10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

Commission File Number: 0-11487

LAKELAND FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Indiana			35-1559596
(State or Other Jurisdiction			(IRS Employer
of Incorporation or Organization)			Identification No.)
202 East Center Street,
Warsaw	,	Indiana	46580
(Address of principal executive offices)			(Zip Code)

(574) 267‑6144

(Registrant’s Telephone Number, Including Area Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, No par value	LKFN	NASDAQ
		(Nasdaq Global Select Market)

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, 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 ☒

Number of shares of common stock outstanding at April 21, 2022:  25,346,149

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets - March 31, 2022 and December 31, 2021	1
	Consolidated Statements of Income — three months ended March 31, 2022 and 2021	2
	Consolidated Statements of Comprehensive Income (Loss) — three months ended March 31, 2022 and 2021	3
	Consolidated Statements of Changes in Stockholders’ Equity — three months ended March 31, 2022 and 2021	4
	Consolidated Statements of Cash Flows — three months ended March 31, 2022 and 2021	5
	Notes to the Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	44
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
SIGNATURES		47

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS (in thousands, except share data)

	March 31, 2022		December 31, 2021
	(Unaudited)
ASSETS
Cash and due from banks	$	71,669	$	51,830
Short-term investments	403,355		631,410
Total cash and cash equivalents	475,024		683,240
Securities available-for-sale (carried at fair value)	1,522,535		1,398,558
Real estate mortgage loans held-for-sale	2,234		7,470
Loans, net of allowance for credit losses of $67,526 and $67,773	4,286,188		4,220,068
Land, premises and equipment, net	58,883		59,309
Bank owned life insurance	97,722		97,652
Federal Reserve and Federal Home Loan Bank stock	12,840		13,772
Accrued interest receivable	19,448		17,674
Goodwill	4,970		4,970
Other assets	92,415		54,610
Total assets	$	6,572,259	$	6,557,323
LIABILITIES
Noninterest bearing deposits	$	1,880,418	$	1,895,481
Interest bearing deposits	3,940,205		3,839,926
Total deposits	5,820,623		5,735,407
Borrowings - Federal Home Loan Bank advances	75,000		75,000
Accrued interest payable	2,303		2,619
Other liabilities	65,231		39,391
Total liabilities	5,963,157		5,852,417
STOCKHOLDERS’ EQUITY
Common stock: 90,000,000 shares authorized, no par value
25,816,997 shares issued and 25,346,149 outstanding as of March 31, 2022
25,777,609 shares issued and 25,300,793 outstanding as of December 31, 2021	121,138		120,615
Retained earnings	596,578		583,134
Accumulated other comprehensive income (loss)	(93,687)		16,093
Treasury stock at cost (470,848 shares as of March 31, 2022, 476,816 shares as of December 31, 2021)	(15,016)		(15,025)
Total stockholders’ equity	609,013		704,817
Noncontrolling interest	89		89
Total equity	609,102		704,906
Total liabilities and equity	$	6,572,259	$	6,557,323

The accompanying notes are an integral part of these consolidated financial statements.

1

CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands, except share and per share data)

	Three Months Ended March 31,
	2022		2021
NET INTEREST INCOME
Interest and fees on loans
Taxable	$	39,735	$	43,461
Tax exempt	169		104
Interest and dividends on securities
Taxable	3,278		1,835
Tax exempt	4,606		2,489
Other interest income	246		88
Total interest income	48,034		47,977
Interest on deposits	3,081		4,218
Interest on borrowings
Short-term	0		7
Long-term	73		73
Total interest expense	3,154		4,298
NET INTEREST INCOME	44,880		43,679
			`
Provision for credit losses	417		1,477
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	44,463		42,202
NONINTEREST INCOME
Wealth advisory fees	2,287		2,178
Investment brokerage fees	519		464
Service charges on deposit accounts	2,809		2,491
Loan and service fees	2,889		2,776
Merchant card fee income	815		622
Bank owned life insurance income (loss)	(83)		756
Interest rate swap fee income	50		249
Mortgage banking income	509		1,373
Net securities gains	0		753
Other income	892		895
Total noninterest income	10,687		12,557
NONINTEREST EXPENSE
Salaries and employee benefits	14,392		14,385
Net occupancy expense	1,629		1,503
Equipment costs	1,411		1,445
Data processing fees and supplies	3,081		3,319
Corporate and business development	1,219		1,509
FDIC insurance and other regulatory fees	439		464
Professional fees	1,559		1,877
Other expense	3,239		2,244
Total noninterest expense	26,969		26,746
INCOME BEFORE INCOME TAX EXPENSE	28,181		28,013
Income tax expense	4,539		5,030
NET INCOME	$	23,642	$	22,983
BASIC WEIGHTED AVERAGE COMMON SHARES	25,515,271		25,457,659
BASIC EARNINGS PER COMMON SHARE	$	0.93	$	0.90
DILUTED WEIGHTED AVERAGE COMMON SHARES	25,690,372		25,550,111
DILUTED EARNINGS PER COMMON SHARE	$	0.92	$	0.90

The accompanying notes are an integral part of these consolidated financial statements.

2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited - in thousands)

	Three months ended March 31,
	2022		2021
Net income	$	23,642	$	22,983
Other comprehensive income (loss)
Change in securities available-for-sale:
Unrealized holding gain (loss) on securities available-for-sale arising during the period	(138,995)		(15,297)
Reclassification adjustment for gains included in net income	0		(753)
Net securities gain (loss) activity during the period	(138,995)		(16,050)
Tax effect	29,188		3,371
Net of tax amount	(109,807)		(12,679)
Defined benefit pension plans:
Amortization of net actuarial loss	36		60
Net gain activity during the period	36		60
Tax effect	(9)		(15)
Net of tax amount	27		45
Total other comprehensive income (loss), net of tax	(109,780)		(12,634)
Comprehensive income (loss)	$	(86,138)	$	10,349

The accompanying notes are an integral part of these consolidated financial statements.

3

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited - in thousands, except share and per share data)

	Three Months Ended
	Common Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Stockholders’ Equity		Noncontrolling Interest		Total Equity
	Shares	Stock
Balance at January 1, 2021	25,239,748	$	114,927	$	529,005	$	27,744	$	(14,581)	$	657,095	$	89	$	657,184
Adoption of ASU 2016-13				(6,951)						(6,951)				$	(6,951)
Comprehensive income:
Net income				22,983						22,983				22,983
Other comprehensive income (loss), net of tax						(12,634)				(12,634)				(12,634)
Cash dividends declared and paid, $0.34 per share				(8,647)						(8,647)				(8,647)
Treasury shares purchased under deferred directors' plan	(3,634)	219						(219)		0				0
Treasury shares sold and distributed under deferred directors' plan	5,664	(115)						115		0				0
Stock activity under equity compensation plans	49,130	(1,648)								(1,648)				(1,648)
Stock based compensation expense		1,381								1,381				1,381
Balance at March 31, 2021	25,290,908	$	114,764	$	536,390	$	15,110	$	(14,685)	$	651,579	$	89	$	651,668
Balance at January 1, 2022	25,300,793	$	120,615	$	583,134	$	16,093	$	(15,025)	$	704,817	$	89	$	704,906
Comprehensive loss:
Net income				23,642						23,642				23,642
Other comprehensive income (loss), net of tax						(109,780)				(109,780)				(109,780)
Cash dividends declared and paid, $0.40 per share				(10,198)						(10,198)				(10,198)
Treasury shares purchased under deferred directors' plan	(2,587)	212						(212)		0				0
Treasury shares sold and distributed under deferred directors' plan	8,555	(221)						221		0				0
Stock activity under equity compensation plans	39,388	(1,728)								(1,728)				(1,728)
Stock based compensation expense		2,260								2,260				2,260
Balance at March 31, 2022	25,346,149	$	121,138	$	596,578	$	(93,687)	$	(15,016)	$	609,013	$	89	$	609,102

The accompanying notes are an integral part of these consolidated financial statements.

4

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited - in thousands)

Three Months Ended March 31,	2022		2021
Cash flows from operating activities:
Net income	$	23,642	$	22,983
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	1,516		1,575
Provision for credit losses	417		1,477
Amortization of loan servicing rights	223		198
Net change in loan servicing rights valuation allowance	(360)		(197)
Loans originated for sale, including participations	(12,468)		(32,629)
Net gain on sales of loans	(513)		(1,233)
Proceeds from sale of loans, including participations	18,058		25,692
Net (gain) loss on sales of premises and equipment	1		(1)
Net gain on sales and calls of securities available-for-sale	0		(753)
Net securities amortization	1,654		958
Stock based compensation expense	2,260		1,381
Losses (earnings) on life insurance	83		(756)
Gain on life insurance	0		(202)
Tax benefit of stock award issuances	(500)		(266)
Net change:
Interest receivable and other assets	(2,822)		(1,415)
Interest payable and other liabilities	16,513		6,980
Total adjustments	24,062		809
Net cash from operating activities	47,704		23,792
Cash flows from investing activities:
Proceeds from sale of securities available- for-sale	0		13,506
Proceeds from maturities, calls and principal paydowns of securities available-for-sale	29,647		31,734
Purchases of securities available-for-sale	(292,127)		(161,224)
Purchase of life insurance	(43)		(528)
Net (increase) decrease in total loans	(66,537)		174,303
Proceeds from sales of land, premises and equipment	0		2
Purchases of land, premises and equipment	(1,091)		(2,162)
Proceeds from redemption of Federal Home Loan Bank stock	932		0
Proceeds from life insurance	0		329
Net cash from investing activities	(329,219)		55,960
Cash flows from financing activities:
Net increase in total deposits	85,216		193,165
Net increase (decrease) in short-term borrowings	0		(10,500)
Common dividends paid	(10,198)		(8,647)
Payments related to equity incentive plans	(1,728)		(1,648)
Purchase of treasury stock	(212)		(219)
Sale of treasury stock	221		115
Net cash from financing activities	73,299		172,266
Net change in cash and cash equivalents	(208,216)		252,018
Cash and cash equivalents at beginning of the period	683,240		249,927
Cash and cash equivalents at end of the period	475,024		501,945
Cash paid during the period for:
Interest	$	3,470	$	5,973
Supplemental non-cash disclosures:
Loans transferred to other real estate owned	0		131
Securities purchases payable	2,146		5,855
Right-of-use assets obtained in exchange for lease liabilities	1,612		0

The accompanying notes are an integral part of these consolidated financial statements.

5

NOTE 1. BASIS OF PRESENTATION

This report is filed for Lakeland Financial Corporation (the "Company"), which has two wholly owned subsidiaries, Lake City Bank (the "Bank") and LCB Risk Management, a captive insurance company. Also included in this report are results for the Bank’s wholly owned subsidiary, LCB Investments II, Inc. ("LCB Investments"), which manages the Bank’s investment portfolio. LCB Investments owns LCB Funding, Inc. ("LCB Funding"), a real estate investment trust. All significant inter-company balances and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and are unaudited. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for any subsequent reporting periods, including the year ending December 31, 2022. The Company’s 2021 Annual Report on Form 10-K should be read in conjunction with these statements.

Newly Issued But Not Yet Effective Accounting Standards

On March 12, 2020, the FASB issued Accounting Standards Update (ASU) 2020-04, "Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASC 848 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The Company has formed a cross-functional project team to lead the transition from LIBOR to a planned adoption of reference rates which could include Secured Overnight Financing Rate (“SOFR”), amongst others. The Company has identified loans that renewed prior to 2021 and obtained updated reference rate language at the time of renewal. Additionally, management is utilizing the timeline guidance published by the Alternative Reference Rates Committee to develop and achieve internal milestones during this transitional period. The Company has adhered to the International Swaps and Derivatives Association 2020 IBOR Fallbacks Protocol that was released on October 23, 2020.

The Company discontinued the use of new LIBOR-based loans by December 31, 2021, according to regulatory guidelines. Legacy LIBOR-based loans will be transitioned to an alternative reference rate on or before June 30, 2023. The guidance under ASC 848 will be available for a limited time, generally through December 31, 2022. The Company expects to adopt the LIBOR transition relief allowed under this standard, and does note expect such adoption to have a material impact on the consolidated financial statements.

In March 2022, the FASB issued ASU 2022-01, "Derivatives and Hedging (ASC 815): Fair Value Hedging - Portfolio Layer Method." ASC 815 currently permits only prepayable financial assets and one or more beneficial interests secured by a portfolio of prepayable financial instruments to be included in a last-of-layer closed portfolio. The amendments in this Update allow nonprepayable financial assets to also be included in a closed portfolio hedged using the portfolio layer method. That expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and nonpreapayble financial assets, thereby allowing consistent accounting for similar hedges. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements.

In March 2022, the FASB issued ASU 2022-02, "Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures." The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying TDR recognition and measurement guidance, creditors will determine whether a modification results in a new loan or continuation of existing loan. These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, the amendments to ASC 326 require that an entity disclose current-period gross writeoffs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The guidance is only for entities that have adopted the amendments in Update 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption using prospective application, including adoption in an interim period where the guidance should be applied as of the beginning of the fiscal year. The Company is currently assessing the impact of ASU 2022-02 on its disclosures and control structure; however, the Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements.

6

Reclassification

Certain amounts appearing in the consolidated financial statements and notes thereto for prior periods have been reclassified to conform with the current presentation. The reclassifications had no effect on net income or stockholders' equity as previously reported.

NOTE 2. SECURITIES

Information related to the amortized cost, fair value and allowance for credit losses of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income is provided in the tables below.

(dollars in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
March 31, 2022
U.S. Treasury securities	$	2,250	$	0	$	(4)	$	0	$	2,246
U.S. government sponsored agencies	164,514		0		(11,622)		0		152,892
Mortgage-backed securities: residential	634,654		680		(39,013)		0		596,321
Mortgage-backed securities: commercial	96		0		0		0		96
State and municipal securities	838,427		4,608		(72,055)		0		770,980
Total	$	1,639,941	$	5,288	$	(122,694)	$	0	$	1,522,535
December 31, 2021
U.S. Treasury securities	$	900	$	0	$	0	$	0	$	900
U.S. government sponsored agencies	145,858		39		(2,445)		0		143,452
Mortgage-backed securities: residential	487,157		4,455		(4,936)		0		486,676
Mortgage-backed securities: commercial	522		1		0		0		523
State and municipal securities	742,532		25,749		(1,274)		0		767,007
Total	$	1,376,969	$	30,244	$	(8,655)	$	0	$	1,398,558

Information regarding the fair value and amortized cost of available-for-sale debt securities by maturity as of March 31, 2022 is presented below. Maturity information is based on contractual maturity for all securities other than mortgage-backed securities. Actual maturities of securities may differ from contractual maturities because borrowers may have the right to prepay the obligation without a prepayment penalty.

(dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	3,356	$	3,357
Due after one year through five years	11,031		11,140
Due after five years through ten years	54,556		54,559
Due after ten years	936,248		857,062
	1,005,191		926,118
Mortgage-backed securities	634,750		596,417
Total debt securities	$	1,639,941	$	1,522,535

    Securities proceeds, gross gains and gross losses are presented below.

	Three Months Ended March 31,
(dollars in thousands)	2022		2021
Sales of securities available-for-sale
Proceeds	$	0	$	13,506
Gross gains	0		753
Gross losses	0		0
Number of securities	0		7

7

In accordance with ASU No. 2017-8, purchase premiums for callable securities are amortized to the earliest call date and premiums on non-callable securities as well as discounts are recognized in interest income using the interest method over the terms of the securities or over the estimated lives of mortgage-backed securities. Gains and losses on sales are based on the amortized cost of the security sold and recorded on the trade date.

Securities with carrying values of $272.6 million and $300.8 million were pledged as of March 31, 2022 and December 31, 2021, respectively, as collateral for borrowings from the Federal Home Loan Bank and Federal Reserve Bank and for other purposes as permitted or required by law.

Information regarding securities with unrealized losses as of March 31, 2022 and December 31, 2021 is presented below. The tables divide the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

	Less than 12 months				12 months or more				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2022
U.S. Treasury securities	$	2,246	$	4	$	0	$	0	$	2,246	$	4
U.S. government sponsored agencies	126,338		8,757		26,554		2,865		152,892		11,622
Mortgage-backed securities: residential	441,367		26,752		109,331		12,261		550,698		39,013
Mortgage-backed securities: commercial	96		0		0		0		96		0
State and municipal securities	560,210		71,480		3,497		575		563,707		72,055
Total temporarily impaired	$	1,130,257	$	106,993	$	139,382	$	15,701	$	1,269,639	$	122,694
December 31, 2021
U.S. government sponsored agencies	$	85,968	$	1,364	$	28,676	$	1,081	$	114,644	$	2,445
Mortgage-backed securities: residential	272,264		4,076		22,792		860		295,056		4,936
State and municipal securities	138,659		1,274		0		0		138,659		1,274
Total temporarily impaired	$	496,891	$	6,714	$	51,468	$	1,941	$	548,359	$	8,655

The total number of securities with unrealized losses as of March 31, 2022 and December 31, 2021 is presented below.

	Less than 12 months	12 months or more	Total
March 31, 2022
U.S. Treasury securities	6	0	6
U.S. government sponsored agencies	12	5	17
Mortgage-backed securities: residential	90	15	105
Mortgage-backed securities: commercial	1	0	1
State and municipal securities	376	3	379
Total temporarily impaired	485	23	508
December 31, 2021
U.S. government sponsored agencies	8	5	13
Mortgage-backed securities: residential	29	3	32
State and municipal securities	80	0	80
Total temporarily impaired	117	8	125

Available-for-sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For available-for sale debt securities in an unrealized loss position, management first assesses whether it intends to sell, or it is more likely than not that the Company 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 consolidated income statement. For available-for sale debt securities that do not meet the criteria, management evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this

8

assessment, management 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 and the issuer, among other factors. If this assessment indicates that a credit loss exists, management compares the present value of cash flows expected to be collected from the security with 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 for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income (loss), net of applicable taxes. No allowance for credit losses for available-for-sale debt securities was needed at March 31, 2022. Accrued interest receivable on available-for-sale debt securities totaled $8.8 million and $7.4 million at March 31, 2022 and December 31, 2021, respectively, and is excluded from the estimate of credit losses.

The U.S. government sponsored agencies and mortgage-backed securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. Therefore, for those securities, we do not record expected credit losses.

NOTE 3. LOANS

(dollars in thousands)	March 31, 2022				December 31, 2021
Commercial and industrial loans:
Working capital lines of credit loans	$	678,567	15.6	%	$	652,861	15.2	%
Non-working capital loans	784,890		18.0		736,608		17.2
Total commercial and industrial loans	1,463,457		33.6		1,389,469		32.4
Commercial real estate and multi-family residential loans:
Construction and land development loans	399,618		9.2		379,813		8.9
Owner occupied loans	724,588		16.6		739,371		17.2
Nonowner occupied loans	619,163		14.2		588,458		13.7
Multifamily loans	214,003		4.9		247,204		5.8
Total commercial real estate and multi-family residential loans	1,957,372		44.9		1,954,846		45.6
Agri-business and agricultural loans:
Loans secured by farmland	164,252		3.8		206,331		4.8
Loans for agricultural production	259,417		6.0		239,494		5.6
Total agri-business and agricultural loans	423,669		9.8		445,825		10.4
Other commercial loans	78,412		1.8		73,490		1.7
Total commercial loans	3,922,910		90.1		3,863,630		90.1
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	180,448		4.1		176,561		4.1
Open end and junior lien loans	158,583		3.6		156,238		3.6
Residential construction and land development loans	11,135		0.3		11,921		0.3
Total consumer 1-4 family mortgage loans	350,166		8.0		344,720		8.0
Other consumer loans	83,395		1.9		82,755		1.9
Total consumer loans	433,561		9.9		427,475		9.9
Subtotal	4,356,471		100.0	%	4,291,105		100.0	%
Less: Allowance for credit losses	(67,526)				(67,773)
Net deferred loan fees	(2,757)				(3,264)
Loans, net	$	4,286,188			$	4,220,068

The recorded investment in loans does not include accrued interest, which totaled $10.3 million and $10.0 million at March 31, 2022 and December 31, 2021, respectively.

The Company had $239,000 and $350,000 in residential real estate loans in the process of foreclosure as of March 31, 2022 and December 31, 2021, respectively.

9

NOTE 4. ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

The Company maintains an allowance for credit losses to provide for expected credit losses. Losses are charged against the allowance when management believes that the principal is uncollectable. Subsequent recoveries, if any, are credited to the allowance. Allocations of the allowance are made for specific loans and for pools of similar types of loans, although the entire allowance is available for any loan that, in management’s judgment, should be charged against the allowance. A provision for credit losses is taken based on management’s ongoing evaluation of the appropriate allowance balance. A formal evaluation of the adequacy of the credit loss allowance is conducted monthly. The ultimate recovery of all loans is susceptible to future market factors beyond the Company’s control.

The level of credit loss provision is influenced by growth in the overall loan portfolio, emerging market risk, emerging concentration risk, commercial loan focus and large credit concentration, new industry lending activity, general economic conditions and historical loss analysis. In addition, management gives consideration to changes in the facts and circumstances of watch list credits, which includes the security position of the borrower, in determining the appropriate level of the credit loss provision. Furthermore, management’s overall view on credit quality is a factor in the determination of the provision.

The determination of the appropriate allowance is inherently subjective, as it requires significant estimates by management. The Company has an established process to determine the adequacy of the allowance for credit losses that generally includes consideration of changes in the nature and volume of the loan portfolio and overall portfolio quality, along with current and forecasted economic conditions that may affect borrowers’ ability to repay. Consideration is not limited to these factors although they represent the most commonly cited factors. To determine the specific allocation levels for individual credits, management considers the current valuation of collateral and the amounts and timing of expected future cash flows as the primary measures. Management also considers trends in adversely classified loans based upon an ongoing review of those credits. With respect to pools of similar loans, an appropriate level of general allowance is determined by portfolio segment using a probability of default-loss given default (“PD/LGD”) model, subject to a floor. A default can be triggered by one of several different asset quality factors, including past due status, nonaccrual status, TDR status or if the loan has had a charge-off. This PD is then combined with a LGD derived from historical charge-off data to construct a default rate. This loss rate is then supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, particularly the unemployment rate forecast from the Federal Open Market Committee’s Summary of Economic Projections, and other environmental factors based on the risks present for each portfolio segment. These environmental factors include consideration of the following: levels of, and trends in, delinquencies and nonperforming loans; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedure, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. It is also possible that these factors could include social, political, economic, and terrorist events or activities. All of these factors are susceptible to change, which may be significant. As a result of this detailed process, the allowance results in two forms of allocations, specific and general. These two components represent the total allowance for credit losses deemed adequate to cover probable losses inherent in the loan portfolio.

Commercial loans are subject to a dual standardized grading process administered by the credit administration function. These grade assignments are performed independent of each other and a consensus is reached by credit administration and the loan review officer. Specific allowances are established in cases where management has identified significant conditions or circumstances related to an individual credit that indicate it should be evaluated on an individual basis. Considerations with respect to specific allocations for these individual credits include, but are not limited to, the following: (a) the sufficiency of the customer’s cash flow or net worth to repay the loan; (b) the adequacy of the discounted value of collateral relative to the loan balance; (c) whether the loan has been criticized in a regulatory examination; (d) whether the loan is nonperforming; (e) any other reasons the ultimate collectability of the loan may be in question; or (f) any unique loan characteristics that require special monitoring.

Allocations are also applied to categories of loans considered not to be individually analyzed, but for which the rate of loss is expected to be consistent with or greater than historical averages. Such allocations are based on past loss experience and information about specific borrower situations and estimated collateral values. These general pooled loan allocations are performed for portfolio segments of commercial and industrial; commercial real estate, multi-family, and construction; agri-business and agricultural; other commercial loans; and consumer 1-4 family mortgage and other consumer loans. General allocations of the allowance are determined by a historical loss rate based on the calculation of each pool’s probability of default-loss given default, subject to a floor. The length of the historical period for each pool is based on the average life of the pool. The historical loss rates are supplemented with consideration of economic conditions and portfolio trends.

10

Due to the imprecise nature of estimating the allowance for credit losses, the Company’s allowance for credit losses includes an unallocated component. The unallocated component of the allowance for credit losses incorporates the Company’s judgmental determination of potential expected losses that may not be fully reflected in other allocations, including factors such as the level of classified credits, economic uncertainties, industry trends impacting specific portfolio segments, broad portfolio quality trends, and trends in the composition of the Company’s large commercial loan portfolio and related large dollar exposures to individual borrowers. As a practical expedient, the Company has elected to disclose accrued interest separately from loan principal balances on the consolidated balance sheet. Additionally, when a loan is placed on non-accrual, interest payments are reversed through interest income.

For off balance sheet credit exposures outlined in the ASU at 326-20-30-11, it is the Company’s position that nearly all of the unfunded amounts on lines of credit are unconditionally cancellable, and therefore not subject to having a liability recorded.

The following tables present the activity in the allowance for credit losses by portfolio segment for the periods ended:

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multifamily Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
Three Months Ended March 31, 2022
Beginning balance, January 1	$	30,595	$	26,535	$	5,034	$	1,146	$	2,866	$	1,147	$	450	$	67,773
Provision for credit losses	730		319		(273)		(88)		(248)		(55)		32		417
Loans charged-off	(19)		(597)		0		0		(22)		(102)		0		(740)
Recoveries	16		0		0		0		10		50		0		76
Net loans (charged-off) recovered	(3)		(597)		0		0		(12)		(52)		0		(664)
Ending balance	$	31,322	$	26,257	$	4,761	$	1,058	$	2,606	$	1,040	$	482	$	67,526

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multifamily Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
Three Months Ended March 31, 2021
Beginning balance, January 1	$	28,333	$	22,907	$	3,043	$	416	$	2,619	$	951	$	3,139	$	61,408
Impact of adopting ASC 326	4,312		4,316		1,060		941		953		349		(2,881)		9,050
Provision for credit losses	(540)		2,285		(202)		(185)		(233)		13		339		1,477
Loans charged-off	(87)		(71)		0		0		(6)		(72)		0		(236)
Recoveries	34		8		0		0		51		52		0		145
Net loans (charged-off) recovered	(53)		(63)		0		0		45		(20)		0		(91)
Ending balance	$	32,052	$	29,445	$	3,901	$	1,172	$	3,384	$	1,293	$	597	$	71,844

11

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $250,000.

The Company uses the following definitions for risk ratings:

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

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

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

Loans are considered to be "Pass" rated when they are reviewed as part of the previously described process and do not meet the criteria above with the exception of consumer troubled debt restructurings, which are evaluated and listed with Substandard commercial grade loans and consumer nonaccrual loans which are evaluated individually and listed with “Not Rated” loans. Loans listed as Not Rated are consumer loans or commercial loans with consumer characteristics included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status.

12

The following table summarizes the risk category of loans by loan segment and origination date as of March 31, 2022:

(dollars in thousands)	2022			2021		2020		2019			2018		Prior		Term Total		Revolving		Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass	$	0		$	3,082	$	764	$	3,045		$	0	$	0	$	6,891	$	593,938	$	600,829
Special Mention	0			0		0		0			0		0		0		59,209		59,209
Substandard	0			0		74		0			0		0		74		18,542		18,616
Total	0			3,082		838		3,045			0		0		6,965		671,689		678,654
Non-working capital loans:
Pass	63,830			165,396		123,800		71,707			23,723		31,231		479,687		256,462		736,149
Special Mention	209			16,535		0		216			635		3,657		21,252		79		21,331
Substandard	0			2,937		6,380		862			2,370		5,217		17,766		3,835		21,601
Not Rated	399			2,105		1,627		710			417		96		5,354		0		5,354
Total	64,438			186,973		131,807		73,495			27,145		40,201		524,059		260,376		784,435
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass	9,322			37,819		20,870		542			573		0		69,126		328,593		397,719
Special Mention	0			0		0		0			0		0		0		56		56
Total	9,322			37,819		20,870		542			573		0		69,126		328,649		397,775
Owner occupied loans:
Pass	20,705			166,777		174,001		108,181			78,260		126,142		674,066		28,228		702,294
Special Mention	0			6,277		0		865			909		9,180		17,231		0		17,231
Substandard	0			473		1,679		894			1,161		236		4,443		0		4,443
Total	20,705			173,527		175,680		109,940			80,330		135,558		695,740		28,228		723,968
Nonowner occupied loans:
Pass	41,921			142,070		146,588		105,635			21,701		87,080		544,995		47,604		592,599
Special Mention	0			11,667		307		0			0		14,120		26,094		0		26,094
Total	41,921			153,737		146,895		105,635			21,701		101,200		571,089		47,604		618,693
Multifamily loans:
Pass	2,665			67,930		37,909		36,337		17,105	11,969		21,061		177,871		13,605		191,476
Special Mention	22,178			0		0		0			0		0		22,178		0		22,178
Total	24,843			67,930		37,909		36,337			11,969		21,061		200,049		13,605		213,654
Agri-business and agricultural loans:
Loans secured by farmland:
Pass	4,748			46,921		35,089		12,005			10,034		25,189		133,986		24,532		158,518
Special Mention	0			0		1,985		2,278			0		210		4,473		899		5,372
Substandard	0			0		0		0			190		145		335		0		335
Total	4,748			46,921		37,074		14,283			10,224		25,544		138,794		25,431		164,225
Loans for agricultural production:
Pass	1,573			31,444		24,820		3,985			10,372		5,356		77,550		166,721		244,271
Special Mention	0			432		7,727		1,160			0		0		9,319		5,905		15,224
Total	1,573			31,876		32,547		5,145			10,372		5,356		86,869		172,626		259,495
Other commercial loans:
Pass	2,964			6,417		20,425		3,082			1,175		15,043		49,106		25,363		74,469
Special Mention	0			0		0		0			0		3,649		3,649		0		3,649
Total	2,964			6,417		20,425		3,082			1,175		18,692		52,755		25,363		78,118
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans
Pass	1,360			13,558		15,386		5,197			5,722		4,604		45,827		6,191		52,018
Substandard	0			0		0		0			88		3,050		3,138		0		3,138
Not Rated	8,079			47,296		24,338		8,764			4,069		32,489		125,035		0		125,035
Total	9,439			60,854		39,724		13,961			9,879		40,143		174,000		6,191		180,191
Open end and junior lien loans
Pass	0		453	662		374		115			103		0		1,254		4,900		6,154
Substandard	0			0		0		0			0		2		2		26		28
Not Rated	14,626			18,637		4,667		4,967			2,976		3,304		49,177		104,879		154,056
Total	14,626			19,299		5,041		5,082			3,079		3,306		50,433		109,805		160,238
Residential construction loans
Not Rated	1,420		4,756	6,189		1,158		892			136		1,278		11,073		0		11,073
Total	1,420			6,189		1,158		892			136		1,278		11,073		0		11,073

13

Other consumer loans
Pass	78		2,302		787		1,167		0		1,088		5,422		17,046		22,468
Substandard	0		0		22		219		0		0		241		41		282
Not Rated	5,320		19,432		13,237		6,122		4,878		2,509		51,498		8,947		60,445
Total	5,398		21,734		14,046		7,508		4,878		3,597		57,161		26,034		83,195
TOTAL	$	201,397	$	816,358	$	664,014	$	378,947	$	181,461	$	395,936	$	2,638,113	$	1,715,601	$	4,353,714

As of March 31, 2022, $12.5 million in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans. These loans were included in this risk rating category because they are fully guaranteed by the SBA.

