C & F FINANCIAL CORP

Previous wording

Consolidated net income increased $1.7 million and $6.4 million for the third quarter and first nine months of 2025 compared to the same periods in 2024 due to higher net income at the community banking and mortgage banking segments, partially offset by lower net income at the consumer finance segment. A discussion of the performance of our business segments is included under the heading “Business Segments” in the “Results of Operations” section of this discussion and analysis.

Current wording

Consolidated net income increased $1.4 million for the first quarter of 2026 compared to the same period in 2025 due primarily to higher net income at the community banking and mortgage banking segments, partially offset by a net loss at the consumer finance segment. A discussion of the performance of our business segments is included under the heading “Business Segments” in the “Results of Operations” section of this discussion and analysis.

Previous wording

Key factors affecting comparison for the third quarter and first nine months of 2025 are as follows.

Current wording

Key factors affecting comparison for the first quarter of 2026 are as follows.

Previous wording

Total equity was $253.9 million at September 30, 2025 compared to $227.0 million at December 31, 2024. Under regulatory capital standards, the Corporation’s tier 1 risk-based capital and total risk-based capital ratios at September 30, 2025 were 12.2 percent and 15.3 percent, respectively, compared to 11.9 percent and 14.1 percent, respectively, at December 31, 2024. At September 30, 2025, the book value per share of the Corporation’s common stock was $78.23 and tangible book value per share, which is a non-GAAP financial measure, was $70.15, compared to $70.00 and $61.86, respectively, at December 31, 2024.

Current wording

Total equity was $266.1 million at March 31, 2026 compared to $262.3 million at December 31, 2025. Under regulatory capital standards, the Corporation’s tier 1 risk-based capital and total risk-based capital ratios at March 31, 2026 were 12.1 percent and 15.1 percent, respectively, compared to 12.2 percent and 15.2 percent, respectively, at December 31, 2025. At March 31, 2026, the book value per share of the Corporation’s common stock was $81.73 and tangible book value per share, which is a non-GAAP financial measure, was $73.70, compared to $80.64 and $72.60, respectively, at December 31, 2025.

Previous wording

Total equity increased $26.9 million at September 30, 2025 compared to December 31, 2024 due primarily to net income and lower net unrealized losses in the market value of securities available for sale, which are recognized as a component of other comprehensive income, partially offset by dividends paid on the Corporation’s common stock. The Corporation’s securities available for sale are fixed income debt securities and their net unrealized loss position is a result of increased market interest rates since they were purchased. The Corporation expects to recover its investments in debt securities through scheduled payments of principal and interest. Unrealized losses are not expected to affect the earnings or regulatory capital of the Corporation or C&F Bank. The accumulated other comprehensive loss related to the Corporation’s securities available for sale, net of deferred income taxes, decreased to $12.9 million at September 30, 2025, compared to $23.7 million at December 31, 2024 due primarily to fluctuations in debt security market interest rates and a decrease in the balance of securities available for sale in an unrealized loss position as a result of maturities, calls and paydowns.

Current wording

Total consolidated equity increased $3.8 million at March 31, 2026 compared to December 31, 2025 due primarily to net income, partially offset by dividends paid on the Corporation’s common stock and higher net unrealized losses in the market value of securities available for sale, which are recognized as a component of other comprehensive income. The Corporation’s securities available for sale are fixed income debt securities and their net unrealized loss position is a result of increased market interest rates since they were purchased. The Corporation expects to recover its investments in debt securities through scheduled payments of principal and interest. Unrealized losses are not expected to affect the earnings or regulatory capital of the Corporation or C&F Bank. The accumulated other comprehensive loss related to the Corporation’s securities available for sale, net of deferred income taxes, increased to $11.7 million at March 31, 2026, compared to $10.2 million at December 31, 2025 due primarily to fluctuations in debt security market interest rates.

Previous wording

The Corporation’s Board of Directors declared a quarterly cash dividend of 46 cents per share during the third quarter of 2025, which was paid on October 1, 2025. This dividend represents a payout ratio of 21.1 percent of earnings per share for the third quarter of 2025. The Board of Directors of the Corporation continually reviews the amount of cash dividends per share and the resulting dividend payout ratio in light of changes in economic conditions, current and future capital levels and requirements and expected future earnings. In making its decision on the payment of dividends on the Corporation’s common stock, the Corporation’s Board of Directors considers operating results, financial condition, capital adequacy, regulatory requirements, shareholder returns, growth expectations and other factors.

Current wording

The Corporation’s Board of Directors declared a quarterly cash dividend of 48 cents per share during the first quarter of 2026, which was paid on April 1, 2026. This dividend represents a payout ratio of 23.1 percent of earnings per share for the first quarter of 2026. The Board of Directors of the Corporation continually reviews the amount of cash dividends per share and the resulting dividend payout ratio in light of changes in economic conditions, current and future capital levels and requirements and expected future earnings. In making its decision on the payment of dividends on the Corporation’s common stock, the Corporation’s Board of Directors considers operating results, financial condition, capital adequacy, regulatory requirements, shareholder returns, growth expectations and other factors.

Previous wording

The Corporation has a share repurchase program that was authorized by the Board of Directors to repurchase up to $5.0 million of the Corporation’s common stock, effective January 1, 2025 through December 31, 2025 (the 2025 Repurchase Program). During the third quarter and first nine months of 2025, the Corporation did not make any repurchases of its common stock under the 2025 Repurchase Program.

Current wording

The Corporation has a share repurchase program, effective January 1, 2026 through December 31, 2026, that was authorized by the Board of Directors to repurchase up to $5.0 million of the Corporation’s common stock (the 2026 Repurchase Program). During the first quarter of 2026, the Corporation repurchased 4,279 shares, or $309,000, of its common stock under the 2026 Repurchase Program.

