FIRST CAPITAL INC

Previous wording

The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated financial statements that have been prepared in accordance with GAAP. The preparation of the Company’s financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, income and expenses. These estimates are based upon historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The estimates and judgments that management believes involve the most complex and subjective estimates and judgments and have the most effect on the Company’s reported financial position and results of operations are described as critical accounting policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. During the six months ended June 30, 2025, there was no significant change in the Company’s critical account policies or the application of critical accounting policies as disclosed in the Company’s Annual report on Form 10-K for the year ended December 31, 2024.

Current wording

The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated financial statements that have been prepared in accordance with GAAP. The preparation of the Company’s financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, income and expenses. These estimates are based upon historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The estimates and judgments that management believes involve the most complex and subjective estimates and judgments and have the most effect on the Company’s reported financial position and results of operations are described as critical accounting policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. During the nine months ended September 30, 2025, there was no significant change in the Company’s critical account policies or the application of critical accounting policies as disclosed in the Company’s Annual report on Form 10-K for the year ended December 31, 2024.

Previous wording

Total assets increased $55.2 million from $1.19 billion at December 31, 2024 to $1.24 billion at June 30, 2025.

Current wording

Total assets increased $48.0 million from $1.19 billion at December 31, 2024 to $1.24 billion at September 30, 2025.

Previous wording

Net loans receivable (excluding loans held for sale) increased $18.0 million from $631.2 million at December 31, 2024 to $649.2 million at June 30, 2025. Multifamily residential, 1-4 family residential mortgage, 1-4 family residential construction, and commercial real estate loan increases of $9.5 million, $5.7 million, $4.1 million, and $3.8 million, respectively, were partially offset by decreases of $6.6 million and $1.7 million in other construction, development and land and consumer and other loans, respectively, during the six months ended June 30, 2025.

Current wording

Net loans receivable (excluding loans held for sale) increased $11.1 million from $631.2 million at December 31, 2024 to $642.3 million at September 30, 2025. Commercial real estate, multifamily residential, 1-4 family residential mortgage, and home equity and second mortgage loans increases of $16.8 million, $13.1 million, $7.0 million, and $5.1 million, respectively, were partially offset by a decrease of $30.9 million in other construction, development and land loans during the nine months ended September 30, 2025.

Previous wording

Cash and cash equivalents increased from $105.9 million at December 31, 2024 to $134.6 million at June 30, 2025 primarily due to net deposit inflows at the Bank.

Current wording

Cash and cash equivalents increased from $105.9 million at December 31, 2024 to $112.2 million at September 30, 2025 primarily due to net deposit inflows at the Bank which were partially offset by loan originations and purchases of available for sale securities.

Previous wording

Securities available for sale increased $6.3 million from $389.2 million at December 31, 2024 to $395.6 million at June 30, 2025. Purchases of $54.5 million of securities classified as available for sale were made during the six months ended June 30, 2025 and consisted primarily of U.S. government agency CMOs and mortgage-backed securities and municipal bonds. Principal payments and maturities of available for sale securities totaled $15.4 million and $25.7 million, respectively, during the six months ended June 30, 2025. Securities classified as available for sale totaling $11.2 million were sold during the six months ended June 30, 2025 and consisted primarily of municipal and U.S. government agency notes and bonds. In addition, there was an unrealized gain of $4.6 million on the securities available for sale portfolio during the six month period ended June 30, 2025 due primarily to decreasing market interest rates.

Current wording

Securities available for sale increased $32.4 million from $389.2 million at December 31, 2024 to $421.6 million at September 30, 2025. Purchases of $108.0 million of securities classified as available for sale were made during the nine months ended September 30, 2025 and consisted primarily of U.S. government agency CMOs and mortgage-backed securities and municipal bonds. Principal payments and maturities of available for sale securities totaled $24.0 million and $45.1 million, respectively, during the nine months ended September 30, 2025. Securities classified as available for sale totaling $17.9 million were sold during the nine months ended September 30, 2025 and consisted primarily of municipal and U.S. government agency notes and bonds. In addition, there was an unrealized gain of $12.1 million on the securities available for sale portfolio during the nine month period ended September 30, 2025 due primarily to decreasing market interest rates.

