UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the quarterly period ended ~~September 30, 2023~~March 31, 2024


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

For the transition period from to


			Commission file number			001-35968

MIDWESTONE FINANCIAL GROUP, INC.

(Exact name of Registrant as specified in its charter)


Iowa						42-1206172
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

102 South Clinton Street, Iowa City, IA 52240						(319) 356-5800
(Address of principal executive offices, including zip code)						(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $1.00 par value

MOFG

The Nasdaq Stock Market LLC

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. x 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x 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.

Large accelerated filer

☐

Accelerated filer

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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 x No

As of ~~November 1, 2023,~~May 3, 2024, there were ~~15,691,738~~15,755,319 shares of common stock, $1.00 par value per share, outstanding.

Table of Contents

MIDWESTONE FINANCIAL GROUP, INC.

Form 10-Q Quarterly Report

Table of Contents

PART I – FINANCIAL INFORMATION

Glossary of Acronyms, Abbreviations, and Terms

As used in this report, references to "MidWestOne", "we", "our", "us", the "Company", and similar terms refer to the consolidated entity consisting of MidWestOne Financial Group, Inc. and its wholly-owned subsidiaries. MidWestOne Bank or the "Bank" refers to MidWestOne's bank subsidiary, MidWestOne Bank.

The acronyms, abbreviations, and terms listed below are used in various sections of this Quarterly Report on Form 10-Q ("Form 10-Q"), including "Item 1. Financial Statements" and "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations."


ACL	Allowance for Credit Losses	FHLB	Federal Home Loan Bank
AFS	Available for Sale	FHLBC	Federal Home Loan Bank of Chicago
AOCI	Accumulated Other Comprehensive Income	FHLBDM	Federal Home Loan Bank of Des Moines
ASC	Accounting Standards Codification	FHLMC	Federal Home Loan Mortgage Corporation
ASU	Accounting Standards Update	FNBF	First National Bank in Fairfield
ATM	Automated Teller Machine	FNBM	First National Bank of Muscatine
Basel III Rules	A comprehensive capital framework and rules for U.S. banking organizations approved by the FRB and the FDIC in 2013	FNMA	Federal National Mortgage Association
BHCA	Bank Holding Company Act of 1956, as amended	FRB	Board of Governors of the Federal Reserve System
~~BOLI~~BOD	Bank ~~Owned Life Insurance~~of Denver	GAAP	U.S. Generally Accepted Accounting Principles
BOLI	Bank Owned Life Insurance	GLBA	Gramm-Leach-Bliley Act of 1999
CAA	Consolidated Appropriations Act, 2021	~~GLBA~~GNMA	~~Gramm-Leach-Bliley Act of 1999~~Government National Mortgage Association
CARES Act	Coronavirus Aid, Relief and Economic Security Act	~~GNMA~~ICS	~~Government National Mortgage Association~~Insured Cash Sweep
CDARS	Certificate of Deposit Account Registry Service	~~ICS~~IOFB	~~Insured Cash Sweep~~Iowa First Bancshares Corp.
CECL	Current Expected Credit Loss	~~IOFB~~LIBOR	~~Iowa First Bancshares Corp.~~The London Inter-bank Offered Rate
CMO	Collateralized Mortgage Obligations	~~LIBOR~~MBEFD	~~The London Inter-bank Offered Rate~~Loan Modification for Borrowers Experiencing Financial Difficulty
COVID-19	Coronavirus Disease 2019	MBS	Mortgage-Backed Securities
CRA	Community Reinvestment Act	PCD	Purchase Credit Deteriorated
CRE	Commercial Real Estate	PPP	Paycheck Protection Program
DCF	Discounted Cash Flows	ROU	Right-of-Use
DNVB	Denver Bankshares, Inc.	RPA	Credit Risk Participation Agreement
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act	RRE	Residential Real Estate
ECL	Expected Credit Losses	SBA	U.S. Small Business Administration
EVE	Economic Value of Equity	SEC	U.S. Securities and Exchange Commission
FASB	Financial Accounting Standards Board	SOFR	Secured Overnight Financing Rate
FDIC	Federal Deposit Insurance Corporation	~~TDR~~	~~Troubled Debt Restructuring~~

Table of Contents

Item 1. Financial Statements (unaudited).

MIDWESTONE FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS


		September 30, 2023		December 31, 2022		March 31, 2024	December 31, 2023
(unaudited) (dollars in thousands, except per share amounts)	(unaudited) (dollars in thousands, except per share amounts)
ASSETS	ASSETS
ASSETS
ASSETS
Cash and due from banks
Cash and due from banks
Cash and due from banks	Cash and due from banks	$	71,015	$	83,990
Interest earning deposits in banks	Interest earning deposits in banks	3,773		2,445

Federal funds sold
Total cash and cash equivalents	Total cash and cash equivalents	74,788		86,435
Debt securities available for sale at fair value	Debt securities available for sale at fair value	872,770		1,153,547
Held to maturity securities at amortized cost	Held to maturity securities at amortized cost	1,085,751		1,129,421
Total securities	Total securities	1,958,521		2,282,968
Loans held for sale	Loans held for sale	2,528		612
Gross loans held for investment	Gross loans held for investment	4,078,060		3,854,791
Unearned income, net	Unearned income, net	(12,091)		(14,267)
Loans held for investment, net of unearned income	Loans held for investment, net of unearned income	4,065,969		3,840,524
Allowance for credit losses	Allowance for credit losses	(51,600)		(49,200)
Total loans held for investment, net	Total loans held for investment, net	4,014,369		3,791,324
Premises and equipment, net	Premises and equipment, net	85,589		87,125
Goodwill	Goodwill	62,477		62,477
Other intangible assets, net	Other intangible assets, net	25,510		30,315
Foreclosed assets, net	Foreclosed assets, net	—		103
Other assets	Other assets	244,036		236,517
Total assets	Total assets	$	6,467,818	$	6,577,876

LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest bearing deposits
Noninterest bearing deposits
Noninterest bearing deposits	Noninterest bearing deposits	$	924,213	$	1,053,450
Interest bearing deposits	Interest bearing deposits	4,439,111		4,415,492
Total deposits	Total deposits	5,363,324		5,468,942
Short-term borrowings	Short-term borrowings	373,956		391,873
Long-term debt	Long-term debt	124,526		139,210
Other liabilities	Other liabilities	100,601		85,058
Total liabilities	Total liabilities	5,962,407		6,085,083

Shareholders' equity	Shareholders' equity
Shareholders' equity
Shareholders' equity
Preferred stock, no par value; authorized 500,000 shares; no shares issued and outstanding	Preferred stock, no par value; authorized 500,000 shares; no shares issued and outstanding	—		—
Common stock, $1.00 par value; authorized 30,000,000 shares; issued shares of 16,581,017 and 16,581,017; outstanding shares of 15,691,738 and 15,623,977		16,581		16,581
Preferred stock, no par value; authorized 500,000 shares; no shares issued and outstanding
Preferred stock, no par value; authorized 500,000 shares; no shares issued and outstanding
Common stock, $1.00 par value; authorized 30,000,000 shares; issued shares of 16,581,017 and 16,581,017; outstanding shares of 15,750,471 and 15,694,306
Additional paid-in capital	Additional paid-in capital	301,889		302,085
Retained earnings	Retained earnings	295,862		289,289
Treasury stock at cost, 889,279 and 957,040 shares		(24,315)		(26,115)
Treasury stock at cost, 830,546 and 886,711 shares
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(84,606)		(89,047)
Total shareholders' equity	Total shareholders' equity	505,411		492,793
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	6,467,818	$	6,577,876

See accompanying notes to consolidated financial statements.

Table of Contents

MIDWESTONE FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		Three Months Ended
		Three Months Ended
		Three Months Ended
		March 31,
		March 31,
		March 31,
(unaudited) (dollars in thousands, except per share amounts)
(unaudited) (dollars in thousands, except per share amounts)
(unaudited) (dollars in thousands, except per share amounts)	(unaudited) (dollars in thousands, except per share amounts)	2023		2022		2023		2022
Interest income	Interest income
Interest income
Interest income
Loans, including fees
Loans, including fees
Loans, including fees	Loans, including fees	$	51,870	$	40,451	$	148,086	$	104,515
Taxable investment securities	Taxable investment securities	9,526		10,635		29,704		28,334
Taxable investment securities
Taxable investment securities
Tax-exempt investment securities
Tax-exempt investment securities
Tax-exempt investment securities	Tax-exempt investment securities	1,802		2,326		5,751		7,076
Other	Other	374		9		686		77
Other
Other
Total interest income
Total interest income
Total interest income	Total interest income	63,572		53,421		184,227		140,002
Interest expense	Interest expense
Interest expense
Interest expense
Deposits
Deposits
Deposits	Deposits	23,128		5,035		58,564		11,118
Short-term borrowings	Short-term borrowings	3,719		767		7,623		1,115
Short-term borrowings
Short-term borrowings
Long-term debt
Long-term debt
Long-term debt	Long-term debt	2,150		1,886		6,427		4,975
Total interest expense	Total interest expense	28,997		7,688		72,614		17,208
Total interest expense
Total interest expense
Net interest income
Net interest income
Net interest income	Net interest income	34,575		45,733		111,613		122,794
Credit loss expense	Credit loss expense	1,551		638		4,081		3,920
Credit loss expense
Credit loss expense
Net interest income after credit loss expense	Net interest income after credit loss expense	33,024		45,095		107,532		118,874
Noninterest income
Net interest income after credit loss expense
Net interest income after credit loss expense
Noninterest income (loss)
Noninterest income (loss)
Noninterest income (loss)
Investment services and trust activities
Investment services and trust activities
Investment services and trust activities	Investment services and trust activities	3,004		2,876		9,056		8,557
Service charges and fees	Service charges and fees	2,146		2,075		6,201		5,449
Service charges and fees
Service charges and fees
Card revenue
Card revenue
Card revenue	Card revenue	1,817		1,898		5,412		5,426
Loan revenue	Loan revenue	1,462		1,722		3,791		9,538
Loan revenue
Loan revenue
Bank-owned life insurance
Bank-owned life insurance
Bank-owned life insurance	Bank-owned life insurance	626		579		1,844		1,668

Investment securities gains (losses), net	Investment securities gains (losses), net	79		(163)		(13,093)		272

Investment securities gains (losses), net

Investment securities gains (losses), net
Other	Other	727		3,601		1,350		5,669
Total noninterest income		9,861		12,588		14,561		36,579
Other
Other
Total noninterest income (loss)
Total noninterest income (loss)
Total noninterest income (loss)
Noninterest expense
Noninterest expense
Noninterest expense	Noninterest expense
Compensation and employee benefits	Compensation and employee benefits	18,558		20,046		58,551		57,665
Compensation and employee benefits
Compensation and employee benefits
Occupancy expense of premises, net
Occupancy expense of premises, net
Occupancy expense of premises, net	Occupancy expense of premises, net	2,405		2,577		7,725		7,609
Equipment	Equipment	2,123		2,358		6,729		6,366
Equipment
Equipment
Legal and professional
Legal and professional
Legal and professional	Legal and professional	1,678		2,012		5,096		6,800
Data processing	Data processing	1,504		1,731		4,388		4,199
Data processing
Data processing
Marketing
Marketing
Marketing	Marketing	782		1,139		2,910		3,325
Amortization of intangibles	Amortization of intangibles	1,460		1,789		4,806		4,299
Amortization of intangibles
Amortization of intangibles
FDIC insurance
FDIC insurance
FDIC insurance	FDIC insurance	783		415		2,394		1,255
Communications	Communications	206		302		727		840
Communications
Communications
Foreclosed assets, net
Foreclosed assets, net
Foreclosed assets, net	Foreclosed assets, net	2		42		(32)		(66)

Other	Other	2,043		2,212		6,488		6,056

Other

Other
Total noninterest expense
Total noninterest expense
Total noninterest expense	Total noninterest expense	31,544		34,623		99,782		98,348
Income before income tax expense	Income before income tax expense	11,341		23,060		22,311		57,105
Income before income tax expense
Income before income tax expense
Income tax expense	Income tax expense	2,203		4,743		4,182		12,272
Income tax expense
Income tax expense
Net income
Net income
Net income	Net income	$	9,138	$	18,317	$	18,129	$	44,833

Per common share information	Per common share information

Per common share information

Per common share information
Earnings - basic
Earnings - basic
Earnings - basic	Earnings - basic	$	0.58	$	1.17	$	1.16	$	2.86
Earnings - diluted	Earnings - diluted	$	0.58	$	1.17	$	1.15	$	2.86
Earnings - diluted
Earnings - diluted
Dividends paid	Dividends paid	$	0.2425	$	0.2375	$	0.7275	$	0.7125
Dividends paid
Dividends paid

See accompanying notes to consolidated financial statements.

Table of Contents

MIDWESTONE FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		Three Months Ended
		Three Months Ended
		Three Months Ended
		March 31,
		March 31,
		March 31,
(unaudited) (dollars in thousands)
(unaudited) (dollars in thousands)
(unaudited) (dollars in thousands)	(unaudited) (dollars in thousands)	2023		2022		2023		2022
Net income	Net income	$	9,138	$	18,317	$	18,129	$	44,833
Net income
Net income

Other comprehensive income (loss), net of tax:
Unrealized loss from AFS debt securities:
Unrealized net loss on debt securities AFS		(4,578)		(42,935)		(13,658)		(121,179)
Reclassification adjustment for losses (gains) included in net income		(79)		163		13,093		(272)
Other comprehensive income, net of tax:

Other comprehensive income, net of tax:

Other comprehensive income, net of tax:
Unrealized gain from AFS debt securities:
Unrealized gain from AFS debt securities:
Unrealized gain from AFS debt securities:
Unrealized net gain (loss) on debt securities AFS
Unrealized net gain (loss) on debt securities AFS
Unrealized net gain (loss) on debt securities AFS
Reclassification adjustment for (gains) losses included in net income
Reclassification adjustment for (gains) losses included in net income
Reclassification adjustment for (gains) losses included in net income
Reclassification of the change in fair value of AFS debt securities attributable to change in hedged risk	Reclassification of the change in fair value of AFS debt securities attributable to change in hedged risk	454		—		454		—
Income tax benefit		1,065		10,823		27		31,358
Unrealized net loss on AFS debt securities, net of reclassification adjustments		(3,138)		(31,949)		(84)		(90,093)
Reclassification of the change in fair value of AFS debt securities attributable to change in hedged risk
Reclassification of the change in fair value of AFS debt securities attributable to change in hedged risk
Income tax (expense)
Income tax (expense)
Income tax (expense)
Unrealized net gain on AFS debt securities, net of reclassification adjustments
Unrealized net gain on AFS debt securities, net of reclassification adjustments
Unrealized net gain on AFS debt securities, net of reclassification adjustments
Reclassification of AFS debt securities to HTM:
Reclassification of AFS debt securities to HTM:
Reclassification of AFS debt securities to HTM:	Reclassification of AFS debt securities to HTM:
Amortization of the net unrealized loss from the reclassification of AFS debt securities to HTM	Amortization of the net unrealized loss from the reclassification of AFS debt securities to HTM	586		746		1,768		3,152
Amortization of the net unrealized loss from the reclassification of AFS debt securities to HTM
Amortization of the net unrealized loss from the reclassification of AFS debt securities to HTM
Income tax expense
Income tax expense
Income tax expense	Income tax expense	(148)		(189)		(447)		(817)
Amortization of net unrealized loss from the reclassification of AFS debt securities to HTM, net	Amortization of net unrealized loss from the reclassification of AFS debt securities to HTM, net	438		557		1,321		2,335
Amortization of net unrealized loss from the reclassification of AFS debt securities to HTM, net
Amortization of net unrealized loss from the reclassification of AFS debt securities to HTM, net
Unrealized gain from cash flow hedging instruments:
Unrealized gain from cash flow hedging instruments:
Unrealized gain from cash flow hedging instruments:	Unrealized gain from cash flow hedging instruments:
Unrealized net gains in cash flow hedging instruments	Unrealized net gains in cash flow hedging instruments	1,829		—		5,288		—
Unrealized net gains in cash flow hedging instruments
Unrealized net gains in cash flow hedging instruments
Reclassification adjustment for net gain in cash flow hedging instruments included in income
Reclassification adjustment for net gain in cash flow hedging instruments included in income
Reclassification adjustment for net gain in cash flow hedging instruments included in income	Reclassification adjustment for net gain in cash flow hedging instruments included in income	(761)		—		(999)		—
Income tax expense	Income tax expense	(270)		—		(1,085)		—
Income tax expense
Income tax expense
Unrealized net gains on cash flow hedge instruments, net of reclassification adjustment	Unrealized net gains on cash flow hedge instruments, net of reclassification adjustment	798		—		3,204		—
Other comprehensive income (loss), net of tax		(1,902)		(31,392)		4,441		(87,758)
Comprehensive income (loss)		$	7,236	$	(13,075)	$	22,570	$	(42,925)
Unrealized net gains on cash flow hedge instruments, net of reclassification adjustment
Unrealized net gains on cash flow hedge instruments, net of reclassification adjustment
Other comprehensive income, net of tax
Other comprehensive income, net of tax
Other comprehensive income, net of tax
Comprehensive income
Comprehensive income
Comprehensive income

See accompanying notes to consolidated financial statements.

Table of Contents

MIDWESTONE FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Three Months Ended September 30,
Common Stock
(unaudited)
(dollars in thousands, except per share amounts)
Par Value
Additional
Paid-in
Capital
Retained Earnings Treasury Stock
Accumulated
Other
Comprehensive
Income (Loss)
Total
Balance at June 30, 2022 $ 16,581 $ 300,859 $ 262,395 $ (25,772) $ (65,231) $ 488,832
Net Income — — 18,317 — — 18,317
Other comprehensive loss — — — — (31,392) (31,392)
Release/lapse of restriction on RSUs (2,280 shares, net) — (81) (4) 58 — (27)
Repurchase of common stock (14,586 shares) — — — (431) — (431)
Share-based compensation — 640 — — — 640
Dividends paid on common stock ($0.2375 per share) — — (3,710) — — (3,710)
Balance at September 30, 2022 $ 16,581 $ 301,418 $ 276,998 $ (26,145) $ (96,623) $ 472,229
Balance at June 30, 2023 $ 16,581 $ 301,424 $ 290,548 $ (24,508) $ (82,704) $ 501,341
Net Income — — 9,138 — — 9,138
Other comprehensive loss — — — — (1,902) (1,902)
Release/lapse of restriction on RSUs (6,615 shares, net) — (227) (19) 193 — (53)
Share-based compensation — 692 — — — 692
Dividends paid on common stock ($0.2425 per share) — — (3,805) — — (3,805)
Balance at September 30, 2023 $ 16,581 $ 301,889 $ 295,862 $ (24,315) $ (84,606) $ 505,411
Nine Months Ended September 30,
Common Stock
(unaudited)
(dollars in thousands, except per share amounts)
Par Value
Additional
Paid-in
Capital
Retained Earnings Treasury Stock
Accumulated
Other
Comprehensive
Income (Loss)
Total
Balance at December 31, 2021 $ 16,581 $ 300,940 $ 243,365 $ (24,546) $ (8,865) $ 527,475
Net income — — 44,833 — — 44,833
Other comprehensive loss — — — — (87,758) (87,758)
Release/lapse of restriction on RSUs (43,079 shares, net) — (1,359) (42) 1,131 — (270)
Repurchase of common stock (91,401 shares) — — — (2,730) — (2,730)
Share-based compensation — 1,837 — — — 1,837
Dividends paid on common stock ($0.7125 per share) — — (11,158) — — (11,158)
Balance at September 30, 2022 $ 16,581 $ 301,418 $ 276,998 $ (26,145) $ (96,623) $ 472,229
Balance at December 31, 2022 $ 16,581 $ 302,085 $ 289,289 $ (26,115) $ (89,047) $ 492,793
Net income — — 18,129 — — 18,129
Other comprehensive income — — — — 4,441 4,441
Release/lapse of restriction on RSUs (67,761 shares, net) — (2,261) (146) 1,800 — (607)
Share-based compensation — 2,065 — — — 2,065
Dividends paid on common stock ($0.7275 per share) — — (11,410) — — (11,410)
Balance at September 30, 2023 $ 16,581 $ 301,889 $ 295,862 $ (24,315) $ (84,606) $ 505,411


Three Months Ended March 31,
	Common Stock
(unaudited) (dollars in thousands, except per share amounts)	Par Value		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total
Balance at December 31, 2022	$	16,581	$	302,085	$	289,289	$	(26,115)	$	(89,047)	$	492,793
Net income	—		—		1,397		—		—		1,397
Other comprehensive income	—		—		—		—		10,162		10,162
Release/lapse of restriction on RSUs (51,348 shares)	—		(1,767)		(118)		1,336		—		(549)

Share-based compensation	—		648		—		—		—		648
Dividends paid on common stock ($0.2425 per share)	—		—		(3,801)		—		—		(3,801)
Balance at March 31, 2023	$	16,581	$	300,966	$	286,767	$	(24,779)	$	(78,885)	$	500,650















Balance at December 31, 2023	$	16,581	$	302,157	$	294,784	$	(24,245)	$	(64,899)	$	524,378
Net income	—		—		3,269		—		—		3,269
Other comprehensive income	—		—		—		—		4,095		4,095
Release/lapse of restriction on RSUs (56,165 shares, net)	—		(1,953)		(167)		1,597		—		(523)

Share-based compensation	—		641		—		—		—		641
Dividends paid on common stock ($0.2425 per share)	—		—		(3,820)		—		—		(3,820)
Balance at March 31, 2024	$	16,581	$	300,845	$	294,066	$	(22,648)	$	(60,804)	$	528,040

Table of Contents

MIDWESTONE FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


		Nine Months Ended September 30,
	Three Months Ended March 31,								Three Months Ended March 31,
(unaudited) (dollars in thousands)	(unaudited) (dollars in thousands)	2023		2022		(unaudited) (dollars in thousands)	2024	2023
Operating Activities:	Operating Activities:
Net income	Net income	$	18,129	$	44,833
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:
Credit loss expense	Credit loss expense	4,081		3,920
Credit loss expense
Credit loss expense

Depreciation, amortization, and accretion
Depreciation, amortization, and accretion
Depreciation, amortization, and accretion	Depreciation, amortization, and accretion	9,420		7,511

Net change in premises and equipment due to writedown or sale	Net change in premises and equipment due to writedown or sale	68		500

Net change in premises and equipment due to writedown or sale

Net change in premises and equipment due to writedown or sale
Share-based compensation	Share-based compensation	2,065		1,837
Net loss (gain) on sale or call of debt securities available for sale		13,093		(272)
Net (gain) loss on call or sale of debt securities available for sale

Net change in foreclosed assets due to writedown or sale

Net change in foreclosed assets due to writedown or sale

Net change in foreclosed assets due to writedown or sale	Net change in foreclosed assets due to writedown or sale	(29)		(71)
Net gain on sale of loans held for sale	Net gain on sale of loans held for sale	(912)		(1,705)
Origination of loans held for sale	Origination of loans held for sale	(41,650)		(81,490)
Proceeds from sales of loans held for sale	Proceeds from sales of loans held for sale	40,646		93,792
Increase in cash surrender value of bank-owned life insurance	Increase in cash surrender value of bank-owned life insurance	(1,844)		(1,668)
(Increase) decrease in deferred income taxes, net		(75)		4,082
Bargain purchase gain		—		(1,257)
Increase in deferred income taxes, net

Change in:	Change in:
Change in:
Change in:
Other assets
Other assets
Other assets	Other assets	(2,701)		(34,484)
Other liabilities	Other liabilities	15,543		36,791
Net cash provided by operating activities	Net cash provided by operating activities	$	55,834	$	72,319
Investing Activities:	Investing Activities:

Purchases of equity securities

Purchases of equity securities

Purchases of equity securities	Purchases of equity securities	$	(750)	$	(1,250)
Proceeds from sales of debt securities available for sale	Proceeds from sales of debt securities available for sale	218,667		129,823
Proceeds from maturities and calls of debt securities available for sale	Proceeds from maturities and calls of debt securities available for sale	101,194		133,018
Purchases of debt securities available for sale	Purchases of debt securities available for sale	(54,690)		(386,278)

Proceeds from maturities and calls of debt securities held to maturity	Proceeds from maturities and calls of debt securities held to maturity	43,963		108,180
Proceeds from maturities and calls of debt securities held to maturity
Proceeds from maturities and calls of debt securities held to maturity
Net increase in loans held for investment	Net increase in loans held for investment	(224,068)		(215,738)
Purchases of premises and equipment	Purchases of premises and equipment	(2,280)		(1,980)
Proceeds from sale of foreclosed assets	Proceeds from sale of foreclosed assets	135		345
Proceeds from sale of premises and equipment	Proceeds from sale of premises and equipment	880		23
Net cash acquired in business acquisition		—		31,375
Net cash paid in business acquisition

Net cash provided by (used in) investing activities		$	83,051	$	(202,482)
Net cash (used in) provided by investing activities

Net cash (used in) provided by investing activities

Net cash (used in) provided by investing activities
Financing Activities:	Financing Activities:
Net (decrease) increase in:	Net (decrease) increase in:
Net (decrease) increase in:
Net (decrease) increase in:
Deposits
Deposits
Deposits	Deposits	$	(105,713)	$	(101,501)
Short-term borrowings	Short-term borrowings	(17,917)		121,627

Payments on finance lease liability	Payments on finance lease liability	(135)		(121)

Payments of Federal Home Loan Bank borrowings		(11,000)		(21,000)
Proceeds from other long-term debt		—		25,000
Payments on finance lease liability

Payments on finance lease liability

Payments of other long-term debt	Payments of other long-term debt	(3,750)		(5,000)

Payments of other long-term debt

Payments of other long-term debt

Taxes paid relating to the release/lapse of restriction on RSUs
Taxes paid relating to the release/lapse of restriction on RSUs
Taxes paid relating to the release/lapse of restriction on RSUs	Taxes paid relating to the release/lapse of restriction on RSUs	(607)		(270)
Dividends paid	Dividends paid	(11,410)		(11,158)

Repurchase of common stock		—		(2,730)
Net cash (used in) provided by financing activities		$	(150,532)	$	4,847

Net cash provided by (used in) financing activities

Net cash provided by (used in) financing activities

Net cash provided by (used in) financing activities
Net change in cash and cash equivalents	Net change in cash and cash equivalents	$	(11,647)	$	(125,316)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	86,435		203,830
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	74,788	$	78,514

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		Nine Months Ended September 30,
	Three Months Ended March 31,								Three Months Ended March 31,
(unaudited) (dollars in thousands)	(unaudited) (dollars in thousands)	2023		2022		(unaudited) (dollars in thousands)	2024	2023
Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:
Cash paid during the period for interest	Cash paid during the period for interest	$	65,992	$	17,628
Cash paid during the period for income taxes, net of refunds		1,456		8,229
Cash paid during the period for interest
Cash paid during the period for interest

Supplemental schedule of non-cash investing and financing activities:	Supplemental schedule of non-cash investing and financing activities:
Supplemental schedule of non-cash investing and financing activities:
Supplemental schedule of non-cash investing and financing activities:
Transfer of loans to foreclosed assets, net
Transfer of loans to foreclosed assets, net
Transfer of loans to foreclosed assets, net	Transfer of loans to foreclosed assets, net	$	3	$	20

Transfer of premises and equipment to assets held for sale		—		1,349
Transfer of debt securities available for sale to debt securities held to maturity		—		1,253,179

Supplemental schedule of non-cash investing activities from acquisition:

Supplemental schedule of non-cash investing activities from acquisition:

Supplemental schedule of non-cash investing activities from acquisition:	Supplemental schedule of non-cash investing activities from acquisition:
Non-cash assets acquired:	Non-cash assets acquired:
Non-cash assets acquired:
Non-cash assets acquired:
Investment securities
Investment securities
Investment securities	Investment securities	$	—	$	119,820
Total loans held for investment, net	Total loans held for investment, net	—		281,326
Premises and equipment	Premises and equipment	—		7,363
Assets held for sale
Goodwill
Core deposit intangible	Core deposit intangible	—		16,500
Bank-owned life insurance		—		7,862

Other assets
Other assets
Other assets	Other assets	—		3,766
Total non-cash assets acquired	Total non-cash assets acquired	$	—	$	436,637
Liabilities assumed:	Liabilities assumed:
Deposits	Deposits	$	—	$	463,638
Deposits
Deposits
Short-term borrowings	Short-term borrowings	—		1,541
FHLB borrowings		—		250

Other liabilities
Other liabilities
Other liabilities	Other liabilities	—		1,326
Total liabilities assumed	Total liabilities assumed	$	—	$	466,755

See accompanying notes to consolidated financial statements.

Table of Contents

MidWestOne Financial Group, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

1. Nature of Business and Significant Accounting Policies

Nature of Business

~~MidWestOne~~ ~~Financial Group, Inc. (the "Company"),~~The Company, an Iowa corporation formed in 1983, is a bank holding company under the BHCA and a financial holding company under the GLBA. Our principal executive offices are located at 102 South Clinton Street, Iowa City, Iowa 52240.

The Company owns all of the outstanding common stock of MidWestOne Bank, an Iowa state non-member bank chartered in 1934 with its main office in Iowa City, Iowa. We operate primarily through MidWestOne Bank, our bank subsidiary.

On ~~June 9, 2022,~~January 31, 2024, the Company ~~acquired Iowa First Bancshares Corp.,~~completed the acquisition of DNVB, a bank holding company whose wholly-owned banking ~~subsidiaries were First National Bank of Muscatine and First National Bank in Fairfield, community banks located in Muscatine and Fairfield, Iowa, respectively.~~subsidiary was BOD. Immediately following ~~the~~ completion of the acquisition, ~~First National Bank of Muscatine and First National Bank in Fairfield were~~BOD was merged with and into the Bank. As consideration for the merger, we paid cash in the amount of ~~$46.7~~$32.6 million.

Basis of Presentation

The accompanying interim condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, certain disclosures accompanying annual consolidated financial statements are omitted. In the opinion of management, all significant intercompany accounts and transactions have been eliminated and adjustments, consisting solely of normal recurring accruals and considered necessary for the fair presentation of financial statements for the interim periods, have been included. The current period's results of operations are not necessarily indicative of the results that ultimately may be achieved for the year. The interim condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, ~~2022,~~2023, filed with the SEC on March ~~13, 2023.~~8, 2024.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect: (1) the reported amounts of assets and liabilities, (2) the disclosure of contingent assets and liabilities at the date of the financial statements, and (3) the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available to management at the time the estimates are made. Actual results could differ from those estimates. The results for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 may not be indicative of results for the year ending December 31, ~~2023,~~2024, or for any other period.

All significant accounting policies followed in the preparation of the quarterly financial statements are disclosed in the Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, filed with the SEC on March ~~13, 2023.~~8, 2024.

Segment Reporting

The Company’s activities are considered to be one reportable segment for financial reporting purposes. The Company is engaged in the business of commercial and retail banking and trust and investment management services with operations throughout central and eastern Iowa, the Minneapolis/St. Paul metropolitan area, ~~of Minnesota,~~ southwestern Wisconsin, Naples and Fort Myers, Florida, and Denver, Colorado. Substantially all income is derived from a diverse base of commercial, mortgage and retail lending activities, and investments.

Effect of New Financial Accounting Standards

Accounting Guidance Pending Adoption at ~~September 30, 2023~~March 31, 2024

On March 12, 2020, the FASB issued ASU 2020-04, 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 GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. Certain optional expedients and exceptions for contract modifications and hedging relationships were amended in ASU 2021-01, Reference Rate Reform (Topic 848): Scope Refinement, issued on January 7, 2021. In addition, ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset

~~Table of Contents~~

Date of Topic 848, deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which time entities will no longer be permitted to apply the relief in Topic 848. The adoption of ASU 2020-04 is not expected to have a material impact on the Company’s consolidated financial statements.

Table of Contents

~~Accounting Guidance Adopted at September 30, 2023~~

On ~~March 31, 2022,~~November 27, 2023, the FASB issued ASU ~~2022-02,~~2023-07, ~~Financial Instruments~~Segment Reporting (Topic 280) - ~~Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage~~Improvements to Reportable Segment Disclosures. ~~For creditors that have adoptedthe CECL accounting guidance~~Enhanced disclosures about significant segment expenses are included within ASU 2016-13, the amendments eliminate the accounting guidance for TDRs within ASC 310-40, while also enhancing the disclosure requirements for certain loan refinancings and restructurings when a borrower is experiencing financial difficulty. In addition, public business entities must also disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of ASC 326-20.this ASU. The amendments are effective for fiscal years beginning after December 15, ~~2022~~2023, and ~~should be applied prospectively,~~interim periods within fiscal years beginning after December 15, 2024, with an option to ~~apply~~early adopt. The amendments should be applied retrospectively to all prior periods presented in the financial statements, with the segment expense categories and amounts disclosed in prior periods being based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the impact of ASU 2023-07.

On December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. Additional transparency about income tax information through improvements to income tax disclosures, primarily related to the rate reconciliation and income taxes paid information, will be required. The amendments are effective for annual periods beginning after December 15, 2024, with an option to early adopt. The amendments should be applied on a prospective basis, with retrospective application being permitted. The Company is currently evaluating the impact of ASU 2023-09.

Accounting Guidance Adopted in 2024

On March 29, 2023, the FASB issued ASU 2023-02, Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. Under this ASU, if certain conditions are met, a reporting entity may elect to account for its tax equity investments by using the proportional amortization method regardless of the program from which it receives income tax credits. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with an option to early adopt. The amendments must be applied on either a modified retrospective ~~transition approach~~or a retrospective basis, with certain exceptions for low-income-housing tax credit structures that are not accounted for using the ~~recognition and measurement of TDRs.~~proportional amortization method. The adoption of ASU ~~2022-02~~2023-02 was applied ~~prospectively~~on a modified retrospective basis and did not have a material impact on the Company's consolidated financial statements.

2. Business Combinations

On ~~June 9, 2022,~~January 31, 2024, the Company acquired 100% of the equity of ~~IOFB~~DNVB through a merger and acquired its wholly-owned ~~subsidiaries FNBM and FNBF~~banking subsidiary, Bank of Denver, for cash consideration of ~~$46.7~~$32.6 million. The primary ~~reasons~~reason for the acquisition ~~were~~was to ~~enter the Muscatine, Iowa market and~~ increase our presence in ~~Fairfield, Iowa.~~Denver, Colorado. Immediately following the completion of the acquisition, ~~FNBM and FNBF were~~BOD was merged with and into the Bank.

