10-Q

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _______ to _______

FIRST MERCHANTS CORPORATION

(Exact name of registrant as specified in its charter)

Indiana
(State or other jurisdiction of incorporation)
001-41342	35-1544218
(Commission File Number)	(IRS Employer Identification No.)

200 East Jackson Street, Muncie, IN                  47305-2814

(Address of principal executive offices)                   (Zip code)

(Registrant’s telephone number, including area code): (765) 747-1500

Not Applicable

(Former name, former address and former fiscal year,

if changed since last report)

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

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.125 stated value per share	FRME	The Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/100th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series A	FRMEP	The Nasdaq Stock Market LLC

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

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

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

Large Accelerated Filer	☒	Accelerated Filer	☐	Non-Accelerated Filer	☐
Smaller Reporting Company	☐	Emerging Growth Company	☐

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

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

As of July 26, 2024, there were 58,506,917 outstanding common shares of the registrant.

1

TABLE OF CONTENTS

FIRST MERCHANTS CORPORATION

		Page No.
Glossary of Defined Terms		3
Part I. Financial Information
Item 1.	Financial  Statements:
	Consolidated Condensed Balance Sheets	4
	Consolidated Condensed Statements of Income	5
	Consolidated Condensed Statements of Comprehensive Income (Loss)	6
	Consolidated Condensed Statements of Stockholders' Equity	7
	Consolidated Condensed Statements of Cash Flows	9
	Notes to Consolidated Condensed Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	60
Part II. Other Information
Item 1.	Legal Proceedings	61
Item 1A.	Risk Factors	61
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3.	Defaults Upon Senior Securities	61
Item 4.	Mine Safety Disclosures	61
Item 5.	Other Information	61
Item 6.	Exhibits	62
Signatures		63

2

GLOSSARY OF DEFINED TERMS

FIRST MERCHANTS CORPORATION

ACL	Allowance for Credit Losses
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
Bank	First Merchants Bank, a wholly-owned subsidiary of the Corporation
BTFP	Bank Term Funding Program created by the Federal Reserve in March 2023
CECL	FASB Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, adopted by the Corporation on January 1, 2021.
CET1	Common Equity Tier 1
CODM	Chief operating decision maker
Corporation	First Merchants Corporation
CRE	Commercial Real Estate
EITF	FASB's Emerging Issues Task Force
ESPP	Employee Stock Purchase Plan
FASB	Financial Accounting Standards Board
FDIC	Federal Deposit Insurance Corporation
Federal Reserve	Board of Governors of the Federal Reserve System
FHLB	Federal Home Loan Bank
FOMC	Federal Open Market Committee, the monetary policymaking body of the Federal Reserve System.
FTE	Fully taxable equivalent
GAAP	U.S. Generally Accepted Accounting Principles
IRA	Inflation Reduction Act of 2022
Level One	Level One Bancorp, Inc., which was acquired by the Corporation on April 1, 2022.
OREO	Other real estate owned
PPP	Paycheck Protection Program, which was established by the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, and implemented by the U.S. Small Business Administration to provide small business loans.
RSA	Restricted Stock Awards
SOFR	Secured Overnight Financing Rate

3

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED BALANCE SHEETS

	June 30, 2024		December 31, 2023
	(Unaudited)
ASSETS
Cash and due from banks	$	105,372	$	112,649
Interest-bearing deposits	168,528		436,080
Investment securities available for sale	1,618,893		1,627,112
Investment securities held to maturity, net of allowance for credit losses of $245 and $245 (fair value of $1,779,216 and $1,870,374)	2,134,195		2,184,252
Loans held for sale	32,292		18,934
Loans	12,639,650		12,486,027
Less: Allowance for credit losses - loans	(189,537)		(204,934)
Net loans	12,450,113		12,281,093
Premises and equipment	133,245		133,896
Federal Home Loan Bank stock	41,738		41,769
Interest receivable	97,546		97,664
Goodwill	712,002		712,002
Other intangibles	23,371		27,099
Cash surrender value of life insurance	306,379		306,301
Other real estate owned	4,824		4,831
Tax asset, deferred and receivable	107,080		99,883
Other assets	367,845		322,322
TOTAL ASSETS	$	18,303,423	$	18,405,887
LIABILITIES
Deposits:
Noninterest-bearing	$	2,303,313	$	2,500,062
Interest-bearing	12,265,757		12,321,391
Total Deposits	14,569,070		14,821,453
Borrowings:
Federal funds purchased	147,229		—
Securities sold under repurchase agreements	100,451		157,280
Federal Home Loan Bank advances	832,703		712,852
Subordinated debentures and other borrowings	93,589		158,644
Total Borrowings	1,173,972		1,028,776
Interest payable	18,554		18,912
Other liabilities	329,302		289,033
Total Liabilities	16,090,898		16,158,174
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized - 600 cumulative shares
Issued and outstanding - 125 cumulative shares	125		125
Preferred Stock, Series A, no par value, $2,500 liquidation preference:
Authorized - 10,000 non-cumulative perpetual shares
Issued and outstanding - 10,000 non-cumulative perpetual shares	25,000		25,000
Common Stock, $0.125 stated value:
Authorized - 100,000,000 shares
Issued and outstanding - 58,045,653 and 59,424,122 shares	7,256		7,428
Additional paid-in capital	1,191,193		1,236,506
Retained earnings	1,200,930		1,154,624
Accumulated other comprehensive loss	(211,979)		(175,970)
Total Stockholders' Equity	2,212,525		2,247,713
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,303,423	$	18,405,887

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

4

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
INTEREST INCOME
Loans receivable:
Taxable	$	201,413	$	186,256	$	399,436	$	358,609
Tax exempt	8,430		7,760		16,620		15,469
Investment securities:
Taxable	9,051		8,886		17,799		17,973
Tax exempt	13,613		14,279		27,224		30,349
Deposits with financial institutions	2,995		3,164		9,488		3,801
Federal Home Loan Bank stock	879		1,020		1,714		1,562
Total Interest Income	236,381		221,365		472,281		427,763
INTEREST EXPENSE
Deposits	99,151		73,201		197,436		123,886
Federal funds purchased	126		123		126		1,420
Securities sold under repurchase agreements	645		979		1,677		1,827
Federal Home Loan Bank advances	6,398		6,815		13,171		13,879
Subordinated debentures and other borrowings	1,490		2,412		4,237		4,797
Total Interest Expense	107,810		83,530		216,647		145,809
NET INTEREST INCOME	128,571		137,835		255,634		281,954
Provision for credit losses	24,500		—		26,500		—
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	104,071		137,835		229,134		281,954
NONINTEREST INCOME
Service charges on deposit accounts	8,214		7,813		16,121		15,172
Fiduciary and wealth management fees	8,825		7,397		17,025		15,259
Card payment fees	4,739		4,537		9,239		9,709
Net gains and fees on sales of loans	5,141		3,632		8,395		6,031
Derivative hedge fees	489		672		752		1,820
Other customer fees	460		742		887		1,259
Increase in cash surrender value of life insurance	1,414		1,316		2,863		2,603
Gains on life insurance benefits	515		780		658		781
Net realized losses on sales of available for sale securities	(49)		(1,392)		(51)		(2,963)
Other income	1,586		822		2,083		1,645
Total Noninterest Income	31,334		26,319		57,972		51,316
NONINTEREST EXPENSES
Salaries and employee benefits	52,214		54,753		110,507		112,212
Net occupancy	6,746		6,674		14,058		13,933
Equipment	6,599		6,181		12,825		12,307
Marketing	1,773		1,102		2,971		2,411
Outside data processing fees	7,072		6,604		13,961		12,717
Printing and office supplies	354		434		707		817
Intangible asset amortization	1,771		2,182		3,728		4,379
FDIC assessments	3,278		2,740		7,565		4,136
Other real estate owned and foreclosure expenses	373		916		907		898
Professional and other outside services	3,822		4,660		7,774		8,358
Other expenses	7,411		6,347		13,345		14,145
Total Noninterest Expenses	91,413		92,593		188,348		186,313
INCOME BEFORE INCOME TAX	43,992		71,561		98,758		146,957
Income tax expense	4,067		10,699		10,892		22,016
NET INCOME	39,925		60,862		87,866		124,941
Preferred stock dividends	469		469		938		938
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	39,456	$	60,393	$	86,928	$	124,003
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.68	$	1.02	$	1.48	$	2.09
Diluted Net Income Available to Common Stockholders	$	0.68	$	1.02	$	1.48	$	2.09
Cash Dividends Paid	$	0.35	$	0.34	$	0.69	$	0.66
Average Diluted Common Shares Outstanding (in thousands)	58,328		59,448		58,800		59,446

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

5

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	39,925	$	60,862	$	87,866	$	124,941
Other comprehensive income (loss):
Unrealized gains (losses) on securities available-for-sale:
Unrealized holding gain (loss) arising during the period	(17,708)		(25,461)		(45,632)		23,954
Reclassification adjustment for losses (gains) included in net income	49		1,392		51		2,963
Tax effect	3,709		5,055		9,572		(5,652)
Net of tax	(13,950)		(19,014)		(36,009)		21,265
Unrealized gain (loss) on cash flow hedges:
Unrealized holding gain (loss) arising during the period	—		(62)		—		(113)
Reclassification adjustment for losses (gains) included in net income	—		16		—		15
Tax effect	—		10		—		20
Net of tax	—		(36)		—		(78)
Total other comprehensive income (loss), net of tax	(13,950)		(19,050)		(36,009)		21,187
Comprehensive income	$	25,975	$	41,812	$	51,857	$	146,128

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

6

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Three Months Ended June 30, 2024
	Cumulative Preferred Stock			Non-Cumulative Preferred Stock			Common Stock			Additional				Accumulated Other
	Shares	Amount		Shares	Amount		Shares	Amount		Paid in Capital		Retained Earnings		Comprehensive Loss		Total
Balances, March 31, 2024	125	$	125	10,000	$	25,000	58,564,819	$	7,321	$	1,208,447	$	1,181,939	$	(198,029)	$	2,224,803
Comprehensive income:
Net income	—	—		—	—		—	—		—		39,925		—		39,925
Other comprehensive loss, net of tax	—	—		—	—		—	—		—		—		(13,950)		(13,950)
Cash dividends on preferred stock ($46.88 per share)	—	—		—	—		—	—		—		(469)		—		(469)
Cash dividends on common stock ($0.35 per share)	—	—		—	—		—	—		—		(20,465)		—		(20,465)
Repurchases of common stock	—	—		—	—		(593,123)	(74)		(19,907)		—		—		(19,981)
Excise tax on common stock repurchases	—	—		—	—		—	—		(185)		—		—		(185)
Share-based compensation	—	—		—	—		8,803	—		1,351		—		—		1,351
Stock issued under employee benefit plans	—	—		—	—		5,510	1		156		—		—		157
Stock issued under dividend reinvestment and stock purchase plan	—	—		—	—		17,675	2		557		—		—		559
Stock options exercised	—	—		—	—		42,893	6		807		—		—		813
Restricted shares withheld for taxes	—	—		—	—		(924)	—		(33)		—		—		(33)
Balances, June 30, 2024	125	$	125	10,000	$	25,000	58,045,653	$	7,256	$	1,191,193	$	1,200,930	$	(211,979)	$	2,212,525

	Three Months Ended June 30, 2023
	Cumulative Preferred Stock			Non-Cumulative Preferred Stock			Common Stock			Additional				Accumulated Other
	Shares	Amount		Shares	Amount		Shares	Amount		Paid in Capital		Retained Earnings		Comprehensive Loss		Total
Balances, March 31, 2023	125	$	125	10,000	$	25,000	59,257,051	$	7,407	$	1,231,532	$	1,057,298	$	(198,914)	$	2,122,448
Comprehensive income:
Net income	—	—		—	—		—	—		—		60,862		—		60,862
Other comprehensive loss net of tax	—	—		—	—		—	—		—		—		(19,050)		(19,050)
Cash dividends on preferred stock ($46.88 per share)	—	—		—	—		—	—		—		(469)		—		(469)
Cash dividends on common stock ($0.34 per share)	—	—		—	—		—	—		—		(20,292)		—		(20,292)
Share-based compensation	—	—		—	—		7,084	1		1,234		—		—		1,235
Stock issued under employee benefit plans	—	—		—	—		7,535	1		180		—		—		181
Stock issued under dividend reinvestment and stock purchase plan	—	—		—	—		19,073	2		548		—		—		550
Stock options exercised	—	—		—	—		6,405	1		99		—		—		100
Balances, June 30, 2023	125	$	125	10,000	$	25,000	59,297,148	$	7,412	$	1,233,593	$	1,097,399	$	(217,964)	$	2,145,565

7

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

	Six Months Ended June 30, 2024
	Cumulative Preferred Stock			Non-Cumulative Preferred Stock			Common Stock			Additional				Accumulated Other
	Shares	Amount		Shares	Amount		Shares	Amount		Paid in Capital		Retained Earnings		Comprehensive  Loss		Total
Balances, December 31, 2023	125	$	125	10,000	$	25,000	59,424,122	$	7,428	$	1,236,506	$	1,154,624	$	(175,970)	$	2,247,713
Comprehensive income:
Net income	—	—		—	—		—	—		—		87,866		—		87,866
Other comprehensive loss, net of tax	—	—		—	—		—	—		—		—		(36,009)		(36,009)
Cash dividends on preferred stock ($93.76 per share)	—	—		—	—		—	—		—		(938)		—		(938)
Cash dividends on common stock ($0.69 per share)	—	—		—	—		—	—		—		(40,622)		—		(40,622)
Repurchases of common stock	—	—		—	—		(1,481,565)	(185)		(49,770)		—		—		(49,955)
Excise tax on stock repurchase	—	—		—	—		—	—		(482)		—		—		(482)
Share-based compensation	—	—		—	—		16,216	2		2,752		—		—		2,754
Stock issued under employee benefit plans	—	—		—	—		11,769	2		341		—		—		343
Stock issued under dividend reinvestment and stock purchase plan	—	—		—	—		33,890	4		1,097		—		—		1,101
Stock options exercised	—	—		—	—		42,893	5		807		—		—		812
Restricted shares withheld for taxes	—	—		—	—		(1,672)	—		(58)		—		—		(58)
Balances, June 30, 2024	125	$	125	10,000	$	25,000	58,045,653	$	7,256	$	1,191,193	$	1,200,930	$	(211,979)	$	2,212,525

	Six Months Ended June 30, 2023
	Cumulative Preferred Stock			Non-Cumulative Preferred Stock			Common Stock			Additional				Accumulated Other
	Shares	Amount		Shares	Amount		Shares	Amount		Paid in Capital		Retained Earnings		Comprehensive Loss		Total
Balances, December 31, 2022	125	$	125	10,000	$	25,000	59,170,583	$	7,396	$	1,228,626	$	1,012,774	$	(239,151)	$	2,034,770
Comprehensive income:
Net income	—	—		—	—		—	—		—		124,941		—		124,941
Other comprehensive income, net of tax	—	—		—	—		—	—		—		—		21,187		21,187
Cash dividends on preferred stock ($93.76 per share)	—	—		—	—		—	—		—		(938)		—		(938)
Cash dividends on common stock ($0.66 per share)	—	—		—	—		—	—		—		(39,378)		—		(39,378)
Share-based compensation	—	—		—	—		14,657	2		2,430		—		—		2,432
Stock issued under employee benefit plans	—	—		—	—		13,435	2		378		—		—		380
Stock issued under dividend reinvestment and stock purchase plan	—	—		—	—		33,537	4		1,060		—		—		1,064
Stock options exercised	—	—		—	—		65,025	8		1,102		—		—		1,110
Restricted shares withheld for taxes	—	—		—	—		(89)	—		(3)		—		—		(3)
Balances, June 30, 2023	125	$	125	10,000	$	25,000	59,297,148	$	7,412	$	1,233,593	$	1,097,399	$	(217,964)	$	2,145,565

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

8

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended June 30,
	2024		2023
Cash Flow From Operating Activities:
Net income	$	87,866	$	124,941
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	26,500		—
Depreciation and amortization	6,680		5,799
Change in deferred taxes	1,356		(1,429)
Share-based compensation	2,754		2,432
Loans originated for sale	(451,682)		(272,074)
Proceeds from sales of loans held for sale	443,068		256,880
Gains on sales of loans held for sale	(4,744)		(3,009)
Net losses on sales and redemptions of securities available for sale	51		2,963
Increase in cash surrender value of life insurance	(2,863)		(2,603)
Gains on life insurance benefits	(658)		(781)
Change in interest receivable	118		(4,714)
Change in interest payable	(358)		6,065
Other adjustments	13,787		(1,497)
Net cash provided by operating activities	121,875		112,973
Cash Flows from Investing Activities:
Net change in interest-bearing deposits	267,552		(93,419)
Purchases of:
Securities available for sale	(62,328)		(1,400)
Securities held to maturity	—		(5,653)
Proceeds from sales of securities available for sale	—		314,087
Proceeds from maturities and redemptions of:
Securities available for sale	21,396		32,365
Securities held to maturity	48,254		50,774
Change in Federal Home Loan Bank stock	31		(3,317)
Payment of capital calls to qualified affordable housing investments	(15,933)		(4,749)
Net change in loans	(171,915)		(386,135)
Proceeds from the sale of other real estate owned	274		101
Proceeds from life insurance benefits	3,443		4,675
Proceeds from mortgage portfolio loan sale	1,716		—
Proceeds from commercial portfolio loan sale	3,273		89,675
Other adjustments	(28,469)		2,424
Net cash provided by (used in) investing activities	67,294		(572)
Cash Flows from Financing Activities:
Net change in:
Demand and savings deposits	(385,455)		(530,227)
Certificates of deposit and other time deposits	133,072		728,637
Borrowings	427,348		746,773
Repayment of borrowings	(282,152)		(1,033,441)
Cash dividends on preferred stock	(938)		(938)
Cash dividends on common stock	(40,622)		(39,378)
Stock issued under employee benefit plans	343		380
Stock issued under dividend reinvestment and stock purchase plans	1,101		1,064
Stock options exercised	812		1,110
Repurchase of common stock	(49,955)		—
Net cash used in financing activities	(196,446)		(126,020)
Net Change in Cash and Cash Equivalents	(7,277)		(13,619)
Cash and Cash Equivalents, January 1	112,649		122,594
Cash and Cash Equivalents, June 30	$	105,372	$	108,975
Additional cash flow information:
Interest paid	$	217,005	$	139,744
Income tax paid (refunded)	5,300		27,530
Loans transferred to other real estate owned	211		1,080
Fixed assets transferred to other real estate owned	—		2,900
Non-cash investing activities using trade date accounting	28,805		26,911
ROU assets obtained in exchange for new operating lease liabilities	5,588		1,505
Qualified affordable housing investments obtained in exchange for funding commitments	40,000		4,700

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

9

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

NOTE 1 

GENERAL

Financial Statement Preparation

The Consolidated Condensed Balance Sheet of the Corporation as of December 31, 2023, has been derived from the audited consolidated balance sheet of the Corporation as of that date. Certain information and note disclosures normally included in the Corporation’s annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission. The results of operations for the three and six months ended June 30, 2024, are not necessarily indicative of the results to be expected for the year. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses and fair value of financial instruments.

Significant Accounting Policies

The significant accounting policies followed by the Corporation and its wholly-owned subsidiaries for interim financial reporting are consistent with the accounting policies followed for annual financial reporting. All adjustments, which are of a normal recurring nature and are in the opinion of management necessary for a fair statement of the results for the periods reported, have been included in the accompanying Consolidated Condensed Financial Statements.

Recent Accounting Changes Adopted in 2024

FASB Accounting Standards Updates - No. 2023-02 - Investments - Equity Method and Joint Ventures (Topic 323) - Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

Summary - The FASB issued ASU No. 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, which is intended to improve the accounting and disclosures for investments in tax credit structures. The ASU is a consensus of the FASB’s Emerging Issues Task Force (“EITF”).

The ASU allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. The ASU responds to stakeholder feedback that the proportional amortization method provides investors and other allocators of capital with a better understanding of the returns from investments that are made primarily for the purpose of receiving income tax credits and other income tax benefits.

Reporting entities were previously permitted to apply the proportional amortization method only to qualifying tax equity investments in low-income housing tax credit (LIHTC) structures. In recent years, stakeholders asked the FASB to extend the application of the proportional amortization method to qualifying tax equity investments that generate tax credits through other programs, which resulted in the EITF addressing this issue.

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for all entities in any interim period. The Corporation adopted this guidance in the first quarter of 2024 and adoption did not have a significant impact on the Corporation’s financial statements or disclosures.

New Accounting Pronouncements Not Yet Adopted

The Corporation continually monitors potential accounting pronouncements and the following pronouncements have been deemed to have the most applicability to the Corporation's financial statements:

FASB Accounting Standards Updates - No. 2023-07 - Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosure

Summary - The FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosure, which is intended to improve disclosures about a public entity’s reportable segments and addresses requests from investors and other allocators of capital for additional, more detailed information about a reportable segment’s expenses.

The key amendments:

•Require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss.

•Require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the significant expenses disclosed and each reported measure of segment profit or loss.

•Require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by FASB ASC Topic 280, Segment Reporting, in interim periods.

10

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

•Clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit or loss. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements.

•Require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

•Require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in the ASU and all existing segment disclosures in Topic 280.

ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, applies to all public entities that are required to report segment information in accordance with Topic 280. All public entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. This ASU is not expected to have a material impact on the Corporation’s financial statements and disclosures as the Corporation has one operating segment.

FASB Accounting Standards Update - No. 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures

Summary - The FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures in the fourth quarter of 2023. This ASU is intended to enhance income tax disclosures to address investor requests for more information about the tax risks and opportunities present in an entity’s worldwide operations.

The two primary enhancements disaggregate existing income tax disclosures related to the effective tax rate reconciliation and income taxes paid. These amendments require that public business entities on an annual basis disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The amendments also require that all entities disclose on an annual basis the amount of income taxes paid (net of refunds received) disaggregated by federal, state and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds received).

For public business entities, the amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issue. The amendments should be applied on a prospective basis. The Corporation is assessing the terms of this guidance, but adoption of the standard is not expected to have a significant impact on the Corporation’s financial statements or disclosures.

NOTE 2

INVESTMENT SECURITIES

The following tables summarize the amortized cost, gross unrealized gains and losses and approximate fair value of investment securities available for sale as of June 30, 2024 and December 31, 2023.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at June 30, 2024
U.S. Government-sponsored agency securities	$	108,842	$	—	$	17,565	$	91,277
State and municipal	1,178,364		25		153,482		1,024,907
U.S. Government-sponsored mortgage-backed securities	584,055		376		93,777		490,654
Corporate obligations	12,954		—		899		12,055
Total available for sale	$	1,884,215	$	401	$	265,723	$	1,618,893

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2023
U.S. Government-sponsored agency securities	$	111,521	$	—	$	16,214	$	95,307
State and municipal	1,181,029		364		116,222		1,065,171
U.S. Government-sponsored mortgage-backed securities	541,343		462		86,990		454,815
Corporate obligations	12,947		—		1,128		11,819
Total available for sale	$	1,846,840	$	826	$	220,554	$	1,627,112

11

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The following tables summarize the amortized cost, gross unrealized gains and losses, approximate fair value and allowance for credit losses on investment securities held to maturity as of June 30, 2024 and December 31, 2023.

	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at June 30, 2024
U.S. Government-sponsored agency securities	$	365,081	$	—	$	365,081	$	—	$	66,005	$	299,076
State and municipal	1,091,714		245		1,091,469		300		183,892		908,122
U.S. Government-sponsored mortgage-backed securities	676,145		—		676,145		—		105,607		570,538
Foreign investment	1,500		—		1,500		—		20		1,480
Total held to maturity	$	2,134,440	$	245	$	2,134,195	$	300	$	355,524	$	1,779,216

	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at December 31, 2023
U.S. Government-sponsored agency securities	$	374,002	$	—	$	374,002	$	—	$	64,159	$	309,843
State and municipal	1,099,201		245		1,098,956		1,625		152,113		948,713
U.S. Government-sponsored mortgage-backed securities	709,794		—		709,794		—		99,448		610,346
Foreign investment	1,500		—		1,500		—		28		1,472
Total held to maturity	$	2,184,497	$	245	$	2,184,252	$	1,625	$	315,748	$	1,870,374

Accrued interest on investment securities available for sale and held to maturity at June 30, 2024 and December 31, 2023 of $25.3 million and $25.2 million, respectively, are included in the Interest Receivable line on the Corporation's Consolidated Condensed Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of available for sale and held to maturity securities presented above.

In determining the allowance for credit losses on investment securities available for sale that are in an unrealized loss position, the Corporation first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through the income statement. For investment securities available for sale that do not meet the aforementioned criteria, the Corporation evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Corporation considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Unrealized losses that have not been recorded through an allowance for credit losses is recognized in other comprehensive income. Adjustments to the allowance are reported in the income statement as a component of the provision for credit loss. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities available for sale from the estimate of credit losses. Investment securities available for sale are charged off against the allowance or, in the absence of any allowance, written down through the income statement when deemed uncollectible or when either of the aforementioned criteria regarding intent or requirement to sell is met. The Corporation did not record an allowance for credit losses on its investment securities available for sale as the unrealized losses were attributable to changes in interest rates, not credit quality.

The allowance for credit losses on investment securities held to maturity is a contra asset-valuation account that is deducted from the amortized cost basis of investment securities held to maturity to present the net amount expected to be collected. Investment securities held to maturity are charged off against the allowance when deemed uncollectible. Adjustments to the allowance are reported in the income statement as a component of the provision for credit loss. The Corporation measures expected credit losses on investment securities held to maturity on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities held to maturity from the estimate of credit losses. With regard to U.S. Government-sponsored agency and mortgage-backed securities, all these securities are issued by a U.S. Government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities. With regard to securities issued by states and municipalities and other investment securities held to maturity, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. Historical loss rates associated with securities having similar grades as those in the Corporation's portfolio have been insignificant. Furthermore, as of June 30, 2024, there were no past due principal and interest payments associated with these securities. At current expected credit loss ("CECL") adoption, an allowance for credit losses of $245,000 was recorded on the state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities. The balance of the allowance for credit losses remained unchanged at $245,000 as of June 30, 2024.

12

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

On a quarterly basis, the Corporation monitors the credit quality of investment securities held to maturity through the use of credit ratings. The following table summarizes the amortized cost of investment securities held to maturity at June 30, 2024, aggregated by credit quality indicator.

	Held to Maturity
	State and municipal		Other		Total
Credit Rating:
Aaa	$	113,341	$	70,588	$	183,929
Aa1	161,380		—		161,380
Aa2	167,506		—		167,506
Aa3	133,319		—		133,319
A1	131,193		—		131,193
A2	16,839		—		16,839
A3	3,470		—		3,470
Non-rated	364,666		972,138		1,336,804
Total	$	1,091,714	$	1,042,726	$	2,134,440

The following tables summarize, as of June 30, 2024 and December 31, 2023, investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and length of time in a continuous unrealized loss position.

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at June 30, 2024
U.S. Government-sponsored agency securities	$	—	$	—	$	91,277	$	17,565	$	91,277	$	17,565
State and municipal	50,145		2,900		973,117		150,582		1,023,262		153,482
U.S. Government-sponsored mortgage-backed securities	57,352		903		399,051		92,874		456,403		93,777
Corporate obligations	—		—		12,024		899		12,024		899
Total investment securities available for sale	$	107,497	$	3,803	$	1,475,469	$	261,920	$	1,582,966	$	265,723

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at December 31, 2023
U.S. Government-sponsored agency securities	$	—	$	—	$	95,307	$	16,214	$	95,307	$	16,214
State and municipal	55,514		1,076		963,584		115,146		1,019,098		116,222
U.S. Government-sponsored mortgage-backed securities	11,493		25		422,868		86,965		434,361		86,990
Corporate obligations	—		—		11,788		1,128		11,788		1,128
Total investment securities available for sale	$	67,007	$	1,101	$	1,493,547	$	219,453	$	1,560,554	$	220,554

The following tables summarize investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and the number of securities in the portfolio as of the dates indicated.

	Gross Unrealized Losses		Number of Securities
Investment securities available for sale at June 30, 2024
U.S. Government-sponsored agency securities	$	17,565	14
State and municipal	153,482		725
U.S. Government-sponsored mortgage-backed securities	93,777		161
Corporate obligations	899		10
Total investment securities available for sale	$	265,723	910

13

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

	Gross Unrealized Losses		Number of Securities
Investment securities available for sale at December 31, 2023
U.S. Government-sponsored agency securities	$	16,214	14
State and municipal	116,222		691
U.S. Government-sponsored mortgage-backed securities	86,990		150
Corporate obligations	1,128		10
Total investment securities available for sale	$	220,554	865

The unrealized losses in the Corporation’s investment portfolio were the result of changes in interest rates and not credit quality. As a result, the Corporation expects to recover the amortized cost basis over the term of the securities. The Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.

Certain investment securities available for sale are reported in the financial statements at an amount less than their historical cost as indicated in the table below.

	June 30, 2024			December 31, 2023
Investments available for sale reported at less than historical cost:
Historical cost	$	1,848,689		$	1,781,108
Fair value	1,582,966			1,560,554
Gross unrealized losses	$	265,723		$	220,554
Percent of the Corporation's investments available for sale	97.8		%	95.9		%

In determining the fair value of the investment securities portfolio, the Corporation utilizes a third party for portfolio accounting services, including market value input, for those securities classified as Level 1 and Level 2 in the fair value hierarchy.  The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor classified these securities based upon these inputs.  From these discussions, the Corporation’s management is comfortable that the classifications are proper.  The Corporation has gained trust in the data for two reasons:  (a) independent spot testing of the data is conducted by the Corporation through obtaining market quotes from various brokers on a periodic basis; and (b) actual gains or losses resulting from the sale of certain securities has proven the data to be accurate over time.   Fair value of securities classified as Level 3 in the valuation hierarchy was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

The amortized cost and fair value of investment securities available for sale and held to maturity at June 30, 2024 and December 31, 2023, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately.

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at June 30, 2024
Due in one year or less	$	2,402	$	2,383	$	13,380	$	13,249
Due after one through five years	24,675		22,920		113,750		106,226
Due after five through ten years	160,390		144,580		139,308		125,618
Due after ten years	1,112,693		958,356		1,191,857		963,585
	1,300,160		1,128,239		1,458,295		1,208,678
U.S. Government-sponsored mortgage-backed securities	584,055		490,654		676,145		570,538
Total investment securities	$	1,884,215	$	1,618,893	$	2,134,440	$	1,779,216

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at December 31, 2023
Due in one year or less	$	1,390	$	1,382	$	3,041	$	3,043
Due after one through five years	24,899		23,372		118,592		111,723
Due after five through ten years	127,948		120,385		135,805		126,461
Due after ten years	1,151,260		1,027,158		1,217,265		1,018,801
	1,305,497		1,172,297		1,474,703		1,260,028
U.S. Government-sponsored mortgage-backed securities	541,343		454,815		709,794		610,346
Total investment securities	$	1,846,840	$	1,627,112	$	2,184,497	$	1,870,374

14

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Securities with a carrying value of approximately $1.5 billion and $1.8 billion were pledged at June 30, 2024 and December 31, 2023, respectively, to secure certain deposits and securities sold under repurchase agreements, and for other purposes as permitted or required by law.

The book value of securities pledged and available under agreements to repurchase amounted to $118.8 million at June 30, 2024 and $181.4 million at December 31, 2023.

Gross gains and losses on the sales and redemptions of investment securities available for sale for the three and six months ended June 30, 2024 and 2023 are shown below.

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Sales and redemptions of investment securities available for sale:
Gross gains	$	—	$	151	$	—	$	759
Gross losses	(49)		(1,543)		(51)		(3,722)
Net gains (losses) on sales and redemptions of investment securities available for sale	$	(49)	$	(1,392)	$	(51)	$	(2,963)

NOTE 3

LOANS AND ALLOWANCE

Loan Portfolio and Credit Quality

The Corporation's primary lending focus is small business and middle market commercial, commercial real estate, public finance and residential real estate, which results in portfolio diversification. The following tables show the composition of the loan portfolio and credit quality characteristics by collateral classification, excluding loans held for sale.  Loans held for sale at June 30, 2024 and December 31, 2023, were $32.3 million and $18.9 million, respectively.

The following table illustrates the composition of the Corporation’s loan portfolio by loan class as of the dates indicated:

	June 30, 2024		December 31, 2023
Commercial and industrial loans	$	3,949,817	$	3,670,948
Agricultural land, production and other loans to farmers	239,926		263,414
Real estate loans:
Construction	823,267		957,545
Commercial real estate, non-owner occupied	2,323,533		2,400,839
Commercial real estate, owner occupied	1,174,195		1,162,083
Residential	2,370,905		2,288,921
Home equity	631,104		617,571
Individuals' loans for household and other personal expenditures	162,089		168,388
Public finance and other commercial loans	964,814		956,318
Loans	$	12,639,650	$	12,486,027

15

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Credit Quality

As part of the ongoing monitoring of the credit quality of the Corporation's loan portfolio, management tracks certain credit quality indicators including trends related to: (i) the level of criticized commercial loans, (ii) net charge-offs, (iii) nonperforming loans, (iv) covenant failures and (v) the general national and local economic conditions.

The Corporation utilizes a risk grading of pass, special mention, substandard, doubtful and loss to assess the overall credit quality of large commercial loans. All large commercial credit grades are reviewed at a minimum of once a year for pass grade loans. Loans with grades below pass are reviewed more frequently depending on the grade. A description of the general characteristics of these grades is as follows:

•Pass - Loans that are considered to be of acceptable credit quality.

•Special Mention - Loans which possess some credit deficiency or potential weakness, which deserves close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Corporation's credit position at some future date. Special mention assets are not adversely classified and do not expose the Corporation to sufficient risk to warrant adverse classification.

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

•Doubtful - Loans that have all of the weaknesses of those classified as Substandard. However, based on currently existing facts, conditions and values, these weaknesses make full collection of principal highly questionable and improbable.

•Loss – Loans that are considered uncollectible and of such little value that continuing to carry them as an asset is not warranted. Loans will be classified as Loss when it is neither practical or desirable to defer charging-off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

16

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The following tables summarize the risk grading of the Corporation’s loan portfolio and gross charge-offs by loan class and by year of origination for the periods indicated. Consumer loans are not risk graded. For the purposes of this disclosure, the consumer loans are classified in the following manner: loans that are less than 30 days past due are Pass, loans 30-89 days past due are Special Mention and loans greater than 89 days past due are Substandard.  The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.

	June 30, 2024
	Term Loans (amortized cost basis by origination year)												Revolving loans amortized		Revolving loans converted
	2024		2023		2022		2021		2020		Prior		cost basis		to term		Total
Commercial and industrial loans
Pass	$	778,502	$	810,290	$	275,900	$	201,870	$	70,975	$	76,151	$	1,533,518	$	4	$	3,747,210
Special Mention	2,913		5,746		21,042		1,574		2,488		11		35,722		—		69,496
Substandard	13,274		38,566		21,712		5,592		1,625		1,827		42,791		—		125,387
Doubtful	—		7,643		—		—		—		—		81		—		7,724
Total Commercial and industrial loans	794,689		862,245		318,654		209,036		75,088		77,989		1,612,112		4		3,949,817
Current period gross charge-offs	1,100		31,803		205		8,425		345		133		—		—		42,011
Agricultural land, production and other loans to farmers
Pass	22,137		24,869		34,809		29,077		28,845		34,134		61,444		—		235,315
Special Mention	—		—		245		—		—		448		250		—		943
Substandard	601		53		968		709		516		33		788		—		3,668
Total Agricultural land, production and other loans to farmers	22,738		24,922		36,022		29,786		29,361		34,615		62,482		—		239,926
Real estate loans:
Construction
Pass	166,149		276,029		194,572		95,193		6,632		9,460		10,810		—		758,845
Special Mention	—		5,600		23,660		645		—		—		—		—		29,905
Substandard	21,202		2,858		5,135		5,322		—		—		—		—		34,517
Total Construction	187,351		284,487		223,367		101,160		6,632		9,460		10,810		—		823,267
Commercial real estate, non-owner occupied
Pass	245,845		303,828		399,269		451,607		373,231		298,925		13,660		—		2,086,365
Special Mention	77,354		22,906		21,755		10,937		2,428		45,158		—		—		180,538
Substandard	19,488		2,927		189		502		19,824		1,638		85		—		44,653
Doubtful	—		11,288		689		—		—		—		—		—		11,977
Total Commercial real estate, non-owner occupied	342,687		340,949		421,902		463,046		395,483		345,721		13,745		—		2,323,533
Current period gross charge-offs	—		339		3		—		—		—		—		—		342
Commercial real estate, owner occupied
Pass	75,597		191,056		175,737		245,405		231,751		159,142		30,206		—		1,108,894
Special Mention	138		3,230		15,076		6,717		5,301		1,750		260		—		32,472
Substandard	2,072		16,234		964		5,028		4,118		4,135		278		—		32,829
Total Commercial real estate, owner occupied	77,807		210,520		191,777		257,150		241,170		165,027		30,744		—		1,174,195
Current period gross charge-offs	—		—		—		—		9		—		—		—		9
Residential
Pass	111,630		427,692		698,308		421,439		350,587		322,922		5,052		14		2,337,644
Special Mention	668		2,480		5,301		3,917		1,197		5,147		350		—		19,060
Substandard	414		760		4,367		2,973		1,250		4,437		—		—		14,201
Total Residential	112,712		430,932		707,976		428,329		353,034		332,506		5,402		14		2,370,905
Current period gross charge-offs	—		39		403		57		21		54		—		—		574
Home equity
Pass	6,606		7,648		26,336		56,066		10,956		4,652		500,801		6,294		619,359
Special Mention	113		—		1,340		406		1,057		66		5,117		245		8,344
Substandard	62		—		52		597		—		325		2,125		240		3,401
Total Home Equity	6,781		7,648		27,728		57,069		12,013		5,043		508,043		6,779		631,104
Current period gross charge-offs	—		11		36		22		—		265		—		—		334
Individuals' loans for household and other personal expenditures
Pass	34,921		27,868		37,193		14,676		3,983		5,878		35,512		659		160,690
Special Mention	29		224		226		135		110		18		623		—		1,365
Substandard	—		22		10		—		—		—		2		—		34
Total Individuals' loans for household and other personal expenditures	34,950		28,114		37,429		14,811		4,093		5,896		36,137		659		162,089
Current period gross charge-offs	22		353		232		120		25		32		—		—		784
Public finance and other commercial loans
Pass	43,164		54,409		206,136		199,844		152,505		308,167		589		—		964,814
Total Public finance and other commercial loans	43,164		54,409		206,136		199,844		152,505		308,167		589		—		964,814
Loans	$	1,622,879	$	2,244,226	$	2,170,991	$	1,760,231	$	1,269,379	$	1,284,424	$	2,280,064	$	7,456	$	12,639,650
Total current period gross charge-offs	$	1,122	$	32,545	$	879	$	8,624	$	400	$	484	$	—	$	—	$	44,054

17

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

	December 31, 2023
	Term Loans (amortized cost basis by origination year)												Revolving loans amortized		Revolving loans converted
	2023		2022		2021		2020		2019		Prior		cost basis		to term		Total
Commercial and industrial loans
Pass	$	1,175,967	$	474,601	$	253,148	$	86,226	$	47,910	$	45,020	$	1,393,756	$	60	$	3,476,688
Special Mention	34,356		3,911		1,546		5,149		2,986		241		45,994		—		94,183
Substandard	12,311		20,245		17,733		2,479		1,507		1,512		40,449		144		96,380
Doubtful	857		—		—		—		—		—		2,840		—		3,697
Total Commercial and industrial loans	1,223,491		498,757		272,427		93,854		52,403		46,773		1,483,039		204		3,670,948
Current period gross charge-offs	13,973		2,711		576		5,665		78		261		—		—		23,264
Agricultural land, production and other loans to farmers
Pass	35,633		38,145		31,511		31,048		12,995		25,462		87,534		—		262,328
Special Mention	—		266		—		—		—		122		—		—		388
Substandard	58		150		—		454		—		36		—		—		698
Total Agricultural land, production and other loans to farmers	35,691		38,561		31,511		31,502		12,995		25,620		87,534		—		263,414
Real estate loans:
Construction
Pass	403,578		267,587		198,350		8,372		7,723		2,357		11,735		—		899,702
Special Mention	25,894		—		—		20,846		—		—		—		—		46,740
Substandard	1,451		4,330		5,322		—		—		—		—		—		11,103
Total Construction	430,923		271,917		203,672		29,218		7,723		2,357		11,735		—		957,545
Commercial real estate, non-owner occupied
Pass	373,378		504,280		535,327		418,553		141,320		200,821		16,744		—		2,190,423
Special Mention	76,382		21,145		7,005		4,531		19,479		27,941		37		—		156,520
Substandard	20,358		10,537		219		20,236		—		2,299		247		—		53,896
Total Commercial real estate, non-owner occupied	470,118		535,962		542,551		443,320		160,799		231,061		17,028		—		2,400,839
Current period gross charge-offs	—		66		—		—		—		—		—		—		66
Commercial real estate, owner occupied
Pass	176,750		199,821		256,346		263,522		99,180		77,485		27,369		—		1,100,473
Special Mention	6,712		5,034		9,319		2,460		919		2,902		514		—		27,860
Substandard	18,092		3,712		4,183		4,545		289		2,929		—		—		33,750
Total Commercial real estate, owner occupied	201,554		208,567		269,848		270,527		100,388		83,316		27,883		—		1,162,083
Current period gross charge-offs	48		—		—		—		2		—		—		—		50
Residential
Pass	395,363		695,056		442,495		365,297		98,654		254,718		4,988		83		2,256,654
Special Mention	2,167		5,591		3,202		1,924		1,065		4,837		200		81		19,067
Substandard	804		3,708		2,529		1,199		866		4,063		31		—		13,200
Total Residential	398,334		704,355		448,226		368,420		100,585		263,618		5,219		164		2,288,921
Current period gross charge-offs	101		252		208		3		3		94		—		—		661
Home equity
Pass	9,375		29,784		61,591		11,084		1,092		3,875		484,330		5,837		606,968
Special Mention	—		715		—		1,092		15		2		5,031		149		7,004
Substandard	63		—		727		—		—		123		2,589		97		3,599
Total Home Equity	9,438		30,499		62,318		12,176		1,107		4,000		491,950		6,083		617,571
Current period gross charge-offs	69		213		224		149		193		1,596		—		—		2,444
Individuals' loans for household and other personal expenditures
Pass	35,781		49,295		28,387		6,726		2,070		5,904		38,619		772		167,554
Special Mention	184		246		138		69		—		14		176		—		827
Substandard	—		6		—		—		1		—		—		—		7
Total Individuals' loans for household and other personal expenditures	35,965		49,547		28,525		6,795		2,071		5,918		38,795		772		168,388
Current period gross charge-offs	147		770		342		77		62		156		—		—		1,554
Public finance and other commercial loans
Pass	65,357		208,347		204,863		155,132		91,619		229,355		1,645		—		956,318
Total Public finance and other commercial loans	65,357		208,347		204,863		155,132		91,619		229,355		1,645		—		956,318
Loans	$	2,870,871	$	2,546,512	$	2,063,941	$	1,410,944	$	529,690	$	892,018	$	2,164,828	$	7,223	$	12,486,027
Total current period gross charge-offs	$	14,338	$	4,012	$	1,350	$	5,894	$	338	$	2,107	$	—	$	—	$	28,039

18

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Total past due loans equaled $98.2 million as of June 30, 2024 representing an $18.9 million increase from $79.2 million at December 31, 2023. The 30-59 days past due loans decreased $5.0 million from December 31, 2023 as commercial real estate, non-owner occupied decreased $11.2 million, which was partially offset by increases in commercial and industrial and commercial real estate, owner occupied of $1.0 million and $3.2 million, respectively. The 60-89 days past due loans increased $19.0 million from December 31, 2023 as construction increased $19.2 million. The 90 days or more past due loans increased $5.0 million from December 31, 2023 as commercial and industrial and commercial real estate, non-owner occupied increased $3.5 million and $1.6 million, respectively. The tables below show a past due aging of the Corporation’s loan portfolio, by loan class, as of the dates indicated:

	June 30, 2024
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	3,932,986	$	6,014	$	463	$	10,354	$	3,949,817	$	385
Agricultural land, production and other loans to farmers	239,676		250		—		—		239,926		—
Real estate loans:
Construction	802,064		—		21,203		—		823,267		—
Commercial real estate, non-owner occupied	2,306,861		1,789		1,799		13,084		2,323,533		—
Commercial real estate, owner occupied	1,170,516		3,237		—		442		1,174,195		—
Residential	2,342,411		12,483		4,213		11,798		2,370,905		1,187
Home equity	621,441		4,293		2,152		3,218		631,104		114
Individuals' loans for household and other personal expenditures	160,690		1,017		348		34		162,089		—
Public finance and other commercial loans	964,814		—		—		—		964,814		—
Loans	$	12,541,459	$	29,083	$	30,178	$	38,930	$	12,639,650	$	1,686

	December 31, 2023
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	3,657,447	$	5,021	$	1,622	$	6,858	$	3,670,948	$	86
Agricultural land, production and other loans to farmers	263,414		—		—		—		263,414		—
Real estate loans:
Construction	955,588		—		1,957		—		957,545		—
Commercial real estate, non-owner occupied	2,376,184		12,995		195		11,465		2,400,839		—
Commercial real estate, owner occupied	1,161,869		—		104		110		1,162,083		—
Residential	2,259,496		11,810		5,472		12,143		2,288,921		—
Home equity	608,948		3,614		1,647		3,362		617,571		52
Individuals' loans for household and other personal expenditures	167,553		635		192		8		168,388		—
Public finance and other commercial loans	956,284		—		—		34		956,318		34
Loans	$	12,406,783	$	34,075	$	11,189	$	33,980	$	12,486,027	$	172

Loans are reclassified to a nonaccruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. At the time the accrual is discontinued, all unpaid accrued interest is reversed against earnings. Interest income accrued in prior years, if any, is charged to the allowance for credit losses. Payments subsequently received on nonaccrual loans are applied to principal. A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of six consecutive months of performance.

The following table summarizes the Corporation’s nonaccrual loans by loan class as of the dates indicated:

	June 30, 2024				December 31, 2023
	Nonaccrual Loans		Nonaccrual Loans with no Allowance for Credit Losses		Nonaccrual Loans		Nonaccrual Loans with no Allowance for Credit Losses
Commercial and industrial loans	$	13,373	$	5,884	$	9,050	$	1,015
Agricultural land, production and other loans to farmers	53		—		58		—
Real estate loans:
Construction	—		—		520		—
Commercial real estate, non-owner occupied	22,704		10,372		11,932		11,095
Commercial real estate, owner occupied	2,452		1,870		3,041		2,257
Residential	18,814		—		25,140		—
Home equity	4,476		—		3,820		—
Individuals' loans for household and other personal expenditures	34		—		19		—
Loans	$	61,906	$	18,126	$	53,580	$	14,367

19

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Interest income on nonaccrual loans is recognized only to the extent that cash payments are received in excess of principal due. There was no interest income recognized on nonaccrual loans for the three and six months ended June 30, 2024 or 2023.

Determining fair value for collateral dependent loans requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

The tables below present the amortized cost basis of collateral dependent loans by loan class and their respective collateral type, which are individually evaluated to determine expected credit losses. The total collateral dependent loan balance increased $5.0 million, primarily related to an increase of $8.1 million in commercial real estate, non-owner occupied, offset by a decrease of $3.4 million in commercial and industrial, for the six months ended June 30, 2024. The total related allowance balance decreased $612,000, primarily related to a decrease of $3.0 million in commercial and industrial, offset by an increase of $2.4 million in commercial real estate, non-owner occupied, for the six months ended June 30, 2024.

	June 30, 2024
	Commercial Real Estate		Residential Real Estate		Other		Total		Allowance on Collateral Dependent Loans
Commercial and industrial loans	$	—	$	—	$	28,665	$	28,665	$	8,442
Real estate loans:
Construction	—		5		—		5		—
Commercial real estate, non-owner occupied	25,606		—		—		25,606		2,483
Commercial real estate, owner occupied	9,951		—		—		9,951		—
Residential	—		1,263		—		1,263		204
Home equity	—		212		—		212		28
Loans	$	35,557	$	1,480	$	28,665	$	65,702	$	11,157

	December 31, 2023
	Commercial Real Estate		Residential Real Estate		Other		Total		Allowance on Collateral Dependent Loans
Commercial and industrial loans	$	—	$	—	$	32,029	$	32,029	$	11,474
Real estate loans:
Construction	—		7		—		7		—
Commercial real estate, non-owner occupied	17,516		—		—		17,516		35
Commercial real estate, owner occupied	9,452		—		—		9,452		—
Residential	—		1,439		—		1,439		230
Home equity	—		223		—		223		30
Loans	$	26,968	$	1,669	$	32,029	$	60,666	$	11,769

20

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

In certain situations, the Corporation may modify the terms of a loan to a debtor experiencing financial difficulty. The modifications may include principal forgiveness, interest rate reductions, payment delays, term extensions or combinations of these modifications. The following tables present the amortized cost basis of loans at June 30, 2024 and 2023 that were both experiencing financial difficulty and modified during the three and six months ended June 30, 2024 and 2023, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.

	Three Months Ended June 30, 2024
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Combination Payment Delay & Term Extension		Combination Interest Rate Reduction, Term Extension, & Payment Delay		% of Total Class of Financing Receivable
Commercial and industrial loans	$	—	$	1,778	$	13	$	—	0.05	%
Real estate loans:
Commercial real estate, non-owner occupied	—		19,488		—		—		0.84	%
Commercial real estate, owner occupied	—		1,990		—		—		0.17	%
Residential	250		—		392		227		0.04	%
Home equity	—		—		162		—		0.03	%
Total	$	250	$	23,256	$	567	$	227

	Three Months Ended June 30, 2023
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Combination Interest Rate Reduction & Term Extension		Combination Payment Delay & Term Extension		% of Total Class of Financing Receivable
Commercial and industrial loans	$	—	$	3,917	$	110	$	—	0.11	%
Real estate loans:
Commercial real estate, non-owner occupied	—		1,570		—		—		0.07	%
Commercial real estate, owner occupied	5,664		2,032		—		—		0.65	%
Residential	—		14		—		458		0.02	%
Total	$	5,664	$	7,533	$	110	$	458

	Six Months Ended June 30, 2024
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Interest Rate Reduction		Combination Payment Delay & Term Extension		Combination Interest Rate Reduction, Term Extension, & Payment Delay		% of Total Class of Financing Receivable
Commercial and industrial loans	$	1,491	$	4,383	$	249	$	27	$	—	0.16	%
Real estate loans:
Commercial real estate, non-owner occupied	—		19,488		—		—		—		0.84	%
Commercial real estate, owner occupied	—		1,990		—		—		—		0.17	%
Residential	1,880		274		—		392		227		0.12	%
Home Equity	89		62		—		162		—		0.05	%
Total	$	3,460	$	26,197	$	249	$	581	$	227

	Six Months Ended June 30, 2023
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Combination Interest Rate Reduction & Term Extension		Combination Payment Delay & Term Extension		% of Total Class of Financing Receivable
Commercial and industrial loans	$	—	$	12,897	$	110	$	—	0.37	%
Agricultural land, production and other loans to farmers	—		35		—		—		0.02	%
Real estate loans:
Construction	—		15		—		—		—	%
Commercial real estate, non-owner occupied	—		12,394		5,954		—		0.77	%
Commercial real estate, owner occupied	5,664		2,843		79		—		0.73	%
Residential	—		14		—		458		0.02	%
Total	$	5,664	$	28,198	$	6,143	$	458

21

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three and six months ended June 30, 2024 and 2023.

