First Farmers Financial : Unaudited Shareholder Consolidation June30, 2022

FIRST FARMERS FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

June 30, 2022 (Unaudited) and December 31, 2021 (Audited)

(Dollar amounts in thousands except per share data)

		June 30,		December 31,
		2022			2021
ASSETS
Cash and due from financial institutions	$	53,790	$	204,251
Money market funds		6,875			13,946
Cash and cash equivalents		60,665			218,197
Interest-bearing deposits in other financial institutions		1,570			2,540
Securities available for sale		474,520			418,048
Securities held to maturity (fair value $171 in 2022 and $189 in 2021)		145			160
Equity securities		1,816			1,649
Restricted stock, at cost		10,493			11,068
Loans held-for-sale		6,889			8,140
Loans, net of allowance of $21,058 in 2022 and $19,672 in 2021		1,814,145			1,689,527
Premises and equipment, net		22,197			20,772
Goodwill		8,729			8,729
Core deposit and other intangibles		194			286
Bank-owned life insurance		20,976			20,719
Investments in affordable housing partnerships		13,342			7,898
Accrued interest receivable and other assets		50,910			31,250
	$	2,486,591		$	2,438,983
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits	$	531,423	$	535,669
Interest-bearing deposits		1,593,988			1,559,171
Total deposits		2,125,411			2,094,840
Federal funds purchased		6,400			-
Federal Home Loan Bank (FHLB) advances		80,000			53,000
Notes payable		8,481			8,977
Subordinated debentures		18,558			18,558
Accrued interest payable and other liabilities		25,954			21,080
Total liabilities		2,264,804			2,196,455
Stockholders' equity
Common stock, $1 stated value, 10,000,000 shares authorized, 7,199,684
issued and 7,031,113 outstanding in 2022; 10,000,000 authorized,
7,199,684 issued and 7,009,630 outstanding in 2021		7,200			7,200
Additional paid-in capital		4,706			5,001
Retained earnings		246,350			231,466
Treasury Stock (168,571 shares in 2022 and 190,054 shares in 2021)		(7,594)			(8,494)
Accumulated other comprehensive income/(loss)		(28,875)			7,355
Total stockholders' equity		221,787			242,528
	$	2,486,591		$	2,438,983

FIRST FARMERS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

For the 3 Months and 6 Months June 30, 2022 (Unaudited) and June 30, 2021 (Unaudited)

(Dollar amounts in thousands except per share data)

		3 Months Ended			6 Months Ended
		June 30,				June 30,
Interest and dividend income		2022			2021			2022			2021
Loans, including fees	$	20,470	$	18,651	$	40,411	$	36,956
Securities
Taxable		1,142			898			2,059			1,792
Non-taxable		1,385			1,233			2,673			2,430
Other		195			63			287			122
Interest expense		23,192			20,845			45,430			41,300
Deposits		1,314			1,195			2,528			2,374
Short-term borrowings		1			-			1			-
Notes payable and FHLB advances		282			654			613			1,493
Subordinated debentures		181			169			349			336
		1,778			2,018			3,491			4,203
Net interest income
	21,414			18,827			41,939			37,097
Provision for loan losses		750			3,200			1,650			4,400
Net interest income after provision for loan losses
	20,664			15,627			40,289			32,697
Other income
Investment product fees		206			276			456			507
Service charges on deposit accounts		904			740			1,799			1,445
Interchange Income		1,347			1,387			2,584			2,601
Net gain on sale and redemption of securities		-			3			-			142
Unrealized gains/(losses) recognized on equity securities		(174)			(39)			(135)			102
Loan sales and servicing income		832			2,561			3,296			5,807
Back to back swap fee income		185			400			185			400
Other income		641			600			1,293			1,211
Other expenses		3,941			5,928			9,478			12,215
Salaries and employee benefits		7,948			7,681			15,334			15,118
Occupancy and equipment expense		1,892			1,776			3,749			3,613
Data processing		531			513			1,095			1,126
Marketing and business development		471			334			904			586
Consulting and professional services		367			293			708			627
Amortization of intangible assets		37			88			92			187
Telecommunication		275			263			539			524
Other operating expenses		916			1,153			1,955			2,455
Income before income taxes		12,437			12,101			24,376			24,236
	12,168			9,454			25,391			20,676
Provision for income taxes		2,096			1,784			4,749			4,050
Net income	$	10,072		$	7,670		$	20,642		$	16,626
Basic and diluted earnings per common share	$	1.43	$	1.09	$	2.94	$	2.35
Average basic and diluted common shares outstanding		7,030,102			7,062,751			7,019,615			7,067,348
Diluted earnings per share	$	1.43		$	1.09		$	2.94		$	2.35
Average diluted shares outstanding		7,030,102			7,062,751			7,019,615			7,067,348

