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, 2023March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission file number001-35968
MIDWESTONE FINANCIAL GROUP, INC.
(Exact name of Registrant as specified in its charter)
 
Iowa42-1206172
(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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, $1.00 par valueMOFGThe 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 filerAccelerated filerx
Non-accelerated filerSmaller 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 15,691,73815,755,319 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
Page No.
PART I
Item 1.
Item 2.
Item 3.
Item 4.
Part II
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



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."
ACLAllowance for Credit LossesFHLBFederal Home Loan Bank
AFSAvailable for SaleFHLBCFederal Home Loan Bank of Chicago
AOCIAccumulated Other Comprehensive IncomeFHLBDMFederal Home Loan Bank of Des Moines
ASCAccounting Standards CodificationFHLMCFederal Home Loan Mortgage Corporation
ASUAccounting Standards UpdateFNBFFirst National Bank in Fairfield
ATMAutomated Teller MachineFNBMFirst National Bank of Muscatine
Basel III RulesA comprehensive capital framework and rules for U.S. banking organizations approved by the FRB and the FDIC in 2013FNMAFederal National Mortgage Association
BHCABank Holding Company Act of 1956, as amendedFRBBoard of Governors of the Federal Reserve System
BOLIBODBank Owned Life Insuranceof DenverGAAPU.S. Generally Accepted Accounting Principles
BOLIBank Owned Life InsuranceGLBAGramm-Leach-Bliley Act of 1999
CAAConsolidated Appropriations Act, 2021GLBAGNMAGramm-Leach-Bliley Act of 1999Government National Mortgage Association
CARES ActCoronavirus Aid, Relief and Economic Security ActGNMAICSGovernment National Mortgage AssociationInsured Cash Sweep
CDARSCertificate of Deposit Account Registry ServiceICSIOFBInsured Cash SweepIowa First Bancshares Corp.
CECLCurrent Expected Credit LossIOFBLIBORIowa First Bancshares Corp.The London Inter-bank Offered Rate
CMOCollateralized Mortgage ObligationsLIBORMBEFDThe London Inter-bank Offered RateLoan Modification for Borrowers Experiencing Financial Difficulty
COVID-19Coronavirus Disease 2019MBSMortgage-Backed Securities
CRACommunity Reinvestment ActPCDPurchase Credit Deteriorated
CRECommercial Real EstatePPPPaycheck Protection Program
DCFDiscounted Cash FlowsROURight-of-Use
DNVBDenver Bankshares, Inc.RPACredit Risk Participation Agreement
Dodd-Frank ActDodd-Frank Wall Street Reform and Consumer Protection ActRREResidential Real Estate
ECLExpected Credit LossesSBAU.S. Small Business Administration
EVEEconomic Value of EquitySECU.S. Securities and Exchange Commission
FASBFinancial Accounting Standards BoardSOFRSecured Overnight Financing Rate
FDICFederal Deposit Insurance CorporationTDRTroubled 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) 
ASSETSASSETS
ASSETS
ASSETS
Cash and due from banks
Cash and due from banks
Cash and due from banksCash and due from banks$71,015 $83,990 
Interest earning deposits in banksInterest earning deposits in banks3,773 2,445 
Federal funds sold
Total cash and cash equivalentsTotal cash and cash equivalents74,788 86,435 
Debt securities available for sale at fair valueDebt securities available for sale at fair value872,770 1,153,547 
Held to maturity securities at amortized costHeld to maturity securities at amortized cost1,085,751 1,129,421 
Total securitiesTotal securities1,958,521 2,282,968 
Loans held for saleLoans held for sale2,528 612 
Gross loans held for investmentGross loans held for investment4,078,060 3,854,791 
Unearned income, netUnearned income, net(12,091)(14,267)
Loans held for investment, net of unearned incomeLoans held for investment, net of unearned income4,065,969 3,840,524 
Allowance for credit lossesAllowance for credit losses(51,600)(49,200)
Total loans held for investment, netTotal loans held for investment, net4,014,369 3,791,324 
Premises and equipment, netPremises and equipment, net85,589 87,125 
GoodwillGoodwill62,477 62,477 
Other intangible assets, netOther intangible assets, net25,510 30,315 
Foreclosed assets, netForeclosed assets, net— 103 
Other assetsOther assets244,036 236,517 
Total assetsTotal assets$6,467,818 $6,577,876 
LIABILITIES AND SHAREHOLDERS' EQUITYLIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest bearing deposits
Noninterest bearing deposits
Noninterest bearing depositsNoninterest bearing deposits$924,213 $1,053,450 
Interest bearing depositsInterest bearing deposits4,439,111 4,415,492 
Total depositsTotal deposits5,363,324 5,468,942 
Short-term borrowingsShort-term borrowings373,956 391,873 
Long-term debtLong-term debt124,526 139,210 
Other liabilitiesOther liabilities100,601 85,058 
Total liabilitiesTotal liabilities5,962,407 6,085,083 
Shareholders' equityShareholders' equity
Shareholders' equity
Shareholders' equity
Preferred stock, no par value; authorized 500,000 shares; no shares issued and outstandingPreferred 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 15,623,97716,581 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 capitalAdditional paid-in capital301,889 302,085 
Retained earningsRetained earnings295,862 289,289 
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 lossAccumulated other comprehensive loss(84,606)(89,047)
Total shareholders' equityTotal shareholders' equity505,411 492,793 
Total liabilities and shareholders' equityTotal liabilities and shareholders' equity$6,467,818 $6,577,876 
See accompanying notes to consolidated financial statements.  
1

Table of Contents
MIDWESTONE FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
 
Three Months EndedNine 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 202220232022
Interest incomeInterest income 
Interest income
Interest income
Loans, including fees
Loans, including fees
Loans, including feesLoans, including fees$51,870  $40,451 $148,086 $104,515 
Taxable investment securitiesTaxable investment securities9,526  10,635 29,704 28,334 
Taxable investment securities
Taxable investment securities
Tax-exempt investment securities
Tax-exempt investment securities
Tax-exempt investment securitiesTax-exempt investment securities1,802  2,326 5,751 7,076 
OtherOther374 686 77 
Other
Other
Total interest income
Total interest income
Total interest incomeTotal interest income63,572  53,421 184,227 140,002 
Interest expenseInterest expense 
Interest expense
Interest expense
Deposits
Deposits
DepositsDeposits23,128  5,035 58,564 11,118 
Short-term borrowingsShort-term borrowings3,719  767 7,623 1,115 
Short-term borrowings
Short-term borrowings
Long-term debt
Long-term debt
Long-term debtLong-term debt2,150  1,886 6,427 4,975 
Total interest expenseTotal interest expense28,997  7,688 72,614  17,208 
Total interest expense
Total interest expense
Net interest income
Net interest income
Net interest incomeNet interest income34,575  45,733 111,613 122,794 
Credit loss expenseCredit loss expense1,551  638 4,081 3,920 
Credit loss expense
Credit loss expense
Net interest income after credit loss expenseNet interest income after credit loss expense33,024  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 activitiesInvestment services and trust activities3,004  2,876 9,056 8,557 
Service charges and feesService charges and fees2,146  2,075 6,201 5,449 
Service charges and fees
Service charges and fees
Card revenue
Card revenue
Card revenueCard revenue1,817  1,898 5,412 5,426 
Loan revenueLoan revenue1,462  1,722 3,791 9,538 
Loan revenue
Loan revenue
Bank-owned life insurance
Bank-owned life insurance
Bank-owned life insuranceBank-owned life insurance626  579 1,844 1,668 
Investment securities gains (losses), netInvestment securities gains (losses), net79  (163)(13,093)272 
Investment securities gains (losses), net
Investment securities gains (losses), net
OtherOther727 3,601 1,350 5,669 
Total noninterest income9,861  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 expenseNoninterest expense 
Compensation and employee benefitsCompensation and employee benefits18,558  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, netOccupancy expense of premises, net2,405  2,577 7,725 7,609 
EquipmentEquipment2,123 2,358 6,729 6,366 
Equipment
Equipment
Legal and professional
Legal and professional
Legal and professionalLegal and professional1,678 2,012 5,096 6,800 
Data processingData processing1,504 1,731 4,388 4,199 
Data processing
Data processing
Marketing
Marketing
MarketingMarketing782 1,139 2,910 3,325 
Amortization of intangiblesAmortization of intangibles1,460  1,789 4,806 4,299 
Amortization of intangibles
Amortization of intangibles
FDIC insurance
FDIC insurance
FDIC insuranceFDIC insurance783  415 2,394 1,255 
CommunicationsCommunications206  302 727 840 
Communications
Communications
Foreclosed assets, net
Foreclosed assets, net
Foreclosed assets, netForeclosed assets, net42 (32)(66)
OtherOther2,043  2,212 6,488 6,056 
Other
Other
Total noninterest expense
Total noninterest expense
Total noninterest expenseTotal noninterest expense31,544  34,623 99,782 98,348 
Income before income tax expenseIncome before income tax expense11,341  23,060 22,311 57,105 
Income before income tax expense
Income before income tax expense
Income tax expenseIncome tax expense2,203  4,743 4,182 12,272 
Income tax expense
Income tax expense
Net income
Net income
Net incomeNet income$9,138  $18,317 $18,129 $44,833 
Per common share informationPer common share information 
Per common share information
Per common share information
Earnings - basic
Earnings - basic
Earnings - basicEarnings - basic$0.58  $1.17 $1.16 $2.86 
Earnings - dilutedEarnings - diluted$0.58  $1.17 $1.15 $2.86 
Earnings - diluted
Earnings - diluted
Dividends paidDividends paid$0.2425  $0.2375 $0.7275 $0.7125 
Dividends paid
Dividends paid
See accompanying notes to consolidated financial statements.
2

Table of Contents
MIDWESTONE FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
Three Months EndedNine 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)2023202220232022
Net incomeNet 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 riskReclassification of the change in fair value of AFS debt securities attributable to change in hedged risk454 — 454 — 
Income tax benefit1,065 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 HTMAmortization of the net unrealized loss from the reclassification of AFS debt securities to HTM586 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 expenseIncome tax expense(148)(189)(447)(817)
Amortization of net unrealized loss from the reclassification of AFS debt securities to HTM, netAmortization of net unrealized loss from the reclassification of AFS debt securities to HTM, net438 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 instrumentsUnrealized net gains in cash flow hedging instruments1,829 — 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 incomeReclassification adjustment for net gain in cash flow hedging instruments included in income(761)— (999)— 
Income tax expenseIncome tax expense(270)— (1,085)— 
Income tax expense
Income tax expense
Unrealized net gains on cash flow hedge instruments, net of reclassification adjustmentUnrealized net gains on cash flow hedge instruments, net of reclassification adjustment798 — 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.

3

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 EarningsTreasury 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 EarningsTreasury 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 EarningsTreasury 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 

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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 incomeNet 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 expenseCredit loss expense4,081  3,920 
Credit loss expense
Credit loss expense
Depreciation, amortization, and accretion
Depreciation, amortization, and accretion
Depreciation, amortization, and accretionDepreciation, amortization, and accretion9,420  7,511 
Net change in premises and equipment due to writedown or sale Net change in premises and equipment due to writedown or sale68 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 compensationShare-based compensation2,065  1,837 
Net loss (gain) on sale or call of debt securities available for sale13,093  (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 saleNet change in foreclosed assets due to writedown or sale(29)(71)
Net gain on sale of loans held for saleNet gain on sale of loans held for sale(912)(1,705)
Origination of loans held for saleOrigination of loans held for sale(41,650) (81,490)
Proceeds from sales of loans held for saleProceeds from sales of loans held for sale40,646 93,792 
Increase in cash surrender value of bank-owned life insuranceIncrease 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 assetsOther assets(2,701) (34,484)
Other liabilitiesOther liabilities15,543 36,791 
Net cash provided by operating activitiesNet cash provided by operating activities$55,834  $72,319 
Investing Activities:Investing Activities: 
Purchases of equity securities
Purchases of equity securities
Purchases of equity securitiesPurchases of equity securities$(750)$(1,250)
Proceeds from sales of debt securities available for saleProceeds from sales of debt securities available for sale218,667  129,823 
Proceeds from maturities and calls of debt securities available for saleProceeds from maturities and calls of debt securities available for sale101,194  133,018 
Purchases of debt securities available for salePurchases of debt securities available for sale(54,690) (386,278)
Proceeds from maturities and calls of debt securities held to maturityProceeds from maturities and calls of debt securities held to maturity43,963  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 investmentNet increase in loans held for investment(224,068) (215,738)
Purchases of premises and equipmentPurchases of premises and equipment(2,280) (1,980)
Proceeds from sale of foreclosed assetsProceeds from sale of foreclosed assets135 345 
Proceeds from sale of premises and equipmentProceeds from sale of premises and equipment880  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  $(202,482)
Net cash (used in) provided by investing activities
Net cash (used in) provided by investing activities
Net cash (used in) provided by investing activities
Financing Activities:Financing Activities: 
Net (decrease) increase in:Net (decrease) increase in:
Net (decrease) increase in:
Net (decrease) increase in:
Deposits
Deposits
DepositsDeposits$(105,713) $(101,501)
Short-term borrowingsShort-term borrowings(17,917)121,627 
Payments on finance lease liability Payments on finance lease liability(135)(121)
Payments of Federal Home Loan Bank borrowings(11,000)(21,000)
Proceeds from other long-term debt— 25,000 
Payments on finance lease liability
Payments on finance lease liability
Payments of other long-term debtPayments of other long-term debt(3,750)(5,000)
Payments of other long-term debt
Payments of other long-term debt
Taxes paid relating to the release/lapse of restriction on RSUs
Taxes paid relating to the release/lapse of restriction on RSUs
Taxes paid relating to the release/lapse of restriction on RSUsTaxes paid relating to the release/lapse of restriction on RSUs(607)(270)
Dividends paidDividends paid(11,410) (11,158)
Repurchase of common stock— (2,730)
Net cash (used in) provided by financing activities$(150,532) $4,847 
Net cash provided by (used in) financing activities
Net cash provided by (used in) financing activities
Net cash provided by (used in) financing activities
Net change in cash and cash equivalentsNet change in cash and cash equivalents$(11,647) $(125,316)
Cash and cash equivalents at beginning of periodCash and cash equivalents at beginning of period86,435  203,830 
Cash and cash equivalents at end of periodCash 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 interestCash paid during the period for interest$65,992  $17,628 
Cash paid during the period for income taxes, net of refunds1,456  8,229 
Cash paid during the period for interest
Cash paid during the period for interest
Supplemental schedule of non-cash investing and financing activities:Supplemental schedule of non-cash investing and financing activities:
Supplemental schedule of non-cash investing and financing activities:
Supplemental schedule of non-cash investing and financing activities:
Transfer of loans to foreclosed assets, net
Transfer of loans to foreclosed assets, net
Transfer of loans to foreclosed assets, netTransfer of loans to foreclosed assets, net$ $20 
Transfer of premises and equipment to assets held for sale— 1,349 
Transfer of debt securities available for sale to debt securities held to maturity — 1,253,179 
Supplemental schedule of non-cash investing activities from acquisition:
Supplemental schedule of non-cash investing activities from acquisition:
Supplemental schedule of non-cash investing activities from acquisition:Supplemental schedule of non-cash investing activities from acquisition:
Non-cash assets acquired:Non-cash assets acquired:
Non-cash assets acquired:
Non-cash assets acquired:
Investment securities
Investment securities
Investment securities Investment securities$— $119,820 
Total loans held for investment, net Total loans held for investment, net— 281,326 
Premises and equipment Premises and equipment— 7,363 
Assets held for sale
Goodwill
Core deposit intangible Core deposit intangible— 16,500 
Bank-owned life insurance— 7,862 
Other assets
Other assets
Other assets Other assets— 3,766 
Total non-cash assets acquired Total non-cash assets acquired$— $436,637 
Liabilities assumed:Liabilities assumed:
Deposits Deposits$— $463,638 
Deposits
Deposits
Short-term borrowings Short-term borrowings— 1,541 
FHLB borrowings— 250 
Other liabilities
Other liabilities
Other liabilities Other liabilities— 1,326 
Total liabilities assumed Total liabilities assumed$— $466,755 
See accompanying notes to consolidated financial statements.
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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 wereBOD 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, 2023March 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, 2023March 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
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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.
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Accounting Guidance Adopted at September 30, 2023

