Community Bancorp 10-Q for FY2023 Q2

Community Bancorp (CMTV)

10-Q 2023-08-11 For: 2023-06-30

Added on April 11, 2026

About this 10-Q

Community Bancorp filed this 10-Q on August 11, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net income: $3.2M; up 5.8% from net income of $3.02M a year earlier

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Vermont			03-0284070
(State of Incorporation)			(IRS Employer Identification Number)

4811 US Route 5, Derby, Vermont			05829
(Address of Principal Executive Offices)			(zip code)

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

FORM 10-Q

Index
		Page
PART I	FINANCIAL INFORMATION

Item 1	Financial Statements	3
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4	Controls and Procedures	53

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	54
Item 1A	Risk Factors	54
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 6	Exhibits	55
	Signatures	56
	Exhibit Index	57

Community Bancorp. and Subsidiary	June 30,			December 31,
Consolidated Balance Sheets	2023			2022
	(Unaudited)

Assets
Cash and due from banks	$	13,754,587		$	12,302,771
Federal funds sold and overnight deposits		5,586,640			58,837,557
Total cash and cash equivalents		19,341,227			71,140,328
Securities available-for-sale		186,536,541			192,918,109
Restricted equity securities, at cost		1,787,850			1,411,750
Loans held-for-sale		904,250			0
Loans		780,985,276			748,548,608
Allowance for credit losses		(9,255,501	)		(8,709,225	)
Deferred net loan costs		521,300			493,275
Net loans		772,251,075			740,332,658
Bank premises and equipment, net		12,651,906			13,042,468
Accrued interest receivable		3,212,265			3,214,332
Bank owned life insurance		5,192,876			5,153,387
Goodwill		11,574,269			11,574,269
Other assets		18,406,068			17,244,846
Total assets	$	1,031,858,327		$	1,056,032,147

Liabilities and Shareholders' Equity
Liabilities
Deposits:
Demand, non-interest bearing	$	201,716,781		$	216,093,534
Interest-bearing transaction accounts		267,151,188			294,050,079
Money market funds		109,035,047			140,117,086
Savings		166,057,812			171,072,921
Time deposits, $250,000 and over		18,091,657			15,632,058
Other time deposits		89,129,231			86,006,601
Total deposits		851,181,716			922,972,279
Borrowed funds		41,200,000			1,300,000
Repurchase agreements		35,134,331			33,077,829
Junior subordinated debentures		12,887,000			12,887,000
Accrued interest and other liabilities		10,938,178			10,618,676
Total liabilities		951,341,225			980,855,784

Shareholders' Equity
Preferred stock, 1,000,000 shares authorized, 15 shares issued and outstanding
at 06/30/23 and 12/31/22 ($100,000 liquidation value, per share)		1,500,000			1,500,000
Common stock - $2.50 par value; 15,000,000 shares authorized, 5,683,475
shares issued at 06/30/23 and 5,647,710 shares issued at 12/31/22		14,208,688			14,119,275
Additional paid-in capital		36,995,946			36,383,235
Retained earnings		49,886,680			46,464,447
Accumulated other comprehensive loss		(19,451,435	)		(20,667,817	)
Less: treasury stock, at cost; 210,101 shares at 06/30/23 and 12/31/22		(2,622,777	)		(2,622,777	)
Total shareholders' equity		80,517,102			75,176,363
Total liabilities and shareholders' equity	$	1,031,858,327		$	1,056,032,147

Book value per common share outstanding	$	14.44		$	13.55

Community Bancorp. and Subsidiary	Three Months Ended June 30,
Consolidated Statements of Income	2023		2022
(Unaudited)

Interest income
Interest and fees on loans	$	10,014,968	$	7,630,710
Interest on taxable debt securities		929,963		736,407
Interest on tax-exempt debt securities		90,659		33,786
Dividends		33,999		16,632
Interest on federal funds sold and overnight deposits		144,877		169,965
Total interest income		11,214,466		8,587,500

Interest expense
Interest on deposits		2,224,384		585,458
Interest on borrowed funds		252,441		21,665
Interest on repurchase agreements		214,654		22,129
Interest on junior subordinated debentures		254,124		121,063
Total interest expense		2,945,603		750,315

Net interest income		8,268,863		7,837,185
Provision for credit losses		281,142		337,500
Net interest income after provision for credit losses		7,987,721		7,499,685