	Three Months Ended June 30, 2024
	Financial Effect of Loan Modifications
	Payment Delay	Term Extension	Combination Payment Delay & Term Extension	Combination Payment Delay, Term Extension & Interest Rate Reduction
Commercial and industrial loans		Extended loans by a weighted average of 12 months.	Provided payment deferrals with weighted average delayed amounts of $5,000 and extended loans by a weighted average of 3 months.
Real estate loans:
Commercial real estate, non-owner occupied		Extended loans by a weighted average of 16 months.
Commercial real estate, owner occupied		Extended loans by a weighted average of 28 months.
Residential	Provided payment deferrals with weighted average delayed amounts of $9,000.		Provided payment deferrals with weighted average delayed amounts of $8,000 and extended loans by a weighted average of 120 months.	Provided payment deferrals with weighted average delayed amounts of $14,000, extended loans by a weighted average of 12 months, and reduced the weighted average contractual interest rate from 5.75% to 5.00%.
Home equity			Provided payment deferrals with weighted average delayed amounts of $8,000 and extended loans by a weighted average of 60 months.

	Three Months Ended June 30, 2023
	Financial Effect of Loan Modifications
	Payment Delay	Term Extension	Combination Interest Rate Reduction & Term Extension	Combination Payment Delay & Term Extension
Commercial and industrial loans		Extended loans by a weighted average of 6 months.	Reduced the weighted average contractual interest rate from 8.25% to 7.10%. Extended loans by a weighted average of 12 months.
Real estate loans:
Commercial real estate, non-owner occupied		Extended loans by a weighted average of 8 months.
Commercial real estate, owner occupied	Provided payment deferrals with weighted average delayed amounts of $4.5 million.	Extended loans by a weighted average of 6 months.
Residential		Extended loans by a weighted average of 11 months.		Provided payment deferrals with weighted average delayed amounts of $3,400. Extended loans by a weighted average of 3 months.

22

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

	Six Months Ended June 30, 2024
	Financial Effect of Loan Modifications
	Payment Delay	Term Extension	Interest Rate Reduction	Combination Payment Delay & Term Extension	Combination Payment Delay, Term Extension & Interest Rate Reduction
Commercial and industrial loans	Provided payment deferrals with weighted average delayed amounts of $50,000.	Extended loans by a weighted average of 14 months.	Reduced the weighted average contractual interest rate from 9.00% to 8.00%.	Provided payment deferrals with weighted average delayed amounts of $5,000 and extended loans by a weighted average of 3 months.
Real estate loans:
Commercial real estate, non-owner occupied		Extended loans by a weighted average of 16 months.
Commercial real estate, owner occupied		Extended loans by a weighted average of 28 months.
Residential	Provided payment deferrals with weighted average delayed amounts of $28,000.	Extended loans by a weighted average of 6 months.		Provided payment deferrals with weighted average delayed amounts of $8,000 and extended loans by a weighted average of 120 months.	Provided payment deferrals with weighted average delayed amounts of $14,000, extended loans by a weighted average of 12 months, and reduced the weighted average contractual interest rate from 5.75% to 5.00%.
Home Equity	Provided payment deferrals with weighted average delayed amounts of $4,000.	Extended loans by a weighted average of 5 months.		Provided payment deferrals with weighted average delayed amounts of $8,000 and extended loans by a weighted average of 60 months.

	Six Months Ended June 30, 2023
	Financial Effect of Loan Modifications
	Payment Delay	Term Extension	Combination Interest Rate Reduction & Term Extension	Combination Payment Delay & Term Extension
Commercial and industrial loans		Extended loans by a weighted average of 7 months.	Reduced the weighted average contractual interest rate from 8.25% to 7.10%. Extended loans by a weighted average of 12 months.	Reduced the weighted average contractual interest rate from 8.25% to 7.10%. Extended loans by a weighted average of 12 months.
Agricultural land, production and other loans to farmers		Extended loans by a weighted average of 60 months.
Real estate loans:
Construction		Extended loans by a weighted average of 24 months.
Commercial real estate, non-owner occupied		Extended loans by a weighted average of 9 months.	Reduced the weighted average contractual interest rate from 7.81% to 7.40%. Extended loans by a weighted average of 41 months.
Commercial real estate, owner occupied	Provided payment deferrals with weighted average delayed amounts of $4.5 million.	Extended loans by a weighted average of 6 months.	Reduced the weighted average contractual interest rate from 10.25% to 6.61%. Extended loans by a weighted average of 12 months.
Residential		Extended loans by a weighted average of 11 months.		Provided payment deferrals with weighted average delayed amounts $3,400. Extended loans by a weighted average of 3 months.

23

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The following tables present the amortized cost basis and payment status of loans modified within the previous twelve months to borrowers experiencing financial difficulty, and that subsequently defaulted during the three and six months ended June 30, 2024 and 2023 and remained in default at period end.

	Three Months Ended June 30, 2024
	Payment Status
	Current		30-89 Days Past Due
Commercial and industrial loans	$	1,791	$	125
Real estate loans:
Commercial real estate, non-owner occupied	19,488		1,799
Commercial real estate, owner occupied	1,990		—
Residential	869		538
Home equity	162		89
Total	$	24,300	$	2,551

	Three Months Ended June 30, 2023
	Payment Status
	Current		30-89 Days Past Due		90+ Days Past Due
Commercial and industrial loans	$	4,027	$	—	$	—
Real estate loans:
Commercial real estate, non-owner occupied	1,570		—		—
Commercial real estate, owner occupied	7,696		—		—
Residential	159		108		205
Total	$	13,452	$	108	$	205

	Six Months Ended June 30, 2024
	Payment Status
	Current		30-89 Days Past Due		90+ Days Past Due
Commercial and industrial loans	$	6,150	$	125	$	—
Real estate loans:
Commercial real estate, non-owner occupied	19,488		1,799		—
Commercial real estate, owner occupied	1,990		—		—
Residential	1,219		538		1,188
Home equity	224		89		—
Total	$	29,071	$	2,551	$	1,188

	Six Months Ended June 30, 2023
	Payment Status
	Current		30-89 Days Past Due		90+ Days Past Due
Commercial and industrial loans	$	13,007	$	—	$	—
Agricultural land, production and other loans to farmers	35		—		—
Real estate loans:
Construction	15		—		—
Commercial real estate, non-owner occupied	18,348		—		—
Commercial real estate, owner occupied	8,586		—		—
Residential	159		108		205
Total	$	40,150	$	108	$	205

Upon the Corporation's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is charged-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.

24

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Allowance for Credit Losses on Loans

The Allowance for Credit Losses on Loans ("ACL - Loans") is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on loans over the contractual term. The ACL - Loans is adjusted by the provision for credit losses, which is reported in earnings, and reduced by charge-offs for loans, net of recoveries. Provision for credit losses on loans reflects the totality of actions taken on all loans for a particular period including any necessary increases or decreases in the allowance related to changes in credit loss expectations associated with specific loans or pools of loans. Loans are charged-off against the allowance when the uncollectibility of the loan is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

The allowance represents the Corporation’s best estimate of current expected credit losses on loans using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The CECL calculation is performed and evaluated quarterly and losses are estimated over the expected life of the loan. The level of the allowance for credit losses is believed to be adequate to absorb all expected future losses inherent in the loan portfolio at the measurement date.

In calculating the allowance for credit losses, the loan portfolio was pooled into ten loan segments with similar risk characteristics. Common characteristics include the type or purpose of the loan, underlying collateral and historical/expected credit loss patterns. In developing the loan segments, the Corporation analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors.

The expected credit losses are measured over the life of each loan segment utilizing the Probability of Default / Loss Given Default methodology combined with economic forecast models to estimate the current expected credit loss inherent in the loan portfolio. This approach is also leveraged to estimate the expected credit losses associated with unfunded loan commitments incorporating expected utilization rates.

The Corporation sub-segmented certain commercial portfolios by risk level and certain consumer portfolios by delinquency status where appropriate. The Corporation utilized a four-quarter reasonable and supportable economic forecast period followed by a six-quarter, straight-line reversion period to the historical macroeconomic mean for the remaining life of the loans. Econometric modeling was performed using historical default rates and a selection of economic forecast scenarios published by Moody’s to develop a range of estimated credit losses for which to determine the best credit loss estimate within. Macroeconomic factors utilized in the modeling process include the national unemployment rate, BBB US corporate index, Commercial Real Estate ("CRE") price index and the home price index.

The Corporation qualitatively adjusts model results for risk factors that are not inherently considered in the quantitative modeling process, but are nonetheless relevant in assessing the expected credit losses within the loan portfolio. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor. The various risks that may be considered in making qualitative adjustments include, among other things, the impact of (i) changes in the nature and volume of the loan portfolio, (ii) changes in the existence, growth and effect of any concentrations in credit, (iii) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, charge-offs, and recoveries, (iv) changes in the quality of the credit review function, (v) changes in the experience, ability and depth of lending, investment, collection and other relevant management staff, (vi) changes in the volume and severity of past due financial assets, the volume of the nonaccrual assets, and the volume and severity of adversely classified or graded assets, (vii) the value of underlying collateral for loans that are not collateral dependent, and (viii) other environmental factors such as regulatory, legal and technological considerations, as well as competition and changes in the economic and business conditions that affect the collectibility of financial assets. At CECL adoption, the Corporation established certain qualitative factors that were expected to correlate to losses within the loan portfolio. During a scheduled review of qualitative factors in 2023, the Corporation determined there had not been significant evidence of correlation to losses for the qualitative factors that included i) changes in experience, ability and depth of lending management and staff; ii) changes in lending policies and procedures; iii) changes in the quality of the credit review function; iv) portfolio mix and growth; and v) industry concentration. The Corporation decided to refine these qualitative factors in order to improve our ability to assess related risk and enhance our ability to correlate to losses. The Corporation’s evaluation of the qualitative approach resulted in an insignificant change to the ACL – Loans estimate.

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within the loan segments. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific reserve allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The fair value of collateral supporting collateral dependent loans is evaluated on a quarterly basis.

25

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The risk characteristics of the Corporation’s portfolio segments are as follows:

Commercial

Commercial lending is primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the tangible assets being financed such as equipment or real estate or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. Other loans may be unsecured, secured but under-collateralized or otherwise made on the basis of the enterprise value of an organization. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. The Corporation monitors commercial real estate loans based on collateral and risk grade criteria, as well as the levels of owner-occupied versus non-owner occupied loans.

Construction

Construction loans are underwritten utilizing a combination of tools and techniques including feasibility and market studies, independent appraisals and appraisal reviews, absorption and interest rate sensitivity analysis as well as the financial analysis of the developer and all guarantors. Construction loans are monitored by either in house or third party inspectors limiting advances to a percentage of costs or stabilized project value. These loans frequently involve the disbursement of significant funds with the repayment dependent upon the successful completion and, where necessary, the future stabilization of the project. The predominant inherent risk of this portfolio is associated with the borrower's ability to successfully complete a project on time, within budget and stabilize the projected as originally projected.

Consumer and Residential

With respect to residential loans that are secured by 1-4 family residences, which are typically owner occupied, the Corporation generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans, such as small installment loans and certain lines of credit, are unsecured. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers and can also be impacted by changes in property values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

The allowance for credit losses decreased $15.1 million and $15.4 million during the three and six months ended June 30, 2024, respectively. Net charge-offs totaled $39.6 million and $41.9 million during the three and six months ended June 30, 2024, respectively. Provision expense of $24.5 million and $26.5 million was recorded during the three and six months ended June 30, 2024, respectively. The following tables summarize changes in the allowance for credit losses by loan segment for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30, 2024
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, March 31, 2024	$	99,213	$	45,278	$	20,369	$	39,821	$	204,681
Provision for credit losses	31,648		75		(6,009)		(1,214)		24,500
Recoveries on loans	536		161		—		560		1,257
Loans charged off	(40,180)		—		—		(721)		(40,901)
Balances, June 30, 2024	$	91,217	$	45,514	$	14,360	$	38,446	$	189,537

	Three Months Ended June 30, 2023
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, March 31, 2023	$	101,304	$	46,308	$	28,571	$	46,869	$	223,052
Provision for credit losses	7,639		(7,151)		1,502		(1,990)		—
Recoveries on loans	66		—		—		379		445
Loans charged off	(636)		—		—		(1,714)		(2,350)
Balances, June 30, 2023	$	108,373	$	39,157	$	30,073	$	43,544	$	221,147

26

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

	Six Months Ended June 30, 2024
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, December 31, 2023	$	97,348	$	44,048	$	24,823	$	38,715	$	204,934
Provision for credit losses	34,793		1,603		(10,463)		567		26,500
Recoveries on loans	1,087		214		—		856		2,157
Loans charged off	(42,011)		(351)		—		(1,692)		(44,054)
Balances, June 30, 2024	$	91,217	$	45,514	$	14,360	$	38,446	$	189,537

	Six Months Ended June 30, 2023
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, December 31, 2022	$	102,216	$	46,839	$	28,955	$	45,267	$	223,277
Provision for credit losses	6,440		(7,734)		1,118		176		—
Recoveries on loans	596		56		—		637		1,289
Loans charged off	(879)		(4)		—		(2,536)		(3,419)
Balances, June 30, 2023	$	108,373	$	39,157	$	30,073	$	43,544	$	221,147

Off-Balance Sheet Arrangements, Commitments And Contingencies

In the normal course of business, the Corporation has entered into off-balance sheet financial instruments which include commitments to extend credit and standby letters of credit. Commitments to extend credit are usually the result of lines of credit granted to existing borrowers under agreements that the total outstanding indebtedness will not exceed a specific amount during the term of the indebtedness. Typical borrowers are commercial customers that use lines of credit to supplement their treasury management functions, and thus their total outstanding indebtedness may fluctuate during any time period based on the seasonality of their business and the resultant timing for their cash flows. Other typical lines of credit are related to home equity loans granted to customers. Commitments to extend credit generally have fixed expiration dates or other termination clauses that may require a fee.

Standby letters of credit are generally issued on behalf of an applicant (the Corporation’s customer) to a specifically named beneficiary and are the result of a particular business arrangement that exists between the applicant and the beneficiary. Standby letters of credit have fixed expiration dates and are usually for terms of two years or less unless terminated beforehand due to criteria specified in the standby letter of credit. The standby letter of credit would permit the beneficiary to obtain payment from the Corporation under certain prescribed circumstances. Subsequently, the Corporation would seek reimbursement from the applicant pursuant to the terms of the standby letter of credit.

The Corporation typically follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet instruments. Each customer’s creditworthiness is typically evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on management’s credit evaluation of the customer. Collateral held varies but may include cash, real estate, marketable securities, accounts receivable, inventory, equipment and personal property. The contractual amounts of these commitments are not reflected in the consolidated financial statements and only amounts drawn upon would be reflected in the future. Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent future cash requirements. However, should the commitments be drawn upon and should the Corporation’s customers default on their resulting obligation to the Corporation, the maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those commitments.

Financial instruments with off-balance sheet risk were as follows:

	June 30, 2024		December 31, 2023
Amounts of commitments:
Loan commitments to extend credit	$	5,271,982	$	5,025,790
Standby letters of credit	$	69,618	$	65,580

27

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The Corporation maintains an accrual for credit losses on off-balance sheet commitments using the CECL methodology. Reserves for unfunded commitments declined by $3.8 million during the year ended December 31, 2023, which decreased the reserve to $19.5 million at December 31, 2023 and June 30, 2024. This reserve level remains appropriate and is reported in Other Liabilities as of June 30, 2024 in the Consolidated Condensed Balance Sheets.

The table below reflects the total allowance for credit losses for the off-balance sheet commitment for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Balance at beginning of the period	$	19,500	$	23,300	$	19,500	$	23,300
Provision for credit losses - unfunded commitments	—		—		—		—
Ending balance	$	19,500	$	23,300	$	19,500	$	23,300

NOTE 4

DERIVATIVE FINANCIAL INSTRUMENTS

Risk Management Objective of Using Derivatives

The Corporation is exposed to certain risks arising from both its business operations and economic conditions.  The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments.  Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.  The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash payments principally related to certain variable-rate liabilities.  The Corporation also has derivatives that are a result of a service the Corporation provides to certain qualifying customers, and, therefore, are not used to manage interest rate risk in the Corporation’s assets or liabilities.  The Corporation manages a matched book with respect to its derivative instruments offered as a part of this service to its customers in order to minimize its net risk exposure resulting from such transactions.

Derivatives Designated as Hedges

The Corporation’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Corporation primarily uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the payment of fixed amounts to a counterparty in exchange for the Corporation receiving variable payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. As of June 30, 2024 and December 31, 2023 the Corporation had no interest rate swaps or caps designated as hedges.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss). The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three and six months ended June 30, 2024 and 2023, the Corporation did not recognize any ineffectiveness.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Corporation's variable-rate liabilities. During the next twelve months, the Corporation doesn't expect to reclassify income (loss) from accumulated other comprehensive income (loss) to interest income.

The amount of gain (loss) recognized in other comprehensive income (loss) is included in the table below for the periods indicated.

Derivatives in Cash Flow Hedging Relationships	Amount of Loss Recognized in Other Comprehensive Income (Loss) on Derivatives  (Effective Portion)
	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Interest Rate Products	$	—	$	(62)	$	—	$	(113)

28

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The amount of gain (loss) reclassified from other comprehensive income (loss) into income related to cash flow hedging relationships is included in the tables below for the periods indicated.

Derivatives Designated as Hedging Instruments	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain Reclassed from Other Comprehensive Income (Loss) into Income (Effective Portion)
		Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
Interest rate contracts	Interest Expense	$	—	$	(16)

Derivatives Designated as Hedging Instruments	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain Reclassed from Other Comprehensive Income (Loss) into Income (Effective Portion)
		Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Interest rate contracts	Interest Expense	$	—	$	(15)

Non-designated Hedges

The Corporation does not use derivatives for trading or speculative purposes.  Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain customers. The Corporation executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies.  Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Corporation executes with a third party, such that the Corporation minimizes its net risk exposure resulting from such transactions.  As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. 

Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. It is the Corporation's practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated in hedge relationships. Fair values were estimated based on changes in mortgage interest rates from the date of the commitments. Changes in the fair value of these mortgage banking derivatives are included in net gains and fees on sales of loans.

The table below presents the fair value of the Corporation’s non-designated hedges, as well as their classification on the Consolidated Condensed Balance Sheet, as of June 30, 2024, and December 31, 2023.

	June 30, 2024				December 31, 2023
	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in other assets:
Interest rate swaps	$	1,299,892	$	86,965	$	1,355,947	$	78,743
Forward contracts related to mortgage loans to be delivered for sale	46,801		605		15,160		469
Interest rate lock commitments	27,375		207		22,706		167
Included in other assets	$	1,374,068	$	87,777	$	1,393,813	$	79,379
Included in other liabilities:
Interest rate swaps	$	1,299,892	$	87,015	$	1,355,947	$	78,811
Forward contracts related to mortgage loans to be delivered for sale	30,948		129		25,290		191
Interest rate lock commitments	22,283		92		1,025		6
Included in other liabilities	$	1,353,123	$	87,236	$	1,382,262	$	79,008

In the normal course of business, the Corporation may decide to settle a forward contract rather than fulfill the contract. Cash received or paid in this settlement manner is included in "Net gains and fees on sales of loans" in the Consolidated Condensed Statements of Income and is considered a cost of executing a forward contract. The amount of gain (loss) recognized into income related to non-designated hedging instruments is included in the tables below for the periods indicated.

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain (Loss) Recognized into Income on Derivatives
		Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
Forward contracts related to mortgage loans to be delivered for sale	Net gains and fees on sales of loans	$	395	$	604
Interest rate lock commitments	Net gains and fees on sales of loans	(33)		(220)
Total net gain (loss) recognized in income		$	362	$	384

29

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain (Loss) Recognized into Income on Derivatives
		Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Forward contracts related to mortgage loans to be delivered for sale	Net gains and fees on sales of loans	$	393	$	709
Interest rate lock commitments	Net gains and fees on sales of loans	(45)		(33)
Total net gain/(loss) recognized in income		$	348	$	676

The Corporation’s exposure to credit risk occurs because of nonperformance by its counterparties.  The counterparties approved by the Corporation are usually financial institutions, which are well capitalized and have credit ratings through Moody’s and/or Standard & Poor’s at or above investment grade.  The Corporation’s control of such risk is through quarterly financial reviews, comparing mark-to-market values with policy limitations, credit ratings and collateral pledging.

Credit-risk-related Contingent Features

The Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation fails to maintain its status as a well or adequately capitalized institution, then the Corporation could be required to terminate or fully collateralize all outstanding derivative contracts. Additionally, the Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations. As of June 30, 2024, the termination value of derivatives in a net liability position related to these agreements was $3.4 million, which resulted in no collateral pledged to counterparties as of June 30, 2024. While the Corporation did not breach any of these provisions as of June 30, 2024, if it had, the Corporation could have been required to settle its obligations under the agreements at their termination value.

NOTE 5

FAIR VALUES OF FINANCIAL INSTRUMENTS

The Corporation used fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The accounting guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.  ASC 820 applies only when other guidance requires or permits assets or liabilities to be measured at fair value; it does not expand the use of fair value in any new circumstances.

As defined in ASC 820, fair value is the price to sell an asset or transfer a liability in an orderly transaction between market participants. It represents an exit price at the measurement date. Market participants are buyers and sellers, who are independent, knowledgeable, and willing and able to transact in the principal (or most advantageous) market for the asset or liability being measured. Current market conditions, including imbalances between supply and demand, are considered in determining fair value. The Corporation values its assets and liabilities in the principal market where it sells the particular asset or transfers the liability with the greatest volume and level of activity. In the absence of a principal market, the valuation is based on the most advantageous market for the asset or liability (i.e., the market where the asset could be sold or the liability transferred at a price that maximizes the amount to be received for the asset or minimizes the amount to be paid to transfer the liability).

Valuation inputs refer to the assumptions market participants would use in pricing a given asset or liability. Inputs can be observable or unobservable. Observable inputs are those assumptions which market participants would use in pricing the particular asset or liability. These inputs are based on market data and are obtained from a source independent of the Corporation. Unobservable inputs are assumptions based on the Corporation’s own information or estimate of assumptions used by market participants in pricing the asset or liability. Unobservable inputs are based on the best and most current information available on the measurement date. All inputs, whether observable or unobservable, are ranked in accordance with a prescribed fair value hierarchy which gives the highest ranking to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest ranking to unobservable inputs for which there is little or no market activity (Level 3). Fair values for assets or liabilities classified as Level 2 are based on one or a combination of the following factors: (i) quoted prices for similar assets; (ii) observable inputs for the asset or liability, such as interest rates or yield curves; or (iii) inputs derived principally from or corroborated by observable market data. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation considers an input to be significant if it drives 10 percent or more of the total fair value of a particular asset or liability.

30

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

RECURRING MEASUREMENTS

Assets and liabilities are considered to be measured at fair value on a recurring basis if fair value is measured regularly (i.e., daily, weekly, monthly or quarterly). Recurring valuation occurs at a minimum on the measurement date. Assets and liabilities are considered to be measured at fair value on a nonrecurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the balance sheet. Generally, nonrecurring valuation is the result of the application of other accounting pronouncements which require assets or liabilities to be assessed for impairment and recorded at the lower of cost or fair value. The fair value of assets or liabilities transferred in or out of Level 3 is measured on the transfer date, with any additional changes in fair value subsequent to the transfer considered to be realized or unrealized gains or losses.

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the

accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Investment Securities

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include U.S. Treasury securities. Where significant observable inputs, other than Level 1 quoted prices, are available, securities are classified within Level 2 of the valuation hierarchy. Level 2 securities include U.S. Government-sponsored agency and mortgage-backed securities, state and municipal securities and corporate obligations securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include state and municipal securities, U.S. Government-sponsored mortgage-backed securities and corporate obligations securities. Level 3 fair value for securities was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

Third party vendors compile prices from various sources and may apply such techniques as matrix pricing to determine the value of identical or similar investment securities (Level 2). Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities. Any investment security not valued based upon the methods above are considered Level 3.

Derivative Financial Agreements

See information regarding the Corporation’s derivative financial agreements in NOTE 4. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements.

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2024, and December 31, 2023.

			Fair Value Measurements Using:
June 30, 2024	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	91,277	$	—	$	91,277	$	—
State and municipal	1,024,907		—		1,021,718		3,189
U.S. Government-sponsored mortgage-backed securities	490,654		—		490,650		4
Corporate obligations	12,055		—		12,024		31
Derivative assets	87,777		—		87,777		—
Derivative liabilities	87,236		—		87,236		—

			Fair Value Measurements Using:
December 31, 2023	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	95,307	$	—	$	95,307	$	—
State and municipal	1,065,171		—		1,061,896		3,275
U.S. Government-sponsored mortgage-backed securities	454,815		—		454,811		4
Corporate obligations	11,819		—		11,788		31
Derivative assets	79,379		—		79,379		—
Derivative liabilities	79,008		—		79,008		—

31

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Level 3 Reconciliation

The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying

balance sheets using significant unobservable Level 3 inputs for the three and six months ended June 30, 2024 and 2023.

	Available for Sale Securities
	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Balance at beginning of the period	$	3,247	$	3,462	$	3,310	$	3,439
Included in other comprehensive income	(21)		(111)		11		3
Principal payments	(2)		(3)		(97)		(94)
Ending balance	$	3,224	$	3,348	$	3,224	$	3,348

There were no gains or losses included in earnings that were attributable to the changes in unrealized gains or losses related to assets or

liabilities held at June 30, 2024 or December 31, 2023.

Transfers Between Levels

There were no transfers in or out of Level 3 during the three and six months ended June 30, 2024 and 2023.

Nonrecurring Measurements

Following is a description of valuation methodologies used for instruments measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy at June 30, 2024, and December 31, 2023.

			Fair Value Measurements Using
June 30, 2024	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	30,988	$	—	$	—	$	30,988

			Fair Value Measurements Using
December 31, 2023	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable  Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	55,020	$	—	$	—	$	55,020

Collateral Dependent Loans

Determining fair value for collateral dependent loans requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

32

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Unobservable (Level 3) Inputs

The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill, at June 30, 2024 and December 31, 2023.

June 30, 2024	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	3,189	Discounted cash flow	Maturity/Call date	1 month to 6 years
				US Muni BQ curve	BBB
				Discount rate	3.7% - 4.6%
				Weighted-average coupon	3.3%
Corporate obligations and U.S. Government-sponsored mortgage-backed securities	$	35	Discounted cash flow	Risk free rate	3 month CME Term SOFR plus 26bps
				plus premium for illiquidity (basis points)	plus 200bps
				Weighted-average coupon	0%
Collateral dependent loans	$	30,988	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 25%
				Weighted-average discount by loan balance	21.8%

December 31, 2023	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	3,275	Discounted cash flow	Maturity/Call date	1 month to 15 years
				US Muni BQ curve	A- to BBB
				Discount rate	3.6% - 4.7%
				Weighted-average coupon	3.3%
Corporate obligations and U.S. Government-sponsored mortgage-backed securities	$	35	Discounted cash flow	Risk free rate	3 month CME Term SOFR plus 26bps
				plus premium for illiquidity (basis points)	plus 200bps
				Weighted-average coupon	0%
Collateral dependent loans	$	55,020	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 10%
				Weighted-average discount by loan balance	4.1%

The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement and how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.

State and Municipal Securities, Corporate Obligations and U.S. Government-sponsored Mortgage-Backed Securities

The significant unobservable inputs used in the fair value measurement of the Corporation's state and municipal securities, corporate obligations and U.S. Government-sponsored mortgage-backed securities are premiums for unrated securities and marketability discounts. Significant increases or decreases in either of those inputs in isolation would result in a significantly lower or higher fair value measurement. Generally, changes in either of those inputs will not affect the other input.

33

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Fair Value of Financial Instruments

The following tables present estimated fair values of the Corporation’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2024 and December 31, 2023.

			June 30, 2024
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		Total Fair Value
Assets:
Cash and due from banks	$	105,372	$	105,372	$	—	$	—	$	105,372
Interest-bearing deposits	168,528		168,528		—		—		168,528
Investment securities available for sale	1,618,893		—		1,615,669		3,224		1,618,893
Investment securities held to maturity, net	2,134,195		—		1,771,567		7,649		1,779,216
Loans held for sale	32,292		—		32,292		—		32,292
Loans, net	12,450,113		—		—		12,121,987		12,121,987
Federal Home Loan Bank stock	41,738		—		41,738		—		41,738
Derivative assets	87,777		—		87,777		—		87,777
Interest receivable	97,546		—		97,546		—		97,546
Liabilities:
Deposits	$	14,569,070	$	12,096,840	$	2,460,291	$	—	14,557,131
Borrowings:
Federal funds purchased	147,229		—		147,229		—		147,229
Securities sold under repurchase agreements	100,451		—		100,451		—		100,451
Federal Home Loan Bank advances	832,703		—		822,958		—		822,958
Subordinated debentures and other borrowings	93,589		—		84,091		—		84,091
Derivative liabilities	87,236		—		87,236		—		87,236
Interest payable	18,554		—		18,554		—		18,554

			December 31, 2023
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		Total Fair Value
Assets:
Cash and due from banks	$	112,649	$	112,649	$	—	$	—	$	112,649
Interest-bearing deposits	436,080		436,080		—		—		436,080
Investment securities available for sale	1,627,112		—		1,623,802		3,310		1,627,112
Investment securities held to maturity, net	2,184,252		—		1,859,974		10,400		1,870,374
Loans held for sale	18,934		—		18,934		—		18,934
Loans, net	12,281,093		—		—		11,958,301		11,958,301
Federal Home Loan Bank stock	41,769		—		41,769		—		41,769
Derivative assets	79,379		—		79,379		—		79,379
Interest receivable	97,664		—		97,664		—		97,664
Liabilities:
Deposits	$	14,821,453	$	12,482,295	$	2,329,662	$	—	14,811,957
Borrowings:
Securities sold under repurchase agreements	157,280		—		157,265		—		157,265
Federal Home Loan Bank advances	712,852		—		707,377		—		707,377
Subordinated debentures and other borrowings	158,644		—		149,995		—		149,995
Derivative liabilities	79,008		—		79,008		—		79,008
Interest payable	18,912		—		18,912		—		18,912

34

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

NOTE 6

QUALIFIED AFFORDABLE HOUSING INVESTMENTS

The Corporation has investments in various limited partnerships that sponsor affordable housing projects. The purpose of these investments is to earn an adequate return of capital through the receipt of low income housing tax credits and to assist the Corporation in achieving goals associated with the CRA. These investments are included in other assets on the Consolidated Balance Sheet, with any unfunded commitments included in other liabilities. The investments are amortized as a component of income tax expense.

The following table summarizes the Corporation’s affordable housing investments as of June 30, 2024 and December 31, 2023:

	June 30, 2024				December 31, 2023
Investment Type	Investment		Unfunded Commitment		Investment		Unfunded Commitment
LIHTC	$	151,029	$	120,562	$	114,514	$	96,408

The following table summarizes the amortization expense and tax credits recognized for the Corporation’s affordable housing investments for the three and six months ended June 30, 2024 and 2023, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Amortization expense	$	1,626	$	1,594	$	3,323	$	1,837
Tax credits recognized	1,644		1,332		3,289		1,616

NOTE 7

BORROWINGS

The following table summarizes the Corporation’s borrowings as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023
Federal funds purchased	$	147,229	$	—
Securities sold under repurchase agreements	100,451		157,280
Federal Home Loan Bank advances	832,703		712,852
Subordinated debentures and other borrowings	93,589		158,644
Total Borrowings	$	1,173,972	$	1,028,776

Securities sold under repurchase agreements consist of obligations of the Bank to other parties and are secured by U.S. Government-sponsored enterprise obligations. The maximum amount of outstanding agreements at any month-end during the first six months of 2024 and 2023 totaled $194.2 million and $241.9 million, respectively, and the average of such agreements totaled $144.3 million and $194.3 million during the same period of 2024 and 2023, respectively.

The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of June 30, 2024 and December 31, 2023 were:

	June 30, 2024
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	100,451	$	—	$	—	$	—	$	100,451

	December 31, 2023
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	157,280	$	—	$	—	$	—	$	157,280

35

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Contractual maturities of borrowings as of June 30, 2024, are as follows:

Maturities in Years Ending December 31:	Federal Funds Purchased		Securities Sold Under Repurchase Agreements		Federal Home Loan Bank Advances		Subordinated Debentures and Term Loans
2024	$	147,229	$	100,451	$	110,000	$	1,166
2025	—		—		95,000		—
2026	—		—		75,000		—
2027	—		—		250,000		—
2028	—		—		190,000		5,000
2029 and after	—		—		112,703		90,938
ASC 805 fair value adjustments at acquisition	—		—		—		(3,515)
	$	147,229	$	100,451	$	832,703	$	93,589

The terms of a security agreement with the Federal Home Loan Bank ("FHLB") require the Corporation to pledge, as collateral for advances, qualifying first mortgage loans, investment securities and multi-family loans in an amount equal to at least 145 percent of these advances depending on the type of collateral pledged. At June 30, 2024, the outstanding FHLB advances had interest rates from 0.35 to 5.48 percent and are subject to restrictions or penalties in the event of prepayment. The total available remaining borrowing capacity from the FHLB at June 30, 2024, was $780.7 million. As of June 30, 2024, the Corporation had $205.0 million of putable advances with the FHLB.

Subordinated Debentures and Term Loans. As of June 30, 2024 and December 31, 2023, subordinated debentures and term loans totaled $93.6 million and $158.6 million, respectively.

•First Merchants Capital Trust II (“FMC Trust II”). At June 30, 2024 and December 31, 2023, the Corporation had $41.7 million of subordinated debentures issued to FMC Trust II, a wholly-owned statutory business trust. FMC Trust II was formed in July 2007 for purposes of issuing trust preferred securities to investors. At that time, it simultaneously issued and sold its common securities to the Corporation, which constituted all of the issued and outstanding common securities of FMC Trust II. The subordinated debentures, which were purchased with the proceeds of the sale of the trust’s capital securities, are the sole assets of FMC Trust II and are fully and unconditionally guaranteed by the Corporation. As of June 30, 2024, the subordinated debentures and trust preferred securities bear interest at a variable rate equal to the three-month CME Term Secured Overnight Financing Rate ("SOFR"), plus the 0.26161 percent spread adjustment. The interest rate at June 30, 2024 was 7.16 percent. As of December 31, 2023, the subordinated debentures and the trust preferred securities bear interest at a variable rate equal to CME Term SOFR, plus the 0.26161 percent spread adjustment. The interest rate at December 31, 2023 was 7.21 percent. The trust preferred securities are currently redeemable at par and without penalty, subject to the Corporation having first redeemed the related subordinated debentures, with the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies. The trust preferred securities and the subordinated debentures of FMC Trust II will mature on September 15, 2037. The Corporation continues to hold all outstanding common securities of FMC Trust II.

•Ameriana Capital Trust I. At June 30, 2024 and December 31, 2023, the Corporation had $10.3 million of subordinated debentures issued to Ameriana Capital Trust I. On December 31, 2015, the Corporation acquired Ameriana Capital Trust I in conjunction with its acquisition of Ameriana Bancorp, Inc. With a trust preferred structure substantially similar to that described above for FMC Trust II, the subordinated debentures held by Ameriana Capital Trust I were purchased with the proceeds of the sale of the trust’s capital securities. As of June 30, 2024, the subordinated debentures and trust preferred securities bear interest at a variable rate equal to the three-month CME Term SOFR, plus the 0.26161 percent spread adjustment. The interest rate at June 30, 2024 was 7.10 percent. As of December 31, 2023, the subordinated debentures and the trust preferred securities bear interest at a variable rate equal to three-month CME Term SOFR, plus the 0.26161 percent spread adjustment. The interest rate at December 31, 2023 was 7.15 percent. The trust preferred securities of Ameriana Capital Trust I are currently redeemable at par and without penalty, subject to the Corporation having first redeemed the related subordinated debentures, with the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies. The trust preferred securities and the subordinated debentures of Ameriana Capital Trust I will mature in March 2036. The Corporation continues to hold all of the outstanding common securities of Ameriana Capital Trust I.

36

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

•First Merchants Senior Notes and Subordinated Notes. On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $70 million of debt comprised of (a) 5.00 percent Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million (the “Senior Debt”) and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due 2028 in the aggregate principal amount of $65 million (the “Subordinated Debt”). The interest rate on the Senior Debt and Subordinated Debt remained fixed for the first ten (10) years and became floating thereafter. The rates converted to floating on October 30, 2023. The Corporation had an option to redeem the Subordinated Debt in whole or in part at a redemption price equal to 100 percent of the principal amount of the redeemed Subordinated Notes, plus accrued and unpaid interest to the date of the redemption. The option of redemption was subject to the approval of the Federal Reserve Board. The Corporation has an option to redeem the Senior Debt in whole or in part at a redemption price equal to 100 percent of the principal amount of the redeemed Senior Notes, plus accrued and unpaid interest to the date of the redemption; provided, however, that no Subordinated Notes (as defined in the Issuing and Paying Agency Agreement) may remain outstanding subsequent to any early redemption of Senior Notes. The Subordinated Debt and the Senior Debt options to redeem began with the interest payment date on October 30, 2023, or on any scheduled interest payment date thereafter. As of June 30, 2024, the Subordinated Debt was fully paid. During the first quarter of 2024, the Corporation exercised its rights to redeem $40.0 million in principal and paid the debt on the scheduled interest payment date. Additionally, in the second quarter of 2024, the Corporation exercised its rights to redeem the remaining $25.0 million in principal and paid the debt on the scheduled interest payment date. Both redemptions were permitted under the optional redemptions provisions of the Subordinated Note Certificate representing the Subordinated Debt. The Senior Debt agreement contains certain customary representations and warranties and financial and negative covenants. As of June 30, 2024 and December 31, 2023 the Corporation was in compliance with these covenants.

•Level One Subordinated Notes. On April 1, 2022, the Corporation assumed certain subordinated notes in conjunction with its acquisition of Level One. The $30.0 million of subordinated notes issued on December 18, 2019 bear a fixed interest rate of 4.75 percent per annum, payable semiannually through December 18, 2024. The notes will bear a floating interest rate equal to the of three-month CME Term SOFR plus 3.11 percent, payable quarterly, after December 18, 2024 through maturity. The notes mature on December 18, 2029, and the Corporation has the option to redeem any or all of the subordinated notes without premium or penalty any time after December 18, 2024 or upon the occurrence of a tier 2 capital event or tax event.

•Other Borrowings. During the third quarter of 2023, the Corporation acquired a secured borrowing in conjunction with the purchase of the Indianapolis regional headquarters building. The secured borrowing bears a fixed interest rate of 3.41 percent, has a maturity date of March 2035, and had a balance of $7.2 million as of June 30, 2024 and December 31, 2023. On April 1, 2022, the Corporation acquired a secured borrowing in conjunction with its acquisition of Level One. The secured borrowing related to a certain loan participation sold by Level One that did not qualify for sales treatment. The secured borrowing bears a fixed rate of 1.00 percent and had a balance of $1.2 million as of June 30, 2024 and December 31, 2023.

NOTE 8

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, as of June 30, 2024 and 2023:

	Accumulated Other Comprehensive Income (Loss)
	Unrealized Gains (Losses) on Securities Available for Sale		Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Defined Benefit Plans		Total
Balance at December 31, 2023	$	(173,654)	$	—	$	(2,316)	$	(175,970)
Other comprehensive income (loss) before reclassifications	(36,049)		—		—		(36,049)
Amounts reclassified from accumulated other comprehensive income (loss)	40		—		—		40
Period change	(36,009)		—		—		(36,009)
Balance at June 30, 2024	$	(209,663)	$	—	$	(2,316)	$	(211,979)
Balance at December 31, 2022	$	(234,495)	$	130	$	(4,786)	$	(239,151)
Other comprehensive income (loss) before reclassifications	18,924		(90)		—		18,834
Amounts reclassified from accumulated other comprehensive income (loss)	2,341		12		—		2,353
Period change	21,265		(78)		—		21,187
Balance at June 30, 2023	$	(213,230)	$	52	$	(4,786)	$	(217,964)

37

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The following tables present the reclassification adjustments out of accumulated other comprehensive income (loss) that were included in net income in the Consolidated Condensed Statements of Income for the three and six months ended June 30, 2024 and 2023.

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Three Months Ended June 30,
Details about Accumulated Other Comprehensive Income (Loss) Components	2024		2023		Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities gains (losses) reclassified into income	$	(49)	$	(1,392)	Other income - net realized gains (losses) on sales of available for sale securities
Related income tax benefit (expense)	10		292		Income tax expense
	$	(39)	$	(1,100)
Unrealized gains (losses) on cash flow hedges (2)
Interest rate contracts	$	—	$	(16)	Interest expense - subordinated debentures and term loans
Related income tax benefit (expense)	—		3		Income tax expense
	$	—	$	(13)
Total reclassifications for the period, net of tax	$	(39)	$	(1,113)

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Six Months Ended June 30,
Details about Accumulated Other Comprehensive Income (Loss) Components	2024		2023		Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities gains reclassified into income	$	(51)	$	(2,963)	Other income - net realized gains on sales of available for sale securities
Related income tax benefit (expense)	11		622		Income tax expense
	$	(40)	$	(2,341)
Unrealized gains (losses) on cash flow hedges (2)
Interest rate contracts	$	—	$	(15)	Interest expense - subordinated debentures and term loans
Related income tax benefit (expense)	—		3		Income tax expense
	$	—	$	(12)
Total reclassifications for the period, net of tax	$	(40)	$	(2,353)

(1) For additional detail related to unrealized gains (losses) on available for sale securities and related amounts reclassified from accumulated other comprehensive loss see NOTE 2. INVESTMENT SECURITIES of these Notes to Consolidated Condensed Financial Statements.

(2) For additional detail related to unrealized gains (losses) on cash flow hedges and related amounts reclassified from accumulated other comprehensive loss see NOTE 4. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements.

NOTE 9

SHARE-BASED COMPENSATION

Stock options and Restricted Stock Awards ("RSA") have been issued to directors, officers and other management employees under the Corporation's 2019 Long-term Equity Incentive Plan, the 2024 Long-term Equity Incentive Plan, the Level One Bancorp, Inc. 2007 Stock Option Plan and the Equity Compensation Plan for Non-Employee Directors. The stock options, which have a ten year life, become 100 percent vested based on time ranging from one year to two years and are fully exercisable when vested. Option exercise prices equal the Corporation's common stock closing price on NASDAQ on the date of grant. The RSAs issued to employees and non-employee directors provide for the issuance of shares of the Corporation's common stock at no cost to the holder and generally vest after three years.  The RSAs vest only if the employee is actively employed by the Corporation on the vesting date and, therefore, any unvested shares are forfeited.  For non-employee directors, the RSAs vest only if the non-employee director remains as an active board member on the vesting date and, therefore, any unvested shares are forfeited. The RSAs for employees and non-employee directors are either immediately vested at retirement, disability or death, or, continue to vest after retirement, disability or death, depending on the plan under which the shares were granted.

The Corporation’s 2019 Employee Stock Purchase Plan and 2024 Employee Stock Purchase Plan ("ESPP") provide eligible employees of the Corporation and its subsidiaries an opportunity to purchase shares of common stock of the Corporation through quarterly offerings financed by payroll deductions. The price of the stock to be paid by the employees shall be equal to 85 percent of the average of the closing price of the Corporation’s common stock on each trading day during the offering period. However, in no event shall such purchase price be less than the lesser of an amount equal to 85 percent of the market price of the Corporation’s stock on the offering date or an amount equal to 85 percent of the market value on the date of purchase. Common stock purchases are made quarterly and are paid through advance payroll deductions up to a calendar year maximum of $25,000. The 2019 Employee Stock Purchase Plan expired on June 30, 2024.

38

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Compensation expense related to unvested share-based awards is recorded by recognizing the unamortized grant date fair value of these awards over the remaining service periods of those awards, with no change in historical reported fair values and earnings.  Awards are valued at

fair value in accordance with provisions of share-based compensation guidance and are recognized on a straight-line basis over the service periods of each award. To complete the exercise of vested stock options, RSA’s and ESPP options, the Corporation generally issues new shares from its authorized but unissued share pool. Share-based compensation has been recognized as a component of salaries and benefits expense in the accompanying Consolidated Condensed Statements of Income.

Share-based compensation expense recognized in the Consolidated Condensed Statements of Income is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Share-based compensation guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods, if actual forfeitures differ from those estimates. Pre-vesting forfeitures were estimated to be approximately 0.05 percent for the six months ended June 30, 2024, based on historical experience.

The following table summarizes the components of the Corporation's share-based compensation awards recorded as an expense and the income tax benefit of such awards.

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Stock and ESPP Options
Pre-tax compensation expense	$	35	$	15	$	102	$	44
Income tax expense (benefit)	(40)		(6)		(40)		(62)
Stock and ESPP option expense, net of income taxes	$	(5)	$	9	$	62	$	(18)
Restricted Stock Awards
Pre-tax compensation expense	$	1,316	$	1,220	$	2,652	$	2,388
Income tax expense (benefit)	(258)		(257)		(523)		(513)
Restricted stock awards expense, net of income taxes	$	1,058	$	963	$	2,129	$	1,875
Total Share-Based Compensation
Pre-tax compensation expense	$	1,351	$	1,235	$	2,754	$	2,432
Income tax expense (benefit)	(298)		(263)		(563)		(575)
Total share-based compensation expense, net of income taxes	$	1,053	$	972	$	2,191	$	1,857

The grant date fair value of ESPP options was estimated to be approximately $35,000 at the beginning of the April 1, 2024 quarterly offering period. The ESPP options vested during the three months ending June 30, 2024, leaving no unrecognized compensation expense related to unvested ESPP options at June 30, 2024.

Stock option activity under the Corporation's stock option plans as of June 30, 2024 and changes during the six months ended June 30, 2024, were as follows:

	Number of Shares	Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2024	90,075	$	20.21
Exercised	(42,893)	$	18.94
Outstanding June 30, 2024	47,182	$	21.36	1.91	$	562,979
Vested and Expected to Vest at June 30, 2024	47,182	$	21.36	1.91	$	562,979
Exercisable at June 30, 2024	47,182	$	21.36	1.91	$	562,979

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Corporation's closing stock price on the last trading day of the first six months of 2024 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their stock options on June 30, 2024.  The amount of aggregate intrinsic value will change based on the fair value of the Corporation's common stock.

The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2024 and 2023 was $591,000 and $1.4 million, respectively. Cash receipts of stock options exercised during the same periods were $812,000 and $1.1 million, respectively.

39

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The following table summarizes information on unvested RSAs outstanding as of June 30, 2024:

	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested RSAs at January 1, 2024	452,426	$	37.94
Granted	24,052	$	34.00
Vested	(16,216)	$	44.21
Forfeited	(2,250)	$	38.23
Unvested RSAs at June 30, 2024	458,012	$	37.51

As of June 30, 2024, unrecognized compensation expense related to RSAs was $7.4 million and is expected to be recognized over a weighted-average period of 1.5 years. The Corporation did not have any unrecognized compensation expense related to stock options as of June 30, 2024.

NOTE 10

INCOME TAX

The following table summarizes the major components creating differences between income taxes at the federal statutory and the effective tax rate recorded in the consolidated statements of income for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal statutory income tax at 21%	$	9,238		$	15,028		$	20,739		$	30,861
Tax-exempt interest income	(4,396)			(4,456)			(8,748)			(9,323)
Non-deductible FDIC premiums	143			113			282			173
Share-based compensation	(15)			(3)			15			(64)
Tax-exempt earnings and gains on life insurance	(405)			(441)			(739)			(711)
Tax credits	(360)			(73)			(664)			(165)
State Income Tax	(225)			520			(191)			1,220
Other	87			11			198			25
Actual Tax Expense	$	4,067		$	10,699		$	10,892		$	22,016
Effective Tax Rate	9.2		%	15.0		%	11.0		%	15.0		%

NOTE 11

NET INCOME PER COMMON SHARE

Basic net income per common share is computed by dividing net income available to common stockholders by the weighted-average common shares outstanding during the reporting period. Diluted net income per common share is computed by dividing net income available to common stockholders by the combination of the weighted-average common shares outstanding during the reporting period and all potentially dilutive common shares. Potentially dilutive common shares include stock options and RSAs issued under the Corporation's share-based compensation plans. Potentially dilutive common shares are excluded from the computation of diluted earnings per common share in the periods where the effect would be antidilutive.

The following tables reconcile basic and diluted net income per common share for the three and six months ended June 30, 2024 and 2023.

	Three Months Ended June 30,
	2024					2023
	Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount		Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount
Net income available to common stockholders	$	39,456	58,104,021	$	0.68	$	60,393	59,263,813	$	1.02
Effect of potentially dilutive stock options and restricted stock awards			224,244					184,566
Diluted net income per common share	$	39,456	58,328,265	$	0.68	$	60,393	59,448,379	$	1.02
RSAs excluded from the diluted average common share calculation(1)			90,734					67,731

40

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

	Six Months Ended June 30,
	2024					2023
	Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount		Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount
Net income available to common stockholders	$	86,928	58,585,405	$	1.48	$	124,003	59,240,137	$	2.09
Effect of potentially dilutive stock options and restricted stock awards			215,058					205,920
Diluted net income per common share	$	86,928	58,800,463	$	1.48	$	124,003	59,446,057	$	2.09
RSAs excluded from the diluted average common share calculation(1)			89,011					59,913

(1) Anti-dilution occurs when the unrecognized compensation cost per share of an RSA exceeds the market price of the Corporation's stock.

