COMMERCE BANCSHARES INC /MO/

Previous wording

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes and with the statistical information and financial data appearing in this report as well as the Company's 2024 Annual Report on Form 10-K. Results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of results to be attained for any other period.

Current wording

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes and with the statistical information and financial data appearing in this report as well as the Company's 2025 Annual Report on Form 10-K. Results of operations for the three months ended March 31, 2026 are not necessarily indicative of results to be attained for any other period.

Previous wording

This report may contain "forward-looking statements" that are subject to risks and uncertainties and include information about possible or assumed future results of operations. Many possible events or factors could affect the future financial results and performance of the Company. This could cause results or performance to differ materially from those expressed in the forward-looking statements. Words such as "expects", "anticipates", "believes", "estimates", variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed throughout this report. Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events. Such possible events or factors include: changes in economic conditions in the Company's market area; changes in policies by regulatory agencies; governmental legislation and regulation; fluctuations in interest rates; changes in liquidity requirements; demand for loans in the Company's market area; changes in accounting and tax principles, estimates made on income taxes, competition with other entities that offer financial services, cybersecurity threats; risks related to the proposed Merger with FineMark including, among others, (i) failure to complete the Merger or unexpected delays related to the merger or either party’s inability to satisfy closing conditions required to complete the Merger, (ii) certain restrictions during the pendency of the proposed Merger that may impact the parties’ ability to pursue certain business opportunities or strategic transactions, (iii) diversion of management’s attention from ongoing business operations and opportunities, (iv) cost savings and any revenue synergies from the Merger may not be fully realized or may take longer than anticipated to be realized, (v) deposits attrition, customer or employee loss and/or revenue loss as a result of the proposed Merger, and (vi) expenses related to the proposed Merger being greater than expected; and such other factors as discussed in Part I Item 1A - "Risk Factors" and Part II Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2024 Annual Report on Form 10-K and Part II, Item 1A. - "Risk Factors" in this report.

Current wording

This report may contain "forward-looking statements" that are subject to risks and uncertainties and include information about possible or assumed future results of operations. Many possible events or factors could affect the future financial results and performance of the Company. This could cause results or performance to differ materially from those expressed in the forward-looking statements. Words such as "expects", "anticipates", "believes", "estimates", variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed throughout this report. Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events. Such possible events or factors include: changes in economic conditions in the Company's market area; changes in policies by regulatory agencies; governmental legislation and regulation; fluctuations in interest rates; changes in liquidity requirements; demand for loans in the Company's market area; changes in accounting and tax principle;, estimates made on income taxes; competition with other entities that offer financial services; cybersecurity threats; risks related to the merger with FineMark including, among others, (i) the Company's ability to promptly and effectively integrate the merger, (ii) diversion of management’s attention from ongoing business operations and opportunities, (iii) cost savings and any revenue synergies from the merger may not be fully realized or may take longer than anticipated to be realized, (iv) deposits attrition, customer or employee loss and/or revenue loss as a result of the merger, and (v) expenses related to the merger being greater than expected; and such other factors as discussed in Part I Item 1A - "Risk Factors" and Part II Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2025 Annual Report on Form 10-K and Part II, Item 1A. - "Risk Factors" in this report.

Previous wording

For the quarter ended September 30, 2025, net income attributable to Commerce Bancshares, Inc. (net income) amounted to $141.5 million, an increase of $3.5 million, or 2.5%, compared to the third quarter of the previous year. For the current quarter, the annualized return on average assets was 1.78%, the annualized return on average equity was 15.26%, and the efficiency ratio was 55.26%. Diluted earnings per common share was $1.06 per share in the current quarter, an increase of 5.0% compared to $1.01 per share in the third quarter of 2024, and decreased 7.0% compared to $1.14 per share in the previous quarter.

Current wording

For the quarter ended March 31, 2026, net income attributable to Commerce Bancshares, Inc. (net income) amounted to $141.6 million, an increase of $10.0 million, or 7.6%, compared to the first quarter of the previous year. For the current quarter, the annualized return on average assets was 1.62%, the annualized return on average equity was 13.22%, and the efficiency ratio was 60.00%. Diluted earnings per common share was $.96 per share in the current quarter, an increase of 3.2% compared to $.93 per share in the first quarter of 2025, and decreased 5.0% compared to $1.01 per share in the previous quarter.

Previous wording

Compared to the third quarter of last year, net interest income increased $17.1 million, or 6.5%, mainly due to increases in interest income on investment securities and securities purchased under agreements to resell ("resale agreements") of $11.8 million and $4.4 million, respectively, partly offset by a decrease in interest income on loans of $6.2 million. Interest expense on deposits and interest expense on borrowings also decreased $10.9 million and $4.2 million, respectively. The provision for credit losses increased $10.9 million compared to the same quarter in the prior year. Non-interest income increased $2.5 million, or 1.6%, compared to the third quarter of 2024, mainly due to increases in trust fees, brokerage fees and deposit account fees of $3.7 million, $2.1 million, and $2.0 million, respectively. These increases were partly offset by a decrease in bankcard fee income and a decrease in capital market fees of $2.0 million and $857 thousand, respectively. Net gains on investment securities totaled $7.9 million in the current quarter compared to net gains of $3.9 million in the same quarter of last year. Securities gains in the current quarter primarily resulted from net gains in fair value of $8.0 million recorded on private equity investments. Non-interest expense increased $6.4 million, or 2.7%, over the third quarter of 2024, mainly due to higher salaries expense, professional and other services expense, and data processing and software expense of $4.3 million, $2.5 million, and $1.2 million, respectively, partly offset by non-recurring litigation settlement expense during the third quarter of the prior year.

Current wording

Compared to the first quarter of last year, net interest income increased $30.7 million, or 11.4%, mainly due to increases in interest income on loans and securities purchased under agreements to resell (“resale agreements”) of $34.2 million and $1.0 million, respectively, partly offset by a decrease in interest income on investment securities of $4.2 million. Interest expense on deposits increased $4.1 million, while interest expense on borrowings decreased $2.7 million. The provision for credit losses decreased $3.5 million compared to the same quarter in the prior year. Non-interest income increased $16.9 million, or 10.6%, compared to the first quarter of 2025, mainly due to increases in trust fees, deposit account fees and brokerage fees of $14.5 million, $2.0 million and $659 thousand, respectively. Net gains on investment securities totaled $11.6 million in the current quarter compared to net losses of $7.6 million in the same quarter of last year. Securities gains in the current quarter primarily resulted from net gains in fair value of $10.9 million recorded on private equity investments. Non-interest expense increased $52.8 million, or 22.1%, over the first quarter of 2025, mainly due to higher salaries and benefits expense of $27.7 million, primarily a result of onboarding FineMark team members and acquisition-related compensation payments. Professional and other services expense increased $8.8 million, which included $4.7 million in acquisition-related legal and professional services expense. Other non-interest expense increased $6.4 million, primarily due an increase of $5.4 million in intangible amortization expense related to the FineMark acquisition. Data processing expense expense increased $5.1 million compared to the same quarter of last year.

