12 unchanged sentences
Derivative Instruments
−Removed: Short-term Borrowings
FHLB Advances and Other Borrowings
37 unchanged sentences
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
−Removed: A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
−Removed: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
−Removed: with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
+Added: A company’s internal control over financial reporting
+Added: includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
+Added: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
44 unchanged sentences
Cash and cash equivalents 135,061 160,631
−Removed: Investment securities available for sale, at fair value (allowance for credit losses of $ 0 and $ 221 at December 31,
−Removed: 2022 and December 31, 2021, respectively)
−Removed: 768,234 906,603
+Added: Investment securities available for sale, at fair value 915,895 768,234
Equity securities, at fair value 4,501 8,626
27 unchanged sentences
4,000,000 shares authorized;
−Removed: 115,000 Series A shares, $ 1,000 per share liquidation preference, issued and outstanding at December 31, 2022
+Added: 115,000 Series A shares, $ 1,000 per share liquidation preference, issued and outstanding at December 31, 2023 and 2022, respectively
+Added: 110,548 110,548
Common stock, $ 0.01 par value;
40,000,000 shares authorized;
−Removed: 22,214,913 and 22,050,537 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively
+Added: 21,551,402 and 22,214,913 shares issued and outstanding at December 31, 2023 and 2022, respectively
Capital surplus 435,463 449,196
Retained earnings 322,379 282,405
−Removed: Accumulated other comprehensive (loss) income, net of tax ( 83,797 ) 5,237
+Added: Accumulated other comprehensive loss, net of tax ( 76,753 ) ( 83,797 )
Total shareholders’ equity 791,853 758,574
27 unchanged sentences
Provision for credit losses on loans 21,132 18,797 3,950
−Removed: Provision for (recapture of) credit losses on unfunded commitments 1,550 ( 412 ) 846
−Removed: (Recapture of) provision for other credit losses ( 221 ) ( 145 ) 366
+Added: Provision for credit losses on unfunded commitments — 1,550 ( 412 )
+Added: Recapture of other credit losses — ( 221 ) ( 145 )
Total provision for credit losses 21,132 20,126 3,393
2 unchanged sentences
Wealth management revenue 25,572 25,708 26,811
−Removed: Commercial FHA revenue 1,663 1,414 6,007
Residential mortgage banking revenue 1,903 1,509 5,526
4 unchanged sentences
Impairment on commercial mortgage servicing rights — ( 1,263 ) ( 7,532 )
−Removed: Company-owned life insurance 3,584 4,496 3,581
+Added: Income on company-owned life insurance 4,439 3,584 4,496
Other income 17,756 8,936 14,160
4 unchanged sentences
Data processing 26,286 24,350 24,595
+Added: FDIC insurance 4,779 3,336 3,346
Professional 7,049 6,907 10,971
5 unchanged sentences
Loss on mortgage servicing rights held for sale — 3,250 222
−Removed: Impairment related to facilities optimization — — 12,847
Federal Home Loan Bank advances prepayment fees — — 8,536
18 unchanged sentences
Net income $ 75,460 $ 99,025 $ 81,317
−Removed: Other comprehensive (loss) income:
+Added: Other comprehensive income (loss):
Investment securities available for sale:
−Removed: Unrealized (losses) gains that occurred during the period ( 106,927 ) ( 12,553 ) 6,454
−Removed: (Recapture of) provision for credit loss expense ( 221 ) ( 145 ) 366
+Added: Unrealized losses that occurred during the period ( 1,280 ) ( 106,927 ) ( 12,553 )
+Added: Recapture of credit loss expense — ( 221 ) ( 145 )
Reclassification adjustment for realized net losses (gains) on sales of investment securities included in net income
7 unchanged sentences
Change in cash flow hedges, net of tax 1,136 ( 10,992 ) 3,401
−Removed: Other comprehensive (loss) income, net of tax ( 89,034 ) ( 6,194 ) 3,989
+Added: Other comprehensive income (loss), net of tax 7,044 ( 89,034 ) ( 6,194 )
Total comprehensive income $ 82,504 $ 9,991 $ 75,123
2 unchanged sentences
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
−Removed: YEARS ENDED December 31, 2022, 2021, AND 2020
(dollars in thousands, except per share data)
6 unchanged sentences
shareholders'
−Removed: Balance at December 31, 2019 $ — $ 244 $ 488,305 $ 165,920 $ 7,442 $ 661,911
−Removed: Cumulative effect of change in accounting principles (Note 1) — — — ( 7,172 ) — ( 7,172 )
−Removed: Balance at January 1, 2020 $ — $ 244 $ 488,305 $ 158,748 $ 7,442 $ 654,739
+Added: Balances, December 31, 2020 $ — $ 223 $ 453,410 $ 156,327 $ 11,431 $ 621,391
Net income — — — 81,317 — 81,317
−Removed: Other comprehensive income — — — — 3,989 3,989
+Added: Other comprehensive loss — — — — ( 6,194 ) ( 6,194 )
Common dividends declared ($ 1.12 per share)
3 unchanged sentences
Issuance of common stock under employee benefit plans — 3 2,246 — — 2,249
−Removed: Balance at December 31, 2020 $ — $ 223 $ 453,410 $ 156,327 $ 11,431 $ 621,391
+Added: Balances, December 31, 2021 $ — $ 221 $ 445,907 $ 212,472 $ 5,237 $ 663,837
Net income — — — 99,025 — 99,025
Other comprehensive loss — — — — ( 89,034 ) ( 89,034 )
+Added: Issuance of preferred stock, net of offering costs 110,548 — — — — 110,548
Common dividends declared ($ 1.16 per share)
— — — ( 25,923 ) — ( 25,923 )
+Added: Preferred dividends — — — ( 3,169 ) — ( 3,169 )
Common stock repurchased — ( 1 ) ( 1,108 ) — — ( 1,109 )
3 unchanged sentences
Net income — — — 75,460 — 75,460
−Removed: Other comprehensive loss — — — — ( 89,034 ) ( 89,034 )
−Removed: Issuance of preferred stock, net of offering costs 110,548 — — — — 110,548
+Added: Other comprehensive income — — — — 7,044 7,044
Common dividends declared ($ 1.20 per share)
22 unchanged sentences
Gain on proceeds from company-owned life insurance — ( 264 ) ( 1,045 )
−Removed: Investment securities amortization, net 2,311 4,196 3,411
+Added: Investment securities (accretion) amortization, net ( 2,414 ) 2,311 4,196
Gain on termination of hedged interest rate swaps — ( 17,531 ) ( 2,159 )
Loss (gain) on sales of investment securities, net 9,372 230 ( 537 )
+Added: Gain on repurchase of subordinated debt ( 676 ) — —
(Loss) gain on sales of other real estate owned ( 819 ) 118 ( 473 )
5 unchanged sentences
Loss on mortgage servicing rights held for sale — 3,250 222
−Removed: Impairment related to facilities optimization — — 12,847
Net change in operating assets and liabilities:
8 unchanged sentences
Purchases of equity securities ( 286 ) ( 511 ) ( 260 )
−Removed: Net increase in loans ( 1,177,598 ) ( 258,401 ) ( 1,279,913 )
−Removed: Proceeds from sale of commercial FHA origination platform — — 7,502
+Added: Proceeds from sales of equity securities 5,148 — —
+Added: Net decrease (increase) in loans 112,496 ( 1,177,598 ) ( 258,401 )
Purchases of premises and equipment ( 8,731 ) ( 3,470 ) ( 2,718 )
1 unchanged sentence
Purchases of nonmarketable equity securities ( 239,597 ) ( 24,787 ) —
−Removed: Proceeds from sales of nonmarketable equity securities 14,927 20,255 —
+Added: Proceeds from redemptions of nonmarketable equity securities 242,377 14,927 20,255
Proceeds from sales of other real estate owned 7,547 1,453 9,210
−Removed: Purchases of company-owned life insurance — ( 550 ) —
−Removed: Proceeds from settlements of company-owned life insurance 1,518 2,672 —
+Added: (Purchases of) proceeds from company-owned life insurance, net ( 48,603 ) 1,518 2,122
Net cash acquired (paid) in acquisitions — 60,275 ( 2,715 )
1 unchanged sentence
Cash flows from financing activities:
−Removed: Net increase in deposits 174,210 1,009,632 556,762
+Added: Net (decrease) increase in deposits ( 55,123 ) 174,210 1,009,632
Net (decrease) increase in short-term borrowings ( 7,446 ) ( 34,492 ) 7,846
3 unchanged sentences
Payments made on subordinated debt ( 5,845 ) ( 40,000 ) ( 31,075 )
−Removed: Subordinated debt prepayment fees — — 193
Proceeds from issuance of preferred stock — 110,548 —
3 unchanged sentences
Proceeds from issuance of common stock under employee benefit plans 1,670 2,188 2,249
−Removed: Net cash provided by financing activities 332,082 482,788 760,421
+Added: Net cash (used in) provided by financing activities ( 104,128 ) 332,082 482,788
Net (decrease) increase in cash and cash equivalents ( 25,570 ) ( 519,740 ) 338,731
8 unchanged sentences
Midland States Bancorp, Inc.
−Removed: (the “Company,” “we,” “our,” or “us”) is a diversified financial holding company headquartered in Effingham, Illinois.
−Removed: Our wholly owned banking subsidiary, Midland States Bank (the “Bank”), has branches across Illinois and in Missouri, and provides a full range of commercial and consumer banking products and services, business equipment financing, merchant credit card services, trust and investment management services, and insurance and financial planning services.
+Added: is a diversified financial holding company headquartered in Effingham, Illinois.
+Added: Our wholly owned banking subsidiary, Midland States Bank, has branches across Illinois and in Missouri, and provides a full range of commercial and consumer banking products and services, business equipment financing, merchant credit card services, trust and investment management services, and insurance and financial planning services.
Our principal business activity has been lending to and accepting deposits from individuals, businesses, municipalities and other entities.
3 unchanged sentences
wealth management services;
−Removed: commercial Federal Housing Administration ("FHA") mortgage loan servicing;
+Added: commercial FHA mortgage loan servicing;
residential mortgage loan originations, sales and servicing;
2 unchanged sentences
Basis of Presentation
−Removed: The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and conform to predominant practices within the banking industry.
+Added: The accompanying consolidated financial statements of the Company have been prepared in accordance with GAAP and conform to predominant practices within the banking industry.
Management of the Company has made a number of estimates and assumptions related to the reporting of assets and liabilities to prepare the consolidated financial statements in conformity with GAAP.
1 unchanged sentence
In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation of the results of operations for annual periods presented herein, have been included.
−Removed: Certain reclassifications of 2021 and 2020 amounts have been made to conform to the 2022 presentation but do not have an effect on net income or shareholders’ equity.
−Removed: Principles of Consolidation
−Removed: The consolidated financial statements include the accounts of the parent company and its subsidiaries.
−Removed: All significant intercompany accounts and transactions have been eliminated.
−Removed: Assets held for customers in a fiduciary or agency capacity, other than trust cash on deposit with the Bank, are not assets of the Company and, accordingly, are not included in the accompanying consolidated financial statements.
+Added: Certain reclassifications of 2022 amounts have been made to conform to the 2023 presentation but do not have an effect on net income or shareholders’ equity.
Subsequent Events
22 unchanged sentences
Transfer of loan servicing rights, at lower of cost or market to loan servicing rights held for sale — 23,995 705
+Added: Transfer of loan servicing rights held for sale to loan servicing rights, at lower of cost or market 20,745 — —
+Added: Right of use assets obtained in exchange for lease obligations 2,470 502 1,118
Investment Securities
6 unchanged sentences
The related accumulated unrealized holding gains and losses are reported as a separate component of shareholders’ equity until realized.
+Added: Purchase premiums are amortized over the estimated life or to the earliest call date and purchase discounts are accreted over the estimated life of the related investment security as an adjustment to yield using the effective interest method.
+Added: Unamortized premiums, unaccreted discounts, and early payment premiums are recognized in interest income upon disposition of the related security.
+Added: Interest and dividend income are recognized when earned.
+Added: Realized gains and losses from the sale of investment securities available for sale are determined using the specific identification method and are included in noninterest income.
+Added: Also, when applicable, realized gains and losses are reported as a reclassification adjustment, net of tax, in other comprehensive income.
Available-for-sale debt securities in an unrealized loss position are evaluated, at least quarterly, for impairment related to credit losses.
3 unchanged sentences
In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.
−Removed: If this assessment indicates that a credit loss exists, and the present value of cash flows expected to be collected from the security is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis.
