corporation's results of operations, financial position or cash flows.

4740

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(All dollar amounts presented in tables are in thousands, except per share data. “BP” equates to “basis points”; "NM" equates to “not meaningful”; “—” equates to “zero” or “doesn’t round to a reportable number”; and “N/A” equates to “not applicable.” Certain prior period amounts have been reclassified to conform to the current-year presentation.)

Forward-Looking Statements

The information contained in this report may contain forward-looking statements. When used or incorporated by reference in disclosure documents, the words "believe" "anticipate," "estimate," "expect," "project," "target," "goal" and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may include but are not limited to: statements of our goals, intentions and expectations; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. These forward-looking statements are based on current beliefs and expectations of our management and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to certain risks, uncertainties and assumptions, including but not limited to those set forth below:

•Operating, legal and regulatory risks;

•Economic, political and competitive forces;

•Legislative, regulatory and accounting changes;

•Demand for our financial products and services in our market area;

•Major catastrophes such as earthquakes, floods or other natural or human disasters and infectious disease outbreaks, including the current coronavirus (COVID-19) pandemic, the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on us and our customers and other constituencies;

•~~Volatility~~Inflation or volatility in interest rates;

•Fluctuations in real estate values in our market area;

•The composition and credit quality of our loan and investment portfolios;

•Changes in the level and direction of loan delinquencies, classified and criticized loans and charge-offs and changes in estimates of the adequacy of the allowance for credit losses;

•Economic assumptions utilized to calculate the allowance for credit losses;

•Our ability to access cost-effective funding;

•Our ability to ~~continue to~~ implement our business strategies;

•Our ability to manage market risk, credit risk and operational risk;

•Timing and amount of revenue and expenditures;

•Adverse changes in the securities markets;

•The anticipated impact of any military conflict, terrorist act or other geopolitical acts;

•Our ability to enter new markets successfully and capitalize on growth opportunities;

•Competition for loans, deposits and employees;

•System failures or cyber-security breaches of our information technology infrastructure and those of our third-party service providers;

•The failure to maintain current technologies ~~and~~and/or to successfully implement future information technology enhancements;

•Our ability to retain key employees;

•Other risks and uncertainties, including those occurring in the U.S. and world financial systems; and

•The risk that our analysis of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful.

Given the ongoing and dynamic nature of the COVID-19 pandemic, it is difficult to predict the ~~full~~continued impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and ~~abated and whether the continued reopening of businesses will result in a meaningful increase in economic activity.~~abated. As a result of the COVID-19 pandemic and the related adverse local and

national economic consequences, our forward-looking statements are also subject to the following risks, uncertainties and assumptions:

•Demand for our products and services may decline;

•If the economy ~~is unable to remain open, and higher levels of unemployment continue for an extended period of time,~~worsens, loan delinquencies, problem assets, and foreclosures may increase;

•Collateral for loans, especially real estate, may decline in value;

•Our allowance for credit losses on loans and leases may have to be increased if economic conditions worsen or if borrowers experience financial difficulties;

•The net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;

•A material decrease in net income or a net loss over several quarters could result in the elimination of or a decrease in the rate of our quarterly cash dividend;

•Our wealth management revenues may decline with ~~continuing~~ market turmoil;

•Our cyber security risks are increased as the result of an increase in the number of employees working remotely; and

•FDIC premiums may increase if the agency experiences additional resolution ~~costs; and~~

•Litigation, regulatory enforcement risk and reputation risk regarding our participation in the Paycheck Protection Program and the risk that the Small Business Administration may not fund some or all PPP loan guaranties.costs.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected or projected. These and other risk factors are more fully described in this report and in the Univest Financial Corporation Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 under the section entitled "Item 1A - Risk Factors," and from time to time in other filings made by the Corporation with the SEC.

These forward-looking statements speak only at the date of the report. The Corporation expressly disclaims any obligation to publicly release any updates or revisions to reflect any change in the Corporation’s expectations with regard to any change in events, conditions or circumstances on which any such statement is based.

Critical Accounting Policies

Management, in order to prepare the Corporation’s financial statements in conformity with U.S. generally accepted accounting principles, is required to make estimates and assumptions that affect the amounts reported in the Corporation’s financial statements. There are uncertainties inherent in making these estimates and assumptions. Certain critical accounting policies could materially affect the results of operations and financial position of the Corporation should changes in circumstances require a change in related estimates or assumptions. The Corporation has identified the fair value measurement of investment securities available-for-sale and the calculation of the allowance for credit losses on loans and leases as critical accounting policies. For more information on these critical accounting policies, please refer to the Corporation’s ~~2020~~2021 Annual Report on Form 10-K.

General

The Corporation is a Pennsylvania corporation, organized in 1973 and registered as a bank holding company pursuant to the Bank Holding Company Act of 1956. The Corporation owns all of the capital stock of Univest Bank and Trust Co. The consolidated financial statements include the accounts of the Corporation, the Bank and its subsidiaries.

The Bank is engaged in domestic banking services for individuals, businesses, municipalities and non-profit organizations. Through its wholly-owned subsidiaries, the Bank provides a variety of financial services throughout its markets of operation. The Bank is the parent company of Girard Investment Services, LLC, a full-service registered introducing broker-dealer and a licensed insurance agency, Girard Advisory Services, LLC, a registered investment advisory firm, and Girard Pension Services, LLC, a registered investment advisor, which provides investment consulting and management services to municipal entities. The Bank is also the parent company of Univest Insurance, LLC, an independent insurance agency and Univest Capital, Inc., an equipment financing business.

The Corporation earns revenue primarily from the margins and fees generated from lending and depository services as well as fee-based income from trust, insurance, mortgage banking and investment services. The Corporation seeks to achieve adequate and reliable earnings through business growth while maintaining adequate levels of capital and liquidity and limiting exposure to credit and interest rate risk.

Executive Overview

The Corporation’s consolidated net income, earnings per share and return on average assets and average equity were as follows:


		Three Months Ended										Nine Months Ended											Three Months Ended
		September 30,						Change				September 30,						Change					March 31,						Change
(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	2021			2020			Amount		Percent		2021			2020			Amount		Percent		(Dollars in thousands, except per share data)	2022			2021			Amount		Percent
Net income	Net income	$	20,911		$	18,119		$	2,792	15.4	%	$	74,389		$	21,042		$	53,347	253.5	%	Net income	$	20,317		$	32,603		$	(12,286)	(37.7)	%
Net income per share:	Net income per share:																					Net income per share:
Basic	Basic	$	0.71		$	0.62		$	0.09	14.5		$	2.53		$	0.72		$	1.81	251.4		Basic	$	0.69		$	1.11		$	(0.42)	(37.8)
Diluted	Diluted	0.71			0.62			0.09		14.5		2.52			0.72			1.80		250.0		Diluted	0.68			1.11			(0.43)		(38.7)
Return on average assets	Return on average assets	1.24		%	1.15		%	9 BP		7.8		1.53		%	0.48		%	105 BP		218.8		Return on average assets	1.17		%	2.07		%	(90 BP)		(43.5)
Return on average equity	Return on average equity	11.12		%	10.89		%	23 BP		2.1		13.72		%	4.22		%	950 BP		225.5		Return on average equity	10.64		%	18.90		%	(826 BP)		(43.7)

The Corporation reported net income of ~~$20.9~~$20.3 million, or ~~$0.71~~$0.68 diluted earnings per share, for the three months ended ~~September 30, 2021,~~March 31, 2022, compared to net income of ~~$18.1~~$32.6 million, or ~~$0.62~~$1.11 diluted earnings per share, for the three months ended ~~September 30, 2020. Net income for~~March 31, 2021.

During the ~~nine~~three months ended ~~September 30, 2021 was $74.4~~March 31, 2022, the Corporation recorded a reversal of provision for credit losses of $3.5 million, of which $5.7 million (after-tax benefit of $4.5 million), or ~~$2.52~~$0.15 diluted earnings per share, ~~compared~~was attributable to ~~net income~~favorable changes in economic-related assumptions within the Corporation's CECL model, partially offset by increases in reserves for loans, unfunded commitments and investment securities. The reversal of ~~$21.0~~provision for credit losses for the three months ended March 31, 2021 was $11.3 million, of which $12.9 million (after-tax benefit of $10.2 million), or ~~$0.72~~$0.35 diluted earnings per share, ~~for~~was attributable to favorable changes in economic-related assumptions within the ~~nine months ended September 30, 2020.~~Corporation’s CECL model partially offset by a reserve increase attributable to loan growth.

As of ~~September 30, 2021, $85.6~~March 31, 2022, $10.3 million in PPP loan originations remained outstanding. During the ~~third~~first quarter of ~~2021, we~~2022, $591 thousand was recorded ~~income of $4.2 million within~~as net interest income related to these loans, of which ~~$3.7 million~~$552 thousand was the result of recognition of associated net deferred loan fees upon forgiveness and pay downs of PPP loans totaling $171.4 million. During the nine months ended September 30, 2021, we recorded income of $13.5 million within net interest income related to these loans, of which $8.6 million was the result of recognition of associated net deferred loan fees upon forgiveness and pay downs of PPP loans totaling $575.3$22.0 million. As of ~~September 30, 2021,~~March 31, 2022, the Corporation had ~~$2.4 million~~$272 thousand of net deferred fees on the balance sheet related to PPP loans, which represented approximately ~~13.2%~~1.5% of the initial deferred fee amount.

Results of Operations

Net Interest Income

Net interest income is the difference between interest earned on loans and leases and investment securities and interest paid on deposits and borrowings. Net interest income is the principal source of the Corporation’s revenue. Table 1 presents the Corporation’s average balances, tax-equivalent interest income, interest expense, tax-equivalent yields earned on average assets, cost of average liabilities, and shareholders’ equity on a tax-equivalent basis for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021. The tax-equivalent net interest margin is tax-equivalent net interest income as a percentage of average interest-earning assets. The tax-equivalent net interest spread represents the weighted average tax-equivalent yield on interest-earning assets less the weighted average cost of interest-bearing liabilities. The effect of net interest-free funding sources represents the effect on the net interest margin of net funding provided by noninterest-earning assets, noninterest-bearing liabilities and shareholders’ equity. Table 2 analyzes the changes in the tax-equivalent net interest income for the periods broken down by their rate and volume components.

Three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 versus 2021 ~~versus 2020~~

Net interest income on a tax-equivalent basis for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$49.2~~$47.2 million, an increase of ~~$4.8~~$1.2 million, or ~~10.7%~~2.6%, compared to ~~$44.5~~$46.0 million for the three months ended September 30, 2020. Net interest income on a tax-equivalent basis for the nine months ended September 30, 2021 was $142.5 million, an increase of $10.7 million, or 8.1%, compared to the same period in 2020.March 31, 2021. The increase in tax-equivalent net interest income for the three months ended ~~September 30, 2021~~March 31, 2022 compared to the comparable period in the prior year was ~~primarily~~ due to ~~an increase~~loan and investment balance growth outpacing declines in ~~PPP loan income of $1.4 million,~~yield on interest-bearing assets and a ~~$1.9 million~~ decrease in the cost of interest-bearing liabilities, ~~and growth in loans partially~~ offset by a decrease in PPP loan income.

