SANDY SPRING BANCORP INC MANAGEMENT REPORT OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

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Forward-Looking Statements
This report, as well as other periodic reports filed with the Securities and
Exchange Commission, and written or oral communications made from time to time
by or on behalf of Sandy Spring Bancorp, Inc. and its subsidiaries (the
"Company"), may contain statements relating to future events or future results
of the Company that are considered "forward-looking statements" under the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements may be identified by the use of words such as "believe," "expect,"
"anticipate," "plan," "estimate," "intend" and "potential," or words of similar
meaning, or future or conditional verbs such as "should," "could," or "may."
Forward-looking statements include statements of our goals, intentions and
expectations; statements regarding our business plans, prospects, growth and
operating strategies; statements regarding the quality of our loan and
investment portfolios; and estimates of our risks and future costs and benefits.

Forward-looking statements reflect our expectation or prediction of future
conditions, events or results based on information currently available. These
forward-looking statements are subject to significant risks and uncertainties
that may cause actual results to differ materially from those in such
statements. These principal risks and uncertainties include, but are not limited
to, the risks identified in Item 1A of the Company's 2021 Annual Report on Form
10-K, Item 1A of Part II of this report and the following:
•risks, uncertainties and other factors relating to the COVID-19 pandemic,
including the length of time that the pandemic continues, the effectiveness and
acceptance of vaccination programs, the imposition of restrictions on business
operations and/or travel; the effect of the pandemic on the general economy and
on the businesses of our borrowers and their ability to make payments on their
obligations; the remedial actions and stimulus measures adopted by federal,
state and local governments, and the inability of employees to work due to
illness, quarantine, or government mandates;
•the impacts related to or resulting from Russia's military action in Ukraine,
including the broader impacts to financial markets and the global macroeconomic
and geopolitical environments;
•general business and economic conditions, including higher inflation and its
impacts, nationally or in the markets that the Company serves could adversely
affect, among other things, real estate prices, unemployment levels, the ability
of businesses to remain viable and consumer and business confidence, which could
lead to decreases in the demand for loans, deposits and other financial services
that we provide and increases in loan delinquencies and defaults;
•changes or volatility in the capital markets and interest rates may adversely
impact the value of securities, loans, deposits and other financial instruments
and the interest rate sensitivity of our balance sheet as well as our liquidity;
•our liquidity requirements could be adversely affected by changes in our assets
and liabilities;
•our investment securities portfolio is subject to credit risk, market risk, and
liquidity risk, as well as changes in the estimates we use to value certain of
the securities in our portfolio;
•the effect of legislative or regulatory developments including changes in laws
concerning taxes, banking, securities, insurance and other aspects of the
financial services industry;
•acquisition risks, including potential deposit attrition, higher than expected
costs, customer loss, business disruption and the inability to realize benefits
and costs savings from, and limit any unexpected liabilities associated with,
any business combinations;
•competitive factors among financial services companies, including product and
pricing pressures and our ability to attract, develop and retain qualified
banking professionals;
•the effect of changes in accounting policies and practices, as may be adopted
by the Financial Accounting Standards Board, the Securities and Exchange
Commission, the Public Company Accounting Oversight Board and other regulatory
agencies; and
•the effect of fiscal and governmental policies of the United States federal
government.

Forward-looking statements speak only as of the date of this report. The Company
does not undertake to update forward-looking statements to reflect circumstances
or events that occur after the date of this report or to reflect the occurrence
of unanticipated events except as required by federal securities laws.

The Company
Sandy Spring Bancorp, Inc. is the bank holding company for Sandy Spring Bank
(the "Bank"). The Company is a community banking organization that focuses its
lending and other services on businesses and consumers in the local market area.
At June 30, 2022, the Company had $13.3 billion in total assets, compared to
$12.6 billion at December 31, 2021. Bancorp is registered as a bank holding
company pursuant to the Bank Holding Company Act of 1956, as amended and is
subject to supervision and regulation by the Board of Governors of the Federal
Reserve System (the "Federal Reserve").

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The Bank is an independent and community-oriented bank that offers a broad range
of commercial banking, retail banking, mortgage and trust services throughout
central Maryland, Virginia, and the greater Washington, D.C. market. Through its
subsidiaries, West Financial Services, Inc. ("West") and SSB Wealth Management,
Inc. (d/b/a Rembert Pendleton and Jackson, "RPJ"), the Bank also offers wealth
management services. Prior to June 2022, the Company operated Sandy Spring
Insurance Corporation, a subsidiary of the Bank. Effective June 1, 2022, the
Company sold substantially all of the assets of the Sandy Spring Insurance
Corporation. The Bank is a state chartered bank subject to supervision and
regulation by the Federal Reserve and the State of Maryland. Deposit accounts of
the Bank are insured by the Deposit Insurance Fund administered by the Federal
Deposit Insurance Corporation (the "FDIC") to the maximum amount permitted by
law. The Bank is a member of the Federal Reserve System and is an Equal Housing
Lender. The Company, the Bank, and its other subsidiaries are Affirmative
Action/Equal Opportunity Employers.

Current Quarter Financial Overview
The Company recorded net income of $54.8 million ($1.21 per diluted common
share) in the current quarter compared to net income of $57.3 million ($1.19 per
diluted common share) for the second quarter of 2021 and net income of $43.9
million ($0.96 per diluted common share) for the first quarter of 2022. The
decline in earnings was the result of lower net interest income, the current
quarter's provision for credit losses compared to the prior year's credit to the
allowance and an increase in non-interest expense, partially offset by the
increase in non-interest income. The decline in net interest income was the
product of lower PPP fees and interest, partially offset by interest income from
loan growth, and an increase in interest expense.

Current quarter core earnings were $44.2 million ($0.98 per diluted common
share), compared to $58.4 million ($1.23 per diluted common share) for the
quarter ended June 30, 2021 and $45.1 million ($0.99 per diluted common share)
for the quarter ended March 31, 2022. Core earnings are determined by excluding
the after-tax impact of merger, acquisition and disposal expense, the loss on
FHLB redemptions, amortization of intangibles, gain on disposal of assets and
investment securities gains. Core earnings for the current period when compared
to the prior year quarter were reduced primarily as a result of the activity
associated with provisioning for credit losses, a decline in mortgage banking
income, lower other non-interest income from isolated events that occurred in
2021 and a decline in net interest income. The provision for credit losses for
the current quarter was a charge of $3.0 million compared to a credit of $4.2
million for the second quarter of 2021 and a charge of $1.6 million for the
first quarter of 2022.

The current quarter reflects the following:


•At June 30, 2022, total assets were $13.3 billion, a 3% increase compared to
$12.9 billion at June 30, 2021. During the previous twelve months, liquidity
resulting from PPP loan forgiveness was utilized to fund the growth in the loan
and investment securities portfolios. Excluding PPP loan balances, total assets
grew 10% year-over-year.

•For the second quarter of 2022, the net interest margin was 3.49%, compared to
3.63% for the second quarter of 2021, and 3.49% for the first quarter of 2022.
Excluding the amortization of the fair value marks derived from the previous
acquisitions and interest and fees from PPP loans, the current quarter's net
interest margin was 3.45%, compared to 3.49% for second quarter of 2021, and
3.41% for the first quarter of 2022.

•The provision for credit losses was a charge of $3.0 million for the current
quarter compared to the prior year quarter's credit to the provision of $4.2
million. The provision for the current quarter is a reflection of the growth in
the loan portfolio, coupled with the management's consideration of the potential
impact of recessionary pressures, which exceeded the benefit to the provision
derived from continuing improvement in forecasted macroeconomic indicators.

•Non-interest income for the current quarter increased by 34% or $9.0 million
compared to the prior year quarter as a result of the $16.7 million gain from
the disposition of assets of the Company's insurance subsidiary. Excluding the
disposition gain, non-interest income declined 29% compared to the prior year
quarter as a result of the $4.3 million decline in income from mortgage banking
activities and the $3.4 million decline in other non-interest income compared to
the second quarter of 2021.

•Non-interest expense for the current quarter increased $2.0 million or 3%
compared to the prior year quarter with a major component of the increase the
result of $1.1 million in merger, acquisition and disposal expense. Other
non-interest expense also increased $1.4 million driven by the combination of
various operating expenses.

•Return on average assets ("ROA") for the quarter ended June 30, 2022 was 1.69%
and return on average tangible common equity ("ROTCE") was 20.42% compared to
1.79% and 20.44%, respectively, for the second quarter of 2021. On a non-GAAP
basis, the current quarter's core ROA was 1.37% and core ROTCE was 16.49%
compared to core ROA of 1.83% and core ROTCE of 20.87% for the second quarter of
2021.
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•For the second quarter of 2022, the GAAP efficiency ratio was 46.03% compared
to 46.89% for the second quarter of 2021, and 50.92% for the first quarter of
2022. The non-GAAP efficiency ratio for the second quarter of 2022 was 49.79%
compared to 45.36% for the prior year quarter, and 49.34% for the first quarter
of 2022.

•During the quarter, the Company repurchased 625,710 shares of its common stock
for $25.0 million at an average price of $39.93 per share. The repurchase plan
that was authorized on March 30, 2022 permits the repurchase of up to $50.0
million in shares of common stock.

Summary of second quarter results


Balance Sheet and Credit Quality
Total assets grew 3% to $13.3 billion at June 30, 2022, as compared to $12.9
billion at June 30, 2021. During this period, total loans grew by 7% to $10.8
billion at June 30, 2022, compared to $10.1 billion at June 30, 2021. At June
30, 2022, excluding PPP loans, total assets grew 10% and total loans grew 17%
compared to June 30, 2021. Total commercial loans, excluding the impact of PPP
loan forgiveness, grew by $1.3 billion or 17% during the past twelve months.
During this period, the Company generated gross commercial loan production of
$4.4 billion, of which $3.0 billion was funded, offsetting $1.6 billion in
commercial loan run-off. During the second quarter of 2022, funded commercial
loan production was $804.6 million, an increase of 60% compared to $502.5
million for the same quarter of the prior year. The growth in the commercial
portfolio, excluding PPP loans, occurred in all commercial portfolios led by the
$1.0 billion or 28% growth in the investor owned commercial portfolio.
Year-over-year, the total mortgage loan portfolio grew 22%, as a greater number
of conventional 1-4 family mortgages were retained to grow the portfolio.

During the past twelve months, deposits increased 1%, driven by 3% growth in
noninterest-bearing deposits reflecting the growth in transaction relationships,
while interest-bearing deposits remained at $6.8 billion. During the period,
time deposits decreased 9% and money market accounts decreased 4%, while savings
and interest bearing demand categories experienced year-over-year growth of 15%
and 12%, respectively.

The tangible common equity ratio decreased to 8.45% of tangible assets at
June 30, 2022, compared to 9.28% at June 30, 2021 as a result of the $132.3
million repurchase of common shares during the previous twelve months, in
combination with the $88.9 million increase in the accumulated other
comprehensive loss due to the impact of the rising rate environment on values of
the securities in the investment portfolio coupled with the increase in tangible
assets during the past year. At June 30, 2022, the Company had a total
risk-based capital ratio of 16.07%, a common equity tier 1 risk-based capital
ratio of 11.58%, a tier 1 risk-based capital ratio of 11.58%, and a tier 1
leverage ratio of 9.53%.

Non-performing loans include non-accrual loans, accruing loans 90 days or more
past due and restructured loans. At June 30, 2022, the level of non-performing
loans to total loans was 0.40% compared to 0.93% at June 30, 2021, and 0.46% at
March 31, 2022. At June 30, 2022, non-performing loans totaled $43.5 million,
compared to $94.3 million at June 30, 2021, and $46.3 million at March 31, 2022.
Loans placed on non-accrual during the current quarter amounted to $0.9 million
compared to $1.5 million for the prior year quarter and $1.5 million for the
first quarter of 2022.

The Company realized an insignificant amount of net recoveries for the second
quarter of 2022, as compared to net charge-offs of $2.2 million for the second
quarter of 2021 and net charge-offs of $0.2 million for the first quarter of
2022.

At June 30, 2022, the allowance for credit losses was $113.7 million or 1.05% of
outstanding loans and 261% of non-performing loans, compared to $110.6 million
or 1.09% of outstanding loans and 239% of non-performing loans at the end of the
previous quarter. The increase in the allowance during the current quarter
compared to the previous quarter resulted from the growth in the loan portfolio
and the effect of management's consideration of the potential impact of
recessionary pressures. The impact from these metrics applied in the
determination of the allowance continue to be partially mitigated by forecasted
improvement in certain economic metrics, notably the projected improvement in
unemployment rate in future periods.

Quarterly Results of Operations
Net income for the three months ended June 30, 2022 was $54.8 million compared
to net income of $57.3 million for the prior year quarter. The decline in
earnings was the result of lower net interest income, the current quarter's
provision for credit losses compared to the prior year's credit to the allowance
and an increase in non-interest expense, partially offset by the increase in
non-interest income.

