SMARTFINANCIAL INC.

Previous wording

SmartFinancial, Inc. (the “Company,” “SmartFinancial,” “we,” “our” or “us”) is a bank holding company whose principal activity is the ownership and management of its wholly owned subsidiary, SmartBank (the “Bank”). The Company provides a variety of financial services to individuals and corporate customers through its offices in East and Middle Tennessee, Alabama, and Florida. The Bank’s primary deposit products are noninterest-bearing and interest-bearing demand deposits, savings and money market deposits, and time deposits. Its primary lending products are commercial, residential, and consumer loans.

Current wording

SmartFinancial, Inc. (the “Company,” “SmartFinancial,” “we,” “our” or “us”) is a bank holding company whose principal activity is the ownership and management of its wholly owned subsidiary, SmartBank (the “Bank”). The Company provides a variety of financial services to individuals and corporate customers through its offices in East and Middle Tennessee, Alabama, Florida, and Georgia. The Bank’s primary deposit products are noninterest-bearing and interest-bearing demand deposits, savings and money market deposits, and time deposits. Its primary lending products are commercial, residential, and consumer loans.

Previous wording

Our Consolidated Financial Statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and follow general practices within the industries in which we operate. The most significant accounting policies we follow are presented in Note 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Application of these principles requires us to make estimates, assumptions, and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Most accounting policies are not considered by management to be critical accounting policies. Several factors are considered in determining whether or not a policy is critical in the preparation of the Consolidated Financial Statements. These factors include among other things, whether the policy requires management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. The accounting policies which we believe to be most critical in preparing our Consolidated Financial Statements are presented in the section titled “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. During the quarter ending March 31, 2026, the Bank enhanced its ACL loss model for loans and leases. See Note 1. Recently Modified Accounting Policies and Allowance for Credit Lossesin the Notes to our Consolidated Financial Statements in this Form 10-Q for further information related to these changes. There have been no other significant changes in the Company’s application of critical accounting policies since December 31, 2025.

Current wording

Our Consolidated Financial Statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and follow general practices within the industries in which we operate. The most significant accounting policies we follow are presented in Note 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Application of these principles requires us to make estimates, assumptions, and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Most accounting policies are not considered by management to be critical accounting policies. Several factors are considered in determining whether or not a policy is critical in the preparation of the Consolidated Financial Statements. These factors include among other things, whether the policy requires management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. The accounting policies which we believe to be most critical in preparing our Consolidated Financial Statements are presented in the section titled “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. During the quarter ending March 31, 2026, the Bank enhanced its ACL loss model for loans and leases. SeeNote 1. Recently Modified Accounting Policies and Allowance for Credit Lossesin the Notes to our Consolidated Financial Statements in this Form 10-Q for further information related to these changes. There have been no other significant changes in the Company’s application of critical accounting policies since December 31, 2025.

Previous wording

The following is a summary of the Company’s financial highlights and significant events during the second quarter and first six months of 2026:

Current wording

The following is a summary of the Company’s financial highlights and significant events during the third quarter and first nine months of 2026:

Previous wording

The following is a summary of certain financial information for the three and six month periods ended June 30, 2026 and 2025, and as of June 30, 2026, and December 31, 2025*(dollars in thousands, except per share data)*:

Current wording

The following is a summary of certain financial information for the three and nine month periods ended September 30, 2026 and 2025, and as of September 30, 2026, and December 31, 2025*(dollars in thousands, except per share data)*:

Previous wording

Net income was $16.3 million, or $0.96 per diluted common share, for the second quarter of 2026, compared to $11.7 million, or $0.69 per diluted common share, for the second quarter of 2025. For the three months ended June 30, 2026, when compared to the comparable period in 2025, the increase in net income of $4.6 million was due to an increase in net interest income after provision for loan and lease losses of $8.7 million, offset by a decrease in noninterest income of $1.0 million, an increase in noninterest expense of $1.4 million and an increase in income tax expense of $1.7 million. The tax equivalent net interest margin was 3.52% for the second quarter of 2026, compared to 3.29% for the second quarter of 2025. Noninterest income to average assets was 0.53% for the second quarter of 2026, decreasing from 0.67% for the second quarter of 2025. Noninterest expense to average assets decreased to 2.29% in the second quarter of 2026, from 2.44% in the second quarter of 2025.