Non-interest income
Service fees		939,451		936,382
Income from sold loans		106,660		195,542
Other income from loans		341,876		322,913
Other income		450,444		179,459
Total non-interest income		1,838,431		1,634,296

Non-interest expense
Salaries and wages		2,264,760		2,034,000
Employee benefits		811,870		704,623
Occupancy expenses, net		700,228		673,177
Other expenses		2,087,065		2,022,664
Total non-interest expense		5,863,923		5,434,464

Income before income taxes		3,962,229		3,699,517
Income tax expense		765,890		678,365
Net income	$	3,196,339	$	3,021,152

Earnings per common share	$	0.58	$	0.56
Weighted average number of common shares
used in computing earnings per share		5,461,597		5,396,060
Dividends declared per common share	$	0.23	$	0.23

Community Bancorp. and Subsidiary	Six Months Ended June 30,
Consolidated Statements of Income	2023		2022
(Unaudited)

Interest income
Interest and fees on loans	$	19,390,993	$	15,117,910
Interest on taxable debt securities		1,873,441		1,392,684
Interest on tax-exempt debt securities		181,317		44,735
Dividends		64,653		33,092
Interest on federal funds sold and overnight deposits		474,288		250,625
Total interest income		21,984,692		16,839,046

Interest expense
Interest on deposits		4,069,131		1,137,418
Interest on borrowed funds		276,961		43,630
Interest on repurchase agreements		346,782		43,169
Interest on junior subordinated debentures		499,589		219,415
Total interest expense		5,192,463		1,443,632

Net interest income		16,792,229		15,395,414
Provision for credit losses		567,668		1,200,000
Net interest income after provision for credit losses		16,224,561		14,195,414

Non-interest income
Service fees		1,819,739		1,799,269
Income from sold loans		214,195		399,384
Other income from loans		770,448		594,174
Other income		792,827		527,899
Total non-interest income		3,597,209		3,320,726

Non-interest expense
Salaries and wages		4,553,520		4,074,000
Employee benefits		1,566,140		1,476,675
Occupancy expenses, net		1,471,214		1,426,541
Other expenses		4,152,752		3,910,836
Total non-interest expense		11,743,626		10,888,052

Income before income taxes		8,078,144		6,628,088
Income tax expense		1,543,043		1,201,394
Net income	$	6,535,101	$	5,426,694

Earnings per common share	$	1.19	$	1.00
Weighted average number of common shares
used in computing earnings per share		5,452,867		5,389,406
Dividends declared per common share	$	0.46	$	0.46

Community Bancorp. and Subsidiary
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)	Three Months Ended June 30,
	2023			2022

Net income	$	3,196,339		$	3,021,152

Other comprehensive loss, net of tax:
Unrealized holding loss on securities AFS arising during the period		(1,843,589	)		(7,031,667	)
Tax effect		387,153			1,476,649
Other comprehensive loss, net of tax		(1,456,436	)		(5,555,018	)
Total comprehensive income (loss)	$	1,739,903		$	(2,533,866	)

	Six Months Ended June 30, 2023
					Additional										Total
	Common		Preferred		paid-in		Retained						Treasury		shareholders'
	Stock		Stock		capital		earnings			AOCI*			stock		equity

January 1, 2023	$	14,119,275	$	1,500,000	$	36,383,235	$	46,464,447		$	(20,667,817	)	$	(2,622,777)	$	75,176,363
Cumulative change in accounting principle (Note 2)								(549,113	)							(549,113	)
Balance at January 1, 2023 (as adjusted for change in accounting principle)								45,915,334								74,627,250
Issuance of common stock		43,693				276,184										319,877
Cash dividends declared
Common stock								(1,250,794	)							(1,250,794	)
Preferred stock								(28,125	)							(28,125	)
Comprehensive income
Net income								3,338,761								3,338,761
Other comprehensive income											2,672,818					2,672,818
March 31, 2023	$	14,162,968	$	1,500,000	$	36,659,419	$	47,975,176		$	(17,994,999	)	$	(2,622,777)	$	79,679,787

Issuance of common stock		45,720				336,527										382,247
Cash dividends declared
Common stock								(1,254,836	)							(1,254,836	)
Preferred stock								(30,000	)							(30,000	)
Comprehensive income
Net income								3,196,340								3,196,340
Other comprehensive loss											(1,456,436	)				(1,456,436	)
June 30, 2023	$	14,208,688	$	1,500,000	$	36,995,946	$	49,886,680		$	(19,451,435	)	$	(2,622,777)	$	80,517,102

