Risk Factors Update Summary

• Added Home Equity Line of Credit and Lease Financing Receivable to loan portfolio segments.
• Loans to principal officers, directors, and affiliates decreased significantly from $21,107 to $10,550.
• Change in Accounting Principle due to ASU 2016-13, resulting in an increase of $4.3 million to the total allowance for credit losses on loans held for investment.
• TotalFair Value of Loans, net of allowance for loan losses increased from $2,679,988 to $2,824,568.
• Net interest income increased by $15,779 from 2022 to 2023, primarily due to a 15% increase in interest income.
• The company transitioned from LIBOR to SOFR, with total exposure of approximately $274.0 million.
• Goodwill decreased by $48,844 since 2021 due to a deferred tax correction related to acquisitions.
• Shareholders' equity increased by $37,166 from 2022 to 2023, driven by net income of $42,964.
• Nonmaturing deposits increased from $2,084,216 to $2,084,216, with a decrease in Time deposits from $900,812 to $899,443.
• The allowance for loan losses increased from $26,641 to $28,511 for Commercial & Agriculture loans.
• Adoption of CECL methodology for purchased loans, leading to an increase in the allowance for credit losses by $4.3 million.
• Unrealized Gains on Available-for-Sale Securities decreased by $43,747 from $52,771 to $9,024.
• Implemented discounted cash flow method for allowance for credit losses, incorporating loss driver analysis.
• The allowance for credit losses increased from 1.33% in 2021 to 1.30% in 2023.
• Noninterest expense increased by $17,827 from 2022 to 2023, mainly due to higher compensation and occupancy expenses.
• Depreciation expense increased significantly from $4,456 in 2022 to $10,760 in 2023.
• Implementation of Portfolio Segmentation with nine identified risk categories for allocating reserves based on risk.
• Net unrealized losses totaled $54,620 on December 31, 2023, compared to $66,949 on December 31, 2022.
• Adopted CECL methodology, resulting in a $4.3 million increase in the allowance for credit losses.
• Real Estate Construction loans decreased from $2,439 to $1,810 due to changes in loan balances.
• Short-term FHLB advances decreased from $338,000 to $337,267, with an increase in Long-term FHLB advances from $2,392 to $2,419.
• Deposits increased from $2,619,984 in 2022 to $2,985,028 in 2023, an increase of $365,044.
• Enhanced disclosure requirements for troubled debt restructurings and loan modifications under ASU 2022-02.
• Provision for loan credit losses increased to $4,435 in 2023 from $1,752 in 2022, primarily to support organic loan growth.
• Letters of credit increased from $43,154 to $59,149, with an increase in Overdraft protection from $45,182 to $59,489.
• Deferred tax assets increased by $429 from $3,334 to $3,763.
• Consumer and Other loans decreased from $18,056 to $18,019, impacting the total loans.
• Recognized incremental allowance for credit losses on loans to customers and off-balance sheet commitments.
• Noninterest income increased by 7%, or $2,076, for the year ended December 31, 2023, driven by increases in lease revenue and service charges.
• Commitments to make loans had interest rates ranging from 3.25% to 8.00% at December 31, 2022, and 3.5% to 8.5% at December 31, 2023.
• Pension shortfall expense decreased from $145 in 2022 to $130 in 2023.
• Securities available for sale increased by $2,528,870, or 9.5%, from $559,874 at December 31, 2021 to $618,272 at December 31, 2023.
• The allowance for credit losses on off-balance-sheet credit exposures increased from $0 to $3,901.
• Interest-bearing deposits increased by $489,678 from $1,723,651 to $2,213,329.
• Interest expense increased by $4,732 from 2022 to 2023, resulting in a 74% increase in total interest expense.
• Swap assets decreased by $4,507,098 from December 31, 2021 to December 31, 2023.
• Recorded a net reduction of retained earnings of $6.1 million upon CECL adoption.
• Total Risk Based Capital Consolidated increased from $395,125 (14.5%) to $429,080 (14.4%), with a decrease in CET1 Risk Based Capital Consolidated from $288,895 (9.7%) to $133,652 (4.5%).
• Nonaccrual loans with a related allowance increased from $11,269 to $12,467.
• Subordinated debentures increased by $1,144 from $103,799 to $103,943.
• The average balance of loans increased by $172,715 from 2022 to 2023, reflecting a 8.5% growth in the loan portfolio.
• Goodwill decreased by $175,000 from December 31, 2022 to December 31, 2023.
• The recorded investment for Commercial Real Estate Owner Occupied decreased from $1,222 to $0.
• Equity securities increased from $1,072 to $2,169, with an increase in Investment in bank subsidiary from $414,263 to $450,791.
• Adjusted amortized cost basis of PCD assets to reflect an increase in the allowance for credit losses.
• Other intangible assets decreased by $1,973,251 from year-end 2021 to 2023.
• FHLB advances decreased by $56,278 from December 31, 2022 to December 31, 2023.