GERMAN AMERICAN BANCORP, INC.

Previous wording

German American Bancorp, Inc. is a Nasdaq-listed (symbol: GABC) financial holding company based in Jasper, Indiana. German American, through its banking subsidiary German American Bank, operates 94 banking offices located throughout Indiana (central/southern), Kentucky (northern/central/western), and Ohio (central/southwest). In Columbus, Ohio and Greater Cincinnati, the Company does business as Heartland Bank, a Division of German American Bank. The Company also owns an investment brokerage subsidiary German American Investment Services, Inc.

Current wording

German American Bancorp, Inc. is a Nasdaq-listed (symbol: GABC) financial holding company based in Jasper, Indiana. German American, through its banking subsidiary German American Bank, operates 93 banking offices located throughout Indiana (central/southern), Kentucky (northern/central/western), and Ohio (central/southwest). In Columbus, Ohio and Greater Cincinnati, the Company does business as Heartland Bank, a Division of German American Bank. The Company also owns an investment brokerage subsidiary German American Investment Services, Inc.

Previous wording

On an adjusted basis, net income for the third quarter of 2025 was $34,444,000, or $0.92 per share, compared with the adjusted third quarter 2024 net income of $21,722,000, or $0.73 per share. Net income, on an adjusted basis, for the nine months ended September 30, 2025, was $93,789,000, or $2.57 per share, compared with the adjusted nine months ended September 30, 2024 net income of $60,420,000, or $2.04 per share. Adjusted net income and adjusted earnings per share are non-GAAP financial measures. Refer to “Use of Non-GAAP Financial Measures” contained in this Management’s Discussion and Analysis for additional information, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.

Current wording

Net income for the quarter ended March 31, 2026 totaled $33,152,000, or $0.88 per share, an increase of 193% on a per share basis compared with the first quarter 2025 net income of $10,517,000, or $0.30 per share. The first quarter of 2025 results of operations included acquisition-related expenses of $5,932,000 ($4,620,000, on an after tax basis) and a “Day 2” adjustment to the provision for credit losses under the CECL model of $16,200,000 ($12,150,000, on an after tax basis) in connection with the Heartland merger. On an adjusted basis, net income for the first quarter of 2025 was $27,287,000, or $0.79 per share. Adjusted net income and adjusted earnings per share are non-GAAP financial measures. Refer to “Use of Non-GAAP Financial Measures” contained in this Management’s Discussion and Analysis for additional information, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.

Previous wording

The Company has an established process to determine the adequacy of the allowance for credit losses. The determination of the allowance is inherently subjective, as it requires significant estimates, including the amounts and timing of expected future cash flows on individually analyzed loans, estimated losses on other classified loans and pools of homogeneous loans, and consideration of past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, reasonable and supportable forecasts and other factors, all of which may be susceptible to significant change. The allowance consists of two components of allocations, specific and general. These two components represent the total allowance for credit losses deemed adequate to cover expected credit losses over the expected life of the loan portfolio.

Current wording

The Company has an established process to determine the adequacy of the allowance for credit losses. The determination of the allowance is inherently subjective, as it requires significant estimates, including the amounts and timing of expected future cash flows on individually analyzed loans, estimated losses on other classified loans and pools of homogeneous loans, and consideration of past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, reasonable and supportable forecasts and other factors, all of which may be susceptible to significant change. The allowance consists of two components of allocations: an allowance assessed on a collective basis for pools of loans that share similar risk characteristics and an allowance assessed on individual loans that do not share similar risk characteristics with other loans. These two components represent the total allowance for credit losses deemed adequate to cover expected credit losses over the expected life of the loan portfolio.

Previous wording

General allocations are made for commercial and agricultural loans that are graded as substandard and special mention, but are not individually analyzed for specific reserves as well as other pools of loans, including non-classified loans, homogeneous portfolios of consumer and residential real estate loans, and loans within certain industry categories believed to present unique risk of loss. General allocations of the allowance are primarily made based on historical averages for loan losses for these portfolios along with reasonable and supportable forecasts, judgmentally adjusted for economic, external and internal quantitative and qualitative factors and portfolio trends. Economic factors include evaluating changes in international, national, regional and local economic and business conditions that affect the collectability of the loan portfolio. Internal factors include evaluating changes in lending policies and procedures; changes in the nature and volume of the loan portfolio; existence and effect of concentrations of credit; changes in volume and severity of past due loans; and changes in experience, ability and depth of lending management and staff.