On March 31, 2022,November 27, 2023, the FASB issued ASU 2022-02,2023-07, Financial InstrumentsSegment Reporting (Topic 280) - Credit Losses (Topic 326): Troubled Debt Restructurings and VintageImprovements to Reportable Segment Disclosures. For creditors that have adoptedthe CECL accounting guidanceEnhanced 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, 20222023, and should be applied prospectively,interim periods within fiscal years beginning after December 15, 2024, with an option to applyearly 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 approachor 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 2022-022023-02 was applied prospectivelyon 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 IOFBDNVB through a merger and acquired its wholly-owned subsidiaries FNBM and FNBFbanking subsidiary, Bank of Denver, for cash consideration of $46.7$32.6 million. The primary reasonsreason for the acquisition werewas 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 wereBOD 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, 2022January 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 resultexcess of the estimatedconsideration paid over the fair value of identifiablethe net assets acquired exceeding the merger consideration. Bargain purchase gains areis recorded net of deferred taxes and are treated as permanent differences, resulting in lower effectivegoodwill. This goodwill is not deductible for tax rate in the period recorded.purposes. The revenue and earnings amount specific to IOFBDNVB since the acquisition date that are included in the consolidated results for the three and nine months ended September 30, 2022March 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.
8

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, 2022January 31, 2024
Merger consideration
Cash consideration$46,67232,600 
Identifiable net assets acquired, at fair value
Assets acquired
Cash and due from banks$10,192462 
Interest earning deposits in banks67,8553,517 
Debt securities119,82052,493 
Loans held for investment281,326207,095 
Premises and equipment7,36313,470 
Core deposit intangible16,5007,100 
Other assets14,1404,987 
Total assets acquired517,196289,124 
Liabilities assumed
Deposits$(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 value50,44123,959 
Bargain Purchase GainGoodwill$3,7698,641 
8

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 IOFBDNVB 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 IOFBDNVB 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 EndedNine Months Ended
September 30,September 30,
Unaudited
Unaudited
Unaudited
Three Months Ended
Three Months Ended
Three Months Ended
March 31,
March 31,
March 31,
(in thousands, except per share amounts)
(in thousands, except per share amounts)
(in thousands, except per share amounts)(in thousands, except per share amounts)20222022
Total revenuesTotal revenues$55,954 $165,053 
Net Income$17,111 $46,663 
Total revenues
Total revenues
Net income (loss)
Net income (loss)
Net income (loss)
EPS - basic
EPS - basic
EPS - basicEPS - basic$1.10 $2.98 
EPS - dilutedEPS - diluted$1.09 $2.97 
EPS - diluted
EPS - diluted
The Company announced during the third quarter
9

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 EndedNine Months Ended
September 30,September 30,
(in thousands)2023202220232022
Noninterest Expense
Compensation and employee benefits$— $132 $70 $282 
Occupancy expense of premises, net— — — 
Equipment— 14 — 25 
Legal and professional11 193 11 894 
Data processing— 304 65 380 
Marketing— 90 — 162 
Communications— — — 
Other— 30 45 
Total acquisition-related expenses$11 $763 $147 $1,792 

Three Months Ended
March 31,
(in thousands)20242023
Noninterest Expense
Compensation and employee benefits$241 $70 
Occupancy expense of premises, net152 — 
Equipment149 — 
Legal and professional573 — 
Data processing61 65 
Marketing32 — 
Communications— 
Other105 
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 atloss, related to the timetransfer of the transfer.securities classified as available for sale to held to maturity on January 1, 2022.

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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 SecuritiesFair Value(in thousands)
Amortized
Cost (1)
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Allowance for Credit Loss related to Debt SecuritiesFair Value
Available for SaleAvailable 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 subdivisionsState and political subdivisions$177,300 $$14,833 $— $162,468 
Mortgage-backed securitiesMortgage-backed securities5,574 — 247 — 5,327 
Collateralized loan obligationsCollateralized loan obligations52,697 250 — 52,453 
Collateralized mortgage obligationsCollateralized mortgage obligations159,344 — 27,421 — 131,923 
Corporate debt securitiesCorporate debt securities586,612 60 66,073 — 520,599 
Total available for sale debt securitiesTotal available for sale debt securities$981,527 $67 $108,824 $— $872,770 
Held to MaturityHeld to Maturity
Held to Maturity
Held to Maturity
State and political subdivisions
State and political subdivisions
State and political subdivisionsState and political subdivisions$532,885 $— $100,821 $— $432,064 
Mortgage-backed securitiesMortgage-backed securities76,310 — 15,863 — 60,447 
Collateralized mortgage obligationsCollateralized mortgage obligations476,556 — 120,704 — 355,852 
Total held to maturity debt securitiesTotal 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 subdivisions303,573 27 18,244 — 285,356 
Mortgage-backed securities6,165 11 232 — 5,944 
Collateralized mortgage obligations172,568 — 25,375 — 147,193 
Corporate debt securities771,836 125 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 securities81,032 — 12,851 — 68,181 
Collateralized mortgage obligations509,643 — 103,327 — 406,316 
Total held to maturity debt securities$1,129,421 $— $204,527 $— $924,894 
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 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 $$9,345 $— $130,139 
Mortgage-backed securities5,448 142 — 5,311 
Collateralized loan obligations50,541 135 239 — 50,437 
Collateralized mortgage obligations190,304 — 21,108 — 169,196 
Corporate debt securities487,361 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 securities74,904 — 11,635 — 63,269 
Collateralized mortgage obligations467,864 — 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, 2023March 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.
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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 Months12 Months or MoreTotal
Number
of
Securities
Number
of
Securities
Less than 12 Months12 Months or MoreTotal
Available for SaleAvailable 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 subdivisionsState and political subdivisions200 $17,776 $969 $141,021 $13,864 $158,797 $14,833 
Mortgage-backed securitiesMortgage-backed securities29 376 4,910 241 5,286 247 
Collateralized loan obligationsCollateralized loan obligations39,870 250 — — 39,870 250 
Collateralized mortgage obligationsCollateralized mortgage obligations20 6,628 27 125,295 27,394 131,923 27,421 
Corporate debt securitiesCorporate debt securities142 4,130 75 493,017 65,998 497,147 66,073 
TotalTotal395 $68,780 $1,327 $764,243 $107,497 $833,023 $108,824 
As of September 30, 2023, 200March 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, 29March 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, 4March 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, 142March 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 SaleAvailable for Sale
Number
of
Securities
Less than 12 Months12 Months or MoreTotalAvailable for Sale
Number
of
Securities
Less than 12 Months12 Months or MoreTotal
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$7,345 $253 $— $— $7,345 $253 
State and political subdivisions
State and political subdivisions
State and political subdivisionsState and political subdivisions380 248,339 14,553 20,631 3,691 268,970 18,244 
Mortgage-backed securitiesMortgage-backed securities27 5,323 231 45 5,368 232 
Collateralized loan obligations
Collateralized mortgage obligationsCollateralized mortgage obligations20 75,041 7,121 72,152 18,254 147,193 25,375 
Corporate debt securitiesCorporate debt securities159 369,441 21,679 288,329 42,573 657,770 64,252 
TotalTotal594 $705,489 $43,837 $381,157 $64,519 $1,086,646 $108,356 
The Company evaluates debt securities held to maturity for current expected credit losses. There were no debt securities held to maturity classified as nonaccrual or past due as of September 30, 2023.March 31, 2024. Held-to-maturity securities are evaluated on a quarterly basis using historical probability of default and loss given default information specific to the investment category. If this evaluation determines that credit losses exist, an allowance for credit loss is recorded and included in earnings as a component of credit loss expense. Based on this evaluation, management concluded that no allowance for credit loss for these securities was required.
Proceeds and gross realized gains and losses on debt securities available for sale for the three and nine months ended September 30,March 31, 2024 and 2023, and 2022, were as follows:
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Three Months EndedNine Months Ended
Three Months Ended
Three Months Ended
Three Months Ended
(in thousands)(in thousands)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
(in thousands)
(in thousands)
Proceeds from sales of debt securities available for sale
Proceeds from sales of debt securities available for sale
Proceeds from sales of debt securities available for saleProceeds from sales of debt securities available for sale$— $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 SaleHeld to Maturity Available for SaleHeld to Maturity
(in thousands)(in thousands)Amortized CostFair ValueAmortized CostFair Value(in thousands)Amortized CostFair ValueAmortized CostFair Value
Due in one year or lessDue in one year or less$53,730 $52,581 $2,563 $2,495 
Due after one year through five yearsDue after one year through five years522,893 473,528 132,842 117,757 
Due after five years through ten yearsDue after five years through ten years158,373 133,485 232,569 186,814 
Due after ten yearsDue after ten years28,916 23,473 164,911 124,998 
$763,912 $683,067 $532,885 $432,064 
$
Mortgage-backed securitiesMortgage-backed securities5,574 5,327 76,310 60,447 
Collateralized loan obligationsCollateralized loan obligations52,697 52,453 — — 
Collateralized mortgage obligationsCollateralized mortgage obligations159,344 131,923 476,556 355,852 
TotalTotal$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 ofAs of
(in thousands)(in thousands)September 30, 2023December 31, 2022(in thousands)March 31, 2024December 31, 2023
AgriculturalAgricultural$111,950 $115,320 
Commercial and industrialCommercial and industrial1,078,773 1,055,162Commercial and industrial1,105,718 1,075,0031,075,003
Commercial real estate:Commercial real estate:
Construction & development
Construction & development
Construction & developmentConstruction & development331,868 270,991403,571 323,195323,195
FarmlandFarmland182,621 183,913Farmland184,109 184,955184,955
MultifamilyMultifamily337,509 252,129Multifamily409,504 383,178383,178
Commercial real estate-otherCommercial real estate-other1,324,019 1,272,985Commercial real estate-other1,440,645 1,333,9821,333,982
Total commercial real estateTotal commercial real estate2,176,017 1,980,018Total commercial real estate2,437,829 2,225,3102,225,310
Residential real estate:Residential real estate:
One- to four- family first liensOne- to four- family first liens456,771 451,210
One- to four- family first liens
One- to four- family first liens495,408 459,798
One- to four- family junior liensOne- to four- family junior liens173,275 163,218One- to four- family junior liens182,001 180,639180,639
Total residential real estateTotal residential real estate630,046 614,428Total residential real estate677,409 640,437640,437
ConsumerConsumer69,183 75,596Consumer80,661 67,78367,783
Loans held for investment, net of unearned incomeLoans held for investment, net of unearned income4,065,969 3,840,524Loans held for investment, net of unearned income4,414,646 4,126,9474,126,947
Allowance for credit lossesAllowance for credit losses(51,600)(49,200)
Total loans held for investment, netTotal 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, 2023March 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.
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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 Assets90 Days or More Past Due And Accruing
Age Analysis of Past-Due Financial AssetsAge Analysis of Past-Due Financial Assets90 Days or More Past Due And Accruing
(in thousands)(in thousands)Current30 - 59 Days Past Due60 - 89 Days Past Due90 Days or More Past DueTotal90 Days or More Past Due And Accruing
September 30, 2023
March 31, 2024
March 31, 2024
March 31, 2024
Agricultural
Agricultural
AgriculturalAgricultural$111,713 $— $13 $224 $111,950 $— 
Commercial and industrialCommercial and industrial1,077,276 616 31 850 1,078,773 — 
Commercial real estate:Commercial real estate:
Construction and development
Construction and development
Construction and developmentConstruction and development331,868 — — — 331,868 — 
FarmlandFarmland181,352 30 — 1,239 182,621 — 
MultifamilyMultifamily337,509 — — — 337,509 — 
Commercial real estate-otherCommercial real estate-other1,319,503 29 — 4,487 1,324,019 — 
Total commercial real estateTotal commercial real estate2,170,232 59 — 5,726 2,176,017 — 
Residential real estate:Residential real estate:
One- to four- family first liensOne- to four- family first liens449,842 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 liensOne- to four- family junior liens172,936 202 23 114 173,275 — 
Total residential real estateTotal residential real estate622,778 3,811 2,309 1,148 630,046 100 
ConsumerConsumer68,869 275 36 69,183 — 
TotalTotal$4,050,868 $4,761 $2,389 $7,951 $4,065,969 $100 
Age Analysis of Past-Due Financial Assets90 Days or More Past Due And Accruing
(in thousands)Current30 - 59 Days Past Due60 - 89 Days Past Due90 Days or More Past DueTotal
December 31, 2022
Agricultural$114,922 $100 $— $298 $115,320 $— 
Commercial and industrial1,052,406 922 111 1,723 1,055,162 — 
Commercial real estate:
Construction and development270,905 86 — — 270,991 — 
Farmland182,115 729 — 1,069 183,913 — 
Multifamily252,129 — — — 252,129 — 
Commercial real estate-other1,266,874 5,574 45 492 1,272,985 — 
Total commercial real estate1,972,023 6,389 45 1,561 1,980,018 — 
Residential real estate:
One- to four- family first liens446,066 3,177 954 1,013 451,210 565 
One- to four- family junior liens161,989 301 78 850 163,218 — 
Total residential real estate608,055 3,478 1,032 1,863 614,428 565 
Consumer75,443 110 17 26 75,596 — 
Total$3,822,849 $10,999 $1,205 $5,471 $3,840,524 $565 







