What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-01 compared with 2023-08-02 · 139 added, 105 removed, 1134 unchanged (18% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share data)

September 30,

2023 December 31,

27 unchanged sentences

90,000,000 shares authorized, no par value

25,896,764 shares issued and 25,429,216 outstanding as of June 30, 2023

25,903,264 shares issued and 25,431,724 outstanding as of September 30, 2023

25,825,127 shares issued and 25,349,225 outstanding as of December 31, 2022

2 unchanged sentences

Accumulated other comprehensive income (loss) ( 228,111 ) ( 188,923 )

Treasury stock at cost ( 467,548 shares as of June 30, 2023, 475,902 shares as of December 31, 2022)

Treasury stock at cost ( 471,540 shares as of September 30, 2023, 475,902 shares as of December 31, 2022)

( 15,469 ) ( 15,383 )

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

25 unchanged sentences

Mortgage banking income (loss) ( 50 ) ( 89 ) ( 184 ) 771

Net securities gains 3 0 19 0

Net securities gains (losses) ( 35 ) 0 ( 16 ) 0

Other income 598 423 1,907 1,559

20 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited - dollars in thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

4 unchanged sentences

Reclassification adjust for amortization of unrealized losses on securities transferred to held-to-maturity 501 504 1,486 995

Reclassification adjustment for gains included in net income ( 3 ) 0 ( 19 ) 0

Reclassification adjustment for losses included in net income 35 0 16 0

Net securities gain (loss) activity during the period ( 63,896 ) ( 80,028 ) ( 49,648 ) ( 301,142 )

17 unchanged sentences

Interest Total

Balance at April 1, 2022

Balance at July 1, 2022

25,345,162 $ 123,571 $ 612,026 $ ( 158,534 ) $ ( 15,089 ) $ 561,974 $ 89 $ 562,063

8 unchanged sentences

Stock based compensation expense 2,093 2,093 2,093

Balance at June 30, 2022

Balance at September 30, 2022

25,350,134 $ 125,832 $ 630,337 $ ( 221,729 ) $ ( 15,309 ) $ 519,131 $ 89 $ 519,220

Balance at April 1, 2023

Balance at July 1, 2023

25,429,216 $ 123,367 $ 661,447 $ ( 177,645 ) $ ( 15,263 ) $ 591,906 $ 89 $ 591,995

Comprehensive income:

Comprehensive loss:

Net income 25,252 25,252 25,252

6 unchanged sentences

Stock based compensation expense 2,185 2,185 2,185

Balance at June 30, 2023

Balance at September 30, 2023

25,431,724 $ 125,758 $ 674,917 $ ( 228,111 ) $ ( 15,469 ) $ 557,095 $ 89 $ 557,184

Six Months Ended

Nine Months Ended

Common Stock Retained

15 unchanged sentences

Stock based compensation expense 6,713 6,713 6,713

Balance at June 30, 2022

Balance at September 30, 2022

25,350,134 $ 125,832 $ 630,337 $ ( 221,729 ) $ ( 15,309 ) $ 519,131 $ 89 $ 519,220

10 unchanged sentences

Stock based compensation expense 1,792 1,792 1,792

Balance at June 30, 2023

Balance at September 30, 2023

25,431,724 $ 125,758 $ 674,917 $ ( 228,111 ) $ ( 15,469 ) $ 557,095 $ 89 $ 557,184

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited - in thousands)

Six Months Ended June 30, 2023 2022

Nine Months Ended September 30, 2023 2022

Cash flows from operating activities:

9 unchanged sentences

Net (gain) loss on sales of premises and equipment 3 3

Net gain on sales and calls of securities available-for-sale ( 19 ) 0

Net loss on sales and calls of securities available-for-sale 16 0

Net securities amortization 3,732 4,817

22 unchanged sentences

Payments on long-term FHLB borrowings 0 ( 75,000 )

Proceeds from short-term FHLB borrowings 125,000 0

Net payments on short-term FHLB borrowings ( 185,000 ) 0

Common dividends paid ( 35,311 ) ( 30,624 )

25 unchanged sentences

In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included.

Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for any subsequent reporting periods, including the year ending December 31, 2023.

Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for any subsequent reporting periods, including the year ending December 31, 2023.

The Company’s 2022 Annual Report on Form 10-K should be read in conjunction with these statements.

15 unchanged sentences

The Company adopted ASU 2022-01 on January 1, 2023, which did not have a material impact on the consolidated financial statements.

Newly Issued But Not Yet Effective Accounting Standards

On March 12, 2020, the FASB issued Accounting Standards Update (ASU) 2020-04, " Reference Rate Reform (ASC 848):

7 unchanged sentences

On December 22, 2022, the FASB issued ASU 2022-06, " Reference Rate Reform (ASC 848):

Deferral of the Sunset Date of Topic 848 ", which definitively provided a sunset date of December 31, 2024 for the relief guidance allowed under Topic 848.

Deferral of the Sunset Date of Topic 848 ",

which definitively provided a sunset date of December 31, 2024 for the relief guidance allowed under Topic 848.

The ASU was effective immediately upon issuance.

The Company adopted the LIBOR transition relief allowed under this standard, and does not expect final adoption to have a material impact on the consolidated financial statements.

The Company adopted the LIBOR transition relief allowed under this standard, and it did not have a material impact on the consolidated financial statements.

Newly Issued But Not Yet Effective Accounting Standards

On March 28, 2023, the FASB issued ASU 2023-02, " Investments-Equity Method and Joint Ventures (ASC 323):

23 unchanged sentences

The amendments in this update must be applied on either a modified retrospective or a retrospective basis.

The Company is currently evaluating the impact of this standard for its LIHTC investments and the impact to noninterest income and income tax expense within the consolidated financial statements.

The Company is currently evaluating the impact of this standard for its LIHTC investments and the impact to noninterest income, income tax expense, and beginning retained earnings within the consolidated financial statements.

On October 9, 2023, the FASB issued ASU 2023-06, "Disclosure Improvements:

Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative" , which modified the disclosure or presentation requirements of a variety of Topics in the Codification and was intended to both clarify or improve such requirements and align the requirements with the SEC's regulations.

The amendments to Topics of Codification provided in this Update apply to all reporting entities within the scope of the affected Topics unless otherwise indicated by the Update.

Given the variety of Topics amended, a broad range of entities may be affected by one or more of the amendments provided in the Update.

The Company evaluated the amendments provided in the Update and believes certain of the disclosure improvements are applicable to the Company's interim or annual disclosures.

Subtopic 230-10, as amended, requires disclosure within the accounting policy in annual periods of where cash flows associated with derivative instruments and their related gains and losses are presented within the statement of cash flows.

Subtopic 260-10, as amended, requires disclosure of the methods used in the diluted earnings-per-share computation for each dilutive security and clarifies that certain disclosures should be made during interim

Subtopic 470-10, as amended, requires disclosure of amounts and terms of unused lines of credit and unfunded commitments and the weighted-average interest rate on short-term borrowings outstanding as of the date of each balance sheet presented.

The effective date for each amendment for entities subject to the SEC's existing disclosure requirements is the effective date of the removal of the related disclosure from Regulation S-X or Regulation S-K, with early adoption prohibited.

The amendments in the Update are to be applied prospectively.

The Company will apply prospectively the provisions provided in the amendments as such provisions become effective, and does not believe the application of these modified disclosure requirements will have a material impact on the consolidated financial statements.

Reclassification

7 unchanged sentences

Cost Gross Unrealized Gain Gross Unrealized Losses Allowance for Credit Losses Fair Value

June 30, 2023

September 30, 2023

Treasury securities $ 2,873 $ 0 $ ( 12 ) $ 0 $ 2,861

15 unchanged sentences

Cost Gross Unrealized Gain Gross Unrealized Losses Allowance for Credit Losses Fair Value

June 30, 2023

September 30, 2023

State and municipal securities $ 129,494 $ 0 $ ( 26,865 ) $ 0 $ 102,629

2 unchanged sentences

On April 1, 2022, the Company elected to transfer securities from available-for-sale to held-to-maturity as an overall balance sheet management strategy.