Current wording

General allocations are made for commercial and agricultural loans that are graded as substandard and special mention, but are not individually analyzed for specific reserves as well as other pools of loans, including non-classified loans, homogeneous portfolios of consumer and residential real estate loans, and loans within certain industry categories believed to present unique risk of loss.

Previous wording

As previously stated, the Company now utilizes a discounted cash flow methodology to estimate the allowance for credit losses. Expected cash flows are estimated for each loan and discounted using the contractual terms of the loan, calculated probabilities of default, loss given default rates, and prepayment and curtailment estimates, as well as qualitative factors. The probability of default estimates are generated using a regression model that estimates the likelihood of a loan being charged-off during its life. The regression model uses combinations of variables to assess historical loss correlations to economic factors, and these variables become model forecast inputs for economic factors that are updated in the model each period. The Company uses an economic forecast provided by a third-party for these model inputs.

Current wording

The Company utilizes a discounted cash flow methodology to estimate the allowance for credit losses. Expected cash flows are estimated for each loan and discounted using the contractual terms of the loan, calculated probabilities of default, loss given default rates, and prepayment and curtailment estimates, as well as qualitative factors. The probability of default estimates are generated using a regression model that estimates the likelihood of a loan being charged-off during its life. The regression model uses combinations of variables to assess historical loss correlations to economic factors, and these variables become model forecast inputs for economic factors that are updated in the model each period. The Company evaluates and utilizes multiple economic forecast scenarios provided by a third-party for these model inputs. These multiple economic forecast scenarios are weighted to arrive at the quantitative reserve. Changes in the economic forecast or weighting could impact the estimated credit losses which could lead to significantly different allowance levels from one reporting period to the next.

Previous wording

Available-for-sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For available-for-sale debt securities in an unrealized loss position, the Company assesses 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 available-for sale debt securities that do not meet the criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security and the issuer, among other factors. If this assessment indicates that a credit loss exists, the Company compares 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 allowance for credit losses 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 allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. No allowance for credit losses for available-for-sale debt securities was needed at September 30, 2025. Accrued interest receivable on available-for-sale debt securities is excluded from the estimate of credit losses. As of September 30, 2025, gross unrealized gains on the securities available-for-sale portfolio totaled approximately $5,799,000 and gross unrealized losses totaled approximately $236,243,000. The net amount of these two items, net of applicable taxes, is included in other comprehensive income (loss).

Current wording

Available-for-sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For available-for-sale debt securities in an unrealized loss position, the Company assesses 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 available-for-sale debt securities that do not meet the criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security and the issuer, among other factors. If this assessment indicates that a credit loss exists, the Company compares 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 allowance for credit losses 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 allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. No allowance for credit losses for available-for-sale debt securities was needed at March 31, 2026. Accrued interest receivable on available-for-sale debt securities is excluded from the estimate of credit losses. As of March 31, 2026, gross unrealized gains on the securities available-for-sale portfolio totaled approximately $4,205,000 and gross unrealized losses totaled approximately $224,977,000. The net amount of these two items, net of applicable taxes, is included in other comprehensive income (loss).

Previous wording

Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Other intangible assets consist of core deposit and acquired customer relationship intangible assets. They are initially measured at fair value and then are amortized over their estimated useful lives, which range from 6 to 10 years.

Current wording

Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Other intangible assets consist of core deposit and acquired customer relationship intangible assets. They are initially measured at fair value and then are amortized over their estimated useful lives, which range from 7 to 8 years.

Previous wording

On an adjusted basis, net income for the third quarter of 2025 was $34,444,000, or $0.92 per share, compared with the adjusted third quarter 2024 net income of $21,722,000, or $0.73 per share. Net income, on an adjusted basis, for the nine months ended September 30, 2025, was $93,789,000, or $2.57 per share, compared with the adjusted nine months ended September 30, 2024 net income of $60,420,000, or $2.04 per share. Adjusted net income and adjusted earnings per share are non-GAAP financial measures. Refer to “Use of Non-GAAP Financial Measures” contained in this Management’s Discussion and Analysis for additional information, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.

Current wording

Net income for the quarter ended March 31, 2026 totaled $33,152,000, or $0.88 per share, an increase of 193% on a per share basis compared with the first quarter 2025 net income of $10,517,000, or $0.30 per share. The first quarter of 2025 results of operations included acquisition-related expenses of $5,932,000 ($4,620,000, on an after tax basis) and a “Day 2” adjustment to the provision for credit losses under the CECL model of $16,200,000 ($12,150,000, on an after tax basis) in connection with the Heartland merger. On an adjusted basis, net income for the first quarter of 2025 was $27,287,000, or $0.79 per share. Adjusted net income and adjusted earnings per share are non-GAAP financial measures. Refer to “Use of Non-GAAP Financial Measures” contained in this Management’s Discussion and Analysis for additional information, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.