Previous wording

Allowance for Credit Losses: We establish the allowance for credit losses through charges to earnings in the form of a provision for credit losses. Loan losses are charged against the allowance for credit losses for the difference between the carrying value of the loan and the estimated net realizable value or fair value of the collateral, if collateral dependent, when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. The allowance represents management’s current estimate of expected credit losses over the contractual term of loans held for investment, and is recorded at an amount that, in management’s judgment, reduces the recorded investment in loans to the net amount expected to be collected. Management’s judgment in determining the level of the allowance is based on evaluations of historical loan losses, current conditions and reasonable and supportable forecasts relevant to the collectability of loans. The measurement of the allowance for credit losses on commercial and consumer loans is based in part on forecasts of the national unemployment rate, which we believe to be indicative of risk factors related to the collectability of commercial and consumer loans. In addition, management’s estimate of expected credit losses is based on the remaining life of loans held for investment, and changes in expected prepayment behavior may result in changes in the remaining life of loans and expected credit losses. Management also assesses the risk of credit losses arising from changes in general market, economic and business conditions; the nature and volume of the loan portfolio; the volume and severity of delinquencies and adversely classified loan balances and the value of underlying collateral in determining the recorded balance of the allowance for credit losses. This evaluation is inherently subjective because it requires estimates that are susceptible to significant revision as more information becomes available. In evaluating the level of the allowance, we consider a range of possible assumptions and outcomes related to the various factors identified above. The level of the allowance is particularly sensitive to changes in the actual and forecasted national unemployment rate and changes in current conditions or reasonably expected future conditions affecting the collectability of loans.

Current wording

Management’s judgment in determining the level of the allowance is based on evaluations of historical loan losses, current conditions and reasonable and supportable forecasts relevant to the collectability of loans. The measurement of the allowance for credit losses on commercial and consumer loans is based in part on the twelve-month forecast of the national unemployment rate, which we believe to be indicative of risk factors related to the collectability of commercial and consumer loans. Forecasts of the national unemployment rate are derived from the Federal Open Markets Committee of the Federal Reserve Board. For periods beyond those for which reasonable and supportable forecasts are available, projections are based on a reversion of the national unemployment rate from the last forecast to a historical average level over the following six months. In addition, management’s estimate of expected credit losses is based on the remaining life of loans held for investment, which is affected in part by changes in expected prepayment behavior and in the nature and volume of the loan portfolio. Management also assesses the risk of credit losses arising from external factors, such as changes in general market, economic and business conditions and the value of underlying collateral, to make qualitative adjustments in determining the recorded balance of the allowance for credit losses. This evaluation is inherently subjective because it requires estimates that are susceptible to significant revision as more information becomes available. These factors outside of the Corporation’s control are difficult to predict and can have significant impacts on the level of allowance that is required, which can be different than the level recorded based on the then-existing loan portfolio, unemployment rate forecast and other external factors that were used in the qualitative adjustments at that time.

Previous wording

The following table shows the average balance sheets, the amounts of interest earned on earning assets, with related yields, and interest expense on interest-bearing liabilities, with related rates, for the three and nine months ended September 30, 2025 and 2024. Interest on tax-exempt loans and securities is presented on a taxable-equivalent basis (which converts the income on loans and investments for which no income taxes are paid to the equivalent yield as if income taxes were paid) using the federal corporate income tax rate of 21 percent that was applicable for all periods presented. Average balances of securities available for sale are included at amortized cost. Loans include loans held for sale. Loans placed on a nonaccrual status are included in the balances and are included in the computation of yields, but had no material effect.

Current wording

The following table shows the average balance sheets, the amounts of interest earned on earning assets, with related yields, and interest expense on interest-bearing liabilities, with related rates, for the three months ended March 31, 2026 and 2025. Interest on tax-exempt loans and securities is presented on a taxable-equivalent basis (which converts the income on loans and investments for which no income taxes are paid to the equivalent yield as if income taxes were paid) using the federal corporate income tax rate of 21 percent that was applicable for all periods presented. Average balances of securities available for sale are included at amortized cost. Loans include loans held for sale. Loans placed on a nonaccrual status are included in the balances and are included in the computation of yields, but had no material effect for all periods presented.

Previous wording

Interest income and expense are affected by fluctuations in interest rates, by changes in the volume of earning assets and interest-bearing liabilities, and by the interaction of rate and volume factors. The following table shows the direct causes of the period-to-period changes in the components of net interest income on a taxable-equivalent basis. The Corporation calculates the rate and volume variances using a formula prescribed by the SEC. Rate/volume variances, the third element in the calculation, are not shown separately in the table, but are allocated to the rate and volume variances in proportion to the absolute dollar amounts of each.

Current wording

Interest income and expense are affected by fluctuations in interest rates, by changes in the volume of earning assets and interest-bearing liabilities, and by the interaction of rate and volume factors. The following table shows the direct causes of the period-to-period changes in the components of net interest income on a taxable-equivalent basis. The Corporation

Previous wording

Net interest income, on a taxable-equivalent basis, for the third quarter and first nine months of 2025 increased to $27.5 million and $79.6 million, respectively, compared to $25.0 million and $72.5 million for the same periods in 2024. Annualized net interest margin increased 11 basis points to 4.24 percent for the third quarter of 2025 and increased 10 basis points to 4.21 percent for the first nine months of 2025 compared to the same periods of 2024 due primarily to higher average balances of loans and cash reserves, a shift in the mix of the loan portfolio towards higher-yielding loans, higher average interest rates on securities and lower average interest rates on deposits, partially offset by higher average balances of interest-bearing deposits. The Federal Reserve Bank (FRB) target federal funds interest rate was at an upper limit of 5.50 percent at December 31, 2023 until the FRB began decreasing it in September 2024 to an upper limit of 4.50 percent by December 31, 2024, where it remained until September 2025 when it was reduced to 4.25 percent. The yield on interest-

Current wording

Net interest income, on a taxable-equivalent basis, for the first quarter of 2026 increased to $28.0 million compared to $25.3 million for the same period in 2025 due primarily to higher average balances of interest-earning assets and higher net interest margin. Annualized net interest margin increased 11 basis points to 4.27 percent for the first quarter of 2026 compared to the same period of 2025 due primarily to higher average interest rates on securities and lower average interest rates on deposits, partially offset by higher average cost of borrowings. The Federal Reserve Bank (FRB) target federal funds interest rate was at an upper limit of 4.50 percent at December 31, 2024 until the FRB began decreasing it in September 2025, decreasing it to 3.75 percent by December 31, 2025, where it remained during the first quarter of 2026. The yield on interest-earning assets increased by 6 basis points for the first quarter of 2026 compared to the same period in 2025. The cost of interest-bearing liabilities decreased by 10 basis points for the first quarter of 2026 compared to the same period in 2025. Average earning assets increased $193.8 million for the first quarter of 2026 compared to the same period in 2025. Average interest-bearing liabilities increased $157.5 million for the first quarter of 2026 compared to the same period in 2025. Average noninterest-bearing demand deposits increased $13.5 million for the first quarter of 2026 compared to the same period in 2025.