Previous wording

Net interest income in the third quarter of 2025 was $279.5 million, an increase of $17.1 million over the third quarter of 2024. On a fully taxable-equivalent (FTE) basis, net interest income totaled $281.8 million in the third quarter of 2025, up $17.1 million over the same period last year and down $658 thousand from the previous quarter. The increase in net interest income compared to the third quarter of 2024 was mainly due to higher interest income earned on investment securities (FTE) of $11.7 million and lower deposit interest expense of $10.9 million, partly offset by lower interest income earned on loans (FTE) of $6.1 million and deposits at the Federal Reserve of $7.9 million. The increase in total interest earned on investment securities (FTE) was mainly the result of higher average balances and rates earned on U.S. government and federal agency securities and higher average rates earned on asset-backed securities. The decrease in deposit interest expense was mainly due to lower average rates paid, while the decrease in interest earned on deposits at the Federal Reserve was mainly due to lower rates earned. Interest income earned on loans (FTE) decreased mainly due to lower average rates, partly offset by higher average balances. The Company's net yield on earning assets (FTE) was 3.64% in the current quarter compared to 3.50% in the third quarter of 2024.

Current wording

Net interest income in the first quarter of 2026 was $299.8 million, an increase of $30.7 million over the first quarter of 2025. On a fully taxable-equivalent (FTE) basis, net interest income totaled $302.2 million in the first quarter of 2026, up $30.8 million over the same period last year and up $16.4 million over the previous quarter. The increase in net interest income compared to the first quarter of 2025 was mainly due to an increase in average loan balances in connection with the acquisition of FineMark on January 1, 2026. Accretion income on FineMark's loans resulting from purchase accounting adjustments totaled $6.9 million. Interest income earned on loans (FTE) increased over the same period in the prior year mainly due to higher average loan balances, partly offset by lower average rates earned. The decrease in total interest earned on investment securities (FTE) was mainly the result of lower average rates earned on U.S. government and federal agency obligations and lower average balances of asset-backed and mortgage-backed securities. The increase in deposit interest expense was mainly due to higher average balances, partly offset by lower average rates paid. Interest expense on securities sold under agreements to repurchase decreased mainly due to lower average rates paid. The Company's net yield on earning assets (FTE) was 3.59% in the current quarter compared to 3.56% in the first quarter of 2025.

Previous wording

Total interest income (FTE) increased $2.1 million over the third quarter of 2024. Interest income on loans (FTE) was $265.6 million during the third quarter of 2025, a decrease of $6.2 million, or 2.3%, from the same quarter last year. The decrease in loan interest income from the same quarter of last year was primarily due to a decline of 33 basis points in the average rate earned, partly offset by growth of $468.5 million, or 2.8%, in average loan balances. Most of the decrease in interest income occurred in the construction and land, business and business real estate loan categories. The largest decrease to interest income occurred in construction and land loan interest, which declined $3.8 million due to a 107 basis point decrease in the average rate earned. Business loan interest income declined $2.7 million due to a 45 basis point decrease in the average rate earned, partly offset by higher average balances of $263.2 million, or 4.4%. Business real estate loan interest income decreased $1.1 million due to a decrease of 36 basis points in the average rate earned, partly offset by higher average balances of $134.8 million, or 3.8%. Consumer credit card loan interest income declined $938 thousand mainly due to an 80 basis point decrease in the average rate earned. These decreases in interest income were partly offset by an increase in personal real estate loan interest income of $2.1 million mainly due to a 24 basis point increase in the average rate earned.

Current wording

Total interest income (FTE) increased $32.2 million over the first quarter of 2025. Interest income on loans (FTE) was $290.3 million during the first quarter of 2026, an increase of $34.3 million, or 13.4%, over the same quarter last year. The increase in loan interest income over the same quarter of last year was primarily due to growth of $3.1 billion, or 18.0%, in average loan balances and higher average rates earned on personal real estate loans. Most of the increase in interest income was due to the acquisition of FineMark, which added $2.7 billion in loan balances. The largest increase to interest income occurred in personal real estate loan interest, which grew $20.4 million due to a $1.4 billion, or 45.0%, increase in average balances coupled with a 54 basis point increase in the average rate earned. Revolving home equity loan interest income increased $4.6 million mainly due to a $252.4 million, or 70.4%, increase in average balances. Business real estate loan interest income increased $4.2 million due to higher average balances of $377.8 million, or 10.3%, partly offset by a decrease of 13 basis points in the average rate earned. The $3.6 million increase in consumer loan interest income was due to a $339.2 million, or 16.3%, increase in average balances, partly offset by a decline of 32 basis points in the average rate earned. Business loan interest income grew $2.6 million due to higher average balances of $580.9 million, or 9.5%, partly offset by a 34 basis point decrease in the average rate earned. Interest income on construction and land loans increased $402 thousand mainly due to growth in average balances of $177.0 million, or 12.5%, partly offset by a 71 basis point decrease in the average rate earned. These increases in interest income were slightly offset by a decrease in consumer credit card loan interest income of $1.3 million mainly due to an 85 basis point decrease in the average rate earned.

Previous wording

Interest income on investment securities (FTE) was $75.0 million during the third quarter of 2025, which was an increase of $11.7 million over the same quarter last year. The increase in interest income occurred mainly in interest earned on U.S. government and federal agency securities, which grew $10.1 million due to an $804.3 million increase in average balances and a 38 basis point increase in the average rate earned. Interest income related to the Company's U.S. Treasury inflation-protected securities, which is tied to the non-seasonally adjusted Consumer Price Index (CPI-U), increased $1.6 million over the same quarter last year. Interest income earned on asset-backed securities grew $3.5 million due to a 103 basis point increase in the average rate earned, partly offset by a decrease in average balances of $58.8 million, or 3.9%. Interest earned on other securities increased $1.0 million mainly due to the receipt of $1.3 million in non-accrual interest income from a private equity investment in the third quarter of 2025. These increases to interest income were partly offset by a decline in interest income on mortgage-backed securities of $2.4 million, driven by lower average balances of $621.0 million, or 12.2%. In addition, the Company recorded a $314 thousand adjustment to premium amortization at September 30, 2025, which increased interest income and reflected slower forward prepayment speed estimates on mortgage-backed securities. This increase was higher than the $286 thousand adjustment decreasing income in the same quarter last year. Interest income earned on state and municipal obligations declined $416 thousand mainly due to a $100.5 million, or 11.7%, decrease in average balances. Additionally, the average rate earned on investment securities during the three months ended September 30, 2025 increased 47 basis points over the same period in the prior year. The average balance of the total investment portfolio (excluding unrealized fair value adjustments on available for sale debt securities) was $10.0 billion in both the third quarters of 2025 and 2024.

