INDEPENDENT BANK CORP /MI/

Previous 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.

Current wording

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

Previous 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.

Current wording

Summary. We recorded net income of $17.5 million and $13.8 million during the three months ended September 30, 2025 and 2024, respectively. The increase in 2025 third quarter results as compared to 2024 is due primarily to a $3.6 million favorable change in the fair value due to price of capitalized mortgage loan servicing rights and a $3.5 million increase in the net interest income that were partially offset by a $1.5 million increase in non-interest expense.

Previous wording

We recorded net income of $32.5 million and $34.5 million during the six months ended June 30, 2025 and 2024, respectively. The decrease in 2025 year-to-date results as compared to 2024 is primarily due to a $3.9 million unfavorable change in the fair value due to price of capitalized mortgage loan servicing rights, the Visa Inc. common stock gain mentioned above, an increase in non-interest expense and an increase in the provision for credit losses that were partially offset by increases in net-interest income and gain on mortgage loans.

Current wording

We recorded net income of $50.0 million and $48.3 million during the nine months ended September 30, 2025 and 2024, respectively. The increase in 2025 year-to-date results as compared to 2024 is primarily due to a $10.3 million increase in net interest income that was partially offset by a $4.0 million increase in non-interest expense, a $2.0 million increase in the provision for credit losses, a $1.8 million decrease in mortgage loan servicing, net and the prior year including a $2.7 million gain on Visa Inc. common stock.

Previous 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”).

Current wording

Our net interest income totaled $45.4 million during the third quarter of 2025, an increase of $3.5 million, or 8.4% from the year-ago period. This increase primarily reflects a $173.8 million increase in average interest-earning assets and a 17 basis point increase in our tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”).

Previous wording

For the first six months of 2025, net interest income totaled $88.3 million, an increase of $6.8 million, or 8.3% from 2024. This increase primarily reflects a $155.2 million increase in average interest-earning assets and a 19 basis point increase in our net interest margin.

Current wording

For the first nine months of 2025, net interest income totaled $133.7 million, an increase of $10.3 million, or 8.3% from 2024. This increase primarily reflects a $161.6 million increase in average interest-earning assets and a 19 basis point increase in our net interest margin.

Previous 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.

Current wording

The increase in average interest-earning assets in both the three andnine month periods of 2025 as compared to the same periods in 2024 primarily reflects growth in commercial loans funded from decreases in installment loans and securities available for sale and held to maturity as well as an increase in deposits.

Previous 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.

Current wording

The increases in our net interest margin during the three and nine month periods in 2025 is attributed to 27 basis point decreases in interest expense as a percent of average interest-earning assets ("Cost of Funds") that were only partially offset by 10 basis point 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. Our Asset Yield has been negatively impacted by lower rates on variable rate earning assets. However, this impact has been partially offset by the origination of new fixed rate loans at rates higher than those in our current portfolio, as well as 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 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.

Current wording

Our net interest income is also impacted by our level of non-accrual loans. In the third quarter and first nine months of 2025, non-accrual loans averaged $10.8 million and $8.4 million, respectively. In the third quarter and first nine months of 2024, non-accrual loans averaged $4.5 million and $4.1 million, respectively. In addition, in the third quarter and first nine months of 2025 we had net recoveries of $0.1 million and $0.3 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 $0.5 million, respectively, during the same periods in 2024.

Previous 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.

Current wording

Provision for credit losses. The provision for credit losses was an expense of $1.99 million and an expense of $1.49 million for the three months ended September 30, 2025 and 2024, respectively. During the nine month periods ended September 30, 2025 and 2024, the provision for credit losses was an expense of $4.21 million and an expense of $2.25 million, respectively.

Previous wording

The $1.48 million increase in the provision for credit losses expense on loans from the prior year quarter to date period is primarily due to an increase in specific reserves on a $15.4 million commercial real estate loan that was downgraded during the quarter and an increase in pooled reserves on both commercial and retail loans that were partially offset by a four basis point decrease in allocations based on subjective factors and a reduction in specific reserves on two commercial and industrial loans due primarily to pay downs on those credits.

