Metropolitan Bank Holding Corp.

N****OTE 1 — ORGANIZATION

Metropolitan Bank Holding Corp. (the “Company”), a New York corporation, is a bank holding company headquartered in New York, New York and registered under the BHC Act. Through its wholly owned bank subsidiary, Metropolitan Commercial Bank (the “Bank”), a New York state-chartered commercial bank, the Company provides a broad range of business, commercial and retail banking products and services to small businesses, middle-market enterprises, public entities and affluent individuals primarily in the New York metropolitan area. See the “GLOSSARY OF COMMON TERMS AND ACRONYMS” for the definition of certain terms and acronyms used throughout this Form 10-Q.

The Company’s primary lending products are CRE loans and C&I loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flows from the operations of businesses.

The Company’s primary deposit products are checking, savings, and term deposit accounts, all of which are insured by the FDIC up to the maximum amounts allowed by law. In addition to traditional commercial banking products, the Company offers: corporate cash management and retail banking services; customized financial solutions for government entities, municipalities, public institutions and charter schools; specialized services to facilitate secure and efficient real estate transactions and tax-deferred exchanges for title and escrow and Section 1031 exchanges; and EB-5 Program escrow accounts of foreign investor funds for USCIS approved job-creating projects.

As a bank holding company, the Company is subject to the supervision of the Board of Governors of the Federal Reserve System. The Company is required to file with the FRB reports and other information regarding its business operations and the business operations of its subsidiaries. As a state-chartered bank that is a member of the FRB, the Bank is subject to FDIC regulations as well as supervision, periodic examination and regulation by the NYSDFS as its primary state regulator and by the FRB as its primary federal regulator.

NOTE 2 — BASIS OF PRESENTATION

The accounting and reporting policies of the Company conform with GAAP and predominant practices within the U.S. banking industry. The Unaudited Consolidated Financial Statements (“unaudited financial statements”) include the accounts of the Company and the Bank. All intercompany balances and transactions have been eliminated. The unaudited financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q, Article 10 of Regulation S-X and predominant practices within the U.S. banking industry. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The unaudited financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented.

In preparing the interim unaudited financial statements in conformity with GAAP, management has made estimates and assumptions based on available information. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods, and actual results could differ from those estimated. Information available which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy, inflation and its related effects and changes in the financial condition of borrowers.

Some items in the prior period financial statements may have been reclassified to conform to the current presentation. Reclassification had no effect on net income or stockholders’ equity.

The results of operations for the three and nine months ended September 30, 2026 and 2025 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year or for any other period.

The unaudited financial statements presented in this report should be read in conjunction with the Company’s audited consolidated financial statements and notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC.

Allowance for Credit Losses

The ACL for loans is measured on the loan’s amortized cost basis, excluding interest receivable, and is initially recognized upon origination or purchase of the loans and subsequently remeasured on a recurring basis. The ACL is recognized as a contra-asset, and credit loss expense is recorded as a provision for credit losses in the consolidated statements of operations. Loan losses are charged-off against the ACL when management believes the loan is uncollectible. Subsequent recoveries, if any, are credited to the ACL. The Company does not recognize an ACL on accrued interest receivable, consistent with its policy to reverse interest income when interest is 90 days or more past due.

The Company also records an ACL on unfunded loan commitments, which is based on the same assumptions as funded loans and also considers the probability of funding. The ACL is recognized as a liability, and credit loss expense is recorded as a provision for unfunded loan commitments within the provision for credit losses in the consolidated statements of operations. Upon funding of the loan, any related ACL previously recorded on the unfunded amount is reversed and an ACL is subsequently recognized on the outstanding loan.

In estimating the ACL for loans and commitments that are evaluated collectively, the Company uses a third-party modeling platform. Loans evaluated collectively are segmented according to shared risk characteristics, such as loan type, borrower type and collateral to create homogenous loan pools. The measurement of all expected credit losses for financial assets held at amortized cost is based on historical experience, current conditions, and reasonable and supportable forecasts of macroeconomic conditions to account for economic uncertainty. The Company also considers qualitative adjustments for information not adequately captured in the quantitative model. Qualitative adjustments may reflect changes in portfolio composition and concentrations, credit quality, collateral values, lending practices, personnel and loan review processes, regulatory and legal matters, economic conditions, and other portfolio-specific risks.