The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their fair values as of the ~~June 9, 2022~~January 31, 2024 acquisition date net of any applicable tax effects using a methodology similar to the Company's legacy assets and liabilities (refer to Note 14. Fair Value of Financial Instruments and Fair Value Measurements for additional information regarding the fair value methodology). Initial accounting for the assets acquired and liabilities assumed was incomplete at March 31, 2024. Thus, such amounts recognized in the financial statements have been determined to be provisional. The ~~bargain purchase gain, which is recorded in 'Other' noninterest income, was generated as a result~~excess of the ~~estimated~~consideration paid over the fair value of ~~identifiable~~the net assets acquired ~~exceeding the merger consideration. Bargain purchase gains are~~is recorded ~~net of deferred taxes and are treated~~ as ~~permanent differences, resulting in lower effective~~goodwill. This goodwill is not deductible for tax ~~rate in the period recorded.~~purposes. The revenue and earnings amount specific to ~~IOFB~~DNVB since the acquisition date that are included in the consolidated results for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2024 are not readily determinable. The disclosures of these amounts are impracticable due to the merging of certain processes and systems at the acquisition date.

Table of Contents

The table below summarizes the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed:

(in thousands)

~~June 9, 2022~~January 31, 2024

Merger consideration

Cash consideration

~~46,672~~32,600

Identifiable net assets acquired, at fair value

Assets acquired

Cash and due from banks

~~10,192~~462

Interest earning deposits in banks

~~67,855~~3,517

Debt securities

~~119,820~~52,493

Loans held for investment

~~281,326~~207,095

Premises and equipment

~~7,363~~13,470

Core deposit intangible

~~16,500~~7,100

Other assets

~~14,140~~4,987

Total assets acquired

~~517,196~~289,124

Liabilities assumed

Deposits

~~(463,638)~~(224,248)

Short-term borrowings

(37,500)

Other liabilities

~~(3,117)~~(3,417)

Total liabilities assumed

~~(466,755)~~(265,165)

Identifiable net assets acquired, at fair value

~~50,441~~23,959

~~Bargain Purchase Gain~~Goodwill

~~3,769~~8,641

~~Table of Contents~~

~~Of the $281.3 million net loans acquired, $11.0 million exhibited credit deterioration on the date of purchase. The following table provides a summary of these PCD loans at acquisition:~~

~~(in thousands)~~

~~June 9, 2022~~

~~Par value of PCD loans acquired~~

~~15,396~~

~~PCD ACL at acquisition~~

~~(3,371)~~

~~Non-credit discount on PCD loans~~

~~(1,005)~~

~~Purchase price of PCD loans~~

~~11,020~~

For illustrative purposes only, the following table presents certain unaudited pro forma information for the three ~~and nine~~ months ended ~~September 30, 2022.~~March 31, 2024 and March 31, 2023. This unaudited, estimated pro forma information was calculated as if ~~IOFB~~DNVB had been acquired as of the beginning of the year prior to the date of acquisition. This unaudited pro forma information combines the historical results of ~~IOFB~~DNVB and the Company and includes adjustments for the estimated impact of certain fair value purchase accounting, interest expense, acquisition-related expenses, and income tax expense for the respective periods. The pro forma information is not indicative of what would have occurred had the acquisition occurred as of the beginning of the year prior to the acquisition. Additionally, MidWestOne expects to achieve further operating cost savings and other business synergies, including revenue growth as a result of the acquisition, which are not reflected in the pro forma amounts that follow. As a result, actual amounts would have differed from the unaudited pro forma information presented.

Three Months Ended

Nine Months Ended

September 30,

Unaudited

Three Months Ended

March 31,

(in thousands, except per share amounts)

2022

Total revenues

55,954

165,053

Net Income

17,111

46,663

Total revenues

Net income (loss)

EPS - basic

1.10

2.98

EPS - diluted

1.09

2.97

EPS - diluted

~~The Company announced during the third quarter~~

Table of ~~2023 the execution of a definitive merger agreement for the acquisition of DNVB, the parent company for the Bank of Denver.~~Contents

The following table summarizes the DNVB acquisition-related expenses incurred during the three months ended March 31, 2024 and IOFB acquisition-related expenses incurred during the three months ended March 31, 2023, which are included in the respective income statement line items, for the periods indicated:

Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands) 2023 2022 2023 2022
Noninterest Expense
Compensation and employee benefits $ — $ 132 $ 70 $ 282
Occupancy expense of premises, net — — — 1
Equipment — 14 — 25
Legal and professional 11 193 11 894
Data processing — 304 65 380
Marketing — 90 — 162
Communications — — — 3
Other — 30 1 45
Total acquisition-related expenses $ 11 $ 763 $ 147 $ 1,792


	Three Months Ended
	March 31,
(in thousands)	2024		2023
Noninterest Expense
Compensation and employee benefits	$	241	$	70
Occupancy expense of premises, net	152		—
Equipment	149		—
Legal and professional	573		—
Data processing	61		65
Marketing	32		—
Communications	1		—
Other	105		1
Total acquisition-related expenses	$	1,314	$	136

3. Debt Securities

On January 1, 2022, the Company transferred, at fair value, $1.25 billion of mortgage-backed securities, collateralized mortgage obligations, and securities issued by state and political subdivisions from the available for sale classification to the held to maturity classification. The net unrealized after tax loss of $11.5 million associated with those re-classified securities remained in accumulated other comprehensive loss and will be amortized over the remaining life of the securities. At ~~September 30, 2023,~~March 31, 2024, there was ~~$7.4~~$6.6 million of net unrealized after tax loss remaining in accumulated other comprehensive ~~loss. No gains or losses were recognized in earnings at~~loss, related to the ~~time~~transfer of ~~the transfer.~~securities classified as available for sale to held to maturity on January 1, 2022.

~~Table of Contents~~

The following tables summarize the amortized cost, gross unrealized gains and losses and the resulting fair value of debt securities as of the dates indicated:


		As of September 30, 2023											As of March 31, 2024
(in thousands)	(in thousands)	Amortized Cost (1)		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Loss related to Debt Securities		Fair Value		(in thousands)	Amortized Cost (1)	Gross Unrealized Gains	Gross Unrealized Losses	Allowance for Credit Loss related to Debt Securities	Fair Value
Available for Sale	Available for Sale
U.S. Treasury securities
U.S. Treasury securities
U.S. Treasury securities

State and political subdivisions
State and political subdivisions
State and political subdivisions	State and political subdivisions	$	177,300	$	1	$	14,833	$	—	$	162,468
Mortgage-backed securities	Mortgage-backed securities	5,574		—		247		—		5,327
Collateralized loan obligations	Collateralized loan obligations	52,697		6		250		—		52,453
Collateralized mortgage obligations	Collateralized mortgage obligations	159,344		—		27,421		—		131,923
Corporate debt securities	Corporate debt securities	586,612		60		66,073		—		520,599
Total available for sale debt securities	Total available for sale debt securities	$	981,527	$	67	$	108,824	$	—	$	872,770

Held to Maturity	Held to Maturity
Held to Maturity
Held to Maturity
State and political subdivisions
State and political subdivisions
State and political subdivisions	State and political subdivisions	$	532,885	$	—	$	100,821	$	—	$	432,064
Mortgage-backed securities	Mortgage-backed securities	76,310		—		15,863		—		60,447
Collateralized mortgage obligations	Collateralized mortgage obligations	476,556		—		120,704		—		355,852
Total held to maturity debt securities	Total held to maturity debt securities	$	1,085,751	$	—	$	237,388	$	—	$	848,363
(1) Amortized cost for the held to maturity securities includes $223 thousand of unamortized gain in state and political subdivisions, $35 thousand of unamortized gains in mortgage-backed securities and $10.2 million of unamortized losses in collateralized mortgage obligations related to the re-classification of securities from available for sale to held to maturity on January 1, 2022.
(1) Amortized cost for the held to maturity securities includes $231 thousand of unamortized gain in state and political subdivisions, $74 thousand of unamortized gains in mortgage-backed securities and $9.3 million of unamortized losses in collateralized mortgage obligations related to the re-classification of securities from available for sale to held to maturity on January 1, 2022.												(1) Amortized cost for the held to maturity securities includes $231 thousand of unamortized gain in state and political subdivisions, $74 thousand of unamortized gains in mortgage-backed securities and $9.3 million of unamortized losses in collateralized mortgage obligations related to the re-classification of securities from available for sale to held to maturity on January 1, 2022.

As of December 31, 2022
(in thousands) Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Allowance for Credit Loss related to Debt Securities
Fair Value
Available for Sale
U.S. Government agencies and corporations $ 7,598 $ — $ 253 $ — $ 7,345
State and political subdivisions 303,573 27 18,244 — 285,356
Mortgage-backed securities 6,165 11 232 — 5,944
Collateralized mortgage obligations 172,568 — 25,375 — 147,193
Corporate debt securities 771,836 125 64,252 — 707,709
Total available for sale debt securities $ 1,261,740 $ 163 $ 108,356 $ — $ 1,153,547
Held to Maturity
State and political subdivisions $ 538,746 $ — $ 88,349 $ — $ 450,397
Mortgage-backed securities 81,032 — 12,851 — 68,181
Collateralized mortgage obligations 509,643 — 103,327 — 406,316
Total held to maturity debt securities $ 1,129,421 $ — $ 204,527 $ — $ 924,894

Table of Contents


	As of December 31, 2023
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Loss related to Debt Securities		Fair Value
Available for Sale


State and political subdivisions	$	139,482	$	2	$	9,345	$	—	$	130,139
Mortgage-backed securities	5,448		5		142		—		5,311
Collateralized loan obligations	50,541		135		239		—		50,437
Collateralized mortgage obligations	190,304		—		21,108		—		169,196
Corporate debt securities	487,361		57		47,367		—		440,051
Total available for sale debt securities	$	873,136	$	199	$	78,201	$	—	$	795,134

Held to Maturity

State and political subdivisions	$	532,422	$	—	$	65,932	$	—	$	466,490
Mortgage-backed securities	74,904		—		11,635		—		63,269

Collateralized mortgage obligations	467,864		—		102,360		—		365,504

Total held to maturity debt securities	$	1,075,190	$	—	$	179,927	$	—	$	895,263
(1) Amortized cost for the held to maturity securities includes $227 thousand of unamortized gain in state and political subdivisions, $58 thousand of unamortized gains in mortgage-backed securities and $9.7 million of unamortized losses in collateralized mortgage obligations related to the re-classification of securities from available for sale to held to maturity on January 1, 2022.

Investment securities with a fair value of ~~$1.27~~$1.24 billion and ~~$690.2 million~~$1.16 billion at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively, were pledged on public deposits, securities sold under agreements to repurchase and for other purposes, as required or permitted by law.

Accrued interest receivable on available for sale debt securities and held to maturity debt securities is recorded within 'Other Assets,' and is excluded from the estimate of credit losses. At ~~September 30,~~March 31, 2024 the accrued interest receivable on available for sale debt securities and held to maturity debt securities totaled $5.8 million and $3.5 million, respectively. At December 31, 2023 the accrued interest receivable on available for sale debt securities and held to maturity debt securities totaled ~~$6.8 million and $3.5 million, respectively. At December 31, 2022 the accrued interest receivable on available for sale debt securities and held to maturity debt securities totaled $7.6~~$5.5 million and $3.7 million, respectively.

~~Table of Contents~~

The following table presents debt securities AFS in an unrealized loss position for which an allowance for credit losses has not been recorded as of ~~September 30, 2023,~~March 31, 2024, aggregated by investment category and length of time in a continuous loss position:


					As of September 30, 2023																				As of March 31, 2024
		Number of Securities			Less than 12 Months						12 Months or More						Total
	Number of Securities																							Number of Securities		Less than 12 Months			12 Months or More		Total
Available for Sale			Available for Sale	Number of Securities			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses	Available for Sale		Fair Value		Unrealized Losses	Fair Value		Unrealized Losses		Fair Value	Unrealized Losses
(in thousands, except number of securities)	(in thousands, except number of securities)

U.S. Treasury securities
U.S. Treasury securities
U.S. Treasury securities
State and political subdivisions	State and political subdivisions	200			$	17,776		$	969		$	141,021		$	13,864		$	158,797		$	14,833
Mortgage-backed securities	Mortgage-backed securities	29			376			6			4,910			241			5,286			247
Collateralized loan obligations	Collateralized loan obligations	4			39,870			250			—			—			39,870			250
Collateralized mortgage obligations	Collateralized mortgage obligations	20			6,628			27			125,295			27,394			131,923			27,421
Corporate debt securities	Corporate debt securities	142			4,130			75			493,017			65,998			497,147			66,073
Total	Total	395			$	68,780		$	1,327		$	764,243		$	107,497		$	833,023		$	108,824

As of ~~September 30, 2023, 200~~March 31, 2024, 149 state and political subdivisions securities with total unrealized losses of ~~$14.8~~$8.8 million were held by the Company. Management evaluated these securities through a process that included consideration of credit agency ratings and payment history. In addition, management evaluated securities by considering the yield spread to treasury securities and the most recent financial information available. Based on this evaluation, management concluded that the decline in fair value was not attributable to credit losses.

As of ~~September 30, 2023, 29~~March 31, 2024, 21 mortgage-backed securities, and 2022 collateralized mortgage obligations with unrealized losses totaling ~~$27.7~~$22.8 million were held by the Company. Management evaluated the payment history of these securities. In addition, management considered the implied U.S. government guarantee of these agency securities and the level of credit enhancement for non-agency securities. Based on this evaluation, management concluded that the decline in fair value was not attributable to credit losses.

As of ~~September 30, 2023, 4~~March 31, 2024, 3 collateralized loan obligations with unrealized losses of ~~$0.3~~$0.2 million were held by the Company. Management evaluated these securities through a process that included consideration of credit agency ratings, priority of cash

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flows and the amount of over-collateralization. In addition, management may evaluate securities by considering the yield spread to treasury securities and the most recent financial information available. Based on this evaluation, management concluded that the decline in fair value was not attributable to credit losses.

As of ~~September 30, 2023, 142~~March 31, 2024, 130 corporate debt securities with total unrealized losses of ~~$66.1~~$44.4 million were held by the Company. Management evaluated these securities by considering credit agency ratings and payment history. In addition, management evaluated securities by considering the yield spread to treasury securities and the most recent financial information available. Based on this evaluation, management concluded that the decline in fair value was not attributable to credit losses.

The following table presents debt securities AFS in an unrealized loss position for which an allowance for credit losses has not been recorded as of December 31, ~~2022,~~2023, aggregated by investment category and length of time in a continuous loss position:


			As of December 31, 2022														As of December 31, 2023
Available for Sale	Available for Sale	Number of Securities	Less than 12 Months				12 Months or More				Total				Available for Sale	Number of Securities	Less than 12 Months		12 Months or More			Total
			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses				Fair Value	Unrealized Losses		Fair Value	Unrealized Losses		Fair Value	Unrealized Losses
(in thousands, except number of securities)	(in thousands, except number of securities)
U.S. Government agencies and corporations		8	$	7,345	$	253	$	—	$	—	$	7,345	$	253

State and political subdivisions

State and political subdivisions

State and political subdivisions	State and political subdivisions	380	248,339		14,553		20,631		3,691		268,970		18,244
Mortgage-backed securities	Mortgage-backed securities	27	5,323		231		45		1		5,368		232

Collateralized loan obligations
Collateralized mortgage obligations	Collateralized mortgage obligations	20	75,041		7,121		72,152		18,254		147,193		25,375
Corporate debt securities	Corporate debt securities	159	369,441		21,679		288,329		42,573		657,770		64,252
Total	Total	594	$	705,489	$	43,837	$	381,157	$	64,519	$	1,086,646	$	108,356

The Company evaluates debt securities held to maturity for current expected credit losses. There were no debt securities held to maturity classified as nonaccrual or past due as of ~~September 30, 2023.~~March 31, 2024. Held-to-maturity securities are evaluated on a quarterly basis using historical probability of default and loss given default information specific to the investment category. If this evaluation determines that credit losses exist, an allowance for credit loss is recorded and included in earnings as a component of credit loss expense. Based on this evaluation, management concluded that no allowance for credit loss for these securities was required.

Proceeds and gross realized gains and losses on debt securities available for sale for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ were as follows:

~~Table of Contents~~


		Three Months Ended				Nine Months Ended
		Three Months Ended
		Three Months Ended
		Three Months Ended
(in thousands)	(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
(in thousands)
(in thousands)
Proceeds from sales of debt securities available for sale
Proceeds from sales of debt securities available for sale
Proceeds from sales of debt securities available for sale	Proceeds from sales of debt securities available for sale	$	—	$	17,570	$	218,667	$	129,823

Gross realized losses from sales of debt securities available for sale		—		(167)		(13,170)		(167)
Gross realized losses from sales of debt securities available for sale(1)

Gross realized losses from sales of debt securities available for sale(1)

Gross realized losses from sales of debt securities available for sale(1)
Net realized loss from sales of debt securities available for sale(1)
Net realized loss from sales of debt securities available for sale(1)
Net realized loss from sales of debt securities available for sale(1)	Net realized loss from sales of debt securities available for sale(1)	$	—	$	(167)	$	(13,170)	$	(167)
										(1) The difference in investment security gains, net reported herein as compared to the Consolidated Statements of Income is associated with the net realized gain from the call of debt securities of $79 thousand and $77 thousand for the three and nine months ended September 30, 2023 and $4 thousand and $439 thousand for the three and nine months ended September 30, 2022.
(1) The difference in investment security gains, net reported herein as compared to the Consolidated Statements of Income is associated with the net realized gain from the call of debt securities of $36 thousand for the three months ended March 31, 2024, with no net realized gain from the call of debt securities recorded during the three months ended March 31, 2023.

(1) The difference in investment security gains, net reported herein as compared to the Consolidated Statements of Income is associated with the net realized gain from the call of debt securities of $36 thousand for the three months ended March 31, 2024, with no net realized gain from the call of debt securities recorded during the three months ended March 31, 2023.

(1) The difference in investment security gains, net reported herein as compared to the Consolidated Statements of Income is associated with the net realized gain from the call of debt securities of $36 thousand for the three months ended March 31, 2024, with no net realized gain from the call of debt securities recorded during the three months ended March 31, 2023.

The contractual maturity distribution of investment debt securities at ~~September 30, 2023,~~March 31, 2024, is shown below. Expected maturities of MBS, CLO and CMO may differ from contractual maturities because the mortgages underlying the securities may be called or prepaid without any penalties. Therefore, these securities are not included in the maturity categories in the following summary.


		Available for Sale				Held to Maturity					Available for Sale		Held to Maturity
(in thousands)	(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		(in thousands)	Amortized Cost	Fair Value		Amortized Cost	Fair Value
Due in one year or less	Due in one year or less	$	53,730	$	52,581	$	2,563	$	2,495
Due after one year through five years	Due after one year through five years	522,893		473,528		132,842		117,757
Due after five years through ten years	Due after five years through ten years	158,373		133,485		232,569		186,814
Due after ten years	Due after ten years	28,916		23,473		164,911		124,998
		$	763,912	$	683,067	$	532,885	$	432,064
	$
Mortgage-backed securities	Mortgage-backed securities	5,574		5,327		76,310		60,447
Collateralized loan obligations	Collateralized loan obligations	52,697		52,453		—		—
Collateralized mortgage obligations	Collateralized mortgage obligations	159,344		131,923		476,556		355,852
Total	Total	$	981,527	$	872,770	$	1,085,751	$	848,363

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4. Loans Receivable and the Allowance for Credit Losses

The composition of loans by class of receivable was as follows:


		As of
	As of										As of
(in thousands)	(in thousands)	September 30, 2023		December 31, 2022		(in thousands)	March 31, 2024			December 31, 2023
Agricultural	Agricultural	$	111,950	$	115,320
Commercial and industrial	Commercial and industrial	1,078,773		1,055,162		Commercial and industrial	1,105,718		1,075,003		1,075,003
Commercial real estate:	Commercial real estate:
Construction & development
Construction & development
Construction & development	Construction & development	331,868		270,991		403,571		323,195		323,195
Farmland	Farmland	182,621		183,913		Farmland	184,109		184,955		184,955
Multifamily	Multifamily	337,509		252,129		Multifamily	409,504		383,178		383,178
Commercial real estate-other	Commercial real estate-other	1,324,019		1,272,985		Commercial real estate-other	1,440,645		1,333,982		1,333,982
Total commercial real estate	Total commercial real estate	2,176,017		1,980,018		Total commercial real estate	2,437,829		2,225,310		2,225,310
Residential real estate:	Residential real estate:
One- to four- family first liens	One- to four- family first liens	456,771		451,210
One- to four- family first liens
One- to four- family first liens							495,408			459,798
One- to four- family junior liens	One- to four- family junior liens	173,275		163,218		One- to four- family junior liens	182,001		180,639		180,639
Total residential real estate	Total residential real estate	630,046		614,428		Total residential real estate	677,409		640,437		640,437
Consumer	Consumer	69,183		75,596		Consumer	80,661		67,783		67,783
Loans held for investment, net of unearned income	Loans held for investment, net of unearned income	4,065,969		3,840,524		Loans held for investment, net of unearned income	4,414,646		4,126,947		4,126,947
Allowance for credit losses	Allowance for credit losses	(51,600)		(49,200)
Total loans held for investment, net	Total loans held for investment, net	$	4,014,369	$	3,791,324

Loans with unpaid principal in the amount of ~~$1.14~~$1.12 billion and ~~$1.01~~$1.13 billion at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively, were pledged to the FHLB as collateral for borrowings.

Non-accrual and Delinquent Status

Loans are placed on non-accrual when (1) payment in full of principal and interest is no longer expected or (2) principal or interest has been in default for 90 days or more for all loan types, except owner occupied residential real estate, which are moved to non-accrual at 120 days or more past due, unless the loan is both well secured with marketable collateral and in the process of collection. All loans rated doubtful or worse, and certain loans rated substandard, are placed on non-accrual.

~~Table of Contents~~

A non-accrual loan may be restored to an accrual status when (1) all past due principal and interest has been paid (excluding renewals and modifications that involve the capitalizing of interest) or (2) the loan becomes well secured with marketable collateral and is in the process of collection. An established track record of performance is also considered when determining accrual status.

Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement or any portion thereof remains unpaid after the due date of the scheduled payment.

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The following tables present the amortized cost basis of loans based on delinquency status:


					Age Analysis of Past-Due Financial Assets								90 Days or More Past Due And Accruing
				Age Analysis of Past-Due Financial Assets												Age Analysis of Past-Due Financial Assets	90 Days or More Past Due And Accruing
(in thousands)	(in thousands)	Current			30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total				90 Days or More Past Due And Accruing
September 30, 2023
March 31, 2024
March 31, 2024
March 31, 2024
Agricultural
Agricultural
Agricultural	Agricultural	$	111,713		$	—	$	13	$	224	$	111,950	$	—
Commercial and industrial	Commercial and industrial	1,077,276			616		31		850		1,078,773		—
Commercial real estate:	Commercial real estate:
Construction and development
Construction and development
Construction and development	Construction and development	331,868			—		—		—		331,868		—
Farmland	Farmland	181,352			30		—		1,239		182,621		—
Multifamily	Multifamily	337,509			—		—		—		337,509		—
Commercial real estate-other	Commercial real estate-other	1,319,503			29		—		4,487		1,324,019		—
Total commercial real estate	Total commercial real estate	2,170,232			59		—		5,726		2,176,017		—
Residential real estate:	Residential real estate:
One- to four- family first liens	One- to four- family first liens	449,842			3,609		2,286		1,034		456,771		100
One- to four- family first liens
One- to four- family first liens
One- to four- family junior liens	One- to four- family junior liens	172,936			202		23		114		173,275		—
Total residential real estate	Total residential real estate	622,778			3,811		2,309		1,148		630,046		100
Consumer	Consumer	68,869			275		36		3		69,183		—
Total	Total	$	4,050,868		$	4,761	$	2,389	$	7,951	$	4,065,969	$	100

Age Analysis of Past-Due Financial Assets 90 Days or More Past Due And Accruing
(in thousands) Current 30 - 59 Days Past Due 60 - 89 Days Past Due 90 Days or More Past Due Total
December 31, 2022
Agricultural $ 114,922 $ 100 $ — $ 298 $ 115,320 $ —
Commercial and industrial 1,052,406 922 111 1,723 1,055,162 —
Commercial real estate:
Construction and development 270,905 86 — — 270,991 —
Farmland 182,115 729 — 1,069 183,913 —
Multifamily 252,129 — — — 252,129 —
Commercial real estate-other 1,266,874 5,574 45 492 1,272,985 —
Total commercial real estate 1,972,023 6,389 45 1,561 1,980,018 —
Residential real estate:
One- to four- family first liens 446,066 3,177 954 1,013 451,210 565
One- to four- family junior liens 161,989 301 78 850 163,218 —
Total residential real estate 608,055 3,478 1,032 1,863 614,428 565
Consumer 75,443 110 17 26 75,596 —
Total $ 3,822,849 $ 10,999 $ 1,205 $ 5,471 $ 3,840,524 $ 565























			Age Analysis of Past-Due Financial Assets								90 Days or More Past Due And Accruing
(in thousands)	Current		30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total
December 31, 2023
Agricultural	$	117,852	$	338	$	—	$	224	$	118,414	$	—
Commercial and industrial	1,058,301		440		401		15,861		1,075,003		—
Commercial real estate:
Construction and development	323,165		30		—		—		323,195		—
Farmland	182,759		677		352		1,167		184,955		—
Multifamily	383,178		—		—		—		383,178		—
Commercial real estate-other	1,327,727		2,129		1,290		2,836		1,333,982		—
Total commercial real estate	2,216,829		2,836		1,642		4,003		2,225,310		—
Residential real estate:
One- to four- family first liens	453,212		3,572		1,741		1,273		459,798		468
One- to four- family junior liens	179,339		356		690		254		180,639		—
Total residential real estate	632,551		3,928		2,431		1,527		640,437		468
Consumer	67,622		118		28		15		67,783		—
Total	$	4,093,155	$	7,660	$	4,502	$	21,630	$	4,126,947	$	468

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The following table presents the amortized cost basis of loans on non-accrual status, amortized cost basis of loans on non-accrual status with no allowance for credit losses recorded, and loans past due 90 days or more and still accruing by class of loan:


		Nonaccrual				Nonaccrual with no Allowance for Credit Losses				90 Days or More Past Due And Accruing
		Nonaccrual
		Nonaccrual
		Nonaccrual
(in thousands)
(in thousands)
(in thousands)	(in thousands)	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022

Agricultural	Agricultural	$	240	$	377	$	224	$	281	$	—	$	—

Agricultural

Agricultural
Commercial and industrial
Commercial and industrial
Commercial and industrial	Commercial and industrial	18,472		2,728		12,585		1,049		—		—
Commercial real estate:	Commercial real estate:
Commercial real estate:
Commercial real estate:
Construction and development
Construction and development
Construction and development	Construction and development	—		—		—		—		—		—
Farmland	Farmland	1,736		2,278		1,590		1,997		—		—
Farmland
Farmland
Multifamily
Multifamily
Multifamily	Multifamily	—		—		—		—		—		—
Commercial real estate-other	Commercial real estate-other	5,117		6,397		369		5,647		—		—
Commercial real estate-other
Commercial real estate-other
Total commercial real estate
Total commercial real estate
Total commercial real estate	Total commercial real estate	6,853		8,675		1,959		7,644		—		—
Residential real estate:	Residential real estate:
Residential real estate:
Residential real estate:
One- to four- family first liens
One- to four- family first liens
One- to four- family first liens	One- to four- family first liens	2,339		2,275		546		928		100		565
One- to four- family junior liens	One- to four- family junior liens	969		1,165		—		—		—		—
One- to four- family junior liens
One- to four- family junior liens
Total residential real estate
Total residential real estate
Total residential real estate	Total residential real estate	3,308		3,440		546		928		100		565
Consumer	Consumer	14		36		—		—		—		—
Consumer
Consumer
Total
Total
Total	Total	$	28,887	$	15,256	$	15,314	$	9,902	$	100	$	565

The interest income recognized on loans that were on nonaccrual for the three months ended ~~September 30,~~March 31, 2024 and March 31, 2023 ~~and September 30, 2022~~ was ~~$93~~$129 thousand and ~~$70 thousand, respectively. The interest income recognized on loans that were on nonaccrual for the nine months ended September 30, 2023 and September 30, 2022 was $186 thousand and $345~~$56 thousand, respectively.

Credit Quality Information

The Company aggregates loans 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, and other factors. The Company analyzes loans individually to classify the loans as to credit risk. This analysis includes non-homogenous loans, such as agricultural, commercial and industrial, commercial real estate and non-owner occupied residential real estate loans. Loans not meeting the criteria described below that are analyzed individually are considered to be pass-rated. The Company uses the following definitions for risk ratings:

Special Mention/Watch - A special mention/watch asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Special mention/watch assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

Substandard - Substandard loans 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 Company 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 known facts, conditions and values, highly questionable and improbable.

Loss - Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future.

Homogenous loans, including owner occupied residential real estate and consumer loans, are not individually risk rated. Instead, these loans are categorized based on performance: performing and nonperforming. Nonperforming loans include those loans on nonaccrual and loans greater than 90 days past due and on accrual.

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The following table sets forth the amortized cost basis of loans by class of receivable by credit quality indicator, and vintage, in addition to the current period gross write-offs by class of receivable and vintage, based on the most recent analysis performed, as of ~~September 30, 2023.~~March 31, 2024. As of ~~September 30, 2023,~~March 31, 2024, there were no 'loss' rated credits.


		Term Loans by Origination Year												Revolving Loans
September 30, 2023 (in thousands)		2023		2022		2021		2020		2019		Prior				Total
		Term Loans by Origination Year
		Term Loans by Origination Year
		Term Loans by Origination Year
March 31, 2024 (in thousands)
March 31, 2024 (in thousands)
March 31, 2024 (in thousands)																			2024	2023	2022	2021	2020	Prior	Total
Agricultural	Agricultural
Pass
Pass
Pass	Pass	$	11,277	$	13,087	$	9,451	$	3,268	$	1,359	$	1,155	$	63,474		$	103,071
Special mention / watch	Special mention / watch	268		609		801		102		6		523		3,722			6,031
Substandard	Substandard	394		151		184		214		2		225		1,678			2,848
Doubtful	Doubtful	—		—		—		—		—		—		—			—
Total	Total	$	11,939	$	13,847	$	10,436	$	3,584	$	1,367	$	1,903	$	68,874		$	111,950

Commercial and industrial	Commercial and industrial

Commercial and industrial

Commercial and industrial
Pass
Pass
Pass	Pass	$	111,886	$	243,011	$	212,836	$	129,482	$	27,383	$	119,645	$	161,886		$	1,006,129
Special mention / watch	Special mention / watch	1,437		766		652		4,646		8,101		7,825		13,751			37,178
Substandard	Substandard	1,471		2,571		2,440		1,344		717		22,571		4,352			35,466
Doubtful	Doubtful	—		—		—		—		—		—		—			—
Total	Total	$	114,794	$	246,348	$	215,928	$	135,472	$	36,201	$	150,041	$	179,989		$	1,078,773

CRE - Construction and development	CRE - Construction and development

CRE - Construction and development

CRE - Construction and development
Pass
Pass
Pass	Pass	$	69,354	$	198,619	$	47,522	$	3,532	$	833	$	1,118	$	9,754		$	330,732
Special mention / watch	Special mention / watch	—		—		474		—		—		—		412			886
Substandard	Substandard	—		249		—		—		—		1		—			250
Doubtful	Doubtful	—		—		—		—		—		—		—			—
Total	Total	$	69,354	$	198,868	$	47,996	$	3,532	$	833	$	1,119	$	10,166		$	331,868

CRE - Farmland	CRE - Farmland

CRE - Farmland

CRE - Farmland
Pass
Pass
Pass	Pass	$	17,318	$	50,872	$	48,074	$	19,438	$	6,703	$	16,056	$	1,866		$	160,327
Special mention / watch	Special mention / watch	1,237		2,761		2,456		6,104		—		1,180		804			14,542
Substandard	Substandard	1,592		118		1,545		1,103		1,058		2,306		30			7,752
Doubtful	Doubtful	—		—		—		—		—		—		—			—
Total	Total	$	20,147	$	53,751	$	52,075	$	26,645	$	7,761	$	19,542	$	2,700		$	182,621

CRE - Multifamily	CRE - Multifamily

CRE - Multifamily

CRE - Multifamily
Pass
Pass
Pass	Pass	$	28,961	$	55,115	$	112,033	$	83,413	$	8,800	$	5,654	$	33		$	294,009
Special mention / watch	Special mention / watch	—		1,244		280		19,112		7,899		7,025		—			35,560
Substandard	Substandard	—		—		7,611		329		—		—		—			7,940
Doubtful	Doubtful	—		—		—		—		—		—		—			—
Total	Total	$	28,961	$	56,359	$	119,924	$	102,854	$	16,699	$	12,679	$	33		$	337,509

CRE - Other	CRE - Other

CRE - Other

CRE - Other
Pass
Pass
Pass	Pass	$	151,212	$	292,139	$	272,055	$	264,462	$	78,764	$	97,815	$	47,111		$	1,203,558
Special mention / watch	Special mention / watch	1,520		25,905		21,389		4,639		4,290		3,301		3,947			64,991
Substandard	Substandard	324		2,104		1,704		20,414		12,067		18,018		839			55,470
Doubtful	Doubtful	—		—		—		—		—		—		—			—
Total	Total	$	153,056	$	320,148	$	295,148	$	289,515	$	95,121	$	119,134	$	51,897		$	1,324,019

RRE - One- to four- family first liens	RRE - One- to four- family first liens

RRE - One- to four- family first liens

RRE - One- to four- family first liens
Pass / Performing
Pass / Performing
Pass / Performing	Pass / Performing	$	52,320	$	128,048	$	94,709	$	55,492	$	20,236	$	84,489	$	11,312		$	446,606
Special mention / watch	Special mention / watch	470		721		36		633		1,851		323		—			4,034
Substandard / Nonperforming	Substandard / Nonperforming	1,171		463		485		166		167		3,679		—			6,131
Doubtful	Doubtful	—		—		—		—		—		—		—			—
Total	Total	$	53,961	$	129,232	$	95,230	$	56,291	$	22,254	$	88,491	$	11,312		$	456,771

RRE - One- to four- family junior liens	RRE - One- to four- family junior liens

RRE - One- to four- family junior liens

RRE - One- to four- family junior liens
Performing
Performing
Performing	Performing	$	20,458	$	31,327	$	19,622	$	7,643	$	2,449	$	8,322	$	82,485		$	172,306
Nonperforming	Nonperforming	—		—		—		26		203		740		—			969
Total	Total	$	20,458	$	31,327	$	19,622	$	7,669	$	2,652	$	9,062	$	82,485		$	173,275

Consumer	Consumer

Consumer

Consumer
Performing
Performing
Performing	Performing	$	21,003	$	18,598	$	11,481	$	5,213	$	1,821	$	6,911	$	4,143		$	69,170
Nonperforming	Nonperforming	—		—		—		5		5		3		—			13
Total	Total	$	21,003	$	18,598	$	11,481	$	5,218	$	1,826	$	6,914	$	4,143		$	69,183

1516

Table of Contents


		Term Loans by Origination Year												Revolving Loans
September 30, 2023 (in thousands)		2023		2022		2021		2020		2019		Prior						Total

		Term Loans by Origination Year
		Term Loans by Origination Year
		Term Loans by Origination Year
March 31, 2024 (in thousands)
March 31, 2024 (in thousands)
March 31, 2024 (in thousands)																							2024	2023	2022	2021	2020	Prior	Total

Total by Credit Quality Indicator Category	Total by Credit Quality Indicator Category
Total by Credit Quality Indicator Category
Total by Credit Quality Indicator Category
Pass
Pass
Pass	Pass	$	442,328	$	980,891	$	796,680	$	559,087	$	144,078	$	325,932			$	295,436				$	3,544,432
Special mention / watch	Special mention / watch	4,932		32,006		26,088		35,236		22,147		20,177		22,636					163,222
Substandard	Substandard	4,952		5,656		13,969		23,570		14,011		46,800		6,899					115,857
Doubtful	Doubtful	—		—		—		—		—		—		—					—
Performing	Performing	41,461		49,925		31,103		12,856		4,270		15,233		86,628					241,476
Nonperforming	Nonperforming	—		—		—		31		208		743		—					982
Total	Total	$	493,673	$	1,068,478	$	867,840	$	630,780	$	184,714	$	408,885	$	411,599				$	4,065,969

		Term Loans by Origination Year
		Term Loans by Origination Year
		Term Loans by Origination Year
March 31, 2024 (in thousands)
March 31, 2024 (in thousands)
March 31, 2024 (in thousands)																							2024	2023	2022	2021	2020	Prior	Total
Year-to-date Current Period Gross Write-offs	Year-to-date Current Period Gross Write-offs
Agricultural
Agricultural
Agricultural	Agricultural	$	—	$	8	$	1	$	17	$	—	$	—	$	—				$	26
Commercial and industrial	Commercial and industrial	30		256		143		115		431		45		—					1,020
CRE - Construction and development	CRE - Construction and development	—		—		—		—		—		—		—					—
CRE - Farmland	CRE - Farmland	—		—		—		—		—		—		—					—
CRE - Multifamily	CRE - Multifamily	—		—		—		—		—		—		—					—
CRE - Other	CRE - Other	—		—		—		—		—		830		—					830
RRE - One-to-four-family first liens	RRE - One-to-four-family first liens	—		—		—		—		—		35		—					35
RRE - One-to-four-family junior liens	RRE - One-to-four-family junior liens	—		19		—		—		—		—		—					19
Consumer	Consumer	—		424		9		3		11		4		—					451
Total Current Period Gross Write-offs	Total Current Period Gross Write-offs	$	30	$	707	$	153	$	135	$	442	$	914	$	—				$	2,381

1617

Table of Contents

The following table sets forth the amortized cost basis of loans by class of receivable by credit quality indicator and vintage based on the most recent analysis performed, as of December 31, ~~2022.~~2023. As of December 31, ~~2022,~~2023, there were no 'loss' rated credits.

