INDEPENDENT BANK CORP /MI/
For the period ended Sep 30, 2026. Filed Nov 4, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 4, 2026
IBCP$36.31-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-05.
0000039311-26-000061
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-04.
0000039311-26-000067
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 154 previous paragraphs and 171 current paragraphs.
82 unchanged; 65 reworded; 21 added; 6 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 19 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
Based on a valuation of the assets acquired and liabilities assumed in the Merger, we recorded: $21.9 million of goodwill, a core deposit intangible (“CDI”) of $16.7 million, a discount of $12.9 million on loans and a $2.3 million write-up of property and equipment. The Merger impacted our third quarter 2026 results because of the inclusion of their operations for the first time this quarter as well as merger related expenses. See note #18 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
Current report
For the first nine months of 2026, net interest income totaled $150.0 million, an increase of $16.4 million, or 12.2% from 2025. This increase primarily reflects a $326.4 million increase in average interest-earning assets and a 20 basis point increase in the net interest income as a percent of average interest-earning assets, and a 19 basis point increase in tax equivalent net interest income as a percent of average interest-earning assets. See Reconci liation of Non-GAAP Financial Measures
Current report
The increase in our net interest margin during the three and nine month periods in 2026 primarily reflects favorable changes in earning-asset and funding mix, including growth in higher-yielding commercial loans and deposits and a decline in wholesale funding. The lower rate environment partially offset these benefits, as declines in earning-asset yields exceeded declines in interest-bearing funding costs. Merger-related loan discount accretion and a greater contribution from non-interest bearing funding sources ("free funds") also contributed to the increases. See Asset/liability management.
Current report
Interest and fees on loans include $0.9 million for the third quarter and first nine months of 2026, of accretion of the discount recorded on securities and loans acquired in the Merger. No such accretion related to the Merger was included in the prior year periods.
Current report
The quarter to date and year to date provision for credit losses on securities HTM was a credit of $0.03 million in 2026, compared with a quarter to date and year to date credit of $0.04 million in 2025. See Note #3 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
Current report
Interchange income increased on a comparative quarterly and year-to-date basis in 2026 as compared to 2025. The quarterly and year-to-date increases were primarily due to an increase in volume of these transactions. The volume of transactions were favorably impacted by the Merger during these periods.
Current report
Service charges on deposit accounts increased on a comparative quarterly and year-to-date basis in 2026 as compared to 2025. The quarterly and year-to-date increases were principally due to the impact of the Merger and increases in treasury management fees.
Current report
The gains on equity securities at fair value during the quarterly and year-to-date periods in 2026 resulted from the sale of certain Visa Inc. Class C shares. See note #13 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
Current report
Investment and insurance commissions in the table above decreased by $0.3 million and $0.2 million in the third quarter and first nine months of 2026, respectively, compared to the same prior year periods. The decreases were due in part to our wealth management program’s transition between broker-dealer platforms temporarily reduced commission-generating activity.
Current report
Payroll taxes and employee benefits increased (decreased) by $(0.1) million and $0.6 million in the third quarter and first nine months of 2026, respectively, compared to the same periods in 2025. The decrease during the third quarter was due primarily to a decrease in employee medical insurance cost that was partially offset by the impact of the Merger. The increase during the first nine months was due primarily to the impact of the Merger as well as higher retirement and payroll tax (due to higher payroll costs) expenses.
Current report
Occupancy expense increased by $0.3 million and $0.5 million in the third quarter and first nine months of 2026, respectively, compared to the same prior year periods due in part to the impact of the Merger.
Current report
Furniture, fixtures and equipment expense increased by $0.2 million and $0.4 million in the third quarter and first nine months of 2026, respectively, compared to the same prior year periods due in part to the impact of the Merger.
Current report
The amortization of other intangible assets primarily reflects amortization of the core deposit intangible and non-compete agreement recognized in connection with the Merger. We had remaining unamortized intangible assets of $17.0 million and $1.0 million at September 30, 2026 and December 31, 2025, respectively. See note #7 to the Condensed Consolidated Financial Statements for a schedule of future amortization of other intangible assets.
