FIRST UNITED CORP/MD/
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 6, 2026
FUNC$45.92+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0001104659-26-057909
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001104659-26-092127
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 105 previous paragraphs and 109 current paragraphs.
70 unchanged; 32 reworded; 4 added; 3 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 39 previous and 46 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Net income for the six months ended June 30, 2026 was $12.3 million on a GAAP basis, inclusive of the $1.7 million, net of tax, core processing system contract consulting expenses discussed above, and $13.9 million on a non-GAAP basis compared to GAAP and non-GAAP basis income of $11.8 million for the six months ended June 30, 2025. The year-over-year increase of $0.5 million was attributable to a $3.9 million increase in net interest income an increase in other non-interest income of $0.7 million, inclusive of net gains, as a result of increased trust and brokerage income of $0.5 million, and increased bank owned life insurance (“BOLI”) income of $0.2 million related to a one-time death benefit received in the first quarter of 2026, partially offset by an increase in other operating expenses of $3.9 million driven by the aforementioned consulting fee, increased salaries and benefits of $1.7 million and an increase in data processing expenses of $0.3 million. Salaries and benefits increased due to increased salaries as a result of new hires and annual merit increases in April 2026 and increased incentive payouts, partially offset by an increase in the reduction of costs associated with loan originations related to increased loan production.
Current report
Comparing the six months ended June 30, 2026 to the six months ended June 30, 2025, net interest income, on a non-GAAP, FTE basis, increased by $4.0 million. Interest income increased by $3.0 million, primarily driven by an increase of $2.3 million on interest and fees on loans as average loan balances increased by $39.9 million and an increase in yield by 14 basis points. Interest expense on deposits increased slightly by $0.2 million despite an increase in average deposit balances of $89.7 million driven by increases of $26.5 million in demand deposit accounts, and $86.2 million in retail money market balances, partially offset by decreases in savings balances of $10.8 million and $15.0 million in brokered time deposits. Interest expense on short-term borrowings remained stable and interest expense on long-term borrowings decreased by $1.2 million as a result of a decrease in
Current report
average balances of $62.0 million, primarily due to the repayment of $65.0 million of FHLB advances at their maturities in March 2026. The net interest margin for the six months ended June 30, 2026 was 3.89% compared to 3.61% for the six months ended June 30, 2025.
Removed paragraphs (3)
Previous report
Consolidated net income was $6.7 million for the first quarter of 2026, or $1.03 per diluted share, compared to $5.8 million, or $0.89 per diluted share, for the first quarter of 2025. Non-GAAP net income was $6.6 million, or $1.02 per diluted share, for the first quarter of 2026 compared to $5.8 million, or $0.89 per diluted share, for the first quarter of 2025 and $7.2 million, or $1.10 per diluted share, for the fourth quarter of 2025. Return on Average Assets and Return on Average Equity for the quarter ended March 31, 2026, were 1.29% and 13.06%, respectively.
Previous report
term rates decline. Gross loans increased slightly by $3.8 million. While loan production was strong during the quarter, amortization and unusually high payoffs exceeded growth levels. Pension assets decreased by $0.8 million due to decreased market values.
Previous report
As a percentage of the loan portfolio, accruing loans past due 30 days or more increased slightly to 0.35% at March 31, 2026 compared to 0.32% at December 31, 2025. Non-accrual loans totaled $4.7 million at March 31, 2026 compared to $4.2 million at December 31, 2025. The increase in non-accrual balances at March 31, 2026 was related to one commercial loan moving to non-accrual status in the first quarter.
Reworded paragraphs (32)
Previous wording
At March 31, 2026, the Corporation’s total assets were $2.0 billion, net loans were $1.5 billion, and deposits were $1.8 billion. Shareholders’ equity at March 31, 2026 was $205.3 million.
Current wording
At June 30, 2026, the Corporation’s total assets were $2.1 billion, net loans were $1.6 billion, and deposits were $1.7 billion. Shareholders’ equity at June 30, 2026 was $212.4 million.