The fair value of securities transferred was $ 127.0 million from available-for-sale to held-to-maturity.

The unrealized loss on the securities transferred from available-for-sale to held-to-maturity was $ 24.4 million ($ 19.3 million, net of tax) based on the fair value of the securities on the transfer date and was $ 21.9 million ($ 17.3 million, net of tax) at June 30, 2023.

The fair value of securities transferred was $ 127.0 million.

The unrealized loss on the securities transferred from available-for-sale to held-to-maturity was $ 24.4 million ($ 19.3 million, net of tax) based on the fair value of the securities on the transfer date and was $ 21.4 million ($ 16.9 million, net of tax) at September 30, 2023.

The Company has the current intent and ability to hold the transferred securities until maturity.

1 unchanged sentence

There have been no subsequent transfers of securities from available-for-sale to held-to-maturity.

Information regarding the amortized cost and fair value of available-for-sale and held-to-maturity debt securities by maturity as of June 30, 2023 is presented below.

Information regarding the amortized cost and fair value of available-for-sale and held-to-maturity debt securities by maturity as of September 30, 2023 is presented below.

Maturity information is based on contractual maturity for all securities other than mortgage-backed securities.

11 unchanged sentences

Available-for-sale securities proceeds, gross gains and gross losses are presented below.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(dollars in thousands) 2023 2022 2023 2022

7 unchanged sentences

Gains and losses on sales are based on the amortized cost of the security sold and recorded on the trade date.

Securities with fair values of $ 811.1 million and $ 298.2 million were pledged as of June 30, 2023 and December 31, 2022, respectively, as collateral for borrowings from the Federal Home Loan Bank ("FHLB") and Federal Reserve Bank and for other purposes as permitted or required by law.

Securities with fair values of $ 740.8 million and $ 298.2 million were pledged as of September 30, 2023 and December 31, 2022, respectively, as collateral for borrowings from the Federal Home Loan Bank ("FHLB") and Federal Reserve Bank and for other purposes as permitted or required by law.

Unrealized Loss Analysis on Available-for-Sale and Held-to-Maturity Securities

Information regarding available-for-sale securities with unrealized losses as of June 30, 2023 and December 31, 2022 is presented on the following page.

Information regarding available-for-sale securities with unrealized losses as of September 30, 2023 and December 31, 2022 is presented on the following page.

The tables divide the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

4 unchanged sentences

Value Unrealized

June 30, 2023

September 30, 2023

Treasury securities $ 2,466 $ 8 $ 395 $ 4 $ 2,861 $ 12

11 unchanged sentences

Total available-for-sale $ 455,318 $ 53,415 $ 686,704 $ 162,064 $ 1,142,022 $ 215,479

Information regarding held-to-maturity securities with unrealized losses as of June 30, 2023 and December 31, 2022 is presented below.

Information regarding held-to-maturity securities with unrealized losses as of September 30, 2023 and December 31, 2022 is presented below.

The table divides the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

4 unchanged sentences

Value Unrealized

June 30, 2023

September 30, 2023

State and municipal securities $ 0 $ 0 $ 102,629 $ 26,865 $ 102,629 $ 26,865

1 unchanged sentence

State and municipal securities $ 0 $ 0 $ 111,029 $ 17,213 $ 111,029 $ 17,213

The total number of securities with unrealized losses as of June 30, 2023 and December 31, 2022 is presented below.

The total number of securities with unrealized losses as of September 30, 2023 and December 31, 2022 is presented below.

Available-for-sale Held-to-maturity

3 unchanged sentences

or more Total

June 30, 2023

September 30, 2023

Treasury securities 7 1 8 0 0 0

19 unchanged sentences

For available-for-sale debt securities, any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income (loss), net of applicable taxes.

No allowance for credit losses for available-for-sale or held-to-maturity debt securities was recorded at June 30, 2023 or December 31, 2022.