For the second quarter of 2022, net interest income decreased $2.1 million or 2%
compared to the second quarter of 2021, as interest income declined $0.9 million
and interest expense increased $1.2 million. The provision for credit losses was
a charge
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of $3.0 million for the second quarter of 2022 compared to a credit of $4.2
million for the second quarter of 2021. The provision for credit losses for the
first quarter of 2022 was a charge of $1.6 million. Non-interest income for the
current quarter increased by 34% or $9.0 million compared to the prior year
quarter driven by the $16.7 million gain on the sale of the Company's insurance
business. Income from mortgage banking activities declined 74% and other
non-interest income decreased 62% compared to the second quarter of 2021, which
included isolated sources of income. Compared to the prior year quarter, wealth
management income and bank card fees remained stable while service charges on
deposit accounts grew 25%. Non-interest expense increased $2.0 million or 3% for
the second quarter of 2022, compared to the prior year quarter. The majority of
the increase was the result of $1.1 million of transaction costs associated with
the sale of the insurance subsidiary's assets during the quarter. Other expenses
increased $1.4 million as a result of the combination of the provision for lines
of credit, franchise taxes and other operating costs. The remaining categories
of non-interest expense experienced modest increases or decreases with
professional fees declining $0.8 million during the current quarter compared to
the prior year quarter as a result of lower consulting fees.

Results of Operations
For the Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30,
2021

The Company recorded net income of $98.7 million for the six months ended
June 30, 2022 compared to net income of $132.7 million for the same period of
the prior year. The decline in year-to-date earnings for the current year
primarily reflects the impact of the decline in PPP fees and interest, partially
offset by the impact on interest income from the growth in the commercial loan
portfolio, and the activity in the provision for loan losses, which shifted from
the significant credit in the prior year to the charge for the current year.
Core earnings were $89.3 million ($1.97 per diluted common share) for the six
months ended June 30, 2022 compared to $142.0 million ($2.99 per diluted common
share) for the prior year. Core earnings for the current period compared to the
prior year period were reduced primarily as a result of the activity associated
with the provision for credit losses, a decline in mortgage banking income and
lower other non-interest income from isolated events that occurred in 2021. Core
earnings for the current period excludes the gain from the disposal of the
Company's insurance business and the associated transaction costs. Pre-tax,
pre-provision net income, was $136.1 million for the six months ended June 30,
2022 compared to $136.6 million for the prior year period. Net interest income
for the current period included $4.4 million in PPP interest and fees compared
to $24.1 million for the same period of 2021.

Year-to-date, the provision for credit losses was a charge of $4.7 million as
compared to a credit of $38.9 million for the same period of 2021. For the six
months ended June 30, 2022, the provision for credit losses is a reflection of
the growth in the loan portfolio, coupled with the management's consideration of
the potential impact of recessionary pressures, which exceeded the benefit to
the provision derived from continuing improvement in forecasted macroeconomic
indicators. The prior year's credit to the provision for credit losses was a
reflection of the net impact of forecasted economic metrics and other factors
applied in the determination of the allowance.

Net Interest Income
Net interest income for the six months ended June 30, 2022 decreased 2% or $5.2
million to $207.4 million compared to $212.6 million for the six months ended
June 30, 2021. On a tax-equivalent basis, net interest income for the six months
ended June 30, 2022 was $209.3 million compared to $214.6 million for the six
months ended June 30, 2021. A major component driving the decrease in net
interest income for the current period was the $19.7 million reduction in PPP
interest and fees from the prior year period to the current year period.
Excluding the impact of this reduction, interest income grew $10.5 million or 5%
compared to the prior year period, due to the significant growth in the
commercial loan portfolio. Interest expense declined 24% or $3.9 million
period-over-period due to lower deposit and borrowings costs, a result of higher
rate time deposit run-off, lower money market rates and the redemption of FHLB
advances in 2021. On a tax-equivalent basis, year-over-year net interest income
decreased 2% compared to the same period in the prior year as a result of the
$9.2 million decline in interest income, partially mitigated by the $3.9 million
decrease in interest expense. The amortization of fair value marks for the
current period resulted in the reductions of interest income of $0.5 million and
interest expense of $1.1 million compared to additional interest income of $0.9
million and a reduction of interest expense of $2.9 million for the prior year
period.

The following tables provide an analysis of net interest income performance that
reflects a net interest margin that has declined to 3.49% for the six months
ended June 30, 2022 compared to 3.60% for the six months ended June 30, 2021.
For the comparative period, the average yield on earning assets declined 17
basis points while the average rate paid on interest-bearing liabilities
declined nine basis points, resulting in the decreased margin. Excluding the
impact of the amortization of the fair value marks derived from acquisitions and
PPP interest and fees, the net interest margin for the current year would have
been 3.43% compared to 3.46% for the prior year.

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Average Consolidated Balances, Yields and Rates

                                                                                                       Six Months Ended June 30,
                                                                              2022                                                                  2021
                                                                                                  Annualized                                                            Annualized
                                                     Average                                       Average                 Average                                       Average
(Dollars in thousands and tax-equivalent)           Balances             Interest (1)             Yield/Rate              Balances             Interest (1)             Yield/Rate

Assets:

Commercial investor real estate loans            $  4,367,400          $      86,782                     4.01  %       $  3,654,760          $      76,765                     4.24  %
Commercial owner-occupied real estate                                                                                     1,651,282                 38,040                     4.65
loans                                               1,705,562                 37,842                     4.47
Commercial AD&C loans                               1,099,498                 22,320                     4.09             1,069,552                 21,215                     4.00
Commercial business loans                           1,353,446                 32,174                     4.79             2,258,311                 50,042                     4.47
Total commercial loans                              8,525,906                179,118                     4.24             8,633,905                186,062                     4.35
Residential mortgage loans                          1,017,741                 16,652                     3.27             1,030,608                 18,178                     3.53
Residential construction loans                        209,264                  3,267                     3.15               178,020                  3,168                     3.59
Consumer loans                                        422,929                  7,581                     3.61               482,555                  8,728                     3.65
Total residential and consumer loans                1,649,934                 27,500                     3.34             1,691,183                 30,074                     3.57
Total loans (2)                                    10,175,840                206,618                     4.09            10,325,088                216,136                     4.22
Loans held for sale                                    15,155                    343                     4.53                74,568                  1,086                     2.91
Taxable securities                                  1,180,168                  8,737                     1.48               984,305                  8,272                     1.68
Tax-advantaged securities                             471,919                  5,633                     2.39               461,084                  5,407                     2.35
Total investment securities (3)                     1,652,087                 14,370                     1.74             1,445,389                 13,679                     1.89
Interest-bearing deposits with banks                  229,257                    471                     0.41               187,954                     93                     0.10
Federal funds sold                                        650                      1                     0.43                   588                      -                     0.09
Total interest-earning assets                      12,072,989                221,803                     3.70            12,033,587                230,994                     3.87

Less: allowance for credit losses                    (111,302)                                                             (146,892)
Cash and due from banks                                75,750                                                               102,013
Premises and equipment, net                            61,733                                                                56,042
Other assets                                          685,870                                                               752,318
Total assets                                     $ 12,785,040                                                          $ 12,797,068

Liabilities and Stockholders' Equity:
Interest-bearing demand deposits                 $  1,494,809          $         572                     0.08  %       $  1,383,253          $         462                     0.07  %
Regular savings deposits                              553,435                     41                     0.01               460,738                    122                     0.05
Money market savings deposits                       3,401,641                  2,122                     0.13             3,387,341                  2,717                     0.16
Time deposits                                       1,355,615                  3,353                     0.50             1,693,179                  5,380                     0.64
Total interest-bearing deposits                     6,805,500                  6,088                     0.18             6,924,511                  8,681                     0.25
Federal funds purchased                                49,271                    181                     0.74                30,519                     13                     0.09
Repurchase agreements                                 127,083                     74                     0.12               142,208                     83                     0.12
Advances from FHLB                                      1,915                     17                     1.74               224,467                  2,649                     2.38
Subordinated debentures                               287,164                  6,184                     4.31               227,050                  5,012                     4.41
Total borrowings                                      465,433                  6,456                     2.80               624,244                  7,757                     2.51
Total interest-bearing liabilities                  7,270,933                 12,544                     0.35             7,548,755                 16,438                     0.44

Noninterest-bearing demand deposits                 3,880,919                                                             3,579,642
Other liabilities                                     146,018                                                               168,029
Stockholders' equity                                1,487,170                                                             1,500,642
Total liabilities and stockholders' equity       $ 12,785,040                                                          $ 12,797,068

Tax-equivalent net interest income and                                 $     209,259                     3.35  %                             $     214,556                     3.43  %

spread

Less: tax-equivalent adjustment                                                1,858                                                                 1,910
Net interest income                                                    $     207,401                                                         $     212,646

Interest income/earning assets                                                                           3.70  %                                                               3.87  %
Interest expense/earning assets                                                                          0.21                                                                  0.27
Net interest margin                                                                                      3.49  %                                                               3.60  %


(1)Tax-equivalent income has been adjusted using the combined marginal federal
and state rate of 25.64% and 25.50% for 2022 and 2021, respectively. The
annualized taxable-equivalent adjustments utilized in the above table to compute
yields aggregated to $1.9 million and $1.9 million in 2022 and 2021,
respectively.
(2)Non-accrual loans are included in the average balances.
(3)Investments available-for-sale are presented at amortized cost.
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Effect of volume and rate changes on tax-equivalent net interest income The following table analyzes the reasons for year-to-year variations in the main components that make up tax-equivalent net interest income:

                                                                    2022 vs. 2021                                                  2021 vs. 2020

                                                  Increase              Due to Change In Average:*               Increase              Due to Change In Average:*
(Dollars in thousands and tax                        Or                                                             Or
equivalent)                                      (Decrease)              Volume                Rate             (Decrease)              Volume                Rate

Interest income from earning assets:

Real estate loans to commercial investors $10,017 $14,359 $(4,342) $13,074 $17,405

($4,331)

 Commercial owner-occupied real estate
loans                                                 (198)                  1,263            (1,461)               3,040                   3,737              (697)
 Commercial AD&C loans                               1,105                     613               492                2,000                   5,324            (3,324)
 Commercial business loans                         (17,868)                (21,240)            3,372               20,439                  19,823               616
 Residential mortgage loans                         (1,526)                   (221)           (1,305)              (3,822)                 (2,583)           (1,239)
 Residential construction loans                         99                     516              (417)                 (84)                    457              (541)
 Consumer loans                                     (1,147)                 (1,054)              (93)              (1,769)                   (742)           (1,027)
 Loans held for sale                                  (743)                 (1,143)              400                  390                     446               (56)
 Taxable securities                                    465                   1,513            (1,048)              (5,095)                   (987)           (4,108)
 Tax-exempt securities                                 226                     131                95                1,846                   3,017            (1,171)
 Interest-bearing deposits with banks                  378                      25               353                 (242)                    (94)             (148)
 Federal funds sold                                      1                       -                 1                   (1)                      -                (1)
Total tax-equivalent interest income                (9,191)                 (5,238)           (3,953)              29,776                  45,803       

(16,027)


Interest expense on funding of earning
assets:
 Interest-bearing demand deposits                      110                      40                70                 (692)                    356            (1,048)
 Regular savings deposits                              (81)                     20              (101)                 (24)                     37               (61)
 Money market savings deposits                        (595)                      9              (604)              (5,329)                  2,479            (7,808)
 Time deposits                                      (2,027)                   (967)           (1,060)             (11,076)                 (1,926)           (9,150)
 Federal funds purchased                               168                      12               156                 (858)                   (444)             (414)
 Repurchase agreements                                  (9)                     (9)                -                 (226)                      5              (231)
 Advances from FHLB                                 (2,632)                 (2,057)             (575)               1,627                  (1,117)            2,744
 Subordinated debentures                             1,172                   1,287              (115)                  79                     196              (117)
Total interest expense                              (3,894)                 (1,665)           (2,229)             (16,499)                   (460)          (16,039)
Tax-equivalent net interest income             $    (5,297)         $       

(3,573) $(1,724) $46,275 $46,263

$12

*Gaps that are the combined effect of volume and price, but cannot be identified separately, are attributed to volume and price gaps based on their respective relative amounts.


Interest Income
The Company's total tax-equivalent interest income decreased 4% for the first
six months of 2022 compared to the prior year period. The previous table
reflects that the majority of the decrease in interest income was the result of
the decline in interest income on commercial loans, specifically commercial
business loans. This decline occurred as interest and fees associated with PPP
loans decreased year over year by $19.7 million. Interest income on residential
mortgage loans and consumer loans also declined a combined $2.6 million during
the comparative period. Excluding PPP interest and fee income, interest income
increased $10.5 million or 5% during the current period compared to the prior
year period.

During the first six months of 2022 average loans outstanding decreased 1%
compared to the first six months of 2021. Excluding the impact of the reduction
of PPP loans from the forgiveness program, average loans grew 10% period over
period, almost entirely in commercial real estate. During the comparative
period, total average commercial real estate loans grew 12% and commercial
business loans grew 14%. Average consumer loans, predominantly home equity
loans, decreased 12% and the residential mortgage portfolio declined 1% during
the same time period, both the direct result of the increased refinancing
activity spurred by the low rate environment. Compared to the prior year, the
yield on average loans decreased 13 basis points. The average yield on total
investment securities decreased 15 basis points while the average balance of the
investment portfolio increased 14% for the first six months of 2022 compared to
the first six months of 2021. The larger average balance resulted in a 5%
increase in interest income from investment securities during the period despite
lower portfolio yields. Composition of the average investment portfolio shifted
to 71% in taxable securities in the current period, as compared to 68% for the
prior year period. During the same period, the average yield for investment
securities decreased 15 basis points as cash flows and maturities in the
portfolio were reinvested at lower rates in the current interest rate
environment.
                                       44
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Interest Expense
For the first six months of 2022 interest expense decreased $3.9 million or 24%
compared to the first six months of 2021. The year over year decrease was
comprised of a $2.6 million or 30% decline in deposit interest expense and a
$1.3 million or 17% decrease in borrowing cost. The majority of the decline in
deposit interest expense occurred on money market and time deposit accounts due
to the rate decline on the money market accounts and the run-off of higher rate
time deposits. Borrowing expense declined as average borrowings declined coupled
with the associated interest expense shifting away from FHLB borrowings to
subordinated debt. The fair value premium amortization on time deposits for the
first six months of 2022 was responsible for a $1.1 million reduction in
interest expense compared to $2.6 million for the same period in 2021. During
the comparative period, the rate paid on interest-bearing liabilities decreased
nine basis points driven by the decline in the average rate paid on deposits.
The drivers in the decline in the total average rate paid on interest-bearing
deposits during this time period were the 14 basis point decline the average
rate paid on time deposits and the three basis point decline in average money
market rates. The cost of interest-bearing deposits, including the fair value
amortization on time deposits, declined seven basis points for the first six
months of 2022 compared to the first six months of 2021. The time deposit
amortization adjustment benefited the net interest margin by two basis points
for the first six months of 2022 compared to five basis points for the same
period in 2021.