Current wording

Interest income on investment securities (FTE) was $72.8 million during the first quarter of 2026, which was a decrease of $4.3 million from the same quarter last year. The largest decreases in interest income occurred in interest earned on asset-backed and mortgage-backed securities, which declined $2.9 million and $2.6 million, respectively. Interest income earned on asset-backed securities declined due to a $454.5 million decrease in average balances, partly offset by a 34 basis point increase in the average rate earned. A decrease of $577.0 million, or 12.1%, in average balances led to the decline in interest income on mortgage-backed securities. In addition, the Company recorded a $940 thousand adjustment to premium amortization at March 31, 2026, which increased interest income and reflected slower forward prepayment speed estimates on mortgage-backed securities. This increase was higher than the $539 thousand adjustment increasing income in the same quarter last year. These decreases to interest income were partly offset by growth of $2.3 million in interest income on U.S. government and federal agency obligations, driven by higher average balances of $603.9 million, or 23.3%, partly offset by a decline of 49 basis points in the average rate earned. Interest income related to the Company's U.S. Treasury inflation-protected securities, which is tied to the non-seasonally adjusted Consumer Price Index (CPI-U), decreased $3.1 million from the same quarter last year. The average balance of the total investment portfolio (excluding unrealized fair value adjustments on available for sale debt securities) was $9.9 billion in the first quarter of 2026 and $10.5 billion in the first quarter of 2025.

Previous wording

Interest income on securities purchased under agreements to resell increased $4.4 million over the same quarter last year, due to an increase of 47 basis points in the average rate earned and growth of $375.0 million in the average balance. Interest income on deposits at the Federal Reserve decreased $7.9 million due to declines of 98 basis points in average rate earned and $142.7 million in the average balance.

Current wording

Interest income on securities purchased under agreements to resell increased $1.0 million over the same quarter last year, due to an increase of 22 basis points in the average rate earned and growth of $61.1 million in the average balance. Interest income on deposits at the Federal Reserve increased $1.1 million due to an increase of $608.8 million in the average balance, partly offset by a decline of 76 basis points in the average rate earned.

Previous wording

The average fully taxable-equivalent yield on total interest earning assets was 4.86% in the third quarter of 2025, down from 4.96% in the third quarter of 2024.

Current wording

The average fully taxable-equivalent yield on total interest earning assets was 4.74% in the first quarter of 2026, down from 4.81% in the first quarter of 2025.

Previous wording

Total interest expense decreased $15.1 million compared to the third quarter of 2024 due to decreases of $10.9 million in interest expense on interest bearing deposits and $4.2 million in interest expense on borrowings. The decrease in deposit interest expense resulted mainly from lower interest expense on certificates of deposit balances of $6.1 million due to an 81 basis point decline in the average rate paid and a decrease of $111.4 million, or 4.4%, in average balances. Interest expense on interest checking and money market deposit accounts decreased $4.8 million due to a 20 basis point decline in average rates paid, partly offset by an increase of $498.4 million, or 3.8%, in average balances. The overall rate paid on total deposits decreased 29 basis points from the same quarter last year. Interest expense on federal funds purchased decreased $1.4 million due to lower average balances of $76.0 million and a 104 basis point decline in the average rate paid. Interest expense on customer repurchase agreements decreased $2.8 million due to a 68 basis point decline in the average rate paid, partly offset by growth of $167.8 million, or 7.1%, in the average balance. The overall average rate incurred on all interest bearing liabilities was 1.87% and 2.22% in the third quarters of 2025 and 2024, respectively.

Current wording

Total interest expense increased $1.4 million compared to the first quarter of 2025 due an increase of $4.1 million in interest expense on interest bearing deposits, partly offset by a decrease of $2.7 million in interest expense on borrowings. The increase in deposit interest expense was primarily due to the acquisition of FineMark, which added $2.7 billion in interest bearing deposit balances. Compared to the same quarter last year, interest expense on interest checking and money market deposit balances increased $6.1 million due to growth of $2.1 billion, or 15.2%, in average balances, partly offset by a four basis point decline in the average rate paid. Interest expense on certificate of deposit accounts decreased $2.1 million due to a 56 basis point decline in average rates paid, partly offset by an increase of $144.8 million, or 6.1%, in average balances. The overall rate paid on total deposits decreased 11 basis points from the same quarter last year. Interest expense on customer repurchase agreements decreased $3.4 million due to a 47 basis point decline in the average rate paid and a decrease of $48.7 million, or

Previous wording

The table below is a summary of net bank card transaction fees for the nine month periods ended September 30, 2025 and 2024.

Current wording

The table below is a summary of net bank card transaction fees for the three month periods ended March 31, 2026 and 2025.

Previous wording

For the third quarter of 2025, total non-interest income amounted to $161.5 million compared to $159.0 million in the same quarter last year, which was an increase of $2.5 million, or 1.6%. The increase was mainly due to higher trust fees, consumer brokerage service fees and deposit account fees. Trust fees increased $3.7 million, or 6.8%, mainly due to growth of $3.2 million in private client trust fees. Bank card transaction fees for the current quarter declined $2.0 million, or 4.2%, from the same period last year. Net corporate card fees declined $1.7 million mainly due to higher rewards expense, partly offset by higher interchange income. Net credit card fees decreased $336 thousand mainly due to higher rewards expense. Net debit card fees decreased $107 thousand, while net merchant fees increased $89 thousand. Compared to the third quarter of last year, deposit account fees increased $2.0 million, or 8.1%, mainly due to higher corporate cash management fees of $1.8 million. Capital market fees decreased $857 thousand, or 14.3%, mainly due to lower underwriting and trading securities income, while consumer brokerage service fees increased $2.1 million, or 45.0%, mainly due to higher life insurance income and annuity fees. Other non-interest income decreased $2.5 million, or 14.5%, mainly due to lower gains of $4.7 million on the sales of assets, partly offset by increases in cash sweep commissions, tax credit sales income and international fees of $677 thousand, $625 thousand and $408 thousand, respectively.

Current wording

For the first quarter of 2026, total non-interest income amounted to $175.9 million compared to $158.9 million in the same quarter last year, which was an increase of $16.9 million, or 10.6%. The increase was mainly due to higher trust fees and deposit account fees. Trust fees increased $14.5 million, or 25.5%, mainly due to growth of $13.5 million in private client trust fees. Bank card transaction fees for the current quarter were flat compared to the same period last year. Net credit card fees decreased $173 thousand mainly due to higher rewards expense and net merchant fees decreased $184 thousand. Net corporate card fees were flat compared to the same period last year, while net debit card fees increased $301 thousand mainly due to higher interchange income. Compared to the first quarter of last year, deposit account fees increased $2.0 million, or 7.3%, mainly due to higher corporate cash management fees of $1.5 million. Capital market fees increased $226 thousand, or 4.4%, while consumer brokerage service fees increased $659 thousand, or 13.8%, mainly due to higher advisory fees. Other non-interest income decreased $227 thousand, or 1.3%, mainly due to a decrease of $911 thousand in gains on the sales of assets and a decrease of $1.3 million in fair value adjustments recorded on the Company's deferred compensation plan assets and liabilities. These decreases were partly offset by an increase of $1.2 million in cash sweep commissions.