5043

decrease in loan, excluding PPP, and investment yields. The increase in tax-equivalent net interest income for the nine months ended September 30, 2021 compared to the comparable period in the prior year was primarily due to an increase in PPP loan income of $8.5 million, a $6.2 million decrease in the cost of interest-bearing liabilities and growth in loans partially offset by a decrease in loans and investment yields.

The net interest margin, on a tax-equivalent basis, was ~~3.11% and 3.13%~~2.89% for the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022 compared to ~~3.02% and 3.21%~~3.12% for the three ~~and nine~~ months ended ~~September 30, 2020, respectively.~~March 31, 2021. Excess liquidity reduced the net interest margin by approximately ~~27 and 16~~33 basis points for the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022 compared to ~~18 and 14~~eleven basis points for the three ~~and nine~~ months ended ~~September 30, 2020, respectively.~~March 31, 2021. This excess liquidity was primarily driven by strong growth of deposit balances since the beginning of the COVID-19 pandemic, primarily due to the various pandemic-related stimulus initiatives. PPP loans had a favorable impact on net interest margin of 20three and 12four basis points for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and March 31, 2021, ~~respectively, compared to an unfavorable impact of ten and seven basis points for the three and nine months ended September 30, 2020,~~ respectively. As PPP loans are forgiven, the associated deferred fees are recognized in earnings, which occurred with greater frequency in 2021 as compared to ~~2020.~~2022. Excluding the impact of excess liquidity and PPP loans, the net interest margin, on a tax-equivalent basis, was ~~3.18% and 3.17%~~3.19% for the three ~~and nine~~ months ended ~~September 30, 2021, respectively, compared to 3.30%~~March 31, 2022 and ~~3.42% for the three and nine months ended September 30, 2020, respectively.~~2021.

5144

Table 1—Average Balances and Interest Rates—Tax-Equivalent Basis


		Three Months Ended September 30,															Three Months Ended March 31,
		2021							2020								2022							2021
(Dollars in thousands)	(Dollars in thousands)	Average Balance			Income/ Expense		Average Rate		Average Balance			Income/ Expense		Average Rate		(Dollars in thousands)	Average Balance			Income/ Expense		Average Rate		Average Balance			Income/ Expense		Average Rate
Assets:	Assets:															Assets:
Interest-earning deposits with other banks	Interest-earning deposits with other banks	$	530,191		$	189	0.14	%	$	368,181		$	100	0.11	%	Interest-earning deposits with other banks	$	733,173		$	357	0.20	%	$	237,548		$	56	0.10	%
U.S. government obligations	U.S. government obligations	6,999			36		2.04		6,998			36		2.05		U.S. government obligations	5,222			26		2.02		6,998			36		2.09
Obligations of states and political subdivisions		2,992			24		3.18		18,004			167		3.69
Obligations of states and political subdivisions*																Obligations of states and political subdivisions*	2,332			19		3.30		11,544			105		3.69
Other debt and equity securities	Other debt and equity securities	385,289			1,516		1.56		360,219			1,610		1.78		Other debt and equity securities	514,574			2,339		1.84		355,827			1,267		1.44
Federal Home Loan Bank, Federal Reserve Bank and other stock	Federal Home Loan Bank, Federal Reserve Bank and other stock	26,713			334		4.96		28,651			419		5.82		Federal Home Loan Bank, Federal Reserve Bank and other stock	27,115			355		5.31		26,368			348		5.35
Total interest-earning deposits, investments and other interest-earning assets	Total interest-earning deposits, investments and other interest-earning assets	952,184			2,099		0.87		782,053			2,332		1.19		Total interest-earning deposits, investments and other interest-earning assets	1,282,416			3,096		0.98		638,285			1,812		1.15
Commercial, financial and agricultural loans	Commercial, financial and agricultural loans	880,986			7,412		3.34		807,376			7,330		3.61		Commercial, financial and agricultural loans	901,555			7,571		3.41		782,208			6,798		3.52
Paycheck Protection Program loans	Paycheck Protection Program loans	162,611			4,162		10.15		500,549			2,811		2.23		Paycheck Protection Program loans	18,402			591		13.02		506,939			4,524		3.62
Real estate—commercial and construction loans	Real estate—commercial and construction loans	2,784,398			25,634		3.65		2,358,971			23,547		3.97		Real estate—commercial and construction loans	2,904,602			25,820		3.61		2,621,981			24,458		3.78
Real estate—residential loans	Real estate—residential loans	1,100,799			10,171		3.67		1,009,407			10,380		4.09		Real estate—residential loans	1,116,356			9,882		3.59		1,037,000			9,873		3.86
Loans to individuals	Loans to individuals	26,048			253		3.85		28,663			309		4.29		Loans to individuals	25,799			238		3.74		26,447			265		4.06
Municipal loans and leases		247,603			2,504		4.01		267,364			2,839		4.22
Municipal loans and leases*																Municipal loans and leases*	242,508			2,434		4.07		245,638			2,530		4.18
Lease financings	Lease financings	117,966			1,856		6.24		97,707			1,662		6.77		Lease financings	135,476			2,075		6.21		105,684			1,737		6.67
Gross loans and leases	Gross loans and leases	5,320,411			51,992		3.88		5,070,037			48,878		3.84		Gross loans and leases	5,344,698			48,611		3.69		5,325,897			50,185		3.82
Total interest-earning assets	Total interest-earning assets	6,272,595			54,091		3.42		5,852,090			51,210		3.48		Total interest-earning assets	6,627,114			51,707		3.16		5,964,182			51,997		3.54
Cash and due from banks	Cash and due from banks	59,642							56,715							Cash and due from banks	53,698							55,311
Allowance for credit losses, loans and leases	Allowance for credit losses, loans and leases	(72,606)							(87,046)							Allowance for credit losses, loans and leases	(72,067)							(83,254)
Premises and equipment, net	Premises and equipment, net	55,685							55,755							Premises and equipment, net	53,948							55,826
Operating lease right-of-use assets	Operating lease right-of-use assets	31,998							33,875							Operating lease right-of-use assets	30,394							34,033
Other assets	Other assets	350,863							354,216							Other assets	354,893							357,365
Total assets	Total assets	$	6,698,177						$	6,265,605						Total assets	$	7,047,980						$	6,383,463
Liabilities:	Liabilities:															Liabilities:
Interest-bearing checking deposits	Interest-bearing checking deposits	$	857,098		$	537	0.25		$	725,580		$	468	0.26		Interest-bearing checking deposits	$	881,462		$	443	0.20		$	817,940		$	490	0.24
Money market savings	Money market savings	1,382,832			922		0.26		1,116,628			897		0.32		Money market savings	1,542,581			904		0.24		1,243,673			853		0.28
Regular savings	Regular savings	998,568			281		0.11		901,716			449		0.20		Regular savings	1,021,550			238		0.09		959,232			298		0.13
Time deposits	Time deposits	496,702			1,490		1.19		525,656			2,214		1.68		Time deposits	473,589			1,306		1.12		525,800			1,759		1.36
Total time and interest-bearing deposits	Total time and interest-bearing deposits	3,735,200			3,230		0.34		3,269,580			4,028		0.49		Total time and interest-bearing deposits	3,919,182			2,891		0.30		3,546,645			3,400		0.39
Short-term borrowings	Short-term borrowings	15,116			2		0.05		130,359			97		0.30		Short-term borrowings	17,636			2		0.05		17,894			2		0.05
Long-term debt	Long-term debt	95,000			324		1.35		208,776			742		1.41		Long-term debt	95,000			317		1.35		101,333			348		1.39
Subordinated notes	Subordinated notes	98,754			1,328		5.34		155,945			1,891		4.82		Subordinated notes	98,911			1,328		5.45		183,340			2,293		5.07
Total borrowings	Total borrowings	208,870			1,654		3.14		495,080			2,730		2.19		Total borrowings	211,547			1,647		3.16		302,567			2,643		3.54
Total interest-bearing liabilities	Total interest-bearing liabilities	3,944,070			4,884		0.49		3,764,660			6,758		0.71		Total interest-bearing liabilities	4,130,729			4,538		0.45		3,849,212			6,043		0.64
Noninterest-bearing deposits	Noninterest-bearing deposits	1,931,525							1,760,818							Noninterest-bearing deposits	2,065,633							1,749,502
Operating lease liabilities	Operating lease liabilities	35,094							37,170							Operating lease liabilities	33,452							37,415
Accrued expenses and other liabilities	Accrued expenses and other liabilities	41,303							41,010							Accrued expenses and other liabilities	43,808							47,598
Total liabilities	Total liabilities	5,951,992							5,603,658							Total liabilities	6,273,622							5,683,727
Shareholders’ Equity:	Shareholders’ Equity:															Shareholders’ Equity:
Common stock	Common stock	157,784							157,784							Common stock	157,784							157,784
Additional paid-in capital	Additional paid-in capital	297,482							296,272							Additional paid-in capital	298,975							296,136
Retained earnings and other equity	Retained earnings and other equity	290,919							207,891							Retained earnings and other equity	317,599							245,816
Total shareholders’ equity	Total shareholders’ equity	746,185							661,947							Total shareholders’ equity	774,358							699,736
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	6,698,177						$	6,265,605						Total liabilities and shareholders’ equity	$	7,047,980						$	6,383,463
Net interest income	Net interest income				$	49,207						$	44,452			Net interest income				$	47,169						$	45,954
Net interest spread	Net interest spread						2.93							2.77		Net interest spread						2.71							2.90
Effect of net interest-free funding sources	Effect of net interest-free funding sources						0.18							0.25		Effect of net interest-free funding sources						0.18							0.22
Net interest margin	Net interest margin						3.11	%						3.02	%	Net interest margin						2.89	%						3.12	%
Ratio of average interest-earning assets to average interest-bearing liabilities	Ratio of average interest-earning assets to average interest-bearing liabilities	159.04		%					155.45		%					Ratio of average interest-earning assets to average interest-bearing liabilities	160.43		%					154.95		%

*Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets.

Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.

Net interest income includes net deferred (costs) fees of $(136) thousand and $2.3 million for the three months ended March 31, 2022 and 2021, respectively.

Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ have been calculated using the Corporation's federal applicable rate of 21%.