+Added: If this assessment indicates that a credit loss exists, and the present value of cash flows expected to be collected from the security is less than the amortized cost basis, an allowance for credit losses is recorded.
Any impairment that has not been recorded through an allowance for credit losses is recorded in other comprehensive income.
−Removed: Changes in the allowance for credit losses are recorded as provision for, or reversal of, credit loss expense.
−Removed: Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
−Removed: Purchase premiums are amortized over the estimated life or to the earliest call date and purchase discounts are accreted over the estimated life of the related investment security as an adjustment to yield using the effective interest method.
−Removed: Unamortized premiums, unaccreted discounts, and early payment premiums are recognized in interest income upon disposition of the related security.
−Removed: Interest and dividend income are recognized when earned.
−Removed: Realized gains and losses from the sale of investment securities available for sale are determined using the specific identification method and are included in noninterest income.
−Removed: Also, when applicable, realized gains and losses are reported as a reclassification adjustment, net of tax, in other comprehensive income.
Equity Securities
Investments in stock of a publicly traded company or in mutual funds are classified as equity securities.
−Removed: Equity securities are recorded at fair value with unrealized gains and losses recognized in net income.
+Added: Equity securities are recorded at fair value with unrealized gains and losses recognized in noninterest income.
Nonmarketable Equity Securities
−Removed: Nonmarketable equity securities include the Bank’s required investments in the stock of the Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank (“FRB”).
+Added: Nonmarketable equity securities include the Bank’s required investments in the stock of the FHLB and the FRB.
The Bank is a member of the FHLB system as well as its regional FRB.
−Removed: Members of the FHLB are required to own a certain amount of stock based on the level of borrowings and other factors, and
−Removed: may invest in additional amounts.
+Added: Members of the FHLB are required to own a certain amount of stock based on the level of borrowings and other factors.
FHLB stock and FRB stock are both carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value.
−Removed: Both cash dividends and stock dividends are reported as income.
+Added: Both cash dividends and stock dividends are reported as interest income.
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are classified as portfolio loans.
14 unchanged sentences
Unearned lease income is recognized over the term of the lease on a basis that results in an approximately level rate of return on the unrecovered lease investment.
−Removed: Purchased Credit Deteriorated ("PCD") Loans.
−Removed: The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination.
+Added: In the past the Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination.
Purchased credit deteriorated loans are recorded at the amount paid.
6 unchanged sentences
A loan is considered nonperforming when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement.
−Removed: Nonperforming loans include loans on nonaccrual status, loans past due 90 days or more and still accruing interest, and performing troubled debt restructured loans.
−Removed: Depending on a particular loan’s circumstances, we measure impairment based upon either the present value of expected future cash flows discounted at the effective interest rate, the observable market price, or the fair value of the collateral less estimated costs to sell if the loan is collateral dependent.
−Removed: A loan is considered collateral dependent when repayment is based solely on the liquidation of the collateral.
−Removed: Fair value, where possible, is determined by independent appraisals, typically on an annual basis.
−Removed: Between appraisal periods, the fair value may be adjusted based on specific events, such as if deterioration of quality of the collateral comes to our attention as part of our problem loan monitoring process, or if discussions with the borrower lead us to believe the last appraised value no longer reflects the actual market for the collateral.
−Removed: The impairment amount is charged-off to the allowance if deemed not collectible or is set up as a specific reserve.
+Added: Nonperforming loans include loans on nonaccrual status and loans past due 90 days or more and still accruing interest.
Allowance for Credit Losses on Loans
−Removed: The Company adopted the current expected credit loss model under Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326):
−Removed: Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) on January 1, 2020 using the modified retrospective approach.
−Removed: The transition adjustment included an increase in the allowance for credit losses on loans of $ 12.8 million and an increase in the allowance on unfunded commitments of $ 0.3 million.
The allowance for credit losses on loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.
The amount of the allowance represents management's best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing collectibility over the loans' contractual terms, adjusted for expected prepayments when appropriate.
−Removed: The contractual term excludes expected extensions, renewals, and modifications.
−Removed: unless either of the following applies:
−Removed: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.
Management estimates the allowance balance using relevant information, from internal and external sources, relating to historical credit loss experience, current conditions, and reasonable and supportable forecasts.
While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current loan-specific risk characteristics, environmental conditions or other relevant factors.
−Removed: Allowance for credit losses on loans is measured on a collective basis and reflects impairment in groups of loans aggregated on the basis of similar risk characteristics.
+Added: The allowance for credit losses on loans is measured on a collective basis and reflects impairment in groups of loans aggregated on the basis of similar risk characteristics.
Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation.
Expected credit losses for collateral dependent loans, including loans where the borrower is experiencing financial difficulty but foreclosure is not probable, are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.
−Removed: Credit loss expense related to loans reflects the totality of actions taken on all loans for a particular period including any necessary increases or decreases in the allowance related to changes in credit loss expectations associated with specific loans or pools of loans.
−Removed: Portions of the allowance may be allocated for specific credits;
−Removed: however, the entire allowance is available for any credit that, in management’s judgment, should be charged-off.
−Removed: While management utilizes its best judgment and information available, the ultimate appropriateness of the allowance is dependent upon a variety of factors beyond our control, including the performance of our loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.
In calculating the allowance for credit losses, most loans are segmented into pools based upon similar characteristics and risk profiles.
Common characteristics and risk profiles may include internal credit ratings, risk ratings or classification, financial asset type, collateral type, size, industry of the borrower, historical or expected credit loss patterns, and reasonable and supportable forecast periods.
−Removed: For modeling purposes, our loan pools include (i) commercial, (ii) commercial real estate, (iii) construction and land development, (iv) residential real estate, (v) consumer, and (vi) lease financing.
We periodically reassess each pool to ensure the loans within the pool continue to share similar characteristics and risk profiles and to determine whether further segmentation is necessary.
11 unchanged sentences
Lease Financing Lease Financing
−Removed: For each loan pool, we measure expected credit losses over the life of each loan utilizing a combination of models which measure (i) probability of default (“PD”), which is the likelihood that loan will stop performing or default, (ii) loss given default (“LGD”), which is the expected loss rate for loans in default, (iii) assumed prepayment speed, which is the likelihood that a loan will prepay or pay-off prior to maturity, and (iv) exposure at default (“EAD”), which is the estimated outstanding principal balance of the loans upon default, including the expected funding of unfunded commitments outstanding as of the measurement date.
−Removed: For certain commercial loan portfolios, the PD is calculated using a transition matrix to determine the likelihood of a customer’s risk grade migrating from one specified range of risk grades to a different specified range.
−Removed: credit losses are calculated as the product of PD (adjusted for prepayment), LGD and EAD.
+Added: For each loan pool, we measure expected credit losses over the life of each loan utilizing a combination of models which measure (i) probability of default, the likelihood that loan will stop performing or default, (ii) loss given default, the expected loss rate for loans in default, (iii) assumed prepayment speed, the likelihood that a loan will prepay or pay-off prior to maturity, and (iv) exposure at default, the estimated outstanding principal balance of the loans upon default, including the expected funding of unfunded commitments outstanding as of the measurement date.
+Added: Expected credit losses are calculated as the product of probability of default (adjusted for prepayment), loss given default and exposure at default.
This methodology builds on default probabilities already incorporated into our risk grading process by utilizing pool-specific historical loss rates to calculate expected credit losses.
3 unchanged sentences
Significant loan and borrower attributes utilized in our modeling processes include, among other things, (i) origination date, (ii) maturity date, (iii) payment type, (iv) collateral type and amount, (v) current risk grade, (vi) current unpaid balance and commitment utilization rate, (vii) payment status and delinquency history and (viii) expected recoveries of previously charged-off amounts.
−Removed: Significant macroeconomic variables utilized in our modeling processes include, among other things, (i) US and Illinois Disposable Income and Gross Domestic Product, (ii) selected market interest rates including U.S.
−Removed: Treasury rates and government bond rates, (iii) Consumer Price Index, (iv) commercial and residential property prices in Illinois and the US as a whole, and (v) Illinois Housing Starts and Retail Sales for the State of Illinois and US.
+Added: Significant macroeconomic variables utilized in our modeling processes include, among other things, (i) Gross Domestic Product, (ii) Consumer Price Index, (iii) selected market interest rates including U.S.
+Added: Treasury rates, (iv) commercial and residential property prices and unemployment rates in Illinois and the U.S.
+Added: as a whole, and (v) Retail Sales for the State of Illinois.
The probability of default and prepayment assumptions were estimated by analyzing internally-sourced data related to historical performance of each loan pool.
3 unchanged sentences
By reverting these modeling inputs to their historical mean and considering loan and borrower specific attributes, our models are intended to yield a measurement of expected credit losses that reflects our average historical loss rates for periods subsequent to the twelve-month reversion period.
−Removed: The LGD is based on historical recovery averages for each loan pool, adjusted to reflect the current impact of certain macroeconomic variables as well as their expected changes over a two-year forecast period, with the final twelve months of the forecast period encompassing a reversion process, which management considers to be both reasonable and supportable.
+Added: The LGD is based on historical recovery averages for each loan pool, adjusted to reflect the current impact of certain macroeconomic variables as well as their expected changes over a two-year forecast period, with the final twelve months of the forecast period
+Added: encompassing a reversion process, which management considers to be both reasonable and supportable.
The same forecast and reversion periods are used for all macroeconomic variables in our models.
Management qualitatively adjusts model results for risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools.
−Removed: These qualitative factor (“Q-Factor”) adjustments may increase or decrease management's estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk.
+Added: These Q-Factor adjustments may increase or decrease management's estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk.
The various risks that may be considered in making Q-Factor adjustments include, among other things, the impact of (i) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (ii) actual and expected changes in economic and business conditions and developments that affect the collectibility of the loan pools, (iii) changes in the nature and volume of the loan pools and in the terms of the underlying loans, (iv) changes in the experience, ability, and depth of our lending management and staff, (v) changes in volume and severity of past due financial assets, the volume of non-accrual assets, and the volume and severity of adversely classified or graded assets, (vi) changes in the quality of our credit review function, (vii) changes in the value of the underlying collateral for loans that are non-collateral dependent, (viii) the existence, growth, and effect of any concentrations of credit and (ix) other factors such as the regulatory, legal and technological environments;
7 unchanged sentences
Specific reserves reflect expected credit losses on loans identified for evaluation or individually considered nonperforming.
−Removed: These loans no longer have similar risk characteristics to collectively evaluated loans due to changes in credit risk, borrower circumstances, recognition of write-offs, or cash collections that have been fully applied to principal on the basis
−Removed: of nonaccrual policies.
+Added: These loans no longer have similar risk characteristics to collectively evaluated loans due to changes in credit risk, borrower circumstances, recognition of write-offs, or cash collections that have been fully applied to principal on the basis of nonaccrual policies.
At a minimum, the population of loans subject to individual evaluation include individual loans where it is probable we will be unable to collect all amounts due, according to the original contractual terms.
1 unchanged sentence
Allowance for credit losses for consumer and residential loans are, primarily, determined by meaningful pools of similar loans and are evaluated on a quarterly basis.
−Removed: The provision for credit losses on loans individually evaluated is recognized on the basis of the present value of expected future cash flows discounted at the effective interest rate, the fair value of collateral adjusted for estimated costs to sell, or the observable market price as of the relevant date.
−Removed: Allowance for credit losses on loans adjustments for estimated costs to sell are not appropriate when the repayment of the collateral-dependent loan is expected from the operation of the collateral.
Loans Held for Sale
−Removed: Loans held for sale may consist of residential and commercial FHA mortgage loans originated with the intent to sell.
+Added: Loans held for sale consist of residential mortgage loans originated with the intent to sell.
+Added: Prior to 2023, loans held for sale may have also included commercial FHA mortgage loans originated with the intent to sell.
Loans held for sale are carried at fair value, determined individually, as of the balance sheet date.
1 unchanged sentence
Fair value measurements on loans held for sale are based on quoted market prices for similar loans in the secondary market, market quotes from anticipated sales contracts and commitments, or contract prices from firm sales commitments.
−Removed: The changes in the fair value of loans held for sale are reflected in commercial FHA revenue and residential mortgage banking revenue on the consolidated statements of income.
+Added: The changes in the fair value of loans held for sale are reflected in noninterest income on the consolidated statements of income.
Mortgage Repurchase Reserve
8 unchanged sentences
Leasehold improvements are amortized on a straight-line basis over the shorter of the life of the asset or the lease term.