Previous wording

Average loans, which includes both loans held for investment and loans held for sale, increased $106.8 million to $2.04 billion for the third quarter of 2025 and increased $134.8 million to $2.00 billion for the first nine months of 2025, compared to the same periods in 2024. Average loans at the community banking segment increased $126.8 million, or 9.0 percent, for the third quarter of 2025 and increased $144.0 million, or 10.6 percent, for the first nine months of 2025 compared to the same periods in 2024 due primarily to growth in the commercial real estate, land acquisition and development, builder lines and construction segments of the loan portfolio. Average loans at the consumer finance segment decreased $17.4 million, or 3.6 percent, for the third quarter of 2025 and decreased $13.3 million, or 2.8 percent, for the first nine months of 2025 compared to the same periods in 2024 due primarily to increased competition in the automobile segment of the loan portfolio and fewer new marine and RV loans being purchased as the third party administrator of that program significantly decreased sales of those loans to many outside parties during 2025, which led to the consumer finance segment ending future purchases during the third quarter of 2025. The marine and RV portfolio is expected to run off over the next several years as the existing loans are repaid. Average loans at the mortgage banking segment, which consist of loans held for sale, decreased $2.6 million, or 6.6 percent, for the third quarter of 2025 and increased $4.1 million, or 13.5 percent, for the first nine months of 2025 compared to the same periods in 2024.

Current wording

Average loans, which includes both loans held for investment and loans held for sale, increased $152.0 million to $2.11 billion for the first quarter of 2026 compared to the same period in 2025. Average loans at the community banking segment increased $135.2 million, or 9.2 percent, for the first quarter of 2026 compared to the same period in 2025 due primarily to growth in the commercial real estate, land acquisition and development, and equity lines segments of the loan portfolio. Average loans at the consumer finance segment decreased $1.0 million, or less than one percent, for the first quarter of 2026 compared to the same period in 2025 due primarily to a decrease in marine and recreational vehicle loans as the third party administrator of that program significantly decreased sales of those loans to outside parties during 2025, which led to the consumer finance segment ending future purchases under the program during the third quarter of 2025. The marine and recreational vehicle (RV) portfolio is expected to run off over the next several years as scheduled borrower payments are made on the existing loans. Average loans at the mortgage banking segment, which consist of loans held for sale, increased $17.8 million, or 84.7 percent, for the first quarter of 2026 compared to the same period in 2025.

Previous wording

The community banking segment average loan yield increased 2 basis points to 5.60 percent for the third quarter of 2025 and increased 9 basis points to 5.57 percent for the first nine months of 2025 compared to the same periods in 2024 due primarily to a shift in the mix of the loan portfolio towards higher-yielding loans and renewals of fixed rate loans originated during periods of lower interest rates. The consumer finance segment average loan yield increased 13 basis points to 10.61 percent for the third quarter of 2025 and increased 19 basis points to 10.56 percent for the first nine months of 2025 compared to the same periods in 2024 due primarily to a mix shift in the loan portfolio with the termination of the marine and RV loans program and the portfolio composition in general shifting towards originations within the past three years, when interest rates were higher, as loans originated prior to that in periods of lower interest rates pay off or mature. The mortgage banking segment average loan yield increased 70 basis points to 6.60 percent for the third quarter of 2025 and increased 37 basis points to 6.50 percent for the first nine months of 2025 compared to the same periods in 2024 due to fluctuations in mortgage interest rates.

Current wording

The community banking segment average loan yield increased 5 basis points to 5.57 percent for the first quarter of 2026 compared to the same period in 2025 due primarily to renewals of fixed rate loans originated during periods of lower interest rates. The consumer finance segment average loan yield increased 11 basis points to 10.67 percent for the first quarter of 2026 compared to the same period in 2025 due primarily to a mix shift in the loan portfolio with the termination of the marine and RV loans program and the portfolio composition in general shifting towards originations within the past three years, when interest rates were higher, as balances on loans originated prior to that in periods of lower interest rates decline. The mortgage banking segment average loan yield decreased 91 basis points to 5.65 percent for the first quarter of 2026 compared to the same period in 2025 due to fluctuations in mortgage interest rates.

Previous wording

Average securities available for sale increased $22.9 million to $461.0 million for the third quarter of 2025 and increased $400,000 to $460.6 million for the first nine months of 2025 compared to the same periods in 2024 due primarily to purchases of mortgage-backed securities outpacing maturities, calls and paydowns. The average yield on the securities portfolio on a taxable-equivalent basis increased 46 basis points to 3.16 percent for the third quarter of 2025 and increased 43 basis points to 3.05 percent for the first nine months of 2025 compared to the same periods in 2024 due primarily to purchases of securities during recent periods at higher average yields relative to the average yield of the portfolio as a whole and lower prepayment activity on mortgage-backed securities, which resulted in lower premium amortization.

Current wording

Average securities available for sale increased $18.2 million to $476.6 million for the first quarter of 2026 compared to the same period in 2025 due primarily to purchases of corporate debt and mortgage-backed securities outpacing maturities, calls and paydowns. The average yield on the securities portfolio on a taxable-equivalent basis increased 50 basis points to 3.42 percent for the first quarter of 2026 compared to the same period in 2025 due primarily to purchases of securities during recent periods at higher average yields relative to the average yield of the portfolio as a whole.