Previous wording

Net gains on investment securities of $731 thousand were recognized in earnings for the nine months ended September 30, 2025, compared to net gains of $6.8 million for the same period in 2024. Net gains in the first nine months of 2025 were mainly comprised of net gains in fair value of $3.8 million recorded on private equity investments and net gains of $1.7 million on equity securities. These gains were largely offset by net losses of $4.2 million on the sale of available for sale securities. Net gains in the first nine months of 2024 were mainly comprised of net gains of $178.1 million on equity investments and net gains in fair value of $20.2 million recorded on private equity investments, largely offset by net losses of $192.9 million on sales of available for sale securities. The portion of private equity activity attributable to minority interests is reported as non-controlling interest in the consolidated statements of income and resulted in expense of $656 thousand during the first nine months of 2025 and expense of $3.4 million during the first nine months of 2024.

Current wording

Net gains and losses on investment securities, which were recognized in earnings during the three months ended March 31, 2026 and 2025, are shown in the table above. Net securities gains of $11.6 million were reported in the first quarter of 2026, compared to net losses of $7.6 million in the same period last year. The net gains in the first quarter of 2026 were mainly comprised of net gains in fair value of $10.9 million recorded on private equity investments and net gains of $597 thousand on sales of private equity investments. The net losses on investment securities for the same quarter last year were primarily comprised of net losses in fair value of $8.5 million recorded on private equity investments, partly offset by net gains of $1.0 million on sales of private equity investments. The portion of private equity activity attributable to minority interests is reported as non-controlling interest in the consolidated statements of income and resulted in expense of $2.3 million during the first three months of 2026 and income of $1.5 million during the first three months of 2025.

Previous wording

Non-interest expense for the third quarter of 2025 amounted to $244.0 million, an increase of $6.4 million, or 2.7%, compared to expense of $237.6 million in the third quarter of last year. The increase in expense over the same period last year was mainly due to higher salaries and employee benefits expense, professional and other services expense and data processing and software expense. Salaries and employee benefits expense increased $4.3 million, or 2.8%, mainly due to higher full-time salaries expense of $3.0 million and higher incentive compensation expense of $1.4 million, partly offset by lower healthcare expense of $805 thousand. Full-time equivalent employees totaled 4,666 at September 30, 2025, compared to 4,711 at September 30, 2024. Data processing and software expense increased $1.4 million, or 4.2%, mainly due to higher costs for service providers and software. Professional and other services expense, which increased $2.5 million, or 27.8%, included $1.1 million of acquisition related legal and professional services expense. Other non-interest expense decreased $1.3 million, or 14.0%, mainly due to a $1.5 million reimbursement during the third quarter of 2025 related to a litigation settlement.

Current wording

Non-interest expense for the first quarter of 2026 amounted to $291.1 million, an increase of $52.8 million, or 22.1%, compared to expense of $238.4 million in the first quarter of last year. The current quarter included $14.0 million in acquisition-related expense, as well as acquisition-related intangible amortization expense of $5.4 million. The increase in expense over the same period last year was mainly due to higher salaries and employee benefits expense, data processing and software expense, professional and other services expense and intangible amortization expense. Salaries and employee benefits expense increased $27.7 million, or 18.1%, mainly due to an accrual for retention bonuses, acquisition-related compensation payments and the onboarding of FineMark's team members. Salaries and benefits expense included acquisition-related costs of $6.6 million in the current quarter. Full-time salaries, incentive compensation and healthcare expense increased $13.4 million, $7.7 million and $2.2 million, respectively, over the prior year. Full-time equivalent employees totaled 4,960 at March 31, 2026, compared to 4,662 at March 31, 2025. Data processing and software expense increased $6.1 million, or 18.9%, mainly due to higher costs for service providers and software. Professional and other services expense, which increased $8.8 million, or 87.4%, included $4.7 million of acquisition-related legal and professional services expense. Net occupancy expense increased $1.3 million, or 9.2%, mainly due to higher building depreciation expense. Other non-interest expense increased $7.0 million, or 76.6%, mainly due to increases of $5.4 million in intangible amortization expense related to the FineMark acquisition and $2.0 million in other acquisition-related expense. In addition, travel and entertainment expense increased $1.0 million, while a decrease in fair value adjustments of $1.3 million was recorded on the Company's deferred compensation plan assets and liabilities.

Previous wording

Net loan charge-offs in the third quarter of 2025 amounted to $10.3 million, compared to $9.7 million in the prior quarter and $9.6 million in the third quarter of last year. Comp ared to the same period last year, net loan charge-offs in thethird quarter of 2025 increased $749 thousand, and increased $638 thousand from the previous quarter. The increase from the prior year was mainly driven by increases of $712 thousand and $242 thousand in business and consumer credit card loan net charge-offs, respectively, offset by a decrease of $449 thousand in consumer loan net charge-offs. The increase in net loan charge-offs for the three months ended September 30, 2025 from the previous quarter was driven by increases of $402 thousand and $394 thousand in net charge-offs on business real estate and business loans, respectively, partially offset by a decrease of $570 thousand in net charge-offs on consumer credit card loans.

Current wording

Net loan charge-offs in the first quarter of 2026 amounted to $15.0 million, compared to $9.9 million in the prior quarter and $10.8 million in the first quarter of last year. Comp ared to the same period last year, net loan charge-offs in thefirst quarter of 2026 increased $4.2 million, and increased $5.1 million from the previous quarter. The increase from the prior year was mainly driven by an increase of $5.0 million in business real estate loan net charge-offs, offset by a decrease of $1.1 million in consumer loan net charge-offs. The increase in net loan charge-offs for the three months ended March 31, 2026 from the previous quarter was driven by increases of $5.4 million and $651 thousand in net charge-offs on business real estate and consumer credit card loans, respectively, partially offset by a decrease of $730 thousand in net charge-offs on consumer loans.

Previous wording

For the three months ended September 30, 2025, annualized net charge-offs on average consumer credit card loans were 4.59%, compared to 5.08% in the previous quarter and 4.46% in the same period last year. Consumer loan annualized net charge-offs in the current quarter amounted to .42%, compared to .40% in the prior quarter and .52% in the same period last year. In thethird quarter of 2025, total annualized net loan charge-offs were .23%, compared to .22% in the previous quarter and .22% in the same period last year.

Current wording

For the three months ended March 31, 2026, annualized net charge-offs on average consumer credit card loans were 5.21%, compared to 4.55% in the previous quarter and 5.04% in the same period last year. Consumer loan annualized net charge-offs in the current quarter amounted to .30%, compared to .45% in the prior quarter and .56% in the same period last year. In thefirst quarter of 2026, total annualized net loan charge-offs were .30%, compared to .22% in the previous quarter and .25% in the same period last year.

