GERMAN AMERICAN BANCORP, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

GERMAN AMERICAN BANCORP, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

German American Bancorp, Inc. is a Nasdaq-traded (symbol: GABC) financial
holding company based in Jasper, Indiana. German American, through its banking
subsidiary German American Bank, operates 78 banking offices in 20 contiguous
southern Indiana counties and 14 Kentucky counties. The Company also owns an
investment brokerage subsidiary (German American Investment Services, Inc.) and
a full line property and casualty insurance agency (German American Insurance,
Inc.).

Throughout this Management's Discussion and Analysis, as elsewhere in this
Report, when we use the term "Company," we will usually be referring to the
business and affairs (financial and otherwise) of German American Bancorp, Inc.
and its subsidiaries and affiliates as a whole. Occasionally, we will refer to
the term "parent company" or "holding company" when we mean to refer to only
German American Bancorp, Inc.

This section presents an analysis of the consolidated financial condition of the
Company as of September 30, 2022 and December 31, 2021 and the consolidated
results of operations for the three and nine months ended September 30, 2022 and
2021. This discussion should be read in conjunction with the consolidated
financial statements and other financial data presented elsewhere herein and
with the financial statements and other financial data, as well as the
Management's Discussion and Analysis of Financial Condition and Results of
Operations, included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2021.

MANAGEMENT OVERVIEW

This updated discussion should be read in conjunction with management’s overview that was included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.


On January 1, 2022, the Company completed its acquisition of Citizens Union
Bancorp of Shelbyville, Inc. ("CUB"). CUB, headquartered in Shelbyville,
Kentucky, operated 15 retail banking offices located in Shelby, Jefferson,
Spencer, Bullitt, Oldham, Owen, Gallatin and Hardin counties in Kentucky through
its banking subsidiary, Citizens Union Bank of Shelbyville, Inc. As of the
closing of the transaction, CUB had total assets of approximately $1.109
billion, total loans of approximately $683.8 million, and total deposits of
approximately $930.5 million. The Company issued approximately 2.9 million
shares of its common stock, and paid approximately $50.8 million in cash, in
exchange for all of the issued and outstanding shares of common stock of CUB.

For more information regarding this acquisition, see Note 15 (Business combinations) in the Notes to the consolidated financial statements included in Item 1 of this Report.

Net profit for the quarter ended September 30, 2022 totaled $24,596,000Where
$0.83 per share, up 2% per share from third quarter 2021 net income of $21,486,000Where $0.81 per share.


Net income for the nine months ended September 30, 2022 totaled $57,410,000, or
$1.95 per share, a decline of 20% on a per share basis compared with the first
nine months of 2021 net income of $64,865,000, or $2.44 per share. The change in
net income during the first nine months of 2022, compared with the same period
of 2021, was largely impacted by acquisition-related expenses for the CUB
transaction that closed on January 1, 2022. The first nine months of 2022
results of operations included acquisition-related expenses of $12,276,000
($9,336,000 or $0.32 per share, on an after tax basis) and also included Day 1
provision for credit losses under the CECL model of $6,300,000 ($4,725,000 or
$0.16 per share, on an after tax basis). The decline in per share net income for
the nine months ended September 30, 2022, as compared to the same period of
2021, was also impacted by the Company's January 1, 2022 issuance of
approximately 2.9 million shares of common stock as part of the merger
consideration in the CUB transaction.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES


The financial condition and results of operations for the Company presented in
the Consolidated Financial Statements, accompanying Notes to the Consolidated
Financial Statements, and selected financial data appearing elsewhere within
this Report, are, to a large degree, dependent upon the Company's accounting
policies. The selection of and application of these policies involve estimates,
judgments, and uncertainties that are subject to change. The critical accounting
policies and
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estimates that the Company has determined to be the most susceptible to change
in the near term relate to the determination of the allowance for credit losses,
the valuation of securities available for sale, income tax expense, and the
valuation of goodwill and other intangible assets.

Provision for credit losses


The Company maintains an allowance for credit losses to cover the estimated
expected credit losses over the expected contractual life of the loan portfolio.
Loan losses are charged against the allowance when management believes the
uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any,
are credited to the allowance. Allocations of the allowance may be made for
specific loans, but the entire allowance is available for any loan that, in
management's judgment, should be charged-off. A provision for credit losses is
charged to operations based on management's periodic evaluation of the necessary
allowance balance. Evaluations are conducted at least quarterly and more often
if deemed necessary. The ultimate recovery of all loans is susceptible to future
market factors beyond the Company's control.

The Company has an established process to determine the adequacy of the
allowance for credit losses. The determination of the allowance is inherently
subjective, as it requires significant estimates, including the amounts and
timing of expected future cash flows on individually analyzed loans, estimated
losses on other classified loans and pools of homogeneous loans, and
consideration of past loan loss experience, the nature and volume of the
portfolio, information about specific borrower situations and estimated
collateral values, economic conditions, reasonable and supportable forecasts and
other factors, all of which may be susceptible to significant change. The
allowance consists of two components of allocations, specific and general. These
two components represent the total allowance for credit losses deemed adequate
to cover expected credit losses over the expected life of the loan portfolio.

Commercial and agricultural loans are subject to a standardized grading process
administered by an internal loan review function. The need for specific reserves
is considered for credits when: (a) the customer's cash flow or net worth
appears insufficient to repay the loan; (b) the loan has been criticized in a
regulatory examination; (c) the loan is on non-accrual; or (d) other reasons
where the ultimate collectability of the loan is in question, or the loan
characteristics require special monitoring.

Specific reserves on individually analyzed loans are determined by comparing the
loan balance to the present value of expected cash flows or expected collateral
proceeds. Allocations are also applied to categories of loans not individually
analyzed but for which the rate of loss is expected to be greater than other
similar type loans, including non-performing consumer or residential real estate
loans. Such allocations are based on past loss experience, reasonable and
supportable forecasts and information about specific borrower situations and
estimated collateral values.

General allocations are made for commercial and agricultural loans that are
graded as substandard and special mention, but are not individually analyzed for
specific reserves as well as other pools of loans, including non-classified
loans, homogeneous portfolios of consumer and residential real estate loans, and
loans within certain industry categories believed to present unique risk of
loss.  General allocations of the allowance are primarily made based on
historical averages for loan losses for these portfolios along with reasonable
and supportable forecasts, judgmentally adjusted for economic, external and
internal quantitative and qualitative factors and portfolio trends. Economic
factors include evaluating changes in international, national, regional and
local economic and business conditions that affect the collectability of the
loan portfolio. Internal factors include evaluating changes in lending policies
and procedures; changes in the nature and volume of the loan portfolio; and
changes in experience, ability and depth of lending management and staff.

The allowance for credit losses for loans represents management's estimate of
all expected credit losses over the expected contractual life of the loan
portfolio. Determining the appropriateness and adequacy of the allowance is
complex and requires judgment by management about the effect of matters that are
inherently uncertain. Subsequent evaluations of the loan portfolio may result in
significant changes in the allowance for credit losses in future periods.

Valuation of securities


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, the Company
assesses whether we intend to sell, or it is more likely than not that we 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 income.
For available-for sale debt securities that do not meet the criteria, the
Company 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, the Company compares the present value of
cash flows expected to be collected from the security with the amortized cost
basis of
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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, net of applicable taxes. No allowance for credit
losses for available-for-sale debt securities was needed at September 30, 2022.
Accrued interest receivable on available-for-sale debt securities is excluded
from the estimate of credit losses. As of September 30, 2022, gross unrealized
gains on the securities available-for-sale portfolio totaled approximately
$117,000 and gross unrealized losses totaled approximately $391,011,000. The net
amount of these two items, net of applicable taxes, is included in other
comprehensive income.

Equity investments whose fair value is not easily determinable are recognized at cost, less depreciation, observable price changes being recognized in profit or loss.

income tax expense

Income tax expense includes estimates related to valuation allowance on deferred tax assets and potential losses related to exposure to tax audits deemed to occur.


A valuation allowance reduces deferred tax assets to the amount management
believes is more likely than not to be realized. In evaluating the realization
of deferred tax assets, management considers the likelihood that sufficient
taxable income of appropriate character will be generated within carry-back and
carry-forward periods, including consideration of available tax planning
strategies. Tax-related loss contingencies, including assessments arising from
tax examinations and tax strategies, are recorded as liabilities when the
likelihood of loss is probable and an amount or range of loss can be reasonably
estimated. In considering the likelihood of loss, management considers the
nature of the contingency, the progress of any examination or related protest or
appeal, the views of legal counsel and other advisors, experience of the Company
or other enterprises in similar matters, if any, and management's intended
response to any assessment.

Good will and other intangible assets


Goodwill resulting from business combinations represents the excess of the
purchase price over the fair value of the net assets of businesses acquired.
Goodwill resulting from business combinations is generally determined as the
excess of the fair value of the consideration transferred, plus the fair value
of any noncontrolling interests in the acquiree, over the fair value of the net
assets acquired and liabilities assumed as of the acquisition date. Goodwill and
intangible assets acquired in a purchase business combination and determined to
have an indefinite useful life are not amortized, but tested for impairment at
least annually. The Company has selected December 31 as the date to perform the
annual impairment test. Goodwill is the only intangible asset with an indefinite
life on the Company's balance sheet. No impairment to Goodwill was indicated
based on year-end testing and no triggering events occurred in 2022 causing
reassessment.

Intangible assets with definite useful lives are amortized over their estimated
useful lives to their estimated residual values. Other intangible assets consist
of core deposit and acquired customer relationship intangible assets. They are
initially measured at fair value and then are amortized over their estimated
useful lives, which range from 6 to 10 years.

RESULTS OF OPERATIONS

Net revenue:

Net profit for the quarter ended September 30, 2022 totaled $24,596,000Where
$0.83 per share, up 2% per share from third quarter 2021 net income of $21,486,000Where $0.81 per share.


Net income for the nine months ended September 30, 2022 totaled $57,410,000, or
$1.95 per share, a decline of 20% on a per share basis compared with the first
nine months of 2021 net income of $64,865,000, or $2.44 per share. The change in
net income during the first nine months of 2022, compared with the same period
of 2021, was largely impacted by acquisition-related expenses for the CUB
transaction that closed on January 1, 2022. The first nine months of 2022
results of operations included acquisition-related expenses of $12,276,000
($9,336,000 or $0.32 per share, on an after tax basis) and also included Day 1
provision for credit losses under the CECL model of $6,300,000 ($4,725,000 or
$0.16 per share, on an after tax basis). The decline in per share net income for
the nine months ended September 30, 2022, as compared to the same period of
2021, was also impacted by the Company's January 1, 2022 issuance of
approximately 2.9 million shares of common stock as part of the merger
consideration in the CUB transaction.

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Net interest income:


Net interest income is the Company's single largest source of earnings, and
represents the difference between interest and fees realized on earning assets,
less interest paid on deposits and borrowed funds. Several factors contribute to
the determination of net interest income and net interest margin, including the
volume and mix of earning assets, interest rates, and income taxes. Many factors
affecting net interest income are subject to control by management policies and
actions. Factors beyond the control of management include the general level of
credit and deposit demand, Federal Reserve Board monetary policy, and changes in
tax laws.

The following table summarizes net interest income (on a tax equivalent basis) for the three months ended September 30, 2022 and 2021. For tax equivalent adjustments, an effective tax rate of 21% was used for both periods(1).


                                                                                                  Average Balance Sheet
                                                                                      (Tax-equivalent basis / dollars in thousands)
                                                                     Three Months Ended                                             Three Months Ended
                                                                     September 30, 2022                                             September 30, 2021
                                                                               Income /                               Principal            Income /
                                                   Principal Balance           Expense          Yield / Rate           Balance             Expense          Yield / Rate
ASSETS
Federal Funds Sold and Other
Short-term Investments                           $      402,006              $   2,053               2.03  %       $    391,814          $     141               0.14  %
Securities:
Taxable                                               1,009,395                  5,276               2.09  %            857,394              3,261               1.52  %
Non-taxable                                             838,770                  7,679               3.66  %            788,128              5,937               3.01  %
Total Loans and Leases?²?                             3,676,862                 43,251               4.67  %          3,055,926             35,538               4.62  %
TOTAL INTEREST EARNING ASSETS                         5,927,033                 58,259               3.91  %          5,093,262             44,877               3.51  %
Other Assets                                            558,823                                                         384,892
Less: Allowance for Credit Losses                       (45,276)                                                        (40,687)
TOTAL ASSETS                                     $    6,440,580                                                    $  5,437,467

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing Demand, Savings
and Money Market Deposits                        $    3,477,902              $   3,131               0.36  %       $  2,737,358          $     663               0.10  %
Time Deposits                                           451,390                    466               0.41  %            395,114                476               0.48  %
FHLB Advances and Other Borrowings                      143,548                  1,229               3.39  %            190,252              1,149               2.40  %
TOTAL INTEREST-BEARING LIABILITIES                    4,072,840                  4,826               0.47  %          3,322,724              2,288               0.27  %
Demand Deposit Accounts                               1,738,237                                                       1,409,841
Other Liabilities                                        42,759                                                          46,268
TOTAL LIABILITIES                                     5,853,836                                                       4,778,833
Shareholders' Equity                                    586,744                                                         658,634
TOTAL LIBABILITIES AND
  SHAREHOLDERS' EQUITY                           $    6,440,580                                                    $  5,437,467

COST OF FUNDS                                                                                        0.32  %                                                     0.18  %
NET INTEREST INCOME                                                          $  53,433                                                   $  42,589
NET INTEREST MARGIN                                                                                  3.59  %                                                     3.33  %


(1) Effective tax rates have been determined as if interest earned on the Company’s investments in municipal bonds and loans were fully taxable. (2) Loans held for sale and outstanding loans have been included in average loans.


During the third quarter of 2022, net interest income, on a non tax-equivalent
basis, totaled $51,698,000, an increase of $10,411,000, or 25%, compared to the
third quarter of 2021 net interest income of $41,287,000. The increase in net
interest income during the third quarter of 2022 compared with the third quarter
of 2021 was primarily attributable to an improved net interest margin and a
higher level of earning assets driven largely by the CUB acquisition and deposit
growth, which led to a higher level of securities investment. These increases
were partially mitigated by a lower level of PPP loan fee recognition.

The tax equivalent net interest margin for the quarter ended September 30, 2022
was 3.59% compared with 3.33% in the third quarter of 2021. The improvement in
the net interest margin during the third quarter of 2022 was largely
attributable to increased market interest rates resulting in improved yields on
earning assets. The Company's net interest margin in both periods presented was
impacted by fees recognized as a part of the PPP and accretion of loan discounts
on acquired loans. The
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the impact of PPP fees and increased loan forgiveness was significantly lower in the third quarter of 2022 compared to the third quarter of 2021.


Fees recognized on PPP loans through net interest income totaled $46,000 during
the third quarter of 2022 and $4,111,000 during the third quarter of 2021. The
fees recognized related to the PPP were immaterial to the net interest margin on
an annualized basis in the third quarter of 2022 and 32 basis points in the
third quarter of 2021. Accretion of loan discounts on acquired loans contributed
approximately 7 basis points to the net interest margin in the third quarter of
2022 and 4 basis points in the third quarter of 2021. Accretion of discounts on
acquired loans totaled $1,099,000 during the third quarter of 2022 and $516,000
during the third quarter of 2021.

The following table summarizes net interest income (on a tax equivalent basis) for the nine months ended September 30, 2022 and 2021. For tax equivalent adjustments, an effective tax rate of 21% was used for both periods(1).


                                                                                                  Average Balance Sheet
                                                                                      (Tax-equivalent basis / dollars in thousands)
                                                                     Nine Months Ended                                              Nine Months Ended
                                                                     September 30, 2022                                             September 30, 2021
                                                                             Income /                                Principal            Income /
                                                  Principal Balance           Expense          Yield / Rate           Balance              Expense          Yield / Rate
ASSETS
Federal Funds Sold and Other
  Short-term Investments                         $      533,758            $    3,565               0.89  %       $    372,177          $      329               0.12  %
Securities:
Taxable                                               1,033,881                14,909               1.92  %            794,023               9,391               1.58  %
Non-taxable                                             869,039                22,204               3.41  %            681,153              15,928               3.12  %
Total Loans and Leases?²?                             3,664,506               122,331               4.46  %          3,094,214             105,263               4.55  %
TOTAL INTEREST EARNING ASSETS                         6,101,184               163,009               3.57  %          4,941,567             130,911               3.54  %
Other Assets                                            549,657                                                        400,058
Less: Allowance for Credit Losses                       (45,765)                                                       (44,612)
TOTAL ASSETS                                     $    6,605,076                                                   $  5,297,013

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing Demand, Savings
  and Money Market Deposits                      $    3,531,100            $    5,115               0.19  %       $  2,645,261          $    1,972               0.10  %
Time Deposits                                           490,483                 1,360               0.37  %            429,201               1,878               0.59  %
FHLB Advances and Other Borrowings                      157,761                 3,387               2.87  %            184,467               3,445               2.50  %
TOTAL INTEREST-BEARING LIABILITIES                    4,179,344                 9,862               0.32  %          3,258,929               7,295               0.30  %
Demand Deposit Accounts                               1,739,389                                                      1,352,519
Other Liabilities                                        44,017                                                         46,282
TOTAL LIABILITIES                                     5,962,750                                                      4,657,730
Shareholders' Equity                                    642,326                                                        639,283
TOTAL LIBABILITIES AND
  SHAREHOLDERS' EQUITY                           $    6,605,076                                                   $  5,297,013

COST OF FUNDS                                                                                       0.22  %                                                      0.20  %
NET INTEREST INCOME                                                        $  153,147                                                   $  123,616
NET INTEREST MARGIN                                                                                 3.35  %                                                      3.34  %

(1) Effective tax rates have been determined as if interest earned on the Company’s investments in municipal bonds and loans were fully taxable. (2) Loans held for sale and outstanding loans have been included in average loans.


During the first nine months of 2022, net interest income, on a non
tax-equivalent basis, totaled $148,203,000, an increase of $28,104,000, or 23%,
compared to the same period of 2021 net interest income of $120,099,000. The
increase in net interest income during the first nine months of 2022 compared
with same period of 2021 was primarily attributable to a higher level of earning
assets driven by both the CUB acquisition and deposit growth, which led to a
higher level of securities and short-term investments. Such increase was
partially mitigated by a lower level of PPP loan fee recognition.

The tax equivalent net interest margin for the nine months ended September 30,
2022 was 3.35% compared with 3.34% for the same period of 2021. Excluding the
impact of the PPP fees as well as accretion on loan discounts, there was
improvement in the Company's net interest margin for the first nine months of
2022 largely attributable to improved yields on earning assets driven by
increased market interest rates.
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Fees recognized on PPP loans through net interest income totaled $873,000 during
the first nine months of 2022 and $9,894,000 during the same period of 2021. The
fees recognized related to the PPP contributed approximately 3 basis points to
the net interest margin on an annualized basis in the first nine months of 2022
and 27 basis points in the same period of 2021. Accretion of loan discounts on
acquired loans contributed approximately 12 basis points to the net interest
margin in the first nine months of 2022 and 6 basis points in the first nine
months of 2021. Accretion of discounts on acquired loans totaled $3,739,000
during the first nine months of 2022 and $2,054,000 during the first nine months
of 2021.

Provision for Credit Losses:

The Company provides for credit losses through regular provisions to the
allowance for credit losses. The provision is affected by net charge-offs on
loans and changes in specific and general allocations of the allowance. During
the quarter ended September 30, 2022, the Company recorded a provision for
credit losses of $350,000 compared with a negative provision for credit losses
of $2,000,000 during the third quarter of 2021.

During the nine months ended September 30, 2022, the Company recorded a
provision for credit losses of $5,850,000 compared with the first nine months of
2021 negative provision for credit losses of $8,500,000. During the first
quarter of 2022, the provision for credit losses included $6,300,000 for the Day
1 CECL addition to the allowance for credit loss related to the CUB acquisition
for the non-PCD loans. The negative provision for credit losses in the third
quarter of 2021 as well as the first nine months of 2021 was largely due to a
decline in certain adversely criticized assets and improvement in certain
pandemic-related stressed sectors for which the Company had provided significant
levels of allowance for credit losses during 2020.

Net charge-offs totaled $682,000, or 7 basis points on an annualized basis, of
average loans outstanding during the third quarter of 2022 compared with
$197,000, or 3 basis points, of average loans during the third quarter of 2021.
Net charge-offs totaled $1,285,000 or 5 basis points on an annualized basis of
average loans outstanding during the nine months ended September 30, 2022,
compared with $561,000 or 2 basis points on an annualized basis of average loans
outstanding during the same period of 2021.

The provision for credit losses made during the three and nine months ended
September 30, 2022 was made at a level deemed necessary by management to absorb
expected losses in the loan portfolio. A detailed evaluation of the adequacy of
the allowance for credit losses is completed quarterly by management, the
results of which are used to determine provision for credit losses. Management
estimates the allowance balance required using past loan loss experience, the
nature and volume of the portfolio, information about specific borrower
situations and estimated collateral values, economic conditions and reasonable
and supportable forecasts along with other qualitative and quantitative factors.

Non-interest income:


During the quarter ended September 30, 2022, non-interest income totaled
$14,097,000, a decrease of $1,459,000, or 9%, compared with the third quarter of
2021. The decrease in non-interest income during the third quarter of 2022
compared with the third quarter of 2021 was in large part attributable to the
sale of two branch office locations during the third quarter of 2021 and lower
volumes and lower pricing levels of loans sold in the secondary market.

Non-interest Income                           Three Months Ended                 Change From
(dollars in thousands)                           September 30,                  Prior Period
                                                                             Amount         Percent
                                              2022            2021           Change         Change
Wealth Management Fees                    $     2,376      $  2,690      $       (314)        (12) %
Service Charges on Deposit Accounts             3,014         2,017               997          49
Insurance Revenues                              1,995         2,007               (12)         (1)
Company Owned Life Insurance                      416           493               (77)        (16)
Interchange Fee Income                          4,054         3,339               715          21
Other Operating Income                          1,365         2,595            (1,230)        (47)
Subtotal                                       13,220        13,141                79           1
Net Gains on Sales of Loans                       854         2,197            (1,343)        (61)
Net Gains on Securities                            23           218              (195)        (89)
Total Non-interest Income                 $    14,097      $ 15,556      $     (1,459)         (9)


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Wealth management fees have fallen $314,000or 12%, during the third quarter of 2022 compared to the third quarter of 2021. The decline during the third quarter of 2022 was primarily due to the decline in the equity markets as a whole.


Service charges on deposit accounts increased $997,000, or 49%, during the third
quarter of 2022 compared with the third quarter of 2021. The increase during the
third quarter of 2022 was the result of the CUB acquisition as well as increased
deposit customer activity.

Interchange fee income increased $715,000, or 21%, during the quarter ended
September 30, 2022 compared with the third quarter of 2021. The increase in the
level of fees during the third quarter of 2022 compared with the third quarter
of 2021 was related to the CUB acquisition as well as increased card utilization
by customers.

Other operating income declined $1,230,000, or 47%, during the third quarter of
2022 compared with the same quarter of 2021. The decline during the third
quarter of 2022 compared with the third quarter of 2021 was primarily
attributable to the net gain of $1,378,000 related to the sale of the two branch
office locations during the third quarter of 2021.

Net gains on loan sales declined $1,343,000, or 61%, in the third quarter of 2022 compared to the third quarter of 2021. The decline in the third quarter of 2022 compared to the third quarter of 2021 was largely related to a lower volume of loans sold and lower price levels. Loan sales totaled $40.9 million in the third quarter of 2022 compared to $69.7 million during the third quarter of 2021.


During the nine months ended September 30, 2022, non-interest income totaled
$45,465,000, an increase of $970,000, or 2%, compared with the first half of
2021.

Non-interest Income                           Nine Months Ended                   Change From
(dollars in thousands)                          September 30,                    Prior Period
                                                                              Amount           Percent
                                              2022           2021             Change           Change
Wealth Management Fees                    $    7,656      $  7,668      $      (12)                -  %
Service Charges on Deposit Accounts            8,568         5,430           3,138                58
Insurance Revenues                             7,970         7,319             651                 9
Company Owned Life Insurance                   1,768         1,230             538                44
Interchange Fee Income                        11,848         9,651           2,197                23
Other Operating Income                         3,858         5,287          (1,429)              (27)
Subtotal                                      41,668        36,585           5,083                14
Net Gains on Sales of Loans                    3,324         6,417          (3,093)              (48)
Net Gains on Securities                          473         1,493          (1,020)              (68)
Total Non-interest Income                 $   45,465      $ 44,495      $      970                 2



Service charges on deposit accounts increased $3,138,000, or 58%, during the
first nine months of 2022 compared with the same period of 2021. The increase
during 2022 compared with 2021 was the result of the CUB acquisition as well as
increased deposit customer activity.

Company owned life insurance revenue increased $538,000, or 44%, during the nine
months ended September 30, 2022 compared with the first nine months of 2021. The
increase was largely related to death benefits received from life insurance
policies during 2022 and to the CUB acquisition.

Interchange fee income increased $2,197,000, or 23%, during the first nine
months of 2022 compared with the same period of 2021. The increase in the level
of fees during the first nine months of 2022 compared with the same period of
2021 was related to the CUB acquisition as well as increased card utilization by
customers.

Other operating income declined $1,429,000, or 27%, during the nine months ended
September 30, 2022 compared with the same period of 2021. This decline was
primarily attributable to the net gain of $1,378,000 related to the sale of the
two branch office locations during the third quarter of 2021.

Net gains on sales of loans declined $3,093,000, or 48%, during the first three
quarters of 2022 compared with the same period of 2021. The decline in 2022
compared with 2021 was generally attributable to a lower volume of loans sold
and lower pricing levels. Loan sales totaled $142.6 million during 2022 compared
with $200.0 million during 2021.

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The Company realized $473,000 in gains on sales of securities during the first
nine months of 2022 compared with $1,493,000 during the same period of 2021. The
sales of securities in both periods was done as part of modest shifts in the
allocations within the securities portfolio.

Non-interest charges:


During the quarter ended September 30, 2022, non-interest expense totaled
$34,716,000, an increase of $2,272,000, or 7%, compared with the third quarter
of 2021. The increase in non-interest expense in the third quarter of 2022
compared with the third quarter of 2021 was primarily related to the operating
costs for CUB.

Non-interest Expense                                Three Months Ended                Change From
(dollars in thousands)                                 September 30,                  Prior Period
                                                                                  Amount         Percent
                                                    2022            2021          Change         Change
Salaries and Employee Benefits                  $    19,751      $ 17,274      $     2,477          14  %
Occupancy, Furniture and Equipment Expense            3,685         3,453              232           7
FDIC Premiums                                           477           383               94          25
Data Processing Fees                                  2,712         2,006              706          35
Professional Fees                                     1,188         1,357             (169)        (12)
Advertising and Promotion                             1,215           897              318          35
Intangible Amortization                                 897           661              236          36
Other Operating Expenses                              4,791         6,413           (1,622)        (25)
Total Non-interest Expense                      $    34,716      $ 32,444      $     2,272           7



Salaries and benefits increased $2,477,000, or 14%, during the quarter ended
September 30, 2022 compared with the third quarter of 2021. The increase in
salaries and benefits during the third quarter of 2022 compared with the third
quarter of 2021 was largely related to the salaries and benefit costs for the
CUB employee base and a higher number of full time equivalent employees.

Data processing fees increased $706,000, or 35%, during the third quarter of
2022 compared with the third quarter of 2021. The increase in data processing
fees during the third quarter of 2022 compared with the same period of the prior
year was in part attributable to the CUB acquisition and costs related to
continued data system enhancements.

Advertising and promotion costs have increased $318,000or 35%, in the third quarter of 2022 compared to the third quarter of 2021. The increase during the third quarter of 2022 is largely due to expenses related to the acquisition of CUB.


Other operating expenses declined $1,622,000, or 25%, during the third quarter
of 2022 compared with the third quarter of 2021. The decline in the third
quarter of 2022 compared with the same period of 2021 was primarily attributable
to the establishment of a $3,050,000 settlement reserve for a lawsuit
challenging the Company's assessment of overdraft fees for certain debit card
transactions during the third quarter of 2021. Partially offsetting this decline
were increased operating costs related to the acquisition of CUB. As previously
reported, settlement and dismissal of the above lawsuit was approved by the
court in August 2022.

During the nine months ended September 30, 2022, non-interest expense totaled
$118,577,000, an increase of $25,837,000, or 28%, compared with the first nine
months of 2021. The first nine months of 2022 non-interest expenses included
approximately $12,276,000 of non-recurring acquisition-related expenses for the
acquisition of CUB. The primary drivers of the remaining increases in the first
nine months of 2022 compared with the first three quarters of 2021 were the
operating costs for CUB.

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Non-interest Expense                                Nine Months Ended                 Change From
(dollars in thousands)                                September 30,                  Prior Period
                                                                                  Amount         Percent
                                                    2022           2021           Change         Change
Salaries and Employee Benefits                  $   63,223      $ 51,454      $     11,769          23  %
Occupancy, Furniture and Equipment Expense          11,266        11,631              (365)         (3)
FDIC Premiums                                        1,418         1,046               372          36
Data Processing Fees                                12,896         5,528             7,368         133
Professional Fees                                    5,124         4,030             1,094          27
Advertising and Promotion                            3,380         2,384               996          42
Intangible Amortization                              2,871         2,132               739          35
Other Operating Expenses                            18,399        14,535             3,864          27
Total Non-interest Expense                      $  118,577      $ 92,740      $     25,837          28



Salaries and benefits increased $11,769,000, or 23%, during the first nine
months of 2022 compared with the same period of 2021. The increase in salaries
and benefits during the first nine months of 2022 compared with the first nine
months of 2021 was largely attributable to the CUB acquisition completed on
January 1, 2022. The first three quarters of 2022 included approximately
$1,480,000 of acquisition-related salary and benefit costs of a non-recurring
nature with the remainder of the increase due primarily to the salaries and
benefits costs for the CUB employee base.

Occupancy, furniture and equipment expense declined $365,000, or 3%, during the
first nine months of 2022 compared with the same period of 2021. The decline
during the first nine months of 2022 compared to the first nine months of 2021
was largely related to operating fewer branch offices from the Company's
existing branch network (excluding the CUB acquisition), which was the result of
the Company's 2021 operating optimization plan, and non-recurring costs
associated with the optimization plan in the first nine months of 2021,
partially mitigated by the operating costs of the CUB branch network in the
first nine months of 2022.

Data processing fees increased $7,368,000, or 133%, during the first three
quarters of 2022 compared with the same period of 2021. The increase during 2022
compared with 2021 was largely driven by acquisition-related costs which totaled
approximately $4,982,000 during the first three quarters of 2022, along with the
CUB operating costs and costs related to continued data system enhancements.

Professional fees increased $1,094,000, or 27%, in the first nine months of 2022
compared with the first nine months of 2021. The increase during 2022 was
primarily due to professional fees associated with the CUB acquisition. Merger
and acquisition related professional fees totaled approximately $1,755,000
during the first nine months of 2022.

Advertising and promotion expense increased $996,000, or 42%, in the first three
quarters of 2022 compared with the first three quarters of 2021. The increase
during 2022 was due in large part to expenses related to the CUB acquisition.

Other operating expenses increased $3,864,000, or 27%, during the first nine
months of 2022 compared with the first nine months of 2021. The increase in 2022
compared to 2021 was largely attributable to acquisition-related costs that
totaled approximately $3,862,000 in the first nine months of 2022 and operating
costs associated with CUB. The acquisition-related costs were primarily vendor
contract termination costs. These increases were partially offset by the
aforementioned establishment of a $3,050,000 settlement reserve during the first
nine months of 2021.

Income Taxes:

The Company's effective income tax rate was 20.0% and 18.6%, respectively,
during the three months ended September 30, 2022 and 2021. The Company's
effective income tax rate was 17.1% and 19.3%, respectively, during the nine
months ended September 30, 2022 and 2021. The effective tax rate in all periods
presented was lower than the blended statutory rate resulting primarily from the
Company's tax-exempt investment income on securities, loans and company-owned
life insurance, income tax credits generated from affordable housing projects,
and income generated by subsidiaries domiciled in a state with no state or local
income tax.

FINANCIAL CONDITION

The total assets of the Company amount to $6.260 billion at September 30, 2022which represents an increase of $651.4 million compared to the end of 2021. The increase in total assets at September 30, 2022 compared to the end of 2021 was largely attributable to the acquisition of CUB.

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Securities available for sale declined $188.0 million as of September 30, 2022
compared with year-end 2021. The decline in the securities portfolio in the
first three quarters of 2022 was largely the result of fair value adjustments on
the available-for-sale portfolio caused by the rapid rise in market interest
rates throughout 2022.

September 30, 2022 total loans increased $678.4 million compared with December
31, 2021. The increase in total loans at September 30, 2022, compared with
year-end 2021, was largely due to the acquisition of CUB, which was partially
offset by a decline in PPP loans. The Company had no PPP loans at September 30,
2022 compared with $19.5 million at December 31, 2021.

End of Period Loan Balances:                               September 30,          December 31,         Current Period
(dollars in thousands)                                         2022                   2021                 Change
Commercial and Industrial Loans and Leases               $      644,284          $    548,350          $    95,934
Commercial Real Estate Loans                                  1,923,794             1,530,677              393,117
Agricultural Loans                                              401,608               358,150               43,458
Home Equity and Consumer Loans                                  370,335               307,184               63,151
Residential Mortgage Loans                                      346,347               263,565               82,782
Total Loans                                              $    3,686,368          $  3,007,926          $   678,442


The following table shows the breakdown of the allowance for credit losses for the periods indicated (in thousands of dollars):


                                                      September 30,       

the 31st of December,

                                                           2022               2021
     Commercial and Industrial Loans and Leases      $       13,673      $       9,754
     Commercial Real Estate Loans                            22,143             19,245
     Agricultural Loans                                       4,529              4,505
     Home Equity and Consumer Loans                           2,143              1,808
     Residential Mortgage Loans                               2,211              1,705
     Unallocated                                                  -                  -

     Total Allowance for Credit Losses               $       44,699      $      37,017



The Company's allowance for credit losses totaled $44.7 million at September 30,
2022 compared to $37.0 million at year-end 2021. The allowance for credit losses
represented 1.21% of period-end loans at September 30, 2022 compared with 1.23%
at year-end 2021.

The Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses
(Topic 326) ("CECL") on January 1, 2020. The Company added $9.4 million to the
allowance for credit losses in conjunction with the closing of the CUB
acquisition on January 1, 2022, related to the CUB loan portfolio. Of the
increase in the allowance for credit losses for the CUB portfolio, $6.3 million
was recorded through the provision for credit losses on "Day 1" under the CECL
model for non-PCD loans. The Company also acquired $29.9 million in PCD loans
for which the Company recorded a credit adjustment of $3.1 million which was
included in the allowance for credit losses.

Under the CECL model, certain acquired loans continue to carry a fair value
discount as well as an allowance for credit losses. As of September 30, 2022,
the Company held net discounts on acquired loans of $6.6 million which included
$2.8 million related to the CUB loan portfolio.

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The following is an analysis of the Company’s non-performing assets at September 30, 2022 and December 31, 2021:

Non-performing Assets:                                   September 30,       December 31,
(dollars in thousands)                                        2022               2021
Non-accrual Loans                                       $      13,054       $     14,602
Past Due Loans (90 days or more)                                  726                156
Total Non-performing Loans                                     13,780             14,758
Other Real Estate                                                   -                  -
Total Non-performing Assets                             $      13,780       $     14,758

Restructured Loans                                      $           -       $        104

Non-performing Loans to Total Loans                              0.37  %            0.49  %
Allowance for Credit Loss to Non-performing Loans              324.38  %    

250.83%

The following table shows outstanding loans and loans 90 days or more past due by loan category:

                                                                                                        Loans Past Due 90 Days
                                                              Non-Accrual Loans                        or More & Still Accruing
                                                      September 30,        December 31,                                   December 31,
                                                          2022                 2021            September 30, 2022             2021
Commercial and Industrial Loans and Leases           $      8,695          $   10,530          $          28             $         -
Commercial Real Estate Loans                                2,059               2,243                      -                     156
Agricultural Loans                                            899               1,136                    698                       -
Home Equity Loans                                             262                  24                      -                       -
Consumer Loans                                                 89                  82                      -                       -
Residential Mortgage Loans                                  1,050                 587                      -                       -
Total                                                $     13,054          $   14,602          $         726             $       156



Non-performing assets totaled $13.8 million at September 30, 2022 compared to
$14.8 million at year-end 2021. Non-performing assets represented 0.22% of total
assets at September 30, 2022 compared to 0.26% at December 31, 2021.
Non-performing loans totaled $13.8 million at September 30, 2022 compared to
$14.8 million at year-end 2021. Non-performing loans represented 0.37% of total
loans at September 30, 2022 compared to 0.49% at December 31, 2021.

September 30, 2022 total deposits increased $830.0 million compared to the end of 2021. The increase in total deposits at September 30, 2022 year-end 2021 was largely attributable to the acquisition of CUB.


End of Period Deposit Balances:                                  September 30,          December 31,         Current Period
(dollars in thousands)                                               2022                   2021                 Change
Non-interest-bearing Demand Deposits                           $    

1,755,065 $1,529,223 $225,842
Interest-bearing current, savings and money market accounts

                                                            3,381,082             2,867,994              513,088
Time Deposits < $100,000                                              248,455               201,683               46,772
Time Deposits of $100,000 or more                                     189,739               145,416               44,323
Total Deposits                                                 $    5,574,341          $  4,744,316          $   830,025


Capital Resources:

As of September 30, 2022, shareholders' equity declined by $173.8 million to
$494.7 million compared with $668.5 million at year-end 2021. The decline in
shareholders' equity was primarily attributable to a decline in accumulated
other comprehensive income of $324.5 million related to the decrease in value of
the Company's available-for-sale securities portfolio driven by a rapid increase
in market interest rates during the first nine months of 2022. Partially
mitigating the decline was the issuance of the Company's common shares in the
acquisition of CUB. Approximately 2.9 million shares were issued to CUB
shareholders resulting in an increase to shareholders' equity of $111.9 million.
Also mitigating the decline was increased retained earnings of $37.1 million due
to net income of $57.4 million, which was partially offset by the payment of
$20.3 million in shareholder dividends.

Shareholders' equity represented 7.9% of total assets at September 30, 2022 and
11.9% of total assets at December 31, 2021. Shareholders' equity included $190.8
million of goodwill and other intangible assets at September 30, 2022 compared
to $127.6 million of goodwill and other intangible assets at December 31, 2021.
The increase in goodwill and other intangible assets was attributable to the CUB
acquisition.
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On January 31, 2022, the Company's Board of Directors approved a plan to
repurchase up to 1.0 million shares of the Company's outstanding common stock.
On a share basis, the amount of common stock subject to the new repurchase plan
represented approximately 3% of the Company's outstanding shares on the date it
was approved. The Company is not obligated to purchase any shares under the
plan, and the plan may be discontinued at any time. The actual timing, number
and share price of shares purchased under the repurchase plan will be determined
by the Company at its discretion and will depend upon such factors as the market
price of the stock, general market and economic conditions and applicable legal
requirements. At the time it approved the new plan, the Board also terminated a
similar plan that had been adopted in January 2021. The Company has not
repurchased any shares of common stock under the 2022 repurchase plan.

Federal banking regulations provide guidelines for determining the capital
adequacy of bank holding companies and banks. These guidelines provide for a
more narrow definition of core capital and assign a measure of risk to the
various categories of assets. The Company is required to maintain minimum levels
of capital in proportion to total risk-weighted assets and off-balance sheet
exposures.

The current risk-based capital rules, as adopted by federal banking regulators,
are based upon guidelines developed by the Basel Committee on Banking
Supervision and reflect various requirements of the Dodd-Frank Act (the "Basel
III Rules"). The Basel III Rules require banking organizations to, among other
things, maintain a minimum ratio of Total Capital to risk-weighted assets, a
minimum ratio of Tier 1 Capital to risk-weighted assets, a minimum ratio of
"Common Equity Tier 1 Capital" to risk-weighted assets, and a minimum leverage
ratio (calculated as the ratio of Tier 1 Capital to adjusted average
consolidated assets). In addition, under the Basel III Rules, in order to avoid
limitations on capital distributions, including dividend payments, the Company
is required to maintain a 2.5% capital conservation buffer above the adequately
capitalized regulatory capital ratios. At September 30, 2022, the capital levels
for the Company and its subsidiary bank remained well in excess of the minimum
amounts needed for capital adequacy purposes and the Bank's capital levels met
the necessary requirements to be considered well-capitalized.

The table below presents the consolidated capital ratios of the Company and the banking subsidiary according to regulatory guidelines:

                                                                                                       Minimum for Capital
                                                     9/30/2022                  12/31/2021              Adequacy Purposes
                                                       Ratio                       Ratio                       ?¹?               Well-Capitalized Guidelines
Total Capital (to Risk Weighted Assets)
Consolidated                                                15.21  %                    16.20  %                   8.00  %                               N/A
Bank                                                        13.88  %                    13.36  %                   8.00  %                          10.00  %
Tier 1 (Core) Capital (to Risk Weighted
Assets)
Consolidated                                                13.76  %                    14.61  %                   6.00  %                               N/A
Bank                                                        13.26  %                    12.83  %                   6.00  %                           8.00  %
Common Tier 1, (CET 1) Capital Ratio
 (to Risk Weighted Assets)
Consolidated                                                13.04  %                    14.18  %                   4.50  %                               N/A
Bank                                                        13.26  %                    12.83  %                   4.50  %                           6.50  %
Tier 1 Capital (to Average Assets)
Consolidated                                                10.10  %                    10.10  %                   4.00  %                               N/A
Bank                                                         9.75  %                     8.88  %                   4.00  %                           5.00  %

(1) Excluding capital conservation buffer.


In December 2018, the federal banking regulators approved a final rule to
address changes to credit loss accounting under GAAP, including banking
organizations' implementation of CECL. The final rule provides banking
organizations the option to phase in over a three-year period the day-one
adverse effects on regulatory capital that may result from the adoption of the
new accounting standard. On March 27, 2020, in an action related to the CARES
Act, the federal banking regulators announced an interim final rule to delay the
estimated impact on regulatory capital stemming from the implementation of CECL.
The interim final rule, which was finalized effective September 30, 2020,
maintains the three-year transition option in the previous rule and provides
banks the option to delay for two years an estimate of CECL's effect on
regulatory capital, relative to the incurred loss methodology's effect on
regulatory capital, followed by a three-year transition period (five-year
transition option). The Company elected to adopt the five-year transition option
and, as a result, began the required three-year phase-in by reflecting 25% of
the previously deferred estimated capital impact of CECL in its regulatory
capital effective January 1, 2022. An additional 25% is to be phased in at the
beginning of each subsequent year until fully phased in by January 1, 2025.
Under the
                                       57
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five-year transition option, the amount of adjustments to regulatory capital
that could be deferred until the phase-in period began included both the initial
impact of our adoption of CECL at January 1, 2020 and 25% of subsequent changes
in our allowance for credit losses during each quarter of the two-year period
ended December 31, 2021.

On April 9, 2020, federal banking regulators issued an interim final rule to
modify the Basel III regulatory capital rules applicable to banking
organizations to allow those organizations participating in the PPP to
neutralize the regulatory capital effects of participating in the program.
Specifically, the agencies have clarified that banking organizations, including
the Company and the Bank, are permitted to assign a zero percent risk weight to
PPP loans for purposes of determining risk-weighted assets and risk-based
capital ratios.

Liquidity:


The Consolidated Statement of Cash Flows details the elements of changes in the
Company's consolidated cash and cash equivalents. Total cash and cash
equivalents decreased $23.8 million during the nine months ended September 30,
2022 ending at $373.0 million.  During the nine months ended September 30, 2022,
operating activities resulted in net cash inflows of $82.5 million. Investing
activities resulted in net cash inflows of $84.1 million during the nine months
ended September 30, 2022. Financing activities resulted in net cash outflows for
the nine months ended September 30, 2022 of $190.4 million.

The parent company is a corporation separate and distinct from its bank and
other subsidiaries. The Company uses funds at the parent-company level to pay
dividends to its shareholders, to acquire or make other investments in other
businesses or their securities or assets, to repurchase its stock from time to
time, and for other general corporate purposes including debt service. The
parent company does not have access at the parent-company level to the deposits
and certain other sources of funds that are available to its bank subsidiary to
support its operations. Instead, the parent company has historically derived
most of its revenues from dividends paid to the parent company by its bank
subsidiary. The Company's banking subsidiary is subject to statutory
restrictions on its ability to pay dividends to the parent company. The parent
company has in recent years supplemented the dividends received from its
subsidiaries with borrowings. As of September 30, 2022, the parent company had
approximately $41.6 million of cash and cash equivalents available to meet its
cash flow needs.

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS


The Company from time to time in its oral and written communications makes
statements relating to its expectations regarding the future. These types of
statements are considered "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. The Company may include
forward-looking statements in filings with the Securities and Exchange
Commission ("SEC"), such as this Form 10-Q, in other written materials, and in
oral statements made by senior management to analysts, investors,
representatives of the media, and others. Such forward looking statements can
include statements about the Company's net interest income or net interest
margin; its adequacy of allowance for credit losses, levels of provisions for
credit losses, and the quality of the Company's loans, investment securities and
other assets; simulations of changes in interest rates; expected results from
mergers with or acquisitions of other businesses; litigation results; tax
estimates and recognition; dividend policy; parent company cash resources and
cash requirements, and parent company capital resources; estimated cost savings,
plans and objectives for future operations; and expectations about the Company's
financial and business performance and other business matters as well as
economic and market conditions and trends. They often can be identified by the
use of words like "plan," "expect," "can," "might," "may," "will," "would,"
"could," "should," "intend," "project," "estimate," "believe" or "anticipate,"
or similar expressions.

Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the forward-looking statement is made.


Readers are cautioned that, by their nature, all forward-looking statements are
based on assumptions and are subject to risks, uncertainties, and other factors.
Actual results may differ materially and adversely from the expectations of the
Company that are expressed or implied by any forward-looking statement. The
discussions in this Item 2 list some of the factors that could cause the
Company's actual results to vary materially from those expressed or implied by
any forward-looking statements. Other risks, uncertainties, and factors that
could cause the Company's actual results to vary materially from those expressed
or implied by any forward-looking statement include:

•the unknown future direction of interest rates and the timing and magnitude of any changes in interest rates;

•changes in competitive conditions;


•the introduction, withdrawal, success and timing of asset/liability management
strategies or of mergers and acquisitions and other business initiatives and
strategies;

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•changes in customer borrowing, repayment, investment and deposit practices;

•changes in budgetary, monetary and fiscal policies;

•changes in financial and capital markets;

•the potential deterioration in general economic conditions, nationally or locally, resulting in, among other things, a deterioration in the quality of credit;

•the severity and duration of the COVID-19 pandemic and its impact on general economic and financial market conditions and on our business, results of operations and financial condition;

•our participation as a PPP lender;

•capital management activities, including any future sales of new securities, or any repurchases or redemptions by the Company of outstanding debt or equity securities;

•the factors determining investment impairment charges;

•the impact, extent and timing of technological changes;

• potential cyberattacks, information security breaches and other criminal activities;


•litigation liabilities, including related costs, expenses, settlements and
judgments, or the outcome of matters before regulatory agencies, whether pending
or commencing in the future;

• shares of the Federal Reserve Board;

•the possible effects of the replacement of the London interbank offer rate (LIBOR);

•the impact of the current standard on expected credit losses (CECL);

•changes in accounting principles and interpretations;


•potential increases of federal deposit insurance premium expense, and possible
future special assessments of FDIC premiums, either industry wide or specific to
the Company's banking subsidiary;

•actions by regulators under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the Federal Deposit Insurance Act and other possible legislative and regulatory actions and reforms;


•impacts resulting from possible amendments or revisions to the Dodd-Frank Act
and the regulations promulgated thereunder, or to Consumer Financial Protection
Bureau rules and regulations;

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


•with respect to the merger with CUB, the possibility that the anticipated
benefits of the transaction, including anticipated cost savings and strategic
gains, are not realized when expected or at all, including as a result of the
impact of, or problems arising from, the integration of the two companies,
unexpected credit quality problems of the acquired loans or other assets, or
unexpected attrition of the customer base of the acquired institution or
branches.

Such statements reflect our views with respect to future events and are subject
to these and other risks, uncertainties and assumptions relating to the
operations, results of operations, growth strategy and liquidity of the Company.
Readers are cautioned not to place undue reliance on these forward-looking
statements.

Investors should consider these risks, uncertainties, and other factors, in
addition to those mentioned by the Company in its Annual Report on Form 10-K for
its fiscal year ended December 31, 2021, this Quarterly Report on Form 10-Q, and
other SEC filings from time to time, when considering any forward-looking
statement.

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