INDEPENDENT BANK CORP /MI/

Previous wording

It is against this backdrop that we discuss our results of operations and financial condition for the first quarter of 2025 as compared to earlier periods.

Current wording

It is against this backdrop that we discuss our results of operations and financial condition for the second quarter of 2025 as compared to earlier periods.

Previous wording

Summary. We recorded net income of $15.6 million and $16.0 million during the three months ended March 31, 2025 and 2024, respectively. The decrease in 2025 first quarter results as compared to 2024 is due primarily to a $2.8 unfavorable change in the fair value due to price of capitalized mortgage loan servicing rights and a $0.9 million increase in costs (recoveries) related to unfunded lending commitments that were partially offset by a $3.5 million increase in net interest income.

Current wording

Summary. We recorded net income of $16.9 million and $18.5 million during the three months ended June 30, 2025 and 2024, respectively. The decrease in 2025 second quarter results as compared to 2024 is due primarily to a prior year $2.7 million gain on Visa Inc. common stock, a $1.1 million unfavorable change in the fair value due to price of capitalized mortgage loan servicing rights and a $1.5 million increase in the provision for credit losses that were partially offset by a $3.3 million increase in net interest income.

Previous wording

the income or yield that we earn on those assets and the manner and cost of funding our interest-earning assets. Certain macro-economic factors can also influence our net interest income such as the level and direction of interest rates, the difference between short-term and long-term interest rates (the steepness of the yield curve) and the general strength of the economies in which we are doing business. Finally, risk management plays an important role in our level of net interest income. The ineffective management of credit risk and interest-rate risk in particular can adversely impact our net interest income.

Current wording

Net interest income. Net interest income is the most important source of our earnings and thus is critical in evaluating our results of operations. Changes in our net interest income are primarily influenced by our level of interest-earning assets and the income or yield that we earn on those assets and the manner and cost of funding our interest-earning assets. Certain macro-economic factors can also influence our net interest income such as the level and direction of interest rates, the difference between short-term and long-term interest rates (the steepness of the yield curve) and the general strength of the economies in which we are doing business. Finally, risk management plays an important role in our level of net interest income. The ineffective management of credit risk and interest-rate risk in particular can adversely impact our net interest income.

Previous wording

Our net interest income totaled $43.7 million during the first quarter of 2025, an increase of $3.5 million, or 8.7% from the year-ago period. This increase primarily reflects a $167.9 million increase in average interest-earning assets and a 19 basis point increase in our tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”).

Current wording

Our net interest income totaled $44.6 million during the second quarter of 2025, an increase of $3.3 million, or 7.9% from the year-ago period. This increase primarily reflects a $142.7 million increase in average interest-earning assets and an 18 basis point increase in our tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”).

Previous wording

The increase in average interest-earning assets in the first quarter of 2025 as compared to the same period in 2024 primarily reflects growth in commercial and mortgage loans funded from a decrease in securities available for sale and an increase in core deposits.

Current wording

The increase in average interest-earning assets in both the three and six month periods of 2025 as compared to the same periods in 2024 primarily reflects growth in commercial and mortgage loans funded from a decrease in securities available for sale and an increase in core deposits.

Previous wording

The increases in our net interest margin during the three month period in 2025 is attributed to a 25 basis point decrease in interest expense as a percent of average interest-earning assets ("Cost of Funds") that was only partially offset by a six basis point decrease in interest income as a percent of average interest-earning assets ("Asset Yield") . These decreases are primarily attributed to the decreases in the federal funds rate since September of 2024. Our Cost of Funds has been positively impacted by deposit pricing sensitivity to the decreases in interest rates discussed above as well as changes in funding mix (such as shifting from generally higher cost brokered deposits and other borrowings to relatively lower cost core deposits). Our Asset Yield has been negatively impacted by lower rates on variable rate loans as well as new loans being originated at lower rates than existing loans being paid off that has been partially offset by a shift in earning asset mix from generally lower rate investment securities to higher rate loans. See Asset/liability management.