Age Analysis of Past-Due Financial Assets90 Days or More Past Due And Accruing
(in thousands)Current30 - 59 Days Past Due60 - 89 Days Past Due90 Days or More Past DueTotal
December 31, 2023
Agricultural$117,852 $338 $— $224 $118,414 $— 
Commercial and industrial1,058,301 440 401 15,861 1,075,003 — 
Commercial real estate:
Construction and development323,165 30 — — 323,195 — 
Farmland182,759 677 352 1,167 184,955 — 
Multifamily383,178 — — — 383,178 — 
Commercial real estate-other1,327,727 2,129 1,290 2,836 1,333,982 — 
Total commercial real estate2,216,829 2,836 1,642 4,003 2,225,310 — 
Residential real estate:
One- to four- family first liens453,212 3,572 1,741 1,273 459,798 468 
One- to four- family junior liens179,339 356 690 254 180,639 — 
Total residential real estate632,551 3,928 2,431 1,527 640,437 468 
Consumer67,622 118 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:
NonaccrualNonaccrual with no Allowance for Credit Losses90 Days or More Past Due And Accruing
Nonaccrual
Nonaccrual
Nonaccrual
(in thousands)
(in thousands)
(in thousands)(in thousands)September 30, 2023December 31, 2022September 30, 2023December 31, 2022September 30, 2023December 31, 2022
AgriculturalAgricultural$240 $377 $224 $281 $— $— 
Agricultural
Agricultural
Commercial and industrial
Commercial and industrial
Commercial and industrialCommercial and industrial18,472 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 developmentConstruction and development— — — — — — 
FarmlandFarmland1,736 2,278 1,590 1,997 — — 
Farmland
Farmland
Multifamily
Multifamily
MultifamilyMultifamily— — — — — — 
Commercial real estate-otherCommercial real estate-other5,117 6,397 369 5,647 — — 
Commercial real estate-other
Commercial real estate-other
Total commercial real estate
Total commercial real estate
Total commercial real estateTotal commercial real estate6,853 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 liensOne- to four- family first liens2,339 2,275 546 928 100 565 
One- to four- family junior liensOne- to four- family junior liens969 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 estateTotal residential real estate3,308 3,440 546 928 100 565 
ConsumerConsumer14 36 — — — — 
Consumer
Consumer
Total
Total
TotalTotal$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 YearRevolving Loans
September 30, 2023
(in thousands)
20232022202120202019PriorTotal
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)
20242023202220212020PriorTotal
AgriculturalAgricultural
Pass
Pass
PassPass$11,277 $13,087 $9,451 $3,268 $1,359 $1,155 $63,474 $103,071 
Special mention / watchSpecial mention / watch268 609 801 102 523 3,722 6,031 
SubstandardSubstandard394 151 184 214 225 1,678 2,848 
DoubtfulDoubtful— — — — — — — — 
TotalTotal$11,939 $13,847 $10,436 $3,584 $1,367 $1,903 $68,874 $111,950 
Commercial and industrialCommercial and industrial
Commercial and industrial
Commercial and industrial
Pass
Pass
PassPass$111,886 $243,011 $212,836 $129,482 $27,383 $119,645 $161,886 $1,006,129 
Special mention / watchSpecial mention / watch1,437 766 652 4,646 8,101 7,825 13,751 37,178 
SubstandardSubstandard1,471 2,571 2,440 1,344 717 22,571 4,352 35,466 
DoubtfulDoubtful— — — — — — — — 
TotalTotal$114,794 $246,348 $215,928 $135,472 $36,201 $150,041 $179,989 $1,078,773 
CRE - Construction and developmentCRE - Construction and development
CRE - Construction and development
CRE - Construction and development
Pass
Pass
PassPass$69,354 $198,619 $47,522 $3,532 $833 $1,118 $9,754 $330,732 
Special mention / watchSpecial mention / watch— — 474 — — — 412 886 
SubstandardSubstandard— 249 — — — — 250 
DoubtfulDoubtful— — — — — — — — 
TotalTotal$69,354 $198,868 $47,996 $3,532 $833 $1,119 $10,166 $331,868 
CRE - FarmlandCRE - Farmland
CRE - Farmland
CRE - Farmland
Pass
Pass
PassPass$17,318 $50,872 $48,074 $19,438 $6,703 $16,056 $1,866 $160,327 
Special mention / watchSpecial mention / watch1,237 2,761 2,456 6,104 — 1,180 804 14,542 
SubstandardSubstandard1,592 118 1,545 1,103 1,058 2,306 30 7,752 
DoubtfulDoubtful— — — — — — — — 
TotalTotal$20,147 $53,751 $52,075 $26,645 $7,761 $19,542 $2,700 $182,621 
CRE - MultifamilyCRE - Multifamily
CRE - Multifamily
CRE - Multifamily
Pass
Pass
PassPass$28,961 $55,115 $112,033 $83,413 $8,800 $5,654 $33 $294,009 
Special mention / watchSpecial mention / watch— 1,244 280 19,112 7,899 7,025 — 35,560 
SubstandardSubstandard— — 7,611 329 — — — 7,940 
DoubtfulDoubtful— — — — — — — — 
TotalTotal$28,961 $56,359 $119,924 $102,854 $16,699 $12,679 $33 $337,509 
CRE - OtherCRE - Other
CRE - Other
CRE - Other
Pass
Pass
PassPass$151,212 $292,139 $272,055 $264,462 $78,764 $97,815 $47,111 $1,203,558 
Special mention / watchSpecial mention / watch1,520 25,905 21,389 4,639 4,290 3,301 3,947 64,991 
SubstandardSubstandard324 2,104 1,704 20,414 12,067 18,018 839 55,470 
DoubtfulDoubtful— — — — — — — — 
TotalTotal$153,056 $320,148 $295,148 $289,515 $95,121 $119,134 $51,897 $1,324,019 
RRE - One- to four- family first liensRRE - 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 / PerformingPass / Performing$52,320 $128,048 $94,709 $55,492 $20,236 $84,489 $11,312 $446,606 
Special mention / watchSpecial mention / watch470 721 36 633 1,851 323 — 4,034 
Substandard / NonperformingSubstandard / Nonperforming1,171 463 485 166 167 3,679 — 6,131 
DoubtfulDoubtful— — — — — — — — 
TotalTotal$53,961 $129,232 $95,230 $56,291 $22,254 $88,491 $11,312 $456,771 
RRE - One- to four- family junior liensRRE - One- to four- family junior liens
RRE - One- to four- family junior liens
RRE - One- to four- family junior liens
Performing
Performing
PerformingPerforming$20,458 $31,327 $19,622 $7,643 $2,449 $8,322 $82,485 $172,306 
NonperformingNonperforming— — — 26 203 740 — 969 
TotalTotal$20,458 $31,327 $19,622 $7,669 $2,652 $9,062 $82,485 $173,275 
ConsumerConsumer
Consumer
Consumer
Performing
Performing
PerformingPerforming$21,003 $18,598 $11,481 $5,213 $1,821 $6,911 $4,143 $69,170 
NonperformingNonperforming— — — — 13 
TotalTotal$21,003 $18,598 $11,481 $5,218 $1,826 $6,914 $4,143 $69,183 
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Term Loans by Origination YearRevolving Loans
September 30, 2023
(in thousands)
20232022202120202019PriorTotal
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)
20242023202220212020PriorTotal
Total by Credit Quality Indicator CategoryTotal by Credit Quality Indicator Category
Total by Credit Quality Indicator Category
Total by Credit Quality Indicator Category
Pass
Pass
PassPass$442,328 $980,891 $796,680 $559,087 $144,078 $325,932 $295,436 $3,544,432 
Special mention / watchSpecial mention / watch4,932 32,006 26,088 35,236 22,147 20,177 22,636 163,222 
SubstandardSubstandard4,952 5,656 13,969 23,570 14,011 46,800 6,899 115,857 
DoubtfulDoubtful— — — — — — — — 
PerformingPerforming41,461 49,925 31,103 12,856 4,270 15,233 86,628 241,476 
NonperformingNonperforming— — — 31 208 743 — 982 
TotalTotal$493,673 $1,068,478 $867,840 $630,780 $184,714 $408,885 $411,599 $4,065,969 
Term Loans by Origination Year
Term Loans by Origination Year
Term Loans by Origination Year
March 31, 2024
(in thousands)
March 31, 2024
(in thousands)
March 31, 2024
(in thousands)
20242023202220212020PriorTotal
Year-to-date Current Period Gross Write-offsYear-to-date Current Period Gross Write-offs
Agricultural
Agricultural
AgriculturalAgricultural$— $$$17 $— $— $— $26 
Commercial and industrialCommercial and industrial30 256 143 115 431 45 — 1,020 
CRE - Construction and developmentCRE - Construction and development— — — — — — — — 
CRE - FarmlandCRE - Farmland— — — — — — — — 
CRE - MultifamilyCRE - Multifamily— — — — — — — — 
CRE - OtherCRE - Other— — — — — 830 — 830 
RRE - One-to-four-family first liensRRE - One-to-four-family first liens— — — — — 35 — 35 
RRE - One-to-four-family junior liensRRE - One-to-four-family junior liens— 19 — — — — — 19 
ConsumerConsumer— 424 11 — 451 
Total Current Period Gross Write-offsTotal Current Period Gross Write-offs$30 $707 $153 $135 $442 $914 $— $2,381 
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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 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 YearRevolving Loans
December 31, 2022
(in thousands)
20222021202020192018PriorTotal
Agricultural
Pass$20,279 $12,511 $5,398 $2,883 $939 $1,063 $65,395 $108,468 
Special mention / watch143 1,012 115 36 — 604 1,655 3,565 
Substandard48 646 366 302 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 / watch3,975 3,574 5,465 592 3,299 1,864 12,299 31,068 
Substandard556 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 / watch1,787 499 — — — — — 2,286 
Substandard281 — — — — — 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 / watch3,058 2,229 1,470 — 225 21 1,693 8,696 
Substandard148 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 / watch1,000 — 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 / watch8,858 3,399 13,245 10,365 1,137 8,122 2,518 47,644 
Substandard752 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 / watch1,074 611 672 1,920 150 702 — 5,129 
Substandard / Nonperforming175 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— 16 — 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 / watch19,895 11,324 22,534 12,913 10,742 12,491 18,165 108,064 
Substandard1,960 11,538 22,940 15,365 12,893 27,871 2,926 95,493 
Doubtful— — — — — — — — 
Performing69,880 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 YearRevolving Loans
December 31, 2023
(in thousands)
20232022202120202019PriorTotal
Agricultural
Pass$11,859 $12,149 $8,352 $2,752 $689 $1,139 $71,680 $108,620 
Special mention / watch266 550 670 91 522 3,705 5,809 
Substandard709 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 / watch2,541 416 3,209 3,385 193 272 14,692 24,708 
Substandard897 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 / watch1,097 — 464 — — — 467 2,028 
Substandard343 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 / watch1,229 6,898 2,409 5,982 — 965 276 17,759 
Substandard1,830 210 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 / watch5,318 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 / watch364 1,306 3,300 4,823 4,282 2,395 3,856 20,326 
Substandard325 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 / watch629 716 36 620 1,827 319 — 4,147 
Substandard / Nonperforming1,156 191 738 165 164 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 — — — 27 
Total$26,028 $14,341 $10,042 $4,421 $1,454 $7,352 $4,145 $67,783 
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Term Loans by Origination YearRevolving Loans
December 31, 2023
(in thousands)
20232022202120202019PriorTotal
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 / watch11,444 11,123 10,365 33,885 14,157 9,059 22,996 113,029 
Substandard5,260 30,310 31,417 21,416 17,839 52,965 7,795 167,002 
Doubtful— — — — — — — — 
Performing49,579 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 $4,126,947 
Term Loans by Origination YearRevolving Loans
December 31, 2023
(in thousands)
20232022202120202019PriorTotal
Year-to-date Current Period Gross Write-offs
Agricultural$— $$$17 $$— $— $28 
Commercial and industrial239 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— 62130121210— 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-yearyear-to-year change in national retail sales - increases over the next four forecasted quarters; (3) Year-to-yearyear-to-year change in CRE Index - decreases inover the next four forecasted quarters; (4) Year-to-yearyear-to-year change in U.S. GDP - increases over the next four forecasted quarters; (5) Year-to-yearyear-to-year change in National Home Price Index – increases over the next two forecasted quarters, with declines in the third and fourthfour forecasted quarters; and (6) Rental Vacancyrental 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, 2023March 31, 2024 and December 31, 2022 is primarily driven by reserves2023 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, 2023March 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, 2023March 31, 2024 and $15.3$19.7 million at December 31, 20222023 and is excluded from the estimate of credit losses.