Current wording

Net income was $18.6 million, or $1.10 per diluted common share, for the third quarter of 2026, compared to $13.7 million, or $0.81 per diluted common share, for the third quarter of 2025. For the three months ended September 30, 2026, when compared to the comparable period in 2025, the increase in net income of $4.9 million was due to an increase in net interest income after provision for credit losses of $6.5 million, offset by a decrease in noninterest income of $506 thousand, an increase in noninterest expense of $2.5 million and a decrease in income tax expense of $1.4 million. The tax equivalent net interest margin was 3.45% for the third quarter of 2026, compared to 3.25% for the third quarter of 2025. Noninterest income to average assets was 0.52% for the third quarter of 2026, decreasing from 0.61% for the third quarter of 2025. Noninterest expense to average assets decreased to 2.34% in the third quarter of 2026, from 2.38% in the third quarter of 2025.

Previous wording

Net income totaled $30.0 million, or $1.77 per diluted common share, for the six months ended June 30, 2026, compared to $23.0 million, or $1.36 per diluted common share, for the six months ended June 30, 2025. The increase in net income of $7.0 million for this period was primarily from the increases in net interest income after provision for loan and lease losses of $13.1 million, offset by a decrease in noninterest income of $1.7 million and an increase in noninterest expense of $2.0 million and an increase in income tax expense of $2.4 million. The tax equivalent net interest margin was 3.50% for the first six months of 2026, compared to 3.25% for the first six months of 2025. Noninterest income to average assets

Current wording

Net income totaled $48.6 million, or $2.86 per diluted common share, for the nine months ended September 30, 2026, compared to $36.6 million, or $2.17 per diluted common share, for the nine months ended September 30, 2025. The increase in net income of $12.0 million for this period was primarily from the increases in net interest income after provision for credit losses of $19.7 million, offset by a decrease in noninterest income of $2.2 million and an increase in noninterest expense of $4.5 million and an increase in income tax expense of $1.0 million. The tax equivalent net interest margin was 3.48% for the first nine months of 2026, compared to 3.25% for the first nine months of 2025. Noninterest income to average assets was 0.54% for the first nine months of 2026, compared to 0.64% for the first nine months of

Previous wording

Net interest income, taxable equivalent, increased to $48.4 million for the second quarter of 2026, up from $40.7 million for the second quarter of 2025. Net interest income increased due to higher loan and lease balances, higher yields on these assets, and lower cost of interest-bearing liabilities. Average interest-earning assets increased from $4.96 billion for the second quarter of 2025, to $5.52 billion for the second quarter of 2026, primarily from the increase in our average loan and lease balances and average securities balances, which was offset by decreases in cash balances. Over this period, average loan and lease balances increased by $560.0 million and average interest-bearing deposits increased by $395.7 million. Average securities increased by $46.0 million, average federal funds sold and other interest earning assets decreased by $43.4 million, average subordinated debt increased by $59.0 million, average borrowings increased by $33.5 million and noninterest-bearing deposits increased by $25.5 million. The tax equivalent net interest margin increased to 3.52% for the second quarter of 2026, compared to 3.29% for the second quarter of 2025. The yield on earning assets increased from 5.65% for the second quarter of 2025, to 5.70% for the second quarter of 2026, primarily due to the deployment of excess cash and cash equivalents into loans and leases. The cost of average interest-bearing deposits decreased from 2.95% for the second quarter of 2025, to 2.62% for the second quarter of 2026, primarily due to the decrease in rates by the Federal Reserve.

Current wording

Net interest income, taxable equivalent, increased to $49.7 million for the third quarter of 2026, up from $42.8 million for the third quarter of 2025. Net interest income increased due to higher loan and lease balances and lower cost of interest-bearing liabilities. Average interest-earning assets increased from $5.23 billion for the third quarter of 2025, to $5.71 billion for the third quarter of 2026, primarily from the increase in our average loan and lease balances and average securities balances, which was offset by decreases in cash balances. Over this period, average loan and lease balances increased by $604.5 million and average interest-bearing deposits increased by $447.1 million. Average securities increased by $55.2 million, average federal funds sold and other interest earning assets decreased by $175.4 million, average subordinated debt increased by $13.7 million, average borrowings decreased by $4.0 million and noninterest-bearing deposits increased by $1.8 million. The tax equivalent net interest margin increased to 3.45% for the third quarter of 2026, compared to 3.25% for the third quarter of 2025. The yield on earning assets increased from 5.68% for the third quarter of 2025, to 5.72% for the third quarter of 2026, primarily due to the deployment of excess cash and cash equivalents into loans and leases. The cost of average interest-bearing deposits decreased from 2.98% for the third quarter of 2025, to 2.71% for the third quarter of 2026, primarily reflecting lower market interest rates and deposit repricing.