Non-interest Income
Non-interest income amounts and trends are presented in the following table for
the periods indicated:



                                                          Six Months Ended June 30,              2022/2021              2022/2021
(Dollars in thousands)                                     2022                 2021             $ Change               % Change
Securities gains                                     $          46          $     129          $      (83)                    (64.3) %
Gain on disposal of assets                                  16,699                  -              16,699                     N/M
Service charges on deposit accounts                          4,793              3,828                 965                      25.2
Mortgage banking activities                                  3,781             15,945             (12,164)                    (76.3)
Wealth management income                                    18,435             17,851                 584                       3.3
Insurance agency commissions                                 2,927              3,400                (473)                    (13.9)
Income from bank owned life insurance                        1,498              1,385                 113                       8.2
Bank card fees                                               3,478              3,303                 175                       5.3
Other income                                                 4,183              9,284              (5,101)                    (54.9)
Total non-interest income                            $      55,840          $  55,125          $      715                       1.3



For the six months ended June 30, 2022, non-interest income included a $16.7
million gain on the disposal of assets associated with the sale of insurance
business and resulted in an increase of 1% to $55.8 million compared to $55.1
million for 2021. Excluding the gain, non-interest income decreased 29% driven
by a 76% decline in income from mortgage banking activities and a 55% decline in
other income. The decline in income from mortgage banking activities is the
result of the rising interest rate environment, which has dampened new mortgage
and refinancing activity. Other income declined from the prior year, which
included the full payoff of a purchased credit deteriorated loan and
activity-based vendor incentives. These declines exceeded the 3% growth in
wealth management income, 25% growth in service charges on deposit accounts and
5% growth in bank card fees. Wealth management income grew, despite the erosion
of assets under management due to marketplace volatility, as a result of
increased asset management fees. Service charge and bank card income growth
occurred as a result of increased commercial account service charges and
customer activity. Further detail by type of non-interest income follows:

•Service charges on deposit accounts increased 25% in the first six months of
2022, compared to the first six months of 2021. The growth in service charge
income reflects the impact of an increase in the current year's service charges
on commercial demand deposit accounts and return check transaction volume.
•Income from mortgage banking activities decreased 76% in the first six months
of 2022, compared to the first six months of 2021, as a result of reduced demand
for new home mortgages and refinancing.
•Wealth management income, comprised of income from trust and estate services
and investment management fees earned by the Company's investment management
subsidiaries, increased 3% for the first six months of 2022 compared to the same
period of the prior year. The increase in wealth management income was comprised
of a 5% increase in investment management fees and a 1% increase in trust
services fees for the first six months of 2022 compared to the prior year
period. Overall, total assets under management decreased to $5.2 billion at
June 30, 2022 compared to $5.7 billion at June 30, 2021, as a result of the
volatility in the marketplace.
•Insurance agency commissions decreased 14% for the first six months of 2022 as
compared to the first six months of 2021, due the sale of the Company's
insurance business in June 2022.
                                       45
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•Bank-owned life insurance income increased 8% for the first six months of 2022
as compared to the first six months of 2021 as a result of improved policy
returns.
•Bank card fee income grew 5% during the first six months of 2022, compared to
the first six months of 2021, as a result of increased transaction volume during
the period.
•Other income decreased by 55% or $5.1 million during the first six months of
2022, compared to the first six months of 2021. The decrease for the current
year was the result of the prior year's inclusion of the payoff of a purchased
credit deteriorated loan, activity-based contractual vendor incentives and
credit related fees.

Non-interest Expense
Non-interest expense amounts and trends are presented in the following table for
the periods indicated:


                                                          Six Months Ended June 30,               2022/2021              2022/2021
(Dollars in thousands)                                     2022                  2021             $ Change               % Change
Salaries and employee benefits                       $       78,923          $  75,642          $    3,281                       4.3  %
Occupancy expense of premises                                 9,768             10,984              (1,216)                    (11.1)
Equipment expense                                             7,095              6,242                 853                      13.7
Marketing                                                     2,473              2,264                 209                       9.2
Outside data services                                         4,983              4,543                 440                       9.7
FDIC insurance                                                2,062              2,942                (880)                    (29.9)
Amortization of intangible assets                             2,974              3,356                (382)                    (11.4)
Merger, acquisition and disposal expense                      1,067                 45               1,022                     N/M
Professional fees and services                                4,389              4,896                (507)                    (10.4)
Other expenses                                               13,404             20,234              (6,830)                    (33.8)
Total non-interest expense                           $      127,138          $ 131,148          $   (4,010)                     (3.1)



Non-interest expense decreased 3% to $127.1 million for the six months ended
June 30, 2022, compared to $131.1 million for 2021. Excluding merger,
acquisition and disposal expense from the current and prior year periods and the
$9.1 million in prepayment penalties on FHLB borrowings that occurred in the
prior year, non-interest expense increased 3% year-over-year. The drivers of the
increase in adjusted non-interest expense were a 4% increase in salaries and
benefits and a 20% increase in other expense, excluding the FHLB prepayment
penalties. The year-over-year increase in salaries and benefits was the result
of staffing increases, salary adjustments and increased benefit costs. The
principal component of the increase in other expense was the $1.2 million
increase in the provision for credit losses provided on lines of credit compared
to the prior year period. Marketing and outside data services costs increased 9%
and 10%, respectively, while FDIC insurance premiums and professional fee and
service costs decreased 30% and 10%, respectively, for the period. Further
detail by category of non-interest expense follows:

•Salaries and employee benefits, the largest component of non-interest expense,
increased 4% or $3.3 million in the first six months of 2022. Regular salaries
represented $1.4 million of this increase, which was the result of staffing
increases and adjustments. The remainder of the increase was driven by changes
to the stock compensation plan which only affect the current period expense.
•Combined occupancy and equipment expenses decreased 2% compared to the prior
year as a result of decreased rental costs associated with the reduction in
branches and business offices partially offset by increased software costs.
•Marketing expense increased 9% for the first six months of 2022 compared to the
same period of the prior year, due to focused advertising initiatives.
•Outside data services expense increased 10% from the prior year period due to
the increase in volume-based components of contractual-based services.
•FDIC insurance decreased 30% for 2022 as a result of the reduction in risk
factors applied by the regulatory agency in the determination of the Company's
premium.
•Amortization of intangible assets decreased as a result of the decline in the
core deposit intangible amortization of the asset recognized in the Revere
acquisition and, to a lesser degree, the amortization of intangibles acquired
from the RPJ acquisition.
•Professional fees and services declined 10% from the prior year due to costs
associated with various consulting projects and initiatives.
•Other non-interest expenses decreased $6.8 million due primarily to the
prepayment penalties of $9.1 million incurred in the prior year from the
liquidation of FHLB advances. This decrease has been partially offset in the
current year by the increase in the provision for lines of credit, franchise
taxes and other operating costs as compared to the prior year.

                                       46
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Income Taxes
The Company had income tax expense of $32.7 million in the first six months of
2022, compared to income tax expense of $42.8 million in the first six months of
2021, as a result of the decrease in current year-to-date pre-tax earnings
compared to the prior year's pre-tax earnings. The effective tax rate for the
six months ended June 30, 2022 was 24.87%, compared to a tax rate of 24.39% for
the same period in 2021. The increase in the current year's effective tax rate
is the result of pre-tax income containing a greater proportion of taxable
income compared to the prior year period.

Operating Expense Performance
Management views the GAAP efficiency ratio as an important financial measure of
expense performance and cost management. The ratio expresses the level of
non-interest expense as a percentage of total revenue (net interest income plus
total non-interest income). Lower ratios indicate improved productivity.

Non-GAAP Financial Measures
The Company also uses a traditional efficiency ratio that is a non-GAAP
financial measure of operating expense control and efficiency of operations.
Management believes that its traditional efficiency ratio better focuses
attention on the operating performance of the Company over time than does a GAAP
efficiency ratio, and is highly useful in comparing period-to-period operating
performance of the Company's core business operations. It is used by management
as part of its assessment of its performance in managing non-interest expense.
However, this measure is supplemental, and is not a substitute for an analysis
of performance based on GAAP measures. The reader is cautioned that the non-GAAP
efficiency ratio used by the Company may not be comparable to GAAP or non-GAAP
efficiency ratios reported by other financial institutions.

In general, the efficiency ratio is non-interest expense as a percentage of net
interest income plus non-interest income. Non-interest expense used in the
calculation of the non-GAAP efficiency ratio excludes merger, acquisition and
disposal expense, the amortization of intangibles, and other non-core expenses,
such as early prepayment penalties on FHLB advances. Income for the non-GAAP
efficiency ratio includes the favorable effect of tax-exempt income, and
excludes gain on disposal of assets and securities gains and losses, which vary
widely from period to period without appreciably affecting operating expenses,
and other non-recurring gains (if any). The measure is different from the GAAP
efficiency ratio, which also is presented in this report. The GAAP measure is
calculated using non-interest expense and income amounts as shown on the face of
the Condensed Consolidated Statements of Income. For the six months ended
June 30, 2022, the GAAP efficiency ratio was 48.30% compared to 48.98% for the
same period in 2021. The current period's improvement in the GAAP efficiency
ratio compared to the prior year period is directly related to the prior year's
inclusion of the loss on the FHLB redemption in non-interest expense. The
non-GAAP efficiency ratio the current year was 49.57% compared to 44.01% for to
prior year. The current year's non-GAAP efficiency ratio compared to the prior
year, indicates a decline in efficiency, the result of the 8% decrease in
non-GAAP revenue combined with the 4% growth in non-GAAP non-interest expense.

In addition, the Company uses pre-tax, pre-provision net income, as a measure of
the level of certain recurring income before taxes. Management believes this
provides financial statement users with a useful metric of the run-rate of
revenues and expenses that is readily comparable to other financial
institutions. This measure is calculated by adding/(subtracting) the provision
(credit) for credit losses and the provision for income taxes back to/from net
income. This metric remained level the first six months of 2022 compared to the
same period for 2021, due to the impact of the activity in the provision for
credit losses for each period and the impact it had on each period's net income.

The Company has presented core earnings, core earnings per share, core return on
average assets and core return on average tangible common equity in order to
present metrics that are more comparable to prior periods to provide an
indication of the core performance of the Company year over year. Core earnings
reflect net income exclusive of merger, acquisition and disposal expense,
amortization of intangible assets, loss on FHLB redemptions, gain on disposal of
assets and investment securities gains, in each case net of tax. Core earnings
were $89.3 million ($1.97 per diluted common share) for the six months ended
June 30, 2022, compared to $142.0 million ($2.99 per diluted common share) for
the six months ended June 30, 2021. Average tangible assets and average tangible
common equity represents average assets and average stockholders' equity,
respectively, adjusted for average goodwill and average intangible assets. The
ROA for the first six months of 2022 was 1.56% compared to 2.09% for the same
period of the prior year. For the six months ended June 30, 2022, the non-GAAP
core ROA was 1.41% compared to 2.24% for the same period in the prior year.
ROTCE was 18.21% for the first six months of 2022 compared to 24.35% for the
first six months of 2021. The non-GAAP core ROTCE was 16.47% for the first six
months of 2022 compared to 26.04% for the first six months of 2021.

