10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2021.

OR

☐ 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 0-14703

NBT BANCORP INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	16-1268674
(State of Incorporation)	(I.R.S. Employer Identification No.)

52 South Broad Street, Norwich, New York 13815

(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (607) 337-2265

None

(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(s)	Name of exchange on which registered
Common Stock, par value $0.01 per share	NBTB	The NASDAQ Stock Market LLC

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 (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒  No ☐

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

Large accelerated filer ☒ 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 ☒

As of October 29, 2021, there were 43,349,877 shares outstanding of the Registrant’s Common Stock, $0.01 par value per share.

NBT BANCORP INC.

FORM 10-Q - Quarter Ended September 30, 2021

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION

Item 1	Financial Statements
	Consolidated Balance Sheets at September 30, 2021 and December 31, 2020	1
	Consolidated Statements of Income for the three and nine month periods ended September 30, 2021 and 2020	2
	Consolidated Statements of Comprehensive Income for the three and nine month periods ended September 30, 2021 and 2020	3
	Consolidated Statements of Stockholders’ Equity for the three and nine month periods ended September 30, 2021 and 2020	4
	Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2021 and 2020	5
	Notes to Unaudited Interim Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3	Quantitative and Qualitative Disclosures about Market Risk	44
Item 4	Controls and Procedures	44
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	45
Item 1A	Risk Factors	45
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3	Defaults Upon Senior Securities	46
Item 4	Mine Safety Disclosures	46
Item 5	Other Information	46
Item 6	Exhibits	47
SIGNATURES		48

Item 1 – FINANCIAL STATEMENTS

NBT Bancorp Inc. and Subsidiaries

Consolidated Balance Sheets (unaudited)

	September 30,			December 31,
	2021			2020
(In thousands, except share and per share data)
Assets
Cash and due from banks	$	215,032		$	159,995
Short-term interest-bearing accounts		1,131,074			512,686
Equity securities, at fair value		33,013			30,737
Securities available for sale, at fair value		1,576,030			1,348,698
Securities held to maturity (fair value $689,129 and $636,827, respectively)		683,103			616,560
Federal Reserve and Federal Home Loan Bank stock		25,161			27,353
Loans held for sale		1,024			1,119
Loans		7,566,442			7,498,885
Less allowance for loan losses		93,000			110,000
Net loans	$	7,473,442		$	7,388,885
Premises and equipment, net		71,928			74,206
Goodwill		280,541			280,541
Intangible assets, net		9,578			11,735
Bank owned life insurance		227,451			186,434
Other assets		267,034			293,957
Total assets	$	11,994,411		$	10,932,906
Liabilities
Demand (noninterest bearing)	$	3,748,162		$	3,241,123
Savings, NOW and money market		5,894,743			5,207,090
Time		552,273			633,479
Total deposits	$	10,195,178		$	9,081,692
Short-term borrowings		99,715			168,386
Long-term debt		14,020			39,097
Subordinated debt, net		98,380			98,052
Junior subordinated debt		101,196			101,196
Other liabilities		244,465			256,865
Total liabilities	$	10,752,954		$	9,745,288
Stockholders’ equity
Preferred stock, $0.01 par value. Authorized 2,500,000 shares at September 30, 2021 and December 31, 2020	$	-		$	-
Common stock, $0.01 par value. Authorized 100,000,000 shares at September 30, 2021 and December 31, 2020; issued 49,651,493 at September 30, 2021 and December 31, 2020		497			497
Additional paid-in-capital		577,222			578,082
Retained earnings		831,017			749,056
Accumulated other comprehensive (loss) income		(14,492	)		417
Common stock in treasury, at cost, 6,313,800 and 6,022,399 shares at September 30, 2021 and December 31, 2020, respectively		(152,787	)		(140,434	)
Total stockholders’ equity	$	1,241,457		$	1,187,618
Total liabilities and stockholders’ equity	$	11,994,411		$	10,932,906

See accompanying notes to unaudited interim consolidated financial statements.

1

NBT Bancorp Inc. and Subsidiaries

Consolidated Statements of Income (unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021			2020
(In thousands, except per share data)
Interest, fee and dividend income
Interest and fees on loans	$	72,817		$	74,998	$	222,705		$	230,996
Securities available for sale		5,898			5,603		17,204			16,956
Securities held to maturity		2,976			3,734		9,454			11,751
Other		524			659		1,206			2,138
Total interest, fee and dividend income	$	82,215		$	84,994	$	250,569		$	261,841
Interest expense
Deposits	$	2,548		$	4,267	$	8,582		$	18,183
Short-term borrowings		28			446		130			3,215
Long-term debt		89			398		301			1,184
Subordinated debt		1,359			1,375		4,077			1,503
Junior subordinated debt		517			565		1,572			2,186
Total interest expense	$	4,541		$	7,051	$	14,662		$	26,271
Net interest income	$	77,674		$	77,943	$	235,907		$	235,570
Provision for loan losses		(3,342	)		3,261		(11,354	)		51,741
Net interest income after provision for loan losses	$	81,016		$	74,682	$	247,261		$	183,829
Noninterest income
Service charges on deposit accounts	$	3,489		$	3,087	$	9,544		$	9,613
ATM and debit card fees		8,172			7,194		23,343			19,184
Retirement plan administration fees		10,495			9,685		30,372			26,840
Wealth management fees		8,783			7,695		25,099			21,791
Insurance services		3,720			3,742		10,689			11,303
Bank owned life insurance income		1,548			1,255		4,588			4,010
Net securities (losses) gains		(100	)		84		568			(548	)
Other		4,222			4,985		12,480			15,968
Total noninterest income	$	40,329		$	37,727	$	116,683		$	108,161
Noninterest expense
Salaries and employee benefits	$	44,190		$	40,451	$	128,462		$	120,918
Occupancy		5,117			5,294		16,281			16,354
Data processing and communications		3,881			4,058		13,039			12,370
Professional fees and outside services		3,784			3,394		11,403			10,694
Equipment		5,577			5,073		16,247			14,494
Office supplies and postage		1,364			1,530		4,478			4,621
FDIC expense		772			645		2,243			1,949
Advertising		583			530		1,502			1,461
Amortization of intangible assets		663			856		2,157			2,573
Loan collection and other real estate owned, net		706			620		1,959			2,365
Other		6,232			3,857		14,405			14,730
Total noninterest expense	$	72,869		$	66,308	$	212,176		$	202,529
Income before income tax expense	$	48,476		$	46,101	$	151,768		$	89,461
Income tax expense		11,043			10,988		34,193			19,267
Net income	$	37,433		$	35,113	$	117,575		$	70,194
Earnings per share
Basic	$	0.86		$	0.80	$	2.71		$	1.61
Diluted	$	0.86		$	0.80	$	2.69		$	1.60

See accompanying notes to unaudited interim consolidated financial statements.

2

NBT Bancorp Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
(In thousands)
Net income	$	37,433		$	35,113		$	117,575		$	70,194
Other comprehensive income (loss), net of tax:
Securities available for sale:
Unrealized net holding (losses) gains arising during the period, gross	$	(7,426	)	$	(1,263	)	$	(21,329	)	$	26,509
Tax effect		1,857			316			5,332			(6,627	)
Unrealized net holding (losses) gains arising during the period, net	$	(5,569	)	$	(947	)	$	(15,997	)	$	19,882
Reclassification adjustment for net gains in net income, gross	$	-		$	-		$	-		$	(3	)
Tax effect		-			-			-			1
Reclassification adjustment for net gains in net income, net	$	-		$	-		$	-		$	(2	)
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, gross	$	149		$	157		$	434		$	495
Tax effect		(38	)		(39	)		(109	)		(124	)
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, net	$	111		$	118		$	325		$	371
Total securities available for sale, net	$	(5,458	)	$	(829	)	$	(15,672	)	$	20,251
Cash flow hedges:
Unrealized losses on derivatives (cash flow hedges), gross	$	-		$	-		$	-		$	(274	)
Tax effect		-			-			-			69
Unrealized losses on derivatives (cash flow hedges), net	$	-		$	-		$	-		$	(205	)
Reclassification of net unrealized losses on cash flow hedges to interest (income), gross	$	-		$	101		$	21		$	192
Tax effect		-			(25	)		(5	)		(48	)
Reclassification of net unrealized losses on cash flow hedges to interest (income), net	$	-		$	76		$	16		$	144
Total cash flow hedges, net	$	-		$	76		$	16		$	(61	)
Pension and other benefits:
Amortization of prior service cost and actuarial losses, gross	$	344		$	381		$	996		$	1,143
Tax effect		(86	)		(95	)		(249	)		(286	)
Amortization of prior service cost and actuarial losses, net	$	258		$	286		$	747		$	857
Total pension and other benefits, net	$	258		$	286		$	747		$	857
Total other comprehensive (loss) income	$	(5,200	)	$	(467	)	$	(14,909	)	$	21,047
Comprehensive income	$	32,233		$	34,646		$	102,666		$	91,241

See accompanying notes to unaudited interim consolidated financial statements.

3

NBT Bancorp Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity (unaudited)

	Common Stock		Additional Paid-in- Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Common Stock in Treasury			Total
(In thousands, except share and per share data)
Balance at June 30, 2021	$	497	$	576,732		$	805,722		$	(9,292	)	$	(148,603	)	$	1,225,056
Net income		-		-			37,433			-			-			37,433
Cash dividends - $0.28 per share		-		-			(12,138	)		-			-			(12,138	)
Purchase of 119,342 treasury shares		-		-			-			-			(4,212	)		(4,212	)
Net issuance of 1,672 shares to employee and other stock plans		-		(73	)		-			-			28			(45	)
Stock-based compensation		-		563			-			-			-			563
Other comprehensive (loss)		-		-			-			(5,200	)		-			(5,200	)
Balance at September 30, 2021	$	497	$	577,222		$	831,017		$	(14,492	)	$	(152,787	)	$	1,241,457
Balance at June 30, 2020	$	497	$	577,197		$	703,322		$	2,488		$	(140,852	)	$	1,142,652
Net income		-		-			35,113			-			-			35,113
Cash dividends - $0.27 per share		-		-			(11,785	)		-			-			(11,785	)
Net issuance of 3,030 shares to employee and other stock plans		-		(108	)		-			-			58			(50	)
Stock-based compensation		-		648			-			-			-			648
Other comprehensive (loss)		-		-			-			(467	)		-			(467	)
Balance at September 30, 2020	$	497	$	577,737		$	726,650		$	2,021		$	(140,794	)	$	1,166,111

	Common Stock		Additional Paid-in- Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Common Stock in Treasury			Total
(In thousands, except share and per share data)
Balance at December 31, 2020	$	497	$	578,082		$	749,056		$	417		$	(140,434	)	$	1,187,618
Net income		-		-			117,575			-			-			117,575
Cash dividends - $0.82 per share		-		-			(35,614	)		-			-			(35,614	)
Purchase of 400,000 treasury shares		-		-			-			-			(14,083	)		(14,083	)
Net issuance of 108,599 shares to employee and other stock plans		-		(4,679	)		-			-			1,730			(2,949	)
Stock-based compensation		-		3,819			-			-			-			3,819
Other comprehensive (loss)		-		-			-			(14,909	)		-			(14,909	)
Balance at September 30, 2021	$	497	$	577,222		$	831,017		$	(14,492	)	$	(152,787	)	$	1,241,457
Balance at December 31, 2019	$	497	$	576,708		$	696,214		$	(19,026	)	$	(133,996	)	$	1,120,397
Net income		-		-			70,194			-			-			70,194
Cumulative effect adjustment for ASU 2016-13 implementation		-		-			(4,339	)		-			-			(4,339	)
Cash dividends - $0.81 per share		-		-			(35,419	)		-			-			(35,419	)
Purchase of 263,507 treasury shares		-		-			-			-			(7,980	)		(7,980	)
Net issuance of 78,276 shares to employee and other stock plans		-		(2,928	)		-			-			1,182			(1,746	)
Stock-based compensation		-		3,957			-			-			-			3,957
Other comprehensive income		-		-			-			21,047			-			21,047
Balance at September 30, 2020	$	497	$	577,737		$	726,650		$	2,021		$	(140,794	)	$	1,166,111

See accompanying notes to unaudited interim consolidated financial statements.

4

NBT Bancorp Inc. and Subsidiaries

Consolidated Statements of Cash Flows (unaudited)

	Nine Months Ended September 30,
	2021			2020
(In thousands)
Operating activities
Net income	$	117,575		$	70,194
Adjustments to reconcile net income to net cash provided by operating activities
Provision for loan losses		(11,354	)		51,741
Depreciation and amortization of premises and equipment		7,339			7,378
Net amortization on securities		4,460			2,812
Amortization of intangible assets		2,157			2,573
Amortization of operating lease right-of-use assets		5,401			5,549
Excess tax benefit on stock-based compensation		(321	)		(188	)
Stock-based compensation expense		3,819			3,957
Bank owned life insurance income		(4,588	)		(4,010	)
Amortization of subordinated debt issuance costs		328			121
Proceeds from sale of loans held for sale		48,371			153,732
Originations of loans held for sale		(47,996	)		(144,105	)
Net gains on sale of loans held for sale		(280	)		(1,892	)
Net security (gains) losses		(568	)		548
Net gains on sale of other real estate owned		(44	)		(243	)
Net change in other assets and other liabilities		10,951			(40,760	)
Net cash provided by operating activities	$	135,250		$	107,407
Investing activities
Net cash used in acquisitions	$	-		$	(3,899	)
Securities available for sale:
Proceeds from maturities, calls and principal paydowns		308,688			239,622
Purchases		(560,884	)		(437,827	)
Securities held to maturity:
Proceeds from maturities, calls and principal paydowns		149,200			181,143
Proceeds from sales		-			996
Purchases		(216,205	)		(215,327	)
Equity securities:
Proceeds from calls		1,000			-
Other:
Net increase in loans		(73,344	)		(436,630	)
Proceeds from Federal Home Loan Bank stock redemption		2,355			58,799
Purchases of Federal Reserve Bank and Federal Home Loan Bank stock		(163	)		(42,663	)
Proceeds from settlement of bank owned life insurance		3,571			531
Purchases of bank owned life insurance		(40,000	)		-
Purchases of premises and equipment, net		(5,007	)		(4,512	)
Proceeds from sales of other real estate owned		784			1,113
Net cash used in investing activities	$	(430,005	)	$	(658,654	)
Financing activities
Net increase in deposits	$	1,113,486		$	1,370,363
Net decrease in short-term borrowings		(68,671	)		(471,803	)
Proceeds from issuance of subordinated debt		-			100,000
Payment of subordinated debt issuance costs		-			(2,178	)
Repayments of long-term debt		(25,077	)		(85	)
Proceeds from the issuance of shares to employee and other stock plans		112			184
Cash paid by employer for tax-withholdings on stock issuance		(1,973	)		(1,218	)
Purchase of treasury stock		(14,083	)		(7,980	)
Cash dividends		(35,614	)		(35,419	)
Net cash provided by financing activities	$	968,180		$	951,864
Net increase in cash and cash equivalents	$	673,425		$	400,617
Cash and cash equivalents at beginning of period		672,681			216,843
Cash and cash equivalents at end of period	$	1,346,106		$	617,460

5

NBT Bancorp Inc. and Subsidiaries

Consolidated Statements of Cash Flows (unaudited) (continued)

	Nine Months Ended September 30,
	2021		2020
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest expense	$	17,161	$	26,373
Income taxes paid, net of refund		39,025		38,137
Noncash investing activities:
Loans transferred to other real estate owned	$	141	$	1,017
Acquisitions:
Fair value of assets acquired	$	-	$	3,328

See accompanying notes to unaudited interim consolidated financial statements.

6

NBT Bancorp Inc. and Subsidiaries

Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2021

1. Description of Business

NBT Bancorp Inc. (the “Company”) is a registered financial holding company incorporated in the state of Delaware in 1986, with its principal headquarters located in Norwich, New York. The principal assets of the Company consist of all of the outstanding shares of common stock of its subsidiaries, including: NBT Bank, National Association (the “Bank”), NBT Financial Services, Inc. (“NBT Financial”), NBT Holdings, Inc. (“NBT Holdings”), CNBF Capital Trust I, NBT Statutory Trust I, NBT Statutory Trust II, Alliance Financial Capital Trust I and Alliance Financial Capital Trust II (collectively, the “Trusts”). The Company’s principal sources of revenue are the management fees and dividends it receives from the Bank, NBT Financial and NBT Holdings.

The Company’s business, primarily conducted through the Bank, consists of providing commercial banking, retail banking and wealth management services primarily to customers in its market area, which includes central and upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, the southern coastal Maine area and central Connecticut. The Company has been, and intends to continue to be, a community-oriented financial institution offering a variety of financial services. The Company’s business philosophy is to operate as a community bank with local decision-making, providing a broad array of banking and financial services to retail, commercial and municipal customers.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of NBT Bancorp Inc. and its wholly-owned subsidiaries, the Bank, NBT Financial and NBT Holdings. Collectively, NBT Bancorp Inc. and its subsidiaries are referred to herein as (“the Company”). The interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods in accordance with generally accepted accounting principles in the United States of America (“GAAP”). These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2020 Annual Report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period. All material intercompany transactions have been eliminated in consolidation. Amounts previously reported in the consolidated financial statements are reclassified whenever necessary to conform to current period presentation. The Company has evaluated subsequent events for potential recognition and/or disclosure and there were none identified.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from those estimates and such differences could be material to the financial statements.

3. Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU removes specific exceptions to the general principles in Topic 740 in GAAP. It eliminates the need for an organization to analyze whether the following apply in a given period: (1) exception to the incremental approach for intraperiod tax allocation; (2) exceptions to accounting for basis differences when there are ownership changes in foreign investments; and (3) exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. The ASU also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP for: (1) franchise taxes that are partially based on income; (2) transactions with a government that result in a step up in the tax basis of goodwill; (3) separate financial statements of legal entities that are not subject to tax; and (4) enacted changes in tax laws in interim periods. The amendments in this ASU were effective for the Company on January 1, 2021, and interim periods within those fiscal years. The adoption did not have a material impact on the consolidated financial statements and related disclosures.

Accounting Standards Issued Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. On January 7, 2021, the FASB issued ASU 2021-01, which refines the scope of Accounting Standards Codification 848 (“ASC 848”) and clarifies some of its guidance. ASU 2020-04 and related amendments provide temporary optional expedients and exceptions to the existing guidance for applying GAAP to affected contract modifications and hedge accounting relationships in the transition away from the London Interbank Offered Rate (“LIBOR”) or other interbank offered rate on financial reporting. The guidance also allows a one-time election to sell and/or reclassify to available for sale (“AFS”) or trading held to maturity (“HTM”) debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective March 12, 2020 through December 31, 2022 and permits relief solely for reference rate reform actions and permits different elections over the effective date for legacy and new activity. The Company is evaluating the impact of adopting the new guidance on the consolidated financial statements and does not expect it will have a material impact on the consolidated financial statements.

7

4. Securities

The amortized cost, estimated fair value and unrealized gains (losses) of AFS securities are as follows:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
As of September 30, 2021
Federal agency	$	248,462	$	-	$	5,496	$	242,966
State & municipal		84,636		138		753		84,021
Mortgage-backed:
Government-sponsored enterprises		575,884		10,907		3,959		582,832
U.S. government agency securities		65,762		1,710		109		67,363
Collateralized mortgage obligations:
Government-sponsored enterprises		438,255		5,002		2,004		441,253
U.S. government agency securities		115,873		1,774		189		117,458
Corporate		38,500		1,637		-		40,137
Total AFS securities	$	1,567,372	$	21,168	$	12,510	$	1,576,030
As of December 31, 2020
Federal agency	$	245,590	$	59	$	2,052	$	243,597
State & municipal		42,550		630		-		43,180
Mortgage-backed:
Government-sponsored enterprises		521,448		17,079		22		538,505
U.S. government agency securities		55,049		2,332		47		57,334
Collateralized mortgage obligations:
Government-sponsored enterprises		311,710		7,549		58		319,201
U.S. government agency securities		114,864		3,739		-		118,603
Corporate		27,500		778		-		28,278
Total AFS securities	$	1,318,711	$	32,166	$	2,179	$	1,348,698

There was no allowance for credit losses on AFS securities as of September 30, 2021 and December 31, 2020.

During the three and nine months ended September 30, 2021 there were no gains or losses reclassified out of accumulated other comprehensive income (loss) (“AOCI”) and into earnings. During the three months ended September 30, 2020 there were no gains or losses reclassified out of AOCI and into earnings. During the nine months ended September 30, 2020, there were $3 thousand of gross realized gains reclassified out of AOCI and into earnings. Included in net realized gains (losses) on AFS securities, the Company recorded gains from calls of approximately $3 thousand for the nine months ended September 30, 2020.

The amortized cost, estimated fair value and unrealized gains (losses) of HTM securities are as follows:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
As of September 30, 2021
Federal agency	$	100,000	$	-	$	3,821	$	96,179
Mortgage-backed:
Government-sponsored enterprises		121,040		2,851		568		123,323
U.S. government agency securities		9,121		659		-		9,780
Collateralized mortgage obligations:
Government-sponsored enterprises		75,852		3,050		-		78,902
U.S. government agency securities		54,587		679		341		54,925
State & municipal		322,503		5,021		1,504		326,020
Total HTM securities	$	683,103	$	12,260	$	6,234	$	689,129
As of December 31, 2020
Federal agency	$	100,000	$	-	$	1,658	$	98,342
Mortgage-backed:
Government-sponsored enterprises		107,914		4,583		-		112,497
U.S. government agency securities		11,533		979		-		12,512
Collateralized mortgage obligations:
Government-sponsored enterprises		103,105		4,477		-		107,582
U.S. government agency securities		79,145		3,950		-		83,095
State & municipal		214,863		7,953		17		222,799
Total HTM securities	$	616,560	$	21,942	$	1,675	$	636,827

8

At September 30, 2021 and December 31, 2020, all of the mortgaged-backed HTM securities were comprised of U.S. government agency and Government-sponsored enterprises securities. There was no allowance for credit losses on HTM securities as of September 30, 2021 and December 31, 2020.

Included in net realized gains (losses), the Company recorded gains from calls on HTM securities of approximately $14 thousand for the three months ended September 30, 2021 and approximately $29 thousand for the nine months ended September 30, 2021. Included in net realized gains (losses), the Company recorded gains from calls on HTM securities of approximately $11 thousand for the three months ended September 30, 2020 and approximately $15 thousand for the nine months ended September 30, 2020.

There were no sales of HTM securities during the three and nine months ended September 30, 2021. During the nine months ended September 30, 2020, the Company sold HTM securities with an amortized cost of $1.0 million and resulted in a realized loss of $1 thousand. Due to significant deterioration in the creditworthiness of the issuer of the HTM securities, the circumstances caused the Company to change its intent to hold the HTM securities sold to maturity, which did not affect the Company’s intent to hold the remainder of the HTM portfolio to maturity.

AFS and HTM securities with amortized costs totaling $1.6 billion at September 30, 2021 and $1.4 billion at December 31, 2020 were pledged to secure public deposits and for other purposes required or permitted by law. Additionally, at September 30, 2021 and December 31, 2020, AFS and HTM securities with an amortized cost of $149.2 million and $305.2 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

The following tables set forth information with regard to gains and (losses) on equity securities:

	Three Months Ended September 30,
(In thousands)	2021			2020
Net (losses) and gains recognized on equity securities	$	(114	)	$	73
Less: Net (losses) and gains recognized on equity securities sold during the period		-			-
Unrealized (losses) and gains recognized on equity securities still held	$	(114	)	$	73

	Nine Months Ended September 30,
(In thousands)	2021		2020
Net gains and (losses) recognized on equity securities	$	539	$	(565	)
Less: Net gains and (losses) recognized on equity securities sold during the period		-		-
Unrealized gains and (losses) recognized on equity securities still held	$	539	$	(565	)

As of September 30, 2021 and December 31, 2020, the carrying value of equity securities without readily determinable fair values was $1.0 million and $2.0 million, respectively. The Company performed a qualitative assessment to determine whether the investments were impaired and identified no areas of concern as of September 30, 2021 and 2020. There were no impairments, downward or upward adjustments recognized for equity securities without readily determinable fair values during the three and nine months ended September 30, 2021 and 2020.

The following table sets forth information with regard to contractual maturities of debt securities at September 30, 2021:

(In thousands)	Amortized Cost		Estimated Fair Value
AFS debt securities:
Within one year	$	1,258	$	1,262
From one to five years		56,017		56,596
From five to ten years		642,112		639,238
After ten years		867,985		878,934
Total AFS debt securities	$	1,567,372	$	1,576,030
HTM debt securities:
Within one year	$	97,203	$	97,239
From one to five years		56,120		57,485
From five to ten years		226,478		227,026
After ten years		303,302		307,379
Total HTM debt securities	$	683,103	$	689,129

9

Maturities of mortgage-backed, collateralized mortgage obligations and asset-backed securities are stated based on their estimated average lives. Actual maturities may differ from estimated average lives or contractual maturities because, in certain cases, borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Except for U.S. government securities and government-sponsored enterprises securities, there were no holdings, when taken in the aggregate, of any single issuer that exceeded 10% of consolidated stockholders’ equity at September 30, 2021 and December 31, 2020.

The following table sets forth information with regard to investment securities with unrealized losses, for which an allowance for credit losses has not been recorded at September 30, 2021, segregated according to the length of time the securities had been in a continuous unrealized loss position:

	Less Than 12 Months							12 Months or Longer							Total
(In thousands)	Fair Value		Unrealized Losses			Number of Positions		Fair Value		Unrealized Losses			Number of Positions		Fair Value		Unrealized Losses			Number of Positions
As of September 30, 2021
AFS securities:
Federal agency	$	101,674	$	(1,799	)		7	$	141,292	$	(3,697	)		9	$	242,966	$	(5,496	)		16
State & municipal		68,492		(753	)		45		-		-			-		68,492		(753	)		45
Mortgage-backed		239,779		(4,060	)		18		761		(8	)		4		240,540		(4,068	)		22
Collateralized mortgage obligations		247,618		(1,793	)		24		12,816		(400	)		2		260,434		(2,193	)		26
Total securities with unrealized losses	$	657,563	$	(8,405	)		94	$	154,869	$	(4,105	)		15	$	812,432	$	(12,510	)		109
HTM securities:
Federal agency	$	-	$	-			-	$	96,179	$	(3,821	)		4	$	96,179	$	(3,821	)		4
Mortgage-backed		56,996		(568	)		5		-		-			-		56,996		(568	)		5
Collateralized mortgage obligation		31,809		(341	)		5		-		-			-		31,809		(341	)		5
State & municipal		67,806		(1,381	)		50		3,453		(123	)		4		71,259		(1,504	)		54
Total securities with unrealized losses	$	156,611	$	(2,290	)		60	$	99,632	$	(3,944	)		8	$	256,243	$	(6,234	)		68
As of December 31, 2020
AFS securities:
Federal agency	$	148,537	$	(2,052	)		10	$	-	$	-			-	$	148,537	$	(2,052	)		10
Mortgage-backed		47,269		(60	)		3		800		(9	)		4		48,069		(69	)		7
Collateralized mortgage obligations		17,837		(58	)		6		-		-			-		17,837		(58	)		6
Total securities with unrealized losses	$	213,643	$	(2,170	)		19	$	800	$	(9	)		4	$	214,443	$	(2,179	)		23
HTM securities:
Federal agency	$	98,342	$	(1,658	)		4	$	-	$	-			-	$	98,342	$	(1,658	)		4
State & municipal		4,805		(17	)		5		-		-			-		4,805		(17	)		5
Total securities with unrealized losses	$	103,147	$	(1,675	)		9	$	-	$	-			-	$	103,147	$	(1,675	)		9

The Company does not believe the AFS securities that were in an unrealized loss position as of September 30, 2021 and December 31, 2020, which consisted of 109 and 23 individual securities, respectively, represented a credit loss impairment. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. As of September 30, 2021 and December 31, 2020, the majority of the AFS securities in an unrealized loss position consisted of debt securities issued by U.S. government agencies or U.S. government-sponsored enterprises that carry the explicit and/or implicit guarantee of the U.S. government, which are widely recognized as “risk-free” and have a long history of zero credit losses. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. The Company does not intend to sell, nor is it more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, which may be at maturity. The Company elected to exclude accrued interest receivable (“AIR”) from the amortized cost basis of debt securities. AIR on AFS debt securities totaled $3.3 million at September 30, 2021 and December 31, 2020 and is excluded from the estimate of credit losses and reported in the financial statement line for other assets.

10

None of the bank’s HTM debt securities were past due or on non-accrual status as of September 30, 2021 and December 31, 2020. There was no accrued interest reversed against interest income for the three and nine months ended September 30, 2021 or the year-ended December 31, 2020 as all securities remained on accrual status. In addition, there were no collateral-dependent HTM debt securities as of September 30, 2021 and December 31, 2020. As of September 30, 2021 and December 31, 2020, 53% and 65%, respectively, of the Company’s HTM debt securities were issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as “risk free,” and have a long history of zero credit loss. Therefore, the Company did not record an allowance for credit losses for these securities as of September 30, 2021 and December 31, 2020. The remaining HTM debt securities at September 30, 2021 and December 31, 2020 were comprised of state and municipal obligations with bond ratings of A to AAA. Utilizing the Current Expected Credit Losses (“CECL”) approach, the Company determined that the expected credit loss on its HTM municipal bond portfolio was immaterial and therefore no allowance for credit loss was recorded as of September 30, 2021 and December 31, 2020. AIR on HTM debt securities totaled $2.6 million and $2.7 million at September 30, 2021 and December 31, 2020, respectively, and is excluded from the estimate of credit losses and reported in the other assets financial statement line.

5. Allowance for Credit Losses and Credit Quality of Loans

The allowance for credit losses totaled $93.0 million at September 30, 2021, compared to $110.0 million at December 31, 2020. The allowance for credit losses as a percentage of loans was 1.23% at September 30, 2021, compared to 1.47% at December 31, 2020.

The Day 1 increase in the allowance for credit loss on loans relating to adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments was $3.0 million, which decreased retained earnings by $2.3 million and increased the deferred tax asset by $0.7 million.

The September 30, 2021, June 30, 2021, December 31, 2020, September 30, 2020 and Day 1 allowance for credit losses calculation incorporated a 6-quarter forecast period to account for forecast economic conditions under each scenario utilized in the measurement. For periods beyond the 6-quarter forecast, the model reverts to long-term economic conditions over a 4-quarter reversion period on a straight-line basis. The Company considers a baseline, upside and downside economic forecast in measuring the allowance.

The quantitative model as of September 30, 2021 incorporated a baseline economic outlook along with alternative upside and downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment initially above pre-COVID-19 levels although steadily improving to below 4% mid-way through the forecast period. Northeast GDP’s annualized growth (on a quarterly basis) was expected to start the fourth quarter of 2021 at approximately 10% and steadily fall back down to normalized levels by the end of 2022. Other utilized economic variables showed mixed changes in their respective forecasts, with retail sales and business output declining from the prior quarter and housing starts increasing from the prior quarter’s forecast. Key assumptions in the baseline economic outlook included abatement of the coronavirus (“COVID-19”) pandemic in November, additional legislation focused on infrastructure and social benefits programs enacted by the end of 2021 totaling $2.5 trillion, and full employment reached by the end of 2022. The alternative downside scenario assumed deteriorated economic and epidemiological conditions from the baseline outlook. Under this scenario, northeast unemployment rises from 6.2% in the third quarter of 2021 to a peak of 8.2% in the fourth quarter of 2022, remaining above 7% for the entire forecast period. The alternative upside scenario incorporated a more optimistic outlook than the baseline scenario, with a swift return to full employment by the first quarter of 2022 and with northeast unemployment moving down to 3.1% by the end of the forecast period. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of September 30, 2021. Additional adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in the second and third quarters of 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government sponsored loan programs. The Company also continued to monitor the level of criticized and classified loans in the third quarter of 2021 compared to the level contemplated by the model during similar, historical economic conditions, and an adjustment was made to estimate potential additional losses above modeled losses. Additionally, a qualitative adjustment was made for isolated model limitations related to modeled outputs given abnormally high retail sales and business output growth rates. These factors were considered through separate quantitative processes and incorporated into the estimate of current expected credit losses at September 30, 2021.

11

The quantitative model as of June 30, 2021 incorporated a baseline economic outlook along with alternative upside and downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment above pre-COVID-19 levels for the entire forecast period, though steadily improving to below 4% by the end of 2022. Northeast GDP’s annualized growth (on a quarterly basis) was expected to start in the second half of 2021 in the high single digits (9.86%) and steadily fall back down to normalized levels by the end of 2022. Other utilized economic variables showed mixed changes in their respective forecasts, with retail sales and business output being relatively unchanged and housing starts lowered from the prior quarter forecast. Key assumptions in the baseline economic outlook included herd “resiliency” expected by summer-2021, additional legislation focused on infrastructure and social benefits enacted in the second half of 2021 and high, near-term GDP growth expectations. The alternative downside scenario assumed deteriorated economic and epidemiological conditions from the baseline outlook. Under this scenario, northeast unemployment rose from 8.1% in the third quarter of 2021 to a peak of 8.7% in the second quarter of 2022, remaining above 8% for the entire forecast period. The alternative upside scenario incorporated a more optimistic outlook than the baseline scenario, with a swift return to full employment by the first quarter of 2022 and down to a low of 3.5% by the end of the forecast period. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of June 30, 2021. Additional adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in the second and third quarters of 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government sponsored loan programs. The Company also continued to identify a slightly higher level of criticized and classified loans in the second quarter of 2021 than those contemplated by the model during similar, historical economic conditions for which an adjustment was made to estimate potential additional losses above modeled losses. Additionally, a qualitative adjustment was made for isolated model limitations related to modeled outputs given abnormally high retail sales and business output growth rates. These factors were considered through separate quantitative processes and incorporated into the estimate of current expected credit losses at June 30, 2021.

The quantitative model as of December 31, 2020 incorporated a baseline economic outlook, along with alternative upside and downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment above pre-COVID-19 levels for the entire forecast period, though steadily improving, before returning to low single digits by the end of 2023. Northeast GDP’s annual growth was expected to start 2021 in the low to mid-single digits, with a peak growth rate of 8% in the fourth quarter of 2021 and steadily falling back down to normalized levels through 2023 and 2024. Other utilized economic variables show improvement in their respective forecasts, namely business output. Key assumptions in the baseline economic outlook included an additional stimulus package passed at the same timing and a comparable level to that of the actual $900 billion COVID-19 relief package passed in December 2020 along with no significant secondary surge in COVID-19 cases or pandemic-related business closures. The alternative downside scenario assumed deteriorated economic and epidemiological conditions from the baseline outlook. In the same way, the alternative upside scenario assumed a faster economic recovery and more effective management of the COVID-19 virus from the baseline outlook. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2020. Additional adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government-sponsored loan programs. The commercial & industrial and consumer segment models were based upon percent change in unemployment with modeled values as of December 31, 2020 well outside the observed historical experience. Therefore, adjustments were required to produce outputs more aligned with default expectations given the forecast economic environment. Additionally, the Company identified a slightly higher level of criticized and classified loans during 2020 than those contemplated by the model during similar economic conditions in the past for which an adjustment was made for estimated expected additional losses above modeled output. These factors were considered through a separate quantitative process and incorporated into the estimate for allowance for credit losses at December 31, 2020.

On August 3, 2020, the Federal Financial Institutions Examination Council (“FFIEC”) issued a joint statement on additional loan accommodations related to COVID-19. The joint statement clarifies that for loan modifications in which Section 4013 is being applied, subsequent modifications could also be eligible under section 4013 (“Section 4013”) of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). Accordingly, the Company is offering modifications made in response to COVID-19 to borrowers who were current and otherwise not past due in accordance with the criteria stated in Section 4013. These include short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment. Accordingly, the Company did not account for such loan modifications as TDRs. As of September 30, 2021, there were $2.0 million in loans in modification programs related to COVID-19. On December 27, 2020, the Consolidated Appropriations Act amended section 2014 of the CARES Act extending the exemption of qualified loan modifications from classification as a troubled debt restructuring as defined by GAAP to the earlier of January 1, 2022, or 60 days after the National Emergency concerning COVID-19 ends.

There were no loans purchased with credit deterioration during the nine months ended September 30, 2021 or the year ended December 31, 2020. During 2021, the Company purchased $52.4 million of residential loans at a 2% premium and $60.3 million in consumer loans at par. The allowance for credit losses recorded for these loans on the purchase date was $4.6 million. During 2020, the Company purchased $51.9 million of consumer loans at a 1% discount. The allowance for credit losses recorded for these loans on the purchase date was $3.6 million. The Company made a policy election to report AIR in the other assets line item on the balance sheet. AIR on loans totaled $20.4 million at September 30, 2021 and $23.7 million at December 31, 2020 and was included in the allowance for loan credit losses to estimate the impact of accrued interest receivable related to loans with modifications due to the pandemic as the length of time between interest recognition and the write-off of uncollectible interest could exceed 120 days, exempting these loans from our policy election for accrued interest receivable. There was no estimated allowance for credit losses related to AIR at September 30, 2021 and $0.6 million at December 31, 2020.