NOTE 12

GENERAL LITIGATION AND REGULATORY EXAMINATIONS

The Corporation is subject to claims and lawsuits that arise primarily in the ordinary course of business. Additionally, the Corporation is also subject to periodic examinations by various regulatory agencies. It is the general opinion of management that the disposition or ultimate resolution of any such routine litigation or regulatory examinations will not have a material adverse effect on the consolidated financial position, results of operations and cash flow of the Corporation.

41

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

From time to time, we include forward-looking statements in our oral and written communication. We may include forward-looking statements in filings with the Securities and Exchange Commission, such as this Quarterly Report on Form 10-Q, in other written materials and in oral statements made by senior management to analysts, investors, representatives of the media and others. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of these safe harbor provisions. Forward-looking statements can often be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, “would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These forward-looking statements include:

•statements of the Corporation's goals, intentions and expectations;

•statements regarding the Corporation's business plan and growth strategies;

•statements regarding the asset quality of the Corporation's loan and investment portfolios; and

•estimates of the Corporation's risks and future costs and benefits.

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors which could affect the actual outcome of future events:

•fluctuations in market rates of interest and loan and deposit pricing, which could negatively affect our net interest margin, asset valuations and expense expectations;

•adverse changes in the economy, which might affect our business prospects and could cause credit-related losses and expenses;

•the impacts of epidemics, pandemics or other infectious disease outbreaks;

•the impacts related to or resulting from recent bank failures or adverse developments at other banks on general investor sentiment regarding the stability and liquidity of banks;

•adverse developments in our loan and investment portfolios;

•competitive factors in the banking industry, such as the trend towards consolidation in our market;

•changes in the banking legislation or the regulatory requirements of federal and state agencies applicable to bank holding companies and banks like our affiliate bank;

•acquisitions of other businesses by us and integration of such acquired businesses;

•changes in market, economic, operational, liquidity, credit and interest rate risks associated with our business; and

•the continued availability of earnings and excess capital sufficient for the lawful and prudent declaration and payment of cash dividends.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. In addition, our past results of operations do not necessarily indicate our anticipated future results.

BUSINESS SUMMARY

First Merchants Corporation (the “Corporation”) is a financial holding company headquartered in Muncie, Indiana and was organized in September 1982. The Corporation’s common stock is traded on the Nasdaq’s Global Select Market System under the symbol FRME. The Corporation conducts its banking operations through First Merchants Bank (the “Bank”), a wholly-owned subsidiary that opened for business in Muncie, Indiana, in March 1893. The Bank also operates First Merchants Private Wealth Advisors (a division of First Merchants Bank). The Bank includes 116 banking locations in Indiana, Ohio, Michigan and Illinois. In addition to its branch network, the Corporation offers comprehensive electronic and mobile delivery channels to its customers. The Corporation’s business activities are currently limited to one significant business segment, which is community banking.

Through the Bank, the Corporation offers a broad range of financial services, including accepting time, savings and demand deposits; making consumer, commercial, agri-business, public finance and real estate mortgage loans; providing personal and corporate trust services; offering full-service brokerage and private wealth management; and providing letters of credit, repurchase agreements and other corporate services.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Generally accepted accounting principles are complex and require us to apply significant judgments to various accounting, reporting and disclosure matters. Management must use assumptions and estimates to apply those principles where actual measurement is not possible or practical. The judgments and assumptions made are based upon historical experience or other factors that management believes to be reasonable under the circumstances. Because of the nature of the judgments and assumptions, actual results could differ from estimates, which could have a material effect on our financial condition and results of operations. There have been no significant changes during the six months ended June 30, 2024 to the items disclosed as our critical accounting policies and estimates in 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, 2023. For a complete discussion of our significant accounting policies, see “Notes to the Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2023.

42

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

HIGHLIGHTS FOR THE SECOND QUARTER OF 2024

•Net income available to common stockholders for the three months ended June 30, 2024 was $39.5 million compared to $60.4 million for the three months ended June 30, 2023 and $47.5 million for the three months ended March 31,2024.

•Earnings per fully diluted common share for the second quarter of 2024 totaled $0.68 compared to $1.02 in the second quarter of 2023 and $0.80 in the first quarter of 2024.

•Strong liquidity and capital with Common Equity Tier 1 Capital Ratio of 11.02 percent.

•Net interest margin totaled 3.16 percent compared to 3.10 percent on a linked quarter basis and 3.39 percent in the second quarter of 2023.

•Total loans grew $191.2 million, or 6.1 percent annualized, on a linked quarter basis, and $374.4 million, or 3.0 percent, during the last twelve months.

•Total deposits declined $315.5 million, or 8.5 percent annualized, on a linked quarter basis, and declined $252.4 million, or 3.4 percent, during the last twelve months.

•Nonperforming assets to total assets were 36 basis points compared to 37 basis points on a linked quarter basis and 43 basis points as of June 30, 2023.

RESULTS OF OPERATIONS

The Corporation reported second quarter 2024 net income available to common stockholders and diluted earnings per common share of $39.5 million and $0.68 per diluted share, respectively, compared to $60.4 million and $1.02 per diluted share, respectively, during the second quarter of 2023.

Earnings per fully diluted common share for the second quarter of 2024, excluding income on PPP loans and non-core expenses, totaled $0.68, compared to $1.02 in the second quarter of 2023 and $0.85 in the first quarter of 2024. For reconciliations of GAAP earnings per share measures to the corresponding non-GAAP measures provided above, refer to the "NON-GAAP FINANCIAL MEASURES" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

As of June 30, 2024, total assets equaled $18.3 billion, a decrease from the December 31, 2023 total of $18.4 billion.

Cash and due from banks and interest-bearing deposits decreased $274.8 million from December 31, 2023 as funds were used to fund loan growth and repurchase shares of the Corporation's stock. Total investment securities decreased $58.3 million from December 31, 2023, primarily due to scheduled pay downs and maturities of investment securities of $69.7 million and an increase of $45.6 million in unrealized losses in the available for sale portfolio during the first six months of 2024. Partially offsetting these decreases were securities purchases of $62.3 million during the first six months of 2024. Additionally, while not reflected in the balance sheet, the unrealized loss in the held to maturity portfolio also increased during the six months ended June 30, 2024 by $41.1 million. Currently, the Corporation is reinvesting cashflows into the investment securities portfolio on a limited basis with a primary focus of using liquidity to pay down borrowings and fund current and future loan growth. The investment portfolio as a percentage of total assets was 20.5 percent at June 30, 2024 and 20.7 percent at December 31, 2023 which reflects progress towards a more normalized earning asset mix. Additional details of the changes in the Corporation's investment securities portfolio are discussed within NOTE 2. INVESTMENT SECURITIES of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

The Corporation's total loan portfolio increased $167.0 million, or 2.7 percent on an annualized basis, since December 31, 2023. The composition of the loan portfolio is 74.8 percent commercial oriented with the largest loan classes of commercial and industrial and commercial real estate, non-owner occupied, representing 31.1 percent and 18.3 percent of the total loan portfolio, respectively. The increase was primarily driven by an increase in commercial and industrial, residential real estate, home equity and commercial real estate, owner occupied. Partially offsetting those increases was a decrease in construction, commercial real estate, non-owner occupied and agricultural land. Additional details of the changes in the Corporation's loans are discussed within NOTE 3. LOANS AND ALLOWANCE of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q, and the "LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

The Corporation’s ACL - loans totaled $189.5 million as of June 30, 2024 and equaled 1.50 percent of total loans, compared to $204.9 million and 1.64 percent of total loans at December 31, 2023.  The ACL - loans decreased $15.4 million since December 31, 2023, as net charge-offs during the six months ended June 30, 2024 were $41.9 million and provision for credit losses - loans of $26.5 million was recorded. Nonaccrual loans at June 30, 2024 were $61.9 million and increased $8.3 million from December 31, 2023 primarily due to a $10.8 million and a $4.3 million increase in non-accrual balances in commercial real estate, non-owner occupied and commercial and industrial, respectively. The increases were partially offset by a decline in non-accrual balances within residential of $6.3 million.The Corporation's reserve for unfunded commitments was $19.5 million at June 30, 2024 and December 31, 2023, and is recorded in Other Liabilities. Additional details of the Corporation's allowance methodology and asset quality are discussed within NOTE 3. LOANS AND ALLOWANCE of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q and within the “LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

43

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Corporation's other assets increased $45.5 million from December 31, 2023. The Corporation's continued investment in qualified affordable housing projects resulted in an increase of $36.7 million in CRA investments (recorded in other assets) and an increase of $24.2 million in unfunded commitments associated with these CRA investments (recorded in other liabilities) from December 31, 2023. Additionally, the Corporation's derivative assets (recorded in other assets) and derivative liabilities (recorded in other liabilities) increased $8.4 million and $8.2 million, respectively, from December 31, 2023. The increase in valuations are due to additional notional amounts originated in the second quarter of 2024 and an increase in rates.

As of June 30, 2024, total deposits equaled $14.6 billion, a decrease of $252.4 million from December 31, 2023, or 3.4 percent on an annualized basis. Total deposits less time deposits greater than $100,000, or core deposits, represented 89.5 percent of the deposit portfolio at June 30, 2024. Noninterest bearing deposits represents 15.8 percent of the deposit portfolio at June 30, 2024, compared to 16.9 percent at December 31, 2023. The decline is the result of a mix shift occurring across the industry as clients move into higher yielding deposit products. The Corporation experienced decreases from December 31, 2023 in demand deposits of $196.7 million, savings accounts of $107.9 million and money market of $69.4 million. Offsetting these decreases was an increase in brokered certificates of deposit of $86.9 million from December 31, 2023.

The average account within the deposit portfolio totals only $33,000. Insured deposits totaled 70.2 percent of total deposits, with the State of Indiana's Public Deposit Insurance Fund, which insures certain public deposits, providing insurance to 14.7 percent of deposits and the Federal Deposit Insurance Corporation ("FDIC") providing insurance to the remaining 55.5 percent. Only 29.8 percent of deposits are uninsured and our available liquidity is ample to cover those when considering both on balance sheet sources of liquidity and unused capacity from the Federal Reserve Discount Window, FHLB and unsecured borrowing sources.

Total borrowings increased $145.2 million as of June 30, 2024, compared to December 31, 2023. This increase was primarily driven by an increase of $147.2 million in federal funds purchased and an increase of $119.9 million in FHLB advances from December 31, 2023. Subordinated debentures and other borrowings decreased $65.1 million compared to December 31, 2023 as the Corporation utilized excess liquidity to pay down $40 million of subordinated debentures in the January of 2024 and $25 million of subordinated debentures in April of 2024. Securities sold under repurchase decreased $56.8 million from December 31, 2023 as clients moved into higher yielding deposit products.

The Corporation continued to maintain all regulatory capital ratios in excess of the regulatory definition of “well-capitalized.” Details of the Stock Repurchase Program and regulatory capital ratios are discussed within the “CAPITAL” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

NON-GAAP FINANCIAL MEASURES

The Corporation's accounting and reporting policies conform to GAAP and general practices within the banking industry. As a supplement to GAAP, the Corporation provides non-GAAP performance measures, which management believes are useful because they assist investors in assessing the Corporation's performance. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure can be found in the following tables.

Adjusted earnings per share, excluding PPP loans and non-core expenses, are meaningful non-GAAP financial measures for management, as they provide a meaningful foundation for period-to-period and company-to-company comparisons, which management believes will aid both investors and analysts in analyzing our financial measures and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of the Corporation's business, because management does not consider these items to be relevant to ongoing financial performance on a per share basis.

Net interest income and net interest margin presented on a fully taxable equivalent ("FTE") basis, reflecting the income tax savings when comparing tax-exempt and taxable assets using the federal statutory rate of 21 percent, are non-GAAP financial measures used by management to assess what our tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on an FTE basis and that it provides useful information for management and investors for peer comparison purposes.

Non-GAAP financial measures such as tangible common equity to tangible assets, tangible earnings per share, return on average tangible assets and return on average tangible equity are important measures of the strength of the Corporation's capital and ability to generate earnings on tangible common equity invested by our shareholders. These non-GAAP measures provide useful supplemental information and may assist investors in analyzing the Corporation’s financial position without regard to the effects of intangible assets and preferred stock, but do retain the effect of accumulated other comprehensive gains (losses) in stockholders' equity. Disclosure of these measures also allows analysts and banking regulators to assess our capital adequacy on these same bases.

44

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ADJUSTED NET INCOME AND DILUTED EARNINGS PER COMMON SHARE - non-GAAP
(Dollars in thousands, except per share amounts)
	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2024		2024		2023		2024		2023
Net Income Available to Common Stockholders - GAAP	$	39,456	$	47,472	$	60,393	$	86,928	$	124,003
Adjustments:
PPP loan income	—		—		(9)		—		(34)
Non-core expenses 1	—		3,481		—		3,481		—
Tax on adjustment	—		(848)		2		(848)		8
Adjusted Net Income Available to Common Stockholders - non-GAAP	$	39,456	$	50,105	$	60,386	$	89,561	$	123,977
Average Diluted Common Shares Outstanding (in thousands)	58,328		59,273		59,448		58,800		59,446
Diluted Earnings Per Common Share - GAAP	$	0.68	$	0.80	$	1.02	$	1.48	$	2.09
Adjustments:
Non-core expenses 1	—		0.06		—		0.06		—
Tax on adjustment	—		(0.01)		—		(0.01)		—
Adjusted Diluted Earnings Per Common Share - non-GAAP	$	0.68	$	0.85	$	1.02	$	1.53	$	2.09
1 - Non-core expenses in the three months ended March 31, 2024 and the six months ended June 30, 2024 included $2.4 million from duplicative online banking conversion costs and $1.1 million from the FDIC special assessment.

NET INTEREST MARGIN ("NIM"), ADJUSTED
(Dollars in Thousands, Except Per Share Amounts)
	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2024			2023			2024			2023
Net Interest Income (GAAP)	$	128,571		$	137,835		$	255,634		$	281,954
FTE Adjustment	5,859			5,858			11,655			12,179
Net Interest Income (FTE) (non-GAAP)	134,430			143,693			267,289			294,133
Average Earning Assets (GAAP)	$	17,013,984		$	16,968,465		$	17,068,917		$	16,896,834
Net Interest Margin (GAAP)	3.02		%	3.25		%	3.00		%	3.34		%
Net Interest Margin (FTE) (non-GAAP)	3.16		%	3.39		%	3.13		%	3.48		%

TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS - non-GAAP
(Dollars in thousands, except per share amounts)
	June 30, 2024			December 31, 2023
Total Stockholders' Equity (GAAP)	$	2,212,525		$	2,247,713
Less: Preferred stock (GAAP)	(25,125)			(25,125)
Less: Intangible assets (GAAP)	(735,373)			(739,101)
Tangible common equity (non-GAAP)	$	1,452,027		$	1,483,487
Total assets (GAAP)	$	18,303,423		$	18,405,887
Less: Intangible assets (GAAP)	(735,373)			(739,101)
Tangible assets (non-GAAP)	$	17,568,050		$	17,666,786
Stockholders' Equity to Assets (GAAP)	12.09		%	12.21		%
Tangible common equity to tangible assets (non-GAAP)	8.27		%	8.40		%
Tangible common equity (non-GAAP)	$	1,452,027		$	1,483,487
Plus: Tax benefit of intangibles (non-GAAP)	5,020			5,819
Tangible common equity, net of tax (non-GAAP)	$	1,457,047		$	1,489,306
Common Stock outstanding	58,046			59,424
Book Value (GAAP)	$	37.68		$	37.40
Tangible book value - common (non-GAAP)	$	25.10		$	25.06

45

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TANGIBLE EARNINGS PER SHARE, RETURN ON TANGIBLE ASSETS AND RETURN ON TANGIBLE EQUITY - non-GAAP
(Dollars in thousands, except per share amounts)
	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Average goodwill (GAAP)	$	712,002		$	712,002		$	712,002		$	712,002
Average other intangibles (GAAP)	24,169			32,463			25,093			33,540
Average deferred tax on other intangibles (GAAP)	(5,191)			(6,976)			(5,389)			(7,208)
Intangible adjustment (non-GAAP)	$	730,980		$	737,489		$	731,706		$	738,334
Average stockholders' equity (GAAP)	$	2,203,361		$	2,139,877		$	2,222,750		$	2,111,657
Average preferred stock (GAAP)	(25,125)			(25,125)			(25,125)			(25,125)
Intangible adjustment (non-GAAP)	(730,980)			(737,489)			(731,706)			(738,334)
Average tangible capital (non-GAAP)	$	1,447,256		$	1,377,263		$	1,465,919		$	1,348,198
Average assets (GAAP)	$	18,332,159		$	18,170,650		$	18,381,340		$	18,096,832
Intangible adjustment (non-GAAP)	(730,980)			(737,489)			(731,706)			(738,334)
Average tangible assets (non-GAAP)	$	17,601,179		$	17,433,161		$	17,649,634		$	17,358,498
Net income available to common stockholders (GAAP)	$	39,456		$	60,394		$	86,928		$	124,003
Other intangible amortization, net of tax (GAAP)	1,399			1,724			2,945			3,459
Preferred stock dividend	469			469			938			938
Tangible net income available to common stockholders (non-GAAP)	$	41,324		$	62,587		$	90,811		$	128,400
Per Share Data:
Diluted net income available to common stockholders (GAAP)	$	0.68		$	1.02		$	1.48		$	2.09
Diluted tangible net income available to common stockholders (non-GAAP)	$	0.70		$	1.05		$	1.53		$	2.16
Ratios:
Return on average GAAP capital (ROE)	7.16		%	11.29		%	7.82		%	11.74		%
Return on average tangible capital	11.29		%	18.04		%	12.26		%	18.91		%
Return on average assets (ROA)	0.87		%	1.34		%	0.96		%	1.38		%
Return on average tangible assets	0.94		%	1.44		%	1.03		%	1.48		%

Return on average tangible capital is tangible net income available to common stockholders (annualized) expressed as a percentage of average tangible capital.  Return on average tangible assets is tangible net income available to common stockholders (annualized) expressed as a percentage of average tangible assets.

NET INTEREST INCOME

Net interest income is the most significant component of our earnings, comprising 81.5 percent of revenues for the six months ended June 30, 2024. Net interest income and margin are influenced by many factors, primarily the volume and mix of earning assets, funding sources, and interest rate fluctuations. Other factors include the level of accretion income on purchased loans, prepayment risk on loan and investment-related assets, and the composition and maturity of earning assets and interest-bearing liabilities. Loans typically generate more interest income than investment securities with similar maturities. Funding from customer deposits generally costs less than wholesale funding sources. Factors such as general economic activity, Federal Reserve Board monetary policy, and price volatility of competing alternative investments, can also exert significant influence on our ability to optimize the mix of assets and funding and the net interest income and margin.

Net interest income is the excess of interest received from earning assets over interest paid on interest-bearing liabilities. For analytical purposes, net interest income is also presented on an FTE basis in the table that follows to reflect what our tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset. The federal statutory rate of 21 percent was used for 2024 and 2023. The FTE analysis portrays the income tax benefits associated with tax-exempt assets and helps to facilitate a comparison between taxable and tax-exempt assets. Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully taxable equivalent basis. Therefore, management believes these measures provide useful information for both management and investors by allowing them to make peer comparisons. For reconciliations of GAAP net interest margin to the corresponding non-GAAP measures provided below, refer to the "NON-GAAP FINANCIAL MEASURES" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Net interest margin, on an FTE basis, decreased 23 basis points to 3.16 percent for the three months ended June 30, 2024 compared to 3.39 percent for the same period in 2023.

Net interest margin, on an FTE basis, decreased 35 basis points to 3.13 percent for the six months ended June 30, 2024 compared to 3.48 percent for the same period in 2023.

Average Balance Sheet

Average earning assets for the three months ended June 30, 2024 increased $45.5 million compared to the same period in 2023. The increase for the three months ended June 30, 2024 was primarily driven by organic loan growth within the real estate mortgage and commercial portfolios of $119.5 million and $86.4 million, respectively. The organic loan growth was offset by a decrease in the average investment securities portfolio of $184.6 million, as the Corporation utilized cash flows from investment securities to fund current and future loan growth.

46

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Average earning assets for the six months ended June 30, 2024 increased $172.1 million compared to the same period in 2023. The increase for the six months ended June 30, 2024 was driven by an increase in interest bearing deposits of $190.7 million as well as organic loan growth within the real estate mortgage and commercial portfolios of $168.1 million and $100.0 million, respectively. Offsetting the increases in interest-bearing deposits and loans was a decrease in the average investment securities portfolio of $315.1 million for the six months ended June 30, 2024 when compared to the same period in 2023. The Corporation is reinvesting cashflows into the investment securities portfolio on a limited basis with a primary focus of using liquidity to fund current and future loan growth. The investment portfolio as a percentage of total assets was 20.5 percent at June 30, 2024, which is down from the peak at December 31, 2021 of 29.3 percent, and reflects progress towards a more normalized earning asset mix.

Total average deposits for the three months ended June 30, 2024 increased $176.0 million, when compared to the same period in 2023. Average interest-bearing deposits for the three months ended June 30, 2024 increased $624.7 million compared to the same period in 2023, with the largest increases in the certificates and other time deposits, money market and interest-bearing demand deposits. Noninterest bearing deposits act to mitigate deposit yield increases as interest rates rise. Average noninterest bearing deposits declined $448.8 million in the three months ended June 30, 2024 when compared to the same period in 2023. The decline is the result of a mix shift occurring across the industry as clients move into higher yielding deposit products. Average noninterest bearing deposits represented 15.8 percent of the deposit portfolio for the three months ended June 30, 2024, and 19.0 percent of the deposit portfolio for the three months ended June 30, 2023, which is a decline from the peak in the second quarter of 2022 of 23.6 percent.

Total average deposits for the six months ended June 30, 2024 increased $316.1 million, when compared to the same period in 2023. Average interest-bearing deposits for the six months ended June 30, 2024 increased $886.1 million, compared to the same period in 2023, with the largest increases in the certificates and other time deposits, money market and interest-bearing demand deposits. Average noninterest bearing deposits declined $570.0 million, in the six months ended June 30, 2024 when compared to the same period in 2023. Average noninterest bearing deposits, for the six months ended June 30, 2024 and 2023, represented 16.0 percent and 20.3 percent of the deposit portfolio, respectively.

Average borrowings decreased $224.6 million for the three months ended June 30, 2024, compared to the same period in 2023. Average securities sold under repurchase agreements and average FHLB advances decreased $64.7 million and $111.9 million, respectively, for the three months ended June 30, 2024 compared to the same period in 2023. Additionally, for the three months ended June 30, 2024, average subordinated debt decreased $57.2 million when compared to the same period in 2023, due to the Corporation's redemption of $25.0 million of subordinated debt in April of 2024

Average borrowings decreased $252.5 million for the six months ended June 30, 2024 compared to the same period in 2023

Average securities sold under repurchase, Federal Funds purchased and FHLB advances decreased $49.9 million, $48.0 million, and $119.3 million, respectively, for the six months ended June 30, 2024 compared to the same period of 2023. Additionally, for the six months ended June 30, 2024, average subordinated debt decreased $42.4 million due to the Corporation's redemption of $40.0 million and $25.0 million of subordinated debt in January of 2024 and April of 2024, respectively.

Interest Income/Expense and Average Yields

In the second quarter of 2024, FTE asset yields increased 33 basis points compared to the same period in 2023 and was primarily due to Federal Open Market Committee ("FOMC") increasing interest rates a total of 100 basis points in 2023, which resulted in an increase in interest income, on an FTE basis, of $15.0 million during the three months ended June 30, 2024 compared to the same period in 2023. Additionally, the Corporation's loan portfolio is 67.1 percent variable and repricing occurred when the Federal Open Market Committee's ("FOMC") increased interest rates a total of 100 basis points in 2023. The FOMC interest rate increases in 2023 and 2022 also resulted in increased yields on new and renewed loans, which were 8.13 percent for the three months ended June 30, 2024 compared to 7.30 percent for the same period in 2023. The Corporation also recognized fair value accretion income on purchased loans, which is included in interest income, of $1.5 million, which accounted for 3 basis points of net interest margin in the three months ended June 30, 2024. Comparatively, the Corporation recognized $2.0 million of accretion income for the three months ended June 30, 2023, or 5 basis points of net interest margin.

As customers have migrated to higher yielding interest-bearing deposit products, interest expense on deposits increased 26.0 million for the three months ended June 30, 2024, or 70 basis points when compared to the same period in 2023. Total cost of funds was 3.21 percent for the three months ended June 30, 2024 compared to 2.56 percent during the same period in 2023. Interest costs increased 65 basis points, which mitigated the 33 basis point increase in asset yields and resulted in a 32 basis point FTE decrease in net interest spread when compared to the same period in 2023.

In the six months ended June 30, 2024, FTE asset yields increased 46 basis points compared to the same period in 2023. The increase in interest income, on an FTE basis, of $44.0 million during the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to FOMC's increase in interest rates in 2023. The Corporation also recognized fair value accretion income on purchased loans, which is included in interest income, of $2.9 million, which accounted for 3 basis points of net interest margin in the six months ended June 30, 2024. Comparatively, the Corporation recognized $4.4 million of accretion income for the six months ended June 30, 2023, or 5 basis points of net interest margin.

Interest expense on deposits increased $73.6 million for the six months ended June 30, 2024, or 103 basis points when compared to the same period in 2023. Total cost of funds was 3.22 percent for the six months ended June 30, 2024 compared to 2.28 percent during the same period in 2023. Interest costs increased 94 basis points, which mitigated the 46 basis point increase in asset yields and resulted in a 48 basis point FTE decrease in net interest spread when compared to the same period in 2023.

47

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following tables present the Corporation’s average balance sheet, interest income/interest expense, and the average rate as a percent of average earning assets/liabilities for the three and six months ended June 30, 2024 and 2023.

	Three Months Ended
	June 30, 2024						June 30, 2023
	Average Balance		Interest  Income / Expense		Average Rate		Average Balance		Interest  Income / Expense		Average Rate
Assets:
Interest-bearing deposits	$	322,647	$	2,995	3.71	%	$	343,253	$	3,164	3.69	%
Federal Home Loan Bank stock	41,749		879		8.42		41,873		1,020		9.74
Investment Securities: (1)
Taxable	1,788,749		9,051		2.02		1,876,676		8,886		1.89
Tax-Exempt (2)	2,240,309		17,232		3.08		2,336,990		18,075		3.09
Total Investment Securities	4,029,058		26,283		2.61		4,213,666		26,961		2.56
Loans held for sale	28,585		431		6.03		19,328		300		6.21
Loans: (3)
Commercial	8,691,746		160,848		7.40		8,605,339		150,766		7.01
Real estate mortgage	2,150,591		23,799		4.43		2,031,136		20,345		4.01
Installment	823,417		16,335		7.94		831,775		14,844		7.14
Tax-Exempt (2)	926,191		10,670		4.61		882,095		9,823		4.45
Total Loans	12,620,530		212,083		6.72		12,369,673		196,078		6.34
Total Earning Assets	17,013,984		242,240		5.69	%	16,968,465		227,223		5.36	%
Total Non-Earning Assets	1,318,175						1,202,184
Total Assets	$	18,332,159					$	18,170,649
Liabilities:
Interest-Bearing Deposits:
Interest-bearing deposits	$	5,586,549	$	40,994	2.94	%	$	5,546,232	$	34,574	2.49	%
Money market deposits	3,036,398		27,230		3.59		2,766,876		18,684		2.70
Savings deposits	1,508,734		3,476		0.92		1,724,816		3,884		0.90
Certificates and other time deposits	2,414,967		27,451		4.55		1,883,998		16,059		3.41
Total Interest-Bearing Deposits	12,546,648		99,151		3.16		11,921,922		73,201		2.46
Borrowings	885,919		8,659		3.91		1,110,486		10,329		3.72
Total Interest-Bearing Liabilities	13,432,567		107,810		3.21		13,032,408		83,530		2.56
Noninterest-bearing deposits	2,349,219						2,797,991
Other liabilities	347,012						200,373
Total Liabilities	16,128,798						16,030,772
Stockholders' Equity	2,203,361						2,139,877
Total Liabilities and Stockholders' Equity	$	18,332,159	107,810				$	18,170,649	83,530
Net Interest Income (FTE)			$	134,430					$	143,693
Net Interest Spread (FTE) (4)					2.48	%					2.80	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					5.69	%					5.36	%
Interest Expense / Average Earning Assets					2.53	%					1.97	%
Net Interest Margin (FTE) (5)					3.16	%					3.39	%
(1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed utilizing a 30/360 day basis.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2024 and 2023. These totals equal $5,859 and $5,858 for the three months ended June 30, 2024 and 2023, respectively.
(3) Nonaccruing loans have been included in the average balances.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

48

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in Thousands)	Six Months Ended
	June 30, 2024						June 30, 2023
	Average Balance		Interest  Income / Expense		Average Rate		Average Balance		Interest  Income / Expense		Average Rate
Assets:
Federal Funds Sold
Interest-bearing deposits	$	449,173	$	9,488	4.22	%	$	258,504	$	3,801	2.94	%
Federal Home Loan Bank stock	41,757		1,714		8.21		40,821		1,562		7.65
Investment Securities: (1)
Taxable	1,785,903		17,799		1.99		1,900,247		17,973		1.89
Tax-Exempt (2)	2,243,286		34,461		3.07		2,444,086		38,416		3.14
Total Investment Securities	4,029,189		52,260		2.59		4,344,333		56,389		2.60
Loans held for sale	25,184		759		6.03		21,952		660		6.01
Loans: (3)
Commercial	8,644,927		320,057		7.40		8,544,945		290,428		6.80
Real estate mortgage	2,140,769		46,156		4.31		1,972,680		38,736		3.93
Installment	822,616		32,464		7.89		836,088		28,785		6.89
Tax-Exempt (2)	915,302		21,038		4.60		877,511		19,581		4.46
Total Loans	12,548,798		420,474		6.70		12,253,176		378,190		6.17
Total Earning Assets	17,068,917		483,936		5.67	%	16,896,834		439,942		5.21	%
Total Non-Earning Assets	1,312,423						1,199,998
Total Assets	$	18,381,340					$	18,096,832
Liabilities:
Interest-Bearing Deposits:
Interest-bearing deposits	$	5,503,185	$	80,484	2.92	%	$	5,405,696	$	59,237	2.19	%
Money market deposits	3,040,938		54,613		3.59		2,756,519		32,261		2.34
Savings deposits	1,534,305		7,277		0.95		1,775,233		6,849		0.77
Certificates and other time deposits	2,421,413		55,062		4.55		1,676,291		25,539		3.05
Total Interest-Bearing Deposits	12,499,841		197,436		3.16		11,613,739		123,886		2.13
Borrowings	948,866		19,211		4.05		1,201,392		21,923		3.65
Total Interest-Bearing Liabilities	13,448,707		216,647		3.22		12,815,131		145,809		2.28
Noninterest-bearing deposits	2,388,695						2,958,741
Other liabilities	321,188						211,302
Total Liabilities	16,158,590						15,985,174
Stockholders' Equity	2,222,750						2,111,658
Total Liabilities and Stockholders' Equity	$	18,381,340	216,647				$	18,096,832	145,809
Net Interest Income (FTE)			$	267,289					$	294,133
Net Interest Spread (FTE) (4)					2.45	%					2.93	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					5.67	%					5.21	%
Interest Expense / Average Earning Assets					2.54	%					1.73	%
Net Interest Margin (FTE) (5)					3.13	%					3.48	%
(1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed utilizing a 30/360 day basis.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2024 and 2023. These totals equal $11,655 and $12,179 for the six months ended June 30, 2024 and 2023, respectively.
(3) Nonaccruing loans have been included in the average balances.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

49

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NONINTEREST INCOME

Noninterest income totaled $31.3 million for the three months ended June 30, 2024, a $5.0 million, or 19.1 percent, increase compared to the three months ended June 30, 2023. The increase was primarily driven by a $3.1 million increase in customer-related line items, which was driven primarily by higher gains on sales of loans and private wealth fees of $1.5 million and $1.4 million, respectively. The Corporation also recorded $1.4 million increase in the valuation of CRA investments recorded in other income. Additionally, losses on sales of available for sale securities in the second quarter of 2024 were $49,000 compared to $1.4 million in the same period of 2023.

During the first six months of 2024, noninterest income totaled $58.0 million, a $6.7 million, or 13.0 percent, increase when compared to the same period in 2023. The increase is primarily driven by a $2.4 million increase in net gains and fees on sales of loans, a $1.8 million increase in private wealth fees and a $0.9 million increase in service charge income, when compared to the same period in 2023. Additionally, the first six months of 2024 included $51,000 in net losses realized on sales of available for sale securities compared to $3.0 million in the first six months of 2023. These increases were offset by lower derivative hedge fees of $1.1 million in the first six months of 2024 compared to the same period in 2023.

NONINTEREST EXPENSE

Noninterest expense totaled $91.4 million for the three months ended June 30, 2024, a $1.2 million, or 1.3 percent, decrease from the second quarter of 2023. The decrease was primarily due to a decrease of $2.5 million in salaries and employee benefits primarily related to savings generated from the voluntary early retirement program and incentive expenses. Partially offsetting this decrease was an increase of $1.1 million in other expenses during the three months ended June 30, 2024 compared to the same period in 2023 as the Corporation's customer-related contingent losses increased $0.7 million compared to the same quarter in 2023. Additionally, in the three months ended June 30, 2024, the Corporation recorded gains on the sales of former banking center facilities of $0.1 million compared to gains of $0.7 million in the same period of 2023.

During the first six months of 2024, noninterest expense totaled $188.3 million, a $2.0 million, or 1.1 percent, increase when compared to the same period in 2023. FDIC expense increased $3.4 million, primarily due to a one-time FDIC assessment credit of $2.0 million recorded in the first quarter of 2023, which was offset by increases from growth in the balance sheet over the last twelve months. Additionally, outside data processing expenses increased $1.2 million in the six months ended June 30, 2024 compared to the same period in 2023 due to the Corporation's continued investment in customer-facing digital solutions.

Partially offsetting the above noted increases in noninterest expenses was a $1.7 million decrease in salaries and employee benefits. The decline in salaries and employee benefits was primarily related to a decrease in incentives. The Corporation also recorded an increase of $0.3 million on gains from the sales of former banking center facilities in the first six months of 2024 compared to 2023.

INCOME TAXES

Income tax expense for the three months ended June 30, 2024 was $4.1 million on pre-tax net income of $44.0 million.  For the same period in 2023, income tax expense was $10.7 million on pre-tax income of $71.6 million. The effective income tax rates for the second quarter of 2024 and 2023 were 9.2 percent and 15.0 percent, respectively.

Income tax expense for the six months ended June 30, 2024 was $10.9 million on pre-tax net income of $98.8 million. For the same period in 2023, income tax expense was $22.0 million on pre-tax net income of $147.0 million. The effective income tax rates for the six months ended June 30, 2024 and 2023 were 11.0 percent and 15.0 percent, respectively.

The lower effective income tax rate for the three and six months ended June 30, 2024 when compared to the same periods in 2023 was primarily a result of tax-exempt interest income being a larger portion of pre-tax income in 2024.

The detailed reconciliation of federal statutory to actual tax expense is shown in NOTE 10. INCOME TAX of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

CAPITAL

Preferred Stock

As part of the Level One acquisition, the Corporation issued 10,000 shares of newly created 7.5 percent non-cumulative perpetual preferred stock, with a liquidation preference of $2,500 per share, in exchange for the outstanding Level One Series B preferred stock, and as part of that exchange, each outstanding Level One depository share representing a 1/100th interest in a share of the Level One preferred stock was converted into a depository share of the Corporation representing a 1/100th interest in a share of its newly issued preferred stock. The Corporation had $25.0 million of outstanding preferred stock at June 30, 2024 and December 31, 2023. During the three and six months ended June 30, 2024 and 2023, the Corporation declared and paid dividends of $46.88 per share (equivalent to $0.4688 per depository share) and $93.76 per share, respectively, equal to $469,000 and $938,000, respectively. The Series A preferred stock qualifies as Tier 1 capital for purposes of the regulatory capital calculations.

50

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Stock Repurchase Program

On January 27, 2021, the Board of Directors of the Corporation approved a stock repurchase program of up to 3,333,000 shares of the Corporation's outstanding common stock; provided, however, that the total aggregate investment in shares repurchased under the program may not exceed $100,000,000. On a share basis, the amount of common stock subject to the repurchase program represented approximately 6 percent of the Corporation's outstanding shares at the time the program became effective. The Corporation repurchased 0.6 million and 1.5 million shares of its common stock pursuant to the repurchase program during the three and six months ended June 30, 2024, respectively. As of June 30, 2024, the Corporation had approximately 1.2 million shares at an aggregate value of $24.6 million available to repurchase under the program.

In August 2022, the Inflation Reduction Act of 2022 (the "IRA") was enacted. Among other things, the IRA imposes a new 1 percent excise tax on the fair market value of stock repurchased after December 31, 2022 by publicly traded U.S. corporations (like the Corporation). With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements. For the three and six months ended June 30, 2024, the Corporation recorded excise tax of $185,000 and $482,000, respectively, related to its share repurchases during the first half of 2024, which is reflected in the Statement of Stockholders' Equity as a component of additional paid-in capital.

Regulatory Capital

Capital adequacy is an important indicator of financial stability and performance. The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category. The assigned capital category is largely determined by four ratios that are calculated according to the regulations: total risk-based capital, tier 1 risk-based capital, common equity tier 1 ("CET1"), and tier 1 leverage ratios. The ratios are intended to measure capital relative to assets and credit risk associated with those assets and off-balance sheet exposures of the entity. The capital category assigned to an entity can also be affected by qualitative judgments made by regulatory agencies about the risk inherent in the entity's activities that are not part of the calculated ratios.

There are five capital categories defined in the regulations, ranging from well capitalized to critically undercapitalized. Classification of a bank in any of the undercapitalized categories can result in actions by regulators that could have a material effect on a bank's operations. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total risk-based capital, tier 1 capital, and common equity tier 1 capital, in each case, to risk-weighted assets, and of tier 1 capital to average assets, or leverage ratio, all of which are calculated as defined in the regulations. Banks with lower capital levels are deemed to be undercapitalized, significantly undercapitalized or critically undercapitalized, depending on their actual levels. The appropriate federal regulatory agency may also downgrade a bank to the next lower capital category upon a determination that the bank is in an unsafe or unsound practice. Banks are required to monitor closely their capital levels and to notify their appropriate regulatory agency of any basis for a change in capital category.

Basel III requires the Corporation and the Bank to maintain the minimum capital and leverage ratios as defined in the regulation and as illustrated in the table below, which capital to risk-weighted asset ratios include a 2.5 percent capital conservation buffer. Under Basel III, in order to avoid limitations on capital distributions, including dividends, the Corporation must hold a 2.5 percent capital conservation buffer above the adequately capitalized CET1 to risk-weighted assets ratio (which buffer is reflected in the required ratios below). Under Basel III, the Corporation and Bank elected to opt-out of including accumulated other comprehensive income in regulatory capital. As of June 30, 2024, the Bank met all capital adequacy requirements to be considered well capitalized under the fully phased-in Basel III capital rules. There is no threshold for well capitalized status for bank holding companies.

As part of a March 27, 2020 joint statement of federal banking regulators, an interim final rule that allowed banking organizations to mitigate the effects of the CECL accounting standard on their regulatory capital was announced. Banking organizations could elect to mitigate the estimated cumulative regulatory capital effects of CECL for up to two years. This two-year delay was to be in addition to the three-year transition period that federal banking regulators had already made available. While the Consolidated Appropriations Act of 2021 provided for a further extension of the mandatory adoption of CECL until January 1, 2022, the federal banking regulators elected to not provide a similar extension to the two year mitigation period applicable to regulatory capital effects. Instead, the federal banking regulators require that, in order to utilize the additional two-year delay, banking organizations must have adopted the CECL standard no later than December 31, 2020, as required by the Coronavirus Aid, Relief and Economice Security Act, or CARES Act. As a result, because implementation of the CECL standard was delayed by the Corporation until January 1, 2021, it began phasing in the cumulative effect of the adoption on its regulatory capital, at a rate of 25 percent per year, over a three-year transition period that began on January 1, 2021. Under that phase-in schedule, the cumulative effect of the adoption is fully reflected in regulatory capital on January 1, 2024.

51

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Corporation's and Bank's actual and required capital ratios as of June 30, 2024 and December 31, 2023 were as follows:

					Prompt Corrective Action Thresholds
	Actual				Basel III Minimum Capital Required				Well Capitalized
June 30, 2024	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	1,963,709	12.95	%	$	1,591,916	10.50	%	N/A		N/A
First Merchants Bank	1,908,231		12.57		1,593,367		10.50		$	1,517,492	10.00	%
Tier 1 capital to risk-weighted assets
First Merchants Corporation	$	1,695,776	11.19	%	$	1,288,694	8.50	%	N/A		N/A
First Merchants Bank	1,718,364		11.32		1,289,869		8.50		$	1,213,994	8.00	%
CET1 capital to risk-weighted assets
First Merchants Corporation	$	1,670,776	11.02	%	$	1,061,277	7.00	%	N/A		N/A
First Merchants Bank	1,718,364		11.32		1,062,245		7.00		$	986,370	6.50	%
Tier 1 capital to average assets
First Merchants Corporation	$	1,695,776	9.63	%	$	704,142	4.00	%	N/A		N/A
First Merchants Bank	1,718,364		9.64		712,681		4.00		$	890,851	5.00	%

					Prompt Corrective Action Thresholds
	Actual				Basel III Minimum Capital Required				Well Capitalized
December 31, 2023	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	2,021,124	13.67	%	$	1,552,685	10.50	%	N/A		N/A
First Merchants Bank	1,931,810		13.06		1,553,600		10.50		$	1,479,619	10.00	%
Tier 1 capital to risk-weighted assets
First Merchants Corporation	$	1,703,626	11.52	%	$	1,256,935	8.50	%	N/A		N/A
First Merchants Bank	1,746,299		11.80		1,257,676		8.50		$	1,183,695	8.00	%
Common equity tier 1 capital to risk-weighted assets
First Merchants Corporation	$	1,678,626	11.35	%	$	1,035,123	7.00	%	N/A		N/A
First Merchants Bank	1,746,299		11.80		1,035,733		7.00		$	961,752	6.50	%
Tier 1 capital to average assets
First Merchants Corporation	$	1,703,626	9.64	%	$	707,091	4.00	%	N/A		N/A
First Merchants Bank	1,746,299		9.89		706,331		4.00		$	882,913	5.00	%

On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $70.0 million of debt comprised of (a) 5.00 percent Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due October 30, 2028 in the aggregate principal amount of $65.0 million. As of December 31, 2023 the Corporation began the five year phase-out (at a rate of 20 percent per year) as defined in the Basel III capital rules, which resulted in a reduction of $13.0 million in tier 2 capital. Subordinated debt decreased due to the pay down of $40.0 million in principal on the scheduled interest payment date during the first quarter of 2024, which resulted in an additional reduction of $32.0 million in tier 2 capital. Additionally, the remaining $25.0 million of subordinated debt was paid in full during the second quarter of 2024. As of June 30, 2024, the Corporation's remaining subordinated debt of $31.0 million was classified as tier 2 capital and was not subject to the five year phase-out.

Management believes the disclosed capital ratios are meaningful measurements for evaluating the safety and soundness of the Corporation. Traditionally, the banking regulators have assessed bank and bank holding company capital adequacy based on both the amount and the composition of capital, the calculation of which is prescribed in federal banking regulations. The Federal Reserve focuses its assessment of capital adequacy on a component of tier 1 capital known as CET1. Because the Federal Reserve has long indicated that voting common stockholders equity (essentially tier 1 risk-based capital less preferred stock and non-controlling interest in subsidiaries) generally should be the dominant element in tier 1 risk-based capital, this focus on CET1 is consistent with existing capital adequacy categories. Tier I regulatory capital consists primarily of total common stockholders’ equity and subordinated debentures issued to business trusts categorized as qualifying borrowings, less non-qualifying intangible assets and unrealized net securities gains or losses.

52

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

A reconciliation of regulatory measures are detailed in the following table as of the dates indicated.

	June 30, 2024						December 31, 2023
(Dollars in thousands)	First Merchants Corporation			First Merchants Bank			First Merchants Corporation			First Merchants Bank
Total Risk-Based Capital
Total Stockholders' Equity (GAAP)	$	2,212,525		$	2,236,535		$	2,247,713		$	2,291,788
Adjust for Accumulated Other Comprehensive (Income) Loss (1)	211,979			210,112			175,970			174,103
Less: Preferred Stock	(25,125)			(125)			(25,125)			(125)
Add: Qualifying Capital Securities	25,000			—			25,000			—
Less: Disallowed Goodwill and Intangible Assets	(728,321)			(727,873)			(731,315)			(730,867)
Add: Modified CECL Transition Amount	—			—			11,514			11,514
Less: Disallowed Deferred Tax Assets	(282)			(285)			(131)			(114)
Total Tier 1 Capital (Regulatory)	1,695,776			1,718,364			1,703,626			1,746,299
Qualifying Subordinated Debentures	78,236			—			132,174			—
Allowance for Loan Losses Includible in Tier 2 Capital	189,697			189,867			185,324			185,511
Total Risk-Based Capital (Regulatory)	$	1,963,709		$	1,908,231		$	2,021,124		$	1,931,810
Net Risk-Weighted Assets (Regulatory)	$	15,161,104		$	15,174,294		$	14,787,474		$	14,796,189
Average Assets (Regulatory)	$	17,603,556		$	17,817,020		$	17,677,268		$	17,658,269
Total Risk-Based Capital Ratio (Regulatory)	12.95		%	12.57		%	13.67		%	13.06		%
Tier 1 Capital to Risk-Weighted Assets	11.19		%	11.32		%	11.52		%	11.80		%
Tier 1 Capital to Average Assets	9.63		%	9.64		%	9.64		%	9.89		%
CET1 Capital Ratio
Total Tier 1 Capital (Regulatory)	$	1,695,776		$	1,718,364		$	1,703,626		$	1,746,299
Less: Qualified Capital Securities	(25,000)			—			(25,000)			—
CET1 Capital (Regulatory)	$	1,670,776		$	1,718,364		$	1,678,626		$	1,746,299
Net Risk-Weighted Assets (Regulatory)	$	15,161,104		$	15,174,294		$	14,787,474		$	14,796,189
CET1 Capital Ratio (Regulatory)	11.02		%	11.32		%	11.35		%	11.80		%

(1) Includes net unrealized gains or losses on available for sale securities, net gains or losses on cash flow hedges, and amounts resulting from the application of the applicable accounting guidance for defined benefit and other postretirement plans.

In management's view, certain non-GAAP financial measures, when taken together with the corresponding GAAP financial measures and ratios, provide meaningful supplemental information regarding our performance. We believe investors benefit from referring to these non-GAAP financial measures and ratios in assessing our operating results, related trends and when forecasting future periods. However, these non-GAAP financial measures should be considered in addition to, and not a substitute for or preferable to, financial measures and ratios presented in accordance with GAAP.

The Corporation's tangible common equity measures are capital adequacy metrics that are meaningful to the Corporation, as well as analysts and investors, in assessing the Corporation's use of equity and in facilitating period-to-period and company-to-company comparisons. Tangible common equity to tangible assets ratio was 8.27 percent at June 30, 2024, and 8.40 percent at December 31, 2023. At June 30, 2024 and December 31, 2023, the Corporation had net unrealized losses associated with its investment securities available for sale of $265.3 million and $219.7 million, respectively. This decrease in value is due to interest rate changes and not due to credit quality.

Non-GAAP financial measures such as tangible common equity to tangible assets, tangible earnings per share, return on average tangible assets and return on average tangible equity are important measures of the strength of the Corporation's capital and ability to generate earnings on tangible common equity invested by our shareholders. These non-GAAP measures provide useful supplemental information and may assist investors in analyzing the Corporation’s financial position without regard to the effects of intangible assets and preferred stock, but retain the effect of accumulated other comprehensive gains (losses) in shareholder's equity. Disclosure of these measures also allows analysts and banking regulators to assess our capital adequacy on these same bases.

The tables within the “NON-GAAP FINANCIAL MEASURES” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations reconcile traditional GAAP measures to these non-GAAP financial measures at June 30, 2024 and December 31, 2023.

53

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS

The Corporation’s primary lending focus is small business and middle market commercial, commercial real estate, public finance and residential real estate, which results in portfolio diversification.  Commercial loans are individually underwritten and judgmentally risk rated.  They are periodically monitored and prompt corrective actions are taken on deteriorating loans.  Consumer loans are typically underwritten with statistical decision-making tools and are managed throughout their life cycle on a portfolio basis.

Loan Maturities

The following tables present the maturity distribution of our loan portfolio, excluding loans held for sale, by collateral classification at June 30, 2024 according to contractual maturities of (1) one year or less, (2) after one year but within five years and (3) after five years. The tables also present the portion of loans by loan classification that have fixed interest rates or variable interest rates that fluctuate over the life of the loans in accordance with changes in an interest rate index.

(Dollars in Thousands)	Maturing Within 1 Year		Maturing 1-5 Years		Maturing Over 5 Years		Total
Commercial and industrial loans	$	714,807	$	2,862,457	$	372,553	$	3,949,817
Agricultural land, production and other loans to farmers	69,384		37,489		133,053		239,926
Real estate loans:
Construction	317,775		359,463		146,029		823,267
Commercial real estate, non-owner occupied	410,503		1,020,805		892,225		2,323,533
Commercial real estate, owner occupied	115,020		603,714		455,461		1,174,195
Residential	21,144		156,751		2,193,010		2,370,905
Home Equity	30,059		27,373		573,672		631,104
Individuals' loans for household and other personal expenditures	16,322		97,190		48,577		162,089
Public finance and other commercial loans	2,589		58,022		904,203		964,814
Total	$	1,697,603	$	5,223,264	$	5,718,783	$	12,639,650

(Dollars in Thousands)	Maturing Within 1 Year		Maturing 1-5 Years		Maturing Over 5 Years		Total
Commercial and industrial loans	$	36,365	$	417,891	$	162,662	$	616,918
Agricultural land, production and other loans to farmers	1,938		27,344		9,759		39,041
Real estate loans:
Construction	13,446		14,195		122,291		149,932
Commercial real estate, non-owner occupied	127,342		442,268		126,158		695,768
Commercial real estate, owner occupied	66,049		377,395		120,435		563,879
Residential	14,624		117,783		921,229		1,053,636
Home Equity	9,449		10,244		10,860		30,553
Individuals' loans for household and other personal expenditures	3,169		71,740		18,886		93,795
Public finance and other commercial loans	2,049		34,076		874,864		910,989
Total loans with fixed interest rates	$	274,431	$	1,512,936	$	2,367,144	$	4,154,511

(Dollars in Thousands)	Maturing Within 1 Year		Maturing 1-5 Years		Maturing Over 5 Years		Total
Commercial and industrial loans	$	678,442	$	2,444,566	$	209,891	$	3,332,899
Agricultural land, production and other loans to farmers	67,446		10,145		123,294		200,885
Real estate loans:
Construction	304,329		345,268		23,738		673,335
Commercial real estate, non-owner occupied	283,161		578,537		766,067		1,627,765
Commercial real estate, owner occupied	48,971		226,319		335,026		610,316
Residential	6,520		38,968		1,271,781		1,317,269
Home Equity	20,610		17,129		562,812		600,551
Individuals' loans for household and other personal expenditures	13,153		25,450		29,691		68,294
Public finance and other commercial loans	540		23,946		29,339		53,825
Total loans with variable interest rates	$	1,423,172	$	3,710,328	$	3,351,639	$	8,485,139

54

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Loan Quality

The quality of the loan portfolio and the amount of nonperforming loans may increase or decrease as a result of acquisitions, organic portfolio growth, problem loan recognition and resolution through collections, sales or charge-offs. The performance of any loan can be affected by external factors such as economic conditions, or internal factors specific to a particular borrower, such as the actions of a customer's internal management.