−Removed: Estimated useful lives of premises and equipment range from 10 to 40 years and from 3 to 10 years, respectively.
+Added: Estimated useful lives for premises range from 10 to 40 years and for equipment range from 3 to 10 years.
Maintenance and repairs are charged to operating expenses as incurred, while improvements that extend the useful life of assets are capitalized and depreciated over the estimated remaining life.
8 unchanged sentences
Other Real Estate Owned
−Removed: Other real estate owned (“OREO”) represents properties acquired through foreclosure or other proceedings and is initially recorded at fair value at the date of foreclosure less estimated costs of disposal, which establishes a new cost basis.
+Added: OREO represents properties acquired through foreclosure or other proceedings and is initially recorded at fair value at the date of foreclosure less estimated costs of disposal, which establishes a new cost basis.
After foreclosure, OREO is held for sale and is carried at the lower of cost or fair value less estimated costs of disposal.
7 unchanged sentences
Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed.
+Added: Annually, the Company performs an impairment test of goodwill as of August 31 of each year.
+Added: During the current year, management performed quarterly qualitative assessments and an annual qualitative impairment test, as a result of the economic uncertainty and increased market volatility resulting from the rising interest rate environment.
+Added: The Company's annual impairment test of goodwill and other intangible assets did not identify any impairment.
+Added: Additionally, the Company determined that there were no triggering events and as a result no evidence of impairment between the annual impairment test and December 31, 2023.
Other intangible assets, which consist of core deposit and acquired customer relationship intangible assets, are typically amortized over a period ranging from 1 to 20 years using an accelerated method of amortization.
2 unchanged sentences
When loans are sold with servicing retained, a servicing rights asset is capitalized, which represents the, then current, fair value of future net cash flows expected to be realized for performing servicing activities.
−Removed: As the Company has not elected to subsequently measure servicing assets under the fair value measurement method, the Company follows the amortization method.
−Removed: Loan servicing rights are amortized in proportion to and over the period of estimated net servicing income, and assessed for impairment at each reporting date.
Loan servicing rights are carried at the lower of the initial capitalized amount, net of accumulated amortization, or estimated fair value.
1 unchanged sentence
The fair value of loan servicing rights and their sensitivity to changes in interest rates is influenced by the mix of the servicing portfolio and characteristics of each segment of the portfolio.
−Removed: The Company’s servicing portfolio consists of distinct portfolios of government-insured residential and commercial mortgages, conventional residential mortgages and Small Business Administration (“SBA”) loans.
+Added: The Company’s servicing portfolio consists of distinct portfolios of government-insured residential and commercial mortgages, conventional residential mortgages and SBA loans.
The Company periodically evaluates its loan servicing rights asset for impairment.
Impairment is assessed based on the fair value of net servicing cash flows at each reporting date using estimated prepayment speeds of the underlying loans serviced and stratifications based on the risk characteristics of the underlying loans.
−Removed: The fair value of our servicing rights is estimated by using a cash flow valuation model which calculates the present value of estimated future net servicing cash flows, taking into consideration expected mortgage loan prepayment rates, discount rates, servicing costs, replacement reserves and other economic factors which are determined based on current market conditions.
To the extent the amortized cost of the mortgage servicing rights exceeds the estimated fair value by stratification, the Company records an impairment expense and reduces the carrying value of the loan servicing rights.
−Removed: We recognize revenue from servicing commercial FHA mortgages, residential mortgages and SBA loans as earned based on the specific contractual terms.
−Removed: This revenue, along with amortization of and changes in impairment on servicing rights, is reported in commercial FHA revenue, residential mortgage banking revenue and other noninterest income, respectively, in the consolidated statements of income.
+Added: We recognize revenue from servicing residential mortgages, commercial FHA mortgages, and SBA loans as earned based on the specific contractual terms.
+Added: This revenue, along with amortization of and changes in impairment on servicing rights, is reported in residential mortgage banking revenue and other noninterest income, respectively, in the consolidated statements of income.
Loans Servicing Rights Held for Sale
18 unchanged sentences
When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, the derivative will continue to be carried on the consolidated balance sheet at its fair value, and gains and losses that were in accumulated other comprehensive income will be recognized immediately in earnings.
−Removed: In all other situations in which hedge accounting is discontinued, the derivative will be carried at its fair value on the consolidated balance sheet, with subsequent changes in its fair value recognized in current-period earnings.
+Added: In all other situations in which hedge
+Added: accounting is discontinued, the derivative will be carried at its fair value on the consolidated balance sheet, with subsequent changes in its fair value recognized in current-period earnings.
The Company also enters into interest rate lock commitments, which are agreements to originate mortgage loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate.
−Removed: Interest rate lock commitments for mortgage loans that will be held for sale are carried at fair value on the consolidated balance sheet with changes in fair value reflected in commercial FHA revenue and residential mortgage banking revenue.
+Added: Interest rate lock commitments for mortgage loans that will be held for sale are carried at fair value on the consolidated balance sheet with changes in fair value reflected in residential mortgage banking revenue.
The Company also has forward loan sales commitments related to its interest rate lock commitments and its loans held for sale.
−Removed: Forward loan sales commitments that meet the definition of a derivative are recorded at fair value in the consolidated balance sheet with changes in fair value reflected in commercial FHA revenue and residential mortgage banking revenue.
+Added: Forward loan sales commitments that meet the definition of a derivative are recorded at fair value in the consolidated balance sheet with changes in fair value reflected in residential mortgage banking revenue.
Allowance for Credit Losses on Unfunded Commitments
26 unchanged sentences
Comprehensive income is defined as net income plus transactions and other occurrences that are the result of non-owner changes in equity.
−Removed: Non-owner equity changes include unrealized gains and losses on available for sale securities and changes in the fair value of cash flow hedges.
+Added: Non-owner equity changes include unrealized gains and losses on available for sale securities and
+Added: changes in the fair value of cash flow hedges.
These are components of comprehensive income and do not have an impact on the Company’s net income.
3 unchanged sentences
Diluted earnings per share are calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of shares adjusted for the dilutive effect of common stock awards.
−Removed: Accounting Guidance Issued But Not Yet Adopted
+Added: Principles of Consolidation
+Added: The consolidated financial statements include the accounts of the parent company and its subsidiaries.
+Added: All significant intercompany accounts and transactions have been eliminated.
+Added: Assets held for customers in a fiduciary or agency capacity, other than trust cash on deposit with the Bank, are not assets of the Company and, accordingly, are not included in the accompanying consolidated financial statements.
+Added: Accounting Guidance Adopted in 2023
+Added: 2022-02, Financial Instruments-Credit Losses (Topic 326):
+Added: Troubled Debt Restructurings and Vintage Disclosures – In March 2022, the FASB issued ASU No.
+Added: 2022-02, which 1) eliminates the accounting guidance for TDRs by creditors while enhancing the disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty;
+Added: and 2) requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases.
+Added: ASU 2022-02 is effective for fiscal years beginning after December 15, 2022 and the amendments should be applied prospectively, although the entity has the option to apply a modified retrospective transition method for the recognition and measurement of TDRs, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption.
+Added: The Company adopted this guidance on January 1, 2023 and elected to apply on a prospective basis.
+Added: The adoption of this accounting pronouncement did not have an impact on the consolidated financial statements aside from additional and revised disclosures.
2020-04, Reference Rate Reform (Topic 848):
5 unchanged sentences
2022-06, which defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.
−Removed: The Company has been monitoring its volume of commercial loans tied to LIBOR.
−Removed: In 2021, the Company began prioritizing SOFR as the preferred alternative reference rate with plans to cease booking LIBOR based commitments after the end of 2021.
−Removed: Loans with a maturity after June 2023 are being reviewed and monitored to ensure there is appropriate fallback language in place when LIBOR is no longer published.
−Removed: Loans with a maturity date before that time should naturally mature and be re-underwritten with the alternative index rate.
+Added: The amendments in this ASU are effective March 12, 2020 through December 31, 2024.
The Company believes the adoption of this guidance will not have a material impact on the consolidated financial statements.
−Removed: 2022-02, Financial Instruments-Credit Losses (Topic 326):
−Removed: Troubled Debt Restructurings and Vintage Disclosures – In March 2022, the FASB issued ASU No.
−Removed: 2022-02, which 1) eliminates the accounting guidance for troubled debt restructurings ("TDRs") by creditors while enhancing the disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty;
−Removed: and 2) requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases.
−Removed: ASU 2022-02 is effective for fiscal years beginning after December 15, 2022 and the amendments should be applied prospectively, although the entity has the option to apply a modified retrospective transition method for the recognition and measurement of TDRs, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption.
−Removed: The Company is currently evaluating the impact of adopting the new guidance on its consolidated financial statements.
+Added: Accounting Guidance Issued But Not Yet Adopted
+Added: 2023-02, Investments—Equity Method and Joint Ventures (Topic 323):
+Added: Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method – In March 2023, the FASB issued ASU No.
+Added: 2023-02, which allows for reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the type of program the tax credits are related to.
+Added: The ASU is effective for fiscal years beginning after December 15, 2023.
+Added: Early adoption is permitted for all entities.
+Added: The Company b elieves the adoption will not have a material impact on the consolidated financial statements.
NOTE 2 – ACQUISITIONS
FNBC Bank & Trust
−Removed: On June 17, 2022, the Company completed its branch acquisition from FNBC, whereby we acquired $ 79.8 million of deposits and $ 16.6 million of loans as well as other assets and liabilities associated with FNBC's branches in Mokena and Yorkville, Illinois.
+Added: On June 17, 2022, the Company completed its branch acquisition from FNBC, whereby we acquired $ 79.8 million of deposits and $ 16.6 million of loans as well as other assets and liabilities associated with FNBC's branches in Mokena and
+Added: Yorkville, Illinois.
The acquisition was accounted for under the acquisition method of accounting.
19 unchanged sentences
Accordingly, the Company recognized amounts for identifiable assets acquired at their estimated acquisition date fair values, while $ 0.4 million of transaction and integration costs associated with the acquisition were expensed in 2021.
−Removed: Commercial FHA Origination Platform
−Removed: On August 28, 2020, the Company announced that it had completed the sale of its commercial FHA origination platform to Dwight Capital, a nationwide mortgage banking firm headquartered in New York.
−Removed: The Company received proceeds of $ 7.5 million for the sale of the commercial FHA origination platform, owned by our subsidiary, Love Funding.
−Removed: As part of the asset sale, goodwill of $ 10.9 million was derecognized and was not deductible for tax purposes, generating tax expense of $ 3.0 million.
NOTE 3 – INVESTMENT SECURITIES
3 unchanged sentences
(dollars in thousands) Amortized
−Removed: losses Allowance for credit losses Fair
Investment securities available for sale
6 unchanged sentences
State and municipal securities 62,952 258 5,750 57,460
+Added: Collateralized loan obligations 27,646 3 84 27,565
Corporate securities 109,598 41 10,467 99,172
2 unchanged sentences
(dollars in thousands) Amortized
−Removed: losses Allowance for credit losses Fair
Investment securities available for sale
7 unchanged sentences
Total available for sale securities $ 873,023 $ 601 $ 105,390 $ 768,234
−Removed: Investment securities with a carrying amount of $ 441.0 million and $ 371.0 million were pledged for public deposits at December 31, 2022 and 2021 , respectively.
+Added: Investment securities with a carrying amount of $ 320.5 million and $ 440.6 million were pledged for public deposits at December 31, 2023 and December 31, 2022, respectively.
The following is a summary of the amortized cost and fair value of the investment securities available for sale, by maturity, at December 31, 2023.
10 unchanged sentences
Proceeds and gross realized gains and losses on sales of investment securities available for sale for the years ended 2023, 2022, and 2021 are summarized as follows:
+Added: Years Ended December 31,
(dollars in thousands) 2023 2022 2021
3 unchanged sentences
Gross realized losses on sales ( 9,710 ) ( 1,059 ) —
−Removed: The table below presents a rollforward by security type for the years ended December 31, 2022 and 2021 of the allowance for credit losses on investment securities available for sale held at period end:
−Removed: (dollars in thousands) State and municipal securities Corporate securities Total
−Removed: Changes in allowance for credit losses on investment securities available for sale:
−Removed: For the year ended December 31, 2022
−Removed: Balance, beginning of period $ — $ 221 $ 221
−Removed: Current-period provision for expected credit losses — ( 221 ) ( 221 )
−Removed: Balance, end of period $ — $ — $ —
−Removed: For the year ended December 31, 2021
−Removed: Balance, beginning of period $ 29 $ 337 $ 366
−Removed: Current-period provision for expected credit losses ( 29 ) ( 116 ) ( 145 )
−Removed: Balance, end of period $ — $ 221 $ 221
−Removed: Unrealized losses and fair values for investment securities available for sale as of December 31, 2022 and 2021 , for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are summarized as follows:
+Added: Unrealized losses and fair values for investment securities available for sale as of December 31, 2023 and December 31, 2022, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are summarized as follows:
December 31, 2023
5 unchanged sentences
Investment securities available for sale
−Removed: Treasury securities $ 1,839 $ 24 $ 59,865 $ 5,172 $ 61,704 $ 5,196
government sponsored entities and U.S.