Term Loans by Origination Year Revolving Loans
December 31, 2022
(in thousands)
2022 2021 2020 2019 2018 Prior Total
Agricultural
Pass $ 20,279 $ 12,511 $ 5,398 $ 2,883 $ 939 $ 1,063 $ 65,395 $ 108,468
Special mention / watch 143 1,012 115 36 — 604 1,655 3,565
Substandard 48 646 366 4 7 302 1,914 3,287
Doubtful — — — — — — — —
Total $ 20,470 $ 14,169 $ 5,879 $ 2,923 $ 946 $ 1,969 $ 68,964 $ 115,320
Commercial and industrial
Pass $ 262,500 $ 232,263 $ 151,567 $ 48,199 $ 27,680 $ 115,877 $ 163,205 $ 1,001,291
Special mention / watch 3,975 3,574 5,465 592 3,299 1,864 12,299 31,068
Substandard 556 166 1,172 756 556 18,585 1,012 22,803
Doubtful — — — — — — — —
Total $ 267,031 $ 236,003 $ 158,204 $ 49,547 $ 31,535 $ 136,326 $ 176,516 $ 1,055,162
CRE - Construction and development
Pass $ 144,597 $ 73,832 $ 19,324 $ 989 $ 1,058 $ 549 $ 28,069 $ 268,418
Special mention / watch 1,787 499 — — — — — 2,286
Substandard 281 — — — — 6 — 287
Doubtful — — — — — — — —
Total $ 146,665 $ 74,331 $ 19,324 $ 989 $ 1,058 $ 555 $ 28,069 $ 270,991
CRE - Farmland
Pass $ 55,251 $ 52,802 $ 28,744 $ 7,266 $ 8,406 $ 12,895 $ 1,946 $ 167,310
Special mention / watch 3,058 2,229 1,470 — 225 21 1,693 8,696
Substandard 148 1,974 1,192 1,136 1,459 1,998 — 7,907
Doubtful — — — — — — — —
Total $ 58,457 $ 57,005 $ 31,406 $ 8,402 $ 10,090 $ 14,914 $ 3,639 $ 183,913
CRE - Multifamily
Pass $ 31,018 $ 93,907 $ 84,573 $ 17,137 $ 2,549 $ 5,161 $ 49 $ 234,394
Special mention / watch 1,000 — 1,567 — 5,931 1,178 — 9,676
Substandard — 7,725 334 — — — — 8,059
Doubtful — — — — — — — —
Total $ 32,018 $ 101,632 $ 86,474 $ 17,137 $ 8,480 $ 6,339 $ 49 $ 252,129
CRE - Other
Pass $ 322,753 $ 314,376 $ 296,368 $ 79,408 $ 31,041 $ 81,708 $ 51,064 $ 1,176,718
Special mention / watch 8,858 3,399 13,245 10,365 1,137 8,122 2,518 47,644
Substandard 752 589 19,702 13,294 10,197 4,089 — 48,623
Doubtful — — — — — — — —
Total $ 332,363 $ 318,364 $ 329,315 $ 103,067 $ 42,375 $ 93,919 $ 53,582 $ 1,272,985
RRE - One- to four- family first liens
Pass / Performing $ 139,289 $ 103,534 $ 63,627 $ 23,831 $ 21,868 $ 77,967 $ 11,438 $ 441,554
Special mention / watch 1,074 611 672 1,920 150 702 — 5,129
Substandard / Nonperforming 175 438 174 175 674 2,891 — 4,527
Doubtful — — — — — — — —
Total $ 140,538 $ 104,583 $ 64,473 $ 25,926 $ 22,692 $ 81,560 $ 11,438 $ 451,210
RRE - One- to four- family junior liens
Performing $ 37,296 $ 22,908 $ 8,906 $ 3,058 $ 3,757 $ 6,330 $ 79,798 $ 162,053
Nonperforming — 23 31 179 756 76 100 1,165
Total $ 37,296 $ 22,931 $ 8,937 $ 3,237 $ 4,513 $ 6,406 $ 79,898 $ 163,218
Consumer
Performing $ 32,584 $ 18,979 $ 7,966 $ 3,489 $ 1,646 $ 6,641 $ 4,255 $ 75,560
Nonperforming — 2 16 9 4 5 — 36
Total $ 32,584 $ 18,981 $ 7,982 $ 3,498 $ 1,650 $ 6,646 $ 4,255 $ 75,596
Total by Credit Quality Indicator Category
Pass $ 975,687 $ 883,225 $ 649,601 $ 179,713 $ 93,541 $ 295,220 $ 321,166 $ 3,398,153
Special mention / watch 19,895 11,324 22,534 12,913 10,742 12,491 18,165 108,064
Substandard 1,960 11,538 22,940 15,365 12,893 27,871 2,926 95,493
Doubtful — — — — — — — —
Performing 69,880 41,887 16,872 6,547 5,403 12,971 84,053 237,613
Nonperforming — 25 47 188 760 81 100 1,201
Total $ 1,067,422 $ 947,999 $ 711,994 $ 214,726 $ 123,339 $ 348,634 $ 426,410 $ 3,840,524


	Term Loans by Origination Year												Revolving Loans
December 31, 2023 (in thousands)	2023		2022		2021		2020		2019		Prior				Total
Agricultural
Pass	$	11,859	$	12,149	$	8,352	$	2,752	$	689	$	1,139	$	71,680		$	108,620
Special mention / watch	266		550		670		91		5		522		3,705			5,809
Substandard	709		193		302		208		—		224		2,349			3,985
Doubtful	—		—		—		—		—		—		—			—
Total	$	12,834	$	12,892	$	9,324	$	3,051	$	694	$	1,885	$	77,734		$	118,414
Commercial and industrial
Pass	$	176,021	$	224,924	$	193,011	$	117,326	$	25,555	$	116,661	$	147,690		$	1,001,188
Special mention / watch	2,541		416		3,209		3,385		193		272		14,692			24,708
Substandard	897		2,921		2,010		561		8,507		29,432		4,779			49,107
Doubtful	—		—		—		—		—		—		—			—
Total	$	179,459	$	228,261	$	198,230	$	121,272	$	34,255	$	146,365	$	167,161		$	1,075,003
CRE - Construction and development
Pass	$	99,803	$	163,126	$	43,189	$	3,393	$	821	$	700	$	9,552		$	320,584
Special mention / watch	1,097		—		464		—		—		—		467			2,028
Substandard	343		240		—		—		—		—		—			583
Doubtful	—		—		—		—		—		—		—			—
Total	$	101,243	$	163,366	$	43,653	$	3,393	$	821	$	700	$	10,019		$	323,195
CRE - Farmland
Pass	$	25,666	$	44,907	$	47,068	$	18,863	$	6,587	$	14,845	$	1,642		$	159,578
Special mention / watch	1,229		6,898		2,409		5,982		—		965		276			17,759
Substandard	1,830		210		1,542		1,052		926		2,029		29			7,618
Doubtful	—		—		—		—		—		—		—			—
Total	$	28,725	$	52,015	$	51,019	$	25,897	$	7,513	$	17,839	$	1,947		$	184,955
CRE - Multifamily
Pass	$	32,077	$	96,969	$	111,032	$	77,532	$	8,701	$	6,508	$	4,208		$	337,027
Special mention / watch	5,318		1,237		277		18,984		7,850		4,586		—			38,252
Substandard	—		—		7,572		327		—		—		—			7,899
Doubtful	—		—		—		—		—		—		—			—
Total	$	37,395	$	98,206	$	118,881	$	96,843	$	16,551	$	11,094	$	4,208		$	383,178
CRE - Other
Pass	$	199,698	$	295,066	$	256,718	$	250,676	$	77,509	$	90,170	$	51,827		$	1,221,664
Special mention / watch	364		1,306		3,300		4,823		4,282		2,395		3,856			20,326
Substandard	325		26,555		19,253		19,103		8,242		17,876		638			91,992
Doubtful	—		—		—		—		—		—		—			—
Total	$	200,387	$	322,927	$	279,271	$	274,602	$	90,033	$	110,441	$	56,321		$	1,333,982
RRE - One- to four- family first liens
Pass / Performing	$	62,644	$	125,777	$	92,767	$	54,028	$	19,674	$	81,660	$	13,283		$	449,833
Special mention / watch	629		716		36		620		1,827		319		—			4,147
Substandard / Nonperforming	1,156		191		738		165		164		3,404		—			5,818
Doubtful	—		—		—		—		—		—		—			—
Total	$	64,429	$	126,684	$	93,541	$	54,813	$	21,665	$	85,383	$	13,283		$	459,798
RRE - One- to four- family junior liens
Performing	$	23,551	$	29,919	$	18,733	$	7,292	$	2,590	$	7,867	$	89,810		$	179,762
Nonperforming	—		192		—		25		23		637		—			877
Total	$	23,551	$	30,111	$	18,733	$	7,317	$	2,613	$	8,504	$	89,810		$	180,639
Consumer
Performing	$	26,028	$	14,319	$	10,042	$	4,421	$	1,451	$	7,350	$	4,145		$	67,756
Nonperforming	—		22		—		—		3		2		—			27
Total	$	26,028	$	14,341	$	10,042	$	4,421	$	1,454	$	7,352	$	4,145		$	67,783

1718

Table of Contents


	Term Loans by Origination Year												Revolving Loans
December 31, 2023 (in thousands)	2023		2022		2021		2020		2019		Prior				Total
Total by Credit Quality Indicator Category
Pass	$	607,768	$	962,918	$	752,137	$	524,570	$	139,536	$	311,683	$	299,882		$	3,598,494
Special mention / watch	11,444		11,123		10,365		33,885		14,157		9,059		22,996			113,029
Substandard	5,260		30,310		31,417		21,416		17,839		52,965		7,795			167,002
Doubtful	—		—		—		—		—		—		—			—
Performing	49,579		44,238		28,775		11,713		4,041		15,217		93,955			247,518
Nonperforming	—		214		—		25		26		639		—			904
Total	$	674,051	$	1,048,803	$	822,694	$	591,609	$	175,599	$	389,563	$	424,628		$	4,126,947

	Term Loans by Origination Year												Revolving Loans
December 31, 2023 (in thousands)	2023		2022		2021		2020		2019		Prior				Total
Year-to-date Current Period Gross Write-offs
Agricultural	$	—	$	8	$	1	$	17	$	2	$	—	$	—		$	28
Commercial and industrial	239		343		223		133		464		45		—			1,447
CRE - Construction and development	—		—		—		—		—		—		—			—
CRE - Farmland	—		—		—		—		—		—		—			—
CRE - Multifamily	—		—		—		—		—		—		—			—
CRE - Other	—		—		—		—		—		2,337		—			2,337
RRE - One-to-four-family first liens	—		—		—		—		—		36		—			36
RRE - One-to-four-family junior liens	—		19		—		—		—		—		—			19
Consumer	—		621		30		12		12		10		—			685
Total Current Period Gross Write-offs	$	239	$	991	$	254	$	162	$	478	$	2,428	$	—		$	4,552

Allowance for Credit Losses

The following are the economic factors utilized by the Company for its loan credit loss estimation process at ~~September 30, 2023,~~March 31, 2024, and the forecast for each factor at that date: (1) Midwest unemployment – increases over the next four forecasted quarters; (2) ~~Year-to-year~~year-to-year change in national retail sales - increases over the next four forecasted quarters; (3) ~~Year-to-year~~year-to-year change in CRE Index - decreases inover the next four forecasted quarters; (4) ~~Year-to-year~~year-to-year change in U.S. GDP - increases over the next four forecasted quarters; (5) ~~Year-to-year~~year-to-year change in National Home Price Index – increases over the next ~~two forecasted quarters, with declines in the third and fourth~~four forecasted quarters; and (6) ~~Rental Vacancy~~rental vacancy - increases over the next four forecasted quarters. In addition, management utilized qualitative factors to adjust the calculated ACL as appropriate. Qualitative factors are based on management’s judgment of company, market, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions.

The increase in the ACL between ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022 is primarily driven by reserves~~2023 reflects $3.1 million of day 1 credit loss expense related to acquired DNVB loans, ~~individually evaluated for impairment.~~as well as additional reserve taken to support loan growth. Net loan charge-offs were ~~$0.5~~$0.2 million for the three months ended ~~September 30, 2023~~March 31, 2024 as compared to net loan charge-offs of ~~$0.6~~$0.3 million for the three months ended September 30, 2022. Net loan charge-offs were $1.7 million for the nine months ended September 30, 2023 as compared to net loan charge-offs of $3.1 million for the nine months ended September 30, 2022.March 31, 2023.

We have made a policy election to report interest receivable as a separate line on the balance sheet. Accrued interest receivable, which is recorded within 'Other Assets', totaled ~~$19.0~~$20.6 million at ~~September 30, 2023~~March 31, 2024 and ~~$15.3~~$19.7 million at December 31, ~~2022~~2023 and is excluded from the estimate of credit losses.

Table of Contents

The changes in the allowance for credit losses by portfolio segment were as follows:

For the Three Months Ended September 30, 2023 and 2022
(in thousands) Agricultural Commercial and Industrial Commercial Real Estate Residential Real Estate Consumer Total
For the Three Months Ended September 30, 2023
Beginning balance $ 617 $ 22,921 $ 21,911 $ 4,393 $ 558 $ 50,400
Charge-offs (25) (511) — (21) (178) (735)
Recoveries 126 79 4 3 72 284
Credit loss expense (benefit)(1)
(181) (426) 1,872 268 118 1,651
Ending balance $ 537 $ 22,063 $ 23,787 $ 4,643 $ 570 $ 51,600
For the Three Months Ended September 30, 2022
Beginning balance $ 987 $ 21,166 $ 24,399 $ 5,174 $ 624 $ 52,350
Charge-offs (248) (280) (135) (52) (255) (970)
Recoveries 1 295 6 48 32 382
Credit loss expense (benefit) (1)
241 3,075 (3,322) 138 206 338
Ending balance $ 981 $ 24,256 $ 20,948 $ 5,308 $ 607 $ 52,100
(1) The difference in the credit loss expense reported herein as compared to the Consolidated Statements of Income is associated with the credit loss (benefit) expense of $(0.1) million and $0.3 million related to off-balance sheet credit exposures for the three months ended September 30, 2023 and September 30, 2022, respectively.

For the Nine Months Ended September 30, 2023 and 2022
(in thousands) Agricultural Commercial and Industrial Commercial Real Estate Residential Real Estate Consumer Total
For the Nine Months Ended September 30, 2023
Beginning balance $ 923 $ 22,855 $ 20,123 $ 4,678 $ 621 $ 49,200
Charge-offs (26) (1,020) (830) (54) (451) (2,381)
Recoveries 153 349 15 23 160 700
Credit loss expense (benefit)(1)
(513) (121) 4,479 (4) 240 4,081
Ending balance $ 537 $ 22,063 $ 23,787 $ 4,643 $ 570 $ 51,600
For the Nine Months Ended September 30, 2022
Beginning balance $ 667 $ 17,294 $ 26,120 $ 4,010 $ 609 $ 48,700
PCD allowance established in acquisition 512 1,473 1,227 159 — 3,371
Charge-offs (249) (843) (2,319) (90) (540) (4,041)
Recoveries 9 613 154 68 106 950
Credit loss (benefit) expense(1)
42 5,719 (4,234) 1,161 432 3,120
Ending balance $ 981 $ 24,256 $ 20,948 $ 5,308 $ 607 $ 52,100
(1) The difference in the credit loss expense reported herein as compared to the Consolidated Statements of Income is associated with the credit loss expense (benefit) of $0.0 million and $0.8 million related to off-balance sheet credit exposures for the nine months ended September 30, 2023 and September 30, 2022, respectively.

~~Table of Contents~~



	For the Three Months Ended March 31, 2024 and 2023
(in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate		Residential Real Estate		Consumer		Total
For the Three Months Ended March 31, 2024
Beginning balance	$	613	$	21,743	$	23,759	$	4,762	$	623	$	51,500

Charge-offs	(4)		(299)		(35)		(19)		(290)		(647)
Recoveries	355		46		8		9		40		458
Credit loss expense (benefit)(1)	(316)		392		3,040		262		1,211		4,589
Ending balance	$	648	$	21,882	$	26,772	$	5,014	$	1,584	$	55,900

For the Three Months Ended March 31, 2023
Beginning balance	$	923	$	22,855	$	20,123	$	4,678	$	621	$	49,200

Charge-offs	(1)		(320)		(18)		—		(148)		(487)
Recoveries	26		75		5		4		44		154
Credit loss expense (benefit) (1)	(435)		(265)		1,723		(137)		47		933
Ending balance	$	513	$	22,345	$	21,833	$	4,545	$	564	$	49,800
(1) The difference in the credit loss expense reported herein as compared to the Consolidated Statements of Income is associated with the credit loss expense of $0.1 million related to off-balance sheet credit exposures for the three months ended March 31, 2024, with no credit loss expense related to off-balance sheet credit exposures being recorded for the three months ended March 31, 2023.

The composition of the allowance for credit losses by portfolio segment based on evaluation method was as follows:


		As of September 30, 2023
	As of March 31, 2024																		As of March 31, 2024
(in thousands)	(in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate		Residential Real Estate		Consumer		Total		(in thousands)	Agricultural	Commercial and Industrial	Commercial Real Estate	Residential Real Estate		Consumer	Total
Loans held for investment, net of unearned income	Loans held for investment, net of unearned income
Individually evaluated for impairment
Individually evaluated for impairment
Individually evaluated for impairment	Individually evaluated for impairment	$	224	$	17,687	$	12,759	$	1,167	$	—	$	31,837
Collectively evaluated for impairment	Collectively evaluated for impairment	111,726		1,061,086		2,163,258		628,879		69,183		4,034,132
Total	Total	$	111,950	$	1,078,773	$	2,176,017	$	630,046	$	69,183	$	4,065,969
Allowance for credit losses:	Allowance for credit losses:
Individually evaluated for impairment	Individually evaluated for impairment	$	—	$	2,879	$	1,128	$	46	$	—	$	4,053
Individually evaluated for impairment
Individually evaluated for impairment
Collectively evaluated for impairment	Collectively evaluated for impairment	537		19,184		22,659		4,597		570		47,547
Total	Total	$	537	$	22,063	$	23,787	$	4,643	$	570	$	51,600


		As of December 31, 2022
	As of December 31, 2023																		As of December 31, 2023
(in thousands)	(in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate		Residential Real Estate		Consumer		Total		(in thousands)	Agricultural	Commercial and Industrial	Commercial Real Estate	Residential Real Estate		Consumer	Total
Loans held for investment, net of unearned income	Loans held for investment, net of unearned income
Individually evaluated for impairment
Individually evaluated for impairment
Individually evaluated for impairment	Individually evaluated for impairment	$	2,531	$	2,184	$	15,768	$	1,650	$	—	$	22,133
Collectively evaluated for impairment	Collectively evaluated for impairment	112,789		1,052,978		1,964,250		612,778		75,596		3,818,391

Total	Total	$	115,320	$	1,055,162	$	1,980,018	$	614,428	$	75,596	$	3,840,524
Total
Total
Allowance for credit losses:	Allowance for credit losses:
Individually evaluated for impairment
Individually evaluated for impairment
Individually evaluated for impairment	Individually evaluated for impairment	$	500	$	600	$	705	$	180	$	—	$	1,985
Collectively evaluated for impairment	Collectively evaluated for impairment	423		22,255		19,418		4,498		621		47,215

Total	Total	$	923	$	22,855	$	20,123	$	4,678	$	621	$	49,200
Total
Total

Table of Contents

The following tables present the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans:


			As of September 30, 2023
			As of March 31, 2024
			As of March 31, 2024
			As of March 31, 2024
(in thousands)	(in thousands)		Primary Type of Collateral								(in thousands)			Primary Type of Collateral
			Real Estate		Equipment		Other		Total			ACL Allocation
		Real Estate													Real Estate	Equipment	Other	Total	ACL Allocation
Agricultural	Agricultural		$	12	$	212	$	—	$	224		$	—
Commercial and industrial	Commercial and industrial		15,992		326		1,369		17,687			2,879
Commercial real estate:	Commercial real estate:
Construction and development
Construction and development
Construction and development	Construction and development		—		—		—		—			—
Farmland	Farmland		5,582		—		—		5,582			—
Multifamily	Multifamily		—		—		—		—			—
Commercial real estate-other	Commercial real estate-other		6,991		—		186		7,177			1,128
Residential real estate:	Residential real estate:
One- to four- family first liens	One- to four- family first liens		546		—		—		546			—
One- to four- family first liens
One- to four- family first liens
One- to four- family junior liens	One- to four- family junior liens		—		—		621		621			46
Consumer	Consumer		—		—		—		—			—
Total	Total		$	29,123	$	538	$	2,176	$	31,837		$	4,053


			As of December 31, 2022
			As of December 31, 2023
			As of December 31, 2023
			As of December 31, 2023
(in thousands)	(in thousands)		Primary Type of Collateral								(in thousands)			Primary Type of Collateral
			Real Estate		Equipment		Other		Total			ACL Allocation
		Real Estate													Real Estate	Equipment	Other	Total	ACL Allocation
Agricultural	Agricultural		$	68	$	2,463	$	—	$	2,531		$	500
Commercial and industrial	Commercial and industrial		856		736		592		2,184			600
Commercial real estate:	Commercial real estate:
Construction and development
Construction and development
Construction and development	Construction and development		—		—		—		—			—
Farmland	Farmland		4,515		—		—		4,515			—
Multifamily	Multifamily		—		—		—		—			—
Commercial real estate-other	Commercial real estate-other		11,006		—		247		11,253			705
Residential real estate:	Residential real estate:
One- to four- family first liens	One- to four- family first liens		929		—		—		929			—
One- to four- family first liens
One- to four- family first liens
One- to four- family junior liens	One- to four- family junior liens		—		—		721		721			180
Consumer	Consumer		—		—		—		—			—
Total	Total		$	17,374	$	3,199	$	1,560	$	22,133		$	1,985

~~Table of Contents~~

Loan Modifications to Borrowers Experiencing Financial Difficulty

Occasionally, the Company may modify loans to borrowers who are experiencing financial difficulty. Loan modifications to borrowers experiencing financial difficulty may be in the form of principal forgiveness, term extension, an other-than-insignificant payment delay, interest rate reduction, or combination thereof.

The following ~~table presents~~tables present the amortized cost basis of loans as of ~~September 30,~~March 31, 2024 and March 31, 2023 that were modified during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and March 31, 2023 and experiencing financial difficulty at the time of the modification by class and by type of modification:


		For the Three Months Ended March 31, 2024
		For the Three Months Ended March 31, 2024
		For the Three Months Ended March 31, 2024
										Combination:
(dollars in thousands)
(dollars in thousands)
(dollars in thousands)																								Principal Forgiveness						Payment Delay							Term Extension							Interest Rate Reduction							Term Extension & Interest Rate Reduction							Principal Forgiveness & Term Extension							Principal Forgiveness, Term Extension, & Interest Rate Reduction							Payment Delay & Term Extension							Total Class of Financing Receivable
Three Months Ended March 31, 2024
		For the Three Months and Nine Months Ended September 30, 2023
Commercial and industrial
											Combination:
(dollars in thousands)		Principal Forgiveness		Payment Delay		Term Extension		Interest Rate Reduction			Term Extension & Interest Rate Reduction		Principal Forgiveness & Term Extension		Principal Forgiveness, Term Extension, & Interest Rate Reduction		Payment Delay & Term Extension		Total Class of Financing Receivable
Three Months Ended September 30, 2023
Commercial and industrial

Commercial and industrial	Commercial and industrial	$	—	$	—	$	2,062	$	—		$	—	$	—	$	—	$	—	0.19	%		$	—			$		$	—			$			$	350			$			$	—			$			$	—			$			$	—			$			$	—			$			$	—					0.03					0.03	%

CRE - Other	CRE - Other	—		—		1,368		—			—		—		—		—		0.10	%

CRE - Other

Total		$	—	$	—	$	3,430	$	—		$	—	$	—	$	—	$	—

Nine Months Ended September 30, 2023
Agricultural		$	—	$	13	$	—	$	—		$	—	$	—	$	—	$	—	0.01	%
Commercial and industrial		—		264		2,820		—			103		302		—		188		0.34	%

CRE - Farmland		—		—		1,823		—			—		—		—		—		1.00	%

CRE - Other	CRE - Other	—		158		1,368		—			—		—		—		—		0.12	%		—				—			—				202				202			—					—			—					—		—						—		—					—			—			—			0.01						0.01	%
RRE - One- to four- family first liens	RRE - One- to four- family first liens	—		—		49		—			—		—		—		—		0.01	%	RRE - One- to four- family first liens			—			253				253			—					—		—						—		—					—			—					—			—				—				—		—			0.05						0.05	%
RRE - One- to four- family junior liens																					RRE - One- to four- family junior liens			—						—							136							—							—							—							—							—							0.07	%

Total
Total
Total																								$	—					$	253						$	688						$	—						$	—						$	—						$	—						$	—

Total		$	—	$	435	$	6,060	$	—		$	103	$	302	$	—	$	188

Table of Contents


	For the Three Months Ended March 31, 2023
									Combination:
(dollars in thousands)	Principal Forgiveness		Payment Delay		Term Extension		Interest Rate Reduction		Term Extension & Interest Rate Reduction		Principal Forgiveness & Term Extension		Principal Forgiveness, Term Extension, & Interest Rate Reduction		Payment Delay & Term Extension		Total Class of Financing Receivable
Three Months Ended March 31, 2023
Agricultural	$	—	$	16	$	1,502	$	—	$	—	$	—	$	—	$	—	1.42	%
Commercial and industrial	—		—		50		—		120		307		—		—		0.04	%



CRE - Other	—		—		—		—		—		—		20		—		—	%



Total	$	—	$	16	$	1,552	$	—	$	120	$	307	$	20	$	—

The Company has no additional ~~commitment~~commitments to lend amounts to the borrowers included in the previous ~~table~~tables as of ~~September 30,~~March 31, 2024 and March 31, 2023. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024, the Company had 9 modified loans totaling $1.4 million to borrowers experiencing financial difficulty that redefaulted within 12 months subsequent to the modification. For the three months ended March 31, 2023, the Company had 8no modified loans totaling ~~$0.3 million and 12 modified loans totaling $1.1 million, respectively,~~ to borrowers experiencing financial difficulty that redefaulted within 12 months subsequent to the modification.

The following ~~table presents~~tables present the performance, as of ~~September 30,~~March 31, 2024 and March 31, 2023, of loans that were modified while the borrower was experiencing financial difficulty at the time of modification in the last 12 months:


		As of March 31, 2024
		As of March 31, 2024
		As of March 31, 2024
(in thousands)
(in thousands)
(in thousands)
		As of September 30, 2023
(in thousands)		Current		30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total
Agricultural		$	—	$	—	$	13	$	—	$	13
Commercial and industrial	Commercial and industrial	3,490		188		—		—		3,678

Commercial and industrial

Commercial and industrial
CRE - Construction and development
CRE - Construction and development
CRE - Construction and development
CRE - Farmland
CRE - Farmland
CRE - Farmland	CRE - Farmland	1,823		—		—		—		1,823

CRE - Other	CRE - Other	1,525		—		—		—		1,525

CRE - Other

CRE - Other
RRE - One- to four- family first liens	RRE - One- to four- family first liens	—		49		—		—		49
RRE - One- to four- family first liens
RRE - One- to four- family first liens
RRE - One- to four- family junior liens
RRE - One- to four- family junior liens
RRE - One- to four- family junior liens

Total

Total

Total

		As of March 31, 2023

		As of March 31, 2023

		As of March 31, 2023
(in thousands)
(in thousands)
(in thousands)
Agricultural
Agricultural
Agricultural
Commercial and industrial
Commercial and industrial
Commercial and industrial

CRE - Other

CRE - Other

CRE - Other

Total	Total	$	6,838	$	237	$	13	$	—	$	7,088

Total

Total

~~Table of Contents~~

The following ~~table presents~~tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and March 31, 2023:

(dollars in thousands)
Principal Forgiveness Weighted Average Interest Rate Reduction Weighted Average Term Extension (Months)
Three Months Ended September 30, 2023
Commercial and industrial $ — — % 9.9
CRE - Other 18 — % 5.3
Total $ 18 — % 8.1
Nine Months Ended September 30, 2023
Commercial and industrial $ 63 1.25 % 9.2
CRE - Farmland — — % 0.9
CRE - Other 18 — % 5.3
RRE - One- to four- family first liens — — % 3.9
Total $ 81 1.25 % 6.1


(dollars in thousands)	Principal Forgiveness		Weighted Average Interest Rate Reduction		Weighted Average Term Extension (Months)
Three Months Ended March 31, 2024

Commercial and industrial	$	—	—	%	4.4



CRE - Other	—		—	%	5.4

RRE - One- to four- family junior liens	—		—	%	122.0

Total	$	—	—	%	27.9

Table of Contents


(dollars in thousands)	Principal Forgiveness		Weighted Average Interest Rate Reduction		Weighted Average Term Extension (Months)
Three Months Ended March 31, 2023
Agricultural	$	—	—	%	2.37
Commercial and industrial	63		1.25		11.89



CRE - Other	18		7.00		2.47



Total	$	81	2.07	%	4.64

5. Derivatives, Hedging Activities and Balance Sheet Offsetting

The following table presents the total notional amounts and gross fair values of the Company’s derivatives as of the dates indicated. The derivative asset and liability balances are presented on a gross basis, prior to the application of master netting agreements, as included in other assets and other liabilities, respectively, on the consolidated balance sheets. The fair values of the Company's derivative instrument assets and liabilities are summarized as follows:


			As of September 30, 2023											As of December 31, 2022
			Notional Amount			Fair Value								Notional Amount					Fair Value
		As of March 31, 2024																												As of March 31, 2024				As of December 31, 2023
		Notional Amount																										Notional Amount			Fair Value		Notional Amount			Fair Value
(in thousands)	(in thousands)			Notional Amount			Assets				Liabilities						Notional Amount				Assets				Liabilities		(in thousands)		Assets			Liabilities			Assets		Liabilities
Designated as hedging instruments:	Designated as hedging instruments:
Fair value hedges:	Fair value hedges:
Fair value hedges:
Fair value hedges:
Interest rate swaps - loans
Interest rate swaps - loans
Interest rate swaps - loans	Interest rate swaps - loans		$		41,362			$	3,262			$	50			$		24,018			$	2,556			$	—
Interest rate swaps - securities	Interest rate swaps - securities		100,000			449				—					—					—				—
Cash flow hedges	Cash flow hedges
Interest rate swaps	Interest rate swaps		200,000			4,289				—				—					—				—
Interest rate swaps
Interest rate swaps
Total	Total		$	341,362		$	8,000			$	50			$	24,018				$	2,556			$	—

Not designated as hedging instruments:	Not designated as hedging instruments:
Not designated as hedging instruments:
Not designated as hedging instruments:
Interest rate swaps
Interest rate swaps
Interest rate swaps	Interest rate swaps		$	364,153		$	23,408			$	23,438			$	331,197				$	21,084			$	21,087
RPAs - protection sold	RPAs - protection sold		186			—				—				—					—				—
RPAs - protection purchased	RPAs - protection purchased		24,701			—				—				9,421					—				—
Interest rate lock commitments	Interest rate lock commitments		1,474			18				—				1,372					7				—
Interest rate forward loan sales contracts	Interest rate forward loan sales contracts		3,382			22				—				1,400					8				—
Total	Total		$	393,896		$	23,448			$	23,438			$	343,390				$	21,099			$	21,087

Derivatives Designated as Hedging Instruments

The Company uses derivative instruments to hedge its exposure to economic risks. Certain hedging relationships are formally designated and qualify for hedge accounting under GAAP as fair value or cash flow hedges.

