What changed in this filing

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Item 1. Financial Statements

2022-08-03 compared with 2022-05-04 · 326 added, 137 removed, 1016 unchanged (31% of the section changed)

49 unchanged sentences

Three Months Ended

(unaudited) (unaudited)

June 30, Six Months Ended

2022 2021 2022 2021

(unaudited) (unaudited) (unaudited) (unaudited)

INTEREST INCOME:

36 unchanged sentences

Change in funded status of post retirement benefits, net of taxes 314 472 629 944

COMPREHENSIVE INCOME $ ( 47,675 ) $ 2,281

COMPREHENSIVE INCOME (LOSS) $ ( 39,992 ) $ 18,858 $ ( 87,667 ) $ 21,139

PER SHARE DATA

5 unchanged sentences

Three Months Ended

March 31, 2022, and 2021

June 30, 2022, and 2021

(Dollar amounts in thousands, except per share data)

4 unchanged sentences

Income/(Loss) Treasury

Balance, April 1, 2021 $ 2,008 $ 141,024 $ 533,980 $ ( 832 ) $ ( 78,068 ) $ 598,112

Net income — — 16,614 — — 16,614

Other comprehensive income (loss) — — — 2,244 — 2,244

Omnibus Equity Incentive Plan — 216 — — — 216

Treasury shares purchased (497,000 shares) — — — — (22,024) (22,024)

Cash dividends, $.53 per share — — (6,999) — — (6,999)

Balance, June 30, 2021 $ 2,008 $ 141,240 $ 543,595 $ 1,412 $ ( 100,092 ) $ 588,163

Balance, April 1, 2022 $ 2,010 $ 142,185 $ 580,063 $ ( 71,025 ) $ ( 127,789 ) $ 525,444

Net income — — 15,613 — — 15,613

Other comprehensive income (loss) — — — ( 55,605 ) — ( 55,605 )

Omnibus Equity Incentive Plan 1 205 — — — 206

Treasury shares purchased (404,186 shares) — — — — (17,620) (17,620)

Cash dividends, $.54 per share — — (6,507) — — (6,507)

Balance, June 30, 2022 $ 2,011 $ 142,390 $ 589,169 $ ( 126,630 ) $ ( 145,409 ) $ 461,531

See accompanying notes.

FIRST FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Six Months Ended

June 30, 2022, and 2021

(Dollar amounts in thousands, except per share data)

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Income/(Loss) Treasury

Balance, January 1, 2021 $ 2,007 $ 140,820 $ 521,103 $ 9,764 $ ( 76,702 ) $ 596,992

3 unchanged sentences

Treasury shares purchased (531,441 shares) — — — — ( 23,390 ) ( 23,390 )

Balance, March 31, 2021 $ 2,008 $ 141,024 $ 533,980 $ ( 832 ) $ ( 78,068 ) $ 598,112

Cash dividends, $.53 per share — — ( 6,999 ) — — ( 6,999 )

Balance, June 30, 2021 $ 2,008 $ 141,240 $ 543,595 $ 1,412 $ ( 100,092 ) $ 588,163

Balance, January 1, 2022 $ 2,009 $ 141,979 $ 559,139 $ ( 2,426 ) $ ( 118,125 ) $ 582,576

3 unchanged sentences

Treasury shares purchased (617,449 shares) — — — — ( 27,284 ) ( 27,284 )

Balance, March 31, 2022 $ 2,010 $ 142,185 $ 580,063 $ ( 71,025 ) $ ( 127,789 ) $ 525,444

See accompanying notes.

Cash dividends, $.54 per share — — ( 6,507 ) — — ( 6,507 )

Balance, June 30, 2022 $ 2,011 $ 142,390 $ 589,169 $ ( 126,630 ) $ ( 145,409 ) $ 461,531

FIRST FINANCIAL CORPORATION

1 unchanged sentence

(Dollar amounts in thousands, except per share data)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

17 unchanged sentences

Purchase of restricted stock ( 1,037 ) ( 13 )

Purchase of bank owned life insurance — ( 10,000 )

Proceeds from sales of other real estate owned 190 69

15 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The accompanying March 31, 2022 and 2021 consolidated financial statements are unaudited.

The accompanying June 30, 2022 and 2021 consolidated financial statements are unaudited.

The December 31, 2021 consolidated financial statements are as reported in the First Financial Corporation (the “Corporation”) 2021 annual report.

7 unchanged sentences

Some items in the prior year financials were reclassified to conform to the current presentation.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law.

It contained substantial tax and spending provisions intended to address the impact of the COVID-19 pandemic.

The goal of the CARES Act was to prevent a severe economic downturn through various measures, including direct financial aid to American families and economic stimulus to significantly impacted industry sectors.

The CARES Act also included a range of other provisions designed to support the U.S.

economy and mitigate the impact of COVID-19 on financial institutions and their customers, including through the authorization of various programs and measures that the U.S.

Department of the Treasury, the Small Business Administration, the Federal Reserve Board, and other federal banking agencies implemented.

Further, in response to the COVID-19 outbreak, the Federal Reserve Board implemented or announced a number of facilities to provide emergency liquidity to various segments of the U.S.

economy and financial market.

The CARES Act includes a provision that permits a financial institution to elect to suspend temporarily troubled debt restructuring accounting under ASC Subtopic 310-40 in certain circumstances (“section 4013”).

To be eligible under section 4013, a loan modification must be (1) related to COVID-19;

(2) executed on a loan that was not more than 30 days past due as of December 31, 2019;

and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the National Emergency or (B) December 31, 2020.

The date was subsequently extended to December 31, 2021.

In response to this section of the CARES Act, the federal banking agencies issued a revised interagency statement on April 7, 2020 that, in consultation with the Financial Accounting Standards Board, confirmed that for loans not subject to section 4013, short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not troubled debt restructurings under ASC Subtopic 310-40.

This includes short-term (e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant.

Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented.

Recent declines in COVID-19 cases have resulted in most businesses reopening to capacity and a declining unemployment rate.

Some supply chain issues persist contributing to inflation.