Previous wording

For the three months ended September 30, 2025, the provision for credit losses on loans was $20.7 million, which was an increase of $12.8 million from the provision recorded in the prior quarter. The provision for the three months ended September 30, 2025 was the result of an increase in the allowance for credit losses on loans. Compared to the same period in the prior year, the provision for credit losses on loans for the three months ended September 30, 2025 increased $8.9 million. For the nine months ended September 30, 2025, the provision for credit losses on loans was $43.8 million, which was a $17.1 million increase over the $26.7 million provision recorded in the same period last year. Changes in the provision are driven by changes in the estimate for the allowance for credit losses on loans.

Current wording

For the three months ended March 31, 2026, the provision for credit losses on loans was $11.3 million, which was a decrease of $2.4 million from the provision recorded in the prior quarter. Compared to the same period in the prior year, the provision for credit losses on loans for the three months ended March 31, 2026 decreased $3.8 million. Changes in the provision are driven by changes in the estimate for the allowance for credit losses on loans.

Previous wording

In the current quarter, the provision for credit losses on unfunded lending commitments was a benefit of $678 thousand, compared to a benefit of $2.7 million for the three months ended September 30, 2024. At September 30, 2025, the liability for unfunded lending commitments was $15.3 million, compared to $18.9 million at December 31, 2024 and $18.0 million at September 30, 2024. The liability decreased primarily due to decreases in unfunded lending commitment balances, coupled with improvement in loss rate assumptions for the Company's construction loans. The Company's unfunded lending commitments primarily relate to construction loans, and the Company's estimate for credit losses in its unfunded lending commitments utilizes the same model and forecast as its estimate for credit losses on loans. See Note 2 for further discussion of the model inputs utilized in the Company's estimate of credit losses.

Current wording

In the current quarter, the provision for credit losses on unfunded lending commitments was a benefit of $323 thousand, compared to a benefit of $608 thousand for the three months ended March 31, 2025. At March 31, 2026, the liability for unfunded lending commitments was $17.7 million, compared to $17.7 million at December 31, 2025 and $18.3 million at March 31, 2025. At March 31, 2026, the liability for unfunded lending commitments remained largely unchanged from December 31, 2025, because the initial liability recorded related to the FineMark acquisition of $362 thousand was largely offset by a decrease in the provision for the liability for unfunded lending commitments. The Company's unfunded lending commitments primarily relate to construction loans, and the Company's estimate for credit losses in its unfunded lending commitments utilizes the same model and forecast as its estimate for credit losses on loans. See Note 3 for further discussion of the model inputs utilized in the Company's estimate of credit losses.

Previous wording

Non-accrual loans totaled $16.3 million at September 30, 2025, a decrease of $2.0 million from the balance at December 31, 2024. The decrease occurred mainly in revolving home equity non-accrual loans, which decreased $2.0 million. At September 30, 2025, non-accrual loans were comprised of business real estate (91.9%), personal real estate (5.3%) business (1.6%), and construction and land (1.2%) loans. Foreclosed real estate totaled $790 thousand at September 30, 2025, an increase of $447 thousand compared to December 31, 2024. Total loans past due 90 days or more and still accruing interest totaled $21.5 million as of September 30, 2025, a decrease of $3.0 million from December 31, 2024. Balances by class for non-accrual loans and loans past due 90 days and still accruing interest are shown in the "Delinquent and non-accrual loans" section in Note 2 to the consolidated financial statements.

Current wording

Non-accrual loans totaled $10.9 million at March 31, 2026, a decrease of $4.8 million from the balance at December 31, 2025. The decrease occurred mainly in business real estate non-accrual loans, which decreased $5.4 million. At March 31, 2026, non-accrual loans were comprised of business real estate (85.8%), personal real estate (12.1%), business (1.8%), and revolving home equity (0.3%) loans. Foreclosed real estate totaled $678 thousand at March 31, 2026, a decrease of $540 thousand compared to December 31, 2025. Total loans past due 90 days or more and still accruing interest totaled $22.8 million as of March 31, 2026, a decrease of $1.8 million from December 31, 2025. Balances by class for non-accrual loans and loans past due 90 days and still accruing interest are shown in the "Delinquent and non-accrual loans" section in Note 3 to the consolidated financial statements.

Previous wording

In addition to the non-performing and past due loans mentioned above, the Company also has identified loans for which management has concerns about the ability of the borrowers to meet existing repayment terms. They are classified as substandard under the Company's internal rating system. The loans are generally secured by either real estate or other borrower assets, reducing the potential for loss should they become non-performing. Although these loans are generally identified as potential problem loans, they may never become non-performing. Such loans totaled $274.6 million at September 30, 2025 compared to $330.3 million at December 31, 2024, resulting in a decrease of $55.7 million, or 16.9%.

Current wording

In addition to the non-performing and past due loans mentioned above, the Company also has identified loans for which management has concerns about the ability of the borrowers to meet existing repayment terms. They are classified as substandard under the Company's internal rating system. The loans are generally secured by either real estate or other borrower assets, reducing the potential for loss should they become non-performing. Although these loans are generally identified as potential problem loans, they may never become non-performing. Such loans totaled $296.2 million at March 31, 2026 compared to $264.9 million at December 31, 2025, resulting in an increase of $31.3 million, or 11.8%.

Previous wording

When borrowers are experiencing financial difficulty, the Company may agree to modify the contractual terms of a loan to a borrower in order to assist the borrower in repaying principal and interest owed to the Company. At September 30, 2025, the Company held $168.3 million of loans that had been modified during the nine months ended September 30, 2025. These loans are further discussed in the"Modifications for borrowers experiencing financial difficulty"section in Note 2 to the consolidated financial statements.

Current wording

When borrowers are experiencing financial difficulty, the Company may agree to modify the contractual terms of a loan to a borrower in order to assist the borrower in repaying principal and interest owed to the Company. At March 31, 2026, the Company held $66.9 million of loans that had been modified during the three months ended March 31, 2026. These loans are further discussed in the"Modifications for borrowers experiencing financial difficulty"section in Note 3 to the consolidated financial statements.

Previous wording

The Company's portfolio of construction and land loans, as shown in the table below, amounted to 8.1% of total loans outstanding at September 30, 2025. The largest component of construction and land loans was commercial construction, which increased $24.9 million during the nine months ended September 30, 2025. At September 30, 2025, multi-family residential construction loans totaled approximately $556.3 million, or 45.5%, of the commercial construction loan portfolio, compared to $526.6 million, or 44.0%, at December 31, 2024.

Current wording

The Company's portfolio of construction and land loans, as shown in the table below, amounted to 7.7% of total loans outstanding at March 31, 2026. The largest component of construction and land loans was commercial construction, which decreased $26.6 million during the three months ended March 31, 2026. At March 31, 2026, multi-family residential construction loans totaled approximately $529.5 million, or 44.1%, of the commercial construction loan portfolio, compared to $553.1 million, or 45.1%, at December 31, 2025.

