LAKELAND FINANCIAL CORP

Previous wording

Net income in the first six months of 2026 was $54.9 million, which increased $7.9 million, or 16.7%, from $47.1 million for the comparable period of 2025. Diluted earnings per common share were $2.17 in the first six months of 2026, an increase of 19.2% from $1.82 in the comparable period of 2025. The increase in net income for 2026 wasprimarily due to an increase to net interest income of $7.3 million, or 6.8%, an increase in noninterest income of $3.1 million, or 13.8%, and a decrease in the provision for credit losses of $6.1 million, or 62.2%. Offsetting these positive contributions was an increase in noninterest expense of $6.4 million, or 10.1%, and an increase to income tax expense of $2.2 million, or 22.0%. Pretax pre-provision earnings, a non-GAAP measure calculated by adding net interest income to noninterest income and subtracting noninterest expense, were $71.0 million in the first six months of 2026, an increase of $4.0 million, or 6.0%, compared to $67.0 million for the comparable period of 2025.

Current wording

Net income in the first nine months of 2026 was $83.8 million, which increased $10.3 million, or 14.0%, from $73.5 million for the comparable period of 2025. Diluted earnings per common share were $3.31 in the first nine months of 2026, an increase of 16.1% from $2.85 in the comparable period of 2025. The increase in net income for 2026 wasprimarily due to an increase to net interest income of $12.0 million, or 7.3%, an increase in noninterest income of $2.4 million, or 6.8%, and a decrease in the provision for credit losses of $6.9 million, or 58.4%. Offsetting these positive contributions to the increase in net income was an increase in noninterest expense of $7.6 million, or 7.7%, and an increase to income tax expense of $3.4 million, or 21.5%. Pretax pre-provision earnings, a non-GAAP measure calculated by adding net interest income to noninterest income and subtracting noninterest expense, were $107.8 million in the first nine months of 2026, an increase of $6.8 million, or 6.7%, compared to $101.0 million for the comparable period of 2025.

Previous wording

Return on average total equity was 14.44% in the first six months of 2026 versus 13.62% in the comparable period of 2025. Return on average total assets was 1.55% in the first six months of 2026 versus 1.39% for the comparable period of 2025. The Company's average equity to average assets ratio was 10.74% in the first six months of 2026 versus 10.19% in the comparable period of 2025.

Current wording

Return on average total equity was 14.59% in the first nine months of 2026 versus 13.96% in the comparable period of 2025. Return on average total assets was 1.57% in the first nine months of 2026 versus 1.44% for the comparable period of 2025. The Company's average equity to average assets ratio was 10.72% in the first nine months of 2026 versus 10.29% in the comparable period of 2025.

Previous wording

Net income in the second quarter of 2026 was $28.4 million, an increase of $1.5 million, or 5.5%, from $27.0 million for the comparable period of 2025. Diluted earnings per common share were $1.13 in the second quarter of 2026, an increase of 8.7% from $1.04 in the comparable period of 2025. The increase was driven primarily by an increase in net interest income of $3.4 million, or 6.2%, a decrease in provision for credit losses of $1.3 million, or 43.1%, and an increase in noninterest income of $1.1 million, or 9.5%. Offsetting these positive contributions was an increase in noninterest expense of $4.0 million, or 13.2%. Pretax pre-provision earnings in the second quarter of 2026 were $36.4 million, an increase of $486,000, or 1.4%, compared to $35.9 million for the comparable period of 2025.

Current wording

Net income in the third quarter of 2026 was $28.9 million, an increase of $2.5 million, or 9.3%, from $26.4 million for the comparable period of 2025. Diluted earnings per common share were $1.14 in the third quarter of 2026, an increase of 10.7% from $1.03 in the comparable period of 2025. The increase was driven primarily by an increase in net interest income of $4.6 million, or 8.3%, and a decrease in provision for credit losses of $800,000, or 40.0%. Offsetting these positive contributions to the increase in net income was an increase in noninterest expense of $1.2 million, or 3.3%, an increase in income tax expense of $1.2 million, or 20.5%, and a decrease in noninterest income of $680,000, or 5.2%. Pretax pre-provision earnings in the third quarter of 2026 were $36.9 million, an increase of $2.8 million, or 8.3%, compared to $34.1 million for the comparable period of 2025.

Previous wording

Return on average total equity was 15.00% in the second quarter of 2026 versus 15.52% in the comparable period of 2025. Return on average total assets was 1.59% in the second quarter of 2026 versus 1.57% in the comparable period of 2025. The average equity to average assets ratio was 10.58% in the second quarter of 2026 versus 10.09% in the comparable period of 2025.

Current wording

Return on average total equity was 14.88% in the third quarter of 2026 versus 14.60% in the comparable period of 2025. Return on average total assets was 1.59% in the third quarter of 2026 versus 1.53% in the comparable period of 2025. The average equity to average assets ratio was 10.69% in the third quarter of 2026 versus 10.47% in the comparable period of 2025.

Previous wording

The Company’s tangible common equity to tangible assets ratio, which is a non-GAAP financial measure, was 10.63% at June 30, 2026, compared to 10.15% at June 30, 2025 and 10.86% at December 31, 2025. Unrealized losses from available-for-sale investment securities were $140.9 million at June 30, 2026, compared to $185.3 million at June 30, 2025 and $143.3 million at December 31, 2025. When excluding the impact of accumulated other comprehensive income (loss) ("AOCI") on tangible common equity and tangible assets, the Company's adjusted tangible common equity to adjusted tangible assets ratio, which is a non-GAAP financial measure, was 12.14% at June 30, 2026, compared to 12.17% at June 30, 2025 and 12.45% at December 31, 2025.

Current wording

The Company’s tangible common equity to tangible assets ratio, which is a non-GAAP financial measure, was 10.11% at September 30, 2026, compared to 10.79% at September 30, 2025 and 10.86% at December 31, 2025. Unrealized losses from available-for-sale investment securities were $213.9 million at September 30, 2026, compared to $159.9 million at September 30, 2025 and $143.3 million at December 31, 2025. When excluding the impact of accumulated other comprehensive income (loss) ("AOCI") on tangible common equity and tangible assets, the Company's adjusted tangible common equity to adjusted tangible assets ratio, which is a non-GAAP financial measure, was 12.32% at September 30, 2026, compared to 12.57% at September 30, 2025 and 12.45% at December 31, 2025.