12

The following tables present the activity in the allowance for credit losses by portfolio segment:

(In thousands)	Commercial Loans			Consumer Loans			Residential			Total
Balance as of June 30, 2021	$	44,191		$	34,881		$	19,428		$	98,500
Charge-offs		(1,492	)		(3,083	)		(312	)		(4,887	)
Recoveries		354			2,143			232			2,729
Provision		(9,875	)		7,130			(597	)		(3,342	)
Ending balance as of September 30, 2021	$	33,178		$	41,071		$	18,751		$	93,000
Balance as of June 30, 2020	$	50,386		$	40,094		$	23,020		$	113,500
Charge-offs		(624	)		(4,097	)		(58	)		(4,779	)
Recoveries		333			2,123			62			2,518
Provision		1,651			442			1,168			3,261
Ending balance as of September 30, 2020	$	51,746		$	38,562		$	24,192		$	114,500

(In thousands)	Commercial Loans			Consumer Loans			Residential			Total
Balance as of December 31, 2020	$	50,942		$	37,803		$	21,255		$	110,000
Charge-offs		(2,123	)		(10,702	)		(731	)		(13,556	)
Recoveries		533			6,506			871			7,910
Provision		(16,174	)		7,464			(2,644	)		(11,354	)
Ending balance as of September 30, 2021	$	33,178		$	41,071		$	18,751		$	93,000
Balance as of January 1, 2020 (after adoption of ASC 326)	$	27,156		$	32,122		$	16,721		$	75,999
Charge-offs		(2,353	)		(17,166	)		(863	)		(20,382	)
Recoveries		674			6,168			300			7,142
Provision		26,269			17,438			8,034			51,741
Ending balance as of September 30, 2020	$	51,746		$	38,562		$	24,192		$	114,500

The decrease in the allowance for credit losses from December 31, 2020 to June 30, 2021 and September 30, 2021 was primarily due to an improvement in the economic forecast. The increase in the allowance for credit losses from Day 1 to June 30, 2020 and September 30, 2020 was primarily due to the deterioration of macroeconomic factors surrounding the COVID-19 pandemic.

Individually Evaluated Loans

As of September 30, 2021, there were five relationships identified to be evaluated for loss on an individual basis which had an amortized cost basis of $12.5 million. These loans’ allowance for credit loss was $1.3 million and was determined by an estimate of the fair value of the collateral which consisted of business assets (accounts receivable, inventory, machinery and equipment). As of December 31, 2020, these same five relationships were identified to be evaluated for loss on an individual basis with an amortized cost basis of $15.2 million and an allowance for credit loss of $3.2 million. The decrease in the allowance for credit losses evaluated on an individual basis from December 31, 2020 to September 30, 2021 was primarily due to decrease in the amortized cost basis on the loans due to a principal payments and charge-offs.

The following table sets forth information with regard to past due and nonperforming loans by loan segment:

(In thousands)	31-60 Days Past Due Accruing		61-90 Days Past Due Accruing		Greater Than 90 Days Past Due Accruing		Total Past Due Accruing		Nonaccrual		Current		Recorded Total Loans
As of September 30, 2021
Commercial loans:
C&I	$	2,518	$	106	$	-	$	2,624	$	4,261	$	1,110,920	$	1,117,805
CRE		11,759		1,754		441		13,954		16,084		2,528,193		2,558,231
PPP		-		-		-		-		-		276,195		276,195
Total commercial loans	$	14,277	$	1,860	$	441	$	16,578	$	20,345	$	3,915,308	$	3,952,231
Consumer loans:
Auto	$	6,455	$	1,110	$	580	$	8,145	$	1,407	$	829,585	$	839,137
Other consumer		3,473		2,003		810		6,286		210		748,241		754,737
Total consumer loans	$	9,928	$	3,113	$	1,390	$	14,431	$	1,617	$	1,577,826	$	1,593,874
Residential	$	1,879	$	734	$	1,109	$	3,722	$	13,775	$	2,002,840	$	2,020,337
Total loans	$	26,084	$	5,707	$	2,940	$	34,731	$	35,737	$	7,495,974	$	7,566,442

13

(In thousands)	31-60 Days Past Due Accruing		61-90 Days Past Due Accruing		Greater Than 90 Days Past Due Accruing		Total Past Due Accruing		Nonaccrual		Current		Recorded Total Loans
As of December 31, 2020
Commercial loans:
C&I	$	2,235	$	2,394	$	23	$	4,652	$	4,278	$	1,116,686	$	1,125,616
CRE		682		-		470		1,152		19,971		2,391,162		2,412,285
PPP		-		-		-		-		-		430,810		430,810
Total commercial loans	$	2,917	$	2,394	$	493	$	5,804	$	24,249	$	3,938,658	$	3,968,711
Consumer loans:
Auto	$	9,125	$	1,553	$	866	$	11,544	$	2,730	$	877,831	$	892,105
Other consumer		3,711		1,929		1,272		6,912		290		640,952		648,154
Total consumer loans	$	12,836	$	3,482	$	2,138	$	18,456	$	3,020	$	1,518,783	$	1,540,259
Residential	$	2,719	$	309	$	518	$	3,546	$	17,378	$	1,968,991	$	1,989,915
Total loans	$	18,472	$	6,185	$	3,149	$	27,806	$	44,647	$	7,426,432	$	7,498,885

As of September 30, 2021 and December 31, 2020, there were no loans in non-accrual without an allowance for credit losses.

Credit Quality Indicators

The Company has developed an internal loan grading system to evaluate and quantify the Company’s loan portfolio with respect to quality and risk. The system focuses on, among other things, financial strength of borrowers, experience and depth of borrower’s management, primary and secondary sources of repayment, payment history, nature of the business and outlook on particular industries. The internal grading system enables the Company to monitor the quality of the entire loan portfolio on a consistent basis and provide management with an early warning system, enabling recognition and response to problem loans and potential problem loans.

Commercial Grading System

For Commercial and Industrial (“C&I”), Paycheck Protection Program (“PPP”) and Commercial Real Estate (“CRE”) loans, the Company uses a grading system that relies on quantifiable and measurable characteristics when available. This includes comparison of financial strength to available industry averages, comparison of transaction factors (loan terms and conditions) to loan policy and comparison of credit history to stated repayment terms and industry averages. Some grading factors are necessarily more subjective such as economic and industry factors, regulatory environment and management. C&I and CRE loans are graded Doubtful, Substandard, Special Mention and Pass.

Doubtful

A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as a loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral and refinancing. Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new information. Nonaccrual treatment is required for Doubtful assets because of the high probability of loss.

Substandard

Substandard loans have a high probability of payment default or they have other well-defined weaknesses. They require more intensive supervision by bank management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity or marginal capitalization. Repayment may depend on collateral or other credit risk mitigants. For some Substandard loans, the likelihood of full collection of interest and principal may be in doubt and those loans should be placed on nonaccrual. Although Substandard assets in the aggregate will have a distinct potential for loss, an individual asset’s loss potential does not have to be distinct for the asset to be rated Substandard.

Special Mention

Special Mention loans have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s position at some future date. These loans pose elevated risk, but their weakness does not yet justify a Substandard classification. Borrowers may be experiencing adverse operating trends (i.e., declining revenues or margins) or may be struggling with an ill-proportioned balance sheet (i.e., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a Special Mention rating. Although a Special Mention loan has a higher probability of default than a Pass asset, its default is not imminent.

Pass

Loans graded as Pass encompass all loans not graded as Doubtful, Substandard or Special Mention. Pass loans are in compliance with loan covenants and payments are generally made as agreed. Pass loans range from superior quality to fair quality. Pass loans also include any portion of a government guaranteed loan, including PPP loans.

14

Consumer and Residential Grading System

Consumer and Residential loans are graded as either Nonperforming or Performing.

Nonperforming

Nonperforming loans are loans that are (1) over 90 days past due and interest is still accruing or (2) on nonaccrual status.

Performing

All loans not meeting any of the above criteria are considered Performing.

The following tables illustrate the Company’s credit quality by loan class by vintage:

(In thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of September 30, 2021
C&I
By internally assigned grade:
Pass	$	258,044	$	256,285	$	127,995	$	71,024	$	23,541	$	40,962	$	282,471	$	6,724	$	1,067,046
Special mention		163		4,277		5,157		3,339		3,063		3,381		8,477		-		27,857
Substandard		14		367		7,286		1,684		2,675		2,939		2,796		4,829		22,590
Doubtful		-		-		-		126		185		1		-		-		312
Total C&I	$	258,221	$	260,929	$	140,438	$	76,173	$	29,464	$	47,283	$	293,744	$	11,553	$	1,117,805
CRE
By internally assigned grade:
Pass	$	325,092	$	453,138	$	390,834	$	249,362	$	264,620	$	486,685	$	152,622	$	16,661	$	2,339,014
Special mention		796		933		21,467		4,747		20,344		67,530		1,140		-		116,957
Substandard		-		79		15,692		15,555		12,541		50,428		1,239		-		95,534
Doubtful		-		-		-		-		-		6,726		-		-		6,726
Total CRE	$	325,888	$	454,150	$	427,993	$	269,664	$	297,505	$	611,369	$	155,001	$	16,661	$	2,558,231
PPP
By internally assigned grade:
Pass	$	256,940	$	19,255	$	-	$	-	$	-	$	-	$	-	$	-	$	276,195
Total PPP	$	256,940	$	19,255	$	-	$	-	$	-	$	-	$	-	$	-	$	276,195
Auto
By payment activity:
Performing	$	280,805	$	145,585	$	211,921	$	121,108	$	59,047	$	18,684	$	-	$	-	$	837,150
Nonperforming		148		320		712		538		269		-		-		-		1,987
Total auto	$	280,953	$	145,905	$	212,633	$	121,646	$	59,316	$	18,684	$	-	$	-	$	839,137
Other consumer
By payment activity:
Performing	$	298,505	$	166,111	$	128,954	$	88,311	$	34,858	$	18,447	$	18,516	$	15	$	753,717
Nonperforming		96		290		235		96		191		109		3		-		1,020
Total other consumer	$	298,601	$	166,401	$	129,189	$	88,407	$	35,049	$	18,556	$	18,519	$	15	$	754,737
Residential
By payment activity:
Performing	$	263,254	$	229,961	$	187,776	$	185,798	$	155,725	$	722,718	$	248,727	$	11,494	$	2,005,453
Nonperforming		-		1,530		733		1,772		1,632		9,086		39		92		14,884
Total residential	$	263,254	$	231,491	$	188,509	$	187,570	$	157,357	$	731,804	$	248,766	$	11,586	$	2,020,337
Total loans	$	1,683,857	$	1,278,131	$	1,098,762	$	743,460	$	578,691	$	1,427,696	$	716,030	$	39,815	$	7,566,442

15

(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of December 31, 2020
C&I
By internally assigned grade:
Pass	$	331,921	$	182,329	$	91,230	$	41,856	$	32,625	$	32,609	$	322,674	$	412	$	1,035,656
Special mention		20,064		6,534		5,053		4,702		1,624		2,830		13,614		-		54,421
Substandard		338		6,364		10,219		3,388		791		4,272		9,945		14		35,331
Doubtful		-		-		-		207		-		1		-		-		208
Total C&I	$	352,323	$	195,227	$	106,502	$	50,153	$	35,040	$	39,712	$	346,233	$	426	$	1,125,616
CRE
By internally assigned grade:
Pass	$	469,919	$	361,187	$	256,154	$	271,874	$	212,197	$	383,690	$	113,128	$	4,034	$	2,072,183
Special mention		2,051		44,034		22,260		55,039		36,830		43,537		1,297		11,524		216,572
Substandard		536		5,307		18,298		15,691		6,018		62,168		1,501		4,642		114,161
Doubtful		-		1,897		-		-		-		7,472		-		-		9,369
Total CRE	$	472,506	$	412,425	$	296,712	$	342,604	$	255,045	$	496,867	$	115,926	$	20,200	$	2,412,285
PPP
By internally assigned grade:
Pass	$	430,810	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	430,810
Total PPP	$	430,810	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	430,810
Auto
By payment activity:
Performing	$	197,881	$	314,034	$	201,850	$	115,977	$	45,495	$	13,250	$	22	$	-	$	888,509
Nonperforming		359		1,140		1,135		525		437		-		-		-		3,596
Total auto	$	198,240	$	315,174	$	202,985	$	116,502	$	45,932	$	13,250	$	22	$	-	$	892,105
Other consumer
By payment activity:
Performing	$	234,628	$	178,411	$	127,549	$	55,676	$	14,255	$	17,414	$	18,588	$	71	$	646,592
Nonperforming		339		418		307		265		90		133		10		-		1,562
Total other consumer	$	234,967	$	178,829	$	127,856	$	55,941	$	14,345	$	17,547	$	18,598	$	71	$	648,154
Residential
By payment activity:
Performing	$	237,338	$	210,505	$	213,437	$	182,993	$	164,424	$	684,495	$	268,878	$	9,991	$	1,972,061
Nonperforming		1,245		659		2,318		2,535		902		10,195		-		-		17,854
Total residential	$	238,583	$	211,164	$	215,755	$	185,528	$	165,326	$	694,690	$	268,878	$	9,991	$	1,989,915
Total loans	$	1,927,429	$	1,312,819	$	949,810	$	750,728	$	515,688	$	1,262,066	$	749,657	$	30,688	$	7,498,885

16

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

As of September 30, 2021, the allowance for losses on unfunded commitments totaled $5.3 million, compared to $6.4 million as of December 31, 2020.

Troubled Debt Restructuring

When the Company modifies a loan in a troubled debt restructuring (“TDR”), such modifications generally include one or a combination of the following: an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; temporary reduction in the interest rate; or change in scheduled payment amount. Residential and Consumer TDRs occurring during 2021 and 2020 were due to the reduction in the interest rate or extension of the term.

An allowance for impaired commercial and consumer loans that have been modified in a TDR is measured based on the present value of the expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs. If management determines that the value of the modified loan is less than the recorded investment in the loan an impairment charge would be recorded.

The Company began offering loan modifications to assist borrowers during the COVID-19 national emergency. The CARES Act, along with a joint agency statement issued by banking regulatory agencies, provides that modifications made in response to COVID-19 do not need to be accounted for as a TDR. The Company evaluated the modification programs provided to its borrowers and has concluded the modifications were generally made in accordance with the CARES Act guidance to borrowers who were in good standing prior to the COVID-19 pandemic and are not required to be designated as TDRs.

The following tables illustrate the recorded investment and number of modifications designated as TDRs, including the recorded investment in the loans prior to a modification and the recorded investment in the loans after restructuring:

	Three Months Ended September 30, 2021						Three Months Ended September 30, 2020
(Dollars in thousands)	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Consumer loans:
Auto		1	$	20	$	20		-	$	-	$	-
Total consumer loans		1	$	20	$	20		-	$	-	$	-
Residential		3	$	460	$	507		10	$	659	$	715
Total TDRs		4	$	480	$	527		10	$	659	$	715

	Nine Months Ended September 30, 2021						Nine Months Ended September 30, 2020
(Dollars in thousands)	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Consumer loans:
Auto		2	$	38	$	38		1	$	44	$	44
Total consumer loans		2	$	38	$	38		1	$	44	$	44
Residential		9	$	1,071	$	1,183		24	$	1,619	$	1,745
Total TDRs		11	$	1,109	$	1,221		25	$	1,663	$	1,789

17

The following table illustrates the recorded investment and number of modifications for TDRs where a concession has been made and subsequently defaulted during the period:

	Three Months Ended September 30, 2021				Three Months Ended September 30, 2020
(Dollars in thousands)	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Residential		19	$	1,401		9	$	299
Total TDRs		19	$	1,401		9	$	299

	Nine Months Ended September 30, 2021				Nine Months Ended September 30, 2020
(Dollars in thousands)	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Commercial loans:
C&I		-	$	-		1	$	387
CRE		-		-		1		168
Total commercial loans		-	$	-		2	$	555
Consumer loans:
Auto		2	$	18		-	$	-
Total consumer loans		2	$	18		-	$	-
Residential		39	$	2,356		45	$	2,280
Total TDRs		41	$	2,374		47	$	2,835

18

6. Defined Benefit Post-Retirement Plans

The Company has a qualified, noncontributory, defined benefit pension plan (“the Plan”) covering substantially all of its employees at September 30, 2021. Benefits paid from the plan are based on age, years of service, compensation and social security benefits and are determined in accordance with defined formulas. The Company’s policy is to fund the Plan in accordance with Employee Retirement Income Security Act of 1974 standards. Assets of the Plan are invested in publicly traded stocks and mutual funds. In addition to the Plan, the Company provides supplemental employee retirement plans to certain current and former executives. The Company also assumed supplemental retirement plans for former executives of Alliance Financial Corporation (“Alliance”) when the Company acquired Alliance. These supplemental employee retirement plans and the Plan are collectively referred to herein as “Pension Benefits”.

In addition, the Company provides certain health care benefits for retired employees. Benefits were accrued over the employees’ active service period. Only employees that were employed by the Company on or before January 1, 2000 are eligible to receive post-retirement health care benefits. In addition, the Company assumed post-retirement medical life insurance benefits for certain Alliance employees, retirees and their spouses, if applicable, in the Alliance acquisition. These post-retirement benefits are referred to herein as “Other Benefits”.

The Company made no voluntary contributions to the pension and other benefits plans during the three and nine months ended September 30, 2021 and 2020.

The components of expense for Pension Benefits and Other Benefits are set forth below:

	Pension Benefits						Other Benefits
	Three Months Ended September 30,						Three Months Ended September 30,
(In thousands)	2021			2020			2021		2020
Components of net periodic (benefit) cost:
Service cost	$	517		$	446		$	2	$	2
Interest cost		679			809			45		55
Expected return on plan assets		(2,197	)		(2,105	)		-		-
Net amortization		331			368			13		13
Total net periodic (benefit) cost	$	(670	)	$	(482	)	$	60	$	70

	Pension Benefits						Other Benefits
	Nine Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2021			2020			2021		2020
Components of net periodic (benefit) cost:
Service cost	$	1,486		$	1,338		$	6	$	6
Interest cost		2,034			2,427			135		165
Expected return on plan assets		(6,602	)		(6,315	)		-		-
Net amortization		957			1,104			39		39
Total net periodic (benefit) cost	$	(2,125	)	$	(1,446	)	$	180	$	210

The service cost component of the net periodic (benefit) cost is included in Salaries and Employee Benefits and the interest cost, expected return on plan assets and net amortization components are included in Other Noninterest Expense on the unaudited interim consolidated statements of income.

19

7. Earnings Per Share

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity (such as the Company’s dilutive stock options and restricted stock units).

The following is a reconciliation of basic and diluted EPS for the periods presented in the unaudited interim consolidated statements of income:

	Three Months Ended September 30,
(In thousands, except per share data)	2021		2020
Basic EPS:
Weighted average common shares outstanding		43,360		43,643
Net income available to common stockholders	$	37,433	$	35,113
Basic EPS	$	0.86	$	0.80
Diluted EPS:
Weighted average common shares outstanding		43,360		43,643
Dilutive effect of common stock options and restricted stock		271		299
Weighted average common shares and common share equivalents		43,631		43,942
Net income available to common stockholders	$	37,433	$	35,113
Diluted EPS	$	0.86	$	0.80

	Nine Months Ended September 30,
(In thousands, except per share data)	2021		2020
Basic EPS:
Weighted average common shares outstanding		43,464		43,704
Net income available to common stockholders	$	117,575	$	70,194
Basic EPS	$	2.71	$	1.61
Diluted EPS:
Weighted average common shares outstanding		43,464		43,704
Dilutive effect of common stock options and restricted stock		305		293
Weighted average common shares and common share equivalents		43,769		43,997
Net income available to common stockholders	$	117,575	$	70,194
Diluted EPS	$	2.69	$	1.60

There was a nominal number of stock options outstanding for the three and nine months ended September 30, 2021 and September 30, 2020, that were not considered in the calculation of diluted EPS since the stock options’ exercise prices were greater than the average market price during these periods.

20

8. Reclassification Adjustments Out of Other Comprehensive Income (Loss)

The following table summarizes the reclassification adjustments out of AOCI:

Detail About AOCI Components	Amount Reclassified from AOCI						Affected Line Item in the Consolidated Statement of Comprehensive Income (Loss)
	Three Months Ended
(In thousands)	September 30, 2021			September 30, 2020
AFS securities:
Gains on AFS securities	$	-		$	-		Net securities (gains) losses
Amortization of unrealized gains related to securities transfer	$	149		$	157		Interest income
Tax effect	$	(38	)	$	(39	)	Income tax (benefit)
Net of tax	$	111		$	118
Cash flow hedges:
Net unrealized losses on cash flow hedges reclassified to interest expense	$	-		$	101		Interest expense
Tax effect	$	-		$	(25	)	Income tax (benefit)
Net of tax	$	-		$	76
Pension and other benefits:
Amortization of net losses	$	317		$	359		Other noninterest expense
Amortization of prior service costs		27			22		Other noninterest expense
Tax effect	$	(86	)	$	(95	)	Income tax (benefit)
Net of tax	$	258		$	286
Total reclassifications, net of tax	$	369		$	480

Detail About AOCI Components	Amount Reclassified from AOCI						Affected Line item in the Consolidated Statement of Comprehensive Income (Loss)
	Nine Months Ended
(In thousands)	September 30, 2021			September 30, 2020
AFS securities:
Gains on AFS securities	$	-		$	(3	)	Net securities (gains) losses
Amortization of unrealized gains related to securities transfer		434			495		Interest income
Tax effect	$	(109	)	$	(123	)	Income tax (benefit)
Net of tax	$	325		$	369
Cash flow hedges:
Net unrealized losses on cash flow hedges reclassified to interest expense	$	21		$	192		Interest expense
Tax effect	$	(5	)	$	(48	)	Income tax (benefit)
Net of tax	$	16		$	144
Pension and other benefits:
Amortization of net losses	$	913		$	1,075		Other noninterest expense
Amortization of prior service costs		83			68		Other noninterest expense
Tax effect	$	(249	)	$	(286	)	Income tax (benefit)
Net of tax	$	747		$	857
Total reclassifications, net of tax	$	1,088		$	1,370

21

9. Derivative Instruments and Hedging Activities

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, primarily by managing the amount, sources and duration of its assets and liabilities and through the use of derivative instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to certain fixed rate borrowings. The Company also has interest rate derivatives that result from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions.

Derivatives Not Designated as Hedging Instruments

The Company enters into interest rate swaps to facilitate customer transactions and meet their financing needs. These swaps are considered derivatives, but are not designated in hedging relationships. These instruments have interest rate and credit risk associated with them. To mitigate the interest rate risk, the Company enters into offsetting interest rate swaps with counterparties. The counterparty swaps are also considered derivatives and are also not designated in hedging relationships. Interest rate swaps are recorded within other assets or other liabilities on the consolidated balance sheet at their estimated fair value. Changes to the fair value of assets and liabilities arising from these derivatives are included, net, in other operating income in the consolidated statement of income.

The Company is subject to over-the-counter derivative clearing requirements, which require certain derivatives to be cleared through central clearing houses. Accordingly, the Company began to clear certain derivative transactions through the Chicago Mercantile Exchange Clearing House (“CME”) in January 2021. The CME requires the Company to post initial and variation margin payments to mitigate the risk of non-payment, the latter of which is received or paid daily based on the net asset or liability position of the contracts. A daily settlement occurs through the CME for changes in the fair value of centrally cleared derivatives. Not all of the derivatives are required to be cleared through the daily clearing agent. As a result, the total fair values of loan level derivative assets and liabilities recognized on the Company’s financial statements are not equal and offsetting.

As of September 30, 2021 and December 31, 2020, the Company had eighteen and seventeen risk participation agreements, respectively, with financial institution counterparties for interest rate swaps related to participated loans. Risk participation agreements provide credit protection to the financial institution that originated the swap transaction should the borrower fail to perform on its obligation. The Company enters into both risk participation agreements in which it purchases credit protection from other financial institutions and those in which it provides credit protection to other financial institutions.

Derivatives Designated as Hedging Instruments

The Company has previously entered into interest rate swaps to modify the interest rate characteristics of certain short-term Federal Home Loan Bank (“FHLB”) advances from variable rate to fixed rate in order to reduce the impact of changes in future cash flows due to market interest rate changes. These agreements are designated as cash flow hedges.

22

The following table summarizes the derivatives outstanding:

(In thousands)	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
As of September 30, 2021
Derivatives not designated as hedging instruments
Interest rate derivatives	$	1,346,853	Other assets	$	71,246	$	1,346,853	Other liabilities	$	71,246
Risk participation agreements		91,348	Other assets		235		37,852	Other liabilities		68
Total derivatives not designated as hedging instruments				$	71,481				$	71,314
Netting adjustments(1)					-					3,684
Net derivatives in the balance sheet				$	71,481				$	67,630
Derivatives not offset on the balance sheet				$	4,869				$	4,869
Cash collateral(2)					-					55,730
Net derivative amounts				$	66,612				$	7,031
As of December 31, 2020
Derivatives designated as hedging instruments
Interest rate derivatives	$	-	Other assets	$	-	$	25,000	Other liabilities	$	34
Derivatives not designated as hedging instruments
Interest rate derivatives	$	1,223,584	Other assets	$	108,487	$	1,223,584	Other liabilities	$	108,487
Risk participation agreements		72,528	Other assets		292		39,785	Other liabilities		125
Total derivatives not designated as hedging instruments				$	108,779				$	108,612
Cash collateral(2)					-					107,350
Net derivative amounts				$	108,779				$	1,262

(1) Netting adjustments represents the amounts recorded to convert derivatives assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance on the settle to market rules for cleared derivatives. The CME legally characterizes the variation margin posted between counterparties as settlements of the outstanding derivative contracts instead of cash collateral. Company began to clear certain derivative transactions through the CME in 2021.

(2) Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The other collateral consists of securities and is exchanged under bilateral collateral and master netting agreements that allow us to offset the net derivative position with the related collateral. The application of the other collateral cannot reduce the net derivative position below zero. Therefore, excess other collateral, if any, is not reflected above.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest expense in the same period during which the hedge transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s short-term rate borrowings. During the three months ended March 31, 2021 the Company’s final cash flow hedge of interest rate risk matured and the remaining balance was reclassified from AOCI as a reduction to interest expense. There is no additional amount that will be reclassified from AOCI as a reduction to interest expense.

The following table indicates the effect of cash flow hedge accounting on AOCI and on the unaudited interim consolidated statement of income:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2021		2020		2021		2020
Derivatives designated as hedging instruments:
Interest rate derivatives - included component
Amount of (loss) recognized in other comprehensive income	$	-	$	-	$	-	$	(274	)
Amount of loss reclassified from AOCI into interest expense		-		101		21		192

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The following table indicates the gain or loss recognized in income on derivatives not designated as a hedging relationship:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2021			2020			2021			2020
Derivatives not designated as hedging instruments:
(Decrease) increase in other income	$	(307	)	$	(20	)	$	(382	)	$	127

10. Fair Value Measurements and Fair Value of Financial Instruments

GAAP states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value measurements are not adjusted for transaction costs. A fair value hierarchy exists within GAAP that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities, many other sovereign government obligations, liquid mortgage products, active listed equities and most money market securities. Such instruments are generally classified within Level 1 or Level 2 of the fair value hierarchy. The Company does not adjust the quoted prices for such instruments.

The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency include most investment-grade and high-yield corporate bonds, less liquid mortgage products, less liquid agency securities, less liquid listed equities, state, municipal and provincial obligations and certain physical commodities. Such instruments are generally classified within Level 2 of the fair value hierarchy. Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices). Other investment securities are reported at fair value utilizing Level 1 and Level 2 inputs. The prices for Level 2 instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases and sales of investment securities. Prices obtained from these sources include prices derived from market quotations and matrix pricing. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Management reviews the methodologies used in pricing the securities by its third-party providers.

Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions. Valuations are adjusted to reflect illiquidity and/or non-transferability and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate will be used. Management’s best estimate consists of both internal and external support on certain Level 3 investments. Subsequent to inception, management only changes Level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalizations and other transactions across the capital structure, offerings in the equity or debt markets and changes in financial ratios or cash flows.

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The following tables set forth the Company’s financial assets and liabilities measured on a recurring basis that were accounted for at fair value. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

(In thousands)	Level 1		Level 2		Level 3		September 30, 2021
Assets:
AFS securities
Federal agency	$	-	$	242,966	$	-	$	242,966
State & municipal		-		84,021		-		84,021
Mortgage-backed		-		650,195		-		650,195
Collateralized mortgage obligations		-		558,711		-		558,711
Corporate		-		40,137		-		40,137
Total AFS securities	$	-	$	1,576,030	$	-	$	1,576,030
Equity securities		32,013		1,000		-		33,013
Derivatives		-		71,481		-		71,481
Total	$	32,013	$	1,648,511	$	-	$	1,680,524
Liabilities:
Derivatives	$	-	$	71,314	$	-	$	71,314
Total	$	-	$	71,314	$	-	$	71,314

(In thousands)	Level 1		Level 2		Level 3		December 31, 2020
Assets:
AFS securities
Federal agency	$	-	$	243,597	$	-	$	243,597
State & municipal		-		43,180		-		43,180
Mortgage-backed		-		595,839		-		595,839
Collateralized mortgage obligations		-		437,804		-		437,804
Corporate		-		28,278		-		28,278
Total AFS securities	$	-	$	1,348,698	$	-	$	1,348,698
Equity securities		28,737		2,000		-		30,737
Derivatives		-		108,779		-		108,779
Total	$	28,737	$	1,459,477	$	-	$	1,488,214
Liabilities:
Derivatives	$	-	$	108,646	$	-	$	108,646
Total	$	-	$	108,646	$	-	$	108,646

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GAAP requires disclosure of assets and liabilities measured and recorded at fair value on a non-recurring basis such as goodwill, loans held for sale, other real estate owned, collateral-dependent impaired loans, mortgage servicing rights and HTM securities. The non-recurring fair value measurements recorded during the three and nine month periods ended September 30, 2021 and the year ended December 31, 2020 were related to impaired loans, write-downs of other real estate owned and write-down of branch assets to fair value. The Company uses the fair value of underlying collateral, less costs to sell, to estimate the allowance for credit losses for individually evaluated collateral dependent loans. The appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses ranging from 10% to 50%. Based on the valuation techniques used, the fair value measurements for collateral dependent individually evaluated loans are classified as Level 3.

As of September 30, 2021, the Company had collateral dependent individually evaluated loans with a carrying value of $12.5 million, which had an estimated allowance for credit loss of $1.3 million. As of December 31, 2020, the Company had collateral dependent individually evaluated loans with a carrying value of $15.2 million, which had an estimated allowance for credit loss of $3.2 million.

The following table sets forth information with regard to estimated fair values of financial instruments. This table excludes financial instruments for which the carrying amount approximates fair value. Financial instruments for which the fair value approximates carrying value include cash and cash equivalents, AFS securities, equity securities, accrued interest receivable, non-maturity deposits, short-term borrowings, accrued interest payable and derivatives.

			September 30, 2021				December 31, 2020
(In thousands)	Fair Value Hierarchy		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
HTM securities		2	$	683,103	$	689,129	$	616,560	$	636,827
Net loans		3		7,474,466		7,615,405		7,390,004		7,530,033
Financial liabilities:
Time deposits		2	$	552,273	$	553,125	$	633,479	$	638,721
Long-term debt		2		14,020		14,376		39,097		39,820
Subordinated debt		1		100,000		107,684		100,000		103,277
Junior subordinated debt		2		101,196		109,001		101,196		108,926

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, the Company has a substantial wealth operation that contributes net fee income annually. The wealth management operation is not considered a financial instrument and its value has not been incorporated into the fair value estimates. Other significant assets and liabilities include the benefits resulting from the low-cost funding of deposit liabilities as compared to the cost of borrowing funds in the market and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimate of fair value.

HTM Securities

The fair value of the Company’s HTM securities is primarily measured using information from a third-party pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.

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Net Loans

Net loans include portfolio loans and loans held for sale. Loans were first segregated by type and then further segmented into fixed and variable rate and loan quality categories. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments, which also includes credit risk, illiquidity risk and other market factors to calculate the exit price fair value in accordance with ASC 820.

Time Deposits

The fair value of time deposits was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments. The fair values of the Company’s time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.

Long-Term Debt

The fair value of long-term debt was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments.

Subordinated Debt

The fair value of subordinated debt has been measured using the observable market price as of the period reported.

Junior Subordinated Debt

The fair value of junior subordinated debt has been estimated using a discounted cash flow analysis.

11. Commitments and Contingencies

The Company is a party to certain financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, unused lines of credit, standby letters of credit and certain agricultural real estate loans sold to investors with recourse, with the sold portion having a government guarantee that is assignable back to the Company upon repurchase of the loan in the event of default. The Company’s exposure to credit loss in the event of nonperformance by the other party to the commitments to extend credit, unused lines of credit, standby letters of credit and loans sold with recourse is represented by the contractual amount of those investments. The credit risk associated with commitments to extend credit and standby and commercial letters of credit is essentially the same as that involved with extending loans to customers and is subject to normal credit policies. Collateral may be obtained based on management’s assessment of the customer’s credit worthiness. Commitments to extend credit and unused lines of credit totaled $2.3 billion at September 30, 2021 and $2.2 billion at December 31, 2020.

Since many loan commitments, standby letters of credit and guarantees and indemnification contracts expire without being funded in whole or in part, the contract amounts are not necessarily indicative of future cash flows. The Company does not issue any guarantees that would require liability-recognition or disclosure, other than its standby letters of credit.

The Company guarantees the obligations or performance of customers by issuing standby letters of credit to third-parties. These standby letters of credit are generally issued in support of third-party debt, such as corporate debt issuances, industrial revenue bonds and municipal securities. The risk involved in issuing standby letters of credit is essentially the same as the credit risk involved in extending loan facilities to customers and letters of credit are subject to the same credit origination, portfolio maintenance and management procedures in effect to monitor other credit and off-balance sheet products. Typically, these instruments have one year expirations with an option to renew upon annual review; therefore, the total amounts do not necessarily represent future cash requirements. Standby letters of credit totaled $50.6 million at September 30, 2021 and $54.0 million at December 31, 2020. As of September 30, 2021 and December 31, 2020, the fair value of the Company’s standby letters of credit was not significant.

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BANCORP INC. AND SUBSIDIARIES

Item 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The purpose of this discussion and analysis is to provide a concise description of the consolidated financial condition and results of operations of NBT Bancorp Inc. (“NBT”) and its wholly owned subsidiaries, including NBT Bank, National Association (the “Bank”), NBT Financial Services, Inc. (“NBT Financial”) and NBT Holdings, Inc. (“NBT Holdings”) (collectively referred to herein as the “Company”). This discussion will focus on results of operations, financial condition, capital resources and asset/liability management. Reference should be made to the Company’s consolidated financial statements and footnotes thereto included in this Form 10‑Q as well as to the Company’s Annual Report on Form 10‑K for the year ended December 31, 2020 for an understanding of the following discussion and analysis. Operating results for the three and nine month periods ending September 30, 2021 are not necessarily indicative of the results of the full year ending December 31, 2021 or any future period.

Forward-looking Statements

Certain statements in this filing and future filings by the NBT Bancorp Inc. (the “Company”) with the Securities and Exchange Commission (“SEC”), in the Company’s press releases or other public or stockholder communications or in oral statements made with the approval of an authorized executive officer, contain forward-looking statements, as defined in the Private Securities Litigation Reform Act. These statements may be identified by the use of phrases such as “anticipate,” “believe,” “expect,” “forecasts,” “projects,” “will,” “can,” “would,” “should,” “could,” “may,” or other similar terms. There are a number of factors, many of which are beyond the Company’s control that could cause actual results to differ materially from those contemplated by the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) local, regional, national and international economic conditions and the impact they may have on the Company and its customers and the Company’s assessment of that impact; (2) changes in the level of nonperforming assets and charge-offs; (3) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (4) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board (“FRB”); (5) inflation, interest rate, securities market and monetary fluctuations; (6) political instability; (7) acts of war or terrorism; (8) the timely development and acceptance of new products and services and perceived overall value of these products and services by users; (9) changes in consumer spending, borrowings and savings habits; (10) changes in the financial performance and/or condition of the Company’s borrowers; (11) technological changes; (12) acquisitions and integration of acquired businesses; (13) the ability to increase market share and control expenses; (14) changes in the competitive environment among financial holding companies; (15) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company and its subsidiaries must comply, including those under the Dodd-Frank Act, Economic Growth, Regulatory Relief, Consumer Protection Act of 2018, Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), and other legislative and regulatory responses to the coronavirus (“COVID-19”) pandemic; (16) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board (“FASB”) and other accounting standard setters; (17) changes in the Company’s organization, compensation and benefit plans; (18) the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; (19) greater than expected costs or difficulties related to the integration of new products and lines of business; (20) the adverse impact on the U.S. economy, including the markets in which we operate, of the COVID-19 global pandemic; and (21) the Company’s success at managing the risks involved in the foregoing items.

Currently, one of the most significant factors that could cause actual outcomes to differ materially from the Company’s forward-looking statements is the potential adverse effect of the current COVID-19 pandemic on the financial condition, results of operations, cash flows and performance of the Company, its customers and the global economy and financial markets. The extent to which the COVID-19 pandemic impacts the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, and its impact on the Company’s customers and demand for financial services, the actions governments, businesses and individuals take in response to the pandemic, the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies, national and local economic activity, the speed and effectiveness of vaccine and treatment developments and their deployment, including public adoption rates of COVID-19 vaccines, and the pace of recovery when the COVID-19 pandemic subsides, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section entitled “Risk Factors” in our Form 10-K for the year ended December 31, 2020 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic.

