UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~_________~~___________

FORM 10-Q

~~_________~~

___________



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

For the quarterly period ended September 30, ~~2017~~

2021



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

For the transition period from ____to ____

Commission file number: 001-35913

~~_________~~___________

TRISTATE CAPITAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

~~_________~~

___________

Pennsylvania

20-4929029

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

One Oxford Centre

(412)

304-0304

301 Grant Street, Suite 2700

~~Pittsburgh, Pennsylvania 15219~~

~~(Address of principal executive offices)~~

~~(Zip Code)~~

~~(412) 304-0304~~

(Registrant’s telephone number, including area code)

Pittsburgh,

Pennsylvania

15219

(Address of principal executive offices)

(Zip Code)

~~_________~~___________

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, no par value

TSC

Nasdaq Global Select Market

Depositary Shares, Each Representing a 1/40th Interest in a Share of 6.75% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock

TSCAP

Nasdaq Global Select Market

Depositary Shares, Each Representing a 1/40th Interest in a Share of 6.375% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred Stock

TSCBP

Nasdaq Global Select Market

___________

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

ý ~~Yes~~ ¨ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).ý Yes ¨ No

ý ~~Yes~~ ¨ No

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

Large accelerated filer

¨☐

Accelerated filer

Non-accelerated filer

¨☐

Smaller reporting company

¨☐

~~(Do not check if a smaller reporting company)~~

Emerging growth company

ý☐

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

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

¨ ~~Yes~~ ý No___________

As of October ~~13, 2017,~~31, 2021, there were ~~28,642,573~~33,154,343 shares of the registrant’s common stock, no par value, outstanding.

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TRISTATE CAPITAL HOLDINGS, INC. AND SUBSIDIARIES

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			4
PART I – FINANCIAL INFORMATION
		ITEM 1. FINANCIAL STATEMENTS	46
		UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION	46
		UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME	57
		UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	68
		UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY	79
		UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	810
		NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	1012
		ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	4247
		ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	7181
		ITEM 4. CONTROLS AND PROCEDURES	7281
PART II – OTHER INFORMATION
		ITEM 1. LEGAL PROCEEDINGS	7282
		ITEM 1A. RISK FACTORS	7282
		ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	7285
		ITEM 3. DEFAULTS UPON SENIOR SECURITIES	7385
		ITEM 4. MINE SAFETY DISCLOSURES	7385
		ITEM 5. OTHER INFORMATION	7385
		ITEM 6. EXHIBITS	7386
SIGNATURES			7487
~~EXHIBIT INDEX~~	75

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements reflect our current views with respect to, among other things, future events, and our financial performance, as well as our goals and objectives for future operations, financial and business trends, business prospects and management’s outlook or expectations for earnings, revenues, expenses, capital levels, liquidity levels, asset quality or other measures of future financial or business performance, strategies, or expectations. These statements are often, but not always, indicated through the use of words or phrases such as “achieve,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “maintain,” “may,” “opportunity,” “outlook,” “plan,” “potential,” “predict,” “projection,” “seek,” “should,” “sustain,” “target,” “trend,” “will,” “will likely result,” and “would,” or the negative version of those words or other comparable statements of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry and beliefs or assumptions made by management, many of which, by their nature, are inherently uncertain. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that change over time and are difficult to predict, including, but not limited to, the following:

•risks associated with COVID-19 and their expected impact and duration, including effects on our operations, our clients, economic conditions and the demand for our products and services;

•risks associated with the acquisition of our Company by Raymond James Financial, Inc. (“Raymond James”), including risks related to the failure of our Company to satisfy conditions of the closing of the acquisition which could result in the acquisition not closing which could have a material adverse impact on the value of our stock;

•our ability to prudently manage our growth and execute our strategy;

•deterioration of our asset quality;

•our level of non-performing assets and the costs associated with resolving problem loans, including litigation and other costs;

•possible additional loan and lease losses and impairment, changes in the value of collateral securing our loans and leases and the collectability of loans and leases, particularly as a result of the COVID-19 pandemic and the programs implemented by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, including its automatic loan forbearance provisions;

•possible changes in the speed of loan prepayments by customers and loan origination or sales volumes;

•business and economic conditions and trends generally and in the financial services industry, nationally and within our local market areas, including the effects of an increase in unemployment levels, slowdowns in economic growth and changes in demand for products or services or the value of assets under management;

•our ability to maintain important deposit customer relationships, our reputation and otherwise avoid liquidity risks;

•changes in management personnel;

•our ability to recruit and retain key employees;

•volatility and direction of interest rates;

•risks related to the phasing out of London Interbank Offered Rate (“LIBOR”) and changes in the manner of calculating reference rates, as well as the impact of the phase out of LIBOR and introduction of alternative reference rates on the value of loans and other financial instruments that are linked to LIBOR;

•changes in accounting policies, accounting standards, or authoritative accounting guidance;

•any impairment of our goodwill or other intangible assets;

•our ability to develop and provide competitive products and services that appeal to our customers and target markets;

•our ability to provide investment management performance competitive with our peers and benchmarks;

•fluctuations in the carrying value of the assets under management held by our Chartwell Investment Partners, LLC subsidiary, as well as the relative and absolute investment performance of such subsidiary’s investment products;

•operational risks associated with our business, including technology and cyber-security related risks;

•increased competition in the financial services industry, particularly from regional and national institutions;

•negative perceptions or publicity with respect to any products or services we offer;

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•adverse judgments or other resolutions of pending and future legal proceedings, and costs incurred in defending such proceedings;

•changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, accounting, tax, trade, monetary and fiscal matters, including economic stimulus programs, and potential expenses associated with complying with such laws and regulations;

•our ability to comply with applicable capital and liquidity requirements, including our ability to generate liquidity internally or raise capital on favorable terms;

•regulatory limits on our ability to receive dividends from our subsidiaries and pay dividends to shareholders;

•changes and direction of government policy toward and intervention in the U.S. financial system;

•natural disasters and adverse weather, acts of terrorism, regional or national civil unrest, cyber-attacks, an outbreak of hostilities, a public health outbreak (such as COVID-19) or other international or domestic calamities, and other matters beyond our control;

•the effects of any reputation, credit, interest rate, market, operational, legal, liquidity, regulatory or compliance risk resulting from developments related to any of the risks discussed above; and

•other factors that are discussed in the section entitled “Risk Factors” in our Annual Report on Form 10-K, filed with the SEC, which is accessible at www.sec.gov.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this document. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. New factors emerge from time to time, and it is not possible for us to predict which will arise. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TRISTATE CAPITAL HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


(Dollars in thousands)	September 30, 2017			December 31, 2016			(Dollars in thousands)	September 30, 2021		December 31, 2020

ASSETS							ASSETS

Cash	$	380		$	183		Cash	$	341	$	341
Interest-earning deposits with other institutions	129,979			96,244			Interest-earning deposits with other institutions	462,239		429,639
Federal funds sold	6,220			7,567			Federal funds sold	7,352		5,462
Cash and cash equivalents	136,579			103,994			Cash and cash equivalents	469,932		435,442
Investment securities available-for-sale, at fair value (cost: $151,012 and $175,158, respectively)	151,810			174,892
Investment securities held-to-maturity, at cost (fair value: $59,605 and $54,498, respectively)	58,314			53,940
Debt securities available-for-sale, at fair value							Debt securities available-for-sale, at fair value	555,609		617,570
Debt securities held-to-maturity, at amortized cost, net							Debt securities held-to-maturity, at amortized cost, net	857,202		211,691

Equity securities, at fair value							Equity securities, at fair value	5,000		—
Federal Home Loan Bank stock	10,792			9,641			Federal Home Loan Bank stock	11,802		13,284
Total investment securities	220,916			238,473			Total investment securities	1,429,613		842,545
Loans held-for-investment	3,930,670			3,401,054
Allowance for loan losses	(15,979		)	(18,762		)
Loans held-for-investment, net	3,914,691			3,382,292

Loans and leases held-for-investment							Loans and leases held-for-investment	9,869,011		8,237,418
Allowance for credit losses on loans and leases							Allowance for credit losses on loans and leases	(32,363)		(34,630)
Loans and leases held-for-investment, net							Loans and leases held-for-investment, net	9,836,648		8,202,788
Accrued interest receivable	11,732			9,614			Accrued interest receivable	21,872		18,783
Investment management fees receivable, net	7,300			7,749			Investment management fees receivable, net	8,908		7,935
Goodwill and other intangibles, net	65,821			67,209
Office properties and equipment, net	5,103			5,471
Goodwill							Goodwill	41,660		41,660
Intangible assets, net of accumulated amortization of $13,814 and $12,381, respectively							Intangible assets, net of accumulated amortization of $13,814 and $12,381, respectively	20,818		22,251
Office properties and equipment, net of accumulated depreciation of $18,681 and $16,241, respectively							Office properties and equipment, net of accumulated depreciation of $18,681 and $16,241, respectively	16,293		12,369
Operating lease right-of-use asset							Operating lease right-of-use asset	35,109		21,294

Bank owned life insurance	66,154			64,815			Bank owned life insurance	98,308		71,787
Deferred tax asset, net	6,107			7,204

Prepaid expenses and other assets	61,610			43,636			Prepaid expenses and other assets	179,707		219,962
Total assets	$	4,496,013		$	3,930,457		Total assets	$	12,158,868	$	9,896,816

LIABILITIES AND SHAREHOLDERS’ EQUITY							LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:							Liabilities:
Deposits	$	3,769,870		$	3,286,779		Deposits	$	10,756,141	$	8,489,089
Borrowings, net	279,162			239,510			Borrowings, net	355,654		400,493
Accrued interest payable on deposits and borrowings	1,781			1,867			Accrued interest payable on deposits and borrowings	3,145		3,057
Deferred tax liability, net							Deferred tax liability, net	6,772		5,676

Operating lease liability							Operating lease liability	36,694		22,958
Other accrued expenses and other liabilities	67,867			50,494			Other accrued expenses and other liabilities	186,424		218,398
Total liabilities	4,118,680			3,578,650			Total liabilities	11,344,830		9,139,671

Shareholders’ Equity:							Shareholders’ Equity:
Preferred stock, no par value; Shares authorized - 150,000; Shares issued - none	—			—
Common stock, no par value; Shares authorized - 45,000,000; Shares issued - 30,298,858 and 29,790,383, respectively; Shares outstanding - 28,642,573 and 28,415,654, respectively	288,800			285,480
Preferred stock, no par value; Shares authorized - 150,000; Series A Shares issued and outstanding - 40,250 and 40,250, respectively							Preferred stock, no par value; Shares authorized - 150,000; Series A Shares issued and outstanding - 40,250 and 40,250, respectively	38,468		38,468
Series B Shares issued and outstanding - 80,500 and 80,500, respectively							Series B Shares issued and outstanding - 80,500 and 80,500, respectively	77,611		77,611
Series C Shares issued and outstanding - 672 and 650, respectively							Series C Shares issued and outstanding - 672 and 650, respectively	64,364		61,064
Common stock voting, no par value; Shares authorized - 51,653,347; Shares issued -35,553,711 and 34,919,572, respectively; Shares outstanding - 33,154,343 and 32,620,150, respectively							Common stock voting, no par value; Shares authorized - 51,653,347; Shares issued -35,553,711 and 34,919,572, respectively; Shares outstanding - 33,154,343 and 32,620,150, respectively	332,323		331,098
Common stock non- voting, no par value; Shares authorized - 6,653,347; Shares issued - none							Common stock non- voting, no par value; Shares authorized - 6,653,347; Shares issued - none	—		—
Additional paid-in capital	9,020			6,782			Additional paid-in capital	41,295		33,824
Retained earnings	99,689			73,744			Retained earnings	299,817		254,054
Accumulated other comprehensive income, net	1,330			830
Treasury stock (1,656,285 and 1,374,729 shares, respectively)	(21,506		)	(15,029		)
Accumulated other comprehensive loss, net							Accumulated other comprehensive loss, net	(1,535)		(2,697)
Treasury stock (2,399,368 and 2,299,422 shares, respectively)							Treasury stock (2,399,368 and 2,299,422 shares, respectively)	(38,305)		(36,277)
Total shareholders’ equity	377,333			351,807			Total shareholders’ equity	814,038		757,145
Total liabilities and shareholders’ equity	$	4,496,013		$	3,930,457		Total liabilities and shareholders’ equity	$	12,158,868	$	9,896,816

See accompanying notes to unaudited condensed consolidated financial statements.

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TRISTATE CAPITAL HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands, except per share data)	2017		2016			2017		2016			(Dollars in thousands, except per share data)	2021		2020		2021		2020

Interest income:											Interest income:
Loans	$	33,604	$	23,369		$	90,865	$	67,689
Loans and leases											Loans and leases	$	55,071	$	46,256	$	155,959	$	152,551
Investments	1,531		1,400			4,536		3,957			Investments	4,477		3,687		10,860		11,528
Interest-earning deposits	440		156			1,026		434			Interest-earning deposits	157		279		433		2,006
Total interest income	35,575		24,925			96,427		72,080			Total interest income	59,705		50,222		167,252		166,085

Interest expense:											Interest expense:
Deposits	10,604		5,187			25,813		13,928			Deposits	10,480		13,898		31,340		57,095
Borrowings	1,366		1,034			4,060		2,852			Borrowings	2,558		2,850		7,677		7,110
Total interest expense	11,970		6,221			29,873		16,780			Total interest expense	13,038		16,748		39,017		64,205
Net interest income	23,605		18,704			66,554		55,300			Net interest income	46,667		33,474		128,235		101,880
Provision (credit) for loan losses	283		(542		)	1,042		(340		)
Net interest income after provision for loan losses	23,322		19,246			65,512		55,640
Provision for credit losses											Provision for credit losses	—		7,430		320		16,428
Net interest income after provision for credit losses											Net interest income after provision for credit losses	46,667		26,044		127,915		85,452
Non-interest income:											Non-interest income:
Investment management fees	9,214		10,333			27,684		26,814			Investment management fees	9,436		8,095		27,887		23,471
Service charges	96		134			287		393
Net gain on the sale and call of investment securities	15		14			254		77
Service charges on deposits											Service charges on deposits	377		235		1,018		763
Net gain on the sale and call of debt securities											Net gain on the sale and call of debt securities	33		3,744		130		3,815
Swap fees	1,391		977			3,708		3,422			Swap fees	3,059		3,953		9,683		12,179
Commitment and other fees	423		488			1,240		1,497
Other income	567		551			1,654		656
Commitment and other loan fees											Commitment and other loan fees	740		381		1,630		1,262
Bank owned life insurance income											Bank owned life insurance income	613		441		1,522		1,298
Other income (loss)											Other income (loss)	(28)		40		855		414
Total non-interest income	11,706		12,497			34,827		32,859			Total non-interest income	14,230		16,889		42,725		43,202
Non-interest expense:											Non-interest expense:
Compensation and employee benefits	14,683		14,664			42,798		39,404			Compensation and employee benefits	21,701		18,524		62,559		52,539
Premises and occupancy costs	1,257		1,285			3,763		3,583
Premises and equipment expense											Premises and equipment expense	1,520		1,488		4,099		4,389
Professional fees	968		693			2,642		2,483			Professional fees	2,310		1,596		5,758		4,175
FDIC insurance expense	1,121		933			3,074		2,023			FDIC insurance expense	1,375		3,030		3,625		7,760
General insurance expense	245		258			805		768			General insurance expense	363		294		1,002		834
State capital shares tax	398		329			1,148		986
State capital shares tax expense											State capital shares tax expense	790		366		2,217		1,115
Travel and entertainment expense	828		718			2,190		2,140			Travel and entertainment expense	755		592		1,835		1,735
Technology and data services											Technology and data services	4,274		2,576		11,061		7,294
Intangible amortization expense	463		463			1,388		1,291			Intangible amortization expense	477		478		1,433		1,466
Change in fair value of acquisition earn out	—		(1,209		)	—		(1,209		)

Marketing and advertising											Marketing and advertising	984		394		2,566		1,694
Other operating expenses	2,849		2,380			7,946		6,508			Other operating expenses	3,459		2,089		7,556		5,667
Total non-interest expense	22,812		20,514			65,754		57,977			Total non-interest expense	38,008		31,427		103,711		88,668
Income before tax	12,216		11,229			34,585		30,522			Income before tax	22,889		11,506		66,929		39,986
Income tax expense	2,184		2,775			8,640		9,452			Income tax expense	2,873		2,177		11,933		7,362
Net income	$	10,032	$	8,454		$	25,945	$	21,070		Net income	$	20,016	$	9,329	$	54,996	$	32,624
Preferred stock dividends											Preferred stock dividends	3,097		1,962		9,233		5,886
Net income available to common shareholders											Net income available to common shareholders	$	16,919	$	7,367	$	45,763	$	26,738

Earnings per common share:											Earnings per common share:
Basic	$	0.36	$	0.31		$	0.94	$	0.76		Basic	$	0.46	$	0.26	$	1.24	$	0.95
Diluted	$	0.35	$	0.30		$	0.90	$	0.75		Diluted	$	0.44	$	0.26	$	1.20	$	0.93

See accompanying notes to unaudited condensed consolidated financial statements.

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TRISTATE CAPITAL HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 2017 2016

Net income $ 10,032
$ 8,454
$ 25,945
$ 21,070

Other comprehensive income (loss):

Unrealized holding gains (losses) on investment securities, net of tax expense (benefit) of $(19), $397, $490 and $675 (35 ) 711
855
1,146

Reclassification adjustment for gains included in net income on investment securities, net of tax expense of $0, $(6), $(85) and $(11) —
(8 ) (154 ) (20 )

Unrealized holding gains (losses) on derivatives, net of tax expense (benefit) of $31, $224, $(25) and $192 55
402
(45 ) 346

Reclassification adjustment for losses (gains) included in net income on derivatives, net of tax benefit (expense) of $(43), $17, $(87) and $17 (77 ) 29
(156 ) 29

Other comprehensive income (loss) (57 ) 1,134
500
1,501

Total comprehensive income $ 9,975
$ 9,588
$ 26,445
$ 22,571


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2021		2020		2021		2020

Net income	$	20,016	$	9,329	$	54,996	$	32,624

Other comprehensive income (loss):

Unrealized holding gains (losses) on debt securities, net of tax expense (benefit) of $(482), $856, $(651) and $651, respectively	(1,528)		3,088		(2,061)		2,041

Reclassification adjustment for gains included in net income on debt securities, net of tax expense of $(1), $(904), $(25) and $(909), respectively	(4)		(2,835)		(78)		(2,852)

Unrealized holding gains (losses) on derivatives, net of tax expense (benefit) of $(18), $5, $448 and $(2,218), respectively	(56)		27		1,316		(7,040)

Reclassification adjustment for losses included in net income on derivatives, net of tax benefit of $218, $248, $631 and $398, respectively	685		780		1,985		1,249

Other comprehensive income (loss), net of tax	(903)		1,060		1,162		(6,602)

Total comprehensive income	$	19,113	$	10,389	$	56,158	$	26,022

See accompanying notes to unaudited condensed consolidated financial statements.

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TRISTATE CAPITAL HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


(Dollars in thousands)	Preferred Stock		Common Stock		Additional Paid-in-Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss), Net		Treasury Stock		Total Shareholders’ Equity
Balance, June 30, 2020	$	116,079	$	295,820	$	25,088	$	237,795	$	(6,530)	$	(35,422)	$	632,830
Net income	—		—		—		9,329		—		—		9,329
Other comprehensive income	—		—		—		—		1,060		—		1,060
Preferred stock dividends	—		—		—		(1,962)		—		—		(1,962)
Exercise of stock options	—		117		(43)		—		—		—		74
Purchase of treasury stock	—		—		—		—		—		(609)		(609)


Stock-based compensation	—		—		2,478		—		—		—		2,478
Balance, September 30, 2020	$	116,079	$	295,937	$	27,523	$	245,162	$	(5,470)	$	(36,031)	$	643,200

Balance, June 30, 2021	$	179,343	$	332,307	$	38,496	$	282,898	$	(632)	$	(37,844)	$	794,568
Net income	—		—		—		20,016		—		—		20,016
Other comprehensive loss	—		—		—		—		(903)		—		(903)

Preferred stock dividends	1,100		—		—		(3,097)		—		—		(1,997)
Exercise of stock options	—		16		(9)		—		—		—		7
Purchase of treasury stock	—		—		—		—		—		(461)		(461)

Stock-based compensation	—		—		2,808		—		—		—		2,808
Balance, September 30, 2021	$	180,443	$	332,323	$	41,295	$	299,817	$	(1,535)	$	(38,305)	$	814,038

(Dollars in thousands) Common
Stock Additional
Paid-in-Capital Retained Earnings Accumulated Other Comprehensive Income (Loss), net Treasury Stock Total Shareholders' Equity
Balance, December 31, 2015 $ 281,412
$ 10,809
$ 45,103
$ (1,443 ) $ (9,904 ) $ 325,977
Net income —
—
21,070
—
—
21,070
Other comprehensive income —
—
—
1,501
—
1,501
Exercise of stock options 2,089
(663 ) —
—
—
1,426
Purchase of treasury stock —
—
—
—
(4,309 ) (4,309 )
Cancellation of stock options —
(5,220 ) —
—
—
(5,220 )
Stock-based compensation —
2,694
—
—
—
2,694
Balance, September 30, 2016 $ 283,501
$ 7,620
$ 66,173
$ 58
$ (14,213 ) $ 343,139

Balance, December 31, 2016 $ 285,480
$ 6,782
$ 73,744
$ 830
$ (15,029 ) $ 351,807
Net income —
—
25,945
—
—
25,945
Other comprehensive income —
—
—
500
—
500
Exercise of stock options 3,320
(1,982 ) —
—
—
1,338
Purchase of treasury stock —
—
—
—
(6,477 ) (6,477 )
Stock-based compensation —
4,220
—
—
—
4,220
Balance, September 30, 2017 $ 288,800
$ 9,020
$ 99,689
$ 1,330
$ (21,506 ) $ 377,333


(Dollars in thousands)	Preferred Stock		Common Stock		Additional Paid-in-Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss), Net		Treasury Stock		Total Shareholders’ Equity
Balance, December 31, 2019	$	116,079	$	295,349	$	23,095	$	218,449	$	1,132	$	(32,823)	$	621,281
Net income	—		—		—		32,624		—		—		32,624
Other comprehensive loss	—		—		—		—		(6,602)		—		(6,602)
Preferred stock dividends	—		—		—		(5,886)		—		—		(5,886)
Exercise of stock options	—		588		(303)		—		—		—		285
Purchase of treasury stock	—		—		—		—		—		(3,343)		(3,343)
Treasury stock reissuance	—		—		—		(25)		—		135		110
Cancellation of stock options	—		—		(2,484)		—		—		—		(2,484)
Stock-based compensation	—		—		7,215		—		—		—		7,215
Balance, September 30, 2020	$	116,079	$	295,937	$	27,523	$	245,162	$	(5,470)	$	(36,031)	$	643,200

Balance, December 31, 2020	$	177,143	$	331,098	$	33,824	$	254,054	$	(2,697)	$	(36,277)	$	757,145

Net income	—		—		—		54,996		—		—		54,996
Other comprehensive income	—		—		—		—		1,162		—		1,162

Preferred stock dividends	3,300		—		—		(9,233)		—		—		(5,933)
Exercise of stock options	—		1,225		(730)		—		—		—		495
Purchase of treasury stock	—		—		—		—		—		(2,028)		(2,028)


Stock-based compensation	—		—		8,201		—		—		—		8,201
Balance, September 30, 2021	$	180,443	$	332,323	$	41,295	$	299,817	$	(1,535)	$	(38,305)	$	814,038

See accompanying notes to unaudited condensed consolidated financial statements.

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TRISTATE CAPITAL HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30,
(Dollars in thousands)	2021		2020
Cash flows from operating activities:
Net income	$	54,996	$	32,624
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and intangible amortization expense	3,873		3,087
Amortization of deferred financing costs	161		90
Impairment on historic tax credit investments	2,830		145
Provision for credit losses	320		16,428

Stock-based compensation expense	8,201		7,215
Net gain on the sale and call of debt securities	(130)		(3,815)


Income from debt securities trading	(105)		(239)
Purchase of debt securities trading	(9,440)		(20,932)
Proceeds from the sale of debt securities trading	9,545		21,171
Net amortization of premiums and discounts on debt securities	9,556		1,555
Increase in investment management fees receivable, net	(973)		(67)
Decrease (increase) in accrued interest receivable	(3,089)		4,044
Increase (decrease) in accrued interest payable	88		(1,178)
Bank owned life insurance income	(1,522)		(1,298)
Increase in income taxes payable	5,716		2,812
Decrease in prepaid income taxes	1,186		3,163
Deferred tax provision	693		724
Increase (decrease) in accounts payable and other accrued expenses	1,923		(1,901)


Cash received for reimbursement of leasehold improvements	—		2,196
Other, net	(2,471)		(1,600)
Net cash provided by operating activities	81,358		64,224
Cash flows from investing activities:
Purchase of debt securities available-for-sale	(581,985)		(467,245)
Purchase of debt securities held-to-maturity	(481,630)		(436,768)
Purchase of equity securities	(5,000)		—
Proceeds from the sale of debt securities available-for-sale	121,711		120,400

Principal repayments and maturities of debt securities available-for-sale	51,804		44,322
Principal repayments and maturities of debt securities held-to-maturity	308,028		378,367
Purchase of bank owned life insurance	(25,000)		—
Investment in low-income housing and historic tax credits	(8,425)		(8,305)
Investment in small business investment companies	(2,144)		(811)
Net redemption of Federal Home Loan Bank stock	1,482		11,040
Net increase in loans and leases, net	(1,637,222)		(1,076,716)

Proceeds from loan sales	2,939		—
Proceeds from the sale of other real estate owned	351		1,527
Additions to office properties and equipment	(6,363)		(3,719)

Net cash used in investing activities	(2,261,454)		(1,437,908)

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Nine Months Ended September 30,
(Dollars in thousands) 2017 2016
Cash Flows from Operating Activities:
Net income $ 25,945
$ 21,070
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and intangible amortization expense 2,523
2,241
Amortization of deferred financing costs 152
152
Provision (credit) for loan losses 1,042
(340 )
Net gain on the sale of loans (17 ) —
Stock-based compensation expense 4,220
2,694
Net gain on the sale or call of investment securities available-for-sale (239 ) (31 )
Net gain on the call of investment securities held-to-maturity (15 ) (46 )
Net amortization of premiums and discounts 684
682
Decrease (increase) in investment management fees receivable, net 449
(1,063 )
Increase in accrued interest receivable (2,118 ) (1,503 )
Decrease in accrued interest payable (86 ) (347 )
Bank owned life insurance income (1,339 ) (1,331 )
Decrease in income taxes payable (11 ) (353 )
Increase in prepaid income taxes (745 ) (2,404 )
Deferred tax provision 805
720
Decrease in accounts payable and other accrued expenses (5,471 ) (833 )
Change in fair value of acquisition earn out —
(1,209 )
Other, net (2,690 ) (3,944 )
Net cash provided by operating activities 23,089
14,155
Cash Flows from Investing Activities:
Purchase of investment securities available-for-sale (12,907 ) (27,419 )
Purchase of investment securities held-to-maturity (7,467 ) (6,250 )
Proceeds from the sale of investment securities available-for-sale —
4,691
Principal repayments and maturities of investment securities available-for-sale 46,760
9,162
Principal repayments and maturities of investment securities held-to-maturity 3,000
2,500
Purchase of bank owned life insurance —
(3,000 )
Investment in low income housing tax credit (1,851 ) (125 )
Investment in small business investment company (745 ) —
Net redemption (purchase) of Federal Home Loan Bank stock (1,152 ) 570
Net increase in loans (540,292 ) (331,988 )
Proceeds from loan sales 6,867
1,196
Proceeds from the sale of other real estate owned 597
1,080
Additions to office properties and equipment (766 ) (700 )
Acquisition, net of acquired cash —
(14,095 )
Net cash used in investing activities (507,956 ) (364,378 )
Cash Flows from Financing Activities:
Net increase in deposit accounts 483,091
397,386
Net increase in Federal Home Loan Bank advances 35,000
—
Net decrease in Federal Home Loan Bank advances —
(15,000 )
Net increase in line of credit advances 4,500
—
Net proceeds from exercise of stock options 1,338
1,426
Cancellation of stock options —
(5,220 )
Purchase of treasury stock (6,477 ) (4,309 )
Net cash provided by financing activities 517,452
374,283
Net change in cash and cash equivalents during the period 32,585
24,060
Cash and cash equivalents at beginning of the period 103,994
96,676
Cash and cash equivalents at end of the period $ 136,579
$ 120,736

Nine Months Ended September 30,
(Dollars in thousands) 2017 2016

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ 29,807
$ 16,975
Income taxes $ 8,591
$ 11,273
Acquisition of non-cash assets and liabilities:
Assets acquired $ —
$ 1,038
Liabilities assumed $ —
$ 1,402
Other non-cash activity:
Loan foreclosures and repossessions $ —
$ 3,618
Unsettled purchase of investment securities available-for-sale $ 10,000
$ —
Contingent consideration $ —
$ 2,478


	Nine Months Ended September 30,
(Dollars in thousands)	2021		2020
Cash flows from financing activities:
Net increase in deposit accounts	2,267,052		1,549,100
Net decrease in Federal Home Loan Bank advances	(50,000)		(55,000)
Net increase in line of credit advances	5,000		—
Net proceeds from issuance of subordinated notes payable	—		95,349



Net proceeds from exercise of stock options	495		285
Cancellation of stock options	—		(2,484)

Purchase of treasury stock, net of reissuance	(2,028)		(3,233)

Dividends paid on preferred stock	(5,933)		(5,886)
Net cash provided by financing activities	2,214,586		1,578,131
Net change in cash and cash equivalents during the period	34,490		204,447
Cash and cash equivalents at beginning of the period	435,442		403,855
Cash and cash equivalents at end of the period	$	469,932	$	608,302

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest expense	$	38,768	$	65,424
Income taxes	$	4,308	$	663



Other non-cash activity:
Operating lease right-of-use asset	$	13,737	$	—

Unsettled purchase of debt securities available-for-sale	$	13,616	$	—


Transfer of debt securities available-for-sale to held-to-maturity	$	480,769	$	—


Series C dividend distributable	$	3,300	$	—

See accompanying notes to unaudited condensed consolidated financial statements.

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TRISTATE CAPITAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

[1] BASIS OF INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATION

TriState Capital Holdings, Inc. (“~~we”, “us”, “our”~~we,” “us,” “our,” the “holding company,” the “parent company,” or the “Company”) is a registered bank holding company pursuant to the Bank Holding Company Act of 1956, as amended. The Company has ~~three wholly-owned~~3 wholly owned subsidiaries: TriState Capital Bank, ~~(the “Bank”),~~ a Pennsylvania-chartered state ~~bank;~~bank (the “Bank”); Chartwell Investment Partners, LLC, ~~(“Chartwell”),~~ a registered investment ~~advisor;~~adviser (“Chartwell”); and Chartwell TSC Securities Corp., a registered broker-dealer (“CTSC Securities”)~~, a registered broker/dealer.~~.

The Bank was established to serve the commercial banking needs of middle-market businesses and financial services providers and focused private banking needs of high-net-worth ~~individuals.~~ individuals nation-wide. The Bank has 2 wholly owned subsidiaries: TSC Equipment Finance LLC (“TSC Equipment Finance”), established to hold and manage loans and leases of our equipment finance business, and Meadowood Asset Management, LLC (“Meadowood”), established to hold and manage other real estate owned by the Bank and/or foreclosed properties for the Bank.

Chartwell provides investment management services primarily to institutional investors, mutual funds and individual investors. CTSC Securities supports marketing efforts for the proprietary investment products provided by Chartwell, including shares of mutual funds advised and/or administered by Chartwell.

~~Regulatory approval was received and the Bank commenced operations on January 22, 2007.~~ The Company and the Bank are subject to regulatory examination and supervision by the Federal Deposit Insurance Corporation (“FDIC”), the Pennsylvania Department of Banking and Securities and the Board of Governors of the Federal ~~Reserve.~~Reserve System (“Federal Reserve”). In addition, if the Bank’s consolidated total assets exceed $10 billion for four consecutive quarters, the Company and the Bank will become subject to the regulatory examination and supervision of the Consumer Financial Protection Bureau (“CFPB”) with respect to certain consumer protection laws. The Bank’s quarter-end consolidated assets exceeded $10 billion for three consecutive quarters as of September 30, 2021. Chartwell is a registered investment ~~advisor~~adviser regulated by the U.S. Securities and Exchange Commission (“SEC”). Chartwell was established through the acquisition of substantially all the assets of Chartwell Investment Partners, LP on March 5, 2014. CTSC Securities was capitalized in May 2014, and its broker/dealer registration was approved on March 7, 2017. CTSC Securities is regulated by the SEC and the Financial Industry Regulatory Authority, Inc. (“FINRA”).

The Bank conducts business through its main office located in Pittsburgh, Pennsylvania, as well as its ~~four~~4 additional representative offices in Cleveland, Ohio; Philadelphia, Pennsylvania; Edison, New Jersey; and New York, New York. Chartwell conducts business through its office located in Berwyn, Pennsylvania, and CTSC Securities conducts business through its office located in Pittsburgh, Pennsylvania.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States of America requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of related ~~revenue~~revenues and ~~expense~~expenses during the reporting period. Although our current estimates contemplate current conditions and how we expect them to change in the future, it is reasonably possible that actual conditions could be different than those anticipated in the estimates, which could materially affect the financial results of our operations and financial condition.

~~The material~~Material estimates that are particularly susceptible to significant changes relate to the determination of the allowance for ~~loan~~credit losses on loans and leases, valuation of goodwill and other intangible assets and ~~its~~their evaluation for impairment, fair value measurements and deferred income taxes and ~~its~~their related recoverability, each of which ~~are~~is discussed later in this section.

CONSOLIDATION

~~The~~Our consolidated financial statements include the accounts of the Company and its ~~wholly-owned~~wholly owned subsidiaries, the Bank, Chartwell and CTSC Securities, after elimination of inter-company accounts and transactions. The accounts of the Bank, in turn, include its ~~wholly-owned subsidiary,~~wholly owned subsidiaries, TSC Equipment Finance and Meadowood, ~~Asset Management, LLC,~~ after elimination of inter-company accounts and transactions. The unaudited condensed consolidated financial statements of the Company presented herein have been prepared pursuant to SEC rules ~~of the Securities and Exchange Commission~~ for ~~quarterly reports~~Quarterly Reports on ~~form~~Form 10-Q and do not include all of the information and note disclosures required by GAAP for a full year presentation. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) and disclosures considered necessary for the fair presentation of the accompanying unaudited condensed consolidated financial statements have been included. Interim results are not necessarily reflective of the results of the entire year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company and the related notes ~~thereto~~ for the fiscal year ended December 31, ~~2016,~~2020, included in the Company’s Annual Report on Form 10-K filed with the ~~Securities and Exchange Commission~~SEC on February ~~14, 2017.~~25, 2021.

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CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, the Company has defined cash and cash equivalents as cash, interest-earning deposits with other institutions, federal funds sold and short-term investments that have an original maturity of 90 days or less. Under agreements with certain of its derivative counterparties, the Company is required to maintain minimum cash collateral posting thresholds with such counterparties. The cash subject to these agreements is considered restricted for these purposes.

BUSINESS COMBINATIONS

The Company accounts for business combinations using the acquisition method of accounting. Under this method of accounting, the acquired company’s net assets are recorded at fair value as of the date of acquisition, and the results of operations of the acquired company are combined with our results from that date forward. Acquisition costs are expensed when incurred. The difference between the purchase price, which includes an initial measurement of any contingent earn out, and the fair value of the net assets acquired (including identified intangibles) is recorded as goodwill in the consolidated statements of financial condition. A change in the initial estimate of any contingent earn out amount is recorded to non-interest expense in the consolidated statements of income.

INVESTMENT SECURITIES

The Company’s investments are classified as either: (1) held-to-maturity, –which are debt securities that the Company intends to hold until maturity and are reported at amortized ~~cost;~~cost, net of allowance for credit losses; (2) trading, ~~securities –~~which are debt ~~and certain equity~~ securities bought and held principally for

the purpose of selling them in the near term and reported at fair value, with unrealized gains and losses included in ~~earnings; or~~non-interest income; (3) available-for-sale, –which are debt ~~and certain equity~~ securities not classified as either held-to-maturity or trading securities and reported at fair value, with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss), on an after-tax ~~basis.~~basis; or (4) equity securities, which are reported at fair value, with unrealized gains and losses included in non-interest income.

The cost of securities sold is determined on a specific identification basis. Amortization of premiums and accretion of discounts are recorded asto interest income on investments over the estimated life of the security utilizing the level yield method. ~~We evaluate impaired~~Management evaluates expected credit losses on held-to-maturity debt securities on a collective or pool basis, by investment category and credit rating. The Company measures credit losses by comparing the present value of cash flows expected to be collected to the amortized cost of the security that considers historical credit loss information, adjusted for current conditions and reasonable and supportable economic forecasts. The Company’s investment securities can be classified into the following pools based on similar risk characteristics: (1) U.S. government agencies, (2) state and local municipalities, (3) domestic corporations, including trust preferred securities, and (4) non-agency securitizations.The Company’s U.S. government agency securities are issued by U.S. government entities and agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses.For the remaining pools of securities, the credit rating of the issuers, the investment’s cash flow characteristics and the underlying instruments securitizing certain bonds are the most relevant risk characteristics of the investment portfolio.The Company’s investment policy only allows for purchases of investments with investment grade credit ratings and the Company continuously monitors for changes in credit ratings. Probability of default and loss given default rates are based on historical averages for each investment pool, adjusted to reflect the impact of a single, forward-looking forecast of certain macroeconomic variables, such as unemployment rates and interest rate spreads, which management considers to be both reasonable and supportable. The forecast of these macroeconomic variables is applied over a period of three years and reverts to historical averages over a two-year reversion period.

Management evaluates available-for-sale debt securities in an unrealized loss position quarterly ~~to determine if impairments are temporary or other-than-temporary. For impaired debt and equity securities, management~~for expected credit losses. Management first determines whether it intends to sell or if it is ~~more-likely~~more likely than not that it will be required to sell the impaired securities. This determination considers current and forecasted liquidity requirements, regulatory and capital requirements, and securities portfolio management. If the Company intends to sell aan available-for-sale security with a fair value below amortized cost or if it is ~~more-likely~~more likely than not that it will be required to sell such a security before recovery, ~~an other-than-temporary impairment (“OTTI”) charge~~the security’s amortized cost is ~~recorded~~written down to fair value through current period ~~earnings for the full decline in fair value below amortized cost.~~earnings. For available-for-sale debt securities that the Company does not intend to sell or it is more likely than not that it will not be required to sell before recovery, ~~an OTTI charge~~a provision for credit losses is recorded through current period earnings for the amount of the valuation decline below amortized cost that is attributable to credit losses. Management considers the extent to which fair value is less than amortized cost, credit ratings and other factors related to the security in assessing whether credit loss exists. The Company measures credit loss by comparing the present value of cash flows expected to be collected to the amortized cost of the security. An allowance for credit losses is measured by the difference that the present value of cash flows expected to be collected is less than the amortized cost, limited by the amount that the fair value is less than the amortized cost. The remaining difference between the security’s fair value and amortized cost (that is, the decline in fair value not attributable to credit losses) is recognized in other comprehensive income (loss), in the consolidated statements of comprehensive income and the shareholders’ equity section of the consolidated statements of financial condition, on an after-tax basis. ~~For equity securities an OTTI charge~~Changes in the allowance for credit losses are recorded as provision for credit losses. Losses are charged

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against the allowance when management believes the security is ~~recorded through current period earnings for~~uncollectible or management intends to sell or is required to sell the ~~full decline in fair value below cost.~~security.

The recognition of interest income on a debt security is discontinued when any principal or interest payment becomes 90 days past due, at which time the debt security is placed on non-accrual status. All accrued and unpaid interest on such debt security is then reversed. Accrued interest receivable is excluded from the estimate of expected credit losses.

FEDERAL HOME LOAN BANK STOCK

The ~~Company~~Bank is a member of the Federal Home Loan Bank ~~of Pittsburgh~~ (“FHLB”). of Pittsburgh. Member institutions are required to invest in FHLB stock. The stock is carried at cost, which approximates its liquidation value, and it is evaluated for impairment based on the ultimate recoverability of the par value. The following matters are considered by management when evaluating the FHLB stock for impairment: the ability of the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB; the impact of legislative and regulatory changes on the institution and its customer base; and the Company’s intent and ability to hold its FHLB stock for the foreseeable future. Management believes the Company’s holdings in the FHLB stock were recoverable at par value as of September 30, ~~2017~~2021 and December 31, ~~2016.~~2020. Cash and stock dividends are reported as interest income on investments in the consolidated statements of income.

LOANS AND LEASES

Loans and leases ~~held-for investment~~held-for-investment are stated at amortized cost. Amortized cost is the unpaid principal ~~balances,~~balance, net of deferred loan fees and costs. Loans held-for-sale are stated at the lower of cost or fair value. Interest income on loans is accrued at the contractual rate on the principal amount ~~outstanding and includes the amortization of deferred loan fees and costs.~~outstanding. Deferred loan fees and costs are amortized to interest income over the estimated life of the loan, taking into consideration scheduled payments and prepayments.

The Company considers a loan to be a ~~Troubled Debt Restructuring~~troubled debt restructuring (“TDR”) when there is a concession made to a financially troubled borrower without adequate consideration provided to the Company. The Company evaluates any loan reasonably expected to become a TDR, regardless of whether the loan is on accrual or non-accrual status. Once a loan is deemed to be a TDR, the Company considers whether the loan should be placed on non-accrual status. In assessing accrual status, the Company considers the likelihood that repayment and performance according to the original contractual terms will be achieved, as well as the borrower’s historical payment performance. A loan is designated and reported as a TDR until such loan is either ~~paid-off~~paid off or sold unless the restructuring agreement specifies an interest rate equal to or greater than the rate that would be accepted at the time of the restructuring for a new loan with comparable risk and it is fully expected that the remaining principal and interest will be collected according to the restructured agreement.

The recognition of interest income on a loan is discontinued when, in management’s opinion, it is probable the borrower is unable to meet payments as they become due or when the loan becomes 90 days past due, whichever occurs ~~first.~~first, at which time the loan is placed on non-accrual status. All accrued and unpaid interest on such loans is then reversed. ~~Such~~The interest ultimately collected is applied to reduce principal if there is doubt about the collectability of principal. If a borrower brings a loan current for which accrued interest has been reversed, then the recognition of interest income on the loan is resumed once the loan has been current for a period of six consecutive months or greater.

The Company is a party to financial instruments with off-balance sheet risk, ~~(commitments~~such as commitments to extend ~~credit)~~credit, in the normal course of business to meet the financing needs of its customers. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the ~~commitment.~~lending agreement with such customer. Commitments generally have fixed expiration dates or other termination clauses ~~(i.e. demand loans)~~(e.g., loans due on demand) and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the unfunded commitment amount does not necessarily represent future cash requirements. The Company evaluates each customer’s ~~credit worthiness~~creditworthiness on a case-by-case basis using the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The amount of collateral obtained, if deemed necessary by the Company upon extension of a commitment, is based on management’s credit evaluation of the borrower.

OTHER REAL ESTATE OWNED

Real estate owned, other than bank premises, is recorded at fair value less estimated selling costs. Fair value is determined based on an independent appraisal. Expenses related to holding the property are charged against earnings when incurred. Depreciation is not recorded on other real estate owned (“OREO”) properties.

ALLOWANCE FOR ~~LOAN~~CREDIT LOSSES ON LOANS AND LEASES

The allowance for ~~loan~~credit losses is a valuation account that is deducted from the amortized cost of loans and leases to present management’s best estimate of the net amount expected to be collected. Adjustments to the allowance for credit losses are established through provisions for ~~loan~~credit losses that are recorded in the consolidated statements of income. Loans and leases are charged off against the allowance for ~~loan~~credit losses when management believes that the principal is uncollectible. If, at a later

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time, amounts are recovered with respect to loans and leases previously charged off, the recovered amount is credited to ~~the~~ allowance for ~~loan~~credit losses. Accrued interest receivable is excluded from the estimate of expected credit losses.

The allowance for credit losses represents estimates of expected credit losses for homogeneous loan pools that share similar risk characteristics such as commercial and industrial (“C&I”) loans and leases, commercial real estate (“CRE”) loans, and private banking loans, which include consumer lines of credit and residential mortgages. The Company periodically reassesses each loan pool to ensure that the loans within the pool continue to share similar risk characteristics. Non-accrual loans and loans designated as TDRs are assessed individually using a discounted cash flow method or, where a loan is collateral dependent, based upon the fair value of the collateral less estimated selling costs.

The collateral on our private banking loans that are secured by cash, marketable securities and/or cash value life insurance is monitored daily and requires borrowers to continually replenish such collateral as a result of changes in its fair value. Therefore, it is expected that the fair value of the collateral securing each loan will exceed the loan’s amortized cost and no allowance for credit losses would be required under Accounting Standard Codification (“ASC”) 326-20-35-6, “Financial Assets Secured by Collateral Maintenance Provisions.”

In estimating the general allowance for credit losses for loans evaluated on a collective or pool basis, management considers past events, current conditions, and reasonable and supportable economic forecasts, including historical charge-offs and subsequent recoveries. Management also considers qualitative factors that influence our credit quality, including, but not limited to, delinquency and non-performing loan trends, changes in loan underwriting guidelines and credit policies, and the results of internal loan reviews. Finally, management considers the impact of changes in current and forecasted local and regional economic conditions in the markets that we serve.

Management bases the computation of the general allowance for credit losses on two factors: the primary factor and the secondary factor. The primary factor is based on the inherent risk identified by management within each of the Company’s 3 loan portfolios based on the historical loss experience of each loan portfolio. Management has developed a methodology that is applied to each of the 3 primary loan portfolios: C&I loans and leases, CRE loans and private banking loans (other than those secured by cash, marketable securities and/or cash value life insurance).

For each portfolio, management estimates expected credit losses over the life of each loan utilizing lifetime or cumulative loss rate methodology, which identifies macroeconomic factors and asset-specific characteristics that are correlated with credit loss experience, including loan age, loan type, leverage, risk rating, interest rate spread and industry. The lifetime loss rate is applied to the amortized cost of the loan. This methodology builds on default and recovery probabilities by utilizing pool-specific historical loss rates to calculate expected credit losses. These pool-specific historical loss rates may be adjusted for a forecast of certain macroeconomic variables, as further discussed below, and other factors such as differences in underwriting standards, portfolio mix, or when historical asset terms do not reflect the contractual terms of the financial assets being evaluated as of the measurement date. Each time the Company measures expected credit losses, the Company assesses the relevancy of historical loss information and considers any necessary adjustments to address any differences in asset-specific characteristics.

The allowance for credit losses represents management’s ~~judgment the allowance was appropriate to cover probable~~current estimate of expected credit losses ~~inherent~~ in the loan ~~portfolio as~~and lease portfolio. Expected credit losses are estimated over the contractual term of ~~September 30, 2017~~the loans, which includes extension or renewal options that are not unconditionally cancellable by the Company and ~~December 31, 2016.~~are adjusted for expected prepayments when appropriate. Management’s judgment takes into consideration past events, current conditions and reasonable and supportable economic forecasts including general economic conditions, diversification and seasoning of the loan portfolio, historic loss experience, identified credit problems, delinquency levels and adequacy of collateral. Although management believes it has used the best information available ~~to it~~ in making such determinations, and that the present allowance for ~~loan~~credit losses ~~is adequate,~~represents management’s best estimate of current expected credit losses, future adjustments to the allowance may be necessary, and net income may be adversely affected if circumstances differ substantially from the assumptions used in determining the level of the allowance. ~~In addition,~~

The lifetime loss rates are estimated by analyzing a combination of internal and external data related to historical performance of each loan pool over a complete economic cycle. Loss rates are based on historical averages for each loan pool, adjusted to reflect the impact of a single, forward-looking forecast of certain macroeconomic variables such as gross domestic product (“GDP”), unemployment rates, corporate bond credit spreads and commercial property values, which management considers to be both reasonable and supportable. The single, forward-looking forecast of these macroeconomic variables is applied over the remaining life of the loan pools. The development of the reasonable and supportable forecast incorporates an ~~integral~~assumption that each macroeconomic variable will revert to a long-term expectation starting in years two to four of the forecast and largely completing within the first five years of the forecast.

The secondary factor is intended to capture additional risks related to events and circumstances that management believes have an impact on the performance of the loan portfolio that are not considered as part of ~~their periodic examination, certain regulatory agencies review~~ the ~~adequacy~~primary factor. Although this factor is more

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subjective in nature, the methodology focuses on internal and external trends in pre-specified categories, or risk factors, and applies a quantitative percentage that drives the secondary factor. Nine risk factors have been identified and each risk factor is assigned an allowance level based on management’s judgment as to the expected impact of each risk factor on each loan portfolio and is monitored on a quarterly basis. As the trend in any risk factor changes, management evaluates the need for a corresponding change to occur in the allowance associated with each respective risk factor to provide the most appropriate estimate of allowance for credit losses on loans and leases.