When loans do not share risk characteristics with other financial assets they are evaluated individually. Management applies its normal loan review procedures in making these judgments. Individually evaluated loans consist of nonaccrual loans, loans that are classified as substandard or doubtful, and loans that have been modified due to financial difficulty. In determining the ACL, the Company generally applies a discounted cash flow method for instruments that are individually assessed. For collateral dependent financial assets where the borrower is experiencing financial difficulty, the ACL is measured based on the difference between the fair value of the collateral (less selling costs if applicable) and the amortized cost basis of the asset as of the measurement date. Fair value is generally calculated based on the value of the underlying collateral less an appraisal discount.

Prior to the third quarter of 2026, the Company utilized lifetime loss rate models to calculate the expected losses over the life of the loan based on exposure at default loan attributes, and reasonable and supportable economic forecasts for loans collectively evaluated. The portfolios were segmented by loan level attributes such as loan type, loan size, date of origination, and delinquency status to create homogenous loan pools. During the quarter ended March 31, 2026, the peer group selection process, macroeconomic forecast weightings, and the qualitative factor process were adjusted to reflect current conditions and events. The Company accounted for these revisions prospectively as a change in accounting estimate beginning March 31, 2026, and no prior period amounts were adjusted. The effect of this change in accounting estimate for the three months ended March 31, 2026, was a net decrease in the provision for credit losses of $6.4 million, which is $4.6 million, net of tax, or $0.43 per basic earnings per share and $0.42 per dilutive earnings per share.

The Company continuously monitors current conditions and events and will evaluate potential changes that will enhance the estimation process. During the three months ended September 30, 2026, the Company implemented a new modelling platform and transitioned from a lifetime loss-rate methodology to a discounted cash flow ("DCF") methodology for loans evaluated collectively. The Company determined that the DCF methodology provides a more granular and enhanced measurement framework through its use of individual loan characteristics, contractual cash flows, prepayment assumptions, expected loss expectations, and timing of expected cash flows into the ACL estimate. As part of the implementation the Company updated its loan segmentation, peer data methodology, economic forecast assumptions and

certain model inputs, including prepayment assumptions. The Company accounted for these revisions prospectively as a change in accounting estimate beginning September 30, 2026, and no prior period amounts were adjusted. The implementation of the new modelling platform did not have a material impact on the Company's consolidated financial statements.

Under the DCF methodology the ACL reflects the difference between the amortized cost basis of a loan and the present value of expected future cash flows discounted at the loan's effective interest rate. Expected cash flows incorporate probability of default ("PD") and loss given default ("LGD") assumptions, contractual loan terms, and expected prepayments, as applicable. Loans evaluated collectively are segmented according to shared risk characteristics, such as loan type, borrower type and collateral to create homogenous loan pools. The Company uses relevant historical information, including institution and peer data, to develop quantitative model assumptions. Statistical regression analyses are used to evaluate relationships between historical credit performance and macroeconomic variables and to develop forecast PD assumptions. LGD assumptions are derived using historical loss information, peer data, and other relevant inputs considered appropriate by management. A forecast of the U.S. unemployment rate is utilized for all modeled loan segments, and U.S. gross domestic product is also utilized for the C&I and One-to Four-Family loan segments. The Company uses a four-quarter reasonable and supportable forecast period followed by a four-quarter straight-line reversion to the long-term average of the applicable economic variable.

The risk characteristics of each of the identified portfolio segments are as follows:

Commercial Real Estate — CRE loans are secured by nonresidential real estate and generally have larger balances and involve a greater degree of risk than prime residential real estate loans. Repayment of CRE loans depends on the cash flow of the borrower and the net operating income of the property, the borrower’s profitability, and on occasion the value of the underlying property. Payments on loans secured by income producing properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject, to a greater extent than residential real estate loans, to adverse conditions in the real estate market or the economy. CRE is also subject to adverse market conditions that cause a decrease in market value or lease rates, obsolescence in location or function and market conditions associated with oversupply of units in a specific region.