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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)AgriculturalCommercial and IndustrialCommercial Real EstateResidential Real EstateConsumerTotal
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)
Recoveries126 79 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)
Recoveries295 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)AgriculturalCommercial and IndustrialCommercial Real EstateResidential Real EstateConsumerTotal
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)
Recoveries153 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 acquisition512 1,473 1,227 159 — 3,371 
Charge-offs(249)(843)(2,319)(90)(540)(4,041)
Recoveries613 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.
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Table of Contents
For the Three Months Ended March 31, 2024 and 2023
(in thousands)AgriculturalCommercial and IndustrialCommercial Real EstateResidential Real EstateConsumerTotal
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)
Recoveries355 46 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)
Recoveries26 75 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, 2024As of March 31, 2024
(in thousands)(in thousands)AgriculturalCommercial and IndustrialCommercial Real EstateResidential Real EstateConsumerTotal(in thousands)AgriculturalCommercial and IndustrialCommercial Real EstateResidential Real EstateConsumerTotal
Loans held for investment, net of unearned incomeLoans held for investment, net of unearned income
Individually evaluated for impairment
Individually evaluated for impairment
Individually evaluated for impairmentIndividually evaluated for impairment$224 $17,687 $12,759 $1,167 $— $31,837 
Collectively evaluated for impairmentCollectively evaluated for impairment111,726 1,061,086 2,163,258 628,879 69,183 4,034,132 
TotalTotal$111,950 $1,078,773 $2,176,017 $630,046 $69,183 $4,065,969 
Allowance for credit losses:Allowance for credit losses:
Individually evaluated for impairmentIndividually evaluated for impairment$— $2,879 $1,128 $46 $— $4,053 
Individually evaluated for impairment
Individually evaluated for impairment
Collectively evaluated for impairmentCollectively evaluated for impairment537 19,184 22,659 4,597 570 47,547 
TotalTotal$537 $22,063 $23,787 $4,643 $570 $51,600 
As of December 31, 2022
As of December 31, 2023As of December 31, 2023
(in thousands)(in thousands)AgriculturalCommercial and IndustrialCommercial Real EstateResidential Real EstateConsumerTotal(in thousands)AgriculturalCommercial and IndustrialCommercial Real EstateResidential Real EstateConsumerTotal
Loans held for investment, net of unearned incomeLoans held for investment, net of unearned income
Individually evaluated for impairment
Individually evaluated for impairment
Individually evaluated for impairmentIndividually evaluated for impairment$2,531 $2,184 $15,768 $1,650 $— $22,133 
Collectively evaluated for impairmentCollectively evaluated for impairment112,789 1,052,978 1,964,250 612,778 75,596 3,818,391 
TotalTotal$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 impairmentIndividually evaluated for impairment$500 $600 $705 $180 $— $1,985 
Collectively evaluated for impairmentCollectively evaluated for impairment423 22,255 19,418 4,498 621 47,215 
TotalTotal$923 $22,855 $20,123 $4,678 $621 $49,200 
Total
Total
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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 EstateEquipmentOtherTotalACL Allocation
Real EstateReal EstateEquipmentOtherTotalACL Allocation
AgriculturalAgricultural$12 $212 $— $224 $— 
Commercial and industrialCommercial and industrial15,992 326 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 Farmland5,582 — — 5,582 — 
Multifamily Multifamily— — — — — 
Commercial real estate-other Commercial real estate-other6,991 — 186 7,177 1,128 
Residential real estate:Residential real estate:
One- to four- family first liens One- to four- family first liens546 — — 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 
ConsumerConsumer— — — — — 
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 EstateEquipmentOtherTotalACL Allocation
Real EstateReal EstateEquipmentOtherTotalACL Allocation
AgriculturalAgricultural$68 $2,463 $— $2,531 $500 
Commercial and industrialCommercial and industrial856 736 592 2,184 600 
Commercial real estate:Commercial real estate:
Construction and development
Construction and development
Construction and development Construction and development— — — — — 
Farmland Farmland4,515 — — 4,515 — 
Multifamily Multifamily— — — — — 
Commercial real estate-other Commercial real estate-other11,006 — 247 11,253 705 
Residential real estate:Residential real estate:
One- to four- family first liens One- to four- family first liens929 — — 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 
ConsumerConsumer— — — — — 
Total Total$17,374 $3,199 $1,560 $22,133 $1,985 



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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 presentstables 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 ForgivenessPayment DelayTerm ExtensionInterest Rate ReductionTerm Extension & Interest Rate ReductionPrincipal Forgiveness & Term ExtensionPrincipal Forgiveness, Term Extension, & Interest Rate ReductionPayment Delay & Term ExtensionTotal 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 ForgivenessPayment DelayTerm ExtensionInterest Rate ReductionTerm Extension & Interest Rate ReductionPrincipal Forgiveness & Term ExtensionPrincipal Forgiveness, Term Extension, & Interest Rate ReductionPayment Delay & Term ExtensionTotal Class of Financing Receivable
Three Months Ended September 30, 2023
Commercial and industrial
Commercial and industrialCommercial and industrial$— $— $2,062 $— $— $— $— $— 0.19 %$— $$— $$350 $$— $$— $$— $$— $$— 0.03 0.03 %
CRE - OtherCRE - Other— — 1,368 — — — — — 0.10 %
CRE - Other
Total$— $— $3,430 $— $— $— $— $— 
Nine Months Ended September 30, 2023
Agricultural$— $13 $— $— $— $— $— $— 0.01 %
Commercial and industrial— 264 2,820 — 103 302 — 188 0.34 %
CRE - Farmland— — 1,823 — — — — — 1.00 %
CRE - OtherCRE - Other— 158 1,368 — — — — — 0.12 %— — — 202 202 — — — — — — — — — — 0.01 0.01 %
RRE - One- to four- family first liensRRE - One- to four- family first liens— — 49 — — — — — 0.01 %RRE - One- to four- family first liens— 253 253 — — — — — — — — — — — — 0.05 0.05 %
RRE - One- to four- family junior liensRRE - One- to four- family junior liens— — 136 — — — — — 0.07 %
Total
Total
Total$— $253 $688 $— $— $— $— $— 
Total$— $435 $6,060 $— $103 $302 $— $188 

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Table of Contents
For the Three Months Ended March 31, 2023
Combination:
(dollars in thousands)Principal ForgivenessPayment DelayTerm ExtensionInterest Rate ReductionTerm Extension & Interest Rate ReductionPrincipal Forgiveness & Term ExtensionPrincipal Forgiveness, Term Extension, & Interest Rate ReductionPayment Delay & Term ExtensionTotal 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 commitmentcommitments to lend amounts to the borrowers included in the previous tabletables 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 presentstables 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)Current30 - 59 Days Past Due60 - 89 Days Past Due90 Days or More Past DueTotal
Agricultural$— $— $13 $— $13 
Commercial and industrialCommercial and industrial3,490 188 — — 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 - FarmlandCRE - Farmland1,823 — — — 1,823 
CRE - OtherCRE - Other1,525 — — — 1,525 
CRE - Other
CRE - Other
RRE - One- to four- family first liensRRE - 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
TotalTotal$6,838 $237 $13 $— $7,088 
Total
Total











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The following table presentstables 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 ForgivenessWeighted Average Interest Rate ReductionWeighted Average Term Extension (Months)
Three Months Ended September 30, 2023
Commercial and industrial$— — %9.9
CRE - Other18 — %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 - Other18 — %5.3
RRE - One- to four- family first liens— — %3.9
Total$81 1.25 %6.1

(dollars in thousands)
Principal ForgivenessWeighted Average Interest Rate ReductionWeighted 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
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(dollars in thousands)
Principal ForgivenessWeighted Average Interest Rate ReductionWeighted Average Term Extension (Months)
Three Months Ended March 31, 2023
Agricultural$— — %2.37
Commercial and industrial63 1.25 11.89
CRE - Other18 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, 2023As of December 31, 2022
Notional
Amount
Fair Value
Notional
Amount
Fair Value
As of March 31, 2024As of March 31, 2024As of December 31, 2023
Notional
Amount
Notional
Amount
Fair Value
Notional
Amount
Fair Value
(in thousands)(in thousands)
Notional
Amount
AssetsLiabilities
Notional
Amount
AssetsLiabilities(in thousands)AssetsLiabilitiesAssetsLiabilities
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 - loansInterest rate swaps - loans$41,362 $3,262 $50 $24,018 $2,556 $— 
Interest rate swaps - securities Interest rate swaps - securities100,000 449 — — — — 
Cash flow hedgesCash flow hedges
Interest rate swapsInterest rate swaps200,000 4,289 — — — — 
Interest rate swaps
Interest rate swaps
TotalTotal$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 swapsInterest rate swaps$364,153 $23,408 $23,438 $331,197 $21,084 $21,087 
RPAs - protection soldRPAs - protection sold186 — — — — — 
RPAs - protection purchasedRPAs - protection purchased24,701 — — 9,421 — — 
Interest rate lock commitmentsInterest rate lock commitments1,474 18 — 1,372 — 
Interest rate forward loan sales contractsInterest rate forward loan sales contracts3,382 22 — 1,400 — 
TotalTotal$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
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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.
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The table below presents the effect of cash flow hedge accounting on AOCI for the three and nine months ended September 30, 2023March 31, 2024 and 2022:2023:

Amount of Gain (Loss) Recognized in AOCI on DerivativeLocation of Gain (Loss) Reclassified from AOCI into IncomeAmount 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 DerivativeAmount of Gain (Loss) Recognized in AOCI on DerivativeLocation of Gain (Loss) Reclassified from AOCI into IncomeAmount 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)2023202220232022(in thousands)2024202320242023
Interest rate swapsInterest rate swaps$1,829 $— Interest Expense$761 $— 
Nine Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
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,
2023202220232022
(in thousands)Interest IncomeOther IncomeInterest IncomeOther IncomeInterest IncomeOther IncomeInterest IncomeOther 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 instruments964 — 1,175 — 1,219 — 3,519 — 
Interest contracts - securities:
Hedged items(454)— — — (454)— — — 
Derivative designated as hedging instruments560 — — — 560 — — — 
Income statement effect of cash flow hedging relationships in subtopic 815-20:
Interest contracts:
Amount reclassified from AOCI into income761 — — — 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)(in thousands)
LoansLoans$38,187 $(3,211)
Loans
Loans
SecuritiesSecurities$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.
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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.
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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 IncomeFor 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 Income2023202220232022
Interest rate swapsInterest rate swaps$(27)$$(27)$10 
Interest rate swaps
Interest rate swaps
RPAs
RPAs
RPAsRPAsOther income— 70 
Interest rate lock commitmentsInterest rate lock commitmentsLoan revenue(51)(149)11 (367)
Interest rate lock commitments
Interest rate lock commitments
Interest rate forward loan sales contracts
Interest rate forward loan sales contracts
Interest rate forward loan sales contractsInterest rate forward loan sales contractsLoan revenue(5)91 14 63 
Total Total$(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, 2023March 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 RecognizedGross Amounts Offset in the Balance SheetNet Amounts presented in the Balance SheetFinancial InstrumentsCash Collateral Received / PaidNet Assets /Liabilities
As of September 30, 2023
(in thousands)
(in thousands)Gross Amounts RecognizedGross Amounts Offset in the Balance SheetNet Amounts presented in the Balance SheetFinancial InstrumentsCash Collateral Received / PaidNet Assets /Liabilities
As of March 31, 2024
Asset Derivatives
Asset Derivatives
Asset DerivativesAsset Derivatives$31,448 $— $31,448 $— $22,762 $8,686 
Liability DerivativesLiability Derivatives23,488 — 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 DerivativesAsset Derivatives$23,655 $— $23,655 $— $18,858 $4,797 
Liability DerivativesLiability Derivatives21,087 — 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 $62.5for the period indicated:
(in thousands)As of March 31, 2024As of December 31, 2023
Goodwill, beginning of period$62,477 $62,477 
Goodwill from the acquisition of DNVB8,641 — 
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, 2023As of December 31, 2022
(in thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Core deposit intangible$58,245 $(40,171)$18,074 $58,245 $(35,822)$22,423 
Customer relationship intangible5,265 (4,905)360 5,265 (4,490)775 
Other2,700 (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, 2024As of December 31, 2023
(in thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Core deposit intangible$65,345 $(43,044)$22,301 $58,245 $(41,499)$16,746 
Customer relationship intangible5,265 (5,092)173 5,265 (5,008)257 
Other2,700 (2,683)17 2,700 (2,674)26 
$73,310 $(50,819)$22,491 $66,210 $(49,181)$17,029 
Indefinite-lived trade name intangible7,040 7,040 
Total other intangible assets, net$29,531 $24,069 
The following table provides the estimated future amortization expense for the remaining threenine months of the year ending December 31, 20232024 and the succeeding annual periods:
(in thousands)(in thousands)Core Deposit IntangibleCustomer Relationship IntangibleOtherTotal(in thousands)Core Deposit IntangibleCustomer Relationship IntangibleOtherTotal
2023$1,328 $103 $10 $1,441 
2024
2024
202420244,705 239 24 4,968 
202520253,751 18 3,771 
202620262,797 — — 2,797 
202720271,843 — — 1,843 
2028
ThereafterThereafter3,650 — — 3,650 
TotalTotal$18,074 $360 $36 $18,470 