Previous wording

Total assets were $7.243 billion as of June 30, 2026 versus $6.990 billion as of December 31, 2025, an increase of $252.9 million, or 3.6%. Balance sheet expansion was driven by increases to total loans, net of the allowance for credit losses, which increased $202.7 million, or 3.8%, and cash and cash equivalents, which increased $52.8 million, or 37.4%. These increases were offset by a decrease to available-for-sale securities of $16.9 million, or 1.6%. The balance sheet expansion from December 31, 2025 to June 30, 2026 was funded by an increase in total deposits of $356.2 million, or 6.0%, and was offset by a decrease in borrowings of $113.0 million, or 61.3%. Total equity increased $10.9 million, or 1.4%, from $762.5 million at December 31, 2025 to $773.4 million at June 30, 2026. Driving the increase in total equity was an increase in retained earnings of $28.7 million, or 3.6%, primarily as a result of net income of $54.9 million less dividends declared and paid of $26.3 million. Accumulated other comprehensive income (loss) improved by $2.7 million and contributed further to the increase in total equity. Offsetting these items was an increase in treasury stock, which increased by $23.5 million, or 65.7%, driven by the Company's utilization of its share repurchase program. The combined effect of the repurchase activity under the share repurchase program and dividends paid duringthe first six months of 2026 represented a total return of capital to Company shareholders of $49.8 million.

Current wording

Total assets were $7.208 billion as of September 30, 2026 versus $6.990 billion as of December 31, 2025, an increase of $217.9 million, or 3.1%. Balance sheet expansion was driven by loan growth with total loans, net of the allowance for credit losses, increasing by $304.8 million, or 5.7%. The increase in loans was offset by a decrease in available-for-sale securities of $96.0 million, or 9.1%, and a decrease in cash and cash equivalents of $25.6 million, or 18.1%. The balance sheet expansion from December 31, 2025 to September 30, 2026 was funded by an increase in total deposits of $321.4 million, or 5.4%, and was offset by a decrease in borrowings of $82.9 million, or 45.0%. Total equity decreased $30.4 million, or 4.0%, from $762.5 million at December 31, 2025 to $732.1 million at September 30, 2026. Driving the decrease in total equity was a decrease in accumulated other comprehensive income (loss) of $54.6 million, driven by a decline in available-for-sale market valuations, and an increase in treasury stock, which increased by $26.2 million, or 73.4%, from the Company's utilization of its share repurchase program. Offsetting these items was an increase in retained earnings of $44.5 million, or 5.6%, primarily as a result of net income of $83.8 million less dividends declared and paid of $39.3 million. The combined effect of the repurchase activity under the share repurchase program and dividends paid duringthe first nine months of 2026 represented a total return of capital to Company shareholders of $65.3 million.

Previous wording

Selected income statement information for the three and six months ended June 30, 2026 and 2025 is presented in the following table:

Current wording

Selected income statement information for the three and nine months ended September 30, 2026 and 2025 is presented in the following table:

Previous wording

Net income was $54.9 million in the first six months of 2026, which increased $7.9 million, or 16.7%, from $47.1 million for the comparable period of 2025. Diluted earnings per common share were $2.17 in the first six months of 2026, an increase of 19.2% from $1.82 in the comparable period of 2025. The increase in net income for the first six months of 2026 wasprimarily due to an increase to net interest income of $7.3 million, or 6.8%, an increase to noninterest income of $3.1 million, or 13.8%, and a decrease in the provision for credit losses of $6.1 million, or 62.2%. Offsetting these positive contributions was an increase in noninterest expense of $6.4 million, or 10.1%, and an increase to income tax expense of $2.2 million, or 22.0%.

Current wording

Net income was $83.8 million in the first nine months of 2026, which increased $10.3 million, or 14.0%, from $73.5 million for the comparable period of 2025. Diluted earnings per common share were $3.31 in the first nine months of 2026, an increase of 16.1% from $2.85 in the comparable period of 2025. The increase in net income for the first nine months of 2026 wasprimarily due to an increase to net interest income of $12.0 million, or 7.3%, an increase to noninterest income of $2.4 million, or 6.8%, and a decrease in the provision for credit losses of $6.9 million, or 58.4%. Offsetting these positive contributions to the increase in net income was an increase in noninterest expense of $7.6 million, or 7.7%, and an increase to income tax expense of $3.4 million, or 21.5%.

Previous wording

(1)Tax exempt income was converted to a fully tax equivalent basis at a 21 percent tax rate. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses. Tax equivalent basis adjustment was $2.2 million for the six-month periods ended June 30, 2026 and 2025.

Current wording

(1)Tax exempt income was converted to a fully tax equivalent basis at a 21 percent tax rate. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses. Tax equivalent basis adjustment was $3.3 million for the nine-month periods ended September 30, 2026 and 2025.

Previous wording

(2)Loan fees, which are immaterial in relation to total taxable loan interest income for the six months ended June 30, 2026 and 2025, are included as taxable loan interest income.

Current wording

(2)Loan fees, which are immaterial in relation to total taxable loan interest income for the nine months ended September 30, 2026 and 2025, are included as taxable loan interest income.

Previous wording

(1)Tax exempt income was converted to a fully tax equivalent basis at a 21 percent tax rate. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses. Tax equivalent basis adjustments was $1.1 million for the three-month periods ended June 30, 2026 and June 30, 2025.

Current wording

(1)Tax exempt income was converted to a fully tax equivalent basis at a 21 percent tax rate. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses. Tax equivalent basis adjustments were $1.1 million for the three-month periods ended September 30, 2026 and September 30, 2025.

Previous wording

Net interest income, on a fully tax equivalent basis, increased $7.3 million, or 6.6%, to $117.3 million for the six months ended June 30, 2026, compared to $110.0 million for the first six months of 2025. Theincrease in net interest income on a fully tax equivalent basis was driven bya decrease in deposit interest expense of$5.8 million, or 7.6%, from$75.6 million to$69.8 million. Contributing further to the increase in fully tax equivalent net interest income was an increase in loan interest income of $2.9 million, or 1.8%, from $166.9 million to $169.8 million, and an increase in securities interest income of$710,000, or 4.2%, from $16.8 million to $17.5 million. Offsetting these items wasan increase in borrowings expense of$731,000, or 48.1%, from $1.5 million to $2.3 million.

Current wording

Net interest income, on a fully tax equivalent basis, increased $12.0 million, or 7.2%, to $179.1 million for the nine months ended September 30, 2026, compared to $167.2 million for the first nine months of 2025. Theincrease in net interest income on a fully tax equivalent basis was driven bya decrease in deposit interest expense of$7.7 million, or 6.8%, from$114.0 million to$106.3 million. Contributing further to the increase in fully tax equivalent net interest income was an increase in loan interest income of $5.9 million, or 2.3%, from $252.7 million to $258.6 million, and an increase in securities interest income of$1.1 million, or 4.2%, from $25.2 million to $26.3 million. Offsetting these items wasan increase in borrowings expense of$529,000, or 28.0%, from $1.9 million to $2.4 million.

