Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May ~~2, 2022,~~1, 2023, the registrant had ~~35,538,460~~35,728,266 shares of common stock, $.01 par value per share, outstanding.

1. Basis of Presentation

Premier Financial Corp. (“Premier” or the “Company”) is a ~~bank~~financial holding company that conducts business through its wholly-owned subsidiaries, Premier Bank ~~("Bank"~~(the "Bank"), First Insurance Group of the Midwest, Inc. (“First Insurance”), PFC Risk Management Inc. (“PFC Risk Management”) and PFC Capital, LLC (“PFC Capital”). All significant intercompany transactions and balances are eliminated in consolidation. Premier’s stock is traded on the NASDAQ Global Select Market under the ticker PFC.

The Bank is primarily engaged in community banking. It attracts deposits from the general public through its offices and website, and uses those and other available sources of funds to originate residential real estate loans, commercial real estate loans, commercial loans, home improvement and home equity loans and consumer loans. In addition, the Bank invests in U.S. Treasury and federal government agency obligations, obligations of states and political subdivisions, mortgage-backed securities ("MBS") that are issued by federal agencies, collateralized mortgage obligations (“CMOs”), and corporate bonds. The Bank’s deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Bank is a member of the Federal Home Loan Bank (“FHLB”) System.

PFC Capital was formed as an Ohio limited liability company in 2016 for the purpose of providing mezzanine funding for customers. Mezzanine loans are offered by PFC Capital to customers in the Company’s market area and are expected to be repaid from the cash flow from operations of the business.

First Insurance is an insurance agency that conducts business throughout Premier’s markets. First Insurance offers property and casualty insurance, life insurance and group health insurance.

PFC Risk Management is a wholly-owned insurance company subsidiary of the Company that insures the Company and its subsidiaries against certain risks unique to the operations of the Company and for which insurance may not be currently available or economically feasible in today’s insurance marketplace. PFC Risk Management pools resources with several other similar insurance company subsidiaries of financial institutions to help minimize the risk allocable to each participating insurer.

The consolidated condensed statement of financial condition at December 31, ~~2021,~~2022, was derived from the audited financial statements at that date, which were included in Premier’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022 ("2022 Form 10-K").

The accompanying consolidated condensed financial statements as of March 31, ~~2022,~~2023, and for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 have been prepared by the Company without audit and do not include information or footnotes necessary for the complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States (“GAAP”). These consolidated condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the ~~2021~~2022 Form 10-K. However, in the opinion of management, all adjustments, consisting of only normal recurring items, necessary for the fair presentation of the financial statements have been made. The results for the three months ended March 31, ~~2022,~~2023, are not necessarily indicative of the results that may be expected for the entire year.

2. Significant Accounting Policies

Accounting Standards Update

ASU No. 2020-04: Reference Rate Reform – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848): On March 12, 2020, the FASB issued Accounting Standards Update (ASU) 2020-4, "Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASC 848 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rates expected to be discontinued. The Company has formed a cross-functional project team to lead the transition from LIBOR to adoption of alternative reference rates which include Secured Overnight Financing Rate (“SOFR”). The Company identified outstanding loans with LIBOR-based rates and obtained updated reference rate language either at the time of renewal or through separate amendment, or otherwise established that ~~renewed prior to 2021 and began incorporating LIBOR fallback language into existing LIBOR loans.~~an alternate reference rate will apply after June 30, 2023. Additionally, management is utilizing the timeline guidance published by the Alternative Reference Rates Committee to develop and achieve internal milestones during this transitional period. ~~Additionally, the~~The Company has adhered to the International Swaps and Derivatives Association 2020 IBOR Fallbacks Protocol that was released on October 23, 2020. The Company discontinued the use of new LIBOR-based loans by December 31, 2021, according to regulatory guidelines. ~~Legacy LIBOR-based loans will be transitioned~~On December 21, 2022, the FASB issued ASU 2022-06, "Reference Rare Reform (Topic 848): Deferral of the Sunset of Date of Topic 848," which extends the sunset date of ASC Topic 848, "Reference Rate Reform," to ~~an alternative reference rate on or before June 30, 2023. The amendments in these updates are elective, are only available from March 12, 2020 until~~ December 31, ~~2022 and their application did not have a material effect on the Company.~~2024.

~~Accounting Standards not yet adopted~~

ASU No. 2022-02, Troubled Debt Restructurings and Vintage Disclosures: On March 30, 2022, the FASB issued ~~Accounting Standards Update ("ASU")~~ASU 2022-02, "Troubled Debt Restructurings and Vintage Disclosures" which ~~will eliminate~~eliminated troubled debt restructuring ("TDR") accounting for entities that have adopted ASU 2016-13, the current expected credit loss ("CECL") model and ~~will add~~added new vintage disclosures for gross write-offs. The elimination of TDR accounting ~~can~~could be adopted either prospectively for loan modifications ~~after adoption~~ or on a modified retrospective basis that ~~would~~could result in a cumulative effect adjustment to retained earnings in the period of adoption. The Company adopted ASU 2022-02 on January 1, 2023 on a modified retrospective basis. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Therefore, the Company did not make an adjustment to retained earnings. The effect of adoption is included in provision for 2023.

ASU No. 2023-01, Leases (Topic 842): Common Control Arrangements: On March 27, 2023, the FASB issued ASU 2023-01 “Leases (Topic 842): Common Control Arrangements” in order to improve the guidance for applying this topic to arrangements between entities under common control. This ASU also requires all entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group. ASU 2023-01 is effective for the Company for fiscal years beginning after December 15, ~~2022.~~2023, including interim periods within those fiscal years. Early adoption is permitted, however, if an entity adopts these amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes the interim period. The Company ~~can elect to early adopt a part or all of~~does not anticipate any material effect on the ~~update. The~~ Company ~~is currently assessing the impacts of adopting the guidance.~~upon adoption.

3. Fair Value

FASB ASC Topic 820, Fair Value Measurements, defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that

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assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

~~Table of Contents~~

FASB ASC Topic 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on the best information available. In that regard, FASB ASC Topic 820 established a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

•

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

•

Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by a correlation or other means.

•

Level 3: Unobservable inputs for determining fair value of assets and liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Available-for-sale securities - Securities classified as available for sale are generally reported at fair value utilizing Level 2 inputs where the Company obtains fair value measurements from an independent pricing service that uses matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows and the bonds’ terms and conditions, among other things. Securities in Level 2 include U.S. federal government agencies, ~~mortgage-backed~~MBS, asset-backed securities ~~asset-backed securities,~~("ABS"), corporate bonds and municipal securities.

Equity securities – These securities are reported at fair value utilizing Level 1 inputs where the Company obtains fair value measurements from a broker.

Loans held for sale, carried at fair value – The Company has elected the fair value option for all loans held for sale originated after January 31, 2020.

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The fair value of conventional loans held for sale is determined using the current 15 day forward contract price for either 15 or 30 year conventional mortgages (Level 2). The fair value of permanent construction loans held for sale is determined using the current 605 day forward contract price for 15 or 30 years conventional mortgages which is then adjusted for unobservable market data such as estimated fall out rates and estimated time from origination to completion of construction (Level 3).

~~Table of Contents~~

Collateral dependent loans - Fair values for individually analyzed collateral dependent loans are generally based on appraisals obtained from licensed real estate appraisers and in certain circumstances consideration of offers obtained to purchase properties prior to foreclosure. Appraisals for commercial real estate generally use three methods to derive value: cost, sales or market comparison and income approach. The cost method bases value on the cost to replace the current property. Value of market comparison approach evaluates the sales price of similar properties in the same market area. The income approach considers net operating income generated by the property and an investor’s required return. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Comparable sales adjustments are based on known sales prices of similar type and similar use properties and duration of time that the property has been on the market to sell. Such adjustments made in the appraisal process are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Real estate held for sale - Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are then reviewed monthly by members of the asset review committee for valuation changes and are accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which may utilize a single valuation approach or a combination of approaches including cost, comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments may be significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both individually analyzed collateral-dependent loans and other real estate owned ("OREO") are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the Company’s asset quality or collections department reviews the assumptions and approaches utilized in the appraisal. Appraisal values are discounted from 0% to 30% to account for other factors that may impact the value of collateral. In determining the value of individually analyzed collateral dependent loans and OREO, significant unobservable inputs may be used, which include but are not limited to: physical condition of comparable properties sold, net operating income generated by the property and investor rates of return.

Mortgage servicing rights - On a quarterly basis, mortgage servicing rights are evaluated for impairment based upon the fair value of the rights as compared to the carrying amount. If the carrying amount of an individual tranche exceeds fair value, impairment is recorded on that tranche so that the servicing asset is carried at fair value. Fair value is determined at a tranche level based on a model that calculates the present value of estimated future net servicing income. The valuation model utilizes assumptions that market participants would use in estimating future net servicing income and are validated against available market data (Level 2).

Mortgage banking derivative - The fair value of mortgage banking derivatives are evaluated monthly based on derivative valuation models using quoted prices for similar assets adjusted for specific attributes of the commitments and other observable market data at the valuation date (Level 2).

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Interest rate swaps – The Company periodically enters into interest rate swap agreements with its commercial customers who desire a fixed rate loan term that is longer than the Company is willing to extend. The Company then enters into a reciprocal swap agreement with a third party that offsets the interest rate risk from the interest rate swap extended to the customer. The interest rate swaps are derivative instruments which are carried at fair value on the statement of financial condition. The Company uses an independent third party to perform a market valuation analysis for both swap positions (Level 2).

~~Table of Contents~~

The Company also enters into cash flow hedge derivative instruments to hedge the risk of variability in cash flows (future interest payments) attributable to changes in the contractually specified LIBOR benchmark interest rate on the Company’s floating rate loan pool. The Company uses an independent third party to perform a market valuation analysis for these derivatives (Level 2).

The following table summarizes the financial assets measured at fair value on a recurring basis segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets and Liabilities Measured on a Recurring Basis


March 31, 2022	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
March 31, 2023									Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)								(In Thousands)
Assets:
Available for sale securities:
Obligations of U.S. federal government corporations and agencies	$	—	$	161,433	$	—	$	161,433	$	—	$	97,639	$	—	$	97,639
Mortgage-backed securities		—		200,824		—		200,824		—		166,760		—		166,760
Collateralized mortgage obligations		—		305,529		—		305,529		—		248,382		—		248,382
Asset-backed securities		—		213,097		—		213,097		—		159,637		—		159,637
Corporate bonds		—		72,719		—		72,719		—		63,759		—		63,759
Obligations of state and political subdivisions		—		265,764		—		265,764		—		212,565		—		212,565
US Treasuries										49,386		—		—		49,386
Equity securities		13,454		—		—		13,454		6,387		—		—		6,387
Loans held for sale, at fair value		—		37,014		116,484		153,498		—		22,324		97,280		119,604
Interest rate swaps		—		2,338		—		2,338		—		4,180		—		4,180
Mortgage banking derivative		—		9,923		—		9,923
Liabilities:
Interest rate swaps		—		2,338		—		2,338		—		4,180		—		4,180
Cash flow hedge derivative		—		16,180		—		16,180		—		33,395		—		33,395
Mortgage banking derivatives										—		1,348		—		1,348

December 31, 2021

Level 1
Inputs

Level 2
Inputs

Level 3
Inputs

Total
Fair Value

(In Thousands)

Assets:

Available for sale securities:

Obligations of U.S. federal government corporations and
agencies

$
—

$
174,710

$
—

$
174,710

Mortgage-backed securities

—

206,751

—

206,751

Collateralized mortgage obligations

—

260,168

—

260,168

Asset-backed securities

—

220,536

—

220,536

Corporate bonds

—

70,893

—

70,893

Obligations of state and political subdivisions

—

273,202

—

273,202

Equity securities

14,097

—

—

14,097

Loans held for sale, at fair value

—

28,780

134,167

162,947

Interest rate swaps

—

1,287

—

1,287

Mortgage banking derivative

—

2,336

—

2,336

Liabilities:

Interest rate swaps

—

1,292

—

1,292

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December 31, 2022	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Assets:
Available for sale securities:
Obligations of U.S. federal government corporations and agencies	$	—	$	95,909	$	—	$	95,909
Mortgage-backed securities		—		167,589		—		167,589
Collateralized mortgage obligations		—		249,805		—		249,805
Asset-backed securities		—		192,504		—		192,504
Corporate bonds		—		64,482		—		64,482
Obligations of state and political subdivisions		—		221,594		—		221,594
US Treasuries		48,198		—		—		48,198
Equity securities		7,832		—		—		7,832
Loans held for sale, at fair value		—		23,589		91,662		115,251
Interest rate swaps		—		4,494		—		4,494
Mortgage banking derivatives		—		1,349		—		1,349
Liabilities:
Interest rate swaps		—		4,494		—		4,494
Cash flow hedge derivative		—		40,032		—		40,032

The table below presents a reconciliation of assets that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three ~~month periods~~months ended March 31, ~~2022~~2023 and ~~2021.~~

~~Table of Contents~~

2022. There were 0no securities that were measured at Level 3 for the three ~~month periods~~months ended March 31, ~~2022~~2023 and ~~2021.~~2022.


	Construction loans held for sale						Construction loans held for sale
	Three Months Ended March 31,						Three Months Ended March 31,
	2022			2021			2023			2022
Balance of recurring Level 3 assets at beginning of period	$	134,167		$	123,029		$	91,662		$	134,167
Total gains (losses) for the period
Included in change in fair value of loans held for sale		(13,459	)		(5,568	)		5,971			(13,459	)
Originations		36,343			34,003			23,181			36,343
Sales		(40,567	)		(16,826	)		(23,534	)		(40,567	)
Balance of recurring Level 3 assets at end of period	$	116,484		$	134,638		$	97,280		$	116,484

For Level 3 assets and liabilities measured at fair value on a recurring basis, the significant unobservable inputs used in the fair value measurements were as follows:

March 31, 2022

Fair Value

Valuation Technique

Unobservable Inputs

Range of
Inputs

March 31, 2023

Fair Value

Valuation Technique

Unobservable Inputs

Range of
Inputs

(Dollars in Thousands)

Construction loans held for sale

116,484

Quoted market price

Time discount using the 60 day forward contract

0.00% - 1.52%

97,280

Adjusted secondary market pricing

Adjustments

0.00% - 0.14%

December 31, 2021

Fair Value

Valuation Technique

Unobservable Inputs

Range of
Inputs

December 31, 2022

Fair Value

Valuation Technique

Unobservable Inputs

Range of
Inputs

(Dollars in Thousands)

Construction loans held for sale

134,167

Quoted market price

Time discount using the 60 day forward contract

0.00% - 1.86%

91,662

Adjusted secondary market pricing

Adjustments

0.00% - 1.04%

The following table summarizes the financial assets measured at fair value on a non-recurring basis segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets and Liabilities Measured on a Non-Recurring Basis


March 31, 2022	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
March 31, 2023									Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)								(In Thousands)
Individually analyzed loans
Residential	$	—	$	—	$	16		16
Commercial real estate		—		—		3,218		3,218	$	—	$	—	$	5,260	$	5,260
Commercial		—		—		6,998		6,998		—		—		4,861		4,861
Total individually analyzed loans		—		—		10,232		10,232

Mortgage servicing rights		—		20,715		—		20,715	$	—	$	2,513	$	—	$	2,513

December 31, 2021

Level 1
Inputs

Level 2
Inputs

Level 3
Inputs

Total Fair
Value

(In Thousands)

Individually analyzed loans

Commercial real estate

$
—

$
—

$
2,749

$
2,749

Commercial

—

—

8,564

8,564

Total individually analyzed loans

—

—

11,313

11,313

Mortgage servicing rights

—

19,538

—

19,538

For Level 3 assets and liabilities measured at fair value on a non-recurring basis as of March 31, ~~2022,~~2023, the significant unobservable inputs used in the fair value measurements were as follows:

Fair
Value

Valuation
Technique

Unobservable
Inputs

Range of
Inputs

Weighted
Average

(Dollars in Thousands)

Individually analyzed Loans-
   Applies to loan classes with an
   appraisal valuation

$
5,199

Appraisals which utilize sales comparison, net income and cost approach

Discounts for collection issues and changes in market conditions

20-50%

31.38
%
Individually analyzed Loans-
   Applies to loan classes without
   an appraisal valuation

$
5,033

Equitable Recoupment claim estimate

Discounts for collection issues

25
%

25.00
%

Fair
Value

Valuation
Technique

Unobservable
Inputs

Range of
Inputs

Weighted
Average

(Dollars in Thousands)

Individually analyzed Loans-
Applies to loan classes with an
appraisal valuation

6,263

Appraisals which utilize sales comparison, net income and cost approach

Discounts for collection issues and changes in market conditions

10-50%

22.46

For Level 3 assets and liabilities measured at fair value on a non-recurring basis as of December 31, ~~2021,~~2022, the significant unobservable inputs used in the fair value measurements were as follows:

Fair
Value

Valuation
Technique

Unobservable
Inputs

Range of
Inputs

Weighted
Average

(Dollars in Thousands)

Individually analyzed Loans-
   Applies to loan classes with an
   appraisal valuation

$
5,821

Appraisals which utilize sales comparison, net income and cost approach

Discounts for collection issues and changes in market conditions

20-50%

35.18
%
Individually analyzed Loans-
   Applies to loan classes without
   an appraisal valuation

$
5,492

Equitable Recoupment claim estimate

Discounts for collection issues

25
%

25.00
%

Fair
Value

Valuation
Technique

Unobservable
Inputs

Range of
Inputs

Weighted
Average

(Dollars in Thousands)

Individually analyzed Loans-
Applies to loan classes with an
appraisal valuation

5,146

Appraisals which utilize sales comparison, net income and cost approach

Discounts for collection issues and changes in market conditions

10-50%

28.29

The Company has elected the fair value option for new applications accepted after January 31, 2020, and subsequently originated for residential mortgage and permanent construction loans held for sale. These loans are intended for sale and the Company believes that fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policies.

The aggregate fair value of the residential mortgage loans held for sale at March 31, ~~2022~~2023 and December 31, ~~2021~~2022 was $~~37.0~~22.3 million and $~~28.8~~23.6 million, respectively, and they had a contractual balance of $~~36.1~~23.4 million and $~~27.7~~25.3 million, respectively, for these same periods. The difference between the fair value and the contractual balance is recorded in gains and losses on the sale of loans held for sale. For the three months ended March 31, ~~2022,~~2023, $~~1.5~~367,000 ~~million~~ was recorded in ~~losses~~gains on the sale of loans held for sale for the change in fair value. For the three months ended March 31, ~~2021,~~2022, $~~4.3~~1.5 million was recorded in ~~gains~~losses on the sale of loans held for sale for the change in fair value.

The aggregate fair value of the permanent construction loans held for sale at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, was $~~116.5~~97.3 million and $~~134.2~~91.7 million, respectively, and they had a contractual balance of $~~120.8~~102.7 million and $~~125.0~~103.1 million, respectively, for these same periods. The difference between the fair value and the contractual balance is recorded in gains and losses on the sale of loans held for sale. For the three months ended March 31, ~~2022,~~2023, $~~13.4~~6.0 million was recorded in ~~losses~~gains on the sale of loans held for sale for the change in

fair value. For the three months ended March 31, ~~2021,~~2022, $~~5.6~~13.4 million was recorded in losses on the sale of loans held for sale for the change in fair value.

In accordance with FASB ASC Topic 825, the Fair Value Measurements tables are a comparative condensed consolidated statement of financial condition based on carrying amount and estimated fair values of financial instruments as of March 31, ~~2022,~~2023, and December 31, ~~2021.~~2022. Accordingly, the aggregate fair value amounts presented do not represent the underlying value to Premier.

Much of the information used to arrive at “fair value” is highly subjective and judgmental in nature and therefore the results may not be precise. Subjective factors include, among other things, estimated cash flows, risk characteristics and interest rates, all of which are subject to change. With the exception of investment securities, the Company’s financial instruments are not readily marketable and market prices do not exist. Since negotiated prices for the instruments, which are not readily marketable, depend greatly on the motivation of the buyer and seller, the amounts that will actually be realized or paid per settlement or maturity of these instruments could be significantly different.

The carrying amount of cash and cash equivalents, as a result of their short-term nature, is considered to be equal to fair value and are classified as Level 1.

It was not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability.

The Company’s loans were valued on an individual basis, with consideration given to the loans’ underlying characteristics, including account types, remaining terms (in months), annual interest rates or coupons, interest types, past delinquencies, timing of principal and interest payments, current market rates, loss exposures, and remaining balances. The model utilizes a discounted cash flow (“DCF”) approach to estimate the fair value of the loans using assumptions for the coupon rates, remaining maturities, prepayment speeds, projected default probabilities, losses given defaults, and estimates of prevailing discount rates. The DCF approach models the credit losses directly in the projected cash flows. The model applies various assumptions regarding credit, interest, and prepayment risks for the loans based on loan types, payment types and fixed or variable classifications. The estimated fair value of individually analyzed loans is based on the fair value of the collateral, less estimated cost to sell, or the present value of the loan’s expected future cash flows (discounted at the loan’s effective interest rate). All individually analyzed loans are classified as Level 3 within the valuation hierarchy.