Previous wording

During the third quarter of 2025, net interest income, on a non tax-equivalent basis, totaled $75,725,000, an increase of $27,131,000, or 56% compared to the third quarter of 2024 net interest income of $48,594,000. During the first nine months of 2025, net interest income, on a non tax-equivalent basis, totaled $215,452,000, an increase of $75,893,000, or 54%, compared to the first nine months of 2024 net interest income of $139,559,000. The increase in net interest income for both periods presented for 2025 compared with the same periods of 2024 was primarily attributable to a higher level of earning assets driven by the Heartland acquisition and an improvement of the Company’s net interest margin.

Current wording

During the first quarter of 2026, net interest income, on a non tax-equivalent basis, totaled $78,851,000, an increase of $12,279,000, or 18%, compared to the first quarter of 2025 net interest income of $66,572,000. The increase in net interest income during the first quarter of 2026 compared with the first quarter of 2025 was primarily attributable to a higher level of average earning assets driven in large part by the Heartland acquisition and improvement of the Company’s net interest margin.

Previous wording

The continued improvement in the net interest margin, excluding the accretion of discount on acquired loans, during the third quarter of 2025 compared with the third quarter of 2024 as well as the first nine months of 2025 compared with the first nine months of 2024 was largely driven by an improved yield on earning assets (including both loan and security yields) and a lower cost of deposits. The lower cost of deposits was driven by the Federal Reserve’s lowering of the Federal Funds rates over the last several months of 2024 and the Company’s ability to correspondingly lower deposit costs. The Federal Funds rate cut in mid-September 2025 had minimal impact on the average earning asset yields or average cost of deposits during the third quarter of 2025.

Current wording

2025 was driven by a lower cost of funds primarily attributable to lower deposit costs. The lower cost of deposits was driven by the Federal Reserve’s lowering of the Federal Funds rates over the last several months of 2025 and the Company’s ability to correspondingly lower deposit costs.

Previous wording

The tax equivalent net interest margin for the quarter ended September 30, 2025 was 4.06% compared with 3.47% in the third quarter of 2024. The tax equivalent net interest margin for the nine months ended September 30, 2025 was 3.98% compared with 3.39% in the same period of 2024. The Company’s net interest margin and net interest income in both periods presented were impacted by accretion of loan discounts on acquired loans. Accretion of discounts on acquired loans totaled $3,914,000 during the third quarter of 2025 and $236,000 during the third quarter of 2024. Accretion of discounts on acquired loans totaled $11,589,000 and $889,000 for the first nine months of 2025 and 2024, respectively. Accretion of discounts on acquired loans contributed approximately 21 basis points to the net interest margin in the third quarter of 2025 and 2 basis points in the third quarter of 2024. Accretion of loan discounts on acquired loans contributed approximately 21 basis points to the net interest margin in the first nine months of 2025 compared to 2 basis points for the same period of 2024.

Current wording

The Company’s net interest margin and net interest income in both periods presented were impacted by accretion of loan discounts on acquired loans. Accretion of discounts on acquired loans totaled $3,456,000 during the first quarter of 2026 and $4,192,000 during the first quarter of 2025. Accretion of discounts on acquired loans contributed approximately 18 basis points to the net interest margin in the first quarter of 2026 and 24 basis points in the first quarter of 2025.

Previous wording

The Company provides for credit losses through regular provisions to the allowance for credit losses. The provision is affected by net charge-offs on loans and changes in specific and general allocations of the allowance. During the quarter ended September 30, 2025, the Company recorded a provision for credit losses of $700,000 compared with a provision for credit losses of $625,000 during the third quarter of 2024. During the nine months ended September 30, 2025, the Company recorded a provision for credit losses of $17,200,000 compared with a provision for credit losses of $2,150,000 for the first nine months of 2024. The first quarter of 2025 included a provision for credit losses of $16,200,000 related to the “Day 2” adjustment for the Heartland acquisition.