Previous wording

Average earning assets were $6.781 billion for the six months ended June 30, 2026, an increase of $280.2 million, or 4.3%, compared to $6.501 billion for the six months ended June 30, 2025. Average loans outstanding drove the increase to average earning assets, increasing $278.5 million, or 5.3%, to $5.486 billion from $5.208 billion for the six months ended June 30, 2026 and 2025, respectively. Average investment securities increased $45.0 million, or 4.0%, to$1.176 billion from$1.131 billion between the respective periods. Average interest bearing liabilities were $5.069 billion for the six months ended June 30, 2026, an increase of $267.2 million, or 5.6%, from $4.802 billion for the six months ended June 30, 2025. This increase was driven bygrowth in average interest bearing deposits of $218.6 million, or 4.6%, from $4.735 billion for the six months ended June 30, 2025 to $4.954 billion for the six months ended June 30, 2026. Average short-term borrowings increased by $48.1 million, or 72.5%, between the respective periods. Noninterest bearing demand deposits decreased $20.1 million, or 1.6%, to$1.231 billion from$1.251 billion between the two periods.

Current wording

Average earning assets were $6.800 billion for the nine months ended September 30, 2026, an increase of $302.1 million, or 4.6%, compared to $6.498 billion for the nine months ended September 30, 2025. Average loans outstanding drove the increase to average earning assets, increasing $313.3 million, or 6.0%, to $5.521 billion from $5.207 billion for the nine months ended September 30, 2026 and 2025, respectively. Average investment securities increased $38.1 million, or 3.4%, to$1.168 billion from$1.130 billion between the respective periods. Average interest bearing liabilities were $5.067 billion for the nine months ended September 30, 2026, an increase of $259.6 million, or 5.4%, from $4.808 billion for the nine months ended September 30, 2025. This increase was driven bygrowth in average interest bearing deposits of $232.3 million, or 4.9%, from $4.752 billion for the nine months ended September 30, 2025 to $4.984 billion for the nine months ended September 30, 2026. Average short-term borrowings increased by $26.9 million, or 49.2%, between the respective periods. Noninterest bearing demand deposits increased $3.3 million, or 0.3%, to$1.252 billion from$1.249 billion between the two periods.

Previous wording

The fully tax equivalent net interest margin was 3.49% for the six months ended June 30, 2026, compared to 3.41% during the first six months of 2025, representing an 8 basis point expansion between the two periods. The net interest margin increase was primarily driven by a decrease to interest expense as a percentage of average earning assets, which decreased to 2.14% for thesix months ended June 30, 2026, down from 2.39% for the comparable period of 2025, or a decrease of 25 basis points. This decline was attributable to a decrease in the rate for total interest bearing liabilities of 37 basis points from 3.24% to 2.87% between the respective periods. These decreases were driven by reduced costs associated with the repricing of the Company's interest bearing deposits and borrowings as a result of monetary policy easing from the Federal Reserve Bank in late 2025. The average rate for interest bearing deposits declined 38 basis points from 3.22% to 2.84% between the two periods. Contributing further to the reduction in the rate for interest bearing liabilities was a reduction in the average borrowings rate, which declined 65 basis points from 4.57% to 3.92%. The improvement in interest expense as a percentage of average earning assets was offset by a 17 basis point reduction in interest income as a percentage of average earning assets, which declined from 5.80% to 5.63%. This decrease was primarily attributable to a decline in average loan yields, which decreased 22 basis points to 6.24% for the six months ended June 30, 2026, down from 6.46% for the comparable period of 2025.

Current wording

The fully tax equivalent net interest margin was 3.52% for the nine months ended September 30, 2026, compared to 3.44% during the first nine months of 2025, representing an 8 basis point expansion between the two periods. The net interest margin increase was primarily driven by a decrease to interest expense as a percentage of average earning assets, which decreased to 2.14% for thenine months ended September 30, 2026, down from 2.38% for the comparable period of 2025, or a decrease of 24 basis points. This decline was attributable to a decrease in the rate for total interest bearing liabilities of 35 basis points from 3.22% to 2.87% between the respective periods. These decreases were driven by reduced costs associated with the repricing of the Company's interest bearing deposits and borrowings from the effects of monetary policy easing from the Federal Reserve Bank in late 2025. The average rate for interest bearing deposits declined 36 basis points from 3.21% to 2.85% between the two periods. Contributing further to the reduction in the rate for interest bearing liabilities was a reduction in the average borrowings rate, which declined 64 basis points from 4.54% to 3.90%. The improvement in interest expense as a percentage of average earning assets was offset by a 16 basis point reduction in interest income as a percentage of average earning assets, which declined from 5.82% to 5.66%. This decrease was primarily attributable to a decline in average loan yields, which decreased 23 basis points to 6.26% for the nine months ended September 30, 2026, down from 6.49% for the comparable period of 2025. Investment securities yields improved by 3 basis points from 2.98% to 3.01% between the two periods.

Previous wording

Net interest income, on a fully tax equivalent basis, increased by $3.4 million, or 6.1%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The increase in net interest income on a fully tax equivalent basis was driven bya decrease in deposit interest expense of$2.7 million, or 7.0%, from$39.1 million to$36.4 million. Contributing further to the increase in fully tax equivalent net interest income was an increase in loan interest income of $1.6 million, or 1.9%, from $84.8 million to $86.4 million, and an increase to securities interest income of $264,000, or 3.1%, from $8.4 million to $8.7 million between the two periods. Offsetting these, borrowings expense increased$70,000, or 17.6%, from$398,000 to$468,000.

Current wording

Net interest income, on a fully tax equivalent basis, increased by $4.7 million, or 8.1%, to $61.8 million for the three months ended September 30, 2026 as compared to $57.2 million for the three months ended September 30, 2025. The increase in net interest income on a fully tax equivalent basis was driven by an increase in loan interest income of $3.0 million, or 3.5%, from $85.8 million to $88.8 million, a decrease in deposit interest expense of$2.0 million, or 5.1%, from$38.4 million to$36.5 million, and an increase to securities interest income of $352,000, or 4.2%, from $8.4 million to $8.8 million. Additionally, borrowings expense decreased $202,000, or 54.9%, from$368,000 to$166,000.

Previous wording

Average earning assets were $6.833 billion for the second quarter of 2026, an increase of $262.1 million, or 4.0%, compared to $6.571 billion for the second quarter of 2025. The increase in average earning assets was driven by an increase in average loans of $301.7 million, or 5.8%, from $5.230 billion for the second quarter of 2025 to $5.531 billion for the second quarter of 2026. Average investment securities increased $36.2 million, or 3.2%, from $1.126 billion for the second quarter of 2025 to $1.162 billion for the second quarter of 2026. Average interest bearing liabilities were $5.133 billion for the second quarter of 2026, an increase of $246.5 million, or 5.0%, from $4.887 billion for the second quarter of 2025. This increase was driven by growth in interest bearing deposits of $232.5 million, or 4.8%, from $4.852 billion for the second quarter of 2025 to $5.085 billion for the second quarter of 2026. Average short-term borrowings increased$14.0 million, or 42.0%, from$33.3 million to$47.3 million. Noninterest bearing demand deposits decreased $16.3 million, or 1.3%, to $1.228 billion for the second quarter of 2026 from $1.244 billion for thesecond quarter of 2025.