Fair Value Hedges - Derivatives are designated as fair value hedges to limit the Company's exposure to changes in the fair value of assets or liabilities due to movements in interest rates. The Company entered into pay-fixed receive-floating interest rate swaps to manage its exposure to changes in fair value in certain fixed-rate ~~assets.~~assets, including AFS debt securities and loans. The gain or loss on the loan fair value hedge derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income. The change in the fair value of the available for sale securities attributable to changes in the hedged risk is recorded in accumulated other comprehensive income and subsequently reclassified into interest income, as applicable, in the same period(s) to offset the changes in the fair value of the swap, which is also recognized in interest income.

Cash Flow Hedges - Derivatives are designated as cash flow hedges in order to minimize the variability in cash flows of earning assets or forecasted transactions caused by movement in interest rates. The Company has previously entered into pay-fixed receive-variable interest rate swaps to hedge against adverse fluctuations in interest rates by reducing exposure to variability in cash

~~Table of Contents~~

flows relating to interest payments on the Company's variable rate ~~debt.~~debt, including brokered deposits. The gain or loss on the derivatives is recorded in accumulated other comprehensive income and subsequently reclassified into interest expense, as applicable, in the same period(s) during which the hedged transaction affects earnings. During the next 12 months, the Company estimates that an additional ~~$3.0~~$2.2 million of income will be reclassified into interest expense.

Table of Contents

The table below presents the effect of cash flow hedge accounting on AOCI for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:


			Amount of Gain (Loss) Recognized in AOCI on Derivative				Location of Gain (Loss) Reclassified from AOCI into Income	Amount of Gain (Loss) Reclassified from AOCI into Income
			Three Months Ended September 30,					Three Months Ended September 30,
		Amount of Gain (Loss) Recognized in AOCI on Derivative													Amount of Gain (Loss) Recognized in AOCI on Derivative	Location of Gain (Loss) Reclassified from AOCI into Income		Amount of Gain (Loss) Reclassified from AOCI into Income
		Three Months Ended March 31,													Three Months Ended March 31,					Three Months Ended March 31,
(in thousands)	(in thousands)		2023		2022			2023		2022		(in thousands)	2024	2023			2024		2023
Interest rate swaps	Interest rate swaps		$	1,829	$	—	Interest Expense	$	761	$	—

			Nine Months Ended September 30,					Nine Months Ended September 30,
(in thousands)			2023		2022			2023		2022
Interest rate swaps			$	5,288	$	—	Interest Expense	$	999	$	—

The table below presents the effect of the Company’s derivative financial instruments designated as hedging instruments on the consolidated statements of income for the periods indicated:


		Location and Amount of Gain or Loss Recognized in Income on Hedging Relationships
		Location and Amount of Gain or Loss Recognized in Income on Hedging Relationships
		Location and Amount of Gain or Loss Recognized in Income on Hedging Relationships
	For the Three Months Ended March 31,
		2024
		2024
		2024
(in thousands)
(in thousands)
(in thousands)
Income and expense included in the consolidated statements of income related to the effects of fair value or cash flow hedges are recorded
Income and expense included in the consolidated statements of income related to the effects of fair value or cash flow hedges are recorded
Income and expense included in the consolidated statements of income related to the effects of fair value or cash flow hedges are recorded

The effects of fair value and cash flow hedging:

The effects of fair value and cash flow hedging:

The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships in subtopic 815-20:
Gain (loss) on fair value hedging relationships in subtopic 815-20:
Gain (loss) on fair value hedging relationships in subtopic 815-20:
Interest contracts - loans:
Interest contracts - loans:
Interest contracts - loans:
Hedged items
Hedged items
Hedged items
Derivative designated as hedging instruments
Derivative designated as hedging instruments
Derivative designated as hedging instruments

Interest contracts - securities:

Interest contracts - securities:

Interest contracts - securities:
Hedged items
Hedged items
Hedged items
Derivative designated as hedging instruments
Derivative designated as hedging instruments
Derivative designated as hedging instruments

		Location and Amount of Gain or Loss Recognized in Income on Hedging Relationships
		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
(in thousands)		Interest Income		Other Income		Interest Income		Other Income		Interest Income		Other Income		Interest Income		Other Income
Income and expense included in the consolidated statements of income related to the effects of fair value or cash flow hedges are recorded		$	317	$	—	$	24	$	—	$	666	$	—	$	(147)	$	—

The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships in subtopic 815-20:
Interest contracts - loans:
Hedged items		(747)		—		(1,149)		—		(212)		—		(3,665)		—
Derivative designated as hedging instruments		964		—		1,175		—		1,219		—		3,519		—

Interest contracts - securities:
Hedged items		(454)		—		—		—		(454)		—		—		—
Derivative designated as hedging instruments		560		—		—		—		560		—		—		—

Income statement effect of cash flow hedging relationships in subtopic 815-20:
Interest contracts:
Amount reclassified from AOCI into income		761		—		—		—		999		—		—		—

As of ~~September 30, 2023,~~March 31, 2024, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges:

Line Item in the Balance

Sheet in Which the

Hedged Item is Included

Line Item in the Balance

Sheet in Which the

Hedged Item is Included

Carrying Amount of the

Hedged Assets

Cumulative Amount of Fair Value

Hedging Adjustment Included in the Carrying Amount of the Hedged Asset

Line Item in the Balance

Sheet in Which the

Hedged Item is Included

Carrying Amount of the

Hedged Assets

Cumulative Amount of Fair Value

Hedging Adjustment Included in the Carrying Amount of the Hedged Asset

(in thousands)

Loans

38,187

(3,211)

Loans

Securities

99,546

(454)

Derivatives Not Designated as Hedging Instruments

Interest Rate Swaps - The Company periodically enters into commercial loan interest rate swap agreements in order to provide commercial loan customers with the ability to convert from variable to fixed interest rates. These derivative contracts relate to transactions in which the Company enters into an interest rate swap with a customer, while simultaneously entering into an offsetting interest rate swap with an institutional counterparty.

~~Table of Contents~~

Credit Risk Participation Agreements -The Company enters into RPAs to manage the credit exposure on interest rate contracts associated with a syndicated loan or participation agreement. The Company may enter into protection purchased RPAs with institutional counterparties to decrease or increase its exposure to a borrower. Under the RPA, the Company will receive or make payment if a borrower defaults on the related interest rate contract. The notional amount of the RPAs reflects the Company’s pro-rata share of the derivative instrument.

Interest Rate Forward Loan Sales Contracts & Interest Rate Lock Commitments - The Company enters into forward delivery contracts to sell residential mortgage loans at specific prices and dates in order to hedge the interest rate risk in its portfolio of mortgage loans held for sale and its residential mortgage interest rate lock commitments.

Table of Contents

The following table presents the net gains (losses) recognized on the consolidated statements of income related to the derivatives not designated as hedging instruments for the periods indicated:


		Location in the Consolidated Statements of Income			For the Three Months Ended September 30,								For the Nine Months Ended September 30,
			Location in the Consolidated Statements of Income
		Location in the Consolidated Statements of Income
			Location in the Consolidated Statements of Income
(in thousands)
(in thousands)
(in thousands)	(in thousands)	Location in the Consolidated Statements of Income					2023				2022				2023				2022
Interest rate swaps	Interest rate swaps		$	(27)			$	2			$	(27)			$	10
Interest rate swaps
Interest rate swaps
RPAs
RPAs
RPAs	RPAs		Other income				1				—				70				1
Interest rate lock commitments	Interest rate lock commitments	Loan revenue			(51)				(149)				11				(367)
Interest rate lock commitments
Interest rate lock commitments
Interest rate forward loan sales contracts
Interest rate forward loan sales contracts
Interest rate forward loan sales contracts	Interest rate forward loan sales contracts	Loan revenue			(5)				91				14				63
Total	Total				$	(82)			$	(56)			$	68			$	(293)
Total
Total

Offsetting of Derivatives

The Company has entered into agreements with certain counterparty financial institutions, which include master netting agreements. However, the Company has elected to account for all derivatives with counterparty institutions on a gross basis. The Company manages the risk of default by its borrower counterparties through its normal loan underwriting and credit monitoring policies and procedures.

The table below presents gross derivatives and the respective collateral received or pledged in the form of other financial instruments as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, which are generally marketable securities and/or cash. The collateral amounts in the table below are limited to the outstanding balances of the related asset or liability (after netting is applied); thus instances of over-collateralization are not shown. Further, the net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets.


								Gross Amounts Not Offset in the Balance Sheet
							Gross Amounts Not Offset in the Balance Sheet
(in thousands)	(in thousands)	Gross Amounts Recognized		Gross Amounts Offset in the Balance Sheet		Net Amounts presented in the Balance Sheet		Financial Instruments		Cash Collateral Received / Paid		Net Assets /Liabilities
As of September 30, 2023
(in thousands)
(in thousands)														Gross Amounts Recognized	Gross Amounts Offset in the Balance Sheet	Net Amounts presented in the Balance Sheet	Financial Instruments	Cash Collateral Received / Paid	Net Assets /Liabilities
As of March 31, 2024
Asset Derivatives
Asset Derivatives
Asset Derivatives	Asset Derivatives	$	31,448	$	—	$	31,448	$	—	$	22,762	$	8,686
Liability Derivatives	Liability Derivatives	23,488		—		23,488		—		9,420		14,068

As of December 31, 2022
As of December 31, 2023
As of December 31, 2023
As of December 31, 2023
Asset Derivatives
Asset Derivatives
Asset Derivatives	Asset Derivatives	$	23,655	$	—	$	23,655	$	—	$	18,858	$	4,797
Liability Derivatives	Liability Derivatives	21,087		—		21,087		—		3,460		17,627

Credit-risk-related Contingent Features

The Company has an unsecured federal funds line with its institutional derivative counterparties. The Company has an agreement with its institutional derivative counterparties that contains a provision under which if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. The Company also has an agreement with its derivative counterparties that contains a provision under which the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. As of ~~September 30, 2023,~~March 31, 2024, fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was ~~$596 thousand.~~$4.5 million.

6. Goodwill and Intangible Assets

The following table presents the changes in the carrying amount of goodwill ~~was $62.5~~for the period indicated:


(in thousands)	As of March 31, 2024		As of December 31, 2023

Goodwill, beginning of period	$	62,477	$	62,477
Goodwill from the acquisition of DNVB	8,641		—

Total goodwill, end of period	$	71,118	$	62,477

As indicated in Note 2. Business Combinations, the Company acquired a core deposit intangible in connection with its acquisition of DNVB on January 31, 2024 with an estimated fair value of $7.1 million, aswhich will be amortized over its estimated useful life of ~~September 30, 2023 and as of December 31, 2022.~~10 years.

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The following table presents the gross carrying amount, accumulated amortization, and net carrying amount of other intangible assets as of the dates indicated:
As of September 30, 2023 As of December 31, 2022
(in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Core deposit intangible $ 58,245 $ (40,171) $ 18,074 $ 58,245 $ (35,822) $ 22,423
Customer relationship intangible 5,265 (4,905) 360 5,265 (4,490) 775
Other 2,700 (2,664) 36 2,700 (2,623) 77
$ 66,210 $ (47,740) $ 18,470 $ 66,210 $ (42,935) $ 23,275
Indefinite-lived trade name intangible $ 7,040 $ 7,040


	As of March 31, 2024						As of December 31, 2023
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Core deposit intangible	$	65,345	$	(43,044)	$	22,301	$	58,245	$	(41,499)	$	16,746
Customer relationship intangible	5,265		(5,092)		173		5,265		(5,008)		257
Other	2,700		(2,683)		17		2,700		(2,674)		26
	$	73,310	$	(50,819)	$	22,491	$	66,210	$	(49,181)	$	17,029
Indefinite-lived trade name intangible					7,040						7,040
Total other intangible assets, net					$	29,531					$	24,069

The following table provides the estimated future amortization expense for the remaining ~~three~~nine months of the year ending December 31, ~~2023~~2024 and the succeeding annual periods:


(in thousands)	(in thousands)	Core Deposit Intangible		Customer Relationship Intangible		Other		Total		(in thousands)	Core Deposit Intangible	Customer Relationship Intangible	Other	Total

2023		$	1,328	$	103	$	10	$	1,441
2024
2024
2024	2024	4,705		239		24		4,968
2025	2025	3,751		18		2		3,771
2026	2026	2,797		—		—		2,797
2027	2027	1,843		—		—		1,843
2028
Thereafter	Thereafter	3,650		—		—		3,650
Total	Total	$	18,074	$	360	$	36	$	18,470

7. Other Assets

The components of the Company's other assets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 were as follows:

(in thousands) September 30, 2023 December 31, 2022
Bank-owned life insurance $ 97,383 $ 95,539
Interest receivable 30,095 27,090
FHLB stock 14,869 19,248
Mortgage servicing rights 13,438 13,421
Operating lease right-of-use assets, net 2,593 2,492
Federal and state income taxes, current — 2,366
Federal and state income taxes, deferred 37,641 39,071
Derivative assets 31,448 23,655
Other receivables/assets 16,569 13,635
$ 244,036 $ 236,517


(in thousands)	March 31, 2024		December 31, 2023
Bank-owned life insurance	$	98,700	$	98,039
Interest receivable	30,728		29,768
FHLB stock	5,220		5,806
Mortgage servicing rights	12,965		13,333
Operating lease right-of-use assets, net	2,153		2,337
Federal and state income taxes, current	579		1,556
Federal and state income taxes, deferred	29,582		31,218
Derivative assets	27,844		25,093
Other receivables/assets	18,706		15,630
	$	226,477	$	222,780

8. Deposits

The following table presents the composition of our deposits as of the dates indicated:


(in thousands)	(in thousands)	September 30, 2023		December 31, 2022		(in thousands)	March 31, 2024	December 31, 2023
Noninterest bearing deposits	Noninterest bearing deposits	$	924,213	$	1,053,450
Interest checking deposits	Interest checking deposits	1,334,481		1,624,278
Money market deposits	Money market deposits	1,127,287		937,340
Savings deposits	Savings deposits	619,805		664,169
Time deposits of $250 and under	Time deposits of $250 and under	923,709		559,466

Time deposits over $250	Time deposits over $250	433,829		630,239
Total deposits	Total deposits	$	5,363,324	$	5,468,942

The Company had ~~$10.9~~$14.0 million and ~~$4.3~~$15.2 million in reciprocal time deposits as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. Included in money market deposits at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 were ~~$149.6~~$132.7 million and ~~$40.0~~$128.0 million, respectively, of interest-bearing reciprocal deposits. Included in noninterest bearing deposits at ~~September 30, 2023~~March 31, 2024 were ~~$70.1~~$64.2 million of noninterest-bearing reciprocal deposits, with no$58.0 million noninterest-bearing reciprocal deposits at

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December 31, ~~2022.~~2023. These reciprocal deposits are part of the IntraFi Network Deposits program, which is used by financial institutions to spread deposits that exceed the FDIC insurance coverage limits out to numerous institutions in order to provide insurance

~~Table of Contents~~

coverage for all participating deposits. In addition, included within the ~~Company had $220.1~~time deposits of “$250 thousand and under” was $205.0 million of brokered deposits as of ~~September 30, 2023~~March 31, 2024 and ~~$126.8~~$221.0 million as of December 31, ~~2022 of brokered deposits.~~2023.

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the Company had public entity deposits, ~~that~~which were collateralized by investment securities balances of ~~$221.4~~$285.1 million and ~~$387.8~~$183.4 million, respectively.

9. Short-Term Borrowings

The following table summarizes our short-term borrowings as of the dates indicated:


			September 30, 2023				December 31, 2022
		March 31, 2024												March 31, 2024			December 31, 2023
(in thousands)	(in thousands)		Weighted Average Rate		Balance		Weighted Average Rate		Balance		(in thousands)	Weighted Average Rate	Balance		Weighted Average Rate	Balance
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase		0.73	%	$	9,256	1.32	%	$	156,373
Federal Home Loan Bank advances	Federal Home Loan Bank advances		5.53		139,700		4.48		235,500

Federal Reserve Bank borrowings	Federal Reserve Bank borrowings		5.03		225,000		—		—

Federal Reserve Bank borrowings
Federal Reserve Bank borrowings
Unsecured line of credit
Total	Total		5.11	%	$	373,956	3.22	%	$	391,873

Securities Sold Under an Agreement to Repurchase - Securities sold under agreements to repurchase are agreements in which the Company acquires funds by selling assets to another party under a simultaneous agreement to repurchase the same assets at a specified price and date. The Company enters into repurchase agreements and also offers a demand deposit account product to customers that sweeps their balances in excess of an agreed upon target amount into overnight repurchase agreements. All securities sold under agreements to repurchase are recorded on the face of the balance ~~sheet.~~sheet..

Federal Home Loan Bank Advances - The Bank has a secured line of credit with the FHLBDM. Advances from the FHLBDM are collateralized primarily by one- to four-family residential, commercial and agricultural real estate first mortgages equal to various percentages of the total outstanding notes. See Note 4. Loans Receivable and the Allowance for Credit Losses of the notes to the consolidated financial statements.

Federal Funds Purchased - The Bank has unsecured federal funds lines totaling $155.0 million from multiple correspondent banking relationships. There were no borrowings from such lines at either ~~September 30, 2023~~March 31, 2024 or December 31, ~~2022.~~2023.

~~Other~~ Federal Reserve Bank Borrowing- At ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the Company had no Federal Reserve Discount Window borrowings, while the ~~financing~~borrowing capacity was ~~$515.4~~$421.4 million as of ~~September 30, 2023~~March 31, 2024 and ~~$105.6~~$428.8 million as of December 31, ~~2022.~~2023. At ~~September 30, 2023,~~March 31, 2024, the Company had ~~$225.0~~$405.0 million of Bank Term Funding Program ~~borrowings, with~~borrowings. The FRB announced that effective March 11, 2024, no additional ~~borrowing capacity of $224.3 million as of September 30, 2023.~~loans would be made under the Bank Term Funding Program. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022, the Bank had municipal securities with a market value of $880.5 million and $115.2 million, respectively,~~2023, pledged to the Federal Reserve Bank of Chicago ~~to secure potential borrowings.~~were investment securities consisting primarily of corporate debt, state and political subdivisions, mortgage backed, and collateralized mortgage obligations, with a market value of $790.3 million and $797.6 million, respectively.

Unsecured Line of Credit - The Company has a credit agreement with a correspondent bank with a revolving commitment of $25.0 million. The credit agreement was amended on September 19, 2023 such that the revolving commitment matures on September 30, 2024, with no updates made to the fee structure or the interest rate. Fees are paid on the average daily unused revolving commitment in the amount of 0.30% per annum. Interest is payable at a rate equal to the monthly reset term SOFR rate plus 1.55%. The Company had ~~no balance~~$13.0 million outstanding under this revolving credit facility as of ~~both September 30, 2023 and~~March 31, 2024, with no amount outstanding as of December 31, ~~2022.~~

2023.

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10. Long-Term Debt

Junior Subordinated Notes Issued to Capital Trusts

The table below summarizes the terms of each issuance of junior subordinated notes outstanding as of the dates indicated:


				March 31, 2024
(in thousands)	(in thousands)	Face Value			Book Value		Interest Rate	Rate		Maturity Date	Callable Date
September 30, 2023
(in thousands)
(in thousands)													Face Value			Book Value									Interest Rate(1)				Rate							Maturity Date					Callable Date
ATBancorp Statutory Trust I	ATBancorp Statutory Trust I	$	7,732		$	6,959	Three-month CME Term SOFR + 0.26% Spread + 1.68% Margin	7.35	%	06/15/2036	06/15/2011	ATBancorp Statutory Trust I	$	7,732	$	$	6,980	$		$	6,970			1.68% Margin		1.68% Margin				7.27		%			7.33		%			06/15/2036			06/15/2011
ATBancorp Statutory Trust II	ATBancorp Statutory Trust II	12,372			11,018		Three-month CME Term SOFR + 0.26% Spread + 1.65% Margin	7.32	%	09/15/2037	06/15/2012	ATBancorp Statutory Trust II	12,372		11,051		11,051		11,034				11,034				1.65% Margin				7.24		%			7.30		%			09/15/2037			06/15/2012
Barron Investment Capital Trust I	Barron Investment Capital Trust I	2,062			1,854		Three-month CME Term SOFR + 0.26% Spread + 2.15% Margin	7.81	%	09/23/2036	09/23/2011	Barron Investment Capital Trust I	2,062		1,868		1,868		1,861			1,861			2.15% Margin			2.15% Margin				7.73		%			7.77		%			09/23/2036			09/23/2011
Central Bancshares Capital Trust II	Central Bancshares Capital Trust II	7,217			6,954		Three-month CME Term SOFR + 0.26% Spread + 3.50% Margin	9.17	%	03/15/2038	03/15/2013	Central Bancshares Capital Trust II	7,217		6,974		6,974		6,964			6,964			3.50% Margin			3.50% Margin				9.09		%			9.15		%			03/15/2038			03/15/2013
MidWestOne Statutory Trust II	MidWestOne Statutory Trust II	15,464			15,464		Three-month CME Term SOFR + 0.26% Spread + 1.59% Margin	7.26	%	12/15/2037	12/15/2012	MidWestOne Statutory Trust II	15,464		15,464		15,464		15,464			15,464			1.59% Margin			1.59% Margin				7.18		%			7.24		%			12/15/2037			12/15/2012
Total	Total	$	44,847		$	42,249

December 31, 2022
ATBancorp Statutory Trust I		$	7,732		$	6,928	Three-month LIBOR + 1.68%	6.45	%	06/15/2036	06/15/2011
ATBancorp Statutory Trust II		12,372			10,969		Three-month LIBOR + 1.65%	6.42	%	09/15/2037	06/15/2012
Barron Investment Capital Trust I		2,062			1,832		Three-month LIBOR + 2.15%	6.88	%	09/23/2036	09/23/2011
Central Bancshares Capital Trust II		7,217			6,923		Three-month LIBOR + 3.50%	8.27	%	03/15/2038	03/15/2013
MidWestOne Statutory Trust II		15,464			15,464		Three-month LIBOR + 1.59%	6.36	%	12/15/2037	12/15/2012
Total		$	44,847		$	42,116

(1) Interest rate is equal to the Three-month CME Term SOFR + 0.26% Spread + Applicable Margin

(1) Interest rate is equal to the Three-month CME Term SOFR + 0.26% Spread + Applicable Margin

(1) Interest rate is equal to the Three-month CME Term SOFR + 0.26% Spread + Applicable Margin

The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated notes at the stated maturity date or upon redemption of the junior subordinated notes. Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon the Company making payment on the related junior subordinated notes. The Company’s obligation under the junior subordinated notes and other relevant trust agreements, in aggregate, constitutes a full and unconditional guarantee by the Company of each trust’s obligations under the trust preferred securities issued by each trust. The Company has the right to defer payment of interest on the junior subordinated notes and, therefore, distributions on the trust preferred securities, for up to five years, but not beyond the stated maturity date in the table above. During any such deferral period the Company may not pay cash dividends on its stock and generally may not repurchase its stock.

Subordinated Debentures

On July 28, 2020, the Company completed the private placement offering of $65.0 million of its subordinated notes, of which $63.75 million have been exchanged for subordinated notes registered under the Securities Act of 1933. The 5.75% fixed-to-floating rate subordinated notes are due July 30, 2030. At ~~September 30, 2023,~~March 31, 2024, 100% of the subordinated notes qualified as Tier 2 capital. Per applicable Federal Reserve rules and regulations, the amount of the subordinated notes qualifying as Tier 2 regulatory capital will be phased-out by 20% of the amount of the subordinated notes in each of the five years beginning on the fifth anniversary preceding the maturity date of the subordinated notes. At March 31, 2024 and December 31, 2023, the Company had outstanding subordinated debentures of $64.2 million and $64.1 million, respectively.

Other Long-Term Debt

Other long-term borrowings were as follows as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:


		September 30, 2023				December 31, 2022
	March 31, 2024												March 31, 2024		December 31, 2023
(in thousands)	(in thousands)	Weighted Average Rate		Balance		Weighted Average Rate		Balance		(in thousands)	Weighted Average Rate	Balance		Weighted Average Rate		Balance
Finance lease payable	Finance lease payable	8.89	%	$	652	8.89	%	$	787
FHLB borrowings	FHLB borrowings	3.11		6,270		2.91		17,301
Note payable to unaffiliated bank	Note payable to unaffiliated bank	6.88		11,250		5.67		15,000
Total	Total	5.65	%	$	18,172	4.30	%	$	33,088

On June 7, 2022, pursuant to a credit agreement with a correspondent bank, the Company entered into ~~an unsecured~~a $35.0 million term note payable ~~with a correspondent bank with a maturity date of~~maturing on June 30, 2027. ~~Payments of principal~~Principal and interest are payable quarterly, and began on September 30, 2022. Interest ~~is payable~~accrues at the monthly reset term SOFR plus 1.55%. The credit agreement includes customary covenants requiring the Company to, among other things, maintain minimum levels of both regulatory capital and certain financial ratios; the Company certifies compliance with the covenants on a quarterly basis. On February 12, 2024, the credit agreement, including certain of its covenants, was amended.

~~Table of Contents~~

As a member of the FHLBDM, the Bank may borrow funds from the FHLB, ~~in amounts up to 45% of the Bank’s total assets,~~ provided the Bank is able to pledge an adequate amount of qualified assets to secure the borrowings. In addition, the FHLB has established a credit capacity limit to the Bank that is equal to 45% of the Bank’s total assets. This credit capacity limit includes short-term and long-term borrowings, federal funds, letters of credit and other sources of credit exposure to the FHLB. Advances from the FHLB are collateralized primarily

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by one- to four-family residential, commercial and agricultural real estate first mortgages equal to various percentages of the total outstanding notes. See Note 4. Loans Receivable and the Allowance for Credit Losses of the notes to the unaudited consolidated financial statements.

As of ~~September 30, 2023,~~March 31, 2024, FHLB borrowings were as follows:

(in thousands) Weighted Average Rate Amount
Due in 2024 3.11 % 6,250
Valuation adjustment from acquisition accounting 20
Total $ 6,270


(in thousands)	Weighted Average Rate		Amount
Due in 2024	3.11	%	$	6,250






Valuation adjustment from acquisition accounting			5
Total			$	6,255

11. Earnings per Share

The following table ~~present~~presents the computation of basic and diluted earnings per common share for the periods indicated:


		Three Months Ended September 30,				Nine Months Ended September 30,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(dollars in thousands, except per share amounts)
(dollars in thousands, except per share amounts)
(dollars in thousands, except per share amounts)	(dollars in thousands, except per share amounts)	2023		2022		2023		2022
Basic Earnings Per Share:	Basic Earnings Per Share:
Basic Earnings Per Share:
Basic Earnings Per Share:
Net income
Net income
Net income	Net income	$	9,138	$	18,317	$	18,129	$	44,833
Weighted average shares outstanding	Weighted average shares outstanding	15,688,502		15,623,498		15,672,989		15,657,917
Weighted average shares outstanding
Weighted average shares outstanding
Basic earnings per common share
Basic earnings per common share
Basic earnings per common share	Basic earnings per common share	$	0.58	$	1.17	$	1.16	$	2.86

Diluted Earnings Per Share:	Diluted Earnings Per Share:

Diluted Earnings Per Share:

Diluted Earnings Per Share:
Net income
Net income
Net income	Net income	$	9,138	$	18,317	$	18,129	$	44,833
Weighted average shares outstanding, including all dilutive potential shares	Weighted average shares outstanding, including all dilutive potential shares	15,711,137		15,654,443		15,696,071		15,686,098
Weighted average shares outstanding, including all dilutive potential shares
Weighted average shares outstanding, including all dilutive potential shares
Diluted earnings per common share	Diluted earnings per common share	$	0.58	$	1.17	$	1.15	$	2.86
Diluted earnings per common share
Diluted earnings per common share

12. Regulatory Capital Requirements and Restrictions on Subsidiary Cash

Regulatory Capital and Reserve Requirement - The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the Bank was not required to maintain reserve balances in cash on hand or on deposit with Federal Reserve Banks, and therefore ~~the total amount~~no amounts were held in reserve for each of these ~~periods was zero dollars.~~periods.

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A comparison of the Company's and the Bank's capital with the corresponding minimum regulatory requirements in effect at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, is presented below:

Actual
For Capital Adequacy Purposes With Capital Conservation Buffer(1)
To Be Well Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands) Amount Ratio Amount Ratio Amount Ratio
At September 30, 2023
Consolidated:
Total capital/risk weighted assets(1)
$668,678 12.45% $564,137 10.50% N/A N/A
Tier 1 capital/risk weighted assets(1)
553,807 10.31 456,682 8.50 N/A N/A
Common equity tier 1 capital/risk weighted assets(1)
511,558 9.52 376,091 7.00 N/A N/A
Tier 1 leverage capital/average assets 553,807 8.58 258,071 4.00 N/A N/A
MidWestOne Bank:
Total capital/risk weighted assets(1)
$662,831 12.36% $563,166 10.50% $536,348 10.00%
Tier 1 capital/risk weighted assets(1)
612,960 11.43 455,896 8.50 429,079 8.00
Common equity tier 1 capital/risk weighted assets(1)
612,960 11.43 375,444 7.00 348,626 6.50
Tier 1 leverage capital/average assets 612,960 9.51 257,931 4.00 322,414 5.00
At December 31, 2022
Consolidated:
Total capital/risk weighted assets(1)
$653,380 12.07% $568,452 10.50% N/A N/A
Tier 1 capital/risk weighted assets(1)
544,300 10.05 460,175 8.50 N/A N/A
Common equity tier 1 capital/risk weighted assets(1)
502,184 9.28 378,968 7.00 N/A N/A
Tier 1 leverage capital/average assets 544,300 8.35 260,891 4.00 N/A N/A
MidWestOne Bank:
Total capital/risk weighted assets(1)
$654,297 12.10% $567,684 10.50% $540,652 10.00%
Tier 1 capital/risk weighted assets(1)
610,217 11.29 459,554 8.50 432,522 8.00
Common equity tier 1 capital/risk weighted assets(1)
610,217 11.29 378,456 7.00 351,424 6.50
Tier 1 leverage capital/average assets 610,217 9.36 260,776 4.00 325,970 5.00


	Actual		For Capital Adequacy Purposes With Capital Conservation Buffer(1)		To Be Well Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands)	Amount	Ratio	Amount	Ratio	Amount	Ratio
At March 31, 2024
Consolidated:
Total capital/risk weighted assets	$661,448	11.97%	$580,192	10.50%	N/A	N/A
Tier 1 capital/risk weighted assets	538,756	9.75	469,679	8.50	N/A	N/A
Common equity tier 1 capital/risk weighted assets	496,419	8.98	386,795	7.00	N/A	N/A
Tier 1 leverage capital/average assets	538,756	8.16	264,001	4.00	N/A	N/A
MidWestOne Bank:
Total capital/risk weighted assets	$675,287	12.25%	$578,805	10.50%	$551,243	10.00%
Tier 1 capital/risk weighted assets	617,596	11.20	468,557	8.50	440,995	8.00
Common equity tier 1 capital/risk weighted assets	617,596	11.20	385,870	7.00	358,308	6.50
Tier 1 leverage capital/average assets	617,596	9.36	263,801	4.00	329,751	5.00

At December 31, 2023
Consolidated:
Total capital/risk weighted assets	$668,748	12.53%	$560,596	10.50%	N/A	N/A
Tier 1 capital/risk weighted assets	554,177	10.38	453,816	8.50	N/A	N/A
Common equity tier 1 capital/risk weighted assets	511,884	9.59	373,731	7.00	N/A	N/A
Tier 1 leverage capital/average assets	554,177	8.58	258,487	4.00	N/A	N/A
MidWestOne Bank:
Total capital/risk weighted assets	$656,027	12.49%	$551,658	10.50%	$525,388	10.00%
Tier 1 capital/risk weighted assets	606,456	11.54	446,580	8.50	420,310	8.00
Common equity tier 1 capital/risk weighted assets	606,456	11.54	367,772	7.00	341,502	6.50
Tier 1 leverage capital/average assets	606,456	9.39	258,339	4.00	322,924	5.00

(1) Includes a capital conservation buffer of 2.50%.

13. Commitments and Contingencies

Credit-related financial instruments - The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, commitments to sell loans, and standby letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheets.

The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. The following table summarizes the Bank’s commitments as of the dates indicated:


		September 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
(in thousands)	(in thousands)
Commitments to extend credit
Commitments to extend credit
Commitments to extend credit	Commitments to extend credit	$	1,242,267	$	1,190,607
Commitments to sell loans	Commitments to sell loans	2,528		612
Standby letters of credit	Standby letters of credit	9,078		18,398
Total	Total	$	1,253,873	$	1,209,617

The Bank’s exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the party. Collateral held varies, but may include accounts receivable, crops, livestock, inventory, property and equipment, residential real estate and income-producing commercial properties.

Commitments to sell loans are agreements to sell loans held for sale to third parties at an agreed upon price.

Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements and, generally, have terms of one year or

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less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank holds collateral, which may include accounts receivable, inventory, property, equipment and income-producing properties, that support those commitments, if deemed necessary. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Bank would be required to fund the commitment. The maximum potential amount of future payments the Bank could be required to make is represented by the contractual amount shown in the summary above. If the commitment is funded, the Bank would be entitled to seek recovery from the customer.

Liability for Off-Balance Sheet Credit Losses - The Company records a liability for off-balance sheet credit losses through a charge to credit loss expense (or a reversal of credit loss expense) on the Company's consolidated statements of income and other liabilities on the Company's consolidated balance sheets. At ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the liability for off-balance-sheet credit losses totaled ~~$4.8 million.~~$4.7 million and $4.6 million, respectively. For the ~~nine months~~three-months ended ~~September 30, 2023, no~~March 31, 2024, $0.1 million credit loss expense was recorded, ~~while a~~with no credit loss expense ~~of $0.8 million was~~ recorded for the ~~nine months~~three-months ended ~~September 30, 2022.~~March 31, 2023.

Litigation - In the normal course of business, the Company and its subsidiaries have been named, from time to time, as defendants in various legal actions. Certain of the actual or threatened legal actions may include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. Management, after consulting with legal counsel, is of the opinion that the ultimate liability, if any, resulting from these pending or threatened actions and proceedings will not have a material effect on the financial statements of the Company.