	Six Months Ended June 30, 2022
					Additional											Total
	Common		Preferred		paid-in		Retained						Treasury			shareholders'
	Stock		Stock		capital		earnings			AOCI*			stock			equity

January 1, 2022	$	13,969,848	$	1,500,000	$	35,322,063	$	37,758,105		$	(1,166,971	)	$	(2,622,777	)	$	84,760,268

Issuance of common stock		35,597				237,086											272,683
Cash dividends declared
Common stock								(1,236,880	)								(1,236,880	)
Preferred stock								(12,188	)								(12,188	)
Comprehensive loss
Net income								2,405,542									2,405,542
Other comprehensive loss											(8,744,637	)					(8,744,637	)
March 31, 2022	$	14,005,445	$	1,500,000	$	35,559,149	$	38,914,579		$	(9,911,608	)	$	(2,622,777	)	$	77,444,788

Issuance of common stock		33,048				287,882											320,930
Cash dividends declared
Common stock								(1,240,049	)								(1,240,049	)
Preferred stock								(13,124	)								(13,124	)
Comprehensive loss
Net income								3,021,152									3,021,152
Other comprehensive loss											(5,555,018	)					(5,555,018	)
June 30, 2022	$	14,038,493	$	1,500,000	$	35,847,031	$	40,682,558		$	(15,466,626	)	$	(2,622,777	)	$	73,978,679

Community Bancorp. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)	Six Months Ended June 30,
	2023			2022

Cash Flows from Operating Activities:
Net income	$	6,535,101		$	5,426,694
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, bank premises and equipment		543,590			570,063
Provision for credit losses		567,668			1,200,000
Deferred income tax		(24,713	)		13,973
Gain on sale of loans		(56,608	)		(198,869	)
Loss on sale of bank premises and equipment		449			0
Income from CFS Partners		(555,203	)		(298,831	)
Amortization of bond premium, net		128,123			361,335
Proceeds from sales of loans held for sale		2,911,663			7,827,010
Originations of loans held for sale		(3,759,305	)		(8,110,641	)
(Decrease) increase in taxes payable		(722,500	)		151,237
Decrease (increase) in interest receivable		2,067			(250,179	)
Decrease in mortgage servicing rights		41,224			1,019
Decrease in right-of-use assets		100,646			99,340
Decrease in operating lease liabilities		(107,511	)		(102,577	)
Increase in other assets		(130,411	)		(287,979	)
Increase in cash surrender value of BOLI		(39,489	)		(40,239	)
Amortization of limited partnerships		134,256			134,184
Change in net deferred loan fees and costs		(28,025	)		(443,511	)
Increase (decrease) in interest payable		204,150			(7,759	)
(Decrease) increase in accrued expenses		(502,279	)		82,812
Increase in other liabilities		432,388			132,754
Net cash provided by operating activities		5,675,281			6,259,836

Cash Flows from Investing Activities:
Investments - AFS
Maturities, calls, pay downs and sales		7,793,170			9,909,154
Purchases		0			(34,822,702	)
Proceeds from redemption of restricted equity securities		1,171,200			43,500
Purchases of restricted equity securities		(1,547,300	)		0
Investments in limited liability entities		(81,250	)		0
Increase in loans, net		(32,867,687	)		(13,648,856	)
Capital expenditures net of proceeds from sales of bank
premises and equipment		(254,123	)		(168,101	)
Recoveries of loans charged off		148,379			31,359
Net cash used in investing activities		(25,637,611	)		(38,655,646	)

	2023			2022

Cash Flows from Financing Activities:
Net decrease in demand and interest-bearing transaction accounts		(41,275,644	)		(14,107,598	)
Net (decrease) increase in money market and savings accounts		(36,097,148	)		7,448,461
Net increase (decrease) in time deposits		5,582,229			(832,174	)
Net increase (decrease) in repurchase agreements		2,056,502			(1,375,064	)
Net increase in short-term borrowings		13,400,000			0
Proceeds from long-term borrowings		26,500,000			0
Decrease in finance lease obligations		(109,299	)		(105,918	)
Dividends paid on preferred stock		(58,125	)		(25,312	)
Dividends paid on common stock		(1,835,286	)		(1,897,885	)
Net cash used in financing activities		(31,836,771	)		(10,895,490	)