Previous wording

Total business real estate loans were $3.7 billion at September 30, 2025 and comprised 21.1% of the Company's total loan portfolio. These loans include properties such as manufacturing and warehouse buildings, small office and medical buildings, churches, hotels and motels, shopping centers, and other commercial properties. At September 30, 2025, 32.5% of business real estate loans were for owner-occupied real estate properties, which have historically resulted in lower net charge-off rates than non-owner-occupied commercial real estate loans.

Current wording

Total business real estate loans were $4.1 billion at March 31, 2026 and comprised 19.8% of the Company's total loan portfolio. These loans include properties such as manufacturing and warehouse buildings, small office and medical buildings, churches, hotels and motels, shopping centers, and other commercial properties. At March 31, 2026, 37.1% of business real estate loans were for owner-occupied real estate properties, which have historically resulted in lower net charge-off rates than non-owner-occupied commercial real estate loans.

Previous wording

The Company had $364.2 million in revolving home equity loans at September 30, 2025 that were collateralized by residential real estate. Most of these loans (94.4%) are written with terms requiring interest-only monthly payments. These loans are offered in three main product lines: LTV up to 80%, 80% to 90%, and 90% to 100%. As of September 30, 2025, the outstanding principal of loans with an original LTV higher than 80% was $28.6 million, or 8.0% of the portfolio, compared to $31.9 million as of December 31, 2024. Total revolving home equity loan balances over 30 days past due were $1.4 million at September 30, 2025 and $5.6 million at December 31, 2024, and there was no outstanding balance for revolving home equity loans on non-accrual status at September 30, 2025 compared to $2.0 million at December 31, 2024. The weighted average FICO score for the total portfolio balance at September 30, 2025 is 777. At maturity, the accounts are re-underwritten, and if they qualify under the Company's credit, collateral and capacity policies, the borrower is given the option to renew the line of credit or convert the outstanding balance to an amortizing loan. If criteria are not met, amortization is required, or the borrower may pay off the loan. During the remainder of 2025 through 2028, approximately 12.3% of the Company's current outstanding balances are expected to mature. Of these balances, approximately 86.6% have a FICO score of 700 or higher. The Company does not expect a significant increase in losses as these loans mature, due to their high FICO scores, low LTVs, and low historical loss levels.

Current wording

The Company had $619.2 million in revolving home equity loans at March 31, 2026 that were collateralized by residential real estate. Most of these loans (94.9%) are written with terms requiring interest-only monthly payments. These loans are offered in three main product lines: LTV up to 80%, 80% to 90%, and 90% to 100%. As of March 31, 2026, the outstanding principal of loans with an original LTV higher than 80% was $78.6 million, or 12.6% of the portfolio, compared to $27.7 million as of December 31, 2025. Total revolving home equity loan balances over 30 days past due were $4.8 million at March 31, 2026 and $1.9 million at December 31, 2025, and the outstanding balance for revolving home equity loans on non-accrual status was $34 thousand at March 31, 2026 compared to no balance at December 31, 2025. The weighted average FICO score for the total portfolio balance at March 31, 2026 is 776. At maturity, the accounts are re-underwritten, and if they qualify under the Company's credit, collateral and capacity policies, the borrower is given the option to renew the line of credit or convert the outstanding balance to an amortizing loan. If criteria are not met, amortization is required, or the borrower may pay off the loan. During the remainder of 2026 through 2029, approximately 20.5% of the Company's current outstanding balances are expected to mature. Of these balances, approximately 83.2% have a FICO score of 700 or higher. The Company does not expect a significant increase in losses as these loans mature, due to their high FICO scores, low LTVs, and low historical loss levels.

Previous wording

The consumer loans category is mostly comprised of private banking loans and automobile loans. Private banking loans comprised of 39.2% of the consumer loan portfolio at September 30, 2025. The Company's private banking loans are mostly executive lines of credit, which are secured primarily by assets held by the Company's trust department, and insurance premium finance loans, which are primarily secured by life insurance policies. Automobile loans, which include direct and indirect product lines, comprised 35.8% of the consumer loan portfolio at September 30, 2025, and outstanding balances for auto loans were $778.2 million and $776.7 million at September 30, 2025 and December 31, 2024, respectively. The balances over 30 days past due amounted to $9.3 million at September 30, 2025 and $14.4 million at December 31, 2024, respectively, and comprised 1.2% of the outstanding balances of these loans at September 30, 2025 and 1.9% at December 31, 2024. For the nine months ended September 30, 2025, $282.9 million of new auto loans were originated, compared to $260.6 million during the first nine months of 2024. At September 30, 2025, the automobile loan portfolio had a weighted average FICO score of 756, and net charge-offs on auto loans were .9% of average auto loans.

Current wording

The consumer loans category is mostly comprised of private banking loans and automobile loans. Private banking loans comprised of 48.2% of the consumer loan portfolio at March 31, 2026. The Company's private banking loans are mostly executive lines of credit, which are secured primarily by assets held by the Company's trust department, and insurance premium finance loans, which are primarily secured by life insurance policies. Automobile loans, which include direct and indirect product lines, comprised 30.5% of the consumer loan portfolio at March 31, 2026, and outstanding balances for auto loans were $754.3 million and $773.6 million at March 31, 2026 and December 31, 2025, respectively. The balances over 30 days past due amounted to $8.4 million at March 31, 2026 and $11.0 million at December 31, 2025, respectively, and comprised 1.1% of the outstanding balances of these loans at March 31, 2026 and 1.4% at December 31, 2025. For the three months ended March 31, 2026, $88.2 million of new auto loans were originated, compared to $98.0 million during the first three months of 2025. At

Previous wording

The Company's consumer loan portfolio also includes fixed rate home equity loans, typically for home repair or remodeling, and these loans comprised 9.7% of the consumer loan portfolio at September 30, 2025. Losses on these loans have historically been low, and the Company saw net recoveries of $135 thousand for the first nine months of 2025. The remaining portion of the Company's consumer loan portfolio is comprised of healthcare financing, boat, RV, motorcycle, other equipment, and unsecured consumer loans. Net charge-offs on consumer loans, other than automobile loans, totaled $2.3 million in the first nine months of 2025 and were .3% of the average balances of these loans at September 30, 2025.

Current wording

The Company's consumer loan portfolio also includes fixed rate home equity loans, typically for home repair or remodeling, and these loans comprised 8.5% of the consumer loan portfolio at March 31, 2026. Losses on these loans have historically been low, and the Company saw net recoveries of $591 thousand for the first three months of 2026. The remaining portion of the Company's consumer loan portfolio is comprised of healthcare financing, boat, RV, motorcycle, other equipment, and unsecured consumer loans. Net charge-offs on consumer loans, other than automobile and fixed rate home equity loans, totaled $755 thousand in the first three months of 2026 and were .2% of the average balances of these loans at March 31, 2026.