Current report
underperformed Treasuries as municipal-to-taxable yield ratios widened, particularly for maturities of 10 to 15 years. See note #3 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
Current report
The Merger did not have a significant impact on our securities portfolios. $17.8 million of the proceeds from sales of securities available for sale in the table above relate to securities acquired in the Merger and subsequently sold after July 1, 2026. These sales were done to augment market yield and modestly reduce duration while maintaining liquidity metrics.
Current report
Portfolio Loans totaled $4.90 billion at September 30, 2026, an increase of $620.9 million from December 31, 2025. Loans associated with the Merger totaled $366.7 million at September 30, 2026. The remaining $254.2 million increase primarily reflected organic growth related to commercial lending.
Current report
Initial allowances of approximately $4.6 million and $0.06 million were recognized on loans and unfunded commitments, respectively due to the Merger. See Note #18 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
Current report
Index
Current report
The acquisition of HCB Financial Corp. on July 1, 2026 required significant estimates and judgments in determining the acquisition-date fair values of assets acquired and liabilities assumed, particularly acquired loans and the core deposit
Current report
Index
Current report
intangible. Significant assumptions used in these valuations included expected cash flows, credit losses, prepayment speeds and discount rates for acquired loans, and deposit attrition, servicing costs, alternative funding costs and discount rates for the core deposit intangible. Changes in these assumptions could materially affect the amounts assigned to acquired assets and goodwill and the related subsequent recognition of income and expense. See note #18 to the interim consolidated financial statements for additional information.
Removed paragraphs (6)
Previous report
At June 30, 2026, HCB had $591.0 million of total assets, $371.9 million of loans and loans held for sale, $539.9 million of deposits and $47.6 million of shareholders’ equity. HCB reported unaudited net income of $0.99 million in the first six months of 2026. The HCB first six months 2026 results were adversely impacted due to $1.79 million of merger expenses. We expect the Merger to have a significant impact on our third quarter 2026 results because of the inclusion of their operations for the first time that quarter and merger related expenses.
Previous report
For the first six months of 2026, net interest income totaled $94.8 million, an increase of $6.5 million, or 7.3% from 2025. This increase primarily reflects a $157.3 million increase in average interest-earning assets and a 14 basis point increase in our net interest margin.
Previous report
The increase in our net interest margin during the three and six month period in 2026 is attributed to 28 basis point decreases in interest expense as a percent of average interest-earning assets ("Cost of Funds") that were only partially offset by 15 and 14 basis point decreases, respectively 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 January of 2025 as the average federal funds rate was 75 basis points lower during the first quarter of 2026 as compared to the first quarter of 2025. Our Cost of Funds has been positively impacted by deposit pricing sensitivity to the decreases in interest rates discussed above as well as a favorable shift in mix with growth in lower cost non-maturity deposits and runoff in wholesale funding and subordinated debt. 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, consumer loans and overnight liquidity to higher rate loans. See Asset/liability management.
Previous report
The year to date provision for credit losses on securities HTM in 2026 and 2025 was zero and $0.001 million, respectively. See Note #3.
Previous report
Payroll taxes and employee benefits increased by $0.4 million and $0.7 million in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025, due primarily to increases in employee medical insurance costs and retirement costs.
Previous report
Other expense increased by $0.4 million and $0.1 million in the second quarter and first six months of 2026. The increase during the second quarter was due primarily to the prior year period including recoveries related to unfunded lending commitments and higher Michigan Corporate Income Tax (due to an increase in taxable base) while these increases were partially offset by costs related to the capitalized mortgage loan servicing right sale (six month period - see “Non-interest income” above).
Reworded paragraphs (65)
Previous wording
Introduction. The following section presents additional information to assess the financial condition and results of operations of Independent Bank Corporation (“IBCP”), its wholly-owned bank, Independent Bank (the “Bank”), and their subsidiaries. This section should be read in conjunction with the interim Condensed Consolidated Financial Statements. We also encourage you to read our 2025 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”). That report includes a list of risk factors that you should consider in connection with any decision to buy or sell our securities.