Accrued interest receivable on securities totaled $ 7.9 million and $ 8.9 million at June 30, 2023 and December 31, 2022, respectively, and is excluded from the estimate of credit losses.

No allowance for credit losses for available-for-sale or held-to-maturity debt securities was recorded at September 30, 2023 or December 31, 2022.

Accrued interest receivable on securities totaled $ 7.1 million and $ 8.9 million at September 30, 2023 and December 31, 2022, respectively, and is excluded from the estimate of credit losses.

government sponsored agencies and mortgage-backed securities are either explicitly or implicitly guaranteed by the U.S.

2 unchanged sentences

State and municipal securities credit losses are benchmarked against highly rated municipal securities of similar duration, as published by Moody's, resulting in an immaterial allowance for credit losses.

(dollars in thousands) June 30,

(dollars in thousands) September 30,

2023 December 31,

27 unchanged sentences

Loans, net $ 4,798,860 $ 4,637,790

The recorded investment in loans does not include accrued interest, which totaled $ 18.5 million and $ 18.4 million as of June 30, 2023 and December 31, 2022, respectively.

The Company h ad $ 471,000 and $ 306,000 in residential real estate loans in the process of foreclosure as of June 30, 2023 and December 31, 2022, respectively.

The recorded investment in loans does not include accrued interest, which totaled $ 20.7 million and $ 18.4 million as of September 30, 2023 and December 31, 2022, respectively.

The Company h ad $ 470,000 and $ 306,000 in residential real estate loans in the process of foreclosure as of September 30, 2023 and December 31, 2022, respectively.

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

59 unchanged sentences

(dollars in thousands) Commercial and Industrial Commercial Real Estate and Multifamily Residential Agri-business and Agricultural Other Commercial Consumer 1-4 Family Mortgage Other Consumer Unallocated Total

Three Months Ended June 30, 2023

Beginning balance, April 1 $ 31,190 $ 29,036 $ 4,621 $ 1,034 $ 3,398 $ 1,096 $ 840 $ 71,215

Three Months Ended September 30, 2023

Beginning balance, July 1 $ 30,978 $ 30,913 $ 4,402 $ 1,120 $ 3,448 $ 846 $ 351 $ 72,058

Provision for credit losses ( 167 ) 230 ( 139 ) ( 102 ) 197 283 98 400

4 unchanged sentences

Three Months Ended June 30, 2022

Beginning balance, April 1 $ 31,322 $ 26,257 $ 4,761 $ 1,058 $ 2,606 $ 1,040 $ 482 $ 67,526

Three Months Ended September 30, 2022

Beginning balance, July 1 $ 31,195 $ 26,448 $ 4,753 $ 713 $ 2,674 $ 1,093 $ 647 $ 67,523

Provision for credit losses 1,357 ( 678 ) ( 547 ) 16 ( 197 ) 71 ( 22 ) 0

4 unchanged sentences

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Beginning balance, January 1 $ 35,290 $ 27,394 $ 4,429 $ 917 $ 3,001 $ 1,021 $ 554 $ 72,606

5 unchanged sentences

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Beginning balance, January 1 $ 30,595 $ 26,535 $ 5,034 $ 1,146 $ 2,866 $ 1,147 $ 450 $ 67,773

12 unchanged sentences

Loans classified as Special Mention have a potential weakness that deserves management’s close attention.

If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.

4 unchanged sentences

Loans listed as Not Rated are consumer loans or commercial loans with consumer characteristics included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status.

The following table summarizes the risk category of loans by loan segment and origination date as of June 30, 2023:

The following table summarizes the risk category of loans by loan segment and year of origination as of September 30, 2023:

(dollars in thousands) 2023 2022 2021 2020 2019 Prior Term Total Revolving Total

91 unchanged sentences

Total Loans $ 659,079 $ 826,490 $ 589,875 $ 483,008 $ 255,899 $ 338,655 $ 3,153,006 $ 1,717,959 $ 4,870,965

As of June 30, 2023, $ 1.5 million in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans.