Current wording

Average earning assets were $6.838 billion for the third quarter of 2026, an increase of $345.1 million, or 5.3%, compared to $6.493 billion for the third quarter of 2025. The increase in average earning assets was driven by an increase in average loans of $381.9 million, or 7.3%, from $5.206 billion for the third quarter of 2025 to $5.588 billion for the third quarter of 2026. Average investment securities increased $24.6 million, or 2.2%, from $1.127 billion for the third quarter of 2025 to $1.152 billion for the third quarter of 2026. Average interest bearing liabilities were $5.063 billion for the third quarter of 2026, an increase of $244.5 million, or 5.1%, from $4.818 billion for the third quarter of 2025. This increase was driven by growth in interest bearing deposits of $259.3 million, or 5.4%, from $4.785 billion for the third quarter of 2025 to $5.044 billion for the third quarter of 2026. Average short-term borrowings decreased$14.8 million, or 46.6%, from$31.7 million to$17.0 million. Noninterest bearing demand deposits increased $49.3 million, or 4.0%, to $1.294 billion for the third quarter of 2026 from $1.244 billion for thethird quarter of 2025.

Previous wording

The fully tax equivalent net interest margin expanded by 7 basis points, or 2.0%, to 3.49% for the second quarter of 2026, compared to 3.42% for the second quarter of 2025. The net interest margin expansion was primarily driven bya decrease in interest expense as a percentage of average earning assets, which decreased to 2.16% for the second quarter of 2026, down from 2.41% for the comparable period of 2025, fora decrease of 25 basis points. This decrease was attributable toa decrease in the rate for total interest bearing liabilities of 36 basis points from 3.24% to 2.88% between the respective periods. This decrease was driven by reduced costs associated with the repricing of the Company's interest bearing deposits and borrowings as a result of monetary policy easing from the Federal Reserve Bank in late 2025. The average rate for interest bearing deposits declined 36 basis points from 3.23% to 2.87%. Contributing further to the reduction in the rate for interest bearing liabilities was a reduction in the average borrowings rate, which declined 76 basis points from 4.63% to 3.87%. The improvement in interest expense as a percentage of average earning assets was offset by a 18 basis point reduction in interest income as a percentage of average earning assets, which declined from 5.83% for thesecond quarter of 2025 to 5.65% for thesecond quarter of 2026. This decrease was primarily attributable to a decrease in loan yields, which decreased 24 basis points from 6.50% to 6.26% between the two periods. Investment securities yields remained at 3.00% for both periods.

Current wording

The fully tax equivalent net interest margin expanded by 8 basis points to 3.58% for the third quarter of 2026, compared to 3.50% for the third quarter of 2025. The net interest margin expansion was primarily driven bya decrease in interest expense as a percentage of average earning assets, which decreased to 2.13% for the third quarter of 2026, down from 2.37% for the comparable period of 2025, or 24 basis points. This decrease was attributable toa decrease in the rate for total interest bearing liabilities of 33 basis points from 3.20% to 2.87% between the respective periods. This decrease was driven by reduced costs associated with the repricing of the Company's interest bearing deposits and borrowings. The average rate for interest bearing deposits declined 32 basis points from 3.19% to 2.87%. Contributing further to the reduction in the rate for interest bearing liabilities was a reduction in the average borrowings rate, which declined 80 basis points from 4.43% to 3.63%. The improvement in interest expense as a percentage of average earning assets was offset by a 16 basis point reduction in interest income as a percentage of average earning assets, which declined from 5.87% for thethird quarter of 2025 to 5.71% for thethird quarter of 2026. This decrease was primarily attributable to a decrease in loan yields, which decreased 23 basis points from 6.54% to 6.31% between the two periods. Investment securities yields increased 6 basis points to 3.03% from 2.97%.

Previous wording

The Company recorded provision for credit losses expense of $3.7 million for the six months ended June 30, 2026, compared to provision expense of $9.8 million during the comparable period of 2025, a decrease of $6.1 million, or 62.2%. The decrease in provision expense between the respective periods was attributable to the allocation of reserves to a previously disclosed nonperforming credit during the first quarter of 2025. Net charge-offs were $2.1 million during the six month period ended June 30, 2026, compared to $29.2 million during the comparable period of 2025 fora decrease of $27.1 million, or 92.8%. Net charge-offs for the first six months of 2026 were primarily driven by a $2.0 million charge off to one commercial credit during the first quarter of 2026. The decrease in charge offs between the respective periods was attributable to the partial charge off of the previously disclosed nonperforming credit during the second quarter of 2025.

Current wording

The Company recorded provision for credit losses expense of $4.9 million for the nine months ended September 30, 2026, compared to provision expense of $11.8 million during the comparable period of 2025, a decrease of $6.9 million, or 58.4%. The decrease in provision expense between the respective periods was attributable to the allocation of reserves to a previously disclosed nonperforming credit during the first quarter of 2025. Net charge-offs were $5.1 million during the nine month period ended September 30, 2026, compared to $29.6 million during the comparable period of 2025 fora decrease of $24.5 million, or 82.9%. Net charge-offs for the first nine months of 2026 were primarily driven by a $2.0 million charge off to one commercial credit during the first quarter and a $2.8 million partial charge off of a separate, unrelated commercial credit during the third quarter of 2026. The decrease in charge offs between the respective periods was attributable to the partial charge off of the previously disclosed nonperforming credit during the second quarter of 2025.

Previous wording

The Company recorded provision expense of $1.7 million during the second quarter of 2026, compared to $3.0 million during the second quarter of 2025. Net charge-offs were $24,000 during the second quarter of 2026 compared to $28.9 million during the second quarter of 2025.

Current wording

The Company recorded provision expense of $1.2 million during the third quarter of 2026, compared to $2.0 million during the third quarter of 2025. Net charge-offs were $3.0 million during the third quarter of 2026 compared to $384,000 during the third quarter of 2025.