The fair value of non-interest bearing deposits are considered equal to the amount payable on demand at the reporting date (i.e. carrying value) and are classified as Level 1. The fair value of savings, checking and certain money market accounts are equal to their carrying amounts and are a Level 1 classification. Fair values of fixed rate certificates of deposit are estimated using a DCF calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

The carrying value of notes payable, as a result of their short-term nature, is considered to be equal to fair value and are classified as Level 1.

The fair values of securities sold under repurchase agreements are equal to their carrying amounts resulting in a Level 1 classification. The carrying value of floating rate subordinated debentures was considered to be the carrying value as the debt is floating rate and can be prepaid at any time without penalty. The carrying value of fixed rate subordinated debt is estimated using a DCF calculation that applies interest rates currently being offered in the market to the expected maturity of the ~~debt.~~debt resulting in a Level 2 classification.

FHLB advances with maturities greater than 90 days are valued based on a DCF analysis, using interest rates currently being quoted for similar characteristics and maturities resulting in a Level 2 classification. The cost or value of any call or put options is based on the estimated cost to settle the option at March 31, ~~2022.~~2023.

The carrying value and estimated fair values of financial instruments at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, were as follows:


			Fair Value Measurements at March 31, 2022										Fair Value Measurements at March 31, 2023
			(In Thousands)										(In Thousands)
	Carrying Value		Total		Level 1		Level 2		Level 3		Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	153,766	$	153,766	$	153,766	$	—	$	—	$	157,027	$	157,027	$	157,027	$	—	$	—
Securities available for sale		1,219,365		1,219,365		—		1,219,365		—
Equity securities		13,454		13,454		13,454		—		—
Accrued interest receivable		21,765		21,765		21,765		—		—
Federal Home Loan Bank Stock		15,332	N/A		N/A		N/A		N/A			37,056	N/A		N/A		N/A		N/A
Loans receivable, net		5,321,136		5,319,654		—		—		5,319,654		6,501,556		6,267,202		—		—		6,267,202
Loans held for sale, carried at fair value		153,498		153,498		—		37,014		116,484
Accrued interest receivable												29,388		29,388		29,388		—		—

Financial Liabilities:
Deposits	$	6,317,235	$	6,306,616	$	5,592,560	$	714,056	$	—	$	6,774,031	$	6,778,208	$	5,605,298	$	1,172,910	$	—
Advances from Federal Home Loan Bank		150,000		150,000		—		150,000		—		658,000		657,994		—		657,994		—
Subordinated debentures		85,008		84,168		—		84,168		—		85,123		73,758		—		—		73,758


			Fair Value Measurements at December 31, 2021										Fair Value Measurements at December 31, 2022
			(In Thousands)										(In Thousands)
	Carrying Value		Total		Level 1		Level 2		Level 3		Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	161,566	$	161,566	$	161,566	$	—	$	—	$	128,160	$	128,160	$	128,160	$	—	$	—
Securities available for sale		1,206,260		1,206,260		—		1,206,260		—
Equity securities		14,097		14,097		14,097		—		—
Accrued interest receivable		20,767		20,767		20,767		—		—
Federal Home Loan Bank Stock		11,585	N/A		N/A		N/A		N/A			29,185	N/A		N/A		N/A		N/A
Loans receivable, net		5,229,700		5,265,689		—		—		5,265,689		6,387,804		6,129,814		—		—		6,129,814
Loans held for sale, carried at fair value		162,947		162,947		—		28,780		134,167
Accrued interest receivable												28,709		28,709		28,709		—		—

Financial Liabilities:
Deposits	$	6,282,051	$	6,280,336	$	5,481,928	$	798,408	$	—	$	6,906,719	$	6,881,110	$	5,852,952	$	1,028,158	$	—
Advances from Federal Home Loan Bank												428,000		427,999		—		427,999	$	—
Subordinated debentures		84,976		85,417		—		—		85,417		85,103		76,989		—		—		76,989

4. Stock Compensation Plans

Premier has established equity based compensation plans for its directors and employees. On February 27, 2018, the Board adopted, and the shareholders approved at the 2018 Annual Shareholders Meeting, the Premier Financial Corp. 2018 Equity Incentive Plan (the “2018 Equity Plan”). The 2018 Equity Plan replaced all existing plans, although the Company’s former equity plans remain in existence to the extent there were outstanding grants thereunder at the time the 2018 Equity Plan was approved. In addition, as a result of the ~~Merger,~~Company's merger (the "Merger") with United Community Federal Corp. ("UCFC"), Premier assumed certain outstanding stock options granted under UCFC’s Amended and Restated 2007 Long-Term Incentive Plan (the “UCFC 2007 Plan”) and UCFC’s 2015 Long Term Incentive Plan, which has since been renamed as the “Premier Financial Corp. 2015 Long Term Incentive Plan” (the “2015 Plan”). Premier also assumed the ~~2015 Plan with respect to the~~shares available ~~shares~~for future issuance under the ~~UCFC~~ 2015 Plan as of the effective date of the Merger, with appropriate adjustments to the number of shares available to reflect the Merger. The stock options assumed from UCFC in the Merger remain subject to the terms of the 2015 Plan, but became exercisable solely to purchase shares of Premier, with appropriate adjustments to the number of shares subject to the assumed stock options and the exercise price of such stock ~~options and remain subject to the terms of the 2015 Plan.~~options. Besides certain options issued under the First Defiance Financial Corp. 2010 Equity Incentive Plan, all awards currently outstanding are issued under the 2018 Equity Plan or the 2015 Plan. The 2018 Equity Plan and the 2015 Plan were each amended and restated in February 2022 to align certain administrative components of the plans in addition to enhancing certain governance components. New awards will be made under either the 2018 Equity Plan or the 2015 Plan as the Company determines. The 2018 Equity Plan allows for issuance of up to 900,000 common shares through the award of options, ~~performance stock units ("PSUs"),~~ restricted stock, ~~awards ("RSAs"), restricted~~ stock, ~~units ("RSUs"),~~ stock appreciation rights, ~~("SARs")~~ or other stock-based awards. The 2015 Plan allows for the issuance of up to 1.2 million common shares, as adjusted for the Merger, through the award of options, ~~RSAs, RSUs, and SARs.~~stock, restricted stock, stock units, stock appreciation rights, or performance stock awards.

~~The Company maintains a Short-Term Incentive Plan ("STIP"). Under the 2020, 2021 and 2022 STIPs, the participants can earn a~~Beginning in 2023, directors were able to elect to receive stock in lieu of cash ~~payout.~~ ~~The final amount of benefits under the STIPs is determined as of December 31 of the same year and paid out in cash in~~for their director fees. In the first quarter of 2023, the ~~following year.~~company recognized $

~~As of March 31, 2022,~~ ~~35,661~~6,000 ~~options~~in expense for 753 shares that were issued to ~~acquire Premier shares were outstanding at option prices based on the market value of the underlying shares on the date the options were granted.~~ directors.~~All options expire ten years from the date of grant. Vested options of retirees expire on the earlier of the scheduled expiration date or one year after the retirement date.~~

The Company maintains Long-Term Equity Incentive Plans ~~("LTIP"~~(each, an "LTIP") for select members of management (the "Executive LTIP") and a Key Employee and Commercial Lender Plan (the "Key Plan").

Under the Executive LTIP, participants may earn between 20% to 50% of their salary for potential payout in the form of equity awards based on the achievement of certain corporate performance targets over a three-year period. The Company granted ~~80,794~~66,482 ~~PSUs~~performance stock units ("PSUs") to the participants inunder the ~~2021~~ Executive LTIP during the first quarter of ~~2022,~~2023, which represents the maximum target award. The value of awards issued in 2021, 2022 and ~~2022~~2023 under the Executive LTIP will be determined individually at the end of each respective 36 month performance period ending December 31. The benefits earned under these LTIPs will be paid out in equity in the first quarter following the end of the performance period. The participants will receive all or a portion of the award if their employment is terminated by the Company without cause, by the participant in certain situations, or by death, disability or ~~retirement.~~retirement of the participant.

~~Under~~The maximum amount of compensation expense that may be earned for the PSUs at March 31, 2023 is approximately $5.6 million in the aggregate. However, the estimated expense that is expected to be earned as of March 31, 2023 is $3.5 million, of which $865,000 was unrecognized at March 31, 2023, and will be recognized over the remaining performance periods. A reduction in expense of $338,000 was recorded during the three months ended March 31, 2023 compared to expense of $499,000 for the three months ended March 31, 2022.

Beginning in 2022, under the Key Plan, the participants ~~are~~were granted ~~RSUs~~restricted stock awards ("RSAs") based upon the achievement of certain targets in the prior year. Prior to 2022, restricted stock units ("RSUs") were issued to participants under the same plan. The participants can earn from 5% to 10% of their salary in ~~RSUs that vest~~ ~~three years~~ ~~from the~~

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~~date of grant. The Company granted~~ ~~19,612~~ in RSAs ~~and~~ ~~17,542~~or RSUs, ~~in the first quarter of 2022 and 2021, respectively, as a payout under the Key Plan.~~

~~In 2022, the Company also granted~~ ~~324~~ ~~discretionary RSAs~~ that vest three years from the date of grant. The ~~grants~~Company granted 25,044 in RSAs and 19,612 RSUs in the first quarter of 2023 and 2022, respectively, as a payout under the Key Plan.

In the three months ended March 31, 2023, the Company also granted 13,655 discretionary RSAs that vest over a three year time period.

At March 31, 2023, a total of 159,938 RSAs were outstanding. Compensation expense is recognized over the performance or vesting period. Total expense of $444,000 was recorded during the three months ended March 31, 2023 compared to expense of $262,000 for the three months ended March 31, 2022. Approximately $546,000 and $2.1 million is included within other liabilities at March 31, 2023 and December 31, 2022, respectively, related to the cash portion of the Company's Short-Term Incentive Plans.

The ~~fair~~following table sets forth Premier's performance and restricted stock activity during the three months ended March 31, 2023:


	Performance Stock Units					Restricted Stock Units					Restricted Stock Awards
Unvested Shares	Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value		Shares		Weighted- Average Grant Date Fair Value
Unvested at January 1, 2023		229,813		$	29.12		31,796		$	28.44		99,412	$	29.14
Granted		66,482			24.78		—			—		60,526		24.84
Vested		(55,435	)		26.48		(6,626	)		22.41		—		—
Forfeited		(23,298	)		26.48		—			—		—		—
Unvested at March 31, 2023		217,562		$	28.75		25,170		$	30.03		159,938	$	27.51

As of March 31, 2023, 29,661 options to acquire Premier shares were outstanding at option prices based on the market value of ~~all granted restricted~~the underlying shares ~~was determined by~~on the ~~stock price at~~date the options were granted. All options expire ten years from the date of grant. Vested options of retirees expire on the ~~grant.~~earlier of the scheduled expiration date or one year after the retirement date.

The fair value of each option award is estimated on the date of grant using the Black-Scholes model. Expected volatilities are based on historical volatilities of the Company’s common shares. The Company uses historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

There were 0no options granted during the three months ended March 31, ~~2022 or 2021.~~2023 and 2022.

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Following is stock option activity under the plans during the three months ended March 31, ~~2022:~~2023:

Options
Outstanding

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term (in years)

Aggregate
Intrinsic
Value
(in 000’s)

Options outstanding, January 1, 2022

35,661

$
21.72

Forfeited or cancelled

—

—

Exercised

0

0

Granted

—

—

Options outstanding, March 31, 2022

35,661

$
21.72

4.09

$
310,597

Exercisable at March 31, 2022

35,661

$
21.72

4.09

$
310,597

~~Proceeds, related tax benefits realized from options exercised and intrinsic value of options exercised were as follows (in thousands):~~

Three Months Ended
March 31,

Three Months Ended
March 31,

2022

2021

2022

2021

Proceeds of options exercised

$
—

$
8

$
—

$
8

Related tax benefit recognized

—

—

—

—

Intrinsic value of options exercised

—

11

—

11


	Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in 000’s)
Options outstanding, January 1, 2023		29,661	$	22.54
Forfeited or cancelled		—		—
Exercised		—		—
Granted		—		—
Options outstanding, March 31, 2023		29,661	$	22.54		3.84	$	43,909
Exercisable at March 31, 2023		29,661	$	22.54		3.84	$	43,909

As of March 31, ~~2022,~~2023, there was a de minimus amount of total unrecognized compensation costs related to unvested stock options granted under the Company’s equity plans. The cost is expected to be recognized over a weighted-average period of ~~1.0~~one month ~~month~~.

~~At March 31, 2022, a total of~~ ~~332,251~~ ~~RSAs were outstanding. Compensation expense is recognized over the performance or vesting period.~~ ~~Total expense of $34,000~~ ~~and $1.0~~ ~~million was recorded during each of the three months ended March 31, 2022 and 2021, respectively, and approximately $181,000~~ ~~and $2.7~~ ~~million is included within other liabilities at March 31, 2022 and December 31, 2021, respectively, related to the cash portion of the STIPs.~~

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Performance Stock Units

Restricted Stock Units

Restricted Stock Awards

Unvested Shares

Shares

Weighted-
Average
Grant Date
Fair Value

Shares

Weighted-
Average
Grant Date
Fair Value

Shares

Weighted-
Average
Grant Date
Fair Value

Unvested at January 1, 2022

161,674

$
28.36

51,773

$
28.44

58,260

$
29.71

Granted

80,794

30.65

—

—

19,936

30.66

Vested

—

—

(8,090
)

26.40

(27,580
)

26.93

Forfeited

—

—

(3,730
)

28.20

(786
)

31.84

Unvested at March 31, 2022

242,468

$
29.12

39,953

$
28.88

49,830

$
31.60

~~The maximum amount of compensation expense that may be earned for the PSUs at March 31, 2022, is approximately $6.9~~ ~~million in the aggregate. However, the estimated expense that is expected to be earned as of March 31, 2022, is $4.6~~ ~~million of which $1.7~~ ~~million was unrecognized at March 31, 2022, and will be recognized over the remaining performance periods.~~

5. Dividends on Common Stock

Premier declared and paid a $0.31 per common stock dividend in the first quarter of 2023 and declared and paid a $0.30 per common stock dividend in the first quarter of ~~2022 and declared and paid a $0.24~~ ~~per common stock dividend in the first quarter of 2021.~~2022.

6. Earnings Per Common Share

Basic earnings per share are calculated using the two-class method. The two-class method is an earnings allocation formula under which earnings per share is calculated from common stock and participating securities according to dividends declared and participation rights in undistributed earnings. Under this method, all earnings distributed and undistributed, are allocated to participating securities and common shares based on their respective rights to receive dividends. Unvested share-based payment awards that contain non-forfeitable rights to dividends are considered participating securities (i.e., unvested restricted stock), not subject to performance based measures.

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The following table sets forth the computation of basic and diluted earnings per common share:


	Three Months Ended March 31,				Three Months Ended March 31,
	2022		2021		2023		2022
	(In Thousands, except per share data)				(In Thousands, except per share data)
Basic Earnings Per Share:
Net income available to common shareholders	$	26,357	$	40,996	$	18,149	$	26,357
Less: income allocated to participating securities		35		43		42		35
Net income allocated to common shareholders		26,322		40,953		18,107		26,322

Weighted average common shares outstanding including participating securities		36,026		37,332		35,649		36,026
Less: Participating securities		48		39		43		48
Average common shares		35,978		37,293		35,606		35,978

Basic earnings per common share	$	0.73	$	1.10	$	0.51	$	0.73
Diluted Earnings Per Share:
Net income allocated to common shareholders	$	26,322	$	40,953	$	18,107	$	26,322
Weighted average common shares outstanding for basic earnings per common share		35,978		37,293		35,606		35,978
Add: Dilutive effects of stock options and restricted stock units		112		64		113		112
Average shares and dilutive potential common shares		36,090		37,357		35,719		36,090

Diluted earnings per common share	$	0.73	$	1.10	$	0.51	$	0.73

There were 627 shares for the three months ended March 31, 2023 that were excluded from the diluted earnings per common share calculation. There were 16,206 shares for the three months ended March 31, 2022 that were excluded from the ~~diluted~~dilutive earnings per common share calculation. ~~There were~~ 0 ~~shares for the three months ended March 31, 2021 that were excluded from the dilutive earnings per common share calculation as no shares were anti-dilutive.~~

7. Investment Securities

The following is a summary of available-for-sale securities:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss			Fair Value
	(In Thousands)									(In Thousands)
At March 31, 2022
At March 31, 2023
Available-for-Sale Securities:
Obligations of U.S. government corporations and agencies	$	174,400	$	3	$	(12,970	)	$	161,433	$	116,965	$	—	$	(19,326	)	$	97,639
Mortgage-backed securities		215,800		114		(15,090	)		200,824		196,976		—		(30,216	)		166,760
Collateralized mortgage obligations		326,650		—		(21,122	)		305,528		295,303		—		(46,921	)		248,382
Asset-backed securities		216,998		487		(4,388	)		213,097		166,044		315		(6,722	)		159,637
Corporate bonds		74,395		158		(1,834	)		72,719		71,427		—		(7,668	)		63,759
Obligations of state and political subdivisions		290,408		1,577		(26,221	)		265,764		257,170		141		(44,746	)		212,565
US Treasuries											55,925		—		(6,539	)		49,386
Total Available-for-Sale	$	1,298,651	$	2,339	$	(81,625	)	$	1,219,365	$	1,159,810	$	456	$	(162,138	)	$	998,128

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	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss			Fair Value
	(In Thousands)									(In Thousands)
At December 31, 2021
At December 31, 2022
Available-for-sale
Obligations of U.S. government corporations and agencies	$	174,644	$	984	$	(918	)	$	174,710	$	117,150	$	—	$	(21,241	)	$	95,909
Mortgage-backed securities		208,281		851		(2,381	)		206,751		200,548		—		(32,959	)		167,589
Collateralized mortgage obligations		264,541		363		(4,736	)		260,168		299,731		—		(49,926	)		249,805
Asset-backed securities		221,545		610		(1,619	)		220,536		200,312		517		(8,325	)		192,504
Corporate bonds		70,008		1,160		(275	)		70,893		71,543		—		(7,061	)		64,482
Obligations of state and political subdivisions		272,334		5,898		(5,030	)		273,202		274,856		92		(53,354	)		221,594
US Treasuries											55,987		—		(7,789	)		48,198
Total Available-for-Sale	$	1,211,353	$	9,866	$	(14,959	)	$	1,206,260	$	1,220,127	$	609	$	(180,655	)	$	1,040,081

The amortized cost and fair value of the investment securities portfolio at March 31, ~~2022,~~2023, are shown below by contractual maturity. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. For purposes of the maturity table, ~~mortgage-backed securities (“MBS”),~~MBS, CMOs and ~~asset-backed securities (“ABS”),~~ABS, which are not due at a single maturity date, have not been allocated over the maturity groupings. These securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.


	Available-for-Sale				Available-for-Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In Thousands)				(In Thousands)
Due in one year or less	$	3,230	$	3,235	$	623	$	624
Due after one year through five years		43,732		42,536		43,817		40,481
Due after five years through ten years		205,366		195,580		230,273		201,039
Due after ten years		286,875		258,565		226,774		181,205
MBS/CMO/ABS		759,448		719,449		658,323		574,779
	$	1,298,651	$	1,219,365	$	1,159,810	$	998,128

Investment securities with a carrying amount of $~~555.0~~793.1 million and $~~564.4~~759.8 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, were pledged as ~~collateral on public deposits.~~collateral.