The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made, and advises readers that various factors, including, but not limited to, those described above and other factors discussed in the Company’s annual and quarterly reports previously filed with the SEC, could affect the Company’s financial performance and could cause the Company’s actual results or circumstances for future periods to differ materially from those anticipated or projected.

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Unless required by law, the Company does not undertake, and specifically disclaims any obligations to, publicly release any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Non-GAAP Measures

This Quarterly Report on Form 10-Q contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Where non-GAAP disclosures are used in this Form 10-Q, the comparable GAAP measure, as well as a reconciliation to the comparable GAAP measure, is provided in the accompanying tables. Management believes that these non-GAAP measures provide useful information that is important to an understanding of the results of the Company’s core business as well as provide information standard in the financial institution industry. Non-GAAP measures should not be considered a substitute for financial measures determined in accordance with GAAP and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company.

Critical Accounting Policies

The Company has identified policies as being critical because they require management to make particularly difficult, subjective and/or complex judgments about matters that are inherently uncertain. The judgment and assumptions made are based upon historical experience or other factors that management believes to be reasonable under the circumstances. Because of the nature of the judgment and assumptions, actual results could differ from estimates, which could have a material effect on our financial condition and results of operations. These policies relate to the allowance for credit losses, pension accounting and provision for income taxes.

The allowance for credit losses consists of the allowance for credit losses and the allowance for losses on unfunded commitments. Measurement of Credit Losses on Financial Instruments (“CECL”) approach requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses under the CECL approach is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. The Company then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, the Company considers forecasts about future economic conditions that are reasonable and supportable. The allowance for losses on unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit. However, a liability is not recognized for commitments unconditionally cancellable by the Company. The allowance for losses on unfunded commitments is determined by estimating future draws and applying the expected loss rates on those draws.

Management of the Company considers the accounting policy relating to the allowance for credit losses to be a critical accounting policy given the uncertainty in evaluating the level of the allowance required to cover management’s estimate of all expected credit losses over the expected contractual life of our loan portfolio. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the allowance for credit losses in those future periods. While management’s current evaluation of the allowance for credit losses indicates that the allowance is appropriate, the allowance may need to be increased under adversely different conditions or assumptions. Going forward, the impact of utilizing the CECL approach to calculate the reserve for credit losses will be significantly influenced by the composition, characteristics and quality of our loan portfolio, as well as the prevailing economic conditions and forecasts utilized. Material changes to these and other relevant factors may result in greater volatility to the reserve for credit losses, and therefore, greater volatility to our reported earnings.

Management is required to make various assumptions in valuing the Company’s pension assets and liabilities. These assumptions include the expected rate of return on plan assets, the discount rate, the rate of increase in future compensation levels and interest rate of credit for cash balance plans. Changes to these assumptions could impact earnings in future periods. The Company takes into account the plan asset mix, funding obligations and expert opinions in determining the various rates used to estimate pension expense. The Company also considers market interest rates and discounted cash flows in setting the appropriate discount rate. In addition, the Company reviews expected inflationary and merit increases to compensation in determining the rate of increase in future compensation levels.

The Company is subject to examinations from various taxing authorities. Such examinations may result in challenges to the tax return treatment applied by the Company to specific transactions. Management believes that the assumptions and judgments used to record tax-related assets or liabilities have been appropriate. Should tax laws change or the taxing authorities determine that management’s assumptions were inappropriate, an adjustment may be required which could have a material effect on the Company’s results of operations.

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The Company’s policies on the CECL method for allowance for credit losses, pension accounting and provision for income taxes are disclosed in Note 1 to the consolidated financial statements presented in our 2020 Annual Report on Form 10-K. All accounting policies are important and as such, the Company encourages the reader to review each of the policies included in Note 1 to the consolidated financial statements presented in our 2020 Annual Report on Form 10-K to obtain a better understanding of how the Company’s financial performance is reported. Refer to Note 3 to the unaudited interim consolidated finance statements in this Quarterly Report on Form 10-Q for recently adopted accounting standards.

Overview

Significant factors management reviews to evaluate the Company’s operating results and financial condition include, but are not limited to: net income and earnings per share, return on average assets and equity, net interest margin, noninterest income, operating expenses, asset quality indicators, loan and deposit growth, capital management, liquidity and interest rate sensitivity, enhancements to customer products and services, technology advancements, market share and peer comparisons. The Company’s results in 2021 and 2020 have been impacted by the COVID-19 pandemic and the CECL accounting methodology, including the estimated impact of the COVID-19 pandemic on expected credit losses. The following information should be considered in connection with the Company’s results for the three and nine months ended September 30, 2021:

● net income for the three months ended September 30, 2021 was $37.4 million, up $2.3 million from the third quarter of 2020 and down $2.9 million from the second quarter of 2021;

● diluted earnings per share of $0.86 for the three months ended September 30, 2021, up $0.06 from the third quarter of 2020 and down $0.06 from the second quarter of 2021;

● period end loans were $7.6 billion, up 1%, annualized, from December 31, 2020 (4.2% excluding Paycheck Protection Program (“PPP”) loans);

● net charge-offs to average loans of 0.11%, annualized (0.12% excluding PPP loans) and allowance for loan losses to total loans at 1.23% (1.28% excluding PPP loans and related allowance);

● book value per share of $28.65 at September 30, 2021; tangible book value per share grew 2% for the quarter and 10% from September 30, 2020 to $21.95⁽¹⁾.

(1) Non-GAAP measure - Stockholders’ equity less goodwill and intangible assets divided by common shares outstanding.

COVID-19 Pandemic and Company Response

The year 2020 began with overall stable U.S. economic conditions that were significantly impacted by the COVID-19 pandemic and subsequent shut-down of non-essential business throughout the Company’s footprint. A prolonged global pandemic like COVID-19 could adversely affect our operations. The results of operations and the ultimate effect of pandemic will depend on numerous factors that are highly uncertain including how long restrictions for business and individuals will last, further information around the severity of the virus itself, additional actions taken by federal, state and local governments to contain and treat COVID-19 and what, if any, additional government relief will be provided. The expected impact of the pandemic on the Company’s business, financial condition, results of operations, and its customers has not fully manifested. The fiscal stimulus and relief programs appear to have delayed or mitigated any materially adverse financial impact to the Company. Once these stimulus programs have been exhausted, the Company’s credit metrics may worsen and loan losses could ultimately materialize. Any potential loan losses will be contingent upon the resurgence of the virus, including any new strains, offset by the potency of the vaccine along with its extensive distribution, and the ability for customers and businesses to return to their prepandemic routines. However, economic uncertainty remains relatively high and volatility is expected to continue in 2021.

In response, the Company immediately formed an Executive Task Force and engaged its established Incident Response Team under its Business Continuity Plan to execute a comprehensive pandemic response plan. The Company has taken significant steps to address the needs of its customers impacted by COVID-19. The Company provided payment relief for all its customers for 180 days or less, waiving associated late fees while not reporting these payment deferrals as late payments to the credit bureaus for all its consumer customers who were current prior to this event. The Company has also offered longer payment deferral options on a limited, case by case basis to address certain customers’ hardships related to the pandemic where we are able to gather information on the ongoing viability of the borrower’s long-term ability to return to full payment. The Company continues to responsibly lend to qualified consumer and commercial customers and designed special lending programs as well as participating in government sponsored relief programs to respond to customers’ needs during the pandemic. The Company believes our historically strong underwriting practices, diverse and granular portfolios, and geographic footprint will help to mitigate any adverse impact to the Company.

The Company has been a participant in the Small Business Administration’s Paycheck Protection Program, a loan guarantee program created under the CARES Act targeted to provide small businesses with support to cover payroll and certain other expenses. Loans made under the PPP are fully guaranteed by the Small Business Administration (“SBA”), whose guarantee is backed by the full faith and credit of the United States. PPP covered loans also afford borrowers forgiveness up to the principal amount of the PPP covered loan, plus accrued interest, if the loan proceeds are used to retain workers and maintain payroll or to make certain mortgage interest, lease and utility payments, and certain other criteria are satisfied. The SBA will reimburse PPP lenders for any amount of a PPP covered loan that is forgiven, and PPP lenders will not be held liable for any representations made by PPP borrowers in connection with their requests for loan forgiveness. Lenders receive pre-determined fees for processing and servicing PPP loans. In addition, PPP loans are risk-weighted at zero percent under the generally-applicable Standardized Approach used to calculate risk-weighted assets for regulatory capital purposes. The Company processed approximately 3,100 loans totaling $287 million in relief during the nine months ended September 30, 2021 as compared to 3,000 loans totaling over $548 million in 2020. The Company is supporting the PPP application and forgiveness processes with online resources, educational webinars and a partnership with a certified public accounting firm. As of September 30, 2021, the Company has received payment from the SBA on 2,622 of our loans totaling $449.8 million.

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On December 27, 2020, the President signed into law the Consolidated Appropriation Act (“CAA”). The CAA, among other things, extends the life of the PPP, effectively creating a second round of PPP loans for eligible businesses. The Company is participating in the CAA’s second round of PPP lending. In mid-January the Company opened its lending portal and began processing PPP loan applications from current and new customers. As of September 30, 2021, the Company has originated $287 million in PPP loans during this round with an average loan size of $93,000.

The Company established a committee to ensure employee and customer safety and a nimble response across geographic and functional areas. The five focus areas for the Company’s reopening are employee well-being, alternate work plans, physical workspace, working with customers and vendors, and policies, training and communication. The Committee monitored state and local responses and adapted physical locations across its footprint in its re-opening plans and will continue to monitor and adapt its response as the impact of COVID-19 continues to develop. The Company has taken several steps to address the safety of its employees and its customers including health and safety protocols to protect branch and onsite workers, full-time remote and hybrid work arrangement, additional benefits for health, childcare/eldercare needs and well-being and new mobile, online, business banking and mortgage platforms were launched in 2020.

Results of Operations

Net income for the three months ended September 30, 2021 was $37.4 million, down $2.9 million from $40.3 million for the second quarter of 2021 and up $2.3 million from $35.1 million for the third quarter of 2020. Diluted earnings per share for the three months ended September 30, 2021 was $0.86, as compared with $0.92 for the prior quarter, and $0.80 for the third quarter of 2020. Return on average assets (annualized) was 1.26% for the three months ended September 30, 2021 as compared to 1.39% for the prior quarter and 1.29% for the same period last year. Return on average equity (annualized) was 12.04% for the three months ended September 30, 2021 as compared to 13.42% for the prior quarter and 12.09% for the three months ended September 30, 2020. Return on average tangible common equity (annualized) was 15.97% for the three months ended September 30, 2021 as compared to 17.93% for the prior quarter and 16.51% for the three months ended September 30, 2020.

Net income for the nine months ended September 30, 2021 was $117.6 million, up $47.4 from $70.2 million for the same period last year. Diluted earnings per share for the nine months ended September 30, 2021 was $2.69 as compared with $1.60 for the same period in 2020. Return on average assets (annualized) was 1.37% for the nine months ended September 30, 2021 as compared to 0.90% for the same period last year. Return on average equity (annualized) was 13.00% for the nine months ended September 30, 2021 as compared to 8.23% for the nine months ended September 30, 2020. Return on average tangible common equity (annualized) was 17.35% for the nine months ended September 30, 2021 as compared to 11.36% for the nine months ended September 30, 2020.

Return on average tangible common equity is a non-GAAP measure and excludes amortization of intangible assets (net of tax) from net income and average tangible equity calculated as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2021		2020		2021		2020
Net income	$	37,433	$	35,113	$	117,575	$	70,194
Amortization of intangible assets (net of tax)		497		642		1,618		1,930
Net income, excluding intangible amortization	$	37,930	$	35,755	$	119,193	$	72,124
Average stockholders’ equity	$	1,233,045	$	1,155,056	$	1,209,586	$	1,139,871
Less: average goodwill and other intangibles		290,492		293,572		291,177		291,472
Average tangible common equity	$	942,553	$	861,484	$	918,409	$	848,399

Net Interest Income

Net interest income is the difference between interest income on earning assets, primarily loans and securities and interest expense on interest-bearing liabilities, primarily deposits and borrowings. Net interest income is affected by the interest rate spread, the difference between the yield on interest-earning assets and cost of interest-bearing liabilities, as well as the volumes of such assets and liabilities. Net interest income is one of the key determining factors in a financial institution’s performance as it is the principal source of earnings.

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Net interest income was $77.7 million for the third quarter of 2021, down $1.5 million, or 1.9%, from the previous quarter. PPP loan interest and fees recognized into interest income for the three months ended September 30, 2021 was $2.9 million compared to $4.7 million for the previous quarter. The fully taxable equivalent (“FTE”) net interest margin was 2.88% for the three months ended September 30, 2021, a decrease of 12 bps from the previous quarter. Interest income decreased $1.8 million, or 2.2%, as the yield on average interest-earning assets decreased 13 bps from the prior quarter to 3.05%, while average interest-earning assets of $10.7 billion increased $96.4 million from the prior quarter, primarily due to an increase in short-term interest-bearing accounts due to higher levels of short-term interest bearing accounts (“excess liquidity”) and an increase in average investment securities. Interest expense was down $0.3 million, or 6.7%, as the cost of interest-bearing liabilities decreased 2 bps to 0.27% for the quarter ended September 30, 2021, driven by interest-bearing deposit costs decreasing 2 bps.

Net interest income was $77.7 million for the third quarter of 2021, down $0.3 million, or 0.3%, from the third quarter of 2020. PPP loan interest and fees recognized into interest income for the three months ended September 30, 2021 was $2.9 million compared to $4.6 million for the third quarter of 2020. The FTE net interest margin was 2.88% for the three months ended September 30, 2021, a decrease of 29 bps from the third quarter of 2020. Interest income decreased $2.8 million, or 3.3%, as the yield on average interest-earning assets decreased 40 bps from the same period in 2020 to 3.05%, while average interest-earning assets of $10.7 billion increased $0.9 billion from the third quarter of 2020, primarily due to excess liquidity and an increase in average investment securities. Interest expense was down $2.5 million, or 35.6%, as the cost of interest-bearing liabilities decreased 18 bps to 0.27% for the quarter ended September 30, 2021, driven by interest-bearing deposit costs decreasing 14 bps along with a 53 bps decrease in short-term borrowings cost.

Net interest income for the first nine months of 2021 was $235.9 million, up $0.3 million, or 0.1%, from the same period in 2020. PPP loan interest and fees recognized into interest income for the nine months ended September 30, 2021 was $13.8 million compared to $8.5 million for the same period in 2020. FTE net interest margin of 3.01% for the nine months ended September 30, 2021, was down from 3.35% for the same period in 2020. Interest income decreased $11.3 million, or 4.3%, as the yield on average interest-earning assets decreased 52 bps from the same period in 2020 to 3.20%, while average interest-earning assets of $10.5 billion increased $1.1 billion primarily due to excess liquidity and an increase in average investment securities. Interest expense was down $11.6 million, or 44.2%, for the nine months ended September 30, 2021 as compared to the same period in 2020 as the cost of interest-bearing liabilities decreased 27 bps to 0.30%, driven by interest-bearing deposit costs decreasing 25 bps along with a 87 bps decrease in short-term borrowings cost. The Federal Reserve lowered its target fed funds rate by 150 basis points in the first quarter of 2020.

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Average Balances and Net Interest Income

The following tables include the condensed consolidated average balance sheet, an analysis of interest income/expense and average yield/rate for each major category of earning assets and interest-bearing liabilities on a taxable equivalent basis.

Three Months Ended	September 30, 2021							September 30, 2020
(Dollars in thousands)	Average Balance		Interest		Yield/ Rates			Average Balance		Interest		Yield/ Rates
Assets:
Short-term interest-bearing accounts	$	1,014,120	$	403		0.16	%	$	477,946	$	130		0.11	%
Securities available for sale (1) (3)		1,513,071		5,898		1.55	%		1,137,604		5,603		1.96	%
Securities held to maturity (1) (3)		657,314		3,234		1.95	%		621,812		4,008		2.56	%
Federal Reserve Bank and FHLB stock		25,154		121		1.91	%		29,720		529		7.08	%
Loans (2) (3)		7,517,839		72,857		3.84	%		7,559,218		75,049		3.95	%
Total interest-earning assets	$	10,727,498	$	82,513		3.05	%	$	9,826,300	$	85,319		3.45	%
Other assets		1,019,797							967,194
Total assets	$	11,747,295						$	10,793,494
Liabilities and stockholders’ equity:
Money market deposit accounts	$	2,580,570	$	1,266		0.19	%	$	2,364,606	$	1,680		0.28	%
NOW deposit accounts		1,442,678		183		0.05	%		1,207,064		144		0.05	%
Savings deposits		1,691,539		219		0.05	%		1,447,021		192		0.05	%
Time deposits		565,216		880		0.62	%		684,708		2,251		1.31	%
Total interest-bearing deposits	$	6,280,003	$	2,548		0.16	%	$	5,703,399	$	4,267		0.30	%
Short-term borrowings		99,703		28		0.11	%		277,890		446		0.64	%
Long-term debt		14,029		89		2.52	%		64,137		398		2.47	%
Subordinated debt		98,311		1,359		5.48	%		97,934		1,375		5.59	%
Junior subordinated debt		101,196		517		2.03	%		101,196		565		2.22	%
Total interest-bearing liabilities	$	6,593,242	$	4,541		0.27	%	$	6,244,556	$	7,051		0.45	%
Demand deposits	$	3,676,883						$	3,111,617
Other liabilities		244,125							282,265
Stockholders’ equity		1,233,045							1,155,056
Total liabilities and stockholders’ equity	$	11,747,295						$	10,793,494
Net interest income (FTE)			$	77,972						$	78,268
Interest rate spread						2.78	%						3.00	%
Net interest margin (FTE)						2.88	%						3.17	%
Taxable equivalent adjustment			$	298						$	325
Net interest income			$	77,674						$	77,943

(1) Securities are shown at average amortized cost.

(2) For purposes of these computations, nonaccrual loans and loans held for sale are included in the average loan balances outstanding.

(3) Interest income for tax-exempt securities and loans have been adjusted to a FTE basis using the statutory Federal income tax rate of 21%.

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Nine Months Ended	September 30, 2021							September 30, 2020
(Dollars in thousands)	Average Balance		Interest		Yield/ Rates			Average Balance		Interest		Yield/ Rates
Assets:
Short-term interest-bearing accounts	$	860,067	$	763		0.12	%	$	311,577	$	464		0.20	%
Securities available for sale (1) (3)		1,438,117		17,204		1.60	%		1,028,962		16,956		2.20	%
Securities held to maturity (1) (3)		623,284		10,237		2.20	%		619,379		12,562		2.71	%
Federal Reserve Bank and FHLB stock		25,290		443		2.34	%		35,349		1,674		6.33	%
Loans (2) (3)		7,555,276		222,821		3.94	%		7,437,566		231,168		4.15	%
Total interest-earning assets	$	10,502,034	$	251,468		3.20	%	$	9,432,833	$	262,824		3.72	%
Other assets		984,372							938,296
Total assets	$	11,486,406						$	10,371,129
Liabilities and stockholders’ equity:
Money market deposit accounts	$	2,557,172	$	4,022		0.21	%	$	2,275,765	$	8,646		0.51	%
NOW deposit accounts		1,419,102		531		0.05	%		1,153,780		548		0.06	%
Savings deposits		1,633,941		625		0.05	%		1,369,219		553		0.05	%
Time deposits		590,385		3,404		0.77	%		762,548		8,436		1.48	%
Total interest-bearing deposits	$	6,200,600	$	8,582		0.19	%	$	5,561,312	$	18,183		0.44	%
Short-term borrowings		103,314		130		0.17	%		412,312		3,215		1.04	%
Long-term debt		15,976		301		2.52	%		64,165		1,184		2.46	%
Subordinated debt		98,204		4,077		5.55	%		35,750		1,503		5.62	%
Junior subordinated debt		101,196		1,572		2.08	%		101,196		2,186		2.89	%
Total interest-bearing liabilities	$	6,519,290	$	14,662		0.30	%	$	6,174,735	$	26,271		0.57	%
Demand deposits	$	3,514,005						$	2,800,297
Other liabilities		243,525							256,226
Stockholders’ equity		1,209,586							1,139,871
Total liabilities and stockholders’ equity	$	11,486,406						$	10,371,129
Net interest income (FTE)			$	236,806						$	236,553
Interest rate spread						2.90	%						3.15	%
Net interest margin (FTE)						3.01	%						3.35	%
Taxable equivalent adjustment			$	899						$	983
Net interest income			$	235,907						$	235,570

(1) Securities are shown at average amortized cost.

(2) For purposes of these computations, nonaccrual loans and loans held for sale are included in the average loan balances outstanding.

(3) Interest income for tax-exempt securities and loans have been adjusted to a FTE basis using the statutory Federal income tax rate of 21%.

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The following table presents changes in interest income and interest expense attributable to changes in volume (change in average balance multiplied by prior year rate), changes in rate (change in rate multiplied by prior year volume) and the net change in net interest income. The net change attributable to the combined impact of volume and rate has been allocated to each in proportion to the absolute dollar amounts of change.

Three Months Ended September 30,	Increase (Decrease) 2021 over 2020
(In thousands)	Volume			Rate			Total
Short-term interest-bearing accounts	$	194		$	79		$	273
Securities available for sale		1,625			(1,330	)		295
Securities held to maturity		221			(995	)		(774	)
Federal Reserve Bank and FHLB stock		(71	)		(337	)		(408	)
Loans		(375	)		(1,817	)		(2,192	)
Total FTE interest income	$	1,594		$	(4,400	)	$	(2,806	)
Money market deposit accounts	$	144		$	(558	)	$	(414	)
NOW deposit accounts		30			9			39
Savings deposits		32			(5	)		27
Time deposits		(341	)		(1,030	)		(1,371	)
Short-term borrowings		(183	)		(235	)		(418	)
Long-term debt		(317	)		8			(309	)
Subordinated debt		6			(22	)		(16	)
Junior subordinated debt		-			(48	)		(48	)
Total FTE interest expense	$	(629	)	$	(1,881	)	$	(2,510	)
Change in FTE net interest income	$	2,223		$	(2,519	)	$	(296	)

Nine Months Ended September 30,	Increase (Decrease) 2021 over 2020
(In thousands)	Volume			Rate			Total
Short-term interest-bearing accounts	$	548		$	(249	)	$	299
Securities available for sale		5,636			(5,388	)		248
Securities held to maturity		78			(2,403	)		(2,325	)
Federal Reserve Bank and FHLB stock		(383	)		(848	)		(1,231	)
Loans		3,560			(11,907	)		(8,347	)
Total FTE interest income	$	9,439		$	(20,795	)	$	(11,356	)
Money market deposit accounts	$	958		$	(5,582	)	$	(4,624	)
NOW deposit accounts		112			(129	)		(17	)
Savings deposits		102			(30	)		72
Time deposits		(1,613	)		(3,419	)		(5,032	)
Short-term borrowings		(1,456	)		(1,629	)		(3,085	)
Long-term debt		(908	)		25			(883	)
Subordinated debt		2,592			(18	)		2,574
Junior subordinated debt		-			(614	)		(614	)
Total FTE interest expense	$	(213	)	$	(11,396	)	$	(11,609	)
Change in net FTE interest income	$	9,652		$	(9,399	)	$	253

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Noninterest Income

Noninterest income is a significant source of revenue for the Company and an important factor in the Company’s results of operations. The following table sets forth information by category of noninterest income for the periods indicated:

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2021			2020		2021		2020
Service charges on deposit accounts	$	3,489		$	3,087	$	9,544	$	9,613
ATM and debit card fees		8,172			7,194		23,343		19,184
Retirement plan administration fees		10,495			9,685		30,372		26,840
Wealth management fees		8,783			7,695		25,099		21,791
Insurance services		3,720			3,742		10,689		11,303
Bank owned life insurance		1,548			1,255		4,588		4,010
Net securities gains (losses)		(100	)		84		568		(548	)
Other		4,222			4,985		12,480		15,968
Total noninterest income	$	40,329		$	37,727	$	116,683	$	108,161

Noninterest income for the three months ended September 30, 2021 was $40.3 million, up $1.0 million, or 2.6%, from the prior quarter and up $2.6 million, or 6.9%, from the third quarter of 2020. Excluding net securities gains (losses), noninterest income for the three months ended September 30, 2021 was $40.4 million, up $1.3 million, or 3.4%, from the prior quarter and up $2.8 million, or 7.4%, from the third quarter of 2020. The increase from the prior quarter was primarily driven by higher service charges on deposit accounts, higher retirement plan administration fees due to market performance and organic growth in relationships and higher wealth management fees driven by market performance and organic growth. The increase from the third quarter of 2020 was primarily due to higher ATM and debit card fees due to increased volume and higher per transaction rates, higher wealth management fees driven by market performance and organic growth, an increase in retirement plan administration fees driven by driven by market performance and organic growth, and higher service charges on deposit accounts due to lower overdraft charges during the COVID-19 pandemic, partly offset by lower swap fees and lower mortgage banking income.

Noninterest income for the nine months ended September 30, 2021 was $116.7 million, up $8.5 million, or 7.9%, from the same period in 2020. Excluding net securities gains (losses), noninterest income for the nine months ended September 30, 2021 would have been $116.1 million, up $7.4 million, or 6.8%, from the same period in 2020. The increase from the prior year was primarily due to higher ATM and debit card fess due to increased volume and higher per transaction rates, higher wealth management fees driven by market performance and organic growth and an increase in retirement plan administration fees driven by the April 1, 2020 acquisition of Alliance Benefit Group of Illinois, Inc. (“ABG”), partly offset by lower swap fees and lower mortgage banking income.

Noninterest Expense

Noninterest expenses are also an important factor in the Company’s results of operations. The following table sets forth the major components of noninterest expense for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2021		2020		2021		2020
Salaries and employee benefits	$	44,190	$	40,451	$	128,462	$	120,918
Occupancy		5,117		5,294		16,281		16,354
Data processing and communications		3,881		4,058		13,039		12,370
Professional fees and outside services		3,784		3,394		11,403		10,694
Equipment		5,577		5,073		16,247		14,494
Office supplies and postage		1,364		1,530		4,478		4,621
FDIC expense		772		645		2,243		1,949
Advertising		583		530		1,502		1,461
Amortization of intangible assets		663		856		2,157		2,573
Loan collection and other real estate owned, net		706		620		1,959		2,365
Other		6,232		3,857		14,405		14,730
Total noninterest expense	$	72,869	$	66,308	$	212,176	$	202,529

Noninterest expense for the three months ended September 30, 2021 was $72.9 million, up $1.5 million, or 2.0%, from the prior quarter and up $6.6 million, or 9.9%, from the third quarter of 2020. The increase from the prior quarter was due to higher salaries and employee benefits due to one additional day of payroll in the third quarter, increased medical expenses and higher incentive compensation accruals. Other expenses increased due to $2.3 million in non-recurring costs, primarily from estimated litigation settlement costs related to a pending lawsuit regarding certain of the Company’s deposit products and related disclosures. The Company does not anticipate further material accruals related to this legal matter. The increase in noninterest expense from the third quarter of 2020 was due to higher salaries and employee benefits due to annual merit pay increases, increased medical expenses and higher incentive compensation accrual. Higher equipment expense due to higher technology costs associated with several digital upgrades. Other expenses increased due to $2.3 million in non-recurring costs, including the previously mentioned estimated litigation settlement costs.

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Noninterest expense for the nine months ended September 30, 2021 was $212.2 million, up $9.6 million, or 4.8%, from the same period in 2020. The increase from the prior year was driven by higher salaries and employee benefits due to annual merit pay increases, the ABG acquisition and higher medical expenses, increase in data processing communication expense driven by continued investments in digital platform solutions including a PPP specific platform, an increase in professional fees and outside services as a result of projects paused during the COVID-19 pandemic, higher equipment expense due to higher technology costs associated with several digital upgrades.

Income Taxes

Income tax expense for the three months ended September 30, 2021 was $11.0 million, down $1.0 million from the prior quarter and up $0.1 million from the third quarter of 2020. The effective tax rate was 22.8% for the third quarter of 2021, 22.9% in the prior quarter and 23.8% for the third quarter of 2020. The lower effective tax rate compared to the third quarter of 2020 was due to the change in the level of taxable income to bring the nine months ended September 30, 2020 estimated effective tax rate to 21.75%.

Income tax expense for the nine months ended September 30, 2021 was $34.2 million, up $14.9 million from the same period of 2020. The effective tax rate of 22.5% for the first nine months of 2021 was up from 21.5% for the same period in the prior year. The increase in income tax expense from the prior year was due to a higher level of taxable income as a result of the COVID-19 pandemic and decreased provision for loan losses.

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ANALYSIS OF FINANCIAL CONDITION

Securities

Total securities increased $296.2 million, or 14.8%, from December 31, 2020 to September 30, 2021. The securities portfolio represented 19.1% of total assets as of September 30, 2021 as compared to 18.3% of total assets as of December 31, 2020.

The following table details the composition of securities available for sale, securities held to maturity and equity securities for the periods indicated:

	September 30, 2021			December 31, 2020
Mortgage-backed securities:
With maturities 15 years or less		20	%		21	%
With maturities greater than 15 years		8	%		8	%
Collateralized mortgage obligations		33	%		35	%
Municipal securities		18	%		13	%
U.S. agency notes		18	%		20	%
Corporate		2	%		1	%
Equity securities		1	%		2	%
Total		100	%		100	%

The Company’s mortgage-backed securities, U.S. agency notes and collateralized mortgage obligations are all guaranteed by Fannie Mae, Freddie Mac, Federal Home Loan Bank, Federal Farm Credit Banks or Ginnie Mae (“GNMA”). GNMA securities are considered similar in credit quality to U.S. Treasury securities, as they are backed by the full faith and credit of the U.S. government. Currently, there are no subprime mortgages in our investment portfolio.

Loans

A summary of loans, net of deferred fees and origination costs, by type⁽¹⁾ for the periods indicated follows:

(In thousands)	September 30, 2021		December 31, 2020
Commercial	$	1,466,597	$	1,451,560
Commercial real estate		2,320,341		2,196,477
Paycheck protection program		276,195		430,810
Residential real estate		1,549,684		1,466,662
Indirect auto		873,860		931,286
Specialty lending		692,919		579,644
Home equity		339,316		387,974
Other consumer		47,530		54,472
Total loans	$	7,566,442	$	7,498,885

(1) Loans are summarized by business line which do not align to how the Company assesses credit risk in the estimate for credit losses under CECL.

Total loans increased by $67.6 million from December 31, 2020 to September 30, 2021. Total PPP loans as of September 30, 2021 were $276.2 million (net of unamortized fees). The following PPP loan activity occurred during the nine months ended September 30, 2021: $286.6 million in PPP loan originations, $449.8 million of loans forgiven and $13.8 million of interest and fees recognized into interest income. Excluding PPP loans, period end loans increased $222.2 million from December 31, 2020. Commercial and industrial loans increased $15.0 million to $1.5 billion; commercial real estate loans increased $123.9 million to $2.3 billion; and total consumer loans increased $83.3 million to $3.5 billion. Total loans represent approximately 63.1% of assets as of September 30, 2021, as compared to 68.6% as of December 31, 2020.

Allowance for Loan Losses, Provision for Loan Losses and Nonperforming Assets

Management considers the accounting policy relating to the allowance for credit losses to be a critical accounting policy given the degree of judgment exercised in evaluating the level of the allowance required to estimate expected credit losses over the expected contractual life of our loan portfolio and the material effect that such judgments can have on the consolidated results of operations.

Required additions or reductions to the allowance for credit losses are made periodically by charges or credits to the provision for loan losses. These are necessary to maintain the allowance at a level which management believes is reasonably reflective of the overall loss expected over the contractual life of the loan portfolio. While management uses available information to recognize losses on loans, additions or reductions to the allowance may fluctuate from one reporting period to another. These fluctuations are reflective of changes in risk associated with portfolio content and/or changes in management’s assessment of any or all of the determining factors discussed above. Management considers the allowance for credit losses to be appropriate based on evaluation and analysis of the loan portfolio.

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The allowance for credit losses totaled $93.0 million at September 30, 2021, compared to $98.5 million at June 30, 2021 and $114.5 million at September 30, 2020. The allowance for credit losses as a percentage of loans was 1.23% (1.28% excluding PPP loans) at September 30, 2021, compared to 1.31% (1.38% excluding PPP loans) at June 30, 2021 and 1.51% (1.62% excluding PPP loans) at September 30, 2020. The decrease in the allowance for credit losses from June 30, 2021 and September 30, 2020 to September 30, 2021 was primarily due to the improved economic conditions in the CECL forecast.

The provision for loan losses was a net benefit of $3.3 million for three months ended September 30, 2021, compared to a net benefit of $5.2 million in the prior quarter and a provision expense of $3.3 million for the same period in the prior year. Provision expense increased from the prior quarter due primarily to increased net charge-offs and higher reserves established due to change in loan mix, partly offset by continued improvement in economic conditions in the CECL forecast. Provision expense decreased from the same period in the prior year due primarily to the improved economic condition forecast in the current quarter as compared to deterioration of the economic forecast that took place at the end of the third quarter in 2020 due to COVID-19. Net charge-offs totaled $2.2 million during the three months ended September 30, 2021, compared to net charge-offs of $1.3 million during the second quarter of 2021 and $2.3 million in the third quarter of 2020.

The provision for loan losses was a net benefit of $11.4 million for the nine months ended September 30, 2021, compared to a provision expense of $51.7 million for the nine months ended September 30, 2020. Provision expense decreased from the same period in the prior year due primarily to the improved economic condition forecast in the current quarter as compared to significant deterioration of the economic forecast that took place at the end of the nine months ended September 30, 2020 due to COVID-19. Net charge-offs totaled $5.6 million during the nine months ended September 30, 2021, compared to net charge-offs of $13.2 million during the nine months ended September 30, 2020.

As of September 30, 2021, the unfunded commitment reserve totaled $5.3 million, compared to $5.8 million as of June 30, 2021 and $5.5 million as of September 30, 2020.

Nonperforming assets consist of nonaccrual loans, loans 90 days or more past due and still accruing, restructured loans, other real estate owned (“OREO”) and nonperforming securities. Loans are generally placed on nonaccrual when principal or interest payments become 90 days past due, unless the loan is well secured and in the process of collection. Loans may also be placed on nonaccrual when circumstances indicate that the borrower may be unable to meet the contractual principal or interest payments. The threshold for evaluating classified and nonperforming loans specifically evaluated for impairment is $1.0 million. OREO represents property acquired through foreclosure and is valued at the lower of the carrying amount or fair value, less any estimated disposal costs.

	September 30, 2021						December 31, 2020
(Dollars in thousands)	Amount			%			Amount			%
Nonaccrual loans:
Commercial	$	19,726			55	%	$	23,557			53	%
Residential		10,139			28	%		13,082			29	%
Consumer		1,585			5	%		3,020			7	%
Troubled debt restructured loans		4,287			12	%		4,988			11	%
Total nonaccrual loans	$	35,737			100	%	$	44,647			100	%
Loans 90 days or more past due and still accruing:
Commercial	$	441			15	%	$	493			16	%
Residential		1,109			38	%		518			16	%
Consumer		1,390			47	%		2,138			68	%
Total loans 90 days or more past due and still accruing	$	2,940			100	%	$	3,149			100	%
Total nonperforming loans	$	38,677					$	47,796
OREO		859						1,458
Total nonperforming assets	$	39,536					$	49,254
Total nonperforming loans to total loans		0.51	%					0.64	%
Total nonperforming assets to total assets		0.33	%					0.45	%
Allowance for loan losses to total nonperforming loans		240.45	%					230.14	%

Total nonperforming assets were $39.5 million at September 30, 2021, compared to $49.3 million at December 31, 2020 and $40.1 million at September 30, 2020. Nonperforming loans at September 30, 2021 were $38.7 million, or 0.51%, of total loans (0.53% excluding PPP loan originations), compared with $47.8 million, or 0.64% of total loans (0.68% excluding PPP loan originations) at December 31, 2020 and $38.5 million, or 0.51% of total loans (0.55% excluding PPP loan originations) at September 30, 2020.

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Nonperforming loans were consistent compared to a year ago. Past due loans as a percentage of total loans was 0.46% at September 30, 2021 (0.48% excluding PPP loan originations), up from 0.37% at December 31, 2020 (0.39% excluding PPP loan originations) and up from 0.26% at September 30, 2020 (0.28% excluding PPP loan originations).

The Company began offering short-term loan modifications to assist borrowers during the COVID-19 pandemic. The CARES Act, along with a joint agency statement issued by banking regulatory agencies, provides that short-term modifications made in response to COVID-19 do not need to be accounted for as a troubled debt restructuring (“TDR”). The Company evaluated the short-term modification programs provided to its borrowers and has concluded the modifications were generally made to borrowers who were in good standing prior to the COVID-19 pandemic and the modifications were temporary and minor in nature and therefore do not qualify for designation as TDRs. As of September 30, 2021, $2.0 million of total loans outstanding were in payment deferral programs, of which 71% are commercial borrowers and 29% are consumer borrowers. As of December 31, 2020, $106.0 million of total loans outstanding were in payment deferral programs, of which 80% were commercial borrowers and 20% were consumer borrowers.