Previous wording

Average interest-bearing deposits in other banks, consisting primarily of excess cash reserves maintained at the FRB, increased $35.9 million to $74.6 million for the third quarter of 2025 and increased $29.4 million to $59.6 million for the first nine months of 2025 compared to the same periods in 2024. The average yield on interest-bearing deposits in other banks decreased 16 basis points for the third quarter of 2025 due primarily to the decrease in the federal funds interest rate. The average yield on interest-bearing deposits in other banks increased 7 basis points for the first nine months of 2025 compared to the same period in 2024 due primarily to fluctuations in cash items in process. These items, which do not earn interest until they settle, have a larger effect on yields during periods of lower average balances such as 2024 compared to 2025.

Current wording

Average interest-bearing deposits in other banks, consisting primarily of excess cash reserves maintained at the FRB, increased $23.6 million to $79.4 million for the first quarter of 2026 compared to the same period in 2025. The average yield on interest-bearing deposits in other banks decreased 33 basis points for the first quarter of 2026 due primarily to the decreases in the federal funds interest rate beginning in September 2025.

Previous wording

Average savings and money market and interest-bearing demand deposits combined increased $61.9 million to $857.2 million for the third quarter of 2025 and increased $34.5 million to $838.2 million for the first nine months of 2025 compared to the same periods in 2024. Average noninterest-bearing demand deposits increased $17.3 million to $555.1 million for the third quarter of 2025 and increased $23.2 million to $556.3 million for the first nine months of 2025 compared to the same periods in 2024. Average time deposits increased $63.8 million to $865.4 million for the third quarter of 2025 and increased $86.3 million to $839.4 million for the first nine months of 2025 compared to the same periods in 2024. The average cost of interest-bearing deposits decreased 25 basis points to 2.29 percent for the third quarter of 2025 and decreased 7 basis points to 2.33 percent for the first nine months of 2025 compared to the same periods in 2024 due primarily to decreases in interest rates paid on time deposits.

Current wording

Average savings and money market and interest-bearing demand deposits combined increased $80.2 million to $901.7 million for the first quarter of 2026 compared to the same period in 2025. Average noninterest-bearing demand deposits increased $13.5 million to $558.9 million for the first quarter of 2026 compared to the same period in 2025. Average time deposits increased $86.9 million to $908.8 million for the first quarter of 2026 compared to the same period in 2025. The average cost of interest-bearing deposits decreased 19 basis points to 2.21 percent for the first quarter of 2026 compared to the same period in 2025 due primarily to decreases in interest rates paid on time deposits. A portion of the increases in average deposits was due to the wind-down of the repurchase agreement program with certain commercial deposit customers during the third quarter of 2025. The average balance of these repurchase agreements was $28.2 million at March 31, 2025.

Previous wording

The Corporation believes that the effects of declining market interest rates could adversely affect its net interest margin in the short term as its assets typically reprice downward more quickly than its deposits and borrowings. The majority of the Corporation’s time deposits have repriced within the past year, however, the Corporation anticipates further declines in the cost of deposits due to the most recent decreases in market interest rates in September and October 2025. The Corporation also believes any such adverse impacts could be somewhat mitigated by renewals of fixed rate loans originated during periods of lower interest rates and purchases of securities available for sale with higher interest rates. The ultimate effect of market factors, including monetary policy actions taken by the Federal Reserve, on the Corporation’s net interest margin will also depend on other factors, including the Corporation’s ability to grow loans at the community banking and consumer finance segments, to compete for deposits, and the extent of its reliance on borrowings. The Corporation gives no assurance as to the timing or extent of changes in market interest rates or the impact of those changes or any other factor on the Corporation's ability to compete for loans and deposits or on its net interest margin. If market interest rates were to rise, net interest margin could be positively affected in the short term as the Corporation generally expects its assets to reprice upward more quickly than its deposits and borrowings.

Current wording

The Corporation believes that the effects of declining market interest rates, if continued in 2026, could adversely affect its net interest margin in the short term as its assets typically reprice downward more quickly than its deposits and borrowings. The majority of the Corporation’s time deposits have repriced within the past year and while some further declines in the cost of deposits are anticipated as certain time deposits reprice following the Federal Reserve’s lowering of the target federal funds interest rate during the third and fourth quarters of 2025, significant further decreases are not expected unless there are additional decreases in market interest rates or shifts in the mix of deposits. The Corporation also believes any such adverse impacts could be somewhat mitigated by renewals of fixed rate loans originated during periods of lower interest rates and purchases of securities available for sale with higher interest rates. The interest rate environment has grown increasingly uncertain during the first quarter of 2026 and the ultimate effect of market factors, including monetary policy actions taken by the Federal Reserve, on the Corporation’s net interest margin will also depend on other factors, including the Corporation’s ability to grow loans at the community banking and consumer finance segments, to compete for deposits, and the extent of its reliance on borrowings. The Corporation gives no assurance as to the timing or extent of changes in market interest rates or the impact of those changes or any other factor on the Corporation's ability to compete for loans and deposits or on its net interest margin. If market interest rates were to rise, net interest margin could be

Previous wording

Total noninterest income increased $72,000, or 1.0 percent, for the third quarter of 2025 and increased $2.7 million, or 11.3 percent, for the first nine months of 2025 compared to the same periods in 2024 due primarily to higher volume of mortgage loan production which resulted in higher gains on sales of loans and higher mortgage banking fee income, fluctuations in unrealized gains and losses on investments held in the rabbi trust and higher mortgage lender services income, partially offset by lower investment income from other equity interests.

Current wording

Total noninterest income increased $977,000, or 12.9 percent, for the first quarter of 2026 compared to the same period in 2025 due primarily to higher volume of mortgage loan production at the mortgage banking segment which resulted in higher gains on sales of loans and higher mortgage banking fee income, higher mortgage lender services income, and higher investment income from other equity interests, partially offset by fluctuations in unrealized gains and losses on investments held in the rabbi trust.

Previous wording

The Corporation’s consolidated effective income tax rate was 19.4 percent and 18.8 percent for the third quarter and first nine months of 2025, respectively, compared to 18.7 percent and 17.8 percent for the same periods in 2024 due primarily to a higher share of income at the mortgage banking segment, which is subject to state income taxes.