Previous wording
The $0.9 million increase in quarterly net income when compared to the first quarter of 2025 was primarily driven by a $2.1 million increase in net interest income, an increase of $0.4 million in non-interest income, inclusive of gains, partially offset by a $0.2 million increase in provision for credit losses as a result of increased off-balance sheet loan commitments, an increase in non-interest expense of $1.1 million, and an increase in income tax expense of $0.3 million. Comparing the first quarter of 2026 to the same period of 2025, interest and fees on loans increased by $0.7 million resulting from new loans booked at higher rates late in 2025 and the repricing of adjustable-rate loans. Interest expense decreased by $0.4 million when comparing year-over-year quarterly expense, resulting from the repayment of a $25.0 million brokered certificate of deposit in January 2026 and $65.0 million in Federal Home Loan Bank (“FHLB”) borrowings in March 2026. Other operating income increased by $0.4 million, driven by an increase in trust and brokerage income of $0.2 million resulting from increased production and a $0.2 million increase in bank owned life insurance (“BOLI”) related to a one-time death benefit received in the first quarter of 2026. Other operating expenses increased by $1.1 million, driven by a $0.9 million increase in salaries and benefits as a result of filling open positions throughout 2025, normal merit increases in April 2025 and increased incentive payouts, partially offset by reduced life and health insurance expense due to reduced claims and an increase in the reduction of costs associated with loan originations related to increased loan production. Professional services expenses increased by $0.1 million and data processing expenses increased by $0.2 million. These increases were partially offset by reductions in other expenses such as miscellaneous loan fees and net periodic pension expenses.
Current wording
Consolidated net income decreased by $0.3 million for the second quarter of 2026 when compared to the second quarter of 2025. The decrease was driven by an increase in other expense as a result of a one-time, $1.7 million, net of tax, consulting expense related to core processing system contract negotiations. This increase was partially offset by a $1.9 million increase in net interest income, an increase of $0.3 million in non-interest income, inclusive of gains, and a $0.1 million decrease in provision for credit losses. Comparing the second quarter of 2026 to the same period of 2025, interest and fees on loans increased by $1.5 million as a result of new loans booked at higher rates and the continued repricing of adjustable-rate loans. Interest expense decreased by $0.6 million when comparing year-over-year quarterly expense as a result of the repayment of a $25.0 million brokered certificate of deposit in January 2026 and $65.0 million in Federal Home Loan Bank (“FHLB”) borrowings in March 2026. Other operating income increased by $0.3 million driven by an increase in trust and brokerage income of $0.3 million as a result of increased production and favorable market values on assets under management. Other operating expenses increased by $2.8 million driven by the one-time core processing system contract negotiations discussed above, a $0.8 million increase in salaries and benefits as a result of filling open positions in late 2025 and 2026, normal merit increases in April 2026 and increased incentive payouts, partially offset
Previous wording
The table below summarizes net interest income for the three-month periods ended March 31, 2026 and 2025.
Current wording
The table below summarizes net interest income for the six- and three-month periods ended June 30, 2026 and 2025.
Previous wording
The following table sets forth the average balances, net interest income and expense, and average yields and rates of our interest-earning assets and interest-bearing liabilities for the three-month periods ended March 31, 2026 and 2025:
Current wording
The following table sets forth the average balances, net interest income and expense, and average yields and rates of our interest-earning assets and interest-bearing liabilities for the six- and three-month periods ended June 30, 2026 and 2025:
Previous wording
Net interest income, on a non-GAAP, FTE basis, increased by $2.1 million for the first quarter of 2026 when compared to the first quarter of 2025. This increase was driven by an increase of $1.7 million in interest income. Interest income on loans increased by $0.7 million due to the increase of 21 basis points in overall yield on the loan portfolio as new loans were booked at higher rates during 2025 as well as the upward repricing of adjustable-rate loans. Investment income increased slightly by $0.1 million as management continues to reinvest cashflows back into the portfolio resulting in an increase in yield of 14 basis points. Interest income on federal funds sold increased by $0.8 million due to an increase of $87.2 million in average cash balances held at the Federal Reserve Bank as a result of strong deposit growth in 2025. Interest expense, in the first quarter of 2026 decreased by $0.4 million when compared to the first quarter of 2025. Interest on deposits remained stable despite a $95.9 million increase in average deposit balances, primarily in interest bearing demand and money market deposits. Long-term borrowing expense decreased by $0.3 million for the first quarter of 2026 when compared to the same period of 2025 due to the repayment of $65.0 million of FHLB advances at their maturity in March of 2026.