Construction and land — Construction and land financing is generally considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate. Risk of loss on a construction and land loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction and the estimated cost of construction. During the construction phase, a number of factors could result in delays and cost overruns. If the estimate of construction costs proves to be inaccurate, additional funds may be required to be advanced in excess of the amount originally committed to enable completion of the building.

If the estimate of value proves to be inaccurate, the value of the building may be insufficient to assure full repayment if liquidation is required. If foreclosure is required on a building before or at completion due to a default, there can be no assurance that all of the unpaid balance of, and accrued interest on, the loan as well as related foreclosure and holding costs will be recovered.

Multi-family — Multi-family real estate loans are secured by real estate of five or more units and generally have larger balances and involve a greater degree of risk than residential real estate loans. Repayment of multi-family real estate loans depends on the cash flow analysis of the property, occupancy rates, and unemployment rates, combined with the net operating income of the property, the borrower’s profitability, and the value of the underlying property. Payments on these loans depend on successful operation and management of the properties, and repayment of such loans may be subject to adverse conditions in the real estate market and/or the economy.

One-to Four-Family — One-to four-family loans are generally made on the basis of the borrower’s ability to make repayment from his or her employment income or other income. They are secured by real property whose value tends to be readily ascertainable. Repayment of one-to four-family loans is subject to adverse employment conditions in the economy leading to increased default rates and decreased market values, including from oversupply in a geographic area. In general, these loans depend on the borrower’s continuing financial stability and, therefore, are likely to be adversely affected by various factors, including job loss, divorce, illness, or personal bankruptcy. Furthermore, the application of

various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

Commercial & Industrial — C&I loans are generally of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flows of the borrower’s business. As a result, the availability of funds for the repayment of commercial loans may depend substantially on the success of the business itself. Furthermore, any collateral securing such loans may depreciate over time, may be difficult to appraise, and may fluctuate in value.

Consumer — Our consumer loans are primarily comprised of purchased student loans. As a result, repayment of such loans are subject to the financial condition of the borrower.

Income Taxes

In the third quarter of 2026, the Company entered into an agreement to purchase investment tax credits generated by renewable energy projects. The credits are intended to offset the Bank’s 2026 federal income tax liability. No credits had transferred to the Bank as of September 30, 2026. The Bank accounts for the credits under ASC 740, Income Taxes, and includes the anticipated purchase discount on credits expected to transfer in 2026 in its estimated annual effective tax rate.

NOTE 3 — SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40).” ASU 2024-03 requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU No. 2024-03 does not change the expense captions an entity presents on the face of the income statement. Subsequently issued ASU No. 2025-01 amended the effective date of ASU No. 2024-03 to require all public business entities to adopt the new guidance for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The guidance may be applied on a prospective or retrospective basis. The Company is currently evaluating the impact of ASU No. 2024-03 on its consolidated financial statements.

ASU No. 2025-06, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software" clarifies the accounting for costs related to internal-use software. The new guidance clarifies the threshold entities apply to begin capitalizing costs and removes all references to project stages in ASC Subtopic 350-40. ASU No. 2025-06 is effective for the Company beginning in 2028. The new guidance may be applied using a prospective, retrospective or modified transition approach with early adoption permitted. The Company is currently evaluating the impact of ASU 2025-06 on its consolidated financial statements.

In November 2025, the FASB issued ASU 2025-08, “Financial instruments – Credit Losses (Topic 326): Purchased Loans,” which amends the guidance in ASC 326 on the accounting for certain purchased loans. Under the ASU, entities must account for acquired loans (excluding credit cards) that meet certain criteria at acquisition (“purchased seasoned loans”) by recognizing them at their purchase price plus an allowance for expected credit losses (the “gross-up approach”). ASU 2025-08 also introduces an accounting policy election related to the subsequent measurement of expected credit losses for entities that use a method other than a discounted cash flow analysis to estimate credit losses on purchased seasoned loans. If this accounting policy is elected, entities can use the amortized cost basis of the asset to subsequently measure their credit loss allowance. ASU 2025-08 is effective for interim and annual reporting periods beginning after December 15, 2026. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the impact of ASU 2025-08 on its consolidated financial statements.