                                       47
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GAAP and Non-GAAP Efficiency Ratios and Measures


                                                                                    Six Months Ended June 30,
(Dollars in thousands)                                                             2022                    2021
Pre-tax pre-provision net income:
Net income                                                                  $            98,735       $       132,727

Plus/(minus) non-GAAP adjustments:


Income tax expense                                                                       32,687                42,808
Provision/ (credit) for credit losses                                                     4,681              (38,912)
Pre-tax pre-provision net income                                            $           136,103       $       136,623

Efficiency ratio (GAAP):
Non-interest expense                                                        $           127,138       $       131,148

Net interest income plus non-interest income                                $           263,241       $       267,771

Efficiency ratio (GAAP)                                                               48.30   %            48.98    %

Efficiency ratio (non-GAAP):
Non-interest expense                                                        $           127,138       $       131,148
Less non-GAAP adjustments:
Amortization of intangible assets                                                         2,974                 3,356
Loss on FHLB redemption                                                                       -                 9,117

Merger, acquisition and disposal expense                                                  1,067                    45
Non-interest expense - as adjusted                                          $           123,097       $       118,630

Net interest income plus non-interest income                                $           263,241       $       267,771
Plus non-GAAP adjustment:
Tax-equivalent income                                                                     1,858                 1,910
Less non-GAAP adjustment:
Securities gains                                                                             46                   129
Gain on disposal of assets                                                               16,699                     -
Net interest income plus non-interest income - as adjusted                  $           248,354       $       269,552

Efficiency ratio (non-GAAP)                                                           49.57   %            44.01    %



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GAAP and non-GAAP performance ratios


                                                                                      Six Months Ended June 30,
(Dollars in thousands)                                                               2022                    2021
Core earnings (non-GAAP):
Net income                                                                    $            98,735       $       132,727
Plus/ (less) non-GAAP adjustments (net of tax):
Merger, acquisition and disposal expense                                                      793                    34
Amortization of intangible assets                                                           2,211                 2,500
Loss on FHLB redemption                                                                         -                 6,792
Gain on disposal of assets                                                               (12,417)                     -
Investment securities gains                                                                  (34)                  (96)
Core earnings (non-GAAP)                                                      $            89,288       $       141,957

Core earnings per common share (non-GAAP):
Weighted-average common shares outstanding - diluted (GAAP)                            45,223,086            47,469,470

Earnings per diluted common share (GAAP)                                      $              2.17       $          2.77
Core earnings per diluted common share (non-GAAP)                             $              1.97       $          2.99

Core return on average assets (non-GAAP):
Average assets (GAAP)                                                       

$12,785,040 $12,797,068


Return on average assets (GAAP)                                                          1.56   %             2.09    %
Core return on average assets (non-GAAP)                                                 1.41   %             2.24    %

Basic return on average tangible common equity (non-GAAP):


Average total stockholders' equity (GAAP)                                     $         1,487,170       $     1,500,642
Average goodwill                                                                        (369,098)             (370,223)
Average other intangible assets, net                                                     (24,580)              (31,056)
Average tangible common equity (non-GAAP)                                   

$1,093,492 $1,099,363


Return on average tangible common equity (non-GAAP)                                     18.21   %            24.35    %
Core return on average tangible common equity (non-GAAP)                                16.47   %            26.04    %


Results of operations for the three months ended June 30, 2022 Compared to the three months ended
June 30, 2021


Net income for the three months ended June 30, 2022 was $54.8 million compared
to net income of $57.3 million for the prior year quarter. The decline in
earnings was the result of lower net interest income, the current quarter's
provision for credit losses compared to the prior year's credit to the
allowance, and an increase in non-interest expense, which were partially offset
by the increase in non-interest income. The decline in net interest income was
the product of lower PPP fees and interest partially offset by higher interest
income from loan growth, and an increase in interest expense. Non-interest
income increased as a result of the sale of the Company's insurance business,
offsetting lower mortgage banking income. Non-interest expense increased
primarily as a result of the transaction costs associated with the asset sale
and increases in various categories of operational costs in the current quarter
compared to the prior year quarter. Current quarter core earnings were $44.2
million ($0.98 per diluted common share), compared to $58.4 million ($1.23 per
diluted common share) for the quarter ended June 30, 2021 and $45.1 million
($0.99 per diluted common share) for the quarter ended March 31, 2022. Pre-tax,
pre-provision net income was $76.2 million for the three months ended June 30,
2022 compared to $71.3 million for the prior year quarter and $59.9 million for
the first quarter of 2022.

Net Interest Income
Net interest income for the second quarter of 2022 decreased $2.1 million or 2%
compared to the second quarter of 2021, due to the combined impact of the $0.9
million reduction in interest income and the increase of $1.2 million in
interest expense. The decline in interest income was driven by a $12.0 million
decline in interest and fees on PPP loans, which was substantially offset by
higher interest income from the remaining categories of commercial loans and, to
a lesser degree, an increase in investment securities income. The increase in
interest expense was primarily the result of the interest expense associated
with
                                       49
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issuance of subordinated debt late in the first quarter of the current year. The
net interest margin for the second quarter of 2022 was 3.49% as compared to
3.63% for the same quarter of the prior year, as the yield on interest-earning
assets declined 11 basis points and the rate paid on interest-bearing
liabilities increased six basis points. Excluding the effects of amortization of
the fair value marks derived from acquisitions and interest and fees from PPP
loans, the net interest margin was 3.45% for the current quarter compared to
3.49% for second quarter of 2021.
Average interest-earning assets increased by 2% and average interest-bearing
liabilities remained flat in the second quarter of 2022 compared to the second
quarter of 2021. The composition of total average interest-bearing deposits
shifted to savings and demand deposits accounts that provides the customers with
greater liquidity in anticipation of rising rates. As a result, average time
deposits declined 15% while average savings deposits and average demand deposits
increased 17% and 6%, respectively. The percentage of average
noninterest-bearing deposits to total average deposits increased to 37% in the
current quarter compared to 35% in the second quarter of 2021. The primary cause
of the increase in average noninterest-bearing deposits was due to the growth in
core deposit relationships. At June 30, 2022 and 2021, average total loans
comprised 85% and 86% of average interest-earning assets with an average yield
of 4.12% and 4.22%, respectively. In addition, the average yield on investment
securities decreased to 1.83% for the current quarter compared to 1.87% for the
prior year quarter. These portfolio yield movements resulted in the decline in
the overall average yield on interest-earning assets to 3.75% at June 30, 2022
from 3.86% at June 30, 2021. The average rate paid on average interest-bearing
liabilities grew by six basis points, as the average rate paid increased from
0.37% for the second quarter of 2021 to 0.43% for the second quarter of 2022
driven by the increase in the average rate paid on borrowings, which increased
47 basis points compared to the average rate paid on interest-bearing deposits,
which remained flat at 22 basis points for the comparative quarters.
                                       50
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Average Consolidated Balances, Yields and Rates

                                                                                                      Three Months Ended June 30,
                                                                              2022                                                                  2021
                                                                                                  Annualized                                                            Annualized
                                                     Average                                       Average                 Average                                       Average
(Dollars in thousands and tax-equivalent)           Balances             Interest (1)             Yield/Rate              Balances             Interest (1)             Yield/Rate

Assets:

Commercial investor real estate loans            $  4,512,937          $      45,148                     4.01  %       $  3,675,119          $      38,411                     4.19  %
Commercial owner-occupied real estate               1,727,325                 19,410                     4.51             1,663,543                 19,360                     4.67
loans
Commercial AD&C loans                               1,096,369                 11,727                     4.29             1,089,287                 10,819                     3.98
Commercial business loans                           1,334,350                 15,820                     4.76             2,225,885                 25,248                     4.55
Total commercial loans                              8,670,981                 92,105                     4.26             8,653,834                 93,838                     4.35
Residential mortgage loans                          1,070,836                  8,878                     3.32               994,899                  8,634                     3.47
Residential construction loans                        221,031                  1,710                     3.10               176,135                  1,562                     3.56
Consumer loans                                        421,022                  3,992                     3.80               468,686                  4,183                     3.58
Total residential and consumer loans                1,712,889                 14,580                     3.41             1,639,720                 14,379                     3.51
Total loans (2)                                    10,383,870                106,685                     4.12            10,293,554                108,217                     4.22
Loans held for sale                                    12,744                    145                     4.56                66,958                    549                     3.28
Taxable securities                                  1,195,129                  4,630                     1.55             1,052,229                  4,373                     1.66
Tax-advantaged securities                             491,052                  3,082                     2.51               430,676                  2,567                     2.38
Total investment securities (3)                     1,686,181                  7,712                     1.83             1,482,905                  6,940                     1.87
Interest-bearing deposits with banks                  200,560                    358                     0.72               193,749                     47                     0.10
Federal funds sold                                        479                      1                     0.81                   535                      -                     0.10
Total interest-earning assets                      12,283,834                114,901                     3.75            12,037,701                115,753                     3.86

Less: allowance for credit losses                    (112,656)                                                             (130,734)
Cash and due from banks                                84,931                                                                97,813
Premises and equipment, net                            62,422                                                                55,718
Other assets                                          673,161                                                               737,857
Total assets                                     $ 12,991,692                                                          $ 12,798,355

Liabilities and Stockholders' Equity:
Interest-bearing demand deposits                 $  1,488,034          $         414                     0.11  %       $  1,400,661          $         226                     0.06  %
Regular savings deposits                              559,906                     22                     0.02               476,999                     66                     0.06
Money market savings deposits                       3,376,742                  1,497                     0.18             3,364,348                  1,254                     0.15
Time deposits                                       1,402,777                  1,862                     0.53             1,658,203                  2,305                     0.56
Total interest-bearing deposits                     6,827,459                  3,795                     0.22             6,900,211                  3,851                     0.22
Federal funds purchased                                53,055                    166                     1.26                19,506                      3                     0.06
Repurchase agreements                                 122,728                     35                     0.11               136,286                     40                     0.12
Advances from FHLB                                      3,809                     17                     1.74                73,626                    373                     2.03
Subordinated debentures                               369,994                  3,946                     4.27               227,027                  2,510                     4.42
Total borrowings                                      549,586                  4,164                     3.04               456,445                  2,926                     2.57
Total interest-bearing liabilities                  7,377,045                  7,959                     0.43             7,356,656                  6,777                     0.37

Noninterest-bearing demand deposits                 4,001,762                                                             3,763,135
Other liabilities                                     144,849                                                               154,689
Stockholders' equity                                1,468,036                                                             1,523,875
Total liabilities and stockholders' equity       $ 12,991,692                                                          $ 12,798,355

Tax-equivalent net interest income and                                 $     106,942                     3.32  %                             $     108,976                     3.49  %

spread

Less: tax-equivalent adjustment                                                  992                                                                   930
Net interest income                                                    $     105,950                                                         $     108,046

Interest income/earning assets                                                                           3.75  %                                                               3.86  %
Interest expense/earning assets                                                                          0.26                                                                  0.23
Net interest margin                                                                                      3.49  %                                                               3.63  %


(1)Tax-equivalent income has been adjusted using the combined marginal federal
and state rate of 25.64% and 25.50% for 2022 and 2021, respectively. The
annualized taxable-equivalent adjustments utilized in the above table to compute
yields aggregated to $1.0 million and $0.9 million in 2022 and 2021,
respectively.
(2)Non-accrual loans are included in the average balances.
(3)Investments available-for-sale are presented at amortized cost.
                                       51
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Interest Income
Excluding interest and fees associated with the PPP loan program, the Company's
total tax-equivalent interest income increased 11% for the second quarter of
2022 compared to the prior year quarter. Interest and fees from the PPP loan
program amounted to $1.3 million in the current quarter compared to $13.2
million in the prior year quarter. Average interest-earning assets rose 2% over
the prior year quarter as average total loans grew 1% and average investment
securities grew 14%. Excluding average PPP loan balances, average total loans
grew 13% over the previous twelve months. Average total mortgage loans increased
10% as a result of the growth of the conventional 1-4 family mortgage loan
portfolio in addition to the residential construction portfolio over the past
twelve months. Average consumer loans, principally home equity loans and lines,
declined 10% as a result of refinancing activity during the year.

The average yield on interest-earning assets declined to 3.75% for the current
quarter compared to 3.86% for the same period of the prior year. Average yields
on loans and investment securities for the current quarter decreased by 10 and
four basis points, respectively, compared to the prior year quarter, a
reflection of the general market interest rates during the majority of the
previous twelve months. The decrease in the yield on investments was driven
primarily by the decrease in yields on taxable investments during the period.
Excluding PPP interest and fees and the amortization of fair value marks, the
yield on interest-earning assets would have been 3.73% as compared to 3.78% in
the prior year quarter.

Interest Expense
Interest expense increased 17% in the second quarter of 2022 compared to the
second quarter of 2021. The increase from period to period was driven by the
increase in borrowing costs as a result of the issuance of $200 million of
subordinated debt late in the first quarter of 2022. The impact of this resulted
in the average rate on interest-bearing liabilities for the current quarter
rising to 0.43% from 0.37% as compared to the prior year quarter. The offsetting
impact of increasing market rates and the favorable amortization of fair value
marks on time deposits resulted in the average rate paid on interest-bearing
deposits for the current quarter compared to the same period of the prior year
remaining at 0.22%. During this period, the composition of total average
interest-bearing deposits shifted from time deposits to savings and demand
deposits accounts as consumers seek greater liquidity in anticipation of rising
rates. For the comparative period, average time deposits declined 15% while
average savings deposits and average demand deposits increased 17% and 6%,
respectively. Amortization of fair value marks on time deposits resulted in a
reduction of the average rate paid on total average deposits of three basis
points for the current quarter and seven basis points for last year's second
quarter. Excluding the amortization of those fair value marks, the average rate
paid on interest-bearing liabilities would have been 0.46% for the current
quarter compared to 0.43% for the prior year quarter. The average rate paid was
positively impacted by the growth in average noninterest-bearing deposits that
increased to 37% of average deposits in the current quarter compared to 35% in
the prior year's second quarter. The primary cause of the increase in average
noninterest-bearing deposits was due to the growth in core deposit
relationships.