14

The following table summarizes the risk category of loans by loan segment and origination date as of December 31, 2021:

(dollars in thousands)	2021			2020		2019		2018			2017		Prior		Term Total		Revolving		Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass	$	3,699		$	830	$	3,360	$	0		$	0	$	0	$	7,889	$	558,634	$	566,523
Special Mention	0			0		0		0			0		0		0		60,441		60,441
Substandard	0			0		35		0			0		0		35		25,928		25,963
Total	3,699			830		3,395		0			0		0		7,924		645,003		652,927
Non-working capital loans:
Pass	185,374			139,157		79,477		38,899			19,415		18,489		480,811		203,794		684,605
Special Mention	17,728			0		225		979			2,350		1,426		22,708		0		22,708
Substandard	2,996			6,948		1,091		2,534			5,465		426		19,460		3,321		22,781
Not Rated	2,265			1,758		837		563			128		14		5,565		0		5,565
Total	208,363			147,863		81,630		42,975			27,358		20,355		528,544		207,115		735,659
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass	35,136			30,224		1,276		998			0		0		67,634		310,396		378,030
Total	35,136			30,224		1,276		998			0		0		67,634		310,396		378,030
Owner occupied loans:
Pass	135,861			169,404		124,117		85,070			78,155		93,925		686,532		29,611		716,143
Special Mention	6,555			0		880		933			7,387		1,235		16,990		0		16,990
Substandard	489			1,570		909		1,758			694		238		5,658		0		5,658
Total	142,905			170,974		125,906		87,761			86,236		95,398		709,180		29,611		738,791
Nonowner occupied loans:
Pass	146,342			154,433		107,262		19,054			31,023		59,154		517,268		44,362		561,630
Special Mention	11,825			331		0		0			0		14,253		26,409		0		26,409
Total	158,167			154,764		107,262		19,054			31,023		73,407		543,677		44,362		588,039
Multifamily loans:
Pass	84,678			53,195		36,575		12,286		17,105	14,574		9,793		211,101		13,434		224,535
Special Mention	0			0		0		0			22,252		0		22,252		0		22,252
Total	84,678			53,195		36,575		12,286			36,826		9,793		233,353		13,434		246,787
Agri-business and agricultural loans:
Loans secured by farmland:
Pass	47,532			37,035		16,249		10,469			10,454		17,021		138,760		61,774		200,534
Special Mention	0			1,985		2,303		0			180		30		4,498		918		5,416
Substandard	207			0		0		0			0		145		352		0		352
Total	47,739			39,020		18,552		10,469			10,634		17,196		143,610		62,692		206,302
Loans for agricultural production:
Pass	36,238			25,855		4,224		11,072			1,331		4,178		82,898		138,142		221,040
Special Mention	448			8,642		1,171		0			0		0		10,261		8,272		18,533
Total	36,686			34,497		5,395		11,072			1,331		4,178		93,159		146,414		239,573
Other commercial loans:
Pass	6,556			21,111		3,243		1,273			8,592		7,460		48,235		21,145		69,380
Special Mention	0			0		0		0			0		3,798		3,798		0		3,798
Total	6,556			21,111		3,243		1,273			8,592		11,258		52,033		21,145		73,178
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans
Pass	14,635			16,173		5,312		5,903			3,049		3,221		48,293		5,005		53,298
Special Mention	0			0		0		0			0		1,274		1,274		0		1,274
Not Rated	45,089			27,738		9,248		5,217			7,628		26,321		121,241		482		121,723
Total	59,724			43,911		14,560		11,120			10,677		30,816		170,808		5,487		176,295
Open end and junior lien loans
Pass	679		453	379		159		313			0		0		1,530		5,074		6,604
Substandard	0			0		0		0			0		0		0		98		98
Not Rated	21,945			5,624		5,987		3,899			1,653		1,526		40,634		110,523		151,157
Total	22,624			6,003		6,146		4,212			1,653		1,526		42,164		115,695		157,859
Residential construction loans
Not Rated	7,926		4,756	1,537		960		138			171		1,125		11,857		0		11,857
Total	7,926			1,537		960		138			171		1,125		11,857		0		11,857

15

Other consumer loans
Pass	3,401		957		1,523		0		1,155		0		7,036		12,998		20,034
Substandard	36		23		230		0		0		0		289		0		289
Not Rated	21,652		14,931		7,474		5,844		1,890		1,203		52,994		9,227		62,221
Total	25,089		15,911		9,227		5,844		3,045		1,203		60,319		22,225		82,544
TOTAL	$	839,292	$	719,840	$	414,127	$	207,202	$	217,546	$	266,255	$	2,664,262	$	1,623,579	$	4,287,841

As of December 31, 2021, $26.2 million in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans. These loans were included in this risk rating category because they are fully guaranteed by the SBA.

16

Nonaccrual and Past Due Loans:

The Company does not record interest on nonaccrual loans until principal is recovered. For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in the process of collection, or earlier when concern exists as to the ultimate collectability of principal or interest. Interest accrued but not received is reversed against earnings. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and future payments are reasonably assured.

The following table presents the aging of the amortized cost basis in past due loans as of March 31, 2022 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands)	Loans Not Past Due		30-89 Days Past Due		Greater than 89 Days Past Due and Accruing		Total Accruing		Total Nonaccrual		Nonaccrual With No Allowance For Credit Loss		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	678,654	$	0	$	0	$	674,338	$	4,316	$	238	$	678,654
Non-working capital loans	781,306		3,129		0		778,863		5,572		4,546		784,435
Commercial real estate and multi-family residential loans:
Construction and land development loans	397,775		0		0		397,775		0		0		397,775
Owner occupied loans	723,968		0		0		720,812		3,156		1,516		723,968
Nonowner occupied loans	618,693		0		0		618,693		0		0		618,693
Multifamily loans	213,654		0		0		213,654		0		0		213,654
Agri-business and agricultural loans:
Loans secured by farmland	164,225		0		0		163,890		335		0		164,225
Loans for agricultural production	259,495		0		0		259,495		0		0		259,495
Other commercial loans	78,118		0		0		78,118		0		0		78,118
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans	179,872		301		18		179,980		211		140		180,191
Open end and junior lien loans	160,043		195		0		160,210		28		28		160,238
Residential construction loans	11,073		0		0		11,073		0		0		11,073
Other consumer loans	83,150		45		0		82,913		282		0		83,195
Total	$	4,350,026	$	3,670	$	18	$	4,339,814	$	13,900	$	6,468	$	4,353,714

As of March 31, 2022 there were an insignificant number of loans 30-89 days past due or greater than 89 days past due on nonaccrual. Additionally, interest income recognized on nonaccrual loans was insignificant during the three month period ended March 31, 2022.

17

The following table presents the aging of the amortized cost basis in past due loans as of December 31, 2021 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands)	Loans Not Past Due		30-89 Days Past Due		Greater than 89 Days Past Due and Accruing		Total Accruing		Total Nonaccrual		Nonaccrual With No Allowance For Credit Loss		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	652,903	$	24	$	0	$	646,961	$	5,966	$	5,200	$	652,927
Non-working capital loans	735,658		1		0		731,063		4,596		229		735,659
Commercial real estate and multi-family residential loans:
Construction and land development loans	378,030		0		0		378,030		0		0		378,030
Owner occupied loans	738,791		0		0		735,157		3,634		2,129		738,791
Nonowner occupied loans	588,039		0		0		588,039		0		0		588,039
Multifamily loans	246,787		0		0		246,787		0		0		246,787
Agri-business and agricultural loans:
Loans secured by farmland	206,302		0		0		205,967		335		0		206,302
Loans for agricultural production	239,573		0		0		239,573		0		0		239,573
Other commercial loans	73,178		0		0		73,178		0		0		73,178
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans	175,678		500		117		176,240		55		55		176,295
Open end and junior lien loans	157,729		130		0		157,761		98		98		157,859
Residential construction loans	11,857		0		0		11,857		0		0		11,857
Other consumer loans	82,472		72		0		82,255		289		0		82,544
Total	$	4,286,997	$	727	$	117	$	4,272,868	$	14,973	$	7,711	$	4,287,841

As of December 31, 2021 there were an insignificant number of loans 30-89 days past due or greater than 89 days past due on nonaccrual. Additionally, interest income recognized on nonaccrual loans was insignificant during the year ended December 31, 2021.

When management determines that foreclosure is probable, expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. A loan is considered collateral dependent when the borrower is experiencing financial difficulty and the loan is expected to be repaid substantially through the operation or sale of the collateral. The class of loan represents the primary collateral type associated with the loan. Significant quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value.

18

The following tables present the amortized cost basis of collateral dependent loans by class of loan as of:

	March 31, 2022
(dollars in thousands)	Real Estate		General Business  Assets		Other		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	74	$	5,497	$	0	$	5,571
Non-working capital loans	1,581		9,525		229		11,335
Commercial real estate and multi-family residential loans:
Owner occupied loans	960		1,500		1,161		3,621
Agri-business and agricultural loans:
Loans secured by farmland	190		145		0		335
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	3,141		0		0		3,141
Open end and junior lien loans	28		0		0		28
Other consumer loans	0		0		63		63
Total	$	5,974	$	16,667	$	1,453	$	24,094

	December 31, 2021
(dollars in thousands)	Real Estate		General Business  Assets		Other		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	5,966	$	0	$	5,966
Non-working capital loans	1,606		9,475		229		11,310
Commercial real estate and multi-family residential loans:
Owner occupied loans	1,435		1,505		1,161		4,101
Agri-business and agricultural loans:
Loans secured by farmland	190		145		0		335
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	3,081		0		0		3,081
Open end and junior lien loans	98		0		0		98
Other consumer loans	0		0		59		59
Total	$	6,312	$	17,091	$	1,449	$	24,950

Troubled Debt Restructurings:

Troubled debt restructured loans are included in the totals for individually analyzed loans. The Company has allocated $6.0 million and $5.8 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2022 and December 31, 2021, respectively. The Company is not committed to lend additional funds to debtors whose loans have been modified in a troubled debt restructuring.

(dollars in thousands)	March 31, 2022		December 31, 2021
Accruing troubled debt restructured loans	$	4,976	$	5,121
Nonaccrual troubled debt restructured loans	6,443		6,218
Total troubled debt restructured loans	$	11,419	$	11,339

During the three months ended March 31, 2022, one loan was identified as a troubled debt restructuring. This loan was an over line of credit extended to an existing borrower with other previously modified loans as a result of financial difficulty to assist with cash flow needs. No additional credit enhancements were obtained in conjunction with the extension of this over line of credit.

19

(dollars in thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial and industrial loans:
Working capital lines of credit loans	1	$	226	$	226
Total	1	$	226	$	226

For the three month period ended March 31, 2022, the troubled debt restructuring described above did not increase the allowance for credit losses, and no charge-offs were recorded.

During the three months ended March 31, 2021, no loans were modified as troubled debt restructurings.

NOTE 5. BORROWINGS

For the periods ended March 31, 2022 and December 31, 2021, the Company had an advance outstanding from the Federal Home Loan Bank (“FHLB”) in the amount of $75.0 million. The outstanding FHLB advance is a ten-year fixed-rate putable advance with a rate of 0.39% and is due on March 4, 2030. The advance may not be prepaid by the Company without penalty. The note requires monthly interest payments and is secured by residential real estate loans and securities.

On August 2, 2019 the Company entered into an unsecured revolving credit agreement with another financial institution allowing the Company to borrow up to $30.0 million; this credit agreement was subsequently amended and renewed on July 30, 2021. Funds provided under the agreement may be used to repurchase shares of the Company’s common stock under the share repurchase program, which was reauthorized by the Company’s board of directors on April 13, 2021, and for general operations. The credit agreement includes a negative pledge agreement whereby the Company agrees not to pledge or otherwise encumber the stock of the Bank. The credit agreement has a one year term which may be amended, extended, modified or renewed. There were no outstanding borrowings on the credit agreement at March 31, 2022 and December 31, 2021.

NOTE 6. FAIR VALUE DISCLOSURES

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

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

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

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

The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Securities:  Securities available-for-sale are valued primarily by a third party pricing service. The fair values of securities available-for-sale are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or pricing models which utilize significant observable inputs such as matrix pricing. This is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). These models utilize the market approach with standard inputs that include, but are not limited to benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain municipal securities that are not rated and observable inputs about the specific issuer are not available, fair values are estimated

20

using observable data from other municipal securities presumed to be similar or other market data on other non-rated municipal securities (Level 3 inputs).

The Company’s Finance Department, which is responsible for all accounting and SEC disclosure compliance, and the Company’s Treasury Department, which is responsible for investment portfolio management and asset/liability modeling, are the two areas that determine the Company’s valuation policies and procedures. Both of these areas report directly to the Executive Vice President and Chief Financial Officer of the Company. For assets or liabilities that may be considered for Level 3 fair value measurement on a recurring basis, these two departments and the Executive Vice President and Chief Financial Officer determine the appropriate level of the assets or liabilities under consideration. If there are new assets or liabilities that are determined to be Level 3 by this group, the Risk Management Committee of the Company and the Audit Committee of the Board are made aware of such assets at their next scheduled meeting.

Securities pricing is obtained on securities from a third party pricing service and all security prices are tested annually against prices from another third party provider and reviewed with a market value price tolerance variance that varies by sector:  municipal securities +/-5%, government MBS/CMO +/-3% and U.S. treasuries +/-1%. If any securities fall outside the tolerance threshold and have a variance of $100,000 or more, a determination of materiality is made for the amount over the threshold. Any security that would have a material threshold difference would be further investigated to determine why the variance exists and if any action is needed concerning the security pricing for that individual security. Changes in market value are reviewed monthly in aggregate by security type and any material changes are reviewed to determine why they exist. At least annually, the pricing methodology of the pricing service is received and reviewed to support the fair value levels used by the Company. A detailed pricing evaluation is requested and reviewed on any security determined to be fair valued using unobservable inputs by the pricing service.

Mortgage banking derivative:  The fair values of mortgage banking derivatives are based on observable market data as of the measurement date (Level 2).

Interest rate swap derivatives:  Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services. The fair value of interest rate swap derivatives is determined by pricing or valuation models using observable market data as of the measurement date (Level 2).

Collateral dependent loans:  Collateral dependent loans with specific allocations of the allowance for credit losses are generally based on the fair value of the underlying collateral when repayment is expected solely from the collateral. Fair value is determined using several methods. Generally, the fair value of real estate is based on appraisals by qualified third party appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and result in a Level 3 classification of the inputs for determining fair value. In addition, the Company’s management routinely applies internal discount factors to the value of appraisals used in the fair value evaluation of collateral dependent loans. The deductions to the appraisals take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. Commercial real estate is generally discounted from its appraised value by 0-50% with the higher discounts applied to real estate that is determined to have a thin trading market or to be specialized collateral. In addition to real estate, the Company’s management evaluates other types of collateral as follows: (a) raw and finished inventory is discounted from its cost or book value by 35-65%, depending on the marketability of the goods (b) finished goods are generally discounted by 30-60%, depending on the ease of marketability, cost of transportation or scope of use of the finished good (c) work in process inventory is typically discounted by 50%-100%, depending on the length of manufacturing time, types of components used in the completion process, and the breadth of the user base (d) equipment is valued at a percentage of depreciated book value or recent appraised value, if available, and is typically discounted at 30-70% after various considerations including age and condition of the equipment, marketability, breadth of use, and whether the equipment includes unique components or add-ons; and (e) marketable securities are discounted by 10%-30%, depending on the type of investment, age of valuation report and general market conditions. This methodology is based on a market approach and typically results in a Level 3 classification of the inputs for determining fair value.

Mortgage servicing rights:  As of March 31, 2022, the fair value of the Company’s Level 3 servicing assets for residential mortgage loans (“MSRs”) was $2.7 million, carried at amortized cost of $3.0 million less a $355,000 valuation reserve. These residential mortgage loans have a weighted average interest rate of 3.39%, a weighted average maturity of 21 years and are

21

secured by homes generally within the Company’s market area of Northern Indiana and Indianapolis. A third-party valuation is used to estimate fair value by stratifying the portfolios on the basis of certain risk characteristics, including loan type and interest rate. Impairment is estimated based on an income approach. The inputs used include estimates of prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, late fees and float income. The most significant assumption used to value MSRs is prepayment rate. Prepayment rates are estimated based on published industry consensus prepayment rates. The most significant unobservable assumption is the discount rate. At March 31, 2022, the constant prepayment speed (“PSA”) used was 228 and discount rate used was 9.5%. At December 31, 2021, the PSA used was 249 and the discount rate used was 9.5%.

Other real estate owned: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned are measured at the lower of carrying amount or fair value less costs to sell. Fair values are generally based on third party appraisals of the property and are reviewed by the Company’s internal appraisal officer. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable properties used to determine value. Such adjustments are usually significant and result in a Level 3 classification. In addition, the Company’s management may apply discount factors to the appraisals to take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.

Real estate mortgage loans held-for-sale: Real estate mortgage loans held-for-sale are carried at the lower of cost or fair value, as determined by outstanding commitments, from third party investors, and result in a Level 2 classification.

22

The tables below presents the balances of assets measured at fair value on a recurring basis:

	March 31, 2022
	Fair Value Measurements Using						Assets at Fair Value
(dollars in thousands)	Level 1		Level 2		Level 3
Assets:
U.S. Treasury securities	$	2,246	$	0	$	0	$	2,246
U.S. government sponsored agency securities	0		152,892		0		152,892
Mortgage-backed securities: residential	0		596,321		0		596,321
Mortgage-backed securities: commercial	0		96		0		96
State and municipal securities	0		768,663		2,317		770,980
Total Securities	2,246		1,517,972		2,317		1,522,535
Mortgage banking derivative	0		257		0		257
Interest rate swap derivative	0		19,485		0		19,485
Total assets	$	2,246	$	1,537,714	$	2,317	$	1,542,277
Liabilities:
Mortgage banking derivative	$	0	$	3	$	0	$	3
Interest rate swap derivative	0		19,499		0		19,499
Total liabilities	$	0	$	19,502	$	0	$	19,502

	December 31, 2021
	Fair Value Measurements Using						Assets at Fair Value
(dollars in thousands)	Level 1		Level 2		Level 3
Assets:
U.S. Treasury securities	$	900	$	0	$	0	$	900
U.S. government sponsored agency securities	0		143,452		0		143,452
Mortgage-backed securities: residential	0		486,676		0		486,676
Mortgage-backed securities: commercial	0		523		0		523
State and municipal securities	0		764,964		2,043		767,007
Total Securities	900		1,395,615		2,043		1,398,558
Mortgage banking derivative	0		398		0		398
Interest rate swap derivative	0		14,309		0		14,309
Total assets	$	900	$	1,410,322	$	2,043	$	1,413,265
Liabilities:
Mortgage banking derivative	$	0	$	2	$	0	$	2
Interest rate swap derivative	0		14,329		0		14,329
Total liabilities	$	0	$	14,331	$	0	$	14,331

    The fair value of Level 3 available-for-sale securities was immaterial and thus did not require additional recurring fair value disclosure.

23

The tables below presents the balances of assets measured at fair value on a nonrecurring basis:

	March 31, 2022
	Fair Value Measurements Using						Assets at Fair Value
(dollars in thousands)	Level 1		Level 2		Level 3
Assets
Collateral dependent loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	353	$	353
Non-working capital loans	0		0		4,716		4,716
Commercial real estate and multi-family residential loans:
Owner occupied loans	0		0		880		880
Agri-business and agricultural loans:
Loans secured by farmland	0		0		231		231
Total collateral dependent loans	0		0		6,180		6,180
Other real estate owned	0		0		196		196
Total assets	$	0	$	0	$	6,376	$	6,376

	December 31, 2021
	Fair Value Measurements Using						Assets at Fair Value
(dollars in thousands)	Level 1		Level 2		Level 3
Assets
Collateral dependent loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	247	$	247
Non-working capital loans	0		0		5,095		5,095
Commercial real estate and multi-family residential loans:
Owner occupied loans	0		0		791		791
Agri-business and agricultural loans:
Loans secured by farmland	0		0		231		231
Total collateral dependent loans	0		0		6,364		6,364
Other real estate owned	0		0		196		196
Total assets	$	0	$	0	$	6,560	$	6,560

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at March 31, 2022:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Collateral dependent loans:
Commercial and industrial	$	5,069	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	65	%	21%-99%
Collateral dependent loans:
Commercial real estate and multi-family residential loans	880		Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	46	%	34%-68%
Collateral dependent loans:
Agribusiness and agricultural	231		Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	36	%	3%-68%
Other real estate owned	196		Appraisals	Discount to reflect current market conditions and ultimate collectability	38	%

24

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at December 31, 2021:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Collateral dependent loans:
Commercial and industrial	$	5,342	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	65	%	22%-99%
Collateral dependent loans:
Commercial real estate and multi-family residential loans	791		Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	51	%	34%-68%
Collateral dependent loans:
Agribusiness and agricultural	231		Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	35	%	3%-68%
Other real estate owned	196		Appraisals	Discount to reflect current market conditions and ultimate collectability	38	%

The following tables contain the estimated fair values and the related carrying values of the Company’s financial instruments. Items which are not financial instruments are not included.

	March 31, 2022
	Carrying Value		Estimated Fair Value
(dollars in thousands)			Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	475,024	$	473,561	$	1,463	$	0	$	475,024
Securities available-for-sale	1,522,535		2,246		1,517,972		2,317		1,522,535
Real estate mortgages held-for-sale	2,234		0		2,270		0		2,270
Loans, net	4,286,188		0		0		4,169,000		4,169,000
Mortgage banking derivative	257		0		257		0		257
Interest rate swap derivative	19,485		0		19,485		0		19,485
Federal Reserve and Federal Home Loan Bank Stock	12,840		N/A		N/A		N/A		N/A
Accrued interest receivable	19,448		0		9,162		10,286		19,448
Financial Liabilities:
Certificates of deposit	(814,263)		0		(817,622)		0		(817,622)
All other deposits	(5,006,360)		(5,006,360)		0		0		(5,006,360)
Federal Home Loan Bank advances	(75,000)		0		(61,200)		0		(61,200)
Mortgage banking derivative	(3)		0		(3)		0		(3)
Interest rate swap derivative	(19,499)		0		(19,499)		0		(19,499)
Standby letters of credit	(202)		0		0		(202)		(202)
Accrued interest payable	(2,303)		(88)		(2,215)		0		(2,303)

25

	December 31, 2021
	Carrying Value		Estimated Fair Value
(dollars in thousands)			Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	683,240	$	681,286	$	1,954	$	0	$	683,240
Securities available-for-sale	1,398,558		900		1,395,615		2,043		1,398,558
Real estate mortgages held-for-sale	7,470		0		7,634		0		7,634
Loans, net	4,220,068		0		0		4,144,000		4,144,000
Mortgage banking derivative	398		0		398		0		398
Interest rate swap derivative	14,309		0		14,309		0		14,309
Federal Reserve and Federal Home Loan Bank Stock	13,772		N/A		N/A		N/A		N/A
Accrued interest receivable	17,674		0		7,689		9,985		17,674
Financial Liabilities:
Certificates of deposit	(829,518)		0		(833,617)		0		(833,617)
All other deposits	(4,905,889)		(4,905,889)		0		0		(4,905,889)
Federal Home Loan Bank advances	(75,000)		0		(66,118)		0		(66,118)
Mortgage banking derivative	(2)		0		(2)		0		(2)
Interest rate swap derivative	(14,329)		0		(14,329)		0		(14,329)
Standby letters of credit	(272)		0		0		(272)		(272)
Accrued interest payable	(2,619)		(84)		(2,535)		0		(2,619)

NOTE 7. OFFSETTING ASSETS AND LIABILITIES

The following tables summarize gross and net information about financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to an enforceable master netting arrangement at March 31, 2022 and December 31, 2021.

	March 31, 2022
	Gross Amounts of Recognized Assets/Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
(dollars in thousands)							Financial Instruments		Cash Collateral Position
Assets
Interest Rate Swap Derivatives	$	19,485	$	0	$	19,485	$	0	$	(15,415)	$	4,070
Total Assets	$	19,485	$	0	$	19,485	$	0	$	(15,415)	$	4,070
Liabilities
Interest Rate Swap Derivatives	$	19,499	$	0	$	19,499	$	0	$	(90)	$	19,409
Total Liabilities	$	19,499	$	0	$	19,499	$	0	$	(90)	$	19,409

26

	December 31, 2021
	Gross Amounts of Recognized Assets/Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
(dollars in thousands)							Financial Instruments		Cash Collateral Position
Assets
Interest Rate Swap Derivatives	$	14,309	$	0	$	14,309	$	0	$	(2,255)	$	12,054
Total Assets	$	14,309	$	0	$	14,309	$	0	$	(2,255)	$	12,054
Liabilities
Interest Rate Swap Derivatives	$	14,329	$	0	$	14,329	$	0	$	(7,995)	$	6,334
Total Liabilities	$	14,329	$	0	$	14,329	$	0	$	(7,995)	$	6,334

If an event of default occurs causing an early termination of an interest rate swap derivative, any early termination amount payable to one party by the other party may be reduced by set-off against any other amount payable by the one party to the other party. If a default in performance of any obligation of a repurchase agreement occurs, each party will set-off property held in respect of transactions against obligations owing in respect of any other transactions.

NOTE 8. EARNINGS PER SHARE

Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period, which includes shares held in treasury on behalf of participants in the Company’s Directors Fee Deferral Plan, and share repurchases. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock based awards and warrants, none of which were antidilutive.

	Three Months Ended March 31,
	2022		2021
Weighted average shares outstanding for basic earnings per common share	25,515,271		25,457,659
Dilutive effect of stock based awards	175,101		92,452
Weighted average shares outstanding for diluted earnings per common share	25,690,372		25,550,111
Basic earnings per common share	$	0.93	$	0.90
Diluted earnings per common share	$	0.92	$	0.90

NOTE 9. ACCUMULATED OTHER COMPREHENSIVE INCOME

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) for the three months ended March 31, 2022 and 2021, all shown net of tax:

(dollars in thousands)	Unrealized Gains and Losses on Available- for-Sales Securities		Defined Benefit Pension Items		Total
Balance at January 1, 2022	$	17,056	$	(963)	$	16,093
Other comprehensive loss before reclassification	(109,807)		0		(109,807)
Amounts reclassified from accumulated other comprehensive loss	0		27		27
Net current period other comprehensive income (loss)	(109,807)		27		(109,780)
Balance at March 31, 2022	$	(92,751)	$	(936)	$	(93,687)

27

(dollars in thousands)	Unrealized Gains and Losses on Available- for-Sales Securities		Defined Benefit Pension Items		Total
Balance at January 1, 2021	$	29,182	$	(1,438)	$	27,744
Other comprehensive loss before reclassification	(12,084)		0		(12,084)
Amounts reclassified from accumulated other comprehensive income	(595)		45		(550)
Net current period other comprehensive income (loss)	(12,679)		45		(12,634)
Balance at March 31, 2021	$	16,503	$	(1,393)	$	15,110

Reclassifications out of other accumulated comprehensive loss for the three months ended March 31, 2022 are as follows:

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified From Accumulated Other Comprehensive Income		Affected Line Item in the Statement Where Net Income is Presented
(dollars in thousands)
Amortization of defined benefit pension items	$	(36)	Other expense
Tax effect	9		Income tax expense
	(27)		Net of tax
Total reclassifications for the period	$	(27)	Net income

    Reclassifications out of other accumulated comprehensive income for the three months ended March 31, 2021 are as follows:

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified From Accumulated Other Comprehensive Income		Affected Line Item in the Statement Where Net Income is Presented
(dollars in thousands)
Realized gains and losses on available-for-sale securities	$	753	Net securities gains
Tax effect	(158)		Income tax expense
	595		Net of tax
Amortization of defined benefit pension items	(60)		Other expense
Tax effect	15		Income tax expense
	(45)		Net of tax
Total reclassifications for the period	$	550	Net income

NOTE 10. LEASES

The Company leases certain office facilities under long-term operating lease agreements. The leases expire at various dates through 2037 and some include renewal options. Many of these leases require the payment of property taxes, insurance premiums, maintenance, utilities and other costs. In many cases, rentals are subject to increase in relation to a cost-of-living index. The Company accounts for lease and non-lease components together as a single lease component. The Company determines if an arrangement is a lease at inception. Operating leases are recorded as a right-of-use ("ROU") lease assets and are included in other assets on the consolidated balance sheet. The Company's corresponding lease obligations are included in other liabilities on the consolidated balance sheet. ROU lease assets represent the Company's right to use an underlying asset for the lease term and lease obligations represent the Company's obligation to make lease payments arising from the lease. Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU lease asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

28

Lease expense for lease payments is recognized on a straight-line basis over the lease term. Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases, as allowed as practical expedient of the standard.

The following is a maturity analysis of the operating lease liabilities as of March 31, 2022:

Years ending December 31, (in thousands)	Operating Lease Obligation
2022	$	530
2023	717
2024	734
2025	752
2026	731
2027 and thereafter	2,938
Total undiscounted lease payments	6,402
Less imputed interest	(703)
Lease liability	$	5,699
Right-of-use asset	$	5,699

	Three months ended March 31,
	2022			2021
Lease cost
Operating lease cost	$	170		$	135
Short-term lease cost	6			6
Total lease cost	$	176		$	141
Other information
Operating cash outflows from operating leases	$	170		$	135
Weighted-average remaining lease term - operating leases	8.9 years			8.6 years
Weighted average discount rate - operating leases	2.5		%	2.8		%

NOTE 11. CONTINGENCIES

Lakeland Financial Corporation and its subsidiaries are defendants in various legal proceedings arising in the normal course of business. In the opinion of management, based on present information including advice of legal counsel, the ultimate resolution of these proceedings is not expected to have a material effect on the Company's consolidated financial position or results of operations.

29

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

OVERVIEW

Net income in the first three months of 2022 was $23.6 million, which increased $659,000, or 2.9%, from $23.0 million for the comparable period of 2021. Diluted income per common share was $0.92 in the first three months of 2022, up 2.2% from $0.90 in the comparable period of 2021. The increase in net income for 2022 was primarily due to growth in net interest income of $1.2 million and a decrease in provision expense of $1.1 million, offset by a decrease in noninterest income of $1.9 million. Pretax pre-provision earnings in the first three months of 2022 were $28.6 million, a decrease of $892,000, or 3.0%, compared to $29.5 million for the comparable period. Pretax pre-provision earnings is a non-GAAP measure calculated by adding net interest income to noninterest income and subtracting noninterest expense.

Annualized return on average total equity was 14.04% in the first three months of 2022 versus 14.27% in the comparable period of 2021. Annualized return on average total assets was 1.44% in the first three months of 2022 versus 1.58% for the comparable period of 2021. The Company's average equity to average assets ratio was 10.3% in the first three months of 2022 versus 11.1% in the comparable period of 2021.

The Company’s tangible common equity to tangible assets ratio, which is a non-GAAP financial measure, was 9.22% at March 31, 2022, compared to 10.77% at March 31, 2021 and 10.70% at December 31, 2021. The decline was a result of the yield curve steepening in the first quarter of 2022 and a corresponding decline in the market value of the Company's available-for-sale securities portfolio. This resulted in an unrealized loss in market value of $117.4 million as of March 31, 2022, compared to an unrealized gain in market value of $20.9 million at March 31, 2021, and an unrealized gain in market value of $21.6 million at December 31, 2021.

Total assets were $6.572 billion as of March 31, 2022 versus $6.557 billion as of December 31, 2021, an increase of $14.9 million. This increase was primarily due to a $124.0 million increase in securities available-for-sale, a $66.1 million increase in loans, net of the allowance for credit losses, and a $29.2 million increase in deferred taxes, offset by a decrease in cash and cash equivalents of $208.2 million.

Balance sheet growth was primarily funded through growth in deposits during the first three months of 2022. Deposits increased $85.2 million. Other liabilities increased by $26.0 million primarily to the valuation of swap liabilities of $19.5 million, which resulted from the increase in interest rates during the quarter. Total equity decreased by $95.8 million due primarily to a reduction to accumulated other comprehensive income (loss) of $109.8 million, driven by a decrease in the fair value of available-for-sale securities caused by the yield curve steepening in the first quarter of 2022. The change in total equity was also impacted by net income of $23.6 million and dividends declared and paid of $0.40 per share, totaling $10.2 million.

CRITICAL ACCOUNTING POLICIES

The Company’s accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Certain of the Company’s accounting policies are important to the portrayal of the Company’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Some of the facts and circumstances which could affect these judgments include changes in interest rates, in the performance of the economy or in the financial condition of borrowers. Management believes that its critical accounting policies include determining the allowance for credit losses. See “Note 4 – Allowance for Credit Losses and Credit Quality” for more information on this critical accounting policy.

30

RESULTS OF OPERATIONS

Overview

Selected income statement information for the three months ended March 31, 2022 and 2021 is presented in the following table:

	Three Months Ended March 31,
(dollars in thousands)	2022			2021
Income Statement Summary:
Net interest income	$	44,880		$	43,679
Provision for credit losses	417			1,477
Noninterest income	10,687			12,557
Noninterest expense	26,969			26,746
Other Data:
Efficiency ratio (1)	48.53		%	47.56		%
Diluted EPS	$	0.92		$	0.90
Tangible capital ratio (2)	9.22		%	10.77		%
Net charge offs (recoveries) to average loans	0.06		%	0.01		%
Net interest margin	2.93		%	3.19		%
Net interest margin excluding PPP loans (3)	2.90		%	3.06		%
Noninterest income to total revenue	19.23		%	22.33		%
Pretax Pre-Provision Earnings (4)	$	28,598		$	29,490

(1)Noninterest expense/net interest income plus noninterest income.

(2)Non-GAAP financial measure. The Company believes that disclosing non-GAAP financial measures provides investors with information useful to understanding the Company’s financial performance. Additionally, these non-GAAP measures are used by management for planning and forecasting purposes, including measures based on “tangible common equity” which is “total equity” excluding intangible assets, net of deferred tax, and “tangible assets” which is “total assets” excluding intangible assets, net of deferred tax. See reconciliation on the next page.