7.    Other Assets
The components of the Company's other assets as of September 30, 2023March 31, 2024 and December 31, 20222023 were as follows:
(in thousands)September 30, 2023December 31, 2022
Bank-owned life insurance$97,383 $95,539 
Interest receivable30,095 27,090 
FHLB stock14,869 19,248 
Mortgage servicing rights13,438 13,421 
Operating lease right-of-use assets, net2,593 2,492 
Federal and state income taxes, current— 2,366 
Federal and state income taxes, deferred37,641 39,071 
Derivative assets31,448 23,655 
Other receivables/assets16,569 13,635 
$244,036 $236,517 

(in thousands)March 31, 2024December 31, 2023
Bank-owned life insurance$98,700 $98,039 
Interest receivable30,728 29,768 
FHLB stock5,220 5,806 
Mortgage servicing rights12,965 13,333 
Operating lease right-of-use assets, net2,153 2,337 
Federal and state income taxes, current579 1,556 
Federal and state income taxes, deferred29,582 31,218 
Derivative assets27,844 25,093 
Other receivables/assets18,706 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, 2023December 31, 2022(in thousands)March 31, 2024December 31, 2023
Noninterest bearing depositsNoninterest bearing deposits$924,213 $1,053,450 
Interest checking depositsInterest checking deposits1,334,481 1,624,278 
Money market depositsMoney market deposits1,127,287 937,340 
Savings depositsSavings deposits619,805 664,169 
Time deposits of $250 and underTime deposits of $250 and under923,709 559,466 
Time deposits over $250Time deposits over $250433,829 630,239 
Total depositsTotal 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, 2023March 31, 2024 and December 31, 2022,2023, respectively. Included in money market deposits at September 30, 2023March 31, 2024 and December 31, 20222023 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, 2023March 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
24

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

As of September 30, 2023March 31, 2024 and December 31, 2022,2023, the Company had public entity deposits, thatwhich 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, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
(in thousands)(in thousands)Weighted Average RateBalanceWeighted Average RateBalance(in thousands)Weighted Average RateBalanceWeighted Average RateBalance
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase0.73 %$9,256 1.32 %$156,373 
Federal Home Loan Bank advancesFederal Home Loan Bank advances5.53 139,700 4.48 235,500 
Federal Reserve Bank borrowingsFederal Reserve Bank borrowings5.03 225,000 — — 
Federal Reserve Bank borrowings
Federal Reserve Bank borrowings
Unsecured line of credit
TotalTotal5.11 %$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, 2023March 31, 2024 or December 31, 2022.2023.
Other Federal Reserve Bank Borrowing- At September 30, 2023March 31, 2024 and December 31, 2022,2023, the Company had no Federal Reserve Discount Window borrowings, while the financingborrowing capacity was $515.4$421.4 million as of September 30, 2023March 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, withborrowings. 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, 2023March 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 andMarch 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 ValueBook ValueInterest RateRateMaturity DateCallable Date
September 30, 2023
(in thousands)
(in thousands)Face ValueBook Value
Interest Rate(1)
RateMaturity DateCallable Date
ATBancorp Statutory Trust IATBancorp Statutory Trust I$7,732 $6,959 Three-month CME Term SOFR + 0.26% Spread + 1.68% Margin7.35 %06/15/203606/15/2011ATBancorp Statutory Trust I$7,732 $$6,980 $$6,970 1.68% Margin1.68% Margin7.27 %7.33 %06/15/203606/15/2011
ATBancorp Statutory Trust IIATBancorp Statutory Trust II12,372 11,018 Three-month CME Term SOFR + 0.26% Spread + 1.65% Margin7.32 %09/15/203706/15/2012ATBancorp Statutory Trust II12,372 11,051 11,051 11,03411,0341.65% Margin7.24 %7.30 %09/15/203706/15/2012
Barron Investment Capital Trust IBarron Investment Capital Trust I2,062 1,854 Three-month CME Term SOFR + 0.26% Spread + 2.15% Margin7.81 %09/23/203609/23/2011Barron Investment Capital Trust I2,062 1,868 1,868 1,861 1,861 2.15% Margin2.15% Margin7.73 %7.77 %09/23/203609/23/2011
Central Bancshares Capital Trust IICentral Bancshares Capital Trust II7,217 6,954 Three-month CME Term SOFR + 0.26% Spread + 3.50% Margin9.17 %03/15/203803/15/2013Central Bancshares Capital Trust II7,217 6,974 6,974 6,964 6,964 3.50% Margin3.50% Margin9.09 %9.15 %03/15/203803/15/2013
MidWestOne Statutory Trust IIMidWestOne Statutory Trust II15,464 15,464 Three-month CME Term SOFR + 0.26% Spread + 1.59% Margin7.26 %12/15/203712/15/2012MidWestOne Statutory Trust II15,464 15,464 15,464 15,464 15,464 1.59% Margin1.59% Margin7.18 %7.24 %12/15/203712/15/2012
TotalTotal$44,847 $42,249 
December 31, 2022
ATBancorp Statutory Trust I$7,732 $6,928 Three-month LIBOR + 1.68%6.45 %06/15/203606/15/2011
ATBancorp Statutory Trust II12,37210,969Three-month LIBOR + 1.65%6.42 %09/15/203706/15/2012
Barron Investment Capital Trust I2,062 1,832 Three-month LIBOR + 2.15%6.88 %09/23/203609/23/2011
Central Bancshares Capital Trust II7,217 6,923 Three-month LIBOR + 3.50%8.27 %03/15/203803/15/2013
MidWestOne Statutory Trust II15,464 15,464 Three-month LIBOR + 1.59%6.36 %12/15/203712/15/2012
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, 2023March 31, 2024 and December 31, 2022:2023:
September 30, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
(in thousands)(in thousands)Weighted Average RateBalanceWeighted Average RateBalance(in thousands)Weighted Average RateBalanceWeighted Average RateBalance
Finance lease payableFinance lease payable8.89 %$652 8.89 %$787 
FHLB borrowingsFHLB borrowings3.11 6,270 2.91 17,301 
Note payable to unaffiliated bankNote payable to unaffiliated bank6.88 11,250 5.67 15,000 
TotalTotal5.65 %$18,172 4.30 %$33,088 
On June 7, 2022, pursuant to a credit agreement with a correspondent bank, the Company entered into an unsecureda $35.0 million term note payable with a correspondent bank with a maturity date ofmaturing on June 30, 2027. Payments of principalPrincipal and interest are payable quarterly, and began on September 30, 2022. Interest is payableaccrues 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.
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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 RateAmount
Due in 20243.11 %6,250 
Valuation adjustment from acquisition accounting20 
Total$6,270 