At June 30, 2024, non-accrual loans totaled $61.9 million, an increase of $8.3 million from December 31, 2023, primarily due to a $10.8 million and a $4.3 million increase in non-accrual balances in commercial real estate, non-owner occupied and commercial and industrial, respectively. The increase was partially offset by a decline in non-accrual balances within residential of $6.3 million.

Other real estate owned and repossessions, totaling $4.8 million at June 30, 2024, remained consistent from December 31, 2023. For other real estate owned, current appraisals are obtained to determine fair value as management continues to aggressively market these real estate assets.

According to applicable accounting guidance, loans that no longer exhibit similar risk characteristics are evaluated individually to determine if there is a need for a specific reserve. Commercial loans under $500,000 and consumer loans are not individually evaluated. The determination for individual evaluation is made based on current information or events that may suggest it is probable that not all amounts due of principal and interest, according to the contractual terms of the loan agreement, will be substantially collected.

The Corporation's nonperforming assets plus accruing loans 90-days or more delinquent and individually evaluated loans are presented in the table below.

(Dollars in Thousands)	June 30, 2024		December 31, 2023
Nonperforming Assets:
Non-accrual loans	$	61,906	$	53,580
OREO and Repossessions	4,824		4,831
Nonperforming assets (NPA)	66,730		58,411
Loans 90-days or more delinquent and still accruing	1,686		172
NPAs and loans 90-days or more delinquent	$	68,416	$	58,583

The composition of nonperforming assets plus accruing loans 90-days or more delinquent is reflected in the following table by loan class.

(Dollars in Thousands)	June 30, 2024		December 31, 2023
Nonperforming assets and loans 90-days or more delinquent:
Commercial and industrial loans	$	13,758	$	9,136
Agricultural land, production and other loans to farmers	53		58
Real estate loans:
Construction	—		520
Commercial real estate, non-owner occupied	27,424		16,652
Commercial real estate, owner occupied	2,452		3,041
Residential	20,105		25,178
Home equity	4,590		3,945
Individuals' loans for household and other personal expenditures	34		19
Public finance and other commercial loans	—		34
Nonperforming assets and loans 90-days or more delinquent:	$	68,416	$	58,583

Provision and Allowance for Credit Losses on Loans

The Corporation adopted FASB Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on January 1, 2021. CECL replaced the previous "incurred loss" model with an "expected loss" model of measuring credit losses, which encompasses allowances for losses expected to be incurred over the life of the portfolio. The CECL model requires the measurement of all expected credit losses for financial assets measured at amortized cost based on historical experiences, current conditions and reasonable and supportable forecasts. CECL also requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as credit quality and underwriting standards of an organization's portfolio. Additional details of the Corporation's CECL methodology and allowance calculation are discussed within NOTE 3. LOANS AND ALLOWANCE of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

The CECL allowance is maintained through the provision for credit losses, which is a charge against earnings. Based on management’s judgment as to the appropriate level of the allowance for credit losses, the amount provided in any period may be greater or less than net loan losses for the same period. The determination of the provision amount and the adequacy of the allowance in any period is based on management’s continuing review and evaluation of the loan portfolio.

55

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Corporation’s loan balances, excluding loans held for sale, increased $153.6 million from December 31, 2023 to $12.6 billion at June 30, 2024. At June 30, 2024, the allowance for credit losses totaled $189.5 million, which represents a decrease of $15.4 million from December 31, 2023. As a percentage of loans, the allowance for credit losses was 1.50 percent at June 30, 2024 and December 31, 2023.

Net charge-offs totaling $39.6 million and $41.9 million were recognized for the three and six months ended June 30, 2024, respectively, and provision for credit losses of $24.5 million and $26.5 million, respectively, were recorded for the same periods in 2024. Net charge-offs totaling $1.9 million and $2.1 million were recognized for the three and six months ended June 30, 2023, respectively, with no provision for credit losses recorded in the same periods in 2023. The increase in net charge-offs is primarily related to two commercial and industrial relationships that accounted for $36.1 million of charge-offs during the three and six months ended June 30, 2024. One borrower experienced a sudden change in revenue from the cancellation and inability to renegotiate their contracts with the U.S. Government. This negatively impacted the value of the borrower's business and resulted in their inability to repay principal and interest. The second borrower provided notification of its plans to cease operations. These charge-offs are not indicative of the portfolio as a whole.

The distribution of the net charge-offs (recoveries) for the three and six months ended June 30, 2024 and 2023 are reflected in the following table.

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in Thousands)	2024		2023		2024		2023
Net charge-offs (recoveries):
Commercial and industrial loans	$	39,644	$	570	$	40,924	$	283
Real estate loans:
Commercial real estate, non-owner occupied	(150)		—		192		(44)
Commercial real estate, owner occupied	(11)		—		(55)		(8)
Residential	129		51		495		81
Home equity	(174)		1,129		(124)		1,312
Individuals' loans for household and other personal expenditures	206		155		465		506
Total net charge-offs (recoveries)	$	39,644	$	1,905	$	41,897	$	2,130

Management continually evaluates the commercial loan portfolio by including consideration of specific borrower cash flow analysis and estimated collateral values, types and amounts on nonperforming loans, past and anticipated credit loss experience, changes in the composition of the loan portfolio, and the current condition and amount of loans outstanding. The determination of the provision for credit losses in any period is based on management’s continuing review and evaluation of the loan portfolio, and its judgment as to the impact of current economic conditions on the portfolio. The allowance for credit losses remains adequate, along with $20.3 million of fair value accretion remaining on the acquired portfolio. The Corporation continues to monitor economic forecast changes, loan growth and credit quality to determine provision needs in the future.

LIQUIDITY

Liquidity management is the process by which the Corporation ensures that adequate liquid funds are available for the holding company and its subsidiaries. These funds are necessary in order to meet financial commitments on a timely basis. These commitments include withdrawals by depositors, funding credit obligations to borrowers, paying dividends to stockholders, paying operating expenses, funding capital expenditures, and maintaining deposit reserve requirements. Liquidity is monitored and closely managed by the asset/liability committee.

The Corporation’s liquidity is dependent upon the receipt of dividends from the Bank, which is subject to certain regulatory limitations and access to other funding sources.  Liquidity of the Bank is derived primarily from core deposit growth, principal payments received on loans, the sale and maturity of investment securities, net cash provided by operating activities, and access to other funding sources.

The principal source of asset-funded liquidity is investment securities classified as available for sale, the market values of which totaled $1.6 billion at June 30, 2024, a decrease of $8.2 million, or 0.5 percent, from December 31, 2023.  Securities classified as held to maturity that are maturing within a short period of time can also be a source of liquidity. Securities classified as held to maturity and that are maturing in one year or less totaled $13.4 million at June 30, 2024. In addition, other types of assets such as cash and interest-bearing deposits with other banks, federal funds sold and loans maturing within one year are sources of liquidity.

The most stable source of liability-funded liquidity for both the long-term and short-term is deposit growth and retention in the core deposit base.  Federal funds purchased and securities sold under agreements to repurchase are also considered a source of liquidity. In addition, FHLB advances and Federal Reserve Discount Window borrowings utilized as a funding source. At June 30, 2024, total borrowings from the FHLB were $832.7 million and there were no outstanding borrowings from the Federal Reserve Discount Window. The Bank has pledged certain mortgage loans and investments to the FHLB and Federal Reserve. The total available remaining borrowing capacity from the FHLB and Federal Reserve at June 30, 2024 was $780.7 million and $1.1 billion, respectively.

56

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In March 2023, the Federal Reserve created the Bank Term Funding Program (“BTFP”). The BTFP was a new facility established in response to recent liquidity concerns within the banking industry in part due to recent deposit runs that resulted in a few large bank failures. The BTFP was designed to provide available additional funding to eligible depository institutions in order to help assure that banks have the ability to meet the needs of all their depositors. Under the program, eligible depository institutions could obtain loans of up to one year in length by pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets were valued at par. The BTFP was intended to eliminate the need for depository institutions to quickly sell their securities if they were experiencing stress on their liquidity. As of March 11, 2024, the program was discontinued and the Bank had no outstanding balance as of June 30, 2024.

The Corporation and the Bank receive outside credit ratings from Moody's. Both the Corporation and the Bank currently have Issuer Ratings of Baa1. Additionally, the Bank has a Baseline Credit Assessment Rating of a3. Management considers these ratings to be indications of a sound capital base and strong liquidity and believes that these ratings would help ensure the ready marketability of its commercial paper. Because of the Corporation's and Bank's current levels of long-term debt, management believes it could generate additional liquidity from various sources should the need arise.

The following table presents the Corporation's material cash requirements from known contractual and other obligations at June 30, 2024:

	Payments Due In
(Dollars in Thousands)	One Year or Less		Over One Year		Total
Deposits without stated maturity	$	12,096,840	$	—	$	12,096,840
Certificates and other time deposits	2,306,415		165,815		2,472,230
Securities sold under repurchase agreements	100,451		—		100,451
Federal Home Loan Bank advances	180,000		652,703		832,703
Federal Funds Purchased	147,229		—		147,229
Subordinated debentures and other borrowings	1,331		92,258		93,589
Total	$	14,832,266	$	910,776	$	15,743,042

Also, in the normal course of business, the Bank is a party to a number of other off-balance sheet activities that contain credit, market and operational risk that are not reflected in whole or in part in our consolidated financial statements.  These activities primarily consist of traditional off-balance sheet credit-related financial instruments such as loan commitments and standby letters of credit.

Summarized credit-related financial instruments at June 30, 2024 are as follows:

(Dollars in Thousands)	June 30, 2024
Amounts of commitments:
Loan commitments to extend credit	$	5,271,982
Standby and commercial letters of credit	69,618
	$	5,341,600

Since many of the commitments are expected to expire unused or be only partially used, the total amount of unused commitments in the preceding table does not necessarily represent future cash requirements.

INTEREST SENSITIVITY AND DISCLOSURE ABOUT MARKET RISK

Asset/Liability management has been an important factor in the Corporation's ability to record consistent earnings growth through periods of interest rate volatility and product deregulation. Management and the Board of Directors monitor the Corporation's liquidity and interest sensitivity positions at regular meetings to review how changes in interest rates may affect earnings.  Decisions regarding investment and the pricing of loan and deposit products are made after analysis of reports designed to measure liquidity, rate sensitivity, the Corporation’s exposure to changes in net interest income given various rate scenarios and the economic and competitive environments.

It is the objective of the Corporation to monitor and manage risk exposure to net interest income caused by changes in interest rates.  It is the goal of the Corporation’s Asset/Liability management function to provide optimum and stable net interest income. To accomplish this, management uses two asset liability tools. GAP/Interest Rate Sensitivity Reports and Net Interest Income Simulation Modeling are constructed, presented and monitored quarterly. Management believes that the Corporation's liquidity and interest sensitivity position at June 30, 2024, remained adequate to meet the Corporation’s primary goal of achieving optimum interest margins while avoiding undue interest rate risk.

Net interest income simulation modeling, or earnings-at-risk, measures the sensitivity of net interest income to various interest rate movements. The Corporation's asset liability process monitors simulated net interest income under three separate interest rate scenarios; base, rising and falling. Estimated net interest income for each scenario is calculated over a twelve-month horizon. The immediate and parallel changes to the base case scenario used in the model are presented below. The interest rate scenarios are used for analytical purposes and do not necessarily represent management's view of future market movements. Rather, these are intended to provide a measure of the degree of volatility interest rate movements may introduce into the earnings of the Corporation.

57

PART I: FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The base scenario is highly dependent on numerous assumptions embedded in the model, including assumptions related to future interest rates. While the base sensitivity analysis incorporates management's best estimate of interest rate and balance sheet dynamics under various market rate movements, the actual behavior and resulting earnings impact will likely differ from that projected. For certain assets, the base simulation model captures the expected prepayment behavior under changing interest rate environments. Assumptions and methodologies regarding the interest rate or balance behavior of indeterminate maturity products, such as savings, money market, interest-bearing and demand deposits, reflect management's best estimate of expected future behavior. Historical retention rate assumptions are applied to non-maturity deposits for modeling purposes.

The comparative rising 200 basis points and falling 100 basis points scenarios below, as of June 30, 2024 and December 31, 2023, assume further interest rate changes in addition to the base simulation discussed above. These changes are immediate and parallel changes to the base case scenario.

Results for the rising 200 basis points and falling 100 basis points interest rate scenarios are listed below based upon the Corporation’s rate sensitive assets and liabilities at June 30, 2024 and December 31, 2023. The change from the base scenario represents cumulative net interest income over a twelve-month time horizon. Balance sheet assumptions used for the base scenario are the same for the rising and falling simulations.

	June 30, 2024		December 31, 2023
Rising 200 basis points from base case	1.4	%	4.0	%
Falling 100 basis points from base case	(3.3)	%	(5.0)	%

OTHER

The Securities and Exchange Commission maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission, including the Corporation, and that address is (http://www.sec.gov).

58

PART I: FINANCIAL INFORMATION

ITEM 3. QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required under this item is included as part of Management’s Discussion and Analysis of Financial Condition and Results of Operations, under the headings “LIQUIDITY” and “INTEREST SENSITIVITY AND DISCLOSURE ABOUT MARKET RISK”.

59

PART I: FINANCIAL INFORMATION

ITEM 4. CONTROLS AND PROCEDURES

ITEM 4.  CONTROLS AND PROCEDURES

At the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There have been no changes in the Corporation’s internal control over financial reporting identified in connection with the evaluation discussed above that occurred during the Corporation’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

60

PART II: OTHER INFORMATION

ITEM 1., ITEM 1A., ITEM 2., ITEM 3., ITEM 4. AND ITEM 5.

(table dollar amounts in thousands, except share data)

ITEM 1.  LEGAL PROCEEDINGS

There are no pending legal proceedings, other than litigation incidental to the ordinary business of the Corporation or its subsidiaries, of a material nature to which the Corporation or its subsidiaries is a party or of which any of their properties is subject. Further, there are no material legal proceedings in which any director, officer, principal shareholder, or affiliate of the Corporation, or any associate of any such director, officer or principal shareholder, is a party, or has a material interest, adverse to the Corporation or any of its subsidiaries.

None of the routine legal proceedings, individually or in the aggregate, in which the Corporation or its affiliates are involved are expected to have a material adverse impact on the financial position or the results of operations of the Corporation.

ITEM 1A.  RISK FACTORS

There have been no material changes to the risk factors previously disclosed in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

a. None

b. None

c. Issuer Purchases of Equity Securities

The following table presents information relating to our purchases of equity securities during the three months ended June 30, 2024.

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as part of Publicly announced Plans or Programs (2)	Maximum Number of Shares that may yet be Purchased Under the Plans or Programs (2)
April, 2024	570,620	$	33.67	570,137	1,228,319
May, 2024	23,427	$	34.30	22,986	1,205,333
June, 2024	—	$	—	—	1,205,333
Total	594,047			593,123

(1) During the three months ended June 30, 2024, there were 593,123 shares repurchased pursuant to the Corporation's share repurchase program described in note (2) below. The amounts in April 2024 and May 2024 also include 483 and 441 shares, respectively, repurchased pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of the Corporation's restricted stock awards and are not a part of the Corporation's share repurchase program described in note (2) below.

(2) On January 27, 2021, the Board of Directors of the Corporation approved a stock repurchase program of up to 3,333,000 shares of the Corporation's outstanding common stock; provided, however, that the total aggregate investment in shares repurchased under the program may not exceed $100,000,000. The program does not have an expiration date. However, it may be discontinued by the Board at any time. Since commencing the program, the Corporation has repurchased a total of 2,127,667 shares of common stock for a total aggregate investment of $75.4 million.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.  MINE SAFETY DISCLOSURES

Not Applicable 

ITEM 5.  OTHER INFORMATION

a. None

b. None

c. During the three months ended June 30, 2024, no director or officer of the Corporation adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

61

PART II: OTHER INFORMATION

ITEM 6. EXHIBITS

ITEM 6.  EXHIBITS

Exhibit No:	Description of Exhibits:
3.1	First Merchants Corporation Articles of Incorporation, as amended (Incorporated by reference to Exhibit 3.1 of registrant’s Form 8-K filed on May 22, 2024) (SEC No. 000-17071)
3.2	Bylaws of First Merchants Corporation effective as of May 20, 2024 (Incorporated by reference to Exhibit 3.2 of registrant’s Form 8-K filed on May 22, 2024) (SEC No. 001-41342)
4.1	First Merchants Corporation Amended and Restated Declaration of Trust of First Merchants Capital Trust II dated as of July 2, 2007 (Incorporated by reference to Exhibit 4.1 of registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.2	Indenture dated as of July 2, 2007 (Incorporated by reference to Exhibit 4.2 of registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.3	Guarantee Agreement dated as of July 2, 2007 (Incorporated by reference to Exhibit 4.3 of registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.4	Form of Capital Securities Certification of First Merchants Capital Trust II (Incorporated by reference to Exhibit 4.4 of registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.5	First Merchants Corporation Dividend Reinvestment and Stock Purchase Plan (Incorporated by reference to registrant’s Prospectus filed pursuant to Rule 424(b)(3) on July 17, 2020) (SEC No. 333-229527)
4.6	Upon request, the registrant agrees to furnish supplementally to the Commission a copy of the instruments defining the rights of holders of its (a) 5.00% Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million and (b) 6.75% Fixed-to-Floating Rate Subordinated Notes due 2028 in aggregate principal amount of $65 million.
4.7	Deposit Agreement by and among First Merchants Corporation, Broadridge Corporate Issuer Solutions, Inc., as depositary, and holders from time to time of the depositary receipts described therein, as amended on March 30, 2022 (Incorporated by reference to Exhibit 4.1 of registrant’s Form 8-A filed on March 30, 2022) (SEC No. 001-41342)
4.8	Form of Depositary Receipt (Incorporated by reference to Exhibit 4.2 of registrant’s Form 8-A filed on March 30, 2022) (SEC No. 001-41342)
4.9	Indenture, dated as of December 18, 2019, between First Merchants Corporation (as successor to Level One Bancorp, Inc.) and Wilmington Trust, National Association, as trustee (Incorporated by reference to Exhibit 4.1 of Level One Bancorp, Inc.’s Form 8-K filed on December 19, 2019) (SEC No. 001-38458)
4.10	First Supplemental Indenture, dated as of March 31, 2022, among First Merchants Corporation, Level One Bancorp, Inc. and Wilmington Trust, National Association, as trustee (Incorporated by reference to Exhibit 4.11 of registrant’s Form 10-K filed on March 1, 2023) (SEC No. 001-41342)
4.11	Form of 4.75% Fixed-to-Floating Rate Subordinated Notes due 2029 (Incorporated by reference to Exhibit 4.2 of Level One Bancorp, Inc.’s Form 8-K filed on December 19, 2019) (SEC No. 001-38458)
10.1*	First Merchants Corporation 2024 Long-Term Equity Incentive Plan (incorporated by reference to Exhibit 10.1 of registrant's Form 8-K filed on May 10, 2024) (SEC No. 000-17071)
10.2*	First Merchants Corporation 2024 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 of registrant's Form 8-K filed on May 10, 2024) (SEC No. 000-17071)
10.3*	First Merchants Corporation Equity Compensation Plan for Non-Employee Directors (incorporated by reference to registrants Form S-8 filed on June 4, 2024) (SEC No. 333-232362)
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes - Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 (1)
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 (1)
32	Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (2)
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (1)
101.SCH	Inline XBRL Taxonomy Extension Schema Document (1)
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document (1)
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document (1)
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document (1)
104	Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101)
* Management contract or compensatory plan or arrangement
(1)	Filed herewith.
(2)	Furnished herewith.

62

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.

	First Merchants Corporation
	(Registrant)
August 1, 2024	by /s/ Mark K. Hardwick
	Mark K. Hardwick
	Chief Executive Officer
	(Principal Executive Officer)
August 1, 2024	by /s/ Michele M. Kawiecki
	Michele M. Kawiecki
	Executive Vice President, Chief Financial Officer
	(Principal Financial and Accounting Officer)

63

EX-31.1

PART II: OTHER INFORMATION

ITEM 6. EXHIBITS

EXHIBIT-31.1

CERTIFICATIONS PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Mark K. Hardwick, Chief Executive Officer of First Merchants Corporation, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of First Merchants Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

d.    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

August 1, 2024

By: /s/ Mark K. Hardwick

Mark K. Hardwick

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

PART II: OTHER INFORMATION

ITEM 6. EXHIBITS

EXHIBIT-31.2

CERTIFICATIONS PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Michele M. Kawiecki, Executive Vice President and Chief Financial Officer of First Merchants Corporation, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of First Merchants Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

d.    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

August 1, 2024

By: /s/ Michele M. Kawiecki

Michele M. Kawiecki

Executive Vice President,

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32

PART II: OTHER INFORMATION

ITEM 6. EXHIBITS

EXHIBIT-32

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Merchants Corporation (the “Corporation”) on Form 10-Q for the period ending June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark K. Hardwick, Chief Executive Officer of the Corporation, do hereby certify, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o (d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

August 1, 2024

By: /s/ Mark K. Hardwick

Mark K. Hardwick

Chief Executive Officer

(Principal Executive Officer)

A signed copy of this written statement required by Section 906 has been provided to First Merchants Corporation and will be retained by First Merchants Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

_____________________________________________________

In connection with the Quarterly Report of First Merchants Corporation (the “Corporation”) on Form 10-Q for the period ending June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michele M. Kawiecki, Executive Vice President, and Chief Financial Officer of the Corporation, do hereby certify, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o (d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

August 1, 2024

By: /s/ Michele M. Kawiecki

Michele M. Kawiecki

Executive Vice President,

Chief Financial Officer

(Principal Financial and Accounting Officer)

A signed copy of this written statement required by Section 906 has been provided to First Merchants Corporation and will be retained by First Merchants Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2024	Jul. 26, 2024
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
Document Transition Report	false
Entity Registrant Name	FIRST MERCHANTS CORP
Entity Incorporation, State or Country Code	IN
Entity File Number	001-41342
Entity Tax Identification Number	35-1544218
Entity Address, Address Line One	200 East Jackson Street
Entity Address, City or Town	Muncie
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	47305-2814
City Area Code	765
Local Phone Number	747-1500
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		58,506,917
Entity Central Index Key	0000712534
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Stock, $0.125 stated value per share
Entity Information [Line Items]
Title of 12(b) Security	Common Stock, $0.125 stated value per share
Trading Symbol	FRME
Security Exchange Name	NASDAQ
Depositary Shares, each representing a 1/100th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series A
Entity Information [Line Items]
Title of 12(b) Security	Depositary Shares, each representing a 1/100th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series A
Trading Symbol	FRMEP
Security Exchange Name	NASDAQ

XML

CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
ASSETS
Cash and due from banks	$ 105,372	$ 112,649
Interest-bearing deposits	168,528	436,080
Investment securities available for sale	1,618,893	1,627,112
Investment securities held to maturity, net of allowance for credit losses of $245 and $245 (fair value of $1,779,216 and $1,870,374)	2,134,195	2,184,252
Loans held for sale	32,292	18,934
Loans	12,639,650	12,486,027
Less: Allowance for credit losses - loans	(189,537)	(204,934)
Net loans	12,450,113	12,281,093
Premises and equipment	133,245	133,896
Federal Home Loan Bank stock	41,738	41,769
Interest receivable	97,546	97,664
Goodwill	712,002	712,002
Other intangibles	23,371	27,099
Cash surrender value of life insurance	306,379	306,301
Other real estate owned	4,824	4,831
Tax asset, deferred and receivable	107,080	99,883
Other assets	367,845	322,322
TOTAL ASSETS	18,303,423	18,405,887
Deposits:
Noninterest-bearing	2,303,313	2,500,062
Interest-bearing	12,265,757	12,321,391
Total Deposits	14,569,070	14,821,453
Borrowings:
Federal funds purchased	147,229	0
Securities sold under repurchase agreements	100,451	157,280
Federal Home Loan Bank advances	832,703	712,852
Subordinated debentures and other borrowings	93,589	158,644
Total Borrowings	1,173,972	1,028,776
Interest payable	18,554	18,912
Other liabilities	329,302	289,033
Total Liabilities	16,090,898	16,158,174
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Common stock value	7,256	7,428
Additional paid-in capital	1,191,193	1,236,506
Retained earnings	1,200,930	1,154,624
Accumulated other comprehensive loss	(211,979)	(175,970)
Total Stockholders' Equity	2,212,525	2,247,713
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	18,303,423	18,405,887
Cumulative Preferred Stock
STOCKHOLDERS' EQUITY
Preferred stock value	125	125
Series A Preferred Stock
STOCKHOLDERS' EQUITY
Preferred stock value	$ 25,000	$ 25,000

XML

CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Allowance for credit losses	$ 245	$ 245
Investment securities held to maturity - fair value	$ 1,779,216	$ 1,870,374
Common Stock, stated value (in dollars per share)	$ 0.125	$ 0.125
Common Stock, authorized (in shares)	100,000,000	100,000,000
Common Stock, issued (in shares)	58,045,653	59,424,122
Common Stock, outstanding (in shares)	58,045,653	59,424,122
Cumulative Preferred Stock
Preferred stock, par value (in dollars per share)	$ 1,000	$ 1,000
Preferred stock, liquidation value (in dollars per share)	$ 1,000	$ 1,000
Preferred Stock, authorized (in shares)	600	600
Preferred Stock, issued (in shares)	125	125
Preferred Stock, outstanding (in shares)	125	125
Series A Preferred Stock
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, liquidation value (in dollars per share)	$ 2,500	$ 2,500
Preferred Stock, authorized (in shares)	10,000	10,000
Preferred Stock, issued (in shares)	10,000	10,000
Preferred Stock, outstanding (in shares)	10,000	10,000

XML

CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Loans receivable:
Taxable	$ 201,413	$ 186,256	$ 399,436	$ 358,609
Tax exempt	8,430	7,760	16,620	15,469
Investment securities:
Taxable	9,051	8,886	17,799	17,973
Tax exempt	13,613	14,279	27,224	30,349
Deposits with financial institutions	2,995	3,164	9,488	3,801
Federal Home Loan Bank stock	879	1,020	1,714	1,562
Total Interest Income	236,381	221,365	472,281	427,763
INTEREST EXPENSE
Deposits	99,151	73,201	197,436	123,886
Federal funds purchased	126	123	126	1,420
Securities sold under repurchase agreements	645	979	1,677	1,827
Federal Home Loan Bank advances	6,398	6,815	13,171	13,879
Subordinated debentures and other borrowings	1,490	2,412	4,237	4,797
Total Interest Expense	107,810	83,530	216,647	145,809
NET INTEREST INCOME	128,571	137,835	255,634	281,954
Provision for credit losses	24,500	0	26,500	0
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	104,071	137,835	229,134	281,954
NONINTEREST INCOME
Net gains and fees on sales of loans	5,141	3,632	8,395	6,031
Increase in cash surrender value of life insurance	1,414	1,316	2,863	2,603
Gains on life insurance benefits	515	780	658	781
Net realized losses on sales of available for sale securities	(49)	(1,392)	(51)	(2,963)
Other income	1,586	822	2,083	1,645
Total Noninterest Income	31,334	26,319	57,972	51,316
NONINTEREST EXPENSES
Salaries and employee benefits	52,214	54,753	110,507	112,212
Net occupancy	6,746	6,674	14,058	13,933
Equipment	6,599	6,181	12,825	12,307
Marketing	1,773	1,102	2,971	2,411
Outside data processing fees	7,072	6,604	13,961	12,717
Printing and office supplies	354	434	707	817
Intangible asset amortization	1,771	2,182	3,728	4,379
FDIC assessments	3,278	2,740	7,565	4,136
Other real estate owned and foreclosure expenses	373	916	907	898
Professional and other outside services	3,822	4,660	7,774	8,358
Other expenses	7,411	6,347	13,345	14,145
Total Noninterest Expenses	91,413	92,593	188,348	186,313
INCOME BEFORE INCOME TAX	43,992	71,561	98,758	146,957
Income tax expense	4,067	10,699	10,892	22,016
NET INCOME	39,925	60,862	87,866	124,941
Preferred stock dividends	469	469	938	938
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$ 39,456	$ 60,393	$ 86,928	$ 124,003
Per Share Data:
Basic Net Income Available to Common Stockholders (in dollars per share)	$ 0.68	$ 1.02	$ 1.48	$ 2.09
Diluted Net Income Available to Common Stockholders (in dollars per share)	0.68	1.02	1.48	2.09
Cash Dividends Paid (in dollars per share)	$ 0.35	$ 0.34	$ 0.69	$ 0.66
Average Diluted Common Shares Outstanding (in shares)	58,328,265	59,448,379	58,800,463	59,446,057
Service charges on deposit accounts
NONINTEREST INCOME
Other income	$ 8,214	$ 7,813	$ 16,121	$ 15,172
Fiduciary and wealth management fees
NONINTEREST INCOME
Other income	8,825	7,397	17,025	15,259
Card payment fees
NONINTEREST INCOME
Other income	4,739	4,537	9,239	9,709
Derivative hedge fees
NONINTEREST INCOME
Other income	489	672	752	1,820
Other customer fees
NONINTEREST INCOME
Other income	$ 460	$ 742	$ 887	$ 1,259

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CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 39,925	$ 60,862	$ 87,866	$ 124,941
Unrealized gains (losses) on securities available-for-sale:
Unrealized holding gain (loss) arising during the period	(17,708)	(25,461)	(45,632)	23,954
Reclassification adjustment for losses (gains) included in net income	49	1,392	51	2,963
Tax effect	3,709	5,055	9,572	(5,652)
Net of tax	(13,950)	(19,014)	(36,009)	21,265
Unrealized gain (loss) on cash flow hedges:
Unrealized holding gain (loss) arising during the period	0	(62)	0	(113)
Reclassification adjustment for losses (gains) included in net income	0	16	0	15
Tax effect	0	10	0	20
Net of tax	0	(36)	0	(78)
Total other comprehensive income (loss), net of tax	(13,950)	(19,050)	(36,009)	21,187
Comprehensive income	$ 25,975	$ 41,812	$ 51,857	$ 146,128

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CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Cumulative Preferred Stock	Preferred Stock Cumulative Preferred Stock	Preferred Stock Non-Cumulative Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Beginning balance (in shares) at Dec. 31, 2022			125	10,000
Beginning balance at Dec. 31, 2022	$ 2,034,770		$ 125	$ 25,000	$ 7,396	$ 1,228,626	$ 1,012,774	$ (239,151)
Beginning balance (in shares) at Dec. 31, 2022					59,170,583
Comprehensive income:
Net income	124,941						124,941
Other comprehensive income (loss), net of tax	21,187							21,187
Cash dividends on preferred stock	(938)						(938)
Cash dividends on common stock	(39,378)						(39,378)
Share-based compensation (in shares)					14,657
Share-based compensation	2,432				$ 2	2,430
Stock issued under employee benefit plans (in shares)					13,435
Stock issued under employee benefit plans	380				$ 2	378
Stock issued under dividend reinvestment and stock purchase plan (in shares)					33,537
Stock issued under dividend reinvestment and stock purchase plan	1,064				$ 4	1,060
Stock options exercised (in shares)					65,025
Stock options exercised	1,110				$ 8	1,102
Restricted shares withheld for taxes (in shares)					(89)
Restricted shares withheld for taxes	(3)					(3)
Ending balance (in shares) at Jun. 30, 2023			125	10,000
Ending balance at Jun. 30, 2023	2,145,565		$ 125	$ 25,000	$ 7,412	1,233,593	1,097,399	(217,964)
Ending balance (in shares) at Jun. 30, 2023					59,297,148
Beginning balance (in shares) at Mar. 31, 2023			125	10,000
Beginning balance at Mar. 31, 2023	2,122,448		$ 125	$ 25,000	$ 7,407	1,231,532	1,057,298	(198,914)
Beginning balance (in shares) at Mar. 31, 2023					59,257,051
Comprehensive income:
Net income	60,862						60,862
Other comprehensive income (loss), net of tax	(19,050)							(19,050)
Cash dividends on preferred stock	(469)						(469)
Cash dividends on common stock	(20,292)						(20,292)
Share-based compensation (in shares)					7,084
Share-based compensation	1,235				$ 1	1,234
Stock issued under employee benefit plans (in shares)					7,535
Stock issued under employee benefit plans	181				$ 1	180
Stock issued under dividend reinvestment and stock purchase plan (in shares)					19,073
Stock issued under dividend reinvestment and stock purchase plan	550				$ 2	548
Stock options exercised (in shares)					6,405
Stock options exercised	100				$ 1	99
Ending balance (in shares) at Jun. 30, 2023			125	10,000
Ending balance at Jun. 30, 2023	2,145,565		$ 125	$ 25,000	$ 7,412	1,233,593	1,097,399	(217,964)
Ending balance (in shares) at Jun. 30, 2023					59,297,148
Beginning balance (in shares) at Dec. 31, 2023		125	125	10,000
Beginning balance at Dec. 31, 2023	$ 2,247,713		$ 125	$ 25,000	$ 7,428	1,236,506	1,154,624	(175,970)
Beginning balance (in shares) at Dec. 31, 2023	59,424,122				59,424,122
Comprehensive income:
Net income	$ 87,866						87,866
Other comprehensive income (loss), net of tax	(36,009)							(36,009)
Cash dividends on preferred stock	(938)						(938)
Cash dividends on common stock	(40,622)						(40,622)
Repurchase of common stock (in shares)					(1,481,565)
Repurchases of common stock	(49,955)				$ (185)	(49,770)
Excise tax on common stock repurchases	(482)					(482)
Share-based compensation (in shares)					16,216
Share-based compensation	2,754				$ 2	2,752
Stock issued under employee benefit plans (in shares)					11,769
Stock issued under employee benefit plans	343				$ 2	341
Stock issued under dividend reinvestment and stock purchase plan (in shares)					33,890
Stock issued under dividend reinvestment and stock purchase plan	$ 1,101				$ 4	1,097
Stock options exercised (in shares)	42,893				42,893
Stock options exercised	$ 812				$ 5	807
Restricted shares withheld for taxes (in shares)					(1,672)
Restricted shares withheld for taxes	(58)					(58)
Ending balance (in shares) at Jun. 30, 2024		125	125	10,000
Ending balance at Jun. 30, 2024	$ 2,212,525		$ 125	$ 25,000	$ 7,256	1,191,193	1,200,930	(211,979)
Ending balance (in shares) at Jun. 30, 2024	58,045,653				58,045,653
Beginning balance (in shares) at Mar. 31, 2024			125	10,000
Beginning balance at Mar. 31, 2024	$ 2,224,803		$ 125	$ 25,000	$ 7,321	1,208,447	1,181,939	(198,029)
Beginning balance (in shares) at Mar. 31, 2024					58,564,819
Comprehensive income:
Net income	39,925						39,925
Other comprehensive income (loss), net of tax	(13,950)							(13,950)
Cash dividends on preferred stock	(469)						(469)
Cash dividends on common stock	(20,465)						(20,465)
Repurchase of common stock (in shares)					(593,123)
Repurchases of common stock	(19,981)				$ (74)	(19,907)
Excise tax on common stock repurchases	(185)					(185)
Share-based compensation (in shares)					8,803
Share-based compensation	1,351					1,351
Stock issued under employee benefit plans (in shares)					5,510
Stock issued under employee benefit plans	157				$ 1	156
Stock issued under dividend reinvestment and stock purchase plan (in shares)					17,675
Stock issued under dividend reinvestment and stock purchase plan	559				$ 2	557
Stock options exercised (in shares)					42,893
Stock options exercised	813				$ 6	807
Restricted shares withheld for taxes (in shares)					(924)
Restricted shares withheld for taxes	(33)					(33)
Ending balance (in shares) at Jun. 30, 2024		125	125	10,000
Ending balance at Jun. 30, 2024	$ 2,212,525		$ 125	$ 25,000	$ 7,256	$ 1,191,193	$ 1,200,930	$ (211,979)
Ending balance (in shares) at Jun. 30, 2024	58,045,653				58,045,653

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CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Statement of Stockholders' Equity [Abstract]
Cash dividends on preferred stock (in dollars per share)	$ 46.88	$ 46.88	$ 93.76	$ 93.76
Cash dividends on common stock (in dollars per share)	$ 0.35	$ 0.34	$ 0.69	$ 0.66

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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash Flow From Operating Activities:
Net income	$ 87,866	$ 124,941
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	26,500	0
Depreciation and amortization	6,680	5,799
Change in deferred taxes	1,356	(1,429)
Share-based compensation	2,754	2,432
Loans originated for sale	(451,682)	(272,074)
Proceeds from sales of loans held for sale	443,068	256,880
Gains on sales of loans held for sale	(4,744)	(3,009)
Net losses on sales and redemptions of securities available for sale	51	2,963
Increase in cash surrender value of life insurance	(2,863)	(2,603)
Gains on life insurance benefits	(658)	(781)
Change in interest receivable	118	(4,714)
Change in interest payable	(358)	6,065
Other adjustments	13,787	(1,497)
Net cash provided by operating activities	121,875	112,973
Cash Flows from Investing Activities:
Net change in interest-bearing deposits	267,552	(93,419)
Purchases of:
Securities available for sale	(62,328)	(1,400)
Securities held to maturity	0	(5,653)
Proceeds from sales of securities available for sale	0	314,087
Proceeds from maturities and redemptions of:
Securities available for sale	21,396	32,365
Securities held to maturity	48,254	50,774
Change in Federal Home Loan Bank stock	31	(3,317)
Payment of capital calls to qualified affordable housing investments	(15,933)	(4,749)
Net change in loans	(171,915)	(386,135)
Proceeds from the sale of other real estate owned	274	101
Proceeds from life insurance benefits	3,443	4,675
Other adjustments	(28,469)	2,424
Net cash provided by (used in) investing activities	67,294	(572)
Net change in:
Demand and savings deposits	(385,455)	(530,227)
Certificates of deposit and other time deposits	133,072	728,637
Borrowings	427,348	746,773
Repayment of borrowings	(282,152)	(1,033,441)
Cash dividends on preferred stock	(938)	(938)
Cash dividends on common stock	(40,622)	(39,378)
Stock issued under employee benefit plans	343	380
Stock issued under dividend reinvestment and stock purchase plans	1,101	1,064
Stock options exercised	812	1,110
Repurchase of common stock	(49,955)	0
Net cash used in financing activities	(196,446)	(126,020)
Net Change in Cash and Cash Equivalents	(7,277)	(13,619)
Cash and Cash Equivalents, January 1	112,649	122,594
Cash and Cash Equivalents, June 30	105,372	108,975
Additional cash flow information:
Interest paid	217,005	139,744
Income tax paid (refunded)	5,300	27,530
Loans transferred to other real estate owned	211	1,080
Fixed assets transferred to other real estate owned	0	2,900
Non-cash investing activities using trade date accounting	28,805	26,911
ROU assets obtained in exchange for new operating lease liabilities	5,588	1,505
Qualified affordable housing investments obtained in exchange for funding commitments	40,000	4,700
Mortgage Loan
Proceeds from maturities and redemptions of:
Proceeds from portfolio loan sale	1,716	0
Commercial
Proceeds from maturities and redemptions of:
Proceeds from portfolio loan sale	$ 3,273	$ 89,675

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GENERAL

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GENERAL

GENERAL

Financial Statement Preparation

The Consolidated Condensed Balance Sheet of the Corporation as of December 31, 2023, has been derived from the audited consolidated balance sheet of the Corporation as of that date. Certain information and note disclosures normally included in the Corporation’s annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission. The results of operations for the three and six months ended June 30, 2024, are not necessarily indicative of the results to be expected for the year. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses and fair value of financial instruments.

Significant Accounting Policies

The significant accounting policies followed by the Corporation and its wholly-owned subsidiaries for interim financial reporting are consistent with the accounting policies followed for annual financial reporting. All adjustments, which are of a normal recurring nature and are in the opinion of management necessary for a fair statement of the results for the periods reported, have been included in the accompanying Consolidated Condensed Financial Statements.

Recent Accounting Changes Adopted in 2024

FASB Accounting Standards Updates - No. 2023-02 - Investments - Equity Method and Joint Ventures (Topic 323) - Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

Summary - The FASB issued ASU No. 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, which is intended to improve the accounting and disclosures for investments in tax credit structures. The ASU is a consensus of the FASB’s Emerging Issues Task Force (“EITF”).

The ASU allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. The ASU responds to stakeholder feedback that the proportional amortization method provides investors and other allocators of capital with a better understanding of the returns from investments that are made primarily for the purpose of receiving income tax credits and other income tax benefits.

Reporting entities were previously permitted to apply the proportional amortization method only to qualifying tax equity investments in low-income housing tax credit (LIHTC) structures. In recent years, stakeholders asked the FASB to extend the application of the proportional amortization method to qualifying tax equity investments that generate tax credits through other programs, which resulted in the EITF addressing this issue.

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for all entities in any interim period. The Corporation adopted this guidance in the first quarter of 2024 and adoption did not have a significant impact on the Corporation’s financial statements or disclosures.

New Accounting Pronouncements Not Yet Adopted

The Corporation continually monitors potential accounting pronouncements and the following pronouncements have been deemed to have the most applicability to the Corporation's financial statements:

FASB Accounting Standards Updates - No. 2023-07 - Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosure

Summary - The FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosure, which is intended to improve disclosures about a public entity’s reportable segments and addresses requests from investors and other allocators of capital for additional, more detailed information about a reportable segment’s expenses.

The key amendments:

•Require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss.

•Require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the significant expenses disclosed and each reported measure of segment profit or loss.

•Require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by FASB ASC Topic 280, Segment Reporting, in interim periods.

•Clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit or loss. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements.

•Require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

•Require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in the ASU and all existing segment disclosures in Topic 280.

ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, applies to all public entities that are required to report segment information in accordance with Topic 280. All public entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. This ASU is not expected to have a material impact on the Corporation’s financial statements and disclosures as the Corporation has one operating segment.

FASB Accounting Standards Update - No. 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures

Summary - The FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures in the fourth quarter of 2023. This ASU is intended to enhance income tax disclosures to address investor requests for more information about the tax risks and opportunities present in an entity’s worldwide operations.

The two primary enhancements disaggregate existing income tax disclosures related to the effective tax rate reconciliation and income taxes paid. These amendments require that public business entities on an annual basis disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The amendments also require that all entities disclose on an annual basis the amount of income taxes paid (net of refunds received) disaggregated by federal, state and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds received).

For public business entities, the amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issue. The amendments should be applied on a prospective basis. The Corporation is assessing the terms of this guidance, but adoption of the standard is not expected to have a significant impact on the Corporation’s financial statements or disclosures.

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INVESTMENT SECURITIES

6 Months Ended

Jun. 30, 2024

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

INVESTMENT SECURITIES

The following tables summarize the amortized cost, gross unrealized gains and losses and approximate fair value of investment securities available for sale as of June 30, 2024 and December 31, 2023.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at June 30, 2024
U.S. Government-sponsored agency securities	$	108,842	$	—	$	17,565	$	91,277
State and municipal	1,178,364		25		153,482		1,024,907
U.S. Government-sponsored mortgage-backed securities	584,055		376		93,777		490,654
Corporate obligations	12,954		—		899		12,055
Total available for sale	$	1,884,215	$	401	$	265,723	$	1,618,893

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2023
U.S. Government-sponsored agency securities	$	111,521	$	—	$	16,214	$	95,307
State and municipal	1,181,029		364		116,222		1,065,171
U.S. Government-sponsored mortgage-backed securities	541,343		462		86,990		454,815
Corporate obligations	12,947		—		1,128		11,819
Total available for sale	$	1,846,840	$	826	$	220,554	$	1,627,112

The following tables summarize the amortized cost, gross unrealized gains and losses, approximate fair value and allowance for credit losses on investment securities held to maturity as of June 30, 2024 and December 31, 2023.

	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at June 30, 2024
U.S. Government-sponsored agency securities	$	365,081	$	—	$	365,081	$	—	$	66,005	$	299,076
State and municipal	1,091,714		245		1,091,469		300		183,892		908,122
U.S. Government-sponsored mortgage-backed securities	676,145		—		676,145		—		105,607		570,538
Foreign investment	1,500		—		1,500		—		20		1,480
Total held to maturity	$	2,134,440	$	245	$	2,134,195	$	300	$	355,524	$	1,779,216

	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at December 31, 2023
U.S. Government-sponsored agency securities	$	374,002	$	—	$	374,002	$	—	$	64,159	$	309,843
State and municipal	1,099,201		245		1,098,956		1,625		152,113		948,713
U.S. Government-sponsored mortgage-backed securities	709,794		—		709,794		—		99,448		610,346
Foreign investment	1,500		—		1,500		—		28		1,472
Total held to maturity	$	2,184,497	$	245	$	2,184,252	$	1,625	$	315,748	$	1,870,374

Accrued interest on investment securities available for sale and held to maturity at June 30, 2024 and December 31, 2023 of $25.3 million and $25.2 million, respectively, are included in the Interest Receivable line on the Corporation's Consolidated Condensed Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of available for sale and held to maturity securities presented above.

In determining the allowance for credit losses on investment securities available for sale that are in an unrealized loss position, the Corporation first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through the income statement. For investment securities available for sale that do not meet the aforementioned criteria, the Corporation evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Corporation considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Unrealized losses that have not been recorded through an allowance for credit losses is recognized in other comprehensive income. Adjustments to the allowance are reported in the income statement as a component of the provision for credit loss. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities available for sale from the estimate of credit losses. Investment securities available for sale are charged off against the allowance or, in the absence of any allowance, written down through the income statement when deemed uncollectible or when either of the aforementioned criteria regarding intent or requirement to sell is met. The Corporation did not record an allowance for credit losses on its investment securities available for sale as the unrealized losses were attributable to changes in interest rates, not credit quality.

The allowance for credit losses on investment securities held to maturity is a contra asset-valuation account that is deducted from the amortized cost basis of investment securities held to maturity to present the net amount expected to be collected. Investment securities held to maturity are charged off against the allowance when deemed uncollectible. Adjustments to the allowance are reported in the income statement as a component of the provision for credit loss. The Corporation measures expected credit losses on investment securities held to maturity on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities held to maturity from the estimate of credit losses. With regard to U.S. Government-sponsored agency and mortgage-backed securities, all these securities are issued by a U.S. Government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities. With regard to securities issued by states and municipalities and other investment securities held to maturity, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. Historical loss rates associated with securities having similar grades as those in the Corporation's portfolio have been insignificant. Furthermore, as of June 30, 2024, there were no past due principal and interest payments associated with these securities. At current expected credit loss ("CECL") adoption, an allowance for credit losses of $245,000 was recorded on the state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities. The balance of the allowance for credit losses remained unchanged at $245,000 as of June 30, 2024.

On a quarterly basis, the Corporation monitors the credit quality of investment securities held to maturity through the use of credit ratings. The following table summarizes the amortized cost of investment securities held to maturity at June 30, 2024, aggregated by credit quality indicator.

	Held to Maturity
	State and municipal		Other		Total
Credit Rating:
Aaa	$	113,341	$	70,588	$	183,929
Aa1	161,380		—		161,380
Aa2	167,506		—		167,506
Aa3	133,319		—		133,319
A1	131,193		—		131,193
A2	16,839		—		16,839
A3	3,470		—		3,470
Non-rated	364,666		972,138		1,336,804
Total	$	1,091,714	$	1,042,726	$	2,134,440

The following tables summarize, as of June 30, 2024 and December 31, 2023, investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and length of time in a continuous unrealized loss position.

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at June 30, 2024
U.S. Government-sponsored agency securities	$	—	$	—	$	91,277	$	17,565	$	91,277	$	17,565
State and municipal	50,145		2,900		973,117		150,582		1,023,262		153,482
U.S. Government-sponsored mortgage-backed securities	57,352		903		399,051		92,874		456,403		93,777
Corporate obligations	—		—		12,024		899		12,024		899
Total investment securities available for sale	$	107,497	$	3,803	$	1,475,469	$	261,920	$	1,582,966	$	265,723

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at December 31, 2023
U.S. Government-sponsored agency securities	$	—	$	—	$	95,307	$	16,214	$	95,307	$	16,214
State and municipal	55,514		1,076		963,584		115,146		1,019,098		116,222
U.S. Government-sponsored mortgage-backed securities	11,493		25		422,868		86,965		434,361		86,990
Corporate obligations	—		—		11,788		1,128		11,788		1,128
Total investment securities available for sale	$	67,007	$	1,101	$	1,493,547	$	219,453	$	1,560,554	$	220,554

The following tables summarize investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and the number of securities in the portfolio as of the dates indicated.

	Gross Unrealized Losses		Number of Securities
Investment securities available for sale at June 30, 2024
U.S. Government-sponsored agency securities	$	17,565	14
State and municipal	153,482		725
U.S. Government-sponsored mortgage-backed securities	93,777		161
Corporate obligations	899		10
Total investment securities available for sale	$	265,723	910

	Gross Unrealized Losses		Number of Securities
Investment securities available for sale at December 31, 2023
U.S. Government-sponsored agency securities	$	16,214	14
State and municipal	116,222		691
U.S. Government-sponsored mortgage-backed securities	86,990		150
Corporate obligations	1,128		10
Total investment securities available for sale	$	220,554	865

The unrealized losses in the Corporation’s investment portfolio were the result of changes in interest rates and not credit quality. As a result, the Corporation expects to recover the amortized cost basis over the term of the securities. The Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.

Certain investment securities available for sale are reported in the financial statements at an amount less than their historical cost as indicated in the table below.