(3)Non-GAAP financial measure. Calculated by subtracting the impact PPP loans had on average earnings assets, loan interest income, average interest bearing liabilities, and interest expense. Management believes this is an important measure because it provides for better comparability to prior periods, given the low fixed interest rate of 1.0% applicable to PPP loans, and because the accretion of net loan fee income can be accelerated upon borrower forgiveness and repayment by the SBA. Management is actively monitoring net interest margin on a fully tax equivalent basis with and without PPP loan impact for the duration of this program. See reconciliation on the next page.

(4)Non-GAAP financial measure. Pretax pre-provision earnings is calculated by adding net interest income to noninterest income and subtracting noninterest expense. Management believes this is an important measure because it may enable investors to identify the trends in the Company's earnings exclusive of the effects of tax and provision expense, which may vary significantly from period to period. See reconciliation on the next page.

31

A reconciliation of non-GAAP measures is provided below (in thousands, except for per share data).

	Three Months Ended March 31,
(dollars in thousands)	2022			2021
Total Equity	$	609,102		$	651,668
Less: Goodwill	(4,970)			(4,970)
Plus: Deferred Tax Assets Related to Goodwill	1,167			1,176
Tangible Common Equity (A)	605,299			647,874
Total Assets	$	6,572,259		$	6,016,642
Less: Goodwill	(4,970)			(4,970)
Plus: Deferred Tax Assets Related to Goodwill	1,167			1,176
Tangible Assets (B)	6,568,456			6,012,848
Tangible Capital Ratio (A/B)	9.22		%	10.77		%
Net Interest Income	$	44,880		$	43,679
Noninterest Income	10,687			12,557
Noninterest Expense	(26,969)			(26,746)
Pretax Pre-Provision Earnings	$	28,598		$	29,490

Impact of Paycheck Protection Program on Net Interest Margin FTE.

	Three Months Ended March 31,
	2022			2021
Total Average Earnings Assets	$	6,392,075		$	5,638,202
Less: Average Balance of PPP Loans	(17,555)			(402,730)
Total Adjusted Earning Assets	6,374,520			5,235,472
Total Interest Income FTE	$	49,302		$	48,664
Less: PPP Loan Income	(505)			(5,166)
Total Adjusted Interest Income FTE	48,797			43,498
Adjusted Earning Asset Yield, net of PPP Impact	3.10		%	3.37		%
Total Average Interest Bearing Liabilities	$	3,957,547		$	3,617,491
Less: Average Balance of PPP Loans	(17,555)			(402,730)
Total Adjusted Interest Bearing Liabilities	3,939,992			3,214,761
Total Interest Expense FTE	$	3,154		$	4,298
Less: PPP Cost of Funds	(11)			(248)
Total Adjusted Interest Expense FTE	3,143			4,050
Adjusted Cost of Funds, net of PPP Impact	0.20		%	0.31		%
Net Interest Margin FTE, net of PPP Impact	2.90		%	3.06		%

32

Net Income

Net income was $23.6 million in the first three months of 2022, an increase of $659,000, or 2.9%, versus net income of $23.0 million in the first three months of 2021. The increase in net income for 2022 was primarily due to growth in net interest income of $1.2 million, or 2.7%, and a decrease in provision expense of $1.1 million, or 71.8%, offset by a decrease in noninterest income of $1.9 million, or 14.9%.

Net Interest Income

The following table sets forth consolidated information regarding average balances and rates:

	Three Months Ended March 31,
	2022						2021
(fully tax equivalent basis, dollars in thousands)	Average Balance		Interest		Yield (1)/ Rate		Average Balance		Interest		Yield (1)/ Rate
Earning Assets
Loans:
Taxable (2)(3)	$	4,278,894	$	39,735	3.77	%	$	4,554,183	$	43,461	3.87	%
Tax exempt (1)	22,032		213		3.92		13,043		131		4.07
Investments:
Available-for-sale (1)	1,514,024		9,108		2.44		772,247		4,984		2.62
Short-term investments	2,143		1		0.11		2,206		1		0.18
Interest bearing deposits	574,982		245		0.17		296,523		87		0.12
Total earning assets	$	6,392,075	$	49,302	3.13	%	$	5,638,202	$	48,664	3.50	%
Less: Allowance for credit losses (4)	(68,051)						(70,956)
Nonearning Assets
Cash and due from banks	71,905						70,720
Premises and equipment	59,309						59,278
Other nonearning assets	196,705						190,117
Total assets	$	6,651,943					$	5,887,361
Interest Bearing Liabilities
Savings deposits	$	408,314	$	75	0.07	%	$	330,069	$	61	0.07	%
Interest bearing checking accounts	2,642,003		1,862		0.29		2,182,164		1,495		0.28
Time deposits:
In denominations under $100,000	198,257		346		0.71		235,271		648		1.12
In denominations over $100,000	633,947		798		0.51		793,470		2,014		1.03
Miscellaneous short-term borrowings	26		0		0.00		1,517		7		1.87
Long-term borrowings and subordinated debentures	75,000		73		0.40		75,000		73		0.39
Total interest bearing liabilities	$	3,957,547	$	3,154	0.32	%	$	3,617,491	$	4,298	0.48	%
Noninterest Bearing Liabilities
Demand deposits	1,966,117						1,566,045
Other liabilities	45,587						50,496
Stockholders' Equity	682,692						653,329
Total liabilities and stockholders' equity	$	6,651,943					$	5,887,361
Interest Margin Recap
Interest income/average earning assets			49,302		3.13				48,664		3.50	%
Interest expense/average earning assets			3,154		0.20				4,298		0.31	%
Net interest income and margin			$	46,148	2.93	%			$	44,366	3.19	%

(1)Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses. Taxable equivalent basis adjustments were $1.27 million, $1.13 million and $687,000 in the three-month periods ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively.

(2)Loan fees are included as taxable loan interest income. Net loan fees attributable to PPP loans were $461,000, $2.02 million and $4.15 million for the three months ended March 31, 2022, December 31, 2021 and March 31 2021, respectively. All other loan fees were immaterial in relation to total taxable loan interest income for the periods presented.

(3)Nonaccrual loans are included in the average balance of taxable loans.

33

Net interest income increased $1.2 million, or 2.7%, to $44.9 million for the three months ended March 31, 2022, compared with $43.7 million for the first three months of 2021. Growth in core loans and investment security balances coupled with the steepening yield curve positively impacted investment security and loan income and offset the decline in PPP income of $4.7 million during the quarter. In addition, interest expense declined by $1.1 million, further benefiting the increase in net interest income. Average earning assets increased by $753.9 million, due primarily to growth in investment securities of $741.8 million and growth in interest bearing deposits of $278.5 million. Average loans outstanding decreased $266.3 million to $4.301 billion during the three months ended March 31, 2022, compared to $4.567 billion during the same period of 2021. PPP loans declined by $385.2 million to $17.6 million for the first three months of 2022 compared to $402.7 million for the first three months of 2021. Excluding PPP loans, average core loans increased $118.9 million to $4.283 billion during the three months ended March 31, 2022, compared to $4.164 billion during the same period of 2021. The earning asset growth was funded through an increase in deposits. Average deposits increased $741.6 million to $5.849 billion during the three months ended March 31, 2022, compared to $5.107 billion for the same period of 2021.

The tax equivalent net interest margin was 2.93% for the three months ended March 31, 2022 compared to 3.19% during the first three months of 2021. The yield on earning assets totaled 3.13% during the three months ended March 31, 2022 compared to 3.50% in the same period of 2021. Cost of funds (expressed as a percentage of average earning assets) totaled 0.20% during the first three months of 2022, and represented a historical low, compared to 0.31% in the same period of 2021. The lower margin was due to lower yields on loans and securities and excess liquidity on the Company's balance sheet, partially offset by a lower cost of funds. The earning asset mix has changed during 2021 and 2022 to reflect increased investment securities balances and interest bearing deposits, which are lower yielding assets. Net interest margin excluding PPP loans was 2.90% for the three months ended March 31, 2022 compared to 3.06% for the same period of 2021.

On a linked quarter basis net interest margin, excluding PPP, expanded by three basis points to 2.90% compared to 2.87% for the three months ended December 31, 2022. Earning assets yields benefited from the steepening of the yield curve and the Federal Reserve increase to the target Federal Funds Rate in March 2022 of 25 basis points. Further tightening by the Federal Reserve Bank in 2022 is expected to benefit net interest margin due primarily to the repricing of variable rate loans to higher interest rates. Variable rate loans represent 68% of total loans as of March 31, 2022. The benefit of rising rates on the loan portfolio will be offset by excess liquidity that remains on the balance sheet. During the first quarter of 2022, the Bank deployed additional excess liquidity of $250 million to the investment security portfolio. Investment security portfolio and interest-bearing deposit yields are lower than traditional commercial loan yields and continue to negatively impact net interest margin. The Bank expects the excess liquidity position to moderate over time with declines in deposits and increased loan demand. The Bank expects to deploy future cash flows from the investment portfolio to fund loan demand and balance sheet liquidity needs.

Provision for Credit Losses

The Company recorded a provision for credit losses expense of $417,000 for the three months ended March 31, 2022 compared to a provision expense of $1.5 million during the comparable period of 2021, a decrease of $1.1 million. Net charge offs were $664,000 during the three month period ended March 31, 2022 compared to net charge offs of $91,000 during the comparable period of 2021. Additional factors considered by management included key loan quality metrics, including reserve coverage of nonperforming loans and economic conditions in the Company’s markets, and changes in the facts and circumstances of watch list credits, which includes the security position of the borrower. Management’s overall view on current credit quality was also a factor in the determination of the provision for credit losses. The Company’s management continues to monitor the adequacy of the provision based on loan levels, asset quality, economic conditions and other factors that may influence the assessment of the collectability of loans.

34

Noninterest Income

Noninterest income categories for the three-month period ended March 31, 2022 and 2021 are shown in the following table:

	Three Months Ended March 31,
(dollars in thousands)	2022			2021			Dollar Change		Percent Change
Wealth advisory fees	$	2,287		$	2,178		$	109	5.0	%
Investment brokerage fees	519			464			55		11.9
Service charges on deposit accounts	2,809			2,491			318		12.8
Loan and service fees	2,889			2,776			113		4.1
Merchant card fee income	815			622			193		31.0
Bank owned life insurance income (loss)	(83)			756			(839)		(111.0)
Interest rate swap fee income	50			249			(199)		(79.9)
Mortgage banking income	509			1,373			(864)		(62.9)
Net securities gains	0			753			(753)		(100.0)
Other income	892			895			(3)		(0.3)
Total noninterest income	$	10,687		$	12,557		$	(1,870)	(14.9)	%
Noninterest income to total revenue	19.2		%	22.3		%

The Company's noninterest income decreased $1.9 million, or 14.9%, to $10.7 million for the three months ended March 31, 2022 compared to $12.6 million in the prior year period. Noninterest income was positively impacted by elevated service charges on deposit accounts which increased $318,000, or 12.8% for these comparable periods. In addition, merchant card fee income increased $193,000, or 31.0%, and loan and loan and service fees were up $113,000, or 4.1%. These increases were due to an increase in economic activity within the Company's operating footprint. Offsetting these increases were decreases of $864,000, or 62.9%, in mortgage banking income as mortgage banking has seen a decrease in loan originations during the first quarter of 2022 compared to the first quarter of 2021, due to the rise in interest rates. In addition, bank owned life insurance income decreased by $839,000, or 111.0%, and net securities gains decreased $753,000, as there were no investment security sales in the first quarter of 2022. The decrease in bank owned life insurance income was caused by market fluctuations in the Company's variable life insurance policies during the first quarter of 2022, which are tied to equity market returns.

Noninterest Expense

Noninterest expense categories for the three-month period ended March 31, 2022 and 2021 are shown in the following tables:

	Three Months Ended March 31,
(dollars in thousands)	2022			2021			Dollar Change		Percent Change
Salaries and employee benefits	$	14,392		$	14,385		$	7	0.0	%
Net occupancy expense	1,629			1,503			126		8.4
Equipment costs	1,411			1,445			(34)		(2.4)
Data processing fees and supplies	3,081			3,319			(238)		(7.2)
Corporate and business development	1,219			1,509			(290)		(19.2)
FDIC insurance and other regulatory fees	439			464			(25)		(5.4)
Professional fees	1,559			1,877			(318)		(16.9)
Other expense	3,239			2,244			995		44.3
Total noninterest expense	$	26,969		$	26,746		$	223	0.8	%
Efficiency ratio	48.5		%	47.6		%

35

The Company’s noninterest expense increased by $223,000, or 0.8%, to $27.0 million in the first three months of 2022 compared to $26.7 million in the corresponding prior year period. Other expense increased $995,000, or 44.3%, driven by accruals for ongoing legal matters and an increase in director share-based compensation expense, due to the appreciation of the Company's stock price. Professional fees decreased $318,000, or 16.9%, due to reduced legal fees and a reduction in other professional fees related to the Lake City Bank Digital conversion that were incurred in 2021 and were not recurring in 2022. Corporate and business development expense decreased $290,000, or 19.2%, and data processing fees and supplies decreased $238,000 or 7.2%. Corporate and business development expenses were lower in the first quarter of 2022 compared to the prior year first quarter of 2021 due to lower contributions and advertising expense. Data processing fees were lower in the first quarter of 2022 compared to the prior year first quarter of 2021 due primarily to lower processing costs associated with PPP forgiveness applications in the first quarter of 2022.

The Company's efficiency ratio was 48.5% for the three months ended March 31, 2022 compared to 47.6% for the first quarter of 2021 and 45.6% for the linked fourth quarter of 2021.

As previously disclosed, in the third quarter of 2019, the Bank discovered potentially fraudulent activity by a former treasury management client involving multiple banks. The former client subsequently filed several related bankruptcy cases, captioned In re Interlogic Outsourcing, Inc., et al., which are pending in the United States Bankruptcy Court for the Western District of Michigan. On April 27, 2021, the bankruptcy court entered an order approving an amended plan of liquidation, which was filed by the former client, other debtors and bankruptcy plan proponents, and approving the consolidation of the assets in the aforementioned cases under the Khan IOI Consolidated Estate Trust. On August 9, 2021, the liquidating trustee for the bankruptcy estates filed a complaint against the Bank and the Company, and has agreed to stay prosecution of the action through May 31, 2022. The action is focused on a series of business transactions among the client, related entities, and the Bank, which the liquidating trustee alleges are voidable under applicable federal bankruptcy and state law. The complaint also addresses treatment of the Bank’s claims filed in the bankruptcy cases. Based on current information, we have determined that a material loss is neither probable nor estimable at this time, and the Bank and the Company intend to vigorously defend themselves against all allegations asserted in the complaint.

The Company's income tax expense decreased $491,000, or 9.8%, in the three-month period ended March 31, 2022 compared to the same period in 2021. The effective tax rate was 16.1% in the three-month period ended March 31, 2022, compared to 18.0% for the comparable period of 2021. The year-to-date effective tax rate for 2022 decreased as compared to the prior year primarily due to a higher percentage of income being derived from tax-advantaged sources as well as a larger tax benefit from stock-based compensation payments.

FINANCIAL CONDITION

Overview

Total assets of the Company were $6.572 billion as of March 31, 2022, an increase of $14.9 million, when compared to $6.557 billion as of December 31, 2021. This increase was primarily due to a $124.0 million increase in securities available-for-sale, a $66.1 million increase in net loans, and an increase of $29.2 million in deferred taxes offset by a decrease in cash and cash equivalents of $208.2 million. The outstanding balance of Paycheck Protection Program (PPP) loans at March 31, 2022, was $12.5 million versus $26.2 million at December 31, 2021. Loans excluding PPP loans increased by $79.5 million, or 1.9%, from $4.262 billion at December 31, 2021 to $4.341 billion at March 31, 2022. Total deposits increased $85.2 million, or 1.5%. The increase in deposits was primarily driven by growth in core deposits of $85.0 million, or 1.5%. Core deposits were $5.810 billion as of March 31, 2022 compared to $5.725 billion as of December 31, 2021.

Uses of Funds

Total Cash and Cash Equivalents

Total cash and cash equivalents decreased by $208.2 million, or 30.5% to $475.0 million at March 31, 2022, from $683.2 million at December 31, 2021. Cash and cash equivalents at March 31, 2022 reflect an additional deployment of $250 million in funds to the available-for-sale investment securities portfolio during the first quarter of 2022. Cash and cash equivalents include short-term investments. Short-term investments include cash on deposit that earns interest such as excess liquidity maintained at the Federal Reserve Bank. Cash and cash equivalents balances will vary depending on the cyclical nature of the bank’s liquidity position.

36

Investment Portfolio

The amortized cost and the fair value of securities as of March 31, 2022 and December 31, 2021 were as follows:

	March 31, 2022				December 31, 2021
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S Treasury securities	$	2,250	$	2,246	$	900	$	900
U.S government sponsored agencies	164,514		152,892		145,858		143,452
Mortgage-backed securities: residential	634,654		596,321		487,157		486,676
Mortgage-backed securities: commercial	96		96		522		523
State and municipal securities	838,427		770,980		742,532		767,007
Total	$	1,639,941	$	1,522,535	$	1,376,969	$	1,398,558

At March 31, 2022 and December 31, 2021, there were no holdings of securities of any one issuer, other than the U.S. government agencies and government sponsored entities, in an amount greater than 10% of stockholders’ equity. Management is aware that, as interest rates rise, any unrealized loss in the investment portfolio will increase, and as interest rates fall the unrealized gain in the investment portfolio will rise. Since the majority of the bonds in the investment portfolio are fixed-rate, with only a few adjustable-rate bonds, we would expect our investment portfolio to follow this market value pattern. This is taken into consideration when evaluating the gain or loss of investment securities in the portfolio and the potential for an allowance for credit losses.

Purchases of securities available-for-sale totaled $292.1 million in the first three months of 2022. The purchases consisted of U.S. Treasury securities, securities issued by government sponsored entities, mortgage-backed securities issued by government sponsored entities and state and municipal securities. The investment security purchases reflect the deployment of excess liquidity to the available-for-sale investment securities portfolio. Investment securities represented 23.2% of total assets on March 31, 2022 compared to 21.3% of total assets on December 31, 2021. Management expects the investment portfolio as a percent of total assets to normalize once core loan growth demand increases and investment security repayments are deployed into loan growth. Paydowns from prepayments and scheduled payments of $26.5 million were received in the first three months of 2022, and the amortization of premiums, net of the accretion of discounts, was $1.7 million. Maturities and calls of securities totaled $3.1 million in the first three months of 2022. There were no sales of investment securities in the first three months of 2022. No allowance for credit losses was recognized in the first three months of 2022.

The fair value of the investment securities portfolio as of March 31, 2022 included an unrealized losses of $177.4 million compared to unrealized gains of $21.6 million as of December 31, 2021. Unrealized losses in the investment securities portfolio resulted from the steepening of the yield curve during the first quarter of 2022.

The investment portfolio is managed by a third-party firm to provide for an appropriate balance between liquidity, credit risk, interest rate risk management and investment return and to limit the Company’s exposure to credit risk in the investment securities portfolio to an acceptable level. The Company does not trade or invest in or sponsor certain unregistered investment companies defined as hedge funds and private equity funds under what is commonly referred to as the “Volcker Rule” of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Real Estate Mortgage Loans Held-for-Sale

Real estate mortgage loans held-for-sale decreased by $5.2 million, or 70.1%, to $2.2 million at March 31, 2022, from $7.5 million at December 31, 2021. The balance of this asset category is subject to a high degree of variability depending on, among other things, recent mortgage loan rates and the timing of loan sales into the secondary market. The Company generally sells conforming qualifying mortgage loans it originates on the secondary market. Proceeds from sales of residential mortgages totaled $18.1 million in the first three months of 2022 compared to $25.7 million in the first three months of 2021. Management expects the volume of loans originated for sale in the secondary market to decline as compared to volumes originated in 2021 due to the rise in interest rates that have occurred in the first quarter of 2022. Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of these loans were $381.5 million and $375.4 million as of March 31, 2022 and December 31, 2021, respectively.

37

Loan Portfolio

The loan portfolio by portfolio segment as of March 31, 2022 and December 31, 2021 is summarized as follows:

(dollars in thousands)	March 31, 2022				December 31, 2021				Current Period Change
Commercial and industrial loans	$	1,463,457	33.6	%	$	1,389,469	32.4	%	$	73,988
Commercial real estate and multi-family residential loans	1,957,372		44.9		1,954,846		45.6		2,526
Agri-business and agricultural loans	423,669		9.8		445,825		10.4		(22,156)
Other commercial loans	78,412		1.8		73,490		1.7		4,922
Consumer 1-4 family mortgage loans	350,166		8.0		344,720		8.0		5,446
Other consumer loans	83,395		1.9		82,755		1.9		640
Subtotal, gross loans	4,356,471		100.0	%	4,291,105		100.0	%	65,366
Less: Allowance for credit losses	(67,526)				(67,773)				247
Net deferred loan fees	(2,757)				(3,264)				507
Loans, net	$	4,286,188			$	4,220,068			$	66,120

Total loans, excluding real estate mortgage loans held-for-sale and deferred fees, increased by $65.4 million to $4.356 billion at March 31, 2022 from $4.291 billion at December 31, 2021. The increase was primarily driven by originations of loans concentrated in the commercial and industrial categories and was offset by seasonal paydowns in the agri-business and agricultural loans segments and forgiveness of outstanding PPP loans. Total loans excluding PPP loans increased by $79.5 million, as of March 31, 2022 as compared to December 31, 2021.

The following table summarizes the Company’s non-performing assets as of March 31, 2022 and December 31, 2021:

(dollars in thousands)	March 31, 2022			December 31, 2021
Nonaccrual loans including nonaccrual troubled debt restructured loans	$	13,900		$	14,973
Loans past due over 90 days and still accruing	18			117
Total nonperforming loans	13,918			15,090
Other real estate owned	196			196
Repossessions	17			0
Total nonperforming assets	$	14,131		$	15,286
Individually analyzed loans including troubled debt restructurings	$	24,554		$	25,581
Nonperforming loans to total loans	0.32		%	0.35		%
Nonperforming assets to total assets	0.22		%	0.23		%
Performing troubled debt restructured loans	$	4,976		$	5,121
Nonperforming troubled debt restructured loans (included in nonaccrual loans)	6,443			6,218
Total troubled debt restructured loans	$	11,419		$	11,339

Total nonperforming assets decreased by $1.2 million, or 7.6%, to $14.1 million during the three month period ended March 31, 2022. The ratio of nonperforming assets to total assets at March 31, 2022 decreased from 0.23% at December 31, 2021 to 0.22% at March 31, 2022.

A loan is individually analyzed when full payment under the original loan terms is not expected. The analysis for smaller loans that are similar in nature and which are not in nonaccrual or troubled debt restructured status, such as residential mortgage, consumer, and credit card loans, is determined based on the class of loans. If a loan is individually analyzed, a portion of the allowance may be allocated so that the loan is reported, net, at the present value of estimated future cash flows or at the fair value of collateral if repayment is expected solely from the collateral. Total individually analyzed loans decreased by $1.0 million to $24.6 million at March 31, 2022 from $25.6 million at December 31, 2021.

38

Loans are charged against the allowance for credit losses when management believes that the principal is uncollectible. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount that management believes will be adequate to absorb current expected credit losses relating to specifically identified loans based on an evaluation of the loans by management, as well as other current expected losses in the loan portfolio. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans and current economic conditions that may affect the borrower’s ability to repay. Management also considers trends in adversely classified loans based upon a monthly review of those credits. General allowance is determined after considering the following factors: application of loss percentages using a probability of default/loss given default approach subject to a floor, emerging market risk, commercial loan focus and large credit concentrations, new industry lending activity and current economic conditions. Federal regulations require insured institutions to classify their own assets on a regular basis. The regulations provide for three categories of classified loans: Substandard, Doubtful and Loss. The regulations also contain a Special Mention category. Special Mention applies to loans that do not currently expose an insured institution to a sufficient degree of risk to warrant classification as Substandard, Doubtful or Loss but do possess credit deficiencies or potential weaknesses deserving management’s close attention. The Company’s policy is to establish a specific allowance for credit losses for any assets where management has identified conditions or circumstances that indicate an asset is nonperforming. If an asset or portion thereof is classified as a loss, the Company’s policy is to either establish specified allowances for credit losses in the amount of 100% of the portion of the asset classified loss or charge-off such amount.

At March 31, 2022, the allowance for credit losses was 1.55% of total loans outstanding, versus 1.58% of total loans outstanding at December 31, 2021. At March 31, 2022, management believed the allowance for credit losses was at a level commensurate with the overall risk exposure of the loan portfolio. However, if economic conditions deteriorate, certain borrowers may experience difficulty and the level of nonperforming loans, charge-offs and delinquencies could rise and require increases in the allowance for credit losses. The process of identifying credit losses is a subjective process.

The Company has a relatively high percentage of commercial and commercial real estate loans, which are extended to businesses with a broad range of revenue and within a wide variety of industries. Traditionally, this type of lending may have more credit risk than other types of lending because of the size and diversity of the credits. The Company manages this risk by utilizing conservative credit structures, by adjusting its pricing to the perceived risk of each individual credit and by diversifying the portfolio by customer, product, industry and market area.

As of March 31, 2022, based on management’s review of the loan portfolio, the Company had 79 credit relationships totaling $218.8 million on the classified loan list versus 81 credit relationships totaling $234.5 million on December 31, 2021. The decrease in classified loans for the first three months of 2022 resulted primarily from paydowns to previously classified loans on the non-individually analyzed portion of the watchlist. As of March 31, 2022, the Company had $170.3 million of assets classified as Special Mention, $48.4 million classified as Substandard, $0 classified as Doubtful and $0 classified as Loss as compared to $176.6 million, $57.9 million, $0 and $0, respectively, at December 31, 2021.

Allowance estimates are developed by management after taking into account actual loss experience adjusted for current economic conditions and a reasonably supportable forecast period. The Company has regular discussions regarding this methodology with regulatory authorities. Allowance estimates are considered a prudent measurement of the risk in the Company’s loan portfolio based upon loan segment. In accordance with CECL accounting guidance, the allowance is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. For a more thorough discussion of the allowance for credit losses methodology see the Critical Accounting Policies section of this Item 2.

The allowance for credit losses decreased $247,000, from $67.8 million at December 31, 2021 to $67.5 million at March 31, 2022. Most of the Company’s recent loan growth has been concentrated in the commercial loan portfolio, which can result in overall asset quality being influenced by a small number of credits. Management has historically considered growth and portfolio composition when determining credit loss allocations.

The Paycheck Protection Program

During the three months ended March 31, 2022, the Company has continued processing forgiveness applications for PPP made during the first and second rounds of the PPP program. As of March 31, 2022, the Company had $12.5 million in PPP loans outstanding, net of deferred fees, consisting of $3.1 million from PPP round one and $9.4 million from PPP round two. There were seven PPP round one loans and 21 round two loans that had not yet been through the SBA's forgiveness process. The balance of deferred fees not yet recognized into income was $246,000 as of March 31, 2022.

39

Sources of Funds

The average daily deposits and borrowings together with average rates paid on those deposits and borrowings for the three months ended March 31, 2022 and 2021 are summarized in the following table:

	Three months ended March 31,
	2022				2021
(dollars in thousands)	Balance		Rate		Balance		Rate
Noninterest bearing demand deposits	$	1,966,117	0.00	%	$	1,566,045	0.00	%
Savings and transaction accounts:
Savings deposits	408,314		0.07		330,069		0.07
Interest bearing demand deposits	2,642,003		0.29		2,182,164		0.28
Time deposits:			.
Deposits of $100,000 or more	633,947		0.51		793,470		1.03
Other time deposits	198,257		0.71		235,271		1.12
Total deposits	$	5,848,638	0.21	%	$	5,107,019	0.33	%
FHLB advances and other borrowings	75,026		0.40		76,517		0.42
Total funding sources	$	5,923,664	0.32	%	$	5,183,536	0.34	%

    Deposits and Borrowings

As of March 31, 2022, total deposits increased by $85.2 million, or 1.5%, from December 31, 2021. Core deposits increased by $85.0 million to $5.810 billion as of March 31, 2022 from $5.725 billion as of December 31, 2021. Total brokered deposits were $10.2 million at March 31, 2022 compared to $10.0 million at December 31, 2021 reflecting a $241,000 increase during the first three months of 2022.

Since December 31, 2021, the change in core deposits was comprised of increases in public funds deposits of $55.9 million, commercial deposits of $19.9 million, and retail deposits of $9.2 million. Total public funds deposits, including public funds transaction accounts, were $1.341 billion at March 31, 2022 and $1.285 billion at December 31, 2021.

The following table summarizes deposit composition at March 31, 2022 and December 31, 2021:

(dollars in thousands)	March 31, 2022		December 31, 2021		Current Period Change
Retail	$	2,187,733	$	2,178,534	$	9,199
Commercial	2,282,081		2,262,229		19,852
Public funds	1,340,565		1,284,641		55,924
Core deposits	$	5,810,379	$	5,725,404	$	84,975
Brokered deposits	10,244		10,003		241
Total deposits	$	5,820,623	$	5,735,407	$	85,216

There was no change in borrowings from December 31, 2021. The Company utilizes wholesale funding, including brokered deposits and Federal Home Loan Bank advances, to supplement funding of assets, which is primarily used for loan and investment securities growth.

Capital

As of March 31, 2022, total stockholders’ equity was $609.1 million, a decrease of $95.8 million, or 13.6%, from $704.9 million at December 31, 2021. Net income of $23.6 million increased equity. Offsetting the increase to stockholders’ equity was a decrease of $109.8 million in accumulated other comprehensive income (loss), which was primarily driven by a net decrease in the fair value of available-for-sale securities as a result of the yield curve steepening in the first quarter of 2022. Dividends declared and paid of $0.40 per share, or $10.2 million, also contributed the decrease to total stockholders equity.

40

The impact on equity for other comprehensive income (loss) is not included in regulatory capital. The banking regulators have established guidelines for leverage capital requirements, expressed in terms of Tier 1, or core capital, as a percentage of average assets, to measure the soundness of a financial institution. In addition, banking regulators have established risk-based capital guidelines for U.S. banking organizations. As of March 31, 2022, the Company's capital levels remained characterized as “well-capitalized”.

The actual capital amounts and ratios of the Company and the Bank as of March 31, 2022 and December 31, 2021, are presented in the table below. Capital ratios for March 31, 2022 are preliminary until the Call Report and FR Y-9C are filed.