Current wording

The Company provides for credit losses through regular provisions to the allowance for credit losses. The provision is affected by net charge-offs on loans and changes in specific and general allocations of the allowance. During the quarter ended March 31, 2026, the Company recorded a provision for credit losses of $2,000,000 compared with a provision for credit losses of $15,300,000 during the first quarter of 2025. The first quarter of 2025 included a provision for credit losses of $16,200,000 related to the “Day 2” adjustment for the Heartland acquisition. In a transaction like the Heartland merger, the accounting rules in effect prior to adoption of ASU 2025-08 required the acquirer to recognize an allowance for credit losses in the period of acquisition for both purchased credit deterioration (“PCD”) assets and non-PCD assets. The determination of PCD versus non-PCD determines how the allowance for credit loss flows through the financial statements. For PCD assets, the gross-up method includes the impact in the “Day 1” business combination entries with no impact to expense. For non-PCD assets, the impact is reflected outside of the business combination entries (sometimes referred to as “Day 2”) and is reflected in expense.

Previous wording

Net charge-offs totaled $748,000, or 5 basis points, on an annualized basis, of average loans outstanding during the third quarter of 2025 compared with $447,000, or 4 basis points, on an annualized basis, of average loans during the third quarter of 2024. Net charge-offs totaled $2,082,000, or 5 basis points, on an annualized basis, of average loans outstanding during the nine months ended September 30, 2025 compared with $1,791,000, or 6 basis points, on an annualized basis, of average loans during the same period of 2024.

Current wording

Net charge-offs totaled $1,147,000, or 8 basis points, on an annualized basis, of average loans outstanding during the first quarter of 2026 compared with $486,000, or 4 basis points, on an annualized basis, of average loans during the first quarter of 2025.

Previous wording

The provision for credit losses made during the three and nine months ended September 30, 2025 was made at a level deemed necessary by management to absorb expected losses in the loan portfolio. A detailed evaluation of the adequacy of the allowance for credit losses is completed quarterly by management, the results of which are used to determine provision for credit losses. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and reasonable and supportable forecasts along with other qualitative and quantitative factors.

Current wording

The provision for credit losses for the three months ended March 31, 2026 was made at a level deemed necessary by management to absorb expected losses in the loan portfolio. A detailed evaluation of the adequacy of the allowance for credit losses is completed quarterly by management, the results of which are used to determine provision for credit losses. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and reasonable and supportable forecasts along with other qualitative and quantitative factors.

Previous wording

Wealth management fees increased $708,000, or 20%, during the third quarter of 2025 compared with the third quarter of 2024. The increase during the third quarter of 2025 compared with the third quarter of 2024 was largely attributable to increased assets under management, driven by healthy capital markets throughout 2024 and much of 2025, and continued strong new business results in addition to the Heartland acquisition.

Current wording

Wealth management fees increased $673,000, or 18%, during the first quarter of 2026 compared with the first quarter of 2025. The increase during the first quarter of 2026 compared with the first quarter of 2025 was largely attributable to increased assets under management, driven by healthy capital markets throughout much of 2025 and continued strong new business results.

Previous wording

Service charges on deposit accounts increased $597,000, or 18%, during the quarter ended September 30, 2025 compared with the same period of 2024. The increase during the third quarter of 2025 compared with the third quarter of 2024 was primarily driven by the Heartland acquisition in addition to increased customer utilization of deposit services.

Current wording

Service charges on deposit accounts increased $340,000, or 10%, during the quarter ended March 31, 2026 compared with the same period of 2025. The increase during the first quarter of 2026 compared with the first quarter of 2025 was primarily driven by the Heartland acquisition in addition to increased customer utilization of deposit services.

Previous wording

For the quarter ended September 30, 2025, interchange fees increased $697,000, or 16%, compared with the same quarter of 2024. The increase during the third quarter of 2025 compared with the third quarter of 2024 was largely attributable to the Heartland acquisition.

Current wording

For the quarter ended March 31, 2026, interchange fees increased $355,000, or 8%, compared with the same quarter of 2025. The increase during the first quarter of 2026 compared with the first quarter of 2025 was largely attributable to increased card utilization by customers and the Heartland acquisition.

Previous wording

Other operating income increased $2,057,000, or 164%, in the third quarter of 2025 compared with the third quarter of 2024. The increase during the third quarter of 2025 compared with the third quarter of 2024 was largely attributable to a $975,000 gain on the extinguishment of debt resulting from the redemption of the Heartland Notes during the third quarter of 2025.

Current wording

Other operating income increased $406,000, or 26%, in the first quarter of 2026 compared with the first quarter of 2025. The increase during the first quarter of 2026 compared with the first quarter of 2025 was largely the result of the Heartland transaction.

Previous wording

Net gains on sales of loans increased $485,000, or 69%, compared with the third quarter of 2024. The increase during the third quarter of 2025 compared with the third quarter of 2024 was largely related to the Heartland acquisition and a higher volume of loans sold. Loan sales totaled $55.5 million during the third quarter of 2025 compared with $40.3 million during the third quarter of 2024.