Nine Months Ended September 30,
2021 2020
(Dollars in thousands) Average
Balance Income/
Expense Average
Rate Average
Balance Income/
Expense Average
Rate
Assets:
Interest-earning deposits with other banks $ 328,768 $ 291 0.12 % $ 267,023 $ 492 0.25 %
U.S. government obligations 6,999 107 2.04 7,176 109 2.03
Obligations of states and political subdivisions 6,838 187 3.66 26,019 696 3.57
Other debt and equity securities 371,355 4,147 1.49 379,729 6,460 2.27
Federal Home Loan Bank, Federal Reserve Bank and other stock 26,319 1,042 5.29 29,689 1,308 5.88
Total interest-earning deposits, investments and other interest-earning assets 740,279 5,774 1.04 709,636 9,065 1.71
Commercial, financial and agricultural loans 830,248 21,120 3.40 815,178 23,291 3.82
Paycheck Protection Program loans 358,231 13,464 5.03 291,173 4,939 2.27
Real estate—commercial and construction loans 2,703,100 75,023 3.71 2,244,143 70,574 4.20
Real estate—residential loans 1,067,855 29,880 3.74 1,001,904 31,702 4.23
Loans to individuals 25,925 769 3.97 29,251 1,043 4.76
Municipal loans and leases 248,191 7,632 4.11 291,845 9,081 4.16
Lease financings 111,569 5,412 6.49 92,780 4,808 6.92
Gross loans and leases 5,345,119 153,300 3.83 4,766,274 145,438 4.08
Total interest-earning assets 6,085,398 159,074 3.49 5,475,910 154,503 3.77
Cash and due from banks 55,983 51,544
Allowance for credit losses, loans and leases (76,265) (66,977)
Premises and equipment, net 55,803 55,967
Operating lease right-of-use assets 33,334 34,278
Other assets 355,323 342,196
Total assets $ 6,509,576 $ 5,892,918
Liabilities:
Interest-bearing checking deposits $ 820,800 $ 1,514 0.25 $ 642,935 $ 1,636 0.34
Money market savings 1,282,470 2,606 0.27 1,079,279 4,653 0.58
Regular savings 979,013 861 0.12 863,772 1,716 0.27
Time deposits 502,414 4,808 1.28 568,517 7,801 1.83
Total time and interest-bearing deposits 3,584,697 9,789 0.37 3,154,503 15,806 0.67
Short-term borrowings 17,363 7 0.05 110,689 325 0.39
Long-term debt 97,088 993 1.37 196,053 2,268 1.55
Subordinated notes 151,060 5,822 5.15 115,376 4,372 5.06
Total borrowings 265,511 6,822 3.44 422,118 6,965 2.20
Total interest-bearing liabilities 3,850,208 16,611 0.58 3,576,621 22,771 0.85
Noninterest-bearing deposits 1,854,648 1,571,629
Operating lease liabilities 36,636 37,538
Accrued expenses and other liabilities 43,023 41,691
Total liabilities 5,784,515 5,227,479
Shareholders’ Equity:
Common stock 157,784 157,784
Additional paid-in capital 296,744 295,759
Retained earnings and other equity 270,533 211,896
Total shareholders’ equity 725,061 665,439
Total liabilities and shareholders’ equity $ 6,509,576 $ 5,892,918
Net interest income $ 142,463 $ 131,732
Net interest spread 2.91 2.92
Effect of net interest-free funding sources 0.22 0.29
Net interest margin 3.13 % 3.21 %
Ratio of average interest-earning assets to average interest-bearing liabilities 158.05 % 153.10 %

Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments. Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the nine months ended September 30, 2021 and 2020 have been calculated using the Corporation's federal applicable rate of 21%.

5345

Table 2—Analysis of Changes in Net Interest Income

The rate-volume variance analysis set forth in the table below compares changes in tax-equivalent net interest income for the periods indicated by their rate and volume components. The change in interest income/expense due to both volume and rate has been allocated proportionately.


		Three Months Ended						Nine Months Ended							Three Months Ended
		September 30, 2021 Versus 2020						September 30, 2021 Versus 2020							March 31, 2022 Versus 2021
(Dollars in thousands)	(Dollars in thousands)	Volume Change		Rate Change		Total		Volume Change		Rate Change		Total		(Dollars in thousands)	Volume Change		Rate Change		Total
Interest income:	Interest income:													Interest income:
Interest-earning deposits with other banks	Interest-earning deposits with other banks	$	55	$	34	$	89	$	98	$	(299)	$	(201)	Interest-earning deposits with other banks	$	203	$	98	$	301
U.S. government obligations	U.S. government obligations	—		—		—		(3)		1		(2)		U.S. government obligations	(9)		(1)		(10)
Obligations of states and political subdivisions	Obligations of states and political subdivisions	(123)		(20)		(143)		(526)		17		(509)		Obligations of states and political subdivisions	(76)		(10)		(86)
Other debt and equity securities	Other debt and equity securities	109		(203)		(94)		(139)		(2,174)		(2,313)		Other debt and equity securities	661		411		1,072
Federal Home Loan Bank, Federal Reserve Bank and other stock	Federal Home Loan Bank, Federal Reserve Bank and other stock	(26)		(59)		(85)		(141)		(125)		(266)		Federal Home Loan Bank, Federal Reserve Bank and other stock	10		(3)		7
Interest on deposits, investments and other earning assets	Interest on deposits, investments and other earning assets	15		(248)		(233)		(711)		(2,580)		(3,291)		Interest on deposits, investments and other earning assets	789		495		1,284
Commercial, financial and agricultural loans	Commercial, financial and agricultural loans	648		(566)		82		425		(2,596)		(2,171)		Commercial, financial and agricultural loans	994		(221)		773
Paycheck Protection Program loans	Paycheck Protection Program loans	(2,974)		4,325		1,351		1,357		7,168		8,525		Paycheck Protection Program loans	(7,426)		3,493		(3,933)
Real estate—commercial and construction loans	Real estate—commercial and construction loans	4,068		(1,981)		2,087		13,312		(8,863)		4,449		Real estate—commercial and construction loans	2,512		(1,150)		1,362
Real estate—residential loans	Real estate—residential loans	902		(1,111)		(209)		2,002		(3,824)		(1,822)		Real estate—residential loans	726		(717)		9
Loans to individuals	Loans to individuals	(26)		(30)		(56)		(111)		(163)		(274)		Loans to individuals	(6)		(21)		(27)
Municipal loans and leases	Municipal loans and leases	(200)		(135)		(335)		(1,341)		(108)		(1,449)		Municipal loans and leases	(31)		(65)		(96)
Lease financings	Lease financings	330		(136)		194		919		(315)		604		Lease financings	464		(126)		338
Interest and fees on loans and leases	Interest and fees on loans and leases	2,748		366		3,114		16,563		(8,701)		7,862		Interest and fees on loans and leases	(2,767)		1,193		(1,574)
Total interest income	Total interest income	2,763		118		2,881		15,852		(11,281)		4,571		Total interest income	(1,978)		1,688		(290)
Interest expense:	Interest expense:													Interest expense:
Interest-bearing checking deposits	Interest-bearing checking deposits	87		(18)		69		380		(502)		(122)		Interest-bearing checking deposits	37		(84)		(47)
Money market savings	Money market savings	203		(178)		25		771		(2,818)		(2,047)		Money market savings	186		(135)		51
Regular savings	Regular savings	46		(214)		(168)		210		(1,065)		(855)		Regular savings	23		(83)		(60)
Time deposits	Time deposits	(116)		(608)		(724)		(834)		(2,159)		(2,993)		Time deposits	(163)		(290)		(453)
Total time and interest-bearing deposits	Total time and interest-bearing deposits	220		(1,018)		(798)		527		(6,544)		(6,017)		Total time and interest-bearing deposits	83		(592)		(509)
Short-term borrowings		(49)		(46)		(95)		(156)		(162)		(318)

Long-term debt	Long-term debt	(388)		(30)		(418)		(1,036)		(239)		(1,275)		Long-term debt	(21)		(10)		(31)
Subordinated notes	Subordinated notes	(751)		188		(563)		1,371		79		1,450		Subordinated notes	(1,126)		161		(965)
Interest on borrowings	Interest on borrowings	(1,188)		112		(1,076)		179		(322)		(143)		Interest on borrowings	(1,147)		151		(996)
Total interest expense	Total interest expense	(968)		(906)		(1,874)		706		(6,866)		(6,160)		Total interest expense	(1,064)		(441)		(1,505)
Net interest income	Net interest income	$	3,731	$	1,024	$	4,755	$	15,146	$	(4,415)	$	10,731	Net interest income	$	(914)	$	2,129	$	1,215

5446

Provision for Credit Losses

The reversal of the provision for credit losses for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$182 thousand,~~$3.5 million, of which ~~$2.9~~$5.7 million (after-tax benefit of ~~$2.3~~$4.5 million) was attributable to favorable changes in economic-related assumptions within the Corporation's CECL model, partially offset by ~~an increase~~increases in reserves for ~~loan,~~loans, unfunded commitments and investment securities. The provision for credit losses for the three months ended September 30, 2020 was $3.9 million, of which $5.6 million was related to loans and leases, $163 thousand was a reversal of provision related to investment securities and $1.5 million was a reversal of provision related to unfunded commitments. Included within the $3.9 million in provision for credit losses was $280 thousand (after-tax charge of $221 thousand), which was attributable to changes in economic-related assumptions within the Corporation's CECL model, which were predominately driven by COVID-19.

The reversal of the provision for credit losses for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 was ~~$11.5~~$11.3 million, of which ~~$18.7~~$12.9 million (after-tax benefit of ~~$14.8~~$10.2 million) was attributable to favorable changes in economic-related assumptions within the Corporation's CECL model partially offset by ana reserve increase in reserves for loans, unfunded commitments and investment securities. The provision for credit losses for the nine months ended September 30, 2020 was $49.5 million, of which $40.5 million (after-tax charge of $32.0 million) was attributable to ~~economic-related assumptions within the Corporation's CECL model.~~loan growth.