Concentrations of credit risk - Substantially all of the Bank’s loans, commitments to extend credit and standby letters of credit have been granted to customers in the Bank’s market areas. Although the loan portfolio of the Bank is diversified, approximately ~~65%~~66% of the loans are real estate loans, excluding farmland, and approximately 7% are agriculturally related. The concentrations of credit by type of loan are set forth in Note 4. Loans Receivable and the Allowance for Credit Losses. Commitments to extend credit are primarily related to commercial loans and home equity loans. Standby letters of credit were granted primarily to commercial borrowers. Investments in securities issued by state and political subdivisions involve certain governmental entities within Iowa, California, and Minnesota. The carrying value of investment securities of Iowa, California and Minnesota political subdivisions totaled 13%, ~~11%~~12%, and 10%, respectively, as of ~~September 30, 2023.~~March 31, 2024.

14. Fair Value of Financial Instruments and Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

•Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

•Level 2 – Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

•Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

For additional information regarding the valuation methodologies used to measure the Company's assets recorded at fair value, and for estimating fair value for financial instruments not recorded at fair value, see Note 1. Nature of Business and Significant Accounting Policies and Note 20. Estimated Fair Value of Financial Instruments and Fair Value Measurements to the consolidated financial statements in the Company's ~~2022~~2023 Annual Report on Form 10-K, filed with the SEC on March ~~13, 2023.~~8, 2024.

The Company uses fair value to measure certain assets and liabilities on a recurring basis, primarily available for sale debt securities, derivatives and mortgage servicing rights. For assets measured at the lower of cost or fair value, the fair value measurement criteria may or may not be met during a reporting period, and such measurements are therefore considered ~~"nonrecurring"~~“nonrecurring” for purposes of disclosing the Company's fair value measurements. Fair value is used on a nonrecurring basis to adjust carrying values for collateral dependent individually analyzed loans and ~~other real estate owned.~~foreclosed assets.

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Recurring Basis

The following tables summarize assets and liabilities measured at fair value on a recurring basis ~~at the dates indicated,~~as of March 31, 2024 and December 31, 2023, by level within the fair value hierarchy:


		Fair Value Measurement at September 30, 2023 Using									Fair Value Measurement at March 31, 2024 Using
(in thousands)	(in thousands)	Total		Level 1		Level 2		Level 3		(in thousands)	Total	Level 1	Level 2	Level 3
Assets:	Assets:
Available for sale debt securities:	Available for sale debt securities:
Available for sale debt securities:
Available for sale debt securities:
U.S. Treasury securities
U.S. Treasury securities
U.S. Treasury securities

State and political subdivisions
State and political subdivisions
State and political subdivisions	State and political subdivisions	$	162,468	$	—	$	162,468	$	—
Mortgage-backed securities	Mortgage-backed securities	5,327		—		5,327		—
Collateralized loan obligations	Collateralized loan obligations	52,453		—		52,453		—
Collateralized mortgage obligations	Collateralized mortgage obligations	131,923		—		131,923		—
Corporate debt securities	Corporate debt securities	520,599		—		520,599		—
Derivative assets	Derivative assets	31,448		—		31,430		18
Mortgage servicing rights	Mortgage servicing rights	13,438		—		13,438		—

Liabilities:	Liabilities:
Liabilities:
Liabilities:
Derivative liabilities	Derivative liabilities	$	23,488	$	—	$	23,488	$	—
Derivative liabilities
Derivative liabilities


		Fair Value Measurement at December 31, 2022 Using									Fair Value Measurement at December 31, 2023 Using
(in thousands)	(in thousands)	Total		Level 1		Level 2		Level 3		(in thousands)	Total	Level 1	Level 2	Level 3
Assets:	Assets:
Debt securities available for sale:	Debt securities available for sale:
U.S. Government agencies and corporations		$	7,345	$	—	$	7,345	$	—
Debt securities available for sale:
Debt securities available for sale:

State and political subdivisions

State and political subdivisions

State and political subdivisions	State and political subdivisions	285,356		—		285,356		—
Mortgage-backed securities	Mortgage-backed securities	5,944		—		5,944		—

Collateralized loan obligations
Collateralized mortgage obligations	Collateralized mortgage obligations	147,193		—		147,193		—
Corporate debt securities	Corporate debt securities	707,709		—		707,709		—
Derivative assets	Derivative assets	23,655		—		23,648		7
Mortgage servicing rights	Mortgage servicing rights	13,421		—		13,421		—

Liabilities:	Liabilities:
Liabilities:
Liabilities:
Derivative liabilities	Derivative liabilities	$	21,087	$	—	$	21,087	$	—
Derivative liabilities
Derivative liabilities

There were no transfers of assets between Level 3 and other levels of the fair value hierarchy during the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 or the year ended December 31, ~~2022.~~2023. Changes in the fair value of available for sale debt securities, including the changes attributable to the hedged risk, are included in other comprehensive income.

The following table presents the valuation technique, significant unobservable inputs, and quantitative information about the unobservable inputs used for fair value measurements of the financial instruments held by the Company and categorized within Level 3 of the fair value hierarchy at the dates indicated:

Fair Value at

(dollars in thousands)

September 30, 2023

December 31, 2022

Valuation Techniques(s)

Unobservable Input

Range of Inputs

Weighted Average

March 31, 2024

December 31, 2023

Valuation Techniques(s)

Unobservable Input

Range of Inputs

Weighted Average

Interest rate lock commitments

Quoted or published market prices of similar instruments, adjusted for factors such as pull-through rate assumptions

Pull-through rate

70%

100%

85%

Interest rate lock commitments

Quoted or published market prices of similar instruments, adjusted for factors such as pull-through rate assumptions

Pull-through rate

71%

100%

86%

Nonrecurring Basis

The following table presents assets measured at fair value on a nonrecurring basis at the dates indicated:

Fair Value Measurement at September 30, 2023 Using

Fair Value Measurement at March 31, 2024 Using

(in thousands)

Total

Level 1

Level 2

Level 3

(in thousands)

Total

Level 1

Level 2

Level 3

Collateral dependent individually analyzed loans

8,479

—

8,479

Foreclosed assets, net


		Fair Value Measurement at December 31, 2022 Using									Fair Value Measurement at December 31, 2023 Using
(in thousands)	(in thousands)	Total		Level 1		Level 2		Level 3		(in thousands)	Total	Level 1	Level 2	Level 3
Collateral dependent individually analyzed loans	Collateral dependent individually analyzed loans	$	3,159	$	—	$	—	$	3,159
Foreclosed assets, net	Foreclosed assets, net	103		—		—		103

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The following table presents the valuation technique(s), unobservable inputs, and quantitative information about the unobservable inputs used for fair value measurements of the financial instruments held by the Company and categorized within Level 3 of the fair value hierarchy at the dates indicated:


		Fair Value at
	Fair Value at
(dollars in thousands)
(dollars in thousands)
(dollars in thousands)	(dollars in thousands)	September 30, 2023		December 31, 2022		Valuation Techniques(s)	Unobservable Input	Range of Inputs			Weighted Average	March 31, 2024				December 31, 2023				Valuation Techniques(s)		Unobservable Input		Range of Inputs				Weighted Average
Collateral dependent individually analyzed loans	Collateral dependent individually analyzed loans	$	8,479	$	3,159	Fair value of collateral	Valuation adjustments	—%	-	55%	12%	Collateral dependent individually analyzed loans	$	4,481	$		$	6,524	Fair value of collateral		Fair value of collateral		Valuation adjustments		—%	-	33%		11%
Foreclosed assets, net	Foreclosed assets, net	$	—	$	103	Fair value of collateral	Valuation adjustments	N/A(1)				Foreclosed assets, net	$	3,897	$		$	3,929	Fair value of collateral		Fair value of collateral		Valuation adjustments		7%	-	11%		11%
												(1) Quantitative disclosures are not provided for foreclosed assets, net because there were no adjustments made to the appraisal values or stated values during the period.

Changes in assumptions or estimation methodologies may have a material effect on these estimated fair values.

Carrying Amount and Estimated Fair Value of Financial Instruments

The carrying amount and estimated fair value of financial instruments at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 were as follows:


		September 30, 2023											March 31, 2024
(in thousands)	(in thousands)	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3		(in thousands)	Carrying Amount	Estimated Fair Value	Level 1	Level 2	Level 3
Financial assets:	Financial assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	74,788	$	74,788	$	74,788	$	—	$	—
Debt securities available for sale	Debt securities available for sale	872,770		872,770		—		872,770		—
Debt securities held to maturity	Debt securities held to maturity	1,085,751		848,363		—		848,363		—
Loans held for sale	Loans held for sale	2,528		2,564		—		2,564		—
Loans held for investment, net	Loans held for investment, net	4,014,369		3,873,341		—		—		3,873,341
Interest receivable	Interest receivable	30,095		30,095		—		30,095		—
FHLB stock	FHLB stock	14,869		14,869		—		14,869		—
Derivative assets	Derivative assets	31,448		31,448		—		31,430		18
Financial liabilities:	Financial liabilities:
Noninterest bearing deposits	Noninterest bearing deposits	924,213		924,213		924,213		—		—
Noninterest bearing deposits
Noninterest bearing deposits
Interest bearing deposits	Interest bearing deposits	4,439,111		4,424,216		3,081,572		1,342,644		—
Short-term borrowings	Short-term borrowings	373,956		373,956		373,956		—		—
Finance leases payable	Finance leases payable	652		652		—		652		—
FHLB borrowings	FHLB borrowings	6,270		6,269		—		6,269		—
Junior subordinated notes issued to capital trusts	Junior subordinated notes issued to capital trusts	42,249		37,900		—		37,900		—
Subordinated debentures	Subordinated debentures	64,105		62,809		—		62,809		—
Other long-term debt	Other long-term debt	11,250		11,250		—		11,250		—
Derivative liabilities	Derivative liabilities	23,488		23,488		—		23,488		—


		December 31, 2022											December 31, 2023
(in thousands)	(in thousands)	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3		(in thousands)	Carrying Amount	Estimated Fair Value	Level 1	Level 2	Level 3
Financial assets:	Financial assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	86,435	$	86,435	$	86,435	$	—	$	—
Debt securities available for sale	Debt securities available for sale	1,153,547		1,153,547		—		1,153,547		—
Debt securities held to maturity	Debt securities held to maturity	1,129,421		924,894		—		924,894		—
Loans held for sale	Loans held for sale	612		622		—		622		—
Loans held for investment, net	Loans held for investment, net	3,791,324		3,702,527		—		—		3,702,527
Interest receivable	Interest receivable	27,090		27,090		—		27,090		—
FHLB stock	FHLB stock	19,248		19,248		—		19,248		—
Derivative assets	Derivative assets	23,655		23,655		—		23,648		7
Financial liabilities:	Financial liabilities:
Noninterest bearing deposits	Noninterest bearing deposits	1,053,450		1,053,450		1,053,450		—		—
Noninterest bearing deposits
Noninterest bearing deposits
Interest bearing deposits	Interest bearing deposits	4,415,492		4,393,315		3,225,787		1,167,528		—
Short-term borrowings	Short-term borrowings	391,873		391,873		391,873		—		—
Finance leases payable	Finance leases payable	787		787		—		787		—
FHLB borrowings	FHLB borrowings	17,301		17,032		—		17,032		—
Junior subordinated notes issued to capital trusts	Junior subordinated notes issued to capital trusts	42,116		39,023		—		39,023		—
Subordinated debentures	Subordinated debentures	64,006		64,004		—		64,004		—
Other long-term debt	Other long-term debt	15,000		15,000		—		15,000		—
Derivative liabilities	Derivative liabilities	21,087		21,087		—		21,087		—

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15. Leases

The Company's lease commitments consist primarily of real estate property for banking offices and office space with terms extending through 2045. Substantially all of our leases are classified as operating leases, with the Company only holding one existing finance lease for a banking office location with a lease term through 2025.


(in thousands)	(in thousands)		Classification	September 30, 2023			December 31, 2022			(in thousands)	Classification		March 31, 2024			December 31, 2023
Operating lease right-of-use assets	Operating lease right-of-use assets		Other assets	$	2,593		$	2,492
Finance lease right-of-use asset	Finance lease right-of-use asset		Premises and equipment, net	279			350
Total right-of-use assets	Total right-of-use assets			$	2,872		$	2,842

Operating lease liability	Operating lease liability		Other liabilities	$	3,365		$	3,359
Operating lease liability
Operating lease liability
Finance lease liability	Finance lease liability		Long-term debt	652			787
Total lease liabilities	Total lease liabilities			$	4,017		$	4,146

Weighted-average remaining lease term:	Weighted-average remaining lease term:		Operating leases	9.78 years			9.23 years
			Finance lease	2.92 years			3.67 years
Weighted-average remaining lease term:

Weighted-average remaining lease term:											Operating leases		10.61 years			10.20 years
		Finance lease										Finance lease			2.42 years			2.67 years
Weighted-average discount rate:	Weighted-average discount rate:		Operating leases	4.33		%	4.23		%	Weighted-average discount rate:	Operating leases		4.54	%		4.43	%
			Finance lease	8.89		%	8.89		%
		Finance lease										Finance lease			8.89	%		8.89	%

The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities.


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		Three Months Ended
		Three Months Ended
		Three Months Ended
		March 31,
		March 31,
		March 31,
(in thousands)
(in thousands)
(in thousands)	(in thousands)	2023		2022		2023		2022
Lease Costs	Lease Costs
Lease Costs
Lease Costs
Operating lease cost
Operating lease cost
Operating lease cost	Operating lease cost	$	297	$	290	$	885	$	874
Variable lease cost	Variable lease cost	4		7		15		49
Variable lease cost
Variable lease cost
Interest on lease liabilities(1)
Interest on lease liabilities(1)
Interest on lease liabilities(1)	Interest on lease liabilities(1)	15		19		47		58
Amortization of right-of-use assets	Amortization of right-of-use assets	24		24		72		72
Amortization of right-of-use assets
Amortization of right-of-use assets
Net lease cost
Net lease cost
Net lease cost	Net lease cost	$	340	$	340	$	1,019	$	1,053

Other Information	Other Information

Other Information

Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	602	$	553	$	1,799	$	1,689
Operating cash flows from operating leases
Operating cash flows from operating leases
Operating cash flows from finance lease	Operating cash flows from finance lease	15		19		47		58
Operating cash flows from finance lease
Operating cash flows from finance lease
Finance cash flows from finance lease
Finance cash flows from finance lease
Finance cash flows from finance lease	Finance cash flows from finance lease	46		41		135		121

Supplemental non-cash information on lease liabilities:	Supplemental non-cash information on lease liabilities:

Supplemental non-cash information on lease liabilities:

Supplemental non-cash information on lease liabilities:
Right-of-use assets obtained in exchange for new operating lease liabilities	Right-of-use assets obtained in exchange for new operating lease liabilities	526		599		857		638
Right-of-use assets obtained in exchange for new operating lease liabilities
Right-of-use assets obtained in exchange for new operating lease liabilities

(1)Included in long-term debt interest expense in the Company’s consolidated statements of income. All other lease costs in this table are included in occupancy expense of premises, net.

Future minimum payments for finance leases and operating leases with initial or remaining terms of one year or more for the remaining ~~three-months~~nine-months ending December 31, ~~2023~~2024 and the succeeding annual periods were as follows:


(in thousands)	(in thousands)	Finance Leases		Operating Leases		(in thousands)	Finance Leases	Operating Leases
December 31, 2023		$	62	$	318
December 31, 2024	December 31, 2024	250		1,047
December 31, 2025	December 31, 2025	254		568
December 31, 2026	December 31, 2026	172		430
December 31, 2027	December 31, 2027	—		302
December 31, 2028
Thereafter	Thereafter	—		1,738
Total undiscounted lease payment	Total undiscounted lease payment	$	738	$	4,403
Amounts representing interest	Amounts representing interest	(86)		(1,038)
Lease liability	Lease liability	$	652	$	3,365

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16. Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of tax:


(in thousands)	Unrealized Gain (Loss) from AFS Debt Securities		Reclassification of AFS Debt Securities to HTM		Unrealized Gain from Cash Flow Hedging Instruments		Total
Balance, December 31, 2022	$	(91,852)	$	2,805	$	—	$	(89,047)
Other comprehensive (loss) income before reclassifications	(213)		434		103		324
Amounts reclassified from AOCI	9,838		—		—		9,838
Net current-period other comprehensive income	9,625		434		103		10,162
Balance, March 31, 2023	$	(82,227)	$	3,239	$	103	$	(78,885)

Balance, December 31, 2023	$	(69,915)	$	4,511	$	505	$	(64,899)
Other comprehensive income before reclassifications	1,607		374		2,071		4,052
Amounts reclassified from AOCI	632		—		(589)		43
Net current-period other comprehensive income	2,239		374		1,482		4,095
Balance, March 31, 2024	$	(67,676)	$	4,885	$	1,987	$	(60,804)

The following table presents reclassifications out of AOCI:


	Three-Months Ended March 31,
(in thousands)	2024		2023
Investment securities (gains) losses, net	$	(36)	$	13,170
Interest income	882		—
Interest expense	(788)		—
Income tax expense	(15)		(3,332)
Net of tax	$	43	$	9,838

17. Subsequent Events

The Company has evaluated events that have occurred subsequent to ~~September 30, 2023~~March 31, 2024 and has concluded there are no other subsequent events that would require recognition in the accompanying consolidated financial statements.

On ~~October 24, 2023,~~April 25, 2024, the board of directors of the Company declared a cash dividend of $0.2425 per share payable on ~~December 15, 2023~~June 17, 2024 to shareholders of record as of the close of business on ~~December 1, 2023.~~June 3, 2024.

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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q contains certain “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995. We and our representatives may, from time to time, make written or oral statements that are “forward-looking” and provide information other than historical information. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These factors include, among other things, the factors listed below. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “should,” “could,” “would,” “plans,” “intend,” “project,” “estimate,” “forecast,” “may” or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, these statements. Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Additionally, we undertake no obligation to update any statement in light of new information or future events, except as required under federal securities law.

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have an impact on our ability to achieve operating results, growth plan goals and future prospects include, but are not limited to, the following:

•the risks of mergers ~~(including with Iowa First Bancshares Corp. and Denver Bankshares, Inc.)~~ or branch sales (including the sale of our Florida branches and the recent acquisition of DNVB), including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions;

•credit quality deterioration, pronounced and sustained reduction in real estate market values, or other uncertainties, including the impact of inflationary pressures on economic conditions and our business, resulting in an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings;

•the effects of ~~recent and potential additional~~significant increases in inflation and interest rates since 2020, including on our net income and the value of our securities portfolio;

•changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing;

•fluctuations in the value of our investment securities;

•governmental monetary and fiscal policies;

•changes in and uncertainty related to benchmark interest rates used to price loans and deposits;

•legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators, including the ~~new~~ 1.0% excise tax on stock buybacks by publicly traded companies and any changes in response to the recent failures of other banks;

•the ability to attract and retain key executives and employees experienced in banking and financial services;

•the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio;

•our ability to adapt successfully to technological changes to compete effectively in the marketplace;

•credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio;

•the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services;

•the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities;

•volatility of rate-sensitive deposits;

•operational risks, including data processing system failures or fraud;

•asset/liability matching risks and liquidity risks;

•the costs, effects and outcomes of existing or future litigation;

•changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business, including the risk of a recession;

•changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the FASB;

•war or terrorist activities, including the ongoing Israeli-Palestinian conflict and the Russian ~~Invasion~~invasion of Ukraine, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets;

•the occurrence of fraudulent activity, breaches, or failures of our or our third-party vendors' information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools;

•the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers;

•~~effects~~potential changes in federal policy and at regulatory agencies as a result of the ~~ongoing COVID-19 pandemic, including its effects on the economic environment, our customers, employees and supply chain;~~upcoming 2024 presidential election;

•the concentration of large deposits from certain clients who have balances above current FDIC insurance limits;

•the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time ~~at other banks~~ that resulted in ~~failure of those institutions;~~recent bank failures; and

•factors and risks described under “Risk Factors” in ~~this~~our Annual Report on Form ~~10-Q~~10-K and in other reports we file with the SEC.

We qualify all of our forward-looking statements by the foregoing cautionary statements. Because of these risks and other uncertainties, our actual future results, performance or achievement, or industry results, may be materially different from the results indicated by these forward-looking statements. In addition, our past results of operations are not necessarily indicative of our future results.

3436

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OVERVIEW

The Company provides financial services to individuals, businesses, governmental units and institutional customers located primarily in the upper Midwest through its bank subsidiary, MidWestOne Bank. The Bank has locations throughout central and eastern Iowa, the Minneapolis/St. Paul metropolitan area, ~~of Minnesota,~~ southwestern Wisconsin, Naples and Fort Myers, Florida, and Denver, Colorado.

On January 31, 2024, the Company completed the acquisition of DNVB, a bank holding company headquartered in Denver, Colorado, and the parent company of BOD. Immediately following completion of the acquisition, BOD was merged with and into the Bank. As consideration for the merger, we paid cash of $32.6 million.

On September 25, 2023, the Company announced the execution of a definitive purchase and assumption agreement for the sale of its Florida operations to DFCU Financial. The transaction is an all cash deal and is expected to close in ~~the second quarter of~~June 2024, subject to ~~customary~~regulatory approvals.

On September 27, 2023, the Company announced the execution of a definitive merger agreement for the acquisition of DNVB, the parent company for the Bank of Denver ("Bank of Denver"). This transaction is an all cash deal and is expected to close in the first quarter of 2024 subject to customary approvals.

On June 9, 2022, the Company completed the acquisition of IOFB, a bank holding company headquartered in Muscatine, Iowa, and the parent company of FNBM and FNBF. Immediately following the completion of the acquisition, FNBM and FNBF were merged with and into the Bank. As consideration for the merger, we paid cash of $46.7 million. The acquisition added to the Company's existing presence in Fairfield, Iowa and expanded the Company's footprint into Muscatine, Iowa.

The Bank is focused on delivering relationship-based business and personal banking products and services. The Bank provides commercial loans, real estate loans, agricultural loans, credit card loans, and consumer loans. The Bank also provides deposit products including demand and interest checking accounts, savings accounts, money market accounts, and time deposits. Complementary to our loan and deposit products, the Bank also provides products and services including treasury management, Zelle, online and mobile banking, credit and debit cards, ATMs, and safe deposit boxes. The Bank also has ~~a trust department~~wealth management services through which it offers ~~services including~~ the administration of estates, ~~personal~~ trusts, and conservatorships, ~~and the management of real property. Finally, the Bank’s investment services department offers~~as well as financial planning, investment advisory, and ~~retail securities~~ brokerage services (the latter of which is provided through an ~~agreement~~arrangement with a third-party registered broker-dealer).

Our results of operations are significantly affected by our net interest income. Results of operations are also affected by noninterest income and expense, credit loss expense and income tax expense. Significant external factors that impact our results of operations include general economic and competitive conditions, as well as changes in market interest rates, government policies, and actions of regulatory authorities.

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes and the statistical information and financial data appearing in this report as well as our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, filed with the SEC on March ~~13, 2023.~~8, 2024. Results of operations for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 are not necessarily indicative of results to be attained for any other period.

FINANCIAL SUMMARY

The Company reported net income for the three months ended ~~September 30, 2023~~March 31, 2024 of ~~$9.1~~$3.3 million, ~~a decrease~~an increase of ~~$9.2~~$1.9 million, compared to ~~$18.3~~$1.4 million of net income for the three months ended ~~September 30, 2022,~~March 31, 2023, with diluted earnings per share of ~~$0.58~~$0.21 and ~~$1.17,~~$0.09, respectively. For the nine months ended September 30, 2023, the Company reported net income of $18.1 million, a decrease of $26.7 million, compared to $44.8 million of net income for the nine months ended September 30, 2022, with diluted earnings per share of $1.15 and $2.86 for the respective annual periods.

The period as of and for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 was also highlighted by the following results:

Balance Sheet:

•Total assets ~~decreased~~increased to ~~$6.47~~$6.75 billion at ~~September 30, 2023~~March 31, 2024 from ~~$6.58~~$6.43 billion at December 31, ~~2022,~~2023, driven primarily ~~as a result~~by the assets acquired from the acquisition of ~~the sale of $231 million in book value of available for sale debt securities in the first quarter of 2023, coupled with a decline in held to maturity debt securities,~~DNVB and ~~partially offset by an increase in loans held for investment, net of unearned income of $225.4 million.~~organic loan growth.

•At ~~September 30, 2023~~March 31, 2024 the total amount of the held to maturity debt securities was ~~$1.09~~$1.06 billion and the total amount of the debt securities available for sale was ~~$872.8~~$797.2 million. There were ~~$1.13~~$1.08 billion of held to maturity debt securities at December 31, ~~2022,~~2023, while the total amount of the debt securities available for sale was ~~$1.15 billion.~~$795.1 million at that date.

•Gross loans held for investment increased ~~$223.3~~$294.9 million, from ~~$3.85~~$4.14 billion at December 31, ~~2022,~~2023, to ~~$4.08~~$4.43 billion at ~~September 30, 2023.~~March 31, 2024. This increase was primarily driven by ~~new~~acquired DNVB loans and organic loan ~~production.~~growth.

•The allowance for credit losses was ~~$51.6~~$55.9 million, or 1.27% of total loans at ~~September 30, 2023,~~March 31, 2024, compared with ~~$49.2~~$51.5 million, or ~~1.28%~~1.25% of total loans, at December 31, ~~2022.~~

~~Table~~2023. The increase in the ACL primarily reflected the $3.1 million of ~~Contents~~day 1 credit loss expense related to acquired DNVB loans, as well as reserve taken to support organic loan growth.

•Nonperforming assets increased ~~$13.1~~$2.9 million, from ~~$15.9~~$30.3 million at December 31, ~~2022,~~2023, to ~~$29.0~~$33.2 million at ~~September 30, 2023, primarily due to the downgrade of a single commercial relationship.~~March 31, 2024.

•Total deposits ~~decreased $105.6~~increased $189.6 million, from ~~$5.47~~$5.40 billion at December 31, ~~2022,~~2023, to ~~$5.36~~$5.59 billion at ~~September 30, 2023.~~March 31, 2024, primarily due to deposits assumed in the DNVB acquisition.

•Short-term borrowings ~~declined~~increased to ~~$374.0~~$423.0 million at ~~September 30, 2023,~~March 31, 2024, from ~~$391.9~~$300.3 million at December 31, ~~2022,~~2023, and long-term debt decreased to ~~$124.5~~$122.1 million at ~~September 30, 2023~~March 31, 2024, from ~~$139.2~~$123.3 million at December 31, ~~2022.~~2023.

•The Company is well-capitalized with a total risk-based capital ratio of ~~12.45%~~11.97% at ~~September 30, 2023.~~March 31, 2024.

Table of Contents

Income Statement:

~~Three Months Ended:~~

•Tax equivalent net interest income (a non-GAAP financial measure - see the "Non-GAAP Presentations" section for a reconciliation to the most comparable GAAP equivalent) was ~~$35.7~~$36.0 million for the ~~third~~first quarter of ~~2023,~~2024, a decrease of ~~$11.3~~$5.3 million, from ~~$47.0~~$41.3 million in the ~~third~~first quarter of ~~2022.~~2023. The decrease in tax equivalent net interest income was due primarily to an increase in interest expense on interest-bearing deposits and borrowed funds of ~~$18.1~~$12.4 million and $3.2 million, respectively, in addition to a decrease of ~~$1.8~~$1.5 million in interest income earned from investment securities. Partially offsetting these identified decreases in tax equivalent net interest income was an increase of ~~$11.5~~$11.7 million in loan interest income.

•Credit loss expense of ~~$1.6~~$4.7 million was recorded during the ~~third~~first quarter of ~~2023,~~2024, compared to ~~$0.6~~$0.9 million credit loss expense recorded in the ~~third~~first quarter of ~~2022.~~2023. Credit loss expense in the current quarter ~~was primarily attributable to individually evaluated loans.~~

•~~Noninterest income decreased $2.7~~reflected $3.2 million ~~from $12.6 million in the third quarter~~ of 2022 to $9.9 million in the third quarter of 2023, primarily due to the decline of $2.9 million in other revenue stemming from a settlement recognized in the third quarter of 2022 that did not recur in the third quarter of 2023.

•Noninterest expense decreased $3.1 million, from $34.6 million in the third quarter of 2022, to $31.5 million in the third quarter of 2023, due primarily a decline of $1.5 million in compensation and employee benefits related to employee benefits, incentive, and commission expenses, coupled with a $0.8 million decrease in merger-related expenses.

~~Nine Months Ended:~~

•Tax equivalent net interest income (a non-GAAP financial measure - see the "Non-GAAP Presentations" section for a reconciliation to the most comparable GAAP equivalent) was $115.2 million for the nine months ended September 30, 2023, a decrease of $11.2 million from the nine months ended September 30, 2022. The decrease was a result of increases in interest expense on interest-bearing deposits and borrowed funds of $47.4 million and $8.0 million, respectively, coupled with a decline in interest income from investment securities of $0.4 million. Partially offsetting these amounts was an increase in loan interest income of $44.0 million, reflecting higher volume and increased yield.

•~~Credit loss expense of $4.1 million was recorded in the first nine months of 2023, as compared to~~day 1 credit loss expense of $3.9 million for the first nine months of 2022. Credit loss expense in the first nine months of 2023 was primarily attributable to loan growth and individually evaluated loans, while credit loss expense in the first nine months of 2022 reflected $3.1 million related to the ~~acquired IOFB non-PCD loans, $0.2 million related to unfunded loan commitments established in the IOFB~~DNVB acquisition ~~as well as a~~and reserve taken to support organic loan growth.

•Noninterest income ~~decreased $22.0~~increased $13.8 million, from ~~$36.6~~a loss of $4.0 million for the first nine months of 2022 to $14.6 million in the first nine months of 2023. The largest driver in the decrease was the $13.2 million investment securities loss related to balance sheet repositioning executed in the first quarter of ~~2023. An additional significant driver was an MSR fair value adjustment~~2023 to income of ~~$17 thousand in the first nine months of 2023, as compared to an adjustment of $5.6~~$9.8 million in the first ~~nine months~~quarter of ~~2022. In addition, the decrease also was~~2024, primarily due to investment securities losses, net, of $13.2 million recorded in the first quarter of 2023 as part of a ~~$4.3 million decline in other revenue,~~balance sheet repositioning, which ~~primarily stemmed from a settlement in 2022 that~~ did not recur ~~and~~in the ~~initial bargain purchase gain~~first quarter of ~~$1.3 million recognized in connection with the IOFB acquisition in 2022.~~2024.

•Noninterest expense increased ~~$1.4~~$2.2 million, from ~~$98.3 million for the first nine months ended September 30, 2022, to $99.8~~$33.3 million in the first ~~nine months~~quarter of ~~2023. The increase~~2023, to $35.6 million in ~~noninterest expense was~~the first quarter of 2024, primarily due to ~~an overall increase~~increases of $1.3 million, $0.4 million, and $0.4 million in all noninterest expense categories except legal and professional, marketing, and communications. The increases were largely due to a full nine months of operations of IOFB, an increase in severance expense of $0.9 million stemming from a voluntary early retirement program, and normal annual salarycompensation and employee ~~benefit increases. Partially offsetting these identified increases was~~benefits, equipment, and foreclosed assets, net, respectively, partially offset by a decline of $0.4 million in ~~merger-related expenses associated with the acquisition of IOFB.~~marketing.

Critical Accounting Estimates

Management has identified the accounting policies related to the ACL, fair value of assets acquired and liabilities assumed in a business combination, and the annual impairment testing of goodwill and other intangible assets to be critical accounting policies. Information about our critical accounting estimates is included under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, filed with the SEC on March ~~13, 2023,~~8, 2024, and there have been no material changes in these critical accounting policies since December 31, ~~2022.~~2023.

~~Table of Contents~~

RESULTS OF OPERATIONS

Comparison of Operating Results for the Three Months Ended ~~September 30,~~March 31, 2024 and March 31, 2023 ~~and September 30, 2022~~

Summary


		As of or for the Three Months Ended September 30,
	As of or for the Three Months Ended March 31,												As of or for the Three Months Ended March 31,
(dollars in thousands, except per share amounts)	(dollars in thousands, except per share amounts)	2023			2022			(dollars in thousands, except per share amounts)	2024		2023
Net Interest Income	Net Interest Income	$	34,575		$	45,733
Noninterest Income	Noninterest Income	9,861			12,588
Total Revenue, Net of Interest Expense	Total Revenue, Net of Interest Expense	44,436			58,321
Credit Loss Expense	Credit Loss Expense	1,551			638
Noninterest Expense	Noninterest Expense	31,544			34,623
Income Before Income Tax Expense	Income Before Income Tax Expense	11,341			23,060
Income Tax Expense	Income Tax Expense	2,203			4,743
Net Income	Net Income	9,138			18,317
Diluted Earnings Per Share	Diluted Earnings Per Share	$	0.58		$	1.17

Return on Average Assets	Return on Average Assets	0.56		%	1.13		%

Return on Average Assets

Return on Average Assets									0.20	%	0.09	%
Return on Average Equity	Return on Average Equity	7.14			14.56
Return on Average Tangible Equity(1)	Return on Average Tangible Equity(1)	9.68			19.32
Efficiency Ratio(1)	Efficiency Ratio(1)	66.06			53.67
Dividend Payout Ratio	Dividend Payout Ratio	41.81			20.30

Common Equity Ratio	Common Equity Ratio	7.81			7.28
Common Equity Ratio
Common Equity Ratio
Tangible Common Equity Ratio(1)	Tangible Common Equity Ratio(1)	6.54			5.90
Book Value per Share	Book Value per Share	$	32.21		$	30.23
Tangible Book Value per Share(1)	Tangible Book Value per Share(1)	26.60			24.17
(1) A non-GAAP financial measure. See "Non-GAAP Financial Measures" for a reconciliation to the most comparable GAAP equivalents.	(1) A non-GAAP financial measure. See "Non-GAAP Financial Measures" for a reconciliation to the most comparable GAAP equivalents.							(1) A non-GAAP financial measure. See "Non-GAAP Financial Measures" for a reconciliation to the most comparable GAAP equivalents.