Current wording

The Corporation’s consolidated effective income tax rate was 18.6 percent for the first quarter of 2026 compared to 17.3 percent for the same period in 2025 due primarily to a higher share of income at the mortgage banking segment, which is subject to state income taxes, and lower income tax windfall related to the amount deductible upon vesting of restricted stock awards.

Previous wording

Net interest income for the community banking segment increased by $2.9 million to $21.2 million for the third quarter of 2025 and increased $7.4 million to $60.3 million for the first nine months of 2025 compared to the same periods in 2024 due primarily to an increase in net interest margin and higher average balances of earning assets. Average interest-earning asset yields were higher for the third quarter and first nine months of 2025 compared to the same periods in 2024 due primarily to higher average interest rates on securities available for sale and a shift in the mix of the loan portfolio towards higher-yielding loans. The average cost of interest-bearing liabilities were lower for the third quarter and first nine months of 2025 compared to the same periods in 2024 due primarily to decreases in interest rates paid on time deposits. Interest income allocated to the community banking segment includes interest income on loans to the consumer finance and mortgage banking segments. These transactions are eliminated to reach consolidated totals.

Current wording

Net interest income for the community banking segment increased by $2.9 million to $21.6 million for the first quarter of 2026 compared to the same period in 2025 due primarily to an increase in net interest margin and higher average balances of earning assets. Average interest-earning asset yields were higher for the first quarter of 2026 compared to the same period in 2025 due primarily to higher average interest rates on securities available for sale. The average cost of interest-

Previous wording

The community banking segment recorded net reversals of provision for credit losses of $100,000 and $300,000 for the third quarter and first nine months of 2025, respectively, due primarily to a shift in the mix of the loan portfolio towards loans with shorter expected lives, which resulted in lower estimated losses over the life of the loan, and the resolution of a nonperforming commercial real estate loan during the second quarter of 2025 that had carried a specific reserve, partially offset by growth in the loan portfolio and changes in the forecast of key credit loss model assumptions, compared to provision for credit losses of $700,000 and $1.7 million for the same periods in 2024. Management believes that the level of the allowance for credit losses is adequate to reflect the net amount expected to be collected.

Current wording

The community banking segment recorded provision for credit losses of $300,000 for the first quarter of 2026 compared to provision for credit losses of $100,000 for the same period in 2025. Management believes that the level of the allowance for credit losses is adequate to reflect the net amount expected to be collected.

Previous wording

Noninterest income decreased for the third quarter of 2025 compared to the same period in 2024 due primarily to lower investment income from other equity interests. Noninterest income increased for the first nine months of 2025 compared to the same period in 2024 due primarily to higher other service charges and fees, partially offset by lower investment income from other equity interests and lower service charges on deposit accounts. Noninterest expenses increased for the third quarter and first nine months of 2025 compared to the same periods in 2024 due primarily to higher salaries and employee benefits and higher marketing and advertising expenses.

Current wording

Noninterest income increased for the first quarter of 2026 compared to the same period in 2025 due primarily to higher investment income from other equity interests and higher interchange income. Noninterest expenses increased for the first quarter of 2026 compared to the same period in 2025 due primarily to higher salaries and employee benefits and higher data processing expenses.

Previous wording

Despite the sustained elevated level of mortgage interest rates, higher home prices and low levels of inventory, mortgage banking segment loan originations increased 6.4 percent and 24.4 percent for the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024. Gains on sales of loans, while driven in part by mortgage loan originations, also includes the effects of changes in locked loan commitments, which reflect the volume of mortgage loan applications that are in process and have not closed. Lock-adjusted originations for the mortgage banking segment increased 17.7 percent and 23.5 percent for the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024. Locked loan commitments were $62.3 million at September 30, 2025 compared to $39.3 million and $48.2 million at December 31, 2024 and September 30, 2024, respectively. Mortgage banking segment loan originations include originations of loans sold to the community banking segment, at prices similar to those paid by third-party investors. All interest expense at the mortgage banking segment is from variable rate borrowings from the community banking segment. These transactions are eliminated to reach consolidated totals.

Current wording

Mortgage banking segment loan originations increased 57.9 percent for the first quarter of 2026 compared to the same period in 2025 as the mortgage interest rate environment has become more favorable, which led to an increase in both purchases and refinancings. Gains on sales of loans, while driven in part by mortgage loan originations, also includes the effects of changes in locked loan commitments, which reflect the volume of mortgage loan applications that are in process and have not closed. Lock-adjusted originations for the mortgage banking segment increased 56.7 percent for the first quarter of 2026 compared to the same period in 2025. Locked loan commitments were $90.9 million at March 31, 2026 compared to $44.6 million and $71.8 million at December 31, 2025 and March 31, 2025, respectively. Mortgage banking segment loan originations include originations of loans sold to the community banking segment, at prices similar to those paid by third-party investors. All interest expense at the mortgage banking segment is from variable rate borrowings from the community banking segment. These transactions are eliminated to reach consolidated totals.

Previous wording

Through the Lender Solutions division of the mortgage banking segment, mortgage lender services fee income is derived from providing mortgage origination functions to third-party mortgage lenders for a fee. Mortgage lender services fee income increased for the third quarter and first nine months of 2025 compared to the same periods in 2024 due primarily to increased mortgage loan volume in the industry and an increase in fees and the types of services provided.

Current wording

Through the Lender Solutions division of the mortgage banking segment, mortgage lender services fee income is derived from providing mortgage origination functions to third-party mortgage lenders for a fee. Mortgage lender services fee income increased to $820,000 for the first quarter of 2026 compared to $541,000 for the same period in 2025 due primarily to increased mortgage loan volume in the industry.

Previous wording

During the third quarter and first nine months of 2025, the mortgage banking segment recorded net reversals of provision for indemnification losses of $75,000 and $135,000, respectively, compared to net reversals of provision for indemnification losses of $100,000 and $375,000 for the same periods in 2024. The release of indemnification reserves in 2025 and 2024 was due primarily to lower volume of mortgage loan originations in recent years, improvement in the mortgage banking segment’s assessment of borrower payment performance and other factors affecting expected losses on mortgage loans sold in the secondary market, such as time since origination. The releases in 2025 decreased compared to the same periods in 2024 due primarily to the increased mortgage loan originations in 2025 compared to 2024. Management believes that the indemnification reserve is sufficient to absorb losses related to loans that have been sold in the secondary market.