Previous wording

Noninterest income categories for the three and six months ended June 30, 2026 and 2025 are shown in the following tables:

Current wording

Noninterest income categories for the three and nine months ended September 30, 2026 and 2025 are shown in the following tables:

Previous wording

The Company's noninterest income increased by $3.1 million, or 13.8%, to $25.5 million for the six months ended June 30, 2026, compared to $22.4 million for the prior year period. Increases in fee-based revenue streams contributed to the increase to noninterest income, with wealth advisory fees improving by $546,000, or 9.9%, loan and service fees improving by $377,000, or 6.4%, service charges on deposit accounts improving by $151,000, or 2.7%, and investment brokerage fees improving by $33,000, or 3.3%. Additionally, bank owned life insurance increased $1.2 million, or 90.4%, from improved market performance from variable bank owned life insurance policies and incremental income from general account policies purchased in 2025. Increased transaction volume drove increases to interest rate swap fee income of $681,000 and mortgage banking income of $136,000.

Current wording

The Company's noninterest income increased by $2.4 million, or 6.8%, to $37.8 million for the nine months ended September 30, 2026, compared to $35.4 million for the prior year period. Increases in fee-based revenue streams contributed to the increase to noninterest income, with wealth advisory fees improving by $844,000, or 10.1%, and service charges on deposit accounts improving by $235,000, or 2.8%. Conversely, merchant and interchange fee income declined $79,000, or 3.1%. Bank owned life insurance income improved by $817,000, or 27.9%, from improved market performance from variable bank owned life insurance policies, which reflect returns in the equity markets, and incremental income from general account policies purchased in 2025. Interest rate swap fee income improved by $681,000 and mortgage banking income improved $230,000, or 343.3%, from increased volume.

Previous wording

Noninterest expense categories for the three and six months ended June 30, 2026 and 2025 are shown in the following tables:

Current wording

Noninterest expense categories for the three and nine months ended September 30, 2026 and 2025 are shown in the following tables:

Previous wording

The Company's noninterest expense increased by $6.4 million, or 10.1%, for the six months ended June 30, 2026 to $69.6 million compared to $63.2 million for the six months ended June 30, 2025. Salaries and employee benefits expense increased $5.8 million, or 16.5%, primarily due to increased salaries and wages of $2.0 million, performance-based incentive compensation accruals of $2.3 million, variable deferred compensation expense of $799,000, and health insurance expense of $677,000. Net occupancy expense increased $344,000, or 9.2%. Data processing fees and supplies expense increased $216,000, or 2.6%, from continued investment in customer-facing and operational technology solutions. Corporate and business development expense increased $169,000, or 6.6%, from increased advertising and corporate development expenses. FDIC insurance and other regulatory fees increased $115,000, or 7.0%, from increased FDIC insurance premium accruals. Offsetting these increases was a decrease in professional fees of $364,000, or 8.9%, primarily driven by reduced technology implementation fees.

Current wording

The Company's noninterest expense increased by $7.6 million, or 7.7%, for the nine months ended September 30, 2026, to $105.7 million compared to $98.2 million for the comparable period of 2025. Salaries and employee benefits expense increased $6.2 million, or 11.1%, primarily due to increased salaries and wages of $2.9 million, performance-based incentive compensation accruals of $1.6 million, health insurance expense of $1.3 million, and variable deferred compensation expense of $370,000. Net occupancy expense increased $620,000, or 11.1%, from investing in our retail branch and operational infrastructure, including the completion of construction and opening of the Innovation and Technology Center at the Company's downtown Warsaw headquarters. Data processing fees and supplies expense increased $450,000, or 3.6%, from continued investment in customer-facing and operational technology solutions. Corporate and business development expense increased $236,000, or 5.7%, from increased advertising and corporate development expenses. FDIC insurance and other regulatory fees increased $147,000, or 5.8%, from increased FDIC insurance premium accruals due to balance sheet growth.

Previous wording

Noninterest expense increased $4.0 million, or 13.2%, to $34.5 million for the second quarter of 2026, compared to $30.4 million during the second quarter of 2025. Salaries and employee benefits expense increased by $3.4 million, or 19.9%, primarily the result of increased salaries and wages, performance-based incentive compensation accruals, and benefits expenses. Deferred variable compensation expense, which is offset by noninterest income recorded from the performance of the company's variable bank owned life insurance policies, contributed further to the increase. Net occupancy expense increased $220,000, or 12.6%, from the company's continued expansion and reinvestment into its physical branch and operational infrastructure. Data processing fees and supplies increased $222,000, or 5.3%, from continued investment in customer-facing and operational technology solutions, including artificial intelligence capabilities. Additionally, corporate and business development expense increased $82,000, or 7.1%, professional fees increased $79,000, or 4.6%, and FDIC insurance and other regulatory fees increased $42,000, or 5.0%.

Current wording

Noninterest expense increased $1.2 million, or 3.3%, to $36.1 million for the third quarter of 2026, compared to $35.0 million during the third quarter of 2025. Salaries and employee benefits expense increased by $368,000, or 1.8%, primarily the result of increased salaries and wages and benefits expense, and was offset by reduced performance-based incentive compensation accruals. Full-time equivalent staff increased by 31 persons at September 30, 2026 compared to the same period in the prior year, or 4.7%. The growth in staff reflects the organic growth plans with an increase of 18 revenue generating personnel and 13 support staff over the past year. Professional fees increased $397,000, or 23.0%, from increased technology implementation fees and other professional expenses. Net occupancy expense increased $276,000, or 14.7%, from the company's continued expansion and reinvestment into its physical branch and operational infrastructure. Data processing fees and supplies increased $234,000, or 5.7%, from continued investment in customer-facing and operational technology solutions, including artificial intelligence capabilities. Offsetting these increases was a decrease in other expense of $175,000, or 6.0%. The reduction in other expense was driven by reduced office supplies and telecommunications expenses.

Previous wording

The Company's income tax expense increased $2.2 million, or 22.0%, to $12.3 million in the six months ended June 30, 2026, compared to $10.1 million for the same period in 2025. The effective tax rate was 18.4% in the six months ended June 30, 2026, compared to 17.7% for the comparable period of 2025, driven by higher earnings and lower tax-exempt income. Income tax expense increased $304,000, or 5.1%, to $6.3 million for the second quarter of 2026 compared to $6.0 million for the second quarter of 2025. The effective tax rate for the second quarter of 2026 was 18.1%, compared to 18.1% for the prior year period.

Current wording

The Company's income tax expense increased $3.4 million, or 21.5%, to $19.2 million in the nine months ended September 30, 2026, compared to $15.8 million for the same period in 2025. The effective tax rate was 18.6% in the nine months ended September 30, 2026, compared to 17.7% for the comparable period of 2025, driven by higher earnings and lower tax-exempt income. Income tax expense increased $1.2 million, or 20.5%, to $6.8 million for the third quarter of 2026 compared to $5.7 million for the third quarter of 2025. The effective tax rate for the third quarter of 2026 was 19.1%, compared to 17.6% for the prior year period.