In November 2025, the FASB issued ASU 2025-09, “Derivatives and Hedging (Topic 815): Hedge Accounting Improvements,” which addresses five hedge accounting issues by providing additional guidance that is expected to enable entities to achieve and maintain hedge accounting for highly effective economic hedges and more closely aligning hedge accounting with risk management activities. This ASU is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted. Guidance is to be applied on a prospective basis, however certain changes to

existing cash flow hedges are permitted as of adoption. The Company is currently evaluating the impact of ASU 2025-09 on its consolidated financial statements.

NOTE 4 — INVESTMENT SECURITIES

The following tables summarize the amortized cost and fair value of AFS and HTM debt securities and equity investments and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses (in thousands):

There wereno proceeds from sales or calls of AFS securities for the three and nine months ended September 30, 2026 and 2025.

The tables below summarize, by contractual maturity, the amortized cost and fair value of debt securities. The tables do not include the effect of principal repayments or scheduled principal amortization. Equity securities, primarily investments in mutual funds, have been excluded from the table. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties (in thousands):

At September 30, 2026, there were $1.4 billion of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $171.8 million was encumbered. At December 31, 2025, there were $807.5 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $118.2 million was encumbered.

At September 30, 2026 and December 31, 2025, there wereno holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity. At September 30, 2026 and

December 31, 2025, all of the residential MBS and commercial MBS held by the Company were issued by U.S. Government-sponsored entities and agencies.

The following tables present debt securities with unrealized/unrecognized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

Except for U.S. State and Municipal securities, the Company has a zero loss expectation for its HTM securities portfolio, and therefore hasno ACL related to these securities. Obligations of U.S. State and Municipal securities were rated investment grade and the associated ACL was immaterial at September 30, 2026 and December 31, 2025.

AFS securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. The unrealized losses on AFS securities are primarily due to the changes in market interest rates subsequent to purchase. In addition, the Company does not intend, nor would it be required, to sell these investments until there is a full recovery of the unrealized loss, which may be at maturity. As a result, no ACL was recognized during the three and nine months ended September 30, 2026 and 2025.

NOTE 5 — LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans, net of deferred costs and fees, consist of the following (in thousands):

During the three months ended September 30, 2026, the Company implemented a new modelling platform and transitioned from a lifetime loss-rate methodology to a DCF methodology for loans evaluated collectively. As part of the implementation, the Company updated its loan segmentation on a prospective basis and re-segmented $240.1 million of commercial real estate loans to Construction and land and $35.3 million of commercial real estate loans to One-to four-family. See “NOTE 2 — BASIS OF PRESENTATION” for further information.

At September 30, 2026, $4.5 billion of loans were pledged to support wholesale funding and deposits, of which $553.0 million were encumbered for deposits. At December 31, 2025, $3.7 billion of loans were pledged to support wholesale and deposit funding, of which $446.5 million were encumbered.

The following tables present the activity in the ACL for funded loans by segment. The portfolio segments represent the categories that the Company uses to determine its ACL (in thousands):

Net charge-offs for the three and nine months ended September 30, 2026 were $3.4 million and $50.0 million, respectively. Net charge-offs for the three and nine months ended September 30, 2025 were $3.8 million and $3.7 million, respectively.

The following tables present the activity in the ACL for unfunded loan commitments (in thousands):

The following tables present the recorded investment in non-accrual loans and loans past due 90 days and greater and still accruing, by class of loans (in thousands):

Interest income on non-accrual loans recognized on a cash basis for the three and nine months ended September 30, 2026 and 2025 was immaterial.