	June 30, 2024			December 31, 2023
Investments available for sale reported at less than historical cost:
Historical cost	$	1,848,689		$	1,781,108
Fair value	1,582,966			1,560,554
Gross unrealized losses	$	265,723		$	220,554
Percent of the Corporation's investments available for sale	97.8		%	95.9		%

In determining the fair value of the investment securities portfolio, the Corporation utilizes a third party for portfolio accounting services, including market value input, for those securities classified as Level 1 and Level 2 in the fair value hierarchy.  The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor classified these securities based upon these inputs.  From these discussions, the Corporation’s management is comfortable that the classifications are proper.  The Corporation has gained trust in the data for two reasons:  (a) independent spot testing of the data is conducted by the Corporation through obtaining market quotes from various brokers on a periodic basis; and (b) actual gains or losses resulting from the sale of certain securities has proven the data to be accurate over time.   Fair value of securities classified as Level 3 in the valuation hierarchy was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

The amortized cost and fair value of investment securities available for sale and held to maturity at June 30, 2024 and December 31, 2023, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately.

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at June 30, 2024
Due in one year or less	$	2,402	$	2,383	$	13,380	$	13,249
Due after one through five years	24,675		22,920		113,750		106,226
Due after five through ten years	160,390		144,580		139,308		125,618
Due after ten years	1,112,693		958,356		1,191,857		963,585
	1,300,160		1,128,239		1,458,295		1,208,678
U.S. Government-sponsored mortgage-backed securities	584,055		490,654		676,145		570,538
Total investment securities	$	1,884,215	$	1,618,893	$	2,134,440	$	1,779,216

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at December 31, 2023
Due in one year or less	$	1,390	$	1,382	$	3,041	$	3,043
Due after one through five years	24,899		23,372		118,592		111,723
Due after five through ten years	127,948		120,385		135,805		126,461
Due after ten years	1,151,260		1,027,158		1,217,265		1,018,801
	1,305,497		1,172,297		1,474,703		1,260,028
U.S. Government-sponsored mortgage-backed securities	541,343		454,815		709,794		610,346
Total investment securities	$	1,846,840	$	1,627,112	$	2,184,497	$	1,870,374

Securities with a carrying value of approximately $1.5 billion and $1.8 billion were pledged at June 30, 2024 and December 31, 2023, respectively, to secure certain deposits and securities sold under repurchase agreements, and for other purposes as permitted or required by law.

The book value of securities pledged and available under agreements to repurchase amounted to $118.8 million at June 30, 2024 and $181.4 million at December 31, 2023.

Gross gains and losses on the sales and redemptions of investment securities available for sale for the three and six months ended June 30, 2024 and 2023 are shown below.

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Sales and redemptions of investment securities available for sale:
Gross gains	$	—	$	151	$	—	$	759
Gross losses	(49)		(1,543)		(51)		(3,722)
Net gains (losses) on sales and redemptions of investment securities available for sale	$	(49)	$	(1,392)	$	(51)	$	(2,963)

XML

LOANS AND ALLOWANCE

6 Months Ended

Jun. 30, 2024

Receivables [Abstract]

LOANS AND ALLOWANCE

LOANS AND ALLOWANCE

Loan Portfolio and Credit Quality

The Corporation's primary lending focus is small business and middle market commercial, commercial real estate, public finance and residential real estate, which results in portfolio diversification. The following tables show the composition of the loan portfolio and credit quality characteristics by collateral classification, excluding loans held for sale.  Loans held for sale at June 30, 2024 and December 31, 2023, were $32.3 million and $18.9 million, respectively.

The following table illustrates the composition of the Corporation’s loan portfolio by loan class as of the dates indicated:

	June 30, 2024		December 31, 2023
Commercial and industrial loans	$	3,949,817	$	3,670,948
Agricultural land, production and other loans to farmers	239,926		263,414
Real estate loans:
Construction	823,267		957,545
Commercial real estate, non-owner occupied	2,323,533		2,400,839
Commercial real estate, owner occupied	1,174,195		1,162,083
Residential	2,370,905		2,288,921
Home equity	631,104		617,571
Individuals' loans for household and other personal expenditures	162,089		168,388
Public finance and other commercial loans	964,814		956,318
Loans	$	12,639,650	$	12,486,027

Credit Quality

As part of the ongoing monitoring of the credit quality of the Corporation's loan portfolio, management tracks certain credit quality indicators including trends related to: (i) the level of criticized commercial loans, (ii) net charge-offs, (iii) nonperforming loans, (iv) covenant failures and (v) the general national and local economic conditions.

The Corporation utilizes a risk grading of pass, special mention, substandard, doubtful and loss to assess the overall credit quality of large commercial loans. All large commercial credit grades are reviewed at a minimum of once a year for pass grade loans. Loans with grades below pass are reviewed more frequently depending on the grade. A description of the general characteristics of these grades is as follows:

•Pass - Loans that are considered to be of acceptable credit quality.

•Special Mention - Loans which possess some credit deficiency or potential weakness, which deserves close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Corporation's credit position at some future date. Special mention assets are not adversely classified and do not expose the Corporation to sufficient risk to warrant adverse classification.

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

•Doubtful - Loans that have all of the weaknesses of those classified as Substandard. However, based on currently existing facts, conditions and values, these weaknesses make full collection of principal highly questionable and improbable.

•Loss – Loans that are considered uncollectible and of such little value that continuing to carry them as an asset is not warranted. Loans will be classified as Loss when it is neither practical or desirable to defer charging-off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

The following tables summarize the risk grading of the Corporation’s loan portfolio and gross charge-offs by loan class and by year of origination for the periods indicated. Consumer loans are not risk graded. For the purposes of this disclosure, the consumer loans are classified in the following manner: loans that are less than 30 days past due are Pass, loans 30-89 days past due are Special Mention and loans greater than 89 days past due are Substandard.  The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.

	June 30, 2024
	Term Loans (amortized cost basis by origination year)												Revolving loans amortized		Revolving loans converted
	2024		2023		2022		2021		2020		Prior		cost basis		to term		Total
Commercial and industrial loans
Pass	$	778,502	$	810,290	$	275,900	$	201,870	$	70,975	$	76,151	$	1,533,518	$	4	$	3,747,210
Special Mention	2,913		5,746		21,042		1,574		2,488		11		35,722		—		69,496
Substandard	13,274		38,566		21,712		5,592		1,625		1,827		42,791		—		125,387
Doubtful	—		7,643		—		—		—		—		81		—		7,724
Total Commercial and industrial loans	794,689		862,245		318,654		209,036		75,088		77,989		1,612,112		4		3,949,817
Current period gross charge-offs	1,100		31,803		205		8,425		345		133		—		—		42,011
Agricultural land, production and other loans to farmers
Pass	22,137		24,869		34,809		29,077		28,845		34,134		61,444		—		235,315
Special Mention	—		—		245		—		—		448		250		—		943
Substandard	601		53		968		709		516		33		788		—		3,668
Total Agricultural land, production and other loans to farmers	22,738		24,922		36,022		29,786		29,361		34,615		62,482		—		239,926
Real estate loans:
Construction
Pass	166,149		276,029		194,572		95,193		6,632		9,460		10,810		—		758,845
Special Mention	—		5,600		23,660		645		—		—		—		—		29,905
Substandard	21,202		2,858		5,135		5,322		—		—		—		—		34,517
Total Construction	187,351		284,487		223,367		101,160		6,632		9,460		10,810		—		823,267
Commercial real estate, non-owner occupied
Pass	245,845		303,828		399,269		451,607		373,231		298,925		13,660		—		2,086,365
Special Mention	77,354		22,906		21,755		10,937		2,428		45,158		—		—		180,538
Substandard	19,488		2,927		189		502		19,824		1,638		85		—		44,653
Doubtful	—		11,288		689		—		—		—		—		—		11,977
Total Commercial real estate, non-owner occupied	342,687		340,949		421,902		463,046		395,483		345,721		13,745		—		2,323,533
Current period gross charge-offs	—		339		3		—		—		—		—		—		342
Commercial real estate, owner occupied
Pass	75,597		191,056		175,737		245,405		231,751		159,142		30,206		—		1,108,894
Special Mention	138		3,230		15,076		6,717		5,301		1,750		260		—		32,472
Substandard	2,072		16,234		964		5,028		4,118		4,135		278		—		32,829
Total Commercial real estate, owner occupied	77,807		210,520		191,777		257,150		241,170		165,027		30,744		—		1,174,195
Current period gross charge-offs	—		—		—		—		9		—		—		—		9
Residential
Pass	111,630		427,692		698,308		421,439		350,587		322,922		5,052		14		2,337,644
Special Mention	668		2,480		5,301		3,917		1,197		5,147		350		—		19,060
Substandard	414		760		4,367		2,973		1,250		4,437		—		—		14,201
Total Residential	112,712		430,932		707,976		428,329		353,034		332,506		5,402		14		2,370,905
Current period gross charge-offs	—		39		403		57		21		54		—		—		574
Home equity
Pass	6,606		7,648		26,336		56,066		10,956		4,652		500,801		6,294		619,359
Special Mention	113		—		1,340		406		1,057		66		5,117		245		8,344
Substandard	62		—		52		597		—		325		2,125		240		3,401
Total Home Equity	6,781		7,648		27,728		57,069		12,013		5,043		508,043		6,779		631,104
Current period gross charge-offs	—		11		36		22		—		265		—		—		334
Individuals' loans for household and other personal expenditures
Pass	34,921		27,868		37,193		14,676		3,983		5,878		35,512		659		160,690
Special Mention	29		224		226		135		110		18		623		—		1,365
Substandard	—		22		10		—		—		—		2		—		34
Total Individuals' loans for household and other personal expenditures	34,950		28,114		37,429		14,811		4,093		5,896		36,137		659		162,089
Current period gross charge-offs	22		353		232		120		25		32		—		—		784
Public finance and other commercial loans
Pass	43,164		54,409		206,136		199,844		152,505		308,167		589		—		964,814
Total Public finance and other commercial loans	43,164		54,409		206,136		199,844		152,505		308,167		589		—		964,814
Loans	$	1,622,879	$	2,244,226	$	2,170,991	$	1,760,231	$	1,269,379	$	1,284,424	$	2,280,064	$	7,456	$	12,639,650
Total current period gross charge-offs	$	1,122	$	32,545	$	879	$	8,624	$	400	$	484	$	—	$	—	$	44,054

	December 31, 2023
	Term Loans (amortized cost basis by origination year)												Revolving loans amortized		Revolving loans converted
	2023		2022		2021		2020		2019		Prior		cost basis		to term		Total
Commercial and industrial loans
Pass	$	1,175,967	$	474,601	$	253,148	$	86,226	$	47,910	$	45,020	$	1,393,756	$	60	$	3,476,688
Special Mention	34,356		3,911		1,546		5,149		2,986		241		45,994		—		94,183
Substandard	12,311		20,245		17,733		2,479		1,507		1,512		40,449		144		96,380
Doubtful	857		—		—		—		—		—		2,840		—		3,697
Total Commercial and industrial loans	1,223,491		498,757		272,427		93,854		52,403		46,773		1,483,039		204		3,670,948
Current period gross charge-offs	13,973		2,711		576		5,665		78		261		—		—		23,264
Agricultural land, production and other loans to farmers
Pass	35,633		38,145		31,511		31,048		12,995		25,462		87,534		—		262,328
Special Mention	—		266		—		—		—		122		—		—		388
Substandard	58		150		—		454		—		36		—		—		698
Total Agricultural land, production and other loans to farmers	35,691		38,561		31,511		31,502		12,995		25,620		87,534		—		263,414
Real estate loans:
Construction
Pass	403,578		267,587		198,350		8,372		7,723		2,357		11,735		—		899,702
Special Mention	25,894		—		—		20,846		—		—		—		—		46,740
Substandard	1,451		4,330		5,322		—		—		—		—		—		11,103
Total Construction	430,923		271,917		203,672		29,218		7,723		2,357		11,735		—		957,545
Commercial real estate, non-owner occupied
Pass	373,378		504,280		535,327		418,553		141,320		200,821		16,744		—		2,190,423
Special Mention	76,382		21,145		7,005		4,531		19,479		27,941		37		—		156,520
Substandard	20,358		10,537		219		20,236		—		2,299		247		—		53,896
Total Commercial real estate, non-owner occupied	470,118		535,962		542,551		443,320		160,799		231,061		17,028		—		2,400,839
Current period gross charge-offs	—		66		—		—		—		—		—		—		66
Commercial real estate, owner occupied
Pass	176,750		199,821		256,346		263,522		99,180		77,485		27,369		—		1,100,473
Special Mention	6,712		5,034		9,319		2,460		919		2,902		514		—		27,860
Substandard	18,092		3,712		4,183		4,545		289		2,929		—		—		33,750
Total Commercial real estate, owner occupied	201,554		208,567		269,848		270,527		100,388		83,316		27,883		—		1,162,083
Current period gross charge-offs	48		—		—		—		2		—		—		—		50
Residential
Pass	395,363		695,056		442,495		365,297		98,654		254,718		4,988		83		2,256,654
Special Mention	2,167		5,591		3,202		1,924		1,065		4,837		200		81		19,067
Substandard	804		3,708		2,529		1,199		866		4,063		31		—		13,200
Total Residential	398,334		704,355		448,226		368,420		100,585		263,618		5,219		164		2,288,921
Current period gross charge-offs	101		252		208		3		3		94		—		—		661
Home equity
Pass	9,375		29,784		61,591		11,084		1,092		3,875		484,330		5,837		606,968
Special Mention	—		715		—		1,092		15		2		5,031		149		7,004
Substandard	63		—		727		—		—		123		2,589		97		3,599
Total Home Equity	9,438		30,499		62,318		12,176		1,107		4,000		491,950		6,083		617,571
Current period gross charge-offs	69		213		224		149		193		1,596		—		—		2,444
Individuals' loans for household and other personal expenditures
Pass	35,781		49,295		28,387		6,726		2,070		5,904		38,619		772		167,554
Special Mention	184		246		138		69		—		14		176		—		827
Substandard	—		6		—		—		1		—		—		—		7
Total Individuals' loans for household and other personal expenditures	35,965		49,547		28,525		6,795		2,071		5,918		38,795		772		168,388
Current period gross charge-offs	147		770		342		77		62		156		—		—		1,554
Public finance and other commercial loans
Pass	65,357		208,347		204,863		155,132		91,619		229,355		1,645		—		956,318
Total Public finance and other commercial loans	65,357		208,347		204,863		155,132		91,619		229,355		1,645		—		956,318
Loans	$	2,870,871	$	2,546,512	$	2,063,941	$	1,410,944	$	529,690	$	892,018	$	2,164,828	$	7,223	$	12,486,027
Total current period gross charge-offs	$	14,338	$	4,012	$	1,350	$	5,894	$	338	$	2,107	$	—	$	—	$	28,039

Total past due loans equaled $98.2 million as of June 30, 2024 representing an $18.9 million increase from $79.2 million at December 31, 2023. The 30-59 days past due loans decreased $5.0 million from December 31, 2023 as commercial real estate, non-owner occupied decreased $11.2 million, which was partially offset by increases in commercial and industrial and commercial real estate, owner occupied of $1.0 million and $3.2 million, respectively. The 60-89 days past due loans increased $19.0 million from December 31, 2023 as construction increased $19.2 million. The 90 days or more past due loans increased $5.0 million from December 31, 2023 as commercial and industrial and commercial real estate, non-owner occupied increased $3.5 million and $1.6 million, respectively. The tables below show a past due aging of the Corporation’s loan portfolio, by loan class, as of the dates indicated:

	June 30, 2024
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	3,932,986	$	6,014	$	463	$	10,354	$	3,949,817	$	385
Agricultural land, production and other loans to farmers	239,676		250		—		—		239,926		—
Real estate loans:
Construction	802,064		—		21,203		—		823,267		—
Commercial real estate, non-owner occupied	2,306,861		1,789		1,799		13,084		2,323,533		—
Commercial real estate, owner occupied	1,170,516		3,237		—		442		1,174,195		—
Residential	2,342,411		12,483		4,213		11,798		2,370,905		1,187
Home equity	621,441		4,293		2,152		3,218		631,104		114
Individuals' loans for household and other personal expenditures	160,690		1,017		348		34		162,089		—
Public finance and other commercial loans	964,814		—		—		—		964,814		—
Loans	$	12,541,459	$	29,083	$	30,178	$	38,930	$	12,639,650	$	1,686

	December 31, 2023
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	3,657,447	$	5,021	$	1,622	$	6,858	$	3,670,948	$	86
Agricultural land, production and other loans to farmers	263,414		—		—		—		263,414		—
Real estate loans:
Construction	955,588		—		1,957		—		957,545		—
Commercial real estate, non-owner occupied	2,376,184		12,995		195		11,465		2,400,839		—
Commercial real estate, owner occupied	1,161,869		—		104		110		1,162,083		—
Residential	2,259,496		11,810		5,472		12,143		2,288,921		—
Home equity	608,948		3,614		1,647		3,362		617,571		52
Individuals' loans for household and other personal expenditures	167,553		635		192		8		168,388		—
Public finance and other commercial loans	956,284		—		—		34		956,318		34
Loans	$	12,406,783	$	34,075	$	11,189	$	33,980	$	12,486,027	$	172

Loans are reclassified to a nonaccruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. At the time the accrual is discontinued, all unpaid accrued interest is reversed against earnings. Interest income accrued in prior years, if any, is charged to the allowance for credit losses. Payments subsequently received on nonaccrual loans are applied to principal. A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of six consecutive months of performance.

The following table summarizes the Corporation’s nonaccrual loans by loan class as of the dates indicated:

	June 30, 2024				December 31, 2023
	Nonaccrual Loans		Nonaccrual Loans with no Allowance for Credit Losses		Nonaccrual Loans		Nonaccrual Loans with no Allowance for Credit Losses
Commercial and industrial loans	$	13,373	$	5,884	$	9,050	$	1,015
Agricultural land, production and other loans to farmers	53		—		58		—
Real estate loans:
Construction	—		—		520		—
Commercial real estate, non-owner occupied	22,704		10,372		11,932		11,095
Commercial real estate, owner occupied	2,452		1,870		3,041		2,257
Residential	18,814		—		25,140		—
Home equity	4,476		—		3,820		—
Individuals' loans for household and other personal expenditures	34		—		19		—
Loans	$	61,906	$	18,126	$	53,580	$	14,367

Interest income on nonaccrual loans is recognized only to the extent that cash payments are received in excess of principal due. There was no interest income recognized on nonaccrual loans for the three and six months ended June 30, 2024 or 2023.

Determining fair value for collateral dependent loans requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

The tables below present the amortized cost basis of collateral dependent loans by loan class and their respective collateral type, which are individually evaluated to determine expected credit losses. The total collateral dependent loan balance increased $5.0 million, primarily related to an increase of $8.1 million in commercial real estate, non-owner occupied, offset by a decrease of $3.4 million in commercial and industrial, for the six months ended June 30, 2024. The total related allowance balance decreased $612,000, primarily related to a decrease of $3.0 million in commercial and industrial, offset by an increase of $2.4 million in commercial real estate, non-owner occupied, for the six months ended June 30, 2024.

	June 30, 2024
	Commercial Real Estate		Residential Real Estate		Other		Total		Allowance on Collateral Dependent Loans
Commercial and industrial loans	$	—	$	—	$	28,665	$	28,665	$	8,442
Real estate loans:
Construction	—		5		—		5		—
Commercial real estate, non-owner occupied	25,606		—		—		25,606		2,483
Commercial real estate, owner occupied	9,951		—		—		9,951		—
Residential	—		1,263		—		1,263		204
Home equity	—		212		—		212		28
Loans	$	35,557	$	1,480	$	28,665	$	65,702	$	11,157

	December 31, 2023
	Commercial Real Estate		Residential Real Estate		Other		Total		Allowance on Collateral Dependent Loans
Commercial and industrial loans	$	—	$	—	$	32,029	$	32,029	$	11,474
Real estate loans:
Construction	—		7		—		7		—
Commercial real estate, non-owner occupied	17,516		—		—		17,516		35
Commercial real estate, owner occupied	9,452		—		—		9,452		—
Residential	—		1,439		—		1,439		230
Home equity	—		223		—		223		30
Loans	$	26,968	$	1,669	$	32,029	$	60,666	$	11,769

In certain situations, the Corporation may modify the terms of a loan to a debtor experiencing financial difficulty. The modifications may include principal forgiveness, interest rate reductions, payment delays, term extensions or combinations of these modifications. The following tables present the amortized cost basis of loans at June 30, 2024 and 2023 that were both experiencing financial difficulty and modified during the three and six months ended June 30, 2024 and 2023, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.

	Three Months Ended June 30, 2024
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Combination Payment Delay & Term Extension		Combination Interest Rate Reduction, Term Extension, & Payment Delay		% of Total Class of Financing Receivable
Commercial and industrial loans	$	—	$	1,778	$	13	$	—	0.05	%
Real estate loans:
Commercial real estate, non-owner occupied	—		19,488		—		—		0.84	%
Commercial real estate, owner occupied	—		1,990		—		—		0.17	%
Residential	250		—		392		227		0.04	%
Home equity	—		—		162		—		0.03	%
Total	$	250	$	23,256	$	567	$	227

	Three Months Ended June 30, 2023
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Combination Interest Rate Reduction & Term Extension		Combination Payment Delay & Term Extension		% of Total Class of Financing Receivable
Commercial and industrial loans	$	—	$	3,917	$	110	$	—	0.11	%
Real estate loans:
Commercial real estate, non-owner occupied	—		1,570		—		—		0.07	%
Commercial real estate, owner occupied	5,664		2,032		—		—		0.65	%
Residential	—		14		—		458		0.02	%
Total	$	5,664	$	7,533	$	110	$	458

	Six Months Ended June 30, 2024
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Interest Rate Reduction		Combination Payment Delay & Term Extension		Combination Interest Rate Reduction, Term Extension, & Payment Delay		% of Total Class of Financing Receivable
Commercial and industrial loans	$	1,491	$	4,383	$	249	$	27	$	—	0.16	%
Real estate loans:
Commercial real estate, non-owner occupied	—		19,488		—		—		—		0.84	%
Commercial real estate, owner occupied	—		1,990		—		—		—		0.17	%
Residential	1,880		274		—		392		227		0.12	%
Home Equity	89		62		—		162		—		0.05	%
Total	$	3,460	$	26,197	$	249	$	581	$	227

	Six Months Ended June 30, 2023
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Combination Interest Rate Reduction & Term Extension		Combination Payment Delay & Term Extension		% of Total Class of Financing Receivable
Commercial and industrial loans	$	—	$	12,897	$	110	$	—	0.37	%
Agricultural land, production and other loans to farmers	—		35		—		—		0.02	%
Real estate loans:
Construction	—		15		—		—		—	%
Commercial real estate, non-owner occupied	—		12,394		5,954		—		0.77	%
Commercial real estate, owner occupied	5,664		2,843		79		—		0.73	%
Residential	—		14		—		458		0.02	%
Total	$	5,664	$	28,198	$	6,143	$	458

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three and six months ended June 30, 2024 and 2023.

	Three Months Ended June 30, 2024
	Financial Effect of Loan Modifications
	Payment Delay	Term Extension	Combination Payment Delay & Term Extension	Combination Payment Delay, Term Extension & Interest Rate Reduction
Commercial and industrial loans		Extended loans by a weighted average of 12 months.	Provided payment deferrals with weighted average delayed amounts of $5,000 and extended loans by a weighted average of 3 months.
Real estate loans:
Commercial real estate, non-owner occupied		Extended loans by a weighted average of 16 months.
Commercial real estate, owner occupied		Extended loans by a weighted average of 28 months.
Residential	Provided payment deferrals with weighted average delayed amounts of $9,000.		Provided payment deferrals with weighted average delayed amounts of $8,000 and extended loans by a weighted average of 120 months.	Provided payment deferrals with weighted average delayed amounts of $14,000, extended loans by a weighted average of 12 months, and reduced the weighted average contractual interest rate from 5.75% to 5.00%.
Home equity			Provided payment deferrals with weighted average delayed amounts of $8,000 and extended loans by a weighted average of 60 months.

	Three Months Ended June 30, 2023
	Financial Effect of Loan Modifications
	Payment Delay	Term Extension	Combination Interest Rate Reduction & Term Extension	Combination Payment Delay & Term Extension
Commercial and industrial loans		Extended loans by a weighted average of 6 months.	Reduced the weighted average contractual interest rate from 8.25% to 7.10%. Extended loans by a weighted average of 12 months.
Real estate loans:
Commercial real estate, non-owner occupied		Extended loans by a weighted average of 8 months.
Commercial real estate, owner occupied	Provided payment deferrals with weighted average delayed amounts of $4.5 million.	Extended loans by a weighted average of 6 months.
Residential		Extended loans by a weighted average of 11 months.		Provided payment deferrals with weighted average delayed amounts of $3,400. Extended loans by a weighted average of 3 months.

	Six Months Ended June 30, 2024
	Financial Effect of Loan Modifications
	Payment Delay	Term Extension	Interest Rate Reduction	Combination Payment Delay & Term Extension	Combination Payment Delay, Term Extension & Interest Rate Reduction
Commercial and industrial loans	Provided payment deferrals with weighted average delayed amounts of $50,000.	Extended loans by a weighted average of 14 months.	Reduced the weighted average contractual interest rate from 9.00% to 8.00%.	Provided payment deferrals with weighted average delayed amounts of $5,000 and extended loans by a weighted average of 3 months.
Real estate loans:
Commercial real estate, non-owner occupied		Extended loans by a weighted average of 16 months.
Commercial real estate, owner occupied		Extended loans by a weighted average of 28 months.
Residential	Provided payment deferrals with weighted average delayed amounts of $28,000.	Extended loans by a weighted average of 6 months.		Provided payment deferrals with weighted average delayed amounts of $8,000 and extended loans by a weighted average of 120 months.	Provided payment deferrals with weighted average delayed amounts of $14,000, extended loans by a weighted average of 12 months, and reduced the weighted average contractual interest rate from 5.75% to 5.00%.
Home Equity	Provided payment deferrals with weighted average delayed amounts of $4,000.	Extended loans by a weighted average of 5 months.		Provided payment deferrals with weighted average delayed amounts of $8,000 and extended loans by a weighted average of 60 months.

	Six Months Ended June 30, 2023
	Financial Effect of Loan Modifications
	Payment Delay	Term Extension	Combination Interest Rate Reduction & Term Extension	Combination Payment Delay & Term Extension
Commercial and industrial loans		Extended loans by a weighted average of 7 months.	Reduced the weighted average contractual interest rate from 8.25% to 7.10%. Extended loans by a weighted average of 12 months.	Reduced the weighted average contractual interest rate from 8.25% to 7.10%. Extended loans by a weighted average of 12 months.
Agricultural land, production and other loans to farmers		Extended loans by a weighted average of 60 months.
Real estate loans:
Construction		Extended loans by a weighted average of 24 months.
Commercial real estate, non-owner occupied		Extended loans by a weighted average of 9 months.	Reduced the weighted average contractual interest rate from 7.81% to 7.40%. Extended loans by a weighted average of 41 months.
Commercial real estate, owner occupied	Provided payment deferrals with weighted average delayed amounts of $4.5 million.	Extended loans by a weighted average of 6 months.	Reduced the weighted average contractual interest rate from 10.25% to 6.61%. Extended loans by a weighted average of 12 months.
Residential		Extended loans by a weighted average of 11 months.		Provided payment deferrals with weighted average delayed amounts $3,400. Extended loans by a weighted average of 3 months.

The following tables present the amortized cost basis and payment status of loans modified within the previous twelve months to borrowers experiencing financial difficulty, and that subsequently defaulted during the three and six months ended June 30, 2024 and 2023 and remained in default at period end.

	Three Months Ended June 30, 2024
	Payment Status
	Current		30-89 Days Past Due
Commercial and industrial loans	$	1,791	$	125
Real estate loans:
Commercial real estate, non-owner occupied	19,488		1,799
Commercial real estate, owner occupied	1,990		—
Residential	869		538
Home equity	162		89
Total	$	24,300	$	2,551

	Three Months Ended June 30, 2023
	Payment Status
	Current		30-89 Days Past Due		90+ Days Past Due
Commercial and industrial loans	$	4,027	$	—	$	—
Real estate loans:
Commercial real estate, non-owner occupied	1,570		—		—
Commercial real estate, owner occupied	7,696		—		—
Residential	159		108		205
Total	$	13,452	$	108	$	205

	Six Months Ended June 30, 2024
	Payment Status
	Current		30-89 Days Past Due		90+ Days Past Due
Commercial and industrial loans	$	6,150	$	125	$	—
Real estate loans:
Commercial real estate, non-owner occupied	19,488		1,799		—
Commercial real estate, owner occupied	1,990		—		—
Residential	1,219		538		1,188
Home equity	224		89		—
Total	$	29,071	$	2,551	$	1,188

	Six Months Ended June 30, 2023
	Payment Status
	Current		30-89 Days Past Due		90+ Days Past Due
Commercial and industrial loans	$	13,007	$	—	$	—
Agricultural land, production and other loans to farmers	35		—		—
Real estate loans:
Construction	15		—		—
Commercial real estate, non-owner occupied	18,348		—		—
Commercial real estate, owner occupied	8,586		—		—
Residential	159		108		205
Total	$	40,150	$	108	$	205

Upon the Corporation's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is charged-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.

Allowance for Credit Losses on Loans

The Allowance for Credit Losses on Loans ("ACL - Loans") is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on loans over the contractual term. The ACL - Loans is adjusted by the provision for credit losses, which is reported in earnings, and reduced by charge-offs for loans, net of recoveries. Provision for credit losses on loans reflects the totality of actions taken on all loans for a particular period including any necessary increases or decreases in the allowance related to changes in credit loss expectations associated with specific loans or pools of loans. Loans are charged-off against the allowance when the uncollectibility of the loan is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

The allowance represents the Corporation’s best estimate of current expected credit losses on loans using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The CECL calculation is performed and evaluated quarterly and losses are estimated over the expected life of the loan. The level of the allowance for credit losses is believed to be adequate to absorb all expected future losses inherent in the loan portfolio at the measurement date.

In calculating the allowance for credit losses, the loan portfolio was pooled into ten loan segments with similar risk characteristics. Common characteristics include the type or purpose of the loan, underlying collateral and historical/expected credit loss patterns. In developing the loan segments, the Corporation analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors.

The expected credit losses are measured over the life of each loan segment utilizing the Probability of Default / Loss Given Default methodology combined with economic forecast models to estimate the current expected credit loss inherent in the loan portfolio. This approach is also leveraged to estimate the expected credit losses associated with unfunded loan commitments incorporating expected utilization rates.

The Corporation sub-segmented certain commercial portfolios by risk level and certain consumer portfolios by delinquency status where appropriate. The Corporation utilized a four-quarter reasonable and supportable economic forecast period followed by a six-quarter, straight-line reversion period to the historical macroeconomic mean for the remaining life of the loans. Econometric modeling was performed using historical default rates and a selection of economic forecast scenarios published by Moody’s to develop a range of estimated credit losses for which to determine the best credit loss estimate within. Macroeconomic factors utilized in the modeling process include the national unemployment rate, BBB US corporate index, Commercial Real Estate ("CRE") price index and the home price index.

The Corporation qualitatively adjusts model results for risk factors that are not inherently considered in the quantitative modeling process, but are nonetheless relevant in assessing the expected credit losses within the loan portfolio. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor. The various risks that may be considered in making qualitative adjustments include, among other things, the impact of (i) changes in the nature and volume of the loan portfolio, (ii) changes in the existence, growth and effect of any concentrations in credit, (iii) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, charge-offs, and recoveries, (iv) changes in the quality of the credit review function, (v) changes in the experience, ability and depth of lending, investment, collection and other relevant management staff, (vi) changes in the volume and severity of past due financial assets, the volume of the nonaccrual assets, and the volume and severity of adversely classified or graded assets, (vii) the value of underlying collateral for loans that are not collateral dependent, and (viii) other environmental factors such as regulatory, legal and technological considerations, as well as competition and changes in the economic and business conditions that affect the collectibility of financial assets. At CECL adoption, the Corporation established certain qualitative factors that were expected to correlate to losses within the loan portfolio. During a scheduled review of qualitative factors in 2023, the Corporation determined there had not been significant evidence of correlation to losses for the qualitative factors that included i) changes in experience, ability and depth of lending management and staff; ii) changes in lending policies and procedures; iii) changes in the quality of the credit review function; iv) portfolio mix and growth; and v) industry concentration. The Corporation decided to refine these qualitative factors in order to improve our ability to assess related risk and enhance our ability to correlate to losses. The Corporation’s evaluation of the qualitative approach resulted in an insignificant change to the ACL – Loans estimate.

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within the loan segments. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific reserve allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The fair value of collateral supporting collateral dependent loans is evaluated on a quarterly basis.

The risk characteristics of the Corporation’s portfolio segments are as follows:

Commercial

Commercial lending is primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the tangible assets being financed such as equipment or real estate or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. Other loans may be unsecured, secured but under-collateralized or otherwise made on the basis of the enterprise value of an organization. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. The Corporation monitors commercial real estate loans based on collateral and risk grade criteria, as well as the levels of owner-occupied versus non-owner occupied loans.

Construction

Construction loans are underwritten utilizing a combination of tools and techniques including feasibility and market studies, independent appraisals and appraisal reviews, absorption and interest rate sensitivity analysis as well as the financial analysis of the developer and all guarantors. Construction loans are monitored by either in house or third party inspectors limiting advances to a percentage of costs or stabilized project value. These loans frequently involve the disbursement of significant funds with the repayment dependent upon the successful completion and, where necessary, the future stabilization of the project. The predominant inherent risk of this portfolio is associated with the borrower's ability to successfully complete a project on time, within budget and stabilize the projected as originally projected.

Consumer and Residential

With respect to residential loans that are secured by 1-4 family residences, which are typically owner occupied, the Corporation generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans, such as small installment loans and certain lines of credit, are unsecured. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers and can also be impacted by changes in property values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

The allowance for credit losses decreased $15.1 million and $15.4 million during the three and six months ended June 30, 2024, respectively. Net charge-offs totaled $39.6 million and $41.9 million during the three and six months ended June 30, 2024, respectively. Provision expense of $24.5 million and $26.5 million was recorded during the three and six months ended June 30, 2024, respectively. The following tables summarize changes in the allowance for credit losses by loan segment for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30, 2024
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, March 31, 2024	$	99,213	$	45,278	$	20,369	$	39,821	$	204,681
Provision for credit losses	31,648		75		(6,009)		(1,214)		24,500
Recoveries on loans	536		161		—		560		1,257
Loans charged off	(40,180)		—		—		(721)		(40,901)
Balances, June 30, 2024	$	91,217	$	45,514	$	14,360	$	38,446	$	189,537

	Three Months Ended June 30, 2023
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, March 31, 2023	$	101,304	$	46,308	$	28,571	$	46,869	$	223,052
Provision for credit losses	7,639		(7,151)		1,502		(1,990)		—
Recoveries on loans	66		—		—		379		445
Loans charged off	(636)		—		—		(1,714)		(2,350)
Balances, June 30, 2023	$	108,373	$	39,157	$	30,073	$	43,544	$	221,147

	Six Months Ended June 30, 2024
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, December 31, 2023	$	97,348	$	44,048	$	24,823	$	38,715	$	204,934
Provision for credit losses	34,793		1,603		(10,463)		567		26,500
Recoveries on loans	1,087		214		—		856		2,157
Loans charged off	(42,011)		(351)		—		(1,692)		(44,054)
Balances, June 30, 2024	$	91,217	$	45,514	$	14,360	$	38,446	$	189,537

	Six Months Ended June 30, 2023
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, December 31, 2022	$	102,216	$	46,839	$	28,955	$	45,267	$	223,277
Provision for credit losses	6,440		(7,734)		1,118		176		—
Recoveries on loans	596		56		—		637		1,289
Loans charged off	(879)		(4)		—		(2,536)		(3,419)
Balances, June 30, 2023	$	108,373	$	39,157	$	30,073	$	43,544	$	221,147

Off-Balance Sheet Arrangements, Commitments And Contingencies

In the normal course of business, the Corporation has entered into off-balance sheet financial instruments which include commitments to extend credit and standby letters of credit. Commitments to extend credit are usually the result of lines of credit granted to existing borrowers under agreements that the total outstanding indebtedness will not exceed a specific amount during the term of the indebtedness. Typical borrowers are commercial customers that use lines of credit to supplement their treasury management functions, and thus their total outstanding indebtedness may fluctuate during any time period based on the seasonality of their business and the resultant timing for their cash flows. Other typical lines of credit are related to home equity loans granted to customers. Commitments to extend credit generally have fixed expiration dates or other termination clauses that may require a fee.

Standby letters of credit are generally issued on behalf of an applicant (the Corporation’s customer) to a specifically named beneficiary and are the result of a particular business arrangement that exists between the applicant and the beneficiary. Standby letters of credit have fixed expiration dates and are usually for terms of two years or less unless terminated beforehand due to criteria specified in the standby letter of credit. The standby letter of credit would permit the beneficiary to obtain payment from the Corporation under certain prescribed circumstances. Subsequently, the Corporation would seek reimbursement from the applicant pursuant to the terms of the standby letter of credit.

The Corporation typically follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet instruments. Each customer’s creditworthiness is typically evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on management’s credit evaluation of the customer. Collateral held varies but may include cash, real estate, marketable securities, accounts receivable, inventory, equipment and personal property. The contractual amounts of these commitments are not reflected in the consolidated financial statements and only amounts drawn upon would be reflected in the future. Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent future cash requirements. However, should the commitments be drawn upon and should the Corporation’s customers default on their resulting obligation to the Corporation, the maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those commitments.

Financial instruments with off-balance sheet risk were as follows:

	June 30, 2024		December 31, 2023
Amounts of commitments:
Loan commitments to extend credit	$	5,271,982	$	5,025,790
Standby letters of credit	$	69,618	$	65,580

The Corporation maintains an accrual for credit losses on off-balance sheet commitments using the CECL methodology. Reserves for unfunded commitments declined by $3.8 million during the year ended December 31, 2023, which decreased the reserve to $19.5 million at December 31, 2023 and June 30, 2024. This reserve level remains appropriate and is reported in Other Liabilities as of June 30, 2024 in the Consolidated Condensed Balance Sheets.

The table below reflects the total allowance for credit losses for the off-balance sheet commitment for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Balance at beginning of the period	$	19,500	$	23,300	$	19,500	$	23,300
Provision for credit losses - unfunded commitments	—		—		—		—
Ending balance	$	19,500	$	23,300	$	19,500	$	23,300

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DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

Risk Management Objective of Using Derivatives

The Corporation is exposed to certain risks arising from both its business operations and economic conditions.  The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments.  Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.  The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash payments principally related to certain variable-rate liabilities.  The Corporation also has derivatives that are a result of a service the Corporation provides to certain qualifying customers, and, therefore, are not used to manage interest rate risk in the Corporation’s assets or liabilities.  The Corporation manages a matched book with respect to its derivative instruments offered as a part of this service to its customers in order to minimize its net risk exposure resulting from such transactions.

Derivatives Designated as Hedges

The Corporation’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Corporation primarily uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the payment of fixed amounts to a counterparty in exchange for the Corporation receiving variable payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. As of June 30, 2024 and December 31, 2023 the Corporation had no interest rate swaps or caps designated as hedges.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss). The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three and six months ended June 30, 2024 and 2023, the Corporation did not recognize any ineffectiveness.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Corporation's variable-rate liabilities. During the next twelve months, the Corporation doesn't expect to reclassify income (loss) from accumulated other comprehensive income (loss) to interest income.

The amount of gain (loss) recognized in other comprehensive income (loss) is included in the table below for the periods indicated.

Derivatives in Cash Flow Hedging Relationships	Amount of Loss Recognized in Other Comprehensive Income (Loss) on Derivatives  (Effective Portion)
	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Interest Rate Products	$	—	$	(62)	$	—	$	(113)

The amount of gain (loss) reclassified from other comprehensive income (loss) into income related to cash flow hedging relationships is included in the tables below for the periods indicated.

Derivatives Designated as Hedging Instruments	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain Reclassed from Other Comprehensive Income (Loss) into Income (Effective Portion)
		Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
Interest rate contracts	Interest Expense	$	—	$	(16)

Derivatives Designated as Hedging Instruments	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain Reclassed from Other Comprehensive Income (Loss) into Income (Effective Portion)
		Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Interest rate contracts	Interest Expense	$	—	$	(15)

Non-designated Hedges

The Corporation does not use derivatives for trading or speculative purposes.  Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain customers. The Corporation executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies.  Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Corporation executes with a third party, such that the Corporation minimizes its net risk exposure resulting from such transactions.  As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. 

Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. It is the Corporation's practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated in hedge relationships. Fair values were estimated based on changes in mortgage interest rates from the date of the commitments. Changes in the fair value of these mortgage banking derivatives are included in net gains and fees on sales of loans.

The table below presents the fair value of the Corporation’s non-designated hedges, as well as their classification on the Consolidated Condensed Balance Sheet, as of June 30, 2024, and December 31, 2023.

	June 30, 2024				December 31, 2023
	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in other assets:
Interest rate swaps	$	1,299,892	$	86,965	$	1,355,947	$	78,743
Forward contracts related to mortgage loans to be delivered for sale	46,801		605		15,160		469
Interest rate lock commitments	27,375		207		22,706		167
Included in other assets	$	1,374,068	$	87,777	$	1,393,813	$	79,379
Included in other liabilities:
Interest rate swaps	$	1,299,892	$	87,015	$	1,355,947	$	78,811
Forward contracts related to mortgage loans to be delivered for sale	30,948		129		25,290		191
Interest rate lock commitments	22,283		92		1,025		6
Included in other liabilities	$	1,353,123	$	87,236	$	1,382,262	$	79,008

In the normal course of business, the Corporation may decide to settle a forward contract rather than fulfill the contract. Cash received or paid in this settlement manner is included in "Net gains and fees on sales of loans" in the Consolidated Condensed Statements of Income and is considered a cost of executing a forward contract. The amount of gain (loss) recognized into income related to non-designated hedging instruments is included in the tables below for the periods indicated.

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain (Loss) Recognized into Income on Derivatives
		Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
Forward contracts related to mortgage loans to be delivered for sale	Net gains and fees on sales of loans	$	395	$	604
Interest rate lock commitments	Net gains and fees on sales of loans	(33)		(220)
Total net gain (loss) recognized in income		$	362	$	384

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain (Loss) Recognized into Income on Derivatives
		Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Forward contracts related to mortgage loans to be delivered for sale	Net gains and fees on sales of loans	$	393	$	709
Interest rate lock commitments	Net gains and fees on sales of loans	(45)		(33)
Total net gain/(loss) recognized in income		$	348	$	676

The Corporation’s exposure to credit risk occurs because of nonperformance by its counterparties.  The counterparties approved by the Corporation are usually financial institutions, which are well capitalized and have credit ratings through Moody’s and/or Standard & Poor’s at or above investment grade.  The Corporation’s control of such risk is through quarterly financial reviews, comparing mark-to-market values with policy limitations, credit ratings and collateral pledging.

Credit-risk-related Contingent Features

The Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation fails to maintain its status as a well or adequately capitalized institution, then the Corporation could be required to terminate or fully collateralize all outstanding derivative contracts. Additionally, the Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations. As of June 30, 2024, the termination value of derivatives in a net liability position related to these agreements was $3.4 million, which resulted in no collateral pledged to counterparties as of June 30, 2024. While the Corporation did not breach any of these provisions as of June 30, 2024, if it had, the Corporation could have been required to settle its obligations under the agreements at their termination value.

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FAIR VALUES OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

FAIR VALUES OF FINANCIAL INSTRUMENTS

FAIR VALUES OF FINANCIAL INSTRUMENTS

The Corporation used fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The accounting guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.  ASC 820 applies only when other guidance requires or permits assets or liabilities to be measured at fair value; it does not expand the use of fair value in any new circumstances.

As defined in ASC 820, fair value is the price to sell an asset or transfer a liability in an orderly transaction between market participants. It represents an exit price at the measurement date. Market participants are buyers and sellers, who are independent, knowledgeable, and willing and able to transact in the principal (or most advantageous) market for the asset or liability being measured. Current market conditions, including imbalances between supply and demand, are considered in determining fair value. The Corporation values its assets and liabilities in the principal market where it sells the particular asset or transfers the liability with the greatest volume and level of activity. In the absence of a principal market, the valuation is based on the most advantageous market for the asset or liability (i.e., the market where the asset could be sold or the liability transferred at a price that maximizes the amount to be received for the asset or minimizes the amount to be paid to transfer the liability).

Valuation inputs refer to the assumptions market participants would use in pricing a given asset or liability. Inputs can be observable or unobservable. Observable inputs are those assumptions which market participants would use in pricing the particular asset or liability. These inputs are based on market data and are obtained from a source independent of the Corporation. Unobservable inputs are assumptions based on the Corporation’s own information or estimate of assumptions used by market participants in pricing the asset or liability. Unobservable inputs are based on the best and most current information available on the measurement date. All inputs, whether observable or unobservable, are ranked in accordance with a prescribed fair value hierarchy which gives the highest ranking to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest ranking to unobservable inputs for which there is little or no market activity (Level 3). Fair values for assets or liabilities classified as Level 2 are based on one or a combination of the following factors: (i) quoted prices for similar assets; (ii) observable inputs for the asset or liability, such as interest rates or yield curves; or (iii) inputs derived principally from or corroborated by observable market data. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation considers an input to be significant if it drives 10 percent or more of the total fair value of a particular asset or liability.

RECURRING MEASUREMENTS

Assets and liabilities are considered to be measured at fair value on a recurring basis if fair value is measured regularly (i.e., daily, weekly, monthly or quarterly). Recurring valuation occurs at a minimum on the measurement date. Assets and liabilities are considered to be measured at fair value on a nonrecurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the balance sheet. Generally, nonrecurring valuation is the result of the application of other accounting pronouncements which require assets or liabilities to be assessed for impairment and recorded at the lower of cost or fair value. The fair value of assets or liabilities transferred in or out of Level 3 is measured on the transfer date, with any additional changes in fair value subsequent to the transfer considered to be realized or unrealized gains or losses.

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the

accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Investment Securities

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include U.S. Treasury securities. Where significant observable inputs, other than Level 1 quoted prices, are available, securities are classified within Level 2 of the valuation hierarchy. Level 2 securities include U.S. Government-sponsored agency and mortgage-backed securities, state and municipal securities and corporate obligations securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include state and municipal securities, U.S. Government-sponsored mortgage-backed securities and corporate obligations securities. Level 3 fair value for securities was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

Third party vendors compile prices from various sources and may apply such techniques as matrix pricing to determine the value of identical or similar investment securities (Level 2). Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities. Any investment security not valued based upon the methods above are considered Level 3.

Derivative Financial Agreements

See information regarding the Corporation’s derivative financial agreements in NOTE 4. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements.

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2024, and December 31, 2023.

			Fair Value Measurements Using:
June 30, 2024	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	91,277	$	—	$	91,277	$	—
State and municipal	1,024,907		—		1,021,718		3,189
U.S. Government-sponsored mortgage-backed securities	490,654		—		490,650		4
Corporate obligations	12,055		—		12,024		31
Derivative assets	87,777		—		87,777		—
Derivative liabilities	87,236		—		87,236		—

			Fair Value Measurements Using:
December 31, 2023	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	95,307	$	—	$	95,307	$	—
State and municipal	1,065,171		—		1,061,896		3,275
U.S. Government-sponsored mortgage-backed securities	454,815		—		454,811		4
Corporate obligations	11,819		—		11,788		31
Derivative assets	79,379		—		79,379		—
Derivative liabilities	79,008		—		79,008		—

Level 3 Reconciliation

The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying

balance sheets using significant unobservable Level 3 inputs for the three and six months ended June 30, 2024 and 2023.

	Available for Sale Securities
	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Balance at beginning of the period	$	3,247	$	3,462	$	3,310	$	3,439
Included in other comprehensive income	(21)		(111)		11		3
Principal payments	(2)		(3)		(97)		(94)
Ending balance	$	3,224	$	3,348	$	3,224	$	3,348

There were no gains or losses included in earnings that were attributable to the changes in unrealized gains or losses related to assets or

liabilities held at June 30, 2024 or December 31, 2023.

Transfers Between Levels

There were no transfers in or out of Level 3 during the three and six months ended June 30, 2024 and 2023.

Nonrecurring Measurements

Following is a description of valuation methodologies used for instruments measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy at June 30, 2024, and December 31, 2023.

			Fair Value Measurements Using
June 30, 2024	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	30,988	$	—	$	—	$	30,988

			Fair Value Measurements Using
December 31, 2023	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable  Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	55,020	$	—	$	—	$	55,020

Collateral Dependent Loans

Determining fair value for collateral dependent loans requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

Unobservable (Level 3) Inputs

The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill, at June 30, 2024 and December 31, 2023.

June 30, 2024	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	3,189	Discounted cash flow	Maturity/Call date	1 month to 6 years
				US Muni BQ curve	BBB
				Discount rate	3.7% - 4.6%
				Weighted-average coupon	3.3%
Corporate obligations and U.S. Government-sponsored mortgage-backed securities	$	35	Discounted cash flow	Risk free rate	3 month CME Term SOFR plus 26bps
				plus premium for illiquidity (basis points)	plus 200bps
				Weighted-average coupon	0%
Collateral dependent loans	$	30,988	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 25%
				Weighted-average discount by loan balance	21.8%

December 31, 2023	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	3,275	Discounted cash flow	Maturity/Call date	1 month to 15 years
				US Muni BQ curve	A- to BBB
				Discount rate	3.6% - 4.7%
				Weighted-average coupon	3.3%
Corporate obligations and U.S. Government-sponsored mortgage-backed securities	$	35	Discounted cash flow	Risk free rate	3 month CME Term SOFR plus 26bps
				plus premium for illiquidity (basis points)	plus 200bps
				Weighted-average coupon	0%
Collateral dependent loans	$	55,020	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 10%
				Weighted-average discount by loan balance	4.1%

The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement and how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.

State and Municipal Securities, Corporate Obligations and U.S. Government-sponsored Mortgage-Backed Securities

The significant unobservable inputs used in the fair value measurement of the Corporation's state and municipal securities, corporate obligations and U.S. Government-sponsored mortgage-backed securities are premiums for unrated securities and marketability discounts. Significant increases or decreases in either of those inputs in isolation would result in a significantly lower or higher fair value measurement. Generally, changes in either of those inputs will not affect the other input.

Fair Value of Financial Instruments

The following tables present estimated fair values of the Corporation’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2024 and December 31, 2023.