Previous wording

Total deposits increased $44.2 million from $1.07 billion at December 31, 2024 to $1.11 billion at June 30, 2025. Time deposits, non-interest bearing checking accounts, interest bearing checking accounts, and savings accounts increased $20.2 million, $10.6 million, $7.7 million, and $5.7 million, respectively, during the six months ended June 30, 2025. Deposit inflows and outflows are influenced by prevailing market interest rates, competition, local and national economic conditions, and fluctuations in our customers’ own liquidity needs and may also be influenced by recent developments in the financial services industry.

Current wording

Total deposits increased $28.3 million from $1.07 billion at December 31, 2024 to $1.09 billion at September 30, 2025. Time deposits, non-interest bearing checking accounts, and savings accounts increases of $28.9 million, $15.5 million, and $3.7 million, respectively, were partially offset by a decrease of $20.0 million in interest bearing checking accounts during the nine months ended September 30, 2025. Deposit inflows and outflows are influenced by prevailing market interest rates, competition, local and national economic conditions, and fluctuations in our customers’ own liquidity needs and may also be influenced by recent developments in the financial services industry.

Previous wording

Total stockholders’ equity attributable to the Company increased from $114.6 million at December 31, 2024 to $123.2 million at June 30, 2025, primarily due to a $5.1 million increase in retained net income as well as a $3.5 million net unrealized gain on available for sale securities. The net unrealized gain on available for sale securities during the period is primarily due to decreased market interest rates.

Current wording

Total stockholders’ equity attributable to the Company increased from $114.6 million at December 31, 2024 to $132.4 million at September 30, 2025, primarily due to a $9.3 million net unrealized gain on available for sale securities as well as an $8.5 million increase in retained net income. The net unrealized gain on available for sale securities during the period is primarily due to decreased market interest rates.

Previous wording

**Net income.**Net income attributable to the Company was $3.8 million ($1.13 per diluted share) for the three months ended June 30, 2025 compared to $2.8 million ($0.85 per diluted share) for the three months ended June 30, 2024.

Current wording

**Net income.**Net income attributable to the Company was $4.5 million ($1.34 per diluted share) for the three months ended September 30, 2025 compared to $2.9 million ($0.87 per diluted share) for the three months ended September 30, 2024.

Previous wording

**Net interest income.**Net interest income after provision for credit losses increased $1.8 million for the three months ended June, 2025 as compared to the same period in 2024.

Current wording

**Net interest income.**Net interest income after provision for credit losses increased $2.1 million for the three months ended September 30, 2025 as compared to the same period in 2024.

Previous wording

Total interest income increased $1.8 million when comparing the two periods primarily due to an increase in the average tax-equivalent yield on interest-earning assets from 4.42% for the quarter ended June 30, 2024 to 4.82% for the same period in 2025, in addition to an increase in the average balance of interest-earning assets from $1.12 billion for the quarter ended June 30, 2024 to $1.18 billion for the same period in 2025.

Current wording

Total interest income increased $1.4 million when comparing the two periods primarily due to an increase in the average tax-equivalent yield on interest-earning assets from 4.59% for the quarter ended September 30, 2024 to 4.94% for the same period in 2025, in addition to an increase in the average balance of interest-earning assets from $1.17 billion for the quarter ended September 30, 2024 to $1.20 billion for the same period in 2025.

Previous wording

Total interest expense increased $67,000 when comparing the two periods. The average cost of interest-bearing liabilities decreased from 1.71% for the quarter ended June 30, 2024 to 1.64% for the same period in 2025, while the average balance of interest-bearing liabilities increased from $830.7 million for the quarter ended June 30, 2024 to $883.8 million for the same period in 2025.

Current wording

Total interest expense decreased $397,000 when comparing the two periods. The average cost of interest-bearing liabilities decreased from 1.87% for the quarter ended September 30, 2024 to 1.66% for the same period in 2025, while the average balance of interest-bearing liabilities increased from $875.8 million for the quarter ended September 30, 2024 to $891.3 million for the same period in 2025.