The following tables present the aging of the recorded investment in past due loans by class of loans (in thousands):

Credit Quality Indicators

The Company aggregates loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Except for one-to four-family loans and consumer loans, the Company analyzes loans individually by classifying the loans as to credit risk ratings at least annually. For one-to four-family loans and consumer loans, the Company evaluates credit quality based on the aging status of the loan. An analysis is performed on a quarterly basis for loans classified as special mention, substandard or doubtful. The Company uses the following definitions for risk ratings. Loans not meeting these definitions are considered to be pass-rated loans.

**Special Mention -**Loans classified as special mention have a potential weakness that deserves management’s attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

**Substandard -**Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values highly questionable and improbable.

The following table presents loan balances by credit quality indicator and year of origination at September 30, 2026 and charge-offs for the nine months ended September 30, 2026 (in thousands):

The following table presents loan balances by credit quality indicator and year of origination at December 31, 2025 and charge-offs for the year ended December 31, 2025 (in thousands):

A loan is considered collateral dependent when the borrower is experiencing financial difficulties and repayment is expected to be substantially provided by the operation or sale of the collateral. The following table presents collateral dependent loans by portfolio segment as of September 30, 2026 and December 31, 2025. These loans are classified as substandard as of September 30, 2026 and December 31, 2025:

The following tables show the amortized cost basis of modified loans to borrowers experiencing financial difficulty during the periods indicated (in thousands):

The following tables describe the types of modifications made to borrowers experiencing financial difficulty (dollars in thousands):

There wereno loans that had a payment default during the three months ended September 30, 2026 that were modified in the prior 12 months before default to borrowers experiencing financial difficulty. There were $23.0 million of Construction and land loans and $13.9 million of multi-family loans that had a payment default during the nine months ended September 30, 2026 that were modified in the prior 12 months before default to borrowers experiencing financial difficulty. At September 30, 2026 there wereno additional commitments to lend to borrowers experiencing financial difficulty whose loans have been modified. There were $44.4 million and $7.0 million of CRE and C&I loans, respectively, that had a payment default during the three and nine months ended September 30, 2025 that were modified in the prior 12 months before default to borrowers experiencing financial difficulty. At September 30, 2025, there wereno additional commitments to lend to borrowers experiencing financial difficulty whose loans have been modified.

NOTE 6 — BORROWINGS

Borrowings consisted of the following (in thousands):

N.M. – not meaningful

Federal funds purchased are generally overnight transactions and FHLBNY advances are short-term transactions. At September 30, 2026, the Company hadno outstanding Federal funds purchased or FHLBNY advances.

Secured borrowings are loan participation agreements with counterparties where the transfer of the participation interest did not qualify for sale treatment under GAAP.

At September 30, 2026, the Company had cash on deposit with the FRBNY and available secured wholesale funding borrowing capacity of $4.2 billion.

NOTE 7 — STOCKHOLDERS’ EQUITY

On June 19, 2026, the Board of Directors approved a new share repurchase program pursuant to which the Company is authorized to repurchase up to $50.0 million of the Company’s common stock (The “Share Repurchase Program”). The Board of Directors has authorized an aggregate of $150 million of repurchases of the Company’s common stock since March 2025. During the three months ended September 30, 2026, the Company repurchased 112,225 shares of its common stock at an average cost of $89.11 per share. During the nine months ended September 30, 2026, the Company repurchased 235,286 shares at an average cost of $83.99 per share. At September 30, 2026, treasury stock at cost was $85.9 million. At September 30, 2026, the Company had $40.0 million of capacity for repurchases of its common stock remaining under the current authorization from the Board of Directors.

The Company may repurchase shares of common stock from time to time on the open market or by other means in accordance with applicable securities laws and other restrictions, including, in part, under a Rule 10b5-1 plan. The number of shares to be repurchased and the timing of additional repurchases, if any, will depend on several factors, including market conditions, prevailing share price, corporate and regulatory requirements, and other considerations. The Share Repurchase Program has no expiration date, may be discontinued or suspended at any time and does not obligate the Company to acquire any amount of its common stock. The Company records common stock that it repurchases as treasury stock at cost. Treasury stock is reissued at average cost.