Current wording

The increases in our net interest margin during the three and six month periods in 2025 is attributed to 28 basis point and 27 basis point decreases, respectfully in interest expense as a percent of average interest-earning assets ("Cost of Funds") that were only partially offset by 10 and eight basis point decreases, respectfully in interest income as a percent of average interest-earning assets ("Asset Yield") during those same periods. These decreases are primarily attributed to the decreases in the federal funds rate since September of 2024. Our Cost of Funds has been positively impacted by deposit pricing sensitivity to the decreases in interest rates discussed above as well as changes in funding mix (such as shifting from generally higher cost brokered deposits and other borrowings to relatively lower cost core deposits). Our Asset Yield has been negatively impacted by lower rates on variable rate loans as well as new loans being originated at lower rates than existing loans being paid off that has been partially offset by a shift in earning asset mix from generally lower rate investment securities to higher rate loans. See Asset/liability management.

Previous wording

Our net interest income is also impacted by our level of non-accrual loans. In the first quarter of 2025, non-accrual loans averaged $6.6 million. In the first quarter of 2024, non-accrual loans averaged $3.9 million. In addition, in the first quarter of 2025 we had net recoveries of $0.11 million of unpaid interest on loans placed on or taken off non-accrual or on loans previously charged-off compared to net recoveries of $0.29 million during the same period in 2024.

Current wording

Our net interest income is also impacted by our level of non-accrual loans. In the second quarter and first six months of 2025, non-accrual loans averaged $7.7 million and $7.2 million, respectively. In the second quarter and first six months of 2024, non-accrual loans averaged $4.0 million and $3.9 million, respectively. In addition, in the second quarter and first six months of 2025 we had netrecoveriesof $0.1 million and $0.2 million, respectively of unpaid interest on loans placed on or taken off non-accrual or on loans previously charged-off compared to net recoveries of $0.1 million and $0.4 million, respectively, during the same periods in 2024.

Previous wording

Provision for credit losses. The provision for credit losses was an expense of $0.72 million and an expense of $0.74 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Provision for credit losses. The provision for credit losses was an expense of $1.50 million and an expense of $0.02 million for the three months ended June 30, 2025 and 2024, respectively. During the six month periods ended June 30, 2025 and 2024, the provision for credit losses was an expense of $2.22 million and an expense of $0.76 million, respectively.

Previous wording

The provision for credit losses on loans in 2025 and 2024 was an expense of $0.72 million and $1.87 million and reflects our assessment of the allowance for credit losses (the “ACL”) on loans taking into consideration factors such as loan growth, loan mix, levels of non-performing and classified loans, economic conditions and loan net charge-offs. While we use relevant information to recognize losses on loans, additional provisions for related losses may be necessary based on changes in economic conditions, customer circumstances and other credit risk factors. See “Portfolio Loans and asset quality” for a discussion of the various components of the ACL and their impact on the provision for credit losses in 2025. The decrease in the provision for credit losses expense from the prior year period is primarily due to a decrease in pooled allocation rates on commercial and retail loans that was partially offset by increases in the adjustment to allocations based on subjective factors (due in part to an increase in economic uncertainty during the first quarter) and specific allocations of the ACL.

Current wording

The provision reflects our assessment of the allowance for credit losses (the “ACL”) taking into consideration factors such as loan growth, loan mix, levels of non-performing and classified loans, economic conditions and loan net charge-offs. While we use relevant information to recognize losses on loans, additional provisions for related losses may be necessary based on changes in economic conditions, customer circumstances and other credit risk factors. See “Portfolio Loans and asset quality” for a discussion of the various components of the ACL and their impact on the provision for credit losses in 2025.

Previous wording

The provision for credit losses on securities HTM in 2025 and 2024 were credits of $0.003 million and $1.13 million, respectively. The change in provision for credit losses on securities HTM reflects a partial recovery during the first quarter of 2024 of one corporate security (Signature Bank) totaling $1.125 million. See “Securities” below and note #3 to the interim Condensed Consolidated Financial Statements.