FIRST FARMERS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the 3 Months and 6 Months June 30, 2022 (Unaudited) and June 30, 2021 (Unaudited)

(Dollar amounts in thousands except per share data)

		3 Months Ended			6 Months Ended
		June 30,				June 30,
		2022			2021			2022			2021
Net Income	$	10,072	$	7,670	$	20,642	$	16,626
Other Comprehensive Income (Loss):
Changes in securities available for sale:
Unrealized holding gains/(losses) on securities available for sale		(23,308)			2,354			(53,797)			(3,634)
Reclassification adjustment for gains later recognized in income		-			(3)			-			(142)
Net unrealized gains/(losses)		(23,308)			2,351			(53,797)			(3,776)
Tax effect		4,910			(494)			11,329			793
Net of tax amount		(18,398)			1,857			(42,468)			(2,983)
Cash flow hedges
Change in fair value of derivatives used for cash flow hedges		2,198			(505)			8,249			3,355
Reclassification adjustment for losses/amortization realized in income		27			27			54			55
Net unrealized gains/(losses)
	2,225			(478)			8,303			3,410
Tax effect		(553)			119			(2,065)			(848)
Net of tax amount		1,672			(359)			6,238			2,562
Other comprehensive income (loss), net of tax		(16,726)			1,498			(36,230)			(421)
Comprehensive income (loss)
$	(6,654)	$	9,168	$	(15,588)	$	16,205

FIRST FARMERS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the 6 Months June 30, 2022 (Unaudited) and June 30, 2021 (Unaudited)

(Dollar amounts in thousands except per share data)

		6 Months Ended
		June 30,
		2022			2021
Cash flows from operating activities
Net income	$	20,642	$	16,626
Adjustments to reconcile net income to net cash from operating activities:
Depreciation		1,043			1,084
Amortization of intangible assets		92			187
Amortization of debt issuance costs		3			23
Net securities amortization		561			860
Unrealized (gain)/loss of fair value equity securities		135			(102)
Deferred income tax benefit		(617)			(725)
Servicing rights amortization and impairment		539			620
Stock-based compensation		202			180
Provision for loan losses		1,650			4,400
Net gain on sale of loans		(1,200)			(3,405)
Loans originated for resale		(45,767)			(89,766)
Proceeds from sale of loans		48,218			106,117
Net gain on sale and redemption of securities available for sale		-			(142)
Net loss on sale and write-down of premises and equipment		10			7
Net gain on sale and write-down of other real estate		(4)			(3)
Earnings on bank-owned life insurance		(258)			(73)
Pass thru losses in affordable housing partnerships		-			-
Changes in assets and liabilities
Interest receivable and other assets		(6,826)			1,452
Interest payable and other liabilities		3,202			(4,205)
Net cash from operating activities		21,625			33,135
Cash flows from investing activities
Net change in interest bearing deposits in other financial institutions		970			690
Securities available for sale
Proceeds from sales		-			17,100
Purchases		(123,999)			(62,626)
Proceeds from principal payments, calls and maturities		12,926			42,310
Securities held-to-maturity
Proceeds from principal payments, calls and maturities		15			295
Equity securities
Purchases		(301)			(122)
Loans made to customers, net of payments received		(126,471)			(93,491)
Purchase of bank-owned life insurance		-			(15,000)
Premises and equipment expenditures		(2,480)			(1,055)
Proceeds from the disposal of fixed assets		2			-
Investments in affordable housing partnerships		(521)			(804)
Proceeds from the sale of other real estate owned		1,807			311
Redemptions of excess restricted stock		575			-
Purchase of restricted stock		-			(210)
Net cash used in investing activities		(237,477)			(112,602)
Cash flows from financing activities
Net change in deposit accounts		30,571			210,705
Net change in short term borrowings		6,400			-
Payments on notes payable		(500)			(500)
Payments on short term FHLB advances		(13,000)			-
Proceeds from short term FHLB advances		50,000			-
Payments on long term FHLB advances		(45,000)			(247,000)
Proceeds from long term FHLB advances		35,000			125,000
Sale of treasury stock		224			242
Purchase of treasury stock		(46)			(1,991)
Dividends paid		(5,329)			(4,673)
Net cash from financing activities		58,320			81,783
Net change in cash and cash equivalents		(157,532)			2,316
Cash and cash equivalents at beginning of year		218,197			188,078
Cash and cash equivalents at end of year	$	60,665		$	190,394
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest		3,437			4,333
Income taxes		4,404			5,092
Indiana CRED credits		178			500
Supplemental non-cash disclosures
Transfers from premises and equipment to real estate owned		-			-
Real estate acquired in satisfaction of debts previously contracted		308			-
Right of Use Asset Obtained in Exchange for Lease Liabilities		-			-
Dividends declared but unpaid		2,953			2,401
Commitments to fund securities settlements		-			3,055