	Actual				Minimum Required For Capital Adequacy Purposes				For Capital Adequacy Purposes Plus Capital Conservation Buffer				Minimum Required to Be Well Capitalized Under Prompt Corrective Action Regulations
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
As of March 31, 2022:
Total Capital (to Risk Weighted Assets)
Consolidated	$	760,631	15.15	%	$	401,620	8.00	%	$	527,126	N/A		N/A		N/A
Bank	$	740,811	14.80	%	$	400,489	8.00	%	$	525,641	10.50	%	$	500,611	10.00	%
Tier I Capital (to Risk Weighted Assets)
Consolidated	$	697,729	13.90	%	$	301,215	6.00	%	$	426,721	N/A		N/A		N/A
Bank	$	678,084	13.55	%	$	300,366	6.00	%	$	425,519	8.50	%	$	400,489	8.00	%
Common Equity Tier 1 (CET1)
Consolidated	$	697,729	13.90	%	$	225,911	4.50	%	$	351,417	N/A		N/A		N/A
Bank	$	678,084	13.55	%	$	225,275	4.50	%	$	350,428	7.00	%	$	325,397	6.50	%
Tier I Capital (to Average Assets)
Consolidated	$	697,729	10.47	%	$	266,473	4.00	%	$	266,473	N/A		N/A		N/A
Bank	$	678,084	10.20	%	$	265,822	4.00	%	$	265,822	4.00	%	$	332,277	5.00	%
As of December 31, 2021:
Total Capital (to Risk Weighted Assets)
Consolidated	$	744,421	15.35	%	$	388,020	8.00	%	$	509,276	N/A		N/A		N/A
Bank	$	726,091	15.01	%	$	387,118	8.00	%	$	508,093	10.50	%	$	483,898	10.00	%
Tier I Capital (to Risk Weighted Assets)
Consolidated	$	683,754	14.10	%	$	291,015	6.00	%	$	412,271	N/A		N/A		N/A
Bank	$	665,424	13.75	%	$	290,339	6.00	%	$	411,313	8.50	%	$	387,118	8.00	%
Common Equity Tier 1 (CET1)
Consolidated	$	683,754	14.10	%	$	218,261	4.50	%	$	339,518	N/A		N/A		N/A
Bank	$	665,424	13.75	%	$	217,754	4.50	%	$	338,729	7.00	%	$	314,534	6.50	%
Tier I Capital (to Average Assets)
Consolidated	$	683,754	10.73	%	$	254,898	4.00	%	$	254,898	N/A		N/A		N/A
Bank	$	665,424	10.46	%	$	254,425	4.00	%	$	254,425	4.00	%	$	318,030	5.00	%

41

FORWARD-LOOKING STATEMENTS

This document (including information incorporated by reference) contains, and future oral and written statements of the Company and its management may contain, forward-looking statements, within the meaning of such term in the federal securities law. Forward-looking statements are not historical facts and are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “project,” “possible,” “continue,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain and, accordingly, the reader is cautioned not to place undue reliance on any forward-looking statement made by the Company. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including, without limitation:

•the effects of future economic, business and market conditions and changes, including in connection with the COVID-19 pandemic, both domestic and foreign;

•governmental monetary and fiscal policies and the impact the current economic environment will have on these;

•the risks of changes in interest rates on the levels, composition and costs of deposits, loan demand, and the values and liquidity of loan collateral, securities and other interest sensitive assets and liabilities;

•changes in borrowers’ credit risks and payment behaviors;

•the failure of assumptions and estimates used in our reviews of our loan portfolio, underlying the establishment of reserves for possible credit losses, our analysis of our capital position and other estimates;

•changes in the prices, values and sales volumes of residential and commercial real estate;

•the effects of disruption and volatility in capital markets on the value of our investment portfolio;

•the risk of labor availability, trade policy and tariffs, as well as supply chain constraints could impact loan demand from the manufacturing sector;

•changes in the scope and cost of FDIC insurance, the state of Indiana’s Public Deposit Insurance Fund and other coverages;

•changes in the availability and cost of credit and capital in the financial markets;

•the anticipated phase out of most LIBOR tenors by mid-2023 and establishment of a new reference rate or rates;

•the effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services;

•the timing and scope of any legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators;

•risk of cyber-security attacks that could result in damage to the Company's or third-party service providers' networks or data of the Company;

•changes in technology or products that may be more difficult or costly, or less effective than anticipated;

•the effects of any employee or customer fraud;

•the risks of mergers, acquisitions and divestitures, including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions;

•changes in accounting policies, rules and practices;

•the effects of war or other conflicts, acts of terrorism or other catastrophic events, including storms, droughts, tornados and flooding, that may affect general economic conditions, including agricultural production and demand and prices for agricultural goods and land used for agricultural purposes, generally and in our markets; and

42

•the risks noted in the Risk Factors discussed under Item 1A of Part 1 of our Annual Report on Form 10-K for the year ended December 31, 2021, as well as other risks and uncertainties set forth from time to time in the Company’s other filings with the SEC.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk represents the Company’s primary market risk exposure. The Company does not have a material exposure to foreign currency exchange risk, does not have any material amount of derivative financial instruments and does not maintain a trading portfolio. The Corporate Risk Committee of the Board of Directors annually reviews and approves the policy used to manage interest rate risk. The policy was last reviewed and approved in July 2021. The policy sets guidelines for balance sheet structure, which are designed to protect the Company from the impact that interest rate changes could have on net income but do not necessarily indicate the effect on future net interest income. The Company, through the Bank's Asset and Liability Committee, manages interest rate risk by monitoring the computer simulated earnings impact of various rate scenarios and general market conditions. The Company then modifies its long-term risk parameters by attempting to generate the types of loans, investments, and deposits that currently fit the Company’s needs, as determined by the Asset and Liability Committee. This computer simulation analysis measures the net interest income impact of various interest rate scenario changes during the next twelve months. The Company continually evaluates the assumptions used in the model. The current balance sheet structure is considered to be within acceptable risk levels.

Interest rate scenarios for the base, falling 50 basis points, falling 25 basis points, rising 25 basis points, rising 50 basis points, rising 100 basis points, rising 200 basis points and rising 300 basis points are listed below based upon the Company’s rate sensitive assets and liabilities at March 31, 2022. The net interest income shown 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.

The base scenario is an annual calculation that is highly dependent on numerous assumptions embedded in the model. 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 core deposit products, such as savings, money market, NOW and demand deposits reflect management’s best estimate of expected future behavior.

(dollars in thousands)	Base		Falling (50 Basis Points)			Falling (25 Basis Points)			Rising (25 Basis Points)			Rising (50 Basis Points)			Rising (100 Basis Points)			Rising (200 Basis Points)			Rising (300 Basis Points)
Net interest income	$	195,854	$	187,854		$	192,769		$	197,925		$	200,183		$	205,196		$	215,705		$	226,128
Variance from Base			$	(8,000)		$	(3,085)		$	2,071		$	4,329		$	9,342		$	19,851		$	30,274
Percent of change from Base			(4.08)		%	(1.58)		%	1.06		%	2.21		%	4.77		%	10.14		%	15.46		%

43

ITEM 4 – CONTROLS AND PROCEDURES

As required by Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, management has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of March 31, 2022. Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

During the quarter ended March 31, 2022, there were no changes to the Company’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect its internal control over financial reporting.

44

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceedings to which the Company or its subsidiaries is a party other than ordinary routine litigation incidental to their respective businesses.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A. of Part I of the Company’s Form 10-K for the year ended December 31, 2021. Please refer to that section of the Company’s Form 10-K for disclosures regarding the risks and uncertainties related to the Company’s business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

ISSUER PURCHASES OF EQUITY SECURITIES

On April 13, 2021, the Company's board of directors reauthorized and extended a share repurchase program through April 30, 2023, under which the Company is authorized to repurchase, from time to time as the Company deems appropriate, shares of the Company's common stock with an aggregate purchase price of up to $30 million. Repurchases may be made in the open market, through block trades or otherwise, and in privately negotiated transactions. The repurchase program does not obligate the Company to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended or discontinued at any time. There were no repurchases under this plan during the three months ended March 31, 2022.

The following table provides information as of March 31, 2022 with respect to shares of common stock repurchased by the Company during the quarter then ended:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Appropriate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 - 31	1,692	$	82.72	0	$	19,998,273
February 1 - 28	895	80.80		0	19,998,273
March 1 - 31	0	0		0	19,998,273
Total	2,587	$	82.06	0	$	19,998,273

(a)The shares purchased during January and February were credited to the deferred share accounts of non-employee directors under the Company’s directors’ deferred compensation plan. These shares were purchased in the ordinary course of business and consistent with past practice.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

N/A

Item 5. Other Information

None

45

Item 6. Exhibits

31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive Data File
	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021; (ii) Consolidated Statements of Income for the three months ended March 31, 2022 and March 31, 2021; (iii) Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2022 and March 31, 2021; (iv) Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2022 and March 31, 2021; (v) Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and March 31, 2021; and (vi) Notes to Unaudited Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

46

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.

LAKELAND FINANCIAL CORPORATION

(Registrant)

Date: April 27, 2022	/s/ David M. Findlay
	David M. Findlay – President and
	Chief Executive Officer
Date: April 27, 2022	/s/ Lisa M. O’Neill
	Lisa M. O’Neill – Executive Vice President and
	Chief Financial Officer
	(principal financial officer)
Date: April 27, 2022	/s/ Brok A. Lahrman
	Brok A. Lahrman – Senior Vice President and Chief Accounting Officer
	(principal accounting officer)

47

EX-31.1

Exhibit 31.1

I, David M. Findlay, Chief Executive Officer of Lakeland Financial Corporation, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Lakeland Financial 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 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 purpose 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 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 registrant’s board of directors (or persons performing the equivalent function):

a)All significant deficiencies and material weaknesses in the design or operation of internal controls 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.

Date: April 27, 2022	/s/ David M. Findlay
	David M. Findlay
	Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Lisa M. O’Neill, Chief Financial Officer of Lakeland Financial Corporation, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Lakeland Financial 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 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 purpose 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 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 registrant’s board of directors (or persons performing the equivalent function):

a.All significant deficiencies and material weaknesses in the design or operation of internal controls 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.

Date: April 27, 2022	/s/ Lisa M. O’Neill
	Lisa M. O’Neill
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION 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 Lakeland Financial Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David M. Findlay, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 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; and

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

/s/ David M. Findlay

David M. Findlay

Chief Executive Officer

April 27, 2022

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

EX-32.2

Exhibit 32.2

CERTIFICATION 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 Lakeland Financial Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lisa M. O’Neill, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 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; and

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

/s/ Lisa M. O’Neill

Lisa M. O’Neill

Chief Financial Officer

April 27, 2022

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

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2022	Apr. 21, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity File Number	0-11487
Entity Registrant Name	LAKELAND FINANCIAL CORPORATION
Entity Incorporation, State or Country Code	IN
Entity Tax Identification Number	35-1559596
Entity Address, Address Line One	202 East Center Street,
Entity Address, City or Town	Warsaw
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	46580
City Area Code	574
Local Phone Number	267‑6144
Title of 12(b) Security	Common stock, No par value
Trading Symbol	LKFN
Security Exchange Name	NASDAQ
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		25,346,149
Entity Central Index Key	0000721994
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
ASSETS
Cash and due from banks	$ 71,669	$ 51,830
Short-term investments	403,355	631,410
Total cash and cash equivalents	475,024	683,240
Securities available-for-sale (carried at fair value)	1,522,535	1,398,558
Real estate mortgage loans held-for-sale	2,234	7,470
Loans, net of allowance for credit losses of $67,526 and $67,773	4,286,188	4,220,068
Land, premises and equipment, net	58,883	59,309
Bank owned life insurance	97,722	97,652
Federal Reserve and Federal Home Loan Bank stock	12,840	13,772
Accrued interest receivable	19,448	17,674
Goodwill	4,970	4,970
Other assets	92,415	54,610
Total assets	6,572,259	6,557,323
LIABILITIES
Noninterest bearing deposits	1,880,418	1,895,481
Interest bearing deposits	3,940,205	3,839,926
Total deposits	5,820,623	5,735,407
Borrowings - Federal Home Loan Bank advances	75,000	75,000
Accrued interest payable	2,303	2,619
Other liabilities	65,231	39,391
Total liabilities	5,963,157	5,852,417
STOCKHOLDERS’ EQUITY
Common stock: 90,000,000 shares authorized, no par value 25,816,997 shares issued and 25,346,149 outstanding as of March 31, 2022, 25,777,609 shares issued and 25,300,793 outstanding as of December 31, 2021	121,138	120,615
Retained earnings	596,578	583,134
Accumulated other comprehensive income (loss)	(93,687)	16,093
Treasury stock at cost (470,848 shares as of March 31, 2022, 476,816 shares as of December 31, 2021)	(15,016)	(15,025)
Total stockholders’ equity	609,013	704,817
Noncontrolling interest	89	89
Total equity	609,102	704,906
Total liabilities and equity	$ 6,572,259	$ 6,557,323

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Valuation allowance after adoption of ASC 326	$ 67,526	$ 67,773
Common stock, shares authorized (in shares)	90,000,000	90,000,000
Common stock, no par value (in dollars per share)	$ 0	$ 0
Common stock, shares issued (in shares)	25,816,997	25,777,609
Common stock, shares outstanding (in shares)	25,346,149	25,300,793
Treasury stock, at cost (in shares)	470,848	476,816

XML

CONSOLIDATED STATEMENTS OF INCOME (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Interest and fees on loans
Taxable	$ 39,735	$ 43,461
Tax exempt	169	104
Interest and dividends on securities
Taxable	3,278	1,835
Tax exempt	4,606	2,489
Other interest income	246	88
Total interest income	48,034	47,977
Interest on deposits	3,081	4,218
Interest on borrowings
Short-term	0	7
Long-term	73	73
Total interest expense	3,154	4,298
NET INTEREST INCOME	44,880	43,679
Provision for credit losses	417	1,477
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	44,463	42,202
NONINTEREST INCOME
Wealth advisory fees	2,287	2,178
Investment brokerage fees	519	464
Service charges on deposit accounts	2,809	2,491
Loan and service fees	2,889	2,776
Merchant card fee income	815	622
Bank owned life insurance income (loss)	(83)	756
Interest rate swap fee income	50	249
Mortgage banking income	509	1,373
Net securities gains	0	753
Other income	892	895
Total noninterest income	10,687	12,557
NONINTEREST EXPENSE
Salaries and employee benefits	14,392	14,385
Net occupancy expense	1,629	1,503
Equipment costs	1,411	1,445
Data processing fees and supplies	3,081	3,319
Corporate and business development	1,219	1,509
FDIC insurance and other regulatory fees	439	464
Professional fees	1,559	1,877
Other expense	3,239	2,244
Total noninterest expense	26,969	26,746
INCOME BEFORE INCOME TAX EXPENSE	28,181	28,013
Income tax expense	4,539	5,030
NET INCOME	$ 23,642	$ 22,983
BASIC WEIGHTED AVERAGE COMMON SHARES (in shares)	25,515,271	25,457,659
BASIC EARNINGS PER COMMON SHARE (in dollars per share)	$ 0.93	$ 0.90
DILUTED WEIGHTED AVERAGE COMMON SHARES (in shares)	25,690,372	25,550,111
DILUTED EARNINGS PER COMMON SHARE (in dollars per share)	$ 0.92	$ 0.90

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 23,642	$ 22,983
Change in securities available-for-sale:
Unrealized holding gain (loss) on securities available-for-sale arising during the period	(138,995)	(15,297)
Reclassification adjustment for gains included in net income	0	(753)
Net securities gain (loss) activity during the period	(138,995)	(16,050)
Tax effect	29,188	3,371
Net of tax amount	(109,807)	(12,679)
Defined benefit pension plans:
Amortization of net actuarial loss	36	60
Net gain activity during the period	36	60
Tax effect	(9)	(15)
Net of tax amount	27	45
Total other comprehensive income (loss), net of tax	(109,780)	(12,634)
Comprehensive income (loss)	$ (86,138)	$ 10,349

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) - USD ($) $ in Thousands	Total	Impact of adopting ASC 326	Common Stock	Retained Earnings	Retained Earnings Impact of adopting ASC 326	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Total Stockholders’ Equity	Total Stockholders’ Equity Impact of adopting ASC 326	Noncontrolling Interest
Beginning balance (in shares) at Dec. 31, 2020			25,239,748
Beginning balance at Dec. 31, 2020	$ 657,184	$ (6,951)	$ 114,927	$ 529,005	$ (6,951)	$ 27,744	$ (14,581)	$ 657,095	$ (6,951)	$ 89
Accounting standards update	ASU 2016-13
Net income	$ 22,983			22,983				22,983
Net current period other comprehensive income (loss)	(12,634)					(12,634)		(12,634)
Cash dividends declared and paid, $0.34 per share	(8,647)			(8,647)				(8,647)
Treasury shares purchased under deferred directors' plan (in shares)			(3,634)
Treasury shares purchased under deferred directors' plan	0		$ 219				(219)
Treasury shares sold and distributed under deferred directors' plan (in shares)			5,664
Treasury shares sold and distributed under deferred directors' plan			$ (115)				115
Stock activity under equity compensation plans (in shares)			49,130
Stock activity under equity compensation plans	(1,648)		$ (1,648)					(1,648)
Stock based compensation expense	1,381		$ 1,381					1,381
Ending balance (in shares) at Mar. 31, 2021			25,290,908
Ending balance at Mar. 31, 2021	651,668		$ 114,764	536,390		15,110	(14,685)	651,579		89
Beginning balance (in shares) at Dec. 31, 2021			25,300,793
Beginning balance at Dec. 31, 2021	704,906		$ 120,615	583,134		16,093	(15,025)	704,817		89
Net income	23,642			23,642				23,642
Net current period other comprehensive income (loss)	(109,780)					(109,780)		(109,780)
Cash dividends declared and paid, $0.34 per share	(10,198)			(10,198)				(10,198)
Treasury shares purchased under deferred directors' plan (in shares)			(2,587)
Treasury shares purchased under deferred directors' plan	0		$ 212				(212)
Treasury shares sold and distributed under deferred directors' plan (in shares)			8,555
Treasury shares sold and distributed under deferred directors' plan	0		$ (221)				221
Stock activity under equity compensation plans (in shares)			39,388
Stock activity under equity compensation plans	(1,728)		$ (1,728)					(1,728)
Stock based compensation expense	2,260		$ 2,260					2,260
Ending balance (in shares) at Mar. 31, 2022			25,346,149
Ending balance at Mar. 31, 2022	$ 609,102		$ 121,138	$ 596,578		$ (93,687)	$ (15,016)	$ 609,013		$ 89

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Stockholders' Equity [Abstract]
Cash dividends declared, per share	$ 0.40	$ 0.34

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities:
Net income	$ 23,642	$ 22,983
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	1,516	1,575
Provision for credit losses	417	1,477
Amortization of loan servicing rights	223	198
Net change in loan servicing rights valuation allowance	(360)	(197)
Loans originated for sale, including participations	(12,468)	(32,629)
Net gain on sales of loans	(513)	(1,233)
Proceeds from sale of loans, including participations	18,058	25,692
Net (gain) loss on sales of premises and equipment	1	(1)
Net gain on sales and calls of securities available-for-sale	0	(753)
Net securities amortization	1,654	958
Stock based compensation expense	2,260	1,381
Losses (earnings) on life insurance	83	(756)
Gain on life insurance	0	(202)
Tax benefit of stock award issuances	(500)	(266)
Net change:
Interest receivable and other assets	(2,822)	(1,415)
Interest payable and other liabilities	16,513	6,980
Total adjustments	24,062	809
Net cash from operating activities	47,704	23,792
Cash flows from investing activities:
Proceeds from sale of securities available- for-sale	0	13,506
Proceeds from maturities, calls and principal paydowns of securities available-for-sale	29,647	31,734
Purchases of securities available-for-sale	(292,127)	(161,224)
Purchase of life insurance	(43)	(528)
Net (increase) decrease in total loans	(66,537)	174,303
Proceeds from sales of land, premises and equipment	0	2
Purchases of land, premises and equipment	(1,091)	(2,162)
Proceeds from redemption of Federal Home Loan Bank stock	932	0
Proceeds from life insurance	0	329
Net cash from investing activities	(329,219)	55,960
Cash flows from financing activities:
Net increase in total deposits	85,216	193,165
Net increase (decrease) in short-term borrowings	0	(10,500)
Common dividends paid	(10,198)	(8,647)
Payments related to equity incentive plans	(1,728)	(1,648)
Purchase of treasury stock	(212)	(219)
Sale of treasury stock	221	115
Net cash from financing activities	73,299	172,266
Net change in cash and cash equivalents	(208,216)	252,018
Cash and cash equivalents at beginning of the period	683,240	249,927
Cash and cash equivalents at end of the period	475,024	501,945
Cash paid during the period for:
Interest	3,470	5,973
Supplemental non-cash disclosures:
Loans transferred to other real estate owned	0	131
Securities purchases payable	2,146	5,855
Right-of-use assets obtained in exchange for lease liabilities	$ 1,612	$ 0

XML

BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

This report is filed for Lakeland Financial Corporation (the "Company"), which has two wholly owned subsidiaries, Lake City Bank (the "Bank") and LCB Risk Management, a captive insurance company. Also included in this report are results for the Bank’s wholly owned subsidiary, LCB Investments II, Inc. ("LCB Investments"), which manages the Bank’s investment portfolio. LCB Investments owns LCB Funding, Inc. ("LCB Funding"), a real estate investment trust. All significant inter-company balances and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and are unaudited. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for any subsequent reporting periods, including the year ending December 31, 2022. The Company’s 2021 Annual Report on Form 10-K should be read in conjunction with these statements.

Newly Issued But Not Yet Effective Accounting Standards

On March 12, 2020, the FASB issued Accounting Standards Update (ASU) 2020-04, "Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASC 848 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The Company has formed a cross-functional project team to lead the transition from LIBOR to a planned adoption of reference rates which could include Secured Overnight Financing Rate (“SOFR”), amongst others. The Company has identified loans that renewed prior to 2021 and obtained updated reference rate language at the time of renewal. Additionally, management is utilizing the timeline guidance published by the Alternative Reference Rates Committee to develop and achieve internal milestones during this transitional period. The Company has adhered to the International Swaps and Derivatives Association 2020 IBOR Fallbacks Protocol that was released on October 23, 2020.

The Company discontinued the use of new LIBOR-based loans by December 31, 2021, according to regulatory guidelines. Legacy LIBOR-based loans will be transitioned to an alternative reference rate on or before June 30, 2023. The guidance under ASC 848 will be available for a limited time, generally through December 31, 2022. The Company expects to adopt the LIBOR transition relief allowed under this standard, and does note expect such adoption to have a material impact on the consolidated financial statements.

In March 2022, the FASB issued ASU 2022-01, "Derivatives and Hedging (ASC 815): Fair Value Hedging - Portfolio Layer Method." ASC 815 currently permits only prepayable financial assets and one or more beneficial interests secured by a portfolio of prepayable financial instruments to be included in a last-of-layer closed portfolio. The amendments in this Update allow nonprepayable financial assets to also be included in a closed portfolio hedged using the portfolio layer method. That expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and nonpreapayble financial assets, thereby allowing consistent accounting for similar hedges. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements.

In March 2022, the FASB issued ASU 2022-02, "Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures." The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying TDR recognition and measurement guidance, creditors will determine whether a modification results in a new loan or continuation of existing loan. These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, the amendments to ASC 326 require that an entity disclose current-period gross writeoffs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The guidance is only for entities that have adopted the amendments in Update 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption using prospective application, including adoption in an interim period where the guidance should be applied as of the beginning of the fiscal year. The Company is currently assessing the impact of ASU 2022-02 on its disclosures and control structure; however, the Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements.

Reclassification

Certain amounts appearing in the consolidated financial statements and notes thereto for prior periods have been reclassified to conform with the current presentation. The reclassifications had no effect on net income or stockholders' equity as previously reported.

XML

SECURITIES

3 Months Ended

Mar. 31, 2022

Investments, Debt and Equity Securities [Abstract]

SECURITIES

SECURITIES

Information related to the amortized cost, fair value and allowance for credit losses of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income is provided in the tables below.

(dollars in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
March 31, 2022
U.S. Treasury securities	$	2,250	$	0	$	(4)	$	0	$	2,246
U.S. government sponsored agencies	164,514		0		(11,622)		0		152,892
Mortgage-backed securities: residential	634,654		680		(39,013)		0		596,321
Mortgage-backed securities: commercial	96		0		0		0		96
State and municipal securities	838,427		4,608		(72,055)		0		770,980
Total	$	1,639,941	$	5,288	$	(122,694)	$	0	$	1,522,535
December 31, 2021
U.S. Treasury securities	$	900	$	0	$	0	$	0	$	900
U.S. government sponsored agencies	145,858		39		(2,445)		0		143,452
Mortgage-backed securities: residential	487,157		4,455		(4,936)		0		486,676
Mortgage-backed securities: commercial	522		1		0		0		523
State and municipal securities	742,532		25,749		(1,274)		0		767,007
Total	$	1,376,969	$	30,244	$	(8,655)	$	0	$	1,398,558

Information regarding the fair value and amortized cost of available-for-sale debt securities by maturity as of March 31, 2022 is presented below. Maturity information is based on contractual maturity for all securities other than mortgage-backed securities. Actual maturities of securities may differ from contractual maturities because borrowers may have the right to prepay the obligation without a prepayment penalty.

(dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	3,356	$	3,357
Due after one year through five years	11,031		11,140
Due after five years through ten years	54,556		54,559
Due after ten years	936,248		857,062
	1,005,191		926,118
Mortgage-backed securities	634,750		596,417
Total debt securities	$	1,639,941	$	1,522,535

    Securities proceeds, gross gains and gross losses are presented below.

	Three Months Ended March 31,
(dollars in thousands)	2022		2021
Sales of securities available-for-sale
Proceeds	$	0	$	13,506
Gross gains	0		753
Gross losses	0		0
Number of securities	0		7

In accordance with ASU No. 2017-8, purchase premiums for callable securities are amortized to the earliest call date and premiums on non-callable securities as well as discounts are recognized in interest income using the interest method over the terms of the securities or over the estimated lives of mortgage-backed securities. Gains and losses on sales are based on the amortized cost of the security sold and recorded on the trade date.

Securities with carrying values of $272.6 million and $300.8 million were pledged as of March 31, 2022 and December 31, 2021, respectively, as collateral for borrowings from the Federal Home Loan Bank and Federal Reserve Bank and for other purposes as permitted or required by law.

Information regarding securities with unrealized losses as of March 31, 2022 and December 31, 2021 is presented below. The tables divide the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

	Less than 12 months				12 months or more				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2022
U.S. Treasury securities	$	2,246	$	4	$	0	$	0	$	2,246	$	4
U.S. government sponsored agencies	126,338		8,757		26,554		2,865		152,892		11,622
Mortgage-backed securities: residential	441,367		26,752		109,331		12,261		550,698		39,013
Mortgage-backed securities: commercial	96		0		0		0		96		0
State and municipal securities	560,210		71,480		3,497		575		563,707		72,055
Total temporarily impaired	$	1,130,257	$	106,993	$	139,382	$	15,701	$	1,269,639	$	122,694
December 31, 2021
U.S. government sponsored agencies	$	85,968	$	1,364	$	28,676	$	1,081	$	114,644	$	2,445
Mortgage-backed securities: residential	272,264		4,076		22,792		860		295,056		4,936
State and municipal securities	138,659		1,274		0		0		138,659		1,274
Total temporarily impaired	$	496,891	$	6,714	$	51,468	$	1,941	$	548,359	$	8,655

The total number of securities with unrealized losses as of March 31, 2022 and December 31, 2021 is presented below.

	Less than 12 months	12 months or more	Total
March 31, 2022
U.S. Treasury securities	6	0	6
U.S. government sponsored agencies	12	5	17
Mortgage-backed securities: residential	90	15	105
Mortgage-backed securities: commercial	1	0	1
State and municipal securities	376	3	379
Total temporarily impaired	485	23	508
December 31, 2021
U.S. government sponsored agencies	8	5	13
Mortgage-backed securities: residential	29	3	32
State and municipal securities	80	0	80
Total temporarily impaired	117	8	125

Available-for-sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For available-for sale debt securities in an unrealized loss position, management first assesses whether it intends to sell, or it is more likely than not that the Company 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 consolidated income statement. For available-for sale debt securities that do not meet the criteria, management evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this

assessment, management 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 and the issuer, among other factors. If this assessment indicates that a credit loss exists, management compares the present value of cash flows expected to be collected from the security with 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 for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income (loss), net of applicable taxes. No allowance for credit losses for available-for-sale debt securities was needed at March 31, 2022. Accrued interest receivable on available-for-sale debt securities totaled $8.8 million and $7.4 million at March 31, 2022 and December 31, 2021, respectively, and is excluded from the estimate of credit losses.

The U.S. government sponsored agencies and mortgage-backed securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. Therefore, for those securities, we do not record expected credit losses.

XML

LOANS

3 Months Ended

Mar. 31, 2022

Receivables [Abstract]

LOANS

LOANS

(dollars in thousands)	March 31, 2022				December 31, 2021
Commercial and industrial loans:
Working capital lines of credit loans	$	678,567	15.6	%	$	652,861	15.2	%
Non-working capital loans	784,890		18.0		736,608		17.2
Total commercial and industrial loans	1,463,457		33.6		1,389,469		32.4
Commercial real estate and multi-family residential loans:
Construction and land development loans	399,618		9.2		379,813		8.9
Owner occupied loans	724,588		16.6		739,371		17.2
Nonowner occupied loans	619,163		14.2		588,458		13.7
Multifamily loans	214,003		4.9		247,204		5.8
Total commercial real estate and multi-family residential loans	1,957,372		44.9		1,954,846		45.6
Agri-business and agricultural loans:
Loans secured by farmland	164,252		3.8		206,331		4.8
Loans for agricultural production	259,417		6.0		239,494		5.6
Total agri-business and agricultural loans	423,669		9.8		445,825		10.4
Other commercial loans	78,412		1.8		73,490		1.7
Total commercial loans	3,922,910		90.1		3,863,630		90.1
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	180,448		4.1		176,561		4.1
Open end and junior lien loans	158,583		3.6		156,238		3.6
Residential construction and land development loans	11,135		0.3		11,921		0.3
Total consumer 1-4 family mortgage loans	350,166		8.0		344,720		8.0
Other consumer loans	83,395		1.9		82,755		1.9
Total consumer loans	433,561		9.9		427,475		9.9
Subtotal	4,356,471		100.0	%	4,291,105		100.0	%
Less: Allowance for credit losses	(67,526)				(67,773)
Net deferred loan fees	(2,757)				(3,264)
Loans, net	$	4,286,188			$	4,220,068

The recorded investment in loans does not include accrued interest, which totaled $10.3 million and $10.0 million at March 31, 2022 and December 31, 2021, respectively.

The Company had $239,000 and $350,000 in residential real estate loans in the process of foreclosure as of March 31, 2022 and December 31, 2021, respectively.

XML

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

3 Months Ended

Mar. 31, 2022

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

The Company maintains an allowance for credit losses to provide for expected credit losses. Losses are charged against the allowance when management believes that the principal is uncollectable. Subsequent recoveries, if any, are credited to the allowance. Allocations of the allowance are made for specific loans and for pools of similar types of loans, although the entire allowance is available for any loan that, in management’s judgment, should be charged against the allowance. A provision for credit losses is taken based on management’s ongoing evaluation of the appropriate allowance balance. A formal evaluation of the adequacy of the credit loss allowance is conducted monthly. The ultimate recovery of all loans is susceptible to future market factors beyond the Company’s control.

The level of credit loss provision is influenced by growth in the overall loan portfolio, emerging market risk, emerging concentration risk, commercial loan focus and large credit concentration, new industry lending activity, general economic conditions and historical loss analysis. In addition, management gives consideration to changes in the facts and circumstances of watch list credits, which includes the security position of the borrower, in determining the appropriate level of the credit loss provision. Furthermore, management’s overall view on credit quality is a factor in the determination of the provision.

The determination of the appropriate allowance is inherently subjective, as it requires significant estimates by management. The Company has an established process to determine the adequacy of the allowance for credit losses that generally includes consideration of changes in the nature and volume of the loan portfolio and overall portfolio quality, along with current and forecasted economic conditions that may affect borrowers’ ability to repay. Consideration is not limited to these factors although they represent the most commonly cited factors. To determine the specific allocation levels for individual credits, management considers the current valuation of collateral and the amounts and timing of expected future cash flows as the primary measures. Management also considers trends in adversely classified loans based upon an ongoing review of those credits. With respect to pools of similar loans, an appropriate level of general allowance is determined by portfolio segment using a probability of default-loss given default (“PD/LGD”) model, subject to a floor. A default can be triggered by one of several different asset quality factors, including past due status, nonaccrual status, TDR status or if the loan has had a charge-off. This PD is then combined with a LGD derived from historical charge-off data to construct a default rate. This loss rate is then supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, particularly the unemployment rate forecast from the Federal Open Market Committee’s Summary of Economic Projections, and other environmental factors based on the risks present for each portfolio segment. These environmental factors include consideration of the following: levels of, and trends in, delinquencies and nonperforming loans; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedure, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. It is also possible that these factors could include social, political, economic, and terrorist events or activities. All of these factors are susceptible to change, which may be significant. As a result of this detailed process, the allowance results in two forms of allocations, specific and general. These two components represent the total allowance for credit losses deemed adequate to cover probable losses inherent in the loan portfolio.

Commercial loans are subject to a dual standardized grading process administered by the credit administration function. These grade assignments are performed independent of each other and a consensus is reached by credit administration and the loan review officer. Specific allowances are established in cases where management has identified significant conditions or circumstances related to an individual credit that indicate it should be evaluated on an individual basis. Considerations with respect to specific allocations for these individual credits include, but are not limited to, the following: (a) the sufficiency of the customer’s cash flow or net worth to repay the loan; (b) the adequacy of the discounted value of collateral relative to the loan balance; (c) whether the loan has been criticized in a regulatory examination; (d) whether the loan is nonperforming; (e) any other reasons the ultimate collectability of the loan may be in question; or (f) any unique loan characteristics that require special monitoring.

Allocations are also applied to categories of loans considered not to be individually analyzed, but for which the rate of loss is expected to be consistent with or greater than historical averages. Such allocations are based on past loss experience and information about specific borrower situations and estimated collateral values. These general pooled loan allocations are performed for portfolio segments of commercial and industrial; commercial real estate, multi-family, and construction; agri-business and agricultural; other commercial loans; and consumer 1-4 family mortgage and other consumer loans. General allocations of the allowance are determined by a historical loss rate based on the calculation of each pool’s probability of default-loss given default, subject to a floor. The length of the historical period for each pool is based on the average life of the pool. The historical loss rates are supplemented with consideration of economic conditions and portfolio trends.

Due to the imprecise nature of estimating the allowance for credit losses, the Company’s allowance for credit losses includes an unallocated component. The unallocated component of the allowance for credit losses incorporates the Company’s judgmental determination of potential expected losses that may not be fully reflected in other allocations, including factors such as the level of classified credits, economic uncertainties, industry trends impacting specific portfolio segments, broad portfolio quality trends, and trends in the composition of the Company’s large commercial loan portfolio and related large dollar exposures to individual borrowers. As a practical expedient, the Company has elected to disclose accrued interest separately from loan principal balances on the consolidated balance sheet. Additionally, when a loan is placed on non-accrual, interest payments are reversed through interest income.

For off balance sheet credit exposures outlined in the ASU at 326-20-30-11, it is the Company’s position that nearly all of the unfunded amounts on lines of credit are unconditionally cancellable, and therefore not subject to having a liability recorded.

The following tables present the activity in the allowance for credit losses by portfolio segment for the periods ended:

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multifamily Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
Three Months Ended March 31, 2022
Beginning balance, January 1	$	30,595	$	26,535	$	5,034	$	1,146	$	2,866	$	1,147	$	450	$	67,773
Provision for credit losses	730		319		(273)		(88)		(248)		(55)		32		417
Loans charged-off	(19)		(597)		0		0		(22)		(102)		0		(740)
Recoveries	16		0		0		0		10		50		0		76
Net loans (charged-off) recovered	(3)		(597)		0		0		(12)		(52)		0		(664)
Ending balance	$	31,322	$	26,257	$	4,761	$	1,058	$	2,606	$	1,040	$	482	$	67,526

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multifamily Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
Three Months Ended March 31, 2021
Beginning balance, January 1	$	28,333	$	22,907	$	3,043	$	416	$	2,619	$	951	$	3,139	$	61,408
Impact of adopting ASC 326	4,312		4,316		1,060		941		953		349		(2,881)		9,050
Provision for credit losses	(540)		2,285		(202)		(185)		(233)		13		339		1,477
Loans charged-off	(87)		(71)		0		0		(6)		(72)		0		(236)
Recoveries	34		8		0		0		51		52		0		145
Net loans (charged-off) recovered	(53)		(63)		0		0		45		(20)		0		(91)
Ending balance	$	32,052	$	29,445	$	3,901	$	1,172	$	3,384	$	1,293	$	597	$	71,844

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $250,000.

The Company uses the following definitions for risk ratings:

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

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

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

Loans are considered to be "Pass" rated when they are reviewed as part of the previously described process and do not meet the criteria above with the exception of consumer troubled debt restructurings, which are evaluated and listed with Substandard commercial grade loans and consumer nonaccrual loans which are evaluated individually and listed with “Not Rated” loans. Loans listed as Not Rated are consumer loans or commercial loans with consumer characteristics included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status.

The following table summarizes the risk category of loans by loan segment and origination date as of March 31, 2022:

(dollars in thousands)	2022			2021		2020		2019			2018		Prior		Term Total		Revolving		Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass	$	0		$	3,082	$	764	$	3,045		$	0	$	0	$	6,891	$	593,938	$	600,829
Special Mention	0			0		0		0			0		0		0		59,209		59,209
Substandard	0			0		74		0			0		0		74		18,542		18,616
Total	0			3,082		838		3,045			0		0		6,965		671,689		678,654
Non-working capital loans:
Pass	63,830			165,396		123,800		71,707			23,723		31,231		479,687		256,462		736,149
Special Mention	209			16,535		0		216			635		3,657		21,252		79		21,331
Substandard	0			2,937		6,380		862			2,370		5,217		17,766		3,835		21,601
Not Rated	399			2,105		1,627		710			417		96		5,354		0		5,354
Total	64,438			186,973		131,807		73,495			27,145		40,201		524,059		260,376		784,435
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass	9,322			37,819		20,870		542			573		0		69,126		328,593		397,719
Special Mention	0			0		0		0			0		0		0		56		56
Total	9,322			37,819		20,870		542			573		0		69,126		328,649		397,775
Owner occupied loans:
Pass	20,705			166,777		174,001		108,181			78,260		126,142		674,066		28,228		702,294
Special Mention	0			6,277		0		865			909		9,180		17,231		0		17,231
Substandard	0			473		1,679		894			1,161		236		4,443		0		4,443
Total	20,705			173,527		175,680		109,940			80,330		135,558		695,740		28,228		723,968
Nonowner occupied loans:
Pass	41,921			142,070		146,588		105,635			21,701		87,080		544,995		47,604		592,599
Special Mention	0			11,667		307		0			0		14,120		26,094		0		26,094
Total	41,921			153,737		146,895		105,635			21,701		101,200		571,089		47,604		618,693
Multifamily loans:
Pass	2,665			67,930		37,909		36,337		17,105	11,969		21,061		177,871		13,605		191,476
Special Mention	22,178			0		0		0			0		0		22,178		0		22,178
Total	24,843			67,930		37,909		36,337			11,969		21,061		200,049		13,605		213,654
Agri-business and agricultural loans:
Loans secured by farmland:
Pass	4,748			46,921		35,089		12,005			10,034		25,189		133,986		24,532		158,518
Special Mention	0			0		1,985		2,278			0		210		4,473		899		5,372
Substandard	0			0		0		0			190		145		335		0		335
Total	4,748			46,921		37,074		14,283			10,224		25,544		138,794		25,431		164,225
Loans for agricultural production:
Pass	1,573			31,444		24,820		3,985			10,372		5,356		77,550		166,721		244,271
Special Mention	0			432		7,727		1,160			0		0		9,319		5,905		15,224
Total	1,573			31,876		32,547		5,145			10,372		5,356		86,869		172,626		259,495
Other commercial loans:
Pass	2,964			6,417		20,425		3,082			1,175		15,043		49,106		25,363		74,469
Special Mention	0			0		0		0			0		3,649		3,649		0		3,649
Total	2,964			6,417		20,425		3,082			1,175		18,692		52,755		25,363		78,118
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans
Pass	1,360			13,558		15,386		5,197			5,722		4,604		45,827		6,191		52,018
Substandard	0			0		0		0			88		3,050		3,138		0		3,138
Not Rated	8,079			47,296		24,338		8,764			4,069		32,489		125,035		0		125,035
Total	9,439			60,854		39,724		13,961			9,879		40,143		174,000		6,191		180,191
Open end and junior lien loans
Pass	0		453	662		374		115			103		0		1,254		4,900		6,154
Substandard	0			0		0		0			0		2		2		26		28
Not Rated	14,626			18,637		4,667		4,967			2,976		3,304		49,177		104,879		154,056
Total	14,626			19,299		5,041		5,082			3,079		3,306		50,433		109,805		160,238
Residential construction loans
Not Rated	1,420		4,756	6,189		1,158		892			136		1,278		11,073		0		11,073
Total	1,420			6,189		1,158		892			136		1,278		11,073		0		11,073

Other consumer loans
Pass	78		2,302		787		1,167		0		1,088		5,422		17,046		22,468
Substandard	0		0		22		219		0		0		241		41		282
Not Rated	5,320		19,432		13,237		6,122		4,878		2,509		51,498		8,947		60,445
Total	5,398		21,734		14,046		7,508		4,878		3,597		57,161		26,034		83,195
TOTAL	$	201,397	$	816,358	$	664,014	$	378,947	$	181,461	$	395,936	$	2,638,113	$	1,715,601	$	4,353,714

As of March 31, 2022, $12.5 million in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans. These loans were included in this risk rating category because they are fully guaranteed by the SBA.

The following table summarizes the risk category of loans by loan segment and origination date as of December 31, 2021:

(dollars in thousands)	2021			2020		2019		2018			2017		Prior		Term Total		Revolving		Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass	$	3,699		$	830	$	3,360	$	0		$	0	$	0	$	7,889	$	558,634	$	566,523
Special Mention	0			0		0		0			0		0		0		60,441		60,441
Substandard	0			0		35		0			0		0		35		25,928		25,963
Total	3,699			830		3,395		0			0		0		7,924		645,003		652,927
Non-working capital loans:
Pass	185,374			139,157		79,477		38,899			19,415		18,489		480,811		203,794		684,605
Special Mention	17,728			0		225		979			2,350		1,426		22,708		0		22,708
Substandard	2,996			6,948		1,091		2,534			5,465		426		19,460		3,321		22,781
Not Rated	2,265			1,758		837		563			128		14		5,565		0		5,565
Total	208,363			147,863		81,630		42,975			27,358		20,355		528,544		207,115		735,659
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass	35,136			30,224		1,276		998			0		0		67,634		310,396		378,030
Total	35,136			30,224		1,276		998			0		0		67,634		310,396		378,030
Owner occupied loans:
Pass	135,861			169,404		124,117		85,070			78,155		93,925		686,532		29,611		716,143
Special Mention	6,555			0		880		933			7,387		1,235		16,990		0		16,990
Substandard	489			1,570		909		1,758			694		238		5,658		0		5,658
Total	142,905			170,974		125,906		87,761			86,236		95,398		709,180		29,611		738,791
Nonowner occupied loans:
Pass	146,342			154,433		107,262		19,054			31,023		59,154		517,268		44,362		561,630
Special Mention	11,825			331		0		0			0		14,253		26,409		0		26,409
Total	158,167			154,764		107,262		19,054			31,023		73,407		543,677		44,362		588,039
Multifamily loans:
Pass	84,678			53,195		36,575		12,286		17,105	14,574		9,793		211,101		13,434		224,535
Special Mention	0			0		0		0			22,252		0		22,252		0		22,252
Total	84,678			53,195		36,575		12,286			36,826		9,793		233,353		13,434		246,787
Agri-business and agricultural loans:
Loans secured by farmland:
Pass	47,532			37,035		16,249		10,469			10,454		17,021		138,760		61,774		200,534
Special Mention	0			1,985		2,303		0			180		30		4,498		918		5,416
Substandard	207			0		0		0			0		145		352		0		352
Total	47,739			39,020		18,552		10,469			10,634		17,196		143,610		62,692		206,302
Loans for agricultural production:
Pass	36,238			25,855		4,224		11,072			1,331		4,178		82,898		138,142		221,040
Special Mention	448			8,642		1,171		0			0		0		10,261		8,272		18,533
Total	36,686			34,497		5,395		11,072			1,331		4,178		93,159		146,414		239,573
Other commercial loans:
Pass	6,556			21,111		3,243		1,273			8,592		7,460		48,235		21,145		69,380
Special Mention	0			0		0		0			0		3,798		3,798		0		3,798
Total	6,556			21,111		3,243		1,273			8,592		11,258		52,033		21,145		73,178
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans
Pass	14,635			16,173		5,312		5,903			3,049		3,221		48,293		5,005		53,298
Special Mention	0			0		0		0			0		1,274		1,274		0		1,274
Not Rated	45,089			27,738		9,248		5,217			7,628		26,321		121,241		482		121,723
Total	59,724			43,911		14,560		11,120			10,677		30,816		170,808		5,487		176,295
Open end and junior lien loans
Pass	679		453	379		159		313			0		0		1,530		5,074		6,604
Substandard	0			0		0		0			0		0		0		98		98
Not Rated	21,945			5,624		5,987		3,899			1,653		1,526		40,634		110,523		151,157
Total	22,624			6,003		6,146		4,212			1,653		1,526		42,164		115,695		157,859
Residential construction loans
Not Rated	7,926		4,756	1,537		960		138			171		1,125		11,857		0		11,857
Total	7,926			1,537		960		138			171		1,125		11,857		0		11,857

Other consumer loans
Pass	3,401		957		1,523		0		1,155		0		7,036		12,998		20,034
Substandard	36		23		230		0		0		0		289		0		289
Not Rated	21,652		14,931		7,474		5,844		1,890		1,203		52,994		9,227		62,221
Total	25,089		15,911		9,227		5,844		3,045		1,203		60,319		22,225		82,544
TOTAL	$	839,292	$	719,840	$	414,127	$	207,202	$	217,546	$	266,255	$	2,664,262	$	1,623,579	$	4,287,841

As of December 31, 2021, $26.2 million in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans. These loans were included in this risk rating category because they are fully guaranteed by the SBA.

Nonaccrual and Past Due Loans:

The Company does not record interest on nonaccrual loans until principal is recovered. For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in the process of collection, or earlier when concern exists as to the ultimate collectability of principal or interest. Interest accrued but not received is reversed against earnings. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and future payments are reasonably assured.

The following table presents the aging of the amortized cost basis in past due loans as of March 31, 2022 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands)	Loans Not Past Due		30-89 Days Past Due		Greater than 89 Days Past Due and Accruing		Total Accruing		Total Nonaccrual		Nonaccrual With No Allowance For Credit Loss		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	678,654	$	0	$	0	$	674,338	$	4,316	$	238	$	678,654
Non-working capital loans	781,306		3,129		0		778,863		5,572		4,546		784,435
Commercial real estate and multi-family residential loans:
Construction and land development loans	397,775		0		0		397,775		0		0		397,775
Owner occupied loans	723,968		0		0		720,812		3,156		1,516		723,968
Nonowner occupied loans	618,693		0		0		618,693		0		0		618,693
Multifamily loans	213,654		0		0		213,654		0		0		213,654
Agri-business and agricultural loans:
Loans secured by farmland	164,225		0		0		163,890		335		0		164,225
Loans for agricultural production	259,495		0		0		259,495		0		0		259,495
Other commercial loans	78,118		0		0		78,118		0		0		78,118
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans	179,872		301		18		179,980		211		140		180,191
Open end and junior lien loans	160,043		195		0		160,210		28		28		160,238
Residential construction loans	11,073		0		0		11,073		0		0		11,073
Other consumer loans	83,150		45		0		82,913		282		0		83,195
Total	$	4,350,026	$	3,670	$	18	$	4,339,814	$	13,900	$	6,468	$	4,353,714

As of March 31, 2022 there were an insignificant number of loans 30-89 days past due or greater than 89 days past due on nonaccrual. Additionally, interest income recognized on nonaccrual loans was insignificant during the three month period ended March 31, 2022.

The following table presents the aging of the amortized cost basis in past due loans as of December 31, 2021 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands)	Loans Not Past Due		30-89 Days Past Due		Greater than 89 Days Past Due and Accruing		Total Accruing		Total Nonaccrual		Nonaccrual With No Allowance For Credit Loss		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	652,903	$	24	$	0	$	646,961	$	5,966	$	5,200	$	652,927
Non-working capital loans	735,658		1		0		731,063		4,596		229		735,659
Commercial real estate and multi-family residential loans:
Construction and land development loans	378,030		0		0		378,030		0		0		378,030
Owner occupied loans	738,791		0		0		735,157		3,634		2,129		738,791
Nonowner occupied loans	588,039		0		0		588,039		0		0		588,039
Multifamily loans	246,787		0		0		246,787		0		0		246,787
Agri-business and agricultural loans:
Loans secured by farmland	206,302		0		0		205,967		335		0		206,302
Loans for agricultural production	239,573		0		0		239,573		0		0		239,573
Other commercial loans	73,178		0		0		73,178		0		0		73,178
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans	175,678		500		117		176,240		55		55		176,295
Open end and junior lien loans	157,729		130		0		157,761		98		98		157,859
Residential construction loans	11,857		0		0		11,857		0		0		11,857
Other consumer loans	82,472		72		0		82,255		289		0		82,544
Total	$	4,286,997	$	727	$	117	$	4,272,868	$	14,973	$	7,711	$	4,287,841

As of December 31, 2021 there were an insignificant number of loans 30-89 days past due or greater than 89 days past due on nonaccrual. Additionally, interest income recognized on nonaccrual loans was insignificant during the year ended December 31, 2021.

When management determines that foreclosure is probable, expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. A loan is considered collateral dependent when the borrower is experiencing financial difficulty and the loan is expected to be repaid substantially through the operation or sale of the collateral. The class of loan represents the primary collateral type associated with the loan. Significant quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value.

The following tables present the amortized cost basis of collateral dependent loans by class of loan as of:

	March 31, 2022
(dollars in thousands)	Real Estate		General Business  Assets		Other		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	74	$	5,497	$	0	$	5,571
Non-working capital loans	1,581		9,525		229		11,335
Commercial real estate and multi-family residential loans:
Owner occupied loans	960		1,500		1,161		3,621
Agri-business and agricultural loans:
Loans secured by farmland	190		145		0		335
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	3,141		0		0		3,141
Open end and junior lien loans	28		0		0		28
Other consumer loans	0		0		63		63
Total	$	5,974	$	16,667	$	1,453	$	24,094

	December 31, 2021
(dollars in thousands)	Real Estate		General Business  Assets		Other		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	5,966	$	0	$	5,966
Non-working capital loans	1,606		9,475		229		11,310
Commercial real estate and multi-family residential loans:
Owner occupied loans	1,435		1,505		1,161		4,101
Agri-business and agricultural loans:
Loans secured by farmland	190		145		0		335
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	3,081		0		0		3,081
Open end and junior lien loans	98		0		0		98
Other consumer loans	0		0		59		59
Total	$	6,312	$	17,091	$	1,449	$	24,950

Troubled Debt Restructurings:

Troubled debt restructured loans are included in the totals for individually analyzed loans. The Company has allocated $6.0 million and $5.8 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2022 and December 31, 2021, respectively. The Company is not committed to lend additional funds to debtors whose loans have been modified in a troubled debt restructuring.

(dollars in thousands)	March 31, 2022		December 31, 2021
Accruing troubled debt restructured loans	$	4,976	$	5,121
Nonaccrual troubled debt restructured loans	6,443		6,218
Total troubled debt restructured loans	$	11,419	$	11,339

During the three months ended March 31, 2022, one loan was identified as a troubled debt restructuring. This loan was an over line of credit extended to an existing borrower with other previously modified loans as a result of financial difficulty to assist with cash flow needs. No additional credit enhancements were obtained in conjunction with the extension of this over line of credit.

(dollars in thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial and industrial loans:
Working capital lines of credit loans	1	$	226	$	226
Total	1	$	226	$	226

For the three month period ended March 31, 2022, the troubled debt restructuring described above did not increase the allowance for credit losses, and no charge-offs were recorded.

During the three months ended March 31, 2021, no loans were modified as troubled debt restructurings.

XML

BORROWINGS

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

BORROWINGS

BORROWINGS

For the periods ended March 31, 2022 and December 31, 2021, the Company had an advance outstanding from the Federal Home Loan Bank (“FHLB”) in the amount of $75.0 million. The outstanding FHLB advance is a ten-year fixed-rate putable advance with a rate of 0.39% and is due on March 4, 2030. The advance may not be prepaid by the Company without penalty. The note requires monthly interest payments and is secured by residential real estate loans and securities.

On August 2, 2019 the Company entered into an unsecured revolving credit agreement with another financial institution allowing the Company to borrow up to $30.0 million; this credit agreement was subsequently amended and renewed on July 30, 2021. Funds provided under the agreement may be used to repurchase shares of the Company’s common stock under the share repurchase program, which was reauthorized by the Company’s board of directors on April 13, 2021, and for general operations. The credit agreement includes a negative pledge agreement whereby the Company agrees not to pledge or otherwise encumber the stock of the Bank. The credit agreement has a one year term which may be amended, extended, modified or renewed. There were no outstanding borrowings on the credit agreement at March 31, 2022 and December 31, 2021.

XML

FAIR VALUE DISCLOSURES

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

FAIR VALUE DISCLOSURES

FAIR VALUE DISCLOSURES

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

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

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

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

The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Securities:  Securities available-for-sale are valued primarily by a third party pricing service. The fair values of securities available-for-sale are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or pricing models which utilize significant observable inputs such as matrix pricing. This is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). These models utilize the market approach with standard inputs that include, but are not limited to benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain municipal securities that are not rated and observable inputs about the specific issuer are not available, fair values are estimated

using observable data from other municipal securities presumed to be similar or other market data on other non-rated municipal securities (Level 3 inputs).

The Company’s Finance Department, which is responsible for all accounting and SEC disclosure compliance, and the Company’s Treasury Department, which is responsible for investment portfolio management and asset/liability modeling, are the two areas that determine the Company’s valuation policies and procedures. Both of these areas report directly to the Executive Vice President and Chief Financial Officer of the Company. For assets or liabilities that may be considered for Level 3 fair value measurement on a recurring basis, these two departments and the Executive Vice President and Chief Financial Officer determine the appropriate level of the assets or liabilities under consideration. If there are new assets or liabilities that are determined to be Level 3 by this group, the Risk Management Committee of the Company and the Audit Committee of the Board are made aware of such assets at their next scheduled meeting.

Securities pricing is obtained on securities from a third party pricing service and all security prices are tested annually against prices from another third party provider and reviewed with a market value price tolerance variance that varies by sector:  municipal securities +/-5%, government MBS/CMO +/-3% and U.S. treasuries +/-1%. If any securities fall outside the tolerance threshold and have a variance of $100,000 or more, a determination of materiality is made for the amount over the threshold. Any security that would have a material threshold difference would be further investigated to determine why the variance exists and if any action is needed concerning the security pricing for that individual security. Changes in market value are reviewed monthly in aggregate by security type and any material changes are reviewed to determine why they exist. At least annually, the pricing methodology of the pricing service is received and reviewed to support the fair value levels used by the Company. A detailed pricing evaluation is requested and reviewed on any security determined to be fair valued using unobservable inputs by the pricing service.

Mortgage banking derivative:  The fair values of mortgage banking derivatives are based on observable market data as of the measurement date (Level 2).

Interest rate swap derivatives:  Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services. The fair value of interest rate swap derivatives is determined by pricing or valuation models using observable market data as of the measurement date (Level 2).

Collateral dependent loans:  Collateral dependent loans with specific allocations of the allowance for credit losses are generally based on the fair value of the underlying collateral when repayment is expected solely from the collateral. Fair value is determined using several methods. Generally, the fair value of real estate is based on appraisals by qualified third party appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and result in a Level 3 classification of the inputs for determining fair value. In addition, the Company’s management routinely applies internal discount factors to the value of appraisals used in the fair value evaluation of collateral dependent loans. The deductions to the appraisals take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. Commercial real estate is generally discounted from its appraised value by 0-50% with the higher discounts applied to real estate that is determined to have a thin trading market or to be specialized collateral. In addition to real estate, the Company’s management evaluates other types of collateral as follows: (a) raw and finished inventory is discounted from its cost or book value by 35-65%, depending on the marketability of the goods (b) finished goods are generally discounted by 30-60%, depending on the ease of marketability, cost of transportation or scope of use of the finished good (c) work in process inventory is typically discounted by 50%-100%, depending on the length of manufacturing time, types of components used in the completion process, and the breadth of the user base (d) equipment is valued at a percentage of depreciated book value or recent appraised value, if available, and is typically discounted at 30-70% after various considerations including age and condition of the equipment, marketability, breadth of use, and whether the equipment includes unique components or add-ons; and (e) marketable securities are discounted by 10%-30%, depending on the type of investment, age of valuation report and general market conditions. This methodology is based on a market approach and typically results in a Level 3 classification of the inputs for determining fair value.

Mortgage servicing rights:  As of March 31, 2022, the fair value of the Company’s Level 3 servicing assets for residential mortgage loans (“MSRs”) was $2.7 million, carried at amortized cost of $3.0 million less a $355,000 valuation reserve. These residential mortgage loans have a weighted average interest rate of 3.39%, a weighted average maturity of 21 years and are

secured by homes generally within the Company’s market area of Northern Indiana and Indianapolis. A third-party valuation is used to estimate fair value by stratifying the portfolios on the basis of certain risk characteristics, including loan type and interest rate. Impairment is estimated based on an income approach. The inputs used include estimates of prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, late fees and float income. The most significant assumption used to value MSRs is prepayment rate. Prepayment rates are estimated based on published industry consensus prepayment rates. The most significant unobservable assumption is the discount rate. At March 31, 2022, the constant prepayment speed (“PSA”) used was 228 and discount rate used was 9.5%. At December 31, 2021, the PSA used was 249 and the discount rate used was 9.5%.

Other real estate owned: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned are measured at the lower of carrying amount or fair value less costs to sell. Fair values are generally based on third party appraisals of the property and are reviewed by the Company’s internal appraisal officer. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable properties used to determine value. Such adjustments are usually significant and result in a Level 3 classification. In addition, the Company’s management may apply discount factors to the appraisals to take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.

Real estate mortgage loans held-for-sale: Real estate mortgage loans held-for-sale are carried at the lower of cost or fair value, as determined by outstanding commitments, from third party investors, and result in a Level 2 classification.

The tables below presents the balances of assets measured at fair value on a recurring basis:

	March 31, 2022
	Fair Value Measurements Using						Assets at Fair Value
(dollars in thousands)	Level 1		Level 2		Level 3
Assets:
U.S. Treasury securities	$	2,246	$	0	$	0	$	2,246
U.S. government sponsored agency securities	0		152,892		0		152,892
Mortgage-backed securities: residential	0		596,321		0		596,321
Mortgage-backed securities: commercial	0		96		0		96
State and municipal securities	0		768,663		2,317		770,980
Total Securities	2,246		1,517,972		2,317		1,522,535
Mortgage banking derivative	0		257		0		257
Interest rate swap derivative	0		19,485		0		19,485
Total assets	$	2,246	$	1,537,714	$	2,317	$	1,542,277
Liabilities:
Mortgage banking derivative	$	0	$	3	$	0	$	3
Interest rate swap derivative	0		19,499		0		19,499
Total liabilities	$	0	$	19,502	$	0	$	19,502

	December 31, 2021
	Fair Value Measurements Using						Assets at Fair Value
(dollars in thousands)	Level 1		Level 2		Level 3
Assets:
U.S. Treasury securities	$	900	$	0	$	0	$	900
U.S. government sponsored agency securities	0		143,452		0		143,452
Mortgage-backed securities: residential	0		486,676		0		486,676
Mortgage-backed securities: commercial	0		523		0		523
State and municipal securities	0		764,964		2,043		767,007
Total Securities	900		1,395,615		2,043		1,398,558
Mortgage banking derivative	0		398		0		398
Interest rate swap derivative	0		14,309		0		14,309
Total assets	$	900	$	1,410,322	$	2,043	$	1,413,265
Liabilities:
Mortgage banking derivative	$	0	$	2	$	0	$	2
Interest rate swap derivative	0		14,329		0		14,329
Total liabilities	$	0	$	14,331	$	0	$	14,331

    The fair value of Level 3 available-for-sale securities was immaterial and thus did not require additional recurring fair value disclosure.

The tables below presents the balances of assets measured at fair value on a nonrecurring basis:

	March 31, 2022
	Fair Value Measurements Using						Assets at Fair Value
(dollars in thousands)	Level 1		Level 2		Level 3
Assets
Collateral dependent loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	353	$	353
Non-working capital loans	0		0		4,716		4,716
Commercial real estate and multi-family residential loans:
Owner occupied loans	0		0		880		880
Agri-business and agricultural loans:
Loans secured by farmland	0		0		231		231
Total collateral dependent loans	0		0		6,180		6,180
Other real estate owned	0		0		196		196
Total assets	$	0	$	0	$	6,376	$	6,376

	December 31, 2021
	Fair Value Measurements Using						Assets at Fair Value
(dollars in thousands)	Level 1		Level 2		Level 3
Assets
Collateral dependent loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	247	$	247
Non-working capital loans	0		0		5,095		5,095
Commercial real estate and multi-family residential loans:
Owner occupied loans	0		0		791		791
Agri-business and agricultural loans:
Loans secured by farmland	0		0		231		231
Total collateral dependent loans	0		0		6,364		6,364
Other real estate owned	0		0		196		196
Total assets	$	0	$	0	$	6,560	$	6,560

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at March 31, 2022:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Collateral dependent loans:
Commercial and industrial	$	5,069	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	65	%	21%-99%
Collateral dependent loans:
Commercial real estate and multi-family residential loans	880		Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	46	%	34%-68%
Collateral dependent loans:
Agribusiness and agricultural	231		Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	36	%	3%-68%
Other real estate owned	196		Appraisals	Discount to reflect current market conditions and ultimate collectability	38	%

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at December 31, 2021:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Collateral dependent loans:
Commercial and industrial	$	5,342	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	65	%	22%-99%
Collateral dependent loans:
Commercial real estate and multi-family residential loans	791		Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	51	%	34%-68%
Collateral dependent loans:
Agribusiness and agricultural	231		Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	35	%	3%-68%
Other real estate owned	196		Appraisals	Discount to reflect current market conditions and ultimate collectability	38	%

The following tables contain the estimated fair values and the related carrying values of the Company’s financial instruments. Items which are not financial instruments are not included.

	March 31, 2022
	Carrying Value		Estimated Fair Value
(dollars in thousands)			Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	475,024	$	473,561	$	1,463	$	0	$	475,024
Securities available-for-sale	1,522,535		2,246		1,517,972		2,317		1,522,535
Real estate mortgages held-for-sale	2,234		0		2,270		0		2,270
Loans, net	4,286,188		0		0		4,169,000		4,169,000
Mortgage banking derivative	257		0		257		0		257
Interest rate swap derivative	19,485		0		19,485		0		19,485
Federal Reserve and Federal Home Loan Bank Stock	12,840		N/A		N/A		N/A		N/A
Accrued interest receivable	19,448		0		9,162		10,286		19,448
Financial Liabilities:
Certificates of deposit	(814,263)		0		(817,622)		0		(817,622)
All other deposits	(5,006,360)		(5,006,360)		0		0		(5,006,360)
Federal Home Loan Bank advances	(75,000)		0		(61,200)		0		(61,200)
Mortgage banking derivative	(3)		0		(3)		0		(3)
Interest rate swap derivative	(19,499)		0		(19,499)		0		(19,499)
Standby letters of credit	(202)		0		0		(202)		(202)
Accrued interest payable	(2,303)		(88)		(2,215)		0		(2,303)

	December 31, 2021
	Carrying Value		Estimated Fair Value
(dollars in thousands)			Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	683,240	$	681,286	$	1,954	$	0	$	683,240
Securities available-for-sale	1,398,558		900		1,395,615		2,043		1,398,558
Real estate mortgages held-for-sale	7,470		0		7,634		0		7,634
Loans, net	4,220,068		0		0		4,144,000		4,144,000
Mortgage banking derivative	398		0		398		0		398
Interest rate swap derivative	14,309		0		14,309		0		14,309
Federal Reserve and Federal Home Loan Bank Stock	13,772		N/A		N/A		N/A		N/A
Accrued interest receivable	17,674		0		7,689		9,985		17,674
Financial Liabilities:
Certificates of deposit	(829,518)		0		(833,617)		0		(833,617)
All other deposits	(4,905,889)		(4,905,889)		0		0		(4,905,889)
Federal Home Loan Bank advances	(75,000)		0		(66,118)		0		(66,118)
Mortgage banking derivative	(2)		0		(2)		0		(2)
Interest rate swap derivative	(14,329)		0		(14,329)		0		(14,329)
Standby letters of credit	(272)		0		0		(272)		(272)
Accrued interest payable	(2,619)		(84)		(2,535)		0		(2,619)

XML

OFFSETTING ASSETS AND LIABILITIES

3 Months Ended

Mar. 31, 2022

OFFSETTING ASSETS AND LIABILITIES

OFFSETTING ASSETS AND LIABILITIES

OFFSETTING ASSETS AND LIABILITIES

The following tables summarize gross and net information about financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to an enforceable master netting arrangement at March 31, 2022 and December 31, 2021.

	March 31, 2022
	Gross Amounts of Recognized Assets/Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
(dollars in thousands)							Financial Instruments		Cash Collateral Position
Assets
Interest Rate Swap Derivatives	$	19,485	$	0	$	19,485	$	0	$	(15,415)	$	4,070
Total Assets	$	19,485	$	0	$	19,485	$	0	$	(15,415)	$	4,070
Liabilities
Interest Rate Swap Derivatives	$	19,499	$	0	$	19,499	$	0	$	(90)	$	19,409
Total Liabilities	$	19,499	$	0	$	19,499	$	0	$	(90)	$	19,409

	December 31, 2021
	Gross Amounts of Recognized Assets/Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
(dollars in thousands)							Financial Instruments		Cash Collateral Position
Assets
Interest Rate Swap Derivatives	$	14,309	$	0	$	14,309	$	0	$	(2,255)	$	12,054
Total Assets	$	14,309	$	0	$	14,309	$	0	$	(2,255)	$	12,054
Liabilities
Interest Rate Swap Derivatives	$	14,329	$	0	$	14,329	$	0	$	(7,995)	$	6,334
Total Liabilities	$	14,329	$	0	$	14,329	$	0	$	(7,995)	$	6,334

If an event of default occurs causing an early termination of an interest rate swap derivative, any early termination amount payable to one party by the other party may be reduced by set-off against any other amount payable by the one party to the other party. If a default in performance of any obligation of a repurchase agreement occurs, each party will set-off property held in respect of transactions against obligations owing in respect of any other transactions.

XML

EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period, which includes shares held in treasury on behalf of participants in the Company’s Directors Fee Deferral Plan, and share repurchases. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock based awards and warrants, none of which were antidilutive.