Current wording

The year to date provision for credit losses on securities HTM in 2025 and 2024 was an expense (credit) of $0.001 million and $(1.127) million, respectively. The change in provision for credit losses on securities HTM reflects a partial recovery during the first quarter of 2024 of one corporate security (Signature Bank) totaling $1.125 million. See “Securities” below and note #3 to the interim Condensed Consolidated Financial Statements.

Previous wording

Non-interest income. Non-interest income is a significant element in assessing our results of operations. Non-interest income totaled $10.4 million during the first quarter of 2025 compared to $12.6 million in the first quarter of 2024.

Current wording

Non-interest income. Non-interest income is a significant element in assessing our results of operations. Non-interest income totaled $11.3 million during the second quarter of 2025 compared to $15.2 million in the second quarter of 2024. For the first six months of 2025, non-interest income totaled $21.7 million compared to $27.7 million for the first six months of 2024.

Previous wording

(1)Mortgage loan salesin the first quarters of 2025 and 2024 include$8.7 million and$6.8 million, respectively, of portfolio loan transactions. These transactions were performed for interest rate risk purposes.

Current wording

(1)Mortgage loan salesin the second quarters of 2025 and 2024 include $6.7 million and$1.4 million, respectively, of portfolio loan transactions. Mortgage loan sales during the firstsix months of 2025 and 2024 include $15.4 million and$8.1 million, respectively, of portfolio loan transactions. These transactions were performed for interest rate risk purposes.

Previous wording

Our Loan Sales Margin is impacted by several factors including competition and the manner in which the loan is sold. Net gains on mortgage loans are also impacted by recording fair value accounting adjustments. Excluding these fair value accounting adjustments, the Loan Sales Margin would have been 1.91% and 1.21% in the first quarters of 2025 and 2024, respectively. The increase in the Loan Sales Margin (excluding fair value adjustments) in the first quarter of 2025 was generally due in part to higher primary-to-secondary market pricing spreads relative to the same period last year.

Current wording

Our Loan Sales Margin is impacted by several factors including competition and the manner in which the loan is sold. Net gains on mortgage loans are also impacted by recording fair value accounting adjustments. Excluding these fair value accounting adjustments, the Loan Sales Margin would have been 1.59% and 1.32% in the second quarters of 2025 and 2024, respectively, and would have been 1.73% and 1.28% in the first six months of 2025 and 2024, respectively. These increases in the Loan Sales Margin (excluding fair value adjustments) were generally due in part to higher primary-to-secondary market pricing spreads relative to the same period last year.

Previous wording

We recorded a net loss of $0.33 million and a net loss of $0.27 million on the sale of securities AFS for the first three months of 2025 and 2024, respectively. We recorded no credit related charges in either 2025 or 2024 on securities AFS. See “Securities” below and note #3 to the interim Condensed Consolidated Financial Statements.

Current wording

We recorded a net loss of $0.32 million and $0.27 million on the sale of securities AFS for the first six months of 2025 and 2024, respectively. We recorded no credit related charges in either 2025 or 2024 on securities AFS. See “Securities” below and note #3 to the interim Condensed Consolidated Financial Statements.

Previous wording

Mortgage loan servicing, net, generated income (expense) of $(0.6) million and $2.7 million in the first quarters of 2025 and 2024, respectively. The significant variances in mortgage loan servicing, net are primarily due to changes in the fair value of capitalized mortgage loan servicing rights associated with changes in interest rates and the associated expected future prepayment levels and expected float rates as well as a decline in servicing revenue. The decline in servicing revenue is attributed to the sale of approximately $931 million of mortgage servicing rights on January 31, 2025.

Current wording

Mortgage loan servicing, net, generated income of $0.5 million and $2.1 million in the second quarters of 2025 and 2024, respectively. For the first six months of 2025 and 2024, mortgage loan servicing, net, generated income (expense) of $(0.1) million and $4.8 million, respectively. The significant variances in mortgage loan servicing, net are primarily due to changes in the fair value of capitalized mortgage loan servicing rights associated with changes in interest rates and the associated expected future prepayment levels and expected float rates as well as a decline in servicing revenue. The decline in revenue, net in the table below is attributed to the sale of approximately $931 million of mortgage servicing rights on January 31, 2025.