The Company also maintains an allowance for credit losses on off-balance sheet credit exposures for unfunded loan commitments. This allowance is reflected as a component of other liabilities which represents management’s current estimate of expected losses in the unfunded loan commitments. The estimate includes consideration of the ~~Bank’s allowance for loan~~likelihood that funding will occur and an estimate of expected credit losses ~~and may direct the Bank~~on commitments expected to ~~make additions to the allowance~~be funded over its estimated life based on ~~their judgments about information available to them at~~management’s consideration of past events, current conditions and reasonable and supportable economic forecasts. Management tracks the ~~time of their examination.~~

~~The two components~~level and trends in unused commitments and takes into consideration the same factors as those considered for purposes of the allowance for ~~loan~~credit losses ~~represent estimates~~on outstanding loans. Unconditionally cancellable loans are excluded from the calculation of ~~general reserves based upon Accounting Standards Codification~~allowance for credit losses on off-balance sheet credit exposures.

Results for the nine months ended September 30, 2021 are presented under the current expected credit loss (“~~ASC”~~CECL”) methodology, in accordance with ASC Topic 326, while prior period amounts continue to be reported in accordance with ASC Topic 450, ~~Contingencies;~~ “Contingencies,” and specific reserves based upon ASC Topic 310, ~~Receivables~~. “Receivables.” ASC Topic 450 applies to homogeneous loan pools such as commercial loans, consumer lines of credit and residential mortgages that are not individually evaluated for impairment. ASC Topic 310 is applied to commercial and consumer loans that are individually evaluated for impairment.

In management’s opinion a loan is impaired, based upon current information and events, when it is probable that the loan will not be repaid according to its original contractual terms, including both principal and interest, or if a loan is designated as a TDR. Management performs individual assessments of impaired loans to determine the existence of loss exposure based upon a discounted cash flows method or where a loan is collateral dependent, based upon the fair value of the collateral less estimated selling costs.

In estimating probable loan loss of general reserves management considers numerous factors, including historical charge-offs and subsequent recoveries. Management also considers, but is not limited to, qualitative factors that influence our credit quality, such as delinquency and non-performing loan trends, changes in loan underwriting guidelines and credit policies, the results of internal loan reviews, etc. Finally, management considers the impact of changes in current local and regional economic conditions in the markets that we serve. Assessment of relevant economic factors indicates that some of the Company’s primary markets may historically tend to lag the national economy, with local economies in our primary market areas also improving or weakening, as the case may be, but at a more measured rate than the national trends.

Management bases the computation of the allowance for loan losses of general reserves on two factors: the primary factor and the secondary factor. The primary factor is based on the inherent risk identified by management within each of the Company’s three loan portfolios based on the historical loss experience of each loan portfolio and the loss emergence period. Management has developed a methodology that is applied to each of the three primary loan portfolios: private banking, commercial and industrial, and commercial real estate. As the loan loss history, mix and risk ratings of each loan portfolio change, the primary factor adjusts accordingly. The allowance for loan losses related to the primary factor is based on our estimates as to probable losses for each loan portfolio. The secondary factor is intended to capture risks related to events and circumstances that management believes have an impact on the performance of the loan portfolio. Although this factor is more subjective in nature, the methodology focuses on internal and external trends in pre-specified categories (risk factors) and applies a quantitative percentage that drives the secondary factor. There are nine risk factors and each risk factor is assigned a reserve level based on management’s judgment as to the probable impact of each risk factor on each loan portfolio and is monitored on a quarterly basis. As the trend in any risk factor changes, a corresponding change occurs in the reserve associated with each respective risk factor, such that the secondary factor remains current to changes in each loan portfolio.

The Company also maintains a reserve for losses on unfunded commitments. This reserve is reflected as a component of other liabilities and, in management’s judgment, is sufficient to cover probable losses inherent in the commitments. Management tracks the level and trends in unused commitments and takes into consideration the same factors as those considered for purposes of the allowance for loan losses on outstanding loans.

INVESTMENT MANAGEMENT FEES

The Company recognizes investment management fee revenue when ~~the~~ advisory services are performed. Fees are based on assets under management and are calculated pursuant to individual client contracts. Investment management fees are generally ~~paid~~received on a quarterly basis. Certain incremental costs incurred to acquire some of our investment management contracts are deferred and amortized to non-interest expense over the estimated life of the contract.

Investment management fees receivable represent amounts due for contractual investment management services provided to the Company’s clients, primarily institutional investors, mutual funds and individual investors. Management performs credit evaluations of its customers’ financial condition when it is deemed to be necessary and does not require collateral. The Company provides an allowance for uncollectible accounts based on specifically identified receivables. ~~Bad debt expense is recorded to other non-interest expense~~The Company has not experienced any losses on ~~the consolidated statements of income and the allowance~~receivables for ~~uncollectible accounts is recorded to~~ investment management fees receivable, net on the consolidated statements of financial position. Investment management fees receivable are considered delinquent when payment is not received within contractual terms and are charged off against the allowance for uncollectible accounts when management determines that recovery is unlikely and the Company ceases its collection efforts. There was $322,000 of bad debt expense associated with a single relationship recorded for the nine months ended September 30, ~~2017,~~2021 and 2020. The Company had no allowance for ~~uncollectible accounts~~credit losses on investment management fees as of September 30, ~~2017. There was no bad debt expense recorded for the nine months ended September 30, 2016,~~2021 and ~~there was no allowance for uncollectible accounts as of~~ December 31, ~~2016.~~2020.

~~BUSINESS COMBINATIONS~~

The Company accounts for business combinations using the acquisition method of accounting. Under this method of accounting, the acquired company’s net assets are recorded at fair value as of the date of acquisition, and the results of operations of the acquired company are combined with our results from that date forward. Acquisition costs are expensed when incurred. The difference between the purchase price and the fair value of the net assets acquired (including identified intangibles) is recorded as goodwill. The change in the initial estimate of any contingent earn out amounts is reflected in the consolidated statements of income.

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Goodwill is not amortized and is subject to at least annual assessments for impairment by applying a fair ~~value based~~value-based test. The Company reviews goodwill annually and again at any quarter-end if a material event occurs during the quarter that may affect goodwill. If goodwill testing is required, an assessment of qualitative factors can be completed before performing ~~the two step~~a goodwill impairment test. If an assessment of qualitative factors determines it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, then ~~the two step~~a goodwill impairment test is not required. ~~Goodwill is evaluated for potential impairment by determining if the fair value has fallen below carrying value.~~

Other intangible assets represent purchased assets that may lack physical substance but can be distinguished from goodwill because of contractual or other legal rights. The Company has determined that certain of its acquired mutual fund client relationships meet the criteria to be considered indefinite-lived assets because the Company expects both the renewal of these contracts and the cash flows generated by these assets to continue indefinitely. Accordingly, the Company does not amortize these intangible assets, but instead reviews these assets annually or more frequently whenever events or circumstances occur indicating that the recorded indefinite-lived assets may be impaired. Each reporting period, the Company assesses whether events or circumstances have occurred which indicate that the indefinite life criteria are no longer met. If the indefinite life criteria are no longer met, the Company ~~would assess~~assesses whether the carrying value of these assets exceeds its fair value. If the carrying value exceeds the fair value of the assets, an impairment loss ~~would be~~is recorded in an amount equal to any such excess and ~~these~~the assets ~~would be~~are reclassified to finite-lived. Other intangible assets that the Company has determined to have finite lives, such as its trade ~~name,~~names, client lists and non-compete agreements are amortized over their estimated useful lives. These finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from four to ~~twenty-five~~25 years. Finite-lived intangibles are evaluated for impairment on an annual basis or more frequently whenever events or circumstances occur indicating that the carrying amount of such assets may not be recoverable.

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OFFICE PROPERTIES AND EQUIPMENT

Office properties and equipment are stated at cost less accumulated depreciation. Office properties include furniture, fixtures and leasehold improvements. Equipment includes computer equipment and internal use software. Depreciation is computed onutilizing the straight-line method over the estimated useful lives of the related assets, except for leasehold improvements, which are amortized over the terms of the respective leases or the estimated useful lives of the improvements, whichever is shorter. Estimated useful lives are dependent upon the nature and condition of the asset and range from three to ~~ten~~10 years. Repairs and maintenance are charged to expense as incurred, while improvements that extend the useful life of the assets are capitalized and depreciated to non-interest expense over the estimated remaining life of the asset. ~~When the Bank receives an allowance~~

OPERATING LEASES

The Company is a lessee in noncancellable operating leases, primarily for ~~improvements to be made to one of~~ its ~~leased offices, we record the allowance~~office spaces and other office equipment. The Company records operating leases as a ~~deferred~~right-of-use asset and an offsetting lease liability ~~and recognize it~~in the consolidated statements of financial condition at the present value of the unpaid lease payments. The Company generally uses its incremental borrowing rate as the discount rate for operating leases. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the right-of-use asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a ~~reduction to rent expense~~straight-line basis over the ~~life of the related lease.~~lease term.

BANK OWNED LIFE INSURANCE

Bank owned life insurance (“BOLI”) policies on certain officers and employees are recorded at net cash surrender value on the consolidated statements of financial condition. Upon termination of ~~the~~a BOLI policy, the Company receives the cash surrender value.

BOLI benefits are payable to the Company upon the death of the insured. Changes in net cash surrender value are recognized as non-interest income in the consolidated statements of income.

DEPOSITS

Deposits are stated at principal outstanding. Interest on deposits is accrued and charged to interest expense daily and is paid or credited in accordance with the terms of the respective accounts.

BORROWINGS

The Company records FHLB advances, line of credit borrowings and subordinated notes payable at their principal amount, net of debt issuance costs. Interest expense is recognized based on the coupon rate of the obligations. Costs associated with the acquisition of subordinated notes payable are amortized to interest expense over the expected term of the borrowing.

~~EARNINGS PER COMMON SHARE~~

Basic earnings per common share (“EPS”) is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period, excluding non-vested restricted stock. Diluted EPS reflects the potential dilution upon the exercise of stock options and the vesting of restricted stock awards granted utilizing the treasury stock method.

INCOME TAXES

The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the tax effects of differences between the financial statement and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities with regard to a change in tax rates is recognized in income in the period that includes the enactment date. Management assesses all available evidence to determine the amount of deferred tax assets that are ~~more-likely-than-not~~more likely than not to be realized. The available evidence used in connection with the assessments includes taxable income in prior periods, projected taxable income, potential tax planning strategies and projected reversals of deferred tax items. These assessments involve a degree of subjectivity and may undergo significant change. Changes to the evidence used in the assessments could have a material adverse effect on the Company’s results of operations in the period in which they occur. The Company considers uncertain tax positions that it has taken or expects to take on a tax return. Any interest and penalties related to unrecognized tax benefits would be recognized in income tax expense in the consolidated statements of income.

EARNINGS PER COMMON SHARE

Earnings per common share (“EPS”) is computed using the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities, according to dividends and participation rights in undistributed earnings. Under this method, net earnings is reduced by the amount of dividends declared in the current period for common shareholders and participating security holders. The remaining earnings or “undistributed earnings” are allocated between common stock and participating securities to the extent that each security may share in earnings as if all the earnings for the period had been distributed.

The two-class method requires the Company’s Series C perpetual non-cumulative convertible non-voting preferred stock (the “Series C Preferred Stock”) and outstanding warrants to be treated as participating classes of securities in the computation of EPS. In addition, net income is reduced by dividends declared on all series of preferred stock to derive net income available to common

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shareholders. Basic EPS is computed by dividing net income allocable to common shareholders by the weighted average number of the Company’s common shares outstanding for the period, excluding non-vested restricted stock. Diluted EPS reflects the potential dilution upon the exercise of stock options and warrants, and the vesting of restricted stock awards granted utilizing the treasury stock method.

STOCK-BASED COMPENSATION

The Company accounts for its stock-based compensation awards based on estimated fair values of stock-based awards made to employees and directors. Compensation cost for all stock-based payments is based on the estimated grant-date fair value. The value of the portion of the award that is ultimately expected to vest is included in compensation and employee benefits expense in the consolidated statements of income and recorded as a component of additional paid-in capital. Compensation expense for all awards is recognized on a straight-line basis over the requisite service period for the entire grant.

DERIVATIVES AND HEDGING ACTIVITIES

~~The Company evaluates all~~All derivatives are evaluated at inception as to whether ~~or not~~ they are hedging or non-hedging activities. All derivatives are recognized as either assets or liabilities on the consolidated statements of financial condition and measured at fair value. For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. Any hedge ineffectiveness would be recognized in the income statement line item pertaining to the hedged item. For derivatives designated as cash flow hedges, changes in fair value of the effective portion of the cash flow hedges are reported in accumulated other comprehensive income (loss). When the cash flows associated with the hedged item are realized, the gain or loss included in accumulated other comprehensive income (loss) is recognized in the consolidated statements of income. The Company also has interest rate derivative positions that are not designated as hedging instruments. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. The Company is required to have minimum collateral posting thresholds with certain of its derivative counterparties, and this collateral is considered restricted cash.

The Company executes interest rate derivatives with its commercial banking customers to facilitate their respective risk management strategies. The Company generates swap fee income through these transactions. These derivatives are simultaneously and economically hedged by offsetting derivatives that the Company executes with a third party, such that the Company generally eliminates its interest rate exposure resulting from such transactions, and these derivatives are not designated as hedging instruments. Swap fees are based on the notional amount and weighted maturity of each individual transaction and are collected and recorded to non-interest income in the consolidated statements of income when the transaction is executed.

FAIR VALUE MEASUREMENT

Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in a principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date, using assumptions market participants would use when pricing such an asset or liability. An orderly transaction assumes exposure to the market for a customary period for marketing activities prior to the measurement date and not a forced liquidation or distressed sale. Fair value measurement and disclosure guidance provides a three-level hierarchy that prioritizes the inputs of valuation techniques used to measure fair value into three broad categories:

•Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

•Level 2 – Observable inputs such as quoted prices for similar assets and liabilities in active markets, quoted prices for similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

•Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.

Fair value ~~may~~must be recorded for certain assets and liabilities every reporting period on a recurring basis or, under certain circumstances, on a non-recurring basis.

~~STOCK-BASED COMPENSATION~~

~~The Company accounts for its stock-based compensation awards based on estimated fair values of the share-based awards made to employees and directors.~~

Compensation cost for all share-based payments is based on the estimated grant-date fair value. The value of the portion of the award that is ultimately expected to vest is included in stock-based compensation expense in the consolidated statements of income and recorded as a component of additional paid-in capital, for equity-based awards. Compensation expense for all awards is recognized on a straight-line basis over the requisite service period for the entire grant.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Unrealized holding gains and the non-credit component of unrealized losses on the Company’s ~~investment~~debt securities available-for-sale are included in accumulated other comprehensive income (loss), net of applicable income taxes. Also included in accumulated other comprehensive income (loss) is the remaining unamortized balance of the unrealized holding gains (non-credit losses), net of applicable income taxes, that existed on the transfer date for ~~investment~~debt securities reclassified into the held-to-maturity category from the available-for-sale category.

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Unrealized holding gains (losses) on the effective portion of the Company’s cash flow hedge derivatives are included in accumulated other comprehensive income (loss), net of applicable income taxes, which will be reclassified to interest expense as interest payments are made on the Company’s debt.

Income tax effects in accumulated other comprehensive income (loss) are released as investments are sold or mature and as liabilities are extinguished.

TREASURY STOCK

The repurchase of the Company’s common stock is recorded at cost. At the time of reissuance, the treasury stock account is reduced using the average cost method. Gains and losses on the reissuance of common stock are recorded in additional paid-in capital, to the extent additional paid-in capital from any previous net gains on treasury share transactions exists. Any net deficiency is charged to retained earnings.

RECENT ACCOUNTING DEVELOPMENTS

In ~~August 2017,~~July 2021, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) ~~2017-12,~~ ~~“Derivatives and Hedging~~2021-5, Leases (Topic ~~815)~~842): ~~Targeted Improvements to Accounting for Hedging Activities,”~~ which changes the recognition and presentation requirements of hedge accounting, including: eliminating the requirement to separately measure and report hedge ineffectiveness; and presenting all items that affect earnings in the same income statement line item as the hedged item. Lessors—Certain Leases with Variable Lease Payments.The standard also provides new alternatives for: applying hedge accounting to additional hedging strategies; measuring the hedged item in fair value hedges of interest rate risk; reducing the cost and complexity of applying hedge accounting by easing the requirements for effectiveness testing, hedge documentation and application of the critical terms match method; and reducing the risk of material error correction if a company applies the shortcut method inappropriately. This standard isamendments are effective for ~~public business entities, for annual and interim periods in~~ fiscal years beginning after December 15, ~~2018.~~ 2021, for all entities, and for interim periods within those fiscal years for public business entities and interim periods within fiscal years beginning after December 15, 2022, for all other entities.The amendments in this update address stakeholders’ concerns by amending the lease classification requirements for lessors to align them with practice under Topic 840.Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: (1) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria in paragraphs 842-10-25-2 through 25-3; and (2) the lessor would have otherwise recognized a day-one loss.The Company is currently evaluating the impact ~~this standard will have~~of adopting ASU 2021-05 on ~~our results of operations and~~its consolidated financial ~~position.~~statements.

In ~~May 2017,~~April 2021, the FASB issued ASU ~~2017-09,~~ ~~“Compensation-Stock Compensation (Topic 718): Scope~~2021-04, which included Topic 260: Earnings Per Share.This guidance clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of ~~Modification Accounting,”~~ ~~which clarifies what constitutes~~freestanding equity-classified written call options ("warrants") due to a ~~modification~~lack of ~~a share-based payment award. This standard~~explicit guidance in the FASB Codification. ASU 2021-04 is effective for all entities for ~~annual and interim periods in~~ fiscal years beginning after December 15, ~~2017. The~~2021.Early adoption ~~of this standard~~ is ~~not expected to have a material impact on the Company’s consolidated financial statements.~~

~~In March 2017, the FASB issued ASU 2017-08,~~ ~~“Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities,”~~ which shortens the premium amortization period for purchased non-contingently callable debt securities. Shortening the amortization period is generally expected to more closely align the interest income recognition with the expectations incorporated in the market pricing on the underlying securities. This standard is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2018. permitted.The Company is currently evaluating the impact ~~this standard will have~~of adopting ASU 2021-04 on ~~our results of operations and~~its consolidated financial ~~position.~~statements.

In January ~~2017,~~2021, the FASB issued ASU ~~2017-04,~~ ~~“Intangibles-Goodwill~~2021-01 - Reference Rate Reform (Topic 848):Scope.This ASU clarifies the scope of Topic 848 so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and ~~Other (Topic 350): Simplifying the Test~~exceptions in Topic 848.The amendments in this ASU are elective and apply to all entities that have derivative instruments that use an interest rate for ~~Goodwill Impairment,”~~ ~~which requires an entity to no longer perform~~margining, discounting, or contract price alignment that is modified as a ~~hypothetical purchase price allocation to measure goodwill impairment. Instead, impairment will be measured using the difference between the carrying amount and the fair value~~result of ~~the reporting unit.~~ reference rate reform.The ~~changes~~amendments in this ASU are effective immediately for public business entities, for annual and interim periods in fiscal years beginning after December 15, 2019. All entities may early adopt the standard for goodwill impairment tests with measurement dates after January 1, 2017. The Company is currently evaluating the impact this standard will have on our results of operations and financial position.

~~In January 2017, the FASB issued ASU 2017-03,~~ “Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016, and November 17, 2016, EITF Meetings (SEC Update),” ~~which incorporates into the FASB Accounting Standards Codification~~^® recent SEC guidance about disclosing, under SEC SAB Topic 11.M, the effect on financial statements of adopting the revenue, leases, and credit losses standards. The SEC staff had previously announced that registrants should include the disclosures starting with their December 2017 financial statements. all entities.The adoption of this ~~standard is~~guidance did not ~~expected to~~ have a material impact on the ~~Company’s~~Company's consolidated financial ~~statements.~~

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~“Business Combinations (Topic 805),”~~ which provides a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This standard is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~“Statement of Cash Flows (Topic 230): Restricted Cash,”~~ which requires companies to include cash and cash equivalents that have restrictions on withdrawal or use in total cash and cash equivalents on the statement of cash flows. This standard is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~“Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,”~~ which requires entities to recognize at the transaction date the income tax consequences of intercompany asset transfers other than inventory. This standard is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

~~In September 2016, the FASB issued ASU 2016-15,~~ ~~“Statement of Cash Flow (Topic 230): Classification of Certain Cash Receipts and Cash Payments,”~~ which addresses eight classification issues related to the statement of cash flows. The eight classification issues are as follows: debt prepayment or debt extinguishment costs; settlement of zero-coupon bonds; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This standard is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. Entities should apply this standard using a retrospective transition method to each period presented. If it is impracticable for an entity to apply this standard retrospectively for some of the issues, it may apply the amendments for those issues prospectively as of the earliest date practicable. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~“Measurement of Credit Losses on Financial Instruments,”~~ which significantly changes the way entities recognize impairment of many financial assets by requiring immediate recognition of estimated credit losses expected to occur over their remaining life. The changes are effective for public business entities that are SEC filers, for annual and interim periods in fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact this standard will have on our results of operations and financial position.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~“Leases,”~~ which, among other things, requires lessees to recognize most leases on-balance sheet. This will increase their reported assets and liabilities - in some cases very significantly. Lessor accounting remains substantially similar to current U.S. GAAP. ASU 2016-02 supersedes Topic 840, ~~Leases~~. This standard is effective for public business entities, certain not-for-profit entities, and certain employee benefit plans for annual and interim periods in fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact this standard will have on our results of operations and financial position.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~“Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,”~~ which will significantly change the income statement impact of equity investments, and the recognition of changes in fair value of financial liabilities when the fair value option is elected. This standard is effective for public business entities for interim and annual periods in fiscal years beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~“Revenue from Contracts with Customers (Topic 606).”~~ This standard implements a common approach standard that clarifies the principles for recognizing revenue. The core principle of this update is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard establishes a five-step model that

entities must follow to recognize revenue. This update is effective for annual periods and interim periods in fiscal years beginning after December 15, 2017, for public business entities. A significant amount of the Company’s revenues are derived from net interest income on financial assets and liabilities, which are excluded from the scope of the amended guidance. The Company is substantially complete with its overall assessment of revenue streams and review of related contracts potentially affected by the standard, including asset management fees, deposit related fees, interchange fees and merchant income. The Company’s assessment suggests that adoption of this standard should not materially change the method in which we currently recognize revenue for these revenue streams. The Company is also in the final stages of its evaluation of certain contract acquisition costs related to these revenue streams to determine whether such costs should be capitalized and deferred over the life of the contract. With respect to the capitalization of costs to acquire a contract,statements, but the Company ~~believes adoption of~~will consider this ~~standard will likely alter the timing, measurement and recognition of those costs in the income statement; however, the Company does not expect the impact~~guidance as contracts are transitioned from LIBOR to be material. In addition, the Company is evaluating the standard’s expanded disclosure requirements. The Company plans to adopt this standard on January 1, 2018, utilizing the modified retrospective approach with a cumulative effect adjustment to opening retained earnings, if such adjustment is deemed to be material.another reference rate.

RECLASSIFICATION

Certain items previously reported have been reclassified to conform with the current year’s reporting presentation and are considered immaterial.

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[2] INVESTMENT SECURITIES

~~Investment~~Debt securities available-for-sale and held-to-maturity were comprised of the ~~following:~~following as of September 30, 2021:


	September 30, 2021
(Dollars in thousands)	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Allowance for Credit Losses (1)		Estimated Fair Value
Debt securities available-for-sale:

Corporate bonds	$	135,711	$	1,509	$	199	$	—	$	137,021
Non-agency residential mortgage-backed securities	244,744		1		1,057		—		243,688


Trust preferred securities	18,335		445		2		—		18,778
Agency collateralized mortgage obligations	17,495		63		—		—		17,558
Agency mortgage-backed securities	125,982		38		915		—		125,105
Agency debentures	7,600		688		—		—		8,288
Municipal bonds	5,197		—		26		—		5,171
Total debt securities available-for-sale	$	555,064	$	2,744	$	2,199	$	—	$	555,609

(1)Available-for-sale debt securities are recorded on the consolidated statements of financial condition at estimated fair value, which includes allowance for credit losses, if applicable.


	September 30, 2021
(Dollars in thousands)	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Estimated Fair Value		Allowance for Credit Losses (1)
Debt securities held-to-maturity:
Corporate bonds	$	28,168	$	925	$	23	29,070		$	46
Agency debentures	37,199		659		228		37,630		—
Municipal bonds	1,270		2		—		1,272		—
Non-agency residential mortgage-backed securities	205,661		52		1,781		203,932		—
Agency mortgage-backed securities	545,877		638		7,108		539,407		—
U.S. treasury notes	39,073		—		564		38,509		—
Total debt securities held-to-maturity	$	857,248	$	2,276	$	9,704	$	849,820	$	46

(1)Held-to-maturity debt securities are recorded on the consolidated statements of financial condition at amortized cost, net of allowance for credit losses.

During the first quarter of 2021, the Company transferred $480.8 million fair value of previously designated available-for-sale agency mortgage-backed securities to held-to-maturity.

Debt securities available-for-sale and held-to-maturity were comprised of the following as of December 31, 2020:


	December 31, 2020
(Dollars in thousands)	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Allowance for Credit Losses (1)	Estimated Fair Value
Debt securities available-for-sale:

Corporate bonds	$	157,452	$	1,538	$	526	—	$	158,464
Trust preferred securities	18,228		57		198		—	18,087


Agency collateralized mortgage obligations	22,058		36		5		—	22,089
Agency mortgage-backed securities	406,741		3,595		209		—	410,127
Agency debentures	8,013		790		—		—	8,803
Total debt securities available-for-sale	$	612,492	$	6,016	$	938	—	$	617,570

(1)Available-for-sale debt securities are recorded on the consolidated statements of financial condition at estimated fair value, which includes allowance for credit losses, if applicable.

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September 30, 2017
(Dollars in thousands) Amortized
Cost Gross Unrealized
Appreciation Gross Unrealized
Depreciation Estimated
Fair Value
Investment securities available-for-sale:
Corporate bonds $ 57,571
$ 261
$ 60
$ 57,772
Trust preferred securities 17,807
871
—
18,678
Non-agency mortgage-backed securities 5,587
—
—
5,587
Non-agency collateralized loan obligations 903
—
9
894
Agency collateralized mortgage obligations 40,096
26
94
40,028
Agency mortgage-backed securities 20,197
132
125
20,204
Equity securities 8,851
—
204
8,647
Total investment securities available-for-sale 151,012
1,290
492
151,810
Investment securities held-to-maturity:
Corporate bonds 31,190
959
—
32,149
Agency debentures 1,983
16
—
1,999
Municipal bonds 25,141
316
—
25,457
Total investment securities held-to-maturity 58,314
1,291
—
59,605
Total $ 209,326
$ 2,581
$ 492
$ 211,415


	December 31, 2020
(Dollars in thousands)	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Estimated Fair Value		Allowance for Credit Losses (1)










Debt securities held-to-maturity:
Corporate bonds	$	28,672	$	566	$	1	$	29,237	$	79
Agency debentures	48,130		1,051		—		49,181		—
Municipal bonds	6,577		45		—		6,622		—
Non-agency residential mortgage-backed securities	124,152		237		217		124,172		70
Agency mortgage-backed securities	4,309		778		—		5,087		—
Total debt securities held-to-maturity	$	211,840	$	2,677	$	218	$	214,299	$	149

(1)Held-to-maturity debt securities are recorded on the consolidated statements of financial condition at amortized cost, net of allowance for credit losses.

December 31, 2016
(Dollars in thousands) Amortized
Cost Gross Unrealized
Appreciation Gross Unrealized
Depreciation Estimated
Fair Value
Investment securities available-for-sale:
Corporate bonds $ 53,902
$ 164
$ 21
$ 54,045
Trust preferred securities 17,711
159
72
17,798
Non-agency mortgage-backed securities 5,750
14
—
5,764
Non-agency collateralized loan obligations 16,234
—
54
16,180
Agency collateralized mortgage obligations 44,051
49
279
43,821
Agency mortgage-backed securities 24,107
240
198
24,149
Agency debentures 4,760
23
—
4,783
Equity securities 8,643
—
291
8,352
Total investment securities available-for-sale 175,158
649
915
174,892
Investment securities held-to-maturity:
Corporate bonds 28,693
596
30
29,259
Municipal bonds 25,247
88
96
25,239
Total investment securities held-to-maturity 53,940
684
126
54,498
Total $ 229,098
$ 1,333
$ 1,041
$ 229,390

~~The equity securities noted in the tables above consisted of a mutual fund investing in short-duration, corporate bonds.~~

Interest income on investment securities was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2021		2020		2021		2020
Taxable interest income	$	4,305	$	3,436	$	10,295	$	10,437
Non-taxable interest income	35		55		92		192
Dividend income	137		196		473		899
Total interest income on investment securities	$	4,477	$	3,687	$	10,860	$	11,528

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Taxable interest income $ 1,156
$ 1,078
$ 3,540
$ 3,067
Non-taxable interest income 113
107
339
338
Dividend income 262
215
657
552
Total interest income on investment securities $ 1,531
$ 1,400
$ 4,536
$ 3,957

As of September 30, ~~2017,~~2021, the contractual maturities of the debt securities were:


	September 30, 2021
	Available-for-Sale				Held-to-Maturity
(Dollars in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in less than one year	$	27,500	$	27,584	$	860	$	861
Due from one to five years	60,246		61,285		15,578		16,075
Due from five to ten years	57,461		57,911		98,522		98,665
Due after ten years	409,857		408,829		742,288		734,219
Total debt securities	$	555,064	$	555,609	$	857,248	$	849,820

September 30, 2017
Available-for-Sale Held-to-Maturity
(Dollars in thousands) Amortized
Cost Estimated
Fair Value Amortized
Cost Estimated
Fair Value
Due in one year or less $ 8,898
$ 8,920
$ 6,005
$ 6,199
Due from one to five years 34,576
34,812
11,564
11,681
Due from five to ten years 14,167
14,391
39,837
40,788
Due after ten years 84,520
85,040
908
937
Total debt securities $ 142,161
$ 143,163
$ 58,314
$ 59,605

The $85.0 million fair value of debt securities available-for-sale with a contractual maturity due after ten years as of September 30, 2017, included $65.2 million, or 76.6%, that are floating-rate securities. The $39.8 million amortized cost of debt securities held-to-maturity with a contractual maturity due from five to ten years as of September 30, 2017, included $17.3 million that have call provisions in one to five years that would either mature, if called, or become floating-rate securities after the call date.

Prepayments may shorten the contractual lives of the collateralized mortgage obligations, mortgage-backed securities and collateralized loan obligations.

Proceeds from the sale and call of ~~investment~~debt securities available-for-sale ~~during~~and held-to-maturity and related gross realized gains and losses were:


	Available-for-Sale				Held-to-Maturity				Available-for-Sale				Held-to-Maturity
	Three Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2021		2020		2021		2020		2021		2020		2021		2020
Proceeds from sales	$	47,001	$	64,363	$	—	$	—	$	121,711	$	120,400	$	—	$	—
Proceeds from calls	—		—		101,202		118,745		13,000		3,580		144,757		366,503
Total proceeds	$	47,001	$	64,363	$	101,202	$	118,745	$	134,711	$	123,980	$	144,757	$	366,503

Gross realized gains	$	25	$	3,740	$	27	$	4	$	123	$	3,762	$	27	$	53
Gross realized losses	—		—		19		—		1		—		19		—
Net realized gains	$	25	$	3,740	$	8	$	4	$	122	$	3,762	$	8	$	53

There were $38.5 million of debt securities held-to-maturity that were pledged as collateral for certain deposit relationships as of September 30, 2021.

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Changes in the allowance for credit losses on held-to-maturity securities were as follows for the three ~~months ended September 30, 2017~~ and ~~2016, were $0 and $1.7 million, respectively. During the three months ended September 30, 2016, net gains of $14,000 on sales were comprised of gross gains of $14,000 and gross losses of $0.~~

~~Proceeds from the sale of investment securities available-for-sale during the~~ nine months ended September 30, 2017 and 2016, were $0 and $4.7 million, respectively. Proceeds from the call and prepayments of investment securities available-for-sale during the nine months ended September 30, 2017 and 2016, were $21.7 million and $0, respectively. During the nine months ended September 30, 2017, net gains of $239,000 on calls were comprised of gross gains of $241,000 and gross losses of $2,000, which were realized and reclassified out of accumulated other comprehensive income (loss). During the nine months ended September 30, 2016, net gains of $31,000 on sales were comprised of gross gains of $34,000 and gross losses of $3,000.2021:

During the nine months ended September 30, 2017 and 2016, there were proceeds from the call of investment securities held-to-maturity of $3.0 million and $2.5 million, respectively, which had gross gains of $15,000 and $46,000, respectively, that were realized on these calls and reclassified out of accumulated other comprehensive income (loss).


	Three Months Ended September 30, 2021
(Dollars in thousands)	Corporate Bonds		Non-agency Securitizations		Municipal Bonds		Agency Debentures and Securitizations		U.S. Treasury Notes		Total
Balance, beginning of period	$	47	$	23	$	—	$	—	$	—	$	70

Provision (credit) for credit losses	(1)		(23)		—		—		—		(24)
Charge-offs	—		—		—		—		—		—
Recoveries	—		—		—		—		—		—
Balance, end of period	$	46	$	—	$	—	$	—	$	—	$	46

~~Investment securities available-for-sale of $4.2 million, as of September 30, 2017, were held in safekeeping at the FHLB and were included in the calculation of borrowing capacity.~~


	Nine Months Ended September 30, 2021
(Dollars in thousands)	Corporate Bonds		Non-agency Securitizations		Municipal Bonds		Agency Debentures and Securitizations		U.S. Treasury Notes		Total
Balance, beginning of period	$	79	$	70	$	—	$	—	$	—	$	149

Provision (credit) for credit losses	(33)		(70)		—		—		—		(103)
Charge-offs	—		—		—		—		—		—
Recoveries	—		—		—		—		—		—
Balance, end of period	$	46	$	—	$	—	$	—	$	—	$	46

The following tables show the fair value and gross unrealized losses on ~~temporarily impaired investment~~debt securities available-for-sale, ~~and held-to-maturity,~~ by investment category and length of time that the individual securities have been in a continuous unrealized loss position as of September 30, ~~2017~~2021 and December 31, ~~2016, respectively:~~2020:


	September 30, 2021
	Less than 12 Months				12 Months or More				Total
(Dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Debt securities available-for-sale:

Corporate bonds	$	9,518	$	84	$	9,886	$	115	$	19,404	$	199
Non-agency residential mortgage-backed securities	170,302		1,057		—		—		170,302		1,057


Trust preferred securities	—		—		2,373		2		2,373		2

Agency mortgage-backed securities	123,874		915		—		—		123,874		915

Municipal bonds	5,171		26		—		—		5,171		26
Temporarily impaired debt securities available-for-sale (1)	$	308,865	$	2,082	$	12,259	$	117	$	321,124	$	2,199

(1)The number of investment positions with unrealized losses totaled 22 for available-for-sale securities.


	December 31, 2020
	Less than 12 Months				12 Months or More				Total
(Dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Debt securities available-for-sale:

Corporate bonds	$	28,796	$	277	$	9,751	$	249	$	38,547	$	526
Trust preferred securities	13,313		198		—		—		13,313		198


Agency collateralized mortgage obligations	—		—		9,863		5		9,863		5
Agency mortgage-backed securities	89,931		209		—		—		89,931		209

Temporarily impaired debt securities available-for-sale (1)	$	132,040	$	684	$	19,614	$	254	$	151,654	$	938

(1)The number of investment positions with unrealized losses totaled 33 for available-for-sale securities.

September 30, 2017
Less than 12 Months 12 Months or More Total
(Dollars in thousands) Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses
Investment securities available-for-sale:
Corporate bonds $ 8,950
$ 60
$ —
$ —
$ 8,950
$ 60
Non-agency collateralized loan obligations —
—
894
9
894
9
Agency collateralized mortgage obligations 1,641
1
33,642
93
35,283
94
Agency mortgage-backed securities 9,866
117
1,092
8
10,958
125
Equity securities —
—
8,647
204
8,647
204
Total investment securities available-for-sale 20,457
178
44,275
314
64,732
492
Investment securities held-to-maturity:
Total investment securities held-to-maturity —
—
—
—
—
—
Total temporarily impaired securities ⁽¹⁾
$ 20,457
$ 178
$ 44,275
$ 314
$ 64,732
$ 492


⁽¹⁾	~~The number of investment positions with unrealized losses totaled 20 for available-for-sale securities and 0 for held-to-maturity securities.~~

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December 31, 2016
Less than 12 Months 12 Months or More Total
(Dollars in thousands) Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses
Investment securities available-for-sale:
Corporate bonds $ 10,543
$ 21
$ —
$ —
$ 10,543
$ 21
Trust preferred securities —
—
9,038
72
9,038
72
Non-agency collateralized loan obligations 6,191
50
9,990
4
16,181
54
Agency collateralized mortgage obligations 4,593
12
34,408
267
39,001
279
Agency mortgage-backed securities 12,292
198
—
—
12,292
198
Equity securities —
—
8,352
291
8,352
291
Total investment securities available-for-sale 33,619
281
61,788
634
95,407
915
Investment securities held-to-maturity:
Corporate bonds 2,492
8
1,978
22
4,470
30
Municipal bonds 12,559
96
—
—
12,559
96
Total investment securities held-to-maturity 15,051
104
1,978
22
17,029
126
Total temporarily impaired securities ⁽¹⁾
$ 48,670
$ 385
$ 63,766
$ 656
$ 112,436
$ 1,041


⁽¹⁾	~~The number of investment positions with unrealized losses totaled 30 for available-for-sale securities and 18 for held-to-maturity securities.~~

The ~~change~~changes in the fair values of our ~~municipal bonds, agency debentures,~~ agency collateralized mortgage ~~obligation~~obligations and agency mortgage-backed securities are primarily the result of interest rate fluctuations. These agency securities are either explicitly or implicitly guaranteed by the U.S. government, highly rated, and have a long history of no credit losses. To assess for credit ~~impairment,~~losses on debt securities available-for-sale in unrealized loss position, management evaluates the underlying

issuer’s financial performance and the related credit rating information through a review of publicly available financial statements and other publicly available information. ~~This~~The most recent ~~review~~assessment for credit losses did not identify any issues related to the ultimate repayment of principal and interest on these debt securities. In addition, the Company has the ability and intent to hold debt securities in an unrealized loss position until recovery of their amortized cost. Based on this, no allowance for credit losses has been recognized on debt securities available-for-sale in an unrealized loss position.

The Company monitors the credit quality of debt securities held-to-maturity including credit ratings quarterly. The following tables present the amortized costs basis of debt securities held-to-maturity by Moody’s bond credit rating.


	September 30, 2021
(Dollars in thousands)	Aaa		Aa		A		Baa		Ba		Total
Debt securities held-to-maturity:
Corporate bonds	$	—	$	—	$	—	$	28,168	$	—	$	28,168
Agency debentures	37,199		—		—		—		—		37,199
Municipal bonds	—		480		790		—		—		1,270
Non-agency residential mortgage-backed securities	205,661		—		—		—		—		205,661
Agency mortgage-backed securities	545,877		—		—		—		—		545,877
U.S. treasury notes	39,073		—		—		—		—		39,073
Total debt securities held-to-maturity	$	827,810	$	480	$	790	$	28,168	$	—	$	857,248

Accrued interest receivable of $1.6 million and $697,000 on debt securities held-to-maturity as of September 30, 2021 and December 31, 2020, respectively, was excluded from the amortized cost used in the calculation of allowance for credit losses. The Company ~~considers all~~had no debt securities held-to-maturity that were past due as of ~~the unrealized losses to be temporary impairment losses.~~September 30, 2021.

There were no ~~investment~~outstanding debt securities classified as trading ~~securities outstanding~~ as of September 30, ~~2017~~2021 and December 31, ~~2016. There was no activity~~2020.

Equity securities consisted of mutual funds investing in short-duration, investment grade corporate bonds. The investments in these securities ~~classified~~were $5.0 million and $0 as ~~trading during the nine months ended~~of September 30, ~~2017~~2021 and ~~2016.~~December 31, 2020, respectively.

There was ~~$10.8~~$11.8 million and ~~$9.6~~$13.3 million in FHLB stock outstanding as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively. ~~There were $1.2 million of net purchases in FHLB stock during the nine months ended September 30, 2017, and $570,000 of net redemptions during the nine months ended September 30, 2016.~~

[3] LOANS AND LEASES

The Company generates loans through the private banking and middle-market banking channels. ~~These channels provide risk diversification and offer significant growth opportunities.~~ The private banking channel primarily includes loans made to high-net-worth individuals, trusts and businesses that are typically secured by cash, ~~and~~ marketable ~~securities.~~securities and/or cash value life insurance. The middle-market banking channel consists of ~~our commercial~~the Company’s C&I loan and ~~industrial (“C&I”)~~lease portfolio and ~~commercial real estate (“CRE”)~~CRE loan ~~portfolios that~~portfolio, which serve middle-market businesses and real estate developers in our primary markets.

Loans and leases held-for-investment were comprised of the following:


	September 30, 2021
(Dollars in thousands)	Private Banking		Commercial and Industrial		Commercial Real Estate		Total
Loans and leases held-for-investment, before deferred fees and costs	$	6,190,874	$	1,336,331	$	2,329,762	$	9,856,967
Net deferred loan costs (fees)	13,135		4,486		(5,577)		12,044
Loans and leases held-for-investment, net of deferred fees and costs	6,204,009		1,340,817		2,324,185		9,869,011
Allowance for credit losses on loans and leases	(2,156)		(10,796)		(19,411)		(32,363)
Loans and leases held-for-investment, net	$	6,201,853	$	1,330,021	$	2,304,774	$	9,836,648

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September 30, 2017
(Dollars in thousands) Private
Banking Commercial
and
Industrial Commercial
Real Estate Total
Loans held-for-investment, before deferred fees $ 2,052,037
$ 647,910
$ 1,229,548
$ 3,929,495
Deferred loan costs (fees) 3,771
810
(3,406 ) 1,175
Loans held-for-investment, net of deferred fees 2,055,808
648,720
1,226,142
3,930,670
Allowance for loan losses (1,491 ) (9,593 ) (4,895 ) (15,979 )
Loans held-for-investment, net $ 2,054,317
$ 639,127
$ 1,221,247
$ 3,914,691


	December 31, 2020
(Dollars in thousands)	Private Banking		Commercial and Industrial		Commercial Real Estate		Total
Loans and leases held-for-investment, before deferred fees and costs	$	4,797,881	$	1,269,248	$	2,160,784	$	8,227,913
Net deferred loan costs (fees)	9,919		4,904		(5,318)		9,505
Loans and leases held-for-investment, net of deferred fees and costs	4,807,800		1,274,152		2,155,466		8,237,418
Allowance for credit losses on loans and leases	(2,047)		(5,254)		(27,329)		(34,630)
Loans and leases held-for-investment, net	$	4,805,753	$	1,268,898	$	2,128,137	$	8,202,788

December 31, 2016
(Dollars in thousands) Private
Banking Commercial
and
Industrial Commercial
Real Estate Total
Loans held-for-investment, before deferred fees $ 1,732,578
$ 587,791
$ 1,080,637
$ 3,401,006
Deferred loan costs (fees) 3,350
(368 ) (2,934 ) 48
Loans held-for-investment, net of deferred fees 1,735,928
587,423
1,077,703
3,401,054
Allowance for loan losses (1,424 ) (12,326 ) (5,012 ) (18,762 )
Loans held-for-investment, net $ 1,734,504
$ 575,097
$ 1,072,691
$ 3,382,292

The Company’s customers have unused loan commitments based on the availability of eligible collateral or other terms and conditions under ~~the~~their loan ~~agreement~~agreements. ~~Often these~~Included in unused loan commitments are ~~not~~unused availability under demand loans for our private banking lines secured by cash, marketable securities and/or cash value life insurance, as well as commitments to fund loans secured by residential properties, commercial real estate, construction loans, business lines of credit and other unused commitments of loans in various stages of funding. Not all commitments will fund or fully ~~utilized and therefore the total amount does not necessarily represent future cash requirements.~~ fund as customers often only draw on a portion of their available credit. The amount of unfunded commitments, including standby letters of credit, as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, was ~~$2.19~~$9.45 billion and ~~$1.75~~$6.73 billion, respectively. The interest rate for each commitment is based on the prevailing market conditions at the time of funding. The reserve for losses on unfunded commitments was $588,000 and $650,000 as of September 30, 2017 and December 31, 2016, respectively, which includes reserves for probable losses on unfunded loan commitments, including standby letters of credit and also risk participations.

~~The~~ total unfunded commitments above included loans in the process of origination totaling approximately ~~$45.8~~$93.8 million and ~~$59.8~~$39.6 million as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively, which extend over varying periods of time.

The Company issues standby letters of credit in the normal course of business. Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party. The Company would be required to perform under ~~the~~a standby ~~letters~~letter of credit when drawn upon by the guaranteed party in the case of non-performance by the Company’s customer.

Collateral may be obtained based on management’s credit assessment of the customer. The amount of unfunded commitments related to standby letters of credit as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, included in the total unfunded commitments above, was ~~$73.5~~$63.1 million and ~~$77.4~~$82.0 million, respectively. Should the Company be obligated to perform under ~~the~~any standby letters of credit, the Company will seek repayment from the customer for amounts paid. During the nine months ended September 30, ~~2017,~~2021 and 2020, there were ~~seven~~ draws on ~~standby~~ letters of credit totaling ~~$191,000,~~$3.5 million and $49,000, respectively, which were ~~converted to loans and subsequently~~ repaid by the borrowers. ~~During the nine months ended September 30, 2016, there was one draw on a standby letter of credit for $100,000, which was immediately repaid by the borrower.~~ Most of these commitments are expected to expire without being drawn upon and the total amount does not necessarily represent future cash requirements.

The ~~potential liability~~allowance for credit losses on off-balance-sheet credit exposures was $3.1 million and $3.4 million as of September 30, 2021 and December 31, 2020, respectively, which includes allowance for credit losses on unfunded loan commitments and standby letters of ~~credit was included in the reserve for losses on unfunded commitments.~~

credit. The Company ~~has entered into risk participation agreements with financial institution counterparties~~recorded a credit to provision on off-balance sheet exposures as liabilities of $303,000 and provision expense of $765,000 for ~~interest rate swaps related to loans in which we are a participant. The risk participation agreements provide credit protection to~~ the financial institution counterparties should the customers fail to perform on their interest rate derivative contracts. The potential liability for outstanding obligations was included in the reserve for losses on unfunded commitments.nine months ended September 30, 2021 and 2020, respectively.

[4] ALLOWANCE FOR ~~LOAN~~CREDIT LOSSES ON LOANS AND LEASES

Our allowance for ~~loan~~credit losses represents our current estimate of ~~probable loan~~expected credit losses ~~inherent~~ in the ~~loan~~ portfolio at a specific point in time. This estimate includes credit losses associated with ~~specifically identified~~ loans and leases evaluated on a collective or pool basis, as well as ~~estimated probable~~expected credit losses ~~inherent in the remainder~~ of the ~~loan portfolio. Additions are made to the allowance through both periodic provisions recorded in the consolidated statements of income~~individually evaluated loans and ~~recoveries of losses previously incurred. Reductions to the allowance occur as loans are charged off~~ ~~or when the credit history of any of the three loan portfolios improves~~.leases that do not share similar risk characteristics. Management evaluates the adequacy of the allowance at least quarterly, and in doing so relies on various factors including, but not limited to, assessment of historical loss experience, delinquency and non-accrual trends, portfolio growth, underlying collateral coverage and current economic ~~conditions.~~conditions, and economic forecasts over a reasonable and supportable period of time. This evaluation is subjective and requires material estimates that may change over time. ~~In addition, management evaluates the overall methodology for the allowance for loan losses on an annual basis.~~ The calculation of the allowance for ~~loan~~credit losses on loans and leases takes into consideration the inherent risk identified within each of the Company’s ~~three~~3 primary loan ~~portfolios: private banking, commercial~~portfolios. The lifetime loss rates are estimated by analyzing a combination of internal and ~~industrial, and commercial real estate. In addition, management takes into account the~~external data related to historical ~~loss experience~~performance of each loan ~~portfolio,~~pool over a complete economic cycle. Results for the nine months ended September 30, 2021, are presented under CECL methodology while prior period amounts continue to ~~ensure that the allowance for loan losses is sufficient to cover probable losses inherent~~be reported in ~~such loan portfolios.~~accordance with previously applicable GAAP. Refer to Note 1, Summary of Significant Accounting Policies, to our unaudited condensed consolidated financial statements for more details on the Company’s policy on allowance for ~~loan~~credit losses ~~policy.~~on loans and leases.

The following discusses key characteristics and risks within each primary loan portfolio:

Private Banking Loans

Our private banking lending ~~activities are~~business is conducted on a national basis. This loan portfolio primarily includes loans made to high-net-worth individuals, trusts and businesses that are typically secured by marketable securities, cash, and/or cash value life

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insurance. The Company actively monitors the value of the collateral securing these loans on a daily basis and ~~marketable securities.~~ requires borrowers to continually replenish such collateral as a result of changes in its fair value. Therefore, it is expected that the fair value of the collateral value securing each loan will exceed the loan’s amortized cost and no allowance for credit loss would be required under ASC 326-20-35-6, “Financial Assets Secured by Collateral Maintenance Provisions.”