Previous wording

Total assets were $7.243 billion as of June 30, 2026 versus $6.990 billion as of December 31, 2025, an increase of $252.9 million, or 3.6%. Balance sheet expansion was driven by increases to total loans, net of the allowance for credit losses, which increased $202.7 million, or 3.8%, and cash and cash equivalents, which increased $52.8 million, or 37.4%. These increases were offset by a decrease to available-for-sale securities of $16.9 million, or 1.6%. The balance sheet expansion from December 31, 2025 to June 30, 2026 was funded by an increase in total deposits of $356.2 million, or 6.0%, and was offset by a decrease in borrowings of $113.0 million, or 61.3%. Total equity increased $10.9 million, or 1.4%, from $762.5 million at December 31, 2025 to $773.4 million at June 30, 2026. Driving the increase in total equity was an increase in retained earnings of $28.7 million, or 3.6%, primarily as a result of net income of $54.9 million less dividends declared and paid of $26.3 million. Accumulated other comprehensive income (loss) improved by $2.7 million and contributed further to the increase in total equity. Offsetting these items was an increase in treasury stock, which increased by $23.5 million, or 65.7%, driven by the Company's utilization of its share repurchase program. The combined effect of the repurchase activity under the share repurchase program and dividends paid duringthe first six months of 2026 represented a total return of capital to Company shareholders of $49.8 million.

Current wording

Total assets were $7.208 billion as of September 30, 2026 versus $6.990 billion as of December 31, 2025, an increase of $217.9 million, or 3.1%. Balance sheet expansion was driven by loan growth with total loans, net of the allowance for credit losses, increasing by $304.8 million, or 5.7%. The increase in loans was offset by a decrease in available-for-sale securities of $96.0 million, or 9.1%, and a decrease in cash and cash equivalents of $25.6 million, or 18.1%. The balance sheet expansion from December 31, 2025 to September 30, 2026 was funded by an increase in total deposits of $321.4 million, or 5.4%, and was offset by a decrease in borrowings of $82.9 million, or 45.0%. Total equity decreased $30.4 million, or 4.0%, from $762.5 million at December 31, 2025 to $732.1 million at September 30, 2026. Driving the decrease in total equity was a decrease in accumulated other comprehensive income (loss) of $54.6 million, driven by a decline in available-for-sale market valuations, and an increase in treasury stock, which increased by $26.2 million, or 73.4%, from the Company's utilization of its share repurchase program. Offsetting these items was an increase in retained earnings of $44.5 million, or 5.6%, primarily as a result of net income of $83.8 million less dividends declared and paid of $39.3 million. The combined effect of the repurchase activity under the share repurchase program and dividends paid duringthe first nine months of 2026 represented a total return of capital to Company shareholders of $65.3 million.

Previous wording

Total cash and cash equivalents increased by $52.8 million, or 37.4%, to $194.1 million at June 30, 2026, from $141.3 million at December 31, 2025. Cash and cash equivalents include short-term investments. The fluctuation in cash and cash equivalents at June 30, 2026 was driven by an increase in cash and due from banks of $12.7 million, or 22.3%, and an increase in interest bearing short-term investment accounts of $40.1 million, or 47.6%, which were deposited primarily at the Federal Reserve Bank of Chicago.

Current wording

Total cash and cash equivalents decreased by $25.6 million, or 18.1%, to $115.8 million at September 30, 2026, from $141.3 million at December 31, 2025. Cash and cash equivalents include short-term investments. The fluctuation in cash and cash equivalents at September 30, 2026 was driven by a decrease in cash and due from banks of $3.3 million, or 5.8%, and a decrease in interest bearing short-term investment accounts of $22.2 million, or 26.4%, which were deposited primarily at the Federal Reserve Bank of Chicago.

Previous wording

Purchases of available-for-sale securities were $20.5 million in the first six months of 2026. Investment securities represented 16.1% of total assets on June 30, 2026, compared to 17.0% of total assets on December 31, 2025. The Company anticipates receiving principal and interest cash flows of approximately $51.9 million during the remainder of 2026 from the investment securities portfolio and plans to use that liquidity to fund loan growth as well as to fund reinvestments to the investment securities portfolio. Tax equivalent adjusted effective duration for the investment securities portfolio was 5.8 years at June 30, 2026 and 5.9 years at December 31, 2025. Paydowns from prepayments and scheduled payments of $38.1 million were received in the first six months of 2026, and the amortization of premiums, net of the accretion of discounts, was $1.8 million. There were no sales of available-for-sale investment securities in the first six months of 2026. No allowance for credit losses was recognized for available-for-sale or held-to-maturity securities as of June 30, 2026 and December 31, 2025.

Current wording

Purchases of available-for-sale securities were $39.6 million in the first nine months of 2026. Investment securities represented 15.1% of total assets on September 30, 2026, compared to 17.0% of total assets on December 31, 2025. The Company anticipates receiving principal and interest cash flows of approximately $24.1 million during the remainder of 2026 from the investment securities portfolio and plans to use that liquidity to fund loan growth as well as to fund reinvestments to the investment securities portfolio. Tax equivalent adjusted effective duration for the investment securities portfolio was 5.6 years at September 30, 2026 and 5.9 years at December 31, 2025. Paydowns from prepayments and scheduled payments of $62.6 million were received in the first nine months of 2026, and the amortization of premiums, net of the accretion of discounts, was $2.6 million. There were no sales of available-for-sale investment securities in the first nine months of 2026. No allowance for credit losses was recognized for available-for-sale or held-to-maturity securities as of September 30, 2026 and December 31, 2025.

Previous wording

The fair value of the available-for-sale investment securities portfolio as of June 30, 2026 included net unrealized losses of $140.9 million, compared to net unrealized losses of $143.3 million as of December 31, 2025. Unrealized losses in the available-for-sale investment securities portfolio are generally attributable to market value declines experienced during the rate tightening cycle of 2022 and 2023.

Current wording

The fair value of the available-for-sale investment securities portfolio as of September 30, 2026 included net unrealized losses of $213.9 million, compared to net unrealized losses of $143.3 million as of December 31, 2025. Unrealized losses in the available-for-sale investment securities portfolio are generally attributable to market value declines experienced during the rate tightening cycle of 2022 and 2023 and more recently to the rapid increase in longer-dated US Treasury yields during the third quarter of 2026.

Previous wording

Real estate mortgage loans held-for-sale increased by $923,000, or 34.1%, to $3.6 million at June 30, 2026, from $2.7 million at December 31, 2025. The balance of this asset category is subject to a high degree of variability depending on, among other factors, recent mortgage loan rates and the timing of loan sales into the secondary market. The Company generally sells conforming qualifying mortgage loans it originates on the secondary market. Proceeds from sales of residential mortgages totaled $9.4 million in the first six months of 2026, compared to $8.7 million in the first six months of 2025. Management expects the volume of loans originated for sale in the secondary market to increase if long-term interest rates decline from current levels. Demand for mortgage loans has been impacted by elevated interest rates, limited housing inventory and existing home owners locked in at historically low rates. Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others were $286.8 million and $294.5 million, as of June 30, 2026 and December 31, 2025, respectively.