Net decrease in cash and cash equivalents		(51,799,101	)		(43,291,300	)
Cash and cash equivalents:
Beginning		71,140,328			110,358,926
Ending	$	19,341,227		$	67,067,626

Supplemental Schedule of Cash Paid During the Period:
Interest	$	4,988,313		$	1,451,391

Income taxes, net of refunds	$	2,156,000		$	902,000

Supplemental Schedule of Noncash Investing and Financing Activities:
Change in unrealized gain (loss) on securities AFS	$	1,539,725		$	(18,100,828)

Common Shares Dividends Paid:
Dividends declared	$	2,505,630		$	2,476,929
Decrease in dividends payable attributable to dividends declared		31,780			14,569
Dividends reinvested		(702,124	)		(593,613	)
Total dividends paid	$	1,835,286		$	1,897,885

ABS:	Asset backed security	FDIC:	Federal Deposit Insurance Corporation
AFS:	Available-for-sale	FDICIA:	Federal Deposit Insurance Corporation
Agency MBS:	MBS issued by a US government agency		Improvement Act of 1991
	or GSE	FHLBB:	Federal Home Loan Bank of Boston
ACL:	Allowance for Credit Losses	FHLMC:	Federal Home Loan Mortgage Corporation
ALCO:	Asset Liability Committee	FOMC:	Federal Open Market Committee
ALL:	Allowance for Loan Losses	FRB:	Federal Reserve Board
AOCI:	Accumulated other comprehensive income	FRBB:	Federal Reserve Bank of Boston
ASC:	Accounting Standards Codification	GAAP:	Generally Accepted Accounting Principles
ASU:	Accounting Standards Update		in the United States
Bancorp:	Community Bancorp.	GSE:	Government sponsored enterprise
Bank:	Community National Bank	HTM:	Held-to-maturity
BIC:	Borrower-in-Custody	ICS:	Insured Cash Sweeps of the IntraFi Network
Board:	Board of Directors	IRS:	Internal Revenue Service
BOLI:	Bank owned life insurance	JNE:	Jobs for New England
bp or bps:	Basis point(s)	Jr:	Junior
BTFP:	Bank Term Funding Program	LIBOR	London Interbank Offered Rate
CDARS:	Certificate of Deposit Accounts Registry	MBS:	Mortgage-backed security
	Service of the IntraFi Network	MSRs:	Mortgage servicing rights
CDs:	Certificates of deposit	NII:	Net interest income
CDI:	Core deposit intangible	OAS:	Other amortizing security
CECL:	Current Expected Credit Loss	OBS:	Off-balance sheet
CFSG:	Community Financial Services Group, LLC	OCI:	Other comprehensive income (loss)
CFS Partners:	Community Financial Services Partners,	OREO:	Other real estate owned
	LLC	OTTI:	Other-than-temporary impairment
CMO	Collateralized Mortgage Obligations	PMI:	Private mortgage insurance
Company:	Community Bancorp. and Subsidiary	PPP:	Paycheck Protection Program
CRE:	Commercial Real Estate	RD:	USDA Rural Development
DCF:	Discounted cash flow	SBA:	U.S. Small Business Administration
DDA or DDAs:	Demand Deposit Account(s)	SEC:	U.S. Securities and Exchange Commission
DTC:	Depository Trust Company	SOFR:	Secured Overnight Financing Rate
DRIP:	Dividend Reinvestment Plan	TDR:	Troubled-debt restructuring
Exchange Act:	Securities Exchange Act of 1934	USDA:	U.S. Department of Agriculture
FASB:	Financial Accounting Standards Board	VA:	U.S. Veterans Administration

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
June 30, 2023
U.S. GSE debt securities	$	12,000,000	$	0	$	1,474,322	$	10,525,678
U.S. Government securities		41,288,500		0		2,906,560		38,381,940
Taxable Municipal securities		300,000		0		54,558		245,442
Tax-exempt Municipal securities		12,010,573		75,171		646,507		11,439,237
Agency MBS		129,348,788		0		18,951,174		110,397,614
ABS and OAS		2,686,936		0		227,032		2,459,904
CMO		11,789,814		0		367,872		11,421,942
Other investments		1,734,000		0		69,216		1,664,784
Total	$	211,158,611	$	75,171	$	24,697,241	$	186,536,541