Current wording
Introduction. The following section presents additional information to assess the financial condition and results of operations of Independent Bank Corporation (“IBCP”), its wholly-owned banks, Independent Bank and Highpoint Community Bank (the “Banks”), and their subsidiaries. This section should be read in conjunction with the interim Condensed Consolidated Financial Statements. We also encourage you to read our 2025 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”). That report includes a list of risk factors that you should consider in connection with any decision to buy or sell our securities.
Previous wording
On March 18, 2026, we entered into a definitive merger agreement with HCB Financial Corp. ("HCB") (the "Merger Agreement") providing for a business combination of Independent Bank Corporation ("IBCP") and HCB. On July 1, 2026, HCB was merged with and into IBCP, with IBCP as the surviving corporation (the "Merger"). As a result of the Merger, Highpoint Community Bank became a wholly-owned subsidiary of IBCP as of July 1, 2026. IBCP intends to consolidate Highpoint Community Bank with and into Independent Bank (with Independent Bank as the surviving institution) during the fourth quarter of 2026.
Current wording
On March 18, 2026, we entered into a definitive merger agreement with HCB Financial Corp. ("HCBFC") (the "Merger Agreement") providing for a business combination of Independent Bank Corporation ("IBCP") and HCBFC. On July 1, 2026, HCBFC was merged with and into IBCP, with IBCP as the surviving corporation (the "Merger"). As a result of the Merger, Highpoint Community Bank became a wholly-owned subsidiary of IBCP as of July 1, 2026. IBCP intends to consolidate Highpoint Community Bank with and into Independent Bank (with Independent Bank as the surviving institution) during the fourth quarter of 2026.
Previous wording
We paid aggregate Merger consideration of approximately $74.9 million, consisting of 1.59 million shares of IBCP common stock and $17.5 million in cash, for all of the shares of HCB common stock issued and outstanding immediately before the effective time of the Merger.
Current wording
We paid aggregate Merger consideration of approximately $74.9 million, consisting of 1.59 million shares of IBCP common stock and $17.5 million in cash, for all of the shares of HCBFC common stock issued and outstanding immediately before the effective time of the Merger.
Previous wording
It is against this backdrop that we discuss our results of operations and financial condition for the second quarter of 2026 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 2026 as compared to earlier periods.
Previous wording
Summary. We recorded net income of $18.8 million and $16.9 million during the three months ended June 30, 2026 and 2025, respectively. The increase in 2026 second quarter results as compared to 2025 is due primarily to a $3.3 million increase in net interest income, a $1.8 million favorable change in the fair value due to price of capitalized mortgage loan servicing rights and a $1.6 million gain on equity securities at fair value that were partially offset by a $4.0 million increase in non-interest expense and a $1.2 million increase in the provision for credit losses.
Current wording
Summary. We recorded net income of $17.9 million and $17.5 million during the three months ended September 30, 2026 and 2025, respectively. The increase in 2026 third quarter results as compared to 2025 is due primarily to a $9.9 million increase in net interest income, a $4.0 million favorable change in the fair value due to price of capitalized mortgage loan servicing rights that were partially offset by a $10.6 million increase in non-interest expense and a $2.8 million increase in the provision for credit losses.
Previous wording
We recorded net incomeof $35.7 millionand $32.5 million during the six months ended June 30, 2026 and 2025, respectively. The increase in 2026 year-to-date results as compared to 2025 is primarily due to a $6.5 million increase in net interest income, a $2.8 million favorable change in the fair value due to price of capitalized mortgage loan servicing rights and a $1.6 million gain on equity securities at fair value that was partially offset by an $8.1 million increase in non-interest expense.
Current wording
We recorded net incomeof $53.5 millionand $50.0 million during the nine months ended September 30, 2026 and 2025, respectively. The increase in 2026 year-to-date results as compared to 2025 is primarily due to a $16.4 million increase in net interest income, an $8.5 million favorable change in the fair value due to price of capitalized mortgage loan servicing rights and a $1.7 million gain on equity securities at fair value that were partially offset by an $18.7 million increase in non-interest expense and a $3.7 million increase in the provision for credit losses.