This portfolio also has some loans that are secured by residential real estate or other financial assets ~~lines of credit~~ and unsecured loans. The primary sources of repayment for these loans are the income and/or assets of the borrower.

The underlying collateral is the most important indicator of risk for this loan portfolio. The overall lower risk profile of this portfolio is driven by loans secured by cash, ~~and~~ marketable securities and/or cash value life insurance, which were ~~93.9%~~98.7% and ~~91.3%~~98.6% of total private banking loans as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively.

~~Middle-Market~~Commercial Banking: Commercial and Industrial Loans and Leases

This loan portfolio primarily includes loans and leases made to financial services and other service ~~companies~~ and/or ~~manufacturers~~manufacturing companies generally for the purposes of financing production, operating capacity, accounts receivable, inventory, equipment, acquisitions ~~and~~and/or recapitalizations. Cash flow from the borrower’s operations is the primary source of repayment for these ~~loans.~~loans and leases; however, most loans are collateralized by commercial assets.

The borrower’s industry and local and regional economic conditions are important indicators of risk for this loan portfolio. Collateral for these types of loans at times does not have sufficient value in a distressed or liquidation scenario to satisfy the outstanding debt. C&I loans collateralized by ~~cash and~~ marketable securities are treated the same as private banking loans for purposes of the calculation of the allowance for ~~loan loss calculation. In addition, shared national~~ credit losses on loans ~~that also involve a private equity sponsor are combined as a homogeneous group~~ and ~~evaluated separately based on the historical loss trend of such loans.~~leases.

~~Middle-Market~~Commercial Banking: Commercial Real Estate Loans

This loan portfolio includes loans secured by commercial purpose real estate, including both ~~owner occupied~~owner-occupied properties and investment properties for various purposes including office, industrial, multifamily, retail, hospitality, healthcare and self-storage. The primary source of repayment for ~~commercial real estate~~CRE loans secured by ~~owner occupied~~owner-occupied properties is cash flow from the borrower’s operations. Individual project cash flows, global cash flows and liquidity from the developer, or the sale of the property, are the primary sources of repayment for ~~commercial real estate~~CRE loans secured by investment properties. Also included in this portfolio are commercial construction loans

to finance the construction or renovation of structures as well as to finance the acquisition and development of raw land for various purposes. The increased level of risk for these loans is generally confined to the construction period. If ~~there are~~ problems arise, the project may not be completed and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal.

The underlying ~~purpose/~~purpose and collateral of the loans ~~is an~~are important ~~indicator~~indicators of risk for this loan portfolio. Additional risks exist and are dependent on several factors such as the condition of the ~~local/~~local and regional ~~economy,~~economies, whether or not the project is ~~owner occupied,~~owner-occupied, the type of project, and the experience and resources of the developer.

On a monthly basis, management monitors various credit quality indicators for the loan portfolio, including delinquency, non-performing status, changes in risk ratings, changes in the underlying performance of the borrowers and other relevant factors. On a daily basis, the Company monitors the collateral of loans secured by cash, ~~and~~ marketable securities and/or cash value life insurance within the private banking portfolio which further reduces the risk profile of that portfolio. Refer to Note 1, Summary of Significant Accounting Policies, to our unaudited condensed consolidated financial statements for the Company’s policy for determining past due status of loans.

Loan risk ratings are assigned based upon the creditworthiness of the borrower and the quality of the collateral for loans secured by marketable securities. Loan risk ratings are reviewed on an ongoing basis according to internal ~~policies.~~policies and applicable regulatory guidance. Loans within the pass rating are believed to have a lower risk of loss than loans that are risk rated as special mention, substandard ~~and~~or doubtful, which are believed to have an increasing risk of loss. ~~Our internal risk ratings are consistent with regulatory guidance.~~ Management also monitors the loan portfolio through a formal periodic review process. All non-pass rated loans are reviewed monthly and higher risk-rated loans within the pass category are reviewed three times a year.

The Company’s risk ratings are consistent with regulatory guidance and are as follows:

Pass – ~~The~~A pass loan is currently performing in accordance with its contractual terms.

Special Mention – A special mention loan has potential weaknesses that warrant management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects or in our credit position at some future date. Economic and market conditions beyond the customer’s control may in the future necessitate this classification.

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Substandard – A substandard loan is not adequately protected by the net worth and/or paying capacity of the obligor or by the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. These loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful – A doubtful loan has all the weaknesses inherent in a loan categorized as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

The following ~~tables present~~table presents the ~~recorded investment~~amortized cost of loans by portfolio, risk rating and year of origination:


	As of September 30, 2021
(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans (1)		Total
Private Banking:
Pass	$	23,269	$	58,664	$	31,480	$	54,348	$	7,195	$	52,441	$	5,976,612	$	6,204,009
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total private banking loans	23,269		58,664		31,480		54,348		7,195		52,441		5,976,612		6,204,009
Commercial and Industrial:
Pass	129,138		185,460		177,496		47,837		40,650		26,281		709,469		1,316,331
Special mention	—		2,088		1,780		—		—		193		11,800		15,861
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		750		—		7,875		—		—		—		8,625
Total commercial and industrial loans	129,138		188,298		179,276		55,712		40,650		26,474		721,269		1,340,817
Commercial Real Estate:
Pass	359,655		537,743		511,049		363,399		198,938		275,371		59,056		2,305,211
Special mention	—		526		—		628		—		5,303		—		6,457
Substandard	—		262		5,395		—		—		6,860		—		12,517
Doubtful	—		—		—		—		—		—		—		—
Total commercial real estate loans	359,655		538,531		516,444		364,027		198,938		287,534		59,056		2,324,185
Loans and leases held-for-investment	$	512,062	$	785,493	$	727,200	$	474,087	$	246,783	$	366,449	$	6,756,937	$	9,869,011

(1)The Company had 0 revolving loans which were converted to term loans included in loans byand leases held-for-investment as of September 30, 2021.

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	As of December 31, 2020
(Dollars in thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans (1)		Total
Private Banking:
Pass	$	64,829	$	44,210	$	57,081	$	7,736	$	12,040	$	55,092	$	4,566,296	$	4,807,284
Special mention	—		—		—		—		—		—		—		—
Substandard	—		516		—		—		—		—		—		516
Doubtful	—		—		—		—		—		—		—		—
Total private banking loans	64,829		44,726		57,081		7,736		12,040		55,092		4,566,296		4,807,800
Commercial and Industrial:
Pass	216,459		223,189		88,212		44,575		9,383		20,709		651,900		1,254,427
Special mention	1,795		—		5,416		—		—		—		3,431		10,642
Substandard	750		—		7,875		—		—		—		458		9,083
Doubtful	—		—		—		—		—		—		—		—
Total commercial and industrial loans	219,004		223,189		101,503		44,575		9,383		20,709		655,789		1,274,152
Commercial Real Estate:
Pass	514,920		617,120		435,708		202,001		181,108		134,700		38,802		2,124,359
Special mention	446		5,395		4,308		—		1,186		145		—		11,480
Substandard	91		—		6,296		2,926		7,054		3,260		—		19,627
Doubtful	—		—		—		—		—		—		—		—
Total commercial real estate loans	515,457		622,515		446,312		204,927		189,348		138,105		38,802		2,155,466
Loans and leases held-for-investment	$	799,290	$	890,430	$	604,896	$	257,238	$	210,771	$	213,906	$	5,260,887	$	8,237,418

(1)The Company had 0 revolving loans which were converted to term loans included in loans and leases held-for-investment as of December 31, 2020.

Accrued interest receivable of $18.4 million and $16.4 million on loans and leases as of September 30, 2021 and December 31, 2020, respectively, was excluded from the amortized cost used in the calculation of allowance for credit ~~quality indicator:~~losses.

September 30, 2017
(Dollars in thousands) Private
Banking Commercial
and
Industrial Commercial
Real Estate Total
Pass $ 2,055,401
$ 613,584
$ 1,224,292
$ 3,893,277
Special mention —
28,607
1,850
30,457
Substandard 407
6,529
—
6,936
Loans held-for-investment $ 2,055,808
$ 648,720
$ 1,226,142
$ 3,930,670

December 31, 2016
(Dollars in thousands) Private
Banking Commercial
and
Industrial Commercial
Real Estate Total
Pass $ 1,735,404
$ 545,276
$ 1,077,703
$ 3,358,383
Special mention —
18,776
—
18,776
Substandard 524
23,371
—
23,895
Loans held-for-investment $ 1,735,928
$ 587,423
$ 1,077,703
$ 3,401,054

Changes in the allowance for ~~loan~~credit losses on loans and leases were as follows for the three ~~months ended September 30, 2017~~ and ~~2016:~~

Three Months Ended September 30, 2017
(Dollars in thousands) Private
Banking Commercial
and
Industrial Commercial
Real Estate Total
Balance, beginning of period $ 1,448
$ 9,901
$ 4,619
$ 15,968
Provision (credit) for loan losses 43
(31 ) 271
283
Charge-offs —
(413 ) —
(413 )
Recoveries —
136
5
141
Balance, end of period $ 1,491
$ 9,593
$ 4,895
$ 15,979

Three Months Ended September 30, 2016
(Dollars in thousands) Private
Banking Commercial
and
Industrial Commercial
Real Estate Total
Balance, beginning of period $ 1,502
$ 10,841
$ 4,872
$ 17,215
Provision (credit) for loan losses 85
2,548
(3,175 ) (542 )
Charge-offs —
—
—
—
Recoveries —
127
3,411
3,538
Balance, end of period $ 1,587
$ 13,516
$ 5,108
$ 20,211

~~Changes in the allowance for loan losses were as follows for the~~ nine months ended September 30, ~~2017~~2021 and ~~2016:~~2020:


	Three Months Ended September 30, 2021
(Dollars in thousands)	Private Banking		Commercial and Industrial		Commercial Real Estate		Total
Balance, beginning of period	$	2,107	$	8,969	$	21,501	$	32,577
Provision (credit) for credit losses	49		1,949		(1,974)		24
Charge-offs	—		(122)		(116)		(238)
Recoveries	—		—		—		—
Balance, end of period	$	2,156	$	10,796	$	19,411	$	32,363


	Three Months Ended September 30, 2020
(Dollars in thousands)	Private Banking		Commercial and Industrial		Commercial Real Estate		Total
Balance, beginning of period	$	2,151	$	7,546	$	13,579	$	23,276
Provision for credit losses	59		226		7,145		7,430
Charge-offs	—		—		—		—
Recoveries	—		—		—		—
Balance, end of period	$	2,210	$	7,772	$	20,724	$	30,706

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	Nine Months Ended September 30, 2017												Nine Months Ended September 30, 2021
(Dollars in thousands)	Private Banking		Commercial and Industrial			Commercial Real Estate			Total			(Dollars in thousands)	Private Banking		Commercial and Industrial		Commercial Real Estate		Total
Balance, beginning of period	$	1,424	$	12,326		$	5,012		$	18,762		Balance, beginning of period	$	2,047	$	5,254	$	27,329	$	34,630
Provision (credit) for loan losses	67		1,097			(122		)	1,042
Provision (credit) for credit losses												Provision (credit) for credit losses	109		5,750		(5,436)		423
Charge-offs	—		(4,302		)	—			(4,302		)	Charge-offs	—		(321)		(2,482)		(2,803)
Recoveries	—		472			5			477			Recoveries	—		113		—		113
Balance, end of period	$	1,491	$	9,593		$	4,895		$	15,979		Balance, end of period	$	2,156	$	10,796	$	19,411	$	32,363


	Nine Months Ended September 30, 2020
(Dollars in thousands)	Private Banking		Commercial and Industrial		Commercial Real Estate		Total
Balance, beginning of period	$	1,973	$	5,262	$	6,873	$	14,108
Provision for credit losses	408		2,169		13,851		16,428
Charge-offs	(171)		—		—		(171)
Recoveries	—		341		—		341
Balance, end of period	$	2,210	$	7,772	$	20,724	$	30,706

Nine Months Ended September 30, 2016
(Dollars in thousands) Private
Banking Commercial
and
Industrial Commercial
Real Estate Total
Balance, beginning of period $ 1,566
$ 11,064
$ 5,344
$ 17,974
Provision (credit) for loan losses 21
3,286
(3,647 ) (340 )
Charge-offs —
(1,542 ) —
(1,542 )
Recoveries —
708
3,411
4,119
Balance, end of period $ 1,587
$ 13,516
$ 5,108
$ 20,211

The following tables present the age analysis of past due loans and leases segregated by ~~class of loan:~~class:


	September 30, 2021
(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total
Private banking	$	299	$	2,398	$	—	$	2,697	$	6,201,312	$	6,204,009
Commercial and industrial	—		—		8,625		8,625		1,332,192		1,340,817
Commercial real estate	—		—		—		—		2,324,185		2,324,185
Loans and leases held-for-investment	$	299	$	2,398	$	8,625	$	11,322	$	9,857,689	$	9,869,011


	September 30, 2017													December 31, 2020
(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Loans Past Due 90 Days or More		Total Past Due		Current		Total		(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total
Private banking	$	—	$	—	$	—	$	—	$	2,055,808	$	2,055,808	Private banking	$	250	$	—	$	—	$	250	$	4,807,550	$	4,807,800
Commercial and industrial	—		—		97		97		648,623		648,720		Commercial and industrial	—		—		458		458		1,273,694		1,274,152
Commercial real estate	—		—		—		—		1,226,142		1,226,142		Commercial real estate	2,926		—		6,296		9,222		2,146,244		2,155,466
Loans held-for-investment	$	—	$	—	$	97	$	97	$	3,930,573	$	3,930,670
Loans and leases held-for-investment													Loans and leases held-for-investment	$	3,176	$	—	$	6,754	$	9,930	$	8,227,488	$	8,237,418

December 31, 2016
(Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Loans Past Due 90 Days or More Total Past Due Current Total
Private banking $ —
$ —
$ 224
$ 224
$ 1,735,704
$ 1,735,928
Commercial and industrial —
—
—
—
587,423
587,423
Commercial real estate —
—
—
—
1,077,703
1,077,703
Loans held-for-investment $ —
$ —
$ 224
$ 224
$ 3,400,830
$ 3,401,054

~~Non-Performing and Impaired~~Individually Evaluated Loans

Management monitors the delinquency status of the Company’s loan portfolio on a monthly basis. Loans are considered non-performing when interest and principal ~~were~~are 90 days or more past due or management has determined that it is probable the borrower is unable to meet payments as they become due. The risk of loss is generally highest for non-performing loans.

~~Management determines loans to be impaired when, based upon current information and events, it is probable that the loan will not be repaid according to the original contractual terms~~

Table of the loan agreement, including both principal and interest, or if a loan is designated as a TDR. Refer to Note 1, Summary of Significant Accounting Policies, for the Company’s policy on evaluating loans for impairment and interest income.Contents

The following tables present the Company’s ~~investment in~~amortized cost of individually evaluated loans ~~considered to be impaired~~ and related information on those ~~impaired loans:~~loans as of and for the nine months ended September 30, 2021 and as of and for the twelve months ended December 31, 2020:


	As of and for the Nine Months Ended September 30, 2021
(Dollars in thousands)	Amortized Cost		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With a related allowance recorded:
Private banking	$	—	$	—	$	—	$	—	$	—
Commercial and industrial	8,625		8,625		6,900		8,625		—
Commercial real estate	—		—		—		—		—
Total with a related allowance recorded	8,625		8,625		6,900		8,625		—
Without a related allowance recorded:
Private banking	—		—		—		—		—
Commercial and industrial	—		—		—		—		—
Commercial real estate	—		—		—		—		—
Total without a related allowance recorded	—		—		—		—		—
Total:
Private banking	—		—		—		—		—
Commercial and industrial	8,625		8,625		6,900		8,625		—
Commercial real estate	—		—		—		—		—
Total	$	8,625	$	8,625	$	6,900	$	8,625	$	—


	As of and for the Nine Months Ended September 30, 2017											As of and for the Twelve Months Ended December 31, 2020
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		(Dollars in thousands)	Amortized Cost		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With a related allowance recorded:											With a related allowance recorded:
Private banking	$	407	$	575	$	407	$	457	$	—	Private banking	$	—	$	—	$	—	$	—	$	—
Commercial and industrial	6,433		6,997		3,197		6,687		—		Commercial and industrial	458		457		103		458		—
Commercial real estate	—		—		—		—		—		Commercial real estate	9,222		9,251		1,885		9,222		—
Total with a related allowance recorded	6,840		7,572		3,604		7,144		—		Total with a related allowance recorded	9,680		9,708		1,988		9,680		—
Without a related allowance recorded:											Without a related allowance recorded:
Private banking	—		—		—		—		—		Private banking	—		—		—		—		—
Commercial and industrial	3,545		16,111		—		5,932		92		Commercial and industrial	—		—		—		—		—
Commercial real estate	—		—		—		—		—		Commercial real estate	—		—		—		—		—
Total without a related allowance recorded	3,545		16,111		—		5,932		92		Total without a related allowance recorded	—		—		—		—		—
Total:											Total:
Private banking	407		575		407		457		—		Private banking	—		—		—		—		—
Commercial and industrial	9,978		23,108		3,197		12,619		92		Commercial and industrial	458		457		103		458		—
Commercial real estate	—		—		—		—		—		Commercial real estate	9,222		9,251		1,885		9,222		—
Total	$	10,385	$	23,683	$	3,604	$	13,076	$	92	Total	$	9,680	$	9,708	$	1,988	$	9,680	$	—

As of and for the Twelve Months Ended December 31, 2016
(Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized
With a related allowance recorded:
Private banking $ 517
$ 656
$ 517
$ 592
$ —
Commercial and industrial 17,273
26,126
6,422
19,158
—
Commercial real estate —
—
—
—
—
Total with a related allowance recorded 17,790
26,782
6,939
19,750
—
Without a related allowance recorded:
Private banking —
—
—
—
—
Commercial and industrial 471
487
—
485
26
Commercial real estate —
—
—
—
—
Total without a related allowance recorded 471
487
—
485
26
Total:
Private banking 517
656
517
592
—
Commercial and industrial 17,744
26,613
6,422
19,643
26
Commercial real estate —
—
—
—
—
Total $ 18,261
$ 27,269
$ 6,939
$ 20,235
$ 26

~~Impaired~~Individually evaluated loans were $8.6 million and $9.7 million as of September 30, ~~2017~~2021 and December 31, ~~2016, were $10.4 million and $18.3 million,~~2020, respectively. There was no interest income recognized on ~~these~~individually evaluated loans ~~while~~that were also on non-accrual status for the nine months ended September 30, ~~2017,~~2021, and the twelve months ended December 31, ~~2016.~~2020. As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, there were no loans 90 days or more past due and still accruing interest income.

~~Impaired~~The Company estimates allowance for credit losses individually for loans ~~were evaluated~~that do not share similar risk characteristics, including non-accrual loans and loans designated as TDRs, using a discounted cash flow method or based on the fair value of the collateral less estimated selling costs. Based on those evaluations, there were specific reserves totaling ~~$3.6~~$6.9 million and ~~$6.9~~$2.0 million as of September 30, ~~2017~~2021 and December 31, ~~2016.~~2020, respectively. Refer to Note 1, Summary of Significant Accounting Policies, to our unaudited condensed consolidated financial statements for the Company’s policy on evaluating loans for expected credit losses and interest income.

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The following tables present the allowance for ~~loan~~credit losses on loans and ~~recorded investment in loans by class:~~leases and amortized costs of individually evaluated loans:


	September 30, 2021
(Dollars in thousands)	Private Banking		Commercial and Industrial		Commercial Real Estate		Total
Allowance for credit losses on loans and leases:
Individually evaluated for impairment	$	—	$	6,900	$	—	$	6,900
Collectively evaluated for impairment	2,156		3,896		19,411		25,463
Total allowance for credit losses on loans and leases	$	2,156	$	10,796	$	19,411	$	32,363
Loans and leases held-for-investment:
Individually evaluated for impairment	$	—	$	8,625	$	—	$	8,625
Collectively evaluated for impairment	6,204,009		1,332,192		2,324,185		9,860,386
Loans and leases held-for-investment	$	6,204,009	$	1,340,817	$	2,324,185	$	9,869,011


	September 30, 2017									December 31, 2020
(Dollars in thousands)	Private Banking		Commercial and Industrial		Commercial Real Estate		Total		(Dollars in thousands)	Private Banking		Commercial and Industrial		Commercial Real Estate		Total
Allowance for loan losses:
Allowance for credit losses on loans and leases:									Allowance for credit losses on loans and leases:
Individually evaluated for impairment	$	407	$	3,197	$	—	$	3,604	Individually evaluated for impairment	$	—	$	103	$	1,885	$	1,988
Collectively evaluated for impairment	1,084		6,396		4,895		12,375		Collectively evaluated for impairment	2,047		5,151		25,444		32,642
Total allowance for loan losses	$	1,491	$	9,593	$	4,895	$	15,979
Loans held-for-investment:
Total allowance for credit losses on loans and leases									Total allowance for credit losses on loans and leases	$	2,047	$	5,254	$	27,329	$	34,630
Loans and leases held-for-investment:									Loans and leases held-for-investment:
Individually evaluated for impairment	$	407	$	9,978	$	—	$	10,385	Individually evaluated for impairment	$	—	$	458	$	9,222	$	9,680
Collectively evaluated for impairment	2,055,401		638,742		1,226,142		3,920,285		Collectively evaluated for impairment	4,807,800		1,273,694		2,146,244		8,227,738
Loans held-for-investment	$	2,055,808	$	648,720	$	1,226,142	$	3,930,670
Loans and leases held-for-investment									Loans and leases held-for-investment	$	4,807,800	$	1,274,152	$	2,155,466	$	8,237,418

December 31, 2016
(Dollars in thousands) Private
Banking Commercial
and
Industrial Commercial
Real Estate Total
Allowance for loan losses:
Individually evaluated for impairment $ 517
$ 6,422
$ —
$ 6,939
Collectively evaluated for impairment 907
5,904
5,012
11,823
Total allowance for loan losses $ 1,424
$ 12,326
$ 5,012
$ 18,762
Loans held-for-investment:
Individually evaluated for impairment $ 517
$ 17,744
$ —
$ 18,261
Collectively evaluated for impairment 1,735,411
569,679
1,077,703
3,382,793
Loans held-for-investment $ 1,735,928
$ 587,423
$ 1,077,703
$ 3,401,054

Troubled Debt Restructuring

The ~~following table provides additional information on the Company’s~~aggregate recorded investment of impaired loans ~~designated as~~with terms modified through a troubled debt ~~restructurings:~~

(Dollars in thousands) September 30,
2017 December 31,
2016
Aggregate recorded investment of impaired loans with terms modified through a troubled debt restructuring:
Performing loans accruing interest $ 3,449
$ 471
Non-accrual loans 6,936
17,273
Total troubled debt restructurings $ 10,385
$ 17,744

~~There were unused commitments of $1.0~~restructuring was $0 and $2.9 million ~~on these loans~~ as of September 30, ~~2017, of~~2021 and December 31, 2020, respectively, which ~~$704,000 was related to a performing TDR.~~were also on non-accrual status. There were no unused commitments ~~of $121,000~~ on ~~these~~ loans designated as TDRs as of September 30, 2021 and December 31, ~~2016, of which $7,000 was related to a performing TDR.~~2020, respectively.

The modifications made to restructured loans typically consist of an extension of the payment terms or the deferral of principal payments. There were no loans modified as ~~a TDR~~TDRs within ~~twelve~~12 months of the corresponding balance sheet date with a payment ~~default~~defaults during the nine months ended September 30, ~~2017,~~2021 and 2020.

There were no loans ~~modified~~newly designated as ~~a TDR within twelve months of the corresponding balance sheet date with a payment default~~TDRs during the ~~nine~~three months ended September 30, ~~2016.~~

2021. The financial effects of our modifications made to loans newly designated as TDRs during ~~three~~the nine months ended September 30, ~~2017 and 2016,~~2021, were as follows:


	Three Months Ended September 30, 2017										Nine Months Ended September 30, 2021
(Dollars in thousands)	Count	Recorded Investment at the time of Modification		Current Recorded Investment		Allowance for Loan Losses at the time of Modification		Current Allowance for Loan Losses		(Dollars in thousands)	Count	Recorded Investment at the time of Modification		Current Recorded Investment		Allowance for Credit Losses on Loans and Leases at the time of Modification		Current Allowance for Credit Losses on Loans and Leases
Private banking:
Extended term, deferred principal and reduced interest rate	2	$	433	$	407	$	433	$	407
Commercial Real Estate:										Commercial Real Estate:
Extended term, deferred principal										Extended term, deferred principal	2	$	4,454	$	—	$	445	$	—
Total	2	$	433	$	407	$	433	$	407	Total	2	$	4,454	$	—	$	445	$	—

Three Months Ended September 30, 2016
(Dollars in thousands) Count Recorded Investment at the time of Modification Current Recorded Investment Allowance for Loan Losses at the time of Modification Current Allowance for Loan Losses
Commercial and industrial:
Extended term and deferred principal 1 $ 7,160
$ 7,181
$ 1,360
$ 1,360
Total 1 $ 7,160
$ 7,181
$ 1,360
$ 1,360

~~The financial effects of modifications made to~~There were no loans newly designated as TDRs during the three and nine months ended September 30, ~~2017 and 2016, were as follows:~~2020.

Nine Months Ended September 30, 2017
(Dollars in thousands) Count Recorded Investment at the time of Modification Current Recorded Investment Allowance for Loan Losses at the time of Modification Current Allowance for Loan Losses
Private banking:
Extended term, deferred principal and reduced interest rate 2 $ 433
$ 407
$ 433
$ 407
Total 2 $ 433
$ 407
$ 433
$ 407

Nine Months Ended September 30, 2016
(Dollars in thousands) Count Recorded Investment at the time of Modification Current Recorded Investment Allowance for Loan Losses at the time of Modification Current Allowance for Loan Losses
Commercial and industrial:
Extended term and deferred principal 1 $ 7,160
$ 7,181
$ 1,360
$ 1,360
Total 1 $ 7,160
$ 7,181
$ 1,360
$ 1,360

Other Real Estate Owned

As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, the balance of ~~the other real estate owned portfolio~~OREO was ~~$3.6~~$2.2 million and ~~$4.2~~$2.7 million, respectively. ~~Properties were sold~~The change in the OREO balance from ~~other real estate owned totaling $597,000 with~~December 31, 2020 was attributable to a $155,000 write-down on an OREO property and $351,000 in

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proceeds from the sale of an OREO property. The net ~~gains~~loss from the sale of ~~$141,000 realized~~OREO was $39,000 during the nine months ended September 30, ~~2017.~~2021. There were no residential mortgage loans that were in the process of foreclosure as of September 30, ~~2017.~~2021.

[5] DEPOSITS

As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, deposits were comprised of the following:


	Interest Rate Range	Weighted Average Interest Rate		Balance
(Dollars in thousands)	September 30, 2021	September 30, 2021	December 31, 2020	September 30, 2021		December 31, 2020
Demand and savings accounts:
Noninterest-bearing checking accounts	—	—	—	$	593,342	$	456,426
Interest-bearing checking accounts	0.05 to 1.70%	0.38%	0.38%	4,057,005		3,068,834
Money market deposit accounts	0.08 to 3.25%	0.41%	0.56%	5,220,946		3,927,797
Total demand and savings accounts				9,871,293		7,453,057
Certificates of deposit	0.02 to 3.15%	0.41%	1.08%	884,848		1,036,032
Total deposits				$	10,756,141	$	8,489,089
Weighted average rate on interest-bearing accounts		0.40%	0.56%

Interest Rate
Range Weighted Average
Interest Rate Balance
(Dollars in thousands) September 30,
2017 September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016
Demand and savings accounts:
Noninterest-bearing checking accounts — — — $ 209,982
$ 230,226
Interest-bearing checking accounts 0.05 to 1.50% 1.26% 0.56% 403,348
218,984
Money market deposit accounts 0.10 to 1.63% 1.24% 0.82% 2,108,324
1,938,707
Total demand and savings accounts 2,721,654
2,387,917
Certificates of deposit 0.80 to 1.94% 1.32% 0.95% 1,048,216
898,862
Total deposits $ 3,769,870
$ 3,286,779
Weighted average rate on interest-bearing accounts 1.27% 0.84%

As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, the Bank had total brokered deposits of $1.07 billion and ~~$1.06 billion,~~$753.3 million, respectively. ~~The amount for brokered~~Reciprocal deposits ~~includes reciprocal~~through Certificate of Deposit Account Registry Service^® (“CDARS^®”) and ~~reciprocal~~ Insured Cash Sweep^® (“ICS^®”) ~~accounts totaling $645.5 million~~totaled $2.09 billion and ~~$448.1 million~~$1.72 billion as of September 30, ~~2017~~2021 and December 31, ~~2016, respectively.~~2020, respectively, and were not considered brokered deposits.

As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, certificates of deposit with balances of $100,000 or more, excluding brokered and reciprocal deposits, ~~amounted to $457.9~~totaled $529.5 million and ~~$441.1~~$534.3 million, respectively. ~~Certificates~~As of September 30, 2021 and December 31, 2020, certificates of deposit with balances of $250,000 or more, excluding brokered and reciprocal deposits, ~~amounted to $192.3~~totaled $152.9 million and ~~$178.1 million as of September 30, 2017 and December 31, 2016, respectively.~~$159.6 million.

The contractual maturity of certificates of deposit was as follows:


(Dollars in thousands)	September 30, 2021		December 31, 2020
12 months or less	$	756,573	$	892,427
12 months to 24 months	112,316		132,443
24 months to 36 months	15,959		11,162



Total	$	884,848	$	1,036,032

(Dollars in thousands) September 30,
2017 December 31,
2016
12 months or less $ 935,943
$ 751,204
12 months to 24 months 88,208
121,011
24 months to 36 months 24,065
26,647
36 months to 48 months —
—
48 months to 60 months —
—
Over 60 months —
—
Total $ 1,048,216
$ 898,862

Interest expense on deposits was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2021		2020		2021		2020
Interest-bearing checking accounts	$	3,682	$	3,280	$	9,689	$	11,213
Money market deposit accounts	5,794		6,944		17,395		28,975
Certificates of deposit	1,004		3,674		4,256		16,907
Total interest expense on deposits	$	10,480	$	13,898	$	31,340	$	57,095

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Interest-bearing checking accounts $ 1,173
$ 234
$ 2,295
$ 541
Money market deposit accounts 6,263
3,017
15,511
7,847
Certificates of deposit 3,168
1,936
8,007
5,540
Total interest expense on deposits $ 10,604
$ 5,187
$ 25,813
$ 13,928

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[6] BORROWINGS

As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, borrowings were comprised of the following:


	September 30, 2021				December 31, 2020
(Dollars in thousands)	Interest Rate	Ending Balance		Maturity Date	Interest Rate	Ending Balance		Maturity Date
FHLB borrowings:

Issued 9/20/2021	0.26%	$	50,000	12/20/2021	—%	$	—
Issued 9/2/2021	0.34%	50,000		12/2/2021	—%	—
Issued 9/1/2021	0.31%	150,000		12/1/2021	—%	—
Issued 12/21/2020	—%	—			0.39%	50,000		3/22/2021
Issued 12/2/2020	—%	—			0.33%	50,000		3/2/2021
Issued 12/1/2020	—%	—			0.33%	150,000		3/1/2021
Issued 10/8/2020	—%	—			0.39%	50,000		1/8/2021
Line of credit borrowings	4.00%	10,000		2/18/2022	4.25%	5,000		10/17/2021
Subordinated notes payable (net of debt issuance costs of $1,846 and $2,007, respectively)	5.75%	95,654		5/15/2030	5.75%	95,493		5/15/2030
Total borrowings, net		$	355,654			$	400,493

September 30, 2017 December 31, 2016
(Dollars in thousands) Interest Rate Ending Balance Maturity Date Interest Rate Ending Balance Maturity Date
FHLB borrowings:
Issued 9/29/2017 1.30% $ 140,000
10/2/2017
$ —

Issued 9/29/2017 1.33% 100,000
12/29/2017
—

Issued 12/30/2016
—

0.77% 105,000
1/3/2017
Issued 12/29/2016
—

0.85% 100,000
3/29/2017
Line of credit borrowings 4.24% 4,500
12/28/2017
—

Subordinated notes payable (net of debt issuance costs of $338 and $490) 5.75% 34,662
7/1/2019 5.75% 34,510
7/1/2019
Total borrowings, net $ 279,162
$ 239,510

In 2020, the Company completed underwritten public offerings of subordinated notes due 2030, raising aggregate proceeds of $97.5 million. The subordinated notes have a term of 10 years at a fixed-to-floating rate of 5.75%. The subordinated notes constitute Tier 2 capital for the Company under federal regulatory capital rules.

The Bank’s FHLB borrowing capacity is based on the collateral value of certain securities held in safekeeping at the FHLB, if applicable, and loans pledged to the FHLB. The Bank submits a quarterly ~~Qualified~~Qualifying Collateral Report (“QCR”) to the FHLB to update the value of the loans pledged. As of September 30, ~~2017,~~2021, the Bank’s borrowing capacity is based on the information provided in ~~the~~its June 30, ~~2017,~~2021 QCR filing. As of September 30, ~~2017,~~2021, the Bank had ~~securities held in safekeeping at the FHLB with a fair value of $4.2 million, combined with~~ pledged loans of ~~$1.07~~$1.46 billion with the FHLB, for a gross borrowing capacity of ~~$761.8 million,~~$1.04 billion, of which ~~$240.0~~$250.0 million was outstanding in ~~advances, as reflected in the table above.~~advances. As of December 31, ~~2016,~~2020, there was ~~$205.0~~$300.0 million outstanding in advances from the FHLB. When the Bank borrows from the FHLB, interest is charged at the FHLB’s posted rates at the time of the borrowing.

The Bank maintains an unsecured line of credit of $10.0 million with M&T Bank and an unsecured line of credit of $20.0 million with Texas Capital Bank. As of September 30, ~~2017, the full amount~~2021 and December 31, 2020, there were no outstanding borrowings under these lines of ~~these established lines were~~credit, and they are available to the ~~Bank.~~Bank at the lenders’ discretion. In addition, the Bank maintains an $8.0 million unsecured line of credit with PNC Bank for private label credit card facilities for certain existing commercial clients of the Bank, of which $3.3 million in notional value of credit cards have been issued. The clients of the Bank are responsible for repaying any balances due on these credit cards directly to PNC; however, if the customer fails to repay PNC, the Bank could be required to satisfy the obligation to PNC and initiate collection from its customer as part of the existing credit facility of that customer. On August 16, 2021, the Bank entered into a standby letter of credit with PNC Bank for $643,000, which expires on August 16, 2022, for benefit of the lessor of our New York office space in lieu of a security deposit.

The ~~Holding~~ Company maintains an unsecured line of credit of ~~$25.0~~$75.0 million with The Huntington National Bank. As of September 30, 2021, there was $10.0 million in outstanding borrowings under this line of credit. As of December 31, 2020, the Company held an unsecured line of credit of $75.0 million with Texas Capital Bank and had $5.0 million in outstanding borrowings under this line of ~~which $4.5 million was outstanding as~~credit. The Company repaid these borrowings at Texas Capital Bank and subsequently terminated this line of ~~September 30, 2017, as reflected in the table above.~~credit on February 18, 2021.

In June 2014, the Company completed a private placement of subordinated notes payable, raising $35.0 million. The subordinated notes have a term of 5 years at a fixed rate of 5.75%. The proceeds qualified as Tier 2 capital for the holding company, under federal regulatory capital rules.

Interest expense on borrowings was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2021		2020		2021		2020
FHLB borrowings	$	1,102	$	1,392	$	3,256	$	4,711
Line of credit borrowings	—		—		55		261
Subordinated notes payable	1,456		1,458		4,366		2,138
Total interest expense on borrowings	$	2,558	$	2,850	$	7,677	$	7,110

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
FHLB borrowings $ 790
$ 480
$ 2,360
$ 1,191
Line of credit borrowings 22
—
39
—
Subordinated notes payable 554
554
1,661
1,661
Total interest expense on borrowings $ 1,366
$ 1,034
$ 4,060
$ 2,852

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[7] STOCK TRANSACTIONS

On December 30, 2020, the Company completed the private placement of securities pursuant to an Investment Agreement, dated October 10, 2020 and amended December 9, 2020, with T-VIII PubOpps LP (“T-VIII PubOpps”), an affiliate of investment funds managed by Stone Point Capital LLC. Pursuant to the Investment Agreement, the Company sold to T-VIII PubOpps (i) 2,770,083 shares of voting common stock for $40.0 million, (ii) 650 shares of Series C Preferred Stock for $65.0 million, and (iii) warrants to purchase up to 922,438 shares of voting common stock, or non-voting common stock at an exercise price of $17.50 per share. After two years, the Series C Preferred Stock is convertible into shares of non-voting common stock or, when transferred under certain limited circumstances to a holder other than an affiliate of Stone Point Capital LLC, voting common stock, at a price of 13.75 per share. The Series C Preferred Stock has a liquidation preference of $100,000 per share, and pays a quarterly dividend at an annualized rate of 6.75%. The Company received gross proceeds of $105.0 million at closing, and may receive up to an additional $16.1 million if the warrants are exercised in full. The net proceeds were recorded to shareholders’ equity at December 31, 2020, and allocated to the 3 equity instruments issued using the relative fair value method applied to common stock, preferred stock and the warrants issued, which were recorded to additional paid-in capital. The net proceeds constitute Tier 1 capital for the Company under federal regulatory capital rules.

During the nine months ended September 30, 2021 and 2020, the Company paid dividends of $5.9 million on its 6.75% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock, no par value (the “Series A Preferred Stock”) and its 6.375% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred Stock, no par value (the “Series B Preferred Stock”). During the nine months ended September 30, 2021, a stock dividend of 22 shares of the Company’s Series C Preferred Stock was paid in kind, as well as cash paid in lieu of a fractional share.

Under authorization by the Board of Directors of the Company (“Board”), the Company is permitted to repurchase its common stock up to prescribed amounts, of which $7.3 million remained available as of September 30, 2021. The Board also authorized the Company to utilize some of the share repurchase program authorizations to cancel certain options to purchase shares of its common stock granted by the Company.

During the nine months ended September 30, 2021, treasury shares increased 99,946, or approximately $2.0 million, in connection with the net settlement of equity awards exercised or vested. During the nine months ended September 30, 2020, the Company repurchased 40,000 shares of common stock for approximately $670,000, at an average cost of $16.76 per share, which shares are held as treasury stock. In addition to the shares purchased in the market, treasury shares increased 126,148, or approximately $2.7 million, in connection with the net settlement of equity awards exercised or vested during the nine months ended September 30, 2020.

Under prior authorization of the Board, stock option cancellation programs were approved to allow for certain outstanding and vested stock option awards to be canceled by the option holder at a price based on the closing day’s stock price less the option exercise price. During the nine months ended September 30, 2020, there were 212,447 options canceled for approximately $2.5 million, which was recorded as a reduction to additional paid-in capital.

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The tables below show the changes in the Company’s preferred and common shares outstanding during the periods indicated:


	Number of Preferred Shares Outstanding	Number of Common Shares Outstanding	Number of Treasury Shares
Balance, December 31, 2019	120,750	29,355,986	2,126,422


Issuance of restricted common stock	—	607,323	—
Forfeitures of restricted common stock	—	(11,018)	—
Exercise of stock options	—	33,500	—
Purchase of treasury stock	—	(40,000)	40,000
Increase in treasury stock related to equity awards	—	(126,148)	126,148
Reissuance of treasury stock	—	8,500	(8,500)
Balance, September 30, 2020	120,750	29,828,143	2,284,070

Balance, December 31, 2020	121,400	32,620,150	2,299,422


Issuance of restricted common stock	—	595,886	—
Forfeitures of restricted common stock	—	(12,047)	—
Preferred stock dividend	22	—	—
Exercise of stock options	—	50,300	—

Increase in treasury stock related to equity awards	—	(99,946)	99,946

Balance, September 30, 2021	121,422	33,154,343	2,399,368

[8] REGULATORY CAPITAL

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory – and possibly additional discretionary – actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the tables below) of Common Equity Tier 1 (“CET 1”), capital, Tier 1 capital and Total ~~risk-based~~ capital ~~(as~~(each as defined in the regulations) to risk-weighted assets (as ~~defined)~~defined in the regulations), and of Tier 1 capital to average assets (as ~~defined)~~defined in the regulations). As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, TriState Capital Holdings, Inc. and TriState Capital Bank exceeded all capital adequacy requirements to which they were ~~subjected.~~subject.

~~Financial~~Insured depository institutions are categorized as well capitalized if they meet minimum capital ratios as set forth in the tables below. The Bank exceeded the capital ratios necessary to be well capitalized under the regulatory framework for prompt corrective action. There have been no conditions or events since the filing of the most recent Call Report for the period ending September 30, 2021 that management believes have materially changed the Bank’s capital, as presented in the tables below.

Basel III, which began phasing in on January 1, 2015, has replaced the existing regulatory capital rules for the Company and the Bank. The Basel III final rules required new minimum capital ratio standards, established a new common equity tier 1 to total risk-weighted assets ratio, subjected banking organizations to certain limitations on capital distributions and discretionary bonus payments, and established a new standardized approach for risk weightings.

~~The final rules subject a~~A banking organization is also subject to certain limitations on capital distributions and discretionary bonus payments to executive officers if the organization does not maintain athe necessary capital conservation buffer of ~~risk-based~~CET 1 capital ~~ratios in an amount greater than~~to risk-weighted assets ratio of 2.5% of its total risk-weighted assets. The implementation of the capital conservation buffer began on January 1, 2016, at 0.625% and will be phased in over a four-year period (increasing by that amount ratably on each subsequent January 1, until it reaches 2.5% on January 1, 2019). As of September 30, 2017 and December 31, 2016, the capital conservation buffer was 1.25% and 0.625%, respectively,or more, in addition to the minimum risk-based capital adequacy levels shown in the tables below. ~~Thus, both~~Both the Company and the Bank were above the levels required to avoid limitations on capital distributions and discretionary bonus payments.

In 2020, U.S. federal regulatory authorities issued a final rule that provides banking organizations that adopt CECL during the 2020 calendar year with the option to delay the impact of CECL on regulatory capital for up to two years, beginning January 1, 2020, followed by a three-year transition period. As the Company adopted CECL on December 31, 2020, the Company elected to utilize the remainder of the two-year delay of CECL’s impact on its regulatory capital, from December 31, 2020 through December 31, 2021, followed by the three-year transition period of CECL impact on regulatory capital, from January 1, 2022 through December 31, 2024.

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The following tables set forth certain information concerning the Company’s and the Bank’s regulatory capital as of September 30, ~~2017~~2021 and December 31, ~~2016:~~2020:


	September 30, 2021
	Actual				For Capital Adequacy Purposes				To be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital ratio
Company	$	889,197	13.71	%	$	518,882	8.00	%	N/A		N/A
Bank	$	864,503	13.38	%	$	516,720	8.00	%	$	645,900	10.00	%
Tier 1 risk-based capital ratio
Company	$	764,932	11.79	%	$	389,162	6.00	%	N/A		N/A
Bank	$	835,892	12.94	%	$	387,540	6.00	%	$	516,720	8.00	%
Common equity tier 1 risk-based capital ratio
Company	$	584,489	9.01	%	$	291,871	4.50	%	N/A		N/A
Bank	$	835,892	12.94	%	$	290,655	4.50	%	$	419,835	6.50	%
Tier 1 leverage ratio
Company	$	764,932	6.61	%	$	462,757	4.00	%	N/A		N/A
Bank	$	835,892	7.24	%	$	461,884	4.00	%	$	577,355	5.00	%


	December 31, 2020
	Actual				For Capital Adequacy Purposes				To be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital ratio
Company	$	833,819	14.12	%	$	472,267	8.00	%	N/A		N/A
Bank	$	789,273	13.41	%	$	470,820	8.00	%	$	588,525	10.00	%
Tier 1 risk-based capital ratio
Company	$	707,711	11.99	%	$	354,200	6.00	%	N/A		N/A
Bank	$	758,658	12.89	%	$	353,115	6.00	%	$	470,820	8.00	%
Common equity tier 1 risk-based capital ratio
Company	$	530,568	8.99	%	$	265,650	4.50	%	N/A		N/A
Bank	$	758,658	12.89	%	$	264,836	4.50	%	$	382,542	6.50	%
Tier 1 leverage ratio
Company	$	707,711	7.29	%	$	388,408	4.00	%	N/A		N/A
Bank	$	758,658	7.83	%	$	387,626	4.00	%	$	484,533	5.00	%

September 30, 2017
Actual For Capital Adequacy Purposes To be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio
Total risk-based capital ratio
Company $ 335,178
11.80 % $ 227,240
8.00 % N/A
N/A
Bank $ 337,652
12.01 % $ 224,901
8.00 % $ 281,126
10.00 %
Tier 1 risk-based capital ratio
Company $ 316,300
11.14 % $ 170,430
6.00 % N/A
N/A
Bank $ 325,304
11.57 % $ 168,675
6.00 % $ 224,901
8.00 %
Common equity tier 1 risk-based capital ratio
Company $ 316,300
11.14 % $ 127,822
4.50 % N/A
N/A
Bank $ 325,304
11.57 % $ 126,507
4.50 % $ 182,732
6.50 %
Tier 1 leverage ratio
Company $ 316,300
7.40 % $ 170,901
4.00 % N/A
N/A
Bank $ 325,304
7.66 % $ 169,861
4.00 % $ 212,326
5.00 %

December 31, 2016
Actual For Capital Adequacy Purposes To be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio
Total risk-based capital ratio
Company $ 325,122
12.66 % $ 205,488
8.00 % N/A
N/A
Bank $ 314,419
12.39 % $ 203,030
8.00 % $ 253,787
10.00 %
Tier 1 risk-based capital ratio
Company $ 295,089
11.49 % $ 154,116
6.00 % N/A
N/A
Bank $ 298,093
11.75 % $ 152,272
6.00 % $ 203,030
8.00 %
Common equity tier 1 risk-based capital ratio
Company $ 295,089
11.49 % $ 115,587
4.50 % N/A
N/A
Bank $ 298,093
11.75 % $ 114,204
4.50 % $ 164,962
6.50 %
Tier 1 leverage ratio
Company $ 295,089
7.90 % $ 149,369
4.00 % N/A
N/A
Bank $ 298,093
8.04 % $ 148,252
4.00 % $ 185,316
5.00 %

~~[8] EMPLOYEE BENEFIT PLANS~~

~~The Company participates in a qualified 401(k) defined contribution plan, under which eligible employees may contribute a percentage~~Table of their salary at their discretion. During the nine months ended September 30, 2017 and 2016, the Company automatically contributed three percent of the eligible employee’s base salary to the individual’s 401(k) plan, subject to IRS limitations. Full-time employees and certain part-time employees are eligible to participate upon the first month following their first day of employment or having attained the age of 21, whichever is later. The Company’s contribution expense was $218,000 and $204,000 for the three months ended September 30, 2017 and 2016, respectively. The Company’s contribution expense was $660,000 and $606,000 for the nine months ended September 30, 2017 and 2016, respectively.Contents

On February 28, 2013, the Company entered into a supplemental executive retirement plan (“SERP”) for the Chairman and Chief Executive Officer. The benefits will be earned over a five-year period with the projected payments for this SERP of $25,000 per month for 180 months commencing the later of retirement or 60 months. For the three and nine months ended September 30, 2017, the Company recorded expense related to SERP of $123,000 and $390,000, respectively, utilizing a discount rate of 3.59%. For the three and nine months ended September 30, 2016, the Company recorded expense related to SERP of $233,000 and $687,000, utilizing a discount rate

~~of 2.15%. The recorded liability related to the SERP plan was $3.4 million and $3.0 million as of September 30, 2017 and December 31, 2016, respectively.~~

[9] ~~STOCK TRANSACTIONS~~

Under recent programs authorized by the Board of Directors, the Company was permitted to repurchase up to $20 million of its common stock, of which $2.2 million remained available as of September 30, 2017.

During the nine months ended September 30, 2017, the Company repurchased a total of 281,556 shares for approximately $6.5 million, at an average cost of $23.00 per share, which are held as treasury stock. During the nine months ended September 30, 2016, the Company repurchased a total of 334,275 shares for approximately $4.3 million, at an average cost of $12.89 per share, which are held as treasury stock.