In addition to nonperforming loans discussed above, the Company has also identified approximately $105.7 million in potential problem loans at September 30, 2021 as compared to $136.6 million at December 31, 2020 and $117.7 million at September 30, 2020. The increase in potential problem loans from September 30, 2020 is primarily due to the Company’s proactive approach to risk ratings throughout the deferral process and relates to higher risk industries impacted by the COVID-19 pandemic. Higher risk industries include entertainment, restaurants, retail, healthcare and accommodations. As of September 30, 2021, 8.7% of the Company’s outstanding loans were in higher risk industries due to the COVID-19 pandemic. Potential problem loans are loans that are currently performing, with a possibility of loss if weaknesses are not corrected. Such loans may need to be disclosed as nonperforming at some time in the future. Potential problem loans are classified by the Company’s loan rating system as “substandard.” Management cannot predict the extent to which economic conditions may worsen or other factors, which may impact borrowers and the potential problem loans. Accordingly, there can be no assurance that other loans will not become 90 days or more past due, be placed on nonaccrual, become restructured or require increased allowance coverage and provision for loan losses. To mitigate this risk the Company maintains a diversified loan portfolio, has no significant concentration in any particular industry and originates loans primarily within its footprint.

Deposits

Total deposits were $10.2 billion at September 30, 2021, up $1.1 billion, or 12.3%, from December 31, 2020. Total average deposits increased $1.4 billion, or 16.2%, from the same period last year. The growth was driven primarily by an increase of $713.7 million, or 25.5%, in demand deposits, combined with an increase in interest-bearing deposits of $639.3 million, or 11.5%, due to growth in money market deposit accounts (“MMDA”), NOW deposit accounts and savings deposit accounts, partly offset by a decrease in time accounts. The high rate of deposit growth was primarily due to funding of PPP loans and various government support programs.

Borrowed Funds

The Company’s borrowed funds consist of short-term borrowings and long-term debt. Short-term borrowings totaled $99.7 million at September 30, 2021 compared to $168.4 million at December 31, 2020. The notional value of interest rate swaps hedging cash flows related to short-term borrowings totaled $25.0 million at December 31, 2020 and matured during the nine months ended September 30, 2021. Long-term debt was $14.0 million at September 30, 2021 and $39.1 million at December 31, 2020.

For more information about the Company’s borrowing capacity and liquidity position, see “Liquidity Risk” below.

Subordinated Debt

On June 23, 2020, the Company issued $100.0 million of 5.00% fixed-to-floating rate subordinated notes due 2030. The subordinated notes, which qualify as Tier 2 capital, bear interest at an annual rate of 5.00%, payable semi-annually in arrears commencing on January 1, 2021, and a floating rate of interest equivalent to the three-month Secured Overnight Financing Rate plus a spread of 4.85%, payable quarterly in arrears commencing on October 1, 2025. The subordinated debt issuance cost, which is being amortized on a straight-line basis, was $2.2 million. As of September 30, 2021 and December 31, 2020 the subordinated debt net of unamortized issuance costs was $98.4 million and $98.1 million, respectively.

Capital Resources

Stockholders’ equity of $1.2 billion represented 10.35% of total assets at September 30, 2021 compared with $1.2 billion, or 10.86% of total assets, as of December 31, 2020. Stockholders’ equity was consistent with December 31, 2020 as net income of $117.6 million for the nine months ending September 30, 2021 was offset by a decrease in accumulated other comprehensive income of $14.9 million, dividends declared of $35.6 million during the period and repurchase of common stock of $14.1 million.

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The Company repurchased 119,342 shares of common stock during the third quarter of 2021 at a weighted average price of $35.30 per share excluding commissions under a previous announced plan. As of September 30, 2021, there were 1,600,000 shares available for repurchase under this plan authorized on October 28, 2019, amended on March 23, 2020 and January 27, 2021, and set to expire on December 31, 2021.

The Board of Directors considers the Company’s capital levels, earnings position and earnings potential when making dividend decisions. The Board of Directors approved a fourth-quarter 2021 cash dividend of $0.28 per share at a meeting held on October 25, 2021. The dividend will be paid on December 15, 2021 to shareholders of record as of December 1, 2021.

As the capital ratios in the following table indicate, the Company remained “well capitalized” at September 30, 2021 under applicable bank regulatory requirements. Capital measurements are well in excess of regulatory minimum guidelines and meet the requirements to be considered well capitalized for all periods presented. To be considered well capitalized, tier 1 leverage, common equity tier 1 capital, tier 1 capital and total risk-based capital ratios must be 5%, 6.5%, 8% and 10%, respectively.

Capital Measurements	September 30, 2021			December 31, 2020
Tier 1 leverage ratio		9.47	%		9.56	%
Common equity tier 1 capital ratio		12.20	%		11.84	%
Tier 1 capital ratio		13.39	%		13.09	%
Total risk-based capital ratio		15.74	%		15.62	%
Cash dividends as a percentage of net income		30.29	%		45.22	%
Per common share:
Book value	$	28.65		$	27.22
Tangible book value(1)	$	21.95		$	20.52
Tangible equity ratio(2)		8.13	%		8.41	%

(1) Stockholders’ equity less goodwill and intangible assets divided by common shares outstanding.

(2) Non-GAAP measure - Stockholders’ equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets.

In March 2020, the Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (“FDIC”) announced an interim final rule to delay the estimated impact on regulatory capital stemming from the implementation of CECL. Under the modified CECL transition provision, the regulatory capital impact of the January 1, 2020 CECL adoption date adjustment to the allowance for credit losses (after-tax) has been deferred and will phase into regulatory capital at 25% per year commencing January 1, 2022. For the ongoing impact of CECL, the Company is allowed to defer the regulatory capital impact of the allowance for credit losses in an amount equal to 25% of the change in the allowance for credit losses (pre-tax) recognized through earnings for each period between January 1, 2020 and December 31, 2021. The cumulative adjustment to the allowance for credit losses between January 1, 2020 and December 31, 2021, will also phase into regulatory capital at 25% per year commencing January 1, 2022. The Company adopted the capital transition relief over the permissible five-year period.

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Liquidity and Interest Rate Sensitivity Management

Market Risk

Interest rate risk is the most significant market risk affecting the Company. Other types of market risk, such as foreign currency exchange rate risk and commodity price risk, do not arise in the normal course of the Company’s business activities or are immaterial to the results of operations.

Interest rate risk is defined as an exposure to a movement in interest rates that could have an adverse effect on the Company’s net interest income. Net interest income is susceptible to interest rate risk to the degree that interest-bearing liabilities mature or reprice on a different basis than earning assets. When interest-bearing liabilities mature or reprice more quickly than earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income. Similarly, when earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net interest income.

To manage the Company’s exposure to changes in interest rates, management monitors the Company’s interest rate risk. Management’s Asset Liability Committee (“ALCO”) meets monthly to review the Company’s interest rate risk position and profitability and to recommend strategies for consideration by the Board of Directors. Management also reviews loan and deposit pricing and the Company’s securities portfolio, formulates investment and funding strategies and oversees the timing and implementation of transactions to assure attainment of the Board’s objectives in the most effective manner. Notwithstanding the Company’s interest rate risk management activities, the potential for changing interest rates is an uncertainty that can have an adverse effect on net income.

In adjusting the Company’s asset/liability position, the Board and management aim to manage the Company’s interest rate risk while minimizing net interest margin compression. At times, depending on the level of general interest rates, the relationship between long and short-term interest rates, market conditions and competitive factors, the Board and management may determine to increase the Company’s interest rate risk position somewhat in order to increase its net interest margin. The Company’s results of operations and net portfolio values remain vulnerable to changes in interest rates and fluctuations in the difference between long and short-term interest rates.

The primary tool utilized by the ALCO to manage interest rate risk is earnings at risk modeling (interest rate sensitivity analysis). Information, such as principal balance, interest rate, maturity date, cash flows, next repricing date (if needed) and current rates are uploaded into the model to create an ending balance sheet. In addition, the ALCO makes certain assumptions regarding prepayment speeds for loans and mortgage related investment securities along with any optionality within the deposits and borrowings. The model is first run under an assumption of a flat rate scenario (i.e. no change in current interest rates) with a static balance sheet. Three additional models are run in which a gradual increase of 200 bps, a gradual increase of 100 bps and a gradual decrease of 50 bps takes place over a 12-month period with a static balance sheet. Under these scenarios, assets subject to prepayments are adjusted to account for faster or slower prepayment assumptions. Any investment securities or borrowings that have callable options embedded in them are handled accordingly based on the interest rate scenario. The resulting changes in net interest income are then measured against the flat rate scenario. The Company also runs other interest rate scenarios to highlight potential interest rate risk.

In the declining rate scenario, net interest income is projected to decrease when compared to the forecasted net interest income in the flat rate scenario through the simulation period. The decrease in net interest income is a result of earning assets rolling over at lower yields while interest-bearing liabilities remain at or near their floors. In the rising rate scenarios, net interest income is projected to experience a modest increase from the flat rate scenario; however, the potential impact on earnings may be affected by the ability to lag deposit repricing on NOW, savings, MMDA and time accounts. Net interest income for the next twelve months in the +200/+100/-50 bp scenarios, as described above, is within the internal policy risk limits of not more than a 7.5% change in net interest income. The following table summarizes the percentage change in net interest income in the rising and declining rate scenarios over a 12-month period from the forecasted net interest income in the flat rate scenario using the September 30, 2021 balance sheet position:

Interest Rate Sensitivity Analysis
Change in interest rates (in bps points)	Percent change in net interest income
+200	6.93%
+100	3.22%
-50	(0.84%)

The Company anticipates that the trajectory of net interest income will depend significantly on the timing and path of the recovery from the recent economic downturn. In response to the economic impact of the pandemic, the federal funds rate was reduced by 150 bps in March 2020, and term interest rates fell sharply across the yield curve. The Company has reduced deposit rates, but future reductions are likely to be smaller and more selective. With deposit rates near their lower bound, the Company will focus on managing asset yields in order to maintain the net interest margin. Competitive pressure may limit the Company’s ability to maintain asset yields in the current environment, however.

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Liquidity Risk

Liquidity involves the ability to meet the cash flow requirements of depositors wanting to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs. ALCO is responsible for liquidity management and has developed guidelines, which cover all assets and liabilities, as well as off-balance sheet items that are potential sources or uses of liquidity. Liquidity policies must also provide the flexibility to implement appropriate strategies, regular monitoring of liquidity and testing of the contingent liquidity plan. Requirements change as loans grow, deposits and securities mature and payments on borrowings are made. Liquidity management includes a focus on interest rate sensitivity management with a goal of avoiding widely fluctuating net interest margins through periods of changing economic conditions.

The primary liquidity measurement the Company utilizes is called “Basic Surplus,” which captures the adequacy of its access to reliable sources of cash relative to the stability of its funding mix of average liabilities. This approach recognizes the importance of balancing levels of cash flow liquidity from short and long-term securities with the availability of dependable borrowing sources, which can be accessed when necessary. At September 30, 2021, the Company’s Basic Surplus measurement was 29.4% of total assets or approximately $3.5 billion as compared to the December 31, 2020 Basic Surplus of 25.7% or $2.8 billion and was above the Company’s minimum of 5% (calculated at $599.7 million and $546.6 million, of period end total assets as September 30, 2021 and December 31, 2020, respectively) set forth in its liquidity policies.

At September 30, 2021 and December 31, 2020, Federal Home Loan Bank (“FHLB”) advances outstanding totaled $14.0 million and $64.1 million, respectively. At September 30, 2021 and December 31, 2020, the Bank had $130.0 million and $74.0 million, respectively, of collateral encumbered by municipal letters of credit. The Bank is a member of the FHLB system and had additional borrowing capacity from the FHLB of approximately $1.7 billion at September 30, 2021 and $1.6 billion at December 31, 2020. In addition, unpledged securities could have been used to increase borrowing capacity at the FHLB by an additional $901.2 million and $839.4 million at September 30, 2021 and December 31, 2020, respectively, or used to collateralize other borrowings, such as repurchase agreements. The Company also has the ability to issue brokered time deposits and to borrow against established borrowing facilities with other banks (federal funds), which could provide additional liquidity of $2.0 billion at September 30, 2021 and $1.8 billion at December 31, 2020. In addition, the Bank has a “Borrower-in-Custody” program with the FRB with the addition of the ability to pledge automobile loans as collateral. At September 30, 2021 and December 31, 2020, the Bank had the capacity to borrow $588.3 million and $658.1 million, respectively, from this program. The Company’s internal policies authorize borrowing up to 25% of assets. Under this policy, remaining available borrowing capacity totaled $2.8 billion at September 30, 2021 and $2.6 billion at December 31, 2020.

This Basic Surplus approach enables the Company to appropriately manage liquidity from both operational and contingency perspectives. By tempering the need for cash flow liquidity with reliable borrowing facilities, the Company is able to operate with a more fully invested and, therefore, higher interest income generating securities portfolio. The makeup and term structure of the securities portfolio is, in part, impacted by the overall interest rate sensitivity of the balance sheet. Investment decisions and deposit pricing strategies are impacted by the liquidity position. The Company considered its Basic Surplus position to be strong. However, certain events may adversely impact the Company’s liquidity position in 2021. The large inflow of deposits experienced in the second quarter of 2020 could reverse itself and flow out. In the current economic environment, draws against lines of credit could drive asset growth higher. Disruptions in wholesale funding markets could spark increased competition for deposits. These scenarios could lead to a decrease in the Company’s Basic Surplus measure below the minimum policy level of 5%. Significant monetary and fiscal policy actions taken by the federal government have helped to mitigate these risks. Enhanced liquidity monitoring was put in place to quickly respond to the changing environment during the COVID-19 pandemic including increasing the frequency of monitoring and adding additional sources of liquidity.

At September 30, 2021, a portion of the Company’s loans and securities were pledged as collateral on borrowings. Therefore, once on-balance-sheet liquidity is depleted, future growth of earning assets will depend upon the Company’s ability to obtain additional funding, through growth of core deposits and collateral management and may require further use of brokered time deposits or other higher cost borrowing arrangements.

The Company’s primary source of funds is the Bank. Certain restrictions exist regarding the ability of the subsidiary bank to transfer funds to the Company in the form of cash dividends. The approval of the OCC is required to pay dividends when a bank fails to meet certain minimum regulatory capital standards or when such dividends are in excess of a subsidiary bank’s earnings retained in the current year plus retained net profits for the preceding two years as specified in applicable OCC regulations. At September 30, 2021, approximately $193.0 million of the total stockholders’ equity of the Bank was available for payment of dividends to the Company without approval by the OCC. The Bank’s ability to pay dividends is also subject to the Bank being in compliance with regulatory capital requirements. The Bank is currently in compliance with these requirements. Under the State of Delaware General Corporation Law, the Company may declare and pay dividends either out of accumulated net retained earnings or capital surplus.

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Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information called for by Item 3 is contained in the Liquidity and Interest Rate Sensitivity Management section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 4 - CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2021, the Company’s disclosure controls and procedures were effective.

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PART II OTHER INFORMATION

Item 1 – LEGAL PROCEEDINGS

There are no material legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of their property is subject, except as described in the Company’s 2020 Annual Report on Form 10-K.

Item 1A – RISK FACTORS

There are no material changes to the risk factors as previously discussed in Part I, Item 1A of our 2020 Annual Report on Form 10-K.

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

(a) Not applicable

(b) Not applicable

(c) The table below sets forth the information with respect to purchases made by the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a) (3) under the Securities Exchange Act of 1934) of our common stock during the quarter ended September 30, 2021:

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan		Maximum Number of Shares That May Yet be Purchased Under the Plans(1)
7/1/21 - 7/31/21		119,342	$	35.30		119,342		1,600,000
8/1/21 - 8/31/21		-		-		-		1,600,000
9/1/21 - 9/30/21		-		-		-		1,600,000
Total		119,342	$	35.30		119,342		1,600,000

(1) The Company purchased 119,342 shares of its common stock during the third quarter of 2021 at an average price of $35.30 per share under a previously announced plan. As of September 30, 2021, there were 1,600,000 shares available for repurchase under this plan announced on October 28, 2019, amended on March 23, 2020 and January 27, 2021, and set to expire on December 31, 2021.

Item 3 – DEFAULTS UPON SENIOR SECURITIES

None

Item 4 – MINE SAFETY DISCLOSURES

None

Item 5 – OTHER INFORMATION

None

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Item 6 – EXHIBITS

3.1	Restated Certificate of Incorporation of NBT Bancorp Inc. as amended through July 1, 2015 (filed as Exhibit 3.1 to Registrant’s Form 10-Q, filed on August 10, 2015 and incorporated herein by reference).
3.2	Amended and Restated Bylaws of NBT Bancorp Inc. effective May 22, 2018 (filed as Exhibit 3.1 to Registrant’s Form 8-K, filed on May 23, 2018 and incorporated herein by reference).
3.3	Certificate of Designation of the Series A Junior Participating Preferred Stock (filed as Exhibit A to Exhibit 4.1 of the Registrant’s Form 8-K, filed on November 18, 2004 and incorporated herein by reference).
10.1	Employment Agreement, dated August 5, 2021, by and between NBT Bancorp, Inc. and Scott A. Kingsley (filed as Exhibit 10.1 to Registrant’s Form 10-Q filed on August 6, 2021 and incorporated herein by reference).
31.1	Certification by the Chief Executive Officer pursuant to Rules 13(a)-14(a)/15(d)-14(e) of the Securities and Exchange Act of 1934.
31.2	Certification by the Chief Financial Officer pursuant to Rules 13(a)-14(a)/15(d)-14(e) of the Securities and Exchange Act of 1934.
32.1	Certification by the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

47

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, this 9th day of November 2021.

	NBT BANCORP INC.
By:	/s/ Scott A. Kingsley
	Scott A. Kingsley
	Executive Vice President
	Chief Financial Officer

48

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John H. Watt, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of NBT Bancorp Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2021

By:	/s/ John H. Watt, Jr.
	John H. Watt Jr.
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott A. Kingsley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of NBT Bancorp Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2021

By:	/s/ Scott A. Kingsley
	Scott A. Kingsley
	Executive Vice President and
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Written Statement of the Chief Executive Officer Pursuant to Section 906 of the SARBANES-OXLEY ACT OF 2002

The undersigned, the Chief Executive Officer of NBT Bancorp Inc. (the "Company"), hereby certifies that to his knowledge on the date hereof:

(a) the Form 10-Q of the Company for the Quarterly Period Ended September 30, 2021, filed on the date hereof with the Securities and Exchange Commission (the "Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John H. Watt, Jr.

John H. Watt, Jr.

Chief Executive Officer

November 9, 2021

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to NBT Bancorp Inc. and will be retained by NBT Bancorp Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

Written Statement of the Chief Financial Officer Pursuant to Section 906 of the SARBANES-OXLEY ACT OF 2002

The undersigned, the Chief Financial Officer of NBT Bancorp Inc. (the "Company"), hereby certifies that to his knowledge on the date hereof:

(a) the Form 10-Q of the Company for the Quarterly Period Ended September 30, 2021, filed on the date hereof with the Securities and Exchange Commission (the "Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Scott A. Kingsley

Scott A. Kingsley

Executive Vice President and

Chief Financial Officer

November 9, 2021

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to NBT Bancorp Inc. and will be retained by NBT Bancorp Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2021	Oct. 29, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Document Transition Report	false
Entity File Number	0-14703
Entity Registrant Name	NBT BANCORP INC
Entity Central Index Key	0000790359
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	16-1268674
Entity Address, Address Line One	52 South Broad Street
Entity Address, City or Town	Norwich
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	13815
City Area Code	607
Local Phone Number	337-2265
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	NBTB
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
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Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		43,349,877

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Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Assets
Cash and due from banks	$ 215,032	$ 159,995
Short-term interest bearing accounts	1,131,074	512,686
Equity securities, at fair value	33,013	30,737
Securities available for sale, at fair value	1,576,030	1,348,698
Securities held to maturity (fair value $689,129 and $636,827, respectively)	683,103	616,560
Federal Reserve and Federal Home Loan Bank stock	25,161	27,353
Loans held for sale	1,024	1,119
Loans	7,566,442	7,498,885
Less allowance for loan losses	93,000	110,000
Net loans	7,473,442	7,388,885
Premises and equipment, net	71,928	74,206
Goodwill	280,541	280,541
Intangible assets, net	9,578	11,735
Bank owned life insurance	227,451	186,434
Other assets	267,034	293,957
Total assets	11,994,411	10,932,906
Liabilities
Demand (noninterest bearing)	3,748,162	3,241,123
Savings, NOW and money market	5,894,743	5,207,090
Time	552,273	633,479
Total deposits	10,195,178	9,081,692
Short-term borrowings	99,715	168,386
Long-term debt	14,020	39,097
Subordinated debt, net	98,380	98,052
Junior subordinated debt	101,196	101,196
Other liabilities	244,465	256,865
Total liabilities	10,752,954	9,745,288
Stockholders' equity
Preferred stock, $0.01 par value. Authorized 2,500,000 shares at September 30, 2021 and December 31, 2020	0	0
Common stock, $0.01 par value. Authorized 100,000,000 shares at September 30, 2021 and December 31, 2020, issued 49,651,493 at September 30, 2021 and December 31, 2020	497	497
Additional paid-in-capital	577,222	578,082
Retained earnings	831,017	749,056
Accumulated other comprehensive (loss) income	(14,492)	417
Common stock in treasury, at cost, 6,313,800 and 6,022,399 shares at September 30, 2021 and December 31, 2020, respectively	(152,787)	(140,434)
Total stockholders' equity	1,241,457	1,187,618
Total liabilities and stockholders' equity	$ 11,994,411	$ 10,932,906

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Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Assets
Securities held to maturity fair value	$ 689,129	$ 636,827
Stockholders' equity
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	2,500,000	2,500,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	49,651,493	49,651,493
Common stock in treasury, at cost (in shares)	6,313,800	6,022,399

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Consolidated Statements of Income (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Interest, fee and dividend income
Interest and fees on loans	$ 72,817	$ 74,998	$ 222,705	$ 230,996
Securities available for sale	5,898	5,603	17,204	16,956
Securities held to maturity	2,976	3,734	9,454	11,751
Other	524	659	1,206	2,138
Total interest, fee and dividend income	82,215	84,994	250,569	261,841
Interest expense
Deposits	2,548	4,267	8,582	18,183
Short-term borrowings	28	446	130	3,215
Long-term debt	89	398	301	1,184
Subordinated debt	1,359	1,375	4,077	1,503
Junior subordinated debt	517	565	1,572	2,186
Total interest expense	4,541	7,051	14,662	26,271
Net interest income	77,674	77,943	235,907	235,570
Provision for loan losses	(3,342)	3,261	(11,354)	51,741
Net interest income after provision for loan losses	81,016	74,682	247,261	183,829
Noninterest income
Service charges on deposit accounts	3,489	3,087	9,544	9,613
ATM and debit card fees	8,172	7,194	23,343	19,184
Retirement plan administration fees	10,495	9,685	30,372	26,840
Wealth management fees	8,783	7,695	25,099	21,791
Insurance services	3,720	3,742	10,689	11,303
Bank owned life insurance income	1,548	1,255	4,588	4,010
Net securities (losses) gains	(100)	84	568	(548)
Other	4,222	4,985	12,480	15,968
Total noninterest income	40,329	37,727	116,683	108,161
Noninterest expense
Salaries and employee benefits	44,190	40,451	128,462	120,918
Occupancy	5,117	5,294	16,281	16,354
Data processing and communications	3,881	4,058	13,039	12,370
Professional fees and outside services	3,784	3,394	11,403	10,694
Equipment	5,577	5,073	16,247	14,494
Office supplies and postage	1,364	1,530	4,478	4,621
FDIC expense	772	645	2,243	1,949
Advertising	583	530	1,502	1,461
Amortization of intangible assets	663	856	2,157	2,573
Loan collection and other real estate owned, net	706	620	1,959	2,365
Other	6,232	3,857	14,405	14,730
Total noninterest expense	72,869	66,308	212,176	202,529
Income before income tax expense	48,476	46,101	151,768	89,461
Income tax expense	11,043	10,988	34,193	19,267
Net income	$ 37,433	$ 35,113	$ 117,575	$ 70,194
Earnings per share
Basic (in dollars per share)	$ 0.86	$ 0.80	$ 2.71	$ 1.61
Diluted (in dollars per share)	$ 0.86	$ 0.80	$ 2.69	$ 1.60

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Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Consolidated Statements of Comprehensive Income (unaudited) [Abstract]
Net income	$ 37,433	$ 35,113	$ 117,575	$ 70,194
Securities available for sale:
Unrealized net holding (losses) gains arising during the period, gross	(7,426)	(1,263)	(21,329)	26,509
Tax effect	1,857	316	5,332	(6,627)
Unrealized net holding (losses) gains arising during the period, net	(5,569)	(947)	(15,997)	19,882
Reclassification adjustment for net gains in net income, gross	0	0	0	(3)
Tax effect	0	0	0	1
Reclassification adjustment for net gains in net income, net	0	0	0	(2)
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, gross	149	157	434	495
Tax effect	(38)	(39)	(109)	(124)
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, net	111	118	325	371
Total securities available for sale, net	(5,458)	(829)	(15,672)	20,251
Cash flow hedges:
Unrealized losses on derivatives (cash flow hedges), gross	0	0	0	(274)
Tax effect	0	0	0	69
Unrealized losses on derivatives (cash flow hedges), net	0	0	0	(205)
Reclassification of net unrealized losses on cash flow hedges to interest (income), gross	0	101	21	192
Tax effect	0	(25)	(5)	(48)
Reclassification of net unrealized losses on cash flow hedges to interest (income), net	0	76	16	144
Total cash flow hedges, net	0	76	16	(61)
Pension and other benefits:
Amortization of prior service cost and actuarial losses, gross	344	381	996	1,143
Tax effect	(86)	(95)	(249)	(286)
Amortization of prior service cost and actuarial losses, net	258	286	747	857
Total pension and other benefits, net	258	286	747	857
Total other comprehensive (loss) income	(5,200)	(467)	(14,909)	21,047
Comprehensive income	$ 32,233	$ 34,646	$ 102,666	$ 91,241

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Consolidated Statements of Stockholders' Equity (unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in-Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive (Loss) Income [Member]	Common Stock in Treasury [Member]	Total	Cumulative Effect Adjustment for ASU Implementation [Member] Common Stock [Member]	Cumulative Effect Adjustment for ASU Implementation [Member] Additional Paid-in-Capital [Member]	Cumulative Effect Adjustment for ASU Implementation [Member] Retained Earnings [Member]	Cumulative Effect Adjustment for ASU Implementation [Member] Accumulated Other Comprehensive (Loss) Income [Member]	Cumulative Effect Adjustment for ASU Implementation [Member] Common Stock in Treasury [Member]	Cumulative Effect Adjustment for ASU Implementation [Member]
Balance at Dec. 31, 2019	$ 497	$ 576,708	$ 696,214	$ (19,026)	$ (133,996)	$ 1,120,397
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	70,194	0	0	70,194
Cash dividends	0	0	(35,419)	0	0	(35,419)
Purchase of treasury shares	0	0	0	0	(7,980)	(7,980)
Net issuance of shares to employee and other stock plans	0	(2,928)	0	0	1,182	(1,746)
Stock-based compensation	0	3,957	0	0	0	3,957
Other comprehensive income (loss)	0	0	0	21,047	0	21,047
Balance at Sep. 30, 2020	497	577,737	726,650	2,021	(140,794)	1,166,111
Balance (ASU 2016-13 [Member]) at Sep. 30, 2020							$ 0	$ 0	$ (4,339)	$ 0	$ 0	$ (4,339)
Balance at Jun. 30, 2020	497	577,197	703,322	2,488	(140,852)	1,142,652
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	35,113	0	0	35,113
Cash dividends	0	0	(11,785)	0	0	(11,785)
Net issuance of shares to employee and other stock plans	0	(108)	0	0	58	(50)
Stock-based compensation	0	648	0	0	0	648
Other comprehensive income (loss)	0	0	0	(467)	0	(467)
Balance at Sep. 30, 2020	497	577,737	726,650	2,021	(140,794)	1,166,111
Balance (ASU 2016-13 [Member]) at Sep. 30, 2020							$ 0	$ 0	$ (4,339)	$ 0	$ 0	$ (4,339)
Balance at Dec. 31, 2020	497	578,082	749,056	417	(140,434)	1,187,618
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	117,575	0	0	117,575
Cash dividends	0	0	(35,614)	0	0	(35,614)
Purchase of treasury shares	0	0	0	0	(14,083)	(14,083)
Net issuance of shares to employee and other stock plans	0	(4,679)	0	0	1,730	(2,949)
Stock-based compensation	0	3,819	0	0	0	3,819
Other comprehensive income (loss)	0	0	0	(14,909)	0	(14,909)
Balance at Sep. 30, 2021	497	577,222	831,017	(14,492)	(152,787)	1,241,457
Balance at Jun. 30, 2021	497	576,732	805,722	(9,292)	(148,603)	1,225,056
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	37,433	0	0	37,433
Cash dividends	0	0	(12,138)	0	0	(12,138)
Purchase of treasury shares	0	0	0	0	(4,212)	(4,212)
Net issuance of shares to employee and other stock plans	0	(73)	0	0	28	(45)
Stock-based compensation	0	563	0	0	0	563
Other comprehensive income (loss)	0	0	0	(5,200)	0	(5,200)
Balance at Sep. 30, 2021	$ 497	$ 577,222	$ 831,017	$ (14,492)	$ (152,787)	$ 1,241,457

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Consolidated Statements of Stockholders' Equity (unaudited) (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Consolidated Statements of Stockholders' Equity (unaudited) [Abstract]
Cash dividends - per share (in dollars per share)	$ 0.28	$ 0.27	$ 0.82	$ 0.81
Purchase of treasury shares (in shares)	119,342		400,000	263,507
Net issuance of shares to employee benefit plans and other stock plans (in shares)	1,672	3,030	108,599	78,276

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Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Operating activities
Net income	$ 117,575	$ 70,194
Adjustments to reconcile net income to net cash provided by operating activities
Provision for loan losses	(11,354)	51,741
Depreciation and amortization of premises and equipment	7,339	7,378
Net amortization on securities	4,460	2,812
Amortization of intangible assets	2,157	2,573
Amortization of operating lease right-of-use assets	5,401	5,549
Excess tax benefit on stock-based compensation	(321)	(188)
Stock-based compensation expense	3,819	3,957
Bank owned life insurance income	(4,588)	(4,010)
Amortization of subordinated debt issuance costs	328	121
Proceeds from sale of loans held for sale	48,371	153,732
Originations of loans held for sale	(47,996)	(144,105)
Net gains on sale of loans held for sale	(280)	(1,892)
Net security (gains) losses	(568)	548
Net gains on sale of other real estate owned	(44)	(243)
Net change in other assets and other liabilities	10,951	(40,760)
Net cash provided by operating activities	135,250	107,407
Investing activities
Net cash used in acquisitions	0	(3,899)
Securities available for sale:
Proceeds from maturities, calls and principal paydowns	308,688	239,622
Purchases	(560,884)	(437,827)
Securities held to maturity:
Proceeds from maturities, calls and principal paydowns	149,200	181,143
Proceeds from sales	0	996
Purchases	(216,205)	(215,327)
Equity securities:
Proceeds from calls	1,000	0
Other:
Net increase in loans	(73,344)	(436,630)
Proceeds from Federal Home Loan Bank stock redemption	2,355	58,799
Purchases of Federal Reserve Bank and Federal Home Loan Bank stock	(163)	(42,663)
Proceeds from settlement of bank owned life insurance	3,571	531
Purchases of bank owned life insurance	(40,000)	0
Purchases of premises and equipment, net	(5,007)	(4,512)
Proceeds from sales of other real estate owned	784	1,113
Net cash used in investing activities	(430,005)	(658,654)
Financing activities
Net increase in deposits	1,113,486	1,370,363
Net decrease in short-term borrowings	(68,671)	(471,803)
Proceeds from issuance of subordinated debt	0	100,000
Payment of subordinated debt issuance costs	0	(2,178)
Repayments of long-term debt	(25,077)	(85)
Proceeds from the issuance of shares to employee and other stock plans	112	184
Cash paid by employer for tax-withholdings on stock issuance	(1,973)	(1,218)
Purchase of treasury stock	(14,083)	(7,980)
Cash dividends	(35,614)	(35,419)
Net cash provided by financing activities	968,180	951,864
Net increase in cash and cash equivalents	673,425	400,617
Cash and cash equivalents at beginning of period	672,681	216,843
Cash and cash equivalents at end of period	1,346,106	617,460
Cash paid during the period for:
Interest expense	17,161	26,373
Income taxes paid, net of refund	39,025	38,137
Noncash investing activities:
Loans transferred to other real estate owned	141	1,017
Acquisitions:
Fair value of assets acquired	$ 0	$ 3,328

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Description of Business

9 Months Ended

Sep. 30, 2021

Description of Business [Abstract]

Description of Business

1. Description of Business

NBT Bancorp Inc. (the “Company”) is a registered financial holding company incorporated in the state of Delaware in 1986, with its principal headquarters located in Norwich, New York. The principal assets of the Company consist of all of the outstanding shares of common stock of its subsidiaries, including: NBT Bank, National Association (the “Bank”), NBT Financial Services, Inc. (“NBT Financial”), NBT Holdings, Inc. (“NBT Holdings”), CNBF Capital Trust I, NBT Statutory Trust I, NBT Statutory Trust II, Alliance Financial Capital Trust I and Alliance Financial Capital Trust II (collectively, the “Trusts”). The Company’s principal sources of revenue are the management fees and dividends it receives from the Bank, NBT Financial and NBT Holdings.

The Company’s business, primarily conducted through the Bank, consists of providing commercial banking, retail banking and wealth management services primarily to customers in its market area, which includes central and upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, the southern coastal Maine area and central Connecticut. The Company has been, and intends to continue to be, a community-oriented financial institution offering a variety of financial services. The Company’s business philosophy is to operate as a community bank with local decision-making, providing a broad array of banking and financial services to retail, commercial and municipal customers.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of NBT Bancorp Inc. and its wholly-owned subsidiaries, the Bank, NBT Financial and NBT Holdings. Collectively, NBT Bancorp Inc. and its subsidiaries are referred to herein as (“the Company”). The interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods in accordance with generally accepted accounting principles in the United States of America (“GAAP”). These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2020 Annual Report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period. All material intercompany transactions have been eliminated in consolidation. Amounts previously reported in the consolidated financial statements are reclassified whenever necessary to conform to current period presentation. The Company has evaluated subsequent events for potential recognition and/or disclosure and there were none identified.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from those estimates and such differences could be material to the financial statements.

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2021

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

3. Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU removes specific exceptions to the general principles in Topic 740 in GAAP. It eliminates the need for an organization to analyze whether the following apply in a given period: (1) exception to the incremental approach for intraperiod tax allocation; (2) exceptions to accounting for basis differences when there are ownership changes in foreign investments; and (3) exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. The ASU also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP for: (1) franchise taxes that are partially based on income; (2) transactions with a government that result in a step up in the tax basis of goodwill; (3) separate financial statements of legal entities that are not subject to tax; and (4) enacted changes in tax laws in interim periods. The amendments in this ASU were effective for the Company on January 1, 2021, and interim periods within those fiscal years. The adoption did not have a material impact on the consolidated financial statements and related disclosures.

Accounting Standards Issued Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. On January 7, 2021, the FASB issued ASU 2021-01, which refines the scope of Accounting Standards Codification 848 (“ASC 848”) and clarifies some of its guidance. ASU 2020-04 and related amendments provide temporary optional expedients and exceptions to the existing guidance for applying GAAP to affected contract modifications and hedge accounting relationships in the transition away from the London Interbank Offered Rate (“LIBOR”) or other interbank offered rate on financial reporting. The guidance also allows a one-time election to sell and/or reclassify to available for sale (“AFS”) or trading held to maturity (“HTM”) debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective March 12, 2020 through December 31, 2022 and permits relief solely for reference rate reform actions and permits different elections over the effective date for legacy and new activity. The Company is evaluating the impact of adopting the new guidance on the consolidated financial statements and does not expect it will have a material impact on the consolidated financial statements.

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Securities

9 Months Ended

Sep. 30, 2021

Securities [Abstract]

Securities

4. Securities

The amortized cost, estimated fair value and unrealized gains (losses) of AFS securities are as follows:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
As of September 30, 2021
Federal agency	$	248,462	$	-	$	5,496	$	242,966
State & municipal		84,636		138		753		84,021
Mortgage-backed:
Government-sponsored enterprises		575,884		10,907		3,959		582,832
U.S. government agency securities		65,762		1,710		109		67,363
Collateralized mortgage obligations:
Government-sponsored enterprises		438,255		5,002		2,004		441,253
U.S. government agency securities		115,873		1,774		189		117,458
Corporate		38,500		1,637		-		40,137
Total AFS securities	$	1,567,372	$	21,168	$	12,510	$	1,576,030
As of December 31, 2020
Federal agency	$	245,590	$	59	$	2,052	$	243,597
State & municipal		42,550		630		-		43,180
Mortgage-backed:
Government-sponsored enterprises		521,448		17,079		22		538,505
U.S. government agency securities		55,049		2,332		47		57,334
Collateralized mortgage obligations:
Government-sponsored enterprises		311,710		7,549		58		319,201
U.S. government agency securities		114,864		3,739		-		118,603
Corporate		27,500		778		-		28,278
Total AFS securities	$	1,318,711	$	32,166	$	2,179	$	1,348,698

There was no allowance for credit losses on AFS securities as of September 30, 2021 and December 31, 2020.

During the three and nine months ended September 30, 2021 there were no gains or losses reclassified out of accumulated other comprehensive income (loss) (“AOCI”) and into earnings. During the three months ended September 30, 2020 there were no gains or losses reclassified out of AOCI and into earnings. During the nine months ended September 30, 2020, there were $3 thousand of gross realized gains reclassified out of AOCI and into earnings. Included in net realized gains (losses) on AFS securities, the Company recorded gains from calls of approximately $3 thousand for the nine months ended September 30, 2020.