	Less than 12 months				12 months or more				Totals
	Fair		Unrealized		Fair		Unrealized		Number of		Fair		Unrealized
	Value		Loss		Value		Loss		Securities		Value		Loss
June 30, 2023
U.S. GSE debt securities	$	0	$	0	$	10,525,678	$	1,474,322		11	$	10,525,678	$	1,474,322
U.S. Government securities		0		0		38,381,940		2,906,560		54		38,381,940		2,906,560
Taxable Municipal securities		0		0		245,442		54,558		1		245,442		54,558
Tax-exempt Municipal securities		3,050,243		28,616		4,503,273		617,891		16		7,553,516		646,507
Agency MBS		7,083,036		136,925		103,314,578		18,814,249		122		110,397,614		18,951,174
ABS and OAS		0		0		2,459,904		227,032		4		2,459,904		227,032
CMO		6,197,924		113,282		5,224,018		254,590		10		11,421,942		367,872
Other investments		982,655		8,345		682,129		60,871		10		1,664,784		69,216
Total	$	17,313,858	$	287,168	$	165,336,962	$	24,410,073		228	$	182,650,820	$	24,697,241

	June 30, 2023					December 31, 2022

Commercial & industrial	$	126,208,794		16.16	%	$	112,951,873		15.09	%
Purchased		6,167,811		0.79	%		7,530,458		1.00	%
Commercial real estate		384,836,723		49.28	%		356,892,986		47.68	%
Municipal		27,744,099		3.55	%		34,633,055		4.63	%
Residential real estate - 1st lien		200,150,628		25.63	%		198,743,375		26.55	%
Residential real estate - Jr lien		32,032,350		4.10	%		33,756,872		4.51	%
Consumer		3,844,871		0.49	%		4,039,989		0.54	%
Total loans		780,985,276		100.00	%		748,548,608		100.00	%

ACL		(9,255,501	)				(8,709,225	)
Deferred net loan costs		521,300					493,275
Net loans	$	772,251,075				$	740,332,658

	Amortized		Fair
	Cost		Value
June 30, 2023
Due in one year or less	$	9,490,328	$	9,261,518
Due from one to five years		53,150,139		49,018,937
Due from five to ten years		4,903,728		4,434,174
Due after ten years		14,265,628		13,424,298
Agency MBS		129,348,788		110,397,614
Total	$	211,158,611	$	186,536,541

December 31, 2022
Due in one year or less	$	1,976,000	$	1,966,767
Due from one to five years		58,875,224		54,736,949
Due from five to ten years		8,631,626		7,591,761
Due after ten years		14,403,957		13,391,033
Agency MBS		135,193,097		115,231,599
Total	$	219,079,904	$	192,918,109

												Residential			Residential
	Commercial						Commercial					Real Estate			Real Estate
	& Industrial			Purchased			Real Estate		Municipal			1st Lien			Jr Lien			Consumer			Total

ACL beginning balance	$	1,015,638		$	20,201		$	5,186,156	$	91,185		$	2,396,109		$	516,648		$	30,233		$	9,256,170
Charge-offs		(350,000	)		0			0		0			0			0			(44,187	)		(394,187	)
Recoveries		976			0			57		0			262			1,230			12,993			15,518
Provision (credit)		387,728			(1,864	)		85,308		(21,825	)		(81,817	)		(24,642	)		35,112			378,000
ACL ending balance	$	1,054,342		$	18,337		$	5,271,521	$	69,360		$	2,314,554		$	493,236		$	34,151		$	9,255,501

			90 Days		Total
June 30, 2023	30-89 Days		or More		Past Due		Current		Total Loans

Commercial & industrial	$	64,312	$	3,029,266	$	3,093,578	$	123,115,216	$	126,208,794
Purchased		0		0		0		6,167,811		6,167,811
Commercial real estate		864,534		776,328		1,640,862		383,195,861		384,836,723
Municipal		0		0		0		27,744,099		27,744,099
Residential real estate - 1st lien		1,078,947		384,329		1,463,276		198,687,352		200,150,628
Residential real estate - Jr lien		288,822		25,007		313,829		31,718,521		32,032,350
Consumer		55,267		0		55,267		3,789,604		3,844,871
Totals	$	2,351,882	$	4,214,930	$	6,566,812	$	774,418,464	$	780,985,276