Previous wording

(1) On January 31, 2025 we sold $931.6 million of mortgage loan servicing rights (26.3% of total servicing portfolio) and transferred the servicing on March 3, 2025. This sale represented approximately $13.1 million (27.9%) of the total capitalized mortgage loan servicing right asset. While there remains a customary hold back of final settlement funds of approximately $0.5 million relating to this transaction, we are not aware of any issues that will have a material impact on this final payment. Transaction expenses relating to this sale were approximately $0.3 million and was expensed during the first quarter of 2025.

Current wording

(1) On January 31, 2025 we sold $931.6 million of mortgage loan servicing rights (26.3% of total servicing portfolio) and transferred the servicing on March 3, 2025. This sale represented approximately $13.1 million (27.9%) of the total capitalized mortgage loan servicing right asset. While there remains a customary hold back of final settlement funds of approximately $0.7 million relating to this transaction, we are not aware of any issues that will have a material impact on this final payment. While we have a target date of the fourth quarter, 2025, we have until the first quarter, 2026 to receive this final payment. Transaction expenses relating to this sale were approximately $0.2 million and was expensed during the first quarter of 2025.

Previous wording

At March 31, 2025 we were servicing approximately $2.61 billion in mortgage loans for others on which servicing rights have been capitalized. This servicing portfolio had a weighted average coupon rate of 4.35% and a weighted average service fee of approximately 25.7 basis points. Capitalized mortgage loan servicing rights at March 31, 2025 totaled $32.2 million, representing approximately 123.2 basis points on the related amount of mortgage loans serviced for others.

Current wording

At June 30, 2025 we were servicing approximately $2.61 billion in mortgage loans for others on which servicing rights have been capitalized. This servicing portfolio had a weighted average coupon rate of 4.42% and a weighted average service fee of approximately 25.7 basis points. Capitalized mortgage loan servicing rights at June 30, 2025 totaled $32.1 million, representing approximately 122.6 basis points on the related amount of mortgage loans serviced for others.

Previous wording

As summarized in the table above, the decrease in capitalized mortgage loan servicing rights during the first quarter of 2025 is primarily attributed to the originated mortgage loan servicing rights sale. This transaction was executed in part to reduce the amount of exposure the bank had to rate variances that may impact the mortgage servicing right asset valuation in future periods. With this sale, it is expected mortgage servicing revenue, net will decrease commensurate with amount of servicing sold relative to the same periods in 2024. While the magnitude of fair value adjustments would also be expected to decrease, those adjustments are dependent upon factors that are harder to predict.

Current wording

As summarized in the table above, the decrease in capitalized mortgage loan servicing rights during the first six months of 2025 is primarily attributed to the originated mortgage loan servicing rights sale. This transaction was executed in part to reduce the amount of exposure the bank had to rate variances that may impact the mortgage servicing right asset valuation in future periods. With this sale, it is expected mortgage loan servicing, net will decrease commensurate with the amount of servicing sold relative to the same periods in 2024. While the magnitude of fair value adjustments would also be expected to decrease, those adjustments are dependent upon factors that are harder to predict.

Previous wording

Bank owned life insurance increased by $0.1 million in the first quarter of 2025, compared to the same prior year period due to an increase in crediting rate.

Current wording

Bank owned life insurance increased by $0.1 million and $0.2 million in the second quarter and first six months of 2025, respectively compared to the same prior year periods due to an increase in crediting rate.

Previous wording

Other income in the table above increased by $0.4 million in the first quarter of 2025, compared to the same prior year period. The increase in the first quarter of 2025 was primarily due to higher commercial loan swap fees.

Current wording

Other income in the table above increased by $0.4 million in the first six months of 2025, as compared to the same prior year period due to higher commercial loan swap fees.