The amortized cost, estimated fair value and unrealized gains (losses) of HTM securities are as follows:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
As of September 30, 2021
Federal agency	$	100,000	$	-	$	3,821	$	96,179
Mortgage-backed:
Government-sponsored enterprises		121,040		2,851		568		123,323
U.S. government agency securities		9,121		659		-		9,780
Collateralized mortgage obligations:
Government-sponsored enterprises		75,852		3,050		-		78,902
U.S. government agency securities		54,587		679		341		54,925
State & municipal		322,503		5,021		1,504		326,020
Total HTM securities	$	683,103	$	12,260	$	6,234	$	689,129
As of December 31, 2020
Federal agency	$	100,000	$	-	$	1,658	$	98,342
Mortgage-backed:
Government-sponsored enterprises		107,914		4,583		-		112,497
U.S. government agency securities		11,533		979		-		12,512
Collateralized mortgage obligations:
Government-sponsored enterprises		103,105		4,477		-		107,582
U.S. government agency securities		79,145		3,950		-		83,095
State & municipal		214,863		7,953		17		222,799
Total HTM securities	$	616,560	$	21,942	$	1,675	$	636,827

At September 30, 2021 and December 31, 2020, all of the mortgaged-backed HTM securities were comprised of U.S. government agency and Government-sponsored enterprises securities. There was no allowance for credit losses on HTM securities as of September 30, 2021 and December 31, 2020.

Included in net realized gains (losses), the Company recorded gains from calls on HTM securities of approximately $14 thousand for the three months ended September 30, 2021 and approximately $29 thousand for the nine months ended September 30, 2021. Included in net realized gains (losses), the Company recorded gains from calls on HTM securities of approximately $11 thousand for the three months ended September 30, 2020 and approximately $15 thousand for the nine months ended September 30, 2020.

There were no sales of HTM securities during the three and nine months ended September 30, 2021. During the nine months ended September 30, 2020, the Company sold HTM securities with an amortized cost of $1.0 million and resulted in a realized loss of $1 thousand. Due to significant deterioration in the creditworthiness of the issuer of the HTM securities, the circumstances caused the Company to change its intent to hold the HTM securities sold to maturity, which did not affect the Company’s intent to hold the remainder of the HTM portfolio to maturity.

AFS and HTM securities with amortized costs totaling $1.6 billion at September 30, 2021 and $1.4 billion at December 31, 2020 were pledged to secure public deposits and for other purposes required or permitted by law. Additionally, at September 30, 2021 and December 31, 2020, AFS and HTM securities with an amortized cost of $149.2 million and $305.2 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

The following tables set forth information with regard to gains and (losses) on equity securities:

	Three Months Ended September 30,
(In thousands)	2021			2020
Net (losses) and gains recognized on equity securities	$	(114	)	$	73
Less: Net (losses) and gains recognized on equity securities sold during the period		-			-
Unrealized (losses) and gains recognized on equity securities still held	$	(114	)	$	73

	Nine Months Ended September 30,
(In thousands)	2021		2020
Net gains and (losses) recognized on equity securities	$	539	$	(565	)
Less: Net gains and (losses) recognized on equity securities sold during the period		-		-
Unrealized gains and (losses) recognized on equity securities still held	$	539	$	(565	)

As of September 30, 2021 and December 31, 2020, the carrying value of equity securities without readily determinable fair values was $1.0 million and $2.0 million, respectively. The Company performed a qualitative assessment to determine whether the investments were impaired and identified no areas of concern as of September 30, 2021 and 2020. There were no impairments, downward or upward adjustments recognized for equity securities without readily determinable fair values during the three and nine months ended September 30, 2021 and 2020.

The following table sets forth information with regard to contractual maturities of debt securities at September 30, 2021:

(In thousands)	Amortized Cost		Estimated Fair Value
AFS debt securities:
Within one year	$	1,258	$	1,262
From one to five years		56,017		56,596
From five to ten years		642,112		639,238
After ten years		867,985		878,934
Total AFS debt securities	$	1,567,372	$	1,576,030
HTM debt securities:
Within one year	$	97,203	$	97,239
From one to five years		56,120		57,485
From five to ten years		226,478		227,026
After ten years		303,302		307,379
Total HTM debt securities	$	683,103	$	689,129

Maturities of mortgage-backed, collateralized mortgage obligations and asset-backed securities are stated based on their estimated average lives. Actual maturities may differ from estimated average lives or contractual maturities because, in certain cases, borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Except for U.S. government securities and government-sponsored enterprises securities, there were no holdings, when taken in the aggregate, of any single issuer that exceeded 10% of consolidated stockholders’ equity at September 30, 2021 and December 31, 2020.

The following table sets forth information with regard to investment securities with unrealized losses, for which an allowance for credit losses has not been recorded at September 30, 2021, segregated according to the length of time the securities had been in a continuous unrealized loss position:

	Less Than 12 Months							12 Months or Longer							Total
(In thousands)	Fair Value		Unrealized Losses			Number of Positions		Fair Value		Unrealized Losses			Number of Positions		Fair Value		Unrealized Losses			Number of Positions
As of September 30, 2021
AFS securities:
Federal agency	$	101,674	$	(1,799	)		7	$	141,292	$	(3,697	)		9	$	242,966	$	(5,496	)		16
State & municipal		68,492		(753	)		45		-		-			-		68,492		(753	)		45
Mortgage-backed		239,779		(4,060	)		18		761		(8	)		4		240,540		(4,068	)		22
Collateralized mortgage obligations		247,618		(1,793	)		24		12,816		(400	)		2		260,434		(2,193	)		26
Total securities with unrealized losses	$	657,563	$	(8,405	)		94	$	154,869	$	(4,105	)		15	$	812,432	$	(12,510	)		109
HTM securities:
Federal agency	$	-	$	-			-	$	96,179	$	(3,821	)		4	$	96,179	$	(3,821	)		4
Mortgage-backed		56,996		(568	)		5		-		-			-		56,996		(568	)		5
Collateralized mortgage obligation		31,809		(341	)		5		-		-			-		31,809		(341	)		5
State & municipal		67,806		(1,381	)		50		3,453		(123	)		4		71,259		(1,504	)		54
Total securities with unrealized losses	$	156,611	$	(2,290	)		60	$	99,632	$	(3,944	)		8	$	256,243	$	(6,234	)		68
As of December 31, 2020
AFS securities:
Federal agency	$	148,537	$	(2,052	)		10	$	-	$	-			-	$	148,537	$	(2,052	)		10
Mortgage-backed		47,269		(60	)		3		800		(9	)		4		48,069		(69	)		7
Collateralized mortgage obligations		17,837		(58	)		6		-		-			-		17,837		(58	)		6
Total securities with unrealized losses	$	213,643	$	(2,170	)		19	$	800	$	(9	)		4	$	214,443	$	(2,179	)		23
HTM securities:
Federal agency	$	98,342	$	(1,658	)		4	$	-	$	-			-	$	98,342	$	(1,658	)		4
State & municipal		4,805		(17	)		5		-		-			-		4,805		(17	)		5
Total securities with unrealized losses	$	103,147	$	(1,675	)		9	$	-	$	-			-	$	103,147	$	(1,675	)		9

The Company does not believe the AFS securities that were in an unrealized loss position as of September 30, 2021 and December 31, 2020, which consisted of 109 and 23 individual securities, respectively, represented a credit loss impairment. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. As of September 30, 2021 and December 31, 2020, the majority of the AFS securities in an unrealized loss position consisted of debt securities issued by U.S. government agencies or U.S. government-sponsored enterprises that carry the explicit and/or implicit guarantee of the U.S. government, which are widely recognized as “risk-free” and have a long history of zero credit losses. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. The Company does not intend to sell, nor is it more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, which may be at maturity. The Company elected to exclude accrued interest receivable (“AIR”) from the amortized cost basis of debt securities. AIR on AFS debt securities totaled $3.3 million at September 30, 2021 and December 31, 2020 and is excluded from the estimate of credit losses and reported in the financial statement line for other assets.

None of the bank’s HTM debt securities were past due or on non-accrual status as of September 30, 2021 and December 31, 2020. There was no accrued interest reversed against interest income for the three and nine months ended September 30, 2021 or the year-ended December 31, 2020 as all securities remained on accrual status. In addition, there were no collateral-dependent HTM debt securities as of September 30, 2021 and December 31, 2020. As of September 30, 2021 and December 31, 2020, 53% and 65%, respectively, of the Company’s HTM debt securities were issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as “risk free,” and have a long history of zero credit loss. Therefore, the Company did not record an allowance for credit losses for these securities as of September 30, 2021 and December 31, 2020. The remaining HTM debt securities at September 30, 2021 and December 31, 2020 were comprised of state and municipal obligations with bond ratings of A to AAA. Utilizing the Current Expected Credit Losses (“CECL”) approach, the Company determined that the expected credit loss on its HTM municipal bond portfolio was immaterial and therefore no allowance for credit loss was recorded as of September 30, 2021 and December 31, 2020. AIR on HTM debt securities totaled $2.6 million and $2.7 million at September 30, 2021 and December 31, 2020, respectively, and is excluded from the estimate of credit losses and reported in the other assets financial statement line.

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Allowance for Credit Losses and Credit Quality of Loans

9 Months Ended

Sep. 30, 2021

Allowance for Credit Losses and Credit Quality of Loans [Abstract]

Allowance for Credit Losses and Credit Quality of Loans

5. Allowance for Credit Losses and Credit Quality of Loans

The allowance for credit losses totaled $93.0 million at September 30, 2021, compared to $110.0 million at December 31, 2020. The allowance for credit losses as a percentage of loans was 1.23% at September 30, 2021, compared to 1.47% at December 31, 2020.

The Day 1 increase in the allowance for credit loss on loans relating to adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments was $3.0 million, which decreased retained earnings by $2.3 million and increased the deferred tax asset by $0.7 million.

The September 30, 2021, June 30, 2021, December 31, 2020, September 30, 2020 and Day 1 allowance for credit losses calculation incorporated a 6-quarter forecast period to account for forecast economic conditions under each scenario utilized in the measurement. For periods beyond the 6-quarter forecast, the model reverts to long-term economic conditions over a 4-quarter reversion period on a straight-line basis. The Company considers a baseline, upside and downside economic forecast in measuring the allowance.

The quantitative model as of September 30, 2021 incorporated a baseline economic outlook along with alternative upside and downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment initially above pre-COVID-19 levels although steadily improving to below 4% mid-way through the forecast period. Northeast GDP’s annualized growth (on a quarterly basis) was expected to start the fourth quarter of 2021 at approximately 10% and steadily fall back down to normalized levels by the end of 2022. Other utilized economic variables showed mixed changes in their respective forecasts, with retail sales and business output declining from the prior quarter and housing starts increasing from the prior quarter’s forecast. Key assumptions in the baseline economic outlook included abatement of the coronavirus (“COVID-19”) pandemic in November, additional legislation focused on infrastructure and social benefits programs enacted by the end of 2021 totaling $2.5 trillion, and full employment reached by the end of 2022. The alternative downside scenario assumed deteriorated economic and epidemiological conditions from the baseline outlook. Under this scenario, northeast unemployment rises from 6.2% in the third quarter of 2021 to a peak of 8.2% in the fourth quarter of 2022, remaining above 7% for the entire forecast period. The alternative upside scenario incorporated a more optimistic outlook than the baseline scenario, with a swift return to full employment by the first quarter of 2022 and with northeast unemployment moving down to 3.1% by the end of the forecast period. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of September 30, 2021. Additional adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in the second and third quarters of 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government sponsored loan programs. The Company also continued to monitor the level of criticized and classified loans in the third quarter of 2021 compared to the level contemplated by the model during similar, historical economic conditions, and an adjustment was made to estimate potential additional losses above modeled losses. Additionally, a qualitative adjustment was made for isolated model limitations related to modeled outputs given abnormally high retail sales and business output growth rates. These factors were considered through separate quantitative processes and incorporated into the estimate of current expected credit losses at September 30, 2021.

The quantitative model as of June 30, 2021 incorporated a baseline economic outlook along with alternative upside and downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment above pre-COVID-19 levels for the entire forecast period, though steadily improving to below 4% by the end of 2022. Northeast GDP’s annualized growth (on a quarterly basis) was expected to start in the second half of 2021 in the high single digits (9.86%) and steadily fall back down to normalized levels by the end of 2022. Other utilized economic variables showed mixed changes in their respective forecasts, with retail sales and business output being relatively unchanged and housing starts lowered from the prior quarter forecast. Key assumptions in the baseline economic outlook included herd “resiliency” expected by summer-2021, additional legislation focused on infrastructure and social benefits enacted in the second half of 2021 and high, near-term GDP growth expectations. The alternative downside scenario assumed deteriorated economic and epidemiological conditions from the baseline outlook. Under this scenario, northeast unemployment rose from 8.1% in the third quarter of 2021 to a peak of 8.7% in the second quarter of 2022, remaining above 8% for the entire forecast period. The alternative upside scenario incorporated a more optimistic outlook than the baseline scenario, with a swift return to full employment by the first quarter of 2022 and down to a low of 3.5% by the end of the forecast period. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of June 30, 2021. Additional adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in the second and third quarters of 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government sponsored loan programs. The Company also continued to identify a slightly higher level of criticized and classified loans in the second quarter of 2021 than those contemplated by the model during similar, historical economic conditions for which an adjustment was made to estimate potential additional losses above modeled losses. Additionally, a qualitative adjustment was made for isolated model limitations related to modeled outputs given abnormally high retail sales and business output growth rates. These factors were considered through separate quantitative processes and incorporated into the estimate of current expected credit losses at June 30, 2021.

The quantitative model as of December 31, 2020 incorporated a baseline economic outlook, along with alternative upside and downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment above pre-COVID-19 levels for the entire forecast period, though steadily improving, before returning to low single digits by the end of 2023. Northeast GDP’s annual growth was expected to start 2021 in the low to mid-single digits, with a peak growth rate of 8% in the fourth quarter of 2021 and steadily falling back down to normalized levels through 2023 and 2024. Other utilized economic variables show improvement in their respective forecasts, namely business output. Key assumptions in the baseline economic outlook included an additional stimulus package passed at the same timing and a comparable level to that of the actual $900 billion COVID-19 relief package passed in December 2020 along with no significant secondary surge in COVID-19 cases or pandemic-related business closures. The alternative downside scenario assumed deteriorated economic and epidemiological conditions from the baseline outlook. In the same way, the alternative upside scenario assumed a faster economic recovery and more effective management of the COVID-19 virus from the baseline outlook. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2020. Additional adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government-sponsored loan programs. The commercial & industrial and consumer segment models were based upon percent change in unemployment with modeled values as of December 31, 2020 well outside the observed historical experience. Therefore, adjustments were required to produce outputs more aligned with default expectations given the forecast economic environment. Additionally, the Company identified a slightly higher level of criticized and classified loans during 2020 than those contemplated by the model during similar economic conditions in the past for which an adjustment was made for estimated expected additional losses above modeled output. These factors were considered through a separate quantitative process and incorporated into the estimate for allowance for credit losses at December 31, 2020.

On August 3, 2020, the Federal Financial Institutions Examination Council (“FFIEC”) issued a joint statement on additional loan accommodations related to COVID-19. The joint statement clarifies that for loan modifications in which Section 4013 is being applied, subsequent modifications could also be eligible under section 4013 (“Section 4013”) of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). Accordingly, the Company is offering modifications made in response to COVID-19 to borrowers who were current and otherwise not past due in accordance with the criteria stated in Section 4013. These include short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment. Accordingly, the Company did not account for such loan modifications as TDRs. As of September 30, 2021, there were $2.0 million in loans in modification programs related to COVID-19. On December 27, 2020, the Consolidated Appropriations Act amended section 2014 of the CARES Act extending the exemption of qualified loan modifications from classification as a troubled debt restructuring as defined by GAAP to the earlier of January 1, 2022, or 60 days after the National Emergency concerning COVID-19 ends.

There were no loans purchased with credit deterioration during the nine months ended September 30, 2021 or the year ended December 31, 2020. During 2021, the Company purchased $52.4 million of residential loans at a 2% premium and $60.3 million in consumer loans at par. The allowance for credit losses recorded for these loans on the purchase date was $4.6 million. During 2020, the Company purchased $51.9 million of consumer loans at a 1% discount. The allowance for credit losses recorded for these loans on the purchase date was $3.6 million. The Company made a policy election to report AIR in the other assets line item on the balance sheet. AIR on loans totaled $20.4 million at September 30, 2021 and $23.7 million at December 31, 2020 and was included in the allowance for loan credit losses to estimate the impact of accrued interest receivable related to loans with modifications due to the pandemic as the length of time between interest recognition and the write-off of uncollectible interest could exceed 120 days, exempting these loans from our policy election for accrued interest receivable. There was no estimated allowance for credit losses related to AIR at September 30, 2021 and $0.6 million at December 31, 2020.

The following tables present the activity in the allowance for credit losses by portfolio segment:

(In thousands)	Commercial Loans			Consumer Loans			Residential			Total
Balance as of June 30, 2021	$	44,191		$	34,881		$	19,428		$	98,500
Charge-offs		(1,492	)		(3,083	)		(312	)		(4,887	)
Recoveries		354			2,143			232			2,729
Provision		(9,875	)		7,130			(597	)		(3,342	)
Ending balance as of September 30, 2021	$	33,178		$	41,071		$	18,751		$	93,000
Balance as of June 30, 2020	$	50,386		$	40,094		$	23,020		$	113,500
Charge-offs		(624	)		(4,097	)		(58	)		(4,779	)
Recoveries		333			2,123			62			2,518
Provision		1,651			442			1,168			3,261
Ending balance as of September 30, 2020	$	51,746		$	38,562		$	24,192		$	114,500

(In thousands)	Commercial Loans			Consumer Loans			Residential			Total
Balance as of December 31, 2020	$	50,942		$	37,803		$	21,255		$	110,000
Charge-offs		(2,123	)		(10,702	)		(731	)		(13,556	)
Recoveries		533			6,506			871			7,910
Provision		(16,174	)		7,464			(2,644	)		(11,354	)
Ending balance as of September 30, 2021	$	33,178		$	41,071		$	18,751		$	93,000
Balance as of January 1, 2020 (after adoption of ASC 326)	$	27,156		$	32,122		$	16,721		$	75,999
Charge-offs		(2,353	)		(17,166	)		(863	)		(20,382	)
Recoveries		674			6,168			300			7,142
Provision		26,269			17,438			8,034			51,741
Ending balance as of September 30, 2020	$	51,746		$	38,562		$	24,192		$	114,500

The decrease in the allowance for credit losses from December 31, 2020 to June 30, 2021 and September 30, 2021 was primarily due to an improvement in the economic forecast. The increase in the allowance for credit losses from Day 1 to June 30, 2020 and September 30, 2020 was primarily due to the deterioration of macroeconomic factors surrounding the COVID-19 pandemic.

Individually Evaluated Loans

As of September 30, 2021, there were five relationships identified to be evaluated for loss on an individual basis which had an amortized cost basis of $12.5 million. These loans’ allowance for credit loss was $1.3 million and was determined by an estimate of the fair value of the collateral which consisted of business assets (accounts receivable, inventory, machinery and equipment). As of December 31, 2020, these same five relationships were identified to be evaluated for loss on an individual basis with an amortized cost basis of $15.2 million and an allowance for credit loss of $3.2 million. The decrease in the allowance for credit losses evaluated on an individual basis from December 31, 2020 to September 30, 2021 was primarily due to decrease in the amortized cost basis on the loans due to a principal payments and charge-offs.

The following table sets forth information with regard to past due and nonperforming loans by loan segment:

(In thousands)	31-60 Days Past Due Accruing		61-90 Days Past Due Accruing		Greater Than 90 Days Past Due Accruing		Total Past Due Accruing		Nonaccrual		Current		Recorded Total Loans
As of September 30, 2021
Commercial loans:
C&I	$	2,518	$	106	$	-	$	2,624	$	4,261	$	1,110,920	$	1,117,805
CRE		11,759		1,754		441		13,954		16,084		2,528,193		2,558,231
PPP		-		-		-		-		-		276,195		276,195
Total commercial loans	$	14,277	$	1,860	$	441	$	16,578	$	20,345	$	3,915,308	$	3,952,231
Consumer loans:
Auto	$	6,455	$	1,110	$	580	$	8,145	$	1,407	$	829,585	$	839,137
Other consumer		3,473		2,003		810		6,286		210		748,241		754,737
Total consumer loans	$	9,928	$	3,113	$	1,390	$	14,431	$	1,617	$	1,577,826	$	1,593,874
Residential	$	1,879	$	734	$	1,109	$	3,722	$	13,775	$	2,002,840	$	2,020,337
Total loans	$	26,084	$	5,707	$	2,940	$	34,731	$	35,737	$	7,495,974	$	7,566,442

(In thousands)	31-60 Days Past Due Accruing		61-90 Days Past Due Accruing		Greater Than 90 Days Past Due Accruing		Total Past Due Accruing		Nonaccrual		Current		Recorded Total Loans
As of December 31, 2020
Commercial loans:
C&I	$	2,235	$	2,394	$	23	$	4,652	$	4,278	$	1,116,686	$	1,125,616
CRE		682		-		470		1,152		19,971		2,391,162		2,412,285
PPP		-		-		-		-		-		430,810		430,810
Total commercial loans	$	2,917	$	2,394	$	493	$	5,804	$	24,249	$	3,938,658	$	3,968,711
Consumer loans:
Auto	$	9,125	$	1,553	$	866	$	11,544	$	2,730	$	877,831	$	892,105
Other consumer		3,711		1,929		1,272		6,912		290		640,952		648,154
Total consumer loans	$	12,836	$	3,482	$	2,138	$	18,456	$	3,020	$	1,518,783	$	1,540,259
Residential	$	2,719	$	309	$	518	$	3,546	$	17,378	$	1,968,991	$	1,989,915
Total loans	$	18,472	$	6,185	$	3,149	$	27,806	$	44,647	$	7,426,432	$	7,498,885

As of September 30, 2021 and December 31, 2020, there were no loans in non-accrual without an allowance for credit losses.

Credit Quality Indicators

The Company has developed an internal loan grading system to evaluate and quantify the Company’s loan portfolio with respect to quality and risk. The system focuses on, among other things, financial strength of borrowers, experience and depth of borrower’s management, primary and secondary sources of repayment, payment history, nature of the business and outlook on particular industries. The internal grading system enables the Company to monitor the quality of the entire loan portfolio on a consistent basis and provide management with an early warning system, enabling recognition and response to problem loans and potential problem loans.

Commercial Grading System

For Commercial and Industrial (“C&I”), Paycheck Protection Program (“PPP”) and Commercial Real Estate (“CRE”) loans, the Company uses a grading system that relies on quantifiable and measurable characteristics when available. This includes comparison of financial strength to available industry averages, comparison of transaction factors (loan terms and conditions) to loan policy and comparison of credit history to stated repayment terms and industry averages. Some grading factors are necessarily more subjective such as economic and industry factors, regulatory environment and management. C&I and CRE loans are graded Doubtful, Substandard, Special Mention and Pass.

Doubtful

A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as a loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral and refinancing. Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new information. Nonaccrual treatment is required for Doubtful assets because of the high probability of loss.

Substandard

Substandard loans have a high probability of payment default or they have other well-defined weaknesses. They require more intensive supervision by bank management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity or marginal capitalization. Repayment may depend on collateral or other credit risk mitigants. For some Substandard loans, the likelihood of full collection of interest and principal may be in doubt and those loans should be placed on nonaccrual. Although Substandard assets in the aggregate will have a distinct potential for loss, an individual asset’s loss potential does not have to be distinct for the asset to be rated Substandard.

Special Mention

Special Mention loans have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s position at some future date. These loans pose elevated risk, but their weakness does not yet justify a Substandard classification. Borrowers may be experiencing adverse operating trends (i.e., declining revenues or margins) or may be struggling with an ill-proportioned balance sheet (i.e., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a Special Mention rating. Although a Special Mention loan has a higher probability of default than a Pass asset, its default is not imminent.

Pass

Loans graded as Pass encompass all loans not graded as Doubtful, Substandard or Special Mention. Pass loans are in compliance with loan covenants and payments are generally made as agreed. Pass loans range from superior quality to fair quality. Pass loans also include any portion of a government guaranteed loan, including PPP loans.

Consumer and Residential Grading System

Consumer and Residential loans are graded as either Nonperforming or Performing.

Nonperforming

Nonperforming loans are loans that are (1) over 90 days past due and interest is still accruing or (2) on nonaccrual status.

Performing

All loans not meeting any of the above criteria are considered Performing.

The following tables illustrate the Company’s credit quality by loan class by vintage:

(In thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of September 30, 2021
C&I
By internally assigned grade:
Pass	$	258,044	$	256,285	$	127,995	$	71,024	$	23,541	$	40,962	$	282,471	$	6,724	$	1,067,046
Special mention		163		4,277		5,157		3,339		3,063		3,381		8,477		-		27,857
Substandard		14		367		7,286		1,684		2,675		2,939		2,796		4,829		22,590
Doubtful		-		-		-		126		185		1		-		-		312
Total C&I	$	258,221	$	260,929	$	140,438	$	76,173	$	29,464	$	47,283	$	293,744	$	11,553	$	1,117,805
CRE
By internally assigned grade:
Pass	$	325,092	$	453,138	$	390,834	$	249,362	$	264,620	$	486,685	$	152,622	$	16,661	$	2,339,014
Special mention		796		933		21,467		4,747		20,344		67,530		1,140		-		116,957
Substandard		-		79		15,692		15,555		12,541		50,428		1,239		-		95,534
Doubtful		-		-		-		-		-		6,726		-		-		6,726
Total CRE	$	325,888	$	454,150	$	427,993	$	269,664	$	297,505	$	611,369	$	155,001	$	16,661	$	2,558,231
PPP
By internally assigned grade:
Pass	$	256,940	$	19,255	$	-	$	-	$	-	$	-	$	-	$	-	$	276,195
Total PPP	$	256,940	$	19,255	$	-	$	-	$	-	$	-	$	-	$	-	$	276,195
Auto
By payment activity:
Performing	$	280,805	$	145,585	$	211,921	$	121,108	$	59,047	$	18,684	$	-	$	-	$	837,150
Nonperforming		148		320		712		538		269		-		-		-		1,987
Total auto	$	280,953	$	145,905	$	212,633	$	121,646	$	59,316	$	18,684	$	-	$	-	$	839,137
Other consumer
By payment activity:
Performing	$	298,505	$	166,111	$	128,954	$	88,311	$	34,858	$	18,447	$	18,516	$	15	$	753,717
Nonperforming		96		290		235		96		191		109		3		-		1,020
Total other consumer	$	298,601	$	166,401	$	129,189	$	88,407	$	35,049	$	18,556	$	18,519	$	15	$	754,737
Residential
By payment activity:
Performing	$	263,254	$	229,961	$	187,776	$	185,798	$	155,725	$	722,718	$	248,727	$	11,494	$	2,005,453
Nonperforming		-		1,530		733		1,772		1,632		9,086		39		92		14,884
Total residential	$	263,254	$	231,491	$	188,509	$	187,570	$	157,357	$	731,804	$	248,766	$	11,586	$	2,020,337
Total loans	$	1,683,857	$	1,278,131	$	1,098,762	$	743,460	$	578,691	$	1,427,696	$	716,030	$	39,815	$	7,566,442

(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of December 31, 2020
C&I
By internally assigned grade:
Pass	$	331,921	$	182,329	$	91,230	$	41,856	$	32,625	$	32,609	$	322,674	$	412	$	1,035,656
Special mention		20,064		6,534		5,053		4,702		1,624		2,830		13,614		-		54,421
Substandard		338		6,364		10,219		3,388		791		4,272		9,945		14		35,331
Doubtful		-		-		-		207		-		1		-		-		208
Total C&I	$	352,323	$	195,227	$	106,502	$	50,153	$	35,040	$	39,712	$	346,233	$	426	$	1,125,616
CRE
By internally assigned grade:
Pass	$	469,919	$	361,187	$	256,154	$	271,874	$	212,197	$	383,690	$	113,128	$	4,034	$	2,072,183
Special mention		2,051		44,034		22,260		55,039		36,830		43,537		1,297		11,524		216,572
Substandard		536		5,307		18,298		15,691		6,018		62,168		1,501		4,642		114,161
Doubtful		-		1,897		-		-		-		7,472		-		-		9,369
Total CRE	$	472,506	$	412,425	$	296,712	$	342,604	$	255,045	$	496,867	$	115,926	$	20,200	$	2,412,285
PPP
By internally assigned grade:
Pass	$	430,810	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	430,810
Total PPP	$	430,810	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	430,810
Auto
By payment activity:
Performing	$	197,881	$	314,034	$	201,850	$	115,977	$	45,495	$	13,250	$	22	$	-	$	888,509
Nonperforming		359		1,140		1,135		525		437		-		-		-		3,596
Total auto	$	198,240	$	315,174	$	202,985	$	116,502	$	45,932	$	13,250	$	22	$	-	$	892,105
Other consumer
By payment activity:
Performing	$	234,628	$	178,411	$	127,549	$	55,676	$	14,255	$	17,414	$	18,588	$	71	$	646,592
Nonperforming		339		418		307		265		90		133		10		-		1,562
Total other consumer	$	234,967	$	178,829	$	127,856	$	55,941	$	14,345	$	17,547	$	18,598	$	71	$	648,154
Residential
By payment activity:
Performing	$	237,338	$	210,505	$	213,437	$	182,993	$	164,424	$	684,495	$	268,878	$	9,991	$	1,972,061
Nonperforming		1,245		659		2,318		2,535		902		10,195		-		-		17,854
Total residential	$	238,583	$	211,164	$	215,755	$	185,528	$	165,326	$	694,690	$	268,878	$	9,991	$	1,989,915
Total loans	$	1,927,429	$	1,312,819	$	949,810	$	750,728	$	515,688	$	1,262,066	$	749,657	$	30,688	$	7,498,885

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

As of September 30, 2021, the allowance for losses on unfunded commitments totaled $5.3 million, compared to $6.4 million as of December 31, 2020.

Troubled Debt Restructuring

When the Company modifies a loan in a troubled debt restructuring (“TDR”), such modifications generally include one or a combination of the following: an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; temporary reduction in the interest rate; or change in scheduled payment amount. Residential and Consumer TDRs occurring during 2021 and 2020 were due to the reduction in the interest rate or extension of the term.

An allowance for impaired commercial and consumer loans that have been modified in a TDR is measured based on the present value of the expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs. If management determines that the value of the modified loan is less than the recorded investment in the loan an impairment charge would be recorded.

The Company began offering loan modifications to assist borrowers during the COVID-19 national emergency. The CARES Act, along with a joint agency statement issued by banking regulatory agencies, provides that modifications made in response to COVID-19 do not need to be accounted for as a TDR. The Company evaluated the modification programs provided to its borrowers and has concluded the modifications were generally made in accordance with the CARES Act guidance to borrowers who were in good standing prior to the COVID-19 pandemic and are not required to be designated as TDRs.

The following tables illustrate the recorded investment and number of modifications designated as TDRs, including the recorded investment in the loans prior to a modification and the recorded investment in the loans after restructuring:

	Three Months Ended September 30, 2021						Three Months Ended September 30, 2020
(Dollars in thousands)	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Consumer loans:
Auto		1	$	20	$	20		-	$	-	$	-
Total consumer loans		1	$	20	$	20		-	$	-	$	-
Residential		3	$	460	$	507		10	$	659	$	715
Total TDRs		4	$	480	$	527		10	$	659	$	715

	Nine Months Ended September 30, 2021						Nine Months Ended September 30, 2020
(Dollars in thousands)	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Consumer loans:
Auto		2	$	38	$	38		1	$	44	$	44
Total consumer loans		2	$	38	$	38		1	$	44	$	44
Residential		9	$	1,071	$	1,183		24	$	1,619	$	1,745
Total TDRs		11	$	1,109	$	1,221		25	$	1,663	$	1,789

The following table illustrates the recorded investment and number of modifications for TDRs where a concession has been made and subsequently defaulted during the period:

	Three Months Ended September 30, 2021				Three Months Ended September 30, 2020
(Dollars in thousands)	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Residential		19	$	1,401		9	$	299
Total TDRs		19	$	1,401		9	$	299

	Nine Months Ended September 30, 2021				Nine Months Ended September 30, 2020
(Dollars in thousands)	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Commercial loans:
C&I		-	$	-		1	$	387
CRE		-		-		1		168
Total commercial loans		-	$	-		2	$	555
Consumer loans:
Auto		2	$	18		-	$	-
Total consumer loans		2	$	18		-	$	-
Residential		39	$	2,356		45	$	2,280
Total TDRs		41	$	2,374		47	$	2,835

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Defined Benefit Post-Retirement Plans

9 Months Ended

Sep. 30, 2021

Defined Benefit Post-Retirement Plans [Abstract]

Defined Benefit Post-Retirement Plans

6. Defined Benefit Post-Retirement Plans

The Company has a qualified, noncontributory, defined benefit pension plan (“the Plan”) covering substantially all of its employees at September 30, 2021. Benefits paid from the plan are based on age, years of service, compensation and social security benefits and are determined in accordance with defined formulas. The Company’s policy is to fund the Plan in accordance with Employee Retirement Income Security Act of 1974 standards. Assets of the Plan are invested in publicly traded stocks and mutual funds. In addition to the Plan, the Company provides supplemental employee retirement plans to certain current and former executives. The Company also assumed supplemental retirement plans for former executives of Alliance Financial Corporation (“Alliance”) when the Company acquired Alliance. These supplemental employee retirement plans and the Plan are collectively referred to herein as “Pension Benefits”.

In addition, the Company provides certain health care benefits for retired employees. Benefits were accrued over the employees’ active service period. Only employees that were employed by the Company on or before January 1, 2000 are eligible to receive post-retirement health care benefits. In addition, the Company assumed post-retirement medical life insurance benefits for certain Alliance employees, retirees and their spouses, if applicable, in the Alliance acquisition. These post-retirement benefits are referred to herein as “Other Benefits”.

The Company made no voluntary contributions to the pension and other benefits plans during the three and nine months ended September 30, 2021 and 2020.

The components of expense for Pension Benefits and Other Benefits are set forth below:

	Pension Benefits						Other Benefits
	Three Months Ended September 30,						Three Months Ended September 30,
(In thousands)	2021			2020			2021		2020
Components of net periodic (benefit) cost:
Service cost	$	517		$	446		$	2	$	2
Interest cost		679			809			45		55
Expected return on plan assets		(2,197	)		(2,105	)		-		-
Net amortization		331			368			13		13
Total net periodic (benefit) cost	$	(670	)	$	(482	)	$	60	$	70

	Pension Benefits						Other Benefits
	Nine Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2021			2020			2021		2020
Components of net periodic (benefit) cost:
Service cost	$	1,486		$	1,338		$	6	$	6
Interest cost		2,034			2,427			135		165
Expected return on plan assets		(6,602	)		(6,315	)		-		-
Net amortization		957			1,104			39		39
Total net periodic (benefit) cost	$	(2,125	)	$	(1,446	)	$	180	$	210

The service cost component of the net periodic (benefit) cost is included in Salaries and Employee Benefits and the interest cost, expected return on plan assets and net amortization components are included in Other Noninterest Expense on the unaudited interim consolidated statements of income.

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Earnings Per Share

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Earnings Per Share

7. Earnings Per Share

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity (such as the Company’s dilutive stock options and restricted stock units).

The following is a reconciliation of basic and diluted EPS for the periods presented in the unaudited interim consolidated statements of income:

	Three Months Ended September 30,
(In thousands, except per share data)	2021		2020
Basic EPS:
Weighted average common shares outstanding		43,360		43,643
Net income available to common stockholders	$	37,433	$	35,113
Basic EPS	$	0.86	$	0.80
Diluted EPS:
Weighted average common shares outstanding		43,360		43,643
Dilutive effect of common stock options and restricted stock		271		299
Weighted average common shares and common share equivalents		43,631		43,942
Net income available to common stockholders	$	37,433	$	35,113
Diluted EPS	$	0.86	$	0.80

	Nine Months Ended September 30,
(In thousands, except per share data)	2021		2020
Basic EPS:
Weighted average common shares outstanding		43,464		43,704
Net income available to common stockholders	$	117,575	$	70,194
Basic EPS	$	2.71	$	1.61
Diluted EPS:
Weighted average common shares outstanding		43,464		43,704
Dilutive effect of common stock options and restricted stock		305		293
Weighted average common shares and common share equivalents		43,769		43,997
Net income available to common stockholders	$	117,575	$	70,194
Diluted EPS	$	2.69	$	1.60

There was a nominal number of stock options outstanding for the three and nine months ended September 30, 2021 and September 30, 2020, that were not considered in the calculation of diluted EPS since the stock options’ exercise prices were greater than the average market price during these periods.