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The following tables summarize Premier’s securities that were in an unrealized loss position at March 31, ~~2022,~~2023 and December 31, ~~2021:~~2022:


	Duration of Unrealized Loss Position															Duration of Unrealized Loss Position
	Less than 12 Months					12 Months or Longer					Total					Less than 12 Months					12 Months or Longer					Total
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Unrealized Loss
	(In Thousands)															(In Thousands)
At March 31, 2022
At March 31, 2023
Available-for-sale securities:
Obligations of U.S. government corporations and agencies	$	152,407	$	(11,201	)	$	8,503	$	(1,769	)	$	160,910	$	(12,970	)	$	—	$	—		$	97,639	$	(19,326	)	$	97,639	$	(19,326	)
Mortgage-backed securities		134,953		(9,319	)		61,098		(5,771	)		196,051		(15,090	)		3,678		(117	)		163,082		(30,099	)		166,760		(30,216	)
Collateralized mortgage obligations		300,681		(20,737	)		4,847		(385	)		305,528		(21,122	)		—		—			248,382		(46,921	)		248,382		(46,921	)
Asset-backed securities		167,305		(4,255	)		15,634		(133	)		182,939		(4,388	)		3,697		(4	)		128,276		(6,718	)		131,973		(6,722	)
Corporate bonds		60,809		(1,786	)		1,212		(48	)		62,021		(1,834	)		8,723		(800	)		55,036		(6,868	)		63,759		(7,668	)
Obligations of state and political subdivisions		125,688		(13,129	)		73,619		(13,092	)		199,307		(26,221	)		18,293		(412	)		177,794		(44,334	)		196,087		(44,746	)
US Treasuries																	—					49,386		(6,539	)		49,386		(6,539	)
Total available-for-sale	$	941,843	$	(60,427	)	$	164,913	$	(21,198	)	$	1,106,756	$	(81,625	)	$	34,391	$	(1,333	)	$	919,595	$	(160,805	)	$	953,986	$	(162,138	)


	Duration of Unrealized Loss Position															Duration of Unrealized Loss Position
	Less than 12 Months					12 Months or Longer					Total					Less than 12 Months					12 Months or Longer					Total
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Unrealized Loss
	(In Thousands)															(In Thousands)
At December 31, 2021
At December 31, 2022
Available-for-sale securities:
Obligations of U.S. government corporations and agencies	$	73,810	$	(918	)	$	—	$	—		$	73,810	$	(918	)	$	64,394	$	(11,158	)	$	31,513	$	(10,083	)	$	95,907	$	(21,241	)
Mortgage-backed securities-residential		167,379		(2,048	)		13,689		(333	)		181,068		(2,381	)		40,908		(4,184	)		126,681		(28,775	)		167,589		(32,959	)
Collateralized mortgage obligations		222,134		(4,736	)		—		—			222,134		(4,736	)		60,676		(11,985	)		159,129		(37,941	)		219,805		(49,926	)
Asset-backed securities		140,226		(1,589	)		2,705		(30	)		142,931		(1,619	)		45,534		(1,499	)		113,580		(6,826	)		159,114		(8,325	)
Corporate bonds		24,173		(270	)		504		(5	)		24,677		(275	)		49,114		(4,960	)		15,368		(2,101	)		64,482		(7,061	)
Obligations of state and political subdivisions		99,199		(3,355	)		34,548		(1,675	)		133,747		(5,030	)		106,610		(13,378	)		98,063		(39,976	)		204,673		(53,354	)
US Treasuries																	19,891		(3,448	)		28,309		(4,341	)		48,200		(7,789	)
Total available-for-sale	$	726,921	$	(12,916	)	$	51,446	$	(2,043	)	$	778,367	$	(14,959	)	$	387,127	$	(50,612	)	$	572,643	$	(130,043	)	$	959,770	$	(180,655	)

The Company ~~realized~~ had $034,000 in realized gains from the sale of available-for-sale securities in the three ~~month period ending~~months ended March 31, ~~2022.~~2023. For the three months ended March 31, ~~2021,~~2022, the Company ~~had $~~realized ~~516,000~~no ~~in realized~~ gains or losses from the sale of investment securities.

~~ASU 2016-13 makes targeted improvements~~ It is expected that the securities would not be settled at less than the amortized cost of the Company's investment because the decline in fair value is attributable to ~~the accounting for~~changes in interest rates and relative spreads and not credit ~~losses on securities available- for-sale. The concept of other than-temporarily impaired has been replaced with the allowance for credit losses. Unlike securities held~~quality. Management does not intend to ~~maturity, securities available-for-sale are evaluated on an individual level~~sell these investments and ~~pooling of securities~~it is not ~~allowed.~~

Quarterly, the Company evaluates if any security has a fair value less than its amortized cost. Once these securities are identified, in order to determine whether a decline in fair value resulted from a credit loss or other factors, the Company performs further analysis as outlined below:

At March 31, ~~2022,~~2023 and December 31, ~~2021,~~2022, the Company held preferred and common stock of various bank holding companies totaling $~~13.4~~6.4 million and $~~14.1~~7.8 million, respectively. During the three months ended March 31, 2023, an unrealized loss of $1.4 million was recorded within gain (loss) on equity securities on the Consolidated Condensed Statements of Income. During the three months ended March 31, 2022, $643,000 of unrealized losses were recorded within gain (loss) on equity securities on the Consolidated Condensed Statements of Income. ~~During the three months ended March 31, 2021, $1.6~~ ~~million of unrealized gains were recorded within gain(loss) on equity securities on the Consolidated Condensed Statements of Income.~~

8. Loans

Loan segments have been identified by evaluating the portfolio based on collateral and credit risk characteristics. Loans receivable consist of the following:

March 31,
2022

December 31,
2021

(In Thousands)

Real Estate:

Residential

$
1,222,057

$
1,167,466

Commercial

2,495,469

2,450,349

Construction

883,712

862,815

4,601,238

4,480,630

Other Loans:

Commercial

910,553

895,638

Home equity and improvement

261,176

264,354

Consumer finance

132,294

126,417

1,304,023

1,286,409

Loans before deferred loan origination fees and costs

5,905,261

5,767,039

Deduct:

Undisbursed construction loan funds

(525,545
)

(477,890
)
Net deferred loan origination fees and costs

8,615

7,019

Allowance for credit losses

(67,195
)

(66,468
)
Total loans

$
5,321,136

$
5,229,700

~~Table of Contents~~


	March 31, 2023			December 31, 2022
	(In Thousands)
Real Estate:
Residential	$	1,624,331		$	1,535,574
Commercial		2,813,441			2,762,311
Construction		1,185,947			1,278,255
		5,623,719			5,576,140
Other Loans:
Commercial		1,061,142			1,055,180
Home equity and improvement		271,676			277,613
Consumer finance		212,299			213,405
		1,545,117			1,546,198
Loans before deferred loan origination fees and costs		7,168,836			7,122,338
Deduct:
Undisbursed construction loan funds		(604,228	)		(672,775	)
Net deferred loan origination fees and costs		11,221			11,057
Allowance for credit losses		(74,273	)		(72,816	)
Total loans	$	6,501,556		$	6,387,804

The Company has responded to the pandemic in numerous ways, including by actively participating in the Paycheck Protection Program (“PPP”) and distributing $636.9 million to small businesses in our markets. As of March 31, ~~2022,~~2023, the Company had $~~18.7~~791,000 ~~million~~ in PPP loans ~~which~~that remained unpaid and were included in commercial loans in the above loan table. As of December 31, ~~2021,~~2022, the Company had $~~58.9~~1.1 million in PPP loans.

~~The following table discloses allowance for credit loss (“ACL”) activity for the three months ended March 31, 2022 and 2021 by portfolio segment (in thousands):~~

Three Months Ended March 31, 2022

Residential Real Estate

Commercial
Real Estate

Construction

Commercial

Home Equity
and
Improvement

Consumer
Finance

Total

Beginning Allowance

$
12,029

$
32,399

$
3,004

$
13,410

$
4,221

$
1,405

$
66,468

Charge-Offs

(140
)

(7
)

—

(10
)

(29
)

(103
)

(289
)
Recoveries

81

59

—

102

34

114

390

Provisions

(330
)

1,750

(391
)

319

(307
)

(415
)

626

Ending Allowance

$
11,640

$
34,201

$
2,613

$
13,821

$
3,919

$
1,001

$
67,195

Three Months Ended March 31, 2021

Residential Real Estate

Commercial
Real Estate

Construction

Commercial

Home Equity
and
Improvement

Consumer Finance

Total

Beginning Allowance

$
17,534

$
43,417

$
2,741

$
11,665

$
4,739

$
1,983

$
82,079

Charge-Offs

—

—

—

(70
)

(3
)

(36
)

(109
)
Recoveries

8

36

—

198

29

27

298

Provisions

(34
)

(8,181
)

35

398

416

(148
)

(7,514
)
Ending Allowance

$
17,508

$
35,272

$
2,776

$
12,191

$
5,181

$
1,826

$
74,754

Table of Contents

The following table presents the amortized cost basis of collateral-dependent loans by class of loans and collateral type as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):


	March 31, 2022										March 31, 2023
	Real Estate		Equipment and Machinery		Inventory and Receivables		Vehicles		Total		Real Estate		Equipment and Machinery		Inventory and Receivables		Vehicles		Total
Real Estate:
Residential	$	78	$	—	$	—	$	—	$	78	$	50	$	—	$	—	$	—	$	50
Commercial		17,592		—		—		—		17,592		12,787		—		1,190		—		13,977
Construction		—		—		—		—		—		—		—		—		—		—

Other Loans:
Commercial		1,573		—		13,711		21		15,305		2,026		447		3,858		31		6,362
Home equity and improvement		—		—		—		—		—		—		—		—		—		—
Consumer finance		—		—		—		—		—		—		—		—		—		—

Total	$	19,243	$	—	$	13,711	$	21	$	32,975	$	14,863	$	447	$	5,048	$	31	$	20,389

~~Table of Contents~~


	December 31, 2021										December 31, 2022
	Real Estate		Equipment and Machinery		Inventory and Receivables		Vehicles		Total		Real Estate		Equipment and Machinery		Inventory and Receivables		Vehicles		Total
Real Estate:
Residential	$	226	$	—	$	—	$	—	$	226	$	51	$	—	$	—	$	—	$	51
Commercial		18,399		—		—		—		18,399		10,708		—		2,716		—		13,424
Construction		—		—		—		—		—		—		—		—		—		—

Other Loans:
Commercial		1,574		160		14,023		25		15,782		2,161		523		3,858		—		6,542
Home equity and improvement		—		—		—		—		—		—		—		—		—		—
Consumer finance		—		—		—		—		—		—		—		—		—		—

Total	$	20,199	$	160	$	14,023	$	25	$	34,407	$	12,920	$	523	$	6,574	$	—	$	20,017

Non-performing loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually analyzed loans. All loans greater than 90 days past due are placed on non-accrual status. The following table presents the current balance of the aggregate amounts of non-performing assets, comprised of non-performing loans and real estate owned as of the dates indicated:


	March 31, 2022		December 31, 2021		March 31, 2023		December 31, 2022
	(In Thousands)				(In Thousands)
Non-accrual loans with reserve	$	32,930	$	35,480	$	19,925	$	20,369
Non-accrual loans without reserve		14,368	$	12,534		14,452		13,453
Loans 90 days plus past due and still accruing		—		—		—		—
Total non-performing loans		47,298		48,014		34,377		33,822
Real estate and other assets held for sale		253		171		393		619
Total non-performing assets	$	47,551	$	48,185	$	34,770	$	34,441
Troubled debt restructuring, still accruing	$	6,287	$	7,768

The following table presents the aging of the amortized cost in past due and non-accrual loans as of March 31, ~~2022,~~2023, by class of loans (in thousands):

Current

30 - 59 days

60 - 89 days

90 + days

Total
Past Due

Total
Non-
Accrual

Real Estate:

Residential

$
1,202,041

$
307

$
3,327

$
7,654

$
11,288

$
9,280

Commercial

2,486,865

549

6

8,059

8,614

14,423

Construction

358,167

0

0

0

0

0

Other Loans:

Commercial

890,418

10,371

—

936

11,307

11,386

Home equity and improvement

255,180

756

334

1,771

2,861

2,171

Consumer finance

129,659

1,530

598

1,959

4,087

2,100

PCD

21,924

173

703

5,044

5,920

7,938

Total Loans

$
5,344,254

$
13,686

$
4,968

$
25,423

$
44,077

$
47,298

~~Table of Contents~~


	Current		30 - 59 days		60 - 89 days		90 + days		Total Past Due		Total Non- Accrual
Real Estate:
Residential	$	1,608,696	$	228	$	4,254	$	5,224	$	9,706	$	6,763
Commercial		2,804,630		760		21		10,122		10,903		14,187
Construction		581,575		—		144		—		144		—

Other Loans:
Commercial		1,050,336		494		252		4,703		5,449		5,142
Home equity and improvement		266,094		1,571		426		1,363		3,360		1,879
Consumer finance		208,619		2,976		534		2,243		5,753		2,508
PCD		17,031		431		253		2,849		3,533		3,898

Total Loans	$	6,536,981	$	6,460	$	5,884	$	26,504	$	38,848	$	34,377

The following table presents the aging of the recorded investment in past due and non-accrual loans as of December 31, ~~2021,~~2022, by class of loans (in thousands):


	Current		30 - 59 days		60 - 89 days		90 + days		Total Past Due		Total Non Accrual		Current		30 - 59 days		60 - 89 days		90 + days		Total Past Due		Total Non- Accrual
Real Estate:
Residential	$	1,144,533	$	234	$	5,340	$	7,487	$	13,061	$	9,034	$	1,516,135	$	279	$	6,350	$	6,203	$	12,832	$	7,724
Commercial		2,439,552		96		847		7,168		8,111		14,621		2,751,933		327		878		11,477		12,682		13,396
Construction		383,136		43		1,746		0		1,789		0		605,043		298		139		—		437		—

Other Loans:
Commercial		884,025		42		35		867		944		11,531		1,044,898		413		128		4,635		5,176		4,862
Home equity and improvement		257,055		1,851		408		1,634		3,893		2,051		269,183		4,342		489		1,190		6,021		1,637
Consumer finance		124,073		1,112		819		1,728		3,659		1,873		209,062		2,763		1,397		2,227		6,387		2,401
PCD		25,111		225		1,005		5,996		7,226		8,904		17,082		603		495		2,651		3,749		3,802

Total Loans	$	5,257,485	$	3,603	$	10,200	$	24,880	$	38,683	$	48,014	$	6,413,336	$	9,025	$	9,876	$	28,383	$	47,284	$	33,822

As of ~~March 31, 2022, and December 31, 2021,~~January 1, 2023, the Company ~~had a recorded investment in troubled~~adopted the modified retrospective method under ASU 2022-02, "Trouble Debt Restructurings and Vintage Disclosures" which eliminated trouble debt ~~restructurings (“TDRs”) of $10.6~~ ~~million and $11.9~~ ~~million, respectively. The Company allocated $358,000~~ ~~and $378,000~~ ~~of specific reserves to those loans at March 31, 2022, and December 31, 2021, respectively, and had committed to lend additional amounts totaling up to $319,000~~ ~~and $348,000~~ ~~at March 31, 2022, and December 31, 2021, respectively.~~

~~The Company had previously worked with borrowers~~restructuring accounting for entities that ~~were impacted by~~have adopted ASU 2016-13, the ~~COVID-19 pandemic by providing modifications to include either interest only deferral or principal and interest deferral. These modifications ranged from one to~~ ~~nine months. As of March 31, 2022 and December 31, 2021, the Company had~~ 0 ~~active deferrals.~~current expected credit losses model.

Occasionally, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal forgiveness is provided, the amortized cost basis of the loan is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of amortized cost basis and a corresponding adjustments to the allowance for credit losses. In some cases, the Company ~~offers various~~will modify a certain loan by providing multiple types of ~~concessions when modifying~~concessions. Typically, one type of concession, such as a ~~loan, however, forgiveness of principal~~term extension, is rarely granted. Each TDR is uniquely designed to meet the specific needs of the borrower. Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions and converting revolving credit lines to term loans. Additional collateral or an additional guarantor is often requested when granting a concession. Commercial mortgage loans modified in a TDR often involve temporary interest-only payments, re-amortization of remaining debt in order to lower payments and sometimes reducing the interest rate lower than the current market rate. Residential mortgage loans modified in a TDR are comprised of loans where monthly payments are lowered, either through interest rate reductions or principal only payments for a period of time, to accommodate the borrowers’ financial needs, interest is capitalized into principal, or the term and amortization are extended. Home equity modifications are made infrequently and usually involve providing an interest rate that is lower thangranted initially. If the borrower ~~would~~continues to experience financial difficulty, another concession, such as principal forgiveness or reduction of rate, may be ~~able to obtain due to credit issues. All retail loans where the borrower is in bankruptcy are classified as TDRs regardless of whether or not a concession is made.~~granted.

Of the loans modified ~~in a TDR~~ as of March 31, ~~2022, $4.3~~ ~~million~~2023, none were on non-accrual status and partial charge-offs have in some cases been taken against the outstanding balance. ~~Loans~~The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each loan upon loan origination or acquisition. The starting

point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of loans to borrowers experiencing financial difficulty. The company uses probability of default/loss given default, discounted cash flows or remaining life method to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification.

The following table shows the amortized cost basis at the end of the reporting period of the loans modified to borrowers experiencing financial difficulty, disaggregated by loan category and type of modification granted during the three months ended March 31, 2023. The percentage of the amortized cost basis of loans that were modified to borrowers experiencing financial difficulty as ~~a TDR may have~~compared to the amortized cost basis of each class of loan category is also presented below:


	Loans Modifications Made to Borrowers Experiencing Financial Difficulty Three Months Ended March 31, 2023 (Dollars in Thousands)
	Term Extension
Loan Type	Amortized Cost Basis		Percent of total loans by category
Real Estate:
Residential	$	—		—
Commercial		373		0.01	%
Construction		—		—

Other Loans:
Commercial		39		0.00	%
Home equity and improvement		—		—
Consumer finance		—		—

Total	$	412

The following table describes the financial effect of ~~increasing~~ the ~~allowance associated with the loan. If the loan is determined~~modifications made to be collateral dependent, the estimated fair value of the collateral, less any selling costs is used to determine if there is a need for a specific allowance or charge-off. If the loan is determined to be cash flow dependent, the allowance is measured based on the present value of expected future cash flows discounted at the loan’s pre-modification effective interest rate.borrowers experiencing financial difficulty:


	Term Extension
Loan Type	Financial Effect
Real Estate:
Commercial	Added 12 months to the life of the loan, which reduced monthly payment amounts for the borrower.

Other Loans:
Commercial	Added 84 months to the life of the loan to term out 2 year balloon, which reduced monthly payment amounts for the borrower.

~~The loans described above increased the ACL by $6,000~~ ~~in the three months ended March 31, 2021.~~

~~In order~~that were modified to ~~determine whether a borrower is~~borrowers experiencing financial difficulty ~~an evaluation is performed on~~to understand the ~~probability that the borrower will be in payment default on any~~effectiveness of its ~~debt in the foreseeable future without the modification. There were~~ 0 ~~TDRs that subsequently defaulted~~modification efforts. The modified loans are current and have not experienced delinquency as of March 31, ~~2022 or March 31, 2021.~~2023.

Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Loans are analyzed individually by classifying the loans by credit risk. This analysis includes all non-homogeneous loans, such as commercial and

commercial real estate loans and certain ~~homogenous~~homogeneous mortgage, home equity and consumer loans. This analysis is performed on a quarterly basis. Premier uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of March 31, ~~2022,~~2023, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (in thousands):


Class	Unclassified		Special Mention		Substandard		Doubtful		Total classified		Total		Unclassified		Special Mention		Substandard		Doubtful		Total classified		Total
Real Estate:
Residential	$	1,202,103	$	1,295	$	9,931	$	-	$	9,931	$	1,213,329	$	1,610,097	$	493	$	7,812	$	—	$	7,812	$	1,618,402
Commercial		2,376,266		93,550		25,663		—		25,663		2,495,479		2,752,132		41,677		21,724		—		21,724		2,815,533
Construction		358,167		—		—		—		—		358,167		581,719		—		—		—		—		581,719

Other Loans:
Commercial		869,383		20,558		11,784		—		11,784		901,725		1,015,372		33,090		7,323		—		7,323		1,055,785
Home equity and improvement		255,883		—		2,158		—		2,158		258,041		267,587		—		1,867		—		1,867		269,454
Consumer finance		131,647		—		2,099		—		2,099		133,746		211,895		—		2,477		—		2,477		214,372
PCD		19,110		98		8,636		—		8,636		27,844		13,177		3,683		3,704		—		3,704		20,564

Total Loans(1)	$	5,212,559	$	115,501	$	60,271	$	—	$	60,271	$	5,388,331	$	6,451,979	$	78,943	$	44,907	$	—	$	44,907	$	6,575,829

(1) Total loans are net of undisbursed funds and deferred fees and costs.

Table of Contents

As of December 31, ~~2021,~~2022, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (in thousands):


Class	Unclassified		Special Mention		Substandard		Doubtful		Total classified		Total		Unclassified		Special Mention		Substandard		Doubtful		Total classified		Total
Real Estate:
Residential	$	1,146,212	$	1,316	$	10,066	$	-	$	10,066	$	1,157,594		1,519,657		935		8,375		—		8,375		1,528,967
Commercial		2,324,846		93,676		29,141		—		29,141		2,447,663		2,698,292		46,029		20,294		—		20,294		2,764,615
Construction		365,403		19,522		—		—		—		384,925		605,480		—		—		—		—		605,480

Other Loans:
Commercial		856,402		14,815		13,752		—		13,752		884,969		1,016,925		26,319		6,830		—		6,830		1,050,074
Home equity and improvement		258,914		—		2,034		—		2,034		260,948		273,613		—		1,591		—		1,591		275,204
Consumer finance		125,879		—		1,853		—		1,853		127,732		213,078		—		2,371		—		2,371		215,449
PCD		19,547		101		12,689		—		12,689		32,337		13,904		2,590		4,337		—		4,337		20,831

Total Loans(1)	$	5,097,203	$	129,430	$	69,535	$	—	$	69,535	$	5,296,168	$	6,340,949	$	75,873	$	43,798	$	—	$	43,798	$	6,460,620

~~Table of Contents~~

(1) Total loans are net undisbursed loan funds and deferred fees and costs

The following tables ~~below~~ present the amortized cost basis of loans by credit quality indicator and class of loans as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):.