As of September 30, 2023, $ 1.5 million in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans.

These loans were included in this risk rating category because they are fully guaranteed by the Small Business Administration ("SBA").

The following table summarizes the risk category of loans by loan segment and origination date as of December 31, 2022:

The following table summarizes the risk category of loans by loan segment and year of origination as of December 31, 2022:

(dollars in thousands) 2022 2021 2020 2019 2018 Prior Term Total Revolving Total

71 unchanged sentences

Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and future payments are reasonably assured.

The following table presents the aging of the amortized cost basis in past due loans as of June 30, 2023 by class of loans and loans past due 90 days or more and still accruing by class of loan:

The following table presents the aging of the amortized cost basis in past due loans as of September 30, 2023 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands) Loans Not Past Due 30-89 Days Past Due Greater than 89 Days Past Due and Accruing Total Accruing Total Nonaccrual Nonaccrual With No Allowance For Credit Loss Total

17 unchanged sentences

Total $ 4,852,877 $ 1,779 $ 19 $ 4,854,675 $ 16,290 $ 2,330 $ 4,870,965

As of June 30, 2023 there were an insignificant number of loans 30-89 days past due or greater than 89 days past due on nonaccrual.

Additionally, interest income recognized on nonaccrual loans was insignificant during the three and six month periods ended June 30, 2023.

As of September 30, 2023 there were an insignificant number of loans 30-89 days past due or greater than 89 days past due on nonaccrual.

Additionally, interest income recognized on nonaccrual loans was insignificant during the three and nine month periods ended September 30, 2023.

The following table presents the aging of the amortized cost basis in past due loans as of December 31, 2022 by class of loans and loans past due 90 days or more and still accruing by class of loan:

25 unchanged sentences

The following tables present the amortized cost basis of collateral dependent loans by class of loan as of:

June 30, 2023

September 30, 2023

(dollars in thousands) Real Estate General

35 unchanged sentences

Because the effect of most modifications to borrowers experiencing financial difficulty is already included in the allowance for credit losses, no change to the allowance for credit losses is generally recorded for these modifications.

The following tables present the amortized cost basis of loans that were experiencing financial difficulty and received a modification of terms during the three and six months ended June 30, 2023, by class and type of modification.

The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivables is also presented below:

(dollars in thousands) Combination Principal Forgiveness, Term Extension and Interest Rate Reduction Total Class of Financing Receivable

Three Months Ended June 30, 2023

The following tables present the amortized cost basis at the end of the reporting period of loans that were experiencing financial difficulty and received a modification of terms during the three and nine months ended September 30, 2023, by class and type of modification.

(dollars in thousands) Interest Rate Reduction Combination Interest Rate Reduction and Term Extension Combination Principal Forgiveness, Interest Rate Reduction and Term Extension Total Modifications Total Class of Financing Receivable

Three Months Ended September 30, 2023

Commercial and industrial loans:

Working capital lines of credit loans $ 2,000 $ 931 $ 0 $ 2,931 0.50 %

Non-working capital loans 0 0 0 0 0.00

(dollars in thousands) Combination Principal Forgiveness, Term Extension and Interest Rate Reduction Total Class of Financing Receivable

Six Months Ended June 30, 2023

Total commercial and industrial loans 2,000 931 0 2,931 0.21

Total loan modifications made to borrowers experiencing financial difficulty $ 2,000 $ 931 $ 0 $ 2,931 0.06 %

Nine Months Ended September 30, 2023

Commercial and industrial loans:

Working capital lines of credit loans $ 2,000 $ 931 $ 0 $ 2,931 0.50 %

Non-working capital loans 0 0 1,596 1,596 0.20

Total commercial and industrial loans 2,000 931 1,596 4,527 0.32

Total loan modifications made to borrowers experiencing financial difficulty $ 2,000 $ 931 $ 1,596 $ 4,527 0.09 %

The Company has no material commitments to lend additional funds to borrowers included in the previous tables.