Current wording
Net interest income, on a non-GAAP, FTE basis, increased by $1.9 million for the second quarter of 2026 when compared to the second quarter of 2025. This increase was driven by an increase of $1.3 million in interest income. Interest income on loans increased by $1.5 million due to the increase of 15 basis points in overall yield on the loan portfolio as new loans were booked at higher rates during 2025 and 2026 as well as the upward repricing of adjustable-rate loans. Investment income remained stable as management continued to reinvest cashflows back into the portfolio resulting in an increase in yield of 12 basis points. Interest income on federal funds sold decreased by $0.3 million due to a decrease of $22.2 million in average cash balances held at the
Previous wording
The following table sets forth an analysis of volume and rate changes in interest income and interest expense for our average interest-earning assets and average interest-bearing liabilities for the three-month periods ended March 31, 2026 and 2025:
Current wording
The following tables set forth an analysis of volume and rate changes in interest income and interest expense for our average interest-earning assets and average interest-bearing liabilities for the six- and three-month periods ended June 30, 2026 and 2025:
Previous wording
Specific allocations have been made for loans where management has determined that the collateral supporting the loans is not adequate to cover the loan balance, and the qualitative factors affecting the estimated allowance for credit losses (“ACL”) have been adjusted based on the current economic environment and the characteristics of the loan portfolio. The provision for credit losses was $0.9 million for the quarter ended March 31, 2026 compared to $0.7 million for the quarter ended March 31, 2025.
Current wording
Specific allocations have been made for loans where management has determined that the collateral supporting the loans is not adequate to cover the loan balance, and the qualitative factors affecting the estimated allowance for credit losses (“ACL”) have been adjusted based on the current economic environment and the characteristics of the loan portfolio. The provision for credit losses was $0.8 million for the quarter ended June 30, 2026 compared to $0.9 million for the quarter ended June 30, 2025. Provision for credit losses was $1.7 million and $1.5 million for the first six months of 2026 and 2025, respectively.
Previous wording
The composition of other operating income for the three-month periods ended March 31, 2026 and 2025 is illustrated in the following table:
Current wording
The composition of other operating income for the six- and three-month periods ended June 30, 2026 and 2025 is illustrated in the following table:
Previous wording
The composition of other operating expenses for the three-month periods ended March 31, 2026 and 2025 is illustrated in the following table:
Current wording
The composition of other operating expenses for the six- and three-month periods ended June 30, 2026 and 2025 is illustrated in the following table:
Previous wording
In reporting interim financial information, income tax provisions should be determined under the procedures set forth in Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 740,Income Taxes (Section 740-270-30). This guidance provides that at the end of each interim period, an entity should make its best estimate of the effective tax rate expected to be applicable for the full fiscal year. The rate so determined should be used in providing for income taxes on a current year-to-date basis. The effective tax rate should reflect anticipated investment tax credits, capital gains rates, and other available tax planning alternatives. In arriving at this effective tax rate, however, no effect should be included for the tax related to significant, unusual or extraordinary items that will be separately reported or reported net of their related tax effect in reports for the interim period or for the fiscal year. The effective income tax rates, as a percentage of income, for the three-month periods ended March 31, 2026 and 2025 were both 24.6%.
Current wording
In reporting interim financial information, income tax provisions should be determined under the procedures set forth in Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 740,Income Taxes (Section 740-270-30). This guidance provides that at the end of each interim period, an entity should make its best estimate of the effective tax rate expected to be applicable for the full fiscal year. The rate so determined should be used in providing for income taxes on a current year-to-date basis. The effective tax rate should reflect anticipated investment tax credits, capital gains rates, and other available tax planning alternatives. In arriving at this effective tax rate, however, no effect should be included for the tax related to significant, unusual or extraordinary items that will be separately reported or reported net of their related tax effect in reports for the interim period or for the fiscal year. The effective income tax rates, as a percentage of income, for the six-month periods ended June 30, 2026 and 2025 were 24.1% and 24.7%, respectively.
Previous wording
The following table sets forth certain selected financial data for the three-month periods ended March 31, 2026 and 2025 under GAAP (as reported) and non-GAAP. A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with GAAP in the United States. Management believes that the presentation of non-GAAP financial measures provides investors with a greater understanding of the Corporation’s operating results in addition to the results measured in accordance with GAAP. While management uses these non-GAAP measures in its analysis of the Corporation’s performance, this information should not be viewed as a substitute for financial results determined in accordance with GAAP or considered to be more important than financial results determined in accordance with GAAP.