3 unchanged sentences
State and municipal securities 51,497 5,750 — — 51,497 5,750
+Added: Collateralized loan obligations 14,763 84 — — 14,763 84
Corporate securities 4,688 53 84,662 10,414 89,350 10,467
16 unchanged sentences
At December 31, 2023, 262 investment securities available for sale had unrealized losses with aggregate depreciation of 12.27 % from their amortized cost basis.
−Removed: For all of the above investment securities, the unrealized losses were generally due to changes in interest rates, and unrealized losses were considered to be temporary as the fair value is expected to recover as the securities approach their respective maturity dates.
+Added: For all of the above investment securities, the unrealized losses were generally due to changes in interest rates and other market conditions, and unrealized losses were considered to be temporary as the fair value is expected to recover as the securities approach their respective maturity dates.
The issuers are of high credit quality and all principal amounts are expected to be paid when securities mature.
21 unchanged sentences
Total loans include net deferred loan costs of $ 3.8 million and $ 4.4 million at December 31, 2023 and December 31, 2022, respectively, and unearned discounts of $ 66.4 million and $ 62.6 million within the lease financing portfolio at December 31, 2023 and December 31, 2022, respectively.
−Removed: At December 31, 2022, the Company had residential real estate loans held for sale totaling $ 1.3 million, compared to commercial real estate and residential real estate loans held for sale totaling $ 32.0 million at December 31, 2021.
−Removed: sold commercial real estate, residential real estate and consumer loans with proceeds totaling $ 270.0 million and $ 740.0 million during the years ended December 31, 2022 and 2021, respectively.
+Added: At December 31, 2023, the Company had residential real estate loans held for sale totaling $ 3.8 million, compared to $ 1.3 million at December 31, 2022.
+Added: The Company sold loans and leases with proceeds totaling $ 98.9 million and $ 270.0 million during the years ended December 31, 2023 and 2022, respectively.
Classifications of Loan Portfolio
4 unchanged sentences
Commercial loans are predominately secured by equipment, inventory, accounts receivable, and other sources of repayment.
−Removed: PPP loans of $ 1.9 million and $ 52.5 million as of December 31, 2022 and December 31, 2021, respectively, and commercial FHA warehouse lines of $ 25.0 million and $ 91.9 million as of December 31, 2022 and December 31, 2021, respectively, were included in this classification.
+Added: Commercial FHA warehouse lines of $ 25.0 million as of December 31, 2022 were included in this classification.
Commercial real estate —Loans secured by real estate occupied by the borrower for ongoing operations, including loans to borrowers engaged in agricultural production, and non-owner occupied real estate leased to one or more tenants, including commercial office, industrial, special purpose, retail and multi-family residential real estate loans.
14 unchanged sentences
These loans were made in the ordinary course of business upon substantially the same terms, including collateralization and interest rates prevailing at the time.
−Removed: The aggregate loans outstanding to the Company's directors, executive officers, principal shareholders and their affiliates totaled $ 19.8 million and $ 13.9 million at December 31, 2022 and December 31, 2021, respectively.
The new loans, other additions, repayments and other reductions for the years ended December 31, 2023 and 2022, are summarized as follows:
26 unchanged sentences
Balance, beginning of period $ 19,851 $ 25,465 $ 1,433 $ 3,929 $ 2,338 $ 7,427 $ 60,443
−Removed: Impact of adopting ASC 326 2,327 4,104 724 1,211 ( 594 ) 774 8,546
−Removed: Impact of adopting ACS 326 - PCD loans 1,045 1,311 809 1,015 57 — 4,237
Provision for credit losses on loans 648 1,031 ( 234 ) ( 1,085 ) 864 2,726 3,950
2 unchanged sentences
Balance, end of period $ 14,375 $ 22,993 $ 972 $ 2,695 $ 2,558 $ 7,469 $ 51,062
−Removed: The Company utilizes a combination of models which measure probability of default and loss given default methodology in determining expected future credit losses.
+Added: The Company utilizes a combination of models which measure probability of default and loss given default in determining expected future credit losses.
The probability of default is the risk that the borrower will be unable or unwilling to repay its debt in full or on time.
11 unchanged sentences
The Company’s expected loss estimate is anchored in historical credit loss experience, with an emphasis on all available portfolio data.
−Removed: The Company’s historical look-back period includes January 2012 through the current period on a monthly basis.
+Added: The Company’s historical look-back period includes January 2012 through the current period on a
+Added: monthly basis.
When historical credit loss experience is not sufficient for a specific portfolio, the Company may supplement its own portfolio data with external models or data.
9 unchanged sentences
The Company utilizes risk ratings for the commercial portfolios and days past due for the consumer and the lease financing portfolios.
+Added: Within the probability of default segmentation, credit metrics are identified to further segment the financial assets.
+Added: The Company utilizes risk ratings for the commercial portfolios and days past due for the consumer and the lease financing portfolios.
The Company has defined five transitioning risk states for each asset pool within the expected credit loss model.
8 unchanged sentences
with other loans in the pool.
−Removed: The following table presents amortized cost basis of individually evaluated loans on nonaccrual status as of December 31, 2022 and December 31, 2021:
+Added: The following table presents the amortized cost basis of individually evaluated loans on nonaccrual status as of December 31, 2023 and December 31, 2022:
December 31, 2023 December 31, 2022
29 unchanged sentences
Commercial $ — $ — $ 1,972 $ 1,972
+Added: Commercial other — — 1,232 1,232
Commercial real estate:
2 unchanged sentences
Multi-family 5,143 — — 5,143
−Removed: Residential real estate
−Removed: Residential first lien 220 — — 220
Total collateral dependent loans $ 28,565 $ — $ 3,204 $ 31,769
1 unchanged sentence
Commercial $ — $ 1,604 $ — $ 1,604
−Removed: Commercial other — — 502 502
Commercial real estate:
2 unchanged sentences
Multi-family 8,950 — — 8,950
+Added: Residential real estate
+Added: Residential first lien 220 — — 220
Total collateral dependent loans $ 26,077 $ 1,604 $ — $ 27,681
45 unchanged sentences
Total loans $ 17,328 $ 15,044 $ 1,173 $ 33,545 $ 41,976 $ 6,230,946 $ 6,306,467
−Removed: Troubled Debt Restructurings ("TDRs")
−Removed: Loans modified as TDRs for commercial and commercial real estate loans generally consist of allowing commercial borrowers to defer scheduled principal payments and make interest only payments for a specified period of time at the stated interest rate of the original loan agreement or lower payments due to a modification of the loans’ contractual terms.
−Removed: TDRs are transferred to nonaccrual status when it is probable that any remaining principal and interest payments due on the loan will not be collected in accordance with the contractual terms of the loan.
−Removed: TDRs that subsequently default are individually evaluated for impairment at the time of default.
−Removed: The outstanding balance of modifications made as a result of COVID, that were not considered TDRs under the Coronavirus Aid, Relief, and Economic Security Act, as amended by Section 541 of the Consolidated Appropriations Act, totaled $ 0 and $ 13.3 million at December 31, 2022 and 2021, respectively.
−Removed: The Company’s TDRs are identified on a case-by-case basis in connection with the ongoing loan collection processes.
−Removed: The following table presents TDRs by loan portfolio as of December 31, 2022 and December 31, 2021:
−Removed: December 31, 2022 December 31, 2021
−Removed: (dollars in thousands) Accruing (1)
−Removed: Non-accrual (2)
−Removed: Total Accruing (1)
−Removed: Non-accrual (2)
−Removed: Commercial $ 1,663 $ 484 $ 2,147 $ 833 $ 1,422 $ 2,255
−Removed: Commercial real estate 112 2,387 2,499 1,522 3,302 4,824
−Removed: Construction and land development 27 — 27 37 — 37
−Removed: Residential real estate 3,653 712 4,365 3,128 784 3,912
−Removed: Consumer 56 — 56 98 — 98
−Removed: Lease financing 763 21 784 1,394 241 1,635
−Removed: Total loans $ 6,274 $ 3,604 $ 9,878 $ 7,012 $ 5,749 $ 12,761
−Removed: (1) These loans are still accruing interest.
−Removed: (2) These loans are included in non-accrual loans in the preceding tables.
−Removed: The allowance for credit losses on TDRs totaled $ 0.3 million and $ 0.7 million as of December 31, 2022 and December 31, 2021, respectively.
−Removed: The Company had nine unfunded commitments in connection with TDRs at December 31, 2022 and December 31, 2021.
−Removed: The following table presents a summary of loans by portfolio that were restructured during the years ended December 31, 2022 and 2021.
−Removed: There were no loans modified as TDRs within the previous twelve months that subsequently defaulted during the years ended December 31, 2022 or 2021:
−Removed: Commercial loan portfolio Other loan portfolio
−Removed: (dollars in thousands) Commercial Commercial
−Removed: estate Construction
−Removed: development Residential
−Removed: estate Consumer Lease
−Removed: financing Total
−Removed: For the year ended December 31, 2022
−Removed: Troubled debt restructurings:
−Removed: Number of loans 5 1 — 12 4 2 24
−Removed: Pre-modification outstanding balance $ 1,353 $ 6 $ — $ 611 $ 108 $ 84 $ 2,162
−Removed: Post-modification outstanding balance 1,353 6 — 596 106 84 2,145
−Removed: For the year ended December 31, 2021
−Removed: Troubled debt restructurings:
−Removed: Number of loans 16 3 1 10 6 9 45
−Removed: Pre-modification outstanding balance $ 2,294 $ 1,639 $ 49 $ 551 $ 134 $ 1,635 $ 6,302
−Removed: Post-modification outstanding balance 2,178 1,539 — 513 89 1,635 5,954
−Removed: For the year ended December 31, 2020
−Removed: Troubled debt restructurings:
−Removed: Number of loans 4 4 3 22 4 — 37
−Removed: Pre-modification outstanding balance $ 989 $ 797 $ 1,010 $ 2,334 $ 34 $ — $ 5,164
−Removed: Post-modification outstanding balance 967 383 900 2,172 33 — 4,455
+Added: Loan Restructurings
+Added: The Company adopted the accounting guidance in ASU No.
+Added: 2022-02, effective as of January 1, 2023, which eliminated the recognition and measurement of a TDR.
+Added: Due to the removal of the TDR designation, the Company evaluates all loan restructurings according to the accounting guidance for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan.
+Added: Loan modifications to borrowers experiencing financial difficulties that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the listed modifications.
+Added: Therefore, the disclosures related to loan restructurings are for modifications which have a direct impact on cash flows.
+Added: The Company may offer various types of concessions when modifying a loan.
+Added: Commercial and industrial loans modified in a loan restructuring often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans.
+Added: Additional collateral, a co-borrower, or a guarantor is often requested.
+Added: Loans modified in a loan restructuring for the Company may have the financial effect of increasing the specific allowance associated with the loan.
+Added: An allowance for loans that have been modified in a loan restructuring is measured based on the probability of default and loss given default model, the loan's observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent.
+Added: Management exercises significant judgment in developing these estimates.
+Added: Commercial and consumer loans modified in a loan restructuring are closely monitored for delinquency as an early indicator of possible future default.
+Added: If loans modified in a loan restructuring subsequently default, the Company evaluates the loan for possible further loss.
+Added: The allowance may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.
+Added: In some cases, the Company will modify a loan by providing multiple types of concessions.
+Added: Typically, one type of concession, such as a term extension, is granted initially.
+Added: If the borrower continues to experience financial difficulty, another concession such as an interest rate reduction or principal forgiveness, may be granted.
+Added: During the year ended December 31, 2023 the Company restructured eleven loans and one lease for borrowers experiencing financial difficulties with principal balances totaling $ 2.4 million.
+Added: Nine of the restructured loans were provided a term extension with the other two receiving an interest rate reduction and a term extension.
+Added: The lease was provided a term extension with an increased interest rate.
+Added: The Company has not committed to lend any additional amounts to the borrowers that have been granted a loan modification.
