Risk Factors Update Summary

• Adoption of ASU 2016-13 changed the Company's accounting for credit losses, resulting in a $4.5 million decrease in retained earnings.
• Net charge-offs increased significantly from $1,081 million to $11,379 million for the twelve months ended December 31, 2022 to 2023.
• Municipal securities decreased by $70 million from $158 million to $88 million.
• Increase in total interest expense due to various interest expense increases, notably certificates and brokered deposits.
• The Company exited the residential mortgage business, selling $388.0 million in 2022, resulting in a loss of $184 million.
• Increase in interest expense associated with certificates and brokered deposits by $65.7 million, or 330.5%.
• The Compensation Recoupment Policy was adopted to ensure accountability and integrity in pay practices.
• Negative developments in the banking industry could adversely affect business operations and financial condition. Bank failures and increased regulatory scrutiny may impact profitability.
• The provision for credit losses - loans increased from $15.0 million for the twelve months ended December 31, 2022, to $15.5 million for the twelve months ended December 31, 2023.
• Loans transferred to other real estate owned increased by $375 million to $1,188 million.
• Covered Executives are required to return Erroneously Awarded Compensation upon a Recoupment Event.
• The Company adopted ASU 2016-2023, recording a one-time $3.0 million pre-tax adjustment and expects an increase of $2.5-$3.0 million in the allowance for credit losses.
• Loans reclassified to non-accruing status decreased from $450 million to $79 million.
• Increase in interest expense associated with money market accounts by $31.4 million, or 169.5%.
• The wind-down of the consumer mortgage business may result in a $3.1 million pre-tax expense in the first and second quarters of 2023.
• Increase in interest expense associated with other borrowed funds by $3.2 million, or 17.8%.
• The ACL on loans was $38,774,000 as of December 31, 2023, reflecting changes due to ASU 2016-13 adoption.
• Increase in interest income earned on other earning assets by $2.4 million, or 168.0%.
• Agency mortgage-backed securities-residential increased by $74 million from $853 million to $927 million.
• Total deposits increased by $625 million, or 18.2%, from $3.4 billion as of December 31, 2022, to $4.1 billion as of December 31, 2023.
• The Company formed a CECL working group to discuss implementation matters, including a $0.3 million one-time cumulative adjustment to the allowance for held-to-maturity securities.
• Total consumer loans decreased by $341 million from $796 million to $455 million.
• Small business lending increased by $572 million, from $212,975 million to $218,506 million.
• Increase in interest expense related to money market accounts driven by commercial yield increase.
• Increase in interest expense associated with interest-bearing demand deposits by $4.1 million, or 200.9%.
• Incentive-Based Compensation subject to recovery includes amounts received after October 2023.
• Net deferred income tax decreased by $1,919 million to $4,353 million.
• The Company repurchased 188,522 shares of common stock at an average price of $46, totaling a $5.7 million investment.
• The ACL for loans represents all expected credit losses over the expected life of the existing loan portfolio.
• The Company voluntarily revised the 2022 financial statements, correcting an immaterial error in the presentation of dividends received from subsidiaries and equity in undistributed net income.
• Diluted earnings per share decreased from $3.70 to $0.95.
• The approximate fair value of investment securities available-for-sale increased by $84 million, or 21.5%, from $390.4 million as of December 31, 2022, to $474.9 million as of December 31, 2023.
• Residential mortgage loans decreased by $185 million, from $468 million to $383 million.
• The Company repurchased 46,497 shares of common stock in 2023 at an average price of $24.42 per share.
• Net cash provided by operating activities increased by $28,840 million to $82,723 million.
• Accrued income and other assets increased by $6.2 million, or 13.8%, from $44.9 million at December 31, 2022, to $51.1 million at December 31, 2023.
• Net change in other liabilities decreased by $4,983 million to $3,158 million.
• The Company expects to incur a total pre-tax expense of approximately $3.3 million in the first and second quarters of 2023 associated with exiting a line of business.
• The Company adopted ASU 2023-07, enhancing financial reporting by requiring incremental segment information disclosure on an annual and interim basis.