Current wording

The $0.50 million increase in the provision for credit losses expense on loans from the prior year quarter is primarily due to an increase in specific allocations of the ACL on commercial loans including a $13.8 million commercial real estate loan that was put on non-accrual during the quarter as well as an increase in pooled reserves on commercial loans that were partially offset by a two basis point decrease in allocations based on subjective factors. The decrease in the allocation based on subjective factors was due in part to a generally less pessimistic economic outlook including previous expectations of the impact of new tariffs.

Previous wording

The $0.33 million increase in the provision for credit losses expense on loans from the prior year to date period is primarily due to a net increase in specific reserve allocations on both the commercial and retail loans (see above discussion on commercial specific loans) as well as a decrease in gross recoveries of previously charged-off commercial and retail loans, that were partially offset by a decrease in pooled allocations in the retail loan portfolio.

Current wording

The $2.0 million increase in the provision for credit losses expense on loans from the prior year to date period is primarily due to a net increase in specific reserve allocations on commercial loans (see above discussion on commercial specific loans), an increase in net charge-offs in both the retail and commercial loan portfolios and an increase in pooled allocations in the commercial loan portfolio that were partially offset by decreases in pooled and specific allocations in the retail loan portfolio and a decrease in allocations based on subjective factors.

Previous 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.

Current wording

The year to date provision for credit losses on securities HTM in 2025 and 2024 was a credit of $0.040 million and $1.149 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 $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.

Current wording

Non-interest income. Non-interest income is a significant element in assessing our results of operations. Non-interest income totaled $11.9 million during the third quarter of 2025 compared to $9.5 million in the third quarter of 2024. For the first nine months of 2025, non-interest income totaled $33.7 million compared to $37.2 million for the first nine months of 2024.

Previous 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.

Current wording

(1)Mortgage loan salesin the third quarters of 2025 and 2024 include $4.5 million and$6.6 million, respectively, of portfolio loan transactions. Mortgage loan sales during the first nine months of 2025 and 2024 include $19.9 million and$14.7 million, respectively, of portfolio loan transactions. These transactions were performed for interest rate risk purposes.

Previous wording

(2) Net gains on mortgage loans in thesecond quarters of 2025 and 2024 include net gains of$0.08 million and$0.02 million, respectively, from portfolio loan transactions. Net gains during the firstsix months of 2025 and 2024 were$0.3 million and$0.1 million, respectively.

Current wording

(2) Net gains on mortgage loans in thethird quarters of 2025 and 2024 include net gains of$0.07 million and$0.12 million, respectively, from portfolio loan transactions. Net gains during the first nine months of 2025 and 2024 were $0.4 million and$0.3 million, respectively.

Previous wording

Mortgage loans originated and sold in both the quarter and year to date periods ending June 30 modestly increased in 2025 as compared to 2024. These increases reflect ongoing sales efforts by our mortgage lending team.

Current wording

Mortgage loans originated and sold in both the quarter and year to date periods ending September 30, were relatively unchanged in 2025 as compared to 2024. These results reflect ongoing sales efforts by our mortgage lending team.

Previous wording

Net gains on mortgage loans totaled $1.6 million and $1.3 million during the second quarters of 2025 and 2024, respectively and $3.9 million and $2.7 million during the first six months of 2025 and 2024, respectively. The increases from the prior year periods were primarily due to an increase in the Loan Sales Margin.

Current wording

Net gains on mortgage loans totaled $1.5 million and $2.2 million during the third quarters of 2025 and 2024, respectively and $5.4 million and $4.9 million during the first nine months of 2025 and 2024, respectively. The decrease from the prior year three month period is attributed to a combination of a lower Loan Sales Margin (due to lower fair value adjustments) and a decrease in the volume of loans sold while the increase during the year to date period is attributed to an increase in the loan sales margin.

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 1.59% 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.