Previous wording

The Company offers low promotional rates on selected consumer credit card products. Out of a portfolio at September 30, 2025 of $575.3 million in consumer credit card loans outstanding, approximately $125.2 million, or 21.8%, carried a low promotional rate. Within the next six months, $51.8 million of these loans are scheduled to convert to the ongoing higher contractual rate. To mitigate some of the risk involved with this credit card product, the Company performs credit checks and detailed analysis of the customer borrowing profile before approving the loan application. Management believes that the risks in the consumer loan portfolio are reasonable and the anticipated loss ratios are within acceptable parameters.

Current wording

The Company offers low promotional rates on selected consumer credit card products. Out of a portfolio at March 31, 2026 of $557.7 million in consumer credit card loans outstanding, approximately $120.5 million, or 21.6%, carried a low promotional rate. Within the next six months, $54.5 million of these loans are scheduled to convert to the ongoing higher contractual rate. To mitigate some of the risk involved with this credit card product, the Company performs credit checks and detailed analysis of the customer borrowing profile before approving the loan application. Management believes that the risks in the consumer loan portfolio are reasonable and the anticipated loss ratios are within acceptable parameters.

Previous wording

The Company's energy lending portfolio is comprised of lending to the petroleum and natural gas sectors and totaled $302.0 million, or 1.7% of total loans at September 30, 2025, a decrease of $36.0 million from December 31, 2024, as shown in the table below.

Current wording

The Company's energy lending portfolio is comprised of lending to the petroleum and natural gas sectors and totaled $369.6 million, or 1.8% of total loans at March 31, 2026, an increase of $66.5 million from December 31, 2025, as shown in the table below.

Previous wording

The Company participates in credits of large, publicly traded companies which are defined by regulation as shared national credits, or SNCs. Regulations define SNCs as loans exceeding $100 million that are shared by three or more financial institutions. The Company typically participates in these loans when business operations are maintained in the local communities or regional markets and opportunities to provide other banking services are present. The balance of SNC loans totaled $1.6 billion at both September 30, 2025 and December 31, 2024. Additional unfunded commitments at September 30, 2025 totaled $2.4 billion.

Current wording

The Company participates in credits of large, publicly traded companies which are defined by regulation as shared national credits, or SNCs. Regulations define SNCs as loans exceeding $100 million that are shared by three or more financial institutions. The Company typically participates in these loans when business operations are maintained in the local communities or regional markets and opportunities to provide other banking services are present. The balance of SNC loans totaled $1.7 billion at March 31, 2026 and $1.5 billion December 31, 2025. Additional unfunded commitments at March 31, 2026 totaled $2.4 billion.

Previous wording

Total assets of the Company were $32.3 billion at September 30, 2025 and $32.0 billion at December 31, 2024. Earning assets (excluding the allowance for credit losses on loans and fair value adjustments on available for sale debt securities) amounted to $31.1 billion at September 30, 2025 and $30.9 billion at December 31, 2024, and consisted of 57% in loans and 32% in investment securities at September 30, 2025.

Current wording

Total assets of the Company were $35.7 billion at March 31, 2026 and $32.9 billion at December 31, 2025. Earning assets (excluding the allowance for credit losses on loans and fair value adjustments on available for sale debt securities) amounted to $34.3 billion at March 31, 2026 and $31.4 billion at December 31, 2025, and consisted of 60% in loans and 28% in investment securities at March 31, 2026.

Previous wording

September 30, 2025 compared to December 31, 2024. These decreases were partly offset by growth of $309.0 million in U.S. government and federal agency obligations. At September 30, 2025, the duration of the available for sale investment portfolio was 4.4 years, and maturities and pay downs of approximately $1.3 billion are expected to occur during the next 12 months.

Current wording

Total average available for sale debt securities decreased $269.0 million from the previous quarter to $8.9 billion, at fair value. The decrease in available for sale debt securities was mainly the result of lower average balances of mortgage-backed and asset-backed securities. During the first quarter of 2026, the unrealized loss on available for sale debt securities increased $40.7 million to $687.5 million, at period end. Also, during the first quarter of 2026, maturities and pay downs of available for sale debt securities were $410.7 million. At March 31, 2026, the duration of the available for sale investment portfolio was 4.2 years, and maturities and pay downs of approximately $1.2 billion are expected to occur during the next 12 months.

Previous wording

The Company’s most liquid assets include balances at the Federal Reserve Bank, federal funds sold, and available for sale debt securities, as follows:

Current wording

The Company’s most liquid assets include balances at the Federal Reserve Bank, federal funds sold, available for sale debt securities, and securities purchased under agreements to resell, as follows:

Previous wording

Interest earning balances at the Federal Reserve Bank, which have overnight maturities and are used for general liquidity purposes, totaled $2.5 billion at September 30, 2025 and decreased $147 thousand from December 31, 2024. At September 30, 2025, the Company did not have a balance of federal funds sold, which are funds lent to the Company's correspondent bank customers with overnight maturities. The fair value of the available for sale debt portfolio was $9.0 billion at September 30, 2025 and included an unrealized net loss of $688.5 million. The total net unrealized loss included net losses of $640.7 million on mortgage-backed and asset-backed securities and $52.9 million on state and municipal obligations.

Current wording

Interest earning balances at the Federal Reserve Bank, which have overnight maturities and are used for general liquidity purposes, totaled $3.3 billion at March 31, 2026 and increased $526 million from December 31, 2025. At March 31, 2026, the Company's balance of federal funds sold totaled $630 thousand, which are funds lent to the Company's correspondent bank customers with overnight maturities. The fair value of the available for sale debt portfolio was $8.6 billion at March 31, 2026 and included an unrealized net loss of $687.5 million. The total net unrealized loss included net losses of $620.0 million on mortgage-backed and asset-backed securities and $51.0 million on state and municipal obligations.

Previous wording

The Company also holds securities sold under agreements to repurchase ("resale agreements") which are an additional source of liquidity. At September 30, 2025, the Company's resale agreements totaled $850.0 million and mature from 2028 through 2030. Under these agreements, the Company lends funds to upstream financial institutions and holds marketable securities, safe-kept by a third-party custodian, as collateral. This collateral totaled $875.1 million in fair value at September 30, 2025.

Current wording

The Company holds securities purchased under agreements to resell (“resale agreements”) which totaled $850.0 million at March 31, 2026, with maturities in 2028 through 2030. Under these agreements, the Company lends funds to upstream financial institutions and holds marketable securities, safe-kept by a third-party custodian, as collateral. This collateral totaled $871.1 million in fair value at March 31, 2026.