Current wording
The following table sets forth certain selected financial data for the six- and three-month periods ended June 30, 2026 and 2025 under GAAP (as reported) and non-GAAP. A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with GAAP in the United States. Management believes that the presentation of non-GAAP financial measures provides investors with a greater understanding of the Corporation’s operating results in addition to the results measured in accordance with GAAP. While management uses these non-GAAP measures in its analysis of the Corporation’s performance, this information should not be viewed as a substitute for financial results determined in accordance with GAAP or considered to be more important than financial results determined in accordance with GAAP.
Previous wording
Total assets at March 31, 2026 were $2.0 billion, representing a $48.4 million decrease since December 31, 2025. During the first quarter of 2026, cash and interest-bearing deposits in other banks decreased by $41.8 million. The investment portfolio increased by $3.2 million as cashflows of the bonds were reinvested in the first quarter of 2026 in an effort to gain yield before long-
Current wording
Total assets at June 30, 2026 were $2.1 billion, representing a $5.4 million decrease since December 31, 2025. During the six months of 2026, cash and interest-bearing deposits in other banks decreased by $46.4 million. The investment portfolio decreased by $0.2 million. The decreases were partially offset by increases in gross loans of $50.4 million as well as an increase in pension assets of $3.2 million due to increased market values.
Previous wording
Total liabilities at March 31, 2026 were $1.8 billion, representing a $50.1 million decrease since December 31, 2025. Total deposits increased by $15.5 million when compared to December 31, 2025. In January 2026, a $25.0 million brokered certificate of deposit with an interest rate of 4.23% matured and was repaid. Savings and money market accounts increased by $44.4 million due primarily to the expansion of current and new relationships throughout the first three months of 2026. Non-interest-bearing demand deposits decreased by $1.7 million and interest-bearing demand deposits decreased by $1.4 million due primarily to seasonal fluctuations in municipal and commercial account balances and increased spending by businesses and consumers. Retail time deposits decreased by $0.8 million since December 31, 2025.
Current wording
Total liabilities at June 30, 2026 were $1.9 billion, representing a $14.1 million decrease since December 31, 2025. Total deposits increased by $0.4 million when compared to December 31, 2025. In January 2026, a $25.0 million brokered certificate of deposit with an interest rate of 4.23% matured and was repaid. Savings and money market accounts increased by $27.6 million due primarily to the expansion of current and new relationships throughout the first six months of 2026. Non-interest-bearing demand deposits decreased by $11.6 million and interest-bearing demand deposits increased by $13.3 million. Retail time deposits decreased by $3.9 million since December 31, 2025. Short-term borrowings increased by $51.6 million at June 30, 2026 when compared to December 31, 2025 as a result of overnight borrowings in anticipation of loan funding. These borrowings were subsequently fully repaid in July.
Previous wording
Outstanding loans of $1.5 billion at March 31, 2026 reflected a $3.8 million increase since December 31, 2025. Since December 31, 2025, commercial real estate loans increased by $38.7 million as a result of new customer relationships; acquisition and development loans increased by $7.5 million; commercial and industrial loans decreased by $30.8 million as a result of payoffs related to approximately $15.0 million due to competitive pricing, approximately $5.3 million related to sales of businesses, and approximately $8.0 million as a result of a refinance to another institution; residential mortgage loans decreased by $10.6 million as a result of normal amortization; and consumer loans decreased by $1.0 million.
Current wording
Outstanding loans of $1.6 billion at June 30, 2026 reflected a $50.4 million increase since December 31, 2025. Since December 31, 2025, commercial real estate loans increased by $55.0 million as a result of new business relationships as well as additional growth in existing relationships; acquisition and development loans increased by $11.9 million; commercial and industrial loans decreased by $35.0 million as a result of payoffs related to approximately $15.0 million due to competitive pricing, approximately $5.3 million related to sales of businesses, approximately $8.0 million as a result of a refinance to another institution, and the payoff of a floorplan line of credit. Residential mortgage loans increased by $10.2 million as a result of robust mortgage production booked in house as opposed to the selling to the secondary market outlets, offset slightly by normal amortization; and consumer loans increased by $8.3 million related to the purchase of a consumer loan pool in the second quarter of 2026.