~~The tables below show the changes in the Company’s common shares outstanding during the periods indicated:~~



	~~Number of~~ ~~Common Shares~~ ~~Outstanding~~
~~Balance, December 31, 2015~~	~~28,056,195~~
~~Issuance of restricted common stock~~	~~460,309~~
~~Forfeitures of restricted common stock~~	~~(4,575~~	)
~~Exercise of stock options~~	~~139,500~~
~~Purchase of treasury stock~~	~~(334,275~~	)
~~Balance, September 30, 2016~~	~~28,317,154~~

~~Balance, December 31, 2016~~	~~28,415,654~~
~~Issuance of restricted common stock~~	~~369,175~~
~~Forfeitures of restricted common stock~~	—
~~Exercise of stock options~~	~~139,300~~
~~Purchase of treasury stock~~	~~(281,556~~	)
~~Balance, September 30, 2017~~	~~28,642,573~~

~~[10]~~ EARNINGS PER COMMON SHARE

The computation of basic and diluted earnings per common share for the periods presented ~~was~~were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands, except per share data) 2017 2016 2017 2016

Net income available to common shareholders $ 10,032
$ 8,454
$ 25,945
$ 21,070
Weighted average common shares outstanding:
Basic 27,515,923
27,514,724
27,581,229
27,586,816
Restricted stock - dilutive 661,086
290,326
616,742
206,289
Stock options - dilutive 482,981
502,582
523,776
483,118
Diluted 28,659,990
28,307,632
28,721,747
28,276,223

Earnings per common share:
Basic $ 0.36
$ 0.31
$ 0.94
$ 0.76
Diluted $ 0.35
$ 0.30
$ 0.90
$ 0.75


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands, except per share data)	2021		2020		2021		2020

Basic earnings per common share:
Net income	$	20,016	$	9,329	$	54,996	$	32,624
Less: Preferred dividends on Series A and Series B	1,963		1,962		5,887		5,886
Less: Preferred dividends on Series C	1,134		—		3,346		—
Net income available to common shareholders	$	16,919	$	7,367	$	45,763	$	26,738

Allocation of net income available:
Common shareholders	$	14,274	$	7,367	$	38,679	$	26,738
Series C convertible preferred shareholders	2,225		—		5,944		—
Warrant shareholders	420		—		1,140		—
Total	$	16,919	$	7,367	$	45,763	$	26,738

Basic weighted average common shares outstanding:
Basic common shares	31,357,356		28,286,250		31,287,924		28,230,180
Series C convertible preferred stock, as-if converted	4,887,272		—		4,807,858		—
Warrants, as-if exercised	922,438		—		922,438		—

Basic earnings per common share	$	0.46	$	0.26	$	1.24	$	0.95

Diluted earnings per common share:
Income available to common shareholders after allocation	$	14,274	$	7,367	$	38,679	$	26,738

Diluted weighted average common shares outstanding:
Basic common shares	31,357,356		28,286,250		31,287,924		28,230,180
Restricted stock - dilutive	664,729		303,138		884,714		313,726
Stock options - dilutive	124,137		85,055		144,229		135,377
Diluted common shares	32,146,222		28,674,443		32,316,867		28,679,283

Diluted earnings per common share	$	0.44	$	0.26	$	1.20	$	0.93

	Three Months Ended September 30,				Nine Months Ended September 30,
Anti-dilutive shares:	2021		2020		2021		2020
Restricted stock	10,750		785,762		11,500		566,498
Stock options	—		5,500		—		—
Series C convertible preferred stock, as-if converted	4,887,272		—		4,887,272		—
Warrants, as-if exercised	922,438		—		922,438		—
Total anti-dilutive shares	5,820,460		791,262		5,821,210		566,498

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Anti-dilutive shares ⁽¹⁾
—
31,500
—
180,000


⁽¹⁾	~~Included stock options and restricted stock not considered for the calculation of diluted EPS as their inclusion would have been anti-dilutive.~~

The Series C convertible preferred stock and warrants are anti-dilutive under the treasury stock method compared to the basic EPS calculation under the two-class method.

[~~11]~~10] DERIVATIVES AND HEDGING ACTIVITY

RISK MANAGEMENT OBJECTIVE OF USING DERIVATIVES

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources, and duration of its debt funding and through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash ~~receipts~~payments related to certain of the Company’s ~~fixed-rate loan assets~~FHLB borrowings and ~~differences in~~to manage the ~~amount, timing, and duration~~volatility of the ~~Company's known or expected cash payments~~change in fair value related to certain of the ~~Company's FHLB borrowings.~~Company’s equity investments. The Company also has derivatives that are a result of a service the Company provides to certain qualifying ~~customers while at~~customers.

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When providing this service, the ~~same time the~~ Company generally enters into an offsetting derivative transaction in order to eliminate its interest rate risk exposure resulting from such transactions.

FAIR VALUES OF DERIVATIVE INSTRUMENTS ON THE STATEMENTS OF FINANCIAL CONDITION

The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the unaudited condensed consolidated statements of financial condition as of September 30, ~~2017~~2021 and December 31, ~~2016:~~2020:

Asset Derivatives

Liability Derivatives

as of September 30, 2021

(Dollars in thousands)

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate products

Other assets

276

Other liabilities

4,786

Derivatives not designated as hedging instruments:

Interest rate products

Other assets

100,718

Other liabilities

100,727

Total

Other assets

100,994

Other liabilities

105,513

Asset Derivatives

Liability Derivatives

Asset Derivatives

Liability Derivatives

as of September 30, 2017

as of December 31, 2020

(Dollars in thousands)

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

(Dollars in thousands)

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate products

Other assets

1,448

Other liabilities

Interest rate products

Other assets

—

Other liabilities

9,082

Derivatives not designated as hedging instruments:

Interest rate products

Other assets

11,870

Other liabilities

12,038

Interest rate products

Other assets

144,333

Other liabilities

144,351

Total

Other assets

13,318

Other liabilities

12,062

Total

Other assets

144,333

Other liabilities

153,433

Asset Derivatives Liability Derivatives
as of December 31, 2016 as of December 31, 2016
(Dollars in thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Derivatives designated as hedging instruments:
Interest rate products Other assets $ 1,793
Other liabilities $ 80
Derivatives not designated as hedging instruments:
Interest rate products Other assets 10,324
Other liabilities 10,529

Total Other assets $ 12,117
Other liabilities $ 10,609

The following tables show the impact legally enforceable master netting agreements had on the Company’s derivative financial instruments as of September 30, ~~2017:~~2021 and December 31, 2020:


	Offsetting of Derivative Assets
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position				Net Amount

(Dollars in thousands)							Financial Instruments		Cash Collateral Received
September 30, 2021	$	100,994	$	—	$	100,994	$	(10,560)	$	—	$	90,434

December 31, 2020	$	144,333	$	—	$	144,333	$	(94)	$	—	$	144,239

Offsetting of Derivative Assets
September 30, 2017
Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets
presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position Net Amount

(Dollars in thousands) Financial Instruments Cash Collateral Received
Derivatives $ 13,318
$ —
$ 13,318
$ (5,070 ) $ —
$ 8,248


	Offsetting of Derivative Liabilities
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position				Net Amount

(Dollars in thousands)							Financial Instruments		Cash Collateral Posted
September 30, 2021	$	105,513	$	—	$	105,513	$	(10,560)	$	(80,719)	$	14,234

December 31, 2020	$	153,433	$	—	$	153,433	$	(94)	$	(150,238)	$	3,101

Offsetting of Derivative Liabilities
September 30, 2017
Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Liabilities
presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position Net Amount

(Dollars in thousands) Financial Instruments Cash Collateral Posted
Derivatives $ 12,062
$ —
$ 12,062
$ (5,070 ) $ (2,871 ) $ 4,121

~~FAIR VALUE HEDGES OF INTEREST RATE RISK~~

The Company is exposed to changes in the fair value of certain of its fixed-rate obligations due to changes in benchmark interest rates, which relate predominantly to LIBOR. Interest rate swaps designated as fair value hedges involve the receipt of variable-rate payments from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount. As of September 30, 2017, the Company had four interest rate swaps, with an aggregate notional amount of $2.5 million that were designated as fair value hedges of interest rate risk associated with the Company’s fixed-rate loan assets. The notional amounts for the derivatives express the face amount of the positions and credit risk was considered insignificant for nine months ended September 30, 2017 and 2016. There were no counterparty default losses on derivatives for the nine months ended September 30, 2017 and 2016.

For the four derivatives that were designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in earnings by applying the “fair value long haul” method. The Company includes the gain or loss on the hedged items in the same line item as the offsetting loss or gain on the related derivatives.

~~The table below presents the effect of the Company’s fair value hedge instruments in the consolidated statements of income:~~

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Derivatives designated as hedging instruments: Location of Gain (Loss) Recognized in Income on Derivative Amount of Gain (Loss) Recognized in Income on Derivative Amount of Gain (Loss) Recognized in Income on Derivative
Interest rate products Interest income $ (15 ) $ (24 ) $ (46 ) $ (71 )
Interest rate products Non-interest income 1
—
4
2
Total $ (14 ) $ (24 ) $ (42 ) $ (69 )

CASH FLOW HEDGES OF INTEREST RATE RISK

The Company’s objectives in using certain interest rate derivatives are to add stability to net interest ~~expense~~income and to manage its exposure to interest rate movements. To accomplish ~~this objective,~~these objectives, the Company primarily uses interest rate swaps as part of its

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interest rate risk management strategy. ~~In June 2016, the~~The Company has entered into derivative contracts to hedge the variable cash flows associated with certain FHLB borrowings. These interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company effectively making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. The Company’s cash flow hedge derivatives did not have any hedge ineffectiveness recognized in earnings during the nine months ended September 30, ~~2017.~~2021.

AsCharacteristics of the Company’s interest rate derivative transactions designated as cash flow hedges of interest rate risk as of September 30, ~~2017,~~2021, were as follows:


(Dollars in thousands)	Notional Amount		Effective Rate (1)	Estimated Increase/ (Decrease) to Interest Expense in the Next Twelve Months		Maturity Date	Remaining Term (in Months)
Interest rate products:

Issued 5/30/2019	$	50,000	2.05%	$	641	6/1/2022	8
Issued 5/30/2019	50,000		2.03%	942		6/1/2023	20
Issued 5/30/2019	50,000		2.04%	948		6/1/2024	32
Issued 3/2/2020	50,000		0.98%	410		3/2/2025	41
Issued 3/20/2020	50,000		0.60%	219		3/20/2025	42
Total	$	250,000		$	3,160

(1)The effective rate is adjusted for the ~~Company had two outstanding interest~~difference between the three-month FHLB advance rate ~~derivatives with an aggregate notional amount of $100.0 million that was designated as a cash flow hedge of interest rate risk. During the three~~ and ~~nine months ended September 30, 2017, an unrealized net gain of $86,000 and net loss of $70,000, respectively, was recognized in accumulated other comprehensive income (loss) on~~three-month LIBOR.

The tables below present the effective portion of the derivative. During the three and nine months ended September 30, 2016, an unrealized net gain of $626,000 and $538,000, respectively, was recognized in accumulated other comprehensive income (loss) on the effective portion of the derivative.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s debt. During the next twelve months, the Company estimates $719,000 to be reclassified

~~to earnings as a decrease to interest expense. The Company is hedging its exposure to the variability in future cash flows for forecasted transactions over a remaining period of 21 months.~~

~~The table below presents the effect~~ of the Company’s cash flow hedge instruments in the unaudited condensed consolidated statements of ~~income:~~income and accumulated other comprehensive income (loss):


		Three Months Ended September 30,				Three Months Ended September 30,
(Dollars in thousands)		2021		2020		2021		2020
Derivatives designated as hedging instruments:	Location of Gain (Loss) Recognized in Income on Derivatives	Realized Gain (Loss) Recognized in Income on Derivatives				Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income on Derivatives
Interest rate products	Interest expense	$	(903)	$	(1,028)	$	(74)	$	32

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Derivatives designated as hedging instruments: Location of Gain (Loss) Recognized in Income on Derivative Amount of Gain (Loss) Recognized in Income on Derivative Amount of Gain (Loss) Recognized in Income on Derivative
Interest rate products Interest expense $ 120
$ (46 ) $ 243
$ (46 )
Total $ 120
$ (46 ) $ 243
$ (46 )


		Nine Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)		2021		2020		2021		2020
Derivatives designated as hedging instruments:	Location of Gain (Loss) Recognized in Income on Derivatives	Realized Gain (Loss) Recognized in Income on Derivatives				Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income on Derivatives
Interest rate products	Interest expense	$	(2,616)	$	(1,647)	$	1,733	$	(9,258)

NON-DESIGNATED HEDGES

The Company does not use derivatives for trading or speculative purposes. Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. The Company executes interest rate derivatives with its commercial and private banking customers to facilitate their respective risk management strategies. Those derivatives are simultaneously and economically hedged by offsetting derivatives that the Company executes with a third party, such that the Company generally eliminates its interest rate exposure resulting from such transactions. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. As of September 30, ~~2017,~~2021, the Company had ~~294~~interest rate derivative transactions with an aggregate notional amount of ~~$1.30~~$4.55 billion related to this program.

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The table below presents the effect of the Company’s non-designated hedge instruments in the unaudited condensed consolidated statements of income:


		Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)		2021		2020		2021		2020
Derivatives not designated as hedging instruments:	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives				Amount of Gain (Loss) Recognized in Income on Derivatives
Interest rate products	Non-interest income	$	10	$	14	$	33	$	(51)

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Derivatives not designated as hedging instruments: Location of Gain (Loss) Recognized in Income on Derivative Amount of Gain (Loss) Recognized in Income on Derivative Amount of Gain (Loss) Recognized in Income on Derivative
Interest rate products Non-interest income $ (25 ) $ 62
$ 175
$ (777 )
Total $ (25 ) $ 62
$ 175
$ (777 )

CREDIT-RISK-RELATED CONTINGENT FEATURES

The Company has agreements with each of its derivative counterparties that contain a provision where, if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.

The Company has agreements with certain of its derivative counterparties that contain a provision where, if either the Company or the counterparty fails to maintain its status as a ~~well/~~well-capitalized or adequately capitalized institution, then the Company or the counterparty could be required to terminate any outstanding derivative positions and settle its obligations under the agreement.

As of September 30, ~~2017,~~2021, the termination value of derivatives for which wethe Company had master netting arrangements with the counterparty and in a net liability position was ~~$2.7~~$81.2 million, including accrued interest. As of September 30, ~~2017,~~2021, the Company has minimum collateral posting thresholds with certain of its derivative counterparties and has posted collateral of ~~$4.9 million.~~$88.5 million which is considered restricted cash. If the Company had breached any of these provisions as of September 30, ~~2017,~~2021, it could have been required to settle its obligations under the agreements at their termination value.

[~~12]~~11] DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value estimates of financial instruments are based on the present value of expected future cash flows, quoted market prices of similar financial instruments, if available, and other valuation techniques. These valuations are significantly affected by discount rates, cash flow assumptions and risk assumptions used. Therefore, fair value estimates may not be substantiated by comparison to independent markets and are not intended to reflect the proceeds that may be realized in an immediate settlement of instruments. Accordingly, the aggregate fair value amounts presented below do not represent the underlying value of the Company.

FAIR VALUE MEASUREMENTS

In accordance with U.S. GAAP, the Company must account for certain financial assets and liabilities at fair value on a recurring and non-recurring basis. The Company utilizes a three-level fair value hierarchy of valuation techniques to estimate the fair value of its financial assets and liabilities based on whether the inputs to those valuation techniques are observable or unobservable. The fair value hierarchy gives the highest priority to quoted prices with readily available independent data in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable market inputs (Level 3). When various inputs for measurement fall within multiple levels of the fair value hierarchy, the lowest level input that has a significant impact on fair value measurement is used.

Financial assets and liabilities are categorized based upon the following characteristics or inputs to the valuation techniques:

•Level 1 – Financial assets and liabilities for which inputs are observable and are obtained from reliable quoted prices for identical assets or liabilities in actively traded markets. This is the most reliable fair value measurement and includes, for example, active exchange-traded equity securities.

•Level 2 – Financial assets and liabilities for which values are based on quoted prices in markets that are not active or for which values are based on similar assets or liabilities that are actively traded. Level 2 also includes pricing models in which the inputs are corroborated by market data, for example, matrix pricing.

•Level 3 – Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Level 3 inputs include assumptions of a source independent of the reporting entity or the reporting entity’s own assumptions that are supported by little or no market activity or observable inputs.

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The Company is responsible for the valuation process and as part of this process may use data from outside sources in establishing fair value. The Company performs due diligence to understand the inputs used or how the data was calculated or ~~derived. The Company~~derived and corroborates the reasonableness of external inputs in the valuation process.

RECURRING FAIR VALUE MEASUREMENTS

The following tables represent assets and liabilities measured at fair value on a recurring basis as of September 30, ~~2017~~2021 and December 31, ~~2016:~~2020:


	September 30, 2021
(Dollars in thousands)	Level 1		Level 2		Level 3		Total Assets / Liabilities at Fair Value
Financial assets:
Debt securities available-for-sale:

Corporate bonds	$	—	$	137,021	$	—	$	137,021
Non-agency residential mortgage-backed securities	—		243,688		—		243,688
Trust preferred securities	—		18,778		—		18,778
Agency collateralized mortgage obligations	—		17,558		—		17,558
Agency mortgage-backed securities	—		125,105		—		125,105
Agency debentures	—		8,288		—		8,288
Municipal bonds	—		5,171		—		5,171
Equity securities	5,000		—		—		5,000
Interest rate swaps	—		100,994		—		100,994

Total financial assets	5,000		656,603		—		661,603

Financial liabilities:
Interest rate swaps	—		105,513		—		105,513


Total financial liabilities	$	—	$	105,513	$	—	$	105,513


	September 30, 2017									December 31, 2020
(Dollars in thousands)	Level 1		Level 2		Level 3		Total Assets / Liabilities at Fair Value		(Dollars in thousands)	Level 1		Level 2		Level 3		Total Assets / Liabilities at Fair Value
Financial assets:									Financial assets:
Investment securities available-for-sale:
Debt securities available-for-sale:									Debt securities available-for-sale:

Corporate bonds	$	—	$	57,772	$	—	$	57,772	Corporate bonds	$	—	$	158,464	$	—	$	158,464
Trust preferred securities	—		18,678		—		18,678		Trust preferred securities	—		18,087		—		18,087
Non-agency mortgage-backed securities	—		5,587		—		5,587
Non-agency collateralized loan obligations	—		894		—		894

Agency collateralized mortgage obligations	—		40,028		—		40,028		Agency collateralized mortgage obligations	—		22,089		—		22,089
Agency mortgage-backed securities	—		20,204		—		20,204		Agency mortgage-backed securities	—		410,127		—		410,127
Equity securities	8,647		—		—		8,647
Agency debentures									Agency debentures	—		8,803		—		8,803

Interest rate swaps	—		13,318		—		13,318		Interest rate swaps	—		144,333		—		144,333

Total financial assets	8,647		156,481		—		165,128		Total financial assets	—		761,903		—		761,903

Financial liabilities:									Financial liabilities:
Interest rate swaps	—		12,062		—		12,062		Interest rate swaps	—		153,433		—		153,433

Total financial liabilities	$	—	$	12,062	$	—	$	12,062	Total financial liabilities	$	—	$	153,433	$	—	$	153,433

December 31, 2016
(Dollars in thousands) Level 1 Level 2 Level 3 Total Assets /
Liabilities
at Fair Value
Financial assets:
Investment securities available-for-sale:
Corporate bonds $ —
$ 54,045
$ —
$ 54,045
Trust preferred securities —
17,798
—
17,798
Non-agency mortgage-backed securities —
5,764
—
5,764
Non-agency collateralized loan obligations —
16,180
—
16,180
Agency collateralized mortgage obligations —
43,821
—
43,821
Agency mortgage-backed securities —
24,149
—
24,149
Agency debentures —
4,783
—
4,783
Equity securities 8,352
—
—
8,352
Interest rate swaps —
12,117
—
12,117
Total financial assets 8,352
178,657
—
187,009

Financial liabilities:
Interest rate swaps —
10,609
—
10,609
Total financial liabilities $ —
$ 10,609
$ —
$ 10,609

INVESTMENT SECURITIES

Generally, debt securities are valued using pricing for similar securities, recently executed transactions, and other pricing models utilizing observable inputs and therefore are classified as Level 2. Equity securities (including mutual funds) are classified as Level 1 because these securities are in actively traded markets.

INTEREST RATE SWAPS

The fair value of interest rate swaps is estimated using inputs that are observable or that can be corroborated by observable market data and therefore are classified as Level 2. These fair value estimations include primarily market observable inputs such as the forward LIBOR swap curve.

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NON-RECURRING FAIR VALUE MEASUREMENTS

Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

The following tables represent the balances of assets measured at fair value on a non-recurring basis as of September 30, ~~2017~~2021 and December 31, ~~2016:~~2020:


	September 30, 2021
(Dollars in thousands)	Level 1		Level 2		Level 3		Total Assets at Fair Value
Loans measured for impairment, net	$	—	$	—	$	1,725	$	1,725
Other real estate owned	—		—		2,178		2,178
Total assets	$	—	$	—	$	3,903	$	3,903


	September 30, 2017									December 31, 2020
(Dollars in thousands)	Level 1		Level 2		Level 3		Total Assets at Fair Value		(Dollars in thousands)	Level 1		Level 2		Level 3		Total Assets at Fair Value
Loans measured for impairment, net	$	—	$	—	$	6,781	$	6,781	Loans measured for impairment, net	$	—	$	—	$	7,692	$	7,692
Other real estate owned	—		—		3,581		3,581		Other real estate owned	—		—		2,724		2,724
Total assets	$	—	$	—	$	10,362	$	10,362	Total assets	$	—	$	—	$	10,416	$	10,416

December 31, 2016
(Dollars in thousands) Level 1 Level 2 Level 3 Total Assets
at Fair Value
Loans measured for impairment, net $ —
$ —
$ 10,851
$ 10,851
Other real estate owned —
—
4,178
4,178
Total assets $ —
$ —
$ 15,029
$ 15,029

As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, the Company recorded ~~$3.6~~$6.9 million and ~~$6.9~~$2.0 million, respectively, of specific reserves to allowance for ~~loan~~credit losses on loans and leases as a result of adjusting the fair value of impaired loans.

~~IMPAIRED~~INDIVIDUALLY EVALUATED LOANS

~~A loan is considered impaired when management determines it is probable~~The Company evaluates individually loans that ~~all of the principal~~do not share similar risk characteristics, including non-accrual loans and ~~interest due under the original terms of the loan may not be collected or if a loan is~~loans designated as ~~a TDR. Impairment~~TDRs. Specific allowance for credit losses is measured based on a market approach, discounted cash ~~flows method~~flow of ongoing operations, discounted at the loan’s original effective interest rate, or a calculation of the fair value of the underlying collateral less estimated selling costs. Our policy is to obtain appraisals on collateral supporting ~~impaired~~individually evaluated loans on an annual basis, unless circumstances dictate a shorter time frame. Appraisals are reduced by estimated costs to sell the collateral, and, under certain circumstances, additional factors that may arise and cause us to believe our recoverable value may be less than the independent appraised value. Accordingly, ~~impaired~~individually evaluated loans are classified as Level 3. ~~The Company measures impairment on all loans as part of the allowance for loan losses.~~

OTHER REAL ESTATE OWNED

~~Real estate owned~~OREO is comprised of property acquired through foreclosure or voluntarily conveyed by borrowers. These assets are recorded on the date acquired at fair value, less estimated disposition costs, with the fair value being determined by appraisal. Our policy is to obtain appraisals on collateral supporting OREO on an annual basis, unless circumstances dictate a shorter time frame. Appraisals are reduced by estimated costs to sell the collateral and, under certain circumstances, additional factors that may arise and cause us to believe our recoverable value may be less than the independent appraised value. Accordingly, ~~other real estate owned~~OREO is classified as Level 3.

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LEVEL 3 VALUATION

The following tables present additional quantitative information about assets measured at fair value on a recurring and non-recurring basis and for which we have utilized Level 3 inputs to determine fair value as of September 30, ~~2017~~2021 and December 31, ~~2016:~~2020:

September 30, 2021

(Dollars in thousands)

Fair Value

Valuation Techniques (1)(2)

Significant Unobservable Inputs

Weighted Average Discount Rate

Loans measured for impairment, net

1,725

Collateral

Liquidation value and discount due to salability conditions

80%

Other real estate owned

2,178

Collateral

Appraisal value and discount due to salability conditions

15%

September 30, 2017
(Dollars in thousands) Fair Value
Valuation Techniques ⁽¹⁾
Significant Unobservable Inputs Weighted Average
Discount Rate
Loans measured for impairment, net $ 96
Liquidation analysis Discount due to salability conditions — %

Loans measured for impairment, net $ 6,685
Discounted cash flow Discount due to restructured nature of operations 6 %

Other real estate owned $ 3,581
Appraisal value Discount due to salability conditions 10 %


⁽¹⁾	Fair value is generally determined through independent appraisals or liquidation analysis of the underlying collateral, which may include level 3 inputs that are not identifiable, or by using the discounted cash flow method if the loan is not collateral dependent.

(1)Fair value is generally determined through independent appraisals of the underlying collateral, which may include Level 3 inputs that are not identifiable, or by using the discounted cash flow of ongoing operations if the loan is not collateral dependent.

December 31, 2016
(Dollars in thousands) Fair Value
Valuation Techniques ⁽¹⁾
Significant Unobservable Inputs Weighted Average
Discount Rate
Loans measured for impairment, net $ 10,851
Discounted cash flow Discount due to restructured nature of operations 6 %

Other real estate owned $ 4,178
Appraisal value Discount due to salability conditions 10 %


⁽¹⁾	Fair value is generally determined through independent appraisals of the underlying collateral, which may include level 3 inputs that are not identifiable, or by using the discounted cash flow method if the loan is not collateral dependent.

(2)The collateral which is used in the valuation of these loans is commercial real estate.

December 31, 2020

(Dollars in thousands)

Fair Value

Valuation Techniques (1)(2)

Significant Unobservable Inputs

Weighted Average
Discount Rate

Loans measured for impairment, net

7,692

Collateral

Appraisal value and discount due to salability conditions

23%

Other real estate owned

2,724

Collateral

Appraisal value and discount due to salability conditions

12%

(2)The collateral which is used in the valuation of these loans is commercial real estate.

FAIR VALUE OF FINANCIAL INSTRUMENTS

~~A summary of~~The following table summarizes the carrying amounts and estimated fair values of financial ~~instruments was as follows:~~instruments:


		September 30, 2021				December 31, 2020
(Dollars in thousands)	Fair Value Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	1	$	469,932	$	469,932	$	435,442	$	435,442

Debt securities available-for-sale	2	555,609		555,609		617,570		617,570
Debt securities held-to-maturity, net	2	857,202		849,820		211,691		214,299
Equity securities	1	5,000		5,000		—		—

Federal Home Loan Bank stock	2	11,802		11,802		13,284		13,284

Loans and leases held-for-investment, net	3	9,836,648		9,815,390		8,202,788		8,199,922
Accrued interest receivable	2	21,872		21,872		18,783		18,783
Investment management fees receivable, net	2	8,908		8,908		7,935		7,935
Bank owned life insurance	2	98,308		98,308		71,787		71,787
Other real estate owned	3	2,178		2,178		2,724		2,724
Interest rate swaps	2	100,994		100,994		144,333		144,333


Financial liabilities:
Deposits	2	$	10,756,141	$	10,767,182	$	8,489,089	$	8,510,799
Borrowings, net	2	355,654		364,201		400,493		402,714

Interest rate swaps	2	105,513		105,513		153,433		153,433

September 30, 2017 December 31, 2016
(Dollars in thousands) Fair Value
Level Carrying
Amount Estimated
Fair Value Carrying
Amount Estimated
Fair Value
Financial assets:
Cash and cash equivalents 1 $ 136,579
$ 136,579
$ 103,994
$ 103,994
Investment securities available-for-sale: debt 2 143,163
143,163
166,540
166,540
Investment securities available-for-sale: equity 1 8,647
8,647
8,352
8,352
Investment securities held-to-maturity 2 58,314
59,605
53,940
54,498
Federal Home Loan Bank stock 2 10,792
10,792
9,641
9,641
Loans held-for-investment, net 3 3,914,691
3,908,256
3,382,292
3,362,031
Accrued interest receivable 2 11,732
11,732
9,614
9,614
Investment management fees receivable, net 2 7,300
7,300
7,749
7,749
Bank owned life insurance 2 66,154
66,154
64,815
64,815
Other real estate owned 3 3,581
3,581
4,178
4,178
Interest rate swaps 2 13,318
13,318
12,117
12,117

Financial liabilities:
Deposits 2 $ 3,769,870
$ 3,768,536
$ 3,286,779
$ 3,286,553
Borrowings, net 2 279,162
279,506
239,510
240,143
Interest rate swaps 2 12,062
12,062
10,609
10,609

During the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, there were no transfers between fair value Levels 1, 2 or 3.

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The following methods and assumptions were used to estimate the fair value of each class of financial instruments as of September 30, ~~2017~~2021 and December 31, ~~2016:~~2020:

CASH AND CASH EQUIVALENTS

The carrying amount approximates fair value.

INVESTMENT SECURITIES

The fair values of ~~investment~~debt securities available-for-sale, debt securities held-to-maturity, debt securities trading and ~~trading~~equity securities are based on quoted market prices for the same or similar securities, recently executed transactions and pricing models.

FEDERAL HOME LOAN BANK STOCK

The carrying value of our FHLB stock, which is ~~a marketable equity investment,~~carried at cost, approximates fair value.

LOANS AND LEASES HELD-FOR-INVESTMENT

The fair value of loans and leases held-for-investment is estimated by discounting the future cash flows using ~~the current~~market rates (utilizing both unobservable and certain observable inputs when applicable) at which similar loans would be made to borrowers with similar credit ratings ~~and for~~over the ~~same~~estimated remaining maturities. ~~Fair value as determined here does not represent an exit price.~~ Impaired loans are generally valued at the fair value of the associated collateral.

ACCRUED INTEREST RECEIVABLE

The carrying amount approximates fair value.

INVESTMENT MANAGEMENT FEES RECEIVABLE

The carrying amount approximates fair value.

BANK OWNED LIFE INSURANCE

The fair value of ~~the~~ general account ~~bank owned life insurance~~BOLI is based on the insurance contract net cash surrender value.

OTHER REAL ESTATE OWNED

~~Real estate owned~~OREO is ~~recorded on the date acquired~~carried at fair value less estimated ~~disposition costs, with the fair value being determined by appraisal.~~selling costs.

DEPOSITS

The fair value of demand deposits is the amount payable on demand as of the reporting date, ~~i.e.~~i.e., their carrying amounts. The fair value of fixed maturity deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.

BORROWINGS

The fair value of borrowings is calculated by discounting scheduled cash flows through the estimated maturity using period end market rates for borrowings of similar remaining maturities.

INTEREST RATE SWAPS

The fair value of interest rate swaps ~~are~~is estimated through the assistance of an independent third party and compared to the fair value determined by the swap counterparty to establish reasonableness.

OFF-BALANCE SHEET INSTRUMENTS

Fair values for the Company’s off-balance sheet instruments, which consist of lending commitments, standby letters of credit and risk participation agreements related to interest rate swap agreements, are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. Management believes that the fair value of these off-balance sheet instruments is not significant.

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[~~13]~~12] CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables show the changes in accumulated other comprehensive income (loss) net of tax, for the periods presented:


	Three Months Ended September 30,
	2021						2020
(Dollars in thousands)	Debt Securities		Derivatives		Total		Debt Securities		Derivatives		Total
Balance, beginning of period	$	3,227	$	(3,859)	$	(632)	$	1,692	$	(8,222)	$	(6,530)
Change in unrealized holding gains (losses)	(1,528)		(56)		(1,584)		3,088		27		3,115
Losses (gains) reclassified from other comprehensive income	(4)		685		681		(2,835)		780		(2,055)


Net other comprehensive income (loss)	(1,532)		629		(903)		253		807		1,060
Balance, end of period	$	1,695	$	(3,230)	$	(1,535)	$	1,945	$	(7,415)	$	(5,470)

Three Months Ended September 30,
2017 2016
(Dollars in thousands) Investment Securities Derivatives Total Investment Securities Derivatives Total
Balance, beginning of period $ 439
$ 948
$ 1,387
$ (1,020 ) $ (56 ) $ (1,076 )
Change in unrealized holding gains (losses) (35 ) 55
20
711
402
1,113
Losses (gains) reclassified from other comprehensive income —
(77 ) (77 ) (8 ) 29
21
Net other comprehensive income (loss) (35 ) (22 ) (57 ) 703
431
1,134
Balance, end of period $ 404
$ 926
$ 1,330
$ (317 ) $ 375
$ 58


	Nine Months Ended September 30,
	2021						2020
(Dollars in thousands)	Debt Securities		Derivatives		Total		Debt Securities		Derivatives		Total
Balance, beginning of period	$	3,834	$	(6,531)	$	(2,697)	$	2,756	$	(1,624)	$	1,132
Change in unrealized holding gains (losses)	(2,061)		1,316		(745)		2,041		(7,040)		(4,999)
Losses (gains) reclassified from other comprehensive income	(78)		1,985		1,907		(2,852)		1,249		(1,603)


Net other comprehensive income (loss)	(2,139)		3,301		1,162		(811)		(5,791)		(6,602)
Balance, end of period	$	1,695	$	(3,230)	$	(1,535)	$	1,945	$	(7,415)	$	(5,470)

Nine Months Ended September 30,
2017 2016
(Dollars in thousands) Investment Securities Derivatives Total Investment Securities Derivatives Total
Balance, beginning of period $ (297 ) $ 1,127
$ 830
$ (1,443 ) $ —
$ (1,443 )
Change in unrealized holding gains (losses) 855
(45 ) 810
1,146
346
1,492
Losses (gains) reclassified from other comprehensive income (154 ) (156 ) (310 ) (20 ) 29
9
Net other comprehensive income (loss) 701
(201 ) 500
1,126
375
1,501
Balance, end of period $ 404
$ 926
$ 1,330
$ (317 ) $ 375
$ 58

[~~14]~~13] CONTINGENT LIABILITIES

From time to time the Company is a party to various litigation matters incidental to the conduct of its business. The Company is not aware of any material unasserted claims. In the opinion of management, there are no potential claims that would have a material adverse effect on the Company’s financial position, liquidity or results of operations.

[~~15]~~14] SEGMENTS

The Company operates ~~two~~2 reportable segments: Bank and Investment Management.

•The Bank segment provides commercial banking services to middle-market businesses and private banking services to high-net-worth individuals through the ~~TriState Capital~~ Bank subsidiary.

•The Investment Management segment provides advisory and sub-advisory investment management services primarily to institutional investors, mutual funds and individual investors through the Chartwell ~~Investment Partners, LLC~~ subsidiary. It also supports marketing efforts for Chartwell’s proprietary investment products through the ~~Chartwell TSC~~CTSC Securities ~~Corp.~~ subsidiary.

The following tables provide financial information for the ~~two~~2 segments of the Company as of and for the periods indicated. The information provided under the caption “Parent and Other” represents general operating activity of the Company not considered to be a reportable segment, which includes ~~the~~ parent company activity as well as eliminations and adjustments that are necessary for purposes of reconciliation to the consolidated amounts.


(Dollars in thousands)	September 30, 2021		December 31, 2020
Assets:
Bank	$	12,074,984	$	9,819,719
Investment management	84,822		86,150
Parent and other	(938)		(9,053)
Total assets	$	12,158,868	$	9,896,816

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(Dollars in thousands) September 30,
2017 December 31,
2016
Assets:
Bank $ 4,409,661
$ 3,846,353
Investment management 80,632
85,072
Parent and other 5,720
(968 )
Total assets $ 4,496,013
$ 3,930,457


	Three Months Ended September 30, 2021								Three Months Ended September 30, 2020
(Dollars in thousands)	Bank		Investment Management		Parent and Other		Consolidated		Bank		Investment Management		Parent and Other		Consolidated
Income statement data:
Interest income	$	59,705	$	—	$	—	$	59,705	$	50,222	$	—	$	—	$	50,222
Interest expense	11,591		—		1,447		13,038		15,297		—		1,451		16,748
Net interest income (loss)	48,114		—		(1,447)		46,667		34,925		—		(1,451)		33,474
Provision for credit losses	—		—		—		—		7,430		—		—		7,430
Net interest income (loss) after provision for credit losses	48,114		—		(1,447)		46,667		27,495		—		(1,451)		26,044
Non-interest income:
Investment management fees	—		9,780		(344)		9,436		—		8,293		(198)		8,095
Net gain on the sale and call of debt securities	33		—		—		33		3,744		—		—		3,744
Other non-interest income (loss)	4,768		(7)		—		4,761		5,027		23		—		5,050
Total non-interest income (loss)	4,801		9,773		(344)		14,230		8,771		8,316		(198)		16,889
Non-interest expense:
Intangible amortization expense	—		477		—		477		—		478		—		478

Other non-interest expense	28,975		8,031		525		37,531		23,462		6,868		619		30,949
Total non-interest expense	28,975		8,508		525		38,008		23,462		7,346		619		31,427
Income (loss) before tax	23,940		1,265		(2,316)		22,889		12,804		970		(2,268)		11,506
Income tax expense (benefit)	2,719		(412)		566		2,873		2,357		251		(431)		2,177
Net income (loss)	$	21,221	$	1,677	$	(2,882)	$	20,016	$	10,447	$	719	$	(1,837)	$	9,329


	Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2020
(Dollars in thousands)	Bank		Investment Management		Parent and Other		Consolidated		Bank		Investment Management		Parent and Other		Consolidated
Income statement data:
Interest income	$	167,252	$	—	$	—	$	167,252	$	166,085	$	—	$	—	$	166,085
Interest expense	34,629		—		4,388		39,017		61,844		—		2,361		64,205
Net interest income (loss)	132,623		—		(4,388)		128,235		104,241		—		(2,361)		101,880
Provision for credit losses	320		—		—		320		16,428		—		—		16,428
Net interest income (loss) after provision for credit losses	132,303		—		(4,388)		127,915		87,813		—		(2,361)		85,452
Non-interest income:
Investment management fees	—		28,789		(902)		27,887		—		23,955		(484)		23,471
Net gain on the sale and call of debt securities	130		—		—		130		3,815		—		—		3,815
Other non-interest income	14,683		25		—		14,708		15,893		23		—		15,916
Total non-interest income (loss)	14,813		28,814		(902)		42,725		19,708		23,978		(484)		43,202
Non-interest expense:
Intangible amortization expense	—		1,433		—		1,433		—		1,466		—		1,466

Other non-interest expense	77,201		23,300		1,777		102,278		64,462		20,498		2,242		87,202
Total non-interest expense	77,201		24,733		1,777		103,711		64,462		21,964		2,242		88,668
Income (loss) before tax	69,915		4,081		(7,067)		66,929		43,059		2,014		(5,087)		39,986
Income tax expense (benefit)	12,013		183		(263)		11,933		7,878		381		(897)		7,362
Net income (loss)	$	57,902	$	3,898	$	(6,804)	$	54,996	$	35,181	$	1,633	$	(4,190)	$	32,624

[15] SUBSEQUENT EVENTS

On October 1, 2021, a stock dividend of 11 shares of the Company’s Series C Preferred Stock was paid in kind, as well as cash paid in lieu of a fractional share, which was declared by the Board in July 2021 and fully accrued for as of September 30, 2021.

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Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
(Dollars in thousands) Bank Investment
Management Parent
and Other Consolidated Bank Investment
Management Parent
and Other Consolidated
Income statement data:
Interest income $ 35,512
$ —
$ 63
$ 35,575
$ 24,855
$ —
$ 70
$ 24,925
Interest expense 11,398
—
572
11,970
5,673
—
548
6,221
Net interest income (loss) 24,114
—
(509 ) 23,605
19,182
—
(478 ) 18,704
Provision (credit) for loan losses 283
—
—
283
(542 ) —
—
(542 )
Net interest income (loss) after provision for loan losses 23,831
—
(509 ) 23,322
19,724
—
(478 ) 19,246
Non-interest income:
Investment management fees —
9,265
(51 ) 9,214
—
10,391
(58 ) 10,333
Net gain on the sale and call of investment securities 15
—
—
15
14
—
—
14
Other non-interest income 2,477
—
—
2,477
2,149
1
—
2,150
Total non-interest income 2,492
9,265
(51 ) 11,706
2,163
10,392
(58 ) 12,497
Non-interest expense:
Intangible amortization expense —
463
—
463
—
463
—
463
Change in fair value of acquisition earn out —
—
—
—
—
(1,209 ) —
(1,209 )
Other non-interest expense 14,575
7,747
27
22,349
13,227
8,009
24
21,260
Total non-interest expense 14,575
8,210
27
22,812
13,227
7,263
24
20,514
Income (loss) before tax 11,748
1,055
(587 ) 12,216
8,660
3,129
(560 ) 11,229
Income tax expense (benefit) 1,987
435
(238 ) 2,184
1,823
1,385
(433 ) 2,775
Net income (loss) $ 9,761
$ 620
$ (349 ) $ 10,032
$ 6,837
$ 1,744
$ (127 ) $ 8,454
On October 11, 2021, the Board declared a dividend payable of approximately $679,000, or $0.42 per depositary share, on the Company’s Series A Preferred Stock and a dividend payable of approximately $1.3 million, or $0.40 per depositary share, on the Company’s Series B Preferred Stock, each of which is payable on January 1, 2022, to preferred shareholders of record as of the close of business on December 15, 2021. The Board also declared a dividend payable of 11 shares of the Company’s Series C Preferred Stock per share, and cash paid in lieu of a fractional share, which is payable on January 1, 2022, to preferred shareholders of record of the Series C Preferred Stock as of the close of business on December 15, 2021.

On October 20, 2021, the Company announced that it entered into a definitive agreement under which Raymond James Financial, Inc. (“Raymond James”) will acquire the outstanding shares of stock of the Company for consideration that is a combination of cash and Raymond James stock at a fixed exchange rate, valued in aggregate at approximately $1.1 billion based on the trading value of Raymond James’ stock on the announcement date. The acquisition is subject to customary closing conditions, including regulatory approvals and approval by the Company’s shareholders, and is expected to close in 2022.

Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
(Dollars in thousands) Bank Investment
Management Parent
and Other Consolidated Bank Investment
Management Parent
and Other Consolidated
Income statement data:
Interest income $ 96,220
$ —
$ 207
$ 96,427
$ 71,871
$ —
$ 209
$ 72,080
Interest expense 28,183
—
1,690
29,873
15,130
—
1,650
16,780
Net interest income (loss) 68,037
—
(1,483 ) 66,554
56,741
—
(1,441 ) 55,300
Provision (credit) for loan losses 1,042
—
—
1,042
(340 ) —
—
(340 )
Net interest income (loss) after provision for loan losses 66,995
—
(1,483 ) 65,512
57,081
—
(1,441 ) 55,640
Non-interest income:
Investment management fees —
27,843
(159 ) 27,684
—
26,981
(167 ) 26,814
Net gain on the sale and call of investment securities 254
—
—
254
77
—
—
77
Other non-interest income 6,888
1
—
6,889
5,966
2
—
5,968
Total non-interest income 7,142
27,844
(159 ) 34,827
6,043
26,983
(167 ) 32,859
Non-interest expense:
Intangible amortization expense —
1,388
—
1,388
—
1,291
—
1,291
Change in fair value of acquisition earn out —
—
—
—
—
(1,209 ) —
(1,209 )
Other non-interest expense 41,868
22,398
100
64,366
37,849
19,986
60
57,895
Total non-interest expense 41,868
23,786
100
65,754
37,849
20,068
60
57,977
Income (loss) before tax 32,269
4,058
(1,742 ) 34,585
25,275
6,915
(1,668 ) 30,522
Income tax expense (benefit) 7,734
1,587
(681 ) 8,640
7,476
2,833
(857 ) 9,452
Net income (loss) $ 24,535
$ 2,471
$ (1,061 ) $ 25,945
$ 17,799
$ 4,082
$ (811 ) $ 21,070

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section presents management’s perspective on our financial condition and results of operations and highlights material changes to ~~the~~our financial condition and results of operations as of and for the three and nine months ended September 30, ~~2017~~2021. The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes contained ~~herein~~in Item 1 of this Quarterly Report on Form 10-Q and our consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, ~~2016,~~2020, included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the “SEC”) on February ~~14, 2017.~~25, 2021.

~~CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS~~

~~This report~~To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. In addition to historical information, this discussion contains forward-looking statements ~~within the meaning of section 27A of the Securities Act~~that involve risks, uncertainties and section 21E of the Exchange Act. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

~~There are or will be important factors~~ that could cause ~~our actual~~ results to differ materially from ~~those indicated in these forward-looking statements, including, but not limited to, the following:~~

~~Deterioration of our asset quality;~~

~~Our ability to prudently manage our growth and execute our strategy;~~

~~Changes in the value of collateral securing our loans;~~

~~Business and economic conditions generally and in the financial services industry, nationally and within our local market area;~~

~~Changes in management personnel;~~

~~Our ability to maintain important deposit customer relationships, our reputation and otherwise avoid liquidity risks;~~

~~Our ability to provide investment management performance competitive with our peers and benchmarks;~~

~~Operational risks associated with our business;~~

~~Volatility and direction of market interest rates;~~

~~Increased competition in the financial services industry, particularly from regional and national institutions;~~

~~Changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, accounting, tax, trade, monetary and fiscal matters;~~

~~Further government intervention in the U.S. financial system;~~

~~Natural disasters and adverse weather, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, and other matters beyond our control; and~~

~~Other factors~~management’s expectations. Factors that could cause such differences are discussed in the ~~section entitled “~~sections titled “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this document and “Item 1A. Risk ~~Factors~~,Factors.”

General

TriState Capital Holdings, Inc. (“we,” ~~in our Annual Report on Form 10-K, filed with~~“us,” “our,” the ~~SEC on February 14, 2017, which is accessible at www.sec.gov.~~

~~The foregoing factors should not be construed as exhaustive and should be read together with~~“holding company,” the other cautionary statements included in this document. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business“parent company,” or the ~~extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.~~

~~General~~

~~We are~~“Company”) is a bank holding company that operates through two reportable segments: Bank and Investment Management. Through ~~our~~ TriState Capital Bank, ~~subsidiary~~ a Pennsylvania chartered bank (the “Bank”), the Bank segment provides commercial banking services to middle-market and financial services businesses and private banking services to high-net-worth ~~individuals.~~individuals and trusts. The Bank segment generates most of its revenue from interest on loans and investments, ~~loan related~~swap fees, ~~including swap~~loan fees, and liquidity and treasury management related fees. Its primary source of funding for loans is ~~deposits. Its~~deposits and its secondary source of funding is borrowings. The Bank’s largest expenses are interest on these deposits and borrowings, and salaries and related employee benefits. Through ~~our~~ Chartwell Investment Partners, LLC, ~~subsidiary~~ an SEC-registered investment adviser (“Chartwell”),the Investment Management segment provides advisory and sub-advisory investment management services primarily to institutional investors, mutual funds and individual investors. It also supports marketing efforts for Chartwell’s proprietary investment products through ~~our~~ Chartwell TSC Securities Corp. ~~subsidiary.~~, our registered broker-dealer subsidiary (“CTSC Securities”). The Investment Management segment generates its revenue from investment management fees earned on assets under management, and its largest expenses are salaries and related employee benefits.

~~The following~~This discussion and analysis ~~presents~~present our financial condition and results of operations on a consolidated basis, except where significant segment disclosures are necessary to better explain the operations of each segment and related variances. In particular, the discussion and analysis of non-interest income and non-interest expense is reported by segment.

We measure our performance primarily through our net income available to common shareholders, earnings per common share (“EPS”) and total ~~revenue.~~revenue (which is a non-GAAP financial measure). Other salient metrics include the ratio of allowance for ~~loan~~credit losses on loans and leases to ~~loans;~~loans and leases; net interest margin; the efficiency ratio of the Bank ~~segment; assets under management; adjusted EBITDA of the Investment Management segment;~~segment (which is a non-GAAP financial measure); return on average assets; return on average common equity; ~~pre-tax, pre-provision net revenue; and~~ regulatory leverage and risk-based capital ~~ratios.~~ratios; and assets under management and EBITDA of the Investment Management segment (which is a non-GAAP financial measure).

Executive Overview

~~TriState Capital Holdings, Inc. (“we”, “us”, “our” or the “Company”) is~~We are a bank holding company headquartered in Pittsburgh, Pennsylvania. The Company has three wholly owned subsidiaries: ~~TriState Capital~~the Bank, ~~(the “Bank”), a Pennsylvania chartered bank;~~ Chartwell ~~Investment Partners, LLC (“Chartwell”), an SEC registered investment advisor;~~ and ~~Chartwell TSC Securities Corp. (“~~CTSC ~~Securities”), a~~ ~~registered broker/dealer with~~Securities. Through the ~~SEC and FINRA. Through our bank subsidiary,~~Bank, we serve middle-market and financial services businesses in our primary markets throughout the states of Pennsylvania, Ohio, New Jersey and New York. We also serve high-net-worth individuals and trusts on a national basis through our private banking channel. We market and distribute our products and services through a scalable, branchless banking model, which creates significant operating leverage throughout our business as we continue to grow. The Bank’s total assets were $12.07 billion as of September 30, 2021.Through Chartwell, our investment management subsidiary, we provide investment management services primarily to institutional investors, mutual funds and individual investors on a national basis. A~~ssets~~Chartwell’s assets under management were ~~$8.20~~$11.45 billion as of September 30, ~~2017. Our broker/dealer~~2021. CTSC Securities, our broker-dealer subsidiary, supports marketing efforts for Chartwell’s proprietary investment ~~products~~products and is regulated by the SEC and the Financial Industry Regulatory Authority, Inc. (“FINRA”).