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Net Interest Income

The following table shows consolidated average balance sheets, detailing the major categories of assets and liabilities, the interest income earned on interest-earning assets, the interest expense paid for interest-bearing liabilities, and the related yields and costs for the periods indicated:


		Three Months Ended September 30,														Three Months Ended March 31,
		2023						2022								2024												2023
		Average Balance		Interest Income/ Expense		Average Yield/ Cost		Average Balance		Interest Income/ Expense		Average Yield/ Cost				Average Balance						Interest Income/ Expense				Average Yield/ Cost					Average Balance									Interest Income/ Expense				Average Yield/ Cost
(dollars in thousands)	(dollars in thousands)													(dollars in thousands)
ASSETS	ASSETS
Loans, including fees (1)(2)(3)
Loans, including fees (1)(2)(3)
Loans, including fees (1)(2)(3)	Loans, including fees (1)(2)(3)	$	4,019,852	$	52,605	5.19	%	$	3,673,379	$	41,124	4.44	%	$	4,298,216			$		$	58,867				5.51	%			$	3,867,110			$					$	47,206			4.95		%
Taxable investment securities	Taxable investment securities	1,637,259		9,526		2.31		1,939,517		10,635		2.18
Tax-exempt investment securities (2)(4)	Tax-exempt investment securities (2)(4)	341,330		2,234		2.60		431,898		2,922		2.68
Total securities held for investment (2)	Total securities held for investment (2)	1,978,589		11,760		2.36		2,371,415		13,557		2.27
Other	Other	34,195		374		4.34		6,070		9		0.59
Total interest earning assets (2)	Total interest earning assets (2)	$	6,032,636	$	64,739	4.26	%	$	6,050,864	$	54,690	3.59	%	Total interest earning assets (2)		$	6,215,160		$			$	70,842			4.58	%				$	6,100,456			$					$	60,543			4.02	%
Other assets	Other assets	420,179						406,783
Total assets	Total assets	$	6,452,815					$	6,457,647
Total assets
Total assets



LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest checking deposits
Interest checking deposits
Interest checking deposits	Interest checking deposits	$	1,354,597	$	2,179	0.64	%	$	1,725,000	$	1,463	0.34	%	$	1,301,470			$		$	2,890			0.89			0.89		%							$	1,515,845			$			$	1,849		0.49	0.49	%
Money market deposits	Money market deposits	1,112,149		7,402		2.64		1,016,005		1,268		0.50
Savings deposits	Savings deposits	603,628		749		0.49		710,836		297		0.17
Time deposits	Time deposits	1,403,504		12,798		3.62		913,307		2,007		0.87
Total interest bearing deposits	Total interest bearing deposits	4,473,878		23,128		2.05		4,365,148		5,035		0.46
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	66,020		85		0.51		144,628		228		0.63

Other short-term borrowings	Other short-term borrowings	277,713		3,634		5.19		83,086		539		2.57
Other short-term borrowings
Other short-term borrowings
Total short-term borrowings	Total short-term borrowings	343,733		3,719		4.29		227,714		767		1.34
Long-term debt	Long-term debt	125,737		2,150		6.78		159,125		1,886		4.70
Total borrowed funds	Total borrowed funds	469,470		5,869		4.96		386,839		2,653		2.72
Total interest bearing liabilities	Total interest bearing liabilities	$	4,943,348	$	28,997	2.33	%	$	4,751,987	$	7,688	0.64	%	Total interest bearing liabilities		$	5,083,258		$			$	34,804			2.75	%				$	4,913,442			$					$	19,229			1.59	%

Noninterest bearing deposits	Noninterest bearing deposits	905,993						1,142,334
Other liabilities	Other liabilities	95,408						64,063
Other liabilities
Other liabilities
Shareholders’ equity
Shareholders’ equity
Shareholders’ equity	Shareholders’ equity	508,066						499,263
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	6,452,815					$	6,457,647
Total liabilities and shareholders’ equity
Total liabilities and shareholders’ equity
Net interest income (2)	Net interest income (2)			$	35,742					$	47,002
Net interest income (2)
Net interest income (2)
Net interest spread(2)
Net interest spread(2)
Net interest spread(2)	Net interest spread(2)					1.93	%					2.95	%																			1.83		%															2.43	%
Net interest margin(2)	Net interest margin(2)					2.35	%					3.08	%	Net interest margin(2)																				2.33		%														2.75	%

Total deposits(5)
Total deposits(5)
Total deposits(5)	Total deposits(5)	$	5,379,871	$	23,128	1.71	%	$	5,507,482	$	5,035	0.36	%	$	5,481,114			$		$	27,726			2.03			2.03		%							$	5,546,694			$			$	15,319		1.12	1.12	%
Cost of funds(6)	Cost of funds(6)					1.97	%					0.52	%	Cost of funds(6)																				2.33		%														1.31	%


(1)			Average balance includes nonaccrual loans.
(2)			Tax ~~equivalent.~~equivalent (a non-GAAP financial measure - see the "Non-GAAP Presentations" section for a reconciliation to the most comparable GAAP equivalent). The federal statutory tax rate utilized was 21%.
(3)			Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were ~~$141~~$237 thousand and ~~$35~~$95 thousand for the three months ended ~~September 30,~~March 31, 2024 and March 31, 2023, ~~and September 30, 2022,~~ respectively. Loan purchase discount accretion was ~~$791 thousand~~$1.2 million and ~~$2.0~~$1.2 million for the three months ended ~~September 30,~~March 31, 2024 and March 31, 2023, ~~and September 30, 2022,~~ respectively. Tax equivalent adjustments were ~~$735~~$920 thousand and ~~$673~~$716 thousand for the three months ended ~~September 30,~~March 31, 2024 and March 31, 2023, ~~and September 30, 2022,~~ respectively. The federal statutory tax rate utilized was 21%.
(4)			Interest income includes tax equivalent adjustments of ~~$432~~$387 thousand and ~~$596~~$522 thousand for the three months ended ~~September 30,~~March 31, 2024 and March 31, 2023, ~~and September 30, 2022,~~ respectively. The federal statutory tax rate utilized was 21%.
(5)			Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6)			Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.

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The following table shows changes to tax equivalent net interest income (a non-GAAP financial measure - see the "Non-GAAP Presentations" section for a reconciliation to the most comparable GAAP equivalent) attributable to (i) changes in volume and (ii) changes in rate. Changes attributable to both rate and volume have been allocated proportionately to the change due to volume and the change due to rate.


		Three Months Ended September 30,								Three Months Ended March 31,
		2023 Compared to 2022								2024 Compared to 2023
		Change due to
	Change due to													Change due to
(in thousands)	(in thousands)	Volume		Yield/Cost		Net			(in thousands)	Volume	Yield/Cost	Net
Increase (decrease) in interest income:	Increase (decrease) in interest income:
Loans, including fees (1)
Loans, including fees (1)
Loans, including fees (1)	Loans, including fees (1)	$	4,113	$	7,368	$	11,481
Taxable investment securities	Taxable investment securities	(1,722)		613		(1,109)
Tax-exempt investment securities (1)	Tax-exempt investment securities (1)	(602)		(86)		(688)
Total securities held for investment (1)	Total securities held for investment (1)	(2,324)		527		(1,797)
Other	Other	155		210		365
Change in interest income (1)	Change in interest income (1)	1,944		8,105		10,049
Increase (decrease) in interest expense:	Increase (decrease) in interest expense:
Interest checking deposits	Interest checking deposits	(370)		1,086		716
Interest checking deposits
Interest checking deposits
Money market deposits	Money market deposits	133		6,001		6,134
Savings deposits	Savings deposits	(52)		504		452
Time deposits	Time deposits	1,566		9,225		10,791
Total interest-bearing deposits	Total interest-bearing deposits	1,277		16,816		18,093
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	(106)		(37)		(143)

Other short-term borrowings
Other short-term borrowings
Other short-term borrowings	Other short-term borrowings	2,156		939		3,095
Total short-term borrowings	Total short-term borrowings	2,050		902		2,952
Long-term debt	Long-term debt	(452)		716		264
Total borrowed funds	Total borrowed funds	1,598		1,618		3,216
Change in interest expense	Change in interest expense	2,875		18,434		21,309
Change in net interest income	Change in net interest income	$	(931)	$	(10,329)	$	(11,260)
Percentage increase in net interest income over prior period	Percentage increase in net interest income over prior period					(24.0)		%	Percentage increase in net interest income over prior period				(12.8)	%
(1) Tax equivalent, using a federal statutory tax rate of 21%.

Our tax equivalent net interest income for the ~~third~~first quarter of ~~2023~~2024 was ~~$35.7~~$36.0 million, a decrease of ~~$11.3~~$5.3 million, or ~~24.0%~~12.8%, as compared to ~~$47.0~~$41.3 million for the ~~third~~first quarter of ~~2022.~~2023. The decrease in tax equivalent net interest income in the ~~third~~first quarter of ~~2023~~2024 as compared to the ~~third~~first quarter of ~~2022~~2023 was due primarily to an increase in interest expense on interest bearing deposits and borrowed funds of ~~$18.1~~$12.4 million and $3.2 million, respectively, due to higher costs and volumes. The decrease in tax equivalent net interest income was also due to a decrease of ~~$1.8~~$1.5 million, or ~~13.3%~~11.7%, in interest income earned from investment securities, which stemmed from lower volumes. Partially offsetting these decreases was an increase of ~~$11.5~~$11.7 million, or ~~27.9%~~24.7%, in loan interest income due to the acquired DNVB loan portfolio, organic loan growth and an increase in loan yield.

The tax equivalent net interest margin for the ~~third~~first quarter of ~~2023~~2024 declined to ~~2.35%~~2.33% from ~~3.08%~~2.75% for the ~~third~~first quarter of ~~2022,~~2023, driven by higher funding costs and volumes, partially offset by higher interest earning asset volumes and yields. The cost of interest bearing liabilities increased ~~169~~116 bps to ~~2.33%~~2.75%, due to interest bearing deposit costs of ~~2.05%~~2.45%, short-term borrowing costs of ~~4.29%~~4.82%, and long-term debt costs of ~~6.78%~~6.86%, which increased ~~159~~107 bps, ~~295~~200 bps and ~~208~~67 bps, respectively from the ~~third~~first quarter of ~~2022.~~2023. Total interest earning assets yield increased 6756 bps from the ~~third~~first quarter of ~~2022,~~2023, primarily as a result of anthe increase in loan ~~and securities yields~~yield of ~~75 bps and 9 bps, respectively.~~56 bps.

Credit Loss Expense

Credit loss expense of ~~$1.6~~$4.7 million was recorded during the ~~third~~first quarter of ~~2023,~~2024, with ~~$0.6~~$0.9 million credit loss expense recorded in the ~~third~~first quarter of ~~2022.~~2023. Credit loss expense in the current quarter ~~was primarily attributable~~reflected $3.2 million of day 1 credit loss expense related to ~~individually evaluated loans.~~the DNVB acquisition, as well as additional reserve taken to support organic loan growth. Net charge-offs were ~~$0.5~~$0.2 million in the ~~third~~first quarter of ~~2023~~2024, as compared to net charge-offs of ~~$0.6~~$0.3 million in the ~~third~~first quarter of ~~2022.~~2023. The estimation model utilized by the Company is sensitive to changes in the following forecast inputs: (1) Midwest unemployment, (2) year-to-year change in national retail sales, (3) year-to-year change in the CRE Index, (4) year-to-year change in U.S. GDP, (5) year-to-year change in the National Home Price Index, and (6) ~~Rental Vacancy.~~rental vacancy. In addition, management utilized qualitative factors to adjust the calculated ACL as appropriate. Qualitative factors are based on management’s judgment of company, market, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions.

3940

Table of Contents

Noninterest Income (Loss)

The following table presents significant components of noninterest income and the related dollar and percentage change from period to period:


		Three Months Ended September 30,									Three Months Ended March 31,
(dollars in thousands)	(dollars in thousands)	2023		2022		$ Change		% Change		(dollars in thousands)	2024		2023			$ Change			% Change
Investment services and trust activities	Investment services and trust activities	$	3,004	$	2,876	$	128	4.5	%	Investment services and trust activities	$	3,503	$	2,933	$	$	570	19.4		19.4	%
Service charges and fees	Service charges and fees	2,146		2,075		71		3.4
Card revenue	Card revenue	1,817		1,898		(81)		(4.3)
Loan revenue	Loan revenue	1,462		1,722		(260)		(15.1)
Bank-owned life insurance	Bank-owned life insurance	626		579		47		8.1

Investment securities gains (losses), net	Investment securities gains (losses), net	79		(163)		242		(148.5)
Investment securities gains (losses), net
Investment securities gains (losses), net											36		(13,170)			13,206			n/m
Other	Other	727		3,601		(2,874)		(79.8)
Total noninterest income		$	9,861	$	12,588	$	(2,727)	(21.7)	%
Total noninterest income (loss)										Total noninterest income (loss)	$	9,750	$	(4,046)		$	13,796		n/m

Results are not meaningful (n/m)
Results are not meaningful (n/m)
Results are not meaningful (n/m)

Total noninterest income for the ~~third~~first quarter of 2024 increased $13.8 million to $9.8 million, compared to a loss of $4.0 million in the first quarter of 2023, ~~decreased $2.7 million, or 21.7%, to $9.9 million from $12.6 million in the third quarter of 2022,~~ primarily due to ~~the decline~~investment securities losses, net, of ~~$2.9~~$13.2 million ~~in other revenue stemming from a settlement recognized~~recorded in the ~~third~~first quarter of ~~2022 that~~2023 as part of a balance sheet repositioning, which did not recur in the ~~third~~first quarter of ~~2023.~~2024. In addition, investment services and trust activities income increased $0.6 million compared to the first quarter of 2023, due to growth in assets under administration. Partially offsetting these identified increases was a decline of $0.6 million in loan revenue, which primarily reflected the unfavorable year-over-year change in the fair value of our mortgage servicing rights, from a positive adjustment of $315 thousand in the first quarter of 2023 to a negative adjustment of $368 thousand in the first quarter of 2024.

Noninterest Expense

The following tables present significant components of noninterest expense and the related dollar and percentage change from period to period:


		Three Months Ended September 30,									Three Months Ended March 31,
(dollars in thousands)	(dollars in thousands)	2023		2022		$ Change		% Change		(dollars in thousands)	2024			2023				$ Change					% Change
Compensation and employee benefits	Compensation and employee benefits	$	18,558	$	20,046	$	(1,488)	(7.4)	%	Compensation and employee benefits	$	20,930	$	$	19,607	$		$	1,323		6.7			6.7		%
Occupancy expense of premises, net	Occupancy expense of premises, net	2,405		2,577		(172)		(6.7)
Equipment	Equipment	2,123		2,358		(235)		(10.0)
Legal and professional	Legal and professional	1,678		2,012		(334)		(16.6)
Data processing	Data processing	1,504		1,731		(227)		(13.1)
Marketing	Marketing	782		1,139		(357)		(31.3)
Amortization of intangibles	Amortization of intangibles	1,460		1,789		(329)		(18.4)
FDIC insurance	FDIC insurance	783		415		368		88.7
Communications	Communications	206		302		(96)		(31.8)
Foreclosed assets, net	Foreclosed assets, net	2		42		(40)		(95.2)		Foreclosed assets, net	358		(28)		(28)		386			386		n/m					n/m
Other	Other	2,043		2,212		(169)		(7.6)

Total noninterest expense	Total noninterest expense	$	31,544	$	34,623	$	(3,079)	(8.9)	%

Total noninterest expense

Total noninterest expense											$	35,565		$	33,319			$	2,246				6.7		%

Results are not meaningful (n/m)
Results are not meaningful (n/m)
Results are not meaningful (n/m)

Table of Contents


		Three Months Ended September 30,
	Three Months Ended March 31,								Three Months Ended March 31,
Merger-related expenses:	Merger-related expenses:	2023		2022		Merger-related expenses:	2024	2023
(dollars in thousands)	(dollars in thousands)
Compensation and employee benefits	Compensation and employee benefits	$	—	$	132

Compensation and employee benefits
Compensation and employee benefits
Occupancy expense of premises, net
Equipment	Equipment	—		14
Legal and professional	Legal and professional	11		193
Data processing	Data processing	—		304
Marketing	Marketing	—		90

Communications
Other	Other	—		30
Total merger-related expenses	Total merger-related expenses	$	11	$	763

Noninterest expense for the ~~third~~first quarter of 2024 increased $2.2 million, or 6.7%, to $35.6 million from $33.3 million for the first quarter of 2023, ~~decreased $3.1~~primarily due to increases of $1.3 million, ~~or 8.9%, to $31.5~~$0.4 million, ~~from $34.6~~and $0.4 million ~~for the third quarter of 2022, with overall decreases in all noninterest expense categories except FDIC insurance. These decreases primarily reflected a $1.5 million decline~~ in compensation and employee benefits, ~~related to~~equipment, and foreclosed assets, net, respectively. The increase in compensation and employee benefits was primarily driven by annual compensation adjustments, increased headcount as a result of the DNVB acquisition, increased incentive and commission ~~expenses, coupled with~~expense, and merger-related expenses. The increase in equipment reflected higher software costs and merger-related expenses. The increase in foreclosed assets, net, was due to a ~~$0.8~~$0.3 million ~~decrease~~write-down of other real estate owned. Partially offsetting these increases was a decline of $0.4 million in ~~merger-related expenses.~~marketing.

~~Table of Contents~~

~~Income Tax~~Credit Loss Expense

~~Our effective income tax rate, or income taxes divided by income before taxes,~~Credit loss expense of $4.7 million was ~~19.4% for~~recorded during the ~~three months ended September 30, 2023,~~first quarter of 2024, with $0.9 million credit loss expense recorded in the first quarter of 2023. Credit loss expense in the current quarter reflected $3.2 million of day 1 credit loss expense related to the DNVB acquisition, as well as additional reserve taken to support organic loan growth. Net charge-offs were $0.2 million in the first quarter of 2024, as compared to ~~an effective tax rate~~net charge-offs of ~~20.6% for the three months ended September 30, 2022. The effective tax rate for the full year 2023 is expected to be~~$0.3 million in the ~~range~~first quarter of ~~18%~~2023. The estimation model utilized by the Company is sensitive to ~~20%.~~

~~Comparison~~changes in the following forecast inputs: (1) Midwest unemployment, (2) year-to-year change in national retail sales, (3) year-to-year change in the CRE Index, (4) year-to-year change in U.S. GDP, (5) year-to-year change in the National Home Price Index, and (6) rental vacancy. In addition, management utilized qualitative factors to adjust the calculated ACL as appropriate. Qualitative factors are based on management’s judgment of ~~Operating Results for the Nine Months Ended September 30, 2023~~company, market, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and ~~September 30, 2022~~

~~Summary~~

As of and for the Nine Months Ended September 30,
(dollars in thousands, except per share amounts) 2023 2022
Net Interest Income $ 111,613 $ 122,794
Noninterest Income 14,561 36,579
     Total Revenue, Net of Interest Expense 126,174 159,373
Credit Loss Expense 4,081 3,920
Noninterest Expense 99,782 98,348
     Income Before Income Tax Expense 22,311 57,105
Income Tax Expense 4,182 12,272
     Net Income 18,129 44,833
Diluted Earnings Per Share $ 1.15 $ 2.86
Return on Average Assets 0.37 % 0.97 %
Return on Average Equity 4.81 11.81
Return on Average Tangible Equity(1)
7.03 15.28
Efficiency Ratio (1)
66.40 56.70
Dividend Payout Ratio 62.72 24.91
Common Equity Ratio 7.81 7.28
Tangible Common Equity Ratio(1)
6.54 5.90
Book Value per Share $ 32.21 $ 30.23
Tangible Book Value per Share(1)
26.60 24.17
(1) A non-GAAP financial measure. See "Non-GAAP Financial Measures" for a reconciliation to the most comparable GAAP equivalents.

adversely rated loans, and reasonable and supportable forecasts of economic conditions.

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Table of Contents

~~Net Interest~~Noninterest Income (Loss)

The following table ~~shows consolidated average balance sheets, detailing the major categories~~presents significant components of ~~assets and liabilities, the interest~~noninterest income ~~earned on interest-earning assets, the interest expense paid for interest-bearing liabilities,~~ and the related ~~yields~~dollar and ~~costs~~percentage change from period to period:


	Three Months Ended March 31,
(dollars in thousands)	2024		2023		$ Change		% Change
Investment services and trust activities	$	3,503	$	2,933	$	570	19.4	%
Service charges and fees	2,144		2,008		136		6.8
Card revenue	1,943		1,748		195		11.2
Loan revenue	856		1,420		(564)		(39.7)
Bank-owned life insurance	660		602		58		9.6

Investment securities gains (losses), net	36		(13,170)		13,206		n/m
Other	608		413		195		47.2
Total noninterest income (loss)	$	9,750	$	(4,046)	$	13,796	n/m

Results are not meaningful (n/m)

Total noninterest income for the ~~periods indicated:~~first quarter of 2024 increased $13.8 million to $9.8 million, compared to a loss of $4.0 million in the first quarter of 2023, primarily due to investment securities losses, net, of $13.2 million recorded in the first quarter of 2023 as part of a balance sheet repositioning, which did not recur in the first quarter of 2024. In addition, investment services and trust activities income increased $0.6 million compared to the first quarter of 2023, due to growth in assets under administration. Partially offsetting these identified increases was a decline of $0.6 million in loan revenue, which primarily reflected the unfavorable year-over-year change in the fair value of our mortgage servicing rights, from a positive adjustment of $315 thousand in the first quarter of 2023 to a negative adjustment of $368 thousand in the first quarter of 2024.

Nine Months Ended September 30,
2023 2022
(dollars in thousands) Average
Balance Interest
Income/
Expense Average
Yield/
Cost Average
Balance Interest
Income/
Expense Average
Yield/
Cost
ASSETS
Loans, including fees (1)(2)(3)
$ 3,964,119 $ 150,250 5.07 % $ 3,416,600 $ 106,297 4.16 %
Taxable investment securities 1,714,912 29,704 2.32 1,899,907 28,334 1.99
Tax-exempt investment securities (2)(4)
361,254 7,136 2.64 440,542 8,895 2.70
Total securities held for investment (2)
2,076,166 36,840 2.37 2,340,449 37,229 2.13
Other 22,741 686 4.03 25,972 77 0.40
Total interest-earning assets (2)
$ 6,063,026 $ 187,776 4.14 % $ 5,783,021 $ 143,603 3.32 %
Other assets 417,610 369,369
Total assets $ 6,480,636 $ 6,152,390

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest checking deposits $ 1,429,804 $ 5,999 0.56 % $ 1,642,849 $ 3,713 0.30 %
Money market deposits 1,014,708 15,970 2.10 991,338 2,338 0.32
Savings deposits 620,011 1,309 0.28 671,917 863 0.17
Time deposits 1,437,122 35,286 3.28 877,923 4,204 0.64
Total interest-bearing deposits 4,501,645 58,564 1.74 4,184,027 11,118 0.36
Securities sold under agreements to repurchase 123,512 958 1.04 152,663 435 0.38
Other short-term borrowings 174,448 6,665 5.11 42,952 680 2.12
Total short-term borrowings 297,960 7,623 3.42 195,615 1,115 0.76
Long-term debt 133,375 6,427 6.44 148,053 4,975 4.49
Total borrowed funds 431,335 14,050 4.36 343,668 6,090 2.37
Total interest-bearing liabilities $ 4,932,980 $ 72,614 1.97 % $ 4,527,695 $ 17,208 0.51 %
Noninterest bearing deposits 958,104 1,062,156
Other liabilities 85,650 54,775
Shareholders' equity 503,902 507,764
Total liabilities and shareholders' equity $ 6,480,636 $ 6,152,390
Net interest income (2)
$ 115,162 $ 126,395
Net interest spread(2)
2.17 % 2.81 %
Net interest margin (2)
2.54 % 2.92 %
Total deposits(5)
$ 5,459,749 $ 58,564 1.43 % $ 5,246,183 $ 11,118 0.28 %
Cost of funds(6)
1.65 % 0.41 %


~~(1)~~			~~Average balance includes nonaccrual loans.~~
~~(2)~~			~~Tax equivalent. The federal statutory tax rate utilized was 21%.~~
~~(3)~~			Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $315 million and $678 thousand for the nine months ended September 30, 2023 and September 30, 2022, respectively. Loan purchase discount accretion was $3.0 million and $3.3 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. Tax equivalent adjustments were $2.2 million and $1.8 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
~~(4)~~			Interest income includes tax equivalent adjustments of $1.4 million and $1.8 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
~~(5)~~			Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
~~(6)~~			~~Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.~~

Noninterest Expense

The following tables present significant components of noninterest expense and the related dollar and percentage change from period to period:


	Three Months Ended March 31,
(dollars in thousands)	2024		2023		$ Change		% Change
Compensation and employee benefits	$	20,930	$	19,607	$	1,323	6.7	%
Occupancy expense of premises, net	2,813		2,746		67		2.4
Equipment	2,600		2,171		429		19.8
Legal and professional	2,059		1,736		323		18.6
Data processing	1,360		1,363		(3)		(0.2)
Marketing	598		986		(388)		(39.4)
Amortization of intangibles	1,637		1,752		(115)		(6.6)
FDIC insurance	942		749		193		25.8
Communications	196		261		(65)		(24.9)
Foreclosed assets, net	358		(28)		386		n/m
Other	2,072		1,976		96		4.9


Total noninterest expense	$	35,565	$	33,319	$	2,246	6.7	%

Results are not meaningful (n/m)

4241

Table of Contents

The following table ~~shows changes to tax equivalent net interest~~summarizes the DNVB acquisition-related expenses incurred during the three months ended March 31, 2024 and IOFB acquisition-related expenses incurred during the three months ended March 31, 2023, which are included in the respective income ~~attributable to (i) changes in volume and (ii) changes in rate. Changes attributable to both rate and volume have been allocated proportionately to the change due to volume and the change due to rate.~~

Nine Months Ended September 30,
2023 Compared to 2022
Change due to
(in thousands) Volume Yield/Cost Net
Increase (decrease) in interest income:
Loans, including fees (1)
$ 18,585 $ 25,368 $ 43,953
Taxable investment securities (2,962) 4,332 1,370
Tax-exempt investment securities(1)
(1,565) (194) (1,759)
Total securities held for investment(1)
(4,527) 4,138 (389)
Other (11) 620 609
Change in interest income (1)
14,047 30,126 44,173
Increase (decrease) in interest expense:
Interest checking deposits (534) 2,820 2,286
Money market deposits 58 13,574 13,632
Savings deposits (70) 516 446
Time deposits 4,158 26,924 31,082
Total interest-bearing deposits 3,612 43,834 47,446
    Securities sold under agreements to repurchase (98) 621 523
    Other short-term borrowings 4,097 1,888 5,985
       Total short-term borrowings 3,999 2,509 6,508
Long-term debt (533) 1,985 1,452
Total borrowed funds 3,466 4,494 7,960
Change in interest expense 7,078 48,328 55,406
Change in net interest income $ 6,969 $ (18,202) $ (11,233)
Percentage (decrease) increase in net interest income over prior period (8.9) %
(1) Tax equivalent, using a federal statutory tax rate of 21%.

~~Our tax equivalent net interest income~~statement line items, for the ~~nine months ended September 30, 2023 was $115.2 million, a decrease~~periods indicated:


	Three Months Ended March 31,
Merger-related expenses:	2024		2023
(dollars in thousands)
Compensation and employee benefits	$	241	$	70
Occupancy expense of premises, net	152		—
Equipment	149		—
Legal and professional	573		—
Data processing	61		65
Marketing	32		—
Communications	1		—
Other	105		1
Total merger-related expenses	$	1,314	$	136

Noninterest expense for the first quarter of ~~$11.2~~2024 increased $2.2 million, or ~~8.9%~~6.7%, ~~as compared~~ to ~~$126.4~~$35.6 million from $33.3 million for the ~~nine months ended September 30, 2022. This decrease~~first quarter of 2023, primarily due to increases of $1.3 million, $0.4 million, and $0.4 million in compensation and employee benefits, equipment, and foreclosed assets, net, ~~interest income was due primarily to an~~respectively. The increase in ~~interest~~compensation and employee benefits was primarily driven by annual compensation adjustments, increased headcount as a result of the DNVB acquisition, increased incentive and commission expense, ~~on interest bearing deposits~~ and ~~borrowed funds of $47.4 million and $8.0 million, respectively, due to~~merger-related expenses. The increase in equipment reflected higher software costs and ~~volumes.~~merger-related expenses. The ~~decrease~~increase in ~~tax equivalent~~foreclosed assets, net, ~~interest income~~ was ~~also~~ due to a ~~decrease~~$0.3 million write-down of other real estate owned. Partially offsetting these increases was a decline of $0.4 million ~~or 1.0%,~~ in interest income earned from investment securities, which stemmed from lower volumes. Partially offsetting these decreases was an increase of $44.0 million, or 41.3%, in loan interest income due to organic loan growth and an increase in loan yield.marketing.

The tax equivalent net interest margin for the nine months ended September 30, 2023 was 2.54%, or 38 basis points lower than the tax equivalent net interest margin of 2.92% for the nine months ended September 30, 2022. The cost of interest-bearing deposits increased 138 basis points for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, while the cost of borrowed funds increased 199 basis points for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022. The increase in the cost of interest-bearing liabilities was a result of higher market interest rates, which reflect increases in the target federal funds rate. Partially offsetting these identified decreases to tax equivalent net interest margin were increases in the tax equivalent yield on loans and the tax equivalent yield on investment securities of 91 basis points and 24 basis points, respectively. Combined, the resulting yield on interest-earning assets for the nine months ended September 30, 2023 was 82 basis points higher than the nine months ended September 30, 2022, which primarily reflected new loan production originated at higher yields and the shift in earning asset mix to a greater proportion of loans, which generally have higher yields than investment securities.

Credit Loss Expense

Credit loss expense of ~~$4.1~~$4.7 million was recorded induring the first ~~nine months~~quarter of ~~2023, as compared to credit loss expense of $3.9~~2024, with $0.9 million for the first nine months of 2022, an increase of $0.2 million, or 4.1%. Credit loss expense in the first nine months of 2023 was primarily attributable to loan growth and individually evaluated loans. The credit loss expense recorded in the first ~~nine months~~quarter of ~~2022 primarily~~2023. Credit loss expense in the current quarter reflected ~~$3.1~~$3.2 million of day 1 credit loss expense related to the ~~acquired IOFB non-PCD loans, $0.2 million related to unfunded loan commitments established in the IOFB~~DNVB acquisition, as well as aadditional reserve taken to support organic loan growth. Net charge-offs were $0.2 million in the first ~~nine months~~quarter of ~~2023 were $1.7 million,~~2024, as compared to net charge-offs of ~~$3.1~~$0.3 million in the first ~~nine months~~quarter of ~~2022.~~2023. The estimation model utilized by the Company is sensitive to changes in the following forecast inputs: (1) Midwest

~~Table of Contents~~

unemployment, (2) year-to-year change in national retail sales, (3) year-to-year change in the CRE Index, (4) year-to-year change in U.S. GDP, (5) year-to-year change in the National Home Price Index, and (6) ~~Rental Vacancy.~~rental vacancy. In addition, management utilized qualitative factors to adjust the calculated ACL as appropriate. Qualitative factors are based on management’s judgment of company, market, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions.

Table of Contents

Noninterest Income (Loss)

The following table presents ~~the~~ significant components of noninterest income and the related dollar and percentage change from period to period:

Nine Months Ended September 30,
(dollars in thousands) 2023 2022 $ Change % Change
Investment services and trust activities $ 9,056 $ 8,557 $ 499 5.8 %
Service charges and fees 6,201 5,449 752 13.8
Card revenue 5,412 5,426 (14) (0.3)
Loan revenue 3,791 9,538 (5,747) (60.3)
Bank-owned life insurance 1,844 1,668 176 10.6
Investment securities gains (losses), net (13,093) 272 (13,365) n/m
Other 1,350 5,669 (4,319) (76.2)
Total noninterest income $ 14,561 $ 36,579 $ (22,018) (60.2) %
NM - Percentage change not considered meaningful.


	Three Months Ended March 31,
(dollars in thousands)	2024		2023		$ Change		% Change
Investment services and trust activities	$	3,503	$	2,933	$	570	19.4	%
Service charges and fees	2,144		2,008		136		6.8
Card revenue	1,943		1,748		195		11.2
Loan revenue	856		1,420		(564)		(39.7)
Bank-owned life insurance	660		602		58		9.6

Investment securities gains (losses), net	36		(13,170)		13,206		n/m
Other	608		413		195		47.2
Total noninterest income (loss)	$	9,750	$	(4,046)	$	13,796	n/m

Results are not meaningful (n/m)

Total noninterest income for the first ~~nine months~~quarter of ~~2023 decreased $22.0~~2024 increased $13.8 million ~~or 60.2%,~~ to ~~$14.6~~$9.8 million, ~~from $36.6~~compared to a loss of $4.0 million ~~during the same period of 2022. The largest driver in the decrease was the $13.2 million investment securities loss related to balance sheet repositioning executed~~ in the first quarter of ~~2023. Also contributing~~2023, primarily due to investment securities losses, net, of $13.2 million recorded in the first quarter of 2023 as part of a balance sheet repositioning, which did not recur in the first quarter of 2024. In addition, investment services and trust activities income increased $0.6 million compared to the ~~decline~~first quarter of 2023, due to growth in ~~noninterest income~~assets under administration. Partially offsetting these identified increases was a ~~decrease~~decline of ~~$5.7~~$0.6 million in loan revenue, which primarily ~~driven by~~reflected the ~~MSR~~unfavorable year-over-year change in the fair value of our mortgage servicing rights, from a positive adjustment of ~~$17~~$315 thousand in the first ~~nine months~~quarter of 2023 ~~as compared~~ to ana negative adjustment of ~~$5.6 million~~$368 thousand in the first ~~nine months~~quarter of 2022. In addition, the decrease was driven by the $4.3 million decline in other revenue, which stemmed from a settlement in 2022 that did not recur and the initial bargain purchase gain of $1.3 million recognized in connection with the IOFB acquisition in 2022.2024.