NOTE 8 — EARNINGS PER SHARE

The Company uses the two-class method in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. The factors used in the earnings per share calculation are as follows (in thousands, except per share data).

For the three and nine months ended September 30, 2026, and 2025, respectively, all granted PRSUs and restricted stock units were considered in computing diluted earnings per common share.

NOTE 9 — STOCK COMPENSATION PLAN

Equity Incentive Plan

At September 30, 2026, the Company maintained a stock compensation plan, the Amended and Restated 2022 Equity Incentive Plan, as amended (the “2022 EIP”).

The 2022 EIP was approved on May 31, 2022 by the stockholders of the Company and an amendment and restatement of the 2022 EIP was approved by the stockholders of the Company on May 29, 2024 to increase the number of shares of common stock that may be issued under the plan by 358,000. The stockholders of the Company subsequently approved an amendment to the 2022 EIP on May 28, 2025 to increase the number of shares of common stock that may be issued under the plan by an additional 750,000. Under the 2022 EIP, the remaining maximum number of shares of stock that may be

delivered to participants in the form of restricted stock, restricted stock units and stock options, including ISOs and non-qualified stock options is 676,816 at September 30, 2026, subject to adjustment as set forth in the 2022 EIP.

Restricted Stock Awards and Restricted Stock Units

The Company grants restricted stock awards and restricted stock units under the 2022 EIP to certain key personnel. Each restricted stock grant vests based on the vesting schedule outlined in the respective grant agreement. Unvested restricted stock units are subject to forfeiture if the holder is not employed by the Company on the applicable vesting date.

In the first quarter of 2026 and 2025,104,755 and 133,359 restricted stock units were granted to certain key personnel, respectively. One-third of these shares vest each year forthree years beginning in March, 2027 and March, 2026, respectively. In the first quarter of 2026,30,000 restricted stock units were granted to certain key personnel that fully vestone year from the grant date. Total compensation cost that has been charged against income for restricted stock grants was $2.4 million and $6.8 million for the three and nine months ended September 30, 2026, respectively. Total compensation cost that has been charged against income for restricted stock grants was $1.6 million and $4.8 million for the three and nine months ended September 30, 2025, respectively. As of September 30, 2026, there was $12.3 million of total unrecognized compensation expense related to the restricted stock grants. The cost is expected to be recognized over a weighted-average period of 1.87 years.

In January 2026,27,500 restricted stock units were granted to members of the Company’s Board of Directors, which fully vestone year from the grant date. In January 2025,27,500 restricted stock units were granted to members of the Company’s Board of Directors which vested in January 2026. Total expense for the restricted stock unit awards granted to members of the Board of Directors was $597,000 and $1.9 million for the three and nine months ended September 30, 2026, respectively. Total expense for the awards granted to members of the Board of Directors was $452,000 and $1.4 million for the three and nine months ended September 30, 2025, respectively. As of September 30, 2026, total unrecognized expense for these awards was $0.7 million.

The following table summarizes the changes in the Company’s restricted stock grants:

Performance-Based Stock Units

During the second quarter of 2022, the Company established a long-term incentive award program under the 2022 EIP. Under the program,39,018 PRSUs were granted in the first quarter of 2026.11,148 of these PRSUs vest in equal installments over athree-year period beginning in March 2027 if certain performance criteria are met.27,870 of these PRSUs cliff vest after three years from January 2026 if certain performance criteria are met. In the first quarter of 2025,52,807 PRSUs were awarded, which vest in equal installments over athree-year period beginning in March 2026 if certain performance criteria are met. In the second quarter of 2024,73,260 PRSUs were awarded, of which 31,746 met the performance criteria and vest in equal installments over athree-year period beginning in June 2025. If the performance criteria are not met, no compensation cost is recognized and any recognized compensation cost is reversed. The total weighted average service inception date fair value of the outstanding awarded shares was $7.8 million. Total compensation cost that has been charged against income for these PRSUs was $850,000 and $2.6 million for the three and nine months

ended September 30, 2026, respectively. Total compensation cost that has been charged against income for these PRSUs was $578,000 and $908,000 for the three and nine months ended September 30, 2025, respectively. As of September 30, 2026, there was $3.3 million of total unrecognized compensation expense related to PRSUs. The cost is expected to be recognized over a weighted-average period of 2.17 years.