(in thousands)Weighted Average RateAmount
Due in 20243.11 %$6,250 
Valuation adjustment from acquisition accounting
Total$6,255 
11.    Earnings per Share
The following table presentpresents 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)2023202220232022
Basic Earnings Per Share:Basic Earnings Per Share:
Basic Earnings Per Share:
Basic Earnings Per Share:
Net income
Net income
Net incomeNet income$9,138 $18,317 $18,129 $44,833 
Weighted average shares outstandingWeighted average shares outstanding15,688,502 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 shareBasic 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 incomeNet income$9,138 $18,317 $18,129 $44,833 
Weighted average shares outstanding, including all dilutive potential sharesWeighted average shares outstanding, including all dilutive potential shares15,711,137 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 shareDiluted 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, 2023March 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 amountno 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, 2023March 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)AmountRatioAmountRatioAmountRatio
At September 30, 2023
Consolidated:
Total capital/risk weighted assets(1)
$668,67812.45%$564,13710.50%N/AN/A
Tier 1 capital/risk weighted assets(1)
553,80710.31456,6828.50N/AN/A
Common equity tier 1 capital/risk weighted assets(1)
511,5589.52376,0917.00N/AN/A
Tier 1 leverage capital/average assets553,8078.58258,0714.00N/AN/A
MidWestOne Bank:
Total capital/risk weighted assets(1)
$662,83112.36%$563,16610.50%$536,34810.00%
Tier 1 capital/risk weighted assets(1)
612,96011.43455,8968.50429,0798.00
Common equity tier 1 capital/risk weighted assets(1)
612,96011.43375,4447.00348,6266.50
Tier 1 leverage capital/average assets612,9609.51257,9314.00322,4145.00
At December 31, 2022
Consolidated:
Total capital/risk weighted assets(1)
$653,38012.07%$568,45210.50%N/AN/A
Tier 1 capital/risk weighted assets(1)
544,30010.05460,1758.50N/AN/A
Common equity tier 1 capital/risk weighted assets(1)
502,1849.28378,9687.00N/AN/A
Tier 1 leverage capital/average assets544,3008.35260,8914.00N/AN/A
MidWestOne Bank:
Total capital/risk weighted assets(1)
$654,29712.10%$567,68410.50%$540,65210.00%
Tier 1 capital/risk weighted assets(1)
610,21711.29459,5548.50432,5228.00
Common equity tier 1 capital/risk weighted assets(1)
610,21711.29378,4567.00351,4246.50
Tier 1 leverage capital/average assets610,2179.36260,7764.00325,9705.00
Actual
For Capital Adequacy Purposes With Capital Conservation Buffer(1)
To Be Well Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands)AmountRatioAmountRatioAmountRatio
At March 31, 2024
Consolidated:
Total capital/risk weighted assets$661,44811.97%$580,19210.50%N/AN/A
Tier 1 capital/risk weighted assets538,7569.75469,6798.50N/AN/A
Common equity tier 1 capital/risk weighted assets496,4198.98386,7957.00N/AN/A
Tier 1 leverage capital/average assets538,7568.16264,0014.00N/AN/A
MidWestOne Bank:
Total capital/risk weighted assets$675,28712.25%$578,80510.50%$551,24310.00%
Tier 1 capital/risk weighted assets617,59611.20468,5578.50440,9958.00
Common equity tier 1 capital/risk weighted assets617,59611.20385,8707.00358,3086.50
Tier 1 leverage capital/average assets617,5969.36263,8014.00329,7515.00
At December 31, 2023
Consolidated:
Total capital/risk weighted assets$668,74812.53%$560,59610.50%N/AN/A
Tier 1 capital/risk weighted assets554,17710.38453,8168.50N/AN/A
Common equity tier 1 capital/risk weighted assets511,8849.59373,7317.00N/AN/A
Tier 1 leverage capital/average assets554,1778.58258,4874.00N/AN/A
MidWestOne Bank:
Total capital/risk weighted assets$656,02712.49%$551,65810.50%$525,38810.00%
Tier 1 capital/risk weighted assets606,45611.54446,5808.50420,3108.00
Common equity tier 1 capital/risk weighted assets606,45611.54367,7727.00341,5026.50
Tier 1 leverage capital/average assets606,4569.39258,3394.00322,9245.00
(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, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
(in thousands)(in thousands)
Commitments to extend credit
Commitments to extend credit
Commitments to extend creditCommitments to extend credit$1,242,267 $1,190,607 
Commitments to sell loansCommitments to sell loans2,528 612 
Standby letters of creditStandby letters of credit9,078 18,398 
TotalTotal$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, 2023March 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 monthsthree-months ended September 30, 2023, noMarch 31, 2024, $0.1 million credit loss expense was recorded, while awith no credit loss expense of $0.8 million was recorded for the nine monthsthree-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 20222023 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 subdivisionsState and political subdivisions$162,468  $—  $162,468  $— 
Mortgage-backed securitiesMortgage-backed securities5,327  —  5,327  — 
Collateralized loan obligations Collateralized loan obligations52,453 — 52,453 — 
Collateralized mortgage obligationsCollateralized mortgage obligations131,923 — 131,923 — 
Corporate debt securitiesCorporate debt securities520,599  —  520,599  — 
Derivative assetsDerivative assets31,448 — 31,430 18 
Mortgage servicing rights Mortgage servicing rights13,438 — 13,438 — 
Liabilities:Liabilities:
Liabilities:
Liabilities:
Derivative liabilitiesDerivative 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 subdivisionsState and political subdivisions285,356  —  285,356  — 
Mortgage-backed securitiesMortgage-backed securities5,944  —  5,944  — 
Collateralized loan obligations
Collateralized mortgage obligationsCollateralized mortgage obligations147,193 — 147,193 — 
Corporate debt securitiesCorporate debt securities707,709  —  707,709  — 
Derivative assetsDerivative assets23,655 — 23,648 
Mortgage servicing rightsMortgage servicing rights13,421 — 13,421 — 
Liabilities:Liabilities:
Liabilities:
Liabilities:
Derivative liabilitiesDerivative 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 ninethree months ended September 30, 2023March 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
Fair Value at
(dollars in thousands)
(dollars in thousands)
(dollars in thousands)(dollars in thousands)September 30, 2023December 31, 2022Valuation Techniques(s)Unobservable InputRange of InputsWeighted AverageMarch 31, 2024December 31, 2023Valuation Techniques(s)Unobservable InputRange of InputsWeighted Average
Interest rate lock commitmentsInterest rate lock commitments$18 $Quoted or published market prices of similar instruments, adjusted for factors such as pull-through rate assumptionsPull-through rate70%-100%85%Interest rate lock commitments$77 $$50 Quoted or published market prices of similar instruments, adjusted for factors such as pull-through rate assumptionsQuoted or published market prices of similar instruments, adjusted for factors such as pull-through rate assumptionsPull-through rate71%-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)(in thousands)TotalLevel 1Level 2Level 3(in thousands)TotalLevel 1Level 2Level 3
Collateral dependent individually analyzed loansCollateral 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)TotalLevel 1Level 2Level 3(in thousands)TotalLevel 1Level 2Level 3
Collateral dependent individually analyzed loansCollateral dependent individually analyzed loans$3,159 $— $— $3,159 
Foreclosed assets, netForeclosed assets, net103 — — 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, 2023December 31, 2022Valuation Techniques(s)Unobservable InputRange of InputsWeighted AverageMarch 31, 2024December 31, 2023Valuation Techniques(s)Unobservable InputRange of InputsWeighted Average
Collateral dependent individually analyzed loansCollateral dependent individually analyzed loans$8,479 $3,159 Fair value of collateralValuation adjustments—%-55%12%Collateral dependent individually analyzed loans$4,481 $$6,524 Fair value of collateralFair value of collateralValuation adjustments—%-33%11%
Foreclosed assets, netForeclosed assets, net$— $103 Fair value of collateralValuation adjustments
N/A(1)
Foreclosed assets, net$3,897 $$3,929 Fair value of collateralFair value of collateralValuation adjustments7%-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, 2023March 31, 2024 and December 31, 20222023 were as follows:
September 30, 2023 March 31, 2024
(in thousands)(in thousands)Carrying
Amount
Estimated
Fair Value
Level 1Level 2Level 3(in thousands)Carrying
Amount
Estimated
Fair Value
Level 1Level 2Level 3
Financial assets:Financial assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalentsCash and cash equivalents$74,788 $74,788 $74,788 $— $— 
Debt securities available for saleDebt securities available for sale872,770 872,770 — 872,770 — 
Debt securities held to maturityDebt securities held to maturity1,085,751 848,363 — 848,363 — 
Loans held for saleLoans held for sale2,528 2,564 — 2,564 — 
Loans held for investment, netLoans held for investment, net4,014,369 3,873,341 — — 3,873,341 
Interest receivableInterest receivable30,095 30,095 — 30,095 — 
FHLB stockFHLB stock14,869 14,869 — 14,869 — 
Derivative assetsDerivative assets31,448 31,448 — 31,430 18 
Financial liabilities:Financial liabilities:
Noninterest bearing depositsNoninterest bearing deposits924,213 924,213 924,213 — — 
Noninterest bearing deposits
Noninterest bearing deposits
Interest bearing depositsInterest bearing deposits4,439,111 4,424,216 3,081,572 1,342,644 — 
Short-term borrowingsShort-term borrowings373,956 373,956 373,956 — — 
Finance leases payableFinance leases payable652 652 — 652 — 
FHLB borrowingsFHLB borrowings6,270 6,269 — 6,269 — 
Junior subordinated notes issued to capital trustsJunior subordinated notes issued to capital trusts42,249 37,900 — 37,900 — 
Subordinated debenturesSubordinated debentures64,105 62,809 — 62,809 — 
Other long-term debtOther long-term debt11,250 11,250 — 11,250 — 
Derivative liabilitiesDerivative liabilities23,488 23,488 — 23,488 — 
December 31, 2022 December 31, 2023
(in thousands)(in thousands)
Carrying
Amount
Estimated
Fair Value
Level 1Level 2Level 3(in thousands)
Carrying
Amount
Estimated
Fair Value
Level 1Level 2Level 3
Financial assets:Financial assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalentsCash and cash equivalents$86,435 $86,435 $86,435 $— $— 
Debt securities available for saleDebt securities available for sale1,153,547 1,153,547 — 1,153,547 — 
Debt securities held to maturityDebt securities held to maturity1,129,421 924,894 — 924,894 — 
Loans held for saleLoans held for sale612 622 — 622 — 
Loans held for investment, netLoans held for investment, net3,791,324 3,702,527 — — 3,702,527 
Interest receivableInterest receivable27,090 27,090 — 27,090 — 
FHLB stockFHLB stock19,248 19,248 — 19,248 — 
Derivative assetsDerivative assets23,655 23,655 — 23,648 
Financial liabilities:Financial liabilities:
Noninterest bearing depositsNoninterest bearing deposits1,053,450 1,053,450 1,053,450 — — 
Noninterest bearing deposits
Noninterest bearing deposits
Interest bearing depositsInterest bearing deposits4,415,492 4,393,315 3,225,787 1,167,528 — 
Short-term borrowingsShort-term borrowings391,873 391,873 391,873 — — 
Finance leases payableFinance leases payable787 787 — 787 — 
FHLB borrowingsFHLB borrowings17,301 17,032 — 17,032 — 
Junior subordinated notes issued to capital trustsJunior subordinated notes issued to capital trusts42,116 39,023 — 39,023 — 
Subordinated debenturesSubordinated debentures64,006 64,004 — 64,004 — 
Other long-term debtOther long-term debt15,000 15,000 — 15,000 — 
Derivative liabilitiesDerivative liabilities21,087 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)ClassificationSeptember 30, 2023December 31, 2022(in thousands)ClassificationMarch 31, 2024December 31, 2023
Operating lease right-of-use assetsOperating lease right-of-use assets
Other assets
$2,593 $2,492 
Finance lease right-of-use assetFinance lease right-of-use asset
Premises and equipment, net
279 350 
Total right-of-use assetsTotal right-of-use assets$2,872 $2,842 
Operating lease liabilityOperating lease liability
Other liabilities
$3,365 $3,359 
Operating lease liability
Operating lease liability
Finance lease liabilityFinance lease liability
Long-term debt
652 787 
Total lease liabilitiesTotal lease liabilities$4,017 $4,146 
Weighted-average remaining lease term:Weighted-average remaining lease term:Operating leases9.78 years9.23 years
Finance lease2.92 years3.67 years
Weighted-average remaining lease term:
Weighted-average remaining lease term:Operating leases10.61 years10.20 years
Finance leaseFinance lease2.42 years2.67 years
Weighted-average discount rate:Weighted-average discount rate:Operating leases4.33 %4.23 %Weighted-average discount rate:Operating leases4.54 %4.43 %
Finance lease8.89 %8.89 %
Finance leaseFinance lease8.89 %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 EndedNine 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 202220232022
Lease CostsLease Costs
Lease Costs
Lease Costs
Operating lease cost
Operating lease cost
Operating lease costOperating lease cost$297 $290 $885 $874 
Variable lease costVariable lease cost15 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 assetsAmortization of right-of-use assets24 24 72 72 
Amortization of right-of-use assets
Amortization of right-of-use assets
Net lease cost
Net lease cost
Net lease costNet lease cost$340 $340 $1,019 $1,053 
Other InformationOther 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 leasesOperating 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 leaseOperating cash flows from finance lease15 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 leaseFinance cash flows from finance lease46 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 liabilitiesRight-of-use assets obtained in exchange for new operating lease liabilities526 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-monthsnine-months ending December 31, 20232024 and the succeeding annual periods were as follows:
(in thousands)(in thousands)Finance LeasesOperating Leases(in thousands)Finance LeasesOperating Leases
December 31, 2023$62 $318 
December 31, 2024December 31, 2024250 1,047 
December 31, 2025December 31, 2025254 568 
December 31, 2026December 31, 2026172 430 
December 31, 2027December 31, 2027— 302 
December 31, 2028
ThereafterThereafter— 1,738 
Total undiscounted lease paymentTotal undiscounted lease payment$738 $4,403 
Amounts representing interestAmounts representing interest(86)(1,038)
Lease liabilityLease 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 SecuritiesReclassification of AFS Debt Securities to HTMUnrealized Gain from Cash Flow Hedging InstrumentsTotal
Balance, December 31, 2022$(91,852)$2,805 $— $(89,047)
Other comprehensive (loss) income before reclassifications(213)434 103 324 
Amounts reclassified from AOCI9,838 — — 9,838 
Net current-period other comprehensive income9,625 434 103 10,162 
Balance, March 31, 2023$(82,227)$3,239 $103 $(78,885)
Balance, December 31, 2023$(69,915)$4,511 $505 $(64,899)
Other comprehensive income before reclassifications1,607 374 2,071 4,052 
Amounts reclassified from AOCI632 — (589)43 
Net current-period other comprehensive income2,239 374 1,482 4,095 
Balance, March 31, 2024$(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 income882 — 
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, 2023March 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, 2023June 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 additionalsignificant 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 Invasioninvasion 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;
effectspotential 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 thisour Annual Report on Form 10-Q10-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.

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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 ofJune 2024, subject to customaryregulatory 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 departmentwealth 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 offersas well as financial planning, investment advisory, and retail securities brokerage services (the latter of which is provided through an agreementarrangement 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, 2023March 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, 2023March 31, 2024 of $9.1$3.3 million, a decreasean 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, 2023March 31, 2024 was also highlighted by the following results:

Balance Sheet:
Total assets decreasedincreased to $6.47$6.75 billion at September 30, 2023March 31, 2024 from $6.58$6.43 billion at December 31, 2022,2023, driven primarily as a resultby 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, 2023March 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 newacquired 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.
35

Table2023. The increase in the ACL primarily reflected the $3.1 million of Contentsday 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 $105.6increased $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 declinedincreased 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, 2023March 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.

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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 thirdfirst quarter of 2023,2024, a decrease of $11.3$5.3 million, from $47.0$41.3 million in the thirdfirst 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 thirdfirst quarter of 2023,2024, compared to $0.6$0.9 million credit loss expense recorded in the thirdfirst quarter of 2022.2023. Credit loss expense in the current quarter was primarily attributable to individually evaluated loans.
Noninterest income decreased $2.7reflected $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 today 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 IOFBDNVB acquisition as well as aand reserve taken to support organic loan growth.
Noninterest income decreased $22.0increased $13.8 million, from $36.6a 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 adjustment2023 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 monthsquarter of 2022. In addition, the decrease also was2024, 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 andin the initial bargain purchase gainfirst 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 monthsquarter of 2023. The increase2023, to $35.6 million in noninterest expense wasthe first quarter of 2024, primarily due to an overall increaseincreases 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 wasbenefits, 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.
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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 IncomeNet Interest Income$34,575 $45,733 
Noninterest IncomeNoninterest Income9,861 12,588 
Total Revenue, Net of Interest Expense Total Revenue, Net of Interest Expense44,436 58,321 
Credit Loss ExpenseCredit Loss Expense1,551 638 
Noninterest ExpenseNoninterest Expense31,544 34,623 
Income Before Income Tax Expense Income Before Income Tax Expense11,341 23,060 
Income Tax ExpenseIncome Tax Expense2,203 4,743 
Net Income Net Income9,138  18,317 
Diluted Earnings Per ShareDiluted Earnings Per Share$0.58 $1.17 
Return on Average AssetsReturn on Average Assets0.56 % 1.13 %
Return on Average Assets
Return on Average Assets0.20 % 0.09 %
Return on Average EquityReturn on Average Equity7.14  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 RatioDividend Payout Ratio41.81 20.30 
Common Equity RatioCommon Equity Ratio7.81  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 ShareBook 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)     
ASSETSASSETS   
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 securitiesTaxable investment securities1,637,259 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 
OtherOther34,195 374  4.34  6,070  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 assetsOther assets420,179   406,783  
Total assetsTotal assets$6,452,815   $6,457,647  
Total assets
Total assets
     