			June 30, 2024
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		Total Fair Value
Assets:
Cash and due from banks	$	105,372	$	105,372	$	—	$	—	$	105,372
Interest-bearing deposits	168,528		168,528		—		—		168,528
Investment securities available for sale	1,618,893		—		1,615,669		3,224		1,618,893
Investment securities held to maturity, net	2,134,195		—		1,771,567		7,649		1,779,216
Loans held for sale	32,292		—		32,292		—		32,292
Loans, net	12,450,113		—		—		12,121,987		12,121,987
Federal Home Loan Bank stock	41,738		—		41,738		—		41,738
Derivative assets	87,777		—		87,777		—		87,777
Interest receivable	97,546		—		97,546		—		97,546
Liabilities:
Deposits	$	14,569,070	$	12,096,840	$	2,460,291	$	—	14,557,131
Borrowings:
Federal funds purchased	147,229		—		147,229		—		147,229
Securities sold under repurchase agreements	100,451		—		100,451		—		100,451
Federal Home Loan Bank advances	832,703		—		822,958		—		822,958
Subordinated debentures and other borrowings	93,589		—		84,091		—		84,091
Derivative liabilities	87,236		—		87,236		—		87,236
Interest payable	18,554		—		18,554		—		18,554

			December 31, 2023
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		Total Fair Value
Assets:
Cash and due from banks	$	112,649	$	112,649	$	—	$	—	$	112,649
Interest-bearing deposits	436,080		436,080		—		—		436,080
Investment securities available for sale	1,627,112		—		1,623,802		3,310		1,627,112
Investment securities held to maturity, net	2,184,252		—		1,859,974		10,400		1,870,374
Loans held for sale	18,934		—		18,934		—		18,934
Loans, net	12,281,093		—		—		11,958,301		11,958,301
Federal Home Loan Bank stock	41,769		—		41,769		—		41,769
Derivative assets	79,379		—		79,379		—		79,379
Interest receivable	97,664		—		97,664		—		97,664
Liabilities:
Deposits	$	14,821,453	$	12,482,295	$	2,329,662	$	—	14,811,957
Borrowings:
Securities sold under repurchase agreements	157,280		—		157,265		—		157,265
Federal Home Loan Bank advances	712,852		—		707,377		—		707,377
Subordinated debentures and other borrowings	158,644		—		149,995		—		149,995
Derivative liabilities	79,008		—		79,008		—		79,008
Interest payable	18,912		—		18,912		—		18,912

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QUALIFIED AFFORDABLE HOUSING INVESTMENTS

6 Months Ended

Jun. 30, 2024

Equity Method Investments and Joint Ventures [Abstract]

QUALIFIED AFFORDABLE HOUSING INVESTMENTS

QUALIFIED AFFORDABLE HOUSING INVESTMENTS

The Corporation has investments in various limited partnerships that sponsor affordable housing projects. The purpose of these investments is to earn an adequate return of capital through the receipt of low income housing tax credits and to assist the Corporation in achieving goals associated with the CRA. These investments are included in other assets on the Consolidated Balance Sheet, with any unfunded commitments included in other liabilities. The investments are amortized as a component of income tax expense.

The following table summarizes the Corporation’s affordable housing investments as of June 30, 2024 and December 31, 2023:

	June 30, 2024				December 31, 2023
Investment Type	Investment		Unfunded Commitment		Investment		Unfunded Commitment
LIHTC	$	151,029	$	120,562	$	114,514	$	96,408

The following table summarizes the amortization expense and tax credits recognized for the Corporation’s affordable housing investments for the three and six months ended June 30, 2024 and 2023, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Amortization expense	$	1,626	$	1,594	$	3,323	$	1,837
Tax credits recognized	1,644		1,332		3,289		1,616

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BORROWINGS

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

BORROWINGS

BORROWINGS

The following table summarizes the Corporation’s borrowings as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023
Federal funds purchased	$	147,229	$	—
Securities sold under repurchase agreements	100,451		157,280
Federal Home Loan Bank advances	832,703		712,852
Subordinated debentures and other borrowings	93,589		158,644
Total Borrowings	$	1,173,972	$	1,028,776

Securities sold under repurchase agreements consist of obligations of the Bank to other parties and are secured by U.S. Government-sponsored enterprise obligations. The maximum amount of outstanding agreements at any month-end during the first six months of 2024 and 2023 totaled $194.2 million and $241.9 million, respectively, and the average of such agreements totaled $144.3 million and $194.3 million during the same period of 2024 and 2023, respectively.

The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of June 30, 2024 and December 31, 2023 were:

	June 30, 2024
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	100,451	$	—	$	—	$	—	$	100,451

	December 31, 2023
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	157,280	$	—	$	—	$	—	$	157,280

Contractual maturities of borrowings as of June 30, 2024, are as follows:

Maturities in Years Ending December 31:	Federal Funds Purchased		Securities Sold Under Repurchase Agreements		Federal Home Loan Bank Advances		Subordinated Debentures and Term Loans
2024	$	147,229	$	100,451	$	110,000	$	1,166
2025	—		—		95,000		—
2026	—		—		75,000		—
2027	—		—		250,000		—
2028	—		—		190,000		5,000
2029 and after	—		—		112,703		90,938
ASC 805 fair value adjustments at acquisition	—		—		—		(3,515)
	$	147,229	$	100,451	$	832,703	$	93,589

The terms of a security agreement with the Federal Home Loan Bank ("FHLB") require the Corporation to pledge, as collateral for advances, qualifying first mortgage loans, investment securities and multi-family loans in an amount equal to at least 145 percent of these advances depending on the type of collateral pledged. At June 30, 2024, the outstanding FHLB advances had interest rates from 0.35 to 5.48 percent and are subject to restrictions or penalties in the event of prepayment. The total available remaining borrowing capacity from the FHLB at June 30, 2024, was $780.7 million. As of June 30, 2024, the Corporation had $205.0 million of putable advances with the FHLB.

Subordinated Debentures and Term Loans. As of June 30, 2024 and December 31, 2023, subordinated debentures and term loans totaled $93.6 million and $158.6 million, respectively.

•First Merchants Capital Trust II (“FMC Trust II”). At June 30, 2024 and December 31, 2023, the Corporation had $41.7 million of subordinated debentures issued to FMC Trust II, a wholly-owned statutory business trust. FMC Trust II was formed in July 2007 for purposes of issuing trust preferred securities to investors. At that time, it simultaneously issued and sold its common securities to the Corporation, which constituted all of the issued and outstanding common securities of FMC Trust II. The subordinated debentures, which were purchased with the proceeds of the sale of the trust’s capital securities, are the sole assets of FMC Trust II and are fully and unconditionally guaranteed by the Corporation. As of June 30, 2024, the subordinated debentures and trust preferred securities bear interest at a variable rate equal to the three-month CME Term Secured Overnight Financing Rate ("SOFR"), plus the 0.26161 percent spread adjustment. The interest rate at June 30, 2024 was 7.16 percent. As of December 31, 2023, the subordinated debentures and the trust preferred securities bear interest at a variable rate equal to CME Term SOFR, plus the 0.26161 percent spread adjustment. The interest rate at December 31, 2023 was 7.21 percent. The trust preferred securities are currently redeemable at par and without penalty, subject to the Corporation having first redeemed the related subordinated debentures, with the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies. The trust preferred securities and the subordinated debentures of FMC Trust II will mature on September 15, 2037. The Corporation continues to hold all outstanding common securities of FMC Trust II.

•Ameriana Capital Trust I. At June 30, 2024 and December 31, 2023, the Corporation had $10.3 million of subordinated debentures issued to Ameriana Capital Trust I. On December 31, 2015, the Corporation acquired Ameriana Capital Trust I in conjunction with its acquisition of Ameriana Bancorp, Inc. With a trust preferred structure substantially similar to that described above for FMC Trust II, the subordinated debentures held by Ameriana Capital Trust I were purchased with the proceeds of the sale of the trust’s capital securities. As of June 30, 2024, the subordinated debentures and trust preferred securities bear interest at a variable rate equal to the three-month CME Term SOFR, plus the 0.26161 percent spread adjustment. The interest rate at June 30, 2024 was 7.10 percent. As of December 31, 2023, the subordinated debentures and the trust preferred securities bear interest at a variable rate equal to three-month CME Term SOFR, plus the 0.26161 percent spread adjustment. The interest rate at December 31, 2023 was 7.15 percent. The trust preferred securities of Ameriana Capital Trust I are currently redeemable at par and without penalty, subject to the Corporation having first redeemed the related subordinated debentures, with the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies. The trust preferred securities and the subordinated debentures of Ameriana Capital Trust I will mature in March 2036. The Corporation continues to hold all of the outstanding common securities of Ameriana Capital Trust I.

•First Merchants Senior Notes and Subordinated Notes. On November 1, 2013, the Corporation completed the private issuance and sale to four institutional investors of an aggregate of $70 million of debt comprised of (a) 5.00 percent Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million (the “Senior Debt”) and (b) 6.75 percent Fixed-to-Floating Rate Subordinated Notes due 2028 in the aggregate principal amount of $65 million (the “Subordinated Debt”). The interest rate on the Senior Debt and Subordinated Debt remained fixed for the first ten (10) years and became floating thereafter. The rates converted to floating on October 30, 2023. The Corporation had an option to redeem the Subordinated Debt in whole or in part at a redemption price equal to 100 percent of the principal amount of the redeemed Subordinated Notes, plus accrued and unpaid interest to the date of the redemption. The option of redemption was subject to the approval of the Federal Reserve Board. The Corporation has an option to redeem the Senior Debt in whole or in part at a redemption price equal to 100 percent of the principal amount of the redeemed Senior Notes, plus accrued and unpaid interest to the date of the redemption; provided, however, that no Subordinated Notes (as defined in the Issuing and Paying Agency Agreement) may remain outstanding subsequent to any early redemption of Senior Notes. The Subordinated Debt and the Senior Debt options to redeem began with the interest payment date on October 30, 2023, or on any scheduled interest payment date thereafter. As of June 30, 2024, the Subordinated Debt was fully paid. During the first quarter of 2024, the Corporation exercised its rights to redeem $40.0 million in principal and paid the debt on the scheduled interest payment date. Additionally, in the second quarter of 2024, the Corporation exercised its rights to redeem the remaining $25.0 million in principal and paid the debt on the scheduled interest payment date. Both redemptions were permitted under the optional redemptions provisions of the Subordinated Note Certificate representing the Subordinated Debt. The Senior Debt agreement contains certain customary representations and warranties and financial and negative covenants. As of June 30, 2024 and December 31, 2023 the Corporation was in compliance with these covenants.

•Level One Subordinated Notes. On April 1, 2022, the Corporation assumed certain subordinated notes in conjunction with its acquisition of Level One. The $30.0 million of subordinated notes issued on December 18, 2019 bear a fixed interest rate of 4.75 percent per annum, payable semiannually through December 18, 2024. The notes will bear a floating interest rate equal to the of three-month CME Term SOFR plus 3.11 percent, payable quarterly, after December 18, 2024 through maturity. The notes mature on December 18, 2029, and the Corporation has the option to redeem any or all of the subordinated notes without premium or penalty any time after December 18, 2024 or upon the occurrence of a tier 2 capital event or tax event.

•Other Borrowings. During the third quarter of 2023, the Corporation acquired a secured borrowing in conjunction with the purchase of the Indianapolis regional headquarters building. The secured borrowing bears a fixed interest rate of 3.41 percent, has a maturity date of March 2035, and had a balance of $7.2 million as of June 30, 2024 and December 31, 2023. On April 1, 2022, the Corporation acquired a secured borrowing in conjunction with its acquisition of Level One. The secured borrowing related to a certain loan participation sold by Level One that did not qualify for sales treatment. The secured borrowing bears a fixed rate of 1.00 percent and had a balance of $1.2 million as of June 30, 2024 and December 31, 2023.

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ACCUMULATED OTHER COMPREHENSIVE LOSS

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, as of June 30, 2024 and 2023:

	Accumulated Other Comprehensive Income (Loss)
	Unrealized Gains (Losses) on Securities Available for Sale		Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Defined Benefit Plans		Total
Balance at December 31, 2023	$	(173,654)	$	—	$	(2,316)	$	(175,970)
Other comprehensive income (loss) before reclassifications	(36,049)		—		—		(36,049)
Amounts reclassified from accumulated other comprehensive income (loss)	40		—		—		40
Period change	(36,009)		—		—		(36,009)
Balance at June 30, 2024	$	(209,663)	$	—	$	(2,316)	$	(211,979)
Balance at December 31, 2022	$	(234,495)	$	130	$	(4,786)	$	(239,151)
Other comprehensive income (loss) before reclassifications	18,924		(90)		—		18,834
Amounts reclassified from accumulated other comprehensive income (loss)	2,341		12		—		2,353
Period change	21,265		(78)		—		21,187
Balance at June 30, 2023	$	(213,230)	$	52	$	(4,786)	$	(217,964)

The following tables present the reclassification adjustments out of accumulated other comprehensive income (loss) that were included in net income in the Consolidated Condensed Statements of Income for the three and six months ended June 30, 2024 and 2023.

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Three Months Ended June 30,
Details about Accumulated Other Comprehensive Income (Loss) Components	2024		2023		Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities gains (losses) reclassified into income	$	(49)	$	(1,392)	Other income - net realized gains (losses) on sales of available for sale securities
Related income tax benefit (expense)	10		292		Income tax expense
	$	(39)	$	(1,100)
Unrealized gains (losses) on cash flow hedges (2)
Interest rate contracts	$	—	$	(16)	Interest expense - subordinated debentures and term loans
Related income tax benefit (expense)	—		3		Income tax expense
	$	—	$	(13)
Total reclassifications for the period, net of tax	$	(39)	$	(1,113)

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Six Months Ended June 30,
Details about Accumulated Other Comprehensive Income (Loss) Components	2024		2023		Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities gains reclassified into income	$	(51)	$	(2,963)	Other income - net realized gains on sales of available for sale securities
Related income tax benefit (expense)	11		622		Income tax expense
	$	(40)	$	(2,341)
Unrealized gains (losses) on cash flow hedges (2)
Interest rate contracts	$	—	$	(15)	Interest expense - subordinated debentures and term loans
Related income tax benefit (expense)	—		3		Income tax expense
	$	—	$	(12)
Total reclassifications for the period, net of tax	$	(40)	$	(2,353)

(1) For additional detail related to unrealized gains (losses) on available for sale securities and related amounts reclassified from accumulated other comprehensive loss see NOTE 2. INVESTMENT SECURITIES of these Notes to Consolidated Condensed Financial Statements.

(2) For additional detail related to unrealized gains (losses) on cash flow hedges and related amounts reclassified from accumulated other comprehensive loss see NOTE 4. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements.

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SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

Stock options and Restricted Stock Awards ("RSA") have been issued to directors, officers and other management employees under the Corporation's 2019 Long-term Equity Incentive Plan, the 2024 Long-term Equity Incentive Plan, the Level One Bancorp, Inc. 2007 Stock Option Plan and the Equity Compensation Plan for Non-Employee Directors. The stock options, which have a ten year life, become 100 percent vested based on time ranging from one year to two years and are fully exercisable when vested. Option exercise prices equal the Corporation's common stock closing price on NASDAQ on the date of grant. The RSAs issued to employees and non-employee directors provide for the issuance of shares of the Corporation's common stock at no cost to the holder and generally vest after three years.  The RSAs vest only if the employee is actively employed by the Corporation on the vesting date and, therefore, any unvested shares are forfeited.  For non-employee directors, the RSAs vest only if the non-employee director remains as an active board member on the vesting date and, therefore, any unvested shares are forfeited. The RSAs for employees and non-employee directors are either immediately vested at retirement, disability or death, or, continue to vest after retirement, disability or death, depending on the plan under which the shares were granted.

The Corporation’s 2019 Employee Stock Purchase Plan and 2024 Employee Stock Purchase Plan ("ESPP") provide eligible employees of the Corporation and its subsidiaries an opportunity to purchase shares of common stock of the Corporation through quarterly offerings financed by payroll deductions. The price of the stock to be paid by the employees shall be equal to 85 percent of the average of the closing price of the Corporation’s common stock on each trading day during the offering period. However, in no event shall such purchase price be less than the lesser of an amount equal to 85 percent of the market price of the Corporation’s stock on the offering date or an amount equal to 85 percent of the market value on the date of purchase. Common stock purchases are made quarterly and are paid through advance payroll deductions up to a calendar year maximum of $25,000. The 2019 Employee Stock Purchase Plan expired on June 30, 2024.

Compensation expense related to unvested share-based awards is recorded by recognizing the unamortized grant date fair value of these awards over the remaining service periods of those awards, with no change in historical reported fair values and earnings.  Awards are valued at

fair value in accordance with provisions of share-based compensation guidance and are recognized on a straight-line basis over the service periods of each award. To complete the exercise of vested stock options, RSA’s and ESPP options, the Corporation generally issues new shares from its authorized but unissued share pool. Share-based compensation has been recognized as a component of salaries and benefits expense in the accompanying Consolidated Condensed Statements of Income.

Share-based compensation expense recognized in the Consolidated Condensed Statements of Income is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Share-based compensation guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods, if actual forfeitures differ from those estimates. Pre-vesting forfeitures were estimated to be approximately 0.05 percent for the six months ended June 30, 2024, based on historical experience.

The following table summarizes the components of the Corporation's share-based compensation awards recorded as an expense and the income tax benefit of such awards.

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Stock and ESPP Options
Pre-tax compensation expense	$	35	$	15	$	102	$	44
Income tax expense (benefit)	(40)		(6)		(40)		(62)
Stock and ESPP option expense, net of income taxes	$	(5)	$	9	$	62	$	(18)
Restricted Stock Awards
Pre-tax compensation expense	$	1,316	$	1,220	$	2,652	$	2,388
Income tax expense (benefit)	(258)		(257)		(523)		(513)
Restricted stock awards expense, net of income taxes	$	1,058	$	963	$	2,129	$	1,875
Total Share-Based Compensation
Pre-tax compensation expense	$	1,351	$	1,235	$	2,754	$	2,432
Income tax expense (benefit)	(298)		(263)		(563)		(575)
Total share-based compensation expense, net of income taxes	$	1,053	$	972	$	2,191	$	1,857

The grant date fair value of ESPP options was estimated to be approximately $35,000 at the beginning of the April 1, 2024 quarterly offering period. The ESPP options vested during the three months ending June 30, 2024, leaving no unrecognized compensation expense related to unvested ESPP options at June 30, 2024.

Stock option activity under the Corporation's stock option plans as of June 30, 2024 and changes during the six months ended June 30, 2024, were as follows:

	Number of Shares	Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2024	90,075	$	20.21
Exercised	(42,893)	$	18.94
Outstanding June 30, 2024	47,182	$	21.36	1.91	$	562,979
Vested and Expected to Vest at June 30, 2024	47,182	$	21.36	1.91	$	562,979
Exercisable at June 30, 2024	47,182	$	21.36	1.91	$	562,979

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Corporation's closing stock price on the last trading day of the first six months of 2024 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their stock options on June 30, 2024.  The amount of aggregate intrinsic value will change based on the fair value of the Corporation's common stock.

The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2024 and 2023 was $591,000 and $1.4 million, respectively. Cash receipts of stock options exercised during the same periods were $812,000 and $1.1 million, respectively.

The following table summarizes information on unvested RSAs outstanding as of June 30, 2024:

	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested RSAs at January 1, 2024	452,426	$	37.94
Granted	24,052	$	34.00
Vested	(16,216)	$	44.21
Forfeited	(2,250)	$	38.23
Unvested RSAs at June 30, 2024	458,012	$	37.51

As of June 30, 2024, unrecognized compensation expense related to RSAs was $7.4 million and is expected to be recognized over a weighted-average period of 1.5 years. The Corporation did not have any unrecognized compensation expense related to stock options as of June 30, 2024.

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INCOME TAX

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAX

INCOME TAX

The following table summarizes the major components creating differences between income taxes at the federal statutory and the effective tax rate recorded in the consolidated statements of income for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal statutory income tax at 21%	$	9,238		$	15,028		$	20,739		$	30,861
Tax-exempt interest income	(4,396)			(4,456)			(8,748)			(9,323)
Non-deductible FDIC premiums	143			113			282			173
Share-based compensation	(15)			(3)			15			(64)
Tax-exempt earnings and gains on life insurance	(405)			(441)			(739)			(711)
Tax credits	(360)			(73)			(664)			(165)
State Income Tax	(225)			520			(191)			1,220
Other	87			11			198			25
Actual Tax Expense	$	4,067		$	10,699		$	10,892		$	22,016
Effective Tax Rate	9.2		%	15.0		%	11.0		%	15.0		%

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NET INCOME PER COMMON SHARE

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

NET INCOME PER COMMON SHARE

NET INCOME PER COMMON SHARE

Basic net income per common share is computed by dividing net income available to common stockholders by the weighted-average common shares outstanding during the reporting period. Diluted net income per common share is computed by dividing net income available to common stockholders by the combination of the weighted-average common shares outstanding during the reporting period and all potentially dilutive common shares. Potentially dilutive common shares include stock options and RSAs issued under the Corporation's share-based compensation plans. Potentially dilutive common shares are excluded from the computation of diluted earnings per common share in the periods where the effect would be antidilutive.

The following tables reconcile basic and diluted net income per common share for the three and six months ended June 30, 2024 and 2023.

	Three Months Ended June 30,
	2024					2023
	Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount		Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount
Net income available to common stockholders	$	39,456	58,104,021	$	0.68	$	60,393	59,263,813	$	1.02
Effect of potentially dilutive stock options and restricted stock awards			224,244					184,566
Diluted net income per common share	$	39,456	58,328,265	$	0.68	$	60,393	59,448,379	$	1.02
RSAs excluded from the diluted average common share calculation(1)			90,734					67,731

	Six Months Ended June 30,
	2024					2023
	Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount		Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount
Net income available to common stockholders	$	86,928	58,585,405	$	1.48	$	124,003	59,240,137	$	2.09
Effect of potentially dilutive stock options and restricted stock awards			215,058					205,920
Diluted net income per common share	$	86,928	58,800,463	$	1.48	$	124,003	59,446,057	$	2.09
RSAs excluded from the diluted average common share calculation(1)			89,011					59,913

(1) Anti-dilution occurs when the unrecognized compensation cost per share of an RSA exceeds the market price of the Corporation's stock.

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GENERAL LITIGATION AND REGULATORY EXAMINATIONS

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

GENERAL LITIGATION AND REGULATORY EXAMINATIONS

GENERAL LITIGATION AND REGULATORY EXAMINATIONS

The Corporation is subject to claims and lawsuits that arise primarily in the ordinary course of business. Additionally, the Corporation is also subject to periodic examinations by various regulatory agencies. It is the general opinion of management that the disposition or ultimate resolution of any such routine litigation or regulatory examinations will not have a material adverse effect on the consolidated financial position, results of operations and cash flow of the Corporation.

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Total reclassifications for the period, net of tax	$ 39,925	$ 60,862	$ 87,866	$ 124,941	$ 124,941

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Insider Trading Arrangements	3 Months Ended
	Jun. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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GENERAL (Policies)

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Financial Statement Preparation

Financial Statement Preparation

The Consolidated Condensed Balance Sheet of the Corporation as of December 31, 2023, has been derived from the audited consolidated balance sheet of the Corporation as of that date. Certain information and note disclosures normally included in the Corporation’s annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission. The results of operations for the three and six months ended June 30, 2024, are not necessarily indicative of the results to be expected for the year. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses and fair value of financial instruments.

Recent Accounting Changes Adopted and New Accounting Pronouncements Not Yet Adopted

Recent Accounting Changes Adopted in 2024

FASB Accounting Standards Updates - No. 2023-02 - Investments - Equity Method and Joint Ventures (Topic 323) - Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

Summary - The FASB issued ASU No. 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, which is intended to improve the accounting and disclosures for investments in tax credit structures. The ASU is a consensus of the FASB’s Emerging Issues Task Force (“EITF”).

The ASU allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. The ASU responds to stakeholder feedback that the proportional amortization method provides investors and other allocators of capital with a better understanding of the returns from investments that are made primarily for the purpose of receiving income tax credits and other income tax benefits.

Reporting entities were previously permitted to apply the proportional amortization method only to qualifying tax equity investments in low-income housing tax credit (LIHTC) structures. In recent years, stakeholders asked the FASB to extend the application of the proportional amortization method to qualifying tax equity investments that generate tax credits through other programs, which resulted in the EITF addressing this issue.

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for all entities in any interim period. The Corporation adopted this guidance in the first quarter of 2024 and adoption did not have a significant impact on the Corporation’s financial statements or disclosures.

New Accounting Pronouncements Not Yet Adopted

The Corporation continually monitors potential accounting pronouncements and the following pronouncements have been deemed to have the most applicability to the Corporation's financial statements:

FASB Accounting Standards Updates - No. 2023-07 - Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosure

Summary - The FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosure, which is intended to improve disclosures about a public entity’s reportable segments and addresses requests from investors and other allocators of capital for additional, more detailed information about a reportable segment’s expenses.

The key amendments:

•Require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss.

•Require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the significant expenses disclosed and each reported measure of segment profit or loss.

•Require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by FASB ASC Topic 280, Segment Reporting, in interim periods.

•Clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit or loss. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements.

•Require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

•Require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in the ASU and all existing segment disclosures in Topic 280.

ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, applies to all public entities that are required to report segment information in accordance with Topic 280. All public entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. This ASU is not expected to have a material impact on the Corporation’s financial statements and disclosures as the Corporation has one operating segment.

FASB Accounting Standards Update - No. 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures

Summary - The FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures in the fourth quarter of 2023. This ASU is intended to enhance income tax disclosures to address investor requests for more information about the tax risks and opportunities present in an entity’s worldwide operations.

The two primary enhancements disaggregate existing income tax disclosures related to the effective tax rate reconciliation and income taxes paid. These amendments require that public business entities on an annual basis disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The amendments also require that all entities disclose on an annual basis the amount of income taxes paid (net of refunds received) disaggregated by federal, state and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds received).

For public business entities, the amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issue. The amendments should be applied on a prospective basis. The Corporation is assessing the terms of this guidance, but adoption of the standard is not expected to have a significant impact on the Corporation’s financial statements or disclosures.

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INVESTMENT SECURITIES (Tables)

6 Months Ended

Jun. 30, 2024

Investments, Debt and Equity Securities [Abstract]

Summary of Amortized Cost, Gross Unrealized Gains and Losses and Approximate Fair Value of Investment Securities

The following tables summarize the amortized cost, gross unrealized gains and losses and approximate fair value of investment securities available for sale as of June 30, 2024 and December 31, 2023.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at June 30, 2024
U.S. Government-sponsored agency securities	$	108,842	$	—	$	17,565	$	91,277
State and municipal	1,178,364		25		153,482		1,024,907
U.S. Government-sponsored mortgage-backed securities	584,055		376		93,777		490,654
Corporate obligations	12,954		—		899		12,055
Total available for sale	$	1,884,215	$	401	$	265,723	$	1,618,893

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2023
U.S. Government-sponsored agency securities	$	111,521	$	—	$	16,214	$	95,307
State and municipal	1,181,029		364		116,222		1,065,171
U.S. Government-sponsored mortgage-backed securities	541,343		462		86,990		454,815
Corporate obligations	12,947		—		1,128		11,819
Total available for sale	$	1,846,840	$	826	$	220,554	$	1,627,112

The following tables summarize the amortized cost, gross unrealized gains and losses, approximate fair value and allowance for credit losses on investment securities held to maturity as of June 30, 2024 and December 31, 2023.

	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at June 30, 2024
U.S. Government-sponsored agency securities	$	365,081	$	—	$	365,081	$	—	$	66,005	$	299,076
State and municipal	1,091,714		245		1,091,469		300		183,892		908,122
U.S. Government-sponsored mortgage-backed securities	676,145		—		676,145		—		105,607		570,538
Foreign investment	1,500		—		1,500		—		20		1,480
Total held to maturity	$	2,134,440	$	245	$	2,134,195	$	300	$	355,524	$	1,779,216

	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at December 31, 2023
U.S. Government-sponsored agency securities	$	374,002	$	—	$	374,002	$	—	$	64,159	$	309,843
State and municipal	1,099,201		245		1,098,956		1,625		152,113		948,713
U.S. Government-sponsored mortgage-backed securities	709,794		—		709,794		—		99,448		610,346
Foreign investment	1,500		—		1,500		—		28		1,472
Total held to maturity	$	2,184,497	$	245	$	2,184,252	$	1,625	$	315,748	$	1,870,374

Summary of Amortized Cost of Investment Securities Held to Maturity Aggregated by Credit Quality Indicator

On a quarterly basis, the Corporation monitors the credit quality of investment securities held to maturity through the use of credit ratings. The following table summarizes the amortized cost of investment securities held to maturity at June 30, 2024, aggregated by credit quality indicator.

	Held to Maturity
	State and municipal		Other		Total
Credit Rating:
Aaa	$	113,341	$	70,588	$	183,929
Aa1	161,380		—		161,380
Aa2	167,506		—		167,506
Aa3	133,319		—		133,319
A1	131,193		—		131,193
A2	16,839		—		16,839
A3	3,470		—		3,470
Non-rated	364,666		972,138		1,336,804
Total	$	1,091,714	$	1,042,726	$	2,134,440

Summary of Investment Securities in a Continuous Unrealized Loss Position

The following tables summarize, as of June 30, 2024 and December 31, 2023, investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and length of time in a continuous unrealized loss position.

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at June 30, 2024
U.S. Government-sponsored agency securities	$	—	$	—	$	91,277	$	17,565	$	91,277	$	17,565
State and municipal	50,145		2,900		973,117		150,582		1,023,262		153,482
U.S. Government-sponsored mortgage-backed securities	57,352		903		399,051		92,874		456,403		93,777
Corporate obligations	—		—		12,024		899		12,024		899
Total investment securities available for sale	$	107,497	$	3,803	$	1,475,469	$	261,920	$	1,582,966	$	265,723

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at December 31, 2023
U.S. Government-sponsored agency securities	$	—	$	—	$	95,307	$	16,214	$	95,307	$	16,214
State and municipal	55,514		1,076		963,584		115,146		1,019,098		116,222
U.S. Government-sponsored mortgage-backed securities	11,493		25		422,868		86,965		434,361		86,990
Corporate obligations	—		—		11,788		1,128		11,788		1,128
Total investment securities available for sale	$	67,007	$	1,101	$	1,493,547	$	219,453	$	1,560,554	$	220,554

The following tables summarize investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and the number of securities in the portfolio as of the dates indicated.

	Gross Unrealized Losses		Number of Securities
Investment securities available for sale at June 30, 2024
U.S. Government-sponsored agency securities	$	17,565	14
State and municipal	153,482		725
U.S. Government-sponsored mortgage-backed securities	93,777		161
Corporate obligations	899		10
Total investment securities available for sale	$	265,723	910

	Gross Unrealized Losses		Number of Securities
Investment securities available for sale at December 31, 2023
U.S. Government-sponsored agency securities	$	16,214	14
State and municipal	116,222		691
U.S. Government-sponsored mortgage-backed securities	86,990		150
Corporate obligations	1,128		10
Total investment securities available for sale	$	220,554	865

Summary of Investments in Debt and Equity Securities Reported in the Financial Statements at an Amount Less Than Their Historical Cost

Certain investment securities available for sale are reported in the financial statements at an amount less than their historical cost as indicated in the table below.

	June 30, 2024			December 31, 2023
Investments available for sale reported at less than historical cost:
Historical cost	$	1,848,689		$	1,781,108
Fair value	1,582,966			1,560,554
Gross unrealized losses	$	265,723		$	220,554
Percent of the Corporation's investments available for sale	97.8		%	95.9		%

Summary of Amortized Cost and Fair Value of Available for Sale Securities and Held to Maturity Securities by Contractual Maturity

The amortized cost and fair value of investment securities available for sale and held to maturity at June 30, 2024 and December 31, 2023, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately.

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at June 30, 2024
Due in one year or less	$	2,402	$	2,383	$	13,380	$	13,249
Due after one through five years	24,675		22,920		113,750		106,226
Due after five through ten years	160,390		144,580		139,308		125,618
Due after ten years	1,112,693		958,356		1,191,857		963,585
	1,300,160		1,128,239		1,458,295		1,208,678
U.S. Government-sponsored mortgage-backed securities	584,055		490,654		676,145		570,538
Total investment securities	$	1,884,215	$	1,618,893	$	2,134,440	$	1,779,216

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at December 31, 2023
Due in one year or less	$	1,390	$	1,382	$	3,041	$	3,043
Due after one through five years	24,899		23,372		118,592		111,723
Due after five through ten years	127,948		120,385		135,805		126,461
Due after ten years	1,151,260		1,027,158		1,217,265		1,018,801
	1,305,497		1,172,297		1,474,703		1,260,028
U.S. Government-sponsored mortgage-backed securities	541,343		454,815		709,794		610,346
Total investment securities	$	1,846,840	$	1,627,112	$	2,184,497	$	1,870,374

Summary of Gross Gains and Losses on Sales and Redemptions of Available for Sale Securities

Gross gains and losses on the sales and redemptions of investment securities available for sale for the three and six months ended June 30, 2024 and 2023 are shown below.

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Sales and redemptions of investment securities available for sale:
Gross gains	$	—	$	151	$	—	$	759
Gross losses	(49)		(1,543)		(51)		(3,722)
Net gains (losses) on sales and redemptions of investment securities available for sale	$	(49)	$	(1,392)	$	(51)	$	(2,963)

XML

LOANS AND ALLOWANCE (Tables)

6 Months Ended

Jun. 30, 2024

Receivables [Abstract]

Summary of Composition of Loan Portfolio by Loan Class

The following table illustrates the composition of the Corporation’s loan portfolio by loan class as of the dates indicated:

	June 30, 2024		December 31, 2023
Commercial and industrial loans	$	3,949,817	$	3,670,948
Agricultural land, production and other loans to farmers	239,926		263,414
Real estate loans:
Construction	823,267		957,545
Commercial real estate, non-owner occupied	2,323,533		2,400,839
Commercial real estate, owner occupied	1,174,195		1,162,083
Residential	2,370,905		2,288,921
Home equity	631,104		617,571
Individuals' loans for household and other personal expenditures	162,089		168,388
Public finance and other commercial loans	964,814		956,318
Loans	$	12,639,650	$	12,486,027

Summary of Credit Quality of Loan Portfolio by Loan Class

The following tables summarize the risk grading of the Corporation’s loan portfolio and gross charge-offs by loan class and by year of origination for the periods indicated. Consumer loans are not risk graded. For the purposes of this disclosure, the consumer loans are classified in the following manner: loans that are less than 30 days past due are Pass, loans 30-89 days past due are Special Mention and loans greater than 89 days past due are Substandard.  The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.

	June 30, 2024
	Term Loans (amortized cost basis by origination year)												Revolving loans amortized		Revolving loans converted
	2024		2023		2022		2021		2020		Prior		cost basis		to term		Total
Commercial and industrial loans
Pass	$	778,502	$	810,290	$	275,900	$	201,870	$	70,975	$	76,151	$	1,533,518	$	4	$	3,747,210
Special Mention	2,913		5,746		21,042		1,574		2,488		11		35,722		—		69,496
Substandard	13,274		38,566		21,712		5,592		1,625		1,827		42,791		—		125,387
Doubtful	—		7,643		—		—		—		—		81		—		7,724
Total Commercial and industrial loans	794,689		862,245		318,654		209,036		75,088		77,989		1,612,112		4		3,949,817
Current period gross charge-offs	1,100		31,803		205		8,425		345		133		—		—		42,011
Agricultural land, production and other loans to farmers
Pass	22,137		24,869		34,809		29,077		28,845		34,134		61,444		—		235,315
Special Mention	—		—		245		—		—		448		250		—		943
Substandard	601		53		968		709		516		33		788		—		3,668
Total Agricultural land, production and other loans to farmers	22,738		24,922		36,022		29,786		29,361		34,615		62,482		—		239,926
Real estate loans:
Construction
Pass	166,149		276,029		194,572		95,193		6,632		9,460		10,810		—		758,845
Special Mention	—		5,600		23,660		645		—		—		—		—		29,905
Substandard	21,202		2,858		5,135		5,322		—		—		—		—		34,517
Total Construction	187,351		284,487		223,367		101,160		6,632		9,460		10,810		—		823,267
Commercial real estate, non-owner occupied
Pass	245,845		303,828		399,269		451,607		373,231		298,925		13,660		—		2,086,365
Special Mention	77,354		22,906		21,755		10,937		2,428		45,158		—		—		180,538
Substandard	19,488		2,927		189		502		19,824		1,638		85		—		44,653
Doubtful	—		11,288		689		—		—		—		—		—		11,977
Total Commercial real estate, non-owner occupied	342,687		340,949		421,902		463,046		395,483		345,721		13,745		—		2,323,533
Current period gross charge-offs	—		339		3		—		—		—		—		—		342
Commercial real estate, owner occupied
Pass	75,597		191,056		175,737		245,405		231,751		159,142		30,206		—		1,108,894
Special Mention	138		3,230		15,076		6,717		5,301		1,750		260		—		32,472
Substandard	2,072		16,234		964		5,028		4,118		4,135		278		—		32,829
Total Commercial real estate, owner occupied	77,807		210,520		191,777		257,150		241,170		165,027		30,744		—		1,174,195
Current period gross charge-offs	—		—		—		—		9		—		—		—		9
Residential
Pass	111,630		427,692		698,308		421,439		350,587		322,922		5,052		14		2,337,644
Special Mention	668		2,480		5,301		3,917		1,197		5,147		350		—		19,060
Substandard	414		760		4,367		2,973		1,250		4,437		—		—		14,201
Total Residential	112,712		430,932		707,976		428,329		353,034		332,506		5,402		14		2,370,905
Current period gross charge-offs	—		39		403		57		21		54		—		—		574
Home equity
Pass	6,606		7,648		26,336		56,066		10,956		4,652		500,801		6,294		619,359
Special Mention	113		—		1,340		406		1,057		66		5,117		245		8,344
Substandard	62		—		52		597		—		325		2,125		240		3,401
Total Home Equity	6,781		7,648		27,728		57,069		12,013		5,043		508,043		6,779		631,104
Current period gross charge-offs	—		11		36		22		—		265		—		—		334
Individuals' loans for household and other personal expenditures
Pass	34,921		27,868		37,193		14,676		3,983		5,878		35,512		659		160,690
Special Mention	29		224		226		135		110		18		623		—		1,365
Substandard	—		22		10		—		—		—		2		—		34
Total Individuals' loans for household and other personal expenditures	34,950		28,114		37,429		14,811		4,093		5,896		36,137		659		162,089
Current period gross charge-offs	22		353		232		120		25		32		—		—		784
Public finance and other commercial loans
Pass	43,164		54,409		206,136		199,844		152,505		308,167		589		—		964,814
Total Public finance and other commercial loans	43,164		54,409		206,136		199,844		152,505		308,167		589		—		964,814
Loans	$	1,622,879	$	2,244,226	$	2,170,991	$	1,760,231	$	1,269,379	$	1,284,424	$	2,280,064	$	7,456	$	12,639,650
Total current period gross charge-offs	$	1,122	$	32,545	$	879	$	8,624	$	400	$	484	$	—	$	—	$	44,054

	December 31, 2023
	Term Loans (amortized cost basis by origination year)												Revolving loans amortized		Revolving loans converted
	2023		2022		2021		2020		2019		Prior		cost basis		to term		Total
Commercial and industrial loans
Pass	$	1,175,967	$	474,601	$	253,148	$	86,226	$	47,910	$	45,020	$	1,393,756	$	60	$	3,476,688
Special Mention	34,356		3,911		1,546		5,149		2,986		241		45,994		—		94,183
Substandard	12,311		20,245		17,733		2,479		1,507		1,512		40,449		144		96,380
Doubtful	857		—		—		—		—		—		2,840		—		3,697
Total Commercial and industrial loans	1,223,491		498,757		272,427		93,854		52,403		46,773		1,483,039		204		3,670,948
Current period gross charge-offs	13,973		2,711		576		5,665		78		261		—		—		23,264
Agricultural land, production and other loans to farmers
Pass	35,633		38,145		31,511		31,048		12,995		25,462		87,534		—		262,328
Special Mention	—		266		—		—		—		122		—		—		388
Substandard	58		150		—		454		—		36		—		—		698
Total Agricultural land, production and other loans to farmers	35,691		38,561		31,511		31,502		12,995		25,620		87,534		—		263,414
Real estate loans:
Construction
Pass	403,578		267,587		198,350		8,372		7,723		2,357		11,735		—		899,702
Special Mention	25,894		—		—		20,846		—		—		—		—		46,740
Substandard	1,451		4,330		5,322		—		—		—		—		—		11,103
Total Construction	430,923		271,917		203,672		29,218		7,723		2,357		11,735		—		957,545
Commercial real estate, non-owner occupied
Pass	373,378		504,280		535,327		418,553		141,320		200,821		16,744		—		2,190,423
Special Mention	76,382		21,145		7,005		4,531		19,479		27,941		37		—		156,520
Substandard	20,358		10,537		219		20,236		—		2,299		247		—		53,896
Total Commercial real estate, non-owner occupied	470,118		535,962		542,551		443,320		160,799		231,061		17,028		—		2,400,839
Current period gross charge-offs	—		66		—		—		—		—		—		—		66
Commercial real estate, owner occupied
Pass	176,750		199,821		256,346		263,522		99,180		77,485		27,369		—		1,100,473
Special Mention	6,712		5,034		9,319		2,460		919		2,902		514		—		27,860
Substandard	18,092		3,712		4,183		4,545		289		2,929		—		—		33,750
Total Commercial real estate, owner occupied	201,554		208,567		269,848		270,527		100,388		83,316		27,883		—		1,162,083
Current period gross charge-offs	48		—		—		—		2		—		—		—		50
Residential
Pass	395,363		695,056		442,495		365,297		98,654		254,718		4,988		83		2,256,654
Special Mention	2,167		5,591		3,202		1,924		1,065		4,837		200		81		19,067
Substandard	804		3,708		2,529		1,199		866		4,063		31		—		13,200
Total Residential	398,334		704,355		448,226		368,420		100,585		263,618		5,219		164		2,288,921
Current period gross charge-offs	101		252		208		3		3		94		—		—		661
Home equity
Pass	9,375		29,784		61,591		11,084		1,092		3,875		484,330		5,837		606,968
Special Mention	—		715		—		1,092		15		2		5,031		149		7,004
Substandard	63		—		727		—		—		123		2,589		97		3,599
Total Home Equity	9,438		30,499		62,318		12,176		1,107		4,000		491,950		6,083		617,571
Current period gross charge-offs	69		213		224		149		193		1,596		—		—		2,444
Individuals' loans for household and other personal expenditures
Pass	35,781		49,295		28,387		6,726		2,070		5,904		38,619		772		167,554
Special Mention	184		246		138		69		—		14		176		—		827
Substandard	—		6		—		—		1		—		—		—		7
Total Individuals' loans for household and other personal expenditures	35,965		49,547		28,525		6,795		2,071		5,918		38,795		772		168,388
Current period gross charge-offs	147		770		342		77		62		156		—		—		1,554
Public finance and other commercial loans
Pass	65,357		208,347		204,863		155,132		91,619		229,355		1,645		—		956,318
Total Public finance and other commercial loans	65,357		208,347		204,863		155,132		91,619		229,355		1,645		—		956,318
Loans	$	2,870,871	$	2,546,512	$	2,063,941	$	1,410,944	$	529,690	$	892,018	$	2,164,828	$	7,223	$	12,486,027
Total current period gross charge-offs	$	14,338	$	4,012	$	1,350	$	5,894	$	338	$	2,107	$	—	$	—	$	28,039

The tables below present the amortized cost basis of collateral dependent loans by loan class and their respective collateral type, which are individually evaluated to determine expected credit losses. The total collateral dependent loan balance increased $5.0 million, primarily related to an increase of $8.1 million in commercial real estate, non-owner occupied, offset by a decrease of $3.4 million in commercial and industrial, for the six months ended June 30, 2024. The total related allowance balance decreased $612,000, primarily related to a decrease of $3.0 million in commercial and industrial, offset by an increase of $2.4 million in commercial real estate, non-owner occupied, for the six months ended June 30, 2024.

	June 30, 2024
	Commercial Real Estate		Residential Real Estate		Other		Total		Allowance on Collateral Dependent Loans
Commercial and industrial loans	$	—	$	—	$	28,665	$	28,665	$	8,442
Real estate loans:
Construction	—		5		—		5		—
Commercial real estate, non-owner occupied	25,606		—		—		25,606		2,483
Commercial real estate, owner occupied	9,951		—		—		9,951		—
Residential	—		1,263		—		1,263		204
Home equity	—		212		—		212		28
Loans	$	35,557	$	1,480	$	28,665	$	65,702	$	11,157

	December 31, 2023
	Commercial Real Estate		Residential Real Estate		Other		Total		Allowance on Collateral Dependent Loans
Commercial and industrial loans	$	—	$	—	$	32,029	$	32,029	$	11,474
Real estate loans:
Construction	—		7		—		7		—
Commercial real estate, non-owner occupied	17,516		—		—		17,516		35
Commercial real estate, owner occupied	9,452		—		—		9,452		—
Residential	—		1,439		—		1,439		230
Home equity	—		223		—		223		30
Loans	$	26,968	$	1,669	$	32,029	$	60,666	$	11,769

Summary of Past Due Aging of Loan Portfolio by Loan Class

The tables below show a past due aging of the Corporation’s loan portfolio, by loan class, as of the dates indicated:

	June 30, 2024
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	3,932,986	$	6,014	$	463	$	10,354	$	3,949,817	$	385
Agricultural land, production and other loans to farmers	239,676		250		—		—		239,926		—
Real estate loans:
Construction	802,064		—		21,203		—		823,267		—
Commercial real estate, non-owner occupied	2,306,861		1,789		1,799		13,084		2,323,533		—
Commercial real estate, owner occupied	1,170,516		3,237		—		442		1,174,195		—
Residential	2,342,411		12,483		4,213		11,798		2,370,905		1,187
Home equity	621,441		4,293		2,152		3,218		631,104		114
Individuals' loans for household and other personal expenditures	160,690		1,017		348		34		162,089		—
Public finance and other commercial loans	964,814		—		—		—		964,814		—
Loans	$	12,541,459	$	29,083	$	30,178	$	38,930	$	12,639,650	$	1,686

	December 31, 2023
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	3,657,447	$	5,021	$	1,622	$	6,858	$	3,670,948	$	86
Agricultural land, production and other loans to farmers	263,414		—		—		—		263,414		—
Real estate loans:
Construction	955,588		—		1,957		—		957,545		—
Commercial real estate, non-owner occupied	2,376,184		12,995		195		11,465		2,400,839		—
Commercial real estate, owner occupied	1,161,869		—		104		110		1,162,083		—
Residential	2,259,496		11,810		5,472		12,143		2,288,921		—
Home equity	608,948		3,614		1,647		3,362		617,571		52
Individuals' loans for household and other personal expenditures	167,553		635		192		8		168,388		—
Public finance and other commercial loans	956,284		—		—		34		956,318		34
Loans	$	12,406,783	$	34,075	$	11,189	$	33,980	$	12,486,027	$	172

Summary of Non-Accrual Loans by Loan class

The following table summarizes the Corporation’s nonaccrual loans by loan class as of the dates indicated:

	June 30, 2024				December 31, 2023
	Nonaccrual Loans		Nonaccrual Loans with no Allowance for Credit Losses		Nonaccrual Loans		Nonaccrual Loans with no Allowance for Credit Losses
Commercial and industrial loans	$	13,373	$	5,884	$	9,050	$	1,015
Agricultural land, production and other loans to farmers	53		—		58		—
Real estate loans:
Construction	—		—		520		—
Commercial real estate, non-owner occupied	22,704		10,372		11,932		11,095
Commercial real estate, owner occupied	2,452		1,870		3,041		2,257
Residential	18,814		—		25,140		—
Home equity	4,476		—		3,820		—
Individuals' loans for household and other personal expenditures	34		—		19		—
Loans	$	61,906	$	18,126	$	53,580	$	14,367

Summary of Modified Loans

The following tables present the amortized cost basis of loans at June 30, 2024 and 2023 that were both experiencing financial difficulty and modified during the three and six months ended June 30, 2024 and 2023, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.

	Three Months Ended June 30, 2024
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Combination Payment Delay & Term Extension		Combination Interest Rate Reduction, Term Extension, & Payment Delay		% of Total Class of Financing Receivable
Commercial and industrial loans	$	—	$	1,778	$	13	$	—	0.05	%
Real estate loans:
Commercial real estate, non-owner occupied	—		19,488		—		—		0.84	%
Commercial real estate, owner occupied	—		1,990		—		—		0.17	%
Residential	250		—		392		227		0.04	%
Home equity	—		—		162		—		0.03	%
Total	$	250	$	23,256	$	567	$	227

	Three Months Ended June 30, 2023
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Combination Interest Rate Reduction & Term Extension		Combination Payment Delay & Term Extension		% of Total Class of Financing Receivable
Commercial and industrial loans	$	—	$	3,917	$	110	$	—	0.11	%
Real estate loans:
Commercial real estate, non-owner occupied	—		1,570		—		—		0.07	%
Commercial real estate, owner occupied	5,664		2,032		—		—		0.65	%
Residential	—		14		—		458		0.02	%
Total	$	5,664	$	7,533	$	110	$	458

	Six Months Ended June 30, 2024
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Interest Rate Reduction		Combination Payment Delay & Term Extension		Combination Interest Rate Reduction, Term Extension, & Payment Delay		% of Total Class of Financing Receivable
Commercial and industrial loans	$	1,491	$	4,383	$	249	$	27	$	—	0.16	%
Real estate loans:
Commercial real estate, non-owner occupied	—		19,488		—		—		—		0.84	%
Commercial real estate, owner occupied	—		1,990		—		—		—		0.17	%
Residential	1,880		274		—		392		227		0.12	%
Home Equity	89		62		—		162		—		0.05	%
Total	$	3,460	$	26,197	$	249	$	581	$	227

	Six Months Ended June 30, 2023
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Combination Interest Rate Reduction & Term Extension		Combination Payment Delay & Term Extension		% of Total Class of Financing Receivable
Commercial and industrial loans	$	—	$	12,897	$	110	$	—	0.37	%
Agricultural land, production and other loans to farmers	—		35		—		—		0.02	%
Real estate loans:
Construction	—		15		—		—		—	%
Commercial real estate, non-owner occupied	—		12,394		5,954		—		0.77	%
Commercial real estate, owner occupied	5,664		2,843		79		—		0.73	%
Residential	—		14		—		458		0.02	%
Total	$	5,664	$	28,198	$	6,143	$	458

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three and six months ended June 30, 2024 and 2023.