Noninterest Expense

The following tables present ~~the~~ significant components of noninterest expense and the related dollar and percentage change from period to period:


		Nine Months Ended September 30,									Three Months Ended March 31,
(dollars in thousands)	(dollars in thousands)	2023		2022		$ Change		% Change		(dollars in thousands)	2024			2023				$ Change					% Change
Compensation and employee benefits	Compensation and employee benefits	$	58,551	$	57,665	$	886	1.5	%	Compensation and employee benefits	$	20,930	$	$	19,607	$		$	1,323		6.7			6.7		%
Occupancy expense of premises, net	Occupancy expense of premises, net	7,725		7,609		116		1.5
Equipment	Equipment	6,729		6,366		363		5.7
Legal and professional	Legal and professional	5,096		6,800		(1,704)		(25.1)
Data processing	Data processing	4,388		4,199		189		4.5
Marketing	Marketing	2,910		3,325		(415)		(12.5)
Amortization of intangibles	Amortization of intangibles	4,806		4,299		507		11.8
FDIC insurance	FDIC insurance	2,394		1,255		1,139		90.8
Communications	Communications	727		840		(113)		(13.5)
Foreclosed assets, net	Foreclosed assets, net	(32)		(66)		34		(51.5)		Foreclosed assets, net	358		(28)		(28)		386			386		n/m					n/m
Other	Other	6,488		6,056		432		7.1

Total noninterest expense	Total noninterest expense	$	99,782	$	98,348	$	1,434	1.5	%

Total noninterest expense

Total noninterest expense											$	35,565		$	33,319			$	2,246				6.7		%

Results are not meaningful (n/m)
Results are not meaningful (n/m)
Results are not meaningful (n/m)

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	Three Months Ended March 31,								Three Months Ended March 31,
Merger-related expenses:	Merger-related expenses:	Nine Months Ended September 30,				Merger-related expenses:	2024	2023
(dollars in thousands)	(dollars in thousands)	2023		2022
Compensation and employee benefits
Compensation and employee benefits
Compensation and employee benefits	Compensation and employee benefits	$	70	$	282
Occupancy expense of premises, net	Occupancy expense of premises, net	—		1
Equipment	Equipment	—		25
Legal and professional	Legal and professional	11		894
Data processing	Data processing	65		380
Marketing	Marketing	—		162
Communications	Communications	—		3
Other	Other	1		45
Total impact of merger-related expenses to noninterest expense		$	147	$	1,792
Total merger-related expenses

Noninterest expense for the ~~nine months ended September 30, 2023 was $99.8 million, an increase~~first quarter of ~~$1.4~~2024 increased $2.2 million, or ~~1.5%~~6.7%, to $35.6 million from ~~$98.3~~$33.3 million for the ~~nine months ended September 30, 2022. The increase in noninterest expense was~~first quarter of 2023, primarily due to ~~an overall increase~~increases of $1.3 million, $0.4 million, and $0.4 million in ~~all noninterest expense categories except legal~~compensation and ~~professional, marketing,~~employee benefits, equipment, and ~~communications.~~foreclosed assets, net, respectively. The ~~increases were largely due to a full nine months of operations of IOFB. Also contributing to the increase in noninterest expense was an~~ increase in compensation and employee benefits was primarily driven by annual compensation adjustments, increased headcount as a result of the DNVB acquisition, increased incentive and commission expense, and merger-related expenses. The increase in equipment reflected higher software costs and merger-related expenses. The increase in foreclosed assets, net, was due to a ~~voluntary early retirement program, which was the primary driver~~$0.3 million write-down of ~~the $0.9 million increase in severance expense, coupled with normal annual salary and employee benefit increases.~~other real estate owned. Partially offsetting these ~~identified~~ increases was a decline of $0.4 million in ~~merger-related expenses associated with the acquisition of IOFB.~~marketing.

Income Tax Expense

Our effective income tax rate, or income taxes divided by income before taxes, was ~~18.7%~~22.7% for the ~~first nine~~three months ~~of 2023,~~ended March 31, 2024, as compared to an effective tax rate of ~~21.5%~~21.4% for the ~~first nine~~three months ~~of 2022.~~ended March 31, 2023. The effective tax rate for the full year ~~2023~~2024 is expected to be in the range of ~~18-20%~~21 to 23%.

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FINANCIAL CONDITION

The table below presents the major categories of the Company's balance sheet as of the dates indicated:


(dollars in thousands)	(dollars in thousands)	September 30, 2023		December 31, 2022		$ Change		% Change
(dollars in thousands)
(dollars in thousands)
ASSETS
ASSETS
ASSETS	ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	74,788	$	86,435	$	(11,647)	(13.5)	%
Cash and cash equivalents
Cash and cash equivalents
Loans held for sale
Loans held for sale
Loans held for sale	Loans held for sale	2,528		612		1,916		313.1
Debt securities available for sale at fair value	Debt securities available for sale at fair value	872,770		1,153,547		(280,777)		(24.3)
Debt securities available for sale at fair value
Debt securities available for sale at fair value
Held to maturity securities at amortized cost
Held to maturity securities at amortized cost
Held to maturity securities at amortized cost	Held to maturity securities at amortized cost	1,085,751		1,129,421		(43,670)		(3.9)
Loans held for investment, net of unearned income	Loans held for investment, net of unearned income	4,065,969		3,840,524		225,445		5.9
Loans held for investment, net of unearned income
Loans held for investment, net of unearned income
Allowance for credit losses
Allowance for credit losses
Allowance for credit losses	Allowance for credit losses	(51,600)		(49,200)		(2,400)		4.9
Total loans held for investment, net	Total loans held for investment, net	4,014,369		3,791,324		223,045		5.9
Total loans held for investment, net
Total loans held for investment, net
Other assets
Other assets
Other assets	Other assets	417,612		416,537		1,075		0.3
Total assets	Total assets	$	6,467,818	$	6,577,876	$	(110,058)	(1.7)	%
Total assets
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY
Total deposits	Total deposits	$	5,363,324	$	5,468,942	$	(105,618)	(1.9)	%
Total deposits
Total deposits
Total borrowings
Total borrowings
Total borrowings	Total borrowings	498,482		531,083		(32,601)		(6.1)
Other liabilities	Other liabilities	100,601		85,058		15,543		18.3
Other liabilities
Other liabilities
Total shareholders' equity	Total shareholders' equity	505,411		492,793		12,618		2.6
Total shareholders' equity
Total shareholders' equity
Total liabilities and shareholders' equity
Total liabilities and shareholders' equity
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	6,467,818	$	6,577,876	$	(110,058)	(1.7)	%

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Debt Securities

The composition of debt securities available for sale and held to maturity as of the dates indicated was as follows:


		September 30, 2023				December 31, 2022						March 31, 2024								December 31, 2023
(dollars in thousands)	(dollars in thousands)	Balance		% of Total		Balance		% of Total		(dollars in thousands)		Balance					% of Total					Balance							% of Total
Available for Sale	Available for Sale
U.S. Government agencies and corporations		$	—	—	%	$	7,345	0.6	%
U.S. Treasuries
U.S. Treasuries
U.S. Treasuries												$	247				—		%						$	—					—		%

States and political subdivisions
States and political subdivisions
States and political subdivisions	States and political subdivisions	162,468		18.6		285,356		24.7
Mortgage-backed securities	Mortgage-backed securities	5,327		0.6		5,944		0.5
Collateralized loan obligations	Collateralized loan obligations	52,453		6.0		—		—
Collateralized mortgage obligations	Collateralized mortgage obligations	131,923		15.1		147,193		12.8
Corporate debt securities	Corporate debt securities	520,599		59.7		707,709		61.4
Fair value of debt securities available for sale	Fair value of debt securities available for sale	$	872,770	100.0	%	$	1,153,547	100.0	%	Fair value of debt securities available for sale		$	797,230		100.0			100.0		%			$	795,134			100.0			100.0		%

Held to Maturity	Held to Maturity
Held to Maturity
Held to Maturity

States and political subdivisions

States and political subdivisions

States and political subdivisions	States and political subdivisions	$	532,885	49.1		$	538,746	47.7	%	$	531,961			50.0		50.0				$				$	532,422			49.5			49.5		%
Mortgage-backed securities	Mortgage-backed securities	76,310		7.0		81,032		7.2	%	Mortgage-backed securities		73,668			6.9			6.9			74,904						74,904		7.0					7.0	%
Collateralized mortgage obligations	Collateralized mortgage obligations	476,556		43.9		509,643		45.1	%	Collateralized mortgage obligations		459,310			43.1			43.1			467,864						467,864		43.5					43.5	%

Amortized cost of debt securities held to maturity	Amortized cost of debt securities held to maturity	$	1,085,751	100.0	%	$	1,129,421	100.0	%
Amortized cost of debt securities held to maturity
Amortized cost of debt securities held to maturity												$	1,064,939				100.0		%						$	1,075,190					100.0		%

As of ~~September 30, 2023,~~March 31, 2024, there was ~~$67~~$314 thousand of gross unrealized gains and ~~$108.8~~$76.2 million of gross unrealized losses in our debt securities available for sale portfolio for a net unrealized loss of ~~$108.8~~$75.9 million. As of ~~September 30, 2023~~March 31, 2024 there were no gross unrealized gains and ~~$237.4~~$189.3 million of gross unrealized losses in our held to maturity debt ~~securities.~~

During the first quarter of 2023, the Company undertook balance sheet repositioning related to its debt securities portfolio. Specifically, the Company executed the sale of $231 million in book value of its AFS debt securities, with a pre-tax loss of $13.2 million and $220 million of proceeds that were used to pay off short-term borrowings and reinvest in higher yielding, floating rate securities.

See Note 3. Debt Securities to our consolidated financial statements for additional information related to debt securities.

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Loans

The composition of our loan portfolio by type of loan was as ~~follows:~~follows, as of the dates indicated:


		September 30, 2023				December 31, 2022					March 31, 2024					December 31, 2023
(dollars in thousands)	(dollars in thousands)	Balance		% of Total		Balance		% of Total		(dollars in thousands)	Balance			% of Total			Balance				% of Total
Agricultural	Agricultural	$	111,950	2.8	%	$	115,320	3.0	%	Agricultural	$	113,029	2.6		2.6	%		$	118,414	2.9		2.9	%
Commercial and industrial	Commercial and industrial	1,078,773		26.5		1,055,162		27.5

Commercial real estate	Commercial real estate	2,176,017		53.5		1,980,018		51.6

Commercial real estate

Commercial real estate

Residential real estate

Residential real estate

Residential real estate	Residential real estate	630,046		15.5		614,428		15.9
Consumer	Consumer	69,183		1.7		75,596		2.0
Loans held for investment, net of unearned income	Loans held for investment, net of unearned income	$	4,065,969	100.0	%	$	3,840,524	100.0	%	Loans held for investment, net of unearned income	$	4,414,646	100.0		100.0	%		$	4,126,947	100.0		100.0	%
Loans held for sale	Loans held for sale	$	2,528			$	612

Loans held for investment, net of unearned income, at ~~September 30, 2023,~~March 31, 2024, increased ~~$225.4~~$287.7 million, or ~~5.9%~~7.0%, from December 31, ~~2022~~2023 to ~~$4.07~~$4.41 billion, driven primarily by ~~new~~loans acquired in the DNVB acquisition, organic loan ~~production, draws on construction loans,~~growth, and higher line of credit ~~usage during 2023.~~usage. See Note 4. Loans Receivable and the Allowance for Credit Losses to our consolidated financial statements for additional information related to our loan portfolio. Our loan to deposit ratio increased to ~~75.81%~~79.04% as of ~~September 30, 2023~~March 31, 2024 as compared to ~~70.22%~~76.49% as of December 31, ~~2022.~~2023.

Commitments under standby letters of credit, unused lines of credit and other conditionally approved credit lines totaled approximately ~~$1.25~~$1.24 billion and $1.21 billion as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

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The composition of our commercial real estate loan portfolio as of March 31, 2024 was as follows:



(dollars in thousands)	Amount		% of Total Loans
Construction & Development	$	403,571	9.1	%
Farmland	184,109		4.2
Multifamily	409,504		9.3
CRE Other:
NOO CRE Office	166,115		3.8
OO CRE Office	91,259		2.1
Industrial and Warehouse	429,080		9.7
Retail	285,020		6.5
Hotel	126,229		2.9
Other	342,942		7.8
Total CRE	$	2,437,829	55.2	%

Nonperforming Assets

The following table sets forth information concerning nonperforming loans by class of receivable and our nonperforming assets at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:


(in thousands)	(in thousands)	September 30, 2023			December 31, 2022			(in thousands)	March 31, 2024		December 31, 2023

Nonaccrual loans held for investment
Nonaccrual loans held for investment
Nonaccrual loans held for investment	Nonaccrual loans held for investment	$	28,887		$	15,256
Accruing loans contractually past due 90 days or more	Accruing loans contractually past due 90 days or more	100			565
Total nonperforming loans	Total nonperforming loans	28,987			15,821
Foreclosed assets, net	Foreclosed assets, net	—			103
Total nonperforming assets	Total nonperforming assets	28,987			15,924

Nonaccrual loans ratio (1)	Nonaccrual loans ratio (1)	0.71		%	0.40		%
Nonaccrual loans ratio (1)
Nonaccrual loans ratio (1)									0.64	%	0.63	%
Nonperforming loans ratio (2)	Nonperforming loans ratio (2)	0.71		%	0.41		%	Nonperforming loans ratio (2)	0.66	%	0.64	%
Nonperforming assets ratio (3)	Nonperforming assets ratio (3)	0.45		%	0.24		%	Nonperforming assets ratio (3)	0.49	%	0.47	%
								(1) Nonaccrual loans ratio is calculated as nonaccrual loans divided by loans held for investment, net of unearned income, at the end of the period.
(1) Nonaccrual loans ratio is calculated as nonaccrual loans divided by loans held for investment, net of unearned income, at the end of the period.
(1) Nonaccrual loans ratio is calculated as nonaccrual loans divided by loans held for investment, net of unearned income, at the end of the period.
(2) Nonperforming loans ratio is calculated as total nonperforming loans divided by loans held for investment, net of unearned income, at the end of the period.	(2) Nonperforming loans ratio is calculated as total nonperforming loans divided by loans held for investment, net of unearned income, at the end of the period.							(2) Nonperforming loans ratio is calculated as total nonperforming loans divided by loans held for investment, net of unearned income, at the end of the period.
(3) Nonperforming assets ratio is calculated as total nonperforming assets divided by total assets at the end of the period.	(3) Nonperforming assets ratio is calculated as total nonperforming assets divided by total assets at the end of the period.							(3) Nonperforming assets ratio is calculated as total nonperforming assets divided by total assets at the end of the period.

Compared to December 31, ~~2022,~~2023, nonperforming loans and asset ratios ~~increased 30~~remained stable, with slight increases in both ratios of 2 basis ~~points and 21 basis points, respectively, primarily due to the downgrade of a single commercial relationship.~~points.

Loan Review and Classification Process for Agricultural, Commercial and Industrial, and Commercial Real Estate Loans:

The Bank maintains a loan review and classification process which involves multiple officers of the Bank and is designed to assess the general quality of credit underwriting and to promote early identification of potential problem loans. All commercial and agricultural loan officers are charged with the responsibility of risk rating all loans in their portfolios and updating the ratings, positively or negatively, on an ongoing basis as conditions warrant. Risk ratings are selected from an 8-point scale with ratings as follows: ratings 1- 4 Satisfactory (pass), rating 5 Special Mention/Watch (potential weakness), rating 6 Substandard (well-defined weakness), rating 7 Doubtful, and rating 8 Loss.

When a loan officer originates a new loan, based upon proper loan authorization, they document the credit file with an offering sheet summary, supplemental underwriting analysis, relevant financial information and collateral evaluations. This information is used in the determination of the initial loan risk rating. Segregation of owner-occupied and non-owner occupied residential real estate loans is made at the time of origination. ~~This information is used in the determination of the initial loan risk rating.~~ The Bank’s loan review department undertakes independent credit reviews of relationships based on either criteria established by loan policy, risk-focused sampling, or random sampling. Credit relationships with larger exposure may pose incrementally higher risks. As a result, the Bank's loan review department is required to review all credit relationships with total exposure of ~~$5.0~~$7.5 million or more at least annually. In addition, the individual loan reviews consider such items as: loan type; nature, type and estimated value of collateral; borrower and/or

~~Table of Contents~~

guarantor estimated financial strength; most recently available financial information; related loans and total borrower exposure; and current and anticipated performance of the loan. The results of such reviews are presented to both executive management and the audit committee of the Company's board of directors.

Through the review of delinquency reports, updated financial statements or other relevant information, the lending officer and/or loan review personnel may determine that a loan relationship has weakened to the point that a Special Mention/Watch (risk

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rating 5) or Classified (risk ratings 6 through 8) status is warranted. At least quarterly, the loan strategy committee will meet to discuss loan relationships with total exposure of $1.0 million or above that are Special Mention/Watch rated credits, loan relationships with total exposure of $500 thousand and above that are Substandard or worse rated credits, as well as loan relationships with total exposure of $250 thousand and above that are on non-accrual. Loan relationships outside these designated thresholds are reviewed upon request. The lending officer is charged with preparing a loan strategy summary worksheet that outlines the background of the credit problem, current repayment status of the loans, current collateral evaluation and a workout plan of action. This plan may include goals to improve the credit rating, assist the borrower in moving the loans to another institution and/or collateral liquidation. All such reports are presented to the loan strategy committee. The minutes of the loan strategy committee meetings are provided to the board of directors of the Bank.

Depending upon the individual facts and circumstances and the result of the classified/watch review process, loan officers and/or loan review personnel may categorize a loan relationship as requiring an individual analysis. Once that determination has occurred, the credit analyst will complete an individually analyzed worksheet that contains an evaluation of the collateral (for collateral-dependent loans) based upon the estimated collateral value, adjusting for current market conditions and other local factors that may affect collateral value. Loan review personnel may also complete an independent individual analysis when deemed necessary. These judgmental evaluations may produce an initial specific allowance for recognition in the Company’s allowance for credit losses calculation. An analysis for the underlying collateral value of each individually analyzed loan relationship is completed in the last month of the quarter. The individually analyzed worksheets are reviewed by the Credit Administration department prior to quarter-end. The board of directors of the Bank on a quarterly basis reviews the classified/watch reports including changes in credit grades of 5 or higher as well as all individually analyzed loans, the related allowances and foreclosed assets, net.

The review process also provides for the upgrade of loans that show improvement since the last review. All requests for an upgrade of a credit are approved by the proper authority based upon the aggregate credit exposure before the rating can be changed.

Loan Modifications for Borrowers Experiencing Financial Difficulty

Infrequently, the Company makes modification to certain loans in order to alleviate temporary difficulties in the borrower's financial condition and/or constraints on the borrower's ability to repay a loan, and to minimize potential losses to the Company. GAAP requires that certain types of modifications be reported, including:

•Principal forgiveness.

•Interest rate reduction.

•An other than-insignificant payment delay.

•Term extension.

During the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, the amortized cost of the loans that were modified to borrowers in financial distress was ~~$3.4~~$0.9 million, ~~and $7.1 million, respectively,~~ which represented ~~0.09% and 0.18%~~0.02% of total loans held for investment, net of unearned ~~income for each respective period.~~income.

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Allowance for Credit Losses

The following table sets forth the allowance for credit losses by loan portfolio segments compared to the percentage of loans to total loans by loan portfolio segment for the periods indicated:


		September 30, 2023					December 31, 2022
		March 31, 2024
		March 31, 2024
		March 31, 2024
(dollars in thousands)
(dollars in thousands)
(dollars in thousands)	(dollars in thousands)	Allowance for Credit Losses			% of Loans in Each Segment to Total Loans		Allowance for Credit Losses			% of Loans in Each Segment to Total Loans
Agricultural	Agricultural	$	537		2.8	%	$	923		3.0	%
Agricultural
Agricultural
Commercial and industrial
Commercial and industrial
Commercial and industrial	Commercial and industrial	22,063			26.5	%	22,855			27.5	%
Commercial real estate	Commercial real estate	23,787			53.5	%	20,123			51.6	%
Commercial real estate
Commercial real estate
Residential real estate
Residential real estate
Residential real estate	Residential real estate	4,643			15.5	%	4,678			15.9	%
Consumer	Consumer	570			1.7	%	621			2.0	%
Consumer
Consumer
Total	Total	$	51,600		100.0	%	$	49,200		100.0	%
Total
Total

Allowance for credit losses ratio(1)

Allowance for credit losses ratio(1)

Allowance for credit losses ratio(1)	Allowance for credit losses ratio(1)	1.27		%			1.28		%

Allowance for credit losses to nonaccrual loans ratio(2)	Allowance for credit losses to nonaccrual loans ratio(2)	178.63		%			322.50		%

Allowance for credit losses to nonaccrual loans ratio(2)

Allowance for credit losses to nonaccrual loans ratio(2)

(1) Allowance for credit losses ratio is calculated as allowance for credit losses divided by loans held for investment, net of unearned income at the end of the period.

(1) Allowance for credit losses ratio is calculated as allowance for credit losses divided by loans held for investment, net of unearned income at the end of the period.

(1) Allowance for credit losses ratio is calculated as allowance for credit losses divided by loans held for investment, net of unearned income at the end of the period.	(1) Allowance for credit losses ratio is calculated as allowance for credit losses divided by loans held for investment, net of unearned income at the end of the period.

(2) Allowance for credit losses to nonaccrual loans ratio is calculated as allowance for credit losses divided by nonaccrual loans at the end of the period.	(2) Allowance for credit losses to nonaccrual loans ratio is calculated as allowance for credit losses divided by nonaccrual loans at the end of the period.

(2) Allowance for credit losses to nonaccrual loans ratio is calculated as allowance for credit losses divided by nonaccrual loans at the end of the period.

(2) Allowance for credit losses to nonaccrual loans ratio is calculated as allowance for credit losses divided by nonaccrual loans at the end of the period.

The following ~~tables set~~table sets forth the net (charge-offs) recoveries by loan portfolio segments for the periods indicated:

For the Three Months Ended September 30, 2023 and 2022
(in thousands) Agricultural Commercial and Industrial Commercial Real Estate Residential Real Estate Consumer Total
For the Three Months Ended September 30, 2023
Charge-offs $ (25) $ (511) $ — $ (21) $ (178) $ (735)
Recoveries 126 79 4 3 72 284
Net (charge-offs) recoveries $ 101 $ (432) $ 4 $ (18) $ (106) $ (451)
Net (charge-off) recovery ratio(1)
0.01 % (0.04) % — % — % (0.01) % (0.04) %
For the Three Months Ended September 30, 2022
Charge-offs $ (248) $ (280) $ (135) $ (52) $ (255) $ (970)
Recoveries 1 295 6 48 32 382
Net (charge-offs) recoveries $ (247) $ 15 $ (129) $ (4) $ (223) $ (588)
Net (charge-off) recovery ratio(1)
(0.03) % — % (0.01) % — % (0.02) % (0.06) %
For the Nine Months Ended September 30, 2023 and 2022
(in thousands) Agricultural Commercial and Industrial Commercial Real Estate Residential Real Estate Consumer Total
For the Nine Months Ended September 30, 2023
Charge-offs $ (26) $ (1,020) $ (830) $ (54) $ (451) $ (2,381)
Recoveries 153 349 15 23 160 700
Net (charge-offs) recoveries $ 127 $ (671) $ (815) $ (31) $ (291) $ (1,681)
Net (charge-off) recovery ratio(1)
— % (0.02) % (0.03) % — % (0.01) % (0.06) %
For the Nine Months Ended September 30, 2022
Charge-offs $ (249) $ (843) $ (2,319) $ (90) $ (540) $ (4,041)
Recoveries 9 613 154 68 106 950
Net (charge-offs) recoveries $ (240) $ (230) $ (2,165) $ (22) $ (434) $ (3,091)
Net (charge-off) recovery ratio(1)
(0.01) % (0.01) % (0.08) % — % (0.02) % (0.12) %
(1) Net (charge-off) recovery ratio is calculated as the annualized net (charge-offs) recoveries divided by average loans held for investment, net of unearned income and average loans held for sale, during the period.

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	For the Three Months Ended March 31, 2024 and 2023
(in thousands)	Agricultural			Commercial and Industrial			Commercial Real Estate			Residential Real Estate			Consumer			Total
For the Three Months Ended March 31, 2024
Charge-offs	$	(4)		$	(299)		$	(35)		$	(19)		$	(290)		$	(647)
Recoveries	355			46			8			9			40			458
Net (charge-offs) recoveries	$	351		$	(253)		$	(27)		$	(10)		$	(250)		$	(189)

Net (charge-off) recovery ratio(1)	0.03		%	(0.02)		%	—		%	—		%	(0.02)		%	(0.02)		%

For the Three Months Ended March 31, 2023
Charge-offs	$	(1)		$	(320)		$	(18)		$	—		$	(148)		$	(487)
Recoveries	26			75			5			4			44			154
Net (charge-offs) recoveries	$	25		$	(245)		$	(13)		$	4		$	(104)		$	(333)

Net (charge-off) recovery ratio(1)	—		%	(0.03)		%	—		%	—		%	(0.01)		%	(0.03)		%

















(1) Net (charge-off) recovery ratio is calculated as the annualized net (charge-offs) recoveries divided by average loans held for investment, net of unearned income and average loans held for sale, during the period.

Actual Results: Our ACL as of ~~September 30, 2023~~March 31, 2024 was ~~$51.6~~$55.9 million, which was 1.27% of loans held for investment, net of unearned income as of that date. This compares with an ACL of ~~$49.2~~$51.5 million as of December 31, ~~2022,~~2023, which was ~~1.28%~~1.25% of loans held for investment, net of unearned income. The increase in the ACL primarily reflected the $3.1 million of day 1 credit loss expense related to the acquired DNVB loans, as well as an additional reserve taken to support organic loan ~~growth and related to individually evaluated loans.~~growth. The liability for off-balance sheet credit exposures totaled ~~$4.8~~$4.7 million as of ~~September 30, 2023~~March 31, 2024 and $4.6 million as of December 31, ~~2022,~~2023, and is included in 'Other liabilities' on the balance sheet.

The Company recorded a credit loss expense related to loans of ~~$4.1~~$4.6 million for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024, as compared to credit loss expense related to loans of ~~$3.1~~$0.9 million for the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. Gross charge-offs for the first ~~nine~~three months of ~~2023~~2024 totaled ~~$2.4~~$0.6 million, while there were ~~$0.7~~$0.5 million in gross recoveries of previously charged-off loans. The ratio of annualized net charge-offs to average loans for the first ~~nine~~three months of ~~2023~~2024 was ~~0.06%~~0.02% compared to ~~0.12%~~0.03% for the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

Economic Forecast: At ~~September 30, 2023,~~March 31, 2024, the economic forecast used by the Company showed the following: (1) Midwest unemployment – increases over the next four forecasted quarters; (2) ~~Year-to-year~~year-to-year change in national retail sales - increases over the next four forecasted quarters; (3) ~~Year-to-year~~year-to-year change in CRE Index - decreases inover the next four forecasted quarters; (4) ~~Year-to-year~~year-to-year change in U.S. GDP - increases over the next four forecasted quarters; (5) ~~Year-to-year~~year-to-year change in National Home Price Index – increases over the next ~~two forecasted quarters, with declines in the third and fourth~~four forecasted quarters; and (6) ~~Rental Vacancy~~rental vacancy - increases over the next four forecasted quarters. In addition, management utilized qualitative factors to adjust the calculated ACL as appropriate. Qualitative factors are

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based on management’s judgment of company, market, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions.

Loan Policy: We review all nonaccrual ~~loans~~relationships greater than ~~$250,000~~$250 thousand individually on a quarterly basis to measure any amount to be recognized in the Company's allowance for credit losses by analyzing the borrower's ability to repay amounts owed, collateral deficiencies, and other relevant factors. In addition, PCD loans greater than $250,000 are evaluated individually to determine the required ACL. Loans modified to borrowers experiencing financial difficulty performing in accordance with their modified contractual terms for a reasonable period of time may be included in the Company’s existing pools based on the underlying risk characteristics of the loan to measure the ACL. Upon the Company's determination that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. We review loans 90 days or more past due that are still accruing interest no less than quarterly to determine if the asset is both well secured and in the process of collection. If not, such loans are placed on non-accrual status. Upon the Company's determination that a loan balance has been deemed uncollectible, the uncollectible balance is charged-off.

Based on the inherent risk in the loan portfolio, management believed that as of ~~September 30, 2023,~~March 31, 2024, the ACL was adequate; however, there is no assurance losses will not exceed the ACL. In addition, growth in the loan portfolio or general economic deterioration may require the recognition of additional credit loss expense in future periods. See Note 4. Loans Receivable and the Allowance for Credit Losses to our unaudited consolidated financial statements for additional information related to the allowance for credit losses.

Deposits

The composition of deposits was as follows:


		As of September 30, 2023				As of December 31, 2022
	As of March 31, 2024															As of March 31, 2024						As of December 31, 2023
(in thousands)	(in thousands)	Balance		% of Total		Balance		% of Total		(in thousands)	Balance			% of Total				Balance					% of Total
Noninterest bearing deposits	Noninterest bearing deposits	$	924,213	17.2	%	$	1,053,450	19.3	%	Noninterest bearing deposits	$	920,764	16.5		16.5		%		$	897,053	16.6			16.6	%
Interest checking deposits	Interest checking deposits	1,334,481		24.9		1,624,278		29.8
Money market deposits	Money market deposits	1,127,287		21.0		937,340		17.1
Savings deposits	Savings deposits	619,805		11.6		664,169		12.1
Total non-maturity deposits
Time deposits of $250 and under	Time deposits of $250 and under	703,646		13.1		559,466		10.2
Total core deposits		4,709,432		87.8		4,838,703		88.5
Brokered deposits		220,063		4.1		126,767		2.4
Time deposits over $250	Time deposits over $250	433,829		8.1		503,472		9.1
Total non-core deposits		653,892		12.2		630,239		11.5
Total time deposits										Total time deposits	$	1,463,656		26.2		%		$	1,422,037				26.3	%
Total deposits	Total deposits	$	5,363,324	100.0	%	$	5,468,942	100.0	%	Total deposits	$	5,585,236	100.0		100.0		%		$	5,395,673	100.0			100.0	%

Deposits ~~decreased $105.6~~increased $189.6 million from December 31, ~~2022,~~2023, or ~~1.9%. Brokered~~3.5%, primarily due to the $224.2 million of deposits asassumed in the DNVB acquisition. Included within time deposits of ~~September 30, 2023 totaled $220.1~~“$250 thousand and under” is $205.0 million of brokered deposits at March 31, 2024, compared with ~~$126.8~~$221.0 million as of December 31, ~~2022.~~2023. Approximately ~~87.8%~~87.9% of our total deposits were considered “core” deposits as of ~~September 30, 2023,~~March 31, 2024, compared to ~~88.5%~~87.6% at December 31, ~~2022.~~2023. We consider core deposits to be the total of all deposits other than time deposits greater than ~~$250k~~$250 thousand and non-reciprocal brokered deposits. ~~Deposit inflows and outflows are influenced by prevailing market interest rates, competition, local and national economic conditions, and~~

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~~fluctuations in our business customers own liquidity needs and may also be influenced by recent developments in the financial services industry.~~ See Note 8. Deposits to our consolidated financial statements for additional information related to our deposits.

Short-Term Borrowings and Long-Term Debt

The following table sets forth the composition of short-term borrowings and long-term debt as of the dates presented:


(dollars in thousands)	(dollars in thousands)	September 30, 2023		December 31, 2022		(dollars in thousands)	March 31, 2024	December 31, 2023
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	$	9,256	$	156,373
Federal Home Loan Bank advances	Federal Home Loan Bank advances	139,700		235,500

Federal Reserve Bank borrowings	Federal Reserve Bank borrowings	225,000		—

Federal Reserve Bank borrowings
Federal Reserve Bank borrowings
Line of credit
Total short-term borrowings	Total short-term borrowings	$	373,956	$	391,873

Junior subordinated notes issued to capital trusts
Junior subordinated notes issued to capital trusts
Junior subordinated notes issued to capital trusts	Junior subordinated notes issued to capital trusts	42,249		42,116
Subordinated debentures	Subordinated debentures	64,105		64,006
Finance lease payable	Finance lease payable	652		787
Federal Home Loan Bank borrowings	Federal Home Loan Bank borrowings	6,270		17,301
Other long-term debt	Other long-term debt	11,250		15,000
Total long-term debt	Total long-term debt	$	124,526	$	139,210

See Note 9. Short-Term Borrowings and Note 10. Long-Term Debt to our unaudited consolidated financial statements for additional information related to short-term borrowings and long-term debt.

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Capital Resources

Shareholders' Equity and Capital Adequacy

The following table summarizes certain equity capital ratios and book value per share amounts of the Company at the dates presented:


			September 30, 2023			December 31, 2022
		March 31, 2024										March 31, 2024			December 31, 2023
Common equity ratio	Common equity ratio		7.81		%	7.49		%	Common equity ratio	7.83	%		8.16	%
Tangible common equity ratio(1)	Tangible common equity ratio(1)		6.54		%	6.17		%	Tangible common equity ratio(1)	6.43	%		6.90	%
Total risk-based capital ratio	Total risk-based capital ratio		12.45		%	12.07		%	Total risk-based capital ratio	11.97	%		12.53	%
Tier 1 risk-based capital ratio	Tier 1 risk-based capital ratio		10.31		%	10.05		%	Tier 1 risk-based capital ratio	9.75	%		10.38	%
Common equity tier 1 risk-based capital ratio	Common equity tier 1 risk-based capital ratio		9.52		%	9.28		%	Common equity tier 1 risk-based capital ratio	8.98	%		9.59	%
Tier 1 leverage ratio	Tier 1 leverage ratio		8.58		%	8.35		%	Tier 1 leverage ratio	8.16	%		8.58	%
Book value per share	Book value per share		$	32.21		$	31.54
Tangible book value per share(1)	Tangible book value per share(1)		$	26.60		$	25.60
(1)A non-GAAP financial measure - see the “Non-GAAP Presentations” section for a reconciliation to the most comparable GAAP equivalent.	(1)A non-GAAP financial measure - see the “Non-GAAP Presentations” section for a reconciliation to the most comparable GAAP equivalent.								(1)A non-GAAP financial measure - see the “Non-GAAP Presentations” section for a reconciliation to the most comparable GAAP equivalent.

Shareholders' Equity: Total shareholders’ equity was ~~$505.4~~$528.0 million as of ~~September 30, 2023,~~March 31, 2024, compared to ~~$492.8~~$524.4 million as of December 31, ~~2022,~~2023, an increase of ~~$12.6~~$3.7 million, or ~~2.6%~~0.7%, ~~primarily due to net income and~~driven by a decrease in the unrealized loss on available for sale debt securities, which decreased the negative balance included in ~~AOCI.~~AOCI, coupled with decrease in treasury stock, partially offset by a decline in additional paid-in capital and retained earnings.

Capital Adequacy: Risk-based capital guidelines require the classification of assets and some off-balance-sheet items in terms of credit-risk exposure and the measuring of capital as a percentage of the risk-adjusted asset totals. Management believed that, as of ~~September 30, 2023,~~March 31, 2024, the Company and the Bank met all capital adequacy requirements to which we were subject. As of that date, the Bank was “well capitalized” under regulatory prompt corrective action provisions. See Note 12. Regulatory Capital Requirements and Restrictions on Subsidiary Cash to our unaudited consolidated financial statements for additional information related to our capital.

Stock Compensation

Restricted stock units were granted to certain officers of the Company on February 15, ~~2023,~~2024, in the aggregate amount of 80,745. In the second quarter, restricted stock units were granted to directors of the Company and Bank on May 15, 2023, in the aggregate amount of 20,148, while during the third quarter, restricted stock units were granted to certain officers of the Company and the Bank on August 15, 2023, in the aggregate amount of 894.104,326. Additionally, during the first ~~nine~~three months of ~~2023, 88,039~~2024, 77,443 shares of common stock were issued in connection with the vesting of previously awarded grants of restricted stock

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units, of which ~~20,278~~21,278 shares were surrendered by grantees to satisfy tax requirements, and ~~881~~582 unvested restricted stock units were forfeited.