Previous wording
Our net interest income totaled $47.9 million during the second quarter of 2026, an increase of $3.3 million, or 7.4% from the year-ago period. This increase primarily reflects a $183.6 million increase in average interest-earning assets and a 13 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 $55.3 million during the third quarter of 2026, an increase of $9.9 million, or 21.8% from the year-ago period. This increase primarily reflects a $659.1 million increase in average interest-earning assets and a 28 basis point increase in both the net interest income as a percent of average interest-earning assets and tax equivalent net interest income as a percent of average interest-earning assets. See Reconciliation of Non-GAAP Financial Measures
Previous wording
The increase in average interest-earning assets in both the three and six month periods of 2026 as compared to the same period in 2025 primarily reflects growth in commercial loans funded from decreases in interest bearing cash deposits, installment loans and securities available for sale and held to maturity as well as an increase in deposits.
Current wording
The increase in average interest-earning assets in both the three and nine month periods of 2026 as compared to the same period in 2025 primarily reflects the Merger as well as growth in commercial loans funded from decreases in installment loans and securities held to maturity as well as an increase in deposits.
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 2026, non-accrual loans averaged $39.4 million and $37.7 million, respectively. In the second quarter and first six months of 2025, non-accrual loans averaged $7.7 million and $7.2 million, respectively. In addition, in the second quarter and first six months of 2026 we had net recoveries of $0.16 million and $0.02 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 $0.11 million and $0.22 million, respectively, during the same periods in 2025.
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 2026, non-accrual loans averaged $46.2 million and $40.5 million, respectively. In the third quarter and first nine months of 2025, non-accrual loans averaged $10.8 million and $8.4 million, respectively. In addition, in the third quarter and first nine months of 2026, we had net reversals of $0.05 million and $0.03 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 $0.3 million, respectively, during the same periods in 2025.
Previous wording
(1)Interest on tax-exempt loans and securities available for sale is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.
Current wording
(1)Interest on tax-exempt loans and securities available for sale is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%. See Reconciliation of Non-GAAP Financial Measures.
Previous wording
(1)Interest on tax-exempt loans and securities available for sale is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.
Current wording
(1)Interest on tax-exempt loans and securities available for sale is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%. See Reconciliation of Non-GAAP Financial Measures.
Previous wording
Provision for credit losses. The provision for credit losses was an expense of $2.7 million and an expense of $1.5 million for the three months ended June 30, 2026 and 2025, respectively. During the six-month periods ended June 30, 2026 and 2025, the provision for credit losses was an expense of $3.1 million and an expense of $2.2 million, respectively.
Current wording
Provision for credit losses. The provision for credit losses was an expense of $4.8 million and an expense of $2.0 million for the three months ended September 30, 2026 and 2025, respectively. During the nine-month periods ended September 30, 2026 and 2025, the provision for credit losses was an expense of $7.9 million and an expense of $4.2 million, respectively.
Previous wording
The increase in the provision for credit losses expense from the prior year period is primarily due to the commercial portfolios reflecting an increase in specific reserves on certain individually evaluated commercial loan relationships and net loan growth as well asan increase in the reserve on unfunded lending commitments (attributed to an increase in expected loss rates). Partially offsetting these increases was a decrease in net newly allocated losses in the retail loan portfolios reflecting fewer retail loans requiring incremental expected credit loss allocations during the quarter, as well as a five basis point decrease in the adjustment to allocations based on subjective factors. The five basis point reduction in allocations based on subjective factors reflects our annual CECL model recalibration, which resulted in minimal changes to the quantitative estimate and demonstrated continued model maturity. The reduction also reflected our assessment of current economic conditions, portfolio performance, business survey results, stable collateral values and reduced regulatory risk.
Current wording
The increase in the provision for credit losses expense from the prior year period is primarily due to the commercial portfolios reflecting an increase in specific reserves on certain individually evaluated commercial loan relationships and net loan growth as well as an increase in the reserve on unfunded lending commitments (attributed to an increase in commitments outstanding as well as the mix of new commitments). Partially offsetting these increases was a decrease in net newly allocated losses in the retail loan portfolios reflecting fewer retail loans requiring incremental expected credit loss allocations during the quarter as well as a decrease in the adjustment to allocations based on subjective factors (for the year to date period). That reduction in allocations based on subjective factors reflects our annual CECL model recalibration, which resulted in minimal changes to the quantitative estimate and demonstrated continued model maturity. The reduction also reflected our assessment of current economic conditions, portfolio performance, business survey results, stable collateral values and reduced regulatory risk.