							90 Days or
	Nonaccrual		Nonaccrual		Total		More and
June 30, 2023	with an ACL		with No ACL		Nonaccrual		Accruing

Commercial & industrial	$	0	$	3,649,767	$	3,649,767	$	0
Commercial real estate		0		2,991,511		2,991,511		0
Residential real estate - 1st lien		124,090		856,192		980,282		350,504
Residential real estate - Jr lien		0		123,502		123,502		0
Totals	$	124,090	$	7,620,972	$	7,745,062	$	350,504

	Business		Commercial		Residential
	Assets (1)		Real Estate		Real Estate		Total

Commercial & industrial	$	1,565,635	$	0	$	0	$	1,565,635
Commercial real estate		0		776,329		0		776,329
Residential real estate - 1st lien		0		0		319,420		319,420
	$	1,565,635	$	776,329	$	319,420	$	2,661,384

(1)	Including, but not limited to, inventory, equipment and accounts receivable.

	As of December 31, 2022
			Unpaid
	Recorded		Principal		Related
	Investment (1)		Balance		Allowance

Related allowance recorded
Commercial & industrial	$	452,963	$	462,745	$	2,322
Residential real estate – 1st lien		1,041,730		1,073,350		106,280
Total with related allowance		1,494,693		1,536,095		108,602

No related allowance recorded
Commercial & industrial		2,989,161		3,078,769
Commercial real estate		3,176,962		3,671,196
Residential real estate - 1st lien		2,785,669		3,805,682
Residential real estate - Jr lien		77,419		126,250
Total with no related allowance		9,029,211		10,681,897

Total impaired loans	$	10,523,904	$	12,217,992	$	108,602

	As of June 30, 2022
			Unpaid
	Recorded		Principal		Related
	Investment (1)		Balance		Allowance

Related allowance recorded
Residential real estate – 1st lien	$	1,011,645	$	1,033,657	$	102,062

No related allowance recorded
Commercial & industrial		145,810		181,929
Commercial real estate		3,396,482		4,548,768
Residential real estate - 1st lien		2,739,726		3,745,194
Residential real estate - Jr lien		82,405		128,821
Total with no related allowance		6,364,423		8,604,712

Total impaired loans	$	7,376,068	$	9,638,369	$	102,062

(1)	Recorded investment in impaired loans in the table above includes accrued interest receivable and deferred net loan costs of $33,126.

	As of June 30, 2022
	Three Months Ended					Six Months Ended
	Average		Interest			Average		Interest
	Recorded		Income			Recorded		Income
	Investment		Recognized			Investment		Recognized

Related allowance recorded
Residential real estate - 1st lien	$	1,062,379	$	12,570		$	942,448	$	26,957
Residential real estate - Jr lien		0		48			0		100
Total with related allowance		1,062,379		12,618			942,448		27,057

No related allowance recorded
Commercial & industrial		184,023		0			153,803		204
Commercial real estate		3,554,895		(178	)		3,887,955		1,492
Residential real estate - 1st lien		2,787,897		49,794			2,875,480		92,508
Residential real estate - Jr lien		84,051		34			85,557		71
Total with no related allowance		6,610,866		49,650			7,002,795		94,275

Total impaired loans	$	7,673,245	$	62,268		$	7,945,243	$	121,332

As of or for the six months ended,													Revolving		Revolving
June 30, 2023													Loans		Loans
(In thousands)	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
	2023		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total

Commercial & industrial:
Pass	$	9,792	$	21,220	$	15,016	$	3,378	$	4,621	$	6,049	$	54,526	$	0	$	114,602
Special mention		0		133		943		245		17		56		5,678		0		7,072
Substandard/Doubtful		0		385		0		261		292		1,538		2,059		0		4,535
Total commercial	$	9,792	$	21,738	$	15,959	$	3,884	$	4,930	$	7,643	$	62,263	$	0	$	126,209

Current period gross charge-offs	$	0	$	150	$	0	$	0	$	0	$	212	$	0	$	0	$	362

Purchased:
Pass	$	164	$	100	$	1,802	$	1,580	$	2,522	$	0	$	0	$	0	$	6,168
Total purchased	$	164	$	100	$	1,802	$	1,580	$	2,522	$	0	$	0	$	0	$	6,168

Commercial real estate:
Pass	$	33,532	$	80,335	$	40,459	$	44,798	$	35,745	$	91,753	$	47,781	$	0	$	374,403
Special mention		0		379		1,499		2,757		0		1,497		0		0		6,132
Substandard/Doubtful		0		0		0		594		1,408		2,300		0		0		4,302
Total commercial real estate	$	33,532	$	80,714	$	41,958	$	48,149	$	37,153	$	95,550	$	47,781	$	0	$	384,837