Table of Contents


	Term of loans by origination																Term of loans by origination
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Total		2023		2022		2021		2020		2019		Prior		Revolving Loans		Total
As of March 31, 2022
As of March 31, 2023

Real Estate
Residential:
Current-period gross charge-offs																	$	—	$	—	$	—	$	—	$	—	$	5	$	—	$	5
Risk Rating
Pass	$	87,717	$	247,594	$	355,860	$	104,958	$	59,789	$	344,704	$	1,481	$	1,202,103
Unclassified																	$	42,003	$	343,450	$	463,431	$	331,088	$	92,532	$	335,784	$	1,809	$	1,610,097
Special Mention		—		—		187		37		—		158		913		1,295		—		—		—		178		—		315		—		493
Substandard		—		777		957		779		1,178		6,240		—		9,931		—		325		1,366		976		721		4,424		—		7,812
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	87,717	$	248,371	$	357,004	$	105,774	$	60,967	$	351,102	$	2,394	$	1,213,329	$	42,003	$	343,775	$	464,797	$	332,242	$	93,253	$	340,523	$	1,809	$	1,618,402

Commercial:
Current-period gross charge-offs																	$	—	$	—	$	—	$	—	$	112	$	1,557	$	—	$	1,669
Risk Rating
Pass	$	117,640	$	511,210	$	513,331	$	358,355	$	228,407	$	636,090	$	11,233	$	2,376,266
Unclassified																	$	66,836	$	585,730	$	530,145	$	520,817	$	320,220	$	714,615	$	13,769	$	2,752,132
Special Mention		2,380		292		—		2,111		17,094		71,000		673		93,550		—		213		1,961		—		322		39,071		110		41,677
Substandard		—		195		559		4,788		4,946		14,949		226		25,663		—		274		2,087		2,750		4,833		11,649		131		21,724
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	120,020	$	511,697	$	513,890	$	365,254	$	250,447	$	722,039	$	12,132	$	2,495,479	$	66,836	$	586,217	$	534,193	$	523,567	$	325,375	$	765,335	$	14,010	$	2,815,533

Construction:
Current-period gross charge-offs																	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Risk Rating
Pass	$	196,348	$	86,533	$	53,706	$	-	$	727	$	-	$	20,853	$	358,167
Unclassified																	$	13,934	$	355,461	$	160,963	$	40,998	$	10,363	$	—	$	—	$	581,719
Special Mention		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		—				—		—		—		—		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	196,348	$	86,533	$	53,706	$	-	$	727	$	-	$	20,853	$	358,167	$	13,934	$	355,461	$	160,963	$	40,998	$	10,363	$	—	$	-	$	581,719

Other Loans
Commercial:
Current-period gross charge-offs																	$	—	$	—	$	—	$	—	$	498	$	—	$	—	$	498
Risk Rating
Pass	$	67,089	$	240,506	$	125,299	$	74,398	$	41,778	$	34,471	$	285,842	$	869,383
Unclassified																	$	51,429	$	261,813	$	196,844	$	82,463	$	46,141	$	39,007	$	337,675	$	1,015,372
Special Mention		2,857		—		2,117		3,919		225		5,738		5,702		20,558		668		2,075		5,523		4,985		1,260		6,127		12,452		33,090
Substandard		—		123		10,347		22		249		216		827		11,784		—		283		31		3,897		92		326		2,694		7,323
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	69,946	$	240,629	$	137,763	$	78,339	$	42,252	$	40,425	$	292,371	$	901,725	$	52,097	$	264,171	$	202,398	$	91,345	$	47,493	$	45,460	$	352,821	$	1,055,785

Home equity and Improvement:
Current-period gross charge-offs																	$	—	$	—	$	—	$	—	$	—	$	9	$	15	$	24
Risk Rating
Pass	$	3,622	$	23,965	$	6,444	$	4,267	$	2,524	$	35,008	$	180,053	$	255,883
Unclassified																	$	4,692	$	28,615	$	20,528	$	5,129	$	3,447	$	30,684	$	174,492	$	267,587
Special Mention		—		—		—		—		��		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		28		37		790		1,303		2,158		—		30		14		—		28		440		1,355		1,867
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	3,622	$	23,965	$	6,444	$	4,295	$	2,561	$	35,798	$	181,356	$	258,041	$	4,692	$	28,645	$	20,542	$	5,129	$	3,475	$	31,124	$	175,847	$	269,454

Consumer Finance:
Current-period gross charge-offs																	$	—	$	268	$	97	$	36	$	41	$	6	$	1	$	449
Risk Rating
Pass	$	21,501	$	44,590	$	23,257	$	19,959	$	7,877	$	5,528	$	8,935	$	131,647
Unclassified																	$	16,885	$	123,154	$	30,347	$	15,678	$	11,755	$	4,819	$	9,257	$	211,895
Special Mention		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		187		980		717		125		86		4		2,099		—		958		545		553		282		70		69		2,477
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	21,501	$	44,777	$	24,237	$	20,676	$	8,002	$	5,614	$	8,939	$	133,746	$	16,885	$	124,112	$	30,892	$	16,231	$	12,037	$	4,889	$	9,326	$	214,372

PCD:
Current-period gross charge-offs																	$	—	$	—	$	—	$	—	$	—	$	63	$	5	$	68
Risk Rating
Pass	$	-	$	-	$	-	$	163	$	1,733	$	13,739	$	3,475	$	19,110
Unclassified																	$	—	$	—	$	—	$	—	$	127	$	12,629	$	421	$	13,177
Special Mention		—		—		—		—		—		98		—		98		—		—		—		—		—		758		2,925		3,683
Substandard		—		—		—		53		26		5,854		2,703		8,636		—		—		—		—		1		3,500		203		3,704
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	-	$	-	$	-	$	216	$	1,759	$	19,691	$	6,178	$	27,844	$	—	$	—	$	—	$	-	$	128	$	16,887	$	3,549	$	20,564

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Term of loans by origination

2020

2019

2018

2017

2016

Prior

Revolving Loans

Total

As of December 31, 2021

Real Estate

Residential:

Risk Rating

Pass
$
219,006

$
373,439

$
112,781

$
65,544

$
71,794

$
301,735

$
1,913

$
1,146,212

Special Mention

—

190

—

—

59

109

958

1,316

Substandard

465

780

1,198

1,006

2,095

4,522

—

10,066

Doubtful

—

—

—

—

—

—

—

—

Total
$
219,471

$
374,409

$
113,979

$
66,550

$
73,948

$
306,366

$
2,871

$
1,157,594

Commercial:

Risk Rating

Pass
$
514,333

$
493,575

$
388,117

$
230,734

$
237,712

$
451,113

$
9,262

$
2,324,846

Special Mention

294

5,349

5,533

11,055

49,993

20,662

790

93,676

Substandard

172

570

4,920

5,525

62

17,665

227

29,141

Doubtful

—

—

—

—

—

—

—

—

Total
$
514,799

$
499,494

$
398,570

$
247,314

$
287,767

$
489,440

$
10,279

$
2,447,663

Construction:

Risk Rating

Pass
$
198,221

$
100,606

$
55,707

$
10,039

$
685

$
145

$
-

$
365,403

Special Mention

—

12,500

—

5,996

1,026

—

—

19,522

Substandard

—

—

—

—

—

—

—

—

Doubtful

—

—

—

—

—

—

—

—

Total
$
198,221

$
113,106

$
55,707

$
16,035

$
1,711

$
145

$
-

$
384,925

Other Loans

Commercial:

Risk Rating

Pass
$
293,644

$
132,703

$
84,668

$
47,421

$
24,269

$
17,038

$
256,659

$
856,402

Special Mention

—

2,180

4,094

272

1,264

4,663

2,342

14,815

Substandard

136

11,550

23

288

388

131

1,236

13,752

Doubtful

—

—

—

—

—

—

—

—

Total
$
293,780

$
146,433

$
88,785

$
47,981

$
25,921

$
21,832

$
260,237

$
884,969

Home equity and Improvement:

Risk Rating

Pass
$
24,707

$
6,870

$
4,867

$
2,879

$
5,534

$
31,317

$
182,740

$
258,914

Special Mention

—

—

—

—

—

—

—

—

Substandard

15

—

28

48

27

690

1,226

2,034

Doubtful

—

—

—

—

—

—

—

—

Total
$
24,722

$
6,870

$
4,895

$
2,927

$
5,561

$
32,007

$
183,966

$
260,948

Consumer Finance:

Risk Rating

Pass
$
50,202

$
25,866

$
23,000

$
9,643

$
4,313

$
2,769

$
10,086

$
125,879

Special Mention

—

—

—

—

—

—

—

—

Substandard

196

707

619

129

67

131

4

1,853

Doubtful

—

—

—

—

—

—

—

—

Total
$
50,398

$
26,573

$
23,619

$
9,772

$
4,380

$
2,900

$
10,090

$
127,732

PCD:

Risk Rating

Pass
$
-

$
-

$
170

$
1,753

$
1,860

$
12,496

$
3,268

$
19,547

Special Mention

—

—

—

0

0

101

0

101

Substandard

—

—

67

28

3,242

6,490

2,862

12,689

Doubtful

—

—

��

—

—

—

—

—

Total
$
-

$
-

$
237

$
1,781

$
5,102

$
19,087

$
6,130

$
32,337


	Term of loans by origination
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Total
As of December 31, 2022

Real Estate
Residential:
Risk Rating
Pass	$	264,884	$	474,992	$	335,982	$	93,548	$	51,710	$	296,089	$	2,452	$	1,519,657
Special Mention		—		—		180		30		80		78		567		935
Substandard		280		1,648		1,614		922		517		3,394		—		8,375
Doubtful		—		—		—		—		—		—		—		—
Total	$	265,164	$	476,640	$	337,776	$	94,500	$	52,307	$	299,561	$	3,019	$	1,528,967

Commercial:
Risk Rating
Pass	$	582,384	$	506,386	$	517,790	$	324,210	$	194,240	$	557,728	$	15,554	$	2,698,292
Special Mention		161		3,614		—		593		25,395		15,561		705		46,029
Substandard		115		2,104		527		4,612		4,455		8,348		133		20,294
Doubtful		—		—		—		—		—		—		—		—
Total	$	582,660	$	512,104	$	518,317	$	329,415	$	224,090	$	581,637	$	16,392	$	2,764,615

Construction:
Risk Rating
Pass	$	348,570	$	182,755	$	53,161	$	20,994	$	—	$	—	$	—	$	605,480
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	348,570	$	182,755	$	53,161	$	20,994	$	—	$	—	$	—	$	605,480

Other Loans
Commercial:
Risk Rating
Pass	$	266,501	$	208,663	$	90,014	$	49,887	$	23,719	$	22,515	$	355,626	$	1,016,925
Special Mention		1,891		4,094		3,913		1,533		1,160		5,365		8,363		26,319
Substandard		16		119		3,897		4		190		204		2,400		6,830
Doubtful		—		—		—		—		—		—		—		—
Total	$	268,408	$	212,876	$	97,824	$	51,424	$	25,069	$	28,084	$	366,389	$	1,050,074

Home equity and Improvement:
Risk Rating
Pass	$	30,009	$	21,116	$	5,387	$	3,592	$	1,849	$	30,509	$	181,151	$	273,613
Special Mention		—		—		—		—		—		—		—		—
Substandard		44		14		—		28		32		502		971		1,591
Doubtful		—		—		—		—		—		—		—		—
Total	$	30,053	$	21,130	$	5,387	$	3,620	$	1,881	$	31,011	$	182,122	$	275,204

Consumer Finance:
Risk Rating
Pass	$	133,194	$	33,109	$	17,219	$	13,681	$	4,022	$	2,529	$	9,324	$	213,078
Special Mention		—		—		—		—		—		—		—		—
Substandard		676		483		668		316		62		34		132		2,371
Doubtful		—		—		—		—		—		—		—		—
Total	$	133,870	$	33,592	$	17,887	$	13,997	$	4,084	$	2,563	$	9,456	$	215,449

PCD:
Risk Rating
Pass	$	—	$	—	$	—	$	131	$	369	$	13,117	$	287	$	13,904
Special Mention		—		—		—		—		—		292		2,298		2,590
Substandard		—		—		—		2		22		3,697		616		4,337
Doubtful		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	133	$	391	$	17,106	$	3,201	$	20,831

The Company has adopted ASU 2016-13 (Topic 326 – Credit Losses) to calculate the ACL, which requires a projection of credit loss over the contract lifetime of the credit adjusted for prepayment tendencies. This

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valuation account is deducted from the loans amortized cost basis to present the net amount expected to be

~~Table of Contents~~

collected on the loan. The ACL is adjusted through the provision for credit losses and reduced by net charge offs of loans.

The credit loss estimation process involves procedures that consider the unique characteristics of the Company’s portfolio segments. These segments are further disaggregated into the loan pools for monitoring. When computing allowance levels, a model of risk characteristics, such as loss history and delinquency status, along with current conditions and a supportable forecast is used to determine credit loss assumptions.

The Company is generally utilizing two methodologies to analyze loan pools, DCF and probability of default/loss given default (“PD/LGD”).

A default can be triggered by one of several different asset quality factors including past due status, non-accrual status, ~~TDR~~modification status or if the loan has had a charge-off. The PD/LGD utilizes charge off data from the Federal Financial Institutions Examination Council to construct a default rate. This default rate is further segmented based on the risk of the credit assigning a higher default rate to riskier credits.

The DCF methodology was selected as the most appropriate for loan segments with longer average lives and regular payment structures. The DCF model has two key components, the loss driver analysis combined with a cash flow analysis. The contractual cash flow is adjusted for PD/LGD and prepayment speed to establish a reserve level. The prepayment studies are updated quarterly by a third-party for each applicable pool. The Company estimates losses over an approximate one-year forecast period using Moody’s baseline economic forecasts, and then reverts to longer term historical loss experience over a three-year period.

The remaining life method was selected for the consumer direct loan segment since the pool contains loans with many different structures and payment streams and collateral. The weighted average remaining life uses an average annual charge-off rate applied to the contractual term, further adjusted for estimated prepayments to determine the unadjusted historical charge-off rate for the remaining balance of assets.


Portfolio Segments	Loan Pool	Methodology	Loss Drivers
Residential real estate	1-4 Family nonowner occupied	DCF	National unemployment
	1-4 Family owner occupied	DCF	National unemployment
Commercialreal estate	Commercial real estate nonowner occupied	DCF	National unemployment
	Commercial real estate owner occupied	DCF	National unemployment
	Multi Family	DCF	National unemployment
	Agriculture Land	DCF	National unemployment
	Other commercial real estate	DCF	National unemployment
Construction secured by real estate	Construction Other	PD/LGD	Call report loss history
	Construction Residential	PD/LGD	Call report loss history
Commercial	Commercial working capital	PD/LGD	Call report loss history
	Agriculture production	PD/LGD	Call report loss history
	Other commercial	PD/LGD	Call report loss history
Home equity and improvement	Home equity and improvement	PD/LGD	Call report loss history
Consumer finance	Consumer direct	Remaining life	Call report loss history
	Consumer indirect	DCF	National unemployment

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According to the accounting standard, an entity may make an accounting policy election not to measure an ~~allowance for credit losses~~ACL for accrued interest receivable if the entity writes off the applicable accrued interest receivable balance in a timely manner. The Company has made the accounting policy election not to measure an ~~allowance for credit losses~~ACL for accrued interest receivables for all loan segments. Current policy dictates that a loan will be placed on nonaccrual status, with the current accrued interest receivable balance being written off, upon the loan being 90 days delinquent or when the loan is deemed to be collateral dependent and the collateral analysis shows less than 1.2 times discounted collateral coverage based on a current assessment of the value of the collateral.

In addition, ~~to the~~ ASC Topic 326 requires the Company to establish a liability for anticipated credit losses for unfunded commitments. To accomplish this, the company must first ~~establishes~~establish a loss expectation for extended (funded) commitments. This loss expectation, expressed as a ratio to the amortized cost basis, is then applied to the portion of unfunded commitments not considered unilaterally cancelable and is considered by the company’s management as likely to fund over the life of the instrument. At March 31, ~~2022,~~2023, the Company had $~~1.5~~1.7 billion in unfunded commitments and set aside $~~5.3~~6.6 million in anticipated credit losses. This reserve is recorded in other liabilities as opposed to the ACL.

The determination of ACL is complex and the Company makes decisions on the effects of matters that are inherently uncertain. Evaluations of the loan portfolio and individual credits require certain estimates, assumptions and ~~judgements~~judgments as to the facts and circumstances related to particular situations or credits. There may be significant changes in the ACL in future periods determined by prevailing factors at that point in time along with future forecasts.

The following table discloses allowance for credit loss (“ACL”) activity for the three months ended March 31, 2023 and 2022 by portfolio segment (in thousands):


Three Months Ended March 31, 2023	Residential Real Estate			Commercial Real Estate			Construction			Commercial			Home Equity and Improvement			Consumer Finance			Total
Beginning Allowance	$	16,711		$	34,218		$	4,025		$	11,769		$	4,044		$	2,049		$	72,816
Charge-Offs		(5	)		(1,669	)		—			(511	)		(79	)		(449	)		(2,713	)
Recoveries		22			12			—			96			21			75			226
Provisions		1,501			1,270			(143	)		1,171			(332	)		477			3,944
Ending Allowance	$	18,229		$	33,831		$	3,882		$	12,525		$	3,654		$	2,152		$	74,273


Three Months Ended March 31, 2022	Residential Real Estate			Commercial Real Estate			Construction			Commercial			Home Equity and Improvement			Consumer Finance			Total
Beginning Allowance	$	12,029		$	32,399		$	3,004		$	13,410		$	4,221		$	1,405		$	66,468
Charge-Offs		(140	)		(7	)		—			(10	)		(29	)		(103	)		(289	)
Recoveries		81			59			—			102			34			114			390
Provisions		(330	)		1,750			(391	)		319			(307	)		(415	)		626
Ending Allowance	$	11,640		$	34,201		$	2,613		$	13,821		$	3,919		$	1,001		$	67,195

Under ASU Topic 326, when loans are purchased with evidence of more than insignificant deterioration of credit, they are accounted for as PCD. PCD loans acquired in a transaction are marked to fair value and a mark on yield is recorded. In addition, an adjustment is made to the ACL for the expected loss on the acquisition date. These loans are assessed on a regular basis and subsequent adjustments to the ACL are recorded on the income statement. The outstanding balance and related allowance on these loans as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 is as follows (in thousands):

As of March 31, 2022

As of December 31, 2021

Loan Balance

ACL Balance

Loan Balance

ACL Balance

(In Thousands)

(In Thousands)

Real Estate:

Residential
$
12,520

$
176

$
13,396

$
197

Commercial

3,146

51

5,878

151

Construction

—

—

—

—

15,666

227

19,274

348

Other Loans:

Commercial

8,595

1,211

9,167

1,531

Home equity and improvement

3,135

139

3,405

154

Consumer finance

448

9

491

7

12,178

1,359

13,063

1,692

Total
$
27,844

$
1,586

$
32,337

$
2,040

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	As of March 31, 2023				As of December 31, 2022
	Loan Balance		ACL Balance		Loan Balance		ACL Balance
	(In Thousands)				(In Thousands)
Real Estate:
Residential	$	11,332	$	159	$	11,546	$	139
Commercial		1,442		34		1,544		34
Construction		—		—		—		—
		12,774		193		13,090		173
Other Loans:
Commercial		5,313		588		5,058		594
Home equity and improvement		2,222		61		2,409		80
Consumer finance		255		5		274		5
		7,790		654		7,741		679
Total	$	20,564	$	847	$	20,831	$	852

Consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure totaled $~~4.1~~3.5 million as of March 31, ~~2022,~~2023, and $~~3.3~~4.3 million as of December 31, ~~2021.~~2022.

9. Mortgage Banking

Net revenues from the sales and servicing of mortgage loans consisted of the following:


	Three Months Ended March 31,						Three Months Ended March 31,
	2022			2021			2023			2022
	(In Thousands)						(In Thousands)
Mortgage banking gain, net	$	2,543		$	5,640
Mortgage banking (loss) gain, net							$	(837	)	$	2,543
Mortgage loans servicing revenue (expense):
Mortgage loans servicing revenue		1,879			1,917			1,888			1,879
Amortization of mortgage servicing rights		(1,403	)		(2,344	)		(1,219	)		(1,403	)
Mortgage servicing rights valuation adjustments		1,233			5,320			(106	)		1,233
		1,709			4,893			563			1,709

Net revenue from sale and servicing of mortgage loans	$	4,252		$	10,533
Net (expense) revenue from sale and servicing of mortgage loans							$	(274	)	$	4,252

The unpaid principal balance of residential mortgage loans serviced for third parties was $~~2.94~~2.96 billion at March 31, ~~2022,~~2023 and December 31, ~~2021.~~2022.

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Activity for capitalized mortgage servicing rights and the related valuation allowance follows for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


	Three Months Ended March 31,						Three Months Ended March 31,
	2022			2021			2023			2022
	(In Thousands)						(In Thousands)
Mortgage servicing assets:
Balance at beginning of period	$	22,244		$	21,666		$	21,858		$	22,244
Loans sold, servicing retained		1,348			2,374			808			1,348
Amortization		(1,403	)		(2,344	)		(1,219	)		(1,403	)
Carrying value before valuation allowance at end of period		22,189			21,696			21,447			22,189

Valuation allowance:
Balance at beginning of period		(2,707	)		(8,513	)		(687	)		(2,707	)
Impairment recovery (charges)		1,233			5,320			(106	)		1,233
Balance at end of period		(1,474	)		(3,193	)		(793	)		(1,474	)
Net carrying value of MSRs at end of period	$	20,715		$	18,503		$	20,654		$	20,715
Fair value of MSRs at end of period	$	25,996		$	18,695		$	28,165		$	25,996

Amortization of mortgage servicing rights is computed based on payments and payoffs of the related mortgage loans serviced. Estimates of future amortization expense are not easily estimable.