Previous wording

As a result of the changes in interest-earning assets and interest-bearing liabilities, the tax equivalent net interest margin increased from 3.15% for the quarter ended June 30, 2024 to 3.59% for the same period in 2025.

Current wording

As a result of the changes in interest-earning assets and interest-bearing liabilities, the tax-equivalent net interest margin increased from 3.19% for the quarter ended September 30, 2024 to 3.71% for the same period in 2025.

Previous wording

Provision for credit losses. Based on management’s analysis of the ACL on loans and unfunded loan commitments, the provision for credit losses decreased from $360,000 for the quarter ended June 30, 2024 to $306,000 for the quarter ended June 30, 2025. The Bank recognized net charge-offs of $113,000 and $30,000 for the quarters ended June 30, 2025 and 2024, respectively.

Current wording

Provision for credit losses. Based on management’s analysis of the ACL on loans and unfunded loan commitments, the provision for credit losses decreased from $463,000 for the quarter ended September 30, 2024 to $150,000 for the quarter ended September 30, 2025. The Bank recognized net charge-offs of $17,000 and $64,000 for the quarters ended September 30, 2025 and 2024, respectively.

Previous wording

**Noninterest income.**Noninterest income decreased $5,000 for the quarter ended June 30, 2025 as compared to the quarter ended June 30, 2024 primarily due to the Company recognizing a $41,000 loss on equity securities for the quarter ended June 30, 2025 compared to a $6,000 loss on equity securities for the quarter ended June 30, 2024. In addition, the Company recognized a $17,000 decrease in both gain on sale of loans and in the increase of the cash surrender of bank owned life insurance policies when comparing the two periods. These were partially offset by the Company recognizing a $46,000 gain on the redemption of a bank owned life insurance policy during the quarter ended June 30, 2025, which is reported in other income.

Current wording

**Noninterest income.**Noninterest income increased $506,000 for the quarter ended September 30, 2025 as compared to the quarter ended September 30, 2024 primarily due to the Company recognizing a $150,000 gain on equity securities for the quarter ended September 30, 2025 compared to a $196,000 loss on equity securities for the quarter ended September 30, 2024. In addition, the Company recognized a $119,000 increase in gain on sale of loans as well as an increase of $47,000 in ATM and debit card fee income when comparing the two periods. These increases were partially offset by the Company recognizing a net $39,000 loss on the sale of available for sale securities during the quarter ended September 30, 2025. The Company did not sell any securities during the quarter ended September 30, 2024.

Previous wording

**Noninterest expense.**Noninterest expenses increased $494,000 for the quarter ended June 30, 2025 as compared to the same period in 2024. This was primarily due to increases in compensation and benefits, occupancy and equipment, advertising and data processing expenses of $308,000, $69,000, $41,000, and $41,000, respectively. The increase in compensation and benefits is due to increases in salary and wages associated with annual cost of living and performance related adjustments as well as increases in the cost of Company-provided health insurance benefits. The increase in occupancy and equipment expenses is primarily due to costs associated with the upgrade of the Company’s call center system as well as increased ATM servicing expenses. The increase in advertising expenses is related to various new marketing efforts undertaken in the current quarter. The increase in data processing expense is related to licensing upgrades and various new software.

Current wording

**Noninterest expense.**Noninterest expenses increased $540,000 for the quarter ended September 30, 2025 as compared to the same period in 2024. This was primarily due to increases in occupancy and equipment and compensation and benefits expenses of $331,000 and $202,000, respectively. The increase in occupancy and equipment expenses is primarily due to costs for the demolition and subsequent rebuilding of one of the Bank’s Bullitt County branches in addition to a loss recognized for the remaining net book value of assets associated with the branch. The increase in compensation and benefits is due to increases in salary and wages associated with annual cost of living and performance related adjustments.