Previous wording

Compensation and employee benefits expenses, in total, decreased $0.4 million on a quarterly comparative basis.

Current wording

Compensation and employee benefits expenses, in total, decreased $0.1 million on a quarterly comparative basis and decreased $0.5 million for the first six months of 2025 compared to the same periods in 2024.

Previous wording

Compensation expense decreased by $0.1 million in the first quarter of 2025 compared to the same period in 2024. This comparative decrease in 2025 were primarily due to an increase in deferred loan origination costs due in part to higher commercial and mortgage loan volume.and a decrease in mortgage lending and other retail personnel that were only partially offset by salary increases that were predominantly effective on January 1, 2025.

Current wording

Compensation expense increased by $0.2 million and $0.1 million in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024. These comparative increases in 2025 were primarily due to salary increases that were predominantly effective on January 1, 2025, that were partially offset by deferred loan origination costs due in part to higher commercial and mortgage loan volume.and a decrease in mortgage lending and other retail personnel.

Previous wording

Payroll taxes and employee benefits decreased by $0.3 million in the first quarter of 2025, respectively compared to the same period in 2024. The decrease was primarily due to a decrease in employee medical insurance costs.

Current wording

Payroll taxes and employee benefits decreased by $0.1 million and $0.4 million in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024, due primarily to a decrease in employee medical insurance costs.

Previous wording

Data processing expense increased by $0.5 million in the first quarter of 2025 compared to the same prior year period due in part to core data processor annual asset growth and CPI related cost increases as well as new solutions implemented during this time frame.

Current wording

Data processing expense increased by $0.6 million and $1.1 million in the second quarter and first six months of 2025, respectively, compared to the same prior year periods due in part to core data processor annual asset growth and CPI related cost increases as well as new solutions implemented during this time frame.

Previous wording

Advertising increased by $0.4 million in the first quarter of 2025 compared to the same prior year period due primarily to the timing of strategic marketing spend relative to the prior year.

Current wording

Advertising increased by $0.4 million in the first six months of 2025, compared to the same prior year period due primarily to the timing of strategic marketing spend relative to the prior year.

Previous wording

Loan and collection increased by $0.3 million in the first quarter of 2025 compared to the same period in 2024 due primarily to higher attorney and other general collection related expenses.

Current wording

Loan and collection expense increased by $0.3 million in the first six months of 2025, compared to the same prior year period due primarily to higher attorney and other general collection related expenses.

Previous wording

Costs (recoveries) related to unfunded lending commitments increased by $0.8 million in the first quarter of 2025 compared to the same prior year period. The increase was primarily due to increases in the changes to both the balance of lending commitments and the loss rates applied to those lending commitments.

Current wording

Recoveries related to unfunded lending commitments decreased by $0.3 million in the second quarter of 2025 and increased $0.6 million during the first six months of 2025, compared to the same prior year periods. These changes are impacted by changes to the balance of lending commitments and the loss rates applied to those lending commitments during the respective time periods.

Previous wording

Other expense increased by $0.5 million in the first quarter of 2025 compared to the same prior year period due primarily to costs related to the capitalized mortgage loan servicing right sale and higher Michigan Corporate Income Tax (due to an increase in taxable base). See “Non-interest income” above.

Current wording

Other expense increased by $0.1 million and $0.6 million in the second quarter and first six months of 2025, respectively, due primarily to costs related to the capitalized mortgage loan servicing right sale (six month period), higher fraud related losses, real estate property write down and higher Michigan Corporate Income Tax (due to an increase in taxable base). See “Non-interest income” above.

Previous wording

Income tax expense. We recorded an income tax expense of $3.5 million in the first quarter of 2025. This compares to an income tax expense of $3.8 million in the first quarter of 2024. The change in expense in thefirst quarter of 2025 compared to the same period in 2024 is due in part to changes in pretax income.