Previous wording

1 Yields related to tax-exempt loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $194 thousand and $245 thousand for the three months ended June 30, 2026, and 2025, respectively.

Current wording

1 Yields related to tax-exempt loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $157 thousand and $244 thousand for the three months ended September 30, 2026, and 2025, respectively.

Previous wording

2 Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $150 thousand and $105 thousand for the three months ended June 30, 2026, and 2025, respectively.

Current wording

2 Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $154 thousand and $117 thousand for the three months ended September 30, 2026, and 2025, respectively.

Previous wording

Net interest income, taxable equivalent, increased to $94.7 million for the first six months of 2026, up from $79.3 million for the first six months of 2025. Net interest income was positively impacted, compared to the prior year, primarily by the increase in balances of loans and leases and the increase in yield/rate on interest-earning assets and the decrease in the cost of interest-bearing liabilities. Average interest-earning assets increased from $4.91 billion for the first six months of 2025 to $5.45 billion for the first six months of 2026, primarily due to the Company’s continued organic loan and lease growth and average securities balances, offset by decreases in our average cash balances. Over this period, average loan and lease balances increased by $526.6 million and average interest-bearing deposits increased by $369.3 million. Comparing the first six months of 2026 to the first six months of 2025, average securities increased by $46.1 million, average federal funds sold and other interest earning assets decreased by $32.0 million, average subordinated debt increased by $59.0 million, average borrowings increased by $14.5 million and noninterest-bearing deposits increased by $36.6 million. The tax equivalent net interest margin increased to 3.50% for the first six months of 2026, compared to 3.25% for the first six months of 2025. The yield on earning assets increased from 5.61% for the first six months of 2025, to 5.66% for the first six months of 2026, primarily due to the deployment of excess cash and cash equivalents into loans and leases. The cost of average interest-bearing deposits decreased from 2.93% for the first six months of 2025 to 2.61% for the first six months of 2026, primarily due to the decrease in rates by the Federal Reserve.

Current wording

Net interest income, taxable equivalent, increased to $144.4 million for the first nine months of 2026, up from $122.1 million for the first nine months of 2025. Net interest income was positively impacted, compared to the prior year, primarily by the increase in balances of loans and leases and the increase in yield/rate on interest-earning assets and the decrease in the cost of interest-bearing liabilities. Average interest-earning assets increased from $5.02 billion for the first nine months of 2025 to $5.54 billion for the first nine months of 2026, primarily due to the Company’s continued organic loan and lease growth and average securities balances, offset by decreases in our average cash balances. Over this period, average loan and lease balances increased by $553.8 million and average interest-bearing deposits increased by $395.5 million. Comparing the first nine months of 2026 to the first nine months of 2025, average securities increased by $49.1 million, average federal funds sold and other interest earning assets decreased by $80.3 million, average subordinated debt increased by $43.8 million, average borrowings increased by $8.3 million and noninterest-bearing deposits increased by $24.8 million. The tax equivalent net interest margin increased to 3.48% for the first nine months of 2026, compared to 3.25% for the first nine months of 2025. The yield on earning assets increased from 5.63% for the first nine months of 2025, to 5.68% for the first nine months of 2026, primarily due to the deployment of excess cash and cash equivalents into loans and leases. The cost of average interest-bearing deposits decreased from 2.95% for the first nine months of 2025 to 2.64% for the first nine months of 2026, primarily reflecting lower market interest rates and deposit repricing.

Previous wording

1 Yields related to tax-exempt loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $412 thousand and $491 thousand for the six months ended June 30, 2026, and 2025, respectively.

Current wording

1 Yields related to tax-exempt loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $569 thousand and $735 thousand for the nine months ended September 30, 2026, and 2025, respectively.

Previous wording

2 Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $298 thousand and $199 thousand for the six months ended June 30, 2026, and 2025, respectively.

Current wording

2 Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $451 thousand and $316 thousand for the nine months ended September 30, 2026, and 2025, respectively.