Current wording

Real estate mortgage loans held-for-sale decreased by $439,000, or 16.2%, to $2.3 million at September 30, 2026, from $2.7 million at December 31, 2025. The balance of this asset category is subject to a high degree of variability depending on, among other factors, recent mortgage loan rates and the timing of loan sales into the secondary market. The Company generally sells conforming qualifying mortgage loans it originates on the secondary market. Proceeds from sales of residential mortgages totaled $13.5 million in the first nine months of 2026, compared to $16.2 million in the first nine months of 2025. Management expects the volume of loans originated for sale in the secondary market to increase if long-term interest rates decline from current levels. Demand for mortgage loans has been impacted by elevated interest rates, limited housing inventory and existing home owners locked in at historically low rates. Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others were $284.0 million and $294.5 million, as of September 30, 2026 and December 31, 2025, respectively.

Previous wording

Total net loans, excluding real estate mortgage loans held-for-sale, increased by $202.7 million, or 3.8%, to $5.509 billion at June 30, 2026 from $5.306 billion at December 31, 2025. The increase was primarily driven by originations of loans concentrated in the commercial and industrial loans, commercial real estate and multi-family residential loans, other commercial loans, and consumer 1-4 family mortgage loans categories and was offset by paydowns in the agri-business and agricultural loans segment, which traditionally experiences seasonal fluctuations in activity.

Current wording

Total net loans, excluding real estate mortgage loans held-for-sale, increased by $304.8 million, or 5.7%, to $5.611 billion at September 30, 2026 from $5.306 billion at December 31, 2025. The increase was primarily driven by originations of loans concentrated in the commercial and industrial loans, commercial real estate and multi-family residential loans, other commercial loans, and consumer 1-4 family mortgage loans categories and was offset by paydowns in the agri-business and agricultural loans segment, which traditionally experiences seasonal fluctuations in activity.

Previous wording

Total nonperforming assets decreased by $926,000, or 4.4%, from $20.9 million at December 31, 2025 to $20.0 million at June 30, 2026. The ratio of nonperforming assets to total assets declined to 0.28% at June 30, 2026, down from 0.30% as of December 31, 2025.

Current wording

Total nonperforming assets decreased by $3.0 million, or 14.2%, from $20.9 million at December 31, 2025 to $18.0 million at September 30, 2026. The ratio of nonperforming assets to total assets declined to 0.25% at September 30, 2026, down from 0.30% as of December 31, 2025.

Previous wording

A loan is individually analyzed when full payment under the original loan terms is not expected. The analysis for smaller loans that are similar in nature and which are not in nonaccrual or modified status, such as residential mortgage, consumer, and credit card loans, is determined based on the class of loans. If a loan is individually analyzed, a portion of the allowance may be allocated so that the loan is reported, net, at the present value of estimated future cash flows or at the fair value of collateral if repayment is expected solely from the collateral. Total individually analyzed loans increased by $23.9 million, or 55.6%, to $66.9 million at June 30, 2026 from $43.0 million at December 31, 2025. The increase in individually analyzed loans during the first six months of 2026 was primarily driven by migration within the watchlist as three unrelated relationships with an aggregate balance of approximately $24.7 million were moved from the pooled watch list to individually analyzed status during the second quarter of 2026.

Current wording

A loan is individually analyzed when full payment under the original loan terms is not expected. The analysis for smaller loans that are similar in nature and which are not in nonaccrual or modified status, such as residential mortgage, consumer, and credit card loans, is determined based on the class of loans. If a loan is individually analyzed, a portion of the allowance may be allocated so that the loan is reported, net, at the present value of estimated future cash flows or at the fair value of collateral if repayment is expected solely from the collateral. Total individually analyzed loans increased by $22.8 million, or 53.1%, to $65.9 million at September 30, 2026 from $43.0 million at December 31, 2025. The increase in individually analyzed loans during the first nine months of 2026 was primarily driven by migration within the watchlist as three unrelated relationships with an aggregate balance of approximately $24.7 million were moved from the pooled watch list to individually analyzed status during the second quarter of 2026.

Previous wording

At June 30, 2026, the allowance for credit losses was 1.27% of total loans, a decrease of 1 basis point from 1.28% at December 31, 2025. At June 30, 2026, management believed the allowance for credit losses was at a level commensurate with the overall risk exposure of the loan portfolio. However, if economic conditions deteriorate, certain borrowers may experience difficulty and the level of nonperforming loans, charge-offs and delinquencies could rise and require increases in the allowance for credit losses. The process of identifying credit losses is a subjective process.

Current wording

At September 30, 2026, the allowance for credit losses was 1.21% of total loans, a decrease of 7 basis points from 1.28% at December 31, 2025. At September 30, 2026, management believed the allowance for credit losses was at a level commensurate with the overall risk exposure of the loan portfolio. However, if economic conditions deteriorate, certain borrowers may experience difficulty and the level of nonperforming loans, charge-offs and delinquencies could rise and require increases in the allowance for credit losses. The process of identifying credit losses is a subjective process.

Previous wording

The Company has a relatively high percentage of commercial and commercial real estate loans, which are extended to businesses with a broad range of revenue and within a wide variety of industries. Traditionally, this type of lending may have more credit risk than other types of lending because of the size and diversity of the credits. The Company manages this risk by utilizing relatively conservative credit structures, by adjusting its pricing to the perceived risk of each individual credit and by diversifying the portfolio by customer, product, industry and market area. The Company has limited exposure to commercial office space borrowers, all of which are located in the Bank's Indiana markets. Loans totaling $104.9 million for this sector represented 1.9% of total loans at June 30, 2026. Additionally, commercial real estate loans secured by multi-family residential properties and secured by non-farm non-residential properties were approximately 222.8% of the Bank's risk-based capital at June 30, 2026. The Company continues to monitor the impact of tariffs on its borrowers.

Current wording

The Company has a relatively high percentage of commercial and commercial real estate loans, which are extended to businesses with a broad range of revenue and within a wide variety of industries. Traditionally, this type of lending may have more credit risk than other types of lending because of the size and diversity of the credits. The Company manages this risk by utilizing relatively conservative credit structures, by adjusting its pricing to the perceived risk of each individual credit and by diversifying the portfolio by customer, product, industry and market area. The Company has limited exposure to commercial office space borrowers, all of which are located in the Bank's Indiana markets. Loans totaling $117.4 million for this sector represented 2.1% of total loans at September 30, 2026. Additionally, commercial real estate loans secured by multi-family residential properties and secured by non-farm non-residential properties were approximately 227.1% of the Bank's risk-based capital at September 30, 2026. The Company continues to monitor the impact of tariffs on its borrowers.