On October 20, 2021, the Company announced that ~~require SEC or FINRA licensing.~~it entered into a definitive agreement under which Raymond James will acquire the outstanding shares of stock of the Company for consideration that is a combination of cash and Raymond James stock at a fixed exchange rate, valued in aggregate at approximately $1.1 billion based on the trading value of Raymond James’ stock on the announcement date. Raymond James is a leading diversified financial services company providing private client group, capital markets, asset management, banking and other services to individuals, corporations and municipalities. Subsequent to closing,

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TriState Capital Bank will continue operating as a separately branded stand-alone, independently chartered bank subsidiary of Raymond James and Chartwell will continue to operate as a separately branded stand-alone investment adviser. The acquisition is subject to customary closing conditions, including regulatory approvals and approval by the Company’s shareholders, and is expected to close in 2022.

Performance

For the three months ended September 30, ~~2017,~~2021, our net income available to common shareholders was ~~$10.0~~$16.9 million compared to ~~$8.5~~$7.4 million for the same period in ~~2016~~2020, an increase of ~~$1.6 million.~~$9.6 million, or 129.7%. This increase in net income available to common shareholders from the same period in 2020was ~~primarily~~ due to ~~the~~an increase in net ~~impact~~interest income of ~~(1) a $4.9~~$13.2 million, or ~~26.2%~~39.4%, ~~increase in our net interest income;~~driven by loan growth and ~~(2) a $591,000 decrease in income taxes;~~reduced deposit cost and lower provision for credit losses of $7.4 million driven by an improving economic outlook, which were partially offset by ~~(3) an increase of $2.3 million in our non-interest expense; (4) higher provision for loan losses of $825,000; and (5)~~ a decrease in non-interest income of ~~$791,000.~~$2.7 million, or 15.7%, an increase of $6.6 million, or 20.9%, in non-interest expense as the Company continues to invest in people, processes and technology, an increase of $696,000 in income tax expense, and an increase in preferred stock dividends of $1.1 million.

For the nine months ended September 30, ~~2017~~,2021, our net income available to common shareholders was ~~$25.9~~$45.8 million compared to ~~$21.1~~$26.7 million for the same period in ~~2016~~2020, an increase of ~~$4.9 million. This~~$19.0 million, or 71.2%. The increase in net income available to common shareholders from the same period in 2020was ~~primarily~~ due to ~~the impact~~an increase in net interest income of ~~(1) a $11.3~~$26.4 million, or ~~20.4%~~25.9%, ~~increase in our net interest income; (2)~~driven by loan growth and reduced deposit costs and lower provision for credit losses of $16.1 million driven by an ~~increase~~improving economic outlook, which were partially offset by a decrease in non-interest income of ~~$2.0 million; and (3) a $812,000 decrease in income taxes; offset by (4)~~$477,000, or 1.1%, an increase of ~~$7.8~~$15.0 million, or 17.0%, in non-interest expense, an increase of $4.6 million in ~~our non-interest expense;~~income tax expense, and ~~(5) higher provision for loan losses~~an increase in preferred stock dividends of ~~$1.4~~$3.3 million.

Our diluted EPS was ~~$0.35~~$0.44 for the three months ended September 30, ~~2017,~~2021, compared to ~~$0.30~~$0.26 for the same period in ~~2016. The increase is a result of~~2020, an increase of ~~$1.6 million in our net income.~~

$0.18 per share, or 69.2%. Our diluted EPS was ~~$0.90~~$1.20 for the nine months ended September 30, ~~2017~~2021, compared to ~~$0.75~~$0.93 for the same period in ~~2016. The increase is a result of~~2020, an increase of ~~$4.9~~$0.27 per share, or 29.0%. Results for the three and nine months ended September 30, 2021, included higher net income available to common shareholders, as well as a higher number of diluted shares outstanding and an increase in preferred dividends compared to 2020 due to the effect of our December 30, 2020 private placement of $105 million of common stock, convertible preferred stock and warrants. EPS is computed using the two-class method, which is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends accumulated or declared and participation rights in undistributed earnings. For more information on the Company’s calculation of EPS, refer to Note 1, Summary of Significant Accounting Policies and Note 9, Earnings per Common Share, to our unaudited condensed consolidated financial statements.

Net interest income and non-interest income, excluding net ~~income.~~

~~For~~gains and losses on the sale of securities, combined to generate total revenue of $60.9 million for the three months ended September 30, ~~2017~~2021, ~~total revenue increased $4.1 million, or 13.2%, to $35.3 million~~an increase of 30.6% from ~~$31.2~~$46.6 million for the same period in ~~2016, driven by highernet interest income for the Bank. Pre-tax, pre-provision net revenue increased $1.8 million, or 17.0%, to $12.5 million for the three months ended September 30, 2017, from $10.7 million for the same period in~~ ~~2016, primarily resulting from the higher total revenue partially offset by higher non-interest expense.~~

2020. For the nine months ended September 30, ~~2017,~~2021, total revenue increased ~~$13.0~~$29.6 million, or ~~14.8%~~20.9%, to ~~$101.1~~$170.8 million from ~~$88.1~~$141.3 million for the same period in ~~2016, driven by higher net interest income for the Bank and higher investment management fees. Pre-tax, pre-provision net revenue increased $5.3 million, or 17.5%, to $35.4 million for the~~ ~~nine months ended September 30, 2017, from $30.1 million for the same period in~~ ~~2016, due to higher total revenue, partially offset by higher non-interest expenses.~~

~~Our annualized net interest margin was 2.27%~~ ~~and~~ ~~2.25% for the three and~~ ~~nine months ended September 30, 2017, respectively, as compared to 2.18% and 2.25% for the same periods in~~ ~~2016, respectively.~~ 2020. The increase in ~~net interest margin for the~~ ~~three months ended September 30, 2017, was driven by an increase in the yield on loans offset by an increase in the cost of funds.~~

~~Our annualized non-interest expense to average assets for the three and~~ ~~nine months ended September 30, 2017, was 2.09% and 2.11%, respectively, compared to 2.27% and 2.25% for the same periods in~~ ~~2016, respectively. For the three and~~ ~~nine months ended September 30, 2017, the Bank’s efficiency ratio was 54.81%~~ ~~and 55.88%, respectively, as compared to 62.01% and 60.36% for the same periods in~~ ~~2016, respectively.~~

~~Our annualized return on average assets was 0.92%~~ ~~and~~ ~~0.83% for the three and~~ ~~nine months ended September 30, 2017, respectively, as compared to 0.93%~~ ~~and~~ ~~0.82% for the same periods in~~ ~~2016, respectively. Our annualized return on average equity was 10.69%~~ ~~and~~ ~~9.52% for the three and~~ ~~nine months ended September 30, 2017, respectively,~~ ~~as compared to 9.88%~~ ~~and~~ ~~8.42% for the same periods in~~ ~~2016, respectively, largely due to continued growth in earnings.~~

~~Total assets of $4.50 billion as of~~ ~~September 30, 2017, increased $565.6 million, or 19.2% on an annualized basis, from~~ ~~December 31, 2016. Loans held-for-investment grew by $529.6 million to $3.93 billion as of~~ ~~September 30, 2017, an annualized increase of 20.8%, from~~ ~~December 31, 2016, as a result of growth in both our commercial and private banking loan portfolios. Total deposits increased $483.1 million, or 19.7% on an annualized basis, to $3.77 billion as of~~ ~~September 30, 2017, from December 31, 2016.~~

~~Adverse rated credits to~~ total ~~loans declined to 0.95% at~~ ~~September 30, 2017, from 1.25% at~~ ~~December 31, 2016. The allowance for loan losses to loans was 0.41% as of~~ ~~September 30, 2017, compared to 0.55% as of~~ ~~December 31, 2016, reflecting the lower non-performing loans and lower levels of provision required for private banking loans.~~ ~~The provision for loan losses was $283,000 and $1.0 million~~revenue for the three and nine months ended September 30, ~~2017,~~2021, was driven largely by higher net interest income due to decreased funding costs and loan growth, as well as increased investment management fees from Chartwell for both periods.

Our annualized net interest margin was 1.65% and 1.46%for the three months ended September 30, 2021 and 2020, respectively, and 1.63% and 1.60% for the nine months ended September 30, 2021 and 2020, respectively. The increase in net interest margin for the three months ended September 30, 2021, was driven primarily by a decrease of 30 basis points in the cost of interest-bearing liabilities, partially offset by a decrease of 17 basis points in the yield on loans.The increase in net interest margin for the nine months ended September 30, 2021, was driven primarily by a decrease of 57 basis points in the cost of interest-bearing liabilities, partially offset by a decrease of 53 basis points in the yield on loans.

The significant reduction in interest rates by the Federal Reserve in response to the COVID-19 pandemic has continued to impact our interest-earning assets and interest-bearing liabilities. Our loans are predominantly variable rate loans, of which many are indexed to one-month LIBOR. At the end of the first quarter 2020, we placed interest rate floors on the majority of our floating rate loans, particularly our private banking loans, and we have continued to implement floors on newly originated loans. As a result, approximately 50% of our total loans have floors that are currently benefiting the Bank compared to their contractual index. While we continue our strategy to implement floors on most recently originated loans, we have modified our pricing strategy to balance wider spreads with lower floor rates to manage our interest rate sensitivity while managing overall yield. Our deposits include fixed-rate time deposits but are primarily comprised of variable rate deposits, many of which are linked to an index such as the effective federal funds rate and others that are priced at the Bank’s discretion. While our deposit rates have declined during 2021 and 2020, the majority of the impact from repricing of floating rate deposits was achieved with the initial repricing in March 2020, in line with the Federal Reserve rate reduction.

Our non-interest income is largely comprised of investment management fees for Chartwell, which totaled $9.4 million for the three months ended September 30, 2021, as compared to ~~credits to provision of $542,000 and $340,000~~$8.1 million for the same ~~periods~~period in ~~2016~~2020, and $27.9 million for the nine months

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ended September 30, 2021, as compared to $23.5 million for the same period in 2020. Assets under management were $11.45 billion as of September 30, 2021, an increase of $1.80 billion from September 30, 2020, driven by net inflows of $362.0 million and market appreciation of $1.44 billion. Chartwell’s annual run-rate revenue increased to $39.0 million as of September 30, 2021, compared to $33.6 million as of September 30, 2020. For the three months ended September 30, 2021, investment fees grew $1.5 million, or 17.9%, while expenses grew $1.2 million, or 15.8%. For the nine months ended September 30, 2021, investment fees grew $4.8 million, or 20.2%, while expenses grew $2.8 million, or 12.6%. Importantly, EBITDA improved 19% for the three months ended September 30, 2021 from $1.6 million to $1.8 million and 53% for the nine months ended September 30, 2021 from $3.8 million to $5.8 million.

Another large component of our non-interest income is swap fees for the Bank, which totaled $3.1 million for the three months ended September 30, 2021, and $4.0 million for the same period in 2020. Swap fees totaled $9.7 million for the nine months ended September 30, 2021, as compared to $12.2 million for the same period in 2020. The difference in swap fees for the nine months ended September 30, 2021, was due in part to the extremely low interest rate environment and very flat or negative term structure for interest rates that persisted for most of 2020 and to the opportunity for originating long duration loans that sought to lock in interest rates. This created strong demand and pricing structures from borrowers seeking fixed rates in 2020 that were not replicated in 2021. While swap fees decreased for the nine months ended September 30, 2021 from the year-ago period, we have continued to enhance our distribution and product strategies to drive consistent opportunities for interest rate protection through swaps in both our commercial banking and private banking clients. The number of swaps executed as well as the notional amount and term of each swap transaction impact the fee income from period to period.

Our annualized ratio of non-interest expense to average assets was 1.30% and 1.31% for the three months ended September 30, 2021 and 2020, respectively, and 1.27% and 1.33% for the nine months ended September 30, 2021 and 2020, respectively. The Bank’s efficiency ratio was 54.79% and 58.73% for the three months ended September 30, 2021 and 2020, respectively, and 52.41% and 53.66% for the nine months ended September 30, 2021 and 2020, respectively. The Bank’s efficiency ratio reflects improvement in operating leverage through growth in the Bank’s total revenue of 22.6%, partially offset by the growth in the Bank’s non-interest expense of 19.8% for the nine months ended September 30, 2021. The Bank’s efficiency ratio improved for the nine months ended September 30, 2021, despite the increase in non-interest expense of 19.8%, demonstrating that we are making worthwhile investments in the technology and people necessary to drive responsible growth.

Our annualized return on average assets (net income to average total assets) was 0.68% and 0.39% for the three months ended September 30, 2021 and 2020, respectively, and 0.67% and 0.49% for the nine months ended September 30, 2021 and 2020, respectively. This change in the return on assets reflects our increased net interest margin while still reflecting the outpaced rate of growth in our lower-risk, lower-yielding marketable-securities-backed private banking loans and increase in our investment portfolio as a portion of our assets over prior periods. Our annualized return on average common equity (net income available to common shareholders to average common equity) was 10.67% and 5.56% for the three months ended September 30, 2021 and 2020, respectively, and 10.06% and 6.90% for the nine months ended September 30, 2021 and 2020, respectively. The increase in the annualized return on common equity is a return to a more normalized ratio as we are deploying the common equity raised in December 2020 and growing average asset levels.

Our total assets were $12.16 billion as of September 30, 2021, an increase of $2.26 billion, or 30.6% on an annualized basis, from December 31, 2020, primarily due to growth in our loan and lease portfolio, an increase in cash and cash equivalents, and growth in our investment portfolio. Loans and leases held-for-investment grew by $1.63 billion to $9.87 billion as of September 30, 2021, an annualized increase of 26.5% from December 31, 2020, as a result of growth in our commercial and private banking loan portfolios. Cash and cash equivalents increased $34.5 million, or 10.6% on an annualized basis, to $469.9 million as of September 30, 2021, from December 31, 2020. Total investment securities increased $587.1 million, or 93.2% on an annualized basis, to $1.43 billion as of September 30, 2021, from December 31, 2020. Total deposits increased $2.27 billion, or 35.7% on an annualized basis, to $10.76 billion as of September 30, 2021, from December 31, 2020. We focus on high quality loan growth and we aim to increase our assets through adding to our investment portfolio as part of our strategy to build greater on-balance sheet liquidity, funded by our deposits.

Our ratio of adverse rated credits to total loans declined to 0.44% at September 30, 2021, from 0.62% at December 31, 2020, primarily due to the reduction in criticized assets of $7.9 million. Our ratio of allowance for credit losses on loans and leases to loans and leases was 0.33% and 0.42% as of September 30, 2021 and December 31, 2020, respectively. We recorded provision for credit losses of $320,000 for the nine months ended September 30, 2021, compared to $16.4 million for the nine months ended September 30, 2020 primarily driven by an improving economic outlook.

Our book value per common share increased ~~$0.79~~$1.33 to ~~$13.17~~$19.11 as of September 30, ~~2017~~2021, from ~~$12.38~~$17.78 as of December 31, ~~2016~~2020, largely as a result of ~~an increase in our net income,~~higher levels of retained earnings as of September 30, 2021, which was partially offset by ~~the issuance~~increased common shares outstanding as of ~~restricted stock and purchase of treasury stock during~~ ~~nine months ended~~ September 30, ~~2017~~.2021.

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Non-GAAP Financial Measures

~~The information set forth above contains~~We report certain financial information determined by methods other than in accordance with GAAP. These non-GAAP financial measures are “tangible common equity,” “tangible book value per common share,” “total revenue,” “pre-tax, pre-provision net revenue,” “efficiency ~~ratio,~~ratio” and “EBITDA.” ~~“EBITDA,” and “adjusted EBITDA.” Although we believe these~~These non-GAAP financial measures are supplemental measures that we believe provide management and our investors with a ~~greater~~more detailed understanding of our ~~business,~~performance, although these measures are not necessarily comparable to similar measures that may be presented by other companies. These disclosures should not be viewed as a substitute for financial measures in accordance with GAAP.

The non-GAAP financial measures presented herein are calculated as follows:

“Tangible common equity” is defined as common shareholders’ equity reduced by intangible assets, including goodwill. We believe this measure is important to management and investors toso that they can better understand and assess changes from period to period in common shareholders’ equity exclusive of changes in intangible ~~assets. Goodwill, an intangible asset~~assets associated with prior acquisitions. Intangible assets are created when we buy businesses that ~~is recorded in a business purchase combination, has~~add relationships and revenue to our Company. Intangible assets have the effect of increasing both equity and assets, while not increasing our tangible equity or tangible assets.

“Tangible book value per common share” is defined as ~~book value, excluding the impact of~~common shareholders’ equity reduced by intangible assets, including goodwill, divided by common shares outstanding. We believe this measure is important to many investors who are interested in changes from period to period in book value per common share exclusive of changes in intangible ~~assets.~~assets associated with prior acquisitions.

“Total revenue” is defined as net interest income and total non-interest income, excluding gains and losses on the sale and call of debt securities. We believe adjustments made to our operating revenue allow management and investors to better assess our core operating revenue by removing the volatility that is associated with certain items that are unrelated to our core business.

“Pre-tax, pre-provision net revenue” is defined as net interest income and non-interest income, excluding gains and losses on the sale and call of ~~investment securities. We believe adjustments made to our operating revenue allow management~~debt securities and ~~investors to better assess our operating revenue by removing the volatility that is associated with certain items that are unrelated to our core business.~~

“Pre-tax, pre-provision net revenue” is defined as net income, without giving effect to loan loss provision and income taxes, and excluding gains and losses on the sale and call of investment securities.total non-interest expense. We believe this measure is important because it allows management and investors to better assess our performance in relation to our core operating revenue, excluding the volatility that is associated with provision for ~~loan~~credit losses orand changes in our tax rates and other items that are unrelated to our core business.

“Efficiency ratio” is defined as total non-interest expense ~~excluding acquisition related items and intangible amortization expense, where applicable,~~ divided by our total revenue. We believe this measure ~~particularly at the Bank,~~ allows management and investors to better assess our operating expenses in relation to our core operating revenue ~~by removing~~, particularly at the ~~volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.~~Bank.

“EBITDA” ~~and “Adjusted EBITDA” are~~is defined as net income before interest expense, income ~~taxes,~~tax expense, depreciation expense and intangible amortization ~~adjusted for acquisition related items.~~expense. We use ~~adjusted~~ EBITDA particularly to assess the strength of our investment management business. We believe this measure is important because it allows management and investors to better assess our investment management performance in relation to our core operating earnings by excluding certain non-cash items and the volatility that is associated with certain ~~one-time items and other~~ discrete items that are unrelated to our core business.

The following tables present the financial measures calculated and presented in accordance with GAAP that are most directly comparable to the non-GAAP financial measures and a reconciliation of the differences between the GAAP financial measures and the non-GAAP financial measures.

TRISTATE CAPITAL HOLDINGS, INC.


(Dollars in thousands, except per share data)	September 30, 2021		December 31, 2020
Tangible common equity and tangible book value per common share:
Common shareholders’ equity	$	633,595	$	580,002
Less: goodwill and intangible assets	62,478		63,911
Tangible common equity (numerator)	$	571,117	$	516,091
Common shares outstanding (denominator)	33,154,343		32,620,150
Tangible book value per common share	$	17.23	$	15.82

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(Dollars in thousands, except per share data) September 30,
2017 December 31,
2016
Tangible book value per common share:
Total shareholders' equity $ 377,333
$ 351,807
Less: intangible assets 65,821
67,209
Tangible common equity $ 311,512
$ 284,598
Common shares outstanding 28,642,573
28,415,654
Tangible book value per common share $ 10.88
$ 10.02
TRISTATE CAPITAL HOLDINGS, INC.


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2021		2020		2021		2020
Total revenue and pre-tax, pre-provision net revenue:
Net interest income	$	46,667	$	33,474	$	128,235	$	101,880
Total non-interest income	14,230		16,889		42,725		43,202
Less: net gain on the sale and call of debt securities	33		3,744		130		3,815
Total revenue	$	60,864	$	46,619	$	170,830	$	141,267
Less: total non-interest expense	38,008		31,427		103,711		88,668
Pre-tax, pre-provision net revenue	$	22,856	$	15,192	$	67,119	$	52,599

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Pre-tax, pre-provision net revenue:
Net interest income $ 23,605
$ 18,704
$ 66,554
$ 55,300
Total non-interest income 11,706
12,497
34,827
32,859
Less: net gain on the sale and call of investment securities 15
14
254
77
Total revenue 35,296
31,187
101,127
88,082
Less: total non-interest expense 22,812
20,514
65,754
57,977
Pre-tax, pre-provision net revenue $ 12,484
$ 10,673
$ 35,373
$ 30,105

Efficiency ratio:
Total non-interest expense $ 22,812
$ 20,514
$ 65,754
$ 57,977
Plus: change in fair value of acquisition earn out —
1,209
—
1,209
Less: acquisition related items —
—
—
1
Less: intangible amortization expenses 463
463
1,388
1,291
Total non-interest expense, as adjusted (numerator) $ 22,349
$ 21,260
$ 64,366
$ 57,894
Total revenue (denominator) $ 35,296
$ 31,187
$ 101,127
$ 88,082
Efficiency ratio 63.32 % 68.17 % 63.65 % 65.73 %

BANK SEGMENT


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2021			2020			2021			2020
Bank total revenue:
Net interest income	$	48,114		$	34,925		$	132,623		$	104,241
Total non-interest income	4,801			8,771			14,813			19,708
Less: net gain on the sale and call of debt securities	33			3,744			130			3,815
Bank total revenue	$	52,882		$	39,952		$	147,306		$	120,134



Bank efficiency ratio:


Total non-interest expense (numerator)	$	28,975		$	23,462		$	77,201		$	64,462
Total revenue (denominator)	$	52,882		$	39,952		$	147,306		$	120,134
Bank efficiency ratio	54.79		%	58.73		%	52.41		%	53.66		%

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Bank pre-tax, pre-provision net revenue:
Net interest income $ 24,114
$ 19,182
$ 68,037
$ 56,741
Total non-interest income 2,492
2,163
7,142
6,043
Less: net gain on the sale and call of investment securities 15
14
254
77
Total revenue 26,591
21,331
74,925
62,707
Less: total non-interest expense 14,575
13,227
41,868
37,849
Pre-tax, pre-provision net revenue $ 12,016
$ 8,104
$ 33,057
$ 24,858

Bank efficiency ratio:
Total non-interest expense (numerator) $ 14,575
$ 13,227
$ 41,868
$ 37,849
Total revenue (denominator) $ 26,591
$ 21,331
$ 74,925
$ 62,707
Bank efficiency ratio 54.81 % 62.01 % 55.88 % 60.36 %

INVESTMENT MANAGEMENT SEGMENT


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2021		2020		2021		2020
Investment Management EBITDA:
Net income	$	1,677	$	719	$	3,898	$	1,633
Interest expense	—		—		—		—
Income tax expense	(412)		251		183		381
Depreciation expense	105		103		312		319
Intangible amortization expense	477		478		1,433		1,466
EBITDA	$	1,847	$	1,551	$	5,826	$	3,799

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Investment Management EBITDA:
Net income $ 620
$ 1,744
$ 2,471
$ 4,082
Interest expense —
—
—
—
Income taxes expense 435
1,385
1,587
2,833
Depreciation expense 130
32
369
78
Intangible amortization expense 463
463
1,388
1,291
EBITDA 1,648
3,624
5,815
8,284
Change in fair value of acquisition earn out —
(1,209 ) —
(1,209 )
Acquisition related items —
—
—
1
Adjusted EBITDA $ 1,648
$ 2,415
$ 5,815
$ 7,076

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Results of Operations

Net Interest Income

Net interest income represents the difference between the interest received on interest-earning assets and the interest paid on interest-bearing liabilities. Net interest income is affected by changes in the volume of interest-earning assets and interest-bearing liabilities and changes in interest yields earned and interest rates paid. ~~Maintaining consistent spreads between earning assets and interest-bearing liabilities is significant to our financial performance because net~~Net interest income comprised ~~65.8%~~75.1% and ~~62.8%~~72.1% of total revenue for the nine months ended September 30, ~~2017~~2021 and ~~2016~~2020, respectively.

The table below reflects an analysis of net interest income, on a fully taxable equivalent basis, for the periods indicated. The adjustment to convert certain income to a fully taxable equivalent basis consists of dividing ~~tax exempt~~tax-exempt income by one minus the statutory federal income tax rate of ~~35.0%~~21% for 2021 and 2020.


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2021			2020			2021			2020
Interest income	$	59,705		$	50,222		$	167,252		$	166,085
Fully taxable equivalent adjustment	10			15			25			51
Interest income adjusted	59,715			50,237			167,277			166,136
Less: interest expense	13,038			16,748			39,017			64,205
Net interest income adjusted	$	46,677		$	33,489		$	128,260		$	101,931

Yield on earning assets (1) (2)	2.11		%	2.20		%	2.12		%	2.60		%
Cost of interest-bearing liabilities (1)	0.51		%	0.81		%	0.55		%	1.12		%
Net interest spread (1) (2)	1.60		%	1.39		%	1.57		%	1.48		%
Net interest margin (1) (2)	1.65		%	1.46		%	1.63		%	1.60		%

(1)Annualized.

(2)Calculated on a fully taxable equivalent basis.

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Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Interest income $ 35,575
$ 24,925
$ 96,427
$ 72,080
Fully taxable equivalent adjustment 60
57
181
203
Interest income adjusted 35,635
24,982
96,608
72,283
Less: interest expense 11,970
6,221
29,873
16,780
Net interest income adjusted $ 23,665
$ 18,761
$ 66,735
$ 55,503

Yield on earning assets 3.42 % 2.90 % 3.25 % 2.94 %
Cost of interest-bearing liabilities 1.28 % 0.81 % 1.13 % 0.77 %
Net interest spread 2.14 % 2.09 % 2.12 % 2.17 %
Net interest margin ⁽¹⁾
2.27 % 2.18 % 2.25 % 2.25 %


⁽¹⁾	~~Net interest margin is calculated on a fully taxable equivalent basis.~~

The following table provides information regarding the average balances and yields earned on interest-earning assets and the average balances and rates paid on interest-bearing liabilities for the three months ended September 30, ~~2017~~2021 and ~~2016~~2020. Non-accrual loans are included in the calculation of ~~the~~ average loan balances, while interest collected on non-accrual loans is recorded as a reduction to principal. Where applicable, interest income and yield are reflected on a fully taxable equivalent basis and have been adjusted based on the statutory federal income tax rate of ~~35.0%~~21% for 2021 and 2020.


	Three Months Ended September 30,
	2021						2020
(Dollars in thousands)	Average Balance		Interest Income (1)/ Expense		Average Yield/ Rate (2)		Average Balance		Interest Income (1)/ Expense		Average Yield/ Rate (2)
Assets
Interest-earning deposits	$	429,806	$	155	0.14	%	$	866,502	$	278	0.13	%
Federal funds sold	12,629		2		0.06	%	9,071		2		0.09	%
Debt securities available-for-sale	415,855		1,664		1.59	%	561,378		1,804		1.28	%
Debt securities held-to-maturity	943,733		2,686		1.13	%	262,128		1,701		2.58	%

Equity securities	163		—		—	%	—		—		—	%
FHLB stock	11,932		137		4.56	%	13,284		196		5.87	%
Total loans and leases	9,427,370		55,071		2.32	%	7,386,265		46,256		2.49	%
Total interest-earning assets	11,241,488		59,715		2.11	%	9,098,628		50,237		2.20	%
Other assets	382,763						420,887
Total assets	$	11,624,251					$	9,519,515

Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-bearing checking accounts	$	3,946,028	$	3,682	0.37	%	$	2,866,303	$	3,280	0.46	%
Money market deposit accounts	4,879,971		5,794		0.47	%	3,811,100		6,944		0.72	%
Certificates of deposit	899,855		1,004		0.44	%	1,121,824		3,674		1.30	%
Borrowings:
FHLB borrowings	250,815		1,102		1.74	%	300,000		1,392		1.85	%
Line of credit borrowings	761		—		—	%	—		—		—	%
Subordinated notes payable, net	95,619		1,456		6.04	%	95,601		1,458		6.07	%
Total interest-bearing liabilities	10,073,049		13,038		0.51	%	8,194,828		16,748		0.81	%
Noninterest-bearing deposits	528,897						407,079
Other liabilities	213,552						274,480
Shareholders’ equity	808,753						643,128
Total liabilities and shareholders’ equity	$	11,624,251					$	9,519,515

Net interest income (1)			$	46,677					$	33,489
Net interest spread (1)					1.60	%					1.39	%
Net interest margin (1)					1.65	%					1.46	%

(1)Calculated on a fully taxable equivalent basis.

Three Months Ended September 30,
2017 2016
(Dollars in thousands) Average
Balance
Interest Income ⁽¹⁾/
Expense
Average
Yield/
Rate Average
Balance
Interest Income ⁽¹⁾/
Expense
Average
Yield/
Rate
Assets
Interest-earning deposits $ 131,115
$ 420
1.27 % $ 114,245
$ 150
0.52 %
Federal funds sold 6,845
20
1.16 % 6,445
6
0.37 %
Investment securities available-for-sale 140,741
760
2.14 % 182,354
828
1.81 %
Investment securities held-to-maturity 60,220
631
4.16 % 48,495
485
3.98 %
FHLB stock 12,582
200
6.31 % 12,347
144
4.64 %
Total loans 3,787,231
33,604
3.52 % 3,061,427
23,369
3.04 %
Total interest-earning assets 4,138,734
35,635
3.42 % 3,425,313
24,982
2.90 %
Other assets 194,405
171,986

Total assets $ 4,333,139
$ 3,597,299

Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 371,526
$ 1,173
1.25 % $ 190,270
$ 234
0.49 %
Money market deposit accounts 2,021,755
6,263
1.23 % 1,688,250
3,017
0.71 %
Certificates of deposit 1,003,280
3,168
1.25 % 863,872
1,936
0.89 %
Borrowings:
FHLB borrowings 271,304
790
1.16 % 273,804
480
0.70 %
Line of credit borrowings 2,571
22
3.39 % —
—
— %
Subordinated notes payable, net 34,629
554
6.35 % 34,427
554
6.40 %
Total interest-bearing liabilities 3,705,065
11,970
1.28 % 3,050,623
6,221
0.81 %
Noninterest-bearing deposits 205,368
161,723

Other liabilities 50,332
44,565

Shareholders' equity 372,374
340,388

Total liabilities and shareholders' equity $ 4,333,139
$ 3,597,299

Net interest income ⁽¹⁾
$ 23,665
$ 18,761

Net interest spread 2.14 % 2.09 %
Net interest margin⁽¹⁾
2.27 % 2.18 %


⁽¹⁾	~~Interest income and net interest margin are calculated on a fully taxable equivalent basis.~~

(2)Annualized.

Net Interest Income for the Three Months Ended September 30, ~~2017~~2021 and ~~2016~~2020. Net interest income, calculated on a fully taxable equivalent basis, increased ~~$4.9~~$13.2 million, or ~~26.1%~~39.4%, to ~~$23.7~~$46.7 million for the three months ended September 30, ~~2017,~~2021, from ~~$18.8~~$33.5 million for the same period in ~~2016~~2020. The increase in net interest income for the three months ended September 30, ~~2017,~~2021, was ~~primarily attributable to a $713.4 million, or 20.8%, increase in average interest-earning assets driven primarily by loan growth. The increase in net interest income reflects~~comprised of an increase of ~~$10.7~~$9.5 million, or ~~42.6%~~18.9%, in interest income ~~partially offset by an increase~~and a decrease of ~~$5.7~~$3.7 million, or ~~92.4%~~22.2%, in interest expense. Net interest margin increased to ~~2.27%~~1.65% for the three months ended September 30, ~~2017,~~2021, as compared to ~~2.18%~~1.46% for the same period in ~~2016~~2020, driven primarily by ~~a higher yield on the loan portfolio,~~lower cost of funds, partially offset by ~~higher interest expense associated with~~ the higher ~~volumes and cost~~average balances of ~~deposits and higher costs of FHLB borrowings.~~lower-earning assets.

The increase in interest income on interest-earning assets was primarily the result of an increase in average total loans, ~~of $725.8 million, or 23.7%,~~ which isare our primary earning ~~asset and the Bank’s core business, and an increase~~assets, of 48$2.04 billion, or 27.6%, partially offset by a decrease of 17 basis points in yield on our ~~loans.~~ ~~The most significant factors driving the yield on our loan portfolio was the effect of the Federal Reserve’s increases in the target federal funds rate on our floating-rate~~ loans, ~~partially offset by the shift toward lower-risk marketable-securities-backed private banking loans.~~ ~~The overall yield on interest-earning assets increased 52 basis points to 3.42%~~ for the three months ended September 30, ~~2017,~~2021, compared to the same period in 2020. The change in yield is attributable to an increased portion of our portfolio being comprised of our lower-risk, lower-yielding marketable-securities-backed private banking loans. The overall yield

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on interest-earning assets declined 9 basis points to 2.11% for the three months ended September 30, 2021, as compared to ~~2.90%~~2.20% for the same period in ~~2016~~2020, primarily ~~from higher~~due to the lower yield on loans.

The ~~increase~~decrease in interest expense on interest-bearing liabilities was primarily the result of ~~an increase~~a decrease of 4730 basis points in the average rate paid on our interest-bearing liabilities, partially offset by an increase of $1.88 billion, or 22.9%, in average interest-bearing liabilities for the three months ended September 30, ~~2017, as well as an increase of $654.4 million, or 21.5%, in average interest-bearing liabilities,~~2021, compared to the same period in ~~2016~~2020. The ~~increase~~decrease in the average rate paid ~~was reflective of increases~~on our interest-bearing liabilities reflected decreases in rates paid in all deposit categories, ~~and FHLB borrowings.~~ which was largely driven by the repricing of our deposits as a result of the current interest rate environment. The increase in average interest-bearing liabilities was driven

primarily by an increase of ~~$333.5 million in average money market deposit accounts, an increase of $181.3 million~~$1.08 billion in average interest-bearing checking accounts and an increase of ~~$139.4~~$1.07 billion in average money market deposit accounts, partially offset by a decrease of $222.0 million in average certificates of deposit. The ongoing success of our treasury management business contributed to the growth in our checking account deposit categories.

The following table analyzes the dollar amount of the ~~change~~changes in interest income and interest expense with respect to the primary components of interest-earning assets and interest-bearing liabilities. The table shows the amount of the change in interest income or interest expense caused by either changes in outstanding balances or changes in interest rates for the three months ended September 30, ~~2017~~2021, compared to ~~2016~~the same period in 2020. The effect of a change in balances is measured by applying the average rate during the first period to the balance (“volume”) change between the two periods. The effect of changes in interest rate is measured by applying the change in rate between the two periods to the average volume during the first period.


	Three Months Ended September 30,
	2021 over 2020
(Dollars in thousands)	Yield/Rate		Volume		Change(1)
Increase (decrease) in:
Interest income:
Interest-earning deposits	$	31	$	(154)	$	(123)
Federal funds sold	(1)		1		—
Debt securities available-for-sale	387		(527)		(140)
Debt securities held-to-maturity	(1,396)		2,381		985

Equity securities	—		—		—
FHLB stock	(40)		(19)		(59)
Total loans	(3,276)		12,091		8,815
Total increase (decrease) in interest income	(4,295)		13,773		9,478

Interest expense:
Interest-bearing deposits:
Interest-bearing checking accounts	(680)		1,082		402
Money market deposit accounts	(2,795)		1,645		(1,150)
Certificates of deposit	(2,054)		(616)		(2,670)
Borrowings:
FHLB borrowings	(71)		(219)		(290)
Line of credit borrowings	—		—		—
Subordinated notes payable, net	(2)		—		(2)
Total increase (decrease) in interest expense	(5,602)		1,892		(3,710)
Total increase in net interest income	$	1,307	$	11,881	$	13,188

(1)The change in interest income and interest expense due to changes in both composition and applicable yields/rates has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

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Three Months Ended September 30,
2017 over 2016
(Dollars in thousands) Yield/Rate Volume
Change⁽¹⁾
Increase in:
Interest income:
Interest-earning deposits $ 245
$ 25
$ 270
Federal funds sold 14
—
14
Investment securities available-for-sale 140
(208 ) (68 )
Investment securities held-to-maturity 24
122
146
FHLB stock 53
3
56
Total loans 4,161
6,074
10,235
Total increase in interest income 4,637
6,016
10,653

Interest expense:
Interest-bearing deposits:
Interest-bearing checking accounts 584
355
939
Money market deposit accounts 2,557
689
3,246
Certificates of deposit 883
349
1,232
Borrowings:
FHLB borrowings 314
(4 ) 310
Line of credit borrowings —
22
22
Subordinated notes payable, net (3 ) 3
—
Total increase in interest expense 4,335
1,414
5,749
Total increase in net interest income $ 302
$ 4,602
$ 4,904


⁽¹⁾	The change in interest income and expense due to changes in both composition and applicable yields/rates has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

The following table provides information regarding the average balances and yields earned on interest-earning assets and the average balances and rates paid on interest-bearing liabilities for the nine months ended September 30, ~~2017~~2021 and ~~2016~~2020. Non-accrual loans are included in the calculation of ~~the~~ average loan balances, while interest payments collected on non-accrual loans isare recorded as a reduction to principal. Where applicable, interest income and yield are reflected on a fully taxable equivalent basis and have been adjusted based on the statutory federal income tax rate of ~~35.0%.~~21% for 2021 and 2020.


	Nine Months Ended September 30,
	2021						2020
(Dollars in thousands)	Average Balance		Interest Income (1)/ Expense		Average Yield/ Rate (2)		Average Balance		Interest Income (1)/ Expense		Average Yield/ Rate (2)
Assets
Interest-earning deposits	$	463,827	$	427	0.12	%	$	809,978	$	1,983	0.33	%
Federal funds sold	11,570		6		0.07	%	8,022		23		0.38	%
Debt securities available-for-sale	343,897		3,120		1.21	%	391,377		5,874		2.00	%
Debt securities held-to-maturity	875,157		7,291		1.11	%	252,296		4,805		2.54	%
Debt securities trading	104		1		1.29	%	76		1		1.76	%
Equity securities	55		—		—	%	—		—		—	%
FHLB stock	11,754		473		5.38	%	15,569		899		7.71	%
Total loans and leases	8,841,619		155,959		2.36	%	7,052,457		152,551		2.89	%
Total interest-earning assets	10,547,983		167,277		2.12	%	8,529,775		166,136		2.60	%
Other assets	368,728						380,908
Total assets	$	10,916,711					$	8,910,683

Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-bearing checking accounts	$	3,624,587	$	9,689	0.36	%	$	2,224,827	$	11,213	0.67	%
Money market deposit accounts	4,516,081		17,395		0.51	%	3,740,968		28,975		1.03	%
Certificates of deposit	947,127		4,256		0.60	%	1,297,637		16,907		1.74	%
Borrowings:
FHLB borrowings	251,557		3,256		1.73	%	340,493		4,711		1.85	%
Line of credit borrowings	1,769		55		4.16	%	8,047		261		4.33	%
Subordinated notes payable, net	95,565		4,366		6.11	%	46,851		2,138		6.10	%
Total interest-bearing liabilities	9,436,686		39,017		0.55	%	7,658,823		64,205		1.12	%
Noninterest-bearing deposits	471,727						391,689
Other liabilities	221,290						226,838
Shareholders’ equity	787,008						633,333
Total liabilities and shareholders’ equity	$	10,916,711					$	8,910,683

Net interest income (1)			$	128,260					$	101,931
Net interest spread (1)					1.57	%					1.48	%
Net interest margin (1)					1.63	%					1.60	%

(1)Calculated on a fully taxable equivalent basis.

Nine Months Ended September 30,
2017 2016
(Dollars in thousands) Average
Balance
Interest Income ⁽¹⁾/
Expense
Average
Yield/
Rate Average
Balance
Interest Income ⁽¹⁾/
Expense
Average
Yield/
Rate
Assets
Interest-earning deposits $ 121,640
$ 981
1.08 % $ 107,651
$ 418
0.52 %
Federal funds sold 6,501
45
0.93 % 6,180
16
0.35 %
Investment securities available-for-sale 153,665
2,422
2.11 % 181,383
2,387
1.76 %
Investment securities held-to-maturity 58,744
1,845
4.20 % 46,977
1,409
4.01 %
FHLB stock 13,803
450
4.36 % 10,983
343
4.17 %
Total loans 3,619,679
90,865
3.36 % 2,935,663
67,710
3.08 %
Total interest-earning assets 3,974,032
96,608
3.25 % 3,288,837
72,283
2.94 %
Other assets 189,483
155,903

Total assets $ 4,163,515
$ 3,444,740

Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing checking accounts $ 298,631
$ 2,295
1.03 % $ 160,310
$ 541
0.45 %
Money market deposit accounts 1,951,258
15,511
1.06 % 1,614,669
7,847
0.65 %
Certificates of deposit 954,352
8,007
1.12 % 869,879
5,540
0.85 %
Borrowings:
FHLB borrowings 307,143
2,360
1.03 % 243,686
1,191
0.65 %
Line of credit borrowings 1,375
39
3.79 % —
—
— %
Subordinated notes payable, net 34,579
1,661
6.42 % 34,376
1,661
6.45 %
Total interest-bearing liabilities 3,547,338
29,873
1.13 % 2,922,920
16,780
0.77 %
Noninterest-bearing deposits 206,063
153,763

Other liabilities 45,596
33,770

Shareholders' equity 364,518
334,287

Total liabilities and shareholders' equity $ 4,163,515
$ 3,444,740

Net interest income ⁽¹⁾
$ 66,735
$ 55,503

Net interest spread 2.12 % 2.17 %
Net interest margin⁽¹⁾
2.25 % 2.25 %


⁽¹⁾	~~Interest income and net interest margin are calculated on a fully taxable equivalent basis.~~

(2)Annualized.

Net Interest Income for the Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020. Net interest income, calculated on a fully taxable equivalent basis, increased ~~$11.2~~$26.3 million, or ~~20.2%~~25.8%, to ~~$66.7~~$128.3 million for the nine months ended September 30, ~~2017~~2021, from ~~$55.5~~$101.9 million for the same period in ~~2016~~2020. ~~The~~This increase in net interest income for the nine months ended September 30, ~~2017~~,2021 was ~~primarily attributable to a $685.2 million, or 20.8%, increase in average interest-earning assets driven primarily by loan growth. The increase in net interest income reflects~~comprised of an increase of ~~$24.3~~$1.1 million, or ~~33.7%~~0.7%, in interest income ~~partially offset by an increase~~and a decrease of ~~$13.1~~$25.2 million, or ~~78.0%~~39.2%, in interest expense. Net interest margin was ~~2.25%~~1.63% for the nine months ended September 30, ~~2017~~ ~~and~~ ~~2016~~.2021, compared to 1.60% for the same period in 2020, driven primarily by a lower cost of funds, largely offset by the higher average balances of lower-earning assets.

The increase in interest income on interest-earning assets was primarily the result of an increase in average total loans, ~~of $684.0 million, or 23.3%,~~ which isare our primary earning ~~asset and the Bank’s core business, and an increase~~assets, of 28$1.79 billion, or 25.4%, mostly offset by a decrease of 53 basis points in yield on our ~~loans.~~loans, for the nine months ended September 30, 2021, compared to the same period in 2020. The ~~most significant factors driving the~~change in yield onis attributable to an increased portion of our ~~loan~~ portfolio ~~was~~ ~~the effect~~being comprised of ~~the Federal Reserve’s increases in the target federal funds rate on~~ our ~~floating-rate loans, partially offset by the~~ ~~shift toward~~ lower-risk, lower-yielding marketable-securities-backed private banking loans. The overall yield

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on interest-earning assets ~~increased 31~~declined 48 basis points to ~~3.25%~~2.12% for the nine months ended September 30, ~~2017~~2021, as compared to ~~2.94%~~2.60% for the same period in ~~2016~~2020, primarily ~~from higher~~due to the lower loan yields. Our loans are predominantly variable rate loans indexed to one-month LIBOR.

The ~~increase~~decrease in interest expense on interest-bearing liabilities was primarily the result of ~~an increase~~a decrease of 3657 basis points in the average rate paid on our interest-bearing liabilities, partially offset by an increase of $1.78 billion, or 23.2%, in average interest-bearing liabilities for the nine months ended September 30, ~~2017~~2021, ~~as well as an increase of $624.4 million, or 21.4%, in average interest-bearing liabilities,~~ compared to the same period in ~~2016~~2020. The ~~increase~~decrease in average rate paid ~~was reflective of increases~~on our interest-bearing liabilities reflected decreases in rates paid in all deposit categories, ~~and FHLB borrowings.~~which was largely driven by the repricing of our deposits as a result of the current interest rate environment. The increase in average interest-bearing liabilities was driven primarily by an increase of ~~$336.6~~$1.40 billion in average interest-bearing checking accounts and an increase of $775.1 million in average money market deposit accounts, ~~an increase~~partially offset by a decrease of ~~$138.3 million in average interest-~~

~~bearing checking accounts, an increase of $84.5~~$350.5 million in average certificates of ~~deposit and an increase of $63.5 million in average FHLB borrowings.~~deposit.

The following table analyzes the dollar amount of the ~~change~~changes in interest income and interest expense with respect to the primary components of interest-earning assets and interest-bearing liabilities. The table shows the amount of the change in interest income or interest expense caused by either changes in outstanding balances or changes in interest rates for the nine months ended September 30, ~~2017~~2021, compared to ~~2016~~the same period in 2020. The effect of a change in balances is measured by applying the average rate during the first period to the balance (“volume”) change between the two periods. The effect of changes in interest rate is measured by applying the change in rate between the two periods to the average volume during the first period.


	Nine Months Ended September 30,
	2021 over 2020
(Dollars in thousands)	Yield/Rate		Volume		Change(1)
Increase (decrease) in:
Interest income:
Interest-earning deposits	$	(923)	$	(633)	$	(1,556)
Federal funds sold	(24)		7		(17)
Debt securities available-for-sale	(2,105)		(649)		(2,754)
Debt securities held-to-maturity	(3,916)		6,402		2,486
Debt securities trading	—		—		—
Equity securities	—		—		—
FHLB stock	(235)		(191)		(426)
Total loans	(30,747)		34,155		3,408
Total increase (decrease) in interest income	(37,950)		39,091		1,141

Interest expense:
Interest-bearing deposits:
Interest-bearing checking accounts	(6,644)		5,120		(1,524)
Money market deposit accounts	(16,654)		5,074		(11,580)
Certificates of deposit	(8,953)		(3,698)		(12,651)
Borrowings:
FHLB borrowings	(276)		(1,179)		(1,455)
Line of credit borrowings	(9)		(197)		(206)
Subordinated notes payable, net	10		2,218		2,228
Total increase (decrease) in interest expense	(32,526)		7,338		(25,188)
Total increase (decrease) in net interest income	$	(5,424)	$	31,753	$	26,329

Nine Months Ended September 30,
2017 over 2016
(Dollars in thousands) Yield/Rate Volume
Change⁽¹⁾
Increase (decrease) in:
Interest income:
Interest-earning deposits $ 503
$ 60
$ 563
Federal funds sold 28
1
29
Investment securities available-for-sale 434
(399 ) 35
Investment securities held-to-maturity 74
362
436
FHLB stock 17
90
107
Total loans 6,573
16,582
23,155
Total increase in interest income 7,629
16,696
24,325

Interest expense:
Interest-bearing deposits:
Interest-bearing checking accounts 1,050
704
1,754
Money market deposit accounts 5,785
1,879
7,664
Certificates of deposit 1,896
571
2,467
Borrowings:
FHLB borrowings 806
363
1,169
Line of credit borrowings —
39
39
Subordinated notes payable, net (6 ) 6
—
Total increase in interest expense 9,531
3,562
13,093
Total increase (decrease) in net interest income $ (1,902 ) $ 13,134
$ 11,232


⁽¹⁾	The change in interest income and expense due to changes in both composition and applicable yields/rates has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

Provision for ~~Loan~~Credit Losses on Loans and Leases

The provision for ~~loan~~credit losses on loans and leases represents our determination of the amount necessary to be recorded against the current period’s earnings to maintain the allowance for ~~loan~~credit losses at a level that is ~~considered adequate in relation to the estimated~~consistent with management’s assessment of credit losses ~~inherent~~ in the loan ~~portfolio.~~ and lease portfolio at a specific point in time under the methodology required by CECL. Results for the three and nine months ended September 30, 2021, are presented under CECL methodology while prior period amounts continue to be reported in accordance with previously applicable GAAP. For additional information regarding our allowance for ~~loan~~credit losses on loans and leases, see ~~“Allowance~~“Allowance for Credit Losses on Loans and Leases.”

