What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-27 compared with 2023-03-01 · 200 added, 217 removed, 1695 unchanged (20% of the section changed)

58 unchanged sentences

Louisville, Kentucky

March 1, 2023

February 27, 2024

Consolidated Balance Sheets

103 unchanged sentences

Total Other Comprehensive Income (Loss) 46,378 ( 278,922 ) ( 19,891 )

COMPREHENSIVE INCOME $ ( 197,097 ) $ 64,246 $ 82,480

COMPREHENSIVE INCOME (LOSS) $ 132,266 $ ( 197,097 ) $ 64,246

See accompanying notes to the consolidated financial statements.

3 unchanged sentences

Balances, December 31, 2020 26,502,157 $ 26,502 $ 274,385 $ 288,447 $ 35,375 $ 624,709

Cumulative Effect of Change in Accounting Principles (1)

( 6,717 ) ( 6,717 )

Balances, January 1, 2020 26,671,368 26,671 278,954 246,373 15,105 567,103

Net Income 84,137 84,137

4 unchanged sentences

Restricted Share Grants 51,351 52 1,672 1,724

Stock Repurchase ( 221,912 ) ( 222 ) ( 5,567 ) ( 5,789 )

Balances, December 31, 2021 26,553,508 26,554 276,057 350,364 15,484 668,459

4 unchanged sentences

Issuance of Common Stock for:

Acquisition of Citizens Union Bancorp 2,870,975 2,871 108,852 111,723

Restricted Share Grants 68,710 68 2,262 2,330

5 unchanged sentences

Issuance of Common Stock for:

Acquisition of Citizens Union Bancorp 2,870,975 2,871 108,852 111,723

Restricted Share Grants 91,516 92 2,240 2,332

Balances, December 31, 2023 29,584,709 $ 29,585 $ 389,411 $ 461,622 $ ( 217,060 ) $ 663,558

(1) The Company adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments on January 1, 2020 using the modified retrospective approach.

As a result, the Company recorded a net reduction of retained earnings upon adoption.

See accompanying notes to the consolidated financial statements.

18 unchanged sentences

Equity Based Compensation 2,332 2,330 1,724

Excess Tax Benefit from Restricted Share Grant — — 3

Change in Assets and Liabilities:

21 unchanged sentences

Change in Short-term Borrowings ( 35,193 ) 29,817 15,423

Advances in Long-term Debt 25,000 — —

Repayments of Long-term Debt ( 132 ) ( 41,690 ) ( 58,091 )

10 unchanged sentences

Loans Transferred to Other Real Estate $ — $ 30 $ —

Reclass of Land & Buildings to Other Assets 691 — —

Interest Rate Swap Fair Value Activity ( 2,282 ) 4,988 ( 4,287 )

Supplemental Schedule for Investing Activities (See Note 18 for Business Combinations)

Assets acquired, net of purchase consideration 945,160 — —

Liabilities assumed 1,003,756 — —

Goodwill $ 58,596 $ — $ —

See Note 18 (Business Combinations, Goodwill and Intangible Assets) regarding non-cash transactions included in the acquisition.

See accompanying notes to the consolidated financial statements.

17 unchanged sentences

As of December 31, 2023, and 2022, the Company held no securities classified as held-to-maturity.

These include securities that management may use as part of its asset/liability strategy, or that may be sold in response to changes in interest rates, changes in prepayment risk, or similar reasons.

Debt securities classified as available-for-sale include securities that management may use as part of its asset/liability strategy, or that may be sold in response to changes in interest rates, changes in prepayment risk, or similar reasons.

Securities classified as available-for-sale are reported at fair value with unrealized gains or losses included as a separate component of equity (other comprehensive income), net of tax.

69 unchanged sentences

When the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date adjusted for selling costs.

Troubled Debt Restructurings (“TDR”)

A loan for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, is considered to be a TDR.

The allowances for credit losses on loans on a TDR is measured using the same method as all other loans held for investment.

Loan Modifications and Troubled Debt Restructurings due to COVID-19

On April 7, 2020, the Board of Governors of the Federal Reserve System (the “FRB”), the Office of the Comptroller of the Currency (the “OCC”), and the Federal Deposit Insurance Corporation (the “FDIC” and, together with the FRB and OCC, the “federal banking regulators”) issued a revised Interagency Statement on Loan Modifications and Reporting for Financial Institutions, which, among other things, encouraged financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations because of the effects of COVID-19, and stated that institutions generally would not need to categorize COVID-19-related modifications as troubled debt restructurings and that the agencies would not direct supervised institutions to automatically categorize all COVID-19 related loan modifications as troubled debt restructurings.

Similarly, under the CARES Act, provisions were included that allowed for loan modifications to not be classified as TDRs if certain criteria were met.

This TDR exemption expired on January 1, 2022.

Modifications to Borrowers Experiencing Financial Difficulty

From time to time, the Company may modify certain loans to borrowers who are experiencing financial difficulty.

The Company’s loan modifications for borrowers experiencing financial difficulties will typically include one or a combination of the following:

a reduction of the stated interest rate of the loan;

an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk;

or a permanent reduction of the recorded investment in the loan.

Allowance for Credit Losses on Available-For-Sale Securities

14 unchanged sentences

Federal Home Loan Bank (FHLB) Stock

The Bank is a member of the FHLB of Indianapolis.

The Bank is a member of the FHLB of Indianapolis and FHLB of Cincinnati.

Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts.

5 unchanged sentences

Buildings and related components are depreciated using the straight-line method with useful lives ranging generally from 10 to 40 years.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 1 – Summary of Significant Accounting Policies (continued)

Furniture, fixtures, and equipment are depreciated using the straight-line method with useful lives ranging generally from 3 to 10 years.

1 unchanged sentence

Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.

Physical possession of commercial/residential real estate property collateralizing a commercial/consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through the completion of a deed in lieu of foreclosure or through a similar legal agreement.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 1 – Summary of Significant Accounting Policies (continued)

If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense.

24 unchanged sentences

Stock Based Compensation

Compensation cost is recognized for stock options and restricted stock awards issued to employees and directors, based on the fair value of these awards at the date of grant.

A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Corporation’s common stock at the date of grant is used for restricted stock awards.

Compensation cost is recognized for restricted stock awards issued to employees and directors, based on the fair value of these awards at the date of grant.