Noninterest Income

The following table presents noninterest income for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended								Nine Months Ended									Three Months Ended
		September 30,				Change				September 30,				Change					March 31,				Change
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Amount		Percent		2021		2020		Amount		Percent		(Dollars in thousands)	2022		2021		Amount		Percent
Trust fee income	Trust fee income	2,126		$	1,915	$	211	11.0	%	$	6,317	$	5,729	$	588	10.3	%	Trust fee income	$	2,102	$	2,034	$	68	3.3	%
Service charges on deposit accounts	Service charges on deposit accounts	1,422		1,187		235		19.8		4,018		3,474		544		15.7		Service charges on deposit accounts	1,504		1,282		222		17.3
Investment advisory commission and fee income	Investment advisory commission and fee income	4,796		4,005		791		19.8		14,051		11,800		2,251		19.1		Investment advisory commission and fee income	5,152		4,697		455		9.7
Insurance commission and fee income	Insurance commission and fee income	3,837		3,776		61		1.6		12,631		12,575		56		0.4		Insurance commission and fee income	5,570		4,955		615		12.4
Other service fee income	Other service fee income	2,576		2,093		483		23.1		7,516		5,451		2,065		37.9		Other service fee income	2,756		2,192		564		25.7
Bank owned life insurance income	Bank owned life insurance income	925		741		184		24.8		3,262		2,207		1,055		47.8		Bank owned life insurance income	699		717		(18)		(2.5)
Net gain on sales of investment securities	Net gain on sales of investment securities	21		57		(36)		(63.2)		140		817		(677)		(82.9)		Net gain on sales of investment securities	30		65		(35)		(53.8)
Net gain on mortgage banking activities	Net gain on mortgage banking activities	3,224		5,860		(2,636)		(45.0)		12,623		12,119		504		4.2		Net gain on mortgage banking activities	1,929		5,938		(4,009)		(67.5)

Other income	Other income	1,625		2,171		(546)		(25.1)		3,474		4,017		(543)		(13.5)		Other income	728		1,370		(642)		(46.9)
Total noninterest income	Total noninterest income	$	20,552	$	21,805	$	(1,253)	(5.7	%)	$	64,032	$	58,189	$	5,843	10.0	%	Total noninterest income	$	20,470	$	23,250	$	(2,780)	(12.0	%)

Three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 versus 2021 ~~versus 2020~~

Noninterest income for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$20.6~~$20.5 million, a decrease of ~~$1.3~~$2.8 million, or ~~5.7%~~12.0%, from the three months ended ~~September 30, 2020. Noninterest income for the nine months ended September 30, 2021 was $64.0 million, an increase of $5.8 million, or 10.0%, from the nine months ended September 30, 2020.~~March 31, 2021.

The net gain on mortgage banking activities decreased ~~$2.6~~$4.0 million, or ~~45.0%~~67.5%, for the three months ended ~~September 30, 2021 but increased $504 thousand, or 4.2%, for the nine months ended September 30, 2021~~March 31, 2022 from the comparable ~~periods~~period in the prior year. The decrease for the three months ended ~~September 30, 2021~~March 31, 2022 was primarily due to a decrease in ~~volume~~loan sales and a contraction of margins. Other income decreased $642 thousand, or 46.9%, for the three months ended March 31, 2022 from the comparable period in the prior year, primarily due to a decrease of $657 thousand in fees on risk participation agreements for interest rate swaps driven by a decrease in customer demand.

Investment advisory commission and fee income increased ~~$791~~$455 thousand, or ~~19.8%~~9.7%, for the three months ended ~~September 30, 2021 and $2.3 million, or 19.1%, for the nine months ended September 30, 2021~~March 31, 2022 from the comparable periods in the prior year, due to increased assets under management driven by favorable market conditions and new customer relationships. BOLI income increased $184 thousand, or 24.8%, for the three months ended September 30, 2021 and $1.1 million, or 47.8%, for the nine months ended September 30, 2021 from the comparable periodsperiod in the prior year, primarily due to ~~tax-free proceeds~~new customer relationships and appreciation of assets under management, as a majority of investment advisory fees are billed based on the prior quarter-end assets under management balance. Insurance commission and fee income increased $615 thousand, or 12.4%, for the three months ended March 31, 2022 from ~~BOLI death benefit claims of $893 thousand and $196 thousand received~~the comparable period in the ~~second and third~~prior year, primarily due to incremental revenue attributable to the insurance agency the Corporation acquired in the fourth quarter of ~~2021, respectively.~~2021.

Other service fee income increased ~~$483~~$564 thousand, or ~~23.1%~~25.7%, for the three months ended ~~September 30, 2021 and $2.1 million, or 37.9%, for the nine months ended September 30, 2021~~March 31, 2022 from the comparable ~~periods~~period in the prior year. Interchange fee income increased ~~$290~~$176 thousand for the three months ended ~~September 30, 2021 and $962 thousand for the nine months ended September 30, 2021~~March 31, 2022 from the comparable ~~periods~~period in the prior year, due to increased customer activity. Mortgage servicing fees increased ~~$163~~$262 thousand for the three months ended ~~September 30, 2021 and $855 thousand for the nine months ended September 30, 2021~~March 31, 2022 from the comparable ~~periods~~period in the prior year, driven by ~~an increase~~reduced amortization as a result of a decrease in ~~retained servicing associated with elevated mortgage volume over the past eighteen months.~~prepayment speeds.

Other income decreased $546 thousand, or 25.1%, for the three months ended September 30, 2021 and $543 thousand, or 13.5%, for the nine months ended September 30, 2021 from the comparable periods in the prior year. Fees on risk participation agreements for interest rate swaps decreased $1.9 million and $2.3 million for the three and nine months ended September 30, 2021, respectively, from the comparable periods in the prior year driven by a decrease in customer demand. Gain on the sale of SBA loans increased $897 thousand and $922 thousand for the three and nine months ended September 30, 2021, respectively, from the comparable periods in the prior year. This increase was reflective of the Corporation's commitment to delivering comprehensive financial solutions to small businesses and the expansion of the SBA lending team during the first half of 2021. Net gains or losses related to valuations and sales of other real estate owned increased $297 thousand for the three and nine months ended September 30, 2021 from the comparable periods in the prior year, primarily due to a $300 thousand valuation adjustment on other real estate owned during the third quarter of 2020. Other income increased $456 thousand for the nine months ended September 30, 2021 primarily driven by a gain on the value of equity securities measured at fair value of $164 thousand compared to a loss of $321 thousand for the nine months ended September 30, 2020.

Noninterest Expense

The following table presents noninterest expense for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended								Nine Months Ended									Three Months Ended
		September 30,				Change				September 30,				Change					March 31,				Change
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Amount		Percent		2021		2020		Amount		Percent		(Dollars in thousands)	2022		2021		Amount		Percent
Salaries, benefits and commissions	Salaries, benefits and commissions	26,641		24,059		$	2,582	10.7	%	$	76,817	$	69,595	$	7,222	10.4	%	Salaries, benefits and commissions	$	28,245	$	24,780	$	3,465	14.0	%
Net occupancy	Net occupancy	2,525		2,609		(84)		(3.2)		7,920		7,661		259		3.4		Net occupancy	2,716		2,739		(23)		(0.8)
Equipment	Equipment	1,000		972		28		2.9		2,914		2,890		24		0.8		Equipment	982		946		36		3.8
Data processing	Data processing	3,274		2,862		412		14.4		9,388		8,372		1,016		12.1		Data processing	3,567		3,050		517		17.0
Professional fees	Professional fees	2,174		1,321		853		64.6		5,937		3,902		2,035		52.2		Professional fees	2,138		1,748		390		22.3
Marketing and advertising	Marketing and advertising	539		463		76		16.4		1,380		1,400		(20)		(1.4)		Marketing and advertising	425		280		145		51.8
Deposit insurance premiums	Deposit insurance premiums	765		707		58		8.2		2,014		1,826		188		10.3		Deposit insurance premiums	893		636		257		40.4
Intangible expenses	Intangible expenses	214		283		(69)		(24.4)		712		934		(222)		(23.8)		Intangible expenses	341		249		92		36.9

Other expense	Other expense	6,116		5,251		865		16.5		16,992		16,684		308		1.8		Other expense	6,105		5,112		993		19.4
Total noninterest expense	Total noninterest expense	$	43,248	$	38,527	$	4,721	12.3	%	$	124,074	$	113,264	$	10,810	9.5	%	Total noninterest expense	$	45,412	$	39,540	$	5,872	14.9	%

Three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 versus 2021 ~~versus 2020~~

Noninterest expense for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$43.2~~$45.4 million, an increase of ~~$4.7~~$5.9 million, or ~~12.3%~~14.9%, from the three months ended ~~September 30, 2020. Noninterest expense for the nine months ended September 30, 2021 was $124.1 million, an increase of $10.8 million, or 9.5%, from the nine months ended September 30, 2020.~~March 31, 2021.

Salaries, benefits and commissions increased ~~$2.6~~$3.5 million, or ~~10.7%~~14.0%, for the three months ended ~~September 30, 2021 and $7.2 million, or 10.4%, for the nine months ended September 30, 2021~~March 31, 2022 from the comparable ~~periods~~period in the prior year. These increases reflect our continued investment in revenue producing staff across all business lines, including the acquisition of the Paul I. Sheaffer insurance agency, and annual merit increases. Additionally, ~~variable incentive compensation expenses increased $829 thousand and $2.6 million for~~during the three ~~and nine~~ months ended ~~September 30, 2021, respectively, from~~March 31, 2022, we incurred $387 thousand of short-term incremental guaranties related to the ~~comparable periods~~hiring of new producers in our Mortgage Banking line of business. Finally, the ~~prior year, due~~three months ended March 31, 2022 was benefited by $582 thousand of incremental capitalized compensation related to ~~increased profitability.~~the origination of PPP loans.

~~Professional fees~~Data processing expenses increased ~~$853~~$517 thousand, or ~~64.6%~~17.0%, for the three months ended ~~September 30, 2021 and $2.0 million, or 52.2%, for the nine months ended September 30, 2021~~March 31, 2022 from the comparable ~~periods~~period in the prior year, primarily attributable to increased consultant fees in support of our Diversity, Equity and Inclusion program, training initiatives and treasury management product enhancements. Data processing expenses increased $412 thousand, or 14.4%, for the three months ended September 30, 2021 and $1.0 million, or 12.1%, for the nine months ended September 30, 2021 from the comparable periods in

the prior year, primarily due to continued investments in our end-to-end loan origination solution for loans below $1.0 million, customer relationship management software, internal infrastructure improvements, ~~and~~ outsourced data processing ~~solutions.~~solutions, and our digital transformation initiative.

~~Other expense~~Professional fees increased ~~$865~~$390 thousand, or ~~16.5%~~22.3%, for the three months ended ~~September 30, 2021~~March 31, 2022 from the comparable period in the prior year, primarily attributable to $658 thousand in consultant fees spent in support of our digital transformation initiative, as compared to our $276 thousand investment in support of our Diversity, Equity and Inclusion training initiatives during the three months ended March 31, 2021. Deposit insurance premiums increased $257 thousand, or 40.4%, for the three months ended March 31, 2022 from the comparable period in the prior year, attributable to an increased assessment base primarily driven by excess liquidity.

Other expense increased $993 thousand, or 19.4%, for the three months ended March 31, 2022 from the comparable period in the prior year, driven by increases in recruiting costs of $282 thousand due to ~~increases in professional liability insurance, bank shares tax expense, interchange fee expense~~increased hiring activity and travel and entertainment expenses of $265 thousand, which ~~are beginning~~have begun to normalize as the markets we operate in continue to remain open. Additionally, we incurred costs of $330 thousand as a result of a customer who was defrauded.