Credit Quality Monitoring
The Company maintains loan policies and credit underwriting standards as part of the process of managing credit risk.
−Removed: These standards include making loans generally within the Company’s four main regions, which include eastern, northern and southern Illinois and the St.
−Removed: Louis metropolitan area.
+Added: These standards include making loans generally within the Company’s four geographic regions.
In addition, our specialty finance division does nationwide bridge lending for FHA and HUD developments and originates loans for multifamily, assisted and senior living and multi-use properties.
143 unchanged sentences
Total commercial loans $ 1,546,160 $ 927,973 $ 440,732 $ 266,582 $ 121,697 $ 408,276 $ 557,195 $ 4,268,615
+Added: The following table presents the gross charge-offs by class of loan and year of origination on the commercial loan portfolio for the year ended December 31, 2023:
+Added: Term Loans by Origination Year
+Added: (dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Total
+Added: For the year ended December 31, 2023
+Added: Commercial Commercial $ — $ — $ — $ 70 $ 126 $ 224 $ 2,211 $ 2,631
+Added: Commercial Other 203 2,412 697 702 292 420 — 4,726
+Added: Commercial Real Estate Non-owner occupied — — — — — 2,630 — 2,630
+Added: Owner occupied — — — — 48 1,510 — 1,558
+Added: Multi-family — — — — — 812 — 812
+Added: Construction and land development
+Added: — — — — 42 1,559 — 1,601
+Added: Total gross commercial charge-offs $ 203 $ 2,412 $ 697 $ 772 $ 508 $ 7,155 $ 2,211 $ 13,958
The Company evaluates the credit quality of its other loan portfolios, which includes residential real estate, consumer and lease financing loans, based primarily on the aging status of the loan and payment activity.
−Removed: Accordingly, loans on nonaccrual status, loans past due 90 days or more and still accruing interest, and loans modified under troubled debt restructurings are considered to be nonperforming for purposes of credit quality evaluation.
+Added: Accordingly, loans on nonaccrual status and loans past due 90 days or more and still accruing interest are considered to be nonperforming for purposes of credit quality evaluation.
The following tables present the recorded investment of our other loan portfolio based on the credit risk profile of loans that are performing and loans that are nonperforming as of December 31, 2023 and December 31, 2022:
41 unchanged sentences
Total other loans $ 994,715 $ 450,870 $ 218,964 $ 115,741 $ 55,631 $ 139,156 $ 62,775 $ 2,037,852
+Added: The following table presents the gross charge-offs by class of loan and year of origination on the other loan portfolio for the year ended December 31, 2023:
+Added: Term Loans by Origination Year
+Added: (dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Total
+Added: For the year ended December 31, 2023
+Added: Residential real estate Residential first lien $ — $ — $ 8 $ 35 $ 108 $ 53 $ — $ 204
+Added: Other residential — — — — — 10 57 67
+Added: Consumer Consumer — 49 23 22 37 36 — 167
+Added: Consumer other 46 101 45 19 37 631 — 879
+Added: Lease financing 669 2,156 1,172 213 542 274 — 5,026
+Added: Total gross other charge-offs $ 715 $ 2,306 $ 1,248 $ 289 $ 724 $ 1,004 $ 57 $ 6,343
NOTE 5 – PREMISES, EQUIPMENT AND LEASES
−Removed: A summary of premises and equipment at December 31, 2022 and 2021 is as follows:
+Added: A summary of premises, equipment and leases at December 31, 2023 and December 31, 2022 is as follows:
+Added: December 31, December 31,
(dollars in thousands) 2023 2022
7 unchanged sentences
Depreciation expense for the years ended December 31, 2023, 2022 and 2021 was $ 4.8 million, $ 4.8 million, and $ 5.5 million, respectively.
−Removed: The Company closed 13 branches, or 20 % of its branch network, and vacated approximately 23,000 square feet of corporate office space between September 3, 2020 and December 31, 2020, recording $ 12.7 million of asset impairment on existing banking facilities, including $ 2.4 million of asset impairment on right-of-use assets, and $ 0.8 million in other related charges, all of which was recognized in other expense in the consolidated statements of income.
−Removed: The Company has entered into operating leases, primarily for banking offices and operating facilities, which have remaining lease terms of 1 month to 10 years, some of which may include options to extend the lease terms for up to an additional 10 years.
−Removed: The options to extend are included if they are reasonably certain to be exercised.
−Removed: The Company had operating lease right-of-use assets of $ 7.0 million and $ 8.4 million as of December 31, 2022 and 2021, respectively, included in other assets on our consolidated balance sheets.
−Removed: The operating lease liabilities of the Company were $ 8.9 million and $ 10.7
−Removed: million as of December 31, 2022 and 2021, respectively, and are included in accrued interest payable and other liabilities on our consolidated balance sheets.
+Added: The Company has entered into operating leases, primarily for banking offices and operating facilities, which have remaining lease terms of 2 months to 14 years, some of which may include options to extend the lease terms for up to an additional 10 years.
+Added: The options to extend are included in the remaining lease term if they are reasonably certain to be exercised.
+Added: The Company had operating lease right-of-use assets of $ 7.7 million and $ 7.0 million as of December 31, 2023 and December 31, 2022, respectively, included in premises and equipment on our consolidated balance sheets.
+Added: The operating lease liabilities of the Company were $ 9.3 million and $ 8.9 million as of December 31, 2023 and December 31, 2022, respectively, and are included in accrued interest payable and other liabilities on our consolidated balance sheets.
Information related to operating leases for the years ended December 31, 2023 and 2022 was as follows:
16 unchanged sentences
NOTE 6 – LOAN SERVICING RIGHTS
−Removed: A summary of loan servicing rights at December 31, 2022 and 2021 is as follows:
−Removed: (dollars in thousands) 2022 2021
−Removed: Serviced Loans Carrying Value Serviced Loans Carrying Value
+Added: A summary of loan servicing rights at December 31, 2023 and December 31, 2022 is as follows:
+Added: December 31, 2023 December 31, 2022
+Added: (dollars in thousands) Serviced Loans Carrying Value Serviced Loans Carrying Value
Commercial FHA $ 2,084,961 $ 19,273 $ — $ —
5 unchanged sentences
During the third quarter of 2022, the Company committed to a plan to sell our commercial FHA servicing portfolio and, therefore, transferred $ 24.0 million to commercial FHA servicing rights held for sale.
−Removed: Servicing rights held for sale are recorded at the lower of their carrying value or fair value less estimated costs to sell.
−Removed: At December 31, 2022, the $ 20.7 million carrying amount of the asset reflected its estimated fair value less estimated selling costs.
−Removed: Fair value was based on a letter of intent to purchase from an interested buyer.
−Removed: The Company recognized a $ 3.3 million loss on commercial FHA loan servicing rights held for sale in the fourth quarter of 2022 to write down the asset balance to the fair value based on the letter of intent sales price and estimated selling costs.
−Removed: Prior to the transfer of the commercial FHA servicing rights to held for sale, the fair value of commercial FHA loan servicing rights was determined using key assumptions, representing both general economic and other published information, including the assumed earnings rates related to escrow and replacement reserves, and the weighted average characteristics of the commercial portfolio, including the prepayment rate and discount rate.
+Added: At June 30, 2023, the Company abandoned its plans to sell this servicing asset and removed this asset from held for sale at lower of cost or fair value with no gain or loss recognized.
+Added: The fair value of commercial FHA loan servicing rights is determined using key assumptions, representing both general economic and other published information, including the assumed earnings rates related to escrow and replacement reserves, and the weighted average characteristics of the commercial portfolio, including the prepayment rate and discount rate.
The prepayment rate considered many factors as appropriate, including lockouts, balloons, prepayment penalties, interest rate ranges, delinquencies, and geographic location.
1 unchanged sentence
Significant increases or decreases in any one of these assumptions would result in a significantly lower or higher fair value measurement.
−Removed: The weighted average prepayment rate and weighted average discount rate was 8.24 % and 11.87 % at December 31, 2021, respectively.
−Removed: Changes in our commercial FHA loan servicing rights for the years ended 2022, 2021, and 2020 are summarized as follows:
+Added: The weighted average prepayment rate and weighted average discount rate was 7.23 % and 8.12 % at December 31, 2023.
+Added: Changes in our commercial FHA loan servicing rights for the years ended December 31, 2023 2022 and 2021are summarized as follows:
Years Ended December 31,
2 unchanged sentences
Balance, beginning of period $ — $ 27,386 $ 38,322
−Removed: Servicing rights transferred to held for sale ( 23,995 ) — 1,128
+Added: Servicing rights transferred from (to) held for sale 20,473 ( 23,995 ) —
Amortization ( 1,200 ) ( 1,907 ) ( 2,965 )
5 unchanged sentences
NOTE 7 – GOODWILL AND INTANGIBLE ASSETS
−Removed: The carrying amount of goodwill by segment at December 31, 2022 and 2021 is summarized as follows:
+Added: The carrying amount of goodwill by segment at December 31, 2023 and December 31, 2022 is summarized as follows:
(dollars in thousands) 2023 2022
2 unchanged sentences
Total goodwill $ 161,904 $ 161,904
−Removed: The Company’s intangible assets, consisting of core deposit and customer relationship intangibles, as of December 31, 2022 and 2021 are summarized as follows:
+Added: The Company’s intangible assets, consisting of core deposit and customer relationship intangibles, as of December 31, 2023 and December 31, 2022 are summarized as follows:
December 31, 2023 December 31, 2022
7 unchanged sentences
Total intangible assets $ 74,832 $ ( 58,724 ) $ 16,108 $ 74,832 $ ( 53,966 ) $ 20,866
−Removed: In conjunction with the FNBC branch acquisition, the Company recorded $ 1.9 million of core deposit intangibles, which are being amortized on an accelerated basis over an estimated useful life of 10 years.
Amortization of intangible assets was $ 4.8 million, $ 5.4 million and $ 5.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
5 unchanged sentences
NOTE 8 – DERIVATIVE INSTRUMENTS
−Removed: As part of the Company’s overall management of interest rate sensitivity, the Company utilizes derivative instruments to minimize significant, unanticipated earnings fluctuations caused by interest rate volatility, including interest rate lock commitments, forward commitments to sell mortgage-backed securities, cash flow hedges and interest rate swap contracts.
+Added: As part of the Company’s overall interest rate risk management, the Company utilizes derivative instruments to minimize significant, unanticipated earnings fluctuations caused by interest rate volatility, including interest rate lock commitments, forward commitments to sell mortgage-backed securities, cash flow hedges and interest rate swap contracts.
+Added: The notional amount does not represent amounts exchanged by the parties, rather the amount exchanged is determined by reference to the notional amount and the other terms of the individual agreements.
Interest Rate Lock Commitments / Forward Commitments to Sell Mortgage-Backed Securities
2 unchanged sentences
The fair value of the interest rate lock commitments and forward contracts to sell mortgage-backed securities are included in other assets or other liabilities in the consolidated balance sheets.
−Removed: Changes in the fair value of derivative financial instruments are recognized in commercial FHA revenue and residential mortgage banking revenue in the consolidated statements of income.
+Added: Changes in the fair value of derivative financial instruments are recognized in residential mortgage banking revenue and other noninterest income in the consolidated statements of income.
The following table summarizes the interest rate lock commitments and forward commitments to sell mortgage-backed securities held by the Company, their notional amount and estimated fair values at December 31, 2023 and December 31, 2022:
6 unchanged sentences
Interest rate lock commitments $ 2,405 $ 2,078 $ 62 $ 49
−Removed: Forward commitments to sell mortgage-backed securities — 60,427 — —
−Removed: Total $ 2,078 $ 126,643 $ 49 $ 410
Notional amount Fair value loss
7 unchanged sentences
Total $ 5,000 $ 11,088 $ 83 $ 15
−Removed: During the years ended December 31, 2022, 2021 and 2020, the Company recognized net losses of $ 0.4 million, $ 1.5 million and $ 1.4 million, respectively, on derivative instruments in commercial FHA revenue and residential mortgage banking revenue in the consolidated statements of income.
+Added: During the years ended December 31, 2023, 2022 and 2021, the Company recognized net losses of $ 0.1 million, $ 0.4 million and $ 1.5 million, respectively, on derivative instruments.
Cash Flow Hedges
−Removed: In the first quarter of 2022, the Company entered into interest rate swap agreements, which qualify as cash flow hedges, to manage the risk of changes in future cash flows due to interest rate fluctuations.