Current wording

During the first quarter of 2026, the mortgage banking segment recorded net reversals of provision for indemnification losses of $35,000 compared to net reversals of provision for indemnification losses of $25,000 for the same period in 2025. The release of indemnification reserves in 2026 and 2025 was due primarily to lower volume of mortgage loan originations in recent years compared to years prior when the indemnification reserve was increased due to higher volume coming out of the pandemic, improvement in the mortgage banking segment’s assessment of borrower payment performance and other factors affecting expected losses on mortgage loans sold in the secondary market, such as time since origination. Management believes that the indemnification reserve is sufficient to absorb losses related to loans that have been sold in the secondary market.

Previous wording

loan balances, compared to $3.0 million and $8.1 million for the same periods in 2024. Net charge-offs increased due primarily to an increase in delinquent loans, repossessions and the average amount charged-off when a loan was uncollectable. If loan performance deteriorates, resulting in further elevated delinquencies or net charge-offs, the provision for credit losses may increase in future periods.

Current wording

The consumer finance segment recorded $3.3 million in provision for credit losses for the first quarter of 2026 compared to $2.9 million for the same period in 2025. Net charge-offs increased due primarily to an increase in delinquent loans and repossessions. If loan performance deteriorates, resulting in further elevated delinquencies or net charge-offs, the provision for credit losses may increase in future periods.

Previous wording

Loans are required to be measured at amortized cost and to be presented at the net amount expected to be collected. Credit losses on available for sale debt securities are accounted for as an allowance for credit losses, which is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value and the amount expected to be collected on the financial asset. Off balance sheet credit exposures, including loan commitments, are not recorded on balance sheet, but expected credit losses arising from off balance sheet credit exposures are recorded as a reserve for unfunded commitments and reported in Other Liabilities. The following table presents the Corporation’s reserve for unfunded commitments for the periods indicated.

Current wording

Loans are required to be measured at amortized cost and to be presented at the net amount expected to be collected. Credit losses on available for sale debt securities are accounted for as an allowance for credit losses, which is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value and the amount expected to be collected on the financial asset. The Corporation concluded that a credit loss did not exist in its securities portfolio at March 31, 2026, and no allowance for credit losses has been recognized. Off balance sheet credit exposures, including loan commitments, are not recorded on balance sheet, but expected credit losses arising from off balance sheet credit exposures are recorded as a reserve for unfunded commitments and reported in Other Liabilities. The following table presents the Corporation’s reserve for unfunded commitments for the periods indicated.

Previous wording

The community banking segment’s nonaccrual loans were $1.2 million at September 30, 2025 compared to $333,000 at December 31, 2024. The increase in nonaccrual loans compared to December 31, 2024 is due primarily to the downgrade of one residential mortgage relationship in the first quarter of 2025. The community banking segment recorded net reversals of provision for credit losses of $100,000 and $300,000 for the third quarter and first nine months of 2025, respectively, compared to provision for credit losses of $700,000 and $1.7 million for the same periods in 2024. At September 30, 2025, the allowance for credit losses decreased to $17.2 million compared to $17.4 million at December 31, 2024. The allowance for credit losses as a percentage of total loans decreased to 1.11 percent at September 30, 2025 from 1.20 percent at December 31, 2024. These decreases are due primarily to the resolution of a nonperforming commercial real estate loan that had carried a specific reserve and growth in loans with shorter expected lives, which resulted in lower estimated losses over the life of the loans, partially offset by growth in the loan portfolio and changes in the forecast of key credit loss model assumptions. Management believes that the level of the allowance for credit losses is adequate to reflect the net amount expected to be collected.

Current wording

The community banking segment’s nonaccrual loans were $1.1 million at both March 31, 2026 and December 31, 2025. The community banking segment recorded a provision for credit losses of $300,000 for the first quarter of 2026 compared to a provision for credit losses of $100,000 for the same period in 2025. At March 31, 2026, the allowance for credit losses increased to $17.6 million compared to $17.4 million at December 31, 2025. The allowance for credit losses as a percentage of total loans decreased to 1.09 percent at March 31, 2026 from 1.10 percent at December 31, 2025. Management believes that the level of the allowance for credit losses is adequate to reflect the net amount expected to be collected.

Previous wording

consumer finance loan portfolio because the consumer finance segment generally initiates repossession of loan collateral once a loan becomes more than 60 days delinquent. Repossessed vehicles of the consumer finance segment are classified as other assets and consist only of vehicles the Corporation has the legal right to sell. Prior to the reclassification from loans to repossessed vehicles, the difference between the carrying amount of each loan and the fair value of each vehicle (i.e. the deficiency) is charged against the allowance for credit losses. At September 30, 2025, repossessed vehicles available for sale totaled $867,000 compared to $779,000 at December 31, 2024.

Current wording

Nonaccrual loans at the consumer finance segment were $913,000 at March 31, 2026 compared to $1.0 million at December 31, 2025. Nonaccrual consumer finance loans remain low relative to the allowance for credit losses and the total consumer finance loan portfolio because the consumer finance segment generally initiates repossession of loan collateral once a loan becomes more than 60 days delinquent. Repossessed vehicles of the consumer finance segment are classified as other assets and consist only of vehicles the Corporation has the legal right to sell. Prior to the reclassification from loans to repossessed vehicles, the difference between the carrying amount of each loan and the fair value of each vehicle

Previous wording

The consumer finance segment experienced net charge-offs at an annualized rate of 2.51 percent of average total loans for the first nine months of 2025 compared to 2.36 percent for the same period of 2024 due primarily to an increase in delinquent loans, repossessions and the average amount charged-off when a loan was uncollectable. At September 30, 2025, total delinquent loans as a percentage of total loans was 4.00 percent compared to 3.90 percent at December 31, 2024 and 3.49 percent at September 30, 2024. The allowance for credit losses decreased to $22.3 million at September 30, 2025 compared to $22.7 million at December 31, 2024 due primarily to lower balances of loans. The allowance for credit losses as a percentage of total loans decreased to 4.81 percent at September 30, 2025, compared to 4.86 percent at December 31, 2024 due primarily to changes in qualitative model adjustments primarily related to the relative stabilization of collateral values during 2025.