Non-interest Income
Non-interest income amounts and trends are presented in the following table for
the periods indicated:


                                                       Three Months Ended June 30,              2022/2021              2022/2021
(Dollars in thousands)                                  2022                  2021              $ Change               % Change
Securities gains                                  $           38          $       71          $      (33)                    (46.5) %
Gain on disposal of assets                                16,699                   -              16,699                     N/M
Service charges on deposit accounts                        2,467               1,976                 491                      24.8
Mortgage banking activities                                1,483               5,776              (4,293)                    (74.3)
Wealth management income                                   9,098               9,121                 (23)                     (0.3)
Insurance agency commissions                                 812               1,247                (435)                    (34.9)
Income from bank owned life insurance                        703                 705                  (2)                     (0.3)
Bank card fees                                             1,810               1,785                  25                       1.4
Other income                                               2,135               5,578              (3,443)                    (61.7)
Total non-interest income                         $       35,245          $   26,259          $    8,986                      34.2



Total non-interest income increased $9.0 million or 34% for the second quarter
of 2022, compared to the prior year quarter as a direct result of the gain on
the sale of the Company's insurance business. Excluding the disposal gain,
non-interest income declined 29% compared to the prior year quarter. The gain
was partially offset by a decline in income from mortgage banking activities and
the decline in other non-interest income compared to the same quarter of the
prior year. Wealth management income remained stable and service charges on
deposit accounts grew. Other non-interest income declined from the prior year
quarter, which included the full payoff of a purchased credit deteriorated loan
and activity-based vendor incentives.

                                       52
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Further details by type of non-interest income follow:


•Service charges on deposit accounts increased 25% in the second quarter of
2022, compared to the second quarter of 2021, reflecting the impact of an
increase in the current year's service charges on commercial demand deposit
accounts and returned check transaction volume.
•Income from mortgage banking activities decreased by $4.3 million or 74% in the
second quarter of 2022 as compared to the second quarter of 2021, reflecting the
impact of reduced origination volume, the result of increasing mortgage lending
rates during the comparative period.
•Wealth management income remained stable for the second quarter of 2022, as
compared to the second quarter of 2021, due to the due to market volatility
during the current quarter compared to the prior year quarter. Overall total
assets under management decreased to $5.2 billion at June 30, 2022 compared to
$5.7 billion at June 30, 2021.
•Income from bank owned life insurance was unchanged for the second quarter of
2022, compared to the second quarter of 2021.
•Bank card income increased 1% in the second quarter of 2022, compared to the
second quarter of 2021, due to a rise in transaction income.
•Other income decreased $3.4 million or 62% in the second quarter of 2022,
compared to the second quarter of 2021 which included the full payoff of a
purchased credit deteriorated loan and activity-based vendor incentives.

Non-interest Expense
Non-interest expense amounts and trends are presented in the following table for
the periods indicated:


                                                       Three Months Ended June 30,              2022/2021              2022/2021
(Dollars in thousands)                                  2022                  2021              $ Change               % Change
Salaries and employee benefits                    $       39,550          $   38,990          $      560                       1.4  %
Occupancy expense of premises                              4,734               5,497                (763)                    (13.9)
Equipment expense                                          3,559               3,020                 539                      17.8
Marketing                                                  1,280               1,052                 228                      21.7
Outside data services                                      2,564               2,260                 304                      13.5
FDIC insurance                                             1,078               1,450                (372)                    (25.7)
Amortization of intangible assets                          1,466               1,659                (193)                    (11.6)
Merger, acquisition and disposal expense                   1,067                   -               1,067                    N/M
Professional fees and services                             2,372               3,165                (793)                    (25.1)
Other expenses                                             7,321               5,882               1,439                      24.5
Total non-interest expense                        $       64,991          $   62,975          $    2,016                       3.2



Total non-interest expense increased $2.0 million or 3% for the second quarter
of 2022, compared to the prior year quarter. The majority of the increase was
the result of merger, acquisition and disposal expense associated with the sale
of the Company's insurance business during the quarter. Other expenses increased
as a result of the combination of the provision for lines of credit, franchise
taxes and other operating costs. The remaining categories of non-interest
expense experienced modest increases or decreases with professional fees
declining during the current quarter 25% compared to the prior year quarter as a
result of lower consulting fees. Further detail of significant changes in the
levels of non-interest expense by category follows:

•Salaries and employee benefits, the largest component of non-interest expenses,
increased 1% in the second quarter of 2022 compared to the same period of the
prior year. While the compensation component increased 1%, benefit cost, driven
by stock compensation costs from plan changes, increased 2%.
•Occupancy and equipment expenses for the quarter decreased a combined 3%
compared to the prior year quarter as a result of lower rental expense.
•Marketing expense increased 22% compared to the prior year as a result of
increased advertising initiatives.
•FDIC insurance expense declined 26% as a result of the reduction in risk
factors applied by the regulatory agency in the determination of the Company's
premium.
•Professional fees and services decreased 25% from the prior year quarter due
primarily to consulting fees associated with specific projects and initiatives.
•Amortization of intangible assets decreased primarily as a result of the
decline in the amortization expense for the core deposit intangible asset
recognized from previous acquisitions.
•Other non-interest expense increased 24% as a result of the combination of the
provision for lines of credit, franchise taxes and other operating costs.
                                       53
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Income Taxes
The Company had income tax expense of $18.4 million in the second quarter of
2022, compared to income tax expense of $18.3 million in the second quarter of
2021. The resulting effective tax rate was 25.1% for the second quarter of 2022
compared to an effective tax rate of 24.2% for the second quarter of 2021. The
increase in the current year's effective tax rate is the result of pre-tax
income containing a greater proportion of taxable income compared to the prior
year period.

Non-GAAP Financial Measures

The GAAP efficiency ratio in the second quarter of 2022 decreased to 46.03%
compared to 46.89% for the second quarter of 2021. The GAAP and non-GAAP
efficiency ratios are reconciled and provided in the following table. The
non-GAAP efficiency ratio was 49.79% in the second quarter of 2022 compared to
45.36% in the second quarter of 2021. The change in the current year's non-GAAP
efficiency ratio compared to the prior year was the result of the 7% decline in
non-GAAP revenue coupled with the 2% growth in non-GAAP non-interest expense.

Pre-tax pre-provision net income increased 7% for the current quarter compared
to the prior year quarter as a result of the impact of the $16.7 million gain
from the sale of the Company's insurance business that more than offset the
decline in net interest income and the increase in non-interest expense.

For the quarter ended June 30, 2022, core earnings were $44.2 million ($0.98 per
diluted common share), compared to $58.4 million ($1.23 per diluted common
share) for the quarter ended June 30, 2021. ROA was 1.69% for the three months
ended June 30, 2022 compared to 1.79% for the prior year quarter. For the three
months ended June 30, 2022, the non-GAAP core ROA was 1.37% compared to 1.83%
for the prior year quarter. ROTCE was 20.42% for the quarter ended June 30, 2022
compared to 20.44% for the second quarter of 2021. The non-GAAP core ROTCE was
16.49% for the quarter ended June 30, 2022 compared to 20.87% for the prior year
quarter.

                                       54
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GAAP and Non-GAAP Efficiency Ratios and Measures


                                                                                Three Months Ended June 30,
(Dollars in thousands)                                                          2022                      2021
Pre-tax pre-provision net income:
Net income                                                              $              54,800       $         57,263
Plus/ (less) non-GAAP adjustments:
Income tax expense                                                                     18,358                 18,271
Provision/ (credit) for credit losses                                                   3,046                (4,204)
Pre-tax pre-provision net income                                        $              76,204       $         71,330

Efficiency ratio (GAAP):
Non-interest expense                                                    $              64,991       $         62,975

Net interest income plus non-interest income                            $             141,195       $        134,305

Efficiency ratio (GAAP)                                                             46.03   %              46.89   %

Efficiency ratio (non-GAAP):
Non-interest expense                                                    $              64,991       $         62,975
Less/ (plus) non-GAAP adjustments:
Amortization of intangible assets                                                       1,466                  1,659

Merger, acquisition and disposal expense                                                1,067                      -
Non-interest expense - as adjusted                                      $              62,458       $         61,316

Net interest income plus non-interest income                            $             141,195       $        134,305
Plus non-GAAP adjustment:
Tax-equivalent income                                                                     992                    930
Less non-GAAP adjustment:
Securities gains                                                                           38                     71
Gain on disposal of assets                                                             16,699                      -
Net interest income plus non-interest income - as adjusted              $             125,450       $        135,164

Efficiency ratio (non-GAAP)                                                         49.79   %              45.36   %



                                       55
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GAAP and non-GAAP performance ratios


                                                                                   Three Months Ended June 30,
(Dollars in thousands)                                                            2022                      2021
Core earnings (non-GAAP):
Net income (GAAP)                                                         $              54,800       $          57,263
Plus/ (less) non-GAAP adjustments (net of tax):
Merger, acquisition and disposal expense                                                    793                       -
Amortization of intangible assets                                                         1,090                   1,236

Gain on disposal of assets                                                             (12,417)                       -
Investment securities gains                                                                (28)                    (53)
Core earnings (non-GAAP)                                                  $              44,238       $          58,446

Core earnings per common share (non-GAAP):
Weighted-average common shares outstanding - diluted (GAAP)                          45,111,693              47,523,198

Earnings per diluted common share (GAAP)                                  $                1.21       $            1.19
Core earnings per diluted common share (non-GAAP)                         $                0.98       $            1.23

Core return on average assets (non-GAAP):
Average assets (GAAP)                                                     $ 

12,991,692 $12,798,355


Return on average assets (GAAP)                                                        1.69   %                1.79   %
Core return on average assets (non-GAAP)                                               1.37   %                1.83   %

Basic return on average tangible common equity (non-GAAP):


Average total stockholders' equity (GAAP)                                 $           1,468,036       $       1,523,875
Average goodwill                                                                      (367,986)               (370,223)
Average other intangible assets, net                                                   (23,801)                (30,224)
Average tangible common equity (non-GAAP)                                 $ 

1,076,249 $1,123,428


Return on average tangible common equity (non-GAAP)                                   20.42   %               20.44   %
Core return on average tangible common equity (non-GAAP)                              16.49   %               20.87   %


                                       56
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FINANCIAL CONDITION
Total assets grew 6% to $13.3 billion at June 30, 2022, as compared to $12.6
billion at December 31, 2021. During this period, total loans increased by 8% to
$10.8 billion at June 30, 2022, compared to $10.0 billion at December 31, 2021.
Excluding PPP loans, total loans at June 30, 2022 increased $979.8 million or
10%, as compared to $9.8 billion at December 31, 2021. Deposit growth was 3%
during 2022, as noninterest-bearing deposits experienced growth of 9% and
interest-bearing deposits remained stable. The growth in loans resulted in the
loan to deposit ratio increasing to 98.3% at June 30, 2022 from 93.8% at
December 31, 2021.

Analysis of Loans
A comparison of the loan portfolio at the dates indicated is presented in the
following table:

                                                        June 30, 2022                           December 31, 2021                       
Period-to-Period Change
(Dollars in thousands)                            Amount                 %                   Amount                   %                  Amount                  %
Commercial real estate:
Commercial investor real estate               $  4,761,658              44.2  %       $       4,141,346              41.5  %       $        620,312             15.0  %
Commercial owner-occupied real estate            1,767,326              16.4                  1,690,881              17.0                    76,445              4.5
Commercial AD&C                                  1,094,528              10.1                  1,088,094              10.9                     6,434              0.6
Commercial business                              1,353,380              12.5                  1,481,834              14.9                  (128,454)            (8.7)
Total commercial loans                           8,976,892              83.2                  8,402,155              84.3                   574,737              6.8
Residential real estate:
Residential mortgage                             1,147,577              10.6                    937,570               9.4                   210,007             22.4
Residential construction                           235,486               2.2                    197,652               2.0                    37,834             19.1
Consumer                                           426,335               4.0                    429,714               4.3                    (3,379)            (0.8)
Total residential and consumer loans             1,809,398              16.8                  1,564,936              15.7                   244,462             15.6
Total loans                                   $ 10,786,290             100.0  %       $       9,967,091             100.0  %       $        819,199              8.2




Total commercial loans, excluding PPP loans, grew by $735 million or 9% since
December 31, 2021. During this period, the Company generated commercial gross
loan production of $2.0 billion, of which $1.4 billion was funded, offsetting
$614 million in commercial loan run-off. During the first six months of 2022,
the funded commercial loan production increased 71% compared to $790.2 million
for the same period of the prior year. The growth in the commercial portfolio,
excluding PPP loans, occurred in all commercial portfolios led by the $620
million or 15% growth in the investor owned commercial portfolio. Excluding PPP
loans, commercial business loans increased 2%. The residential mortgage loan
portfolio grew 22% as a greater number of conventional 1-4 family mortgages were
retained to offset the run-off that occurred in the prior year. Consumer loans
remained relatively unchanged from year-end 2021.