The Company had no accrual for secondary market buy-back activity at March 31, ~~2022~~2023 or December 31, ~~2021~~2022 based on management’s estimate of potential losses from this activity. There was 0no expense or credit recognized in the three months ended March 31, ~~2022.~~ 2023 and 2022.

10. Leases

The Company’s lease agreements have maturity dates ranging from April ~~2022~~2023 to September 2044, some of which include options for multiple five and ten year extensions. The weighted average remaining life of the lease term for these leases was ~~13.72~~13.0 years as of March 31, ~~2022~~2023 and ~~14.21~~13.29 years as of December 31, ~~2021.~~2022. The weighted average discount rate for leases was ~~2.55~~2.41% as of March 31, ~~2022~~2023 and ~~2.57~~2.52% as of December 31, ~~2021.~~

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2022.

The total operating lease costs were $~~542,000~~ ~~and $664,000~~681,000 for the three months ended March 31, ~~2022~~2023 and $542,000 for the three months ended March 31, ~~2021, respectively.~~2022. The right-of-use asset, included in other assets, was $~~15.6~~15.5 million and $~~15.4~~14.9 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The lease liabilities, included in other liabilities, were $~~16.3~~16.2 million and $~~16.1~~15.6 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Undiscounted cash flows included in lease liabilities have expected contractual payments as follows:


(in thousands)	March 31, 2022
Remainder of 2022	$	2,526
2023		2,023
(In Thousands)				March 31, 2023
Remainder of 2023				$	2,854
2024		1,632			1,977
2025		1,408			1,675
2026		1,173			1,419
2027					1,290
Thereafter		11,772			11,172
Total undiscounted minimum lease payments		20,534			20,387
Present value adjustment		(4,187	)		(4,210	)
Total lease liabilities	$	16,347		$	16,177

11. Deposits

A summary of deposit balances is as follows:


	March 31, 2022		December 31, 2021		March 31, 2023		December 31, 2022
	(In Thousands)				(In Thousands)
Non-interest-bearing checking accounts	$	1,733,157	$	1,724,772	$	1,649,726	$	1,869,509
Interest-bearing checking and money market accounts		3,029,260		2,952,705		3,179,844		3,185,440
Savings deposits		830,143		804,451		775,728		798,003
Retail certificates of deposit less than $250,000		586,967		636,477		708,818		645,318
Retail certificates of deposit greater than $250,000		137,708		163,646		305,046		264,741
Brokered deposits						154,869		143,708
	$	6,317,235	$	6,282,051	$	6,774,031	$	6,906,719

12. Borrowings

The Company's FHLB advances and junior subordinated debentures owed to unconsolidated subsidiary trusts and subordinated debentures are comprised of the following:


	March 31, 2022		December 31, 2021		March 31, 2023		December 31, 2022
	(In Thousands)				(In Thousands)
FHLB Advances:
Single maturity fixed rate advances					$	—	$	195,000
Overnight advances						658,000		233,000
Total					$	658,000	$	428,000
First Defiance Statutory Trust I due December 2035	$	20,619	$	20,619	$	20,619	$	20,619
First Defiance Statutory Trust II due June 2037	$	15,464	$	15,464		15,464		15,464
Junior subordinated debentures owed to unconsolidated subsidiary trusts	$	36,083	$	36,083	$	36,083	$	36,083
Subordinated debentures	$	48,925	$	48,893	$	49,041	$	49,020

At March 31, ~~2022,~~2023, the Company ~~had~~has $~~150.0~~658.0 million of outstanding FHLB advances with a maturity ~~date~~dates in ~~2022.~~2023. There ~~were~~ was $0428.0 million in outstanding FHLB advances at December 31, ~~2021.~~2022 with maturity dates in 2023. The Company's available borrowing capacity at the FHLB was $1.4 billion and $1.5 billion as of March 31, 2023 and December 31, 2022, respectively. The Company has an available credit line at the Federal Reserve Bank Discount Window of $44.5 million and $43.9 million as of March 31, 2023 and December 31, 2022, respectively, which has not been drawn upon. The Company also has a $50 million credit line at US Bank as of March 31, 2023 and December 31, 2022, respectively, which also was not drawn upon.

In September 2020, the Company completed the issuance of $50.0 million aggregate principal amount, fixed-to-floating rate subordinated notes due September 30, 2030 in a private offering exempt from the registration requirements under the Securities Act of 1933, as amended. The notes carry a fixed rate of 4.0% for five years at which time they will convert to a floating rate based on the secured overnight borrowing rate, plus a spread of 388.5 basis points. The Company may, at its option, beginning September 30, 2025, redeem the notes,

~~Table of Contents~~

in whole or in part, from time to time, subject to certain conditions. The net proceeds from the sale were approximately $48.7 million, after deducting the estimated offering expenses. The Company has used, and intends to ~~use~~continue using, the net proceeds for general corporate purposes, which may include, without limitation, providing capital to support its growth organically or through strategic acquisitions, repaying indebtedness, in financing investments, capital expenditures, repurchasing its common shares and for investments in the Bank as regulatory capital. The subordinated debentures are included in ~~Total Capital~~"Total Capital", as such term is defined under current regulatory guidelines and interpretations.

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In March 2007, the Company sponsored an affiliated trust, First Defiance Statutory Trust II (“Trust Affiliate II”) that issued $15.0 million of Guaranteed Capital Trust Securities (“Trust Preferred Securities”). In connection with this transaction, the Company issued $15.5 million of Junior Subordinated Deferrable Interest Debentures ~~(Subordinated Debentures)~~("Subordinated Debentures") to Trust Affiliate II. The Company formed Trust Affiliate II for the purpose of issuing Trust Preferred Securities to third-party investors and investing the proceeds from the sale of these capital securities solely in Subordinated Debentures of the Company. The Subordinated Debentures held by Trust Affiliate II are the sole assets of that trust. The Company is not considered the primary beneficiary of Trust Affiliate II (variable interest entity), therefore the trust is not consolidated in the Company’s financial statements, but rather the ~~subordinated debentures~~Subordinated Debentures are shown as a liability. Distributions on the Trust Preferred Securities issued by Trust Affiliate II are payable quarterly at a variable rate equal to the three-month LIBOR rate plus 1.5%. The coupon rate payable on the Trust Preferred Securities issued by Trust Affiliate II was ~~2.33~~6.37% as of March 31, ~~2022,~~2023, and ~~1.70~~6.27% as of December 31, ~~2021.~~2022.

The Trust Preferred Securities issued by Trust Affiliate II are subject to mandatory redemption, in whole or part, upon repayment of the Subordinated Debentures. The Company has entered into an agreement that fully and unconditionally guarantees the Trust Preferred Securities subject to the terms of the guarantee. The Trust Preferred Securities and Subordinated Debentures mature on September 15, 2037, but can be redeemed at the Company’s option at any ~~time now.~~time.

The Company also sponsored an affiliated trust, First Defiance Statutory Trust I (“Trust Affiliate I”) that issued $20.0 million of Trust Preferred Securities in 2005. In connection with this transaction, the Company issued $20.6 million of Subordinated Debentures to Trust Affiliate I. Trust Affiliate I was formed for the purpose of issuing Trust Preferred Securities to third-party investors and investing the proceeds from the sale of these capital securities solely in Subordinated Debentures of the Company. The Junior Debentures held by Trust Affiliate I are the sole assets of the trust. The Company is not considered the primary beneficiary of Trust Affiliate I (variable interest entity), therefore the trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability. Distributions on the Trust Preferred Securities issued by Trust Affiliate I are payable quarterly at a variable rate equal to the three-month LIBOR rate plus 1.38%. The coupon rate payable on the Trust Preferred Securities issued by Trust Affiliate I was ~~2.21~~6.25% and ~~1.58~~6.15% on March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

The Trust Preferred Securities issued by Trust Affiliate I are subject to mandatory redemption, in whole or in part, upon repayment of the Subordinated Debentures. The Company has entered into an agreement that fully and unconditionally guarantees the Trust Preferred Securities subject to the terms of the guarantee. The Trust Preferred Securities and Subordinated Debentures mature on December 15, 2035, but can be redeemed at the Company’s option at any time now.

The Subordinated Debentures related to the Trust Preferred Securities may be included in Tier 1 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

Interest on both issues of Trust Preferred Securities may be deferred for a period of up to five years at the option of the issuer.

13. Commitments, Guarantees and Contingent Liabilities

Loan commitments are made to accommodate the financial needs of Premier’s customers in the form of unfunded loans or unused lines of credit and result in market risk. Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. They primarily are issued to facilitate customers’ trade transactions.

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Both arrangements have credit risk, essentially the same as that involved in extending loans to customers, and are subject to the Company’s normal credit policies. Collateral (e.g., securities, receivables, inventory and equipment) is obtained based on a credit assessment of the customer.

The Company’s maximum obligation to extend credit for loan commitments (unfunded loans and unused lines of credit) and standby letters of credit outstanding as of the periods stated below were as follows (in thousands):



	March 31, 2022			December 31, 2021		March 31, 2023		December 31, 2022
Commitments to make loans	$	1,154,525		$	1,175,916	$	820,570	$	957,533
Unused lines of credit		1,007,302			626,348		1,072,405		1,044,875
Standby letters of credit		13,319			10,851		17,884		18,632
Total	$	2,175,146	��	$	1,813,115	$	1,910,859	$	2,021,040

Commitments to make loans are generally made for periods of 60 days or less.

14.14. Income Taxes

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in the states of Indiana and West Virginia. The Company is no longer subject to examination by income taxing authorities for years before ~~2018.~~2019. The Company also currently operates in the states of Ohio, Michigan and Pennsylvania which tax financial institutions based on their equity rather than their income.

The components of income tax expense (benefit) are as follows:

For the Three Months Ended March 31,

2022

2021

(In Thousands)

Current:

Federal
$
5,814

$
6,362

State and local

163

163

Deferred

193

3,427

$
6,170

$
9,952


	For the Three Months Ended March 31,
	2023		2022
	(In Thousands)
Current:
Federal	$	3,352	$	5,814
State and local		136		163
Deferred		615		193
	$	4,103	$	6,170

The effective tax rates differ from federal statutory rate applied to income due to the following:


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2022			2021			2023			2022
	(In Thousands)						(In Thousands)
Tax expense (benefit) at statutory rate (21%)	$	6,830		$	10,699
Tax expense at statutory rate (21%)							$	4,673		$	6,830
Increases (decreases) in taxes from:
State income tax - net of federal tax benefit		128			128			107			128
Tax exempt interest income, net of TEFRA		(186	)		(200	)		(140	)		(186	)
Bank owned life insurance		(209	)		(245	)		(298	)		(209	)
Captive insurance		(105	)		(90	)		(92	)		(105	)
Other		(288	)		(340	)		(147	)		(288	)
Totals	$	6,170		$	9,952
Total							$	4,103		$	6,170

3536

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The table below provides data about the amount of gains and losses recognized in income on derivative instruments not designated as hedging instruments. The difference in derivative carrying value at March 31, ~~2022~~2023 and ~~2021~~2022 represents a fair value adjustment that runs through mortgage banking income.


	Three Months Ended March 31,				Three Months Ended March 31,
	2022		2021		2023			2022
	(In Thousands)				(In Thousands)
Derivatives not designated as hedging instruments
Mortgage Banking Derivatives – Gain (Loss)	$	7,587	$	4,124
Mortgage Banking Derivatives – (Loss) Gain					$	(2,697	)	$	7,587

The Company maintains an interest rate protection program for commercial loan customers. Under this program, the Company provides a customer with a fixed rate loan while creating a variable rate asset for the Company by the customer entering into an interest rate swap with terms that match the loan. The Company offsets its risk exposure by entering into an offsetting interest rate swap with an unaffiliated institution. The Company had interest rate swaps associated with commercial loans with a notional value of $~~82.6~~86.3 million and fair value of $~~2.3~~4.2 million in other assets and $~~2.3~~4.2 million in other liabilities at March 31, ~~2022.~~2023. As of December 31, ~~2021,~~2022, the Company had interest rate swaps associated with commercial loans with a notional value of $~~69.4~~67.3 million and fair value of $~~1.3~~4.5 million in other assets and $~~1.3~~4.5 million in other liabilities. For the three months ended March 31, 2023, $191,000 flowed through noninterest income. For the three months ended March 31, 2022, ~~and 2021,~~ $1,000 ~~and $198,000, respectively,~~ flowed through noninterest income.

In May 2021, the Company entered into derivative instruments designated as a cash flow hedge. For a derivative instrument that is designated and qualifies as a cash flow hedge, the change in fair value of the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

An interest rate swap with notional amount totaling $250.0 million as of March 31, ~~2022~~2023 was designated as a cash flow hedge to hedge the risk of variability in cash flows (future interest receipts) attributable to changes in the contractually specified LIBOR benchmark interest rate on the Company’s floating rate loan pool. The gross aggregate fair value of the swap of $~~16.2~~33.4 million is recorded in other liabilities in the unaudited Consolidated

Balance Sheets at March 31, ~~2022,~~2023, with changes in fair value recorded net of tax in other comprehensive income

(loss). As of December 31, ~~2021,~~2022, the gross aggregate fair value of the swap of $~~854,000~~40.0 million was recorded in other ~~assets~~liabilities in the Consolidated Balance Sheets. A summary of the interest-rate swap designated as a cash flow hedge is presented below (dollars in thousands):

Activity in accumulated other comprehensive income (loss), net of tax, was as follows:


	Securities Available For Sale			Post- retirement Benefit			Cash Flow Hedge Derivatives			Accumulated Other Comprehensive Income (Loss)			Securities Available For Sale			Post- retirement Benefit			Cash Flow Hedge Derivatives			Accumulated Other Comprehensive Income (Loss)
	(In Thousands)												(In Thousands)
Balance January 1, 2022	$	(4,023	)	$	(79	)	$	674		$	(3,428	)
Other comprehensive income/(loss) before reclassifications		(58,613	)		—			(12,830	)		(71,443	)
Amounts reclassified from accumulated other comprehensive income		0			—			(626	)		(626	)

Net other comprehensive income/(loss) during period		(58,613	)		—			(13,456	)		(72,069	)

Balance March 31, 2022	$	(62,636	)	$	(79	)	$	(12,782	)	$	(75,497	)

Balance January 1, 2021	$	15,083		$	(79	)	$	—		$	15,004
Other comprehensive income (loss) before reclassifications		(15,098	)		—			—			(15,098	)
Balance January 1, 2023													$	(142,236	)	$	402		$	(31,626	)	$	(173,460	)
Other comprehensive income before reclassifications														14,535			—			6,783			21,318
Amounts reclassified from accumulated other comprehensive income		(408	)		—			—			(408	)		(27	)		—			(1,540	)		(1,567	)

Net other comprehensive income during period		(15,506	)		—			—			(15,506	)		14,508			—			5,243			19,751

Balance March 31, 2021	$	(423	)	$	(79	)	$	—		$	(502	)
Balance March 31, 2023													$	(127,728	)	$	402		$	(26,383	)	$	(153,709	)

Balance January 1, 2022													$	(4,023	)	$	(79	)	$	674		$	(3,428	)
Other comprehensive loss before reclassifications														(58,613	)		—			(12,830	)		(71,443	)
Amounts reclassified from accumulated other comprehensive loss														—			—			(626	)		(626	)

Net other comprehensive loss during period														(58,613	)		—			(13,456	)		(72,069	)

Balance March 31, 2022													$	(62,636	)	$	(79	)	$	(12,782	)	$	(75,497	)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report, as well as other publicly available documents, including those incorporated herein by reference, may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of ~~1995 .~~1995. These statements may include, but are not limited to, statements regarding projections, forecasts, goals and plans of Premier and its management, future movements of interests, loan or deposit production levels, future credit quality ratios, future strength in the market area, and growth projections. These statements do not describe historical or current facts and may be identified by words such as “intend,” “intent,” “believe,” “expect,” “estimate,” “target,” “plan,” “anticipate,” or similar words or phrases, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “may,” “can,” or similar verbs. There can be no assurances that the forward-looking statements included in this quarterly report will prove to be accurate. In light of the significant uncertainties in the forward-looking statements, the inclusion of such information should not be regarded as a representation by Premier or any other persons, that our objectives and plans will be achieved.

Forward-looking statements involve numerous risks and uncertainties, any one or more of which could affect Premier’s business and financial results in future periods and could cause actual results to differ materially from plans and projections. These risks and uncertainties include, but not limited to: ~~impacts from the novel coronavirus ("COVID-19") pandemic on the economy,~~ financial markets, our customers, and our business and results of operation; changes in interest rates; disruptions in the mortgage market; risks and uncertainties inherent in general and local banking, insurance and mortgage conditions; political uncertainty; uncertainty in U.S. fiscal or monetary policy; uncertainty concerning or disruptions relating to tensions surrounding the current socioeconomic landscape; competitive factors specific to markets in which Premier and its subsidiaries operate; increasing competition for financial products from other financial institutions and nonbank financial technology companies; future interest rate levels; legislative or regulatory rulemaking or actions; capital market conditions; security breaches or unauthorized disclosure of confidential customer or Company information; interruptions in the effective operation of information and transaction processing systems of Premier or Premier’s vendors and service providers; failures or delays in integrating or adopting new technology; the impact of the cessation of LIBOR interest rates and implementation of a replacement rate; and other risks and uncertainties detailed from time to time in our Securities and Exchange Commission (“SEC”) filings, including our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, (the ~~“2021~~“2022 Form 10-K”). and any amendments thereto. Any one or more of these factors have affected or could in the future affect Premier’s business and financial results in future periods and could cause actual results to differ materially from plans and projections.

All forward-looking statements made in this quarterly report are based on information presently available to the management of Premier and speak only as of the date on which they are made. We assume no obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law.

In addition to results presented in accordance with GAAP, this report includes non-GAAP financial measures. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the underlying performance and trends of the Company. The Company monitors the non-GAAP financial measures and the Company’s management believes they are helpful to investors because they provide an additional tool to use in evaluating the Company’s financial and business trends

and operating results. In addition, the Company’s management uses these non-GAAP measures to compare the

Company’s performance to that of prior periods for trend analysis and for budgeting and planning purposes. Fully taxable-equivalent (“FTE”) is an adjustment to net interest income to reflect tax-exempt income on an equivalent before-tax basis.

Non-GAAP financial measures have inherent limitations, which are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To mitigate these limitations, the Company has practices in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and to ensure that our performance is properly reflected to facilitate consistent period-to-period comparisons. The Company’s method of calculating these non-GAAP measures may differ from methods used by other companies. Although the Company believes the non-GAAP financial measures disclosed in this report enhance investors' understanding of our business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for those financial measures prepared in accordance with GAAP.

The following tables present a reconciliation of non-GAAP measures to their respective GAAP measures for the three ~~month periods~~months ended March 31, ~~2022~~2023 and ~~2021.~~2022.

Reconciliations of Net Interest Income on an FTE basis, Net Interest Margin and Efficiency Ratio

Premier has established various accounting policies that govern the application of GAAP in the preparation of its ~~Consolidated Financial Statements.~~consolidated financial statements. The significant accounting policies of Premier are described in the ~~Notes~~notes to the ~~Consolidated Financial Statements.~~consolidated financial statements. Certain accounting policies involve significant judgments and assumptions by management, which have a material impact on the carrying value of certain assets and liabilities and management considers such accounting policies to be critical accounting policies. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ from these judgments and estimates, which could have a material impact on the carrying value of assets and liabilities and the results of operations of Premier.

Premier is a financial holding company that conducts business through its wholly-owned subsidiaries, the Bank, First Insurance, PFC Risk Management and PFC Capital.

The Bank is an Ohio state-chartered bank headquartered in Youngstown, Ohio. It conducts operations through 75 banking center offices, 1210 loan offices and serves clients through a team of wealth professionals. These operations are located in Ohio, Michigan, Indiana, Pennsylvania and West Virginia. The Bank provides a broad range of financial services including checking accounts, savings accounts, certificates of deposit, real estate mortgage loans, commercial loans, consumer loans, home equity loans and trust and wealth management services through its extensive branch network.

PFC Capital was formed as an Ohio limited liability company in 2016 for the purpose of providing mezzanine funding for customers of Home Savings. Mezzanine loans are offered by PFC Capital to customers in the Company’s market area and are expected to be repaid from the cash flow from operations of the business.

First Insurance is a wholly-owned subsidiary of the Company. First Insurance is an insurance agency that conducts business throughout the Company’s markets. First Insurance offers property and casualty insurance, life insurance and group health insurance.

PFC Risk Management is a wholly-owned insurance company subsidiary of the Company that insures the Company and its subsidiaries against certain risks unique to the operations of the Company and for which insurance may not be currently available or economically feasible, in today’s insurance marketplace. PFC Risk Management pools resources with several other similar insurance company subsidiaries of financial institutions to help minimize the risk allocable to each participating insurer.