Current wording

Net gains on sales of loans increased $550,000, or 59%, compared with the first quarter of 2025. The increase during the first quarter of 2026 compared with the first quarter of 2025 was driven by a higher volume of loans sold and improved pricing on loans sold. Loan sales totaled $52.1 million during the first quarter of 2026 compared with $39.3 million during the first quarter of 2025.

Previous wording

On an adjusted basis, non-interest expense for the third quarter of 2025 was $49,565,000 compared to $35,292,000 for the third quarter of 2024. Adjusted non-interest expense is a non-GAAP financial measure. Refer to “Use of Non-GAAP Financial Measures” contained in this release for additional information including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.

Current wording

Adjusted non-interest expense is a non-GAAP financial measure. Refer to “Use of Non-GAAP Financial Measures” contained in this Management’s Discussion and Analysis for additional information including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.

Previous wording

Occupancy, furniture and equipment expense increased $1,375,000, or 35%, for the three months ended September 30, 2025, compared to the same period of 2024. The increase during the three months ended September 30, 2025 compared with the same period of 2024 was primarily attributable to the operating costs of the Heartland branch network.

Current wording

Occupancy, furniture and equipment expense increased $673,000, or 14%, for the three months ended March 31, 2026, compared to the same period of 2025. The increase during the three months ended March 31, 2026 compared with the same period of 2025 was largely attributable to the operating costs of the Heartland branch network.

Previous wording

Intangible amortization increased $5,972,000, or 375%, during the first nine months of 2025 compared with the same period of 2024. The increase was attributable to the Heartland acquisition.

Current wording

Intangible amortization increased $401,000, or 19%, during the first quarter of 2026 compared with the first quarter of 2025. The increase during the first quarter of 2026 compared with the same period of 2025 was attributable to the Heartland acquisition.

Previous wording

Other operating expenses increased $2,513,000, or 48%, for the three months ended September 30, 2025 compared with the same period of 2024. The increase in the three months ended September 30, 2025 compared with the same period of 2024 was largely related the to operating costs of Heartland.

Current wording

Other operating expenses increased $1,397,000, or 23%, for the three months ended March 31, 2026 compared with the same period of 2025. The increase during the first quarter of 2026 compared with the same period of 2025 was primarily attributable to an increase in reserves related to unfunded loan commitments, an increase in the Ohio financial institution tax and increased amortization expense for residential mortgage servicing rights as well as the operating costs of Heartland for a full quarter in 2026.

Previous wording

The Company’s effective income tax rate was 19.8% and 17.9%, respectively, during the three months ended September 30, 2025 and 2024. The Company’s effective income tax rate was 20.1% and 19.7%, respectively, during the nine months ended September 30, 2025 and 2024. The effective tax rate in all periods presented was lower than the blended statutory rate resulting primarily from the Company’s tax-exempt investment income on securities, loans and company-owned life insurance, income tax credits generated from affordable housing projects, and income generated by subsidiaries domiciled in a state with no state or local income tax.

Current wording

The Company’s effective income tax rate was 20.5% and 21.1%, respectively, during the three months ended March 31, 2026 and 2025. The effective tax rate in all periods presented was lower than the blended statutory rate resulting primarily from the Company’s tax-exempt investment income on securities, loans and company-owned life insurance, income tax credits generated from affordable housing projects, and income generated by subsidiaries domiciled in a state with no state or local income tax.

Previous wording

The composition of the loan portfolio has remained relatively stable and diversified over the past several years. The addition of the Heartland loan portfolio resulted in only modest changes to the overall portfolio composition, most notably in the residential mortgage loan segment. The portfolio is most heavily weighted in commercial real estate loans at 54% of the portfolio, followed by commercial and industrial loans at 14% of the portfolio, residential mortgage loans at 14% of the portfolio (up from 9% at year-end 2024), agricultural loans at 8% of the portfolio, and home equity loans at 8% of the portfolio. The Company’s commercial lending is extended to various industries, including multi-family housing and lodging, agribusiness and manufacturing, as well as health care, wholesale, and retail services.

Current wording

The composition of the loan portfolio has remained relatively stable and diversified over the past several years. The addition of the Heartland loan portfolio during the first quarter of 2025 resulted in only modest changes to the overall portfolio composition, most notably in the residential mortgage loan segment. The portfolio is most heavily weighted in commercial real estate loans at 54% of the portfolio, followed by commercial and industrial loans at 14% of the portfolio, residential mortgage loans at 13% of the portfolio, home equity loans at 9% of the portfolio and agricultural loans at 8% of the portfolio. The Company’s commercial lending is extended to various industries, including multi-family housing and lodging, agribusiness and manufacturing, as well as health care, wholesale, and retail services.