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 1.42% and 1.40% in the third quarters of 2025 and 2024, respectively, and would have been 1.61% and 1.38% in the first nine months of 2025 and 2024, respectively. The increase in the Loan Sales Margin (excluding fair value adjustments) during the first nine months of 2025 was generally due in part to higher primary-to-secondary market pricing spreads relative to the same period last year. The contraction of the Loan Sales Margin during the third quarter of 2025 was due in part to certain loan marketing specials during the third quarter of 2025.

Previous wording

Gain on equity securities at fair value totaled zero and $2.7 million during the second quarters of 2025 and 2024, respectively. The gain in 2024 was the consequence of the exchange of our shares of Visa Class B-1 common stock on May 6, 2024 into a combination of Visa Class C common stock and Visa Class B-2 common stock. With the completion of this exchange, we were able to record the fair value of the Visa Class C common stock through income (as it was convertible into publicly traded Visa Class A common stock) while the Visa Class B-2 common stock continues to be carried at zero. See note #13 to the interim Condensed Consolidated Financial Statements.

Current wording

Gain on equity securities at fair value totaled zero and $2.7 million during the first nine months of 2025 and 2024, respectively. The gain in 2024 was the consequence of the exchange of our shares of Visa Class B-1 common stock on May 6, 2024 into a combination of Visa Class C common stock and Visa Class B-2 common stock. With the completion of this exchange, we were able to record the fair value of the Visa Class C common stock through income (as it was convertible into publicly traded Visa Class A common stock) while the Visa Class B-2 common stock continues to becarried at zero. See note #13 to the interim Condensed Consolidated Financial Statements.

Previous 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.

Current wording

We recorded a net loss of $0.36 million and $0.41 million on the sale of securities AFS for the first nine 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 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.

Current wording

Mortgage loan servicing, net, generated income (expense) of $0.1 million and $(3.1) million in the third quarters of 2025 and 2024, respectively. For the first nine months of 2025 and 2024, mortgage loan servicing, net, generated income (expense) of $(0.1)million and $1.7 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 $0.7 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.

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 $0.6 million relating to this transaction, we are not aware of any issues that will have a material impact on this final payment. 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 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.

Current wording

At September 30, 2025 we were servicing approximately $2.62 billion in mortgage loans for others on which servicing rights have been capitalized. This servicing portfolio had a weighted average coupon rate of 4.49% and a weighted average service fee of approximately 25.6 basis points. Capitalized mortgage loan servicing rights at September 30, 2025 totaled $31.5 million, representing approximately 120.3 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 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.

Current wording

As summarized in the table above, the decrease in capitalized mortgage loan servicing rights during the first nine 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 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.

Current wording

Bank owned life insurance increased by $0.1 million and$0.3 million in the third quarter and first nine 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 six months of 2025, as compared to the same prior year period due to higher commercial loan swap fees.

Current wording

Other income in the table above decreased by $0.4 million in the third quarter of 2025, as compared to the same prior year period due to lower commercial loan swap fees.

Previous wording

Non-interest expense increased by $0.4 million to $33.8 million and increased by $2.5 million to $68.0 million during the three- and six-month periods ended June 30, 2025, respectively, compared to the same periods in 2024.

Current wording

Non-interest expense increased by $1.5 million to $34.1 million and increased by $4.0 million to $102.2 million during the three- and nine-month periods ended September 30, 2025, respectively, compared to the same periods in 2024.

Previous 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.

Current wording

Compensation and employee benefits expenses, in total, increased $1.1 million on a quarterly comparative basis and increased $0.6 million for the first nine months of 2025 compared to the same periods in 2024.

Previous 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.

Current wording

Compensation expense increased by $0.7 million and $0.8 million in the third quarter and first nine 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 loan volume and higher per loan costs as well as a decrease in mortgage lending and other retail personnel.

Previous wording

Performance-based compensation decreased by $0.2 million and $0.3 million in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024. The decrease is due in part to lower expected incentive compensation payout for salaried and hourly employees

Current wording

Performance-based compensation decreased by $0.5 million and $0.8 million in the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024. The decrease is due in part to lower expected incentive compensation payout for salaried and hourly employees.

Previous 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.

Current wording

Payroll taxes and employee benefits increased by $1.0 million and $0.6 million in the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024, due primarily to increases in employee medical insurance costs and retirement costs.