COVID-19 continues to impact the Corporation's customers and still may result in adverse conditions on the Corporation's loans and investments.

The Omnibus Equity Incentive Plan is a long-term incentive plan that was designed to align the interests of participants with the interests of shareholders.

2 unchanged sentences

These shares vest over 3 years in increments of 33 %, 33 %, and 34 % respectively.

For the three months ended 2022 and 2021, 18,679 and 21,159 shares were awarded, respectively.

For the six months ended 2022 and 2021, 18,679 and 21,159 shares were awarded, respectively.

These shares had a grant date value of $ 847 thousand and $ 885 thousand for 2022 and 2021, vest over three years, and their grant is not subject to future performance measures.

1 unchanged sentence

Allowance for Credit Losses

The following table presents the activity of the allowance for credit losses by portfolio segment for the three months ended March 31.

The following table presents the activity of the allowance for credit losses by portfolio segment for the three months ended June 30.

Allowance for Credit Losses:

March 31, 2022

June 30, 2022

(Dollar amounts in thousands) Commercial Residential Consumer Unallocated Total

5 unchanged sentences

Allowance for Credit Losses:

March 31, 2021

June 30, 2021

(Dollar amounts in thousands) Commercial Residential Consumer Unallocated Total

4 unchanged sentences

Ending Balance $ 12,717 $ 17,837 $ 10,988 $ 214 $ 41,756

The following table presents the activity of the allowance for credit losses by portfolio segment for the six months ended June 30.

Allowance for Credit Losses:

June 30, 2022

(Dollar amounts in thousands) Commercial Residential Consumer Unallocated Total

Beginning balance $ 18,883 $ 18,316 $ 10,721 $ 385 $ 48,305

Provision for credit losses ( 2,432 ) ( 4,249 ) 1,019 ( 138 ) ( 5,800 )

Loans charged -off ( 1,253 ) ( 522 ) ( 3,890 ) — ( 5,665 )

Recoveries 1,271 623 2,734 — 4,628

Ending Balance $ 16,469 $ 14,168 $ 10,584 $ 247 $ 41,468

Allowance for Credit Losses:

June 30, 2021

(Dollar amounts in thousands) Commercial Residential Consumer Unallocated Total

Beginning balance $ 13,925 $ 19,142 $ 11,009 $ — $ 44,076

Provision for credit losses ( 1,536 ) ( 1,190 ) 768 214 ( 1,744 )

Loans charged -off ( 299 ) ( 431 ) ( 2,759 ) — ( 3,489 )

Recoveries 627 316 1,970 — 2,913

Ending Balance $ 12,717 $ 17,837 $ 10,988 $ 214 $ 41,756

The tables below present the recorded investment in non-performing loans by class of loans.

March 31, 2022

June 30, 2022

90 Days Still Nonaccrual

30 unchanged sentences

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

March 31, 2022

June 30, 2022

Collateral Type

30 unchanged sentences

The following tables presents the aging of the recorded investment in loans by past due category and class of loans.

March 31, 2022

June 30, 2022

30-59 Days 60-89 Days 90 Days and Greater Total

29 unchanged sentences

TOTAL $ 15,178 $ 2,833 $ 3,479 $ 21,490 $ 2,802,479 $ 2,823,969

During the three months ended March 31, 2022 and 2021, the terms of certain loans were modified as troubled debt restructurings (TDRs).

During the three and six months ended June 30, 2022 and 2021, the terms of certain loans were modified as troubled debt restructurings (TDRs).

The following tables present the activity for TDRs.

(Dollar amounts in thousands) Commercial Residential Consumer Total

April 1, $ 407 $ 3,445 $ 690 $ 4,542

Added/(Disposed) 305 101 ( 679 ) ( 273 )

Charged Off — — — —

Payments ( 40 ) ( 72 ) ( 11 ) ( 123 )

June 30, $ 672 $ 3,474 $ — $ 4,146

(Dollar amounts in thousands) Commercial Residential Consumer Total

January 1, $ 407 $ 3,686 $ 706 $ 4,799

Added/(Disposed) 305 128 ( 611 ) ( 178 )

Charged Off — — — —

Payments ( 40 ) ( 340 ) ( 95 ) ( 475 )

June 30, $ 672 $ 3,474 $ — $ 4,146

(Dollar amounts in thousands) Commercial Residential Consumer Total

April 1, — 3,888 576 4,464

Added — 113 74 187

1 unchanged sentence

Payments — ( 70 ) ( 62 ) ( 132 )

March 31, $ 407 $ 3,445 $ 690 $ 4,542

June 30, — 3,904 556 4,460

(Dollar amounts in thousands) Commercial Residential Consumer Total

3 unchanged sentences

Payments — ( 149 ) ( 108 ) ( 257 )

March 31, — 3,888 576 4,464

June 30, — 3,904 556 4,460

Modification of the terms of such loans typically include one or a combination of the following:

5 unchanged sentences

Modifications involving an extension of the maturity date were for periods ranging from twelve months to ten years.

Troubled debt restructurings during the three months ended March 31, 2022 and 2021 did not result in any material charge-offs or additional provision expense.

The Corporation has no allocations of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2022 and 2021.

The Corporation has not committed to lend additional amounts as of March 31, 2022 and 2021 to customers with outstanding loans that are classified as troubled debt restructurings.

None of the charge-offs during the three months ended March 31, 2022 and 2021 were of restructurings that had occurred in the previous 12 months.

To be eligible under section 4013, a loan modification must be (1) related to COVID-19;

Troubled debt restructurings during the three months ended June 30, 2022 and 2021 did not result in any material charge-offs or additional provision expense.

The Corporation has no allocations of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2022 and 2021.

The Corporation has not committed to lend additional amounts as of June 30, 2022 and 2021 to customers with outstanding loans that are classified as troubled debt restructurings.

None of the charge-offs during the three and six months ended June 30, 2022 and 2021 were of restructurings that had occurred in the previous 12 months.

The CARES Act included a provision that permitted a financial institution to elect to suspend temporarily troubled debt restructuring accounting under ASC Subtopic 310-40 in certain circumstances (“section 4013”).