Market price of the Company’s common stock at the date of grant is used for restricted stock awards.

Compensation cost is recognized over the required service period, generally defined as the vesting period.

Comprehensive Income

Comprehensive income consists of net income and other comprehensive income (loss).

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income and other comprehensive income (loss).

Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale and changes in unrecognized amounts in pension and other postretirement benefits, which are also recognized as a separate component of equity.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 1 – Summary of Significant Accounting Policies (continued)

Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.

2 unchanged sentences

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.

The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination.

The amount recognized is the largest amount of tax benefit that

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 1 – Summary of Significant Accounting Policies (continued)

is greater than 50% likely of being realized on examination.

For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

26 unchanged sentences

On March 31, 2022, the FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures” which eliminates the troubled debt restructuring (TDR) recognition and measurement guidance and instead requires an entity to evaluate whether the modification represents a new loan or a continuation of an existing loan.

Troubled Debt Restructurings and Vintage Disclosures” which eliminates the troubled debt restructuring recognition and measurement guidance and instead requires an entity to evaluate whether the modification represents a new loan or a continuation of an existing loan.

The amendments also enhance existing disclosures and include new disclosure requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

2 unchanged sentences

For entities that have not adopted ASU 2016-13, the effective dates for the amendments are the same as the effective dates in ASU 2016-13.

Early adoption is permitted if ASU 2016-13 has been adopted, including adoption in an

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 1 – Summary of Significant Accounting Policies (continued)

interim period.

Early adoption is permitted if ASU 2016-13 has been adopted, including adoption in an interim period.

If an entity elects to adopt the amendments in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period.

The Company is currently evaluating the impact of adopting the new guidance on the consolidated financial statements.

The Company adopted the new guidance prospectively with no material impact to the consolidated financial statements.

The SEC released Staff Accounting Bulletin No.

121 (“SAB 121”), which provides interpretive guidance regarding the accounting for obligations to safeguard crypto-assets an entity holds for its customers, either directly through an agent or another third party acting on its behalf.

SAB 121 requires an entity to recognize a liability on its balance sheet to reflect the obligation to safeguard the crypto-assets of others, along with a corresponding safeguarding asset, both of which are measured at fair value.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 1 – Summary of Significant Accounting Policies (continued)

at fair value.

The Company has completed an evaluation and concluded that it does not have a safeguarding obligation under SAB 121 and therefore the disclosures do not apply.

Newly Issued But Not Yet Effective Accounting Standards

On March 29, 2023, the FASB issued ASU 2023-02, “Investments - Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method” to expand use of the proportional amortization method of accounting to equity investments in tax credit programs beyond those in low-income-housing tax credit (LIHTC) programs.

The amendments in this update permit reporting entities to account for certain tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met.

This guidance provides clarifications to address interpretive issues and prescribes specific information that reporting entities must disclose about tax credit investments each period.

This ASU is effective for reporting periods beginning after December 15, 2023, for public business entities.

For all other entities, the ASU is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted, including early adoption in any interim period as of the beginning of the fiscal year that includes that interim period.

Entities have the option of applying the forthcoming revisions using either a modified retrospective or retrospective adoption approach.

The Company is currently evaluating the impact of adopting this new guidance, however, adoption of the standard is not expected to have a material impact on the Company’s financial statements or disclosures.

NOTE 2 – Securities

7 unchanged sentences

Total $ 1,871,260 $ 1,337 $ ( 275,765 ) $ 1,596,832

Treasury $ 64,097 $ 22 $ — $ 64,119

Obligations of State and Political Subdivisions 939,193 673 ( 162,014 ) 777,852

4 unchanged sentences

The US Gov’t Sponsored Entities & Agencies in the above table have underlying collateral of equipment, machinery and commercial real estate.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 2 – Securities (continued)

The amortized cost and fair value of securities at December 31, 2023 by contractual maturity are shown below.

9 unchanged sentences

Total $ 1,871,260 $ 1,596,832

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 2 – Securities (continued)

2023 2022 2021

4 unchanged sentences

Gross Gains on Sales 346 750 2,399

Income Taxes on Gross Gains 118 472 857

Gross Losses on Sales 306 188 152

Income Taxes on Net Gains 8 118 472

The carrying value of securities pledged to secure repurchase agreements, public and trust deposits, and for other purposes as required by law was $ 366,576 and $ 354,123 as of December 31, 2023 and 2022, respectively.

20 unchanged sentences

For available-for-sale debt securities in an unrealized loss position, the Company assesses whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis.

If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income.

If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is reduced to fair value through

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 2 – Securities (continued)

For available-for sale debt securities that do not meet the criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors.

3 unchanged sentences

Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes.

The increase in unrealized losses from December 31, 2021 to December 31, 2022 in the obligations of state and political subdivisions, MBS/CMO and US government sponsored entities and agencies was primarily the result of fair value adjustments caused by the rise in market interest rates.

The decrease in unrealized losses from December 31, 2022 to December 31, 2023 was primarily the result of fair value adjustments caused by the change in market interest rates.

No allowance for credit losses for available-for-sale debt securities was needed at December 31, 2023 or 2022.

Although management has the ability to sell these securities if the need arises, their designation as available-for-sale should not necessarily be interpreted as an indication that management anticipates such sales.

Accrued interest receivable on available-for-sale debt securities totaled $ 9,620 at December 31, 2023 and $ 10,637 at December 31, 2022.

2 unchanged sentences

The original investment totaled $ 1,350 and other-than-temporary impairment was previously recorded totaling $ 997 .

The Company’s equity securities are

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 2 – Securities (continued)

considered not to have readily determinable fair value and are carried at cost and evaluated for impairment.

The Company’s equity securities are considered not to have readily determinable fair value and are carried at cost and evaluated for impairment.

There was no additional impairment recognized through earnings during 2023 or 2022.

18 unchanged sentences

Interest Rate Swaps $ 139,751 $ 7,467 $ 134,684 $ 9,749

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 3 – Derivatives (continued)

The following table presents the effect of derivative instruments on the Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021 is as follows:

2 unchanged sentences

Included in Other Income $ 344 $ 403 $ 1,131

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 - Loans

13 unchanged sentences

The table above includes $ 13,237 and $ 21,149 of purchase credit deteriorated loans as of December 31, 2023 and 2022, respectively.