Previous wording

Income tax expense. Income tax expense increased $364,000 for the quarter ended June 30, 2025 as compared to the same period in 2024 resulting in an effective tax rate of 18.4% for the quarter ended June 30, 2025, compared to 14.7% for the same period

Current wording

Income tax expense. Income tax expense increased $530,000 for the quarter ended September 30, 2025 as compared to the same period in 2024 resulting in an effective tax rate of 19.2% for the quarter ended September 30, 2025, compared to 15.6% for the same period in 2024. The increase in the Bank’s effective tax rate for the quarter reflects a higher proportion of net income being subject to taxation compared to the same period last year.

Previous wording

Results of Operations for the Six Month Periods Ended June 30, 2025 and 2024

Current wording

Results of Operations for the Nine Month Periods Ended September 30, 2025 and 2024

Previous wording

**Net income.**Net income attributable to the Company was $7.0 million ($2.09 per diluted share) for the six months ended June 30, 2025 compared to $5.8 million ($1.73 per diluted share) for the six months ended June 30, 2024.

Current wording

**Net income.**Net income attributable to the Company was $11.5 million ($3.43 per diluted share) for the nine months ended September 30, 2025 compared to $8.7 million ($2.59 per diluted share) for the nine months ended September 30, 2024.

Previous wording

**Net interest income.**Net interest income after provision for credit losses increased $2.7 million for the six months ended June, 2025 as compared to the same period in 2024.

Current wording

**Net interest income.**Net interest income after provision for credit losses increased $4.9 million for the nine months ended September 30, 2025 as compared to the same period in 2024.

Previous wording

Total interest income increased $3.3 million when comparing the two periods due to an increase in the average tax-equivalent yield on interest-earning assets from 4.36% for the six months ended June 30, 2024 to 4.73% for the same period in 2025, in addition to an increase in the average balance of interest-earning assets from $1.12 billion for the six months ended June 30, 2024 to $1.18 billion for the same period in 2025.

Current wording

Total interest income increased $4.8 million when comparing the two periods due to an increase in the average tax-equivalent yield on interest-earning assets from 4.44% for the nine months ended September 30, 2024 to 4.80% for the same period in 2025, in addition to an increase in the average balance of interest-earning assets from $1.14 billion for the nine months ended September 30, 2024 to $1.19 billion for the same period in 2025.

Previous wording

Total interest expense increased $595,000 as the average cost of interest-bearing liabilities increased from 1.63% for the six months ended June 30, 2024 to 1.67% for the same period in 2025, in addition to an increase in the average balance of interest-bearing liabilities from $832.2 million for the six months ended June 30, 2024 to $883.2 million for the same period in 2025.

Current wording

Total interest expense increased $198,000 as the average cost of interest-bearing liabilities decreased from 1.72% for the nine months ended September 30, 2024 to 1.67% for the same period in 2025 while the average balance of interest-bearing liabilities increased from $846.8 million for the nine months ended September 30, 2024 to $886.0 million for the same period in 2025.

Previous wording

As a result of the changes in interest-earning assets and interest-bearing liabilities, the tax equivalent net interest margin increased from 3.15% for the six months ended June 30, 2024 to 3.47% for the same period in 2025.

Current wording

As a result of the changes in interest-earning assets and interest-bearing liabilities, the tax-equivalent net interest margin increased from 3.16% for the nine months ended September 30, 2024 to 3.55% for the same period in 2025.

Previous wording

Provision for credit losses. Based on management’s analysis of the ACL on loans and unfunded loan commitments, the provision for credit losses increased from $640,000 for the six months ended June 30, 2024 to $644,000 for the six months ended June 30, 2025. The increase was due to loan growth during the period as well as management’s consideration of macroeconomic uncertainty. The Bank recognized net charge-offs of $197,000 and $85,000 for the six months ended June 30, 2025 and 2024, respectively.