Current wording

The consumer finance segment experienced net charge-offs at an annualized rate of 2.98 percent of average total loans for the first quarter of 2026 compared to 2.64 percent for the same period of 2025 due primarily to an increase in delinquent loans and repossessions. At March 31, 2026, total delinquent loans as a percentage of total loans was 3.35 percent compared to 4.38 percent at December 31, 2025 and 3.05 percent at March 31, 2025. The allowance for credit losses was $22.1 million, or 4.80 percent of total loans, at March 31, 2026 compared to $22.3 million, or 4.79 percent of total loans, at December 31, 2025.

Previous wording

The consumer finance segment at times offers payment deferrals to borrowers as a portfolio management technique to achieve higher ultimate cash collections on select loan accounts. A significant reliance on deferrals as a means of managing collections may result in a lengthening of the loss confirmation period, which would increase expectations of credit losses inherent in the portfolio. Average amounts of payment deferrals of automobile loans on a monthly basis, which are not included in delinquent loans, were 1.88 percent and 1.79 percent of average automobile loans outstanding during the third quarter and first nine months of 2025, respectively, compared to 1.91 percent and 1.70 percent during the same periods during 2024.

Current wording

The consumer finance segment at times offers payment deferrals to borrowers as a portfolio management technique to achieve higher ultimate cash collections on select loan accounts. A significant reliance on deferrals as a means of managing collections may result in a lengthening of the loss confirmation period, which would increase expectations of credit losses inherent in the portfolio. Average amounts of payment deferrals of automobile loans on a monthly basis, which are not included in delinquent loans, were 1.34 percent of average automobile loans outstanding during the first quarter of 2026 compared to 2.50 percent during the fourth quarter of 2025 and 1.75 percent during the first quarter of 2025.

Previous wording

The consumer finance segment is an indirect lender that provides automobile financing through lending programs that are designed to serve customers in both the “prime” and “non-prime” markets, including those who may have limited access to traditional automobile financing due to having experienced prior credit difficulties. The preferred automobile is a later model, low mileage used vehicle because the value of new vehicles typically depreciates rapidly. In addition to automobile financing, marine and RV loan contracts were also purchased on an indirect basis through a referral program administered by a third party. The marine and RV loan contracts were for “prime” loans averaging less than $50,000 made to individuals with higher credit scores. The third party administrator of that program significantly decreased sales of those loans to many outside parties during 2025, which led to the consumer finance segment ending future purchases during the third quarter of 2025. The marine and RV portfolio is expected to run off over the next several years as the existing loans are repaid.

Current wording

The consumer finance segment is an indirect lender that provides automobile financing through lending programs that are designed to serve customers in both the “prime” and “non-prime” markets, including those who may have limited access to traditional automobile financing due to having experienced prior credit difficulties. The preferred automobile is a later model, low mileage used vehicle because the value of new vehicles typically depreciates rapidly. In addition to automobile financing, marine and RV loan contracts were also purchased on an indirect basis through a referral program administered by a third party. The marine and RV loan contracts were for “prime” loans averaging less than $50,000 made to individuals with higher credit scores. The third party administrator of that program significantly decreased sales of those loans to outside parties during 2025, which led to the consumer finance segment ending future purchases during the third quarter of 2025. The marine and RV portfolio is expected to run off over the next several years as scheduled borrower payments are made on the existing loans.

Previous wording

The consumer finance segment’s focus has included “non-prime” borrowers and, therefore, the anticipated rates of delinquencies, defaults, repossessions and losses on the consumer finance loans are higher than those experienced in the general automobile finance industry and could be more dramatically affected by changes in general economic conditions. Changes in economic conditions may also affect consumer demand for used automobiles and values of automobiles securing outstanding loans, due to changes in demand or changes in levels of inventory of used automobiles, which may directly affect the amount of a loss incurred by the consumer finance segment in the event of default. While we manage the higher risk inherent in loans made to “non-prime” borrowers through the underwriting criteria, portfolio management and collection methods employed by the consumer finance segment, we cannot guarantee that these criteria or methods will afford adequate protection against these risks. With the consumer finance segment’s scorecard model for purchasing loan contracts, the credit-worthiness of borrowers at origination has improved for automobile loans purchased and the level of credit losses experienced has decreased relative to long-term historical averages. We cannot provide any assurance that the consumer finance segment’s net charge-off ratio will not increase in future periods. However, we believe that the current allowance for credit losses is adequate to reflect the net amount expected to be collected on existing consumer finance segment loans that may become uncollectible. If factors influencing the consumer finance segment result in higher net charge-off ratios in future periods, the consumer finance segment may need to increase the level of its allowance for credit losses through additional provisions for credit losses, which could negatively affect future earnings of the consumer finance segment.

Current wording

The consumer finance segment’s focus has included “non-prime” borrowers and, therefore, the anticipated rates of delinquencies, defaults, repossessions and losses on the consumer finance loans are higher than those experienced in the general automobile finance industry and could be more dramatically affected by changes in general economic conditions. Changes in economic conditions may also affect consumer demand for used automobiles and values of automobiles securing outstanding loans, due to changes in demand or changes in levels of inventory of used automobiles, which may directly affect the amount of a loss incurred by the consumer finance segment in the event of default. While we manage the higher risk inherent in loans made to “non-prime” borrowers through the underwriting criteria, portfolio management and collection methods employed by the consumer finance segment, we cannot guarantee that these criteria or methods will afford adequate protection against these risks. With the consumer finance segment’s scorecard model for purchasing loan contracts, the credit-worthiness of borrowers at origination has improved for automobile loans purchased, however, we cannot provide any assurances regarding the level of the consumer finance segment’s net charge-off ratio in future periods. However, we believe that the current allowance for credit losses is adequate to reflect the net amount expected to be collected on existing consumer finance segment loans that may become uncollectible. If factors influencing the consumer finance segment result in higher net charge-off ratios in future periods, the consumer finance segment may need to increase the level of its allowance for credit losses through additional provisions for credit losses, which could negatively affect future earnings of the consumer finance segment.