Previous wording
Non-interest income. Non-interest income is a significant element in assessing our results of operations. Non-interest income totaled $15.3 million during the second quarter of 2026 compared to $11.3 million in the second quarter of 2025. For the first six months of 2026, non-interest income totaled $27.4 million compared to $21.7 million for the first six months of 2025.
Current wording
Non-interest income. Non-interest income is a significant element in assessing our results of operations. Non-interest income totaled $15.8 million during the third quarter of 2026 compared to $11.9 million in the third quarter of 2025. For the first nine months of 2026, non-interest income totaled $43.2 million compared to $33.7 million for the first nine months of 2025.
Previous wording
(1)Mortgage loan salesin the second quarters of 2026 and 2025 include $1.6 million and$6.7 million, respectively, of portfolio loan transactions. Mortgage loan sales during the firstsix months of 2026 and 2025 include $3.1 million and$15.4 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 2026 and 2025 include $2.2 million and$4.5 million, respectively, of portfolio loan transactions. Mortgage loan sales during the first nine months of 2026 and 2025 include $5.2 million and$19.9 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 2026 and 2025 include net gains of$0.05 million and$0.08 million, respectively, from portfolio loan transactions. Net gains during the firstsix months of 2026 and 2025 were $0.1 million and$0.3 million, respectively.
Current wording
(2) Net gains on mortgage loans in thethird quarters of 2026 and 2025 include net gains of$0.03 million and$0.07 million, respectively, from portfolio loan transactions. Net gains during the first nine months of 2026 and 2025 were $0.1 million and$0.4 million, respectively.
Previous wording
Mortgage loans originated during the second quarter of 2026 were relatively unchanged from the same period last year. The increase in mortgage loans originated for the year to date period ended June 30 2026 as compared to 2025 was primarily driven by higher refinance activity during the first quarter of 2026 as mortgage rates declined through early 2026.
Current wording
Mortgage loans originated during the third quarter of 2026 declined from the same period last year due in part to an increase in interest rates. The increase in mortgage loans originated for the year to date period ended September 30, 2026 as compared to 2025 was primarily driven by higher refinance activity during the first quarter of 2026 as mortgage rates declined through early 2026.
Previous wording
Net gains on mortgage loans totaled $1.7 million and $1.6 million during the second quarters of 2026 and 2025, respectively. For the first six months of 2026 and 2025, net gains on mortgage loans totaled $3.0 million and $3.9 million, respectively.
Current wording
Net gains on mortgage loans totaled $1.0 million and $1.5 million during the third quarters of 2026 and 2025, respectively. For the first nine months of 2026 and 2025, net gains on mortgage loans totaled $4.0 million and $5.4 million, respectively.
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 1.30% and 1.59% in the second quarters of 2026 and 2025, respectively and 1.37% and 1.73% in the first six months of 2026 and 2025, respectively. The contraction of the Loan Sales Margin during both periods of 2026 was primarily due to competitive pressure which had a negative impact on our pricing margins.
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 1.47% and 1.42% in the third quarters of 2026 and 2025, respectively and 1.41% and 1.61% in the first nine months of 2026 and 2025, respectively. The contraction of the Loan Sales Margin during the first nine months of 2026 was primarily due to competitive pressure which had a negative impact on our pricing margins.
Previous wording
We recorded a net loss of $0.12 million and $0.32 million on the sale of securities AFS for the first six months of 2026 and 2025, respectively. We recorded no credit related charges in either 2026 or 2025 on securities AFS. See “Securities” below and note #3 to the interim Condensed Consolidated Financial Statements.
Current wording
We recorded a net loss of $0.13 million and $0.36 million on the sale of securities AFS for the first nine months of 2026 and 2025, respectively. We recorded no credit related charges in either 2026 or 2025 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 $2.5 million and $0.5 million in the second quarters of 2026 and 2025, respectively. For the first six months of 2026 and 2025, mortgage loan servicing, net, generated income (expense) of $4.1 million and $(0.1) 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.