	Three Months Ended June 30, 2024
	Financial Effect of Loan Modifications
	Payment Delay	Term Extension	Combination Payment Delay & Term Extension	Combination Payment Delay, Term Extension & Interest Rate Reduction
Commercial and industrial loans		Extended loans by a weighted average of 12 months.	Provided payment deferrals with weighted average delayed amounts of $5,000 and extended loans by a weighted average of 3 months.
Real estate loans:
Commercial real estate, non-owner occupied		Extended loans by a weighted average of 16 months.
Commercial real estate, owner occupied		Extended loans by a weighted average of 28 months.
Residential	Provided payment deferrals with weighted average delayed amounts of $9,000.		Provided payment deferrals with weighted average delayed amounts of $8,000 and extended loans by a weighted average of 120 months.	Provided payment deferrals with weighted average delayed amounts of $14,000, extended loans by a weighted average of 12 months, and reduced the weighted average contractual interest rate from 5.75% to 5.00%.
Home equity			Provided payment deferrals with weighted average delayed amounts of $8,000 and extended loans by a weighted average of 60 months.

	Three Months Ended June 30, 2023
	Financial Effect of Loan Modifications
	Payment Delay	Term Extension	Combination Interest Rate Reduction & Term Extension	Combination Payment Delay & Term Extension
Commercial and industrial loans		Extended loans by a weighted average of 6 months.	Reduced the weighted average contractual interest rate from 8.25% to 7.10%. Extended loans by a weighted average of 12 months.
Real estate loans:
Commercial real estate, non-owner occupied		Extended loans by a weighted average of 8 months.
Commercial real estate, owner occupied	Provided payment deferrals with weighted average delayed amounts of $4.5 million.	Extended loans by a weighted average of 6 months.
Residential		Extended loans by a weighted average of 11 months.		Provided payment deferrals with weighted average delayed amounts of $3,400. Extended loans by a weighted average of 3 months.

	Six Months Ended June 30, 2024
	Financial Effect of Loan Modifications
	Payment Delay	Term Extension	Interest Rate Reduction	Combination Payment Delay & Term Extension	Combination Payment Delay, Term Extension & Interest Rate Reduction
Commercial and industrial loans	Provided payment deferrals with weighted average delayed amounts of $50,000.	Extended loans by a weighted average of 14 months.	Reduced the weighted average contractual interest rate from 9.00% to 8.00%.	Provided payment deferrals with weighted average delayed amounts of $5,000 and extended loans by a weighted average of 3 months.
Real estate loans:
Commercial real estate, non-owner occupied		Extended loans by a weighted average of 16 months.
Commercial real estate, owner occupied		Extended loans by a weighted average of 28 months.
Residential	Provided payment deferrals with weighted average delayed amounts of $28,000.	Extended loans by a weighted average of 6 months.		Provided payment deferrals with weighted average delayed amounts of $8,000 and extended loans by a weighted average of 120 months.	Provided payment deferrals with weighted average delayed amounts of $14,000, extended loans by a weighted average of 12 months, and reduced the weighted average contractual interest rate from 5.75% to 5.00%.
Home Equity	Provided payment deferrals with weighted average delayed amounts of $4,000.	Extended loans by a weighted average of 5 months.		Provided payment deferrals with weighted average delayed amounts of $8,000 and extended loans by a weighted average of 60 months.

	Six Months Ended June 30, 2023
	Financial Effect of Loan Modifications
	Payment Delay	Term Extension	Combination Interest Rate Reduction & Term Extension	Combination Payment Delay & Term Extension
Commercial and industrial loans		Extended loans by a weighted average of 7 months.	Reduced the weighted average contractual interest rate from 8.25% to 7.10%. Extended loans by a weighted average of 12 months.	Reduced the weighted average contractual interest rate from 8.25% to 7.10%. Extended loans by a weighted average of 12 months.
Agricultural land, production and other loans to farmers		Extended loans by a weighted average of 60 months.
Real estate loans:
Construction		Extended loans by a weighted average of 24 months.
Commercial real estate, non-owner occupied		Extended loans by a weighted average of 9 months.	Reduced the weighted average contractual interest rate from 7.81% to 7.40%. Extended loans by a weighted average of 41 months.
Commercial real estate, owner occupied	Provided payment deferrals with weighted average delayed amounts of $4.5 million.	Extended loans by a weighted average of 6 months.	Reduced the weighted average contractual interest rate from 10.25% to 6.61%. Extended loans by a weighted average of 12 months.
Residential		Extended loans by a weighted average of 11 months.		Provided payment deferrals with weighted average delayed amounts $3,400. Extended loans by a weighted average of 3 months.

The following tables present the amortized cost basis and payment status of loans modified within the previous twelve months to borrowers experiencing financial difficulty, and that subsequently defaulted during the three and six months ended June 30, 2024 and 2023 and remained in default at period end.

	Three Months Ended June 30, 2024
	Payment Status
	Current		30-89 Days Past Due
Commercial and industrial loans	$	1,791	$	125
Real estate loans:
Commercial real estate, non-owner occupied	19,488		1,799
Commercial real estate, owner occupied	1,990		—
Residential	869		538
Home equity	162		89
Total	$	24,300	$	2,551

	Three Months Ended June 30, 2023
	Payment Status
	Current		30-89 Days Past Due		90+ Days Past Due
Commercial and industrial loans	$	4,027	$	—	$	—
Real estate loans:
Commercial real estate, non-owner occupied	1,570		—		—
Commercial real estate, owner occupied	7,696		—		—
Residential	159		108		205
Total	$	13,452	$	108	$	205

	Six Months Ended June 30, 2024
	Payment Status
	Current		30-89 Days Past Due		90+ Days Past Due
Commercial and industrial loans	$	6,150	$	125	$	—
Real estate loans:
Commercial real estate, non-owner occupied	19,488		1,799		—
Commercial real estate, owner occupied	1,990		—		—
Residential	1,219		538		1,188
Home equity	224		89		—
Total	$	29,071	$	2,551	$	1,188

	Six Months Ended June 30, 2023
	Payment Status
	Current		30-89 Days Past Due		90+ Days Past Due
Commercial and industrial loans	$	13,007	$	—	$	—
Agricultural land, production and other loans to farmers	35		—		—
Real estate loans:
Construction	15		—		—
Commercial real estate, non-owner occupied	18,348		—		—
Commercial real estate, owner occupied	8,586		—		—
Residential	159		108		205
Total	$	40,150	$	108	$	205

Summary of Changes in Allowance for Loan Losses

The following tables summarize changes in the allowance for credit losses by loan segment for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30, 2024
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, March 31, 2024	$	99,213	$	45,278	$	20,369	$	39,821	$	204,681
Provision for credit losses	31,648		75		(6,009)		(1,214)		24,500
Recoveries on loans	536		161		—		560		1,257
Loans charged off	(40,180)		—		—		(721)		(40,901)
Balances, June 30, 2024	$	91,217	$	45,514	$	14,360	$	38,446	$	189,537

	Three Months Ended June 30, 2023
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, March 31, 2023	$	101,304	$	46,308	$	28,571	$	46,869	$	223,052
Provision for credit losses	7,639		(7,151)		1,502		(1,990)		—
Recoveries on loans	66		—		—		379		445
Loans charged off	(636)		—		—		(1,714)		(2,350)
Balances, June 30, 2023	$	108,373	$	39,157	$	30,073	$	43,544	$	221,147

	Six Months Ended June 30, 2024
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, December 31, 2023	$	97,348	$	44,048	$	24,823	$	38,715	$	204,934
Provision for credit losses	34,793		1,603		(10,463)		567		26,500
Recoveries on loans	1,087		214		—		856		2,157
Loans charged off	(42,011)		(351)		—		(1,692)		(44,054)
Balances, June 30, 2024	$	91,217	$	45,514	$	14,360	$	38,446	$	189,537

	Six Months Ended June 30, 2023
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, December 31, 2022	$	102,216	$	46,839	$	28,955	$	45,267	$	223,277
Provision for credit losses	6,440		(7,734)		1,118		176		—
Recoveries on loans	596		56		—		637		1,289
Loans charged off	(879)		(4)		—		(2,536)		(3,419)
Balances, June 30, 2023	$	108,373	$	39,157	$	30,073	$	43,544	$	221,147

Summary of Financial Instruments with Off-balance Sheet Risk

Financial instruments with off-balance sheet risk were as follows:

	June 30, 2024		December 31, 2023
Amounts of commitments:
Loan commitments to extend credit	$	5,271,982	$	5,025,790
Standby letters of credit	$	69,618	$	65,580

Summary of Allowance for Credit Losses, Off-balance Sheet

The table below reflects the total allowance for credit losses for the off-balance sheet commitment for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Balance at beginning of the period	$	19,500	$	23,300	$	19,500	$	23,300
Provision for credit losses - unfunded commitments	—		—		—		—
Ending balance	$	19,500	$	23,300	$	19,500	$	23,300

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)

The amount of gain (loss) recognized in other comprehensive income (loss) is included in the table below for the periods indicated.

Derivatives in Cash Flow Hedging Relationships	Amount of Loss Recognized in Other Comprehensive Income (Loss) on Derivatives  (Effective Portion)
	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Interest Rate Products	$	—	$	(62)	$	—	$	(113)

Summary of Effect of Derivative Financial Instruments on the Income Statement

The amount of gain (loss) reclassified from other comprehensive income (loss) into income related to cash flow hedging relationships is included in the tables below for the periods indicated.

Derivatives Designated as Hedging Instruments	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain Reclassed from Other Comprehensive Income (Loss) into Income (Effective Portion)
		Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
Interest rate contracts	Interest Expense	$	—	$	(16)

Derivatives Designated as Hedging Instruments	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain Reclassed from Other Comprehensive Income (Loss) into Income (Effective Portion)
		Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Interest rate contracts	Interest Expense	$	—	$	(15)

The amount of gain (loss) recognized into income related to non-designated hedging instruments is included in the tables below for the periods indicated.

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain (Loss) Recognized into Income on Derivatives
		Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
Forward contracts related to mortgage loans to be delivered for sale	Net gains and fees on sales of loans	$	395	$	604
Interest rate lock commitments	Net gains and fees on sales of loans	(33)		(220)
Total net gain (loss) recognized in income		$	362	$	384

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain (Loss) Recognized into Income on Derivatives
		Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Forward contracts related to mortgage loans to be delivered for sale	Net gains and fees on sales of loans	$	393	$	709
Interest rate lock commitments	Net gains and fees on sales of loans	(45)		(33)
Total net gain/(loss) recognized in income		$	348	$	676

Summary of Fair Value of Derivative Financial Instruments and Classification on the Balance Sheet

The table below presents the fair value of the Corporation’s non-designated hedges, as well as their classification on the Consolidated Condensed Balance Sheet, as of June 30, 2024, and December 31, 2023.

	June 30, 2024				December 31, 2023
	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in other assets:
Interest rate swaps	$	1,299,892	$	86,965	$	1,355,947	$	78,743
Forward contracts related to mortgage loans to be delivered for sale	46,801		605		15,160		469
Interest rate lock commitments	27,375		207		22,706		167
Included in other assets	$	1,374,068	$	87,777	$	1,393,813	$	79,379
Included in other liabilities:
Interest rate swaps	$	1,299,892	$	87,015	$	1,355,947	$	78,811
Forward contracts related to mortgage loans to be delivered for sale	30,948		129		25,290		191
Interest rate lock commitments	22,283		92		1,025		6
Included in other liabilities	$	1,353,123	$	87,236	$	1,382,262	$	79,008

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FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Summary of Fair Value Measurements of Assets and Liabilities Recognized in the Balance Sheets Measured at Fair Value on Recurring Basis

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2024, and December 31, 2023.

			Fair Value Measurements Using:
June 30, 2024	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	91,277	$	—	$	91,277	$	—
State and municipal	1,024,907		—		1,021,718		3,189
U.S. Government-sponsored mortgage-backed securities	490,654		—		490,650		4
Corporate obligations	12,055		—		12,024		31
Derivative assets	87,777		—		87,777		—
Derivative liabilities	87,236		—		87,236		—

			Fair Value Measurements Using:
December 31, 2023	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	95,307	$	—	$	95,307	$	—
State and municipal	1,065,171		—		1,061,896		3,275
U.S. Government-sponsored mortgage-backed securities	454,815		—		454,811		4
Corporate obligations	11,819		—		11,788		31
Derivative assets	79,379		—		79,379		—
Derivative liabilities	79,008		—		79,008		—

Summary of Reconciliation of Beginning and Ending Balances of Recurring Fair Value Measurements Recognized in the Balance Sheets using Significant Unobservable Level 3 Inputs

The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying

balance sheets using significant unobservable Level 3 inputs for the three and six months ended June 30, 2024 and 2023.

	Available for Sale Securities
	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Balance at beginning of the period	$	3,247	$	3,462	$	3,310	$	3,439
Included in other comprehensive income	(21)		(111)		11		3
Principal payments	(2)		(3)		(97)		(94)
Ending balance	$	3,224	$	3,348	$	3,224	$	3,348

Summary of Description of Valuation Methodologies Used for Instruments Measured at Fair Value on a Non-Recurring Basis and Recognized in the Balance Sheets

Following is a description of valuation methodologies used for instruments measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy at June 30, 2024, and December 31, 2023.

			Fair Value Measurements Using
June 30, 2024	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	30,988	$	—	$	—	$	30,988

			Fair Value Measurements Using
December 31, 2023	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable  Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	55,020	$	—	$	—	$	55,020

Summary of Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements Other than Goodwill

The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill, at June 30, 2024 and December 31, 2023.

June 30, 2024	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	3,189	Discounted cash flow	Maturity/Call date	1 month to 6 years
				US Muni BQ curve	BBB
				Discount rate	3.7% - 4.6%
				Weighted-average coupon	3.3%
Corporate obligations and U.S. Government-sponsored mortgage-backed securities	$	35	Discounted cash flow	Risk free rate	3 month CME Term SOFR plus 26bps
				plus premium for illiquidity (basis points)	plus 200bps
				Weighted-average coupon	0%
Collateral dependent loans	$	30,988	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 25%
				Weighted-average discount by loan balance	21.8%

December 31, 2023	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	3,275	Discounted cash flow	Maturity/Call date	1 month to 15 years
				US Muni BQ curve	A- to BBB
				Discount rate	3.6% - 4.7%
				Weighted-average coupon	3.3%
Corporate obligations and U.S. Government-sponsored mortgage-backed securities	$	35	Discounted cash flow	Risk free rate	3 month CME Term SOFR plus 26bps
				plus premium for illiquidity (basis points)	plus 200bps
				Weighted-average coupon	0%
Collateral dependent loans	$	55,020	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 10%
				Weighted-average discount by loan balance	4.1%

Summary of Estimated Fair Values of Financial Instruments

The following tables present estimated fair values of the Corporation’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2024 and December 31, 2023.

			June 30, 2024
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		Total Fair Value
Assets:
Cash and due from banks	$	105,372	$	105,372	$	—	$	—	$	105,372
Interest-bearing deposits	168,528		168,528		—		—		168,528
Investment securities available for sale	1,618,893		—		1,615,669		3,224		1,618,893
Investment securities held to maturity, net	2,134,195		—		1,771,567		7,649		1,779,216
Loans held for sale	32,292		—		32,292		—		32,292
Loans, net	12,450,113		—		—		12,121,987		12,121,987
Federal Home Loan Bank stock	41,738		—		41,738		—		41,738
Derivative assets	87,777		—		87,777		—		87,777
Interest receivable	97,546		—		97,546		—		97,546
Liabilities:
Deposits	$	14,569,070	$	12,096,840	$	2,460,291	$	—	14,557,131
Borrowings:
Federal funds purchased	147,229		—		147,229		—		147,229
Securities sold under repurchase agreements	100,451		—		100,451		—		100,451
Federal Home Loan Bank advances	832,703		—		822,958		—		822,958
Subordinated debentures and other borrowings	93,589		—		84,091		—		84,091
Derivative liabilities	87,236		—		87,236		—		87,236
Interest payable	18,554		—		18,554		—		18,554

			December 31, 2023
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		Total Fair Value
Assets:
Cash and due from banks	$	112,649	$	112,649	$	—	$	—	$	112,649
Interest-bearing deposits	436,080		436,080		—		—		436,080
Investment securities available for sale	1,627,112		—		1,623,802		3,310		1,627,112
Investment securities held to maturity, net	2,184,252		—		1,859,974		10,400		1,870,374
Loans held for sale	18,934		—		18,934		—		18,934
Loans, net	12,281,093		—		—		11,958,301		11,958,301
Federal Home Loan Bank stock	41,769		—		41,769		—		41,769
Derivative assets	79,379		—		79,379		—		79,379
Interest receivable	97,664		—		97,664		—		97,664
Liabilities:
Deposits	$	14,821,453	$	12,482,295	$	2,329,662	$	—	14,811,957
Borrowings:
Securities sold under repurchase agreements	157,280		—		157,265		—		157,265
Federal Home Loan Bank advances	712,852		—		707,377		—		707,377
Subordinated debentures and other borrowings	158,644		—		149,995		—		149,995
Derivative liabilities	79,008		—		79,008		—		79,008
Interest payable	18,912		—		18,912		—		18,912

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QUALIFIED AFFORDABLE HOUSING INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2024

Equity Method Investments and Joint Ventures [Abstract]

Summary of Affordable Housing Investments

The following table summarizes the Corporation’s affordable housing investments as of June 30, 2024 and December 31, 2023:

	June 30, 2024				December 31, 2023
Investment Type	Investment		Unfunded Commitment		Investment		Unfunded Commitment
LIHTC	$	151,029	$	120,562	$	114,514	$	96,408

The following table summarizes the amortization expense and tax credits recognized for the Corporation’s affordable housing investments for the three and six months ended June 30, 2024 and 2023, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Amortization expense	$	1,626	$	1,594	$	3,323	$	1,837
Tax credits recognized	1,644		1,332		3,289		1,616

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BORROWINGS (Tables)

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Summary of Borrowings

The following table summarizes the Corporation’s borrowings as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023
Federal funds purchased	$	147,229	$	—
Securities sold under repurchase agreements	100,451		157,280
Federal Home Loan Bank advances	832,703		712,852
Subordinated debentures and other borrowings	93,589		158,644
Total Borrowings	$	1,173,972	$	1,028,776

Summary of Collateral Pledged for Repurchase Agreements

The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of June 30, 2024 and December 31, 2023 were:

	June 30, 2024
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	100,451	$	—	$	—	$	—	$	100,451

	December 31, 2023
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	157,280	$	—	$	—	$	—	$	157,280

Schedule of Contractual Maturities of Borrowings

Contractual maturities of borrowings as of June 30, 2024, are as follows:

Maturities in Years Ending December 31:	Federal Funds Purchased		Securities Sold Under Repurchase Agreements		Federal Home Loan Bank Advances		Subordinated Debentures and Term Loans
2024	$	147,229	$	100,451	$	110,000	$	1,166
2025	—		—		95,000		—
2026	—		—		75,000		—
2027	—		—		250,000		—
2028	—		—		190,000		5,000
2029 and after	—		—		112,703		90,938
ASC 805 fair value adjustments at acquisition	—		—		—		(3,515)
	$	147,229	$	100,451	$	832,703	$	93,589

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Summary of Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, as of June 30, 2024 and 2023:

	Accumulated Other Comprehensive Income (Loss)
	Unrealized Gains (Losses) on Securities Available for Sale		Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Defined Benefit Plans		Total
Balance at December 31, 2023	$	(173,654)	$	—	$	(2,316)	$	(175,970)
Other comprehensive income (loss) before reclassifications	(36,049)		—		—		(36,049)
Amounts reclassified from accumulated other comprehensive income (loss)	40		—		—		40
Period change	(36,009)		—		—		(36,009)
Balance at June 30, 2024	$	(209,663)	$	—	$	(2,316)	$	(211,979)
Balance at December 31, 2022	$	(234,495)	$	130	$	(4,786)	$	(239,151)
Other comprehensive income (loss) before reclassifications	18,924		(90)		—		18,834
Amounts reclassified from accumulated other comprehensive income (loss)	2,341		12		—		2,353
Period change	21,265		(78)		—		21,187
Balance at June 30, 2023	$	(213,230)	$	52	$	(4,786)	$	(217,964)

Summary of Reclassification out of Accumulated Other Comprehensive Income (Loss)

The following tables present the reclassification adjustments out of accumulated other comprehensive income (loss) that were included in net income in the Consolidated Condensed Statements of Income for the three and six months ended June 30, 2024 and 2023.

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Three Months Ended June 30,
Details about Accumulated Other Comprehensive Income (Loss) Components	2024		2023		Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities gains (losses) reclassified into income	$	(49)	$	(1,392)	Other income - net realized gains (losses) on sales of available for sale securities
Related income tax benefit (expense)	10		292		Income tax expense
	$	(39)	$	(1,100)
Unrealized gains (losses) on cash flow hedges (2)
Interest rate contracts	$	—	$	(16)	Interest expense - subordinated debentures and term loans
Related income tax benefit (expense)	—		3		Income tax expense
	$	—	$	(13)
Total reclassifications for the period, net of tax	$	(39)	$	(1,113)

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Six Months Ended June 30,
Details about Accumulated Other Comprehensive Income (Loss) Components	2024		2023		Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities gains reclassified into income	$	(51)	$	(2,963)	Other income - net realized gains on sales of available for sale securities
Related income tax benefit (expense)	11		622		Income tax expense
	$	(40)	$	(2,341)
Unrealized gains (losses) on cash flow hedges (2)
Interest rate contracts	$	—	$	(15)	Interest expense - subordinated debentures and term loans
Related income tax benefit (expense)	—		3		Income tax expense
	$	—	$	(12)
Total reclassifications for the period, net of tax	$	(40)	$	(2,353)

(1) For additional detail related to unrealized gains (losses) on available for sale securities and related amounts reclassified from accumulated other comprehensive loss see NOTE 2. INVESTMENT SECURITIES of these Notes to Consolidated Condensed Financial Statements.

(2) For additional detail related to unrealized gains (losses) on cash flow hedges and related amounts reclassified from accumulated other comprehensive loss see NOTE 4. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements.

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SHARE-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Summary of Components of Share Based Compensation Awards

The following table summarizes the components of the Corporation's share-based compensation awards recorded as an expense and the income tax benefit of such awards.

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Stock and ESPP Options
Pre-tax compensation expense	$	35	$	15	$	102	$	44
Income tax expense (benefit)	(40)		(6)		(40)		(62)
Stock and ESPP option expense, net of income taxes	$	(5)	$	9	$	62	$	(18)
Restricted Stock Awards
Pre-tax compensation expense	$	1,316	$	1,220	$	2,652	$	2,388
Income tax expense (benefit)	(258)		(257)		(523)		(513)
Restricted stock awards expense, net of income taxes	$	1,058	$	963	$	2,129	$	1,875
Total Share-Based Compensation
Pre-tax compensation expense	$	1,351	$	1,235	$	2,754	$	2,432
Income tax expense (benefit)	(298)		(263)		(563)		(575)
Total share-based compensation expense, net of income taxes	$	1,053	$	972	$	2,191	$	1,857

Summary of Stock Option Activity Under Stock Option Plans

Stock option activity under the Corporation's stock option plans as of June 30, 2024 and changes during the six months ended June 30, 2024, were as follows:

	Number of Shares	Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2024	90,075	$	20.21
Exercised	(42,893)	$	18.94
Outstanding June 30, 2024	47,182	$	21.36	1.91	$	562,979
Vested and Expected to Vest at June 30, 2024	47,182	$	21.36	1.91	$	562,979
Exercisable at June 30, 2024	47,182	$	21.36	1.91	$	562,979

Summary of Unvested RSAs Outstanding

The following table summarizes information on unvested RSAs outstanding as of June 30, 2024:

	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested RSAs at January 1, 2024	452,426	$	37.94
Granted	24,052	$	34.00
Vested	(16,216)	$	44.21
Forfeited	(2,250)	$	38.23
Unvested RSAs at June 30, 2024	458,012	$	37.51

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INCOME TAX (Tables)

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

Summary of Reconciliation of Federal Statutory to Actual Tax Expense

The following table summarizes the major components creating differences between income taxes at the federal statutory and the effective tax rate recorded in the consolidated statements of income for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal statutory income tax at 21%	$	9,238		$	15,028		$	20,739		$	30,861
Tax-exempt interest income	(4,396)			(4,456)			(8,748)			(9,323)
Non-deductible FDIC premiums	143			113			282			173
Share-based compensation	(15)			(3)			15			(64)
Tax-exempt earnings and gains on life insurance	(405)			(441)			(739)			(711)
Tax credits	(360)			(73)			(664)			(165)
State Income Tax	(225)			520			(191)			1,220
Other	87			11			198			25
Actual Tax Expense	$	4,067		$	10,699		$	10,892		$	22,016
Effective Tax Rate	9.2		%	15.0		%	11.0		%	15.0		%

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NET INCOME PER COMMON SHARE (Tables)

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Summary of Reconciliation of Basic and Diluted Net Income Per Share

The following tables reconcile basic and diluted net income per common share for the three and six months ended June 30, 2024 and 2023.

	Three Months Ended June 30,
	2024					2023
	Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount		Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount
Net income available to common stockholders	$	39,456	58,104,021	$	0.68	$	60,393	59,263,813	$	1.02
Effect of potentially dilutive stock options and restricted stock awards			224,244					184,566
Diluted net income per common share	$	39,456	58,328,265	$	0.68	$	60,393	59,448,379	$	1.02
RSAs excluded from the diluted average common share calculation(1)			90,734					67,731

	Six Months Ended June 30,
	2024					2023
	Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount		Net Income Available to Common Stockholders		Weighted-Average Common Shares	Per Share Amount
Net income available to common stockholders	$	86,928	58,585,405	$	1.48	$	124,003	59,240,137	$	2.09
Effect of potentially dilutive stock options and restricted stock awards			215,058					205,920
Diluted net income per common share	$	86,928	58,800,463	$	1.48	$	124,003	59,446,057	$	2.09
RSAs excluded from the diluted average common share calculation(1)			89,011					59,913

(1) Anti-dilution occurs when the unrecognized compensation cost per share of an RSA exceeds the market price of the Corporation's stock.

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GENERAL - Narrative (Details)	6 Months Ended
	Jun. 30, 2024 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segments	1

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INVESTMENT SECURITIES - Amortized Cost and Approximate Fair Value of Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Available for sale securities
Amortized Cost	$ 1,884,215	$ 1,846,840
Gross Unrealized Gains	401	826
Gross Unrealized Losses	265,723	220,554
Fair Value	1,618,893	1,627,112
Held to maturity securities
Amortized Cost	2,134,440	2,184,497
Allowance for Credit Losses	245	245
Net Carrying Amount	2,134,195	2,184,252
Gross Unrealized Gains	300	1,625
Gross Unrealized Losses	355,524	315,748
Fair Value	1,779,216	1,870,374
U.S. Government-sponsored agency securities
Available for sale securities
Amortized Cost	108,842	111,521
Gross Unrealized Gains	0	0
Gross Unrealized Losses	17,565	16,214
Fair Value	91,277	95,307
Held to maturity securities
Amortized Cost	365,081	374,002
Allowance for Credit Losses	0	0
Net Carrying Amount	365,081	374,002
Gross Unrealized Gains	0	0
Gross Unrealized Losses	66,005	64,159
Fair Value	299,076	309,843
State and municipal
Available for sale securities
Amortized Cost	1,178,364	1,181,029
Gross Unrealized Gains	25	364
Gross Unrealized Losses	153,482	116,222
Fair Value	1,024,907	1,065,171
Held to maturity securities
Amortized Cost	1,091,714	1,099,201
Allowance for Credit Losses	245	245
Net Carrying Amount	1,091,469	1,098,956
Gross Unrealized Gains	300	1,625
Gross Unrealized Losses	183,892	152,113
Fair Value	908,122	948,713
U.S. Government-sponsored mortgage-backed securities
Available for sale securities
Amortized Cost	584,055	541,343
Gross Unrealized Gains	376	462
Gross Unrealized Losses	93,777	86,990
Fair Value	490,654	454,815
Held to maturity securities
Amortized Cost	676,145	709,794
Allowance for Credit Losses	0	0
Net Carrying Amount	676,145	709,794
Gross Unrealized Gains	0	0
Gross Unrealized Losses	105,607	99,448
Fair Value	570,538	610,346
Corporate obligations
Available for sale securities
Amortized Cost	12,954	12,947
Gross Unrealized Gains	0	0
Gross Unrealized Losses	899	1,128
Fair Value	12,055	11,819
Foreign investment
Held to maturity securities
Amortized Cost	1,500	1,500
Allowance for Credit Losses	0	0
Net Carrying Amount	1,500	1,500
Gross Unrealized Gains	0	0
Gross Unrealized Losses	20	28
Fair Value	$ 1,480	$ 1,472

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INVESTMENT SECURITIES - Narrative (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023	Jan. 01, 2021
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Accrued interest on investment securities	$ 25,300	$ 25,200
Allowance for credit losses	245	245
Carrying value of securities pledged as collateral	1,500,000	1,800,000
Securities sold under repurchase agreements	118,800	181,400
State and municipal
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Allowance for credit losses	$ 245	$ 245
State and municipal | CECL adoption
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Allowance for credit losses			$ 245

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INVESTMENT SECURITIES - Amortized Cost of Investment Securities Held to Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Schedule of Held-to-maturity Securities [Line Items]
Total	$ 2,134,440	$ 2,184,497
Aaa
Schedule of Held-to-maturity Securities [Line Items]
Total	183,929
Aa1
Schedule of Held-to-maturity Securities [Line Items]
Total	161,380
Aa2
Schedule of Held-to-maturity Securities [Line Items]
Total	167,506
Aa3
Schedule of Held-to-maturity Securities [Line Items]
Total	133,319
A1
Schedule of Held-to-maturity Securities [Line Items]
Total	131,193
A2
Schedule of Held-to-maturity Securities [Line Items]
Total	16,839
A3
Schedule of Held-to-maturity Securities [Line Items]
Total	3,470
Non-rated
Schedule of Held-to-maturity Securities [Line Items]
Total	1,336,804
State and municipal
Schedule of Held-to-maturity Securities [Line Items]
Total	1,091,714	$ 1,099,201
State and municipal | Aaa
Schedule of Held-to-maturity Securities [Line Items]
Total	113,341
State and municipal | Aa1
Schedule of Held-to-maturity Securities [Line Items]
Total	161,380
State and municipal | Aa2
Schedule of Held-to-maturity Securities [Line Items]
Total	167,506
State and municipal | Aa3
Schedule of Held-to-maturity Securities [Line Items]
Total	133,319
State and municipal | A1
Schedule of Held-to-maturity Securities [Line Items]
Total	131,193
State and municipal | A2
Schedule of Held-to-maturity Securities [Line Items]
Total	16,839
State and municipal | A3
Schedule of Held-to-maturity Securities [Line Items]
Total	3,470
State and municipal | Non-rated
Schedule of Held-to-maturity Securities [Line Items]
Total	364,666
Other
Schedule of Held-to-maturity Securities [Line Items]
Total	1,042,726
Other | Aaa
Schedule of Held-to-maturity Securities [Line Items]
Total	70,588
Other | Aa1
Schedule of Held-to-maturity Securities [Line Items]
Total	0
Other | Aa2
Schedule of Held-to-maturity Securities [Line Items]
Total	0
Other | Aa3
Schedule of Held-to-maturity Securities [Line Items]
Total	0
Other | A1
Schedule of Held-to-maturity Securities [Line Items]
Total	0
Other | A2
Schedule of Held-to-maturity Securities [Line Items]
Total	0
Other | A3
Schedule of Held-to-maturity Securities [Line Items]
Total	0
Other | Non-rated
Schedule of Held-to-maturity Securities [Line Items]
Total	$ 972,138

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INVESTMENT SECURITIES - Investments' Gross Unrealized Losses and Fair Value Aggregated by Investment Category and Length of Time in Continuous Unrealized Loss Position (Details) $ in Thousands	Jun. 30, 2024 USD ($) security	Dec. 31, 2023 USD ($) security
Fair Value
Less than 12 Months	$ 107,497	$ 67,007
12 Months or Longer	1,475,469	1,493,547
Total	1,582,966	1,560,554
Gross Unrealized Losses
Less than 12 Months	3,803	1,101
12 Months or Longer	261,920	219,453
Total	$ 265,723	$ 220,554
Number of Securities | security	910	865
U.S. Government-sponsored agency securities
Fair Value
Less than 12 Months	$ 0	$ 0
12 Months or Longer	91,277	95,307
Total	91,277	95,307
Gross Unrealized Losses
Less than 12 Months	0	0
12 Months or Longer	17,565	16,214
Total	$ 17,565	$ 16,214
Number of Securities | security	14	14
State and municipal
Fair Value
Less than 12 Months	$ 50,145	$ 55,514
12 Months or Longer	973,117	963,584
Total	1,023,262	1,019,098
Gross Unrealized Losses
Less than 12 Months	2,900	1,076
12 Months or Longer	150,582	115,146
Total	$ 153,482	$ 116,222
Number of Securities | security	725	691
U.S. Government-sponsored mortgage-backed securities
Fair Value
Less than 12 Months	$ 57,352	$ 11,493
12 Months or Longer	399,051	422,868
Total	456,403	434,361
Gross Unrealized Losses
Less than 12 Months	903	25
12 Months or Longer	92,874	86,965
Total	$ 93,777	$ 86,990
Number of Securities | security	161	150
Corporate obligations
Fair Value
Less than 12 Months	$ 0	$ 0
12 Months or Longer	12,024	11,788
Total	12,024	11,788
Gross Unrealized Losses
Less than 12 Months	0	0
12 Months or Longer	899	1,128
Total	$ 899	$ 1,128
Number of Securities | security	10	10

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INVESTMENT SECURITIES - Investments in Debt and Equity Securities Reported Less than Historical Cost (Details) - Investments reported at less than historical cost - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Schedule of Investments [Line Items]
Historical cost	$ 1,848,689	$ 1,781,108
Fair value	1,582,966	1,560,554
Gross unrealized losses	$ 265,723	$ 220,554
Percent of the Corporation's investments available for sale	97.80%	95.90%

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INVESTMENT SECURITIES - Amortized Cost and Fair Value of Available for Sale Securities and Held to Maturity Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Amortized Cost
Due in one year or less	$ 2,402	$ 1,390
Due after one through five years	24,675	24,899
Due after five through ten years	160,390	127,948
Due after ten years	1,112,693	1,151,260
Total debt securities with a single maturity date	1,300,160	1,305,497
Total investment securities	1,884,215	1,846,840
Fair Value
Due in one year or less	2,383	1,382
Due after one through five years	22,920	23,372
Due after five through ten years	144,580	120,385
Due after ten years	958,356	1,027,158
Total debt securities with a single maturity date	1,128,239	1,172,297
Total investment securities	1,618,893	1,627,112
Amortized Cost
Due in one year or less	13,380	3,041
Due after one through five years	113,750	118,592
Due after five through ten years	139,308	135,805
Due after ten years	1,191,857	1,217,265
Total debt securities with a single maturity date	1,458,295	1,474,703
Total investment securities	2,134,440	2,184,497
Fair Value
Due in one year or less	13,249	3,043
Due after one through five years	106,226	111,723
Due after five through ten years	125,618	126,461
Due after ten years	963,585	1,018,801
Total debt securities with a single maturity date	1,208,678	1,260,028
Total investment securities	1,779,216	1,870,374
U.S. Government-sponsored mortgage-backed securities
Amortized Cost
U.S. Government-sponsored mortgage-backed securities	584,055	541,343
Fair Value
U.S. Government-sponsored mortgage-backed securities	490,654	454,815
Total investment securities	490,654	454,815
Amortized Cost
U.S. Government-sponsored mortgage-backed securities	676,145	709,794
Total investment securities	676,145	709,794
Fair Value
U.S. Government-sponsored mortgage-backed securities	570,538	610,346
Total investment securities	$ 570,538	$ 610,346

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INVESTMENT SECURITIES - Gross Gains and Losses on Sales and Redemptions of Available for Sale Securities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Sales and redemptions of investment securities available for sale:
Gross gains	$ 0	$ 151	$ 0	$ 759
Gross losses	(49)	(1,543)	(51)	(3,722)
Net gains (losses) on sales and redemptions of investment securities available for sale	$ (49)	$ (1,392)	$ (51)	$ (2,963)

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LOANS AND ALLOWANCE - Narrative (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) loan_segment	Jun. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)	Mar. 31, 2024 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale	$ 32,292,000		$ 32,292,000		$ 18,934,000
Loans	12,639,650,000		12,639,650,000		12,486,027,000
Interest income recognized on non-accrual loans	0	$ 0	$ 0	$ 0
Number of loan segments | loan_segment			10
Allowance for credit losses increase (decrease)	(15,100,000)		$ (15,400,000)
Net charge-offs	39,600,000		41,900,000
Provision expense	$ 24,500,000	0	$ 26,500,000	0
Standby letters of credit usual term	2 years		2 years
Increase (decrease) in provision	$ 0	0	$ 0	0	3,800,000
Off-balance sheet commitments	19,500,000	$ 23,300,000	19,500,000	$ 23,300,000	19,500,000	$ 19,500,000	$ 23,300,000	$ 23,300,000
Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	3,949,817,000		3,949,817,000		3,670,948,000
Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,323,533,000		2,323,533,000		2,400,839,000
Commercial real estate, owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,174,195,000		1,174,195,000		1,162,083,000
Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	823,267,000		823,267,000		957,545,000
Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	98,200,000		98,200,000		79,200,000
Increase (decrease) in past due loans			18,900,000
30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	29,083,000		29,083,000		34,075,000
Increase (decrease) in past due loans			(5,000,000)
30-59 Days Past Due | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	6,014,000		6,014,000		5,021,000
Increase (decrease) in past due loans			1,000,000
30-59 Days Past Due | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,789,000		1,789,000		12,995,000
Increase (decrease) in past due loans			(11,200,000)
30-59 Days Past Due | Commercial real estate, owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	3,237,000		3,237,000		0
Increase (decrease) in past due loans			3,200,000
30-59 Days Past Due | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	0		0		0
60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	30,178,000		30,178,000		11,189,000
Increase (decrease) in past due loans			19,000,000
60-89 Days Past Due | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	463,000		463,000		1,622,000
60-89 Days Past Due | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,799,000		1,799,000		195,000
60-89 Days Past Due | Commercial real estate, owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	0		0		104,000
60-89 Days Past Due | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	21,203,000		21,203,000		1,957,000
Increase (decrease) in past due loans			19,200,000
90 Days or More Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	38,930,000		38,930,000		33,980,000
Increase (decrease) in past due loans			5,000,000
90 Days or More Past Due | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	10,354,000		10,354,000		6,858,000
Increase (decrease) in past due loans			3,500,000
90 Days or More Past Due | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	13,084,000		13,084,000		11,465,000
Increase (decrease) in past due loans			1,600,000
90 Days or More Past Due | Commercial real estate, owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	442,000		442,000		110,000
90 Days or More Past Due | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 0		$ 0		$ 0

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LOANS AND ALLOWANCE - Composition of Loan Portfolio by Loan Class (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	$ 12,639,650	$ 12,486,027
Commercial and industrial loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	3,949,817	3,670,948
Agricultural land, production and other loans to farmers
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	239,926	263,414
Construction
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	823,267	957,545
Commercial real estate, non-owner occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	2,323,533	2,400,839
Commercial real estate, owner occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	1,174,195	1,162,083
Residential
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	2,370,905	2,288,921
Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	631,104	617,571
Individuals' loans for household and other personal expenditures
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	162,089	168,388
Public finance and other commercial loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	$ 964,814	$ 956,318

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LOANS AND ALLOWANCE - Risk Grading of Loan Portfolio by Loan Class (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	$ 1,622,879	$ 2,870,871
Current fiscal year, charge-offs		14,338
Fiscal year before current fiscal year	2,244,226	2,546,512
Fiscal year before current fiscal year, charge-offs		4,012
Two years before current fiscal year	2,170,991	2,063,941
Two years before current fiscal year, charge-offs		1,350
Three years before current fiscal year	1,760,231	1,410,944
Three years before current fiscal year, charge-offs		5,894
Four years before current fiscal year	1,269,379	529,690
Four years before current fiscal year, charge-offs		338
Prior	1,284,424	892,018
Prior, charge-offs		2,107
Revolving loans amortized cost basis	2,280,064	2,164,828
Revolving loans amortized cost basis, charge-offs		0
Revolving loans converted to term	7,456	7,223
Revolving loans converted to term, charge-offs		0
Total	12,639,650	12,486,027
Total, charge-offs		28,039
Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	794,689	1,223,491
Current fiscal year, charge-offs	1,100	13,973
Fiscal year before current fiscal year	862,245	498,757
Fiscal year before current fiscal year, charge-offs	31,803	2,711
Two years before current fiscal year	318,654	272,427
Two years before current fiscal year, charge-offs	205	576
Three years before current fiscal year	209,036	93,854
Three years before current fiscal year, charge-offs	8,425	5,665
Four years before current fiscal year	75,088	52,403
Four years before current fiscal year, charge-offs	345	78
Prior	77,989	46,773
Prior, charge-offs	133	261
Revolving loans amortized cost basis	1,612,112	1,483,039
Revolving loans amortized cost basis, charge-offs	0	0
Revolving loans converted to term	4	204
Revolving loans converted to term, charge-offs	0	0
Total	3,949,817	3,670,948
Total, charge-offs	42,011	23,264
Commercial and industrial loans | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	778,502	1,175,967
Fiscal year before current fiscal year	810,290	474,601
Two years before current fiscal year	275,900	253,148
Three years before current fiscal year	201,870	86,226
Four years before current fiscal year	70,975	47,910
Prior	76,151	45,020
Revolving loans amortized cost basis	1,533,518	1,393,756
Revolving loans converted to term	4	60
Total	3,747,210	3,476,688
Commercial and industrial loans | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	2,913	34,356
Fiscal year before current fiscal year	5,746	3,911
Two years before current fiscal year	21,042	1,546
Three years before current fiscal year	1,574	5,149
Four years before current fiscal year	2,488	2,986
Prior	11	241
Revolving loans amortized cost basis	35,722	45,994
Revolving loans converted to term	0	0
Total	69,496	94,183
Commercial and industrial loans | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	13,274	12,311
Fiscal year before current fiscal year	38,566	20,245
Two years before current fiscal year	21,712	17,733
Three years before current fiscal year	5,592	2,479
Four years before current fiscal year	1,625	1,507
Prior	1,827	1,512
Revolving loans amortized cost basis	42,791	40,449
Revolving loans converted to term	0	144
Total	125,387	96,380
Commercial and industrial loans | Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	0	857
Fiscal year before current fiscal year	7,643	0
Two years before current fiscal year	0	0
Three years before current fiscal year	0	0
Four years before current fiscal year	0	0
Prior	0	0
Revolving loans amortized cost basis	81	2,840
Revolving loans converted to term	0	0
Total	7,724	3,697
Agricultural land, production and other loans to farmers
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	22,738	35,691
Fiscal year before current fiscal year	24,922	38,561
Two years before current fiscal year	36,022	31,511
Three years before current fiscal year	29,786	31,502
Four years before current fiscal year	29,361	12,995
Prior	34,615	25,620
Revolving loans amortized cost basis	62,482	87,534
Revolving loans converted to term	0	0
Total	239,926	263,414
Agricultural land, production and other loans to farmers | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	22,137	35,633
Fiscal year before current fiscal year	24,869	38,145
Two years before current fiscal year	34,809	31,511
Three years before current fiscal year	29,077	31,048
Four years before current fiscal year	28,845	12,995
Prior	34,134	25,462
Revolving loans amortized cost basis	61,444	87,534
Revolving loans converted to term	0	0
Total	235,315	262,328
Agricultural land, production and other loans to farmers | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	0	0
Fiscal year before current fiscal year	0	266
Two years before current fiscal year	245	0
Three years before current fiscal year	0	0
Four years before current fiscal year	0	0
Prior	448	122
Revolving loans amortized cost basis	250	0
Revolving loans converted to term	0	0
Total	943	388
Agricultural land, production and other loans to farmers | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	601	58
Fiscal year before current fiscal year	53	150
Two years before current fiscal year	968	0
Three years before current fiscal year	709	454
Four years before current fiscal year	516	0
Prior	33	36
Revolving loans amortized cost basis	788	0
Revolving loans converted to term	0	0
Total	3,668	698
Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	187,351	430,923
Fiscal year before current fiscal year	284,487	271,917
Two years before current fiscal year	223,367	203,672
Three years before current fiscal year	101,160	29,218
Four years before current fiscal year	6,632	7,723
Prior	9,460	2,357
Revolving loans amortized cost basis	10,810	11,735
Revolving loans converted to term	0	0
Total	823,267	957,545
Construction | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	166,149	403,578
Fiscal year before current fiscal year	276,029	267,587
Two years before current fiscal year	194,572	198,350
Three years before current fiscal year	95,193	8,372
Four years before current fiscal year	6,632	7,723
Prior	9,460	2,357
Revolving loans amortized cost basis	10,810	11,735
Revolving loans converted to term	0	0
Total	758,845	899,702
Construction | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	0	25,894
Fiscal year before current fiscal year	5,600	0
Two years before current fiscal year	23,660	0
Three years before current fiscal year	645	20,846
Four years before current fiscal year	0	0
Prior	0	0
Revolving loans amortized cost basis	0	0
Revolving loans converted to term	0	0
Total	29,905	46,740
Construction | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	21,202	1,451
Fiscal year before current fiscal year	2,858	4,330
Two years before current fiscal year	5,135	5,322
Three years before current fiscal year	5,322	0
Four years before current fiscal year	0	0
Prior	0	0
Revolving loans amortized cost basis	0	0
Revolving loans converted to term	0	0
Total	34,517	11,103
Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	342,687	470,118
Current fiscal year, charge-offs	0	0
Fiscal year before current fiscal year	340,949	535,962
Fiscal year before current fiscal year, charge-offs	339	66
Two years before current fiscal year	421,902	542,551
Two years before current fiscal year, charge-offs	3	0
Three years before current fiscal year	463,046	443,320
Three years before current fiscal year, charge-offs	0	0
Four years before current fiscal year	395,483	160,799
Four years before current fiscal year, charge-offs	0	0
Prior	345,721	231,061
Prior, charge-offs	0	0
Revolving loans amortized cost basis	13,745	17,028
Revolving loans amortized cost basis, charge-offs	0	0
Revolving loans converted to term	0	0
Revolving loans converted to term, charge-offs	0	0
Total	2,323,533	2,400,839
Total, charge-offs	342	66
Commercial real estate, non-owner occupied | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	245,845	373,378
Fiscal year before current fiscal year	303,828	504,280
Two years before current fiscal year	399,269	535,327
Three years before current fiscal year	451,607	418,553
Four years before current fiscal year	373,231	141,320
Prior	298,925	200,821
Revolving loans amortized cost basis	13,660	16,744
Revolving loans converted to term	0	0
Total	2,086,365	2,190,423
Commercial real estate, non-owner occupied | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	77,354	76,382
Fiscal year before current fiscal year	22,906	21,145
Two years before current fiscal year	21,755	7,005
Three years before current fiscal year	10,937	4,531
Four years before current fiscal year	2,428	19,479
Prior	45,158	27,941
Revolving loans amortized cost basis	0	37
Revolving loans converted to term	0	0
Total	180,538	156,520
Commercial real estate, non-owner occupied | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	19,488	20,358
Fiscal year before current fiscal year	2,927	10,537
Two years before current fiscal year	189	219
Three years before current fiscal year	502	20,236
Four years before current fiscal year	19,824	0
Prior	1,638	2,299
Revolving loans amortized cost basis	85	247
Revolving loans converted to term	0	0
Total	44,653	53,896
Commercial real estate, non-owner occupied | Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	0
Fiscal year before current fiscal year	11,288
Two years before current fiscal year	689
Three years before current fiscal year	0
Four years before current fiscal year	0
Prior	0
Revolving loans amortized cost basis	0
Revolving loans converted to term	0
Total	11,977
Commercial real estate, owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	77,807	201,554
Current fiscal year, charge-offs	0	48
Fiscal year before current fiscal year	210,520	208,567
Fiscal year before current fiscal year, charge-offs	0	0
Two years before current fiscal year	191,777	269,848
Two years before current fiscal year, charge-offs	0	0
Three years before current fiscal year	257,150	270,527
Three years before current fiscal year, charge-offs	0	0
Four years before current fiscal year	241,170	100,388
Four years before current fiscal year, charge-offs	9	2
Prior	165,027	83,316
Prior, charge-offs	0	0
Revolving loans amortized cost basis	30,744	27,883
Revolving loans amortized cost basis, charge-offs	0	0
Revolving loans converted to term	0	0
Revolving loans converted to term, charge-offs	0	0
Total	1,174,195	1,162,083
Total, charge-offs	9	50
Commercial real estate, owner occupied | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	75,597	176,750
Fiscal year before current fiscal year	191,056	199,821
Two years before current fiscal year	175,737	256,346
Three years before current fiscal year	245,405	263,522
Four years before current fiscal year	231,751	99,180
Prior	159,142	77,485
Revolving loans amortized cost basis	30,206	27,369
Revolving loans converted to term	0	0
Total	1,108,894	1,100,473
Commercial real estate, owner occupied | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	138	6,712
Fiscal year before current fiscal year	3,230	5,034
Two years before current fiscal year	15,076	9,319
Three years before current fiscal year	6,717	2,460
Four years before current fiscal year	5,301	919
Prior	1,750	2,902
Revolving loans amortized cost basis	260	514
Revolving loans converted to term	0	0
Total	32,472	27,860
Commercial real estate, owner occupied | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	2,072	18,092
Fiscal year before current fiscal year	16,234	3,712
Two years before current fiscal year	964	4,183
Three years before current fiscal year	5,028	4,545
Four years before current fiscal year	4,118	289
Prior	4,135	2,929
Revolving loans amortized cost basis	278	0
Revolving loans converted to term	0	0
Total	32,829	33,750
Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	112,712	398,334
Current fiscal year, charge-offs	0	101
Fiscal year before current fiscal year	430,932	704,355
Fiscal year before current fiscal year, charge-offs	39	252
Two years before current fiscal year	707,976	448,226
Two years before current fiscal year, charge-offs	403	208
Three years before current fiscal year	428,329	368,420
Three years before current fiscal year, charge-offs	57	3
Four years before current fiscal year	353,034	100,585
Four years before current fiscal year, charge-offs	21	3
Prior	332,506	263,618
Prior, charge-offs	54	94
Revolving loans amortized cost basis	5,402	5,219
Revolving loans amortized cost basis, charge-offs	0	0
Revolving loans converted to term	14	164
Revolving loans converted to term, charge-offs	0	0
Total	2,370,905	2,288,921
Total, charge-offs	574	661
Residential | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	111,630	395,363
Fiscal year before current fiscal year	427,692	695,056
Two years before current fiscal year	698,308	442,495
Three years before current fiscal year	421,439	365,297
Four years before current fiscal year	350,587	98,654
Prior	322,922	254,718
Revolving loans amortized cost basis	5,052	4,988
Revolving loans converted to term	14	83
Total	2,337,644	2,256,654
Residential | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	668	2,167
Fiscal year before current fiscal year	2,480	5,591
Two years before current fiscal year	5,301	3,202
Three years before current fiscal year	3,917	1,924
Four years before current fiscal year	1,197	1,065
Prior	5,147	4,837
Revolving loans amortized cost basis	350	200
Revolving loans converted to term	0	81
Total	19,060	19,067
Residential | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	414	804
Fiscal year before current fiscal year	760	3,708
Two years before current fiscal year	4,367	2,529
Three years before current fiscal year	2,973	1,199
Four years before current fiscal year	1,250	866
Prior	4,437	4,063
Revolving loans amortized cost basis	0	31
Revolving loans converted to term	0	0
Total	14,201	13,200
Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	6,781	9,438
Current fiscal year, charge-offs	0	69
Fiscal year before current fiscal year	7,648	30,499
Fiscal year before current fiscal year, charge-offs	11	213
Two years before current fiscal year	27,728	62,318
Two years before current fiscal year, charge-offs	36	224
Three years before current fiscal year	57,069	12,176
Three years before current fiscal year, charge-offs	22	149
Four years before current fiscal year	12,013	1,107
Four years before current fiscal year, charge-offs	0	193
Prior	5,043	4,000
Prior, charge-offs	265	1,596
Revolving loans amortized cost basis	508,043	491,950
Revolving loans amortized cost basis, charge-offs	0	0
Revolving loans converted to term	6,779	6,083
Revolving loans converted to term, charge-offs	0	0
Total	631,104	617,571
Total, charge-offs	334	2,444
Home equity | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	6,606	9,375
Fiscal year before current fiscal year	7,648	29,784
Two years before current fiscal year	26,336	61,591
Three years before current fiscal year	56,066	11,084
Four years before current fiscal year	10,956	1,092
Prior	4,652	3,875
Revolving loans amortized cost basis	500,801	484,330
Revolving loans converted to term	6,294	5,837
Total	619,359	606,968
Home equity | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	113	0
Fiscal year before current fiscal year	0	715
Two years before current fiscal year	1,340	0
Three years before current fiscal year	406	1,092
Four years before current fiscal year	1,057	15
Prior	66	2
Revolving loans amortized cost basis	5,117	5,031
Revolving loans converted to term	245	149
Total	8,344	7,004
Home equity | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	62	63
Fiscal year before current fiscal year	0	0
Two years before current fiscal year	52	727
Three years before current fiscal year	597	0
Four years before current fiscal year	0	0
Prior	325	123
Revolving loans amortized cost basis	2,125	2,589
Revolving loans converted to term	240	97
Total	3,401	3,599
Individuals' loans for household and other personal expenditures
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	34,950	35,965
Current fiscal year, charge-offs	22	147
Fiscal year before current fiscal year	28,114	49,547
Fiscal year before current fiscal year, charge-offs	353	770
Two years before current fiscal year	37,429	28,525
Two years before current fiscal year, charge-offs	232	342
Three years before current fiscal year	14,811	6,795
Three years before current fiscal year, charge-offs	120	77
Four years before current fiscal year	4,093	2,071
Four years before current fiscal year, charge-offs	25	62
Prior	5,896	5,918
Prior, charge-offs	32	156
Revolving loans amortized cost basis	36,137	38,795
Revolving loans amortized cost basis, charge-offs	0	0
Revolving loans converted to term	659	772
Revolving loans converted to term, charge-offs	0	0
Total	162,089	168,388
Total, charge-offs	784	1,554
Individuals' loans for household and other personal expenditures | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	34,921	35,781
Fiscal year before current fiscal year	27,868	49,295
Two years before current fiscal year	37,193	28,387
Three years before current fiscal year	14,676	6,726
Four years before current fiscal year	3,983	2,070
Prior	5,878	5,904
Revolving loans amortized cost basis	35,512	38,619
Revolving loans converted to term	659	772
Total	160,690	167,554
Individuals' loans for household and other personal expenditures | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	29	184
Fiscal year before current fiscal year	224	246
Two years before current fiscal year	226	138
Three years before current fiscal year	135	69
Four years before current fiscal year	110	0
Prior	18	14
Revolving loans amortized cost basis	623	176
Revolving loans converted to term	0	0
Total	1,365	827
Individuals' loans for household and other personal expenditures | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	0	0
Fiscal year before current fiscal year	22	6
Two years before current fiscal year	10	0
Three years before current fiscal year	0	0
Four years before current fiscal year	0	1
Prior	0	0
Revolving loans amortized cost basis	2	0
Revolving loans converted to term	0	0
Total	34	7
Public finance and other commercial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	43,164	65,357
Current fiscal year, charge-offs	1,122
Fiscal year before current fiscal year	54,409	208,347
Fiscal year before current fiscal year, charge-offs	32,545
Two years before current fiscal year	206,136	204,863
Two years before current fiscal year, charge-offs	879
Three years before current fiscal year	199,844	155,132
Three years before current fiscal year, charge-offs	8,624
Four years before current fiscal year	152,505	91,619
Four years before current fiscal year, charge-offs	400
Prior	308,167	229,355
Prior, charge-offs	484
Revolving loans amortized cost basis	589	1,645
Revolving loans amortized cost basis, charge-offs	0
Revolving loans converted to term	0	0
Revolving loans converted to term, charge-offs	0
Total	964,814	956,318
Total, charge-offs	44,054
Public finance and other commercial loans | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current fiscal year	43,164	65,357
Fiscal year before current fiscal year	54,409	208,347
Two years before current fiscal year	206,136	204,863
Three years before current fiscal year	199,844	155,132
Four years before current fiscal year	152,505	91,619
Prior	308,167	229,355
Revolving loans amortized cost basis	589	1,645
Revolving loans converted to term	0	0
Total	$ 964,814	$ 956,318