                                       57
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Analysis of Investment Securities
The composition of investment securities at the periods indicated is presented
in the following table:

                                                             June 30, 2022                             December 31, 2021                           Period-to-Period Change
(Dollars in thousands)                                 Amount                 %                    Amount                   %                      Amount                     %
Available-for-sale debt securities:
U.S. treasuries and government agencies            $    101,410                6.4  %       $          68,539                4.5  %       $              32,871              48.0  %
State and municipal                                     299,222               18.8                    326,402               21.7                        (27,180)             (8.3)
Mortgage-backed and asset-backed                        868,191               54.4                  1,070,955               71.1                       (202,764)            (18.9)

Total available-for-sale debt securities              1,268,823               79.6                  1,465,896               97.3                       (197,073)            (13.4)

Debt securities held to maturity:


Mortgage-backed and asset-backed                        274,337               17.2                          -                  -                        274,337                  N/M
Total held-to-maturity debt securities                  274,337               17.2                          -                  -                        274,337                  N/M

Other investments:
Federal Reserve Bank stock                               38,731                2.4                     34,097                2.3                          4,634              13.6
Federal Home Loan Bank of Atlanta stock                  12,856                0.8                      6,392                0.4                          6,464             101.1
Other                                                       677                  -                        677                  -                              -                 -
Total other investments                                  52,264            
   3.2                     41,166                2.7                         11,098              27.0
Total securities                                   $  1,595,424              100.0  %       $       1,507,062              100.0  %       $              88,362               5.9



The investment portfolio consists primarily of U.S. Treasuries, U.S. Agency
securities, U.S. Agency mortgage-backed securities, U.S. Agency collateralized
mortgage obligations, asset-backed securities and state and municipal
securities. The portfolio is monitored on a continuing basis with consideration
given to interest rate trends and the structure of the yield curve and with a
frequent assessment of economic projections and analysis. The overall
distribution of the portfolio between investment types has remained relatively
stable during the first six months of 2022. During the quarter ended March 31,
2022, the Company transferred certain debt securities from available-for-sale to
held-to-maturity. The total amortized cost of debt securities transferred was
$305.6 million with the associated fair value of $289.4 million and unrealized
losses of $16.2 million at the date of transfer. The transfer occurred to lessen
the impact on the Company's tangible common equity in contemplation of
anticipated future increases in general market interest rates. At June 30, 2022,
99% of the investment portfolio was invested in Aaa/AAA or Aa/AA-rated
securities. The duration of the portfolio is monitored to ensure the adequacy
and ability to meet liquidity demands. The duration of the portfolio increased
to 5.2 years at June 30, 2022 compared to 4.3 years at December 31, 2021 as a
result of the recent increase in market interest rates. The portfolio possesses
low credit risk and provides a source of liquidity necessary to meet loan and
operational demands.

Other Earning Assets
Residential mortgage loans held for sale decreased to $23.6 million at June 30,
2022, compared to $39.4 million at December 31, 2021, as a result of a decrease
in origination volume during the period. The Company continues to sell a portion
of its mortgage loan production in the secondary market. The aggregate of
interest-bearing deposits with banks and federal funds sold decreased by $217.3
million at June 30, 2022 compared to December 31, 2021, as a result of providing
a source of funding for loan growth during the period.

                                       58
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Deposits

The composition of deposits for the periods indicated is presented in the
following table:


                                                                June 30, 2022                           December 31, 2021                       Period-to-Period Change
(Dollars in thousands)                                     Amount                %                   Amount                  %                  Amount                  %
Noninterest-bearing deposits                           $  4,129,440             37.6  %       $       3,779,630             35.6  %       $        349,810              9.3  %
Interest-bearing deposits:
Demand                                                    1,590,484             14.5                  1,604,714             15.1                   (14,230)            (0.9)
Money market savings                                      3,185,150             29.0                  3,415,663             32.1                  (230,513)            (6.7)
Regular savings                                             560,324              5.1                    533,862              5.0                    26,462              5.0
Time deposits of less than $250,000                       1,168,317             10.7                    910,464              8.6                   257,853             28.3
Time deposits of $250,000 or more                           335,746              3.1                    380,398              3.6                   (44,652)           (11.7)
Total interest-bearing deposits                           6,840,021             62.4                  6,845,101             64.4                    (5,080)            (0.1)
Total deposits                                         $ 10,969,461            100.0  %       $      10,624,731            100.0  %       $        344,730              3.2



Deposits and Borrowings
Total deposits increased by 3% to $11.0 billion at June 30, 2022 from $10.6
billion at December 31, 2021. This growth was essentially the result of
non-interest-bearing deposits which grew 9% while interest-bearing deposits
remained stable. At June 30, 2022, interest-bearing deposits represented 62% of
deposits with the remaining 38% in noninterest-bearing balances, compared to 64%
and 36%, respectively, at December 31, 2021. The mix in interest-bearing
deposits shifted during the period as the decline in money market deposits was
effectively offset by growth in the remaining interest-bearing deposit
categories. Growth of time deposits from December 31, 2021 through June 30, 2022
was driven by a $369.8 million increase in brokered time deposits while core
time deposits declined $156.6 million, a result of rate sensitive attrition
precipitated by customers seeking liquidity in anticipation rising interest
rates on deposit accounts.

Capital Management
Management monitors historical and projected earnings, dividends, and asset
growth, as well as risks associated with the various types of on and off-balance
sheet assets and liabilities, in order to determine appropriate capital levels.
Total stockholders' equity remained at $1.5 billion at June 30, 2022 compared to
at December 31, 2021. During this period, the growth in retained earnings from
net income was more than offset by the combination of the quarterly dividend
distribution, the $88.9 million increase in the accumulated other comprehensive
loss during the period resultant of the impact of increased market interest
rates on the available-for-sale securities portfolio at June 30, 2022, and the
$25.0 million in repurchased common stock. The ratio of average equity to
average assets was 11.63% for the six months ended June 30, 2022, as compared to
11.73% for the six months ended June 30, 2021.

Risk-Based Capital Ratios
Bank holding companies and banks are required to maintain capital ratios in
accordance with guidelines adopted by the federal bank regulators. These
guidelines are commonly known as risk-based capital guidelines. The actual
regulatory ratios and required ratios for capital adequacy are summarized for
the Company in the following table.


                                                                             Ratios at                                      Minimum
                                                                                                                           Regulatory
                                                          June 30, 2022                 December 31, 2021                 Requirements
Tier 1 leverage                                               9.53%                           9.26%                          4.00%

Common equity tier 1 capital to risk-weighted
assets                                                        11.58%                          11.91%                         4.50%

Tier 1 capital to risk-weighted assets                        11.58%                          11.91%                         6.00%

Total capital to risk-weighted assets                         16.07%                          14.59%                         8.00%



As of June 30, 2022, the most recent notification from the Bank's primary
regulator categorized the Bank as a "well-capitalized" institution under the
prompt corrective action rules of the Federal Deposit Insurance Act. Designation
as a well-capitalized institution under these regulations is not a
recommendation or endorsement of the Company or the Bank by federal bank
regulators.

                                       59
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The minimum capital level requirements applicable to the Company and the Bank
are: (1) a common equity Tier 1 capital ratio of 4.5%; (2) a Tier 1 capital
ratio of 6%; (3) a total capital ratio of 8%; and (4) a Tier 1 leverage ratio of
4%. The rules also establish a "capital conservation buffer" of 2.5% above the
regulatory minimum capital requirements, which must consist entirely of common
equity Tier 1 capital. An institution would be subject to limitations on paying
dividends, engaging in share repurchases, and paying discretionary bonuses to
executive officers if its capital level falls below the buffer amount. These
limitations establish a maximum percentage of eligible retained income that
could be utilized for such actions.

The increase in the Company's total capital ratio at June 30, 2022 from
December 31, 2021 was driven primarily by the issuance of $200 million in Tier 2
qualifying subordinated notes during March 2022. This debt issuance provided
increased capacity for greater real estate lending and participation in the
Company's stock repurchase program. The decline in the Tier 1 ratios reflects
the impact of the stock repurchase program that was initiated in the second
quarter of the current year. The increase in the leverage ratio was the result
of Tier 1 capital growing at a faster rate than the average assets applied in
the calculation. During 2020, the Company elected to apply the provisions of the
CECL deferral transition in the determination of its risk-based capital ratios.
At June 30, 2022, the impact of the application of this deferral transition
provided an additional $9.8 million in Tier 1 capital and resulted in raising
the common equity Tier 1 ratio by 10 basis points.

Tangible Common Equity
Tangible common equity, tangible assets, and tangible book value per share are
non-GAAP financial measures calculated using GAAP amounts. Tangible common
equity and tangible assets exclude the balances of goodwill and other intangible
assets. Management believes that this non-GAAP financial measure provides
information to investors that may be useful in understanding our financial
condition. Because not all companies use the same calculation of tangible common
equity and tangible assets, this presentation may not be comparable to other
similarly titled measures calculated by other companies.

Tangible common equity remained at $1.1 billion for June 30, 2022 as compared to
December 31, 2021. At June 30, 2022, the ratio of tangible common equity to
tangible assets has decreased to 8.45% compared to 9.21% at December 31, 2021.
The decrease in the tangible common equity ratio was caused by a combination of
the 3% decline in tangible common equity during the first six months of 2022,
the result of the $88.9 million increase in the accumulated other comprehensive
loss and the 6% growth in tangible assets.

A reconciliation of total stockholders' equity to tangible common equity and
total assets to tangible assets along with tangible book value per share, book
value per share and related non-GAAP tangible common equity ratio are provided
in the following table:

Tangible Common Equity Ratio – Non-GAAP


(Dollars in thousands, except per share data)       June 30, 2022      December 31, 2021
Tangible common equity ratio:
Total stockholders' equity                         $  1,477,169       $     

1,519,679

Goodwill                                               (363,436)            

(370,223)

Other intangible assets, net                            (22,694)                (25,920)
Tangible common equity                             $  1,091,039       $       1,123,536

Total assets                                       $ 13,303,009       $      12,590,726
Goodwill                                               (363,436)               (370,223)
Other intangible assets, net                            (22,694)                (25,920)
Tangible assets                                    $ 12,916,879       $      12,194,583

Outstanding common shares                            44,629,697              45,118,930

Tangible common equity ratio                               8.45  %                 9.21  %
Tangible book value per common share               $      24.45       $           24.90
Book value per common share                        $      33.10       $           33.68





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Credit Risk
The fundamental lending business of the Company is based on understanding,
measuring and controlling the credit risk inherent in the loan portfolio. The
Company's loan portfolio is subject to varying degrees of credit risk. Credit
risk entails both general risks, which are inherent in the process of lending,
and risk specific to individual borrowers. The Company's credit risk is
mitigated through portfolio diversification, which limits exposure to any single
customer, industry or collateral type. Typically, each consumer and residential
lending product has a generally predictable level of credit losses based on
historical loss experience. Residential mortgage and home equity loans and lines
generally have the lowest credit loss experience. Loans secured by personal
property, such as auto loans, generally experience medium credit losses.
Unsecured loan products, such as personal revolving credit, have the highest
credit loss experience and, for that reason, the Company has chosen not to
engage in a significant amount of this type of lending. Credit risk in
commercial lending can vary significantly, as losses as a percentage of
outstanding loans can shift widely during economic cycles and are particularly
sensitive to changing economic conditions. Generally, improving economic
conditions result in improved operating results on the part of commercial
customers, enhancing their ability to meet their particular debt service
requirements. Improvements, if any, in operating cash flows can be offset by the
impact of rising interest rates that may occur during improved economic times.
Inconsistent economic conditions may have an adverse effect on the operating
results of commercial customers, reducing their ability to meet debt service
obligations.

To control and manage credit risk, management has a credit process in place to
reasonably ensure that credit standards are maintained along with an in-house
loan administration, accompanied by various oversight and review procedures. The
primary purpose of loan underwriting is the evaluation of specific lending risks
and involves the analysis of the borrower's ability to service the debt as well
as the assessment of the value of the underlying collateral. Oversight and
review procedures include monitoring the credit quality of the portfolio,
providing early identification of potential problem credits and proactive
management of problem credits.

The Company recognizes a lending relationship as non-performing when either the
loan becomes 90 days delinquent or as a result of factors, such as bankruptcy,
interruption of cash flows, etc., considered at the monthly credit committee
meeting. Classification as a non-accrual loan is based on a determination that
the Company may not collect all principal and/or interest payments according to
contractual terms. When a loan is placed on non-accrual status all accrued but
unpaid interest is reversed from interest income. Payments received on
non-accrual loans are first applied to the remaining principal balance of the
loans. Additional recoveries are credited to the allowance up to the amount of
all previous charge-offs.

The level of non-performing loans to total loans decreased to 0.40% at June 30,
2022 compared to 0.49% at December 31, 2021. Non-performing loans were $43.5
million at June 30, 2022 compared to $48.8 million at December 31, 2021. Loans
placed on non-accrual during the current quarter amounted to $0.9 million
compared to $1.5 million for the prior year quarter and $1.5 million for the
first quarter of 2022. Loans greater than 90 days or more were $0.4 million
compared to $0.6 million at December 31, 2021.

While the diversification of the lending portfolio among different commercial,
residential and consumer product lines along with different market conditions of
the D.C. suburbs, Northern Virginia and Baltimore metropolitan area has
mitigated some of the risks in the portfolio, local economic conditions and
levels of non-performing loans may continue to be influenced by the conditions
being experienced in various business sectors of the economy on both a regional
and national level.

The Company's methodology for evaluating whether a loan shall be placed on
non-accrual status begins with risk-rating credits on an individual basis and
includes consideration of the borrower's overall financial condition, payment
record and available cash resources that may include the sufficiency of
collateral value and, in a select few cases, verifiable support from financial
guarantors. In measuring a specific allowance, the Company looks primarily to
the value of the collateral (adjusted for estimated costs to sell) or projected
cash flows generated by the operation of the collateral as the primary sources
of repayment of the loan. The Company may consider the existence of guarantees
and the financial strength and wherewithal of the guarantors involved in any
loan relationship. Guarantees may be considered as a source of repayment based
on the guarantor's financial condition and payment capacity. Accordingly, absent
a verifiable payment capacity, a guarantee alone would not be sufficient to
avoid classifying the loan as non-accrual.