Current wording
Mortgage loan servicing, net, generated income of $4.1 million and $0.1 million in the third quarters of 2026 and 2025, respectively. For the first nine months of 2026 and 2025, mortgage loan servicing, net, generated income (expense) of $8.2 million and $(0.1) 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.
Previous wording
At June 30, 2026, we were servicing approximately $2.59 billion in mortgage loans for others on which servicing rights have been capitalized. This servicing portfolio had a weighted average coupon rate of 4.58% and a weighted average service fee of approximately 25.6 basis points. Capitalized mortgage loan servicing rights at June 30, 2026 totaled $33.9 million, representing approximately 131.1 basis points on the related amount of mortgage loans serviced for others.
Current wording
At September 30, 2026, we were servicing approximately $2.63 billion in mortgage loans for others on which servicing rights have been capitalized. This servicing portfolio had a weighted average coupon rate of 4.63% and a weighted average service fee of approximately 25.6 basis points. Capitalized mortgage loan servicing rights at September 30, 2026 totaled $37.8 million, representing approximately 144.0 basis points on the related amount of mortgage loans serviced for others.
Previous wording
Other income in the table above increased (decreased) by $0.1 million and $(0.2) million in the second quarter and first six months of 2026, respectively, compared to the same prior year periods. The increase in the second quarter of 2026 was primarily due to higher commercial loan swap fees. The decrease from the prior year to date period was primarily due to lower commercial swap fees and declines in check and ATM income.
Current wording
Other income in the table above decreased by $0.2 million and $0.4 million in the third quarter and first nine months of 2026, respectively, compared to the same prior year periods. These decreases were primarily due to lower commercial loan swap fees.
Previous wording
Non-interest expense increased by $4.0 million to $37.8 million and increased by $8.1 million to $76.1 million during the three- and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025.
Current wording
Non-interest expense increased by $10.6 million to $44.8 million and increased by $18.7 million to $120.9 million during the three- and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025.
Previous wording
Compensation and employee benefits expenses, in total, increased $1.4 million on a quarterly comparative basis and increased $2.9 million for the first six months of 2026 compared to the same periods in 2025.
Current wording
Compensation and employee benefits expenses, in total, increased $3.4 million on a quarterly comparative basis and increased $6.2 million for the first nine months of 2026 compared to the same periods in 2025.
Previous wording
Compensation expense increased by $0.6 million and $1.6 million in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025. These comparative increases in 2026 were primarily due to salary increases that were predominantly effective on January 1, 2026, higher severance costs (year to date period only) and additional commercial lending and support staff that were partially offset by a decrease in mortgage lending and other retail personnel.
Current wording
Compensation expense increased by $1.7 million and $3.3 million in the third quarter and first nine months of 2026, respectively, compared to the same periods in 2025. These comparative increases in 2026 were primarily due to the Merger, salary increases that were predominantly effective on January 1, 2026, and additional commercial lending and support staff that were partially offset by a decrease in mortgage lending and other retail personnel.
Previous wording
Performance-based compensation increased by $0.4 million and $0.6 million in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025. The increase is due in part to both higher expected incentive compensation payout for salaried and hourly employees and long term share based incentives.
Current wording
Performance-based compensation increased by $1.7 million and $2.3 million in the third quarter and first nine months of 2026, respectively, compared to the same periods in 2025. The increase is due in part to both higher expected incentive compensation payout for salaried and hourly employees and long term share based incentives as well as the impact of the Merger.
Previous wording
Data processing expense increased by $0.3 million and $0.5 million in the second quarter and first six months of 2026, 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 $1.0 million and $1.5 million in the third quarter and first nine months of 2026, respectively, compared to the same prior year periods due in part to the impact of the Merger, core data processor annual asset growth and CPI related cost increases as well as new solutions implemented during this time frame.
Previous wording
Merger related expenses of $0.4 million and $0.7 million in the second quarter and first six months of 2026 reflect legal, professional, regulatory, valuation, and other direct transaction costs associated with the acquisition of HCB Financial Corp.