Previous wording

Noninterest income decreased by $1.0 million during the second quarter of 2026 compared to the same period in 2025. This quarterly change in total noninterest income primarily resulted from the following:

Current wording

Noninterest income decreased by $506 thousand during the third quarter of 2026 compared to the same period in 2025. This quarterly change in total noninterest income primarily resulted from the following:

Previous wording

Noninterest income decreased by $1.7 million during the first six months of 2026 compared to the same period in 2025. This change in total noninterest income primarily resulted from the following:

Current wording

Noninterest income decreased by $2.2 million during the first nine months of 2026 compared to the same period in 2025. This change in total noninterest income primarily resulted from the following:

Previous wording

Noninterest expense increased by $1.4 million in the second quarter of 2026 as compared to the same period in 2025. The quarterly increase in total noninterest expense primarily resulted from the following:

Current wording

Noninterest expense increased by $2.5 million in the third quarter of 2026 as compared to the same period in 2025. The quarterly increase in total noninterest expense primarily resulted from the following:

Previous wording

Noninterest expense increased by $2.0 million in the first six months of 2026 as compared to the same period in 2025. The change in total noninterest expense primarily resulted from the following:

Current wording

Noninterest expense increased by $4.5 million in the first nine months of 2026 as compared to the same period in 2025. The change in total noninterest expense primarily resulted from the following:

Previous wording

The Company had total net loans and leases outstanding of approximately $4.64 billion at June 30, 2026, compared to $4.32 billion at December 31, 2025. Loans secured by real estate, consisting of commercial and residential property, are the principal component of our loan and lease portfolio.

Current wording

The Company had total net loans and leases outstanding of approximately $4.81 billion at September 30, 2026, compared to $4.32 billion at December 31, 2025. Loans secured by real estate, consisting of commercial and residential property, are the principal component of our loan and lease portfolio.

Previous wording

Nonperforming loans and leases, as a percentage of total gross loans and leases, net of deferred fees, were 0.25% as of June 30, 2026, and 0.22% December 31, 2025. Total nonperforming assets, as a percentage of total assets, were 0.23% at June 30, 2026, and 0.22% at December 31, 2025.

Current wording

Nonperforming loans and leases, as a percentage of total gross loans and leases, net of deferred fees, were 0.28% as of September 30, 2026, and 0.22% December 31, 2025. Total nonperforming assets, as a percentage of total assets, were 0.25% at September 30, 2026, and 0.22% at December 31, 2025.

Previous wording

We maintain the allowance at a level that we deem appropriate to adequately cover change in the loan and lease portfolio. Our provision for credit losses for loans and leases for the six months ended June 30, 2026, was $5.1 million compared to $2.6 million in the same period of 2025, an increase of $2.5 million. As of June 30, 2026, and December 31, 2025, our allowance for credit losses was $45.3 million and $40.9 million, respectively, which we deemed to be adequate at each of the respective dates. Our allowance for credit loss as a percentage of total loans and leases was 0.97% at June 30, 2026, and 0.94% at December 31, 2025. During the quarter ending March 31, 2026, the Bank enhanced its ACL loss model for loans and leases. See Note 1. Recently Modified Accounting Policies and Allowance for Credit Lossesin the Notes to our Consolidated Financial Statements in this Form 10-Q for further information related to these changes.

Current wording

We maintain the allowance at a level that we deem appropriate to adequately cover the expected credit losses in the loan and lease portfolio. Our provision for credit losses for loans and leases for the nine months ended September 30, 2026, was $6.1 million compared to $2.9 million in the same period of 2025, an increase of $3.2 million. As of September 30, 2026, and December 31, 2025, our allowance for credit losses was $45.6 million and $40.9 million, respectively, which we deemed to be adequate at each of the respective dates. Our allowance for credit loss as a percentage of total loans and leases was 0.94% at September 30, 2026 and December 31, 2025, respectively. During the quarter ending March 31, 2026, the Bank enhanced its ACL methodology for loans and leases. SeeNote 1. Recently Modified Accounting Policies and Allowance for Credit Lossesin the Notes to our Consolidated Financial Statements in this Form 10-Q for further information related to these changes.

Previous wording

The allowance associated with the individually evaluated loans and leases was approximately $3.5 million at June 30, 2026, and $4.9 million at December 31, 2025.

Current wording

The allowance associated with the individually evaluated loans and leases was approximately $1.8 million at September 30, 2026, and $4.9 million at December 31, 2025.

Previous wording

Our available-for-sale securities portfolio is carried at fair market value and our held-to-maturity securities portfolio is carried at amortized cost, and consists primarily of Federal agency bonds, mortgage-backed securities, state and municipal securities and other debt securities. Our securities portfolio increased from $662.0 million at December 31, 2025, to $679.9 million at June 30, 2026, primarily as a result of available-for-sale securities purchases. Our securities to asset ratio has decreased from 11.3% at December 31, 2025, to 11.1% at June 30, 2026.

