Risk Factors Update Summary

• Purchased receivables increased to $36,842 in 2023 from $19,994 in 2022.
• The Inflation Reduction Act of 2022 imposes a 1% excise tax on stock repurchases.
• Loan balances increased significantly, with loans held for sale rising from $27 million to $31 million.
• Investment securities increased from $10.7 million to $13.2 million at December 31, 2023.
• Rising interest rates decreased the value of held-to-maturity securities portfolio by $0.8 million.
• The total intrinsic value of restricted stock units vested decreased from $1.3 million to $1.1 million.
• Net interest income increased from $80,827 to $95,115, primarily due to higher interest on core loans.
• Net loans increased from $1.772 billion to $1.487 billion.
• The Committee has the discretion to eliminate or reduce Profit Share payments based on various factors.
• Other real estate owned decreased from $5.638 million to $0.
• The Plan specifies that no Profit Share or rights acquired can be assigned or transferred except by will.
• The Company introduced a Profit Sharing Plan to increase stockholder value and motivate employees.
• Nonaccrual loans decreased from $10.6 million to $5.0 million at December 31, 2023.
• The Company repurchased 208,673 shares at an average price of $43 per share.
• The company increased its investment in Federal Home Loan Bank stock from $3 million to $3.98 million.
• The Company will adopt ASU 2023-07 for segment reporting, enhancing disclosures about significant segment expenses.
• The Company made 521 loans, an increase from 1, with $217 million in repayments.
• The company implemented a Compensation Recovery Policy effective December 1, 2023, to recover erroneously awarded Incentive-based Compensation.
• The Company recognized a decrease in restricted stock unit compensation expense from $900,000 to $751,000.
• Commercial real estate lending concentration increased from 49% to 55% of the loan portfolio.
• The aggregate intrinsic value of options exercised decreased from $2.3 million to $1.2 million.
• Interest rate swaps increased to $12,725 in 2023 from $10,470 in 2022.
• The ACL for loans increased from $13.8 million to $17.3 million due to higher expected future loss rates.
• Total revenue increased from $129,631 to $129,192, driven by higher interest income.
• Mortgage servicing rights increased from $18 million to $19.56 million.
• The Plan allows for the amendment, suspension, or termination by the Board, with restrictions to protect Participant rights.
• The allowance for credit losses on loans decreased from $17.27 million to $13.84 million.
• The Policy outlines the recovery process post-Accounting Restatement, ensuring fair compensation practices and compliance.
• ESG risks include climate, diversity, and social justice issues, impacting reputation and securities.
• The fair value of held-to-maturity securities portfolio decreased from $36.8 million to $33.4 million.
• Deposits increased from $2.39 billion to $2.49 billion, with interest-bearing demand accounts rising from $767 million to $927 million.
• The Plan includes a Profit Share Pool formula based on Performance Goals for each Performance Period.
• Efficiency ratio improved from 72.39% to 72.64%, indicating better cost management.
• Unfunded loan commitments increased to $120,000 in 2023 from $110,000 in 2022.
• Total loans decreased from $1,798,053 to $1,772,227, with a decrease in commercial & industrial loans.
• The Company recognized servicing fees of $3.8 million in 2023, an increase from $3.3 million in 2022.
• ASU 2023-09 improves income tax disclosures, requiring greater disaggregation of information in rate reconciliation.
• The total intrinsic value of options exercised decreased from $355,000 to $1.2 million.
• Restricted Stock Units granted increased from 215 to 502.
• Purchased receivable balances increased from $7.0 million to $24.8 million, with income rising from $2.0 million to $4.5 million.
• The Company capitalized 3 new MSR, totaling $3,616,000, a decrease from 4 capitalized in 2022.
• Stock options granted decreased to 195 in 2023 from 819 in 2022.
• The Company recognized a decrease in stock option compensation expense from $108,000 to $74,000.
• The Policy allows for discretion in determining recovery methods and mandates full repayment of erroneously awarded compensation.
• Common equity tier 1 capital increased from $235,378 to $264,775.
• Participants may receive Profit Shares in cash within three and one-half months following the end of the Company's fiscal year.
• Total assets increased from $2.807 billion to $2.674 billion.
• Provision for credit losses increased from $1,846 to $3,842, mainly due to higher portfolio loans.
• Marketable equity securities increased from $10 million to $13.15 million.
• Interest-bearing deposits at the Federal Reserve Bank decreased from $231,186 to $90,922.
• Loans modified for borrowers experiencing financial difficulty decreased from $10.6 million to $5.1 million.
• The Plan outlines the duties upon insolvency, requiring the Trustee to suspend payments and hold assets for creditors.
• Mortgage banking income decreased by $8,809, impacting other operating income.
• The Company repurchased 110,000 shares of common stock, with a weighted average price of $43.34 in 2023.
• Commercial servicing revenue increased by $1,322, driven by new swap contracts.
• The Company's mix of deposits shifted, with certificates of deposit increasing from $192 million to $331 million.
• Investment securities decreased by $36 million, with changes in short-term maturities and calls.
• The Company's interest sensitivity gap increased from $460 million to $1,125 million, impacting the percentage of total interest-earning assets.