To be eligible under section 4013, a loan modification must have been (1) related to COVID-19;

(2) executed on a loan that was not more than 30 days past due as of December 31, 2019;

and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the National Emergency or (B) December 31, 2020.

This includes short-term (e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant.

Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented.

From the inception of the CARES Act through March 31, 2022, 1,105 loans totaling $225 million were modified, related to COVID-19, that were not considered troubled debt restructurings.

In response to this section of the CARES Act, the federal

banking agencies issued a revised interagency statement on April 7, 2020 that, in consultation with the Financial Accounting Standards Board, confirmed that for loans not subject to section 4013, short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief were not troubled debt restructurings under ASC Subtopic 310-40.

This included short-term (e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that were insignificant.

Borrowers considered current were those that were less than 30 days past due on their contractual payments at the time a modification program was implemented.

From the inception of the CARES Act through December 31, 2021, 1,360 loans totaling $200 million were modified, related to COVID-19, that were not considered troubled debt restructurings.

1,189 loans totaling $195 million have resumed normal scheduled payments.

184 remaining loans are still under a debt relief plan, which include 9 commercial loans totaling $35 million that have been provided additional payment relief since the initial payment relief plan.

1 loan totaling $16 thousand is under the original payment relief plan.

116 remaining loans are still under a debt relief plan, which include no commercial loans that have been provided additional payment relief since the initial payment relief plan.

There are no loans under the original payment relief plan.

Credit Quality Indicators:

2 unchanged sentences

The Corporation analyzes loans individually by classifying the loans as to credit risk.

This analysis includes non-homogeneous loans, such as commercial loans, with an outstanding balance

greater than $ 100 thousand.

This analysis includes non-homogeneous loans, such as commercial loans, with an outstanding balance greater than $ 100 thousand.

Any consumer loans outstanding to a borrower who had commercial loans analyzed will be similarly risk rated.

11 unchanged sentences

The following tables present the commercial loan portfolio by risk category:

March 31, 2022

June 30, 2022

Term Loans at Amortized Cost Basis by Origination Year Revolving

90 unchanged sentences

The following table presents the balance of our other loan portfolio based on the credit risk profile of loans that are performing and loans that are nonperforming:

March 31, 2022

June 30, 2022

Term Loans at Amortized Cost Basis by Origination Year Revolving

47 unchanged sentences

All securities are classified as available-for-sale.

March 31, 2022

June 30, 2022

(Dollar amounts in thousands) Amortized

27 unchanged sentences

TOTAL $ 1,344,790 $ 30,126 $ ( 10,182 ) $ 1,364,734

Contractual maturities of debt securities at March 31, 2022 were as follows.

Contractual maturities of debt securities at June 30, 2022 were as follows.

Available-for-Sale

8 unchanged sentences

TOTAL $ 1,480,872 $ 1,338,452

There were $ 5 thousand in gross gains and zero in losses from investment sales/calls realized by the Corporation for the three months ended March 31, 2022.

For the three months ended March 31, 2021 there were $ 5 thousand in gross gains and $157 thousand in losses on sales/calls of investment securities.

The following tables show the securities’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position, at March 31, 2022 and December 31, 2021.

March 31, 2022

There were zero and $5 thousand in gross gains and zero in losses from investment sales/calls realized by the Corporation for the three and six months ended June 30, 2022.

For the three and six months ended June 30, 2021 there were $ 258 thousand and $263 thousand in gross gains and zero and $157 thousand in losses on sales/calls of investment securities.

June 30, 2022

Less Than 12 Months More Than 12 Months Total

26 unchanged sentences

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

Gross unrealized losses on investment securities were $79.6 million as of March 31, 2022 and $10.2 million as of December 31, 2021.

Gross unrealized losses on investment securities were $146.8 million as of June 30, 2022 and $10.2 million as of December 31, 2021.

Management believes these losses represent negative adjustments to market value relative to the interest rate environment reflecting the increase in market rates and not losses related to the creditworthiness of the issuer.

1 unchanged sentence

Management does not intend to sell these securities and it is not more likely than not that we will be required to sell them before their anticipated recovery.

The table below presents a rollforward of the credit losses recognized in earnings for the three month periods ended March 31, 2022 and 2021:

Three Months Ended March 31,

The table below presents a rollforward of the credit losses recognized in earnings for the three and six month periods ended June 30, 2022 and 2021:

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

(Dollar amounts in thousands) 2022 2021 2022 2021

21 unchanged sentences

The fair value of derivatives is based on valuation models using observable market data as of the measurement date (Level 2 inputs).

March 31, 2022

June 30, 2022

Fair Value Measurements Using Significant

30 unchanged sentences

There were no transfers between Level 1 and Level 2 during 2022 and 2021.

The tables below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2022 and the year ended December 31, 2021.

The tables below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2022 and the year ended December 31, 2021.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

(Dollar amounts in thousands) State and

1 unchanged sentence

obligations Other securities Total

Beginning balance, April 1 $ 1,545 $ 3,531 $ 1,743 $ 6,819

Total realized/unrealized gains or losses

Included in earnings — — — —

Included in other comprehensive income — ( 444 ) — ( 444 )

Transfers — — — —

Settlements — — (249) ( 249 )

Ending balance, June 30 $ 1,545 $ 3,087 $ 1,494 $ 6,126

Six Months Ended June 30, 2022

(Dollar amounts in thousands) State and

obligations Collateralized

obligations Other securities Total

Beginning balance, January 1 $ 1,895 $ 3,359 $ 1,743 $ 6,997

4 unchanged sentences

Settlements ( 350 ) — (249) ( 599 )

Ending balance, March 31 $ 1,545 $ 3,531 $ 1,743 $ 6,819

Ending balance, June 30 $ 1,545 $ 3,087 $ 1,494 $ 6,126

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

10 unchanged sentences

Ending balance, December 31 $ 1,895 $ 3,359 $ 1,743 $ 6,997

The following table presents quantitative information about recurring and non-recurring Level 3 fair value measurements at March 31, 2022.