As further described in Note 18, during 2022 the Company acquired loans at fair value as part of a business combination.

The table below summarizes the loans acquired on January 1, 2022.

Acquired Loan Balance Fair Value Discounts Fair Value

Bank Acquisition $ 683,501 $ ( 5,359 ) $ 678,142

The table below summarizes the remaining carrying amount of acquired loans included in the December 31, 2022 table above.

Loans Commercial

Loans Agricultural

Loans Leases Consumer

Loans Home Equity Loans Credit Cards Residential

Loan Balance $ 48,330 $ 319,893 $ 46,181 $ — $ 10,249 $ 21,766 $ — $ 70,250 $ 516,669

Fair Value (Discount)/Premium ( 1,051 ) ( 1,893 ) 172 — ( 45 ) ( 176 ) — 477 ( 2,516 )

The Company has purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination.

The carrying amount of these loans is as follow:

Purchase Price of Loans at Acquisition $ 32,997

Allowance for Credit Losses at Acquisition 3,117

Non-Credit Discount/(Premium) at Acquisition 1,456

Total $ 37,570

As previously disclosed, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law in March 2020, providing an approximately $2 trillion stimulus package that included direct payments to individual taxpayers, economic stimulus to significantly impacted industry sectors, emergency funding for hospitals and providers, small business loans, increased unemployment benefits, and a variety of tax incentives.

For small businesses, eligible nonprofits and certain others, the CARES Act established a Paycheck Protection Program (“PPP”), a lending program administered by the Small Business Administration (“SBA”) that was intended to incentivize participants to retain their employees by providing them with loans that are fully guaranteed by the U.S.

government and subject to forgiveness if program guidelines are met.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

The Company actively participated in the PPP, lending funds primarily to its existing loan and/or deposit customers.

The PPP loans carried an interest rate of 1.00 % and included a processing fee that varied depending on the balance of the loan at origination (which fee is recognized over the life of the loan).

The vast majority of the Company’s PPP loans made during 2020 had two-year maturities, while PPP loans made during 2021 had five-year maturities.

Under the PPP, the Company originated loans totaling approximately $ 508,302 in principal amount, with approximately $ 21,046 of related net processing fees, on 5,671 PPP loan relationships.

As of December 31, 2021, $ 487,980 of the PPP loans had been forgiven by the SBA and repaid to the Company pursuant to the terms of the program, or otherwise repaid by customers, with $ 20,172 in net processing fees having been recognized by the Company.

As of December 31, 2022, all $ 508,302 of the PPP loans had been forgiven by the SBA and repaid to the Company, or repaid by customers, with all $ 21,046 in net processing fees having been recognized by the Company.

As a result, as of December 31, 2022, no PPP loans remain outstanding and all net fees have been recognized.

Allowance for Credit Losses for Loans:

5 unchanged sentences

Loans Home Equity Loans Credit Cards Residential

Loans Unallocated Total

Allowance for Credit Losses:

Beginning Balance $ 13,749 $ 21,598 $ 4,188 $ 209 $ 595 $ 1,344 $ 257 $ 2,228 $ 44,168

Acquisition of Citizens Union Bank of Shelbyville, KY - PCD Loans 376 1,945 689 — 2 — — 105 — 3,117

Provision (Benefit) for Credit Losses ( 4,190 ) 4,305 ( 324 ) 137 919 551 563 589 2,550

2 unchanged sentences

Total Ending Allowance Balance $ 7,921 $ 25,923 $ 3,837 $ 346 $ 759 $ 1,834 $ 383 $ 2,762 $ 43,765

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

December 31, 2022 Commercial

3 unchanged sentences

Loans Home Equity Loans Credit Cards Residential

Loans Unallocated Total

Allowance for Credit Losses:

Beginning Balance $ 9,554 $ 19,245 $ 4,505 $ 200 $ 507 $ 1,061 $ 240 $ 1,705 $ 37,017

Acquisition of Citizens Union Bank of Shelbyville, KY - PCD Loans 376 1,945 689 — 2 — — 105 3,117

Provision (Benefit) for Credit Losses 4,942 463 ( 1,006 ) 9 991 351 163 437 6,350

2 unchanged sentences

Total Ending Allowance Balance $ 13,749 $ 21,598 $ 4,188 $ 209 $ 595 $ 1,344 $ 257 $ 2,228 $ 44,168

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

December 31, 2021 Commercial

3 unchanged sentences

Loans Home Equity Loans Credit Cards Residential

Loans Unallocated Total

Allowance for Credit Losses:

Beginning balance Prior to Adoption of ASC 326 $ 4,799 $ 4,692 $ 5,315 $ — $ 434 $ 200 $ — $ 333 $ 505 $ 16,278

Impact of Adopting ASC 326 2,245 3,063 1,438 105 ( 59 ) 762 124 1,594 ( 505 ) 8,767

Impact of Adopting ASC 326 - PCD Loans 2,191 4,385 128 — — 35 — 147 — 6,886

Beginning Balance $ 6,445 $ 29,878 $ 6,756 $ 200 $ 490 $ 996 $ 150 $ 1,944 $ 46,859

Provision (Benefit) for Credit Losses 5,825 ( 10,663 ) ( 2,251 ) — 385 44 387 ( 227 ) ( 6,500 )

Initial Allowance on Loans Purchased with Credit Deterioration — — — — — — — — — —

Loans Charged-off ( 2,777 ) ( 10 ) — — ( 675 ) ( 15 ) ( 313 ) ( 45 ) ( 3,835 )

8 unchanged sentences

The analysis takes into consideration industry and collateral concentrations, acquired loan portfolio characteristics and other credit-related analytics as deemed appropriate.

Management attempts to quantify qualitative reserves whenever possible.

Management attempts to quantify qualitative reserves by anchoring to specific data points when possible.

The Company estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

2 unchanged sentences

The allowance for credit losses is measured on a collective (pooled) basis when similar risk characteristics exist.

Based on the potential increased losses related to the advancing stress on the economy as a result of inflationary pressures, rising interest rates and financial market volatility, the Bank has considered this loss experience may align with loss experience from the recessionary period from 2008-2011 and qualitative adjustments have been made accordingly.

Based on the potential increased losses related to the advancing stress on the economy as a result of inflationary pressures, rising interest rates and financial market volatility, the Company has considered this loss experience may align with loss experience from the recessionary period from 2008-2011 and qualitative adjustments have been made accordingly.