−Removed: The following table summarizes the Company's receive-fixed, pay-variable interest rate swaps on certain pools of loans indexed to prime at December 31, 2022:
+Added: The Company periodically enters into interest rate swap agreements, which qualify as cash flow hedges, to manage the risk of changes in future cash flows due to interest rate fluctuations.
+Added: The following table summarizes the Company's receive-fixed, pay-variable interest rate swaps on certain pools of loans indexed to prime at December 31, 2023 and December 31, 2022
(dollars in thousands) December 31,
+Added: 2023 December 31,
Notional Amount $ 400,000 $ 200,000
4 unchanged sentences
Weighted average receive rate 5.41 % 5.48 %
−Removed: The Company had future-starting receive-fixed, pay-variable interest rate swaps on certain FHLB or other fixed-rate advances.
−Removed: These swaps were effective beginning in April 2023.
−Removed: The Company paid or received the net interest amount quarterly based on the respective hedge agreement and included the amount as part of FHLB advances interest expense on the consolidated statements of income.
−Removed: During the fourth quarter of 2022, the Company terminated the future-starting interest rate swap agreements and recognized a net gain of $ 17.5 million in other income in the consolidated statements of income.
−Removed: (dollars in thousands) December 31,
−Removed: 2022 December 31,
−Removed: Notional Amount $ — $ 140,000
−Removed: Fair value gain included in other assets — 5,095
−Removed: Tax effected amount included in accumulated other comprehensive (loss) income — 3,694
Interest Rate Swap Contracts Not Designated as Hedges
4 unchanged sentences
The notional amounts of the customer derivative instruments and the offsetting counterparty derivative instruments were $ 6.9 million and $ 7.4 million at December 31, 2023 and December 31, 2022, respectively.
−Removed: The fair value of the customer derivative instruments and the offsetting counterparty derivative instruments was $ 0.4 million at both December 31, 2022 and December 31, 2021, which are included in other assets and other liabilities, respectively, on the consolidated balance sheets.
+Added: The fair value of the customer derivative instruments and the offsetting counterparty derivative instruments was $ 0.3 million and $ 0.4 million at December 31, 2023 and December 31, 2022, respectively, which are included in other assets and other liabilities, respectively, on the consolidated balance sheets.
NOTE 9 – DEPOSITS
−Removed: The following table summarizes the classification of deposits as of December 31, 2022 and 2021:
−Removed: (dollars in thousands) 2022 2021
+Added: The following table summarizes the classification of deposits as of December 31, 2023 and December 31, 2022:
+Added: (dollars in thousands) December 31, 2023 December 31, 2022
Noninterest-bearing demand $ 1,145,395 $ 1,362,158
5 unchanged sentences
Total deposits $ 6,309,529 $ 6,364,652
−Removed: Included in time deposits are uninsured time certificates of $ 118.6 million and $ 143.5 million as of December 31, 2022 and 2021, respectively.
+Added: Included in time deposits are time certificates of $250,000 or more of $ 179.2 million and $ 118.6 million as of December 31, 2023 and December 31, 2022, respectively.
As of December 31, 2023, the scheduled maturities of time deposits were as follows:
2 unchanged sentences
2024 $ 806,156
−Removed: Thereafter 60
Total $ 957,398
−Removed: NOTE 10 – SHORT-TERM BORROWINGS
−Removed: The following table presents the distribution of short-term borrowings and related weighted average interest rates as of December 31, 2022 and 2021:
−Removed: Repurchase agreements
−Removed: (dollars in thousands) 2022 2021
−Removed: Outstanding at period-end $ 42,311 $ 76,803
−Removed: Average amount outstanding 58,688 68,986
−Removed: Maximum amount outstanding at any month end 76,807 77,497
−Removed: Weighted average interest rate:
−Removed: During period 0.18 % 0.12 %
−Removed: End of period 0.26 % 0.13 %
−Removed: Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature within one to four days from the transaction date.
−Removed: Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction, which represents the amount of the Bank’s obligation.
−Removed: The Bank may be required to provide additional collateral based on the fair value of the underlying securities.
−Removed: Investment securities with a carrying amount of
−Removed: $ 46.1 million and $ 78.3 million at December 31, 2022 and 2021, respectively, were pledged for securities sold under agreements to repurchase.
−Removed: The Company had available lines of credit of $ 12.2 million and $ 55.9 million at December 31, 2022 and 2021, respectively, from the Federal Reserve Discount Window.
−Removed: The lines are collateralized by a collateral agreement with respect to a pool of commercial real estate loans totaling $ 14.3 million and $ 64.8 million at December 31, 2022 and 2021, respectively.
−Removed: There were no outstanding borrowings under these lines at December 31, 2022 and 2021.
−Removed: At December 31, 2022, the Company had available federal funds lines of credit totaling $ 394.0 million.
−Removed: These lines of credit were unused at December 31, 2022.
NOTE 10 – FHLB ADVANCES AND OTHER BORROWINGS
−Removed: The following table summarizes our FHLB advances and other borrowings as of December 31, 2022 and 2021:
−Removed: (dollars in thousands) 2022 2021
−Removed: Midland States Bancorp, Inc.
−Removed: Series G redeemable preferred stock - 171 shares at $ 1,000 per share
−Removed: Midland States Bank
−Removed: FHLB advances – putable fixed rate at rates averaging 2.35 % and 1.48 % at December 31, 2022 and December 31, 2021, respectively – maturing through December 2024
+Added: The following table summarizes our FHLB advances and other borrowings as of December 31, 2023 and December 31, 2022:
+Added: (dollars in thousands) December 31, 2023 December 31, 2022
+Added: FHLB advances – fixed rate, fixed term at rates averaging 4.94 % at December 31, 2023 - maturing through February 2028
$ 150,000 $ —
−Removed: FHLB advances –SOFR floater at rates averaging 5.92 % and 1.67 % at December 31, 2022 and December 31, 2021, respectively – maturing in October 2023
+Added: FHLB advances – putable fixed rate at rates averaging 3.07 % and 2.35 % at December 31, 2023 and December 31, 2022, respectively – maturing through October 2028 with call provisions through October 2024
160,000 110,000
−Removed: FHLB advances – Short term fixed rate at rates averaging 4.31 % at December 31, 2022 – maturing in January 2023
+Added: FHLB advances –SOFR floater at rates averaging 5.92 % at December 31, 2022 – matured October 2023
+Added: FHLB advances – Short term fixed rate at rates averaging 5.45 % and 4.31 % at December 31, 2023 and December 31, 2022, respectively– maturing through January 2024
+Added: 166,000 250,000
Total FHLB advances and other borrowings $ 476,000 $ 460,000
−Removed: The Company’s advances from the FHLB are collateralized by a blanket collateral agreement of qualifying mortgage and home equity line of credit loans and certain commercial real estate loans totaling approximately $ 2.90 billion and $ 2.10 billion at December 31, 2022 and 2021, respectively.
+Added: The Company’s advances from the FHLB are collateralized by a blanket collateral agreement of qualifying mortgage and home equity line of credit loans and certain commercial real estate loans totaling approximately $ 2.98 billion and $ 2.90 billion at December 31, 2023 and December 31, 2022, respectively.
Contractual payments over the next five years for FHLB advances and other borrowings were as follows:
4 unchanged sentences
NOTE 11 – SUBORDINATED DEBT
−Removed: The following table summarizes the Company’s subordinated debt at December 31, 2022 and 2021:
+Added: The following table summarizes the Company’s subordinated debt at December 31, 2023 and December 31, 2022:
Subordinated debt
Fixed to Float Fixed
−Removed: (dollars in thousands) Issued October 2017 Issued September 2019 Issued September 2019 Issued June 2015 Total
+Added: (dollars in thousands) Issued September 2019 Issued September 2019 Issued June 2015 Total
At December 31, 2023
1 unchanged sentence
Carrying amount 66,573 26,973 — 93,546
−Removed: Current rate — 5.00 % 5.50 % 6.50 %
+Added: Current rate 5.00 % 5.50 % N/A
At December 31, 2022
5 unchanged sentences
Fixed to variable conversion date 9/30/2024 9/30/2029 N/A
−Removed: Variable rate 3-month LIBOR plus 4.23 %
−Removed: 3-month SOFR plus 3.61 %
+Added: Variable rate 3-month SOFR plus 3.61 %
3-month SOFR plus 4.05 %
−Removed: Interest payment terms Quarterly Semiannually Semiannually Semiannually
+Added: Interest payment terms Semiannually Semiannually Semiannually
+Added: During the second quarter of 2023, the Company repurchased $ 6.0 million of the outstanding Fixed to Float Subordinated Notes due September 30, 2029.
+Added: The Company recognized a gain of $ 0.7 million, which included the discount realized on the repurchase, offset by the remaining unamortized debt issuance costs on the repurchase.
+Added: The Company also repurchased the outstanding Fixed Rate Subordinated Notes due June 18, 2025, having an aggregate principal amount of $ 0.6 million, during the second quarter of 2023.
+Added: The aggregate repurchase price was 100 % of the aggregate principal amount of the subordinated notes, plus accrued and unpaid interest.
The value of subordinated debentures have been reduced by the debt issuance costs, which are being amortized on a straight line basis through the earlier of the redemption option or maturity date.
All of the subordinated debentures above may be included in Tier 2 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.
−Removed: On October 15, 2022, the Company redeemed the outstanding Fixed-to-Floating Rate Subordinated Notes due October 15, 2027, having an aggregate principal amount of $ 40.0 million, in accordance with the terms of the notes.
−Removed: The aggregate redemption price was 100 % of the aggregate principal amount of the subordinated notes, plus accrued and unpaid interest.
−Removed: The interest rate on the subordinated notes was 6.25 %.
NOTE 12 – TRUST PREFERRED DEBENTURES
−Removed: The Company formed Midland States Preferred Securities Trust (“Midland Trust”), a statutory trust under the Delaware Statutory Trust Act.
+Added: The Company formed Midland Trust, a statutory trust under the Delaware Statutory Trust Act.
Midland Trust issued a pool of $ 10.0 million of floating rate cumulative trust preferred securities with a liquidation amount of $ 1,000 per security.
9 unchanged sentences
(dollars in thousands) Date of issuance Issuance Amount Shares Issued Variable Rate Maturity Date Carrying Amount Rate Carrying Amount Rate
−Removed: Grant Park Statutory Trust I 12/19/2003 $ 3,093 3,000 LIBOR plus 2.85 %
+Added: Grant Park Statutory Trust I 12/19/2003 $ 3,093 3,000 SOFR plus 2.85 %
1/23/2034 $ 2,454 8.52 % $ 2,410 7.26 %
−Removed: Midland States Preferred Securities Trust 3/26/2004 10,310 10,000 LIBOR plus 2.75 %
+Added: Midland States Preferred Securities Trust 3/26/2004 10,310 10,000 SOFR plus 2.75 %
4/23/2034 10,284 8.42 % 10,282 7.07 %
−Removed: Centrue Statutory Trust II 4/22/2004 10,310 10,000 LIBOR plus 2.65 %
+Added: Centrue Statutory Trust II 4/22/2004 10,310 10,000 SOFR plus 2.65 %
6/17/2034 8,468 8.32 % 8,358 7.39 %
−Removed: Love Savings/Heartland Capital Trust III 11/30/2006 20,619 20,000 LIBOR plus 1.75 %
+Added: Love Savings/Heartland Capital Trust III 11/30/2006 20,619 20,000 SOFR plus 1.75 %
12/31/2036 15,110 7.42 % 14,870 6.52 %
−Removed: Love Savings/Heartland Capital Trust IV 6/6/2007 20,619 20,000 LIBOR plus 1.47 %
+Added: Love Savings/Heartland Capital Trust IV 6/6/2007 20,619 20,000 SOFR plus 1.47 %
9/6/2037 14,300 7.13 % 14,055 6.20 %
21 unchanged sentences
Equity-based compensation benefit ( 21 ) ( 186 ) ( 93 )
−Removed: Disposition of nondeductible goodwill — — 2,287
+Added: Surrender of company-owned life insurance policies 3,756 — —
Valuation allowance 69 58 47
2 unchanged sentences
On June 29, 2021, the Company announced the settlement of a prior tax issue related to the treatment of gains recognized on FDIC-assisted transactions that resulted in a $ 6.8 million tax benefit that was recognized in 2021.
−Removed: The tax expense associated with the disposition of nondeductible goodwill is related to Love Funding Corporation's asset disposition discussed in Note 2.