Previous wording

The Company’s commercial real estate loan portfolio is further diversified by occupancy type, with approximately 76% of the CRE portfolio being non-owner occupied at September 30, 2025 (which is 41% of the Company’s overall loan portfolio), and 24% of the CRE portfolio being owner occupied (which is 13% of the Company’s total loan portfolio). At December 31, 2024, the Company’s commercial real estate loan portfolio was diversified by occupancy type, with approximately 77% of the CRE portfolio being non-owner occupied (which was 42% of the Company’s overall loan portfolio), and 23% of the CRE portfolio being owner occupied (which was 12% of the Company’s total loan portfolio).

Current wording

The Company’s commercial real estate (“CRE”) loan portfolio is further diversified by occupancy type, with approximately 76% of the CRE portfolio being non-owner occupied at March 31, 2026 (which is 41% of the Company’s overall loan portfolio), and 24% of the CRE portfolio being owner occupied (which is 13% of the Company’s total loan portfolio). At December 31, 2025, the Company’s commercial real estate loan portfolio was diversified by occupancy type, with approximately 76% of the CRE portfolio being non-owner occupied (which was 40% of the Company’s overall loan portfolio), and 24% of the CRE portfolio being owner occupied (which was 13% of the Company’s total loan portfolio).

Previous wording

The Company’s allowance for credit losses totaled $76.1 million at September 30, 2025 compared to $44.4 million at December 31, 2024. The allowance for credit losses represented 1.32% of period-end loans at September 30, 2025 compared with 1.08% at December 31, 2024. At March 31, 2025, the Company changed its estimate methodology for the allowance for credit losses from the static pool to the discounted cash flow method which resulted in minimal impact to the allowance.

Current wording

The Company’s allowance for credit losses totaled $78.5 million at March 31, 2026 compared to $77.7 million at December 31, 2025. The allowance for credit losses represented 1.34% of period-end loans at March 31, 2026 compared with 1.32% at December 31, 2025.

Previous wording

Under the CECL model, certain acquired loans continue to carry a fair value discount as well as an allowance for credit losses. As of September 30, 2025, the Company held net discounts on acquired loans of $56.9 million, which included $54.7 million related to the Heartland loan portfolio.

Current wording

Under the CECL model, certain acquired loans continue to carry a fair value discount as well as an allowance for credit losses. As of March 31, 2026, the Company held net discounts on acquired loans of $49.5 million, which included $47.6 million related to the Heartland loan portfolio.

Previous wording

Non-performing assets totaled $23.7 million at September 30, 2025 compared to $11.1 million at December 31, 2024. Non-performing assets represented 0.28% of total assets at September 30, 2025 compared with 0.18% at year-end 2024. Non-performing loans totaled $23.7 million at September 30, 2025 compared to $11.1 million at December 31, 2024. Non-performing loans represented 0.41% of total loans at September 30, 2025 compared to 0.27% at December 31, 2024.

Current wording

Non-performing assets totaled $29.6 million at March 31, 2026 compared to $29.4 million at December 31, 2025. Non-performing assets represented 0.35% of total assets at March 31, 2026 and December 31, 2025. Non-performing loans totaled $29.6 million at March 31, 2026 compared to $29.4 million at December 31, 2025. Non-performing loans represented 0.51% of total loans at March 31, 2026 compared to 0.50% at December 31, 2025. Total non-performing assets from the Heartland acquisition were approximately $18.7 million at March 31, 2026.

Previous wording

The addition of the Heartland deposit portfolio did not result in significant changes to the overall deposit portfolio composition. Notably, non-interest bearing deposits have remained relatively stable as a percent of total deposits with September 30, 2025 non-interest deposits totaling 28% of total deposits while non-interest deposits totaled 26% at year-end 2024.

Current wording

March 31, 2026 total deposits remained relatively stable compared to year-end 2025 at $7.0 billion. Non-interest bearing deposits have remained relatively stable as a percent of total deposits at approximately 28% at both March 31, 2026 and December 31, 2025. The addition of the Heartland deposit portfolio did not result in significant changes to the overall deposit portfolio composition.

Previous wording

As of September 30, 2025, shareholders’ equity increased by $404.7 million to $1.120 billion compared with $715.1 million at year-end 2024. The increase in shareholders’ equity was primarily attributable to the issuance of approximately 7.7 million shares of the Bancorp’s common stock in the acquisition of Heartland, resulting in an increase to shareholders’ equity of $320.0 million.