Tax Provision

The Corporation recognized a tax expense of ~~$5.3~~$4.9 million and ~~$5.1~~$7.8 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020~~respectively, resulting in an effective rate of ~~20.1% and 21.9%, respectively. The Corporation recognized a tax expense of $18.0 million and $4.2 million~~19.3% for ~~the nine months ended September 30, 2021 and 2020 resulting in an effective rate of 19.4% and 16.7%, respectively.~~both periods. The effective tax rates for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 were favorably impacted by eight and ~~2020 reflects~~four basis points, respectively, of discrete tax benefits resulting from equity compensation awards vesting in the ~~level of pre-tax income~~respective quarters. Additionally, the effective tax rates for the three months ended March 31, 2022 and 2021 reflected the benefits of tax-exempt income from investments in municipal securities and loans and leases. ~~Additionally, the effective income tax rate for the nine months ended September 30, 2021 was favorably impacted by discrete tax benefits and proceeds from BOLI death benefits.~~

Financial Condition

Assets

The following table presents assets at the dates indicated:


		At September 30, 2021		At December 31, 2020		Change					At March 31, 2022		At December 31, 2021		Change
(Dollars in thousands)	(Dollars in thousands)					Amount		Percent		(Dollars in thousands)					Amount		Percent
Cash and cash equivalents	Cash and cash equivalents	$	902,357	$	219,858	$	682,499	310.4	%	Cash and cash equivalents	$	773,781	$	890,150	$	(116,369)	(13.1	%)
Investment securities, net of allowance for credit losses	Investment securities, net of allowance for credit losses	393,377		373,176		20,201		5.4		Investment securities, net of allowance for credit losses	518,902		496,989		21,913		4.4
Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost	Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost	28,679		28,183		496		1.8		Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost	26,330		28,186		(1,856)		(6.6)
Loans held for sale	Loans held for sale	29,093		37,039		(7,946)		(21.5)		Loans held for sale	14,521		21,600		(7,079)		(32.8)
Loans and leases held for investment	Loans and leases held for investment	5,252,045		5,306,841		(54,796)		(1.0)		Loans and leases held for investment	5,400,786		5,310,017		90,769		1.7
Allowance for credit losses, loans and leases	Allowance for credit losses, loans and leases	(70,146)		(83,044)		12,898		15.5		Allowance for credit losses, loans and leases	(68,286)		(71,924)		3,638		(5.1)
Premises and equipment, net	Premises and equipment, net	55,354		55,636		(282)		(0.5)		Premises and equipment, net	50,429		56,882		(6,453)		(11.3)
Operating lease right-of-use assets	Operating lease right-of-use assets	31,570		34,325		(2,755)		(8.0)		Operating lease right-of-use assets	30,498		30,407		91		0.3
Goodwill and other intangibles, net	Goodwill and other intangibles, net	181,918		181,425		493		0.3		Goodwill and other intangibles, net	187,294		187,358		(64)		—
Bank owned life insurance	Bank owned life insurance	117,981		117,718		263		0.2		Bank owned life insurance	119,398		118,699		699		0.6
Accrued interest receivable and other assets	Accrued interest receivable and other assets	57,624		65,339		(7,715)		(11.8)		Accrued interest receivable and other assets	54,087		54,057		30		0.1
Total assets	Total assets	$	6,979,852	$	6,336,496	$	643,356	10.2	%	Total assets	$	7,107,740	$	7,122,421	$	(14,681)	(0.2	%)

Cash and Interest-Earning Deposits

Cash and interest-earning deposits ~~increased $682.5~~decreased $116.4 million, or ~~310.4%~~13.1%, from December 31, ~~2020,~~2021, primarily due to ~~increased~~decreased interest earning deposits at the Federal Reserve Bank of ~~$675.2~~$120.4 million ~~which stems from~~as the Corporation used excess ~~cash on hand due~~liquidity to ~~deposit~~fund securities and loan growth.

Investment Securities

Total investment securities at ~~September 30, 2021~~March 31, 2022 increased ~~$20.2~~$21.9 million, or ~~5.4%~~4.4%, from December 31, ~~2020.~~2021. Purchases of ~~$122.8~~$69.6 million, ~~increases~~primarily residential mortgage-backed securities, were partially offset by maturities and pay-downs of $22.8 million, decreases in the fair value of available-for-sale investment securities of ~~$1.4 million and a reversal of provision for credit losses of $54 thousand were partially offset by maturities and pay-downs of $81.1 million, calls of $11.1~~$20.1 million, sales of ~~$10.0~~$4.0 million, ~~and~~ net amortization of purchased premiums and discounts of ~~$2.2 million.~~$491 thousand and a provision for credit losses of $346 thousand.

Loans and Leases

Gross loans and leases held for investment ~~decreased $54.8~~increased $90.8 million, or ~~1.0%~~1.7%, from December 31, ~~2020.~~2021. Gross loans and leases held for investment, excluding PPP loans, at ~~September 30, 2021~~March 31, 2022 increased ~~$343.4~~$112.2 million or ~~7.1%~~2.1% from December 31, ~~2020.~~2021. The growth in gross loans and leases held for investment, excluding PPP loans, was primarily due to increases in ~~commercial, construction,~~ commercial real estate and residential mortgage loans.

Asset Quality

The Bank's strategy for credit risk management focuses on having well-defined credit policies and uniform underwriting criteria and providing prompt attention to potential problem loans and leases. Performance of the loan and lease portfolio is monitored on a regular basis by Bank management and lending officers.

Nonaccrual loans and leases and accruing troubled debt restructured loans are loans or leases for which it is probable that not all principal and interest payments due will be collectible in accordance with the original contractual terms. Factors considered by management in determining accrual status include payment status, borrower cash flows, collateral value and the probability of collecting scheduled principal and interest payments when due.

~~Nonperforming assets were $37.1 million at September 30, 2021 and $40.5 million at December~~At March 31, ~~2020. At September 30, 2021~~2022, nonaccrual loans and leases and accruing troubled debt restructured loans were ~~$34.6~~$30.9 million and had a related allowance for credit losses on loans and leases of ~~$15~~$954 thousand. At December 31, ~~2020,~~2021, nonaccrual loans and leases and accruing troubled debt restructured loans were ~~$31.7~~$33.3 million and had a related allowance for credit losses on loans and

leases of ~~$585~~$11 thousand. Individual reserves have been established based on current facts and management's judgements about the ultimate outcome of these credits, including the most recent known data available on any related underlying collateral and the borrower's cash flows. The amount of individual reserve needed for these credits could change in future periods subject to changes in facts and judgements related to these credits.

Net loan and lease ~~recoveries~~charge-offs for the three months ended ~~September 30, 2021~~March 31, 2022 were ~~$75~~$76 thousand compared to ~~$35~~$288 thousand for the same period in the prior year. Net loan and lease charge-offs for the nine months ended September 30, 2021 were $456 thousand compared to $4.0 million for the same period in the prior year. The nine months ended September 30, 2020 included a $2.7 million charge-off related to a commercial real estate loan.

Other real estate owned was $279 thousand ~~and $7.4 million~~ at ~~September 30, 2021~~March 31, 2022 and December 31, 2020, respectively. The decrease of $7.1 million was related to the sale of a commercial real estate property in the second quarter of 2021 which was transferred to other real estate owned in the second quarter of 2020.2021.

Table 3—Nonaccrual and Past Due Loans and Leases; Troubled Debt Restructured Loans and Lease Modifications; Other Real Estate Owned; and Related Ratios

The following table details information pertaining to the Corporation’s nonperforming assets at the dates indicated.

(Dollars in thousands) At September 30, 2021 At December 31, 2020
Nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and lease modifications*:
Commercial, financial and agricultural $ 933 $ 2,827
Real estate—commercial 28,296 22,739
Real estate—residential 5,269 5,919
Lease financings 30 207
Total nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and lease modifications* 34,528 31,692
Accruing troubled debt restructured loans and lease modifications not included in the above 51 53
Accruing loans and leases 90 days or more past due:
Commercial, financial and agricultural 2,000 50
Real estate—commercial — 945
Loans to individuals 58 185
Lease financings 146 212
Total accruing loans and leases, 90 days or more past due 2,204 1,392
Total nonperforming loans and leases 36,783 33,137
Other real estate owned 279 7,355
Total nonperforming assets $ 37,062 $ 40,492
Nonaccrual loans and leases (including nonaccrual troubled debt restructured loans and lease modifications) / loans and leases held for investment 0.66 % 0.60 %
Nonperforming loans and leases / loans and leases held for investment 0.70 % 0.62 %
Nonperforming assets / total assets 0.53 % 0.64 %
Allowance for credit losses, loans and leases $ 70,146 $ 83,044
Allowance for credit losses, loans and leases / loans and leases held for investment 1.34 % 1.56 %
Allowance for credit losses, loans and leases / nonaccrual loans and leases held for investment 203.16 % 262.03 %
Allowance for credit losses, loans and leases / nonperforming loans and leases held for investment 190.70 % 250.61 %
* Nonaccrual troubled debt restructured loans and lease modifications included in nonaccrual loans and leases in the above table $ 2,418 $ 14,069


(Dollars in thousands)	At March 31, 2022			At December 31, 2021
Nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and lease modifications*	$	30,876		$	33,210
Accruing troubled debt restructured loans and lease modifications not included in the above	51			51
Accruing loans and leases, 90 days or more past due	274			498
Total nonperforming loans and leases	$	31,201		$	33,759
Other real estate owned	279			279
Total nonperforming assets	$	31,480		$	34,038

*Nonaccrual troubled debt restructured loans and lease modifications in nonaccrual loans and leases in the above table	$	830		$	758

Loans and leases held for investment	$	5,400,786		$	5,310,017
Allowance for credit losses, loans and leases	68,286			71,924

Allowance for credit losses, loans and leases / loans and leases held for investment	1.26		%	1.35		%
Nonaccrual loans and leases (including nonaccrual troubled debt restructured loans and lease modifications) / loans and leases held for investment	0.57		%	0.63		%
Allowance for credit losses, loans and leases / nonaccrual loans and leases	221.16		%	216.57		%

The following table provides additional information on the Corporation’s nonaccrual loans held for investment:


(Dollars in thousands)	(Dollars in thousands)	At September 30, 2021		At December 31, 2020		(Dollars in thousands)	At March 31, 2022		At December 31, 2021
Total nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and lease modifications	Total nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and lease modifications	$	34,528	$	31,692	Total nonaccrual loans and leases, including nonaccrual troubled debt restructured loans and lease modifications	$	30,876	$	33,210
Nonaccrual loans and leases with partial charge-offs	Nonaccrual loans and leases with partial charge-offs	3,118		4,227		Nonaccrual loans and leases with partial charge-offs	1,417		1,429
Life-to-date partial charge-offs on nonaccrual loans and leases	Life-to-date partial charge-offs on nonaccrual loans and leases	2,269		2,377		Life-to-date partial charge-offs on nonaccrual loans and leases	534		536
Specific reserves on individually analyzed loans	Specific reserves on individually analyzed loans	15		585		Specific reserves on individually analyzed loans	954		11

The Corporation modified certain loans and leases via principal and/or interest deferrals in accordance with Section 4013 of the CARES Act, the Consolidated Appropriations Act, 2021 and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus and have not categorized these modifications as troubled debt restructurings. As of ~~September 30,~~March 31, 2022, there were four loan modifications outstanding with principal balances totaling $2.7 million, which represented approximately 0.1% of the loan portfolio, excluding PPP loans. As of December 31, 2021, there were ~~approximately 14~~nine loan and lease modifications outstanding with principal balances totaling ~~$18.1 million. As~~$6.2 million, which represented approximately 0.1% of ~~December 31, 2020, there were approximately 72~~the loan ~~modifications outstanding with principal balances totaling $68.0 million.~~portfolio, excluding PPP loans. See Table 4 below for a breakdown of these loans by industry.