Management has established a credit process that dictates that structured
procedures be performed to monitor these loans between the receipt of an
original appraisal and the updated appraisal. These procedures include the
following:
•An internal evaluation is updated periodically to include borrower financial
statements and/or cash flow projections.
•The borrower may be contacted for a meeting to discuss an updated or revised
action plan which may include a request for additional collateral.
•Re-verification of the documentation supporting the Company's position with
respect to the collateral securing the loan.
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•At the monthly credit committee meeting the loan may be downgraded and a
specific allowance may be decided upon in advance of the receipt of the
appraisal.
•Upon receipt of the updated appraisal (or based on an updated internal
financial evaluation) the loan balance is compared to the appraisal and a
specific allowance is decided upon for the particular loan, typically for the
amount of the difference between the appraised value (adjusted for estimated
costs to sell) and the loan balance.
•Evaluation of whether adverse changes in the value of the collateral are
expected over the remainder of the loan's expected life.
•The Company will individually assess the allowance for credit losses based on
the fair value of the collateral for any collateral dependent loans where the
borrower is experiencing financial difficulty or when the Company determines
that the foreclosure is probable. The Company will charge-off the excess of the
loan amount over the fair value of the collateral adjusted for the estimated
selling costs.

Loans considered to be troubled debt restructurings ("TDRs") are loans that have
their terms restructured (e.g., interest rates, loan maturity date, payment and
amortization period, etc.) in circumstances that provide payment relief to a
borrower experiencing financial difficulty. All restructured
collateral-dependent loans are individually assessed for allowance for credit
losses and may either be in accruing or non-accruing status. Non-accruing
restructured loans may return to accruing status provided doubt has been removed
concerning the collectability of principal and interest as evidenced by a
sufficient period of payment performance in accordance with the restructured
terms. Loans may be removed from the restructured category if the borrower is no
longer experiencing financial difficulty, a re-underwriting event took place and
the revised loan terms of the subsequent restructuring agreement are considered
to be consistent with terms that can be obtained in the credit market for loans
with comparable risk.

The Company may extend the maturity of a performing or current loan that may
have some inherent weakness associated with the loan. However, the Company
generally follows a policy of not extending maturities on non-performing loans
under existing terms. Maturity date extensions only occur under revised terms
that clearly place the Company in a position to increase the likelihood of or
assure full collection of the loan under the contractual terms and/or terms at
the time of the extension that may eliminate or mitigate the inherent weakness
in the loan. These terms may incorporate, but are not limited to additional
assignment of collateral, significant balance curtailments/liquidations and
assignments of additional project cash flows. Guarantees may be a consideration
in the extension of loan maturities. As a general matter, the Company does not
view the extension of a loan to be a satisfactory approach to resolving
non-performing credits. On an exception basis, certain performing loans that
have displayed some inherent weakness in the underlying collateral values, an
inability to comply with certain loan covenants which are not affecting the
performance of the credit or other identified weakness may be extended.

The Company typically sells the majority of its fixed-rate residential mortgage
originations in the secondary mortgage market. Concurrent with such sales, the
Company is required to make customary representations and warranties to the
purchasers about the mortgage loans and the manner in which they were
originated. The related sale agreements grant the purchasers recourse back to
the Company, which could require the Company to repurchase loans or to share in
any losses incurred by the purchasers. This recourse exposure typically extends
for a period of six to twelve months after the sale of the loan although the
time frame for repurchase requests can extend for an indefinite period. Such
transactions could be due to a number of causes including borrower fraud or
early payment default. The Company has seen a very limited number of repurchase
and indemnity demands from purchasers for such events and routinely monitors its
exposure in this regard. The Company maintains a liability of $0.5 million for
probable losses due to repurchases.

The Company periodically engages in whole loan sale transactions of its
residential mortgage loans as a part its interest rate risk management strategy.
There were no whole loan sales of mortgage loans from the portfolio during the
current year.

Mortgage loan servicing fees are recognized at amortized cost and are subject to ongoing impairment monitoring. The amortized cost of the Company’s mortgage servicing fees remained at $0.4 million at June 30, 2022 compared to December 31, 2021.

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Analysis of Credit Risk
The following table presents information with respect to non-performing assets
and 90-day delinquencies as of the periods indicated:


(Dollars in thousands)                                           June 30, 2022          December 31, 2021
Non-accrual loans:
Commercial real estate:
Commercial investor real estate                                $       11,245          $         12,489
Commercial owner-occupied real estate                                   7,869                     9,306
Commercial AD&C                                                         1,353                       650
Commercial business                                                     7,542                     8,420
Residential real estate:
Residential mortgage                                                    7,305                     8,441
Residential construction                                                    1                        55
Consumer                                                                5,692                     6,725
Total non-accrual loans                                                41,007                    46,086

Loans 90 days past due:
Commercial real estate:
Commercial investor real estate                                             -                         -
Commercial owner-occupied real estate                                       -                         -
Commercial AD&C                                                             -                         -
Commercial business                                                         -                         -
Residential real estate:
Residential mortgage                                                      353                       557
Residential construction                                                    -                         -
Consumer                                                                    -                         -
Total 90 days past due loans                                              353                       557

Restructured loans (accruing)                                           2,119                     2,167
Total non-performing loans                                             43,479                    48,810
Other real estate owned, net                                              739                     1,034
Total non-performing assets                                    $       

44,218 $49,844


Non-accrual loans to total loans                                         0.38  %                   0.46  %
Non-performing loans to total loans                                      0.40  %                   0.49  %
Non-performing assets to total assets                                    0.33  %                   0.40  %
Allowance for credit losses to non-accrual loans                       277.20  %                 236.83  %
Allowance for credit losses to non-performing loans                    261.44  %                 223.61  %



Allowance for Credit Losses
The allowance for credit losses represents management's estimate of the portion
of the Company's loans' amortized cost basis not expected to be collected over
the loans' contractual life. As a part of the credit oversight and review
process, the Company maintains an allowance for credit losses (the "allowance").
The following allowance section should be read in conjunction with "Allowance
for Credit Losses" section in Note 1 - Significant Accounting Policies in the
Notes to the Condensed Consolidated Financial Statements. The Company excludes
accrued interest from the measurement of the allowance as the Company has a
non-accrual policy to reverse any accrued, uncollected interest income when
loans are placed on non-accrual status.

The appropriateness of the allowance is determined through ongoing evaluation of
the credit portfolio, and involves consideration of a number of factors.
Determination of the allowance is inherently subjective and requires significant
estimates, including consideration of current conditions and future economic
forecasts, which may be susceptible to significant volatility. The forecasted
economic metrics with the greatest impact were the expected future unemployment
rate, the expected level of business bankruptcies and, to a lesser degree, the
house price index. In addition to these metrics, management has included the
potential impact of recent recessionary pressures among the qualitative factors
applied in the determination of the allowance. Expected losses can vary
significantly from the amounts actually observed. Loans deemed uncollectible are
charged off against
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the allowance, while recoveries are credited to the allowance when received.
Management adjusts the level of the allowance through the provision for credit
losses in the Condensed Consolidated Statement of Income.

The provision for credit losses for the six months ended June 30, 2022 was $4.7
million as compared to a credit of $38.9 million for the same period in 2021.
For the six months ended June 30, 2022, the provision for credit losses,
compared to the prior year's credit to the provision, reflects the impact of the
growth of the loan portfolio and the consideration of a potential recession,
both of which exceeded the benefit to the provision derived from continued
improvement in forecasted macroeconomic metrics. The credit to the provision for
credit losses for the same period in 2021 predominantly reflected the results of
the impact of the improved economic forecasts during the period.

At June 30, 2022, the allowance for credit losses was $113.7 million as compared
to $109.1 million at December 31, 2021. The allowance for credit losses as a
percent of total loans was 1.05% and 1.10% at June 30, 2022 and December 31,
2021, respectively. The allowance for credit losses represented 261% of
non-performing loans at June 30, 2022 as compared to 224% at December 31, 2021.
The allowance attributable to the commercial portfolio represented 1.15% of
total commercial loans while the portion attributable to total combined consumer
and mortgage loans was 0.58%. With respect to the total commercial portion of
the allowance, 22% of this portion is allocated to the commercial business loan
portfolio, resulting in the ratio of the allowance for commercial business loans
to total commercial business loans of 1.64%. The ratio of the allowance
attributable to AD&C loans was 1.22% at the end of the current quarter, compared
to 1.87% at December 31, 2021. This decline in the allowance ratio was
predominantly the result of shorter weighted average remaining life of loans in
this portfolio.

The current methodology for assessing the appropriate allowance includes: (1) a
collective quantified reserve that reflects the Company's historical default and
loss experience adjusted for expected economic conditions over a reasonable and
supportable forecast period and the Company's prepayment and curtailment rates,
(2) collective qualitative factors that consider concentrations of the loan
portfolio, expected changes to the economic forecasts, large lending
relationships, early delinquencies, and factors related to credit
administration, including, among others, loan-to-value ratios, borrowers' risk
rating and credit score migrations, and (3) individual allowances on
collateral-dependent loans where borrowers are experiencing financial difficulty
or where the Company determined that foreclosure is probable. Under the current
methodology, the impact of the utilization of the historical default and loss
experience results in 46% of the total allowance being attributable to the
historical performance of the portfolio while 54% of the allowance is
attributable to the collective qualitative factors applied to determine the
allowance.

The quantified collective portion of the allowance is determined by pooling
loans into segments based on the similar risk characteristics of the underlying
borrowers, in addition to consideration of collateral type, industry and
business purpose of the loans. The Company selected two collective
methodologies, the discounted cash flows and weighted average remaining life
methodologies. Segments utilizing the discounted cash flow method are further
sub-segmented based on the risk level (determined either by risk ratings or
Beacon Scores). Collective calculation methodologies use the Company's
historical default and loss experience adjusted for future economic forecasts.
The reasonable and supportable forecast period represents a two year economic
outlook for the applicable economic variables. Following the end of the
reasonable and supportable forecast period expected losses revert back to the
historical mean over the next two years on a straight-line basis.

Economic variables which have the most significant impact on the allowance
include:
•unemployment rate;
•number of business bankruptcies; and
•house price index.

The collective quantified component of the allowance is supplemented by a
qualitative component to address various risk characteristics of the Company's
loan portfolio including:
•trends in early delinquencies;
•changes in the risk profile related to large loans in the portfolio;
•concentrations of loans to specific industry segments;
•expected changes in economic conditions;
•changes in the Company's credit administration and loan portfolio management
processes; and
•the quality of the Company's credit risk identification processes.

The individual reserve assessment is applied to collateral dependent loans where
borrowers are experiencing financial difficulty or when the Company determined
that foreclosure is probable. The determination of the fair value of the
collateral depends on whether a repayment of the loan is expected to be from the
sale or the operation of the collateral. When repayment is expected from the
operation of the collateral, the Company uses the present value of expected cash
flows from the operation of the
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collateral as the fair value. When repayment of the loan is expected from the
sale of the collateral the fair value of the collateral is based on an
observable market price or the appraised value less estimated cost to sell.
During the individual reserve assessment, management also considers the
potential future changes in the value of the collateral over the remainder of
the loan's life. The balance of collateral-dependent loans individually assessed
for the allowance was $30.5 million, with individual allowances of $6.2 million
against those loans at June 30, 2022.

If an updated appraisal is received subsequent to the preliminary determination
of an individual allowance or partial charge-off, and it is less than the
initial appraisal used in the initial assessment, an additional individual
allowance or charge-off is taken on the related credit. Partially charged-off
loans are not written back up based on updated appraisals and always remain on
non-accrual with any and all subsequent payments first applied to the remaining
balance of the loan as principal reductions. No interest income is recognized on
loans that have been partially charged-off.

A current appraisal on large loans is usually obtained if the appraisal on file
is more than 12 months old and there has been a material change in market
conditions, zoning, physical use or the adequacy of the collateral based on an
internal evaluation. The Company's policy is to strictly adhere to regulatory
appraisal standards. If an appraisal is ordered, no more than a 30 day
turnaround is requested from the appraiser, who is selected by Credit
Administration from an approved appraiser list. After receipt of the updated
appraisal, the assigned credit officer will recommend to the Chief Credit
Officer whether an individual allowance or a charge-off should be taken. The
Chief Credit Officer has the authority to approve an individual allowance or
charge-off between monthly credit committee meetings to ensure that there are no
significant time lapses during this process. The Company's borrowers are
concentrated in nine counties in Maryland, three counties in Virginia and in
Washington D.C. Excluding the PPP loans, commercial and residential mortgages,
including home equity loans and lines, represented 87% of total loans at both
June 30, 2022 and at December 31, 2021, respectively. Certain loan terms may
create concentrations of credit risk and increase the Company's exposure to
loss. These include terms that permit the deferral of principal payments or
payments that are smaller than normal interest accruals (negative amortization);
loans with high loan-to-value ratios; loans, such as option adjustable-rate
mortgages, that may expose the borrower to future increases in repayments that
are in excess of increases that would result solely from increases in market
interest rates; and interest-only loans. The Company does not make loans that
provide for negative amortization or option adjustable-rate mortgages.

The following table presents an allocation of the allowance for credit losses by
portfolio as of each period end. The allowance is allocated in the following
table to various loan categories based on the methodology used to estimate
credit losses; however, the allocation does not restrict the usage of the
allowance for any specific loan category.