Municipal:
Pass	$	3,642	$	908	$	3,459	$	5,273	$	661	$	11,306	$	2,495	$	0	$	27,744
Total municipal	$	3,642	$	908	$	3,459	$	5,273	$	661	$	11,306	$	2,495	$	0	$	27,744

Residential real estate - 1st lien:
Pass	$	12,432	$	40,124	$	43,113	$	34,367	$	10,661	$	54,485	$	2,262	$	0	$	197,444
Special mention		0		303		131		0		0		0		0		0		434
Substandard/Doubtful		0		0		0		1,854		40		378		0		0		2,272
Total residential real estate - 1st lien	$	12,432	$	40,427	$	43,244	$	36,221	$	10,701	$	54,863	$	2,262	$	0	$	200,150

Residential real estate - Jr lien:
Pass	$	873	$	1,994	$	412	$	623	$	664	$	1,194	$	24,478	$	1,712	$	31,950
Special mention		0		50		0		0		0		0		0		0		50
Substandard/Doubtful		0		0		0		0		0		32		0		0		32
Total residential real estate - Jr lien	$	873	$	2,044	$	412	$	623	$	664	$	1,226	$	24,478	$	1,712	$	32,032

Consumer
Pass	$	1,509	$	1,180	$	560	$	319	$	167	$	110	$	0	$	0	$	3,845
Total consumer	$	1,509	$	1,180	$	560	$	319	$	167	$	110	$	0	$	0	$	3,845

Current period gross charge-offs	$	16	$	19	$	0	$	0	$	1	$	33	$	0	$	0	$	69

Total Loans	$	62,850	$	147,111	$	107,394	$	96,049	$	56,798	$	170,698	$	139,279	$	1,712	$	780,985

	·	Reduced accrued interest;
	·	Reduced the original contractual interest rate to a rate that is below the current market rate for the borrower;
	·	Converted a variable-rate loan to a fixed-rate loan;
	·	Extended the term of the loan beyond an insignificant delay;
	·	Deferred or forgiven principal in an amount greater than three months of payments;
	·	Performed a refinancing and deferred or forgiven principal on the original loan;
	·	Capitalized protective advance to pay delinquent real estate taxes; or
	·	Capitalized delinquent accrued interest.

	Number of		Recorded
	Contracts		Investment

Commercial real estate		2	$	2,412,179

Level 1	Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as U.S. Treasury and other U.S. Government debt securities that are highly liquid and are actively traded in over-the-counter markets.

Level 2	Observable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes MSRs, collateral-dependent impaired loans and OREO.

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. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

	June 30,		December 31,
Assets: (market approach)	2023		2022

Level 1
U.S. Government securities	$	38,381,940	$	38,231,589

Level 2
U.S. GSE debt securities	$	10,525,678	$	10,375,291
Taxable Municipal securities		245,442		234,858
Tax-exempt Municipal securities		11,439,237		11,323,567
Agency MBS		110,397,614		115,231,599
ABS and OAS		2,459,904		2,693,606
CMO		11,421,942		11,935,925
Other investments		1,664,784		2,891,674
Level 2 Total	$	148,154,601	$	154,686,520

Grand Total	$	186,536,541	$	192,918,109

	Six Months Ended June 30, 2023			Year Ended December 31, 2022

Balance at beginning of year	$	862,593		$	897,720
MSRs capitalized		28,610			120,629
MSRs amortized		(69,834	)		(155,756	)
Balance at end of period	$	821,369		$	862,593

	·	interest rates change in such a way as to negatively affect loan demand, the local economy or the Company's net income, asset valuations or margins;
	·	general economic or business conditions, either nationally, regionally or locally, deteriorate, resulting in a decline in credit quality or a diminished demand for the Company's products and services;
	·	the impact of inflation and slowing economic growth on the Company’s customers and on its financial results and performance;
	·	changes in the United States monetary and fiscal policies, including the interest rate policies of the FRB and its regulation of the money supply;
	·	changes in applicable accounting policies, practices and standards;
	·	the geographic concentration of the Company’s loan portfolio and deposit base;
	·	reductions in deposit levels, which necessitate increased borrowings to fund loans and sale of investment securities;
	·	increases in the level of nonperforming assets and charge-offs;
	·	changes in federal or state tax laws or policy;
	·	changes in laws or government rules, including the rules of the federal Consumer Financial Protection Bureau, or the way in which courts or government agencies interpret or implement those laws or rules, increase our costs of doing business, causing us to limit or change our product offerings or pricing, or otherwise adversely affect the Company's business;
	·	regulatory responses to recent high profile bank failures increase our costs of operation, including through regulatory compliance changes and higher FDIC deposit insurance assessments to replenish the Bank Insurance Fund (BIF);