Regulation – The Company is subject to regulation, examination and oversight by the Federal Reserve Board (“Federal Reserve”) and the SEC. The Bank is subject to regulation, examination and oversight by the FDIC and the Division of Financial Institutions of the Ohio Department of Commerce ("ODFI"). In addition, the Bank is subject to regulations of the Consumer Financial Protection Bureau (“CFPB”), which was established by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and has broad powers to adopt and enforce consumer protection regulations. The Company and the Bank must file periodic reports with the Federal Reserve, and examinations are conducted periodically by the Federal Reserve, the FDIC and the ODFI to determine whether the Company and the Bank are in compliance with various regulatory requirements and are operating in a safe and sound manner. The Company is also subject to various Ohio laws which restrict takeover bids, tender offers and control-share acquisitions involving public companies which have significant ties to Ohio.

At March 31, ~~2022,~~2023, the Company's total assets amounted to ~~$7.6~~$8.6 billion compared to ~~$7.5~~$8.5 billion at December 31, ~~2021.~~2022. The increase is primarily attributable to growth in net loans of ~~$91.4~~$113.7 million from ~~$5.2~~$6.4 billion at December 31, ~~2021~~2022 to ~~$5.3~~$6.5 billion at March 31, ~~2022.~~2023. The increases in loans was funded by advances from the FHLB and deposit growth. Deposits increased $35.2 million from $6.3 billion at December 31, 2021, to $6.3 billion as of March 31, 2022. Non-interest bearing deposits grew $8.4 million for the quarter while interest-bearing deposits grew $26.8 million for the quarter.

~~Loans receivable, excluding loans held for sale, were $5.3 billion at March 31, 2022, compared to $5.2 billion at December 31, 2021. The $91.4 million~~ increase was ~~primarily~~mainly due to an increase in residential loans ~~and commercial loans. Residential loans increased~~ as the Company sold fewer loans due to higher yields on holding loans than selling loans. Loans held for sale ~~decreased~~increased from ~~$162.9~~$115.3 million at December 31, ~~2021,~~2022 to ~~$153.5~~$119.6 million at March 31, 2023. The increase in net loans was funded by advances from the FHLB offset by a decline in deposits. Deposits decreased $132.7 million from $6.9 billion at December 31, 2022 to $6.8 billion as ~~a result~~ of ~~sales activity.~~March 31, 2023. Non-interest bearing deposits decreased $219.8 million since December 31, 2022 to $1.6 billion during the three months ended March 31, 2023, while non-brokered interest-bearing deposits grew $75.9 million to $5.0 billion during the same period. Brokered deposits increased $11.2 million in the three months ended March 31, 2023 to $154.9 million compared to $143.7 million at December 31, 2022.

Stockholders’ equity ~~decreased $80.2~~increased $26.7 million from ~~$1.0 billion~~$887.7 million at December 31, ~~2021,~~2022 to ~~$943.3~~$914.5 million at March 31, ~~2022.~~2023. The ~~quarterly decrease~~increase in stockholders’ equity was primarily due to ~~a decrease~~an increase in accumulated other comprehensive income (“AOCI”) ~~and stock buybacks.~~. The ~~decrease~~increase in AOCI is primarily related to ~~a $58.6~~an after-tax $14.5 million ~~negative~~positive valuation adjustment on the available-for-sale securities portfolio. ~~The Company also completed the repurchase of 793,166 common shares for $24.2 million during the quarter.~~ At March 31, ~~2022, 1,291,000~~2023, 1,199,633 common shares remained available for repurchase under the Company’s existing repurchase program.

The following table presents for the periods indicated the total dollar amount of interest from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in thousands of dollars and rates, and the net interest margin. The table reports interest income from tax-exempt loans and investment on a fully tax-equivalent basis. All average balances are based upon daily balances (dollars in thousands).

For the three months ended March 31, ~~2022,~~2023, the Company reported net income of ~~$26.4~~$18.1 million compared to net income of ~~$41.0~~$26.4 million for the ~~quarter~~three months ended March 31, ~~2021.~~2022. On a per share basis, basic and diluted earnings per common share were ~~$0.73~~$0.51 for the three months ended March 31, ~~2022~~2023 and basic and diluted income per common share were ~~$1.10~~$0.73 for the three months ended March 31, ~~2021.~~2022. The changes from ~~2021~~2022 to ~~2022~~2023 are primarily due to fluctuations in interest on loans and deposits, provision for credit losses, and mortgage banking income, ~~and security gains/losses,~~ which are described in further detail below.

The Company’s net interest income is determined by its interest rate spread (i.e. the difference between the yields on its interest-earning assets and the rates paid on its interest-bearing liabilities) and the relative amounts of interest-earning assets and interest-bearing liabilities.

Net interest income was ~~$57.9~~$56.3 million for the quarter ended March 31, ~~2022, up~~2023, down from ~~$56.5~~$57.9 million for the same period in ~~2021.~~2022. Average earning assets for the quarter ended March 31, ~~2022~~2023 were ~~$6.8~~$7.8 billion compared to ~~$6.6~~$6.8 billion for the quarter ended March 31, ~~2021.~~2022. The tax-equivalent net interest margin was ~~3.44%~~2.90% for the quarter ended March 31, ~~2022, an increase~~2023, a decrease of 54 basis points from ~~3.43%~~3.44% for the same period in ~~2021.~~2022. The ~~slight increase~~decrease in margin between the ~~2022~~2023 and ~~2021~~2022 quarters was primarily due to funding cost increasing at a ~~decrease in~~faster pace than the ~~cost of funds partially offset by a decrease in the yield~~company earned on ~~earning~~ assets. The yield on interest-earning assets ~~was 3.62%~~increased 71 basis points to 4.33% for the quarter ended March 31, ~~2022, down 11 basis points from 3.73%~~2023 compared to 3.62% for the same period in ~~2021.~~2022. The cost of interest-bearing liabilities between the two periods ~~declined 17~~increased 173 basis points to 1.98% in the first quarter of 2023 from 0.25% in the first quarter of ~~2022 from 0.42% in the first quarter of 2021.~~2022.

Interest income ~~decreased $547,000~~increased $23.3 million to $84.2 million for the quarter ended March 31, 2023, from $60.8 million for the quarter ended March 31, ~~2022,~~2022. This increase is primarily due to an increase in interest on loans and securities. Income from ~~$61.4~~loans increased to $76.1 million for the quarter ended March 31, ~~2021. This decrease is due to a decrease in interest on loans offset mostly by an increase in interest on securities. Income from loans decreased to $55.2 million for the quarter ended March 31, 2022,~~2023, compared to ~~$57.6~~$55.2 million for the same period in ~~2021~~2022 due to ~~a decrease~~an increase in average loan balances to ~~$5.4~~$6.5 billion for the three months ended March 31, ~~2022~~2023 from ~~$5.6~~$5.4 billion for the first quarter of ~~2021 primarily as a result~~2022. The yield on loans increased 55 basis points in 2023 to 4.66% compared to 4.11% in the first quarter of ~~a decline in PPP loans.~~2022. Interest income from investments increased $1.8 million in the first quarter of ~~2022~~2023 to ~~$5.5~~$7.3 million compared to ~~$3.7~~$5.5 million in the same period in ~~2021~~2022 primarily due to an increase in ~~average security balances~~yield on securities of ~~$426.3 million. The yield decreased 8~~67 basis points to ~~1.82%~~2.49% for the three months ended March 31, ~~2022,~~2023, compared to ~~1.90%~~1.82% for the same period in ~~2021.~~2022. Income from ~~interest bearing~~interest-earning deposits ~~decreased~~increased to ~~$46,000~~$398,000 in the first quarter of ~~2022~~2023 compared to ~~$66,000~~$46,000 for the same period in ~~2021.~~2022. Average balances on ~~interest earning~~interest-earning deposits decreased ~~$35.9~~$74.7 million to ~~$109.8~~$35.1 million in the first quarter of ~~2022~~2023 from ~~$145.7~~$109.8 million for the same period in ~~2021.~~2022. The yield earned on ~~interest bearing~~interest-earning deposits ~~declined 1~~increased 490 basis points in the first quarter of ~~2022~~2023 compared to the same period in ~~2021.~~2022.

Interest expense ~~decreased $2.0~~increased $24.9 million to ~~$2.9~~$27.9 million in the first quarter of ~~2022~~2023 compared to ~~$4.9~~$2.9 million for the same period in ~~2021. This decrease was due to a decline~~2022. An increase in the cost of interest-bearing liabilities of 17173 basis ~~points.~~points is the primary reason for this change. Interest expense related to interest-bearing deposits was ~~$2.2~~$21.5 million in the first quarter of ~~2022~~2023 compared to ~~$4.2~~$2.2 million for the same period in ~~2021.~~2022. Interest expense recognized by the Company related to FHLB advances was ~~$13,000~~$5.3 million in the first quarter of ~~2022. There was no expense related~~2023 compared to ~~FHLB advances~~$13,000 for the same period in ~~2021.~~2022. Expenses on subordinated debentures and notes payable ~~was essentially flat at $696,000~~increased to $1.1 million in the first ~~quarter of 2022 compared to $695,000 for the same period in 2021.~~

quarter of 2023 compared to $696,000 for the same period in 2022 due to increased rates on the variable-rate junior subordinated debentures.

~~The Company has adopted ASU 2016-13, the Current Expected Credit Loss (“CECL”) model.~~ The ACL represents management’s assessment of the estimated credit losses the Company will receive over the life of the loan. ACL requires a projection of credit losses over the contract lifetime of the credit adjusted for prepayment tendencies. Management analyzes the adequacy of the ACL regularly through reviews of the loan portfolio. Consideration is given to economic conditions, changes in interest rates and the effect of such changes on collateral values and borrower’s ability to pay, changes in the composition of the loan portfolio and trends in past due and non-performing loan balances. The ACL is a material estimate that is susceptible to significant fluctuation and is established through a provision for credit losses based on management’s evaluation of the inherent risk in the loan portfolio. In addition to extensive in-house loan monitoring procedures, the Company utilizes an outside party to conduct an independent loan review of commercial loan and commercial real estate loan relationships. The Company’s goal is to have 45-50% of the portfolio reviewed annually using a risk based approach. Management utilizes the results of this outside loan review to assess the effectiveness of its internal loan grading system as well as to assist in the assessment of the overall adequacy of the ACL associated with these types of loans.

The ACL is made up of two basic components. The first component of the allowance for credit loss is the specific reserve in which the Company sets aside reserves based on the analysis of individual analyzed credits. In establishing specific reserves, the Company analyzes all substandard, doubtful and loss graded loans quarterly and makes judgments about the risk of loss based on the cash flow of the borrower, the value of any collateral and the financial strength of any guarantors. If the loan is individually analyzed and cash flow dependent, then a specific reserve is established for the discount on the net present value of expected future cash flows. If the loan is individually analyzed and collateral dependent, then any shortfall is either charged off or a specific reserve is established. The Company also considers the impacts of any Small Business Administration or Farm Service Agency guarantees. The specific reserve portion of the ACL was ~~$7.1~~$1.9 million ~~at both~~as of March 31, ~~2022,~~2023, and $2.4 million as of December 31, ~~2021.~~2022.

The second component is a general reserve, which is used to record loan loss reserves for groups of ~~homogenous~~homogeneous loans in which the Company estimates the potential losses over the contractual lifetime of the loan adjusted for prepayment tendencies. In addition, the future economic environment is incorporated in projection with loss expectations to revert to the long-run historical mean after such time as management can no longer make or obtain a reasonable and supportable forecast. For purposes of the general reserve analysis, the six loan portfolio segments are further segregated into fifteen different loan pools to allocate the ACL. Residential real estate is further segregated into owner occupied and nonowner occupied for ACL. Commercial real estate is split into owner occupied, nonowner occupied, multifamily, agriculture land and other commercial real estate. Commercial credits are comprised of commercial working capital, agriculture production and other commercial credits. Construction is broken ~~down~~out into construction other and residential construction and consumer is broken ~~down~~out into consumer direct, consumer indirect and home equity. The Company utilizes three different methodologies to analyze loan pools.

The DCF methodology was selected as the appropriate method for loan segments with longer average lives and regular payment structures. This method is applied to a majority of the Company’s real estate loans. DCF generates cash flow projections at the instrument level where payment expectations are adjusted for prepayment and curtailment to produce an expected cash flow stream that is net of estimated credit losses. This expected cash flow stream ~~net of estimated credit losses~~ is compared to the ~~net present value of expected~~contractual cash flows to establish a valuation account for these loans.

The PD/LGD methodology was selected as most appropriate for loan segments with average lives of three years or less and/or irregular payment structures. This methodology was used for home equity and commercial portfolios. A loan is considered to default if one of the following is detected:

The default rate is measured on the current life of the loan segment using a weighted average of the maximum possible ~~quarters that fall within~~quarters. The PD is then combined with a LGD derived from historical charge-off data to construct a default rate. This loss rate is then supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, particularly the ~~defined~~ unemployment rate ~~range. PD/~~forecast from the Federal Open Market Committee's Summary of Economic Projections. LGD is determined on a dollar-ratio basis, measuring the ratio of net charged off principal to defaulted principal.

The consumer portfolio contains loans with many different payment structures, payment streams and collateral. The remaining life method was deemed most appropriate for consumer direct loans and DCF for consumer indirect. The weighted average remaining life uses an annual charge-off rate over several vintages to estimate credit losses. The average annual charge-off rate is applied to the contractual term adjusted for prepayments. The DCF method was selected for consumer indirect due to the loan segments' longer average remaining life in addition to regular payment structure.

Additionally, CECL requires a reasonable and supportable forecast when establishing the ACL. The Company estimates losses over an approximate one-year forecast period using Moody’s baseline economic forecasts, and then reverts to longer term historical loss experience over a three-year period.

The quantitative general allowance increased to ~~$15.0~~$16.2 million at March 31, ~~2022,~~2023, up from ~~$12.3~~$15.0 million at December 31, ~~2021.~~2022. As a part of the CECL model in certain calculations, especially discounted cash flows, projected loan losses are correlated to the levels of the unemployment rate over the life of the ~~loans. A decline~~loans in ~~current and forecasted unemployment rates resulted~~addition to the fluctuation of loan balances. The increase in ~~a reduction in projected~~the quantitative general allowance during 2023 is attributed to loan ~~losses.~~growth.

In addition to the quantitative analysis, a qualitative analysis is performed each quarter to provide additional general reserves on loan portfolios that are not individually analyzed for various factors. The overall qualitative factors are based on nine sub-factors. The nine sub-factors have been aggregated into three qualitative factors: economic, environment and risk.

The qualitative analysis indicated a general reserve of ~~$45.1~~$56.2 million at March 31, ~~2022,~~2023, compared to ~~$47.1~~$55.4 million at December 31, ~~2021.~~2022. Overall, the factors decreased slightly in the first quarter as a result of favorable trends in the ~~environmental and~~ risk factors listed above and were partially offset by an increase in the economic and environmental factors.

The Company’s general reserve percentages for main loan segments, not otherwise classified, ranged from 0.66% for ~~consumer indirect~~construction other loans to ~~1.48%~~1.52% for commercial ~~real estate owner occupied~~working capital loans at March 31, ~~2022.~~2023.

Under ASU Topic 326, when loans are purchased with evidence of more than insignificant deterioration of credit, they are accounted for as purchase credit deteriorated (“PCD”). PCD loans acquired in a transaction are marked to fair value and a mark on yield is recorded. In addition, an adjustment is made to the ACL for the expected loss through retained earnings on the acquisition date. These loans are assessed on a regular basis and subsequent adjustments to the ACL are recorded on the income statement. The outstanding balance and related allowance on these loans as of March 31, ~~2022,~~2023, is ~~$27.8~~$20.6 million and ~~$1.6 million,~~$847,000, respectively.

As a result of the quantitative and qualitative analyses, along with the change in specific reserves and the change in net charge-offs in the quarter, the Company’s provision for credit losses for the three months ended March 31, ~~2022~~2023 was an expense of ~~$626,000.~~$3.9 million. This is compared to ~~a recovery~~an expense of ~~$7.5 million~~$626,000 for the three months ended March 31, ~~2021.~~2022. The ACL was ~~$67.2~~$74.3 million at March 31, ~~2022,~~2023, and ~~$66.5~~$67.2 million at December 31, ~~2021.~~2022. The ACL represented ~~1.25%~~1.13% of loans, net of undisbursed loan funds and deferred fees and costs at March 31, ~~2022,~~2023, compared to ~~1.26%~~1.13% at December 31, ~~2021.~~2022. In management’s opinion, the overall ACL of ~~$67.2~~$74.3 million as of March 31, ~~2022,~~2023 is adequate to cover current estimated credit losses.

Management also assesses the value of OREO as of the end of each accounting period and recognizes write-downs to the value of that real estate in the income statement if conditions dictate. In the three ~~month period~~months ended March 31, ~~2022, there were no~~2023, total write-downs of real estate held for ~~sale.~~sale and other repossessed assets were $52,000. Management believes that the values recorded at March 31, ~~2022,~~2023 for OREO and repossessed assets represent the realizable value of such assets.

Total classified loans ~~decreased~~increased to ~~$60.3~~$44.9 million at March 31, ~~2022,~~2023, compared to ~~$69.5~~$43.8 million at December 31, ~~2021, a decrease~~2022, an increase of ~~$9.2~~$1.1 million. Management monitors collateral values of all loans included on the watch list that are collateral dependent and believes that allowances for such loans at March 31, ~~2022,~~2023 were appropriate. Of the ~~$47.3~~$34.4 million in non-accrual loans at March 31, ~~2022, $21.9~~2023, $7.9 million, or ~~(46.3%)~~23.0%, are less than 90 days past due. Non-performing assets include loans that are on non-accrual, OREO and other assets held for sale. Non-performing assets at March 31, ~~2022,~~2023 and December 31, ~~2021,~~2022 by category, were as follows:

PCD loans account for ~~16.7%~~11.3% of non-performing ~~loans.~~loans at March 31, 2023. Excluding non-performing PCD loans, non-performing loans in the commercial loan category represented ~~1.25%~~0.49% of the total loans in that category at March 31, ~~2022,~~2023, compared to ~~1.29%~~0.46% for the same category at December 31, ~~2021.~~2022. Non-performing loans in the non-residential and multi-family residential real estate loan category were ~~0.58%~~0.50% of the total loans in this category at March 31, ~~2022,~~2023, compared to ~~0.60%~~0.48% at December 31, ~~2021.~~2022. Non-performing loans in the residential loan category represented ~~0.76%~~0.42% of the total loans in that category at March 31, ~~2022,~~2023, compared to ~~0.77%~~0.51% for the same category at December 31, ~~2021.~~2022.

The Bank’s Special Assets Committee meets monthly to review the status of work-out strategies for all criticized relationships, which include all non-accrual loans. Based on such factors as anticipated collateral values in liquidation scenarios, cash flow projections, assessment of net worth of guarantors and all other factors which may mitigate risk of loss, the Special ~~Asset~~Assets Committee makes recommendations regarding proposed charge-offs which are then approved by the Committee.

The following tables detail net charge-offs/recoveries and non-accrual loans by loan type.

The following table sets forth information concerning the allocation of the Company’s ACL by loan categories at the dates indicated.

Total non-interest income decreased ~~$9.4~~$4.4 million in the first quarter of ~~2022~~2023 to ~~$16.9~~$12.5 million from ~~$26.3~~$16.9 million for the same period in ~~2021.~~2022.

Service Fees. Service fees and other charges increased by ~~$531,000~~$428,000 from ~~$5.5~~$6.0 million for the three months ended March 31, 2022 to ~~$6.0~~$6.4 million for the same period in ~~2021. This increase is due primarily to higher ATM and interchange related fees in the first quarter of 2022 compared to the same quarter in 2021.~~2023.

Mortgage Banking Activity. ~~Mortgage~~In the first quarter of 2023 a loss of $274,000 was recorded for mortgage banking compared to income ~~decreased to~~of $4.3 million in the first quarter of ~~2022 from $10.5~~2022. Mortgage banking gains decreased $3.4 million to a loss of $837,000 in the first quarter of ~~2021. Mortgage banking gains decreased to~~2023 from a gain of $2.5 million in the first quarter of ~~2022 from $5.6 million in the first quarter of 2021.~~2022. This decrease was primarily ~~due to lower production, compressed margins and lower saleable mix.~~from a decrease in hedge valuations as market rates decreased. Mortgage loan servicing revenue was $1.9 million in the first quarter of both ~~2022~~2023 and ~~2021.~~2022. Amortization of mortgage servicing rights decreased to $1.2 million in the first quarter of 2023 from $1.4 million in the first quarter of ~~2022 from $2.3 million~~2022. The valuation adjustment in mortgage servicing assets was $(274,000) in the first quarter of ~~2021. The Company had a benefit for a decrease in the valuation~~2023 compared with an adjustment ~~in mortgage servicing assets~~ of $1.2 million in the first quarter of ~~2022 compared with a benefit for a decrease in the valuation adjustment of $5.3 million in the first quarter of 2021.~~2022. These fluctuations have ~~been caused by~~primarily resulted from changes in the level of interest rates and prepayment speeds.