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Table 4—Loan Concentration

The following table provides summarized detail related to outstanding commercial loan balances, excluding PPP loans, segmented by industry description, and certain loan modifications segmented by industry description for commercial loans and segmented by loan category for other loan types as of ~~September 30, 2021:~~March 31, 2022:


(Dollars in thousands)	(Dollars in thousands)	As of September 30, 2021								(Dollars in thousands)	As of March 31, 2022
Industry Description	Industry Description	Total Outstanding Balance (excl PPP)		% of Commercial Loan Portfolio		$ Balance of Modified Loans (1)		Modified Loans as a % of Portfolio (excl PPP) (1)		Industry Description	Total Outstanding Balance (excl PPP)		% of Commercial Loan Portfolio		$ Balance of Modified Loans (1)		Modified Loans as a % of Portfolio (excl PPP) (1)
CRE - Retail	CRE - Retail	$	365,379	8.6	%	$	—	—	%	CRE - Retail	$	359,125	8.1	%	$	—	—	%
Animal Production	Animal Production	291,723		6.8		—		—		Animal Production	310,747		7.0		—		—
CRE - Multi-family										CRE - Multi-family	244,480		5.5		—		—
CRE - 1-4 Family Residential Investment	CRE - 1-4 Family Residential Investment	255,116		6.0		—		—		CRE - 1-4 Family Residential Investment	234,653		5.3		—		—
CRE - Office	CRE - Office	240,011		5.6		—		—		CRE - Office	231,125		5.2		—		—
CRE - Multi-family		206,667		4.8		—		—
Hotels & Motels (Accommodation)										Hotels & Motels (Accommodation)	186,497		4.2		1,437		0.8
Nursing and Residential Care Facilities										Nursing and Residential Care Facilities	168,896		3.8		—		—
CRE - Industrial / Warehouse	CRE - Industrial / Warehouse	180,421		4.2		—		—		CRE - Industrial / Warehouse	160,318		3.6		—		—
Nursing and Residential Care Facilities		171,482		4.0		—		—
Hotels & Motels (Accommodation)		170,042		4.0		10,613		6.2 %
Education	Education	156,395		3.7		—		—		Education	151,238		3.4		—		—
Specialty Trade Contractors	Specialty Trade Contractors	122,222		2.9		—		—		Specialty Trade Contractors	133,455		3.0		—		—
CRE - Mixed-Use - Residential	CRE - Mixed-Use - Residential	120,873		2.8		—		—		CRE - Mixed-Use - Residential	116,479		2.6		—		—
CRE - Medical Office	CRE - Medical Office	103,553		2.4		—		—		CRE - Medical Office	108,836		2.4		—		—
Real Estate Lenders, Secondary Market Financing		98,983		2.3		—		—
Homebuilding (tract developers, remodelers)	Homebuilding (tract developers, remodelers)	92,782		2.2		—		—		Homebuilding (tract developers, remodelers)	101,112		2.3		—		—
Merchant Wholesalers, Durable Goods	Merchant Wholesalers, Durable Goods	87,849		2.1		—		—		Merchant Wholesalers, Durable Goods	93,073		2.1		—		—
Motor Vehicle and Parts Dealers										Motor Vehicle and Parts Dealers	89,723		2.0		—		—
Crop Production	Crop Production	75,439		1.8		—		—		Crop Production	85,886		1.9		—		—
Private Equity & Special Purpose Entities		74,026		1.7		—		—
Rental and Leasing Services		70,499		1.7		—		—
Motor Vehicle and Parts Dealers		66,880		1.6		—		—
Food Manufacturing	Food Manufacturing	65,857		1.5		—		—		Food Manufacturing	78,597		1.8		—		—
Wood Product Manufacturing	Wood Product Manufacturing	64,403		1.5		—		—		Wood Product Manufacturing	77,165		1.7		—		—
Fabricated Metal Product Manufacturing		60,991		1.4		—		—
Merchant Wholesalers, Nondurable Goods		60,276		1.4		—		—
Rental and Leasing Services										Rental and Leasing Services	72,878		1.6		—		—
Food Services and Drinking Places	Food Services and Drinking Places	57,794		1.3		—		—		Food Services and Drinking Places	71,327		1.6		473		0.7
Administrative and Support Services	Administrative and Support Services	53,430		1.3		104		0.2		Administrative and Support Services	69,578		1.6		—		—
Miniwarehouse/Self-Storage		52,815		1.2		—		—
Merchant Wholesalers, Nondurable Goods										Merchant Wholesalers, Nondurable Goods	64,564		1.5		—		—
Personal and Laundry Services										Personal and Laundry Services	61,402		1.4		—		—
Fabricated Metal Product Manufacturing										Fabricated Metal Product Manufacturing	60,398		1.4		—		—
Religious Organizations, Advocacy Groups										Religious Organizations, Advocacy Groups	56,869		1.3		—		—
Miniwarehouse / Self-Storage										Miniwarehouse / Self-Storage	54,382		1.2		—		—
Repair and Maintenance										Repair and Maintenance	53,267		1.2		—		—
Industries with >$50 million in outstandings	Industries with >$50 million in outstandings	$	3,365,908	78.8	%	$	10,717	0.3	%	Industries with >$50 million in outstandings	$	3,496,070	78.6	%	$	1,910	0.1	%
Industries with <$50 million in outstandings	Industries with <$50 million in outstandings	$	903,880	21.2	%	$	6,878	0.8	%	Industries with <$50 million in outstandings	$	950,721	21.4	%	$	790	0.1	%
Total Commercial Loans	Total Commercial Loans	$	4,269,788	100.0	%	$	17,595	0.4	%	Total Commercial Loans	$	4,446,791	100.0	%	$	2,700	0.1	%

Consumer Loans and Lease Financings	Consumer Loans and Lease Financings	Total Outstanding Balance				$ Balance of Modified Loans (1)		Modified Loans as a % of Portfolio (excl PPP) (1)		Consumer Loans and Lease Financings	Total Outstanding Balance				$ Balance of Modified Loans (1)		Modified Loans as a % of Portfolio (excl PPP) (1)
Real Estate-Residential Secured for Personal Purpose	Real Estate-Residential Secured for Personal Purpose	$	535,705			$	337	0.1	%	Real Estate-Residential Secured for Personal Purpose	$	568,735			$	—	—	%
Real Estate-Home Equity Secured for Personal Purpose	Real Estate-Home Equity Secured for Personal Purpose	159,029				—		—		Real Estate-Home Equity Secured for Personal Purpose	160,134				—		—
Loans to Individuals	Loans to Individuals	26,458				15		0.1		Loans to Individuals	26,249				—		—
Lease Financings	Lease Financings	175,464				107		0.1		Lease Financings	188,579				—		—
Total Consumer Loans and Lease Financings	Total Consumer Loans and Lease Financings	$	896,656			$	459	0.1	%	Total Consumer Loans and Lease Financings	$	943,697			$	—	—	%

Total	Total	$	5,166,444			$	18,054	0.3	%	Total	$	5,390,488			$	2,700	0.1	%

(1) Loan modifications referenced above were made in accordance with Section 4013 of the CARES Act, the Consolidated Appropriations Act, 2021 and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus and therefore were not classified as TDRs as of ~~September 30, 2021.~~March 31, 2022.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets have been recorded on the books of the Corporation in connection with acquisitions. The Corporation has core deposit and customer-related intangibles and servicing rights, which are not deemed to have an indefinite life and therefore will continue to be amortized over their useful life using the present value of projected cash flows. The amortization of intangible assets was ~~$892~~$784 thousand and ~~$1.1~~$1.0 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively. The amortization of intangible assets was $2.9 million and $3.3 million for the nine months ended September 30, 2021 and 2020,~~ respectively. See Note 5 to the Condensed Unaudited Consolidated Financial Statements, "Goodwill and Other Intangible Assets," for a summary of intangible assets at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

6051

The Corporation also has goodwill with a net carrying value of ~~$172.6~~$175.5 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, which is deemed to be an indefinite intangible asset and is not amortized. The Corporation completes a goodwill impairment analysis on an annual basis, or more often if events and circumstances indicate that there may be impairment. The Corporation also completes an impairment test for other identifiable intangible assets on an annual basis or more often if events and circumstances indicate there may be impairment. There was no impairment of goodwill or identifiable intangibles during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021. There can be no assurance that future impairment assessments or tests will not result in a charge to earnings.

Liabilities

The following table presents liabilities at the dates indicated:


(Dollars in thousands)	(Dollars in thousands)	At September 30, 2021		At December 31, 2020		Change				(Dollars in thousands)	At March 31, 2022		At December 31, 2021		Change
						Amount		Percent							Amount		Percent
Deposits	Deposits	$	5,938,154	$	5,242,715	$	695,439	13.3	%	Deposits	$	6,047,932	$	6,055,124	$	(7,192)	(0.1	%)
Short-term borrowings	Short-term borrowings	14,101		17,906		(3,805)		(21.2)		Short-term borrowings	18,976		20,106		(1,130)		(5.6)
Long-term debt	Long-term debt	95,000		110,000		(15,000)		(13.6)		Long-term debt	95,000		95,000		—		—
Subordinated notes	Subordinated notes	98,797		183,515		(84,718)		(46.2)		Subordinated notes	98,952		98,874		78		0.1
Operating lease liabilities	Operating lease liabilities	34,641		37,690		(3,049)		(8.1)		Operating lease liabilities	33,566		33,453		113		0.3
Accrued interest payable and other liabilities	Accrued interest payable and other liabilities	43,136		52,198		(9,062)		(17.4)		Accrued interest payable and other liabilities	39,459		46,070		(6,611)		(14.3)
Total liabilities	Total liabilities	$	6,223,829	$	5,644,024	$	579,805	10.3	%	Total liabilities	$	6,333,885	$	6,348,627	$	(14,742)	(0.2	%)

Deposits

Total deposits ~~increased $695.4~~decreased $7.2 million, or ~~13.3%~~0.1%, from December 31, ~~2020,~~2021, primarily due to ~~increases~~decreases in ~~commercial,~~ consumer and public funds deposits offset by ~~a decrease~~an increase in ~~brokered~~commercial deposits.