Loans that do not share risk characteristics are evaluated on an individual basis.

1 unchanged sentence

For the year ended December 31, 2022, the allowance for credit losses increased primarily due to the acquisition of Citizens Union Bancorp of Shelbyville, Inc.

(see Note 18 (Business Combinations, Goodwill and Intangible Assets) in the Notes), which is slightly offset by a decline in individually analyzed loans as well as a decline in the reserve attributable to financially stressed sectors.

Key indicators utilized in forecasting for the allowance calculations include unemployment rates and gross domestic product.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

For the year ended December 31, 2023, the decline in allowance for credit losses was largely related to the resolution, during the fourth quarter of 2023, of a single commercial borrowing relationship with minimal loss recognition for which the Company had established a significant reserve in previous periods which was slightly offset by additional reserve for loan portfolio growth.

Key indicators utilized in forecasting for the allowance calculations include unemployment rates and gross domestic product as well as commodity prices for the agricultural segment of the portfolio.

There has been some improvement in these factors over previous periods;

2 unchanged sentences

For purchased loans, the determination is made at the time of acquisition as well as over the life of the loan.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

Uncollected accrued interest for each class of loans is reversed against income at the time a loan is placed on non-accrual.

49 unchanged sentences

Total $ 20,749 $ 1,575 $ 272 $ 5,863 $ 28,459

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

The following tables present the aging of the amortized cost basis in past due loans by class of loans as of December 31, 2023 and 2022:

13 unchanged sentences

Total $ 11,253 $ 3,378 $ 7,234 $ 21,865 $ 3,956,035 $ 3,977,900

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

December 31, 2022 30-59 Days

12 unchanged sentences

Total $ 10,633 $ 3,706 $ 10,783 $ 25,122 $ 3,763,523 $ 3,788,645

Troubled Debt Restructurings:

In certain instances, the Company may choose to restructure the contractual terms of loans.

A troubled debt restructuring occurs when the Bank grants a concession to the borrower that it would not otherwise consider due to a borrower’s financial difficulty.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without modification.

This evaluation is performed under the Company’s internal underwriting policy.

The Company uses the same methodology for loans acquired with deteriorated credit quality as for all other loans when determining whether the loan is a troubled debt restructuring.

As of December 31, 2022 the Company had no troubled debt restructurings.

As of December 31, 2021, the Company had troubled debt restructurings totaling $ 104 .

The Company had no specific allocation of allowance for these loans at December 31, 2021.

The Company had no t committed to lending any additional amounts during 2022 or 2021 to customers with outstanding loans that are classified as troubled debt restructurings.

During the years ended December 31, 2022 and 2021, the Company had no loans modified as troubled debt restructurings.

Additionally, there were no loans modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the years ended December 31, 2022 and 2021.

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

Effective January 1, 2023, the Company prospectively adopted ASU 2022-02, which eliminated the accounting for troubled debt restructurings while establishing a new standard for the treatment of modifications made to borrowers experiencing financial difficulties.

As such, effective with the adoption of the new standard, the Company will now include, prospectively, financial difficulty modifications in its presentation of nonperforming loans, nonperforming assets or classified assets.

Prior period data, which included troubled debt restructurings, has not been adjusted.

The Company’s loan modifications for borrowers experiencing financial difficulties will typically include one or a combination of the following:

a reduction of the stated interest rate of the loan;

an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk;

or a permanent reduction of the recorded investment in the loan.

No modifications in 2023 resulted in the permanent reduction of the recorded investment in the loan.

At December 31, 2023, the Company had no modified loans made to borrowers experiencing financial difficulty.

There were no modified loans that had a payment default during the year ended December 31, 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

The Company considers a loan to be in payment default once it is 30 days contractually past due under the modified terms.

Credit Quality Indicators:

16 unchanged sentences

NOTE 4 – Loans (continued)

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

The following table presents the risk category of loans and current period gross charge-offs as of December 31, 2023 by loan class and vintage year:

Term Loans Amortized Cost Basis by Origination Year

6 unchanged sentences

Total Commercial and Industrial Loans $ 112,673 $ 135,337 $ 86,555 $ 30,101 $ 34,281 $ 49,183 $ 141,411 $ 589,541

Current Period Gross Charge-Offs $ — $ 911 $ 32 $ 493 $ 7 $ 88 $ 261 $ 1,792

Commercial Real Estate:

4 unchanged sentences

Total Commercial Real Estate Loans $ 314,475 $ 419,892 $ 487,582 $ 228,461 $ 148,419 $ 481,090 $ 41,916 $ 2,121,835

Current Period Gross Charge-Offs $ — $ — $ 56 $ — $ — $ — $ — $ 56

Agricultural:

4 unchanged sentences

Total Agricultural Loans $ 46,443 $ 56,455 $ 40,954 $ 47,514 $ 25,755 $ 114,968 $ 91,714 $ 423,803

Current Period Gross Charge-Offs $ — $ — $ — $ 2 $ — $ — $ 25 $ 27

Pass $ 36,848 $ 12,281 $ 10,634 $ 6,086 $ 4,788 $ 1,351 $ — $ 71,988

3 unchanged sentences

Total Leases $ 36,848 $ 12,281 $ 10,634 $ 6,086 $ 4,788 $ 1,351 $ — $ 71,988

Current Period Gross Charge-Offs $ — $ — $ — $ — $ — $ — $ — $ —

Notes to the Consolidated Financial Statements

1 unchanged sentence

NOTE 4 – Loans (continued)

As of December 31, 2022, the risk category of loans by class of loans is as follows:

Term Loans Amortized Cost Basis by Origination Year

28 unchanged sentences

For residential, home equity and consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity.

The following tables present the amortized cost in residential, home equity and consumer loans based on payment activity.

The following table presents the amortized cost in residential, home equity and consumer loans based on payment activity as well as the current period gross charge-offs for the period ended December 31, 2023.