The following table presents quantitative information about recurring and non-recurring Level 3 fair value measurements at June 30, 2022.

(Dollar amounts in thousands) Fair Value Valuation Technique(s) Unobservable Input(s) Range

25 unchanged sentences

Other real estate and individually evaluated loans carried at fair value are primarily comprised of smaller balance properties.

The carrying amounts and estimated fair value of financial instruments at March 31, 2022 and December 31, 2021, are shown below.

The carrying amounts and estimated fair value of financial instruments at June 30, 2022 and December 31, 2021, are shown below.

Carrying amount is the estimated fair value for cash and due from banks, federal funds sold, short-term borrowings, accrued interest receivable and payable, demand deposits, short-term debt and variable-rate loans or deposits that reprice frequently and fully.

7 unchanged sentences

The fair value of off-balance sheet items is not considered material.

March 31, 2022

June 30, 2022

Carrying Fair Value

25 unchanged sentences

Period–end short-term borrowings were comprised of the following:

(Dollar amounts in thousands) March 31, 2022 December 31, 2021

(Dollar amounts in thousands) June 30, 2022 December 31, 2021

Federal Funds Purchased $ 2,350 $ 3,275

8 unchanged sentences

Collateral pledged to repurchase agreements by remaining maturity are as follows:

March 31, 2022

June 30, 2022

Repurchase Agreements Remaining Contractual Maturity of the Agreements

6 unchanged sentences

Components of Net Periodic Benefit Cost

Three Months Ended March 31,

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

(Dollar amounts in thousands) Pension Benefits Post-Retirement

Health Benefits Pension Benefits Post-Retirement

Health Benefits

9 unchanged sentences

Contributions of $ 63 thousand have been made to the Pension Plan thus far in 2022.

Contributions of $ 57 thousand have been made through the first three months of 2022 for the Post Retirement Health Benefits plan.

Contributions of $ 116 thousand have been made through the first six months of 2022 for the Post Retirement Health Benefits plan.

No contributions have been made in 2022 for the ESOP.

The Pension plan was frozen for most employees at the end of 2012 and for those employees there will be discretionary contributions to the ESOP plan and a 401K plan in place of the former Pension benefit.

In the first three months of 2022 and 2021 there has been $ 849 thousand and $ 552 thousand of expense accrued for potential contributions to these alternative retirement benefit options.

In the first six months of 2022 and 2021 there has been $ 1.3 million and $ 1.4 million of expense accrued for potential contributions to these alternative retirement benefit options.

New accounting standards

6 unchanged sentences

In January 2021, the FASB issued ASU 2021-01 which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

The guidance is effective for all entities as of March 12, 2020 through December 31, 2022.

guidance is effective for all entities as of March 12, 2020 through December 31, 2022.

The Corporation has discontinued originating LIBOR based loans and has a plan in place to transition all LIBOR indexed loans to term SOFR.

In March 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-02, "Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures" (ASU 2022-02).

ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings (TDRs) in ASC 310-40, "Receivables - Troubled Debt Restructurings by Creditors" for entities that have adopted the current expected credit loss (CECL) model introduced by ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” (ASU 2016-13).

ASU 2022-02 also requires that public business entities disclose current-period gross charge-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, "Financial Instruments—Credit Losses—Measured at Amortized Cost".

ASU 2022-02 is effective for the Corporation for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted.

The Corporation is evaluating the effect that ASU 2022-02 will have on its consolidated financial statements and related disclosures.

Revenue from Contracts with Customers

All of the Corporation's revenue from contracts with customers in the scope of ASC 606 is recognized within Non-Interest Income.

The following table presents the Corporation's sources of Non-Interest Income for the three months ended March 31, 2022 and 2021.

The following table presents the Corporation's sources of Non-Interest Income for the three and six months ended June 30, 2022 and 2021.

Items outside the scope of ASC 606 are noted as such.

Three Months Ended March 31,

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

(Dollar amounts in thousands) 2022 2021 2022 2020

4 unchanged sentences

Net gains on sales of loans (a)

603 1,450 1,265 2,843

Loan servicing fees (a)

368 788 727 1,141

Net gains/(losses) on sales of securities (a)

Other service charges and fees (a)

222 406 328 822

586 5,009 (c) 886

Total non-interest income $ 10,270 $ 10,931 $ 24,008 $ 20,225

(a) Not within the scope of ASC 606.

(b) The Other category includes gains/(losses) on the sale of OREO for the three months ended March 31, 2022 and March 31, 2021, totaling $68 thousand and zero , respectively, which is within the scope of ASC 606;

(b) The Other category includes gains/(losses) on the sale of OREO for the three months ended June 30, 2022 and June 30, 2021, totaling $17 thousand and $16 thousand, respectively, and for the six months ended for the same periods, totaling $85 thousand and $16 thousand, which is within the scope of ASC 606;

the remaining balance is outside the scope of ASC 606.

30 unchanged sentences

The following table summarizes the consideration paid and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date.

(Dollar amounts in thousands) 2021

(Dollar amounts in thousands) As Initially Reported Measurement Period Adjustments As Adjusted

Consideration

2 unchanged sentences

Assets acquired

Cash $ 3,046 $ — $ 3,046

Investment securities available-for-sale 57,054 — 57,054

18 unchanged sentences

As such, these receivables were not considered impaired at the acquisition date and were not subject to guidance relating to purchase credit impaired loans, which have shown evidence of credit deterioration since origination.

A goodwill adjustment was recorded in the second quarter 2022 of $850 thousand.

The deferred tax assets were adjusted for the acquisition based on the final short-period income tax return that was filed for Hancock Bancorp, Inc.

in the second quarter 2022.

The following table presents supplemental pro forma information as if the acquisition had occurred at the beginning of 2020.

The unaudited pro forma information includes adjustments for interest income on loans and securities acquired, interest

expense on deposits acquired, and the related income tax effects.

The unaudited pro forma information includes adjustments for interest income on loans and securities acquired, interest expense on deposits acquired, and the related income tax effects.

The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transactions been effected on the assumed dates.