Current wording

Income tax expense. We recorded an income tax expense of $3.8 million and $7.3 million in the second quarter and the first six months of 2025, respectively. This compares to an income tax expense of $4.6 million and $8.5 million in the second quarter and the first six months of 2024, respectively. The changes in expense for the first six months of 2025 compared to the same period in 2024 is primarily due to changes in pretax income.

Previous wording

Summary. Our total assets decreased by $9.7 million during the first three months of 2025. Loans, excluding loans held for sale, were $4.07 billion at March 31, 2025, compared to $4.04 billion at December 31, 2024. Commercial loans increased while mortgage loans and installment loans each decreased during the first three months of 2025. (See “Portfolio Loans and asset quality.”) Securities available for sale and securities held to maturity together totaled $866.6 million at March 31, 2025, a decline of $32.0 million since December 31, 2024.

Current wording

Summary. Our total assets increased by $80.4 million during the first six months of 2025. Loans, excluding loans held for sale, were $4.16 billion at June 30, 2025, compared to $4.04 billion at December 31, 2024. Commercial loans and mortgage loans increased while installment loans decreased during the first six months of 2025. (See “Portfolio Loans and asset quality.”) Securities available for sale and securities held to maturity together totaled $838.8 million at June 30, 2025, a decline of $59.8 million since December 31, 2024.

Previous wording

Deposits totaled $4.63 billion at March 31, 2025, a decrease of $20.2 million from December 31, 2024. The decrease in deposits from December 31, 2024, is due to decreases in non-interest bearing and brokered time deposits that were partially offset by increases in savings and interest-bearing checking, reciprocal and time deposits .

Current wording

Deposits totaled $4.66 billion at June 30, 2025, an increase of $5.3 million from December 31, 2024. The increase in deposits from December 31, 2024, is due to increases in reciprocal and brokered time deposits that were partially offset by decreases in non-interest bearing, savings and interest-bearing checking and time deposits.

Previous wording

On April 1, 2022, we transferred certain securities AFS with an amortized cost and unrealized loss at the date of transfer of $418.1 million and $26.5 million, respectively to securities HTM. The transfer was made at fair value, with the unrealized loss becoming part of the purchase discount which will be accreted over the remaining life of the securities. The other comprehensive loss component is separated from the remaining available for sale securities and is accreted over the remaining life of the securities transferred. Based upon our liquidity and capital resources (as explained in more detail

Current wording

On April 1, 2022, we transferred certain securities AFS with an amortized cost and unrealized loss at the date of transfer of $418.1 million and $26.5 million, respectively to securities HTM. The transfer was made at fair value, with the unrealized loss becoming part of the purchase discount which will be accreted over the remaining life of the securities. The other comprehensive loss component is separated from the remaining available for sale securities and is accreted over the remaining life of the securities transferred. Based upon our liquidity and capital resources (as explained in more detail below under "Liquidity and capital resources"), we believe that we have the ability and intent to hold these securities until they mature, at which time we expect to receive full value for these securities.

Previous wording

Securities AFS in unrealized loss positions are evaluated quarterly for impairment related to credit losses. For securities AFS in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities AFS that do not meet this criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, adverse conditions specifically related to the security and the issuer and the impact of changes in market interest rates on the market value of the security, among other factors. If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an ACL is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income, net of applicable taxes. No ACL for securities AFS was needed at March 31, 2025. See note #3 to the interim Condensed Consol idated Financial Statements included within this report for further discussion.

Current wording

Securities AFS in unrealized loss positions are evaluated quarterly for impairment related to credit losses. For securities AFS in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities AFS that do not meet this criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, adverse conditions specifically related to the security and the issuer and the impact of changes in market interest rates on the market value of the security, among other factors. If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an ACL is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehen sive income (loss), net of applicable taxes. No ACL for securities AFS was needed at June 30, 2025. The increase in unrealized losses during the second quarter and first six months of 2025 is primarily attributed to an increase in interest rates since December 31, 2024. See note #3 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.

Previous wording

Non-performing loans have increased modestly as a percent of Portfolio Loans since year-end 2024, reflecting a modest increase in non-performing mortgage loans.