Term Loans Amortized Cost Basis by Origination Year

4 unchanged sentences

Total Consumer Loans $ 49,282 $ 21,480 $ 9,720 $ 2,756 $ 917 $ 1,912 $ 1,786 $ 87,853

Current Period Gross Charge-Offs $ 1,162 $ 42 $ 23 $ 71 $ 3 $ 1 $ 7 $ 1,309

Payment performance

2 unchanged sentences

Total Home Equity Loans $ — $ 417 $ 488 $ 150 $ 165 $ 1,309 $ 297,156 $ 299,685

Current Period Gross Charge-Offs $ — $ — $ — $ 55 $ — $ 24 $ 15 $ 94

Residential Mortgage:

3 unchanged sentences

Total Residential Mortgage Loans $ 56,317 $ 65,361 $ 86,170 $ 41,639 $ 17,940 $ 95,417 $ — $ 362,844

Current Period Gross Charge-Offs $ — $ — $ 22 $ 36 $ — $ — $ — $ 58

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

The following table presents the amortized cost in residential, home equity and consumer loans based on payment activity for the period ended December 31, 2022.

Term Loans Amortized Cost Basis by Origination Year

13 unchanged sentences

Total Residential Mortgage Loans $ 69,982 $ 97,337 $ 47,104 $ 20,080 $ 16,742 $ 99,437 $ — $ 350,682

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses.

13 unchanged sentences

Sales — 3,819 97 — — — — — 3,916

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 4 – Loans (continued)

Certain directors, executive officers, and principal shareholders of the Company, including their immediate families and companies in which they are principal owners, were loan customers of the Company during 2023.

12 unchanged sentences

Depreciation expense was $ 6,570 , $ 6,648 and $ 5,802 for 2023, 2022 and 2021, respectively.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 6 - Deposits

1 unchanged sentence

2024 $ 707,978

Thereafter 17

Total $ 767,042

2 unchanged sentences

Deposits from principal officers, directors, and their affiliates at year-end 2023 and 2022 were $ 67,637 and $ 62,435 , respectively.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 7 – FHLB Advances and Other Borrowings

21 unchanged sentences

The Company may be required to provide additional collateral based on the value of the underlying securities.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 7 - FHLB Advances and Other Borrowings (continued)

Average Daily Balance During the Year $ 51,474 $ 52,932

2 unchanged sentences

Weighted Average Interest Rate at Year-end 1.44 % 0.57 %

At December 31, 2022 and 2021, the Company held one long-term FHLB advance with an interest rate of 1.54 %.

At December 31, 2023, interest rates on long-term FHLB Advances ranged from 1.54 % to 3.57 % with a weighted average rate of 2.56 %.

At December 31, 2022 the Company held one long-term FHLB advance with an interest rate of 1.54 %.

At December 31, 2023 and 2022, the Company had no advances containing options whereby the FHLB may convert a fixed rate advance to an adjustable rate advance.

1 unchanged sentence

The Notes bear interest at a fixed annual rate of 4.50 % until but excluding June 30, 2024, payable semi-annually in arrears.

The indenture for the Notes provides that, from and including June 30, 2024 to but excluding the maturity date of June 30, 2029, or early redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then-current three-month LIBOR (provided, however, that in the event three-month LIBOR is less than zero , three-month LIBOR shall be deemed to be zero ) plus 268 basis points, payable quarterly in arrears.

However, in anticipation of LIBOR being discontinued, the indenture also provided for an alternate rate being used when a successor reference rate had been selected by a central bank, reserve bank, monetary authority or any similar institution.

As the Secured Overnight Financing Rate (“SOFR”) has been identified as the preferred alternate rate by the Alternative Reference Rates Committee, a U.S.-based group convened by the Federal Reserve Board and the Federal Reserve Bank of New York, and the Federal Reserve subsequently adopted final regulations that, among other things, established LIBOR benchmark replacements based on SOFR under certain circumstances, the Company anticipates that, on June 30, 2024, the quarterly interest on the Notes will be based upon the CME Term SOFR, as the replacement benchmark, including a static spread adjustment for the appropriate tenor as provided by the Federal Reserve regulations, plus the 268 basis points referenced above.

The indenture for the Notes contemplates that, from and including June 30, 2024 to but excluding the maturity date of June 30, 2029, or early redemption date, the interest rate will reset quarterly to an interest rate per annum equal to the then-current three-month CME Term SOFR, plus the applicable spread adjustment of 0.26161 % percent, plus 2.68 % percent.

The Secured Overnight Financing Rate, or SOFR, is the preferred alternate rate to LIBOR, as identified by the Alternative Reference Rates Committee, a U.S.-based group convened by the Federal Reserve Board and the Federal Reserve Bank of New York.

The Federal Reserve subsequently

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 7 - FHLB Advances and Other Borrowings (continued)

adopted final regulations that, among other things, established LIBOR benchmark replacements based on SOFR under certain circumstances.

See Replacement of LIBOR Benchmark below for additional information.

9 unchanged sentences

At December 31, 2023, scheduled principal payments on long-term borrowings, excluding the capitalized lease obligation and acquired subordinated debentures (which are discussed below) are as follows:

2024 $ 25,000

Thereafter 39,545

8 unchanged sentences

$ 34,829 of the junior subordinated debentures were treated as Tier 1 capital for regulatory capital purposes as of December 31, 2023.

$ 16,081 of the junior subordinated debentures were treated as Tier 1 capital for regulatory

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 7 - FHLB Advances and Other Borrowings (continued)

capital purposes as of December 31, 2021.

$ 34,378 of the junior subordinated debentures were treated as Tier 1 capital for regulatory capital purposes as of December 31, 2022.

As a result of the acquisitions, these liabilities were recorded at fair value at the acquisition date with the discount amortizing into interest expense over the life of the liability, ultimately accreting to the issuance amount disclosed below.