LIABILITIES AND SHAREHOLDERS' EQUITYLIABILITIES AND SHAREHOLDERS' EQUITY   
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest checking deposits
Interest checking deposits
Interest checking depositsInterest 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 depositsMoney market deposits1,112,149 7,402 2.64 1,016,005 1,268 0.50 
Savings depositsSavings deposits603,628 749  0.49  710,836 297  0.17 
Time depositsTime deposits1,403,504 12,798  3.62  913,307 2,007  0.87 
Total interest bearing depositsTotal interest bearing deposits4,473,878 23,128  2.05  4,365,148 5,035  0.46 
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase66,020 85 0.51 144,628 228 0.63 
Other short-term borrowingsOther short-term borrowings277,713 3,634 5.19 83,086 539 2.57 
Other short-term borrowings
Other short-term borrowings
Total short-term borrowingsTotal short-term borrowings343,733 3,719  4.29  227,714 767  1.34 
Long-term debtLong-term debt125,737 2,150  6.78  159,125 1,886  4.70 
Total borrowed fundsTotal borrowed funds469,470 5,869 4.96 386,839 2,653 2.72 
Total interest bearing liabilitiesTotal 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 depositsNoninterest bearing deposits905,993   1,142,334  
Other liabilitiesOther liabilities95,408   64,063  
Other liabilities
Other liabilities
Shareholders’ equity
Shareholders’ equity
Shareholders’ equityShareholders’ equity508,066 499,263 
Total liabilities and shareholders’ equityTotal 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 toChange 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  $11,481 
Taxable investment securitiesTaxable investment securities(1,722) 613  (1,109)
Tax-exempt investment securities (1)
Tax-exempt investment securities (1)
(602) (86) (688)
Total securities held for investment (1)
Total securities held for investment (1)
(2,324) 527  (1,797)
OtherOther155  210  365 
Change in interest income (1)
Change in interest income (1)
1,944  8,105  10,049 
Increase (decrease) in interest expense:Increase (decrease) in interest expense:  
Interest checking depositsInterest checking deposits(370)1,086 716 
Interest checking deposits
Interest checking deposits
Money market depositsMoney market deposits133 6,001 6,134 
Savings depositsSavings deposits(52) 504  452 
Time depositsTime deposits1,566  9,225  10,791 
Total interest-bearing depositsTotal interest-bearing deposits1,277  16,816  18,093 
Securities sold under agreements to repurchase Securities sold under agreements to repurchase(106)(37)(143)
Other short-term borrowings
Other short-term borrowings
Other short-term borrowings Other short-term borrowings2,156 939 3,095 
Total short-term borrowings Total short-term borrowings2,050  902  2,952 
Long-term debtLong-term debt(452) 716  264 
Total borrowed fundsTotal borrowed funds1,598  1,618  3,216 
Change in interest expenseChange in interest expense2,875  18,434  21,309 
Change in net interest incomeChange in net interest income$(931) $(10,329) $(11,260)
Percentage increase in net interest income over prior periodPercentage 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 thirdfirst quarter of 20232024 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 thirdfirst quarter of 2022.2023. The decrease in tax equivalent net interest income in the thirdfirst quarter of 20232024 as compared to the thirdfirst quarter of 20222023 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 thirdfirst quarter of 20232024 declined to 2.35%2.33% from 3.08%2.75% for the thirdfirst 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 169116 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 159107 bps, 295200 bps and 20867 bps, respectively from the thirdfirst quarter of 2022.2023. Total interest earning assets yield increased 6756 bps from the thirdfirst quarter of 2022,2023, primarily as a result of anthe increase in loan and securities yieldsyield 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 thirdfirst quarter of 2023,2024, with $0.6$0.9 million credit loss expense recorded in the thirdfirst quarter of 2022.2023. Credit loss expense in the current quarter was primarily attributablereflected $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 thirdfirst quarter of 20232024, as compared to net charge-offs of $0.6$0.3 million in the thirdfirst 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.
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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 activitiesInvestment 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 feesService charges and fees2,146  2,075 71 3.4 
Card revenueCard revenue1,817  1,898 (81)(4.3)
Loan revenueLoan revenue1,462 1,722 (260)(15.1)
Bank-owned life insuranceBank-owned life insurance626  579 47 8.1 
Investment securities gains (losses), netInvestment securities gains (losses), net79  (163)242 (148.5)
Investment securities gains (losses), net
Investment securities gains (losses), net36  (13,170)13,206 n/m
OtherOther727 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 thirdfirst 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 declineinvestment securities losses, net, of $2.9$13.2 million in other revenue stemming from a settlement recognizedrecorded in the thirdfirst quarter of 2022 that2023 as part of a balance sheet repositioning, which did not recur in the thirdfirst 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)20232022$ Change% Change(dollars in thousands)20242023$ Change% Change
Compensation and employee benefitsCompensation 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, netOccupancy expense of premises, net2,405 2,577 (172)(6.7)
EquipmentEquipment2,123 2,358 (235)(10.0)
Legal and professionalLegal and professional1,678 2,012 (334)(16.6)
Data processingData processing1,504 1,731 (227)(13.1)
MarketingMarketing782 1,139 (357)(31.3)
Amortization of intangiblesAmortization of intangibles1,460 1,789 (329)(18.4)
FDIC insuranceFDIC insurance783 415 368 88.7 
CommunicationsCommunications206 302 (96)(31.8)
Foreclosed assets, netForeclosed assets, net42 (40)(95.2)Foreclosed assets, net358 (28)(28)386 386 n/mn/m
OtherOther2,043 2,212 (169)(7.6)
Total noninterest expenseTotal noninterest expense$31,544 $34,623 $(3,079)(8.9)%
Total noninterest expense
Total noninterest expense$35,565 $33,319 $2,246 6.7 %
Results are not meaningful (n/m)
Results are not meaningful (n/m)
Results are not meaningful (n/m)
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The following table summarizes the DNVB acquisition-related expenses incurred during the three months ended March 31, 2024 and IOFB acquisition-related expenses incurred during the three months ended March 31, 2023, which are included in the respective income statement line items, for the periods indicated:
Three Months Ended September 30,
Three Months Ended March 31,Three Months Ended March 31,
Merger-related expenses:Merger-related expenses:20232022Merger-related expenses:20242023
(dollars in thousands)(dollars in thousands)
Compensation and employee benefitsCompensation and employee benefits$— $132 
Compensation and employee benefits
Compensation and employee benefits
Occupancy expense of premises, net
EquipmentEquipment— 14 
Legal and professionalLegal and professional11 193 
Data processingData processing— 304 
MarketingMarketing— 90 
Communications
OtherOther— 30 
Total merger-related expensesTotal merger-related expenses$11 $763 
Noninterest expense for the thirdfirst 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 $3.1primarily due to increases of $1.3 million, or 8.9%, to $31.5$0.4 million, from $34.6and $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 toequipment, 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 withexpense, 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 decreasewrite-down of other real estate owned. Partially offsetting these increases was a decline of $0.4 million in merger-related expenses.marketing.
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Income TaxCredit 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% forrecorded 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 ratenet 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 rangefirst quarter of 18%2023. The estimation model utilized by the Company is sensitive to 20%.