8 unchanged sentences

Accumulated Other Comprehensive Income

The following tables summarize the changes, net of tax, within each classification of accumulated other comprehensive income/(loss) for the three months ended March 31, 2022 and 2021.

The following tables summarize the changes, net of tax, within each classification of accumulated other comprehensive income/(loss) for the three and six months ended June 30, 2022 and 2021.

gains and 2022

1 unchanged sentence

(Dollar amounts in thousands) Securities plans Total

Beginning balance, April 1, $ ( 53,240 ) $ ( 17,785 ) $ ( 71,025 )

Change in other comprehensive income (loss) before reclassification ( 55,919 ) — ( 55,919 )

Amounts reclassified from accumulated other comprehensive income — 314 314

Net current period other comprehensive income (loss) ( 55,919 ) 314 ( 55,605 )

Ending balance, June 30, $ ( 109,159 ) $ ( 17,471 ) $ ( 126,630 )

gains and 2022

for-sale Retirement

(Dollar amounts in thousands) Securities plans Total

Beginning balance, January 1, $ 15,674 $ ( 18,100 ) $ ( 2,426 )

1 unchanged sentence

Amounts reclassified from accumulated other comprehensive income ( 4 ) 629 625

Net current period other comprehensive loss — — —

Net current period other comprehensive income (loss) (124,833) 629 (124,204)

Ending balance, March 31, $ ( 53,240 ) $ ( 17,785 ) $ ( 71,025 )

Ending balance, June 30, $ ( 109,159 ) $ ( 17,471 ) $ ( 126,630 )

gains and 2021

1 unchanged sentence

(Dollar amounts in thousands) Securities plans Total

Beginning balance, April 1, $ 23,094 $ ( 23,926 ) $ ( 832 )

Change in other comprehensive income (loss) before reclassification 1,965 — 1,965

Amounts reclassified from accumulated other comprehensive income ( 193 ) 472 279

Net current period other comprehensive income (loss) 1,772 472 2,244

Ending balance, June 30, $ 24,866 $ ( 23,454 ) $ 1,412

gains and 2021

for-sale Retirement

(Dollar amounts in thousands) Securities plans Total

Beginning balance, January 1, $ 34,162 $ ( 24,398 ) $ 9,764

2 unchanged sentences

Net current period other comprehensive income (loss) ( 9,296 ) 944 ( 8,352 )

Ending balance, March 31, $ 23,094 $ ( 23,926 ) $ ( 832 )

ASU 2018-02 adjustment — — —

Ending balance, June 30, $ 24,866 $ ( 23,454 ) $ 1,412

Period Balance

16 unchanged sentences

TOTAL $ ( 2,426 ) $ ( 124,204 ) $ ( 126,630 )

Three Months Ended March 31, 2022

Period Balance

(Dollar amounts in thousands) 4/1/2021 Change 6/30/2021

Unrealized gains (losses) on securities available-for-sale

without other than temporary impairment $ 20,598 $ 1,819 $ 22,417

Unrealized gains (losses) on securities available-for-sale

with other than temporary impairment 2,496 ( 47 ) 2,449

Total unrealized gain (loss) on securities available-for-sale $ 23,094 $ 1,772 $ 24,866

Unrealized loss on retirement plans ( 23,926 ) 472 ( 23,454 )

TOTAL $ ( 832 ) $ 2,244 $ 1,412

Period Balance

(Dollar amounts in thousands) 1/1/2021 Change 6/30/2021

Unrealized gains (losses) on securities available-for-sale

without other than temporary impairment $ 31,810 $ ( 9,393 ) $ 22,417

Unrealized gains (losses) on securities available-for-sale

with other than temporary impairment 2,352 97 2,449

Total unrealized income (loss) on securities available-for-sale $ 34,162 $ ( 9,296 ) $ 24,866

Unrealized gain (loss) on retirement plans ( 24,398 ) 944 ( 23,454 )

TOTAL $ 9,764 $ ( 8,352 ) $ 1,412

Three Months Ended June 30, 2022

Details about accumulated Amount reclassified from Affected line item in

11 unchanged sentences

(see Footnote 6 for additional details).

Three Months Ended March 31, 2021

Six Months Ended June 30, 2022

Details about accumulated Amount reclassified from Affected line item in

11 unchanged sentences

(see Footnote 6 for additional details).

Three Months Ended June 30, 2021

Details about accumulated Amount reclassified from Affected line item in

other comprehensive accumulated other the statement where

income components comprehensive income net income is presented

(in thousands)

Unrealized gains and losses $ 258 Net securities gains (losses)

on available-for-sale ( 65 ) Income tax expense

securities $ 193 Net of tax

Amortization of $ ( 518 ) (a) Salary and benefits

retirement plan items 46 Income tax expense

$ ( 472 ) Net of tax

Total reclassifications for the period $ ( 279 ) Net of tax

(a) Included in the computation of net periodic benefit cost.

(see Footnote 6 for additional details).

Six Months Ended June 30, 2021

Details about accumulated Amount reclassified from Affected line item in

other comprehensive accumulated other the statement where

income components comprehensive income net income is presented

(in thousands)

Unrealized gains and losses $ 106 Net securities gains (losses)

on available-for-sale ( 27 ) Income tax expense

securities $ 79 Net of tax

Amortization of $ ( 1,036 ) (a) Salary and benefits

retirement plan items 92 Income tax expense

$ ( 944 ) Net of tax

Total reclassifications for the period $ ( 865 ) Net of tax

(a) Included in the computation of net periodic benefit cost.

(see Footnote 6 for additional details).

The Corporation leases certain branches under operating leases.

At March 31, 2022, the Corporation had lease liabilities totaling $6,517,000 and right-of-use assets totaling $6,489,000 related to these leases.

At June 30, 2022, the Corporation had lease liabilities totaling $6,304,000 and right-of-use assets totaling $6,271,000 related to these leases.

At December 31, 2021, the Corporation had lease liabilities totaling $6,218,000 and right-of-use assets totaling $6,197,000 related to these leases.

Lease liabilities and right-of-use assets are reflected in other liabilities and other assets, respectively.