Previous wording

At September 30, 2025, the Corporation had total assets of $2.7 billion, an increase of $147.9 million since December 31, 2024. The increase was attributable primarily to growth in loans held for investment, interest-bearing deposits in other banks, available for sale securities, and loans held for sale, funded by growth in deposits. The significant components of the Corporation’s Consolidated Balance Sheets are discussed below.

Current wording

At March 31, 2026, the Corporation had total assets of $2.8 billion, an increase of $45.3 million since December 31, 2025. The increase was attributable primarily to growth in loans held for investment, loans held for sale and available for sale securities, funded by growth in deposits. The significant components of the Corporation’s Consolidated Balance Sheets are discussed below.

Previous wording

During the first nine months of 2025, loans held for investment increased $88.5 million to $1.97 billion at September 30, 2025 due primarily to growth in commercial real estate and land acquisition and development loans, partially offset by a decrease in construction loans at the community banking segment.

Current wording

During the first quarter of 2026, loans held for investment increased $20.5 million to $2.04 billion at March 31, 2026 due primarily to growth in commercial real estate and land acquisition and development loans, partially offset by a decrease in construction loans at the community banking segment.

Previous wording

During the first nine months of 2025, securities available for sale increased $20.4 million to $439.0 million at September 30, 2025 due primarily to an increase in mortgage-backed securities, partially offset by a decrease in U.S. Treasury securities. Net unrealized losses in the market value of securities available for sale decreased to $16.4 million at September 30, 2025 compared to $30.0 million at December 31, 2024.

Current wording

During the first quarter of 2026, securities available for sale increased $12.5 million to $470.6 million at March 31, 2026 due primarily to an increase in mortgage-backed securities, partially offset by a decrease in U.S. government agencies and corporations securities. Net unrealized losses in the market value of securities available for sale increased to $14.8 million at March 31, 2026 compared to $12.9 million at December 31, 2025.

Previous wording

The following table presents additional information pertaining to the composition of the securities portfolio at amortized cost, by the earlier of contractual maturity or expected maturity. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties. The total effective duration of the investment portfolio is 3.8 years as of September 30, 2025.

Current wording

The following table presents additional information pertaining to the composition of the securities portfolio at amortized cost, by the earlier of contractual maturity or expected maturity. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties. The total effective duration of the investment portfolio was 3.7 years as of March 31, 2026.

Previous wording

During the first nine months of 2025, deposits increased $127.2 million to $2.30 billion at September 30, 2025. Noninterest-bearing demand deposits increased $31.9 million, savings and interest-bearing demand deposits increased $43.8 million and time deposits increased $51.4 million during the same period. The increase in deposits was due in part to the opening of new deposit accounts and higher average balances within deposit accounts. The Corporation had $109.7 million in municipal deposits at September 30, 2025 compared to $163.4 million at December 31, 2024.

Current wording

During the first quarter of 2026, deposits increased $53.7 million to $2.40 billion at March 31, 2026 due primarily to increases in time deposits and noninterest-bearing demand deposits. The increase in deposits was due in part to higher average balances within deposit accounts and the opening of new deposit accounts. The Corporation had $143.5 million in municipal deposits at March 31, 2026 compared to $162.4 million at December 31, 2025.

Previous wording

The Corporation had $10.0 million and $25.0 million in brokered time deposits outstanding at September 30, 2025 and December 31, 2024, respectively. The Corporation may continue to use brokered deposits on a limited basis as a means of maintaining and diversifying liquidity and funding sources.

Current wording

The Corporation had $18.0 million and $25.0 million in brokered time deposits outstanding at March 31, 2026 and December 31, 2025, respectively. The Corporation may continue to use brokered deposits on a limited basis as a means of maintaining and diversifying liquidity and funding sources.

Previous wording

Liquid assets, which include cash and due from banks, interest-bearing deposits at other banks and nonpledged securities available for sale, totaled $441.4 million at September 30, 2025 compared to $288.1 million at December 31, 2024. The Corporation’s funding sources, including capacity, amount outstanding and amount available at September 30, 2025 are presented in Table 22. The Corporation’s capacity and amount available increased $6.1 million and $6.1 million, respectively, from December 31, 2024 due primarily to fluctuations in loans pledged to the FHLB.

Current wording

Liquid assets, which include cash and due from banks, interest-bearing deposits at other banks and nonpledged securities available for sale, totaled $428.9 million at March 31, 2026 compared to $406.4 million at December 31, 2025. The Corporation’s funding sources, including capacity, amount outstanding and amount available at March 31, 2026 are presented in Table 22. The Corporation’s capacity decreased $3.4 million from December 31, 2025 due primarily to fluctuations in loans pledged to the FRB and FHLB and the Corporation’s amount available increased $6.6 million from December 31, 2025 due primarily to the repayment of FHLB advances during the first quarter of 2026.

Previous wording

Uninsured deposits represent an estimate of amounts above the Federal Deposit Insurance Corporation (FDIC) insurance coverage limit of $250,000. As of September 30, 2025, the Corporation’s uninsured deposits were approximately $686.2 million, or 29.9 percent of total deposits. Excluding intercompany cash holdings and municipal deposits which are secured with pledged securities, amounts uninsured were approximately $557.4 million, or 24.3 percent of total deposits as of September 30, 2025, compared to $455.2 million, or 21.0 percent of total deposits as of December 31, 2024. The

Current wording

Uninsured deposits represent an estimate of amounts above the Federal Deposit Insurance Corporation (FDIC) insurance coverage limit of $250,000. As of March 31, 2026, the Corporation’s uninsured deposits were approximately $745.7 million, or 31.1 percent of total deposits. Excluding intercompany cash holdings and municipal deposits which are secured with pledged securities, amounts uninsured were approximately $578.4 million, or 24.1 percent of total deposits as of March 31, 2026, compared to $527.8 million, or 22.5 percent of total deposits as of December 31, 2025. The Corporation’s liquid assets and borrowing availability as of March 31, 2026 totaled $1.1 billion, exceeding uninsured deposits, excluding intercompany cash holdings and secured municipal deposits, by $531.9 million.