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three and six months ended June 30, 2023:

(dollars in thousands) Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension Total Class of Financing Receivable

Three Months Ended June 30, 2023

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three and nine months ended September 30, 2023:

(dollars in thousands) Principal Forgiveness Interest Rate Reduction

Financial Effect Term Extension

Financial Effect Total Class of Financing Receivable

Three Months Ended September 30, 2023

Commercial and industrial loans:

Non-working capital loans $ 9,380 Prime+ 0.75 %

260 months 0.20 %

(dollars in thousands) Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension Total Class of Financing Receivable

Six Months Ended June 30, 2023

Working capital lines of credit loans $ 0 Reduction of two variable Prime Rate lines of credit to 1.00 % Fixed

Reduction of one variable line of credit from Prime plus 1.00 % to 1.00 % Fixed

Extension of terms for one variable rate line of credit from 12 months to 120 months

Non-working capital loans 0 No modifications No modifications 0.00 %

(dollars in thousands) Principal Forgiveness Interest Rate Reduction

Financial Effect Term Extension

Financial Effect Total Class of Financing Receivable

Nine Months Ended September 30, 2023

Commercial and industrial loans:

Non-working capital loans $ 9,380 Prime+ 0.75 %

260 months 0.20 %

During the three and six months ended June 30, 2022, no modifications were made to loans for borrowers experiencing financial difficulty.

Working capital lines of credit loans $ 0 Reduction of two variable Prime Rate lines of credit to 1.00 % Fixed

Reduction of one variable line of credit from Prime plus 1.00 % to 1.00 % Fixed

Term extension for one variable rate line of credit from 12 months to 120 months

Non-working capital loans 9,380 Reduction of one term loan from Prime plus 0.75 % to 1.00 % Fixed

Term extension from 40 months to 300 months

During the three and nine months ended September 30, 2022, no modifications were made to loans for borrowers experiencing financial difficulty.

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

At June 30, 2023, no loans receiving such a modification within the last twelve months were 30 days or greater past due.

At June 30, 2023, no loans receiving a modification due to borrower financial difficulty within the last twelve months experienced a payment default.

At September 30, 2023, no loans receiving such a modification within the last twelve months were 30 days or greater past due.

At September 30, 2023, no loans receiving a modification due to borrower financial difficulty within the last twelve months experienced a payment default.

Upon the Company's determination that a modified loan (or portion thereof) has subsequently been deemed uncollectible, the loan (or a portion thereof) is written off.

Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

For the period ended June 30, 2023, the Company had an advance outstanding from the Federal Home Loan Bank ("FHLB") in the amount of $ 400.0 million.

The outstanding advance was a fixed rate bullet advance with an interest rate of 5.17 % and matured July 13, 2023.

For the period ended September 30, 2023, the Company had an advance outstanding from the FHLB in the amount of $ 90.0 million.

The outstanding advance was a fixed rate bullet advance with an interest rate of 5.55 % and matured October 6, 2023.

For the period ended December 31, 2022, the Company had a fixed rate bullet advance from the FHLB with an interest rate of 4.21 % in the amount of $ 275.0 million that matured on January 5, 2023.

1 unchanged sentence

this credit agreement was subsequently amended and renewed on July 29, 2023 for $ 12.5 million.

Funds provided under the agreement may be used to repurchase shares of the Company’s common stock under the share repurchase program, which was reauthorized by the Company’s board of directors on April 11, 2023 and expires on April 30, 2025, and for general operations.

The credit agreement includes a negative pledge agreement whereby the Company agrees not to pledge or otherwise encumber the stock of the Bank.

The credit agreement has a one year term which may be amended, extended, modified or renewed.

There were no outstanding borrowings on the credit agreement at June 30, 2023 and December 31, 2022.

Funds provided under the agreement could be used to repurchase shares of the Company’s common stock under the share repurchase program, which was reauthorized by the Company’s board of directors on April 11, 2023 and expires on April 30, 2025, and for general operations.

The credit agreement included a negative pledge agreement whereby the Company agreed not to pledge or otherwise encumber the stock of the Bank.