Previous wording

As of June 30, 2026, based on management’s review of the loan portfolio, the Company had 107 credit relationships with principal balances totaling $198.0 million on the classified loan list versus 96 credit relationships with principal balances totaling $184.0 million on the classified loan list as of December 31, 2025. As of June 30, 2026, the Company had $135.3 million of assets classified as Special Mention, $62.7 million classified as Substandard, $43,000 classified as Doubtful and $0 classified as Loss as compared to $134.0 million, $50.0 million, $74,000 and $0, respectively, at December 31, 2025. The amounts by grade in "Note 4 - Allowance for Credit Losses and Credit Quality" are reported at amortized cost and include deferred fees and costs. Watch list loans as a percentage of total loans were 3.55% as of June 30, 2026, up 13 basis points from 3.42% at December 31, 2025.

Current wording

As of September 30, 2026, based on management’s review of the loan portfolio, the Company had 116 credit relationships with principal balances totaling $202.0 million on the classified loan list versus 96 credit relationships with principal balances totaling $184.0 million on the classified loan list as of December 31, 2025. As of September 30, 2026, the Company had $129.3 million of assets classified as Special Mention, $69.6 million classified as Substandard, $3.0 million classified as Doubtful and $0 classified as Loss as compared to $134.0 million, $50.0 million, $74,000 and $0, respectively, at December 31, 2025. The amounts by grade in "Note 4 - Allowance for Credit Losses and Credit Quality" are reported at amortized cost and include deferred fees and costs. Watch list loans as a percentage of total loans were 3.56% as of September 30, 2026, up 14 basis points from 3.42% at December 31, 2025.

Previous wording

The allowance for credit losses increased $1.6 million, or 2.3%, from $69.0 million at December 31, 2025 to $70.6 million at June 30, 2026. The increase was primarily driven provision for credit losses of $3.7 million and offset by net charge offs of $2.1 million. Net charge offs for the six months ended June 30, 2026 were primarily driven by a $2.0 million charge off to one commercial credit during the first quarter of 2026. As the bulk of the Company’s lending activity is concentrated in the commercial loan portfolio, which can result in overall asset quality being influenced by a small number of credits, management has historically considered growth and portfolio composition when determining credit loss allocations.

Current wording

The allowance for credit losses decreased $165,000, or 0.2%, from $69.0 million at December 31, 2025 to $68.8 million at September 30, 2026. The decrease was primarily driven by provision for credit losses of $4.9 million and offset by net charge offs of $5.1 million. Net charge offs for the nine months ended September 30, 2026 were primarily driven by a $2.0 million charge off to a commercial credit during the first quarter and a partial charge off of $2.8 million of a separate, unrelated credit in the third quarter of 2026. As the bulk of the Company’s lending activity is concentrated in the commercial loan portfolio, which can result in overall asset quality being influenced by a small number of credits, management has historically considered growth and portfolio composition when determining credit loss allocations.

Previous wording

The Company's sources of funds include a diversified deposit base gathered throughout the Company's footprint and includes a growing mix of commercial, retail and public funds deposit accounts. While the traditional base of core deposits represents the primary source of funding for the Company, the Company has access to a robust array of other liquidity sources, including secured borrowings available from the Federal Home Loan Bank and the Federal Reserve Bank Discount Window. In addition, the Company has access to unsecured borrowing capacity through long established relationships within the brokered deposit markets, Federal Funds lines from correspondent bank partners and Insured Cash Sweep (ICS) one-way buy funds available from the Intrafi network. As of June 30, 2026, the Company had access to $3.380 billion in unused liquidity available from these aggregate sources as compared to $3.526 billion at December 31, 2025.

Current wording

The Company's sources of funds include a diversified deposit base gathered throughout the Company's footprint and includes a growing mix of commercial, retail and public funds deposit accounts. While the traditional base of core deposits represents the primary source of funding for the Company, the Company has access to a robust array of other liquidity sources, including secured borrowings available from the Federal Home Loan Bank and the Federal Reserve Bank Discount Window. In addition, the Company has access to unsecured borrowing capacity through long established relationships within the brokered deposit markets, Federal Funds lines from correspondent bank partners and Insured Cash Sweep (ICS) one-way buy funds available from the Intrafi network. As of September 30, 2026, the Company had access to $3.565 billion in unused liquidity available from these aggregate sources as compared to $3.526 billion at December 31, 2025.

Previous wording

The average daily deposits and borrowings together with average rates paid on those deposits and borrowings for the six months ended June 30, 2026 and 2025 are summarized in the following table:

Current wording

The average daily deposits and borrowings together with average rates paid on those deposits and borrowings for the nine months ended September 30, 2026 and 2025 are summarized in the following table:

Previous wording

Average total deposits were $6.185 billion for the six months ended June 30, 2026, an increase of $198.6 million, or 3.3%, from the comparable period in 2025. Average total borrowings were $115.7 million for the six months ended June 30, 2026, an increase of $48.6 million, or 72.4%, from the comparable period in 2025. Total average deposit costs decreased 27 basis points from 2.55% for the six months ended June 30, 2025, to 2.28% for the six months ended June 30, 2026. Total average borrowing costs decreased 65 basis points from 4.57% for the six months ended June 30, 2025 to 3.92% for the six months ended June 30, 2026. As a result, the total cost of funding sources decreased by 26 basis points from 2.57% for the six months ended June 30, 2025, to 2.31% for the six months ended June 30, 2026. The decrease in the cost of funding sources between the two periods was attributable to easing of monetary policy by the Federal Reserve Bank which allowed deposit costs to reprice to lower levels and reduced average rates for borrowings.

Current wording

Average total deposits were $6.236 billion for the nine months ended September 30, 2026, an increase of $235.6 million, or 3.9%, from the comparable period in 2025. Average total borrowings were $82.8 million for the nine months ended September 30, 2026, an increase of $27.2 million, or 49.0%, from the comparable period in 2025. Total average deposit costs decreased 26 basis points from 2.54% for the nine months ended September 30, 2025, to 2.28% for the nine months ended September 30, 2026. Total average borrowing costs decreased 64 basis points from 4.54% for the nine months ended September 30, 2025 to 3.90% for the nine months ended September 30, 2026. As a result, the total cost of funding sources decreased by 26 basis points from 2.56% for the nine months ended September 30, 2025, to 2.30% for the nine months ended September 30, 2026. The decrease in the cost of funding sources between the two periods was attributable to easing of monetary policy by the Federal Reserve Bank in late 2025 which allowed deposit costs to reprice to lower levels and reduced average rates for borrowings.