Comparisonchanges 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, 2023company, 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 Income14,561 36,579 
     Total Revenue, Net of Interest Expense126,174 159,373 
Credit Loss Expense4,081 3,920 
Noninterest Expense99,782 98,348 
     Income Before Income Tax Expense22,311 57,105 
Income Tax Expense4,182 12,272 
     Net Income18,129  44,833 
Diluted Earnings Per Share$1.15 $2.86 
Return on Average Assets0.37 % 0.97 %
Return on Average Equity4.81  11.81 
Return on Average Tangible Equity(1)
7.03  15.28 
Efficiency Ratio (1)
66.40 56.70 
Dividend Payout Ratio62.72 24.91 
Common Equity Ratio7.81  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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Net InterestNoninterest Income (Loss)
The following table shows consolidated average balance sheets, detailing the major categoriespresents significant components of assets and liabilities, the interestnoninterest income earned on interest-earning assets, the interest expense paid for interest-bearing liabilities, and the related yieldsdollar and costspercentage 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 fees2,144  2,008 136 6.8 
Card revenue1,943  1,748 195 11.2 
Loan revenue856 1,420 (564)(39.7)
Bank-owned life insurance660  602 58 9.6 
Investment securities gains (losses), net36  (13,170)13,206 n/m
Other608 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 securities1,714,912 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 
Other22,741 686  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 assets417,610   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 deposits1,014,708 15,970 2.10 991,338 2,338 0.32 
Savings deposits620,011 1,309  0.28  671,917 863  0.17 
Time deposits1,437,122 35,286  3.28  877,923 4,204  0.64 
Total interest-bearing deposits4,501,645 58,564  1.74  4,184,027 11,118  0.36 
Securities sold under agreements to repurchase123,512 958 1.04 152,663 435 0.38 
Other short-term borrowings174,448 6,665 5.11 42,952 680 2.12 
              Total short-term borrowings297,960 7,623  3.42  195,615 1,115  0.76 
Long-term debt133,375 6,427  6.44  148,053 4,975  4.49 
Total borrowed funds431,335 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 deposits958,104 1,062,156 
Other liabilities85,650 54,775 
Shareholders' equity503,902 507,764 
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 $1.8 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
(5)Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6)Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.
Noninterest Expense
The following tables present significant components of noninterest expense and the related dollar and percentage change from period to period:
 Three Months Ended March 31,
(dollars in thousands)20242023$ Change% Change
Compensation and employee benefits$20,930 $19,607 $1,323 6.7 %
Occupancy expense of premises, net2,813 2,746 67 2.4 
Equipment2,600 2,171 429 19.8 
Legal and professional2,059 1,736 323 18.6 
Data processing1,360 1,363 (3)(0.2)
Marketing598 986 (388)(39.4)
Amortization of intangibles1,637 1,752 (115)(6.6)
FDIC insurance942 749 193 25.8 
Communications196 261 (65)(24.9)
Foreclosed assets, net358 (28)386 n/m
Other2,072 1,976 96 4.9 
Total noninterest expense$35,565 $33,319 $2,246 6.7 %
Results are not meaningful (n/m)
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The following table shows changes to tax equivalent net interestsummarizes 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 deposits58 13,574 13,632 
Savings deposits(70) 516  446 
Time deposits4,158  26,924  31,082 
Total interest-bearing deposits3,612  43,834  47,446 
    Securities sold under agreements to repurchase(98)621 523 
    Other short-term borrowings4,097 1,888 5,985 
       Total short-term borrowings3,999  2,509  6,508 
Long-term debt(533) 1,985  1,452 
Total borrowed funds3,466  4,494  7,960 
Change in interest expense7,078  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 incomestatement line items, for the nine months ended September 30, 2023 was $115.2 million, a decreaseperiods indicated:
Three Months Ended March 31,
Merger-related expenses:20242023
(dollars in thousands)
Compensation and employee benefits$241 $70 
Occupancy expense of premises, net152 — 
Equipment149 — 
Legal and professional573 — 
Data processing61 65 
Marketing32 — 
Communications— 
Other105 
Total merger-related expenses$1,314 $136 
Noninterest expense for the first quarter of $11.22024 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 decreasefirst 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 anrespectively. The increase in interestcompensation 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 tomerger-related expenses. The increase in equipment reflected higher software costs and volumes.merger-related expenses. The decreaseincrease in tax equivalentforeclosed 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 monthsquarter of 2023, as compared to credit loss expense of $3.92024, 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 monthsquarter of 2022 primarily2023. 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 IOFBDNVB acquisition, as well as aadditional reserve taken to support organic loan growth. Net charge-offs were $0.2 million in the first nine monthsquarter of 2023 were $1.7 million,2024, as compared to net charge-offs of $3.1$0.3 million in the first nine monthsquarter of 2022.2023. The estimation model utilized by the Company is sensitive to changes in the following forecast inputs: (1) Midwest
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unemployment, (2) year-to-year change in national retail sales, (3) year-to-year change in the CRE Index, (4) year-to-year change in U.S. GDP, (5) year-to-year change in the National Home Price Index, and (6) Rental Vacancy.rental vacancy. In addition, management utilized qualitative factors to adjust the calculated ACL as appropriate. Qualitative factors are based on management’s judgment of company, market, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions.
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Noninterest Income (Loss)
The following table presents the significant components of noninterest income and the related dollar and percentage change from period to period:
 Nine Months Ended September 30,
(dollars in thousands)2023 2022$ Change% Change
Investment services and trust activities$9,056  $8,557 $499 5.8 %
Service charges and fees6,201  5,449 752 13.8 
Card revenue5,412  5,426 (14)(0.3)
Loan revenue3,791  9,538 (5,747)(60.3)
Bank-owned life insurance1,844 1,668 176 10.6 
Investment securities gains (losses), net(13,093) 272 (13,365)n/m
Other1,350 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 fees2,144  2,008 136 6.8 
Card revenue1,943  1,748 195 11.2 
Loan revenue856 1,420 (564)(39.7)
Bank-owned life insurance660  602 58 9.6 
Investment securities gains (losses), net36  (13,170)13,206 n/m
Other608 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 monthsquarter of 2023 decreased $22.02024 increased $13.8 million or 60.2%, to $14.6$9.8 million, from $36.6compared 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 contributing2023, 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 declinefirst quarter of 2023, due to growth in noninterest incomeassets under administration. Partially offsetting these identified increases was a decreasedecline of $5.7$0.6 million in loan revenue, which primarily driven byreflected the MSRunfavorable 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 monthsquarter of 2023 as compared to ana negative adjustment of $5.6 million$368 thousand in the first nine monthsquarter 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 $1.3 million recognized in connection with the IOFB acquisition in 2022.2024.
Noninterest Expense
The following tables present the significant components of noninterest expense and the related dollar and percentage change from period to period:
Nine Months Ended September 30, Three Months Ended March 31,
(dollars in thousands)(dollars in thousands)20232022$ Change% Change(dollars in thousands)20242023$ Change% Change
Compensation and employee benefitsCompensation 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, netOccupancy expense of premises, net7,725 7,609 116 1.5 
EquipmentEquipment6,729 6,366 363 5.7 
Legal and professionalLegal and professional5,096 6,800 (1,704)(25.1)
Data processingData processing4,388 4,199 189 4.5 
MarketingMarketing2,910 3,325 (415)(12.5)
Amortization of intangiblesAmortization of intangibles4,806 4,299 507 11.8 
FDIC insuranceFDIC insurance2,394 1,255 1,139 90.8 
CommunicationsCommunications727 840 (113)(13.5)
Foreclosed assets, netForeclosed assets, net(32)(66)34 (51.5)Foreclosed assets, net358 (28)(28)386 386 n/mn/m
OtherOther6,488 6,056 432 7.1 
Total noninterest expenseTotal 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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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 March 31,Three Months Ended March 31,
Merger-related expenses:Merger-related expenses:Nine Months Ended September 30,Merger-related expenses:20242023
(dollars in thousands)(dollars in thousands)20232022
Compensation and employee benefits
Compensation and employee benefits
Compensation and employee benefitsCompensation and employee benefits$70 $282 
Occupancy expense of premises, netOccupancy expense of premises, net— 
EquipmentEquipment— 25 
Legal and professionalLegal and professional11 894 
Data processingData processing65 380 
MarketingMarketing— 162 
CommunicationsCommunications— 
OtherOther45 
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 increasefirst quarter of $1.42024 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 wasfirst quarter of 2023, primarily due to an overall increaseincreases of $1.3 million, $0.4 million, and $0.4 million in all noninterest expense categories except legalcompensation 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 ninethree months of 2023,ended March 31, 2024, as compared to an effective tax rate of 21.5%21.4% for the first ninethree months of 2022.ended March 31, 2023. The effective tax rate for the full year 20232024 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, 2023December 31, 2022$ Change% Change
(dollars in thousands)
(dollars in thousands)
ASSETS
ASSETS
ASSETSASSETS
Cash and cash equivalentsCash 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 saleLoans held for sale2,528 612 1,916 313.1 
Debt securities available for sale at fair valueDebt securities available for sale at fair value872,770 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 costHeld to maturity securities at amortized cost1,085,751 1,129,421 (43,670)(3.9)
Loans held for investment, net of unearned incomeLoans held for investment, net of unearned income4,065,969 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 lossesAllowance for credit losses(51,600)(49,200)(2,400)4.9 
Total loans held for investment, netTotal loans held for investment, net4,014,369 3,791,324 223,045 5.9 
Total loans held for investment, net
Total loans held for investment, net
Other assets
Other assets
Other assetsOther assets417,612 416,537 1,075 0.3 
Total assetsTotal 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' EQUITYLIABILITIES AND SHAREHOLDERS' EQUITY
Total depositsTotal deposits$5,363,324 $5,468,942 $(105,618)(1.9)%
Total deposits
Total deposits
Total borrowings
Total borrowings
Total borrowingsTotal borrowings498,482 531,083 (32,601)(6.1)
Other liabilitiesOther liabilities100,601 85,058 15,543 18.3 
Other liabilities
Other liabilities
Total shareholders' equityTotal shareholders' equity505,411 492,793 12,618 2.6 
Total shareholders' equity
Total shareholders' equity
Total liabilities and shareholders' equity
Total liabilities and shareholders' equity
Total liabilities and shareholders' equityTotal liabilities and shareholders' equity$6,467,818 $6,577,876 $(110,058)(1.7)%
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Debt Securities
The composition of debt securities available for sale and held to maturity as of the dates indicated was as follows:
September 30, 2023 December 31, 2022 March 31, 2024 December 31, 2023
(dollars in thousands)(dollars in thousands)Balance% of Total Balance% of Total(dollars in thousands)Balance% of Total Balance% of Total
Available for SaleAvailable for Sale
U.S. Government agencies and corporations$— — %$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 subdivisionsStates and political subdivisions162,468 18.6 285,356 24.7 
Mortgage-backed securitiesMortgage-backed securities5,327 0.6  5,944 0.5 
Collateralized loan obligationsCollateralized loan obligations52,453 6.0 — — 
Collateralized mortgage obligationsCollateralized mortgage obligations131,923 15.1  147,193 12.8 
Corporate debt securitiesCorporate debt securities520,599 59.7 707,709 61.4 
Fair value of debt securities available for saleFair 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 MaturityHeld to Maturity
Held to Maturity
Held to Maturity
States and political subdivisions
States and political subdivisions
States and political subdivisionsStates 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 securitiesMortgage-backed securities76,310 7.0 81,032 7.2 %Mortgage-backed securities73,668 6.9 6.9 74,904 74,904 7.0 7.0 %
Collateralized mortgage obligationsCollateralized mortgage obligations476,556 43.9 509,643 45.1 %Collateralized mortgage obligations459,310 43.1 43.1 467,864 467,864 43.5 43.5 %
Amortized cost of debt securities held to maturityAmortized 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, 2023March 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
AgriculturalAgricultural$111,950 2.8 %$115,320 3.0 %Agricultural$113,029 2.6 2.6 %$118,414 2.9 2.9 %
Commercial and industrialCommercial and industrial1,078,773 26.5 1,055,162 27.5 
Commercial real estateCommercial real estate2,176,017 53.5  1,980,018 51.6 
Commercial real estate
Commercial real estate
Residential real estate
Residential real estate
Residential real estateResidential real estate630,046 15.5  614,428 15.9 
ConsumerConsumer69,183 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, 20222023 to $4.07$4.41 billion, driven primarily by newloans 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, 2023March 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, 2023March 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 %
Farmland184,109 4.2 
Multifamily409,504 9.3 
CRE Other:
NOO CRE Office166,115 3.8 
OO CRE Office91,259 2.1 
Industrial and Warehouse429,080 9.7 
Retail285,020 6.5 
Hotel126,229 2.9 
Other342,942 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, 2023March 31, 2024 and December 31, 2022:2023:
(in thousands)(in thousands)September 30, 2023December 31, 2022(in thousands)March 31, 2024December 31, 2023
Nonaccrual loans held for investment
Nonaccrual loans held for investment
Nonaccrual loans held for investmentNonaccrual loans held for investment$28,887 $15,256 
Accruing loans contractually past due 90 days or moreAccruing loans contractually past due 90 days or more100 565 
Total nonperforming loans Total nonperforming loans28,987 15,821 
Foreclosed assets, netForeclosed assets, net— 103 
Total nonperforming assets Total nonperforming assets28,987 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 30remained 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
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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, 2023December 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 LoansAllowance for Credit Losses% of Loans in Each Segment to Total Loans
AgriculturalAgricultural$537 2.8 %$923 3.0 %
Agricultural
Agricultural
Commercial and industrial
Commercial and industrial
Commercial and industrialCommercial and industrial22,063 26.5 %22,855 27.5 %
Commercial real estateCommercial real estate23,787 53.5 %20,123 51.6 %
Commercial real estate
Commercial real estate
Residential real estate
Residential real estate
Residential real estateResidential real estate4,643 15.5 %4,678 15.9 %
ConsumerConsumer570 1.7 %621 2.0 %
Consumer
Consumer
TotalTotal$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 settable 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)AgriculturalCommercial and IndustrialCommercial Real EstateResidential Real EstateConsumerTotal
For the Three Months Ended September 30, 2023
Charge-offs$(25)$(511)$— $(21)$(178)$(735)
Recoveries126 79 72 284 
     Net (charge-offs) recoveries$101 $(432)$$(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)
Recoveries295 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)AgriculturalCommercial and IndustrialCommercial Real EstateResidential Real EstateConsumerTotal
For the Nine Months Ended September 30, 2023
Charge-offs$(26)$(1,020)$(830)$(54)$(451)$(2,381)
Recoveries153 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)$(4,041)
Recoveries613 154 68 106 950 
Net (charge-offs) recoveries$(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)AgriculturalCommercial and IndustrialCommercial Real EstateResidential Real EstateConsumerTotal
For the Three Months Ended March 31, 2024
Charge-offs$(4)$(299)$(35)$(19)$(290)$(647)
Recoveries355 46 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)
Recoveries26 75 44 154 
     Net (charge-offs) recoveries$25 $(245)$(13)$$(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, 2023March 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, 2023March 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 ninethree months ended September 30, 2023March 31, 2024, as compared to credit loss expense related to loans of $3.1$0.9 million for the ninethree months ended September 30, 2022.March 31, 2023. Gross charge-offs for the first ninethree months of 20232024 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 ninethree months of 20232024 was 0.06%0.02% compared to 0.12%0.03% for the ninethree 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-yearyear-to-year change in national retail sales - increases over the next four forecasted quarters; (3) Year-to-yearyear-to-year change in CRE Index - decreases inover the next four forecasted quarters; (4) Year-to-yearyear-to-year change in U.S. GDP - increases over the next four forecasted quarters; (5) Year-to-yearyear-to-year change in National Home Price Index – increases over the next two forecasted quarters, with declines in the third and fourthfour forecasted quarters; and (6) Rental Vacancyrental 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 loansrelationships 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, 2023As of December 31, 2022
As of March 31, 2024As of March 31, 2024As of December 31, 2023
(in thousands)(in thousands)Balance% of TotalBalance% of Total(in thousands)Balance% of TotalBalance% of Total
Noninterest bearing depositsNoninterest 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 depositsInterest checking deposits1,334,481 24.9 1,624,278 29.8 
Money market depositsMoney market deposits1,127,287 21.0 937,340 17.1 
Savings depositsSavings deposits619,805 11.6 664,169 12.1 
Total non-maturity deposits
Time deposits of $250 and underTime deposits of $250 and under703,646 13.1 559,466 10.2 
Total core deposits4,709,432 87.8 4,838,703 88.5 
Brokered deposits220,063 4.1 126,767 2.4 
Time deposits over $250Time deposits over $250433,829 8.1 503,472 9.1 
Total non-core deposits653,892 12.2 630,239 11.5 
Total time deposits Total time deposits$1,463,656 26.2 %$1,422,037 26.3 %
Total depositsTotal 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 $105.6increased $189.6 million from December 31, 2022,2023, or 1.9%. Brokered3.5%, 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, 2023December 31, 2022(dollars in thousands)March 31, 2024December 31, 2023
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase$9,256 $156,373 
Federal Home Loan Bank advancesFederal Home Loan Bank advances139,700 235,500 
Federal Reserve Bank borrowingsFederal Reserve Bank borrowings225,000 — 
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 trustsJunior subordinated notes issued to capital trusts42,249 42,116 
Subordinated debenturesSubordinated debentures64,105 64,006 
Finance lease payableFinance lease payable652 787 
Federal Home Loan Bank borrowingsFederal Home Loan Bank borrowings6,270 17,301 
Other long-term debtOther long-term debt11,250 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, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
Common equity ratioCommon equity ratio7.81 %7.49 %Common equity ratio7.83 %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 ratioTotal risk-based capital ratio12.45 %12.07 %Total risk-based capital ratio11.97 %12.53 %
Tier 1 risk-based capital ratioTier 1 risk-based capital ratio10.31 %10.05 %Tier 1 risk-based capital ratio9.75 %10.38 %
Common equity tier 1 risk-based capital ratioCommon equity tier 1 risk-based capital ratio9.52 %9.28 %Common equity tier 1 risk-based capital ratio8.98 %9.59 %
Tier 1 leverage ratioTier 1 leverage ratio8.58 %8.35 %Tier 1 leverage ratio8.16 %8.58 %
Book value per shareBook 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 anddriven 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 ninethree months of 2023, 88,0392024, 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 20,27821,278 shares were surrendered by grantees to satisfy tax requirements, and 881582 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, 2023As of December 31, 2022(dollars in thousands)As of March 31, 2024As of December 31, 2023
Cash and due from banksCash and due from banks$71,015 $83,990 
Interest-bearing depositsInterest-bearing deposits3,773 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 monthsthree-months ended September 30, 2023March 31, 2024 and $72.3$17.6 million for the nine monthsthree-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 EndedNine Months Ended
Return on Average Tangible EquitySeptember 30, 2023September 30, 2022September 30, 2023September 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 equity7.14 %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 EquityMarch 31, 2024March 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 equity2.49 %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, 2024December 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 outstanding15,750,471 15,694,306 
Equity to assets ratio7.83 %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 RatioMarch 31, 2024March 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, 2023December 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 outstanding15,691,738 15,623,977 
Equity to assets ratio7.81 %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 EndedNine Months Ended
Efficiency RatioSeptember 30, 2023September 30, 2022September 30, 2023September 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 income9,861 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 EndedNine 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 MarginNet Interest Margin, Tax Equivalent/Core Net Interest MarginSeptember 30, 2023September 30, 2022September 30, 2023September 30, 2022
(dollars in thousands)(dollars in thousands)
(dollars in thousands)
(dollars in thousands)
Net interest income
Net interest income
Net interest incomeNet 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 equivalentNet interest income, tax equivalent$35,742 $47,002 $115,162 $126,395 
Loan purchase discount accretionLoan 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 marginNet interest margin2.27 %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 assetsAverage 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 ninethree months of 2023,2024, compared with $72.3$17.6 million in the first ninethree months of 2022.2023. Net cash inflowsoutflows from investing activities were $83.1$38.3 million in the first ninethree months of 2023,2024, compared to net cash outflowsinflows of $202.5$132.5 million in the comparable nine-monththree-month period of 2022.2023. Net cash outflowsinflows from financing activities in the first ninethree months of 20232024 were $150.5$44.8 million, compared with net cash inflowsoutflows 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 ProgramBTFP are additional sources of liquidity, particularly during periods of economic uncertainty or stress. TheEffective March 11, 2024, no new loans will be made under the BTFP. As of March 31, 2024, the Bank has a borrowing capacityhad 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. AdvancesAll 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 borrowingcredit 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 ofno 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, 2023March 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 change0.3 % 0.2 % (0.3)% (0.7)%
December 31, 2022   
Dollar change$8,398  $5,637  $(6,738) $(13,921)
Percent change5.2 % 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 change1.9 % 0.9 % (1.5)% (3.1)%
December 31, 2023   
Dollar change$1,280  $(347) $229  $111 
Percent change0.9 % (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, 2023March 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 thirdfirst 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, 20232,382 22.37 — 15,000,000 
September 1 - 30, 2023— — — 15,000,000 
Total2,382 $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, 202421,278 24.48 — 15,000,000 
March 1 - 31, 2024— — — 15,000,000 
Total21,278 $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 2,38221,278 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 newthe 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
DescriptionIncorporated by Reference to:
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
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
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
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
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
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
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
Third Amendment to the Credit Agreement by and between MidWestOne Financial Group, Inc. and U.S. Bank National Association dated February 12, 2024Exhibit 10.11 to the Company's Annual Report on Form 10-K filed with the SEC on March 8, 2024
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)Filed herewith
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)Filed herewith
Certification of Principal Accounting Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)Filed herewith
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 2002Filed herewith
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 2002Filed herewith
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 2002Filed herewith
101The 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.SCHInline XBRL Taxonomy Extension Schema DocumentFiled herewith
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentFiled herewith
101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentFiled herewith
101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentFiled herewith
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentFiled herewith
104Cover 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, 2023May 7, 2024By: /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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