Current wording
Merger related expenses of $3.5 million and $4.1 million in the third quarter and first nine months of 2026 reflect change in control related payments, investment banker fees, legal, professional, regulatory, valuation, and other direct transaction costs associated with the Merger.
Previous wording
Advertising expense increased by $0.3 million and$0.7 million in the second quarter and first six months of 2026, respectively, compared to the same prior year periods due to higher customer acquisition marketing costs as well as higher out-of-home advertising campaigns.
Current wording
Advertising expense increased by $0.2 million and $0.9 million in the third quarter and first nine months of 2026, respectively, compared to the same prior year periods due to higher customer acquisition marketing costs (year to date), higher out-of-home advertising campaigns (year to date) and higher strategic sponsorship costs.
Previous wording
Loan and collection expense increased by $0.3 million in both the second quarter and first six months of 2026, compared to the same prior year periods due primarily to higher legal fees associated with collection and workout activities.
Current wording
Loan and collection expense increased by $0.4 million and $0.7 million in the third quarter and first nine months of 2026, respectively, compared to the same prior year periods due primarily to higher legal fees associated with collection and workout activities.
Previous wording
Income tax expense. We recorded an income tax expense of $3.9 million and $7.3 million in the second quarter and the first six months of 2026, respectively. This compares to an income tax expense of $3.8 million and $7.3 million in the second quarter and the first six months of 2025, respectively. The changes in expense for the first six months of 2026 compared to the same period in 2025 is primarily due to changes in pretax income as well as an increase in certain tax credits recognized during 2026.
Current wording
Income tax expense. We recorded an income tax expense of $3.6 million and $10.9 million in the third quarter and the first nine months of 2026, respectively. This compares to an income tax expense of $3.7 million and $11.0 million in the third quarter and the first nine months of 2025, respectively. The changes in expense for the first nine months of 2026 compared to the same period in 2025 is primarily due to changes in pretax income as well as an increase in certain tax credits recognized during 2026.
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 tax credit investments.
Previous wording
Summary. Our total assets increased by $158.1 million during the first six months of 2026. Loans, excluding loans held for sale, were $4.41 billion at June 30, 2026, compared to $4.28 billion at December 31, 2025. Commercial loans and mortgage loans increased while installment loans decreased during the first six months of 2026. (See “Portfolio Loans and asset quality.”) Securities available for sale and securities held to maturity together totaled $781.5 million at June 30, 2026, a decline of $23.9 million since December 31, 2025.
Current wording
Summary. Our total assets increased by $757.9 million during the first nine months of 2026. Loans, excluding loans held for sale, were $4.90 billion at September 30, 2026, compared to $4.28 billion at December 31, 2025. Commercial loans and mortgage loans increased while installment loans decreased during the first nine months of 2026. (See “Portfolio Loans and asset quality.”) Securities available for sale and securities held to maturity together totaled $812.5 million at September 30, 2026, an increase of $7.1 million since December 31, 2025. These balances were impacted by the Merger. See Note #18 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
Previous wording
Deposits totaled $4.86 billion at June 30, 2026, an increase of $100.5 million from December 31, 2025. The increase in deposits from December 31, 2025, is due to increases in non-interest bearing, savings and interest-bearing checking and reciprocal deposits that were partially offset by a decrease in brokered time deposits.
Current wording
Deposits totaled $5.52 billion at September 30, 2026, an increase of $759.7 million from December 31, 2025. Deposits associated with the Merger totaled $543.5 million at September 30, 2026. The remaining $216.2 million increase reflected organic growth in reciprocal deposits ($77.5 million), savings and interest-bearing checking deposits ($107.9 million), non-interest-bearing deposits ($36.0 million) and time deposits ($12.9 million), partially offset by an $18.1 million decrease in brokered time deposits.