Deferred tax assets, net in the accompanying consolidated balance sheets at December 31, 2023 and 2022 include the following amounts of deferred tax assets and liabilities:
7 unchanged sentences
Net operating losses 8,090 8,922
−Removed: Fair value adjustment on investments 287 879
Operating lease liabilities 2,521 2,415
4 unchanged sentences
Premises and equipment 786 573
−Removed: Unrealized gain on securities — 569
−Removed: Unrealized gain on derivatives — 1,401
Mortgage servicing rights 3,870 4,217
2 unchanged sentences
Intangible assets 3,577 4,458
−Removed: Software development costs 842 1,446
Leased equipment 23,824 24,346
2 unchanged sentences
Deferred tax liabilities 41,594 45,579
−Removed: Deferred tax assets (liabilities), net $ 22,485 $ ( 13,578 )
+Added: Deferred tax assets, net $ 22,211 $ 22,485
At December 31, 2023 and 2022, the accumulation of the prior year’s earnings representing tax bad debt deductions was approximately $ 3.1 million for both years.
2 unchanged sentences
The tax benefit associated with the state tax settlement is related to an agreement that was reached with the state taxing authorities on an issue from prior year state tax returns.
−Removed: The tax expense associated with the disposition of nondeductible goodwill is related to Love Funding Corporation's asset disposition discussed in Note 2.
The Company had $ 33.6 million of federal net operating loss carryforwards expiring 2024 through 2035, $ 13.8 million of Illinois post-apportioned net operating loss carryforwards expiring in 2028 and 2029, and $ 33.6 million of Missouri pre-apportioned net operating loss carryforwards expiring 2024 through 2035, at December 31, 2023.
3 unchanged sentences
Any amounts that are expected to expire before being fully utilized have been accounted for through a valuation allowance as discussed below.
+Added: The deferred tax asset associated with the unrealized losses on securities is mainly a result of changes in interest rates, and the unrealized losses are considered to be temporary as the fair value is expected to recover as the securities approach their respective maturity dates.
We had no unrecognized tax benefits as of December 31, 2023 and 2022, and did not recognize any increase of unrecognized benefits during 2023 relative to any tax positions taken during the year.
4 unchanged sentences
At December 31, 2023, the Company concluded, based on all available evidence, a valuation allowance was needed for the Company’s deferred tax asset related to capital loss carry forwards.
−Removed: An addition was made to the $ 0.1 million valuation allowance from December 31, 2021 in the amount of $ 0.1 million, resulting in a valuation allowance of $ 0.2 million at December 31, 2022 for the estimated capital losses that will not be able to be utilized in the future.
+Added: An addition was made to the $ 176,000 valuation allowance from December 31, 2022 in the amount of $ 68,000 , resulting in a valuation allowance of $ 244,000 at December 31, 2023 for the estimated capital losses that will not be able to be utilized in the future.
For the Company's remaining deferred tax assets, based on our taxpaying history and estimates of taxable income over the years in which the items giving rise to the deferred tax assets are deductible, management believes it is more likely than not that we will realize the benefits of these deductible differences.
2 unchanged sentences
Years that remain open for potential review by the Internal Revenue Service are 2020 through 2022 and by state taxing authorities are 2019 through 2022.
−Removed: On August 16, 2022, the U.S.
−Removed: government enacted the Inflation Reduction Act of 2022 that includes, among other provisions, changes to the U.S.
−Removed: corporate income tax system, including a fifteen percent minimum tax based on "adjusted financial statement income," which is effective for tax years beginning after December 31, 2022, and a one percent excise tax on net repurchases of stock after December 31, 2022.
−Removed: The Company is continuing to evaluate the Inflation Reduction Act and its requirements, as well as the application to its business, but at this time does not expect the Inflation Reduction Act to have a material impact on the Company's financial results.
NOTE 14 – RETIREMENT PLANS
1 unchanged sentence
We sponsor the Midland States Bank 401(k) Profit Sharing Plan, which provides retirement benefits to substantially all of our employees.
−Removed: There were no employer discretionary profit sharing contributions made to the 401(k) plan in 2022, 2021 and 2020.
The 401(k) component of the plan allows participants to defer a portion of their compensation ranging from 1 % to 100 %.
2 unchanged sentences
Total expense recorded for the Company match was $ 1.8 million, $ 1.6 million and $ 1.2 million for the years ended December 31, 2023, 2022, and 2021, respectively.
+Added: There were no employer discretionary profit sharing contributions made to the 401(k) plan in 2023, 2022 and 2021.
Deferred Compensation Arrangements
Certain executive officers participate in a nonqualified deferred compensation arrangement.
−Removed: Beginning in May 2020, the plan is fully funded in a trust controlled by the Company with the gains and losses recognized in other noninterest income.
+Added: The plan is fully funded in a trust controlled by the Company with the gains and losses recognized in other noninterest income.
The trust asset is reflected in the Company's equity securities with the offsetting deferred compensation liability reflected in other liabilities.
4 unchanged sentences
Contributions 255 446 207
−Removed: (Loss) gain on trust assets ( 474 ) 359 499
+Added: Gain (loss) on trust assets 427 ( 474 ) 359
Distributions ( 396 ) ( 392 ) ( 509 )
18 unchanged sentences
Effective October 1, 2021, the Bank withdrew from the multiple-employer plan by transferring assets and liabilities to a qualified successor plan under actuarial assumptions and methodology determined appropriate by Pentegra.
−Removed: $ 16.6 million were transferred to the successor plan on November 30, 2021.
+Added: Assets of $ 16.6 million were transferred to the successor plan on November 30, 2021.
Transferred liability excludes the previously allocated orphan liability.
+Added: On June 30, 2023, we terminated the plan and notified the IRS, seeking a final determination letter.
+Added: We expect to receive the final determination letter and begin distributing assets to plan participants in late 2024.
The following table details the components of the net periodic benefit cost for the years ended December 31, 2023 and 2022:
8 unchanged sentences
Expected long-term return on plan assets 4.75 % 5.50 %
−Removed: Rate of compensation increase — %
+Added: Rate of compensation increase N/A N/A
Previously, costs for administration, shortfalls in funds to maintain the frozen level of benefit coverage and differences of actuarial assumptions related to the frozen benefits were expensed as incurred.
6 unchanged sentences
NOTE 15 – SHARE-BASED COMPENSATION
−Removed: The Company awards select employees and directors certain forms of share-based incentives under the Midland States Bancorp, Inc.
−Removed: 2019 Long-Term Incentive Plan (“2019 Incentive Plan”).
+Added: The Company awards select employees and directors certain forms of share-based incentives under the 2019 Incentive Plan.
The 2019 Incentive Plan made 1,000,000 shares available to be issued to selected employees and directors of, and service providers to, the Company or its subsidiaries.
30 unchanged sentences
Expected life 6.25 years
+Added: The weighted average fair value of stock options granted during the year ended December 31, 2022 was $ 4.92 .
The summary of our stock option activity for the year ended December 31, 2023 is as follows:
2 unchanged sentences
Option outstanding, beginning of year 415,572 $ 25.81
−Removed: Options granted 220,730 28.43
+Added: Options granted — N/A
Options exercised ( 42,437 ) 18.45
−Removed: Options expired ( 16,917 ) 32.53
+Added: Options forfeited ( 30,179 ) 28.43
+Added: Options expired — N/A
Options outstanding, end of year 342,956 26.49 5.7 years
4 unchanged sentences
This cost is expected to be recognized over a period of 2.8 years.
−Removed: The weighted average fair value of stock options granted during the year ended December 31, 2022 was $ 4.92 .
The following table includes information related to stock option exercises for the years ended December 31, 2023, 2022, and 2021.
7 unchanged sentences
The gross proceeds were $ 115.0 million while net proceeds from the issuance of the Series A preferred stock, after deducting $ 4.5 million of offering costs, including the underwriting discount and other expenses, were $ 110.5 million.
−Removed: Dividends on the Series A preferred stock will not be cumulative or mandatory, and will be paid when, as, and if declared by the Company’s board of directors.
+Added: Dividends on the Series A preferred stock are not cumulative or mandatory, and will be paid when, as, and if declared by the Company’s board of directors.
If declared, dividends will accrue and be payable, quarterly in arrears, (i) from and including the date of original issuance to, but excluding September 30, 2027 or the date of earlier redemption, at a rate of 7.75 % per annum, on March 30, June 30, September 30 and December 30 of each year, commencing on December 30, 2022, and (ii) from and including September 30, 2027, during each reset period, at a rate per annum equal to the five-year treasury rate as of the most recent reset dividend determination date plus 4.713 %, on March 30, June 30, September 30 and December 30 of each year, beginning on December 30, 2027, except in each case where such day is not a business day.
−Removed: If the Company’s board of directors does not declare a dividend on the Series A preferred stock in respect of a dividend period, then no dividend shall be deemed to be payable for such dividend period, or be cumulative, and the Company will have no obligation to pay any dividend for that dividend period, whether or not the board of directors declares a dividend on the Series A preferred stock or any other class or series of the Company's capital stock for any future dividend period.
−Removed: Additionally, so long as any share of Series A preferred stock remains outstanding, unless dividends on all outstanding shares of Series A preferred stock for the most recently completed dividend period have been paid in full or declared and a sum sufficient for the payment thereof has been set aside for payment, no dividend shall be declared or paid or set aside for payment and no distribution shall be declared or made or set aside for payment on the Company’s common stock.
−Removed: The Series A preferred stock is perpetual and has no maturity date.
−Removed: The Series A preferred stock is not subject to any mandatory redemption, sinking fund, or other similar provisions.
−Removed: The Company, at its option and subject to prior regulatory approval, may redeem the Series A preferred stock (i) in whole or in part, from time to time, on any dividend payment date on or after September 30, 2027, or (ii) in whole but not in part at any time within 90 days following a regulatory capital treatment event, in each case, at a redemption price equal to $ 1,000 per share of Series A preferred stock (equivalent to $ 25 per Depositary Share), plus any declared and unpaid dividends, without regard to any undeclared dividends, to but excluding the redemption date.
Neither the holders of the Series A preferred stock nor holders of the Depositary Shares will have the right to require the redemption or repurchase of the Series A preferred stock.
2 unchanged sentences
Basic earnings per common share is calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding.
−Removed: Diluted earnings per common share is calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of shares adjusted for the dilutive effect of common stock awards.
−Removed: The diluted earnings per share computation for the years ended December 31, 2022, 2021 and 2020 excluded antidilutive stock options of 265,831 , 65,033 and 364,272 , respectively, because the exercise prices of these stock options exceeded the average market
−Removed: prices of the Company’s common shares for those respective years.
+Added: Diluted earnings per common share is calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common
+Added: shareholders by the weighted average number of shares adjusted for the dilutive effect of common stock awards.
Presented below are the calculations for basic and diluted earnings per common share for the years ended 2023, 2022, and 2021:
21 unchanged sentences
Diluted earnings per common share 2.97 4.23 3.57
+Added: Antidilutive stock options (1)
+Added: 302,020 265,831 65,033
+Added: (1) The diluted earnings per common share computation excludes antidilutive stock options because the exercise prices of these stock options exceeded the average market prices of the Company's common shares for those respective periods.
NOTE 18 – CAPITAL REQUIREMENTS
66 unchanged sentences
Securities classified as Level 3 are not actively traded, and as a result, fair value is determined utilizing third-party valuation services through consensus pricing.
−Removed: There were no transfers between Levels 1, 2 or 3 during the years ended December 31, 2022 or 2021 for assets measured at fair value on a recurring basis.
+Added: There were no transfers between Levels 1, 2 or 3 during the period presented for assets measured at fair value on a recurring basis.
The fair value of equity securities is determined using quoted prices or market prices for similar securities (Level 2).
10 unchanged sentences
Nonperforming loans.
−Removed: Nonperforming loans are measured and recorded at fair value on a non-recurring basis.
−Removed: All of our nonaccrual loans and restructured loans are considered nonperforming and are reviewed individually for the amount of impairment, if any.
−Removed: Most of our loans are collateral dependent and, accordingly, we measure nonperforming loans based on the estimated fair value of such collateral.
+Added: All of our nonaccrual loans are considered nonperforming and are reviewed individually for the amount of impairment, if any.
+Added: We measure collateral dependent nonperforming loans based on the estimated fair value of such collateral.
In cases where the Company has an agreed upon selling price for the collateral, the fair value is set at the selling price (Level 1).
6 unchanged sentences
Fair value for OREO is based on an appraisal performed upon foreclosure.
+Added: Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between comparable sales and income data available.
Property is evaluated regularly to ensure the recorded amount is supported by its fair value less estimated costs to dispose.