2 unchanged sentences

Amount Carrying

December 31, 2022 Variable Rate Rate as of

December 31, 2023 Variable Rate (1)

December 31, 2023 Rate as of

December 31, 2021 Maturity

ACB Trust I 5/6/2005 $ 5,155 $ 4,013 90 day LIBOR + 2.15 %

December 31, 2022 (2)

ACB Trust I 5/6/2005 $ 5,155 $ 4,105 3-Month SOFR + 2.15 %

7.81 % 6.90 % May 2035

ACB Trust II 7/15/2005 3,093 2,362 90 day LIBOR + 1.85 %

ACB Trust II 7/15/2005 3,093 2,420 3-Month SOFR + 1.85 %

7.49 % 6.54 % July 2035

RIVR Statutory Trust I 3/26/2003 7,217 6,135 3-Month LIBOR + 3.15 %

RIVR Statutory Trust I 3/26/2003 7,217 6,240 3-Month SOFR + 3.15 %

8.77 % 7.87 % March 2033

Citizens First Statutory Trust I 10/16/2006 5,155 4,236 3-Month LIBOR + 1.65 %

Citizens First Statutory Trust I 10/16/2006 5,155 4,302 3-Month SOFR + 1.65 %

7.31 % 5.39 % January 2037

CUB Capital Trust I 10/21/2004 10,310 9,593 3-Month LIBOR + 2.00 %

6.69 % N/A November 2034

CUB Capital Trust II 8/17/2005 10,310 8,987 3-Month LIBOR + 1.50 %

5.58 % N/A October 2035

CUB Capital Trust I 10/21/2004 10,310 9,642 3-Month SOFR + 2.00 %

7.64 % 6.69 % November 2034

CUB Capital Trust II 8/17/2005 10,310 9,073 3-Month SOFR + 1.50 %

7.16 % 5.58 % October 2035

(1) “3-Month SOFR” refers to the three-month CME Term SOFR, which became effective following the first London banking day after June 30, 2023, plus the applicable spread adjustment of 0.26161 % percent.

(2) Prior to CME Term SOFR becoming effective, the variable rate was based upon LIBOR rates and tenors.

See Replacement of LIBOR Benchmark below for additional information.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 7 - FHLB Advances and Other Borrowings (continued)

Replacement of LIBOR Benchmark:

6 unchanged sentences

dollar LIBOR (the overnight and one-, three-, six-, and 12-month tenors) and that do not have terms that provide for the use of a clearly defined and practicable replacement benchmark rate (“fallback provisions”) following the first London banking day after June 30, 2023.

As the junior subordinated debentures discussed above do not have LIBOR fallback provisions, after June 30, 2023, the interest paid on those debentures will be based upon the CME Term SOFR, as the replacement benchmark, including a static spread adjustment for the appropriate tenor, as provided by the LIBOR Act and related Federal Reserve regulations.

The relevant spread adjustment for a three-month tenor is 0.26161 percent.

As the junior subordinated debentures discussed above do not have LIBOR fallback provisions, after June 30, 2023, the interest paid on those debentures has been and will be based upon the CME Term SOFR, as the replacement benchmark, including a static spread adjustment for the appropriate tenor, as provided by the LIBOR Act and related Federal Reserve regulations.

The relevant spread adjustment for a three-month tenor is 0.26161 %.

NOTE 8 - Shareholders ’ Equity

59 unchanged sentences

At December 31, 2023 the Bank had approximately $ 175,000 in retained earnings available for payment of dividends to the parent company without prior regulatory approval.

In December 2018, federal banking regulators approved a final rule to address changes to credit loss accounting under GAAP, including banking organizations’ implementation of CECL.

The final rule provides banking organizations the option to phase in over a three-year period the day-one adverse effects on regulatory capital that may result from the adoption of the new accounting standard.

On March 27, 2020, in an action related to the CARES Act, the federal banking regulators announced an interim final rule to delay the estimated impact on regulatory capital stemming from the implementation of CECL.

The interim final rule, which was finalized effective September 30, 2020, maintained the three-year transition option in the previous rule and provided banks the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option).

The Company has taken advantage of the capital transition relief over the permissible five-year period and began the three-year phase-in of the regulatory impact effective January 1, 2022.

The Company adopted the CECL accounting standard under GAAP effective January 1, 2020.

The regulatory capital rules applicable to the Company provided an optional three-year phase-in period for the day-one adverse regulatory capital effects of adopting CECL.

In addition, as part of the CARES Act, banking organizations were further permitted to mitigate the estimated cumulative regulatory capital effects of CECL for up to an additional two years.

As a result, on January 1, 2022, the Company began the required three-year phase-in by reflecting 25% of the previously deferred estimated capital impact of CECL in its regulatory capital effective January 1, 2022.

An additional 25% was phased in on each of January 1, 2023 and January 1, 2024 and another 25% will be phased in on January 1, 2025 (at which time the cumulative effects of adopting CECL will have been fully phased into our regulatory capital).

Under the five-year transition option, the amount of adjustments to regulatory capital that could be deferred until the phase-in period began included both the initial impact of our adoption of CECL at January 1, 2020 and 25% of subsequent changes in our allowance for credit losses during each quarter of the two-year period ended December 31, 2021.

Equity Plans and Equity Based Compensation

During the periods presented, the Company maintained two equity incentive plans under which stock options, restricted stock, and other equity incentive awards could be granted.

Those plans include (i) the Company’s 2009 Long-Term Equity Incentive Plan, under which no new grants may be made, and (ii) the Company’s 2019 Long-Term Equity Incentive Plan (the “2019 LTI Plan”).

The 2019 LTI Plan, which authorizes a maximum aggregate issuance of 1,000,000 shares of common stock (subject to certain permitted adjustments), became effective on May 16, 2019, following approval of the Company’s shareholders.

During the periods presented, the Company maintained one equity incentive plan under which stock options, restricted stock, and other equity incentive awards could be granted.

The Company’s 2019 Long-Term Equity Incentive Plan (the “2019 LTI Plan”), which authorizes a maximum aggregate issuance of 1,000,000 shares of common stock (subject to certain permitted adjustments), became effective on May 16, 2019, following approval of the Company’s shareholders.

It will remain in effect until May 16, 2029, or until all shares of common stock subject to the 2019 LTI Plan are distributed, all awards have expired or terminated, or the plan is terminated pursuant to its terms, whichever occurs first.

10 unchanged sentences

The Company recorded no other stock compensation expense applicable to options during the years ended December 31, 2023, 2022 and 2021.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 8 – Shareholders ’ Equity (continued)

Restricted Stock

5 unchanged sentences

Beginning in 2021, for named executive officers, awards are granted in the form of 100 % restricted stock grants which will vest in one-third installments on the first, second and third anniversaries of the award date.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 8 – Shareholders ’ Equity (continued)

Awards that are granted to directors as additional retainers for their services do not include any cash credit entitlement.

28 unchanged sentences

In 2022, the Company recorded $ 53 of expense, $ 39 net of tax, for the employee stock purchase plan.