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Reclassification Adjustments Out of Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2021

Reclassification Adjustments Out of Other Comprehensive Income (Loss) [Abstract]

Reclassification Adjustments Out of Other Comprehensive Income (Loss)

8. Reclassification Adjustments Out of Other Comprehensive Income (Loss)

The following table summarizes the reclassification adjustments out of AOCI:

Detail About AOCI Components	Amount Reclassified from AOCI						Affected Line Item in the Consolidated Statement of Comprehensive Income (Loss)
	Three Months Ended
(In thousands)	September 30, 2021			September 30, 2020
AFS securities:
Gains on AFS securities	$	-		$	-		Net securities (gains) losses
Amortization of unrealized gains related to securities transfer	$	149		$	157		Interest income
Tax effect	$	(38	)	$	(39	)	Income tax (benefit)
Net of tax	$	111		$	118
Cash flow hedges:
Net unrealized losses on cash flow hedges reclassified to interest expense	$	-		$	101		Interest expense
Tax effect	$	-		$	(25	)	Income tax (benefit)
Net of tax	$	-		$	76
Pension and other benefits:
Amortization of net losses	$	317		$	359		Other noninterest expense
Amortization of prior service costs		27			22		Other noninterest expense
Tax effect	$	(86	)	$	(95	)	Income tax (benefit)
Net of tax	$	258		$	286
Total reclassifications, net of tax	$	369		$	480

Detail About AOCI Components	Amount Reclassified from AOCI						Affected Line item in the Consolidated Statement of Comprehensive Income (Loss)
	Nine Months Ended
(In thousands)	September 30, 2021			September 30, 2020
AFS securities:
Gains on AFS securities	$	-		$	(3	)	Net securities (gains) losses
Amortization of unrealized gains related to securities transfer		434			495		Interest income
Tax effect	$	(109	)	$	(123	)	Income tax (benefit)
Net of tax	$	325		$	369
Cash flow hedges:
Net unrealized losses on cash flow hedges reclassified to interest expense	$	21		$	192		Interest expense
Tax effect	$	(5	)	$	(48	)	Income tax (benefit)
Net of tax	$	16		$	144
Pension and other benefits:
Amortization of net losses	$	913		$	1,075		Other noninterest expense
Amortization of prior service costs		83			68		Other noninterest expense
Tax effect	$	(249	)	$	(286	)	Income tax (benefit)
Net of tax	$	747		$	857
Total reclassifications, net of tax	$	1,088		$	1,370

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Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities [Abstract]

Derivative Instruments and Hedging Activities

9. Derivative Instruments and Hedging Activities

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, primarily by managing the amount, sources and duration of its assets and liabilities and through the use of derivative instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to certain fixed rate borrowings. The Company also has interest rate derivatives that result from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions.

Derivatives Not Designated as Hedging Instruments

The Company enters into interest rate swaps to facilitate customer transactions and meet their financing needs. These swaps are considered derivatives, but are not designated in hedging relationships. These instruments have interest rate and credit risk associated with them. To mitigate the interest rate risk, the Company enters into offsetting interest rate swaps with counterparties. The counterparty swaps are also considered derivatives and are also not designated in hedging relationships. Interest rate swaps are recorded within other assets or other liabilities on the consolidated balance sheet at their estimated fair value. Changes to the fair value of assets and liabilities arising from these derivatives are included, net, in other operating income in the consolidated statement of income.

The Company is subject to over-the-counter derivative clearing requirements, which require certain derivatives to be cleared through central clearing houses. Accordingly, the Company began to clear certain derivative transactions through the Chicago Mercantile Exchange Clearing House (“CME”) in January 2021. The CME requires the Company to post initial and variation margin payments to mitigate the risk of non-payment, the latter of which is received or paid daily based on the net asset or liability position of the contracts. A daily settlement occurs through the CME for changes in the fair value of centrally cleared derivatives. Not all of the derivatives are required to be cleared through the daily clearing agent. As a result, the total fair values of loan level derivative assets and liabilities recognized on the Company’s financial statements are not equal and offsetting.

As of September 30, 2021 and December 31, 2020, the Company had eighteen and seventeen risk participation agreements, respectively, with financial institution counterparties for interest rate swaps related to participated loans. Risk participation agreements provide credit protection to the financial institution that originated the swap transaction should the borrower fail to perform on its obligation. The Company enters into both risk participation agreements in which it purchases credit protection from other financial institutions and those in which it provides credit protection to other financial institutions.

Derivatives Designated as Hedging Instruments

The Company has previously entered into interest rate swaps to modify the interest rate characteristics of certain short-term Federal Home Loan Bank (“FHLB”) advances from variable rate to fixed rate in order to reduce the impact of changes in future cash flows due to market interest rate changes. These agreements are designated as cash flow hedges.

The following table summarizes the derivatives outstanding:

(In thousands)	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
As of September 30, 2021
Derivatives not designated as hedging instruments
Interest rate derivatives	$	1,346,853	Other assets	$	71,246	$	1,346,853	Other liabilities	$	71,246
Risk participation agreements		91,348	Other assets		235		37,852	Other liabilities		68
Total derivatives not designated as hedging instruments				$	71,481				$	71,314
Netting adjustments(1)					-					3,684
Net derivatives in the balance sheet				$	71,481				$	67,630
Derivatives not offset on the balance sheet				$	4,869				$	4,869
Cash collateral(2)					-					55,730
Net derivative amounts				$	66,612				$	7,031
As of December 31, 2020
Derivatives designated as hedging instruments
Interest rate derivatives	$	-	Other assets	$	-	$	25,000	Other liabilities	$	34
Derivatives not designated as hedging instruments
Interest rate derivatives	$	1,223,584	Other assets	$	108,487	$	1,223,584	Other liabilities	$	108,487
Risk participation agreements		72,528	Other assets		292		39,785	Other liabilities		125
Total derivatives not designated as hedging instruments				$	108,779				$	108,612
Cash collateral(2)					-					107,350
Net derivative amounts				$	108,779				$	1,262

(1) Netting adjustments represents the amounts recorded to convert derivatives assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance on the settle to market rules for cleared derivatives. The CME legally characterizes the variation margin posted between counterparties as settlements of the outstanding derivative contracts instead of cash collateral. Company began to clear certain derivative transactions through the CME in 2021.

(2) Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The other collateral consists of securities and is exchanged under bilateral collateral and master netting agreements that allow us to offset the net derivative position with the related collateral. The application of the other collateral cannot reduce the net derivative position below zero. Therefore, excess other collateral, if any, is not reflected above.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest expense in the same period during which the hedge transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s short-term rate borrowings. During the three months ended March 31, 2021 the Company’s final cash flow hedge of interest rate risk matured and the remaining balance was reclassified from AOCI as a reduction to interest expense. There is no additional amount that will be reclassified from AOCI as a reduction to interest expense.

The following table indicates the effect of cash flow hedge accounting on AOCI and on the unaudited interim consolidated statement of income:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2021		2020		2021		2020
Derivatives designated as hedging instruments:
Interest rate derivatives - included component
Amount of (loss) recognized in other comprehensive income	$	-	$	-	$	-	$	(274	)
Amount of loss reclassified from AOCI into interest expense		-		101		21		192

The following table indicates the gain or loss recognized in income on derivatives not designated as a hedging relationship:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2021			2020			2021			2020
Derivatives not designated as hedging instruments:
(Decrease) increase in other income	$	(307	)	$	(20	)	$	(382	)	$	127

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Fair Value Measurements and Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2021

Fair Value Measurements and Fair Value of Financial Instruments [Abstract]

Fair Value Measurements and Fair Value of Financial Instruments

10. Fair Value Measurements and Fair Value of Financial Instruments

GAAP states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value measurements are not adjusted for transaction costs. A fair value hierarchy exists within GAAP that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities, many other sovereign government obligations, liquid mortgage products, active listed equities and most money market securities. Such instruments are generally classified within Level 1 or Level 2 of the fair value hierarchy. The Company does not adjust the quoted prices for such instruments.

The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency include most investment-grade and high-yield corporate bonds, less liquid mortgage products, less liquid agency securities, less liquid listed equities, state, municipal and provincial obligations and certain physical commodities. Such instruments are generally classified within Level 2 of the fair value hierarchy. Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices). Other investment securities are reported at fair value utilizing Level 1 and Level 2 inputs. The prices for Level 2 instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases and sales of investment securities. Prices obtained from these sources include prices derived from market quotations and matrix pricing. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Management reviews the methodologies used in pricing the securities by its third-party providers.

Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions. Valuations are adjusted to reflect illiquidity and/or non-transferability and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate will be used. Management’s best estimate consists of both internal and external support on certain Level 3 investments. Subsequent to inception, management only changes Level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalizations and other transactions across the capital structure, offerings in the equity or debt markets and changes in financial ratios or cash flows.

The following tables set forth the Company’s financial assets and liabilities measured on a recurring basis that were accounted for at fair value. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

(In thousands)	Level 1		Level 2		Level 3		September 30, 2021
Assets:
AFS securities
Federal agency	$	-	$	242,966	$	-	$	242,966
State & municipal		-		84,021		-		84,021
Mortgage-backed		-		650,195		-		650,195
Collateralized mortgage obligations		-		558,711		-		558,711
Corporate		-		40,137		-		40,137
Total AFS securities	$	-	$	1,576,030	$	-	$	1,576,030
Equity securities		32,013		1,000		-		33,013
Derivatives		-		71,481		-		71,481
Total	$	32,013	$	1,648,511	$	-	$	1,680,524
Liabilities:
Derivatives	$	-	$	71,314	$	-	$	71,314
Total	$	-	$	71,314	$	-	$	71,314

(In thousands)	Level 1		Level 2		Level 3		December 31, 2020
Assets:
AFS securities
Federal agency	$	-	$	243,597	$	-	$	243,597
State & municipal		-		43,180		-		43,180
Mortgage-backed		-		595,839		-		595,839
Collateralized mortgage obligations		-		437,804		-		437,804
Corporate		-		28,278		-		28,278
Total AFS securities	$	-	$	1,348,698	$	-	$	1,348,698
Equity securities		28,737		2,000		-		30,737
Derivatives		-		108,779		-		108,779
Total	$	28,737	$	1,459,477	$	-	$	1,488,214
Liabilities:
Derivatives	$	-	$	108,646	$	-	$	108,646
Total	$	-	$	108,646	$	-	$	108,646

GAAP requires disclosure of assets and liabilities measured and recorded at fair value on a non-recurring basis such as goodwill, loans held for sale, other real estate owned, collateral-dependent impaired loans, mortgage servicing rights and HTM securities. The non-recurring fair value measurements recorded during the three and nine month periods ended September 30, 2021 and the year ended December 31, 2020 were related to impaired loans, write-downs of other real estate owned and write-down of branch assets to fair value. The Company uses the fair value of underlying collateral, less costs to sell, to estimate the allowance for credit losses for individually evaluated collateral dependent loans. The appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses ranging from 10% to 50%. Based on the valuation techniques used, the fair value measurements for collateral dependent individually evaluated loans are classified as Level 3.

As of September 30, 2021, the Company had collateral dependent individually evaluated loans with a carrying value of $12.5 million, which had an estimated allowance for credit loss of $1.3 million. As of December 31, 2020, the Company had collateral dependent individually evaluated loans with a carrying value of $15.2 million, which had an estimated allowance for credit loss of $3.2 million.

The following table sets forth information with regard to estimated fair values of financial instruments. This table excludes financial instruments for which the carrying amount approximates fair value. Financial instruments for which the fair value approximates carrying value include cash and cash equivalents, AFS securities, equity securities, accrued interest receivable, non-maturity deposits, short-term borrowings, accrued interest payable and derivatives.

			September 30, 2021				December 31, 2020
(In thousands)	Fair Value Hierarchy		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
HTM securities		2	$	683,103	$	689,129	$	616,560	$	636,827
Net loans		3		7,474,466		7,615,405		7,390,004		7,530,033
Financial liabilities:
Time deposits		2	$	552,273	$	553,125	$	633,479	$	638,721
Long-term debt		2		14,020		14,376		39,097		39,820
Subordinated debt		1		100,000		107,684		100,000		103,277
Junior subordinated debt		2		101,196		109,001		101,196		108,926

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, the Company has a substantial wealth operation that contributes net fee income annually. The wealth management operation is not considered a financial instrument and its value has not been incorporated into the fair value estimates. Other significant assets and liabilities include the benefits resulting from the low-cost funding of deposit liabilities as compared to the cost of borrowing funds in the market and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimate of fair value.

HTM Securities

The fair value of the Company’s HTM securities is primarily measured using information from a third-party pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.

Net Loans

Net loans include portfolio loans and loans held for sale. Loans were first segregated by type and then further segmented into fixed and variable rate and loan quality categories. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments, which also includes credit risk, illiquidity risk and other market factors to calculate the exit price fair value in accordance with ASC 820.

Time Deposits

The fair value of time deposits was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments. The fair values of the Company’s time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.

Long-Term Debt

The fair value of long-term debt was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments.

Subordinated Debt

The fair value of subordinated debt has been measured using the observable market price as of the period reported.

Junior Subordinated Debt

The fair value of junior subordinated debt has been estimated using a discounted cash flow analysis.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies [Abstract]

Commitments and Contingencies

11. Commitments and Contingencies

The Company is a party to certain financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, unused lines of credit, standby letters of credit and certain agricultural real estate loans sold to investors with recourse, with the sold portion having a government guarantee that is assignable back to the Company upon repurchase of the loan in the event of default. The Company’s exposure to credit loss in the event of nonperformance by the other party to the commitments to extend credit, unused lines of credit, standby letters of credit and loans sold with recourse is represented by the contractual amount of those investments. The credit risk associated with commitments to extend credit and standby and commercial letters of credit is essentially the same as that involved with extending loans to customers and is subject to normal credit policies. Collateral may be obtained based on management’s assessment of the customer’s credit worthiness. Commitments to extend credit and unused lines of credit totaled $2.3 billion at September 30, 2021 and $2.2 billion at December 31, 2020.

Since many loan commitments, standby letters of credit and guarantees and indemnification contracts expire without being funded in whole or in part, the contract amounts are not necessarily indicative of future cash flows. The Company does not issue any guarantees that would require liability-recognition or disclosure, other than its standby letters of credit.

The Company guarantees the obligations or performance of customers by issuing standby letters of credit to third-parties. These standby letters of credit are generally issued in support of third-party debt, such as corporate debt issuances, industrial revenue bonds and municipal securities. The risk involved in issuing standby letters of credit is essentially the same as the credit risk involved in extending loan facilities to customers and letters of credit are subject to the same credit origination, portfolio maintenance and management procedures in effect to monitor other credit and off-balance sheet products. Typically, these instruments have one year expirations with an option to renew upon annual review; therefore, the total amounts do not necessarily represent future cash requirements. Standby letters of credit totaled $50.6 million at September 30, 2021 and $54.0 million at December 31, 2020. As of September 30, 2021 and December 31, 2020, the fair value of the Company’s standby letters of credit was not significant.

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Description of Business (Policies)

9 Months Ended

Sep. 30, 2021

Description of Business [Abstract]

Nature of Operations

NBT Bancorp Inc. (the “Company”) is a registered financial holding company incorporated in the state of Delaware in 1986, with its principal headquarters located in Norwich, New York. The principal assets of the Company consist of all of the outstanding shares of common stock of its subsidiaries, including: NBT Bank, National Association (the “Bank”), NBT Financial Services, Inc. (“NBT Financial”), NBT Holdings, Inc. (“NBT Holdings”), CNBF Capital Trust I, NBT Statutory Trust I, NBT Statutory Trust II, Alliance Financial Capital Trust I and Alliance Financial Capital Trust II (collectively, the “Trusts”). The Company’s principal sources of revenue are the management fees and dividends it receives from the Bank, NBT Financial and NBT Holdings.

The Company’s business, primarily conducted through the Bank, consists of providing commercial banking, retail banking and wealth management services primarily to customers in its market area, which includes central and upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, the southern coastal Maine area and central Connecticut. The Company has been, and intends to continue to be, a community-oriented financial institution offering a variety of financial services. The Company’s business philosophy is to operate as a community bank with local decision-making, providing a broad array of banking and financial services to retail, commercial and municipal customers.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2021

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of NBT Bancorp Inc. and its wholly-owned subsidiaries, the Bank, NBT Financial and NBT Holdings. Collectively, NBT Bancorp Inc. and its subsidiaries are referred to herein as (“the Company”). The interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods in accordance with generally accepted accounting principles in the United States of America (“GAAP”). These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2020 Annual Report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period. All material intercompany transactions have been eliminated in consolidation. Amounts previously reported in the consolidated financial statements are reclassified whenever necessary to conform to current period presentation. The Company has evaluated subsequent events for potential recognition and/or disclosure and there were none identified.

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from those estimates and such differences could be material to the financial statements.

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Recent Accounting Pronouncements (Policies)

9 Months Ended

Sep. 30, 2021

Recent Accounting Pronouncements [Abstract]

Recently Adopted Accounting Standards and Accounting Standards Issued Not Yet Adopted

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU removes specific exceptions to the general principles in Topic 740 in GAAP. It eliminates the need for an organization to analyze whether the following apply in a given period: (1) exception to the incremental approach for intraperiod tax allocation; (2) exceptions to accounting for basis differences when there are ownership changes in foreign investments; and (3) exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. The ASU also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP for: (1) franchise taxes that are partially based on income; (2) transactions with a government that result in a step up in the tax basis of goodwill; (3) separate financial statements of legal entities that are not subject to tax; and (4) enacted changes in tax laws in interim periods. The amendments in this ASU were effective for the Company on January 1, 2021, and interim periods within those fiscal years. The adoption did not have a material impact on the consolidated financial statements and related disclosures.

Accounting Standards Issued Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. On January 7, 2021, the FASB issued ASU 2021-01, which refines the scope of Accounting Standards Codification 848 (“ASC 848”) and clarifies some of its guidance. ASU 2020-04 and related amendments provide temporary optional expedients and exceptions to the existing guidance for applying GAAP to affected contract modifications and hedge accounting relationships in the transition away from the London Interbank Offered Rate (“LIBOR”) or other interbank offered rate on financial reporting. The guidance also allows a one-time election to sell and/or reclassify to available for sale (“AFS”) or trading held to maturity (“HTM”) debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective March 12, 2020 through December 31, 2022 and permits relief solely for reference rate reform actions and permits different elections over the effective date for legacy and new activity. The Company is evaluating the impact of adopting the new guidance on the consolidated financial statements and does not expect it will have a material impact on the consolidated financial statements.

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Securities (Policies)

9 Months Ended

Sep. 30, 2021

Securities [Abstract]

Investment, Policy

The Company does not believe the AFS securities that were in an unrealized loss position as of September 30, 2021 and December 31, 2020, which consisted of 109 and 23 individual securities, respectively, represented a credit loss impairment. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. As of September 30, 2021 and December 31, 2020, the majority of the AFS securities in an unrealized loss position consisted of debt securities issued by U.S. government agencies or U.S. government-sponsored enterprises that carry the explicit and/or implicit guarantee of the U.S. government, which are widely recognized as “risk-free” and have a long history of zero credit losses. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. The Company does not intend to sell, nor is it more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, which may be at maturity. The Company elected to exclude accrued interest receivable (“AIR”) from the amortized cost basis of debt securities. AIR on AFS debt securities totaled $3.3 million at September 30, 2021 and December 31, 2020 and is excluded from the estimate of credit losses and reported in the financial statement line for other assets.

None of the bank’s HTM debt securities were past due or on non-accrual status as of September 30, 2021 and December 31, 2020. There was no accrued interest reversed against interest income for the three and nine months ended September 30, 2021 or the year-ended December 31, 2020 as all securities remained on accrual status. In addition, there were no collateral-dependent HTM debt securities as of September 30, 2021 and December 31, 2020. As of September 30, 2021 and December 31, 2020, 53% and 65%, respectively, of the Company’s HTM debt securities were issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as “risk free,” and have a long history of zero credit loss. Therefore, the Company did not record an allowance for credit losses for these securities as of September 30, 2021 and December 31, 2020. The remaining HTM debt securities at September 30, 2021 and December 31, 2020 were comprised of state and municipal obligations with bond ratings of A to AAA. Utilizing the Current Expected Credit Losses (“CECL”) approach, the Company determined that the expected credit loss on its HTM municipal bond portfolio was immaterial and therefore no allowance for credit loss was recorded as of September 30, 2021 and December 31, 2020. AIR on HTM debt securities totaled $2.6 million and $2.7 million at September 30, 2021 and December 31, 2020, respectively, and is excluded from the estimate of credit losses and reported in the other assets financial statement line.

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Allowance for Credit Losses and Credit Quality of Loans (Policies)

9 Months Ended

Sep. 30, 2021

Allowance for Credit Losses and Credit Quality of Loans [Abstract]

Allowance for Credit Losses

The Day 1 increase in the allowance for credit loss on loans relating to adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments was $3.0 million, which decreased retained earnings by $2.3 million and increased the deferred tax asset by $0.7 million.

The September 30, 2021, June 30, 2021, December 31, 2020, September 30, 2020 and Day 1 allowance for credit losses calculation incorporated a 6-quarter forecast period to account for forecast economic conditions under each scenario utilized in the measurement. For periods beyond the 6-quarter forecast, the model reverts to long-term economic conditions over a 4-quarter reversion period on a straight-line basis. The Company considers a baseline, upside and downside economic forecast in measuring the allowance.

The quantitative model as of September 30, 2021 incorporated a baseline economic outlook along with alternative upside and downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment initially above pre-COVID-19 levels although steadily improving to below 4% mid-way through the forecast period. Northeast GDP’s annualized growth (on a quarterly basis) was expected to start the fourth quarter of 2021 at approximately 10% and steadily fall back down to normalized levels by the end of 2022. Other utilized economic variables showed mixed changes in their respective forecasts, with retail sales and business output declining from the prior quarter and housing starts increasing from the prior quarter’s forecast. Key assumptions in the baseline economic outlook included abatement of the coronavirus (“COVID-19”) pandemic in November, additional legislation focused on infrastructure and social benefits programs enacted by the end of 2021 totaling $2.5 trillion, and full employment reached by the end of 2022. The alternative downside scenario assumed deteriorated economic and epidemiological conditions from the baseline outlook. Under this scenario, northeast unemployment rises from 6.2% in the third quarter of 2021 to a peak of 8.2% in the fourth quarter of 2022, remaining above 7% for the entire forecast period. The alternative upside scenario incorporated a more optimistic outlook than the baseline scenario, with a swift return to full employment by the first quarter of 2022 and with northeast unemployment moving down to 3.1% by the end of the forecast period. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of September 30, 2021. Additional adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in the second and third quarters of 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government sponsored loan programs. The Company also continued to monitor the level of criticized and classified loans in the third quarter of 2021 compared to the level contemplated by the model during similar, historical economic conditions, and an adjustment was made to estimate potential additional losses above modeled losses. Additionally, a qualitative adjustment was made for isolated model limitations related to modeled outputs given abnormally high retail sales and business output growth rates. These factors were considered through separate quantitative processes and incorporated into the estimate of current expected credit losses at September 30, 2021.

The quantitative model as of June 30, 2021 incorporated a baseline economic outlook along with alternative upside and downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment above pre-COVID-19 levels for the entire forecast period, though steadily improving to below 4% by the end of 2022. Northeast GDP’s annualized growth (on a quarterly basis) was expected to start in the second half of 2021 in the high single digits (9.86%) and steadily fall back down to normalized levels by the end of 2022. Other utilized economic variables showed mixed changes in their respective forecasts, with retail sales and business output being relatively unchanged and housing starts lowered from the prior quarter forecast. Key assumptions in the baseline economic outlook included herd “resiliency” expected by summer-2021, additional legislation focused on infrastructure and social benefits enacted in the second half of 2021 and high, near-term GDP growth expectations. The alternative downside scenario assumed deteriorated economic and epidemiological conditions from the baseline outlook. Under this scenario, northeast unemployment rose from 8.1% in the third quarter of 2021 to a peak of 8.7% in the second quarter of 2022, remaining above 8% for the entire forecast period. The alternative upside scenario incorporated a more optimistic outlook than the baseline scenario, with a swift return to full employment by the first quarter of 2022 and down to a low of 3.5% by the end of the forecast period. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of June 30, 2021. Additional adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in the second and third quarters of 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government sponsored loan programs. The Company also continued to identify a slightly higher level of criticized and classified loans in the second quarter of 2021 than those contemplated by the model during similar, historical economic conditions for which an adjustment was made to estimate potential additional losses above modeled losses. Additionally, a qualitative adjustment was made for isolated model limitations related to modeled outputs given abnormally high retail sales and business output growth rates. These factors were considered through separate quantitative processes and incorporated into the estimate of current expected credit losses at June 30, 2021.

The quantitative model as of December 31, 2020 incorporated a baseline economic outlook, along with alternative upside and downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment above pre-COVID-19 levels for the entire forecast period, though steadily improving, before returning to low single digits by the end of 2023. Northeast GDP’s annual growth was expected to start 2021 in the low to mid-single digits, with a peak growth rate of 8% in the fourth quarter of 2021 and steadily falling back down to normalized levels through 2023 and 2024. Other utilized economic variables show improvement in their respective forecasts, namely business output. Key assumptions in the baseline economic outlook included an additional stimulus package passed at the same timing and a comparable level to that of the actual $900 billion COVID-19 relief package passed in December 2020 along with no significant secondary surge in COVID-19 cases or pandemic-related business closures. The alternative downside scenario assumed deteriorated economic and epidemiological conditions from the baseline outlook. In the same way, the alternative upside scenario assumed a faster economic recovery and more effective management of the COVID-19 virus from the baseline outlook. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2020. Additional adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government-sponsored loan programs. The commercial & industrial and consumer segment models were based upon percent change in unemployment with modeled values as of December 31, 2020 well outside the observed historical experience. Therefore, adjustments were required to produce outputs more aligned with default expectations given the forecast economic environment. Additionally, the Company identified a slightly higher level of criticized and classified loans during 2020 than those contemplated by the model during similar economic conditions in the past for which an adjustment was made for estimated expected additional losses above modeled output. These factors were considered through a separate quantitative process and incorporated into the estimate for allowance for credit losses at December 31, 2020.

On August 3, 2020, the Federal Financial Institutions Examination Council (“FFIEC”) issued a joint statement on additional loan accommodations related to COVID-19. The joint statement clarifies that for loan modifications in which Section 4013 is being applied, subsequent modifications could also be eligible under section 4013 (“Section 4013”) of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). Accordingly, the Company is offering modifications made in response to COVID-19 to borrowers who were current and otherwise not past due in accordance with the criteria stated in Section 4013. These include short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment. Accordingly, the Company did not account for such loan modifications as TDRs. As of September 30, 2021, there were $2.0 million in loans in modification programs related to COVID-19. On December 27, 2020, the Consolidated Appropriations Act amended section 2014 of the CARES Act extending the exemption of qualified loan modifications from classification as a troubled debt restructuring as defined by GAAP to the earlier of January 1, 2022, or 60 days after the National Emergency concerning COVID-19 ends.

There were no loans purchased with credit deterioration during the nine months ended September 30, 2021 or the year ended December 31, 2020. During 2021, the Company purchased $52.4 million of residential loans at a 2% premium and $60.3 million in consumer loans at par. The allowance for credit losses recorded for these loans on the purchase date was $4.6 million. During 2020, the Company purchased $51.9 million of consumer loans at a 1% discount. The allowance for credit losses recorded for these loans on the purchase date was $3.6 million. The Company made a policy election to report AIR in the other assets line item on the balance sheet. AIR on loans totaled $20.4 million at September 30, 2021 and $23.7 million at December 31, 2020 and was included in the allowance for loan credit losses to estimate the impact of accrued interest receivable related to loans with modifications due to the pandemic as the length of time between interest recognition and the write-off of uncollectible interest could exceed 120 days, exempting these loans from our policy election for accrued interest receivable. There was no estimated allowance for credit losses related to AIR at September 30, 2021 and $0.6 million at December 31, 2020.

The decrease in the allowance for credit losses from December 31, 2020 to June 30, 2021 and September 30, 2021 was primarily due to an improvement in the economic forecast. The increase in the allowance for credit losses from Day 1 to June 30, 2020 and September 30, 2020 was primarily due to the deterioration of macroeconomic factors surrounding the COVID-19 pandemic.

Individually Evaluated Loans

As of September 30, 2021, there were five relationships identified to be evaluated for loss on an individual basis which had an amortized cost basis of $12.5 million. These loans’ allowance for credit loss was $1.3 million and was determined by an estimate of the fair value of the collateral which consisted of business assets (accounts receivable, inventory, machinery and equipment). As of December 31, 2020, these same five relationships were identified to be evaluated for loss on an individual basis with an amortized cost basis of $15.2 million and an allowance for credit loss of $3.2 million. The decrease in the allowance for credit losses evaluated on an individual basis from December 31, 2020 to September 30, 2021 was primarily due to decrease in the amortized cost basis on the loans due to a principal payments and charge-offs.

Credit Quality Indicators

The Company has developed an internal loan grading system to evaluate and quantify the Company’s loan portfolio with respect to quality and risk. The system focuses on, among other things, financial strength of borrowers, experience and depth of borrower’s management, primary and secondary sources of repayment, payment history, nature of the business and outlook on particular industries. The internal grading system enables the Company to monitor the quality of the entire loan portfolio on a consistent basis and provide management with an early warning system, enabling recognition and response to problem loans and potential problem loans.

Commercial Grading System

For Commercial and Industrial (“C&I”), Paycheck Protection Program (“PPP”) and Commercial Real Estate (“CRE”) loans, the Company uses a grading system that relies on quantifiable and measurable characteristics when available. This includes comparison of financial strength to available industry averages, comparison of transaction factors (loan terms and conditions) to loan policy and comparison of credit history to stated repayment terms and industry averages. Some grading factors are necessarily more subjective such as economic and industry factors, regulatory environment and management. C&I and CRE loans are graded Doubtful, Substandard, Special Mention and Pass.

Doubtful

A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as a loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral and refinancing. Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new information. Nonaccrual treatment is required for Doubtful assets because of the high probability of loss.

Substandard

Substandard loans have a high probability of payment default or they have other well-defined weaknesses. They require more intensive supervision by bank management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity or marginal capitalization. Repayment may depend on collateral or other credit risk mitigants. For some Substandard loans, the likelihood of full collection of interest and principal may be in doubt and those loans should be placed on nonaccrual. Although Substandard assets in the aggregate will have a distinct potential for loss, an individual asset’s loss potential does not have to be distinct for the asset to be rated Substandard.

Special Mention

Special Mention loans have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s position at some future date. These loans pose elevated risk, but their weakness does not yet justify a Substandard classification. Borrowers may be experiencing adverse operating trends (i.e., declining revenues or margins) or may be struggling with an ill-proportioned balance sheet (i.e., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a Special Mention rating. Although a Special Mention loan has a higher probability of default than a Pass asset, its default is not imminent.

Pass

Loans graded as Pass encompass all loans not graded as Doubtful, Substandard or Special Mention. Pass loans are in compliance with loan covenants and payments are generally made as agreed. Pass loans range from superior quality to fair quality. Pass loans also include any portion of a government guaranteed loan, including PPP loans.

Consumer and Residential Grading System

Consumer and Residential loans are graded as either Nonperforming or Performing.

Nonperforming

Nonperforming loans are loans that are (1) over 90 days past due and interest is still accruing or (2) on nonaccrual status.

Performing

All loans not meeting any of the above criteria are considered Performing.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

As of September 30, 2021, the allowance for losses on unfunded commitments totaled $5.3 million, compared to $6.4 million as of December 31, 2020.

Troubled Debt Restructuring

Troubled Debt Restructuring

When the Company modifies a loan in a troubled debt restructuring (“TDR”), such modifications generally include one or a combination of the following: an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; temporary reduction in the interest rate; or change in scheduled payment amount. Residential and Consumer TDRs occurring during 2021 and 2020 were due to the reduction in the interest rate or extension of the term.

An allowance for impaired commercial and consumer loans that have been modified in a TDR is measured based on the present value of the expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs. If management determines that the value of the modified loan is less than the recorded investment in the loan an impairment charge would be recorded.

The Company began offering loan modifications to assist borrowers during the COVID-19 national emergency. The CARES Act, along with a joint agency statement issued by banking regulatory agencies, provides that modifications made in response to COVID-19 do not need to be accounted for as a TDR. The Company evaluated the modification programs provided to its borrowers and has concluded the modifications were generally made in accordance with the CARES Act guidance to borrowers who were in good standing prior to the COVID-19 pandemic and are not required to be designated as TDRs.

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Defined Benefit Post-Retirement Plans (Policies)

9 Months Ended

Sep. 30, 2021

Defined Benefit Post-Retirement Plans [Abstract]

Postemployment Benefit Plans, Policy

The Company has a qualified, noncontributory, defined benefit pension plan (“the Plan”) covering substantially all of its employees at September 30, 2021. Benefits paid from the plan are based on age, years of service, compensation and social security benefits and are determined in accordance with defined formulas. The Company’s policy is to fund the Plan in accordance with Employee Retirement Income Security Act of 1974 standards. Assets of the Plan are invested in publicly traded stocks and mutual funds. In addition to the Plan, the Company provides supplemental employee retirement plans to certain current and former executives. The Company also assumed supplemental retirement plans for former executives of Alliance Financial Corporation (“Alliance”) when the Company acquired Alliance. These supplemental employee retirement plans and the Plan are collectively referred to herein as “Pension Benefits”.

In addition, the Company provides certain health care benefits for retired employees. Benefits were accrued over the employees’ active service period. Only employees that were employed by the Company on or before January 1, 2000 are eligible to receive post-retirement health care benefits. In addition, the Company assumed post-retirement medical life insurance benefits for certain Alliance employees, retirees and their spouses, if applicable, in the Alliance acquisition. These post-retirement benefits are referred to herein as “Other Benefits”.

The Company made no voluntary contributions to the pension and other benefits plans during the three and nine months ended September 30, 2021 and 2020.

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Earnings Per Share (Policies)

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Earnings Per Share

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity (such as the Company’s dilutive stock options and restricted stock units).

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Fair Value Measurements and Fair Value of Financial Instruments (Policies)

9 Months Ended

Sep. 30, 2021

Fair Value Measurements and Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments, Policy

GAAP states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value measurements are not adjusted for transaction costs. A fair value hierarchy exists within GAAP that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities, many other sovereign government obligations, liquid mortgage products, active listed equities and most money market securities. Such instruments are generally classified within Level 1 or Level 2 of the fair value hierarchy. The Company does not adjust the quoted prices for such instruments.

The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency include most investment-grade and high-yield corporate bonds, less liquid mortgage products, less liquid agency securities, less liquid listed equities, state, municipal and provincial obligations and certain physical commodities. Such instruments are generally classified within Level 2 of the fair value hierarchy. Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices). Other investment securities are reported at fair value utilizing Level 1 and Level 2 inputs. The prices for Level 2 instruments are obtained through an independent pricing service or dealer market participants with whom the Company has historically transacted both purchases and sales of investment securities. Prices obtained from these sources include prices derived from market quotations and matrix pricing. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Management reviews the methodologies used in pricing the securities by its third-party providers.

Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions. Valuations are adjusted to reflect illiquidity and/or non-transferability and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate will be used. Management’s best estimate consists of both internal and external support on certain Level 3 investments. Subsequent to inception, management only changes Level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalizations and other transactions across the capital structure, offerings in the equity or debt markets and changes in financial ratios or cash flows.

GAAP requires disclosure of assets and liabilities measured and recorded at fair value on a non-recurring basis such as goodwill, loans held for sale, other real estate owned, collateral-dependent impaired loans, mortgage servicing rights and HTM securities. The non-recurring fair value measurements recorded during the three and nine month periods ended September 30, 2021 and the year ended December 31, 2020 were related to impaired loans, write-downs of other real estate owned and write-down of branch assets to fair value. The Company uses the fair value of underlying collateral, less costs to sell, to estimate the allowance for credit losses for individually evaluated collateral dependent loans. The appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses ranging from 10% to 50%. Based on the valuation techniques used, the fair value measurements for collateral dependent individually evaluated loans are classified as Level 3.

As of September 30, 2021, the Company had collateral dependent individually evaluated loans with a carrying value of $12.5 million, which had an estimated allowance for credit loss of $1.3 million. As of December 31, 2020, the Company had collateral dependent individually evaluated loans with a carrying value of $15.2 million, which had an estimated allowance for credit loss of $3.2 million.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, the Company has a substantial wealth operation that contributes net fee income annually. The wealth management operation is not considered a financial instrument and its value has not been incorporated into the fair value estimates. Other significant assets and liabilities include the benefits resulting from the low-cost funding of deposit liabilities as compared to the cost of borrowing funds in the market and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimate of fair value.

HTM Securities

The fair value of the Company’s HTM securities is primarily measured using information from a third-party pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.

Net Loans

Net loans include portfolio loans and loans held for sale. Loans were first segregated by type and then further segmented into fixed and variable rate and loan quality categories. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments, which also includes credit risk, illiquidity risk and other market factors to calculate the exit price fair value in accordance with ASC 820.

Time Deposits

The fair value of time deposits was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments. The fair values of the Company’s time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.

Long-Term Debt

The fair value of long-term debt was estimated using a discounted cash flow approach that applies prevailing market interest rates for similar maturity instruments.

Subordinated Debt

The fair value of subordinated debt has been measured using the observable market price as of the period reported.

Junior Subordinated Debt

The fair value of junior subordinated debt has been estimated using a discounted cash flow analysis.