Borrowings

Total borrowings decreased ~~$103.5~~$1.1 million, or ~~33.2%~~0.5%, from December 31, ~~2020,~~2021, due to ~~decreases in short-term borrowings of $3.8 million,~~ a decrease in ~~long-term debt of $15.0~~short-term customer repurchase agreements.

Accrued Interest Payable and Other Liabilities

Other liabilities decreased $6.6 million, ~~primarily~~or 14.3%, from December 31, 2021, due to ~~maturities~~the payment in the first quarter of ~~FHLB advances, and a decrease in subordinated notes~~$5.9 million of ~~$84.7 million, primarily due to a $85.0 million redemption of the~~annual incentive payments that were previously ~~issued 2016 and 2015 subordinated notes during the year.~~accrued.

Shareholders’ Equity

The following table presents total shareholders’ equity at the dates indicated:


(Dollars in thousands)	(Dollars in thousands)	At September 30, 2021		At December 31, 2020		Change				(Dollars in thousands)	At March 31, 2022		At December 31, 2021		Change
						Amount		Percent							Amount		Percent
Common stock	Common stock	$	157,784	$	157,784	$	—	—	%	Common stock	$	157,784	$	157,784	$	—	—	%
Additional paid-in capital	Additional paid-in capital	298,033		296,186		1,847		0.6		Additional paid-in capital	297,945		299,181		(1,236)		(0.4)
Retained earnings	Retained earnings	363,607		306,899		56,708		18.5		Retained earnings	389,332		375,124		14,208		3.8
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(20,073)		(22,144)		2,071		(9.4)		Accumulated other comprehensive loss	(31,909)		(16,353)		(15,556)		95.1
Treasury stock	Treasury stock	(43,328)		(46,253)		2,925		(6.3)		Treasury stock	(39,297)		(41,942)		2,645		(6.3)
Total shareholders’ equity	Total shareholders’ equity	$	756,023	$	692,472	$	63,551	9.2	%	Total shareholders’ equity	$	773,855	$	773,794	$	61	—	%

~~Total shareholders' equity increased $63.6 million, or 9.2%, from December 31, 2020.~~ Retained earnings at ~~September 30, 2021~~March 31, 2022 increased by ~~$56.7~~$14.2 million primarily due to net income of ~~$74.4~~$20.3 million offset by ~~$17.6~~$5.9 million of cash dividends paid for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. Treasury stock decreased ~~$2.9~~$2.6 million from December 31, ~~2020~~2021 primarily due to stock issued under the dividend reinvestment and employee stock purchase plans and stock-based incentive plan activity. Accumulated other comprehensive loss ~~decreased~~increased by ~~$2.1~~$15.6 million, primarily attributable to ~~increases~~decreases in the fair value of available-for-sale investment securities of ~~$1.1~~$15.8 million, net of tax.

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Discussion of Segments

The Corporation has three operating segments: Banking, Wealth Management and Insurance. Detailed segment information appears in Note 13, "Segment Reporting" included in the Notes to the Condensed Unaudited Consolidated Financial Statements under Item 1 of this Quarterly Report on Form 10-Q.

The Banking segment reported pre-tax income of ~~$25.7~~$22.8 million and ~~$22.7~~$40.0 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and pre-tax income of $91.4 million and $22.2 million for the nine months ended September 30, 2021 and 2020,~~ respectively. See the section of this MD&A under the headings "Results of Operations" and "Financial Condition" for a discussion of key items impacting the Banking Segment.

The Wealth Management segment reported pre-tax income of ~~$1.9~~$2.4 million and ~~$2.0~~$2.5 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively and $6.5 million and $5.4 million for the nine months ended September 30, 2021 and 2020,~~ respectively. Noninterest income was ~~$7.0~~$7.3 million and ~~$6.0~~$6.8 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, respectively. The decrease in pre-tax income for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily due to increases in commission expense driven by increased production and salary expense as we continue to invest in revenue producing positions. The increase in noninterest income for the three months ended March 31, 2022 compared to the three months ended March 31, 2022 was primarily due to appreciation of assets under management and supervision, as a majority of investment advisory fees are billed based on the prior quarter-end assets under management and supervision balance. Assets under management and supervision were $4.6 billion as of March 31, 2022, $4.9 billion as of December 31, 2021, $4.2 billion as of March 31, 2021 and ~~2020, respectively, and $20.5~~$4.1 billion as of December 31, 2020.

The Insurance segment reported pre-tax income of $1.7 million and ~~$17.7~~$1.6 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, respectively. Noninterest income was $5.8 million and ~~2020,~~$5.1 million for the three months ended March 31, 2022 and 2021, respectively. The increase in pre-tax income and noninterest income for the ~~nine~~three months ended ~~September 30, 2021 compared to the nine months ended September 30, 2020~~March 31, 2022 was primarily due to ~~increased assets under management and supervision driven by favorable market conditions and new customer relationships. Assets under management and supervision were $4.6 billion as~~incremental revenue attributable to the insurance agency the Corporation acquired in the fourth quarter of ~~September 30, 2021, $4.5 billion as of June 30, 2021, $4.1 billion as of December 31, 2020, $3.8 billion as of September 30, 2020 and $3.6 billion as of June 30, 2020.~~

The Insurance segment reported pre-tax income of $597 thousand and $822 thousand for the three months ended September 30, 2021 and 2020, respectively, and $2.9 million and $3.5 million for the nine months ended September 30, 2021 and 2020, respectively. Noninterest income was $4.0 million and $3.9 million for the three months ended September 30, 2021 and 2020, respectively, and $13.1 million and $13.0 million for the nine months ended September 30, 2021 and 2020. The decrease in pre-tax income for the three and nine months ended September 30, 2021 was primarily due to increases in salary expense as we continue to invest in revenue producing positions.2021.

Capital Adequacy

Quantitative measures established by regulation to ensure capital adequacy require the Corporation and the Bank to maintain minimum capital amounts and ratios as set forth in the following table. To comply with the regulatory definition of well capitalized, a depository institution must maintain minimum capital amounts and ratios as set forth in the following table.

Under current rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must hold a capital conservation buffer comprised of common equity Tier 1 capital above its minimum risk-based capital requirements in an amount greater than 2.50% of total risk-weighted assets. The Corporation's and Bank's intent is to maintain capital levels in excess of the capital conservation buffer, which requires Tier 1 Capital to Risk Weighted Assets to exceed 8.50% and Total Capital to Risk Weighted Assets to exceed 10.50%. The Corporation and the Bank were in compliance with these requirements at ~~September 30, 2021.~~March 31, 2022.

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Table 5—Regulatory Capital

The Corporation's and Bank's actual and required capital ratios as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 under regulatory capital rules were as follows.


		Actual				For Capital Adequacy Purposes				To Be Well-Capitalized Under Prompt Corrective Action Provisions					Actual				For Capital Adequacy Purposes				To Be Well-Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
At September 30, 2021
At March 31, 2022														At March 31, 2022
Total Capital (to Risk-Weighted Assets):	Total Capital (to Risk-Weighted Assets):													Total Capital (to Risk-Weighted Assets):
Corporation	Corporation	$	775,691	13.87	%	$	447,422	8.00	%	$	559,278	10.00	%	Corporation	$	799,147	13.73	%	$	465,560	8.00	%	$	581,951	10.00	%
Bank	Bank	654,784		11.75		445,683		8.00		557,104		10.00		Bank	680,330		11.72		464,357		8.00		580,447		10.00
Tier 1 Capital (to Risk-Weighted Assets):	Tier 1 Capital (to Risk-Weighted Assets):													Tier 1 Capital (to Risk-Weighted Assets):
Corporation	Corporation	623,607		11.15		335,567		6.00		447,422		8.00		Corporation	644,487		11.07		349,170		6.00		465,560		8.00
Bank	Bank	601,497		10.80		334,262		6.00		445,683		8.00		Bank	624,622		10.76		348,268		6.00		464,357		8.00
Tier 1 Common Capital (to Risk-Weighted Assets):	Tier 1 Common Capital (to Risk-Weighted Assets):													Tier 1 Common Capital (to Risk-Weighted Assets):
Corporation	Corporation	623,607		11.15		251,675		4.50		363,531		6.50		Corporation	644,487		11.07		261,878		4.50		378,268		6.50
Bank	Bank	601,497		10.80		250,697		4.50		362,117		6.50		Bank	624,622		10.76		261,201		4.50		377,290		6.50
Tier 1 Capital (to Average Assets):	Tier 1 Capital (to Average Assets):													Tier 1 Capital (to Average Assets):
Corporation	Corporation	623,607		9.53		261,801		4.00		327,251		5.00		Corporation	644,487		9.35		275,811		4.00		344,764		5.00
Bank	Bank	601,497		9.22		260,951		4.00		326,189		5.00		Bank	624,622		9.09		274,997		4.00		343,746		5.00
At December 31, 2020
At December 31, 2021														At December 31, 2021
Total Capital (to Risk-Weighted Assets):	Total Capital (to Risk-Weighted Assets):													Total Capital (to Risk-Weighted Assets):
Corporation	Corporation	$	801,368	15.31	%	$	418,811	8.00	%	$	523,513	10.00	%	Corporation	$	786,300	13.77	%	$	456,902	8.00	%	$	571,128	10.00	%
Bank	Bank	632,183		12.12		417,416		8.00		521,769		10.00		Bank	660,436		11.61		455,178		8.00		568,973		10.00
Tier 1 Capital (to Risk-Weighted Assets):	Tier 1 Capital (to Risk-Weighted Assets):													Tier 1 Capital (to Risk-Weighted Assets):
Corporation	Corporation	563,491		10.76		314,108		6.00		418,811		8.00		Corporation	633,023		11.08		342,677		6.00		456,902		8.00
Bank	Bank	569,821		10.92		313,062		6.00		417,416		8.00		Bank	606,033		10.65		341,384		6.00		455,178		8.00
Tier 1 Common Capital (to Risk-Weighted Assets):	Tier 1 Common Capital (to Risk-Weighted Assets):													Tier 1 Common Capital (to Risk-Weighted Assets):
Corporation	Corporation	563,491		10.76		235,581		4.50		340,284		6.50		Corporation	633,023		11.08		257,008		4.50		371,233		6.50
Bank	Bank	569,821		10.92		234,796		4.50		339,150		6.50		Bank	606,033		10.65		256,038		4.50		369,832		6.50
Tier 1 Capital (to Average Assets):	Tier 1 Capital (to Average Assets):													Tier 1 Capital (to Average Assets):
Corporation	Corporation	563,491		9.08		248,224		4.00		310,280		5.00		Corporation	633,023		9.13		277,297		4.00		346,622		5.00
Bank	Bank	569,821		9.21		247,494		4.00		309,368		5.00		Bank	606,033		8.77		276,471		4.00		345,588		5.00

At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, management believes that the Corporation and the Bank continued to meet all capital adequacy requirements to which they are subject. At ~~September 30, 2021,~~March 31, 2022, the Bank was categorized as "well capitalized" under the regulatory framework for prompt corrective action. There are no conditions or events since that management believes have changed the Bank’s category.