Current wording

Provision for credit losses. Based on management’s analysis of the ACL on loans and unfunded loan commitments, the provision for credit losses decreased from $1.1 million for the nine months ended September 30, 2024 to $794,000 for the nine months ended September 30, 2025. The decrease was due to a decrease in non-performing loans and management’s consideration of macroeconomic uncertainty. The Bank recognized net charge-offs of $214,000 and $149,000 for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

**Noninterest income.**Noninterest income decreased $56,000 for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 primarily due to the Company recognizing a $55,000 loss on sale of available for sale securities for the six months ended June 30, 2025 compared to a $32,000 gain on sale of available for sale securities for the six months ended June 30, 2024. In addition, the Company also recognized a $29,000 decrease in gains on sale of loans when comparing the two periods. These were partially offset by a $51,000 reduction in the loss on equity securities and a $24,000 increase in service charges on deposit accounts when comparing the two periods. In addition, the Company also recognized a $46,000 gain on the exercise of a bank owned life insurance policy during the six months ended June 30, 2025, which is reported in other income.

Current wording

**Noninterest income.**Noninterest income increased $450,000 for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The increase is primarily due to the Company recognizing a $127,000 gain on equity securities for the nine months ended September 30, 2025 compared to a loss of $270,000 for the same period in 2024. In addition, the Company also recognized a $90,000 increase in gains on sale of loans and a $39,000 increase in service charges on deposits when comparing the two periods. These were partially offset by the Company recognizing a net $94,000 loss on sale of available for sale securities for the nine months ended September 30, 2025 compared to a net gain of $32,000 on sale of available for sale securities for the same period in 2024.

Previous wording

**Noninterest expense.**Noninterest expenses increased $918,000 for the six months ended June 30, 2025 as compared to the same period in 2024. This was primarily due to increases in (1) compensation and benefits and (2) occupancy and equipment expenses of $567,000 and $229,000, respectively, when comparing the two periods. The increase in compensation and benefits is due to increases in salary and wages associated with annual cost of living and performance related adjustments as well as increases in the cost of Company-provided health insurance benefits. The increase in occupancy and equipment expenses is primarily due to costs associated with snow removal across the Company’s branch network given the historic storms in our communities in the first quarter of 2025, as well as a loss on the disposal of premises and equipment, the upgrade of the Company’s call center system, and increased ATM servicing expenses.

Current wording

**Noninterest expense.**Noninterest expenses increased $1.5 million for the nine months ended September 30, 2025 as compared to the same period in 2024. This was primarily due to increases in compensation and benefits and occupancy and equipment expenses of $769,000 and $560,000, respectively, when comparing the two periods. The increase in compensation and benefits is due to increases in salary and wages associated with annual cost of living and performance related adjustments as well as increases in the cost of Company-provided health insurance benefits. The increase in occupancy and equipment expenses is primarily due to costs associated with snow removal across the Company’s branch network in the first quarter of 2025, as well as a losses on the disposal of premises and equipment associated with two of the Bank’s branches, the upgrade of the Company’s call center system, and demolition of one of the Bank’s branches.

Previous wording

Income tax expense. Income tax expense increased $529,000 for the six months ended June 30, 2025 as compared to the same period in 2024 resulting in an effective tax rate of 17.9% for the six months ended June 30, 2025, compared to 14.7% for the same period in 2024. The increase in the Bank’s effective tax rate for the six months ended June 30, 2025 reflects a higher proportion of net income being subject to taxation compared to the same period last year.

Current wording

Income tax expense. Income tax expense increased $1.1 million for the nine months ended September 30, 2025 as compared to the same period in 2024 resulting in an effective tax rate of 18.4% for the nine months ended September 30, 2025, compared to 15.0% for the same period in 2024. The increase in the Bank’s effective tax rate for the nine months ended September 30, 2025 reflects a higher proportion of net income being subject to taxation compared to the same period last year.

Previous wording

The Bank’s primary sources of funds are customer deposits, proceeds from loan repayments, maturing securities and borrowings from the FHLB or FRB. While loan repayments and maturities are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by market interest rates, general economic conditions and competition. At June 30, 2025, the Bank had cash and cash equivalents of $134.6 million and securities available-for-sale with a fair value of $395.6 million. If the Bank requires funds beyond its ability to generate them internally, it has additional borrowing capacity with the FHLB, FRB, collateral eligible for repurchase agreements and unsecured federal funds purchased lines of credit with other financial institutions.