At March 31, 2022, the weighted average remaining lease term for operating leases was 10.0 years and the weighted average discount rate used in the measurement of operating lease liabilities was 2.20%.

At June 30, 2022, the weighted average remaining lease term for operating leases was 9.8 years and the weighted average discount rate used in the measurement of operating lease liabilities was 2.19%.

The calculated amount of the lease liabilities and right-of-use assets are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments.

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Lease costs were as follows:

(Dollar amounts in thousands) Three Months Ended March 31, 2022

(Dollar amounts in thousands) Six Months Ended June 30, 2022

Operating lease cost $ 523

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Right-of-use assets obtained in exchange for new operating lease liabilities 59

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2022 were as follows:

(Dollar amounts in thousands) March 31, 2022

Twelve Months Ended March 31,

Future minimum payments for operating leases with initial or remaining terms of one year or more as of June 30, 2022 were as follows:

(Dollar amounts in thousands) June 30, 2022

Twelve Months Ended June 30,

Thereafter 2,962

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Present Value of Net Future Minimum Lease Payments $ 6,304

Subsequent Event

On July 12, 2022, the Corporation sold seven classified non farm non residential commercial loans, which were acquired in the two acquisitions in 2019 and 2021, with a total principal balance of $14.9 million.

The net recovery on the sale of $361,000 was a result of the charge-off of the seven loans of $2.1 million, netted by the reserve on those loans and the unamortized discount remaining from the acquisitions.

The loan sale was evaluated to determine if it should be classified as held for sale as of June 30, 2022.

The loan sale did not meet the criteria to be classified as held for sale as of June 30, 2022.

Management's Discussion and Analysis of Financial Condition and Results of Operations

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See further discussion of these critical accounting policies in the 2021 Form 10-K.

Since December 31, 2021, the critical accounting policy for determining the allowance for credit losses has been enhanced with the discussion below from December 31, 2021.

Allowance for credit losses.

The allowance for credit losses (ACL) represents management's estimate of expected losses inherent within the existing loan portfolio.

The allowance for credit losses is increased by the provision for credit losses charged to expense and reduced by loans charged off, net of recoveries.

The allowance for credit losses is determined based on management's assessment of several factors:

reviews and evaluations of specific loans, changes in the nature and volume of the

loan portfolio, current economic conditions, nonperforming loans, determination of acquired loans as purchase credit deteriorated, and reasonable and supportable forecasts.

Loans are individually evaluated when they do not share risk characteristics with other loans in the respective pool.

Loans evaluated individually are excluded from the collective evaluation.

Management elected the collateral dependent practical expedient upon adoption of ASC 326.

Expected credit losses on individually evaluated loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

Management utilizes a cohort methodology to determine the allowance for credit losses.

This method identifies and

captures the balance of a pool of loans with similar risk characteristics, as of a particular point in time to form a cohort, then tracks the respective losses generated by that cohort of loans over their remaining life.

The cohorts track loan balances and historical loss experience since 2008, and management extends the look back period each quarter to capture all available data points in the historical loss rate calculation.

The quantitative component of the ACL involves assumptions that require a significant level of estimation;

these include historical losses as a predictor of future performance, appropriateness of selected delay periods, and the reasonableness of the portfolio segmentation.

A historical data set is expected to provide the best indication of future credit performance.

Delay periods represent the amount of time it takes a cohort of loans to become seasoned, or incur sufficient attrition through pay downs, renewals, or charge-offs.

Portfolio segmentation relates to the pooling of loans with similar risk characteristics, such as industry types, collateral, and consumer purpose.

On an annual basis, in the first quarter, management performs a recalibration of the delay periods and portfolio segmentation to determine whether they are reasonable and appropriate based on the information available at that time.

Management considers qualitative adjustments to expected credit loss estimates for information not already captured in the loss estimation process.

Where past performance may not be representative of future losses, loss rates are adjusted for qualitative and economic forecast factors.

Management uses the peak three consecutive quarter net charge off rate to capture maximum potential volatility over the reasonable and supportable forecast period.

Historical losses utilized in setting the qualitative factor ranges are anchored to 2008 and may be supplemented by peer information when needed.

The qualitative factor ranges are recalibrated annually to capture recent behavior that is indicative of the credit profile of the current portfolio.

Qualitative factors include items, such as changes in lending policies or procedures, asset specific risks, and economic uncertainty in forward-looking forecasts.

Economic indicators utilized in forecasting include unemployment rate, gross domestic product, housing starts, and interest rates.

Management uses a two-year reasonable and supportable period across all loan segments to forecast economic conditions.

Management believes the two-year time horizon aligns with available industry guidance and various forecasting sources.

Economic forecast adjustments are overlaid onto historical loss rates.

As such, reversion from forecast rates to historical loss rates is immediate.

The ACL and allowance for unfunded commitments were $48.3 million and $3.0 million, respectively at December 31, 2021, compared to $43.6 million and $3.4 million, respectively at December 31, 2020.

The $4.7 million increase in the ACL was primarily attributable to the acquisition completed during 2021, offset by a reduction in our qualitative factors related to the COVID pandemic.

The qualitative amount of the reserve increased $631 thousand to $14.3 million.

The quantitative amount is $33.6 million compared to $29.9 million for the previous period.

The $400 thousand decrease in the allowance for unfunded commitments was primarily a result of the removal of our COVID related qualitative factors.

Based on management’s analysis of the current portfolio, management believes the allowance is adequate.Changes in the financial condition of individual borrowers, economic conditions, historical loss experience, or the condition of the various markets in which collateral may be sold may affect the required level of the allowance for credit losses and the associated provision for credit losses.

As management monitors these changes, as well as those factors discussed above, adjustments may be recorded to the allowance for credit losses and the associated provision for credit losses in the future.

Summary of Operating Results

Net income for the three months ended March 31, 2022 was $20.9 million, compared to $12.9 million for the same period in 2021.

Net income for the three months ended June 30, 2022 was $15.6 million, compared to $16.6 million for the same period in 2021.

Basic earnings per share increased to $1.27 for the first quarter of 2022 compared to $1.24 for the same period in 2021.