Previous wording

The Company's available for sale debt securities portfolio has a diverse mix of high quality and liquid investment securities with a duration of 4.4 years at September 30, 2025. Approximately $1.3 billion of the Company's available for sale debt portfolio is expected to mature or pay down during the next 12 months, and these funds offer substantial resources to meet either new loan demand or offset potential reductions in the Company's deposit funding base. The Company pledges portions of its investment securities portfolio to secure public fund deposits, securities sold under agreements to repurchase, trust funds, letters of credit issued by the FHLB, and borrowing capacity at the FHLB and the Federal Reserve Bank. Total investment securities pledged for these purposes were as follows:

Current wording

The Company's available for sale debt securities portfolio has a diverse mix of high quality and liquid investment securities with a duration of 4.2 years at March 31, 2026. Approximately $1.2 billion of the Company's available for sale debt portfolio is expected to mature or pay down during the next 12 months, and these funds offer substantial resources to meet either new loan demand or offset potential reductions in the Company's deposit funding base. The Company pledges portions of its investment securities portfolio to secure public fund deposits, securities sold under agreements to repurchase, trust funds, letters of credit issued by the FHLB, and borrowing capacity at the FHLB and the Federal Reserve Bank. Total investment securities pledged for these purposes were as follows:

Previous wording

The average loans to deposits ratio is a measure of a bank's liquidity, and the Company’s average loans to deposits ratio was 70.1% for the nine months ended September 30, 2025. Core customer deposits, defined as non-interest bearing, interest checking, savings, and money market deposit accounts totaled $23.0 billion and represented 90.5% of the Company's total deposits at September 30, 2025. These core deposits are normally less volatile, as they are often with customer relationships tied to other products offered by the Company, promoting long lasting relationships and stable funding sources. Core deposits increased $136.2 million at September 30, 2025 compared to December 31, 2024, primarily due to an increase in commercial deposits of $451.4 million, partly offset by a decrease in consumer deposits of $265.9 million. While the Company considers core consumer and wealth management deposits less volatile, corporate deposits could decline if interest rates increase significantly, encouraging corporate customers to increase investing activities, or if the economy deteriorates and companies experience lower cash inflows, reducing deposit balances. If these corporate deposits decline, the Company's funding needs may be met by liquidity supplied by investment security maturities and pay downs expected to total $1.3 billion over the next year, as noted above. In addition, as shown in the table of collateral available for future advances below, the Company has borrowing capacity of $6.5 billion through advances from the FHLB and the Federal Reserve.

Current wording

The average loans to deposits ratio is a measure of a bank's liquidity, and the Company’s average loans to deposits ratio was 73.4% for the three months ended March 31, 2026. Core customer deposits, defined as non-interest bearing, interest checking, savings, and money market deposit accounts totaled $25.9 billion and represented 91.4% of the Company's total deposits at March 31, 2026. These core deposits are normally less volatile, as they are often with customer relationships tied to other products offered by the Company, promoting long lasting relationships and stable funding sources. Core deposits increased $2.7 billion at March 31, 2026 compared to December 31, 2025, primarily due to an increase in wealth deposits from the acquisition of FineMark Holdings, Inc. While the Company considers core retail banking and wealth deposits less volatile, corporate deposits could decline if interest rates increase significantly, encouraging corporate customers to increase investing activities, or if the economy deteriorates and companies experience lower cash inflows, reducing deposit balances. If these corporate deposits decline, the Company's funding needs may be met by liquidity supplied by investment security maturities and pay downs expected to total $1.2 billion over the next year, as noted above. In addition, as shown in the table of collateral available for future advances below, the Company has borrowing capacity of $6.9 billion through advances from the FHLB and the Federal Reserve.

Previous wording

Certificates of deposit of $100,000 or greater totaled $1.4 billion at September 30, 2025. These deposits are normally considered more volatile and higher costing, and comprised 5.6% of total deposits at September 30, 2025.

Current wording

Certificates of deposit of $100,000 or greater totaled $1.4 billion at March 31, 2026. These deposits are normally considered more volatile and higher costing, and comprised 5.0% of total deposits at March 31, 2026.

Previous wording

During the third quarter of 2024, the Company issued $100.0 million of short-term brokered certificates of deposit, which all matured by December 31, 2024. The Company may occasionally issue brokered certificates of deposit to test the reliability of this potential funding source. While it is not clear how many brokered certificates of deposit the market would allow the Company to issue, the Company believes brokered certificates of deposits may be an additional, reliable source of liquidity during periods of stress in the banking industry.

Current wording

The Company may occasionally issue short-term brokered certificates of deposit to test the reliability of this potential funding source. While it is not clear how many brokered certificates of deposit the market would allow the Company to issue, the Company believes brokered certificates of deposits may be an additional, reliable source of liquidity during periods of stress in the banking industry.

Previous wording

Federal funds purchased, which totaled $137.7 million at September 30, 2025, are unsecured overnight borrowings obtained mainly from upstream correspondent banks with which the Company maintains approved lines of credit. At September 30, 2025, the Company had approved lines of credit totaling $4.6 billion. Since these borrowings are unsecured and limited by market trading activity, their availability may be less certain than collateralized sources of borrowings. Retail repurchase agreements are offered to customers wishing to earn interest in highly liquid balances and are used by the Company as a funding source considered to be stable, but short-term in nature. Repurchase agreements are collateralized by securities in the Company's investment portfolio. Total repurchase agreements at September 30, 2025 were comprised of non-insured customer funds totaling $2.3 billion, and securities pledged as collateral for these retail agreements totaled $2.4 billion at September 30, 2025. The Company also borrows on a secured basis through advances from the FHLB. The advances are generally short-term, fixed interest rate borrowings. There were no advances outstanding from the FHLB at September 30, 2025.

Current wording

Federal funds purchased, which totaled $129.7 million at March 31, 2026, are unsecured overnight borrowings obtained mainly from upstream correspondent banks with which the Company maintains approved lines of credit. At March 31, 2026, the Company had approved lines of credit totaling $4.4 billion. Since these borrowings are unsecured and limited by market trading activity, their availability may be less certain than collateralized sources of borrowings. Retail repurchase agreements are offered to customers wishing to earn interest in highly liquid balances and are used by the Company as a funding source considered to be stable, but short-term in nature. Repurchase agreements are collateralized by securities in the Company's investment portfolio. Total repurchase agreements at March 31, 2026 were comprised of non-insured customer funds totaling $2.4 billion, and securities pledged as collateral for these retail agreements totaled $2.5 billion at March 31, 2026. The Company also borrows on a secured basis through advances from the FHLB. The advances are generally short-term, fixed interest rate borrowings. There were no advances outstanding from the FHLB at March 31, 2026.

Previous wording

The Company 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, should the need arise. No commercial paper has been outstanding during the past ten years. The Company has no subordinated or hybrid debt instruments which would affect future borrowing capacity. Because of its lack of significant long-term debt, the Company believes that through its Commercial Tradable Products division or in other public debt markets, it could generate additional liquidity from sources such as jumbo certificates of deposit, privately placed corporate notes or other forms of debt.

Current wording

The Company 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, should the need arise. No commercial paper has been outstanding during the past ten years. The Company has no subordinated or hybrid debt instruments which would affect future borrowing capacity. Because of its lack of significant long-term debt, the Company believes that through its Commercial