Current wording

Our available-for-sale securities portfolio is carried at fair market value and our held-to-maturity securities portfolio is carried at amortized cost, and consists primarily of Federal agency bonds, mortgage-backed securities, state and municipal securities and other debt securities. Our securities portfolio increased from $662.0 million at December 31, 2025, to $676.0 million at September 30, 2026, primarily as a result of available-for-sale securities purchases. Our securities to asset ratio has decreased from 11.3% at December 31, 2025, to 10.7% at September 30, 2026.

Previous wording

Deposits are the primary source of funds for the Company’s lending and investing activities. The Company provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts, Individual Retirement Accounts and certificates of deposit. These accounts generally earn interest at rates the Company establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Company’s primary focus is on establishing customer relationships to attract core deposits, at times, the Company uses brokered deposits and other wholesale deposits to supplement its funding sources. As of June 30, 2026, and December 31, 2025, the Company had $106.2 and $51.9 million in brokered deposits, respectively.

Current wording

Deposits are the primary source of funds for the Company’s lending and investing activities. The Company provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts, Individual Retirement Accounts and certificates of deposit. These accounts generally earn interest at rates the Company establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Company’s primary focus is on establishing customer relationships to attract core deposits, at times, the Company uses brokered deposits and other wholesale deposits to supplement its funding sources. As of September 30, 2026, and December 31, 2025, the Company had $134.1 million and $51.9 million in brokered deposits, respectively.

Previous wording

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the three and six month periods ending June 30, 2026, and 2025, respectively (dollars in thousands):

Current wording

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the three and nine months ending September 30, 2026, and 2025, respectively (dollars in thousands):

Previous wording

The Company believes its deposit product offerings are properly structured to attract and retain core deposit relationships. The average cost of interest-bearing deposits for the three months ended June 30, 2026, and 2025, was 2.15% and 2.39%, respectively. The cost decrease was primarily attributable to the rate decreases by the Federal Reserve. The average cost of interest-bearing deposits for the six months ended June 30, 2026, and 2025, was 2.14% and 2.38%, respectively. The cost decrease was primarily attributable to rate decreases by the Federal Reserve.

Current wording

The Company believes its deposit product offerings are properly structured to attract and retain core deposit relationships. The average cost of interest-bearing deposits for the three months ended September 30, 2026, and 2025, was 2.71% and 2.98%, respectively. The cost decrease was primarily attributable to lower market interest rates and the repricing of interest-bearing deposits. The average cost of interest-bearing deposits for the nine months ended September 30, 2026, and 2025, was 2.64% and 2.95%, respectively. The cost decrease was primarily attributable to lower market interest rates and the repricing of interest-bearing deposits.

Previous wording

Total deposits as of June 30, 2026, were $5.39 billion, which was an increase of $232.8 million from December 31, 2025. This increase was driven primarily by increases in money market deposits of $181.2 million, interest-bearing demand deposits of $76.4 million, certificate time deposits of $62.0 million and brokered deposits of $54.3 million, offset by a decline in noninterest demand deposits of $141.0 million. As of June 30, 2026, the Company had outstanding time deposits under $250,000 with balances of $474.6 million and time deposits over $250,000 with balances of $512.2 million.

Current wording

Total deposits as of September 30, 2026, were $5.58 billion, which was an increase of $423.4 million from December 31, 2025. This increase was driven primarily by increases in money market deposits of $321.5 million, interest-bearing demand deposits of $117.6 million, brokered deposits of $82.2 million and certificate time deposits of $44.9 million, offset by a decline in noninterest demand deposits of $142.8 million. As of September 30, 2026, the Company had outstanding time deposits under $250,000 with balances of $531.0 million and time deposits over $250,000 with balances of $466.7 million.

Previous wording

The Company uses short-term borrowings and long-term debt to provide both funding and, to a lesser extent, regulatory capital using debt at the Company level which can be down-streamed as Tier 1 capital to the Bank. Borrowings totaled $603 thousand at June 30, 2026, and consisted entirely of securities sold under repurchase agreements. Long-term debt totaled $98.8 million at June 30, 2026, and $98.7 million at December 31, 2025, respectively, and consisted entirely of subordinated debt. For more information regarding our borrowings, see “Part I - Item 1. Consolidated Financial Statements – Note 6 –Borrowings, Line of Credit and Subordinated Debt” of this report.