Return on Assets and Return on Equity were 1.63% and 14.81% respectively, for the three months ended March 31, 2022 compared to 1.12% and 8.58% for the three months ended March 31, 2021.

In March 2020, the outbreak of the Coronavirus Disease 2019 (COVID-19) was recognized as a pandemic by the World Health Organization.

The spread of COVID-19 caused economic and social disruption resulting in unprecedented uncertainty.

Recent declines in COVID-19 cases have resulted in most businesses reopening to capacity and a declining unemployment rate.

Some supply chain issues persist contributing to inflation.

COVID-19 continues to impact the Corporation's customers and still may result in adverse conditions on the Corporation's loans and investments.

Return on Assets and Return on Equity were 1.24% and 12.64% respectively, for the three months ended June 30, 2022 compared to 1.40% and 11.06% for the three months ended June 30, 2021.

Net income for the six months ended June 30, 2022 was $36.5 million, compared to $29.5 million for the same period in 2021.

Basic earnings per share increased to $2.95 for the first six months of 2022 compared to $2.19 for the same period in 2021.

Return on Assets and Return on Equity were 1.43% and 13.80% respectively, for the six months ended June 30, 2022, compared to 1.26% and 9.82% for the six months ended June 30, 2021.

On November 5, 2021, the Corporation completed its acquisition of Hancock Bancorp, Inc.

and its banking subsidiary, Hancock Bank and Trust Company.

Therefore, the results of Hancock Bancorp have been included in the results of operations

beginning on November 5, 2021.

Therefore, the results of Hancock Bancorp have been included in the results of operations beginning on November 5, 2021.

Pursuant to the terms of the merger agreement, each issued and outstanding share of Hancock Bancorp, Inc.

8 unchanged sentences

The Corporation's primary source of earnings is net interest income, which is the difference between the interest earned on loans and other investments and the interest paid for deposits and other sources of funds.

Net interest income increased $2.9 million in the three months ended March 31, 2022 to $37.8 million from $34.9 million in the same period in 2021.

The net interest margin for the three months ended March 31, 2022 is 3.16% compared to 3.27% for the same period in 2021, a 3.42% decrease.

Net interest income increased $4.8 million in the three months ended June 30, 2022 to $40.5 million from $35.6 million in the same period in 2021.

The net interest margin for the three months ended June 30, 2022 is 3.46% compared to 3.23% for the same period in 2021, a 7.17% increase.

Net interest income increased $7.7 million in the six months ended June 30, 2022 to $78.3 million from $70.5 million in the same period in 2021.

The net interest margin for the six months ended June 30, 2022 is 3.31% compared to 3.25% for the same period in 2021.

Interest rates increased significantly from 2021 to 2022, due to federal rate adjustments.

Non-Interest Income

Non-interest income for the three months ended March 31, 2022 was $13.7 million compared to $9.3 million for the same period of 2021.

The change in non-interest income from 2021 to 2022 was primarily driven by a $4.0 million legal settlement received in the first quarter.

Non-interest income for the three months ended June 30, 2022 was $10.3 million compared to $10.9 million for the same period of 2021.

Non-interest income for the six months ended June 30, 2022 was $24.0 million compared to $20.2 million for the same period in 2021.

The change in non-interest income from 2021 to 2022 was primarily driven by a $4.0 million legal settlement received in February, 2022.

The Corporation does not expect this income to reoccur.

Non-Interest Expenses

The Corporation’s non-interest expense for the quarter ended March 31, 2022 was $31.3 million compared to $27.6 million for the same period in 2021.

The year-over-year change is, in part, impacted by the acquisition of Hancock Bancorp in the fourth quarter of 2021.

The Corporation’s non-interest expense for the quarter ended June 30, 2022 was $30.7 million compared to $28.0 million for the same period in 2021.

The Corporation's non-interest expense for the six months ended June 30, 2022 increased $6.4 million to $62.0 million compared to the same period in 2021.

The year-over-year changes are, in part, impacted by the acquisition of Hancock Bancorp in the fourth quarter of 2021.

Allowance for Credit Losses

The Corporation’s provision for credit losses decreased to $(6.6) million for the first quarter of 2022 as compared to $452 thousand for the same period in 2021.

Net charge offs for the first quarter of 2022 were $1.2 million compared to $728 thousand for the same period of 2021.

The negative provision for the quarter was the result of several factors.

The first was the annual model recalibration in which delay periods are updated as well as the qualitative factor scorecard ranges.

Secondly, management removed two qualitative factors that are no longer applicable.

Lastly, loss rates continue to decline, lowering the required reserve.

The Corporation’s provision for credit losses increased to $750 thousand for the first quarter of 2022 as compared to $(2.2) million for the same period in 2021.

Net recoveries for the second quarter of 2022 were $202 thousand compared to $152 thousand for the same period of 2021.

In 2021 the potential losses from the original CECL calculation were not realized, and the economy had shown improvements which allowed for the decrease in provision.

The provision for loan losses decreased $4.1 million to $(5.8) million for the six months ended June 30, 2022 compared to $(1.7) million for the same period in 2021.

Net charge offs for the first six months of 2022 increased $461 thousand to $1.0 million compared to the same period in 2021.

The negative provision for the year was the result of several factors.

The first was the annual model recalibration.

Each year, in the first quarter, management reviews each model variable to determine if adjustments are necessary to improve the model’s predictability.

In the first quarter 2022 the delay periods were shortened to pick up more recent losses.

Also, the qualitative factor maximum scorecard ranges for certain cohorts were reduced, which reduced the reserve.

Secondly, management removed two qualitative factors that were deemed no longer applicable.

The first was related to an acquisition, which management believed to have seasoned adequately that it was no longer warranted.

The second was related to the CECL model and the related uncertainty.

The uncertainty surrounded the newness of the model and potential regulatory scrutiny.

Following two exam cycles, management elected to remove the factor.

Also, during the quarter, historical loss rates continued to decline, which lowers the required reserve.

The historical loss rate declined in most segments.