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Provision for Loan ~~Losses.”~~

~~Provision for Loan~~and Lease Losses for the Three Months Ended September 30, ~~2017~~2021 and ~~2016~~2020. We recorded provision expense for loan and lease losses of ~~$283,000~~$24,000 for the three months ended September 30, ~~2017,~~2021, compared to ~~a credit to~~ provision expense of ~~$542,000~~$7.4 million for the three months ended September 30, ~~2016.~~2020. The provision expense for loan and lease losses for the three months ended September 30, ~~2017,~~2021, was comprised of a ~~net~~decrease in general reserves of $1.5 million largely due to adjustments to the qualitative factors related to forecasted economic improvement, more than offset by an increase ~~of $206,000 of~~in specific reserves on non-performing loans of $1.3 million and charge-offs of $238,000. The provision expense for loan and lease losses for the three months ended September 30, 2020, was comprised of a net increase in general reserves of ~~$219,000, partially offset by recoveries of $142,000. The credit~~$6.9 million largely due to ~~provision for~~adjustments to the ~~three months ended September 30, 2016, was comprised of recoveries of $3.5 million~~qualitative factors in response to economic uncertainty around the COVID-19 pandemic and ~~a net decrease in general reserves of $681,000, partially offset by~~ a net increase of ~~$3.7 million~~$504,000 in specific reserves onthat was primarily attributable to a non-performing ~~loans.~~loan in our commercial loan portfolio.

Provision for ~~Loan~~Credit Losses on Loans and Leases for the Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020. We recorded provision expense for loan and lease losses of ~~$1.0 million~~$423,000 for the nine months ended September 30, ~~2017~~2021, compared to ~~a credit to provision of $340,000~~$16.4 million for the nine months ended September 30, ~~2016.~~2020. The provision expense for ~~loan~~credit losses on loans and leases for the nine months ended September 30, ~~2017~~2021, was comprised of a ~~net~~decrease in general reserves of $7.3 million largely due to improvement in the economic forecasts utilized in the qualitative factors, more than offset by an increase ~~of $967,000 of~~in specific reserves on non-performing loans of $4.9 million and ~~a net increase in general reserves~~charge-offs of ~~$553,000, partially offset by recoveries of $478,000.~~$2.8 million. The ~~credit to~~ provision expense for loan and lease losses for the nine months ended September 30, ~~2016,~~2020, was comprised of ~~recoveries of $4.1 million, a net decrease~~an increase in general reserves of ~~$1.1~~$15.3 million ~~partially offset by~~largely due to adjustments to the qualitative factors in response to economic uncertainty around the COVID-19 pandemic and a net increase of ~~$4.9~~$1.5 million in specific reserves on ~~non-performing~~nonperforming loans, largely driven by a new non-accrual loan in our commercial loan portfolio, partially offset by recoveries of ~~which $1.5 million was charged-off.~~$342,000 in our commercial loan portfolio.

Non-Interest Income

Non-interest income is an important component of our total revenue and it is comprised ~~primarily~~largely of investment management fees from Chartwell coupled with fees generated from loan and deposit relationships ~~from~~with our Bank customers, including swap transactions. The information provided in the table below under the caption “Parent and Other” represents general operating activity of the Company not considered to be a reportable segment, which includes ~~the~~ parent company activity as well as eliminations and adjustments that are necessary for purposes of reconciliation to the consolidated amounts.

The following table presents the components of our non-interest income by operating segment for the three months ended September 30, ~~2017~~2021 and ~~2016~~2020:


	Three Months Ended September 30, 2021								Three Months Ended September 30, 2020
			Investment		Parent						Investment		Parent
(Dollars in thousands)	Bank		Management		and Other		Consolidated		Bank		Management		and Other		Consolidated
Investment management fees	$	—	$	9,780	$	(344)	$	9,436	$	—	$	8,293	$	(198)	$	8,095
Service charges on deposits	377		—		—		377		235		—		—		235
Net gain on the sale and call of debt securities	33		—		—		33		3,744		—		—		3,744
Swap fees	3,059		—		—		3,059		3,953		—		—		3,953
Commitment and other loan fees	740		—		—		740		381		—		—		381
Bank owned life insurance income	613		—		—		613		441		—		—		441
Other income (loss) (1)	(21)		(7)		—		(28)		17		23		—		40
Total non-interest income	$	4,801	$	9,773	$	(344)	$	14,230	$	8,771	$	8,316	$	(198)	$	16,889

Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
Investment Parent Investment Parent
(Dollars in thousands) Bank Management and Other Consolidated Bank Management and Other Consolidated
Investment management fees $ —
$ 9,265
$ (51 ) $ 9,214
$ —
$ 10,391
$ (58 ) $ 10,333
Service charges 96
—
—
96
134
—
—
134
Net gain on the sale and call of investment securities 15
—
—
15
14
—
—
14
Swap fees 1,391
—
—
1,391
977
—
—
977
Commitment and other fees 423
—
—
423
488
—
—
488
Other income ⁽¹⁾
567
—
—
567
550
1
—
551
Total non-interest income $ 2,492
$ 9,265
$ (51 ) $ 11,706
$ 2,163
$ 10,392
$ (58 ) $ 12,497


⁽¹⁾	~~Other income largely includes items such as income from BOLI, change in fair value on swaps, gains on the sale of loans or OREO, and other general operating income.~~

(1)Other income is largely comprised of items such as change in fair value on swaps, losses on the sale of loans or OREO, and other general operating income.

Non-Interest Income for the Three Months Ended September 30, ~~2017~~2021 and ~~2016~~2020. Our non-interest income was ~~$11.7~~$14.2 million for the three months ended September 30, ~~2017,~~2021, a decrease of ~~$791,000,~~$2.7 million, or ~~6.3%~~15.7%, from ~~$12.5~~$16.9 million for the same period in ~~2016~~,2020. This decrease was primarily related to ~~a decrease~~decreases in net gain on the sale and call of debt securities and swap fees, partially offset by increases in investment management fees, ~~partially offset by an increase in swap~~commitment and other loan fees ~~for the Bank.~~and bank owned life insurance income, as follows:

Bank Segment:

•Net gain on the sale and call of debt securities decreased $3.7 million for three months ended September 30, 2021, compared to the same period in 2020, due to the repositioning of a portion of the corporate bond portfolio into government agency securities that took place during the three months ended September 30, 2020.

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•Swap fees ~~increased $414,000~~decreased $894,000 for the three months ended September 30, ~~2017, as~~2021, compared to the same period in ~~2016, driven by increases in customer~~2020 due to changing demand from customers for ~~long-term~~ interest rate ~~protection.~~ protection through swaps given recent movement in the yield curve. The ~~level~~number of swaps executed as well as the notional amount and ~~frequency~~term of ~~income associated with~~each swap ~~transactions can vary materially~~transaction impact the fee income from period to period.

•Commitment and other loan fees for the three months ended September 30, 2021, increased $359,000 compared to the same period ~~based on customers’ behavior and market conditions.~~

in 2020, primarily due to an increase in letter of credit fee income.

•Bank owned life insurance income for the three months ended September 30, 2021, increased $172,000 compared to the same period in 2020, primarily due to increased level of investments in bank owned life insurance during the second quarter of 2021.

Investment Management Segment:

•Investment management fees ~~decreased $1.1~~increased $1.5 million for the three months ended September 30, ~~2017,~~2021, compared to the same period in ~~2016, driven primarily by lower~~2020, due to higher assets ~~under management. Assets~~ under management of ~~$8.20~~$11.45 billion as of September 30, ~~2017, decreased $2.61~~2021, an increase of $1.80 billion from September 30, ~~2016, primarily due to the previously disclosed conclusion~~2020. The weighted average fee rate was 0.34% and 0.35% as of ~~a sub-advisory relationship announced in the fourth quarter of 2016.~~September 30, 2021 and 2020, respectively.

The following table presents the components of our non-interest income by operating segment for the nine months ended September 30, ~~2017~~2021 and ~~2016~~2020:


	Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2020
			Investment		Parent						Investment		Parent
(Dollars in thousands)	Bank		Management		and Other		Consolidated		Bank		Management		and Other		Consolidated
Investment management fees	$	—	$	28,789	$	(902)	$	27,887	$	—	$	23,955	$	(484)	$	23,471
Service charges on deposits	1,018		—		—		1,018		763		—		—		763
Net gain on the sale and call of debt securities	130		—		—		130		3,815		—		—		3,815
Swap fees	9,683		—		—		9,683		12,179		—		—		12,179
Commitment and other loan fees	1,630		—		—		1,630		1,262		—		—		1,262
Bank owned life insurance income	1,522		—		—		1,522		1,298		—		—		1,298
Other income (1)	830		25		—		855		391		23		—		414
Total non-interest income	$	14,813	$	28,814	$	(902)	$	42,725	$	19,708	$	23,978	$	(484)	$	43,202

Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
Investment Parent Investment Parent
(Dollars in thousands) Bank Management and Other Consolidated Bank Management and Other Consolidated
Investment management fees $ —
$ 27,843
$ (159 ) $ 27,684
$ —
$ 26,981
$ (167 ) $ 26,814
Service charges 287
—
—
287
393
—
—
393
Net gain on the sale and call of investment securities 254
—
—
254
77
—
—
77
Swap fees 3,708
—
—
3,708
3,422
—
—
3,422
Commitment and other fees 1,240
—
—
1,240
1,497
—
—
1,497
Other income ⁽¹⁾
1,653
1
—
1,654
654
2
—
656
Total non-interest income $ 7,142
$ 27,844
$ (159 ) $ 34,827
$ 6,043
$ 26,983
$ (167 ) $ 32,859


⁽¹⁾	~~Other income largely includes items such as income from BOLI, change in fair value on swaps, gains on the sale of loans or OREO, and other general operating income.~~

(1)Other income is largely comprised of items such as change in fair value on swaps, trading securities income, gains/losses on the sale of loans, leases or OREO, and other general operating income.

Non-Interest Income for the Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020. Our non-interest income was ~~$34.8~~$42.7 million for the nine months ended September 30, ~~2017~~2021, ~~an increase~~a decrease of ~~$2.0 million,~~$477,000, or ~~6.0%~~1.1%, from ~~$32.9~~$43.2 million for the same period in ~~2016~~,2020. This decrease was primarily related to decreases in net gain on the sale and call of debt securities and swap fees, partially offset by increases in investment management fees, commitment and other loan fees and other income, ~~for the Bank.~~as follow:

Bank Segment:

~~Other~~ ~~income increased $999,000~~•Net gain on the sale and call of debt securities decreased $3.7 million for ~~the~~ nine months ended September 30, ~~2017, as~~2021, compared to the same period in ~~2016~~2020, ~~largely~~ due to the ~~change~~repositioning of a portion of the corporate bond portfolio into government agency securities that took place during the nine months ended September 30, 2020.

•Swap fees decreased $2.5 million for the nine months ended September 30, 2021, compared to the same period in 2020, due to changing demand from customers for interest rate protection through swaps given recent movement in the ~~fair values~~yield curve. The number of ~~our interest rate~~ swaps executed as well as the notional amount and term of ~~$757,000~~each swap transaction impact the fee income from period to period.

•Commitment and other loan fees for the nine months ended September 30, 2021, increased $368,000 compared to the same period in 2020, primarily due to an increase in letter of credit fee income.

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•Other income increased $439,000 for the nine months ended September 30, 2021, compared to the same period in 2020, primarily due to an early payoff of a customer’s equipment lease resulting in a gain, which was partially offset by lower income from debt securities and lower gains on ~~the~~ sale of ~~OREO of $134,000.~~

OREO.

Investment Management Segment:

•Investment management fees increased ~~$862,000~~$4.8 million for the nine months ended September 30, ~~2017, as~~2021, compared to the same period in ~~2016, driven primarily by the additional four months~~2020, due to higher assets under management. Assets under management were $11.45 billion as of ~~revenue provided by the operations~~September 30, 2021, an increase of $1.80 billion from September 30, 2020. The ~~Killen Group, Inc. (“TKG”), which~~weighted average fee rate was ~~acquired at the end~~0.34% and 0.35% as of ~~April 2016, partially offset by the loss of a sub-advisory relationship.~~September 30, 2021 and 2020, respectively.

Non-Interest Expense

Our non-interest expense represents the operating cost of maintaining and growing our business. The largest portion of non-interest expense for each segment is compensation and employee benefits, which include employee payroll expense as well as the cost of incentive compensation, benefit plans, health insurance and payroll taxes, all of which are impacted by the growth in our employee base, coupled with increases in the level of compensation and benefits of our existing employees. The information provided in the table below under the caption “Parent and Other” represents general operating activity of the Company not considered to be a reportable segment, which includes ~~the~~ parent company activity as well as eliminations and adjustments that are necessary for purposes of reconciliation to the consolidated amounts.

The following table presents the components of our non-interest expense by operating segment for the three months ended September 30, ~~2017~~2021 and ~~2016~~2020:


	Three Months Ended September 30, 2021								Three Months Ended September 30, 2020
			Investment		Parent						Investment		Parent
(Dollars in thousands)	Bank		Management		and Other		Consolidated		Bank		Management		and Other		Consolidated
Compensation and employee benefits	$	15,565	$	5,812	$	324	$	21,701	$	13,246	$	5,014	$	264	$	18,524
Premises and equipment expense	1,141		379		—		1,520		1,095		393		—		1,488
Professional fees	2,097		241		(28)		2,310		1,367		160		69		1,596
FDIC insurance expense	1,375		—		—		1,375		3,030		—		—		3,030
General insurance expense	288		75		—		363		225		69		—		294
State capital shares tax	790		—		—		790		366		—		—		366
Travel and entertainment expense	618		137		—		755		524		30		38		592
Technology and data services	3,508		766		—		4,274		1,847		729		—		2,576
Intangible amortization expense	—		477		—		477		—		478		—		478

Marketing and advertising	645		339		—		984		84		310		—		394
Other operating expenses (1)	2,948		282		229		3,459		1,678		163		248		2,089
Total non-interest expense	$	28,975	$	8,508	$	525	$	38,008	$	23,462	$	7,346	$	619	$	31,427

Full-time equivalent employees (2)	288		53		—		341		243		55		—		298

Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
Investment Parent Investment Parent
(Dollars in thousands) Bank Management and Other Consolidated Bank Management and Other Consolidated
Compensation and employee benefits $ 9,035
$ 6,416
$ (768 ) $ 14,683
$ 8,075
$ 6,589
$ —
$ 14,664
Premises and occupancy costs 981
280
(4 ) 1,257
1,025
260
—
1,285
Professional fees 778
234
(44 ) 968
566
176
(49 ) 693
FDIC insurance expense 1,121
—
—
1,121
933
—
—
933
General insurance expense 175
70
—
245
188
70
—
258
State capital shares tax 398
—
—
398
329
—
—
329
Travel and entertainment expense 575
363
(110 ) 828
495
223
—
718
Intangible amortization expense —
463
—
463
—
463
—
463
Change in fair value of acquisition earn out —
—
—
—
—
(1,209 ) —
(1,209 )
Other operating expenses ⁽¹⁾
1,512
384
953
2,849
1,616
691
73
2,380
Total non-interest expense $ 14,575
$ 8,210
$ 27
$ 22,812
$ 13,227
$ 7,263
$ 24
$ 20,514

Full-time equivalent employees ⁽²⁾
165
67
—
232
150
66
—
216


⁽¹⁾	Other operating expenses largely include items such as organizational dues and subscriptions, charitable contributions, data processing, sub-advisory fees, telephone, marketing, employee-related expenses and other general operating expenses.


⁽²⁾	~~Full-time equivalent employees shown are as of the end of the periods presented.~~

(1)Other operating expenses include items such as impairment on historic tax credit investments, charitable contributions, investor relations fees, platform distribution expenses, provision for credit losses on unfunded commitments and other general operating expenses.

(2)Full-time equivalent employees shown are as of the end of the periods presented.

Non-Interest Expense for the Three Months Ended September 30, ~~2017~~2021 and ~~2016~~2020. Our non-interest expense for the three months ended September 30, ~~2017,~~2021, increased ~~$2.3~~$6.6 million, or ~~11.2%~~20.9%, as compared to the same period in ~~2016~~2020, of which ~~$1.3~~included a $5.5 million ~~relates to the~~ increase in expenses of the Bank segment and ~~$947,000 relates to the~~an $1.2 million increase in expenses of the Investment Management segment. ~~The significant~~Notable changes in each segment’s expenses are ~~described below.~~as follows:

Bank Segment:

•The Bank’s compensation and employee benefits costs for the three months ended September 30, ~~2017,~~2021, increased by ~~$960,000,~~$2.3 million, or 17.5%, compared to the same period in ~~2016~~2020, primarily due to an increase in the number of full-time equivalent employees by 45, or 18.5%, from 243 at September 30, 2020 to 288 at September 30, 2021, increases in the overall annual wage and benefits costs of our existing employees, and increases in incentive and stock-based compensation ~~expense.~~ expenses. Due to the uncertainty regarding the impact of the pandemic in 2020, we temporarily minimized hiring efforts beginning in the

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second quarter of 2020. The increases in the number of employees and related expenses are a result of our investment in talent to support our risk management, scalable growth and client experience.

•Professional fees increased $730,000 for the three months ended September 30, ~~2017, increased by $212,000,~~2021, compared to the same period in ~~2016~~, 2020 primarily due to higher consulting fees related to the workout of non-performing loans and higher audit, accounting and legal ~~fees.~~

fees related to routine accounting and regulatory compliance.

•FDIC insurance expense decreased $1.7 million for the three months ended September 30, 2021, compared to the same period in 2020, as the Bank qualified for the lower assessment rates included in the FDIC’s large bank assessment methodology beginning in the fourth quarter of 2020.

•Technology and data services for the three months ended September 30, 2021, increased by $1.7 million compared to the same period in 2020, primarily due to increased software depreciation expense, maintenance costs and software licensing fees all as a result of our continued enhancements in technology and product innovation to support our risk management, scalable growth and client experience.

•Other operating expenses increased by $1.3 million for the three months ended September 30, 2021, compared to the same period in 2020 primarily due to higher impairment of historic tax credit investments.

Investment Management Segment:

•Chartwell’s compensation and employee benefits costs for the three months ended September 30, 2021, increased by $798,000 compared to the same period in 2020, primarily due to an increase in variable incentive compensation expense as a result of increased revenue.

•Travel and entertainment expense for the three months ended September 30, ~~2017,~~2021, increased by ~~$188,000,~~$107,000 compared to the same period in ~~2016~~2020, ~~due to the increase in the Bank’s assets.~~

~~Investment Management Segment:~~

~~Chartwell’s~~ ~~non-interest expenses~~ ~~for the~~ ~~three months ended September 30, 2017, increased by~~ ~~$947,000, compared to the same period in 2016,~~ primarily due to less pandemic related travel restrictions in the ~~decrease to the fair value of the TKG acquisition earnout of $1.2 million~~2021 period.

•Other operating expenses for the three months ended September 30, ~~2016, based on~~ ~~management’s estimate of~~2021, increased by $119,000 compared to the ~~projected annualized run-rate EBITDA of TKG at December 31, 2016.~~

same period in 2020, primarily due to higher mutual fund platform distribution expenses and increased registration fee related expenses.

The following table presents the components of our non-interest expense by operating segment for the nine months ended September 30, ~~2017~~2021 and ~~2016~~2020:


	Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2020
			Investment		Parent						Investment		Parent
(Dollars in thousands)	Bank		Management		and Other		Consolidated		Bank		Management		and Other		Consolidated
Compensation and employee benefits	$	44,472	$	17,168	$	919	$	62,559	$	37,007	$	14,659	$	873	$	52,539
Premises and equipment expense	3,179		920		—		4,099		3,219		1,170		—		4,389
Professional fees	5,185		629		(56)		5,758		3,012		599		564		4,175
FDIC insurance expense	3,625		—		—		3,625		7,760		—		—		7,760
General insurance expense	783		219		—		1,002		627		207		—		834
State capital shares tax	2,217		—		—		2,217		1,115		—		—		1,115
Travel and entertainment expense	1,609		226		—		1,835		1,443		253		39		1,735
Technology and data services	8,713		2,348		—		11,061		5,166		2,128		—		7,294
Intangible amortization expense	—		1,433		—		1,433		—		1,466		—		1,466

Marketing and advertising	1,565		1,001		—		2,566		777		917		—		1,694
Other operating expenses (1)	5,853		789		914		7,556		4,336		565		766		5,667
Total non-interest expense	$	77,201	$	24,733	$	1,777	$	103,711	$	64,462	$	21,964	$	2,242	$	88,668

Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
Investment Parent Investment Parent
(Dollars in thousands) Bank Management and Other Consolidated Bank Management and Other Consolidated
Compensation and employee benefits $ 25,737
$ 18,528
$ (1,467 ) $ 42,798
$ 23,145
$ 16,259
$ —
$ 39,404
Premises and occupancy costs 2,887
883
(7 ) 3,763
2,896
687
—
3,583
Professional fees 2,222
547
(127 ) 2,642
2,156
473
(146 ) 2,483
FDIC insurance expense 3,074
—
—
3,074
2,023
—
—
2,023
General insurance expense 563
242
—
805
547
221
—
768
State capital shares tax 1,148
—
—
1,148
986
—
—
986
Travel and entertainment expense 1,514
786
(110 ) 2,190
1,551
589
—
2,140
Intangible amortization expense —
1,388
—
1,388
—
1,291
—
1,291
Change in fair value of acquisition earn out —
—
—
—
—
(1,209 ) —
(1,209 )
Other operating expenses ⁽¹⁾
4,723
1,412
1,811
7,946
4,545
1,757
206
6,508
Total non-interest expense $ 41,868
$ 23,786
$ 100
$ 65,754
$ 37,849
$ 20,068
$ 60
$ 57,977


⁽¹⁾	Other operating expenses largely include items such as organizational dues and subscriptions, charitable contributions, data processing, sub-advisory fees, telephone, marketing, employee-related expenses and other general operating expenses.

Non-Interest Expense for the Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020. Our non-interest expense for the nine months ended September 30, ~~2017~~2021, increased ~~$7.8~~$15.0 million, or ~~13.4%~~17.0%, as compared to the same period in ~~2016~~2020, which included a $12.7 million

Table of ~~which $4.0 million relates to the~~ Contents

increase in expenses of the Bank segment and ~~$3.7~~a $2.8 million ~~relates to the~~ increase in expenses of the Investment Management segment. ~~The significant~~Notable changes in each segment’s expenses are ~~described below.~~as follows:

Bank Segment:

•The Bank’s compensation and employee benefits costs for the nine months ended September 30, ~~2017~~2021, increased by ~~$2.6~~$7.5 million compared to the same period in ~~2016~~2020, primarily due to an increase in the number of full-time equivalent employees, increases in the overall annual wage and benefits costs of our existing employees, and increases in incentive and stock-based compensation expenses.

Due to the uncertainty regarding the impact of the pandemic in 2020, we temporarily minimized hiring efforts beginning in the second quarter of 2020. The increases in the number of employees and related expenses are a result of our investment in talent to support our risk management, scalable growth and client experience.

~~FDIC insurance expense~~•Professional fees for the nine months ended September 30, ~~2017~~,2021, increased ~~by $1.1~~$2.2 million compared to the same period in ~~2016~~, 2020, primarily due to higher audit, accounting and legal fees related to routine accounting and regulatory compliance, higher investment advisory fees and increases in other professional fees including consulting fees related to the ~~one-time change~~workout of non-performing loans.

•FDIC insurance expense for the nine months ended September 30, 2021, decreased $4.1 million compared to the same period in 2020, as the Bank qualified for the lower assessment rates included in the ~~FDIC~~FDIC’s large bank assessment methodology ~~effective for~~beginning in the ~~third~~fourth quarter of ~~2016,~~2020.

•Technology and ~~the increase in the Bank’s assets.~~

~~Investment Management Segment:~~

~~There was a decrease to the fair value of the TKG acquisition earnout of $1.2 million~~data services for the nine months ended September 30, ~~2016, based on management’s estimate~~2021, increased $3.5 million compared to the same period in 2020, primarily due to increased software depreciation expense, maintenance costs, and software licensing fees all as a result of ~~the projected annualized run-rate EBITDA of TKG at December 31, 2016.~~our continued enhancements in technology and product innovation to support our risk management, scalable growth and client experience.

~~Excluding the earnout adjustment,~~ ~~Chartwell’s non-interest~~•Other operating expenses increased by $1.5 million for the nine months ended September 30, ~~2017~~2021, compared to the same period in 2020 primarily due to higher impairment of historic tax credit investments.

Investment Management Segment:

•Chartwell’s compensation and employee benefits costs for the nine months ended September 30, 2021, increased by $2.5 million compared to the same period in ~~2016~~2020, primarily due to ~~four~~an increase in variable incentive compensation expense as a result of increased revenue.

•Premises and equipment expense for nine months ended September 30, 2021, decreased by $250,000 compared to the same period in 2020, primarily due to lower rent expense as a result of ~~additional~~a new lease amendment effective April 1, 2021.

•Technology and data services for the nine months ended September 30, 2021, increased by $220,000 compared to the same period in 2020, primarily driven by higher investment research services and costs relating to updating Chartwell’s external website.

•Other operating expenses ~~contributed~~for the nine months ended September 30, 2021, increased by $224,000 compared to the ~~operations of TKG, which was acquired at the end of April 2016~~.

same period in 2020, primarily due to higher mutual fund platform distribution expenses and increased registration fee related expenses.

Income Taxes

We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the tax effects of differences between the financial statement and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities with regard to a change in tax rates is recognized in income in the period that includes the enactment date. We evaluate whether it is more likely than not that we will be able to realize the benefit of identified deferred tax assets.

Income Taxes for the Three Months Ended September 30, ~~2017~~2021 and ~~2016~~2020. For the three months ended September 30, ~~2017,~~2021, we recognized income tax expense of ~~$2.2~~$2.9 million, or ~~17.9%~~12.6% of income before tax, as compared to income tax expense of ~~$2.8~~$2.2 million, or ~~24.7%~~18.9% of

income before tax, for the same period in ~~2016~~2020. Our effective tax rate of ~~17.9%~~12.6% for the three months ended September 30, ~~2017,~~

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2021, decreased as compared to the same period in the prior year primarily due to ~~a higher level~~the amount and timing of ~~investment~~ tax credits recognized in ~~the three months ended September 30, 2017, versus the same period in~~ ~~2016~~.2021 compared to 2020.

Income Taxes for the Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020. For the nine months ended September 30, ~~2017~~2021, we recognized income tax expense of ~~$8.6~~$11.9 million, or ~~25.0%~~17.8% of income before tax, as compared to income tax expense of ~~$9.5~~$7.4 million, or ~~31.0%~~18.4% of income before tax, for the same period in ~~2016~~2020. Our effective tax rate of ~~25.0%~~17.8% for the nine months ended September 30, ~~2017~~2021, decreased as compared to the same period in the prior year primarily due to ~~a higher level~~the amount and timing of ~~investment~~ tax credits recognized in ~~the~~ ~~nine months ended September 30, 2017, versus the same period in~~ ~~2016~~.2021 compared to 2020.

Financial Condition

Our total assets as of September 30, ~~2017~~2021, were $~~4.50~~12.16 billion, ~~which was~~ an increase of $~~565.6 million~~2.26 billion, or ~~19.2%~~30.6% on an annualized basis, from December 31, ~~2016~~2020, driven primarily by growth in our loan and investment portfolio. As of September 30, ~~2017~~2021, our loan portfolio totaled $9.87 billion, an increaseof ~~$3.93~~$1.63 billion~~increased$529.6 million~~, or ~~20.8%~~26.5% on an annualized basis, from December 31, ~~2016~~2020. Total investment securities ~~decreased $17.6~~increased $587.1 million, or ~~9.8%~~93.2% on an annualized basis, to $~~220.9 million~~,1.43 billion as of September 30, ~~2017~~2021, from December 31, ~~2016, primarily~~2020. We focus on high quality loan growth and we aim to increase our assets through adding to our investment portfolio as ~~a result~~part of ~~the net activity~~our strategy to build greater on-balance sheet liquidity, funded by our deposits.

As of ~~calls, maturities and purchases of certain securities. Cash and cash equivalents~~ ~~increased$32.6 million, to~~ ~~$136.6 million, as of~~ September 30, ~~2017, from~~ ~~December 31, 2016. As of~~ ~~September 30, 2017~~2021, our total deposits were $10.76 billion, an increase of $~~3.77~~2.27 billion~~increased$483.1 million~~, or ~~19.7%~~35.7% annualized, from December 31, ~~2016~~2020. Net borrowings ~~increased $39.7~~decreased $44.8 million to ~~$279.2~~$355.7 million as of September 30, ~~2017~~2021, from December 31, ~~2016~~2020. Our shareholders’ equity increased$~~25.5~~56.9 million to $~~377.3~~814.0 million as of September 30, ~~2017~~2021, from December 31, ~~2016. This~~ ~~increase~~ ~~was~~2020, primarily ~~the result of~~ ~~$25.9 million~~ indue to net income ~~and the impact~~ of ~~$4.2~~$55.0 million,$8.2 million in stock-based compensation and an increase of $1.2 million in accumulated other comprehensive income, partially offset by ~~the purchase~~preferred stock dividends paid of ~~$6.5~~$5.9 million, and an increase of $2.0 million in treasury ~~stock.~~stock related to the net settlement of equity awards exercised or vested.

Loans and Leases

~~The Bank’s primary source of income is interest on loans.~~ Our loan and lease portfolio, which represents our largest earning asset, primarily consists of loans to our private banking clients, commercial and industrial loans and leases, and real estate loans secured by commercial properties. ~~The loan portfolio represents our largest earning asset.~~ As of September 30, ~~2017, 90.0%~~2021, 94.8% of our loans ~~have~~had a floating interest rate.

The following table presents the composition of our loan portfolio as of the dates indicated:


	September 30, 2021				December 31, 2020
(Dollars in thousands)	Outstanding		Percent of Loans		Outstanding		Percent of Loans
Private banking loans	$	6,204,009	62.9	%	$	4,807,800	58.4	%
Middle-market banking loans:
Commercial and industrial	1,340,817		13.6	%	1,274,152		15.5	%
Commercial real estate	2,324,185		23.5	%	2,155,466		26.1	%
Total middle-market banking loans	3,665,002		37.1	%	3,429,618		41.6	%
Loans and leases held-for-investment	$	9,869,011	100.0	%	$	8,237,418	100.0	%

September 30, 2017 December 31, 2016
(Dollars in thousands) Outstanding Percent of
Loans Outstanding Percent of
Loans
Private banking loans $ 2,055,808
52.3 % $ 1,735,928
51.0 %
Middle-market banking loans:
Commercial and industrial 648,720
16.5 % 587,423
17.3 %
Commercial real estate 1,226,142
31.2 % 1,077,703
31.7 %
Total middle-market banking loans 1,874,862
47.7 % 1,665,126
49.0 %
Loans held-for-investment $ 3,930,670
100.0 % $ 3,401,054
100.0 %

Loans and Leases Held-for-Investment. Loans and leases held-for-investment increased by $~~529.6 million~~1.63 billion, or ~~20.8%~~26.5% on an annualized basis, to $~~3.93~~9.87 billion as of September 30, ~~2017~~2021, ~~as compared to~~ from December 31, ~~2016~~2020. Our growth for the nine months ended September 30, ~~2017~~2021, was comprised of an increase in private banking loans of $~~319.9 million~~, 1.40 billion, an increase ~~in commercial and industrial loans of~~ ~~$61.3 million, and~~ ~~an increase~~ in commercial real estate loans of $~~148.4~~168.7 million, and an increase in commercial and industrial loans and leases of $66.7 million.

Primary Loan Categories

Private Banking Loans. Our private banking loans include personal and commercial loans that are sourced through our private banking channel (which operates on a national basis), including referral relationships with financial ~~intermediaries, which operates on a national basis.~~intermediaries. These loans primarily consist of loans made to high-net-worth individuals, trusts and businesses that ~~may be~~are secured by cash and marketable ~~securities,~~securities. We also originate loans that are secured by cash value life insurance and to a lesser extent residential property or other financial assets. The primary source of repayment for these loans is the income and assets of the borrower.We also have a limited number of unsecured loans and lines of credit in our private banking loan portfolio.

As of September 30, ~~2017~~2021, ~~there were $1.93~~$6.12 billion, or ~~93.9%~~98.7%, of our private banking loans ~~that~~ were secured by cash, ~~and~~ marketable securities and/or cash value life insurance as compared to ~~$1.58~~$4.74 billion, or ~~91.3%~~98.6%, as of December 31, ~~2016~~2020. Our private banking lines of credit are

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typically due on demand. ~~The~~We expect the growth in these loans ~~secured by cash and marketable securities is expected~~ to continue as a result of our focus on this portion of our ~~private~~ banking ~~business as we~~business. We believe we have strong competitive advantages in this line of ~~business.~~business given our robust distribution channel relationships and proprietary technology. These loans ~~tend to~~usually have a lower risk profile and are an efficient use of capital because they typically are zero percent risk-weighted for regulatory capital purposes. On a daily

basis, we monitor the collateral of ~~these~~the loans secured by cash, ~~and~~ marketable securities and/or cash value life insurance, which further reduces the risk profile of the private banking portfolio. Since inception, we have had no charge-offs related to our loans secured by cash, ~~and~~ marketable ~~securities.~~securities and/or cash value life insurance.

Loans sourced through our private banking channel also include loans that are classified for regulatory purposes as commercial, most of which are also secured by cash, ~~and~~ marketable ~~securities.~~securities and/or cash value life insurance. The table below includes all loans made through our private banking channel, by collateral type, as of the dates indicated.


(Dollars in thousands)	September 30, 2021		December 31, 2020
Private banking loans:
Secured by cash, marketable securities and/or cash value life insurance	$	6,123,908	$	4,738,594
Secured by real estate	42,033		45,014
Other	38,068		24,192
Total private banking loans	$	6,204,009	$	4,807,800

(Dollars in thousands) September 30,
2017 December 31,
2016
Private banking loans:
Secured by cash and marketable securities $ 1,930,501
$ 1,584,373
Secured by real estate 95,649
110,476
Other 29,658
41,079
Total private banking loans $ 2,055,808
$ 1,735,928

As of September 30, 2021, there were $6.12 billion of total private banking loans with a floating interest rate and $80.7 million with a fixed interest rate, compared to $4.73 billion and $77.1 million, respectively, as of December 31, 2020.

~~Middle-Market~~

Commercial Banking - Commercial and Industrial ~~Loans.~~ Loans and Leases. Our commercial and industrial loan and lease portfolio primarily includes loans and equipment leases made to financial and other service companies or manufacturers generally for the purposes of financing production, operating capacity, accounts receivable, inventory, equipment, acquisitions and recapitalizations. Cash flow from the borrower’s operations is the primary source of repayment for these loans and leases, except for certain commercial loans that are secured by ~~cash~~marketable securities.

As of September 30, 2021, there were $1.01 billion of total commercial and ~~marketable securities.~~industrial loans with a floating interest rate and $330.7 million with a fixed interest rate, compared to $966.6 million and $307.6 million, respectively, as of December 31, 2020.

~~Middle-Market~~Commercial Banking - Commercial Real Estate Loans. Our commercial real estate loan portfolio includes loans secured by commercial purpose real estate, including both ~~owner occupied~~owner-occupied properties and investment properties for various purposes including office, industrial, multifamily, retail, hospitality, healthcare and self-storage. Also included are commercial construction loans to finance the construction or renovation of structures as well as to finance the acquisition and development of raw land for various purposes. Individual project cash flows, global cash flows and liquidity from the developer, or the sale of the property are the primary sources of repayment for commercial real estate loans secured by investment properties. The primary source of repayment for commercial real estate loans secured by ~~owner occupied~~owner-occupied properties is cash flow from the borrower’s operations. There were $216.7 million and $220.8 million of owner-occupied commercial real estate loans as of September 30, 2021 and December 31, 2020, respectively.

As of September 30, ~~2017~~2021, there were ~~$1.04~~$2.22 billion of total commercial real estate loans with a floating interest rate and ~~$181.2~~$100.0 million with a fixed interest rate, as compared to ~~$901.5~~$2.03 billion and $123.3 million, ~~and~~ ~~$176.2 million~~, respectively, as of December 31, ~~2016~~2020.

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Loan and Lease Maturities and Interest Rate Sensitivity

The following table presents the contractual maturity ranges and the amount of such loans and leases with fixed and adjustable rates in each maturity range as of the date indicated.


	September 30, 2021
(Dollars in thousands)	Due on Demand		One Year or Less		One to Five Years		Greater Than Five Years		Total
Maturity:
Private banking	$	5,945,944	$	55,636	$	106,143	$	96,286	$	6,204,009
Commercial and industrial	6,439		414,469		714,806		205,103		1,340,817
Commercial real estate	—		385,398		941,230		997,557		2,324,185
Loans and leases held-for-investment	$	5,952,383	$	855,503	$	1,762,179	$	1,298,946	$	9,869,011

Interest rate sensitivity:
Fixed interest rates	$	57,963	$	36,879	$	232,307	$	184,269	$	511,418
Floating or adjustable interest rates	5,894,420		818,624		1,529,872		1,114,677		9,357,593
Loans and leases held-for-investment	$	5,952,383	$	855,503	$	1,762,179	$	1,298,946	$	9,869,011

September 30, 2017
(Dollars in thousands) One Year
or Less One to
Five Years Greater Than
Five Years Total
Loan maturity:
Private banking $ 1,950,330
$ 56,765
$ 48,713
$ 2,055,808
Commercial and industrial 173,859
356,631
118,230
648,720
Commercial real estate 234,856
555,715
435,571
1,226,142
Loans held-for-investment $ 2,359,045
$ 969,111
$ 602,514
$ 3,930,670

Interest rate sensitivity:
Fixed interest rates $ 118,061
$ 140,916
$ 134,259
$ 393,236
Floating or adjustable interest rates 2,240,984
828,195
468,255
3,537,434
Loans held-for-investment $ 2,359,045
$ 969,111
$ 602,514
$ 3,930,670

Interest Reserve Loans

As of September 30, ~~2017~~2021, loans with interest reserves totaled ~~$197.2~~$427.3 million, which represented ~~5.0%~~4.3% of loans and leases held-for-investment, as compared to ~~$159.4~~$389.1 million, or 4.7%, as of December 31, ~~2016.~~2020. Certain loans reserve a portion of the proceeds to be used to pay interest due on the loan. These loans with interest reserves are common for construction and land development loans. The use of interest reserves is based on the project budget and schedule for completion, the feasibility of the project, the creditworthiness of the borrower and guarantors, and the loan to value coverage of the collateral. The interest reserve may be used by the borrower, when certain financial conditions are met, to draw loan funds to pay interest charges on the outstanding balance of the loan. When drawn, the interest is capitalized and added to the loan balance, subject to conditions

specified during the initial underwriting and at the time the credit is approved. We have procedures and controls for monitoring compliance with loan covenants, ~~for~~ advancing funds and determining default conditions. ~~In addition, most of our construction lending is performed within our geographic footprint and our lenders are familiar with trends in the local real estate market.~~

Allowance for ~~Loan~~Credit Losses on Loans and Leases

Our allowance for ~~loan~~credit losses ~~represents~~on loans and leases represent our current estimate of ~~probable loan~~expected credit losses ~~inherent~~ in the loan and lease portfolio at a specific point in time. This estimate includes credit losses associated with ~~specifically identified~~individually evaluated loans ~~as well as estimated probable credit losses inherent in the remainder of the loan portfolio.~~and leases that do not share similar risk characteristics. Additions are made to the allowance through both periodic provisions recorded in the consolidated statements of income and recoveries of losses previously incurred. Reductions to the allowance occur as loans and lease are charged off or when the current estimate of expected credit ~~history~~losses in of any of the three loan portfolios ~~improves. Management evaluates~~ decreases. Results for the ~~adequacy~~three and nine months ended September 30, 2021, are presented under CECL methodology while prior period amounts continue to be reported in accordance with previously applicable GAAP. Refer to Note 1, Summary of Significant Accounting Policies and Note 4, Allowance for Credit Losses on Loans and Leases, to our unaudited condensed consolidated financial statements for more details on the ~~allowance quarterly. This evaluation is subjective and requires material estimates that may change over time.~~ ~~In addition, management evaluates the~~Company’s allowance for ~~loan~~credit losses ~~overall methodology~~ on loans and ~~estimates used in the calculation on an annual basis.~~leases.

The two components of the allowance for loan losses are general reserves, in which estimates are based upon homogeneous loan pools such as commercial loans, consumer lines of credit and residential mortgages that are not individually evaluated for impairment; and specific reserves, which are applied to commercial and consumer loans that are individually evaluated for impairment.

In estimating probable loan loss of general reserves we consider numerous factors, including historical charge-offs and subsequent recoveries. We also consider, but are not limited to, qualitative factors that influence our credit quality, such as delinquency and non-performing loan trends, changes in loan underwriting guidelines and credit policies, as well as the results of internal loan reviews. Finally, we consider the impact of changes in current local and regional economic conditions in the markets that we serve. Assessment of relevant economic factors indicates that some of our primary markets historically tend to lag the national economy, with local economies in those primary markets also improving or weakening, as the case may be, but at a more measured rate than the national trends.

~~We base the computation of the allowance for loan losses of general reserves on two factors: the primary factor and the secondary factor. The primary factor is based~~ on the inherent risk identified within each of the Company’s three loan portfolios based on the historical loss experience of each loan portfolio and the loss emergence period. Management has developed a methodology that is applied to each of our three primary loan portfolios: private banking, commercial and industrial, and commercial real estate. As the loan loss history, mix and risk rating of each loan portfolio change, the primary factor adjusts accordingly. The allowance for loan losses related to the primary factor is based on our estimates as to probable losses for each loan portfolio. The secondary factor is intended to capture risks related to events and circumstances that management believes have an impact on the performance of the loan portfolio. Although this factor is more subjective in nature, the methodology focuses on internal and external trends in pre-specified categories (risk factors) and applies a quantitative percentage that drives the secondary factor. We have identified nine risk factors and each risk factor is assigned a reserve level, based on management’s judgment, as to the probable impact on each loan portfolio and is monitored on a quarterly basis. As the trend in each risk factor changes, a corresponding change occurs in the reserve associated with each respective risk factor, such that the secondary factor remains current to changes in each loan portfolio. Potential problem loans are identified and monitored through frequent, formal review processes. Updates are presented to our board of directors as to the status of loan quality at least quarterly.

The following table summarizes the allowance for loan and lease losses, as of the dates indicated:


(Dollars in thousands)	September 30, 2021			December 31, 2020
General reserves	$	25,463		$	32,642
Specific reserves	6,900			1,988
Total allowance for credit losses on loans and leases	$	32,363		$	34,630
Allowance for credit losses on loans and leases to loans and leases	0.33		%	0.42		%

(Dollars in thousands) September 30,
2017 December 31,
2016
General reserves $ 12,375
$ 11,823
Specific reserves 3,604
6,939
Total allowance for loan losses $ 15,979
$ 18,762
Allowance for loan losses to loans 0.41 % 0.55 %

As of September 30, ~~2017~~2021, we had specific reserves totaling $~~3.6~~6.9 millionrelated to ~~impaired~~individually evaluated loans with an aggregated total outstanding balance of $~~6.8~~8.6 million. As of December 31, ~~2016~~2020, we had specific reserves totaling ~~$6.9~~$2.0 millionrelated to ~~impaired~~individually evaluated loans with an aggregated total outstanding balance of ~~$17.8 million~~.$9.7 million. These loans were on non-accrual status as of September 30, ~~2017~~2021 and December 31, ~~2016~~.2020, respectively.

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The following table summarizes allowance for ~~loan~~credit losses ~~by loan category~~on loans and leases and the percentage of loans and leases by category, as of the dates indicated:


	September 30, 2021				December 31, 2020
(Dollars in thousands)	Reserve		Percent of Loans and Leases			Reserve		Percent of Loans and Leases
Private banking	$	2,156	62.9	%		$	2,047	58.4	%
Commercial and industrial	10,796		13.6	%		5,254		15.5	%
Commercial real estate	19,411		23.5	%		27,329		26.1	%
Total allowance for credit losses on loans and leases	$	32,363	100.0	%		$	34,630	100.0	%

September 30, 2017 December 31, 2016
(Dollars in thousands) Reserve Percent of Loans Reserve Percent of Loans
Private banking $ 1,491
52.3 % $ 1,424
51.0 %
Commercial and industrial 9,593
16.5 % 12,326
17.3 %
Commercial real estate 4,895
31.2 % 5,012
31.7 %
Total allowance for loan losses $ 15,979
100.0 % $ 18,762
100.0 %

Allowance for ~~Loan~~Credit Losses on Loans and Leases as of September 30, ~~2017~~2021 and December 31, ~~2016~~2020. Our allowance for ~~loan~~credit losses ~~decreased~~ to on loans and leases was $~~16.0~~32.4 million, or ~~0.41%~~0.33% of loans as of September 30, ~~2017, as~~2021, compared to $~~18.8~~34.6 million, or ~~0.55%~~0.42% of loans, as of December 31, ~~2016~~2020. Our allowance for ~~loan~~credit losses on commercial loans decreased to 0.82% of total commercial loans (excluding private banking loans primarily collateralized by liquid, marketable securities that do not require a reserve) as of September 30, 2021, compared to 0.95% of commercial loans as of December 31, 2020. Our allowance for credit losses decreased $2.3 million from December 31, 2020, driven by a decrease of $7.2 million in general reserves, partially offset by an increase of $4.9 million in specific reserves. Our allowance for credit losses related to private banking loans increased ~~$67,000~~$109,000 from December 31, ~~2016~~2020 to September 30, ~~2017, which was attributable to growth in this portfolio partially offset by lower specific reserves related to paydowns on non-performing loans.~~ 2021. Our allowance for ~~loan~~credit losses related to commercial and industrial loans ~~decreased~~ ~~$2.7~~increased $5.5 million from December 31, ~~2016~~2020 to September 30, ~~2017~~2021, which was attributable to ~~charge-offs~~higher specific reserves due to the addition of ~~$4.3 million on non-performing~~non-accrual loans, partially offset by ~~increases~~a decrease in general ~~reserves of $494,000 and net increases in specific reserves of $1.1 million.~~reserves. Our allowance for ~~loan~~credit losses related to commercial real estate loans decreased by $~~117,000~~7.9 million from December 31, ~~2016~~2020 to September 30, ~~2017~~2021, ~~primarily~~ due to decreased general reserves. The decrease in general reserves in our commercial loan portfolio was primarily driven by improvement in economic forecasts related to assumptions utilized in the ~~overall strong~~qualitative factors. We applied a management overlay to our allowance for credit ~~quality~~loss model to provide a reserve level that supports management’s best estimate of ~~this portfolio partially offset~~current expected credit losses within the loan portfolio. The management overlay includes scenarios with near-term economic stress and other factors based upon management judgement. The consensus forecast within our model provided for a greater reserve release based on optimism around the economic environment and loss forecasts, which we believe may be an overreaction to the early onset of historically high level and rate of changes in the forecast and transactional values within commercial asset types. We would release reserves to the extent suggested by ~~loan growth.~~our model if we believe that there is a sustained trend in the economic recovery data and continued progress overcoming the COVID-19 pandemic and associated supply chain issues.

Charge-Offs /and Recoveries

Our charge-off policy for commercial and private banking loans and leases requires that ~~loans and other~~ obligations that are not collectible be promptly charged off in the month the loss becomes probable, regardless of the delinquency status of the ~~loan.~~loan or lease. We recognize a partial charge-off when we have determined that the value of the collateral is less than the remaining ledger balance at the time of the evaluation. ~~A loan or~~An obligation is not required to be charged off, regardless of delinquency status, if ~~(1)~~ we have determined there exists sufficient collateral to protect the remaining loan or lease balance and ~~(2)~~ there exists a strategy to liquidate the collateral. We may also consider a number of other factors to determine when a charge-off is appropriate, including: the status of a bankruptcy ~~proceeding;~~proceeding, the value of collateral and probability of successful ~~liquidation;~~liquidation, and the status of adverse proceedings or litigation that may result in collection.

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The following table provides an analysis of the allowance for ~~loan~~credit losses on loans and leases, charge-offs, recoveries and provision for ~~loan~~credit losses on loans and leases for the periods indicated:


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2021			2020			2021			2020
Beginning balance	$	32,577		$	23,276		$	34,630		$	14,108

Charge-offs:
Private banking	—			—			—			(171)
Commercial and industrial	(122)			—			(321)			—
Commercial real estate	(116)			—			(2,482)			—
Total charge-offs	(238)			—			(2,803)			(171)
Recoveries:
Private banking	—			—			—			—
Commercial and industrial	—			—			113			341
Commercial real estate	—			—			—			—
Total recoveries	—			—			113			341
Net recoveries (charge-offs)	(238)			—			(2,690)			170
Provision for credit losses on loans and leases	24			7,430			423			16,428
Ending balance	$	32,363		$	30,706		$	32,363		$	30,706

Net loan charge-offs to average total loans and leases, annualized	0.01		%	—		%	0.04		%	—		%
Provision for credit losses on loans and leases to average total loans and leases, annualized	—		%	0.40		%	0.01		%	0.31		%

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Beginning balance $ 15,968
$ 17,215
$ 18,762
$ 17,974
Charge-offs:
Private banking —
—
—
—
Commercial and industrial (413 ) —
(4,302 ) (1,542 )
Commercial real estate —
—
—
—
Total charge-offs (413 ) —
(4,302 ) (1,542 )
Recoveries:
Private banking —
—
—
—
Commercial and industrial 136
127
472
708
Commercial real estate 5
3,411
5
3,411
Total recoveries 141
3,538
477
4,119
Net recoveries (charge-offs) (272 ) 3,538
(3,825 ) 2,577
Provision (credit) for loan losses 283
(542 ) 1,042
(340 )
Ending balance $ 15,979
$ 20,211
$ 15,979
$ 20,211

Net loan charge-offs (recoveries) to average total loans, annualized 0.03 % (0.46 )% 0.14 % (0.12 )%
Provision (credit) for loan losses to average total loans, annualized 0.03 % (0.07 )% 0.04 % (0.02 )%

Non-Performing Assets

Non-performing assets consist of non-performing loans and ~~other real estate owned.~~OREO. Non-performing loans are loans that are on non-accrual status. OREO is real property acquired through foreclosure on the collateral underlying defaulted loans and includes in-substance foreclosures. We record OREO at fair value, less estimated costs to sell the assets.