	·	competitive pressures increase among financial service providers in the Company's northern New England market area or in the financial services industry generally, including competitive pressures from non-bank financial service providers, from increasing consolidation and integration of financial service providers, and from changes in technology and delivery systems;
	·	cybersecurity risks could adversely affect the Company’s business, financial performance or reputation and could result in financial liability for losses incurred by customers or others due to data breaches or other compromise of the Company’s information security systems;
	·	higher-than-expected costs are incurred relating to information technology or difficulties arise in implementing technological enhancements;
	·	management’s risk management measures may not be completely effective;
	·	changes in consumer and business spending, borrowing and savings habits;
	·	operational and internal system failures due to changes in normal business practices, including remote working for Company staff;
	·	increased cybercrime and payment system risk due to increased usage by customers of online, mobile and other remote banking channels;
	·	the ongoing challenges to find qualified workers to maintain a stable workforce;
	·	losses due to the fraudulent or negligent conduct of third parties, including the Company’s service providers, customers and employees; and
	·	adverse changes in the credit rating of U.S. government debt.

·	the ACL;
·	OREO;
·	credit losses on debt securities;
·	valuation of residential MSRs; and
·	the carrying value of goodwill.

	1.	Included in net loans are non-accrual loans with average balances of $8,586,182 and $5,014,853 for the three months ended June 30, 2023 and 2022, respectively. Loans are stated net of unearned discount and ACL, plus loans held-for-sale and include tax-exempt loans to local municipalities with average balances of $35,117,182 and $47,565,225 for the three months ended June 30, 2023 and 2022, respectively.

	2.	Included in other investments is the Company’s FHLBB Stock with average balances of $815,824 and $712,800 for the three months ended June 30, 2023 and 2022, respectively, with a dividend rate of approximately 3.72% and 2.09%, respectively, per quarter.

	3.	Net interest spread is the difference between the average yield on average interest-earning assets and the average rate paid on average interest-bearing liabilities.

	4.	Net interest margin is net interest income divided by average earning assets.

	Three Months Ended June 30,								Six Months Ended June 30,
	Variance		Variance						Variance			Variance
	Due to		Due to			Total			Due to			Due to			Total
	Rate (1)		Volume (1)			Variance			Rate (1)			Volume (1)			Variance

Average Interest-Earning Assets

Loans, net	$	1,650,456	$	730,310		$	2,380,766		$	2,863,526		$	1,399,739		$	4,263,265
Taxable investment securities		211,589		(18,033	)		193,556			519,755			(38,998	)		480,757
Tax-exempt investment securities		23,953		48,038			71,991			60,026			112,862			172,888
Sweep and interest-earning accounts		616,684		(641,772	)		(25,088	)		1,280,824			(1,057,161	)		223,663
Other investments		16,404		963			17,367			30,606			955			31,561
Total	$	2,519,086	$	119,506		$	2,638,592		$	4,754,737		$	417,397		$	5,172,134

Average Interest-Bearing Liabilities

Interest-bearing transaction accounts	$	952,291	$	9,397		$	961,688		$	1,743,082		$	23,395		$	1,766,477
Money market funds		400,420		(31,124	)		369,296			766,290			(11,000	)		755,290
Savings deposits		9,503		(2,474	)		7,029			17,450			(2,865	)		14,585
Time deposits		299,935		977			300,912			411,272			(15,912	)		395,360
Borrowed funds		232,011		0			232,011			235,790			0			235,790
Repurchase agreements		187,510		5,015			192,525			293,206			10,407			303,613
Finance lease obligations		3		(1,237	)		(1,234	)		(7	)		(2,451	)		(2,458	)
Junior subordinated debentures		133,061		0			133,061			280,174			0			280,174
Total	$	2,214,734	$	(19,446	)	$	2,195,288		$	3,747,257		$	1,574		$	3,748,831

Changes in net interest income	$	304,352	$	138,952		$	443,304		$	1,007,480		$	415,823		$	1,423,303