Based on management’s analysis of the current portfolio, an evaluation that includes consideration of changes in CECL model assumptions of credit quality, economic conditions, and loan composition, management believes the allowance is adequate.

Income Tax Expense

The Corporation’s effective income tax rate for the first three months of 2022 was 21.79% compared to 20.10% for the same period in 2021.

The Corporation’s effective income tax rate for the first six months of 2022 was 20.69% compared to 20.02% for the same period in 2021.

Non-performing Loans

Non-performing loans consist of (1) non-accrual loans on which the ultimate collectability of the full amount of interest is uncertain, (2) loans which have been renegotiated to provide for a reduction or deferral of interest or principal because of a deterioration in the financial position of the borrower, and (3) loans past due ninety days or more as to principal or interest.

Non-performing loans decreased to $13.0 million at March 31, 2022 compared to $14.9 million at December 31, 2021.

Nonperforming loans decreased 38.3% compared to $21.0 million as of March 31, 2021.

A summary of non-performing loans at March 31, 2022 and December 31, 2021 follows:

March 31, 2022 December 31, 2021

Non-performing loans decreased to $13.5 million at June 30, 2022 compared to $14.9 million at December 31, 2021.

Nonperforming loans decreased 32.5% compared to $20.0 million as of June 30, 2021.

A summary of non-performing loans at June 30, 2022 and December 31, 2021 follows:

June 30, 2022 December 31, 2021

Non-accrual loans $ 8,383 $ 9,590

6 unchanged sentences

The following loan categories comprise significant components of the nonperforming non-restructured loans:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Non-accrual loans

7 unchanged sentences

Consumer loans 71 91

To be eligible under section 4013, a loan modification must be (1) related to COVID-19;

To be eligible under section 4013, a loan modification must have been (1) related to COVID-19;

(2) executed on a loan that was not more than 30 days past due as of December 31, 2019;

and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the National Emergency or (B) December 31, 2020.

The date was subsequently extended to December 31, 2021.

This includes short-term (e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant.

Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented.

From the inception of the CARES Act through March 31, 2022, 1,105 loans totaling $225 million were modified, related to COVID-19, that were not considered troubled debt restructurings.

In response to this section of the CARES Act, the federal banking agencies issued a revised interagency statement on April 7, 2020 that, in consultation with the Financial Accounting Standards Board, confirmed that for loans not subject to section 4013, short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief were not troubled debt restructurings under ASC Subtopic 310-40.

This included short-term (e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that were insignificant.

Borrowers considered current were those that were less than 30 days past due on their contractual payments at the time a modification program was implemented.

From the inception of the CARES Act through December 31, 2021, 1,360 loans totaling $200 million were modified, related to COVID-19, that were not considered troubled debt restructurings.

1,189 loans totaling $195 million have resumed normal scheduled payments.

184 remaining loans are still under a debt relief plan, which include 9 commercial loans totaling $35 million that have been provided additional payment relief since the initial payment relief plan.

1 loan totaling $16 thousand is under the original payment relief plan.

116 remaining loans are still under a debt relief plan, which include no commercial loans that have been provided additional payment relief since the initial payment relief plan.

There are no loans under the original payment relief plan.

On these modifications, we have granted payment deferrals, generally for up to three months.

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Responsibility for management of these functions resides with the Asset Liability Committee.

The primary goal

of the Asset Liability Committee is to maximize net interest income within the interest rate risk limits approved by the Board of Directors.

The primary goal of the Asset Liability Committee is to maximize net interest income within the interest rate risk limits approved by the Board of Directors.

Interest Rate Risk

13 unchanged sentences

Management continuously evaluates the merits of such interest rate risk products but does not anticipate the use of such products to become a major part of the Corporation’s risk management strategy.

The table below shows the Corporation’s estimated sensitivity profile as of March 31, 2022.

The table below shows the Corporation’s estimated sensitivity profile as of June 30, 2022.

The change in interest rates assumes a parallel shift in interest rates of 100 and 200 basis points.

5 unchanged sentences

Down 200 -11.45 % -21.62 % -27.44 %

Down 100 -4.95 -9.69 -12.71

Up 100 3.98 7.25 10.01

10 unchanged sentences

Financial Condition

Comparing the first three months of 2022 to the same period in 2021, loans, net of deferred loan costs, have increased $158 million to $2.8 billion.

Deposits increased 12.5% to $4.4 billion at March 31, 2022 compared to March 31, 2021.

Comparing the first six months of 2022 to year-ended December 31, 2021, loans net of deferred loan costs, have increased $72 million to $2.9 billion.

Deposits decreased 0.6% to $4.4 billion at June 30, 2022 compared to December 31, 2021.

Shareholders' equity decreased 20.77% or $121.0 million.

This financial performance decreased book value per share 4.41% to $42.25 at March 31, 2022 from $44.20 at March 31, 2021.

This financial performance decreased book value per share 16.84% to $38.36 at June 30, 2022 from $46.13 at December 31, 2021.

Comparing the first six months of 2022 to the same period in 2021, loans, net of deferred loan costs, have increased $319 million to $2.9 billion.

Deposits increased 9.9% to $4.4 billion at June 30, 2022 compared to June 30, 2021.

Shareholders' equity decreased 21.53% or $126.6 million.

This financial performance decreased book value per share 14.90% to $38.36 at June 30, 2022 from $45.08 at June 30, 2021.

Book value per share is calculated by dividing the total shareholders' equity by the number of shares outstanding.

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As a Small Business Administration lender, we were well positioned to assist business customers in accessing funds available through the Paycheck Protection Program (“PPP”) implemented in April 2020.

Through March 31, 2022, we processed approximately $275 million of approved PPP loans.

The carrying value of these loans is $18 million as of March 31, 2022.

Through June 30, 2022, we processed approximately $272 million of approved PPP loans.

The carrying value of these loans is $5 million as of June 30, 2022.

Capital Adequacy

19 unchanged sentences

Currently the Corporation exceeds all of these minimums.

March 31, 2022 December 31, 2021 To Be Well Capitalized

June 30, 2022 December 31, 2021 To Be Well Capitalized

Common equity tier 1 capital

11 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements