10-Q

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________

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

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

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 0-17071

FIRST MERCHANTS CORPORATION

(Exact name of registrant as specified in its charter)

Indiana                                                                            35-1544218

(State or other jurisdiction of                                   (I.R.S. Employer

incorporation or organization)                               Identification No.)

200 East Jackson Street, Muncie, IN                  47305-2814

(Address of principal executive offices)                   (Zip code)

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

Not Applicable

(Former name, former address and former fiscal year,

if changed since last report)

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

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.125 stated value per share	FRME	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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

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

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

As of May 3, 2021, there were 54,371,549 outstanding common shares of the registrant.

1

Table of Contents

TABLE OF CONTENTS

FIRST MERCHANTS CORPORATION

		Page No.
Glossary of Defined Terms		3
Part I. Financial Information
Item 1.	Financial  Statements:
	Consolidated Condensed Balance Sheets	4
	Consolidated Condensed Statements of Income	5
	Consolidated Condensed Statements of Comprehensive Income	6
	Consolidated Condensed Statements of Stockholders' Equity	7
	Consolidated Condensed Statements of Cash Flows	8
	Notes to Consolidated Condensed Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4.	Controls and Procedures	54
Part II. Other Information
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	56
Signatures		57

2

Table of Contents

GLOSSARY OF DEFINED TERMS

FIRST MERCHANTS CORPORATION

ACL	Allowance for Credit Losses
Ameribor	The American interbank offered rate, a potential replacement for LIBOR, is a benchmark interest rate calculated as a volume-weighted average of the daily transactions in overnight unsecured loans on the American Financial Exchange, LLC, a self-regulated electronic exchange for direct lending by American banks and financial institutions.
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
Bank	First Merchants Bank, a wholly-owned subsidiary of the Corporation
CARES Act	Coronavirus Aid, Relief and Economic Security Act
CECL	Current expected credit losses
CET1	Common Equity Tier 1
Corporation	First Merchants Corporation
COVID-19	2019 novel coronavirus disease, which was declared a pandemic by the World Health Organization on March 11, 2020.
Economic Impact Payments	Economic stimulus payments of up to $1,200 per adult and $500 per child, subject to eligibility requirements and certain limitations, as established under the CARES Act and distributed by the IRS.
ESPP	Employee Stock Purchase Plan
FASB	Financial Accounting Standards Board
FDIC	Federal Deposit Insurance Corporation
Federal Reserve	Board of Governors of the Federal Reserve System
FHLB	Federal Home Loan Bank
FOMC	Federal Open Market Committee, the monetary policymaking body of the Federal Reserve System.
FTE	Fully taxable equivalent
GAAP	U.S. Generally Accepted Accounting Principles
IRS	Internal Revenue Service
OREO	Other real estate owned
PPP	Paycheck Protection Program, which was established by the CARES Act and implemented by the Small Business Administration to provide small business loans.
RSA	Restricted Stock Awards
TEFRA	Tax Equity and Fiscal Responsibility Act

3

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED BALANCE SHEETS

	March 31, 2021		December 31, 2020
	(Unaudited)
ASSETS
Cash and cash equivalents	$	187,901	$	192,896
Interest-bearing deposits	392,806		392,305
Investment securities available for sale	2,405,568		1,919,119
Investment securities held to maturity, net of allowance for credit losses of $245 and $0 (fair value of $1,318,780 and $1,280,293)	1,295,289		1,227,668
Loans held for sale	4,430		3,966
Loans	9,318,228		9,243,174
Less: Allowance for credit losses - loans 1	(201,082)		(130,648)
Net loans	9,117,146		9,112,526
Premises and equipment	109,432		111,062
Federal Home Loan Bank stock	28,736		28,736
Interest receivable	54,662		53,948
Goodwill	543,918		543,918
Other intangibles	27,618		28,975
Cash surrender value of life insurance	293,766		292,745
Other real estate owned	604		940
Tax asset, deferred and receivable	40,163		12,340
Other assets	127,027		146,066
TOTAL ASSETS	$	14,629,066	$	14,067,210
LIABILITIES
Deposits:
Noninterest-bearing	$	2,494,891	$	2,298,138
Interest-bearing	9,456,889		9,063,472
Total Deposits	11,951,780		11,361,610
Borrowings:
Securities sold under repurchase agreements	185,721		177,102
Federal Home Loan Bank advances	359,337		389,430
Subordinated debentures and other borrowings	118,439		118,380
Total Borrowings	663,497		684,912
Interest payable	4,020		3,287
Other liabilities	203,913		141,756
Total Liabilities	12,823,210		12,191,565
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized - 600 shares
Issued and outstanding - 125 shares	125		125
Common Stock, $0.125 stated value:
Authorized - 100,000,000 shares
Issued and outstanding - 53,953,723 and 53,922,359 shares	6,744		6,740
Additional paid-in capital	1,007,300		1,005,366
Retained earnings	755,877		788,578
Accumulated other comprehensive income	35,810		74,836
Total Stockholders' Equity	1,805,856		1,875,645
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	14,629,066	$	14,067,210

1 Beginning January 1, 2021, the calculation is based on the current expected credit loss methodology. Prior to January 1, 2021, the calculation is based on the incurred loss methodology. See additional details in NOTE 1. GENERAL of these Notes to Consolidated Condensed Financial Statement.

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

4

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended March 31,
	2021		2020
INTEREST INCOME
Loans receivable:
Taxable	$	85,105	$	96,652
Tax exempt	5,339		5,315
Investment securities:
Taxable	6,695		7,631
Tax exempt	12,385		9,335
Deposits with financial institutions	114		575
Federal Home Loan Bank stock	178		299
Total Interest Income	109,816		119,807
INTEREST EXPENSE
Deposits	6,200		21,748
Federal funds purchased	2		111
Securities sold under repurchase agreements	87		352
Federal Home Loan Bank advances	1,442		1,774
Subordinated debentures and other borrowings	1,657		1,945
Total Interest Expense	9,388		25,930
NET INTEREST INCOME	100,428		93,877
Provision for credit losses - loans	—		19,752
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	100,428		74,125
OTHER INCOME
Service charges on deposit accounts	5,264		5,970
Fiduciary and wealth management fees	6,422		5,985
Card payment fees	4,367		5,907
Net gains and fees on sales of loans	3,986		3,363
Derivative hedge fees	317		1,939
Other customer fees	368		398
Increase in cash surrender value of life insurance	1,189		1,360
Gains on life insurance benefits	147		—
Net realized gains on sales of available for sale securities	1,799		4,612
Other income	232		265
Total Other Income	24,091		29,799
OTHER EXPENSES
Salaries and employee benefits	38,811		39,243
Net occupancy	6,491		5,801
Equipment	5,030		4,344
Marketing	1,124		1,443
Outside data processing fees	4,244		4,199
Printing and office supplies	283		387
Intangible asset amortization	1,357		1,514
FDIC assessments	1,368		1,523
Other real estate owned and foreclosure expenses	734		505
Professional and other outside services	2,543		2,258
Other expenses	4,113		4,954
Total Other Expenses	66,098		66,171
INCOME BEFORE INCOME TAX	58,421		37,753
Income tax expense	8,952		3,490
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	49,469	$	34,263
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.92	$	0.63
Diluted Net Income Available to Common Stockholders	$	0.91	$	0.62
Cash Dividends Paid	$	0.26	$	0.26
Average Diluted Shares Outstanding (in thousands)	54,134		54,918

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

5

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended March 31,
	2021		2020
Net income	$	49,469	$	34,263
Other comprehensive income (loss):
Unrealized gains/losses on securities available-for-sale:
Unrealized holding gain (loss) arising during the period	(47,911)		38,435
Reclassification adjustment for losses (gains) included in net income	(1,799)		(4,612)
Tax effect	10,439		(7,102)
Net of tax	(39,271)		26,721
Unrealized gain/loss on cash flow hedges:
Unrealized holding gain (loss) arising during the period	58		(1,314)
Reclassification adjustment for losses (gains) included in net income	252		125
Tax effect	(65)		250
Net of tax	245		(939)
Total other comprehensive income (loss), net of tax	(39,026)		25,782
Comprehensive income	$	10,443	$	60,045

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

6

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Three Months Ended March 31, 2021
	Preferred			Common Stock			Additional					Accumulated Other
	Shares	Amount		Shares	Amount		Paid in Capital			Retained Earnings		Comprehensive Income		Total
Balances, December 31, 2020	125	$	125	53,922,359	$	6,740	$	1,005,366		$	788,578	$	74,836	$	1,875,645
Cumulative effect of ASC 326 adoption										(68,040)				(68,040)
Balance, January 1, 2021	125	$	125	53,922,359	$	6,740	$	1,005,366	1005366	$	720,538	$	74,836	$	1,807,605
Comprehensive income:
Net income	—	—		—	—		—			49,469		—		49,469
Other comprehensive loss, net of tax	—	—		—	—		—			—		(39,026)		(39,026)
Cash dividends on common stock ($.26 per share)	—	—		—	—		—			(14,130)		—		(14,130)
Share-based compensation	—	—		4,285	1		1,189			—		—		1,190
Stock issued under employee benefit plans	—	—		3,929	—		144			—		—		144
Stock issued under dividend reinvestment and stock purchase plan	—	—		9,117	1		442			—		—		443
Stock options exercised	—	—		14,300	2		169			—		—		171
Restricted shares withheld for taxes	—	—		(267)	—		(10)			—		—		(10)
Balances, March 31, 2021	125	$	125	53,953,723	$	6,744	$	1,007,300		$	755,877	$	35,810	$	1,805,856

	Three Months Ended March 31, 2020
	Preferred			Common Stock			Additional				Accumulated Other
	Shares	Amount		Shares	Amount		Paid in Capital		Retained Earnings		Comprehensive Loss		Total
Balances, December 31, 2019	125	$	125	55,368,482	$	6,921	$	1,054,997	$	696,520	$	27,874	$	1,786,437
Comprehensive income:
Net income	—	—		—	—		—		34,263		—		34,263
Other comprehensive income, net of tax	—	—		—	—		—		—		25,782		25,782
Cash dividends on common stock ($.26 per share)	—	—		—	—		—		(14,265)		—		(14,265)
Repurchases of common stock	—	—		(1,634,437)	(204)		(55,708)		—		—		(55,912)
Share-based compensation	—	—		3,332	—		1,220		—		—		1,220
Stock issued under dividend reinvestment and stock purchase plan	—	—		15,710	2		426		—		—		428
Stock options exercised	—	—		1,050	—		7		—		—		7
Balances, March 31. 2020	125	$	125	53,754,137	$	6,719	$	1,000,942	$	716,518	$	53,656	$	1,777,960

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

7

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended
	March 31, 2021		March 31, 2020
Cash Flow From Operating Activities:
Net income	$	49,469	$	34,263
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	—		19,752
Depreciation and amortization	2,748		2,674
Change in deferred taxes	(3,079)		(7,662)
Share-based compensation	1,190		1,220
Loans originated for sale	(111,558)		(163,378)
Proceeds from sales of loans held for sale	114,383		170,307
Gains on sales of loans held for sale	(3,289)		(2,931)
Gains on sales of securities available for sale	(1,799)		(4,612)
Increase in cash surrender of life insurance	(1,189)		(1,360)
Gains on life insurance benefits	(147)		—
Change in interest receivable	(714)		1,412
Change in interest payable	733		992
Other adjustments	6,062		20,816
Net cash provided by operating activities	52,810		71,493
Cash Flows from Investing Activities:
Net change in interest-bearing deposits	(501)		(14,681)
Purchases of:
Securities available for sale	(597,901)		(87,499)
Securities held to maturity	(135,098)		(126,759)
Proceeds from sales of securities available for sale	48,016		96,558
Proceeds from maturities of:
Securities available for sale	80,114		45,621
Securities held to maturity	66,361		49,912
Net change in loans	(72,704)		(148,882)
Proceeds from the sale of other real estate owned	495		303
Proceeds from life insurance benefits	315		—
Other adjustments	(2,285)		(3,672)
Net cash used in investing activities	(613,188)		(189,099)
Cash Flows from Financing Activities:
Net change in :
Demand and savings deposits	620,609		109,276
Certificates of deposit and other time deposits	(30,439)		(78,748)
Borrowings	8,678		180,060
Repayment of borrowings	(30,093)		(72,710)
Cash dividends on common stock	(14,130)		(14,265)
Stock issued under employee benefit plans	144		—
Stock issued under dividend reinvestment and stock purchase plans	443		428
Stock options exercised	171		7
Repurchase of common stock	—		(55,912)
Net cash provided by financing activities	555,383		68,136
Net Change in Cash and Cash Equivalents	(4,995)		(49,470)
Cash and Cash Equivalents, January 1	192,896		177,201
Cash and Cash Equivalents, March 31	$	187,901	$	127,731
Additional cash flow information:
Interest paid	$	8,655	$	24,938
Loans transferred to other real estate owned	44		761
Fixed assets transferred to other real estate owned	1,167		—
Non-cash investing activities using trade date accounting	66,558		44,362
ROU assets obtained in exchange for new operating lease liabilities	386		79

See NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

8

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

NOTE 1 

GENERAL

Financial Statement Preparation

The Consolidated Condensed Balance Sheet of the Corporation as of December 31, 2020, has been derived from the audited consolidated balance sheet of the Corporation as of that date. Certain information and note disclosures normally included in the Corporation’s annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission. The results of operations for the three months ended March 31, 2021, are not necessarily indicative of the results to be expected for the year. Reclassifications have been made to prior financial statements to conform to the current financial statement presentation. These reclassifications had no effect on net income. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses and fair value of financial instruments. The uncertainties related to the coronavirus disease 2019 ("COVID-19") could cause significant changes to these estimates compared to what was known at the time these financial statements were prepared.

Significant Accounting Policies

The significant accounting policies followed by the Corporation and its wholly-owned subsidiaries for interim financial reporting are consistent with the accounting policies followed for annual financial reporting, with the exception of the Corporation's adoption of ASC 326 as described below under the heading "Recent Accounting Changes Adopted In 2021." The Corporation revised certain accounting policies and implemented certain accounting policy elections, related to the adoption of ASC 326 which are described below. All adjustments, which are of a normal recurring nature and are in the opinion of management necessary for a fair statement of the results for the periods reported, have been included in the accompanying Consolidated Condensed Financial Statements.

The Corporation adopted FASB Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL") on January 1, 2021. CECL replaces the previous "incurred loss" model for measuring credit losses, which encompassed allowances for current known and inherent losses within the portfolio, with an "expected loss" model for measuring credit losses, which encompasses allowances for losses expected to be incurred over the life of the portfolio. The new CECL model requires the measurement of all expected credit losses for financial assets measured at amortized cost and certain off-balance sheet credit exposures based on historical experiences, current conditions, and reasonable and supportable forecasts. CECL also requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as credit quality and underwriting standards of an organization's portfolio. In addition, CECL includes certain changes to the accounting for investment securities available for sale depending on whether management intends to sell the securities or believes that it is more likely than not they will be required to sell.

As of the adoption and day one measurement date of January 1, 2021, the Corporation recorded a one-time cumulative-effect adjustment to retained earnings, net of income taxes, on the consolidated balance sheet of $68.0 million. The allowance increased 57 percent from December 31, 2020, or $74.1 million, because it covered expected credit losses over the life of the loan portfolio, which approximates four years, and it included an allowance on all purchased loans that were previously excluded from the allowance for loan losses calculation. CECL also requires the establishment of a reserve for potential losses from unfunded commitments that is recorded in other liabilities, separate from allowance for credit losses, which was approximately $20.5 million. An allowance for credit losses of $245,000 was recorded on the state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities. The following table details the impact of the adoption of CECL on the Corporation's balance sheet as of January 1, 2021.

	December 31, 2020	Impact of CECL Adoption	January 1, 2021 Post-CECL Adoption
Assets:
Held to maturity securities	1,227,668	(245)	1,227,423
Loans	9,243,174	4,776	9,247,950
Allowance for credit losses - Loans	(130,648)	(74,055)	(204,703)
Net loans	9,112,526	(69,279)	9,043,247
Tax asset, deferred and receivable	12,340	21,984	34,324
Liabilities:
Allowance for credit losses on unfunded loan commitments	—	20,500	20,500
Stockholder's Equity:
Retained Earnings	788,578	(68,040)	720,538
		—

9

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

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

Allowance for credit losses on investment securities held to maturity ("ACL - Investments") – the ACL - Investments is a contra asset-valuation account that is deducted from the amortized cost basis of investment securities held to maturity to present the net amount expected to be collected. Investment securities held to maturity are charged off against the ACL - Investments when deemed uncollectible. Adjustments to the ACL - Investments are reported in the income statement as a component of the provision for credit loss. The Corporation measures expected credit losses on held to maturity debt securities on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities held to maturity from the estimate of credit losses. With regard to U.S. Government-sponsored agency and mortgage-backed securities, all these securities are issued by a U.S. government-sponsored entity and have an implicit or explicit government guarantee. With regard to securities issued by states and municipalities and other investment securities held to maturity, management considers (1) issuer bond ratings, (2) the financial condition of the issuer, (3) historical loss rates for given bond ratings, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. Historical loss rates associated with securities having similar grades as those in the Corporation's portfolio have generally not been significant. Furthermore, as of March 31, 2021, there were no past due principal and interest payments associated with these securities. An allowance for credit losses of $245,000 was recorded on the state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities.

Purchased Credit Deteriorated (“PCD”) – the Corporation has purchased loans, some of which have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans held for investment. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is the noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses.

Allowance for Credit Losses - Loans ("ACL - Loans") - the ACL - Loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on loans over the contractual term. Loans are charged off against the allowance when the uncollectibility of the loan is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off. Adjustments to the ACL- Loans are reported in the income statement as a component of provision for credit loss. The Corporation has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses. Further information regarding the policies and methodology used to estimate the ACL - Loans is detailed in NOTE 3. LOANS AND ALLOWANCE of these Notes to Consolidated Condensed Financial Statements.

Allowance for Credit Losses – Off-Balance Sheet Credit Exposures – the allowance for credit losses on off-balance sheet credit exposures is a liability account representing expected credit losses over the contractual period for which the Corporation is exposed to credit risk resulting from a contractual obligation to extend credit. No allowance is recognized if the Corporation has the unconditional right to cancel the obligation. Off-balance sheet credit exposures primarily consist of amounts available under outstanding lines of credit and letters of credit. For the period of exposure, the estimate of expected credit losses considers both the likelihood that funding will occur and the amount expected to be funded over the estimated remaining life of the commitment or other off-balance sheet exposure. The likelihood and expected amount of funding are based on historical utilization rates. The amount of the allowance represents management’s best estimate of expected credit losses on commitments expected to be funded over the contractual life of the commitment. The allowance for off-balance sheet credit exposures is adjusted through the income statement as a component of provision for credit loss.

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PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Impact of COVID-19

On January 30, 2020, the World Health Organization (“WHO”) announced that the outbreak of COVID-19 constituted a public health emergency of international concern. On March 11, 2020, WHO declared COVID-19 to be a global pandemic and, on March 13, 2020, the President of the United States declared the COVID-19 outbreak a national emergency. The health concerns relating to the COVID-19 outbreak and related governmental actions taken to reduce the spread of the virus have significantly impacted the global economy (including the states and local economies in which the Corporation operates), disrupted supply chains, lowered equity market valuations, and created significant volatility and disruption in financial markets. The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place or total lock-down orders and business limitations and shutdowns. As a result of the shelter in place mandates in effect beginning early in the second quarter of 2020, commercial activity throughout our geographic footprint, as well as nationally, decreased significantly during 2020 and 2021. These containment measures have significantly contributed to rising unemployment and negatively impacted consumer and business spending. Although most states have reopened, albeit under limited capacities and under other social distancing restrictions, commercial activity has not returned to the levels existing prior to the outbreak of the pandemic. While multiple COVID-19 vaccines are now broadly available and vaccination rates are steadily increasing, it is too early to know how effective vaccinations will be in mitigating the adverse social and economic effects of the pandemic. Moreover, certain states and localities have recently experienced significant increases in the number of individuals diagnosed with COVID-19, which, in certain cases, is causing government officials to reinstitute activity restrictions. In addition, variant strains of the COVID-19 virus have appeared, further complicating efforts of the medical community and federal, state and local governments in response to the pandemic.

The continued impact of COVID-19 on the Corporation will depend on numerous factors and future developments that are highly uncertain and cannot be predicted with confidence. It is unknown how long the COVID-19 pandemic will last, or when restrictions on individuals and businesses will be fully lifted and businesses and their employees will be able to resume normal activities. Additional information may emerge regarding new developments with COVID-19 and additional actions may be taken by federal, state and local governments to contain COVID-19 or treat its impact. Changes in the behavior of customers, businesses and their employees as a result of COVID-19 pandemic, including social distancing practices, even after formal restrictions have been lifted and vaccination rates have increased, are also unknown. As a result of COVID-19 and the actions taken to contain it or reduce its impact, we may experience changes in the demand for our products and services, changes in the value of collateral securing outstanding loans, reductions in the credit quality of borrowers and the inability of borrowers to repay loans in accordance with their terms. Our commercial and consumer customers are experiencing varying degrees of financial distress, which is expected to continue in 2021, especially if positive cases increase and economic shutdowns continue. These and similar factors and events may have substantial negative effects on the business, financial condition and results of operations of the Corporation and its customers.

Guidance on Non-TDR Loan Modifications due to COVID-19

On March 22, 2020, a statement was issued by the Bank’s banking regulators and titled the “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” (the “Interagency Statement”) that encourages financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act further provides that a qualified loan modification is exempt by law from classification as a troubled debt restructure as defined by GAAP, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates. The Interagency Statement was subsequently revised on April 7, 2020 to clarify the interaction of the original guidance with Section 4013 of the CARES Act, as well as setting forth the banking regulators’ views on consumer protection considerations. In accordance with such guidance, the Bank has offered short-term modifications made in response to COVID-19 to borrowers who were current and otherwise not past due. These included short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. The CAA, as described above, extended the expiration date for COVID-related loan modifications exempt from troubled debt restructuring classification until the earlier of January 1, 2022, or 60 days after the termination of the national emergency. Details of the Corporation's modifications are included in the "LOAN QUALITY" section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included on this Form 10-Q.

Recent Accounting Changes Adopted In 2021

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

FASB Accounting Standards Updates No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

Summary - The FASB issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This new guidance replaces the previous "incurred loss" model for measuring credit losses with an "expected life of loan loss" model, referred to as the CECL model.

Under the CECL model, certain financial assets carried at amortized cost, such as loans held for investment and held-to-maturity debt securities, are required to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This measurement takes place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model, which delayed recognition until it is probable a loss had been incurred.

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PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The Corporation developed models that satisfy the requirements of the new standard which are governed by a system of internal controls and a cross-functional working group consisting of accounting, finance, and credit administration personnel. The loan portfolio was pooled into ten loan segments with similar risk characteristics for which the probability of default/loss given default methodology was applied. The Corporation utilized a one-year economic forecast period then reverted to historical macroeconomic levels for the remaining life of the portfolio. A baseline macroeconomic scenario, along with other scenarios, were used to develop a range of estimated credit losses for which to determine the best estimate within.

The ASU was effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Pursuant to the CARES Act and the related joint statement of federal banking regulators (which also became effective as of March 27, 2020), and consistent with guidance from the SEC and FASB, the Corporation elected to delay implementation of ASU No. 2016-13, which was set to expire on December 31, 2020. However, the CAA (as discussed above) extended the temporary relief from CECL compliance to the earlier of the first day of the fiscal year that begins after the date on which the national emergency concerning COVID-19 terminates, or January 1, 2022. The Corporation elected to delay implementation of CECL following the approval of the CARES Act and, with the enactment of the CAA, the Corporation elected to adopt CECL on January 1, 2021. This allows the Corporation to utilize the CECL standard for the entire year of 2021, while its 2020 financial statements were prepared under the incurred loss model.

As of the adoption and day one measurement date of January 1, 2021, the Corporation recorded a one-time cumulative-effect adjustment to retained earnings, net of income taxes, on the consolidated balance sheet of $68.0 million. The allowance increased 57 percent from December 31, 2020, or $74.1 million, because it covered expected credit losses over the life of the loan portfolio, which approximates four years, and it included an allowance on all purchased loans that were previously excluded from the allowance for loan losses calculation. CECL also requires the establishment of a reserve for potential losses from unfunded commitments that is recorded in other liabilities, separate from allowance for credit losses, which was approximately $20.5 million. An allowance for credit losses of $245,000 was recorded on the state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities.

FASB Accounting Standards Updates No. 2019-11 - Codification Improvements to (Topic 326): Financial Instruments - Credit Losses

Summary - The FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses in order to address issues raised by stakeholders during the implementation of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments.

Among other narrow-scope improvements, the new ASU clarifies guidance around how to report expected recoveries. “Expected recoveries” describes a situation in which an organization recognizes a full or partial write-off of the amortized cost basis of a financial asset, but then later determines that the amount written off, or a portion of that amount, will in fact be recovered. While applying the credit losses standard, stakeholders questioned whether expected recoveries were permitted on assets that had already shown credit deterioration at the time of purchase (also known as PCD assets). In response to this question, the ASU permits organizations to record expected recoveries on PCD assets. In addition to other narrow technical improvements, the ASU also reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities.

The ASU includes effective dates and transition requirements that vary depending on whether or not an entity has already adopted ASU No. 2016-13. As discussed above, pursuant to the CARES Act, the Corporation elected to defer the adoption of CECL. Additionally, the 2021 Consolidated Appropriations Act ("CAA"), signed into law on December 27, 2020, amended the CARES Act by extending the temporary relief from CECL compliance to the earlier of the first day of the fiscal year that begins after the date on which the national emergency concerning COVID-19 terminates, or January 1, 2022. The Corporation elected to delay implementation of CECL following the approval of the CARES Act and, with the enactment of the CAA, the Corporation elected to adopt CECL on January 1, 2021. The adoption of this standard did not have a significant effect on the Corporation’s consolidated financial statements or disclosures.

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PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Accounting Standards Update No. 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

Summary - The FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is expected to reduce cost and complexity related to the accounting for income taxes.

The ASU removes specific exceptions to the general principles in Topic 740 in Generally Accepted Accounting Principles (GAAP). It eliminates the need for an organization to analyze whether the following apply in a given period:

•    Exception to the incremental approach for intraperiod tax allocation;

•    Exceptions to accounting for basis differences when there are ownership changes in foreign investments; and

•    Exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses.

The ASU also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP for:

•    Franchise taxes that are partially based on income;

•    Transactions with a government that result in a step up in the tax basis of goodwill

•    Separate financial statements of legal entities that are not subject to tax; and

•    Enacted changes in tax laws in interim periods.

The ASU is part of the FASB’s simplification initiative to make narrow-scope simplifications and improvements to accounting standards through a series of short-term projects. For public business entities, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption of the ASU was permitted. The Corporation adopted this standard on January 1, 2021 and adoption of this standard did not have a significant effect on the Corporation's consolidated financial statements or disclosures.

New Accounting Pronouncements Not Yet Adopted

FASB Accounting Standards Updates - No. 2020-04 - Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

Summary - The FASB issued ASU No. 2020-04 to provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. LIBOR and other interbank offered rates are widely used benchmarks or reference rates in the United States and globally. Trillions of dollars in loans, derivatives, and other financial contracts reference LIBOR, the benchmark interest rate banks use to make short-term loans to each other. With global capital markets expected to move away from LIBOR and other interbank offered rates and move toward rates that are more observable or transaction based and less susceptible to manipulation, the FASB launched a broad project in late 2018 to address potential accounting challenges expected to arise from the transition. The new guidance provides 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 ASU is intended to help stakeholders during the global market-wide reference rate transition period.

Entities may apply this ASU as of the beginning of an interim period that includes the March 12, 2020 issuance date of the ASU, through December 31, 2022. The Corporation expects to adopt the practical expedients included in the ASU prior to December 31, 2022. The Corporation is implementing a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR. The Corporation is assessing ASU 2020-04 and its impact on the Corporation's transition away from LIBOR for its loans and other financial instruments.

FASB Accounting Standards Updates - Accounting Standards Update No. 2021-01 - Reference Rate Reform (Topic 848): Scope

Summary - The FASB has published ASU 2021-01, Reference Rate Reform. ASU 2021-01 clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition.

An entity may elect to apply the amendments in this Update on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final Update, up to the date that financial statements are available to be issued.

If an entity elects to apply any of the amendments in this Update for an eligible hedging relationship, any adjustments as a result of those elections must be reflected as of the date the entity applies the election.

The amendments in this Update do not apply to contract modifications made after December 31, 2022, new hedging relationships entered into after December 31, 2022, and existing hedging relationships evaluated for effectiveness in periods after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship (including periods after December 31, 2022). The Corporation is assessing ASU 2021-01 and its impact on the Corporation's transition away from LIBOR for its loans and other financial instruments.

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PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

NOTE 2

INVESTMENT SECURITIES

The following table summarizes the amortized cost, gross unrealized gains and losses and approximate fair value of investment securities available for sale as of March 31, 2021 and December 31, 2020.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at March 31, 2021
U.S. Treasury	$	1,000	$	—	$	—	$	1,000
U.S. Government-sponsored agency securities	11,504		40		163		11,381
State and municipal	1,301,378		67,438		2,654		1,366,162
U.S. Government-sponsored mortgage-backed securities	1,025,660		13,550		16,347		1,022,863
Corporate obligations	4,031		153		22		4,162
Total available for sale	$	2,343,573	$	81,181	$	19,186	$	2,405,568

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2020
U.S. Government-sponsored agency securities	$	2,380	$	50	$	—	$	2,430
State and municipal	1,168,711		89,420		246		1,257,885
U.S. Government-sponsored mortgage-backed securities	632,267		22,505		103		654,669
Corporate obligations	4,031		104		—		4,135
Total available for sale	$	1,807,389	$	112,079	$	349	$	1,919,119

The following table summarizes the amortized cost, gross unrealized gains and losses, approximate fair value and allowance for credit losses on investment securities held to maturity as of March 31, 2021 and December 31, 2020.

	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at March 31, 2021
U.S. Government-sponsored agency securities	$	60,676	$	—	$	60,676	$	1	$	1,553	59,124
State and municipal	624,553		245		624,308		23,154		3,389		644,318
U.S. Government-sponsored mortgage-backed securities	608,805		—		608,805		11,849		6,816		613,838
Foreign investment	1,500		—		1,500		—		—		1,500
Total held to maturity	$	1,295,534	$	245	$	1,295,289	$	35,004	$	11,758	$	1,318,780

	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at December 31, 2020
U.S. Government-sponsored agency securities	$	31,087	$	—	$	31,087	$	10	$	113	$	30,984
State and municipal	619,927		—		619,927		34,978		32		654,873
U.S. Government-sponsored mortgage-backed securities	575,154		—		575,154		17,889		107		592,936
Foreign investment	1,500		—		1,500		—		—		1,500
Total held to maturity	$	1,227,668	$	—	$	1,227,668	$	52,877	$	252	$	1,280,293

Accrued interest on investment securities available for sale and held to maturity of $20.6 million are included in the Interest Receivable line on the Corporation's Consolidated Condensed Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of available for sale and held to maturity securities presented above.

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PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

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

The allowance for credit losses on investment securities held to maturity is a contra asset-valuation account that is deducted from the amortized cost basis of investment securities held to maturity to present the net amount expected to be collected. Investment securities held to maturity are charged off against the allowance when deemed uncollectible. Adjustments to the allowance are reported in the income statement as a component of the provision for credit loss. The Corporation measures expected credit losses on investment securities held to maturity on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities held to maturity from the estimate of credit losses. With regard to U.S. Government-sponsored agency and mortgage-backed securities, all these securities are issued by a U.S. government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities.. With regard to securities issued by states and municipalities and other investment securities held to maturity, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. Historical loss rates associated with securities having similar grades as those in the Corporation's portfolio have been insignificant. Furthermore, as of March 31, 2021, there were no past due principal and interest payments associated with these securities. An allowance for credit losses of $245,000 was recorded on the state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities.

On a quarterly basis, the Corporation monitors the credit quality of investment securities held to maturity through the use of credit ratings. The following table summarizes the amortized cost of investment securities held to maturity at March 31, 2021, aggregated by credit quality indicator.

	Held to Maturity
	State and municipal		Other		Total
Credit Rating:
Aaa	$	48,689	$	60,676	$	109,365
Aa1	84,954		—		84,954
Aa2	107,436		—		107,436
Aa3	72,969		—		72,969
A1	65,578		—		65,578
A2	19,074		—		19,074
A3	1,065		—		1,065
Baa2	528		—		528
Non-rated	224,260		610,305		834,565
Total	$	624,553	$	670,981	$	1,295,534

The following table details activity in the allowance for credit losses on investment securities held to maturity during the three months ended March 31, 2021.

	State and municipal
Allowance for Credit Losses:
Balance, December 31, 2020	$	—
Impact of adopting ASC 326	245
Provision for credit loss	—
Securities charged off	—
Recoveries on securities	—
Balance, March 31, 2021	$	245

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PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The following tables summarize, as of March 31, 2021 and December 31, 2020, investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and length of time in a continuous unrealized loss position.

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at March 31, 2021
U.S. Government-sponsored agency securities	$	9,837	$	163	$	—	$	—	$	9,837	$	163
State and municipal	172,655		2,654		—		—		172,655		2,654
U.S. Government-sponsored mortgage-backed securities	606,498		16,347		—		—		606,498		16,347
Corporate obligations	978		22		—		—		978		22
Total investment securities available for sale	$	789,968	$	19,186	$	—	$	—	$	789,968	$	19,186

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at December 31, 2020
State and municipal	$	5,368	$	246	$	—	$	—	$	5,368	$	246
U.S. Government-sponsored mortgage-backed securities	9,651		103		—		—		9,651		103
Total investment securities available for sale	$	15,019	$	349	$	—	$	—	$	15,019	$	349

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

	March 31, 2021			December 31, 2020
Investments available for sale reported at less than historical cost:
Historical cost	$	809,154		$	15,368
Fair value	789,968			15,019
Gross unrealized losses	$	19,186		$	349
Percent of the Corporation's investments available for sale	21.4		%	0.5		%

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

U.S. Government-Sponsored Mortgage-Backed Securities

The unrealized losses on the Corporation's investment in mortgage-backed securities were a result of interest rate changes. The Corporation expects to recover the amortized cost basis over the term of the securities. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. As noted in the table above, the mortgage-backed securities portfolio contains unrealized losses of $16.3 million on fifty-five securities in the available for sale portfolio. All these securities are issued by a government-sponsored entity.

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PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

State and Municipal Securities, U.S. Government-Sponsored Agency Securities and Corporate Obligation Securities 

The unrealized losses on the Corporation's investments in securities of state and political subdivisions, U.S. Government-Sponsored Agency securities and corporate obligations were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. The Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. As noted in the table above, the state and municipal securities portfolio contains unrealized losses of $2.7 million on one hundred eight securities in the available for sale portfolio. The U.S. government-sponsored agency securities portfolio contains unrealized losses of $163,000 on two securities in the available for sale portfolio. The corporate obligation securities portfolio contains unrealized losses of $22,000 on one security in the available for sale portfolio.

The amortized cost and fair value of investment securities available for sale and held to maturity at March 31, 2021 and December 31, 2020, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately.

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at March 31, 2021
Due in one year or less	$	2,062	$	2,071	$	9,056	$	9,068
Due after one through five years	4,781		4,960		23,116		24,084
Due after five through ten years	92,598		96,882		151,103		154,819
Due after ten years	1,218,472		1,278,792		503,454		516,971
	1,317,913		1,382,705		686,729		704,942
U.S. Government-sponsored mortgage-backed securities	1,025,660		1,022,863		608,805		613,838
Total investment securities	$	2,343,573	$	2,405,568	$	1,295,534	$	1,318,780

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at December 31, 2020
Due in one year or less	$	1,349	$	1,353	$	9,712	$	9,755
Due after one through five years	5,545		5,764		22,241		23,190
Due after five through ten years	70,777		75,223		115,408		121,333
Due after ten years	1,097,451		1,182,110		505,153		533,079
	1,175,122		1,264,450		652,514		687,357
U.S. Government-sponsored mortgage-backed securities	632,267		654,669		575,154		592,936
Total investment securities	$	1,807,389	$	1,919,119	$	1,227,668	$	1,280,293

Securities with a carrying value of approximately $999.2 million and $890.0 million were pledged at March 31, 2021 and December 31, 2020, respectively, to secure certain deposits and securities sold under repurchase agreements, and for other purposes as permitted or required by law.

The book value of securities sold under agreements to repurchase amounted to $178.2 million at March 31, 2021 and $167.3 million at

December 31, 2020.

Gross gains on the sales and redemptions of investment securities available for sale for the three months ended March 31, 2021 and 2020 are shown below.

	Three Months Ended March 31,
	2021		2020
Sales and redemptions of investment securities available for sale:
Gross gains	$	2,076	$	4,612
Gross losses	277		—
Net gains on sales and redemptions of investment securities available for sale	$	1,799	$	4,612

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ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

NOTE 3

LOANS AND ALLOWANCE

Loan Portfolio and Credit Quality

The Corporation's primary lending focus is small business and middle market commercial, commercial real estate and residential real estate, which results in portfolio diversification. The following tables show the composition of the loan portfolio and credit quality characteristics by collateral classification, excluding loans held for sale. Loans held for sale at March 31, 2021 and December 31, 2020, were $4.4 million and $4.0 million, respectively.

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

	March 31, 2021		December 31, 2020
Commercial and industrial loans	$	2,876,212	$	2,776,699
Agricultural land, production and other loans to farmers	245,631		281,884
Real estate loans:
Construction	541,224		484,723
Commercial real estate, non-owner occupied	2,178,832		2,220,949
Commercial real estate, owner occupied	950,038		958,501
Residential	1,239,925		1,234,741
Home equity	482,229		508,259
Individuals' loans for household and other personal expenditures	126,387		129,479
Public finance and other commercial loans	677,750		647,939
Loans	$	9,318,228	$	9,243,174

As of March 31, 2021, the Corporation had $741.7 million of Paycheck Protection Program ("PPP") loans compared to the December 31, 2020 balance of $667.1 million. PPP loans are included in the commercial and industrial loan class. Additional details of the PPP are included in The CARES Act and the Paycheck Protection Program section of the "COVID-19 UPDATE" section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included on this Form 10-Q.

Credit Quality

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

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

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

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

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

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

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

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(table dollar amounts in thousands, except share data)

(Unaudited)

The following tables summarize the risk grading of the Corporation’s loan portfolio by loan class and by year of origination for the years indicated. Consumer loans are not risk graded. For the purposes of this disclosure the consumer loans are classified in the following manner: loans that are less than 30 days past due are Pass, loans 30-89 days past due are Special Mention and loans greater than 89 days past due are Substandard. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Loans that evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected are included in the applicable categories below. Outstanding loan balances as of March 31, 2021 with an origination year of 2021 and 2020 include PPP loans of $293.1 million and $448.6 million, respectively.

	Term Loans (amortized cost basis by origination year)
	2021		2020		2019		2018		2017		Prior		Revolving loans amortized cost basis		Total
Commercial and industrial loans
Pass	$	451,747	$	1,101,622	$	265,685	$	121,416	$	47,101	$	64,093	$	634,146	$	2,685,810
Special Mention	7,735		50,704		1,421		7,435		2,306		2,326		29,255		101,182
Substandard	1,891		4,946		6,319		606		469		1,394		73,595		89,220
Total Commercial and industrial loans	$	461,373	$	1,157,272	$	273,425	$	129,457	$	49,876	$	67,813	$	736,996	$	2,876,212
Agricultural land, production and other loans to farmers
Pass	22,570		58,620		26,146		11,864		8,821		49,646		45,626		223,293
Special Mention	151		621		186		2,151		—		3,347		8,824		15,280
Substandard	—		4,116		64		125		717		877		1,159		7,058
Total Agricultural land, production and other loans to farmers	$	22,721	$	63,357	$	26,396	$	14,140	$	9,538	$	53,870	$	55,609	$	245,631
Real estate loans:
Construction
Pass	60,800		208,852		165,903		68,816		3,104		1,945		17,184		526,604
Special Mention	—		10,118		—		63		—		—		30		10,211
Substandard	4,391		—		—		—		—		18		—		4,409
Total Construction	$	65,191	$	218,970	$	165,903	$	68,879	$	3,104	$	1,963	$	17,214	$	541,224
Commercial real estate, non-owner occupied
Pass	93,726		933,226		275,343		225,971		141,947		196,284		25,454		1,891,951
Special Mention	9,544		169,291		13,242		990		—		112		1,250		194,429
Substandard	238		38,545		24,741		11,585		7,840		9,503		—		92,452
Total Commercial real estate, non-owner occupied	$	103,508	$	1,141,062	$	313,326	$	238,546	$	149,787	$	205,899	$	26,704	$	2,178,832
Commercial real estate, owner occupied
Pass	51,710		481,355		122,017		57,531		60,587		89,802		39,729		902,731
Special Mention	45		10,174		2,606		1,646		2,242		1,178		149		18,040
Substandard	5,079		19,107		154		2,179		723		1,979		—		29,221
Loss	46		—		—		—		—		—		—		46
Total Commercial real estate, owner occupied	$	56,880	$	510,636	$	124,777	$	61,356	$	63,552	$	92,959	$	39,878	$	950,038
Residential
Pass	171,109		398,112		148,457		101,627		88,700		314,130		3,873		1,226,008
Special Mention	349		982		—		588		82		1,313		93		3,407
Substandard	485		3,152		518		1,355		372		4,628		—		10,510
Total Residential	$	171,943	$	402,246	$	148,975	$	103,570	$	89,154	$	320,071	$	3,966	$	1,239,925
Home equity
Pass	2,673		20,032		2,577		2,930		1,786		5,085		442,166		477,249
Special Mention	—		91		—		—		—		59		2,588		2,738
Substandard	403		151		—		13		129		195		1,351		2,242
Total Home Equity	$	3,076	$	20,274	$	2,577	$	2,943	$	1,915	$	5,339	$	446,105	$	482,229
Individuals' loans for household and other personal expenditures
Pass	16,786		38,678		24,201		18,482		4,383		7,550		15,996		126,076
Special Mention	—		68		75		35		8		33		4		223
Substandard	—		1		87		—		—		—		—		88
Total Individuals' loans for household and other personal expenditures	$	16,786	$	38,747	$	24,363	$	18,517	$	4,391	$	7,583	$	16,000	$	126,387
Public finance and other commercial loans
Pass	21,613		191,808		128,844		39,837		130,856		151,403		13,389		677,750
Total Public finance and other commercial loans	$	21,613	$	191,808	$	128,844	$	39,837	$	130,856	$	151,403	$	13,389	$	677,750
Loans	$	923,091	$	3,744,372	$	1,208,586	$	677,245	$	502,173	$	906,900	$	1,355,861	$	9,318,228

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(table dollar amounts in thousands, except share data)

(Unaudited)

	December 31, 2020
	Commercial Pass		Commercial Special Mention		Commercial Substandard		Commercial Doubtful		Commercial Loss		Consumer Performing			Consumer Non-Performing		Total
Commercial and industrial loans	$	2,562,077	$	117,503	$	97,119	$	—	$	—	$	—		$	—	$	2,776,699
Agricultural production financing and other loans to farmers	243,991		26,835		9,885		—		—		1,173			—		281,884
Real estate Loans:
Construction	446,846		10,445		5,549		—		—		21,763			120		484,723
Commercial real estate, non-owner occupied	1,979,827		160,304		80,818		—		—		—			—		2,220,949
Commercial real estate, owner occupied	907,566		17,641		33,294						—			—		958,501
Residential	199,338		2,261		7,058		—		—		1,020,687			5,397		1,234,741
Home equity	12,714		—		989		—		—		492,999			1,557		508,259
Individuals' loans for household and other personal expenditures	—		—		—		—		—		129,440			39		129,479
Public finance and other commercial loans	647,939		—		—		—		—		—			—		647,939
Loans	$	7,000,298	$	334,989	$	234,712	$	—	$	—	$	1,666,062	1666062	$	7,113	$	9,243,174

At March 31, 2021, 30-59 Days Past Due loans totaled $55.6 million, an increase of $36.0 million from December 31, 2020. The primary increase was in the commercial real estate, non-owner occupied segment and is related to four relationships. Three of the relationships are multi-family units totaling $24.1 million and the fourth relationship is a hotel totaling $21.0 million. At March 31, 2021, the 60-89 Days Past Due category totaled $3.0 million, a decrease of $8.2 million from December 31, 2020. The primary decrease was related to a $5.0 million commercial and industrial loan that was current as of March 31, 2021. The 90 Days or More Past Due bucket totaled $47.4 million at March 31, 2021, an increase of $5.4 million from December 31, 2020. The primary increase was related to a $13.0 million nursing home loan within the commercial real estate, non-owner occupied segment, that was current at December 31, 2020, but has moved into the 90+ Days Past Due bucket. This was offset by a $3.7 million loan within the same segment that was 90+ Days Past Due at December 31, 2020, but has since paid off. The tables below show a past due aging of the Corporation’s loan portfolio, by loan class, for the years indicated:

	March 31, 2021
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	2,870,436	$	4,545	$	19	$	1,212	$	2,876,212	$	—
Agricultural land, production and other loans to farmers	244,403		114		—		1,114		245,631		—
Real estate loans:
Construction	540,648		560		—		16		541,224		—
Commercial real estate, non-owner occupied	2,094,103		45,942		434		38,353		2,178,832		—
Commercial real estate, owner occupied	946,423		792		1,096		1,727		950,038		1,032
Residential	1,234,473		1,582		377		3,493		1,239,925		—
Home equity	477,927		1,906		1,010		1,386		482,229		60
Individuals' loans for household and other personal expenditures	126,075		181		42		89		126,387		1
Public finance and other commercial loans	677,750		—		—		—		677,750		—
Loans	$	9,212,238	$	55,622	$	2,978	$	47,390	$	9,318,228	$	1,093

	December 31, 2020
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	2,761,473	$	5,866	$	6,571	$	2,789	$	2,776,699	$	594
Agricultural land, production and other loans to farmers	280,615		146		226		897		281,884		—
Real estate loans:									—
Construction	484,706		—		17		—		484,723		—
Commercial real estate, non-owner occupied	2,184,681		2,525		2,109		31,634		2,220,949		—
Commercial real estate, owner occupied	951,561		4,854		180		1,906		958,501		—
Residential	1,226,779		3,269		1,429		3,264		1,234,741		133
Home equity	503,596		2,644		559		1,460		508,259		19
Individuals' loans for household and other personal expenditures	129,049		334		96		—		129,479		—
Public finance and other commercial loans	647,939		—		—		—		647,939		—
Loans	$	9,170,399	$	19,638	$	11,187	$	41,950	$	9,243,174	$	746

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(table dollar amounts in thousands, except share data)

(Unaudited)

Loans are reclassified to a non-accruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. All unpaid accrued interest is reversed against earnings when considered uncollectible and at the time accrual is discontinued. Payments subsequently received on non-accrual loans are applied to principal. A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of six consecutive months of performance.

The following table summarizes the Corporation’s non-accrual loans by loan class for the periods indicated:

	March 31, 2021				December 31, 2020
	Non-Accrual Loans		Non-Accrual Loans with no Allowance for Credit Losses		Non-Accrual Loans
Commercial and industrial loans	$	1,671	$	786	$	2,329
Agricultural land, production and other loans to farmers	1,220		561		1,012
Real estate loans:
Construction	18		—		123
Commercial real estate, non-owner occupied	44,143		1,853		46,316
Commercial real estate, owner occupied	1,760		1,513		3,040
Residential	6,336		835		6,517
Home equity	2,650		—		2,095
Individuals' loans for household and other personal expenditures	125		—		39
Loans	$	57,923	$	5,548	$	61,471

There was no interest income recognized on non-accrual loans for the three months ended March 31, 2021 and 2020, respectively.

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

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses:

	March 31, 2021
	Commercial Real Estate		Residential Real Estate		Other		Total		Allowance on Collateral Dependent Loans
Commercial and industrial loans	$	—	$	—	$	2,202	$	2,202	$	—
Agricultural land, production and other loans to farmers	780		—		—		780		—
Real estate loans:
Commercial real estate, non-owner occupied	45,188		—		—		45,188		5,561
Commercial real estate, owner occupied	3,539		—		—		3,539		—
Residential	—		3,113		—		3,113		356
Home equity	—		452		—		452		77
Individuals' loans for household and other personal expenditures	—		—		2		2		—
Loans	$	49,507	$	3,565	$	2,204	$	55,276	$	5,994

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(table dollar amounts in thousands, except share data)

(Unaudited)

As detailed in NOTE 1. GENERAL of these Notes to Consolidated Condensed Financial Statements, the Bank's banking regulators issued guidance in March 2020 encouraging financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act had further provided that a qualified loan modification is exempt by law from classification as a troubled debt restructure as defined by GAAP, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates. In accordance with that guidance, the Bank has offered short-term modifications made in response to COVID-19 to borrowers who were current and otherwise not past due. These included short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. The Consolidated Appropriations Act, 2021 extended the expiration date for COVID-related loan modifications exempt from troubled debt restructuring classification until the earlier of January 1, 2022, or 60 days after the termination of the national emergency. Details of the Corporation's modifications are included in the "LOAN QUALITY" section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included on this Form 10-Q.

In certain loan restructuring situations, the Corporation may grant a concession to a debtor experiencing financial difficulty, resulting in a troubled debt restructuring. A concession is deemed to be granted when, as a result of the restructuring, the Corporation does not expect to collect all original amounts due, including interest accrued at the original contract rate. If the payment of principal at original maturity is primarily dependent on the value of collateral, the current value of the collateral is considered in determining whether the principal will be repaid.

The following tables summarize troubled debt restructures in the Corporation's loan portfolio that occurred during the three months ended March 31, 2021. No troubled debt restructures in the Corporation's loan portfolio occurred in the three months ended March 31, 2020.

			Three Months Ended March 31, 2021
	Pre- Modification Recorded Balance		Term Modification		Rate Modification		Combination		Post - Modification Recorded Balance		Number of Loans
Commercial and industrial	$	348	$	348	$	—	$	—	$	348	2
Real estate loans:
Residential	625		383		126		118		627		7
Total	$	973	$	731	$	126	$	118	$	975	9

Loans secured by 1- 4 family residential real estate made up 64 percent of the post-modification balances of the troubled debt restructured loans that occurred during the three months ending March 31, 2021.

The following tables summarize troubled debt restructures that occurred during the twelve months ended March 31, 2021 and 2020, that subsequently defaulted during the period indicated and remained in default at period end. For purposes of this schedule, a loan is considered in default if it is 30-days or more past due.

	Three Months Ended March 31, 2021
	Number of Loans	Recorded Balance
Real estate loans:
Residential	5	$	197
Home equity	1	91
Individuals' loans for household and other personal expenditures	1	2
Total	7	$	290

	Three Months Ended March 31, 2020
	Number of Loans	Recorded Balance
Real estate loans:
Residential	1	$	22
Total	1	$	22

Commercial troubled debt restructured loans risk graded special mention, substandard, doubtful and loss are individually evaluated for apparent loss and may result in a specific reserve allocation in the allowance for credit loss. Commercial troubled debt restructures that aren't individually evaluated for a specific reserve are included in the calculation of allowance for credit losses through the loan segment loss analysis.

For all consumer loan modifications, an evaluation to identify if a troubled debt restructure has occurred is performed prior to making the modification. Any subsequent deterioration is addressed through the charge-off process or through a specific reserve allocation included in the allowance for credit loss. Consumer troubled debt restructures that are not individually evaluated for a specific reserve are included in the calculation of the allowance for credit losses through the loan segment loss analysis. Consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $3.3 million and $507,000 at March 31, 2021 and March 31, 2020, respectively.

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(table dollar amounts in thousands, except share data)

(Unaudited)

Allowance for Credit Losses on Loans

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

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

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

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

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

The Corporation qualitatively adjusts model results for risk factors that are not inherently considered in the quantitative modeling process, but are nonetheless relevant in assessing the expected credit losses within the loan portfolio. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor. The various risks that may be considered in making qualitative adjustments include, among other things, the impact of (i) changes in the nature and volume of the loan portfolio, (ii) changes in the existence, growth and effect of any concentrations in credit, (iii) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (iv) changes in the quality of the credit review function, (v) changes in the experience, ability and depth of lending management and staff, and (vi) other environmental factors such as regulatory, legal and technological considerations, as well as competition.

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

No allowance for credit losses has been recognized for PPP loans as such loans are fully guaranteed by the Small Business Administration ("SBA").

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

Commercial

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

Commercial real estate

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

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PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Construction

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

Consumer and Residential

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

The following tables summarize changes in the allowance for credit losses by loan segment for the three months ended March 31, 2021:

	Three Months Ended March 31, 2021
	Commercial		Commercial Real Estate		Construction		Consumer		Residential		Consumer & Residential		Total
Allowance for credit losses
Balances, December 31, 2020	$	47,115	$	51,070	$	—	$	9,648	$	22,815	$	—	$	130,648
Credit risk reclassifications	—		(10,284)		10,284		(9,648)		(22,815)		32,463		—
Balances, December 31, 2020 after reclassifications	47,115		40,786		10,284		—		—		32,463		130,648
Impact of adopting ASC 326	20,024		34,925		8,805		—		—		10,301		74,055
Balances, January 1, 2021 Post-ASC 326 adoption	67,139		75,711		19,089		—		—		42,764		204,703
Provision for credit losses	(932)		(1,701)		1,095		—		—		1,538		—
Recoveries on loans	188		164		—		—		—		342		694
Loans charged off	(673)		(3,313)		(2)		—		—		(327)		(4,315)
Balances, March 31, 2021	$	65,722	$	70,861	$	20,182	$	—	$	—	$	44,317	$	201,082

Allowance for Loan Losses under prior GAAP ("Incurred Loss Model")

Prior to the adoption of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on January 1, 2021, the Corporation maintained an allowance for loan losses in accordance with the incurred loss model as disclosed in the Corporation's 2020 Annual Report on Form 10-K.

The following tables summarize changes in the allowance for loan losses by loan segment for the three months ended March 31, 2020:

	Three Months Ended March 31, 2020
	Commercial		Commercial Real Estate		Consumer		Residential		Total
Allowance for loan losses:
Balances, December 31, 2019	$	32,902	$	28,778	$	4,035	$	14,569	$	80,284
Provision for losses	5,701		9,194		1,924		2,933		19,752
Recoveries on loans	443		118		42		70		673
Loans charged off	(615)		(183)		(249)		(208)		(1,255)
Balances, March 31, 2020	$	38,431	$	37,907	$	5,752	$	17,364	$	99,454

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PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

The table below shows the Corporation’s allowance for loan losses under the incurred loss model and loan portfolio by loan segment as of the periods indicated.

	December 31, 2020
	Commercial		Commercial Real Estate		Consumer		Residential		Total
Allowance Balances:
Individually evaluated for impairment	$	223	$	12,246	$	—	$	432	$	12,901
Collectively evaluated for impairment	46,892		38,824		9,648		22,383		117,747
Total Allowance for Loan Losses	$	47,115	$	51,070	$	9,648	$	22,815	$	130,648
Loan Balances:
Individually evaluated for impairment	$	1,258	$	51,605	$	2	$	3,291	$	56,156
Collectively evaluated for impairment	3,505,863		3,805,808		129,477		1,739,709		9,180,857
Loans acquired with deteriorated credit quality	577		5,584		—		—		6,161
Loans	$	3,507,698	$	3,862,997	$	129,479	$	1,743,000	$	9,243,174

The following tables show the composition of the Corporation’s impaired loans, related allowance under the incurred loss model and interest income recognized while impaired by loan class as of the periods indicated:

	December 31, 2020
	Unpaid Principal Balance		Recorded Investment		Related Allowance
Impaired loans with no related allowance:
Commercial and industrial loans	$	1,059	$	991	$	—
Real estate Loans:
Commercial real estate, non-owner occupied	4,958		4,694		—
Commercial real estate, owner occupied	2,125		1,310		—
Residential	957		816		—
Individuals' loans for household and other personal expenditures	2		2		—
Total	$	9,101	$	7,813	$	—
Impaired loans with related allowance:
Commercial and industrial loans	$	268	$	268	$	223
Agricultural land, production and other loans to farmers	640		562		3
Real estate Loans:
Commercial real estate, non-owner occupied	44,016		43,715		11,686
Commercial real estate, owner occupied	2,061		1,323		557
Residential	2,041		2,014		352
Home equity	487		461		80
Total	$	49,513	$	48,343	$	12,901
Total Impaired Loans	$	58,614	$	56,156	$	12,901

	Three Months Ended March 31, 2020
	Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	905	$	—
Real estate Loans:
Construction	1,015		—
Commercial and farmland	6,852		37
Residential	59		1
Individuals' loans for household and other personal expenditures	3		—
Total	$	8,834	$	38
Impaired loans with related allowance:
Real estate Loans:
Commercial and farmland	$	2,400	$	—
Residential	2,180		19
Home equity	393		3
Total	$	4,973	$	22
Total Impaired Loans	$	13,807	$	60

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PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Off-Balance Sheet Arrangements, Commitments And Contingencies

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

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

The Corporation typically follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet instruments. Each customer’s creditworthiness is typically evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on management’s credit evaluation of the customer. Collateral held varies but may include cash, real estate, marketable securities, accounts receivable, inventory, equipment and personal property.

The contractual amounts of these commitments are not reflected in the consolidated financial statements and only amounts drawn upon would be reflected in the future. Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent future cash requirements. However, should the commitments be drawn upon and should the Corporation’s customers default on their resulting obligation to the Corporation, the maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those commitments.

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

	March 31, 2021		December 31, 2020
Amounts of commitments:
Loan commitments to extend credit	$	3,657,931	$	3,443,514
Standby letters of credit	$	33,610	$	29,555

The adoption of the CECL methodology for measuring credit losses, as discussed more fully in the Allowance for Credit Loss on Loans section of this Note, and in NOTE 1. GENERAL of these Notes to Consolidated Condensed Financial Statements, increased the opening balance of our accrual for off-balance sheet commitments at adoption by $20.5 million, which is reported in Other Liabilities as of March 31, 2021 in the CONSOLIDATED CONDENSED BALANCE SHEETS.

The following table details activity in the allowance for credit losses on off-balance sheet commitments:

	Three Months Ended March 31, 2021
Balances, December 31, 2020	$	—
Impact of adopting ASC 326	20,500
Provision for credit losses	—
Balances, March 31, 2021	$	20,500

NOTE 4

OTHER INTANGIBLES

Core deposit intangibles are recorded on the acquisition date of an entity. The carrying basis and accumulated amortization of recognized core deposit intangibles are noted below.

	March 31, 2021		December 31, 2020
Gross carrying amount	$	102,396	$	102,396
Accumulated amortization	(74,778)		(73,421)
Total core deposit intangibles	$	27,618	$	28,975

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(table dollar amounts in thousands, except share data)

(Unaudited)

The core deposit intangibles are being amortized primarily on an accelerated basis over their estimated useful lives, generally over a period of ten years. Intangible asset amortization expense for the three months ended March 31, 2021 was $1.4 million compared to $1.5 million for the three months ended March 31, 2020. Estimated future amortization expense is summarized as follows:

	Amortization Expense
2021	$	4,072
2022	5,027
2023	4,827
2024	4,241
2025	3,526
After 2025	5,925
	$	27,618

NOTE 5

DERIVATIVE FINANCIAL INSTRUMENTS

Risk Management Objective of Using Derivatives

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

Cash Flow Hedges of Interest Rate Risk

The Corporation’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Corporation primarily uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy.  Interest rate swaps designated as cash flow hedges involve the payment of fixed amounts to a counterparty in exchange for the Corporation receiving variable payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. As of March 31, 2021 and December 31, 2020, the Corporation had four interest rate swaps with a notional amount of $60.0 million that were designated as cash flow hedges.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the first quarter of 2021, $26.0 million of the interest rate swaps were used to hedge the variable cash outflows (LIBOR-based) associated with existing trust preferred securities when the outflows converted from a fixed rate to variable rate in September 2012.  In addition, $10.0 million of interest rate swaps were used to hedge the variable cash outflows (LIBOR-based) associated with one Federal Home Loan Bank advances. Finally, the remaining $24.0 million of interest rate swaps were used to hedge the variable cash outflows (Ameribor-based) associated with a brokered deposit originated in December 2020. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three months ended March 31, 2021 and 2020, the Corporation did not recognize any ineffectiveness.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Corporation's variable-rate liabilities. During the next twelve months, the Corporation expects to reclassify $1.0 million from accumulated other comprehensive income to interest expense.

Non-designated Hedges

The Corporation does not use derivatives for trading or speculative purposes.  Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain customers. The Corporation executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies.  Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Corporation executes with a third party, such that the Corporation minimizes its net risk exposure resulting from such transactions.  As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.  As of March 31, 2021 and December 31, 2020, the notional amount of customer-facing swaps was approximately $972.7 million and $985.0 million, respectively.  These amounts are offset with third party counterparties, as described above.

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PART I. FINANCIAL INFORMATION

ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(table dollar amounts in thousands, except share data)

(Unaudited)

Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Corporation’s derivative financial instruments, as well as their classification on the Balance Sheet, as of March 31, 2021, and December 31, 2020.

Asset Derivatives

Liability Derivatives

March 31, 2021

December 31, 2020

March 31, 2021

December 31, 2020

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate contracts

Other Assets

$

—

Other Assets

$

—

Other Liabilities

$

1,708

Other Liabilities

$

2,018

Derivatives not designated as hedging instruments:

Interest rate contracts

Other Assets

$

48,576

Other Assets

$

74,335

Other Liabilities

$

48,576

Other Liabilities

$

74,335

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

Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative  (Effective Portion)
	Three Months Ended
	March 31, 2021		March 31, 2020
Interest Rate Products	$	58	$	(1,314)

Effect of Derivative Instruments on the Income Statement

The Corporation did not recognize any gains or losses from derivative financial instruments in the Consolidated Condensed Statements of Income for the three months ended March 31, 2021 and 2020.

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

Derivatives Designated as Hedging Instruments under FASB ASC 815-10	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain (Loss) Reclassed from Other Comprehensive Income into Income (Effective Portion)
		Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
Interest rate contracts	Interest Expense	$	(252)	$	(125)

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

Credit-risk-related Contingent Features

The Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation fails to maintain its status as a well or adequately capitalized institution, then the Corporation could be required to terminate or fully collateralize all outstanding derivative contracts. Additionally, the Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations. As of March 31, 2021, the termination value of derivatives in a net liability position related to these agreements was $36.7 million. As of March 31, 2021, the Corporation has minimum collateral posting thresholds with certain of its derivative counterparties and has posted collateral of $62.8 million. While the Corporation did not breach any of these provisions as of March 31, 2021, if it had, the Corporation could have been required to settle its obligations under the agreements at their termination value.

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(table dollar amounts in thousands, except share data)

(Unaudited)

NOTE 6 

DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES

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

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

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

RECURRING MEASUREMENTS

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

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

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

Investment Securities

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. The Corporation currently has no securities classified within Level 1 of the hierarchy. Where significant observable inputs, other than Level 1 quoted prices, are available, securities are classified within Level 2 of the valuation hierarchy. Level 2 securities include U.S. treasury securities, government-sponsored agency and mortgage-backed securities, state and municipal securities and corporate obligations securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include state and municipal securities, government-sponsored mortgage-backed securities and corporate obligations securities. Level 3 fair value for securities was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

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

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(table dollar amounts in thousands, except share data)

(Unaudited)

Interest Rate Derivative Agreements

See information regarding the Corporation’s interest rate derivative products in NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements.

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the ASC 820 fair value hierarchy in which the fair value measurements fall at March 31, 2021, and December 31, 2020.

			Fair Value Measurements Using:
March 31, 2021	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:
U.S. Treasury	$	1,000	$	—	$	1,000	$	—
U.S. Government-sponsored agency securities	11,381		—		11,381		—
State and municipal	1,366,162		—		1,364,051		2,111
U.S. Government-sponsored mortgage-backed securities	1,022,863		—		1,022,859		4
Corporate obligations	4,162		—		4,131		31
Interest rate swap asset	48,576		—		48,576		—
Interest rate swap liability	50,284		—		50,284		—

			Fair Value Measurements Using:
December 31, 2020	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	2,430	$	—	$	2,430	$	—
State and municipal	1,257,885		—		1,255,441		2,444
U.S. Government-sponsored mortgage-backed securities	654,669		—		654,665		4
Corporate obligations	4,135		—		4,104		31
Interest rate swap asset	74,335		—		74,335		—
Interest rate swap liability	76,353		—		76,353		—

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

liabilities held at March 31, 2021 or December 31, 2020.

Level 3 Reconciliation

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

balance sheets using significant unobservable Level 3 inputs for the three months ended March 31, 2021 and 2020.

	Available for Sale Securities
	Three Months Ended
	March 31, 2021		March 31, 2020
Balance at beginning of the period	$	2,479	$	2,893
Included in other comprehensive income	(60)		(20)
Principal payments	(273)		(344)
Ending balance	$	2,146	$	2,529

Transfers Between Levels

There were no transfers in or out of Level 3 for the three months ended March 31, 2021 and 2020.

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(table dollar amounts in thousands, except share data)

(Unaudited)

Nonrecurring Measurements

Following is a description of valuation methodologies used for instruments measured at fair value on a non-recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy for March 31, 2021, and December 31, 2020.

			Fair Value Measurements Using
March 31, 2021	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	40,698	$	—	$	—	$	40,698
Other real estate owned	185		—		—		185

			Fair Value Measurements Using
December 31, 2020	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable  Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans (collateral dependent)	$	37,250	$	—	$	—	$	37,250
Other real estate owned	544		—		—		544

Impaired Loans (collateral dependent)

Loans for which it is probable that the Corporation will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for determining the amount of impairment include estimating fair value of the collateral for collateral dependent loans. If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations cause the allowance for loan losses to increase, such increase is reported as a component of the provision for loan losses. Loan losses are charged against the allowance when management believes the uncollectability of the loan is confirmed. During 2020 and 2021, certain impaired loans were partially charged off or re-evaluated. Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method.

Other Real Estate Owned

The fair value for impaired loans and other real estate owned is measured based on the value of the collateral securing those loans or real estate and is determined using several methods. The fair value of real estate is generally determined based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a discounted cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and/or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

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(table dollar amounts in thousands, except share data)

(Unaudited)

Unobservable (Level 3) Inputs

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill, at March 31, 2021 and December 31, 2020.

March 31, 2021	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	2,111	Discounted cash flow	Maturity/Call date	1 month to 15 years
				US Muni BQ curve	A- to BBB-
				Discount rate	2% - 4%
				Weighted-average coupon	4%
Corporate obligations and U.S. Government-sponsored mortgage-backed securities	$	35	Discounted cash flow	Risk free rate	3 month LIBOR
				plus premium for illiquidity	plus 200bps
				Weighted-average coupon	—%
Collateral dependent loans	$	40,698	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 10%
				Weighted-average discount by loan balance	4%
Other real estate owned	$	185	Appraisals	Discount to reflect current market conditions	0% - 72%
				Weighted-average discount of other real estate owned balance	39%

December 31, 2020	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	2,444	Discounted cash flow	Maturity/Call date	1 month to 15 years
				US Muni BQ curve	A- to BBB-
				Discount rate	2% - 4%
				Weighted-average coupon	4%
Corporate obligations and U.S Government-sponsored mortgage-backed securities	$	35	Discounted cash flow	Risk free rate	3 month LIBOR
				plus premium for illiquidity	plus 200bps
				Weighted-average coupon	—%
Impaired loans (collateral dependent)	$	37,250	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 10%
				Weighted-average discount by loan balance	6%
Other real estate owned	$	544	Appraisals	Discount to reflect current market conditions	0% - 30%
				Weighted-average discount of other real estate owned balance	26%

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

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

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

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(table dollar amounts in thousands, except share data)

(Unaudited)

Fair Value of Financial Instruments

The following table presents estimated fair values of the Corporation’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2021, and December 31, 2020.

			March 31, 2021
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	187,901	$	187,901	$	—	$	—
Interest-bearing deposits	392,806		392,806		—		—
Investment securities available for sale	2,405,568		—		2,403,422		2,146
Investment securities held to maturity	1,295,289		—		1,299,944		18,836
Loans held for sale	4,430		—		4,430		—
Loans	9,117,146		—		—		9,168,023
Federal Home Loan Bank stock	28,736		—		28,736		—
Interest rate swap asset	48,576		—		48,576		—
Interest receivable	54,662		—		54,662		—
Liabilities:
Deposits	$	11,951,780	$	11,103,474	$	847,398	$	—
Borrowings:
Securities sold under repurchase agreements	185,721		—		185,716		—
Federal Home Loan Bank advances	359,337		—		366,179		—
Subordinated debentures and other borrowings	118,439		—		108,124		—
Interest rate swap liability	50,284		—		50,284		—
Interest payable	4,020		—		4,020		—

			December 31, 2020
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	192,896	$	192,896	$	—	$	—
Interest-bearing deposits	392,305		392,305		—		—
Investment securities available for sale	1,919,119		—		1,916,640		2,479
Investment securities held to maturity	1,227,668		—		1,260,815		19,478
Loans held for sale	3,966		—		3,966		—
Loans	9,112,526		—		—		9,191,628
Federal Home Loan Bank stock	28,736		—		28,736		—
Interest rate swap asset	74,335		—		74,335		—
Interest receivable	53,948		—		53,948		—
Liabilities:
Deposits	$	11,361,610	$	10,482,865	$	878,257	$	—
Borrowings:
Securities sold under repurchase agreements	177,102		—		177,097		—
Federal Home Loan Bank advances	389,430		—		399,991		—
Subordinated debentures and other borrowings	118,380		—		108,439		—
Interest rate swap liability	76,353		—		76,353		—
Interest payable	3,287		—		3,287		—

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(table dollar amounts in thousands, except share data)

(Unaudited)

NOTE 7

TRANSFERS ACCOUNTED FOR AS SECURED BORROWINGS

The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of March 31, 2021 and December 31, 2020 were:

	March 31, 2021
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	184,067	$	—	$	1,654	$	—	$	185,721

	December 31, 2020
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	175,449	$	—	$	1,653	$	—	$	177,102

NOTE 8 

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, as of March 31, 2021 and 2020:

	Accumulated Other Comprehensive Income (Loss)
	Unrealized Gains (Losses) on Securities Available for Sale		Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Defined Benefit Plans		Total
Balance at December 31, 2020	$	87,988	$	(1,594)	$	(11,558)	$	74,836
Other comprehensive income (loss) before reclassifications	(37,850)		46		—		(37,804)
Amounts reclassified from accumulated other comprehensive income	(1,421)		199		—		(1,222)
Period change	(39,271)		245		—		(39,026)
Balance at March 31, 2021	$	48,717	$	(1,349)	$	(11,558)	$	35,810
Balance at December 31, 2019	$	38,872	$	(1,141)	$	(9,857)	$	27,874
Other comprehensive income (loss) before reclassifications	30,364		(1,038)		—		29,326
Amounts reclassified from accumulated other comprehensive income	(3,643)		99		—		(3,544)
Period change	26,721		(939)		—		25,782
Balance at March 31, 2020	$	65,593	$	(2,080)	$	(9,857)	$	53,656

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(table dollar amounts in thousands, except share data)

(Unaudited)

The following table presents the reclassification adjustments out of accumulated other comprehensive income (loss) that were included in net income in the Consolidated Condensed Statements of Income for the three months ended March 31, 2021 and 2020.

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Three Months Ended March 31,
Details about Accumulated Other Comprehensive Income (Loss) Components	2021		2020		Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities gains reclassified into income	$	1,799	$	4,612	Other income - net realized gains on sales of available for sale securities
Related income tax expense	(378)		(969)		Income tax expense
	$	1,421	$	3,643
Unrealized gains (losses) on cash flow hedges (2)
Interest rate contracts	$	(252)	$	(125)	Interest expense - subordinated debentures and term loans
Related income tax benefit	53		26		Income tax expense
	$	(199)	$	(99)
Total reclassifications for the period, net of tax	$	1,222	$	3,544

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

(2) For additional detail related to unrealized gains (losses) on cash flow hedges and related amounts reclassified from accumulated other comprehensive income see NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements.

NOTE 9

SHARE-BASED COMPENSATION

Stock options and RSAs have been issued to directors, officers and other management employees under the Corporation's 2009 Long-term Equity Incentive Plan, the 2019 Long-term Equity Incentive Plan, and the Equity Compensation Plan for Non-Employee Directors. The stock options, which have a ten year life, become 100 percent vested based on time ranging from one year to two years and are fully exercisable when vested. Option exercise prices equal the Corporation's common stock closing price on NASDAQ on the date of grant. The RSAs issued to employees and non-employee directors provide for the issuance of shares of the Corporation's common stock at no cost to the holder and generally vest after 3 years.  The RSAs vest only if the employee is actively employed by the Corporation on the vesting date and, therefore, any unvested shares are forfeited.  For non-employee directors, the RSAs vest only if the non-employee director remains as an active board member on the vesting date and, therefore, any unvested shares are forfeited. The RSAs for employees and non-employee directors are either immediately vested at retirement, disability or death, or, continue to vest after retirement, disability or death, depending on the plan under which the shares were granted.

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

Compensation expense related to unvested share-based awards is recorded by recognizing the unamortized grant date fair value of these awards over the remaining service periods of those awards, with no change in historical reported fair values and earnings.  Awards are valued at fair value in accordance with provisions of share-based compensation guidance and are recognized on a straight-line basis over the service periods of each award. To complete the exercise of vested stock options, RSA’s and ESPP options, the Corporation generally issues new shares from its authorized but unissued share pool. Share-based compensation for the three months ended March 31, 2021 was $1,190,000 compared to $1,220,000 for the three months ended March 31, 2020. Share-based compensation has been recognized as a component of salaries and benefits expense in the accompanying Consolidated Condensed Statements of Income.

Share-based compensation expense recognized in the Consolidated Condensed Statements of Income is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Share-based compensation guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods, if actual forfeitures differ from those estimates. Pre-vesting forfeitures were estimated to be approximately 0.5 percent for the three months ended March 31, 2021, based on historical experience.

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(table dollar amounts in thousands, except share data)

(Unaudited)

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

	Three Months Ended March 31,
	2021		2020
Stock and ESPP Options
Pre-tax compensation expense	$	75	$	41
Income tax expense (benefit)	(72)		—
Stock and ESPP option expense, net of income taxes	$	3	$	41
Restricted Stock Awards
Pre-tax compensation expense	$	1,115	$	1,179
Income tax expense (benefit)	(237)		(257)
Restricted stock awards expense, net of income taxes	$	878	$	922
Total Share-Based Compensation
Pre-tax compensation expense	$	1,190	$	1,220
Income tax expense (benefit)	(309)		(257)
Total share-based compensation expense, net of income taxes	$	881	$	963

As of March 31, 2021, unrecognized compensation expense related to RSAs was $8.4 million and is expected to be recognized over a weighted-average period of 2.01 years. The Corporation did not have any unrecognized compensation expense related to stock options as of March 31, 2021.

Stock option activity under the Corporation's stock option plans as of March 31, 2021 and changes during the three months ended March 31, 2021, were as follows:

	Number of Shares	Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2021	45,800	$	15.00
Exercised	(14,300)	$	11.97
Outstanding March 31, 2021	31,500	$	16.37	2.06	$	949,155
Vested and Expected to Vest at March 31, 2021	31,500	$	16.37	2.06	$	949,155
Exercisable at March 31, 2021	31,500	$	16.37	2.06	$	949,155

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Corporation's closing stock price on the last trading day of the first three months of 2021 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their stock options on March 31, 2021.  The amount of aggregate intrinsic value will change based on the fair market value of the Corporation's common stock.

The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2021 and 2020 was $453,000 and $36,000, respectively. Cash receipts of stock options exercised during this same period were $171,000 and $7,000, respectively.

The following table summarizes information on unvested RSAs outstanding as of March 31, 2021:

	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested RSAs at January 1, 2021	357,883	$	36.30
Granted	66,913	$	42.39
Vested	(4,285)	$	42.15
Forfeited	(1,650)	$	32.21
Unvested RSAs at March 31, 2021	418,861	$	37.23

The grant date fair value of ESPP options was estimated to be approximately $75,000 at the beginning of the January 1, 2021 quarterly offering period. The ESPP options vested during the three months ending March 31, 2021, leaving no unrecognized compensation expense related to unvested ESPP options at March 31, 2021.

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(table dollar amounts in thousands, except share data)

(Unaudited)

NOTE 10

INCOME TAX

The following table summarizes the major components creating differences between income taxes at the federal statutory and the effective tax rate recorded in the consolidated statements of income for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,
	2021			2020
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal statutory income tax at 21%	$	12,268		$	7,928
Tax-exempt interest income	(3,706)			(3,022)
Share-based compensation	(59)			—
Tax-exempt earnings and gains on life insurance	(281)			(286)
Tax credits	(73)			(61)
CARES Act - NOL carryback rate differential	—			(1,178)
State Income Tax	702			86
Other	101			23
Actual Tax Expense	$	8,952		$	3,490
Effective Tax Rate	15.3		%	9.2		%

NOTE 11

NET INCOME PER SHARE

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

The following table reconciles basic and diluted net income per share for the three months ended March 31, 2021 and 2020.

	Three Months Ended March 31,
	2021					2020
	Net Income		Weighted-Average Shares	Per Share Amount		Net Income		Weighted-Average Shares	Per Share Amount
Net income available to common stockholders	$	49,469	53,930,200	$	0.92	$	34,263	54,732,073	$	0.63
Effect of potentially dilutive stock options and restricted stock awards			203,422					185,687
Diluted net income per share	$	49,469	54,133,622	$	0.91	$	34,263	54,917,760	$	0.62

For the three months ended March 31, 2021 and 2020, there were no stock options with an option price greater than the average market price of the common shares.

NOTE 12

GENERAL LITIGATION AND REGULATORY EXAMINATIONS

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

NOTE 13

SUBSEQUENT EVENT

On April 1, 2021, the Bank closed its acquisition of Hoosier Trust Company, an Indiana trust company (“Hoosier”), pursuant to which Hoosier merged with and into the Bank. The consideration paid to the shareholders of Hoosier at closing was $3,225,000 in cash.

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

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

FORWARD-LOOKING STATEMENTS

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

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

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

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

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

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

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

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

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

•adverse developments in our loan and investment portfolios;

•our participation as a lender in the PPP;

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

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

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

•our ability to implement and comply with the Settlement Agreement and Agreed Order entered into with the United States Department of Justice ("DOJ") related to our fair lending practices;

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

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

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

CRITICAL ACCOUNTING POLICIES

Generally accepted accounting principles are complex and require us to apply significant judgments to various accounting, reporting and disclosure matters. We must use assumptions and estimates to apply those principles where actual measurement is not possible or practical. For a complete discussion of our significant accounting policies, see “Notes to the Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2020. Certain policies are considered critical because they are highly dependent upon subjective or complex judgments, assumptions and estimates. Changes in such estimates may have a significant impact on the financial statements. The uncertainties related to COVID-19 could cause significant changes to these estimates compared to what was known at the time these financial statements were prepared.

We believe there have been no significant changes during the three months ended March 31, 2021 to the items that we disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2020, with the exception of the adoption of Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL") on January 1, 2021. Certain accounting policies were revised and certain accounting policy elections were implemented, related to the adoption of CECL.

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CECL replaces the previous "incurred loss" model for measuring credit losses, which encompassed allowances for current known and inherent losses within the portfolio, with an "expected loss" model for measuring credit losses, which encompasses allowances for losses expected to be incurred over the life of the portfolio. The new CECL model requires the measurement of all expected credit losses for financial assets measured at amortized cost and certain off-balance sheet credit exposures based on historical experiences, current conditions, and reasonable and supportable forecasts. CECL also requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as credit quality and underwriting standards of an organization's portfolio. In addition, CECL includes certain changes to the accounting for investment securities available for sale depending on whether management intends to sell the securities or believes that it is more likely than not they will be required to sell. See NOTE 1. GENERAL, NOTE 2. INVESTMENT SECURITIES and NOTE 3. LOANS AND ALLOWANCE of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q for details of the accounting policy changes related to the adoption of CECL.

BUSINESS SUMMARY

First Merchants Corporation (the “Corporation”) is a financial holding company headquartered in Muncie, Indiana and was organized in September 1982. The Corporation’s Common Stock is traded on NASDAQ’s Global Select Market System under the symbol FRME. The Corporation has one full-service bank charter, First Merchants Bank (the “Bank”), which opened for business in Muncie, Indiana, in March 1893. The Bank also operates First Merchants Private Wealth Advisors (a division of First Merchants Bank).  The Bank includes 125 banking locations in Indiana, Illinois, Ohio and Michigan. In addition to its traditional branch network, the Corporation offers comprehensive electronic and mobile delivery channels to its customers. The Corporation’s business activities are currently limited to one significant business segment, which is community banking.

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

COVID-19 UPDATE

The COVID-19 pandemic continued to impact the Corporation’s operations during the quarter ended March 31, 2021. While most states have eased restrictive measures and vaccination rates are steadily increasing, uncertainty remains about the ultimate duration of the pandemic and the timing and strength of the economic recovery. As the pandemic has evolved, we continue to support our customers by providing assistance to those affected by the pandemic, including by working with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19 and by originating loans under the Paycheck Protection Program (“PPP”).

The CARES Act and the Paycheck Protection Program

As previously reported, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law in March 2020, providing an approximately $2 trillion stimulus package. For small businesses, eligible nonprofits and certain others, the CARES Act established the PPP, a lending program administered by the Small Business Administration (“SBA”) that is intended to incentivize participants to retain their employees by providing them with loans that are fully guaranteed by the U.S. government and subject to forgiveness if program guidelines are met. The PPP was later extended and modified by the Paycheck Protection Program and Health Care Enhancement Act in April 2020 and the Paycheck Protection Program Flexibility Act in June 2020, with PPP funding under this initial round expiring on August 8, 2020.

In December 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act was signed into law as part of the Consolidated Appropriations Act, 2021 (the “CAA”). In addition to direct stimulus payments and other aid, this Act provided for a second round of PPP loans through March 31, 2021, and included the establishment of PPP second draw loans. Certain borrowers that had obtained a PPP loan in 2020 (a “first draw PPP loan”) became eligible in January 2021 to apply for a “second draw PPP loan” on generally the same terms and conditions as their first draw loans. The eligibility requirements for a second draw PPP loan, however, are much narrower than the eligibility requirements for a first draw PPP loan. More recently, the American Rescue Plan Act of 2021 was signed into law on March 11, 2021, providing additional funds for the PPP and expanding certain PPP eligibility requirements. Further, on March 30, 2021, the PPP Extension Act of 2021 (was signed into law, providing applicants two additional months (through May 31, 2021) to apply for a first draw or second draw PPP loan and giving the SBA until June 30, 2021 to process loan applications.

Having actively participated in assisting its customers with applications for resources through the first round of the PPP during 2020, the Bank is also participating in the second round that commenced in January 2021. Loans under the program earn interest at a fixed rate of 1 percent and the vast majority of the Bank’s first round PPP loans have two-year maturities. The second round PPP loans have five-year maturities. The Bank anticipates that the majority of these loans will ultimately be forgiven, in whole or in part, by the SBA in accordance with the terms of the program. As of March 31, 2021, the Bank had over 4,700 PPP loans representing $741.7 million, which is net of $18.6 million of deferred processing fee income and costs. The weighted-average deferred processing fee on PPP loans was approximately 3.44 percent and is recognized over the term of the loan. If a loan is forgiven by the SBA or paid off by the borrower prior to maturity, any unamortized portion of the fee will be recognized immediately. During the three months ended March 31, 2021, the Corporation recognized interest income on PPP loans of $1.7 million and $7.6 million of PPP loan related deferred processing fee income as a yield adjustment.

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PART I: FINANCIAL INFORMATION

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

Loan Modifications and Troubled Debt Restructures

As previously reported, the Bank's banking regulators issued guidance in March 2020 encouraging financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act had further provided that a qualified loan modification is exempt by law from classification as a troubled debt restructure as defined by GAAP, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates. In accordance with that guidance, the Bank has offered short-term modifications made in response to COVID-19 to borrowers who were current and otherwise not past due. These included short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. The CAA, as described above, extended the expiration date for COVID-related loan modifications exempt from troubled debt restructuring classification until the earlier of January 1, 2022, or 60 days after the termination of the national emergency. As of March 31, 2021, $65.1 million in loan balances remained in deferral. Details of the modifications are included in the "LOAN QUALITY" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

CECL Implementation

Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit losses on Financial Instruments ("CECL") had an original adoption date of January 1, 2020, which included a day 1 measurement date of January 1, 2020. Pursuant to the CARES Act, which created an optional deferral of the CECL adoption date, and the related joint statement of federal banking regulators (which also became effective in March 2020), and consistent with guidance from the SEC and FASB, the Corporation elected to delay implementation of ASU No. 2016-13, the optional deferral of which was set to expire on December 31, 2020. However, the CAA amended the CARES Act by extending the temporary relief from CECL compliance to the earlier of the first day of the fiscal year that begins after the date on which the national emergency concerning COVID-19 terminates, or January 1, 2022. The Corporation elected to delay implementation of CECL following the approval of the CARES Act and, with the enactment of the CAA, the Corporation elected to delay adoption of CECL to January 1, 2021. As a result of the Corporation’s election, its 2020 financial statements have been prepared under the incurred loss model and its 2021 financial statements have been prepared under the CECL model.

Regulatory Capital

As part of a March 27, 2020 joint statement of federal banking regulators, an interim final rule that allowed banking organizations to mitigate the effects of the CECL accounting standard on their regulatory capital was announced. Banking organizations could elect to mitigate the estimated cumulative regulatory capital effects of CECL for up to two years. This two-year delay was to be in addition to the three-year transition period that federal banking regulators had already made available. While the CAA provided for a further extension of the mandatory adoption of CECL to the earlier of the first day of the fiscal year that begins after the date on which the national emergency concerning COVID-19 terminates, or January 1, 2022, the federal banking regulators have elected to not provide a similar extension to the two year mitigation period applicable to regulatory capital effects. Instead, the federal banking regulators require that, in order to utilize the additional two-year delay, banking organizations must have adopted the CECL standard no later than December 31, 2020, as required by the CARES Act.

As discussed above, the Corporation elected to delay implementation of ASU No. 2016-13 until January 1, 2021 and, as a result, will recognize the implementation effects of CECL on its regulatory capital over a three-year transition period. Beginning on January 1, 2021, the Corporation phased in 25 percent of the deferred capital impact of CECL, with an additional 25 percent to be phased in at the beginning of the following three years, resulting in the impact being fully phased in on January 1, 2024.

RESULTS OF OPERATIONS

The Corporation reported first quarter 2021 net income of $49.5 million, compared to $34.3 million during the first quarter of 2020. Diluted earnings per share for the first quarter 2021 totaled $0.91 per share, compared to $0.62 per diluted share during the same period in 2020.

As of March 31, 2021, total assets equaled $14.6 billion, an increase of $561.9 million, or 4.0 percent, from December 31, 2020. The Corporation's total loan portfolio increased $75.5 million from December 31, 2020. As of March 31, 2021, the Corporation had $741.7 million of PPP loans, an increase of $74.6 million from the December 31, 2020 balance of $667.1 million. PPP loans are included in the commercial and industrial loan class, which was the largest loan class increase since December 31, 2020. Additionally, other loan classes that experienced large increases from December 31, 2020 were real estate construction and public finance and other commercial loans. The largest loan classes that experienced a decrease from December 31, 2020 were commercial real estate, non-owner occupied and agricultural land, production and other loans to farmers. Additional details of the changes in the Corporation's loans are discussed within NOTE 3. LOANS AND ALLOWANCE of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q, and the "LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Total investment securities increased $554.1 million from December 31, 2020 as the excess liquidity from deposit growth was used to invest in the bond portfolio, which was offset by a decline in net unrealized gains on the available for sale portfolio of $49.7 million. The net decrease in unrealized gains from December 31, 2020 to March 31, 2021 is primarily due to changes in interest rates. The longer term points on the yield curve have increased since year-end which decreases the fair value of securities held in the portfolio. Additionally, the overall increase in investment securities was also offset by the Corporation's adoption of CECL, which resulted in an allowance for credit loss of $245,000 recorded at adoption on the state and municipal securities in the held to maturity portfolio. Additional details of the changes in the Corporation's investment securities portfolio are discussed within NOTE 2. INVESTMENT SECURITIES of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

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PART I: FINANCIAL INFORMATION

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

The Corporation’s allowance for credit losses - loans totaled $201.1 million as of March 31, 2021 and equaled 2.16 percent of total loans. The Corporation adopted the current expected credit losses ("CECL") model for calculating the allowance for credit losses on January 1, 2021. CECL replaces the previous "incurred loss" model for measuring credit losses, which encompassed allowances for current known and inherent losses within the portfolio, with an "expected loss" model for measuring credit losses, which encompasses allowances for losses expected to be incurred over the life of the portfolio. The new CECL model requires the measurement of all expected credit losses for financial assets measured at amortized cost and certain off-balance sheet credit exposures based on historical experiences, current conditions, and reasonable and supportable forecasts. CECL also requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as credit quality and underwriting standards of an organization's portfolio. The impact of the adoption was an increase to the Allowance for Credit Losses - Loans of $74.1 million. Additional details of the Allowance methodology and credit quality of the loan portfolio are discussed within NOTE 3. LOANS AND ALLOWANCE of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q and within the “LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Corporation did not recognize any provision expense during the three months ended March 31, 2021, compared to provision expense of $19.8 million during the same period of the prior year. Net charge-offs in the first quarter of 2021 were $3.6 million, compared to net charge-offs of $582,000 during the same period of 2020. For the three months ended March 31, 2021, there were three individual charge-offs greater than $500,000 that totaled $3.2 million, and for the three months ended March 31, 2020, there were not any charge-offs greater than $500,000. Non-accrual loans totaled $57.9 million, a decrease of $3.5 million from December 31, 2020, resulting in a coverage ratio of 347.2 percent..

The Corporation's net tax asset, deferred and receivable increased $27.8 million from December 31, 2020. As a result of the CECL adoption on January 1, 2021, the cumulative effect of adoption resulted in a deferred tax asset of $22.0 million. Additionally, the decrease in unrealized gains on available for sale investment securities resulted in a $10.4 million decline in the deferred tax liability. Both, the increase in deferred tax asset from CECL adoption and the decrease in deferred tax liability related to unrealized gains on available for sale investment securities, increase the net deferred tax asset.

The Corporation's other assets decreased $19.0 million from December 31, 2020. The Corporation's derivative asset (recorded in other assets) and derivative liability (recorded in other liabilities) related to interest rate contracts decreased $25.8 million and $26.1 million, respectively, from December 31, 2020. The decreases in valuations are due to a lower total notional balance and higher yield curve rates across the entire term point spectrum. The higher interest rates are the result of higher inflation expectations resulting from surging consumer demand observed in the market place.

As of March 31, 2021, total deposits equaled $12.0 billion, an increase of $590.2 million from December 31, 2020. The Corporation experienced increases from December 31, 2020 in demand and savings accounts of $424.7 million and $195.9 million, respectively. A portion of the increase is due to PPP loans that have remained on deposit, in addition to consumer Economic Impact Payments from the IRS that have also remained on deposit. Offsetting these increases were decreases in certificates of deposit and brokered deposits of $23.0 million and $7.5 million, respectively, from December 31, 2020. The low interest rate environment has resulted in customers moving funds from maturing time deposit products into non-maturity products due to similar rates offered for both products.

Total borrowings decreased $21.4 million as of March 31, 2021, compared to December 31, 2020. Federal Home Loan Bank advances decreased $30.1 million compared to December 31, 2020 as the Corporation utilized excess liquidity from deposit growth to pay off maturing advances. Offsetting this decrease was an increase in securities sold under repurchase agreements of $8.6 million.

The Corporation's other liabilities as of March 31, 2021 increased $62.2 million compared to December 31, 2020. As part of the CECL adoption on January 1, 2021, the Corporation recorded a $20.5 million allowance for credit losses on off-balance sheet credit exposures as a liability account representing expected credit losses over the contractual period for which the Corporation is exposed to credit risk resulting from a contractual obligation to extend credit. The Corporation also accrued $72.7 million of trade date accounting related to investment securities purchases as of March 31, 2021, of which, the accrual was $6.2 million as of December 31, 2020. Additionally, as noted above, the derivative hedge liability decreased $26.1 million from December 31, 2020.

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

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PART I: FINANCIAL INFORMATION

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

NET INTEREST INCOME

Net interest income is the most significant component of our earnings, comprising 81 percent of revenues for the three months ended March 31, 2021. Net interest income and margin are influenced by many factors, primarily the volume and mix of earning assets, funding sources, and interest rate fluctuations. Other factors include the level of accretion income on purchased loans, prepayment risk on mortgage and investment-related assets, and the composition and maturity of earning assets and interest-bearing liabilities. Loans typically generate more interest income than investment securities with similar maturities. Funding from customer deposits generally cost less than wholesale funding sources. Factors such as general economic activity, Federal Reserve Board monetary policy, and price volatility of competing alternative investments, can also exert significant influence on our ability to optimize the mix of assets and funding and the net interest income and margin.

Net interest income is the excess of interest received from earning assets over interest paid on interest-bearing liabilities. For analytical purposes, net interest income is also presented on an FTE basis in the tables that follow to reflect what tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset. The federal statutory rate of 21 percent was used for all periods, adjusted for the TEFRA interest disallowance applicable to certain tax-exempt obligations. The FTE analysis portrays the income tax benefits associated with tax-exempt assets and helps to facilitate a comparison between taxable and tax-exempt assets. Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully taxable equivalent basis. Therefore, management believes these measures provide useful information for both management and investors by allowing them to make peer comparisons.

Net interest margin, on a tax equivalent basis, decreased 23 basis points to 3.23 percent for three months ended March 31, 2021 compared to 3.46 percent for the same period in 2020. Average earning assets for the three months ended March 31, 2021 increased $1.7 billion compared to the same period in 2020, and was primarily attributable to an increase in loans and investment securities of $709.9 million and $739.6 million, respectively. Since the beginning of the PPP in April 2020, the Bank has originated over $1.2 billion of PPP loans, which averaged $660.7 million in the first quarter of 2021. The increase in the investment securities portfolio was the result of excess liquidity generated from growth in deposits being used to invest in the bond portfolio.

In the first quarter of 2021, FTE asset yields decreased 86 basis points compared to the same period in 2020. This decrease was primarily a result of the FOMC's interest rate decreases of 50 basis points on March 3, 2020 and 100 basis points on March 16, 2020 at the Committee's special meetings related to COVID-19, and the decline in one-month LIBOR from March 31, 2020 to March 31, 2021 of 88 basis points. The PPP loans originated were recorded at an interest rate of only 1 percent, but the Corporation also recognized fee income of $7.6 million during the first quarter of 2021, which is included in interest income, and had a positive impact to net interest margin of 13 basis points.

The Corporation recognized fair value accretion income on purchased loans, which is included in interest income, of $4.7 million, which accounted for 6 basis points of net interest margin in the first quarter of 2021. Comparatively, the Corporation recognized $3.5 million of accretion income for the first quarter of 2020, or 12 basis points of net interest margin.

Interest costs decreased 78 basis points, contributing to a 8 basis point FTE decrease in net interest spread as compared to the same period in 2020. Interest costs have decreased as management aggressively moved deposit rates down in tandem with a decline in wholesale funding rates. Interest-bearing deposit and borrowing costs for the three months ended March 31, 2021 of 0.27 percent and 1.89 percent, respectively, decreased from 1.06 percent and 2.24 percent, respectively, during the same period in 2020.

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PART I: FINANCIAL INFORMATION

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

The following tables presents the Corporation’s average balance sheet, interest income/interest expense, and the average rate as a percent of average earning assets/liabilities for the three months ended March 31, 2021, and 2020.

(Dollars in Thousands)	Three Months Ended
	March 31, 2021						March 31, 2020
	Average Balance		Interest  Income / Expense		Average Rate		Average Balance		Interest  Income / Expense		Average Rate
Assets:
Interest-bearing deposits	$	441,254	$	114	0.10	%	$	159,859	$	575	1.44	%
Federal Home Loan Bank stock	28,736		178		2.48		28,737		299		4.16
Investment Securities: (1)
Taxable	1,494,008		6,695		1.79		1,368,546		7,631		2.23
Tax-Exempt (2)	1,822,899		15,677		3.44		1,208,717		11,816		3.91
Total Investment Securities	3,316,907		22,372		2.70		2,577,263		19,447		3.02
Loans held for sale	16,139		156		3.87		17,217		193		4.48
Loans: (3)
Commercial	6,876,818		69,174		4.02		6,235,336		76,952		4.94
Real Estate Mortgage	975,262		9,286		3.81		870,654		10,402		4.78
Installment	674,307		6,489		3.85		759,614		9,105		4.79
Tax-Exempt (2)	693,895		6,758		3.90		643,750		6,728		4.18
Total Loans	9,236,421		91,863		3.98		8,526,571		103,380		4.85
Total Earning Assets	13,023,318		114,527		3.52	%	11,292,430		123,701		4.38	%
Net unrealized gain on securities available for sale	55,658						48,656
Allowance for credit losses	(204,353)						(81,160)
Cash and cash equivalents	165,774						159,757
Premises and equipment	110,992						113,812
Other assets	1,093,350						1,039,743
Total Assets	$	14,244,739					$	12,573,238
Liabilities:
Interest-bearing deposits:
Interest-bearing deposits	$	4,616,988	$	3,709	0.32	%	$	3,589,240	$	8,276	0.92	%
Money market deposits	2,086,322		835		0.16		1,535,844		3,783		0.99
Savings deposits	1,660,528		476		0.11		1,425,054		1,827		0.51
Certificates and other time deposits	859,334		1,180		0.55		1,666,642		7,862		1.89
Total Interest-bearing Deposits	9,223,172		6,200		0.27		8,216,780		21,748		1.06
Borrowings	675,117		3,188		1.89		748,185		4,182		2.24
Total Interest-bearing Liabilities	9,898,289		9,388		0.38		8,964,965		25,930		1.16
Noninterest-bearing deposits	2,344,746						1,669,493
Other liabilities	161,272						122,362
Total Liabilities	12,404,307						10,756,820
Stockholders' Equity	1,840,432						1,816,418
Total Liabilities and Stockholders' Equity	$	14,244,739	9,388				$	12,573,238	25,930
Net Interest Income (FTE)			$	105,139					$	97,771
Net Interest Spread (FTE) (4)					3.14	%					3.22	%
Net Interest Margin (FTE):
Interest Income (FTE) / Average Earning Assets					3.52	%					4.38	%
Interest Expense / Average Earning Assets					0.29	%					0.92	%
Net Interest Margin (FTE) (5)					3.23	%					3.46	%
(1) Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments. Annualized amounts are computed utilizing a 30/360 day basis.
(2) Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 21 percent for 2021 and 2020. These totals equal $4,711 and $3,894 for the three months ended March 31, 2021 and 2020, respectively.
(3) Non-accruing loans have been included in the average balances.
(4) Net Interest Spread (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average interest-bearing liabilities.
(5) Net Interest Margin (FTE) is interest income expressed as a percentage of average earning assets minus interest expense expressed as a percentage of average earning assets.

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PART I: FINANCIAL INFORMATION

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

NON-INTEREST INCOME

Non-interest income totaled $24.1 million for the quarter ended March 31, 2021, a $5.7 million, or 19.2 percent decline from the first quarter of 2020. Customer-specific line items accounted for $2.8 million of the decrease driven by lower derivative hedge fees and the impact of the Durbin Amendment adoption on card payment fees. Additionally, net realized gains on the sales of available for sale securities decreased $2.8 million in the first quarter of 2021 when compared to the same period in 2020.

NON-INTEREST EXPENSE

Non-interest expense totaled $66.1 million for the first quarter of 2021 and remained consistent with the first quarter of 2020 expense total of $66.2 million. The largest increases in the comparative first quarter periods were in net occupancy and equipment costs, which primarily resulted from additional expenses incurred to continue established social distancing and cleaning protocols resulting from the COVID-19 pandemic. The largest offsetting decrease, when comparing first quarter of 2021 to first quarter of 2020, was in customer-related travel and entertainment, which was also caused by COVID-19 pandemic.

INCOME TAXES

Income tax expense for the three months ended March 31, 2021 was $8,952,000 on pre-tax net income of $58,421,000.  For the same period in 2020, income tax expense was $3,490,000 on pre-tax net income of $37,753,000. The effective income tax rate was 15.3 percent for the first quarter of 2021 and 9.2 percent for the first quarter of 2020.

The lower effective income tax rate for the comparative period ended March 31, 2020 was driven by two factors. First, an abnormally high level of loan provision expense as a result of the economic impact of the COVID-19 pandemic reduced taxable income, and when coupled with an increase in tax-exempt income, the benefit of non-taxable income increased. Secondly, the CARES Act provided for the carryback of certain federal net operating losses to a prior period with a rate differential between the 2020 statutory rate of 21 percent and the rate in effect during the carryback year.

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

CAPITAL

Stockholders' Equity

The Corporation adopted the current expected credit losses ("CECL") model for calculating the allowance for credit losses on January 1, 2021. CECL replaces the previous "incurred loss" model for measuring credit losses, which encompassed allowances for current known and inherent losses within the portfolio, with an "expected loss" model for measuring credit losses, which encompasses allowances for losses expected to be incurred over the life of the portfolio. As of the adoption and day one measurement date of January 1, 2021, the Corporation recorded a one-time cumulative-effect adjustment to retained earnings, net of income taxes, of $68.0 million. See additional details of the Corporation's CECL adoption in NOTE 3. LOANS AND ALLOWANCE of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Stock Repurchase Program

On September 3, 2019, the Board of Directors of the Corporation approved a stock repurchase program of up to 3 million shares of the Corporation's outstanding common stock; provided, however, that the total aggregate investment in shares repurchased under the program was not to exceed $75 million. On a share basis, the amount of common stock subject to the repurchase program represented approximately 5 percent of the Corporation's outstanding shares. During the first quarter of 2020, the Corporation repurchased 1,634,437 of its common shares for $55.9 million at an average price of $34.21, which resulted in the aggregate investment in share repurchases of $75.0 million, the maximum allowable under the plan. As such, the September 2019 program terminated upon its own terms following the repurchases.

On January 27, 2021, the Board of Directors of the Corporation approved a stock repurchase program of up to 3,333,000 shares of the Corporation's outstanding common stock; provided, however, that the total aggregate investment in shares repurchased under the program may not exceed $100,000,000. On a share basis, the amount of common stock subject to the repurchase program represents approximately 6 percent of the Corporation's outstanding shares. The Corporation has not made any repurchases under the January 2021 program as of March 31, 2021.

Regulatory Capital

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

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

There are five capital categories defined in the regulations, ranging from well capitalized to critically undercapitalized. Classification of a bank in any of the undercapitalized categories can result in actions by regulators that could have a material effect on a bank's operations. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total and tier 1 capital to risk-weighted assets, and of tier 1 capital to average assets, or leverage ratio, all of which are calculated as defined in the

regulations. Banks with lower capital levels are deemed to be undercapitalized, significantly undercapitalized or critically undercapitalized, depending on their actual levels. The appropriate federal regulatory agency may also downgrade a bank to the next lower capital category upon a determination that the bank is in an unsafe or unsound practice. Banks are required to monitor closely their capital levels and to notify their appropriate regulatory agency of any basis for a change in capital category.

Basel III was effective for the Corporation on January 1, 2015 and requires the Corporation and the Bank to maintain the minimum capital and

leverage ratios as defined in the regulation and as illustrated in the table below, which capital to risk-weighted asset ratios include a 2.5 percent capital conservation buffer. Under Basel III, in order to avoid limitations on capital distributions, including dividends, the Corporation must hold a 2.5 percent capital conservation buffer above the adequately capitalized CET1 to risk-weighted assets ratio (which buffer is reflected in the required ratios below). Under Basel III, the Corporation and Bank elected to opt-out of including accumulated other comprehensive income in regulatory capital. As of March 31, 2021, the Bank met all capital adequacy requirements to be considered well capitalized under the fully phased-in Basel III capital rules. There is no threshold for well capitalized status for bank holding companies.

As part of a March 27, 2020 joint statement of federal banking regulators, an interim final rule that allowed banking organizations to mitigate the effects of the CECL accounting standard on their regulatory capital was announced. Banking organizations could elect to mitigate the estimated cumulative regulatory capital effects of CECL for up to two years. This two-year delay was to be in addition to the three-year transition period that federal banking regulators had already made available. While the CAA provided for a further extension of the mandatory adoption of CECL to the earlier of the first day of the fiscal year that begins after the date on which the national emergency concerning COVID-19 terminates, or January 1, 2022, the federal banking regulators have elected to not provide a similar extension to the two year mitigation period applicable to regulatory capital effects. Instead, the federal banking regulators require that, in order to utilize the additional two-year delay, banking organizations must have adopted the CECL standard no later than December 31, 2020, as required by the CARES Act.

The Corporation elected to delay implementation of ASU No. 2016-13 until January 1, 2021 and, as a result, will recognize the implementation effects of CECL on its regulatory capital over a three-year transition period. Beginning on January 1, 2021, the Corporation phased in 25 percent of the deferred capital impact of CECL, with an additional 25 percent to be phased in at the beginning of the following three years, resulting in the impact being fully phased in on January 1, 2024.

The Corporation's and Bank's actual and required capital ratios as of March 31, 2021 and December 31, 2020 were as follows:

					Prompt Corrective Action Thresholds
	Actual				Basel III Minimum Capital Required				Well Capitalized
March 31, 2021	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	1,487,455	14.33	%	$	1,090,253	10.50	%	N/A		N/A
First Merchants Bank	1,404,801		13.49		1,093,668		10.50		$	1,041,589	10.00	%
Tier 1 capital to risk-weighted assets
First Merchants Corporation	$	1,291,394	12.44	%	$	882,586	8.50	%	N/A		N/A
First Merchants Bank	1,273,339		12.22		885,350		8.50		$	833,271	8.00	%
CET1 capital to risk-weighted assets
First Merchants Corporation	$	1,244,967	11.99	%	$	726,835	7.00	%	N/A		N/A
First Merchants Bank	1,273,339		12.22		729,112		7.00		$	677,033	6.50	%
Tier 1 capital to average assets
First Merchants Corporation	$	1,291,394	9.41	%	$	548,791	4.00	%	N/A		N/A
First Merchants Bank	1,273,339		9.31		546,920		4.00		$	683,650	5.00	%

					Prompt Corrective Action Thresholds
	Actual				Basel III Minimum Capital Required				Well Capitalized
December 31, 2020	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital to risk-weighted assets
First Merchants Corporation	$	1,475,551	14.36	%	$	1,079,015	10.50	%	N/A		N/A
First Merchants Bank	1,412,805		13.70		1,082,430		10.50		$	1,030,886	10.00	%
Tier 1 capital to risk weighted assets
First Merchants Corporation	$	1,282,070	12.48	%	$	873,488	8.50	%	N/A		N/A
First Merchants Bank	1,283,922		12.45		876,253		8.50		$	824,708	8.00	%
CET1 capital to risk-weighted assets
First Merchants Corporation	$	1,235,702	12.02	%	$	719,343	7.00	%	N/A		N/A
First Merchants Bank	1,283,922		12.45		721,620		7.00		$	670,076	6.50	%
Tier 1 capital to average assets
First Merchants Corporation	$	1,282,070	9.57	%	$	536,123	4.00	%	N/A		N/A
First Merchants Bank	1,283,922		9.59		535,279		4.00		$	669,098	5.00	%

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PART I: FINANCIAL INFORMATION

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

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. The interim final rule, which became effective April 13, 2020, clarifies that PPP loans receive a zero percent risk weight for purposes of determining risk-weighted assets and the CET1, Tier 1 and Total Risk-Based capital ratios. At March 31, 2021, risk-weighted assets included $741.7 million of PPP loans at a zero risk weight. Additionally, in order to facilitate use of the PPPL Facility, the agencies have clarified that banking organizations, including the Corporation and the Bank, are allowed to neutralize the regulatory effects of PPP covered loans on the risk-based capital ratios, as well as PPP covered loans pledged under the PPPL Facility on the leverage capital ratios. The Bank has until June 30, 2021 to access funds under the PPPL Facility, unless further extended by the Federal Reserve and the Department of the Treasury. At March 31, 2021 and December 31, 2020, the Corporation did not have an outstanding balance with the PPPL Facility; therefore there were no adjustments to the leverage ratio for PPP loans.

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

	March 31, 2021						December 31, 2020
(Dollars in thousands, except per share amounts)	First Merchants Corporation			First Merchants Bank			First Merchants Corporation			First Merchants Bank
Total Risk-Based Capital
Total Stockholders' Equity (GAAP)	$	1,805,856		$	1,836,502		$	1,875,645		$	1,926,269
Adjust for Accumulated Other Comprehensive (Income) Loss (1)	(35,810)			(38,532)			(74,836)			(77,687)
Less: Preferred Stock	(125)			(125)			(125)			(125)
Add: Qualifying Capital Securities	46,427			—			46,368			—
Less: Disallowed Goodwill and Intangible Assets	(563,889)			(563,441)			(564,982)			(564,535)
Add: Modified CECL Transition Amount	40,314			40,314			—			—
Less: Disallowed Deferred Tax Assets	(1,379)			(1,379)			—			—
Total Tier 1 Capital (Regulatory)	1,291,394			1,273,339			1,282,070			1,283,922
Qualifying Subordinated Debentures	65,000			—			65,000			—
Allowance for Loan Losses Includible in Tier 2 Capital	131,061			131,462			128,481			128,883
Total Risk-Based Capital (Regulatory)	$	1,487,455		$	1,404,801		$	1,475,551		$	1,412,805
Net Risk-Weighted Assets (Regulatory)	$	10,383,360		$	10,415,888		$	10,276,333		$	10,308,855
Average Assets (Regulatory)	$	13,719,785		$	13,672,992		$	13,403,065		$	13,381,969
Total Risk-Based Capital Ratio (Regulatory)	14.33		%	13.49		%	14.36		%	13.70		%
Tier 1 Capital to Risk-Weighted Assets	12.44		%	12.22		%	12.48		%	12.45		%
Tier 1 Capital to Average Assets	9.41		%	9.31		%	9.57		%	9.59		%
CET1 Capital Ratio
Total Tier 1 Capital (Regulatory)	$	1,291,394		$	1,273,339		$	1,282,070		$	1,283,922
Less: Qualified Capital Securities	(46,427)			—			(46,368)			—
CET1 Capital (Regulatory)	$	1,244,967		$	1,273,339		$	1,235,702		$	1,283,922
Net Risk-Weighted Assets (Regulatory)	$	10,383,360		$	10,415,888		$	10,276,333		$	10,308,855
CET1 Capital Ratio (Regulatory)	11.99		%	12.22		%	12.02		%	12.45		%

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

Additionally, management believes the following tables are also meaningful when considering performance measures of the Corporation. Non-GAAP financial measures such as tangible common equity to tangible assets, return on average tangible capital and return on average tangible assets are important measures of the strength of the Corporation's capital and ability to generate earnings on tangible common equity invested by our shareholders. These non-GAAP measures provide useful supplemental information and may assist investors in analyzing the

Corporation’s financial position without regard to the effects of intangible assets and preferred stock. Disclosure of these measures also allows analysts and banking regulators to assess our capital adequacy on these same bases.

Because these measures are not defined in GAAP or federal banking regulations, they are considered non-GAAP financial measures. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.

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

The Corporation had a strong capital position as evidenced by the tangible common equity to tangible assets ratio of 8.78 percent at March 31, 2021, and 9.65 percent at December 31, 2020.

	Tangible Common Equity to Tangible Assets (non-GAAP)
(Dollars in thousands, except per share amounts)	March 31, 2021			December 31, 2020
Total Stockholders' Equity (GAAP)	$	1,805,856		$	1,875,645
Less: Cumulative preferred stock (GAAP)	(125)			(125)
Less: Intangible assets (GAAP)	(571,536)			(572,893)
Tangible common equity (non-GAAP)	$	1,234,195		$	1,302,627
Total assets (GAAP)	$	14,629,066		$	14,067,210
Less: Intangible assets (GAAP)	(571,536)			(572,893)
Tangible assets (non-GAAP)	$	14,057,530		$	13,494,317
Stockholders' Equity to Assets (GAAP)	12.34		%	13.33		%
Tangible common equity to tangible assets (non-GAAP)	8.78		%	9.65		%
Tangible common equity (non-GAAP)	$	1,234,195		$	1,302,627
Plus: Tax Benefit of intangibles (non-GAAP)	5,710			5,989
Tangible common equity, net of tax (non-GAAP)	$	1,239,905		$	1,308,616
Common Stock outstanding	53,954			53,922
Book Value (GAAP)	$	33.47		$	34.78
Tangible book value - common (non-GAAP)	$	22.98		$	24.27

The following table details and reconciles tangible earnings per share, return on tangible capital and tangible assets to traditional GAAP measures for the three months ended March 31, 2021 and 2020.

	Three Months Ended March 31,
(Dollars in thousands, except per share amounts)	2021			2020
Average goodwill (GAAP)	$	543,919		$	543,919
Average core deposit intangible (GAAP)	28,427			34,335
Average deferred tax on CDI (GAAP)	(5,877)			(7,129)
Intangible adjustment (non-GAAP)	$	566,469		$	571,125
Average stockholders' equity (GAAP)	$	1,840,432		$	1,816,418
Average cumulative preferred stock (GAAP)	(125)			(125)
Intangible adjustment (non-GAAP)	(566,469)			(571,125)
Average tangible capital (non-GAAP)	$	1,273,838		$	1,245,168
Average assets (GAAP)	$	14,244,739		$	12,573,238
Intangible adjustment (non-GAAP)	(566,469)			(571,125)
Average tangible assets (non-GAAP)	$	13,678,270		$	12,002,113
Net income available to common stockholders (GAAP)	$	49,469		$	34,263
CDI amortization, net of tax (GAAP)	1,072			1,197
Tangible net income available to common stockholders (non-GAAP)	$	50,541		$	35,460
Per Share Data:
Diluted net income available to common stockholders (GAAP)	$	0.91		$	0.62
Diluted tangible net income available to common stockholders (non-GAAP)	$	0.93		$	0.65
Ratios:
Return on average GAAP capital (ROE)	10.75		%	7.55		%
Return on average tangible capital	15.87		%	11.39		%
Return on average assets (ROA)	1.39		%	1.09		%
Return on average tangible assets	1.48		%	1.18		%

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

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PART I: FINANCIAL INFORMATION

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

LOAN QUALITY AND PROVISION FOR CREDIT LOSSES ON LOANS

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

Loan Quality

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

At March 31, 2021, non-performing loans totaled $58.6 million, a decrease of $6.1 million from December 31, 2020. Loans not accruing interest income totaled $57.9 million at March 31, 2021, a decrease of $3.6 million from December 31, 2020. The decrease in the non- accrual loan balance was attributed to partial charge-offs related to three loans. Two of the loans are in the senior living sector with remaining balances, net of specific reserves, totaling $23.4 million and the third is a medical office building with a remaining loan balance of $164,000.

Other real estate owned and repossessions, totaling $604,000 at March 31, 2021, decreased $336,000 from December 31, 2020. For other real estate owned, current appraisals are obtained to determine fair value as management continues to aggressively market these real estate assets.

According to guidance set forth in ASC 326-20-35, loans that no longer exhibit similar risk characteristics are evaluated individually to determine if there is a need for a specific reserve. Commercial loans under $500,000 and consumer loans, with the exception of troubled debt restructures, are not individually evaluated. The determination for individual evaluation is made based on current information or events that may suggest it is probable that not all amounts due of principal and interest, according to the contractual terms of the loan agreement, will be substantially collected.

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

(Dollars in Thousands)	March 31, 2021		December 31, 2020
Non-Performing Assets:
Non-accrual loans	$	57,923	$	61,471
Renegotiated loans	655		3,240
Non-performing loans (NPL)	58,578		64,711
OREO and Repossessions	604		940
Non-performing assets (NPA)	59,182		65,651
Loans 90-days or more delinquent and still accruing	1,093		746
NPAs and loans 90-days or more delinquent	$	60,275	$	66,397

The non-accrual balances in the table above include troubled debt loan restructures totaling $1.8 million and $1.7 million as of March 31, 2021 and December 31, 2020, respectively.

The composition of non-performing assets plus accruing loans 90-days or more delinquent is reflected in the following table.

(Dollars in Thousands)	March 31, 2021		December 31, 2020
Non-performing assets and loans 90-days or more delinquent:
Commercial and industrial loans	$	1,671	$	2,923
Agricultural land, production and other loans to farmers	1,220		1,012
Real estate loans:
Construction	330		435
Commercial real estate, non-owner occupied	44,239		47,548
Commercial real estate, owner occupied	2,792		3,040
Residential	7,185		9,034
Home equity	2,710		2,350
Individuals' loans for household and other personal expenditures	128		55
Non-performing assets and loans 90-days or more delinquent:	$	60,275	$	66,397

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

On March 22, 2020, a statement was issued by the Bank's banking regulators and titled the “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” (the "Interagency Statement") that encourages financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act further provides that a qualified loan modification is exempt by law from classification as a troubled debt restructure as defined by GAAP, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates. The Interagency Statement was subsequently revised on April 7, 2020 to clarify the interaction of the original guidance with Section 4013 of the CARES Act, as well as setting forth the banking regulators’ views on consumer protection considerations. In accordance with such guidance, the Bank has offered short-term modifications made in response to COVID-19 to borrowers who were current and otherwise not past due. These included short-term, 180 days or less, modifications primarily in the form of payment deferrals. Modifications in the form of fee waivers, extensions of repayment terms, or other delays in payment that are insignificant were also made.

On December 27, 2020, a $900 billion COVID-19 relief package, as passed by the U.S. Congress, was signed into law as part of the 2021 Consolidated Appropriations Act (the “CAA”) that provides federal government funding through the end of its 2021 fiscal year. In addition to delivering direct stimulus payments to certain individuals, an increase in unemployment insurance benefits, an extension of the eviction moratorium, relief to the healthcare industry, and additional aid to various other businesses, the COVID-19-related provisions of the CAA provide for (i) an additional $284 billion in funding for the PPP, through March 31, 2021, and the establishment of PPP second draw loans, (ii) an extension of the temporary delay for implementation of the CECL accounting standard, and (iii) further suspension of the troubled debt restructure assessment and reporting requirements for financial institutions under GAAP. Certain borrowers that had obtained a PPP loan in 2020 (a “first draw PPP loan”) became eligible on January 19, 2021 to apply for a “second draw PPP loan” on generally the same terms and conditions as their first draw loans. However, the eligibility requirements for a second draw PPP loan are much narrower than the eligibility requirements for a first draw PPP loan. The following table summarizes modifications that remained in deferment as of March 31, 2021.

	March 31, 2021
	Recorded Balance		Number of Loans
Commercial and industrial loans	$	13,984	11
Real estate loans:
Construction	4,360		1
Commercial real estate, non-owner occupied	43,530		10
Commercial real estate, owner occupied	1,865		6
Residential	1,026		8
Individuals' loans for household and other personal expenditures	291		13
Total	$	65,056	49

Of the loans still in deferment at March 31, 2021 as indicated in the table above, $46.6 million, or 72 percent of the balance, were in the hotel industry. Although the Corporation believes its underwriting and loan review procedures are appropriate for the various kinds of loans it makes, its results of operations and financial condition could be adversely affected in the event the quality of its loan portfolio declines. Deterioration in the economic environment including residential and commercial real estate values may result in increased levels of loan delinquencies and credit losses.

Provision and Allowance for Credit Losses on Loans

The Corporation adopted FASB Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL") on January 1, 2021. CECL replaces the previous "incurred loss" model with an "expected loss" model of measuring credit losses, which encompasses allowances for losses expected to be incurred over the life of the portfolio. The new CECL model requires the measurement of all expected credit losses for financial assets measured at amortized cost based on historical experiences, current conditions and reasonable and supportable forecasts. CECL also requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as credit quality and underwriting standards of an organization's portfolio.

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

The Corporation’s total loan balance increased $75.1 million from December 31, 2020 to $9.3 billion at March 31, 2021. PPP loans accounted for $741.7 million of the total loan balance at March 31, 2021. At March 31, 2021, the allowance for credit losses totaled $201.1 million, which represents an increase of $70.4 million from December 31, 2020. The allowance increase was primarily due to the day one cumulative effect adjustment related to the adoption of CECL. As a percent of loans, the allowance for credit losses was 2.16 percent at March 31, 2021 compared to 1.41 percent at December 31, 2020. The allowance for credit losses as a percentage of total loans less PPP loans was 2.34 percent as of March 31, 2021. The Bank anticipates that a majority of the PPP loans will ultimately be forgiven, in whole or in part, by the SBA as, in accordance with the terms of the PPP, the loans are fully guaranteed by the SBA.

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

There was no provision for credit losses for the three months ended March 31, 2021 compared to $19.8 million for the same period of 2020. The first quarter 2020 provision reflected an increase in the reserve related to the estimated impact on the economy and the credit quality of our loan portfolio due to the emerging COVID-19 pandemic. The Corporation adopted CECL effective January 1, 2021 and recorded a day one cumulative effect adjustment which increased the Allowance for Credit Losses for Loans to $204.7 million. Net charge-offs lowered the allowance to $201.1 million. The Corporation deems this estimate for loan portfolio credit exposure as appropriate, thus there was no related provision in the first quarter 2021.

Net charge-offs totaling $3.6 million and $582,000, respectively, were recognized for the three months ended March 31, 2021 and March 31, 2020. For the three months ended March 31, 2021, there were three individual charge-offs greater than $500,000 that totaled $3.2 million, and for the three months ended March 31, 2020, there were not any charge-offs greater than $500,000. There have been no individual recoveries greater than $500,000 for either reporting period. The distribution of the net charge-offs (recoveries) for the three months ended March 31, 2021 and 2020 are reflected in the following table:

	Three Months Ended March 31,
(Dollars in Thousands)	2021		2020
Net charge-offs (Recoveries):
Commercial and industrial loans	$	484	$	129
Agricultural land, production and other loans to farmers	1		43
Real estate loans:
Construction	2		(37)
Commercial real estate, non-owner occupied	2,511		19
Commercial real estate, owner occupied	638		83
Residential	72		(7)
Home equity	(165)		145
Individuals' loans for household and other personal expenditures	78		207
Total net charge-offs	$	3,621	$	582

Management continually evaluates the commercial loan portfolio by including consideration of specific borrower cash flow analysis and estimated collateral values, types and amounts on non-performing loans, past and anticipated loan loss experience, changes in the composition of the loan portfolio, and the current condition and amount of loans outstanding. The determination of the provision for loan losses in any period is based on management’s continuing review and evaluation of the loan portfolio, and its judgment as to the impact of current economic conditions on the portfolio.

LIQUIDITY

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

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

The principal source of asset-funded liquidity is investment securities classified as available for sale, the market values of which totaled $2.4 billion at March 31, 2021, an increase of $486.4 million, or 25.4 percent, from December 31, 2020.  Securities classified as held to maturity that are maturing within a short period of time can also be a source of liquidity. Securities classified as held to maturity and that are maturing in one year or less totaled $9.1 million at March 31, 2021. In addition, other types of assets such as cash and interest-bearing deposits with other banks, federal funds sold and loans maturing within one year are sources of liquidity.

The most stable source of liability-funded liquidity for both the long-term and short-term is deposit growth and retention in the core deposit base.  Federal funds purchased and securities sold under agreements to repurchase are also considered a source of liquidity. In addition, FHLB advances are utilized as a funding source.  At March 31, 2021, total borrowings from the FHLB were $359.3 million The Bank has pledged certain mortgage loans and investments to the FHLB. The total available remaining borrowing capacity from the FHLB at March 31, 2021 was $714.6 million.

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

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

The required payments related to operating leases and borrowings at March 31, 2021 are as follows:

(Dollars in Thousands)	Remaining 2021		2022		2023		2024		2025		2026 and after		ASC 805 fair value adjustments at acquisition		Total
Operating leases	$	2,729	$	3,544	$	3,141	$	3,070	$	2,837	$	7,750	$	—	$	23,071
Securities sold under repurchase agreements	185,721		—		—		—		—		—		—		185,721
Federal Home Loan Bank advances	25,072		75,097		115,097		10,097		25,097		108,877		—		359,337
Subordinated debentures and other borrowings	—		—		—		—		—		122,012		(3,573)		118,439
Total	$	213,522	$	78,641	$	118,238	$	13,167	$	27,934	$	238,639	$	(3,573)	$	686,568

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

Summarized credit-related financial instruments at March 31, 2021 are as follows:

(Dollars in Thousands)	March 31, 2021
Amounts of commitments:
Loan commitments to extend credit	$	3,657,931
Standby and commercial letters of credit	33,610
	$	3,691,541

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

INTEREST SENSITIVITY AND DISCLOSURE ABOUT MARKET RISK

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

It is the objective of the Corporation to monitor and manage risk exposure to net interest income caused by changes in interest rates.  It is the goal of the Corporation’s Asset/Liability management function to provide optimum and stable net interest income. To accomplish this, management uses two asset liability tools. GAP/Interest Rate Sensitivity Reports and Net Interest Income Simulation Modeling are constructed, presented and monitored quarterly. Management believes that the Corporation's liquidity and interest sensitivity position at March 31, 2021, remained adequate to meet the Corporation’s primary goal of achieving optimum interest margins while avoiding undue interest rate risk.

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

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

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

The comparative rising 200 basis points and falling 100 basis points scenarios below, as of March 31, 2021 and December 31, 2020, assume further interest rate changes in addition to the base simulation discussed above. These changes are immediate and parallel changes to the base case scenario. In the current rate environment, many drivers are at or near historical lows due to the FOMC's rate reductions in March 2020 in response to COVID-19.

Results for the rising 200 basis points, and falling 100 basis points interest rate scenarios are listed below based upon the Corporation’s rate sensitive assets and liabilities at March 31, 2021 and December 31, 2020. The change from the base scenario represents cumulative net interest income over a twelve-month time horizon. Balance sheet assumptions used for the base scenario are the same for the rising and falling simulations.

	March 31, 2021	December 31, 2020
Rising 200 basis points from base case	3.9%	5.9	%
Falling 100 basis points from base case	(0.5)%	0.7	%

EARNING ASSETS

The following table presents the earning asset mix as of March 31, 2021 and December 31, 2020. Earning assets increased by $630.1 million during the three months ended March 31, 2021.   

Total investment securities increased $554.1 million from December 31, 2020 as excess liquidity from deposit growth was used to invest in the bond portfolio, which was offset by a decline in net unrealized gains on the available for sale portfolio of $49.7 million. The net decrease in unrealized gains from December 31, 2020 to March 31, 2021 is primarily due the changes in interest rates. The longer term points on the yield curve have increased since year-end which decreases the fair value of securities held in the portfolio. Additionally, the overall increase in investment securities was also offset by the Corporation's adoption of CECL, which resulted in an allowance for credit loss of $245,000 recorded at adoption on the state and municipal securities in the held to maturity portfolio. Additional details of the changes in the Corporation's investment securities portfolio are discussed within NOTE 2. INVESTMENT SECURITIES of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Loans and loans held for sale increased $75.5 million from December 31, 2020. As of March 31, 2021, the Corporation had $741.7 million of PPP loans, an increase of $74.6 million from the December 31, 2020 balance of $667.1 million. PPP loans are included in the commercial and industrial loan class, which was the largest loan class increase since December 31, 2020. Additionally, other loan classes that experienced large increases from December 31, 2020 were real estate construction and public finance and other commercial loans. The largest loan classes that experienced a decrease from December 31, 2020 were commercial real estate, non-owner occupied and agricultural land, production and other loans to farmers. Additional details of the changes in the Corporation's loan portfolio are discussed within NOTE 3. LOANS AND ALLOWANCE of the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

(Dollars in Thousands)	March 31, 2021		December 31, 2020
Interest-bearing deposits	$	392,806	$	392,305
Investment securities available for sale	2,405,568		1,919,119
Investment securities held to maturity, net of allowance for credit losses of $245,000 as of March 31, 2021	1,295,289		1,227,668
Loans held for sale	4,430		3,966
Loans	9,318,228		9,243,174
Federal Home Loan Bank stock	28,736		28,736
Total	$	13,445,057	$	12,814,968

OTHER

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

52

Table of Contents

PART I: FINANCIAL INFORMATION

ITEM 3. QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

53

Table of Contents

PART I: FINANCIAL INFORMATION

ITEM 4. CONTROLS AND PROCEDURES

ITEM 4.  CONTROLS AND PROCEDURES

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

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

54

Table of Contents

PART II: OTHER INFORMATION

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

(table dollar amounts in thousands, except share data)

ITEM 1.  LEGAL PROCEEDINGS

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

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

ITEM 1A.  RISK FACTORS

There have been no material changes to the risk factors previously disclosed in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020.

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

a. None

b. None

c. Issuer Purchases of Equity Securities

The following table presents information relating to our purchases of equity securities during the three months ended March 31, 2021.

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as part of Publicly announced Plans or Programs	Maximum Number of Shares that may yet be Purchased Under the Plans or Programs (2)
January, 2021	267	$	40.82	—	3,333,000
February, 2021	—	$	—	—	3,333,000
March, 2021	—	$	—	—	3,333,000

(i) The shares repurchased were pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of the Corporation's restricted stock awards.

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

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.  MINE SAFETY DISCLOSURES

Not Applicable 

ITEM 5.  OTHER INFORMATION

a. None

b. None

55

Table of Contents

PART II: OTHER INFORMATION

ITEM 6. EXHIBITS

ITEM 6.  EXHIBITS

Exhibit No:	Description of Exhibits:
3.1	First Merchants Corporation Articles of Incorporation, as amended (Incorporated by reference to registrant’s Form 8-K filed on May 2, 2017) (SEC No. 000-17071)
3.2	Bylaws of First Merchants Corporation dated August 11, 2016 (Incorporated by reference to registrant’s Form 10-K filed on March 1, 2017) (SEC No. 000-17071)
4.1	First Merchants Corporation Amended and Restated Declaration of Trust of First Merchants Capital Trust II dated as of July 2, 2007 (Incorporated by reference to registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.2	Indenture dated as of July 2, 2007 (Incorporated by reference to registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.3	Guarantee Agreement dated as of July 2, 2007 (Incorporated by reference to registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.4	Form of Capital Securities Certification of First Merchants Capital Trust II (Incorporated by reference to registrant's Form 8-K filed on July 3, 2007) (SEC No. 000-17071)
4.5	First Merchants Corporation Dividend Reinvestment and Stock Purchase Plan (Incorporated by reference to registrant’s Prospectus filed pursuant to Rule 424(b)(3) on July 17, 2020) (SEC No. 333-229527)
4.6	Upon request, the registrant agrees to furnish supplementally to the Commission a copy of the instruments defining the rights of holders of its (a) 5.00% Fixed-to-Floating Rate Senior Notes due 2028 in the aggregate principal amount of $5 million and (b) 6.75% Fixed-to-Floating Rate Subordinated Notes due 2028 in aggregate principal amount of $65 million.
10.1	First Merchants Corporation non-employee director compensation schedule adopted February 9, 2021 (1)(2)
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes - Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 (2) Act of 2002 (2)
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 (2)
32	Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (3)
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (2)
101.SCH	Inline XBRL Taxonomy Extension Schema Document (2)
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document (2)
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document (2)
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document (2)
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document (2)
104	Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101)
	(1) Management contract or compensatory plan.
	(2) Filed herewith.
	(3) Furnished herewith.

56

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	First Merchants Corporation
	(Registrant)
May 10, 2021	by /s/ Mark K. Hardwick
	Mark K. Hardwick
	Chief Executive Officer
	(Principal Executive Officer)
May 10, 2021	by /s/ Michele M. Kawiecki
	Michele M. Kawiecki
	Executive Vice President, Chief Financial Officer
	(Principal Financial and Accounting Officer)

57

EX-10.1

PART II: OTHER INFORMATION

ITEM 6. EXHIBITS

EXHIBIT-10.1

First Merchants Corporation

Non-Employee Director Compensation Schedule

Adopted by Board of Directors on February 9, 2021

Effective as of January 1, 2021, the following fees shall be paid to the non-employee members of the Board of Directors of First Merchants Corporation:

Service	Annual Amount			Increase from Prior
Board Retainer	$	115,000		$	20,000
Audit Committee Retainer	5,000			5,000
Risk and Credit Policy Committee Retainer	5,000
Board Chair Supplemental Fee	50,000
Committee Chair Supplemental Fee:
Audit	15,000		*
Compensation and Human Resources	10,000
Risk and Credit Policy	10,000
Nominating and Governance	7,500
•Committee Chair does not also receive committee retainer.

All non-employee Director compensation shall be paid 3/8 in cash and 5/8 in shares of First Merchants Corporation common stock.

EX-31.1

PART II: OTHER INFORMATION

ITEM 6. EXHIBITS

EXHIBIT-31.1

CERTIFICATIONS PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

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

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

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

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

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

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

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

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

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

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

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

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

May 10, 2021

By: /s/ Mark K. Hardwick

Mark K. Hardwick

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

PART II: OTHER INFORMATION

ITEM 6. EXHIBITS

EXHIBIT-31.2

CERTIFICATIONS PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

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

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

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

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

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

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

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

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

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

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

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

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

May 10, 2021

By: /s/ Michele M. Kawiecki

Michele M. Kawiecki

Executive Vice President,

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

PART II: OTHER INFORMATION

ITEM 6. EXHIBITS

EXHIBIT-32

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Merchants Corporation (the “Corporation”) on Form 10-Q for the period ending March 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael C. Rechin, President and Chief Executive Officer of the Corporation, do hereby certify, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

May 10, 2021

By: /s/ Mark K. Hardwick

Mark K. Hardwick

Chief Executive Officer

(Principal Executive Officer)

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

_____________________________________________________

In connection with the Quarterly Report of First Merchants Corporation (the “Corporation”) on Form 10-Q for the period ending March 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark K. Hardwick, Executive Vice President, Chief Financial Officer and Chief Operating Officer of the Corporation, do hereby certify, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

May 10, 2021

By: /s/ Michele M. Kawiecki

Michele M. Kawiecki

Executive Vice President,

Chief Financial Officer

(Principal Financial and Accounting Officer)

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

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2021	May 03, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Entity File Number	0-17071
Entity Registrant Name	FIRST MERCHANTS CORP
Entity Incorporation, State or Country Code	IN
Entity Tax Identification Number	35-1544218
Entity Address, Address Line One	200 East Jackson Street
Entity Address, City or Town	Muncie
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	47305-2814
City Area Code	765
Local Phone Number	747-1500
Title of 12(b) Security	Common Stock, $0.125 stated value per share
Trading Symbol	FRME
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		54,371,549
Entity Central Index Key	0000712534
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Thousands		Mar. 31, 2021	Dec. 31, 2020
ASSETS
Cash and cash equivalents		$ 187,901	$ 192,896
Interest-bearing deposits		392,806	392,305
Investment securities available for sale		2,405,568	1,919,119
Investment securities held to maturity, net of allowance for credit losses of $245 and $0 (fair value of $1,318,780 and $1,280,293)		1,295,289	1,227,668
Loans held for sale		4,430	3,966
Loans		9,318,228	9,243,174
Less: Allowance for credit losses - loans	[1]	(201,082)	(130,648)
Net loans		9,117,146	9,112,526
Premises and equipment		109,432	111,062
Federal Home Loan Bank stock		28,736	28,736
Interest receivable		54,662	53,948
Goodwill		543,918	543,918
Other intangibles		27,618	28,975
Cash surrender value of life insurance		293,766	292,745
Other real estate owned		604	940
Tax asset, deferred and receivable		40,163	12,340
Other assets		127,027	146,066
TOTAL ASSETS		14,629,066	14,067,210
Deposits:
Noninterest-bearing		2,494,891	2,298,138
Interest-bearing		9,456,889	9,063,472
Total Deposits		11,951,780	11,361,610
Borrowings:
Securities sold under repurchase agreements		185,721	177,102
Federal Home Loan Bank advances		359,337	389,430
Subordinated debentures and other borrowings		118,439	118,380
Total Borrowings		663,497	684,912
Interest payable		4,020	3,287
Other liabilities		203,913	141,756
Total Liabilities		12,823,210	12,191,565
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value: Authorized - 600 shares Issued and outstanding - 125 shares		125	125
Common Stock, $0.125 stated value: Authorized - 100,000,000 shares Issued and outstanding - 53,953,723 and 53,922,359 shares		6,744	6,740
Additional paid-in capital		1,007,300	1,005,366
Retained earnings		755,877	788,578
Accumulated other comprehensive income		35,810	74,836
Total Stockholders' Equity		1,805,856	1,875,645
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$ 14,629,066	$ 14,067,210

[1] Beginning January 1, 2021, the calculation is based on the current expected credit loss methodology. Prior to January 1, 2021, the calculation is based on the incurred loss methodology. See additional details in NOTE 1. GENERAL of these Notes to Consolidated Condensed Financial Statement.

XML

CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Allowance for Credit Losses	$ 245	$ 0
Investment securities held to maturity - fair value	$ 1,318,780	$ 1,280,293
Preferred Stock, par value (in dollars per share)	$ 1,000	$ 1,000
Preferred Stock, liquidation value per share (in dollars per share)	$ 1,000	$ 1,000
Preferred Stock, authorized (in shares)	600	600
Preferred Stock, issued (in shares)	125	125
Preferred Stock, outstanding (in shares)	125	125
Common Stock, stated value (in dollars per share)	$ 0.125	$ 0.125
Common Stock, authorized (in shares)	100,000,000	100,000,000
Common Stock, issued (in shares)	53,953,723	53,922,359
Common Stock, outstanding (in shares)	53,953,723	53,922,359

XML

CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Loans receivable:
Taxable	$ 85,105	$ 96,652
Tax exempt	5,339	5,315
Investment securities:
Taxable	6,695	7,631
Tax exempt	12,385	9,335
Deposits with financial institutions	114	575
Federal Home Loan Bank stock	178	299
Total Interest Income	109,816	119,807
INTEREST EXPENSE
Deposits	6,200	21,748
Federal funds purchased	2	111
Securities sold under repurchase agreements	87	352
Federal Home Loan Bank advances	1,442	1,774
Subordinated debentures and other borrowings	1,657	1,945
Total Interest Expense	9,388	25,930
NET INTEREST INCOME	100,428	93,877
Provision for credit losses - loans	0	19,752
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	100,428	74,125
OTHER INCOME
Net gains and fees on sales of loans	3,986	3,363
Increase in cash surrender value of life insurance	1,189	1,360
Gains on life insurance benefits	147	0
Net realized gains on sales of available for sale securities	1,799	4,612
Other income	232	265
Total Other Income	24,091	29,799
OTHER EXPENSES
Salaries and employee benefits	38,811	39,243
Net occupancy	6,491	5,801
Equipment	5,030	4,344
Marketing	1,124	1,443
Outside data processing fees	4,244	4,199
Printing and office supplies	283	387
Intangible asset amortization	1,357	1,514
FDIC assessments	1,368	1,523
Other real estate owned and foreclosure expenses	734	505
Professional and other outside services	2,543	2,258
Other expenses	4,113	4,954
Total Other Expenses	66,098	66,171
INCOME BEFORE INCOME TAX	58,421	37,753
Income tax expense	8,952	3,490
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$ 49,469	$ 34,263
Per Share Data:
Basic Net Income Available to Common Stockholders (in dollars per share)	$ 0.92	$ 0.63
Diluted Net Income Available to Common Stockholders (in dollars per share)	0.91	0.62
Cash Dividends Paid (in dollars per share)	$ 0.26	$ 0.26
Average Diluted Shares Outstanding (in shares)	54,133,622	54,917,760
Service charges on deposit accounts
OTHER INCOME
Other income	$ 5,264	$ 5,970
Fiduciary and wealth management fees
OTHER INCOME
Other income	6,422	5,985
Card payment fees
OTHER INCOME
Other income	4,367	5,907
Derivative hedge fees
OTHER INCOME
Other income	317	1,939
Other customer fees
OTHER INCOME
Other income	$ 368	$ 398

XML

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Statement of Comprehensive Income [Abstract]
Net income	$ 49,469	$ 34,263
Unrealized gains/losses on securities available-for-sale:
OCI, Debt Securities, Available-for-Sale, Unrealized Holding Gain (Loss), before Adjustment and Tax	(47,911)	38,435
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, before Tax	(1,799)	(4,612)
Tax effect	10,439	(7,102)
Net of tax	(39,271)	26,721
Unrealized gain/loss on cash flow hedges:
Unrealized holding gain (loss) arising during the period	58	(1,314)
Reclassification adjustment for losses (gains) included in net income	252	125
Tax effect	(65)	250
Net of tax	245	(939)
Other comprehensive income (loss), net of tax	(39,026)	25,782
Comprehensive Income (Loss), Net of Tax, Attributable to Parent, Total	$ 10,443	$ 60,045

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CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Cumulative effect of ASC 326 adoption	Adjusted balance	Preferred	Preferred Adjusted balance	Common Stock	Common Stock Adjusted balance	Additional Paid in Capital	Additional Paid in Capital Adjusted balance	Retained Earnings	Retained Earnings Cumulative effect of ASC 326 adoption	Retained Earnings Adjusted balance	Accumulated Other Comprehensive Income (Loss)	Accumulated Other Comprehensive Income (Loss) Adjusted balance
Beginning balance (in shares) at Dec. 31, 2019				125		55,368,482
Beginning balance at Dec. 31, 2019	$ 1,786,437			$ 125		$ 6,921		$ 1,054,997		$ 696,520			$ 27,874
Comprehensive income:
Net income	34,263									34,263
Other comprehensive income (loss), net of tax	25,782												25,782
Cash dividends on common stock	(14,265)									(14,265)
Repurchase of common stock (in shares)						(1,634,437)
Repurchases of common stock	(55,912)					$ (204)		(55,708)
Share-based compensation (in shares)						3,332
Share-based compensation	1,220							1,220
Stock issued under dividend reinvestment and stock purchase plan (in shares)						15,710
Stock issued under dividend reinvestment and stock purchase plan	428					$ 2		426
Stock options exercised (in shares)						1,050
Stock options exercised	7							7
Ending balance (in shares) at Mar. 31, 2020				125		53,754,137
Ending balance at Mar. 31, 2020	1,777,960			$ 125		$ 6,719		1,000,942		716,518			53,656
Beginning balance (in shares) at Dec. 31, 2020				125	125	53,922,359	53,922,359
Beginning balance at Dec. 31, 2020	1,875,645	$ (68,040)	$ 1,807,605	$ 125	$ 125	$ 6,740	$ 6,740	1,005,366	$ 1,005,366	788,578	$ (68,040)	$ 720,538	74,836	$ 74,836
Comprehensive income:
Net income	49,469									49,469
Other comprehensive income (loss), net of tax	(39,026)												(39,026)
Cash dividends on common stock	(14,130)									(14,130)
Share-based compensation (in shares)						4,285
Share-based compensation	1,190					$ 1		1,189
Stock issued under employee benefit plans (in shares)						3,929
Stock issued under employee benefit plans	144							144
Stock issued under dividend reinvestment and stock purchase plan (in shares)						9,117
Stock issued under dividend reinvestment and stock purchase plan	$ 443					$ 1		442
Stock options exercised (in shares)	14,300					14,300
Stock options exercised	$ 171					$ 2		169
Restricted shares withheld for taxes (in shares)						(267)
Restricted shares withheld for taxes	(10)							(10)
Ending balance (in shares) at Mar. 31, 2021				125		53,953,723
Ending balance at Mar. 31, 2021	$ 1,805,856			$ 125		$ 6,744		$ 1,007,300		$ 755,877			$ 35,810

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CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (Parenthetical)	12 Months Ended
	Dec. 31, 2020
Statement of Stockholders' Equity [Abstract]
Accounting Standards Update [Extensible List]	us-gaap:AccountingStandardsUpdate201613Member

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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash Flow From Operating Activities:
Net income	$ 49,469	$ 34,263
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	0	19,752
Depreciation and amortization	2,748	2,674
Change in deferred taxes	(3,079)	(7,662)
Share-based compensation	1,190	1,220
Loans originated for sale	(111,558)	(163,378)
Proceeds from sales of loans held for sale	114,383	170,307
Gains on sales of loans held for sale	(3,289)	(2,931)
Gains on sales of securities available for sale	(1,799)	(4,612)
Increase in cash surrender of life insurance	(1,189)	(1,360)
Gains on life insurance benefits	(147)	0
Change in interest receivable	(714)	1,412
Change in interest payable	733	992
Other adjustments	6,062	20,816
Net cash provided by operating activities	52,810	71,493
Cash Flows from Investing Activities:
Net change in interest-bearing deposits	(501)	(14,681)
Purchases of:
Securities available for sale	(597,901)	(87,499)
Securities held to maturity	(135,098)	(126,759)
Proceeds from sales of securities available for sale	48,016	96,558
Proceeds from maturities of:
Securities available for sale	80,114	45,621
Securities held to maturity	66,361	49,912
Net change in loans	(72,704)	(148,882)
Proceeds from the sale of other real estate owned	495	303
Proceeds from life insurance benefits	315	0
Other adjustments	(2,285)	(3,672)
Net cash used in investing activities	(613,188)	(189,099)
Net change in :
Demand and savings deposits	620,609	109,276
Certificates of deposit and other time deposits	(30,439)	(78,748)
Borrowings	8,678	180,060
Repayment of borrowings	(30,093)	(72,710)
Cash dividends on common stock	(14,130)	(14,265)
Stock issued under employee benefit plans	144	0
Stock issued under dividend reinvestment and stock purchase plans	443	428
Stock options exercised	171	7
Repurchase of common stock	0	(55,912)
Net cash provided by financing activities	555,383	68,136
Net Change in Cash and Cash Equivalents	(4,995)	(49,470)
Cash and Cash Equivalents, January 1	192,896	177,201
Cash and Cash Equivalents, March 31	187,901	127,731
Additional cash flow information:
Interest paid	8,655	24,938
Loans transferred to other real estate owned	44	761
Fixed assets transferred to other real estate owned	1,167	0
Non-cash investing activities using trade date accounting	66,558	44,362
ROU assets obtained in exchange for new operating lease liabilities	$ 386	$ 79

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General

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General

GENERAL

Financial Statement Preparation

The Consolidated Condensed Balance Sheet of the Corporation as of December 31, 2020, has been derived from the audited consolidated balance sheet of the Corporation as of that date. Certain information and note disclosures normally included in the Corporation’s annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission. The results of operations for the three months ended March 31, 2021, are not necessarily indicative of the results to be expected for the year. Reclassifications have been made to prior financial statements to conform to the current financial statement presentation. These reclassifications had no effect on net income. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses and fair value of financial instruments. The uncertainties related to the coronavirus disease 2019 ("COVID-19") could cause significant changes to these estimates compared to what was known at the time these financial statements were prepared.

Significant Accounting Policies

The significant accounting policies followed by the Corporation and its wholly-owned subsidiaries for interim financial reporting are consistent with the accounting policies followed for annual financial reporting, with the exception of the Corporation's adoption of ASC 326 as described below under the heading "Recent Accounting Changes Adopted In 2021." The Corporation revised certain accounting policies and implemented certain accounting policy elections, related to the adoption of ASC 326 which are described below. All adjustments, which are of a normal recurring nature and are in the opinion of management necessary for a fair statement of the results for the periods reported, have been included in the accompanying Consolidated Condensed Financial Statements.

The Corporation adopted FASB Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL") on January 1, 2021. CECL replaces the previous "incurred loss" model for measuring credit losses, which encompassed allowances for current known and inherent losses within the portfolio, with an "expected loss" model for measuring credit losses, which encompasses allowances for losses expected to be incurred over the life of the portfolio. The new CECL model requires the measurement of all expected credit losses for financial assets measured at amortized cost and certain off-balance sheet credit exposures based on historical experiences, current conditions, and reasonable and supportable forecasts. CECL also requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as credit quality and underwriting standards of an organization's portfolio. In addition, CECL includes certain changes to the accounting for investment securities available for sale depending on whether management intends to sell the securities or believes that it is more likely than not they will be required to sell.

As of the adoption and day one measurement date of January 1, 2021, the Corporation recorded a one-time cumulative-effect adjustment to retained earnings, net of income taxes, on the consolidated balance sheet of $68.0 million. The allowance increased 57 percent from December 31, 2020, or $74.1 million, because it covered expected credit losses over the life of the loan portfolio, which approximates four years, and it included an allowance on all purchased loans that were previously excluded from the allowance for loan losses calculation. CECL also requires the establishment of a reserve for potential losses from unfunded commitments that is recorded in other liabilities, separate from allowance for credit losses, which was approximately $20.5 million. An allowance for credit losses of $245,000 was recorded on the state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities. The following table details the impact of the adoption of CECL on the Corporation's balance sheet as of January 1, 2021.

	December 31, 2020	Impact of CECL Adoption	January 1, 2021 Post-CECL Adoption
Assets:
Held to maturity securities	1,227,668	(245)	1,227,423
Loans	9,243,174	4,776	9,247,950
Allowance for credit losses - Loans	(130,648)	(74,055)	(204,703)
Net loans	9,112,526	(69,279)	9,043,247
Tax asset, deferred and receivable	12,340	21,984	34,324
Liabilities:
Allowance for credit losses on unfunded loan commitments	—	20,500	20,500
Stockholder's Equity:
Retained Earnings	788,578	(68,040)	720,538
		—

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

Allowance for credit losses on investment securities held to maturity ("ACL - Investments") – the ACL - Investments is a contra asset-valuation account that is deducted from the amortized cost basis of investment securities held to maturity to present the net amount expected to be collected. Investment securities held to maturity are charged off against the ACL - Investments when deemed uncollectible. Adjustments to the ACL - Investments are reported in the income statement as a component of the provision for credit loss. The Corporation measures expected credit losses on held to maturity debt securities on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities held to maturity from the estimate of credit losses. With regard to U.S. Government-sponsored agency and mortgage-backed securities, all these securities are issued by a U.S. government-sponsored entity and have an implicit or explicit government guarantee. With regard to securities issued by states and municipalities and other investment securities held to maturity, management considers (1) issuer bond ratings, (2) the financial condition of the issuer, (3) historical loss rates for given bond ratings, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. Historical loss rates associated with securities having similar grades as those in the Corporation's portfolio have generally not been significant. Furthermore, as of March 31, 2021, there were no past due principal and interest payments associated with these securities. An allowance for credit losses of $245,000 was recorded on the state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities.

Purchased Credit Deteriorated (“PCD”) – the Corporation has purchased loans, some of which have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans held for investment. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is the noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses.

Allowance for Credit Losses - Loans ("ACL - Loans") - the ACL - Loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on loans over the contractual term. Loans are charged off against the allowance when the uncollectibility of the loan is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off. Adjustments to the ACL- Loans are reported in the income statement as a component of provision for credit loss. The Corporation has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses. Further information regarding the policies and methodology used to estimate the ACL - Loans is detailed in NOTE 3. LOANS AND ALLOWANCE of these Notes to Consolidated Condensed Financial Statements.

Allowance for Credit Losses – Off-Balance Sheet Credit Exposures – the allowance for credit losses on off-balance sheet credit exposures is a liability account representing expected credit losses over the contractual period for which the Corporation is exposed to credit risk resulting from a contractual obligation to extend credit. No allowance is recognized if the Corporation has the unconditional right to cancel the obligation. Off-balance sheet credit exposures primarily consist of amounts available under outstanding lines of credit and letters of credit. For the period of exposure, the estimate of expected credit losses considers both the likelihood that funding will occur and the amount expected to be funded over the estimated remaining life of the commitment or other off-balance sheet exposure. The likelihood and expected amount of funding are based on historical utilization rates. The amount of the allowance represents management’s best estimate of expected credit losses on commitments expected to be funded over the contractual life of the commitment. The allowance for off-balance sheet credit exposures is adjusted through the income statement as a component of provision for credit loss.

Impact of COVID-19

On January 30, 2020, the World Health Organization (“WHO”) announced that the outbreak of COVID-19 constituted a public health emergency of international concern. On March 11, 2020, WHO declared COVID-19 to be a global pandemic and, on March 13, 2020, the President of the United States declared the COVID-19 outbreak a national emergency. The health concerns relating to the COVID-19 outbreak and related governmental actions taken to reduce the spread of the virus have significantly impacted the global economy (including the states and local economies in which the Corporation operates), disrupted supply chains, lowered equity market valuations, and created significant volatility and disruption in financial markets. The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place or total lock-down orders and business limitations and shutdowns. As a result of the shelter in place mandates in effect beginning early in the second quarter of 2020, commercial activity throughout our geographic footprint, as well as nationally, decreased significantly during 2020 and 2021. These containment measures have significantly contributed to rising unemployment and negatively impacted consumer and business spending. Although most states have reopened, albeit under limited capacities and under other social distancing restrictions, commercial activity has not returned to the levels existing prior to the outbreak of the pandemic. While multiple COVID-19 vaccines are now broadly available and vaccination rates are steadily increasing, it is too early to know how effective vaccinations will be in mitigating the adverse social and economic effects of the pandemic. Moreover, certain states and localities have recently experienced significant increases in the number of individuals diagnosed with COVID-19, which, in certain cases, is causing government officials to reinstitute activity restrictions. In addition, variant strains of the COVID-19 virus have appeared, further complicating efforts of the medical community and federal, state and local governments in response to the pandemic.

The continued impact of COVID-19 on the Corporation will depend on numerous factors and future developments that are highly uncertain and cannot be predicted with confidence. It is unknown how long the COVID-19 pandemic will last, or when restrictions on individuals and businesses will be fully lifted and businesses and their employees will be able to resume normal activities. Additional information may emerge regarding new developments with COVID-19 and additional actions may be taken by federal, state and local governments to contain COVID-19 or treat its impact. Changes in the behavior of customers, businesses and their employees as a result of COVID-19 pandemic, including social distancing practices, even after formal restrictions have been lifted and vaccination rates have increased, are also unknown. As a result of COVID-19 and the actions taken to contain it or reduce its impact, we may experience changes in the demand for our products and services, changes in the value of collateral securing outstanding loans, reductions in the credit quality of borrowers and the inability of borrowers to repay loans in accordance with their terms. Our commercial and consumer customers are experiencing varying degrees of financial distress, which is expected to continue in 2021, especially if positive cases increase and economic shutdowns continue. These and similar factors and events may have substantial negative effects on the business, financial condition and results of operations of the Corporation and its customers.

Guidance on Non-TDR Loan Modifications due to COVID-19

On March 22, 2020, a statement was issued by the Bank’s banking regulators and titled the “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” (the “Interagency Statement”) that encourages financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act further provides that a qualified loan modification is exempt by law from classification as a troubled debt restructure as defined by GAAP, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates. The Interagency Statement was subsequently revised on April 7, 2020 to clarify the interaction of the original guidance with Section 4013 of the CARES Act, as well as setting forth the banking regulators’ views on consumer protection considerations. In accordance with such guidance, the Bank has offered short-term modifications made in response to COVID-19 to borrowers who were current and otherwise not past due. These included short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. The CAA, as described above, extended the expiration date for COVID-related loan modifications exempt from troubled debt restructuring classification until the earlier of January 1, 2022, or 60 days after the termination of the national emergency. Details of the Corporation's modifications are included in the "LOAN QUALITY" section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included on this Form 10-Q.

Recent Accounting Changes Adopted In 2021

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

FASB Accounting Standards Updates No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

Summary - The FASB issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This new guidance replaces the previous "incurred loss" model for measuring credit losses with an "expected life of loan loss" model, referred to as the CECL model.

Under the CECL model, certain financial assets carried at amortized cost, such as loans held for investment and held-to-maturity debt securities, are required to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This measurement takes place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model, which delayed recognition until it is probable a loss had been incurred.

The Corporation developed models that satisfy the requirements of the new standard which are governed by a system of internal controls and a cross-functional working group consisting of accounting, finance, and credit administration personnel. The loan portfolio was pooled into ten loan segments with similar risk characteristics for which the probability of default/loss given default methodology was applied. The Corporation utilized a one-year economic forecast period then reverted to historical macroeconomic levels for the remaining life of the portfolio. A baseline macroeconomic scenario, along with other scenarios, were used to develop a range of estimated credit losses for which to determine the best estimate within.

The ASU was effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Pursuant to the CARES Act and the related joint statement of federal banking regulators (which also became effective as of March 27, 2020), and consistent with guidance from the SEC and FASB, the Corporation elected to delay implementation of ASU No. 2016-13, which was set to expire on December 31, 2020. However, the CAA (as discussed above) extended the temporary relief from CECL compliance to the earlier of the first day of the fiscal year that begins after the date on which the national emergency concerning COVID-19 terminates, or January 1, 2022. The Corporation elected to delay implementation of CECL following the approval of the CARES Act and, with the enactment of the CAA, the Corporation elected to adopt CECL on January 1, 2021. This allows the Corporation to utilize the CECL standard for the entire year of 2021, while its 2020 financial statements were prepared under the incurred loss model.

As of the adoption and day one measurement date of January 1, 2021, the Corporation recorded a one-time cumulative-effect adjustment to retained earnings, net of income taxes, on the consolidated balance sheet of $68.0 million. The allowance increased 57 percent from December 31, 2020, or $74.1 million, because it covered expected credit losses over the life of the loan portfolio, which approximates four years, and it included an allowance on all purchased loans that were previously excluded from the allowance for loan losses calculation. CECL also requires the establishment of a reserve for potential losses from unfunded commitments that is recorded in other liabilities, separate from allowance for credit losses, which was approximately $20.5 million. An allowance for credit losses of $245,000 was recorded on the state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities.

FASB Accounting Standards Updates No. 2019-11 - Codification Improvements to (Topic 326): Financial Instruments - Credit Losses

Summary - The FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses in order to address issues raised by stakeholders during the implementation of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments.

Among other narrow-scope improvements, the new ASU clarifies guidance around how to report expected recoveries. “Expected recoveries” describes a situation in which an organization recognizes a full or partial write-off of the amortized cost basis of a financial asset, but then later determines that the amount written off, or a portion of that amount, will in fact be recovered. While applying the credit losses standard, stakeholders questioned whether expected recoveries were permitted on assets that had already shown credit deterioration at the time of purchase (also known as PCD assets). In response to this question, the ASU permits organizations to record expected recoveries on PCD assets. In addition to other narrow technical improvements, the ASU also reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities.

The ASU includes effective dates and transition requirements that vary depending on whether or not an entity has already adopted ASU No. 2016-13. As discussed above, pursuant to the CARES Act, the Corporation elected to defer the adoption of CECL. Additionally, the 2021 Consolidated Appropriations Act ("CAA"), signed into law on December 27, 2020, amended the CARES Act by extending the temporary relief from CECL compliance to the earlier of the first day of the fiscal year that begins after the date on which the national emergency concerning COVID-19 terminates, or January 1, 2022. The Corporation elected to delay implementation of CECL following the approval of the CARES Act and, with the enactment of the CAA, the Corporation elected to adopt CECL on January 1, 2021. The adoption of this standard did not have a significant effect on the Corporation’s consolidated financial statements or disclosures.

Accounting Standards Update No. 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

Summary - The FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is expected to reduce cost and complexity related to the accounting for income taxes.

The ASU removes specific exceptions to the general principles in Topic 740 in Generally Accepted Accounting Principles (GAAP). It eliminates the need for an organization to analyze whether the following apply in a given period:

•    Exception to the incremental approach for intraperiod tax allocation;

•    Exceptions to accounting for basis differences when there are ownership changes in foreign investments; and

•    Exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses.

The ASU also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP for:

•    Franchise taxes that are partially based on income;

•    Transactions with a government that result in a step up in the tax basis of goodwill

•    Separate financial statements of legal entities that are not subject to tax; and

•    Enacted changes in tax laws in interim periods.

The ASU is part of the FASB’s simplification initiative to make narrow-scope simplifications and improvements to accounting standards through a series of short-term projects. For public business entities, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption of the ASU was permitted. The Corporation adopted this standard on January 1, 2021 and adoption of this standard did not have a significant effect on the Corporation's consolidated financial statements or disclosures.

New Accounting Pronouncements Not Yet Adopted

FASB Accounting Standards Updates - No. 2020-04 - Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

Summary - The FASB issued ASU No. 2020-04 to provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. LIBOR and other interbank offered rates are widely used benchmarks or reference rates in the United States and globally. Trillions of dollars in loans, derivatives, and other financial contracts reference LIBOR, the benchmark interest rate banks use to make short-term loans to each other. With global capital markets expected to move away from LIBOR and other interbank offered rates and move toward rates that are more observable or transaction based and less susceptible to manipulation, the FASB launched a broad project in late 2018 to address potential accounting challenges expected to arise from the transition. The new guidance provides 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 ASU is intended to help stakeholders during the global market-wide reference rate transition period.

Entities may apply this ASU as of the beginning of an interim period that includes the March 12, 2020 issuance date of the ASU, through December 31, 2022. The Corporation expects to adopt the practical expedients included in the ASU prior to December 31, 2022. The Corporation is implementing a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR. The Corporation is assessing ASU 2020-04 and its impact on the Corporation's transition away from LIBOR for its loans and other financial instruments.

FASB Accounting Standards Updates - Accounting Standards Update No. 2021-01 - Reference Rate Reform (Topic 848): Scope

Summary - The FASB has published ASU 2021-01, Reference Rate Reform. ASU 2021-01 clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition.

An entity may elect to apply the amendments in this Update on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final Update, up to the date that financial statements are available to be issued.

If an entity elects to apply any of the amendments in this Update for an eligible hedging relationship, any adjustments as a result of those elections must be reflected as of the date the entity applies the election.

The amendments in this Update do not apply to contract modifications made after December 31, 2022, new hedging relationships entered into after December 31, 2022, and existing hedging relationships evaluated for effectiveness in periods after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship (including periods after December 31, 2022). The Corporation is assessing ASU 2021-01 and its impact on the Corporation's transition away from LIBOR for its loans and other financial instruments.

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Investment Securities

3 Months Ended

Mar. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Investment Securities

INVESTMENT SECURITIES

The following table summarizes the amortized cost, gross unrealized gains and losses and approximate fair value of investment securities available for sale as of March 31, 2021 and December 31, 2020.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at March 31, 2021
U.S. Treasury	$	1,000	$	—	$	—	$	1,000
U.S. Government-sponsored agency securities	11,504		40		163		11,381
State and municipal	1,301,378		67,438		2,654		1,366,162
U.S. Government-sponsored mortgage-backed securities	1,025,660		13,550		16,347		1,022,863
Corporate obligations	4,031		153		22		4,162
Total available for sale	$	2,343,573	$	81,181	$	19,186	$	2,405,568

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2020
U.S. Government-sponsored agency securities	$	2,380	$	50	$	—	$	2,430
State and municipal	1,168,711		89,420		246		1,257,885
U.S. Government-sponsored mortgage-backed securities	632,267		22,505		103		654,669
Corporate obligations	4,031		104		—		4,135
Total available for sale	$	1,807,389	$	112,079	$	349	$	1,919,119

The following table summarizes the amortized cost, gross unrealized gains and losses, approximate fair value and allowance for credit losses on investment securities held to maturity as of March 31, 2021 and December 31, 2020.

	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at March 31, 2021
U.S. Government-sponsored agency securities	$	60,676	$	—	$	60,676	$	1	$	1,553	59,124
State and municipal	624,553		245		624,308		23,154		3,389		644,318
U.S. Government-sponsored mortgage-backed securities	608,805		—		608,805		11,849		6,816		613,838
Foreign investment	1,500		—		1,500		—		—		1,500
Total held to maturity	$	1,295,534	$	245	$	1,295,289	$	35,004	$	11,758	$	1,318,780

	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at December 31, 2020
U.S. Government-sponsored agency securities	$	31,087	$	—	$	31,087	$	10	$	113	$	30,984
State and municipal	619,927		—		619,927		34,978		32		654,873
U.S. Government-sponsored mortgage-backed securities	575,154		—		575,154		17,889		107		592,936
Foreign investment	1,500		—		1,500		—		—		1,500
Total held to maturity	$	1,227,668	$	—	$	1,227,668	$	52,877	$	252	$	1,280,293

Accrued interest on investment securities available for sale and held to maturity of $20.6 million are included in the Interest Receivable line on the Corporation's Consolidated Condensed Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of available for sale and held to maturity securities presented above.

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

The allowance for credit losses on investment securities held to maturity is a contra asset-valuation account that is deducted from the amortized cost basis of investment securities held to maturity to present the net amount expected to be collected. Investment securities held to maturity are charged off against the allowance when deemed uncollectible. Adjustments to the allowance are reported in the income statement as a component of the provision for credit loss. The Corporation measures expected credit losses on investment securities held to maturity on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities held to maturity from the estimate of credit losses. With regard to U.S. Government-sponsored agency and mortgage-backed securities, all these securities are issued by a U.S. government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities.. With regard to securities issued by states and municipalities and other investment securities held to maturity, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. Historical loss rates associated with securities having similar grades as those in the Corporation's portfolio have been insignificant. Furthermore, as of March 31, 2021, there were no past due principal and interest payments associated with these securities. An allowance for credit losses of $245,000 was recorded on the state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities.

On a quarterly basis, the Corporation monitors the credit quality of investment securities held to maturity through the use of credit ratings. The following table summarizes the amortized cost of investment securities held to maturity at March 31, 2021, aggregated by credit quality indicator.

	Held to Maturity
	State and municipal		Other		Total
Credit Rating:
Aaa	$	48,689	$	60,676	$	109,365
Aa1	84,954		—		84,954
Aa2	107,436		—		107,436
Aa3	72,969		—		72,969
A1	65,578		—		65,578
A2	19,074		—		19,074
A3	1,065		—		1,065
Baa2	528		—		528
Non-rated	224,260		610,305		834,565
Total	$	624,553	$	670,981	$	1,295,534

The following table details activity in the allowance for credit losses on investment securities held to maturity during the three months ended March 31, 2021.

	State and municipal
Allowance for Credit Losses:
Balance, December 31, 2020	$	—
Impact of adopting ASC 326	245
Provision for credit loss	—
Securities charged off	—
Recoveries on securities	—
Balance, March 31, 2021	$	245

The following tables summarize, as of March 31, 2021 and December 31, 2020, investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and length of time in a continuous unrealized loss position.

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at March 31, 2021
U.S. Government-sponsored agency securities	$	9,837	$	163	$	—	$	—	$	9,837	$	163
State and municipal	172,655		2,654		—		—		172,655		2,654
U.S. Government-sponsored mortgage-backed securities	606,498		16,347		—		—		606,498		16,347
Corporate obligations	978		22		—		—		978		22
Total investment securities available for sale	$	789,968	$	19,186	$	—	$	—	$	789,968	$	19,186

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at December 31, 2020
State and municipal	$	5,368	$	246	$	—	$	—	$	5,368	$	246
U.S. Government-sponsored mortgage-backed securities	9,651		103		—		—		9,651		103
Total investment securities available for sale	$	15,019	$	349	$	—	$	—	$	15,019	$	349

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

	March 31, 2021			December 31, 2020
Investments available for sale reported at less than historical cost:
Historical cost	$	809,154		$	15,368
Fair value	789,968			15,019
Gross unrealized losses	$	19,186		$	349
Percent of the Corporation's investments available for sale	21.4		%	0.5		%

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

U.S. Government-Sponsored Mortgage-Backed Securities

The unrealized losses on the Corporation's investment in mortgage-backed securities were a result of interest rate changes. The Corporation expects to recover the amortized cost basis over the term of the securities. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. As noted in the table above, the mortgage-backed securities portfolio contains unrealized losses of $16.3 million on fifty-five securities in the available for sale portfolio. All these securities are issued by a government-sponsored entity.

State and Municipal Securities, U.S. Government-Sponsored Agency Securities and Corporate Obligation Securities 

The unrealized losses on the Corporation's investments in securities of state and political subdivisions, U.S. Government-Sponsored Agency securities and corporate obligations were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. The Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. As noted in the table above, the state and municipal securities portfolio contains unrealized losses of $2.7 million on one hundred eight securities in the available for sale portfolio. The U.S. government-sponsored agency securities portfolio contains unrealized losses of $163,000 on two securities in the available for sale portfolio. The corporate obligation securities portfolio contains unrealized losses of $22,000 on one security in the available for sale portfolio.

The amortized cost and fair value of investment securities available for sale and held to maturity at March 31, 2021 and December 31, 2020, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately.

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at March 31, 2021
Due in one year or less	$	2,062	$	2,071	$	9,056	$	9,068
Due after one through five years	4,781		4,960		23,116		24,084
Due after five through ten years	92,598		96,882		151,103		154,819
Due after ten years	1,218,472		1,278,792		503,454		516,971
	1,317,913		1,382,705		686,729		704,942
U.S. Government-sponsored mortgage-backed securities	1,025,660		1,022,863		608,805		613,838
Total investment securities	$	2,343,573	$	2,405,568	$	1,295,534	$	1,318,780

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at December 31, 2020
Due in one year or less	$	1,349	$	1,353	$	9,712	$	9,755
Due after one through five years	5,545		5,764		22,241		23,190
Due after five through ten years	70,777		75,223		115,408		121,333
Due after ten years	1,097,451		1,182,110		505,153		533,079
	1,175,122		1,264,450		652,514		687,357
U.S. Government-sponsored mortgage-backed securities	632,267		654,669		575,154		592,936
Total investment securities	$	1,807,389	$	1,919,119	$	1,227,668	$	1,280,293

Securities with a carrying value of approximately $999.2 million and $890.0 million were pledged at March 31, 2021 and December 31, 2020, respectively, to secure certain deposits and securities sold under repurchase agreements, and for other purposes as permitted or required by law.

The book value of securities sold under agreements to repurchase amounted to $178.2 million at March 31, 2021 and $167.3 million at

December 31, 2020.

Gross gains on the sales and redemptions of investment securities available for sale for the three months ended March 31, 2021 and 2020 are shown below.

	Three Months Ended March 31,
	2021		2020
Sales and redemptions of investment securities available for sale:
Gross gains	$	2,076	$	4,612
Gross losses	277		—
Net gains on sales and redemptions of investment securities available for sale	$	1,799	$	4,612

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Loans and Allowance

3 Months Ended

Mar. 31, 2021

Receivables [Abstract]

Loans and Allowance

LOANS AND ALLOWANCE

Loan Portfolio and Credit Quality

The Corporation's primary lending focus is small business and middle market commercial, commercial real estate and residential real estate, which results in portfolio diversification. The following tables show the composition of the loan portfolio and credit quality characteristics by collateral classification, excluding loans held for sale. Loans held for sale at March 31, 2021 and December 31, 2020, were $4.4 million and $4.0 million, respectively.

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

	March 31, 2021		December 31, 2020
Commercial and industrial loans	$	2,876,212	$	2,776,699
Agricultural land, production and other loans to farmers	245,631		281,884
Real estate loans:
Construction	541,224		484,723
Commercial real estate, non-owner occupied	2,178,832		2,220,949
Commercial real estate, owner occupied	950,038		958,501
Residential	1,239,925		1,234,741
Home equity	482,229		508,259
Individuals' loans for household and other personal expenditures	126,387		129,479
Public finance and other commercial loans	677,750		647,939
Loans	$	9,318,228	$	9,243,174

As of March 31, 2021, the Corporation had $741.7 million of Paycheck Protection Program ("PPP") loans compared to the December 31, 2020 balance of $667.1 million. PPP loans are included in the commercial and industrial loan class. Additional details of the PPP are included in The CARES Act and the Paycheck Protection Program section of the "COVID-19 UPDATE" section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included on this Form 10-Q.

Credit Quality

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

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

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

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

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

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

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

The following tables summarize the risk grading of the Corporation’s loan portfolio by loan class and by year of origination for the years indicated. Consumer loans are not risk graded. For the purposes of this disclosure the consumer loans are classified in the following manner: loans that are less than 30 days past due are Pass, loans 30-89 days past due are Special Mention and loans greater than 89 days past due are Substandard. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Loans that evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected are included in the applicable categories below. Outstanding loan balances as of March 31, 2021 with an origination year of 2021 and 2020 include PPP loans of $293.1 million and $448.6 million, respectively.

	Term Loans (amortized cost basis by origination year)
	2021		2020		2019		2018		2017		Prior		Revolving loans amortized cost basis		Total
Commercial and industrial loans
Pass	$	451,747	$	1,101,622	$	265,685	$	121,416	$	47,101	$	64,093	$	634,146	$	2,685,810
Special Mention	7,735		50,704		1,421		7,435		2,306		2,326		29,255		101,182
Substandard	1,891		4,946		6,319		606		469		1,394		73,595		89,220
Total Commercial and industrial loans	$	461,373	$	1,157,272	$	273,425	$	129,457	$	49,876	$	67,813	$	736,996	$	2,876,212
Agricultural land, production and other loans to farmers
Pass	22,570		58,620		26,146		11,864		8,821		49,646		45,626		223,293
Special Mention	151		621		186		2,151		—		3,347		8,824		15,280
Substandard	—		4,116		64		125		717		877		1,159		7,058
Total Agricultural land, production and other loans to farmers	$	22,721	$	63,357	$	26,396	$	14,140	$	9,538	$	53,870	$	55,609	$	245,631
Real estate loans:
Construction
Pass	60,800		208,852		165,903		68,816		3,104		1,945		17,184		526,604
Special Mention	—		10,118		—		63		—		—		30		10,211
Substandard	4,391		—		—		—		—		18		—		4,409
Total Construction	$	65,191	$	218,970	$	165,903	$	68,879	$	3,104	$	1,963	$	17,214	$	541,224
Commercial real estate, non-owner occupied
Pass	93,726		933,226		275,343		225,971		141,947		196,284		25,454		1,891,951
Special Mention	9,544		169,291		13,242		990		—		112		1,250		194,429
Substandard	238		38,545		24,741		11,585		7,840		9,503		—		92,452
Total Commercial real estate, non-owner occupied	$	103,508	$	1,141,062	$	313,326	$	238,546	$	149,787	$	205,899	$	26,704	$	2,178,832
Commercial real estate, owner occupied
Pass	51,710		481,355		122,017		57,531		60,587		89,802		39,729		902,731
Special Mention	45		10,174		2,606		1,646		2,242		1,178		149		18,040
Substandard	5,079		19,107		154		2,179		723		1,979		—		29,221
Loss	46		—		—		—		—		—		—		46
Total Commercial real estate, owner occupied	$	56,880	$	510,636	$	124,777	$	61,356	$	63,552	$	92,959	$	39,878	$	950,038
Residential
Pass	171,109		398,112		148,457		101,627		88,700		314,130		3,873		1,226,008
Special Mention	349		982		—		588		82		1,313		93		3,407
Substandard	485		3,152		518		1,355		372		4,628		—		10,510
Total Residential	$	171,943	$	402,246	$	148,975	$	103,570	$	89,154	$	320,071	$	3,966	$	1,239,925
Home equity
Pass	2,673		20,032		2,577		2,930		1,786		5,085		442,166		477,249
Special Mention	—		91		—		—		—		59		2,588		2,738
Substandard	403		151		—		13		129		195		1,351		2,242
Total Home Equity	$	3,076	$	20,274	$	2,577	$	2,943	$	1,915	$	5,339	$	446,105	$	482,229
Individuals' loans for household and other personal expenditures
Pass	16,786		38,678		24,201		18,482		4,383		7,550		15,996		126,076
Special Mention	—		68		75		35		8		33		4		223
Substandard	—		1		87		—		—		—		—		88
Total Individuals' loans for household and other personal expenditures	$	16,786	$	38,747	$	24,363	$	18,517	$	4,391	$	7,583	$	16,000	$	126,387
Public finance and other commercial loans
Pass	21,613		191,808		128,844		39,837		130,856		151,403		13,389		677,750
Total Public finance and other commercial loans	$	21,613	$	191,808	$	128,844	$	39,837	$	130,856	$	151,403	$	13,389	$	677,750
Loans	$	923,091	$	3,744,372	$	1,208,586	$	677,245	$	502,173	$	906,900	$	1,355,861	$	9,318,228

	December 31, 2020
	Commercial Pass		Commercial Special Mention		Commercial Substandard		Commercial Doubtful		Commercial Loss		Consumer Performing			Consumer Non-Performing		Total
Commercial and industrial loans	$	2,562,077	$	117,503	$	97,119	$	—	$	—	$	—		$	—	$	2,776,699
Agricultural production financing and other loans to farmers	243,991		26,835		9,885		—		—		1,173			—		281,884
Real estate Loans:
Construction	446,846		10,445		5,549		—		—		21,763			120		484,723
Commercial real estate, non-owner occupied	1,979,827		160,304		80,818		—		—		—			—		2,220,949
Commercial real estate, owner occupied	907,566		17,641		33,294						—			—		958,501
Residential	199,338		2,261		7,058		—		—		1,020,687			5,397		1,234,741
Home equity	12,714		—		989		—		—		492,999			1,557		508,259
Individuals' loans for household and other personal expenditures	—		—		—		—		—		129,440			39		129,479
Public finance and other commercial loans	647,939		—		—		—		—		—			—		647,939
Loans	$	7,000,298	$	334,989	$	234,712	$	—	$	—	$	1,666,062	1666062	$	7,113	$	9,243,174

At March 31, 2021, 30-59 Days Past Due loans totaled $55.6 million, an increase of $36.0 million from December 31, 2020. The primary increase was in the commercial real estate, non-owner occupied segment and is related to four relationships. Three of the relationships are multi-family units totaling $24.1 million and the fourth relationship is a hotel totaling $21.0 million. At March 31, 2021, the 60-89 Days Past Due category totaled $3.0 million, a decrease of $8.2 million from December 31, 2020. The primary decrease was related to a $5.0 million commercial and industrial loan that was current as of March 31, 2021. The 90 Days or More Past Due bucket totaled $47.4 million at March 31, 2021, an increase of $5.4 million from December 31, 2020. The primary increase was related to a $13.0 million nursing home loan within the commercial real estate, non-owner occupied segment, that was current at December 31, 2020, but has moved into the 90+ Days Past Due bucket. This was offset by a $3.7 million loan within the same segment that was 90+ Days Past Due at December 31, 2020, but has since paid off. The tables below show a past due aging of the Corporation’s loan portfolio, by loan class, for the years indicated:

	March 31, 2021
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	2,870,436	$	4,545	$	19	$	1,212	$	2,876,212	$	—
Agricultural land, production and other loans to farmers	244,403		114		—		1,114		245,631		—
Real estate loans:
Construction	540,648		560		—		16		541,224		—
Commercial real estate, non-owner occupied	2,094,103		45,942		434		38,353		2,178,832		—
Commercial real estate, owner occupied	946,423		792		1,096		1,727		950,038		1,032
Residential	1,234,473		1,582		377		3,493		1,239,925		—
Home equity	477,927		1,906		1,010		1,386		482,229		60
Individuals' loans for household and other personal expenditures	126,075		181		42		89		126,387		1
Public finance and other commercial loans	677,750		—		—		—		677,750		—
Loans	$	9,212,238	$	55,622	$	2,978	$	47,390	$	9,318,228	$	1,093

	December 31, 2020
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	2,761,473	$	5,866	$	6,571	$	2,789	$	2,776,699	$	594
Agricultural land, production and other loans to farmers	280,615		146		226		897		281,884		—
Real estate loans:									—
Construction	484,706		—		17		—		484,723		—
Commercial real estate, non-owner occupied	2,184,681		2,525		2,109		31,634		2,220,949		—
Commercial real estate, owner occupied	951,561		4,854		180		1,906		958,501		—
Residential	1,226,779		3,269		1,429		3,264		1,234,741		133
Home equity	503,596		2,644		559		1,460		508,259		19
Individuals' loans for household and other personal expenditures	129,049		334		96		—		129,479		—
Public finance and other commercial loans	647,939		—		—		—		647,939		—
Loans	$	9,170,399	$	19,638	$	11,187	$	41,950	$	9,243,174	$	746

Loans are reclassified to a non-accruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. All unpaid accrued interest is reversed against earnings when considered uncollectible and at the time accrual is discontinued. Payments subsequently received on non-accrual loans are applied to principal. A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of six consecutive months of performance.

The following table summarizes the Corporation’s non-accrual loans by loan class for the periods indicated:

	March 31, 2021				December 31, 2020
	Non-Accrual Loans		Non-Accrual Loans with no Allowance for Credit Losses		Non-Accrual Loans
Commercial and industrial loans	$	1,671	$	786	$	2,329
Agricultural land, production and other loans to farmers	1,220		561		1,012
Real estate loans:
Construction	18		—		123
Commercial real estate, non-owner occupied	44,143		1,853		46,316
Commercial real estate, owner occupied	1,760		1,513		3,040
Residential	6,336		835		6,517
Home equity	2,650		—		2,095
Individuals' loans for household and other personal expenditures	125		—		39
Loans	$	57,923	$	5,548	$	61,471

There was no interest income recognized on non-accrual loans for the three months ended March 31, 2021 and 2020, respectively.

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

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses:

	March 31, 2021
	Commercial Real Estate		Residential Real Estate		Other		Total		Allowance on Collateral Dependent Loans
Commercial and industrial loans	$	—	$	—	$	2,202	$	2,202	$	—
Agricultural land, production and other loans to farmers	780		—		—		780		—
Real estate loans:
Commercial real estate, non-owner occupied	45,188		—		—		45,188		5,561
Commercial real estate, owner occupied	3,539		—		—		3,539		—
Residential	—		3,113		—		3,113		356
Home equity	—		452		—		452		77
Individuals' loans for household and other personal expenditures	—		—		2		2		—
Loans	$	49,507	$	3,565	$	2,204	$	55,276	$	5,994

As detailed in NOTE 1. GENERAL of these Notes to Consolidated Condensed Financial Statements, the Bank's banking regulators issued guidance in March 2020 encouraging financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act had further provided that a qualified loan modification is exempt by law from classification as a troubled debt restructure as defined by GAAP, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates. In accordance with that guidance, the Bank has offered short-term modifications made in response to COVID-19 to borrowers who were current and otherwise not past due. These included short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. The Consolidated Appropriations Act, 2021 extended the expiration date for COVID-related loan modifications exempt from troubled debt restructuring classification until the earlier of January 1, 2022, or 60 days after the termination of the national emergency. Details of the Corporation's modifications are included in the "LOAN QUALITY" section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included on this Form 10-Q.

In certain loan restructuring situations, the Corporation may grant a concession to a debtor experiencing financial difficulty, resulting in a troubled debt restructuring. A concession is deemed to be granted when, as a result of the restructuring, the Corporation does not expect to collect all original amounts due, including interest accrued at the original contract rate. If the payment of principal at original maturity is primarily dependent on the value of collateral, the current value of the collateral is considered in determining whether the principal will be repaid.

The following tables summarize troubled debt restructures in the Corporation's loan portfolio that occurred during the three months ended March 31, 2021. No troubled debt restructures in the Corporation's loan portfolio occurred in the three months ended March 31, 2020.

			Three Months Ended March 31, 2021
	Pre- Modification Recorded Balance		Term Modification		Rate Modification		Combination		Post - Modification Recorded Balance		Number of Loans
Commercial and industrial	$	348	$	348	$	—	$	—	$	348	2
Real estate loans:
Residential	625		383		126		118		627		7
Total	$	973	$	731	$	126	$	118	$	975	9

Loans secured by 1- 4 family residential real estate made up 64 percent of the post-modification balances of the troubled debt restructured loans that occurred during the three months ending March 31, 2021.

The following tables summarize troubled debt restructures that occurred during the twelve months ended March 31, 2021 and 2020, that subsequently defaulted during the period indicated and remained in default at period end. For purposes of this schedule, a loan is considered in default if it is 30-days or more past due.

	Three Months Ended March 31, 2021
	Number of Loans	Recorded Balance
Real estate loans:
Residential	5	$	197
Home equity	1	91
Individuals' loans for household and other personal expenditures	1	2
Total	7	$	290

	Three Months Ended March 31, 2020
	Number of Loans	Recorded Balance
Real estate loans:
Residential	1	$	22
Total	1	$	22

Commercial troubled debt restructured loans risk graded special mention, substandard, doubtful and loss are individually evaluated for apparent loss and may result in a specific reserve allocation in the allowance for credit loss. Commercial troubled debt restructures that aren't individually evaluated for a specific reserve are included in the calculation of allowance for credit losses through the loan segment loss analysis.

For all consumer loan modifications, an evaluation to identify if a troubled debt restructure has occurred is performed prior to making the modification. Any subsequent deterioration is addressed through the charge-off process or through a specific reserve allocation included in the allowance for credit loss. Consumer troubled debt restructures that are not individually evaluated for a specific reserve are included in the calculation of the allowance for credit losses through the loan segment loss analysis. Consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $3.3 million and $507,000 at March 31, 2021 and March 31, 2020, respectively.

Allowance for Credit Losses on Loans

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

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

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

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

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

The Corporation qualitatively adjusts model results for risk factors that are not inherently considered in the quantitative modeling process, but are nonetheless relevant in assessing the expected credit losses within the loan portfolio. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor. The various risks that may be considered in making qualitative adjustments include, among other things, the impact of (i) changes in the nature and volume of the loan portfolio, (ii) changes in the existence, growth and effect of any concentrations in credit, (iii) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (iv) changes in the quality of the credit review function, (v) changes in the experience, ability and depth of lending management and staff, and (vi) other environmental factors such as regulatory, legal and technological considerations, as well as competition.

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

No allowance for credit losses has been recognized for PPP loans as such loans are fully guaranteed by the Small Business Administration ("SBA").

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

Commercial

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

Commercial real estate

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

Construction

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

Consumer and Residential

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

The following tables summarize changes in the allowance for credit losses by loan segment for the three months ended March 31, 2021:

	Three Months Ended March 31, 2021
	Commercial		Commercial Real Estate		Construction		Consumer		Residential		Consumer & Residential		Total
Allowance for credit losses
Balances, December 31, 2020	$	47,115	$	51,070	$	—	$	9,648	$	22,815	$	—	$	130,648
Credit risk reclassifications	—		(10,284)		10,284		(9,648)		(22,815)		32,463		—
Balances, December 31, 2020 after reclassifications	47,115		40,786		10,284		—		—		32,463		130,648
Impact of adopting ASC 326	20,024		34,925		8,805		—		—		10,301		74,055
Balances, January 1, 2021 Post-ASC 326 adoption	67,139		75,711		19,089		—		—		42,764		204,703
Provision for credit losses	(932)		(1,701)		1,095		—		—		1,538		—
Recoveries on loans	188		164		—		—		—		342		694
Loans charged off	(673)		(3,313)		(2)		—		—		(327)		(4,315)
Balances, March 31, 2021	$	65,722	$	70,861	$	20,182	$	—	$	—	$	44,317	$	201,082

Allowance for Loan Losses under prior GAAP ("Incurred Loss Model")

Prior to the adoption of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on January 1, 2021, the Corporation maintained an allowance for loan losses in accordance with the incurred loss model as disclosed in the Corporation's 2020 Annual Report on Form 10-K.

The following tables summarize changes in the allowance for loan losses by loan segment for the three months ended March 31, 2020:

	Three Months Ended March 31, 2020
	Commercial		Commercial Real Estate		Consumer		Residential		Total
Allowance for loan losses:
Balances, December 31, 2019	$	32,902	$	28,778	$	4,035	$	14,569	$	80,284
Provision for losses	5,701		9,194		1,924		2,933		19,752
Recoveries on loans	443		118		42		70		673
Loans charged off	(615)		(183)		(249)		(208)		(1,255)
Balances, March 31, 2020	$	38,431	$	37,907	$	5,752	$	17,364	$	99,454

The table below shows the Corporation’s allowance for loan losses under the incurred loss model and loan portfolio by loan segment as of the periods indicated.

	December 31, 2020
	Commercial		Commercial Real Estate		Consumer		Residential		Total
Allowance Balances:
Individually evaluated for impairment	$	223	$	12,246	$	—	$	432	$	12,901
Collectively evaluated for impairment	46,892		38,824		9,648		22,383		117,747
Total Allowance for Loan Losses	$	47,115	$	51,070	$	9,648	$	22,815	$	130,648
Loan Balances:
Individually evaluated for impairment	$	1,258	$	51,605	$	2	$	3,291	$	56,156
Collectively evaluated for impairment	3,505,863		3,805,808		129,477		1,739,709		9,180,857
Loans acquired with deteriorated credit quality	577		5,584		—		—		6,161
Loans	$	3,507,698	$	3,862,997	$	129,479	$	1,743,000	$	9,243,174

The following tables show the composition of the Corporation’s impaired loans, related allowance under the incurred loss model and interest income recognized while impaired by loan class as of the periods indicated:

	December 31, 2020
	Unpaid Principal Balance		Recorded Investment		Related Allowance
Impaired loans with no related allowance:
Commercial and industrial loans	$	1,059	$	991	$	—
Real estate Loans:
Commercial real estate, non-owner occupied	4,958		4,694		—
Commercial real estate, owner occupied	2,125		1,310		—
Residential	957		816		—
Individuals' loans for household and other personal expenditures	2		2		—
Total	$	9,101	$	7,813	$	—
Impaired loans with related allowance:
Commercial and industrial loans	$	268	$	268	$	223
Agricultural land, production and other loans to farmers	640		562		3
Real estate Loans:
Commercial real estate, non-owner occupied	44,016		43,715		11,686
Commercial real estate, owner occupied	2,061		1,323		557
Residential	2,041		2,014		352
Home equity	487		461		80
Total	$	49,513	$	48,343	$	12,901
Total Impaired Loans	$	58,614	$	56,156	$	12,901

	Three Months Ended March 31, 2020
	Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	905	$	—
Real estate Loans:
Construction	1,015		—
Commercial and farmland	6,852		37
Residential	59		1
Individuals' loans for household and other personal expenditures	3		—
Total	$	8,834	$	38
Impaired loans with related allowance:
Real estate Loans:
Commercial and farmland	$	2,400	$	—
Residential	2,180		19
Home equity	393		3
Total	$	4,973	$	22
Total Impaired Loans	$	13,807	$	60

Off-Balance Sheet Arrangements, Commitments And Contingencies

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

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

The Corporation typically follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet instruments. Each customer’s creditworthiness is typically evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on management’s credit evaluation of the customer. Collateral held varies but may include cash, real estate, marketable securities, accounts receivable, inventory, equipment and personal property.

The contractual amounts of these commitments are not reflected in the consolidated financial statements and only amounts drawn upon would be reflected in the future. Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent future cash requirements. However, should the commitments be drawn upon and should the Corporation’s customers default on their resulting obligation to the Corporation, the maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those commitments.

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

	March 31, 2021		December 31, 2020
Amounts of commitments:
Loan commitments to extend credit	$	3,657,931	$	3,443,514
Standby letters of credit	$	33,610	$	29,555

The adoption of the CECL methodology for measuring credit losses, as discussed more fully in the Allowance for Credit Loss on Loans section of this Note, and in NOTE 1. GENERAL of these Notes to Consolidated Condensed Financial Statements, increased the opening balance of our accrual for off-balance sheet commitments at adoption by $20.5 million, which is reported in Other Liabilities as of March 31, 2021 in the CONSOLIDATED CONDENSED BALANCE SHEETS.

The following table details activity in the allowance for credit losses on off-balance sheet commitments:

	Three Months Ended March 31, 2021
Balances, December 31, 2020	$	—
Impact of adopting ASC 326	20,500
Provision for credit losses	—
Balances, March 31, 2021	$	20,500

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Other Intangibles

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Other Intangibles

OTHER INTANGIBLES

Core deposit intangibles are recorded on the acquisition date of an entity. The carrying basis and accumulated amortization of recognized core deposit intangibles are noted below.

	March 31, 2021		December 31, 2020
Gross carrying amount	$	102,396	$	102,396
Accumulated amortization	(74,778)		(73,421)
Total core deposit intangibles	$	27,618	$	28,975

The core deposit intangibles are being amortized primarily on an accelerated basis over their estimated useful lives, generally over a period of ten years. Intangible asset amortization expense for the three months ended March 31, 2021 was $1.4 million compared to $1.5 million for the three months ended March 31, 2020. Estimated future amortization expense is summarized as follows:

	Amortization Expense
2021	$	4,072
2022	5,027
2023	4,827
2024	4,241
2025	3,526
After 2025	5,925
	$	27,618

XML

Derivative Financial Instruments

3 Months Ended

Mar. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

DERIVATIVE FINANCIAL INSTRUMENTS

Risk Management Objective of Using Derivatives

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

Cash Flow Hedges of Interest Rate Risk

The Corporation’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Corporation primarily uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy.  Interest rate swaps designated as cash flow hedges involve the payment of fixed amounts to a counterparty in exchange for the Corporation receiving variable payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. As of March 31, 2021 and December 31, 2020, the Corporation had four interest rate swaps with a notional amount of $60.0 million that were designated as cash flow hedges.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the first quarter of 2021, $26.0 million of the interest rate swaps were used to hedge the variable cash outflows (LIBOR-based) associated with existing trust preferred securities when the outflows converted from a fixed rate to variable rate in September 2012.  In addition, $10.0 million of interest rate swaps were used to hedge the variable cash outflows (LIBOR-based) associated with one Federal Home Loan Bank advances. Finally, the remaining $24.0 million of interest rate swaps were used to hedge the variable cash outflows (Ameribor-based) associated with a brokered deposit originated in December 2020. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three months ended March 31, 2021 and 2020, the Corporation did not recognize any ineffectiveness.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Corporation's variable-rate liabilities. During the next twelve months, the Corporation expects to reclassify $1.0 million from accumulated other comprehensive income to interest expense.

Non-designated Hedges

The Corporation does not use derivatives for trading or speculative purposes.  Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain customers. The Corporation executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies.  Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Corporation executes with a third party, such that the Corporation minimizes its net risk exposure resulting from such transactions.  As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.  As of March 31, 2021 and December 31, 2020, the notional amount of customer-facing swaps was approximately $972.7 million and $985.0 million, respectively.  These amounts are offset with third party counterparties, as described above.

Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Corporation’s derivative financial instruments, as well as their classification on the Balance Sheet, as of March 31, 2021, and December 31, 2020.

Asset Derivatives

Liability Derivatives

March 31, 2021

December 31, 2020

March 31, 2021

December 31, 2020

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate contracts

Other Assets

$

—

Other Assets

$

—

Other Liabilities

$

1,708

Other Liabilities

$

2,018

Derivatives not designated as hedging instruments:

Interest rate contracts

Other Assets

$

48,576

Other Assets

$

74,335

Other Liabilities

$

48,576

Other Liabilities

$

74,335

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

Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative  (Effective Portion)
	Three Months Ended
	March 31, 2021		March 31, 2020
Interest Rate Products	$	58	$	(1,314)

Effect of Derivative Instruments on the Income Statement

The Corporation did not recognize any gains or losses from derivative financial instruments in the Consolidated Condensed Statements of Income for the three months ended March 31, 2021 and 2020.

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

Derivatives Designated as Hedging Instruments under FASB ASC 815-10	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain (Loss) Reclassed from Other Comprehensive Income into Income (Effective Portion)
		Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
Interest rate contracts	Interest Expense	$	(252)	$	(125)

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

Credit-risk-related Contingent Features

The Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation fails to maintain its status as a well or adequately capitalized institution, then the Corporation could be required to terminate or fully collateralize all outstanding derivative contracts. Additionally, the Corporation has agreements with certain of its derivative counterparties that contain a provision where if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations. As of March 31, 2021, the termination value of derivatives in a net liability position related to these agreements was $36.7 million. As of March 31, 2021, the Corporation has minimum collateral posting thresholds with certain of its derivative counterparties and has posted collateral of $62.8 million. While the Corporation did not breach any of these provisions as of March 31, 2021, if it had, the Corporation could have been required to settle its obligations under the agreements at their termination value.

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Disclosures About Fair Value of Assets and Liabilities

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Disclosures About Fair Value of Assets and Liabilities

DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES

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

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

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

RECURRING MEASUREMENTS

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

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

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

Investment Securities

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. The Corporation currently has no securities classified within Level 1 of the hierarchy. Where significant observable inputs, other than Level 1 quoted prices, are available, securities are classified within Level 2 of the valuation hierarchy. Level 2 securities include U.S. treasury securities, government-sponsored agency and mortgage-backed securities, state and municipal securities and corporate obligations securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include state and municipal securities, government-sponsored mortgage-backed securities and corporate obligations securities. Level 3 fair value for securities was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

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

Interest Rate Derivative Agreements

See information regarding the Corporation’s interest rate derivative products in NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements.

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the ASC 820 fair value hierarchy in which the fair value measurements fall at March 31, 2021, and December 31, 2020.

			Fair Value Measurements Using:
March 31, 2021	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:
U.S. Treasury	$	1,000	$	—	$	1,000	$	—
U.S. Government-sponsored agency securities	11,381		—		11,381		—
State and municipal	1,366,162		—		1,364,051		2,111
U.S. Government-sponsored mortgage-backed securities	1,022,863		—		1,022,859		4
Corporate obligations	4,162		—		4,131		31
Interest rate swap asset	48,576		—		48,576		—
Interest rate swap liability	50,284		—		50,284		—

			Fair Value Measurements Using:
December 31, 2020	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	2,430	$	—	$	2,430	$	—
State and municipal	1,257,885		—		1,255,441		2,444
U.S. Government-sponsored mortgage-backed securities	654,669		—		654,665		4
Corporate obligations	4,135		—		4,104		31
Interest rate swap asset	74,335		—		74,335		—
Interest rate swap liability	76,353		—		76,353		—

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

liabilities held at March 31, 2021 or December 31, 2020.

Level 3 Reconciliation

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

balance sheets using significant unobservable Level 3 inputs for the three months ended March 31, 2021 and 2020.

	Available for Sale Securities
	Three Months Ended
	March 31, 2021		March 31, 2020
Balance at beginning of the period	$	2,479	$	2,893
Included in other comprehensive income	(60)		(20)
Principal payments	(273)		(344)
Ending balance	$	2,146	$	2,529

Transfers Between Levels

There were no transfers in or out of Level 3 for the three months ended March 31, 2021 and 2020.

Nonrecurring Measurements

Following is a description of valuation methodologies used for instruments measured at fair value on a non-recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy for March 31, 2021, and December 31, 2020.

			Fair Value Measurements Using
March 31, 2021	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	40,698	$	—	$	—	$	40,698
Other real estate owned	185		—		—		185

			Fair Value Measurements Using
December 31, 2020	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable  Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans (collateral dependent)	$	37,250	$	—	$	—	$	37,250
Other real estate owned	544		—		—		544

Impaired Loans (collateral dependent)

Loans for which it is probable that the Corporation will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for determining the amount of impairment include estimating fair value of the collateral for collateral dependent loans. If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations cause the allowance for loan losses to increase, such increase is reported as a component of the provision for loan losses. Loan losses are charged against the allowance when management believes the uncollectability of the loan is confirmed. During 2020 and 2021, certain impaired loans were partially charged off or re-evaluated. Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method.

Other Real Estate Owned

The fair value for impaired loans and other real estate owned is measured based on the value of the collateral securing those loans or real estate and is determined using several methods. The fair value of real estate is generally determined based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a discounted cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and/or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

Unobservable (Level 3) Inputs

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill, at March 31, 2021 and December 31, 2020.

March 31, 2021	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	2,111	Discounted cash flow	Maturity/Call date	1 month to 15 years
				US Muni BQ curve	A- to BBB-
				Discount rate	2% - 4%
				Weighted-average coupon	4%
Corporate obligations and U.S. Government-sponsored mortgage-backed securities	$	35	Discounted cash flow	Risk free rate	3 month LIBOR
				plus premium for illiquidity	plus 200bps
				Weighted-average coupon	—%
Collateral dependent loans	$	40,698	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 10%
				Weighted-average discount by loan balance	4%
Other real estate owned	$	185	Appraisals	Discount to reflect current market conditions	0% - 72%
				Weighted-average discount of other real estate owned balance	39%

December 31, 2020	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	2,444	Discounted cash flow	Maturity/Call date	1 month to 15 years
				US Muni BQ curve	A- to BBB-
				Discount rate	2% - 4%
				Weighted-average coupon	4%
Corporate obligations and U.S Government-sponsored mortgage-backed securities	$	35	Discounted cash flow	Risk free rate	3 month LIBOR
				plus premium for illiquidity	plus 200bps
				Weighted-average coupon	—%
Impaired loans (collateral dependent)	$	37,250	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 10%
				Weighted-average discount by loan balance	6%
Other real estate owned	$	544	Appraisals	Discount to reflect current market conditions	0% - 30%
				Weighted-average discount of other real estate owned balance	26%

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

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

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

Fair Value of Financial Instruments

The following table presents estimated fair values of the Corporation’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2021, and December 31, 2020.

			March 31, 2021
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	187,901	$	187,901	$	—	$	—
Interest-bearing deposits	392,806		392,806		—		—
Investment securities available for sale	2,405,568		—		2,403,422		2,146
Investment securities held to maturity	1,295,289		—		1,299,944		18,836
Loans held for sale	4,430		—		4,430		—
Loans	9,117,146		—		—		9,168,023
Federal Home Loan Bank stock	28,736		—		28,736		—
Interest rate swap asset	48,576		—		48,576		—
Interest receivable	54,662		—		54,662		—
Liabilities:
Deposits	$	11,951,780	$	11,103,474	$	847,398	$	—
Borrowings:
Securities sold under repurchase agreements	185,721		—		185,716		—
Federal Home Loan Bank advances	359,337		—		366,179		—
Subordinated debentures and other borrowings	118,439		—		108,124		—
Interest rate swap liability	50,284		—		50,284		—
Interest payable	4,020		—		4,020		—

			December 31, 2020
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	192,896	$	192,896	$	—	$	—
Interest-bearing deposits	392,305		392,305		—		—
Investment securities available for sale	1,919,119		—		1,916,640		2,479
Investment securities held to maturity	1,227,668		—		1,260,815		19,478
Loans held for sale	3,966		—		3,966		—
Loans	9,112,526		—		—		9,191,628
Federal Home Loan Bank stock	28,736		—		28,736		—
Interest rate swap asset	74,335		—		74,335		—
Interest receivable	53,948		—		53,948		—
Liabilities:
Deposits	$	11,361,610	$	10,482,865	$	878,257	$	—
Borrowings:
Securities sold under repurchase agreements	177,102		—		177,097		—
Federal Home Loan Bank advances	389,430		—		399,991		—
Subordinated debentures and other borrowings	118,380		—		108,439		—
Interest rate swap liability	76,353		—		76,353		—
Interest payable	3,287		—		3,287		—

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Transfers Accounted for as Secured Borrowings

3 Months Ended

Mar. 31, 2021

Transfers and Servicing [Abstract]

Transfers Accounted for as Secured Borrowings

TRANSFERS ACCOUNTED FOR AS SECURED BORROWINGS

The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of March 31, 2021 and December 31, 2020 were:

	March 31, 2021
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	184,067	$	—	$	1,654	$	—	$	185,721

	December 31, 2020
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	175,449	$	—	$	1,653	$	—	$	177,102

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Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2021

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, as of March 31, 2021 and 2020:

	Accumulated Other Comprehensive Income (Loss)
	Unrealized Gains (Losses) on Securities Available for Sale		Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Defined Benefit Plans		Total
Balance at December 31, 2020	$	87,988	$	(1,594)	$	(11,558)	$	74,836
Other comprehensive income (loss) before reclassifications	(37,850)		46		—		(37,804)
Amounts reclassified from accumulated other comprehensive income	(1,421)		199		—		(1,222)
Period change	(39,271)		245		—		(39,026)
Balance at March 31, 2021	$	48,717	$	(1,349)	$	(11,558)	$	35,810
Balance at December 31, 2019	$	38,872	$	(1,141)	$	(9,857)	$	27,874
Other comprehensive income (loss) before reclassifications	30,364		(1,038)		—		29,326
Amounts reclassified from accumulated other comprehensive income	(3,643)		99		—		(3,544)
Period change	26,721		(939)		—		25,782
Balance at March 31, 2020	$	65,593	$	(2,080)	$	(9,857)	$	53,656

The following table presents the reclassification adjustments out of accumulated other comprehensive income (loss) that were included in net income in the Consolidated Condensed Statements of Income for the three months ended March 31, 2021 and 2020.

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Three Months Ended March 31,
Details about Accumulated Other Comprehensive Income (Loss) Components	2021		2020		Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities gains reclassified into income	$	1,799	$	4,612	Other income - net realized gains on sales of available for sale securities
Related income tax expense	(378)		(969)		Income tax expense
	$	1,421	$	3,643
Unrealized gains (losses) on cash flow hedges (2)
Interest rate contracts	$	(252)	$	(125)	Interest expense - subordinated debentures and term loans
Related income tax benefit	53		26		Income tax expense
	$	(199)	$	(99)
Total reclassifications for the period, net of tax	$	1,222	$	3,544

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

(2) For additional detail related to unrealized gains (losses) on cash flow hedges and related amounts reclassified from accumulated other comprehensive income see NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements.

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Share-Based Compensation

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

SHARE-BASED COMPENSATION

Stock options and RSAs have been issued to directors, officers and other management employees under the Corporation's 2009 Long-term Equity Incentive Plan, the 2019 Long-term Equity Incentive Plan, and the Equity Compensation Plan for Non-Employee Directors. The stock options, which have a ten year life, become 100 percent vested based on time ranging from one year to two years and are fully exercisable when vested. Option exercise prices equal the Corporation's common stock closing price on NASDAQ on the date of grant. The RSAs issued to employees and non-employee directors provide for the issuance of shares of the Corporation's common stock at no cost to the holder and generally vest after 3 years.  The RSAs vest only if the employee is actively employed by the Corporation on the vesting date and, therefore, any unvested shares are forfeited.  For non-employee directors, the RSAs vest only if the non-employee director remains as an active board member on the vesting date and, therefore, any unvested shares are forfeited. The RSAs for employees and non-employee directors are either immediately vested at retirement, disability or death, or, continue to vest after retirement, disability or death, depending on the plan under which the shares were granted.

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

Compensation expense related to unvested share-based awards is recorded by recognizing the unamortized grant date fair value of these awards over the remaining service periods of those awards, with no change in historical reported fair values and earnings.  Awards are valued at fair value in accordance with provisions of share-based compensation guidance and are recognized on a straight-line basis over the service periods of each award. To complete the exercise of vested stock options, RSA’s and ESPP options, the Corporation generally issues new shares from its authorized but unissued share pool. Share-based compensation for the three months ended March 31, 2021 was $1,190,000 compared to $1,220,000 for the three months ended March 31, 2020. Share-based compensation has been recognized as a component of salaries and benefits expense in the accompanying Consolidated Condensed Statements of Income.

Share-based compensation expense recognized in the Consolidated Condensed Statements of Income is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Share-based compensation guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods, if actual forfeitures differ from those estimates. Pre-vesting forfeitures were estimated to be approximately 0.5 percent for the three months ended March 31, 2021, based on historical experience.

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

	Three Months Ended March 31,
	2021		2020
Stock and ESPP Options
Pre-tax compensation expense	$	75	$	41
Income tax expense (benefit)	(72)		—
Stock and ESPP option expense, net of income taxes	$	3	$	41
Restricted Stock Awards
Pre-tax compensation expense	$	1,115	$	1,179
Income tax expense (benefit)	(237)		(257)
Restricted stock awards expense, net of income taxes	$	878	$	922
Total Share-Based Compensation
Pre-tax compensation expense	$	1,190	$	1,220
Income tax expense (benefit)	(309)		(257)
Total share-based compensation expense, net of income taxes	$	881	$	963

As of March 31, 2021, unrecognized compensation expense related to RSAs was $8.4 million and is expected to be recognized over a weighted-average period of 2.01 years. The Corporation did not have any unrecognized compensation expense related to stock options as of March 31, 2021.

Stock option activity under the Corporation's stock option plans as of March 31, 2021 and changes during the three months ended March 31, 2021, were as follows:

	Number of Shares	Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2021	45,800	$	15.00
Exercised	(14,300)	$	11.97
Outstanding March 31, 2021	31,500	$	16.37	2.06	$	949,155
Vested and Expected to Vest at March 31, 2021	31,500	$	16.37	2.06	$	949,155
Exercisable at March 31, 2021	31,500	$	16.37	2.06	$	949,155

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Corporation's closing stock price on the last trading day of the first three months of 2021 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their stock options on March 31, 2021.  The amount of aggregate intrinsic value will change based on the fair market value of the Corporation's common stock.

The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2021 and 2020 was $453,000 and $36,000, respectively. Cash receipts of stock options exercised during this same period were $171,000 and $7,000, respectively.

The following table summarizes information on unvested RSAs outstanding as of March 31, 2021:

	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested RSAs at January 1, 2021	357,883	$	36.30
Granted	66,913	$	42.39
Vested	(4,285)	$	42.15
Forfeited	(1,650)	$	32.21
Unvested RSAs at March 31, 2021	418,861	$	37.23

The grant date fair value of ESPP options was estimated to be approximately $75,000 at the beginning of the January 1, 2021 quarterly offering period. The ESPP options vested during the three months ending March 31, 2021, leaving no unrecognized compensation expense related to unvested ESPP options at March 31, 2021.

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Income Tax

3 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

Income Tax

INCOME TAX

The following table summarizes the major components creating differences between income taxes at the federal statutory and the effective tax rate recorded in the consolidated statements of income for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,
	2021			2020
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal statutory income tax at 21%	$	12,268		$	7,928
Tax-exempt interest income	(3,706)			(3,022)
Share-based compensation	(59)			—
Tax-exempt earnings and gains on life insurance	(281)			(286)
Tax credits	(73)			(61)
CARES Act - NOL carryback rate differential	—			(1,178)
State Income Tax	702			86
Other	101			23
Actual Tax Expense	$	8,952		$	3,490
Effective Tax Rate	15.3		%	9.2		%

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Net Income Per Share

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Net Income Per Share

NET INCOME PER SHARE

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

The following table reconciles basic and diluted net income per share for the three months ended March 31, 2021 and 2020.

	Three Months Ended March 31,
	2021					2020
	Net Income		Weighted-Average Shares	Per Share Amount		Net Income		Weighted-Average Shares	Per Share Amount
Net income available to common stockholders	$	49,469	53,930,200	$	0.92	$	34,263	54,732,073	$	0.63
Effect of potentially dilutive stock options and restricted stock awards			203,422					185,687
Diluted net income per share	$	49,469	54,133,622	$	0.91	$	34,263	54,917,760	$	0.62

For the three months ended March 31, 2021 and 2020, there were no stock options with an option price greater than the average market price of the common shares.

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General Litigation and Regulatory Examinations

3 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

General Litigation and Regulatory Examinations

GENERAL LITIGATION AND REGULATORY EXAMINATIONS

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

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Subsequent Event	3 Months Ended
	Mar. 31, 2021
Subsequent Events [Abstract]
Subsequent Event	SUBSEQUENT EVENTOn April 1, 2021, the Bank closed its acquisition of Hoosier Trust Company, an Indiana trust company (“Hoosier”), pursuant to which Hoosier merged with and into the Bank. The consideration paid to the shareholders of Hoosier at closing was $3,225,000 in cash.

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General (Policies)

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Recent Accounting Changes Adopted in 2021 and New Accounting Pronouncements Not Yet Adopted

Recent Accounting Changes Adopted In 2021

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

FASB Accounting Standards Updates No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

Summary - The FASB issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This new guidance replaces the previous "incurred loss" model for measuring credit losses with an "expected life of loan loss" model, referred to as the CECL model.

Under the CECL model, certain financial assets carried at amortized cost, such as loans held for investment and held-to-maturity debt securities, are required to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This measurement takes place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model, which delayed recognition until it is probable a loss had been incurred.

The Corporation developed models that satisfy the requirements of the new standard which are governed by a system of internal controls and a cross-functional working group consisting of accounting, finance, and credit administration personnel. The loan portfolio was pooled into ten loan segments with similar risk characteristics for which the probability of default/loss given default methodology was applied. The Corporation utilized a one-year economic forecast period then reverted to historical macroeconomic levels for the remaining life of the portfolio. A baseline macroeconomic scenario, along with other scenarios, were used to develop a range of estimated credit losses for which to determine the best estimate within.

The ASU was effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Pursuant to the CARES Act and the related joint statement of federal banking regulators (which also became effective as of March 27, 2020), and consistent with guidance from the SEC and FASB, the Corporation elected to delay implementation of ASU No. 2016-13, which was set to expire on December 31, 2020. However, the CAA (as discussed above) extended the temporary relief from CECL compliance to the earlier of the first day of the fiscal year that begins after the date on which the national emergency concerning COVID-19 terminates, or January 1, 2022. The Corporation elected to delay implementation of CECL following the approval of the CARES Act and, with the enactment of the CAA, the Corporation elected to adopt CECL on January 1, 2021. This allows the Corporation to utilize the CECL standard for the entire year of 2021, while its 2020 financial statements were prepared under the incurred loss model.

As of the adoption and day one measurement date of January 1, 2021, the Corporation recorded a one-time cumulative-effect adjustment to retained earnings, net of income taxes, on the consolidated balance sheet of $68.0 million. The allowance increased 57 percent from December 31, 2020, or $74.1 million, because it covered expected credit losses over the life of the loan portfolio, which approximates four years, and it included an allowance on all purchased loans that were previously excluded from the allowance for loan losses calculation. CECL also requires the establishment of a reserve for potential losses from unfunded commitments that is recorded in other liabilities, separate from allowance for credit losses, which was approximately $20.5 million. An allowance for credit losses of $245,000 was recorded on the state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities.

FASB Accounting Standards Updates No. 2019-11 - Codification Improvements to (Topic 326): Financial Instruments - Credit Losses

Summary - The FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses in order to address issues raised by stakeholders during the implementation of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments.

Among other narrow-scope improvements, the new ASU clarifies guidance around how to report expected recoveries. “Expected recoveries” describes a situation in which an organization recognizes a full or partial write-off of the amortized cost basis of a financial asset, but then later determines that the amount written off, or a portion of that amount, will in fact be recovered. While applying the credit losses standard, stakeholders questioned whether expected recoveries were permitted on assets that had already shown credit deterioration at the time of purchase (also known as PCD assets). In response to this question, the ASU permits organizations to record expected recoveries on PCD assets. In addition to other narrow technical improvements, the ASU also reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities.

The ASU includes effective dates and transition requirements that vary depending on whether or not an entity has already adopted ASU No. 2016-13. As discussed above, pursuant to the CARES Act, the Corporation elected to defer the adoption of CECL. Additionally, the 2021 Consolidated Appropriations Act ("CAA"), signed into law on December 27, 2020, amended the CARES Act by extending the temporary relief from CECL compliance to the earlier of the first day of the fiscal year that begins after the date on which the national emergency concerning COVID-19 terminates, or January 1, 2022. The Corporation elected to delay implementation of CECL following the approval of the CARES Act and, with the enactment of the CAA, the Corporation elected to adopt CECL on January 1, 2021. The adoption of this standard did not have a significant effect on the Corporation’s consolidated financial statements or disclosures.

Accounting Standards Update No. 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

Summary - The FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is expected to reduce cost and complexity related to the accounting for income taxes.

The ASU removes specific exceptions to the general principles in Topic 740 in Generally Accepted Accounting Principles (GAAP). It eliminates the need for an organization to analyze whether the following apply in a given period:

•    Exception to the incremental approach for intraperiod tax allocation;

•    Exceptions to accounting for basis differences when there are ownership changes in foreign investments; and

•    Exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses.

The ASU also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP for:

•    Franchise taxes that are partially based on income;

•    Transactions with a government that result in a step up in the tax basis of goodwill

•    Separate financial statements of legal entities that are not subject to tax; and

•    Enacted changes in tax laws in interim periods.

The ASU is part of the FASB’s simplification initiative to make narrow-scope simplifications and improvements to accounting standards through a series of short-term projects. For public business entities, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption of the ASU was permitted. The Corporation adopted this standard on January 1, 2021 and adoption of this standard did not have a significant effect on the Corporation's consolidated financial statements or disclosures.

New Accounting Pronouncements Not Yet Adopted

FASB Accounting Standards Updates - No. 2020-04 - Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

Summary - The FASB issued ASU No. 2020-04 to provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. LIBOR and other interbank offered rates are widely used benchmarks or reference rates in the United States and globally. Trillions of dollars in loans, derivatives, and other financial contracts reference LIBOR, the benchmark interest rate banks use to make short-term loans to each other. With global capital markets expected to move away from LIBOR and other interbank offered rates and move toward rates that are more observable or transaction based and less susceptible to manipulation, the FASB launched a broad project in late 2018 to address potential accounting challenges expected to arise from the transition. The new guidance provides 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 ASU is intended to help stakeholders during the global market-wide reference rate transition period.

Entities may apply this ASU as of the beginning of an interim period that includes the March 12, 2020 issuance date of the ASU, through December 31, 2022. The Corporation expects to adopt the practical expedients included in the ASU prior to December 31, 2022. The Corporation is implementing a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR. The Corporation is assessing ASU 2020-04 and its impact on the Corporation's transition away from LIBOR for its loans and other financial instruments.

FASB Accounting Standards Updates - Accounting Standards Update No. 2021-01 - Reference Rate Reform (Topic 848): Scope

Summary - The FASB has published ASU 2021-01, Reference Rate Reform. ASU 2021-01 clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition.

An entity may elect to apply the amendments in this Update on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final Update, up to the date that financial statements are available to be issued.

If an entity elects to apply any of the amendments in this Update for an eligible hedging relationship, any adjustments as a result of those elections must be reflected as of the date the entity applies the election.

The amendments in this Update do not apply to contract modifications made after December 31, 2022, new hedging relationships entered into after December 31, 2022, and existing hedging relationships evaluated for effectiveness in periods after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship (including periods after December 31, 2022). The Corporation is assessing ASU 2021-01 and its impact on the Corporation's transition away from LIBOR for its loans and other financial instruments.

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General (Tables)

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of changes in accounting principles

The following table details the impact of the adoption of CECL on the Corporation's balance sheet as of January 1, 2021.

	December 31, 2020	Impact of CECL Adoption	January 1, 2021 Post-CECL Adoption
Assets:
Held to maturity securities	1,227,668	(245)	1,227,423
Loans	9,243,174	4,776	9,247,950
Allowance for credit losses - Loans	(130,648)	(74,055)	(204,703)
Net loans	9,112,526	(69,279)	9,043,247
Tax asset, deferred and receivable	12,340	21,984	34,324
Liabilities:
Allowance for credit losses on unfunded loan commitments	—	20,500	20,500
Stockholder's Equity:
Retained Earnings	788,578	(68,040)	720,538
		—

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Investment Securities (Tables)

3 Months Ended

Mar. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Schedule of amortized cost, gross unrealized gains, gross unrealized losses and approximate fair value of investment securities

The following table summarizes the amortized cost, gross unrealized gains and losses and approximate fair value of investment securities available for sale as of March 31, 2021 and December 31, 2020.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at March 31, 2021
U.S. Treasury	$	1,000	$	—	$	—	$	1,000
U.S. Government-sponsored agency securities	11,504		40		163		11,381
State and municipal	1,301,378		67,438		2,654		1,366,162
U.S. Government-sponsored mortgage-backed securities	1,025,660		13,550		16,347		1,022,863
Corporate obligations	4,031		153		22		4,162
Total available for sale	$	2,343,573	$	81,181	$	19,186	$	2,405,568

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2020
U.S. Government-sponsored agency securities	$	2,380	$	50	$	—	$	2,430
State and municipal	1,168,711		89,420		246		1,257,885
U.S. Government-sponsored mortgage-backed securities	632,267		22,505		103		654,669
Corporate obligations	4,031		104		—		4,135
Total available for sale	$	1,807,389	$	112,079	$	349	$	1,919,119

The following table summarizes the amortized cost, gross unrealized gains and losses, approximate fair value and allowance for credit losses on investment securities held to maturity as of March 31, 2021 and December 31, 2020.

	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at March 31, 2021
U.S. Government-sponsored agency securities	$	60,676	$	—	$	60,676	$	1	$	1,553	59,124
State and municipal	624,553		245		624,308		23,154		3,389		644,318
U.S. Government-sponsored mortgage-backed securities	608,805		—		608,805		11,849		6,816		613,838
Foreign investment	1,500		—		1,500		—		—		1,500
Total held to maturity	$	1,295,534	$	245	$	1,295,289	$	35,004	$	11,758	$	1,318,780

	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity at December 31, 2020
U.S. Government-sponsored agency securities	$	31,087	$	—	$	31,087	$	10	$	113	$	30,984
State and municipal	619,927		—		619,927		34,978		32		654,873
U.S. Government-sponsored mortgage-backed securities	575,154		—		575,154		17,889		107		592,936
Foreign investment	1,500		—		1,500		—		—		1,500
Total held to maturity	$	1,227,668	$	—	$	1,227,668	$	52,877	$	252	$	1,280,293

Schedule of amortized cost of investment securities held to maturity aggregated by credit quality indicator

The following table summarizes the amortized cost of investment securities held to maturity at March 31, 2021, aggregated by credit quality indicator.

	Held to Maturity
	State and municipal		Other		Total
Credit Rating:
Aaa	$	48,689	$	60,676	$	109,365
Aa1	84,954		—		84,954
Aa2	107,436		—		107,436
Aa3	72,969		—		72,969
A1	65,578		—		65,578
A2	19,074		—		19,074
A3	1,065		—		1,065
Baa2	528		—		528
Non-rated	224,260		610,305		834,565
Total	$	624,553	$	670,981	$	1,295,534

Schedule of allowance for credit losses on investment securities held to maturity

The following table details activity in the allowance for credit losses on investment securities held to maturity during the three months ended March 31, 2021.

	State and municipal
Allowance for Credit Losses:
Balance, December 31, 2020	$	—
Impact of adopting ASC 326	245
Provision for credit loss	—
Securities charged off	—
Recoveries on securities	—
Balance, March 31, 2021	$	245

Schedule of investment securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position

The following tables summarize, as of March 31, 2021 and December 31, 2020, investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and length of time in a continuous unrealized loss position.

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at March 31, 2021
U.S. Government-sponsored agency securities	$	9,837	$	163	$	—	$	—	$	9,837	$	163
State and municipal	172,655		2,654		—		—		172,655		2,654
U.S. Government-sponsored mortgage-backed securities	606,498		16,347		—		—		606,498		16,347
Corporate obligations	978		22		—		—		978		22
Total investment securities available for sale	$	789,968	$	19,186	$	—	$	—	$	789,968	$	19,186

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities available for sale at December 31, 2020
State and municipal	$	5,368	$	246	$	—	$	—	$	5,368	$	246
U.S. Government-sponsored mortgage-backed securities	9,651		103		—		—		9,651		103
Total investment securities available for sale	$	15,019	$	349	$	—	$	—	$	15,019	$	349

Schedule of investments in debt and equity securities reported in the financial statements at an amount less than their historical cost

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

	March 31, 2021			December 31, 2020
Investments available for sale reported at less than historical cost:
Historical cost	$	809,154		$	15,368
Fair value	789,968			15,019
Gross unrealized losses	$	19,186		$	349
Percent of the Corporation's investments available for sale	21.4		%	0.5		%

Schedule of amortized cost and fair value of available for sale securities and held to maturity securities

The amortized cost and fair value of investment securities available for sale and held to maturity at March 31, 2021 and December 31, 2020, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately.

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at March 31, 2021
Due in one year or less	$	2,062	$	2,071	$	9,056	$	9,068
Due after one through five years	4,781		4,960		23,116		24,084
Due after five through ten years	92,598		96,882		151,103		154,819
Due after ten years	1,218,472		1,278,792		503,454		516,971
	1,317,913		1,382,705		686,729		704,942
U.S. Government-sponsored mortgage-backed securities	1,025,660		1,022,863		608,805		613,838
Total investment securities	$	2,343,573	$	2,405,568	$	1,295,534	$	1,318,780

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at December 31, 2020
Due in one year or less	$	1,349	$	1,353	$	9,712	$	9,755
Due after one through five years	5,545		5,764		22,241		23,190
Due after five through ten years	70,777		75,223		115,408		121,333
Due after ten years	1,097,451		1,182,110		505,153		533,079
	1,175,122		1,264,450		652,514		687,357
U.S. Government-sponsored mortgage-backed securities	632,267		654,669		575,154		592,936
Total investment securities	$	1,807,389	$	1,919,119	$	1,227,668	$	1,280,293

Schedule of gross gains on sales and redemptions of available for sale securities

Gross gains on the sales and redemptions of investment securities available for sale for the three months ended March 31, 2021 and 2020 are shown below.

	Three Months Ended March 31,
	2021		2020
Sales and redemptions of investment securities available for sale:
Gross gains	$	2,076	$	4,612
Gross losses	277		—
Net gains on sales and redemptions of investment securities available for sale	$	1,799	$	4,612

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Loans and Allowance (Tables)

3 Months Ended

Mar. 31, 2021

Receivables [Abstract]

Schedule of composition of loan portfolio by loan class

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

	March 31, 2021		December 31, 2020
Commercial and industrial loans	$	2,876,212	$	2,776,699
Agricultural land, production and other loans to farmers	245,631		281,884
Real estate loans:
Construction	541,224		484,723
Commercial real estate, non-owner occupied	2,178,832		2,220,949
Commercial real estate, owner occupied	950,038		958,501
Residential	1,239,925		1,234,741
Home equity	482,229		508,259
Individuals' loans for household and other personal expenditures	126,387		129,479
Public finance and other commercial loans	677,750		647,939
Loans	$	9,318,228	$	9,243,174

Schedule of credit quality of loan portfolio by loan class

The following tables summarize the risk grading of the Corporation’s loan portfolio by loan class and by year of origination for the years indicated. Consumer loans are not risk graded. For the purposes of this disclosure the consumer loans are classified in the following manner: loans that are less than 30 days past due are Pass, loans 30-89 days past due are Special Mention and loans greater than 89 days past due are Substandard. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Loans that evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected are included in the applicable categories below. Outstanding loan balances as of March 31, 2021 with an origination year of 2021 and 2020 include PPP loans of $293.1 million and $448.6 million, respectively.

	Term Loans (amortized cost basis by origination year)
	2021		2020		2019		2018		2017		Prior		Revolving loans amortized cost basis		Total
Commercial and industrial loans
Pass	$	451,747	$	1,101,622	$	265,685	$	121,416	$	47,101	$	64,093	$	634,146	$	2,685,810
Special Mention	7,735		50,704		1,421		7,435		2,306		2,326		29,255		101,182
Substandard	1,891		4,946		6,319		606		469		1,394		73,595		89,220
Total Commercial and industrial loans	$	461,373	$	1,157,272	$	273,425	$	129,457	$	49,876	$	67,813	$	736,996	$	2,876,212
Agricultural land, production and other loans to farmers
Pass	22,570		58,620		26,146		11,864		8,821		49,646		45,626		223,293
Special Mention	151		621		186		2,151		—		3,347		8,824		15,280
Substandard	—		4,116		64		125		717		877		1,159		7,058
Total Agricultural land, production and other loans to farmers	$	22,721	$	63,357	$	26,396	$	14,140	$	9,538	$	53,870	$	55,609	$	245,631
Real estate loans:
Construction
Pass	60,800		208,852		165,903		68,816		3,104		1,945		17,184		526,604
Special Mention	—		10,118		—		63		—		—		30		10,211
Substandard	4,391		—		—		—		—		18		—		4,409
Total Construction	$	65,191	$	218,970	$	165,903	$	68,879	$	3,104	$	1,963	$	17,214	$	541,224
Commercial real estate, non-owner occupied
Pass	93,726		933,226		275,343		225,971		141,947		196,284		25,454		1,891,951
Special Mention	9,544		169,291		13,242		990		—		112		1,250		194,429
Substandard	238		38,545		24,741		11,585		7,840		9,503		—		92,452
Total Commercial real estate, non-owner occupied	$	103,508	$	1,141,062	$	313,326	$	238,546	$	149,787	$	205,899	$	26,704	$	2,178,832
Commercial real estate, owner occupied
Pass	51,710		481,355		122,017		57,531		60,587		89,802		39,729		902,731
Special Mention	45		10,174		2,606		1,646		2,242		1,178		149		18,040
Substandard	5,079		19,107		154		2,179		723		1,979		—		29,221
Loss	46		—		—		—		—		—		—		46
Total Commercial real estate, owner occupied	$	56,880	$	510,636	$	124,777	$	61,356	$	63,552	$	92,959	$	39,878	$	950,038
Residential
Pass	171,109		398,112		148,457		101,627		88,700		314,130		3,873		1,226,008
Special Mention	349		982		—		588		82		1,313		93		3,407
Substandard	485		3,152		518		1,355		372		4,628		—		10,510
Total Residential	$	171,943	$	402,246	$	148,975	$	103,570	$	89,154	$	320,071	$	3,966	$	1,239,925
Home equity
Pass	2,673		20,032		2,577		2,930		1,786		5,085		442,166		477,249
Special Mention	—		91		—		—		—		59		2,588		2,738
Substandard	403		151		—		13		129		195		1,351		2,242
Total Home Equity	$	3,076	$	20,274	$	2,577	$	2,943	$	1,915	$	5,339	$	446,105	$	482,229
Individuals' loans for household and other personal expenditures
Pass	16,786		38,678		24,201		18,482		4,383		7,550		15,996		126,076
Special Mention	—		68		75		35		8		33		4		223
Substandard	—		1		87		—		—		—		—		88
Total Individuals' loans for household and other personal expenditures	$	16,786	$	38,747	$	24,363	$	18,517	$	4,391	$	7,583	$	16,000	$	126,387
Public finance and other commercial loans
Pass	21,613		191,808		128,844		39,837		130,856		151,403		13,389		677,750
Total Public finance and other commercial loans	$	21,613	$	191,808	$	128,844	$	39,837	$	130,856	$	151,403	$	13,389	$	677,750
Loans	$	923,091	$	3,744,372	$	1,208,586	$	677,245	$	502,173	$	906,900	$	1,355,861	$	9,318,228

	December 31, 2020
	Commercial Pass		Commercial Special Mention		Commercial Substandard		Commercial Doubtful		Commercial Loss		Consumer Performing			Consumer Non-Performing		Total
Commercial and industrial loans	$	2,562,077	$	117,503	$	97,119	$	—	$	—	$	—		$	—	$	2,776,699
Agricultural production financing and other loans to farmers	243,991		26,835		9,885		—		—		1,173			—		281,884
Real estate Loans:
Construction	446,846		10,445		5,549		—		—		21,763			120		484,723
Commercial real estate, non-owner occupied	1,979,827		160,304		80,818		—		—		—			—		2,220,949
Commercial real estate, owner occupied	907,566		17,641		33,294						—			—		958,501
Residential	199,338		2,261		7,058		—		—		1,020,687			5,397		1,234,741
Home equity	12,714		—		989		—		—		492,999			1,557		508,259
Individuals' loans for household and other personal expenditures	—		—		—		—		—		129,440			39		129,479
Public finance and other commercial loans	647,939		—		—		—		—		—			—		647,939
Loans	$	7,000,298	$	334,989	$	234,712	$	—	$	—	$	1,666,062	1666062	$	7,113	$	9,243,174

Schedule of changes in allowance for loan losses

The following tables summarize changes in the allowance for credit losses by loan segment for the three months ended March 31, 2021:

	Three Months Ended March 31, 2021
	Commercial		Commercial Real Estate		Construction		Consumer		Residential		Consumer & Residential		Total
Allowance for credit losses
Balances, December 31, 2020	$	47,115	$	51,070	$	—	$	9,648	$	22,815	$	—	$	130,648
Credit risk reclassifications	—		(10,284)		10,284		(9,648)		(22,815)		32,463		—
Balances, December 31, 2020 after reclassifications	47,115		40,786		10,284		—		—		32,463		130,648
Impact of adopting ASC 326	20,024		34,925		8,805		—		—		10,301		74,055
Balances, January 1, 2021 Post-ASC 326 adoption	67,139		75,711		19,089		—		—		42,764		204,703
Provision for credit losses	(932)		(1,701)		1,095		—		—		1,538		—
Recoveries on loans	188		164		—		—		—		342		694
Loans charged off	(673)		(3,313)		(2)		—		—		(327)		(4,315)
Balances, March 31, 2021	$	65,722	$	70,861	$	20,182	$	—	$	—	$	44,317	$	201,082

Allowance for Loan Losses under prior GAAP ("Incurred Loss Model")

Prior to the adoption of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on January 1, 2021, the Corporation maintained an allowance for loan losses in accordance with the incurred loss model as disclosed in the Corporation's 2020 Annual Report on Form 10-K.

The following tables summarize changes in the allowance for loan losses by loan segment for the three months ended March 31, 2020:

	Three Months Ended March 31, 2020
	Commercial		Commercial Real Estate		Consumer		Residential		Total
Allowance for loan losses:
Balances, December 31, 2019	$	32,902	$	28,778	$	4,035	$	14,569	$	80,284
Provision for losses	5,701		9,194		1,924		2,933		19,752
Recoveries on loans	443		118		42		70		673
Loans charged off	(615)		(183)		(249)		(208)		(1,255)
Balances, March 31, 2020	$	38,431	$	37,907	$	5,752	$	17,364	$	99,454

Schedule of past due aging of loan portfolio by loan class

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

	March 31, 2021
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	2,870,436	$	4,545	$	19	$	1,212	$	2,876,212	$	—
Agricultural land, production and other loans to farmers	244,403		114		—		1,114		245,631		—
Real estate loans:
Construction	540,648		560		—		16		541,224		—
Commercial real estate, non-owner occupied	2,094,103		45,942		434		38,353		2,178,832		—
Commercial real estate, owner occupied	946,423		792		1,096		1,727		950,038		1,032
Residential	1,234,473		1,582		377		3,493		1,239,925		—
Home equity	477,927		1,906		1,010		1,386		482,229		60
Individuals' loans for household and other personal expenditures	126,075		181		42		89		126,387		1
Public finance and other commercial loans	677,750		—		—		—		677,750		—
Loans	$	9,212,238	$	55,622	$	2,978	$	47,390	$	9,318,228	$	1,093

	December 31, 2020
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	2,761,473	$	5,866	$	6,571	$	2,789	$	2,776,699	$	594
Agricultural land, production and other loans to farmers	280,615		146		226		897		281,884		—
Real estate loans:									—
Construction	484,706		—		17		—		484,723		—
Commercial real estate, non-owner occupied	2,184,681		2,525		2,109		31,634		2,220,949		—
Commercial real estate, owner occupied	951,561		4,854		180		1,906		958,501		—
Residential	1,226,779		3,269		1,429		3,264		1,234,741		133
Home equity	503,596		2,644		559		1,460		508,259		19
Individuals' loans for household and other personal expenditures	129,049		334		96		—		129,479		—
Public finance and other commercial loans	647,939		—		—		—		647,939		—
Loans	$	9,170,399	$	19,638	$	11,187	$	41,950	$	9,243,174	$	746

Schedule of non-accrual loans by loan class

The following table summarizes the Corporation’s non-accrual loans by loan class for the periods indicated:

	March 31, 2021				December 31, 2020
	Non-Accrual Loans		Non-Accrual Loans with no Allowance for Credit Losses		Non-Accrual Loans
Commercial and industrial loans	$	1,671	$	786	$	2,329
Agricultural land, production and other loans to farmers	1,220		561		1,012
Real estate loans:
Construction	18		—		123
Commercial real estate, non-owner occupied	44,143		1,853		46,316
Commercial real estate, owner occupied	1,760		1,513		3,040
Residential	6,336		835		6,517
Home equity	2,650		—		2,095
Individuals' loans for household and other personal expenditures	125		—		39
Loans	$	57,923	$	5,548	$	61,471

Schedule of amortized cost basis of collateral dependent loans

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses:

	March 31, 2021
	Commercial Real Estate		Residential Real Estate		Other		Total		Allowance on Collateral Dependent Loans
Commercial and industrial loans	$	—	$	—	$	2,202	$	2,202	$	—
Agricultural land, production and other loans to farmers	780		—		—		780		—
Real estate loans:
Commercial real estate, non-owner occupied	45,188		—		—		45,188		5,561
Commercial real estate, owner occupied	3,539		—		—		3,539		—
Residential	—		3,113		—		3,113		356
Home equity	—		452		—		452		77
Individuals' loans for household and other personal expenditures	—		—		2		2		—
Loans	$	49,507	$	3,565	$	2,204	$	55,276	$	5,994

Schedules of troubled debt restructurings

The following tables summarize troubled debt restructures in the Corporation's loan portfolio that occurred during the three months ended March 31, 2021. No troubled debt restructures in the Corporation's loan portfolio occurred in the three months ended March 31, 2020.

			Three Months Ended March 31, 2021
	Pre- Modification Recorded Balance		Term Modification		Rate Modification		Combination		Post - Modification Recorded Balance		Number of Loans
Commercial and industrial	$	348	$	348	$	—	$	—	$	348	2
Real estate loans:
Residential	625		383		126		118		627		7
Total	$	973	$	731	$	126	$	118	$	975	9

The following tables summarize troubled debt restructures that occurred during the twelve months ended March 31, 2021 and 2020, that subsequently defaulted during the period indicated and remained in default at period end. For purposes of this schedule, a loan is considered in default if it is 30-days or more past due.

	Three Months Ended March 31, 2021
	Number of Loans	Recorded Balance
Real estate loans:
Residential	5	$	197
Home equity	1	91
Individuals' loans for household and other personal expenditures	1	2
Total	7	$	290

	Three Months Ended March 31, 2020
	Number of Loans	Recorded Balance
Real estate loans:
Residential	1	$	22
Total	1	$	22

Schedule of allowance for credit losses and loan portfolio by loan segment

The table below shows the Corporation’s allowance for loan losses under the incurred loss model and loan portfolio by loan segment as of the periods indicated.

	December 31, 2020
	Commercial		Commercial Real Estate		Consumer		Residential		Total
Allowance Balances:
Individually evaluated for impairment	$	223	$	12,246	$	—	$	432	$	12,901
Collectively evaluated for impairment	46,892		38,824		9,648		22,383		117,747
Total Allowance for Loan Losses	$	47,115	$	51,070	$	9,648	$	22,815	$	130,648
Loan Balances:
Individually evaluated for impairment	$	1,258	$	51,605	$	2	$	3,291	$	56,156
Collectively evaluated for impairment	3,505,863		3,805,808		129,477		1,739,709		9,180,857
Loans acquired with deteriorated credit quality	577		5,584		—		—		6,161
Loans	$	3,507,698	$	3,862,997	$	129,479	$	1,743,000	$	9,243,174

Schedule of composition of impaired loans by loan class

The following tables show the composition of the Corporation’s impaired loans, related allowance under the incurred loss model and interest income recognized while impaired by loan class as of the periods indicated:

	December 31, 2020
	Unpaid Principal Balance		Recorded Investment		Related Allowance
Impaired loans with no related allowance:
Commercial and industrial loans	$	1,059	$	991	$	—
Real estate Loans:
Commercial real estate, non-owner occupied	4,958		4,694		—
Commercial real estate, owner occupied	2,125		1,310		—
Residential	957		816		—
Individuals' loans for household and other personal expenditures	2		2		—
Total	$	9,101	$	7,813	$	—
Impaired loans with related allowance:
Commercial and industrial loans	$	268	$	268	$	223
Agricultural land, production and other loans to farmers	640		562		3
Real estate Loans:
Commercial real estate, non-owner occupied	44,016		43,715		11,686
Commercial real estate, owner occupied	2,061		1,323		557
Residential	2,041		2,014		352
Home equity	487		461		80
Total	$	49,513	$	48,343	$	12,901
Total Impaired Loans	$	58,614	$	56,156	$	12,901

	Three Months Ended March 31, 2020
	Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	905	$	—
Real estate Loans:
Construction	1,015		—
Commercial and farmland	6,852		37
Residential	59		1
Individuals' loans for household and other personal expenditures	3		—
Total	$	8,834	$	38
Impaired loans with related allowance:
Real estate Loans:
Commercial and farmland	$	2,400	$	—
Residential	2,180		19
Home equity	393		3
Total	$	4,973	$	22
Total Impaired Loans	$	13,807	$	60

Schedule of financial instruments with off-balance sheet risk

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

	March 31, 2021		December 31, 2020
Amounts of commitments:
Loan commitments to extend credit	$	3,657,931	$	3,443,514
Standby letters of credit	$	33,610	$	29,555

Schedule of allowance for credit losses, off-balance sheet

The following table details activity in the allowance for credit losses on off-balance sheet commitments:

	Three Months Ended March 31, 2021
Balances, December 31, 2020	$	—
Impact of adopting ASC 326	20,500
Provision for credit losses	—
Balances, March 31, 2021	$	20,500

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Other Intangibles (Tables)

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of core deposit intangibles

The carrying basis and accumulated amortization of recognized core deposit intangibles are noted below.

	March 31, 2021		December 31, 2020
Gross carrying amount	$	102,396	$	102,396
Accumulated amortization	(74,778)		(73,421)
Total core deposit intangibles	$	27,618	$	28,975

Schedule of estimated future amortization expense

Estimated future amortization expense is summarized as follows:

	Amortization Expense
2021	$	4,072
2022	5,027
2023	4,827
2024	4,241
2025	3,526
After 2025	5,925
	$	27,618

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Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of fair value of derivative financial instruments and their classification on Balance Sheet

The table below presents the fair value of the Corporation’s derivative financial instruments, as well as their classification on the Balance Sheet, as of March 31, 2021, and December 31, 2020.

Asset Derivatives

Liability Derivatives

March 31, 2021

December 31, 2020

March 31, 2021

December 31, 2020

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate contracts

Other Assets

$

—

Other Assets

$

—

Other Liabilities

$

1,708

Other Liabilities

$

2,018

Derivatives not designated as hedging instruments:

Interest rate contracts

Other Assets

$

48,576

Other Assets

$

74,335

Other Liabilities

$

48,576

Other Liabilities

$

74,335

Schedule of amount of gain (loss) recognized in other comprehensive income

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

Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative  (Effective Portion)
	Three Months Ended
	March 31, 2021		March 31, 2020
Interest Rate Products	$	58	$	(1,314)

Schedule of amount of gain (loss) reclassified from other comprehensive income

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

Derivatives Designated as Hedging Instruments under FASB ASC 815-10	Location of Gain (Loss) Recognized Income on Derivative	Amount of Gain (Loss) Reclassed from Other Comprehensive Income into Income (Effective Portion)
		Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
Interest rate contracts	Interest Expense	$	(252)	$	(125)

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Disclosures About Fair Value of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of fair value measurements of assets and liabilities recognized in Consolidated Condensed Balance Sheets measured at fair value

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the ASC 820 fair value hierarchy in which the fair value measurements fall at March 31, 2021, and December 31, 2020.

			Fair Value Measurements Using:
March 31, 2021	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:
U.S. Treasury	$	1,000	$	—	$	1,000	$	—
U.S. Government-sponsored agency securities	11,381		—		11,381		—
State and municipal	1,366,162		—		1,364,051		2,111
U.S. Government-sponsored mortgage-backed securities	1,022,863		—		1,022,859		4
Corporate obligations	4,162		—		4,131		31
Interest rate swap asset	48,576		—		48,576		—
Interest rate swap liability	50,284		—		50,284		—

			Fair Value Measurements Using:
December 31, 2020	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities:
U.S. Government-sponsored agency securities	$	2,430	$	—	$	2,430	$	—
State and municipal	1,257,885		—		1,255,441		2,444
U.S. Government-sponsored mortgage-backed securities	654,669		—		654,665		4
Corporate obligations	4,135		—		4,104		31
Interest rate swap asset	74,335		—		74,335		—
Interest rate swap liability	76,353		—		76,353		—

Schedule of reconciliation of beginning and ending balances of recurring fair value measurements recognized in Consolidated Condensed Balance Sheets using significant unobservable Level 3 inputs

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

balance sheets using significant unobservable Level 3 inputs for the three months ended March 31, 2021 and 2020.

	Available for Sale Securities
	Three Months Ended
	March 31, 2021		March 31, 2020
Balance at beginning of the period	$	2,479	$	2,893
Included in other comprehensive income	(60)		(20)
Principal payments	(273)		(344)
Ending balance	$	2,146	$	2,529

Schedule of description of valuation methodologies used for instruments measured at fair value on a non-recurring basis and recognized in Consolidated Condensed Balance Sheets

Following is a description of valuation methodologies used for instruments measured at fair value on a non-recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy for March 31, 2021, and December 31, 2020.

			Fair Value Measurements Using
March 31, 2021	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	40,698	$	—	$	—	$	40,698
Other real estate owned	185		—		—		185

			Fair Value Measurements Using
December 31, 2020	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable  Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans (collateral dependent)	$	37,250	$	—	$	—	$	37,250
Other real estate owned	544		—		—		544

Schedule of unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements other than goodwill

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements, other than goodwill, at March 31, 2021 and December 31, 2020.

March 31, 2021	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	2,111	Discounted cash flow	Maturity/Call date	1 month to 15 years
				US Muni BQ curve	A- to BBB-
				Discount rate	2% - 4%
				Weighted-average coupon	4%
Corporate obligations and U.S. Government-sponsored mortgage-backed securities	$	35	Discounted cash flow	Risk free rate	3 month LIBOR
				plus premium for illiquidity	plus 200bps
				Weighted-average coupon	—%
Collateral dependent loans	$	40,698	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 10%
				Weighted-average discount by loan balance	4%
Other real estate owned	$	185	Appraisals	Discount to reflect current market conditions	0% - 72%
				Weighted-average discount of other real estate owned balance	39%

December 31, 2020	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted-Average)
State and municipal securities	$	2,444	Discounted cash flow	Maturity/Call date	1 month to 15 years
				US Muni BQ curve	A- to BBB-
				Discount rate	2% - 4%
				Weighted-average coupon	4%
Corporate obligations and U.S Government-sponsored mortgage-backed securities	$	35	Discounted cash flow	Risk free rate	3 month LIBOR
				plus premium for illiquidity	plus 200bps
				Weighted-average coupon	—%
Impaired loans (collateral dependent)	$	37,250	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	0% - 10%
				Weighted-average discount by loan balance	6%
Other real estate owned	$	544	Appraisals	Discount to reflect current market conditions	0% - 30%
				Weighted-average discount of other real estate owned balance	26%

Schedule of estimated fair values of financial instruments

The following table presents estimated fair values of the Corporation’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2021, and December 31, 2020.

			March 31, 2021
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	187,901	$	187,901	$	—	$	—
Interest-bearing deposits	392,806		392,806		—		—
Investment securities available for sale	2,405,568		—		2,403,422		2,146
Investment securities held to maturity	1,295,289		—		1,299,944		18,836
Loans held for sale	4,430		—		4,430		—
Loans	9,117,146		—		—		9,168,023
Federal Home Loan Bank stock	28,736		—		28,736		—
Interest rate swap asset	48,576		—		48,576		—
Interest receivable	54,662		—		54,662		—
Liabilities:
Deposits	$	11,951,780	$	11,103,474	$	847,398	$	—
Borrowings:
Securities sold under repurchase agreements	185,721		—		185,716		—
Federal Home Loan Bank advances	359,337		—		366,179		—
Subordinated debentures and other borrowings	118,439		—		108,124		—
Interest rate swap liability	50,284		—		50,284		—
Interest payable	4,020		—		4,020		—

			December 31, 2020
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Carrying Amount		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	192,896	$	192,896	$	—	$	—
Interest-bearing deposits	392,305		392,305		—		—
Investment securities available for sale	1,919,119		—		1,916,640		2,479
Investment securities held to maturity	1,227,668		—		1,260,815		19,478
Loans held for sale	3,966		—		3,966		—
Loans	9,112,526		—		—		9,191,628
Federal Home Loan Bank stock	28,736		—		28,736		—
Interest rate swap asset	74,335		—		74,335		—
Interest receivable	53,948		—		53,948		—
Liabilities:
Deposits	$	11,361,610	$	10,482,865	$	878,257	$	—
Borrowings:
Securities sold under repurchase agreements	177,102		—		177,097		—
Federal Home Loan Bank advances	389,430		—		399,991		—
Subordinated debentures and other borrowings	118,380		—		108,439		—
Interest rate swap liability	76,353		—		76,353		—
Interest payable	3,287		—		3,287		—

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Transfers Accounted for as Secured Borrowings (Tables)

3 Months Ended

Mar. 31, 2021

Transfers and Servicing [Abstract]

Schedule of collateral pledged for all repurchase agreements accounted for as secured borrowings

The collateral pledged for all repurchase agreements that are accounted for as secured borrowings as of March 31, 2021 and December 31, 2020 were:

	March 31, 2021
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	184,067	$	—	$	1,654	$	—	$	185,721

	December 31, 2020
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
U.S. Government-sponsored mortgage-backed securities	$	175,449	$	—	$	1,653	$	—	$	177,102

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Accumulated Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2021

Equity [Abstract]

Schedule of accumulated other comprehensive income (loss)

The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, as of March 31, 2021 and 2020:

	Accumulated Other Comprehensive Income (Loss)
	Unrealized Gains (Losses) on Securities Available for Sale		Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Defined Benefit Plans		Total
Balance at December 31, 2020	$	87,988	$	(1,594)	$	(11,558)	$	74,836
Other comprehensive income (loss) before reclassifications	(37,850)		46		—		(37,804)
Amounts reclassified from accumulated other comprehensive income	(1,421)		199		—		(1,222)
Period change	(39,271)		245		—		(39,026)
Balance at March 31, 2021	$	48,717	$	(1,349)	$	(11,558)	$	35,810
Balance at December 31, 2019	$	38,872	$	(1,141)	$	(9,857)	$	27,874
Other comprehensive income (loss) before reclassifications	30,364		(1,038)		—		29,326
Amounts reclassified from accumulated other comprehensive income	(3,643)		99		—		(3,544)
Period change	26,721		(939)		—		25,782
Balance at March 31, 2020	$	65,593	$	(2,080)	$	(9,857)	$	53,656

Schedule of reclassification out of accumulated other comprehensive income (loss)

The following table presents the reclassification adjustments out of accumulated other comprehensive income (loss) that were included in net income in the Consolidated Condensed Statements of Income for the three months ended March 31, 2021 and 2020.

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss) For the Three Months Ended March 31,
Details about Accumulated Other Comprehensive Income (Loss) Components	2021		2020		Affected Line Item in the Statements of Income
Unrealized gains (losses) on available for sale securities (1)
Realized securities gains reclassified into income	$	1,799	$	4,612	Other income - net realized gains on sales of available for sale securities
Related income tax expense	(378)		(969)		Income tax expense
	$	1,421	$	3,643
Unrealized gains (losses) on cash flow hedges (2)
Interest rate contracts	$	(252)	$	(125)	Interest expense - subordinated debentures and term loans
Related income tax benefit	53		26		Income tax expense
	$	(199)	$	(99)
Total reclassifications for the period, net of tax	$	1,222	$	3,544

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

(2) For additional detail related to unrealized gains (losses) on cash flow hedges and related amounts reclassified from accumulated other comprehensive income see NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS of these Notes to Consolidated Condensed Financial Statements.

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Share-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Schedule of components of share-based compensation awards

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

	Three Months Ended March 31,
	2021		2020
Stock and ESPP Options
Pre-tax compensation expense	$	75	$	41
Income tax expense (benefit)	(72)		—
Stock and ESPP option expense, net of income taxes	$	3	$	41
Restricted Stock Awards
Pre-tax compensation expense	$	1,115	$	1,179
Income tax expense (benefit)	(237)		(257)
Restricted stock awards expense, net of income taxes	$	878	$	922
Total Share-Based Compensation
Pre-tax compensation expense	$	1,190	$	1,220
Income tax expense (benefit)	(309)		(257)
Total share-based compensation expense, net of income taxes	$	881	$	963

Schedule of stock option activity under stock option plans

Stock option activity under the Corporation's stock option plans as of March 31, 2021 and changes during the three months ended March 31, 2021, were as follows:

	Number of Shares	Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2021	45,800	$	15.00
Exercised	(14,300)	$	11.97
Outstanding March 31, 2021	31,500	$	16.37	2.06	$	949,155
Vested and Expected to Vest at March 31, 2021	31,500	$	16.37	2.06	$	949,155
Exercisable at March 31, 2021	31,500	$	16.37	2.06	$	949,155

Schedule of unvested RSAs outstanding

The following table summarizes information on unvested RSAs outstanding as of March 31, 2021:

	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested RSAs at January 1, 2021	357,883	$	36.30
Granted	66,913	$	42.39
Vested	(4,285)	$	42.15
Forfeited	(1,650)	$	32.21
Unvested RSAs at March 31, 2021	418,861	$	37.23

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Income Tax (Tables)

3 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

Schedule of reconciliation of Federal Statutory to actual tax expense

The following table summarizes the major components creating differences between income taxes at the federal statutory and the effective tax rate recorded in the consolidated statements of income for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,
	2021			2020
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal statutory income tax at 21%	$	12,268		$	7,928
Tax-exempt interest income	(3,706)			(3,022)
Share-based compensation	(59)			—
Tax-exempt earnings and gains on life insurance	(281)			(286)
Tax credits	(73)			(61)
CARES Act - NOL carryback rate differential	—			(1,178)
State Income Tax	702			86
Other	101			23
Actual Tax Expense	$	8,952		$	3,490
Effective Tax Rate	15.3		%	9.2		%

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Net Income Per Share (Tables)

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Schedule of basic and diluted net income per share

The following table reconciles basic and diluted net income per share for the three months ended March 31, 2021 and 2020.

	Three Months Ended March 31,
	2021					2020
	Net Income		Weighted-Average Shares	Per Share Amount		Net Income		Weighted-Average Shares	Per Share Amount
Net income available to common stockholders	$	49,469	53,930,200	$	0.92	$	34,263	54,732,073	$	0.63
Effect of potentially dilutive stock options and restricted stock awards			203,422					185,687
Diluted net income per share	$	49,469	54,133,622	$	0.91	$	34,263	54,917,760	$	0.62

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General - Narrative (Details) - USD ($) $ in Thousands	Jan. 01, 2021	Mar. 31, 2021		Dec. 31, 2020		Mar. 31, 2020	Dec. 31, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained earnings		$ 755,877		$ 788,578
Allowance for credit losses - Loans		201,082	[1]	130,648	[1]	$ 99,454	$ 80,284
Allowance for credit losses on unfunded loan commitments		20,500		0
Allowance for credit losses		245		0
State and municipal
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses		245		0
Cumulative effect of ASC 326 adoption
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained earnings	$ (68,040)
Percent of increase in allowance	57.00%
Allowance for credit losses - Loans	$ 74,055			74,055
Life of loan portfolio	4 years
Allowance for credit losses on unfunded loan commitments	$ 20,500	20,500		20,500
Cumulative effect of ASC 326 adoption | State and municipal
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses		$ 245		$ 245

[1] Beginning January 1, 2021, the calculation is based on the current expected credit loss methodology. Prior to January 1, 2021, the calculation is based on the incurred loss methodology. See additional details in NOTE 1. GENERAL of these Notes to Consolidated Condensed Financial Statement.

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General - Schedule of Changes in Accounting Principles (Details) - USD ($) $ in Thousands	Mar. 31, 2021		Jan. 01, 2021	Dec. 31, 2020		Mar. 31, 2020	Dec. 31, 2019
Assets:
Held to maturity securities	$ 1,295,534			$ 1,227,668
Loans	9,318,228			9,243,174
Less: Allowance for credit losses - loans	(201,082)	[1]		(130,648)	[1]	$ (99,454)	$ (80,284)
Net loans	9,117,146			9,112,526
Tax asset, deferred and receivable	40,163			12,340
Liabilities:
Allowance for credit losses on unfunded loan commitments	20,500			0
Stockholder's Equity:
Retained earnings	755,877			788,578
Impact of CECL Adoption
Assets:
Held to maturity securities			$ (245)
Loans			4,776
Less: Allowance for credit losses - loans			(74,055)	(74,055)
Net loans			(69,279)
Tax asset, deferred and receivable			21,984
Liabilities:
Allowance for credit losses on unfunded loan commitments	$ 20,500		20,500	20,500
Stockholder's Equity:
Retained earnings			(68,040)
January 1, 2021 Post-CECL Adoption
Assets:
Held to maturity securities			1,227,423
Loans			9,247,950
Less: Allowance for credit losses - loans			(204,703)	$ (204,703)
Net loans			9,043,247
Tax asset, deferred and receivable			34,324
Liabilities:
Allowance for credit losses on unfunded loan commitments			20,500
Stockholder's Equity:
Retained earnings			$ 720,538

[1] Beginning January 1, 2021, the calculation is based on the current expected credit loss methodology. Prior to January 1, 2021, the calculation is based on the incurred loss methodology. See additional details in NOTE 1. GENERAL of these Notes to Consolidated Condensed Financial Statement.

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Investment Securities - Amortized Cost and Approximate Fair Value of Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Available for sale securities
Amortized Cost	$ 2,343,573	$ 1,807,389
Gross Unrealized Gains	81,181	112,079
Gross Unrealized Losses	19,186	349
Fair Value	2,405,568	1,919,119
Held to maturity securities
Amortized Cost	1,295,534	1,227,668
Allowance for Credit Losses	245	0
Net Carrying Amount	1,295,289	1,227,668
Gross Unrealized Gains	35,004	52,877
Gross Unrealized Losses	11,758	252
Fair Value	1,318,780	1,280,293
U.S. Treasury
Available for sale securities
Amortized Cost	1,000
Gross Unrealized Gains	0
Gross Unrealized Losses	0
Fair Value	1,000
U.S. Government-sponsored agency securities
Available for sale securities
Amortized Cost	11,504	2,380
Gross Unrealized Gains	40	50
Gross Unrealized Losses	163	0
Fair Value	11,381	2,430
Held to maturity securities
Amortized Cost	60,676	31,087
Allowance for Credit Losses	0	0
Net Carrying Amount	60,676	31,087
Gross Unrealized Gains	1	10
Gross Unrealized Losses	1,553	113
Fair Value	59,124	30,984
State and municipal
Available for sale securities
Amortized Cost	1,301,378	1,168,711
Gross Unrealized Gains	67,438	89,420
Gross Unrealized Losses	2,654	246
Fair Value	1,366,162	1,257,885
Held to maturity securities
Amortized Cost	624,553	619,927
Allowance for Credit Losses	245	0
Net Carrying Amount	624,308	619,927
Gross Unrealized Gains	23,154	34,978
Gross Unrealized Losses	3,389	32
Fair Value	644,318	654,873
U.S. Government-sponsored mortgage-backed securities
Available for sale securities
Amortized Cost	1,025,660	632,267
Gross Unrealized Gains	13,550	22,505
Gross Unrealized Losses	16,347	103
Fair Value	1,022,863	654,669
Held to maturity securities
Amortized Cost	608,805	575,154
Allowance for Credit Losses	0	0
Net Carrying Amount	608,805	575,154
Gross Unrealized Gains	11,849	17,889
Gross Unrealized Losses	6,816	107
Fair Value	613,838	592,936
Corporate obligations
Available for sale securities
Amortized Cost	4,031	4,031
Gross Unrealized Gains	153	104
Gross Unrealized Losses	22	0
Fair Value	4,162	4,135
Foreign investment
Held to maturity securities
Amortized Cost	1,500	1,500
Allowance for Credit Losses	0	0
Net Carrying Amount	1,500	1,500
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	$ 1,500	$ 1,500

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Investment Securities - Narrative (Details) $ in Thousands	Mar. 31, 2021 USD ($) instrument	Dec. 31, 2020 USD ($)
Schedule of Available for sale Securities and Held to maturity Securities [Line Items]
Accrued interest on investment securities	$ 20,600
Allowance for credit losses	245	$ 0
Gross unrealized losses	19,186	349
Carrying value of securities pledged as collateral	999,200	890,000
Securities sold under repurchase agreements	178,200	167,300
State and municipal
Schedule of Available for sale Securities and Held to maturity Securities [Line Items]
Allowance for credit losses	245	0
Gross unrealized losses	$ 2,654	246
Number of securities in unrealized loss positions | instrument	108
U.S. Government-sponsored mortgage-backed securities
Schedule of Available for sale Securities and Held to maturity Securities [Line Items]
Allowance for credit losses	$ 0	0
Gross unrealized losses	$ 16,347	103
Number of securities in unrealized loss positions | instrument	55
U.S. Government-sponsored agency securities
Schedule of Available for sale Securities and Held to maturity Securities [Line Items]
Allowance for credit losses	$ 0	0
Gross unrealized losses	$ 163	0
Number of securities in unrealized loss positions | instrument	2
Corporate obligations
Schedule of Available for sale Securities and Held to maturity Securities [Line Items]
Gross unrealized losses	$ 22	$ 0
Number of securities in unrealized loss positions | instrument	1

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Investment Securities - Amortized Cost of Investment Securities Held to Maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	$ 1,295,534	$ 1,227,668
Aaa
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	109,365
Aa1
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	84,954
Aa2
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	107,436
Aa3
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	72,969
A1
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	65,578
A2
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	19,074
A3
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	1,065
Baa2
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	528
Non-rated
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	834,565
State and municipal
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	624,553	$ 619,927
State and municipal | Aaa
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	48,689
State and municipal | Aa1
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	84,954
State and municipal | Aa2
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	107,436
State and municipal | Aa3
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	72,969
State and municipal | A1
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	65,578
State and municipal | A2
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	19,074
State and municipal | A3
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	1,065
State and municipal | Baa2
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	528
State and municipal | Non-rated
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	224,260
Other
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	670,981
Other | Aaa
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	60,676
Other | Aa1
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	0
Other | Aa2
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	0
Other | Aa3
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	0
Other | A1
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	0
Other | A2
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	0
Other | A3
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	0
Other | Baa2
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	0
Other | Non-rated
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity securities	$ 610,305

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Investment Securities - Allowance for Credit Losses on Investment Securities Held to Maturity (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($)
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning balance	$ 0
Ending balance	245
State and municipal
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning balance	0
Provision for credit loss	0
Securities charged off	0
Recoveries on securities	0
Ending balance	245
State and municipal | Cumulative effect of ASC 326 adoption
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning balance	245
Ending balance	$ 245

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Investment Securities - Investments' Gross Unrealized Losses and Fair Value Aggregated by Investment Category and Length of Time in Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Fair Value
Less than 12 Months	$ 789,968	$ 15,019
12 Months or Longer	0	0
Total	789,968	15,019
Gross Unrealized Losses
Less than 12 Months	19,186	349
12 Months or Longer	0	0
Total	19,186	349
U.S. Government-sponsored agency securities
Fair Value
Less than 12 Months	9,837
12 Months or Longer	0
Total	9,837
Gross Unrealized Losses
Less than 12 Months	163
12 Months or Longer	0
Total	163
State and municipal
Fair Value
Less than 12 Months	172,655	5,368
12 Months or Longer	0	0
Total	172,655	5,368
Gross Unrealized Losses
Less than 12 Months	2,654	246
12 Months or Longer	0	0
Total	2,654	246
U.S. Government-sponsored mortgage-backed securities
Fair Value
Less than 12 Months	606,498	9,651
12 Months or Longer	0	0
Total	606,498	9,651
Gross Unrealized Losses
Less than 12 Months	16,347	103
12 Months or Longer	0	0
Total	16,347	$ 103
Corporate obligations
Fair Value
Less than 12 Months	978
12 Months or Longer	0
Total	978
Gross Unrealized Losses
Less than 12 Months	22
12 Months or Longer	0
Total	$ 22

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Investment Securities - Investments in Debt and Equity Securities Reported Less than Historical Cost (Details) - Investments reported at less than historical cost - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Schedule of Investments [Line Items]
Historical cost	$ 809,154	$ 15,368
Fair value	789,968	15,019
Gross unrealized losses	$ 19,186	$ 349
Percent of the Corporation's investments available for sale	21.40%	0.50%

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Investment Securities - Amortized Cost and Fair Value of Available for Sale Securities and Held to Maturity Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Amortized Cost
Due in one year or less	$ 2,062	$ 1,349
Due after one through five years	4,781	5,545
Due after five through ten years	92,598	70,777
Due after ten years	1,218,472	1,097,451
Total debt securities with a single maturity date	1,317,913	1,175,122
Total investment securities	2,343,573	1,807,389
Fair Value
Due in one year or less	2,071	1,353
Due after one through five years	4,960	5,764
Due after five through ten years	96,882	75,223
Due after ten years	1,278,792	1,182,110
Total debt securities with a single maturity date	1,382,705	1,264,450
Total investment securities	2,405,568	1,919,119
Amortized Cost
Due in one year or less	9,056	9,712
Due after one through five years	23,116	22,241
Due after five through ten years	151,103	115,408
Due after ten years	503,454	505,153
Total debt securities with a single maturity date	686,729	652,514
Total investment securities	1,295,534	1,227,668
Fair Value
Due in one year or less	9,068	9,755
Due after one through five years	24,084	23,190
Due after five through ten years	154,819	121,333
Due after ten years	516,971	533,079
Total debt securities with a single maturity date	704,942	687,357
Investment securities held to maturity	1,318,780	1,280,293
U.S. Government-sponsored mortgage-backed securities
Amortized Cost
Without single maturity date	1,025,660	632,267
Total investment securities	1,025,660	632,267
Fair Value
Without single maturity date	1,022,863	654,669
Total investment securities	1,022,863	654,669
Amortized Cost
Without single maturity date	608,805	575,154
Total investment securities	608,805	575,154
Fair Value
Without single maturity date	613,838	592,936
Investment securities held to maturity	$ 613,838	$ 592,936

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Investment Securities - Gross Gains on Sales and Redemptions of Available for Sale Securities (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Sales and redemptions of investment securities available for sale:
Gross gains	$ 2,076	$ 4,612
Gross losses	277	0
Net gains on sales and redemptions of investment securities available for sale	$ 1,799	$ 4,612

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Loans and Allowance - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Jan. 01, 2021	Dec. 31, 2020
Receivables [Abstract]
Loans held for sale	$ 4,430,000			$ 3,966,000
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	9,318,228,000			9,243,174,000
Interest income recognized on non-accrual loans	0	$ 0
Allowance for credit losses on unfunded loan commitments	20,500,000			0
Cumulative effect of ASC 326 adoption
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans			$ 4,776,000
Allowance for credit losses on unfunded loan commitments	20,500,000		$ 20,500,000	20,500,000
Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,178,832,000			2,220,949,000
Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,876,212,000			2,776,699,000
Residential Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 1,239,925,000			1,234,741,000
Percentage of troubled debt restructured loans	6400.00%
Mortgage loans with formal foreclosure proceedings	$ 3,300,000	$ 507,000
PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	741,700,000			667,100,000
30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	55,622,000			19,638,000
Increase (decrease) in past due loans	(36,000,000.0)
30-59 Days Past Due | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	45,942,000			2,525,000
30-59 Days Past Due | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	4,545,000			5,866,000
30-59 Days Past Due | Residential Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	1,582,000			3,269,000
30-59 Days Past Due | Multifamily | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	24,100,000
30-59 Days Past Due | Hotel | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	21,000,000.0
60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	2,978,000			11,187,000
Increase (decrease) in past due loans	8,200,000
60-89 Days Past Due | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	434,000			2,109,000
60-89 Days Past Due | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	19,000			6,571,000
Increase (decrease) in past due loans	(5,000,000.0)
60-89 Days Past Due | Residential Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	377,000			1,429,000
90 Days or More Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	47,390,000			41,950,000
Increase (decrease) in past due loans	(5,400,000)
90 Days or More Past Due | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	38,353,000			31,634,000
Increase (decrease) in past due loans	3,700,000
90 Days or More Past Due | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	1,212,000			2,789,000
90 Days or More Past Due | Residential Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due	3,493,000			$ 3,264,000
90 Days or More Past Due | Nursing Home | Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Increase (decrease) in past due loans	$ (13,000,000.0)

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Loans and Allowance - Composition of Loan Portfolio by Loan Class (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	$ 9,318,228	$ 9,243,174
Commercial and industrial loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	2,876,212	2,776,699
Agricultural land, production and other loans to farmers
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	245,631	281,884
Construction
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	541,224	484,723
Commercial real estate, non-owner occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	2,178,832	2,220,949
Commercial real estate, owner occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	950,038	958,501
Residential Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	1,239,925	1,234,741
Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	482,229	508,259
Individuals' loans for household and other personal expenditures
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	126,387	129,479
Public finance and other commercial loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	$ 677,750	$ 647,939

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Loans and Allowance - Credit Quality of Loan Portfolio by Loan Class (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	$ 923,091
2020	3,744,372
2019	1,208,586
2018	677,245
2017	502,173
Prior	906,900
Revolving loans amortized cost basis	1,355,861
Loans	9,318,228	$ 9,243,174
Commercial Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		7,000,298
Commercial Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		334,989
Commercial Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		234,712
Commercial Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Commercial Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Consumer Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		1,666,062
Consumer Non-Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		7,113
PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	293,100
2020	448,600
Loans	741,700	667,100
Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	461,373
2020	1,157,272
2019	273,425
2018	129,457
2017	49,876
Prior	67,813
Revolving loans amortized cost basis	736,996
Loans	2,876,212	2,776,699
Commercial and industrial loans | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	451,747
2020	1,101,622
2019	265,685
2018	121,416
2017	47,101
Prior	64,093
Revolving loans amortized cost basis	634,146
Loans	2,685,810
Commercial and industrial loans | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	7,735
2020	50,704
2019	1,421
2018	7,435
2017	2,306
Prior	2,326
Revolving loans amortized cost basis	29,255
Loans	101,182
Commercial and industrial loans | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	1,891
2020	4,946
2019	6,319
2018	606
2017	469
Prior	1,394
Revolving loans amortized cost basis	73,595
Loans	89,220
Commercial and industrial loans | Commercial Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		2,562,077
Commercial and industrial loans | Commercial Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		117,503
Commercial and industrial loans | Commercial Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		97,119
Commercial and industrial loans | Commercial Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Commercial and industrial loans | Commercial Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Commercial and industrial loans | Consumer Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Commercial and industrial loans | Consumer Non-Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Agricultural land, production and other loans to farmers
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	22,721
2020	63,357
2019	26,396
2018	14,140
2017	9,538
Prior	53,870
Revolving loans amortized cost basis	55,609
Loans	245,631	281,884
Agricultural land, production and other loans to farmers | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	22,570
2020	58,620
2019	26,146
2018	11,864
2017	8,821
Prior	49,646
Revolving loans amortized cost basis	45,626
Loans	223,293
Agricultural land, production and other loans to farmers | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	151
2020	621
2019	186
2018	2,151
2017	0
Prior	3,347
Revolving loans amortized cost basis	8,824
Loans	15,280
Agricultural land, production and other loans to farmers | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	0
2020	4,116
2019	64
2018	125
2017	717
Prior	877
Revolving loans amortized cost basis	1,159
Loans	7,058
Agricultural land, production and other loans to farmers | Commercial Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		243,991
Agricultural land, production and other loans to farmers | Commercial Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		26,835
Agricultural land, production and other loans to farmers | Commercial Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		9,885
Agricultural land, production and other loans to farmers | Commercial Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Agricultural land, production and other loans to farmers | Commercial Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Agricultural land, production and other loans to farmers | Consumer Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		1,173
Agricultural land, production and other loans to farmers | Consumer Non-Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	65,191
2020	218,970
2019	165,903
2018	68,879
2017	3,104
Prior	1,963
Revolving loans amortized cost basis	17,214
Loans	541,224	484,723
Construction | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	60,800
2020	208,852
2019	165,903
2018	68,816
2017	3,104
Prior	1,945
Revolving loans amortized cost basis	17,184
Loans	526,604
Construction | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	0
2020	10,118
2019	0
2018	63
2017	0
Prior	0
Revolving loans amortized cost basis	30
Loans	10,211
Construction | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	4,391
2020	0
2019	0
2018	0
2017	0
Prior	18
Revolving loans amortized cost basis	0
Loans	4,409
Construction | Commercial Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		446,846
Construction | Commercial Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		10,445
Construction | Commercial Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		5,549
Construction | Commercial Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Construction | Commercial Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Construction | Consumer Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		21,763
Construction | Consumer Non-Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		120
Commercial real estate, non-owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	103,508
2020	1,141,062
2019	313,326
2018	238,546
2017	149,787
Prior	205,899
Revolving loans amortized cost basis	26,704
Loans	2,178,832	2,220,949
Commercial real estate, non-owner occupied | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	93,726
2020	933,226
2019	275,343
2018	225,971
2017	141,947
Prior	196,284
Revolving loans amortized cost basis	25,454
Loans	1,891,951
Commercial real estate, non-owner occupied | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	9,544
2020	169,291
2019	13,242
2018	990
2017	0
Prior	112
Revolving loans amortized cost basis	1,250
Loans	194,429
Commercial real estate, non-owner occupied | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	238
2020	38,545
2019	24,741
2018	11,585
2017	7,840
Prior	9,503
Revolving loans amortized cost basis	0
Loans	92,452
Commercial real estate, non-owner occupied | Commercial Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		1,979,827
Commercial real estate, non-owner occupied | Commercial Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		160,304
Commercial real estate, non-owner occupied | Commercial Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		80,818
Commercial real estate, non-owner occupied | Commercial Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Commercial real estate, non-owner occupied | Commercial Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Commercial real estate, non-owner occupied | Consumer Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Commercial real estate, non-owner occupied | Consumer Non-Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Commercial real estate, owner occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	56,880
2020	510,636
2019	124,777
2018	61,356
2017	63,552
Prior	92,959
Revolving loans amortized cost basis	39,878
Loans	950,038	958,501
Commercial real estate, owner occupied | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	51,710
2020	481,355
2019	122,017
2018	57,531
2017	60,587
Prior	89,802
Revolving loans amortized cost basis	39,729
Loans	902,731
Commercial real estate, owner occupied | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	45
2020	10,174
2019	2,606
2018	1,646
2017	2,242
Prior	1,178
Revolving loans amortized cost basis	149
Loans	18,040
Commercial real estate, owner occupied | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	5,079
2020	19,107
2019	154
2018	2,179
2017	723
Prior	1,979
Revolving loans amortized cost basis	0
Loans	29,221
Commercial real estate, owner occupied | Commercial Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		907,566
Commercial real estate, owner occupied | Commercial Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		17,641
Commercial real estate, owner occupied | Commercial Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		33,294
Commercial real estate, owner occupied | Commercial Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans
Commercial real estate, owner occupied | Commercial Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	46
2020	0
2019	0
2018	0
2017	0
Prior	0
Revolving loans amortized cost basis	0
Loans	46
Commercial real estate, owner occupied | Consumer Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Commercial real estate, owner occupied | Consumer Non-Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Residential Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	171,943
2020	402,246
2019	148,975
2018	103,570
2017	89,154
Prior	320,071
Revolving loans amortized cost basis	3,966
Loans	1,239,925	1,234,741
Residential Real Estate | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	171,109
2020	398,112
2019	148,457
2018	101,627
2017	88,700
Prior	314,130
Revolving loans amortized cost basis	3,873
Loans	1,226,008
Residential Real Estate | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	349
2020	982
2019	0
2018	588
2017	82
Prior	1,313
Revolving loans amortized cost basis	93
Loans	3,407
Residential Real Estate | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	485
2020	3,152
2019	518
2018	1,355
2017	372
Prior	4,628
Revolving loans amortized cost basis	0
Loans	10,510
Residential Real Estate | Commercial Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		199,338
Residential Real Estate | Commercial Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		2,261
Residential Real Estate | Commercial Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		7,058
Residential Real Estate | Commercial Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Residential Real Estate | Commercial Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Residential Real Estate | Consumer Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		1,020,687
Residential Real Estate | Consumer Non-Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		5,397
Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	3,076
2020	20,274
2019	2,577
2018	2,943
2017	1,915
Prior	5,339
Revolving loans amortized cost basis	446,105
Loans	482,229	508,259
Home equity | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	2,673
2020	20,032
2019	2,577
2018	2,930
2017	1,786
Prior	5,085
Revolving loans amortized cost basis	442,166
Loans	477,249
Home equity | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	0
2020	91
2019	0
2018	0
2017	0
Prior	59
Revolving loans amortized cost basis	2,588
Loans	2,738
Home equity | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	403
2020	151
2019	0
2018	13
2017	129
Prior	195
Revolving loans amortized cost basis	1,351
Loans	2,242
Home equity | Commercial Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		12,714
Home equity | Commercial Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Home equity | Commercial Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		989
Home equity | Commercial Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Home equity | Commercial Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Home equity | Consumer Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		492,999
Home equity | Consumer Non-Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		1,557
Individuals' loans for household and other personal expenditures
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	16,786
2020	38,747
2019	24,363
2018	18,517
2017	4,391
Prior	7,583
Revolving loans amortized cost basis	16,000
Loans	126,387	129,479
Individuals' loans for household and other personal expenditures | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	16,786
2020	38,678
2019	24,201
2018	18,482
2017	4,383
Prior	7,550
Revolving loans amortized cost basis	15,996
Loans	126,076
Individuals' loans for household and other personal expenditures | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	0
2020	68
2019	75
2018	35
2017	8
Prior	33
Revolving loans amortized cost basis	4
Loans	223
Individuals' loans for household and other personal expenditures | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	0
2020	1
2019	87
2018	0
2017	0
Prior	0
Revolving loans amortized cost basis	0
Loans	88
Individuals' loans for household and other personal expenditures | Commercial Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Individuals' loans for household and other personal expenditures | Commercial Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Individuals' loans for household and other personal expenditures | Commercial Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Individuals' loans for household and other personal expenditures | Commercial Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Individuals' loans for household and other personal expenditures | Commercial Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Individuals' loans for household and other personal expenditures | Consumer Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		129,440
Individuals' loans for household and other personal expenditures | Consumer Non-Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		39
Public finance and other commercial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	21,613
2020	191,808
2019	128,844
2018	39,837
2017	130,856
Prior	151,403
Revolving loans amortized cost basis	13,389
Loans	677,750	647,939
Public finance and other commercial loans | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2021	21,613
2020	191,808
2019	128,844
2018	39,837
2017	130,856
Prior	151,403
Revolving loans amortized cost basis	13,389
Loans	$ 677,750
Public finance and other commercial loans | Commercial Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		647,939
Public finance and other commercial loans | Commercial Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Public finance and other commercial loans | Commercial Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Public finance and other commercial loans | Commercial Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Public finance and other commercial loans | Commercial Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Public finance and other commercial loans | Consumer Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		0
Public finance and other commercial loans | Consumer Non-Performing
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans		$ 0

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Loans and Allowance - Past Due Aging of Loan Portfolio by Loan Class (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Financing Receivable, Past Due [Line Items]
Current	$ 9,212,238	$ 9,170,399
Loans	9,318,228	9,243,174
Commercial and industrial loans
Financing Receivable, Past Due [Line Items]
Current	2,870,436	2,761,473
Loans	2,876,212	2,776,699
Agricultural land, production and other loans to farmers
Financing Receivable, Past Due [Line Items]
Current	244,403	280,615
Loans	245,631	281,884
Construction
Financing Receivable, Past Due [Line Items]
Current	540,648	484,706
Loans	541,224	484,723
Commercial real estate, non-owner occupied
Financing Receivable, Past Due [Line Items]
Current	2,094,103	2,184,681
Loans	2,178,832	2,220,949
Commercial real estate, owner occupied
Financing Receivable, Past Due [Line Items]
Current	946,423	951,561
Loans	950,038	958,501
Residential Real Estate
Financing Receivable, Past Due [Line Items]
Current	1,234,473	1,226,779
Loans	1,239,925	1,234,741
Home equity
Financing Receivable, Past Due [Line Items]
Current	477,927	503,596
Loans	482,229	508,259
Individuals' loans for household and other personal expenditures
Financing Receivable, Past Due [Line Items]
Current	126,075	129,049
Loans	126,387	129,479
Public finance and other commercial loans
Financing Receivable, Past Due [Line Items]
Current	677,750	647,939
Loans	677,750	647,939
30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Past Due	55,622	19,638
30-59 Days Past Due | Commercial and industrial loans
Financing Receivable, Past Due [Line Items]
Past Due	4,545	5,866
30-59 Days Past Due | Agricultural land, production and other loans to farmers
Financing Receivable, Past Due [Line Items]
Past Due	114	146
30-59 Days Past Due | Construction
Financing Receivable, Past Due [Line Items]
Past Due	560	0
30-59 Days Past Due | Commercial real estate, non-owner occupied
Financing Receivable, Past Due [Line Items]
Past Due	45,942	2,525
30-59 Days Past Due | Commercial real estate, owner occupied
Financing Receivable, Past Due [Line Items]
Past Due	792	4,854
30-59 Days Past Due | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Past Due	1,582	3,269
30-59 Days Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Past Due	1,906	2,644
30-59 Days Past Due | Individuals' loans for household and other personal expenditures
Financing Receivable, Past Due [Line Items]
Past Due	181	334
30-59 Days Past Due | Public finance and other commercial loans
Financing Receivable, Past Due [Line Items]
Past Due	0	0
60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Past Due	2,978	11,187
60-89 Days Past Due | Commercial and industrial loans
Financing Receivable, Past Due [Line Items]
Past Due	19	6,571
60-89 Days Past Due | Agricultural land, production and other loans to farmers
Financing Receivable, Past Due [Line Items]
Past Due	0	226
60-89 Days Past Due | Construction
Financing Receivable, Past Due [Line Items]
Past Due	0	17
60-89 Days Past Due | Commercial real estate, non-owner occupied
Financing Receivable, Past Due [Line Items]
Past Due	434	2,109
60-89 Days Past Due | Commercial real estate, owner occupied
Financing Receivable, Past Due [Line Items]
Past Due	1,096	180
60-89 Days Past Due | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Past Due	377	1,429
60-89 Days Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Past Due	1,010	559
60-89 Days Past Due | Individuals' loans for household and other personal expenditures
Financing Receivable, Past Due [Line Items]
Past Due	42	96
60-89 Days Past Due | Public finance and other commercial loans
Financing Receivable, Past Due [Line Items]
Past Due	0	0
90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Past Due	47,390	41,950
Loans > 90 Days or More Past Due And Accruing	1,093	746
90 Days or More Past Due | Commercial and industrial loans
Financing Receivable, Past Due [Line Items]
Past Due	1,212	2,789
Loans > 90 Days or More Past Due And Accruing	0	594
90 Days or More Past Due | Agricultural land, production and other loans to farmers
Financing Receivable, Past Due [Line Items]
Past Due	1,114	897
Loans > 90 Days or More Past Due And Accruing	0	0
90 Days or More Past Due | Construction
Financing Receivable, Past Due [Line Items]
Past Due	16	0
Loans > 90 Days or More Past Due And Accruing	0	0
90 Days or More Past Due | Commercial real estate, non-owner occupied
Financing Receivable, Past Due [Line Items]
Past Due	38,353	31,634
Loans > 90 Days or More Past Due And Accruing	0	0
90 Days or More Past Due | Commercial real estate, owner occupied
Financing Receivable, Past Due [Line Items]
Past Due	1,727	1,906
Loans > 90 Days or More Past Due And Accruing	1,032	0
90 Days or More Past Due | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Past Due	3,493	3,264
Loans > 90 Days or More Past Due And Accruing	0	133
90 Days or More Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Past Due	1,386	1,460
Loans > 90 Days or More Past Due And Accruing	60	19
90 Days or More Past Due | Individuals' loans for household and other personal expenditures
Financing Receivable, Past Due [Line Items]
Past Due	89	0
Loans > 90 Days or More Past Due And Accruing	1	0
90 Days or More Past Due | Public finance and other commercial loans
Financing Receivable, Past Due [Line Items]
Past Due	0	0
Loans > 90 Days or More Past Due And Accruing	$ 0	$ 0

XML

Loans and Allowance - Summary of Non-Accrual Loans by Loan Class (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	$ 57,923	$ 61,471
Non-Accrual Loans with no Allowance for Credit Losses	5,548
Commercial and industrial loans
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	1,671	2,329
Non-Accrual Loans with no Allowance for Credit Losses	786
Agricultural land, production and other loans to farmers
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	1,220	1,012
Non-Accrual Loans with no Allowance for Credit Losses	561
Construction
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	18	123
Non-Accrual Loans with no Allowance for Credit Losses	0
Commercial real estate, non-owner occupied
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	44,143	46,316
Non-Accrual Loans with no Allowance for Credit Losses	1,853
Commercial real estate, owner occupied
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	1,760	3,040
Non-Accrual Loans with no Allowance for Credit Losses	1,513
Residential Real Estate
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	6,336	6,517
Non-Accrual Loans with no Allowance for Credit Losses	835
Home equity
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	2,650	2,095
Non-Accrual Loans with no Allowance for Credit Losses	0
Individuals' loans for household and other personal expenditures
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	125	$ 39
Non-Accrual Loans with no Allowance for Credit Losses	$ 0

XML

Loans and Allowance - Amortized Cost Basis Of Collateral Dependent Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2021		Dec. 31, 2020		Mar. 31, 2020	Dec. 31, 2019
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	$ 55,276
Allowance on Collateral Dependent Loans	201,082	[1]	$ 130,648	[1]	$ 99,454	$ 80,284
Commercial and industrial loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	2,202
Agricultural land, production and other loans to farmers
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	780
Commercial real estate, non-owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	45,188
Commercial real estate, owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	3,539
Residential Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	3,113
Allowance on Collateral Dependent Loans	0		0		17,364	14,569
Home equity
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	452
Individuals' loans for household and other personal expenditures
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	2
Allowance on Collateral Dependent Loans	0		$ 0		$ 5,752	$ 4,035
Commercial Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	49,507
Commercial Real Estate | Commercial and industrial loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Commercial Real Estate | Agricultural land, production and other loans to farmers
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	780
Commercial Real Estate | Commercial real estate, non-owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	45,188
Commercial Real Estate | Commercial real estate, owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	3,539
Commercial Real Estate | Residential Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Commercial Real Estate | Home equity
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Commercial Real Estate | Individuals' loans for household and other personal expenditures
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Residential Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	3,565
Residential Real Estate | Commercial and industrial loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Residential Real Estate | Agricultural land, production and other loans to farmers
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Residential Real Estate | Commercial real estate, non-owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Residential Real Estate | Commercial real estate, owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Residential Real Estate | Residential Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	3,113
Residential Real Estate | Home equity
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	452
Residential Real Estate | Individuals' loans for household and other personal expenditures
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Other
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	2,204
Other | Commercial and industrial loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	2,202
Other | Agricultural land, production and other loans to farmers
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Other | Commercial real estate, non-owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Other | Commercial real estate, owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Other | Residential Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Other | Home equity
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	0
Other | Individuals' loans for household and other personal expenditures
Financing Receivable, Allowance for Credit Loss [Line Items]
Loans	2
Collateral Dependent
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance on Collateral Dependent Loans	5,994
Collateral Dependent | Commercial and industrial loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance on Collateral Dependent Loans	0
Collateral Dependent | Agricultural land, production and other loans to farmers
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance on Collateral Dependent Loans	0
Collateral Dependent | Commercial real estate, non-owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance on Collateral Dependent Loans	5,561
Collateral Dependent | Commercial real estate, owner occupied
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance on Collateral Dependent Loans	0
Collateral Dependent | Residential Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance on Collateral Dependent Loans	356
Collateral Dependent | Home equity
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance on Collateral Dependent Loans	77
Collateral Dependent | Individuals' loans for household and other personal expenditures
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance on Collateral Dependent Loans	$ 0

[1] Beginning January 1, 2021, the calculation is based on the current expected credit loss methodology. Prior to January 1, 2021, the calculation is based on the incurred loss methodology. See additional details in NOTE 1. GENERAL of these Notes to Consolidated Condensed Financial Statement.

XML

Loans and Allowance - Summary of Troubled Debt Restructurings by Modification Type (Details)	3 Months Ended
	Mar. 31, 2021 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Pre- Modification Recorded Balance	$ 973,000
Post - Modification Recorded Balance	$ 975,000
Number of Loans	9
Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Pre- Modification Recorded Balance	$ 348,000
Post - Modification Recorded Balance	$ 348,000
Number of Loans	2
Residential Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Pre- Modification Recorded Balance	$ 625,000
Post - Modification Recorded Balance	$ 627,000
Number of Loans	7
Term Modification
Accounts, Notes, Loans and Financing Receivable [Line Items]
Modification Recorded Balance	$ 731,000
Term Modification | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Modification Recorded Balance	348,000
Term Modification | Residential Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Modification Recorded Balance	383,000
Rate Modification
Accounts, Notes, Loans and Financing Receivable [Line Items]
Modification Recorded Balance	126,000
Rate Modification | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Modification Recorded Balance	0
Rate Modification | Residential Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Modification Recorded Balance	126,000
Combination
Accounts, Notes, Loans and Financing Receivable [Line Items]
Modification Recorded Balance	118,000
Combination | Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Modification Recorded Balance	0
Combination | Residential Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Modification Recorded Balance	$ 118,000

XML

Loans and Allowance - Schedule of Modified Loans (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($) loan	Mar. 31, 2020 USD ($) loan
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	7	1
Recorded Balance | $	$ 290	$ 22
Residential Real Estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	5	1
Recorded Balance | $	$ 197	$ 22
Residential
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	1
Recorded Balance | $	$ 2
Home equity
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	1
Recorded Balance | $	$ 91

XML

Loans and Allowance - Changes in Allowance for Loan Losses by Loan Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021		Mar. 31, 2020
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	$ 130,648	[1]	$ 80,284
Provision for credit losses - loans	0		19,752
Recoveries on loans	694		673
Loans charged off	(4,315)		(1,255)
Ending balance	201,082	[1]	99,454
Previously reported
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	130,648
Credit risk reclassifications
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	0
Cumulative effect of ASC 326 adoption
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	74,055
Adjusted balance
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	204,703
Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	47,115		32,902
Provision for credit losses - loans	(932)		5,701
Recoveries on loans	188		443
Loans charged off	(673)		(615)
Ending balance	65,722		38,431
Commercial | Previously reported
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	47,115
Commercial | Credit risk reclassifications
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	0
Commercial | Cumulative effect of ASC 326 adoption
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	20,024
Commercial | Adjusted balance
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	67,139
Commercial Real Estate
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	40,786		28,778
Provision for credit losses - loans	(1,701)		9,194
Recoveries on loans	164		118
Loans charged off	(3,313)		(183)
Ending balance	70,861		37,907
Commercial Real Estate | Previously reported
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	51,070
Commercial Real Estate | Credit risk reclassifications
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	(10,284)
Commercial Real Estate | Cumulative effect of ASC 326 adoption
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	34,925
Commercial Real Estate | Adjusted balance
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	75,711
Construction
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	10,284
Provision for credit losses - loans	1,095
Recoveries on loans	0
Loans charged off	(2)
Ending balance	20,182
Construction | Previously reported
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	0
Construction | Credit risk reclassifications
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	10,284
Construction | Cumulative effect of ASC 326 adoption
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	8,805
Construction | Adjusted balance
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	19,089
Consumer
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	0		4,035
Provision for credit losses - loans	0		1,924
Recoveries on loans	0		42
Loans charged off	0		(249)
Ending balance	0		5,752
Consumer | Previously reported
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	9,648
Consumer | Credit risk reclassifications
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	(9,648)
Consumer | Cumulative effect of ASC 326 adoption
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	0
Consumer | Adjusted balance
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	0
Residential Real Estate
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	0		14,569
Provision for credit losses - loans	0		2,933
Recoveries on loans	0		70
Loans charged off	0		(208)
Ending balance	0		$ 17,364
Residential Real Estate | Previously reported
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	22,815
Residential Real Estate | Credit risk reclassifications
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	(22,815)
Residential Real Estate | Cumulative effect of ASC 326 adoption
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	0
Residential Real Estate | Adjusted balance
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	0
Consumer & Residential
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	32,463
Provision for credit losses - loans	1,538
Recoveries on loans	342
Loans charged off	(327)
Ending balance	44,317
Consumer & Residential | Previously reported
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	0
Consumer & Residential | Credit risk reclassifications
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	32,463
Consumer & Residential | Cumulative effect of ASC 326 adoption
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	10,301
Consumer & Residential | Adjusted balance
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	$ 42,764

[1] Beginning January 1, 2021, the calculation is based on the current expected credit loss methodology. Prior to January 1, 2021, the calculation is based on the incurred loss methodology. See additional details in NOTE 1. GENERAL of these Notes to Consolidated Condensed Financial Statement.

XML

Loans and Allowance - Allowance for Credit Losses and Loan Portfolio by Loan Segment (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Allowance Balances:
Individually evaluated for impairment	$ 12,901
Collectively evaluated for impairment	117,747
Total Allowance for Loan Losses	130,648
Loan Balances:
Individually evaluated for impairment	56,156
Collectively evaluated for impairment	9,180,857
Financing Receivable, Evaluated for Impairment	9,243,174
Loans acquired with deteriorated credit quality
Loan Balances:
Financing Receivable, Evaluated for Impairment	6,161
Commercial
Allowance Balances:
Individually evaluated for impairment	223
Collectively evaluated for impairment	46,892
Total Allowance for Loan Losses	47,115
Loan Balances:
Individually evaluated for impairment	1,258
Collectively evaluated for impairment	3,505,863
Financing Receivable, Evaluated for Impairment	3,507,698
Commercial | Loans acquired with deteriorated credit quality
Loan Balances:
Financing Receivable, Evaluated for Impairment	577
Commercial Real Estate
Allowance Balances:
Individually evaluated for impairment	12,246
Collectively evaluated for impairment	38,824
Total Allowance for Loan Losses	51,070
Loan Balances:
Individually evaluated for impairment	51,605
Collectively evaluated for impairment	3,805,808
Financing Receivable, Evaluated for Impairment	3,862,997
Commercial Real Estate | Loans acquired with deteriorated credit quality
Loan Balances:
Financing Receivable, Evaluated for Impairment	5,584
Consumer
Allowance Balances:
Individually evaluated for impairment	0
Collectively evaluated for impairment	9,648
Total Allowance for Loan Losses	9,648
Loan Balances:
Individually evaluated for impairment	2
Collectively evaluated for impairment	129,477
Financing Receivable, Evaluated for Impairment	129,479
Residential
Allowance Balances:
Individually evaluated for impairment	432
Collectively evaluated for impairment	22,383
Total Allowance for Loan Losses	22,815
Loan Balances:
Individually evaluated for impairment	3,291
Collectively evaluated for impairment	1,739,709
Financing Receivable, Evaluated for Impairment	1,743,000
Residential | Loans acquired with deteriorated credit quality
Loan Balances:
Financing Receivable, Evaluated for Impairment	$ 0

XML

Loans and Allowance - Incurred loss model and interest income recognized while impaired by loan class (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2020
Unpaid Principal Balance
Impaired loans with no related allowance		$ 9,101
Impaired loans with related allowance		49,513
Total Impaired Loans		58,614
Recorded Investment
Impaired loans with no related allowance		7,813
Impaired loans with related allowance		48,343
Total Impaired Loans		56,156
Related Allowance		12,901
Average Recorded Investment
Impaired loans with no related allowance	$ 8,834
Impaired loans with related allowance	4,973
Total Impaired Loans	13,807
Interest Income Recognized
Impaired loans with no related allowance	38
Impaired loans with related allowance	22
Total Impaired Loans	60
Commercial and industrial loans
Unpaid Principal Balance
Impaired loans with no related allowance		1,059
Impaired loans with related allowance		268
Recorded Investment
Impaired loans with no related allowance		991
Impaired loans with related allowance		268
Related Allowance		223
Average Recorded Investment
Impaired loans with no related allowance	905
Interest Income Recognized
Impaired loans with no related allowance	0
Agricultural land, production and other loans to farmers
Unpaid Principal Balance
Impaired loans with related allowance		640
Recorded Investment
Impaired loans with related allowance		562
Related Allowance		3
Commercial real estate, non-owner occupied
Unpaid Principal Balance
Impaired loans with no related allowance		4,958
Impaired loans with related allowance		44,016
Recorded Investment
Impaired loans with no related allowance		4,694
Impaired loans with related allowance		43,715
Related Allowance		11,686
Construction
Average Recorded Investment
Impaired loans with no related allowance	1,015
Interest Income Recognized
Impaired loans with no related allowance	0
Commercial and farmland
Unpaid Principal Balance
Impaired loans with no related allowance		2,125
Impaired loans with related allowance		2,061
Recorded Investment
Impaired loans with no related allowance		1,310
Impaired loans with related allowance		1,323
Related Allowance		557
Average Recorded Investment
Impaired loans with no related allowance	6,852
Impaired loans with related allowance	2,400
Interest Income Recognized
Impaired loans with no related allowance	37
Residential Real Estate
Unpaid Principal Balance
Impaired loans with no related allowance		957
Impaired loans with related allowance		2,041
Recorded Investment
Impaired loans with no related allowance		816
Impaired loans with related allowance		2,014
Related Allowance		352
Average Recorded Investment
Impaired loans with no related allowance	59
Impaired loans with related allowance	2,180
Interest Income Recognized
Impaired loans with no related allowance	1
Impaired loans with related allowance	19
Individuals' loans for household and other personal expenditures
Unpaid Principal Balance
Impaired loans with no related allowance		2
Recorded Investment
Impaired loans with no related allowance		2
Average Recorded Investment
Impaired loans with no related allowance	3
Interest Income Recognized
Impaired loans with no related allowance	0
Home equity
Unpaid Principal Balance
Impaired loans with related allowance		487
Recorded Investment
Impaired loans with related allowance		461
Related Allowance		$ 80
Average Recorded Investment
Impaired loans with related allowance	393
Interest Income Recognized
Impaired loans with related allowance	$ 3

XML

Loans and Allowance - Amounts of Commitments (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Loan commitments to extend credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Amounts of commitments	$ 3,657,931	$ 3,443,514
Standby letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Amounts of commitments	$ 33,610	$ 29,555

XML

Loans and Allowance - Allowance for Credit Losses, Off-balance Sheet (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($)
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Balances, December 31, 2020	$ 0
Provision for credit losses	0
Balances, March 31, 2021	20,500
Cumulative effect of ASC 326 adoption
Off-Balance Sheet, Credit Loss, Liability [Roll Forward]
Balances, December 31, 2020	20,500
Balances, March 31, 2021	$ 20,500

XML

Other Intangibles- Schedule of Core Deposit Intangibles (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Gross carrying amount	$ 102,396	$ 102,396
Accumulated amortization	(74,778)	(73,421)
Total core deposit intangibles	$ 27,618	$ 28,975

XML

Other Intangibles - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Useful life of core deposit intangibles and other intangibles	10 years
Intangible asset amortization	$ 1,357	$ 1,514

XML

Other Intangibles - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Amortization Expense
2021	$ 4,072
2022	5,027
2023	4,827
2024	4,241
2025	3,526
After 2025	5,925
Total core deposit intangibles	$ 27,618	$ 28,975

XML

Derivative Financial Instruments - Narrative (Details) $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($) interest_rate_swap	Dec. 31, 2020 USD ($) interest_rate_swap
Derivative [Line Items]
Estimated amount to be transferred from accumulated other comprehensive income to earnings	$ 1.0
Termination value of derivatives in a net liability position	36.7
Derivative collateral posted	62.8
Not Designated as Hedging Instrument
Derivative [Line Items]
Notional amount of interest rate derivatives	$ 972.7	$ 985.0
Cash Flow Hedging | Interest rate swap
Derivative [Line Items]
Number of interest rate derivatives held | interest_rate_swap	4	4
Notional amount of interest rate derivatives	$ 60.0	$ 60.0
Cash Flow Hedging | Interest rate swap | Trust Preferred Debt
Derivative [Line Items]
Notional amount of interest rate derivatives	26.0
Cash Flow Hedging | Interest rate swap | Federal Home Loan Bank Advances
Derivative [Line Items]
Notional amount of interest rate derivatives	10.0
Cash Flow Hedging | Interest rate swap | Brokered Deposit
Derivative [Line Items]
Notional amount of interest rate derivatives	$ 24.0

XML

Derivative Financial Instruments - Fair Value of Derivative Financial Instruments and Their Classification on Balance Sheet (Details) - Interest rate contracts - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Derivatives designated as hedging instruments | Other Assets
Derivatives, Fair Value [Line Items]
Asset Derivatives	$ 0	$ 0
Derivatives designated as hedging instruments | Other Liabilities
Derivatives, Fair Value [Line Items]
Liability Derivatives	1,708	2,018
Derivatives not designated as hedging instruments | Other Assets
Derivatives, Fair Value [Line Items]
Asset Derivatives	48,576	74,335
Derivatives not designated as hedging instruments | Other Liabilities
Derivatives, Fair Value [Line Items]
Liability Derivatives	$ 48,576	$ 74,335

XML

Derivative Financial Instruments - Effect of Derivative Financial Instruments on Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Derivative [Line Items]
Unrealized holding gain (loss) arising during the period	$ 58	$ (1,314)
Designated as Hedging Instrument | Cash Flow Hedging | Interest Rate Products
Derivative [Line Items]
Unrealized holding gain (loss) arising during the period	$ 58	$ (1,314)

XML

Derivative Financial Instruments - Effect of Derivative Financial Instruments on Income Statement (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Derivative [Line Items]
Amount of Gain (Loss) Reclassed from Other Comprehensive Income into Income (Effective Portion)	$ (252)	$ (125)
Interest rate contracts | Derivatives designated as hedging instruments | Interest Expense
Derivative [Line Items]
Amount of Gain (Loss) Reclassed from Other Comprehensive Income into Income (Effective Portion)	$ (252)	$ (125)

XML

Disclosures About Fair Value of Assets and Liabilities - Fair Value Measurements of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	$ 2,405,568	$ 1,919,119
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	2,403,422	1,916,640
Significant Unobservable Inputs (Level 3)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	2,146	2,479
Recurring | Interest rate swap liability
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap liability	50,284	76,353
Recurring | U.S. Treasury
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	1,000
Recurring | U.S. Government-sponsored agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	11,381	2,430
Recurring | State and municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	1,366,162	1,257,885
Recurring | U.S. Government-sponsored mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	1,022,863	654,669
Recurring | Corporate obligations
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	4,162	4,135
Recurring | Interest rate swap asset
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap asset	48,576	74,335
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Interest rate swap liability
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap liability	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Government-sponsored agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | State and municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Government-sponsored mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate obligations
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Interest rate swap asset
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap asset	0	0
Recurring | Significant Other Observable Inputs (Level 2) | Interest rate swap liability
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap liability	50,284	76,353
Recurring | Significant Other Observable Inputs (Level 2) | U.S. Treasury
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	1,000
Recurring | Significant Other Observable Inputs (Level 2) | U.S. Government-sponsored agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	11,381	2,430
Recurring | Significant Other Observable Inputs (Level 2) | State and municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	1,364,051	1,255,441
Recurring | Significant Other Observable Inputs (Level 2) | U.S. Government-sponsored mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	1,022,859	654,665
Recurring | Significant Other Observable Inputs (Level 2) | Corporate obligations
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	4,131	4,104
Recurring | Significant Other Observable Inputs (Level 2) | Interest rate swap asset
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap asset	48,576	74,335
Recurring | Significant Unobservable Inputs (Level 3) | Interest rate swap liability
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap liability	0	0
Recurring | Significant Unobservable Inputs (Level 3) | U.S. Treasury
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0
Recurring | Significant Unobservable Inputs (Level 3) | U.S. Government-sponsored agency securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	0	0
Recurring | Significant Unobservable Inputs (Level 3) | State and municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	2,111	2,444
Recurring | Significant Unobservable Inputs (Level 3) | U.S. Government-sponsored mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	4	4
Recurring | Significant Unobservable Inputs (Level 3) | Corporate obligations
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available for sale	31	31
Recurring | Significant Unobservable Inputs (Level 3) | Interest rate swap asset
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap asset	$ 0	$ 0

XML

Disclosures About Fair Value of Assets and Liabilities - Reconciliation of Beginning and Ending Balances of Recurring Fair Value Measurements using Significant Unobservable Level 3 Inputs (Details) - Recurring - Available for Sale Securities - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Available for Sale Securities
Balance at beginning of the period	$ 2,479	$ 2,893
Included in other comprehensive income	(60)	(20)
Principal payments	(273)	(344)
Ending balance	$ 2,146	$ 2,529

XML

Disclosures About Fair Value of Assets and Liabilities - Valuation Methodologies Used for Instruments Measured at Fair Value on Non-Recurring Basis (Details) - Nonrecurring - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Collateral dependent loans | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	$ 40,698	$ 37,250
Collateral dependent loans | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	0	0
Collateral dependent loans | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	0	0
Collateral dependent loans | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	40,698	37,250
Other real estate owned | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	185	544
Other real estate owned | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	0	0
Other real estate owned | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	0	0
Other real estate owned | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	$ 185	$ 544

XML

Disclosures About Fair Value of Assets and Liabilities - Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements Other Than Goodwill (Details) - Significant Unobservable Inputs (Level 3) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Discounted cash flow | State and municipal securities
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	$ 2,111	$ 2,444
Discounted cash flow | State and municipal securities | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Maturity/Call date	1 month	1 month
US Muni BQ curve	A-	A-
Discounted cash flow | State and municipal securities | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Maturity/Call date	15 years	15 years
US Muni BQ curve	BBB-	BBB-
Discounted cash flow | State and municipal securities | Discount rate | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	0.02	0.02
Discounted cash flow | State and municipal securities | Discount rate | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	0.04	0.04
Discounted cash flow | State and municipal securities | Weighted-average coupon | Weighted-average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	0.04	0.04
Discounted cash flow | Corporate obligations and U.S. Government-sponsored mortgage-backed securities
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	$ 35	$ 35
Discounted cash flow | Corporate obligations and U.S. Government-sponsored mortgage-backed securities | Weighted-average coupon | Weighted-average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	0	0
Discounted cash flow | Corporate obligations and U.S. Government-sponsored mortgage-backed securities | Risk free rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Risk free rate	3 month LIBOR	3 month LIBOR
Discounted cash flow | Corporate obligations and U.S. Government-sponsored mortgage-backed securities | Plus premium for illiquidity
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	0.02	0.02
Collateral based measurements | Collateral dependent loans
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	$ 40,698	$ 37,250
Collateral based measurements | Collateral dependent loans | Discount to reflect current market conditions and ultimate collectability | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability	0	0
Collateral based measurements | Collateral dependent loans | Discount to reflect current market conditions and ultimate collectability | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability	0.10	0.10
Collateral based measurements | Collateral dependent loans | Discount to reflect current market conditions and ultimate collectability | Weighted-average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount to reflect current market conditions and ultimate collectability	0.04	0.06
Appraisals | Other real estate owned
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	$ 185	$ 544
Appraisals | Other real estate owned | Discount to reflect current market conditions | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Other real estate owned	0	0
Appraisals | Other real estate owned | Discount to reflect current market conditions | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Other real estate owned	0.72	0.30
Appraisals | Other real estate owned | Discount to reflect current market conditions | Weighted-average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Other real estate owned	0.39	0.26

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Disclosures About Fair Value of Assets and Liabilities - Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Assets:
Investment securities available for sale	$ 2,405,568	$ 1,919,119
Investment securities held to maturity	1,318,780	1,280,293
Loans held for sale	4,430	3,966
Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Cash and cash equivalents	187,901	192,896
Interest-bearing deposits	392,806	392,305
Investment securities available for sale	0	0
Investment securities held to maturity	0	0
Loans held for sale	0	0
Loans	0	0
Federal Home Loan Bank stock	0	0
Interest rate swap asset	0	0
Interest receivable	0	0
Liabilities:
Deposits	11,103,474	10,482,865
Borrowings:
Securities sold under repurchase agreements	0	0
Federal Home Loan Bank advances	0	0
Subordinated debentures and other borrowings	0	0
Interest rate swap liability	0	0
Interest payable	0	0
Significant Other Observable Inputs (Level 2)
Assets:
Cash and cash equivalents	0	0
Interest-bearing deposits	0	0
Investment securities available for sale	2,403,422	1,916,640
Investment securities held to maturity	1,299,944	1,260,815
Loans held for sale	4,430	3,966
Loans	0	0
Federal Home Loan Bank stock	28,736	28,736
Interest rate swap asset	48,576	74,335
Interest receivable	54,662	53,948
Liabilities:
Deposits	847,398	878,257
Borrowings:
Securities sold under repurchase agreements	185,716	177,097
Federal Home Loan Bank advances	366,179	399,991
Subordinated debentures and other borrowings	108,124	108,439
Interest rate swap liability	50,284	76,353
Interest payable	4,020	3,287
Significant Unobservable Inputs (Level 3)
Assets:
Cash and cash equivalents	0	0
Interest-bearing deposits	0	0
Investment securities available for sale	2,146	2,479
Investment securities held to maturity	18,836	19,478
Loans held for sale	0	0
Loans	9,168,023	9,191,628
Federal Home Loan Bank stock	0	0
Interest rate swap asset	0	0
Interest receivable	0	0
Liabilities:
Deposits	0	0
Borrowings:
Securities sold under repurchase agreements	0	0
Federal Home Loan Bank advances	0	0
Subordinated debentures and other borrowings	0	0
Interest rate swap liability	0	0
Interest payable	0	0
Carrying Amount
Assets:
Cash and cash equivalents	187,901	192,896
Interest-bearing deposits	392,806	392,305
Investment securities available for sale	2,405,568	1,919,119
Investment securities held to maturity	1,295,289	1,227,668
Loans held for sale	4,430	3,966
Loans	9,117,146	9,112,526
Federal Home Loan Bank stock	28,736	28,736
Interest rate swap asset	48,576	74,335
Interest receivable	54,662	53,948
Liabilities:
Deposits	11,951,780	11,361,610
Borrowings:
Securities sold under repurchase agreements	185,721	177,102
Federal Home Loan Bank advances	359,337	389,430
Subordinated debentures and other borrowings	118,439	118,380
Interest rate swap liability	50,284	76,353
Interest payable	$ 4,020	$ 3,287

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Transfers Accounted for as Secured Borrowings (Details) - U.S. Government-sponsored mortgage-backed securities - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Assets Sold under Agreements to Repurchase [Line Items]
Collateral pledged for all repurchase agreements accounted for as secured borrowings	$ 185,721	$ 177,102
Overnight and Continuous
Assets Sold under Agreements to Repurchase [Line Items]
Collateral pledged for all repurchase agreements accounted for as secured borrowings	184,067	175,449
Up to 30 Days
Assets Sold under Agreements to Repurchase [Line Items]
Collateral pledged for all repurchase agreements accounted for as secured borrowings	0	0
30-90 Days
Assets Sold under Agreements to Repurchase [Line Items]
Collateral pledged for all repurchase agreements accounted for as secured borrowings	1,654	1,653
Greater Than 90 Days
Assets Sold under Agreements to Repurchase [Line Items]
Collateral pledged for all repurchase agreements accounted for as secured borrowings	$ 0	$ 0

XML

Accumulated Other Comprehensive Income (Loss) - Summary of Changes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Accumulated Other Comprehensive Income (Loss)
Beginning balance	$ 1,875,645	$ 1,786,437
Other comprehensive income (loss) before reclassifications	(37,804)	29,326
Amounts reclassified from accumulated other comprehensive income	(1,222)	(3,544)
Total other comprehensive income (loss), net of tax	(39,026)	25,782
Ending balance	1,805,856	1,777,960
Total
Accumulated Other Comprehensive Income (Loss)
Beginning balance	74,836	27,874
Ending balance	35,810	53,656
Unrealized Gains (Losses) on Securities Available for Sale
Accumulated Other Comprehensive Income (Loss)
Beginning balance	87,988	38,872
Other comprehensive income (loss) before reclassifications	(37,850)	30,364
Amounts reclassified from accumulated other comprehensive income	(1,421)	(3,643)
Total other comprehensive income (loss), net of tax	(39,271)	26,721
Ending balance	48,717	65,593
Unrealized Gains (Losses) on Cash Flow Hedges
Accumulated Other Comprehensive Income (Loss)
Beginning balance	(1,594)	(1,141)
Other comprehensive income (loss) before reclassifications	46	(1,038)
Amounts reclassified from accumulated other comprehensive income	199	99
Total other comprehensive income (loss), net of tax	245	(939)
Ending balance	(1,349)	(2,080)
Unrealized Gains (Losses) on Defined Benefit Plans
Accumulated Other Comprehensive Income (Loss)
Beginning balance	(11,558)	(9,857)
Other comprehensive income (loss) before reclassifications	0	0
Amounts reclassified from accumulated other comprehensive income	0	0
Total other comprehensive income (loss), net of tax	0	0
Ending balance	$ (11,558)	$ (9,857)

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Accumulated Other Comprehensive Income (Loss) - Reclassifications (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Net realized gains on sales of available for sale securities	$ 1,799	$ 4,612
Income tax expense	(8,952)	(3,490)
Interest expense - subordinated debentures and term loans	1,657	1,945
Total reclassifications for the period, net of tax	49,469	34,263
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) for the Period
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications for the period, net of tax	1,222	3,544
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) for the Period | Unrealized gains (losses) on available for sale securities
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Net realized gains on sales of available for sale securities	1,799	4,612
Income tax expense	(378)	(969)
Total reclassifications for the period, net of tax	1,421	3,643
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) for the Period | Unrealized gains (losses) on cash flow hedges
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Income tax expense	53	26
Total reclassifications for the period, net of tax	(199)	(99)
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) for the Period | Unrealized gains (losses) on cash flow hedges | Interest rate contracts
Reclassification Adjustments out of Accumulated Other Comprehensive Income [Line Items]
Interest expense - subordinated debentures and term loans	$ (252)	$ (125)

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Share-Based Compensation - Narrative (Details) - USD ($)		3 Months Ended
	Jan. 01, 2021	Mar. 31, 2021	Mar. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of average closing price to be paid by employees		85.00%
Maximum common stock purchases through advance payroll deductions in a calendar year		$ 25,000
Share-based compensation		$ 1,190,000	$ 1,220,000
Forfeiture rate		0.50%
Unrecognized compensation expense related to stock options		$ 0
Aggregate intrinsic value of stock options exercised		453,000	36,000
Cash receipts of stock options exercised		$ 171,000	$ 7,000
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option term		10 years
Stock options vesting percentage		100.00%
Stock Options | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested period		1 year
Stock Options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested period		2 years
RSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested period		3 years
Unrecognized compensation expense related to RSAs		$ 8,400,000
Unrecognized compensation expense expected recognition period		2 years 3 days
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense related to stock options		$ 0
Grant date fair value of ESPP options	$ 75,000

XML

Share-Based Compensation - Components of Awards (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax compensation expense	$ 1,190	$ 1,220
Income tax expense (benefit)	(309)	(257)
Total share-based compensation expense, net of income taxes	881	963
Stock and ESPP Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax compensation expense	75	41
Income tax expense (benefit)	(72)	0
Total share-based compensation expense, net of income taxes	3	41
Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax compensation expense	1,115	1,179
Income tax expense (benefit)	(237)	(257)
Total share-based compensation expense, net of income taxes	$ 878	$ 922

XML

Share-Based Compensation - Stock Option Activity (Details)	3 Months Ended
	Mar. 31, 2021 USD ($) $ / shares shares
Number of Shares
Beginning balance (in shares) | shares	45,800
Exercised (in shares) | shares	(14,300)
Ending balance (in shares) | shares	31,500
Vested and Expected to Vest (in shares) | shares	31,500
Exercisable (in shares) | shares	31,500
Weighted-Average Exercise Price
Beginning balance (in dollars per share) | $ / shares	$ 15.00
Exercised (in dollars per share) | $ / shares	11.97
Ending balance (in dollars per share) | $ / shares	16.37
Vested and Expected to Vest, Weighted-Average Exercise Price (in dollars per share) | $ / shares	16.37
Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ / shares	$ 16.37
Weighted Average Remaining Contractual Term (in Years)
Outstanding	2 years 21 days
Vested and Expected to Vest	2 years 21 days
Exercisable	2 years 21 days
Aggregate Intrinsic Value
Outstanding | $	$ 949,155
Vested and Expected to Vest | $	949,155
Exercisable | $	$ 949,155

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Share-Based Compensation - Unvested RSAs Outstanding (Details) - RSAs	3 Months Ended
	Mar. 31, 2021 $ / shares shares
Number of Shares
Unvested RSAs, Beginning Balance (in shares) | shares	357,883
Granted (in shares) | shares	66,913
Vested (in shares) | shares	(4,285)
Forfeited (in shares) | shares	(1,650)
Unvested RSAs, Ending Balance (in shares) | shares	418,861
Weighted-Average Grant Date Fair Value
Unvested RSAs, Beginning Balance (in dollars per share) | $ / shares	$ 36.30
Granted (in dollars per share) | $ / shares	42.39
Vested (in dollars per share) | $ / shares	42.15
Forfeited (in dollars per share) | $ / shares	32.21
Unvested RSAs, Ending Balance (in dollars per share) | $ / shares	$ 37.23

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Income Tax (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal statutory income tax at 21%	$ 12,268	$ 7,928
Tax-exempt interest income	(3,706)	(3,022)
Share-based compensation	(59)	0
Tax-exempt earnings and gains on life insurance	(281)	(286)
Tax credits	(73)	(61)
CARES Act - NOL carryback rate differential	0	(1,178)
State Income Tax	702	86
Other	101	23
Actual Tax Expense	$ 8,952	$ 3,490
Effective Tax Rate	15.30%	9.20%

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Net Income Per Share - Reconciliation of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Net Income
Net income available to common stockholders	$ 49,469	$ 34,263
Diluted net income per share	$ 49,469	$ 34,263
Weighted-Average Shares
Net income available to common stockholders (in shares)	53,930,200	54,732,073
Effect of potentially dilutive stock options and restricted stock awards (in shares)	203,422	185,687
Diluted net income per share (in shares)	54,133,622	54,917,760
Per Share Amount
Net income available to common stockholders (in dollars per share)	$ 0.92	$ 0.63
Diluted net income per share (in dollars per share)	$ 0.91	$ 0.62

XML

Net Income Per Share - Narrative (Details) - shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Earnings Per Share [Abstract]
Stock options not included in the earnings per share calculation (in shares)	0	0

XML

Subsequent Event (Details) $ in Thousands	Apr. 01, 2021 USD ($)
Subsequent event | Hoosier
Subsequent Event [Line Items]
Cash paid in acquisition	$ 3,225