Previous 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.

Current wording

Data processing expense increased by $0.4 million and $1.5 million in the third quarter and first nine 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

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.

Current wording

Other expense increased by $1.2 million in the first nine months of 2025, due primarily to costs related to the capitalized mortgage loan servicing right sale (nine month period - see “Non-interest income” above), higher fraud related losses, real estate property write down, higher travel and expense costs and higher Michigan Corporate Income Tax (due to an increase in taxable base).

Previous 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.

Current wording

Income tax expense. We recorded an income tax expense of $3.7 million and $11.0 million in the third quarter and the first nine months of 2025, respectively. This compares to an income tax expense of $3.5 million and $11.9 million in the third quarter and the first nine months of 2024, respectively. The changes in expense for the first nine months of 2025 compared to the same period in 2024 is primarily due to changes in pretax income that was partially offset by an increase in non-taxable income and certain low income housing and solar tax credits.

Previous wording

Our actual income tax expense is different than the amount computed by applying our statutory income tax rate to our income before income tax primarily due to tax-exempt interest income, tax-exempt income from the increase in the cash surrender value on life insurance, and differences in the value of stock awards that vest and stock options that are exercised as compared to the initial fair values that were expensed.

Current wording

Our actual income tax expense is different than the amount computed by applying our statutory income tax rate to our income before income tax primarily due to tax-exempt interest income, tax-exempt income from the increase in the cash surrender value on life insurance, differences in the value of stock awards that vest and stock options that are exercised as compared to the initial fair values that were expensed and certain low income housing and solar tax credits.

Previous 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.

Current wording

Summary. Our total assets increased by $155.0 million during the first nine months of 2025. Loans, excluding loans held for sale, were $4.20 billion at September 30, 2025, compared to $4.04 billion at December 31, 2024. Commercial loans and mortgage loans increased while installment loans decreased during the first nine months of 2025. (See “Portfolio Loans and asset quality.”) Securities available for sale and securities held to maturity together totaled $824.0 million at September 30, 2025, a decline of $74.6 million since December 31, 2024.

Previous 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.

Current wording

Deposits totaled $4.86 billion at September 30, 2025, an increase of $205.1 million from December 31, 2024. The increase in deposits from December 31, 2024, is due to increases in savings and interest-bearing checking, reciprocal, time and brokered time deposits that were partially offset by a decrease in non-interest bearing deposits.

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 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.

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, net of applicable taxes. No ACL for securities AFS was needed at September 30, 2025. The decrease in unrealized losses during the third quarter and first nine months of 2025 is primarily attributed to a decrease 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

On May 6, 2024, we exchanged 12,566 shares of Visa Inc. Class B-1 common stock (all of the Class B-1 shares we owned) for 2,493 shares of Visa Inc. Class C common stock and 6,283 shares of Visa Inc. Class B-2 common stock pursuant to an exchange offer conducted by Visa. With the completion of the exchange, we recorded a gain related to the Class C shares of $2.677 million based on the conversion privilege of those shares and the closing price of the Class A shares on May 3, 2024 (the exchange expiration date) of $268.49 per share. Subsequent to the exchange, we sold all of our Class C shares. See note #13 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.

Current wording

On May 6, 2024, we exchanged 12,566 shares of Visa Inc. Class B-1 common stock (all of the Class B-1 shares we owned) for 2,493 shares of Visa Inc. Class C common stock and 6,283 shares of Visa Inc. Class B-2 common stock pursuant to an exchange offer conducted by Visa. With the completion of the exchange, we recorded a gain related to the Class C shares of $2.7 million based on the conversion privilege of those shares and the closing price of the Class A shares on May 3, 2024 (the exchange expiration date) of $268.49 per share. Subsequent to the exchange, we sold all of our Class C shares. See note #13 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, primarily due to an increase in non-performing mortgage loans.

Current wording

Non-performing loans have increased as a percent of Portfolio Loans since year-end 2024, primarily due to the addition of one commercial real estate loan during the third quarter of 2025. See note #4.