In 2020, the Company recorded $ 40 of expense,

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 8 – Shareholders ’ Equity (continued)

$ 30 net of tax, for the employee stock purchase plan.

In 2021, the Company recorded $ 45 of expense, $ 34 net of tax, for the employee stock purchase plan.

There was no unrecognized compensation expense as of December 31, 2023, 2022 and 2021 for the Employee Stock Purchase Plans.

Stock Repurchase Plan

On January 25, 2021, the Company’s Board of Directors approved a plan to repurchase up to one million shares of the Company’s outstanding common stock.

On a share basis, the amount of common stock subject to the repurchase plan represented approximately 4 % of the Company’s outstanding shares at the time it was adopted.

During 2021, the Company did no t repurchase any of its outstanding common stock.

The 2021 plan replaced a similar share repurchase plan approved by the Company’s Board of Directors on January 27, 2020.

At the time of its termination in 2021, the Company had repurchased 221,912 shares of common stock under the 2020 plan.

On January 31, 2022, the Company’s Board of Directors terminated the 2021 repurchase plan and approved a new plan to repurchase up to one million shares of the Company’s outstanding common stock.

On January 31, 2022, the Company’s Board of Directors approved a new plan to repurchase up to one million shares of the Company’s outstanding common stock.

On a share basis, the amount of common stock subject to the new repurchase plan represented approximately 3 % of the Company’s outstanding shares on the date it was approved.

The Company is not obligated to purchase shares under the plan, and the plan may be discontinued at any time.

The actual timing, number and share price of shares purchased under the repurchase plan will be determined by the Company at its discretion and will depend upon such factors as the market price of the stock, general market and economic conditions and applicable legal requirements.

The actual timing, number and share price of shares purchased under the repurchase plan will be determined by the Company at its discretion and will depend upon such

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 8 – Shareholders ’ Equity (continued)

factors as the market price of the stock, general market and economic conditions and applicable legal requirements.

The Company has not repurchased an shares under this repurchase plan.

In August 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted.

12 unchanged sentences

Under the plans, the Company agrees in return for the directors and officers deferring the receipt of a portion of their current compensation, to pay a retirement benefit computed as the amount of the compensation deferred plus accrued interest at a variable rate.

Accrued benefits payable totaled $ 3,212 and $ 2,279 at December 31, 2022 and 2021.

Accrued benefits payable totaled $ 2,651 and $ 3,212 at December 31, 2023 and 2022, respectively.

Deferred compensation expense was $ 261 , $ 1,143 , and $ 302 for 2023, 2022, and 2021, respectively.

In conjunction with the plans, the Company purchased life insurance on certain directors and officers.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 9 – Employee Benefit Plans (continued)

Postretirement Medical and Life Benefit Plan

20 unchanged sentences

Total Recognized in Net Postretirement Benefit Expense and Other Comprehensive Income $ 359 $ 69 $ 79

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 9 – Employee Benefit Plans (continued)

Assumptions Used to Determine Net Periodic Cost and Benefit Obligations:

10 unchanged sentences

2029-2033 931

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 9 – Employee Benefit Plans (continued)

Multi-Employer Pension Plan

3 unchanged sentences

Specific plan asset and accumulated benefit information for the Company’s portion of the fund is not available.

Under the Employee Retirement Income and Security Act of 1974 (“ERISA”), a contributor to a multi-employer pension plan may be liable in the event of complete or partial withdrawal for the benefit payments guaranteed under ERISA, but there is no intention to withdraw.

The Company is in process of withdrawing from this multi-employer pension plan with finalization expected to occur in the second quarter of 2024.

As a result, the Company has accrued a withdrawal liability in the amount of $ 101 as of December 31, 2023.

The Company participates in the Pentegra Defined Benefit Plan for Financial Institutions (the “Pentegra DB Plan”), a tax-qualified defined-benefit pension plan.

5 unchanged sentences

The Company’s contributions to the Pentegra DB Plan for the fiscal year ending December 31, 2023 were not more than 5 % of total contributions to the Pentegra DB Plan for the year ending June 30, 2022.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 10 - Income Taxes

14 unchanged sentences

General Business Tax Credits ( 1,128 ) ( 1,038 ) ( 1,013 )

Amortization of Tax Credit Investments 1,101 1,040 1,001

Company Owned Life Insurance ( 363 ) ( 476 ) ( 321 )

18 unchanged sentences

Net Operating Loss Carryforward 650 828

Mortgage Servicing Rights — 49

Other 879 1,190

3 unchanged sentences

Leasing Activities, Net ( 12,926 ) ( 10,983 )

Unrealized Gain on Securities — ( 4,366 )

FHLB Stock Dividends ( 455 ) ( 488 )

4 unchanged sentences

Right of Use Asset (Operating Leases) ( 1,274 ) ( 1,548 )

Business Combination Fair Value Adjustments ( 478 ) —

Other ( 1,325 ) ( 924 )

36 unchanged sentences

Other Operating Income:

ATM Fees 1,185 1,235 992

Wire Transfer Fees 696 737 703

1,251 1,251 1,182

Non-interest Income (in-scope of Topic 606) 53,429 50,596 43,305

1 unchanged sentence

Total Non-interest Income $ 60,261 $ 59,133 $ 59,462

(1) “ Other ” income includes safe deposit box rentals and other non-interest related fees totaling $ 1.2 million, $ 1.2 million, and $ 1.2 million for the years ended December 31, 2023, 2022, and 2021, respectively, all of which are within scope of ASC 606.

A description of the Company’s revenue streams accounted for under Topic 606 follows:

11 unchanged sentences

Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed (trade date).

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 11 – Revenue Recognition (continued)

Insurance Revenues :

1 unchanged sentence

These commissions are primarily earned over time as the Company provides the contracted insurance product to customers.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

Other Operating Income :

The other operating income revenue streams within the scope of Topic 606 consist of ATM fees, wire transfer fees, safe deposit box rentals, check printing commissions and other non-interest related fees.

NOTE 12 - Per Share Data

8 unchanged sentences

Weighted Average Shares Outstanding 29,557,567 29,464,591 26,537,311

Stock Options, Net — — —

Potentially Dilutive Shares, Net — — —

Diluted Weighted Average Shares Outstanding 29,557,567 29,464,591 26,537,311

7 unchanged sentences

Control over the use of an identified asset means that the customer has both (1) the right to obtain substantially all of the economic benefits from the use of the asset and (2) the right to direct the use of the asset.