Previous wording
New commercial loan production for the three months ended March 31, 2026 was approximately $98.0 million. The pipeline of commercial loans as of March 31, 2026 was robust, and unfunded committed commercial construction loans totaled approximately $43.0 million. Commercial amortization and payoffs were approximately $43.0 million through March 31, 2026, due primarily to pay-offs of short-term commercial loans as well as normal amortizations of the commercial loan portfolio.
Current wording
New commercial loan production for the second quarter of 2026 was approximately $66.0 million. The pipeline of commercial loans as of June 30, 2026 was robust, and unfunded committed commercial construction loans totaled approximately $42.0 million. Commercial amortization and payoffs were approximately $71.6 million through June 30, 2026, due primarily to pay-offs of short-term commercial loans as well as normal amortizations of the commercial loan portfolio.
Previous wording
New consumer mortgage loan production for the first quarter of 2026 was approximately $16.0 million, with most of this production comprised of in-house mortgages. The pipeline of in-house, portfolio loans as of March 31, 2026 was $17.5 million. Unfunded commitments related to residential construction loans totaled $14.4 million at March 31, 2026.
Current wording
New consumer mortgage loan production for the second quarter of 2026 was approximately $33.9 million, with most of this production comprised of in-house mortgages. The pipeline of in-house, portfolio loans as of June 30, 2026 was $20.0 million. Unfunded commitments related to residential construction loans totaled $20.7 million at June 30, 2026.
Previous wording
The ACL “base case” model is derived from various economic forecasts provided by widely recognized sources. Management evaluates the variability of market conditions by examining the peak and trough of economic cycles. These peaks and troughs are used to stress the base case model to develop a range of potential outcomes. Management then determines the appropriate reserve through an evaluation of these various outcomes relative to current economic conditions and known risks in the portfolio. For the three-month period ended March 31, 2026, the range of outcomes would produce a 26% reduction or a 44% increase in reserves based on the best-case and worst-case scenarios, respectively.
Current wording
The ACL “base case” model is derived from various economic forecasts provided by widely recognized sources. Management evaluates the variability of market conditions by examining the peak and trough of economic cycles. These peaks and troughs are used to stress the base case model to develop a range of potential outcomes. Management then determines the appropriate reserve through an evaluation of these various outcomes relative to current economic conditions and known risks in the portfolio. For the six-month period ended June 30, 2026, the range of outcomes would produce a 16% reduction or a 43% increase in reserves based on the best-case and worst-case scenarios, respectively.
Previous wording
The following table presents a summary of the activity in the ACL for the three-month periods ended March 31, 2026 and 2025:
Current wording
The following table presents a summary of the activity in the ACL for the six-month periods ended June 30, 2026 and 2025:
Previous wording
The following table presents a summary of charge-offs and recoveries as a percent to their applicable portfolio for the three-month periods ended March 31, 2026 and 2025:
Current wording
The following table presents a summary of charge-offs and recoveries as a percent to their applicable portfolio for the six- month periods ended June 30, 2026 and 2025:
Previous wording
At March 31, 2026, the total amortized cost basis of the available-for-sale investment portfolio was $126.3 million compared to a fair value of $109.0 million. Unrealized gains and losses on available-for-sale securities are reflected in accumulated other comprehensive loss, net of tax, a component of shareholders’ equity. The amortized cost basis of the held to maturity portfolio was $172.8 million compared to a fair value of $148.9 million.
Current wording
At June 30, 2026, the total amortized cost basis of the available-for-sale investment portfolio was $125.1 million compared to a fair value of $108.0 million. Unrealized gains and losses on available-for-sale securities are reflected in accumulated other comprehensive loss, net of tax, and a component of shareholders’ equity. The amortized cost basis of the held to maturity portfolio was $170.4 million compared to a fair value of $146.4 million.
Previous wording
Total fair value of investment securities available for sale increased by $1.9 million since December 31, 2025. At March 31, 2026, the securities classified as available-for-sale included a net unrealized loss of $17.3 million, which represents the difference between the fair value and amortized cost of securities in the portfolio.
Current wording
Total fair value of investment securities available for sale increased by $0.9 million since December 31, 2025. At June 30, 2026, the securities classified as available-for-sale included a net unrealized loss of $17.1 million, which represents the difference between the fair value and amortized cost of securities in the portfolio.
Previous wording
Total amortized cost of securities held to maturity increased by $1.3 million since December 31, 2025 due to new security purchases.
Current wording
Total amortized cost of securities held to maturity decreased by $1.1 million since December 31, 2025 due to security paydowns, net of new purchases.