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Securities (Tables)

9 Months Ended

Sep. 30, 2021

Securities [Abstract]

Amortized Cost, Estimated Fair Value and Unrealized Gains (Losses) of AFS Securities

The amortized cost, estimated fair value and unrealized gains (losses) of AFS securities are as follows:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
As of September 30, 2021
Federal agency	$	248,462	$	-	$	5,496	$	242,966
State & municipal		84,636		138		753		84,021
Mortgage-backed:
Government-sponsored enterprises		575,884		10,907		3,959		582,832
U.S. government agency securities		65,762		1,710		109		67,363
Collateralized mortgage obligations:
Government-sponsored enterprises		438,255		5,002		2,004		441,253
U.S. government agency securities		115,873		1,774		189		117,458
Corporate		38,500		1,637		-		40,137
Total AFS securities	$	1,567,372	$	21,168	$	12,510	$	1,576,030
As of December 31, 2020
Federal agency	$	245,590	$	59	$	2,052	$	243,597
State & municipal		42,550		630		-		43,180
Mortgage-backed:
Government-sponsored enterprises		521,448		17,079		22		538,505
U.S. government agency securities		55,049		2,332		47		57,334
Collateralized mortgage obligations:
Government-sponsored enterprises		311,710		7,549		58		319,201
U.S. government agency securities		114,864		3,739		-		118,603
Corporate		27,500		778		-		28,278
Total AFS securities	$	1,318,711	$	32,166	$	2,179	$	1,348,698

Amortized Cost, Estimated Fair Value, and Unrealized Gains (Losses) of HTM Securities

The amortized cost, estimated fair value and unrealized gains (losses) of HTM securities are as follows:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
As of September 30, 2021
Federal agency	$	100,000	$	-	$	3,821	$	96,179
Mortgage-backed:
Government-sponsored enterprises		121,040		2,851		568		123,323
U.S. government agency securities		9,121		659		-		9,780
Collateralized mortgage obligations:
Government-sponsored enterprises		75,852		3,050		-		78,902
U.S. government agency securities		54,587		679		341		54,925
State & municipal		322,503		5,021		1,504		326,020
Total HTM securities	$	683,103	$	12,260	$	6,234	$	689,129
As of December 31, 2020
Federal agency	$	100,000	$	-	$	1,658	$	98,342
Mortgage-backed:
Government-sponsored enterprises		107,914		4,583		-		112,497
U.S. government agency securities		11,533		979		-		12,512
Collateralized mortgage obligations:
Government-sponsored enterprises		103,105		4,477		-		107,582
U.S. government agency securities		79,145		3,950		-		83,095
State & municipal		214,863		7,953		17		222,799
Total HTM securities	$	616,560	$	21,942	$	1,675	$	636,827

Gains and (Losses) on Equity Securities

The following tables set forth information with regard to gains and (losses) on equity securities:

	Three Months Ended September 30,
(In thousands)	2021			2020
Net (losses) and gains recognized on equity securities	$	(114	)	$	73
Less: Net (losses) and gains recognized on equity securities sold during the period		-			-
Unrealized (losses) and gains recognized on equity securities still held	$	(114	)	$	73

	Nine Months Ended September 30,
(In thousands)	2021		2020
Net gains and (losses) recognized on equity securities	$	539	$	(565	)
Less: Net gains and (losses) recognized on equity securities sold during the period		-		-
Unrealized gains and (losses) recognized on equity securities still held	$	539	$	(565	)

Contractual Maturities of Debt Securities

The following table sets forth information with regard to contractual maturities of debt securities at September 30, 2021:

(In thousands)	Amortized Cost		Estimated Fair Value
AFS debt securities:
Within one year	$	1,258	$	1,262
From one to five years		56,017		56,596
From five to ten years		642,112		639,238
After ten years		867,985		878,934
Total AFS debt securities	$	1,567,372	$	1,576,030
HTM debt securities:
Within one year	$	97,203	$	97,239
From one to five years		56,120		57,485
From five to ten years		226,478		227,026
After ten years		303,302		307,379
Total HTM debt securities	$	683,103	$	689,129

Investment Securities with Unrealized Losses

The following table sets forth information with regard to investment securities with unrealized losses, for which an allowance for credit losses has not been recorded at September 30, 2021, segregated according to the length of time the securities had been in a continuous unrealized loss position:

	Less Than 12 Months							12 Months or Longer							Total
(In thousands)	Fair Value		Unrealized Losses			Number of Positions		Fair Value		Unrealized Losses			Number of Positions		Fair Value		Unrealized Losses			Number of Positions
As of September 30, 2021
AFS securities:
Federal agency	$	101,674	$	(1,799	)		7	$	141,292	$	(3,697	)		9	$	242,966	$	(5,496	)		16
State & municipal		68,492		(753	)		45		-		-			-		68,492		(753	)		45
Mortgage-backed		239,779		(4,060	)		18		761		(8	)		4		240,540		(4,068	)		22
Collateralized mortgage obligations		247,618		(1,793	)		24		12,816		(400	)		2		260,434		(2,193	)		26
Total securities with unrealized losses	$	657,563	$	(8,405	)		94	$	154,869	$	(4,105	)		15	$	812,432	$	(12,510	)		109
HTM securities:
Federal agency	$	-	$	-			-	$	96,179	$	(3,821	)		4	$	96,179	$	(3,821	)		4
Mortgage-backed		56,996		(568	)		5		-		-			-		56,996		(568	)		5
Collateralized mortgage obligation		31,809		(341	)		5		-		-			-		31,809		(341	)		5
State & municipal		67,806		(1,381	)		50		3,453		(123	)		4		71,259		(1,504	)		54
Total securities with unrealized losses	$	156,611	$	(2,290	)		60	$	99,632	$	(3,944	)		8	$	256,243	$	(6,234	)		68
As of December 31, 2020
AFS securities:
Federal agency	$	148,537	$	(2,052	)		10	$	-	$	-			-	$	148,537	$	(2,052	)		10
Mortgage-backed		47,269		(60	)		3		800		(9	)		4		48,069		(69	)		7
Collateralized mortgage obligations		17,837		(58	)		6		-		-			-		17,837		(58	)		6
Total securities with unrealized losses	$	213,643	$	(2,170	)		19	$	800	$	(9	)		4	$	214,443	$	(2,179	)		23
HTM securities:
Federal agency	$	98,342	$	(1,658	)		4	$	-	$	-			-	$	98,342	$	(1,658	)		4
State & municipal		4,805		(17	)		5		-		-			-		4,805		(17	)		5
Total securities with unrealized losses	$	103,147	$	(1,675	)		9	$	-	$	-			-	$	103,147	$	(1,675	)		9

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Allowance for Credit Losses and Credit Quality of Loans (Tables)

9 Months Ended

Sep. 30, 2021

Allowance for Credit Losses and Credit Quality of Loans [Abstract]

Allowance for Loan Losses by Portfolio

The following tables present the activity in the allowance for credit losses by portfolio segment:

(In thousands)	Commercial Loans			Consumer Loans			Residential			Total
Balance as of June 30, 2021	$	44,191		$	34,881		$	19,428		$	98,500
Charge-offs		(1,492	)		(3,083	)		(312	)		(4,887	)
Recoveries		354			2,143			232			2,729
Provision		(9,875	)		7,130			(597	)		(3,342	)
Ending balance as of September 30, 2021	$	33,178		$	41,071		$	18,751		$	93,000
Balance as of June 30, 2020	$	50,386		$	40,094		$	23,020		$	113,500
Charge-offs		(624	)		(4,097	)		(58	)		(4,779	)
Recoveries		333			2,123			62			2,518
Provision		1,651			442			1,168			3,261
Ending balance as of September 30, 2020	$	51,746		$	38,562		$	24,192		$	114,500

(In thousands)	Commercial Loans			Consumer Loans			Residential			Total
Balance as of December 31, 2020	$	50,942		$	37,803		$	21,255		$	110,000
Charge-offs		(2,123	)		(10,702	)		(731	)		(13,556	)
Recoveries		533			6,506			871			7,910
Provision		(16,174	)		7,464			(2,644	)		(11,354	)
Ending balance as of September 30, 2021	$	33,178		$	41,071		$	18,751		$	93,000
Balance as of January 1, 2020 (after adoption of ASC 326)	$	27,156		$	32,122		$	16,721		$	75,999
Charge-offs		(2,353	)		(17,166	)		(863	)		(20,382	)
Recoveries		674			6,168			300			7,142
Provision		26,269			17,438			8,034			51,741
Ending balance as of September 30, 2020	$	51,746		$	38,562		$	24,192		$	114,500

Past due and Nonperforming Loans by Loan Class

The following table sets forth information with regard to past due and nonperforming loans by loan segment:

(In thousands)	31-60 Days Past Due Accruing		61-90 Days Past Due Accruing		Greater Than 90 Days Past Due Accruing		Total Past Due Accruing		Nonaccrual		Current		Recorded Total Loans
As of September 30, 2021
Commercial loans:
C&I	$	2,518	$	106	$	-	$	2,624	$	4,261	$	1,110,920	$	1,117,805
CRE		11,759		1,754		441		13,954		16,084		2,528,193		2,558,231
PPP		-		-		-		-		-		276,195		276,195
Total commercial loans	$	14,277	$	1,860	$	441	$	16,578	$	20,345	$	3,915,308	$	3,952,231
Consumer loans:
Auto	$	6,455	$	1,110	$	580	$	8,145	$	1,407	$	829,585	$	839,137
Other consumer		3,473		2,003		810		6,286		210		748,241		754,737
Total consumer loans	$	9,928	$	3,113	$	1,390	$	14,431	$	1,617	$	1,577,826	$	1,593,874
Residential	$	1,879	$	734	$	1,109	$	3,722	$	13,775	$	2,002,840	$	2,020,337
Total loans	$	26,084	$	5,707	$	2,940	$	34,731	$	35,737	$	7,495,974	$	7,566,442

(In thousands)	31-60 Days Past Due Accruing		61-90 Days Past Due Accruing		Greater Than 90 Days Past Due Accruing		Total Past Due Accruing		Nonaccrual		Current		Recorded Total Loans
As of December 31, 2020
Commercial loans:
C&I	$	2,235	$	2,394	$	23	$	4,652	$	4,278	$	1,116,686	$	1,125,616
CRE		682		-		470		1,152		19,971		2,391,162		2,412,285
PPP		-		-		-		-		-		430,810		430,810
Total commercial loans	$	2,917	$	2,394	$	493	$	5,804	$	24,249	$	3,938,658	$	3,968,711
Consumer loans:
Auto	$	9,125	$	1,553	$	866	$	11,544	$	2,730	$	877,831	$	892,105
Other consumer		3,711		1,929		1,272		6,912		290		640,952		648,154
Total consumer loans	$	12,836	$	3,482	$	2,138	$	18,456	$	3,020	$	1,518,783	$	1,540,259
Residential	$	2,719	$	309	$	518	$	3,546	$	17,378	$	1,968,991	$	1,989,915
Total loans	$	18,472	$	6,185	$	3,149	$	27,806	$	44,647	$	7,426,432	$	7,498,885

Financing Receivable Credit Quality by Loan Class

The following tables illustrate the Company’s credit quality by loan class by vintage:

(In thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of September 30, 2021
C&I
By internally assigned grade:
Pass	$	258,044	$	256,285	$	127,995	$	71,024	$	23,541	$	40,962	$	282,471	$	6,724	$	1,067,046
Special mention		163		4,277		5,157		3,339		3,063		3,381		8,477		-		27,857
Substandard		14		367		7,286		1,684		2,675		2,939		2,796		4,829		22,590
Doubtful		-		-		-		126		185		1		-		-		312
Total C&I	$	258,221	$	260,929	$	140,438	$	76,173	$	29,464	$	47,283	$	293,744	$	11,553	$	1,117,805
CRE
By internally assigned grade:
Pass	$	325,092	$	453,138	$	390,834	$	249,362	$	264,620	$	486,685	$	152,622	$	16,661	$	2,339,014
Special mention		796		933		21,467		4,747		20,344		67,530		1,140		-		116,957
Substandard		-		79		15,692		15,555		12,541		50,428		1,239		-		95,534
Doubtful		-		-		-		-		-		6,726		-		-		6,726
Total CRE	$	325,888	$	454,150	$	427,993	$	269,664	$	297,505	$	611,369	$	155,001	$	16,661	$	2,558,231
PPP
By internally assigned grade:
Pass	$	256,940	$	19,255	$	-	$	-	$	-	$	-	$	-	$	-	$	276,195
Total PPP	$	256,940	$	19,255	$	-	$	-	$	-	$	-	$	-	$	-	$	276,195
Auto
By payment activity:
Performing	$	280,805	$	145,585	$	211,921	$	121,108	$	59,047	$	18,684	$	-	$	-	$	837,150
Nonperforming		148		320		712		538		269		-		-		-		1,987
Total auto	$	280,953	$	145,905	$	212,633	$	121,646	$	59,316	$	18,684	$	-	$	-	$	839,137
Other consumer
By payment activity:
Performing	$	298,505	$	166,111	$	128,954	$	88,311	$	34,858	$	18,447	$	18,516	$	15	$	753,717
Nonperforming		96		290		235		96		191		109		3		-		1,020
Total other consumer	$	298,601	$	166,401	$	129,189	$	88,407	$	35,049	$	18,556	$	18,519	$	15	$	754,737
Residential
By payment activity:
Performing	$	263,254	$	229,961	$	187,776	$	185,798	$	155,725	$	722,718	$	248,727	$	11,494	$	2,005,453
Nonperforming		-		1,530		733		1,772		1,632		9,086		39		92		14,884
Total residential	$	263,254	$	231,491	$	188,509	$	187,570	$	157,357	$	731,804	$	248,766	$	11,586	$	2,020,337
Total loans	$	1,683,857	$	1,278,131	$	1,098,762	$	743,460	$	578,691	$	1,427,696	$	716,030	$	39,815	$	7,566,442

(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of December 31, 2020
C&I
By internally assigned grade:
Pass	$	331,921	$	182,329	$	91,230	$	41,856	$	32,625	$	32,609	$	322,674	$	412	$	1,035,656
Special mention		20,064		6,534		5,053		4,702		1,624		2,830		13,614		-		54,421
Substandard		338		6,364		10,219		3,388		791		4,272		9,945		14		35,331
Doubtful		-		-		-		207		-		1		-		-		208
Total C&I	$	352,323	$	195,227	$	106,502	$	50,153	$	35,040	$	39,712	$	346,233	$	426	$	1,125,616
CRE
By internally assigned grade:
Pass	$	469,919	$	361,187	$	256,154	$	271,874	$	212,197	$	383,690	$	113,128	$	4,034	$	2,072,183
Special mention		2,051		44,034		22,260		55,039		36,830		43,537		1,297		11,524		216,572
Substandard		536		5,307		18,298		15,691		6,018		62,168		1,501		4,642		114,161
Doubtful		-		1,897		-		-		-		7,472		-		-		9,369
Total CRE	$	472,506	$	412,425	$	296,712	$	342,604	$	255,045	$	496,867	$	115,926	$	20,200	$	2,412,285
PPP
By internally assigned grade:
Pass	$	430,810	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	430,810
Total PPP	$	430,810	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	430,810
Auto
By payment activity:
Performing	$	197,881	$	314,034	$	201,850	$	115,977	$	45,495	$	13,250	$	22	$	-	$	888,509
Nonperforming		359		1,140		1,135		525		437		-		-		-		3,596
Total auto	$	198,240	$	315,174	$	202,985	$	116,502	$	45,932	$	13,250	$	22	$	-	$	892,105
Other consumer
By payment activity:
Performing	$	234,628	$	178,411	$	127,549	$	55,676	$	14,255	$	17,414	$	18,588	$	71	$	646,592
Nonperforming		339		418		307		265		90		133		10		-		1,562
Total other consumer	$	234,967	$	178,829	$	127,856	$	55,941	$	14,345	$	17,547	$	18,598	$	71	$	648,154
Residential
By payment activity:
Performing	$	237,338	$	210,505	$	213,437	$	182,993	$	164,424	$	684,495	$	268,878	$	9,991	$	1,972,061
Nonperforming		1,245		659		2,318		2,535		902		10,195		-		-		17,854
Total residential	$	238,583	$	211,164	$	215,755	$	185,528	$	165,326	$	694,690	$	268,878	$	9,991	$	1,989,915
Total loans	$	1,927,429	$	1,312,819	$	949,810	$	750,728	$	515,688	$	1,262,066	$	749,657	$	30,688	$	7,498,885

Troubled Debt Restructurings on Financing Receivables

The following tables illustrate the recorded investment and number of modifications designated as TDRs, including the recorded investment in the loans prior to a modification and the recorded investment in the loans after restructuring:

	Three Months Ended September 30, 2021						Three Months Ended September 30, 2020
(Dollars in thousands)	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Consumer loans:
Auto		1	$	20	$	20		-	$	-	$	-
Total consumer loans		1	$	20	$	20		-	$	-	$	-
Residential		3	$	460	$	507		10	$	659	$	715
Total TDRs		4	$	480	$	527		10	$	659	$	715

	Nine Months Ended September 30, 2021						Nine Months Ended September 30, 2020
(Dollars in thousands)	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Consumer loans:
Auto		2	$	38	$	38		1	$	44	$	44
Total consumer loans		2	$	38	$	38		1	$	44	$	44
Residential		9	$	1,071	$	1,183		24	$	1,619	$	1,745
Total TDRs		11	$	1,109	$	1,221		25	$	1,663	$	1,789

The following table illustrates the recorded investment and number of modifications for TDRs where a concession has been made and subsequently defaulted during the period:

	Three Months Ended September 30, 2021				Three Months Ended September 30, 2020
(Dollars in thousands)	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Residential		19	$	1,401		9	$	299
Total TDRs		19	$	1,401		9	$	299

	Nine Months Ended September 30, 2021				Nine Months Ended September 30, 2020
(Dollars in thousands)	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Commercial loans:
C&I		-	$	-		1	$	387
CRE		-		-		1		168
Total commercial loans		-	$	-		2	$	555
Consumer loans:
Auto		2	$	18		-	$	-
Total consumer loans		2	$	18		-	$	-
Residential		39	$	2,356		45	$	2,280
Total TDRs		41	$	2,374		47	$	2,835

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Defined Benefit Post-Retirement Plans (Tables)

9 Months Ended

Sep. 30, 2021

Defined Benefit Post-Retirement Plans [Abstract]

Net Periodic Pension Benefits and Other Benefit Costs

The components of expense for Pension Benefits and Other Benefits are set forth below:

	Pension Benefits						Other Benefits
	Three Months Ended September 30,						Three Months Ended September 30,
(In thousands)	2021			2020			2021		2020
Components of net periodic (benefit) cost:
Service cost	$	517		$	446		$	2	$	2
Interest cost		679			809			45		55
Expected return on plan assets		(2,197	)		(2,105	)		-		-
Net amortization		331			368			13		13
Total net periodic (benefit) cost	$	(670	)	$	(482	)	$	60	$	70

	Pension Benefits						Other Benefits
	Nine Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2021			2020			2021		2020
Components of net periodic (benefit) cost:
Service cost	$	1,486		$	1,338		$	6	$	6
Interest cost		2,034			2,427			135		165
Expected return on plan assets		(6,602	)		(6,315	)		-		-
Net amortization		957			1,104			39		39
Total net periodic (benefit) cost	$	(2,125	)	$	(1,446	)	$	180	$	210

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Reconciliation of Basic and Diluted Earnings Per Share

The following is a reconciliation of basic and diluted EPS for the periods presented in the unaudited interim consolidated statements of income:

	Three Months Ended September 30,
(In thousands, except per share data)	2021		2020
Basic EPS:
Weighted average common shares outstanding		43,360		43,643
Net income available to common stockholders	$	37,433	$	35,113
Basic EPS	$	0.86	$	0.80
Diluted EPS:
Weighted average common shares outstanding		43,360		43,643
Dilutive effect of common stock options and restricted stock		271		299
Weighted average common shares and common share equivalents		43,631		43,942
Net income available to common stockholders	$	37,433	$	35,113
Diluted EPS	$	0.86	$	0.80

	Nine Months Ended September 30,
(In thousands, except per share data)	2021		2020
Basic EPS:
Weighted average common shares outstanding		43,464		43,704
Net income available to common stockholders	$	117,575	$	70,194
Basic EPS	$	2.71	$	1.61
Diluted EPS:
Weighted average common shares outstanding		43,464		43,704
Dilutive effect of common stock options and restricted stock		305		293
Weighted average common shares and common share equivalents		43,769		43,997
Net income available to common stockholders	$	117,575	$	70,194
Diluted EPS	$	2.69	$	1.60

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Reclassification Adjustments Out of Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2021

Reclassification Adjustments Out of Other Comprehensive Income (Loss) [Abstract]

Reclassification Adjustments out of AOCI

The following table summarizes the reclassification adjustments out of AOCI:

Detail About AOCI Components	Amount Reclassified from AOCI						Affected Line Item in the Consolidated Statement of Comprehensive Income (Loss)
	Three Months Ended
(In thousands)	September 30, 2021			September 30, 2020
AFS securities:
Gains on AFS securities	$	-		$	-		Net securities (gains) losses
Amortization of unrealized gains related to securities transfer	$	149		$	157		Interest income
Tax effect	$	(38	)	$	(39	)	Income tax (benefit)
Net of tax	$	111		$	118
Cash flow hedges:
Net unrealized losses on cash flow hedges reclassified to interest expense	$	-		$	101		Interest expense
Tax effect	$	-		$	(25	)	Income tax (benefit)
Net of tax	$	-		$	76
Pension and other benefits:
Amortization of net losses	$	317		$	359		Other noninterest expense
Amortization of prior service costs		27			22		Other noninterest expense
Tax effect	$	(86	)	$	(95	)	Income tax (benefit)
Net of tax	$	258		$	286
Total reclassifications, net of tax	$	369		$	480

Detail About AOCI Components	Amount Reclassified from AOCI						Affected Line item in the Consolidated Statement of Comprehensive Income (Loss)
	Nine Months Ended
(In thousands)	September 30, 2021			September 30, 2020
AFS securities:
Gains on AFS securities	$	-		$	(3	)	Net securities (gains) losses
Amortization of unrealized gains related to securities transfer		434			495		Interest income
Tax effect	$	(109	)	$	(123	)	Income tax (benefit)
Net of tax	$	325		$	369
Cash flow hedges:
Net unrealized losses on cash flow hedges reclassified to interest expense	$	21		$	192		Interest expense
Tax effect	$	(5	)	$	(48	)	Income tax (benefit)
Net of tax	$	16		$	144
Pension and other benefits:
Amortization of net losses	$	913		$	1,075		Other noninterest expense
Amortization of prior service costs		83			68		Other noninterest expense
Tax effect	$	(249	)	$	(286	)	Income tax (benefit)
Net of tax	$	747		$	857
Total reclassifications, net of tax	$	1,088		$	1,370

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Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosures [Line Items]

Summary of Derivatives Outstanding

The following table summarizes the derivatives outstanding:

(In thousands)	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
As of September 30, 2021
Derivatives not designated as hedging instruments
Interest rate derivatives	$	1,346,853	Other assets	$	71,246	$	1,346,853	Other liabilities	$	71,246
Risk participation agreements		91,348	Other assets		235		37,852	Other liabilities		68
Total derivatives not designated as hedging instruments				$	71,481				$	71,314
Netting adjustments(1)					-					3,684
Net derivatives in the balance sheet				$	71,481				$	67,630
Derivatives not offset on the balance sheet				$	4,869				$	4,869
Cash collateral(2)					-					55,730
Net derivative amounts				$	66,612				$	7,031
As of December 31, 2020
Derivatives designated as hedging instruments
Interest rate derivatives	$	-	Other assets	$	-	$	25,000	Other liabilities	$	34
Derivatives not designated as hedging instruments
Interest rate derivatives	$	1,223,584	Other assets	$	108,487	$	1,223,584	Other liabilities	$	108,487
Risk participation agreements		72,528	Other assets		292		39,785	Other liabilities		125
Total derivatives not designated as hedging instruments				$	108,779				$	108,612
Cash collateral(2)					-					107,350
Net derivative amounts				$	108,779				$	1,262

(1) Netting adjustments represents the amounts recorded to convert derivatives assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance on the settle to market rules for cleared derivatives. The CME legally characterizes the variation margin posted between counterparties as settlements of the outstanding derivative contracts instead of cash collateral. Company began to clear certain derivative transactions through the CME in 2021.

(2) Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The other collateral consists of securities and is exchanged under bilateral collateral and master netting agreements that allow us to offset the net derivative position with the related collateral. The application of the other collateral cannot reduce the net derivative position below zero. Therefore, excess other collateral, if any, is not reflected above.

Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member]

Derivative Instruments and Hedging Activities Disclosures [Line Items]

Effect of Derivatives on AOCI and on Consolidated Statement of Income

The following table indicates the effect of cash flow hedge accounting on AOCI and on the unaudited interim consolidated statement of income:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2021		2020		2021		2020
Derivatives designated as hedging instruments:
Interest rate derivatives - included component
Amount of (loss) recognized in other comprehensive income	$	-	$	-	$	-	$	(274	)
Amount of loss reclassified from AOCI into interest expense		-		101		21		192

Not Designated as Hedging Instrument [Member]

Derivative Instruments and Hedging Activities Disclosures [Line Items]

Effect of Derivatives on AOCI and on Consolidated Statement of Income

The following table indicates the gain or loss recognized in income on derivatives not designated as a hedging relationship:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2021			2020			2021			2020
Derivatives not designated as hedging instruments:
(Decrease) increase in other income	$	(307	)	$	(20	)	$	(382	)	$	127

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Fair Value Measurements and Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2021

Fair Value Measurements and Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

The following tables set forth the Company’s financial assets and liabilities measured on a recurring basis that were accounted for at fair value. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

(In thousands)	Level 1		Level 2		Level 3		September 30, 2021
Assets:
AFS securities
Federal agency	$	-	$	242,966	$	-	$	242,966
State & municipal		-		84,021		-		84,021
Mortgage-backed		-		650,195		-		650,195
Collateralized mortgage obligations		-		558,711		-		558,711
Corporate		-		40,137		-		40,137
Total AFS securities	$	-	$	1,576,030	$	-	$	1,576,030
Equity securities		32,013		1,000		-		33,013
Derivatives		-		71,481		-		71,481
Total	$	32,013	$	1,648,511	$	-	$	1,680,524
Liabilities:
Derivatives	$	-	$	71,314	$	-	$	71,314
Total	$	-	$	71,314	$	-	$	71,314

(In thousands)	Level 1		Level 2		Level 3		December 31, 2020
Assets:
AFS securities
Federal agency	$	-	$	243,597	$	-	$	243,597
State & municipal		-		43,180		-		43,180
Mortgage-backed		-		595,839		-		595,839
Collateralized mortgage obligations		-		437,804		-		437,804
Corporate		-		28,278		-		28,278
Total AFS securities	$	-	$	1,348,698	$	-	$	1,348,698
Equity securities		28,737		2,000		-		30,737
Derivatives		-		108,779		-		108,779
Total	$	28,737	$	1,459,477	$	-	$	1,488,214
Liabilities:
Derivatives	$	-	$	108,646	$	-	$	108,646
Total	$	-	$	108,646	$	-	$	108,646

Information with Regard to Estimated Fair Values of Financial Instruments

The following table sets forth information with regard to estimated fair values of financial instruments. This table excludes financial instruments for which the carrying amount approximates fair value. Financial instruments for which the fair value approximates carrying value include cash and cash equivalents, AFS securities, equity securities, accrued interest receivable, non-maturity deposits, short-term borrowings, accrued interest payable and derivatives.

			September 30, 2021				December 31, 2020
(In thousands)	Fair Value Hierarchy		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
HTM securities		2	$	683,103	$	689,129	$	616,560	$	636,827
Net loans		3		7,474,466		7,615,405		7,390,004		7,530,033
Financial liabilities:
Time deposits		2	$	552,273	$	553,125	$	633,479	$	638,721
Long-term debt		2		14,020		14,376		39,097		39,820
Subordinated debt		1		100,000		107,684		100,000		103,277
Junior subordinated debt		2		101,196		109,001		101,196		108,926

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Securities, Available for Sale (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Debt securities, available-for-sale [Abstract]
Amortized cost	$ 1,567,372		$ 1,567,372		$ 1,318,711
Unrealized gains	21,168		21,168		32,166
Unrealized losses	12,510		12,510		2,179
Estimated fair value	1,576,030		1,576,030		1,348,698
Allowance for credit losses on AFS securities	0		0		0
Gross realized gains	0	$ 0	0	$ 3
Gross realized losses	0	$ 0	0
Gains from calls on securities available for sale				$ 3
Federal Agency [Member]
Debt securities, available-for-sale [Abstract]
Amortized cost	248,462		248,462		245,590
Unrealized gains	0		0		59
Unrealized losses	5,496		5,496		2,052
Estimated fair value	242,966		242,966		243,597
State & Municipal [Member]
Debt securities, available-for-sale [Abstract]
Amortized cost	84,636		84,636		42,550
Unrealized gains	138		138		630
Unrealized losses	753		753		0
Estimated fair value	84,021		84,021		43,180
Mortgage-Backed, Government Sponsored Enterprises [Member]
Debt securities, available-for-sale [Abstract]
Amortized cost	575,884		575,884		521,448
Unrealized gains	10,907		10,907		17,079
Unrealized losses	3,959		3,959		22
Estimated fair value	582,832		582,832		538,505
Mortgage-Backed, U.S. Government Agency Securities [Member]
Debt securities, available-for-sale [Abstract]
Amortized cost	65,762		65,762		55,049
Unrealized gains	1,710		1,710		2,332
Unrealized losses	109		109		47
Estimated fair value	67,363		67,363		57,334
Collateralized Mortgage Obligations, Government-Sponsored Enterprises [Member]
Debt securities, available-for-sale [Abstract]
Amortized cost	438,255		438,255		311,710
Unrealized gains	5,002		5,002		7,549
Unrealized losses	2,004		2,004		58
Estimated fair value	441,253		441,253		319,201
Collateralized Mortgage Obligations, U.S. Government Agency Securities [Member]
Debt securities, available-for-sale [Abstract]
Amortized cost	115,873		115,873		114,864
Unrealized gains	1,774		1,774		3,739
Unrealized losses	189		189		0
Estimated fair value	117,458		117,458		118,603
Corporate [Member]
Debt securities, available-for-sale [Abstract]
Amortized cost	38,500		38,500		27,500
Unrealized gains	1,637		1,637		778
Unrealized losses	0		0		0
Estimated fair value	$ 40,137		$ 40,137		$ 28,278

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Securities, Held to Maturity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Held-to-maturity securities, fair value to amortized cost [Abstract]
Amortized cost	$ 683,103		$ 683,103		$ 616,560
Unrealized gains	12,260		12,260		21,942
Unrealized losses	6,234		6,234		1,675
Estimated fair value	689,129		689,129		636,827
Allowance for credit losses on HTM securities	0		0		0
Gains from calls on HTM securities	14	$ 11	29	$ 15
Held-to-maturity securities sold, amortized cost	0		0	1,000
Held-to-maturity securities sold, realized loss				$ 1
Amortized costs of securities available for sale and held to maturity pledged	1,600,000		1,600,000		1,400,000
Amortized costs of securities AFS and HTM pledged as collateral for repurchase agreements	149,200		149,200		305,200
Federal Agency [Member]
Held-to-maturity securities, fair value to amortized cost [Abstract]
Amortized cost	100,000		100,000		100,000
Unrealized gains	0		0		0
Unrealized losses	3,821		3,821		1,658
Estimated fair value	96,179		96,179		98,342
Mortgage-Backed, Government Sponsored Enterprises [Member]
Held-to-maturity securities, fair value to amortized cost [Abstract]
Amortized cost	121,040		121,040		107,914
Unrealized gains	2,851		2,851		4,583
Unrealized losses	568		568		0
Estimated fair value	123,323		123,323		112,497
Mortgage-Backed, U.S. Government Agency Securities [Member]
Held-to-maturity securities, fair value to amortized cost [Abstract]
Amortized cost	9,121		9,121		11,533
Unrealized gains	659		659		979
Unrealized losses	0		0		0
Estimated fair value	9,780		9,780		12,512
Collateralized Mortgage Obligations, Government-Sponsored Enterprises [Member]
Held-to-maturity securities, fair value to amortized cost [Abstract]
Amortized cost	75,852		75,852		103,105
Unrealized gains	3,050		3,050		4,477
Unrealized losses	0		0		0
Estimated fair value	78,902		78,902		107,582
Collateralized Mortgage Obligations, U.S. Government Agency Securities [Member]
Held-to-maturity securities, fair value to amortized cost [Abstract]
Amortized cost	54,587		54,587		79,145
Unrealized gains	679		679		3,950
Unrealized losses	341		341		0
Estimated fair value	54,925		54,925		83,095
State & Municipal [Member]
Held-to-maturity securities, fair value to amortized cost [Abstract]
Amortized cost	322,503		322,503		214,863
Unrealized gains	5,021		5,021		7,953
Unrealized losses	1,504		1,504		17
Estimated fair value	$ 326,020		$ 326,020		$ 222,799

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Securities, Gains and (Losses) on Equity Securities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Gains (losses) on equity securities [Abstract]
Net gains and (losses) recognized on equity securities	$ (114)	$ 73	$ 539	$ (565)
Less: Net gains and (losses) recognized on equity securities sold during the period	0	0	0	0
Unrealized gains and (losses) recognized on equity securities still held	(114)	73	539	(565)
Equity Securities without Readily Determinable Fair Value, Annual Amount [Abstract]
Carrying amount of equity securities without readily determinable fair values	1,000		1,000		$ 2,000
Impairment adjustments of equity securities without readily determinable fair values	0	0	0	0
Downward adjustments of equity securities without readily determinable fair values	0	0	0	0
Upward adjustments of equity securities without readily determinable fair values	$ 0	$ 0	$ 0	$ 0

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Securities, AFS Debt Securities, Contractual Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Available-for-sale Securities, Debt Maturities, Amortized Cost [Abstract]
Within one year	$ 1,258
From one to five years	56,017
From five to ten years	642,112
After ten years	867,985
Amortized cost	1,567,372	$ 1,318,711
Available-for-sale Securities, Debt Maturities, Estimated Fair Value [Abstract]
Within one year	1,262
From one to five years	56,596
From five to ten years	639,238
After ten years	878,934
Fair value	$ 1,576,030	$ 1,348,698

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Securities, HTM Debt Securities, Contractual Maturities (Details) $ in Thousands	Sep. 30, 2021 USD ($) Issuer	Dec. 31, 2020 USD ($) Issuer
Held-to-maturity Securities, Debt Maturities, Amortized Cost [Abstract]
Within one year	$ 97,203
From one to five years	56,120
From five to ten years	226,478
After ten years	303,302
Amortized cost	683,103	$ 616,560
Held-to-maturity Securities, Debt Maturities, Estimated Fair Value [Abstract]
Within one year	97,239
From one to five years	57,485
From five to ten years	227,026
After ten years	307,379
Fair value	$ 689,129	$ 636,827
Number of issuers whose holdings exceeded 10% of consolidated stockholders' equity, excluding U.S. Government securities and Government-sponsored enterprises securities | Issuer	0	0

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Securities, AFS Securities in Continuous Unrealized Loss Position (Details) $ in Thousands	Sep. 30, 2021 USD ($) Position	Dec. 31, 2020 USD ($) Position
Unrealized Loss Position, Fair Value [Abstract]
Less than 12 months	$ 657,563	$ 213,643
12 months or longer	154,869	800
Total	812,432	214,443
Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	(8,405)	(2,170)
12 months or longer	(4,105)	(9)
Total	$ (12,510)	$ (2,179)
Unrealized Loss Position, Number of Positions [Abstract]
Less than 12 months | Position	94	19
12 months or longer | Position	15	4
Total | Position	109	23
AIR on AFS debt securities	$ 3,300	$ 3,300
Federal Agency [Member]
Unrealized Loss Position, Fair Value [Abstract]
Less than 12 months	101,674	148,537
12 months or longer	141,292	0
Total	242,966	148,537
Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	(1,799)	(2,052)
12 months or longer	(3,697)	0
Total	$ (5,496)	$ (2,052)
Unrealized Loss Position, Number of Positions [Abstract]
Less than 12 months | Position	7	10
12 months or longer | Position	9	0
Total | Position	16	10
State & Municipal [Member]
Unrealized Loss Position, Fair Value [Abstract]
Less than 12 months	$ 68,492
12 months or longer	0
Total	68,492
Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	(753)
12 months or longer	0
Total	$ (753)
Unrealized Loss Position, Number of Positions [Abstract]
Less than 12 months | Position	45
12 months or longer | Position	0
Total | Position	45
Mortgage-Backed [Member]
Unrealized Loss Position, Fair Value [Abstract]
Less than 12 months	$ 239,779	$ 47,269
12 months or longer	761	800
Total	240,540	48,069
Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	(4,060)	(60)
12 months or longer	(8)	(9)
Total	$ (4,068)	$ (69)
Unrealized Loss Position, Number of Positions [Abstract]
Less than 12 months | Position	18	3
12 months or longer | Position	4	4
Total | Position	22	7
Collateralized Mortgage Obligations [Member]
Unrealized Loss Position, Fair Value [Abstract]
Less than 12 months	$ 247,618	$ 17,837
12 months or longer	12,816	0
Total	260,434	17,837
Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	(1,793)	(58)
12 months or longer	(400)	0
Total	$ (2,193)	$ (58)
Unrealized Loss Position, Number of Positions [Abstract]
Less than 12 months | Position	24	6
12 months or longer | Position	2	0
Total | Position	26	6