NOTE 10 — FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Accounting guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own judgments about the assumptions that market participants would use in pricing an asset or liability.

Assets and Liabilities Measured at Fair Value on a Recurring and Non-Recurring Basis

Assets measured on a recurring basis are limited to the Company’s AFS securities portfolio, equity investments, and derivative contracts. The AFS portfolio is carried at estimated fair value with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income or loss in shareholders’ equity. Equity investments are carried at estimated fair value with changes in fair value reported on the statements of operations. Outstanding derivative contracts designated as cash flow hedges are carried at estimated fair value with changes in fair value reported as accumulated other comprehensive income or loss in shareholders’ equity. Outstanding derivatives not designated as hedges are carried at estimated fair value with changes in fair value reported as non-interest income. The fair values for substantially all of these assets are obtained monthly from an independent nationally recognized pricing service. On a quarterly basis, the Company assesses the reasonableness of the fair values obtained for the AFS portfolio by reference to a second independent nationally recognized pricing service. Based on the nature of these securities, the Company’s independent pricing service provides prices which are categorized as Level 2 since quoted prices in active markets for identical assets are generally not available for the majority of securities in the Company’s portfolio. Various modeling techniques are used to determine pricing for the Company’s mortgage-backed securities, including option pricing and discounted cash flow models. The inputs to these models include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. On an annual basis, the Company obtains the models, inputs and assumptions utilized by its pricing service and reviews them for reasonableness. Other than derivative contracts, the Company did not have any liabilities that were measured at fair value at September 30, 2026 and December 31, 2025.

From time to time, the Company may be required to record at fair value other assets or liabilities on a non-recurring basis, such as certain loans where the carrying value is based on the fair value of the underlying collateral estimated using Level 3 inputs consisting of individual third-party appraisals that may be adjusted based on certain criteria.

Assets and liabilities measured at fair value on a recurring and non-recurring basis are summarized below (in thousands):

There wereno transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2026 and 2025.

The collateral value for collateral dependent loans was estimated using individual third party appraisals that utilized the sales comparison valuation technique. At September 30, 2026, the Company used Level 3 inputs to estimate the fair value including discounts to the appraisal for costs to sell, and other adjustments, ranging from -71% to 14%, and with a weighted-average of -27%. At December 31, 2025, the Company used Level 3 inputs to estimate the fair value including discounts to the appraisals for costs to sell, and other adjustments ranging from -100% to 15%, and with a weighted-average of -40%.

Assets and Liabilities Not Measured at Fair Value

The Company has engaged independent pricing service providers to provide the fair values of its financial assets and liabilities not measured at fair value. These providers follow FASB’s exit pricing guidelines, as required by ASC 820, Fair Value Measurement, when calculating the fair market value. Cash and cash equivalents include cash and due from banks and overnight deposits. The estimated fair values of cash and cash equivalents are assumed to equal their carrying values, as these financial instruments are either due on demand or have short-term maturities. For securities and the disability fund, if quoted market prices are not available for a specific security, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. These pricing models primarily use market-based or independently sourced market parameters as inputs, including, but not limited to, yield curves, interest rates, equity or debt prices, and credit spreads. The estimated fair value of loans are measured using an exit price notion. Ownership in equity securities of the FRB and FHLB is generally restricted and there is no established liquid market for their resale. The fair values of deposit liabilities with no stated maturity (i.e., money market and savings deposits, and non-interest-bearing demand deposits) are equal to the carrying amounts payable on demand. Time deposits are valued using a replacement cost of funds approach. Trust preferred securities are valued using a replacement cost of funds approach. For all other assets and liabilities it is assumed that the carrying value equals their current fair value.

Carrying amounts and estimated fair values of financial instruments not carried at fair value were as follows (in thousands):

NOTE 11 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables present the tax effects allocated to each component of Other Comprehensive Income (Loss) (in thousands):