Previous wording
Approximately $92.8 million of the available-for-sale portfolio was valued using Level 2 pricing and had net unrealized losses of $14.7 million at March 31, 2026. The remaining $16.2 million of the available-for-sale securities represents the entire collateralized debt obligation portfolio, which was valued using significant unobservable inputs (Level 3 assets). The $2.6 million in net unrealized losses associated with this portfolio relates to nine pooled trust preferred securities that comprise the collateralized debt obligation portfolio.
Current wording
Approximately $92.9 million of the available-for-sale portfolio was valued using Level 2 pricing and had net unrealized losses of $14.9 million at June 30, 2026. The remaining $15.1 million of the available-for-sale securities represents the entire collateralized debt obligation portfolio, which was valued using significant unobservable inputs (Level 3 assets). The $2.1 million in net unrealized losses associated with this portfolio relates to eight pooled trust preferred securities that comprise the collateralized debt obligation portfolio.
Previous wording
Total deposits at March 31, 2026 increased by $15.5 million when compared to December 31, 2025. Non-interest-bearing demand deposits decreased by $1.7 million and interest-bearing demand deposits decreased by $1.4 million due primarily to seasonal fluctuations in municipal and commercial account balances and increased spending by businesses and consumers. Savings and money market accounts increased by $44.4 million due primarily to the expansion of current and new relationships throughout the first three months of 2026. Retail time deposits decreased by $0.8 million since December 31, 2025. In January 2026, a $25.0 million brokered certificate of deposit, with an interest rate of 4.23%, was repaid at its maturity.
Current wording
Total deposits at June 30, 2026 remained flat at $1.7 billion when compared to December 31, 2025. In January 2026, a $25.0 million brokered certificate of deposit, with an interest rate of 4.23%, was repaid at its maturity. Savings and money market accounts increased by $27.6 million due primarily to the expansion of current and new relationships throughout the first six months of 2026. Non-interest-bearing demand deposits decreased by $11.6 million, offset by an increase in interest-bearing demand deposits of $13.3 million, primarily related to municipality accounts. Retail time deposits decreased by $3.9 million since December 31, 2025.
Previous wording
Short-term borrowings increased by $1.9 million due to increased balances in the overnight investment sweep product. Long-term borrowings decreased by $65.0 million due to the full repayment of $65.0 million in FHLB advances at their maturities in March 2026.
Current wording
Short-term borrowings increased by $51.6 million driven by increased balances in overnight borrowings of $50.0 million in anticipation of loan funding. The $50.0 million was subsequently repaid in July 2026. Long-term borrowings decreased by $65.0 million due to the full repayment of $65.0 million in FHLB advances at their maturities in March 2026.
Previous wording
NII modeling allows management to view how changes in interest rates will affect the spread between the yield paid on assets and the cost of deposits and borrowed funds. Unlike traditional Gap modeling, NII modeling takes into account the different degree to which installments in the same repricing period will adjust to a change in interest rates. It also allows the use of different assumptions in a falling versus a rising rate environment. The period considered by the NII modeling is the next eight quarters.
Current wording
NII modeling allows management to view how changes in interest rates will affect the spread between the yield earned on assets and the cost of deposits and borrowed funds. Unlike traditional Gap modeling, NII modeling takes into account the different degree to which installments in the same repricing period will adjust to a change in interest rates. It also allows the use of different assumptions in a falling versus a rising rate environment. The period considered by the NII modeling is the next eight quarters.
Previous wording
NPV / EVE modeling focuses on the change in the market value of equity. NPV / EVE is defined as the market value of assets less the market value of liabilities plus/minus the market value of any off-balance sheet positions. By effectively looking at the present value of all future cash flows on or off the balance sheet, NPV / EVE modeling takes a longer-term view of interest rate risk. This complements the shorter-term view of the NII modeling.
Current wording
NPV / EVE modeling focuses on the change in the market value of equity. NPV / EVE is defined as the market value of assets less the market value of liabilities plus/minus the market value of any off-balance sheet positions. By effectively looking at the present value of all future cash flows on or off the balance sheet, NPV / EVE modeling takes a longer-term view of interest rate risk. This complements the shorter-term view of NII modeling.
Previous wording
The Corporation became slightly more asset sensitive as of March 31, 2026 when compared to December 31, 2025 as a result of increased reductions of liabilities related to the repayment of the brokered CD and FHLB borrowings. All changes in net interest income from our simulation analysis remain within our policy limits.