XML

Securities, HTM Securities in Continuous Unrealized Loss Position (Details) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2021 USD ($) Position	Sep. 30, 2021 USD ($) Position	Dec. 31, 2020 USD ($) Position
Unrealized Loss Position, Fair Value [Abstract]
Less than 12 months	$ 156,611	$ 156,611	$ 103,147
12 months or longer	99,632	99,632	0
Total	256,243	256,243	103,147
Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	(2,290)	(2,290)	(1,675)
12 months or longer	(3,944)	(3,944)	0
Total	$ (6,234)	$ (6,234)	$ (1,675)
Unrealized Loss Position, Number of Positions [Abstract]
Less than 12 months | Position	60	60	9
12 months or longer | Position	8	8	0
Total | Position	68	68	9
HTM debt securities	$ 683,103	$ 683,103	$ 616,560
Accrued interest reversed against interest income	0	0	0
Collateral-dependent HTM debt securities	0	0	0
AIR on HTM debt securities	2,600	2,600	2,700
Past Due [Member]
Unrealized Loss Position, Number of Positions [Abstract]
HTM debt securities	0	0	0
Federal Agency [Member]
Unrealized Loss Position, Fair Value [Abstract]
Less than 12 months	0	0	98,342
12 months or longer	96,179	96,179	0
Total	96,179	96,179	98,342
Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	0	0	(1,658)
12 months or longer	(3,821)	(3,821)	0
Total	$ (3,821)	$ (3,821)	$ (1,658)
Unrealized Loss Position, Number of Positions [Abstract]
Less than 12 months | Position	0	0	4
12 months or longer | Position	4	4	0
Total | Position	4	4	4
HTM debt securities	$ 100,000	$ 100,000	$ 100,000
Mortgage-Backed [Member]
Unrealized Loss Position, Fair Value [Abstract]
Less than 12 months	56,996	56,996
12 months or longer	0	0
Total	56,996	56,996
Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	(568)	(568)
12 months or longer	0	0
Total	$ (568)	$ (568)
Unrealized Loss Position, Number of Positions [Abstract]
Less than 12 months | Position	5	5
12 months or longer | Position	0	0
Total | Position	5	5
Collateralized Mortgage Obligations [Member]
Unrealized Loss Position, Fair Value [Abstract]
Less than 12 months	$ 31,809	$ 31,809
12 months or longer	0	0
Total	31,809	31,809
Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	(341)	(341)
12 months or longer	0	0
Total	$ (341)	$ (341)
Unrealized Loss Position, Number of Positions [Abstract]
Less than 12 months | Position	5	5
12 months or longer | Position	0	0
Total | Position	5	5
State & Municipal [Member]
Unrealized Loss Position, Fair Value [Abstract]
Less than 12 months	$ 67,806	$ 67,806	4,805
12 months or longer	3,453	3,453	0
Total	71,259	71,259	4,805
Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	(1,381)	(1,381)	(17)
12 months or longer	(123)	(123)	0
Total	$ (1,504)	$ (1,504)	$ (17)
Unrealized Loss Position, Number of Positions [Abstract]
Less than 12 months | Position	50	50	5
12 months or longer | Position	4	4	0
Total | Position	54	54	5
HTM debt securities	$ 322,503	$ 322,503	$ 214,863
US Government Agencies Debt Securities and US Government-sponsored Enterprises Debt Securities [Member]
Unrealized Loss Position, Number of Positions [Abstract]
Held-to-maturity debt securities, percentage		53.00%	65.00%

XML

Allowance for Credit Losses and Credit Quality of Loans (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Dec. 31, 2020	Jun. 30, 2021	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Allowance for Credit Losses [Abstract]
Allowance for credit losses	$ 93,000	$ 110,000	$ 98,500	$ 114,500	$ 113,500	$ 75,999
Percentage of allowance of credit losses	1.23%	1.47%
Retained earnings	$ 831,017	$ 749,056
Loans purchased with credit deterioration	0	0
Allowance for credit losses on loans purchased	4,600	3,600
Accrued Interest Receivable [Member]
Allowance for Credit Losses [Abstract]
Allowance for credit losses	0	600
AIR on loans	$ 20,400	23,700
Write-off of uncollectible interest period	120 days
COVID-19 [Member]
Allowance for Credit Losses [Abstract]
Loans in modification programs related to COVID-19	$ 2,000
ASU 2016-13 [Member] | Loans [Member]
Allowance for Credit Losses [Abstract]
Allowance for credit losses						3,000
Retained earnings						(2,300)
Deferred tax asset						700
Consumer Loans [Member]
Allowance for Credit Losses [Abstract]
Allowance for credit losses	41,071	37,803	34,881	38,562	40,094	32,122
Amount of loans purchased	60,300	$ 51,900
Discount on loans purchased		1.00%
Residential [Member]
Allowance for Credit Losses [Abstract]
Allowance for credit losses	18,751	$ 21,255	$ 19,428	$ 24,192	$ 23,020	$ 16,721
Amount of loans purchased	$ 52,400
Premium on loans purchased	2.00%

XML

Allowance for Credit Losses and Credit Quality of Loans, Allowance for Credit Losses by Portfolio Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Activity in allowance for credit losses by portfolio segment [Roll Forward]
Balance, beginning of period	$ 98,500	$ 113,500	$ 110,000	$ 75,999
Charge-offs	(4,887)	(4,779)	(13,556)	(20,382)
Recoveries	2,729	2,518	7,910	7,142
Provision	(3,342)	3,261	(11,354)	51,741
Balance, end of period	93,000	114,500	93,000	114,500
Commercial Loans [Member]
Activity in allowance for credit losses by portfolio segment [Roll Forward]
Balance, beginning of period	44,191	50,386	50,942	27,156
Charge-offs	(1,492)	(624)	(2,123)	(2,353)
Recoveries	354	333	533	674
Provision	(9,875)	1,651	(16,174)	26,269
Balance, end of period	33,178	51,746	33,178	51,746
Consumer Loans [Member]
Activity in allowance for credit losses by portfolio segment [Roll Forward]
Balance, beginning of period	34,881	40,094	37,803	32,122
Charge-offs	(3,083)	(4,097)	(10,702)	(17,166)
Recoveries	2,143	2,123	6,506	6,168
Provision	7,130	442	7,464	17,438
Balance, end of period	41,071	38,562	41,071	38,562
Residential [Member]
Activity in allowance for credit losses by portfolio segment [Roll Forward]
Balance, beginning of period	19,428	23,020	21,255	16,721
Charge-offs	(312)	(58)	(731)	(863)
Recoveries	232	62	871	300
Provision	(597)	1,168	(2,644)	8,034
Balance, end of period	$ 18,751	$ 24,192	$ 18,751	$ 24,192

XML

Allowance for Credit Losses and Credit Quality of Loans, Past Due Loans (Details) $ in Thousands	Sep. 30, 2021 USD ($) Relationship	Dec. 31, 2020 USD ($) Relationship
Allowance for Credit Losses and Credit Quality of Loans [Abstract]
Individually evaluated loans, number of relationships | Relationship	5	5
Individually evaluated loans, amortized cost	$ 12,500	$ 15,200
Individually evaluated loans, allowance for credit losses	1,300	3,200
Past Due and Nonperforming Loans [Abstract]
Nonaccrual	35,737	44,647
Recorded total loans	7,566,442	7,498,885
Loans in non-accrual without an allowance for credit losses	0	0
Past Due [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	34,731	27,806
31-60 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	26,084	18,472
61-90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	5,707	6,185
Greater Than 90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	2,940	3,149
Current [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	7,495,974	7,426,432
C&I [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	1,117,805	1,125,616
CRE [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	2,558,231	2,412,285
PPP [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	276,195	430,810
Auto [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	839,137	892,105
Other Consumer [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	754,737	648,154
Commercial Loans [Member]
Past Due and Nonperforming Loans [Abstract]
Nonaccrual	20,345	24,249
Recorded total loans	3,952,231	3,968,711
Commercial Loans [Member] | Past Due [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	16,578	5,804
Commercial Loans [Member] | 31-60 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	14,277	2,917
Commercial Loans [Member] | 61-90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	1,860	2,394
Commercial Loans [Member] | Greater Than 90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	441	493
Commercial Loans [Member] | Current [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	3,915,308	3,938,658
Commercial Loans [Member] | C&I [Member]
Past Due and Nonperforming Loans [Abstract]
Nonaccrual	4,261	4,278
Recorded total loans	1,117,805	1,125,616
Commercial Loans [Member] | C&I [Member] | Past Due [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	2,624	4,652
Commercial Loans [Member] | C&I [Member] | 31-60 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	2,518	2,235
Commercial Loans [Member] | C&I [Member] | 61-90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	106	2,394
Commercial Loans [Member] | C&I [Member] | Greater Than 90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	0	23
Commercial Loans [Member] | C&I [Member] | Current [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	1,110,920	1,116,686
Commercial Loans [Member] | CRE [Member]
Past Due and Nonperforming Loans [Abstract]
Nonaccrual	16,084	19,971
Recorded total loans	2,558,231	2,412,285
Commercial Loans [Member] | CRE [Member] | Past Due [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	13,954	1,152
Commercial Loans [Member] | CRE [Member] | 31-60 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	11,759	682
Commercial Loans [Member] | CRE [Member] | 61-90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	1,754	0
Commercial Loans [Member] | CRE [Member] | Greater Than 90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	441	470
Commercial Loans [Member] | CRE [Member] | Current [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	2,528,193	2,391,162
Commercial Loans [Member] | PPP [Member]
Past Due and Nonperforming Loans [Abstract]
Nonaccrual	0	0
Recorded total loans	276,195	430,810
Commercial Loans [Member] | PPP [Member] | Past Due [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	0	0
Commercial Loans [Member] | PPP [Member] | 31-60 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	0	0
Commercial Loans [Member] | PPP [Member] | 61-90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	0	0
Commercial Loans [Member] | PPP [Member] | Greater Than 90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	0	0
Commercial Loans [Member] | PPP [Member] | Current [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	276,195	430,810
Consumer Loans [Member]
Past Due and Nonperforming Loans [Abstract]
Nonaccrual	1,617	3,020
Recorded total loans	1,593,874	1,540,259
Consumer Loans [Member] | Past Due [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	14,431	18,456
Consumer Loans [Member] | 31-60 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	9,928	12,836
Consumer Loans [Member] | 61-90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	3,113	3,482
Consumer Loans [Member] | Greater Than 90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	1,390	2,138
Consumer Loans [Member] | Current [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	1,577,826	1,518,783
Consumer Loans [Member] | Auto [Member]
Past Due and Nonperforming Loans [Abstract]
Nonaccrual	1,407	2,730
Recorded total loans	839,137	892,105
Consumer Loans [Member] | Auto [Member] | Past Due [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	8,145	11,544
Consumer Loans [Member] | Auto [Member] | 31-60 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	6,455	9,125
Consumer Loans [Member] | Auto [Member] | 61-90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	1,110	1,553
Consumer Loans [Member] | Auto [Member] | Greater Than 90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	580	866
Consumer Loans [Member] | Auto [Member] | Current [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	829,585	877,831
Consumer Loans [Member] | Other Consumer [Member]
Past Due and Nonperforming Loans [Abstract]
Nonaccrual	210	290
Recorded total loans	754,737	648,154
Consumer Loans [Member] | Other Consumer [Member] | Past Due [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	6,286	6,912
Consumer Loans [Member] | Other Consumer [Member] | 31-60 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	3,473	3,711
Consumer Loans [Member] | Other Consumer [Member] | 61-90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	2,003	1,929
Consumer Loans [Member] | Other Consumer [Member] | Greater Than 90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	810	1,272
Consumer Loans [Member] | Other Consumer [Member] | Current [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	748,241	640,952
Residential [Member]
Past Due and Nonperforming Loans [Abstract]
Nonaccrual	13,775	17,378
Recorded total loans	2,020,337	1,989,915
Residential [Member] | Past Due [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	3,722	3,546
Residential [Member] | 31-60 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	1,879	2,719
Residential [Member] | 61-90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	734	309
Residential [Member] | Greater Than 90 Days Past Due Accruing [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	1,109	518
Residential [Member] | Current [Member]
Past Due and Nonperforming Loans [Abstract]
Recorded total loans	$ 2,002,840	$ 1,968,991

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Allowance for Credit Losses and Credit Quality of Loans, Credit Quality Indicators (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Financing Receivable, Credit Quality Indicator [Line Items]
Minimum number of days past due for loans to be considered nonperforming	90 days
Credit Quality by Loan Class [Abstract]
2021/2020	$ 1,683,857	$ 1,927,429
2020/2019	1,278,131	1,312,819
2019/2018	1,098,762	949,810
2018/2017	743,460	750,728
2017/2016	578,691	515,688
Prior	1,427,696	1,262,066
Revolving Loans Amortized Cost Basis	716,030	749,657
Revolving Loans Converted to Term	39,815	30,688
Total	7,566,442	7,498,885
C&I [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	258,221	352,323
2020/2019	260,929	195,227
2019/2018	140,438	106,502
2018/2017	76,173	50,153
2017/2016	29,464	35,040
Prior	47,283	39,712
Revolving Loans Amortized Cost Basis	293,744	346,233
Revolving Loans Converted to Term	11,553	426
Total	1,117,805	1,125,616
C&I [Member] | Pass [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	258,044	331,921
2020/2019	256,285	182,329
2019/2018	127,995	91,230
2018/2017	71,024	41,856
2017/2016	23,541	32,625
Prior	40,962	32,609
Revolving Loans Amortized Cost Basis	282,471	322,674
Revolving Loans Converted to Term	6,724	412
Total	1,067,046	1,035,656
C&I [Member] | Special Mention [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	163	20,064
2020/2019	4,277	6,534
2019/2018	5,157	5,053
2018/2017	3,339	4,702
2017/2016	3,063	1,624
Prior	3,381	2,830
Revolving Loans Amortized Cost Basis	8,477	13,614
Revolving Loans Converted to Term	0	0
Total	27,857	54,421
C&I [Member] | Substandard [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	14	338
2020/2019	367	6,364
2019/2018	7,286	10,219
2018/2017	1,684	3,388
2017/2016	2,675	791
Prior	2,939	4,272
Revolving Loans Amortized Cost Basis	2,796	9,945
Revolving Loans Converted to Term	4,829	14
Total	22,590	35,331
C&I [Member] | Doubtful [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	0	0
2020/2019	0	0
2019/2018	0	0
2018/2017	126	207
2017/2016	185	0
Prior	1	1
Revolving Loans Amortized Cost Basis	0	0
Revolving Loans Converted to Term	0	0
Total	312	208
CRE [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	325,888	472,506
2020/2019	454,150	412,425
2019/2018	427,993	296,712
2018/2017	269,664	342,604
2017/2016	297,505	255,045
Prior	611,369	496,867
Revolving Loans Amortized Cost Basis	155,001	115,926
Revolving Loans Converted to Term	16,661	20,200
Total	2,558,231	2,412,285
CRE [Member] | Pass [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	325,092	469,919
2020/2019	453,138	361,187
2019/2018	390,834	256,154
2018/2017	249,362	271,874
2017/2016	264,620	212,197
Prior	486,685	383,690
Revolving Loans Amortized Cost Basis	152,622	113,128
Revolving Loans Converted to Term	16,661	4,034
Total	2,339,014	2,072,183
CRE [Member] | Special Mention [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	796	2,051
2020/2019	933	44,034
2019/2018	21,467	22,260
2018/2017	4,747	55,039
2017/2016	20,344	36,830
Prior	67,530	43,537
Revolving Loans Amortized Cost Basis	1,140	1,297
Revolving Loans Converted to Term	0	11,524
Total	116,957	216,572
CRE [Member] | Substandard [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	0	536
2020/2019	79	5,307
2019/2018	15,692	18,298
2018/2017	15,555	15,691
2017/2016	12,541	6,018
Prior	50,428	62,168
Revolving Loans Amortized Cost Basis	1,239	1,501
Revolving Loans Converted to Term	0	4,642
Total	95,534	114,161
CRE [Member] | Doubtful [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	0	0
2020/2019	0	1,897
2019/2018	0	0
2018/2017	0	0
2017/2016	0	0
Prior	6,726	7,472
Revolving Loans Amortized Cost Basis	0	0
Revolving Loans Converted to Term	0	0
Total	6,726	9,369
PPP [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	256,940	430,810
2020/2019	19,255	0
2019/2018	0	0
2018/2017	0	0
2017/2016	0	0
Prior	0	0
Revolving Loans Amortized Cost Basis	0	0
Revolving Loans Converted to Term	0	0
Total	276,195	430,810
PPP [Member] | Pass [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	256,940	430,810
2020/2019	19,255	0
2019/2018	0	0
2018/2017	0	0
2017/2016	0	0
Prior	0	0
Revolving Loans Amortized Cost Basis	0	0
Revolving Loans Converted to Term	0	0
Total	276,195	430,810
Auto [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	280,953	198,240
2020/2019	145,905	315,174
2019/2018	212,633	202,985
2018/2017	121,646	116,502
2017/2016	59,316	45,932
Prior	18,684	13,250
Revolving Loans Amortized Cost Basis	0	22
Revolving Loans Converted to Term	0	0
Total	839,137	892,105
Auto [Member] | Performing [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	280,805	197,881
2020/2019	145,585	314,034
2019/2018	211,921	201,850
2018/2017	121,108	115,977
2017/2016	59,047	45,495
Prior	18,684	13,250
Revolving Loans Amortized Cost Basis	0	22
Revolving Loans Converted to Term	0	0
Total	837,150	888,509
Auto [Member] | Nonperforming [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	148	359
2020/2019	320	1,140
2019/2018	712	1,135
2018/2017	538	525
2017/2016	269	437
Prior	0	0
Revolving Loans Amortized Cost Basis	0	0
Revolving Loans Converted to Term	0	0
Total	1,987	3,596
Other Consumer [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	298,601	234,967
2020/2019	166,401	178,829
2019/2018	129,189	127,856
2018/2017	88,407	55,941
2017/2016	35,049	14,345
Prior	18,556	17,547
Revolving Loans Amortized Cost Basis	18,519	18,598
Revolving Loans Converted to Term	15	71
Total	754,737	648,154
Other Consumer [Member] | Performing [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	298,505	234,628
2020/2019	166,111	178,411
2019/2018	128,954	127,549
2018/2017	88,311	55,676
2017/2016	34,858	14,255
Prior	18,447	17,414
Revolving Loans Amortized Cost Basis	18,516	18,588
Revolving Loans Converted to Term	15	71
Total	753,717	646,592
Other Consumer [Member] | Nonperforming [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	96	339
2020/2019	290	418
2019/2018	235	307
2018/2017	96	265
2017/2016	191	90
Prior	109	133
Revolving Loans Amortized Cost Basis	3	10
Revolving Loans Converted to Term	0	0
Total	1,020	1,562
Residential [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	263,254	238,583
2020/2019	231,491	211,164
2019/2018	188,509	215,755
2018/2017	187,570	185,528
2017/2016	157,357	165,326
Prior	731,804	694,690
Revolving Loans Amortized Cost Basis	248,766	268,878
Revolving Loans Converted to Term	11,586	9,991
Total	2,020,337	1,989,915
Residential [Member] | Performing [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	263,254	237,338
2020/2019	229,961	210,505
2019/2018	187,776	213,437
2018/2017	185,798	182,993
2017/2016	155,725	164,424
Prior	722,718	684,495
Revolving Loans Amortized Cost Basis	248,727	268,878
Revolving Loans Converted to Term	11,494	9,991
Total	2,005,453	1,972,061
Residential [Member] | Nonperforming [Member]
Credit Quality by Loan Class [Abstract]
2021/2020	0	1,245
2020/2019	1,530	659
2019/2018	733	2,318
2018/2017	1,772	2,535
2017/2016	1,632	902
Prior	9,086	10,195
Revolving Loans Amortized Cost Basis	39	0
Revolving Loans Converted to Term	92	0
Total	$ 14,884	$ 17,854

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Allowance for Credit Losses and Credit Quality of Loans, Allowance for Credit Losses on Off-Balance Sheet Credit Exposures (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Allowance for Credit Losses and Credit Quality of Loans [Abstract]
Allowance for credit losses	$ 93,000	$ 98,500	$ 110,000	$ 114,500	$ 113,500	$ 75,999
Unfunded Commitment [Member]
Allowance for Credit Losses and Credit Quality of Loans [Abstract]
Allowance for credit losses	$ 5,300		$ 6,400

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Allowance for Credit Losses and Credit Quality of Loans, Troubled Debt Restructuring (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021 USD ($) Contract	Sep. 30, 2020 USD ($) Contract	Sep. 30, 2021 USD ($) Contract	Sep. 30, 2020 USD ($) Contract
Recorded Investment and Number of Modifications Designated as TDRs [Abstract]
Number of contracts | Contract	4	10	11	25
Pre-modification outstanding recorded investment	$ 480	$ 659	$ 1,109	$ 1,663
Post-modification outstanding recorded investment	$ 527	$ 715	$ 1,221	$ 1,789
Recorded Investment and Number of Modifications for TDRs Where a Concession Has Been Made and Subsequently Defaulted [Abstract]
Number of contracts | Contract	19	9	41	47
Recorded Investment	$ 1,401	$ 299	$ 2,374	$ 2,835
Commercial Loans [Member]
Recorded Investment and Number of Modifications for TDRs Where a Concession Has Been Made and Subsequently Defaulted [Abstract]
Number of contracts | Contract			0	2
Recorded Investment			$ 0	$ 555
Commercial Loans [Member] | C&I [Member]
Recorded Investment and Number of Modifications for TDRs Where a Concession Has Been Made and Subsequently Defaulted [Abstract]
Number of contracts | Contract			0	1
Recorded Investment			$ 0	$ 387
Commercial Loans [Member] | CRE [Member]
Recorded Investment and Number of Modifications for TDRs Where a Concession Has Been Made and Subsequently Defaulted [Abstract]
Number of contracts | Contract			0	1
Recorded Investment			$ 0	$ 168
Consumer Loans [Member]
Recorded Investment and Number of Modifications Designated as TDRs [Abstract]
Number of contracts | Contract	1	0	2	1
Pre-modification outstanding recorded investment	$ 20	$ 0	$ 38	$ 44
Post-modification outstanding recorded investment	$ 20	$ 0	$ 38	$ 44
Recorded Investment and Number of Modifications for TDRs Where a Concession Has Been Made and Subsequently Defaulted [Abstract]
Number of contracts | Contract			2	0
Recorded Investment			$ 18	$ 0
Consumer Loans [Member] | Auto [Member]
Recorded Investment and Number of Modifications Designated as TDRs [Abstract]
Number of contracts | Contract	1	0	2	1
Pre-modification outstanding recorded investment	$ 20	$ 0	$ 38	$ 44
Post-modification outstanding recorded investment	$ 20	$ 0	$ 38	$ 44
Recorded Investment and Number of Modifications for TDRs Where a Concession Has Been Made and Subsequently Defaulted [Abstract]
Number of contracts | Contract			2	0
Recorded Investment			$ 18	$ 0
Residential [Member]
Recorded Investment and Number of Modifications Designated as TDRs [Abstract]
Number of contracts | Contract	3	10	9	24
Pre-modification outstanding recorded investment	$ 460	$ 659	$ 1,071	$ 1,619
Post-modification outstanding recorded investment	$ 507	$ 715	$ 1,183	$ 1,745
Recorded Investment and Number of Modifications for TDRs Where a Concession Has Been Made and Subsequently Defaulted [Abstract]
Number of contracts | Contract	19	9	39	45
Recorded Investment	$ 1,401	$ 299	$ 2,356	$ 2,280

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Defined Benefit Post-Retirement Plans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Defined Benefit Post-Retirement Plans [Abstract]
Employer contributions	$ 0	$ 0	$ 0	$ 0
Pension Benefits [Member]
Components of net periodic (benefit) cost [Abstract]
Service cost	517	446	1,486	1,338
Interest cost	679	809	2,034	2,427
Expected return on plan assets	(2,197)	(2,105)	(6,602)	(6,315)
Net amortization	331	368	957	1,104
Net periodic pension (benefit) cost	(670)	(482)	(2,125)	(1,446)
Other Benefits [Member]
Components of net periodic (benefit) cost [Abstract]
Service cost	2	2	6	6
Interest cost	45	55	135	165
Expected return on plan assets	0	0	0	0
Net amortization	13	13	39	39
Net periodic pension (benefit) cost	$ 60	$ 70	$ 180	$ 210

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Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Basic EPS [Abstract]
Weighted average common shares outstanding (in shares)	43,360	43,643	43,464	43,704
Net income available to common stockholders	$ 37,433	$ 35,113	$ 117,575	$ 70,194
Basic EPS (in dollars per share)	$ 0.86	$ 0.80	$ 2.71	$ 1.61
Diluted EPS [Abstract]
Weighted average common shares outstanding (in shares)	43,360	43,643	43,464	43,704
Dilutive effect of common stock options and restricted stock (in shares)	271	299	305	293
Weighted average common shares and common share equivalents (in shares)	43,631	43,942	43,769	43,997
Net income available to common stockholders	$ 37,433	$ 35,113	$ 117,575	$ 70,194
Diluted EPS (in dollars per share)	$ 0.86	$ 0.80	$ 2.69	$ 1.60

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Reclassification Adjustments Out of Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Reclassification Adjustment out of AOCI [Abstract]
Net securities (gains) losses	$ (100)	$ 84	$ 568	$ (548)
Interest income (expense)	77,674	77,943	235,907	235,570
Other noninterest expense	6,232	3,857	14,405	14,730
Income tax (benefit)	11,043	10,988	34,193	19,267
Net income	37,433	35,113	117,575	70,194
Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of AOCI [Abstract]
Total reclassifications during the period, net of tax	369	480	1,088	1,370
Accumulated Net Unrealized Investment Gain (Loss) [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of AOCI [Abstract]
Income tax (benefit)	(38)	(39)	(109)	(123)
Net income	111	118	325	369
Gains on AFS Securities [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of AOCI [Abstract]
Net securities (gains) losses	0	0	0	(3)
Amortization of Unrealized Gains Related to Securities Transfer [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of AOCI [Abstract]
Interest income (expense)	149	157	434	495
Net Unrealized Losses on Cash Flow Hedges Reclassified to Interest Expense [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of AOCI [Abstract]
Interest income (expense)	0	101	21	192
Income tax (benefit)	0	(25)	(5)	(48)
Net income	0	76	16	144
Accumulated Defined Benefit Plans Adjustment [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of AOCI [Abstract]
Income tax (benefit)	(86)	(95)	(249)	(286)
Net income	258	286	747	857
Amortization of Net Losses [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of AOCI [Abstract]
Other noninterest expense	317	359	913	1,075
Amortization of Prior Service Costs [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of AOCI [Abstract]
Other noninterest expense	$ 27	$ 22	$ 83	$ 68

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Derivative Instruments and Hedging Activities (Details) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2021 USD ($) Agreement	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($) Agreement	Sep. 30, 2020 USD ($)	Dec. 31, 2020 USD ($) Agreement
Interest rate derivatives - Included Component [Abstract]
Amount of (loss) recognized in other comprehensive income		$ 0	$ 0	$ 0	$ (274)
Amount of loss reclassified from AOCI into interest expense		0	101	21	192
Derivatives Designated as Hedging Instruments [Member] | Cash Flow Hedging [Member]
Interest rate derivatives - Included Component [Abstract]
Amount of (loss) recognized in other comprehensive income		0	0	0	(274)
Derivatives Designated as Hedging Instruments [Member] | Cash Flow Hedging [Member] | Interest (Income) Expense [Member]
Interest rate derivatives - Included Component [Abstract]
Amount of loss reclassified from AOCI into interest expense		0	101	21	192
Derivatives Designated as Hedging Instruments [Member] | Cash Flow Hedging [Member] | Interest Rate Swaps [Member]
Derivative Liability [Abstract]
Amount to be reclassified from AOCI as a reduction to interest expense during next twelve months				0
Derivatives Designated as Hedging Instruments [Member] | Cash Flow Hedging [Member] | Interest Rate Swaps [Member] | Other Assets [Member]
Derivative Asset [Abstract]
Derivatives, notional amount						$ 0
Derivatives, fair value						0
Derivatives Designated as Hedging Instruments [Member] | Cash Flow Hedging [Member] | Interest Rate Swaps [Member] | Other Liabilities [Member]
Derivative Liability [Abstract]
Derivatives, notional amount						25,000
Derivatives, fair value						34
Derivatives Not Designated as Hedging Instruments [Member]
Derivative Asset [Abstract]
Derivatives, fair value		71,481		71,481		108,779
Netting adjustments, fair value	[1]	0		0
Net derivatives in the balance sheet, fair value		71,481		71,481
Derivatives not offset on the balance sheet, fair value		4,869		4,869
Cash collateral, fair value	[2]	0		0		0
Net derivative amounts, fair value		66,612		66,612		108,779
Derivative Liability [Abstract]
Derivatives, fair value		71,314		71,314		108,612
Netting adjustments, fair value	[1]	3,684		3,684
Net derivatives in the balance sheet, fair value		67,630		67,630
Derivatives not offset on the balance sheet, fair value		4,869		4,869
Cash collateral, fair value	[2]	55,730		55,730		107,350
Net derivative amounts, fair value		7,031		7,031		$ 1,262
Derivatives Not Designated as Hedging Instruments [Member] | Other Income [Member]
Gain or loss recognized in income on derivatives not designating as a hedging relationship [Abstract]
(Decrease) increase in other income		$ (307)	$ (20)	$ (382)	$ 127
Derivatives Not Designated as Hedging Instruments [Member] | Interest Rate Swaps [Member]
Interest rate derivatives [Abstract]
Number of risk participation agreements held | Agreement		18		18		17
Derivatives Not Designated as Hedging Instruments [Member] | Interest Rate Swaps [Member] | Other Assets [Member]
Derivative Asset [Abstract]
Derivatives, notional amount		$ 1,346,853		$ 1,346,853		$ 1,223,584
Derivatives, fair value		71,246		71,246		108,487
Derivatives Not Designated as Hedging Instruments [Member] | Interest Rate Swaps [Member] | Other Liabilities [Member]
Derivative Liability [Abstract]
Derivatives, notional amount		1,346,853		1,346,853		1,223,584
Derivatives, fair value		71,246		71,246		108,487
Derivatives Not Designated as Hedging Instruments [Member] | Risk Participation Agreements [Member] | Other Assets [Member]
Derivative Asset [Abstract]
Derivatives, notional amount		91,348		91,348		72,528
Derivatives, fair value		235		235		292
Derivatives Not Designated as Hedging Instruments [Member] | Risk Participation Agreements [Member] | Other Liabilities [Member]
Derivative Liability [Abstract]
Derivatives, notional amount		37,852		37,852		39,785
Derivatives, fair value		$ 68		$ 68		$ 125

[1] Netting adjustments represents the amounts recorded to convert derivatives assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance on the settle to market rules for cleared derivatives. The CME legally characterizes the variation margin posted between counterparties as settlements of the outstanding derivative contracts instead of cash collateral. Company began to clear certain derivative transactions through the CME in 2021.

[2] Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The other collateral consists of securities and is exchanged under bilateral collateral and master netting agreements that allow us to offset the net derivative position with the related collateral. The application of the other collateral cannot reduce the net derivative position below zero. Therefore, excess other collateral, if any, is not reflected above.

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Fair Value Measurements and Fair Value of Financial Instruments, Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
AFS securities [Abstract]
AFS securities	$ 1,576,030	$ 1,348,698
Equity securities	33,013	30,737
Fair Value Measurements [Abstract]
Collateral dependent impaired loans with specific reserve	12,500	15,200
Reserves on collateral dependent impaired loans	$ 1,300	3,200
Minimum [Member]
Fair Value Measurements [Abstract]
Liquidation expense ratio on impaired collateral	10.00%
Maximum [Member]
Fair Value Measurements [Abstract]
Liquidation expense ratio on impaired collateral	50.00%
Federal Agency [Member]
AFS securities [Abstract]
AFS securities	$ 242,966	243,597
State & Municipal [Member]
AFS securities [Abstract]
AFS securities	84,021	43,180
Corporate [Member]
AFS securities [Abstract]
AFS securities	40,137	28,278
Recurring Basis [Member]
AFS securities [Abstract]
AFS securities	1,576,030	1,348,698
Equity securities	33,013	30,737
Derivatives	71,481	108,779
Total	1,680,524	1,488,214
Liabilities [Abstract]
Derivatives	71,314	108,646
Total	71,314	108,646
Recurring Basis [Member] | Level 1 [Member]
AFS securities [Abstract]
AFS securities	0	0
Equity securities	32,013	28,737
Derivatives	0	0
Total	32,013	28,737
Liabilities [Abstract]
Derivatives	0	0
Total	0	0
Recurring Basis [Member] | Level 2 [Member]
AFS securities [Abstract]
AFS securities	1,576,030	1,348,698
Equity securities	1,000	2,000
Derivatives	71,481	108,779
Total	1,648,511	1,459,477
Liabilities [Abstract]
Derivatives	71,314	108,646
Total	71,314	108,646
Recurring Basis [Member] | Level 3 [Member]
AFS securities [Abstract]
AFS securities	0	0
Equity securities	0	0
Derivatives	0	0
Total	0	0
Liabilities [Abstract]
Derivatives	0	0
Total	0	0
Recurring Basis [Member] | Federal Agency [Member]
AFS securities [Abstract]
AFS securities	242,966	243,597
Recurring Basis [Member] | Federal Agency [Member] | Level 1 [Member]
AFS securities [Abstract]
AFS securities	0	0
Recurring Basis [Member] | Federal Agency [Member] | Level 2 [Member]
AFS securities [Abstract]
AFS securities	242,966	243,597
Recurring Basis [Member] | Federal Agency [Member] | Level 3 [Member]
AFS securities [Abstract]
AFS securities	0	0
Recurring Basis [Member] | State & Municipal [Member]
AFS securities [Abstract]
AFS securities	84,021	43,180
Recurring Basis [Member] | State & Municipal [Member] | Level 1 [Member]
AFS securities [Abstract]
AFS securities	0	0
Recurring Basis [Member] | State & Municipal [Member] | Level 2 [Member]
AFS securities [Abstract]
AFS securities	84,021	43,180
Recurring Basis [Member] | State & Municipal [Member] | Level 3 [Member]
AFS securities [Abstract]
AFS securities	0	0
Recurring Basis [Member] | Mortgage-Backed [Member]
AFS securities [Abstract]
AFS securities	650,195	595,839
Recurring Basis [Member] | Mortgage-Backed [Member] | Level 1 [Member]
AFS securities [Abstract]
AFS securities	0	0
Recurring Basis [Member] | Mortgage-Backed [Member] | Level 2 [Member]
AFS securities [Abstract]
AFS securities	650,195	595,839
Recurring Basis [Member] | Mortgage-Backed [Member] | Level 3 [Member]
AFS securities [Abstract]
AFS securities	0	0
Recurring Basis [Member] | Collateralized Mortgage Obligations [Member]
AFS securities [Abstract]
AFS securities	558,711	437,804
Recurring Basis [Member] | Collateralized Mortgage Obligations [Member] | Level 1 [Member]
AFS securities [Abstract]
AFS securities	0	0
Recurring Basis [Member] | Collateralized Mortgage Obligations [Member] | Level 2 [Member]
AFS securities [Abstract]
AFS securities	558,711	437,804
Recurring Basis [Member] | Collateralized Mortgage Obligations [Member] | Level 3 [Member]
AFS securities [Abstract]
AFS securities	0	0
Recurring Basis [Member] | Corporate [Member]
AFS securities [Abstract]
AFS securities	40,137	28,278
Recurring Basis [Member] | Corporate [Member] | Level 1 [Member]
AFS securities [Abstract]
AFS securities	0	0
Recurring Basis [Member] | Corporate [Member] | Level 2 [Member]
AFS securities [Abstract]
AFS securities	40,137	28,278
Recurring Basis [Member] | Corporate [Member] | Level 3 [Member]
AFS securities [Abstract]
AFS securities	$ 0	$ 0

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Fair Value Measurements and Fair Value of Financial Instruments, Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Financial assets [Abstract]
HTM securities	$ 689,129	$ 636,827
Carrying Amount [Member] | Level 1 [Member]
Financial liabilities [Abstract]
Subordinated debt	100,000	100,000
Carrying Amount [Member] | Level 2 [Member]
Financial assets [Abstract]
HTM securities	683,103	616,560
Financial liabilities [Abstract]
Time deposits	552,273	633,479
Long-term debt	14,020	39,097
Junior subordinated debt	101,196	101,196
Carrying Amount [Member] | Level 3 [Member]
Financial assets [Abstract]
Net loans	7,474,466	7,390,004
Estimated Fair Value [Member] | Level 1 [Member]
Financial liabilities [Abstract]
Subordinated debt	107,684	103,277
Estimated Fair Value [Member] | Level 2 [Member]
Financial assets [Abstract]
HTM securities	689,129	636,827
Financial liabilities [Abstract]
Time deposits	553,125	638,721
Long-term debt	14,376	39,820
Junior subordinated debt	109,001	108,926
Estimated Fair Value [Member] | Level 3 [Member]
Financial assets [Abstract]
Net loans	$ 7,615,405	$ 7,530,033

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Commitments and Contingencies (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Guarantor Obligations [Abstract]
Obligation instrument term	1 year
Commitment to Extend Credits and Unused Lines of Credit [Member]
Guarantor Obligations [Abstract]
Commitments - maximum potential obligation	$ 2,300.0	$ 2,200.0
Standby Letters of Credit [Member]
Guarantor Obligations [Abstract]
Commitments - maximum potential obligation	$ 50.6	$ 54.0