Previous wording
Securities. We maintain diversified securities portfolios, which include obligations of U.S. government-sponsored agencies, securities issued by states and political subdivisions, residential and commercial mortgage-backed securities, asset-backed securities, corporate securities, trust preferred securities and foreign government securities (that are
Current wording
Securities. We maintain diversified securities portfolios, which include obligations of U.S. government-sponsored agencies, securities issued by states and political subdivisions, residential and commercial mortgage-backed securities,
Previous wording
denominated in U.S. dollars). We regularly evaluate asset/liability management needs and attempt to maintain a portfolio structure that provides sufficient liquidity and cash flow.
Current wording
asset-backed securities, corporate securities, trust preferred securities and foreign government securities (that are denominated in U.S. dollars). We regularly evaluate asset/liability management needs and attempt to maintain a portfolio structure that provides sufficient liquidity and cash flow.
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, 2026 and December 31, 2025. The decrease in unrealized losses during the first six months of 2026 primarily reflects the outperformance of obligations of states and political subdivisions relative to U.S. Treasury securities, resulting in favorable changes in fair value, partially offset by modest declines in the fair value of certain agency residential mortgage-backed and corporate securities. 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 earnings. For securities AFS that do not meet these 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 September 30, 2026 and December 31, 2025. The increase in unrealized losses during the first nine months of 2026 primarily reflected higher U.S. Treasury yields. During 2026 the Treasury curve flattened, with two- to five-year rates rising 125 to 140 basis points, compared with increases of 90 to 110 basis points on seven- to ten-year rates. Credit spreads were generally stable. Tax-exempt municipal securities
Previous wording
ACL are reported in our interim Condensed Consolidated Statements of Operations in provision for credit losses. We measure expected credit losses on securities HTM on a collective basis by major security type with each type sharing similar risk characteristics. With regard to U.S. Government-sponsored agency and mortgage-backed securities (residential and commercial), all these securities are issued by a U.S. government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities. With regard to obligations of states and political subdivisions, private label-mortgage-backed, corporate and trust preferred securities HTM, we consider (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. See note #3 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
Current wording
For securities HTM an ACL is maintained at a level which represents our best estimate of expected credit losses. This ACL is a contra asset valuation account that is deducted from the carrying amount of securities HTM to present the net amount expected to be collected. Securities HTM are charged off against the ACL when deemed uncollectible. Adjustments to the ACL are reported in our interim Condensed Consolidated Statements of Operations in provision for credit losses. We measure expected credit losses on securities HTM on a collective basis by major security type with each type sharing similar risk characteristics. With regard to U.S. Government-sponsored agency and mortgage-backed securities (residential and commercial), all these securities are issued by a U.S. government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities. With regard to obligations of states and political subdivisions, private label-mortgage-backed, corporate and trust preferred securities HTM, we consider (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. See note #3 to the interim Condensed Consolidated Financial Statements included within this report for further discussion.
Previous wording
Portfolio Loans and asset quality. In addition to the communities served by our Bank branch and loan production office network, our principal lending markets also include nearby communities and metropolitan areas. Subject to established underwriting criteria, we also may participate in commercial lending transactions with certain non-affiliated banks and make whole loan purchases from other financial institutions.
Current wording
Portfolio Loans and asset quality. In addition to the communities served by our Banks' branch and loan production office network, our principal lending markets also include nearby communities and metropolitan areas. Subject to established underwriting criteria, we also may participate in commercial lending transactions with certain non-affiliated banks and make whole loan purchases from other financial institutions.
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Current report — wording carried from elsewhere
implementation of our asset/liability management strategies, but such evaluations further consider interest-rate and liquidity risk as well as other pertinent factors. We have established parameters for interest-rate risk. We regularly monitor our interest-rate risk and report at least quarterly to our board of directors.
Current report — wording carried from elsewhere
upon a static interim Condensed Consolidated Statement of Financial Condition, which includes debt and related financial derivative instruments, and do not consider loan fees or loan origination costs.
Current report — wording carried from elsewhere
Other than the business combination estimates discussed above, there have been no material changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
For securities HTM an ACL is maintained at a level which represents our best estimate of expected credit losses. This ACL is a contra asset valuation account that is deducted from the carrying amount of securities HTM to present the net amount expected to be collected. Securities HTM are charged off against the ACL when deemed uncollectible. Adjustments to the