Current wording

As of March 31, 2026, shareholders’ equity increased by $12.3 million to $1.175 billion compared with $1.162 billion at year-end 2025. The increase in shareholders’ equity was primarily attributable to increased retained earnings of $21.6 million due to net income of $33.2 million. Partially offsetting the increase in retained earnings was the payment of $11.6 million in shareholder dividends.

Previous wording

Shareholders’ equity represented 13.3% of total assets at September 30, 2025 and 11.4% of total assets at December 31, 2024. Shareholders’ equity included $411.7 million of goodwill and other intangible assets at September 30, 2025 compared to $183.0 million of goodwill and other intangible assets at December 31, 2024.

Current wording

Shareholders’ equity represented 14.0% of total assets at March 31, 2026 and 13.9% of total assets at December 31, 2025. Shareholders’ equity included $406.8 million of goodwill and other intangible assets at March 31, 2026 compared to $409.3 million of goodwill and other intangible assets at December 31, 2025.

Previous wording

The Consolidated Statement of Cash Flows details the elements of changes in the Company’s consolidated cash and cash equivalents. Total cash and cash equivalents increased $66.9 million during the nine months ended September 30, 2025 ending at $255.6 million. During the nine months ended September 30, 2025, operating activities resulted in net cash inflows of $116.6 million. Investing activities resulted in net cash inflows of $55.3 million during the nine months ended September 30, 2025. Financing activities resulted in net cash outflows for the nine months ended September 30, 2025 of $105.1 million.

Current wording

The Consolidated Statement of Cash Flows details the elements of changes in the Company’s consolidated cash and cash equivalents. Total cash and cash equivalents increased $5.5 million during the three months ended March 31, 2026 ending at $123.9 million. During the three months ended March 31, 2026, operating activities resulted in net cash inflows of $37.0 million. Investing activities resulted in net cash inflows of $2.5 million during the three months ended March 31, 2026. Financing activities resulted in net cash outflows for the three months ended March 31, 2026 of $34.0 million.

Previous wording

The Company’s primary source of funding is its customer deposits, supplemented by reciprocal deposits. The bank subsidiary of the Company also utilizes short-term funding sources from time to time. These sources consist of overnight federal funds purchased from other financial institutions, secured repurchase agreements that generally mature within one day of the transaction date, and secured overnight variable rate borrowings from the FHLB and the Federal Reserve Bank. These borrowings represent an important source of short-term liquidity for the Company’s bank subsidiary. In addition, the Company, as a separate and distinct corporation from its bank and other subsidiaries, also has the ability to borrow funds from other financial institutions and to raise debt or equity capital from the capital markets and other sources.

Current wording

The Company’s bank subsidiary’s primary source of funding is its customer deposits, supplemented by reciprocal deposits. The bank subsidiary of the Company also utilizes short-term funding sources from time to time. These sources consist of overnight federal funds purchased from other financial institutions, secured repurchase agreements that generally mature within one day of the transaction date, and secured overnight variable rate borrowings from the FHLB and the Federal Reserve Bank. These borrowings represent an important source of short-term liquidity for the Company’s bank subsidiary. In addition, the

Previous wording

The Company’s bank subsidiary is authorized by its Board to borrow up to $1.66 billion at the FHLB, but availability at September 30, 2025 was limited to approximately $592 million based on the then pledged collateral and outstanding borrowings. In addition, the Company had a borrowing capacity of approximately $734 million at the Federal Reserve Bank as of September 30, 2025, based on the then pledged collateral. The capacity for borrowings from the FHLB and the Federal Reserve Bank could be increased, in each case, by the Company pledging additional available collateral. The Company’s Asset/Liability Committee closely monitors the availability of these sources as part of its overall oversight and management of the bank subsidiary’s liquidity.

Current wording

The Company’s bank subsidiary is authorized by its Board to borrow up to $1.68 billion at the FHLB, but availability at March 31, 2026 was limited to approximately $634 million based on the then pledged collateral and outstanding borrowings. In addition, the Company had a borrowing capacity of approximately $764 million at the Federal Reserve Bank as of March 31, 2026, based on the then pledged collateral. The capacity for borrowings from the FHLB and the Federal Reserve Bank could be increased, in each case, by the Company pledging additional available collateral. The Company’s Asset/Liability Committee closely monitors the availability of these sources as part of its overall oversight and management of the bank subsidiary’s liquidity.