	Three Months Ended March 31,
	2022		2021
Weighted average shares outstanding for basic earnings per common share	25,515,271		25,457,659
Dilutive effect of stock based awards	175,101		92,452
Weighted average shares outstanding for diluted earnings per common share	25,690,372		25,550,111
Basic earnings per common share	$	0.93	$	0.90
Diluted earnings per common share	$	0.92	$	0.90

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME

3 Months Ended

Mar. 31, 2022

OCI, Debt Securities, Available-for-Sale, Gain (Loss), after Adjustment and Tax [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME

ACCUMULATED OTHER COMPREHENSIVE INCOME

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) for the three months ended March 31, 2022 and 2021, all shown net of tax:

(dollars in thousands)	Unrealized Gains and Losses on Available- for-Sales Securities		Defined Benefit Pension Items		Total
Balance at January 1, 2022	$	17,056	$	(963)	$	16,093
Other comprehensive loss before reclassification	(109,807)		0		(109,807)
Amounts reclassified from accumulated other comprehensive loss	0		27		27
Net current period other comprehensive income (loss)	(109,807)		27		(109,780)
Balance at March 31, 2022	$	(92,751)	$	(936)	$	(93,687)

(dollars in thousands)	Unrealized Gains and Losses on Available- for-Sales Securities		Defined Benefit Pension Items		Total
Balance at January 1, 2021	$	29,182	$	(1,438)	$	27,744
Other comprehensive loss before reclassification	(12,084)		0		(12,084)
Amounts reclassified from accumulated other comprehensive income	(595)		45		(550)
Net current period other comprehensive income (loss)	(12,679)		45		(12,634)
Balance at March 31, 2021	$	16,503	$	(1,393)	$	15,110

Reclassifications out of other accumulated comprehensive loss for the three months ended March 31, 2022 are as follows:

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified From Accumulated Other Comprehensive Income		Affected Line Item in the Statement Where Net Income is Presented
(dollars in thousands)
Amortization of defined benefit pension items	$	(36)	Other expense
Tax effect	9		Income tax expense
	(27)		Net of tax
Total reclassifications for the period	$	(27)	Net income

    Reclassifications out of other accumulated comprehensive income for the three months ended March 31, 2021 are as follows:

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified From Accumulated Other Comprehensive Income		Affected Line Item in the Statement Where Net Income is Presented
(dollars in thousands)
Realized gains and losses on available-for-sale securities	$	753	Net securities gains
Tax effect	(158)		Income tax expense
	595		Net of tax
Amortization of defined benefit pension items	(60)		Other expense
Tax effect	15		Income tax expense
	(45)		Net of tax
Total reclassifications for the period	$	550	Net income

XML

LEASES

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

LEASES

LEASESThe Company leases certain office facilities under long-term operating lease agreements. The leases expire at various dates through 2037 and some include renewal options. Many of these leases require the payment of property taxes, insurance premiums, maintenance, utilities and other costs. In many cases, rentals are subject to increase in relation to a cost-of-living index. The Company accounts for lease and non-lease components together as a single lease component. The Company determines if an arrangement is a lease at inception. Operating leases are recorded as a right-of-use ("ROU") lease assets and are included in other assets on the consolidated balance sheet. The Company's corresponding lease obligations are included in other liabilities on the consolidated balance sheet. ROU lease assets represent the Company's right to use an underlying asset for the lease term and lease obligations represent the Company's obligation to make lease payments arising from the lease. Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU lease asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term. Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases, as allowed as practical expedient of the standard.

The following is a maturity analysis of the operating lease liabilities as of March 31, 2022:

Years ending December 31, (in thousands)	Operating Lease Obligation
2022	$	530
2023	717
2024	734
2025	752
2026	731
2027 and thereafter	2,938
Total undiscounted lease payments	6,402
Less imputed interest	(703)
Lease liability	$	5,699
Right-of-use asset	$	5,699

	Three months ended March 31,
	2022			2021
Lease cost
Operating lease cost	$	170		$	135
Short-term lease cost	6			6
Total lease cost	$	176		$	141
Other information
Operating cash outflows from operating leases	$	170		$	135
Weighted-average remaining lease term - operating leases	8.9 years			8.6 years
Weighted average discount rate - operating leases	2.5		%	2.8		%

XML

CONTINGENCIES	3 Months Ended
	Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
CONTINGENCIES	CONTINGENCIESLakeland Financial Corporation and its subsidiaries are defendants in various legal proceedings arising in the normal course of business. In the opinion of management, based on present information including advice of legal counsel, the ultimate resolution of these proceedings is not expected to have a material effect on the Company's consolidated financial position or results of operations.

XML

BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Consolidation Policy

This report is filed for Lakeland Financial Corporation (the "Company"), which has two wholly owned subsidiaries, Lake City Bank (the "Bank") and LCB Risk Management, a captive insurance company. Also included in this report are results for the Bank’s wholly owned subsidiary, LCB Investments II, Inc. ("LCB Investments"), which manages the Bank’s investment portfolio. LCB Investments owns LCB Funding, Inc. ("LCB Funding"), a real estate investment trust. All significant inter-company balances and transactions have been eliminated in consolidation.

Basis of Accounting Policy

The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and are unaudited. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for any subsequent reporting periods, including the year ending December 31, 2022. The Company’s 2021 Annual Report on Form 10-K should be read in conjunction with these statements.

Newly Issued But Not Yet Effective Accounting Standards

Newly Issued But Not Yet Effective Accounting Standards

On March 12, 2020, the FASB issued Accounting Standards Update (ASU) 2020-04, "Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASC 848 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The Company has formed a cross-functional project team to lead the transition from LIBOR to a planned adoption of reference rates which could include Secured Overnight Financing Rate (“SOFR”), amongst others. The Company has identified loans that renewed prior to 2021 and obtained updated reference rate language at the time of renewal. Additionally, management is utilizing the timeline guidance published by the Alternative Reference Rates Committee to develop and achieve internal milestones during this transitional period. The Company has adhered to the International Swaps and Derivatives Association 2020 IBOR Fallbacks Protocol that was released on October 23, 2020.

The Company discontinued the use of new LIBOR-based loans by December 31, 2021, according to regulatory guidelines. Legacy LIBOR-based loans will be transitioned to an alternative reference rate on or before June 30, 2023. The guidance under ASC 848 will be available for a limited time, generally through December 31, 2022. The Company expects to adopt the LIBOR transition relief allowed under this standard, and does note expect such adoption to have a material impact on the consolidated financial statements.

In March 2022, the FASB issued ASU 2022-01, "Derivatives and Hedging (ASC 815): Fair Value Hedging - Portfolio Layer Method." ASC 815 currently permits only prepayable financial assets and one or more beneficial interests secured by a portfolio of prepayable financial instruments to be included in a last-of-layer closed portfolio. The amendments in this Update allow nonprepayable financial assets to also be included in a closed portfolio hedged using the portfolio layer method. That expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and nonpreapayble financial assets, thereby allowing consistent accounting for similar hedges. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements.

In March 2022, the FASB issued ASU 2022-02, "Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures." The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying TDR recognition and measurement guidance, creditors will determine whether a modification results in a new loan or continuation of existing loan. These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, the amendments to ASC 326 require that an entity disclose current-period gross writeoffs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The guidance is only for entities that have adopted the amendments in Update 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption using prospective application, including adoption in an interim period where the guidance should be applied as of the beginning of the fiscal year. The Company is currently assessing the impact of ASU 2022-02 on its disclosures and control structure; however, the Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements.

Reclassification

Reclassification

Certain amounts appearing in the consolidated financial statements and notes thereto for prior periods have been reclassified to conform with the current presentation. The reclassifications had no effect on net income or stockholders' equity as previously reported.

Allowance for Credit Losses and Credit Quality

The Company maintains an allowance for credit losses to provide for expected credit losses. Losses are charged against the allowance when management believes that the principal is uncollectable. Subsequent recoveries, if any, are credited to the allowance. Allocations of the allowance are made for specific loans and for pools of similar types of loans, although the entire allowance is available for any loan that, in management’s judgment, should be charged against the allowance. A provision for credit losses is taken based on management’s ongoing evaluation of the appropriate allowance balance. A formal evaluation of the adequacy of the credit loss allowance is conducted monthly. The ultimate recovery of all loans is susceptible to future market factors beyond the Company’s control.

The level of credit loss provision is influenced by growth in the overall loan portfolio, emerging market risk, emerging concentration risk, commercial loan focus and large credit concentration, new industry lending activity, general economic conditions and historical loss analysis. In addition, management gives consideration to changes in the facts and circumstances of watch list credits, which includes the security position of the borrower, in determining the appropriate level of the credit loss provision. Furthermore, management’s overall view on credit quality is a factor in the determination of the provision.

The determination of the appropriate allowance is inherently subjective, as it requires significant estimates by management. The Company has an established process to determine the adequacy of the allowance for credit losses that generally includes consideration of changes in the nature and volume of the loan portfolio and overall portfolio quality, along with current and forecasted economic conditions that may affect borrowers’ ability to repay. Consideration is not limited to these factors although they represent the most commonly cited factors. To determine the specific allocation levels for individual credits, management considers the current valuation of collateral and the amounts and timing of expected future cash flows as the primary measures. Management also considers trends in adversely classified loans based upon an ongoing review of those credits. With respect to pools of similar loans, an appropriate level of general allowance is determined by portfolio segment using a probability of default-loss given default (“PD/LGD”) model, subject to a floor. A default can be triggered by one of several different asset quality factors, including past due status, nonaccrual status, TDR status or if the loan has had a charge-off. This PD is then combined with a LGD derived from historical charge-off data to construct a default rate. This loss rate is then supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, particularly the unemployment rate forecast from the Federal Open Market Committee’s Summary of Economic Projections, and other environmental factors based on the risks present for each portfolio segment. These environmental factors include consideration of the following: levels of, and trends in, delinquencies and nonperforming loans; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedure, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. It is also possible that these factors could include social, political, economic, and terrorist events or activities. All of these factors are susceptible to change, which may be significant. As a result of this detailed process, the allowance results in two forms of allocations, specific and general. These two components represent the total allowance for credit losses deemed adequate to cover probable losses inherent in the loan portfolio.

Commercial loans are subject to a dual standardized grading process administered by the credit administration function. These grade assignments are performed independent of each other and a consensus is reached by credit administration and the loan review officer. Specific allowances are established in cases where management has identified significant conditions or circumstances related to an individual credit that indicate it should be evaluated on an individual basis. Considerations with respect to specific allocations for these individual credits include, but are not limited to, the following: (a) the sufficiency of the customer’s cash flow or net worth to repay the loan; (b) the adequacy of the discounted value of collateral relative to the loan balance; (c) whether the loan has been criticized in a regulatory examination; (d) whether the loan is nonperforming; (e) any other reasons the ultimate collectability of the loan may be in question; or (f) any unique loan characteristics that require special monitoring.

Allocations are also applied to categories of loans considered not to be individually analyzed, but for which the rate of loss is expected to be consistent with or greater than historical averages. Such allocations are based on past loss experience and information about specific borrower situations and estimated collateral values. These general pooled loan allocations are performed for portfolio segments of commercial and industrial; commercial real estate, multi-family, and construction; agri-business and agricultural; other commercial loans; and consumer 1-4 family mortgage and other consumer loans. General allocations of the allowance are determined by a historical loss rate based on the calculation of each pool’s probability of default-loss given default, subject to a floor. The length of the historical period for each pool is based on the average life of the pool. The historical loss rates are supplemented with consideration of economic conditions and portfolio trends.

Due to the imprecise nature of estimating the allowance for credit losses, the Company’s allowance for credit losses includes an unallocated component. The unallocated component of the allowance for credit losses incorporates the Company’s judgmental determination of potential expected losses that may not be fully reflected in other allocations, including factors such as the level of classified credits, economic uncertainties, industry trends impacting specific portfolio segments, broad portfolio quality trends, and trends in the composition of the Company’s large commercial loan portfolio and related large dollar exposures to individual borrowers. As a practical expedient, the Company has elected to disclose accrued interest separately from loan principal balances on the consolidated balance sheet. Additionally, when a loan is placed on non-accrual, interest payments are reversed through interest income.

For off balance sheet credit exposures outlined in the ASU at 326-20-30-11, it is the Company’s position that nearly all of the unfunded amounts on lines of credit are unconditionally cancellable, and therefore not subject to having a liability recorded.

Leases

The Company leases certain office facilities under long-term operating lease agreements. The leases expire at various dates through 2037 and some include renewal options. Many of these leases require the payment of property taxes, insurance premiums, maintenance, utilities and other costs. In many cases, rentals are subject to increase in relation to a cost-of-living index. The Company accounts for lease and non-lease components together as a single lease component. The Company determines if an arrangement is a lease at inception. Operating leases are recorded as a right-of-use ("ROU") lease assets and are included in other assets on the consolidated balance sheet. The Company's corresponding lease obligations are included in other liabilities on the consolidated balance sheet. ROU lease assets represent the Company's right to use an underlying asset for the lease term and lease obligations represent the Company's obligation to make lease payments arising from the lease. Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU lease asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.Lease expense for lease payments is recognized on a straight-line basis over the lease term. Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases, as allowed as practical expedient of the standard.

XML

SECURITIES (Tables)

3 Months Ended

Mar. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-For-Sale Securities

Information related to the amortized cost, fair value and allowance for credit losses of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income is provided in the tables below.

(dollars in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
March 31, 2022
U.S. Treasury securities	$	2,250	$	0	$	(4)	$	0	$	2,246
U.S. government sponsored agencies	164,514		0		(11,622)		0		152,892
Mortgage-backed securities: residential	634,654		680		(39,013)		0		596,321
Mortgage-backed securities: commercial	96		0		0		0		96
State and municipal securities	838,427		4,608		(72,055)		0		770,980
Total	$	1,639,941	$	5,288	$	(122,694)	$	0	$	1,522,535
December 31, 2021
U.S. Treasury securities	$	900	$	0	$	0	$	0	$	900
U.S. government sponsored agencies	145,858		39		(2,445)		0		143,452
Mortgage-backed securities: residential	487,157		4,455		(4,936)		0		486,676
Mortgage-backed securities: commercial	522		1		0		0		523
State and municipal securities	742,532		25,749		(1,274)		0		767,007
Total	$	1,376,969	$	30,244	$	(8,655)	$	0	$	1,398,558

Schedule of Available-For-Sale Securities By Maturity

Information regarding the fair value and amortized cost of available-for-sale debt securities by maturity as of March 31, 2022 is presented below. Maturity information is based on contractual maturity for all securities other than mortgage-backed securities. Actual maturities of securities may differ from contractual maturities because borrowers may have the right to prepay the obligation without a prepayment penalty.

(dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	3,356	$	3,357
Due after one year through five years	11,031		11,140
Due after five years through ten years	54,556		54,559
Due after ten years	936,248		857,062
	1,005,191		926,118
Mortgage-backed securities	634,750		596,417
Total debt securities	$	1,639,941	$	1,522,535

Schedule of Sales of Securities Available For Sale

Securities proceeds, gross gains and gross losses are presented below.

	Three Months Ended March 31,
(dollars in thousands)	2022		2021
Sales of securities available-for-sale
Proceeds	$	0	$	13,506
Gross gains	0		753
Gross losses	0		0
Number of securities	0		7

Debt Securities, Available-for-sale, Unrealized Loss Position, Fair Value

Information regarding securities with unrealized losses as of March 31, 2022 and December 31, 2021 is presented below. The tables divide the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

	Less than 12 months				12 months or more				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2022
U.S. Treasury securities	$	2,246	$	4	$	0	$	0	$	2,246	$	4
U.S. government sponsored agencies	126,338		8,757		26,554		2,865		152,892		11,622
Mortgage-backed securities: residential	441,367		26,752		109,331		12,261		550,698		39,013
Mortgage-backed securities: commercial	96		0		0		0		96		0
State and municipal securities	560,210		71,480		3,497		575		563,707		72,055
Total temporarily impaired	$	1,130,257	$	106,993	$	139,382	$	15,701	$	1,269,639	$	122,694
December 31, 2021
U.S. government sponsored agencies	$	85,968	$	1,364	$	28,676	$	1,081	$	114,644	$	2,445
Mortgage-backed securities: residential	272,264		4,076		22,792		860		295,056		4,936
State and municipal securities	138,659		1,274		0		0		138,659		1,274
Total temporarily impaired	$	496,891	$	6,714	$	51,468	$	1,941	$	548,359	$	8,655

Schedule of Quantitative Disclosure of Available-For-Sale Securities

The total number of securities with unrealized losses as of March 31, 2022 and December 31, 2021 is presented below.

	Less than 12 months	12 months or more	Total
March 31, 2022
U.S. Treasury securities	6	0	6
U.S. government sponsored agencies	12	5	17
Mortgage-backed securities: residential	90	15	105
Mortgage-backed securities: commercial	1	0	1
State and municipal securities	376	3	379
Total temporarily impaired	485	23	508
December 31, 2021
U.S. government sponsored agencies	8	5	13
Mortgage-backed securities: residential	29	3	32
State and municipal securities	80	0	80
Total temporarily impaired	117	8	125

XML

LOANS (Tables)

3 Months Ended

Mar. 31, 2022

Receivables [Abstract]

Schedule of Loans

(dollars in thousands)	March 31, 2022				December 31, 2021
Commercial and industrial loans:
Working capital lines of credit loans	$	678,567	15.6	%	$	652,861	15.2	%
Non-working capital loans	784,890		18.0		736,608		17.2
Total commercial and industrial loans	1,463,457		33.6		1,389,469		32.4
Commercial real estate and multi-family residential loans:
Construction and land development loans	399,618		9.2		379,813		8.9
Owner occupied loans	724,588		16.6		739,371		17.2
Nonowner occupied loans	619,163		14.2		588,458		13.7
Multifamily loans	214,003		4.9		247,204		5.8
Total commercial real estate and multi-family residential loans	1,957,372		44.9		1,954,846		45.6
Agri-business and agricultural loans:
Loans secured by farmland	164,252		3.8		206,331		4.8
Loans for agricultural production	259,417		6.0		239,494		5.6
Total agri-business and agricultural loans	423,669		9.8		445,825		10.4
Other commercial loans	78,412		1.8		73,490		1.7
Total commercial loans	3,922,910		90.1		3,863,630		90.1
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	180,448		4.1		176,561		4.1
Open end and junior lien loans	158,583		3.6		156,238		3.6
Residential construction and land development loans	11,135		0.3		11,921		0.3
Total consumer 1-4 family mortgage loans	350,166		8.0		344,720		8.0
Other consumer loans	83,395		1.9		82,755		1.9
Total consumer loans	433,561		9.9		427,475		9.9
Subtotal	4,356,471		100.0	%	4,291,105		100.0	%
Less: Allowance for credit losses	(67,526)				(67,773)
Net deferred loan fees	(2,757)				(3,264)
Loans, net	$	4,286,188			$	4,220,068

XML

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (Tables)

3 Months Ended

Mar. 31, 2022

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

In Allowance For Loan Losses and Recorded Investment In Loans By Portfolio Segment

The following tables present the activity in the allowance for credit losses by portfolio segment for the periods ended:

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multifamily Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
Three Months Ended March 31, 2022
Beginning balance, January 1	$	30,595	$	26,535	$	5,034	$	1,146	$	2,866	$	1,147	$	450	$	67,773
Provision for credit losses	730		319		(273)		(88)		(248)		(55)		32		417
Loans charged-off	(19)		(597)		0		0		(22)		(102)		0		(740)
Recoveries	16		0		0		0		10		50		0		76
Net loans (charged-off) recovered	(3)		(597)		0		0		(12)		(52)		0		(664)
Ending balance	$	31,322	$	26,257	$	4,761	$	1,058	$	2,606	$	1,040	$	482	$	67,526

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multifamily Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
Three Months Ended March 31, 2021
Beginning balance, January 1	$	28,333	$	22,907	$	3,043	$	416	$	2,619	$	951	$	3,139	$	61,408
Impact of adopting ASC 326	4,312		4,316		1,060		941		953		349		(2,881)		9,050
Provision for credit losses	(540)		2,285		(202)		(185)		(233)		13		339		1,477
Loans charged-off	(87)		(71)		0		0		(6)		(72)		0		(236)
Recoveries	34		8		0		0		51		52		0		145
Net loans (charged-off) recovered	(53)		(63)		0		0		45		(20)		0		(91)
Ending balance	$	32,052	$	29,445	$	3,901	$	1,172	$	3,384	$	1,293	$	597	$	71,844

Summary of Risk Category of Loans by Loan Segment and Origination Date and Credit Quality Indicators

The following table summarizes the risk category of loans by loan segment and origination date as of March 31, 2022:

(dollars in thousands)	2022			2021		2020		2019			2018		Prior		Term Total		Revolving		Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass	$	0		$	3,082	$	764	$	3,045		$	0	$	0	$	6,891	$	593,938	$	600,829
Special Mention	0			0		0		0			0		0		0		59,209		59,209
Substandard	0			0		74		0			0		0		74		18,542		18,616
Total	0			3,082		838		3,045			0		0		6,965		671,689		678,654
Non-working capital loans:
Pass	63,830			165,396		123,800		71,707			23,723		31,231		479,687		256,462		736,149
Special Mention	209			16,535		0		216			635		3,657		21,252		79		21,331
Substandard	0			2,937		6,380		862			2,370		5,217		17,766		3,835		21,601
Not Rated	399			2,105		1,627		710			417		96		5,354		0		5,354
Total	64,438			186,973		131,807		73,495			27,145		40,201		524,059		260,376		784,435
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass	9,322			37,819		20,870		542			573		0		69,126		328,593		397,719
Special Mention	0			0		0		0			0		0		0		56		56
Total	9,322			37,819		20,870		542			573		0		69,126		328,649		397,775
Owner occupied loans:
Pass	20,705			166,777		174,001		108,181			78,260		126,142		674,066		28,228		702,294
Special Mention	0			6,277		0		865			909		9,180		17,231		0		17,231
Substandard	0			473		1,679		894			1,161		236		4,443		0		4,443
Total	20,705			173,527		175,680		109,940			80,330		135,558		695,740		28,228		723,968
Nonowner occupied loans:
Pass	41,921			142,070		146,588		105,635			21,701		87,080		544,995		47,604		592,599
Special Mention	0			11,667		307		0			0		14,120		26,094		0		26,094
Total	41,921			153,737		146,895		105,635			21,701		101,200		571,089		47,604		618,693
Multifamily loans:
Pass	2,665			67,930		37,909		36,337		17,105	11,969		21,061		177,871		13,605		191,476
Special Mention	22,178			0		0		0			0		0		22,178		0		22,178
Total	24,843			67,930		37,909		36,337			11,969		21,061		200,049		13,605		213,654
Agri-business and agricultural loans:
Loans secured by farmland:
Pass	4,748			46,921		35,089		12,005			10,034		25,189		133,986		24,532		158,518
Special Mention	0			0		1,985		2,278			0		210		4,473		899		5,372
Substandard	0			0		0		0			190		145		335		0		335
Total	4,748			46,921		37,074		14,283			10,224		25,544		138,794		25,431		164,225
Loans for agricultural production:
Pass	1,573			31,444		24,820		3,985			10,372		5,356		77,550		166,721		244,271
Special Mention	0			432		7,727		1,160			0		0		9,319		5,905		15,224
Total	1,573			31,876		32,547		5,145			10,372		5,356		86,869		172,626		259,495
Other commercial loans:
Pass	2,964			6,417		20,425		3,082			1,175		15,043		49,106		25,363		74,469
Special Mention	0			0		0		0			0		3,649		3,649		0		3,649
Total	2,964			6,417		20,425		3,082			1,175		18,692		52,755		25,363		78,118
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans
Pass	1,360			13,558		15,386		5,197			5,722		4,604		45,827		6,191		52,018
Substandard	0			0		0		0			88		3,050		3,138		0		3,138
Not Rated	8,079			47,296		24,338		8,764			4,069		32,489		125,035		0		125,035
Total	9,439			60,854		39,724		13,961			9,879		40,143		174,000		6,191		180,191
Open end and junior lien loans
Pass	0		453	662		374		115			103		0		1,254		4,900		6,154
Substandard	0			0		0		0			0		2		2		26		28
Not Rated	14,626			18,637		4,667		4,967			2,976		3,304		49,177		104,879		154,056
Total	14,626			19,299		5,041		5,082			3,079		3,306		50,433		109,805		160,238
Residential construction loans
Not Rated	1,420		4,756	6,189		1,158		892			136		1,278		11,073		0		11,073
Total	1,420			6,189		1,158		892			136		1,278		11,073		0		11,073

Other consumer loans
Pass	78		2,302		787		1,167		0		1,088		5,422		17,046		22,468
Substandard	0		0		22		219		0		0		241		41		282
Not Rated	5,320		19,432		13,237		6,122		4,878		2,509		51,498		8,947		60,445
Total	5,398		21,734		14,046		7,508		4,878		3,597		57,161		26,034		83,195
TOTAL	$	201,397	$	816,358	$	664,014	$	378,947	$	181,461	$	395,936	$	2,638,113	$	1,715,601	$	4,353,714

The following table summarizes the risk category of loans by loan segment and origination date as of December 31, 2021:

(dollars in thousands)	2021			2020		2019		2018			2017		Prior		Term Total		Revolving		Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass	$	3,699		$	830	$	3,360	$	0		$	0	$	0	$	7,889	$	558,634	$	566,523
Special Mention	0			0		0		0			0		0		0		60,441		60,441
Substandard	0			0		35		0			0		0		35		25,928		25,963
Total	3,699			830		3,395		0			0		0		7,924		645,003		652,927
Non-working capital loans:
Pass	185,374			139,157		79,477		38,899			19,415		18,489		480,811		203,794		684,605
Special Mention	17,728			0		225		979			2,350		1,426		22,708		0		22,708
Substandard	2,996			6,948		1,091		2,534			5,465		426		19,460		3,321		22,781
Not Rated	2,265			1,758		837		563			128		14		5,565		0		5,565
Total	208,363			147,863		81,630		42,975			27,358		20,355		528,544		207,115		735,659
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass	35,136			30,224		1,276		998			0		0		67,634		310,396		378,030
Total	35,136			30,224		1,276		998			0		0		67,634		310,396		378,030
Owner occupied loans:
Pass	135,861			169,404		124,117		85,070			78,155		93,925		686,532		29,611		716,143
Special Mention	6,555			0		880		933			7,387		1,235		16,990		0		16,990
Substandard	489			1,570		909		1,758			694		238		5,658		0		5,658
Total	142,905			170,974		125,906		87,761			86,236		95,398		709,180		29,611		738,791
Nonowner occupied loans:
Pass	146,342			154,433		107,262		19,054			31,023		59,154		517,268		44,362		561,630
Special Mention	11,825			331		0		0			0		14,253		26,409		0		26,409
Total	158,167			154,764		107,262		19,054			31,023		73,407		543,677		44,362		588,039
Multifamily loans:
Pass	84,678			53,195		36,575		12,286		17,105	14,574		9,793		211,101		13,434		224,535
Special Mention	0			0		0		0			22,252		0		22,252		0		22,252
Total	84,678			53,195		36,575		12,286			36,826		9,793		233,353		13,434		246,787
Agri-business and agricultural loans:
Loans secured by farmland:
Pass	47,532			37,035		16,249		10,469			10,454		17,021		138,760		61,774		200,534
Special Mention	0			1,985		2,303		0			180		30		4,498		918		5,416
Substandard	207			0		0		0			0		145		352		0		352
Total	47,739			39,020		18,552		10,469			10,634		17,196		143,610		62,692		206,302
Loans for agricultural production:
Pass	36,238			25,855		4,224		11,072			1,331		4,178		82,898		138,142		221,040
Special Mention	448			8,642		1,171		0			0		0		10,261		8,272		18,533
Total	36,686			34,497		5,395		11,072			1,331		4,178		93,159		146,414		239,573
Other commercial loans:
Pass	6,556			21,111		3,243		1,273			8,592		7,460		48,235		21,145		69,380
Special Mention	0			0		0		0			0		3,798		3,798		0		3,798
Total	6,556			21,111		3,243		1,273			8,592		11,258		52,033		21,145		73,178
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans
Pass	14,635			16,173		5,312		5,903			3,049		3,221		48,293		5,005		53,298
Special Mention	0			0		0		0			0		1,274		1,274		0		1,274
Not Rated	45,089			27,738		9,248		5,217			7,628		26,321		121,241		482		121,723
Total	59,724			43,911		14,560		11,120			10,677		30,816		170,808		5,487		176,295
Open end and junior lien loans
Pass	679		453	379		159		313			0		0		1,530		5,074		6,604
Substandard	0			0		0		0			0		0		0		98		98
Not Rated	21,945			5,624		5,987		3,899			1,653		1,526		40,634		110,523		151,157
Total	22,624			6,003		6,146		4,212			1,653		1,526		42,164		115,695		157,859
Residential construction loans
Not Rated	7,926		4,756	1,537		960		138			171		1,125		11,857		0		11,857
Total	7,926			1,537		960		138			171		1,125		11,857		0		11,857

Other consumer loans
Pass	3,401		957		1,523		0		1,155		0		7,036		12,998		20,034
Substandard	36		23		230		0		0		0		289		0		289
Not Rated	21,652		14,931		7,474		5,844		1,890		1,203		52,994		9,227		62,221
Total	25,089		15,911		9,227		5,844		3,045		1,203		60,319		22,225		82,544
TOTAL	$	839,292	$	719,840	$	414,127	$	207,202	$	217,546	$	266,255	$	2,664,262	$	1,623,579	$	4,287,841

Schedule of Aging of the Amortized Cost Basis In Past Due Loans

The following table presents the aging of the amortized cost basis in past due loans as of March 31, 2022 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands)	Loans Not Past Due		30-89 Days Past Due		Greater than 89 Days Past Due and Accruing		Total Accruing		Total Nonaccrual		Nonaccrual With No Allowance For Credit Loss		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	678,654	$	0	$	0	$	674,338	$	4,316	$	238	$	678,654
Non-working capital loans	781,306		3,129		0		778,863		5,572		4,546		784,435
Commercial real estate and multi-family residential loans:
Construction and land development loans	397,775		0		0		397,775		0		0		397,775
Owner occupied loans	723,968		0		0		720,812		3,156		1,516		723,968
Nonowner occupied loans	618,693		0		0		618,693		0		0		618,693
Multifamily loans	213,654		0		0		213,654		0		0		213,654
Agri-business and agricultural loans:
Loans secured by farmland	164,225		0		0		163,890		335		0		164,225
Loans for agricultural production	259,495		0		0		259,495		0		0		259,495
Other commercial loans	78,118		0		0		78,118		0		0		78,118
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans	179,872		301		18		179,980		211		140		180,191
Open end and junior lien loans	160,043		195		0		160,210		28		28		160,238
Residential construction loans	11,073		0		0		11,073		0		0		11,073
Other consumer loans	83,150		45		0		82,913		282		0		83,195
Total	$	4,350,026	$	3,670	$	18	$	4,339,814	$	13,900	$	6,468	$	4,353,714

The following table presents the aging of the amortized cost basis in past due loans as of December 31, 2021 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands)	Loans Not Past Due		30-89 Days Past Due		Greater than 89 Days Past Due and Accruing		Total Accruing		Total Nonaccrual		Nonaccrual With No Allowance For Credit Loss		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	652,903	$	24	$	0	$	646,961	$	5,966	$	5,200	$	652,927
Non-working capital loans	735,658		1		0		731,063		4,596		229		735,659
Commercial real estate and multi-family residential loans:
Construction and land development loans	378,030		0		0		378,030		0		0		378,030
Owner occupied loans	738,791		0		0		735,157		3,634		2,129		738,791
Nonowner occupied loans	588,039		0		0		588,039		0		0		588,039
Multifamily loans	246,787		0		0		246,787		0		0		246,787
Agri-business and agricultural loans:
Loans secured by farmland	206,302		0		0		205,967		335		0		206,302
Loans for agricultural production	239,573		0		0		239,573		0		0		239,573
Other commercial loans	73,178		0		0		73,178		0		0		73,178
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans	175,678		500		117		176,240		55		55		176,295
Open end and junior lien loans	157,729		130		0		157,761		98		98		157,859
Residential construction loans	11,857		0		0		11,857		0		0		11,857
Other consumer loans	82,472		72		0		82,255		289		0		82,544
Total	$	4,286,997	$	727	$	117	$	4,272,868	$	14,973	$	7,711	$	4,287,841

Schedule of Amortized Cost Basis Of Collateral Dependent Loans

The following tables present the amortized cost basis of collateral dependent loans by class of loan as of:

	March 31, 2022
(dollars in thousands)	Real Estate		General Business  Assets		Other		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	74	$	5,497	$	0	$	5,571
Non-working capital loans	1,581		9,525		229		11,335
Commercial real estate and multi-family residential loans:
Owner occupied loans	960		1,500		1,161		3,621
Agri-business and agricultural loans:
Loans secured by farmland	190		145		0		335
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	3,141		0		0		3,141
Open end and junior lien loans	28		0		0		28
Other consumer loans	0		0		63		63
Total	$	5,974	$	16,667	$	1,453	$	24,094