−Removed: After the initial foreclosure appraisal, fair value is generally determined by an annual appraisal unless known events warrant adjustments to the recorded value.
+Added: After the initial foreclosure appraisal, fair value is generally determined by an annual appraisal unless known events warrant adjustments to the recorded value (Level 2).
Assets held for sale.
16 unchanged sentences
State and municipal securities 57,460 — 57,460 —
+Added: Collateralized loan obligations 27,565 — 27,565 —
Corporate securities 99,172 — 99,172 —
6 unchanged sentences
Assets measured at fair value on a non-recurring basis:
−Removed: Loan servicing rights $ 1,205 $ — $ — $ 1,205
−Removed: Commercial FHA loan servicing rights held for sale 20,745 — 20,745 —
Nonperforming loans 4,633 — 3,964 669
Other real estate owned 9,112 — 9,112 —
−Removed: Assets held for sale 356 — 356 —
December 31, 2022
21 unchanged sentences
Loan servicing rights $ 1,205 $ — $ — $ 1,205
+Added: Mortgage servicing rights held for sale 20,745 — 20,745 —
Nonperforming loans 49,423 5,478 34,406 9,539
1 unchanged sentence
Assets held for sale 356 — 356 —
−Removed: The following table provides a reconciliation of activity for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2022 and 2021:
−Removed: Years Ended December 31,
−Removed: (dollars in thousands) 2022 2021
−Removed: Balance, beginning of period $ 935 $ 959
−Removed: Transferred to level 2 ( 935 ) —
−Removed: Total realized in earnings (1)
−Removed: Total unrealized in other comprehensive income (2)
−Removed: Net settlements (principal and interest) ( 6 ) ( 14 )
−Removed: Balance, end of period $ — $ 935
−Removed: (1) Amounts included in interest income from investment securities taxable in the consolidated statements of income.
−Removed: (2) Represents change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period.
−Removed: The following table provides quantitative information about significant unobservable inputs used in fair value measurements of Level 3 assets measured at fair value on a recurring basis at December 31, 2021:
−Removed: (dollars in thousands) Fair value Valuation
−Removed: technique Unobservable
−Removed: input / assumptions Range (weighted average) (1)
−Removed: December 31, 2021
−Removed: Corporate securities $ 935 Consensus pricing Net market price 0.00 % - 7.00 % ( 4.50 )%
−Removed: (1) Unobservable inputs were weighted by the relative fair value of the instruments.
−Removed: The significant unobservable inputs used in the fair value measurement of the Company’s corporate securities is net market price.
−Removed: The corporate securities are not actively traded, and as a result, fair value is determined utilizing third-party valuation services through consensus pricing.
−Removed: Significant changes in any of the inputs in isolation would result in a significant change to the fair value measurement.
+Added: There were no assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2023 and 2022.
The following table presents losses recognized on assets measured on a nonrecurring basis for the years ended December 31, 2023, 2022 and 2021:
5 unchanged sentences
Other real estate owned — 4,276 454
−Removed: Assets held for sale — — 10,404
Total losses on assets measured on a nonrecurring basis $ 19,421 $ 17,681 $ 22,676
4 unchanged sentences
December 31, 2023
−Removed: Loan servicing rights:
−Removed: SBA servicing rights $ 876 Discounted cash flow Prepayment speed 14.49 % - 15.44 % ( 15.00 %)
−Removed: Discount rate No range ( 13.00 %)
−Removed: Residential servicing rights 2,770 Discounted cash flow Prepayment speed 7.56 % - 26.28 % ( 7.92 %)
−Removed: Discount rate 9.00 % - 11.50 % ( 10.13 %)
+Added: Nonperforming loans $ 669 Collateral based measurements Discount to reflect current market conditions and ultimate collectability 24.38 % - 100.00 % ( 27.46 %)
December 31, 2022
Loan servicing rights:
−Removed: Commercial MSR $ 28,368 Discounted cash flow Prepayment speed 8.00 % - 18.00 % ( 8.24 %)
−Removed: Discount rate 10.00 % - 27.00 % ( 11.87 %)
SBA servicing rights $ 876 Discounted cash flow Prepayment speed 14.49 % - 15.44 % ( 15.00 %)
−Removed: Discount rate 10.00 % - 12.00 % ( 11.00 %)
+Added: Discount rate No range ( 13.00 %)
Residential servicing rights 2,770 Discounted cash flow Prepayment speed 7.56 % - 26.28 % ( 7.92 %)
3 unchanged sentences
Additionally, certain financial instruments and all nonfinancial instruments are excluded from the applicable disclosure requirements.
−Removed: The Company has elected the fair value option for newly originated commercial and residential loans held for sale.
+Added: The Company has elected the fair value option for newly originated residential loans held for sale.
These loans are intended for sale and are hedged with derivative instruments.
−Removed: We have elected the fair value option
−Removed: to mitigate accounting mismatches in cases where hedge accounting is complex and to achieve operational simplification.
+Added: We have elected the fair value option to mitigate accounting mismatches in cases where hedge accounting is complex and to achieve operational simplification.
The following table presents the difference between the aggregate fair value and the aggregate remaining principal balance for loans for which the fair value option has been elected as of December 31, 2023 and December 31, 2022:
4 unchanged sentences
fair value Difference Contractual
−Removed: Commercial loans held for sale $ — $ — $ — $ 19,230 $ — $ 19,230
Residential loans held for sale $ 3,811 $ 203 $ 3,608 $ 1,286 $ 42 $ 1,244
−Removed: Total loans held for sale $ 1,286 $ 42 $ 1,244 $ 32,045 $ 584 $ 31,461
−Removed: The following table presents the amount of losses from fair value changes included in income before income taxes for financial assets carried at fair value for the years ended December 31, 2022, 2021 and 2020 :
+Added: The following table presents the amount of gains (losses) from fair value changes included in income before income taxes for financial assets carried at fair value for the years ended December 31, 2023, 2022 and 2021 :
Years Ended December 31,
12 unchanged sentences
Federal funds sold 849 849 849 — —
−Removed: Loans, net 6,245,416 6,121,026 — — 6,121,026
+Added: Loans 6,131,079 6,129,244 — — 6,129,244
Accrued interest receivable 24,934 24,934 — 24,934 —
12 unchanged sentences
Federal funds sold 7,286 7,286 7,286 — —
−Removed: Loans, net 5,173,739 5,221,886 — — 5,221,886
+Added: Loans 6,306,467 6,121,026 — — 6,121,026
Accrued interest receivable 20,313 20,313 — 20,313 —
11 unchanged sentences
These financial instruments include commitments to extend credit and standby letters of credit.
−Removed: Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet.
+Added: Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance
The contract amounts of those instruments reflect the extent of involvement we have in particular classes of financial instruments.
2 unchanged sentences
The commitments are principally tied to variable rates.
−Removed: Loan commitments as of December 31, 2022 and 2021 were as follows:
−Removed: (dollars in thousands) 2022 2021
+Added: Loan commitments as of December 31, 2023 and December 31, 2022 were as follows:
+Added: (dollars in thousands) December 31, 2023 December 31, 2022
Commitments to extend credit $ 855,489 $ 1,276,263
4 unchanged sentences
Subsequent to repurchase, such loans are carried in loans receivable.
−Removed: There were no losses as a result of make-whole requests and loan repurchases for the years ended 2022, 2021, and 2020.
−Removed: The liability for unresolved repurchase demands totaled $ 0.2 million at December 31, 2022 and 2021.
+Added: There were no losses as a result of make-whole requests and loan repurchases for the years ended December 31, 2023, 2022 and 2021.
+Added: The liability for unresolved repurchase demands totaled $ 0.1 million and $ 0.2 million at December 31, 2023 and December 31, 2022.
NOTE 21 – SEGMENT INFORMATION
10 unchanged sentences
The Other segment includes the operating results of the parent company, our captive insurance business unit, and the elimination of intercompany transactions.
−Removed: Selected business segment financial information for the years ended 2022, 2021, and 2020 were as follows:
+Added: Selected business segment financial information for the years ended December 31, 2023, 2022 and 2021 were as follows:
(dollars in thousands) Banking Wealth
29 unchanged sentences
The Company’s revenue from contracts with customers in the scope of Topic 606 is recognized within noninterest income in the consolidated statements of income.
−Removed: The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the years ended 2022, 2021, and 2020.
+Added: The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the years ended December 31, 2023, 2022 and 2021.
Years Ended December 31,
21 unchanged sentences
Wealth management revenue is primarily comprised of fees earned from the management and administration of trusts and other customer assets.
−Removed: Previously, the Company also earned investment advisory fees through its SEC registered investment advisory subsidiary.
+Added: The Company also earns investment advisory fees through its SEC registered investment advisory subsidiary.
The Company’s performance obligation in both of these instances is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and contractually determined fee schedules.
11 unchanged sentences
The Company’s performance obligation for the proper safeguard and remittance of funds, monthly account analysis and any other monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided.
−Removed: Payment for service charges on deposit accounts is typically received immediately or in the following month through a direct charge to a customer’s account.
+Added: Payment for service
+Added: charges on deposit accounts is typically received immediately or in the following month through a direct charge to a customer’s account.
Interchange Revenue
1 unchanged sentence
Card income is primarily comprised of interchange fees earned for standing ready to authorize and providing settlement on card transactions processed through the MasterCard interchange network.
−Removed: The levels and structure of interchange rates are set by MasterCard and can vary based on
−Removed: cardholder purchase volumes.
+Added: The levels and structure of interchange rates are set by MasterCard and can vary based on cardholder purchase volumes.
Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with completion of the Company’s performance obligation, the transaction processing services provided to the cardholder.
14 unchanged sentences
Cash $ 7,763 $ 2,721
−Removed: Investment in banking subsidiaries 859,355 808,283
−Removed: Investment in non-banking subsidiaries 774 860
+Added: Investment in subsidiaries 892,781 860,129
Note receivable due from bank subsidiary 30,000 40,000
3 unchanged sentences
Trust preferred debentures 50,616 49,975
−Removed: Other borrowings — 171
Other liabilities 2,539 2,997
8 unchanged sentences
Earnings of consolidated subsidiaries, net of dividends 28,286 90,021 44,582
−Removed: Interest income on note to subsidiary 10 — —
+Added: Interest income on note due from bank subsidiary 1,578 10 —
Other income 323 4 932
13 unchanged sentences
Adjustments to reconcile net income to net cash provided by operating activities:
−Removed: Equity in undistributed (income) loss of subsidiaries ( 90,021 ) ( 44,582 ) 56,739
+Added: Equity in undistributed income of subsidiaries ( 28,286 ) ( 90,021 ) ( 44,582 )
Share-based compensation expense 2,489 2,211 1,938
4 unchanged sentences
Capital injection to bank subsidiary — ( 50,000 ) —
−Removed: Note receivable to bank subsidiary ( 40,000 ) — —
+Added: Change in note receivable due from bank subsidiary 10,000 ( 40,000 ) —
Net cash received in dissolution of subsidiary 2,674 — 2,003
−Removed: Net cash (used in) provided by investing activities ( 90,000 ) 2,003 —
+Added: Net cash provided by (used in) investing activities 12,674 ( 90,000 ) 2,003
Cash flows from financing activities:
1 unchanged sentence
Payments made on subordinated debt ( 5,845 ) ( 40,000 ) ( 31,075 )
−Removed: Subordinated debt prepayment fees — — 193
Common stock repurchased ( 17,898 ) ( 1,109 ) ( 11,692 )
3 unchanged sentences
Proceeds from issuance of common stock under employee benefit plans 1,670 2,188 2,249
−Removed: Net cash provided by (used in) financing activities 42,364 ( 65,690 ) ( 69,309 )
−Removed: Net (decrease) increase in cash ( 35,155 ) ( 21,028 ) 6,231
+Added: Net cash (used in) provided by financing activities ( 57,559 ) 42,364 ( 65,690 )
+Added: Net increase (decrease) in cash 5,042 ( 35,155 ) ( 21,028 )
Beginning of period 2,721 37,876 58,904
End of period $ 7,763 $ 2,721 $ 37,876
−Removed: In 2022, the Bank borrowed $ 40.0 million from the parent as part of its strategy to manage FDIC insurance premiums.
−Removed: The note has a rolling 13 month maturity with an interest rate of 4.51 %.
+Added: The Bank has $ 30.0 million of borrowings from the parent as part of its strategy to manage FDIC insurance premiums.
+Added: The note has a rolling 13 month maturity, and the interest rate is a variable rate equal to the one year treasury rate.
ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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.