Current wording

The Bank’s primary sources of funds are customer deposits, proceeds from loan repayments, maturing securities and borrowings from the FHLB or FRB. While loan repayments and maturities are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by market interest rates, general economic conditions and competition. At September 30, 2025, the Bank had cash and cash equivalents of $112.2 million and securities available-for-sale with a fair value of $421.6 million. If the Bank requires funds beyond its ability to generate them internally, it has additional borrowing capacity with the FHLB, FRB, collateral eligible for repurchase agreements and unsecured federal funds purchased lines of credit with other financial institutions.

Previous wording

The Company is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, the Company, on a stand-alone basis, is responsible for paying any dividends declared to its shareholders. The Board of Directors of the Company also has authorized the repurchase of shares of its common stock. The Company’s primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to the Company in any calendar year, without the receipt of prior approval from the Indiana Department of Financial Institutions (“IDFI”), cannot exceed net income for that year to date plus retained net income (as defined under Indiana law) for the preceding two calendar years. On a stand-alone basis, the Company had liquid assets of $2.7 million at June 30, 2025.

Current wording

The Company is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, the Company, on a stand-alone basis, is responsible for paying any dividends declared to its shareholders. The Board of Directors of the Company also has authorized the repurchase of shares of its common stock. The Company’s primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to the Company in any calendar year, without the receipt of prior approval from the Indiana Department of Financial Institutions (“IDFI”), cannot exceed net income for that year to date plus retained net income (as defined under Indiana law) for the preceding two calendar years. On a stand-alone basis, the Company had liquid assets of $2.8 million at September 30, 2025.

Previous wording

The Bank is required to maintain specific amounts of capital pursuant to regulatory requirements. Beginning in 2020, qualifying community banks with assets of less than $10 billion are eligible to opt in to the Community Bank Leverage Ratio (“CBLR”) framework. The CBLR is the ratio of a bank’s tangible equity capital to average total consolidated assets. A qualifying community bank that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies must set the minimum capital for the new CBLR at not less than 8% and not more than 10%, and has set the minimum ratio at 9% effective January 1, 2022. A financial institution that falls below the minimum CBLR generally has a two quarter grace period to get back into compliance as long as it maintains a minimum CBLR of 8%. A financial institution can elect to be subject to or opt out of the CBLR framework at any time. As a qualified community bank, the Bank had opted into the CBLR framework as of June 30, 2025 and December 31, 2024 and its CBLR was 10.80% and 10.57% as of those dates, respectively. Management believes that the Bank met all capital adequacy requirements to which it was subject as of June 30, 2025. At both June 30, 2025 and December 31, 2024, the Bank was considered “well-capitalized” under applicable regulatory guidelines.

Current wording

The Bank is required to maintain specific amounts of capital pursuant to regulatory requirements. Beginning in 2020, qualifying community banks with assets of less than $10 billion are eligible to opt in to the Community Bank Leverage Ratio (“CBLR”) framework. The CBLR is the ratio of a bank’s tangible equity capital to average total consolidated assets. A qualifying community bank that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies must set the minimum capital for the new CBLR at not less than 8% and not more than 10%, and has set the minimum ratio at 9% effective January 1, 2022. A financial institution that falls below the minimum CBLR generally has a two quarter grace period to get back into compliance as long as it maintains a minimum CBLR of 8%. A financial institution can elect to be subject to or opt out of the CBLR framework at any time. As a qualified community bank, the Bank had opted into the CBLR framework as of September 30, 2025 and December 31, 2024 and its CBLR was 10.82% and 10.57% as of those dates, respectively. Management believes that the Bank met all capital adequacy requirements to which it was subject as of September 30, 2025. At both September 30, 2025 and December 31, 2024, the Bank was considered “well-capitalized” under applicable regulatory guidelines.

Previous wording

For the six months ended June 30, 2025, the Company did not engage in any off-balance sheet transactions reasonably likely to have a material effect on the Company’s financial condition, results of operations or cash flows.

Current wording

For the nine months ended September 30, 2025, the Company did not engage in any off-balance sheet transactions reasonably likely to have a material effect on the Company’s financial condition, results of operations or cash flows.