The credit agreement had a one year term which may be amended, extended, modified or renewed.

There were no outstanding borrowings on the credit agreement at September 30, 2023 and December 31, 2022.

This unsecured revolving credit agreement was terminated on October 11, 2023 and replaced by a new revolving credit agreement with a different financial institution.

The new unsecured revolving credit agreement was effective October 11, 2023, for $ 30.0 million.

FAIR VALUE DISCLOSURES

38 unchanged sentences

Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available.

Such adjustments are usually significant and result in a Level 3 classification of the inputs for determining fair value.

Such adjustments are usually significant and result in a Level 3

classification of the inputs for determining fair value.

In addition, the Company’s management routinely applies internal discount factors to the value of appraisals used in the fair value evaluation of collateral dependent loans.

6 unchanged sentences

Mortgage servicing rights:

As of June 30, 2023, the fair value of the Company’s Level 3 servicing assets for residential mortgage loans (“MSRs”) was $ 2.4 million, carried at amortized cost and no valuation reserve.

As of September 30, 2023, the fair value of the Company’s Level 3 servicing assets for residential mortgage loans (“MSRs”) was $ 2.3 million, carried at amortized cost and no valuation reserve.

These residential mortgage loans have a weighted average interest rate of 3.5 %, a weighted average maturity of 20 years and are secured by homes generally within the Company’s market area of Northern Indiana and Indianapolis.

5 unchanged sentences

The most significant unobservable assumption is the discount rate.

At June 30, 2023, the constant prepayment speed (“PSA”) used was 150 and used a discount rate range of 9.50 %- 11.50 %.

At September 30, 2023, the constant prepayment speed (“PSA”) used was 148 and used a discount rate range of 9.5 %- 11.5 %.

At December 31, 2022, the PSA used was 159 and the discount rate used was 9.5 %.

9 unchanged sentences

The tables below present the balances of assets measured at fair value on a recurring basis:

June 30, 2023

September 30, 2023

Fair Value Measurements Using Assets

29 unchanged sentences

The tables below present the balances of assets measured at fair value on a nonrecurring basis:

June 30, 2023

September 30, 2023

Fair Value Measurements Using Assets

27 unchanged sentences

Total assets $ 0 $ 0 $ 12,092 $ 12,092

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at June 30, 2023:

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at September 30, 2023:

(dollars in thousands) Fair Value Valuation Methodology Unobservable Inputs Average Range of Inputs

17 unchanged sentences

Items that are not financial instruments are not included.

June 30, 2023

September 30, 2023

Value Estimated Fair Value

39 unchanged sentences

OFFSETTING ASSETS AND LIABILITIES

The following tables summarize gross and net information about financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to an enforceable master netting arrangement at June 30, 2023 and December 31, 2022.

June 30, 2023

September 30, 2023

Gross Amounts of Recognized Assets/Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position Net Amount

16 unchanged sentences

Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock based awards and warrants, none of which were antidilutive.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

5 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) for the three months ended June 30, 2023 and 2022, all shown net of tax:

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) for the three months ended September 30, 2023 and 2022, all shown net of tax:

(dollars in thousands) Unrealized Gains and Losses on Available-

for-Sales Securities Defined Benefit Pension Items Total

Balance at April 1, 2023

Balance at July 1, 2023

$ ( 176,898 ) $ ( 747 ) $ ( 177,645 )

2 unchanged sentences

Net current period other comprehensive income (loss) ( 50,477 ) 11 ( 50,466 )

Balance at June 30, 2023 $ ( 176,898 ) $ ( 747 ) $ ( 177,645 )

Balance at September 30, 2023 $ ( 227,375 ) $ ( 736 ) $ ( 228,111 )

(dollars in thousands) Unrealized Gains and Losses on Available-

for-Sales Securities Defined Benefit Pension Items Total

Balance at April 1, 2022

Balance at July 1, 2022

$ ( 157,625 ) $ ( 909 ) $ ( 158,534 )