Previous wording

The parent company is a corporation separate and distinct from its bank and other subsidiaries. The Company uses funds at the parent-company level to pay dividends to its shareholders, to acquire or make other investments in other businesses or their securities or assets, to repurchase its stock from time to time, and for other general corporate purposes including debt service. The parent company does not have access at the parent-company level to the deposits and certain other sources of funds that are available to its bank subsidiary to support its operations. Instead, the parent company has historically derived most of its revenues from dividends paid to the parent company by its bank subsidiary. The Company’s banking subsidiary is subject to statutory restrictions on its ability to pay dividends to the parent company. The parent company has, from time-to-time, supplemented the dividends received from its subsidiaries with borrowings. As of September 30, 2025, the parent company had approximately $68.0 million of cash and cash equivalents available to meet its cash flow needs.

Current wording

The parent company is a corporation separate and distinct from its bank and other subsidiaries. The Company uses funds at the parent-company level to pay dividends to its shareholders, to acquire or make other investments in other businesses or their securities or assets, to repurchase its stock from time to time, and for other general corporate purposes including debt service. The parent company does not have access at the parent-company level to the deposits and certain other sources of funds that are available to its bank subsidiary to support its operations. Instead, the parent company has historically derived most of its revenues from dividends paid to the parent company by its bank subsidiary. The Company’s banking subsidiary is subject to statutory restrictions on its ability to pay dividends to the parent company. The parent company has, from time-to-time, supplemented the dividends received from its subsidiaries with borrowings. As of March 31, 2026, the parent company had approximately $62.1 million of cash and cash equivalents available to meet its cash flow needs.

Previous wording

The accounting and reporting policies of the Company conform to GAAP and general practices within the banking industry. As a supplement to GAAP, the Company has provided certain, non-GAAP financial measures, which it believes are useful because they assist investors in assessing the Company’s operating performance. Specifically, the Company has presented its net income, earnings per share, provision for credit losses, non-interest expense, non-interest income, efficiency ratio, and net interest margin on an as adjusted basis for the periods set forth below to reflect the exclusion of the following items: (1) the CECL “Day 2” provision expense for acquired loans that have only insignificant credit deterioration (i.e., non-PCD loans) related to the Heartland merger; (2) non-recurring expenses related to the Heartland merger; (3) the gain on the extinguishment of debt resulting from the redemption of certain subordinated notes on September 15, 2025; (4) the operating results for GAI, whose assets were sold effective June 1, 2024; (5) the gain on the sale of GAI assets; and (6) the loss related to the securities portfolio restructuring transaction that occurred in the second quarter of 2024. Management believes excluding such items from these financial measures may be useful in assessing the Company’s underlying operational performance since the applicable transactions do not pertain to its core business operations and exclusion may facilitate better comparability between periods. In addition, management believes that by excluding such items the measures are useful to the Company, as well as analysts and investors, in assessing operating performance. Management also believes excluding these items may enhance comparability for peer comparison purposes.

Current wording

The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles (“GAAP”) and general practices within the banking industry. As a supplement to GAAP, the Company has provided certain, non-GAAP financial measures, which it believes are useful because they assist investors in assessing the Company’s operating performance. Specifically, the Company has presented its net income, earnings per share, provision for credit losses, non-interest expense, non-interest income, efficiency ratio, return on average assets, return on average equity, return on tangible equity, and net interest margin on an as adjusted basis for the periods set forth below to reflect the exclusion of the following items: (1) the Current Expected Credit Losses (“CECL”) “Day 2” provision expense for acquired loans that have only insignificant credit deterioration (i.e., non-PCD loans) related to the Heartland merger; and (2) non-recurring expenses related to the Heartland merger. Management believes excluding such items from these financial measures may be useful in assessing the Company’s underlying operational performance since the applicable transactions do not pertain to its core business operations and exclusion may facilitate better comparability between periods. In addition, management believes that by excluding such items the measures are useful to the Company, as well as analysts and investors, in assessing operating performance. Management also believes excluding these items may enhance comparability for peer comparison purposes.

Previous wording

•unfavorable economic conditions, including a prolonged period of inflation, and the resulting adverse impact on, among other things, credit quality;

Current wording

•unfavorable economic conditions, including prolonged periods of inflation, and the resulting adverse impact on, among other things, credit quality;

Previous wording

•impacts resulting from possible amendments or revisions to the Dodd-Frank Act and the regulations promulgated thereunder, or to Consumer Financial Protection Bureau rules and regulations;

Current wording

•impacts resulting from possible amendments or revisions to the Dodd-Frank Act and the regulations promulgated thereunder, or to Consumer Financial Protection Bureau rules and regulations; and