Gain on Sale of Available-for-Sale Securities. The Company sold available-for-sale securities during the first quarter of ~~2021~~2023 resulting in a gain of ~~$516,000~~$34,000 compared to no activity for the same period in 2022. ~~The Company sold the securities to exit from fast paying mortgage-backed securities and take advantage of favorable pricing.~~

Gain (loss) on Equity Securities. The Company recognized an unrealized loss on equity securities of $1.4 million for the first quarter of 2023, compared to an unrealized loss of $643,000 for the first quarter of ~~2022 compared to an unrealized gain of $1.6 million in the first quarter of 2021.~~

2022. These amounts are attributable to changes in valuations in the ~~trading~~equity securities portfolio as a result of market conditions.

Insurance Commissions. Insurance commissions ~~decreased slightly from $4.9~~were $4.7 and $4.6 million infor the first quarter of ~~2021 to $4.6 million in the first quarter of 2022.~~2023 and 2022, respectively.

Wealth Management Income. Income from wealth management was $1.5 million for the first quarter of ~~2022 compared~~2023 and 2022.

Bank-Owned Life Insurance ("BOLI"). Income from BOLI increased to ~~$1.8~~$1.4 million in the first quarter of ~~2021.~~

~~Bank-Owned Life Insurance~~. ~~Income~~2023 from ~~bank owned life insurance decreased slightly from $1.2 million in the first quarter of 2021 to~~ $996,000 for the same period in 2022 ~~as a result~~due to the recognition of ~~$334,000~~claim gains in ~~claims in the first quarter of 2021 compared to none~~2023. There were no claim gains recognized in 2022.

Other Non-Interest Income. Other non-interest income ~~declined~~decreased to ~~$150,000~~$92,000 in the first quarter of ~~2022~~2023 from ~~$340,000~~$142,000 in the same period in ~~2021.~~2022.

Non-interest expense increased ~~$2.5~~$1.5 million to ~~$41.3~~$42.8 million for the first quarter of ~~2022~~2023 compared to ~~$38.8~~$41.3 million for the same period in ~~2021. The increase is mainly attributable to compensation and benefits.~~2022.

Compensation and Benefits. Compensation and benefits increased slightly to $25.7 million in the first quarter of 2023, compared to $25.5 million in the first quarter of 2022, compared to $22.0 million in the first quarter of 2021. This is primarily due to the combination of higher costs related to higher staffing levels for our growth initiatives, continued higher healthcare benefit costs and lower deferred costs related to lower residential mortgage production.2022.

Occupancy. Occupancy expense decreased to $3.6 million in the first quarter of 2023 compared to $3.7 million in the first quarter of ~~2022 compared to $4.1 million in the first quarter of 2021.~~2022. This decrease was due to the closure of ~~three branches~~one branch in ~~2021.~~2022.

FDIC Insurance Premium. The premiums on FDIC insurance ~~decreased~~increased to ~~$593,000~~$1.3 million for the three months ended March 31, ~~2022~~2023 compared to ~~$898,000~~$593,000 for the first quarter of ~~2021. The decrease was due to higher levels of equity at the Bank~~2022 primarily resulting from ~~increased net income.~~growth in deposits.

Financial Institutions Tax. The Company’s financial institutions tax ~~remained flat at~~decreased to $852,000 in the first quarter of 2023 compared to $1.2 million in the first quarter of 2022 ~~and 2021.~~as a result of lower equity at the end of 2022.

Data Processing. Data processing costs ~~were mostly flat at~~increased to $3.9 million in the first quarter of 2023, from $3.3 million in the first quarter of ~~2022, a decrease of $47,000 from $3.4 million in the first quarter of 2021.~~2022.

Amortization of Intangibles. Expense from the amortization of intangibles decreased to $1.3 million in the first quarter of 2023 from $1.4 million in the first quarter of ~~2022 from $1.6 million in the first quarter of 2021.~~2022. The decrease is primarily related to the amortization of core deposit intangibles over the past year.

Other Non-Interest Expenses. Other non-interest expenses ~~decreased $96,000~~increased $789,000 to ~~$5.5~~$6.3 million for the three months ended March 31, ~~2022 from $5.6~~2023, compared to $5.5 million for the same ~~period~~quarter in ~~2021.~~2022.

As a regulated financial institution, the Company is required to maintain appropriate levels of “liquid” assets to meet short-term funding requirements. The Company’s liquidity, primarily represented by cash and cash equivalents, is a result of its operating, investing and financing activities.

The principal source of funds for the Company are deposits, loan repayments, maturities of securities, borrowings from financial institutions and other funds provided by operations. The Bank also has the ability to

borrow from the FHLB. While scheduled loan repayments and maturing investments are relatively predictable, deposit flows and early loan repayments are more influenced by interest rates, general economic conditions and competition. Investments in liquid assets maintained by the Company and the Bank are based upon management’s assessment of (i) the need for funds, (ii) expected deposit flows, (iii) yields available on short-term liquid assets, and (iv) objectives of the asset and liability management program.

The Bank’s Asset/Liability Committee (“ALCO”) is responsible for establishing and monitoring liquidity guidelines, policies and procedures. ALCO uses a variety of methods to monitor the liquidity position of the Bank including liquidity analyses that measure potential sources and uses of funds over future periods out to one year. ALCO also performs contingency funding analyses to determine the Bank’s ability to meet potential liquidity needs under stress scenarios that cover varying time horizons ranging from immediate to longer term.

At March 31, ~~2022,~~2023, the Bank had ~~$1.9~~$1.6 billion of on-hand liquidity, defined as cash and cash equivalents, unencumbered securities and additional FHLB borrowing capacity.

Liquidity risk arises from the possibility that the Company may not be able to meet its financial obligations and operating cash needs or may become overly reliant upon external funding sources. In order to manage this risk, the Company’s Board of Directors has established a Liquidity Policy that identifies primary sources of

liquidity, establishes procedures for monitoring and measuring liquidity and quantifies minimum liquidity requirements. This policy designates ALCO as the body responsible for meeting these objectives. ALCO reviews liquidity on a ~~monthly~~quarterly basis and approves significant changes in strategies that affect balance sheet or cash flow positions. Management reviews liquidity on a monthly basis.

Capital is managed at the Bank and on a consolidated basis. Capital levels are maintained based on regulatory capital requirements and the economic capital required to support credit, market, liquidity and operational risks inherent in the business, as well as flexibility needed for future growth and new business opportunities.

In July 2013, the ~~first quarter of 2020, the federal banking agencies~~Federal Reserve and FDIC approved the final rules implementing ~~CECL. Under~~ the ~~final rules~~Basel Committee on Banking Supervision's capital guidelines for U.S. banks (commonly known as Basel III). The Company is in compliance with the Company had the ability to phase in the effects of the adoption of CECL, which it chose not to do. The full effect of the adoption of CECL was absorbed in the Company’s March 31, 2020 capital calculations. Basel III guidelines.

The Company met each of the well-capitalized ratio guidelines at March 31, ~~2022.~~2023. The following table indicates the capital ratios for the Company (consolidated) and the Bank at March 31, ~~2022,~~2023 and December 31, ~~2021~~2022 (in thousands):

As discussed in detail in the Company’s ~~2021~~2022 Form 10-K, the Company's ability to maximize net income is dependent on management’s ability to plan and control net interest income through management of the pricing and mix of assets and liabilities. Because a large portion of assets and liabilities of the Company are monetary in nature, changes in interest rates and monetary or fiscal policy affect its financial condition and can have significant impact on the net income of the Company.

The Company monitors its exposure to interest rate risk on a quarterly basis through simulation analysis that measures the impact changes in interest rates can have on net interest income. The simulation technique

analyzes the effect of a presumed 100 basis point shift in interest rates (which is consistent with management’s estimate of the range of potential interest rate fluctuations) and takes into account prepayment speeds on amortizing financial instruments, loan and deposit volumes and rates, borrowings, derivative positions and non-maturity deposit assumptions (such as beta and decay rates) and capital requirements.

The table below presents, for the twelve months subsequent to March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, an estimate of the change in net interest income that would result from an immediate (shock) change in interest rates, moving in a parallel fashion over the entire yield curve, relative to the measured base case scenario. Based on our net interest income simulation as of March 31, ~~2022,~~2023, net interest income sensitivity to changes in interest rates for the twelve months subsequent to March 31, ~~2022,~~2023, decreased in the rising rate environment and increased in the falling rate environment for the shock compared to the sensitivity profile for the twelve months subsequent to December 31, ~~2021.~~2022. The change in modeling results from the prior period shown is largely due to increased re-pricing expectations on deposits which increased liability sensitivity for the period.

To analyze the impact of changes in interest rates in a more realistic manner, non-parallel interest rate scenarios are also simulated. These non-parallel interest rate scenarios indicate that net interest income may ~~decrease~~increase from the base case scenario should the yield curve flatten, become inverted or ~~become inverted. Conversely, if the yield curve should steepen, net interest income may increase.~~steepen.

In addition to the simulation analysis, Premier also uses an economic value of equity (“EVE”) analysis to measure risk in the balance sheet incorporating all cash flows over the estimated remaining life of all balance sheet positions. The EVE analysis generally calculates the net present value of Premier’s assets and liabilities in rate shock environments that range from ~~-100~~-400 basis points to +400 basis points. The results of this analysis are reflected in the following tables for the quarter ended March 31, ~~2022,~~2023, and the year ended December 31, ~~2021.~~2022.

~~Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in~~An evaluation of the Company's ~~reports filed under the Exchange Act, including this report, is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, including those~~ disclosure controls and procedures designed to ensure that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed or operated,

can provide only reasonable, not absolute, assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. An evaluation was carried out under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, ~~2022.~~2023. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective. No changes occurred in the Company’s internal controls over financial reporting during the quarter ended March 31, ~~2022,~~2023, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Premier and its subsidiaries are involved in various legal proceedings that arise in the ordinary course of its business. While the ultimate liability with respect to litigation matters and claims cannot be determined at this

time, management believes any resulting liability and other amounts relating to pending matters are not likely to be material to the Company’s consolidated financial position or results of ~~operations~~.operations.

There are no material changes from the risk factors set forth under Part I, Item 1A, “Risk Factors” in the ~~2021~~2022 Form 10-K.

~~The Company had no unregistered sales of equity securities during the quarter ended March 31, 2022.~~ The following table provides information regarding Premier’s purchases of its common stock during the three-month period ended March 31, ~~2022:~~2023:

Premier discovered that it issued approximately 77,847 more shares of the Company’s common stock in connection with its employee share purchase plan (“ESPP”) than were registered on July 2, 2014 on the previously filed Registration Statement on Form S-8 (File No. 333-197203), as amended on July 17, 2018, relating to the ESPP. Because the Company sponsors the ESPP, it is required to register shares issued through the ESPP even though all ESPP shares are purchased by Broadridge Corporate Issuer Solutions, Inc., the plan administrator, in the open market. The Company filed a new registration statement on Form S-8 to register future shares issued through the ESPP on November 7, 2022.

The Company has always treated the shares issued through the ESPP as outstanding for financial reporting purposes. The Company believes that it has always provided the employee-participants in the ESPP with the same information they would have received had the additional shares been registered. Original purchasers of the unregistered ESPP shares may have rescission rights with respect to such shares under applicable federal securities laws for up to one year following the date of acquisition of the shares. These rescission rights represent a potential liability to the Company. In addition, the Company may be subject to civil and other penalties by regulatory authorities as a result of the failure to register these transactions. During the three months ended March 31, 2023, the Company purchased 391 shares of stock that were previously held in the ESPP.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Ohio	34-1803915
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
601 Clinton Street Defiance, OH	43512
(Address of principal executive offices)	(Zip Code)


		Page Number

PART I - FINANCIAL INFORMATION

Item 1.	Consolidated Condensed Financial Statements (Unaudited):	2

	Consolidated Condensed Statements of Financial Condition – March 31, ~~2022~~2023 and December 31, ~~2021~~2022	2

	Consolidated Condensed Statements of Income ~~Three~~– three months ended March 31, ~~2022~~2023 and ~~2021~~2022	3

	Consolidated Condensed Statements of Comprehensive Income (Loss) – ~~Three~~three months ended March 31, ~~2022~~2023 and ~~2021~~2022	4

	Consolidated Condensed Statements of Changes in Stockholders’ Equity – ~~Three~~three months ended March 31, ~~2022~~2023 and ~~2021~~2022	5

	Consolidated Condensed Statements of Cash Flows – ~~Three~~three months ended March 31, ~~2022~~2023 and ~~2021~~2022	6

	Notes to Consolidated Condensed Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3940

Item 33.	Quantitative and Qualitative Disclosures about Market Risk	5253

Item 44.	Controls and Procedures	5354

PART II - OTHER INFORMATION:

Item 11.	Legal Proceedings	54

Item 1A.	Risk Factors	5455

Item 22.	Unregistered Sales of Equity Securities and Use of Proceeds	5455

Item 33.	Defaults upon Senior Securities	54

~~Item 4~~	~~Mine Safety Disclosures~~	55

Item 54.	~~Other Information~~Mine Safety Disclosures	5556

Item 65.	Other Information	56

Item 6.	Exhibits	56

	Signatures	5657


	March 31, 2022			December 31, 2021			March 31, 2023			December 31, 2022
Assets
Cash and cash equivalents:
Cash and amounts due from depository institutions	$	62,083		$	54,858		$	68,628		$	88,257
Interest-bearing deposits		91,683			106,708			88,399			39,903
		153,766			161,566			157,027			128,160
Securities available-for-sale, carried at fair value		1,219,365			1,206,260			998,128			1,040,081
Equity securities, carried at fair value		13,454			14,097			6,387			7,832
Loans held for sale, carried at fair value		153,498			162,947			119,604			115,251
Loans receivable, net of allowance for credit losses of $67,195 at March 31, 2022 and $66,468 at December 31, 2021, respectively		5,321,136			5,229,700
Loans receivable, net of allowance for credit losses of $74,273 at March 31, 2023 and $72,816 at December 31, 2022, respectively								6,501,556			6,387,804
Mortgage servicing rights		20,715			19,538			20,654			21,171
Accrued interest receivable		21,765			20,767			29,388			28,709
Federal Home Loan Bank stock		15,332			11,585			37,056			29,185
Bank owned life insurance		167,763			166,767			170,841			170,713
Premises and equipment		54,684			55,602			55,982			55,541
Real estate and other assets held for sale		253			171			393			619
Goodwill		317,948			317,948			317,988			317,988
Core deposit and other intangibles		22,691			24,129			17,804			19,074
Other assets		108,510			90,325			129,508			133,214
Total assets	$	7,590,880		$	7,481,402		$	8,562,316		$	8,455,342
Liabilities and stockholders’ equity
Liabilities:
Deposits	$	6,317,235		$	6,282,051		$	6,774,031		$	6,906,719
Advances from the Federal Home Loan Bank		150,000			—			658,000			428,000
Subordinated debentures		85,008			84,976			85,123			85,103
Advance payments by borrowers		20,332			24,716			26,300			34,188
Reserve for credit losses - unfunded commitments		5,340			5,031			6,577			6,816
Other liabilities		69,669			61,132			97,835			106,795
Total liabilities		6,647,584			6,457,906			7,647,866			7,567,621
Stockholders’ equity:
Preferred stock, $.01 par value per share: 37,000 shares authorized; 0 shares issued		—		—
Preferred stock, $.01 par value per share: 4,963,000 shares authorized; 0 shares issued	—			—
Common stock, $.01 par value per share: 50,000,000 shares authorized; 43,297,260 and 43,297,260 shares issued and 35,620,578 and 36,383,613 shares outstanding at March 31, 2022 and December 31, 2021, respectively		306			306
Preferred stock, $.01 par value per share: 37,000 shares authorized; no shares issued								—		—
Preferred stock, $.01 par value per share: 4,963,000 shares authorized; no shares issued							—			—
Common stock, $.01 par value per share: 50,000,000 shares authorized; 43,297,260 and 43,297,260 shares issued and 35,701,244 and 35,591,277 shares outstanding at March 31, 2023 and December 31, 2022, respectively								306			306
Additional paid-in capital		691,350			691,132			689,807			691,453
Accumulated other comprehensive income, net of tax of $(20,069) and $(912), respectively		(75,497	)		(3,428	)
Accumulated other comprehensive loss, net of tax of $(40,859) and $(46,323), respectively								(153,709	)		(173,460	)
Retained earnings		459,087			443,517			510,021			502,909
Treasury stock, at cost, 7,676,682 shares at March 31, 2022 and 6,913,647 shares at December 31, 2021		(131,950	)		(108,031	)
Treasury stock, at cost, 7,596,016 shares at March 31, 2023 and 7,705,983 shares at December 31, 2022								(131,975	)		(133,487	)
Total stockholders’ equity		943,296			1,023,496			914,450			887,721
Total liabilities and stockholders’ equity	$	7,590,880		$	7,481,402		$	8,562,316		$	8,455,342


	Three Months Ended March 31,						Three Months Ended March 31,
	2022			2021			2023			2022
Interest Income
Loans	$	55,241		$	57,565		$	76,057		$	55,241
Investment securities:
Taxable		4,610			2,782			6,608			4,610
Non-taxable		869			900			653			869
Interest-bearing deposits		46			66			444			46
FHLB stock dividends		59			59			394			59
Total interest income		60,825			61,372			84,156			60,825
Interest Expense
Deposits		2,222			4,164			21,458			2,222
FHLB advances and other		13			0			5,336			13
Subordinated debentures		696			695			1,075			696
Notes payable								—			—
Total interest expense		2,931			4,859			27,869			2,931
Net interest income		57,894			56,513			56,287			57,894
Credit loss expense (benefit) - loans and leases		626			(7,514	)		3,944			626
Credit loss expense - unfunded commitments		309			551
Credit loss expense (benefit) - unfunded commitments								(238	)		309
Net interest income after credit (benefit) loss expense		56,959			63,476			52,581			56,959
Non-interest Income
Service fees and other charges		6,000			5,469			6,428			6,000
Insurance commissions		4,639			4,882			4,725			4,639
Mortgage banking income		4,252			10,533
Mortgage banking (loss) income								(274	)		4,252
Gain on sale of securities available for sale		0			516			34			—
Gain (loss) on equity securities		(643	)		1,610			(1,445	)		(643	)
Wealth management income		1,477			1,757			1,485			1,477
Income from Bank Owned Life Insurance		996			1,168			1,417			996
Other non-interest income		150			340			92			142
Total non-interest income		16,871			26,275			12,462			16,863
Non-interest Expense
Compensation and benefits		25,541			21,997			25,658			25,541
Occupancy		3,700			4,112			3,574			3,700
FDIC insurance premium		593			898			1,288			593
Financial institutions tax		1,191			1,190			852			1,191
Data processing		3,335			3,382			3,863			3,335
Amortization of intangibles		1,438			1,623			1,270			1,438
Other non-interest expense		5,505			5,601			6,286			5,497
Total non-interest expense		41,303			38,803			42,791			41,295
Income before income taxes		32,527			50,948			22,252			32,527
Income tax expense		6,170			9,952			4,103			6,170
Net income	$	26,357		$	40,996		$	18,149		$	26,357
Earnings per common share
Basic	$	0.73		$	1.10		$	0.51		$	0.73
Diluted	$	0.73		$	1.10		$	0.51		$	0.73


	Three Months Ended March 31,						Three Months Ended March 31,
	2022			2021			2023			2022
Net income	$	26,357		$	40,996		$	18,149		$	26,357

Other comprehensive (loss) income:
Unrealized (losses) gains on securities available for sale		(74,193	)		(19,112	)
Reclassification adjustment for securities gains (losses) included in net income		0			(516	)
Other comprehensive income (loss):
Unrealized gains (losses) on securities available for sale								18,399			(74,193	)
Reclassification adjustment for securities (gains) losses included in net income								(34	)		—
Income tax effect		15,580			4,122			(3,857	)		15,580
Net of tax amount		(58,613	)		(15,506	)		14,508			(58,613	)

Unrealized gain (loss) on balance sheet swap		(16,241	)		—			8,586			(16,241	)
Reclassification adjustment for cash flow hedge derivatives gain included in net income		(793	)
Reclassification adjustment for cash flow hedge derivatives gains included in net income								(1,949	)		(793	)
Income tax effect		3,578			—			(1,394	)		3,578
Net of tax amount		(13,456	)		—			5,243			(13,456	)

Total other comprehensive income (loss)		(72,069	)		(15,506	)		19,751			(72,069	)

Comprehensive income (loss)	$	(45,712	)	$	25,490		$	37,900		$	(45,712	)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Preferred Stock		Common Stock Shares			Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income			Retained Earnings			Treasury Stock			Total Stockholders Equity			Preferred Stock		Common Stock Shares			Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Treasury Stock			Total Stockholders Equity
Balance at January 1, 2022	$	—		36,383,613		$	306	$	691,132		$	(3,428	)	$	443,517		$	(108,031	)	$	1,023,496
Balance at January 1, 2023																							$	—		35,591,277		$	306	$	691,453		$	(173,460	)	$	502,909		$	(133,487	)	$	887,721
Net income															26,357						26,357																18,149						18,149
Other comprehensive income (loss)												(72,069	)								(72,069	)
Other comprehensive income																																		19,751									19,751
Deferred compensation plan				9,933					(14	)								14			—					9,196					75									(75	)		—
Stock based compensation expenses																										753					112									13			125
Vesting of incentive plans				5,660					760									246			1,006					62,061					(1,078	)								1,078			—
Restricted share issuance				19,936					(597	)								351			(246	)				60,526					(755	)								1,051			296
Restricted share forfeitures				(5,398	)				69									(285	)		(216	)				(22,178	)													(544	)		(544	)
Shares repurchased				(793,166	)													(24,245	)		(24,245	)				(391	)													(11	)		(11	)
Common stock dividend payment ($0.30 per share)															(10,787	)					(10,787	)
Balance at March 31, 2022	$	—		35,620,578		$	306	$	691,350		$	(75,497	)	$	459,087		$	(131,950	)	$	943,296
Common stock dividend payment ($0.31 per share)																																					(11,037	)					(11,037	)
Balance at March 31, 2023																							$	—		35,701,244		$	306	$	689,807		$	(153,709	)	$	510,021		$	(131,975	)	$	914,450