Current wording
The Corporation became slightly less asset sensitive as of June 30, 2026 when compared to December 31, 2025 as a result of increased liabilities related to overnight borrowings at June 30, 2026. All changes in net interest income from our simulation analysis remain within our policy limits.
Previous wording
This estimate is based on assumptions that may be affected by unforeseeable changes in the general interest rate environment and any number of unforeseeable factors. Rates on different assets and liabilities within a single maturity category adjust to changes in interest rates to varying degrees and over varying periods of time. The relationships between lending rates and rates paid on purchased funds are not constant over time. Management can respond to current or anticipated market conditions by lengthening or shortening the Bank’s sensitivity through loan repricings or changing its funding mix. The rate of growth in interest-free sources of funds will influence the level of interest-sensitive funding sources. In addition, the absolute level of interest rates will affect the volume of earning assets and funding sources. As a result of these limitations, the interest-sensitive gap is only one factor to be considered in estimating the net interest margin.
Current wording
This estimate is based on assumptions that may be affected by unforeseeable changes in the general interest rate environment and any number of unforeseeable factors. Rates on different assets and liabilities within a single maturity category adjust to changes in interest rates to varying degrees and over varying periods of time. The relationship between lending rates and rates paid on purchased funds are not constant over time. Management can respond to current or anticipated market conditions by lengthening or shortening the Bank’s sensitivity through loan repricings or changing its funding mix. The rate of growth in interest-free sources of funds will influence the level of interest-sensitive funding sources. In addition, the absolute level of interest rates will affect the volume of earning assets and funding sources. As a result of these limitations, the interest-sensitive gap is only one factor to be considered in estimating the net interest margin.
Previous wording
The Corporation enters into contractual obligations in the normal course of business. Among these obligations are FHLB advances and junior subordinated debentures, operating lease agreements for banking and subsidiaries’ offices and for data processing and telecommunications equipment. Comparing March 31, 2026 to December 31, 2025, short-term borrowings increased by $1.9 million due to increases in the overnight investment sweep product. Long-term borrowings decreased by $65.0 million due to the full repayment of $65.0 million in FHLB advances at their maturities in March 2026.
Current wording
The Corporation enters into contractual obligations in the normal course of business. Among these obligations are FHLB advances and junior subordinated debentures, operating lease agreements for banking and subsidiaries’ offices and for data processing and telecommunications equipment. Short-term borrowings increased by $51.6 million at June 30, 2026 when compared to December 31, 2025 as a result of overnight borrowings in anticipation of loan funding. These borrowings were subsequently fully repaid in July 2026.
Previous wording
The increase of $29.2 million in commitments at March 31, 2026 when compared to December 31, 2025 was primarily due to new commercial business commitments originated during the first quarter of 2026.
Current wording
The increase of $31.1 million in commitments at June 30, 2026 when compared to December 31, 2025 was primarily due to new commercial business commitments originated during the first six months of 2026.
Previous wording
For the three-month periods ended March 31, 2026 and 2025, net credit loss expense/(credit) for off-balance sheet exposures was approximately $0.2 million and ($1,000), respectively.
Current wording
For the six-month periods ended June 30, 2026 and 2025, net credit loss expense for off-balance sheet exposures was approximately $0.2 million and $0.1 million, respectively. For the three-month periods ended June 30, 2026 and 2025, net credit loss expense for off-balance sheet exposures was $45,000 and $0.1 million, respectively.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
by reduced life and health insurance expense due to reduced claims and an increase in the reduction of costs associated with loan originations related to increased loan production.
Current report — wording carried from elsewhere
Federal Reserve Bank as a result of loan growth in the second quarter of 2026. Interest expense decreased by $0.6 million in the second quarter of 2026 when compared to the second quarter of 2025. Interest on deposits increased slightly by $0.2 million despite an $84.4 million increase in average deposit balances, primarily in interest bearing demand and money market deposits. Long-term borrowing interest expense decreased by $0.8 million due to a decrease of average balances of $90.0 million for the second quarter of 2026 when compared to the same period of 2025 primarily related to the repayment of $65.0 million and $25.0 million of FHLB advances at their maturities in March of 2026 and September of 2025, respectively.
Current report — wording carried from elsewhere
Note: The change in interest income/expense due to both volume and rate has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.