XML

LOANS AND ALLOWANCE - Past Due Aging of Loan Portfolio by Loan Class (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Financing Receivable, Past Due [Line Items]
Loans	$ 12,639,650	$ 12,486,027
Loans > 90 Days or More Past Due And Accruing	1,686	172
Current
Financing Receivable, Past Due [Line Items]
Loans	12,541,459	12,406,783
30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	29,083	34,075
60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	30,178	11,189
90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Loans	38,930	33,980
Commercial and industrial loans
Financing Receivable, Past Due [Line Items]
Loans	3,949,817	3,670,948
Loans > 90 Days or More Past Due And Accruing	385	86
Commercial and industrial loans | Current
Financing Receivable, Past Due [Line Items]
Loans	3,932,986	3,657,447
Commercial and industrial loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	6,014	5,021
Commercial and industrial loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	463	1,622
Commercial and industrial loans | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Loans	10,354	6,858
Agricultural land, production and other loans to farmers
Financing Receivable, Past Due [Line Items]
Loans	239,926	263,414
Loans > 90 Days or More Past Due And Accruing	0	0
Agricultural land, production and other loans to farmers | Current
Financing Receivable, Past Due [Line Items]
Loans	239,676	263,414
Agricultural land, production and other loans to farmers | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	250	0
Agricultural land, production and other loans to farmers | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Agricultural land, production and other loans to farmers | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Construction
Financing Receivable, Past Due [Line Items]
Loans	823,267	957,545
Loans > 90 Days or More Past Due And Accruing	0	0
Construction | Current
Financing Receivable, Past Due [Line Items]
Loans	802,064	955,588
Construction | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Construction | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	21,203	1,957
Construction | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Commercial real estate, non-owner occupied
Financing Receivable, Past Due [Line Items]
Loans	2,323,533	2,400,839
Loans > 90 Days or More Past Due And Accruing	0	0
Commercial real estate, non-owner occupied | Current
Financing Receivable, Past Due [Line Items]
Loans	2,306,861	2,376,184
Commercial real estate, non-owner occupied | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	1,789	12,995
Commercial real estate, non-owner occupied | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	1,799	195
Commercial real estate, non-owner occupied | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Loans	13,084	11,465
Commercial real estate, owner occupied
Financing Receivable, Past Due [Line Items]
Loans	1,174,195	1,162,083
Loans > 90 Days or More Past Due And Accruing	0	0
Commercial real estate, owner occupied | Current
Financing Receivable, Past Due [Line Items]
Loans	1,170,516	1,161,869
Commercial real estate, owner occupied | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	3,237	0
Commercial real estate, owner occupied | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	104
Commercial real estate, owner occupied | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Loans	442	110
Residential
Financing Receivable, Past Due [Line Items]
Loans	2,370,905	2,288,921
Loans > 90 Days or More Past Due And Accruing	1,187	0
Residential | Current
Financing Receivable, Past Due [Line Items]
Loans	2,342,411	2,259,496
Residential | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	12,483	11,810
Residential | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	4,213	5,472
Residential | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Loans	11,798	12,143
Home equity
Financing Receivable, Past Due [Line Items]
Loans	631,104	617,571
Loans > 90 Days or More Past Due And Accruing	114	52
Home equity | Current
Financing Receivable, Past Due [Line Items]
Loans	621,441	608,948
Home equity | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	4,293	3,614
Home equity | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	2,152	1,647
Home equity | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Loans	3,218	3,362
Individuals' loans for household and other personal expenditures
Financing Receivable, Past Due [Line Items]
Loans	162,089	168,388
Loans > 90 Days or More Past Due And Accruing	0	0
Individuals' loans for household and other personal expenditures | Current
Financing Receivable, Past Due [Line Items]
Loans	160,690	167,553
Individuals' loans for household and other personal expenditures | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	1,017	635
Individuals' loans for household and other personal expenditures | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	348	192
Individuals' loans for household and other personal expenditures | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Loans	34	8
Public finance and other commercial loans
Financing Receivable, Past Due [Line Items]
Loans	964,814	956,318
Loans > 90 Days or More Past Due And Accruing	0	34
Public finance and other commercial loans | Current
Financing Receivable, Past Due [Line Items]
Loans	964,814	956,284
Public finance and other commercial loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Public finance and other commercial loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Public finance and other commercial loans | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Loans	$ 0	$ 34

XML

LOANS AND ALLOWANCE - Non-Accrual Loans by Loan Class (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Financing Receivable, Past Due [Line Items]
Nonaccrual Loans	$ 61,906	$ 53,580
Nonaccrual Loans with no Allowance for Credit Losses	18,126	14,367
Commercial and industrial loans
Financing Receivable, Past Due [Line Items]
Nonaccrual Loans	13,373	9,050
Nonaccrual Loans with no Allowance for Credit Losses	5,884	1,015
Agricultural land, production and other loans to farmers
Financing Receivable, Past Due [Line Items]
Nonaccrual Loans	53	58
Nonaccrual Loans with no Allowance for Credit Losses	0	0
Construction
Financing Receivable, Past Due [Line Items]
Nonaccrual Loans	0	520
Nonaccrual Loans with no Allowance for Credit Losses	0	0
Commercial real estate, non-owner occupied
Financing Receivable, Past Due [Line Items]
Nonaccrual Loans	22,704	11,932
Nonaccrual Loans with no Allowance for Credit Losses	10,372	11,095
Commercial real estate, owner occupied
Financing Receivable, Past Due [Line Items]
Nonaccrual Loans	2,452	3,041
Nonaccrual Loans with no Allowance for Credit Losses	1,870	2,257
Residential
Financing Receivable, Past Due [Line Items]
Nonaccrual Loans	18,814	25,140
Nonaccrual Loans with no Allowance for Credit Losses	0	0
Home equity
Financing Receivable, Past Due [Line Items]
Nonaccrual Loans	4,476	3,820
Nonaccrual Loans with no Allowance for Credit Losses	0	0
Individuals' loans for household and other personal expenditures
Financing Receivable, Past Due [Line Items]
Nonaccrual Loans	34	19
Nonaccrual Loans with no Allowance for Credit Losses	$ 0	$ 0

XML

LOANS AND ALLOWANCE - Amortized Cost Basis of Collateral Dependent Loans (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Dec. 31, 2023	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	$ 65,702		$ 60,666
Allowance on Collateral Dependent Loans	189,537	$ 204,681	204,934	$ 221,147	$ 223,052	$ 223,277
Commercial and industrial loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	28,665		32,029
Construction
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	5		7
Commercial real estate, non-owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	25,606		17,516
Commercial real estate, owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	9,951		9,452
Residential
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	1,263		1,439
Home equity
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	212		223
Allowance on Collateral Dependent Loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Increase (decrease) in individually evaluated for impairment	5,000
Increase (decrease) allowance for credit loss, recovery	(612)
Allowance on Collateral Dependent Loans	11,157		11,769
Allowance on Collateral Dependent Loans | Commercial and industrial loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Increase (decrease) in individually evaluated for impairment	(3,400)
Increase (decrease) allowance for credit loss, recovery	(3,000)
Allowance on Collateral Dependent Loans	8,442		11,474
Allowance on Collateral Dependent Loans | Construction
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance on Collateral Dependent Loans	0		0
Allowance on Collateral Dependent Loans | Commercial real estate, non-owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Increase (decrease) in individually evaluated for impairment	8,100
Increase (decrease) allowance for credit loss, recovery	2,400
Allowance on Collateral Dependent Loans	2,483		35
Allowance on Collateral Dependent Loans | Commercial real estate, owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance on Collateral Dependent Loans	0		0
Allowance on Collateral Dependent Loans | Residential
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance on Collateral Dependent Loans	204		230
Allowance on Collateral Dependent Loans | Home equity
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance on Collateral Dependent Loans	28		30
Commercial Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	35,557		26,968
Commercial Real Estate | Commercial and industrial loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	0		0
Commercial Real Estate | Construction
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	0		0
Commercial Real Estate | Commercial real estate, non-owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	25,606		17,516
Commercial Real Estate | Commercial real estate, owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	9,951		9,452
Commercial Real Estate | Residential
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	0		0
Commercial Real Estate | Home equity
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	0		0
Residential Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	1,480		1,669
Residential Real Estate | Commercial and industrial loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	0		0
Residential Real Estate | Construction
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	5		7
Residential Real Estate | Commercial real estate, non-owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	0		0
Residential Real Estate | Commercial real estate, owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	0		0
Residential Real Estate | Residential
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	1,263		1,439
Residential Real Estate | Home equity
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	212		223
Other
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	28,665		32,029
Other | Commercial and industrial loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	28,665		32,029
Other | Construction
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	0		0
Other | Commercial real estate, non-owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	0		0
Other | Commercial real estate, owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	0		0
Other | Residential
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	0		0
Other | Home equity
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	$ 0		$ 0

XML

LOANS AND ALLOWANCE - Troubled Debt Restructurings by Modification Type (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2022
Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
% of Total Class of Financing Receivable	0.05%	0.11%	0.16%	0.37%
Agricultural land, production and other loans to farmers
Accounts, Notes, Loans and Financing Receivable [Line Items]
% of Total Class of Financing Receivable				0.02%
Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
% of Total Class of Financing Receivable				0.00%
Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
% of Total Class of Financing Receivable	0.84%	0.07%	0.84%	0.77%
Commercial real estate, owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
% of Total Class of Financing Receivable	0.17%	0.65%	0.17%	0.73%
Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
% of Total Class of Financing Receivable	0.04%	0.02%	0.12%	0.02%
Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
% of Total Class of Financing Receivable	0.03%		0.05%
Payment Delay
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	$ 250,000	$ 5,664,000	$ 3,460,000	$ 5,664,000
Payment Delay | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	0	0	1,491,000	0
Payment Delay			50,000
Payment Delay | Agricultural land, production and other loans to farmers
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers				0
Payment Delay | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers				0
Payment Delay | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	0	0	0	0
Payment Delay | Commercial real estate, owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	0	5,664,000	0	5,664,000
Payment Delay		4,500,000		4,500,000
Payment Delay | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	250,000	0	1,880,000	0
Payment Delay	9,000		28,000
Payment Delay | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	0		89,000
Payment Delay			4,000
Term Extension
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	23,256,000	7,533,000	26,197,000	28,198,000
Term Extension | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	$ 1,778,000	$ 3,917,000	$ 4,383,000	$ 12,897,000
Term Extension	12 months	6 months	14 months	7 months
Term Extension | Agricultural land, production and other loans to farmers
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers				$ 35,000
Term Extension				60 months
Term Extension | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers				$ 15,000
Term Extension				24 months
Term Extension | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	$ 19,488,000	$ 1,570,000	$ 19,488,000	$ 12,394,000
Term Extension	16 months	8 months	16 months	9 months
Term Extension | Commercial real estate, owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	$ 1,990,000	$ 2,032,000	$ 1,990,000	$ 2,843,000
Term Extension	28 months	6 months	28 months	6 months
Term Extension | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	$ 0	$ 14,000	$ 274,000	$ 14,000
Term Extension		11 months	6 months	11 months
Term Extension | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	0		$ 62,000
Term Extension			5 months
Combination Interest Rate Reduction & Term Extension
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers		$ 110,000	$ 249,000	$ 6,143,000
Combination Interest Rate Reduction & Term Extension | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers		$ 110,000	$ 249,000	$ 110,000
Term Extension		12 months		12 months
Combination Interest Rate Reduction & Term Extension | Commercial and industrial loans | Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Reduced the weighted average contractual interest rate		7.10%	9.00%	8.25%
Combination Interest Rate Reduction & Term Extension | Commercial and industrial loans | Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Reduced the weighted average contractual interest rate		8.25%	8.00%	7.10%
Combination Interest Rate Reduction & Term Extension | Agricultural land, production and other loans to farmers
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers				$ 0
Combination Interest Rate Reduction & Term Extension | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers				0
Combination Interest Rate Reduction & Term Extension | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers		$ 0	$ 0	$ 5,954,000
Term Extension				41 months
Combination Interest Rate Reduction & Term Extension | Commercial real estate, non-owner occupied | Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Reduced the weighted average contractual interest rate				7.81%
Combination Interest Rate Reduction & Term Extension | Commercial real estate, non-owner occupied | Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Reduced the weighted average contractual interest rate				7.40%
Combination Interest Rate Reduction & Term Extension | Commercial real estate, owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers		0	0	$ 79,000
Term Extension				12 months
Combination Interest Rate Reduction & Term Extension | Commercial real estate, owner occupied | Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Reduced the weighted average contractual interest rate				10.25%
Combination Interest Rate Reduction & Term Extension | Commercial real estate, owner occupied | Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Reduced the weighted average contractual interest rate				6.61%
Combination Interest Rate Reduction & Term Extension | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers		0	0	$ 0
Combination Interest Rate Reduction & Term Extension | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers			0
Combination Payment Delay & Term Extension
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	567,000	458,000	581,000	458,000
Combination Payment Delay & Term Extension | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	13,000	0	27,000	$ 0
Payment Delay	$ 5,000		$ 5,000
Term Extension	3 months		3 months	12 months
Reduced the weighted average contractual interest rate				7.10%	8.25%
Combination Payment Delay & Term Extension | Agricultural land, production and other loans to farmers
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers				$ 0
Combination Payment Delay & Term Extension | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers				0
Combination Payment Delay & Term Extension | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	$ 0	0	$ 0	0
Combination Payment Delay & Term Extension | Commercial real estate, owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	0	0	0	0
Combination Payment Delay & Term Extension | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	392,000	458,000	392,000	458,000
Payment Delay	$ 8,000	$ 3,400	$ 8,000	$ 3,400
Term Extension	120 months	3 months	120 months	3 months
Combination Payment Delay & Term Extension | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	$ 162,000		$ 162,000
Payment Delay	$ 8,000		$ 8,000
Term Extension	60 months		60 months
Combination Interest Rate Reduction, Term Extension, & Payment Delay
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	$ 227,000		$ 227,000
Combination Interest Rate Reduction, Term Extension, & Payment Delay | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	0		0
Combination Interest Rate Reduction, Term Extension, & Payment Delay | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	0		0
Combination Interest Rate Reduction, Term Extension, & Payment Delay | Commercial real estate, owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	0		0
Combination Interest Rate Reduction, Term Extension, & Payment Delay | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	227,000		227,000
Combination Interest Rate Reduction, Term Extension, & Payment Delay | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Modifications Made to Borrowers	0		0
Combination Payment Delay, Term Extension & Interest Rate Reduction | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Payment Delay	$ 14,000		$ 14,000
Term Extension	12 months		12 months
Combination Payment Delay, Term Extension & Interest Rate Reduction | Residential | Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Reduced the weighted average contractual interest rate	5.75%		5.75%
Combination Payment Delay, Term Extension & Interest Rate Reduction | Residential | Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Reduced the weighted average contractual interest rate	5.00%		5.00%

XML

LOANS AND ALLOWANCE - Payment Status (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Current
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers	$ 24,300	$ 13,452	$ 29,071	$ 40,150
30-89 Days Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers	2,551	108	2,551	108
90 Days or More Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers		205	1,188	205
Commercial and industrial loans | Current
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers	1,791	4,027	6,150	13,007
Commercial and industrial loans | 30-89 Days Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers	125	0	125	0
Commercial and industrial loans | 90 Days or More Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers		0	0	0
Agricultural land, production and other loans to farmers | Current
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers				35
Agricultural land, production and other loans to farmers | 30-89 Days Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers				0
Agricultural land, production and other loans to farmers | 90 Days or More Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers				0
Construction | Current
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers				15
Construction | 30-89 Days Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers				0
Construction | 90 Days or More Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers				0
Commercial real estate, non-owner occupied | Current
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers	19,488	1,570	19,488	18,348
Commercial real estate, non-owner occupied | 30-89 Days Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers	1,799	0	1,799	0
Commercial real estate, non-owner occupied | 90 Days or More Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers		0	0	0
Commercial real estate, owner occupied | Current
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers	1,990	7,696	1,990	8,586
Commercial real estate, owner occupied | 30-89 Days Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers	0	0	0	0
Commercial real estate, owner occupied | 90 Days or More Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers		0	0	0
Residential | Current
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers	869	159	1,219	159
Residential | 30-89 Days Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers	538	108	538	108
Residential | 90 Days or More Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers		$ 205	1,188	$ 205
Home equity | Current
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers	162		224
Home equity | 30-89 Days Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers	$ 89		89
Home equity | 90 Days or More Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Loan Modifications Made to Borrowers			$ 0

XML

LOANS AND ALLOWANCE - Changes in Allowance for Loan Losses by Loan Segment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	$ 204,681	$ 223,052	$ 204,934	$ 223,277
Provision for credit losses	24,500	0	26,500	0
Recoveries on loans	1,257	445	2,157	1,289
Loans charged off	(40,901)	(2,350)	(44,054)	(3,419)
Ending balance	189,537	221,147	189,537	221,147
Commercial
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	99,213	101,304	97,348	102,216
Provision for credit losses	31,648	7,639	34,793	6,440
Recoveries on loans	536	66	1,087	596
Loans charged off	(40,180)	(636)	(42,011)	(879)
Ending balance	91,217	108,373	91,217	108,373
Commercial Real Estate
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	45,278	46,308	44,048	46,839
Provision for credit losses	75	(7,151)	1,603	(7,734)
Recoveries on loans	161	0	214	56
Loans charged off	0	0	(351)	(4)
Ending balance	45,514	39,157	45,514	39,157
Construction
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	20,369	28,571	24,823	28,955
Provision for credit losses	(6,009)	1,502	(10,463)	1,118
Recoveries on loans	0	0	0	0
Loans charged off	0	0	0	0
Ending balance	14,360	30,073	14,360	30,073
Consumer & Residential
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	39,821	46,869	38,715	45,267
Provision for credit losses	(1,214)	(1,990)	567	176
Recoveries on loans	560	379	856	637
Loans charged off	(721)	(1,714)	(1,692)	(2,536)
Ending balance	$ 38,446	$ 43,544	$ 38,446	$ 43,544

XML

LOANS AND ALLOWANCE - Amounts of Commitments (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Loan commitments to extend credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Amounts of commitments	$ 5,271,982	$ 5,025,790
Standby letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Amounts of commitments	$ 69,618	$ 65,580

XML

LOANS AND ALLOWANCE - Allowance for Credit Losses, Off-balance Sheet (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Beginning balance	$ 19,500	$ 23,300	$ 19,500	$ 23,300	$ 23,300
Provision for credit losses - unfunded commitments	0	0	0	0	3,800
Ending balance	$ 19,500	$ 23,300	$ 19,500	$ 23,300	$ 19,500

XML

DERIVATIVE FINANCIAL INSTRUMENTS - Narrative (Details)	Jun. 30, 2024 USD ($) instrument	Dec. 31, 2023 instrument
Derivative [Line Items]
Termination value of derivatives in a net liability position	$ 3,400,000
Derivative collateral posted	$ 0
Derivatives Designated as Hedges | Derivatives in Cash Flow Hedging Relationships | Interest rate swaps
Derivative [Line Items]
Number of interest rate derivatives held | instrument	0	0

XML

DERIVATIVE FINANCIAL INSTRUMENTS - Amount of Loss Recognized in Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2022
Derivative [Line Items]
Amount of Loss Recognized in Other Comprehensive Income (Loss) on Derivatives (Effective Portion)	$ 0	$ (62)	$ 0		$ (113)
Derivatives Designated as Hedging Instruments | Derivatives in Cash Flow Hedging Relationships | Interest Rate Products
Derivative [Line Items]
Amount of Loss Recognized in Other Comprehensive Income (Loss) on Derivatives (Effective Portion)	$ 0	$ (62)	$ 0	$ (113)

XML

DERIVATIVE FINANCIAL INSTRUMENTS - Effect of Derivative Financial Instruments on Income Statement (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2022
Derivative [Line Items]
Amount of Gain Reclassed from Other Comprehensive Income (Loss) into Income (Effective Portion)	$ 0	$ (16)	$ 0		$ (15)
Derivatives Designated as Hedging Instruments | Interest rate contracts | Interest Expense | Cash Flow Hedging
Derivative [Line Items]
Amount of Gain Reclassed from Other Comprehensive Income (Loss) into Income (Effective Portion)	$ 0	$ (16)	$ 0	$ (15)

XML

DERIVATIVE FINANCIAL INSTRUMENTS - Fair Value of Derivative Financial Instruments and Their Classification on Balance Sheet (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Fair Value
Assets Derivatives	$ 87,777	$ 79,379
Liabilities Derivatives	87,236	79,008
Derivatives Not Designated as Hedging Instruments | Other Assets
Notional Amount
Included in other assets	1,374,068	1,393,813
Fair Value
Assets Derivatives	87,777	79,379
Derivatives Not Designated as Hedging Instruments | Other Liabilities
Notional Amount
Included in other liabilities	1,353,123	1,382,262
Fair Value
Liabilities Derivatives	87,236	79,008
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Other Assets
Notional Amount
Included in other assets	1,299,892	1,355,947
Fair Value
Assets Derivatives	86,965	78,743
Derivatives Not Designated as Hedging Instruments | Interest rate swaps | Other Liabilities
Notional Amount
Included in other liabilities	1,299,892	1,355,947
Fair Value
Liabilities Derivatives	87,015	78,811
Derivatives Not Designated as Hedging Instruments | Forward contracts related to mortgage loans to be delivered for sale | Other Assets
Notional Amount
Included in other assets	46,801	15,160
Fair Value
Assets Derivatives	605	469
Derivatives Not Designated as Hedging Instruments | Forward contracts related to mortgage loans to be delivered for sale | Other Liabilities
Notional Amount
Included in other liabilities	30,948	25,290
Fair Value
Liabilities Derivatives	129	191
Derivatives Not Designated as Hedging Instruments | Interest rate lock commitments | Other Assets
Notional Amount
Included in other assets	27,375	22,706
Fair Value
Assets Derivatives	207	167
Derivatives Not Designated as Hedging Instruments | Interest rate lock commitments | Other Liabilities
Notional Amount
Included in other liabilities	22,283	1,025
Fair Value
Liabilities Derivatives	$ 92	$ 6

XML

DERIVATIVE FINANCIAL INSTRUMENTS - Gain (Loss) Recognized Into Income Related to Non-designated Hedging Instruments (Details) - Derivatives Not Designated as Hedging Instruments - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Derivative [Line Items]
Amount of Gain (Loss) Recognized into Income on Derivatives	$ 362	$ 384	$ 348	$ 676
Net gains and fees on sales of loans | Forward contracts related to mortgage loans to be delivered for sale
Derivative [Line Items]
Amount of Gain (Loss) Recognized into Income on Derivatives	395	604	393	709
Net gains and fees on sales of loans | Interest rate lock commitments
Derivative [Line Items]
Amount of Gain (Loss) Recognized into Income on Derivatives	$ (33)	$ (220)	$ (45)	$ (33)

XML

FAIR VALUES OF FINANCIAL INSTRUMENTS - Fair Value Measurements of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	$ 1,618,893	$ 1,627,112
U.S. Government-sponsored agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	91,277	95,307
State and municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	1,024,907	1,065,171
U.S. Government-sponsored mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	490,654	454,815
Corporate obligations
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	12,055	11,819
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	1,615,669	1,623,802
Significant Unobservable Inputs (Level 3)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	3,224	3,310
Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative assets	87,777	79,379
Derivative liabilities	87,236	79,008
Recurring | U.S. Government-sponsored agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	91,277	95,307
Recurring | State and municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	1,024,907	1,065,171
Recurring | U.S. Government-sponsored mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	490,654	454,815
Recurring | Corporate obligations
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	12,055	11,819
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative assets	0	0
Derivative liabilities	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Government-sponsored agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | State and municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Government-sponsored mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate obligations
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0	0
Recurring | Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative assets	87,777	79,379
Derivative liabilities	87,236	79,008
Recurring | Significant Other Observable Inputs (Level 2) | U.S. Government-sponsored agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	91,277	95,307
Recurring | Significant Other Observable Inputs (Level 2) | State and municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	1,021,718	1,061,896
Recurring | Significant Other Observable Inputs (Level 2) | U.S. Government-sponsored mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	490,650	454,811
Recurring | Significant Other Observable Inputs (Level 2) | Corporate obligations
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	12,024	11,788
Recurring | Significant Unobservable Inputs (Level 3)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative assets	0	0
Derivative liabilities	0	0
Recurring | Significant Unobservable Inputs (Level 3) | U.S. Government-sponsored agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0	0
Recurring | Significant Unobservable Inputs (Level 3) | State and municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	3,189	3,275
Recurring | Significant Unobservable Inputs (Level 3) | U.S. Government-sponsored mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	4	4
Recurring | Significant Unobservable Inputs (Level 3) | Corporate obligations
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	$ 31	$ 31

XML

FAIR VALUES OF FINANCIAL INSTRUMENTS - Reconciliation of Beginning and Ending Balances of Recurring Fair Value Measurements using Significant Unobservable Level 3 Inputs (Details) - Recurring - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Available for Sale Securities
Balance at beginning of the period	$ 3,247	$ 3,462	$ 3,310	$ 3,439
Included in other comprehensive income	(21)	(111)	11	3
Principal payments	(2)	(3)	(97)	(94)
Ending balance	$ 3,224	$ 3,348	$ 3,224	$ 3,348

XML

FAIR VALUES OF FINANCIAL INSTRUMENTS - Valuation Methodologies Used for Instruments Measured at Fair Value on Non-Recurring Basis (Details) - Nonrecurring - Collateral dependent loans - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loans	$ 30,988	$ 55,020
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loans	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loans	0	0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loans	$ 30,988	$ 55,020

XML

FAIR VALUES OF FINANCIAL INSTRUMENTS - Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements Other Than Goodwill (Details) - Significant Unobservable Inputs (Level 3) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2024 USD ($)	Dec. 31, 2023 USD ($)
State and municipal securities | Discounted cash flow
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	$ 3,189	$ 3,275
State and municipal securities | Discounted cash flow | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Maturity/Call date	1 month	1 month
US Muni BQ curve		A-
State and municipal securities | Discounted cash flow | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Maturity/Call date	6 years	15 years
US Muni BQ curve	BBB	BBB
State and municipal securities | Discounted cash flow | Discount rate | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0.037	0.036
State and municipal securities | Discounted cash flow | Discount rate | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0.046	0.047
State and municipal securities | Discounted cash flow | Weighted-average coupon | Weighted-average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0.033	0.033
Corporate obligations and U.S. Government-sponsored mortgage-backed securities | Discounted cash flow
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	$ 35	$ 35
Corporate obligations and U.S. Government-sponsored mortgage-backed securities | Discounted cash flow | Weighted-average coupon | Weighted-average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0	0
Corporate obligations and U.S. Government-sponsored mortgage-backed securities | Discounted cash flow | Risk free rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0.0026	0.0026
Corporate obligations and U.S. Government-sponsored mortgage-backed securities | Discounted cash flow | plus premium for illiquidity (basis points)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0.0200	0.0200
Collateral dependent loans | Collateral based measurements
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	$ 30,988	$ 55,020
Collateral dependent loans | Collateral based measurements | Discount to reflect current market conditions and ultimate collectability | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0	0
Collateral dependent loans | Collateral based measurements | Discount to reflect current market conditions and ultimate collectability | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0.25	0.10
Collateral dependent loans | Collateral based measurements | Discount to reflect current market conditions and ultimate collectability | Weighted-average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0.218	0.041

XML

FAIR VALUES OF FINANCIAL INSTRUMENTS - Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Assets:
Cash and due from banks	$ 105,372	$ 112,649
Interest-bearing deposits	168,528	436,080
Investment securities available for sale	1,618,893	1,627,112
Investment securities held to maturity, net	1,779,216	1,870,374
Loans held for sale	32,292	18,934
Loans, net	12,121,987	11,958,301
Federal Home Loan Bank stock	41,738	41,769
Derivative assets	87,777	79,379
Interest receivable	97,546	97,664
Liabilities:
Deposits	14,557,131	14,811,957
Borrowings:
Federal funds purchased	147,229
Securities sold under repurchase agreements	100,451	157,265
Federal Home Loan Bank advances	822,958	707,377
Subordinated debentures and other borrowings	84,091	149,995
Derivative liabilities	87,236	79,008
Interest payable	18,554	18,912
Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Cash and due from banks	105,372	112,649
Interest-bearing deposits	168,528	436,080
Investment securities available for sale	0	0
Investment securities held to maturity, net	0	0
Loans held for sale	0	0
Loans, net	0	0
Federal Home Loan Bank stock	0	0
Derivative assets	0	0
Interest receivable	0	0
Liabilities:
Deposits	12,096,840	12,482,295
Borrowings:
Federal funds purchased	0
Securities sold under repurchase agreements	0	0
Federal Home Loan Bank advances	0	0
Subordinated debentures and other borrowings	0	0
Derivative liabilities	0	0
Interest payable	0	0
Significant Other Observable Inputs (Level 2)
Assets:
Cash and due from banks	0	0
Interest-bearing deposits	0	0
Investment securities available for sale	1,615,669	1,623,802
Investment securities held to maturity, net	1,771,567	1,859,974
Loans held for sale	32,292	18,934
Loans, net	0	0
Federal Home Loan Bank stock	41,738	41,769
Derivative assets	87,777	79,379
Interest receivable	97,546	97,664
Liabilities:
Deposits	2,460,291	2,329,662
Borrowings:
Federal funds purchased	147,229
Securities sold under repurchase agreements	100,451	157,265
Federal Home Loan Bank advances	822,958	707,377
Subordinated debentures and other borrowings	84,091	149,995
Derivative liabilities	87,236	79,008
Interest payable	18,554	18,912
Significant Unobservable Inputs (Level 3)
Assets:
Cash and due from banks	0	0
Interest-bearing deposits	0	0
Investment securities available for sale	3,224	3,310
Investment securities held to maturity, net	7,649	10,400
Loans held for sale	0	0
Loans, net	12,121,987	11,958,301
Federal Home Loan Bank stock	0	0
Derivative assets	0	0
Interest receivable	0	0
Liabilities:
Deposits	0	0
Borrowings:
Federal funds purchased	0
Securities sold under repurchase agreements	0	0
Federal Home Loan Bank advances	0	0
Subordinated debentures and other borrowings	0	0
Derivative liabilities	0	0
Interest payable	0	0
Carrying Amount
Assets:
Cash and due from banks	105,372	112,649
Interest-bearing deposits	168,528	436,080
Investment securities available for sale	1,618,893	1,627,112
Investment securities held to maturity, net	2,134,195	2,184,252
Loans held for sale	32,292	18,934
Loans, net	12,450,113	12,281,093
Federal Home Loan Bank stock	41,738	41,769
Derivative assets	87,777	79,379
Interest receivable	97,546	97,664
Liabilities:
Deposits	14,569,070	14,821,453
Borrowings:
Federal funds purchased	147,229
Securities sold under repurchase agreements	100,451	157,280
Federal Home Loan Bank advances	832,703	712,852
Subordinated debentures and other borrowings	93,589	158,644
Derivative liabilities	87,236	79,008
Interest payable	$ 18,554	$ 18,912

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QUALIFIED AFFORDABLE HOUSING INVESTMENTS - Summary of Affordable Housing Investments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Equity Method Investments and Joint Ventures [Abstract]
Investment	$ 151,029		$ 151,029		$ 114,514
Unfunded Commitment	120,562		120,562		$ 96,408
Amortization expense	1,626	$ 1,594	3,323	$ 1,837
Tax credits recognized	$ 1,644	$ 1,332	$ 3,289	$ 1,616

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BORROWINGS - Summary of Borrowings (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Debt Disclosure [Abstract]
Federal funds purchased	$ 147,229	$ 0
Securities sold under repurchase agreements	100,451	157,280
Federal Home Loan Bank advances	832,703	712,852
Subordinated debentures and other borrowings	93,589	158,644
Total Borrowings	$ 1,173,972	$ 1,028,776

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BORROWINGS - Narrative (Details)			6 Months Ended		12 Months Ended
	Dec. 18, 2024	Nov. 01, 2013 USD ($) investor	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)	Mar. 31, 2024 USD ($)	Dec. 18, 2019 USD ($)
Debt Instrument [Line Items]
Required value of assets pledged as collateral as a percentage to outstanding advances (at least)			145.00%
Total available remaining borrowing capacity from FHLB			$ 780,700,000
Putable advances with the FHLB			832,703,000		$ 712,852,000
Debt face amount		$ 70,000,000
Private debt issuance, number of institutional investors | investor		4
Senior Notes
Debt Instrument [Line Items]
Fixed interest rate term		10 years
5.00% Senior Notes Due 2028
Debt Instrument [Line Items]
Redemption price (percent)		100.00%
Putable Advances
Debt Instrument [Line Items]
Putable advances with the FHLB			$ 205,000,000
Minimum
Debt Instrument [Line Items]
Interest rate, minimum (as a percent)			0.35%
Maximum
Debt Instrument [Line Items]
Interest rate, minimum (as a percent)			5.48%
Securities Sold Under Repurchase Agreements
Debt Instrument [Line Items]
Maximum amount of outstanding agreements			$ 194,200,000	$ 241,900,000
Total of average agreements			144,300,000	$ 194,300,000
Debt outstanding			100,451,000
Subordinated Debentures and Term Loans
Debt Instrument [Line Items]
Debt outstanding			93,589,000		158,600,000
Subordinated Debenture | 6.75% Subordinated Notes Due 2028
Debt Instrument [Line Items]
Debt face amount		$ 65,000,000
Interest rate on notes (as a percent)		6.75%
Redemption price (percent)		100.00%
Issued notice						$ 40,000,000
Subordinated Debenture | 6.75% Subordinated Notes Due 2028 | Notice
Debt Instrument [Line Items]
Issued notice			25,000,000
Subordinated Debenture | Level One Subordinated Notes
Debt Instrument [Line Items]
Debt face amount							$ 30,000,000
Interest rate on notes (as a percent)							4.75%
Subordinated Debenture | Level One Subordinated Notes | Forecast
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	3.11%
Subordinated Debenture | First Merchant Capital Trust II
Debt Instrument [Line Items]
Debt face amount			$ 41,700,000		$ 41,700,000
Basis spread on variable rate (as a percent)			0.26161%		0.26161%
Interest rate during the period			7.16%		7.21%
Subordinated Debenture | Ameriana Capital Trust I
Debt Instrument [Line Items]
Debt face amount			$ 10,300,000		$ 10,300,000
Basis spread on variable rate (as a percent)			0.26161%		0.26161%
Interest rate during the period			7.10%		7.15%
Senior Notes | 5.00% Senior Notes Due 2028
Debt Instrument [Line Items]
Debt face amount		$ 5,000,000
Interest rate on notes (as a percent)		5.00%
Secured Debt
Debt Instrument [Line Items]
Debt outstanding			$ 7,200,000		$ 7,200,000
Interest rate on notes (as a percent)			3.41%		3.41%
Secured Debt | Level One
Debt Instrument [Line Items]
Debt outstanding			$ 1,200,000		$ 1,200,000
Interest rate on notes (as a percent)			1.00%		1.00%

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BORROWINGS - Summary of Collateral Pledged for Repurchase Agreements (Details) - U.S. Government-sponsored mortgage-backed securities - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Assets Sold under Agreements to Repurchase [Line Items]
Remaining Contractual Maturity of the Agreements	$ 100,451	$ 157,280
Overnight and Continuous
Assets Sold under Agreements to Repurchase [Line Items]
Remaining Contractual Maturity of the Agreements	100,451	157,280
Up to 30 Days
Assets Sold under Agreements to Repurchase [Line Items]
Remaining Contractual Maturity of the Agreements	0	0
30-90 Days
Assets Sold under Agreements to Repurchase [Line Items]
Remaining Contractual Maturity of the Agreements	0	0
Greater Than 90 Days
Assets Sold under Agreements to Repurchase [Line Items]
Remaining Contractual Maturity of the Agreements	$ 0	$ 0

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BORROWINGS - Schedule of Contractual Maturities of Borrowings (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Federal Funds Purchased
Maturities in Years Ending December 31:
2024	$ 147,229
2025	0
2026	0
2027	0
2028	0
2029 and after	0
ASC 805 fair value adjustments at acquisition	0
Debt outstanding	147,229
Securities Sold Under Repurchase Agreements
Maturities in Years Ending December 31:
2024	100,451
2025	0
2026	0
2027	0
2028	0
2029 and after	0
ASC 805 fair value adjustments at acquisition	0
Debt outstanding	100,451
Federal Home Loan Bank Advances
Maturities in Years Ending December 31:
2024	110,000
2025	95,000
2026	75,000
2027	250,000
2028	190,000
2029 and after	112,703
ASC 805 fair value adjustments at acquisition	0
Debt outstanding	832,703
Subordinated Debentures and Term Loans
Maturities in Years Ending December 31:
2024	1,166
2025	0
2026	0
2027	0
2028	5,000
2029 and after	90,938
ASC 805 fair value adjustments at acquisition	(3,515)
Debt outstanding	$ 93,589	$ 158,600

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ACCUMULATED OTHER COMPREHENSIVE LOSS - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Accumulated Other Comprehensive Income (Loss)
Beginning balance	$ 2,224,803	$ 2,122,448	$ 2,247,713	$ 2,034,770
Other comprehensive income (loss) before reclassifications			(36,049)	18,834
Amounts reclassified from accumulated other comprehensive income (loss)			40	2,353
Period change	(13,950)	(19,050)	(36,009)	21,187
Ending balance	2,212,525	2,145,565	2,212,525	2,145,565
Total
Accumulated Other Comprehensive Income (Loss)
Beginning balance	(198,029)	(198,914)	(175,970)	(239,151)
Period change	(13,950)	(19,050)	(36,009)	21,187
Ending balance	(211,979)	(217,964)	(211,979)	(217,964)
Unrealized Gains (Losses) on Securities Available for Sale
Accumulated Other Comprehensive Income (Loss)
Beginning balance			(173,654)	(234,495)
Other comprehensive income (loss) before reclassifications			(36,049)	18,924
Amounts reclassified from accumulated other comprehensive income (loss)			40	2,341
Period change			(36,009)	21,265
Ending balance	(209,663)	(213,230)	(209,663)	(213,230)
Unrealized Gains (Losses) on Cash Flow Hedges
Accumulated Other Comprehensive Income (Loss)
Beginning balance			0	130
Other comprehensive income (loss) before reclassifications			0	(90)
Amounts reclassified from accumulated other comprehensive income (loss)			0	12
Period change			0	(78)
Ending balance	0	52	0	52
Unrealized Gains (Losses) on Defined Benefit Plans
Accumulated Other Comprehensive Income (Loss)
Beginning balance			(2,316)	(4,786)
Other comprehensive income (loss) before reclassifications			0	0
Amounts reclassified from accumulated other comprehensive income (loss)			0	0
Period change			0	0
Ending balance	$ (2,316)	$ (4,786)	$ (2,316)	$ (4,786)

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ACCUMULATED OTHER COMPREHENSIVE LOSS - Reclassification out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2022
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Other income - net realized gains (losses) on sales of available for sale securities	$ (49)	$ (1,392)	$ (51)	$ (2,963)
Income tax expense	(4,067)	(10,699)	(10,892)	(22,016)
Total reclassifications for the period, net of tax	39,925	60,862	87,866	124,941	$ 124,941
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications for the period, net of tax	(39)	(1,113)	(40)	(2,353)
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Unrealized gains (losses) on available for sale securities
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Other income - net realized gains (losses) on sales of available for sale securities	(49)	(1,392)	(51)	(2,963)
Income tax expense	10	292	11	622
Total reclassifications for the period, net of tax	(39)	(1,100)	(40)	(2,341)
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Unrealized gains (losses) on cash flow hedges
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Income tax expense	0	3	0	3
Total reclassifications for the period, net of tax	0	(13)	0	(12)
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Unrealized gains (losses) on cash flow hedges | Interest rate contracts
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Interest expense - subordinated debentures and term loans	$ 0	$ (16)	$ 0	$ (15)

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SHARE-BASED COMPENSATION - Narrative (Details) - USD ($)		6 Months Ended
	Apr. 01, 2024	Jun. 30, 2024	Jun. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Forfeiture rate		0.05%
Aggregate intrinsic value of stock options exercised		$ 591,000	$ 1,400,000
Cash receipts of stock options exercised		$ 812,000	$ 1,110,000
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option term		10 years
Stock options vesting percentage		100.00%
Unrecognized compensation expense related to stock options		$ 0
Stock Options | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested period		1 year
Stock Options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested period		2 years
RSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested period		3 years
Unrecognized compensation expense related to RSAs		$ 7,400,000
Unrecognized compensation expense expected recognition period		1 year 6 months
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of average closing price to be paid by employees		85.00%
Maximum common stock purchases through advance payroll deductions in a calendar year		$ 25,000
Grant date fair value	$ 35,000
Unrecognized compensation expense related to stock options		$ 0

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SHARE-BASED COMPENSATION - Components of Awards (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax compensation expense	$ 1,351	$ 1,235	$ 2,754	$ 2,432
Income tax expense (benefit)	(298)	(263)	(563)	(575)
Total share-based compensation expense, net of income taxes	1,053	972	2,191	1,857
Stock and ESPP Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax compensation expense	35	15	102	44
Income tax expense (benefit)	(40)	(6)	(40)	(62)
Total share-based compensation expense, net of income taxes	(5)	9	62	(18)
Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax compensation expense	1,316	1,220	2,652	2,388
Income tax expense (benefit)	(258)	(257)	(523)	(513)
Total share-based compensation expense, net of income taxes	$ 1,058	$ 963	$ 2,129	$ 1,875

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SHARE-BASED COMPENSATION - Stock Option Activity (Details) - USD ($)	6 Months Ended
	Jun. 30, 2024
Number of Shares
Beginning balance (in shares)	90,075
Exercised (in shares)	(42,893)
Ending balance (in shares)	47,182
Vested and expected to vest, number of shares (in shares)	47,182
Exercisable, number of shares (in shares)	47,182
Weighted-Average Exercise Price
Beginning balance (in dollars per share)	$ 20.21
Exercised (in dollars per share)	18.94
Ending balance (in dollars per share)	21.36
Vested and expected to vest, weighted-average exercise price (in dollars per share)	21.36
Exercisable, weighted-average exercise price (in dollars per share)	$ 21.36
Weighted Average Remaining Contractual Term (in Years)
Outstanding	1 year 10 months 28 days
Vested and expected to vest	1 year 10 months 28 days
Exercisable	1 year 10 months 28 days
Aggregate Intrinsic Value
Outstanding	$ 562,979
Vested and expected to vest	562,979
Exercisable	$ 562,979

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SHARE-BASED COMPENSATION - Unvested RSAs Outstanding (Details) - RSAs	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Number of Shares
Unvested RSAs, Beginning balance (in shares) | shares	452,426
Granted (in shares) | shares	24,052
Vested (in shares) | shares	(16,216)
Forfeited (in shares) | shares	(2,250)
Unvested RSAs, Ending balance (in shares) | shares	458,012
Weighted-Average Grant Date Fair Value
Unvested RSAs, Beginning balance (in dollars per share) | $ / shares	$ 37.94
Granted (in dollars per share) | $ / shares	34.00
Vested (in dollars per share) | $ / shares	44.21
Forfeited (in dollars per share) | $ / shares	38.23
Unvested RSAs, Ending balance (in dollars per share) | $ / shares	$ 37.51

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INCOME TAX (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal statutory income tax at 21%	$ 9,238	$ 15,028	$ 20,739	$ 30,861
Tax-exempt interest income	(4,396)	(4,456)	(8,748)	(9,323)
Non-deductible FDIC premiums	143	113	282	173
Share-based compensation	(15)	(3)	15	(64)
Tax-exempt earnings and gains on life insurance	(405)	(441)	(739)	(711)
Tax credits	(360)	(73)	(664)	(165)
State Income Tax	(225)	520	(191)	1,220
Other	87	11	198	25
Actual Tax Expense	$ 4,067	$ 10,699	$ 10,892	$ 22,016
Effective Tax Rate	9.20%	15.00%	11.00%	15.00%

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NET INCOME PER COMMON SHARE - Reconciliation of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Net Income Available to Common Stockholders
Net income available to common stockholders	$ 39,456	$ 60,393	$ 86,928	$ 124,003
Diluted net income per common share	$ 39,456	$ 60,393	$ 86,928	$ 124,003
Weighted-Average Common Shares
Net income available to common stockholders (in shares)	58,104,021	59,263,813	58,585,405	59,240,137
Effect of potentially dilutive stock options and restricted stock awards (in shares)	224,244	184,566	215,058	205,920
Diluted net income per common share (in shares)	58,328,265	59,448,379	58,800,463	59,446,057
RSAs excluded from the diluted average common share calculation (in shares)	90,734	67,731	89,011	59,913
Per Share Amount
Net income available to common stockholders (in dollars per share)	$ 0.68	$ 1.02	$ 1.48	$ 2.09
Diluted net income per common share (in dollars per share)	$ 0.68	$ 1.02	$ 1.48	$ 2.09