	December 31, 2021
(dollars in thousands)	Real Estate		General Business  Assets		Other		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	5,966	$	0	$	5,966
Non-working capital loans	1,606		9,475		229		11,310
Commercial real estate and multi-family residential loans:
Owner occupied loans	1,435		1,505		1,161		4,101
Agri-business and agricultural loans:
Loans secured by farmland	190		145		0		335
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	3,081		0		0		3,081
Open end and junior lien loans	98		0		0		98
Other consumer loans	0		0		59		59
Total	$	6,312	$	17,091	$	1,449	$	24,950

Troubled Debt Restructuring

(dollars in thousands)	March 31, 2022		December 31, 2021
Accruing troubled debt restructured loans	$	4,976	$	5,121
Nonaccrual troubled debt restructured loans	6,443		6,218
Total troubled debt restructured loans	$	11,419	$	11,339

Loans by Class Modified as Troubled Debt Restructurings

(dollars in thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial and industrial loans:
Working capital lines of credit loans	1	$	226	$	226
Total	1	$	226	$	226

XML

FAIR VALUE DISCLOSURES (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Schedule of Assets Measured at Fair Value on a Recurring Basis

The tables below presents the balances of assets measured at fair value on a recurring basis:

	March 31, 2022
	Fair Value Measurements Using						Assets at Fair Value
(dollars in thousands)	Level 1		Level 2		Level 3
Assets:
U.S. Treasury securities	$	2,246	$	0	$	0	$	2,246
U.S. government sponsored agency securities	0		152,892		0		152,892
Mortgage-backed securities: residential	0		596,321		0		596,321
Mortgage-backed securities: commercial	0		96		0		96
State and municipal securities	0		768,663		2,317		770,980
Total Securities	2,246		1,517,972		2,317		1,522,535
Mortgage banking derivative	0		257		0		257
Interest rate swap derivative	0		19,485		0		19,485
Total assets	$	2,246	$	1,537,714	$	2,317	$	1,542,277
Liabilities:
Mortgage banking derivative	$	0	$	3	$	0	$	3
Interest rate swap derivative	0		19,499		0		19,499
Total liabilities	$	0	$	19,502	$	0	$	19,502

	December 31, 2021
	Fair Value Measurements Using						Assets at Fair Value
(dollars in thousands)	Level 1		Level 2		Level 3
Assets:
U.S. Treasury securities	$	900	$	0	$	0	$	900
U.S. government sponsored agency securities	0		143,452		0		143,452
Mortgage-backed securities: residential	0		486,676		0		486,676
Mortgage-backed securities: commercial	0		523		0		523
State and municipal securities	0		764,964		2,043		767,007
Total Securities	900		1,395,615		2,043		1,398,558
Mortgage banking derivative	0		398		0		398
Interest rate swap derivative	0		14,309		0		14,309
Total assets	$	900	$	1,410,322	$	2,043	$	1,413,265
Liabilities:
Mortgage banking derivative	$	0	$	2	$	0	$	2
Interest rate swap derivative	0		14,329		0		14,329
Total liabilities	$	0	$	14,331	$	0	$	14,331

Schedule of Assets Measured at Fair Value on a Nonrecurring Basis

The tables below presents the balances of assets measured at fair value on a nonrecurring basis:

	March 31, 2022
	Fair Value Measurements Using						Assets at Fair Value
(dollars in thousands)	Level 1		Level 2		Level 3
Assets
Collateral dependent loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	353	$	353
Non-working capital loans	0		0		4,716		4,716
Commercial real estate and multi-family residential loans:
Owner occupied loans	0		0		880		880
Agri-business and agricultural loans:
Loans secured by farmland	0		0		231		231
Total collateral dependent loans	0		0		6,180		6,180
Other real estate owned	0		0		196		196
Total assets	$	0	$	0	$	6,376	$	6,376

	December 31, 2021
	Fair Value Measurements Using						Assets at Fair Value
(dollars in thousands)	Level 1		Level 2		Level 3
Assets
Collateral dependent loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	247	$	247
Non-working capital loans	0		0		5,095		5,095
Commercial real estate and multi-family residential loans:
Owner occupied loans	0		0		791		791
Agri-business and agricultural loans:
Loans secured by farmland	0		0		231		231
Total collateral dependent loans	0		0		6,364		6,364
Other real estate owned	0		0		196		196
Total assets	$	0	$	0	$	6,560	$	6,560

Schedule of Fair Value Measured on Nonrecurring Basis Valuation Techniques

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at March 31, 2022:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Collateral dependent loans:
Commercial and industrial	$	5,069	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	65	%	21%-99%
Collateral dependent loans:
Commercial real estate and multi-family residential loans	880		Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	46	%	34%-68%
Collateral dependent loans:
Agribusiness and agricultural	231		Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	36	%	3%-68%
Other real estate owned	196		Appraisals	Discount to reflect current market conditions and ultimate collectability	38	%

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at December 31, 2021:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Collateral dependent loans:
Commercial and industrial	$	5,342	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	65	%	22%-99%
Collateral dependent loans:
Commercial real estate and multi-family residential loans	791		Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	51	%	34%-68%
Collateral dependent loans:
Agribusiness and agricultural	231		Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	35	%	3%-68%
Other real estate owned	196		Appraisals	Discount to reflect current market conditions and ultimate collectability	38	%

Schedule of Fair Values and the Related Carrying Values of Financial Instruments

The following tables contain the estimated fair values and the related carrying values of the Company’s financial instruments. Items which are not financial instruments are not included.

	March 31, 2022
	Carrying Value		Estimated Fair Value
(dollars in thousands)			Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	475,024	$	473,561	$	1,463	$	0	$	475,024
Securities available-for-sale	1,522,535		2,246		1,517,972		2,317		1,522,535
Real estate mortgages held-for-sale	2,234		0		2,270		0		2,270
Loans, net	4,286,188		0		0		4,169,000		4,169,000
Mortgage banking derivative	257		0		257		0		257
Interest rate swap derivative	19,485		0		19,485		0		19,485
Federal Reserve and Federal Home Loan Bank Stock	12,840		N/A		N/A		N/A		N/A
Accrued interest receivable	19,448		0		9,162		10,286		19,448
Financial Liabilities:
Certificates of deposit	(814,263)		0		(817,622)		0		(817,622)
All other deposits	(5,006,360)		(5,006,360)		0		0		(5,006,360)
Federal Home Loan Bank advances	(75,000)		0		(61,200)		0		(61,200)
Mortgage banking derivative	(3)		0		(3)		0		(3)
Interest rate swap derivative	(19,499)		0		(19,499)		0		(19,499)
Standby letters of credit	(202)		0		0		(202)		(202)
Accrued interest payable	(2,303)		(88)		(2,215)		0		(2,303)

	December 31, 2021
	Carrying Value		Estimated Fair Value
(dollars in thousands)			Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	683,240	$	681,286	$	1,954	$	0	$	683,240
Securities available-for-sale	1,398,558		900		1,395,615		2,043		1,398,558
Real estate mortgages held-for-sale	7,470		0		7,634		0		7,634
Loans, net	4,220,068		0		0		4,144,000		4,144,000
Mortgage banking derivative	398		0		398		0		398
Interest rate swap derivative	14,309		0		14,309		0		14,309
Federal Reserve and Federal Home Loan Bank Stock	13,772		N/A		N/A		N/A		N/A
Accrued interest receivable	17,674		0		7,689		9,985		17,674
Financial Liabilities:
Certificates of deposit	(829,518)		0		(833,617)		0		(833,617)
All other deposits	(4,905,889)		(4,905,889)		0		0		(4,905,889)
Federal Home Loan Bank advances	(75,000)		0		(66,118)		0		(66,118)
Mortgage banking derivative	(2)		0		(2)		0		(2)
Interest rate swap derivative	(14,329)		0		(14,329)		0		(14,329)
Standby letters of credit	(272)		0		0		(272)		(272)
Accrued interest payable	(2,619)		(84)		(2,535)		0		(2,619)

XML

OFFSETTING ASSETS AND LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2022

OFFSETTING ASSETS AND LIABILITIES

Schedule of Offsetting Assets and Liability

The following tables summarize gross and net information about financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to an enforceable master netting arrangement at March 31, 2022 and December 31, 2021.

	March 31, 2022
	Gross Amounts of Recognized Assets/Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
(dollars in thousands)							Financial Instruments		Cash Collateral Position
Assets
Interest Rate Swap Derivatives	$	19,485	$	0	$	19,485	$	0	$	(15,415)	$	4,070
Total Assets	$	19,485	$	0	$	19,485	$	0	$	(15,415)	$	4,070
Liabilities
Interest Rate Swap Derivatives	$	19,499	$	0	$	19,499	$	0	$	(90)	$	19,409
Total Liabilities	$	19,499	$	0	$	19,499	$	0	$	(90)	$	19,409

	December 31, 2021
	Gross Amounts of Recognized Assets/Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
(dollars in thousands)							Financial Instruments		Cash Collateral Position
Assets
Interest Rate Swap Derivatives	$	14,309	$	0	$	14,309	$	0	$	(2,255)	$	12,054
Total Assets	$	14,309	$	0	$	14,309	$	0	$	(2,255)	$	12,054
Liabilities
Interest Rate Swap Derivatives	$	14,329	$	0	$	14,329	$	0	$	(7,995)	$	6,334
Total Liabilities	$	14,329	$	0	$	14,329	$	0	$	(7,995)	$	6,334

XML

EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Schedule of Weighted Average Number of Shares

	Three Months Ended March 31,
	2022		2021
Weighted average shares outstanding for basic earnings per common share	25,515,271		25,457,659
Dilutive effect of stock based awards	175,101		92,452
Weighted average shares outstanding for diluted earnings per common share	25,690,372		25,550,111
Basic earnings per common share	$	0.93	$	0.90
Diluted earnings per common share	$	0.92	$	0.90

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables)

3 Months Ended

Mar. 31, 2022

OCI, Debt Securities, Available-for-Sale, Gain (Loss), after Adjustment and Tax [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Income

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) for the three months ended March 31, 2022 and 2021, all shown net of tax:

(dollars in thousands)	Unrealized Gains and Losses on Available- for-Sales Securities		Defined Benefit Pension Items		Total
Balance at January 1, 2022	$	17,056	$	(963)	$	16,093
Other comprehensive loss before reclassification	(109,807)		0		(109,807)
Amounts reclassified from accumulated other comprehensive loss	0		27		27
Net current period other comprehensive income (loss)	(109,807)		27		(109,780)
Balance at March 31, 2022	$	(92,751)	$	(936)	$	(93,687)

(dollars in thousands)	Unrealized Gains and Losses on Available- for-Sales Securities		Defined Benefit Pension Items		Total
Balance at January 1, 2021	$	29,182	$	(1,438)	$	27,744
Other comprehensive loss before reclassification	(12,084)		0		(12,084)
Amounts reclassified from accumulated other comprehensive income	(595)		45		(550)
Net current period other comprehensive income (loss)	(12,679)		45		(12,634)
Balance at March 31, 2021	$	16,503	$	(1,393)	$	15,110

Schedule of Reclassification Accumulated Other Comprehensive Income

Reclassifications out of other accumulated comprehensive loss for the three months ended March 31, 2022 are as follows:

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified From Accumulated Other Comprehensive Income		Affected Line Item in the Statement Where Net Income is Presented
(dollars in thousands)
Amortization of defined benefit pension items	$	(36)	Other expense
Tax effect	9		Income tax expense
	(27)		Net of tax
Total reclassifications for the period	$	(27)	Net income

    Reclassifications out of other accumulated comprehensive income for the three months ended March 31, 2021 are as follows:

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified From Accumulated Other Comprehensive Income		Affected Line Item in the Statement Where Net Income is Presented
(dollars in thousands)
Realized gains and losses on available-for-sale securities	$	753	Net securities gains
Tax effect	(158)		Income tax expense
	595		Net of tax
Amortization of defined benefit pension items	(60)		Other expense
Tax effect	15		Income tax expense
	(45)		Net of tax
Total reclassifications for the period	$	550	Net income

XML

LEASES (Tables)

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

Schedule of Maturity Analysis of the Operating Lease Liabilities

The following is a maturity analysis of the operating lease liabilities as of March 31, 2022:

Years ending December 31, (in thousands)	Operating Lease Obligation
2022	$	530
2023	717
2024	734
2025	752
2026	731
2027 and thereafter	2,938
Total undiscounted lease payments	6,402
Less imputed interest	(703)
Lease liability	$	5,699
Right-of-use asset	$	5,699

Schedule of Lease Cost

	Three months ended March 31,
	2022			2021
Lease cost
Operating lease cost	$	170		$	135
Short-term lease cost	6			6
Total lease cost	$	176		$	141
Other information
Operating cash outflows from operating leases	$	170		$	135
Weighted-average remaining lease term - operating leases	8.9 years			8.6 years
Weighted average discount rate - operating leases	2.5		%	2.8		%

XML

BASIS OF PRESENTATION (Details)	3 Months Ended
	Mar. 31, 2022 subsidiary
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of wholly owned subsidiaries	2

XML

SECURITIES - Summary of Available For Sale Securities (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Information related to available for sale securities
Amortized Cost	$ 1,639,941,000	$ 1,376,969,000
Gross Unrealized Gain	5,288,000	30,244,000
Gross Unrealized Losses	(122,694,000)	(8,655,000)
Allowance for Credit Losses	0	0
Fair Value	1,522,535,000	1,398,558,000
U.S. Treasury securities
Information related to available for sale securities
Amortized Cost	2,250,000	900,000
Gross Unrealized Gain	0	0
Gross Unrealized Losses	(4,000)	0
Allowance for Credit Losses	0	0
Fair Value	2,246,000	900,000
U.S. government sponsored agencies
Information related to available for sale securities
Amortized Cost	164,514,000	145,858,000
Gross Unrealized Gain	0	39,000
Gross Unrealized Losses	(11,622,000)	(2,445,000)
Allowance for Credit Losses	0	0
Fair Value	152,892,000	143,452,000
Mortgage-backed securities: residential
Information related to available for sale securities
Amortized Cost	634,654,000	487,157,000
Gross Unrealized Gain	680,000	4,455,000
Gross Unrealized Losses	(39,013,000)	(4,936,000)
Allowance for Credit Losses	0	0
Fair Value	596,321,000	486,676,000
Mortgage-backed securities: commercial
Information related to available for sale securities
Amortized Cost	96,000	522,000
Gross Unrealized Gain	0	1,000
Gross Unrealized Losses	0	0
Allowance for Credit Losses	0	0
Fair Value	96,000	523,000
State and municipal securities
Information related to available for sale securities
Amortized Cost	838,427,000	742,532,000
Gross Unrealized Gain	4,608,000	25,749,000
Gross Unrealized Losses	(72,055,000)	(1,274,000)
Allowance for Credit Losses	0	0
Fair Value	$ 770,980,000	$ 767,007,000

XML

SECURITIES - Schedule of Available For Sale Securities By Maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Amortized Cost
Due in one year or less	$ 3,356
Due after one year through five years	11,031
Due after five years through ten years	54,556
Due after ten years	936,248
Total debt securities, gross	1,005,191
Mortgage-backed securities	634,750
Amortized Cost	1,639,941	$ 1,376,969
Fair Value
Due in one year or less	3,357
Due after one year through five years	11,140
Due after five years through ten years	54,559
Due after ten years	857,062
Total debt securities, gross	926,118
Mortgage-backed securities	596,417
Total debt securities	$ 1,522,535	$ 1,398,558

XML

SECURITIES - Schedule of Sales of Securities Available For Sale (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) security	Mar. 31, 2021 USD ($) security
Sales of securities available-for-sale
Proceeds	$ 0	$ 13,506
Gross gains	0	753
Gross losses	$ 0	$ 0
Number of securities | security	0	7

XML

SECURITIES - Additional Information (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Information related to available for sale securities
Available-for-sale Securities pledged as collateral	$ 272,600,000	$ 300,800,000
Allowance for credit losses	0	0
Accrued interest receivable on available-for-sale debt securities	$ 8,800,000	$ 7,400,000

XML

SECURITIES - Schedule of Available For Sale of Securities Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Schedule of Available-for-sale Securities
Less than 12 months, fair value	$ 1,130,257	$ 496,891
12 months or more, fair value	139,382	51,468
Total fair value	1,269,639	548,359
Less than 12 months, unrealized losses	106,993	6,714
12 Months or more, unrealized losses	15,701	1,941
Total unrealized losses	122,694	8,655
U.S. Treasury securities
Schedule of Available-for-sale Securities
Less than 12 months, fair value	2,246
12 months or more, fair value	0
Total fair value	2,246
Less than 12 months, unrealized losses	4
12 Months or more, unrealized losses	0
Total unrealized losses	4
U.S. government sponsored agencies
Schedule of Available-for-sale Securities
Less than 12 months, fair value	126,338	85,968
12 months or more, fair value	26,554	28,676
Total fair value	152,892	114,644
Less than 12 months, unrealized losses	8,757	1,364
12 Months or more, unrealized losses	2,865	1,081
Total unrealized losses	11,622	2,445
Mortgage-backed securities: residential
Schedule of Available-for-sale Securities
Less than 12 months, fair value	441,367	272,264
12 months or more, fair value	109,331	22,792
Total fair value	550,698	295,056
Less than 12 months, unrealized losses	26,752	4,076
12 Months or more, unrealized losses	12,261	860
Total unrealized losses	39,013	4,936
Mortgage-backed securities: commercial
Schedule of Available-for-sale Securities
Less than 12 months, fair value	96
12 months or more, fair value	0
Total fair value	96
Less than 12 months, unrealized losses	0
12 Months or more, unrealized losses	0
Total unrealized losses	0
State and municipal securities
Schedule of Available-for-sale Securities
Less than 12 months, fair value	560,210	138,659
12 months or more, fair value	3,497	0
Total fair value	563,707	138,659
Less than 12 months, unrealized losses	71,480	1,274
12 Months or more, unrealized losses	575	0
Total unrealized losses	$ 72,055	$ 1,274

XML

SECURITIES - Quantitative Disclosure of Available For Sale of Securities (Details) - position	Mar. 31, 2022	Dec. 31, 2021
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	485	117
Number of available-for-sale securities in unrealized loss positions, 12 months or more	23	8
Number of available-for-sale securities in unrealized loss positions, total	508	125
U.S. Treasury securities
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	6
Number of available-for-sale securities in unrealized loss positions, 12 months or more	0
Number of available-for-sale securities in unrealized loss positions, total	6
U.S. government sponsored agencies
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	12	8
Number of available-for-sale securities in unrealized loss positions, 12 months or more	5	5
Number of available-for-sale securities in unrealized loss positions, total	17	13
Mortgage-backed securities: residential
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	90	29
Number of available-for-sale securities in unrealized loss positions, 12 months or more	15	3
Number of available-for-sale securities in unrealized loss positions, total	105	32
Mortgage-backed securities: commercial
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	1
Number of available-for-sale securities in unrealized loss positions, 12 months or more	0
Number of available-for-sale securities in unrealized loss positions, total	1
State and municipal securities
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	376	80
Number of available-for-sale securities in unrealized loss positions, 12 months or more	3	0
Number of available-for-sale securities in unrealized loss positions, total	379	80

XML

LOANS - Total Loans Outstanding (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 4,356,471	$ 4,291,105
Percentage of loans receivable	100.00%	100.00%
Less: Allowance for credit losses	$ (67,526)	$ (67,773)	$ (71,844)	$ (61,408)
Net deferred loan fees	(2,757)	(3,264)
Loans, net	4,286,188	4,220,068
Total commercial loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 3,922,910	$ 3,863,630
Percentage of loans receivable	90.10%	90.10%
Total consumer loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 433,561	$ 427,475
Percentage of loans receivable	9.90%	9.90%
Other consumer loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 83,395	$ 82,755
Percentage of loans receivable	1.90%	1.90%
Commercial and industrial loans:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 1,463,457	$ 1,389,469
Percentage of loans receivable	33.60%	32.40%
Commercial and industrial loans: | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Less: Allowance for credit losses	$ (31,322)	$ (30,595)	(32,052)	(28,333)
Commercial and industrial loans: | Working capital lines of credit loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 678,567	$ 652,861
Percentage of loans receivable	15.60%	15.20%
Commercial and industrial loans: | Non-working capital loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 784,890	$ 736,608
Percentage of loans receivable	18.00%	17.20%
Commercial real estate and multi-family residential loans:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 1,957,372	$ 1,954,846
Percentage of loans receivable	44.90%	45.60%
Commercial real estate and multi-family residential loans: | Construction and land development loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 399,618	$ 379,813
Percentage of loans receivable	9.20%	8.90%
Commercial real estate and multi-family residential loans: | Owner occupied loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 724,588	$ 739,371
Percentage of loans receivable	16.60%	17.20%
Commercial real estate and multi-family residential loans: | Nonowner occupied loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 619,163	$ 588,458
Percentage of loans receivable	14.20%	13.70%
Commercial real estate and multi-family residential loans: | Multifamily loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 214,003	$ 247,204
Percentage of loans receivable	4.90%	5.80%
Agri-business and agricultural loans:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 423,669	$ 445,825
Percentage of loans receivable	9.80%	10.40%
Agri-business and agricultural loans: | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Less: Allowance for credit losses	$ (4,761)	$ (5,034)	$ (3,901)	$ (3,043)
Agri-business and agricultural loans: | Loans secured by farmland | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 164,252	$ 206,331
Percentage of loans receivable	3.80%	4.80%
Agri-business and agricultural loans: | Loans for agricultural production | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 259,417	$ 239,494
Percentage of loans receivable	6.00%	5.60%
Other commercial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 78,412	$ 73,490
Percentage of loans receivable	1.80%	1.70%
Consumer 1-4 family mortgage loans:
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 350,166	$ 344,720
Percentage of loans receivable	8.00%	8.00%
Consumer 1-4 family mortgage loans: | Closed end first mortgage loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 180,448	$ 176,561
Percentage of loans receivable	4.10%	4.10%
Consumer 1-4 family mortgage loans: | Open end and junior lien loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 158,583	$ 156,238
Percentage of loans receivable	3.60%	3.60%
Consumer 1-4 family mortgage loans: | Residential construction and land development loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable before allowance for credit loss	$ 11,135	$ 11,921
Percentage of loans receivable	0.30%	0.30%

XML

LOANS - Additional Information (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Receivables [Abstract]
Investment loans excluding accrued interest	$ 10,300	$ 10,000
Residential real estate loans in the process of foreclosure	$ 239	$ 350

XML

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY - Allowance for loan losses by portfolio segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance	$ 67,773	$ 61,408
Provision for credit losses	417	1,477
Loans charged-off	(740)	(236)
Recoveries	76	145
Net loans (charged-off) recovered	(664)	(91)
Ending balance	67,526	71,844
Impact of adopting ASC 326 | ASU 2016-13
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance		9,050
Commercial and Industrial | Commercial Portfolio Segment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance	30,595	28,333
Provision for credit losses	730	(540)
Loans charged-off	(19)	(87)
Recoveries	16	34
Net loans (charged-off) recovered	(3)	(53)
Ending balance	31,322	32,052
Commercial and Industrial | Impact of adopting ASC 326 | ASU 2016-13 | Commercial Portfolio Segment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance		4,312
Commercial Real Estate and Multifamily Residential | Commercial Portfolio Segment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance	26,535	22,907
Provision for credit losses	319	2,285
Loans charged-off	(597)	(71)
Recoveries	0	8
Net loans (charged-off) recovered	(597)	(63)
Ending balance	26,257	29,445
Commercial Real Estate and Multifamily Residential | Impact of adopting ASC 326 | ASU 2016-13 | Commercial Portfolio Segment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance		4,316
Agri-business and Agricultural | Commercial Portfolio Segment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance	5,034	3,043
Provision for credit losses	(273)	(202)
Loans charged-off	0	0
Recoveries	0	0
Net loans (charged-off) recovered	0	0
Ending balance	4,761	3,901
Agri-business and Agricultural | Impact of adopting ASC 326 | ASU 2016-13 | Commercial Portfolio Segment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance		1,060
Other Commercial | Commercial Portfolio Segment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance	1,146	416
Provision for credit losses	(88)	(185)
Loans charged-off	0	0
Recoveries	0	0
Net loans (charged-off) recovered	0	0
Ending balance	1,058	1,172
Other Commercial | Impact of adopting ASC 326 | ASU 2016-13 | Commercial Portfolio Segment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance		941
Consumer 1-4 Family Mortgage | Consumer Portfolio Segment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance	2,866	2,619
Provision for credit losses	(248)	(233)
Loans charged-off	(22)	(6)
Recoveries	10	51
Net loans (charged-off) recovered	(12)	45
Ending balance	2,606	3,384
Consumer 1-4 Family Mortgage | Impact of adopting ASC 326 | ASU 2016-13 | Consumer Portfolio Segment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance		953
Other Consumer | Consumer Portfolio Segment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance	1,147	951
Provision for credit losses	(55)	13
Loans charged-off	(102)	(72)
Recoveries	50	52
Net loans (charged-off) recovered	(52)	(20)
Ending balance	1,040	1,293
Other Consumer | Impact of adopting ASC 326 | ASU 2016-13 | Consumer Portfolio Segment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance		349
Unallocated
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance	450	3,139
Provision for credit losses	32	339
Loans charged-off	0	0
Recoveries	0	0
Net loans (charged-off) recovered	0	0
Ending balance	$ 482	597
Unallocated | Impact of adopting ASC 326 | ASU 2016-13
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance		$ (2,881)

XML

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY - Additional Information (Details)	3 Months Ended
	Mar. 31, 2022 USD ($) loan	Mar. 31, 2021 loan	Dec. 31, 2021 USD ($)
Financing Receivable, Allowance for Credit Loss [Line Items]
Loan amount of credit quality analysis	$ 250,000
Loans receivable before allowance for credit loss	4,353,714,000		$ 4,287,841,000
PPP | Pass
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans receivable before allowance for credit loss	12,500,000		26,200,000
Total consumer loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans modified In troubled debt restructured loans	$ 6,000,000		$ 5,800,000
Number of loans modified as troubled debt restructurings | loan	1	0