2 unchanged sentences

Net current period other comprehensive income (loss) ( 63,222 ) 27 ( 63,195 )

Balance at June 30, 2022 $ ( 157,625 ) $ ( 909 ) $ ( 158,534 )

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) for the six months ended June 30, 2023 and 2022, all shown net of tax:

Balance at September 30, 2022 $ ( 220,847 ) $ ( 882 ) $ ( 221,729 )

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) for the nine months ended September 30, 2023 and 2022, all shown net of tax:

(dollars in thousands) Unrealized Gains and Losses on Available-

4 unchanged sentences

Net current period other comprehensive income (loss) ( 39,221 ) 33 ( 39,188 )

Balance at June 30, 2023

Balance at September 30, 2023

$ ( 227,375 ) $ ( 736 ) $ ( 228,111 )

5 unchanged sentences

Net current period other comprehensive income (loss) ( 237,903 ) 81 ( 237,822 )

Balance at June 30, 2022

Balance at September 30, 2022

$ ( 220,847 ) $ ( 882 ) $ ( 221,729 )

Reclassifications out of other accumulated other comprehensive income (loss) for the three months ended June 30, 2023 are as follows:

Reclassifications out of other accumulated other comprehensive income (loss) for the three months ended September 30, 2023 are as follows:

Details about

6 unchanged sentences

Amortization of unrealized losses on held-to-maturity securities $ ( 501 ) Interest income

Realized gains and (losses) on available-for-sale securities 3 Net securities gains

Realized gains and (losses) on available-for-sale securities ( 35 ) Net securities gains (losses)

Tax effect 113 Income tax expense

4 unchanged sentences

Total reclassifications for the period $ ( 434 ) Net income

Reclassifications out of other accumulated comprehensive income (loss) for the three months ended June 30, 2022 are as follows:

Reclassifications out of other accumulated comprehensive income (loss) for the three months ended September 30, 2022 are as follows:

Details about

12 unchanged sentences

Total reclassifications for the period $ ( 425 ) Net income

Reclassifications out of accumulated comprehensive loss for the six months ended June 30, 2023 are as follows:

Reclassifications out of accumulated comprehensive income (loss) for the nine months ended September 30, 2023 are as follows:

Details about

6 unchanged sentences

Amortization of unrealized losses on held-to-maturity securities $ ( 1,486 ) Interest income

Realized gains and (losses) on available-for-sale securities 19 Net securities gains

Realized gains and (losses) on available-for-sale securities ( 16 ) Net securities gains (losses)

Tax effect 316 Income tax expense

4 unchanged sentences

Total reclassifications for the period $ ( 1,219 ) Net income

Reclassifications out of accumulated other comprehensive income (loss) for the six months ended June 30, 2022 are as follows:

Reclassifications out of accumulated other comprehensive income (loss) for the nine months ended September 30, 2022 are as follows:

Details about

28 unchanged sentences

The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases, as allowed as a practical expedient of the standard.

The following is a maturity analysis of the operating lease liabilities as of June 30, 2023:

The following is a maturity analysis of the operating lease liabilities as of September 30, 2023:

Years ending December 31, (in thousands) Operating Lease Obligation

4 unchanged sentences

Right-of-use asset $ 4,848

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(dollars in thousands) 2023 2022 2023 2022

26 unchanged sentences

The trustee alleges many of the same claims that were alleged in his second amended complaint.

The defendants will file a motion to dismiss the third amended complaint on July 25, 2023.

The defendants filed a motion to dismiss the third amended complaint on July 25, 2023.

The Trustee subsequently filed a response to this motion and the parties are currently awaiting a decision from the court to rule on the motion and response as filed or to schedule a hearing for the parties to present arguments on the motion.

This activity is expected to occur in the fourth quarter of 2023.

Based on current information, we have determined that a material loss is neither probable nor estimable at this time, and the Bank, and the four individual Bank representatives who are named as defendants in the third amended complaint, intend to vigorously defend themselves against all allegations asserted in the third amended complaint.

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-Q

Item 1. Financial Statements