Our policy is to place loans in all categories on non-accrual status when collection of interest or principal is doubtful, or when interest or principal payments are 90 days or more past due. There ~~were~~ no ~~loans 90 days or more past due and still accruing interest as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, and there~~ was no interest income recognized on ~~these~~ loans while on non-accrual status for the nine months ended September 30, ~~2017~~2021 and ~~2016.~~2020. As of September 30, 2021 and December 31, 2020, there were no loans 90 days or more past due and still accruing income. As of September 30, ~~2017,~~2021, non-performing loans were ~~$6.9~~$8.6 million, or ~~0.18%~~0.09% of total loans, compared to ~~$17.8~~$9.7 million, or ~~0.52%~~0.12% of total loans, as of December 31, ~~2016.~~2020. We had specific reserves of ~~$3.6~~$6.9 million and ~~$6.9~~$2.0 million as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively, on these non-performing loans. The net loan balance of our non-performing loans was ~~18.3%~~20.0% and ~~40.5%~~79.2% of the customer’s outstanding balance after payments, charge-offs and specific reserves as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively.

For additional information on our non-performing loans ~~for~~as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, refer to Note 4, Allowance for ~~Loan~~Credit Losses on Loans and Leases, to our unaudited condensed consolidated financial statements.

Once the determination is made that a foreclosure is necessary, the loan is reclassified as “in-substance foreclosure” until a sale date and title to the property is finalized. Once we own the property, it is maintained, marketed, and rented ~~and~~or sold to repay the original loan. Historically, foreclosure trends in our loan portfolio have been low due to the ~~seasoning~~credit quality of ~~our~~the real estate portfolio. Any loans that are modified or extended are reviewed for potential classification as a ~~TDR~~troubled debt restructuring (“TDR”) loan. For borrowers that are experiencing financial difficulty, we complete a process that outlines the terms of the modification, the reasons for the proposed modification, and documents the current status of the borrower.

In response to the COVID-19 pandemic and its economic impact on our customers, we implemented a short-term loan modification program in compliance with the CARES Act and applicable regulatory guidance to provide temporary payment relief to those borrowers directly impacted by COVID-19. As of September 30, 2021, only two loans representing $18.8 million, or 0.2% of loans, were still in deferral status. Under the applicable guidance, these loan modifications were not considered TDRs. These loans that are still in deferral status are in our commercial real estate loan portfolio.

We had non-performing assets of $~~10.5~~10.8 million, or ~~0.23%~~0.09% of total assets, as of September 30, ~~2017~~2021, as compared to $~~22.0~~12.4 million, or ~~0.56%~~0.13% of total assets, as of December 31, ~~2016~~2020. The decrease in non-performing assets was ~~due to $11.5~~the result of $13.1 million in new non-performing assets, more than offset by $14.7 million in reductions onto non-performing ~~loans including a loan which was restructured and returned to performing status, charge-offs, paydowns and sales~~assets. As of ~~OREO during the~~ ~~nine months ended~~ September 30, ~~2017. This~~ ~~decrease~~ ~~was considered within the assessment of the determination of the allowance for loan losses. As of~~ ~~September 30, 2017~~2021 and December 31, ~~2016~~2020, we had OREO properties totaling ~~$3.6~~$2.2 million and ~~$4.2~~$2.7 million, respectively.The change in the OREO balance

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from December 31, 2020 was attributable to a $155,000 write-down on an OREO property and $351,000 in proceeds from the sale of an OREO property. The net loss from the sale of OREO was $39,000 during the nine months ended September 30, 2021.

The following table summarizes our non-performing assets as of the dates indicated:


(Dollars in thousands)	September 30, 2021			December 31, 2020
Non-performing loans:
Private banking	$	—		$	—
Commercial and industrial	8,625			458
Commercial real estate	—			9,222
Total non-performing loans	$	8,625		$	9,680
Other real estate owned	2,178			2,724
Total non-performing assets	$	10,803		$	12,404

Non-performing troubled debt restructured loans	$	—		$	2,926


Non-performing loans to total loans	0.09		%	0.12		%
Allowance for credit losses on loans and leases to non-performing loans	375.22		%	357.75		%
Non-performing assets to total assets	0.09		%	0.13		%

(Dollars in thousands) September 30,
2017 December 31,
2016
Non-performing loans:
Private banking $ 407
$ 517
Commercial and industrial 6,529
17,273
Commercial real estate —
—
Total non-performing loans $ 6,936
$ 17,790
Other real estate owned 3,581
4,178
Total non-performing assets $ 10,517
$ 21,968

Non-performing troubled debt restructured loans $ 6,936
$ 17,273
Performing troubled debt restructured loans $ 3,449
$ 471
Non-performing loans to total loans 0.18 % 0.52 %
Allowance for loan losses to non-performing loans 230.38 % 105.46 %
Non-performing assets to total assets 0.23 % 0.56 %

Potential Problem Loans

Potential problem loans are those loans that are not categorized as non-performing loans, but where current information indicates that the borrower may not be able to comply with repayment ~~terms.~~terms in the future. Among other factors, we monitor past due status as an indicator of credit deterioration and potential problem loans. A loan is considered past due when the contractual principal and/or interest due in accordance with the terms of the loan agreement remains unpaid after the due date of the scheduled payment. To the extent that loans become past due, we assess the potential for loss on such loans individually as we would with other problem loans and consider the effect of any potential loss in determining any additional provision for ~~loan losses.~~credit losses on loans and leases. We also assess alternatives to maximize collection of any past due loans, including and without limitation, restructuring loan terms, requiring additional loan guarantee(s) or collateral, or other planned action.

For additional information on the age analysis of past due loans segregated by class of loan for September 30, ~~2017~~2021 and December 31, ~~2016~~2020, refer to Note 4, Allowance for ~~Loan~~Credit Losses on Loans and Leases, to our unaudited condensed consolidated financial statements.

On a monthly basis, we monitor various credit quality indicators for our loan portfolio, including delinquency, non-performing status, changes in risk ratings, changes in the underlying performance of the borrowers and other relevant factors. On a daily basis, we monitor the collateral of loans secured by cash, ~~and~~ marketable securities and/or cash value life insurance within the private banking portfolio, which further reduces the risk profile of that portfolio.

Loan risk ratings are assigned based ~~upon~~on the creditworthiness of the borrower and the quality of the collateral for loans secured by marketable securities. Loan risk ratings are reviewed on an ongoing basis according to internal policies. Loans within the pass rating are believed to have a lower risk of loss than loans that are risk rated as special mention, substandard ~~and~~or doubtful, which are believed to have an increasing risk of loss. Our internal risk ratings are consistent with regulatory guidance. We also monitor the loan portfolio through a formal periodic review process. All non-pass rated loans are reviewed monthly and higher risk-rated loans within the pass category are reviewed three times a year.

For additional information on the definitions of our internal risk rating and the ~~recorded investment in~~amortized cost of loans by credit quality indicator for September 30, ~~2017~~2021 and December 31, ~~2016~~2020, refer to Note 4, Allowance for ~~Loan~~Credit Losses on Loans and Leases, to our unaudited condensed consolidated financial statements.

Investment Securities

We utilize investment activities to enhance net interest income while supporting liquidity management and interest rate risk ~~management and liquidity~~ management. Our securities portfolio consists of available-for-sale debt securities, held-to-maturity debt securities, equity securities and, from time to time, debt securities held for trading purposes. Also included in our investment securities ~~is Federal Home Loan Bank Stock.~~are FHLB stock. For additional information on FHLB stock, refer to Note 2, Investment Securities, to our unaudited condensed consolidated financial statements. ~~Securities~~Debt securities purchased with the intent to sell under trading activity and equity securities are recorded at fair value and changes to fair value are recognized in the consolidated statements of income. ~~Securities~~Debt securities categorized as available-for-sale are

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recorded at fair value and changes in the fair value of these securities are recognized as a component of total shareholders’ equity, within accumulated other comprehensive income (loss), net of deferred taxes. ~~Securities~~Debt securities categorized as held-to-maturity are ~~debt~~ securities that the Company intends to hold until maturity and are recorded at amortized ~~cost.~~cost, net of allowance for credit losses.

On a quarterly basis, we determine the fair market value of our investment securities based on information provided by external sources. In addition, on a quarterly basis, we conduct an internal evaluation of changes in the fair market value of our investment securities to gain a level of comfort with the market value information received from the external sources.

Securities, like loans, are subject to interest rate risk and credit risk. In addition, by their nature, securities classified as available-for-sale are also subject to fair value risks that could negatively affect the level of liquidity available to us, as well as shareholders’ equity. The Bank has engaged Chartwell to provide securities portfolio advisory services, subject to the investment parameters set forth in our investment policy.

As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, we reported debt securities in available-for-sale and held-to-maturity ~~categories.~~categories as

well as equity securities. In general, fair value is based ~~upon~~on quoted market prices of identical assets, when available. Where sufficient data is not available to produce a fair valuation, fair value is based on broker quotes for similar assets. ~~Quarterly, we~~We validate the prices received from these third parties on a quarterly basis by comparing them to prices provided by a different independent pricing service. We have also reviewed the valuation methodologies provided to us by our pricing services. Broker quotes may be adjusted to ensure that financial instruments are recorded at fair value. Adjustments may include unobservable parameters, among other things.

~~We perform a quarterly review of our investment~~Securities, like loans, are subject to interest rate risk and credit risk. In addition, by their nature, debt securities ~~to identify those that may indicate other-than-temporary impairment. Our policy for OTTI is based upon a number of factors, including but not limited to, the length of time~~classified as available-for-sale, and ~~extent~~trading securities and equity securities are also subject to ~~which the estimated~~ fair value ~~has been less than cost,~~risks that could negatively affect the ~~financial condition~~level of ~~the underlying issuer, the ability of the issuer~~liquidity available to meet contractual obligations, the likelihood of the investment security’s ability to recover any decline in its estimated fair value and for debt securities whether we intend to sell the investment security or if it is more likely than not that we will be required to sell the investment security prior to its recovery. If the financial markets experience deterioration, charges to income could occur in future periodsus, as ~~a result of OTTI determinations.~~well as shareholders’ equity.

Our available-for-sale debt securities portfolio consists of U.S. government agency obligations, mortgage-backed securities, collateralized ~~loan~~mortgage obligations, corporate bonds, single-issuer trust preferred securities, and certain municipal bonds, all with varying contractual ~~maturities, as well as certain equity securities.~~maturities. Our held-to-maturity ~~portfolio~~debt securities consists of certain municipal bonds, agency obligations, mortgage-backed securities, U.S. treasury notes and corporate bonds while our trading portfolio, when active, typically consists of U.S. ~~Treasury Notes,~~treasury notes, also with varying contractual maturities. However, these maturities do not necessarily represent the expected life of ~~the~~certain securities as the securities may be called or paid down without penalty prior to their stated maturities. The effective duration of our debt securities portfolio as of September 30, ~~2017~~2021, was approximately ~~1.6,~~4.8, where duration is defined as the approximate percentage change in price for a ~~100 basis~~100-basis point change in rates. No investment in any of these securities exceeds any applicable limitation imposed by law or regulation. Our ~~Asset/~~Asset and Liability ~~Management~~ Committee (“ALCO”) reviews the investment portfolio on an ongoing basis to ensure that the investments conform to our investment policy.

Available-for-Sale ~~Investment~~Debt Securities. We held ~~$151.8~~$555.6 million and ~~$174.9~~$617.6 million in ~~investment~~debt securities available-for-sale as of September 30, ~~2017~~2021 and December 31, ~~2016~~2020, respectively. The decrease of $~~23.1~~62.0 million was primarily attributable to ~~repayments, including~~the transfer of $480.8 million fair value of agency mortgage-backed securities to held-to-maturity, sales of $121.7 million, and prepayments, calls and maturities of ~~$46.8~~$51.8 million, net of purchases of ~~$22.9~~$595.6 million ~~of certain securities~~ during the nine months ended September 30, ~~2017.~~2021.

On a fair value basis, ~~53.1%~~23.8% of our available-for-sale ~~investment~~debt securities as of September 30, ~~2017~~2021, were floating-rate securities, for which yields increase or decrease based on changes in market interest rates. As of December 31, ~~2016~~2020, floating-rate securities comprised ~~67.0%~~23.8% of our available-for-sale ~~investment~~debt securities.

On a fair value basis, ~~39.7%~~27.2% of our available-for-sale ~~investment~~debt securities as of September 30, ~~2017~~2021, were U.S. government and agency securities, which tend to have a lower risk profile ~~while the remainder of the portfolio was comprised of~~than certain corporate bonds, single-issuer trust preferred securities, non-agency ~~commercial~~residential mortgage-backed securities, and ~~collateralized loan obligations, and certain equity securities.~~municipal bonds, which comprised the remainder of the portfolio. As of December 31, ~~2016~~2020, agency securities comprised ~~41.6%~~71.4% of our available-for-sale ~~investment~~debt securities. The decrease was due to the transfer of the agency mortgage-backed securities to held-to-maturity.

Held-to-Maturity ~~Investment~~Debt Securities. We held ~~$58.3~~$857.2 million and ~~$53.9~~$211.8 million in ~~investment~~debt securities held-to-maturity as of September 30, ~~2017~~2021 and December 31, ~~2016~~2020, respectively. The increase of ~~$4.4~~$645.4 million was primarily attributable to the transfer of $480.8 million of previously designated available-for-sale agency mortgage-backed securities to held-to-maturity designation and purchases of ~~$7.5~~$481.6 million, net of ~~a call~~calls and maturities of ~~$3.0~~$308.0 million, ~~of certain securities~~ during the nine months ended September 30, ~~2017.~~2021. As part of our asset and liability management strategy, we determined that we have the intent and ability to hold these bonds until maturity, and these securities were reported at amortized cost, net of allowance for credit losses, as of September 30, ~~2017~~2021 and December 31, ~~2016~~2020.

Trading ~~Investment~~Debt Securities. We held no ~~investment~~ trading debt securities ~~for trading~~ as of September 30, ~~2017~~2021 and December 31, ~~2016~~2020. ~~From time~~

Equity Securities. Chartwell launched a new mutual fund during the three months ended September 30, 2021. The Chartwell Short Duration Bond Fund is a short duration, fixed income fund that invests at least 75% of its net assets in investment grade short duration bonds and can allocate up to ~~time, we may identify opportunities~~25% of the fund to short duration high yield bonds. The fund is managed by a team of seven investment professionals that brings an average of 18 years of investment experience to the fund. TriState Capital Holdings, Inc. was one of the initial investors at the inception of the fund in the ~~marketplace to generate supplemental income from trading activity, principally based on~~amount of $5 million. As of September 30, 2021, equity securities, which are recorded at fair value, included only the ~~volatility~~investment in the Chartwell fund which was valued at $5.0 million. The Company held no equity securities as of ~~U.S. Treasury Notes with maturities up to ten years. The level and frequency~~December 31, 2020.

Table of ~~income generated from these transactions can vary materially based upon market conditions.~~Contents

The following tables summarize the amortized cost and fair value of ~~investment~~debt securities available-for-sale and held-to-maturity, as of the dates indicated:


	September 30, 2021
(Dollars in thousands)	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Allowance for Credit Losses (1)		Estimated Fair Value
Debt securities available-for-sale:

Corporate bonds	135,711		1,509		199		—		137,021
Non-agency residential mortgage-backed securities	244,744		1		1,057		—		243,688


Trust preferred securities	18,335		445		2		—		18,778
Agency collateralized mortgage obligations	17,495		63		—		—		17,558
Agency mortgage-backed securities	125,982		38		915		—		125,105
Agency debentures	7,600		688		—		—		8,288
Municipal bonds	5,197		—		26		—		5,171
Total debt securities available-for-sale	$	555,064	$	2,744	$	2,199	$	—	$	555,609

(1)Available-for-sale debt securities are recorded on the consolidated statements of financial condition at estimated fair value, which includes allowance for credit losses, if applicable.


	September 30, 2021
(Dollars in thousands)	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Estimated Fair Value		Allowance for Credit Losses (1)
Debt securities held-to-maturity:
Corporate bonds	$	28,168	$	925	$	23	$	29,070	$	46
Agency debentures	37,199		659		228		37,630		—
Municipal bonds	1,270		2		—		1,272		—
Non-agency residential mortgage-backed securities	205,661		52		1,781		203,932		—
Agency mortgage-backed securities	545,877		638		7,108		539,407		—
U.S. treasury notes	39,073		—		564		38,509		—
Total debt securities held-to-maturity	$	857,248	$	2,276	$	9,704	$	849,820	$	46

(1)Held-to-maturity debt securities are recorded on the consolidated statements of financial condition at amortized cost, net of allowance for credit losses.


	December 31, 2020
(Dollars in thousands)	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Allowance for Credit Losses (1)		Estimated Fair Value
Debt securities available-for-sale:

Corporate bonds	$	157,452	$	1,538	$	526	$	—	$	158,464
Trust preferred securities	18,228		57		198		—		18,087


Agency collateralized mortgage obligations	22,058		36		5		—		22,089
Agency mortgage-backed securities	406,741		3,595		209		—		410,127
Agency debentures	8,013		790		—		—		8,803
Total debt securities available-for-sale	612,492		6,016		938		—		617,570

(1)Available-for-sale debt securities are recorded on the consolidated statements of financial condition at estimated fair value, which includes allowance for credit losses, if applicable.

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	December 31, 2020
(Dollars in thousands)	Amortized Cost	Gross Unrealized Appreciation	Gross Unrealized Depreciation	Estimated Fair Value	Allowance for Credit Losses (1)
Debt securities held-to-maturity:
Corporate bonds	28,672	566	1	29,237	79
Agency debentures	48,130	1,051	—	49,181	—
Municipal bonds	6,577	45	—	6,622	—
Non-agency residential mortgage-backed securities	124,152	237	217	124,172	70
Agency mortgage-backed securities	4,309	778	—	5,087	—
Total debt securities held-to-maturity	211,840	2,677	218	214,299	149

(1)Held-to-maturity debt securities are recorded on the consolidated statements of financial condition at amortized cost, net of allowance for credit losses.

The ~~change~~changes in the fair values of our municipal bonds, agency debentures, agency collateralized mortgage ~~obligation and~~obligations, agency mortgage-backed securities, and U.S. treasury notes are primarily the result of interest rate fluctuations. To assess for credit impairment on debt securities available-for-sale, management evaluates the underlying issuer’s financial performance and the related credit rating information through a review of publicly available financial statements and other publicly available information. ~~This~~The most recent ~~review~~assessment for credit impairment did not identify any issues related to the ultimate repayment of principal and interest on these debt securities. In addition, the Company has the ability and intent to hold debt securities in an unrealized loss position until recovery of their amortized cost. Based on this, ~~the Company considers all~~no allowance for credit losses has been recognized on debt securities available-for-sale in an unrealized loss position.

There were $38.5 million of ~~the unrealized losses to be temporary impairment losses.~~debt securities held-to-maturity that were pledged as collateral for certain deposit relationships as of September 30, 2021.

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The following table sets forth the fair value, contractual maturities and approximated weighted average yield, calculated on a fully taxable equivalent basis, of our available-for-sale and held-to-maturity debt securities portfolios as of September 30, 2021, based on estimated annual income divided by the average amortized cost of ~~our available-for-sale and held-to-maturity debt securities portfolios as of~~ ~~September 30, 2017~~.these securities. Contractual maturities may differ from expected maturities because issuers and/or borrowers may have the right to call or prepay obligations with or without penalties, which would also impact the corresponding yield.


	September 30, 2021
	Less Than One Year				One to Five Years				Five to 10 Years				Greater Than 10 Years				Total
(Dollars in thousands)	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
Debt securities available-for-sale:

Corporate bonds	$	27,584	0.70	%	$	61,285	1.17	%	$	48,152	1.51	%	$	—	—	%	$	137,021	1.19	%
Non-agency residential mortgage-backed securities	—		—	%	—		—	%	—		—	%	243,688		2.19	%	243,688		2.19	%


Trust preferred securities	—		—	%	—		—	%	9,759		1.93	%	9,019		1.88	%	18,778		1.91	%
Agency collateralized mortgage obligations	—		—	%	—		—	%	—		—	%	17,558		0.51	%	17,558		0.51	%
Agency mortgage-backed securities	—		—	%	—		—	%	—		—	%	125,105		2.00	%	125,105		2.00	%
Agency debentures	—		—	%	—		—	%	—		—	%	8,288		3.01	%	8,288		3.01	%
Municipal bonds	—		—	%	—		—	%	—		—	%	5,171		1.71	%	5,171		1.71	%
Total debt securities available-for-sale	27,584				61,285				57,911				408,829				555,609
Weighted average yield			0.70	%			1.17	%			1.58	%			2.06	%			1.85	%
Debt securities held-to-maturity:
Corporate bonds	—		—	%	15,664		5.37	%	13,406		4.96	%	—		—	%	29,070		5.18	%
Agency debentures	—		—	%	—		—	%	29,772		1.25	%	7,858		3.09	%	37,630		1.61	%
Municipal bonds	861		2.59	%	411		2.66	%	—		—	%	—		—	%	1,272		2.61	%
Non-agency residential mortgage-backed securities	—		—	%	—		—	%	—		—	%	203,932		2.00	%	203,932		2.00	%
Agency mortgage-backed securities	—		—	%	—		—	%	16,978		1.85	%	522,429		1.61	%	539,407		1.62	%
U.S. treasury notes	—		—	%	—		—	%	38,509		1.33	%	—		—	%	38,509		1.33	%
Total debt securities held-to-maturity	861				16,075				98,665				734,219				849,820
Weighted average yield			2.59	%			5.30	%			1.87	%			1.73	%			1.81	%
Total debt securities	$	28,445			$	77,360			$	156,576			$	1,143,048			$	1,405,429
Weighted average yield			0.76	%			2.02	%			1.76	%			1.85	%			1.83	%

September 30, 2017
Less Than
One Year One to
Five Years Five to
10 Years Greater Than
10 Years Total
(Dollars in thousands) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
Investment securities available-for-sale:
Corporate bonds $ 8,920
1.94 % $ 33,911
2.31 % $ 4,941
5.00 % $ 10,000
5.00 % $ 57,772
2.96 %
Trust preferred securities —
— % —
— % 9,450
3.13 % 9,228
3.26 % 18,678
3.19 %
Non-agency mortgage-backed securities —
— % —
— % —
— % 5,587
2.31 % 5,587
2.31 %
Non-agency collateralized loan obligations —
— % —
— % —
— % 894
3.57 % 894
3.57 %
Agency collateralized mortgage obligations —
— % 901
1.60 % —
— % 39,127
1.66 % 40,028
1.66 %
Agency mortgage-backed securities —
— % —
— % —
— % 20,204
1.95 % 20,204
1.95 %
Total debt securities available-for-sale 8,920
34,812
14,391
85,040
143,163

Weighted average yield 1.94 % 2.29 % 3.79 % 2.35 % 2.45 %
Investment securities held-to-maturity:
Corporate bonds 5,194
6.38 % —
— % 26,955
5.37 % —
— % 32,149
5.53 %
Agency debentures —
— % —
— % 1,999
2.83 % —
— % 1,999
2.83 %
Municipal bonds 1,005
1.97 % 11,681
2.44 % 11,834
2.84 % 937
3.55 % 25,457
2.65 %
Total debt securities held-to-maturity 6,199
11,681
40,788
937
59,605

Weighted average yield 5.64 % 2.44 % 4.50 % 3.55 % 4.19 %
Total debt securities $ 15,119
$ 46,493
$ 55,179
$ 85,977
$ 202,768

Weighted average yield 3.43 % 2.33 % 4.32 % 2.36 % 2.96 %

The table above excludes equity securities because they have an indefinite life. For additional information regarding our investment securities portfolios, refer to Note 2, Investment Securities, to our unaudited condensed consolidated financial statements.

Assets Under Management

Chartwell’s total assets under management of $11.45 billion increased $1.19 billion, or 11.6%, as of September 30, 2021, from $10.26 billion as of December 31, 2020.

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The following table shows the changes of our assets under management by investment style for the nine months ended September 30, 2021.


	Nine Months Ended September 30, 2021
(Dollars in thousands)	Beginning Balance		Inflows (1)		Outflows (2)		Market Appreciation (Depreciation)		Ending Balance
Equity investment styles	$	4,042,000	$	363,000	$	(811,000)	$	587,000	$	4,181,000
Fixed income investment styles	5,663,000		1,389,000		(379,000)		75,000		6,748,000
Balanced investment styles	558,000		38,000		(98,000)		27,000		525,000
Total assets under management	$	10,263,000	$	1,790,000	$	(1,288,000)	$	689,000	$	11,454,000

(1)Inflows consist of new business and contributions to existing accounts.

(2)Outflows consist of business lost as well as distributions from existing accounts.

Deposits

Deposits are our primary source of funds to support our earning assets. We have focused on creating and growing diversified, stable, and ~~low~~lower all-in cost deposit channels without operating through a traditional branch network. ~~Our client~~We market primarily consists of high-net-worth individuals; family offices; trust companies; wealth management firms; businesses and their executives; municipalities; endowments and foundations; broker-dealers; futures commission merchants; and other financial institutions.

~~We build deposit relationships through both our commercial bank and our private bank channels. We compete for deposits by offering superior~~ liquidity and treasury management products, payment processing products, and ~~services~~other deposit products to ~~our customers. We focus on providing our clients~~high-net-worth individuals, family offices, trust companies, wealth management firms, municipalities, endowments and ~~prospects within our key markets with superior service, sophisticated yet customizable solutions, simple~~foundations, broker/dealers, futures commission merchants, investment management firms, property management firms, payroll providers and ~~competitive fee structures for our service offerings and an easier client experience.~~other financial institutions. We believe that our deposit base is stable and diversified. We further believe we have the ability to attract new deposits, which is the primary source of funding our projected loan growth. With respect to our treasury management business, we utilize hybrid interest-bearing accounts that provide our clients with certainty around their fee structures and returns for their total cash position while enhancing our ability to obtain their full liquidity relationship and still meeting our cost of funds expectations, rather than the more traditional combination of separate non-interest bearing and interest-bearing accounts, which have reduced transparency and increased client burden.

AsWe continue to enhance our liquidity and treasury management capabilities and team to support our efforts to grow this source of funding. Treasury management deposit accounts totaled $2.45 billion as of September 30, ~~2017~~2021, an increase of $994.4 million, or 68.2%, ~~we consider nearly 90%~~from December 31, 2020. Treasury management deposit accounts contributed to almost 45% of our total ~~deposits to be relationship-based deposits. Some of our relationship-based deposits, including reciprocal certificates of~~ deposit ~~placed through CDARS~~^® ~~and~~ ~~reciprocal~~ ~~demand deposits placed through ICS~~^® ~~, have been classified~~growth for ~~some regulatory purposes as brokered deposits, while for other regulatory purposes they are not classified as brokered deposits.~~ the nine months ended September 30, 2021. As of September 30, ~~2017,~~2021, we had approximately 480 treasury management clients, the ~~Bank had CDARS~~^®majority of which were payment processors, lending client-operating accounts, bankruptcy, and ~~ICS~~^® ~~reciprocal deposits totaling $645.5 million and other brokered deposits of $420.2 million.~~ We continue to utilize other brokered deposits as a tool for us to manage our cost of funds and to efficiently match changes in our liquidity needs based on our loan growth with our deposit balances and origination activity. For additional information on our deposits, refer to Note 5, Deposits, to our unaudited condensed consolidated financial statements.real estate accounts.

The table below depicts average balances of, and rates paid on, our deposit portfolio ~~broken out~~ by major deposit category for the three months ended September 30, ~~2017~~2021 and ~~2016~~2020.


	Three Months Ended September 30,
	2021				2020
(Dollars in thousands)	Average Amount		Average Rate Paid (1)		Average Amount		Average Rate Paid (1)
Interest-bearing checking accounts	$	3,946,028	0.37	%	$	2,866,303	0.46	%
Money market deposit accounts	4,879,971		0.47	%	3,811,100		0.72	%
Certificates of deposit	899,855		0.44	%	1,121,824		1.30	%
Total average interest-bearing deposits	9,725,854		0.43	%	7,799,227		0.71	%
Noninterest-bearing deposits	528,897		—		407,079		—
Total average deposits	$	10,254,751	0.41	%	$	8,206,306	0.67	%

Three Months Ended September 30,
2017 2016
(Dollars in thousands) Average Amount Average Rate Paid Average Amount Average Rate Paid
Interest-bearing checking accounts $ 371,526
1.25 % $ 190,270
0.49 %
Money market deposit accounts 2,021,755
1.23 % 1,688,250
0.71 %
Certificates of deposit 1,003,280
1.25 % 863,872
0.89 %
Total average interest-bearing deposits 3,396,561
1.24 % 2,742,392
0.75 %
Noninterest-bearing deposits 205,368
—
161,723
—
Total average deposits $ 3,601,929
1.17 % $ 2,904,115
0.71 %
(1)Annualized

Average Deposits for the Three Months Ended September 30, ~~2017~~2021 and ~~2016~~2020. For the three months ended September 30, ~~2017,~~2021, our average total deposits were ~~$3.60~~$10.25 billion, representing an increase of ~~$697.8 million,~~$2.05 billion, or ~~24.0%~~25.0%, from the same period in ~~2016~~2020. The average deposit growth was driven by increases in ~~all~~our interest-bearing checking account, money market deposit ~~categories.~~account and noninterest-bearing deposit account categories as we continue to attract clients to our treasury management business and grow our deposit product offerings. Our average cost of interest-bearing deposits ~~increased 49~~decreased 28 basis points to ~~1.24%~~0.43% for the three months ended September 30, ~~2017,~~2021, from ~~0.75%~~0.71% for the same period in ~~2016~~2020, as average rates paid were ~~higher~~lower in all interest-bearing deposit ~~categories.~~categories, which was largely driven by the repricing of our deposits as a result of the continued low interest rate environment. Another driver of the combination of higher average deposits and lower rates is our continued addition of meaningful and long-term

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client relationships that support our efforts to manage deposit costs through variable rate and discretionary pricing in the economic environment. Average ~~money market deposits~~ ~~decreased~~interest-bearing checking accounts increased to ~~59.5%~~40.6% of total average interest-bearing deposits for the three months ended September 30, ~~2017, from 61.6%~~2021, compared to 36.8% for the same period in ~~2016~~2020. Average ~~certificates of deposit~~ ~~decreased~~money market deposits increased to ~~29.6%~~50.1% of total average interest-bearing deposits for the three months ended September 30, ~~2017, compared to 31.5%~~2021, from 48.8% for the same period in ~~2016~~2020. Average ~~interest-bearing checking accounts increased~~certificates of deposit decreased to ~~10.9%~~9.3% of total average interest-bearing deposits for the three months ended September 30, ~~2017,~~2021, compared to ~~6.9%~~14.4% for the same period in ~~2016~~2020. Average noninterest-bearing deposits increased ~~$43.6~~$121.8 million, or ~~27.0%~~29.9%, in the three months ended September 30, ~~2017~~2021, from the three months ended September 30, ~~2016,~~2020, and ~~the~~ the average cost of total deposits ~~increased 46~~decreased 26 basis points to ~~1.17%~~0.41% for the three months ended September 30, ~~2017~~2021, from ~~0.71%~~0.67% for the same period in ~~2016.~~2020.

The table below depicts average balances of, and rates paid on, our deposit portfolio ~~broken out~~ by deposit type for the nine months ended September 30, ~~2017~~2021 and ~~2016~~2020.


	Nine Months Ended September 30,
	2021				2020
(Dollars in thousands)	Average Amount		Average Rate Paid (1)		Average Amount		Average Rate Paid (1)
Interest-bearing checking accounts	$	3,624,587	0.36	%	$	2,224,827	0.67	%
Money market deposit accounts	4,516,081		0.51	%	3,740,968		1.03	%
Certificates of deposit	947,127		0.60	%	1,297,637		1.74	%
Total average interest-bearing deposits	9,087,795		0.46	%	7,263,432		1.05	%
Noninterest-bearing deposits	471,727		—		391,689		—
Total average deposits	$	9,559,522	0.44	%	$	7,655,121	1.00	%

Nine Months Ended September 30,
2017 2016
(Dollars in thousands) Average Amount Average Rate Paid Average Amount Average Rate Paid
Interest-bearing checking accounts $ 298,631
1.03 % $ 160,310
0.45 %
Money market deposit accounts 1,951,258
1.06 % 1,614,669
0.65 %
Certificates of deposit 954,352
1.12 % 869,879
0.85 %
Total average interest-bearing deposits 3,204,241
1.08 % 2,644,858
0.70 %
Noninterest-bearing deposits 206,063
—
153,763
—
Total average deposits $ 3,410,304
1.01 % $ 2,798,621
0.66 %
(1) Annualized

Average Deposits for the Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020. For the nine months ended September 30, ~~2017~~2021, our average total deposits were ~~$3.41~~$9.56 billion, representing an increase of ~~$611.7 million,~~$1.90 billion, or ~~21.9%~~24.9%, from the same period in ~~2016~~2020. The average deposit growth was driven by increases in ~~all~~our interest-bearing checking account, money market deposit ~~categories.~~account and noninterest-bearing deposit account categories as we continue to attract clients to our treasury management business and grow our deposit product offerings. Our average cost of interest-bearing deposits ~~increased 38~~decreased 59 basis points to ~~1.08%~~0.46% for the nine months ended September 30, ~~2017~~2021, from ~~0.70%~~1.05% for the same period in ~~2016~~2020, as average rates paid were ~~higher~~lower in all interest-bearing deposit ~~categories.~~categories, which was largely driven by the repricing of our deposits as a result of the continued low interest rate environment. Another driver of the combination of higher average deposits and lower rates is our continued addition of meaningful and long-term client relationships that support our efforts to manage deposit costs through variable rate and discretionary pricing in the economic environment. Average ~~money market deposits decreased~~interest-bearing checking accounts increased to ~~60.9%~~39.9% of total average interest-bearing deposits for the nine months ended September 30, ~~2017~~2021, ~~from 61.0%~~compared to 30.6% for the same period in ~~2016~~2020. Average money market deposits decreased to 49.7% of total average interest-bearing deposits for the nine months ended September 30, 2021, from 51.5% for the same period in 2020. Average certificates of deposit decreased to ~~29.8%~~10.4% of total average interest-bearing deposits for the nine months ended September 30, ~~2017~~2021, compared to ~~32.9%~~17.9% for the same period in ~~2016. Average interest-bearing checking accounts increased to 9.3% of total average interest-bearing deposits for the~~ ~~nine months ended September 30, 2017, compared to 6.1% for the same period in~~ ~~2016~~2020. Average noninterest-bearing deposits increased ~~$52.3~~$80.0 million, or ~~34.0%~~20.4%, in the nine months ended September 30, ~~2017,~~2021, from the nine months ended September 30, ~~2016,~~2020, and ~~the~~the average cost of total deposits ~~increased 35~~decreased 56 basis points to ~~1.01%~~0.44% for the nine months ended September 30, ~~2017,~~2021, from ~~0.66%~~1.00% for the same period in ~~2016.~~2020.

Certificates of Deposit

Maturities of certificates of deposit of $100,000 or more outstanding are summarized below, as of September 30, ~~2017.~~2021.


(Dollars in thousands)	September 30, 2021
Months to maturity:
Three months or less	$	261,107
Over three to six months	191,501
Over six to 12 months	243,577
Over 12 months	111,822
Total	$	808,007

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(Dollars in thousands) September 30, 2017
Months to maturity:
Three months or less $ 289,531
Over three to six months 286,241
Over six to 12 months 239,913
Over 12 months 110,617
Total $ 926,302
Reciprocal and Brokered Deposits

As of September 30, 2021, we consider approximately 90% of our total deposits to be relationship-based deposits, which include reciprocal certificates of deposit placed through CDARS® and reciprocal demand deposits placed through ICS®. As of September 30, 2021, the Bank had CDARS® and ICS® reciprocal deposits totaling $2.09 billion, which were not classified as brokered deposits. We continue to utilize brokered deposits as a tool for us to manage our cost of funds and to efficiently match changes in our liquidity needs based on our loan growth with our deposit balances. As of September 30, 2021, brokered deposits were approximately 10% of total deposits. For additional information on our deposits, refer to Note 5, Deposits, to our unaudited condensed consolidated financial statements.

Borrowings

Deposits are the primary source of funds for our lending and investment activities, as well as the Bank’s general business purposes. As an alternative source of liquidity for the Bank, we may obtain advances from the FHLB of Pittsburgh, sell investment securities subject to our obligation to repurchase them, purchase ~~Federal~~federal funds or engage in overnight borrowings from the FHLB or our correspondent banks.

The following table presents certain information with respect to our outstanding borrowings, as of September 30, ~~2017~~2021 and December 31, ~~2016~~2020.


	September 30, 2021								December 31, 2020
(Dollars in thousands)	Amount		Interest Rate	Maximum Balance at Any Month End		Average Balance During the Period		Maximum Original Term	Amount		Interest Rate	Maximum Balance at Any Month End		Average Balance During the Period		Maximum Original Term
FHLB borrowings	$	250,000	0.30%	$	250,000	$	251,557	3 months	$	300,000	0.35%	$	480,000	$	330,314	3 months
Line of credit borrowings	10,000		4.00%	10,000		1,769		12 months	5,000		4.25%	30,000		6,243		12 months
Subordinated notes payable	97,500		5.75%	97,500		97,500		10 years	97,500		5.75%	97,500		60,246		10 years
Total borrowings outstanding	$	357,500	1.89%	$	357,500	$	350,826		$	402,500	1.71%	$	607,500	$	396,803

September 30, 2017 December 31, 2016
(Dollars in thousands) Amount Interest Rate Maximum Balance at Any Month End Average
Balance During the Period Original Term Amount Interest Rate Maximum Balance at Any Month End Average
Balance During the Period Original Term
Daily FHLB borrowings $ 140,000
1.30% $ 370,000
$ 207,143
1-4 days $ 105,000
0.77% $ 260,000
$ 142,664
1-4 days
Term FHLB borrowings:
Issued 7/29/2015 —
—% —
—

—
0.61% 25,000
14,754
12 months
Issued 7/29/2015 —
—% —
—

—
0.72% 25,000
20,970
15 months
Issued 6/29/2016 —
—% —
—

—
0.66% 100,000
24,863
3 months
Issued 9/29/2016 —
—% —
—

—
0.58% 100,000
24,863
3 months
Issued 12/29/2016 —
0.85% 100,000
31,868
3 months 100,000
0.85% 100,000
820
3 months
Issued 3/29/2017 —
1.07% 100,000
33,700
3 months —
—% —
—

Issued 6/29/2017 —
1.32% 100,000
33,700
3 months —
—% —
—

Issued 9/29/2017 100,000
1.33% 100,000
732
3 months —
—% —
—

Line of credit borrowings 4,500
4.24% 4,500
1,375
12 months —
—% —
—

Subordinated notes payable 35,000
5.75% 35,000
35,000
5 years 35,000
5.75% 35,000
35,000
5 years
Total borrowings outstanding $ 279,500
1.92% $ 809,500
$ 343,518
$ 240,000
1.53% $ 645,000
$ 263,934

In ~~June 2016,~~2020, the Company completed underwritten public offerings of subordinated notes due 2030, raising aggregate proceeds of $97.5 million. The subordinated notes have a term of 10 years at a fixed-to-floating rate of 5.75%. The subordinated notes constitute Tier 2 capital for the Company under federal regulatory capital rules.

The Company previously entered into ~~a three-year~~ cash flow hedge ~~derivative transaction~~transactions to establish the interest rate paid on ~~$100.0~~$250.0 million of ~~the~~its FHLB borrowings at anvarying effective ~~rate of 0.83% plus the difference between the 3-month FHLB advance rate~~rates and ~~3-month LIBOR.~~maturities. For additional information on the detail of each cash flow hedge transaction, refer to Note ~~11,~~10, Derivatives and Hedging Activity, to our unaudited condensed consolidated financial statements.

Liquidity

We evaluate liquidity both at the holding company level and at the Bank level. As of September 30, ~~2017~~2021, the Bank and Chartwell ~~subsidiaries~~ represent our only material assets. Our primary sources of funds at the parent company level are cash on hand, dividends paid to us from ~~the Bank and~~ Chartwell, ~~subsidiaries~~availability on our line of credit, and the net proceeds from the issuance of our debt and/or equity securities. As of September 30, ~~2017~~2021, our primary liquidity needs at the parent company level were the ~~semi-annual interest payments~~ quarterly dividends on ~~the subordinated notes payable,~~our preferred stock, interest payments on our subordinated debt and other borrowings, and ~~our~~ share repurchase programs. All other liquidity needs were minimal and related to reimbursing the Bank for management, accounting and financial reporting services provided by ~~bank~~Bank personnel. During the

nine months ended September 30, ~~2017~~2021, the parent company paid ~~$6.5~~$5.9 million related to ~~share repurchase programs~~our preferred stock dividends and ~~$2.0~~$2.9 million related to interest payments on ~~the~~our subordinated notes payable and other ~~borrowings.~~borrowings. During the nine months ended September 30, ~~2016,~~2020, the parent company paid ~~$15.0~~$3.2 million ~~for the TKG acquisition, $2.0~~related to our share repurchase and stock option cancellation program, $5.9 million related to our preferred stock dividends and $261,000 related to interest payments on ~~the subordinated notes and $9.5 million related to share repurchase programs.~~our other borrowings. We believe that our cash on hand at the parent company level, coupled with the dividend paying capacity of the Bank and Chartwell, were adequate to fund any foreseeable parent company obligations as of September 30, ~~2017.~~2021. In addition, ~~the holding company maintains~~we maintain an unsecured line of credit with Huntington National Bank. As of ~~$25.0~~September 30, 2021, the unsecured line was $75.0 million, ~~with Texas Capital Bank,~~ of which ~~$20.5~~$65.0 million was available ~~as of~~ ~~September 30, 2017~~.for borrowing.

Our primary goal in liquidity management at the Bank level is to satisfy the cash flow requirements of depositors and borrowers, as well as our operating cash needs. These requirements include the payment of deposits on demand or at their contractual maturity, the

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repayment of borrowings as they mature, the payment of our ordinary business obligations, the ability to fund new and existing loans and other funding commitments or arrangements, and the ability to take advantage of new business opportunities. Our ALCO, which includes members of executive management, has established an asset/liability management policy designed to achieve and maintain earnings performance consistent with long-term goals while maintaining acceptable levels of interest rate risk, well capitalized regulatory status and adequate levels of liquidity. The ALCO has also established a contingency funding plan to address liquidity ~~crisis~~stress conditions. The ALCO is designated as the body responsible for the monitoring and implementation of these policies. The ALCO ~~which includes members of executive management,~~ reviews liquidity on a frequent basis and approves significant changes in strategies that affect balance sheet or cash flow positions.

~~Our principal sources~~Sources of asset liquidity are cash, interest-earning deposits with other banks, federal funds sold, certain unpledged debt and equity securities, ~~available-for-sale,~~ loan repayments (scheduled and unscheduled) and future earnings. ~~Liability~~Sources of liability liquidity ~~sources~~ include a stable deposit base, the ability to renew maturing certificates of deposit, borrowing availability at the FHLB of Pittsburgh, unsecured lines with other financial institutions, access to reciprocal CDARS^®and ICS^® deposits and ~~other~~ brokered deposits, and the ability to raise debt and equity. Customer deposits, which are an important source of liquidity, ~~which depends~~depend on the confidence of ~~those~~ customers in ~~us and is~~us. Deposits are supported by our capital position and, up to applicable limits, the protection provided by FDIC insurance.

We measure and monitor liquidity on an ongoing basis, which allows us to more effectively understand and react to trends in our balance sheet. In addition, the ALCO uses a variety of methods to monitor our liquidity position and liquidity needs, including a liquidity gap, which measures potential sources and uses of funds over future periods. ~~Policy~~We have established policy guidelines ~~have been established~~ for a variety of liquidity-related performance metrics, such as net loans to deposits, brokered funding composition, cash to total loans and duration of certificates of deposit, among others, all of which are utilized in measuring and managing our liquidity position. The ALCO performs contingency funding and capital stress analyses at least annually to determine our ability to meet potential liquidity and capital needs under various stress scenarios.

~~We believe that our~~Our strong liquidity position ~~continues to be strong~~is due to our ability to generate strong growth in deposits, which is evidenced by our ratio of total deposits to total assets of ~~83.8%~~88.5% and ~~83.6%~~85.8% as of September 30, ~~2017~~2021 and December 31, ~~2016~~2020, respectively. Our ratio of average deposits to average assets increased to 87.6% for the nine months ended September 30, 2021, from 85.9% for the same period in 2020.As of September 30, ~~2017~~2021, we had available liquidity of $~~792.9 million~~2.59 billion, or ~~17.6%~~21.3% of total assets. These sources consisted of ~~liquid assets (cash and~~available cash ~~equivalents, and~~totaling $370.2 million, unpledged investment securities ~~available-for-sale),~~ totaling ~~$227.3 million~~,$1.34 billion, or ~~5.1%~~11.0% of total assets, ~~coupled with secondary sources of liquidity (the~~and the ability to borrow from the FHLB and correspondent bank ~~lines)~~lines totaling $~~565.6~~882.2 million, or ~~12.6%~~7.3% of total assets. Available cash excludes ~~pledged accounts~~cash posted as collateral for derivative and letter of credit transactions and the reserve balance requirement at the Federal Reserve.

The following table shows our available liquidity, by source, as of the dates indicated:


(Dollars in thousands)	September 30, 2021		December 31, 2020
Available cash	$	370,206	$	271,090
Certain unpledged debt and equity securities	1,341,578		793,658
Net borrowing capacity	882,176		704,082
Total liquidity	$	2,593,960	$	1,768,830

(Dollars in thousands) September 30,
2017 December 31,
2016
Available cash $ 79,756
$ 64,816
Unpledged investment securities available-for-sale 147,593
169,830
Net borrowing capacity 565,597
509,906
Total liquidity $ 792,946
$ 744,552

~~For the~~ ~~nine months ended September 30, 2017, we generated~~ ~~$23.1 million~~ ~~of cash from operating activities, compared to cash generated of~~ ~~$14.2 million~~ ~~for the same period in~~ ~~2016. This change in cash flow was primarily the result of an increase in net income of $4.9 million for the~~ ~~nine months ended September 30, 2017, and changes in working capital items largely related to timing.~~

Investing activities resulted in a net cash outflow of $~~508.0 million~~,2.26 billion for the nine months ended September 30, ~~2017~~2021, as compared to a net cash outflow of ~~$364.4 million~~$1.44 billion for the same period in ~~2016~~2020. The outflows for the nine months ended September 30, ~~2017~~2021, were primarily due to net loan growth of $~~540.3 million~~1.64 billion and purchases of investment securities totaling ~~$20.4 million,~~$1.07 billion, partially offset by the proceeds from the sale, principal repayments and maturities from investment securities totaling ~~$49.8~~$481.5 million. The outflows for the nine months ended September 30, ~~2016,~~2020, included net loan growth of ~~$332.0 million,~~$1.08 billion and purchases of investment securities totaling ~~$33.7~~$904.0 million, ~~and $14.1 million for the~~

~~TKG acquisition net of acquired cash,~~ partially offset by the proceeds from the sale, principal repayments and maturities from investment securities totaling ~~$16.4~~$543.1 million.

Financing activities resulted in a net inflow of $~~517.5 million~~2.21 billion for the nine months ended September 30, ~~2017~~2021, compared to a net inflow of $~~374.3 million~~1.58 billion for the same period in ~~2016~~2020. The inflows for the nine months ended September 30, ~~2017~~2021, were primarily a result of a net increase in deposits of ~~$483.1 million and a net increase in FHLB borrowings of $35.0 million, compared to a $397.4 million net increase in deposits and~~$2.27 billion, partially offset by a net decrease in FHLB borrowings of ~~$15.0 million~~$50.0 million. The inflows for the nine months ended September 30, ~~2016.~~2020, included a net increase in deposits of $1.55 billion and net proceeds of $95.3 million from the issuance of subordinated notes payable, partially offset by a net decrease in FHLB borrowings of $55.0 million.

We continue to evaluate the potential impact on liquidity management by regulatory proposals, including those being established under the Dodd-Frank Act, as government regulators continue the final rule-making process.

Capital Resources

The access to and cost of funding for new business initiatives, the ability to engage in expanded business activities, the ability to pay dividends, the level of deposit insurance costs and the level and nature of regulatory oversight depend, in part, on our capital position.

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The assessment of capital adequacy depends on a number of factors, including loan composition, asset quality, liquidity, earnings performance, changing competitive conditions and economic forces. We seek to maintain a strong capital base to support our growth and expansion activities, to provide stability to our current operations and to promote public ~~confidence.~~confidence in our Company.