(In thousands)                                                  June 30, 2022                             December 31, 2021
                                                                           % of loans to                              % of loans to
Commercial real estate:                                 Amount              total loans             Amount             total loans
Commercial investor real estate                    $      56,794                   44.2  %       $   45,289                   41.5  %
Commercial owner-occupied real estate                     10,784                   16.4              11,687                   17.0
Commercial AD&C                                           13,383                   10.1              20,322                   10.9
Commercial business                                       22,238                   12.5              23,170                   14.9
Total commercial                                         103,199                   83.2             100,468                   84.3
Residential real estate:
Residential mortgage                                       7,254                   10.6               5,384                    9.4
Residential construction                                   1,141                    2.2               1,048                    2.0
Consumer                                                   2,076                    4.0               2,245                    4.3
Total residential and consumer                            10,471                   16.8               8,677                   15.7
Total allowance                                    $     113,670                  100.0  %       $  109,145                  100.0  %



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Summary of Loan Credit Loss Experience
The following table presents the activity in the allowance for credit losses for
the periods indicated:

                                                  Six Months Ended         Year Ended
(Dollars in thousands)                             June 30, 2022        December 31, 2021
Balance, January 1                               $       109,145       $        165,367

Provision/ (credit) for credit losses                      4,681            

(45,556)

Loan charge-offs:
Commercial real estate:
Commercial investor real estate                                -            

(5,802)

Commercial owner-occupied real estate                          -                   (136)
Commercial AD&C                                                -                 (2,007)
Commercial business                                         (507)                (4,069)
Residential real estate:
Residential mortgage                                        (131)                     -
Residential construction                                       -                      -
Consumer                                                    (124)                  (299)
Total charge-offs                                           (762)               (12,313)
Loan recoveries:
Commercial real estate:
Commercial investor real estate                              319            

285

Commercial owner-occupied real estate                         12                      -
Commercial AD&C                                                -                      -
Commercial business                                           65                    565
Residential real estate:
Residential mortgage                                          20                    410
Residential construction                                       5                      5
Consumer                                                     185                    382
Total recoveries                                             606                  1,647
Net charge-offs                                             (156)               (10,666)
Balance, period end                              $       113,670       $        109,145

Annualized net charge-offs to average loans                 0.00  %                0.11  %
Allowance for credit losses to loans                        1.05  %                1.10  %




Market Risk Management
The Company's net income is largely dependent on its net interest income. Net
interest income is susceptible to interest rate risk to the extent that
interest-bearing liabilities mature or re-price on a different basis than
interest-earning assets. When interest-bearing liabilities mature or re-price
more quickly than interest-earning assets in a given period, a significant
increase in market rates of interest could adversely affect net interest income.
Similarly, when interest-earning assets mature or re-price more quickly than
interest-bearing liabilities, falling interest rates could result in a decrease
in net interest income. Net interest income is also affected by changes in the
portion of interest-earning assets that are funded by interest-bearing
liabilities rather than by other sources of funds, such as noninterest-bearing
deposits and stockholders' equity.

The Company's interest rate risk management goals are (1) to increase net
interest income at a growth rate consistent with the growth rate of total
assets, and (2) to minimize fluctuations in net interest income as a percentage
of interest-earning assets. Management attempts to achieve these goals by
balancing, within policy limits, the volume of floating-rate liabilities with a
similar volume of floating-rate assets; by keeping the average maturity of
fixed-rate asset and liability contracts reasonably matched; by maintaining a
pool of administered core deposits; and by adjusting pricing rates to market
conditions on a continuing basis.

The Company's board of directors has established a comprehensive interest rate
risk management policy, which is administered by management's Asset Liability
Management Committee ("ALCO"). The policy establishes limits on risk, which are
quantitative measures of the percentage change in net interest income (a measure
of net interest income or "NII" at risk) and the fair value of equity capital (a
measure of economic value of equity or "EVE" at risk) resulting from a
hypothetical change in U.S. Treasury interest rates for maturities from one day
to thirty years. The Company measures the potential adverse impacts
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that changing interest rates may have on its short-term earnings, long-term
value, and liquidity by employing simulation analysis through the use of
computer modeling. The simulation model captures optionality factors such as
call features and interest rate caps and floors embedded in investment and loan
portfolio contracts. As with any method of gauging interest rate risk, there are
certain shortcomings inherent in the interest rate modeling methodology used by
the Company. When interest rates change, actual movements in different
categories of interest-earning assets and interest-bearing liabilities, loan
prepayments, and withdrawals of time and other deposits, may deviate
significantly from assumptions used in the model. As an example, certain types
of money market deposit accounts are assumed to reprice at 40 to 100% of the
interest rate change in each of the up rate shock scenarios even though this is
not a contractual requirement. As a practical matter, management would likely
lag the impact of any upward movement in market rates on these accounts as a
mechanism to manage the Company's net interest margin. Finally, the methodology
does not measure or reflect the impact that higher rates may have on
adjustable-rate loan customers' ability to service their debts, or the impact of
rate changes on demand for loan and deposit products.

The Company prepares a current base case and multiple alternative simulations at
least once per quarter and reports the analysis to the board of directors. In
addition, more frequent forecasts are produced when interest rates are
particularly uncertain or when other business conditions so dictate.

The statement of condition is subject to quarterly testing for eight alternative
interest rate shock possibilities to indicate the inherent interest rate risk.
Average interest rates are shocked by +/- 100, 200, 300, and 400 basis points
("bp"), although the Company may elect not to use particular scenarios that it
determines are impractical in a current rate environment. It is management's
goal to structure the statement of condition so that net interest income at risk
over a twelve-month period and the economic value of equity at risk do not
exceed policy guidelines at the various interest rate shock levels.

The Company augments its quarterly interest rate shock analysis with alternative
external interest rate scenarios on a monthly basis. These alternative interest
rate scenarios may include non-parallel rate ramps and non-parallel yield curve
twists. If a measure of risk produced by the alternative simulations of the
entire statement of condition violates policy guidelines, ALCO is required to
develop a plan to restore the measure of risk to a level that complies with
policy limits within two quarters.

Measures of net interest income at risk produced by simulation analysis are
indicators of an institution's short-term performance in alternative rate
environments. These measures are typically based upon a relatively brief period,
usually one year. They do not necessarily indicate the long-term prospects or
economic value of the institution.

Estimated Changes in Net Interest Income
Change in Interest
Rates:                        + 400 bp           + 300 bp           + 200 bp           + 100 bp           - 100 bp           - 200 bp           -300 bp            -400 bp
Policy Limit                   23.50%             17.50%             15.00%             10.00%             10.00%             15.00%             17.50%             23.50%
June 30, 2022                  2.91%              2.48%              1.98%              1.22%              -3.91%              N/A                N/A                N/A
December 31, 2021              8.61%              6.53%              4.80%              2.16%               N/A                N/A                N/A                N/A



As reflected in the table above, the measures of net interest income at risk at
June 30, 2022 declined in every rising interest rate change scenario compared to
December 31, 2021. As the table indicates, in each rising interest rate
environment, net interest income sensitivity decreased compared to December 31,
2021. The change in the net interest income at risk is the result of a decrease
in asset sensitivity due to the decrease in interest-bearing deposits with
banks, recent loan growth at market rates and the increase in non-interest
bearing deposits. The impact of those changes was further affected by the
increase in short-term borrowings during the period. At June 30, 2022, all
measures remained well within prescribed policy limits. The table also indicates
that should the interest rate environment decline, net interest income would be
reduced. This potential reduction in net interest income could occur because of
the current low level of deposit rates and those rates being unable to reprice
lower as current asset yields decline.

The measures of equity value at risk indicate the ongoing economic value of the
Company by considering the effects of changes in interest rates on all of the
Company's cash flows, and by discounting the cash flows to estimate the present
value of assets and liabilities. The difference between these discounted values
of the assets and liabilities is the economic value of equity, which, in theory,
approximates the fair value of the Company's net assets.


Estimated Changes in Economic Value of Equity
Change in Interest
Rates:                        + 400 bp           + 300 bp           + 200 bp           + 100 bp           - 100 bp           - 200 bp          -300 bp           -400 bp
Policy Limit                   35.00%             25.00%             20.00%             10.00%             10.00%             20.00%            25.00%            35.00%
June 30, 2022                 (15.43%)           (11.65%)           (7.66%)            (3.70%)             2.58%               N/A               N/A               N/A
December 31, 2021             (10.29%)           (6.18%)            (2.16%)             0.05%               N/A                N/A               N/A               N/A


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Overall, the measure of the economic value of equity ("EVE") at risk increased
in all of the rising rate scenarios from December 31, 2021 to June 30, 2022. The
increase in the risk associated with EVE during the period was primarily the
result of reduced asset market values of loans and investments driven by the
increase in the interest rate environment during period.

Liquidity Management
Liquidity is measured by a financial institution's ability to raise funds
through loan repayments, maturing investments, deposit growth, borrowed funds,
capital and the sale of highly marketable assets such as investment securities
and residential mortgage loans. In assessing liquidity, management considers
operating requirements, the seasonality of deposit flows, investment, loan and
deposit maturities and calls, expected funding of loans and deposit withdrawals,
and the market values of available-for-sale investments, so that sufficient
funds are available on short notice to meet obligations as they arise and to
ensure that the Company is able to pursue new business opportunities. The
Company's liquidity position, considering both internal and external sources
available, exceeded anticipated short-term and long-term needs at June 30, 2022.

Liquidity is measured using an approach designed to take into account core
deposits, in addition to factors already discussed above. Management considers
core deposits, defined to include all deposits other than brokered and
outsourced deposits, to be a relatively stable funding source. Core deposits
equaled 81% of total interest-earning assets at June 30, 2022. The Company's
growth and mortgage banking activities are also additional considerations when
evaluating liquidity requirements. Also considered are changes in the liquidity
of the investment portfolio due to fluctuations in interest rates. Under this
approach, implemented by the Funding and Liquidity Subcommittee of ALCO under
formal policy guidelines, the Company's liquidity position is measured weekly,
looking forward at thirty day intervals from thirty (30) to three hundred sixty
(360) days. The measurement is based upon the projection of funds sold or
purchased position, along with ratios and trends developed to measure dependence
on purchased funds and core growth. At June 30, 2022, the Company's liquidity
and funds availability provides it with flexibility in funding loan demand and
other liquidity demands.

The Company also has external sources of funds available that can be drawn upon
when required. The main sources of external liquidity are available lines of
credit with the FHLB and the Federal Reserve Bank. At June 30, 2022, the Company
had the ability to pledge collateral at prevailing market rates under a line of
credit with the FHLB of $3.9 billion. FHLB availability based on pledged
collateral at June 30, 2022, amounted to $3.1 billion, with $175.0 million
outstanding against it. The secured lines of credit at the Federal Reserve Bank
and correspondent banks totaled $684.9 million, all of which was available for
borrowing based on pledged collateral, with no borrowings against it as of
June 30, 2022. In addition, the Company had unsecured lines of credit with
correspondent banks of $1.3 billion with $75.0 million outstanding at June 30,
2022. Based upon its liquidity analysis, including external sources of liquidity
available, management believes the liquidity position was appropriate at
June 30, 2022.

The parent company ("Bancorp") is a separate legal entity from the Bank and must
provide for its own liquidity. In addition to its operating expenses, Bancorp is
responsible for paying any dividends declared to its common shareholders and
interest and principal on outstanding debt. Bancorp's primary source of income
is dividends received from the Bank. The amount of dividends that the Bank may
declare and pay to Bancorp in any calendar year, without the receipt of prior
approval from the Federal Reserve Bank, cannot exceed net income for that year
to date period plus retained net income (as defined) for the preceding two
calendar years. Based on this requirement, as of June 30, 2022, the Bank could
have declared a dividend of up to $108.5 million to Bancorp. At June 30, 2022,
Bancorp had liquid assets of $100.0 million.

Arrangements to fund credit products or guarantee financing take the form of
loan commitments (including lines of credit on revolving credit structures) and
letters of credit. Approvals for these arrangements are obtained in the same
manner as loans. Generally, cash flows, collateral value and risk assessment are
considered when determining the amount and structure of credit arrangements.

Credit commitments in the form of consumer real estate, business real estate and business real estate on the dates indicated are as follows:


(In thousands)                                                      June 30, 2022           December 31, 2021
Commercial real estate development and construction               $      690,429          $          621,725
Residential real estate-development and construction                     821,951                     885,806
Real estate-residential mortgage                                          36,783                      54,072
Lines of credit, principally home equity and business lines            2,261,447                   2,096,874
Standby letters of credit                                                 77,094                      70,642
Total commitments to extend credit and available credit
lines                                                             $    3,887,704          $        3,729,119


                                       68
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Commitments to extend credit are agreements to provide financing to a customer
with the provision that there are no violations of any condition established in
the agreement. Commitments generally have interest rates determined by current
market rates, expiration dates or other termination clauses and may require
payment of a fee. Lines of credit typically represent unused portions of lines
of credit that were provided and remain available as long as customers comply
with the requisite contractual conditions. Commitments to extend credit are
evaluated, processed and/or renewed regularly on a case by case basis, as part
of the credit management process. The total commitment amount or line of credit
amounts do not necessarily represent future cash requirements, as it is highly
unlikely that all customers would draw on their lines of credit in full at one
time.

As of June 30, 2022, the total reserve for unfunded commitments was $0.3 million
and is accounted for in other liabilities in the Condensed Consolidated
Statements of Financial Condition. See Note 1 - Significant Accounting Policies
in the Notes to the Condensed Consolidated Financial Statements for more
information on the accounting policy for the allowance for unfunded commitments.
                                       69

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