Liquidity

Liquidity management involves meeting the cash flow requirements of depositors and borrowers. We conduct liquidity management on both a daily and long-term basis, and adjust our investments in liquid assets based on expected loan demand, projected loan maturities and payments, expected deposit flows, yields available on interest-bearing deposits, and the objectives of our asset/liability management program. Excess liquidity is invested generally in short-term U.S. government and agency securities, short- and medium-term state and political subdivision securities, and other investment securities. Our most liquid assets are cash and due from banks, interest-bearing bank deposits, and federal funds sold. The balances of these assets are dependent on our operating, investing, and financing activities during any given period.

Cash and cash equivalents are summarized in the table below.


(dollars in thousands)	(dollars in thousands)	As of September 30, 2023		As of December 31, 2022		(dollars in thousands)	As of March 31, 2024	As of December 31, 2023
Cash and due from banks	Cash and due from banks	$	71,015	$	83,990
Interest-bearing deposits	Interest-bearing deposits	3,773		2,445

Federal funds sold
Total	Total	$	74,788	$	86,435

Generally, our principal sources of funds are deposits, advances from the FHLB, principal repayments on loans, proceeds from the sale of loans, proceeds from the maturity and sale of investment securities, our federal funds lines, and funds provided by operations. While scheduled loan amortization and maturing interest-bearing deposits are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by economic conditions, the general level of interest rates,

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and competition. We utilized particular sources of funds based on comparative costs and availability. The Bank maintains unsecured lines of credit with several correspondent banks and secured lines with the Federal Reserve Bank of Chicago and the FHLB that would allow us to borrow funds on a short-term basis, if necessary. We also hold debt securities classified as available for sale that could be sold to meet liquidity needs if necessary.

Net cash provided by operations was another major source of liquidity. The net cash provided by operating activities was ~~$55.8~~$9.6 million for the ~~nine months~~three-months ended ~~September 30, 2023~~March 31, 2024 and ~~$72.3~~$17.6 million for the ~~nine months~~three-months ended ~~September 30, 2022.~~March 31, 2023.

Inflation

The effects of price changes and inflation can vary substantially for most financial institutions. While management believes that inflation affects the growth of total assets, it is difficult to assess its overall impact on the Company. The price of one or more of the components of the Consumer Price Index may fluctuate considerably and thereby influence the overall Consumer Price Index without having a corresponding effect on interest rates or upon the cost of those goods and services normally purchased by us. Inflation and related increases in market rates by the Federal Reserve generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings and shareholders' equity. Ongoing higher inflation levels and higher interest rates could have a negative impact on both our consumer and commercial borrowers. We anticipate our noninterest income may be adversely affected in future periods as a result of increasing interest rates and inflationary pressure, which has begun to and will continue to adversely affect mortgage originations and mortgage banking revenue. Additionally, the economic impact of the recent rise in inflation and rising interest rates could place increased demand on our liquidity if we experience significant credit deterioration and as we meet borrowers' needs. There is also a risk that interest rate increases to fight inflation could lead to a recession.

Off-Balance-Sheet Arrangements

During the normal course of business, we are a party to financial instruments with off-balance-sheet risk in order to meet the financing needs of our customers. These financial instruments include commitments to extend credit, commitments to sell loans, and standby letters of credit. We follow the same credit policy (including requiring collateral, if deemed appropriate) to make such commitments as is followed for those loans that are recorded in our financial statements.

Our exposure to credit losses in the event of nonperformance is represented by the contractual amount of the commitments. Management does not expect any significant losses as a result of these commitments, and also expects to have sufficient liquidity available to cover these off-balance-sheet instruments. Off-balance-sheet transactions are more fully discussed in Note 13. Commitments and Contingencies to our unaudited consolidated financial statements.

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Contractual Obligations

There have been no material changes to the Company's contractual obligations existing at December 31, ~~2022,~~2023, as disclosed in the Annual Report on Form 10-K, filed with the SEC on March ~~13, 2023.~~8, 2024.

Non-GAAP Financial Measures

Certain ratios and amounts not in conformity with GAAP are provided to evaluate and measure the Company’s operating performance and financial condition, including return on average tangible equity, tangible common equity, tangible book value per share, tangible common equity ratio, efficiency ratio, net interest margin (tax equivalent), and core net interest margin. Management believes these ratios and amounts provide investors with useful information regarding the Company’s profitability, financial condition and capital adequacy, consistent with how management evaluates the Company’s financial performance.

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The following tables provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent:
Three Months Ended Nine Months Ended
Return on Average Tangible Equity September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
(Dollars in thousands)
Net income $ 9,138 $ 18,317 $ 18,129 $ 44,833
Intangible amortization, net of tax (1)
1,095 1,342 3,605 3,224
Tangible net income $ 10,233 $ 19,659 $ 21,734 $ 48,057

Average shareholders' equity $ 508,066 $ 499,263 $ 503,902 $ 507,764
Average intangible assets, net (88,699) (95,499) (90,308) (87,318)
Average tangible equity $ 419,367 $ 403,764 $ 413,594 $ 420,446
Return on average equity 7.14 % 14.56 % 4.81 % 11.81 %
Return on average tangible equity (2)
9.68 % 19.32 % 7.03 % 15.28 %
(1) Computed assuming a combined marginal income tax rate of 25%.
(2) Annualized tangible net income divided by average tangible equity.


	Three Months Ended
Return on Average Tangible Equity	March 31, 2024			March 31, 2023
(Dollars in thousands)
Net income	$	3,269		$	1,397
Intangible amortization, net of tax (1)	1,228			1,314

Tangible net income	$	4,497		$	2,711

Average shareholders' equity	$	527,533		$	498,547
Average intangible assets, net	(95,296)			(92,002)
Average tangible equity	$	432,237		$	406,545

Return on average equity	2.49		%	1.14		%
Return on average tangible equity (2)	4.18		%	2.70		%

(1) Computed assuming a combined marginal income tax rate of 25%.
(2) Annualized tangible net income divided by average tangible equity.


Tangible Common Equity/Tangible Book Value per Share / Tangible Common Equity Ratio	March 31, 2024			December 31, 2023
(Dollars in thousands, except per share data)
Total shareholders’ equity	$	528,040		$	524,378
Intangible assets, net	(100,649)			(86,546)
Tangible common equity	$	427,391		$	437,832

Total assets	$	6,748,015		$	6,427,540
Intangible assets, net	(100,649)			(86,546)
Tangible assets	$	6,647,366		$	6,340,994

Book value per share	$	33.53		$	33.41
Tangible book value per share (1)	$	27.14		$	27.90
Shares outstanding	15,750,471			15,694,306

Equity to assets ratio	7.83		%	8.16		%
Tangible common equity ratio (2)	6.43		%	6.90		%

(1) Tangible common equity divided by shares outstanding.
(2) Tangible common equity divided by tangible assets.


	Three Months Ended
Efficiency Ratio	March 31, 2024			March 31, 2023
(dollars in thousands)
Total noninterest expense	$	35,565		$	33,319
Amortization of intangibles	(1,637)			(1,752)
Merger-related expenses	(1,314)			(136)

Noninterest expense used for efficiency ratio	$	32,614		$	31,431

Net interest income, tax equivalent(1)	$	36,038		$	41,314
Noninterest income (loss)	9,750			(4,046)
Investment security (gains) losses, net	(36)			13,170
Net revenues used for efficiency ratio	$	45,752		$	50,438

Efficiency ratio(2)	71.28		%	62.32		%
(1) The federal statutory tax rate utilized was 21%.
(2) Noninterest expense adjusted for amortization of intangibles and merger-related expenses divided by the sum of tax equivalent net interest income, noninterest income and net investment securities gains.

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Tangible Common Equity/Tangible Book Value per Share /
Tangible Common Equity Ratio September 30, 2023 December 31, 2022
(Dollars in thousands, except per share data)
Total shareholders’ equity $ 505,411 $ 492,793
Intangible assets, net (87,987) (92,792)
Tangible common equity $ 417,424 $ 400,001
Total assets $ 6,467,818 $ 6,577,876
Intangible assets, net (87,987) (92,792)
Tangible assets $ 6,379,831 $ 6,485,084
Book value per share $ 32.21 $ 31.54
Tangible book value per share (1)
$ 26.60 $ 25.60
Shares outstanding 15,691,738 15,623,977
Equity to assets ratio 7.81 % 7.49 %
Tangible common equity ratio (2)
6.54 % 6.17 %
(1) Tangible common equity divided by shares outstanding.
(2) Tangible common equity divided by tangible assets.
Three Months Ended Nine Months Ended
Efficiency Ratio September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
(dollars in thousands)
Total noninterest expense $ 31,544 $ 34,623 $ 99,782 $ 98,348
Amortization of intangibles (1,460) (1,789) (4,806) (4,299)
Merger-related expenses (11) (763) (147) (1,792)
Noninterest expense used for efficiency ratio $ 30,073 $ 32,071 $ 94,829 $ 92,257
Net interest income, tax equivalent(1)
$ 35,742 $ 47,002 $ 115,162 $ 126,395
Noninterest income 9,861 12,588 14,561 36,579
Investment security losses (gains), net (79) 163 13,093 (272)
Net revenues used for efficiency ratio $ 45,524 $ 59,753 $ 142,816 $ 162,702
Efficiency ratio(2)
66.06 % 53.67 % 66.40 % 56.70 %
(1) The federal statutory tax rate utilized was 21%.
(2) Noninterest expense adjusted for amortization of intangibles and merger-related expenses divided by the sum of tax equivalent net interest income, noninterest income and net investment securities gains.


		Three Months Ended						Nine Months Ended
		Three Months Ended
		Three Months Ended
		Three Months Ended
Net Interest Margin, Tax Equivalent/Core Net Interest Margin
Net Interest Margin, Tax Equivalent/Core Net Interest Margin
Net Interest Margin, Tax Equivalent/Core Net Interest Margin	Net Interest Margin, Tax Equivalent/Core Net Interest Margin	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
(dollars in thousands)	(dollars in thousands)
(dollars in thousands)
(dollars in thousands)
Net interest income
Net interest income
Net interest income	Net interest income	$	34,575		$	45,733		$	111,613		$	122,794
Tax equivalent adjustments:	Tax equivalent adjustments:
Tax equivalent adjustments:
Tax equivalent adjustments:
Loans (1)
Loans (1)
Loans (1)	Loans (1)	735			673			2,164			1,782
Securities (1)	Securities (1)	432			596			1,385			1,819
Securities (1)
Securities (1)
Net interest income, tax equivalent
Net interest income, tax equivalent
Net interest income, tax equivalent	Net interest income, tax equivalent	$	35,742		$	47,002		$	115,162		$	126,395
Loan purchase discount accretion	Loan purchase discount accretion	(791)			(2,015)			(2,964)			(3,275)
Loan purchase discount accretion
Loan purchase discount accretion
Core net interest income
Core net interest income
Core net interest income	Core net interest income	$	34,951		$	44,987		$	112,198		$	123,120

Net interest margin	Net interest margin	2.27		%	3.00		%	2.46		%	2.84		%

Net interest margin

Net interest margin
Net interest margin, tax equivalent (2)
Net interest margin, tax equivalent (2)
Net interest margin, tax equivalent (2)	Net interest margin, tax equivalent (2)	2.35		%	3.08		%	2.54		%	2.92		%
Core net interest margin (3)	Core net interest margin (3)	2.30		%	2.95		%	2.47		%	2.85		%
Core net interest margin (3)
Core net interest margin (3)
Average interest earning assets	Average interest earning assets	$	6,032,636		$	6,050,864		$	6,063,026		$	5,783,021
Average interest earning assets
Average interest earning assets

(1) The federal statutory tax rate utilized was 21%.

(1) The federal statutory tax rate utilized was 21%.
														(1) The federal statutory tax rate utilized was 21%.
(2) Annualized tax equivalent net interest income divided by average interest earning assets.	(2) Annualized tax equivalent net interest income divided by average interest earning assets.													(2) Annualized tax equivalent net interest income divided by average interest earning assets.
(3) Annualized core net interest income divided by average interest earning assets.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

In general, market risk is the risk of change in asset values due to movements in underlying market rates and prices. Interest rate risk is the risk to earnings and capital arising from movements in interest rates. Interest rate risk is the most significant market risk affecting us as other types of market risk, such as foreign currency exchange rate risk and commodity price risk, do not arise in the normal course of our business activities.

In addition to interest rate risk, economic conditions in recent years have made liquidity risk (namely, funding liquidity risk) a more prevalent concern among financial institutions. In general, liquidity risk is the risk of being unable to fund an entity’s obligations to creditors (including, in the case of banks, obligations to depositors) as such obligations become due and/or fund its acquisition of assets.

Liquidity Risk

Liquidity refers to our ability to fund operations, to meet depositor withdrawals, to provide for our customers’ credit needs, and to meet maturing obligations and existing commitments. Our liquidity principally depends on cash flows from operating activities, investment in and maturity of assets, changes in balances of deposits and borrowings, and our ability to borrow funds.

Net cash inflows from operating activities were ~~$55.8~~$9.6 million in the first ~~nine~~three months of ~~2023,~~2024, compared with ~~$72.3~~$17.6 million in the first ~~nine~~three months of ~~2022.~~2023. Net cash ~~inflows~~outflows from investing activities were ~~$83.1~~$38.3 million in the first ~~nine~~three months of ~~2023,~~2024, compared to net cash ~~outflows~~inflows of ~~$202.5~~$132.5 million in the comparable ~~nine-month~~three-month period of ~~2022.~~2023. Net cash ~~outflows~~inflows from financing activities in the first ~~nine~~three months of ~~2023~~2024 were ~~$150.5~~$44.8 million, compared with net cash ~~inflows~~outflows of ~~$4.8~~$167.4 million for the same period of ~~2022.~~2023.

To manage liquidity risk, the Bank has several sources of liquidity in place to maximize funding availability and increase the diversification of funding sources. The criteria for evaluating the use of these sources include volume concentration (percentage of liabilities), cost, volatility, and the fit with the current asset/liability management plan. These acceptable sources of liquidity include:

•Federal Funds Lines

•Federal Reserve Bank Discount Window/Bank Term Funding Program

•Federal Home Loan Bank Advances

•Brokered Deposits

•Brokered Repurchase Agreements

Federal Funds Lines - Federal funds positions provide a source of short-term liquidity funding for the Bank. Unsecured federal funds purchased lines are viewed as a volatile liability and are not used as a long-term funding solution, especially when used to fund long-term assets. The current federal funds purchased limit is 10% of total assets, or the amount of established federal funds lines, whichever is smaller. As of ~~September 30, 2023,~~March 31, 2024, the Bank maintains several unsecured federal funds lines totaling $155.0 million, which lines are tested annually to ensure availability.

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Federal Reserve Bank Discount Window and Bank Term Funding Program - The Federal Reserve Bank Discount Window and the ~~Bank Term Funding Program~~BTFP are additional sources of liquidity, particularly during periods of economic uncertainty or stress. ~~The~~Effective March 11, 2024, no new loans will be made under the BTFP. As of March 31, 2024, the Bank ~~has a borrowing capacity~~had investment securities consisting primarily of corporate debt, state and political subdivisions, mortgage backed, and collateralized mortgage obligations, with an approximate market value of $790.3 million pledged to the Federal Reserve Bank of Chicago ~~limited by the amount of municipal securities pledged against the line. As of September 30, 2023, the Bank had municipal securities with an approximate market value of $880.5 million pledged~~ for liquidity purposes and had additional borrowing capacity of ~~$739.7~~$421.4 million. There were no outstanding borrowings through the FRB Discount Window at ~~September 30, 2023.~~March 31, 2024. There were ~~$225.0~~$405.0 million of Bank Term Funding Program borrowings outstanding at ~~September 30, 2023.~~March 31, 2024.

Federal Home Loan Bank Advances - FHLB advances provide both a source of liquidity and long-term funding for the Bank. ~~Advances~~All credit exposure, including advances and federal funds borrowings from the FHLBDM are collateralized primarily by one- to four-family residential, commercial and agricultural real estate first mortgages equal to various percentages of the total outstanding notes. The current ~~FHLB borrowing~~credit limit established by the FHLBDM is equal to 45% of the Bank's total assets. This credit capacity limit includes short-term and long-term borrowings, federal funds, letters of credit, and other sources of credit exposure to the FHLB. As of ~~September 30, 2023,~~March 31, 2024, the Bank had ~~$139.7 million of~~no short-term FHLB advances and $6.3 million in long-term FHLB borrowings and additional borrowing capacity of ~~$673.3~~$795.9 million.

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Brokered Deposits and Reciprocal Deposits - The Bank has brokered time deposit and non-maturity deposit relationships available to diversify its funding sources. Brokered deposits offer several benefits relative to other funding sources, such as: maturity structures which cannot be duplicated in the current retail market, deposit gathering which does not cannibalize the existing deposit base, the unsecured nature of these liabilities, and the ability to quickly generate funds. The Bank’s internal policy limits the use of brokered deposits as a funding source to no more than ~~10%~~20% of total assets. Board approval is required to exceed this limit. The Bank must maintain a “well capitalized” rating to access brokered deposits without FDIC waiver. An “adequately capitalized” rating requires an FDIC waiver to access brokered deposits and an “undercapitalized” rating prohibits the Bank from using brokered deposits. The Company had brokered deposits of ~~$220.1~~$205.0 million as of ~~September 30, 2023~~March 31, 2024 and ~~$126.8~~$221.0 million as of December 31, ~~2022.~~2023.

Under a final rule that was issued by the FDIC in December 2018, financial institutions that are considered "well capitalized" qualify for the exemption of certain reciprocal deposits from being considered brokered deposits. Such exemption is limited to the lesser of 20 percent of total liabilities or $5$5.00 billion, with some exceptions for financial institutions that do not meet such criteria. At ~~September 30, 2023,~~March 31, 2024, the Company had ~~$10.9~~$14.0 million of reciprocal time deposits, ~~$149.6~~$132.7 million of reciprocal interest bearing non-maturity deposits, and ~~$70.1~~$64.2 million non-interest bearing non-maturity deposits that qualified for the brokered deposit exemption. These reciprocal deposits are part of the IntraFi Network Deposits program, which is used by financial institutions to spread deposits that exceed the FDIC insurance coverage limits out to numerous institutions in order to provide insurance coverage for all participating deposits.

Brokered Repurchase Agreements - Brokered repurchase agreements may be established with approved brokerage firms and banks. Repurchase agreements create rollover risk (the risk that a broker will discontinue the relationship due to market factors) and are not used as a long-term funding solution, especially when used to fund long-term assets. Collateral requirements and availability are evaluated and monitored. The current policy limit for brokered repurchase agreements is ~~10%~~15% of total assets. There were no outstanding brokered repurchase agreements at ~~September 30, 2023.~~March 31, 2024.

Interest Rate Risk

Interest rate risk is defined as the exposure of net interest income and fair value of financial instruments (interest-earning assets, deposits and borrowings) to movements in interest rates. The Company’s results of operations depend to a large degree on its net interest income and its ability to manage interest rate risk. The Company considers interest rate risk to be a significant market risk. The major sources of the Company’s interest rate risk are timing differences in the maturity and re-pricing characteristics of assets and liabilities, changes in the shape of the yield curve, changes in customer behavior and changes in relationships between rate indices (basis risk). Management measures these risks and their impact in various ways, including through the use of income simulation and valuation analyses. Multiple interest rate scenarios are used in this analysis which include changes in interest rates, spread narrowing and widening, yield curve twists and changes in assumptions about customer behavior in various interest rate scenarios. A mismatch between maturities, interest rate sensitivities and prepayment characteristics of assets and liabilities results in interest-rate risk. Like most financial institutions, we have material interest-rate risk exposure to changes in both short-term and long-term interest rates, as well as variable interest rate indices (e.g., the prime rate or SOFR).

The Bank’s asset and liability committee meets regularly and is responsible for reviewing its interest rate sensitivity position and establishing policies to monitor and limit exposure to interest rate risk. Our asset and liability committee seeks to manage interest rate risk under a variety of rate environments by structuring our balance sheet and off-balance-sheet positions in such a

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way that changes in interest rates do not have a large negative impact. The risk is monitored and managed within approved policy limits.

We use a third-party service to model and measure our exposure to potential interest rate changes. For various assumed hypothetical changes in market interest rates, numerous other assumptions are made, such as prepayment speeds on loans and securities backed by mortgages, the slope of the Treasury yield-curve, the rates and volumes of our deposits, and the rates and volumes of our loans. There are two primary tools used to evaluate interest rate risk: net interest income simulation and economic value of equity ("EVE"). In addition, interest rate gap is reviewed to monitor asset and liability repricing over various time periods.

Net Interest Income Simulation - Management utilizes net interest income simulation models to estimate the near-term effects of changing interest rates on its net interest income. Net interest income simulation involves projecting net interest income under a variety of scenarios, which include varying the level of interest rates and shifts in the shape of the yield curve. Management exercises its best judgment in making assumptions regarding events that management can influence, such as non-contractual deposit re-pricings, and events outside management’s control, such as customer behavior on loan and deposit activity and the effect that competition has on both loan and deposit pricing. These assumptions are subjective and, as a result,

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net interest income simulation results will differ from actual results due to the timing, magnitude and frequency of interest rate changes, changes in market conditions, customer behavior and management strategies, among other factors. We perform various sensitivity analyses on assumptions of deposit attrition and deposit re-pricing.

The following table presents the anticipated effect on net interest income over a twelve month period if short- and long-term interest rates were to sustain an immediate decrease of 100 basis points or 200 basis points, or an immediate increase of 100 basis points or 200 basis points:

Immediate Change in Rates
(dollars in thousands) -200 -100 +100 +200
September 30, 2023
Dollar change $ 461 $ 225 $ (361) $ (973)
Percent change 0.3 % 0.2 % (0.3) % (0.7) %
December 31, 2022
Dollar change $ 8,398 $ 5,637 $ (6,738) $ (13,921)
Percent change 5.2 % 3.5 % (4.2) % (8.7) %


	Immediate Change in Rates
(dollars in thousands)	-200			-100			+100			+200
March 31, 2024
Dollar change	$	2,832		$	1,273		$	(2,220)		$	(4,634)
Percent change	1.9		%	0.9		%	(1.5)		%	(3.1)		%
December 31, 2023
Dollar change	$	1,280		$	(347)		$	229		$	111
Percent change	0.9		%	(0.2)		%	0.2		%	0.1		%

As of ~~September 30, 2023, 29.9%~~March 31, 2024, 33.9% of the Company’s earning asset balances will reprice or are expected to pay down in the next twelve months, and ~~42.1%~~40.7% of the Company’s deposit balances are low cost or no cost deposits.

Economic Value of Equity - Management also uses EVE to measure risk in the balance sheet that might not be taken into account in the net interest income simulation analysis. Net interest income simulation highlights exposure over a relatively short time period, while EVE analysis incorporates all cash flows over the estimated remaining life of all balance sheet positions. The valuation of the balance sheet, at a point in time, is defined as the discounted present value of asset cash flows minus the discounted present value of liability cash flows. EVE analysis addresses only the current balance sheet and does not incorporate the run-off replacement assumptions that are used in the net interest income simulation model. As with the net interest income simulation model, EVE analysis is based on key assumptions about the timing and variability of balance sheet cash flows and does not take into account any potential responses by management to anticipated changes in interest rates.

Interest Rate Gap - The interest rate gap is the difference between interest-earning assets and interest-bearing liabilities re-pricing within a given period and represents the net asset or liability sensitivity at a point in time. An interest rate gap measure could be significantly affected by external factors such as loan prepayments, early withdrawals of deposits, changes in the correlation of various interest-bearing instruments, competition, or a rise or decline in interest rates.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

The Company’s management, including the Chief Executive Officer, the Chief Financial Officer, and the Chief Accounting Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer, the Chief Financial Officer, and the Chief Accounting Officer,

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to allow timely decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer, the Chief Financial Officer, and the Chief Accounting Officer, have concluded that the Company’s disclosure controls and procedures were effective as of ~~September 30, 2023.~~March 31, 2024.

The effectiveness of our or any system of disclosure controls and procedures is subject to certain limitations, including the exercise of judgment in designing, implementing, and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events, and the inability to eliminate misconduct completely. As a result, there can be no assurance that our disclosure controls and procedures will prevent all errors or fraud or ensure that all material information will be made known to appropriate management in a timely fashion. By their nature, our or any system of disclosure controls and procedures can provide only reasonable assurance regarding management’s control objectives.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) that occurred during the quarter ended ~~September 30, 2023~~March 31, 2024 that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We and our subsidiaries are from time to time parties to various legal actions arising in the normal course of business. We believe that there is no threatened or pending proceeding, other than ordinary routine litigation incidental to the Company’s business, against us or our subsidiaries or of which our property is the subject, which, if determined adversely, would have a material adverse effect on our consolidated business or financial condition.

Item 1A. Risk Factors.

There have been no material changes to the risk factors set forth under Part I, Item 1A "Risk Factors" in the Company's Form 10-K for the fiscal year ended December 31, ~~2022,~~2023, filed with the SEC on March ~~13, 2023.~~8, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of ~~Proceeds, and Issuer Purchases of Equity Securities.~~Proceeds.

Repurchase of Equity Securities

The following table sets forth information about the Company’s purchases of its common stock during the ~~third~~first quarter of ~~2023:~~2024:

Total Number of Shares Purchased(1)
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Programs(2)
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program
July 1 - 31, 2023 — $ — — $ 15,000,000
August 1 - 31, 2023 2,382 22.37 — 15,000,000
September 1 - 30, 2023 — — — 15,000,000
Total 2,382 $ 22.37 — $ 15,000,000


	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs(2)	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program
January 1 - 31, 2024	—	$	—	—	$	15,000,000
February 1 - 29, 2024	21,278	24.48		—	15,000,000
March 1 - 31, 2024	—	—		—	15,000,000
Total	21,278	$	24.48	—	$	15,000,000

(1) During the three months ended ~~September 30, 2023,~~March 31, 2024, no shares were repurchased by the Company under the current share repurchase program, while ~~2,382~~21,278 shares were surrendered by employees of the Company to pay withholding taxes on vesting of restricted stock unit awards.

(2) On June 22, 2021, the Board of Directors of the Company approved a share repurchase program, allowing for the repurchase of up to $15.0 million of the Company's common stock through December 31, 2023. This repurchase program replaced the Company’s prior repurchase program, which was due to expire on December 31, 2021. Since June 23, 2021 and through April 27, 2023, the Company repurchased 403,368 shares of common stock for approximately $12.0 million, leaving $3.0 million available to be repurchased.

On April 27, 2023, the Board of Directors of the Company approved ~~a new~~the current share repurchase program, allowing for the repurchase of up to $15.0 million of the Company's common stock through December 31, 2025. ~~This new repurchase program replaced the Company’s prior repurchase program, adopted in June 2021, which was due to expire on December 31, 2023.~~ Since April 28, 2023 and through ~~September 30, 2023,~~March 31, 2024, the Company repurchased no shares of common stock, leaving $15.0 million available to be repurchased.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

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Item 5. Other Information.

During the fiscal quarter ended ~~September 30, 2023,~~March 31, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule10b5-1(c) or any "non-Rule 10b5-1 trading arrangement."

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Item 6. Exhibits.

Exhibit

Number

Description

Incorporated by Reference to:

3.1

Amended and Restated Articles of Incorporation of MidWestOne Financial Group, Inc. filed with the Secretary of State of the State of Iowa on March 14, 2008

Exhibit 3.3 to the Company’s Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-147628) filed with the SEC on January 14, 2008

3.2

Articles of Amendment (First Amendment) to the Amended and Restated Articles of Incorporation of MidWestOne Financial Group, Inc. filed with the Secretary of State of the State of Iowa on January 23, 2009

Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2009

3.3

Articles of Amendment (Second Amendment) to the Amended and Restated Articles of Incorporation of MidWestOne Financial Group, Inc. filed with the Secretary of State of the State of Iowa on February 4, 2009 (containing the Certificate of Designations for the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A)

Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 6, 2009

3.4

Articles of Amendment (Third Amendment) to the Amended and Restated Articles of Incorporation of MidWestOne Financial Group, Inc., filed with the Secretary of State of the State of Iowa on April 21, 2017

Exhibit 3.1 to the Company’s Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 4, 2017

3.5

Third Amended and Restated Bylaws, as Amended of MidWestOne Financial Group, Inc. as of October 18, 2022

Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 19, 2022

4.1

Form of MidWestOne Financial Group, Inc. 2023 Equity Incentive Plan Restricted Stock Unit Award Agreement

Exhibit 4.7 to the Company’s Form S-8 filed with the SEC on May 5, 2023

4.2

Form of MidWestOne Financial Group, Inc. 2023 Equity Incentive Plan Performance-Based Restricted Stock Unit Award Agreement

Exhibit 4.8 to the Company’s Form S-8 filed with the SEC on May 5, 2023

10.1

Third Amendment to the Credit Agreement by and between MidWestOne Financial Group, Inc. and U.S. Bank National Association dated February 12, 2024

Exhibit 10.11 to the Company's Annual Report on Form 10-K filed with the SEC on March 8, 2024

31.1

Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)

Filed herewith

31.2

Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)

Filed herewith

31.3

Certification of Principal Accounting Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)

Filed herewith

32.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

32.2

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

32.3

Certification of Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

101

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2023,~~March 31, 2024, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

Filed herewith

101.SCH

Inline XBRL Taxonomy Extension Schema Document

Filed herewith

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

Filed herewith

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

Filed herewith

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith

104

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

Filed herewith

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SIGNATURES

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.

MIDWESTONE FINANCIAL GROUP, INC.

Dated:

~~November 2, 2023~~May 7, 2024

By:

/s/ CHARLES N. REEVES

Charles N. Reeves

Chief Executive Officer

(Principal Executive Officer)

By:

/s/ BARRY S. RAY

Barry S. Ray

Chief Financial Officer

(Principal Financial Officer)

By:

/s/ JOHN J. RUPPEL

John J. Ruppel

Chief Accounting Officer

(Principal Accounting Officer)

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	Term Loans by Origination Year												Revolving Loans
December 31, 2022 (in thousands)	2022		2021		2020		2019		2018		Prior				Total
Agricultural
Pass	$	20,279	$	12,511	$	5,398	$	2,883	$	939	$	1,063	$	65,395		$	108,468
Special mention / watch	143		1,012		115		36		—		604		1,655			3,565
Substandard	48		646		366		4		7		302		1,914			3,287
Doubtful	—		—		—		—		—		—		—			—
Total	$	20,470	$	14,169	$	5,879	$	2,923	$	946	$	1,969	$	68,964		$	115,320
Commercial and industrial
Pass	$	262,500	$	232,263	$	151,567	$	48,199	$	27,680	$	115,877	$	163,205		$	1,001,291
Special mention / watch	3,975		3,574		5,465		592		3,299		1,864		12,299			31,068
Substandard	556		166		1,172		756		556		18,585		1,012			22,803
Doubtful	—		—		—		—		—		—		—			—
Total	$	267,031	$	236,003	$	158,204	$	49,547	$	31,535	$	136,326	$	176,516		$	1,055,162
CRE - Construction and development
Pass	$	144,597	$	73,832	$	19,324	$	989	$	1,058	$	549	$	28,069		$	268,418
Special mention / watch	1,787		499		—		—		—		—		—			2,286
Substandard	281		—		—		—		—		6		—			287
Doubtful	—		—		—		—		—		—		—			—
Total	$	146,665	$	74,331	$	19,324	$	989	$	1,058	$	555	$	28,069		$	270,991
CRE - Farmland
Pass	$	55,251	$	52,802	$	28,744	$	7,266	$	8,406	$	12,895	$	1,946		$	167,310
Special mention / watch	3,058		2,229		1,470		—		225		21		1,693			8,696
Substandard	148		1,974		1,192		1,136		1,459		1,998		—			7,907
Doubtful	—		—		—		—		—		—		—			—
Total	$	58,457	$	57,005	$	31,406	$	8,402	$	10,090	$	14,914	$	3,639		$	183,913
CRE - Multifamily
Pass	$	31,018	$	93,907	$	84,573	$	17,137	$	2,549	$	5,161	$	49		$	234,394
Special mention / watch	1,000		—		1,567		—		5,931		1,178		—			9,676
Substandard	—		7,725		334		—		—		—		—			8,059
Doubtful	—		—		—		—		—		—		—			—
Total	$	32,018	$	101,632	$	86,474	$	17,137	$	8,480	$	6,339	$	49		$	252,129
CRE - Other
Pass	$	322,753	$	314,376	$	296,368	$	79,408	$	31,041	$	81,708	$	51,064		$	1,176,718
Special mention / watch	8,858		3,399		13,245		10,365		1,137		8,122		2,518			47,644
Substandard	752		589		19,702		13,294		10,197		4,089		—			48,623
Doubtful	—		—		—		—		—		—		—			—
Total	$	332,363	$	318,364	$	329,315	$	103,067	$	42,375	$	93,919	$	53,582		$	1,272,985
RRE - One- to four- family first liens
Pass / Performing	$	139,289	$	103,534	$	63,627	$	23,831	$	21,868	$	77,967	$	11,438		$	441,554
Special mention / watch	1,074		611		672		1,920		150		702		—			5,129
Substandard / Nonperforming	175		438		174		175		674		2,891		—			4,527
Doubtful	—		—		—		—		—		—		—			—
Total	$	140,538	$	104,583	$	64,473	$	25,926	$	22,692	$	81,560	$	11,438		$	451,210
RRE - One- to four- family junior liens
Performing	$	37,296	$	22,908	$	8,906	$	3,058	$	3,757	$	6,330	$	79,798		$	162,053
Nonperforming	—		23		31		179		756		76		100			1,165
Total	$	37,296	$	22,931	$	8,937	$	3,237	$	4,513	$	6,406	$	79,898		$	163,218
Consumer
Performing	$	32,584	$	18,979	$	7,966	$	3,489	$	1,646	$	6,641	$	4,255		$	75,560
Nonperforming	—		2		16		9		4		5		—			36
Total	$	32,584	$	18,981	$	7,982	$	3,498	$	1,650	$	6,646	$	4,255		$	75,596

Total by Credit Quality Indicator Category
Pass	$	975,687	$	883,225	$	649,601	$	179,713	$	93,541	$	295,220	$	321,166		$	3,398,153
Special mention / watch	19,895		11,324		22,534		12,913		10,742		12,491		18,165			108,064
Substandard	1,960		11,538		22,940		15,365		12,893		27,871		2,926			95,493
Doubtful	—		—		—		—		—		—		—			—
Performing	69,880		41,887		16,872		6,547		5,403		12,971		84,053			237,613
Nonperforming	—		25		47		188		760		81		100			1,201
Total	$	1,067,422	$	947,999	$	711,994	$	214,726	$	123,339	$	348,634	$	426,410		$	3,840,524