Current wording

The Company uses short-term borrowings and long-term debt to provide both funding and, to a lesser extent, regulatory capital using debt at the Company level which can be down-streamed as Tier 1 capital to the Bank. Borrowings totaled $345 thousand at September 30, 2026, and consisted entirely of securities sold under repurchase agreements. Long-term debt totaled $98.9 million at September 30, 2026, and $98.7 million at December 31, 2025, respectively, and consisted entirely of subordinated debt. For more information regarding our borrowings, see “Part I - Item 1. Consolidated Financial Statements – Note 6 –Borrowings, Line of Credit and Subordinated Debt” of this report.

Previous wording

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing and depository needs of its customers. At June 30, 2026, we had $1.04 billion of pre-approved but unused lines of credit and $23.3 million of standby letters of credit. These commitments generally have fixed expiration dates, and many will expire without being drawn upon. The total commitment level does not necessarily represent future cash requirements. If needed to fund these outstanding commitments, the Bank has the ability to liquidate federal funds sold or securities available-for-sale, or on a short-term basis to borrow and purchase federal funds from other financial institutions. For more information regarding our off-balance sheet arrangements, see “Part I - Item 1. Consolidated Financial Statements – Note 8 –Commitments and Contingent Liabilities” of this report.

Current wording

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing and depository needs of its customers. At September 30, 2026, we had $1.07 billion of pre-approved but unused lines of credit and $22.8 million of standby letters of credit. These commitments generally have fixed expiration dates, and many will expire without being drawn upon. The total commitment level does not necessarily represent future cash requirements. If needed to fund these outstanding commitments, the Bank has the ability to liquidate federal funds sold or securities available-for-sale, or on a short-term basis to borrow and purchase federal funds from other financial institutions.

Previous wording

Earnings Simulation Model. We believe interest rate risk is effectively measured by our earnings simulation modeling. Earning assets, interest-bearing liabilities and off-balance sheet financial instruments are combined with simulated forecasts of interest rates for the next 12 months. To limit interest rate risk, we have guidelines for our earnings at risk which seek to limit the variance of net interest income in instantaneous changes to interest rates. We also periodically monitor simulations based on various rate scenarios such as non-parallel shifts or 12-month ramp in market interest rates over time. For changes up or down in rates from our static interest rate forecast over the next 12 months, limits in the decline in net interest income are as follows:

Current wording

Earnings Simulation Model. We believe interest rate risk is effectively measured by our earnings simulation modeling. Earning assets, interest-bearing liabilities and off-balance sheet financial instruments are combined with simulated forecasts of interest rates for the next 12 months. To limit interest rate risk, we have guidelines for our earnings at risk which seek to limit the variance of net interest income in instantaneous changes to interest rates. We also periodically monitor simulations based on various rate scenarios such as non-parallel shifts or 12-month ramp in market interest rates over time. For changes up or down in rates from our static interest rate forecast over the next 12 months, estimated changes in the decline in net interest income are as follows:

Previous wording

Economic Value of Equity Our economic value of equity model measures the extent that estimated economic values of our assets, liabilities and off-balance sheet items will change as a result of interest rate changes. Economic values are

Current wording

Economic Value of Equity Our economic value of equity model measures the extent that estimated economic values of our assets, liabilities and off-balance sheet items will change as a result of interest rate changes. Economic values are determined by discounting expected cash flows from assets, liabilities and off-balance sheet items, which establishes a base case economic value of equity.

Previous wording

To help monitor our related risk, we’ve established the following policy limits regarding simulated changes in our economic value of equity:

Current wording

To help monitor our related risk, we’ve established the following policy limits regarding simulated estimated changes in our economic value of equity:

Previous wording

The Company has $2.7 million in securities that mature throughout the next 12 months. The Company also has unused borrowing capacity in the amount of $1.12 billion available with the Federal Reserve, Federal Home Loan Bank, several correspondent banks and a line of credit. With these sources of funds, the Company currently anticipates adequate liquidity to meet the expected obligations of its customers.

Current wording

The Company has $5.3 million in securities that mature throughout the next 12 months. The Company also has unused borrowing capacity in the amount of $1.16 billion available with the Federal Reserve, Federal Home Loan Bank, several correspondent banks and a line of credit. With these sources of funds, the Company currently anticipates adequate liquidity to meet the expected obligations of its customers.