Current wording

Non-performing loans have increased modestly as a percent of Portfolio Loans since year-end 2024, primarily due to an increase in non-performing mortgage loans.

Previous wording

Other real estate and repossessed assets totaled $0.41 million and $0.94 million at March 31, 2025, and December 31, 2024, respectively.

Current wording

Other real estate and repossessed assets totaled $0.43 million and $0.94 million at June 30, 2025, and December 31, 2024, respectively.

Previous wording

The ACL increased $0.7 million to $60.0 million at March 31, 2025 from $59.4 million at December 31, 2024, and was equal to 1.47% and 1.47% of total Portfolio Loans at March 31, 2025, and December 31, 2024, respectively.

Current wording

The ACL increased $1.8 million to $61.2 million at June 30, 2025 from $59.4 million at December 31, 2024, and was equal to 1.47% of total Portfolio Loans at both June 30, 2025, and December 31, 2024, respectively.

Previous wording

Since December 31, 2024, the ACL related to specific loans increased $1.4 million due primarily to one commercial loan addition and an increase to one existing commercial loan reserve during the first quarter of 2025. The ACL related to pooled analysis of loans decreased $2.4 million due primarily to a refinement in prepayment assumptions on mortgage loans.that included a breakdown between fixed and variable rate loans. The ACL related to subjective factors increased $1.7 million due primarily to an increase in economic uncertainty during the first quarter of 2025.

Current wording

Since December 31, 2024, the ACL related to specific loans increased $2.3 million due primarily to one commercial loan addition. The ACL related to pooled analysis of loans decreased $0.9 million due primarily to a refinement in prepayment assumptions on mortgage loans that included a breakdown between fixed and variable rate loans. The ACL related to subjective factors increased $0.4 million due primarily to loan growth during the first half of 2025.

Previous wording

Deposits totaled $4.63 billion and $4.65 billion at March 31, 2025, and December 31, 2024, respectively. The decrease in deposits is primarily due to decreases in non-interest bearing and brokered time deposits that were partially offset by increases in savings and interest-bearing checking, reciprocal and time deposits. Reciprocal deposits totaled$910.5 million and$907.0 million at March 31, 2025 and December 31, 2024, respectively. These deposits represent demand, money market and time deposits from our customers that have been placed through IntraFi Network. This service allows our customers to access multi-million dollar FDIC deposit insurance on deposit balances greater than the standard FDIC insurance maximum.

Current wording

Deposits totaled $4.66 billion and $4.65 billion at June 30, 2025, and December 31, 2024, respectively. Balances were relatively unchanged during the first half of 2025 as increases in brokered time and reciprocal deposits were offset by decreases in non-interest bearing, savings and interest-bearing checking and time deposits. Reciprocal deposits totaled$911.8 million and$907.0 million at June 30, 2025 and December 31, 2024, respectively. These deposits represent demand, money market and time deposits from our customers that have been placed through IntraFi Network. This service allows our customers to access multi-million dollar FDIC deposit insurance on deposit balances greater than the standard FDIC insurance maximum.

Previous wording

(1) These amounts exclude intercompany related deposits of $55.8 million and $54.8 million respectively. Uninsured deposits reported in our Call Report at March 31, 2025 and December 31, 2024 totaled $1,103.9 million and $1,114.7 million, respectively.

Current wording

(1) These amounts exclude intercompany related deposits of $54.2 million and $54.8 million at June 30, 2025 and December 31, 2024, respectively. Uninsured deposits reported in our Call Report at June 30, 2025 and December 31, 2024 totaled $1,075.8 million and $1,114.7 million, respectively.

Previous wording

Other borrowings, comprised primarily of FRB and FHLB borrowings, totaled $45.0 million at both March 31, 2025, and December 31, 2024.

Current wording

Other borrowings, comprised primarily of FRB and FHLB borrowings, totaled $102.0 million and $45.0 million at June 30, 2025, and December 31, 2024, respectively.