In December 2018, the Federal Reserve announced that a banking organization that experiences a reduction in retained earnings due to the CECL adoption as of the beginning of the fiscal year in which CECL was adopted may elect to phase in the regulatory capital impact of adopting CECL. Transitional amounts are calculated for the following items: retained earnings, temporary difference deferred tax assets and credit loss allowances eligible for inclusion in regulatory capital. When calculating regulatory capital ratios, 25% of the transitional amounts are phased in during the first year. An additional 25% of the transitional amounts are phased in over each of the next two years and at the beginning of the fourth year, the day-one effects of CECL are completely reflected in regulatory capital.

Additionally, in March 2020, the Office of the Comptroller of the Currency, the U.S. Department of the Treasury, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation announced the 2020 CECL interim final rule (IFR) designed to allow eligible firms to better focus on supporting lending to creditworthy households and businesses in light of recent strains on the U.S. economy as a result of the coronavirus (COVID-19). The 2020 CECL IFR allows corporations that ~~adopted~~adopt CECL before December 31, 2020 to defer 100 percent of the day-one transitional amounts

6354

described above through December 31, 2021 for regulatory capital purposes. Additionally, the 2020 CECL IFR allows electing firms to defer through December 31, 2021 the approximate portion of the post day-one allowance attributable to CECL relative to the incurred loss methodology. This is calculated by applying a 25% scaling factor to the CECL provision.

The Corporation adopted the transition guidance and the 2020 CECL IFR relief and applied these effects to regulatory capital.

Asset/Liability Management

The primary functions of Asset/Liability Management are to assure adequate earnings, capital and liquidity while maintaining an appropriate balance between interest-earning assets and interest-bearing liabilities. Management's objective with regard to interest rate risk is to understand the Corporation's sensitivity to changes in interest rates and develop and implement strategies to minimize volatility while maximizing net interest income.

The Corporation uses gap analysis and earnings at risk simulation modeling to quantify exposure to interest rate risk. The Corporation uses the gap analysis to identify and monitor long-term rate exposure and uses a simulation model to measure short-term rate exposure. The Corporation runs various earnings simulation scenarios to quantify the impact of declining or rising interest rates on net interest income over a one-year and two-year horizon. The simulation uses expected cash flows and repricing characteristics for all financial instruments at a point in time and incorporates company-developed, market-based assumptions regarding growth, pricing, and optionality such as prepayment speeds. As interest rates increase, fixed-rate assets ~~that banks hold~~ tend to decrease in value; conversely, as interest rates decline, fixed-rate assets ~~that banks hold~~ tend to increase in value.

Liquidity

The Corporation, in its role as a financial intermediary, is exposed to certain liquidity risks. Liquidity refers to the Corporation’s ability to ensure that sufficient cash flows and liquid assets are available to satisfy demand for loans, deposit withdrawals, repayment of borrowings, ~~and~~ certificates of deposit at maturity, operating ~~expense,~~expenses and capital expenditures. The Corporation manages liquidity risk by measuring and monitoring liquidity sources and estimated funding needs on a daily basis. The Corporation has a contingency funding plan in place to address liquidity needs in the event of an institution-specific or a systemic financial crisis.

Sources of Funds

Core deposits continue to be the largest significant funding source for the Corporation. These deposits are primarily generated from individuals, businesses, municipalities and non-profit customers located in our primary service areas. The Corporation faces increased competition for these deposits from a large array of financial market participants, including banks, credit unions, savings institutions, mutual funds, security dealers and others.

As part of its diversified funding strategy, the Corporation also utilizes a mix of short-term and long-term wholesale funding providers. Wholesale funding includes federal funds purchases from correspondent banks, secured borrowing lines from the Federal Home Loan Bank of Pittsburgh, the Federal Reserve Bank of Philadelphia and, at times, brokered deposits and other similar sources.

Cash Requirements

The Corporation has cash requirements for various financial obligations, including contractual obligations and commitments that require cash payments. The most significant contractual obligation, in both the under and over one-year time period, is for the Bank to repay certificates of deposit and long-term borrowings. The Bank anticipates meeting these obligations by utilizing on-balance sheet liquidity and continuing to provide convenient depository and cash management services through its financial center network, thereby replacing these contractual obligations with similar fund sources at rates that are competitive in our market. The Bank will also use borrowings and brokered deposits to meet its obligations.

Commitments to extend credit are the Bank’s most significant commitment in both the under and over one-year time periods. These commitments do not necessarily represent future cash requirements in that these commitments often expire without being drawn upon.

6455

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, refer to Note 1 to the Condensed Consolidated Financial Statements, "Summary of Significant Accounting Policies."

~~Recent Regulatory and Legislative Developments~~

~~Coronavirus Response and Relief Supplemental Appropriations Act, 2021~~

On December 27, 2020, the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ("CRRSA Act") was signed into law, which contains provisions that could directly impact financial institutions including: (1) extending until January 1, 2022 when insured depository institutions and depository institution holding companies have to comply with the current expected credit losses (CECL) accounting standard; and (2) extending until January 1, 2022 the authority granted to banks under the CARES Act to elect to temporarily suspend the requirements under U.S. GAAP applicable to troubled debt restructurings for loan modifications related to the COVID-19 pandemic for any loan that was not more than 30 days past due as of December 31, 2019. The CRRSA Act directs financial regulators to support community development financial institutions and minority depository institutions and directs Congress to re-appropriate $429 billion in unobligated CARES Act funds. The PPP, which was originally established under the CARES Act, was also extended under the CRRSA Act.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

No material changes in the Corporation’s market risk occurred during the current period. A detailed discussion of market risk is provided in the Corporation's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management is responsible for the disclosure controls and procedures of the Corporation. Disclosure controls and procedures are controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods required by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be so disclosed by an issuer is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Corporation’s management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial and Accounting Officer), of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures. Based on that evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of ~~September 30, 2021.~~March 31, 2022.

Changes in Internal Control over Financial Reporting

There were no changes in the Corporation's internal control over financial reporting (as defined in Rule 13a-15(f)) during the quarter ended ~~September 30, 2021~~March 31, 2022 that materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

There have been no material changes in risk factors applicable to the Corporation from those disclosed in "Risk Factors" in Item 1A of the Corporation's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information on repurchases by the Corporation of its common stock under the Corporation's Board approved program.


ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
~~July~~January 1 – 31, ~~2021~~2022	—	$	—	—	679,174
~~August~~February 1 – ~~31, 2021~~28, 2022	—	—		—	679,174
~~September~~March 1 – ~~30, 2021~~31, 2022	—	—		—	679,174
Total	—	$	—	—

1.On May 27, 2015, the Corporation's Board of Directors approved the repurchase of 1,000,000 shares, or approximately 5% of the Corporation's common stock outstanding as of May 27, 2015. The stock repurchase plan does not include normal treasury activity such as purchases to fund the dividend reinvestment, employee stock purchase and equity compensation plans. The program has no scheduled expiration date and the Board of Directors has the right to suspend or discontinue the program at any time.

In addition to the repurchases disclosed above, participants in the Corporation's stock-based incentive plans may have shares withheld to cover income taxes upon the vesting of restricted stock awards and may use a stock swap to exercise stock options. Shares withheld to cover income taxes upon the vesting of restricted stock awards and stock swaps to exercise stock options are repurchased pursuant to the terms of the applicable plan and not under the Corporation's share repurchase program. Shares repurchased pursuant to these plans during the three months ended ~~September 30, 2021~~March 31, 2022 were as follows:


Period	Total Number of Shares Purchased	Average Price Paid per Share
~~July~~January 1 – 31, ~~2021~~2022	—	$	—
~~August~~February 1 – ~~31, 2021~~28, 2022	—	—
~~September~~March 1 – ~~30, 2021~~31, 2022	—	—
Total	—	$	—

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

6657

Item 6. Exhibits


a.	Exhibits

	Exhibit 3.1	Amended and Restated Articles of Incorporation are incorporated by reference to Exhibit 3.1 of Form 10-K, filed with the SEC on February 28, 2019.

	Exhibit 3.2	Amended By-Laws are incorporated by reference to Exhibit 3.2 of Form 8 -K, filed with the SEC on ~~January~~April 2 97 , 20 212 2 .

	Exhibit 31.1	Certification of Jeffrey M. Schweitzer, President and Chief Executive Officer of the Corporation, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.

	Exhibit 31.2	Certification of Brian J. Richardson, Senior Executive Vice President and Chief Financial Officer of the Corporation, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.

	Exhibit 32.1	Certification of Jeffrey M. Schweitzer, President and Chief Executive Officer of the Corporation, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.

	Exhibit 32.2	Certification of Brian J. Richardson, Senior Executive Vice President and Chief Financial Officer of the Corporation, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.

	Exhibit 101	The following financial statements from the Corporation's Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2021,~~March 31, 2022, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Changes in Shareholders' Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Unaudited Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

	Exhibit 104	The cover page from the Corporation's Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2021,~~March 31, 2022, formatted in Inline XBRL.

6758

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.


			Univest Financial Corporation
			(Registrant)

Date: ~~November 2, 2021~~May 3, 2022			/s/ Jeffrey M. Schweitzer
			Jeffrey M. Schweitzer President and Chief Executive Officer (Principal Executive Officer)

Date: ~~November 2, 2021~~May 3, 2022			/s/ Brian J. Richardson
			Brian J. Richardson Senior Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

6859


	Amortization Period Extension
(Dollars in thousands)		No. of Loans	Amount
Three Months Ended September 30, 2021
Accruing Troubled Debt Restructured Loans:




Total		—	$	—
Nonaccrual Troubled Debt Restructured Loans:

Real estate—commercial real estate		3	$	198

Total		3	$	198
Three Months Ended September 30, 2020
Accruing Troubled Debt Restructured Loans:





Total		—	$	—
Nonaccrual Troubled Debt Restructured Loans:



Real estate—residential secured for personal purpose		1	$	544
Total		1	$	544
Nine Months Ended September 30, 2021
Accruing Troubled Debt Restructured Loans:




Total		—	$	—
Nonaccrual Troubled Debt Restructured Loans:

Real estate—commercial real estate		3	$	198


Total		3	$	198
Nine Months Ended September 30, 2020
Accruing Troubled Debt Restructured Loans:





Total		—	$	—
Nonaccrual Troubled Debt Restructured Loans:
Commercial, financial and agricultural		1	$	619


Real estate—residential secured for personal purpose		1	544
Total		2	$	1,163


(Dollars in thousands, except per share data)	Nonvested Stock Options	Weighted Average Grant Date Fair Value
Nonvested stock options at December 31, 2020	49,771	$	6.46

Vested	(49,771)	6.46

Nonvested stock options at September 30, 2021	—	—