XML

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY - Risk category of loans by loan segment and origination (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Financing Receivable, Credit Quality Indicator [Line Items]
2022	$ 201,397	$ 839,292
2021	816,358	719,840
2020	664,014	414,127
2019	378,947	207,202
2018	181,461	217,546
Prior	395,936	266,255
Term Total	2,638,113	2,664,262
Revolving	1,715,601	1,623,579
Total	4,353,714	4,287,841
Other commercial loans
Financing Receivable, Credit Quality Indicator [Line Items]
2022	2,964	6,556
2021	6,417	21,111
2020	20,425	3,243
2019	3,082	1,273
2018	1,175	8,592
Prior	18,692	11,258
Term Total	52,755	52,033
Revolving	25,363	21,145
Total	78,118	73,178
Working capital lines of credit loans | Commercial and industrial loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	3,699
2021	3,082	830
2020	838	3,395
2019	3,045	0
2018	0	0
Prior	0	0
Term Total	6,965	7,924
Revolving	671,689	645,003
Total	678,654	652,927
Non-working capital loans | Commercial and industrial loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	64,438	208,363
2021	186,973	147,863
2020	131,807	81,630
2019	73,495	42,975
2018	27,145	27,358
Prior	40,201	20,355
Term Total	524,059	528,544
Revolving	260,376	207,115
Total	784,435	735,659
Construction and land development loans | Commercial Real Estate and Multifamily Residential
Financing Receivable, Credit Quality Indicator [Line Items]
2022	9,322	35,136
2021	37,819	30,224
2020	20,870	1,276
2019	542	998
2018	573	0
Prior	0	0
Term Total	69,126	67,634
Revolving	328,649	310,396
Total	397,775	378,030
Owner occupied loans | Commercial Real Estate and Multifamily Residential
Financing Receivable, Credit Quality Indicator [Line Items]
2022	20,705	142,905
2021	173,527	170,974
2020	175,680	125,906
2019	109,940	87,761
2018	80,330	86,236
Prior	135,558	95,398
Term Total	695,740	709,180
Revolving	28,228	29,611
Total	723,968	738,791
Nonowner occupied loans | Commercial Real Estate and Multifamily Residential
Financing Receivable, Credit Quality Indicator [Line Items]
2022	41,921	158,167
2021	153,737	154,764
2020	146,895	107,262
2019	105,635	19,054
2018	21,701	31,023
Prior	101,200	73,407
Term Total	571,089	543,677
Revolving	47,604	44,362
Total	618,693	588,039
Multifamily loans | Commercial Real Estate and Multifamily Residential
Financing Receivable, Credit Quality Indicator [Line Items]
2022	24,843	84,678
2021	67,930	53,195
2020	37,909	36,575
2019	36,337	12,286
2018	11,969	36,826
Prior	21,061	9,793
Term Total	200,049	233,353
Revolving	13,605	13,434
Total	213,654	246,787
Loans secured by farmland | Agri-business and agricultural loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	4,748	47,739
2021	46,921	39,020
2020	37,074	18,552
2019	14,283	10,469
2018	10,224	10,634
Prior	25,544	17,196
Term Total	138,794	143,610
Revolving	25,431	62,692
Total	164,225	206,302
Loans for agricultural production | Agri-business and agricultural loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	1,573	36,686
2021	31,876	34,497
2020	32,547	5,395
2019	5,145	11,072
2018	10,372	1,331
Prior	5,356	4,178
Term Total	86,869	93,159
Revolving	172,626	146,414
Total	259,495	239,573
Closed end first mortgage loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	9,439	59,724
2021	60,854	43,911
2020	39,724	14,560
2019	13,961	11,120
2018	9,879	10,677
Prior	40,143	30,816
Term Total	174,000	170,808
Revolving	6,191	5,487
Total	180,191	176,295
Open end and junior lien loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	14,626	22,624
2021	19,299	6,003
2020	5,041	6,146
2019	5,082	4,212
2018	3,079	1,653
Prior	3,306	1,526
Term Total	50,433	42,164
Revolving	109,805	115,695
Total	160,238	157,859
Residential construction loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	1,420	7,926
2021	6,189	1,537
2020	1,158	960
2019	892	138
2018	136	171
Prior	1,278	1,125
Term Total	11,073	11,857
Revolving	0	0
Total	11,073	11,857
Other consumer loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	5,398	25,089
2021	21,734	15,911
2020	14,046	9,227
2019	7,508	5,844
2018	4,878	3,045
Prior	3,597	1,203
Term Total	57,161	60,319
Revolving	26,034	22,225
Total	83,195	82,544
Pass | Other commercial loans
Financing Receivable, Credit Quality Indicator [Line Items]
2022	2,964	6,556
2021	6,417	21,111
2020	20,425	3,243
2019	3,082	1,273
2018	1,175	8,592
Prior	15,043	7,460
Term Total	49,106	48,235
Revolving	25,363	21,145
Total	74,469	69,380
Pass | Working capital lines of credit loans | Commercial and industrial loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	3,699
2021	3,082	830
2020	764	3,360
2019	3,045	0
2018	0	0
Prior	0	0
Term Total	6,891	7,889
Revolving	593,938	558,634
Total	600,829	566,523
Pass | Non-working capital loans | Commercial and industrial loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	63,830	185,374
2021	165,396	139,157
2020	123,800	79,477
2019	71,707	38,899
2018	23,723	19,415
Prior	31,231	18,489
Term Total	479,687	480,811
Revolving	256,462	203,794
Total	736,149	684,605
Pass | Construction and land development loans | Commercial Real Estate and Multifamily Residential
Financing Receivable, Credit Quality Indicator [Line Items]
2022	9,322	35,136
2021	37,819	30,224
2020	20,870	1,276
2019	542	998
2018	573	0
Prior	0	0
Term Total	69,126	67,634
Revolving	328,593	310,396
Total	397,719	378,030
Pass | Owner occupied loans | Commercial Real Estate and Multifamily Residential
Financing Receivable, Credit Quality Indicator [Line Items]
2022	20,705	135,861
2021	166,777	169,404
2020	174,001	124,117
2019	108,181	85,070
2018	78,260	78,155
Prior	126,142	93,925
Term Total	674,066	686,532
Revolving	28,228	29,611
Total	702,294	716,143
Pass | Nonowner occupied loans | Commercial Real Estate and Multifamily Residential
Financing Receivable, Credit Quality Indicator [Line Items]
2022	41,921	146,342
2021	142,070	154,433
2020	146,588	107,262
2019	105,635	19,054
2018	21,701	31,023
Prior	87,080	59,154
Term Total	544,995	517,268
Revolving	47,604	44,362
Total	592,599	561,630
Pass | Multifamily loans | Commercial Real Estate and Multifamily Residential
Financing Receivable, Credit Quality Indicator [Line Items]
2022	2,665	84,678
2021	67,930	53,195
2020	37,909	36,575
2019	36,337	12,286
2018	11,969	14,574
Prior	21,061	9,793
Term Total	177,871	211,101
Revolving	13,605	13,434
Total	191,476	224,535
Pass | Loans secured by farmland | Agri-business and agricultural loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	4,748	47,532
2021	46,921	37,035
2020	35,089	16,249
2019	12,005	10,469
2018	10,034	10,454
Prior	25,189	17,021
Term Total	133,986	138,760
Revolving	24,532	61,774
Total	158,518	200,534
Pass | Loans for agricultural production | Agri-business and agricultural loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	1,573	36,238
2021	31,444	25,855
2020	24,820	4,224
2019	3,985	11,072
2018	10,372	1,331
Prior	5,356	4,178
Term Total	77,550	82,898
Revolving	166,721	138,142
Total	244,271	221,040
Pass | Closed end first mortgage loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	1,360	14,635
2021	13,558	16,173
2020	15,386	5,312
2019	5,197	5,903
2018	5,722	3,049
Prior	4,604	3,221
Term Total	45,827	48,293
Revolving	6,191	5,005
Total	52,018	53,298
Pass | Open end and junior lien loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	679
2021	662	379
2020	374	159
2019	115	313
2018	103	0
Prior	0	0
Term Total	1,254	1,530
Revolving	4,900	5,074
Total	6,154	6,604
Pass | Other consumer loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	78	3,401
2021	2,302	957
2020	787	1,523
2019	1,167	0
2018	0	1,155
Prior	1,088	0
Term Total	5,422	7,036
Revolving	17,046	12,998
Total	22,468	20,034
Special Mention | Other commercial loans
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	0
2021	0	0
2020	0	0
2019	0	0
2018	0	0
Prior	3,649	3,798
Term Total	3,649	3,798
Revolving	0	0
Total	3,649	3,798
Special Mention | Working capital lines of credit loans | Commercial and industrial loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	0
2021	0	0
2020	0	0
2019	0	0
2018	0	0
Prior	0	0
Term Total	0	0
Revolving	59,209	60,441
Total	59,209	60,441
Special Mention | Non-working capital loans | Commercial and industrial loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	209	17,728
2021	16,535	0
2020	0	225
2019	216	979
2018	635	2,350
Prior	3,657	1,426
Term Total	21,252	22,708
Revolving	79	0
Total	21,331	22,708
Special Mention | Construction and land development loans | Commercial Real Estate and Multifamily Residential
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0
2021	0
2020	0
2019	0
2018	0
Prior	0
Term Total	0
Revolving	56
Total	56
Special Mention | Owner occupied loans | Commercial Real Estate and Multifamily Residential
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	6,555
2021	6,277	0
2020	0	880
2019	865	933
2018	909	7,387
Prior	9,180	1,235
Term Total	17,231	16,990
Revolving	0	0
Total	17,231	16,990
Special Mention | Nonowner occupied loans | Commercial Real Estate and Multifamily Residential
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	11,825
2021	11,667	331
2020	307	0
2019	0	0
2018	0	0
Prior	14,120	14,253
Term Total	26,094	26,409
Revolving	0	0
Total	26,094	26,409
Special Mention | Multifamily loans | Commercial Real Estate and Multifamily Residential
Financing Receivable, Credit Quality Indicator [Line Items]
2022	22,178	0
2021	0	0
2020	0	0
2019	0	0
2018	0	22,252
Prior	0	0
Term Total	22,178	22,252
Revolving	0	0
Total	22,178	22,252
Special Mention | Loans secured by farmland | Agri-business and agricultural loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	0
2021	0	1,985
2020	1,985	2,303
2019	2,278	0
2018	0	180
Prior	210	30
Term Total	4,473	4,498
Revolving	899	918
Total	5,372	5,416
Special Mention | Loans for agricultural production | Agri-business and agricultural loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	448
2021	432	8,642
2020	7,727	1,171
2019	1,160	0
2018	0	0
Prior	0	0
Term Total	9,319	10,261
Revolving	5,905	8,272
Total	15,224	18,533
Special Mention | Closed end first mortgage loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022		0
2021		0
2020		0
2019		0
2018		0
Prior		1,274
Term Total		1,274
Revolving		0
Total		1,274
Substandard | Working capital lines of credit loans | Commercial and industrial loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	0
2021	0	0
2020	74	35
2019	0	0
2018	0	0
Prior	0	0
Term Total	74	35
Revolving	18,542	25,928
Total	18,616	25,963
Substandard | Non-working capital loans | Commercial and industrial loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	2,996
2021	2,937	6,948
2020	6,380	1,091
2019	862	2,534
2018	2,370	5,465
Prior	5,217	426
Term Total	17,766	19,460
Revolving	3,835	3,321
Total	21,601	22,781
Substandard | Owner occupied loans | Commercial Real Estate and Multifamily Residential
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	489
2021	473	1,570
2020	1,679	909
2019	894	1,758
2018	1,161	694
Prior	236	238
Term Total	4,443	5,658
Revolving	0	0
Total	4,443	5,658
Substandard | Loans secured by farmland | Agri-business and agricultural loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	207
2021	0	0
2020	0	0
2019	0	0
2018	190	0
Prior	145	145
Term Total	335	352
Revolving	0	0
Total	335	352
Substandard | Closed end first mortgage loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0
2021	0
2020	0
2019	0
2018	88
Prior	3,050
Term Total	3,138
Revolving	0
Total	3,138
Substandard | Open end and junior lien loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	0
2021	0	0
2020	0	0
2019	0	0
2018	0	0
Prior	2	0
Term Total	2	0
Revolving	26	98
Total	28	98
Substandard | Other consumer loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	0	36
2021	0	23
2020	22	230
2019	219	0
2018	0	0
Prior	0	0
Term Total	241	289
Revolving	41	0
Total	282	289
Not Rated | Non-working capital loans | Commercial and industrial loans:
Financing Receivable, Credit Quality Indicator [Line Items]
2022	399	2,265
2021	2,105	1,758
2020	1,627	837
2019	710	563
2018	417	128
Prior	96	14
Term Total	5,354	5,565
Revolving	0	0
Total	5,354	5,565
Not Rated | Closed end first mortgage loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	8,079	45,089
2021	47,296	27,738
2020	24,338	9,248
2019	8,764	5,217
2018	4,069	7,628
Prior	32,489	26,321
Term Total	125,035	121,241
Revolving	0	482
Total	125,035	121,723
Not Rated | Open end and junior lien loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	14,626	21,945
2021	18,637	5,624
2020	4,667	5,987
2019	4,967	3,899
2018	2,976	1,653
Prior	3,304	1,526
Term Total	49,177	40,634
Revolving	104,879	110,523
Total	154,056	151,157
Not Rated | Residential construction loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	1,420	7,926
2021	6,189	1,537
2020	1,158	960
2019	892	138
2018	136	171
Prior	1,278	1,125
Term Total	11,073	11,857
Revolving	0	0
Total	11,073	11,857
Not Rated | Other consumer loans | Consumer 1-4 Family Mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2022	5,320	21,652
2021	19,432	14,931
2020	13,237	7,474
2019	6,122	5,844
2018	4,878	1,890
Prior	2,509	1,203
Term Total	51,498	52,994
Revolving	8,947	9,227
Total	$ 60,445	$ 62,221

XML

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY - Aging Of The Amortized Cost In Past Due Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	$ 4,353,714	$ 4,287,841
Total Nonaccrual	13,900	14,973
Nonaccrual With No Allowance For Credit Loss	6,468	7,711
Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	4,350,026	4,286,997
30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	3,670	727
Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	18	117
Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	4,339,814	4,272,868
Commercial and industrial loans: | Working capital lines of credit loans
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	678,654	652,927
Total Nonaccrual	4,316	5,966
Nonaccrual With No Allowance For Credit Loss	238	5,200
Commercial and industrial loans: | Working capital lines of credit loans | Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	678,654	652,903
Commercial and industrial loans: | Working capital lines of credit loans | 30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	0	24
Commercial and industrial loans: | Working capital lines of credit loans | Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	0	0
Commercial and industrial loans: | Working capital lines of credit loans | Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	674,338	646,961
Commercial and industrial loans: | Non-working capital loans
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	784,435	735,659
Total Nonaccrual	5,572	4,596
Nonaccrual With No Allowance For Credit Loss	4,546	229
Commercial and industrial loans: | Non-working capital loans | Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	781,306	735,658
Commercial and industrial loans: | Non-working capital loans | 30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	3,129	1
Commercial and industrial loans: | Non-working capital loans | Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	0	0
Commercial and industrial loans: | Non-working capital loans | Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	778,863	731,063
Commercial Real Estate and Multifamily Residential | Construction and land development loans
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	397,775	378,030
Total Nonaccrual	0	0
Nonaccrual With No Allowance For Credit Loss	0	0
Commercial Real Estate and Multifamily Residential | Construction and land development loans | Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	397,775	378,030
Commercial Real Estate and Multifamily Residential | Construction and land development loans | 30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	0	0
Commercial Real Estate and Multifamily Residential | Construction and land development loans | Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	0	0
Commercial Real Estate and Multifamily Residential | Construction and land development loans | Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	397,775	378,030
Commercial Real Estate and Multifamily Residential | Owner occupied loans
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	723,968	738,791
Total Nonaccrual	3,156	3,634
Nonaccrual With No Allowance For Credit Loss	1,516	2,129
Commercial Real Estate and Multifamily Residential | Owner occupied loans | Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	723,968	738,791
Commercial Real Estate and Multifamily Residential | Owner occupied loans | 30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	0	0
Commercial Real Estate and Multifamily Residential | Owner occupied loans | Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	0	0
Commercial Real Estate and Multifamily Residential | Owner occupied loans | Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	720,812	735,157
Commercial Real Estate and Multifamily Residential | Nonowner occupied loans
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	618,693	588,039
Total Nonaccrual	0	0
Nonaccrual With No Allowance For Credit Loss	0	0
Commercial Real Estate and Multifamily Residential | Nonowner occupied loans | Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	618,693	588,039
Commercial Real Estate and Multifamily Residential | Nonowner occupied loans | 30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	0	0
Commercial Real Estate and Multifamily Residential | Nonowner occupied loans | Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	0	0
Commercial Real Estate and Multifamily Residential | Nonowner occupied loans | Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	618,693	588,039
Commercial Real Estate and Multifamily Residential | Multifamily loans
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	213,654	246,787
Total Nonaccrual	0	0
Nonaccrual With No Allowance For Credit Loss	0	0
Commercial Real Estate and Multifamily Residential | Multifamily loans | Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	213,654	246,787
Commercial Real Estate and Multifamily Residential | Multifamily loans | 30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	0	0
Commercial Real Estate and Multifamily Residential | Multifamily loans | Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	0	0
Commercial Real Estate and Multifamily Residential | Multifamily loans | Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	213,654	246,787
Agri-business and agricultural loans: | Loans secured by farmland
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	164,225	206,302
Total Nonaccrual	335	335
Nonaccrual With No Allowance For Credit Loss	0	0
Agri-business and agricultural loans: | Loans secured by farmland | Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	164,225	206,302
Agri-business and agricultural loans: | Loans secured by farmland | 30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	0	0
Agri-business and agricultural loans: | Loans secured by farmland | Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	0	0
Agri-business and agricultural loans: | Loans secured by farmland | Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	163,890	205,967
Agri-business and agricultural loans: | Loans for agricultural production
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	259,495	239,573
Total Nonaccrual	0	0
Nonaccrual With No Allowance For Credit Loss	0	0
Agri-business and agricultural loans: | Loans for agricultural production | Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	259,495	239,573
Agri-business and agricultural loans: | Loans for agricultural production | 30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	0	0
Agri-business and agricultural loans: | Loans for agricultural production | Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	0	0
Agri-business and agricultural loans: | Loans for agricultural production | Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	259,495	239,573
Agri-business and agricultural loans: | Other commercial loans
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	78,118	73,178
Total Nonaccrual	0	0
Nonaccrual With No Allowance For Credit Loss	0	0
Agri-business and agricultural loans: | Other commercial loans | Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	78,118	73,178
Agri-business and agricultural loans: | Other commercial loans | 30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	0	0
Agri-business and agricultural loans: | Other commercial loans | Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	0	0
Agri-business and agricultural loans: | Other commercial loans | Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	78,118	73,178
Consumer 1-4 Family Mortgage | Closed end first mortgage loans
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	180,191	176,295
Total Nonaccrual	211	55
Nonaccrual With No Allowance For Credit Loss	140	55
Consumer 1-4 Family Mortgage | Closed end first mortgage loans | Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	179,872	175,678
Consumer 1-4 Family Mortgage | Closed end first mortgage loans | 30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	301	500
Consumer 1-4 Family Mortgage | Closed end first mortgage loans | Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	18	117
Consumer 1-4 Family Mortgage | Closed end first mortgage loans | Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	179,980	176,240
Consumer 1-4 Family Mortgage | Open end and junior lien loans
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	160,238	157,859
Total Nonaccrual	28	98
Nonaccrual With No Allowance For Credit Loss	28	98
Consumer 1-4 Family Mortgage | Open end and junior lien loans | Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	160,043	157,729
Consumer 1-4 Family Mortgage | Open end and junior lien loans | 30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	195	130
Consumer 1-4 Family Mortgage | Open end and junior lien loans | Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	0	0
Consumer 1-4 Family Mortgage | Open end and junior lien loans | Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	160,210	157,761
Consumer 1-4 Family Mortgage | Residential construction loans
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	11,073	11,857
Total Nonaccrual	0	0
Nonaccrual With No Allowance For Credit Loss	0	0
Consumer 1-4 Family Mortgage | Residential construction loans | Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	11,073	11,857
Consumer 1-4 Family Mortgage | Residential construction loans | 30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	0	0
Consumer 1-4 Family Mortgage | Residential construction loans | Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	0	0
Consumer 1-4 Family Mortgage | Residential construction loans | Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	11,073	11,857
Consumer 1-4 Family Mortgage | Other consumer loans
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	83,195	82,544
Total Nonaccrual	282	289
Nonaccrual With No Allowance For Credit Loss	0	0
Consumer 1-4 Family Mortgage | Other consumer loans | Loans Not Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	83,150	82,472
Consumer 1-4 Family Mortgage | Other consumer loans | 30-89 Days Past Due
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	45	72
Consumer 1-4 Family Mortgage | Other consumer loans | Greater than 89 Days Past Due and Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Greater than 89 Days Past Due and Accruing	0	0
Consumer 1-4 Family Mortgage | Other consumer loans | Total Accruing
Financing Receivable, Amortized Cost, Aging [Abstract]
Loans	$ 82,913	$ 82,255

XML

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY - Amortized Cost Basis Of Collateral Dependent Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Collateral Dependent Loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Real Estate	$ 5,974	$ 6,312
General Business  Assets	16,667	17,091
Other	1,453	1,449
Total	24,094	24,950
Commercial and industrial loans: | Working capital lines of credit loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Real Estate	74	0
General Business  Assets	5,497	5,966
Other	0	0
Total	5,571	5,966
Commercial and industrial loans: | Non-working capital loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Real Estate	1,581	1,606
General Business  Assets	9,525	9,475
Other	229	229
Total	11,335	11,310
Commercial Real Estate and Multifamily Residential | Owner occupied loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Real Estate	960	1,435
General Business  Assets	1,500	1,505
Other	1,161	1,161
Total	3,621	4,101
Agri-business and agricultural loans: | Loans secured by farmland
Financing Receivable, Allowance for Credit Loss [Line Items]
Real Estate	190	190
General Business  Assets	145	145
Other	0	0
Total	335	335
Consumer 1-4 Family Mortgage | Closed end first mortgage loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Real Estate	3,141	3,081
General Business  Assets	0	0
Other	0	0
Total	3,141	3,081
Consumer 1-4 Family Mortgage | Open end and junior lien loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Real Estate	28	98
General Business  Assets	0	0
Other	0	0
Total	28	98
Consumer 1-4 Family Mortgage | Other consumer loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Real Estate	0	0
General Business  Assets	0	0
Other	63	59
Total	$ 63	$ 59

XML

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY - Troubled Debt Restructuring (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY
Accruing troubled debt restructured loans	$ 4,976
Nonaccrual troubled debt restructured loans	6,443
Total troubled debt restructured loans	$ 11,419
Accruing troubled debt restructured loans		$ 5,121
Nonaccrual troubled debt restructured loans		6,218
Total troubled debt restructured loans		$ 11,339

XML

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY - Loans By Class Modified As Troubled Debt Restructuring (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) loan	Mar. 31, 2021 loan
All Modifications
Financing Receivable, Modifications
Number of Loans | loan	1
Commercial and industrial loans:
Financing Receivable, Modifications
Pre-Modification Outstanding Recorded Investment	$ 226
Post-Modification Outstanding Recorded Investment	226
Commercial and industrial loans: | Working capital lines of credit loans
Financing Receivable, Modifications
Pre-Modification Outstanding Recorded Investment	226
Post-Modification Outstanding Recorded Investment	$ 226
Commercial and industrial loans: | Working capital lines of credit loans | All Modifications
Financing Receivable, Modifications
Number of Loans | loan	1
Total consumer loans
Financing Receivable, Modifications
Number of Loans | loan	1	0

XML

BORROWINGS - Long-term Borrowings (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Federal Home Loan Bank Advance, ten-year, putable six-month Bermudan fixed-rate, Due March 4, 2030
Debt Instrument [Line Items]
Debt instrument, term	10 years
Debt instrument, interest rate, stated percentage (as a percent)	0.39%
Federal Home Loan Bank Advances
Debt Instrument [Line Items]
Long-term Federal Home Loan Bank advances	$ 75.0	$ 75.0

XML

BORROWINGS - Revolving Credit Agreement (Details) - Unsecured revolving credit agreement - USD ($)	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Aug. 02, 2019
Line of Credit Facility [Line Items]
Maximum borrowing capacity			$ 30,000,000
Debt instrument, term	1 year
Outstanding borrowings	$ 0	$ 0

XML

FAIR VALUE DISCLOSURES - Additional Information (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)	3.39%
Mortgage servicing rights	$ 2,700,000
Amortized cost	3,000,000
Mortgage servicing rights, impairment	$ 355,000
Weighted average maturity of residential mortgages	21 years
Qualitative information used to estimate fair value	228	249
Discount rate used to estimate fair value	9.50%	9.50%
Minimum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Amount of variance	$ 100,000
Minimum | Commercial Real Estates | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)	0.00%
Minimum | Inventory Finished Goods | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)	35.00%
Minimum | Finished Goods | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)	30.00%
Minimum | Inventory Work In Process | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)	50.00%
Minimum | Equipment | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)	30.00%
Minimum | Marketable Securities | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)	10.00%
Maximum | Commercial Real Estates | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)	50.00%
Maximum | Inventory Finished Goods | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)	65.00%
Maximum | Finished Goods | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)	60.00%
Maximum | Inventory Work In Process | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)	100.00%
Maximum | Equipment | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)	70.00%
Maximum | Marketable Securities | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)	30.00%
Municipal Notes | Minimum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of variance	(5.00%)
Municipal Notes | Maximum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of variance	5.00%
US Government Agencies Short-term Debt Securities | Minimum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of variance	(3.00%)
US Government Agencies Short-term Debt Securities | Maximum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of variance	3.00%
U.S. Treasury securities | Minimum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of variance	(1.00%)
U.S. Treasury securities | Maximum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of variance	1.00%

XML

FAIR VALUE DISCLOSURES - Assets and Liabilities Measured At Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Assets:
Total debt securities	$ 1,522,535	$ 1,398,558
Debt Securities, Available-for-sale, Total		1,398,558
Mortgage banking derivative	19,485	14,309
Interest rate swap derivative	19,485	14,309
Liabilities:
Mortgage banking derivative	19,499	14,329
Interest rate swap derivative	19,499	14,329
Fair Value, Measurements, Recurring
Assets:
U.S. Treasury securities	2,246	900
U.S. government sponsored agency securities	152,892	143,452
Mortgage-backed securities: residential	596,321	486,676
Mortgage-backed securities: commercial	96	523
State and municipal securities	770,980	767,007
Total debt securities	1,522,535
Debt Securities, Available-for-sale, Total		1,398,558
Mortgage banking derivative	257	398
Interest rate swap derivative	19,485	14,309
Total assets	1,542,277	1,413,265
Liabilities:
Mortgage banking derivative	3	2
Interest rate swap derivative	19,499	14,329
Total liabilities	19,502	14,331
Level 1 | Fair Value, Measurements, Recurring
Assets:
U.S. Treasury securities	2,246	900
U.S. government sponsored agency securities	0	0
Mortgage-backed securities: residential	0	0
Mortgage-backed securities: commercial	0	0
State and municipal securities	0	0
Total debt securities	2,246
Debt Securities, Available-for-sale, Total		900
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total assets	2,246	900
Liabilities:
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total liabilities	0	0
Level 2 | Fair Value, Measurements, Recurring
Assets:
U.S. Treasury securities	0	0
U.S. government sponsored agency securities	152,892	143,452
Mortgage-backed securities: residential	596,321	486,676
Mortgage-backed securities: commercial	96	523
State and municipal securities	768,663	764,964
Total debt securities	1,517,972
Debt Securities, Available-for-sale, Total		1,395,615
Mortgage banking derivative	257	398
Interest rate swap derivative	19,485	14,309
Total assets	1,537,714	1,410,322
Liabilities:
Mortgage banking derivative	3	2
Interest rate swap derivative	19,499	14,329
Total liabilities	19,502	14,331
Level 3 | Fair Value, Measurements, Recurring
Assets:
U.S. Treasury securities	0	0
U.S. government sponsored agency securities	0	0
Mortgage-backed securities: residential	0	0
Mortgage-backed securities: commercial	0	0
State and municipal securities	2,317	2,043
Total debt securities	2,317
Debt Securities, Available-for-sale, Total		2,043
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total assets	2,317	2,043
Liabilities:
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total liabilities	$ 0	$ 0

XML

FAIR VALUE DISCLOSURES - Assets Measured at Fair Value on a Nonrecurring Basis (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 6,180	$ 6,364
Other real estate owned	196	196
Total assets	6,376	6,560
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Other real estate owned	0	0
Total assets	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Other real estate owned	0	0
Total assets	0	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	6,180	6,364
Other real estate owned	196	196
Total assets	6,376	6,560
Commercial and industrial loans:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	5,069	5,342
Commercial and industrial loans: | Working capital lines of credit loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	353	247
Commercial and industrial loans: | Working capital lines of credit loans | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Commercial and industrial loans: | Working capital lines of credit loans | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Commercial and industrial loans: | Working capital lines of credit loans | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	353	247
Commercial and industrial loans: | Non-working capital loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	4,716	5,095
Commercial and industrial loans: | Non-working capital loans | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Commercial and industrial loans: | Non-working capital loans | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Commercial and industrial loans: | Non-working capital loans | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	4,716	5,095
Commercial Real Estate and Multifamily Residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	880	791
Commercial Real Estate and Multifamily Residential | Owner occupied loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	880	791
Commercial Real Estate and Multifamily Residential | Owner occupied loans | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Commercial Real Estate and Multifamily Residential | Owner occupied loans | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Commercial Real Estate and Multifamily Residential | Owner occupied loans | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	880	791
Agri-business and agricultural loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	231	231
Agri-business and agricultural loans | Loans secured by farmland
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	231	231
Agri-business and agricultural loans | Loans secured by farmland | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Agri-business and agricultural loans | Loans secured by farmland | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Agri-business and agricultural loans | Loans secured by farmland | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 231	$ 231

XML

FAIR VALUE DISCLOSURES - Valuation Methodology and Unobservable Inputs for Level 3 Assets (Details) - Fair Value, Measurements, Nonrecurring $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Fair Value	$ 6,180	$ 6,364
Commercial and industrial loans:
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Fair Value	$ 5,069	$ 5,342
Valuation Methodology	Collateral based measurements	Collateral based measurements
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	Discount to reflect current market conditions and ultimate collectability
Commercial and industrial loans: | Average
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Average	0.65	0.65
Commercial and industrial loans: | Minimum
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Average	0.21	0.22
Commercial and industrial loans: | Maximum
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Average	0.99	0.99
Commercial Real Estate and Multifamily Residential
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Fair Value	$ 880	$ 791
Valuation Methodology	Collateral based measurements	Collateral based measurements
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	Discount to reflect current market conditions and ultimate collectability
Commercial Real Estate and Multifamily Residential | Average
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Average	0.46	0.51
Commercial Real Estate and Multifamily Residential | Minimum
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Average	0.34	0.34
Commercial Real Estate and Multifamily Residential | Maximum
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Average	0.68	0.68
Agri-business and agricultural loans
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Fair Value	$ 231	$ 231
Valuation Methodology	Collateral based measurements	Collateral based measurements
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	Discount to reflect current market conditions and ultimate collectability
Agri-business and agricultural loans | Average
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Average	0.36	0.35
Agri-business and agricultural loans | Minimum
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Average	0.03	0.03
Agri-business and agricultural loans | Maximum
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Average	0.68	0.68
Other Real Estate Owned
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Fair Value	$ 196	$ 196
Valuation Methodology	Appraisals	Appraisals
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	Discount to reflect current market conditions and ultimate collectability
Other Real Estate Owned | Average
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Average	0.38	0.38

XML

FAIR VALUE DISCLOSURES - Estimated Fair Values And The Related Carrying Values Of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Financial Assets:
Cash and cash equivalents	$ 475,024	$ 683,240
Securities available-for-sale (carried at fair value)	1,522,535	1,398,558
Securities available-for-sale (carried at fair value)		1,398,558
Real estate mortgages held-for-sale	2,270	7,634
Loans, net	4,169,000	4,144,000
Mortgage banking derivative	257	398
Interest rate swap derivative	19,485	14,309
Accrued interest receivable	19,448	17,674
Financial Liabilities:
Certificates of deposit	(817,622)	(833,617)
All other deposits	(5,006,360)	(4,905,889)
Federal Home Loan Bank advances	(61,200)	(66,118)
Mortgage banking derivative	(3)	(2)
Interest rate swap derivative	(19,499)	(14,329)
Standby letters of credit	(202)	(272)
Accrued interest payable	(2,303)	(2,619)
Carrying Value
Financial Assets:
Cash and cash equivalents	475,024	683,240
Securities available-for-sale (carried at fair value)	1,522,535
Securities available-for-sale (carried at fair value)		1,398,558
Real estate mortgages held-for-sale	2,234	7,470
Loans, net	4,286,188	4,220,068
Mortgage banking derivative	257	398
Interest rate swap derivative	19,485	14,309
Federal Reserve and Federal Home Loan Bank Stock	12,840	13,772
Accrued interest receivable	19,448	17,674
Financial Liabilities:
Certificates of deposit	(814,263)	(829,518)
All other deposits	(5,006,360)	(4,905,889)
Federal Home Loan Bank advances	(75,000)	(75,000)
Mortgage banking derivative	(3)	(2)
Interest rate swap derivative	(19,499)	(14,329)
Standby letters of credit	(202)	(272)
Accrued interest payable	(2,303)	(2,619)
Level 1 | Estimated Fair Value
Financial Assets:
Cash and cash equivalents	473,561	681,286
Securities available-for-sale (carried at fair value)	2,246
Securities available-for-sale (carried at fair value)		900
Real estate mortgages held-for-sale	0	0
Loans, net	0	0
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Accrued interest receivable	0	0
Financial Liabilities:
Certificates of deposit	0	0
All other deposits	(5,006,360)	(4,905,889)
Federal Home Loan Bank advances	0	0
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Standby letters of credit	0	0
Accrued interest payable	(88)	(84)
Level 2 | Estimated Fair Value
Financial Assets:
Cash and cash equivalents	1,463	1,954
Securities available-for-sale (carried at fair value)	1,517,972
Securities available-for-sale (carried at fair value)		1,395,615
Real estate mortgages held-for-sale	2,270	7,634
Loans, net	0	0
Mortgage banking derivative	257	398
Interest rate swap derivative	19,485	14,309
Accrued interest receivable	9,162	7,689
Financial Liabilities:
Certificates of deposit	(817,622)	(833,617)
All other deposits	0	0
Federal Home Loan Bank advances	(61,200)	(66,118)
Mortgage banking derivative	(3)	(2)
Interest rate swap derivative	(19,499)	(14,329)
Standby letters of credit	0	0
Accrued interest payable	(2,215)	(2,535)
Level 3 | Estimated Fair Value
Financial Assets:
Cash and cash equivalents	0	0
Securities available-for-sale (carried at fair value)	2,317
Securities available-for-sale (carried at fair value)		2,043
Real estate mortgages held-for-sale	0	0
Loans, net	4,169,000	4,144,000
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Accrued interest receivable	10,286	9,985
Financial Liabilities:
Certificates of deposit	0	0
All other deposits	0	0
Federal Home Loan Bank advances	0	0
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Standby letters of credit	(202)	(272)
Accrued interest payable	$ 0	$ 0

XML

OFFSETTING ASSETS AND LIABILITIES - Schedule of Offsetting of Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Assets
Gross Amounts of Recognized Assets/Liabilities	$ 19,485	$ 14,309
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts presented in the Statement of Financial Position	19,485	14,309
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Position	(15,415)	(2,255)
Net Amount	4,070	12,054
Liabilities
Gross Amounts of Recognized Liabilities	19,499	14,329
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts presented in the Statement of Financial Position	19,499	14,329
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Position	(90)	(7,995)
Net Amounts presented in the Statement of Financial Position	19,409	6,334
Interest Rate Swap Derivatives
Assets
Gross Amounts of Recognized Assets/Liabilities	19,485	14,309
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts presented in the Statement of Financial Position	19,485	14,309
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Position	(15,415)	(2,255)
Net Amount	4,070	12,054
Liabilities
Gross Amounts of Recognized Liabilities	19,499	14,329
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts presented in the Statement of Financial Position	19,499	14,329
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Position	(90)	(7,995)
Net Amounts presented in the Statement of Financial Position	$ 19,409	$ 6,334

XML

EARNINGS PER SHARE - Earnings Per Share Computations (Details) - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Earnings Per Share [Abstract]
Number of antidilutive shares	0	0
Weighted average shares outstanding for basic earnings per common share	25,515,271	25,457,659
Dilutive effect of stock based awards	175,101	92,452
Weighted average shares outstanding for diluted earnings per common share	25,690,372	25,550,111
Basic earnings per common share (in dollars per share)	$ 0.93	$ 0.90
Diluted earnings per common share (in dollars per share)	$ 0.92	$ 0.90

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME - Changes in Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ 704,906	$ 657,184
Net current period other comprehensive (loss) income	(109,780)	(12,634)
Ending balance	609,102	651,668
Total
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	16,093	27,744
Other comprehensive loss before reclassification	(109,807)	(12,084)
Amounts reclassified from accumulated other comprehensive income	27	(550)
Net current period other comprehensive (loss) income	(109,780)	(12,634)
Ending balance	(93,687)	15,110
Unrealized Gains and Losses on Available- for-Sales Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	17,056	29,182
Other comprehensive loss before reclassification	(109,807)	(12,084)
Amounts reclassified from accumulated other comprehensive income	0	(595)
Net current period other comprehensive (loss) income	(109,807)	(12,679)
Ending balance	(92,751)	16,503
Defined Benefit Pension Items
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(963)	(1,438)
Other comprehensive loss before reclassification	0	0
Amounts reclassified from accumulated other comprehensive income	27	45
Net current period other comprehensive (loss) income	27	45
Ending balance	$ (936)	$ (1,393)

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME - Reclassifications (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net securities gains	$ 0	$ 753
Other expense	3,239	2,244
Income tax expense	4,539	5,030
Net income	23,642	22,983
Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net income	(27)	550
Reclassification out of Accumulated Other Comprehensive Income | Unrealized Gains and Losses on Available- for-Sales Securities
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net securities gains		753
Income tax expense		(158)
Net income		595
Reclassification out of Accumulated Other Comprehensive Income | Defined Benefit Pension Items
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other expense	(36)	(60)
Income tax expense	9	15
Net income	$ (27)	$ (45)

XML

LEASES - Maturity Analysis (Details) $ in Thousands	Mar. 31, 2022 USD ($)
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
2022	$ 530
2023	717
2024	734
2025	752
2026	731
2027 and thereafter	2,938
Total undiscounted lease payments	6,402
Less imputed interest	$ (703)
Operating lease, liability, statement of financial position	Other liabilities
Lease liability	$ 5,699
Operating lease, right-of-use asset, statement of financial position	Other Assets
Right-of-use asset	$ 5,699

XML

LEASES - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Lease cost
Operating lease cost	$ 170	$ 135
Short-term lease cost	6	6
Total lease cost	$ 176	$ 141

XML

LEASES - Other Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Leases [Abstract]
Operating cash outflows from operating leases	$ 170	$ 135
Weighted-average remaining lease term - operating leases	8 years 10 months 24 days	8 years 7 months 6 days
Weighted average discount rate - operating leases	2.50%	2.80%