Three Months Ended March 31, 2021	Residential Real Estate			Commercial Real Estate			Construction		Commercial			Home Equity and Improvement			Consumer Finance			Total
Beginning Allowance	$	17,534		$	43,417		$	2,741	$	11,665		$	4,739		$	1,983		$	82,079
Charge-Offs		—			—			—		(70	)		(3	)		(36	)		(109	)
Recoveries		8			36			—		198			29			27			298
Provisions		(34	)		(8,181	)		35		398			416			(148	)		(7,514	)
Ending Allowance	$	17,508		$	35,272		$	2,776	$	12,191		$	5,181		$	1,826		$	74,754


	Loans Modified as a TDR for the Three Months Ended March 31, 2022 ($ in thousands)
Troubled Debt Restructurings	Number of Loans		Recorded Investment (as of period end)
Real Estate:
Residential		1	$	252
Commercial		—		—
Construction		—		—

Other Loans:
Commercial		—		—
Home equity and improvement		—		—
Consumer finance		2		20

Total		3	$	272


	As of March 31, 2022				As of December 31, 2021
	Loan Balance		ACL Balance		Loan Balance		ACL Balance
	(In Thousands)				(In Thousands)
Real Estate:
Residential	$	12,520	$	176	$	13,396	$	197
Commercial		3,146		51		5,878		151
Construction		—		—		—		—
		15,666		227		19,274		348
Other Loans:
Commercial		8,595		1,211		9,167		1,531
Home equity and improvement		3,135		139		3,405		154
Consumer finance		448		9		491		7
		12,178		1,359		13,063		1,692
Total	$	27,844	$	1,586	$	32,337	$	2,040


	Before Tax Amount			Tax (Expense) Benefit		Net of Tax Amount
	(In Thousands)
Three months ended March 31, 2022:
Securities available for sale and transferred securities:
Change in net unrealized gain/loss during the period	$	(74,193	)	$	15,580	$	(58,613	)
Reclassification adjustment for net losses included in net income		—			—		—
Cash flow hedge derivatives
Change in net unrealized gain/loss during the period		(16,241	)		3,411		(12,830	)
Reclassification adjustment for net gains included in net income		(793	)		167		(626	)
Total other comprehensive gain	$	(91,227	)	$	19,158	$	(72,069	)


	Three Months Ended March 31,														Three Months Ended March 31,
	2022							2021							2023							2022
	Average				Yield/			Average				Yield/			Average				Yield/			Average				Yield/
	Balance		Interest(1)		Rate(2)			Balance		Interest(1)		Rate(2)			Balance		Interest (1)		Rate (2)			Balance		Interest (1)		Rate (2)
Interest-earning assets:
Loans receivable	$	5,382,825	$	55,248		4.11	%	$	5,629,715	$	57,579		4.09	%	$	6,535,080	$	76,063		4.66	%	$	5,382,825	$	55,248		4.11	%
Securities		1,250,321		5,701		1.82			823,986		3,905		1.90			1,183,361		7,359		2.49			1,250,321		5,701		1.82
Interest bearing deposits		109,757		46		0.17			145,658		66		0.18			35,056		444		5.07			109,757		46		0.17
FHLB stock		11,959		59		1.97			11,984		59		1.97			30,353		394		5.19			11,959		59		1.97
Total interest-earning assets		6,754,862		61,054		3.62			6,611,343		61,609		3.73			7,783,850		84,260		4.33			6,754,862		61,054		3.62
Non-interest-earning assets		786,552							727,543							649,250							786,552
Total assets	$	7,541,414						$	7,338,886						$	8,433,100						$	7,541,414

Interest-bearing liabilities:
Deposits	$	4,600,801	$	2,222		0.19	%	$	4,546,272	$	4,164		0.37	%	$	5,078,510	$	21,458		1.69	%	$	4,600,801	$	2,222		0.19	%
FHLB advances and other		16,278		13		0.32			—		—		—			467,311		5,336		4.57			16,278		13		0.32
Subordinated debentures		84,988		696		3.28			84,868		695		3.28			85,114		1,075		5.05			84,988		696		3.28
Total interest-bearing liabilities		4,702,067		2,931		0.25			4,631,140		4,859		0.42			5,630,935		27,869		1.98			4,702,067		2,931		0.25
Non-interest bearing deposits		1,713,416		—		—			1,644,020		—		—			1,755,011		—		—			1,713,416		—		—
Total including non-interest bearing demand deposits		6,415,483		2,931		0.18			6,275,160		4,859		0.31			7,385,946		27,869		1.51			6,415,483		2,931		0.18
Other non-interest-bearing liabilities		92,115							91,073							145,567							92,115
Total liabilities		6,507,598							6,366,233							7,531,513							6,507,598
Stockholders’ equity		1,033,816							972,653							901,587							1,033,816
Total liabilities and stockholders’ equity	$	7,541,414						$	7,338,886						$	8,433,100						$	7,541,414
Net interest income; interest rate spread			$	58,123		3.37	%			$	56,750		3.31	%			$	56,391		2.35	%			$	58,123		3.37	%
Net interest margin (3)						3.44	%						3.43	%						2.90	%						3.44	%
Average interest-earning assets to average interest-bearing liabilities						144	%						143	%						138	%						144	%


	March 31,			December 31,			March 31,			December 31,
	2022			2021			2023			2022
	(In Thousands)						(In Thousands)
Non-performing loans:
Residential real estate	$	9,280		$	9,034		$	6,763		$	7,724
Commercial real estate		14,423			14,621			14,187			13,396
Construction		—			—			—			—
Commercial		11,386			11,531			5,142			4,862
Home equity and improvement		2,171			2,051			1,879			1,637
Consumer finance		2,100			1,873			2,508			2,401
PCD		7,938			8,904			3,898			3,802
Total non-performing loans		47,298			48,014			34,377			33,822

Real estate owned		253			171			393			619
Total repossessed assets		253			171			393			619

Total Nonperforming assets	$	47,551		$	48,185
TDR loans, accruing	$	6,287		$	7,768
Total nonperforming assets							$	34,770		$	34,441

Total nonperforming assets as a percentage of total assets		0.63	%		0.64	%		0.41	%		0.41	%
Total nonperforming assets as a percentage of total loans plus REO*		0.88	%		0.91	%
Total nonperforming assets as a percentage of total loans plus OREO*								0.53	%		0.53	%
ACL as a percent of total nonperforming assets		141.31	%		137.94	%		213.61	%		211.42	%


	For the Three Months Ended March 31, 2022						As of March 31, 2022					For the Three Months Ended March 31, 2023						As of March 31, 2023
	Net Charge-offs (Recovery)			% of Total Net Charge-offs			Nonaccrual Loans		% of Total Non- Accrual Loans			Net Charge-offs (Recovery)			% of Total Net Charge-offs			Nonaccrual Loans		% of Total Non- Accrual Loans
	(In Thousands)						(In Thousands)					(In Thousands)						(In Thousands)
Residential	$	82			(81.19	)%	$	9,280		19.62	%	$	(16	)		(0.64	)%	$	6,763		19.67	%
Commercial real estate		(52	)		51.49	%		14,423		30.49	%		1,657			66.63	%		14,187		41.27	%
Construction		—			—			-		—			—			—			—		—
Commercial		(89	)		88.12	%		11,386		24.07	%		402			16.16	%		5,142		14.96	%
Home equity and improvement		(14	)		13.86	%		2,171		4.59	%		3			0.12	%		1,879		5.47	%
Consumer finance		19			(18.81	)%		2,100		4.44	%		375			15.08	%		2,508		7.30	%
PCD		(47	)		46.53	%		7,938		16.78	%		66			2.65	%		3,898		11.33	%
Total	$	(101	)		100.00	%	$	47,298		100.00	%	$	2,487			100.00	%	$	34,377		100.00	%


	For the Quarter Ended
	1st Qtr 2022			4th Qtr 2021		3rd Qtr 2021			2nd Qtr 2021			1st Qtr 2021
	(In Thousands)
Allowance at beginning of period	$	66,468		$	73,217	$	71,367		$	74,754		$	82,079
Provision (benefit) for credit losses		626			2,818		1,594			(3,631	)		(7,514	)
Charge-offs:
Residential		140			83		27			—			—
Commercial real estate		7			3,087		84			—			—
Construction		—			—		—			—			—
Commercial		10			6,513		372			—			70
Home equity and improvement		20			13		47			—			3
Consumer finance		102			249		85			106			32
PCD		10			2		3			605			4
Total charge-offs		289			9,947		618			711			109
Recoveries		390			380		874			955			298
Net charge-offs (recoveries)		(101	)		9,567		(256	)		(244	)		(189	)
Ending allowance	$	67,195		$	66,468	$	73,217		$	71,367		$	74,754


	For the Quarter Ended
	1st Qtr 2023		4th Qtr 2022		3rd Qtr 2022		2nd Qtr 2022		1st Qtr 2022
									(In Thousands)
Allowance at beginning of period	$	72,816	$	70,626	$	67,074	$	67,195	$	66,468
Provision for credit losses		3,944		3,020		3,706		5,151		626
Charge-offs:
Residential		5		38		15		832		140
Commercial real estate		1,669		93		206		137		7
Construction		—		—		—		16		—
Commercial		498		—		29		5,303		10
Home equity and improvement		24		19		47		216		20
Consumer finance		449		540		185		136		102
PCD		68		367		—		63		10
Total charge-offs		2,713		1,057		482		6,703		289
Recoveries		226		227		328		1,431		390
Net charge-offs (recoveries)		2,487		830		154		5,272		(101	)
Ending allowance	$	74,273	$	72,816	$	70,626	$	67,074	$	67,195


	March 31, 2023					December 31, 2022					September 30, 2022					June 30, 2022					March 31, 2022
	Amount		Percent of total loans by category			Amount		Percent of total loans by category			Amount		Percent of total loans by category			Amount		Percent of total loans by category			Amount		Percent of total loans by category
	(Dollars In Thousands)
Residential	$	18,229		22.7	%	$	16,711		21.6	%	$	16,311		21.4	%	$	14,113		21.0	%	$	11,640		20.7	%
Commercial real estate		33,831		39.3	%		34,218		38.8	%		32,712		38.6	%		34,952		40.4	%		34,201		42.3	%
Construction		3,882		16.5	%		4,025		17.9	%		3,286		17.9	%		2,999		16.7	%		2,613		15.0	%
Commercial		12,525		14.8	%		11,769		14.8	%		12,282		15.1	%		9,762		15.1	%		13,821		15.4	%
Home equity and improvement		3,654		3.8	%		4,044		3.9	%		4,210		3.9	%		4,003		4.1	%		3,919		4.4	%
Consumer finance		2,152		3.0	%		2,049		3.0	%		1,825		3.1	%		1,245		2.7	%		1,001		2.2	%
	$	74,273		100.0	%	$	72,816		100.0	%	$	70,626		100.0	%	$	67,074		100.0	%	$	67,195		100.0	%


	March 31, 2022					December 31, 2021					September 30, 2021					June 30, 2021					March 31, 2021
	Amount		Percent of total loans by category			Amount		Percent of total loans by category			Amount		Percent of total loans by category			Amount		Percent of total loans by category			Amount		Percent of total loans by category
											(Dollars In Thousands)
Residential	$	11,640		20.7	%	$	12,029		20.2	%	$	13,749		19.7	%	$	15,268		19.6	%	$	17,508		19.9	%
Commercial real estate		34,201		42.3	%		32,399		42.5	%		34,092		41.6	%		34,461		41.4	%		35,272		40.9	%
Construction		2,613		15.0	%		3,004		15.0	%		3,621		15.4	%		2,739		14.3	%		2,776		12.8	%
Commercial		13,821		15.4	%		13,410		15.5	%		15,428		16.6	%		12,211		18.1	%		12,191		20.0	%
Home equity and improvement		3,919		4.4	%		4,221		4.6	%		4,688		4.6	%		4,988		4.5	%		5,181		4.4	%
Consumer finance		1,001		2.2	%		1,405		2.2	%		1,639		2.2	%		1,700		2.0	%		1,826		2.0	%
	$	67,195		100.0	%	$	66,468		100.0	%	$	73,217		100.0	%	$	71,367		100.0	%	$	74,754		100.0	%


	1st Qtr 2022			4th Qtr 2021			3rd Qtr 2021			2nd Qtr 2021			1st Qtr 2021			1st Qtr 2023			4th Qtr 2022			3rd Qtr 2022			2nd Qtr 2022			1st Qtr 2022
Allowance for credit losses / loans*		1.25	%		1.26	%		1.39	%		1.33	%		1.37	%		1.13	%		1.13	%		1.14	%		1.14	%		1.25	%
Allowance for credit losses / loans excluding PPP loans		1.25	%		1.27	%		1.43	%		1.41	%		1.49	%
Allowance for credit losses / non-performing assets		141.31	%		137.94	%		121.77	%		172.63	%		151.47	%		213.61	%		211.42	%		210.49	%		190.57	%		141.31	%
Allowance for credit losses / non-performing loans		142.07	%		138.43	%		122.30	%		172.82	%		151.64	%		216.05	%		215.29	%		213.13	%		193.10	%		142.07	%
Non-performing assets / loans plus OREO*		0.88	%		0.91	%		1.14	%		0.77	%		0.90	%		0.53	%		0.53	%		0.54	%		0.60	%		0.88	%
Non-performing assets / total assets		0.63	%		0.64	%		0.81	%		0.54	%		0.66	%		0.41	%		0.41	%		0.41	%		0.44	%		0.63	%
Net charge-offs / average loans (annualized)		(0.01	)%		0.71	%		(0.02	)%		(0.02	)%		(0.01	)%		0.15	%		0.05	%		0.01	%		0.37	%		(0.01	)%


	March 31, 2022															March 31, 2023
	Actual					Minimum Required for Adequately Capitalized					Minimum Required to be Well Capitalized for Prompt Corrective Action					Actual					Minimum Required for Adequately Capitalized					Minimum Required to be Well Capitalized for Prompt Corrective Action
	Amount		Ratio			Amount		Ratio(1)			Amount		Ratio			Amount		Ratio			Amount		Ratio(1)			Amount		Ratio
CET1 Capital (to Risk-Weighted Assets)
Consolidated	$	683,235		10.31	%	$	298,312		4.5	%	N/A		N/A			$	737,448		10.01	%	$	331,682		4.5	%	N/A		N/A
Premier Bank	$	713,920		10.81	%	$	297,097		4.5	%	$	429,139		6.5	%	$	782,641		10.66	%	$	330,399		4.5	%	$	477,243		6.5	%
Tier 1 Capital
Consolidated	$	718,235		9.86	%	$	291,406		4.0	%	N/A		N/A			$	772,448		9.35	%	$	330,563		4.0	%	N/A		N/A
Premier Bank	$	713,920		9.88	%	$	289,054		4.0	%	$	361,317		5.0	%	$	782,641		9.50	%	$	329,700		4.0	%	$	412,124		5.0	%
Tier 1 Capital (to Risk Weighted Assets)
Consolidated	$	718,235		10.83	%	$	397,750		6.0	%	N/A		N/A			$	772,448		10.48	%	$	442,242		6.0	%	N/A		N/A
Premier Bank	$	713,920		10.81	%	$	396,129		6.0	%	$	528,172		8.0	%	$	782,641		10.66	%	$	440,532		6.0	%	$	587,376		8.0	%
Total Capital (to Risk Weighted Assets)
Consolidated	$	839,184		12.66	%	$	530,333		8.0	%	N/A		N/A			$	902,451		12.24	%	$	589,656		8.0	%	N/A		N/A
Premier Bank	$	784,869		11.89	%	$	528,172		8.0	%	$	660,215		10.0	%	$	862,644		11.75	%	$	587,376		8.0	%	$	734,220		10.0	%


	December 31, 2021
	Actual					Minimum Required for Adequately Capitalized					Minimum Required to be Well Capitalized for Prompt Corrective Action
	Amount		Ratio			Amount		Ratio(1)			Amount		Ratio
CET1 Capital (to Risk-Weighted Assets)
Consolidated	$	689,930		10.92	%	$	284,394		4.5	%	N/A		N/A
Premier Bank	$	725,600		11.53	%	$	283,265		4.5	%	$	409,160		6.5	%

Tier 1 Capital
Consolidated	$	724,930		10.10	%	$	287,138		4.0	%	N/A		N/A
Premier Bank	$	725,600		10.16	%	$	285,664		4.0	%	$	357,080		5.0	%

Tier 1 Capital (to Risk Weighted Assets)
Consolidated	$	724,930		11.47	%	$	379,192		6.0	%	N/A		N/A
Premier Bank	$	725,600		11.53	%	$	377,686		6.0	%	$	503,582		8.0	%

Total Capital (to Risk Weighted Assets)
Consolidated	$	844,389		13.36	%	$	505,589		8.0	%	N/A		N/A
Premier Bank	$	795,059		12.63	%	$	503,582		8.0	%	$	629,477		10.0	%


	Impact on Future Annual Net Interest Income
	March 31, 2022		December 31, 2021
Immediate Change in Interest Rates
+400		14.45%	19.16%
+300		11.08%	14.52%
+200		7.49%	9.66%
+100		3.62%	4.82%
-100		(3.13)%	(3.21)%


Period	Total Number of Shares Purchased(2)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(1)
Beginning Balance, January 1, 2022								1,032,864
January 1 - January 31, 2022		103,038	$	30.86		99,166		1,985,000
February 1 - February 28, 2022		486,126		30.46		484,600		1,500,400
March 1 - March 31, 2022		209,400		30.69		209,400		1,291,000
Total		798,564	$	28.92		793,166		1,291,000


Exhibit 3.1		Second Amended and Restated Articles of Incorporation of Premier Financial Corp. (incorporated herein by reference to Exhibit 3.2 in Registrant’s Form 8-K filed June 22, 2020 (File No. 000-26850))
Exhibit 3.2		Second Amended and Restated Code of Regulations of Premier Financial Corp. (reflecting all amendments) (incorporated herein by reference to Exhibit 3.3 in Registrant’s Form 8-K filed June 22, 2020 (File No. ~~000-26850))~~
~~Exhibit 10.1~~		~~Premier Financial Corp. Long Term Incentive Program (incorporated herein by reference to Exhibit 10.1 in Registrant's Form 8-K filed February, 23, 2022 (File NO. 000-26850))~~
~~Exhibit 10.2~~		Premier Financial Corp. Form of Long Term Incentive Plan Performance Share Units Award Agreement (incorporated herein by reference to Exhibit 10.2 in Registrant's Form 8-K filed February, 23, 2022 (File NO. 000-26850))
~~Exhibit 10.3~~		~~Premier Financial Corp. Restricted Stock Award Agreement (incorporated herein by reference to Exhibit 10.3 in Registrant's Form 8-K filed February, 23, 2022 (File NO. 000-26850))~~
~~Exhibit 10.4~~		~~Premier Financial Corp. Short Term Incentive Program (incorporated herein by reference to Exhibit 10.4 in Registrant's Form 8-K filed February, 23, 2022 (File NO.~~ 000-26850))
Exhibit 31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 101		The following financial information from the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2022~~2023 is formatted in Inline XBRL: (i) Unaudited Consolidated Condensed Statements of Financial Condition at March 31, ~~2022~~2023 and December 31, ~~2021;~~2022; (ii) Unaudited Consolidated Condensed Statements of Income for the three months ended March 31, ~~2022~~2023 and ~~2021;~~2022; (iii) Unaudited Consolidated Condensed Statements of Comprehensive Income for the three months ended March 31, ~~2022~~2023 and ~~2021;~~2022; (iv) Unaudited Consolidated Condensed Statements of Changes in Stockholders’ Equity for the three months ended March 31, ~~2022~~2023 and ~~2021;~~2022; (v) Unaudited Consolidated Condensed Statements of Cash Flows for the three months ended March 31, ~~2022~~2023 and ~~2021;~~2022; and (vi) Notes to Unaudited Consolidated Condensed Financial Statements.

Exhibit 104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


Date: May ~~9, 2022~~5, 2023	By:	/s/ Gary M. Small
		Gary M. Small
		President and Chief Executive Officer (Principal Executive Officer)


Date: May ~~9, 2022~~5, 2023	By:	/s/ Paul D. Nungester, Jr.
		Paul D. Nungester, Jr.
		Executive Vice President and
		Chief Financial Officer (Principal Financial and Accounting Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company