Shareholders’ Equity. Shareholders’ equity ~~increased~~ to was $~~377.3~~814.0 million as of September 30, ~~2017~~2021, compared to $~~351.8~~757.1 million as of December 31, ~~2016~~2020. The $~~25.5~~56.9 millionincrease during the nine months ended September 30, ~~2017~~2021, was primarily attributable to net income of $~~25.9~~55.0 million,~~, the impact of~~ $~~4.2~~8.2 million in stock-based compensation an ~~increase~~ of and $~~500,000~~1.2 million in ~~accumulated~~ other comprehensive income, ~~(loss) and $1.3 million in exercises of stock options,~~ partially offset by ~~the purchase~~preferred stock dividends of ~~$6.5~~$5.9 million and an increase of $2.0 million in treasury ~~stock.~~stock related to the net settlement of equity awards exercised or vested.

On December 30, 2020, the Company completed the private placement of securities pursuant to an Investment Agreement, dated October 10, 2020 and amended December 9, 2020, with T-VIII PubOpps LP (“T-VIII PubOpps”), an affiliate of investment funds managed by Stone Point Capital LLC. Pursuant to the Investment Agreement, the Company sold to T-VIII PubOpps (i) 2,770,083 shares of voting common stock for $40.0 million, (ii) 650 shares of Series C Preferred Stock for $65.0 million, and (iii) warrants to purchase up to 922,438 shares of voting common stock or non-voting common stock at an exercise price of $17.50 per share. After two years, the Series C Preferred Stock is convertible into shares of non-voting common stock or, when transferred under certain limited circumstances to a holder other than an affiliate of Stone Point Capital LLC, voting common stock, at a price of $13.75 per share. The Series C Preferred Stock has a liquidation preference of $100,000 per share, and is entitled to receive, when, as and if declared by the Board of Directors of the Company (“Board”), dividends at a rate of 6.75% per annum for each quarterly dividend period, payable in arrears in cash or additional shares of Series C Preferred Stock. The Company does not have redemption rights with respect to the Series C Preferred Stock.

The Company received gross proceeds of $105.0 million at the closing of the private placement, and may receive up to an additional $16.1 million if the warrants are exercised in full. The net proceeds were recorded to shareholders’ equity at December 31, 2020, and allocated to the three equity instruments issued using the relative fair value method applied to the common stock, preferred stock, and the warrants issued, which were recorded to additional paid-in capital. The net proceeds constitute Tier 1 capital for the Company under federal regulatory capital rules.

Regulatory Capital. As of September 30, ~~2017~~2021 and December 31, ~~2016~~2020, TriState Capital Holdings, Inc. and TriState Capital Bank were in compliance with all applicable regulatory capital requirements, and TriState Capital Bank was categorized as well capitalized for purposes of the FDIC’s prompt corrective action regulations. As we employ our capital and continue to grow our operations, our regulatory capital levels may decrease. However, we will monitor our capital in order to remain categorized as well capitalized under the applicable regulatory guidelines and in compliance with all regulatory capital standards applicable to us.

~~Basel III, which began phasing~~The capital conservation buffer requirement is a CET 1 capital to risk-weighted assets ratio of 2.5% or more, in ~~on January 1, 2015, has replaced~~addition to the ~~existing regulatory~~minimum risk-based capital ~~rules for~~adequacy levels shown in the tables below. As of September 30, 2021 and December 31, 2020, both the Company and the ~~Bank. The Basel III final rules~~Bank were above the capital conservation buffer levels required ~~new minimum capital ratio standards, established a new common equity tier 1~~ to ~~total risk-weighted assets ratio, subjected banking organizations to certain~~avoid limitations on capital distributions and discretionary bonus ~~payments and established~~payments.

In 2020, U.S. federal regulatory authorities issued a ~~new standardized approach~~final rule that provides banking organizations that adopt CECL during the 2020 calendar year with the option to delay the impact of CECL on regulatory capital for ~~risk weightings.~~

~~The final rules subject~~up to two years, beginning January 1, 2020, followed by a ~~banking organization~~three-year transition period. As the Company adopted CECL on December 31, 2020, the Company elected to ~~certain limitations on capital distributions and discretionary bonus payments to executive officers if~~utilize the ~~organization does not maintain a capital conservation buffer of risk-based capital ratios in an amount greater than 2.5% of its total risk-weighted assets. The implementation~~remainder of the two-year delay of CECL’s impact on its regulatory capital, ~~conservation buffer began~~from December 31, 2020 through December 31, 2021, followed by the three-year transition period of CECL impact on regulatory capital, from January 1, ~~2016, at 0.625% and will be phased in over a four-year period (increasing by that amount ratably on each subsequent January 1, until it reaches 2.5% on January 1, 2019).~~2022 through December 31, 2024.

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The following tables present the actual capital amounts and regulatory capital ratios for the Company and the Bank as of the dates indicated:


	September 30, 2021
	Actual				For Capital Adequacy Purposes				To be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital ratio
Company	$	889,197	13.71	%	$	518,882	8.00	%	N/A		N/A
Bank	$	864,503	13.38	%	$	516,720	8.00	%	$	645,900	10.00	%
Tier 1 risk-based capital ratio
Company	$	764,932	11.79	%	$	389,162	6.00	%	N/A		N/A
Bank	$	835,892	12.94	%	$	387,540	6.00	%	$	516,720	8.00	%
Common equity tier 1 risk-based capital ratio
Company	$	584,489	9.01	%	$	291,871	4.50	%	N/A		N/A
Bank	$	835,892	12.94	%	$	290,655	4.50	%	$	419,835	6.50	%
Tier 1 leverage ratio
Company	$	764,932	6.61	%	$	462,757	4.00	%	N/A		N/A
Bank	$	835,892	7.24	%	$	461,884	4.00	%	$	577,355	5.00	%


	September 30, 2017													December 31, 2020
	Actual				For Capital Adequacy Purposes				To be Well Capitalized Under Prompt Corrective Action Provisions					Actual				For Capital Adequacy Purposes				To be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital ratio													Total risk-based capital ratio
Company	$	335,178	11.80	%	$	227,240	8.00	%	N/A		N/A		Company	$	833,819	14.12	%	$	472,267	8.00	%	N/A
Bank	$	337,652	12.01	%	$	224,901	8.00	%	$	281,126	10.00	%	Bank	$	789,273	13.41	%	$	470,820	8.00	%	$	588,525	10.00	%
Tier 1 risk-based capital ratio													Tier 1 risk-based capital ratio
Company	$	316,300	11.14	%	$	170,430	6.00	%	N/A		N/A		Company	$	707,711	11.99	%	$	354,200	6.00	%	N/A
Bank	$	325,304	11.57	%	$	168,675	6.00	%	$	224,901	8.00	%	Bank	$	758,658	12.89	%	$	353,115	6.00	%	$	470,820	8.00	%
Common equity tier 1 risk-based capital ratio													Common equity tier 1 risk-based capital ratio
Company	$	316,300	11.14	%	$	127,822	4.50	%	N/A		N/A		Company	$	530,568	8.99	%	$	265,650	4.50	%	N/A
Bank	$	325,304	11.57	%	$	126,507	4.50	%	$	182,732	6.50	%	Bank	$	758,658	12.89	%	$	264,836	4.50	%	$	382,542	6.50	%
Tier 1 leverage ratio													Tier 1 leverage ratio
Company	$	316,300	7.40	%	$	170,901	4.00	%	N/A		N/A		Company	$	707,711	7.29	%	$	388,408	4.00	%	N/A
Bank	$	325,304	7.66	%	$	169,861	4.00	%	$	212,326	5.00	%	Bank	$	758,658	7.83	%	$	387,626	4.00	%	$	484,533	5.00	%

Contractual Obligations and Commitments

~~The following table presents significant fixed and determinable~~There were no material changes to contractual obligations during the nine months ended September 30, 2021, that were outside the ordinary course of ~~principal, interest~~business. During the three months ended September 30, 2021, the Company entered into two new operating leases in the ordinary course of business: one for additional office space in Pittsburgh and ~~expenses that may require future cash payments as of~~ the ~~date indicated.~~other to replace its office space in New York City.

September 30, 2017
(Dollars in thousands) One Year
or Less One to
Three Years Three to
Five Years Greater Than
Five Years Total
Transaction deposits $ 2,517,576
$ 204,078
$ —
$ —
$ 2,721,654
Certificates of deposit 935,943
112,273
—
—
1,048,216
Borrowings outstanding 244,500
35,000
—
—
279,500
Interest payments on certificates of deposit and borrowings
11,851
4,028
—
—
15,879
Operating leases 2,552
5,058
2,733
1,051
11,394
Commitments for low income housing tax credits 7,931
13,101
423
69
21,524
Commitments for small business investment companies 3,255
—
—
—
3,255
Total contractual obligations $ 3,723,608
$ 373,538
$ 3,156
$ 1,120
$ 4,101,422

Off-Balance Sheet Arrangements

In the normal course of business, we enter into various transactions that are not included in our consolidated balance sheets in accordance with GAAP. These transactions include commitments to extend credit in the ordinary course of business to approved customers.

~~Loan~~Unfunded loan commitments and demand line of credit availability, including standby letters of credit, are recorded on our statement of financial ~~statements~~condition as they are funded. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. ~~Loan~~Our measure of unfunded loan commitments and demand line of credit availability include unused ~~commitments~~availability under demand loans for ~~open end~~our private banking lines secured by cash, ~~and~~ marketable securities ~~and residential properties,~~and/or cash value life insurance,

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as well as commitments to fund loans secured by residential properties, commercial real estate, construction loans, business lines of credit and other unused commitments of loans in various stages of funding. Not all commitments will fund or fully fund as customers often only draw on a portion of their available credit and we continuously monitor utilization of our unfunded lines of credit and on both commercial and private banking loans. We believe that we maintain sufficient liquidity or otherwise have the ability to generate the liquidity necessary to fund anticipated draws under unused loan commitments and demand lines of credit.

Standby letters of credit are written conditional commitments issued by us to guarantee the performance of our customer to a third party. In the event our customer does not perform in accordance with the terms of the agreement with the third party, we would be required to fund the commitment. The maximum potential amount of future payments we could be required to make is represented by the contractual amount of the commitment. If the commitment is funded, we would be entitled to seek recovery from the customer.

We minimize our exposure to loss under loan commitments and standby letters of credit and unfunded demand lines of credit by subjecting them to credit approval and monitoring procedures. The effect on our revenues, expenses, cash flows and liquidity of the unused portions of these commitments cannot be reasonably predicted because, while the borrower has the ability to draw upon these commitments at any time under certain contractual agreements, these commitments often expire without being drawn. There is no guarantee that the lines of credit will be used.

The following table is a summary of the total notional amount of unused loan commitments and demand lines of credit availability as well as standby letters of credit commitments, based on the ~~availability~~values of eligible collateral or other terms under the loan agreement, by contractual maturities outstanding as of the date indicated.


	September 30, 2021
(Dollars in thousands)	Due on Demand		One Year or Less		One to Three Years		Three to Five Years		Greater Than Five Years		Total
Unused loan commitments and demand lines of credit	$	8,026,145	$	642,833	$	554,433	$	133,458	$	31,181	$	9,388,050
Standby letters of credit	700		41,062		18,740		2,585		48		63,135
Total off-balance sheet arrangements	$	8,026,845	$	683,895	$	573,173	$	136,043	$	31,229	$	9,451,185

September 30, 2017
(Dollars in thousands)
One Year
or Less ⁽¹⁾
One to
Three Years Three to
Five Years Greater Than
Five Years Total
Unused loan commitments $ 1,784,000
$ 193,463
$ 44,778
$ 89,385
$ 2,111,626
Standby letters of credit 37,812
20,052
10,265
5,325
73,454
Total off-balance sheet arrangements $ 1,821,812
$ 213,515
$ 55,043
$ 94,710
$ 2,185,080


⁽¹⁾	The off-balance sheet amounts reflected in the One Year or Less category in the table above include $1.63 billion in unused loan commitments and $1.9 million in standby letters of credit that are due on demand with no stated maturity.

Market Risk

Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices and commodity prices. Our primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact the level of both income and expense recorded on most of our assets and liabilities, and the market value of all interest-earning assets and interest-bearing liabilities, other than those that have a short term to maturity. Because of the nature of our operations, we are not subject to foreign exchange or commodity price risk. From time to time, we do hold market risk sensitive instruments for trading purposes. The summary information provided in this section should be read in conjunction with our unaudited condensed consolidated financial statements and related notes.

Interest rate risk is comprised of re-pricing risk, basis risk, yield curve risk and option risk. Re-pricing risk arises from differences in the cash flow or re-pricing between asset and liability portfolios. Basis risk arises when asset and liability portfolios are related to different market rate indexes, which do not always change by the same amount or at the same time. Yield curve risk arises when asset and liability portfolios are related to different maturities on a given yield curve; when the yield curve changes shape, the risk position is altered. Option risk arises from embedded options within asset and liability products as certain borrowers may prepay their loans ~~when rates fall, while~~and certain depositors may redeem their certificates when rates ~~rise.~~change.

Our ALCO actively measures and manages interest rate risk. The ALCO is responsible for the formulation and implementation of strategies to improve balance sheet positioning and earnings, and for reviewing our interest rate sensitivity position. This involves devising policy guidelines, risk measures and limits, and managing the amount of interest rate risk and its effect on net interest income and capital.

We utilize an asset/liability model to measure and manage interest rate risk. The specific measurement tools used by management on at least a quarterly basis include net interest income (“NII”) simulation, economic value of equity (“EVE”) analysis and gap analysis. All are static measures that do not incorporate assumptions regarding future business. All are also measures of interest rate sensitivity used to help us develop strategies for managing exposure to interest rate risk rather than projecting future earnings.

In our view, all three measures ~~also~~ have specific benefits and shortcomings. ~~Net interest income (~~“NII”) simulation explicitly measures exposure to earnings from changes in market rates of interest but does not provide a long-term ~~view. Economic value~~view of ~~equity (~~“value. EVE”) analysis helps identify changes in optionality and price over a ~~longer term~~longer-term horizon, but its liquidation perspective does not convey the earnings-based measures that are typically the focus of managing and valuing a going concern. Gap analysis compares the difference between the amount of interest-earning assets

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and interest-bearing liabilities subject to re-pricing over a period of time but only captures a single rate environment. Reviewing these various measures ~~collectively~~together helps management obtain a comprehensive view of our interest risk rate profile.

The following NII simulation and EVE analysis metrics were calculated using rate shocks ~~which~~that represent immediate rate changes that move all market rates by the same amount instantaneously. The variance percentages represent the change between the NII simulation and EVE calculated under the particular rate scenario versus the NII simulation and EVE analysis calculated assuming market rates deemed appropriate as of the ~~dates indicated.~~date of this filing. For the purpose of this exercise, it is assumed that rates do not fall below zero.


	September 30, 2021				December 31, 2020
(Dollars in thousands)	Amount Change from Base Case		Percent Change from Base Case		Amount Change from Base Case		Percent Change from Base Case
Net interest income (loss):
+300	$	12,913	6.29	%	$	31,178	18.47	%
+200	$	(661)	(0.32)	%	$	13,176	7.81	%
+100	$	(14,044)	(6.84)	%	$	(4,648)	(2.75)	%
–100	$	(3,451)	(1.68)	%	$	(3,041)	(1.80)	%


Economic value of equity:
+300	$	(193,487)	(25.17)	%	$	(56,573)	(7.66)	%
+200	$	(134,259)	(17.47)	%	$	(42,325)	(5.73)	%
+100	$	(79,725)	(10.37)	%	$	(31,120)	(4.22)	%
–100	$	80,760	10.51	%	$	14,471	1.96	%

September 30, 2017 December 31, 2016
(Dollars in thousands) Amount Change from
Base Case Percent Change from
Base Case ALCO
Guidelines Amount Change from
Base Case Percent Change from
Base Case
Net interest income:
+300 $ 25,118
26.72 % -20.00% $ 25,570
30.48 %
+200 $ 16,739
17.81 % -15.00% $ 16,986
20.25 %
+100 $ 8,345
8.88 % -10.00% $ 8,431
10.05 %
–100 $ (8,943 ) (9.51 )% -10.00% $ (3,836 ) (4.57 )%

Economic value of equity:
+300 $ 2,814
0.75 % +/-30.00% $ 6,027
1.82 %
+200 $ 2,457
0.66 % +/-20.00% $ 4,201
1.27 %
+100 $ 1,195
0.32 % +/-10.00% $ 2,095
0.63 %
–100 $ (1,721 ) (0.46 )% +/-10.00% $ (11,980 ) (3.61 )%

Our means of managing interest rate risk over the longer term include our focus on growing the low-cost deposit balances associated with our treasury management services, controlled adjustments within our discretionary priced accounts to respond to rising rates, and our future ability to extend duration in liabilities, especially with rates at historically low levels across the yield curve. Additionally, while we will continue to implement floors on most new loan originations, our pricing strategy has transitioned to emphasizing loan spread as the primary tool to achieve yield and implementing lower levels of floors, which will reduce our liability sensitivity over time. Given the ~~relatively~~longer-term nature of the EVE analysis and the absolute low ~~current~~level of interest ~~rate environment, it is our strategy~~rates, we have migrated to ~~continue to manage an asset~~a more liability sensitive interest rate risk position ~~in both our net interest income and~~when it comes to economic value of ~~equity measures. Therefore,~~equity. Beginning with the September 30, 2021, period shown above, we have begun to incorporate the impact of a pricing lag to certain components of our deposit portfolio as interest rates rise. This methodology revision was replicated in and applied to our December 31, 2020, interest rate risk analysis to provide a consistent comparison between the two periods. In past periods, we had incorporated no lag to deposit pricing in rising ~~rates are expected to~~rate scenarios. The liability sensitivity demonstrated in our NII scenarios extends from the inclusion of floors in our loans and from the extension of duration in our securities portfolio. We have ~~a positive effect on both net interest income~~pursued this strategy because of the material benefit provided by those floors and ~~economic value~~that duration extension in the base case.

Table of ~~equity as compared to a situation where rates fall or remain unchanged.~~Contents

The following gap analysis presents the amounts of interest-earning assets and interest-bearing liabilities and related cash flow hedging instruments that are subject to re-pricing within the periods indicated.


	September 30, 2021
(Dollars in thousands)	Less Than 90 Days			91 to 180 Days			181 to 365 Days			One to Three Years			Three to Five Years			Greater Than Five Years			Non-Sensitive			Total Balance
Assets:
Interest-earning deposits	$	462,239		$	—		$	—		$	—		$	—		$	—		$	—		$	462,239
Federal funds sold	7,352			—			—			—			—			—			—			7,352
Total investment securities	234,728			63,068			85,770			298,365			214,418			531,071			2,193			1,429,613
Total loans and leases	9,408,351			46,898			91,059			217,426			59,920			21,750			23,607			9,869,011
Other assets	—			—			—			—			—			—			390,653			390,653
Total assets	$	10,112,670		$	109,966		$	176,829		$	515,791		$	274,338		$	552,821		$	416,453		$	12,158,868

Liabilities:
Transaction deposits	$	8,735,770		$	156,204		$	60,977		$	325,000		$	—		$	—		$	593,342		$	9,871,293
Certificates of deposit	306,587			204,024			245,962			128,275			—			—			—			884,848
Borrowings, net	10,000			—			50,000			100,000			195,654			—			—			355,654
Other liabilities	—			—			—			—			—			—			233,035			233,035
Total liabilities	9,052,357			360,228			356,939			553,275			195,654			—			826,377			11,344,830

Equity	—			—			—			—			—			—			814,038			814,038
Total liabilities and equity	$	9,052,357		$	360,228		$	356,939		$	553,275		$	195,654		$	—		$	1,640,415		$	12,158,868

Interest rate sensitivity gap	$	1,060,313		$	(250,262)		$	(180,110)		$	(37,484)		$	78,684		$	552,821		$	(1,223,962)
Cumulative interest rate sensitivity gap	$	1,060,313		$	810,051		$	629,941		$	592,457		$	671,141		$	1,223,962
Cumulative interest rate sensitive assets to rate sensitive liabilities	111.7		%	108.6		%	106.4		%	105.7		%	106.4		%	111.6		%	107.2		%
Cumulative gap to total assets	8.7		%	6.7		%	5.2		%	4.9		%	5.5		%	10.1		%

September 30, 2017
(Dollars in thousands) Less Than
90 Days 91 to 180
Days 181 to 365
Days One to Three
Years Three to Five
Years Greater Than Five Years Non-Sensitive Total Balance
Assets:
Interest-earning deposits $ 129,979
$ —
$ —
$ —
$ —
$ —
$ —
$ 129,979
Federal funds sold 6,220
—
—
—
—
—
—
6,220
Total investment securities 95,632
3,926
15,295
71,822
17,898
15,544
799
220,916
Total loans 3,552,583
40,825
60,974
179,000
70,206
18,691
8,391
3,930,670
Other assets —
—
—
—
—
—
208,228
208,228
Total assets $ 3,784,414
$ 44,751
$ 76,269
$ 250,822
$ 88,104
$ 34,235
$ 217,418
$ 4,496,013

Liabilities:
Transaction deposits $ 2,220,594
$ —
$ 87,000
$ 204,078
$ —
$ —
$ 209,982
$ 2,721,654
Certificates of deposit
399,783
286,684
249,476
112,273
—
—
—
1,048,216
Borrowings, net 144,500
—
—
135,000
—
—
(338 ) 279,162
Other liabilities —
—
—
—
—
—
69,648
69,648
Total liabilities 2,764,877
286,684
336,476
451,351
—
—
279,292
4,118,680

Equity —
—
—
—
—
—
377,333
377,333
Total liabilities and equity $ 2,764,877
$ 286,684
$ 336,476
$ 451,351
$ —
$ —
$ 656,625
$ 4,496,013

Interest rate sensitivity gap $ 1,019,537
$ (241,933 ) $ (260,207 ) $ (200,529 ) $ 88,104
$ 34,235
$ (439,207 )
Cumulative interest rate sensitivity gap $ 1,019,537
$ 777,604
$ 517,397
$ 316,868
$ 404,972
$ 439,207

Cumulative interest rate sensitive assets to rate sensitive liabilities 136.9 % 125.5 % 115.3 % 108.3 % 110.5 % 111.4 % 109.2 %
Cumulative gap to total assets 22.7 % 17.3 % 11.5 % 7.0 % 9.0 % 9.8 %

The cumulative ~~twelve-month~~12-month ratio of interest rate sensitive assets to interest rate sensitive liabilities decreased to ~~115.3%~~106.4% as of September 30, ~~2017~~2021, from ~~120.5%~~116.9% as of December 31, ~~2016~~2020.

~~In June 2016, the~~The Company entered into a cash flow hedge ~~derivative transaction~~transactions to fix the interest rate on ~~$100.0 million~~certain of the Company’s borrowings for ~~a period~~varying periods of ~~three years. This transaction has~~time. During the life of these transactions, they have the effect on our gap analysis of moving ~~$100.0~~$250.0 million of borrowings from the less than 90 ~~day~~days re-pricing category to the 181 to 365 days and longer re-pricing categories. Of the $250.0 million, $50.0 million was moved to the 181 to 365 days re-pricing category, $100.0 million was moved to the one to three years re-pricing category and $100.0 million to the three to five years re-pricing category. For additional information on ~~the~~ cash flow hedge transactions, refer to Note ~~11,~~10, Derivatives and Hedging Activity, to our unaudited condensed consolidated financial statements.

~~Additionally, in all of these analyses (NII, EVE and gap), we use what we believe is a conservative treatment of non-maturity, interest-bearing deposits.~~ In our gap analysis, the allocation of non-maturity, interest-bearing deposits is fully reflected in the less than 90 days re-pricing category. The allocation of non-maturity, noninterest-bearing deposits is fully reflected in the non-sensitive category. ~~In taking this approach, we provide ourselves~~

Impact of Inflation

Our financial statements and related data presented herein have been prepared in accordance with ~~no benefit to either NII or EVE from a potential time-lag~~GAAP, which requires the measure of financial position and operating results in terms of historic dollars, without considering changes in the relative purchasing power of money over time due to inflation.

Inflation generally increases the costs of funds, operating overhead, and to the extent loans and other assets bear variable rates, the yields on such assets. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant effect on the performance of a financial institution than the effects of general levels of inflation. In addition, inflation affects a financial institution’s cost of goods and services purchased, the cost of salaries and benefits, occupancy expense and similar items. Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings and shareholders’ equity.

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LIBOR Transition

On March 5, 2021, the United Kingdom’s Financial Conduct Authority (the “FCA”), which regulates the London Interbank Offered Rate (“LIBOR”), confirmed that the publication of most LIBOR term rates will end on June 30, 2023, (excluding 1-week U.S. LIBOR and 2-month U.S. LIBOR, the publication of which will end on December 31, 2021). Given LIBOR’s extensive use across financial markets, the transition away from LIBOR presents various risks and challenges to financial markets and institutions, including the Company. The Company’s commercial and consumer businesses issue, trade and hold various products that are currently indexed to LIBOR. As of September 30, 2021, the Company had a material amount of loans, investment securities, and notional value of derivatives indexed to LIBOR that will mature after 2021. If not sufficiently planned for, the discontinuation of LIBOR could result in financial, operational, legal, reputational and compliance risks to financial markets and institutions, including the Company.

The Alternative Reference Rates Committee (“ARRC”) has proposed the Secured Overnight Financing Rate (“SOFR”) as its preferred rate ~~increase~~as an alternative to LIBOR, although the ARRC has not proposed that SOFR be required. The selection of ~~our non-maturity, interest-bearing deposits.~~SOFR as the alternative reference rate currently presents certain market concerns because it is a risk-free rate, while LIBOR incorporates credit risk, and because the methodology for the proposed term structure for SOFR differs from the LIBOR framework. The federal banking agencies are not requiring SOFR as the replacement rate. On April 6, 2021, New York Governor Cuomo signed into law legislation that provides for the substitution of SOFR as an alternative reference rate in any LIBOR-based contract governed by New York state law that does not include clear fallback language, once LIBOR is discontinued.

The ARRC has released final recommended fallback contract language for new issuances of LIBOR-indexed bilateral business loans, syndicated loans, floating rate notes, securitizations and adjustable-rate mortgage loans, and it continues to develop other LIBOR transition guidance. The International Swaps and Derivatives Association, Inc. (“ISDA”) has announced protocol for the transition of derivative instruments away from LIBOR. The process for modification of legacy contracts that do not provide for a permanent transition from LIBOR remains a work in progress.

Due to the uncertainty surrounding the future of LIBOR, it is expected that the transition will span several reporting periods through the end of LIBOR publication in June 2023. The federal banking agencies have continued to encourage banks to transition away from LIBOR as soon as practicable but no later than December 31, 2021 and have stated that an institution’s LIBOR transition plans are an examination priority. One of the major identified risks is inadequate fallback language in various instruments’ that may result in issues establishing the alternative index and adjusting the margin as applicable. The Company continues to monitor this activity and evaluate the related risks. The Company has: (1) established a cross-functional team to identify, assess and monitor risks associated with the transition of LIBOR and other benchmark rates; (2) developed an inventory of affected products; (3) implemented more robust fallback contract language; and (4) implemented a plan to adhere to the ISDA protocol for the transition of derivatives away from LIBOR. The Company’s cross-functional team is also tasked with managing clear communication of the Company’s transition plans with both internal and external stakeholders and ensuring that the Company appropriately updates its business processes, analytical tools, information systems and contract language to minimize disruption during and after the LIBOR transition. For additional information related to the potential impact surrounding the transition from LIBOR on the Company’s business, see “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC on February 25, 2021.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and qualitative disclosures about market risk are presented under the caption “Market Risk” in Part I, Item 2 ~~“Management’s Discussion and Analysis~~ of ~~Financial Condition and Results of Operations.”~~this Quarterly Report on Form 10-Q.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”))~~Act) as of September 30, ~~2017.~~2021. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the ~~U.S. Securities and Exchange Commission’s~~SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the ~~Company’s~~ Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of September 30, ~~2017.~~2021.

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Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, ~~2017,~~2021, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time the Company is a party to various litigation matters incidental to the conduct of its business. During the three months ended September 30, ~~2017,~~2021, the Company was not a party to any legal proceedings ~~that~~ the resolution of which management believes ~~would have a~~will be material ~~adverse effect on~~to the Company’s business, future prospects, financial condition, liquidity, results of operation, cash flows or capital levels.

ITEM 1A. RISK FACTORS

There ~~are risks, many beyond our control, that could cause our results~~have not been any material changes to ~~differ significantly from management’s expectations. Any~~the risk factors previously disclosed under Item 1A of ~~the risks described in~~ our Annual Report on Form 10-K for the ~~period~~year ended December 31, ~~2016,~~2020, previously filed with the SEC, except for the risk factors included below:

In December 2020, the FDIC issued a final rule aimed to clarify and modernize the FDIC’s existing regulatory framework for brokered deposits.

The final brokered deposits rule sets forth a new framework for analyzing whether certain deposit arrangements qualify as brokered deposits.Among other things, the final rule establishes bright-line standards for determining whether an entity meets the definition of a “deposit broker,” and identifies a number of designated business relationships that automatically meet the “primary purpose” exception to this definition.The final rule was effective as of April 1, 2021, and has an extended compliance date of January 1, 2022, for institutions relying on previous FDIC staff opinions, such as the Bank.The final rule, and any interpretation of it by the FDIC, could have a material adverse effect on our business and could have an impact on the Bank’s deposit premiums, capital and liquidity risk management planning, and regulatory monitoring and reporting obligations.The Bank currently is evaluating the potential effects of the final rule on our business and we cannot at this time predict these effects, including the extent to which the final rule will affect our deposit classifications.

COVID-19 and the impact of actions to mitigate it could have an adverse effect on our business, financial condition and results of operations, and such effects will depend on future developments, which are highly uncertain and are difficult to predict.

Federal, state and local governments have enacted various restrictions in an attempt to limit the spread of COVID-19, including the declaration of a national emergency; multiple cities’ and states’ declarations of states of emergency; school and business closings; limitations on social or public gatherings and other social distancing measures, such as working remotely, travel restrictions, quarantines and stay at home orders. Such measures have disrupted economic activity and contributed to job losses and reductions in consumer and business spending. In response to the economic and financial effects of COVID-19, the Federal Reserve has sharply reduced interest rates and instituted quantitative easing measures, as well as domestic and global capital market support programs. In addition, the President’s Administration, Congress, various federal agencies and state governments have taken measures to address the economic and social consequences of the pandemic, including the passage of the CARES Act. The CARES Act, among other things, provides certain measures to support individuals and businesses in maintaining solvency through monetary relief, including in the form of financing, loan forgiveness and automatic forbearance. The full impact on our business activities as a result of new government and regulatory policies, programs and guidelines, as well as regulators’ reactions to such activities, remains uncertain.

The economic effects of the COVID-19 pandemichave had a destabilizing effect on financial markets, key market indices and overall economic activity. The uncertainty regarding the duration of the pandemic and the resulting economic disruption caused increased market volatility and led to an economic recession (including uncertainty regarding the impacts of a resurgence of COVID-19 infections, including new strains of the virus, as well as a significant decrease in consumer confidence and business generally). The continuation of these conditions, the impacts of the CARES Act, and other federal and state measures, specifically with respect to loan forbearances, have adversely impacted our businesses and results of operations and the business and operations of at least some of our borrowers, customers and business partners and these impacts may be material. In particular, even as COVID-19 vaccines become widely available, these events have had, and/or can be expected to continue to have, the following effects, among other things:

•impair the ability of borrowers to repay outstanding loans or other obligations, resulting in increases in delinquencies;

•impair the value of collateral securing loans;

•impair the value of our securities portfolio;

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•require an increase in our allowance for credit losses on loans and leases;

•adversely affect the stability of our deposit base, or otherwise impair our liquidity;

•reduce our asset management revenues and the demand for our products and services;

•impair the ability of loan guarantors to honor commitments;

•negatively impact our regulatory capital ratios;

•result in increased compliance risk as we become subject to new regulatory and other requirements associated with any government stimulus new programs in which we participated;

•negatively impact the productivity and availability of key personnel and other employees necessary to conduct our business, and of third-party service providers who perform critical services for us, or otherwise cause operational failures due to changes in our normal business practices necessitated by the outbreak and related governmental actions;

•increase cyber and payment fraud risk, and other operational risks, given increased online and remote activity; and

•negatively impact revenue and income.

Prolonged measures by health or other governmental authorities encouraging or requiring significant restrictions on travel, assembly or other core business practices could further harm our business and those of our customers. Although we have business continuity plans and other safeguards in place, there is no assurance that they will continue to be effective.

The ultimate impact of these factors is highly uncertain at this ~~Quarterly~~time and we do not yet know the full extent of the impacts on our business, our operations or the national or global economies, nor the pace of the economic recovery when the COVID-19 pandemic subsides. The decline in economic conditions generally and a prolonged negative impact on middle market businesses, in particular, due to COVID-19 is likely to result in a material adverse effect to our business, financial condition and results of operations in future period.

In addition, to the extent COVID-19 adversely affects our business, financial condition and results of operations, and global economic conditions more generally, it may also have the effect of heightening many of the other risks described in the “Risk Factors” section of our Annual Report on Form ~~10-Q~~10-K for the year ended December 31, 2020.

The intention of the United Kingdom’s FCA to cease support of LIBOR by June 30, 2023, could ~~by itself~~negatively affect the fair value of our financial assets and liabilities, results of operations and net worth. A transition to an alternative reference interest rate could present operational problems and result in market disruption, including inconsistent approaches for different financial products, as well as disagreements with counterparties.

Although the publication of most LIBOR rates will cease on June 30, 2023, (excluding 1-week U.S. LIBOR and 2-month U.S. LIBOR, the publication of which will end on December 31, 2021), we cannot predict exactly when the capital and debt markets will cease to use LIBOR as a benchmark, whether SOFR will become the market benchmark in its place or ~~together with one or more other factors, adversely affect~~what impact such a transition may have on our business, results of operations and financial condition.

The selection of SOFR as the alternative reference rate for these products currently presents certain market concerns because SOFR (unlike LIBOR) does not have an inherent term structure. A methodology has been developed to calculate SOFR-based term rates, and the Federal Reserve Bank of New York has published such rates daily since early 2020. However, the methodology has not been tested for an extended period of time, which may limit market acceptance of the use of SOFR. In addition, SOFR may not be a suitable alternative to LIBOR for all of our financial products, and it is uncertain what other rates might be appropriate for that purpose. It is uncertain whether these other indices will remain acceptable alternatives for such products. The replacement of LIBOR also may result in economic mismatches between different categories of instruments that now consistently rely on the LIBOR benchmark.

We have a significant number of financial products, including loans, mortgage-related securities, other debt securities and derivatives, that are tied to LIBOR, and we continue to enter into transactions involving such products that will mature after 2021. Inconsistent approaches to a transition from LIBOR to an alternative rate among different market participants and for different financial products may cause market disruption and operational problems, which could adversely affect us, including by exposing us to increased basis risk and resulting costs in connection with this risk, and by creating the possibility of disagreements with counterparties.

Risks Relating to the Proposed Acquisition of the Company by Raymond James

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or cannot be met.

Before the transactions contemplated by the Agreement and Plan of Merger, dated as of October 20, 2021, among the Company, Raymond James Financial, Inc. (“Raymond James”), Macaroon One LLC and Macaroon Two LLC (the “Merger Agreement”), including the acquisition of the Company by Raymond James (the “Acquisition”), may be completed, various approvals must be

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obtained from regulatory authorities. In determining whether to grant these approvals, the applicable regulatory authorities consider a variety of factors, including the competitive impact of the proposal in the relevant geographic markets; financial, managerial and other supervisory considerations of each party; convenience and needs of the communities to be served and the record of the insured depository institution subsidiaries under the Community Reinvestment Act of 1977 and the regulations promulgated thereunder; effectiveness of the parties in combating money laundering activities; and the extent to which the proposal would result in greater or more concentrated risks to the stability of the United States banking or financial ~~condition. Additional risks~~system. The regulatory approvals may not be received at all, may not be received in a timely fashion, or may contain conditions on the completion of the mergers that are not anticipated or cannot be met. If the consummation of the Acquisition is delayed, including by a delay in receipt of necessary regulatory approvals, the business, financial condition and ~~uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business,~~ results of operations of each company may be materially and adversely affected. Additionally, conditions that the regulatory authorities may impose in connection with the Acquisition could have the effect of delaying completion of the Acquisition or of imposing additional costs or limitations on the combined company following the Acquisition. Such conditions may constitute a burdensome condition that may allow Raymond James to terminate the Merger Agreement on or after June 30, 2022.

Failure of the Acquisition to be completed, the termination of the Merger Agreement or a significant delay in the consummation of the Acquisition could negatively impact us.

The Merger Agreement is subject to a number of conditions that must be fulfilled in order to complete the Acquisition, including approval of the Acquisition by the affirmative vote of a majority of the votes entitled to be cast by holders of our common stock. These conditions to the consummation of the Acquisition may not be fulfilled and, accordingly, the Acquisition may not be completed or significantly delayed. In addition, if the Merger is not completed by October 20, 2022, either Raymond James or we may choose to terminate the Merger Agreement at any time after that date. Furthermore, the consummation of the Acquisition may be significantly delayed due to various factors, including potential litigation related to the Acquisition.

If the Acquisition is not consummated or is significantly delayed, our ongoing business, financial ~~condition.~~condition and results of operations may be materially adversely affected, and the market price of our common stock may decline significantly, particularly to the extent that the current market price reflects a market assumption that the Acquisition will be consummated. If the consummation of the Acquisition is delayed, including by the receipt of a competing acquisition proposal, our business, financial condition and results of operations may be materially adversely affected.

In addition, we have incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement. If the Acquisition is not completed or is significantly delayed, we would have to recognize these expenses without realizing the expected benefits of the Acquisition. Any of the foregoing, or other risks arising in connection with the failure of or delay in consummating the Acquisition, including the diversion of management attention from pursuing other opportunities and the constraints in the Merger Agreement on our ability to make significant changes to our ongoing business during the pendency of the Acquisition, could have a material adverse effect on our business, financial condition and results of operations.

Additionally, our business may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Acquisition, without realizing any of the anticipated benefits of completing the Acquisition, and the market price of our common stock might decline to the extent that the current market price reflects a market assumption that the Acquisition will be completed. If the Merger Agreement is terminated and a party’s board of directors seeks another merger or business combination, our stockholders cannot be certain that we will be able to find a party willing to engage in a transaction on more attractive terms than the Acquisition.

We will be subject to business uncertainties and contractual restrictions while the Acquisition is pending.

Uncertainty about the effect of the Acquisition on employees, customers (including depositors and borrowers), counterparties, suppliers and vendors may have an adverse effect on our business, financial condition and results of operations. These uncertainties may impair our ability to attract, retain and motivate key personnel and customers pending the consummation of the Acquisition, as such personnel and customers may experience uncertainty about their future roles and relationships following the consummation of the Acquisition. Additionally, these uncertainties could cause our customers, counterparties, suppliers, vendors and others with whom we deal to seek to change, or fail to extend, existing business relationships with us. In addition, competitors may target our existing customers by highlighting potential uncertainties and integration difficulties that may result from the Acquisition.

The pursuit of the Acquisition and the preparation for the integration may place a burden on our management and internal resources. Any significant diversion of management attention away from ongoing business concerns and any difficulties encountered in the transition and integration process could have a material adverse effect on each company’s business, financial condition and results of operations.

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In addition, the Merger Agreement restricts us from taking certain actions without Raymond James’ consent while the Acquisition is pending. If the Acquisition is not completed, these restrictions could have a material adverse effect on our business, financial condition and results of operations.

Litigation against us or Raymond James, or the members of our or Raymond James’ board of directors, could prevent or delay the completion of the Acquisition.

The results of any potential legal claims that may be asserted by purported stockholder plaintiffs related to the Acquisition are difficult to predict and could delay or prevent the Acquisition from being completed in a timely manner. Moreover, any litigation could be time consuming and expensive for the parties and could divert our and Raymond James’ management’s attention away from their regular business. Any lawsuit adversely resolved against us, Raymond James or members of our or Raymond James’ board of directors could have a material adverse effect on each party’s business, financial condition and results of operations.

One of the conditions to the consummation of the Acquisition is the absence of any order, injunction, law, regulation or other legal restraints preventing, prohibiting or making illegal the completion of the Acquisition or any other transactions contemplated by the Merger Agreement. Consequently, if a settlement or other resolution is not reached in any lawsuit that is filed or any regulatory proceeding and a claimant secures injunctive or other relief or a regulatory authority issues an order or other directive having the effect of making the Acquisition illegal or otherwise prohibiting consummation of the Acquisition, then such injunctive or other relief may prevent the Acquisition from becoming effective in a timely manner or at all.

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

Recent Sales of Unregistered Securities

None.

Purchases of Equity Securities by the ~~Issuer~~Company and Affiliated Purchasers

The table below sets forth information regarding the Company’s purchases of its common stock during its fiscal quarter ended September 30, ~~2017:~~2021:


	Total Number of Shares Purchased (1)	Weighted Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
July 1, 2021 - July 31, 2021	20,205	$	20.64	—	$	7,273,785
August 1, 2021 - August 31, 2021	427	20.38		—	7,273,785
September 1, 2021 - September 30, 2021	1,759	20.04		—	7,273,785
Total	22,391	$	20.59	—	$	7,273,785

Total Number
of Shares
Purchased

Weighted
Average
Price Paid
per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs*

Approximate Dollar Value
of Shares that May
Yet Be Purchased
Under the Plans or
Programs*
July 1, 2017 - July 31, 2017 36,453
$ 23.00
36,453
$ 3,716,466
August 1, 2017 - August 31, 2017 60,500
21.69
60,500
2,404,008
September 1, 2017 - September 30, 2017 10,000
20.55
10,000
2,198,464
Total 106,953
$ 22.03
106,953
$ 2,198,464


*	In January 2017, the Company announced that its Board of Directors had approved a share repurchase program authorizing the Company to repurchase up to $5 million of its common stock from time to time on the open market or in privately negotiated transactions.

(1)There were 22,391 shares of treasury stock acquired in connection with the net settlement of equity awards exercised or vested included in the total number of shares purchased reflected in the table above. These shares were not part of a publicly announced plan or program.

(2)On July 15, 2019, the Board approved a share repurchase program of up to $10 million. Under this authorization, purchases of shares may be made at the discretion of management from time to time in the open market or through negotiated transactions, as well as purchases of shares or the options to acquire shares subject to common stock incentive compensation award agreements from officers, directors or employees of the Company.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

~~Exhibit No.Description~~


Exhibit No.			Description

~~31.1~~2.1			Agreement and Plan of Merger, dated October 20, 2021, among Raymond James Financial, Inc., Macaroon One LLC, Macaroon Two LLC and TriState Capital Holdings, Inc. (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K, filed with the SEC on October 27, 2021).

10.1			Support Agreement, dated October 20, 2021, by and among James F. Getz, Brian S. Fetterolf, Raymond James Financial, Inc., Macaroon One LLC and, solely for purposes of the last sentence of Section 9 thereof, TriState Capital Holdings, Inc. (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, filed with the SEC on October 27, 2021).

10.2			Support Agreement, dated October 20, 2021, by and among T-VIII PubOpps LP, Raymond James Financial, Inc., Macaroon One LLC and, solely for purposes of the last sentence of Section 9 and Section 10(c) thereof, TriState Capital Holdings, Inc. (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, filed with the SEC on October 27, 2021).

31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.


31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.


32			Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.


101			The following materials from TriState Capital Holdings, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, ~~2017,~~2021, formatted in XBRL: (i) the Unaudited Condensed Consolidated Statements of Financial Condition, (ii) the Unaudited Condensed Consolidated Statements of Income, (iii) the Unaudited Condensed Consolidated Statements of Comprehensive Income, (iv) the Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity, (v) the Unaudited Condensed Consolidated Statements of Cash Flows, ~~and~~ (vi) the Notes to Unaudited Condensed Consolidated Financial ~~Statements.~~Statements, and (vii) the Cover Page, furnished herewith.*

104			Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101).

* This information is deemed furnished, not filed.

* This information is deemed furnished, not filed.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


TRISTATE CAPITAL HOLDINGS, INC.

~~TRISTATE CAPITAL HOLDINGS, INC.~~
By
By	/s/ James F. Getz
		James F. Getz
		Chairman, President and Chief Executive Officer

By	~~/s/ Mark L. Sullivan~~
	~~Mark L. Sullivan~~
	~~Vice Chairman and Chief Financial Officer~~

~~Date: October 30, 2017~~

~~EXHIBIT INDEX~~


~~Exhibit No.~~By			~~Description~~/s/ David J. Demas

			David J. Demas
~~31.1~~			~~Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.~~


~~31.2~~	~~Certification of~~ Chief Financial Officer ~~pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.~~


32	~~Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.~~

~~101~~

~~The following materials from TriState Capital Holdings, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2017~~, formatted in XBRL: (i) the Unaudited Condensed Consolidated Statements of Financial Condition, (ii) the Unaudited Condensed Consolidated Statements of Income, (iii) the Unaudited Condensed Consolidated Statements of Comprehensive Income, (iv) the Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity, (v) the Unaudited Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Unaudited Condensed Consolidated Financial Statements.*

* This information is deemed furnished, not filed.

Date: November 5, 2021



	December 31, 2016
(Dollars in thousands)	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Estimated Fair Value
Investment securities available-for-sale:
Corporate bonds	$	53,902	$	164	$	21	$	54,045
Trust preferred securities	17,711		159		72		17,798
Non-agency mortgage-backed securities	5,750		14		—		5,764
Non-agency collateralized loan obligations	16,234		—		54		16,180
Agency collateralized mortgage obligations	44,051		49		279		43,821
Agency mortgage-backed securities	24,107		240		198		24,149
Agency debentures	4,760		23		—		4,783
Equity securities	8,643		—		291		8,352
Total investment securities available-for-sale	175,158		649		915		174,892
Investment securities held-to-maturity:
Corporate bonds	28,693		596		30		29,259
Municipal bonds	25,247		88		96		25,239
Total investment securities held-to-maturity	53,940		684		126		54,498
Total	$	229,098	$	1,333	$	1,041	$	229,390



	Three Months Ended September 30, 2016
(Dollars in thousands)	Private Banking		Commercial and Industrial		Commercial Real Estate			Total
Balance, beginning of period	$	1,502	$	10,841	$	4,872		$	17,215
Provision (credit) for loan losses	85		2,548		(3,175		)	(542		)
Charge-offs	—		—		—			—
Recoveries	—		127		3,411			3,538
Balance, end of period	$	1,587	$	13,516	$	5,108		$	20,211



	Nine Months Ended September 30, 2016
(Dollars in thousands)	Private Banking		Commercial and Industrial			Commercial Real Estate			Total
Balance, beginning of period	$	1,566	$	11,064		$	5,344		$	17,974
Provision (credit) for loan losses	21		3,286			(3,647		)	(340		)
Charge-offs	—		(1,542		)	—			(1,542		)
Recoveries	—		708			3,411			4,119
Balance, end of period	$	1,587	$	13,516		$	5,108		$	20,211



	Asset Derivatives			Liability Derivatives
	as of December 31, 2016			as of December 31, 2016
(Dollars in thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate products	Other assets	$	1,793	Other liabilities	$	80
Derivatives not designated as hedging instruments:
Interest rate products	Other assets	10,324		Other liabilities	10,529

Total	Other assets	$	12,117	Other liabilities	$	10,609



	Three Months Ended September 30,
	2017 over 2016
(Dollars in thousands)	Yield/Rate			Volume			Change⁽¹⁾
Increase in:
Interest income:
Interest-earning deposits	$	245		$	25		$	270
Federal funds sold	14			—			14
Investment securities available-for-sale	140			(208		)	(68		)
Investment securities held-to-maturity	24			122			146
FHLB stock	53			3			56
Total loans	4,161			6,074			10,235
Total increase in interest income	4,637			6,016			10,653

Interest expense:
Interest-bearing deposits:
Interest-bearing checking accounts	584			355			939
Money market deposit accounts	2,557			689			3,246
Certificates of deposit	883			349			1,232
Borrowings:
FHLB borrowings	314			(4		)	310
Line of credit borrowings	—			22			22
Subordinated notes payable, net	(3		)	3			—
Total increase in interest expense	4,335			1,414			5,749
Total increase in net interest income	$	302		$	4,602		$	4,904



	September 30, 2017
(Dollars in thousands)	One Year or Less ⁽¹⁾		One to Three Years		Three to Five Years		Greater Than Five Years		Total
Unused loan commitments	$	1,784,000	$	193,463	$	44,778	$	89,385	$	2,111,626
Standby letters of credit	37,812		20,052		10,265		5,325		73,454
Total off-balance sheet arrangements	$	1,821,812	$	213,515	$	55,043	$	94,710	$	2,185,080



	Total Number of Shares Purchased	Weighted Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs*	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs*
July 1, 2017 - July 31, 2017	36,453	$	23.00	36,453	$	3,716,466
August 1, 2017 - August 31, 2017	60,500	21.69		60,500	2,404,008
September 1, 2017 - September 30, 2017	10,000	20.55		10,000	2,198,464
Total	106,953	$	22.03	106,953	$	2,198,464