German American has finance leases for branch offices as well as operating leases for branch offices, ATM locations and certain office equipment.

The Bank has finance leases for branch offices as well as operating leases for branch offices, ATM locations and certain office equipment.

The right-of-use asset is included in the ‘Premises, Furniture and Equipment, Net’ line of the Consolidated Balance Sheet.

51 unchanged sentences

The Company uses the same credit policy to make commitments as it uses for on-balance sheet items.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 14 – Commitments and Off-balance Sheet Items (continued)

The Company’s exposure to credit risk for commitments to sell loans is dependent upon the ability of the counter-party to purchase the loans.

1 unchanged sentence

These commitments are subject to market risk resulting from fluctuations in interest rates.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 14 – Commitments and Off-balance Sheet Items (continued)

Commitments and contingent liabilities are summarized as follows, at December 31:

13 unchanged sentences

Collateral obtained upon exercise of the commitment is determined using management’s credit evaluation of the borrower, and may include accounts receivable, inventory, property, land, and other items.

The Company maintains an allowance for credit losses on unfunded loan commitments to provide for the risk of loss inherent in these arrangements.

The allowance is computed using a methodology similar to that used to determine the allowance for credit losses on loans, modified to take into account the probability of a drawdown on the commitment.

The allowance for credit losses on unfunded loan commitments is classified as a liability account on the balance sheet within accrued interest payable and other liabilities.

NOTE 15 - Fair Value

70 unchanged sentences

(Level 3) Total

Treasury $ 64,119 $ — $ — $ 64,119

Obligations of State and Political Subdivisions — 777,769 83 $ 777,852

50 unchanged sentences

No charge to earnings was included in the years ended December 31, 2023 and 2022.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 15 – Fair Value (continued)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2023 and 2022:

6 unchanged sentences

Individually Analyzed Loans - Residential Mortgage Loans $ 450 Sales comparison approach Adjustment for physical condition of comparable properties sold 20 % - 20 %

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 15 – Fair Value (continued)

December 31, 2022 Fair Value Valuation Technique(s) Unobservable Input(s) Range (Weighted Average)

7 unchanged sentences

Not all of the Company’s assets and liabilities are considered financial instruments, and therefore are not included in the tables.

Because no active market exists for a significant

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 15 – Fair Value (continued)

portion of the Company’s financial instruments, fair value estimates were based on subjective judgments, and therefore cannot be determined with precision.

Because no active market exists for a significant portion of the Company’s financial instruments, fair value estimates were based on subjective judgments, and therefore cannot be determined with precision.

Fair Value Measurements at

30 unchanged sentences

The core banking segment involves attracting deposits from the general public and using such funds to originate consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, primarily in the Company’s local markets.

The core banking segment also involves the sale of residential mortgage loans in the secondary market.

The core banking segment also involves the sale of residential mortgage loans in the secondary

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 16 – Segment Information (continued)

The wealth management segment involves providing trust, investment advisory, brokerage and retirement planning services to customers.

9 unchanged sentences

The evaluation process for segments does not include holding company income and expense.

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 16 – Segment Information (continued)

company amounts are the primary differences between segment amounts and consolidated totals, and are reflected in the column labeled “Other” below, along with amounts to eliminate transactions between segments.

Holding company amounts are the primary differences between segment amounts and consolidated totals, and are reflected in the column labeled “Other” below, along with amounts to eliminate transactions between segments.

Banking Wealth Management Services Insurance Other Consolidated

24 unchanged sentences

Segment Assets at December 31, 2022 6,152,346 8,846 14,706 ( 19,907 ) 6,155,991

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 16 – Segment Information (continued)

Banking Wealth Management Services Insurance Other Consolidated

11 unchanged sentences

Segment Assets at December 31, 2021 5,595,721 6,115 12,245 ( 5,542 ) 5,608,539

Notes to the Consolidated Financial Statements

Dollars in thousands, except per share data

NOTE 17 - Parent Company Financial Statements

3 unchanged sentences

Cash $ 66,835 $ 46,541

Securities Available-for-Sale 4,112 —

Other Investments 353 353

52 unchanged sentences

Equity Based Compensation 2,332 2,330 1,723

Excess Tax Benefit from Restricted Share Grant — — 3

Equity in Excess Undistributed Income of Subsidiaries ( 41,287 ) ( 52,400 ) ( 21,706 )

2 unchanged sentences

Cash Used for Business Acquisitions — ( 49,644 ) —

Net Equity in Dissolution of Subsidiary 1,978 — —

Net Cash from Investing Activities 1,978 ( 49,644 ) —

CASH FLOWS FROM FINANCING ACTIVITIES

Issuance (Retirement) of Common Stock — — ( 5,789 )

Dividends Paid ( 29,433 ) ( 27,022 ) ( 22,220 )

75 unchanged sentences

End of Year $ 180,357 $ 180,357 $ 121,761

Of the $ 180,357 carrying amount of goodwill, $ 179,025 is allocated to the core banking segment, and $ 1,332 is allocated to the insurance segment for the period ended December 31, 2022.

Of the $ 180,357 carrying amount of goodwill, $ 179,025 is allocated to the core banking segment, and $ 1,332 is allocated to the insurance segment for both periods ended December 31, 2023 and 2022.

Of the $ 121,761 carrying amount of goodwill, $ 120,429 is allocated to the core banking segment, and $ 1,332 is allocated to the insurance segment for the period ended December 31, 2021.

The decrease of $ 195 in 2021 is attributable to the sale of two branches located in Lexington, Kentucky.

Of the $ 121,956 carrying amount of goodwill, $ 120,624 is allocated to the core banking segment, and $ 1,332 is allocated to the insurance segment for the period ended December 31, 2020.

During 2020, the Company finalized valuation estimates for the Citizens First acquisition and recorded $ 650 of additional goodwill.

Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value.

16 unchanged sentences

Total $ 38,912 $ ( 30,636 )

Amortization Expense was $ 3,711 , $ 2,731 and $ 3,539 , for 2022, 2021 and 2020.

Amortization Expense was $ 2,840 , $ 3,711 and $ 2,731 , for 2023, 2022 and 2021, respectively.

Estimated amortization expense for each of the next five years is as follows:

63 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data